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[Federal Register Volume 76, Number 228 (Monday, November 28, 2011)]
[Rules and Regulations]
[Pages 73026-73474]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28597]

[[Page 73025]]

Vol. 76

Monday,

No. 228

November 28, 2011

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 410, 414, 415, et al.

Medicare Program; Payment Policies Under the Physician Fee Schedule, 
Five-Year Review of Work Relative Value Units, Clinical Laboratory Fee 
Schedule: Signature on Requisition, and Other Revisions to Part B for 
CY 2012; Final Rule

Federal Register / Vol. 76, No. 228 / Monday, November 28, 2011 / 
Rules and Regulations

[[Page 73026]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 414, 415, and 495

[CMS-1524-FC and CMS-1436-F]
RINs 0938-AQ25 and 0938-AQ00

Medicare Program; Payment Policies Under the Physician Fee 
Schedule, Five-Year Review of Work Relative Value Units, Clinical 
Laboratory Fee Schedule: Signature on Requisition, and Other Revisions 
to Part B for CY 2012

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period addresses changes to the 
physician fee schedule and other Medicare Part B payment policies to 
ensure that our payment systems are updated to reflect changes in 
medical practice and the relative value of services. It also addresses, 
implements or discusses certain statutory provisions including 
provisions of the Patient Protection and Affordable Care Act, as 
amended by the Health Care and Education Reconciliation Act of 2010 
(collectively known as the Affordable Care Act) and the Medicare 
Improvements for Patients and Providers Act (MIPPA) of 2008. In 
addition, this final rule with comment period discusses payments for 
Part B drugs; Clinical Laboratory Fee Schedule: Signature on 
Requisition; Physician Quality Reporting System; the Electronic 
Prescribing (eRx) Incentive Program; the Physician Resource-Use 
Feedback Program and the value modifier; productivity adjustment for 
ambulatory surgical center payment system and the ambulance, clinical 
laboratory, and durable medical equipment prosthetics orthotics and 
supplies (DMEPOS) fee schedules; and other Part B related issues.

DATES: Effective date: These regulations are effective on January 1, 
2012.
    Implementation date: The 3-day payment window policy provisions 
specified in section V.B.3.a. of this final rule with comment period 
will be implemented by July 1, 2012.
    Comment date: To be assured consideration, comments on the items 
listed in the ``Comment Subject Areas'' section of this final rule with 
comment period must be received at one of the addresses provided below, 
no later than 5 p.m. Eastern Standard Time on January 3, 2012.

ADDRESSES: In commenting, please refer to file code CMS-1524-FC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the instructions for 
``submitting a comment.''
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1524-FC, P.O. Box 8013, 
Baltimore, MD 21244-8013.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1524-FC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201.

(Because access to the interior of the Hubert H. Humphrey Building is 
not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
please call telephone number (410) 786-1066 in advance to schedule your 
arrival with one of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.

FOR FURTHER INFORMATION CONTACT: Ryan Howe, (410) 786-3355 or Chava 
Sheffield, (410) 786-2298, for issues related to the physician fee 
schedule practice expense methodology and direct practice expense 
inputs.
    Elizabeth Truong, (410) 786-6005, or Sara Vitolo, (410) 786-5714, 
for issues related to potentially misvalued services and interim final 
work RVUs.
    Ken Marsalek, (410) 786-4502, for issues related the multiple 
procedure payment reduction and pathology services.
    Sara Vitolo, (410) 786-5714, for issues related to malpractice 
RVUs.
    Michael Moore, (410) 786-6830, for issues related to geographic 
practice cost indices.
    Ryan Howe, (410) 786-3355, for issues related to telehealth 
services.
    Elizabeth Truong, (410) 786-6005, for issues related to the 
sustainable growth rate, or the anesthesia or physician fee schedule 
conversion factors.
    Bonny Dahm, (410) 786-4006, for issues related to payment for 
covered outpatient drugs and biologicals.
    Glenn McGuirk, (410) 786-5723, for issues related to the Clinical 
Laboratory Fee Schedule (CLFS) signature on requisition policy.
    Claudia Lamm, (410) 786-3421, for issues related to the 
chiropractic services demonstration budget neutrality issue.
    Jamie Hermansen, (410) 786-2064, or Stephanie Frilling, (410) 786-
4507 for issues related to the annual wellness visit.
    Christine Estella, (410) 786-0485, for issues related to the 
Physician Quality Reporting System, incentives for Electronic 
Prescribing (eRx) and Physician Compare.
    Gift Tee, (410) 786-9316, for issues related to the Physician 
Resource Use Feedback Program and physician value modifier.
    Stephanie Frilling, (410) 786-4507 for issues related to the 3-day 
payment window.
    Pam West, (410) 786-2302, for issues related to the technical 
corrections or the therapy cap.
    Rebecca Cole or Erin Smith, (410) 786-4497, for issues related to 
physician payment not previously identified.

SUPPLEMENTARY INFORMATION:
    Comment Subject Areas: We will consider comments on the following 
subject areas discussed in this final rule with comment period that are 
received by the date and time indicated in the DATES section of this 
final rule with comment period:

[[Page 73027]]

    (1) The interim final work, practice expense, and malpractice RVUs 
(including the physician time, direct practice expense (PE) inputs, and 
the equipment utilization rate assumption) for new, revised, 
potentially misvalued, and certain other CY 2012 HCPCS codes. These 
codes and their CY 2012 interim final RVUs are listed in Addendum C to 
this final rule with comment period.
    (2) The physician self-referral designated health services codes 
listed in Tables 83 and 84.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the regulations.gov 
Web site (http://www.regulations.gov) as soon as possible after they 
have been received. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-(800) 743-3951.

Table of Contents

    To assist readers in referencing sections contained in this 
preamble, we are providing a table of contents. Some of the issues 
discussed in this preamble affect the payment policies, but do not 
require changes to the regulations in the Code of Federal Regulations 
(CFR). Information on the regulations' impact appears throughout the 
preamble and, therefore, is not discussed exclusively in section IX. of 
this final rule with comment period.

I. Background
    A. Development of the Relative Value System
    1. Work RVUs
    2. Practice Expense Relative Value Units (PE RVUs)
    3. Resource-Based Malpractice RVUs
    4. Refinements to the RVUs
    5. Application of Budget Neutrality to Adjustments of RVUs
    B. Components of the Fee Schedule Payment Amounts
    C. Most Recent Changes to Fee Schedule
II. Provisions of the Rule for the Physician Fee Schedule
    A. Resource-Based Practice Expense (PE) Relative Value Units 
(RVUs)
    1. Overview
    2. Practice Expense Methodology
    a. Direct Practice Expense
    b. Indirect Practice Expense per Hour Data
    c. Allocation of PE to Services
    (1) Direct Costs
    (2) Indirect Costs
    d. Facility and Nonfacility Costs
    e. Services With Technical Components (TCs) and Professional 
Components (PCs)
    f. PE RVU Methodology
    (1) Setup File
    (2) Calculate the Direct Cost PE RVUs
    (3) Create the Indirect Cost PE RVUs
    (4) Calculate the Final PE RVUs
    (5) Setup File Information
    (6) Equipment Cost per Minute
    3. Changes to Direct PE Inputs
    a. Inverted Equipment Minutes
    b. Labor and Supply Input Duplication
    c. AMA RUC Recommendations for Moderate Sedation Direct PE 
Inputs
    d. Updates to Price and Useful Life for Existing Direct Inputs
    4. Development of Code-Specific PE RVUs
    5. Physician Time for Select Services
    B. Potentially Misvalued Services Under the Physician Fee 
Schedule
    1. Valuing Services Under the PFS
    2. Identifying, Reviewing, and Validating the RVUs of 
Potentially Misvalued Services Under the PFS
    a. Background
    b. Progress in Identifying and Reviewing Potentially Misvalued 
Codes
    c. Validating RVUs of Potentially Misvalued Codes
    3. Consolidating Reviews of Potentially Misvalued Codes
    4. Public Nomination Process
    5. CY 2012 Identification and Review of Potentially Misvalued 
Services
    a. Code Lists
    b. Specific Codes
    (1) Codes Potentially Requiring Updates to Direct PE Inputs
    (2) Codes Without Direct Practice Expense Inputs in the Non-
Facility Setting
    (3) Codes Potentially Requiring Updates to Physician Work
    6. Expanding the Multiple Procedure Payment Reduction (MPPR) 
Policy
    a. Background
    b. CY 2012 Expansion of the MPPR Policy to the Professional 
Component of Advance Imaging Services
    c. Further Expansion of MPPR Policies Under Consideration for 
Future Years
    d. Procedures Subject to the OPPS Cap
    C. Overview of the Methodology for Calculation of Malpractice 
RVUs
    D. Geographic Practice Cost Indices (GPCIs)
    1. Background
    2. GPCI Revisions for CY 2012
    a. Physician Work GPCIs
    b. Practice Expense GPCIs
    (1) Affordable Care Act Analysis and Revisions for PE GPCIs
    (A) General Analysis for the CY 2012 PE GPCIs
    (B) Analysis of ACS Rental Data
    (C) Employee Wage Analysis
    (D) Purchased Services Analysis
    (E) Determining the PE GPCI Cost Share Weights
    (i) Practice Expense
    (ii) Employee Compensation
    (iii) Office Rent
    (iv) Purchased Services
    (v) Equipment, Supplies, and Other Miscellaneous Expenses
    (vi) Physician Work and Malpractice GPCIs
    (F) PE GPCI Floor for Frontier States
    (2) Summary of CY 2012 PE Proposal
    c. Malpractice GPCIs
    d. Public Comments and CMS Responses Regarding the CY 2012 
Proposed Revisions to the 6th GPCI Update
    e. Summary of CY 2012 Final GPCIs
    3. Payment Localities
    4. Report From the Institute of Medicine
    E. Medicare Telehealth Services for the Physician Fee Schedule
    1. Billing and Payment for Telehealth Services
    a. History
    b. Current Telehealth Billing and Payment Policies
    2. Requests for Adding Services to the List of Medicare 
Telehealth Services
    3. Submitted Requests for Addition to the List of Telehealth 
Services for CY 2012
    a. Smoking Cessation Services
    b. Critical Care Services
    c. Domiciliary or Rest Home Evaluation and Management Services
    d. Genetic Counseling Services
    e. Online Evaluation and Management Services
    f. Data Collection Services
    g. Audiology Services
    4. The Process for Adding HCPCS Codes as Medicare Telehealth 
Services
    5. Telehealth Consultations in Emergency Departments
    6. Telehealth Originating Site Facility Fee Payment Amount 
Update
    III. Addressing Interim Final Relative Value Units From CY 2011 
and Establishing Interim Relative Value Units for CY 2012
    A. Methodology
    B. Finalizing CY 2011 Interim and Proposed Values for CY 2012
    1. Finalizing CY 2011 Interim and Proposed Work Values for CY 
2012
    a. Refinement Panel
    (1) Refinement Panel Process
    (2) Proposed and Interim Final Work RVUs Referred to the 
Refinement Panels in CY 2011
    b. Code-Specific Issues
    (1) Integumentary System: Skin, Subcutaneous, and Accessory 
Structures (CPT Codes 10140-11047) and Active Wound Care Management 
(CPT Codes 97597 and 97598)
    (2) Integumentary System: Nails (CPT Codes 11732-11765)
    (3) Integumentary System: Repair (Closure) (CPT Codes 11900-
11901, 12001-12018, 12031-13057, 13100-13101, 15120-15121, 15260, 
15732, 15832))
    (4) Integumentary System: Destruction (CPT Codes 17250-17286)
    (5) Integumentary System: Breast (CPT Codes 19302-19357)
    (6) Musculoskeletal: Spine (Vertebral Column) (CPT Codes 22315-
22851)

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    (7) Musculoskeletal: Forearm and Wrist (CPT Codes 25116-25605)
    (8) Musculoskeletal: Femur (Thigh Region) and Knee Joint (CPT 
Codes 27385-27530)
    (9) Musculoskeletal: Leg (Tibia and Fibula) and Ankle Joint (CPT 
Codes 27792)
    (10) Musculoskeletal: Foot and Toes (CPT Codes 28002-28825)
    (11) Musculoskeletal: Application of Casts and Strapping (CPT 
Codes 29125-29916)
    (12) Respiratory: Lungs and Pleura (CPT Codes 32405-32854)
    (13) Cardiovascular: Heart and Pericardium (CPT Codes 33030-
37766)
    (14) Digestive: Salivary Glands and Ducts (CPT Codes 42415-
42440)
    (15) Digestive: Esophagus (CPT Codes 43262-43415)
    (16) Digestive: Rectum (CPT Codes 45331)
    (17) Digestive: Biliary Tract (CPT Codes 47480-47564)
    (18) Digestive: Abdomen, Peritoneum, and Omentum (CPT Codes 
49082-49655)
    (19) Urinary System: Bladder (CPT Codes 51705-53860)
    (20) Female Genital System: Vagina (CPT Codes 57155-57288)
    (21) Maternity Care and Delivery (CPT Codes 59400-59622)
    (22) Endocrine System: Thyroid Glad (CPT Codes 60220-60240)
    (23) Endocrine System: Parathyroid, Thymus, Adrenal Glands, 
Pancreas, and Cartoid Body (CPT Codes 60500)
    (24) Nervous System: Skull, Meninges, Brain and Extracranial 
Peripheral Nerves and Autonomic Nervous System (CPT Codes 61781-
61885, 64405-64831)
    (25) Nervous system: Spine and Spinal Cord (CPT Codes 62263-
63685)
    (26) Eye and Ocular Adnexa: Eyeball (CPT Codes 65285)
    (27) Eye and Ocular Adnexa: Posterior Segment (CPT Codes 67028)
    (28) Diagnostic Radiology: Chest, Spine, and Pelvis (CPT Codes 
71250, 72114-72131)
    (29) Diagnostic Radiology: Upper Extremities (CPT Codes 73080-
73700)
    (30) Diagnostic Ultrasound: Extremities (CPT Codes 76881-76882)
    (31) Radiation Oncology: Radiation Treatment Management (CPT 
Codes 77427-77469)
    (32) Nuclear Medicine: Diagnostic (CPT Codes 78226-78598)
    (33) Pathology and Laboratory: Urinalysis (CPT Codes 88120-
88177)
    (34) Immunization Administration for Vaccines/Toxoids (CPT Codes 
90460-90461)
    (35) Gastroenterology (CPT Codes 91010-91117)
    (36) Opthalmology: Special Opthalmological Services (CPT Codes 
92081-92285)
    (37) Special Otorhinolaryngologic Services (CPT Codes 92504-
92511)
    (38) Special Otorhinolaryngologic Services: Evaluative and 
Therapeutic Services (CPT Codes 92605-92618)
    (39) Cardiovascular: Therapeutic Services and Procedures (CPT 
Codes 92950)
    (40) Neurology and Neuromuscular Procedures: Sleep Testing (CPT 
Codes 95800-95811)
    (41) Osteopathic Manipulative Treatment (CPT Codes 98925-98929)
    (42) Evaluation and Management: Initial Observation Care (CPT 
Codes 99218-99220)
    (43) Evaluation and Management: Subsequent Observation Care (CPT 
Codes 99224-99226)
    (44) Evaluation and Management: Subsequent Hospital Care (CPT 
Codes 99234-99236)
    2. Finalizing CY 2011 Interim Direct PE RVUs for CY 2012
    a. Background and Methodology
    b. Common Refinements
    (1) General Equipment Time
    (2) Supply and Equipment Items Missing Invoices
    c. Code-Specific Direct PE Inputs
    (1) CT Abdomen and Pelvis
    (2) Endovascular Revascularization
    (3) Nasal/Sinus Endoscopy
    (4) Insertion of Intraperitoneal Catheter
    (5) In Situ Hybridization Testing
    (6) External Mobile Cardivascular Telemetry
    3. Finalizing CY 2011 Interim Final and CY 2012 Proposed 
Malpractice RVUs
    a. Finalizing CY 2011 Interim Final Malpractice RVUs
    b. Finalizing CY 2012 Proposed Malpractice RVUs, Including 
Malpractice RVUs for Certain Cardiothoracic Surgery Services
    4. Payment for Bone Density Tests
    5. Other New, Revised, or Potentially Misvalued Codes With CY 
2011 Interim Final RVUs or CY 2012 Proposed RVUs Not Specifically 
Discussed in the CY 2012 Final Rule With Comment Period
    C. Establishing Interim Final RVUs for CY 2012
    1. Establishing Interim Final Work RVUs for CY 2012
    a. Code-Specific Issues
    (1) Integumentary System: Skin, Subcutaneous, and Accessory 
Structures (CPT Codes 10060-10061, 11056)
    (2) Integumentary System: Nails (CPT Codes 11719-11721, and 
G0127)
    (3) Integumentary System: Repair (Closure) (CPT Codes 15271-
15278, 16020, 16025)
    (4) Musculoskeletal: Hand and Fingers (CPT Codes 26341)
    (5) Musculoskeletal: Application of Casts and Strapping (CPT 
Codes 29125-29881)
    (6) Musculoskeletal: Endoscopy/Arthroscopy (CPT codes 29826, 
29880, 29881)
    (7) Respiratory: Lungs and Pleura (CPT Codes 32096-32674)
    (8) Cardiovascular: Heart and Pericardium (CPT Codes 33212-
37619)
    (A) Pediatric Cardiovascular Code (CPT Code 36000)
    (B) Renal Angiography codes (CPT Codes 36251-36254)
    (C) IVC Transcatheter Procedures (CPT Codes 37191-37193)
    (9) Hemic and Lymphatic: General (CPT Codes 38230-38232)
    (10) Digestive: Liver (CPT Codes 47000)
    (11) Digestive: Abdomen, Peritoneum, and Omentum (CPT Codes 
49082-49084)
    (12) Nervous system: Spine and Spinal Cord (CPT Codes 62263-
63685)
    (13) Nervous System: Extracranial Nerves, Peripheral Nerves, and 
Autonomic Nervous System (CPT Codes 64633-64636)
    (14) Diagnostic Radiology: Abdomen (CPT Codes 74174-74178)
    (15) Pathology and Laboratory: Cytopathology (CPT Codes 88101-
88108)
    (16) Psychiatry: Psychiatric Therapeutic Procedures (CPT Codes 
90854, 90867-98069)
    (17) Opthalmology: Special Opthalmological Services (CPT Codes 
92071-92072)
    (18) Special Otorhinolaryngologic Services: Audologic Function 
Tests (CPT Codes 92558-92588)
    (19) Special Otorhinolaryngologic Services: Evaluative and 
Therapeutic Services (CPT Codes 92605 and 92618)
    (20) Cardiovascular: Cardiac Catheterization (CPT Codes 93451-
93568)
    (21) Pulmonary: Other Procedures (CPT Codes 94060-94781)
    (22) Neurology and Neuromuscular Procedures: Nerve Conduction 
Tests (CPT Codes 95885-95887)
    (23) Neurology and Neuromuscular Procedures: Autonomic Function 
Tests (CPT Codes 95938-95939)
    (24) Other CY 2012 New, Revised, and Potentially Misvalued CPT 
Codes Not Specifically Discussed Previously
    2. Establishing Interim Final Direct PE RVUs for CY 2012
    3. Establishing Interim Final Malpractice RVUs for CY 2012
IV. Allowed Expenditures for Physicians' Services and the 
Sustainable Growth Rate
    A. Medicare Sustainable Growth Rate (SGR)
    1. Physicians' Services
    2. Preliminary Estimate of the SGR for 2012
    3. Revised Sustainable Growth Rate for CY 2011
    4. Final Sustainable Growth Rate for CY 2010
    5. Calculation of CYs 2012, 2011, and 2010 Sustainable Growth 
Rates
    a. Detail on the CY 2012 SGR
    (1) Factor 1--Changes in Fees for Physicians' Services (Before 
Applying Legislative Adjustments) for CY 2012
    (2) Factor 2--The Percentage Change in the Average Number of 
Part B Enrollees From CY 2011 to CY 2012
    (3) Factor 3--Estimated Real Gross Domestic Product Per Capita 
Growth in 2012
    (4) Factor 4--Percentage Change in Expenditures for Physicians' 
Services Resulting From Changes in Statute or Regulations in CY 2012 
Compared With CY 2011
    b. Detail on the CY 2011 SGR
    (1) Factor 1--Changes in Fees for Physicians' Services (Before 
Applying Legislative Adjustments) for CY 2011
    (2) Factor 2--The Percentage Change in the Average Number of 
Part B Enrollees From CY 2010 to CY 2011
    (3) Factor 3--Estimated Real Gross Domestic Product Per Capita 
Growth in CY 2011

[[Page 73029]]

    (4) Factor 4--Percentage Change in Expenditures for Physicians' 
Services Resulting From Changes in Statute or Regulations in CY 2011 
Compared With CY 2010
    c. Detail on the CY 2010 SGR
    (1) Factor 1--Changes in Fees for Physicians' Services (Before 
Applying Legislative Adjustments) for CY 2010
    (2) Factor 2--The Percentage Change in the Average Number of 
Part B Enrollees From CY 2009 to CY 2010
    (3) Factor 3--Estimated Real Gross Domestic Product Per Capita 
Growth in CY 2010
    (4) Factor 4--Percentage Change in Expenditures for Physicians' 
Services Resulting From Changes in Statute or Regulations in CY 2010 
Compared With CY 2009
    B. The Update Adjustment Factor (UAF)
    1. Calculation Under Current Law
    C. The Percentage Change in the Medicare Economic Index (MEI)
    D. Physician and Anesthesia Fee Schedule Conversion Factors for 
CY 2012
    1. Physician Fee Schedule Update and Conversion Factor
    a. CY 2012 PFS Update
    b. CY 2011 PFS Conversion Factor
    2. Anesthesia Conversion Factor
V. Other PFS Issues
    A. Section 105: Extension of Payment for Technical Component of 
Certain Physician Pathology Services
    B. Bundling of Payments for Services Provided to Outpatients Who 
Later Are Admitted as Inpatients: 3-Day Payment Window Policy and 
the Impact on Wholly Owned or Wholly Operated Physician Practices
    1. Introduction
    2. Background
    3. Applicability of the 3-Day Payment Window Policy for Services 
Furnished in Physician Practices
    a. Payment Methodology
    b. Identification of Wholly Owned or Wholly Operated Physician 
Practices
    C. Medicare Therapy Caps
VI. Other Provisions of the Final Rule
    A. Part B Drug Payment: Average Sales Price (ASP) Issues
    1. Widely Available Market Price (WAMP)/Average Manufacturer 
Price
    2. AMP Threshold and Price Substitutions
    a. AMP Threshold
    b. AMP Price Substitution
    (1) Inspector General Studies
    (2) Proposal
    (3) Timeframe for and Duration of Price Substitutions
    (4) Implementation of AMP-Based Price Substitution and the 
Relationship of ASP to AMP
    3. ASP Reporting Update
    a. ASP Reporting Template Update
    b. Reporting of ASP Units and Sales Volume for Certain Products
    4. Out of Scope Comments
    B. Discussion of Budget Neutrality for the Chiropractic Services 
Demonstration
    C. Productivity Adjustment for the Ambulatory Surgical Center 
Payment System, and the Ambulance, Clinical Laboratory and DMEPOS 
Fee Schedules
    D. Clinical Laboratory Fee schedule: Signature on Requisition
    1. History and Overview
    2. Proposed Changes
    E. Section 4103 of the Affordable Care Act: Medicare Coverage 
and Payment of the Annual Wellness Visit Providing a Personalized 
Prevention Plan Under Medicare Part B
    1. Incorporation of a Health Risk Assessment as Part of the 
Annual Wellness Visit
    a. Background and Statutory Authority--Medicare Part B Coverage 
of an Annual Wellness Visit Providing Personalized Prevention Plan 
Services
    b. Implementation
    (1) Definition of a ``Health Risk Assessment''
    (2) Changes to the Definitions of First Annual Wellness Visit 
and Subsequent Annual Visit
    (3) Additional Comments
    (4) Summary
    2. The Addition of a Health Risk Assessment as a Required 
Element for the Annual Wellness Visit Beginning in 2012
    a. Payment for AWV Services With the Inclusion of an HRA Element
    F. Quality Reporting Initiatives
    1. Physician Payment, Efficiency, and Quality Improvements--
Physician Quality Reporting System
    a. Program Background and Statutory Authority
    b. Methods of Participation
    (1) Individual Eligible Professionals
    (2) Group Practices
    (A) Background and Authority
    (B) Definition of Group Practice
    (C) Process for Physician Group Practices To Participate as 
Group Practices
    c. Reporting Period
    d. Reporting Mechanisms--Individual Eligible Professionals
    (1) Claims-Based Reporting
    (2) Registry-Based Reporting
    (A) Requirements for the Registry-Based Reporting Mechanism--
Individual Eligible Professionals
    (B) 2012 Qualification Requirements for Registries
    (3) EHR-Based Reporting
    (A) Direct EHR-Based Reporting
    (i) Requirements for the Direct EHR-Based Reporting Mechanism--
Individual Eligible Professionals
    (ii) 2012 Qualification Requirements for Direct EHR-Based 
Reporting Products
    (B) EHR Data Submission Vendors
    (i) Requirements for EHR Data Submission Vendors Based on 
Reporting Mechanism--Individual Eligible Professionals
    (ii) 2012 Qualification Requirements for EHR Data Submission 
Vendors
    (C) Qualification Requirements for Direct EHR-Based Reporting 
Data Submission Vendors and Their Products for the 2013 Physician 
Quality Reporting System
    e. Incentive Payments for the 2012 Physician Quality Reporting 
System
    (1) Criteria for Satisfactory Reporting of Individual Quality 
Measures for Individual Eligible Professionals via Claims
    (2) 2012 Criteria for Satisfactory Reporting of Individual 
Quality Measures for Individual Eligible Professionals via Registry
    (3) Criteria for Satisfactory Reporting of Individual Quality 
Measures for Individual Eligible Professionals via EHR
    (4) Criteria for Satisfactory Reporting of Measures Groups via 
Claims--Individual Eligible Professionals
    (5) 2012 Criteria for Satisfactory Reporting of Measures Groups 
via Registry--Individual Eligible Professionals
    (6) 2012 Criteria for Satisfactory Reporting on Physician 
Quality Reporting System Measures by Group Practices Under the GPRO
    f. 2012 Physician Quality Reporting System Measures
    (1) Statutory Requirements for the Selection of 2012 Physician 
Quality Reporting System Measures
    (2) Other Considerations for the Selection of 2012 Physician 
Quality Reporting System Measures
    (3) 2012 Physician Quality Reporting System Individual Measures
    (A) 2012 Physician Quality Reporting System Core Measures 
Available for Claims, Registry, and/or EHR-Based Reporting
    (B) 2012 Physician Quality Reporting System Individual Measures 
for Claims and Registry Reporting
    (C) 2012 Measures Available for EHR-Based Reporting
    (4) 2012 Physician Quality Reporting System Measures Groups
    (5) 2012 Physician Quality Reporting System Quality Measures for 
Group Practices Selected To Participate in the GPRO (GPRO)
    g. Maintenance of Certification Program Incentive
    h. Feedback Reports
    i. Informal Review
    j. Future Payment Adjustments for the Physician Quality 
Reporting System
    2. Incentives and Payment Adjustments for Electronic Prescribing 
(eRx)--The Electronic Prescribing Incentive Program
    a. Program Background and Statutory Authority
    b. Eligibility
    (1) Individual Eligible Professionals
    (A) Definition of Eligible Professional
    (2) Group Practices
    (A) Definition of ``Group Practice''
    (B) Process To Participate in the eRx Incentive Program--eRx 
GPRO
    c. Reporting Periods
    (1) Reporting Periods for the 2012 and 2013 eRx Incentives
    (2) Reporting Periods for the 2013 and 2014 eRx Payment 
Adjustments
    d. Standard for Determining Successful Electronic Prescribers
    (1) Reporting the Electronic Prescribing Quality Measure
    (2) The Denominator for the Electronic Prescribing Measure
    (3) The Reporting Numerator for the Electronic Prescribing 
Measure
    e. Required Functionalities and Part D Electronic Prescribing 
Standards
    (1) ``Qualified'' Electronic Prescribing System

[[Page 73030]]

    (2) Part D Electronic Prescribing Standards
    f. Reporting Mechanisms for the 2012 and 2013 Reporting Periods
    (1) Claims-Based Reporting
    (2) Registry-Based Reporting
    (3) EHR-Based Reporting
    g. The 2012 and 2013 eRx Incentives
    (1) Applicability of 2012 and 2013 eRx Incentives for Eligible 
Professionals and Group Practices
    (2) Reporting Criteria for Being a Successful Electronic for the 
2012 and 2013 eRx Incentives--Individual Eligible Professionals
    (3) Criteria for Being a Successful Electronic Prescriber 2012 
and 2013 eRx Incentives--Group Practices
    (4) No Double Payments
    h. The 2013 and 2014 Electronic Prescribing Payment Adjustments
    (1) Limitations to the 2013 and 2014 eRx Payment Adjustments--
Individual Eligible Professionals
    (2) Requirements for the 2013 and 2014 eRx Payment Adjustments--
Individual Eligible Professionals
    (3) Requirements for the 2013 and 2014 eRx Payment Adjustments--
Group Practices
    (4) Significant Hardship Exemptions
    (A) Significant Hardship Exemptions
    (i) Inability To Electronically Prescribe Due to Local, State, 
or Federal Law or Regulation
    (ii) Eligible Professionals Who Prescribe Fewer Than 100 
Prescriptions During a 6-Month, Payment Adjustment Reporting Period
    (B) Process for Submitting Significant Hardship Exemptions--
Individual Eligible Professionals and Group Practices
    G. Physician Compare Web site
    1. Background and Statutory Authority
    2. Final Plans
    H. Medicare EHR Incentive Program for Eligible Professionals for 
the 2012 Payment Year
    1. Background
    2. Attestation
    3 The Physician Quality Reporting System--Medicare EHR Incentive 
Pilot
    a. EHR Data Submission Vendor-Based Reporting Option
    b. Direct EHR-Based Reporting Option
    4. Method for EPs To Indicate Election To Participate in the 
Physician Quality Reporting System--Medicare EHR Incentive Pilot for 
Payment Year 2012
    I. Establishment of the Value-Based Payment Modifier and 
Improvements to the Physician Feedback Program
    1. Overview
    2. The Value Based Modifier
    a. Measures of Quality of Care and Costs
    (1) Quality of Care Measures
    (A) Quality of Care Measures for the Value-Modifier
    (B) Potential Quality of Care Measures for Additional Dimensions 
of Care in the Value Modifier
    (i) Outcome Measures
    (ii) Care Coordination/Transition Measures
    (iii) Patient Safety, Patient Experience and Functional Status
    (2) Cost Measures
    (A) Cost Measures for the Value Modifier
    (B) Potential Cost Measures for Future Use in the Value Modifier
    b. Implementation of the Value Modifier
    c. Initial Performance Period
    d. Other Issues
    3. Physician Feedback Program
    a. Alignment of Physician Quality Reporting System Quality Care 
Measures With the Physician Feedback Reports
    b. 2010 Physician Group and Individual Reports Disseminated in 
2011
    J. Physician Self-Referral Prohibition: Annual Update to the 
List of CPT/HCPCS Codes
    1. General
    2. Annual Update to the Code List
    a. Background
    b. Response to Comments
    c. Revisions Effective for 2012
    K. Technical Corrections
    1. Outpatient Speech-Language Pathology Services: Conditions and 
Exclusions
    2. Outpatient Diabetes Self-Management Training and Diabetes 
Outcome Measurements
    a. Changes to the Definition of Deemed Entity
    b. Changes to the Condition of Coverage Regarding Training 
Orders
    3. Practice Expense Relative Value Units (RVUs)
VII. Waiver of Proposed Rulemaking and Collection of Information 
Requirements
    A. Waiver of Proposed Rulemaking and Delay of Effective Date
    B. Collection of Information Requirements
    1. Part B Drug Payment
    2. The Physician Quality Reporting System (Formerly the 
Physician Quality Reporting Initiative (PQRI))
    a. Estimated Participation in the 2010 Physician Quality 
Reporting System
    b. Burden Estimate on Participation in the 2010 Physician 
Quality Reporting System--Individual Eligible Professionals
    (1) Burden Estimate on Participation in the 2012 Physician 
Quality Report System via the Claims-Based Reporting Mechanism--
Individual Eligible Professionals
    (2) Burden Estimate on Participation in the 2012 Physician 
Quality Reporting System--Group Practices
    (3) Burden Estimate on Participation in the Maintenance of 
Certification Program Incentive
    (4) Burden Estimate on Participation in the Maintenance of 
Certification Program Incentive
    3. Electronic Prescribing (eRx) Incentive Program
    a. Estimate on Participation in the 2012, 2013, and 2014 eRx 
Incentive Program
    b. Burden Estimate on Participation in the eRx Incentive 
Program--Individual Eligible Professionals
    (1) Burden Estimate on Participation in the eRx Incentive 
Program via the Claims-Based Reporting Mechanism- Individual 
Eligible Professionals
    (2) Burden Estimate on Participation in the eRx Incentive 
Program via the Registry-Based Reporting Mechanism- Individual 
Eligible Professionals and Group Practices
    (3) Burden Estimate on Participation in the eRx Incentive 
Program via the EHR-Based Reporting Mechanism--Individual Eligible 
Professionals and Group Practices
    (4) Burden Estimate on Participation in the eRx Incentive 
Program--Group Practices
    4. Medicare Electronic Health Record (EHR) Incentive Program for 
Eligible Professionals for the 2012 Payment Year
VIII. Response to Comments
IX. Regulatory Impact Analysis
    A. Statement of Need
    B. Overall Impact
    C. RVU Impacts
    1. Resource-Based Work, PE, and Malpractice RVUs
    2. CY 2012 PFS Impact Discussion
    a. Changes in RVUs
    b. Combined Impact
    D. Effects of Proposal To Review Potentially Misvalued Codes on 
an Annual Basis Under the PFS
    E. Effect of Revisions to Malpractice RUVs
    F. Effect of Changes to Geographic Practice Cost Indices (GPCIs)
    G. Effects of Final Changes to Medicare Telehealth Services 
Under the Physician Fee Schedule H Effects of the Impacts of Other 
Provisions of the Final Rule With Comment Period
    1. Part B Drug Payment: ASP Issues
    2. Chiropractic Services Demonstration
    3. Extension of Payment for Technical Component of Certain 
Physician Pathology Services
    4. Section 4103: Medicare Coverage of Annual Wellness Visit 
Providing a Personalized Prevention Plan: Incorporation of a Health 
Risk Assessment as Part of the Annual Wellness Visit
    5. Physician Payment, Efficiency, and Quality Improvements--
Physician Quality Reporting System
    6. Incentives for Electronic Prescribing (eRx)--The Electronic 
Prescribing Incentive Program
    7. Physician Compare Web site
    8. Medicare EHR Incentive Program
    9. Physician Feedback Program/Value Modifier Payment
    10. Bundling of Payments for Services Provided to Outpatients 
Who Later Are Admitted as Inpatients: 3-Day Window Policy and Impact 
on Wholly Owned or Wholly Operated Physician Offices
    11. Clinical Lab Fee Schedule: Signature on Requisition
    I. Alternatives Considered
    J. Impact on Beneficiaries
    K. Accounting Statement
    L. Conclusion
X. Addenda Referenced in This Rule and Available Only Through the 
Internet on the CMS Web Site
Regulations Text

Acronyms

    In addition, because of the many organizations and terms to which 
we refer by acronym in this final rule with comment period, we are 
listing these acronyms and their corresponding terms in alphabetical 
order as follows:

[[Page 73031]]

AA Anesthesiologist assistant
AACE American Association of Clinical Endocrinologists
AACVPR American Association of Cardiovascular and Pulmonary 
Rehabilitation
AADE American Association of Diabetes Educators
AANA American Association of Nurse Anesthetists
ABMS American Board of Medical Specialties
ABN Advanced Beneficiary Notice
ACC American College of Cardiology
ACGME Accreditation Council on Graduate Medical Education
ACLS Advanced cardiac life support
ACP American College of Physicians
ACR American College of Radiology
ACS American Community Survey
ADL Activities of daily living
AED Automated external defibrillator
AFROC Association of Freestanding Radiation Oncology Centers
AFS Ambulance Fee Schedule
AHA American Heart Association
AHFS-DI American Hospital Formulary Service-Drug Information
AHRQ [HHS] Agency for Healthcare Research and Quality
AMA American Medical Association
AMA RUC [AMA's Specialty Society] Relative (Value) Update Committee
AMA-DE American Medical Association Drug Evaluations
AMI Acute Myocardial Infarction
AMP Average Manufacturer Price
AO Accreditation organization
AOA American Osteopathic Association
APA American Psychological Association
APC Administrative Procedures Act
APTA American Physical Therapy Association
ARRA American Recovery and Reinvestment Act (Pub. L. 111-5)
ASC Ambulatory surgical center
ASP Average Sales Price
ASPE Assistant Secretary of Planning and Evaluation (ASPE)
ASRT American Society of Radiologic Technologists
ASTRO American Society for Therapeutic Radiology and Oncology
ATA American Telemedicine Association
AWP Average Wholesale Price
AWV Annual Wellness Visit
BBA Balanced Budget Act of 1997 (Pub. L. 105-33)
BBRA [Medicare, Medicaid and State Child Health Insurance Program] 
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection 
Act of 2000 (Pub. L. 106-554)
BLS Bureau of Labor and Statistics
BMD Bone Mineral Density
BMI Body Mass Index
BN Budget Neutrality
BPM Benefit Policy Manual
CABG Coronary Artery Bypass Graft
CAD Coronary Artery Disease
CAH Critical Access Hospital
CAHEA Committee on Allied Health Education and Accreditation
CAP Competitive Acquisition Program
CARE Continuity Assessment Record and Evaluation
CBIC Competitive Bidding Implementation Contractor
CBP Competitive Bidding Program
CBSA Core-Based Statistical Area
CDC Centers for Disease Control and Prevention
CEM Cardiac Event Monitoring
CF Conversion Factor
CFC Conditions for Coverage
CFR Code of Federal Regulations
CKD Chronic Kidney Disease
CLFS Clinical Laboratory Fee Schedule
CMA California Medical Association
CMD Contractor Medical Director
CME Continuing Medical Education
CMHC Community Mental Health Center
CMPs Civil Money Penalties
CMS Centers for Medicare & Medicaid Services
CNS Clinical Nurse Specialist
CoP Condition of Participation
COPD Chronic Obstructive Pulmonary Disease
CORF Comprehensive Outpatient Rehabilitation Facility
COS Cost of Service
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPI-U Consumer Price Index for Urban Consumers
CPR Cardiopulmonary Resuscitation
CPT [Physicians] Current Procedural Terminology (4th Edition, 2002, 
copyrighted by the American Medical Association)
CQM Clinical Quality Measures
CR Cardiac Rehabilitation
CRF Chronic Renal Failure
CRNA Certified Registered Nurse Anesthetist
CROs Clinical Research Organizations
CRP Canalith Repositioning
CRT Certified Respiratory Therapist
CSC Computer Sciences Corporation
CSW Clinical Social Worker
CT Computed Tomography
CTA Computed Tomography Angiography
CWF Common Working File
CY Calendar Year
D.O. Doctor of Osteopathy
DEA Drug Enforcement Agency
DHHS Department of Health and Human Services
DHS Designated health services
DME Durable Medical Equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and 
supplies
DOJ Department of Justice
DOQ Doctors Office Quality
DOS Date of service
DOTPA Development of Outpatient Therapy Alternatives
DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)
DSMT Diabetes Self-Management Training Services
DXA CPT Dual energy X-ray absorptiometry
E/M Evaluation and Management Medicare Services
ECG Electrocardiogram
EDI Electronic data interchange
EEG Electroencephalogram
EGC Electrocardiogram
EHR Electronic health record
EKG Electrocardiogram
EMG Electromyogram
EMTALA Emergency Medical Treatment and Active Labor Act
EOG Electro-oculogram
EPO Erythopoeitin
EPs Eligible Professional
eRx Electronic Prescribing
ESO Endoscopy Supplies
ESRD End-Stage Renal Disease
FAA Federal Aviation Administration
FAX Facsimile
FDA Food and Drug Administration (HHS)
FFS Fee-for-service
FISH In Situ Hybridization Testing
FOTO Focus On Therapeutic Outcomes
FQHC Federally Qualified Health Center
FR Federal Register
FTE Full Time Equivalent
GAF Geographic Adjustment Factor
GAO Government Accountability Office
GEM Generating Medicare [Physician Quality Performance Measurement 
Results]
GFR Glomerular Filtration Rate
GME Graduate Medical Education
GPCIs Geographic Practice Cost Indices
GPO Group Purchasing Organization
GPRO Group Practice Reporting Option
GPS Geographic Positioning System
GSA General Services Administration
GT Growth Target
HAC Hospital-Acquired Conditions
HBAI Health and Behavior Assessment and Intervention
HCC Hierarchal Condition Category
HCPAC Health Care Professionals Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HDL/LDL High-Density Lipoprotein/Low-Density Lipoprotein
HDRT High Dose Radiation Therapy
HEMS Helicopter Emergency Medical Services
HH PPS Home Health Prospective Payment System
HHA Home Health Agency
HHRG Home Health Resource Group
HHS [Department of] Health and Human Services
HIPAA Health Insurance Portability and Accountability Act of 1996 
(Pub. L. 104-191)
HIT Health Information Technology
HITECH Health Information Technology for Economic and Clinical 
Health Act (Title IV of Division B of the Recovery Act, together 
with Title XIII of Division A of the Recovery Act)
HITSP Healthcare Information Technology Standards Panel
HIV Human Immunodeficiency Virus
HMO Health Maintenance Organization
HOPD Hospital Outpatient Department
HPSA Health Professional Shortage Area
HRA Health Risk Assessment
HRSA Health Resources Services Administration (HHS)
HSIP HPSA Surgical Incentive Program
HUD Department of Housing and Urban Development
HUD Housing and Urban Development
IACS Individuals Access to CMS Systems
IADL Instrumental Activities of Daily Living

[[Page 73032]]

ICD International Classification of Diseases
ICF Intermediate Care Facilities
ICF International Classification of Functioning, Disability and 
Health
ICR Intensive Cardiac Rehabilitation
ICR Information Collection Requirement
IDE Investigational Device Exemption
IDTF Independent Diagnostic Testing Facility
IFC Interim Rinal Rule with Comment Period
IGI IHS Global Insight, Inc.
IME Indirect Medical Education
IMRT Intensity-Modulated Radiation Therapy
INR International Normalized Ratio
IOM Institute of Medicine
IOM Internet Only Manual
IPCI Indirect Practice Cost Index
IPPE Initial Preventive Physical Examination
IPPS Inpatient Prospective Payment System
IRS Internal Revenue Service
ISO Insurance Services Office
IVD Ischemic Vascular Disease
IVIG Intravenous Immune Globulin
IWPUT Intra-service Work Per Unit of Time
JRCERT Joint Review Committee on Education in Radiologic Technology
KDE Kidney Disease Education
LCD Local Coverage Determination
LOPS Loss of Protective Sensation
LUGPA Large Urology Group Practice Association
M.D. Doctor of Medicine
MA Medicare Advantage Program
MAC Medicare Administrative Contractor
MA-PD Medicare Advantage-Prescription Drug Plans
MAV Measure Applicability Validation
MCMP Medicare Care Management Performance
MCP Monthly Capitation Payment
MDRD Modification of Diet in Renal Disease
MedCAC Medicare Evidence Development and Coverage Advisory Committee 
(formerly the Medicare Coverage Advisory Committee (MCAC))
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MGMA Medical Group Management Association
MIEA-TRHCA Medicare Improvements and Extension Act of 2006 (that is, 
Division B of the Tax Relief and Health Care Act of 2006 (TRHCA) 
(Pub. L. 109-432)
MIPPA Medicare Improvements for Patients and Providers Act of 2008 
(Pub. L. 110-275)
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (Pub. L. 108-173)
MMEA Medicare and Medicaid Extenders Act of 2010 (Pub. L. 111-309)
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 
110-173)
MNT Medical Nutrition Therapy
MOC Maintenance of Certification
MP Malpractice
MPC Multispecialty Points of Comparison
MPPR Multiple Procedure Payment Reduction Policy
MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539)
MRA Magnetic Resonance Angiography
MRI Magnetic Resonance Imaging
MSA Metropolitan Statistical Area
MSP Medicare Secondary Payer
MUE Medically Unlikely Edit
NAICS North American Industry Classification System
NBRC National Board for Respiratory Care
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NCQA National Committee for Quality Assurance
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NDC National Drug Codes
NF Nursing facility
NISTA National Institute of Standards and Technology Act
NP Nurse Practitioner
NPI National Provider Identifier
NPP Nonphysician Practitioner
NPPES National Plan & Provider Enumeration System
NQF National Quality Forum
NRC Nuclear Regulatory Commission
NSQIP National Surgical Quality Improvement Program
NTSB National Transportation Safety Board
NUBC National Uniform Billing Committee
OACT [CMS] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
OCR Optical Character Recognition
ODF Open Door Forum
OES Occupational Employment Statistics
OGPE Oxygen Generating Portable Equipment
OIG Office of the Inspector General
OMB Office of Management and Budget
ONC [HHS] Office of the National Coordinator for Health IT
OPPS Outpatient Prospective Payment System
OSCAR Online Survey and Certification and Reporting
PA Physician Assistant
PACE Program of All-inclusive Care for the Elderly
PACMBPRA Preservation of Access to Care for Medicare Beneficiaries 
and Pension Relief Act of 2010 (Pub. L. 111-192)
PAT Performance Assessment Tool
PC Professional Components
PCI Percutaneous Coronary Intervention
PCIP Primary Care Incentive Payment Program
PDP Prescription Drug Plan
PE Practice Expense
PE/HR Practice Expense per Hour
PEAC Practice Expense Advisory Committee
PECOS Provider Enrollment Chain and Ownership System
PERC Practice Expense Review Committee
PFS Physician Fee Schedule
PGP [Medicare] Physician Group Practice
PHI Protected Health Information
PHP Partial Hospitalization Program
PIM [Medicare] Program Integrity Manual
PLI Professional Liability Insurance
POA Present On Admission
POC Plan Of Care
PODs Physician Owned Distributors
PPATRA Physician Payment And Therapy Relief Act
PPI Producer Price Index
PPIS Physician Practice Expense Information Survey
PPPS Personalized Prevention Plan Services
PPS Prospective Payment System
PPTA Plasma Protein Therapeutics Association
PQRI Physician Quality Reporting Initiative
PR Pulmonary rehabilitation
PRA Paperwork Reduction Act
PSA Physician Scarcity Areas
PT Physical Therapy
PTA Physical Therapy Assistant
PTCA Percutaneous Transluminal Coronary Angioplasty
PVBP Physician and Other Health Professional Value-Based Purchasing 
Workgroup
QDCs (Physician Quality Reporting System) Quality Data Codes
RA Radiology Assistant
RAC Medicare Recovery Audit Contractor
RBMA Radiology Business Management Association
RFA Regulatory Flexibility Act
RHC Rural Health Clinic
RHQDAPU Reporting Hospital Quality Data Annual Payment Update 
Program
RIA Regulatory Impact Analysis
RN Registered Nurse
RNAC Reasonable Net Acquisition Cost
RPA Radiology Practitioner Assistant
RRT Registered Respiratory Therapist
RUC [AMA's Specialty Society] Relative (Value) Update Committee
RVRBS Resource-Based Relative Value Scale
RVU Relative Value Unit
SBA Small Business Administration
SCHIP State Children's Health Insurance Programs
SDW Special Disability Workload
SGR Sustainable Growth Rate
SLP Speech-Language Pathology
SMS [AMAs] Socioeconomic Monitoring System
SNF Skilled Nursing Facility
SOR System of Record
SRS Stereotactic Radiosurgery
SSA Social Security Administration
SSI Social Security Income
STARS Services Tracking and Reporting System
STATS Short Term Alternatives for Therapy Services
STS Society for Thoracic Surgeons
TC Technical Components
TIN Tax Identification Number
TJC Joint Commission
TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432)
TTO Transtracheal Oxygen
UAF Update Adjustment Factor
UPMC University of Pittsburgh Medical Center
URAC Utilization Review Accreditation Committee
USDE United States Department of Education
USP-DI United States Pharmacopoeia-Drug Information
VA Department of Veterans Affairs
VBP Value-Based Purchasing
WAC Wholesale Acquisition Cost
WAMP Widely Available Market Price
WHO World Health Organization

[[Page 73033]]

Addenda Available Only Through the Internet on the CMS Web Site

    In the past, the Addenda referred to throughout the preamble of our 
annual PFS proposed and final rules with comment period were included 
in the printed Federal Register. However, beginning with the CY 2012 
PFS proposed rule, the PFS Addenda no longer appear in the Federal 
Register. Instead these Addenda to the annual proposed and final rules 
with comment period will be available only through the Internet. The 
PFS Addenda along with other supporting documents and tables referenced 
in this final rule with comment period are available through the 
Internet on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/. 
Click on the link on the left side of the screen titled, ``PFS Federal 
Regulations Notices'' for a chronological list of PFS Federal Register 
and other related documents. For the CY 2012 PFS final rule with 
comment period, refer to item CMS-1524-FC. For complete details on the 
availability of the Addenda referenced in this final rule with comment 
period, we refer readers to section X. of this final rule with comment 
period. Readers who experience any problems accessing any of the 
Addenda or other documents referenced in this final rule with comment 
period and posted on the CMS Web site identified above should contact 
Rebecca Cole at (410) 786-1589 or Erin Smith at (410) 786-4497.

CPT (Current Procedural Terminology) Copyright Notice

    Throughout this final rule with comment period, we use CPT codes 
and descriptions to refer to a variety of services. We note that CPT 
codes and descriptions are copyright 2010 American Medical Association. 
All Rights Reserved. CPT is a registered trademark of the American 
Medical Association (AMA). Applicable Federal Acquisition Regulations 
(FAR) and Defense Federal Acquisition Regulations (DFAR) apply.

I. Background

    Since January 1, 1992, Medicare has paid for physicians' services 
under section 1848 of the Social Security Act (the Act), ``Payment for 
Physicians' Services.'' The Act requires that payments under the 
physician fee schedule (PFS) are based on national uniform relative 
value units (RVUs) based on the relative resources used in furnishing a 
service. Section 1848(c) of the Act requires that national RVUs be 
established for physician work, practice expense (PE), and malpractice 
expense. Before the establishment of the resource-based relative value 
system, Medicare payment for physicians' services was based on 
reasonable charges. We note that throughout this final rule with 
comment period, unless otherwise noted, the term ``practitioner'' is 
used to describe both physicians and nonphysician practitioners (such 
as physician assistants, nurse practitioners, clinical nurse 
specialists, certified nurse-midwives, psychologists, or clinical 
social workers) that are permitted to furnish and bill Medicare under 
the PFS for their services.

A. Development of the Relative Value System

1. Work RVUs
    The concepts and methodology underlying the PFS were enacted as 
part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (Pub. L. 
101-239), and OBRA 1990, (Pub. L. 101-508). The final rule, published 
on November 25, 1991 (56 FR 59502), set forth the fee schedule for 
payment for physicians' services beginning January 1, 1992. Initially, 
only the physician work RVUs were resource-based, and the PE and 
malpractice RVUs were based on average allowable charges.
    The physician work RVUs established for the implementation of the 
fee schedule in January 1992 was developed with extensive input from 
the physician community. A research team at the Harvard School of 
Public Health developed the original physician work RVUs for most codes 
in a cooperative agreement with the Department of Health and Human 
Services (DHHS). In constructing the code-specific vignettes for the 
original physician work RVUs, Harvard worked with panels of experts, 
both inside and outside the Federal government, and obtained input from 
numerous physician specialty groups.
    Section 1848(b)(2)(B) of the Act specifies that the RVUs for 
anesthesia services are based on RVUs from a uniform relative value 
guide, with appropriate adjustment of the conversion factor (CF), in a 
manner to assure that fee schedule amounts for anesthesia services are 
consistent with those for other services of comparable value. We 
established a separate CF for anesthesia services, and we continue to 
utilize time units as a factor in determining payment for these 
services. As a result, there is a separate payment methodology for 
anesthesia services.
    We establish physician work RVUs for new and revised codes based, 
in part, on our review of recommendations received from the American 
Medical Association's (AMA's) Specialty Society Relative Value Update 
Committee (RUC).
2. Practice Expense Relative Value Units (PE RVUs)
    Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 
103-432), enacted on October 31, 1994, amended section 
1848(c)(2)(C)(ii) of the Act and required us to develop resource-based 
PE RVUs for each physicians service beginning in 1998. We were to 
consider general categories of expenses (such as office rent and wages 
of personnel, but excluding malpractice expenses) comprising PEs.
    Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 
105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay 
implementation of the resource-based PE RVU system until January 1, 
1999. In addition, section 4505(b) of the BBA provided for a 4-year 
transition period from charge-based PE RVUs to resource-based RVUs.
    We established the resource-based PE RVUs for each physician's 
service in a final rule with comment period, published November 2, 1998 
(63 FR 58814), effective for services furnished in 1999. Based on the 
requirement to transition to a resource-based system for PE over a 4-
year period, resource-based PE RVUs did not become fully effective 
until 2002.
    This resource-based system was based on two significant sources of 
actual PE data: the Clinical Practice Expert Panel (CPEP) data and the 
AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were 
collected from panels of physicians, practice administrators, and 
nonphysician health professionals (for example, registered nurses 
(RNs)) nominated by physician specialty societies and other groups. The 
CPEP panels identified the direct inputs required for each physician's 
service in both the office setting and out-of-office setting. We have 
since refined and revised these inputs based on recommendations from 
the AMA RUC. The AMA's SMS data provided aggregate specialty-specific 
information on hours worked and PEs.
    Separate PE RVUs are established for procedures that can be 
performed in both a nonfacility setting, such as a physician's office, 
and a facility setting, such as a hospital outpatient department 
(HOPD). The difference between the facility and nonfacility RVUs 
reflects the fact that a facility typically receives separate payment 
from Medicare for its costs of providing the service, apart from 
payment under the PFS. The nonfacility RVUs reflect all

[[Page 73034]]

of the direct and indirect PEs of providing a particular service.
    Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) 
(Pub. L. 106-113) directed the Secretary of Health and Human Services 
(the Secretary) to establish a process under which we accept and use, 
to the maximum extent practicable and consistent with sound data 
practices, data collected or developed by entities and organizations to 
supplement the data we normally collect in determining the PE 
component. On May 3, 2000, we published the interim final rule (65 FR 
25664) that set forth the criteria for the submission of these 
supplemental PE survey data. The criteria were modified in response to 
comments received, and published in the Federal Register (65 FR 65376) 
as part of a November 1, 2000 final rule. The PFS final rules with 
comment period published in 2001 and 2003, respectively, (66 FR 55246 
and 68 FR 63196) extended the period during which we would accept these 
supplemental data through March 1, 2005.
    In the calendar year (CY) 2007 PFS final rule with comment period 
(71 FR 69624), we revised the methodology for calculating direct PE 
RVUs from the top-down to the bottom-up methodology beginning in CY 
2007 and provided for a 4-year transition for the new PE RVUs under 
this new methodology. This transition ended in CY 2010 and direct PE 
RVUs are calculated in CY 2012 using this methodology, unless otherwise 
noted.
    In the CY 2010 PFS final rule with comment period (74 FR 61749), we 
updated the PE/hour (PE/HR) data that are used in the calculation of PE 
RVUs for most specialties. For this update, we used the Physician 
Practice Information Survey (PPIS) conducted by the AMA. The PPIS is a 
multispecialty, nationally representative, PE survey of both physicians 
and nonphysician practitioners (NPPs) using a survey instrument and 
methods highly consistent with those of the SMS and the supplemental 
surveys used prior to CY 2010. We note that in CY 2010, for oncology, 
clinical laboratories, and independent diagnostic testing facilities 
(IDTFs), we continued to use the supplemental survey data to determine 
practice expense per hour (PE/HR) values (74 FR 61752). Beginning in CY 
2010, we provided for a 4-year transition for the new PE RVUs using the 
updated PE/HR data. In CY 2012, the third year of the transition, PE 
RVUs are calculated based on a 75/25 blend of the new PE RVUs developed 
using the PPIS data and the previous PE RVUs based on the SMS and 
supplemental survey data.
3. Resource-Based Malpractice RVUs
    Section 4505(f) of the BBA amended section 1848(c) of the Act to 
require that we implement resource-based malpractice RVUs for services 
furnished on or after CY 2000. The resource-based malpractice RVUs were 
implemented in the PFS final rule with comment period published 
November 2, 1999 (64 FR 59380). The MP RVUs were based on malpractice 
insurance premium data collected from commercial and physician-owned 
insurers from all the States, the District of Columbia, and Puerto 
Rico. In the CY 2010 PFS final rule with comment period (74 FR 61758), 
we implemented the Second Five-Year Review and update of the 
malpractice RVUs. In the CY 2011 PFS final rule with comment period, we 
described our approach for determining malpractice RVUs for new or 
revised codes that become effective before the next Five-Year Review 
and update (75 FR 73208). Accordingly, to develop the CY 2012 
malpractice RVUs for new or revised codes we crosswalked the new or 
revised code to the malpractice RVUs of a similar source code and 
adjusted for differences in work (or, if greater, the clinical labor 
portion of the fully implemented PE RVUs) between the source code and 
the new or revised code.
4. Refinements to the RVUs
    Section 1848(c)(2)(B)(i) of the Act requires that we review all 
RVUs no less often than every 5-years. The First Five-Year Review of 
Work RVUs was published on November 22, 1996 (61 FR 59489) and was 
effective in 1997. The Second Five-Year Review of Work RVUs was 
published in the CY 2002 PFS final rule with comment period (66 FR 
55246) and was effective in 2002. The Third Five-Year Review of Work 
RVUs was published in the CY 2007 PFS final rule with comment period 
(71 FR 69624) and was effective on January 1, 2007. The Fourth Five-
Year Review of Work RVUs was initiated in the CY 2010 PFS final rule 
with comment period where we solicited candidate codes from the public 
for this review (74 FR 61941). Proposed revisions to work RVUs and 
corresponding changes to PE and malpractice RVUs affecting payment for 
physicians' services for the Fourth Five-Year Review of Work RVUs were 
published in a separate Federal Register notice on June 6, 2011 (76 FR 
32410). We have reviewed public comments, made adjustments to our 
proposals in response to comments, as appropriate, and included final 
values in this final rule with comment period, effective for services 
furnished beginning January 1, 2012.
    In 1999, the AMA RUC established the Practice Expense Advisory 
Committee (PEAC) for the purpose of refining the direct PE inputs. 
Through March 2004, the PEAC provided recommendations to CMS for over 
7,600 codes (all but a few hundred of the codes currently listed in the 
AMA's Current Procedural Terminology (CPT) codes). As part of the CY 
2007 PFS final rule with comment period (71 FR 69624), we implemented a 
new bottom-up methodology for determining resource-based PE RVUs and 
transitioned the new methodology over a 4-year period. A comprehensive 
review of PE was undertaken prior to the 4-year transition period for 
the new PE methodology from the top-down to the bottom-up methodology, 
and this transition was completed in CY 2010. In CY 2010, we also 
incorporated the new PPIS data to update the specialty-specific PE/HR 
data used to develop PE RVUs, adopting a 4-year transition to PE RVUs 
developed using the PPIS data.
    In the CY 2005 PFS final rule with comment period (69 FR 66236), we 
implemented the First Five-Year Review of the malpractice RVUs (69 FR 
66263). Minor modifications to the methodology were addressed in the CY 
2006 PFS final rule with comment period (70 FR 70153). The Second Five-
Year Review and update of resource-based malpractice RVUs was published 
in the CY 2010 PFS final rule with comment period (74 FR 61758) and was 
effective in CY 2010.
    In addition to the Five-Year Reviews, beginning for CY 2009, CMS 
and the AMA RUC have identified and reviewed a number of potentially 
misvalued codes on an annual basis based on various identification 
screens. This annual review of work and PE RVUs for potentially 
misvalued codes was supplemented by section 3134 of the Affordable Care 
Act, which requires the agency to periodically identify, review and 
adjust values for potentially misvalued codes with an emphasis on the 
following categories: (1) Codes and families of codes for which there 
has been the fastest growth; (2) codes or families of codes that have 
experienced substantial changes in practice expenses; (3) codes that 
are recently established for new technologies or services; (4) multiple 
codes that are frequently billed in conjunction with furnishing a 
single service; (5) codes with low relative values, particularly those 
that are often billed multiple times for a single treatment; (6) codes 
which have not been subject to review

[[Page 73035]]

since the implementation of the RBRVS (the so-called `Harvard valued 
codes'); and (7) other codes determined to be appropriate by the 
Secretary.
5. Application of Budget Neutrality to Adjustments of RVUs
    Budget neutrality typically requires that expenditures not increase 
or decrease as a result of changes or revisions to policy. However, 
section 1848(c)(2)(B)(ii)(II) of the Act requires adjustment only if 
the change in expenditures resulting from the annual revisions to the 
PFS exceeds a threshold amount. Specifically, adjustments in RVUs for a 
year may not cause total PFS payments to differ by more than $20 
million from what they would have been if the adjustments were not 
made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if 
revisions to the RVUs cause expenditures to change by more than $20 
million, we make adjustments to ensure that expenditures do not 
increase or decrease by more than $20 million.

B. Components of the Fee Schedule Payment Amounts

    To calculate the payment for every physician's service, the 
components of the fee schedule (physician work, PE, and malpractice 
RVUs) are adjusted by geographic practice cost indices (GPCIs). The 
GPCIs reflect the relative costs of physician work, PE, and malpractice 
in an area compared to the national average costs for each component.
    RVUs are converted to dollar amounts through the application of a 
CF, which is calculated by CMS' Office of the Actuary (OACT).
    The formula for calculating the Medicare fee schedule payment 
amount for a given service and fee schedule area can be expressed as:

Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU 
Malpractice x GPCI Malpractice)] x CF.

C. Most Recent Changes to the Fee Schedule

    The CY 2011 PFS final rule with comment period (75 FR 73170) 
implemented changes to the PFS and other Medicare Part B payment 
policies. It also finalized many of the CY 2010 interim RVUs and 
implemented interim RVUs for new and revised codes for CY 2011 to 
ensure that our payment systems are updated to reflect changes in 
medical practice and the relative values of services. The CY 2011 PFS 
final rule with comment period also addressed other policies, as well 
as certain provisions of the Affordable Care Act and the Medicare 
Improvements for Patients and Providers Act of 2008 (MIPPA).
    In the CY 2011 PFS final rule with comment period, we announced the 
following for CY 2011: the total PFS update of -10.1 percent; the 
initial estimate for the sustainable growth rate of -13.4 percent; and 
the conversion factor (CF) of $25.5217. These figures were calculated 
based on the statutory provisions in effect on November 2, 2010, when 
the CY 2011 PFS final rule with comment period was issued.
    On December 30, 2010, we published a correction notice (76 FR 1670) 
to correct several technical and typographical errors that occurred in 
the CY 2011 PFS final rule with comment period. This correction notice 
announced a revised CF for CY 2011 of $25.4999, which was in accordance 
with the statutory provisions in effect as of November 2, 2010, the 
date the CY 2011 PFS final rule with comment period was issued.
    On November 30, 2010, the Physician Payment and Therapy Relief Act 
of 2010 (PPATRA) (Pub. L. 111-286) was signed into law. Section 3 of 
Pub. L. 111-286 modified the policy finalized in the CY 2011 PFS final 
rule with comment period (75 FR 73241), effective January 1, 2011, 
regarding the payment reduction applied to multiple therapy services 
provided to the same patient on the same day in the office setting by 
one provider and paid for under the PFS (hereinafter, the therapy 
multiple procedure payment reduction (MPPR)). The PPATRA provision 
changed the therapy MPPR percentage from 25 to 20 percent of the PE 
component of payment for the second and subsequent ``always'' therapy 
services furnished in the office setting on the same day to the same 
patient by one provider, and excepted the payment reductions associated 
with the therapy MPPR from budget neutrality under the PFS.
    On December 15, 2010, the Medicare and Medicaid Extenders Act of 
2010 (MMEA) (Pub. L. 111-309) was signed into law. Section 101 of the 
MMEA provided for a 1-year zero percent update for the CY 2011 PFS. As 
a result of the MMEA, the CY 2011 PFS conversion factor was revised to 
$33.9764.

II. Provisions of the Final Rule for the Physician Fee Schedule

A. Resource-Based Practice Expense (PE) Relative Value Units (RVUs)

1. Overview
    Practice expense (PE) is the portion of the resources used in 
furnishing the service that reflects the general categories of 
physician and practitioner expenses, such as office rent and personnel 
wages but excluding malpractice expenses, as specified in section 
1848(c)(1)(B) of the Act. Section 121 of the Social Security Amendments 
of 1994 (Pub. L. 103-432), enacted on October 31, 1994, required us to 
develop a methodology for a resource-based system for determining PE 
RVUs for each physician's service. We develop PE RVUs by looking at the 
direct and indirect physician practice resources involved in furnishing 
each service. Direct expense categories include clinical labor, medical 
supplies, and medical equipment. Indirect expenses include 
administrative labor, office expense, and all other expenses. The 
sections that follow provide more detailed information about the 
methodology for translating the resources involved in furnishing each 
service into service-specific PE RVUs. In addition, we note that 
section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in 
RVUs for a year may not cause total PFS payments to differ by more than 
$20 million from what they would have been if the adjustments were not 
made. Therefore, if revisions to the RVUs cause expenditures to change 
by more than $20 million, we make adjustments to ensure that 
expenditures do not increase or decrease by more than $20 million. We 
refer readers to the CY 2010 PFS final rule with comment period (74 FR 
61743 through 61748) for a more detailed history of the PE methodology.
2. Practice Expense Methodology
a. Direct Practice Expense
    We use a bottom-up approach to determine the direct PE by adding 
the costs of the resources (that is, the clinical staff, equipment, and 
supplies) typically required to provide each service. The costs of the 
resources are calculated using the refined direct PE inputs assigned to 
each CPT code in our PE database, which are based on our review of 
recommendations received from the AMA RUC. For a detailed explanation 
of the bottom-up direct PE methodology, including examples, we refer 
readers to the Five-Year Review of Work Relative Value Units Under the 
PFS and Proposed Changes to the Practice Expense Methodology proposed 
notice (71 FR 37242) and the CY 2007 PFS final rule with comment period 
(71 FR 69629).
b. Indirect Practice Expense per Hour Data
    We use survey data on indirect practice expenses incurred per hour 
worked in developing the indirect

[[Page 73036]]

portion of the PE RVUs. Prior to CY 2010, we primarily used the 
practice expense per hour (PE/HR) by specialty that was obtained from 
the AMA's Socioeconomic Monitoring Surveys (SMS). The AMA administered 
a new survey in CY 2007 and CY 2008, the Physician Practice Expense 
Information Survey (PPIS), which was expanded (relative to the SMS) to 
include nonphysician practitioners (NPPs) paid under the PFS.
    The PPIS is a multispecialty, nationally representative, PE survey 
of both physicians and NPPs using a consistent survey instrument and 
methods highly consistent with those used for the SMS and the 
supplemental surveys. The PPIS gathered information from 3,656 
respondents across 51 physician specialty and healthcare professional 
groups. We believe the PPIS is the most comprehensive source of PE 
survey information available to date. Therefore, we used the PPIS data 
to update the PE/HR data for almost all of the Medicare-recognized 
specialties that participated in the survey for the CY 2010 PFS.
    When we changed over to the PPIS data beginning in CY 2010, we did 
not change the PE RVU methodology itself or the manner in which the PE/
HR data are used in that methodology. We only updated the PE/HR data 
based on the new survey. Furthermore, as we explained in the CY 2010 
PFS final rule with comment period (74 FR 61751), because of the 
magnitude of payment reductions for some specialties resulting from the 
use of the PPIS data, we finalized a 4-year transition (75 percent old/
25 percent new for CY 2010, 50 percent old/50 percent new for CY 2011, 
25 percent old/75 percent new for CY 2012, and 100 percent new for CY 
2013) from the previous PE RVUs to the PE RVUs developed using the new 
PPIS data.
    Section 303 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) added section 
1848(c)(2)(H)(i) of the Act, which requires us to use the medical 
oncology supplemental survey data submitted in 2003 for oncology drug 
administration services. Therefore, the PE/HR for medical oncology, 
hematology, and hematology/oncology reflects the continued use of these 
supplemental survey data.
    We do not use the PPIS data for reproductive endocrinology, sleep 
medicine, and spine surgery since these specialties are not separately 
recognized by Medicare, nor do we have a method to blend these data 
with Medicare-recognized specialty data.
    Supplemental survey data on independent labs, from the College of 
American Pathologists, were implemented for payments in CY 2005. 
Supplemental survey data from the National Coalition of Quality 
Diagnostic Imaging Services (NCQDIS), representing independent 
diagnostic testing facilities (IDTFs), were blended with supplementary 
survey data from the American College of Radiology (ACR) and 
implemented for payments in CY 2007. Neither IDTFs nor independent labs 
participated in the PPIS. Therefore, we continue to use the PE/HR that 
was developed from their supplemental survey data.
    Consistent with our past practice, the previous indirect PE/HR 
values from the supplemental surveys for medical oncology, independent 
laboratories, and IDTFs were updated to CY 2006 using the MEI to put 
them on a comparable basis with the PPIS data.
    Previously, we have established PE/HR values for various 
specialties without SMS or supplemental survey data by crosswalking 
them to other similar specialties to estimate a proxy PE/HR. For 
specialties that were part of the PPIS for which we previously used a 
crosswalked PE/HR, we instead use the PPIS-based PE/HR. We continue 
previous crosswalks for specialties that did not participate in the 
PPIS. However, beginning in CY 2010 we changed the PE/HR crosswalk for 
portable x-ray suppliers from radiology to IDTF, a more appropriate 
crosswalk because these specialties are more similar to each other with 
respect to physician time.
    For registered dietician services, the resource-based PE RVUs have 
been calculated in accordance with the final policy that crosswalks the 
specialty to the ``All Physicians'' PE/HR data, as adopted in the CY 
2010 PFS final rule with comment period (74 FR 61752) and discussed in 
more detail in the CY 2011 PFS final rule with comment period (75 FR 
73183).
    There are four specialties whose utilization data will be newly 
incorporated into ratesetting for CY 2012. We proposed to use proxy PE/
HR values for these specialties by crosswalking values from other, 
similar specialties as follows: Speech Language Pathology from Physical 
Therapy; Hospice and Palliative Care from All Physicians; Geriatric 
Psychiatry from Psychiatry; and Intensive Cardiac Rehabilitation from 
Cardiology. Additionally, since section 1833(a)(1)(K) of the Act (as 
amended by section 3114 of the Affordable Care Act) requires that 
payment for services provided by a certified nurse midwife be paid at 
100 percent of the PFS amount, this specialty will no longer be 
excluded from the ratesetting calculation. We proposed to crosswalk the 
PE\HR data from Obstetrics/gynecology to Certified Nurse Midwife. These 
proposed changes were reflected in the ``PE HR'' file available on the 
CMS Web site under the supporting data files for the CY 2012 PFS 
proposed rule at http://www.cms.gov/PhysicianFeeSched/.
    Comment: Several commenters supported the proposals to incorporate 
the data into ratesetting for CY 2012. Most of these commenters also 
supported the proposed proxy PE/HR value crosswalks. One commenter, 
however, objected to using the Psychiatry PE/HR crosswalk for Geriatric 
Psychiatry. The commenter noted that many of the specific geriatric 
issues such as mobility, hearing impairments, and cognitive impairments 
that increase the expenses for geriatrician's treating frail adults 
also apply to the practice expenses for geriatric psychiatrists. 
Therefore, the commenter argued that CMS should use a blend of 
information from Geriatric Medicine and Psychiatry as the PE/HR 
crosswalk.
    Response: We appreciate the broad support for the proposal to 
incorporate utilization data from these specialties into ratesetting 
for CY 2012. We understand the commenters' concerns in terms of 
geriatric psychiatry and agree that in many ways the patient population 
for geriatric psychiatry may resemble the patient population for 
geriatric medicine. However, the primary drivers of the indirect 
practice expense per hour for these specialties are the administrative 
staff category and the office rent category. We disagree with the 
commenter that the administrative staff and office space requirements 
for geriatric psychiatrists more closely resemble the administrative 
staff and office space requirements for geriatrics than for psychiatry. 
In general, these categories are more likely to be driven by the types 
of services provided than the patient population served.
    After consideration of the public comments we received, we are 
finalizing our CY 2012 proposals to update the PE/HR data as reflected 
in the ``PE HR'' file available on the CMS Web site under the 
supporting data files for the CY 2012 PFS final rule with comment 
period at http://www.cms.gov/PhysicianFeeSched/.
    As provided in the CY 2010 PFS final rule with comment period (74 
FR 61751), CY 2012 is the third year of the 4-year transition to the PE 
RVUs calculated using the PPIS data.

[[Page 73037]]

Therefore, in general, the CY 2012 PE RVUs are a 25 percent/75 percent 
blend of the previous PE RVUs based on the SMS and supplemental survey 
data and the new PE RVUS developed using the PPIS data as described 
previously.
c. Allocation of PE to Services
    To establish PE RVUs for specific services, it is necessary to 
establish the direct and indirect PE associated with each service.
(1) Direct Costs
    The relative relationship between the direct cost portions of the 
PE RVUs for any two services is determined by the relative relationship 
between the sum of the direct cost resources (that is, the clinical 
staff, equipment, and supplies) typically required to provide the 
services. The costs of these resources are calculated from the refined 
direct PE inputs in our PE database. For example, if one service has a 
direct cost sum of $400 from our PE database and another service has a 
direct cost sum of $200, the direct portion of the PE RVUs of the first 
service would be twice as much as the direct portion of the PE RVUs for 
the second service.
(2) Indirect Costs
    Section II.A.2.b. of this final rule with comment period describes 
the current data sources for specialty-specific indirect costs used in 
our PE calculations. We allocate the indirect costs to the code level 
on the basis of the direct costs specifically associated with a code 
and the greater of either the clinical labor costs or the physician 
work RVUs. We also incorporate the survey data described earlier in the 
PE/HR discussion. The general approach to developing the indirect 
portion of the PE RVUs is described as follows:
     For a given service, we use the direct portion of the PE 
RVUs calculated as previously described and the average percentage that 
direct costs represent of total costs (based on survey data) across the 
specialties that perform the service to determine an initial indirect 
allocator. For example, if the direct portion of the PE RVUs for a 
given service were 2.00 and direct costs, on average, represented 25 
percent of total costs for the specialties that performed the service, 
the initial indirect allocator would be 6.00 since 2.00 is 25 percent 
of 8.00 and 6.00 is 75 percent of 8.00.
     We then add the greater of the work RVUs or clinical labor 
portion of the direct portion of the PE RVUs to this initial indirect 
allocator. In our example, if this service had work RVUs of 4.00 and 
the clinical labor portion of the direct PE RVUs was 1.50, we would add 
6.00 plus 4.00 (since the 4.00 work RVUs are greater than the 1.50 
clinical labor portion) to get an indirect allocator of 10.00. In the 
absence of any further use of the survey data, the relative 
relationship between the indirect cost portions of the PE RVUs for any 
two services would be determined by the relative relationship between 
these indirect cost allocators. For example, if one service had an 
indirect cost allocator of 10.00 and another service had an indirect 
cost allocator of 5.00, the indirect portion of the PE RVUs of the 
first service would be twice as great as the indirect portion of the PE 
RVUs for the second service.
     We next incorporate the specialty-specific indirect PE/HR 
data into the calculation. As a relatively extreme example for the sake 
of simplicity, assume in our previous example that, based on the survey 
data, the average indirect cost of the specialties performing the first 
service with an allocator of 10.00 was half of the average indirect 
cost of the specialties performing the second service with an indirect 
allocator of 5.00. In this case, the indirect portion of the PE RVUs of 
the first service would be equal to that of the second service.
d. Facility and Nonfacility Costs
    For procedures that can be furnished in a physician's office, as 
well as in a hospital or facility setting, we establish two PE RVUs: 
facility and nonfacility. The methodology for calculating PE RVUs is 
the same for both the facility and nonfacility RVUs, but is applied 
independently to yield two separate PE RVUs. Because Medicare makes a 
separate payment to the facility for its costs of furnishing a service, 
the facility PE RVUs are generally lower than the nonfacility PE RVUs.
e. Services With Technical Components (TCs) and Professional Components 
(PCs)
    Diagnostic services are generally comprised of two components: a 
professional component (PC) and a technical component (TC), each of 
which may be performed independently or by different providers, or they 
may be performed together as a ``global'' service. When services have 
PC and TC components that can be billed separately, the payment for the 
global component equals the sum of the payment for the TC and PC. This 
is a result of using a weighted average of the ratio of indirect to 
direct costs across all the specialties that furnish the global 
components, TCs, and PCs; that is, we apply the same weighted average 
indirect percentage factor to allocate indirect expenses to the global 
components, PCs, and TCs for a service. (The direct PE RVUs for the TC 
and PC sum to the global under the bottom-up methodology.)
f. PE RVU Methodology
    For a more detailed description of the PE RVU methodology, we refer 
readers to the CY 2010 PFS final rule with comment period (74 FR 61745 
through 61746).
(1) Setup File
    First, we create a setup file for the PE methodology. The setup 
file contains the direct cost inputs, the utilization for each 
procedure code at the specialty and facility/nonfacility place of 
service level, and the specialty-specific PE/HR data from the surveys.
(2) Calculate the Direct Cost PE RVUs
    Sum the costs of each direct input.
    Step 1: Sum the direct costs of the inputs for each service.
    Apply a scaling adjustment to the direct inputs.
    Step 2: Calculate the current aggregate pool of direct PE costs. 
This is the product of the current aggregate PE (aggregate direct and 
indirect) RVUs, the CF, and the average direct PE percentage from the 
survey data.
    Step 3: Calculate the aggregate pool of direct costs. This is the 
sum of the product of the direct costs for each service from Step 1 and 
the utilization data for that service.
    Step 4: Using the results of Step 2 and Step 3 calculate a direct 
PE scaling adjustment so that the aggregate direct cost pool does not 
exceed the current aggregate direct cost pool and apply it to the 
direct costs from Step 1 for each service.
    Step 5: Convert the results of Step 4 to an RVU scale for each 
service. To do this, divide the results of Step 4 by the CF. Note that 
the actual value of the CF used in this calculation does not influence 
the final direct cost PE RVUs, as long as the same CF is used in Step 2 
and Step 5. Different CFs will result in different direct PE scaling 
factors, but this has no effect on the final direct cost PE RVUs since 
changes in the CFs and changes in the associated direct scaling factors 
offset one another.
(3) Create the Indirect Cost PE RVUs
    Create indirect allocators.
    Step 6: Based on the survey data, calculate direct and indirect PE 
percentages for each physician specialty.
    Step 7: Calculate direct and indirect PE percentages at the service 
level by taking a weighted average of the results

[[Page 73038]]

of Step 6 for the specialties that furnish the service. Note that for 
services with TCs and PCs, the direct and indirect percentages for a 
given service do not vary by the PC, TC, and global components.
    Step 8: Calculate the service level allocators for the indirect PEs 
based on the percentages calculated in Step 7. The indirect PEs are 
allocated based on the three components: the direct PE RVUs, the 
clinical PE RVUs, and the work RVUs. For most services the indirect 
allocator is: Indirect percentage * (direct PE RVUs/direct percentage) 
+ work RVUs.
    There are two situations where this formula is modified:
     If the service is a global service (that is, a service 
with global, professional, and technical components), then the indirect 
allocator is: indirect percentage (direct PE RVUs/direct percentage) + 
clinical PE RVUs + work RVUs.
     If the clinical labor PE RVUs exceed the work RVUs (and 
the service is not a global service), then the indirect allocator is: 
Indirect percentage (direct PE RVUs/direct percentage) + clinical PE 
RVUs.

(Note: For global services, the indirect allocator is based on both the 
work RVUs and the clinical labor PE RVUs. We do this to recognize that, 
for the PC service, indirect PEs will be allocated using the work RVUs, 
and for the TC service, indirect PEs will be allocated using the direct 
PE RVUs and the clinical labor PE RVUs. This also allows the global 
component RVUs to equal the sum of the PC and TC RVUs.)

    For presentation purposes in the examples in Table 2, the formulas 
were divided into two parts for each service.
     The first part does not vary by service and is the 
indirect percentage (direct PE RVUs/direct percentage).
     The second part is either the work RVUs, clinical PE RVUs, 
or both depending on whether the service is a global service and 
whether the clinical PE RVUs exceed the work RVUs (as described earlier 
in this step).
    Apply a scaling adjustment to the indirect allocators.
    Step 9: Calculate the current aggregate pool of indirect PE RVUs by 
multiplying the current aggregate pool of PE RVUs by the average 
indirect PE percentage from the survey data.
    Step 10: Calculate an aggregate pool of indirect PE RVUs for all 
PFS services by adding the product of the indirect PE allocators for a 
service from Step 8 and the utilization data for that service.
    Step 11: Using the results of Step 9 and Step 10, calculate an 
indirect PE adjustment so that the aggregate indirect allocation does 
not exceed the available aggregate indirect PE RVUs and apply it to 
indirect allocators calculated in Step 8.
    Calculate the indirect practice cost index.
    Step 12: Using the results of Step 11, calculate aggregate pools of 
specialty-specific adjusted indirect PE allocators for all PFS services 
for a specialty by adding the product of the adjusted indirect PE 
allocator for each service and the utilization data for that service.
    Step 13: Using the specialty-specific indirect PE/HR data, 
calculate specialty-specific aggregate pools of indirect PE for all PFS 
services for that specialty by adding the product of the indirect PE/HR 
for the specialty, the physician time for the service, and the 
specialty's utilization for the service across all services performed 
by the specialty.
    Step 14: Using the results of Step 12 and Step 13, calculate the 
specialty-specific indirect PE scaling factors.
    Step 15: Using the results of Step 14, calculate an indirect 
practice cost index at the specialty level by dividing each specialty-
specific indirect scaling factor by the average indirect scaling factor 
for the entire PFS.
    Step 16: Calculate the indirect practice cost index at the service 
level to ensure the capture of all indirect costs. Calculate a weighted 
average of the practice cost index values for the specialties that 
furnish the service.
(Note: For services with TCs and PCs, we calculate the indirect 
practice cost index across the global components, PCs, and TCs. Under 
this method, the indirect practice cost index for a given service (for 
example, echocardiogram) does not vary by the PC, TC, and global 
component.)
    Step 17: Apply the service level indirect practice cost index 
calculated in Step 16 to the service level adjusted indirect allocators 
calculated in Step 11 to get the indirect PE RVUs.
(4) Calculate the Final PE RVUs
    Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs 
from Step 17 and apply the final PE budget neutrality (BN) adjustment.
    The final PE BN adjustment is calculated by comparing the results 
of Step 18 to the current pool of PE RVUs. This final BN adjustment is 
required primarily because certain specialties are excluded from the PE 
RVU calculation for ratesetting purposes, but all specialties are 
included for purposes of calculating the final BN adjustment. (See 
``Specialties excluded from ratesetting calculation'' later in this 
section.)
(5) Setup File Information
     Specialties excluded from ratesetting calculation: For the 
purposes of calculating the PE RVUs, we exclude certain specialties, 
such as certain nonphysician practitioners paid at a percentage of the 
PFS and low-volume specialties, from the calculation. These specialties 
are included for the purposes of calculating the BN adjustment. They 
are displayed in Table 1. We note that since specialty code 97 
(physician assistant) is paid at a percentage of the PFS and therefore 
excluded from the ratesetting calculation, this specialty has been 
added to the table for CY 2012.
BILLING CODE 4120-01-P

[[Page 73039]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.000

BILLING CODE 4120-01-C
     Crosswalk certain low volume physician specialties: 
Crosswalk the utilization of certain specialties with relatively low 
PFS utilization to the associated specialties.
     Physical therapy utilization: Crosswalk the utilization 
associated with all physical therapy services to the specialty of 
physical therapy.
     Identify professional and technical services not 
identified under the usual TC and 26 modifiers: Flag the services that 
are PC and TC services, but do not use TC and 26 modifiers (for 
example, electrocardiograms). This flag associates the PC and TC with 
the associated global code for use in creating the indirect PE RVUs. 
For example, the professional service, CPT code 93010 
(Electrocardiogram, routine ECG with at least 12 leads; interpretation 
and report only), is associated with the global service, CPT code 93000 
(Electrocardiogram, routine ECG with at least 12 leads; with 
interpretation and report).
     Payment modifiers: Payment modifiers are accounted for in 
the creation of the file. For example, services billed with the 
assistant at surgery modifier are paid 16 percent of the PFS amount for 
that service; therefore, the utilization file is modified to only 
account for 16 percent of any service that contains the assistant at 
surgery modifier.
     Work RVUs: The setup file contains the work RVUs from this 
final rule with comment period.
(6) Equipment Cost Per Minute
    The equipment cost per minute is calculated as:

(1/(minutes per year * usage)) * price * ((interest rate/(1-(1/((1 + 
interest rate)- life of equipment)))) + maintenance)

Where:
minutes per year = maximum minutes per year if usage were continuous 
(that is, usage = 1); generally 150,000 minutes.
usage = equipment utilization assumption; 0.75 for certain expensive 
diagnostic imaging equipment (see 74 FR 61753 through 61755 and 
section II.A.3. of the

[[Page 73040]]

CY 2011 PFS final rule with comment period) and 0.5 for others.
price = price of the particular piece of equipment.
interest rate = 0.11.
life of equipment = useful life of the particular piece of 
equipment.
maintenance = factor for maintenance; 0.05.

This interest rate was proposed and finalized during rulemaking for CY 
1998 PFS (62 FR 33164). We solicit comment regarding reliable data on 
current prevailing loan rates for small businesses.
    Comment: Several commenters, including the AMA RUC stated that CMS 
should establish a periodic review of the interest rate assumption for 
equipment costs using current interest rate data from the Small 
Business Association and the Federal Reserve and allow for public 
comment on periodic updates. The RUC also noted that current market 
volatility exacerbates the need to establish such a process. One 
commenter noted that exaggerated assumptions about equipment interest 
rates inflates services with high equipment cost inputs relative to 
services without high equipment cost inputs, such as most primary care 
services. Therefore, CMS should update the equipment interest rate 
assumption.
    In addition to examining the interest rate assumption, the RUC 
requested that CMS review the assumptions regarding useful life of 
equipment and yearly maintenance costs associated with maintaining high 
cost equipment and allow for comment on the methodologies used in 
developing these assumptions.
    Response: We appreciate the public comments we received in response 
to our request regarding reliable data on current prevailing loan rates 
for small businesses. We will examine the suggestions of the AMA RUC 
and the other commenters in order to inform any future rulemaking on 
this issue.
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BILLING CODE 4120-01-C
3. Changes to Direct PE Inputs
    In this section, we discuss other specific CY 2012 proposals and 
changes related to direct PE inputs. The changes we proposed and are 
finalizing are included in the proposed CY 2012 direct PE database, 
which is available on the CMS Web site under the supporting data files 
for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.
a. Inverted Equipment Minutes
    It came to our attention that the minutes allocated for two 
particular equipment items have been inverted. This inversion affected 
three codes: 37232 (Revascularization, endovascular, open or 
percutaneous, tibial/peroneal artery, unilateral, each additional 
vessel; with transluminal angioplasty (List separately in addition to 
code for primary procedure)), 37233 (Revascularization, endovascular, 
open or percutaneous, tibial/peroneal artery, unilateral, each 
additional vessel; with atherectomy, includes angioplasty within the 
same vessel, when performed (List separately in addition to code for 
primary procedure)), and 37234 (Revascularization, endovascular, open 
or percutaneous, tibial/peroneal artery, unilateral, each additional 
vessel; with transluminal stent placement(s), includes angioplasty 
within the same vessel, when performed (List separately in addition to 
code for primary procedure)). In each case, the number of minutes 
allocated to the ``printer, dye sublimation (photo, color)'' (ED031) 
should have been appropriately allocated to the ``stretcher'' (EF018). 
The number of minutes allocated to the stretcher should have been 
appropriately allocated to the printer. Therefore, we proposed input 
corrections to the times associated with the two equipment items in the 
three codes.
    Comment: Several commenters agreed with these corrections as 
proposed.
    Response: We appreciate the support for these proposed revisions, 
as well as the information provided that allowed us to make them.
    After consideration of the public comments we received, we are 
finalizing our CY 2012 proposal to modify the direct PE database by 
correcting the input errors associated with the two equipment items in 
the three codes. The CY 2012 direct PE database reflects these changes 
and is available on the CMS Web site under the supporting data files 
for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.
b. Labor and Supply Input Duplication
    We recently identified a number of CPT codes with inadvertently 
duplicated labor and supply inputs in the PE database. We proposed to 
remove the duplicate labor and supply inputs in the CY 2012 database as 
detailed in Table 3.
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[[Page 73043]]

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    Comment: Many commenters agreed with the proposal to remove the 
duplicate labor and supply inputs from the direct PE database. One 
commenter agreed with the proposal but also stated that the inputs for 
CPT code 76813 may not reflect the use of current technology.
    Response: We appreciate the broad support for the proposal. We 
refer stakeholders who do not believe that the direct PE database 
reflects current use technology for particular codes to the public 
process for nominating potentially misvalued codes in section II.B. of 
this final rule with comment period.
    After consideration of the public comments we received, we are 
finalizing our CY 2012 proposal to remove the duplicate labor and 
supply inputs in the CY 2012 database as detailed in Table 3. The CY 
2012 direct PE database reflects these changes and is available on the 
CMS Web site under the supporting data files for the CY 2012 PFS final 
rule with comment period at http://www.cms.gov/PhysicianFeeSched/.
c. AMA RUC Recommendations for Moderate Sedation Direct PE Inputs
    For services described by certain codes, the direct PE database 
includes nonfacility inputs that reflect the assumption that moderate 
sedation is inherent in the procedure. These codes

[[Page 73044]]

are listed in Table 4. The AMA RUC has recently provided CMS with a 
recommendation that standardizes the nonfacility direct PE inputs that 
account for moderate sedation as typically furnished as part of these 
services. Specifically, the RUC recommended that the direct PE inputs 
allocated for moderate sedation include the following:
     Clinical Labor Inputs: Registered Nurse (L051A) time that 
includes two minutes of time to initiate sedation, the number of 
minutes associated with the physician intra-service work time, and 15 
minutes for every hour of patient recovery time for post-service 
patient monitoring. Supply Inputs: ``Pack, conscious sedation'' (SA044) 
that includes: an angiocatheter 14g-24g, bandage, strip 0.75in x 3in, 
catheter, suction, dressing, 4in x 4.75in (Tegaderm), electrode, ECG 
(single), electrode, ground, gas, oxygen, gauze, sterile 4in x 4in, 
gloves, sterile, gown, surgical, sterile, iv infusion set, kit, iv 
starter, oxygen mask (1) and tubing (7ft), pulse oximeter sensor probe 
wrap, stop cock, 3-way, swab-pad, alcohol, syringe 1ml, syringe-needle 
3ml 22-26g, tape, surgical paper 1in (Micropore), tourniquet, and non-
latex 1in x 18in.
     Equipment Inputs: ``Table, instrument, mobile'' (EF027), 
``ECG, 3-channel (with SpO2, NIBP, temp, resp)'' (EQ011), ``IV infusion 
pump'' (EQ032), ``pulse oxymetry recording software (prolonged 
monitoring)'' (EQ212), and ``blood pressure monitor, ambulatory, w-
battery charger'' (EQ269).
    We have reviewed this recommendation and generally agree with these 
inputs. However, we note that the equipment item ``ECG, 3-channel (with 
SpO2, NIBP, temp, resp)'' (EQ011) incorporates the functionality of the 
equipment items ``pulse oxymetry recording software (prolonged 
monitoring)'' (EQ212), and ``blood pressure monitor, ambulatory, w-
battery charger'' (EQ269). Therefore, we did not include these two 
items as standard nonfacility inputs for moderate sedation in our 
proposal to accept the AMA RUC recommendation with the refinement as 
stated.

[[Page 73045]]

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[[Page 73046]]

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[[Page 73047]]

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[[Page 73048]]

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BILLING CODE 4120-01-C
    Comment: Several commenters, including the AMA RUC, agreed with 
CMS' proposal to accept the recommendations for moderate sedation 
direct PE inputs with the stated refinements. One commenter suggested 
that a particular code on the list should be removed since moderate 
sedation is not typically performed when that service is furnished.
    Response: We appreciate the support for our proposal to accept the

[[Page 73049]]

recommendation as well as those in favor of our refinements. We 
acknowledge and appreciate the perspectives of the commenter who 
suggested that a particular code should not include moderate sedation. 
However, we note that we generally include nonfacility direct PE inputs 
for moderate sedation for all services valued in the nonfacility 
setting and reported using CPT codes that are identified by the CPT 
Editorial Panel as having moderate sedation as inherent to the 
procedure.
    After consideration of the public comments we received, we are 
finalizing our CY 2012 proposal to accept the AMA RUC recommendation 
with the refinement as stated. The CY 2012 direct PE database reflects 
these changes and is available on the CMS Web site under the supporting 
data files for the CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.
d. Updates to Price and Useful Life for Existing Direct Inputs
    In the CY 2011 PFS final rule with comment period (75 FR 73205), we 
finalized a process to act on public requests to update equipment and 
supply price and equipment useful life inputs through annual rulemaking 
beginning with the CY 2012 PFS final rule with comment period.
    During 2010, we received a request to update the price of ``tray, 
bone marrow biopsy-aspiration'' (SA062) from $24.27 to $34.47. The 
request included multiple invoices that documented updated prices for 
the supply item. We also received a request to update the useful life 
of ``holter monitor'' (EQ127) from 7 years to 5 years, based on its 
entry in the AHA's publication, ''Estimated Useful Lives of Depreciable 
Hospital Assets,'' which we use as a standard reference. In each of 
these cases, we proposed to accept the updated inputs, as requested. 
The CY 2012 direct PE database reflects these proposed changes and is 
available on the CMS Web site under the supporting data files for the 
CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.
    Comment: Several commenters expressed support for the proposal to 
update the supply items as proposed. MedPAC expressed continued 
misgivings that this process for updating prices is flawed because it 
relies on voluntary requests from stakeholders who have a financial 
stake in the process. Therefore, MedPAC believes that stakeholders are 
unlikely to provide CMS with evidence that prices for supplies and 
equipment have declined because it would lead to lower RVUs for 
particular services. MedPAC also called for CMS to establish an 
objective process to regularly update the prices of medical supplies 
and equipment to reflect market prices, especially for expense items.
    Response: We appreciate the general support for the proposal. We 
also appreciate MedPAC's comments and understand the commission's 
concerns. As we have previously stated, we continue to believe it is 
important to establish a periodic and transparent process to update the 
cost of high-cost items to reflect typical market prices in our 
ratesetting methodology, and we continue to study the best way to 
establish such a process. We remind stakeholders that we have 
previously stated our difficulty in obtaining accurate pricing 
information, and this transparent process offers the opportunity for 
the community to object to increases in price inputs for particular 
items by providing accurate information about lower prices available to 
the practitioner community. We remind stakeholders that PFS payment 
rates are developed within a budget neutral system, and any increases 
in price inputs for particular supply items result in corresponding 
decreases to the relative value of all other direct practice expense 
inputs. Had any interested stakeholder presented information that 
indicated that increasing the price input for the bone marrow biopsy-
aspiration was inappropriate, we would have considered evidence of 
lower available prices prior to amending the price input in the CY 2012 
direct PE database.
    After consideration of the public comments we received, we are 
finalizing our CY 2012 proposal to accept the updated inputs, as 
requested. The CY 2012 direct PE database reflects these changes and is 
available on the CMS Web site under the supporting data files for the 
CY 2012 PFS final rule with comment period at http://www.cms.gov/PhysicianFeeSched/.
4. Development of Code-Specific PE RVUs
    When creating G codes, we often develop work, PE, and malpractice 
RVUs by crosswalking the RVUs from similar (reference) codes. In most 
of these cases, the PE RVUs are directly crosswalked pending the 
availability of utilization data. Once that data is available, we 
crosswalk the direct PE inputs and develop PE RVUs using the regular 
practice expense methodology, including allocators that are derived 
from utilization data. For CY 2012, we are using this process to 
develop PE RVUs for the following services: G0245 (Initial physician 
evaluation and management of a diabetic patient with diabetic sensory 
neuropathy resulting in a loss of protective sensation (LOPS) which 
must include: (1) The diagnosis of LOPS, (2) a patient history, (3) a 
physical examination that consists of at least the following elements: 
(a) Visual inspection of the forefoot, hindfoot and toe web spaces, (b) 
evaluation of a protective sensation, (c) evaluation of foot structure 
and biomechanics, (d) evaluation of vascular status and skin integrity, 
and (e) evaluation and recommendation of footwear and (4) patient 
education); G0246 (Follow-up physician evaluation and management of a 
diabetic patient with diabetic sensory neuropathy resulting in a loss 
of protective sensation (LOPS) to include at least the following: (1) A 
patient history, (2) a physical examination that includes: (a) Visual 
inspection of the forefoot, hindfoot and toe web spaces, (b) evaluation 
of protective sensation, (c) evaluation of foot structure and 
biomechanics, (d) evaluation of vascular status and skin integrity, and 
(e) evaluation and recommendation of footwear, and (3) patient 
education); G0247 (Routine foot care by a physician of a diabetic 
patient with diabetic sensory neuropathy resulting in a loss of 
protective sensation (LOPS) to include, the local care of superficial 
wounds (for example, superficial to muscle and fascia) and at least the 
following if present: (1) Local care of superficial wounds, (2) 
debridement of corns and calluses, and (3) trimming and debridement of 
nails); G0341 (Percutaneous islet cell transplant, includes portal vein 
catheterization and infusion); G0342 (Laparoscopy for islet cell 
transplant, includes portal vein catheterization and infusion); G0343 
(Laparotomy for islet cell transplant, includes portal vein 
catheterization and infusion); and G0365 (Vessel mapping of vessels for 
hemodialysis access (services for preoperative vessel mapping prior to 
creation of hemodialysis access using an autogenous hemodialysis 
conduit, including arterial inflow and venous outflow)). The values in 
Addendum B reflect the updated PE RVUs.
    In addition, there is a series of G-codes describing surgical 
pathology services with PE RVUs historically valued outside of the 
regular PE methodology. These codes are: G0416 (Surgical pathology, 
gross and microscopic examination for prostate needle saturation biopsy 
sampling, 1-20 specimens); G0417 (Surgical pathology, gross and 
microscopic examination for prostate needle saturation biopsy

[[Page 73050]]

sampling, 21-40 specimens); G0418 (Surgical pathology, gross and 
microscopic examination for prostate needle saturation biopsy sampling, 
41-60 specimens); and G0419 (Surgical pathology, gross and microscopic 
examination for prostate needle saturation biopsy sampling, greater 
than 60 specimens.) The PE RVUs for these codes were established as 
described in the CY 2009 PFS final rule with comment period (73 FR 
69751). In reviewing these values for CY 2012, we noted that because 
the PE RVUs established through rulemaking in CY 2009 were neither 
developed using the regular PE methodology nor directly crosswalked 
from other codes, the PE RVUs for these codes were not adjusted to 
account for the CY 2011 MEI rebasing and revising, which is discussed 
in the CY 2011 PFS final rule with comment period (75 FR 73262). While 
it was technically appropriate to insulate the PE RVUs from that 
adjustment in CY 2011, upon further review, we believe adjusting these 
PE RVUs would result in more accurate payment rates relative to the 
RVUs for other PFS services. Therefore, we proposed to adjust the PE 
RVUs for these codes by 1.182, the adjustment rate that accounted for 
the MEI rebasing and revising for CY 2011. The PE RVUs in Addendum B to 
the CY 2011 PFS proposed rule reflected the proposed updates.
    Comment: In general, commenters were supportive of the proposal to 
develop PE RVUs for these services through the PE methodology. Several 
commenters, however, urged CMS to reconsider using the standard PE 
methodology to develop PE RVUs for this service since the resulting 
payment rate for G0365 would be significantly lower than the current 
rate.
    Response: We appreciate the general support for proposal. We are 
also grateful to those commenters who alerted us to the significant 
change in PE RVUs for G0365. In developing the proposal, we did not 
expect the newly developed PE RVUs for G0365 to change significantly 
from those previously established outside the methodology. In re-
examining the disparities between the CY 2011 PE RVUs and those that 
appeared in the proposed rule, we discovered that an inadvertent data 
entry error in the proposed direct PE database had led to the 
development and display of erroneous PE RVUs. Because the commenters' 
objections to the proposal in methodology resulted directly from 
concerns about the resulting PE RVUs, we believe that those concerns 
are addressed by the correction of direct PE database error and the 
development of PE RVUs for G0365 that are more similar to the current 
PE RVUs.
    After consideration of the public comments we received, we are 
finalizing our CY 2012 proposal to develop PE RVUs through the 
methodologies explained in the proposal. The final CY 2012 RVUs for 
these codes are displayed in Addendum B to this final rule with comment 
period.
5. Physician Time for Select Services
    As we describe in section II.A.2.f. of this final rule with comment 
period, in creating the indirect practice cost index, we calculate 
specialty-specific aggregate pools of indirect PE for all PFS services 
for that specialty by adding the product of the indirect PE/HR for the 
specialty, the physician time for the service, and the specialty's 
utilization for the service across all services performed by the 
specialty.
    During a review of the physician time data for the CY 2012 PFS 
rulemaking, we noted an anomaly regarding the physician time allotted 
to a series of group service codes that are listed in Table 5. We 
believe that the time associated with these codes reflects the typical 
amount of time spent by the practitioner in furnishing the group 
service. However, because the services are billed per patient receiving 
the service, the time for these codes should be divided by the typical 
number of patients per session. In reviewing the data used in the 
valuation of work RVUs for these services, we noted that in one 
vignette for these services, the typical group session consisted of 6 
patients. Therefore we proposed adjusted times for these services based 
on 6 patients. However, we sought comment on the typical number of 
patients seen per session for each of these services.
[GRAPHIC] [TIFF OMITTED] TR28NO11.007

    Comment: Several commenters alerted CMS to inaccurate post-service 
times and rounding discrepancies in the physician time file that did 
not correspond with the intent of the proposal. Specifically, 
commenters urged CMS to recalculate the times for group education/
therapy to ensure they reflect the intent of the proposal.
    Response: We appreciate being informed of these inaccuracies and 
discrepancies. As the commenters noted, the physician time file as 
displayed in the supporting web files for the CY 2012 PFS proposed rule 
included inappropriate post-service times and rounding discrepancies 
for some of the codes addressed in the proposal. We have addressed 
these issues in the physician time file used in developing the PE RVUs 
for CY 2012.

[[Page 73051]]

    Comment: Several commenters, including the AMA RUC, submitted 
useful information regarding the typical group size for particular 
services. In many cases, however, commenters expressed concerns about 
this proposal that stretched beyond the scope of the proposed rule, 
including concerns about detrimental effect on work RVUs for the 
services, inappropriate clinical comparisons of unrelated services by 
CMS, or Medicare or other payment policy changes regarding appropriate 
group sizes for billing or coverage purposes.
    Response: We did not propose any changes to the work RVUs or other 
policies related to these services. Our proposal related to the 
physician time data as used in the practice expense methodology as we 
describe in section II.A.2.f. of this final rule with comment period. 
In creating the indirect practice cost index, we calculate specialty-
specific aggregate pools of indirect PE for all PFS services for that 
specialty by adding the product of the indirect PE/HR for the 
specialty, the physician time for the service, and the specialty's 
utilization for the service across all services performed by the 
specialty. The proposal addresses the times associated for these codes 
only insofar as they contribute to the aggregate pools of indirect PE 
at the specialty level. In formulating the proposal, we addressed these 
services together because we believe that these group services share 
particular coding, not clinical, characteristics that complicate the 
use of time data in the practice expense methodology. If appropriate, 
we would address any changes to the work RVUs or other polices in 
future rulemaking.
    We appreciate all of the comments regarding this proposal. In the 
following paragraphs, we address how we will use this submitted 
information in order to set final time values for these codes--
     90849 (Multiple-family group psychotherapy);
     90853 (Group psychotherapy (other than of a multiple-
family group); and
     90857 (Interactive group psychotherapy).
    Comment: The AMA RUC recommended that CMS postpone any changes to 
the physician times for these codes since these services are currently 
under revision by the CPT Editorial Panel and the AMA RUC intends to 
provide CMS with new recommendations in the near future.
    Response: We appreciate that CPT and the AMA RUC are both examining 
these services, and we will consider any codes or recommendations 
regarding these services. Until then, we continue to believe that 
because these services are billed per patient, the physician time for 
the corresponding codes should be divided by the typical number of 
patients per session in order to arrive at more appropriate PE RVUs 
across the PFS. We note that the vignette for 90853 includes a typical 
group session of 6 patients. Therefore, pending new recommendations 
from the AMA RUC, we believe it would be appropriate to establish 
physician time for this code as 2 pre-service minutes, 14 intra-service 
minutes, and 8 post-service minutes with the understanding that the 
total resulting minutes is the product of these and the number of 
patients in the group.
    We believe that the typical group session may be similar for 90857 
based on similar code descriptors, work RVUs, and clinical vignettes. 
Therefore, pending new recommendations from the AMA RUC, we believe it 
would be appropriate to establish physician time for this code as 3 
pre-service minutes, 9 intra-service minutes, and 10 post-service 
minutes with the understanding that the total resulting minutes is the 
product of these and the number of patients in the group.
    For 90849, we believe that it would be most appropriate to wait for 
the new recommendations prior to adjusting the physician time because 
the typical group size and typical patient size is different, and we 
received no information regarding the typical group size.
     92508 (Treatment of speech, language, voice, 
communication, and/or auditory processing disorder; group, 2 or more 
individuals)
    Comment: Several commenters pointed out that the CPT 92508 was 
recently reviewed by the HCPAC and that the recommended physician times 
already are considered the appropriate proration by the number of 
patients in the group.
    Response: We agree with the commenter's assessment and therefore, 
believe it would be appropriate to discard our proposed physician time 
changes for CPT 92508 and maintain the current time of 2 minutes pre-
time, 17 minutes intra-time and 3 minutes post-time for CY 2012.
     96153 (Health and behavior intervention, each 15 minutes, 
face-to-face; group (2 or more patients))
    Comment: The AMA RUC reported that because the February 2001 HCPAC 
recommendation indicated that the typical number of people receiving 
this service per group was 6 individuals, CMS' proposal to divide the 
physician time by six is appropriate.
    Response: We appreciate the information submitted by the AMA RUC 
and thank them for pointing out initially the inaccuracy in the post 
service minutes. Considering this information, we believe it is 
appropriate to amend the physician time for CPT code 96153 to 1 pre-
service minute, 3 intra-service minutes, and 1 post-service minute with 
the understanding that the total resulting minutes is the product of 
these and the number of patients in the group.
     97150 (Therapeutic procedure(s), group (2 or more 
individuals))
    Comment: In its comment, the AMA RUC noted that this code is 
scheduled to be reviewed by the RUC early in 2012. Therefore, the AMA 
RUC recommends that CMS postpone any changes until receiving the new 
recommendation. Another commenter informed CMS that the typical group 
size is two for this procedure.
    Response: We appreciate the AMA RUC's comments and we will consider 
any codes or recommendations regarding these services. Until then, we 
continue to believe that, because these services are billed per 
patient, the physician time for the corresponding codes should be 
divided by the typical number of patients per session in order to 
arrive at more appropriate PE RVUs across the PFS. We also appreciate 
the other commenter's information that two patients are the typical 
group size for this service. Therefore, pending the new recommendation 
from the AMA RUC, we believe it would be appropriate to establish 
physician time for this code as 1 pre-service minute, 12 intra-service 
minutes, and 2 post-service minutes with the understanding that the 
total resulting minutes is the product of these and the number of 
patients in the group.
     97804 (Medical nutrition therapy; group (2 or more 
individual(s)), each 30 minutes)
    Comment: The AMA RUC suggested that CMS should rely on information 
provided by the American Dietetic Association for a specific typical 
number of individuals in a group for CPT code 97804. The American 
Dietetic Association commented that groups of four to six patients were 
typical when this service is furnished.
    Response: We appreciate the information provided by the commenters. 
Considering this information, we believe it is appropriate to amend the 
physician time for CPT code 97804 to 2 pre-service minutes, 6 intra-
service minutes, and 2 post-service minutes with the understanding that 
the total resulting minutes is the product of these and the number of 
patients in the group.
     G0109 (Diabetes outpatient self-management training 
services, group session (2 or more), per 30 minutes)

[[Page 73052]]

    Comment: A commenter submitted information supporting a typical 
group size of 6 patients for this service and urged CMS to use that 
number in determining the appropriate physician time associated with 
the code.
    Response: We appreciate the commenter's response. Considering this 
information, we believe it is appropriate to amend the physician time 
for CPT code 97804 to 2 pre-service minutes, 5 intra-service minutes, 
and 2 post-service minutes with the understanding that the total 
resulting minutes is the product of these and the number of patients in 
the group.
     G0271 (Medical nutrition therapy, reassessment and 
subsequent intervention(s) following second referral in same year for 
change in diagnosis, medical condition, or treatment regimen (including 
additional hours needed for renal disease), group (2 or more 
individuals), each 30 minutes), and G0421 (Face-to-face educational 
services related to the care of chronic kidney disease; group, per 
session, per one hour)
    We received no comments regarding the typical group time for these 
services. However, given the similarities of these services to CPT code 
97804 (Medical nutrition therapy; group (2 or more individual(s)), each 
30 minutes), we believe it would be appropriate to use the times for 
that code as a reasonable crosswalk and establish physician time for 
these codes as 2 pre-service minutes, 6 intra-service minutes, and 2 
post-service minutes with the understanding that the total resulting 
minutes is the product of these and the number of patients in the 
group.
    After consideration of the public comments and related information, 
we are finalizing our proposed updates to the physician time file, as 
amended for certain codes as explicitly addressed in this section. The 
final time values for these codes can be found in the final CY 2012 
Physician Time file, which is available on the CMS Web site under the 
supporting data files for the CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.
    As a result of our review, we also proposed to update our physician 
time file to reflect the physician time associated with certain G-codes 
that had previously been missing from the file.
    We received no comments regarding our proposal to update the 
physician time file to reflect the physician time associated with the 
G-codes that were previously missing from the file. Therefore, we are 
finalizing our updates to the physician time file. The final time 
values can be found in the final CY 2012 Physician Time file, which is 
available on the CMS Web site under the supporting data files for the 
CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/.

B. Potentially Misvalued Services Under the Physician Fee Schedule

1. Valuing Services Under the PFS
    As discussed in section I. of this final rule with comment period, 
in order to value services under the PFS, section 1848(c) of the Act 
requires the Secretary to determine relative values for physicians' 
services based on three components: work, practice expense (PE), and 
malpractice. Section 1848(c)(1)(A) of the Act defines the work 
component to include ``the portion of the resources used in furnishing 
the service that reflects physician time and intensity in furnishing 
the service.'' Additionally, the statute provides that the work 
component shall include activities that occur before and after direct 
patient contact. Furthermore, the statute specifies that with respect 
to surgical procedures, the valuation of the work component for the 
code must reflect a ``global'' concept in which pre-operative and post-
operative physicians' services related to the procedure are also 
included.
    In addition, section 1848(c)(2)(C)(i) of the Act specifies that 
``the Secretary shall determine a number of work relative value units 
(RVUs) for the service based on the relative resources incorporating 
physician time and intensity required in furnishing the service.'' As 
discussed in detail in sections I.A.2. and I.A.3. of this final rule 
with comment period, the statute also defines the PE and malpractice 
components and provides specific guidance in the calculation of the 
RVUs for each of these components. Section 1848(c)(1)(B) of the Act 
defines the PE component as ``the portion of the resources used in 
furnishing the service that reflects the general categories of expenses 
(such as office rent and wages of personnel, but excluding malpractice 
expenses) comprising practice expenses.''
    Section 1848(c)(2)(C)(ii) of the Act specifies that the ``Secretary 
shall determine a number of practice expense relative value units for 
the services for years beginning with 1999 based on the relative 
practice expense resources involved in furnishing the service.'' 
Furthermore, section 1848(c)(2)(B) of the Act directs the Secretary to 
conduct a periodic review, not less often than every 5 years, of the 
RVUs established under the PFS. On March 23, 2010, the Affordable Care 
Act was enacted, further requiring the Secretary to periodically 
identify and review potentially misvalued codes, and make appropriate 
adjustments to the relative values of those services identified as 
being potentially misvalued. Section 3134(a) of the Affordable Care Act 
added a new section 1848(c)(2)(K) to the Act which requires the 
Secretary to periodically identify potentially misvalued services using 
certain criteria, and to review and make appropriate adjustments to the 
relative values for those services. Section 3134(a) of the Affordable 
Care Act also added a new section 1848(c)(2)(L) to the Act which 
requires the Secretary to develop a process to validate the RVUs of 
certain potentially misvalued codes under the PFS, identified using the 
same criteria used to identify potentially misvalued codes, and to make 
appropriate adjustments.
    As discussed in section I.A.1. of this final rule with comment 
period, we generally establish physician work RVUs for new and revised 
codes based on our review of recommendations received from the American 
Medical Association Specialty Society Relative Value Scale Update 
Committee (AMA RUC). We also receive recommendations from the AMA RUC 
regarding direct PE inputs for services, which we evaluate in order to 
develop the PE RVUs under the PFS. The AMA RUC also provides 
recommendations to us on the values for codes that have been identified 
as potentially misvalued. To respond to concerns expressed by MedPAC, 
the Congress, and other stakeholders regarding accurate valuation of 
services under the PFS, the AMA RUC created the Five-Year Review 
Identification Workgroup in 2006. In addition to providing 
recommendations to us for work RVUs and physician times, the AMA RUC's 
Practice Expense Subcommittee reviews direct PE inputs (clinical labor, 
medical supplies, and medical equipment) for individual services.
    In accordance with section 1848(c) of the Act, we determine 
appropriate adjustments to the RVUs, taking into account the 
recommendations provided by the AMA RUC and MedPAC, explain the basis 
of these adjustments, and respond to public comments in the PFS 
proposed and final rules. We note that section 1848(c)(2)(A)(ii) of the 
Act authorizes the use of extrapolation and other techniques to 
determine the RVUs for physicians' services for which specific data are 
not available, in addition to taking into account the results of 
consultations with organizations representing physicians.

[[Page 73053]]

2. Identifying, Reviewing, and Validating the RVUs of Potentially 
Misvalued Services Under the PFS
a. Background
    In its March 2006 Report to the Congress, MedPAC noted that 
``misvalued services can distort the price signals for physicians' 
services as well as for other health care services that physicians 
order, such as hospital services.'' In that same report MedPAC 
postulated that physicians' services under the PFS can become misvalued 
over time for a number of reasons: For example, MedPAC stated, ``when a 
new service is added to the physician fee schedule, it may be assigned 
a relatively high value because of the time, technical skill, and 
psychological stress that are often required to furnish that service. 
Over time, the work required for certain services would be expected to 
decline as physicians become more familiar with the service and more 
efficient in furnishing it.'' That is, the amount of physician work 
needed to furnish an existing service may decrease when new 
technologies are incorporated. Services can also become overvalued when 
practice expenses decline. This can happen when the costs of equipment 
and supplies fall, or when equipment is used more frequently, reducing 
its cost per use. Likewise, services can become undervalued when 
physician work increases or practice expenses rise. In the ensuing 
years since MedPAC's 2006 report, additional groups of potentially 
misvalued services have been identified by the Congress, CMS, MedPAC, 
the AMA RUC, and other stakeholders.
    In recent years CMS and the AMA RUC have taken increasingly 
significant steps to address potentially misvalued codes. As MedPAC 
noted in its March 2009 Report to the Congress, in the intervening 
years since MedPAC made the initial recommendations, ``CMS and the AMA 
RUC have taken several steps to improve the review process.'' Most 
recently, section 1848(c)(2)(K)(ii) of the Act (as added by section 
3134(a) of the Affordable Care Act) directed the Secretary to 
specifically examine, as determined appropriate, potentially misvalued 
services in seven categories as follows:
     Codes and families of codes for which there has been the 
fastest growth.
     Codes and families of codes that have experienced 
substantial changes in practice expenses.
     Codes that are recently established for new technologies 
or services.
     Multiple codes that are frequently billed in conjunction 
with furnishing a single service.
     Codes with low relative values, particularly those that 
are often billed multiple times for a single treatment.
     Codes which have not been subject to review since the 
implementation of the RBRVS (the so-called `Harvard-valued codes').
     Other codes determined to be appropriate by the Secretary.
    Section 1848(c)(2)(K)(iii) of the Act also specifies that the 
Secretary may use existing processes to receive recommendations on the 
review and appropriate adjustment of potentially misvalued services. In 
addition, the Secretary may conduct surveys, other data collection 
activities, studies, or other analyses, as the Secretary determines to 
be appropriate, to facilitate the review and appropriate adjustment of 
potentially misvalued services. This section also authorizes the use of 
analytic contractors to identify and analyze potentially misvalued 
codes, conduct surveys or collect data, and make recommendations on the 
review and appropriate adjustment of potentially misvalued services. 
Additionally, this section provides that the Secretary may coordinate 
the review and adjustment of the RVUs with the periodic review 
described in section 1848(c)(2)(B) of the Act. Finally, section 
1848(c)(2)(K)(iii)(V) of the Act specifies that the Secretary may make 
appropriate coding revisions (including using existing processes for 
consideration of coding changes) which may include consolidation of 
individual services into bundled codes for payment under the physician 
fee schedule.
b. Progress in Identifying and Reviewing Potentially Misvalued Codes
    Over the last several years, CMS, in conjunction with the AMA RUC, 
has identified and reviewed numerous potentially misvalued codes in all 
seven of the categories specified in section 1848(c)(2)(K)(ii) of the 
Act, and we plan to continue our work examining potentially misvalued 
codes in these areas over the upcoming years, consistent with the new 
legislative requirements on this issue. In the current process, we 
request the AMA RUC to review potentially misvalued codes that we 
identify and to make recommendations on revised work RVUs and/or direct 
PE inputs for those codes to us. The AMA RUC, through its own 
processes, also might identify and review potentially misvalued 
procedures. We then assess the recommended revised work RVUs and/or 
direct PE inputs and, in accordance with section 1848(c) of the Act, we 
determine if the recommendations constitute appropriate adjustments to 
the RVUs under the PFS.
    Since CY 2009, as a part of the annual potentially misvalued code 
review, we have reviewed over 700 potentially misvalued codes to refine 
work RVUs and direct PE inputs in addition to continuing the 
comprehensive Five-Year Review process. We have adopted appropriate 
work RVUs and direct PE inputs for these services as a result of these 
reviews.
    Our prior reviews of codes under the potentially misvalued codes 
initiative have included codes in all seven categories specified in 
section 1848(c)(2)(K)(ii) of the Act. That is, we have reviewed and 
assigned more appropriate values to certain--
     Codes and families of codes for which there has been the 
fastest growth;
     Codes and families of codes that have experienced 
substantial changes in practice expenses;
     Codes that were recently established for new technologies 
or services;
     Multiple codes that are frequently billed in conjunction 
with furnishing a single service;
     Codes with low relative values, particularly those that 
are often billed multiple times for a single treatment;
     Codes which had not been subject to review since the 
implementation of the RBRVS (`Harvard valued'); and
     Codes potentially misvalued as determined by the 
Secretary.
    In this last category, we have previously proposed policies in CYs 
2009, 2010, and 2011, and requested that the AMA RUC review codes for 
which there have been shifts in the site-of-service (that is, codes 
that were originally valued as being furnished in the inpatient 
setting, but that are now predominantly furnished on an outpatient 
basis), as well as codes that qualify as ``23-hour stay'' outpatient 
services (these services typically have lengthy hospital outpatient 
recovery periods). We note that a more detailed discussion of the 
extensive prior reviews of potentially misvalued codes is included in 
the CY 2011 PFS final rule with comment period (75 FR 73215 through 
73216).
    In CY 2011, we identified additional codes under section 
1848(c)(2)(K)(ii) of the Act that we believe are ripe for review and 
referred them to the AMA RUC (75 FR 73215 through 73216). Specifically, 
we identified potentially misvalued codes in the category of ``Other 
codes determined to be appropriate by the Secretary,'' referring lists 
of codes that have low work RVUs but that are high volume based on 
claims data, as well as targeted key

[[Page 73054]]

codes that the AMA RUC uses as reference services for valuing other 
services (termed ``multispecialty points of comparison'' services).
    Since the publication of the CY 2011 PFS final rule with comment 
period, we released the Fourth Five-Year Review of Work (76 FR 32410), 
which discussed the identification and review of an additional 173 
potentially misvalued codes. We initiated the Fourth Five-Year Review 
of work RVUs by soliciting public comments on potentially misvalued 
codes for all services included in the CY 2010 PFS final rule with 
comment period that was published in the Federal Register on November 
25, 2009. In addition to the codes submitted by the commenters, we 
identified a number of potentially misvalued codes and requested the 
AMA RUC review and provide recommendations. Our identification of 
potentially misvalued codes for the Fourth Five-Year Review focused on 
two Affordable Care Act categories: site-of-service anomaly codes and 
Harvard valued codes. As discussed in the Fourth Five-Year Review of 
Work (76 FR 32410), we sent the AMA RUC an initial list of 219 codes 
for review. Consistent with our past practice, we requested the AMA RUC 
to review codes on a ``family'' basis rather than in isolation in order 
to ensure that appropriate relativity in the system was retained. 
Consequently, the AMA RUC included additional codes for review, 
resulting in a total of 290 codes for the Fourth Five-Year Review of 
Work. Of those 290 codes, 53 were subsequently sent by the AMA RUC to 
the CPT Editorial Panel to consider coding changes, 14 were not 
reviewed by the AMA RUC (and subsequently not reviewed by us) because 
the specialty society that had originally requested the review in its 
public comments on the CY 2010 PFS final rule with comment period 
elected to withdraw the codes, 36 were not reviewed by the AMA RUC 
because their values were set as interim final in the CY 2011 PFS final 
rule with comment period, and 14 were not reviewed by us because they 
were noncovered services under Medicare. Therefore, the AMA RUC 
reviewed 173 of the 290 codes initially identified for the Fourth Five-
Year Review of Work, and provided the recommendations that were 
addressed in detail in the Fourth Five-Year Review of Work (76 FR 
32410). In addition, under the Fourth Five-Year Review of Work, we 
reviewed recommendations for five additional potentially misvalued 
codes from the Health Care Professionals Advisory Committee (HCPAC), a 
deliberative body of nonphysician practitioners that also convenes 
during the AMA RUC meeting. The HCPAC represents physician assistants, 
chiropractors, nurses, occupational therapists, optometrists, physical 
therapists, podiatrists, psychologists, audiologists, speech 
pathologists, social workers, and registered dieticians.
    In summary, since CY 2009, CMS and the AMA RUC have addressed a 
number of potentially misvalued codes. For CY 2009, the AMA RUC 
recommended revised work values and/or PE inputs for 204 misvalued 
services (73 FR 69883). For CY 2010, an additional 113 codes were 
identified as misvalued and the AMA RUC provided us new recommendations 
for revised work RVUs and/or PE inputs for these codes to us as 
discussed in the CY 2010 PFS final rule with comment period (74 FR 
61778). For CY 2011, CMS reviewed and adopted more appropriate values 
for 209 codes under the annual review of potentially misvalued codes. 
For CY 2012, we recently released the Fourth Five-Year Review of Work, 
which discussed the review of 173 potentially misvalued codes and 
proposed appropriate adjustments to RVUs. In section II.B.5.of this 
final rule with comment period, we also provide a list of codes 
identified for future consideration as part of the potentially 
misvalued codes initiative, that is, in addition to the codes that are 
part of the Fourth Five-Year Review of Work, as discussed in that 
section, we are requesting the AMA RUC review these codes and submit 
recommendations to us.
c. Validating RVUs of Potentially Misvalued Codes
    In addition to identifying and reviewing potentially misvalued 
codes, section 3134(a) of the Affordable Care Act added a new section 
1848(c)(2)(L) of the Act, which specifies that the Secretary shall 
establish a formal process to validate RVUs under the PFS. The 
validation process may include validation of work elements (such as 
time, mental effort and professional judgment, technical skill and 
physical effort, and stress due to risk) involved with furnishing a 
service and may include validation of the pre-, post-, and intra-
service components of work. The Secretary is directed to validate a 
sampling of the work RVUs of codes identified through any of the seven 
categories of potentially misvalued codes specified by section 
1848(c)(2)(K)(ii) of the Act. Furthermore, the Secretary may conduct 
the validation using methods similar to those used to review 
potentially misvalued codes, including conducting surveys, other data 
collection activities, studies, or other analyses as the Secretary 
determines to be appropriate to facilitate the validation of RVUs of 
services.
    In the CY 2011 PFS proposed rule (75 FR 40068), we solicited public 
comments on possible approaches and methodologies that we should 
consider for a validation process. We received a number of comments 
regarding possible approaches and methodologies for a validation 
process. As discussed in the CY 2011 PFS final rule with comment period 
(75 FR 73217), some commenters were skeptical that there could be 
viable alternative methods to the existing AMA RUC code review process 
for validating physician time and intensity that would preserve the 
appropriate relativity of specific physician's services under the 
current payment system. These commenters generally urged us to rely 
solely on the AMA RUC to provide valuations for services under the PFS.
    While a number of commenters strongly opposed our plans to develop 
a formal validation process, many other commenters expressed support 
for the development and establishment of a system-wide validation 
process of the work RVUs under the PFS. As noted in the CY 2011 PFS 
final rule with comment period (75 FR 73217 through 73218), these 
commenters commended us for seeking new approaches to validation, as 
well as being open to suggestions from the public on this process. A 
number of commenters submitted technical advice and offered their time 
and expertise as resources for us to draw upon in any examination of 
possible approaches to developing a formal validation process.
    However, in response to our solicitation of comments regarding time 
and motion studies, a number of commenters opposed the approach of 
using time and motion studies to validate estimates of physician time 
and intensity, stating that properly conducted time and motion studies 
are extraordinarily expensive and, given the thousands of codes paid 
under the PFS, it would be unlikely that all codes could be studied. As 
we stated in the CY 2011 PFS final rule with comment period (75 FR 
73218), we understand that these studies would require significant 
resources and we remain open to suggestions for other approaches to 
developing a formal validation process. We noted that MedPAC suggested 
in its comment letter that we should consider ``collecting data on a 
recurring basis from a cohort of practices and other facilities where 
physicians and nonphysician clinical practitioners

[[Page 73055]]

work'' (75 FR 73218). As we stated previously, we intend to establish a 
more extensive validation process of RVUs in the future in accordance 
with the requirements of section 1848(c)(2)(L) of the Act.
    While we received a modest number of comments specifically 
addressing technical and methodological aspects of developing a 
validation system, we believe it would be beneficial to provide an 
additional opportunity for stakeholders to submit comments on data 
sources and possible methodologies for developing a system-wide 
validation system. In the proposed rule, we solicited comments on data 
sources and studies which may be used to validate estimates of 
physician time and intensity that could be factored into the work RVUs, 
especially for services with rapid growth in Medicare expenditures, 
which is one of the Affordable Care Act categories that the statute 
specifically directs us to examine. We also solicited comments 
regarding MedPAC's suggestion of ``collecting data on a recurring basis 
from a cohort of practices and other facilities where physicians and 
nonphysician clinical practitioners work.'' We note that after our 
proposed rule was released, MedPAC further discussed its continuing 
concerns regarding accurate data. ``In our June 2011 Report to the 
Congress, we expressed deep concern in particular about the accuracy of 
the fee schedule's time estimates--estimates of the time that 
physicians and other health professionals spend furnishing services. 
These estimates are an important factor in determining the RVUs for 
practitioner work. However, research for CMS and for the Assistant 
Secretary for Planning and Evaluation has shown that the time estimates 
are likely too high for some services. In addition, anecdotal evidence 
and the experience of clinicians on the Commission raises questions 
about the time estimates'' (MedPAC Report to the Congress ``Medicare 
and the Health Care Delivery System, June 2011'').
    We plan to discuss the validation process in more detail in a 
future PFS rule once we have considered the matter further in 
conjunction with the public comments received on the CY 2011 
rulemaking, as well as comments received on this final rule with 
comment period. We note that any proposals we would make on the formal 
validation process would be subject to public comment, and we would 
consider those comments before finalizing the policies.
    Comment: We received a number of comments and suggestions on 
developing a system-wide validation process, including stakeholders' 
reactions to MedPAC's suggestion of data collection from a cohort of 
physician practices.
    Response: We thank the commenters for their suggestions on 
developing a system-wide validation system and, as we noted previously, 
we plan to discuss the development of the validation process in more 
detail in a future PFS rule.
3. Consolidating Reviews of Potentially Misvalued Codes
    As previously discussed, we are statutorily required under section 
1848(c)(2)(B) of the Act to review the RVUs of services paid under the 
PFS no less often than every 5 years. In the past, we have satisfied 
this requirement by conducting separate periodic reviews of work, PE, 
and malpractice RVUs for established services every 5-years in what is 
commonly known as CMS' Five-Year Reviews of Work, PE, and Malpractice 
RVUs. On May 24, 2011, we released the proposed notice regarding the 
Fourth Five-Year Review of Work RVUs. The most recent comprehensive 
Five-Year Review of PE RVUs occurred for CY 2010; the same year we 
began using the Physician Practice Information Survey (PPIS) data to 
update the PE RVUs. The last Five-Year Review of Malpractice RVUs also 
occurred for CY 2010. These Five-Year Reviews have historically 
included codes identified and nominated by the public for review, as 
well as those identified by CMS and the AMA RUC.
    In addition to the Five-Year Reviews, beginning for CY 2009, CMS 
and the AMA RUC have identified and reviewed a number of potentially 
misvalued codes on an annual basis using various identification 
screens, such as codes with high growth rates, codes that are 
frequently billed together in one encounter, and codes that are valued 
as inpatient services but that are now predominately furnished as 
outpatient services. These annual reviews have not included codes 
identified by the public as potentially misvalued since, historically, 
the public has the opportunity to submit potentially misvalued codes 
during the Five-Year Review process.
    With the enactment of the Affordable Care Act in 2010, which 
endorsed our initiative to identify and review potentially misvalued 
codes and emphasized the importance of our ongoing work in this area to 
improve accuracy and appropriateness of payments under the PFS, we 
believe that continuing the annual identification and review of 
potentially misvalued codes is necessary. Given that we are engaging in 
extensive reviews of work RVUs and direct PE inputs of potentially 
misvalued codes on an annual basis, we believe that separate and 
``freestanding'' Five-Year Reviews of Work and PE may have become 
redundant with our annual efforts. Therefore, for CY 2012 and forward, 
we proposed to consolidate the formal Five-Year Review of Work and PE 
with the annual review of potentially misvalued codes. That is, we 
would begin meeting the statutory requirement to review work and PE 
RVUs for potentially misvalued codes at least once every 5-years 
through an annual process, rather than once every 5-years. Furthermore, 
to allow for public input and to preserve the public's ability to 
identify and nominate potentially misvalued codes for review, we 
proposed a process by which the public could submit codes for our 
potential review, along with supporting documentation, on an annual 
basis. Our review of these codes would be incorporated into our 
potentially misvalued codes initiative. This proposed public process is 
further discussed in section II.B.4. of this final rule with comment 
period. In the CY 2012 proposed rule, we solicited comments on our 
proposal to consolidate the formal Five-Year Reviews of Work and PE 
with the annual review of potentially misvalued codes.
    Comment: Commenters overwhelmingly supported the proposal to 
consolidate review of potentially misvalued codes into one annual 
process. Commenters also agreed that the review should include both 
work and practice expense, and encouraged CMS to continue its efforts 
to ensure that professional liability valuations are as current as 
possible. However, some commenters were concerned that the number of 
codes that CMS and the public, through the proposed code nomination 
process, could potentially bring forward for review would create 
significant burden on specialty societies in terms of time, manpower, 
and financial resources on specialty societies. The commenters urged 
CMS to recognize that a reasonable timeline is required for specialty 
societies to conduct a credible evaluation of potentially misvalued 
services, especially as specialty societies already have a sizable 
number of pending requests for reviews of services previously 
identified under the potentially misvalued code initiative.
    To alleviate concerns that the consolidation could result in 
requiring specialty societies to survey a large

[[Page 73056]]

volume of codes every year, commenters offered several suggestions for 
limiting the number of codes reviewed each year. Commenters requested 
that CMS consider establishing a timeframe under which codes could be 
resurveyed. That is, a number of commenters suggested that the 
physician work of a code should not be re-reviewed within a certain 
timeframe, such as a 3- or 5-year period after it was last reviewed. 
Commenters also asked that CMS consider a ``cap'' on the number of 
codes and/or code families that we would require any given specialty to 
review in a calendar year. Furthermore, some commenters were worried 
that in substituting an annual review process for one that previously 
occurred once every five years, the burden of reviewing codes 
identified as potentially misvalued would be distributed inequitably 
among the various specialties, leading to a perception of unfairness in 
the process which the commenters believed would undermine CMS' 
potentially misvalued codes initiative. These commenters urged CMS to 
establish a 3-year timetable for the review of potentially misvalued 
services where a comparable proportion of codes for each specialty each 
year would be specified in advance so that the specialty societies may 
be able to allocate resources more predictably and efficiently.
    Commenters also expressed concern that CMS is proposing to review 
potentially misvalued codes on the same time frame as the review of new 
and revised codes where CMS has historically issued interim final 
values for these codes in the final rule with comment period. The 
commenters asserted they need to have the opportunity to review CMS' 
response to AMA RUC recommendations, comment on CMS' proposed values, 
and receive a response from CMS to these comments prior to January 1 of 
the year the revised RVUs will be used to pay physician claims. A 
commenter noted ``physicians should not be penalized by having to 
receive potentially incorrect reimbursement for a procedure for as much 
as 12 months because of the government's timing of its notice and 
comment processes.'' Other commenters, while supportive of CMS' 
proposal to consolidate reviews, stressed that the process should not 
be condensed so much that there is not time for thoughtful comment and 
consideration. Consequently, commenters urged CMS to work with the AMA 
RUC so that all recommendations for a given year are received by an 
earlier deadline, allowing for publication in that year's proposed rule 
and for comments to be addressed by CMS in that year's final rule 
before changes that affect payment are implemented.
    Response: We appreciate the support commenters expressed for our 
proposed consolidated annual review of codes and thank the commenters 
for their comments and suggestions. We understand the commenters' 
concerns regarding the potential burden that some specialty societies 
may be expecting from this process. We agree with commenters that a 
reasonable timeline should be allowed for evaluation of services. 
Therefore, to address commenters' concern regarding the potential 
burden, we will be sensitive to the number of codes identified as 
potentially misvalued for any given specialty society, and we will 
prioritize codes for immediate review if the specialty society makes 
such a request to us. Since we cannot predict with certainty the number 
of codes that will be identified as potentially misvalued, nor the 
distribution of those codes among specialty societies for review, we do 
not believe we should predetermine ``caps'' or place time limitations 
on the review process that may unintentionally hinder the rapid 
progress of our potentially misvalued codes initiative. However, we may 
revisit the commenters' suggestions at a later date if the volume of 
codes to be reviewed becomes an issue.
    To respond to the commenters who were worried that codes identified 
through the potentially misvalued codes process may not be equitably or 
``fairly'' distributed among specialty societies and have suggested 
that CMS review a comparable proportion of codes for each specialty 
each year, we note that, based on our previous experience, the 
objective screens we have used to identify potentially misvalued codes 
do not produce lists of codes that are evenly distributed among the 
specialties that furnish them. Rather, the screens have tended to 
identify certain types of services more frequently than others (for 
example, due to rapidly changing technology) and therefore yield 
disproportionate numbers of potentially misvalued codes to be reviewed 
by the various specialty societies. However, we have received similar 
comments in previous rules regarding distribution among specialty 
societies. Consequently, in the CY 2012 proposed rule, we explicitly 
identified a list of potentially misvalued high expenditure codes that 
spans most specialties discussed in II.B.5.a. of this final rule with 
comment period.
    Finally, to respond to the comments regarding the code review 
cycle, we note that the timing of CMS' current review process is 
constrained by the CPT Editorial Panel's scheduled release of new and 
revised codes by October 1 and the receipt of the complete AMA RUC's 
recommendations later in the year, which are at odds with the PFS 
rulemaking cycle. As we have indicated for many years in our PFS final 
rules with comment period, most recently in the CY 2011 rule (75 FR 
73170), before adopting interim RVUs for new and revised codes, we have 
the opportunity to review and consider AMA RUC recommendations which 
are based on input from the medical community. If we did not adopt RVUs 
for new and revised codes in the initial year on an interim final 
basis, we would either have to delay using the codes for a year or 
permit each Medicare contractor to establish their own payment rate for 
the codes. We believe it would be contrary to the public interest to 
delay adopting values for new and revised codes for the initial year, 
especially since we have an opportunity to receive significant input 
from the medical community before adopting the values, and the 
alternatives could produce undesirable levels of uncertainty and 
inconsistency in payment for a year. We understand the preference of 
some commenters for the review of potentially misvalued codes to be 
conducted within a single rulemaking year in order to avoid payment 
under interim values for the coming year. However, we continue to 
believe that it is important to consolidate the work and PE reviews for 
all codes (new, revised, and potentially misvalued) into one cycle. As 
we have explained in several previous PFS final rules with comment 
period, most recently in the CY 2011 PFS final rule with comment period 
(75 FR 73170), we believe it is in the public interest to adopt interim 
final revised RVUs for codes that have been identified as misvalued. 
Similar to the new and revised codes, before making any changes to RVUs 
for potentially misvalued codes, we have an opportunity to review input 
from the medical community in the form of the AMA RUC recommendations 
for the codes. We believe a delay in implementing revised values for 
codes that have been identified as misvalued would perpetuate payment 
for the services at a rate that does not appropriately reflect the 
relative resources involved in furnishing the service and would 
continue unwarranted distortion in the payment for other services 
across the PFS.

[[Page 73057]]

    We note that it is often difficult to draw definitive lines between 
the codes that are being reviewed as new, revised, or potentially 
misvalued. For example, CMS may identify a code as potentially 
misvalued in a given year and refer the family of codes to the AMA RUC 
for review. Subsequently, the AMA RUC may send the family of codes to 
the CPT Editorial Panel for revision because upon an initial review, 
the AMA RUC may have concluded that the family of services has evolved 
to the point that the code descriptors are no longer appropriate. The 
CPT Editorial Panel may revise the code(s) descriptors or may create 
entirely new codes to better define the service. In this final rule 
with comment period, we reviewed several new codes initially referred 
to the AMA RUC for review through our potentially misvalued codes 
initiative, and we believe that this trend likely will increase in the 
near future. Additionally, since CMS reviews and assigns interim values 
to new and revised codes in the PFS final rule with comment period for 
the coming year, consolidating the review of potentially misvalued 
codes with the new and revised codes is a more efficient and 
transparent process, and reduces the burden on both specialty societies 
and other stakeholders who would otherwise be called upon to consider, 
review and comment on the same family of codes in multiple rules. 
Moreover, consolidation of our review of new, revised, and potentially 
misvalued codes in one cycle allows for codes in a family to be 
reviewed together, resulting in more consistent valuation within code 
families and a better opportunity to maintain appropriate relativity 
within code families which, as we discuss in this section of this final 
rule with comment period, is a high priority.
    Therefore, given the considerable overall support commenters 
expressed, we are finalizing our proposal without modification to 
consolidate periodic reviews of work and PE RVUs under section 
1848(c)(2)(B) of the Act and of potentially misvalued codes under 
section 1848(c)(2)(K) of the Act into one annual process.
    We note that while we proposed to review the physician work RVUs 
and direct PE inputs of potentially misvalued codes on an annual basis, 
we did not propose at this time to review malpractice RVUs on an annual 
basis. As discussed in section II.C. of this final rule with comment 
period, in general, malpractice RVUs are based on malpractice insurance 
premium data on a specialty level. The last comprehensive review and 
update of the malpractice RVUs occurred for CY 2010 using data obtained 
from the PPIS data. Since it is not feasible to conduct such extensive 
physician surveys to obtain updated specialty level malpractice 
insurance premium data on an annual basis, we believe the comprehensive 
review of malpractice RVUs should continue to occur at 5-year 
intervals.
    Furthermore, in identifying and reviewing potentially misvalued 
codes on an annual basis, we note that this new proposed process 
presents us with the opportunity to review simultaneously both the work 
RVUs and the direct PE inputs for each code. Heretofore, the work RVUs 
and direct PE inputs of potentially misvalued codes were commonly 
reviewed separately and at different times. For example, a code may 
have been identified as potentially misvalued based solely on its work 
RVUs so the AMA RUC would have reviewed the code and provided us with 
recommendations on the physician times and work RVUs. However, the 
direct PE inputs of the code would not necessarily have been reviewed 
concurrently and therefore, the AMA RUC would not necessarily have 
provided us with recommendations for any changes in the direct PE 
inputs of the code that would have been warranted to ensure that the PE 
RVUs of the code are determined more appropriately. Therefore, while 
this code may have been recently reviewed and revised under the 
potentially misvalued codes initiative for physician work, the PE 
component of the code could still be potentially misvalued. Going 
forward, we believe combining the reviews of both physician work and PE 
for each code under our potentially misvalued codes initiative will 
align the review of these codes and lead to more accurate and 
appropriate payments under the PFS.
    Finally, it is important to note that the code-specific resource 
based relative value framework under the PFS system is one in which 
services are ranked relative to each other. That is, the work RVUs 
assigned to a code are based on the physician time and intensity 
expended on that particular service as compared to the physician time 
and intensity of the other services paid under the PFS. This concept of 
relativity to other services also applies to the PE RVUs, particularly 
when it comes to reviewing and assigning correct direct PE inputs that 
are relative to other similar services. Consequently, we are 
emphasizing the need to review both the work and PE components of codes 
that are identified as part of the potentially misvalued initiative to 
ensure that appropriate relativity is constructed and maintained in 
several key relationships:
     The work and PE RVUs of codes are ranked appropriately 
within the code family. That is, the RVUs of services within a family 
should be ranked progressively so that less intensive services and/or 
services that require less physician time and/or require fewer or less 
expensive direct PE inputs should be assigned lower work or PE RVUs 
relative to other codes within the family. For example, if a code for 
treatment of elbow fracture is under review under the potentially 
misvalued codes initiative, we would expect the work and PE RVUs for 
all the codes in the family also be reviewed in order to ensure that 
relativity is appropriately constructed and maintained within this 
family. Furthermore, as we noted in the CY 2010 PFS final rule with 
comment period (74 FR 61941), when we submit codes to the AMA RUC and 
request its review, in order to maintain relativity, we emphasized the 
importance of reviewing the base code of a family. The base code is the 
most important code to review because it is the basis for the valuation 
of other codes within the family and allows for all related codes to be 
reviewed at the same time (74 FR 61941).
     The work and PE RVUs of codes are appropriately relative 
based on a comparison of physician time and/or intensity and/or direct 
inputs to other services furnished by physicians in the same specialty. 
To continue the example discussed previously, if a code for treatment 
of elbow fracture is under review, we would expect this code to be 
compared to other codes, such as codes for treatment of humerus 
fracture, or other codes furnished by physicians in the same specialty, 
in order to ensure that the work and PE RVUs are appropriately relative 
within the specialty.
     The work and PE RVUs of codes are appropriately relative 
when compared to services across specialties. While it may be 
challenging to compare codes that describe completely unrelated 
services, since the entire PFS is a budget neutral system where payment 
differentials are dependent on the relative differences between 
services, it is essential that services across specialties are 
appropriately valued relative to each other. To illustrate the point, 
if a service furnished primarily by dermatology is analogous in 
physician time and intensity to another service furnished primarily by 
allergy/immunology, then we would expect the work RVUs for the two 
services to be

[[Page 73058]]

similar, even though the two services may be otherwise unrelated.
4. Public Nomination Process
    Under the previous Five-Year Reviews, the public was provided with 
the opportunity to nominate potentially misvalued codes for review. To 
allow for public input and to preserve the public's ability to identify 
and nominate potentially misvalued codes for review under our annual 
potentially misvalued codes initiative, we proposed a process by which 
on an annual basis the public could submit codes, along with 
documentation supporting the need for review. We proposed that 
stakeholders may nominate potentially misvalued codes by submitting the 
code with supporting documentation during the 60-day public comment 
period following the release of the annual PFS final rule with comment 
period. We would evaluate the supporting documentation and decide 
whether the nominated code should be reviewed as potentially misvalued 
during the following year. If we were to receive an overwhelming number 
of nominated codes that qualified as potentially misvalued in any given 
year, we would prioritize the codes for review and could decide to hold 
our review of some of the potentially misvalued codes for a future 
year. We noted that we may identify additional potentially misvalued 
codes for review by the AMA RUC based on the seven statutory categories 
under section 1848(c)(2)(K)(ii) of the Act.
    We encouraged stakeholders who believe they have identified a 
potentially misvalued code, supported by documentation, to nominate 
codes through the public process. We emphasized that in order to ensure 
that a nominated code will be fully considered to qualify as a 
potentially misvalued code to be reviewed under our annual process, 
accompanying documentation must be provided to show evidence of the 
code's inappropriate valuation, either in terms of inappropriate 
physician times, work RVUs, and/or direct PE inputs. The AMA RUC 
developed certain ``Guidelines for Compelling Evidence'' for the Third 
Five-Year Review which we believe could be applicable for members of 
the public as they gather supporting documentation for codes they wish 
to nominate for the annual review of potentially misvalued codes. The 
specific documentation that we would seek under this proposal includes 
the following:
     Documentation in the peer reviewed medical literature or 
other reliable data that there have been changes in physician work due 
to one or more of the following:
    ++ Technique.
    ++ Knowledge and technology.
    ++ Patient population.
    ++ Site-of-service.
    ++ Length of hospital stay.
    ++ Physician time.
     An anomalous relationship between the code being proposed 
for review and other codes. For example, if code ``A'' describes a 
service that requires more work than codes ``B,'' ``C,'' and ``D,'' but 
is nevertheless valued lower. The commenter would need to assemble 
evidence on service time, technical skill, patient severity, 
complexity, length of stay and other factors for the code being 
considered and the codes to which it is compared. These reference 
services may be both inter- and intra-specialty.
     Evidence that technology has changed physician work, that 
is, diffusion of technology.
     Analysis of other data on time and effort measures, such 
as operating room logs or national and other representative databases.
     Evidence that incorrect assumptions were made in the 
previous valuation of the service, such as a misleading vignette, 
survey, or flawed crosswalk assumptions in a previous evaluation;
     Prices for certain high cost supplies or other direct PE 
inputs that are used to determine PE RVUs are inaccurate and do not 
reflect current information.
     Analyses of physician time, work RVU, or direct PE inputs 
using other data sources (for example, Department of Veteran Affairs 
(VA) National Surgical Quality Improvement Program (NSQIP), the Society 
for Thoracic Surgeons (STS), and the Physician Quality Reporting System 
(PQRS) databases).
     National surveys of physician time and intensity from 
professional and management societies and organizations, such as 
hospital associations.
    We noted that when a code is nominated, and supporting 
documentation is provided, we would expect to receive a description of 
the reasons for the code's misvaluation with the submitted materials. 
That is, we would require a description and summary of the evidence is 
required that shows how the service may have changed since the original 
valuation or may have been inappropriately valued due to an incorrect 
assumption. We would also appreciate specific Federal Register 
citations, if they exist, where commenters believe the nominated codes 
were previously valued erroneously. We also proposed to consider only 
nominations of active codes that are covered by Medicare at the time of 
the nomination.
    As proposed in the CY 2012 proposed rule, after we receive the 
nominated codes during the 60-day comment period following the release 
of the annual PFS final rule with comment period, we would review the 
supporting documentation and assess whether they appear to be 
potentially misvalued codes appropriate for review under the annual 
process. We proposed that, in the following PFS proposed rule, we would 
publish a list of the codes received under the public nomination 
process during the previous year and indicate whether the codes would 
be included in the current review of potentially misvalued codes. We 
would also indicate the publicly nominated codes that we would not be 
including in the current review (whether due to insufficient 
documentation or for other reasons). Under this proposed process, the 
first opportunity for the public to nominate codes would be during the 
public comment period for this CY 2012 PFS final rule with comment 
period. We would publish in the CY 2013 PFS proposed rule, the list of 
nominated codes, and indicate whether they will be reviewed as 
potentially misvalued codes. We would request that the AMA RUC review 
these potentially misvalued codes along with any other codes identified 
by CMS as potentially misvalued, and provide to us recommendations for 
appropriate physician times, work RVUs, and direct PE inputs. We 
requested public comments on this proposed code nomination process and 
indicated that we would consider any suggestions to modify and improve 
the proposed process.
    Comment: The vast majority of commenters supported CMS' proposal to 
develop a public nomination process for potentially misvalued codes. 
The commenters noted that the proposed process would provide a way for 
the public to participate in the identification of potentially 
misvalued procedures. Commenters were enthusiastic that the proposal 
allows for stakeholders to propose a code for review on an immediate 
basis which is a significant improvement to the current process, noting 
that previously, only ``CMS and the RUC could bring a code forward for 
review whenever they have reason to believe it may be misvalued; 
however, physicians, other healthcare providers, specialty societies 
and other stakeholders are restricted to a five-year cycle.'' On the 
other hand, another commenter ``does not agree with the

[[Page 73059]]

once-a-year opportunity to nominate codes [and] * * * recommends that 
there should be greater opportunity for public comment.''
    A number of commenters stated that they believe the supporting 
documentation criteria would ensure that all requests are considered 
fairly and urged CMS to conduct a rigorous review of public comments 
and supporting documentation when determining whether a publicly 
nominated code should be reviewed as a potentially misvalued code, 
especially when a code is nominated by only a few commenters or even a 
single commenter. Other commenters thought CMS should provide 
``guidelines'' to justify bringing a code(s) forward for review in 
order to prevent a member of the public from asking that every single 
code paid under the Medicare PFS be reviewed. Some commenters noted 
that ``professional associations participating on the RUC frequently 
struggle with the concept and documentation of `Compelling Evidence.' 
'' Consequently, the commenters believed that the public will likewise 
struggle with the concept of submitting evidence to substantiate 
potentially misvalued codes. Other commenters noted that the public 
nomination process proposed by CMS requires that commenters nominating 
codes include supportive evidence to show that the resource use related 
to the delivery of a service has changed in a way to suggest a code's 
RVUs may be misvalued, whereas CMS is not obligated to follow this same 
standard. The commenters suggested that CMS should be required to 
adhere to the supporting documentation that the public would need to 
provide when nominating a potentially misvalued code for review through 
the proposed public nomination process.
    Several commenters believed that CMS should not restrict which 
codes could be nominated or referred. A number of commenters objected 
to CMS' proposal to consider only nominations of active codes that are 
covered by Medicare at the time of the nomination. The commenters 
believed this proposal was unfair to those specialties that do not 
serve a predominantly Medicare-aged population but who must also rely 
on the the resource based relative value scale. The commenters asserted 
that CMS has historically published the relative value recommendations 
from the AMA RUC for preventive services and other non-covered 
services. Commenters recommended that all valid CPT codes should remain 
open to comment and review. Commenters also believed as long as a 
stakeholder could provide adequate supporting documentation to support 
the nomination of the code, CMS should allow for the review of any 
code, including any codes that went through refinement in the past.
    Commenters also expressed appreciation that CMS proposed to 
disclose in the PFS proposed rule the list of codes identified as 
potentially misvalued (including those that originated from the public 
nomination process) for future review because publishing the misvalued 
codes list provides some notice to affected parties who may wish to 
provide input during the review process. Some commenters suggested that 
following the nomination process, specialty societies should have 
another opportunity to review and comment on any relevant nominations 
before CMS decides to include the codes on the list of potentially 
misvalued codes in the proposed rule.
    Response: We appreciate the enthusiasm expressed by commenters who 
welcome the opportunity to participate with us in the identification of 
potentially misvalued codes. We also acknowledge the commenters' 
concern that our requirements for accompanying documentation to show 
how the code is potentially misvalued may be viewed as burdensome and 
could pose a barrier to the public in nominating some codes. We 
provided guidelines in the proposed rule for such documentation in 
order to help the public to develop a strong case and assemble 
sufficient documentation when nominating a code. Although some 
commenters viewed the requirement to provide evidence of potential 
misvaluation as overly burdensome, it is important to demonstrate that 
a nominated code is not only potentially misvalued, but that improved 
accuracy in payment for the code would improve the overall accuracy of 
the physician fee schedule. As commenters have pointed out, reviewing 
potentially misvalued codes is resource intensive for the AMA RUC, 
specialty societies, CMS, and the public, and we must ensure that codes 
we refer as potentially misvalued warrant the requested review.
    However, to respond to the commenters who suggested we should be 
required to follow the same process as the public for nominating 
potentially misvalued codes, we note that we have longstanding 
statutory authority to identify and review the RVUs of services no less 
often than every 5-years and that we frequently have exercised our 
discretion to prioritize codes for review.
    We understand commenters' concerns about the burden that reviewing 
codes entails. We believe that by ranking codes in order of interest to 
CMS for review over a reasonable timeframe, we can help to reduce some 
of that burden. For this year, we have prioritized the review of codes 
to those that have some degree of significant financial impact on the 
PFS. Specifically, we have proposed a list of high expenditure codes 
for review in CY 2012. We also are limiting the review of RVUs to codes 
that are active, covered by Medicare, and for which the RVUs are used 
for payment purposes under the PFS so that resources are not expended 
on the review of codes with RVUs that have no financial impact on the 
PFS. We note that while we have published the AMA RUC relative value 
recommendations for non-covered services as a courtesy, these codes 
historically have not been reviewed by CMS and the RVUs are not valid 
for Medicare payment purposes. Therefore, while we will continue our 
historical practice of publishing the AMA RUC relative value 
recommendations for non-covered services, we will not be accepting for 
review either inactive or non-covered codes (for which the RVUs will 
have no financial impact on the PFS) through the public nomination 
process. We will consider any other active and Medicare covered 
services that are nominated by the public and supported by 
documentation of the nature described previously in this section.
    Finally, we note that all timely comments received on the final 
rule with comment period can be accessed and reviewed by the public 
through http://www.regulations.gov/ after the final rule's comment 
period closes. Therefore, anyone who wishes to look though the public 
comments can identify the codes that have been nominated by the public 
as potentially misvalued, as well as the accompanying supporting 
documentation. CMS will assess the list of publicly nominated codes, 
taking into consideration the documentation provided as well as the 
list of codes the agency has identified for review, and will identify 
and publish in the following year's proposed rule the list of nominated 
codes and codes selected for review. Accordingly, we are finalizing the 
proposed public nomination process without modification.
5. CY 2012 Identification and Review of Potentially Misvalued Services
a. Code Lists
    While we anticipate receiving nominations from the public for 
potentially misvalued codes in conjunction with rulemaking, we believe 
it is imperative that we continue

[[Page 73060]]

the work of the review initiatives over the last several years and 
drive the agenda forward to identify, review, and adjust values for 
potentially misvalued codes for CY 2012.
    In the CY 2011 PFS proposed rule (75 FR 40068 through 40069), we 
identified and referred to the AMA RUC a list of potentially misvalued 
codes in three areas:
     Codes on the AMA RUC's multi-specialty points of 
comparison (MPC) list (used as reference codes in the valuation of 
other codes),
     Services with low work RVUs that are billed in multiples 
(a statutory category); and
     Codes that have low work RVUs for which CMS claims data 
show high volume (that is, high utilization of these codes represents a 
significant dollar impact in the payment system).
    Our understanding is that the AMA RUC is currently working towards 
reviewing these codes at our request. We intend to provide an update 
and discuss any RVU adjustments to codes that have been identified as 
potentially misvalued in the CY 2012 PFS final rule, as they move 
through the review process.
    Meanwhile, for CY 2012, we are continuing with our work to identify 
and review additional services under the potentially misvalued codes 
initiative. Stakeholders have noted that many of the services 
previously identified under the potentially misvalued codes initiative 
were concentrated in certain specialties. To develop a robust and 
representative list of codes for review under the potentially misvalued 
codes initiative, we examined the highest PFS expenditure services by 
specialty (based on our most recently available claims data and using 
the specialty categories listed in the PFS specialty impact table, see 
Table 84 in section IX.B. of this final rule with comment period) and 
identified those that have not been reviewed since CY 2006 (which was 
the year we completed the Third Five-Year Review of Work and before we 
began our potentially misvalued codes initiative).
    In our examination of the highest PFS expenditure codes for each 
specialty (we used the specialty categories listed in the PFS specialty 
impact table, see Table 84 in section IX.B. of this final rule with 
comment period), we noted that Evaluation and Management (E/M) services 
consistently appeared in the top 20 high PFS expenditure services. We 
noted as well that most of the E/M services have not been reviewed 
since the comprehensive review of services for the Third Five-Year 
Review of Work in CY 2006. Therefore, after an examination of the 
highest PFS expenditure codes for each specialty, we have developed two 
code lists of potentially misvalued codes which we proposed to refer to 
the AMA RUC for review.
    First, we proposed to request that the AMA RUC conduct a 
comprehensive review of all E/M codes, including the codes listed in 
Table 6. As shown previously, E/M services are commonly among the 
highest PFS expenditure services. Additionally in recent years, there 
has been significant interest in delivery system reforms, such as 
patient-centered medical homes and making the primary care physician 
the focus of managing the patient's chronic conditions. The chronic 
conditions challenging the Medicare population include heart disease, 
diabetes, respiratory disease, breast cancer, allergy, Alzheimer's 
disease, and factors associated with obesity. Thus, as the focus of 
primary care has evolved from an episodic treatment-based orientation 
to a focus on comprehensive patient-centered care management in order 
to meet the challenges of preventing and managing chronic disease, we 
believed a more current review of E/M codes was warranted. We note that 
although physicians in primary care specialties bill a high percentage 
of their services using the E/M codes, physicians in non-primary care 
specialties also bill these codes for many of their services.
    Since we believe the focus of primary care is evolving to meet the 
challenges of preventing and managing chronic disease, we noted in the 
proposed rule that we would like the AMA RUC to prioritize review of 
the E/M codes and provide us with recommendations on the physician 
times, work RVUs, and direct PE inputs of at least half of the E/M 
codes listed in Table 6 by July 2012 in order for us to include any 
revised valuations for these codes in the CY 2013 PFS final rule with 
comment period. We also noted that we would expect the AMA RUC to 
review the remaining E/M codes listed in Table 6 by July 2013 in order 
for us to complete the comprehensive re-evaluation of E/M services and 
include the revised valuations for these codes in the CY 2014 PFS final 
rule with comment period.
BILLING CODE 4120-01-P

[[Page 73061]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.008

[[Page 73062]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.009

BILLING CODE 4120-01-C
    Comment: Many commenters did not believe that reviewing the work 
RVUs and direct PE inputs of all E/M services is warranted at this 
time. A significant number of commenters generally agreed that health 
care delivery has changed, that chronic disease management has led to 
increases in physician time and effort, and that primary care 
physicians provide valuable services to Medicare beneficiaries that are 
not captured appropriately in the E/M services. Some commenters did not 
believe that the resource-based relative value scale is the appropriate 
system to account for

[[Page 73063]]

changes in health care delivery models. A smaller number of commenters 
did not believe that physician work for E/M services had changed since 
the codes were last reviewed.
    The majority of commenters requested that CMS withdraw its proposal 
to review all E/M codes because the current E/M codes, as written, do 
not fully encompass the work associated with patient-centered care 
management. The commenters noted that there are many codes that have 
been reviewed and valued by the AMA RUC for such services, including 
medical team conference, comprehensive preventive evaluation, physician 
supervision of a hospice patient, international normalized ratio 
management, smoking and alcohol counseling, case management, monthly 
medical home management, anticoagulation management, and phone or 
electronic evaluation. Some commenters noted that the AMA RUC has 
previously provided recommendations to value telephone and electronic 
evaluation services that complement coordinated care. While Medicare 
either does not pay separately for or does not cover many of these 
services, the commenters believed these services are part of a patient 
centered care management model and are necessary services for managing 
patients with chronic conditions. The commenters urged CMS to provide 
explicit payment for these coordination services rather than attempt to 
address the primary care issue through the comprehensive review of 
current E/M code values. For example, commenters suggested CMS ``work 
with the medical community to develop and implement the patient-
centered medical home, reward prevention and wellness, eliminate 
fragmentation and duplication, and produce a cohesive system of care 
that prevents unnecessary complications from acute or chronic illness, 
hospitalizations, and other avoidable expenses.''
    Some commenters asserted that the current E/M codes have code 
descriptors and documentation requirements that do not capture the work 
necessary for chronic disease management. Commenters noted that the 
current E/M codes were developed 20 years ago and describe care of 
patients with acute problems. In addition, the commenters believed the 
current E/M codes do not describe care to treat chronic medical 
problems of patients in skilled nursing facilities which were treated 
in the hospital a few years ago. Commenters asserted that physicians 
are now caring for an increasingly complex elderly population with 
multiple chronic problems who require services such as extensive care 
coordination that was not part of standard medical practice when many 
of the E/M codes were created. Thus, while the commenters agreed that 
care coordination would help better manage chronic diseases in the 
elderly, they believed this care would be better described by new 
codes, and not the current E/M codes. Accordingly, the commenters 
recommended that CMS undertake a comprehensive review of the existing 
E/M service codes in collaboration with the AMA RUC and the CPT 
Editorial Panel. That is, the commenters envisioned and supported an 
extensive review that considers revisions to these codes that will 
better recognize the work of primary care physicians and cognitive 
specialists who provide care for patients with acute and chronic 
conditions before focusing on the valuation of the codes.
    Many commenters, representing different medical specialties, noted 
that CMS' focus on primary care as the locus for care coordination and 
chronic disease management is misplaced. Commenters asserted that 
patient care coordination, prevention, performance measurement and the 
adoption of health information technology affects the entire medical 
community. These commenters argued that that these trends and 
initiatives will pose challenges for specialty medicine as well. 
Specifically, a commenter stated, ``We believe that high quality 
provision of such services is not defined by the specialty of the 
provider and thus we cannot support policy options that focus on 
provider specialty rather than on the content and the quality of the 
service being provided.''
    Other commenters noted that the E/M codes are used by many surgeons 
and other specialists because nearly every procedural CPT code involves 
one or more E/M service within the code's global period. Commenters 
suggested that CMS unbundle E/M services from surgical codes in order 
to ensure that surgical patients received the appropriate follow-up 
care and management of post-procedure activity to achieve desired 
outcomes. That is, CMS should apply zero-day global periods to surgical 
codes, such that post-operative hospital and office visits must meet 
the medical necessity and documentation requirements for evaluation and 
management coding in order to be paid separately.
    Finally, some commenters noted that the previous comprehensive 
review of the evaluation and management codes in 2006 did not improve 
the emphasis on chronic care management, stating that ``the third 5-
Year Review failed to achieve the goals of properly compensating 
primary physicians for chronic care management, so there is no 
expectation that another review within the existing system will result 
in a different outcome.'' A few commenters supported the proposal to 
review the E/M codes and they ``consider the review and re-evaluation 
of E&M codes as a critical immediate step to ensure patient access to 
care and to maintaining the viability of the [their] workforce.''
    Response: We thank the commenters for their comments on our 
proposal to review E/M services and address the evolving challenges of 
chronic care management. We also appreciate commenters' support for 
recognizing the importance of primary care and care coordination, and 
appropriately valuing such care within Medicare's statutory structure 
for physician payment and quality reporting. We understand some 
commenters' concerns about the ability of the current E/M coding and 
documentation system to appropriately value primary care services and 
improved care coordination. We understand that many commenters would 
prefer that we consider paying separately for non-face-to-face care 
coordination activities, such as telephone calls and medical team 
conferences, rather than finalize the proposal to request that the AMA 
RUC review all 91 E/M codes at this time. We will continue to explore 
valuations of E/M services and other potential refinements to the PFS 
that would appropriately value these services. We are also examining 
many other programs that may contribute to more appropriate valuation 
of services and better health care outcomes.
    We would like to assure the commenters that we, as well as the HHS' 
Assistant Secretary for Planning and Evaluation (ASPE), are actively 
researching our current coding and payment systems to appropriately 
value these services. As detailed in the proposed rule (75 FR 42917), 
we are considering several approaches to improve coordinated care and 
health care transitions to reduce readmissions or subsequent illnesses, 
improve beneficiary outcomes, and avoid additional financial burden on 
the health care system. We are committed to achieving better care for 
individuals, better health for populations, and reduced expenditure 
growth. Reforms such as Accountable Care Organizations and Medical 
Homes and reforms of our current fee-for-service payment system are 
designed to achieve these goals.

[[Page 73064]]

    As an example, we recently launched the Partnership for Patients 
(in April 2011), a national public-private patient safety initiative 
for which more than 6,000 organizations--including physician and 
nurses' organizations, consumer groups, employers and over 3,000 
hospitals--have pledged to help achieve the Partnership's goals of 
reducing hospital complications and improving care transitions. The 
Partnership for Patients includes the Community-Based Care Transitions 
Program, which provides funding to community-based organizations 
partnering with eligible hospitals to coordinate a continuum of post-
acute care in order to test models for improving care transitions for 
high risk Medicare beneficiaries. Achieving the goals of the 
Partnership for Patients will take the combined effort of many key 
stakeholders across the health care system--physicians, nurses, 
hospitals, health plans, employers and unions, patients and their 
advocates, as well as the Federal and State governments. Many important 
stakeholders have already pledged to join this Partnership in a shared 
effort to save thousands of lives, stop millions of injuries and take 
important steps toward a more dependable and affordable health care 
system. We are currently working with these stakeholders to improve 
care processes and systems, enhance communication and coordination to 
reduce complication for patients, raise public awareness and develop 
information, tools and resources to help patients and families 
effectively engage with their providers to avoid preventable 
complications, and provide the incentives and support that will enable 
clinicians and hospitals to deliver high-quality health care to their 
patients, with minimal burdens. (For more information regarding the 
Partnership for Patients Initiative, we refer readers to http://www.healthcare.gov/compare/partnership-for-patients/index.html.)
    Additionally, the Center for Medicare and Medicaid Innovation 
(Innovation Center) of CMS has undertaken several demonstrations to 
support care coordination and primary care. Most recently, on September 
28, 2011, we released a request for applications for the Comprehensive 
Primary Care Initiative, a CMS-led multipayer initiative to provide 
enhanced support for comprehensive primary care. A primary care 
practice is a key point of contact for patients' health care needs. In 
recent years, new ways have emerged to strengthen primary care by 
improving care coordination, making it easier to work together, and 
helping clinicians spend more time with their patients. Under the 
Comprehensive Primary Care Initiative, we intend to pay primary care 
providers a monthly care management fee on behalf of Medicare fee-for-
service beneficiaries and, in participating states, Medicaid fee-for-
service beneficiaries for improved and comprehensive care management. 
Specifically, participating primary care practices will be given 
support to better coordinate primary care for their Medicare patients, 
including creating personalized care plans for patients with serious or 
chronic diseases follow personalized care plans, give patients 24-hour 
access to care and health information, more preventive care, and more 
patient centered care management. The work of the Comprehensive Primary 
Care Initiative could inform and help further develop innovative 
revisions to the PFS. (For more information regarding the Comprehensive 
Primary Care Initiative, we refer readers to http://innovations.cms.gov/areas-of-focus/seamless-and-coordinated-care-models/cpci/.)
    Further, HHS' ASPE has convened a Technical Expert Panel (TEP) to 
conduct studies that could inform efforts to accurately align physician 
payments in Medicare, which may help expand the supply of primary care 
physicians and improve the value of care for beneficiaries. One of the 
major tasks being undertaken by this TEP is to develop new approaches 
to defining visits and paying for primary care services under the 
physician fee schedule. There are a number of services that are 
increasingly viewed as key to high-quality primary care but that do not 
require a face-to-face encounter with the patient. While the valuations 
of current E/M services include care coordination, communication and 
other management, this project will consider how visits are defined and 
will examine whether we need to adjust payments to appropriately pay 
for primary care activities. It makes sense to reassess how visits are 
defined because it is becoming increasingly more common for primary 
care physicians to be engaged in the management of multiple established 
chronic conditions rather than evaluation and treatment of acute, new 
problems. The complexity and time for the physician is more often 
associated with decision-making than with the history-taking and 
physicals. Further, the chronic care model involves much greater 
attention to teaching patient self-management skills, doing more 
proactive care coordination, and anticipation of health care needs. We 
believe the TEP findings could provide us with improved information for 
the valuation of primary care services, including care coordination, 
which may be more effective than simply reviewing the work RVUs and 
direct PE inputs of current E/M services. In addition to ASPE's efforts 
that are focused directly on physician payment, they also have a second 
project underway to research effective methods for increasing the 
supply of primary care providers and services. This project will 
analyze what is known about the relative effectiveness of various 
strategies to increase the supply of primary care providers and 
services in order to meet these future health system needs.
    Accordingly, given the significant concern expressed by the 
majority of commenters over the possible inadequacies of the current E/
M coding and documentation structure to address evolving chronic care 
management and support primary care and our ongoing research on how to 
best provide payment for primary care and patient-centered care 
management, we are not finalizing the proposal to review the list of 91 
E/M codes at this time. Instead, we believe allowing time for 
consideration of the findings of the Comprehensive Primary Care 
Initiative, the ASPE research on balancing physician incentives and 
evaluating payment for primary care services, demonstrations that we 
have undertaken on care coordination, as well as other initiatives 
assessing how to value and encourage primary care will provide improved 
information for the valuation of chronic care management, primary care, 
and care transitions. We also will continue to consider the numerous 
policy alternatives that commenters offered, such as separate E/M codes 
for established visits for patients with chronic disease versus a post-
surgical follow-up office visits. We intend to continue to work with 
stakeholders on how to value and pay for primary care and patient-
centered care management, and we continue to welcome ideas from the 
medical community for how to improve care management through the 
provision of primary care services. Second, we also proposed providing 
a select list of high PFS expenditure procedural codes representing 
services furnished by an array of specialties, as listed in Table 7. 
These procedural codes have not been reviewed since CY 2006 (before we 
began our potentially misvalued codes initiatives in CY 2008) and, 
based on the most recently available data, have CY 2010 allowed charges 
of greater than $10 million at the specialty level (based on the

[[Page 73065]]

specialty categories listed in the PFS specialty impact table and CY 
2010 Medicare claims data). A number of the codes in Table 7 would not 
otherwise be identified as potentially misvalued services using the 
screens we have used in recent years with the AMA RUC or based on one 
of the six specific statutory categories under section 
1848(c)(2)(k)(ii) of the Act. However, we identified the potentially 
misvalued codes listed in Table 7 under the seventh statutory category, 
``other codes determined to be appropriate by the Secretary.'' We 
selected these codes based on the fact that they have not been reviewed 
for at least 6 years, and in many cases the last review occurred more 
than 10 years ago. They represent high Medicare expenditures under the 
PFS; thus, we believe that a review to assess changes in physician work 
and update direct PE inputs is warranted. Furthermore, since these 
codes have significant impact on PFS payment on a specialty level, a 
review of the relativity of the codes to ensure that the work and PE 
RVUs are appropriately relative within the specialty and across 
specialties, as discussed previously, is essential. For these reasons, 
we have identified these codes as potentially misvalued and proposed to 
request the AMA RUC review the codes listed in Table 7 and provide us 
with recommendations on the physician times, work RVUs and direct PE 
inputs in a timely manner. That is, similar to our proposal for the AMA 
RUC to review E/M codes in a timely manner, we proposed to request that 
the AMA RUC review at least half of the procedural codes listed in 
Table 7 by July 2012 in order for us to include any revised valuations 
for these codes in the CY 2013 PFS final rule with comment period.
BILLING CODE 4210-01-P

[[Page 73066]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.010

[[Page 73067]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.011

BILLING CODE 4120-01-C
    Comment: Some commenters did not believe that high expenditure/high 
volume was an appropriate criterion for us to use to identify the codes 
for the potentially misvalued codes initiative, stating ``simply 
because a service is frequently performed, does not indicate that the 
service may be overvalued.'' Additionally, the commenters believed that 
selecting codes that have not been reviewed since CY 2006 was arbitrary 
and assumes that the delivery of these services and procedures has 
changed radically over the past 5-years. Other commenters believed CMS 
should provide justification for the revaluation by providing evidence 
of how the delivery of a service or procedure has changed within 5 
years.
    Some commenters agreed that high expenditure codes should be 
reviewed on a periodic basis; however, the commenters suggested that 
the periodic basis should be a reasonably long length of time and 5 (or 
6) years is not a sufficiently long period of time absent other 
evidence of potential changes in the service under review. The 
commenters suggested that CMS could automatically review high 
expenditure procedures every 10 or 15 years. MedPAC, commenting on the 
CY 2012 PFS proposed rule, agreed that accurate payments for high 
expenditure services ``can improve the balance of payments between 
primary care and services such as imaging tests, and other 
procedures.''
    Finally, we received a number of comments on specific codes where 
commenters provided arguments as to why CMS should remove these codes 
from the high expenditure code list. The commenters noted that specific 
codes had been considered by the AMA RUC in the past five years or that 
certain codes are currently scheduled to be considered by either the 
CPT Editorial Panel for new coding or the AMA RUC for revised 
valuations (for work RVUs and/or PE inputs) at an upcoming meeting.
    Response: As we noted previously, it is a long-standing statutory 
requirement that we review RVUs no less often than every 5-years and, 
in conducting these reviews, we have historically exercised our 
discretion to prioritize which codes to review. In proposing to 
prioritize this list of high expenditure codes, we stated that the 
reason we identified these codes is because they have significant 
impact on PFS payment on a specialty level and have not been recently 
reviewed. We believe that the practice of a service can evolve over 
time, as can the technology used to conduct the service, and such 
efficiencies could easily have developed since our last comprehensive 
review of services in 2006 for the third 5-year review. As such, a 
review of the relativity of these codes, which are high expenditure and 
high volume, to ensure that the work and PE RVUs are appropriately 
valued to reflect changes in practice and technology and relative to 
other services within the specialty and across specialties is essential 
to the overall accuracy of the PFS.
    Because of the concerns expressed by commenters about the burden 
associated with code reviews, we believe that it is appropriate to 
prioritize review of codes to a manageable subset that also have a high 
impact on the PFS and work with the specialty society to spread review 
of the remaining codes identified as potentially misvalued over a 
reasonable timeframe. In this spirit, we do not believe it would be 
appropriate to remove codes from the high expenditure list unless we 
find, as some commenters indicated, that we have reviewed both the work 
RVUs and direct PE inputs for the code during the

[[Page 73068]]

specified time period. Also, regarding the suggestion to schedule 
review of high expenditure codes every 10 to 15-years, not only do we 
believe more regular monitoring of codes with high impact on the PFS 
will produce a more accurate and equitable payment system, but we have 
a statutory obligation to review codes at least every 5-years (although 
we do not always conduct a review that involves the AMA RUC). As noted, 
changes in technology and practice evolve for many services more 
rapidly than every 10 to 15-years. We also believe that, with our 
decision not to review the 91 E/M codes at this time, we have relieved 
some of the burden on specialty societies, which should enable them to 
complete their reviews of these high expenditure/high volume codes.
    Finally, in reviewing the code specific comments, we noticed that 
in many cases, the commenters believed that the code should be removed 
from this code list because the work RVU had been reviewed within 6-
years, or the code was recently considered at an AMA RUC meeting. We 
note that while a number of codes have been considered at an AMA RUC 
meeting, until we receive recommendations and review the codes for both 
work and direct PE inputs, we will continue to include these codes on 
the high expenditure list. We think some of the commenters may have 
believed that since a code was discussed at an AMA RUC meeting and sent 
to the CPT editorial panel or the code is being surveyed and prepared 
for a presentation at the AMA RUC, the code should be removed from the 
potentially misvalued high expenditure code list. We are clarifying 
that even if a code is about to be reviewed by the specialty society or 
AMA RUC, or referred to the CPT Editorial Panel, we would continue to 
include the code on our list of codes for review under the potentially 
misvalued codes initiative. Similarly, if a code is being reviewed by 
the CPT editorial panel, we would consider any replacement codes to 
address the potential misvaluation associated with the previous codes.
    Accordingly, we are finalizing the proposed high expenditure/high 
volume list without modification.
Specific Codes
    On an ongoing basis, public stakeholders (including physician 
specialty societies, beneficiaries, and other members of the public) 
bring concerns to us regarding direct PE inputs and physician work. In 
the past, we would consider these concerns and address them through 
proposals in annual rulemaking, technical corrections, or by requesting 
that the AMA RUC consider the issue.
    Since last year's rulemaking, the public has brought a series of 
issues to our attention that relate directly to direct PE inputs and 
physician work. We believe that some of these issues will serve as 
examples of codes that might be brought forward by the public as 
potentially misvalued in the proposed nomination process as discussed 
previously in section II.B.4. of this final rule with comment period.
(1) Codes Potentially Requiring Updates to Direct PE Inputs
    Abdomen and Pelvis CT. For CY 2011, AMA CPT created a series of new 
codes that describe combined CTs of the abdomen and pelvis. Prior to 
2011, these services would have been billed using multiple stand-alone 
codes for each body region. The new codes are: 74176 (Computed 
tomography, abdomen and pelvis; without contrast material); 74177 
(Computed tomography, abdomen and pelvis; with contrast material); and 
74178 (Computed tomography, abdomen and pelvis; without contrast 
material in one or both body regions, followed by with contrast 
material(s) and further sections in one or both body regions.)
    As stated in the CY 2011 PFS final rule with comment period (75 FR 
73350), we accepted the AMA RUC- recommended direct PE inputs for these 
codes, with refinements to the equipment minutes to assure that the 
time associated with the equipment items reflected the time during the 
intra-service period when a clinician is using the piece of equipment, 
plus any additional time the piece of equipment is not available for 
use for another patient due to its use during the designated procedure. 
We believe that the direct PE inputs of the new codes reflect the 
typical resources required to furnish the services in question.
    However, stakeholders have alerted us that the resulting PE RVUs 
for the new codes reflect an anomalous rank order in comparison to the 
previously existing stand-alone codes. Specifically, the PE RVUs for 
the codes that describe CT scans without contrast for either body 
region are greater than the PE RVUs for 74176, which describes a CT 
scan of both body regions. We believe that the anomalous rank order of 
the PE RVUs for this series of codes may be the result of outdated 
direct PE inputs for the previously existing stand-alone codes. The 
physician work for those codes was last reviewed by the AMA RUC during 
the Third Five-Year Review of Work for CY 2007. However, the direct PE 
inputs for the codes have not been reviewed since 2003. Therefore, we 
are requesting that the AMA RUC review both the direct PE inputs and 
work values of the following codes in accordance with the consolidated 
approach to reviewing potentially misvalued codes as outlined in 
section II.B.2.c. of this final rule with comment period:
     72192 Computed tomography, pelvis; without contrast 
material.
     72193 Computed tomography, pelvis; with contrast 
material(s).
     72194 Computed tomography, pelvis; without contrast 
material, followed by contrast material(s) and further sections.
     74150 Computed tomography, abdomen; without contrast 
material.
     74160 Computed tomography, abdomen; with contrast 
material(s).
     74170 Computed tomography, abdomen; without contrast 
material, followed by contrast material(s) and further sections.
    Comment: Several commenters suggested that the rank order anomalies 
resulted from a series of issues unrelated to the direct PE inputs for 
the existing component codes. These commenters argued that the anomaly 
resulted from CMS' refinement of equipment minutes in the new codes, 
errors in CMS' direct PE database, and the longstanding CMS policy that 
new codes are not subject to practice expense transitions. Furthermore, 
the commenters asserted that the AMA RUC reviewed the component code 
direct PE inputs when developing the direct PE inputs for the combined 
codes. Therefore, the commenters asked that CMS withdraw its request 
that the AMA RUC review the direct PE inputs of the existing codes.
    Response: We refer readers to section III.B.2 of this final rule 
with comment period. There, we address interim final direct PE inputs 
from CY 2011, including accurate allocation of equipment minutes and, 
specifically, the direct PE inputs for CPT codes 74176, 74177, and 
74178. In that section we finalize the interim direct PE inputs as 
published in the CY 2011 PFS final rule, with a minor refinement to the 
clinical labor inputs. We note that the refined PE RVUs for the 
combined codes do not significantly alter payment.
    While we acknowledge the occasional irregularities that result from 
the application of broad-based payment transitions, our longstanding 
policy in a PFS transition payment year is that if the CPT Editorial 
Panel creates a new code for that year, the new code would be paid at 
its fully implemented PFS amount and not at a transition rate for that 
year.

[[Page 73069]]

    While the commenters suggested that the RUC reviewed the direct PE 
inputs of the component codes recently, we have received no recent 
recommendation from the RUC regarding the direct PE inputs for these 
codes. Had the RUC reviewed the direct PE inputs for the component 
codes and made recommendations either to maintain or amend the current 
direct PE inputs, we would have responded to those recommendations. 
After considering these comments and noting the technical refinements 
to the direct PE inputs of the combined codes, we continue to believe 
that the direct PE inputs of the component codes should be reviewed. 
Therefore, we are maintaining our request that the RUC review the 
component codes.
    Tissue Pathology. A stakeholder informed us that the direct PE 
inputs associated with a particular tissue examination code are 
atypical. Specifically, the stakeholder suggested that the AMA RUC 
relied upon an atypical clinical vignette in identifying the direct PE 
inputs for the service associated with CPT code 88305 (Level IV--
Surgical pathology, gross and microscopic examination). The stakeholder 
claims that in furnishing the typical service, the required material 
includes a single block of tissue and 1-3 slides. The stakeholder 
argues that the typical cost of the resources needed to provide the 
service is approximately $18, but the PE RVUs for 2011 result in a 
national payment rate of $69.65 for the technical component of the 
service. Because the direct PE inputs associated with this code have 
not been reviewed since 1999, we are asking that the AMA RUC review 
both the direct PE inputs and work values of this code as soon as 
possible in accordance with the consolidated approach to reviewing 
potentially misvalued codes as outlined in section II.B.2.c. of this 
final rule with comment period though the work for this code was 
reviewed in April 2010.
    Comment: Several commenters disagreed with CMS' request to review 
the work RVU of this code because the most recent extensive review of 
the physician work was conducted by the RUC in April of 2010. The AMA 
RUC expressed concern that CMS would ask the RUC to review the code 
solely on the basis of the stakeholder's assertions about overpayment. 
The AMA RUC asked CMS to consider that the stakeholder's estimates of 
typical costs do not reflect the range of practice costs considered in 
the PE methodology, and that the stakeholder should be directed to 
consider direct practice expense costs instead of full practice expense 
payment rates.
    Response: We understand the commenters' requests to review only the 
direct PE inputs for the code since the physician work for this code 
and for the code family were recently reviewed by the RUC and CMS. We 
maintain that conducting a combined review of both physician work and 
direct PE for each code reviewed under our potentially misvalued codes 
initiative will lead to a more comprehensive evaluation and to more 
accurate and appropriate payments under the PFS. However, we understand 
that the advantages of a simultaneous review of work and direct 
practice may be limited in the case of this code where the work was so 
recently reviewed. Therefore, we believe that a review of the direct PE 
inputs alone is appropriate.
    We acknowledge the RUC's concern that the commenter may have been 
comparing his perception of direct practice expense costs with broader 
practice expense payments for this code. We acknowledge the practice 
expense portion of PFS payment is developed in consideration of both 
direct and indirect practice expense costs. We also concur with the RUC 
that interested stakeholders can review the publicly available direct 
PE inputs associated with each code. Those inputs are available in the 
direct PE database on the CMS Web site under the downloads section for 
the ``CY 2012 PFS final rule with comment period'' at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.
    However, we note that the stakeholder's assessment of the direct 
costs associated with the typical service reported using CPT code 88305 
is significantly lower than the summed direct practice expense inputs 
currently associated with the code. Additionally, as we stated in the 
CY 2012 PFS proposed rule, we are asking the RUC to review the direct 
PE inputs of the code because they have not been reviewed since 1999. 
We also point out that if the stakeholder had not brought the concern 
to us, this code would have appeared on our list of PFS high 
expenditure procedural codes that had not been reviewed since CY 2006. 
After consideration of these comments, we are maintaining our request 
that the RUC review CPT code 88305, but in the case of this code, we 
are only asking for a review of direct PE inputs.
    In Situ Hybridization Testing. We received comments from the Large 
Urology Group Practice Association (LUGPA) regarding two new 
cytopathology codes that describe in situ hybridization testing of 
urine specimens. Prior to CY 2011, in situ hybridization testing was 
coded and billed using CPT Codes 88365 (In situ hybridization (e.g., 
FISH), each probe), 88367 (Morphometric analysis, in situ hybridization 
(quantitative or semi-quantitative) each probe; using computer-assisted 
technology) and 88368 (Morphometric analysis, in situ hybridization 
(quantitative or semi-quantitative) each probe; manual). The 
appropriate CPT code listed would be billed one time for each probe 
used in the performance of the test, regardless of the medium of the 
specimen (that is, blood, tissue, tumor, bone marrow or urine).
    For CY 2011, the AMA's CPT Editorial Panel created two new 
cytopathology codes that describe in situ hybridization testing using 
urine samples: CPT code 88120 (Cytopathology, in situ hybridization 
(e.g., FISH), urinary tract specimen with morphometric analysis, 3-5 
molecular probes, each specimen; manual) and CPT code 88121 
(Cytopathology, in situ hybridization (e.g., FISH), urinary tract 
specimen with morphometric analysis, 3-5 molecular probes, each 
specimen; using computer-assisted technology).
    Because the descriptors indicate that the new codes account for 
approximately four probes, whereas 88367 and 88368 describe each probe, 
there are more PE RVUs associated with the new codes than with the 
previously existing codes that are currently still used for any 
specimen except for urine. However, because the previously existing 
codes are billed per probe, the payment for a test using a different 
specimen type could vary depending upon the number of probes. For 
example, a practitioner furnishing a test involving a blood specimen 
and using three probes would bill CPT code 88368 (total RVUs: 6.28) 
three times with the result of 18.84 RVUs. A practitioner furnishing 
the same test but using a urine sample instead of a blood sample would 
receive payment based on the 13.47 RVUs associated with CPT code 88120.
    We accepted the RUC-recommended work values and direct PE inputs, 
without refinement, for the two new cytopathology codes that describe 
in situ hybridization testing using urine samples. We reviewed the 
direct PE recommendations made by the AMA RUC and considered the inputs 
to be appropriate. However, we shared LUGPA's concerns regarding the 
potential payment discrepancies between the codes that describe the 
same test using different specimen media. Therefore, in the CY 2012 PFS 
proposed rule, we asked the AMA RUC to review the both the direct PE 
inputs and work values of the following codes

[[Page 73070]]

in accordance with the consolidated approach to reviewing potentially 
misvlaued codes as outlined in section II.B.2.c. of this final rule 
with comment period: CPT codes 88365 (In situ hybridization (e.g., 
FISH), each probe); 88367 (Morphometric analysis, in situ hybridization 
(quantitative or semi-quantitative) each probe; using computer-assisted 
technology); and 88368 (Morphometric analysis, in situ hybridization 
(quantitative or semi-quantitative) each probe; manual).
    Comment: Several commenters urged CMS to remove the in situ 
hybridization codes from its request for review since the RUC reviewed 
the work values for those codes when valuing the new codes.
    Response: We believe that these codes exemplify the need to conduct 
simultaneous review of direct PE inputs and physician work and time. As 
we explained in the proposal, maintaining appropriate relativity among 
payment rates, and PE RVUs in particular, requires the assignment of 
correct direct PE inputs relative to similar services. We understand 
that the RUC recommended maintaining the work RVUs for the existing 
codes in the context of the recommendation regarding the new codes, but 
the recommendations did not address the direct PE inputs of the 
existing codes that now describe similar tests using specimen media 
other than urine.
    Comment: LUGPA urged CMS to resolve the payment discrepancies by 
amending the direct PE inputs for 88120 and 88121 in order to equalize 
payment with the payment rates with 88367 and 88368. Additionally, the 
association suggested that CMS should equalize the work and malpractice 
RVUs for these codes with 88367 and 88368. The association also 
reasserted the claim that the information which CMS accepted in its 
totality from the RUC and the CPT Editorial Panel, with respect to both 
the existence of and values for the new codes, is erroneous and 
unsupportable.
    Response: We do not agree with the commenter's assertion that the 
technical resources required in conducting the urinary tract specimen 
test with and without the use of computer-assisted technology are 
exactly the same. We believe that using computer-assisted technology 
inherently alters the kind and amount of direct practice expense 
resources typically used in furnishing services. Therefore, we believe 
it would be inappropriate to use the direct inputs for the manual code 
in the calculation of PE RVUs for the code that describes the service 
when furnished using computer-assisted technology.
    However, we continue to share the commenter's concerns regarding 
the potential payment discrepancies between the codes that describe the 
same test using different specimen media. If the direct resources 
required for conducting the test using urine specimens are different 
from the direct resources required for conducting the test using other 
specimen media, we do not believe it would be appropriate to assume the 
typical direct practice expense inputs for the non-specific specimen 
media codes that were previously valued based upon all the specimen 
media including urine are still accurate now that services using urine 
will be reported using different codes.
    Therefore, we maintain our request as stated in the in the CY 2012 
PFS proposed rule (76 FR 42795 and 42796) that the AMA RUC review both 
the direct PE inputs and work values of the existing codes that 
describe the test using specimen media other than urine.
    After consideration of these comments, and in anticipation of 
forthcoming review of codes 88365, 88367, and 88368, we are maintaining 
for CY 2012 the current direct PE inputs for CPT codes 88120 and 88121 
on an interim basis subject to public comment.
    Ultrasound Equipment. A stakeholder has raised concerns about 
potential inconsistencies with the inputs and the prices related to 
ultrasound equipment in the direct PE database. Upon reviewing inputs 
and prices for ultrasound equipment, we have noted that there are 17 
different pieces of ultrasound and ultrasound-related equipment in the 
database that are associated with 110 CPT Codes. The price inputs for 
ultrasound equipment range from $1,304.33 to $466,492.00. Therefore, we 
are asking the AMA RUC to review the ultrasound equipment included in 
those codes as well as the way the equipment is described and priced in 
the direct PE database.
    In the past, the AMA RUC has provided us with valuable 
recommendations regarding particular categories of equipment and supply 
items that are used as direct PE inputs for a range of codes. For 
example, in the 2011 PFS final rule (75 FR 73204), we made changes to a 
series of codes following the RUC's review of services that include the 
radiographic fluoroscopic room (CMS Equipment Code EL014) as a direct 
PE input. The RUC review revealed the use of the item to no longer be 
typical for certain services in which it had been specified within the 
direct cost inputs. These recommendations have often prompted our 
proposals that have served to maintain appropriate relativity within 
the PFS, and we hope that the RUC will continue to address issues 
relating to equipment and supply inputs that affect many codes. 
Furthermore, we believe that in these kinds of cases, it may be 
appropriate to make changes to the related direct PE inputs for a 
series of codes without reevaluating the physician work or other direct 
PE inputs for the individual codes. In other words, while we generally 
believe that both the work and the direct practice expense inputs 
should be reviewed whenever the RUC makes recommendations regarding 
either component of a code's value, we recognize the value of discrete 
RUC reviews of direct PE items that serve as inputs for a series of 
service codes.
    Comment: Many commenters expressed agreement with CMS' interest in 
establishing consistency regarding direct PE inputs for ultrasound 
equipment. The RUC agreed to review the types of equipment and the 
assignment to individual codes but reiterated that the RUC does not 
make recommendations related to specific prices used in the practice 
expense RVU calculations. A few commenters urged CMS and the RUC to 
provide manufacturers and other stakeholders the opportunity to provide 
input and feedback to the AMA RUC regarding descriptive and other 
information related to this equipment during any review.
    Response: We appreciate the support for this request and the 
efforts of the RUC in taking on this review. We remind commenters that 
because the AMA RUC is an independent committee, concerned stakeholders 
should communicate directly with the AMA RUC regarding its professional 
composition. We note that we alone are responsible for all decisions 
about the direct PE inputs for purposes of PFS payment so, while the 
AMA RUC provides us with recommendations based on its broad expertise, 
we ultimately remain responsible for determining the direct PE inputs 
for all PFS services. Additionally, we note that any changes to the 
equipment inputs related to ultrasound services will be made through 
rulemaking and be subject to public comment. Finally, we remind 
interested stakeholders that throughout the year we meet with parties 
who want to share their views on topics of interest to them. These 
discussions may provide us with information regarding changes in 
medical practice and afford opportunities for the public to bring to 
our attention issues they believe we should consider for future 
rulemaking. (2) Codes Without Direct Practice

[[Page 73071]]

Expense Inputs in the Non-Facility Setting Certain stakeholders have 
requested that we create nonfacility PE values for a series of 
kyphoplasty services CPT codes:
     22523 (Percutaneous vertebral augmentation, including 
cavity creation (fracture reduction and bone biopsy included when 
performed) using mechanical device, 1 vertebral body, unilateral or 
bilateral cannulation (e.g., kyphoplasty); thoracic),
     22524 (Percutaneous vertebral augmentation, including 
cavity creation (fracture reduction and bone biopsy included when 
performed) using mechanical device, 1 vertebral body, unilateral or 
bilateral cannulation (e.g., kyphoplasty); lumbar).
     22525 (Percutaneous vertebral augmentation, including 
cavity creation (fracture reduction and bone biopsy included when 
performed) using mechanical device, 1 vertebral body, unilateral or 
bilateral cannulation (e.g., kyphoplasty); each additional thoracic or 
lumbar vertebral body (List separately in addition to code for primary 
procedure)).
    In the case of these codes, we are asking the RUC to make 
recommendations regarding the appropriateness of creating nonfacility 
direct PE inputs. If the RUC were to make direct PE recommendations, we 
would review those recommendations as part of the annual process.
    Comment: Several commenters asserted that determining the 
appropriateness of creating nonfacility direct PE inputs for particular 
services is not the role of the RUC. In response to this request, the 
RUC provided CMS with recommended direct PE inputs for CY 2012, but 
asserted that the RUC does not believe that it is within the 
Committee's expertise to determine whether a service can be performed 
safely or effectively in the office setting.
    Response: We appreciate the commenter's' perspectives and 
understand the RUC's position. Since the RUC submitted nonfacility 
direct PE input recommendations with its annual recommendations on new, 
revised, and potentially misvalued codes for CY 2012, we priced the 
services on an interim basis in the nonfacility setting for CY 2012. 
However, we note that the valuation of a service under the PFS in 
particular settings does not address whether those services are 
medically reasonable and necessary in the case of individual patients, 
including being furnished in a setting appropriate to the patient's 
medical needs and condition. We address the nonfacility direct PE input 
recommendations for these codes in section III.B.2. of this final rule 
with comment period.
(3) Codes Potentially Requiring Updates to Physician Work
    Cholecystectomy. We received a comment regarding a potential 
relativity problem between two cholecystectomy (gall bladder removal) 
CPT codes. CPT code 47600 (Cholecystectomy;) has a work RVU of 17.48, 
and CPT code 47605 (Cholecystectomy; with cholangiography) has a work 
RVU of 15.98. Upon examination of the physician time and visits 
associated with these codes, we found that CPT code 47600 includes 115 
minutes of intra-service time and a total time of 420 minutes, 
including 3 office visits, 3 subsequent hospital care days, and 1 
hospital discharge management day. CPT code 47605 includes 90 minutes 
of intra-service time and a total time of 387 minutes, including 2 
office visits, 3 subsequent hospital care days, and 1 hospital 
discharge management day. We believe that the difference in physician 
time and visits is the cause for the difference in work RVU for these 
codes. However, upon clinical review, it does not appear that these 
visits appropriately reflect the relativity of these two services, as 
CPT code 47600 should not have more time and visits associated with the 
service than CPT code 47605. Therefore, we are asking the AMA RUC to 
review these two cholecystectomy CPT codes, 47600 and 47605.
    Comment: Commenters did not disagree with us that there is a work 
RVU rank order anomaly between codes 47600 and 47605 but they believed 
47605 is undervalued. The commenters agreed that these services should 
be reviewed together.
    Response: We look forward to receiving recommendations from the AMA 
RUC and reviewing these codes. We note again that it is essential to 
value codes in the context of the code family and to consider the 
relativity with other services of similar time and intensity outside of 
the code family.
    We thank the public for bringing these issues to our attention and 
kindly request that the public continue to do so.
6. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy
a. Background
    Medicare has a longstanding policy to reduce payment by 50 percent 
for the second and subsequent surgical procedures furnished to the same 
patient by the same physician on the same day, largely based on the 
presence of efficiencies in the practice expense (PE) and pre- and 
post-surgical physician work. Effective January 1, 1995, the MPPR 
policy, with the same percentage reduction, was extended to nuclear 
medicine diagnostic procedures (CPT codes 78306, 78320, 78802, 78803, 
78806, and 78807). In the CY 1995 PFS final rule with comment period 
(59 FR 63410), we indicated that we would consider applying the policy 
to other diagnostic tests in the future.
    Consistent with recommendations of MedPAC in its March 2005 Report 
to the Congress on Medicare Payment Policy, under the CY 2006 PFS, the 
MPPR policy was extended to the technical component (TC) of certain 
diagnostic imaging procedures performed on contiguous areas of the body 
in a single session (70 FR 70261). The reduction recognizes that, for 
the second and subsequent imaging procedures, there are some 
efficiencies in clinical labor, supplies, and equipment time. In 
particular, certain clinical labor activities and supplies are not 
duplicated for subsequent procedures and, because equipment time and 
indirect costs are allocated based on clinical labor time, those would 
also be reduced accordingly.
    The imaging MPPR policy originally applied to computed tomography 
(CT) and computed tomographic angiography (CTA), magnetic resonance 
imaging (MRI) and magnetic resonance angiography (MRA), and ultrasound 
services within 11 families of codes based on imaging modality and body 
region. When we adopted the policy in CY 2007, we stated that we 
believed efficiencies were most likely to occur when imaging procedures 
are performed on contiguous body areas because the patient and 
equipment have already been prepared for the second and subsequent 
procedures, potentially yielding resource savings in areas such as 
clerical time, technical preparation, and supplies (70 FR 45850). The 
MPPR policy originally applied only to procedures furnished in a single 
session involving contiguous body areas within a family of codes, not 
across families. Additionally, while the MPPR policy applies to TC-only 
services and to the TC of global services, it does not apply to 
professional component (PC) services.
    Under the current imaging MPPR policy, full payment is made for the 
TC of the highest paid procedure, and payment is reduced by 50 percent 
of the TC for each additional procedure when an MPPR scenario applies. 
We originally planned to phase in the imaging MPPR policy over a 2-year 
period, with a 25 percent reduction in CY 2006 and a 50 percent 
reduction in

[[Page 73072]]

CY 2007 (70 FR 70263). However, the Deficit Reduction Act of 2005 (DRA) 
(Pub. L. 109-171) amended the statute to place a cap on the PFS payment 
amount for most imaging procedures at the amount paid under the 
hospital outpatient prospective payment system (OPPS). In view of the 
new OPPS payment cap added by the DRA, we decided in the PFS final rule 
with comment period for 2006 that it would be prudent to retain the 
imaging MPPR at 25 percent while we continued to examine the 
appropriate payment levels (71 FR 69659). The DRA also exempted reduced 
expenditures attributable to the imaging MPPR policy from the PFS 
budget neutrality provision. Effective July 1, 2010, section 3135(b) of 
the Affordable Care Act amended the statute to increase the MPPR on the 
TC of imaging services under the policy established in the CY 2006 PFS 
final rule with comment period from 25 to 50 percent, and exempted the 
reduced expenditures attributable to this further change from the PFS 
budget neutrality provision.
    In the July 2009 GAO report entitled, ``Medicare Physician 
Payments: Fees Could Better Reflect Efficiencies Achieved when Services 
are Provided Together,'' the GAO recommended that we take further steps 
to ensure that fees for services paid under the PFS reflect 
efficiencies that occur when services are furnished by the same 
physician to the same beneficiary on the same day. The GAO recommended 
the following: (1) expanding the existing imaging MPPR policy for 
certain services to the PC to reflect efficiencies in physician work 
for certain imaging services; and (2) expanding the MPPR to reflect PE 
efficiencies that occur when certain nonsurgical, nonimaging services 
are furnished together. The GAO report also encouraged us to focus on 
service pairs that have the most impact on Medicare spending.
    In its March 2010 report, MedPAC noted its concerns about 
mispricing of services under the PFS. MedPAC indicated that it would 
explore whether expanding the unit of payment through packaging or 
bundling would improve payment accuracy and encourage more efficient 
use of services.
    In the CYs 2009 and 2010 PFS proposed rules (73 FR 38586 and 74 FR 
33554, respectively), we stated that we planned to analyze nonsurgical 
services commonly furnished together (for example, 60 to 75 percent of 
the time) to assess whether an expansion of the MPPR policy could be 
warranted. MedPAC encouraged us to consider duplicative physician work, 
as well as PE, in any expansion of the MPPR policy.
    Section 1848(c)(2)(K) of the Act (as added by section 3134(a) of 
the Affordable Care Act) specifies that the Secretary shall identify 
potentially misvalued codes by examining multiple codes that are 
frequently billed in conjunction with furnishing a single service, and 
review and make appropriate adjustments to their relative values. As a 
first step in applying this provision, in the CY 2010 final rule with 
comment period, we implemented a limited expansion of the imaging MPPR 
policy to additional combinations of imaging services.
    Effective January 1, 2011 the imaging MPPR applies regardless of 
code family; that is, the policy applies to multiple imaging services 
furnished within the same family of codes or across families. This 
policy is consistent with the standard PFS MPPR policy for surgical 
procedures that does not group procedures by body region. The current 
imaging MPPR policy applies to CT and CTA, MRI and MRA, and ultrasound 
procedure services furnished to the same patient in the same session, 
regardless of the imaging modality, and is not limited to contiguous 
body areas.
    We note that section 1848(c)(2)(B)(v)(VI) of the Act (as added by 
section 3135(b) of the Affordable Care Act) specifies that reduced 
expenditures attributable to the increase in the imaging MPPR from 25 
to 50 percent (effective for fee schedules established beginning with 
2010 and for services furnished on or after July 1, 2010) are excluded 
from the PFS budget neutrality adjustment. That is, the reduced 
payments for code combinations within a family of codes (contiguous 
body areas) are excluded from budget neutrality. However, this 
exclusion only applies to reduced expenditures attributable to the 
increase in the MPPR percentage from 25 to 50 percent, and not to 
reduced expenditures attributable to our policy change regarding 
additional code combinations across code families (non-continguous body 
areas) that are subject to budget neutrality under the PFS
    The complete list of codes subject to the CY 2012 MPPR policy for 
diagnostic imaging services is included in Addendum F.
    As a further step in applying the provisions of section 3134(a) of 
the Affordable Care Act, effective January 1, 2011, we implemented an 
MPPR for therapy services. The MPPR applies to separately payable 
``always therapy'' services, that is, services that are only paid by 
Medicare when furnished under a therapy plan of care. Contractor-priced 
codes, bundled codes, and add-on codes are excluded because an MPPR 
would not be applicable for ``always therapy'' services furnished in 
combination with these codes. The complete list of codes subject to the 
MPPR policy for therapy services is included in Addendum H.
    In the CY 2011 proposed rule (75 FR 44075), we proposed to apply a 
50 percent payment reduction to the PE component of the second and 
subsequent therapy services for multiple ``always therapy'' services 
furnished to a single patient in a single day. However, in response to 
public comments, in the CY 2011 PFS final rule with comment period (75 
FR 73232), we adopted a 25 percent payment reduction to the PE 
component of the second and subsequent therapy services for multiple 
``always therapy'' services furnished to a single patient in a single 
day.
    Subsequent to publication of the CY 2011 PFS final rule with 
comment period, section 3 of the Physician Payment and Therapy Relief 
Act of 2010 (Pub. L. 111-286) revised the payment reduction percentage 
from 25 percent to 20 percent for therapy services furnished in office 
settings. The payment reduction percentage remains at 25 percent for 
services furnished in institutional settings. Section 4 of the 
Physician Payment and Therapy Relief Act of 2010 exempted the reduced 
expenditures attributable to the therapy MPPR policy from the PFS 
budget neutrality provision. Under our current policy as amended by the 
Physician Payment and Therapy Relief Act, for institutional services, 
full payment is made for the service or unit with the highest PE and 
payment for the PE component for the second and subsequent procedures 
or additional units of the same service is reduced by 25 percent. For 
non-institutional services, full payment is made for the service or 
unit with the highest PE and payment for the PE component for the 
second and subsequent procedures or additional units of the same 
service is reduced by 20 percent.
    The MPPR policy applies to multiple units of the same therapy 
service, as well as to multiple different services, when furnished to 
the same patient on the same day. It applies to services furnished by 
an individual or group practice or ``incident to'' a physician's 
service. The MPPR applies when multiple therapy services are billed on 
the same date of service for one patient by the same practitioner or 
facility under the same National Provider Identifier (NPI), regardless 
of whether the services are furnished in one therapy discipline or 
multiple

[[Page 73073]]

disciplines, including, physical therapy, occupational therapy, or 
speech-language pathology.
    The MPPR policy applies in all settings where outpatient therapy 
services are paid under Part B. This includes both services paid under 
the PFS that are furnished in the office setting, as well as to 
institutional services paid at the PFS rates that are furnished by 
outpatient hospitals, home health agencies, comprehensive outpatient 
rehabilitation facilities (CORFs), and other entities that are paid 
under Medicare Part B for outpatient therapy services.
    In its June 2011 Report to the Congress, MedPAC further discussed 
its concern about the significant growth in ancillary services, 
specifically services for which physicians can self-refer under the in 
office ancillary exceptions list for the Ethics in Patient Referrals 
Act (also known as the Stark Law) including imaging, other diagnostic 
tests, and therapeutic services such as physical therapy and radiation 
therapy. MedPAC argues, in its June 2011 Report, that inaccurate 
pricing has played a role in this growth, and that there are additional 
efficiencies to be achieved in pricing imaging services notwithstanding 
a series of payment adjustments for imaging services over the past 
several years. MedPAC specifically recommended a multiple procedure 
payment reduction to the professional component of diagnostic imaging 
services provided by the same practitioner in the same session.
b. CY 2012 Expansion of the MPPR Policy to the Professional Component 
of Advanced Imaging Services
    Over the past few years, as part of the potentially misvalued 
service initiative, the AMA RUC has examined several services that are 
billed together 75 percent or more of the time as part of the 
potentially misvalued service initiative. In several cases, the AMA 
RUC-recommended work values for new codes that describe the combined 
services, and those recommended values reflected the expected 
efficiencies. For example, for CY 2011, the AMA RUC valued the work for 
a series of new codes that describe CT of the abdomen and pelvis, 
specifically CPT codes:
     74176 (Computed tomography, abdomen and pelvis; without 
contrast material).
     74177 (Computed tomography, abdomen and pelvis; with 
contrast material).
     74178 (Computed tomography, abdomen and pelvis; without 
contrast material in one or both body regions, followed by with 
contrast material(s) and further sections in one or both body regions).
    We accepted the work values recommended by the AMA RUC for these 
codes in the CY 2011 PFS final rule with comment period (75 FR 73229). 
The recommended work values reflected an expected efficiency for the 
typical combined service that paralleled the reductions that would 
typically result from a MPPR adjustment. For example, in support of the 
recommended work value of 1.74 RVUs for 74176, the AMA RUC explained 
that the full value of 74150 (Computed tomography, abdomen; without 
contrast material) (Work RVU = 1.19) plus half the value of 72192 
(Computed tomography, pelvis; without contrast material) (\1/2\ Work 
RVU = 0.55) equals 1.74 work RVUs. The AMA RUC stated that its 
recommended valuation was appropriate even though the combined current 
work RVUs for of 74150 and 72192 would result in a total work RVU of 
2.28. Furthermore, the AMA RUC validated its estimation of work 
efficiency for the combined service by comparing the code favorably 
with the work value associated with 74182 (Magnetic resonance, for 
example, proton imaging, abdomen; with contrast material(s)) (Work RVU 
= 1.73), which has a similar intra-service time, 20 minutes. Thus, we 
believe our current and final MPPR formulations are consistent with the 
AMA RUC's work to review code pairs for unaccounted-for efficiencies 
and to appropriately value comprehensive codes for a bundle of 
component services.
    We continue to believe that there may be additional imaging and 
other diagnostic services for which there are efficiencies in work when 
furnished together, resulting in potentially excessive payment for 
these services under current policy. MedPAC also made this same 
observation in their recent June 2011 Report to the Congress.
    As noted, Medicare has a longstanding policy to reduce payment by 
50 percent for the second and subsequent surgical procedures and 
nuclear medicine diagnostic procedures furnished to the same patient by 
the same physician on the same day.
    In continuing to apply the provisions of section 3134(a) of the 
Affordable Care Act, for CY 2012 we proposed to expand the MPPR to the 
PC of Advanced Imaging Services (CT, MRI, and Ultrasound), that is, the 
same list of codes to which the MPPR on the TC of advanced imaging 
already applies (see Addendum F). Thus, the MPPR would apply to the PC 
and the TC of the codes. Specifically, we proposed to expand the 50 
percent payment reduction currently applied to the TC to apply also to 
the PC of the second and subsequent advanced imaging services furnished 
in the same session. Full payment would be made for the PC and TC of 
the highest paid procedure, and payment would be reduced by 50 percent 
for the PC and TC for each additional procedure furnished to the same 
patient in the same session. This proposal was based on the expected 
efficiencies in furnishing multiple services in the same session due to 
duplication of physician work--primarily in the pre- and post-service 
periods, with smaller efficiencies in the intra-service period.
    The proposal is consistent with the statutory requirement for the 
Secretary to identify, review, and adjust the relative values of 
potentially misvalued services under the PFS as specified by section 
3134(a) of the Affordable Care Act. The proposal is also consistent 
both with our longstanding policy on surgical and nuclear medicine 
diagnostic procedures, which apply a 50 percent reduction to second and 
subsequent procedures. Furthermore, it is responsive to continued 
concerns about significant growth in imaging spending, and to MedPAC 
(March 2010, June 2011) and GAO (July 2009) recommendations regarding 
the expansion of MPPR policies under the PFS to account for additional 
efficiencies.
    Finally, as noted, the proposal is consistent with the AMA RUC's 
recent methodology and rationale in valuing the work for a combined CT 
of the pelvis (CPT codes 72192, 72193 and 72194), and abdomen (CPT 
codes 74150, 74160 and 74170) where the AMA RUC assumed the work 
efficiency for the second service was 50 percent. Savings resulting 
from this proposal would be redistributed to other PFS services as 
required by the general statutory PFS budget neutrality provision.
    Comment: Overall, most commenters opposed the expansion of the 
imaging MPPR policy to the PC. While many commenters acknowledged that 
there may be minimal efficiencies in the PC of second and subsequent 
procedures, they stated a 50 percent reduction was excessive. 
Commenters who agreed that some efficiencies exist indicated that 
activities with potential for duplication included: Review of medical 
history and prior imaging studies; review of the final report; and 
discussion of findings with the referring physician.
    In contrast, a few commenters, including MedPAC, supported the 
proposal. MedPAC indicated that the proposal is consistent with the 
recommendation from its June 2011

[[Page 73074]]

Report to the Congress; noted that recent recommendations from the AMA 
RUC offer additional support; and agreed with a proposal to align the 
MPPR policy for the technical and professional portions of an imaging 
service.
    Commenters opposed to our proposal raised several issues about the 
basis for CMS' proposed 50 percent reduction to the professional 
component for second and subsequent imaging services Many commenters 
cited a recent article entitled, ``Professional Component Payment 
Reductions for Diagnostic Imaging Examinations When More Than One 
Service Is Rendered by the Same Provider in the Same Session: An 
Analysis of Relevant Payment Policy,'' published June 29, 2011, in the 
Journal of the American College of Radiology''. The article argues that 
efficiencies within the professional component of advanced diagnostic 
imaging services including radiography and fluoroscopy, ultrasound, 
nuclear medicine, CT, and MRI are minimal and vary greatly across 
modalities. The article was authored by a group of radiologists that 
also participate in AMA RUC activities. They reached their conclusion 
after a review of the work for codes in the AMA RUC Resource Based 
Relative Value Scale Data Manager database. The authors focused their 
review on pre-service and post-service activities and did not review 
intra-service activities. The authors point out that pre- and post-
service time is not a significant portion of time for imaging studies, 
unlike surgical procedures. The maximum percentage of potentially 
duplicated pre-service and post-service activity that this team 
identified ranged from 19 percent for nuclear medicine to 24 percent 
for ultrasound. The authors found a maximum percentage work reduction 
by modality ranging from 4.32 percent for CT to 8.15 percent for 
ultrasound. This translates to a maximum reduction in the professional 
component of only 2.96 percent for CT to 5.45 percent for ultrasound.
    Commenters point out that neither GAO nor MedPAC supported a 
specific percentage reduction, but recommended that CMS conduct a 
review and analysis to determine the extent of efficiencies associated 
with the PC of multiple imaging services, and suggested that such 
efficiencies may vary by modality. Commenters highlighted several 
perceived deficiencies in the GAO's technical methodology, including a 
failure to distinguish between pre- post- and intra- physician work 
intensity, failure to recognize the wide variability in pre- and post- 
service time allocation among varied imaging services which makes a 
blanket policy more imprecise, and failure to consider clinical 
practice. Commenters argued that CMS provided no analysis to support 
the proposed MPPR level of 50 percent and did not identify potential 
areas of duplication in the pre-, post- and intra-service periods.
    Commenters expressed views regarding our reference to the AMA RUC 
valuation of the work for bundled codes for CT of the pelvis and 
abdomen. Many commenters did not believe it was appropriate to propose 
a 50 percent MPPR to the PC for all advanced imaging services based on 
the AMA RUC's 50 percent reduction in work RVUs when valuing the 
combined pelvis and abdomen CT codes. Commenters indicated that the 
bundled code pair is not representative of most code pairs in that it 
is a focused contiguous body area using the same modality with 
significant overlap in the regions evaluated. Commenters noted that the 
AMA RUC has not consistently found a 50 percent reduction in physician 
work when imaging services are performed together.
    The AMA RUC also objected to CMS using its recommended work values 
for the CT of Abdomen/Pelvis to substantiate our proposal. The AMA RUC 
asserted that it developed the recommended physician work values by 
estimating the magnitude of the physician work of the surveyed codes 
relative to physician work values of MRI, MRA, and evaluation and 
management services. When valuing the code for CT of Abdomen/Pelvis, 
the AMA RUC did not believe that the recommended physician work RVUs 
should be lower than the total RVUs resulting from applying a 50 
percent MPPR to the professional component of the second and subsequent 
imaging service in the CT Abdomen/Pelvis code pair. The AMA RUC pointed 
out that the committee arrived at the recommended values using 
magnitude estimation and did not sum values for the component codes as 
suggested by CMS in the proposed rule.
    Some commenters acknowledged that there are some efficiencies in 
the combined CT of the abdomen and pelvis, noting that overlapping 
images on a CT of the abdomen and pelvis may require less scrutiny. 
Commenters also noted that the physician has to review the patient 
history and provide dictation only once for multiple scans. Other 
commenters rejected the idea that there are efficiencies in the CT of 
the abdomen and pelvis. Commenters indicated that the service included 
only about 75 images 5 years ago. Today, it includes approximately 375 
images, with the addition of thinner slice images and multiplanar 
reformatting.
    Many commenters maintained that the proposed 50 percent MPPR for 
the PC of advanced imaging services is based on erroneous assumptions 
and a misunderstanding of the practice of medicine. These commenters 
argued that, generally, patients who are having multiple imaging 
studies on the same day tend to be patients who are seriously ill or 
injured patients, including cancer, trauma and stroke patients who 
invariably have significantly more complex pathology, requiring more 
time, rather than less. In some cases, the image using an initial 
modality may be inconclusive, requiring use of another imaging 
modality. Commenters argued that there are no efficiencies in physician 
work for interpretation of multiple advanced imaging scans for trauma 
and cancer patients, where images are less likely to be of contiguous 
anatomic areas.
    Commenters maintained that, on average, studies with comparisons 
take longer than those that do not have comparison studies. The 
radiologists must look at more films and, when abnormalities are 
present, must compare each finding to the previous exam. The more 
studies there are, the more time it takes to interpret each one. 
Commenters asserted that radiologists are morally and professionally 
obligated to spend an equal amount of time, effort, and skill on 
interpreting images, irrespective of whether previous examinations have 
been performed on the same patient on the same day.
    Finally, several commenters argued that technological advances in 
imaging have increased the intra-service work requiring radiologists to 
review many more images and more complex images than when the services 
were originally valued. They argue that contrary to the CMS proposal, 
clinical practice has become more time consuming because of the need to 
review hundreds of images per study compared to earlier imaging methods 
which took far fewer images. In addition to axial images, there 
frequently are coronal, sagittal, and oblique sequences as well as 
maximal intensity 3D images with each study. Images of non-contiguous 
body areas, for example, a CT of the brain and abdomen, are unrelated 
and are often read by different specialists, each separately requiring 
dedicated time for interpretation. Further, the search patterns used to 
identify possible issues in the images are different; technical aspects 
of viewing non-contiguous images are different; and the mental process 
used to formulate differential diagnoses are often unrelated. In some 
cases, such as when it is necessary to re-review prior images, 
commenters stated

[[Page 73075]]

that more time may be required compared to the time required to review 
a single image.
    Response: We appreciate the many comments submitted on this 
proposal. However, we continue to believe that some level of 
duplication exists in the PC service for second and subsequent advanced 
imaging services. While our initial proposal was developed with 
reference to existing MPPR policies and supported by the AMA RUC 
valuation of new bundled CT imaging codes, as commenters recommended, 
we have performed additional analysis for this final rule with comment 
period. Specifically, we have reviewed the vignettes in the AMA RUC 
database for 12 high volume code pairs where vignettes were available. 
The codes we reviewed appear in Table 8 and constituted about 30 
percent of utilization for the advanced imaging codes performed on the 
same day in CY 2010 claims data. Although our analysis did not include 
code pairs with different modalities, we note that our claims data 
indicate that such code pairs represent only 3 percent of expenditures 
for advanced imaging codes. Therefore, we do not believe the typical 
multiple advanced imaging scenario involves more than one modality. We 
also note that our analysis did not include ultrasound code pairs as 
there are no vignettes or specific physician times for these services 
in the AMA RUC database. To identify potential duplication in the PC of 
the code combinations for which vignettes and physician times were 
available, we performed a clinical assessment to identify the level of 
duplication in the typical case and assigned a reduction percentage of 
either 0, 25, 50, 75 or 100 to each vignette component in the pre-, 
post-, and intra-service periods.
    Our claims analysis revealed that the majority of multiple imaging 
studies were for contiguous anatomic areas including thorax and 
abdomen/pelvis, and head/brain and neck/spine, and utilized the same 
modality. This suggests that multiple studies are typically performed 
to view a single underlying pathology that spans either multiple 
regions or lies in the region of overlap where a single study might be 
suboptimal. If the reasons for the studies were relatively unrelated, 
the observed association between contiguous areas and same modality 
would not exist. Conversely, the observation of this firm association 
between multiple studies on the same day implies that there are some 
efficiencies in interpreting history; predicting pathology; selecting 
protocols; reviewing scout and technique scans; focusing on particular 
tissue types and imaging windows; reviewing overlapping fields; 
reporting preliminary if not final results; and follow-up discussions 
with patients, staff and physicians. In contrast to the analysis 
published by the ACR, we found--
     Significant duplication in the pre-service work, which 
consists of reviewing patient history and any prior imaging studies, 
and determining the protocol and communicating that protocol with 
technologists;
     Significant duplication in the post-service work, which 
almost always consists of reviewing and signing a final report and 
discussing findings with the referring physician; and
     Moderate efficiencies in intra-service work. Specifically, 
supervising contrast (where appropriate), interpreting the examination 
and comparing it to other studies, and dictating the report for the 
medical record.
    In conclusion, our analysis showed that, after applying a reduction 
percentage to each vignette component for the second and subsequent 
scans, identified as the code(s) in the code pair with the lower 
professional component RVU, and adjusting for intensity differences 
between pre-service and post-service work and intra-service work, the 
total RVU reduction ranges from 27.3 to 43.1 percent for second and 
subsequent procedures in the 12 code pairs.
BILLING CODE 4120-01-P

[[Page 73076]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.012

BILLING CODE 4120-01-C

[[Page 73077]]

    Based on our further analysis and in response to comments, we 
believe that a 25 percent reduction would more appropriately capture 
the range of physician work efficiencies for second and subsequent 
imaging services furnished by the same physician (including physicians 
in the same group practice) to the same patient in the same session on 
the same day.
    Commenters expressed concerns that there is wide variation in the 
potential efficiencies among different code pairs that such variability 
precludes broad application of a single percentage reduction, and that 
establishing new combined codes is the only mechanism for capturing 
accurate payment, for multiple imaging services. In general, we believe 
that MPPR policies capture efficiencies when several services are 
furnished in the same session and that it is appropriate to apply a 
single percentage reduction to second and subsequent procedures to 
capture those efficiencies. Because of the myriad potential 
combinations of advanced imaging scans, establishing new combined codes 
for each combination of advanced imaging scans is unwieldy and 
impractical. An MPPR policy is not precise, but reflects efficiencies 
in the aggregate, such as common patient history, interpretation of 
multiple images involving the same patient and same anatomical 
structures, and, typically, same modality. Our analysis of the specific 
activities included in furnishing advanced imaging scans together 
supports a reduction between 27.3 and 43.1 percent. The implementation 
of a 25 percent reduction in the PC for second and subsequent imaging 
services furnished by the same physician in the same session is less 
than range of reductions we observed for second and subsequent scans in 
our analysis. Therefore, while we acknowledge that efficiencies may 
vary across code pairs, we believe that a 25 percent reduction in the 
PC is reasonable and supported by our analysis. We note that, as with 
many of our policies, we will continue to review this MPPR policy and 
refine it as needed in future years to ensure that we continue to 
provide accurate payments under the PFS.
    We disagree with commenters' assertions that there are no 
efficiencies in physician work for the interpretation of multiple 
advanced imaging scans for trauma and cancer patients. As noted 
previously, our analysis indicates that the typical multiple imaging 
case involves contiguous body areas, and only a very small percentage 
involve more than one modality. We note that this analysis included all 
claims data, including trauma and cancer patient imaging studies. In 
addition, we used conservative estimates of the reduction percentages 
for the observed efficiencies for second and subsequent procedures in 
our analysis. Finally, we believe there are efficiencies in work for 
all multiple imaging studies, including the review of medical history 
and prior imaging studies; contrast administration; review of the final 
report; and discussion of findings with the referring physician, 
regardless of the type of injury or patient's diagnosis.
    Concerning comparison studies, we note that when interpreting 
previous studies, the radiologist would interpret not just the prior 
image itself, but also the patient history or, at a minimum, the 
portfolio of similar available studies. While we understand that time 
spent reviewing prior studies adds work by requiring the radiologist to 
review such studies, we believe that the availability of prior studies 
may also reduce work by creating a baseline against which new images 
can be quickly compared.
    Commenters were also concerned with technological advances that may 
exponentially multiply the number of images that are produced in a 
single imaging session. While we agree with commenters that technology 
has multiplied the number of images produced, we note that that same 
technology has vastly improved viewability. The use of shuttles to scan 
through a series of images along imaged axis, 3-D rendering to allow 
visualization, rotation and zoom, and modeling to enhance suspect 
findings and increase the utility of pattern recognition all exist to 
improve the efficiency of data extraction that at one time had to be 
visualized entirely in the mind of the radiologist from a series of 
side-by-side flat images. Therefore, we believe that, in the aggregate, 
technological advances in imaging have not significantly increased the 
work of interpretation. Efficiencies resulting from technological 
advances are even more evident in cases of multiple contiguous images, 
where rendering allows joystick maneuvering through a single continuous 
image that may be billed independently, but which may be acquired as a 
single activity. Finally, we note that other commenters, and the study 
cited by the American College of Radiology, have acknowledged some 
efficiencies do exist and are not currently recognized in the coding 
and payment structure of these codes.
    Comment: The AMA RUC requested that CMS continue to support the 
activities of the joint CPT/RUC workgroup to identify services that can 
be bundled together into one comprehensive code and to make sure that 
this bundled code is valued appropriately. The AMA RUC noted that it 
utilizes Medicare claims data to ensure that it understands what 
services are reported in conjunction with the codes that are under 
their review, and to ensure that there is no duplication of pre-service 
and post-service work, or in practice costs. The AMA RUC maintains that 
any duplication in the PC that may exist when performing two or more 
imaging services has already been removed from the individual codes as 
it is assumed that there are a certain number of instances for which 
one service will be furnished and reported with another service. The 
AMA RUC maintains that further expansion of the MPPR to the PC would 
result in unwarranted and unfair reductions to the payment rate. The 
AMA RUC has found, through review of survey data, that when codes are 
commonly reported together (that is, more than 75 percent of the time), 
the duplication in physician work for the second or subsequent services 
is not consistently 50 percent, and may range from anywhere between 0 
percent and 100 percent. The AMA RUC views its current project to 
address efficiencies on an individual basis with bundled codes to be a 
fair and consistent process. Commenters noted that thirteen new bundled 
CPT codes have been developed and valued by the AMA RUC so far, and 
more bundled codes are being developed for the 2013 and 2014 CPT 
cycles. Therefore, the AMA RUC believes its efforts should more than 
address the GAO recommendation to systematically review services 
commonly furnished together, and that CMS' implementation of the 
imaging MPPR policy for the professional component of advanced imaging 
services is not warranted at this time.
    Response: The imaging MPPR is not intended to supersede the AMA RUC 
process of developing recommended values for services described by CPT 
codes. We appreciate the work by the AMA RUC and encourage them to 
continue examining code pairs for duplication based upon the typical 
case, and appropriately valuing new comprehensive codes for bundled 
services that are established by the CPT Editorial Panel. We view the 
AMA RUC process and the MPPR policy as complimentary and equally 
reasonable means to the appropriate valuation and payment for services 
under the PFS. Codes subject to the MPPR that are subsequently bundled 
would no longer be subject to the MPPR when billed alone in a single 
session. At the same

[[Page 73078]]

time, the adoption of the MPPR for the PC of advanced imaging services 
will address duplications in work to ensure that multiple imaging 
services are paid more appropriately. As noted previously, we believe 
that an MPPR policy addresses work efficiencies present when more than 
one advanced imaging service is performed in the same session, and that 
creating new comprehensive codes to capture the myriad of unique 
combinations of advanced imaging services that could be performed in 
the same session would be unwieldy and impractical. In addition, we 
believe that the expansion of the MPPR policy for advanced imaging 
services to the PC is consistent with both the GAO and MedPAC 
recommendations. We note that as more code combinations are bundled 
into a single complete service reported by one CPT code, the MPPR 
policy would no longer apply for the combined services. For example, 
the MPPR no longer applies when the single code is billed for a 
combined CT of the pelvis and abdomen performed in the same session.
    Comment: In the proposed rule, we cited section 3134 of the 
Affordable Care Act, which requires the Secretary identify potentially 
misvalued codes by examining multiple codes that are frequently billed 
in conjunction with furnishing a single service, and to review and make 
appropriate adjustments to their relative values. A commenter believed 
that we inappropriately relied on this authority to justify the 
expansion of the MPPR to PC services. The commenter noted that we 
stated in the PFS final rule for 2011 that ``[b]ecause of the different 
pieces of equipment used for CT/CTA, MRI/MRA, and ultrasound 
procedures, it would be highly unlikely that a single practitioner 
would furnish more than one imaging procedure involving two different 
modalities to one patient in a single session where the proposed MPPR 
would apply.'' Therefore, the commenter concluded that we should not 
rely on the authority under section 3134 of the Affordable Care Act to 
adjust payment for ``codes that are frequently billed in conjunction 
with furnishing a single service'' as the basis to expand the MPPR 
policy to procedures that we conceded are rarely billed together.
    Response: We believe that the application of the MPPR to the PC of 
second and subsequent advanced imaging services furnished in the same 
session to the same patient is fully consistent with section 
1848(c(2)(K) of the Act (as added by section 3134 of the Affordable 
Care Act). Additionally, we believe the proposed MPPR is consistent 
with our authority under section 1848(c)(2)(B) of the Act which 
requires us to review the relative and make adjustments to values for 
physicians' services at least once every 5 years, and with our 
authority to establish ancillary policies under section 1848(c)(4) of 
the Act. As noted previously, we have had several MPPR policies in 
place for many years before the enactment of section 3134 of the 
Affordable Care Act.
    As explained previously, section 1848(c)(2)(K)(i) of the Act 
requires the Secretary to identify services within several specific 
categories as being potentially misvalued, and to make appropriate 
adjustments to their relative values. One of the specific categories 
listed under section 1834(c)(2)(K)(ii) of the Act is ``multiple codes 
that are frequently billed in conjunction with furnishing a single 
service.''
    Therefore, we do not agree with the commenters that the MPPR policy 
undermines the goals of the Affordable Care Act. It appears the 
commenter may have misunderstood the point of the quoted statement from 
the proposed rule that, ``[b]ecause of the different pieces of 
equipment used for CT/CTA, MRI/MRA, and ultrasound procedures, it would 
be highly unlikely that a single practitioner would furnish more than 
one imaging procedure involving two different modalities to one patient 
in a single session where the proposed MPPR would apply.'' The 
commenter is correct that we conceded, in the circumstance where two 
different modalities are used, it is unlikely that two advanced imaging 
codes would be billed by a single physician for a single patient in a 
single session. However, the point of this statement was to indicate 
that the proposed MPPR would not apply in the vast majority of these 
situations. Although there remains the remote possibility that the MPPR 
would apply in a scenario where the codes for multiple advanced imaging 
services are not ``frequently billed in conjunction with furnishing a 
single service,'' we believe this would be exceedingly rare. Moreover, 
we would expect there to be some level of efficiencies in work even in 
these cases. As we indicated in the CY 2011 PFS final rule with comment 
period (75 FR 73231), application of a general MPPR policy to numerous 
imaging service combinations may result in an overestimate of 
efficiencies in some cases and an underestimate in others. But this can 
be true for any service paid under the PFS, and we believe it is 
important to establish a general policy to pay appropriately for the 
typical service or services furnished. Given that, based on our review 
of CY 2010 claims data, 97 percent of second and subsequent advanced 
imaging services furnished to the same patient on the same day involved 
the use of the same imaging modality, and that some of the cases that 
did involve different modalities might have been furnished by different 
physicians in different group practices (in which case the MPPR would 
not apply), we do not believe it is necessary to adjust our MPPR policy 
to address an uncommon scenario. Therefore, we believe the MPPR policy 
is fully consistent with section 1848(c)(2)(K) of the statute, as added 
by section 3134(a) of the Affordable Care Act, and that the policy 
fulfills several of our key statutory obligations by more appropriately 
valuing combinations of imaging services furnished to patients and paid 
under the PFS.
    Comment: Commenters indicated that contemporary radiology is not 
designed to distinguish between imaging procedures performed during the 
``same'' or ``different'' sessions with any degree of reliability. 
There is no practical method to reliably and efficiently make this 
distinction. This challenge is made even more difficult when the issue 
of ``same'' versus ``different'' interpreting physician(s) is taken 
into account. The process will also be challenging to auditors who will 
likely suggest that the burden is on the practice to prove claims 
submitted with a -59 modifier actually occurred in a separate session. 
Commenters are concerned that it is unclear how this can be efficiently 
documented, and request that this be considered before any new policy 
is adopted.
    Commenters noted that imaging tests utilizing different modalities 
are rarely performed in the same session. For example, a patient may 
undergo an ultrasound, which would be interpreted by the physician to 
determine whether the patient requires a CT for further diagnostic 
evaluation. The physician supervises and/or performs and interprets 
each test separately, at different times, and speaks to the patient 
about the results of each test on separate occasions during the 
patient's visit. Also, separate written reports are required for each 
test.
    Commenters further noted that in multiple trauma cases, the same 
radiologist would not interpret the entire series of exams. In 
addition, there are cases when a radiologist determines upon review 
that X-rays were insufficient to determine the problem and, therefore, 
recommends another type of imaging study be performed. The same 
radiologist may review the results of this second imaging test for the 
same

[[Page 73079]]

patient later in the same day. In this case, the radiologist needs to 
complete an entire dictation to reflect the subsequent study and 
provide his professional interpretation. Commenters specifically asked 
whether the MPPR would apply when--
     A physician does not read both scans together, for 
example, in emergency situations even though both scans were performed 
in the same session;
     Two physicians with different specialties each read a 
separate scan of a patient, though both scans were taken during the 
same session; and
     Physicians are in the same group practice.
    Response: The MPPR for the PC of advanced imaging services applies 
to procedures furnished to the same patient, in the same session, on 
the same day. For purposes of the MPPR on the PC, scans interpreted at 
widely different times (such as in the emergency situation noted) would 
constitute separate sessions, even though the scans themselves were 
conducted in the same session and the MPPR on the TC would apply. We 
further recognize that in some cases, imaging tests utilizing different 
modalities may be conducted in separate sessions for the TC service, 
such as when the patient must be moved to another floor of the 
hospital; however, the PC services in such cases may, or may not, be 
furnished in separate sessions. As with the MPPR for multiple surgery, 
the MPPR on the PC for advanced imaging services applies in the case of 
multiple procedures furnished by a single physician or by multiple 
physicians in the same group practice. As a general policy, however, 
when multiple scans are conducted on a patient in the same session, we 
would generally consider the interpretations of those scans to be 
furnished in the same session, including cases when furnished by 
different physicians in the same group practice. In cases where the 
physician demonstrates the medical necessity of furnishing 
interpretations in separate sessions, use of the -59 modifier would be 
appropriate. We recognize that it may not always be a simple matter to 
determine whether a service was furnished in the ``same'' session, 
particularly in the case of the PC. The physician will need to exercise 
judgment to determine when it is appropriate to use the -59 modifier 
indicating separate sessions. We do not expect use of the modifier to 
be a frequent occurrence.
    Comment: Some commenters expressed concern that the proposal may 
create an incentive to bypass ultrasound and simply order an advanced 
imaging procedure because, as the lower cost modality, ultrasound 
payment would be reduced. Another commenter indicated that CMS was 
proposing to include ultrasound under the definition of advanced 
imaging services for application of the MPPR, noting that this 
conflicts with the statutory definition of advanced imaging services as 
MRI, CT, PET and nuclear cardiology.
    Response: Clearly, we do not intend the MPPR to encourage 
radiologists to forego ultrasound imaging in favor of advanced imaging 
modalities. We trust that radiologists will continue to utilize the 
modality or modalities that is/are both medically necessary and most 
appropriate, rather than use payment considerations to dictate the 
modality.
    We believe the term ``advanced imaging'' has confused commenters 
because this term has been used to define different sets of imaging 
services for different Medicare initiatives. We have not revised the 
definition of advanced imaging services that we have used for the 
imaging MPPR policy regarding the TC of the second and subsequent 
imaging services Since 2006, for payment under the PFS, the imaging 
MPPR for the TC has included CT, MRI and ultrasound. While ultrasound 
services are included in both the existing imaging MPPR for the TC and 
in the MPPR policy we are finalizing for the PC beginning in CY 2012, 
we do not consider ultrasound services to be advanced imaging 
procedures for purposes of accreditation. Section 135(a) of the 
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) 
(Pub. L. 110-275) required the Secretary to designate organizations to 
accredit suppliers, including but not limited to physicians, non-
physician practitioners and Independent Diagnostic Testing Facilities 
that furnish the technical component (TC) of advanced diagnostic 
imaging services, which include MRI, CT, and nuclear medicine imaging 
such as positron emission tomography (PET). The MIPPA provision 
expressly excludes ultrasound, X-ray, and fluoroscopy from this 
requirement.
    Comment: Commenters indicated that CMS' proposed MPPR policy for 
the PC would result in a payment reduction that would adversely affect 
both the quality of care and access to care; shift imaging to 
hospitals; jeopardize the integrated, community-based care model; is 
counter-productive to the concept of pay for quality performance; and 
will encourage partial studies to be done over several different 
visits, which is inefficient for everyone involved and detrimental to 
patient care. Several commenters did not condone such an unprofessional 
response, but were concerned that practitioners might begin to 
circumvent this payment policy.
    Response: We have no reason to believe that appropriately valuing 
services for payment under the PFS by revising payment to reflect 
duplication in the PC of multiple imaging services would negatively 
impact quality of care; jeopardize the integrated, community-based care 
model; be counter-productive to the concept of pay for quality 
performance; or limit patients' access to medically reasonable and 
necessary imaging services. We have no evidence to suggest any of the 
adverse impacts identified by the commenters have resulted from the 
implementation of the MPPR on the TC of imaging in 2006. In fact, to 
the contrary, MedPAC's analysis in its June 2011 report indicates there 
has been continued high annual growth in the use of imaging.
    With respect to the ordering and scheduling of imaging services for 
Medicare beneficiaries, we require that Medicare-covered services be 
appropriate to patient needs. We would not expect the adoption of an 
MPPR for the PC of imaging services to result in imaging services being 
furnished on separate days by one provider merely so that the 
practitioner or provider may garner increased payment. We agree with 
the commenters who noted that such an unprofessional response on the 
part of practitioners would be inefficient and inappropriate. We will 
continue to monitor access to care and patterns of delivery for imaging 
services, with particular attention focused on identifying any changes 
in the delivery of same day imaging services that may be clinically 
inappropriate.
    Comment: Commenters maintained that utilization of advanced imaging 
has not declined since implementation of the MPPRs or the OPPS cap 
because the ordering physician has not been impacted by MPPR payment 
policy. Commenters indicated that in order to address issues of over-
utilization of imaging services, it would be more appropriate for CMS 
to address self-referral issues rather than continue to affect the 
payment for physicians performing and interpreting imaging studies 
through an MPPR or payment cap methodology.
    Response: We understand the commenters' concerns and will continue 
to explore ways to appropriately address overutilization. We note that 
in addition to the commmenters' reference to physician self-referral, 
in its June 2011 report, MedPAC noted that numerous factors

[[Page 73080]]

contribute to overutilization include mispricing of services under the 
PFS.
    In summary, after consideration of the public comments received, we 
are adopting our CY 2012 proposal to apply an MPPR to the PC of 
advanced imaging services, with a modification to apply a 25 percent 
reduction for CY 2012 rather than the 50 percent reduction we had 
proposed. We continue to believe that efficiencies exist in the PC of 
multiple imaging services, and we will continue to monitor code 
combinations for possible future adjustments to the reduction 
percentage applied through this MPPR policy.
    Specifically, beginning in CY 2012 we are adopting an MPPR that 
applies a 25 percent reduction to the PC of second and subsequent 
advanced imaging services furnished by the same physician to the same 
patient, in the same session, on the same day. We are proposing to add 
CPT 74174 (Computed tomographic angiography, abdomen and pelvis; with 
contrast material(s), including noncontrast images, if performed, and 
image postprocessing), which is a new code for CY 2012, to the imaging 
MPPR list. This code is being added on an interim final basis and is 
open to public comment on this final rule with comment period. We note 
that the MPPR will apply when the combined new procedure is furnished 
in conjunction with another procedure(s). The complete list of services 
subject to the MPPR for the PC of imaging services is the same as for 
the MPPR currently applied to the TC of imaging services, and is shown 
in Addendum F. The PFS budget neutrality provision is applicable to the 
new MPPR for the PC of advanced imaging services. Therefore, the 
estimated reduced expenditures for imaging services have been 
redistributed to increase payment for other PFS services. We refer 
readers to section IX.C. of this final rule with comment period for 
further discussion of the impact of this policy.
c. Further Expansion of MPPR Policies Under Consideration for Future 
Years
    Currently, the MPPR policies focus only on a select number of 
codes. We will be aggressively looking for efficiencies in other sets 
of codes during the coming years and will consider implementing more 
expansive multiple procedure payment reduction policies in CY 2013 and 
beyond. In the proposed rule, we invited public comment on the 
following MPPR policies which are under consideration. Any proposals 
would be presented in future rulemaking and subject to further public 
comment:
     Apply the MPPR to the TC of All Imaging Services. This 
approach would apply a payment reduction to the TC of the second and 
subsequent imaging services performed in the same session. Such an 
approach could define imaging consistent with our existing definition 
of imaging for purposes of the statutory cap on payment at the OPPS 
rate (including X-ray, ultrasound (including echocardiography), nuclear 
medicine (including positron emission tomography), magnetic resonance 
imaging, computed tomography, and fluoroscopy, but excluding diagnostic 
and screening mammography). Add-on codes that are always furnished with 
another service and have been valued accordingly could be excluded.
    Such an approach would be based on the expected efficiencies due to 
duplication of clinical labor activities, supplies, and equipment time. 
This approach would apply to approximately 530 HCPCS codes, including 
the 119 codes to which the current imaging MPPR applies. Savings would 
be redistributed to other PFS services as required by the statutory PFS 
budget neutrality provision.
     Apply the MPPR to the PC of All Imaging Services. This 
approach would apply a payment reduction to the PC of the second or 
subsequent imaging services furnished in the same encounter. Such an 
approach could define imaging consistent with our existing definition 
of imaging for the cap on payment at the OPPS rate. Add-on codes that 
are always furnished with another service and have been valued 
accordingly could be excluded.
    This approach would be based on efficiencies due to duplication of 
physician work primarily in the pre- and post-service periods, with 
smaller efficiencies in the intra-service period. This approach would 
apply to approximately 530 HCPCS codes, including the 119 codes to 
which the current imaging MPPR applies. Savings would be redistributed 
to other PFS services as required by the statutory PFS budget 
neutrality provision.
     Apply the MPPR to the TC of All Diagnostic Tests. This 
approach would apply a payment reduction to the TC of the second and 
subsequent diagnostic tests (such as radiology, cardiology, audiology, 
etc.) furnished in the same encounter. Add-on codes that are always 
furnished with another service and have been valued accordingly could 
be excluded.
    The approach would be based on the expected efficiencies due to 
duplication of clinical labor activities, supplies, and equipment time. 
The approach would apply to approximately 700 HCPCS codes, including 
the approximately 560 HCPCS codes subject to the OPPS cap. The savings 
would be redistributed to other PFS services as required by the 
statutory PFS budget neutrality provision.
    We received several comments concerning the future expansion of the 
MPPR. We will take the comments under consideration as we develop 
future proposals. Any proposals would be presented in future rulemaking 
and subject to further public comment.
d. Procedures Subject to the OPPS Cap
    We are proposing to add the new codes in Table 9 to the list of 
procedures subject to the OPPS cap, effective January 1, 2012. These 
procedures meet the definition of imaging under section 5102(b) of the 
DRA. These codes are being added on an interim final basis and are open 
to public comment in this final rule with comment period.

[[Page 73081]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.013

C. Overview of the Methodology for the Calculation of Malpractice RVUs

    Section 1848(c) of the Act requires that each service paid under 
the PFS be comprised of three components: work, PE, and malpractice. 
From 1992 to 1999, malpractice RVUs were charge-based, using weighted 
specialty-specific malpractice expense percentages and 1991 average 
allowed charges. Malpractice RVUs for new codes after 1991 were 
extrapolated from similar existing codes or as a percentage of the 
corresponding work RVU. Section 4505(f) of the BBA amended section 
1848(c) of the Act which required us to implement resource-based 
malpractice RVUs for services furnished beginning in 2000. Therefore, 
initial implementation of resource-based malpractice RVUs occurred in 
2000.
    The statute also requires that we review, and if necessary adjust, 
RVUs no less often than every 5-years. The first review and update of 
resource-based malpractice RVUs was addressed in the CY 2005 PFS final 
rule with comment period (69 FR 66263). Minor modifications to the 
methodology were addressed in the CY 2006 PFS final rule with comment 
period (70 FR 70153). In the CY 2010 PFS final rule with comment 
period, we implemented the second review and update of malpractice 
RVUs. For a discussion of the second review and update of malpractice 
RVUs, see the CY 2010 PFS proposed rule (74 FR 33537) and final rule 
with comment period (74 FR 61758).
    As explained in the CY 2011 PFS final rule with comment period, 
malpractice RVUs for new and revised codes effective before the next 
Five-Year Review of Malpractice (for example, effective CY 2011 through 
CY 2014, assuming that the next review of malpractice RVUs occurs for 
CY 2015) are determined either by a direct crosswalk to a similar 
source code or by a modified crosswalk to account for differences in 
work RVUs between the new/revised code and the source code (75 FR 
73208). For the modified crosswalk approach, we adjust (or ``scale'') 
the malpractice RVU for the new/revised code to reflect the difference 
in work RVU between the source code and the new/revised work value (or, 
if greater, the clinical labor portion of the fully implemented PE RVU) 
for the new code. For example, if the proposed work RVU for a revised 
code is 10 percent higher than the work RVU for its source code, the 
malpractice RVU for the revised code would be increased by 10 percent 
over the source code RVU. This approach presumes the same risk factor 
for the new/revised code and source code but uses the work RVU for the 
new/revised code to adjust for risk-of-service.

D. Geographic Practice Cost Indices (GPCIs)

1. Background
    Section 1848(e)(1)(A) of the Social Security Act requires us to 
develop separate Geographic Practice Cost Indices (GPCIs) to measure 
resource cost differences among localities compared to the national 
average for each of the three fee schedule components (that is, 
physician work, practice expense (PE), and malpractice). While 
requiring that the PE and malpractice GPCIs reflect the full relative 
cost differences, section 1848(e)(1)(A)(iii) of the Act requires that 
the physician work GPCIs reflect only one-quarter of the relative cost 
differences compared to the national average. In addition, section 
1848(e)(1)(G) of the Act sets a permanent 1.5 work GPCI floor for 
services furnished in Alaska beginning January 1, 2009, and section 
1848(e)(1)(I) of the Act sets a permanent 1.0 PE GPCI floor for 
services furnished in frontier States beginning January 1, 2011.
    Section 1848(e)(1)(E) of the Act provides for a 1.0 floor for the 
work GPCIs which was set to expire at the end of 2009 until it was 
extended through December 31, 2010 by section 3102(a) of the Affordable 
Care Act. Because the work GPCI floor was set to expire at the end of 
2010, the GPCIs published in Addendum E of the CY 2011 PFS final rule 
with comment period did not reflect the 1.0 physician work floor. 
However, section 1848(e)(1)(E) of the Act was amended on December 15, 
2010, by section 103 of the Medicare and Medicaid Extenders Act (MMEA) 
of 2010 (P.L. 111-309) to extend the 1.0 work GPCI floor through 
December 31, 2011. Appropriate changes to the CY 2011 GPCIs were made 
to reflect the 1.0 physician work floor required by section 103 of the 
MMEA. Since the work GPCI floor provided in section 1848(e)(1)(E) of 
the Act is set to expire prior to the implementation of the CY 2012 
PFS, the CY 2012 physician work GPCIs, and summarized geographic 
adjustment factors (GAFs), presented in this final rule with comment 
period do not reflect the 1.0 work GPCI floor. As required by section 
1848(e)(1)(G) and section 1848(e)(1)(I) of the Act, the 1.5 work GPCI 
floor for Alaska and the 1.0 PE GPCI floor for frontier States will be 
applicable in CY 2012. Moreover, the limited recognition of cost 
differences in employee compensation and office rent for the PE GPCIs, 
and the related hold harmless provision, required under section 
1848(e)(1)(H) of the Act was only applicable for CY 2010 and CY 2011 
(75 FR 73253) and, therefore, is no longer effective beginning in CY 
2012.
    Section 1848(e)(1)(C) of the Act requires us to review and, if 
necessary, adjust the GPCIs not less often than every 3 years. This 
section also specifies that if more than 1 year has elapsed since the 
last GPCI revision, we must phase in the adjustment over 2 years, 
applying only one-half of any adjustment in the first year.
    As noted in the CY 2011 PFS final rule with comment period (75 FR 
73252 through 73262), for the sixth GPCI update, we updated the data 
used to

[[Page 73082]]

compute all three GPCI components. Specifically, we utilized the 2006 
through 2008 Bureau of Labor Statistics (BLS) Occupational Employment 
Statistics (OES) data to calculate the physician work GPCIs (75 FR 
73252). In addition, we used the 2006 through 2008 BLS OES data to 
calculate the employee compensation sub-component of practice expense 
(75 FR 73255). Consistent with previous updates, we used the 2 bedroom 
residential apartment rent data from HUD (2010) at the 50th percentile 
as a proxy for the relative cost differences in physician office rents 
(75 FR 73256). Lastly, we calculated the malpractice GPCIs using 
malpractice premium data from 2006 through 2007 (75 FR 73256).
    Since more than 1-year had elapsed since the fifth GPCI update, as 
required by law, the sixth GPCI update changes are being phased in over 
a 2-year period. The current CY 2011 GPCIs reflect the first year of 
the transition. The final CY 2012 GPCIs reflect the full implementation 
with modifications reflecting the revisions contained in this final 
rule with comment period.
    The Affordable Care Act requires that we analyze the current 
methodology and data sources used to calculate the PE GPCI component. 
Specifically, section 1848(e)(1)(H)(iv) of the Act (as added by section 
3102(b) of the Affordable Care Act) requires the Secretary to ``analyze 
current methods of establishing practice expense adjustments under 
subparagraph (A)(i) and evaluate data that fairly and reliably 
establishes distinctions in the cost of operating a medical practice in 
different fee schedule areas.'' Section 1848(e)(1)(H)(iv) of the Act 
also requires that such analysis shall include an evaluation of the 
following:
     The feasibility of using actual data or reliable survey 
data developed by medical organizations on the costs of operating a 
medical practice, including office rents and non-physician staff wages, 
in different fee schedule areas.
     The office expense portion of the practice expense 
geographic adjustment; including the extent to which types of office 
expenses are determined in local markets instead of national markets.
     The weights assigned to each area of the categories within 
the practice expense geographic adjustment.
    In addition, the weights for different categories of practice 
expense in the GPCIs have historically matched the weights developed by 
the CMS Office of the Actuary (OACT) for use in the Medicare Economic 
Index (MEI), the measure of inflation used as part of the basis for the 
annual update to the physician fee schedule payment rates. In response 
to comments received on the CY 2011 Physician Fee Schedule proposed 
rule, however, we delayed moving to the new MEI weights developed by 
OACT for CY 2011 pending further analysis.
    Lastly, we asked the Institute of Medicine (IOM) to evaluate the 
accuracy of the geographic adjustment factors used for Medicare 
physician payment. IOM will prepare two reports for the Congress and 
the Secretary of the Department of Health and Human Services. The 
revised first report (Phase I), which includes supplemental 
recommendations to the initial IOM release of June1, 2011, was released 
on September 28, 2011, and includes an evaluation of the accuracy of 
geographic adjustment factors for the hospital wage index and the 
GPCIs, and the methodology and data used to calculate them. The second 
report, expected in spring 2012, will evaluate the effects of the 
adjustment factors on the distribution of the health care workforce, 
quality of care, population health, and the ability to provide 
efficient, high value care. Given the timing of the release of IOM's 
revised report, we are unable to address the full scope of the IOM 
recommendations in this final rule with comment period. These reports 
can be accessed on the IOM's Web site at: http://www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.
    The recommendations that relate to or would have an effect on the 
GPCIs included in IOM's revised Phase I report are summarized as 
follows:
     Recommendation 2-1: The same labor market definition 
should be used for both the hospital wage index and the physician 
geographic adjustment factor. Metropolitan statistical areas and 
Statewide non-metropolitan statistical areas should serve as the basis 
for defining these labor markets.
     Recommendation 2-2: The data used to construct the 
hospital wage index and the physician geographic adjustment factor 
should come from all health care employers.
     Recommendation 5-1: The GPCI cost share weights for 
adjusting fee-for-service payments to practitioners should continue to 
be national, including the three GPCIs (work, practice expense, and 
liability insurance) and the categories within the practice expense 
(office rent and personnel).
     Recommendation 5-2: Proxies should continue to be used to 
measure geographic variation in the physician work adjustment, but CMS 
should determine whether the seven proxies currently in use should be 
modified.
     Recommendation 5-3: CMS should consider an alternative 
method for setting the percentage of the work adjustment based on a 
systematic empirical process.
     Recommendation 5-4: The practice expense GPCI should be 
contructed with the full range of occupations employed in physicians' 
offices, each with a fixed national weight based on the hours of each 
occupation employed in physicians' offices nationwide.
     Recommendation 5-5: CMS and the Bureau of Labor Statistics 
should develop an agreement allowing the Bureau of Labor Statistics to 
analyze confidential data for the Centers for Medicare and Medicaid 
Services.
     Recommendation 5-6: A new source of information should be 
developed to determine the variation in the price of commercial office 
rent per square foot.
     Recommendation 5-7: Nonclinical labor-related expenses 
currently included under practice expense office expenses should be 
geographically adjusted as part of the wage component of the practice 
expense.
2. GPCI Revisions for CY 2012
    The revised GPCI values we proposed were developed by a CMS 
contractor. As mentioned previously, there are three GPCI components 
(physician work, PE, and malpractice), and all GPCIs are developed 
through comparison to a national average for each component. 
Additionally, each of the three GPCIs relies on its own data source(s) 
and methodology for calculating its value. As discussed in more detail 
later in this section, we proposed to revise the PE GPCIs for CY 2012, 
as well as the cost share weights which correspond to all three GPCIs.
a. Physician Work GPCIs
    The physician work GPCIs are designed to capture the relative cost 
of physician labor by Medicare PFS locality. Previously, the physician 
work GPCIs were developed using the median hourly earnings from the 
2000 Census of workers in seven professional specialty occupation 
categories which we used as a proxy for physicians' wages. Physicians' 
wages are not included in the occupation categories because Medicare 
payments are a key determinant of physicians' earnings. That is, 
including physicians' wages in the physician work GPCIs would, in 
effect, have made the indices dependent upon Medicare payments. As 
required by law, the physician work GPCI reflects one quarter of the 
relative wage differences for each locality compared to the national 
average.

[[Page 73083]]

    The physician work GPCI updates in CYs 2001, 2003, 2005, and 2008 
were based on professional earnings data from the 2000 Census. For the 
sixth GPCI update in CY 2011, we used the 2006 through 2008 Bureau of 
Labor Statistics (BLS) Occupational Employment Statistics (OES) data as 
a replacement for the 2000 Census data. We did not propose to revise 
the physician work GPCI data source for CY 2012. However, we note that 
the work GPCIs will be revised to account for the expiration of the 
statutory work floor. The 1.5 work floor for Alaska is permanent and 
will be applicable in CY 2012. In addition, we proposed to revise the 
physician work cost share weight from 52.466 to 48.266 in line with the 
2011 MEI weights, which are based on 2006 data (referred to hereinafter 
as the 2006-based MEI).
b. Practice Expense GPCIs
    (1) Affordable Care Act Analysis and Revisions for PE GPCIs
    (A) General Analysis for the CY 2012 PE GPCIs
    As previously mentioned, section 1848(e)(1)(H)(iv) of the Act (as 
added by section 3102(b) of the Affordable Care Act) requires the 
Secretary to ``analyze current methods of practice expense adjustments 
under subparagraph (A)(i) and evaluate data that fairly and reliably 
establishes distinctions in the cost of operating a medical practice in 
the different fee schedule areas.''
    Moreover, section 1848 (e)(1)(H)(v) of the Act requires the 
Secretary to make appropriate adjustments to the PE GPCIs as a result 
of the required analysis, no later than January 1, 2012. We proposed to 
make four revisions to the PE data sources and cost share weights 
discussed herein effective January 1, 2012. Specifically, we proposed 
to: (1) Revise the occupations used to calculate the employee wage 
component of PE using BLS wage data specific to the office of 
physicians' industry; (2) utilize two bedroom rental data from the 
2006-2008 American Community Survey as the proxy for physician office 
rent; (3) create a purchased service index that accounts for regional 
variation in labor input costs for contracted services from industries 
comprising the ``all other services'' category within the MEI office 
expense and the stand alone ``other professional expenses'' category of 
the MEI; and (4) use the 2006-based MEI (most recent MEI weights 
finalized in the CY 2011 final rule with comment period) to determine 
the GPCI cost share weights. These proposals were based on analyses we 
conducted to address commenter concerns in the CY 2011 final rule with 
comment period and a continuation of our PE evaluation as required by 
the Affordable Care Act. The main comments were related to: (1) the 
occupational groups used to calculate the employee wage component of 
PE, and (2) concerns by commenters stating that regional variation in 
purchased services such as legal and accounting were not sufficiently 
included in the GPCI methodology.
    We began analyzing the current methods and data sources used in the 
establishment of the PE GPCIs during the CY 2011 rulemaking process (75 
FR 40084). With respect to our CY 2011 analysis, we began with a review 
of the Government Accountability Office's (GAO) March 2005 Report 
entitled, ``Medicare Physician Fees: Geographic Adjustment Indices Are 
Valid in Design, but Data and Methods Need Refinement'' (GAO-05-119). 
While we have raised concerns in the past about some of the GAO's GPCI 
recommendations, we noted that with respect to the PE GPCIs, the GAO 
did not indicate any significant issues with the methods underlying the 
PE GPCIs. Rather, the report focused on some of the data sources used 
in the method. For example, the GAO stated that the wage data used for 
the PE GPCIs are not current. Similarly, commenters on previous PE GPCI 
updates predominantly focused on either the data sources used in the 
method or raised issues such as incentivizing the provision of care in 
different geographic areas. However, the latter issue (incentivizing 
the provision of care) is outside the scope of the statutory 
requirement that the PE GPCIs reflect the relative costs of the mix of 
goods and services comprising practice expenses in the different fee 
schedule areas relative to the national average.
    To further analyze the PE office expense in accordance with section 
1848(e)(1)(H)(iv) of the Act, we examined the following issues: the 
appropriateness of expanding the number of occupations included in the 
employee wage index; the appropriateness of replacing rental data from 
the Department of Housing and Urban Development (HUD) with data from 
the 2006-2008 American Community Survey (ACS) two bedroom rental data 
as a proxy for the office rent subcomponent of PE; and the 
appropriateness of adjusting the ``all other services'' and ``other 
professional expenses'' MEI categories for geographic variation in 
labor-related costs. We also examined available ACS occupational group 
data for potential use in determining geographic variation in the 
employee wage component of PE.
    An additional component of the analysis under section 
1848(e)(1)(H)(iv) of the Act is to evaluate the weights assigned to 
each of the categories within the practice expense geographic 
adjustment. As discussed in the CY 2011 final rule with comment period 
(75 FR 73256), in response to concerns raised by commenters and to 
allow us time to conduct additional analysis, we did not revise the 
GPCI cost share weights to reflect the weights used in the revised and 
rebased 2006 MEI that we adopted beginning in CY 2011. In response to 
those commenters who raised many points regarding the appropriateness 
of assigning labor-related costs in the medical equipment and supplies 
and miscellaneous component which do not reflect locality cost 
differentials, we agreed to address the GPCI cost share weights again 
in the CY 2012 PFS proposal. These issues are discussed in greater 
detail in section II.D.2.b.(1).(E). of this final rule with comment 
period that discusses our determination of the cost share weights.
    We also stated in the CY 2011 final rule with comment period that 
we would review the findings of the Secretary's Medicare Geographic 
Payment Summit and the MEI technical advisory panel during future 
rulemaking (75 FR 73256). The Secretary convened the National Summit on 
Health Care Quality and Value on October 4, 2010. This Summit was 
attended by a number of policy experts that engaged in detailed 
discussions regarding geographic adjustment factors and geographic 
variation in payment and the promotion of high quality care. This 
National Summit was useful by informing us on issues that we are 
studying further through two Institute of Medicine studies. In 
accordance with section 3102(b) of the Affordable Care Act, we are also 
continuing to consider these issues in the course of this notice and 
comment rulemaking for the CY 2012 PFS, which includes revisions to the 
GPCI, and through preparation of a report to the Congress that we will 
be submitting later this year in accordance with section 3137(b) of the 
Affordable Care Act on a plan for reforming the hospital wage index. In 
addition, we announced the establishment of the MEI Technical Advisory 
Panel and request for nominations of members on October 7, 2011 (76 FR 
62415 through 62416). We note that the panel will conclude by September 
28, 2012 and we look forward to examining the recommendations of this 
panel once it has issued its report.

[[Page 73084]]

(B) Analysis of ACS Rental Data
    In the CY 2011 final rule with comment period, we finalized our 
policy to use the 2010 Fair Market Rent (FMR) data produced by HUD at 
the 50th percentile as the proxy for relative cost differences in 
physician office rents. However, as part of our analysis required by 
section 1848(e)(1)(H)(iv) of the Act, we have now examined the 
suitability of utilizing 3-year (2006-2008) ACS rental data to serve as 
a proxy for physician office rents. We believe that the ACS rental data 
provide a sufficient degree of reliability and are an appropriate 
source on which to base our PE GPCI office rent proxy. We also believe 
that the ACS data provide a higher degree of accuracy than the HUD data 
since the ACS data are updated annually and not based on data collected 
by the 2000 Census long form. Moreover, it is our understanding that 
the Census ``long form,'' which is utilized to collect the necessary 
base year rents for the HUD Fair Market Rent (FMR) data, will no longer 
be available in future years. Therefore, we proposed to use the 
available 2006 through 2008 ACS rental data for two bedroom residential 
units as the proxy for physician office rent. We also sought comment 
regarding the potential use of 5-year ACS rental data as a proxy for 
physician office rent in future rulemaking.
    We believe the ACS data will more accurately reflect geographic 
variation in the office rent component. As in past GPCI updates, we 
proposed to apply a nationally uniform weight to the office rent 
component. We proposed to use the 2006-based MEI weight for fixed 
capital and utilities as the weight for the office rent category in the 
PE GPCI, and to use the ACS residential rent data to develop the 
practice expense GPCI value.
(C) Employee Wage Analysis
    Accurately evaluating the relative price that physicians pay for 
labor inputs requires both a mechanism for selecting the occupations to 
include in the employee wage index and identifying an accurate measure 
of the wages for each occupation. We received comments during the CY 
2011 rulemaking cycle noting that the current employee wage methodology 
may omit key occupational categories for which cost varies 
significantly across regions. Commenters suggested including 
occupations such as accounting, legal, and information technology in 
the employee wage component of the PE GPCI. To address these concerns, 
we proposed to revise the employee wage index framework within the 
practice expense (PE) GPCI. Under this new methodology, we would only 
select occupational categories relevant to a physician's practice. We 
would use a comprehensive set of wage data from the Bureau of Labor 
Statistics Occupational Employment Statistics (BLS OES) specific to the 
offices of physicians industry. Utilizing wage and national cost share 
weight data from the BLS OES would not only provide a more systematic 
approach to determining which occupations should be included in the 
non-physician employee wage category of the PE GPCI, but would also 
enable us to determine how much weight each occupation should receive 
within the index.
    Due to its reliability, public availability, level of detail, and 
national scope, we proposed to use BLS OES data to estimate both 
occupation cost shares and hourly wages for purposes of determining the 
non-physician employee wage component of the PE GPCI. The OES panel 
data are collected from approximately 200,000 establishments, and 
provide employment and wage estimates for about 800 occupations. At the 
national level, OES provides estimates for over 450 industry 
classifications (using the 3, 4, and 5 digit North American Industry 
Classification System (NAICS)), including the Offices of Physicians 
industry (NAICS 621100). As described in the census, the Offices of 
Physicians industry comprises establishments of health practitioners 
having the degree of M.D. (Doctor of Medicine) or D.O. (Doctor of 
Osteopathy) primarily engaged in the independent practice of general or 
specialized medicine (except psychiatry or psychoanalysis) or surgery. 
These practitioners operate private or group practices in their own 
offices (such as centers, clinics) or in the facilities of others (such 
as hospitals or Health Maintenance Organization (HMO) medical centers). 
The OES data provide significant detail on occupational categories and 
offer national level cost share estimates for the offices of physicians 
industry.
    In the BLS OES data methodology, we weighted each occupation based 
on its share of total labor cost within the offices of physician 
industry. Specifically, each occupation's weight is proportional to the 
product of its occupation's employment share and average hourly wage. 
In this calculation, we used each occupation's employment level rather 
than hours worked, because the BLS OES does not contain industry-
specific information describing the number of hours worked in each 
occupation (see: http://www.bls.gov/oes/current/naics4_621100.htm). 
Our proposed methodology accounted for 90 percent of the total wage 
share in the office of physicians industry. Additionally, our proposed 
strategy produced 33 individual occupations that accounted for many of 
the occupations commenters had stated were historically excluded from 
the employee wage calculation (for example, accounting, auditors, and 
medical transcriptionists).
    We also evaluated available ACS occupational data as a potential 
data source for the non-physician employee wage PE GPCI subcomponent. 
Based on the occupations currently used to calculate employee wages, 
the BLS OES captures occupations with greater relevancy to physician 
office practices and is a more appropriate data source than the 
currently available ACS data. In addition, since our publication of the 
CY 2012 proposed rule, we have conducted an analysis of ACS wage data 
including an expanded mix of occupations. A review of this analysis can 
be found in our contractors ``Revisions to the Sixth Update of the 
Geographic Practice Cost Index: Final Report'' located on the physician 
fee schedule CY 2012 final rule with comment period Web site at: http://www.cms.gov/PhysicianFeeSched/. After careful analysis, we still 
believe that the BLS OES data provide for the most accurate and 
comprehensive measurement of physician non-physician employee wages.
(D) Purchased Services Analysis
    For CY 2012, we proposed to geographically adjust the labor-related 
industries within the ``all other services'' and ``other professional 
expenses'' categories of the MEI. In response to commenters who stated 
that these purchased services were labor-related and should be adjusted 
geographically, we agreed to examine this issue further in the CY 2011 
final rule with comment period and refrained from making any changes. 
Based on our subsequent examination of this issue, we believe it would 
be appropriate to geographically adjust for the labor-related component 
of purchased services within the ``All Other Services'' and ``Other 
Professional Expenses'' categories using BLS wage data. In total, there 
are 63 industries, or cost categories, accounted for within the ``all 
other services'' and ``other professional services'' categories of the 
2006-based MEI. For purposes of the hospital wage index at 74 FR 43845, 
we defined a cost category as labor-related if the cost category is 
defined as being both labor intensive and its costs vary with, or are 
influenced by the local labor market.

[[Page 73085]]

The total purchased services component accounts for 8.095 percent of 
total practice cost. However, only 5.011 percentage points (of the 
total 8.095 percentage points assigned to purchased services) are 
defined as labor-related and thus adjusted for locality cost 
differences. These 5.011 percentage points represent cost categories 
that we believe are labor intensive and have costs that vary with, or 
are influenced by, the local labor market. The labor-related cost 
categories include but are not limited to building services (such as 
janitorial and landscaping), security services, and advertising 
services. The remaining weight assigned to the non labor-related 
industries (3.084 percentage points) represent industries that do not 
meet the criteria of being labor intensive or having their costs vary 
with the local labor market.
    In order to calculate the labor-related and non labor- related 
shares, we would use a similar methodology that is employed in 
estimating the labor-related share of various CMS market baskets. A 
more detailed explanation of this methodology can be found under the 
supporting documents section of the CY 2012 PFS final rule with comment 
period Web page at http://www.cms.gov/PhysicianFeeSched/.
    We believe our analysis, during 2010 and this year, of the current 
methods of establishing PE GPCIs and our evaluation of data that fairly 
and reliably establish distinctions in the cost of operating a medical 
practice in the different fee schedule areas meet the statutory 
requirements of section 1848(e)(1)(H)(iv) of the Act. A more detailed 
discussion of our analysis of current methods of establishing PE GPCIs 
and evaluation of data sources is included in our contractor's draft 
report entitled, ``Proposed Revisions to the Sixth Update of the 
Geographic Practice Cost Index.'' Our contractor's final report and 
associated analysis of the GPCI revisions, including the PE GPCIs, will 
be made publicly available on the CMS Web site. The final report may be 
accessed from the PFS Web site at: http://www.cms.gov/PhysicianFeeSched/ under the ``Downloads'' section of the CY 2012 PFS 
final rule with comment period Web page.
    Additionally, see section IX.F. of this final rule with comment 
period for Table 86, which reflects the GAF impacts resulting from 
these proposals. As the table demonstrates, the primary driver of the 
CY 2012 impact is the expiration of the work GPCI floor which had 
produced non budget-neutral increases to the CY 2011 GPCIs for lower 
cost areas as authorized under the Affordable Care Act the Medicare and 
Medicaid Extenders Act (MMEA).
(E) Determining the PE GPCI Cost Share Weights
    To determine the cost share weights for the CY 2012 GPCIs, we 
proposed to use the weights established in the 2006-based MEI. The MEI 
was rebased and revised in the CY 2011 final rule with comment period 
to reflect the weighted-average annual price change for various inputs 
needed to provide physicians' services. As discussed in detail in that 
section (75 FR 73262 through 73277), the proposed expense categories in 
the MEI, along with their respective weights, were primarily derived 
from data collected in the 2006 AMA PPIS for self-employed physicians 
and selected self-employed non-medical doctor specialties. Since we 
have historically updated the GPCI cost share weights consistent with 
the most recent update to the MEI, and because we have addressed 
commenter concerns regarding the inclusion of the weight assigned to 
utilities with office rent and geographically adjusted for the labor 
intensive industries within the ``all other services'' and ``other 
professional expenses'' MEI categories, we believe it is appropriate to 
adopt the 2006-based MEI cost share weights.
(i) Practice Expense
    For the cost share weight for the CY 2012 PE GPCIs, we used the 
2006-based MEI weight for the PE category of 51.734 percent minus the 
professional liability insurance category weight of 4.295 percent. 
Therefore, we proposed a cost share weight for the PE GPCIs of 47.439 
percent.
(ii) Employee Compensation
    For the employee compensation portion of the PE GPCIs, we proposed 
to use the non-physician employee compensation category weight of 
19.153 percent reflected in the 2006-based MEI.
(iii) Office Rent
    We proposed that the weight for the office rent component be 
revised from 12.209 percent to 10.223 percent. The 12.209 percent 
office rent GPCI weight was set equal to the 2000-based MEI cost weight 
for office expenses, which was calculated using the American Medical 
Association's (AMA) Socioeconomic Monitoring Survey (SMS). The 12.209 
percent reflected the expenses for rent, depreciation on medical 
buildings, mortgage interest, telephone, and utilities. We proposed to 
set the GPCI office rent equal to 10.223 percent reflecting the 2006-
based MEI cost weights (75 FR 73263) for fixed capital (reflecting the 
expenses for rent, depreciation on medical buildings and mortgage 
interest) and utilities. We are no longer including telephone costs in 
the GPCI office rent cost weight because we believe these expenses do 
not vary by geographic area.
    Consistent with the revised and rebased 2006-based MEI which was 
adopted in the CY 2011 final rule with comment period (75 FR 73263), we 
disaggregated the broader office expenses component for the PE GPCI 
into 10 new cost categories. In this disaggregation, the fixed capital 
component is the office expense category applicable to the office rent 
component of the PE GPCI. As discussed in the section dealing with 
office rent, we proposed to use 2006-2008 ACS rental data as the proxy 
for physician office rent. These data represent a gross rent amount and 
includes data on utilities expenditures. Since it is not possible to 
separate the utilities component of rent for all ACS survey 
respondents, it was necessary to combine these two components to 
calculate office rent and by extension, we proposed combining those two 
cost categories when assigning a weight to the office rent component.
(iv) Purchased Services
    As discussed in the previous paragraphs, a new purchased services 
index was created to geographically adjust the labor-related components 
of the ``All Other Services'' and ``Other Professional Expenses'' 
categories of the 2006-based MEI office market basket. In order to 
calculate the purchased services index, we proposed to merge the 
corresponding weights of these two categories to form a combined 
purchased services weight of 8.095 percent. However, we proposed to 
only adjust for locality cost differences of the labor-related share of 
the industries comprising the ``All Other Services'' and ``Other 
Professional Expenses'' categories. We have determined that only 5.011 
percentage points of the 8.095 percentage points would be adjusted for 
locality cost differences (5.011 adjusted purchased service + 3.084 
non-adjusted purchased services = 8.095 total cost share weight).
(v) Equipment, Supplies, and Other Miscellaneous Expenses
    To calculate the proposed medical equipment, supplies, and other 
miscellaneous expenses component, we removed professional liability 
(4.295 percentage points), non-physician employee compensation (19.153 
percentage points), fixed capital/utilities (10.223 percentage points), 
and

[[Page 73086]]

purchased services (8.095 percentage points) from the PE category 
weight (51.734 percent). Therefore, we proposed a cost share weight for 
the medical equipment, supplies, and other miscellaneous expenses 
component of 9.968 percent. Consistent with previous methodology, this 
component of the PE GPCI is not adjusted for geographical variation.
(vi) Physician Work and Malpractice GPCIs
    Furthermore, we proposed to use the physician compensation cost 
category weight of 48.266 percent as the work GPCI cost share weight; 
and we proposed to use the professional liability insurance weight of 
4.295 percent for the malpractice GPCI cost share weight. We believe 
our analysis and evaluation of the weights assigned to each of the 
categories within the PE GPCIs satisfies the statutory requirements of 
section 1848(e)(1)(H)(iv) of the Act.
    The cost share weights for the CY 2012 GPCIs are displayed in Table 
10. For a detailed discussion regarding the GPCI cost share weights and 
how the weights account for local and national adjustments, see our 
contractor's ``Proposed Revisions to the Sixth Update of the Geographic 
Practice Cost Index'' draft report at (http://www.cms.gov/PhysicianFeeSched/). In addition, information regarding the CY 2011 
update to the MEI can be reviewed beginning on 75 FR 73262.
[GRAPHIC] [TIFF OMITTED] TR28NO11.014

(F) PE GPCI Floor for Frontier States
    Section 10324(c) of the Affordable Care Act added a new 
subparagraph (I) under section 1848(e)(1) of the Act to establish a 1.0 
PE GPCI floor for physicians' services furnished in frontier States 
effective January 1, 2011. In accordance with section 1848(e)(1)(I) of 
the Act, beginning in CY 2011, we applied a 1.0 PE GPCI floor for 
physicians' services furnished in States determined to be frontier 
States. There are no changes to those States identified as ``Frontier 
States'' for the CY 2012 final rule with comment period. The qualifying 
States are reflected in Table 11. In accordance with statute, we will 
apply a 1.0 GPCI floor for these States in CY 2012.

    [GRAPHIC] [TIFF OMITTED] TR28NO11.015
    

[[Page 73087]]

(2) Summary of CY 2012 PE GPCI Proposal
    The PE GPCIs include four components: employee compensation, office 
rent, purchased services, and medical equipment, supplies and 
miscellaneous expenses. Our proposals relating to each of these 
components are as follows:
     Employee Compensation: We proposed to geographically 
adjust the employee compensation using the 2006 through 2008 BLS OES 
data specific to the offices of physicians industry along with 
nationwide wage data to determine the employee compensation component 
of the PE GPCIs. The employee compensation component accounts for 
19.153 percent of total practice costs or 40.4 percent of the total PE 
GPCIs.
     Office Rents: We proposed to geographically adjust office 
rent using the 2006 through 2008 ACS residential rental data for two 
bedroom units as a proxy for the relative cost differences in physician 
office rents. In addition, we proposed to consolidate the utilities 
into the office rent weight to account for the utility data present in 
ACS gross rent data. The office rent component accounts for 10.223 
percent of total practice cost or 21.5 percent of the PE GPCIs.
     Purchased Services: We proposed to geographically adjust 
the labor-related component of purchased services within the ``All 
Other Services'' and ``Other Professional Expenses ``categories using 
BLS wage data. The methodology employed to estimate purchased services 
expenses is based on the same data used to estimate the employee wage 
index. Specifically, the purchased services framework relies on BLS OES 
wage data to estimate the price of labor in industries that physician 
offices frequently rely upon for contracted services. As previously 
mentioned, the labor-related share adjustment for each industry was 
derived using a similar methodology as is employed for estimating the 
labor-related shares of CMS market baskets. Furthermore, the weight 
assigned to each industry within the purchased services index was based 
on the 2006-based MEI. A more detailed discussion regarding CMS market 
baskets, as well as the corresponding definitions of a ``labor-related 
share'' and a ``non-labor-related share'' can be viewed at (74 FR 
43845). The total purchased services component accounts for 8.095 
percent of total practice cost or 17.1 percent of the PE GPCI. However, 
the proportion of purchased services that is geographically adjusted 
for locality cost difference is 5.011 percentage points of the 8.095 
percentage points or 10.6 percent of the PE GPCI.
     Medical Equipment, Supplies, and other Miscellaneous 
Expenses: We continue to believe that items such as medical equipment 
and supplies have a national market and that input prices do not vary 
appreciably among geographic areas. As discussed in previous GPCI 
updates in the CY 2008 and CY 2011 PFS proposed rules, specifically the 
fifth GPCI update (72 FR 38138) and sixth GPCI update (75 FR 73256), 
respectively, some price differences may exist, but we believe these 
differences are more likely to be based on volume discounts rather than 
on geographic market differences. For example, large physicians' 
practices may utilize more medical equipment and supplies and therefore 
may or may not receive volume discounts on some of these items. To the 
extent that such discounting may exist, it is a function of purchasing 
volume and not geographic location. The medical equipment, supplies, 
and miscellaneous expenses component was factored into the PE GPCIs 
with a component index of 1.000. The medical equipment, supplies, and 
other miscellaneous expense component account for 9.968 percent of 
total practice cost or 21.0 percent of the PE GPCI.
c. Malpractice GPCIs
    The malpractice GPCIs are calculated based on insurer rate filings 
of premium data for $1 million to $3 million mature ``claims-made'' 
policies (policies for claims made rather than services furnished 
during the policy term). We chose claims-made policies because they are 
the most commonly used malpractice insurance policies in the United 
States. We used claims-made policy rates rather than occurrence 
policies because a claims-made policy covers physicians for the policy 
amount in effect when the claim is made, regardless of the date of 
event in question; whereas an occurrence policy covers a physician for 
the policy amount in effect at the time of the event in question, even 
if the policy is expired. Based on the data we analyzed, we proposed to 
revise the cost share weight for the malpractice GPCI from 3.865 
percent to 4.295 percent.
d. Public Comments and CMS Responses Regarding the CY 2012 Proposed 
Revisions to the 6th GPCI Update
    We received many public comments regarding the CY 2012 proposed 
GPCIs. Summaries of the comments and our responses follow.
Employee Compensation
    Comment: Most commenters agreed with CMS' proposal to expand the 
occupations used to calculate the non-physician employee wage portion 
of the PE GPCI since the updated occupations better reflect the 
occupations found in physician practices. Many commenters indicated 
that BLS was the most appropriate data source since it represents the 
most current data available. Several commenters agreed with IOM's 
recommendation to include the full range of occupations employed in 
physicians' offices (100 percent of total non-physician wage share) 
from the BLS data, rather than the occupations representing 90 percent 
of the total non-physician wage share that we proposed. A few 
commenters did not support the use of BLS data since they do not 
include data describing the number of hours worked. A few commenters 
who provide radiation oncology services recommended adding the salaries 
of medical physicists to the non-physician employee compensation 
calculation based on wage data from the American Association of 
Physicists in Medicine or the American Academy of Pain Medicine. Some 
commenters indicated the occupational weights utilized by CMS are not 
representative of their actual practices or the Medical Group 
Management Association (MGMA) data.
    Response: We agree with the commenters who indicated that the BLS 
is the most current and appropriate data source and disagree with the 
commenters who did not support the use of BLS data since it does not 
include data describing the number of hours worked. We believe that the 
BLS data provide the necessary detail on occupational categories and 
offer national level cost share estimates for the offices of physicians 
industry. In addition, as IOM noted in its report: ``The committee 
finds that independent, health-care specific data from the BLS provide 
the most conceptually appropriate measure of differences in wages for 
health professional labor and clinical and administrative office 
staff.'' (Geographic Adjustment in Medicare Payment: Phase I: Improving 
Accuracy, pp. 5-34, available at http://www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx.)
    We also agree with commenters who stated that the updated 
occupations better reflect the occupations found in physician practices 
and those who indicated we should expand the occupations to include the 
full range of

[[Page 73088]]

occupations employed in physician offices as recommended by IOM. As IOM 
noted in its report, ``the expansion of occupations will be a better 
reflection of the current workforce and a broader range of health 
professions, which will help to improve the accuracy of the adjustment. 
In addition, the expansion will anticipate further changes in the 
workforce brought by changes in labor market, including the increased 
demand for expertise in the adoption and use of health information 
technology'' (pp. 5-34). As such, we are modifying our proposal and 
including all (100%) of non-physician occupations in the offices of 
physicians industry in our employee compensation PE calculation. Our 
modification to include the full range of non-physician occupations in 
response to these comments will increase the number of occupations 
captured in our employee wage calculation from 33 to 155.
    We disagree with commenters who provide radiation oncology services 
and suggested that we should include medical physicists wage data from 
the American Association of Physicists in Medicine or the American 
Academy of Pain Medicine. The use of a consistent and contemporaneous 
source for the employment and wage data included in the calculation is 
preferable to a mix of supplemental data sources. Also, while BLS does 
not collect employment and wage data for medical physicists or health 
physicists specifically, it does collect employment and wage data for 
physicists as a whole (SOC code 19-2012 specifically includes 
physicists, see http://www.bls.gov/opub/ooq/2011/summer/art02.pdf, pg. 
20). These data will be included in our calculation now that we are 
incorporating the full range of occupations employed in physician 
offices.
    With respect to the commenters who indicated the occupational 
weights utilized by CMS are not representative of their actual 
practices or the MGMA data, we understand that national occupational 
weights may not match individual practices or subsets of practices. 
However, we agree with IOM's preference for ``a consistent set of 
national weights applied to wage data from the full range of health 
sector occupations so that hourly wage comparisons can be made'' (pp. 
5-34).
Office Rent
    Comment: Some commenters agreed with our proposal to use the ACS 
data instead of the HUD FMR data. Additionally, some commenters stated 
that the 3-year ACS was preferable to the 5-year ACS rental data, 
because it is more recent and thus more likely to reflect current value 
differences in the rapidly changing marketplace. However, most 
commenters reiterated their longstanding opposition to the use of 
residential rent as a proxy for physician office space and indicated 
that a better solution would be for the government to develop actual 
data on the cost of renting medical office space consistent with the 
IOM recommendation. Some commenters recommended a survey of physicians 
to acquire data on medical office rent. Others recommended a continued 
use of HUD data for CY 2012 until the ACS is more robust. Several 
commenters recommended that CMS use data from the MGMA survey to 
develop a medical office rent index. Commenters also raised issues with 
the relative relationship between selected individual counties in the 
ACS data or between the ACS data and CMS' assigned weights, questioning 
the validity of the methodology. These comments noted that the rent 
index in Santa Clara increased 7 percent yet remained unchanged in 
surrounding counties; the rent index in Ft. Lauderdale, Florida, and 
Teton County, Wyoming, are higher than rent index for Manhattan, New 
York; and Polk County, Iowa, and San Francisco County, California, have 
inconsistencies between the ACS-reported median and CMS' assigned 
weights.
    Response: We appreciate all the comments received on our proposal 
to utilize the 3-year (2006-2008) ACS 2 bedroom rental data as our 
proxy for physician office rent. We agree with the commenters who 
stated that the ACS data is preferable to the current HUD FMR data. We 
also agree with commenters that a commercial data source for office 
rent that provided for adequate data representation of urban and rural 
areas would be preferable to a residential rent proxy. As we have 
previously discussed in the CY 2005, CY 2008, and CY 2011 (69 FR 66262, 
72 FR 73257, and 75 FR 73257 respectively) final rules, we recognize 
that apartment rents may not be a perfect proxy for physician office 
rent. We have conducted an exhaustive search for a reliable commercial 
rental data source and have not found any reliable data that meets our 
accuracy standards. We describe in detail our search for a current, 
reliable, and publicly available commercial rent data source in our 
``Final Report on the Sixth Update of the Geographic Practice Cost 
Index for the Medicare Physician Fee Schedule'' viewable at http://www.cms.gov/PhysicianFeeSched/downloads/GPCI_Report.pdf. In addition, 
the IOM in their report titled ``Geographic Adjustment in Medicare 
Payment Phase 1: Improving Accuracy'' (pp 5-35) was unable to identify 
a source for commercial rent data.
    With regards to surveying physicians directly to gather data to 
compute office rent, we note that development and implementation of a 
survey could take several years. Moreover, we have historically not 
sought direct survey data from physicians related to the GPCI to avoid 
issues of circularity and self-reporting bias. Also, in the CY 2011 
final rule with comment period (75 FR 73259) we asked for specific 
public comments regarding the benefits of utilizing physician cost 
reports to potentially achieve greater precision in measuring the 
relative cost difference among Medicare localities. We also asked for 
comments related to the administrative burden of requiring physicians 
to routinely complete these cost reports and whether this should be 
mandatory for physicians practices. We did not receive any feedback 
specifically related to this comment solicitation during the open 
public comment period for the CY 2011 final rule with comment period.
    With regard to comments requesting that CMS use data from the MGMA 
survey to develop the office rent index, as we stated in the CY 2011 
final rule with comment period (75 FR 73257), we have concerns with 
both the sample size and representativeness of the MGMA data. For 
example, the responses represent only about 2,250 (or approximately 1 
percent of physician practices nationwide) and have disproportionate 
sample sizes for each State, suggesting very uneven response rates 
geographically. In addition, we also have concerns that the MGMA data 
have the potential for response bias. The MGMA's substantial reliance 
on its membership base suggests a nonrandom selection into the 
respondent group. Some evidence for such issues in the MGMA data arises 
from the very different sample sizes by State. For example, in the MGMA 
data, 10 States have fewer than 10 observations each, and California, 
New York, and New Jersey have fewer than 10 observations per locality. 
Therefore, we continue to believe the MGMA survey data would not be a 
sufficient rental data source for all PFS localities.
    With regards to comments that rents in Santa Clara increased 7 
percent yet remained unchanged in the surrounding counties (San 
Francisco, San Mateo and Santa Cruz), we contacted the Census Bureau 
and verified that the data were correct. We also checked with the 
Census Bureau regarding commenter observations that the rent index 
value

[[Page 73089]]

for two bedroom rental units is higher in Ft. Lauderdale, Florida, and 
Teton County, Wyoming, than in Manhattan. Census verified that these 
data were correct.
    With regards to comments on rents in Polk County, Iowa, compared to 
San Francisco County, California, Polk County has the second highest 
office rent index of any county in Iowa (at 0.848). In order to 
accurately compare the specific relationship between these two counties 
office rent indices, the Polk County specific office rent index of 
(.848) should be applied. However, the commenters applied the Iowa 
``Statewide'' locality level index of (.696) to Polk County in their 
calculations. Because Iowa is a Statewide locality, the higher office 
rent index for Polk County is reduced when combined with lower cost 
counties in our GPCI methodology.
    As we have stated previously, we did not receive a special 
tabulation from Census in time to analyze 5-year ACS rental data as a 
potential data source for physician office rent for the CY 2012 
rulemaking cycle. We have now received the 5-year ACS special 
tabulation from Census and will examine its suitability as a potential 
proxy for physician office rent. We will also continue our evaluation 
of ACS rental data during the upcoming year, and may propose further 
modifications to our office rent methodology in the CY 2013 PFS 
proposed rule.
    We also note that HUD has proposed a new FMR methodology for 2012 
that abandons the use of Census long-form data, which are no longer 
being collected, and instead relies exclusively on ACS data. We will be 
examining this new proposed methodology to potentially inform future 
rulemaking.
Purchased Services
    Comment: Commenters generally agreed with our proposal to create a 
purchased service index to capture labor-related categories that reside 
within the ``All Other Services'' and ``Other Professional Expenses'' 
MEI categories. In addition, several commenters noted that the 
purchased services index accurately reflects variable professional and 
non-professional labor costs. However, some commenters disagreed with 
the proposal to create a purchased service index. The reasons cited 
included that there is no statutory requirement to add the purchased 
services proxy to the PE GPCI; the proposed methodology does not 
adequately capture geographic variation in purchased services; (for 
example there is no basis to support the assertion that the cost of 
capital is equal across the country) and, the purchased service index 
must be reflective of actual physician practice cost expenses and 
should be based on physician survey data. Lastly, some commenters 
recommend that CMS consult with physicians' organizations and others to 
test its categorizations, methodologies, and assumptions.
    Response: We agree with commenters who stated that the purchased 
services index adds an additional level of precision to our PE GPCI 
calculations. Even though physician practices often purchase 
accounting, legal, advertising, consulting, landscaping, and other 
services from a variety of outside contractors, we have not previously 
included regional variation in the cost of purchased services within 
the current employee wage index. Specifically, the current methodology 
only measures regional variation in wages for workers that physician 
practices employ directly. For these reasons, we worked with our 
contractor to develop our proposed ``purchased services index'' to 
account for the regional labor cost variation within contracted 
services. This index captures labor-related categories residing within 
the ``all other services'' and ``other professional expenses'' MEI 
categories, and addresses the concerns of commenters, who in the CY 
2011 final rule with comment period (75 FR 73258), thought that these 
services needed to be geographically adjusted.
    We disagree with commenters who think there is insufficient 
statutory basis for a purchased services index. The incorporation of a 
purchased services index improves the accuracy of the GPCI consistent 
with the statute. It will allow for the GPCI to account for geographic 
variation in the price of a wider range of inputs.
    We also disagree with commenters who asserted that the proposed 
methodology does not adequately capture geographic variation in 
purchased services, including the cost of capital, and asserted that 
our data sources were inadequate. To adjust for regional variation in 
the labor inputs of purchased services requires four key elements. 
These elements include: Wage data by occupation, industry employment 
levels, labor-related classifications by industry, and the share of 
physician practice expense. We are using a combination of BLS OES data 
and MEI weight data for these elements. The BLS OES data is the best 
currently available data source for this purpose and is used in many 
aspects of the GPCI calculation. The MEI weights represent our 
actuaries' best estimate for the weights for these categories. For a 
fuller discussion of the derivation of the MEI weights, see the CY 2011 
final rule with comment period (75 FR 73262). With respect to capital, 
it is important to note that the proposed purchased services index does 
not assume that the cost of capital for physician practices is constant 
across the nation; instead, it assumes that the cost of capital for 
contracted firms is constant across the nation. Within the purchased 
services index, we assume a constant cost of capital for the purchased 
service firm primarily because we do not believe a reliable data source 
to measure capital costs for each purchased service industry currently 
exists.
    With respect to commenters who recommended that we consult with 
physician organizations and others to test our categorizations, 
methodologies, and assumptions, we have been and will continue to be 
transparent with respect to our calculation of the purchased services 
index. We solicited comments on our proposed approach and have given 
consideration to all comments received.
Updated Cost Share Weights
    Comment: Commenters expressed both support and concern with our 
proposal to update the cost share weights to reflect the 2006-based MEI 
weights finalized in the CY 2011 final rule with comment period. 
Several commenters noted that it was appropriate for CMS to update the 
cost share weights based on the more recent AMA physician survey data 
reflected in the current MEI weights, but not currently reflected in 
the GPCI cost share weights. Other commenters stated that the cost 
share weights should not be adjusted until CMS convenes the MEI 
technical advisory panel. A few commenters indicated that CMS should 
not update the cost share weights but should instead explore the use of 
alternative data sources, such as MGMA or physician surveys, for the 
weights.
    Response: We agree with commenters who supported updating the GPCI 
cost share weights based on the MEI weights, which reflect the most 
recent AMA survey data. We have historically updated the GPCI cost 
share weights consistent with previous adjustments to the MEI. Due 
partly to concerns commenters raised during last year's rulemaking (see 
75 FR 73256) on specific aspects of the GPCI methodology, we delayed 
updating the GPCI cost weights to reflect the updated MEI weights. Our 
CY 2012 changes to the GPCI methodology have addressed these comments 
where appropriate.
    We disagree with commenters who indicated that the cost share 
weights

[[Page 73090]]

should not be adjusted until CMS convenes the MEI technical advisory 
panel. The current MEI cost share weights are based on the most recent 
AMA survey data. The current GPCI cost share weights are based on the 
old MEI weights reflecting older AMA survey data. It would not be 
appropriate to continue to delay the adoption of the current MEI 
weights reflective of more recent AMA survey data in favor of 
continuing to use the old MEI weights reflective of older AMA survey 
data. For additional discussion of the derivation of the MEI weights, 
please see (75 FR 73262). We will study the findings and 
recommendations of the MEI technical advisory panel once the panel has 
had an opportunity to meet and issue its findings. For similar reasons, 
we also disagree with commenters who indicated that CMS should not 
update the cost share weights but should instead explore the use of 
alternative data sources, such as MGMA or physician surveys, for the 
weights. In addition, as discussed earlier, we have concerns with both 
the sample size and representativeness of the MGMA data.
Impacts
    Comment: Many commenters requested that CMS should provide an 
impact table that separately shows the impact of each of our proposals.
    Response: We will provide separate impact tables in our ``Revisions 
to the Sixth Update of the Geographic Practice Cost Index: Final 
Report'' that will individually show the GAF impacts of: Revising the 
GPCI cost share weights to be consistent with the revised and rebased 
2006-based MEI; expanding the occupations used in the calculation of 
non-physician employee wage to reflect the full range of occupations in 
the offices of physicians' industry; implementing a purchased service 
index to account for labor-related services in the ``all other 
services'' and ``other professional services'' MEI categories; and 
utilizing the 2006-2008 ACS for two bedroom units as the proxy for 
physician office rent. This final report is viewable at the following 
Web address: http://www.cms.gov/PhysicianFeeSched/.
Delay Implementation of GPCI Revisions Until IOM Studies Are Completed
    Comment: Many commenters urged us not to move forward with proposed 
changes to the PE GPCI until CMS and various stakeholders have had an 
opportunity to assess the full impacts and recommendations of the IOM 
reports on Medicare geographic adjustments.
    Response: As previously mentioned, section 1848(e)(1)(H)(iv) of the 
Act (as added by section 3102(b) of the Affordable Care Act) requires 
the Secretary to ``analyze current methods of establishing practice 
expense adjustments under subparagraph (A)(i) and evaluate data that 
fairly and reliably establishes distinctions in the cost of operating a 
medical practice in the different fee schedule areas.''
    Moreover, section 1848(e)(1)(H)(v) of the Act requires the 
Secretary to make appropriate adjustments to the PE GPCIs as a result 
of the required analysis no later than January 1, 2012. As a result of 
our analysis, we proposed the four changes to the PE GPCI calculation 
as discussed previously in this section. While we fully intend to 
continue our review of the recently released revised IOM Phase I report 
on the Medicare GPCIs, it is important and consistent with the statute 
to proceed with appropriate improvements to the GPCI methodology in 
conjunction with our review of IOM's reports and IOM's continuing work 
in this area. We may propose further improvements and modifications to 
the GPCIs methodology in future rulemaking once we have had an 
opportunity to assess IOM's recommendations in their entirety.
Budget Neutrality
    Comment: Some commenters stated that the modifications proposed in 
the revised Sixth GPCI Update were not budget neutral. These commenters 
provided tables illustrating the impacts on the single view chest x-ray 
service.
    Response: We disagree that the modifications in the revised Sixth 
GPCI were not budget neutral. Our actuaries have determined that the CY 
2012 GPCIs are budget neutral in the aggregate prior to the application 
of any statutory GPCI provisions (section 1848(e)(1)(G) and section 
1848(e)(1)(I) of the Act) that are exempt by law from budget 
neutrality. The GPCIs are not necessarily budget neutral on an 
individual service by service basis.
Other Issues
    We received other public comments on matters that were not related 
to our proposed CY 2012 changes to the GPCIs. We thank the commenters 
for sharing their views and suggestions. Because we did not make 
proposals regarding these matters, we do not generally summarize or 
respond to such comments in this final rule with comment period. For 
example, we received numerous comments related to the physician work 
GPCI and the aforementioned expiration of the 1.000 work floor. Since 
we only proposed to update the cost share weights attributed to 
physician work, and noted that the statutorily required 1.0 physician 
work floor would be expiring at the end of CY 2011 in the CY 2012 
proposed rule, we will not be responding to comments related to our 
methodologies or calculations of physician work in this final rule with 
comment period. For an in-depth discussion of our most recent physician 
work GPCI update, see the CY 2011 final rule with comment period (75 FR 
73252 and 75 FR 73256 through 73260). We look forward to reviewing and 
evaluating the IOM's recommendations related to physician work included 
in its revised Phase I report. After we have reviewed the IOM's 
recommendations in their entirety, we may propose modifications to the 
physician work GPCI in future rulemaking.
    We also received several comments regarding the calculations and 
methodology used to calculate the MEI, although we did not propose any 
changes in the methodology used to calculate the MEI. Many commenters 
reiterated concerns regarding the assignment of MEI weights to the 10 
office expense subcategories as outlined in the 2011 Medicare physician 
payment schedule final rule with comment period. According to some 
commenters, it is not clear that the AMA PPIS survey expense categories 
match up with the industry-level data from the Bureau of Economic 
Analysis in a way that makes this assignment of subcategory weights 
possible. These commenters further state that the MEI technical 
advisory panel should revisit this issue, and consider whether other 
sources of data are available to split office rent from other types of 
office expenses, and to validate the office rent share as a percent of 
total expense.
    While this issue is outside the scope of this final rule with 
comment, we note that the costs reported in the 2006 AMA PPIS survey 
questions for office expenses were crosswalked as closely as possible 
to the 2002 BEA I/O benchmark categories. The weights for Office 
Expenses found in the MEI were appropriately based on information 
reported by self-employed physicians and selected self-employed non-
medical doctor specialties found in the 2006 American Medical 
Association Physician Practice Information Survey (PPIS). The PPIS was 
developed by medical associations and captures the costs of operating a 
medical practice, including office rents and non-physician wages. The 
survey results were further disaggregated using data from the Bureau of 
Economic Analysis' Benchmark Input/Output tables for Offices of 
Physicians, Dentists, and

[[Page 73091]]

Other Health Professionals. These resulting cost shares, along with the 
methods that were utilized in developing them, were proposed (75 FR 
40087 through 40092) and finalized (75 FR 73262 through 73276) during 
the calendar year 2011, Physician Fee Schedule rule, rulemaking 
process. As stated in the CY 2011 final rule, (75 FR 73270 through 
73276), the MEI technical advisory panel, will be asked to fully 
evaluate the index. In particular, the panel will be evaluating all 
technical aspects of the MEI including the cost categories, their 
associated weights and price proxies, and the productivity adjustment.
e. Summary of CY 2012 Final GPCIs
    After consideration of the public comments received on the GPCIs, 
we are finalizing the revisions to the 6th GPCI update using the most 
current data, with modifications. We are also finalizing the proposal 
to change the GPCI cost share weights for CY 2012. As a result, the 
cost share weight for the physician work GPCI (as a percentage of the 
total) will be 48.266 percent, and the cost share weight for the PE 
GPCI will be 47.439 percent with a change in the employee compensation 
component from 18.654 to 19.153 percentage points. The cost share 
weight for the office rent component of the PE GPCI will be 10.223 
percentage points (fixed capital with utilities), and the medical 
equipment, supplies, and other miscellaneous expenses component will be 
9.968 percentage points. Moreover, the cost share weight for the 
malpractice GPCI will be 4.295 percent. In addition, we are finalizing 
the weight for purchased services at 8.095 percentage points (5.011 
percentage points will be adjusted for geographic cost differences). 
Additionally, we will review the complete findings and recommendations 
from the Institute of Medicine's studies on geographic adjustment 
factors for physician payment and the MEI technical advisory panel once 
that information becomes fully available to CMS. We will once again 
consider the GPCIs for CY 2013 rulemaking in the context of our annual 
PFS rulemaking beginning in CY 2012 based on the information available 
at that time. We are finalizing the use of 2006 through 2008 ACS two 
bedroom rental data as a proxy for the relative cost difference in 
physicians' offices. Moreover, we will examine 5-year ACS rental data 
to determine its appropriateness as a potential data source for 
physician office rent. We will also examine HUDs CY 2012 proposed 
methodology, which utilizes ACS data exclusively, for potential use in 
future rulemaking. We are also finalizing our proposal to create a 
purchased services index to account for labor-related services with the 
``all other services'' and ``other professional expenses'' MEI 
components. In response to public commenters who recommended we utilize 
BLS data to capture the ``full range'' of occupations included in the 
offices of physician industry to calculate employee wage, we are 
modifying our original proposal and expanding the number of occupations 
utilized in our calculation of non-physician employee wages to reflect 
100 percent of the total wage share of non-physician occupations in the 
offices of physicians' industry.
    As we indicated previously in this section, section 103 of the 
Medicare and Medicaid Extenders Act (MMEA) of 2010 (Pub. L. 111-309) 
extended the 1.0 work GPCI floor only through December 31, 2011. 
Therefore, the CY 2012 physician work GPCIs and summarized GAFs do not 
reflect the 1.0 work floor. Moreover, the limited recognition of cost 
differences in employee compensation and office rent for the PE GPCIs, 
and the related hold harmless provision, required under section 1848 
(e)(1)(H) of the Act was only applicable for CY 2010 and CY 2011 (75 FR 
73253) and, therefore under current law, is no longer effective 
beginning in CY 2012. However, the permanent 1.5 work GPCI floor for 
Alaska (as established by section 134(b) of the MIPPA) will remain in 
effect for CY 2012. We are finalizing the CY 2012 GPCIs shown in 
Addendum E. The GPCIs have been budget neutralized to ensure that 
nationwide, total RVUs are not impacted by changes in locality GPCIs. 
The 1.0 PE GPCI floor for frontier States was applied to the budget 
neutralized GPCIs. The frontier States are the following: Montana; 
Wyoming; North Dakota; Nevada; and South Dakota. The CY 2012 updated 
GAFs and GPCIs may be found in Addenda D and E of this final rule with 
comment period.
3. Payment Localities
    The current PFS locality structure was developed and implemented in 
1997. There are currently 89 total PFS localities; 34 localities are 
Statewide areas (that is, only one locality for the entire State). 
There are 52 localities in the other 16 States, with 10 States having 2 
localities, 2 States having 3 localities, 1 State having 4 localities, 
and 3 States having 5 or more localities. The District of Columbia, 
Maryland, Virginia suburbs, Puerto Rico, and the Virgin Islands are 
additional localities that make up the remaining 3 of the total of 89 
localities. The development of the current locality structure is 
described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and 
the subsequent final rule with comment period (61 FR 59494).
    As we have previously noted in the CYs 2008 and 2009 proposed rules 
(72 FR 38139 and 73 FR 38513), any changes to the locality 
configuration must be made in a budget neutral manner within a State 
and can lead to significant redistributions in payments. For many 
years, we have not considered making changes to localities without the 
support of a State medical association in order to demonstrate 
consensus for the change among the professionals whose payments would 
be affected (since such changes would be redistributive, with some 
increasing and some decreasing). However, we have recognized that, over 
time, changes in demographics or local economic conditions may lead us 
to conduct a more comprehensive examination of existing payment 
localities.
    For the past several years, we have been involved in discussions 
with physician groups and their representatives about recent shifts in 
relative demographics and economic conditions. We explained in the CY 
2008 PFS final rule with comment period that we intended to conduct a 
thorough analysis of potential approaches to reconfiguring localities 
and would address this issue again in future rulemaking. For more 
information, we refer readers to the CY 2008 PFS proposed rule (72 FR 
38139) and subsequent final rule with comment period (72 FR 66245).
    As a follow-up to the CY 2008 PFS final rule with comment period, 
we acquired a contractor to conduct a preliminary study of several 
options for revising the payment localities on a nationwide basis. The 
final report entitled, ``Review of Alternative GPCI Payment Locality 
Structures--Final Report,'' is accessible from the CMS PFS Web page 
http://www.cms.hhs.gov/PhysicianFeeSched/10_Interim_Study.asp#TopOfPage under the heading ``Review of Alternative GPCI 
Payment Locality Structures--Final Report.'' The report may also be 
accessed directly from the following link: http://www.cms.gov/PhysicianFeeSched/downloads/Alt_GPCI_Payment_Locality_Structures_Review.pdf.
    We did not make any proposals regarding the PFS locality 
configurations for CY 2012. However, we did receive some comments 
regarding IOM's recommendation to modify Medicare PFS localities to 
reflect metropolitan statistical areas (MSA)-based definitions. We will

[[Page 73092]]

address any changes to Medicare PFS localities in future rulemaking.
4. Report From the Institute of Medicine
    At our request, the Institute of Medicine is conducting a study of 
the geographic adjustment factors in Medicare payment. It is a 
comprehensive empirical study of the geographic adjustment factors 
established under sections 1848(e) (GPCI) and 1886(d)(3)(E) of the Act 
(hospital wage index). These adjustments are designed to ensure 
Medicare payment fees and rates reflect differences in input costs 
across geographic areas. The factors IOM is evaluating include the--
     Accuracy of the adjustment factors;
     Methodology used to determine the adjustment factors, and
     Sources of data and the degree to which such data are 
representative.
    Within the context of the U.S. health care marketplace, the IOM is 
also evaluating and considering the--
     Effect of the adjustment factors on the level and 
distribution of the health care workforce and resources, including--
    ++ Recruitment and retention taking into account mobility between 
urban and rural areas;
    ++ Ability of hospitals and other facilities to maintain an 
adequate and skilled workforce; and
    ++ Patient access to providers and needed medical technologies;
     Effect of adjustment factors on population health and 
quality of care; and
     Effect of the adjustment factors on the ability of 
providers to furnish efficient, high value care.
    The revised first report ``Geographic Adjustment in Medicare 
Payment, Phase I: Improving Accuracy'' that was released September 28, 
2011 and is available on the IOM Web site http://www.iom.edu/Reports/2011/Geographic-Adjustment-in-Medicare-Payment-Phase-I-Improving-Accuracy.aspx. It evaluates the accuracy of geographic adjustment 
factors and the methodology and data used to calculate them, and 
contains supplemental GPCI recommendations that were not contained in 
IOM's initial June 1st report. In its final report, scheduled to be 
released in the spring of 2012, the IOM will consider the role effect 
of Medicare payments in on matters such as the distribution of the 
health care workforce, population health, and the ability of providers 
to produce high-value, high-quality health care.
    The recommendations included in IOM's revised Phase I report that 
relate to or would have an effect on the GPCIs are summarized as 
follows:
     Recommendation 2-1: The same labor market definition 
should be used for both the hospital wage index and the physician 
geographic adjustment factor. Metropolitan statistical areas and 
Statewide non-metropolitan statistical areas should serve as the basis 
for defining these labor markets.
     Recommendation 2-2: The data used to construct the 
hospital wage index and the physician geographic adjustment factor 
should come from all health care employers.
     Recommendation 5-1: The GPCI cost share weights for 
adjusting fee-for-service payments to practitioners should continue to 
be national, including the three GPCIs (work, practice expense, and 
liability insurance) and the categories within the practice expense 
(office rent and personnel).
     Recommendation 5-2: Proxies should continue to be used to 
measure geographic variation in the physician work adjustment, but CMS 
should determine whether the seven proxies currently in use should be 
modified.
     Recommendation 5-3: CMS should consider an alternative 
method for setting the percentage of the work adjustment based on a 
systematic empirical process.
     Recommendation 5-4: The practice expense GPCI should be 
constructed with the full range of occupations employed in physicians' 
offices, each with a fixed national weight based on the hours of each 
occupation employed in physicians' offices nationwide.
     Recommendation 5-5: CMS and the Bureau of Labor Statistics 
should develop an agreement allowing the Bureau of Labor Statistics to 
analyze confidential data for the Centers for Medicare and Medicaid 
Services.
     Recommendation 5-6: A new source of information should be 
developed to determine the variation in the price of commercial office 
rent per square foot.
     Recommendation 5-7: Nonclinical labor-related expenses 
currently included under practice expense office expenses should be 
geographically adjusted as part of the wage component of the practice 
expense.
    We note that the GPCI revisions we are finalizing in this final 
rule with comment period address three of the IOM recommendations 
referenced above. Specifically, our final GPCIs utilize the full range 
of non-physician occupations in the non-physician employee wage 
calculation consistent with IOM recommendation 5-4. Additionally, we 
created a new purchased service index to account for non-clinical 
labor-related expenses similar to IOM recommendation 5-7. Lastly, we 
have consistently used national cost share weights (MEI) to determine 
the appropriate weight attributed to each GPCI component, which is 
supported by recommendation 5-1. We may propose further improvements to 
the GPCI methodology in future rulemaking to address the remaining IOM 
recommendations once we have had an opportunity to assess IOM's 
recommendations in their entirety.

E. Medicare Telehealth Services for the Physician Fee Schedule

1. Billing and Payment for Telehealth Services
a. History
    Prior to January 1, 1999, Medicare coverage for services delivered 
via a telecommunications system was limited to services that did not 
require a face-to-face encounter under the traditional model of medical 
care. Examples of these services included interpretation of an x-ray, 
or electrocardiogram, or electroencephalogram tracing, and cardiac 
pacemaker analysis.
    Section 4206 of the BBA provided for coverage of, and payment for, 
consultation services delivered via a telecommunications system to 
Medicare beneficiaries residing in rural health professional shortage 
areas (HPSAs) as defined by the Public Health Service Act. 
Additionally, the BBA required that a Medicare practitioner 
(telepresenter) be with the patient at the time of a teleconsultation. 
Further, the BBA specified that payment for a teleconsultation had to 
be shared between the consulting practitioner and the referring 
practitioner and could not exceed the fee schedule payment which would 
have been made to the consultant for the service provided. The BBA 
prohibited payment for any telephone line charges or facility fees 
associated with the teleconsultation. We implemented this provision in 
the CY 1999 PFS final rule with comment period (63 FR 58814).
    Effective October 1, 2001, section 223 of the Medicare, Medicaid 
and SCHIP Benefits Improvement Protection Act of 2000 (Pub. L. 106-554) 
(BIPA) added a new section, 1834(m), to the Act which significantly 
expanded Medicare telehealth services. Section 1834(m)(4)(F)(i) of the 
Act defines Medicare telehealth services to include consultations, 
office visits, office psychiatry services, and any additional service 
specified by the Secretary, when delivered via a telecommunications 
system. We first implemented this

[[Page 73093]]

provision in the CY 2002 PFS final rule with comment period (66 FR 
55246). Section 1834(m)(4)(F)(ii) of the Act required the Secretary to 
establish a process that provides for annual updates to the list of 
Medicare telehealth services. We established this process in the CY 
2003 PFS final rule with comment period (67 FR 79988).
    As specified in regulations at Sec.  410.78(b), we generally 
require that a telehealth service be furnished via an interactive 
telecommunications system. Under Sec.  410.78(a)(3), an interactive 
telecommunications system is defined as multimedia communications 
equipment that includes, at a minimum, audio and video equipment 
permitting two-way, real time interactive communication between the 
patient and the practitioner at the distant site. Telephones, facsimile 
machines, and electronic mail systems do not meet the definition of an 
interactive telecommunications system. An interactive 
telecommunications system is generally required as a condition of 
payment; however, section 1834(m)(1) of the Act does allow the use of 
asynchronous ``store-and-forward'' technology in delivering these 
services when the originating site is a Federal telemedicine 
demonstration program in Alaska or Hawaii. As specified in regulations 
at Sec.  410.78(a)(1), store and forward means the asynchronous 
transmission of medical information from an originating site to be 
reviewed at a later time by the practitioner at the distant site.
    Medicare telehealth services may be provided to an eligible 
telehealth individual notwithstanding the fact that the individual 
practitioner providing the telehealth service is not at the same 
location as the beneficiary. An eligible telehealth individual means an 
individual enrolled under Part B who receives a telehealth service 
furnished at an originating site. As specified in BIPA, originating 
sites are limited under section 1834(m)(3)(C) of the Act to specified 
medical facilities located in specific geographic areas. The initial 
list of telehealth originating sites included the office of a 
practitioner, a critical access hospital (CAH), a rural health clinic 
(RHC), a Federally qualified health center (FQHC) and a hospital (as 
defined in Section 1861(e) of the Act). More recently, section 149 of 
the Medicare Improvements for Patients and Providers Act of 2008 (Pub. 
L. 110-275) (MIPPA) expanded the list of telehealth originating sites 
to include hospital-based renal dialysis centers, skilled nursing 
facilities (SNFs), and community mental health centers (CMHCs). In 
order to serve as a telehealth originating site, these sites must be 
located in an area designated as a rural health professional shortage 
area (HPSA), in a county that is not in a metropolitan statistical area 
(MSA), or must be an entity that participates in a Federal telemedicine 
demonstration project that has been approved by (or receives funding 
from) the Secretary of Health and Human Services as of December 31, 
2000. Finally, section 1834(m) of the Act does not require the eligible 
telehealth individual to be presented by a practitioner at the 
originating site.
b. Current Telehealth Billing and Payment Policies
    As noted previously, Medicare telehealth services can only be 
furnished to an eligible telehealth beneficiary in an originating site. 
An originating site is defined as one of the specified sites where an 
eligible telehealth individual is located at the time the service is 
being furnished via a telecommunications system. In general, 
originating sites must be located in a rural HPSA or in a county 
outside of an MSA. The originating sites authorized by the statute are 
as follows:
     Offices of a physician or practitioner.
     Hospitals.
     CAHs.
     RHCs.
     FQHCs.
     Hospital-Based Or Critical Access Hospital-Based Renal 
Dialysis Centers (including Satellites).
     SNFs.
     CMHCs.
    Currently approved Medicare telehealth services include the 
following:
     Initial inpatient consultations.
     Follow-up inpatient consultations.
     Office or other outpatient visits.
     Individual psychotherapy.
     Pharmacologic management.
     Psychiatric diagnostic interview examination.
     End-stage renal disease (ESRD) related services.
     Individual and group medical nutrition therapy (MNT).
     Neurobehavioral status exam.
     Individual and group health and behavior assessment and 
intervention (HBAI).
     Subsequent hospital care.
     Subsequent nursing facility care.
     Individual and group kidney disease education (KDE).
     Individual and group diabetes self-management training 
services (DSMT).
    In general, the practitioner at the distant site may be any of the 
following, provided that the practitioner is licensed under State law 
to furnish the service being furnished via a telecommunications system:
     Physician.
     Physician assistant (PA).
     Nurse practitioner (NP).
     Clinical nurse specialist (CNS);
     Nurse-midwife.
     Clinical psychologist.
     Clinical social worker.
     Registered dietitian or nutrition professional.
    Practitioners furnishing Medicare telehealth services are located 
at a distant site, and they submit claims for telehealth services to 
the Medicare contractors that process claims for the service area where 
their distant site is located. Section 1834(m)(2)(A) of the Act 
requires that a practitioner who furnishes a telehealth service to an 
eligible telehealth individual be paid an amount equal to the amount 
that the practitioner would have been paid if the service had been 
furnished without the use of a telecommunications system. Distant site 
practitioners must submit the appropriate HCPCS procedure code for a 
covered professional telehealth service, appended with the -GT (Via 
interactive audio and video telecommunications system) or -GQ (Via 
asynchronous telecommunications system) modifier. By reporting the -GT 
or -GQ modifier with a covered telehealth procedure code, the distant 
site practitioner certifies that the beneficiary was present at a 
telehealth originating site when the telehealth service was furnished. 
The usual Medicare deductible and coinsurance policies apply to the 
telehealth services reported by distant site practitioners.
    Section 1834(m)(2)(B) of the Act provides for payment of a facility 
fee to the originating site. To be paid the originating site facility 
fee, the provider or supplier where the eligible telehealth individual 
is located must submit a claim with HCPCS code Q3014 (Telehealth 
originating site facility fee), and the provider or supplier is paid 
according to the applicable payment methodology for that facility or 
location. The usual Medicare deductible and coinsurance policies apply 
to HCPCS code Q3014. By submitting HCPCS code Q3014, the originating 
site certifies that it is located in either a rural HPSA or non-MSA 
county or is an entity that participates in a Federal telemedicine 
demonstration project that has been approved by (or receives funding 
from) the Secretary of Health and Human Services as of December 31, 
2000 as specified in section 1834(m)(4)(C)(i)(III) of the Act.
    As previously described, certain professional services that are 
commonly

[[Page 73094]]

furnished remotely using telecommunications technology, but that do not 
require the patient to be present in-person with the practitioner when 
they are furnished, are covered and paid in the same way as services 
delivered without the use of telecommunications technology when the 
practitioner is in-person at the medical facility furnishing care to 
the patient. Such services typically involve circumstances where a 
practitioner is able to visualize some aspect of the patient's 
condition without the patient being present and without the 
interposition of a third person's judgment. Visualization by the 
practitioner can be possible by means of x-rays, electrocardiogram or 
electroencephalogram tracings, tissue samples, etc. For example, the 
interpretation by a physician of an actual electrocardiogram or 
electroencephalogram tracing that has been transmitted via telephone 
(that is, electronically, rather than by means of a verbal description) 
is a covered physician's service. These remote services are not 
Medicare telehealth services as defined under section 1834(m) of the 
Act. Rather, these remote services that utilize telecommunications 
technology are considered physicians' services in the same way as 
services that are furnished in-person without the use of 
telecommunications technology; they are paid under the same conditions 
as in-person physicians' services (with no requirements regarding 
permissible originating sites), and should be reported in the same way 
(that is, without the -GT or -GQ modifier appended).
2. Requests for Adding Services to the List of Medicare Telehealth 
Services
    As noted previously, in the December 31, 2002 Federal Register (67 
FR 79988), we established a process for adding services to or deleting 
services from the list of Medicare telehealth services. This process 
provides the public with an ongoing opportunity to submit requests for 
adding services. We assign any request to make additions to the list of 
Medicare telehealth services to one of the following categories:
     Category 1: Services that are similar to professional 
consultations, office visits, and office psychiatry services that are 
currently on the list of telehealth services. In reviewing these 
requests, we look for similarities between the requested and existing 
telehealth services for the roles of, and interactions among, the 
beneficiary, the physician (or other practitioner) at the distant site 
and, if necessary, the telepresenter. We also look for similarities in 
the telecommunications system used to deliver the proposed service, for 
example, the use of interactive audio and video equipment.
     Category 2: Services that are not similar to the current 
list of telehealth services. Our review of these requests includes an 
assessment of whether the use of a telecommunications system to deliver 
the service produces similar diagnostic findings or therapeutic 
interventions as compared with the in-person delivery of the same 
service. Requestors should submit evidence showing that the use of a 
telecommunications system does not affect the diagnosis or treatment 
plan as compared to in-person delivery of the requested service.
    Since establishing the process to add or remove services from the 
list of approved telehealth services, we have added the following to 
the list of Medicare telehealth services: individual and group HBAI 
services; psychiatric diagnostic interview examination; ESRD services 
with 2 to 3 visits per month and 4 or more visits per month (although 
we require at least 1 visit a month to be furnished in-person by a 
physician, CNS, NP, or PA in order to examine the vascular access 
site); individual and group MNT; neurobehavioral status exam; initial 
and follow-up inpatient telehealth consultations for beneficiaries in 
hospitals and skilled nursing facilities (SNFs); subsequent hospital 
care (with the limitation of one telehealth visit every 3 days); 
subsequent nursing facility care (with the limitation of one telehealth 
visit every 30 days); individual and group KDE; and individual and 
group DSMT services (with a minimum of 1 hour of in-person instruction 
to ensure effective injection training).
    Requests to add services to the list of Medicare telehealth 
services must be submitted and received no later than December 31 of 
each calendar year to be considered for the next rulemaking cycle. For 
example, requests submitted before the end of CY 2011 will be 
considered for the CY 2013 proposed rule. Each request for adding a 
service to the list of Medicare telehealth services must include any 
supporting documentation the requester wishes us to consider as we 
review the request. Because we use the annual PFS rulemaking process as 
a vehicle for making changes to the list of Medicare telehealth 
services, requestors should be advised that any information submitted 
is subject to public disclosure for this purpose. For more information 
on submitting a request for an addition to the list of Medicare 
telehealth services, including where to mail these requests, we refer 
readers to the CMS Web site at http://www.cms.gov/telehealth/.
3. Submitted Requests for Addition to the List of Telehealth Services 
for CY 2012
    We received requests in CY 2010 to add the following services as 
Medicare telehealth services effective for CY 2012: (1) Smoking 
cessation services; (2) critical care services; (3) domiciliary or rest 
home evaluation and management services; (4) genetic counseling 
services; (5) online evaluation and management services; (6) data 
collection services; and (7) audiology services. The following presents 
a discussion of these requests, including our proposals for additions 
to the CY 2012 telehealth list.
a. Smoking Cessation Services
    The American Telemedicine Association and the Marshfield Clinic 
submitted requests to add smoking cessation services, reported by CPT 
codes 99406 (Smoking and tobacco use cessation counseling visit; 
intermediate, greater than 3 minutes up to 10 minutes) and 99407 
(Smoking and tobacco use cessation counseling visit; intensive, greater 
than 10 minutes) to the list of approved telehealth services for CY 
2012 on a category 1 basis.
    Smoking Cessation services are defined as face-to-face behavior 
change interventions. We believe the interaction between a practitioner 
and a beneficiary receiving smoking cessation services is similar to 
the education, assessment, and counseling elements of individual KDE 
reported by HCPCS code G0420 (Face-to-face educational services related 
to the care of chronic kidney disease; individual, per session, per 1 
hour), and individual MNT services, reported by HCPCS code G0270 
(Medical nutrition therapy; reassessment and subsequent intervention(s) 
following second referral in the same year for change in diagnosis, 
medical condition or treatment regimen (including additional hours 
needed for renal disease), individual, face-to-face with the patient, 
each 15 minutes); CPT code 97802 (Medical nutrition therapy; initial 
assessment and intervention, individual, face-to-face with the patient, 
each 15 minutes); and CPT code 97803 (Medical nutrition therapy; re-
assessment and intervention, individual, face-to-face with the patient, 
each 15 minutes), all services that are currently on the telehealth 
list.
    Therefore, we proposed to add CPT codes 99406 and 99407 to the list 
of telehealth services for CY 2012 on a category 1 basis. Additionally, 
we proposed to add HCPCS codes G0436 (Smoking and tobacco cessation

[[Page 73095]]

counseling visit for the asymptomatic patient; intermediate, greater 
than 3 minutes, up to 10 minutes) and G0437 (Smoking and tobacco 
cessation counseling visit for the asymptomatic patient; intensive, 
greater than 10 minutes) to the list of telehealth services for CY 2012 
since these related services are similar to the codes for which we 
received formal public requests.
    Consistent with this proposal, we also proposed to revise our 
regulations at Sec.  410.78(b) and Sec.  414.65(a)(1) to include these 
smoking cessation services as Medicare telehealth services.
    Comment: All commenters expressed support for CMS' proposal to add 
smoking cessation services to the list of Medicare telehealth services 
for CY 2012. One commenter stated that the proposal would contribute to 
ensuring that all Medicare beneficiaries--regardless of where they 
reside--have access to these services that are a valuable step toward 
reducing tobacco use among the Medicare population. Another commenter 
stated that the proposal would go far in helping many rural Americans 
gain access to these services that they would otherwise not have.
    Response: We agree with the commenters that adding smoking 
cessation services to the list of Medicare telehealth services will 
help to provide greater access to the services for beneficiaries in 
rural or other isolated areas.
    After consideration of the public comments we received, we are 
finalizing our CY 2012 proposal to add CPT codes 99406 and 99407 to the 
list of telehealth services for CY 2012 on a category 1 basis. 
Additionally, we are finalizing our proposal to add HCPCS codes G0436 
(Smoking and tobacco cessation counseling visit for the asymptomatic 
patient; intermediate, greater than 3 minutes, up to 10 minutes) and 
G0437 (Smoking and tobacco cessation counseling visit for the 
asymptomatic patient; intensive, greater than 10 minutes) to the list 
of telehealth services for CY 2012 and to revise our regulations at 
Sec.  410.78(b) and Sec.  414.65(a)(1) to include smoking cessation 
services as Medicare telehealth services.
b. Critical Care Services
    The American Telemedicine Association and the Marshfield Clinic 
submitted requests to add critical care service CPT codes 99291 
(Critical care, evaluation and management of the critically ill or 
critically injured patient; first 30-74 minutes) and 99292 (Critical 
care, evaluation and management of the critically ill or critically 
injured patient; each additional 30 minutes) to the list of approved 
telehealth services. We previously received this request for the CY 
2009 and CY 2010 PFS rulemaking cycles (73 FR 38517, 73 FR 69744 and 
69745, 74 FR 33548, and 74 FR 61764) and did not add the codes on a 
category 1 basis due to the acute nature of the typical patient. We 
continue to believe that patients requiring critical care services are 
more acutely ill than those patients typically receiving any service 
currently on the list of telehealth services. Therefore, we cannot 
consider critical care services on a category 1 basis.
    In the CY 2009 PFS proposed rule (73 FR 38517), we explained that 
we had no evidence suggesting that the use of telehealth could be a 
reasonable surrogate for the in-person delivery of critical care 
services; therefore, we would not add the services on a category 2 
basis. Requestors submitted new studies for CY 2012, but none 
demonstrated that comparable outcomes to a face-to-face encounter can 
be achieved using telehealth to deliver these services. The studies we 
received primarily addressed other issues relating to telehealth 
services. Some studies addressed the cost benefits and cost savings of 
telehealth services. Others focused on the positive outcomes of 
telehealth treatment when compared with no treatment at all. One 
submitted study addressed the equivalency of patient outcomes for 
telehealth services delivered to patients in emergency rooms, but the 
study's authors specifically restricted their population to patients 
whose complaints were not considered to be genuine emergencies. Given 
that limitation, it seems unlikely that any of these patients would 
have required critical care services as defined by CPT codes 99291 and 
99292.
    We note that consultations are included on the list of Medicare 
telehealth services and may be billed by practitioners furnishing 
services to critically ill patients These services are described by the 
following HCPCS codes: G0425 (Initial inpatient telehealth 
consultation, typically 30 minutes communicating with the patient via 
telehealth), G0426 (Initial inpatient telehealth consultation, 
typically 50 minutes communicating with the patient via telehealth), 
G0427 (Initial inpatient telehealth consultation, typically 70 minutes 
or more communicating with the patient via telehealth), G0406 (Follow-
up inpatient telehealth consultation, limited, physicians typically 
spend 15 minutes communicating with the patient via telehealth), G0407 
(Follow-up inpatient telehealth consultation, intermediate, physicians 
typically spend 25 minutes communicating with the patient via 
telehealth), and G0408 (Follow-up inpatient telehealth consultation, 
complex, physicians typically spend 35 minutes or more communicating 
with the patient via telehealth). Critical care services, as reported 
by the applicable CPT codes and described in the introductory language 
in the CPT book, consist of direct delivery by a physician of medical 
care for a critically ill or injured patient, including high complexity 
decision-making to assess, manipulate, and support vital system 
functions. Critical care requires interpretation of multiple 
physiologic parameters and/or application of advanced technologies, 
including temporary pacing, ventilation management, and vascular access 
services. The payment rates under the PFS reflect this full scope of 
physician work. To add the critical services to the telehealth list 
would require the physician to be able to deliver this full scope of 
services via telehealth. Based on the code descriptions, we have 
previously believed that it is not possible to deliver the full range 
of critical care services without a physical physician presence with 
the patient.
    We note that there are existing Category III CPT codes (temporary 
codes for emerging services that allow data collection) for remote 
real-time interactive video-conferenced critical care services that, 
consistent with our treatment of other Category III CPT codes, are not 
nationally priced under the PFS. The fact that the CPT Editorial Panel 
created these additional Category III CPT codes suggests to us that 
these video-conferenced critical care services are not the same as the 
in-person critical care services requested for addition to the 
telehealth list.
    Because we did not find evidence that use of a telecommunications 
system to deliver critical care services produces similar diagnostic or 
therapeutic outcomes as compared with the face-to-face deliver of the 
services, we did not propose to add critical care services (as 
described by CPT codes 99291 and 99292) to the list of approved 
telehealth services. We reiterated that our decision not to propose to 
add critical care services to the list of approved telehealth services 
does not preclude physicians from furnishing telehealth consultations 
to critically ill patients using the consultation codes that are on the 
list of Medicare telehealth services.
    Comment: One commenter supported CMS's decision not to add critical 
care services because the use of a telecommunications system to deliver 
critical services is unlikely to produce

[[Page 73096]]

``similar diagnostic findings or therapeutic interventions as compared 
with the in-person delivery of the same service.''
    Response: We appreciate this support for our proposal. As we stated 
in the CY 2012 PFS proposed rule (76 FR 42843), none of the submitted 
requests to add these services included evidence that demonstrated 
delivery via telehealth resulted in comparable outcomes to in-person 
care.
    Comment: One commenter disagreed with CMS' decision not to add 
critical care services to the list of Medicare Telehealth Services. The 
commenter argued that because the patient who requires critical care is 
more acutely ill than patients receiving any of the services currently 
on the list of approved codes, these services should be added to the 
list. This commenter also suggested that the proposal to allow 
consulting physicians to use the inpatient telehealth g-codes to report 
care of critically ill patients through telehealth was inappropriate 
because not all critically ill patients are inpatients.
    Response: We appreciate and share the commenter's concern for 
beneficiary access to care. However, we reiterate that no evidence that 
we received meets the criteria to add these services to the list of 
Medicare telehealth services. Regarding the appropriateness of the 
telehealth consultation g-codes in the emergency department setting, we 
refer the commenter to section II.E.5. of this final rule with comment 
period.
    After consideration of the public comments we received, we are 
finalizing our decision not to add critical care services to the list 
of Medicare telehealth services for CY 2012.
c. Domiciliary or Rest Home Evaluation and Management Services
    The American Telemedicine Association and the Marshfield Clinic 
submitted requests to add the following domiciliary or rest home 
evaluation and management CPT codes to the telehealth list for CY 2012:
     99334 (Domiciliary or rest home visit for the evaluation 
and management of an established patient, which requires at least 2 of 
these 3 key components: A problem focused interval history; a problem 
focused examination; or straightforward medical decision making. 
Counseling and/or coordination of care with other providers or agencies 
are provided consistent with the nature of the problem(s) and the 
patient's and/or family's needs. Usually, the presenting problem(s) are 
self-limited or minor. Physicians typically spend 15 minutes with the 
patient and/or family or caregiver).
     99335 (Domiciliary or rest home visit for the evaluation 
and management of an established patient, which requires at least 2 of 
these 3 key components: An expanded problem focused interval history; 
An expanded problem focused examination; Medical decision making of low 
complexity. Counseling and/or coordination of care with other providers 
or agencies are provided consistent with the nature of the problem(s) 
and the patient's and/or family's needs. Usually, the presenting 
problem(s) are of low to moderate severity. Physicians typically spend 
25 minutes with the patient and/or family or caregiver).
     99336 (Domiciliary or rest home visit for the evaluation 
and management of an established patient, which requires at least 2 of 
these 3 key components: A detailed interval history; a detailed 
examination; medical decision making of moderate complexity. Counseling 
and/or coordination of care with other providers or agencies are 
provided consistent with the nature of the problem(s) and the patient's 
and/or family's needs. Usually, the presenting problem(s) are of 
moderate to high severity. Physicians typically spend 40 minutes with 
the patient and/or family or caregiver).
     99337 (Domiciliary or rest home visit for the evaluation 
and management of an established patient, which requires at least 2 of 
these 3 key components: A comprehensive interval history; a 
comprehensive examination; medical decision making of moderate to high 
complexity. Counseling and/or coordination of care with other providers 
or agencies are provided consistent with the nature of the problem(s) 
and the patient's and/or family's needs. Usually, the presenting 
problem(s) are of moderate to high severity. The patient may be 
unstable or may have developed a significant new problem requiring 
immediate physician attention. Physicians typically spend 60 minutes 
with the patient and/or family or caregiver).
    A domiciliary or rest home is not permitted under current statute 
to serve as an originating site for Medicare telehealth services. 
Therefore, we did not propose to add domiciliary or rest home 
evaluation and management services to the list of Medicare telehealth 
services for CY 2012.
    Comment: One commenter disagreed with our proposal not to add 
domiciliary or rest home evaluation and management services because 
neither domiciliaries nor rest homes are permitted under current statue 
to serve as an originating site for Medicare Telehealth services. The 
commenter argued that because CMS added new ESRD-related G-codes to the 
list of approved Medicare Telehealth services in 2005 despite the fact 
that dialysis centers were not then permitted under statute to serve as 
originating sites, CMS' current reasoning is invalid.
    Comment: We acknowledge that we previously added certain ESRD 
services to the list of Medicare telehealth services when dialysis 
centers were not permitted under statute to serve as telehealth 
originating sites. However, the services in question can also be 
furnished in sites that were eligible originating sites when the codes 
were added to the list. At this time, we do not believe that 
domiciliary or rest home evaluation and management services can be 
furnished outside of domiciliaries or rest homes.
    After consideration of the public comments we received, we are 
finalizing our decision not to add domiciliary or rest home evaluation 
and management services to the list of Medicare telehealth services for 
CY2012.
d. Genetic Counseling Services
    The American Telemedicine Association and the Marshfield Clinic 
submitted requests to add CPT code 96040 (Medical genetics and genetic 
counseling services, each 30 minutes face-to-face with patient/family) 
to the telehealth list for CY 2012. We note that CPT guidance regarding 
reporting genetic counseling and education furnished by a physician to 
an individual directs physicians to evaluation and management (E/M) CPT 
codes and that services described by CPT code 96040 are provided by 
trained genetic counselors. Physicians and nonphysician practitioners 
who may independently bill Medicare for their service and who are 
counseling individuals would generally report office or other 
outpatient evaluation and management (E/M) CPT codes for office visits 
that involve significant counseling, including genetic counseling, and 
these office visit CPT codes are already on the list of telehealth 
services. CPT code 96040 would only be reported by genetic counselors 
for genetic counseling services. These practitioners cannot bill 
Medicare directly for their professional services and they are also not 
on the list of practitioners who can furnish telehealth services 
(specified in section 1834(m)(4)(E) of the Act). As such, we do not 
believe that it would be necessary or appropriate to add CPT code 96040 
to the list of Medicare

[[Page 73097]]

telehealth services. Therefore, we did not propose to add genetic 
counseling services to the list of Medicare telehealth services for CY 
2012.
    Comment: One commenter expressed concerns about beneficiary access 
concerns to genetic counseling but acknowledged the statutory 
constraints faced by CMS.
    Response: We appreciate the commenter's concerns and their 
agreement with our conclusions regarding our statutory limitations.
    After consideration of the public comments we received, we are 
finalizing our decision not to add genetic counseling services to the 
list of Medicare telehealth services for CY 2012.
e. Online Evaluation and Management Services
    The American Telemedicine Association and the Marshfield Clinic 
submitted requests to add CPT code 99444 (Online evaluation and 
management service provided by a physician to an established patient, 
guardian, or health care provider not originating from a related E/M 
service provided within the previous 7 days, using the Internet or 
similar electronic communications network) to the list of Medicare 
telehealth services.
    As we explained in the CY 2008 PFS final rule with comment period 
(72 FR 66371), we assigned a status indicator of ``N'' (Non-covered 
service) to these services because: (1) These services are non-face-to-
face; and (2) the code descriptor includes language that recognizes the 
provision of services to parties other than the beneficiary and for 
whom Medicare does not provide coverage (for example, a guardian).
    According to section 1834(m)(2)(A) of the Act, Medicare is required 
to pay for telehealth services at an amount equal to the amount that a 
practitioner would have been paid had such service been furnished 
without the use of a telecommunications system. As such, we do not 
believe it would be appropriate to make payment for services furnished 
via telehealth when those services would not otherwise be covered under 
Medicare. Because CPT code 99444 is currently noncovered, we did not 
propose to add online evaluation and management services to the list of 
Medicare Telehealth Services for CY 2012.
    Comment: One commenter argued that adding online evaluation and 
management and other services to the list of Medicare telehealth 
services would support chronic care management and care coordination. 
The same commenter also asserted that adding these services would be 
administratively easy for CMS to implement.
    Response: While we appreciate the potential value of maximizing the 
use of communication technology in care coordination and chronic care 
management, we cannot consider adding services that are not otherwise 
payable under the physician fee schedule to the Medicare telehealth 
benefit, as defined in 1834 (m) of the Act. Our decision not to add 
online evaluation and management or any other requested services to the 
list of Medicare telehealth services does not result from concern about 
administrative burden.
    After consideration of the public comments we received, we are 
finalizing our decision not to add online evaluation and management 
services to the list of Medicare telehealth services for CY 2012.
f. Data Collection Services
    The American Telemedicine Association and the Marshfield Clinic 
submitted requests to add CPT codes 99090 (Analysis of clinical data 
stored in computers (e.g., ECGs, blood pressures, hematologic data)) 
and 99091 (Collection and interpretation of physiologic data (e.g., 
ECG, blood pressure, glucose monitoring) digitally stored and/or 
transmitted by the patient and/or caregiver to the physician or other 
qualified health care professional, requiring a minimum of 30 minutes 
of time) to the list of Medicare telehealth services.
    As we explained in the in CY 2002 PFS final rule with comment 
period (66 FR 55309), we assigned a status indicator of ``B'' (Payment 
always bundled into payment for other services not specified) to these 
services because the associated work is considered part of the pre- and 
post-service work of an E/M service. We note that many E/M codes are on 
the list of Medicare telehealth services.
    According to section 1834(m)(2)(A) of the Act, Medicare is required 
to pay for telehealth services an amount equal to the amount that a 
practitioner would have been paid had such service been furnished 
without the use of a telecommunications system. Similar to the point 
noted previously for online E/M services, we do not believe it would be 
appropriate to make separate payment for services furnished via 
telehealth when Medicare would not otherwise make separate payment for 
the services. Moreover, we believe the payment for these data 
collection services should be bundled into the payment for E/M 
services, many of which are already on the Medicare telehealth list. 
Because CPT codes 99090 and 99091 are currently bundled, we did not 
propose to add data collection services to the list of Medicare 
telehealth services for CY 2012.
    Comment: Two commenters argued that CMS should pay separately for 
services like data collection since when furnished they often mitigate 
the need for an in-person visit and in those cases cannot logically be 
considered to be bundled with other services.
    Response: We thank the commenters for conveying their perspective 
on the value of such services. However, we continue to believe it would 
be inappropriate to add services that are not otherwise separately 
payable under the physician fee schedule to the Medicare telehealth 
benefit, as defined in 1834 (m) of the Act.
    After consideration of the public comments we received, we are 
finalizing our decision not to add data collection services to the list 
of Medicare telehealth services for CY 2012.
g. Audiology Services
    The American Academy of Audiology submitted a request that CMS add 
services that audiologists provide for balance disorders and hearing 
loss to the list of Medicare telehealth services. The request did not 
include specific HCPCS codes. Nevertheless, it is not within our 
administrative authority to pay audiologists for services furnished via 
telehealth. The statute authorizes the Secretary to pay for telehealth 
services only when furnished by a physician or a practitioner as 
physician or practitioner are defined in sections 1834(m)(4)(D) and (E) 
of the Act. Therefore, we did not propose to add services that are 
primarily provided by audiologists to the list of Medicare telehealth 
services for CY 2012.
    Comment: Several commenters stated broad support for the value of 
audiology services when furnished through telehealth. These commenters 
urged CMS to consider other ways of implementing programs that allow 
audiology services to be furnished through telehealth.
    Response: We appreciate the commenters' perspective on the value of 
audiology services. The statute authorizes payment for telehealth 
services only when furnished by a physician or practitioner as defined 
in sections 1834(m)(4)(D) and (E) of the Act. Audiologists do not fall 
within either of these definitions, and we do not believe there is 
another way to make

[[Page 73098]]

payment to audiologists for telehealth services.
    After consideration of the public comments we received, we are 
finalizing our decision not to add audiology services to the list of 
Medicare telehealth services for CY 2012.
4. The Process for Adding HCPCS Codes as Medicare Telehealth Services
    Along with its submission of codes for consideration as additions 
to the Medicare telehealth list for CY 2012, the American Telemedicine 
Association (ATA) also requested that CMS consider revising the annual 
process for adding to or deleting services from the list of telehealth 
services. The existing process, adopted in the CY 2003 PFS rulemaking 
cycle (67 FR 43862 through 43863 and 67 FR 79988 through 79989), is 
described in section II.E.1. of this final rule with comment period. 
The following discussion includes a summary of recent requests by the 
ATA and other stakeholders for changes to the established process for 
adding services to the telehealth list, an assessment of our historical 
experience with the current process including the request review 
criteria, and our proposed refinement to the process for adding 
services to the telehealth list that would be used in our evaluation of 
candidate telehealth services beginning for CY 2013.
    The ATA asked CMS to consider two specific changes to the process, 
including--
     Broadening the factors for consideration to include 
shortages of health professionals to provide in-person services, speed 
of access to in-person services, and other barriers to care for 
beneficiaries; and
     Equalizing the standard for adding telehealth services 
with the standard for deleting telehealth services by adopting a 
standard that allows services that are safe, effective or medically 
beneficial when furnished via telehealth to be added to the list of 
Medicare telehealth services. Similarly, we have received 
recommendations that CMS place all codes payable under the PFS on the 
telehealth list and allow physicians and practitioners to make a 
clinical determination in each case about whether a medically 
reasonable and necessary service could be appropriately furnished to a 
beneficiary through telehealth. Under this scenario, stakeholders have 
argued that CMS would only remove services from the telehealth list 
under its existing policy for service removal; specifically, that a 
decision to remove a service from the list of telehealth services would 
be made using evidence-based, peer-reviewed data which indicate that a 
specific service is not safe, effective, or medically beneficial when 
furnished via telehealth (67 FR 79988).
    While we share the interests of stakeholders in reducing barriers 
to health care access faced by some beneficiaries, given that section 
1834(m)(2)(F)(ii) of the Act requires the Secretary to establish a 
process that provides, on an annual basis, for the addition or deletion 
of telehealth services (and HCPCS codes), as appropriate, we do not 
believe it would be appropriate to add all services for which payment 
is made under the PFS to the telehealth list without explicit 
consideration as to whether the candidate service could be effectively 
furnished through telehealth. For example, addition of all codes to the 
telehealth list could result in a number of services on the list that 
could never be furnished by a physician or nonphysician practitioner 
who was not physically present with the beneficiary, such as major 
surgical procedures and interventional radiology services. Furthermore, 
we do not believe it would be appropriate to add services to the 
telehealth list without explicit consideration as to whether or not the 
nature of the service described by a candidate code allows the service 
to be furnished effectively through telehealth. Section 1834(m)(2)(A) 
of the Act requires that the distant site physician or practitioner 
furnishing the telehealth service must be paid an amount equal to the 
amount the physician or practitioner would have been paid under the PFS 
has such service been furnished without the use of a telecommunications 
system. Therefore, we believe that candidate telehealth services must 
also be covered when furnished in-person; and that any service that 
would only be furnished through a telecommunications system would be a 
new service and, therefore, not a candidate for addition to the 
telehealth list. In view of these considerations, we will continue to 
consider candidate additions to the telehealth list on a HCPCS code-
specific basis based on requests from the public and our own 
considerations.
    We also believe it continues to be most appropriate to consider 
candidate services for the telehealth list based on the two mutually 
exclusive established categories into which all services fall--
specifically, services that are similar to services currently on the 
telehealth list (category 1) and services that are not similar to 
current telehealth services (category 2). Under our existing policy, we 
add services to the telehealth list on a category 1 basis when we 
determine that they are similar to services on the existing telehealth 
list with respect to the roles of, and interactions among, the 
beneficiary, physician (or other practitioner) at the distant site and, 
if necessary, the telepresenter (67 FR 43862). Since CY 2003, we have 
added 35 services to the telehealth list on a category 1 basis based on 
public requests and our own identification of such services. We believe 
it is efficient and valuable to maintain the existing policy that 
allows us to consider requests for additions to the telehealth list on 
a category 1 basis and proposed to add them to the telehealth list if 
the existing criteria are met. This procedure expedites our ability to 
identify codes for the telehealth list that resemble those services 
already on this list, streamlining our review process and the public 
request and information-submission process for services that fall into 
this category. Therefore, we believe that any changes to the process 
for adding codes to the telehealth list should be considered with 
respect to category 2 additions, rather than category 1 additions.
    Our existing criteria for consideration of codes that would be 
category 2 additions, specifically those candidate telehealth services 
that are not similar to any current telehealth services, include an 
assessment of whether the use of a telecommunications system to deliver 
the services produces similar diagnostic findings or therapeutic 
interventions as compared with a face-to-face in-person delivery of the 
same service (67 FR 43682). In other words, the discrete outcome of the 
interaction between the clinician and patient facilitated by a 
telecommunications system should correlate well with the discrete 
outcome of the clinician-patient interaction when performed face-to-
face. In the CY 2003 PFS proposed rule (67 FR 43862), we explained that 
requestors for category 2 additions to the telehealth list should 
submit evidence that the use of a telecommunications systems does not 
affect the diagnosis or treatment plan as compared to in-person 
delivery of the service. We indicated that if evidence shows that the 
candidate telehealth service is equivalent when furnished in person or 
through telehealth, we would add it to the list of telehealth services. 
We refer to this standard in further discussion in this final rule with 
comment period as the ``comparability standard.'' We stated in the CY 
2003 PFS proposed rule (67 FR 43862) that if we determine that the use 
of a telecommunications system changes the nature or outcome of the 
service, for

[[Page 73099]]

example, as compared with the in-person delivery of the service, we 
would review the telehealth service addition request as a request for a 
new service, rather than a different method of delivering an existing 
Medicare service. For coverage and payment of most services, Medicare 
requires that a new service must: (1) Fall into a Medicare benefit 
category; (2) be reasonable and necessary in accordance with section 
1862(a)(1)(A) of the Act; and (3) not be explicitly excluded from 
coverage. In such a case, the requestor would have the option of 
applying for a national coverage determination for the new service.
    We believe it is most appropriate to address the ATA and other 
stakeholder requests to broaden the current factors we consider when 
deciding whether to add candidate services to the telehealth list--to 
include factors such as the effects of barriers to in-person care and 
the safety, effectiveness, or medical benefit of the service furnished 
through telehealth, as potential refinements to our category 2 
criteria. We initially established these category 2 criteria in the 
interest of ensuring that the candidate services were safe, effective, 
medically beneficial, and still accurately described by the 
corresponding codes when delivered via telehealth, while also ensuring 
that beneficiaries furnished telehealth services receive high quality 
care that is comparable to in-person care. We believed that the 
demonstration of comparable clinical outcomes (diagnostic findings and/
or therapeutic interventions) from telehealth and in-person services 
would prove to be the best indicator that all of these conditions were 
met. While we continue to believe that safety, effectiveness, and 
medical benefit, as well as accurate description of the candidate 
telehealth services by the CPT or HCPCS codes, are necessary conditions 
for adding codes to the list of Medicare telehealth services, our 
recent experience in reviewing public requests for telehealth list 
additions and our discussions with stakeholders regarding contemporary 
medical practice and potential barriers to care, have led us to 
conclude that the comparability standard for category 2 requests should 
be modified.
    In our annual evaluation of category 2 requests since we adopted 
the process for evaluating additions to the telehealth list almost 10 
years ago, we have consistently observed that requestors have 
difficulty demonstrating that clinical outcomes of a service delivered 
via telehealth are comparable to the outcomes of the in-person service. 
The medical literature frequently does not include studies of the 
outcomes of many types of in-person services that allow for comparison 
to the outcomes demonstrated for candidate telehealth services. 
Furthermore, we know that in some cases the alternative to a telehealth 
service may be no service rather than an in-person service. The 
comparability standard may not sufficiently allow for the opportunity 
to add candidate services to the telehealth list that may be safe, 
effective, and medically beneficial when delivered via telehealth, 
especially to beneficiaries who experience significant barriers to in-
person care. While we continue to believe that beneficiaries receiving 
services through telehealth are deserving of high quality health care 
and that in-person care may be very important and potentially 
preferable for some services when in-person care is possible, we are 
concerned that we have not added any services to the telehealth list on 
a category 2 basis as a result of our reviews. While some candidate 
services appear to have the potential for clinical benefit when 
furnished through telehealth, the requests have not met the 
comparability standard.
    Therefore, we proposed to refine our category 2 review criteria for 
adding codes to the list of Medicare telehealth services beginning in 
CY 2013 by modifying the current requirement to demonstrate similar 
diagnostic findings or therapeutic interventions with respect to a 
candidate service delivered through telehealth compared to in-person 
delivery of the service (the comparability standard). We proposed to 
establish a revised standard of demonstrated clinical benefit when the 
service is furnished via telehealth. We refer to this proposed standard 
in further discussion in this final rule with comment period as the 
``clinical benefit standard.'' To support our review using this revised 
standard, we would ask requestors to specify in their request how the 
candidate telehealth service is still accurately described by the 
corresponding HCPCS or CPT code when delivered via telehealth as 
opposed to in-person.
    We proposed that our refined criteria for category 2 additions 
would be as follows:
     Category 2: Services that are not similar to the current 
list of telehealth services. Our review of these requests would include 
an assessment of whether the service is accurately described by the 
corresponding code when delivered via telehealth and whether the use of 
a telecommunications system to deliver the service produces 
demonstrated clinical benefit to the patient. Requestors should submit 
evidence indicating that the use of a telecommunications system in 
delivering the candidate telehealth service produces clinical benefit 
to the patient.
    The evidence submitted should include both a description of 
relevant clinical studies that demonstrate the service furnished by 
telehealth to a Medicare beneficiary improves the diagnosis or 
treatment of an illness or injury or improves the functioning of a 
malformed body part, including dates and findings and a list and copies 
of published peer-reviewed articles relevant to the service when 
furnished via telehealth. Some examples of clinical benefit include the 
following:
     Ability to diagnose a medical condition in a patient 
population without access to clinically appropriate in-person 
diagnostic services.
     Treatment option for a patient population without access 
to clinically appropriate in-person treatment options.
     Reduced rate of complications.
     Decreased rate of subsequent diagnostic or therapeutic 
interventions (for example, due to reduced rate of recurrence of the 
disease process).
     Decreased number of future hospitalizations or physician 
visits.
     More rapid beneficial resolution of the disease process 
treatment.
     Decreased pain, bleeding, or other quantifiable symptom.
     Reduced recovery time.
    We believe the adoption of this clinical benefit standard for our 
review of candidate telehealth services on a category 2 basis is 
responsive to the requests of stakeholders that we broaden the factors 
taken into consideration to include barriers to care for beneficiaries. 
It allows us to consider the demonstrated clinical benefit of 
telehealth services for beneficiaries who might otherwise have no 
access to certain diagnostic or treatment services. Furthermore, we 
believe the focus on demonstrated clinical benefit in our review of 
category 2 requests for addition to the telehealth lists is equivalent 
to our standard for deleting services from the telehealth list that 
rests upon evidence that a service is not safe, not effective, or not 
medically beneficial. Finally, we believe the proposed clinical benefit 
standard for our review of candidate telehealth services on a category 
2 basis is fully consistent with our responsibility to ensure that 
telehealth services are safe, effective, medically beneficial, and 
still accurately described by the corresponding codes that would be 
used for the services when delivered in-person.

[[Page 73100]]

    We solicited public comments on the proposed refinement to our 
established process for adding codes to the telehealth list, including 
the information that requestors should furnish to facilitate our full 
review of requests in preparation for the CY 2013 PFS rulemaking cycle 
during which we will use the category 2 review criteria finalized in 
this final rule with comment period.
    Comment: Many commenters supported the proposal to revise the 
category 2 criteria to incorporate the clinical benefit standard. Many 
of these commenters stated that they expect the revised criteria to 
result in both an expanded list of telehealth services and better 
medical care for beneficiaries who might otherwise not have access to 
certain diagnostic or treatment services. Several of these commenters 
explicitly stated that the criteria as described in the proposal 
presented a rigorous evidentiary standard for demonstrating clinical 
benefit.
    Response: We appreciate the broad support for the proposal. We 
believe that the proposed clinical benefit standard would allow us to 
consider the demonstrated clinical benefit of telehealth services for 
beneficiaries who might otherwise have no access to certain diagnostic 
or treatment services. We also believe that the proposal would ensure 
that Medicare telehealth services are safe, effective, and medically 
beneficial.
    Comment: Some commenters advocated for eliminating the process for 
adding and deleting codes. These commenters argued that the 
determination of which services can be furnished through telehealth 
should be left to the judgment of individual physicians. One commenter 
suggested that CMS should evaluate clinical equivalence for 
telemedicine procedures by limiting the scope to clinical procedures 
and interventions that would normally be performed in the hospital 
setting as a part of ongoing care. A commenting organization informed 
CMS that it had conducted an extensive study of services and determined 
a list of services that should be eligible based on positive 
correlation of discrete outcomes of those services furnished through 
telehealth and those same services furnished in-person. However, the 
organization did not provide this analysis with their comments.
    Response: We understand the commenters' interests in making broader 
changes to the way that services are added to or deleted from list of 
Medicare telehealth services. As we stated in the proposal, we believe 
that because section 1834(m)(2)(F)(ii) of the Act requires the 
Secretary to establish a process that provides, on an annual basis, for 
the addition or deletion of telehealth services (and HCPCS codes), as 
appropriate, we do not believe it would be appropriate to add all 
services for which payment is made under the PFS to the telehealth list 
without explicit consideration as to whether the candidate service 
could be effectively furnished through telehealth. Furthermore, because 
section 1834(m)(2)(A) of the Act requires that the distant site 
physician or practitioner furnishing the telehealth service must be 
paid an amount equal to the amount the physician or practitioner would 
have been paid under the PFS had such service been furnished without 
the use of a telecommunications system, we do not believe it would be 
appropriate to add services to the telehealth list without explicit 
consideration as to whether or not the nature of the service described 
by a candidate code allows the service to be furnished as effectively 
through telehealth as in an in-person encounter. We believe continuing 
the current annual process, with the proposed amendment to the category 
2 criteria, provides the appropriate opportunity to evaluate whether to 
add or delete specific services to the list of Medicare telehealth 
services. Although Medicare has not received many studies comparing 
clinical outcomes for in-person and telehealth delivery of the same 
service, we encourage stakeholders that conduct such comparison studies 
to submit such evidence to support category 2 requests for the addition 
of particular services to the list.
    Comment: One commenter expressed support for the proposal but urged 
CMS to carefully evaluate its impact if implemented. That commenter 
suggested that the addition of new services under the proposed standard 
could incentivize changes in practice patterns where Medicare 
beneficiaries in remote areas receive consistently a lower level of 
care if clinical benefit has no relationship to the equivalent of an 
in-person visit. Another commenter disagreed with the proposal to amend 
the ``comparability standard'' for adding services to the list of 
Medicare telehealth services. The commenter asserted that telehealth 
services can be effective as a step to help patients get the care they 
need, but should not be used to replace in-person care. The commenter 
argued that paying for telehealth services that may have some minor 
benefit as equivalent to an in-person service is misleading to patients 
and would prevent Medicare beneficiaries from getting the actual in-
person care they need.
    Response: We appreciate these concerns and agree that Medicare 
beneficiaries in remote areas deserve access to high quality health 
care. As we noted in the proposal, we also believe that in-person care 
may be very important and potentially preferable for some services when 
in-person care is possible. However, we also know that in some cases 
the alternative to a telehealth service may be no service rather than 
an in-person service.
    We continue to believe safety, effectiveness, and medical benefit, 
as well as accurate description of the candidate telehealth services by 
the CPT or HCPCS codes, are necessary conditions for adding codes to 
the list of Medicare telehealth services. While we believe that in many 
cases, the existing standard has led to appropriate category 2 
determinations not to add services to the telehealth benefit, we also 
believe that the current standard has prevented consideration of some 
services that could be clinically beneficial because there are no 
studies that compare patient outcomes when services are delivered via 
telehealth versus in person. This does not support our interests in 
identifying beneficial services for the telehealth benefit. 
Specifically, we observe that the medical literature frequently does 
not include studies of the outcomes of many types of in-person services 
that allow for comparison to the outcomes demonstrated for candidate 
telehealth services. We believe that the proposed revision to the 
existing criteria will allow thorough consideration of a greater number 
of requests for addition to the list. We would also remind commenters 
that the annual process will continue to provide stakeholders who 
support or oppose adding particular services to the list the 
opportunity to contribute to our evaluations of particular requests 
through public comment.
    Additionally, we note that the established process for deleting 
services from the list would allow Medicare to consider any available 
evidence suggesting that the addition of particular services to the 
list of Medicare telehealth services had detrimentally changed the 
quality of medical care for Medicare beneficiaries in remote areas. 
Such evidence could be considered in the context of either a public 
request or internally generated proposal to delete services from the 
list of Medicare telehealth services during annual PFS rulemaking. This 
process was

[[Page 73101]]

established during CY 2003 PFS rulemaking. (67 FR 7988)
    Finally, we agree with the commenter that argued that we should not 
add services to the telehealth list based on demonstrated evidence of 
minor benefit. We would like to clarify that our evidentiary standard 
of clinical benefit would not include minor or incidental benefits.
    Comment: Some commenters offered feedback on the specific kind of 
information that requestors should furnish to facilitate CMS review of 
requests to add specific services. One commenter suggested that CMS 
should recognize any biometrics or clinical parameters known to affect 
morbidity/mortality as appropriate supporting evidence. Another 
commenter suggested that CMS should make clear that its list of 
clinical benefits that could be conferred by the use of telehealth 
services, as featured in the proposed rule, is not exhaustive. Rather, 
the list is illustrative. The commenter asked CMS to clarify that there 
are many kinds of clinical benefits that are possible for telehealth 
services as well as face-to-face services, and that CMS will consider 
clinical benefits on a case-by-case basis based on studies submitted by 
requestors. Another commenter expressed concern that the proposed 
evaluation criteria are inappropriate since they resemble the criteria 
for a Medicare coverage determination.
    Response: We agree with the commenter who stated that the list of 
examples of demonstrated clinical benefits as presented in the proposed 
rule (76 FR 42827) is not exhaustive, but rather illustrative. 
Furthermore, we acknowledge that our proposal allows us to consider 
clinical benefits on a case-by-case basis depending on studies 
submitted by requestors, our own internal evaluation, and information 
submitted by commenters. While we acknowledge a similarity between some 
of the examples provided in the proposal and Medicare coverage 
criteria, we believe that such resemblance is appropriate given our 
interest in ensuring that services the Secretary adds to the telehealth 
benefit demonstrate clinical benefit to Medicare beneficiaries.
    Comment: Several commenters requested that CMS provide more 
specific information about how the new criteria will be used to 
evaluate the requests to add services to the list of Medicare 
telehealth services. One of these commenters asked CMS to provide 
workshops and other outreach efforts related to the review criteria.
    Response: We appreciate the commenters' interest in requesting 
greater specificity regarding how the new criteria will be used in 
evaluation of annual requests. In proposing the new category 2 
criteria, we provided some examples of demonstrated benefit instead of 
establishing a series of specified clinical metrics because we expect 
the choice of appropriate evaluation criteria should be identified on a 
case-by-case basis specific to the information submitted with requests 
to add services through the established annual process.
    We believe that establishing more rigid evaluation criteria (for 
example, criteria that rely on measurement of a series of demonstrated 
clinical outcomes specified by CMS) might present as many problems as 
has the current category 2 criteria, because under such a process 
requestors would be required to submit medical literature that passes a 
series of hurdles established by us prior to receiving a particular 
request. We would not be able to assess the benefit of the requested 
service within the context of the submitted evidence and the specific 
services. We also believe that such a process might lead to greater 
administrative burden for requestors and might require constant 
revision through annual rulemaking to adapt any specific criteria to 
changes in medical and communication technology as well as developments 
in medical literature.
    Additionally, we note that the application of the proposed criteria 
to each request will remain subject to public notice and comment. Since 
we implemented the process to add or delete services, including the 
existing category 2 criteria, we have used the PFS notice and comment 
rulemaking process to propose, accept public comments, and ultimately 
explain how the established evaluation criteria apply to each service 
we evaluate for addition to the list of Medicare telehealth services. 
We are not proposing a change to that aspect of the process with this 
proposed change in category 2 criteria.
    Comment: One commenter expressed concern regarding the aspect of 
the proposed criteria that includes CMS' review of whether the service 
is accurately described by the corresponding code when delivered via 
telehealth. The commenter asserted that that aspect of the criteria is 
self-fulfilling and might prevent the addition of otherwise appropriate 
services to the list of Medicare telehealth services since the codes 
were written to describe in-person services. Similarly, one commenter 
was concerned that accurate description of the code when delivered via 
telehealth might prevent CMS from adding critical care services to the 
list of Medicare telehealth services because there are category III CPT 
codes that describe remote real-time interactive videoconferenced 
critical care services.
    Response: In general, we do not believe it would be appropriate to 
add services to the Medicare telehealth list if those services cannot 
be accurately described by CPT or HCPCS codes that could otherwise 
describe in-person services. Medicare payment for the services is based 
upon the services that the CPT or HCPCS code describes. As we explained 
in the CY 2012 PFS proposed rule with comment period (76 FR 42826), 
Section 1834(m)(2)(A) of the Act requires that the distant site 
physician or practitioner furnishing the telehealth service must be 
paid an amount equal to the amount the physician or practitioner would 
have been paid under the PFS had such service been furnished without 
the use of a telecommunications system. Therefore, we believe that 
candidate telehealth services must also be covered when furnished in-
person; that the CPT and HCPCS code that is the basis for payment must 
accurately describe the service; and that any service that would only 
be furnished through a telecommunications system would be a distinct 
service from an in-person service, and therefore, not a candidate for 
addition to the Medicare telehealth list even when covered by Medicare. 
For example, remote services that utilize telecommunications technology 
are considered physicians' services in the same way as services that 
are furnished in-person without the use of telecommunications 
technology; they are paid under the same conditions as in-person 
physicians' services (with no requirements regarding permissible 
originating sites), and should be reported in the same way (that is, 
without the -GT or -GQ modifier appended). Medicare coverage for these 
types of services is distinct from the Medicare telehealth benefit.
    With regard to the request to add critical care services to the 
list of Medicare telehealth services, the application of the proposed 
category 2 criteria to that request is contingent on both the 
finalization of the proposed criteria and our receipt of a new request 
to add the services. However, as we noted in the CY 2012 PFS proposed 
rule with comment period (76 FR 42824), the fact that the CPT Editorial 
Panel created the Category III CPT codes suggests to us that these 
video-conferenced critical care services are not the same as the in-
person critical care services requested for addition to the telehealth 
list.
    After consideration of the public comments we received, we are

[[Page 73102]]

finalizing our proposal to revise the criteria we use to review 
category 2 requests to add services to the list of Medicare telehealth 
services beginning in CY 2013. We are modifying the current requirement 
to demonstrate similar diagnostic findings or therapeutic interventions 
with respect to a candidate service delivered through telehealth 
compared to in person delivery of the service (the comparability 
standard). Instead, we will assess category 2 requests to add services 
to the telehealth list using a standard of demonstrated clinical 
benefit (the clinical benefit standard) when the service is furnished 
via telehealth. To support our review using this revised standard, we 
ask requestors to specify in their request how the candidate telehealth 
service is still accurately described by the corresponding HCPCS or CPT 
code when delivered via telehealth as opposed to in person.
    Our revised criteria for category 2 additions are as follows:
     Category 2: Services that are not similar to the current 
list of telehealth services. Our review of these requests will include 
an assessment of whether the service is accurately described by the 
corresponding code when delivered via telehealth and whether the use of 
a telecommunications system to deliver the service produces 
demonstrated clinical benefit to the patient. Requestors should submit 
evidence indicating that the use of a telecommunications system in 
delivering the candidate telehealth service produces clinical benefit 
to the patient.
    The evidence submitted should include both a description of 
relevant clinical studies that demonstrate the service furnished by 
telehealth to a Medicare beneficiary improves the diagnosis or 
treatment of an illness or injury or improves the functioning of a 
malformed body part, including dates and findings and a list and copies 
of published peer reviewed articles relevant to the service when 
furnished via telehealth. Our evidentiary standard of clinical benefit 
will not include minor or incidental benefits. Some examples of 
clinical benefit include the following:
     Ability to diagnose a medical condition in a patient 
population without access to clinically appropriate in person 
diagnostic services.
     Treatment option for a patient population without access 
to clinically appropriate in-person treatment options.
     Reduced rate of complications.
     Decreased rate of subsequent diagnostic or therapeutic 
interventions (for example, due to reduced rate of recurrence of the 
disease process).
     Decreased number of future hospitalizations or physician 
visits.
     More rapid beneficial resolution of the disease process 
treatment.
     Decreased pain, bleeding, or other quantifiable symptom.
     Reduced recovery time.
5. Telehealth Consultations in Emergency Departments
    We have recently been asked to clarify instructions regarding 
appropriate reporting of telehealth services that, prior to our policy 
change regarding consultation codes, would have been reported as 
consultations furnished to patients in an emergency department. When we 
eliminated the use of consultation codes under the PFS beginning in CY 
2010, we instructed practitioners, when furnishing a service that would 
have been reported as a consultation service, to report the E/M code 
that is most appropriate to the particular service for all office/
outpatient or inpatient visits. Since section 1834(m) of the Act 
includes ``professional consultations'' (including the initial 
inpatient consultation codes ``as subsequently modified by the 
Secretary'') in the definition of telehealth services, we established 
several HCPCS codes to describe the telehealth delivery of initial 
inpatient consultations. For inpatient hospital and skilled nursing 
facility care telehealth services, we instructed practitioners to use 
the inpatient telehealth consultation G-codes listed in Table 12 to 
report those telehealth services (74 FR 61763, 61774). However, we 
neglected to account for the fact that E/M emergency department visit 
codes (99281-99285) are not on the telehealth list. As a result, there 
has not been a clear means for practitioners to bill a telehealth 
consultation furnished in an emergency department. In order to address 
this issue, we proposed to change the code descriptors for the 
inpatient telehealth consultation G-codes to include emergency 
department telehealth consultations effective January 1, 2012. However, 
we requested public comment regarding other options, including creating 
G-codes specific to these services when furnished to patients in the 
emergency department.
[GRAPHIC] [TIFF OMITTED] TR28NO11.016

[[Page 73103]]

    Comment: Many commenters supported the proposal to change the code 
descriptors for the inpatient telehealth consultation G-codes to 
include emergency department telehealth consultations effective January 
1, 2012. These commenters asserted that changing the code descriptors 
is an appropriate way for CMS to provide a clear means for 
practitioners to bill telehealth consultations furnished to emergency 
department patients.
    Response: We appreciate the support for the proposal. We agree that 
changing the code descriptors will ensure that telehealth consultations 
can be reported appropriately when furnished to emergency department 
patients.
    Comment: A few commenters expressed concerns that the proposal 
would blur the line between inpatient and outpatient services. One 
commenter disagreed with the proposal and suggested that CMS should 
create new G-codes since it is important to maintain the distinction 
between outpatient and inpatient services.
    Response: We thank the commenters for bringing these concerns to 
our attention. While we understand that emergency department services 
are considered outpatient services, at this time we believe that 
allowing practitioners to report the G-codes we created for initial 
inpatient telehealth consultations when furnishing telehealth 
consultations to emergency department patients is the most appropriate 
way to resolve the immediate issue. We note that the G-codes we created 
for telehealth consultations are used exclusively under the telehealth 
benefit. In this unique circumstance, we believe that the use of single 
codes to describe what can be an inpatient or an outpatient emergency 
department service is an appropriate mechanism to allow practitioners 
to report these telehealth services.
    However, the comments regarding site of service coding distinctions 
have prompted us to reconsider the need to provide a mechanism for 
follow-up consultations in the emergency department. While follow-up 
consultative services are furnished to hospital and SNF inpatients, we 
do not believe these services are furnished to patients in emergency 
departments since patients do not spend enough time in the emergency 
department to warrant a second consultative service by the same 
practitioner. Therefore, we are amending our proposal to pertain only 
to the G-codes that describe initial telehealth consultations.
    Comment: One commenter disagreed with the code descriptor change 
based on the assertion that the existing G-codes do not sufficiently 
cover the intensity, risk and medical judgment involved in providing 
teleICU services to critically ill patients.
    Response: We agree that the telehealth consultation codes do not 
fully describe critical care services. For additional information 
regarding the request to add critical care services to the list of 
Medicare telehealth services, we refer the commenter to our discussion 
in section II.E.1.b. of this final rule with comment period.
    Comment: One commenter requested additional information regarding 
why Medicare only pays for consultations furnished through telehealth.
    Response: While Medicare no longer recognizes CPT consultation 
codes for payment purposes, practitioners furnishing services that 
could be described by CPT consultation codes are still paid for those 
services when they are reported using the the most appropriate office 
or inpatient evaluation and management code. The telehealth 
consultation G-codes are intended to provide a mechanism for reporting 
telehealth consultation services to patients in the inpatient and SNF 
settings. We created these codes because inpatient and SNF evaluation 
and management codes were not included in the telehealth benefit and a 
practitioner could not bill an evaluation and management code when 
providing consultation services via telehealth furnished to patients in 
those settings. We refer the reader to our most recent thorough 
discussion of this issue in the CY 2010 PFS final rule with comment 
period (74 FR 61763 and 61767 through 61775).
    After consideration of the public comments we received, we are 
finalizing our proposal to change the code descriptors for initial 
inpatient telehealth consultation G-codes to reflect telehealth 
consultations furnished to emergency department patients in addition to 
inpatient telehealth consultations effective January 1, 2012. The 
descriptors for these codes for CY 2012 appear in table 13. After 
consideration of the public comments we received, we are not finalizing 
our proposal to change the code descriptors for follow-up inpatient 
telehealth consultations, since we do not believe follow-up 
consultations are furnished to emergency department patients.
[GRAPHIC] [TIFF OMITTED] TR28NO11.017

[[Page 73104]]

6. Telehealth Originating Site Facility Fee Payment Amount Update
    Section 1834(m)(2)(B) of the Act establishes the payment amount for 
the Medicare telehealth originating site facility fee for telehealth 
services provided from October 1, 2001, through December 31, 2002, at 
$20. For telehealth services provided on or after January 1 of each 
subsequent calendar year, the telehealth originating site facility fee 
is increased by the percentage increase in the MEI as defined in 
section 1842(i)(3) of the Act. The MEI increase for 2012 is 0.6 
percent. Therefore, for CY 2012, the payment amount for HCPCS code 
Q3014 (Telehealth originating site facility fee) is 80 percent of the 
lesser of the actual charge or $24.24. The Medicare telehealth 
originating site facility fee and MEI increase by the applicable time 
period is shown in Table 14.
[GRAPHIC] [TIFF OMITTED] TR28NO11.018

III. Addressing Interim Final Relative Value Units (RVUs) From CY 2011, 
Proposed RVUs From CY 2012, and Establishing Interim RVUs for CY 2012

    Under section 1848(c)(2)(B) of the Act, we review and make 
adjustments to RVUs for physicians' services at least once every 5 
years. Under section 1848(c)(2)(K) of the Act (as added by section 3134 
of the Affordable Care Act), we are required to identify and revise 
RVUs for services identified as potentially misvalued. Section 
1848(c)(2)(K)(iii) specifies that the Secretary may use existing 
processes to receive recommendations on the review and appropriate 
adjustment of potentially misvalued services. In accordance with 
section 1848(c)(2)(K)(iii) of the Act, we develop and propose 
appropriate adjustments to the RVUs, taking into account the 
recommendations provided by the AMA RUC, the Medicare Payment Advisory 
Commission (MedPAC), and others. To respond to concerns expressed by 
MedPAC, the Congress, and other stakeholders regarding the accuracy of 
values for services under the PFS, the AMA RUC has used an annual 
process to systematically identify, review, and provide CMS with 
recommendations for revised work values for many existing potentially 
misvalued services.
    For many years, the AMA RUC has provided CMS with recommendations 
on the appropriate relative values for PFS services. In recent years 
CMS and the AMA RUC have taken increasingly significant steps to 
address potentially misvalued codes. In addition to the Five-Year 
Reviews of Work, over the past several years CMS and the AMA RUC have 
identified and reviewed a number of potentially misvalued codes on an 
annual basis based on various identification screens for codes at risk 
for being misvalued, such as codes with high growth rates, codes that 
are frequently billed together in one encounter, and codes that are 
valued as inpatient services but that are now predominantly performed 
as outpatient services. This annual review of work RVUs and direct PE 
inputs for potentially misvalued codes was further bolstered by the 
Affordable Care Act mandate to examine potentially misvalued codes, 
with an emphasis on the following categories specified in section 
1848(c)(2)(K)(ii) (as added by section 3134 of the Affordable Care 
Act):
     Codes and families of codes for which there has been the 
fastest growth.
     Codes or families of codes that have experienced 
substantial changes in practice expenses.
     Codes that are recently established for new technologies 
or services.
     Multiple codes that are frequently billed in conjunction 
with furnishing a single service.
     Codes with low relative values, particularly those that 
are often billed multiple times for a single treatment.
     Codes which have not been subject to review since the 
implementation of the RBRVS (the ``Harvard-valued'' codes).
     Other codes determined to be appropriate by the Secretary. 
(For example, codes for which there have been shifts in the site-of-
service (site-of-service anomalies).)
    In addition to providing recommendations to CMS for work RVUs, the 
AMA RUC's Practice Expense Subcommittee reviews, and then the AMA RUC 
recommends, direct PE inputs (clinical labor, medical supplies, and 
medical equipment) for individual services. To guide the establishment 
of malpractice RVUs for new and revised codes before each Five-Year 
Review of Malpractice, the AMA RUC also provides crosswalk 
recommendations, that is, ``source'' codes with a similar specialty mix 
of practitioners furnishing the source code and the new/revised code.
    CMS reviews the AMA RUC recommendations on a code-by-code basis. 
For AMA RUC recommendations regarding physician work RVUs, we determine 
whether we agree with the recommended work RVUs for a service (that is, 
whether we agree the valuation is accurate). If we disagree, we 
determine an alternative value that

[[Page 73105]]

better reflects our estimate of the physician work for the service. 
Because of the timing of the CPT Editorial Panel decisions, the AMA RUC 
recommendations, and our rulemaking cycle, we publish these work RVUs 
in the PFS final rule with comment period as interim final values, 
subject to public comment. Similarly, we assess the AMA RUC's 
recommendations for direct PE inputs and malpractice crosswalks, and 
establish PE and malpractice interim final values, which are also 
subject to comment. We note that, with respect to interim final PE 
RVUs, the main aspect of our valuation that is open for public comment 
for a new, revised, or potentially misvalued code is the direct PE 
inputs and not the other elements of the PE valuation methodology, such 
as the indirect cost allocation methodology, that also contribute to 
establishing the PE RVUs for a code. The public comment period on the 
PFS final rule with comment period remains open for 60 days after the 
rule is issued.
    If we receive public comments on the interim final work RVUs for a 
specific code indicating that refinement of the interim final work 
value is warranted based on sufficient information from the commenters 
concerning the clinical aspects of the physician work associated with 
the service (57 FR 55917), we refer the service to a refinement panel, 
as discussed in further detail in section III.B.1.a. of this final rule 
with comment period.
    In the interval between closure of the comment period and the 
subsequent year's PFS final rule with comment period, we consider all 
of the public comments on the interim final work, PE, and malpractice 
RVUs for the new, revised, and potentially misvalued codes and the 
results of the refinement panel, if applicable. Finally, we address the 
interim final RVUs (including the interim final direct PE inputs) by 
providing a summary of the public comments and our responses to those 
comments, including a discussion of any changes to the interim final 
work or malpractice RVUs or direct PE inputs, in the following year's 
PFS final rule with comment period. We then typically finalize the 
direct PE inputs and the work, PE, and malpractice RVUs for the service 
in that year's PFS final rule with comment period, unless we determine 
it would be more appropriate to continue their interim final status for 
another year and solicit further public comment.

A. Methodology

    We conducted a clinical review of each code identified in this 
section and reviewed the AMA RUC recommendations for work RVUs, time to 
perform the ``pre-,'' ``intra-,'' and ``post-'' service activities, as 
well as other components of the service which contribute to the value. 
Our clinical review generally includes, but is not limited to, a review 
of information provided by the AMA RUC, medical literature, public 
comments, and comparative databases, as well as a comparison with other 
codes within the Medicare PFS, consultation with other physicians and 
healthcare care professionals within CMS and the Federal Government, 
and the views based on clinical experience of the physicians on the 
clinical team. We also assessed the AMA RUC's methodology and data used 
to develop the recommendations and the rationale for the 
recommendations. As we noted in the CY 2011 PFS final rule with comment 
period (75 FR 73328 through 73329), the AMA RUC uses a variety of 
methodologies and approaches to assign work RVUs, including building 
block, survey data, crosswalk to key reference or similar codes, and 
magnitude estimation. The building block methodology is used to 
construct, or deconstruct, the work RVU for a CPT code based on 
component pieces of the code. Components may include pre-, intra-, or 
post-service time and post-procedure visits, or, when referring to a 
bundled CPT code, the components could be considered to be the CPT 
codes that make up the bundled code. Magnitude estimation refers to a 
methodology for valuing physician work that determines the appropriate 
work RVU for a service by gauging the total amount of physician work 
for that service relative to the physician work for similar service 
across the physician fee schedule without explicitly valuing the 
components of that work. The resource-based relative value system 
(RBRVS) has incorporated into it cross-specialty and cross-organ system 
relativity. This RBRVS requires assessment of relative value and takes 
into account the clinical intensity and time required to perform a 
service. In selecting which methodological approach will best determine 
the appropriate value for a service we consider the current physician 
work and time values, AMA RUC-recommended physician work and time 
values, and specialty society physician work and time values, as well 
as the intensity of the service, all relative to other services. During 
our clinical review to assess the appropriate values for the codes we 
developed systematic approaches to address particular areas of concern. 
Specifically, the application of work budget neutrality within clinical 
categories of CPT codes, CPT codes with site-of-service anomalies, and 
CPT codes for services typically furnished on the same day as an 
evaluation and management visit. A description of those methodologies 
follows.
[cir] Work Budget Neutrality for Clinical Categories of CPT Codes
    We apply work budget neutrality to hold the aggregate work RVUs 
constant within a set of clinically related CPT codes, while 
maintaining the relativity of values for the individual codes within 
that set. In some cases, when the CPT coding framework for a clinically 
related set of CPT codes is revised by the creation of new CPT codes or 
existing CPT codes are revalued, the aggregate work RVUs recommended by 
the AMA RUC within that clinical category of CPT codes may change, 
although the actual physician work associated with the services has not 
changed. When this occurs, we may apply work budget neutrality to 
adjust the work RVUs of each clinically related code so that the sum of 
the new/revised code work RVUs (weighted by projected utilization) for 
a set of CPT codes would be the same as the sum of the current work 
RVUs (weighted by projected utilization) for that set of codes.
    When the AMA RUC recommends work RVUs for new or revised CPT codes, 
we review the work RVUs and adjust or accept the recommended values as 
appropriate, making note of whether any estimated changes in aggregate 
work RVUs would result from true change in physician work, or from 
structural coding changes. We then determine whether the application of 
budget neutrality within sets of codes is appropriate. If the aggregate 
work RVUs would increase without a corresponding true increase in 
physician work, we generally view this as an indication that an 
adjustment to ensure work budget neutrality within the set of CPT codes 
is warranted. Ensuring work budget neutrality is an important principle 
so that structural coding changes are not unjustifiably redistributive 
among PFS services.
    In the CY 2011 PFS final rule with comment period, there were four 
sets of clinically related CPT codes where we believed that the 
application of work budget neutrality was appropriate. These codes were 
in the areas of paraesophageal hernia procedures, esophageal motility 
and high resolution esophageal pressure topography, skin excision and 
debridement, and obstetrical care. The CY 2011 interim final values and 
CY 2012 final values for these services are discussed in section

[[Page 73106]]

III.B.1.b. of this final rule with comment period.
[cir] 23-Hour Stay Site-of-Service Anomaly CPT Codes
    Since CY 2009, CMS and the AMA RUC have reviewed a number of CPT 
codes that have experienced a change in the typical site-of-service 
since the original valuation of the codes. Specifically, these codes 
were originally furnished in the inpatient setting, but Medicare claims 
data show that the typical case has shifted to being furnished in the 
outpatient setting. As we discussed in the CY 2011 PFS final rule with 
comment period (75 FR 73221) and the CY 2012 PFS proposed rule (76 FR 
42797), when the typical case for a service has shifted from the 
inpatient setting to an outpatient or physician's office setting, we do 
not believe the inclusion of inpatient hospital visits in the post-
operative period is appropriate. Additionally, we believe that it is 
reasonable to expect that there have been changes in medical practice 
for these services, and that such changes would represent a decrease in 
physician time or intensity or both.
    For CY 2009 and CY 2010, the AMA RUC reviewed and recommended--RVUs 
for 40 CPT codes we identified as being potentially misvalued under the 
Secretary's discretion to identify other categories of potentially 
misvalued codes (see section II.B. of this final rule) because a site-
of-service anomaly exists. In the CYs 2009 and 2010 PFS final rule with 
comment period (73 FR 69883 and 74 FR 61776 through 61778, 
respectively), we indicated that although we would accept the AMA RUC 
valuations for these CPT codes on an interim basis, we had ongoing 
concerns about the methodology used by the AMA RUC to value these 
services, and in the CY 2010 PFS final rule with comment period (74 FR 
61777) we encouraged the AMA RUC to utilize the building block 
methodology when revaluing services with site-of-service anomalies. In 
the CY 2011 final rule with comment period (75 FR 73221), we requested 
that the AMA RUC re-examine the site-of-service anomaly codes and 
adjust the work RVU, times, and post-service visits to reflect those 
typical of a service furnished in an outpatient or physician's office 
setting.
    Following this request, the AMA RUC re-reviewed these site-of-
service anomaly codes and recommended work RVUs to us for these 
services. Of the 40 CPT codes on the CY 2009 and CY 2010 site-of-
service anomaly codes lists, 1 CPT code was not re-reviewed, as it was 
addressed in the CY 2011 PFS final rule with comment period. Ten of the 
remaining 39 site-of-service anomaly codes were addressed in the Fourth 
Five-Year Review of Work (76 FR 32410), and the remaining 29 CPT codes 
were addressed in the CY 2012 PFS proposed rule (76 FR 72798 through 
42809). In addition, several other CPT codes were identified as having 
site-of-service anomalies and were addressed in the Fourth Five-Year 
Review of Work (76 FR 32410). In the CY 2012 PFS proposed rule (76 FR 
42797), we stated that we would respond to public comments and adopt 
final work RVUs for these codes in the CY 2012 PFS final rule with 
comment period.
    When Medicare claims data show that the typical setting for a CPT 
code has shifted from the inpatient setting to the outpatient setting, 
we believe that the work RVU, time, and post-service visits of the code 
should reflect a service furnished in the outpatient setting. For 
nearly all of the codes with site-of-service anomalies, the 
accompanying survey data suggest they are ``23-hour stay'' outpatient 
services. As we discussed in detail in the CY 2011 PFS final rule with 
comment period (75 FR 73226), the Fourth Five-Year Review of Work (76 
FR 32410) and the CY 2012 PFS proposed rule (76 FR 42798), the ``23-
hour stay service'' is a term of art describing services that typically 
have lengthy hospital outpatient recovery periods. For these 23-hour 
stay services, the typical patient is at the hospital for less than 24-
hours, but often stays overnight at the hospital. Unless a treating 
physician has written an order to admit the patient as an inpatient, 
the patient is considered for Medicare purposes to be a hospital 
outpatient, not an inpatient, and our claims data support that the 
typical 23-hour stay service is billed as an outpatient service.
    As we discussed in the Five-Year Review of Work (76 FR 32410), and 
CY 2012 PFS proposed rule (76 FR 42798) we believe that the values of 
the codes that fall into the 23-hour stay category should not reflect 
work that is typically associated with an inpatient service. However, 
as we stated in the CY 2011 PFS final rule with comment period (75 FR 
73226 through 73227), while the patient receiving the outpatient 23-
hour stay service remains a hospital outpatient, the patient would 
typically be cared for by a physician during that lengthy recovery 
period at the hospital. While we do not believe that post-procedure 
hospital visits would be at the inpatient level since the typical case 
is an outpatient who would be ready to be discharged from the hospital 
in 23-hours or less, we believe it is generally appropriate to include 
the intra-service time of the inpatient hospital visit in the immediate 
post-service time of the 23-hour stay code under review. In addition, 
we indicated that we believe it is appropriate to include a half day, 
rather than a full day, of a discharge day management service.
    We finalized this policy in the CY 2011 PFS final rule with comment 
period (75 FR 73226 through 73227) and applied this methodology when 
valuing 23-hour stay codes in the Fourth Five-Year Review and CY 2012 
PFS proposed rule in order to ensure the consistent and appropriate 
valuation of the physician work for these services. A full description 
of our methodology for revaluing the site-of-service anomaly codes can 
be found in the Fourth Five-Year Review of Work (76 FR 32410), and the 
CY 2012 PFS proposed rule (76 FR 72798 through 42809). In brief, where 
Medicare claims data suggested a site-of-service anomaly (more than 50 
percent of the Medicare PFS utilization is outpatient) and the AMA 
RUC's recommended value continued to include inpatient visits in the 
post-operative period, we removed any post-procedure inpatient visits 
or subsequent observation care services included in the AMA RUC-
recommended values for these codes and adjusted the physician times 
accordingly. We also consistently included the value of a half day of 
discharge management service.
    Comment: We received a number of comments that disagreed with the 
premise of the 23-hour site-of-service anomaly methodology arguing that 
the acuity of the patient as captured in patient status (inpatient or 
outpatient) is not an indicator of physician work. The commenters 
believe that if the procedure or service is typically performed in the 
hospital and the patient is kept overnight and/or admitted, the RUC 
should evaluate it as an inpatient service or procedure using the 
hospital visits as a work proxy regardless of the patient's status. 
Commenters noted that while physicians generally write admitting 
orders, the hospital frequently makes the determination to categorize a 
patient's stay as inpatient or outpatient, and that hospital attention 
to patient status is being driven by a fear of Recover Audit Contractor 
(RAC) audits and not clinical judgment. Commenters asserted that the 
AMA RUC-recommended values for site-of-service anomaly codes are based 
on physician specialty survey responses which identified the actual 
work performed in caring for these patients and that the physician work 
to treat the patient does not vary with regard to how the patient is 
later categorized for facility billing purposes as an inpatient or 
outpatient.

[[Page 73107]]

    Response: As we noted in the CY 2011 PFS final rule with comment 
period (75 FR 73227), these services would be considered for hospital 
outpatient services, not inpatient services, for the typical patient, 
and our claims data support that the typical 23-hour stay service, 
usually a scheduled procedure, is billed as an outpatient service. 
Since the typical patient commonly remains in the hospital for less 
than 24 hours, even if the stay extends overnight, and the patient's 
encounter is relatively brief, the acuity of the typical patient and 
the risk of adverse outcomes is less than that of a typical inpatient 
who is admitted to the hospital, and we continue to believe that the 
intensity of the physician work involved in caring for the hospital 
outpatient immediately following a 23-hour stay procedure is less than 
for a hospital inpatient. The typical hospital outpatient for a 23-hour 
procedure has fewer comorbidities, less complications, lower risk and 
therefore less need for intensive nursing and physician care of the 
kind provided during an inpatient admission. Medicare pays for an 
inpatient admission when, among other criteria, the physician 
responsible for the care of the patient has an expectation of a minimum 
24-hour stay and the patient requires an inpatient level of care, based 
on assessment of several factors including the severity of the signs 
and symptoms and the probability of an adverse event (Medicare Benefit 
Policy Manual 100-02, chapter 1, section 10).
    There are many reasons that services move from the inpatient to 
outpatient setting that reduce the overall risk of adverse outcomes and 
intensity of physician work. Services frequently move to the outpatient 
setting when the technique matures; that is, the risk-benefit ratio of 
the service is better understood and the efficacy of the service is 
more clearly established. Services may move to the outpatient setting 
because technological advances decrease the need for intensive 
monitoring and allow the discharge of sicker patients. Patient-
controlled analgesia, for example, reduces the iterative assessment and 
response work necessary to manage post-operative pain and allows 
earlier discharge. Technological advances in the procedures themselves 
also reduce the risk of adverse outcomes. Electronic imaging and 
robotic surgery both allow procedures to be performed with increasingly 
smaller incisions, decreasing post-operative morbidity. Accordingly, we 
believe that, generally, the valuation of the codes that fall into the 
23-hour stay category should not reflect physician work that is 
typically associated with an inpatient service.
[cir] CPT Codes Typically Billed on the Same Day as an Evaluation and 
Management Service
    Since CY 2011, we have reviewed a number of CPT codes that are 
typically billed with an E/M service on the same day. In cases where a 
service is typically furnished with an E/M service on the same day, we 
believe that there may be overlap between the two services in some of 
the activities conducted during the pre- and post-service times of the 
procedure code. Accordingly, in cases where the most recently available 
Medicare PFS claims data show the code is typically billed with an E/M 
visit on the same day, and where we believe that the AMA RUC did not 
adequately account for overlapping activities in the recommended value 
for the code, we systematically adjusted the physician times for the 
code to account for the overlap. After clinical review of the pre- and 
post-service work, we believe that at least one-third of the physician 
time in both the pre-service evaluation and post-service period is 
duplicative of the E/M visit in this circumstance. Therefore, for a 
number of CPT codes discussed in the following paragraphs, we adjusted 
the pre-service evaluation portion of the pre-service time to two-
thirds of the AMA RUC-recommended time. Similarly, we also adjusted the 
post-service time to two-thirds of the AMA RUC-recommended time.

B. Finalizing CY 2011 Interim and CY 2012 Proposed Values for CY 2012

    In this section, we address the interim final values published in 
Appendix C of the CY 2011 PFS final rule with comment period (75 FR 
73810 through 73815), as subsequently corrected in the January 11, 2011 
(76 FR 1670) correction notice; the proposed values published in the 
Fourth Five-Year Review of Work (76 FR 32410 through 32813); and the 
proposed values published in the CY 2012 PFS proposed rule (76 FR 42772 
through 42947). We discuss the results of the CY 2011 multi-specialty 
refinement panel, respond to public comments received on specific 
interim final and proposed values (including direct PE inputs), and 
address the other new, revised, or potentially misvalued codes with 
interim final or proposed values. In section II.B.3. of this final rule 
with comment period, we emphasized the importance of reviewing the full 
value for services (the work, PE, and malpractice components of codes) 
that are identified as part of the potentially misvalued code 
initiative in order to maintain appropriate relativity and key 
relationships within the components of codes. The final CY 2012 direct 
PE database that lists the direct PE inputs is available on the CMS Web 
site under the downloads for the CY 2012 PFS final rule with comment 
period at: https://www.cms.gov/PhysicianFeeSched/. The final CY 2011 
work, PE, and malpractice RVUs are displayed in Addendum B to this 
final rule with comment period at: https://www.cms.gov/PhysicianFeeSched/.
1. Finalizing CY 2011 Interim and Proposed Work Values for CY 2012
a. Refinement Panel
(1) Refinement Panel Process
    As discussed in the 1993 PFS final rule with comment period (57 FR 
55938), we adopted a refinement panel process to assist us in reviewing 
the public comments on CPT codes with interim final work RVUs for a 
year and in developing final work values for the subsequent year. We 
decided that the panel would be comprised of a multispecialty group of 
physicians who would review and discuss the work involved in each 
procedure under review, and then each panel member would individually 
rate the work of the procedure. We believed that establishing the panel 
with a multispecialty group would balance the interests of the 
specialty societies who commented on the work RVUs with the budgetary 
and redistributive effects that could occur if we accepted extensive 
increases in work RVUs across a broad range of services.
    Historically, the refinement panel's recommendation to change a 
work value or to retain the interim value had hinged solely on the 
outcome of a statistical test on the ratings (an F-test of panel 
ratings among the groups of participants). Depending on the number and 
range of codes that specialty societies request be subject to 
refinement through their public comments, we establish refinement 
panels with representatives from 4 groups of physicians: Clinicians 
representing the specialty most identified with the procedures in 
question; physicians with practices in related specialties; primary 
care physicians; and contractor medical directors (CMDs). Typically, 
the refinement panels meet in the summer prior to the promulgation of 
the PFS final rule with comment period that finalizes the RVUs for the 
codes. Typical panels have included 8 to 10 physicians across the 4 
groups. Over time, we found that the statistical test

[[Page 73108]]

used to evaluate the RVU ratings of individual panel members became 
less reliable as the physicians in each group have tended to select a 
previously discussed value, rather than developing a unique value, 
thereby reducing the observed variability needed to conduct a robust 
statistical test. In addition, reliance on values developed using the 
F-test also occasionally resulted in rank order anomalies among 
services (that is, a more complex procedure is assigned lower RVUs than 
a less complex procedure).
    Recently, section 1848(c)(2)(K) of the Act (as added by section 
3134 of the Affordable Care Act) authorized the Secretary to review 
potentially misvalued codes and make appropriate adjustments to the 
relative values. In addition, MedPAC has encouraged CMS to critically 
review the values assigned to the services under the PFS. As detailed 
in the CY 2011 PFS final rule with comment period (75 FR 73306), we 
believed the refinement panel process may provide an opportunity to 
review and discuss the proposed and interim final work RVUs with a 
clinically diverse group of experts, which then provides informed 
recommendations. Therefore, we indicated that we would like to continue 
the refinement process, including the established composition that 
includes representatives from the 4 groups of physicians, but with 
administrative modification and clarification. We eliminated the use of 
the statistical F-test and instead indicated that we would base revised 
RVUs on the median work value of the individual panel members' ratings. 
We believed this approach would simplify the refinement process 
administratively, while resulting in a final panel recommendation that 
reflects the summary opinion of the panel members based on a commonly 
used measure of central tendency that is not significantly affected by 
outlier values. We clarified that we have the final authority to set 
the RVUs, including making adjustments to the work RVUs resulting from 
refinement process if policy concerns warrant modification (75 FR 
73307).
    Due to the major increase in the number of codes reviewed by the CY 
2011 multi-specialty refinement panels as compared to refinement panels 
in recent years, and public comments requesting more clarification 
about the refinement panels, we would like to remind readers that 
historically the refinement panels were not intended to review every 
code for which we did not propose to accept the AMA RUC-recommended 
RVUs. Furthermore, in the past, we have asked commenters requesting 
refinement panel review to submit sufficient information concerning the 
clinical aspects of the work assigned for a service to indicate that 
referral to the refinement panel is warranted (57 FR 55917). We note 
that the majority of the information that was presented during the CY 
2011 refinement panel discussions was duplicative of the information 
provided to the AMA RUC during its development of recommendations. As 
detailed in section III.B. of this final rule with comment period, we 
consider information and recommendations from the AMA RUC when 
assigning proposed and interim final RVUs to services. To facilitate 
the selection of services for the refinement panels, we would like to 
remind specialty societies seeking reconsideration of proposed or 
interim final work RVUs, including consideration by a refinement panel, 
to specifically request refinement panel review in their public comment 
letters. Also, we request that commenters seeking refinement panel 
review of work RVUs submit supporting information that has not already 
been considered by the AMA RUC in creating recommended work RVUs or by 
CMS in assigning proposed and interim final work RVUs. In order to make 
the best use of the agency's limited resources and avoid inefficient 
duplicative consideration of information by the AMA RUC, CMS, and then 
a refinement panel, CMS will more critically evaluate the need to refer 
codes to refinement panels in future years, specifically considering 
any new information provided by commenters.
(2) Proposed and Interim Final Work RVUs Referred to the Refinement 
Panels in CY 2011
    We referred to the CY 2011 refinement panel 143 CPT codes with 
proposed or interim final work values for which we received comments 
from least one major specialty society. For these 143 CPT codes, all 
commenters requested increased work RVUs. For ease of discussion, we 
will be referring to these services as ``refinement codes.'' Consistent 
with past practice (62 FR 59084), we convened a multi-specialty panel 
of physicians to assist us in the review of the comments. The panel was 
moderated by our physician advisors, and consisted of the following 
voting members:
     One to two clinicians representing the commenting 
organization;
     One to two primary care clinicians nominated by the 
American Academy of Family Physicians and the American College of 
Physicians;
     One to three contractor medical directors (CMDs); and
     One to two clinicians with practices in related 
specialties who were expected to have knowledge of the services under 
review.
    The panel process was designed to capture each participant's 
independent judgment and his or her clinical experience which informed 
and drove the discussion of the refinement code during the refinement 
panel proceedings. Following the discussion, each voting participant 
rated the physician work of the refinement code. Ratings were obtained 
individually and confidentially, with no attempt to achieve consensus 
among the panel members.
    As finalized in the CY 2011 PFS final rule with comment period (75 
FR 73307), we reviewed the ratings from each panel member and 
determined the median value for each service that was reviewed by the 
refinement panels. Our decision to convene multi-specialty panels of 
physicians has historically been based on our need to balance the 
interests of those who commented on the interim final work values with 
the redistributive effects that would occur in other specialties if the 
work values were changed. We refer readers to section III.I. of the CY 
2011 PFS final rule with comment period for a full discussion of the 
changes to the refinement process that we adopted for refinement panels 
beginning in CY 2011.
    We note that individual codes, including those that were reviewed 
by the refinement panels, and their final work RVUs are discussed in 
section III.B.1.b. of this final rule with comment period. Also, see 
Table 15 for the refinement panel ratings and the final work RVUs for 
the codes that were reviewed by the CY 2011 multi-specialty refinement 
panels.
b. Code-Specific Issues
    In this section we discuss all code families for which we received 
a comment on an interim final physician work value in CY 2011 PFS final 
rule with comment period, on a proposed value in the Fourth Five-Year 
Review of Work, or on a proposed value in the CY 2012 PFS proposed 
rule. Table 15 provides a comprehensive list of all final values.
    (1) Integumentary System: Skin, Subcutaneous, and Accessory 
Structures (CPT codes 10140, 10160, 11010-11012, 11042-11047) and 
Active Wound Care Management (CPT codes 97597 and 97598)
    For the Fourth Five-Year Review, we identified CPT codes 10140 and 
10160

[[Page 73109]]

as potentially misvalued though the Harvard-Valued--Utilization > 
30,000 screen. The related specialty societies surveyed their members, 
and the AMA RUC issued recommendations to us for the Fourth Five-Year 
Review.
    As detailed in the Fourth Five-Year Review, for CPT codes 10140 
(Incision and drainage of hematoma, seroma or fluid collection) and 
10160 (Puncture aspiration of abscess, hematoma, bulla, or cyst) we 
believed that the current (CY 2011) work RVUs continued to accurately 
reflect the work of these services. For CPT code 10140 we proposed a 
work RVU of 1.58, and for CPT code 10160 we proposed a work RVU of 
1.25. The AMA RUC recommended maintaining the current work RVUs for 
these services as well. For CPT code 10160, the AMA RUC recommended a 
pre-service evaluation time of 7 minutes. As CPT codes 10160 and 10140 
have the same description of pre-service work, we believed that they 
should have the same pre-service time. Therefore, we reduced the pre-
service evaluation time for CPT code 10140 from 17 minutes to 7 
minutes, to match the pre-service evaluation time of CPT code 10160 (76 
FR 32431 through 32432).
    Comment: In its public comment to CMS on the Fourth Five-Year 
Review, the AMA RUC wrote that there was a typographical error in its 
recommendation to CMS for CPT code 10160, and the correct pre-service 
evaluation time for that code should have been 17 minutes. The AMA RUC 
wrote that they agree that CPT codes 10140 and 10160 should have the 
same pre-service time, but that both should have 17 minutes of pre-
service evaluation time, and not 7 minutes. They requested that CMS 
change the pre-service time for both CPT codes 10140 and 10160.
    Response: In response to comments, we re-reviewed CPT codes 10140 
and 10160. After reviewing the descriptions of pre-service work and the 
recommended pre-service time packages, we agree that both CPT codes 
10140 and 10160 should have 17 minutes of pre-service evaluation work. 
We thank the AMA RUC for pointing out this time error. For CPT code 
10140 we are finalizing a work RVU of 1.50 and a pre-service evaluation 
time of 17 minutes. For CPT code 10160 we are finalizing a work RVU of 
1.25 and a pre-service evaluation time of 17 minutes. CMS time 
refinements can be found in Table 16.
    CPT codes 11043 (Debridement; skin, subcutaneous tissue, and 
muscle) and 11044 (Debridement; skin, subcutaneous tissue, muscle, and 
bone) were identified by the AMA RUC's Five-Year Review Identification 
Workgroup through the ``site-of-service anomalies'' potentially 
misvalued codes screen in September 2007. The AMA RUC recommended that 
the entire family of services described by CPT codes 11040 through 
11044, and 97597 and 97598 be referred to the CPT Editorial Panel 
because the current descriptors allowed reporting of the codes for a 
bimodal distribution of patients and also to better define the terms 
excision and debridement. The CPT Excision and Debridement Workgroup 
and the CPT Editorial Panel reviewed and revised the CPT code 
descriptors for CPT codes 11042 through 11047, along with the 
descriptors for other related CPT codes. Following the descriptor 
changes, the related specialty societies surveyed their members, 
gathering information for work RVU and time recommendations for these 
services, and the AMA RUC issued recommendations to us for CY 2011. We 
reviewed these CPT codes, and published the CY 2011 interim final work 
RVUs in the CY 2011 PFS final rule with comment period (75 FR 73329 
through 73330). Based on comments received during the public comment 
period, we referred CPT codes 11042 through 11047 to the CY 2011 multi-
specialty refinement panel for further review.
    As detailed in the CY 2011 PFS final rule with comment period, for 
CPT code 11042 (Debridement, subcutaneous tissue (includes epidermis 
and dermis, if performed); first 20 sq cm or less) we assigned a work 
RVU of 0.80 on an interim final basis for CY 2011. After clinical 
review, we believed that the then current (2010) work RVU of 0.80 
continued to accurately reflect the work of the service relative to 
similar services, including reference CPT code 16020 (Dressings and/or 
debridement of partial-thickness burns, initial or subsequent; small 
(less than 5 percent total body surface area)). We found no grounds to 
increase the work RVU for this service. The AMA RUC recommended a work 
RVU of 1.12 for CPT code 11042 for CY 2011 (75 FR 73329).
    Comment: Commenters disagreed with the interim final work RVU of 
0.80 assigned to CPT code 11042 by CMS and believe that the AMA RUC-
recommended work RVU of 1.12 is more appropriate for this service. 
Commenters reiterated the arguments that the specialty societies 
presented to the AMA RUC that--(1) the 2005 survey for this code did 
not include podiatry, which is now the dominant specialty for this 
service; and (2) the original Harvard valuation of this code was based 
on a 10-day global period, and that since the original valuation CMS 
has reduced the work RVU and changed global period for this service 
through the refinement process in previous years. Commenters also noted 
that, while CMS indicated that the AMA RUC-recommended work RVU of 1.12 
was based on an old surveyed value, the AMA RUC agreed that a work RVU 
of 1.12 continues to be an appropriate valuation for this service 
relative to other services.
    Response: Based on the comments received, we referred CPT code 
11042 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU for CPT code 11042 was 
1.01. As a result of the refinement panel ratings and our clinical 
review, we are assigning a work RVU of 1.01 to CPT code 11042 as the 
final value for CY 2012.
    As detailed in the CY 2011 PFS final rule with comment period, for 
CPT code 11045 (Debridement, subcutaneous tissue (includes epidermis 
and dermis, if performed); each additional 20 sq cm, or part thereof 
(List separately in addition to code for primary procedure)) we 
assigned a work RVU of 0.33 on an interim final basis for CY 2011. CPT 
code 11045 is the add-on code to CPT code 11042. To obtain the 
appropriate RVU for this add-on service, we started with the CMS-
assigned CY 2011 interim final RVU of 0.80 for the primary code (CPT 
code 11042), and removed the work RVUs corresponding to the pre- and 
post-service time (add-on codes generally do not have pre- and post-
service time because that work is captured by the primary service). The 
AMA RUC recommended a work RVU of 0.69 for CPT code 11045 for CY 2011 
(75 FR 73329 and 73330).
    Comment: Commenters disagreed with the interim final work RVU of 
0.33 assigned to CPT code 11045 by CMS and believe that the AMA RUC-
recommended work RVU of 0.69 is more appropriate for this service. 
Commenters noted that removing the RVUs related to the pre- and post-
service time results in a work RVU of 0.34, not a work RVU of 0.33. 
Commenters offered reference service CPT code 36575 (Repair of tunneled 
or non-tunneled central venous access catheter, without subcutaneous 
port or pump, central or peripheral insertion site) to support the AMA 
RUC-recommended work RVU of 0.69.
    Response: Based on the comments received, we referred CPT code 
11045 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU for CPT code 11045 was 
0.50. As a result of the refinement panel ratings and our

[[Page 73110]]

clinical review, we are assigning a work RVU of 0.50 to CPT code 11045 
as the final value for CY 2012.
    As detailed in the CY 2011 PFS final rule with comment period, for 
CPT code 11043 (Debridement, muscle and/or fascia (includes epidermis, 
dermis, and subcutaneous tissue, if performed); first 20 sq cm or less) 
we assigned a work RVU of 2.00 on an interim final basis for CY 2011. 
After clinical review, we believed that the work RVU of 2.00 (the 
survey low) appropriately reflected the AMA RUC-recommended decrease in 
clinical time and follow-up E/M visits attributed to the performance of 
this service (CY 2010 work RVU=3.14). The AMA RUC recommended a work 
RVU of 3.00 for CPT code 11043 for CY 2011. (75 FR 73330)
    Comment: Commenters disagreed with the interim final work RVU of 
2.00 assigned to CPT code 11043 by CMS and believe that the AMA RUC-
recommended work RVU of 3.00 is more appropriate for this service. 
Commenters noted that the AMA RUC-recommended value for this service 
corresponds to the specialty society survey 25th percentile value, and 
that the CMS-assigned value corresponds to the survey low. Commenters 
asserted that CMS ignored the survey results by selecting the survey 
low, noting that the low of any survey could be construed as an outlier 
and that they believe it is not appropriate to value services based on 
the survey low.
    Response: Based on the comments received, we referred CPT code 
11043 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU for CPT code 11043 was 
2.70. As a result of the refinement panel ratings and our clinical 
review, we are assigning a work RVU of 2.70 to CPT code 11043 as the 
final value for CY 2012.
    As detailed in the CY 2011 PFS final rule with comment period, for 
CPT code 11046 (Debridement, muscle and/or fascia (includes epidermis, 
dermis, and subcutaneous tissue, if performed); each additional 20 sq 
cm, or part thereof (List separately in addition to code for primary 
procedure)) we assigned a work RVU of 0.70 on an interim final basis 
for CY 2011. After clinical review, we believed that the work RVU of 
0.70 (the survey low) appropriately placed this add-on service relative 
to its primary service, CPT code 11043. The AMA RUC recommended a work 
RVU of 1.29 for CPT code 11046 for CY 2011 (75 FR 73330).
    Comment: Commenters disagreed with the interim final work RVU of 
0.70 assigned to CPT code 11046 by CMS and believe that the AMA RUC-
recommended work RVU of 1.29 is more appropriate for this service. 
Commenters noted that the AMA RUC-recommended value for this service 
corresponds to the specialty society survey 25th percentile value, and 
that the CMS-assigned value corresponds to the survey low. Commenters 
asserted that CMS ignored the survey results by selecting the survey 
low, noting that the low of any survey could be construed as an outlier 
and that they believe it is not appropriate to value services based on 
the survey low.
    Response: Based on the comments received, we referred CPT code 
11046 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU for CPT code 11046 was 
1.03. As a result of the refinement panel ratings and our clinical 
review, we are assigning a work RVU of 1.03 to CPT code 11046 as the 
final value for CY 2012.
    As detailed in the CY 2011 PFS final rule with comment period, for 
CPT code 11044 (Debridement, bone (includes epidermis, dermis, 
subcutaneous tissue, muscle and/or fascia, if performed); first 20 sq 
cm or less) we assigned a work RVU of 3.60 on an interim final basis 
for CY 2011. After clinical review, we believed that the work RVU of 
3.60 (the survey low) appropriately reflected the AMA RUC-recommended 
decrease in clinical time and follow-up E/M visits attributed to the 
performance of this service (CY 2010 work RVU = 4.26). The AMA RUC 
recommended a work RVU of 4.56 for CPT code 11044 for CY 2011 (75 FR 
73330).
    Comment: Commenters disagreed with the interim final work RVU of 
3.60 assigned to CPT code 11044 by CMS and believe that the AMA RUC-
recommended work RVU of 4.56 is more appropriate for this service. 
Commenters noted that the AMA RUC-recommended value for this service 
corresponds to the specialty society survey 25th percentile value, and 
that the CMS-assigned value corresponds to the survey low. Commenters 
asserted that CMS ignored the survey results by selecting the survey 
low, noting that the low of any survey could be construed as an outlier 
and that they believe it is not appropriate to value services based on 
the survey low.
    Response: Based on the comments received, we referred CPT code 
11044 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU for CPT code 11044 was 
4.10. As a result of the refinement panel ratings and our clinical 
review, we are assigning a work RVU of 4.10 to CPT code 11044 as the 
final value for CY 2012.
    As detailed in the CY 2011 PFS final rule with comment period, for 
CPT code 11047 (Debridement, bone (includes epidermis, dermis, 
subcutaneous tissue, muscle and/or fascia, if performed); each 
additional 20 sq cm, or part thereof (List separately in addition to 
code for primary procedure)) we assigned a work RVU of 1.20 on an 
interim final basis for CY 2011. After clinical review, we believed 
that the work RVU of 1.20 (the survey low) appropriately placed this 
add-on service relative to its primary service, CPT code 11044. The AMA 
RUC recommended a work RVU of 2.00 for CPT code 11047 for CY 2011 (FR 
75 73330).
    Comment: Commenters disagreed with the interim final work RVU of 
1.20 assigned to CPT code 11047 by CMS and believe that the AMA RUC-
recommended work RVU of 2.00 is more appropriate for this service. 
Commenters noted that the AMA RUC-recommended value for this service 
corresponds to the specialty society survey 25th percentile value, and 
that the CMS-assigned value corresponds to the survey low. Commenters 
asserted that CMS ignored the survey results by selecting the survey 
low, noting that the low of any survey could be construed as an outlier 
and that they believe it is not appropriate to value services based on 
the survey low.
    Response: Based on the comments received, we referred CPT code 
11047 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU for CPT code 11047 was 
1.80. As a result of the refinement panel ratings and our clinical 
review, we are assigning a work RVU of 1.80 to CPT code 11047 as the 
final value for CY 2012.
    As stated in the CY 2011 PFS final rule with comment period (75 FR 
73338 and 73339), in the excision and debridement set of services, for 
CY 2011 two CPT codes were deleted and the services that would 
previously have been reported under those CPT codes are now reported 
under two revised codes, CPT code 97597 (Debridement (e.g., high 
pressure waterjet with/without suction, sharp selective debridement 
with scissors, scalpel and forceps), open wound, (e.g., fibrin, 
devitalized epidermis and/or dermis, exudate, debris, biofilm), 
including topical application(s), wound assessment, use of a whirlpool, 
when performed and instruction(s) for ongoing care, per session, total 
wound(s) surface area; first 20 sq cm or less) and CPT code 97598 
(Debridement (e.g., high pressure waterjet with/without suction, sharp 
selective debridement with scissors, scalpel and

[[Page 73111]]

forceps), open wound, (e.g., fibrin, devitalized epidermis and/or 
dermis, exudate, debris, biofilm), including topical application(s), 
wound assessment, use of a whirlpool, when performed and instruction(s) 
for ongoing care, per session, total wound(s) surface area; each 
additional 20 sq cm, or part thereof (List separately in addition to 
code for primary procedure)). These two revised wound management CPT 
codes were restructured from describing two distinct procedures 
reported based on wound surface area to describing a primary procedure 
and an add-on procedure that would additionally be reported in the case 
of a larger wound. We believed that the increase in aggregate work RVUs 
that would results from adoption of the RVUs, even after the 
adjustments we later discuss, did not represent a true increase in 
physician work for these procedures. Therefore, we believed it would be 
appropriate to apply work budget neutrality to this set of CPT codes. 
After reviewing the HCPAC-recommended work RVUs, we adjusted the work 
RVU for CPT code 97598, and then applied work budget neutrality to 
these two CPT codes, which constitute the set of clinically related CPT 
codes. The work budget neutrality factor for these 2 codes was 0.9422. 
The HCPAC-recommended work RVU, CMS-adjusted work RVU prior to the 
budget neutrality adjustment, and the CY 2011 interim final work RVU 
for these skin excision and debridement codes (CPT code 97597 and 
97598) follow.
[GRAPHIC] [TIFF OMITTED] TR28NO11.019

    As mentioned previously, and detailed in the CY 2011 PFS final rule 
with comment period, for CPT code 97598, we disagreed with the HCPAC-
recommended work RVU of 0.40 and assigned alternate work RVU of 0.25 
prior to the application of work budget neutrality (75 FR 73330). We 
believed that a work RVU of 0.25, which corresponded to the specialty 
society survey low value, was consistent with new CY 2011 add-on CPT 
code 11045 (Debridement, subcutaneous tissue (includes epidermis and 
dermis, if performed); each additional 20 sq cm, or part thereof (List 
separately in addition to code for primary procedure)), which we 
assigned a CY 2011 interim final work RVU of 0.33.
    Comment: Commenters agreed with the application of work budget 
neutrality to CPT codes 97597 and 97598, and requested that the codes 
be re-reviewed after additional claims data are available to ensure 
that the frequency estimates were accurate. Commenters disagreed with 
the CMS pre-budget neutrality work RVU of 0.25 for CPT code 97598 and 
believed that the HCPAC-recommended work RVU of 0.40 is more 
appropriate for this service. Commenters asserted that CMS ignored the 
survey results by selecting the survey low, noting that the low of any 
survey could be construed as an outlier and that they believe it is not 
appropriate to value services based on the survey low.
    Response: Based on the comments received, we referred CPT codes 
97597 and 97598 to the CY 2011 multi-specialty refinement panel for 
further review. The refinement panel result supported the HCPAC-
recommended work RVU of 0.54 for CPT code 97597, and the CY 2011 
interim final work RVU of 0.24 for CPT code 97598. Thus, the refinement 
panel result was in line with the pre-work budget neutrality work RVU 
for CPT code 97597, and in line with the post-work budget neutrality 
interim final work RVU for CPT code 97598. The refinement panel does 
not consider whether the application of work budget neutrality is 
appropriate. We continue to believe that these codes, although 
revalued, do not constitute new physician work in aggregate and that 
the application of work budget neutrality is appropriate for this set 
of clinically related CPT codes. Additionally, we continue to believe 
that the post-budget neutrality work RVU of 0.24, which was supported 
by the refinement panel result, appropriately reflects the work 
associated with CPT code 97598. After consideration of the public 
comments, refinement panel results, and our clinical review, we are 
finalizing a work RVU of 0.51 for CPT code 97597, and a work RVU of 
0.24 for CPT code 97598 for CY 2012.
    For CY 2012, we received no comments on the CY 2011 interim final 
work RVUs of 4.19 for CPT code 11010 (Debridement including removal of 
foreign material at the site of an open fracture and/or an open 
dislocation (e.g., excisional debridement); skin and subcutaneous 
tissues), 4.94 for CPT code 11011(Debridement including removal of 
foreign material at the site of an open fracture and/or an open 
dislocation (e.g., excisional debridement); skin, subcutaneous tissue, 
muscle fascia, and muscle), and 6.87 for CPT code 11012 (Debridement 
including removal of foreign material at the site of an open fracture 
and/or an open dislocation (e.g., excisional debridement); skin, 
subcutaneous tissue, muscle fascia, muscle, and bone). We believe these 
values continue to be appropriate and are finalizing them without 
modification.
(2) Integumentary System: Nails (CPT Codes 11732 and 11765)
    For the Fourth Five-Year Review, we identified CPT codes 11732 and 
11765 as potentially misvalued through the Harvard-Valued--Utilization 
> 30,000 screen. The related specialty societies surveyed their members 
and the HCPAC issued recommendations to us for the Fourth Five-Year 
Review.
    As detailed in the Fourth Five-Year Review, for CPT code 11732 
(Avulsion of nail plate, partial or complete, simple; each additional 
nail plate (List separately in addition to code for primary procedure)) 
we proposed a work RVU of 0.44, with refinement to time. After clinical 
review, we believed that Multi-Specialty Points of Comparison (MPC) CPT 
code 92250 (Fundus photography with interpretation and report) (work 
RVU=0.44) provided an appropriate crosswalk work RVU for this service. 
We found the HCPAC-recommended decrease in work RVU (from 0.57 to 0.48) 
to be too small, given the recommended reduction in time (from 20 
minutes total time in CY 2011, to a recommended 15 minutes total time 
for CY 2012). Additionally, we refined the post-service time for CPT 
code 11732 to 1 minute, as we believed the HCPAC-recommended 3 minutes 
of post-service time was excessive for this service (76 FR 32459).

[[Page 73112]]

    Comment: Commenters disagreed with the proposed work RVU of 0.44 
assigned to CPT code 11732 by CMS and believe that the HCPAC-
recommended work RVU of 0.48 is more appropriate for this service. 
Commenters recommended that CMS utilize the survey data when valuing 
this service rather than a crosswalk methodology. Commenters noted that 
the HCPAC reviewed the survey results from 38 podiatrists and 
determined that the 25th percentile work RVU of 0.48 and total time of 
15 minutes appropriately accounted for the work and times required to 
perform this service. Commenters wrote that the CMS-proposed reduction 
in time is unsubstantiated. Commenters reiterated the HCPAC 
recommendation stating that a work RVU of 0.48 maintains the proper 
relativity between this service and the comparison services of CPT 
codes 99212 (Level 3 Office or other outpatient visit) (work RVU=0.48) 
and 11721 (Debridement of nail(s) by any method(s); 6 or more) (work 
RVU=0.54). Commenters requested that CMS accept the HCPAC-recommended 
work RVU of 0.48 and total time of 15 minutes for CPT code 11732.
    Response: Based on the comments received, we re-reviewed CPT code 
11732. We continue to believe that a work RVU of 0.44 accurately 
reflects the work associated with this service and that MPC CPT code 
92250 is a more appropriate comparison for this service than CPT codes 
99212 or 11721. After reviewing the pre-, intra-, and post- service 
work descriptions for this service, we continue to believe that the 
recommended pre-, and intra- service times are appropriate, and that 
the recommended post-service time is in excess of the time required to 
perform the post-service work. We continue to believe that one minute 
of post-service time is sufficient for this add-on service. We are 
maintaining the interim final value, assigning a work RVU of 0.44, with 
13 minutes of total time, as the final values for CPT code 11732 for CY 
2012. A complete listing of the times associated with this, and all CPT 
codes, is available on the CMS Web site at: https://www.cms.gov/PhysicianFeeSched/.
    As detailed in the Fourth Five-Year Review, for CPT code 11765 
(Wedge excision of skin of nail fold (e.g., for ingrown toenail)) we 
proposed a work RVU of 1.22, with refinement to time. We compared CPT 
code 11765 with reference CPT code 11422 (Excision, benign lesion 
including margins, except skin tag (unless listed elsewhere), scalp, 
neck, hands, feet, genitalia; excised diameter 1.1 to 2.0 cm) (work 
RVU=1.68), as well as with CPT code 10060 (Incision and drainage of 
abscess (e.g., carbuncle, suppurative hidradenitis, cutaneous or 
subcutaneous abscess, cyst, furuncle, or paronychia); simple or single) 
(work RVU=1.22), and determined that CPT code 10060 was more similar in 
intensity and complexity to CPT code 11765, and thus the better 
comparator code for this service. We also refined the time associated 
with this service. CPT code 11765 is typically performed on the same 
day as an E/M visit and we believed that some of the activities 
conducted during the pre- and post- service times of the procedure code 
and the E/M visit overlap. To account for this overlap, we reduced the 
pre-service evaluation and post-service time by one third (76 FR 32459 
through 32460).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
1.22 for CPT code 11765, and believe that the HCPAC-recommended work 
RVU of 1.48 is more appropriate for this service. Commenters noted that 
CMS crosswalked the work RVU for CPT code 11765 to CPT code 10060 
which, commenters pointed out, is a revised code for this final rule 
with comment period. Commenters urged CMS not to crosswalk CPT code 
11765 to CPT code 10060 as it is currently under review and asserted 
that a direct crosswalk is inappropriate when survey data are 
available. Commenters also noted that CY 2009 Medicare claims data 
indicated that CPT code 11765 was billed with an E/M less than 50 
percent of the time. Commenters reiterated the HCPAC recommendation 
stating that the HCPAC compared CPT code 11765 to CPT code 11422 (work 
RVU=1.68) and noted that the reference code requires more intra-service 
time, more mental effort and judgment, and higher psychological stress 
to perform as compared to CPT code 11765. Ultimately, commenters 
requested that CMS accept the HCPAC- recommended work RVU of 1.48 and 
total time of 59 minutes for CPT code 11765.
    Response: Based on comments received, we re-reviewed CPT code 
11765. We continue to believe that a work RVU of 1.22 accurately 
reflects the work associated with this service and that CPT code 10060 
is an appropriate comparison code for this service. CPT code 10060 
recently was surveyed by related specialty society members, and the AMA 
RUC issued a new recommendation to us for CPT code 10060 for this final 
rule with comment period. As discussed in section III.C.1.b. of this 
final rule with comment period after a review of the new survey results 
for 10060, the AMA RUC recommendations, and our clinical review, we are 
setting an interim final work RVU of 1.22 for CPT code 10060 for CY 
2012, which maintains the current (CY 2011) value. As such, we believe 
that the crosswalk work RVU of 1.22 for CPT code 11765 continues to be 
appropriate. For CY 2012 we are finalizing a work RVU of 1.22 for CPT 
code 11765.
    In response to commenters' note that CPT code 11765 was billed with 
an E/M visit less than 50 percent of the time and therefore, should not 
be subject to the same day E/M adjustment, we looked back at the data 
for this and all other Five-Year Review CPT codes for which we proposed 
a same day E/M adjustment. When calculating the number of times a 
service was performed on the same day as an E/M visit, we likely over-
counted multiple billings of a CPT code and depending on billing 
patterns may have identified an inappropriately higher percentage of 
same day E/M billing. We recalculated these figures using combined 
occurrence pairs, which we now believe is the more appropriate measure 
of same day E/M billings for this purpose. We note that for all codes 
reviewed for the CY 2012 PFS proposed and final rules we used figures 
calculated based on combined occurrence pairs. After recalculating the 
same day E/M percentages for the Five-Year Review CPT codes, CPT code 
11765 was the only code that had originally appeared to be billed over 
50 percent with an E/M visit, but under the revised calculation is 
billed less than 50 percent with an E/M visit. As such, we no longer 
believe it is appropriate to remove one-third of the pre-service 
evaluation time and one-third of the post service time to account for 
the E/M visit on the same date of service. For CY 2012 we are 
finalizing the HCPAC-recommended times of 17 minutes of pre-service 
evaluation time, 1 minute of pre-service positioning time, 5 minutes of 
pre-service dress, scrub and wait time, 5 minutes of intra-service 
time, 5 minutes of post-service time, and 1 CPT code 99212 office or 
outpatient visit for CPT code 11765.
(3) Integumentary System: Repair (Closure) (CPT Codes 11900-11901, 
12001-12018, 12031-12057, 13100-13101, 15120-15121, 15260, 15732, 
15823)
    In the Fourth Five-Year Review, we identified CPT codes 12031, 
12051, 13101, and 15260 as potentially misvalued through the Harvard-
Valued--Utilization > 30,000 screen. CPT codes 12032-12047, 12052-
12057, and 13100 were added as part of the

[[Page 73113]]

family of services for review. Also for the Fourth Five-Year Review, we 
identified CPT code 15732 as potentially misvalued through the site-of-
service anomaly screen. CPT code 15121 was added as part of the family 
of services for review. The related specialty societies surveyed their 
members and the AMA RUC issued recommendations to us for the Fourth 
Five-Year Review.
    As detailed in the Fourth Five-Year Review, in its review of this 
set of CPT codes, the AMA RUC determined that the original Harvard-
valued work RVUs led to compression within these code families, which 
the AMA RUC recommended correcting by reducing the relative values for 
the smallest wound size repair codes and increasing the relative values 
for the larger wound size repair codes. Our proposed range of work RVUs 
for these CPT codes, while not as large as the range that would have 
resulted from our adoption of the AMA RUC recommendations, nevertheless 
is greater than the current range of work RVUs for the variety of wound 
sizes described by the repair codes (76 FR 32431 through 32432).
    For CPT codes 12035 (Repair, intermediate, wounds of scalp, 
axillae, trunk and/or extremities (excluding hands and feet); 12.6 cm 
to 20.0 cm), 12036 (Repair, intermediate, wounds of scalp, axillae, 
trunk and/or extremities (excluding hands and feet); 20.1 cm to 30.0 
cm), 12037 (Repair, intermediate, wounds of scalp, axillae, trunk and/
or extremities (excluding hands and feet); over 30.0 cm), 12045 
(Repair, intermediate, wounds of neck, hands, feet and/or external 
genitalia; 12.6 cm to 20.0 cm), 12046 (Repair, intermediate, wounds of 
neck, hands, feet and/or external genitalia; 20.1 cm to 30.0 cm), 12047 
(Repair, intermediate, wounds of neck, hands, feet and/or external 
genitalia; over 30.0 cm), 12055 (Repair, intermediate, wounds of face, 
ears, eyelids, nose, lips and/or mucous membranes; 12.6 cm to 20.0 cm), 
12056 (Repair, intermediate, wounds of face, ears, eyelids, nose, lips 
and/or mucous membranes; 20.1 cm to 30.0 cm), and 12057 (Repair, 
intermediate, wounds of face, ears, eyelids, nose, lips and/or mucous 
membranes; over 30.0 cm), we proposed specialty society survey 25th 
percentile work RVU. The specialty society surveys of physicians 
furnishing these services indicated that the work of performing these 
services has not changed in the past 5 years and that the complexity of 
patients requiring the services has also remained constant. The survey 
25th percentile work RVUs were somewhat higher than the current work 
RVUs for CPT codes 12035-12037, 12045-12047, 12055 and 12056, and the 
survey 25th percentile work RVU for CPT code 12057 was the same as the 
current (CY 2011) work RVU. Given the survey responses indicating that 
the work and complexity of these services has remained constant, we 
believed that adopting the survey 25th percentile work RVUs both 
accurately valued the work associated with these services and addressed 
the compression-related relativity adjustments recommended by the AMA 
RUC. For CPT codes 12035-12037, 12045-12047, and 12055-12057 the AMA 
RUC recommended the survey median work RVU, which was higher than both 
the current (CY 2011) and survey 25th percentile work RVU. The CY 2011, 
CMS-proposed survey 25th percentile, and AMA RUC-recommended survey 
median work RVUs are listed in Table 15.
    In addition to proposed changes to the AMA RUC-recommended work 
RVUs for these services, we also refined the time associated with 
several of these services. For CPT codes 12036, and 12055-12057, we 
found the survey median intra-service times to be more appropriate for 
these services than the higher AMA RUC-recommended times. After 
clinical review, we believed that these survey median times accurately 
reflected the work associated with performing these services. We also 
refined the times for CPT codes 12046 and 12047. Both CPT codes are 
typically performed on the same day as an E/M visit and we believed 
that some of the activities conducted during the pre- and post- service 
times of the procedure code and the E/M visit overlap. To account for 
this overlap, we reduced the pre-service evaluation and post-service 
time by one third.
    Comment: Commenters disagreed with the CMS-proposed work RVUs for 
CPT codes 12035-12037, 12045-12047, and 12055-12057, and recommended 
that CMS accept the AMA RUC-recommended work RVUs. Commenters believe 
that the proposal by CMS to select the survey 25th percentile survey 
value for these codes is flawed because, since these codes are not 
provided by a homogeneous group of providers, selecting a consistent 
survey marker does not ensure relativity between services. Commenters 
noted that CMS stated that use of the 25th percentile survey value was 
appropriate because survey respondents indicated that there has not 
been a change in complexity in these services in the last 5 years. 
Commenters asserted that a change in work was irrelevant, and that the 
revaluation was intended to correct compression within the family of 
services. Furthermore, commenters noted that the proposed work RVUs 
create rank order anomalies between similar services.
    Commenters also disagreed with the CMS-proposed reductions in time 
for CPT codes 12036, 12046-12047, and 12055-12057, and recommended that 
CMS accept the AMA RUC-recommended times. For CPT codes 12036, 12055, 
and 12057 commenters noted that a significant number of providers who 
do not typically perform the procedure responded to the survey, 
resulting in an artificially reduced median intra-service time. 
Commenters asserted that in this case it is more valid to utilize the 
results from the providers with experience performing this service. For 
CPT codes 12046 and 12047 commenters asserted that it was not 
appropriate for CMS to reduce the pre-evaluation and post service time 
to account for a same day E/M visit. Commenters noted that these 
services have very low utilization, and that the CMS data showing that 
these services are typically billed with an E/M may be incorrect. 
Commenters also noted that the recommended pre-service time for these 
two codes was already reduced from 19 minutes to 13 minutes so they 
believed that a further reduction was not justified.
    Response: Based on comments received, we referred CPT codes 12035-
12037, 12045-12047, and 12055-12057 to the CY 2011 multi-specialty 
refinement panel for further review. The refinement panel results 
largely supported the AMA RUC-recommended work RVUs for these services. 
However, we are going to maintain the CMS-proposed work RVUs and times 
for these services as interim, pending the AMA RUC review of the 
complex wound repair codes which we anticipate will be complete for CY 
2013. Following the receipt of the AMA RUC recommendations for the 
complex wound repair codes, we will reevaluate the work RVU and times 
for these services, especially relative to the complex wound repair 
services. With regards to the accuracy of the same day E/M data, for 
this final rule with comment period, for all the five-year review CPT 
codes, we recalculated the percentage of time they are billed with an 
E/M visit using combined occurrence pairs, as discussed under 
III.B.1.b.(2). of this final rule with comment period. Using a 5 
percent sample of CY 2009 Medicare claims data, CPT code 12046 is 
billed with an E/M visit for 50 percent of the services, and CPT code 
12047 is billed with an E/M for 60 percent of the services. Therefore, 
we continue to believe that it is appropriate to reduce the pre-service 
evaluation and post

[[Page 73114]]

service times by one-third. We recognize that these services are low 
volume and we will take this into consideration when reevaluating the 
times and work RVUs for these codes for CY 2013.
    In sum, we are holding as interim for CY 2012 the Fourth Five-Year 
Review proposed work RVUs and times for CPT codes 12035-12037, 12045-
12047, and 12055-12057 (the larger of the intermediate wound repair 
services), so we can review these services alongside the complex wound 
repair codes before finalizing their values. For clarification, we do 
not expect that the AMA RUC would resurvey these codes. For CY 2012 the 
interim work RVUs are as follows: A work RVU of 3.50 for CPT code 
12035, a work RVU of 4.23 for CPT code 12036, a work RVU of 5.00 for 
CPT code 12037, a work RVU of 3.75 for CPT code 12045, a work RVU of 
4.30 for CPT code 12046, a work RVU of 4.95 for CPT code 12047, a work 
RVU of 4.50 for CPT code 12055, a work RVU of 5.30 for CPT code 12056, 
and a work RVU of 6.00 for CPT code 12057. A complete listing of the 
times associated with these, and all CPT codes, is available on the CMS 
web site at: https://www.cms.gov/PhysicianFeeSched/.
    As detailed in the Fourth Five-Year Review, for CPT code 13100 
(Repair, complex, trunk; 1.1 cm to 2.5 cm) and 13101 (Repair, complex, 
trunk; 2.6 cm to 7.5 cm) the AMA RUC reviewed the specialty society 
survey results and determined that the current (CY 2011) work RVUs 
maintain the appropriate relativity for these services. We noted that 
the AMA RUC reviewed only two CPT codes in the complex wound repair 
family. We agreed with the AMA RUC-recommended work RVUs for these two 
services, and requested that, in order to ensure consistency, the AMA 
RUC review the entire set of codes in the complex wound repair family 
and assess the appropriate gradation of the work RVUs in this family. 
We maintained the current (CY 2011) work RVUs and times for CPT codes 
13100 and 13101 pending the AMA RUC review of the other CPT codes in 
this family (76 FR 32434 through 32435).
    Comment: Commenters requested that CMS adopt the AMA RUC-
recommended times for CPT codes 13100 and 13101. Commenters believe it 
would be unfair to ask the specialty to re-survey these services and 
that the review of other complex repair codes is unlikely to change the 
AMA RUC-recommended times for CPT code 13100 and 13101. Commenters note 
that the current (CY 2011) Harvard times are very similar to the AMA 
RUC-recommended times.
    Response: In response to comments received, we re-reviewed CPT code 
13100 and 13101. While we appreciate commenters' assertion that the 
review of other complex repair codes is unlikely to change the AMA RUC-
recommended times for CPT code 13100 and 13101, we would like to 
refrain from revising the current (CY 2011) times and work RVUs for 
these codes until we can review them alongside the other complex wound 
repair codes. In the CY 2013 PFS final rule with comment period, we 
anticipate publishing interim final values for CPT codes 13100 and 
13101 along with the other complex wound repair codes.
    In the Fourth Five-Year Review (76 FR 32435), we identified CPT 
codes 15120 and 15732 as potentially misvalued through the site-of-
service anomaly screen. CPT code 15121 was added as part of the family 
of services for AMA RUC review. In addition, we identified CPT code 
15260 as potentially misvalued through the Harvard-Valued--Utilization 
> 30,000 screen. For CPT code 15120 (Split-thickness autograft, face, 
scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/
or multiple digits; first 100 sq cm or less, or 1 percent of body area 
of infants and children (except 15050)), we proposed a work RVU of 
10.15 for CY 2012, which was in agreement with the AMA RUC-recommended 
work RVU for this CPT code. Because the most recent Medicare PFS claims 
data showed that CPT code 15120 is a code with a site-of-service 
anomaly, we adjusted the times in accordance with the policy discussed 
in section III.A. of this final rule with comment period. Specifically, 
we removed the current (CY 2011) 0.5 subsequent hospital care day, 
added 5 minutes to the immediate post-operative period, and reduced the 
discharge day management service to one-half. These time changes were 
reflected in the Five-Year Review physician time file available on the 
CMS Web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/. Though 
this time refinement was listed in the physician time file, we 
unintentionally did not note this time refinement in the Fourth Five-
Year Review proposed notice text. As such, we are holding CPT code 
15120 as interim final for CY 2012, with the previously discussed AMA 
RUC-recommended work RVU of 10.15 and the site-of-service time 
refinement discussed previously. A complete listing of the times 
assigned to CPT code 15120 follow in Table 16.
    For CPT code 15732 (Muscle, myocutaneous, or fasciocutaneous flap; 
head and neck (e.g., temporalis, masseter muscle, sternocleidomastoid, 
levator scapulae)), we proposed a work RVU of 16.38 for CY 2012, with 
refinements to the time. The most recent Medicare PFS claims data 
showed that CPT code 15732 is a code with a site-of-service anomaly. 
Upon review, it was clear that this code was being billed for services 
furnished to hospital outpatients, and we had no reason to believe that 
miscoding was the main reason that outpatient settings were the 
dominant place of service for this code in historical PFS claims data. 
Therefore, in accordance with the policy discussed in section III.A. of 
this final rule with comment period, we removed the inpatient hospital 
visit, reduced the discharge day management service to one-half, and 
adjusted times. These adjustments resulted in a work RVU of 16.38.
    The AMA RUC asserted that claims data indicating that this service 
was furnished in an outpatient setting was the result of miscoding but, 
until the claims data indicate that this service typically was 
furnished in the inpatient setting (greater than 50 percent), we 
believed it was inappropriate for the service to be valued including 
inpatient E/M building blocks. We also stated that we will continue to 
monitor site-of-service utilization for this code and may consider 
reviewing the work RVU for this code again in the future if utilization 
patterns change (76 FR 32435).
    Comment: Commenters disagreed with the proposed work RVU of 16.38 
for CPT code 15732, and supported the AMA RUC-recommended work RVU of 
19.83. Commenters noted that the proposed value was derived from the 
reverse building block methodology, which removed the subsequent 
hospital care codes and reduced the full hospital discharge day code to 
a half day. Commenters stated that the service described by CPT code 
15732 is furnished in the inpatient setting, and that data showing 
otherwise are the result of miscoding. Commenters noted that education 
is still needed for this family of codes. Commenters noted that the AMA 
RUC-recommended value is more similar to the key reference code 15734 
(Muscle, myocutaneous, or fasciocutaneous flap; trunk) (work 
RVU=19.86). Commenters expressed concerns that the proposed work RVU 
will create a rank order anomaly within the family, and requested that 
CMS accept the AMA RUC-recommended work RVU of 19.83 for CPT code 
15732.
    Response: Based on comments we received, we referred CPT code 15732 
to the CY 2011 multi-specialty refinement panel for further review. The 
refinement

[[Page 73115]]

panel voted for a work RVU of 17.38 for CPT code 15732. We appreciate 
commenters' interest in physician education to alleviate the potential 
for miscoding. However, the Medicare PFS data show that this service is 
typically furnished in the outpatient setting. We do not believe it is 
appropriate for this now outpatient service to continue to reflect work 
that is typically associated with an inpatient service. As stated 
previously, we will continue to monitor site-of-service utilization for 
this code and may consider reviewing the work RVU for this code again 
in the future if utilization patterns change. In order to ensure 
consistent and appropriate valuation of physician work, we are 
upholding the application of our methodology to address 23-hour stay 
site-of-service anomalies. After consideration of the public comments, 
refinement panel results, and our clinical review, we are finalizing a 
work RVU of 16.38 for CPT code 15732 and our proposed refinements to 
physician time. CMS time refinements can be found in Table 16.
    For CY 2012, we received no comments on the CY 2011 interim final 
work RVUs for CPT codes 11900, 11901, 12001-12018, and 15823. 
Additionally, for CY 2012, we received no comments on the Fourth Five-
Year Review proposed work RVUs for CPT codes 12041-12044, 12051-12054, 
15120, 15121, and 15260. We believe these values continue to be 
appropriate and are finalizing them without modification (Table 15).
(4) Integumentary System: Destruction (CPT Codes 17250-17286)
    In the Fourth Five-Year Review (76 FR 32436), we identified CPT 
codes 17271, 17272 and 17280 as potentially misvalued through the 
Harvard-Valued--Utilization > 30,000 screen. The dominant specialty for 
this family--dermatology--identified several other codes in the family 
to be reviewed concurrently with these services and submitted to the 
AMA RUC recommendations for CPT codes 17260 through 17286. The AMA RUC 
concluded that, with the exception of one CPT code, 17284, the survey 
data validated the current values of the destruction of skin lesion 
services. We agreed with this assessment, with a few refinements to 
physician time.
    As detailed in the Fourth Five-Year Review (76 FR 32436), we 
proposed work RVUs of 1.37 for CPT codes 17270 (Destruction, malignant 
lesion (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, 
surgical curettement), scalp, neck, hands, feet, genitalia; lesion 
diameter 0.5 cm or less); 1.54 for CPT code 17271 (Destruction, 
malignant lesion (e.g., laser surgery, electrosurgery, cryosurgery, 
chemosurgery, surgical curettement), scalp, neck, hands, feet, 
genitalia; lesion diameter 0.6 to 1.0 cm); and 2.64 for CPT code 17274 
(Destruction, malignant lesion (e.g., laser surgery, electrosurgery, 
cryosurgery, chemosurgery, surgical curettement), scalp, neck, hands, 
feet, genitalia; lesion diameter 3.1 to 4.0 cm) with refinements to 
physician time. The AMA RUC recommended a work RVU of 1.37 for CPT code 
17270, a work RVU of 1.54 for CPT code 17271, and a work RVU of 2.64 
for CPT code 17274. For CPT codes 17270, 17271, and 17274, we believed 
that the survey median intra-service times accurately reflected the 
time required to conduct the intra-service work associated with these 
services, the survey median. Therefore, for CPT code 17270, we 
increased the intra-service time from 15 minutes to 16 minutes. For CPT 
code 17271, we maintained the intra-service time of 18 minutes, the 
survey median. For CPT code 17274, we increased the intra-service time 
from 32 minutes to 33 minutes.
    Comment: In their public comment on the Fourth Five-Year Review, 
the AMA RUC noted that there was a typographical error in specialty 
society's recommendation to CMS for CPT codes 17270, 17271, and 17274, 
which the specialty society later corrected. They requested that CMS 
change the intra-service times to the AMA RUC-recommended times of 15 
minutes for CPT code 17270, the corrected 19 minutes for CPT code 
17271, and 32 minutes for CPT code 17274.
    Response: In response to comments, we re-reviewed CPT codes 17270, 
17271, and 17274. We thank the AMA RUC for pointing out this time 
error. After reviewing the descriptions of intra-service work, we agree 
that CPT codes 17270, 17271, and 17274 should have 15 minutes, 19 
minutes, and 32 minutes of intra-service physician time, respectively. 
For CPT code 17270, we are finalizing a work RVU of 1.37 and an intra-
service time of 15 minutes. For CPT code 17271, we are finalizing a 
work RVU of 1.54 and an intra-service time of 19 minutes. For CPT code 
17274, we are finalizing a work RVU of 2.64 and an intra-service time 
of 32 minutes.
    For CY 2012, we received no comments on the Fourth Five-Year Review 
proposed work RVUs for CPT codes 17250, 17260-17264, 17266, 17272, 
17273, 17276, 17280-17284, and 17286. We believe these values continue 
to be appropriate and are finalizing them without modification (Table 
15).
(5) Integumentary System: Breast (CPT Codes 19302-19357)
    In the Fourth Five-Year Review (76 FR 32437), we identified CPT 
code 19302 as potentially misvalued through the site-of-service anomaly 
screen. For CPT code 19302 (Mastectomy, partial (e.g., lumpectomy, 
tylectomy, quadrantectomy, segmentectomy); with axillary 
lymphadenectomy), we proposed a work RVU of 13.87. We agreed with the 
AMA RUC that CPT code 19302 is similar in work intensity and time to 
CPT code 38745 (Axillary lymphadenectomy; complete) (work RVU = 13.87), 
which overlaps significantly with CPT code 19302. As such, we believed 
these two procedures should have the same work RVU of 13.87. The AMA 
RUC recommended a work RVU of 13.99 for CPT code 19302 (76 FR 32437).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
13.87 for CPT code 19302, and asserted that the AMA RUC-recommended 
work RVU of 13.99 is more appropriate for this service. Commenters 
noted that we compared CPT code 19302 with CPT code 38745, which has an 
intra-service time of 90 minutes. Commenters stated that the slightly 
greater intra-service time of CPT code 19302 supports the current work 
RVU of 13.99, and request that we accept the AMA RUC-recommended work 
RVU of 13.99.
    Response: Based on the comments we received, we referred CPT code 
19302 to the CY 2011 multi-specialty refinement panel for further 
review. Refinement panel results supported the AMA RUC recommendation 
and validated the current work RVU of 13.99. As a result of the 
refinement panel ratings and our clinical review, for CY 2012 we are 
finalizing a work RVU of 13.99 for CPT code 19302.
    For CY 2012, we received no comments on the Fourth Five-Year Review 
proposed work RVU for CPT code 19357. We believe this value continue to 
be appropriate and are finalizing it without modification (Table 15).
(6) Musculoskeletal: Spine (Vertebral Column) (CPT Codes 22315, 22520-
22525, 22551, 22552, 22554, 22585, and 22851)
    In the Fourth Five-Year Review, we identified CPT code 22521 as 
potentially misvalued through the site-of-service anomaly screen. CMS 
also requested that the AMA RUC review other CPT codes in the family 
including

[[Page 73116]]

CPT codes 22520, 22522, 22523, 22524 and 22525.
    In the Fourth Five-Year Review, we proposed a work RVU of 8.01 for 
CPT code 22521 (Percutaneous vertebroplasty, 1 vertebral body, 
unilateral or bilateral injection; lumbar); a work RVU of 8.62 for CPT 
code 22523 (Percutaneous vertebral augmentation, including cavity 
creation (fracture reduction and bone biopsy included when performed) 
using mechanical device, 1 vertebral body, unilateral or bilateral 
cannulation (e.g., kyphoplasty); thoracic); and a work RVU of 8.22 for 
CPT code 22524 (Percutaneous vertebral augmentation, including cavity 
creation (fracture reduction and bone biopsy included when performed) 
using mechanical device, 1 vertebral body, unilateral or bilateral 
cannulation (e.g., kyphoplasty); lumbar). The current valuation of 
these codes includes one full discharge management day consistent with 
performance in an inpatient setting for these services. As these CPT 
codes are typically performed in the outpatient setting, the AMA RUC 
recommended, and we agreed, that the discharge management day should be 
reduced by half as this is consistent with our adjustment methodology 
for site-of-service anomaly codes. Although the AMA RUC reduced the 
discharge day management by half, it discovered that an inadvertent 
clerical error had led these codes to appear as if they had been valued 
with one full discharge management day. The AMA RUC stated that these 
codes were valued as outpatient services using only half a discharge 
management day during the 2006 Third Five-Year Review of Work (71 FR 
37271). The AMA RUC concluded that the current (CY 2011) work RVU for 
these codes should not be reduced to reflect the removal of the half 
discharge day. The AMA RUC recommended maintaining the current work RVU 
of 8.65 for CPT code 22521, 9.26 for CPT code 22523, and 8.86 for CPT 
code 22524 (76 FR 32437).
    Comment: Commenters disagreed with our proposed work RVUs of 8.01 
for CPT code 22521, 8.62 for CPT code 22523, and 8.22 for CPT code 
22524. Additionally, commenters stated that our action to reduce the 
work RVUs of codes 22521, 22523 and 22524 disregarded that the AMA RUC 
previously had accounted for the outpatient location in its 
recommendation. Moreover, commenters disagreed with CMS removing the 
value of the half discharge management day which is 0.64 of a work RVU 
from each code, and recommended that we accept the AMA RUC-recommended 
values for these three CPT codes.
    Response: Based on the public comments received, we referred CPT 
codes 22521, 22523, and 22524 to the CY 2011 multi-specialty refinement 
panel for further review. The refinement panel median work RVUs were 
8.65 for CPT code 22521, 9.04 for CPT code 22523, and 8.54 for CPT code 
22524. In response to the AMA RUC's comments on the Fourth Five-Year 
Review, we re-reviewed the Medicare PFS claims data for CPT codes 
22521, 22523, and 22524. The PFS claims data showed that these services 
were utilized in outpatient settings more than 50 percent of the time 
at the time these codes were last reviewed. These codes are not 
considered to be site-of-service anomaly codes since they were 
previously valued as outpatient services. We do not believe it would be 
appropriate to apply our site-of-service methodology of removing a half 
discharge day management (work RVU = 0.64) from the current (CY 2011) 
values in this final rule with comment period. Instead, we are 
finalizing the refinement panel median work RVUs of 8.65 for CPT code 
22521, 9.04 for CPT code 22523, and 8.54 for CPT code 22524 for CY 
2012. We received no comments on the CY 2012 proposed work RVUs for CPT 
codes 22315, 22520, 22522, and 22525. We believe these values continue 
to be appropriate and are finalizing them without modification (Table 
15).
    The AMA RUC identified CPT code 22554 (Arthrodesis, anterior 
interbody technique, including minimal discectomy to prepare interspace 
(other than for decompression); cervical below C2) through the ``Codes 
Reported Together'' potentially misvalued code screen. After review, 
the AMA RUC referred CPT code 22554 to the CPT Editorial Panel to 
create a new coding structure for this family of services. For CY 2011, 
the CPT Editorial Panel created 2 new CPT codes--22551 (Arthrodesis, 
anterior interbody, including disc space preparation, discectomy, 
osteophytectomy and decompression of spinal cord and/or nerve roots; 
cervical below C2) and 22552 (Arthrodesis, anterior interbody, 
including disc space preparation, discectomy, osteophytectomy and 
decompression of spinal cord and/or nerve roots; cervical below C2, 
each additional interspace (List separately in addition to code for 
separate procedure)--to describe fusion and discectomy of the anterior 
cervical spine.
    In the CY 2011 PFS final rule with comment period (75 FR 73331), we 
assigned a work RVU of 25.00 to CPT code 22551 on an interim final 
basis for CY 2011. The AMA RUC recommended a work RVU of 24.50. The 
specialty society requested a work RVU of 25.00. Upon review of the AMA 
RUC-recommended value and the reference codes used, it was unclear why 
the AMA RUC decided not to accept the specialty society's recommended 
work RVU of 25.00. We agreed with the specialty society and believed a 
work RVU of 25.00 was appropriate for this service. We also requested 
that the specialty society, with the AMA RUC, re-review the pre-service 
times for codes in this family since concerns were noted in the AMA RUC 
recommendation about the pre-service time for this service.
    We did not receive any public comments that disagreed with the 
interim final work values. Therefore, we are finalizing a work RVU of 
25.00 for CPT code 22551. For CY 2012, we received no comments on the 
CY 2011 interim final work RVUs for CPT codes 22552, 22554, 22585, and 
22851. We believe these values continue to be appropriate and are 
finalizing them without modification (Table 15).
(7) Musculoskeletal: Forearm and Wrist (CPT Codes 25116--25605)
    In the Fourth Five-Year Review, we identified CPT codes 25600 
(Closed treatment of distal radial fracture (e.g., Colles or Smith 
type) or epiphyseal separation, includes closed treatment of fracture 
of ulnar styloid, when performed; without manipulation) and 25605 
(Closed treatment of distal radial fracture (e.g., Colles or Smith 
type) or epiphyseal separation, includes closed treatment of fracture 
of ulnar styloid, when performed; with manipulation) as potentially 
misvalued through the Harvard-Valued--Utilization > 30,000 screen.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
25600, we proposed a work RVU of 2.64 for CY 2012. After clinical 
review, we believed that CPT code 25600 required more work than key 
reference CPT code 26600 (Closed treatment of metacarpal fracture, 
single; without manipulation, each bone), and found that CPT code 27767 
(Closed treatment of posterior malleolus fracture; without 
manipulation) (work RVU = 2.64) is similar in complexity and intensity 
to CPT code 25600. In addition to the work RVU adjustment for CPT code 
25600, we refined the time associated with this CPT code. We believed 
some of the activities conducted during the pre- and post-service times 
of the procedure code and the E/M visit overlap. Therefore, to account 
for this overlap, we refined the

[[Page 73117]]

time for CPT code 25600 by reducing the pre-service evaluation and post 
service time by one-third. Specifically, we believed that 5 minutes 
pre-service evaluation time and 7 minutes post-service time accurately 
reflect the time required to conduct the work associated with this 
service. The AMA RUC recommended that CMS continue the current work RVU 
of 2.78 for CPT code 25600 (76 FR 32438) based on the results of a 
recent survey.
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
2.64 for CPT 25600 and believe that the AMA RUC-recommended work RVU of 
2.78 is more appropriate for this service. Furthermore, the commenters 
noted that the AMA RUC and the surveying specialty societies had 
already taken account of pre-operative work by reducing the specialty 
society recommended pre-service time from 9 minutes to 7 minutes. 
Commenters noted that AMA RUC submission to CMS mistakenly failed to 
allocate the 7 minutes of pre-service time between pre-service 
evaluation and pre-service positioning, and noted that they had 
intended to recommend 5 minutes of pre-service evaluation time and 2 
minutes of pre-service positioning time. They also argued that there is 
no overlapping post-operative work because the patient E/M visit would 
have been completed prior to the surgical service and thus, by 
definition, prior to the post-service period. As such, commenters 
requested that CMS accept the clarified pre-service times of 5 minutes 
for pre-service evaluation and 2 minutes for pre-service positioning, 
as well as the recommended 10 minutes of post-service time. 
Additionally, commenters noted that the AMA RUC originally valued this 
service using magnitude estimation based on comparison reference codes, 
which considers the total work of the service rather than the work of 
the component parts of the service, and requested CMS accept the AMA 
RUC-recommended work RVU of 2.78.
    Response: Based on comments received, we referred CPT code 25600 to 
the CY 2011 multi-specialty refinement panel for further review. The 
median refinement panel work RVU was 2.78. As a result of the 
refinement panel rating and our clinical review, we are assigning a 
work RVU of 2.78 to CPT code 25600 as the final value for CY 2012. In 
response to comments received regarding the times associated with CPT 
code 25600, we re-reviewed our proposed pre- and post-service minutes. 
We agree with the AMA RUC that 5 minutes of pre-service evaluation work 
adequately accounts for the time required to furnish this service and 
appropriately accounts for the E/M visit performed on the same day. 
However, for the pre-service positioning time, we believe that 1 minute 
of pre-service positioning time, rather than the revised recommendation 
of 2 minutes, is appropriate. CPT code 25605 (Closed treatment of 
distal radial fracture (e.g., Colles or Smith type) or epiphyseal 
separation, includes closed treatment of fracture of ulnar styloid, 
when performed; with manipulation) is assigned 1 minute of pre-service 
positioning time and includes manipulation, while CPT code 25600 is 
used for the same service, but without manipulation. As such, we do not 
believe that CPT code 25600 should have more pre-service positioning 
time than CPT code 25605. Therefore, for CPT code 25600, we are 
finalizing a pre-service evaluation time of 5 minutes and a pre-service 
positioning time of 1 minute.
    With regard to the post-service time, though the procedure 
described by CPT code 25600 would occur after the E/M service, after a 
review of the post-service work associated with the E/M visit and the 
procedure, we continue to believe that there is overlap, and that this 
overlap was appropriately accounted for by removing one-third of the 
post-service minutes from CPT code 25600, thereby reducing the post-
service time from 10 minutes to 7 minutes. In sum, for CY 2012 we are 
finalizing the refinement panel result median work RVUs of 2.78 and the 
following pre- and post-service times: 5 minutes pre-service evaluation 
time, 1 minute pre-service positioning time, and 7 minutes post-service 
time for CPT code 25600. CMS time refinements are listed in Table 16.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
25605, we proposed a work RVU of 6.00 for CY 2012. After clinical 
review, including comparison to CPT code 28113 (Ostectomy, complete 
excision; fifth metatarsal head), we believed that an RVU of 6.00 (the 
survey low) correctly reflected relativity across these services. The 
AMA RUC recommended a work RVU of 6.50 for CPT code 25605 for CY 2011 
(76 FR 32438). In addition to the work RVU adjustment for CPT code 
25605, we refined the time associated with this code. Recent Medicare 
PFS claims data show that this service is typically performed on the 
same day as an E/M visit. We believed that, in its time recommendation 
to us, the AMA RUC accounted for duplicate E/M work associated with the 
pre-service period, but not the post service period. To account for 
this post-service overlap, we proposed to reduced the post service time 
by one-third.
    Comment: Commenters disagreed with the proposed work RVU of 6.00 
for CPT code 25605 and believe that the AMA RUC-recommended work RVU of 
6.50 is more appropriate. In addition, commenters noted that the AMA 
RUC-recommended value for this service corresponds to the specialty 
society survey 25th percentile, whereas the CMS-assigned value 
corresponds to the survey low. Commenters noted that making a 
recommendation based on the survey low value which is potentially an 
outlier data point is not statistically sound methodology and assert 
that it is inappropriate to value services based on the survey low. 
Furthermore, the commenters noted that the AMA RUC and the surveying 
societies had already taken account of pre-operative overlap in work 
and reduced estimated times accordingly, and that there is no 
overlapping post-operative work because the patient E/M would have been 
completed prior to the surgical service and thus, by definition, prior 
to the post-service period. Commenters noted that the AMA RUC 
originally valued this service using magnitude estimation based on 
comparison reference codes, and requested CMS accept the AMA RUC-
recommended work RVU and physician time.
    Response: Based on comments received, we referred CPT code 25605 to 
the CY 2011 multi-specialty refinement panel for further review. The 
median refinement panel work RVU was 6.25. In response to comments 
received regarding the times associated with CPT code 25605, we re-
reviewed out proposed pre- and post-service minutes. We note that we 
did not propose a reduction in pre-service minutes from the AMA RUC-
recommended time, and that we did propose a one-third reduction in 
post-service minutes to account for the same day E/M visit. After a 
review of the post-service work associated with the E/M visit and the 
procedure, we continue to believe that there is overlap, and that this 
overlap was appropriately accounted for by removing one-third of the 
post-service minutes from CPT code 25605, thereby reducing the post-
service time from 20 minutes to 13 minutes. In sum, for CY 2012 we are 
finalizing the refinement panel result median work RVUs of 6.25 and the 
following pre- and post-service times: 14 minutes of pre-service 
evaluation time, 1 minute of pre-service positioning time, 5 minutes of 
pre-service dress, scrub and wait time, and 13 minutes of post-service 
time for CPT code 25605. CMS time refinements can be found in Table 50.

[[Page 73118]]

(8) Musculoskeletal: Femur (Thigh Region) and Knee Joint (CPT Codes 
27385-27530)
    In the Fourth Five-Year Review, we identified CPT codes 27385 and 
27530 as potentially misvalued through the site-of-service anomaly 
screen.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
27385 (Suture of quadriceps or hamstring muscle rupture; primary), we 
proposed a work RVU of 6.93 for CY 2012. Medicare PFS claims data 
indicated that CPT code 27385 is typically performed as an outpatient 
rather than inpatient service. In accordance with our methodology to 
address 23-hour stay and site-of-service anomalies described in section 
III.A. of this final rule with comment period, for CPT code 27385, we 
removed the hospital visit, reduced the discharge day management 
service by one-half, and increased the post-service time to 30 minutes. 
The AMA RUC recommended a work RVU of 8.11 for CPT code 27385 (76 FR 
32438). The AMA RUC reviewed the survey results from physicians who 
frequently perform this service and decided that the work required to 
perform this service had not changed. The AMA RUC recommended that this 
service be valued as a service performed predominately in the inpatient 
setting, as the survey data indicated that half of patients have an 
overnight stay.
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
6.93 for CPT code 27385 and believe that that AMA RUC-recommended work 
RVU of 8.11 is more appropriate for this service. Commenters asserted 
that CPT code 27385 is not a site-of-service anomaly code because it is 
utilized more than 50 percent of the time in the inpatient setting. 
Commenters noted that the CMS value was derived from the reverse 
building block methodology, which removed the subsequent hospital care 
code and reduced the full hospital discharge day management code to a 
half day, along with the associated work RVUs and times. Commenters 
noted that the AMA RUC originally valued this service using magnitude 
estimation based on comparison reference codes, which considers the 
total work of the service rather than the work of the component parts 
of the service, and requested CMS accept the AMA RUC-recommended work 
RVU and physician time.
    Response: Based on the public comments received, we referred CPT 
code 27385 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 7.77 for CPT code 
27385. The current (CY 2011) work RVU for this service was developed 
when this service was typically furnished in the inpatient setting. The 
most recent Medicare PFS claims data indicates that this service is now 
typically furnished in the outpatient setting. As such, we believe that 
it is reasonable to expect that there have been changes in medical 
practice for these services, and that such changes would represent a 
decrease in physician time and intensity. However, the AMA RUC-
recommendation and refinement panel results do not reflect a decrease 
in physician work. We do not believe it is appropriate for this 
outpatient service to continue to reflect work that is typically 
associated with an inpatient service. In order to ensure consistent and 
appropriate valuation of physician work, we believe it is necessary in 
the case of CPT code 27385 to apply the methodology, described 
previously, to address 23-hour stay site-of-service anomalies. 
Therefore, we are finalizing the proposed work RVU of 6.93 for CPT code 
27385. Additionally, we are finalizing a pre-service evaluation time of 
33 minutes, a pre-service positioning time of 9 minutes, pre-service 
dress, scrub, and wait time of 15 minutes, an intra-service time of 60 
minutes, and a post-service time of 30 minutes. We are also reducing 
the hospital discharge day by 0.5 for CPT code 27385. CMS time 
refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
27530 (Closed treatment of tibial fracture, proximal (plateau); without 
manipulation), we proposed a work RVU of 2.65 for CY 2012. Recent 
Medicare PFS claims data has shown that this service is typically 
performed on the same day as an E/M visit. We believed there was some 
overlap in the activities conducted during the pre- and post-service 
times between the procedure code and the E/M visit and, therefore, the 
time should not be counted twice in developing the procedure's work 
value. As described earlier in section III.A. of this final rule with 
comment period, to account for this overlap, we reduced the pre-service 
evaluation and post-service time by one-third. We believed that 5 
minutes pre-service evaluation time and 7 minutes post-service time 
accurately reflected the time required to conduct the work associated 
with this service. We also removed the 2 minutes of pre-service 
positioning time, as it does not appear from the vignette that 
positioning is required for a non-manipulated extremity.
    In order to determine the appropriate work RVU for this service 
given the time changes, we calculated the value of the extracted time 
and subtracted it from the AMA RUC-recommended work RVU. The AMA RUC 
recommended a work RVU of 2.81 for CPT code 27530 (76 FR 32438).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
2.65 for CPT code 27530 and believe that the AMA RUC-recommended work 
RVU of 2.81 is more appropriate for this service. Commenters disagree 
with CMS' use of the reverse building block methodology, which reduced 
pre- and post-service times because of overlap with same day E/M 
services. Commenters noted that the AMA RUC originally valued this 
service using magnitude estimation based on comparison reference codes, 
which considers the total work of the service rather than the work of 
the component parts of the service, and requested that CMS accept the 
AMA RUC-recommended work RVU and physician time.
    Response: Based on the public comments received, we referred CPT 
code 27530 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 2.76 for CPT code 
27530. In response to comments received, we reviewed the pre- and post- 
service time and work for this procedure. We continue to believe some 
of the activities conducted during the pre- and post-service times of 
the procedure code and the E/M visit overlap and should not be counted 
in developing this procedure's work value. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply the methodology, described previously for 
services typically billed in conjunction with an E/M service, and 
remove a total of 7 minutes from the AMA RUC-recommended pre- and post-
service time, which amounts to the removal of 0.16 of a work RVU as 
described previously. Therefore, we are finalizing a work RVU of 2.65 
for CPT code 27530. In addition, after reviewing the descriptions pre- 
and post-service work, we are finalizing a pre-service time of 4 
minutes, an intra-service time of 15 minutes, and a post-service time 
of 7 minutes. CMS time refinements can be found in Table 16.
(9) Musculoskeletal: Leg (Tibia and Fibula) and Ankle Joint (CPT Code 
27792)
    In the Fourth Five-Year Review, we identified CPT code 27792 (Open 
treatment of distal fibular fracture (lateral malleolus), includes 
internal fixation, when performed) as potentially

[[Page 73119]]

misvalued through the site-of-service anomaly screen. In addition, we 
proposed a work RVU of 8.75 for CPT code 27792. Medicare PFS claims 
data indicated that CPT code 27792 is typically performed in an 
outpatient setting. However, the current AMA RUC-recommended values for 
this code reflect work that is typically associated with an inpatient 
service. Therefore, in accordance with our methodology to address 23-
hour stay and site-of-service anomalies described in section III.A. of 
this final rule with comment period, for CPT code 27792, we removed the 
subsequent observation care service, reduced the discharge day 
management service by one-half, and adjusted the physician times 
accordingly. For CPT code 27792, the AMA RUC used magnitude estimation 
and recommended that the current value of this service, 9.71 RVUs, be 
maintained; and the AMA RUC replaced the current inpatient hospital E/M 
visit included in the value with a subsequent observation care service 
while maintaining a full discharge day management service (76 FR 
32439).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
8.75 for CPT code 27792 and believe that that AMA RUC-recommended work 
RVU of 9.71 is more appropriate for this service. Commenters disagreed 
with CMS' use of the reverse building block methodology, which removed 
the subsequent observation care code and reduced the full hospital 
discharge day management code to a half day, along with the associated 
work RVUs and times. Commenters noted that the AMA RUC originally 
valued this service using magnitude estimation based on comparison 
reference codes, which considers the total work of the service rather 
than the work of the component parts of the service, and requested CMS 
accept the AMA RUC-recommended work RVU and physician time.
    Response: Based on the public comments received, we referred CPT 
27792 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 9.71, which was 
consistent with the AMA RUC recommendation to maintain the current (CY 
2011) work RVU for CPT code 27792. The current (CY 2011) work RVU for 
this service was developed when this service was typically furnished in 
the inpatient setting. As this service is now typically furnished in 
the outpatient setting, we believe that it is reasonable to expect that 
there have been changes in medical practice for these services, and 
that such changes would represent a decrease in physician time or 
intensity or both. However, the AMA RUC-recommendation and refinement 
panel results do not reflect a decrease in physician work. We do not 
believe it is appropriate for this now outpatient service to continue 
to reflect work that is typically associated with an inpatient service. 
In order to ensure consistent and appropriate valuation of physician 
work, we believe it is appropriate to apply the methodology described 
previously to address 23-hour stay site-of-service anomalies. 
Therefore, we are finalizing a work RVU of 8.75 for CPT code 27792. In 
addition, after reviewing the descriptions of the pre- and post-service 
work, we are finalizing a pre-service evaluation time of 33 minutes, a 
pre-service positioning time of 10 minutes, a pre-service dress, scrub, 
and wait time of 15 minutes, an intra-service time of 60 minutes, and a 
post-service time of 30 minutes. We are also reducing the hospital 
discharge day by 0.5 for CPT code 27792. CMS time refinements can be 
found in Table 16.
(10) Musculoskeletal: Foot and Toes (CPT Codes 28002-28825)
    For the Fourth Five-Year Review, we identified CPT codes 28002, 
28715, 28820 as potentially misvalued though the site-of-service 
anomaly screen. CPT code 28003 was added as a part of the family of 
services for review. We also identified CPT code 28285 as potentially 
misvalued through the Harvard-Valued--Utilization > 30,000 screen. The 
related specialty societies surveyed these codes and the AMA RUC issued 
recommendations to us for the Fourth Five-Year Review of Work.
    CPT codes 28120 and 28122 were identified in 2007 by the AMA RUC 
Relativity Assessment Workgroup as potentially misvalued through the 
site-of-service anomaly screen. The related specialty societies 
surveyed these codes and the AMA RUC issued recommendations to us for 
CY 2010. As described in section III.A. of this final rule with comment 
period, we accepted these CY 2010 site-of-service anomaly code values 
on an interim basis but requested that the AMA RUC re-examine the site-
of-service anomaly codes and adjust the work RVUs, times, and post-
operative visits to reflect those typical of a service furnished in an 
outpatient or physician's office setting. The AMA RUC re-reviewed the 
survey data for these codes and issued recommendations to us for the 
Fourth Five-Year Review of Work.
    We reviewed CPT codes 28002-28003, 28120-21822, 28285, 28715, 
28820, and 28825, and published proposed work RVUs in the Fourth Five-
Year Review of Work (76 FR 32440). Based on comments received during 
the public comment period, we referred CPT codes 28002, 28120-21822, 
28285, 28715, 28820, and 28825 to the CY 2011 multi-specialty 
refinement panel for further review.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
28002 (Incision and drainage below fascia, with or without tendon 
sheath involvement, foot; single bursal space), we proposed a work RVU 
of 4.00 for CY 2012. After clinical review, including comparison to CPT 
code 58353 (Endometrial ablation, thermal, without hysteroscopic 
guidance) (work RVU=3.60), we believed that the survey low value work 
RVU of 4.00 accurately reflected the work associated with this service. 
The AMA RUC recommended a work RVU of 5.34 for CPT code 28002 for CY 
2011 (76 FR 32440).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
4.00 for CPT code 28002 and believe that the AMA RUC-recommended work 
RVU of 5.34 is more appropriate for this service. Commenters disagreed 
with the reference service put forward by CMS, and asserted that the 
AMA RUC-chosen reference service is a strong comparison code. 
Commenters noted that the AMA RUC-recommended value for this service 
corresponds to the specialty society survey 25th percentile value, and 
that the CMS-assigned value corresponds to the survey low. Commenters 
asserted that establishing a value based on the survey low, which 
potentially is an outlier data point, is not a statistically sound 
methodology, and believe that it is inappropriate to value services 
based on the survey low.
    Response: Based on the comments received, we referred CPT code 
28002 to the CY 2011 multi-specialty refinement panel for further 
review. The median refinement panel work RVU was 5.34. As a result of 
the refinement panel ratings and clinical review by CMS, we are 
assigning the AMA RUC-recommended work RVU of 5.34 to CPT code 28002 as 
the final value for CY 2012. For CY 2012, we received no comments on 
the proposed CY 2012 work RVU for CPT code 28003. We believe this value 
continues to be appropriate and are finalizing it without modification 
(Table 15).
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
28120 (Partial excision (craterization, saucerization, sequestrectomy, 
or diaphysectomy) bone (e.g., osteomyelitis or bossing); talus or 
calcaneus), we proposed a work RVU of 7.31 for CY 2012. Medicare PFS 
claims data indicated that CPT code 28120 is typically performed in an 
outpatient

[[Page 73120]]

setting. However, the current and AMA RUC-recommended values for this 
code reflected work that is typically associated with an inpatient 
service. Therefore, in accordance with our methodology to address 23-
hour stay and site-of-service anomalies described previously, for CPT 
code 28120, we removed the subsequent observation care service, reduced 
the discharge day management service by one-half, and adjusted the 
physician times accordingly. The AMA RUC recommended maintaining the 
current work RVU of 8.27 for CPT code 28120 for CY 2012 (76 FR 32440).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
7.31 for CPT code 28120 and believe that the AMA RUC-recommended work 
RVU of 8.27 is more appropriate for this service. Commenters disagreed 
with CMS' use of the reverse building block methodology, which removed 
the subsequent observation care code and reduced the full hospital 
discharge management code to a half day, and the associated work RVUs 
and times. Commenters noted that the AMA RUC originally valued this 
service using magnitude estimation based on comparison reference codes, 
which considers the total work of the service rather than the work of 
the component parts of the service, and requested that CMS accept the 
AMA RUC-recommended work RVU and physician time.
    Response: Based on comments received, we referred CPT code 28120 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 8.27, which is consistent with the 
AMA-RUC recommendation to maintain the current work RVU for this 
service. The current (CY 2011) work RVU for this service was developed 
when this service was typically furnished in the inpatient setting. As 
this service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not reflect 
a decrease in physician work. We do not believe it is appropriate for 
this now outpatient service to continue to reflect work that is 
typically associated with an inpatient service. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply our methodology described previously to address 
23-hour stay site-of-service. After consideration of the public 
comments, refinement panel results, and our clinical review, we are 
assigning a work RVU of 7.31 to CPT code 28120 as the final value for 
CY 2012. In addition, after reviewing the descriptions pre- and post-
service work, we are finalizing a pre-service evaluation time of 33 
minutes, a pre-service positioning time of 10 minutes, a pre-service 
dress, scrub, and wait time of 15 minutes, an intra-service time of 50 
minutes, and a post-service time of 30 minutes. We are also reducing 
the hospital discharge day by 0.5 for CPT code 28120. CMS time 
refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
28122 (Partial excision (craterization, saucerization, sequestrectomy, 
or diaphysectomy) bone (e.g., osteomyelitis or bossing); tarsal or 
metatarsal bone, except talus or calcaneus), we proposed a work RVU of 
6.76 for CY 2012. Medicare PFS claims data indicated that CPT code 
28122 is typically performed in an outpatient setting. However, the 
current and AMA RUC-recommended values for this code reflected work 
that is typically associated with an inpatient service. Therefore, in 
accordance with our methodology to address 23-hour stay and site-of-
service anomalies described previously, for CPT code 28122, we removed 
the subsequent observation care service, reduced the discharge day 
management service by one-half, and adjusted the physician times 
accordingly. The AMA RUC recommended maintaining the current work RVU 
of 7.72 for CPT code 28122 for CY 2012 (76 FR 32440).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
6.76 for CPT code 28122 and believe that the AMA RUC-recommended work 
RVU of 7.72 is more appropriate for this service. Commenters noted that 
the CMS value was derived from the reverse building block methodology, 
which removed the subsequent observation care code and reduced the full 
hospital discharge management code to a half day, along with the 
associated work RVUs and times. Commenters noted that the AMA RUC 
originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested that CMS accept the AMA RUC-recommended work RVU and 
physician time.
    Response: Based on comments received, we referred CPT code 28122 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 7.72, which was consistent with 
the AMA RUC recommendation to maintain the current work RVU for this 
service. The current (CY 2011) work RVU for this service was developed 
when this service was typically furnished in the inpatient setting. As 
this service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not reflect 
a decrease in physician work. We do not believe it is appropriate for 
this now outpatient service to continue to reflect work that is 
typically associated with an inpatient service. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply our methodology described previously to address 
23-hour stay site-of-service. After consideration of the public 
comments, refinement panel results, and our clinical review, we are 
assigning a work RVU of 6.76 to CPT code 28122 as the final value for 
CY 2012. In addition, after reviewing the descriptions of pre- and 
post-service work, we are finalizing a pre-service evaluation time of 
33 minutes, a pre-service positioning time of 10 minutes, a pre-service 
dress, scrub, and wait time of 15 minutes, an intra-service time of 45 
minutes, and a post-service time of 30 minutes. We are also reducing 
the hospital discharge day by 0.5 for CPT code 28122. CMS time 
refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
28285 (correction, hammertoe (e.g., interphalangeal fusion, partial or 
total phalangectomy), we proposed a work RVU of 4.76 for CY 2012. The 
AMA RUC recommended a work RVU of 5.62 for CPT code 28285. We disagreed 
with the AMA RUC-recommended work RVU for CPT code 28285 and believed 
that a work RVU of 4.76, the current work RVU, was more appropriate for 
this service. The majority of survey respondents indicated that the 
work of performing this service has not changed in the past 5 years (67 
percent), and that there has been no change in complexity among the 
patients requiring this service (81 percent) (76 FR 32440).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
4.76 for CPT code 28285 and believe that the AMA RUC-recommended work 
RVU of 5.62 is more appropriate for this service. Commenters contend 
that compelling evidence for changes in work, technology, and/or 
patient

[[Page 73121]]

complexity should not be restricted to the previous 5 years, and 
generally that CPT code 28285 is misvalued because there has been a 
change in the way this procedure is performed today resulting in more 
complex and more intense work as compared to 15 to 20 years ago. 
Commenters also noted that the Harvard study did not involve 
podiatrists, which were then and are now the dominant provider of this 
service.
    Response: Based on the comments received, we referred CPT code 
28285 to the CY 2011 multi-specialty refinement panel for further 
review. The median refinement panel work RVU was 5.62. As a result of 
the refinement panel ratings and clinical review by CMS, we are 
assigning a work RVU of 5.62 to CPT code 28285 as the final value for 
CY 2012.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
28715 (Arthrodesis; triple), we proposed a work RVU of 13.42 for CY 
2012. Medicare PFS claims data indicated that CPT code 28715 is 
typically performed in an outpatient setting. However, the current and 
AMA RUC-recommended values for this code reflected work that is 
typically associated with an inpatient service. Therefore, in 
accordance with our methodology to address 23-hour stay and site-of-
service anomalies described previously, for CPT code 28715, we removed 
the subsequent hospital care service, reduced the discharge day 
management service by one-half, and adjusted the physician times 
accordingly. The AMA RUC recommended maintaining the current work RVU 
of 14.60 for CPT code 28715 for CY 2012 (76 FR 32441).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
13.42 for CPT code 28715 and believe that the AMA RUC-recommended work 
RVU of 14.60 is more appropriate for this service. Commenters noted 
that the CMS value was derived from the reverse building block 
methodology, which removed the subsequent hospital care code and 
reduced the full hospital discharge management code to a half day, 
along with the associated work RVUs and time. Commenters noted that the 
AMA RUC originally valued this service using magnitude estimation based 
on comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested that CMS accept the AMA RUC-recommended work RVU and 
physician time.
    Response: Based on comments received, we referred CPT code 28715 to 
the CY 2011 multi-specialty refinement panel for further review. The 
median refinement panel work RVU was 14.60, which was consistent with 
the AMA RUC-recommendation to maintain the current work RVU for this 
service. The current (CY 2011) work RVU for this service was developed 
when this service was typically furnished in the inpatient setting. As 
this service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not reflect 
a decrease in physician work. We do not believe it is appropriate for 
this now outpatient service to continue to reflect work that is 
typically associated with an inpatient service. In order to ensure 
consistent and appropriate valuation of physician work, we are believe 
it is appropriate to apply our methodology described previously to 
address 23-hour stay site-of-service. After consideration of the public 
comments, refinement panel results, and our clinical review, we are 
assigning a work RVU of 13.42 to CPT code 28715 as the final value for 
CY 2012. In addition, after reviewing the descriptions pre- and post-
service work, we are finalizing a pre-service evaluation time of 40 
minutes, a pre-service positioning time of 3 minutes, a pre-service 
dress, scrub, and wait time of 15 minutes, an intra-service time of 125 
minutes, and a post-service time of 40 minutes. We are also reducing 
the hospital discharge day by 0.5 for CPT code 28715. CMS time 
refinements can be found in Table 16.
    As discussed in the CY 2012 MPFS proposed rule, for CPT code 28725 
(Arthrodesis; subtalar) and 28730 (Arthrodesis, midtarsal or 
tarsometatarsal, multiple or transverse), we proposed work RVUs of 
11.22 for CPT code 28725, and work RVUs of 10.70 for CPT code 28730 
respectively. The most recently available Medicare claims data 
suggested that these site-of-service anomaly codes could be ``23-hour 
stay'' outpatient services. As detailed in the CY 2012 MPFS proposed 
rule, for CY 2010, CPT codes 28725 and 28730 were identified as 
potentially misvalued through the site-of-service anomaly screen and 
were reviewed by the AMA RUC. For both of these services, based on 
reference services and specialty survey data, the AMA RUC recommended 
maintaining the current (CY 2009) work RVU, which saw a slight increase 
based on the redistribution of RVUs that resulted from the CY 2010 
policy to no longer recognize the CPT consultation codes (74 FR 61775). 
The AMA RUC re-reviewed CPT codes 28725 and 28730 for CY 2012 and, 
contrary to the 23-hour stay valuation policy we finalized in the CY 
2011 PFS final rule with comment period (75 FR 73226 through 73227), 
recommended replacing the hospital inpatient post-operative visit in 
the current work values with a subsequent observation care service, 
specifically CPT code 99224 (Level 1 subsequent observation care, per 
day) and recommended maintaining the current interim value for the two 
CPT codes. Specifically, for CY 2012 the AMA RUC recommended a work RVU 
of 12.18 for CPT code 28725 and a work RVU of 12.42 for CPT code 28730 
(76 FR 42798).
    We disagreed with the AMA RUC-recommended values for CPT codes 
28725 and 28730. We believed the appropriate methodology for valuing 
these codes entails accounting for the removal of the inpatient visits 
in the work value for the site-of-service anomaly codes since these 
services are no longer typically furnished in the inpatient setting. We 
did not believe it is appropriate to simply exchange the inpatient 
post-operative visits in the original value with subsequent observation 
care visits and maintain the current work RVUs.
    Comment: Commenters stated that just because the patient may be 
discharged prior to 24-hours post-operatively does not mean that the 
post-operative visit would not include the standard pre-service and 
post-service work and instead would only include intra-service work. 
Furthermore, the commenters noted that physicians do not conduct 
shorter or less intense inpatient post-operative visits based on when 
the patient may be discharged. Commenters also stated that CMS is not 
consistent in the application of its methodology of applying intra-
service time and value only. Commenters encouraged CMS to accept the 
RUC-recommended values for 28725 and 28730.
    Response: Based on the public comments received, we referred CPT 
codes 28725 and 28730 to the CY 2011 multi-specialty refinement panel 
for further review. The refinement panel median work RVU was 12.18 for 
CPT code 28725 and 12.42 for CPT code 28730. The current (CY 2011) work 
RVUs for these services were developed based on these services being 
typically furnished in the inpatient setting. As these services are now 
typically furnished in the outpatient setting, we believe that it is 
reasonable to expect that there have been changes in medical

[[Page 73122]]

practice for these services, and that such changes would represent a 
decrease in physician time or intensity or both. However, the AMA RUC-
recommendation and refinement panel results do not reflect a decrease 
in physician work. We do not believe it is appropriate for these 
services, which are typically performed on an outpatient basis, to 
continue to reflect work that is typically associated with an inpatient 
service. In order to ensure consistent and appropriate valuation of 
physician work, we believe it is appropriate to apply our methodology 
described previously to address 23-hour stay site-of-service anomalies. 
Therefore, we are finalizing a work RVU of 11.22 for CPT code 28725 and 
a work RVU of 10.70 for CPT code 28730 with refinements to physician 
time. CMS time refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
28820 (Amputation, toe; metatarsophalangeal joint), we proposed a work 
RVU of 5.82 for CY 2012. Medicare PFS claims data indicated that CPT 
code 28820 is typically performed in an outpatient setting. However, 
the current and AMA RUC-recommended values for this code reflected work 
that is typically associated with an inpatient service. Therefore, in 
accordance with our methodology described previously to address 23-hour 
stay and site-of-service anomalies, for CPT code 28820, we removed the 
subsequent hospital care service, reduced the discharge day management 
service to one-half, and adjusted the physician times accordingly. The 
AMA RUC recommended the survey median work RVU of 7.00 for CPT code 
28820 for CY 2012 (76 FR 32441).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
5.82 for CPT code 28820 and believe that the AMA RUC-recommended work 
RVU of 7.00 is more appropriate for this service. Commenters disagreed 
with CMS' use of the reverse building block methodology, which removed 
the subsequent hospital care code and reduced the full hospital 
discharge management code to a half day, as well as the associated work 
RVUs and time. Commenters noted that the AMA RUC originally valued this 
service using magnitude estimation based on comparison reference codes, 
which considers the total work of the service rather than the work of 
the component parts of the service, and requested that CMS accept the 
AMA RUC-recommended work RVU and physician time.
    Response: Based on comments received, we referred CPT code 28820 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 7.00, which was consistent with 
the AMA-RUC recommendation for this service. The current (CY 2011) work 
RVU for this service was developed when this service was typically 
furnished in the inpatient setting, and the CY 2012 AMA RUC 
recommendation continued to include building blocks typical of an 
inpatient service. Because we removed those building blocks, we believe 
that it is appropriate to reduce the work RVU to reflect the reduction 
in physician work, as measured by time and intensity. We do not believe 
it is appropriate for this now outpatient service to continue to 
reflect work that is typically associated with an inpatient service. In 
order to ensure consistent and appropriate valuation of physician work, 
we believe it is appropriate to apply our methodology described 
previously to address 23-hour stay site-of-service anomalies. After 
consideration of the public comments, refinement panel results, and our 
clinical review, we are assigning a work RVU of 5.82 to CPT code 28820 
as the final value for CY 2012. In addition, after reviewing the 
descriptions pre- and post- service work, we are finalizing a pre-
service evaluation time of 33 minutes, a pre-service positioning time 
of 10 minutes, a pre-service dress, scrub, and wait time of 15 minutes, 
an intra-service time of 30 minutes, and a post-service time of 30 
minutes. We are also reducing the hospital discharge day by 0.5 for CPT 
code 28820. CMS time refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
28825 (Amputation, toe; interphalangeal joint), we proposed a work RVU 
of 5.37 for CY 2012. Medicare PFS claims data indicated that CPT code 
28825 is typically performed in an outpatient setting. However, the 
current and AMA RUC recommended values for this code reflected work 
that is typically associated with an inpatient service. Therefore, in 
accordance with our methodology to address 23-hour stay and site-of-
service anomalies described previously, for CPT code 28825, we reduced 
the discharge day management service to one-half, and adjusted the 
physician times accordingly. The AMA RUC recommended maintaining the 
current work RVU of 6.01 for CPT code 28825 for CY 2012 (76 FR 32441).
    Comment: Commenters disagreed with the CMS proposed work RVU of 
5.37 for CPT code 28825 and believe that the AMA RUC-recommended work 
RVU of 6.01 is more appropriate for this service. Commenters disagreed 
with CMS' use of the reverse building block methodology, which reduced 
the full hospital discharge management code to a half day, along with 
the associated work RVUs and time. Commenters noted that the AMA RUC 
originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested that CMS accept the AMA RUC-recommended work RVU and 
physician time.
    Response: Based on comments received, we referred CPT code 28825 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 6.01, which was consistent with 
the AMA-RUC recommendation to maintain the current work RVU of 6.01 for 
this service. The current (CY 2011) work RVU for this service was 
developed when this service was typically furnished in the inpatient 
setting. As this service is now typically furnished in the outpatient 
setting, we believe that it is reasonable to expect that there have 
been changes in medical practice for these services, and that such 
changes would represent a decrease in physician time or intensity or 
both. However, the AMA RUC-recommendation and refinement panel results 
do not reflect a decrease in physician work. We do not believe it is 
appropriate for this now outpatient service to continue to reflect work 
that is typically associated with an inpatient service. In order to 
ensure consistent and appropriate valuation of physician work, we 
believe it is appropriate to apply our methodology described previously 
to address 23-hour stay site-of-service anomalies. After consideration 
of the public comments, refinement panel results, and our clinical 
review, we are assigning a work RVU of 5.37 to CPT code 28825 as the 
final value for CY 2012. In addition, we are finalizing a pre-service 
evaluation time of 33 minutes, a pre-service positioning time of 10 
minutes, a pre-service dress, scrub, and wait time of 15 minutes, an 
intra-service time of 30 minutes, and a post-service time of 20 
minutes. We are also reducing the hospital discharge day by 0.5 for CPT 
code 28825. CMS time refinements can be found in Table 16.
(11) Musculoskeletal: Application of Casts and Strapping (CPT codes 
29125-29916)
    In the Fourth Five-Year Review, we identified CPT code 29125 
(Application of short arm splint (forearm to hand); static), as 
potentially misvalued through the Harvard-Valued-Utilization > 30,000

[[Page 73123]]

screen. CPT codes 29126 (Application of short arm splint (forearm to 
hand); dynamic) and 29425 were added as part of the family of services 
for AMA RUC review.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
29125 (Application of short arm splint (forearm to hand); static), we 
proposed a work RVU of 0.50 for CY 2012. Medicare PFS claims data 
affirmed that this service is typically performed on the same day as an 
E/M visit. We believed some of the activities conducted during the pre- 
and post-service times of the procedure code and the E/M visit overlap 
and, therefore, should not be counted twice in developing the 
procedure's work value. As described earlier in section III.A. to 
account for this overlap, we reduced the pre-service evaluation and 
post-service time by one third. We believed that 5 minutes pre-service 
evaluation time and 3 minutes post-service time accurately reflect the 
time required to conduct the work associated with this service as 
described by the CPT code-associated specialties to the AMA RUC. The 
AMA RUC recommended maintaining the current work RVU of 0.59 for CPT 
code 29125 (76 FR 32441).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
0.50 for CPT code 29125 and believe that the AMA RUC-recommended work 
RVU of 0.59 is more appropriate. Commenters noted that the CMS value 
was derived from the reverse building block methodology, which removed 
the pre- and post-service time by one-third. Furthermore, commenters 
recommended CMS change our proposed values for this code and accept the 
RUC-recommended value as the pre-service time and values are already 
reduced to account for E/M work on the same day. Commenters noted that 
the AMA RUC originally valued this service using magnitude estimation 
based on comparison reference codes, which considers the total work of 
the service rather than the work of the component parts of the service, 
and requested that CMS accept the AMA RUC-recommended work RVU and 
physician time.
    Response: Based on the public comments received, we referred CPT 
29125 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel results agreed with the CMS-assigned work 
RVU of 0.50 for CPT code 29125. Our clinical review confirmed that this 
value reflects our methodology described previously to reduce the pre-
service evaluation and post-service time by one-third for codes for 
which there is typically a same-day E/M service. Based on the comments 
received, we re-reviewed the pre- and post-service time and work 
assigned to this service. We continue to believe that there is overlap 
in the pre- and post-service work between the E/M visit and service 
described by CPT code 29125. We believe that this overlap was 
appropriately accounted for by removing one-third of the pre-service 
evaluation minutes, and one-third of the post service minutes, thereby 
reducing the pre-service evaluation time from 7 minutes to 5 minutes, 
and the post-service time from 5 minutes to 3 minutes. Therefore, for 
CY 2012 we are finalizing a work RVU for CPT code 29125 of 0.50, with a 
pre-service evaluation time of 5 minutes, and a post-service time of 3 
minutes. CMS time refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work, for CPT code 
29126 (Application of short arm splint (forearm to hand); dynamic), we 
proposed a work RVU of 0.68 for CY 2012. Medicare PFS claims data 
affirmed that this service is typically performed on the same day as an 
E/M visit. We believed some of the activities conducted during the pre- 
and post-service times of the procedure code and the E/M visit overlap 
and, therefore, should not be counted twice in developing the 
procedure's work value. As described earlier in section III.A. of this 
final rule with comment period, to account for this overlap, we reduced 
the pre-service evaluation and post-service time by one-third. The AMA 
RUC recommended maintaining the current work RVU of 0.77 for CPT code 
29126 (76 FR 32442).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
0.68 for CPT code 29126 and believe that the AMA RUC-recommended work 
RVU of 0.77 is more appropriate. Commenters noted that the CMS value 
was derived from the reverse building block methodology, which reduced 
the pre- and post service time by one-third. Furthermore, commenters 
recommended CMS change the proposed values for this code and accept the 
RUC-recommended values because, commenters asserted, the AMA RUC-
recommended pre-service time as values were already reduced to account 
for E/M work on the same day. Commenters noted that the AMA RUC 
originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested that CMS accept the AMA RUC-recommended work RVU and 
physician time.
    Response: Based on the comments received, we referred CPT code 
29126 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 0.77, which supported 
the AMA RUC recommendation to maintain the current work RVU for this 
service. Based on the comments received, we re-reviewed the pre- and 
post-service time and work assigned to this service. We continue to 
believe that there is overlap in the pre- and post-service work between 
the E/M visit and service described by CPT code 29126. We believe that 
this overlap was appropriately accounted for by removing one-third of 
the pre-service evaluation minutes, and one-third of the post service 
minutes, thereby reducing the pre-service evaluation time from 7 
minutes to 5 minutes, and the post-service time from 5 minutes to 3 
minutes. We do not believe it is appropriate for the work RVU of this 
service to reflect the aforementioned overlap in pre- and post-service 
work between the E/M visit and the service described by CPT code 29126. 
Therefore, for CY 2012 we are finalizing the proposed work RVU of 0.68, 
with a pre-service evaluation time of 5 minutes, and a post-service 
time of 3 minutes. CMS time refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review, for CPT code 29515 
(Application of short leg splint (calf to foot)) we believed that the 
current (CY 2011) work RVU continued to accurately reflect the work of 
this service. For CPT code 29515 we proposed the current (CY 2011) work 
RVU of 0.73. The AMA RUC recommended maintaining the current work RVUs 
for this service as well. For CPT code 29515, the AMA RUC recommended 7 
minutes of pre-service evaluation time and 5 minutes of post-service 
time. We proposed to reduce the AMA RUC-recommended times to 5 minutes 
of pre-service evaluation time and 3 minutes of post-service time for 
CPT code 29515 (76 FR 32442).
    Comment: In its public comments to CMS on the Fourth Five-Year 
Review, the AMA RUC wrote that CMS agreed with the AMA RUC-recommended 
work RVU, but noted that CMS disagreed with the AMA RUC-recommended 
pre-service and post-service time components due to an E/M service 
typically being provided on the same day of service. Commenters 
recommended that CMS accept the AMA RUC-recommended pre-service 
evaluation time of 7 minutes and

[[Page 73124]]

immediate post-service time of 5 minutes for CPT code 29515.
    Response: Based on the comments received, we re-reviewed the pre- 
and post-service time and work assigned to this service. We continue to 
believe that there is overlap in the pre- and post-service work between 
the E/M visit and service described by CPT code 29126. We believe that 
this overlap was appropriately accounted for by removing one-third of 
the pre-service evaluation minutes, and one-third of the post service 
minutes, thereby reducing the pre-service evaluation time from 7 
minutes to 5 minutes, and the post-service time from 5 minutes to 3 
minutes. In sum, for CPT code 29515 for CY 2012, we are finalizing the 
Five-Year Review proposed and AMA RUC-recommended work RVU of 0.73, 
with a pre-service evaluation time of 5 minutes, and a post-service 
time of 3 minutes. CMS time refinements can be found in Table 16. In 
CPT code 29540 (Strapping; ankle and/or foot) was identified by the 
Five-Year Review Identification Workgroup through the HarvardValued--
Utilization > 100,000 screen. Upon review, the AMA RUC recommended this 
family of services be surveyed.
    As detailed in the CY 2011 final rule with comment period (75 FR 
73331), for CPT code 29540, we assigned an interim final work RVU of 
0.32. The HCPAC-recommended a work RVU of 0.39. The HCPAC compared the 
total time required for CPT code 29540 to CPT code 29580 (Strapping; 
Unna boot), 18 and 27 minutes, respectively, and noted that CPT code 
29540 requires less time, mental effort/judgment, technical skill and 
psychological stress than CPT code 29580. The HCPAC determined that CPT 
code 29540 was approximately 30 percent less intense and complex than 
CPT code 29580, resulting in work RVUs of 0.39 for CPT code 29540 (75 
FR 73331). We disagreed with the HCPAC-recommended work RVU for this 
service and believed work RVUs of 0.32 were appropriate. We believed 
CPT code 11720 (Debridement of nail(s) by any method(s); 1 to 5) (work 
RVUs = 0.32) was a more appropriate crosswalk (75 FR 73331).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
0.32 for CPT code 29540 and believe that the HCPAC work RVU of 0.39 is 
more appropriate for this service. Additionally, commenters supported 
HCPAC's original recommendation of 0.39 for code 29540 because they 
believe this code is more closely related to reference code 29580 (work 
RVU = 0.55). Commenters disagreed with the reference service put 
forward by CMS, and asserted that the HCPAC-chosen reference service is 
a stronger comparison code.
    Response: Based on the comments received, we referred CPT code 
29540 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 0.39. As a result of 
the refinement panel ratings and clinical review by CMS, we are 
assigning a work RVU of 0.39 to CPT code 29540 as the final value for 
CY 2012.
    As detailed in the CY 2011 final rule with comment period (75 FR 
73331), for CPT code 29550 (Strapping; toes), we assigned an interim 
final work RVU of 0.15. The HCPAC recommended a work RVU of 0.25. The 
HCPAC compared this service to CPT code 97762 (Checkout for orthotic/
prosthetic use, established patient, each 15 minutes) (work RVU = 
0.25), which it believed requires the same intensity and complexity to 
perform as CPT code 29550. The HCPAC recommended crosswalking the work 
RVUs for 29550 to reference CPT code 97762. The HCPAC reviewed the 
survey time and determined that 7 minutes pre-service, 5 minutes intra-
service, and 1 minute immediate post-service time were appropriate to 
perform this service. We disagreed with the HCPAC-recommended value for 
this service and believed a work RVU of 0.15, the survey low value, was 
appropriate, with 5 minutes of pre- and intra-service time and 1 minute 
of post-service time, as we believed the HCPAC-recommended pre-service 
time of 7 minutes was excessive (75 FR 73331).
    Comment: Commenters expressed concerns noting that CMS has 
recommended the interim value be set equal to the survey low, which 
they believe goes against the spirit of the surveys and in fact may be 
based on the response of an outlier, and without a reference service to 
further support the interim recommendation. Commenters agreed with the 
HCPAC request, and requested that CMS accept the HCPAC-recommended work 
RVU of 0.25 and 7 minutes pre-service time, 5 minutes intra-service 
time and 1 minute post-service time for CPT code 29550.
    Response: Based on the comments received, we referred CPT code 
29550 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 0.25. As a result of 
the refinement panel ratings and clinical review by CMS, we are 
assigning a work RVU of 0.25, with 5 minutes of pre- and intra-service 
time and 1 minute of post-service time, to CPT code 29550 as the final 
values for CY 2012. For CY 2012, we received no comments on the CY 2011 
interim final work RVUs for CPT codes 29914, 29915, and 29916. We 
believe these values continue to be appropriate and are finalizing them 
without modification (Table 15).
(12) Respiratory: Lungs and Pleura (CPT Codes 32405, 32851-32854, 
33255)
    We discussed CPT code 32851 (Lung transplant, single; without 
cardiopulmonary bypass) in the Fourth Five-Year Review of Work (76 FR 
32444). As noted in the proposed notice, the AMA RUC reviewed the 
survey responses and concluded that the survey 25th percentile work RVU 
of 63.00 appropriately accounted for the physician work required to 
perform this service. We disagreed with the AMA RUC-recommended work 
RVU for CPT code 32851 and upon a clinical review where we compared 
this service to other services, we concluded that a work RVU of 59.64 
was more appropriate for this service. Comparing CPT code 33255 
(Operative tissue ablation and reconstruction of atria, extensive 
(e.g., maze procedure); without cardiopulmonary bypass) (work RVU = 
29.04) with CPT code 33256 (Operative tissue ablation and 
reconstruction of atria, extensive (e.g., maze procedure); with 
cardiopulmonary bypass) (work RVU = 34.90), there is a difference in 
work RVU of 5.86. We stated that we believed this difference in work 
RVUs reflects the additional time and physician work performed while 
the patient is on cardiopulmonary bypass.
    In addition, we stated that we believed this was the appropriate 
interval in physician work distinguishing CPT code 32852 (Lung 
transplant, single; with cardiopulmonary bypass), from CPT code 32851 
(Lung transplant, single; without cardiopulmonary bypass). Since we 
proposed a work RVU of 65.05 for CPT code 32852 (see below), we 
believed a work RVU of 59.64 accurately reflects the work associated 
with CPT code 32851 and maintains appropriate relativity among similar 
services. Therefore, we proposed an alternative work RVU of 59.64 for 
CPT code 32851 for CY 2012.
    For CPT code 32852 (Lung transplant, single; with cardiopulmonary 
bypass), the AMA RUC reviewed the survey responses and concluded that 
the survey 25th percentile work RVU was too low and the median work RVU 
was too high. Therefore, the AMA RUC recommended a work RVU of 74.37 
for CPT code 32582. We disagreed with the AMA RUC-recommended work RVU 
for CPT code 32582 and believed that the survey 25th percentile value 
of a work RVU of 65.50 was more appropriate for

[[Page 73125]]

this service. Therefore, we proposed an alternative work RVU of 65.50 
for CPT code 32582 for CY 2012.
    Comment: The commenters disagreed with CMS' rationale to use the 
survey 25th percentile work RVU for CPT code 32852 and then use a 
reverse building block methodology to determine the proposed work RVUs 
for CPT code 32851. The commenters asserted that the AMA RUC considered 
and rejected the 25th percentile survey result for CPT code 32852, 
noting that the AMA RUC believed that the survey 25th percentile work 
RVU is insufficient to reflect the physician work involved in 
furnishing this service.
    Response: Based on the comments received, we referred CPT codes 
32851 and 32852 to the CY 2011 multi-specialty refinement panel for 
further review. CPT code 32851 has a current (CY 2011) work RVU of 
41.61, in the Five-Year Review we proposed a work RVU of 59.64, and the 
AMA RUC recommended a work RVU of 63.00. The median refinement panel 
work RVU was 63.00. CPT code 32852 has a current (CY 2011) work RVU of 
45.48, in the Five-Year Review we proposed a work RVU of 65.50, and the 
AMA RUC recommended a work RVU of 74.37. The median refinement panel 
work RVU was 74.37. For CPT codes 32851 and 32852, as well as the other 
CPT codes in this family, the Five-Year Review proposed work RVUs 
represent a significant increase over the current (CY 2011) work RVUs. 
We believe that the even higher AMA RUC-recommended work RVUs and 
refinement panel results would create a new higher standard of 
relativity for codes within this family that would not be appropriate 
when compared to other codes with similar physician time and intensity 
in different code families. We continue to believe the work RVUs of 
59.64 for CPT code 32851 and 65.50 for CPT code 32852, are more 
appropriate in order to preserve appropriate relativity across code 
families. Accordingly, we are assigning a work RVU of 59.64 to CPT code 
32851 and 65.50 to CPT code 32852 as final values for CY 2012.
    We discussed CPT code 32853 (Lung transplant, double (bilateral 
sequential or en bloc); without cardiopulmonary bypass) in the Fourth 
Five-Year Review of Work (76 FR 32444). As noted in the proposed notice 
the AMA RUC reviewed the survey responses and concluded that the survey 
median work RVU of 90.00 appropriately accounted for the physician work 
required to perform this service. We disagreed with the AMA RUC-
recommended work RVU for CPT code 32853 and believed that the survey 
25th percentile value of 84.48 was more appropriate for this service as 
a reflection of the time and intensity of the service in relation to 
other major surgical procedures. Therefore, we proposed an alternative 
work RVU of 84.48 for CPT code 32853 for CY 2012.
    For CPT code 32854 (Lung transplant, double (bilateral sequential 
or en bloc); with cardiopulmonary bypass), the AMA RUC reviewed the 
survey responses and concluded that the survey median work RVU of 95.00 
appropriately accounted for the physician work required to perform this 
service. We disagreed with the AMA RUC-recommended work RVU for CPT 
code 32854 and believed that the survey 25th percentile value of 90.00 
was more appropriate for this service. We stated that a work RVU of 
90.00 maintains the relativity between CPT code 32851 (Lung transplant, 
single; without cardiopulmonary bypass) and CPT code 32854, which 
describes a double lung transplant. We believed this work RVU reflects 
the increased intensity in total service for CPT code 32584 when 
compared to CPT code 32851. Therefore, we proposed an alternative work 
RVU of 90.00 for CPT code 32854 for CY 2012.
    Comment: The commenters disagreed with CMS' rationale to use the 
survey 25th percentile values for CPT codes 32853 and 32584. The 
commenters asserted that the AMA RUC recommendations were based on a 
careful and deliberate evaluation of the work involved in the provision 
of double lung transplantation, as compared with the work involved in 
other services.
    Response: Based on the comments received, we referred CPT codes 
32853 and 32854 to the CY 2011 multi-specialty refinement panel for 
further review. CPT code 32853 has a current (CY 2011) work RVU of 
50.78, in the Five-Year Review we proposed a work RVU of 84.48, and the 
AMA RUC recommended a work RVU of 90.00. The median refinement panel 
work RVU was 85.00, slightly higher than the proposed work RVU. CPT 
code 32854 has a current (CY 2011) work RVU of 54.74, in the Five-Year 
Review we proposed a work RVU of 90.00, and the AMA RUC recommended a 
work RVU of 95.00. The median refinement panel work RVU was 95.00. For 
CPT codes 32853 and 32854, as well as the other CPT codes in this 
family, the Five-Year Review proposed work RVUs represent a significant 
increase over the current (CY 2011) work RVUs. We believe that the even 
higher AMA RUC-recommended work RVUs and refinement panel results would 
create a new higher standard of relativity for codes within this family 
that would not be appropriate when compared to other codes with similar 
physician time and intensity in different code families. We continue to 
believe the work RVUs of 84.48 to CPT code 32853 and 90.00 to CPT code 
32854, are more appropriate. Accordingly, we are assigning a work RVU 
of 84.48 to CPT code 32853 and 90.00 to CPT code 32854 as final values 
for CY 2012.
    We note that CPT code 32405 (Biopsy, Lung or mediastinum) was also 
reviewed in this family for the Fourth Five-Year Review. We agreed with 
the AMA RUC's methodology and recommended value for this code. 
Accordingly, we are finalizing a work RVU of 1.93 for CPT code 32405. 
We note the CY 2012 final values for the codes in this family are 
summarized in Table 15.
(13) Cardiovascular: Heart and Pericardium (CPT Codes 33030-37766)
    We discussed CPT code 33030 (Pericardiectomy, subtotal or complete; 
without cardiopulmonary bypass) in the Fourth Five-Year Review of Work 
(76 FR 32444) where we noted the AMA RUC reviewed the survey responses 
and concluded that the survey median work RVUs of 39.50 for CPT code 
33030 appropriately accounted for the work required to perform this 
service.
    We disagreed with the AMA RUC-recommended work RVUs for CPT code 
33030. Following comparison with similar codes, we believed that the 
survey 25th percentile value of 36.00 was more appropriate for this 
service. Therefore, we proposed an alternative work RVUs of 36.00 for 
CPT code 33030 for CY 2012.
    Comment: The commenters disagreed with this proposed value and 
stated that they preferred that CMS accept the AMA RUC-recommended work 
RVUs of 39.50 based on the AMA RUC rationale. The commenters believed 
this would place the value of CPT code 33030 appropriately as far as 
time and intensity of physician work in relation to 33031.
    Response: Based on the comments received, we referred CPT code 
33030 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33030 has current (CY 2011) work RVUs of 22.29, in the 
Five-Year Review we proposed work RVUs of 36.00, and the AMA RUC 
recommended work RVUs of 39.50. The median refinement panel work RVUs 
were 37.10, between the proposed work RVUs and the AMA RUC 
recommendation. For CPT code 33030, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant

[[Page 73126]]

increase over the current (CY 2011) work RVUs. We believe that the even 
higher AMA RUC-recommended work RVUs and refinement panel results would 
create a new higher standard of relativity for codes within this family 
that would not be appropriate when compared to other codes with similar 
physician time and intensity in different code families. We continue to 
believe the work RVUs of 36.00, which are the survey 25th percentile 
work RVUs, are more appropriate. Accordingly, we are assigning work 
RVUs of 36.00 to CPT code 33030 as the final value for CY 2012.
    We discussed CPT code 33120 (Excision of intracardiac tumor, 
resection with cardiopulmonary bypass) in the Fourth Five-Year Review 
of Work (76 FR 32444), where we noted the AMA RUC reviewed the survey 
responses and concluded that the 25th percentile work RVUs for CPT code 
33120 appropriately accounted for the work required to furnish this 
service. The AMA RUC recommended work RVUs of 42.88 for CPT code 33120.
    We disagreed with the AMA RUC-recommended work RVUs for CPT code 
33120 and believed that work RVUs of 38.45 were more appropriate for 
this service. We compared CPT code 33120 with CPT code 33677 (Closure 
of multiple ventricular septal defects; with removal of pulmonary 
artery band, with or without gusset) (work RVUs = 38.45) and found the 
codes to be similar in complexity and intensity. We believed that work 
RVUs of 38.45 accurately reflect the work associated with CPT code 
33677 and properly maintains the relativity of similar services. 
Therefore, we proposed an alternative work RVUs of 38.45 for CPT code 
33120 for CY 2012.
    Comment: The commenters noted that CMS' proposed value, based on a 
direct crosswalk to 33677, (Closure of multiple ventricular septal 
defects; with removal of pulmonary artery band, with or without 
gusset), was less than the 25th percentile RUC-recommended value of 
42.88. Commenters strongly disagreed with the direct crosswalk and 
requested that CMS review CPT code 33120 in relation to the key 
reference code selected by physicians who furnish the procedure, CPT 
code 33426 (Valvuloplasty, mitral valve, with cardiopulmonary bypass; 
with prosthetic ring). The commenters stated that this procedure is 
very similar to operating to remove the typical left atrial tumor, 
utilizing the same cardiac incision and the same cannulation strategy 
for cardiopulmonary bypass. The commenters also noted that CPT code 
33426 is also an MPC list code and is furnished frequently by adult 
cardiac surgeons who also perform CPT code 33120.
    Response: Based on the comments received, we referred CPT code 
33120 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33120 has current (CY 2011) work RVUs of 27.45, in the 
Five-Year Review we proposed work RVUs of 38.45, and the AMA RUC 
recommended work RVUs of 42.88. The median refinement panel work RVUs 
were also 42.88. For CPT code 33120, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be appropriate when compared to other 
codes with similar physician time and intensity in different code 
families. We continue to believe that a comparison of CPT code 33120 
with CPT code 33677 (Closure of multiple ventricular septal defects; 
with removal of pulmonary artery band, with or without gusset) (work 
RVUs = 38.45) shows the codes to be similar in complexity and 
intensity. Therefore, we believe that work RVUs of 38.45 accurately 
reflect the work associated with CPT code 33677 and properly maintains 
the relativity of similar services. Accordingly, we are assigning work 
RVUs of 38.45 to CPT code 33120 as the final value for CY 2012.
    We discussed CPT code 33412 (Replacement, aortic valve; with 
transventricular aortic annulus enlargement (Konno procedure)) in the 
Fourth Five-Year Review of Work (76 FR 32444) where we noted the AMA 
RUC reviewed the survey responses and concluded that the survey median 
work RVUs for CPT code 33412 appropriately accounted for the work 
required to furnish this service. The AMA RUC recommended work RVUs of 
60.00 for CPT code 33412. We disagreed with the AMA RUC-recommended 
work RVUs for CPT code 33412 and believed that the survey 25th 
percentile value of 59.00 was more appropriate for this service. 
Therefore, we proposed alternative work RVUs of 59.00 for CPT code 
33412 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed value and asserted 
that the AMA RUC workgroup closely reviewed this service and compared 
it to key reference service CPT code 33782 (Aortic root translocation 
with ventricular septal defect and pulmonary stenosis repair (i.e., 
Nikaidoh procedure); without coronary ostium reimplantation) (work RVUs 
= 60.08 and intra-time = 300 minutes). The commenters believed that 
these two services require the same intensity and complexity, physician 
work and time to furnish.
    Response: Based on the comments received, we referred CPT code 
33412 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33412 has current (CY 2011) work RVUs of 43.94, in the 
Five-Year Review we proposed work RVUs of 59.00, and the AMA RUC 
recommended work RVUs of 60.00. The median refinement panel work RVUs 
were 59.00, which were also the proposed work RVUs. For CPT code 33412, 
as well as the other CPT codes in this family, the Five-Year Review 
proposed work RVUs represent a significant increase over the current 
(CY 2011) work RVUs. We believe that the even higher AMA RUC-
recommended work RVUs would create a new higher standard of relativity 
for codes within this family that would not be appropriate when 
compared to other codes with similar physician time and intensity in 
different code families. We continue to believe the work RVUs of 59.00, 
which are consistent with the refinement panel median RVUs, are more 
appropriate. Accordingly, we are assigning work RVUs of 59.00 to CPT 
code 33412 as the final value for CY 2012.
    We discussed CPT code 33468 (Tricuspid valve repositioning and 
plication for Ebstein anomaly) in the Fourth Five-Year Review of Work 
(76 FR 32444) where we noted the AMA RUC reviewed the survey responses 
and concluded that the survey median work RVUs for CPT code 33468 
appropriately accounted for the work required to furnish this service. 
The AMA RUC recommended work RVUs of 50.00 for CPT code 33468. We 
disagreed with the AMA RUC-recommended work RVUs for CPT code 33468 and 
believed that the survey 25th percentile value of 45.13 was more 
appropriate for this service. Therefore, we proposed alternative work 
RVUs of 45.13 for CPT code 33468 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed value and stated 
that the AMA RUC workgroup closely reviewed this service and compared 
CPT code 33468 to key reference service CPT code 33427, (Valvuloplasty, 
mitral valve, with cardiopulmonary bypass; radical reconstruction, with 
or without ring) (work RVUs = 44.83 and intra-time = 221 minutes). The 
commenters asserted that CPT code 33468 is more intense and complex, 
and requires more physician work and time to perform

[[Page 73127]]

than the key reference service CPT code 33427.
    Response: Based on the comments received, we referred CPT code 
33468 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33468 has current (CY 2011) work RVUs of 32.94, in the 
Five-Year Review we proposed work RVUs of 45.13, and the AMA RUC 
recommended work RVUs of 50.00. The median refinement panel work RVUs 
were 46.00. For CPT code 33468, as well as the other CPT codes in this 
family, the Five-Year Review proposed work RVUs represent a significant 
increase over the current (CY 2011) work RVUs. We believe that the even 
higher AMA RUC-recommended work RVUs and refinement panel results would 
create a new higher standard of relativity for codes within this family 
that would not be appropriate when compared to other codes with similar 
physician time and intensity in different code families. We continue to 
believe the work RVUs of 45.13, which are the survey 25th percentile 
work RVUs, are more appropriate. Accordingly, we are assigning work 
RVUs of 45.13 to CPT code 33468 as the final value for CY 2012.
    We discussed CPT code 33645 (Direct or patch closure, sinus 
venosus, with or without anomalous pulmonary venous drainage) in the 
Fourth Five-Year Review of Work (76 FR 32445) where we noted the AMA 
RUC reviewed survey responses and concluded that the survey median work 
RVUs for CPT code 33645 appropriately accounts for the work required to 
perform this service. The AMA RUC recommended work RVUs of 33.00 for 
CPT code 33645. We disagreed with the AMA RUC-recommended work RVUs for 
CPT code 33645 and believed that the survey 25th percentile value of 
31.30 appropriately captures the total work for the service. Therefore, 
we proposed alternative work RVUs of 31.30 for CPT code 33645 for CY 
2012.
    Comment: Commenters disagreed with CMS' proposed value and stated 
that the AMA RUC workgroup closely reviewed this service and compared 
33645 to key reference service CPT codes 33641, (Repair atrial septal 
defect, secundum, with cardiopulmonary bypass, with or without patch) 
(work RVUs = 29.58 and intra-time = 164 minutes) and 33681, (Closure of 
single ventricular septal defect, with or without patch) (work RVUs = 
32.34 and intra-time = 150 minutes). The commenters asserted that 
33645, (Surveyed intra-service time = 175 minutes) requires more 
intensity and complexity to furnish compared to these reference 
services.
    Response: Based on the comments received, we referred CPT code 
33645 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33645 has current (CY 2011) work RVUs of 28.10, in the 
Five-Year Review we proposed work RVUs of 31.30, and the AMA RUC 
recommended work RVUs of 33.00. The median refinement panel work RVUs 
were 31.50, slightly higher than the proposed work RVUs. For CPT code 
33645, as well as the other CPT codes in this family, the Five-Year 
Review proposed work RVUs represent a significant increase over the 
current (CY 2011) work RVUs. We believe that the even higher AMA RUC-
recommended work RVUs and refinement panel results would create a new 
higher standard of relativity for codes within this family that would 
not be appropriate when compared to other codes with similar physician 
time and intensity in different code families. We continue to believe 
the work RVUs of 31.30, which are the survey 25th percentile work RVUs, 
are more appropriate. Accordingly, we are assigning work RVUs of 31.30 
to CPT code 33645 as the final value for CY 2012.
    We discussed CPT code 33647 (Repair of atrial septal defect and 
ventricular septal defect, with direct or patch closure) in the Fourth 
Five-Year Review of Work (76 FR 32445) where we noted the AMA RUC 
reviewed survey responses and concluded that the survey median work 
RVUs for CPT code 33467 appropriately account for the work required to 
furnish this service. The AMA RUC recommended work RVUs of 35.00 for 
CPT code 33647. We disagreed with the AMA RUC-recommended work RVUs for 
CPT code 33647 and believed that the survey 25th percentile value of 
33.00 was more appropriate for this service. Therefore, we proposed 
alternative work RVUs of 33.00 for CPT code 33647 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed value and stated 
that the AMA RUC workgroup closely reviewed this service and compared 
CPT code 33647 to key reference service CPT code 33681, (Closure of 
single ventricular septal defect, with or without patch) (work RVUs = 
32.34 and intra-time = 150 minutes). The commenters asserted that CPT 
code 33647 are similarly intense and complex, and requires more 
physician work and time to furnish compared to the key reference 
service.
    Response: Based on the comments received, we referred CPT code 
33647 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33647 has current (CY 2011) work RVUs of 29.53, in the 
Five-Year Review we proposed work RVUs of 33.00, and the AMA RUC 
recommended work RVUs of 35.00. The median refinement panel work RVUs 
were 33.00, the same as the proposed work RVUs. For CPT code 33647, as 
well as the other CPT codes in this family, the Five-Year Review 
proposed work RVUs represent a significant increase over the current 
(CY 2011) work RVUs. We believe that the even higher AMA RUC-
recommended work RVUs create a new higher standard of relativity for 
codes within this family that would not be appropriate when compared to 
other codes with similar physician time and intensity in different code 
families. We continue to believe the work RVUs of 33.00, which are 
consistent with the refinement panel median work RVUs, are more 
appropriate. Accordingly, we are assigning work RVUs of 33.00 to CPT 
code 33647 as the final value for CY 2012.
    Fourth Five-Year Review of Work (76 FR 32445) where we noted the 
AMA RUC reviewed survey responses, and recommended the survey median 
work RVUs of 38.75 for CPT code 33692. We disagreed with the AMA RUC-
recommended work RVUs for CPT code 33692 and believed that the survey 
25th percentile value of 36.15 was more appropriate for this service. 
Therefore, we proposed alternative work RVUs of 36.15 for CPT code 
33692 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed value and stated 
that the AMA RUC workgroup closely reviewed this service and compared 
the service to key reference service CPT code 33684, (Closure of single 
ventricular septal defect, with or without patch; with pulmonary 
valvotomy or infundibular resection (acyanotic)) (work RVUs = 34.37 and 
intra-time = 200 minutes). Commenters asserted that CPT code 33692 is 
similarly intense and complex, and requires more physician work and 
time to furnish than the key reference service.
    Response: Based on the comments received, we referred CPT code 
33692 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33692 has current (CY 2011) work RVUs of 31.54, in the 
Five-Year Review we proposed work RVUs of 36.15, and the AMA RUC 
recommended work RVUs of 38.75. The median refinement panel work RVUs 
were 38.75. For CPT code 33692, as well as the other CPT codes in this 
family, the Five-Year Review proposed work RVUs represent a significant 
increase over the current (CY 2011) work RVUs. We believe that the even 
higher AMA RUC-recommended

[[Page 73128]]

work RVUs and refinement panel results would create a new higher 
standard of relativity for codes within this family that would not be 
appropriate when compared to other codes with similar physician time 
and intensity in different code families. We continue to believe the 
work RVUs of 36.15, which are the survey 25th percentile work RVUs, are 
more appropriate. Accordingly, we are assigning work RVUs of 36.15 to 
CPT code 33692 as the final value for CY 2012.
    We recommended work RVUs of 43.00 for CPT code 33710, the survey 
median work RVUs. We disagreed with the AMA RUC-recommended work RVUs 
for CPT code 33710 and believed that the survey 25th percentile value 
of 37.50 was more appropriate for this service. We believed the 
physician time and intensity for CPT code 33710 reflected the 
appropriate incremental adjustment when compared to the key reference 
service, CPT code 33405 (Replacement, aortic valve, with 
cardiopulmonary bypass; with prosthetic valve other than homograft or 
stentless valve) (work RVUs = 41.32 and intra-service time = 198 
minutes). Therefore, we proposed alternative work RVUs of 37.50 for CPT 
code 33710 for CY 2012.
    Commenters disagreed with CMS' proposed value and stated that the 
AMA RUC workgroup closely reviewed this service and compared 33710 to 
key reference service CPT code 33405. The commenters asserted that 
33710 is similarly intense and complex, and requires more physician 
work and time to furnish than the key reference service.
    Response: Based on the comments received, we referred CPT code 
33710 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33710 has current (CY 2011) work RVUs of 30.41, in the 
Five-Year Review we proposed work RVUs of 37.50, and the AMA RUC 
recommended work RVUs of 43.00. The median refinement panel work RVUs 
were also 43.00. For CPT code 33710, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be appropriate when compared to other 
codes with similar physician time and intensity in different code 
families. We continue to believe the work RVUs of 37.50, which are the 
survey 25th percentile work RVUs, and more comparable to the reference 
service, are more appropriate. Accordingly, we are assigning work RVUs 
of 37.50 to CPT code 33710 as the final value for CY 2012.
    We discussed CPT code 33875 (Descending thoracic aorta graft, with 
or without bypass) in the Fourth Five-Year Review of Work (76 FR 32445) 
and noted that the AMA RUC reviewed survey responses and concluded that 
the 25th percentile work RVUs for code 33875 appropriately account for 
the work required to furnish this service. The AMA RUC recommended work 
RVUs of 56.83 for CPT code 33875. We disagreed with the AMA RUC-
recommended work RVUs for CPT code 33875 and believed that work RVUs of 
50.72 were more appropriate for this service. We compared CPT code 
33875 with CPT code 33465 (Replacement, tricuspid valve, with 
cardiopulmonary bypass) (work RVUs = 50.72) and believed that CPT code 
33875 was similar to CPT code 33465, with similar inpatient and 
outpatient work. We believed these work RVUs corresponded better to the 
value of the service than the survey 25th percentile work RVUs. 
Therefore, we proposed alternative work RVUs of 50.72 for CPT code 
33875 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed direct crosswalk 
to CPT code 33465, and stated that patients and procedures are 
substantially different for CPT 33875. The commenters requested that 
CMS reconsider its proposed work value of 50.72 and, instead, accept 
the AMA RUC-recommended values of 56.83, which are the 25th percentile 
of the physician survey.
    Response: Based on the comments received, we referred CPT code 
33875 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33875 has current (CY 2011) work RVUs of 35.78, in the 
Five-Year Review we proposed work RVUs of 50.72, and the AMA RUC 
recommended work RVUs of 56.83. The median refinement panel work RVUs 
were also 56.83. For CPT code 33875, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be appropriate when compared to other 
codes with similar physician time and intensity in different code 
families. We compared CPT code 33875 with CPT code 33465 and believed 
that CPT code 33875 is similar to CPT code 33465, with similar 
inpatient and outpatient work. We continue to believe these work RVUs 
corresponds better to the value of the service than the survey 25th 
percentile work RVUs. Accordingly, we are assigning work RVUs of 50.72 
to CPT code 33875 as the final value for CY 2012.
    We discussed CPT code 33910 (Pulmonary artery embolectomy; with 
cardiopulmonary bypass) in the Fourth Five-Year Review of Work (76 FR 
32445) and noted that after reviewing the service, the AMA RUC 
recommended work RVUs of 52.33 for CPT code 33910. We disagreed with 
the AMA RUC-recommended work RVUs for CPT code 33910 and believed that 
work RVUs of 48.21 were more appropriate for this service. We compared 
CPT code 33910 with CPT code 33542 (Myocardial resection (e.g., 
ventricular aneurysmectomy)) (work RVUs = 48.21). We recognized that 
CPT code 33542 is not an emergency service. Nevertheless, this 
procedure requires cardiopulmonary bypass and has physician time and 
visits that are consistently necessary for the care required for the 
patient that are similar to CPT code 33910. We believed that work RVUs 
of 48.21 accurately reflected the work associated with CPT code 33910 
and properly maintained the relativity for a similar service. 
Therefore, we proposed alternative work RVUs of 48.21 for CPT code 
33910 for CY 2012.
    Comment: Commenters requested that CMS reconsider the proposed work 
value of 48.21, and accept the AMA RUC-recommended work value of 52.33, 
the survey median value. Commenters disagreed with the CMS-proposed 
direct crosswalk to the value of CPT code 33542. Commenters asserted 
that, although some of the technical composition of the two codes (time 
and visits) is similar, the intensity and complexity measures are 
different and easily account for the additional RVUs of 4.12 that would 
result from utilizing the survey median work value.
    Response: Based on the comments received, we referred CPT code 
33910 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33910 has current (CY 2011) work RVUs of 29.71, in the 
Five-Year Review we proposed work RVUs of 48.21, and the AMA RUC 
recommended work RVUs of 52.33. The median refinement panel work RVUs 
were 52.33. For CPT code 33910, as well as the other CPT codes in this 
family, the Five-Year Review proposed work RVUs represent a significant 
increase over the current (CY 2011) work RVUs. We believe that the

[[Page 73129]]

even higher AMA RUC-recommended work RVUs and refinement panel results 
would create a new higher standard of relativity for codes within this 
family that would not be appropriate when compared to other codes with 
similar physician time and intensity in different code families. We 
continue to believe the work RVUs of 48.21, which are the survey 25th 
percentile work RVUs and properly maintain the relativity with CPT code 
33542 are more appropriate. Accordingly, we are assigning work RVUs of 
48.21 to CPT code 33910 as the final value for CY 2012.
    Fourth Five-Year Review of Work (76 FR 32445) and noted that the 
AMA RUC reviewed survey responses and recommended work RVUs of 100.00, 
the survey median work RVUs, for CPT code 33935. We disagreed with the 
AMA RUC-recommended work RVUs for CPT code 33935 and believed that the 
survey 25th percentile value of 91.78 was more appropriate for this 
service. We believed this service is more intense and complex than the 
reference CPT code 33945 (Heart transplant, with or without recipient 
cardiectomy) (work RVU = 89.50) and that the survey 25th percentile 
work RVUs accurately reflected the increased intensity and complexity 
when compared to the reference CPT code 33945. Therefore, we proposed 
alternative work RVUs of 91.78 for CPT code 33935 for CY 2012.
    Comment: Commenters requested that CMS reconsider its proposed work 
RVUs of 91.78 and accept the RUC-recommended survey median work RVUs of 
100.00 for CPT code 33935. Commenters noted that CMS acknowledged the 
increased intensity, complexity, and physician work compared to the key 
reference service CPT code 33945 Heart Transplant. However, commenters 
asserted that CPT code 33935 has substantially higher intensity and 
complexity than CPT code 33945, and CMS did not adequately account for 
the additional physician work.
    Response: Based on the comments received, we referred CPT code 
33935 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 33935 has current (CY 2011) work RVUs of 62.01, in the 
Five-Year Review we proposed work RVUs of 91.78, and the AMA RUC 
recommended work RVUs of 100.00. The median refinement panel work RVUs 
were also 100.00. For CPT code 33935, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be appropriate when compared to other 
codes with similar physician time and intensity in different code 
families. We continue to believe work RVUs of 91.78, which are the 
survey 25th percentile work RVUs, are more appropriate. Accordingly, we 
are assigning work RVUs of 91.78 to CPT code 33935 as the final value 
for CY 2012.
    We discussed CPT code 33980 (Removal of ventricular assist device, 
implantable intracorporeal, single ventricle) in the Fourth Five-Year 
Review of Work (76 FR 32445). We noted the AMA RUC reviewed the survey 
results and recommended the survey median work RVUs of 40.00. 
Additionally, the AMA RUC recommended a global period change from 090 
(Major surgery with a 1-day pre-operative period and a 90-day 
postoperative period included in the fee schedule amount) to XXX (the 
global concept does not apply to the code). We agreed with the AMA RUC-
recommended global period change from 090 to XXX. However, we disagreed 
with the AMA RUC-recommended work RVUs for CPT code 33980. We believed 
the work RVUs of 33.50 were more appropriate, given the significant 
reduction in physician times and decrease in the number and level of 
post-operative visits that the AMA RUC included in the value of CPT 
code 33980. For CY 2012, we proposed alternative work RVUs of 33.50, 
the survey 25th percentile work RVUs.
    Comment: Commenters disagreed with the proposed work RVUs, and 
asserted that CPT code 33980 was surveyed as an XXX code with no post-
operative visits. Commenters stated that CPT code 33980 is one of the 
most intense, complex, and demanding procedures that their specialty 
furnishes. The commenters noted that this is an obligatory reoperation, 
which is almost always furnished during a one-six month time frame when 
the adhesions are new, tenacious, and very vascular. The commenters 
asserted that the reoperation CPT code 33530 (Reoperation, coronary 
artery bypass procedure or valve procedure, more than 1 month after 
original operation (List separately in addition to code for primary 
procedure)) its value (work RVUs = 10.13) should be considered. 
Commenters noted, however, that because CPT code 33530 is a ZZZ code 
(code is related to another service and is included in the global 
period of the other service) its value would not apply here. Secondly, 
the commenters noted this procedure requires reconstruction of the 
large bore defect in the apex of the left ventricle, which is 
technically demanding, particularly in patients destined for survival 
with a fragile and compromised left ventricle that must now support the 
circulation without VAD support. The commenters believed these features 
justify the higher AMA RUC-recommended RVUs of 40.00.
    Response: Based on the comments received, we referred CPT code 
33980 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVUs of 40.00, which were 
consistent with the AMA RUC recommendation. We believe work RVUs of 
33.50, which are the survey 25th percentile work RVU are more 
appropriate, given the significant reduction in physician times and 
decrease in the number and level of post-operative visits that the AMA 
RUC included in the value of CPT code 33980. Accordingly, we are 
assigning work RVUs of 33.50 to CPT code 33980 as the final value for 
CY 2012.
    We discussed CPT code 35188 (Repair, acquired or traumatic 
arteriovenous fistula; head and neck) in the Fourth Five-Year Review of 
Work (76 FR 32446) and noted the AMA RUC reviewed the survey results 
and recommended the survey median work RVUs of 18.50 for CPT code 
35188. We disagreed with the AMA RUC-recommended work RVUs for CPT code 
35188 and proposed alternative work RVUs of 18.00, which are the survey 
25th percentile work RVUs. We believed the work RVUs of 18.00 are more 
appropriate, given the decrease in the number and level of post-
operative visits that the AMA RUC included in the value of CPT code 
35188.
    Comment: Commenters noted the AMA RUC compared the service to key 
reference CPT code 35011 (Direct repair of aneurysm, pseudoaneurysm, or 
excision (partial or total) and graft insertion, with or without patch 
graft; for aneurysm and associated occlusive disease, axillary-brachial 
artery, by arm incision) (work RVUs = 18.58) and agreed they were 
similar services in the sense that they are both vascular operations on 
similar sized vessels in the upper body. The AMA RUC also compared 
35188 to MPC codes 19318 Reduction mammoplasty (work RVUs = 16.03) and 
44140 Colectomy, partial; with anastomosis (work RVUs = 22.59), which 
are similarly intensive surgical procedures requiring technical skill 
to successfully complete the operation. Commenters asserted the 
differences between CPT codes 35188, 19318, and 44140 lie in the post-
operative work, which are quite different, yet in proper

[[Page 73130]]

rank order, and requested that CMS reconsider this issue.
    Response: Based on the comments received, we referred CPT code 
35188 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 35188 has current (CY 2011) work RVUs of 15.16, in the 
Five-Year Review we proposed work RVUs of 18.00, and the AMA RUC 
recommended work RVUs of 18.50. The median refinement panel work RVUs 
were also 18.50. For CPT code 35188, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be appropriate when compared to other 
codes with similar physician time and intensity in different code 
families. We continue to believe the work RVUs of 18.00, which are the 
survey 25th percentile work RVUs, are more appropriate, given the 
decrease in the number and level of post-operative visits that the AMA 
RUC included in the value of CPT code 35188. Accordingly, we are 
assigning work RVUs of 18.00 to CPT code 35188 as the final value for 
CY 2012.
    We discussed CPT code 35612 (Bypass graft, with other than vein; 
subclavian) in the Fourth Five-Year Review of Work (76 FR 32446) and 
noted the AMA RUC reviewed the survey results and recommended work RVUs 
of 22.00 for CPT code 35612. We disagreed with the AMA RUC-recommended 
work RVUs for CPT code 35612 and proposed alternative work RVUs of 
20.35, which were the survey 25th percentile work RVUs. We believed the 
work RVUs of 20.35 were more appropriate, given the decrease in the 
number and level of post-operative visits that the AMA RUC included in 
the value of CPT code 35612.
    Comment: Commenters disagreed with the proposed RVUs for CPT code 
35612. Commenters noted that the AMA RUC compared the service to key 
reference CPT code 35661 (Bypass graft, with other than vein; femoral-
femoral) (work RVUs = 20.35) and agreed the work value for CPT code 
35612 should be higher than for the work value for CPT code 35661. The 
AMA RUC also compared the surveyed code to MPC codes 22595 
(Arthrodesis, posterior technique, atlas-axis (C1-C2)) (work RVUs = 
20.46) and 62165 (Neuroendoscopy, intracranial; with excision of 
pituitary tumor, transnasal or trans-sphenoidal approach) (work RVUs = 
23.23), which have similar work intensities. Commenters requested that 
CMS accept the AMA RUC-recommended work RVUs of 22.00 for CPT code 
35612.
    Response: Based on the comments received, we referred CPT code 
35612 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 35612 has current (CY 2011) work RVUs of 16.82, in the 
Five-Year Review we proposed work RVUs of 20.35, and the AMA RUC 
recommended work RVUs of 22.00. The median refinement panel work RVUs 
were also 22.00. For CPT code 35612, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be appropriate when compared to other 
codes with similar physician time and intensity in different code 
families. We continue to believe the work RVUs of 20.35, which are the 
survey 25th percentile work RVUs, are more appropriate, given the 
decrease in the number and level of post-operative visits that the AMA 
RUC included in the value of CPT code 35612. Accordingly, we are 
assigning work RVUs of 20.35 to CPT code 35612 as the final value for 
CY 2012.
    We discussed CPT code 35800 (Exploration for postoperative 
hemorrhage, thrombosis or infection; neck) in the Fourth Five-Year 
Review of Work (76 FR 32446) and noted the AMA RUC used magnitude 
estimation to recommend work RVUs for CPT code 35800 between the survey 
25th percentile (12.00 RVUs) and median (15.00 RVUs) work value. 
Accordingly, the AMA RUC recommended work RVUs of 13.89 for CPT code 
35800. We disagreed with the AMA RUC-recommended work RVUs for CPT code 
35800 and proposed alternative work RVUs of 12.00, which were the 
survey 25th percentile work RVUs. We believed the work RVU of 12.00 
were more appropriate, given that two of the key reference codes to 
which this service has been compared have identical intra-service time 
(60 minutes), but significantly lower work RVUs.
    Comment: Commenters noted that the AMA RUC compared the service to 
key reference codes. Commenters agreed with the intensity, physician 
work, and proper rank order amongst the comparison codes achieved when 
CPT code 35800 was valued between the survey 25th percentile (12.00 
RVUs) and median work value (15.00 RVUs) with work RVUs of 13.89. 
Commenters believed it was inappropriate for CMS to reduce the value of 
CPT code 35800 based on a comparison to two services with much less 
total time. Commenters requested that CMS accept the AMA RUC-
recommended work RVUs of 13.89.
    Response: Based on the comments received, we referred CPT code 
35800 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 35800 has current (CY 2011) work RVUs of 8.07, in the 
Five-Year Review we proposed work RVUs of 12.00, and the AMA RUC 
recommended work RVUs of 13.89. The median refinement panel work RVU 
were also 13.89. For CPT code 35800, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be an appropriate when compared to 
other codes with similar physician time and intensity in different code 
families. That is, as when considering the values for the two reference 
services previously discussed, comparing CPT code 35800 to codes 
outside of the code family but with identical intra-service time (60 
minutes) demonstrates that in order to maintain inter-family relativity 
in the PFS, the 25th percentile survey work RVUs of 12.00 are more 
appropriate than the higher work RVUs recommended by the AMA RUC and 
the refinement panel. Accordingly, we are assigning work RVUs of 12.00 
to CPT code 35800 as the final value for CY 2012.
    We discussed CPT code 35840 (Exploration for postoperative 
hemorrhage, thrombosis or infection; abdomen) in the Fourth Five-Year 
Review of Work (76 FR 32446) and noted the AMA RUC used magnitude 
estimation to recommend work RVUs for CPT code 35840 between the survey 
25th percentile (19.25 RVU) and survey median (22.30 RVUs) work value. 
Accordingly, the AMA RUC recommended a work RVU of 21.19 for CPT code 
35840. We disagreed with the AMA RUC-recommended work RVU for CPT code 
35840 and proposed alternative work RVUs of 20.75, which were between 
the survey 25th percentile and survey median work RVUs. We believed the 
work RVUs of 20.75 were more appropriate given the comparison to the 
two reference codes.

[[Page 73131]]

    Comment: Commenters disagreed with the proposed work RVUs for CPT 
code 35840. Commenters noted that the AMA RUC compared CPT code 35840 
to the following two services: CPT code 49002 (Reopening of recent 
laparotomy) (work RVUs = 17.63, 75 minutes intra-service time), and CPT 
code 37617 (Ligation, major artery (e.g., post-traumatic, rupture); 
abdomen) (work RVUs = 23.70, 120 minutes intraservice time). Commenters 
agreed with the intensity, physician work, and proper rank order 
amongst the comparison codes when code 35840 was valued between the 
survey 25th percentile (19.25 RVUs) and median work value (22.30 RVUs). 
Commenters requested that CMS accept the AMA RUC-recommended work RVUs 
of 21.19.
    Response: Based on the comments received, we referred CPT code 
35840 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 35840 has current (CY 2011) work RVUs of 10.96, in the 
Five-Year Review we proposed work RVUs of 20.75, and the AMA RUC 
recommended work RVUs of 21.19. The median refinement panel work RVUs 
were also 21.19. For CPT code 33840, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be an appropriate when compared to 
other codes with similar physician time and intensity in different code 
families. We continue to believe the work RVUs of 20.75 are more 
appropriate given the two reference codes to which this service has 
been compared. Accordingly, we are assigning work RVUs of 20.75 to CPT 
code 35840 as the final value for CY 2012.
    We discussed CPT code 35860 (Exploration for postoperative 
hemorrhage, thrombosis or infection; extremity) in the Fourth Five-Year 
Review of Work (76 FR 32446-32447) and noted the AMA RUC used magnitude 
estimation to recommend work RVUs between the survey 25th percentile 
(15.25 RVUs) and median work value (18.00 RVUs). The AMA RUC 
recommended work RVUs of 16.89 for CPT code 35860. We disagreed with 
the AMA RUC-recommended work RVUs for CPT code 35860 and proposed 
alternative work RVUs of 15.25, which were the survey 25th percentile 
work RVUs. We believed these work RVU maintained appropriate relativity 
within the family of related services for the exploration of 
postoperative hemorrhage.
    Comment: Commenters disagreed with CMS' proposed RVUs of 15.25 for 
CPT code 35860. Commenters stated the complexity and intensity of this 
service is higher because it is typically furnished to elderly patients 
for whom reoperation imposes more risks. Commenters asserted that the 
family of services was undervalued in the Harvard study. Commenters 
disagreed with CMS's assertion that the proposed work value is more 
relative to similar services in comparison to the RUC recommendation. 
During its review, the AMA RUC compared CPT code 35860 to two similar 
services: CPT code 34203 (Embolectomy or thrombectomy, popliteal-
tibioperoneal artery, by leg incision) (work RVU = 17.86, 108 minutes 
intra-service time) and CPT code 44602 (Suture of small intestine for 
perforation) (work RVU = 24.72, 90 minutes intra-service time). 
Commenters agreed with the intensity, physician work, and proper rank 
order amongst the comparison codes achieved when CPT code 35860 is 
valued between the survey 25th percentile (15.25 RVUs) and median work 
value (18.00 RVUs), at 16.89 work RVUs. Commenters requested that CMS 
accept the RUC recommended work RVUs of 16.89 for CPT code 35860.
    Response: Based on the comments received, we referred CPT code 
35860 to the CY 2011 multi-specialty refinement panel for further 
review. CPT code 35860 has current (CY 2011) work RVUs of 6.80, in the 
Five-Year Review we proposed work RVUs of 15.25, and the AMA RUC 
recommended work RVUs of 16.89. The median refinement panel work RVUs 
were also 16.89. For CPT code 35860, as well as the other CPT codes in 
this family, the Five-Year Review proposed work RVUs represent a 
significant increase over the current (CY 2011) work RVUs. We believe 
that the even higher AMA RUC-recommended work RVUs and refinement panel 
results would create a new higher standard of relativity for codes 
within this family that would not be appropriate when compared to other 
codes with similar physician time and intensity in different code 
families. We continue to believe the work RVUs of 15.25, which are the 
survey 25th percentile work RVUs, maintain appropriate relativity. 
Accordingly, we are assigning work RVUs of 15.25 to CPT code 35860 as 
the final value for CY 2012.
    As detailed in the Fourth Five-Year Review, for CPT code 36600 
(Arterial puncture, withdrawal of blood for diagnosis) we believed that 
the current (CY 2011) work RVUs continued to accurately reflect the 
work of these services and, therefore, proposed work RVUs of 0.32 for 
CPT code 36600. The AMA RUC also recommended maintaining the current 
(CY 2011) work RVUs for these services. For CPT code 36600, the AMA RUC 
recommended a pre-service evaluation time of 5 minutes and immediate 
post service time of 5 minutes. We proposed a pre-service evaluation 
time for CPT code 36600 of 3 minutes and a post service time of 3 
minutes (76 FR 32447).
    Comment: In its public comments to CMS on the Fourth Five-Year 
Review, the AMA RUC wrote that CMS agreed with the AMA RUC-recommended 
work RVU, but noted that CMS disagreed with the AMA RUC-recommended 
pre-service and post-service time components due to an E/M service 
typically being provided on the same day of service. The AMA RUC 
recommends that CMS accept the AMA RUC-recommended pre-service 
evaluation time of 5 minutes and immediate post-service time of 5 
minutes for CPT code 36600.
    Response: In response to comments, we re-reviewed CPT code 36600. 
After reviewing the descriptions of pre-service work and the 
recommended pre-service time packages, we disagree with the times 
recommended by the AMA RUC. For CPT code 36600 we are finalizing a work 
RVU of 0.32 and a pre-service evaluation time of 3 minutes. In 
addition, we are finalizing an intra-service time of 10 minutes, and a 
post-service time of 3 minutes for CPT code 36600. CMS time refinements 
can be found in Table 16.
    We discussed CPT code 36247 (Selective catheter placement, arterial 
system; initial third order or more selective abdominal, pelvic, or 
lower extremity artery branch, within a vascular family) in the Fourth 
Five-Year Review of Work (76 FR 32445) and proposed a CY 2012 work RVU 
of 6.29 and a global period change from 90-days (Major surgery with a 
1-day pre-operative period and a 90-day postoperative period included 
in the fee schedule amount) to XXX (the global concept does not apply 
to the code). The AMA RUC recommended the survey median work RVU of 
7.00 for this service. We disagreed with the RUC-recommended value 
noting that a reduced global period would support a reduction in the 
RVUs.
    Comment: Commenters noted that the dominant specialty for CPT code 
36247 has changed since the original Harvard valuations that therefore 
physician practice also has changed. Commenters pointed out that CMS' 
discussion of the

[[Page 73132]]

global period was not correct, that the specialty societies had 
surveyed the code based on a change to the global period of 000 
(endoscopic or minor procedure with related preoperative and post-
operative relative values on the day of the procedure only included in 
the fee schedule payment amount; evaluation and management services on 
the day of the procedure generally not payable) from the current global 
period indicator of XXX. Commenters also asserted that there had been a 
change in the physician work for CPT code 36247 due to patient 
population changes and the inclusion of moderate sedation as inherent 
in the procedure. Finally, commenters argued that the creation of the 
lower extremity revascularization codes in CY 2011 PFS final rule with 
comment period (75 FR 73334) increased the complexity of procedures 
described by CPT code 36247. Commenters requested that CMS reconsider 
the proposed value and global period.
    Response: Based on the comments received, we referred CPT code 
36247 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median value was a work RVU of 7.0, the 
AMA RUC-recommended value. Upon clinical review, we believe that our 
proposed value of 6.29 in more appropriate. We observe a significant 
decrease in the physician times reported for this service that argue 
for a lower value, notwithstanding that the survey was conducted for a 
0-day global period, which includes an evaluation and management 
service on the same day. We agree with commenters that our discussion 
of the global period in the Fourth Five-Year review of work was 
inconsistent with the commenters' original request. Therefore, we are 
assigning the work RVU of 6.29 and a global period of 000 to CPT code 
37247on an interim basis for CY 2012 and invite additional public 
comment on this code.
    We discussed CPT code 36819 (Arteriovenous anastomosis, open; by 
upper arm basilic vein transposition) in the Fourth Five-Year Review of 
Work (76 FR 32447) where we noted this code was identified as a code 
with a site-of- service anomaly. Medicare PFS claims data indicated 
that this code is typically furnished in an outpatient setting. 
However, the current and AMA RUC-recommended values for this code 
reflected work that is typically associated with an inpatient service. 
As discussed in section III.A. of this final rule with comment period, 
our policy is to remove any post-procedure inpatient and subsequent 
observation care visits remaining in the values for these codes and 
adjust physician times accordingly. It is also our policy for codes 
with site-of-service anomalies to consistently include the value of 
half of a discharge day management service. While the AMA RUC 
recommended maintaining the current (CY 2011) work RVU of 14.47, 
utilizing our methodology, we proposed an alternative work RVU for CY 
2012 of 13.29 with refinements in time for CPT code 36819.
    Comment: Commenters disagreed with the CMS-proposed work RVU and 
requested that CMS accept the AMA RUC-recommended work RVU of 14.47 for 
36819. Furthermore, commenters asked that the AMA RUC-recommended 
physician time should also be restored. Commenters disagreed with CMS' 
use of the reverse building block methodology. Commenters noted that 
the AMA RUC originally valued this service using magnitude estimation 
based on comparison reference codes, which considers the total work of 
the service rather than the work of the component parts of the service, 
and requested CMS accept the AMA RUC-recommended work RVU and physician 
time. Commenters noted that the AMA RUC reviewed the survey data, 
compared this service to other services, and concluded that there was 
no was no compelling evidence to suggest a change in the current work 
RVUs was warranted.
    Response: Based on comments received, we referred CPT code 36819 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 14.47, which was consistent with 
the AMA RUC recommendation to maintain the current (CY 2011) work 
value. The current (CY 2011) work RVU for this service was developed 
when this service was typically furnished in the inpatient setting. As 
this service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not reflect 
a decrease in physician work. We do not believe it is appropriate for 
this now outpatient service to continue to reflect work that is 
typically associated with an inpatient service. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply our methodology described previously to address 
23-hour stay site-of-service anomalies. After consideration of the 
public comments, refinement panel results, and our clinical review, we 
are assigning a final work RVU of 13.29 with refinements in time for 
CPT code 36819 for CY 2012.
    We discussed CPT code 36825 (Creation of arteriovenous fistula by 
other than direct arteriovenous anastomosis (separate procedure); 
autogenous graft) in the Fourth Five-Year Review of Work (76 FR 32445 
and 32446) where we noted this code was identified as a code with a 
site-of-service anomaly. Medicare PFS claims data indicated that this 
code is typically furnished in an outpatient setting. However, the 
current and AMA RUC-recommended values for this code reflected work 
that is typically associated with an inpatient service. As discussed in 
section III.A. of this final rule with comment period, consistent with 
that methodology, we removed the subsequent observation care service, 
reduced the discharge day management service by one-half, and adjusted 
times for CPT code 36825. While the AMA RUC recommended maintaining the 
current (CY 2011) work RVU of 15.13, utilizing our methodology for 
codes with site-of-service anomalies, we proposed an alternative work 
RVU of 14.17 with refinements to the time for CPT code 36825 for CY 
2012.
    Comment: Commenters disagreed with the CMS proposed work RVU of 
14.17. Commenters disagreed with CMS' use of the reverse building block 
methodology, which removed the subsequent observation care code and 
reduced the full hospital discharge day management code to a half day, 
along with the associated work RVUs and times. Commenters noted that 
the AMA RUC originally valued this service using magnitude estimation 
based on comparison reference codes, which considers the total work of 
the service rather than the work of the component parts of the service, 
and requested CMS accept the AMA RUC-recommended work RVU and physician 
time. Commenters contend that if the patient is stable and can safely 
be discharged on a day subsequent to the day of the procedure, then 
there should be no reduction in discharge management work. Commenters 
requested that CMS reconsider this issue and accept the AMA RUC-
recommended work RVU of 15.13 as a valid relative measure using 
magnitude estimation and comparison to codes with similar work and 
intensity.
    Response: Based on comments received, we referred CPT code 36825 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 15.13, which is consistent with 
AMA RUC recommendation to maintain the current (CY 2011) work RVU for 
this service.

[[Page 73133]]

The current (CY 2011) work RVU for this service was developed when this 
service was typically furnished in the inpatient setting. As this 
service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not reflect 
a decrease in physician work. We do not believe it is appropriate for 
this now outpatient service to continue to reflect work that is 
typically associated with an inpatient service. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply our methodology described previously to address 
23-hour stay site-of-service anomalies. After consideration of the 
public comments, refinement panel results, and our clinical review, we 
are assigning a work RVU for CY 2012 of 14.17 with refinements to the 
time for CPT code 36825 for CY 2012. CMS time refinements can be found 
in Table 16.
    For CY 2012, we received no comments on the Fourth Five-Year Review 
of Work proposed work RVUs for CPT codes 33916, 33975, 33976, 33977, 
33978, 33979, 33981, 33982, 33983, 36200, 36246, 36470, 36471, 36600, 
36821, 37140, 37145, 37160, 37180, and 37181. Additionally, we received 
no comments on the CY 2011 final rule with comment period work RVUs for 
CPT codes 33620, 33621, 33622, 33860, 33863, 33864, 34900, 35471, 
36410, 37205, 37206, 37207, 37208, 37220, 37221, 37222, 37223, 37224, 
37225, 37226, 37228, 37229, 27230, 37231, 37232, 37233, 37234, 37235, 
37765, 37766. We believe these values continue to be appropriate and 
are finalizing them without modification (Table 15).
(14) Digestive: Salivary Glands and Ducts (CPT Codes 42415-42440)
    In the Fourth Five-Year Review, we identified CPT codes 42415 and 
42420 as potentially misvalued through the site-of-service anomaly 
screen. The related specialty societies surveyed these codes and the 
AMA RUC issued recommendations to us for the Fourth Five-Year Review of 
Work.
    As detailed in the Fourth Five-Year Review of Work (76 FR 32447), 
for CPT code 42415 (Excision of parotid tumor or parotid gland; lateral 
lobe, with dissection and preservation of facial nerve), we proposed a 
work RVU of 17.16 for CY 2012. Medicare PFS claims data indicated that 
CPT code 42415 is typically furnished in an outpatient setting. 
However, the current AMA RUC-recommended values for this code reflected 
work that is typically associated with an inpatient service. Therefore, 
in accordance with our methodology to address 23-hour stay and site-of-
service anomalies described in section III.A. of this final rule with 
comment period, for CPT code 42415, we removed the observation care 
service, reduced the discharge day management service by one-half, and 
adjusted the physician times accordingly. The AMA RUC recommended 
maintaining the current work RVU of 18.12 for CPT code 42415.
    Furthermore, as detailed in the Fourth Five-Year Review of Work (76 
FR 32447), for CPT code 42420 (Excision of parotid tumor or parotid 
gland; total, with dissection and preservation of facial nerve) we 
proposed a work RVU of 19.53 for CY 2012. Medicare PFS claims data 
indicated that CPT code 42420 is typically furnished in an outpatient 
setting. However, the current AMA RUC-recommended values for this code 
reflected work that is typically associated with an inpatient service. 
Therefore, in accordance with our methodology to address 23-hour stay 
and site-of-service anomalies described in section III.A. of this final 
rule with comment period, for CPT code 42420, we removed the subsequent 
observation care service, reduced the discharge day management service 
by one-half, and adjusted the physician times accordingly. The AMA RUC 
recommended maintaining the current work RVU of 21.00 for CPT code 
42420.
    Comment: Commenters disagreed with the proposed work RVUs for CPT 
codes 42415 and 42420 and requested that CMS accept the AMA RUC-
recommended RVUs of 18.12 and 21.00, respectively, for these services. 
Commenters stated that patients typically stay overnight, receiving 
these specific services require close monitoring for airway patency, 
formation of hematoma, and facial nerve function, and for 42420, 
intervention for any noted deficits, drain function, and control of 
nausea. Moreover, commenters stated that survey data show that the 
typical patient receives this procedure in the hospital (91 percent for 
42415 and 97 percent for 42420) and receives an E/M service on the same 
date (53 percent for 42415 and 64 percent for 42420). Commenters also 
noted that whether or not the service is designated outpatient or 
inpatient, the physician work is the same. Commenters requested that 
CMS not apply the site-of-service anomaly reductions to work RVUs and 
physician times, and accept the AMA RUC recommended RVUs of 18.12 for 
42415 and 21.00 for 42420.
    Response: Based on the public comments received, we referred both 
CPT codes 42415 and 42420 to the CY 2011 multi-specialty refinement 
panel for further review. The refinement panel median work RVUs were 
18.12 for 42415 and 21.00 for 42420, which was consistent with the AMA 
RUC recommendation to maintain the current (CY 2011) work RVUs. The 
current (CY 2011) work RVU for this service was developed when this 
service was typically furnished in the inpatient setting. As this 
service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not reflect 
a decrease in physician work. We do not believe it is appropriate for 
this now outpatient service to continue to reflect work that is 
typically associated with an inpatient service. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply our methodology described previously to address 
23-hour stay site-of-service anomalies. Therefore, we removed the 
subsequent observation care services, reduced the discharge day 
management service to one-half, and increased the post-service times. 
We are finalizing work RVUs of 17.16 for CPT code 42415 and 19.53 for 
CPT code 42420 with refinements to physician time. CMS time refinements 
can be found in Table 16.
    As detailed in the CY 2012 PFS proposed rule (76 FR 42799), for CPT 
code 42440 (Excision of submandibular (submaxillary) gland), we 
proposed a work RVU of 6.14 for CY 2012. As stated in section III.A. of 
this final rule with comment period, we believe the appropriate 
methodology for valuing site-of-service anomaly codes entails not just 
removing the inpatient visits, but also accounting for the removal of 
the inpatient visits in the work value of the CPT code. To 
appropriately revalue this CPT code to reflect an outpatient service we 
started with the original CY 2008 work RVU of 7.05 then, in accordance 
with the policy discussed in section III.A. of this final rule with 
comment period, we removed the value of the subsequent hospital care 
service and one-half discharge day management service, and added back 
the subsequent hospital care intra-service time to the immediate post-
operative care service.

[[Page 73134]]

The AMA RUC recommended maintaining the current work RVU of 7.13 for 
CPT code 42440 (76 FR 42799).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
6.14 for CPT code 42440 and believe that the AMA RUC-recommended work 
RVU of 7.13 was more appropriate for this service. Commenters disagreed 
with CMS' use of the reverse building block methodology, which removed 
the work RVUs associated with the subsequent hospital care code and 
half a hospital discharge day management service. Commenters noted that 
the AMA RUC originally valued this service using magnitude estimation 
based on comparison reference codes, which considers the total work of 
the service rather than the work of the component parts of the service, 
and requested CMS accept the AMA RUC-recommended work RVU and physician 
time. Commenters also noted that there was an increase in intensity of 
office visits, because rather than an overnight stay in the hospital, 
the typical patient is discharged the same day with tubes in their 
neck, and a more intense office visit is needed to remove the tube and 
manage other dressings.
    Response: Based on the public comments received, we referred CPT 
code 42440 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work was 7.13, which was consistent 
with AMA RUC recommendation to maintain the current (CY 2011) work RVU 
for this service. The current (CY 2011) work RVU for this service was 
developed when this service was typically furnished in the inpatient 
setting. As this service is now typically furnished in the outpatient 
setting, we believe that it is reasonable to expect that there have 
been changes in medical practice for these services, and that such 
changes would represent a decrease in physician time or intensity or 
both. However, the AMA RUC-recommendation does not reflect a decrease 
in physician work. We believe the appropriate methodology for valuing 
site-of-service anomaly codes entails not just removing the inpatient 
visits, but also accounting for the removal of the inpatient visits in 
the work value of the CPT code. Furthermore, we believe it is 
appropriate to remove the value of the subsequent hospital care service 
and one-half discharge day management service, and add back the 
subsequent hospital care intra-service time to the immediate post-
operative care service. Therefore, we are finalizing a work RVU for CPT 
code 42440 of 6.14 with refinements to time. CMS time refinements can 
be found in Table 16.
(15) Digestive: Esophagus (CPT codes 43262, 43327-43328, and 43332-
43338)
    As detailed in the Fourth Five-Year Review (76 FR 32448), for CPT 
code 43262 (Endoscopic retrograde cholangiopancreatography (ERCP); with 
sphincterotomy/papillotomy), we believed that the current (CY 2011) 
work RVU of 7.38 continued to accurately reflect the work of this 
service. We proposed to maintain the current work RVU and physician 
times for CPT code 43262. The AMA RUC recommended maintaining the 
current work RVUs for these services as well. However, the AMA RUC 
recommended a pre-service evaluation time of 15 minutes and immediate 
post service time of 20 minutes. Additionally, the AMA RUC recommended 
a pre-service positioning time of 5 minutes; a pre-service dress/scrub 
time of 5 minutes; and an intra-service time of 45 minutes. We noted 
that based on a preliminary review of the intra-service times for these 
codes, we were concerned the codes in this family are potentially 
misvalued. We requested that the AMA RUC undertake a comprehensive 
review of the entire family of ERCP codes, including the base CPT code 
43260, and provide us with work RVU recommendations.
    Comment: In its public comments to CMS on the Fourth Five-Year 
Review, the AMA RUC stated that it intends to review this family of 
codes in 2012. The AMA RUC also noted that CMS disagreed with the AMA 
RUC-recommended physician times for CPT code 43262. The AMA RUC 
requested that CMS accept the AMA RUC-recommended times be utilized for 
CY 2012.
    Response: We appreciate the AMA RUC accepting family of ERCP codes 
for review in 2012. We continue to have concerns about the recommended 
intra-service times for this code, and believe it is appropriate to 
maintain the current physician times. CMS time refinements can be found 
in Table 16.
    For CY 2012, we did not receive any public comments on the Fourth 
Five-Year Review proposed work RVUs for CPT code 43262. We believe this 
value continues to be appropriate and are finalizing it without 
modification (Table 15).
    For CY 2011 the CPT Editorial Panel deleted six existing CPT codes 
and created ten new CPT codes (CPT codes 43283, 43327-43328, 43332-
43338) to better report current surgical techniques for paraesophageal 
hernia procedures. The specialty societies surveyed their members, and 
the AMA RUC issued recommendations to us for the CY 2011 PFS final rule 
with comment period.
    As stated in the CY 2011 PFS final rule with comment period, after 
reviewing these new CPT codes, we believed that this coding change 
resulted in more codes that describe the same physician work with a 
greater degree of precision, and that the aggregate increase in work 
RVUs that would result from the adoption of the CMS-adjusted pre-budget 
neutrality RVUs would not represent a true increase in physician work. 
Therefore, we believed it was appropriate to apply work budget 
neutrality to this set of CPT codes. After reviewing the AMA RUC-
recommended work RVUs, we adjusted the work RVUs for two CPT codes (CPT 
code 43333 and 43335), and then applied work budget neutrality to the 
set of clinically related CPT codes. The work budget neutrality factor 
for the 10 paraesophageal hernia procedure CPT codes was 0.7374. The 
AMA RUC-recommended work RVU, CMS-adjusted work RVU prior to the budget 
neutrality adjustment, and the CY 2011 interim final work RVU for these 
paraesophageal hernia procedure codes follow (CPT codes 43283, 43327-
43328, 43332-43338) (75 FR 73338).

[[Page 73135]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.020

    As mentioned previously, and detailed in the CY 2011 PFS final rule 
with comment period, for CPT codes 43333 (Repair, paraesophageal hiatal 
hernia (including fundoplication), via laparotomy, except neonatal; 
with implantation of mesh or other prosthesis) and 43335 (Repair, 
paraesophageal hiatal hernia (including fundoplication), via 
thoracotomy, except neonatal; with implantation of mesh or other 
prosthesis), we disagreed with the AMA RUC-recommended work RVUs and 
assigned alternate RVUs prior to the application of work budget 
neutrality (75 FR 73331). For CPT code 43333 we assigned a pre-budget 
neutrality work RVU of 29.10 and for CPT code 43335 we assigned a pre-
budget neutrality work RVU of 32.50. We arrived at these values by 
starting with the AMA RUC-recommended values for the repair of 
papaesophageal hernia without mesh, CPT codes 43332 (Repair, 
paraesophageal hiatal hernia (including fundoplication), via 
laparotomy, except neonatal; without implantation of mesh or other 
prosthesis) and 43334 (Repair, paraesophageal hiatal hernia (including 
fundoplication), via thoracotomy, except neonatal; without implantation 
of mesh or other prosthesis) then adjusted them upward by a work RVU of 
2.50 to account for the incremental difference associated with the 
implantation of mesh or other prosthesis. The AMA RUC recommended a 
work RVU of 30.00 for CPT code 43333 and a work RVU of 33.00 for CPT 
43335 for CY 2011.
    Comment: Commenters disagreed with the application of work budget 
neutrality to this set of services and noted that the specialty 
societies and AMA RUC agreed that there was compelling evidence that 
technology has changed the physician work to repair esophageal hernias. 
Commenters stated that the work described by the deleted CPT codes was 
intended for patients with acid reflux or blockage and that, with the 
advent of medical management and less invasive treatments, the 
patients' currently undergoing surgery are symptomatic, typically with 
blockage. They stated that the typical patient has more advanced 
disease and requires more complex repair. Commenters also stated that 
the CY 2011 interim final values would create rank order anomalies 
between these CPT codes and other major inpatient surgical procedures.
    With regard to CPT codes 43333 and 43335, commenters disagreed with 
the CMS-assigned pre-budget neutrality work RVU of 29.10 for CPT code 
43333 and 32.50 for CPT code 43335, and believe that the AMA RUC-
recommended work RVUs of 30.00 for CPT code 43333 and 33.00 for CPT 
code 43335 are more appropriate for these services. Commenters noted 
that CMS adjusted the AMA RUC-recommended values for CPT codes 43333 
and 43335 by 2.50 work RVUs, an increment established in the AMA RUC's 
valuation of CPT codes 43336 and 43337. In other words CMS added 2.50 
work RVUs to the AMA RUC-recommended work RVUs of 26.60 for CPT code 
43332, which resulted in a value of 29.10 for CPT code 43333. Also, CMS 
added 2.50 work RVUs to the AMA RUC-recommended work RVUs of 30.00 for 
CPT code 43334, which resulted in a value of 32.50 for CPT code 43335. 
Commenters disagreed with this method because CMS' interim values were 
not supported by the survey results or AMA RUC recommendations. 
Commenters note that the AMA RUC recommendations were based on 
magnitude estimation rather than the building block methodology, which 
considers the total work of the service rather than the work of the 
component parts of the service. Commenters did not agree with adding 
component parts on to values that were based through magnitude 
estimation. Commenters asserted that these,services should be valued 
through magnitude estimation, rather than incremental addition of work 
RVUs of 2.50 in order to account for both the work related to inserting 
mesh, as well as other patient factors that in turn make the insertion 
of mesh necessary. Based on these arguments, commenters stated that 
work budget neutrality should not be applied to these codes, and urged 
CMS to accept the AMA RUC-recommended values for these services.
    Response: Based on comments received, we referred this set of 
paraesophageal hernia procedures (CPT codes 43283, 43327-43328, and 
43332-43338) to the CY 2011 multi-specialty refinement panel for 
further review. Though the refinement panel median work RVUs were work 
RVUs of 30.00 for CPT code 43333 and 33.00 for CPT 43335, which were 
consistent with the AMA RUC-recommended values for these services. We 
continue to believe that the application of work budget neutrality is 
appropriate for this set of clinically related CPT codes. While we 
understand that the practice of medicine has changed since these codes 
were originally valued, we do not believe these changes have resulted 
in more aggregate physician work. As such, we believe that allowing an 
increase in utilization-weighted RVUs within this set of clinically 
related CPT codes would be unjustifiably redistributive among PFS 
services. Additionally, we continue to believe that a work RVU of 2.50, 
which was based on a differential that was recommended by the AMA RUC 
between a pair of with/without implantation of mesh codes in this 
family, appropriately accounts for the incremental difference in work 
between CPT codes 43332 and 43333, and 43334 and 43335. After 
consideration of the public comments, refinement panel

[[Page 73136]]

results, and our clinical review, we are finalizing the CY 2011 interim 
final work RVU values for paraesophageal hernia procedures (CPT codes 
43283, 43327-43328, and 43332-43338) for CY 2012. The CY 2012 final 
work RVUs for these services are as follows:
[GRAPHIC] [TIFF OMITTED] TR28NO11.021

    Additionally, we received no public comments on the Fourth Five-
Year Review proposed work RVUs for CPT code 43415. We believe these 
values continue to be appropriate and are finalizing them without 
modification (Table 15).
(16) Digestive: Rectum (CPT code 45331)
    As detailed in the Fourth Five-Year Review, for CPT code 45331 
(Sigmoidoscopy, flexible; with biopsy, single or multiple) we believed 
that the current (CY 2011) work RVUs continued to accurately reflect 
the work of these services and, therefore, proposed a work RVU of 1.15 
for CPT code 45331. The AMA RUC recommended maintaining the current 
work RVUs for this service as well. For CPT code 45331, the AMA RUC 
recommended a pre-service time of 15 minutes, intra-service time of 15 
minutes, and post-service time of 10 minutes. While the AMA RUC 
recommended pre-service times based on the 75th percentile of the 
survey results, we believed it was more appropriate to accept the 
median survey physician times. Accordingly, we proposed to refine the 
times to the following: 5 minutes for pre-evaluation; 5 minutes for 
pre-service other, 5 minutes for pre- dress, scrub, and wait; 10 
minutes intra-service; and 10 minutes immediate post-service (76 FR 
32448).
    Comment: In its public comment to CMS on the Fourth Five-Year 
Review, the AMA RUC wrote that CMS agreed with the AMA RUC recommended 
work RVU, but noted that CMS disagreed with the AMA RUC recommended 
time components. The commenters further noted that CMS proposed to use 
the median survey time for CPT code 45331. The AMA RUC recommends that 
CMS accept the AMA RUC recommended intra-service time of 15 minutes for 
CPT code 45331.
    Response: In response to comments, we re-reviewed CPT code 45331. 
After reviewing the descriptions of pre-service work and the 
recommended pre-service time packages, we disagree with the times 
recommended by the AMA RUC. For CPT code 45331 we are finalizing a work 
RVU of 1.15. In addition, we are finalizing the following times for CPT 
code 45331: 5 minutes for pre-evaluation; 5 minutes for pre-service 
other, 5 minutes for pre- dress, scrub, and wait; 10 minutes intra-
service; and 10 minutes immediate post-service. CMS time refinements 
can be found in Table 16.
(17) Digestive: Biliary Tract (CPT Codes 47480, 47490, 47563, and 
47564)
    In the Fourth Five-Year Review, CMS identified CPT code 47563 as 
potentially misvalued through the Harvard Valued--Utilization > 30,000 
screen and site-of-service anomaly screen. The AMA RUC reviewed CPT 
codes 47564 and 47563.
    As detailed in the Fourth Five-Year Review (76 FR 32448), for CPT 
code 47563 (Laparoscopy, surgical; cholecystectomy with 
cholangiography), we proposed a work RVU of 11.47 with refinements in 
time for CPT code 47563 for CY 2012. The survey data show 95 percent 
(57 out of 60) of survey respondents stated they furnish the procedure 
``in the hospital.'' However, of those respondents who stated that they 
typically furnish the procedure in the hospital, 30 percent (17 out of 
57) stated that the patient is ``discharged the same day''; 46 percent 
(26 out of 57) stated the patient is ``kept overnight (less than 24 
hours)''; and 25 percent (14 out of 57) stated the patient is 
``admitted (more than 24 hours).'' These responses make no distinction 
between the patient's status as an inpatient or outpatient of the 
hospital for stays of longer than 24 hours. Based on the survey data, 
we valued this service based on our methodology to address 23-hour stay 
site-of-service anomaly services.
    As we discussed in section III.A. of this final rule with comment 
period, for codes with site-of-service anomalies, our policy is to 
remove any post-procedure inpatient visits remaining in the values for 
these codes and adjust physician times accordingly. It is also our 
policy for codes with site-of-service anomalies to consistently include 
the value of half of a discharge day management service, adjusting 
physician times accordingly. The AMA RUC recommended that this service 
be valued as a service furnished predominately in the facility setting 
with a work RVU of 12.11 for CPT code 47563 (76 FR 32448).
    Comment: Commenters disagreed with the proposed work RVU of 11.47, 
and supported the AMA RUC-recommended work RVU of 12.11 for CPT code 
47563. Commenters disagreed with CMS' methodology to address 23-hour 
stay site-of-service anomaly services of removing half of a discharge 
day management service. Commenters noted the change in physician work 
in the past five years; specifically, a more complex patient 
population. Commenters also stated that the physician's discharge work 
remains the same, independent of facility status. Commenters stated 
that CPT code 47563 is more intense and has a higher intra-service time 
than the key reference code 47562 (Laparoscopy, surgical; 
cholecystectomy), and cautioned against a rank order anomaly within the 
family

[[Page 73137]]

with CPT code 47562 (work RVU = 11.76). Commenters requested that CMS 
accept the AMA RUC-recommended work RVU of 12.11 and include a full day 
discharge service for CPT code 47563.
    Response: Based on the comments we received, we referred CPT code 
47563 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 12.11, which was 
consistent with the AMA RUC recommendation and the current (CY 2011) 
work RVU. The current (CY 2011) work RVU for this service was developed 
when this service was typically furnished in the inpatient setting. As 
this service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not reflect 
a decrease in physician work. We do not believe it is appropriate for 
this 23-hour stay service to continue to reflect work that is typically 
associated with an inpatient service. In order to ensure consistent and 
appropriate valuation of physician work, we believe it is appropriate 
to apply our methodology described previously to address 23-hour stay 
site-of-service anomalies. After consideration of the public comments, 
refinement panel results, and our clinical review, we are finalizing a 
work RVU of 11.47 to CPT code 47563. CMS time refinements can be found 
in Table 16.
    As detailed in the Fourth Five-Year Review (76 FR 32449), for CPT 
code 47564 (Laparoscopy, surgical; cholecystectomy with exploration of 
common duct), we proposed a work RVU of 18.00, the survey low work RVU, 
for CY 2012. We accepted the AMA RUC-recommended median survey times 
and believed the work RVU of 18.00 for CPT code 35860 was more 
appropriate given the significant reduction in recommended physician 
times in comparison to the current times. The AMA RUC recommended a 
work RVU of 20.00, the 25th survey percentile, for CPT code 47564.
    Comment: Commenters disagreed with the proposed work RVU of 18.00, 
and supported the AMA RUC-recommended work RVU of 20.00 for CPT code 
47564. Commenters disagreed with CMS' acceptance of the survey low, 
while the AMA RUC recommended the 25th survey percentile. Commenters 
noted that the physician times for CPT code 47564 were crosswalked in 
1994 and were not accurate. Therefore, they state that reducing the 
work value based on the reduction in physician time is not appropriate.
    Response: Based on comments we received, we referred CPT code 47564 
to the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 20.00, which was consistent with 
the AMA RUC recommendation for this service. We find that the median 
survey times, recommended by the AMA RUC, do not support the AMA RUC-
recommended increase in work RVUs. We believe that the proposed work 
RVU is more appropriate with the AMA RUC-recommended physician times 
that we accepted. After consideration of the public comments, 
refinement panel results, and our clinical review, we are finalizing a 
work RVU of 18.00 for CPT code 47564. CMS time refinements can be found 
in Table 16.
    For CY 2012, we received no comments on the Fourth Five-Year Review 
proposed work RVUs for CPT codes 47480 and 47490. We believe these 
values continue to be appropriate and are finalizing them without 
modification (Table 15).
(18) Digestive: Abdomen, Peritoneum, and Omentum (CPT codes 49324-
49655)
    We discussed CPT codes 49507 (Repair initial inguinal hernia, age 5 
years or over; incarcerated or strangulated), 49521 (Repair recurrent 
inguinal hernia, any age; incarcerated or strangulated), and 49587 
(Repair umbilical hernia, age 5 years or over; incarcerated or 
strangulated) in the Fourth Five-Year Review (76 FR 32449) where we 
noted these codes were identified as codes with a site-of- service 
anomaly. Medicare PFS claims data indicated that these codes are 
typically furnished in an outpatient setting. However, the current and 
AMA RUC-recommended values for these codes reflected work that is 
typically associated with an inpatient service. As discussed in section 
III.A. of this final rule with comment period, our policy is to remove 
any post-procedure inpatient and subsequent observation care visits 
remaining in the values for these codes and adjust physician times 
accordingly. It is also our policy for codes with site-of- service 
anomalies to consistently include the value of half of a discharge day 
management service. While the AMA RUC recommended maintaining the 
current work RVUs, utilizing our methodology, we proposed an 
alternative work RVU of 9.09 for CPT code 49507, 11.48 for CPT code 
49521, and 7.08 for CPT code 49587, with appropriate refinements to the 
time.
    Comment: Commenters disagreed with the CMS-proposed work RVU for 
CPT codes 49507 49521, and 49587. The commenters noted that for these 
three hernia repair codes, the AMA RUC survey data show 98-100 percent 
of survey respondents stated they furnish the procedure ``in the 
hospital.'' Commenters disagreed with CMS' use of the reverse building 
block methodology, which removed the subsequent observation care code 
and reduced the full hospital discharge day management code to a half 
day, along with the associated work RVUs and times. Commenters noted 
that the AMA RUC originally valued this service using magnitude 
estimation based on comparison reference codes, which considers the 
total work of the service rather than the work of the component parts 
of the service, and requested CMS accept the AMA RUC-recommended work 
RVU and physician time. Commenters requested that CMS reconsider this 
issue and accept the AMA RUC recommended work RVU as a valid relative 
measure using magnitude estimation and comparison to codes with similar 
work and intensity.
    Response: Based on comments received, we referred CPT codes 49507, 
49521, and 49587 to the CY 2011 multi-specialty refinement panel for 
further review. The refinement panel median work RVUs were 10.05 for 
CPT code 49507, 12.44 for CPT code 49521, and 8.04 for CPT code 49587, 
which was consistent with the AMA RUC recommendation to maintain the 
current (CY 2011) work RVU for this service. The current (CY 2011) work 
RVU for this service was developed when this service was typically 
furnished in the inpatient setting. As this service is now typically 
furnished in the outpatient setting, we believe that it is reasonable 
to expect that there have been changes in medical practice for these 
services, and that such changes would represent a decrease in physician 
time or intensity or both. However, the AMA RUC-recommendation and 
refinement panel results do not reflect a decrease in physician work. 
We do not believe it is appropriate for this now outpatient service to 
continue to reflect work that is typically associated with an inpatient 
service. While the commenter noted that the survey respondents 
overwhelmingly indicated that they furnish this procedure ``in the 
hospital,'' the Medicare claims data show these patients are typically 
in the hospital as outpatients, not inpatients and we do not believe 
that maintaining the current

[[Page 73138]]

value, which reflects work that is typically associated with an 
inpatient service, is appropriate. In order to ensure consistent and 
appropriate valuation of physician work, we believe it is appropriate 
to apply our methodology described previously to address 23-hour stay 
site-of-service anomalies. After consideration of the public comments, 
refinement panel results, and our clinical review, we are assigning a 
work RVU for CY 2012 of 9.09 for CPT code 49507, 11.48 for CPT code 
49521, and 7.08 for CPT code 49587, with appropriate refinements to the 
time. CMS time refinements can be found in Table 16.
    We discussed CPT code 49652 (Laparoscopy, surgical, repair, 
ventral, umbilical, spigelian or epigastric hernia (includes mesh 
insertion, when performed); reducible), CPT code 49653 (Laparoscopy, 
surgical, repair, ventral, umbilical, spigelian or epigastric hernia 
(includes mesh insertion, when performed); incarcerated or 
strangulated), CPT code 49654 (Laparoscopy, surgical, repair, 
incisional hernia (includes mesh insertion, when performed); 
reducible), and CPT code 49655 (Laparoscopy, surgical, repair, 
incisional hernia (includes mesh insertion, when performed)) in the 
Fourth Five-Year Review of Work (76 FR 32450-32452) where we noted 
these codes were identified as codes with a sites-of-services anomaly. 
Medicare PFS claims data indicated that these codes are typically 
furnished in an outpatient setting. However, the current and AMA RUC-
recommended values for these codes reflected work that is typically 
associated with an inpatient service. As discussed in section III.A. of 
this final rule with comment period, our policy is to remove any post-
procedure inpatient and subsequent observation care visits remaining in 
the values for these codes and adjust physician times accordingly. It 
is also our policy for codes with site-of-service anomalies to 
consistently include the value of half of a discharge day management 
service. While the AMA RUC recommended maintaining the current work 
RVUs, utilizing our methodology, we proposed an alternative work RVU of 
11.92 with refinements to the time for CPT code 49652, 14.92 with 
refinements to the time for CPT code 49653, 13.76 with refinements to 
the time for CPT code 49654, and 16.84 with refinements to the time for 
CPT code 49655.
    Comment: Commenters disagreed with the CMS-proposed work RVU for 
CPT codes 49652, 49653, 49654, and 49655. Commenters noted that similar 
to the three hernia repair codes previously discussed, the AMA RUC 
survey data show 98-100 percent of survey respondents stated they 
furnish these laparoscopic hernia repair procedures ``in the 
hospital.'' Commenters disagreed with CMS' use of the reverse building 
block methodology, which removed the subsequent observation care codes 
and reduced the full hospital discharge day management code to a half 
day, along with the associated work RVUs and times. Commenters noted 
that the AMA RUC originally valued this service using magnitude 
estimation based on comparison reference codes, which considers the 
total work of the service rather than the work of the component parts 
of the service, and requested CMS accept the AMA RUC-recommended work 
RVU and physician time. Commenters also contended the surgeon's post-
operative work has not changed and has not become easier because of a 
change in facility designation. Commenters requested that CMS 
reconsider this issue and accept the AMA RUC recommended work RVU as a 
valid relative measure using magnitude estimation and comparison to 
codes with similar work and intensity.
    Response: Based on comments received, we referred CPT codes 49652, 
49653, 49654, and 49655 to the CY 2011 multi-specialty refinement panel 
for further review. The refinement panel median work RVUs were 12.88, 
16.21, 15.03, and 18.11 for CPT codes 49652, 49653, 49654, and 49655, 
respectively, which were consistent with the AMA RUC recommendation to 
maintain the current work RVUs for this services. The current (CY 2011) 
work RVU for this service was developed when this service was typically 
furnished in the inpatient setting. As this service is now typically 
furnished in the outpatient setting, we believe that it is reasonable 
to expect that there have been changes in medical practice for these 
services, and that such changes would represent a decrease in physician 
time or intensity or both. However, the AMA RUC-recommendation and 
refinement panel results do not reflect a decrease in physician work. 
We do not believe it is appropriate for this now outpatient service to 
continue to reflect work that is typically associated with an inpatient 
service. We note again that while survey respondents overwhelmingly 
indicated that they furnish these procedures ``in the hospital,'' the 
Medicare claims data show these patients are typically in the hospital 
as outpatients, not inpatients and we do not believe that maintaining 
the current value, which reflects work that is typically associated 
with an inpatient service, is appropriate. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply our methodology described previously to address 
23-hour stay site-of-service anomalies. After consideration of the 
public comments, refinement panel results, and our clinical review, we 
are assigning a work RVU for CY 2012 of 11.92 with refinements to the 
time for CPT code 49652, 14.92 with refinements to the time for CPT 
code 49653, 13.76 with refinements to the time for CPT code 49654, and 
16.84 with refinements to the time for CPT code 49655.
    For CY 2012, we received no public comments on the CY 2011 interim 
final work RVUs for CPT codes 49324, 49327, 49412, 49418, 49419, 49421, 
and 49422. We believe these values continue to be appropriate and are 
finalizing them without modification (Table 15).
(19) Urinary System: Bladder (CPT Codes 51705-53860)
    As detailed in the Fourth Five-Year Review, for CPT code 51710 
(Change of cystostomy tube; complicated), we agreed with the AMA RUC-
recommended work RVU, and proposed a work RVU of 1.35 for CY 2012. The 
AMA RUC noted that a request was sent to CMS to have the global service 
period changed from a 10-day global period (010) to a 0-day global 
period (000), which only includes RVUs for the same day pre- and post-
operative period. The AMA RUC indicated that in the standards of care 
for this procedure, there is no hospital time and there are no follow 
up visits. The AMA RUC also noted that while the service was surveyed 
as a 10-day global, the respondents inadvertently included a hospital 
visit, CPT code 99231 (Subsequent hospital care), and removed the RVUs 
for that visit.
    Consequently, the AMA RUC did not use the survey results to value 
the code. Rather, comparing the physician work within the family of 
services, the AMA RUC compared CPT code 51710 to CPT code 51705 (Change 
of cystostomy tube; simple) and recommended a work RVU of 1.35 for CPT 
code 51710.
    We agreed to change the global period from a 10-day global to 0-day 
global. However, we noted that while we believed that changing a 
cystostomy tube in a complicated patient may be more time consuming 
than in a patient that requires a simple cystostomy tube change, we 
believed that the prepositioning time is unnecessarily high given the 
recommended pre-positioning time of 5 minutes for CPT

[[Page 73139]]

code 51705, which has an identical pre-positioning work description. 
Hence, we proposed refinements in time for CPT code 51710 for CY 2012 
(76 FR 32452).
    Comment: In their public comment to CMS on the Fourth Five-Year 
Review, the AMA RUC wrote that CMS agreed with the AMA RUC recommended 
work RVU and the request to change the global period from a 10-day 
global to 0-day global period. Commenters disagreed with CMS that the 
pre-service positioning time is identical between codes 51710 and 
51705. Commenters also state that the service does require more time 
for positioning since many times patients must be transferred from a 
wheelchair to an examination table. Lastly, commenters recommend that 
CMS accept the AMA RUC-recommended pre-service positioning time of 10 
minutes for CPT code 51710.
    Response: In response to comments, we re-reviewed CPT code 51710. 
After reviewing the descriptions of pre-service work and the 
recommended pre-service time packages, we continue to disagree with the 
times recommended by the AMA RUC. We believe that the prepositioning 
time is unnecessarily high given the recommended pre-positioning time 
of 5 minutes for CPT code 51705, which has an identical pre-positioning 
work description. For CPT code 51710, we are finalizing a work RVU of 
1.35. In addition, we are finalizing the following times for CPT code 
51710: 7 minutes for pre-evaluation; 5 minutes for pre-service 
positioning, 15 minutes for intra-service; and 15 minutes post-service. 
CMS time refinements can be found in Table 16.
    CPT codes 52281 (Cystourethroscopy, with calibration and/or 
dilation of urethral stricture or stenosis, with or without meatotomy, 
with or without injection procedure for cystography, male or female) 
and 52332 (Cystourethroscopy, with insertion of indwelling ureteral 
stent (e.g., Gibbons or double-J type)) were identified as a 
potentially misvalued code through the Five-Year Review Identification 
Workgroup under the Harvard-Valued potentially misvalued codes screen 
for services with utilization over 100,000.
    As detailed in the CY 2011 final rule with comment period (75 FR 
73339), for CPT code 52281, we assigned an interim final work RVU of 
2.60. The AMA RUC reviewed the survey results and determined that the 
physician time of 16 minutes pre-, 20 minutes intra-, and 10 minutes 
immediate post-service time and maintaining the current work RVUs of 
2.80 appropriately accounted for the time and work required to furnish 
this procedure. We disagreed with the AMA RUC recommendation to 
maintain the current RVUs for this code because the physician time to 
furnish this service (a building block of the code) has changed since 
the original ``Harvard values'' were established, as indicated by the 
AMA RUC-recommended reduction in pre-service time. Accounting for the 
reduction in pre-service time, we calculated work RVUs that were close 
to the survey 25th percentile.
    Comment: Commenters disagreed with the interim final work RVU of 
2.60. Commenters acknowledged that CPT code 52281 had significant 
reductions to the pre-service times. However, commenters stated that 
the work for this service had not changed. Commenters asserted that 
because this service was valued using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, it 
is not appropriate to remove RVUs based on time (a building block of 
the code). For CPT code, commenters requested that CMS accept the AMA 
RUC-recommended work RVU of 2.80.
    Response: Based on the comments received, we referred CPT code 
52281 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 2.75. As a result of 
the refinement panel ratings and clinical review by CMS, we are 
assigning a work RVU of 2.75 to CPT code 52281 as the final value for 
CY 2012.
    As detailed in the CY 2011 final rule with comment period (75 FR 
73339), for CPT code 52332, we assigned an interim final work RVU of 
2.60. We disagreed with the AMA RUC's CY 2011 work RVU recommendation 
to maintain the current value due significant reduction in pre-service 
time. Based on the same building block rationale we applied to CPT code 
52281, the other code within this family, we believed 2.60, which is 
the survey 25th percentile and maintains rank order, was a more 
appropriate valuation for 52332.
    Comment: Commenters believed that CMS made a mistake on the 
valuation for code 52332 in the CY 2011 PFS final rule with comment 
period. The information in the final rule with comment period prior to 
correction stated that the 25th percentile work RVU was 1.47. The 
commenters noted that the RUC states that the 25th percentile is 3.20 
not 1.47 as stated in the final rule. Additionally, the commenters 
stated that if CMS maintains the 1.47 work RVU, then 52332 will have 
less value than cystoscopy (52000) at 2.23 work RVUs. Moreover, 
commenters stated that the procedure identified as 52332 is a more 
intense procedure than 52000.
    Commenters also acknowledged that CPT code 52332 had significant 
reductions to the pre-service times. However, commenters stated that 
the work for this service had not changed. Commenters asserted that 
because this service was valued using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, it 
is not appropriate to remove RVUs based on time (a building block of 
the code). For CPT code, commenters requested that CMS accept the AMA 
RUC-recommended work RVU of 2.83.
    Response: We corrected a typographical error in the CY 2011 PFS 
final rule with comment period that improperly valued the work RVU for 
CPT code 52332 at 1.47, instead of the interim final work RVU of 2.60 
for CY 2011 (76 FR 1673). Based on the comments received, we referred 
CPT code 52332 to the CY 2011 multi-specialty refinement panel for 
further review. The refinement panel median work RVU was 2.82. As a 
result of the refinement panel ratings and clinical review by CMS, we 
are assigning a work RVU of 2.82 for CPT code 52332 as the final value 
for CY 2012.
    In the Fourth Five-Year Review, we identified CPT codes 51705, 
52005 and 52310 as potentially misvalued through the Harvard-Valued--
Utilization > 30,000 screen. CPT codes 51710, 52007 and 52315 were 
added as part of the family of services for AMA RUC review. In 
addition, we identified CPT codes 52630, 52649, 53440 and 57288 as 
potentially misvalued through the site-of-service anomaly screen. The 
specialty agreed to add CPT codes 52640 and 57287 as part of the family 
of services for AMA RUC review.
    As detailed in the Fourth Five-Year Review of Work (76 FR 32452), 
for CPT code 52630 (Transurethral resection; residual or regrowth of 
obstructive prostate tissue including control of postoperative 
bleeding, complete (vasectomy, meatotomy, cystourethroscopy, urethral 
calibration and/or dilation, and internalurethrotomy are included)), we 
proposed a work RVU of 6.55 for CY 2012. Medicare PFS claims data 
indicated that CPT code 52630 is typically furnished in an outpatient 
setting. However, the current AMA RUC-recommended values for this code 
reflected work that is typically associated with an inpatient service. 
Therefore, in accordance with our methodology to address 23-hour stay 
and site-of-service anomalies described

[[Page 73140]]

in section III.A. of this final rule with comment period, for CPT code 
52630, we removed the post procedure inpatient visit remaining in the 
AMA RUC-recommended value and adjusted the physician times accordingly. 
We also reduced the discharge day management service by one-half. The 
AMA RUC recommended maintaining the current work RVU of 7.73 for CPT 
code 52630.
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
6.55 for CPT code 52630 and believe that the AMA RUC-recommended work 
RVU of 7.73 is more appropriate for this service. The commenters 
disagreed with CMS' reduction to half of a discharge day management 
service. Furthermore, commenters stated that one full discharge day 
management code (either 99238 or 99217 1.28 RVU) should be included in 
the valuation of 52630. The commenters asserted that there was not 
appropriate justification for CMS to remove 0.64 work RVUs from the 
RUC's recommendation to reduce the full day of discharge management 
services to one-half day. Commenters also stated that the AMA RUC-
recommended physician time should be restored.
    Response: Based on comments received, we referred CPT code 52630 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 7.14. The AMA RUC recommended 
maintaining the current (CY 2011) work RVU of 7.73. The current (CY 
2011) work RVU for this service was developed when this service was 
typically furnished in the inpatient setting. As this service is now 
typically furnished in the outpatient setting, we believe that it is 
reasonable to expect that there have been changes in medical practice 
for these services, and that such changes would represent a decrease in 
physician time or intensity or both. However, the AMA RUC-
recommendation and refinement panel results do not adequately reflect a 
decrease in physician work. We do not believe it is appropriate for 
this now outpatient service to continue to reflect work that is 
typically associated with an inpatient service. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply our methodology described previously to address 
23-hour stay site-of-service anomalies. After consideration of the 
public comments, refinement panel results, and our clinical review, we 
are assigning a work RVU of 6.55 to CPT code 52630 as the final value 
for CY 2012. Therefore, we are finalizing a pre-service time of 33 
minutes, a pre-service positioning time of 5 minutes, a pre-service 
(dress, scrub, wait) time of 15 minutes, an intra-service time of 60 
minutes, and a post-service time of 35 minutes. We are also reducing 
the hospital discharge day by 0.5 for CPT code 52630. CMS time 
refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work (76 FR 32453), 
for CPT code 52649 (Laser enucleation of the prostate with 
morcellation, including control of postoperative bleeding, complete 
(vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or 
dilation, internal urethrotomy and transurethral resection of prostate 
are included if performed)), we proposed a work RVU of 14.56 for CY 
2012. Medicare PFS claims data indicated that CPT code 52649 is 
typically furnished in an outpatient setting. However, the current AMA 
RUC-recommended values for this code reflected work that is typically 
associated with an inpatient service. Therefore, in accordance with our 
methodology to address 23-hour stay and site-of-service anomalies 
described in section III.A. of this final rule with comment period, CPT 
code 52649, we reduced the discharge day management service to one-half 
and adjusted the physician times accordingly. The AMA RUC recommended a 
work RVU of 15.20 for CPT code 52649.
    Comment: Commenters disagreed with the CMS proposed work RVU of 
14.56 for CPT code 52649 and believe that the AMA RUC-recommended work 
RVU of 15.20 is more appropriate for this service. In addition, the 
commenters disagreed that a half-day of discharge management services 
is appropriate for this code. The commenters support the utilization of 
a full discharge day that takes into account the time the physician 
spends returning to the hospital later that night or the next morning 
to review charts, furnish an examination of the patient, check on post-
operative status, speak with the patient's family, and provide any 
subsequent discharge services that usually require more than 30 
minutes. Commenters also stated that the AMA RUC physician time should 
be restored.
    Response: Based on comments received, we referred CPT code 52649 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 14.88. The AMA RUC recommendation 
for this service was a work RVU of 15.20. The AMA RUC-recommended work 
value for this service included a full discharge day management 
service, which we do not believe is appropriate for an outpatient 
service. As this service is now typically furnished in the outpatient 
setting, we believe that it is reasonable to expect that there have 
been changes in medical practice for these services, and that such 
changes would represent a decrease in physician time or intensity or 
both. The AMA RUC-recommendation and refinement panel results do not 
adequately reflect the appropriate decrease in physician work. We do 
not believe it is appropriate for this now outpatient service to 
continue to reflect work that is typically associated with an inpatient 
service. In order to ensure consistent and appropriate valuation of 
physician work, we believe it is appropriate to apply our methodology 
described previously to address 23-hour stay site-of-service anomalies. 
After consideration of the public comments, refinement panel results, 
and our clinical review, we are assigning a work RVU of 14.56 to CPT 
code 52649 as the final value for CY 2012. In addition, we are 
finalizing a pre-service time of 33 minutes, a pre-service positioning 
time of 5 minutes, a pre-service (dress, scrub, wait) time of 15 
minutes, an intra-service time of 120 minutes, and a post-service time 
of 25 minutes. We are also reducing the hospital discharge day by 0.5 
for CPT code 52649. CMS time refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work (76 FR 32453), 
for CPT code 53440 (Sling operation for correction of male urinary 
incontinence (e.g., fascia or synthetic)), we proposed a work RVU of 
13.36 for CY 2012. Medicare PFS claims data indicated that CPT code 
53440 is typically furnished in a hospital setting as an outpatient 
service. However, the current AMA RUC-recommended values for this code 
reflected work that is typically associated with an inpatient service. 
Therefore, in accordance with our methodology to address 23-hour stay 
and site-of-service anomalies described in section III.A. of this final 
rule with comment period, for CPT code 53440, we reduced the discharge 
day management service to one-half. The AMA RUC recommended a work RVU 
of 14.00 for CPT code 53440.
    Comment: Commenters disagreed with the CMS proposed work RVU of 
13.36 for CPT code 53440 and believe that the AMA RUC-recommended work 
RVU of 14.00 is more appropriate for this service. In addition, the 
commenters disagreed that a half-day of discharge management services 
is appropriate for this code. The commenters support the utilization of 
a full discharge day that takes into account the time the physician 
spends returning to the hospital later that night or the next morning 
to review charts, furnish an examination of the patient,

[[Page 73141]]

check on post-op status, speak with the patient's family, and provide 
any subsequent discharge services that usually require more than 30 
minutes. Commenters also stated that the AMA RUC-recommended physician 
time should be restored.
    Response: Based on comments received, we referred CPT code 53440 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 13.68. The current (CY 2011) work 
RVU for this service was developed when this service was typically 
furnished in the inpatient setting. As this service is now typically 
furnished in the outpatient setting, we believe that it is reasonable 
to expect that there have been changes in medical practice for these 
services, and that such changes would represent a decrease in physician 
time or intensity or both. However, the AMA RUC-recommendation and 
refinement panel results do not adequately reflect a decrease in 
physician work. We do not believe it is appropriate for this now 
outpatient service to continue to reflect work that is typically 
associated with an inpatient service. In order to ensure consistent and 
appropriate valuation of physician work, we believe it is appropriate 
to apply our methodology described previously to address 23-hour stay 
site-of-service anomalies. After consideration of the public comments, 
refinement panel results, and our clinical review, we are assigning a 
work RVU of 13.36 to CPT code 53440 as the final value for CY 2012. In 
addition, we are finalizing a pre-service time of 33 minutes, a pre-
service positioning time of 7 minutes, a pre-service (dress, scrub, 
wait) time of 15 minutes, an intra-service time of 90 minutes, and a 
post-service time of 22 minutes. We are also reducing the hospital 
discharge day by 0.5 for CPT code 53440. CMS time refinements can be 
found in Table 16.
    For CY 2009, CPT code 53445 (Insertion of inflatable urethral/
bladder neck sphincter, including placement of pump, reservoir, and 
cuff) was identified as potentially misvalued through the site-of-
service anomaly screen. As detailed in the CY 2012 PFS proposed rule 
(76 FR 42799), we proposed a work RVU of 13.00 for CY 2012. Medicare 
PFS claims data indicated that CPT code 53445 is typically furnished in 
a hospital setting as an outpatient service. Upon clinical review of 
this service and the time and visits associated with it, we believe 
that the survey 25th percentile work RVU of 13.00 appropriately 
accounts for the work required to furnish this service (76 F42800).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
13.00 for CPT code 53445 and stated that a work RVU of 15.39 is more 
appropriate for this service. Some commenters opposed the reduction in 
RVUs for this service and our utilization of a reverse building block 
methodology. Additionally, some commenters expressed concerns regarding 
the use of the 25th percentile in the CMS and whether this methodology 
accounts for the resources required to furnish this service. However, 
the AMA RUC clarified that the AMA RUC recommendation was misstated in 
the proposed rule due to an error, and that the AMA RUC-recommended 
work RVU is 13.00 for CPT 53445.
    Response: We agree with the AMA RUC that the 25th percentile value 
of 13.00 work RVUs is appropriate for this service. Therefore, we are 
finalizing a work RVU of 13.00 for CPT code 53445 for CY 2012.
    For CY 2012, we received no public comments on the CY 2011 interim 
final work RVUs for CPT codes 50250, 50542, 51736, 51741, 53860, 55866, 
and 55876. Also, for CY 2012, we received no public comments on the CY 
2012 proposed work RVUs for CPT codes 52341, 52342, 52343, 52344, 
52345, 52346, 52400, 52500, 54410, and 54530. Finally, for CY 2012, we 
received no public comments on the Fourth Five-Year Review proposed 
work RVUs for CPT codes 51705, 52005, 52007, 52310, 52315, and 52640. 
We believe these values continue to be appropriate and are finalizing 
them without modification (Table 15).
(20) Female Genital System: Vagina (CPT Codes 57155-57288)
    We discussed CPT code 57155 (Insertion of uterine tandems and/or 
vaginal ovoids for clinical brachytherapy) in the CY 2011 PFS final 
rule with comment period (75 FR 73330). For CY 2011, the AMA RUC 
reviewed survey responses, concluded that the survey median work RVU 
appropriately accounts for the physician work required to furnish this 
service, and recommended a work RVU of 5.40 for CPT code 57155. We 
disagreed with the AMA RUC-recommended value for this service because 
the description of the AMA RUC's methodology was unclear to us. We 
believed the work RVU of 3.37 was more appropriate for this service, 
which is the same as the value assigned to CPT code 58823 (Drainage of 
pelvic abscess, transvaginal or transrectal approach, percutaneous 
(e.g., ovarian, pericolic)), which we believed was an appropriate 
crosswalk. Therefore, we assigned an alternative work RVU of 3.37 to 
CPT code 57155 on an interim final basis for CY 2011.
    Comment: Commenters disagreed with this proposed value. Commenters 
did not believe comparison of CPT code 57155 to CPT code 58823 was 
acceptable, asserting CPT code 57155 is a much higher intensity 
procedure that is not clinically parallel in work or intensity to CPT 
code 58823. Commenters stated that they preferred CMS accept the AMA 
RUC recommendation.
    Response: Based on the comments received, we referred CPT code 
57155 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 5.40. As a result of 
the refinement panel ratings and clinical review by CMS, we are 
assigning a work RVU of 5.40 to CPT code 57155 as the final value for 
CY 2012.
    We discussed CPT code 57156 (Insertion of a vaginal radiation 
afterloading apparatus for clinical brachytherapy) in the CY 2011 PFS 
final rule with comment period (75 FR 73330). For CY 2011, the AMA RUC 
reviewed survey responses, concluded that the survey 25th work RVU 
appropriately accounts for the physician work required to furnish this 
service, and recommended a work RVU of 2.69. We disagreed with the AMA 
RUC's valuation of the work associated with this service and determined 
it was more appropriate to crosswalk CPT code 57156 to CPT code 62319 
(Injection, including catheter placement, continuous infusion or 
intermittent bolus, not including neurolytic substances, with or 
without contrast (for either localization or epidurography), of 
diagnostic or therapeutic substance(s) (including anesthetic, 
antispasmodic, opioid, steroid, other solution), epidural or 
subarachnoid; lumbar, sacral (caudal)) (work RVUs = 1.87), which has 
the same intra-service time (30 minutes) and overall lower total time 
than the comparison services referenced by the AMA RUC. We assigned an 
alternative value of 1.87 work RVUs to CPT code 57156 on an interim 
final basis for CY 2011.
    Comment: The commenters disagreed with interim final value, noting 
the AMA RUC recommended the survey 25th percentile value which the 
commenters preferred over CMS' crosswalk. The commenters requested that 
CMS accept the AMA RUC recommendation.
    Response: Based on the comments received, we referred CPT code 
57156 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement

[[Page 73142]]

panel median work RVU was 2.69. As a result of the refinement panel 
ratings and clinical review by CMS, we are assigning a work RVU of 2.69 
to CPT code 57156 as the final value for CY 2012.
    Additionally, we note there were two other codes in the Female 
Genital System: Vagina family for which we agreed with the AMA RUC 
recommendations. We received no public comments on CPT codes 57287 
(Revise/remove sling repair) and 57288 (Repair bladder defect). For CY 
2012, we received no public comments on the Fourth Five-Year Review of 
Work proposed work RVUs for CPT codes 57287 and 57288. We believe these 
values continue to be appropriate and are finalizing them without 
modification (Table 15).
(21) Maternity Care and Delivery (CPT Codes 59400-59410, 59510-59515, 
and 59610-59622)
    CPT codes 54900-59622 were identified as potentially misvalued 
codes ``High IWPUT'' screen. The specialty societies surveyed their 
members, and the AMA RUC issued recommendations to us for the CY 2011 
PFS final rule with comment period.
    As stated in the CY 2011 PFS final rule with comment period (75 FR 
73338), for CY 2011 the AMA RUC reviewed 17 existing obstetrical care 
codes as part of the potentially misvalued code initiative. The AMA RUC 
recommended significant increases in the work RVUs for some of the 
comprehensive obstetrical care codes, largely to address the management 
of labor. While we generally agreed with the resulting AMA RUC-
recommended rank order of services in this family, we believed that the 
aggregate increase in work RVUs for the obstetrical services that would 
result from the adoption of the CMS-adjusted pre-budget neutrality work 
RVUs was not indicative of a true increase in physician work for the 
services. Therefore, we believed that it would be appropriate to apply 
work budget neutrality to this set of CPT codes. After reviewing the 
AMA RUC-recommended work RVUs, we adjusted the work RVUs for several 
codes, then applied work budget neutrality to the set of clinically 
related CPT codes. The work budget neutrality factor for the 17 
obstetrical care CPT codes was 0.8922. The AMA RUC-recommended work 
RVU, CMS-adjusted work RVU prior to the budget neutrality adjustment, 
and the CY 2011 interim final work RVU for obstetrical care codes (CPT 
codes 59400-59410, 59510-59515, and 59610-59622) follow.
[GRAPHIC] [TIFF OMITTED] TR28NO11.022

    As mentioned previously, and detailed in the CY 2011 PFS final rule 
with comment period, we disagreed with the AMA RUC-recommended work 
RVUs for a subset of the obstetrical care CPT codes, and assigned 
alternate RVUs prior to the application of work budget neutrality (75 
FR 73340). For obstetrical care services that include postpartum care 
with delivery, the AMA RUC included one CPT code 99214 visit (Level 4 
established patient office or other outpatient visit). We believed that 
one CPT code 99213 visit (Level 3 established patient office or other 
outpatient visit) more accurately reflected the services furnished at 
this postpartum care visit. Therefore, for the obstetrical care 
services that include postpartum care following delivery, we converted 
the CPT code 99214 visit to a 99213 visit and revised the work RVUs 
accordingly. This includes the following CPT codes: 59400 (Routine 
obstetric care including antepartum care, vaginal delivery (with or 
without episiotomy, and/or forceps) and postpartum care), 59410 
(Vaginal delivery only (with or without episiotomy and/or forceps); 
including postpartum care), 59510 (Routine obstetric care including 
antepartum care, cesarean delivery, and postpartum care), 59515 
(Cesarean delivery only; including postpartum care), 59610 (Routine 
obstetric care including antepartum care, vaginal delivery (with or 
without episiotomy, and/or forceps) and postpartum care, after previous 
cesarean delivery), 59614 (Vaginal delivery only, after previous 
cesarean delivery (with or without episiotomy and/or forceps); 
including postpartum care), 59618 (Routine obstetric care including 
antepartum care, cesarean delivery, and postpartum care, following 
attempted vaginal delivery after previous cesarean delivery), and 59622 
(Cesarean delivery only, following attempted vaginal delivery after 
previous cesarean delivery; including postpartum care).

[[Page 73143]]

    Comment: Commenters disagreed with the application of work budget 
neutrality to this set of services and noted that the specialty 
societies and AMA RUC agreed that there was compelling evidence that 
the work RVUs for these services should be increased. Commenters stated 
that the original work RVUs for the obstetrical care codes were 
established using a flawed building block methodology, and that 
discharge day management was not accounted for. Commenters also stated 
that the original building blocks that were used to develop RVUs for 
the obstetrical care codes included evaluation and management codes, 
and that the RVUs for these obstetrical care codes had not been 
increased though the evaluation and management codes have had 
significant RVU increases in the past 17 years. Based on these 
arguments, commenters stated that work budget neutrality should not be 
applied to these codes, and urged CMS to accept the AMA RUC-recommended 
values for these services.
    Additionally, commenters disagreed with the CMS decision to change 
the post-partum visit building block from a CPT code 99214 office visit 
to a CPT code 99213 office visit. Commenters noted that the post-partum 
visit includes not only a post-procedure physical exam, but also 
counseling and screening. They reiterated that they believe the CPT 
code 99214 office visit best reflects the amount of services provided 
by the physician at this visit. Therefore, commenters requested that 
CMS accept the AMA RUC-recommended values for all of the obstetrical 
care services.
    Response: We appreciate the specialty society's comprehensive 
application of the building block methodology to value the obstetrical 
care services and the detailed rationale they provided. After clinical 
review, we continue to believe that CPT code 99213, rather than CPT 
code 99214, accurately reflects the work associated with the provision 
of the post-partum office visit, and are maintaining the CMS-adjusted 
pre-budget neutrality RVUs for these services. After reviewing public 
comments and the history of the valuation of the obstetrical care CPT 
codes, we agree with commenters that the increase in work RVUs reflects 
a true increase in aggregate work for this set of service, and not just 
a structural coding change. As such, we are not applying the budget 
neutrality scaling factor of 0.8922 discussed in the CY 2011 PFS final 
rule with comment period for these obstetrical care services. After 
consideration of the public comments, refinement panel results, and our 
clinical review, we are finalizing the following values for obstetrical 
care services (CPT codes 59400-59410, 59510-59515, and 59610-59622) for 
CY 2012:
[GRAPHIC] [TIFF OMITTED] TR28NO11.023

(22) Endocrine System: Thyroid Gland (CPT Codes 60220-60240)
    In the Fourth Five-Year Review, we identified CPT codes 60220, 
60240, and 60500 as potentially misvalued through the sites-of-service 
anomaly screen. The related specialty societies surveyed these codes 
and the AMA RUC issued recommendations to CMS for the Fourth Five-Year 
Review of Work.
    As detailed in the Fourth Five-Year Review of Work (76 FR 32453), 
for CPT code 60220 (Total thyroid lobectomy, unilateral; with or 
without isthmusectomy), we proposed a work RVU of 11.19 for CY 2012. 
Medicare PFS claims data indicated that CPT code 60220 is typically 
furnished as an outpatient rather than inpatient service. However, the 
AMA RUC recommended that this service be valued as a service furnished 
predominately in the facility setting. The AMA RUC indicated that since 
the typical patient is kept overnight, the AMA RUC believes that one 
inpatient hospital visit as well as one discharge day management 
service should be maintained in the post operative visits for this 
service. Using magnitude estimation, the AMA RUC recommended the 
current work RVU of 12.37 for CPT code 60220. In accordance with our 
methodology to address 23-hour stay and site-of-service anomalies 
described in III.A. of this final rule with comment period, for CPT 
code 60220, we removed the hospital visit, reduced the discharge day 
management service by one-half, and adjusted times.
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
11.19 for CPT code 60220 and believe that that AMA RUC recommended work 
RVU is more appropriate for this service. Commenters noted that the CMS 
value was derived from the reverse building block methodology, which 
removed the subsequent hospital care code and reduced the full hospital

[[Page 73144]]

discharge day management code to a half day. Commenters also stated 
that our reverse building block methodology is incorrect because 
Harvard did not use RVU's for E/M codes to build the values-minutes 
were used. Commenters recommended maintaining the current work RVU of 
12.37 for CPT code 60220. Commenters also stated that the AMA RUC-
recommended physician time should be restored.
    Response: Based on the public comments received, we referred CPT 
60220 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 12.37, which is 
consistent with the AMA RUC recommendation to maintain the current (CY 
2011) work RVU for CPT code 60220. The current (CY 2011) work RVU for 
this service was developed when this service was typically furnished in 
the inpatient setting. As this service is now typically furnished in 
the outpatient setting, we believe that it is reasonable to expect that 
there have been changes in medical practice for these services, and 
that such changes would represent a decrease in physician time or 
intensity or both. However, the AMA RUC-recommendation and refinement 
panel results do not reflect a decrease in physician work. We do not 
believe it is appropriate for this now outpatient service to continue 
to reflect work that is typically associated with an inpatient service. 
In order to ensure consistent and appropriate valuation of physician 
work, we believe it is appropriate to apply our methodology described 
previously to address 23-hour stay site-of-service anomalies. 
Therefore, we are finalizing a work RVU for CPT code 60220 of 11.19. In 
addition, after reviewing the descriptions of the AMA RUC-recommended 
time packages, we disagree with the post-service time recommended by 
the AMA RUC. Therefore, we are finalizing a pre-service time of 40 
minutes, a pre-service positioning time of 12 minutes, a pre-service 
(dress, scrub, wait) time of 20 minutes, an intra-service time of 90 
minutes, and a post-service time of 40 minutes. We are also reducing 
the hospital discharge day by 0.5 for CPT code 60220. CMS time 
refinements can be found in Table 16.
    As detailed in the Fourth Five-Year Review of Work (76 FR 32454), 
for CPT code 60240 (Thyroidectomy, total or complete), we proposed a 
work RVU of 15.04 for CY 2012. Medicare PFS claims data indicated that 
CPT code 60240 is typically furnished as an outpatient rather than 
inpatient service. Using magnitude estimation, the AMA RUC believed the 
current work RVU of 16.22 for CPT code 60240 was appropriate. However, 
in accordance with our methodology to address 23-hour stay and site-of-
service anomalies described in section III.A. of this final rule with 
comment period, for CPT code 60240, we removed the post-procedure 
inpatient visit and reduced the discharge day management service to 
one-half. The AMA RUC recommended maintaining the current work RVU of 
16.22 for CPT code 60240.
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
15.04 of CPT code 60240 and believe that the AMA RUC-recommended work 
RVU of 16.22 is more appropriate. Additionally, commenters noted that 
the CMS value was derived from the reverse building block methodology, 
which removed the post-procedure inpatient visit and reduced the 
discharge day management service to one-half. Commenters also stated 
that the AMA RUC originally valued this service using magnitude 
estimation based on comparison reference codes, and requested that CMS 
accept the AMA RUC-recommended work RVU of 16.22 for CPT code 60420. 
Commenters also stated that the AMA RUC-recommended physician time 
should be restored.
    Response: Based on the public comments received, we referred CPT 
60240 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 16.22, which was 
consistent with the AMA RUC recommendation to maintain the current (CY 
2011) work RVU for CPT code 60240. The current (CY 2011) work RVU for 
this service was developed when this service was typically furnished in 
the inpatient setting. As this service is now typically furnished in 
the outpatient setting, we believe that it is reasonable to expect that 
there have been changes in medical practice for these services, and 
that such changes would represent a decrease in physician time or 
intensity or both. However, the AMA RUC-recommendation and refinement 
panel results do not reflect a decrease in physician work. We do not 
believe it is appropriate for this service, which is typically 
furnished on an outpatient basis, to continue to reflect work that is 
typically associated with an inpatient service. In order to ensure 
consistent and appropriate valuation of physician work, we believe it 
is appropriate to apply our methodology described previously to address 
23-hour stay site-of-service anomalies finalized in the CY 2011 PFS 
final rule with comment period (75 FR 73220). Therefore, we are 
finalizing a work RVU for CPT code 60240 of 15.04. In addition, after 
reviewing the descriptions of the AMA RUC-recommended time packages, we 
disagree with the post-service time recommended by the AMA RUC. 
Therefore, we are finalizing a pre-service time of 40 minutes, a pre-
service positioning time of 12 minutes, a pre-service (dress, scrub, 
wait) time of 20 minutes, an intra-service time of 150 minutes, and a 
post-service time of 40 minutes. We are also reducing the hospital 
discharge day by 0.5 for CPT code 60240. CMS time refinements can be 
found in Table 16.
(23) Endocrine System: Parathyroid, Thymus, Adrenal Glands, Pancreas, 
and Cartoid Body (CPT Code 60500)
    As detailed in the Fourth Five-Year Review of Work (76 FR 32454), 
for CPT code 60500 (Parathyroidectomy or exploration of 
parathyroid(s)), we proposed a work RVU of 15.60 for CY 2012. Medicare 
PFS claims data indicated that CPT code 60500 is typically furnished as 
an outpatient rather than inpatient service. Using magnitude 
estimation, the AMA RUC believed the current work RVU of 16.78 for CPT 
code 60500 was appropriate. Therefore, in accordance with our 
methodology to address 23-hour stay and site-of-service anomalies 
described in section III.A. of this final rule with comment period, for 
CPT code 60500, we removed the hospital visit, reduced the discharge 
day management service by one-half, and adjusted times. The AMA RUC 
recommended maintaining the current work RVU of 16.78 for CPT code 
60500.
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
15.60 for CPT code 60500 and believe that the AMA RUC-recommended work 
RVU of 16.78 is more appropriate. Additionally, commenters noted that 
the CMS value was derived from the reverse building block methodology, 
which removed the hospital visit and reduced the discharge day 
management service to one-half. Commenters also stated that the AMA RUC 
originally valued this service using magnitude estimation based on 
comparison reference codes, and requested that CMS accept the AMA RUC 
recommended work RVU of 16.78 for CPT code 60500. Commenters also 
stated that the AMA RUC recommended physician time should be restored.
    Response: Based on the public comments received, we referred CPT 
60500 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 16.78, which was 
consistent with the AMA RUC recommendation to maintain

[[Page 73145]]

the current (CY 2011) work RVU for CPT code 60500. The current (CY 
2011) work RVU for this service was developed when this service was 
typically furnished in the inpatient setting. As this service is now 
typically furnished in the outpatient setting, we believe that it is 
reasonable to expect that there have been changes in medical practice 
for these services, and that such changes would represent a decrease in 
physician time or intensity or both. However, the AMA RUC-
recommendation and refinement panel results do not reflect a decrease 
in physician work. We do not believe it is appropriate for this 
service, which is typically furnished on an outpatient basis, to 
continue to reflect work that is typically associated with an inpatient 
service. In order to ensure consistent and appropriate valuation of 
physician work, we believe it is appropriate to apply our methodology 
described previously to address 23-hour stay site-of-service anomalies. 
Therefore, we are finalizing a work RVU for CPT code 60500 of 15.60. In 
addition, after reviewing the descriptions of the AMA RUC-recommended 
time packages, we disagree with the post-service time recommended by 
the AMA RUC. Therefore, we are finalizing a pre-service time of 40 
minutes, a pre-service positioning time of 12 minutes, a pre-service 
(dress, scrub, wait) time of 20 minutes, an intra-service time of 120 
minutes, and a post-service time of 40 minutes. We are also reducing 
the hospital discharge day by 0.5 for CPT code 60500. CMS time 
refinements can be found in Table 16.
(24) Nervous System: Skull, Meninges, Brain and Extracranial Peripheral 
Nerves, and Autonomic Nervous System (CPT Codes 61781-61885, 64405-
64831)
    We discussed CPT code 61885 (Insertion or replacement of cranial 
neurostimulator pulse generator or receiver, direct or inductive 
coupling; with connection to a single electrode array) in the CY 2011 
final rule with comment period (75 FR 73332) where we noted that this 
code was identified as a site-of-service anomaly code in September 
2007. After reviewing the vagal nerve stimulator family of services, 
the specialty societies agreed that the family lacked clarity and the 
CPT Editorial Panel created three new codes to accurately describe 
revision of a vagal nerve stimulator lead, the placement of the pulse 
generator and replacement or revision of the vagus nerve electrode. For 
CY 2011, the AMA RUC recommended a work RVU of 6.44 for CPT code 61885. 
Although the AMA RUC compared this service to the key reference 
service, CPT code 63685 (Insertion or replacement of spinal 
neurostimulator pulse generator or receiver, direct or inductive 
coupling) (work RVUs = 6.05) and other relative services and noted the 
similarities in times, the AMA RUC elected not to recommend this value 
of 6.05 for CPT code 61885. We believed the AMA RUC-recommended work 
RVUs did not adequately account for the elimination of two inpatient 
visits and the reduction in outpatient visits for this service. We 
disagreed with the AMA RUC recommended value and believed 6.05 work 
RVUs, the survey 25th percentile, was appropriate for this service. 
Therefore, we assigned an alternative value of 6.05 work RVUs to CPT 
code 61885 on an interim final basis for CY 2011.
    Comment: Commenters stated that assumptions by CMS that the RUC 
recommendations did not adequately account for the elimination of two 
inpatient visits and the reduction in outpatient visits for this 
service is flawed. Furthermore, the commenters asserted that the 
rationale in the RUC database indicates that the initial RUC 
recommended value for this code included a reduction in value due to an 
adjustment of the post-operative E/M visits. Commenters recommended we 
accept the AMA RUC-recommended work RVU of 6.44 for CPT code 61885.
    Response: Based on the comments received, we referred CPT code 
61885 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 6.44, which was 
consistent with the AMA RUC-recommendation to maintain the current work 
RVU for this service. We believe that the AMA RUC-recommended work RVUs 
did not adequately account for the elimination of two inpatient visits 
and the reduction in outpatient visits for this service. We believe 
that 6.05 work RVUs, the survey 25th percentile, is appropriate for 
this service. Therefore, we are finalizing a work RVU of 6.05 for CPT 
code 61885 in CY 2012.
    In the Fourth Five-Year Review (76 FR 32455), CMS identified CPT 
code 64405 as potentially misvalued through the Harvard-Valued--
Utilization > 30,000 screen. As detailed in the Fourth Five-Year Review 
of Work, for CPT code 64405 ((Injection, anesthetic agent; greater 
occipital nerve), we proposed a work RVU of 0.94 for CY 2012. The AMA 
RUC reviewed the survey results and recommended the median survey work 
RVU of 1.00 for CPT code 64405. We disagreed with the AMA RUC-
recommended work RVU for CPT code 64405. Upon clinical review and a 
consideration of physician time and intensity, we believed this code is 
comparable to the key reference CPT code 20526 (Injection, therapeutic 
(e.g., local anesthetic, corticosteroid), carpal tunnel) (work RVU = 
0.94).
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
0.94 of CPT code 64405 and believe that the AMA RUC-recommended work 
RVU of 1.00 is more appropriate. The commenters noted survey findings 
stating that 97 percent of the respondents agreed that the vignette 
described the typical patient for this service. Furthermore, the 
commenters stated that CMS does not provide any rationale explaining 
use of CPT code 20526 as a comparison over the AMA RUC vignette and 
survey results. Commenters believed that CMS should give more 
consideration to the survey results when valuing an occipital nerve 
block.
    Response: Based on the public comments received, we referred CPT 
64405 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU supported the AMA RUC-
recommended work RVU of 1.00 for CPT code 64405. We believe that the 
comparison to CPT code 20526 is appropriate for this service and 
related work RVUs. Therefore, we are finalizing a work RVU of 0.94 for 
CPT code 64405.
    For CPT code 64568 (Incision for implantation of cranial nerve 
(e.g., vagus nerve) neurostimulator electrode array and pulse 
generator), the AMA RUC recommended 11.19 work RVUs; however, the 
methodology was unclear. As with CPT code 61885 discussed previously, 
to which this code is related, we conducted a clinical review and 
compared the physician intensity and time associated with providing 
this service and determined that the survey 25th percentile, 9.00 work 
RVUs, was appropriate. Therefore, we assigned an alternative value of 
9.00 work RVUs to CPT code 64568 on an interim final basis for CY 2011 
(75 FR 73332).
    In the CY 2011 PFS final rule with comment period (75 FR 73332), 
for CPT codes 64569 (Revision or replacement of cranial nerve (e.g., 
vagus nerve) neurostimulator electrode array, including connection to 
existing pulse generator) and 64570 (Removal of cranial nerve (e.g., 
vagus nerve) neurostimulator electrode array and pulse generator), we 
assigned interim final work RVUs of 11.00 and 9.10, respectively, for 
CY 2011. In section II.B.3. of this final rule with comment period, we 
described maintaining relativity for the codes in families as a

[[Page 73146]]

priority in the review of misvalued codes. Based on the reduction in 
work RVUs for CPT codes 61885 and 64568 that we adopted on an interim 
final basis for CY 2011, we believed work RVUs of 11.00, the survey 
25th percentile, were appropriate for CPT code 64569 and work RVUs of 
9.10, the survey 25th percentile, were appropriate for CPT code 64570. 
Therefore, we assigned alternative work RVUs of 11.00 to CPT code 64569 
and 9.10 to CPT code 64570 on an interim final basis for CY 2011.
    Comment: Commenters noted that CMS makes its interim 
recommendations based on the selection of a reference code which has 
similar time and intensity. Additionally, commenters asserted that CMS 
does not offer any reference codes to support the proposed interim 
values for any of these services. Moreover, the commenters disagreed 
with CMS's interim final values for 64568, 64569, and 64570, which were 
based on CMS' rationale to support the valuation of 61885, a site-of-
service anomaly code. The commenters requested that CMS accept the AMA 
RUC-recommended values of 11.19 for CPT code 64568.
    Response: Based on the comments received, we referred CPT code 
64568, 64569, and 64570 to the CY 2011 multi-specialty refinement panel 
for further review. Although the refinement panel median work RVUs were 
11.47 for CPT code 64568, 15.00 for CPT code 64569, and 13.00 for 
64570, we believe it is imperative to maintain appropriate relativity 
within the code family as well as across code families in order to 
ensure accuracy in the entire PFS system. Accordingly, to maintain 
appropriate relativity with CPT code 61885, we are finalizing the 
following work RVUs for CY 2012: 9.00 for CPT code 64568, 11.00 for CPT 
code 64569 and 9.10 for CPT code 64570.
    For CY 2012, we received no public comments on the CY 2011 interim 
final work RVUs for CPT codes 61781, 61782, 61783, 64415, 64445, 64447, 
64479, 64480, 64484, 64566, 64581, 64611, 64708, 64712, 64713, and 
64714. We believe these values continue to be appropriate and are 
finalizing them without modification (Table 15).
    Finally, we received no public comments on the CY 2012 proposed 
work RVUs for CPT codes 64831 and 64708. We believe these values 
continue to be appropriate and are finalizing them without modification 
(Table 15).
(25) Nervous System: Spine and Spinal Cord (CPT Codes 62263-63685)
    As we discussed in the CY 2012 PFS proposed rule (76 FR 42800), CPT 
code 62263 (Percutaneous lysis of epidural adhesions using solution 
injection (e.g., hypertonic saline, enzyme) or mechanical means (e.g., 
catheter) including radiologic localization (includes contrast when 
administered), multiple adhesiolysis sessions; 2 or more days), was 
identified for CY 2009 as potentially misvalued through the site-of-
service anomaly screen. We referred this code back to the AMA RUC for 
review because of our ongoing concern that the AMA RUC did not believe 
the AMA RUC appropriately accounted for the change in site-of-service 
when providing the recommendation for work RVUs. That is, for CY 2009, 
the AMA reviewed survey data, compared this code to other services, and 
concluded that while it was appropriate to remove the inpatient 
subsequent hospital care visits to reflect the current outpatient place 
of service, the AMA RUC recommended maintaining the CY 2008 work RVU 
for this service. We disagreed with the AMA RUC's methodology because 
we believe the appropriate methodology for valuing site-of-service 
anomaly codes entails not just removing the inpatient visits, but also 
accounting for the removal of the inpatient visits in the work value of 
the CPT code. Accordingly, while we accepted the AMA RUC-recommended 
work RVU for this code on an interim basis for CYs 2009 and 2010 (with 
a slight adjustment in CY 2010 due to the consultation code policy (74 
FR 61775)), we referred the code back to the AMA RUC to be reexamined.
    Upon re-review for CY 2012, the AMA RUC reaffirmed its previous 
recommendation and recommended that the current work RVU of 6.54 for 
CPT code 62263 be maintained. In the CY 2012 PFS proposed rule (76 FR 
42800), we indicated that we continue to disagreed with the AMA RUC 
recommended work RVU for this service because we believe the 
appropriate methodology for valuing site-of-service anomaly codes 
entails not just removing the inpatient visits, but also accounting for 
the removal of the inpatient visits in the work value of the CPT code. 
We noted also that the AMA RUC disregarded survey results that 
indicated the respondents believed this service should be valued lower. 
In fact, the median survey work RVU was 5.00. After CMS clinical review 
of this service where we considered this code in comparison to other 
codes in the PFS and accounted for the change in the site-of-service, 
we believed that the survey median work RVU of 5.00 appropriately 
accounted for the removal of the inpatient visits. Therefore, we 
proposed a work RVU of 5.00 for CPT code 62263 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed work RVU, stating 
that they remained concerned that CMS still assumes that the starting 
values for these services were correct. Commenters noted that the AMA 
RUC originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested CMS accept the AMA RUC-recommended work RVU and physician 
time.
    Response: Based on comments received, we referred CPT code 62263 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 6.02. We do not believe that 
either the AMA RUC recommended work RVU or the refinement panel result 
adequately accounts for the removal of all the inpatient visits for 
this service which was originally identified as having a site-of-
service anomaly. As we specified previously, we believe the appropriate 
methodology for valuing site-of-service anomaly codes entails both 
removing the inpatient visits and modifying the work RVU to adequately 
account for the removal of all the inpatient visits originally 
included. In order to ensure consistent and appropriate valuation of 
physician work, we believe it is appropriate to apply our methodology 
to address codes with site-of-service anomalies as discussed in detail 
in section III.A. of this final rule with comment period. After 
consideration of the public comments, refinement panel results, and our 
clinical review, we are assigning a work RVU for CY 2012 of 5.00 for 
CPT code 62263 with refinements to time. CMS time refinements can be 
found in Table 16.
    As we discussed in the CY 2012 PFS proposed rule (76 FR 42800), CPT 
code 62355 (Removal of previously implanted intrathecal or epidural 
catheter) was identified as potentially misvalued through the site-of-
service anomaly screen for CY 2009. The AMA RUC reviewed this service 
and recommended a work RVU of 4.30, approximately midway between the 
survey median and 75th percentile. The AMA RUC also recommended 
removing the inpatient building blocks to reflect the outpatient site-
of-service, removing all but 1 of the post-procedure office visits to 
reflect the shift in global period from 90 days to 10 days, and 
reducing the physician time associated with this service. While we 
accepted the AMA RUC-recommended work RVU for this

[[Page 73147]]

code on an interim basis for CYs 2009 and 2010 (with a slight 
adjustment in CY 2010 due to the consultation code policy (74 FR 
61775)), we referred the code back to the AMA RUC to be reexamined 
because we did not believe the AMA RUC-recommended work RVU fully 
accounted for the reduction in inpatient building blocks to reflect the 
shift to the outpatient setting.
    Upon re-review for CY 2012, the AMA RUC reaffirmed its previous 
recommendation and ultimately recommended that the current work RVU of 
4.35 for CPT code 62355 be maintained. We disagreed with the AMA RUC-
recommended work RVU for CPT code 62355. As stated previously, we 
believed the appropriate methodology for valuing site-of-service 
anomaly codes entails not just removing the inpatient visits, but also 
accounting for the removal of the inpatient visits in the work value of 
the CPT code. We did not believe that the reduction from the CY 2008 
work RVU of 6.60 to the CY 2009 work RVU of 4.30 adequately accounted 
for the removal of 3 subsequent hospital care visits and half a 
discharge management day, which together represent a work RVU of 5.40. 
Also, the time required to furnish this service dropped significantly, 
even after considering the global period change. Upon clinical review, 
we believed that the survey median work RVU of 3.55 appropriately 
accounted for the removal of the inpatient visits and decreased time 
for this service. Therefore, proposed a work RVU of 3.55 for CPT code 
62355 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed work RVU, stating 
that they remained concerned that CMS still assumes that the starting 
values for these services were correct. Commenters noted that the AMA 
RUC originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested CMS accept the AMA RUC-recommended work RVU and physician 
time.
    Response: Based on comments received, we referred CPT code 62355 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 4.18. The AMA RUC recommended 
maintain the current (CY 2011) work RVU of 4.35 for CPT code 62355. 
While the AMA RUC reduced the RVUs for CY 2009, we do not believe the 
AMA RUC-recommended value adequately accounted for the shift from 
inpatient to outpatient and the reduction in office/outpatient visits. 
That is, we do not believe that either the AMA RUC recommended work RVU 
or the refinement panel result adequately accounts for the removal of 
all the inpatient visits for this service which was originally 
identified as having a site-of-service anomaly. As we specified 
previously, we believe the appropriate methodology for valuing site-of-
service anomaly codes entails both removing the inpatient visits and 
modifying the work RVU to adequately account for the removal of all the 
inpatient visits originally included. In order to ensure consistent and 
appropriate valuation of physician work, we believe it is appropriate 
to apply our methodology to address codes with site-of-service 
anomalies as discussed in detail in section III.A. of this final rule 
with comment period. After consideration of the public comments, 
refinement panel results, and our clinical review, we are assigning a 
work RVU for CY 2012 of 3.55 for CPT code 62355.
    As we discussed in the CY 2012 PFS proposed rule (76 FR 42800), CPT 
code 62361 (Implantation or replacement of device for intrathecal or 
epidural drug infusion; nonprogrammable pump) was identified for CY 
2009 as potentially misvalued through the site-of-service anomaly 
screen. The AMA RUC reviewed this code and recommended a work RVU of 
5.60, approximately midway between the survey median and 75th 
percentile. The AMA RUC also recommended removing the inpatient visits 
to reflect the outpatient site-of-service, removing all but 1 of the 
post procedure office visits to reflect the shift in global period from 
90 days to 10 days, and reducing the physician time associated with 
this service. While we accepted the AMA RUC's recommended work RVU for 
this code on an interim basis for CYs 2009 and 2010 (with a slight 
adjustment to 5.65 work RVUs in CY 2010 due to the consultation code 
policy (74 FR 61775)), we referred the code back to the AMA RUC to be 
reexamined because we did not believe the AMA RUC recommended work RVU 
fully accounted for the reduction in inpatient building blocks to 
reflect the shift to the outpatient setting.
    Upon re-review for CY 2012, the AMA RUC reaffirmed its previous 
recommendation and ultimately recommended that the work RVU of 5.65 for 
CPT code 62361 be maintained. We disagreed with the AMA RUC-recommended 
work RVU for CPT code 62361. As stated previously, we believe the 
appropriate methodology for valuing site-of-service anomaly codes 
entails not just removing the inpatient visits, but also accounting for 
the removal of the inpatient visits in the work value of the CPT code. 
We did not believe that the reduction from the CY 2008 work RVU of 6.59 
to the CY 2009 work RVU of 5.60 adequately accounted for the removal of 
3 subsequent hospital care visits and half a discharge management day, 
which together represent a work RVU of 5.40. Also, the time required to 
furnish this service dropped significantly, even after considering the 
global period change. Upon clinical review, we believed that the survey 
25th percentile work RVU of 5.00 appropriately accounted for the 
removal of the inpatient visits and decreased time for this service. 
Therefore, we proposed a work RVU of 5.00 for CPT code 62361 for CY 
2012.
    Comment: Commenters disagreed with CMS' proposed work RVU, stating 
that they remained concerned that CMS still assumes that the starting 
values for these services were correct. Commenters noted that the AMA 
RUC originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested CMS accept the AMA RUC-recommended work RVU and physician 
time.
    Response: Based on comments received, we referred CPT code 62361 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 5.48. The AMA RUC recommended 
maintaining the current work RVU of 5.65 for CPT code 62361. We do not 
believe that either the AMA RUC recommended work RVU or the refinement 
panel result adequately accounts for the removal of all the inpatient 
visits for this service which was originally identified as having a 
site-of-service anomaly. As we specified previously, we believe the 
appropriate methodology for valuing site-of-service anomaly codes 
entails both removing the inpatient visits and modifying the work RVU 
to adequately account for the removal of all the inpatient visits 
originally included. In order to ensure consistent and appropriate 
valuation of physician work, we believe it is appropriate to apply our 
methodology to address codes with site-of-service anomalies as 
discussed in detail in section III.A. of this final rule with comment 
period. After consideration of the public comments, refinement panel 
results, and our clinical review, we are assigning a work RVU for CY 
2012 of 5.00 for CPT code 62361.
    As we discussed in the CY 2012 PFS proposed rule (76 FR 42800), CPT 
code 62362 (Implantation or replacement of device for intrathecal or 
epidural drug

[[Page 73148]]

infusion; programmable pump, including preparation of pump, with or 
without programming) was identified for CY 2009 as potentially 
misvalued through the site-of-service anomaly screen. The AMA RUC 
reviewed the code and recommended a work RVU of 6.05, approximately 
midway between the survey median and 75th percentile. The AMA RUC also 
recommended removing the inpatient visits to reflect the outpatient 
site-of-service, removing all but 1 of the post procedure office visits 
to reflect the shift in global period from 90 days to 10 days, and 
reducing the physician time associated with this service. While we 
accepted the AMA RUC's recommended work RVU for this code on an interim 
basis for CYs 2009 and 2010 (with a slight adjustment to 6.10 work RVUs 
in CY 2010 due to the consultation code policy (74 FR 61775)), we 
referred the code back to the AMA RUC to be reexamined because we did 
not believe the AMA RUC-recommended work RVU fully accounted for the 
reduction in inpatient building blocks to reflect the shift to the 
outpatient setting. Upon re-review for CY 2012, the AMA RUC reaffirmed 
its previous recommendation and ultimately recommended that the current 
work RVU of 6.10 for CPT code 62362 be maintained. We disagree with the 
AMA RUC-recommended work RVU for CPT code 62362. As stated previously, 
we believed the appropriate methodology for valuing site-of-service 
anomaly codes entails not just removing the inpatient visits, but also 
accounting for the removal of the inpatient visits in the work value of 
the CPT code. We do not believe that the reduction from the CY 2008 
work RVU of 8.58 to the CY 2009 work RVU of 6.05 adequately accounts 
for the removal of 3 subsequent hospital care visits and half a 
discharge management day, which together represent a work RVU of 5.40. 
Also, the time required to furnish this service dropped significantly, 
even after considering the global period change. Upon clinical review, 
we believed that the survey median work RVU of 5.60 appropriately 
accounted for the removal of the inpatient visits and decreased time 
for this service. Therefore, we proposed a work RVU of 5.60 for CPT 
code 62362 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed work RVU, stating 
that they remained concerned that CMS still assumes that the starting 
values for these services were correct. Commenters noted that the AMA 
RUC originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested CMS accept the AMA RUC-recommended work RVU and physician 
time.
    Response: Based on comments received, we referred CPT code 62362 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 5.95. The AMA RUC recommended 
maintaining the current work RVU of 6.10 for CPT code 62362. The 
current (CY 2011) work RVU for this service was developed when this 
service was typically furnished in the inpatient setting. As this 
service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not 
adequately reflect a decrease in physician work. We do not believe that 
either the AMA RUC recommended work RVU or the refinement panel result 
adequately accounts for the removal of all the inpatient visits for 
this service which was originally identified as having a site-of-
service anomaly. As we specified previously, we believe the appropriate 
methodology for valuing site-of-service anomaly codes entails both 
removing the inpatient visits and modifying the work RVU to adequately 
account for the removal of all the inpatient visits originally 
included. In order to ensure consistent and appropriate valuation of 
physician work, we believe it is appropriate to apply our methodology 
to address codes with site-of-service anomalies as discussed in detail 
in section III.A. of this final rule with comment period. After 
consideration of the public comments, refinement panel results, and our 
clinical review, we are assigning a work RVU for CY 2012 of 5.60 for 
CPT code 62362.
    As we discussed in the CY 2012 PFS proposed rule (76 FR 42801), CPT 
code 62365 (Removal of subcutaneous reservoir or pump, previously 
implanted for intrathecal or epidural infusion) was identified for CY 
2009 as potentially misvalued through the site-of-service anomaly 
screen. The AMA RUC reviewed this service and recommended a work RVU of 
4.60, the survey median. Additionally, the AMA RUC recommended removing 
the inpatient visits to reflect the outpatient site-of-service, 
removing all but 1 of the post-procedure office visits to reflect the 
shift in global period from 90 days to 10 days, and reducing the 
physician time associated with this service. While we accepted the AMA 
RUC's recommended work RVU for this code on an interim basis for CYs 
2009 and 2010 (with a slight adjustment to 4.65 work RVUs in CY 2010 
due to the consultation code policy (74 FR 61775)), we referred the 
code back to the AMA RUC to be reexamined because we did not believe 
the AMA RUC-recommended work RVU fully accounted for the reduction in 
inpatient building blocks to reflect the shift to the outpatient 
setting.
    Upon re-review for CY 2012, the AMA RUC reaffirmed its previous 
recommendation and ultimately recommended that the current work RVU of 
4.65 for CPT code 62365 be maintained. We disagreed with the AMA RUC 
recommended work RVU for CPT code 62365. As stated previously, we 
believed the appropriate methodology for valuing site-of-service 
anomaly codes entails not just removing the inpatient visits, but also 
accounting for the removal of the inpatient visits in the work value of 
the CPT code. We did not believe that the reduction from the CY 2008 
work RVU of 6.57 to the CY 2009 work RVU of 4.60 adequately accounted 
for the removal of 3 subsequent hospital care visits and half a 
discharge management day, which together represent a work RVU of 5.40. 
Also, the time required to furnish this service dropped significantly, 
even after considering the global period change. We believed that this 
service is similar in terms of time intensity to that of CPT code 33241 
(Subcutaneous removal of single or dual chamber pacing cardioverter-
defibrillator pulse generator) which has a work RVU of 3.29 but does 
not include a half day of discharge management service. Upon clinical 
review, we believed that a work RVU of 3.93, that is a work RVU of 3.29 
plus a work RVU of 0.64 to account for the half day of discharge 
management service, appropriately accounted for the removal of the 
inpatient visits and decreased time for this service. Therefore, we 
proposed a work RVU of 3.93 for CPT code 62365 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed work RVU, stating 
that they remained concerned that CMS still assumes that the starting 
values for these services were correct. Commenters noted that the AMA 
RUC originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested CMS accept the AMA RUC-recommended work RVU and physician 
time.

[[Page 73149]]

    Response: Based on comments received, we referred CPT code 62365 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 4.40. The AMA RUC recommended 
maintaining the current work RVU of 4.65 for CPT code 62365. The 
current (CY 2011) work RVU for this service was developed when this 
service was typically furnished in the inpatient setting. As this 
service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not 
adequately reflect a decrease in physician work. We do not believe that 
either the AMA RUC recommended work RVU or the refinement panel result 
adequately accounts for the removal of all the inpatient visits for 
this service which was originally identified as having a site-of-
service anomaly. As we specified previously, we believe the appropriate 
methodology for valuing site-of-service anomaly codes entails both 
removing the inpatient visits and modifying the work RVU to adequately 
account for the removal of all the inpatient visits originally 
included. In order to ensure consistent and appropriate valuation of 
physician work, we believe it is appropriate to apply our methodology 
to address codes with site-of-service anomalies as discussed in detail 
in section III.A. of this final rule with comment period. After 
consideration of the public comments, refinement panel results, and our 
clinical review, we are assigning a work RVU for CY 2012 of 3.93 for 
CPT code 62365.
    As we discussed in the CY 2012 PFS proposed rule (76 FR 42802), CPT 
code 63650 (Percutaneous implantation of neurostimulator electrode 
array, epidural) or mechanical means (such as, catheter) including 
radiologic localization (includes contrast when administered), multiple 
adhesiolysis sessions; 2 or more days, was identified for CY 2009 as 
potentially misvalued through the site-of-service anomaly screen. The 
AMA RUC reviewed this service and recommended the survey median work 
RVU of 7.15 as well as removing the inpatient subsequent hospital care 
visits to reflect the current outpatient place of service. While we 
accepted the AMA RUC's recommended work RVU for this code on an interim 
basis for CYs 2009 and 2010 (with a slight adjustment to 7.20 work RVUs 
in CY 2010 due to the consultation code policy (74 FR 61775)), we 
referred the code back to the AMA RUC to be reexamined because we did 
not believe the AMA RUC-recommended work RVU fully accounted for the 
reduction in inpatient building blocks to reflect the shift to the 
outpatient setting.
    Upon re-review for CY 2012, the AMA RUC reaffirmed its previous 
recommendation and ultimately recommended that the current work RVU of 
7.20 for CPT code 63650 be maintained. We disagreed with the AMA RUC-
recommended work RVU of 7.20 for CPT code 63650. As stated previously, 
we believed the appropriate methodology for valuing site-of-service 
anomaly codes entails not just removing the inpatient visits, but also 
accounting for the removal of the inpatient visits in the work value of 
the CPT code. Upon clinical review, we believed that the survey median 
work RVU of 7.15 appropriately accounted for the removal of the 
inpatient visits, as well as the physician time and post-operative 
office visit changes. Therefore, we proposed a work RVU of 7.15 for CPT 
code 63650 for CY 2012.
    Comment: Commenters disagreed with CMS' proposed work RVU, stating 
that they remained concerned that CMS still assumes that the starting 
values for these services were correct. Commenters noted that the AMA 
RUC originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested CMS accept the AMA RUC-recommended work RVU and physician 
time.
    Response: Based on comments received, we referred CPT code 63650 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 7.18. The AMA RUC recommended 
maintaining the current work RVU of 7.20 for CPT code 63650. The 
current (CY 2011) work RVU for this service was developed when this 
service was typically furnished in the inpatient setting. As this 
service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not 
adequately reflect a decrease in physician work. That is, we do not 
believe that either the AMA RUC recommended work RVU or the refinement 
panel result adequately accounts for the removal of all the inpatient 
visits for this service which was originally identified as having a 
site-of-service anomaly. As we specified previously, we believe the 
appropriate methodology for valuing site-of-service anomaly codes 
entails both removing the inpatient visits and modifying the work RVU 
to adequately account for the removal of all the inpatient visits 
originally included. In order to ensure consistent and appropriate 
valuation of physician work, we believe it is appropriate to apply our 
methodology to address codes with site-of-service anomalies as 
discussed in detail in section III.A. of this final rule with comment 
period. After consideration of the public comments, refinement panel 
results, and our clinical review, we are assigning a work RVU for CY 
2012 of 7.15 for CPT code 63650.
    As discussed in the Fourth Five-Year Review of Work (76 FR 32454), 
CMS identified CPT code 63655 (Laminectomy for implantation of 
neurostimulator electrodes, plate/paddle, epidural) as potentially 
misvalued through the Site-of-Service Anomaly screen. The AMA RUC 
recommended maintaining the current work RVU of 11.56, as well as the 
current physician time components. We disagreed with the AMA RUC-
recommended work RVU for CPT code 63655. We noted that according to the 
survey data provided by the AMA RUC, of the 90 percent of respondents 
that stated they furnish the procedure ``in the hospital,'' 18 percent 
stated that the patient is ``discharged the same day'' and 55 percent 
stated that the patient was ``kept overnight (less than 24 hours).'' 
Given that the most recently available Medicare PFS claims data 
continue to show the typical case is not an inpatient, and that the 
survey data for this code suggested the typical case is a 23-hour stay 
service, we believed it was appropriate to apply our established policy 
and reduce the discharge day management service to one-half. 
Accordingly, we proposed an alternative work RVU of 10.92 with 
refinements in time for CPT code 63655 for CY 2012.
    Comment: Commenters disagreed with the CMS proposed work RVU of 
10.92 for CPT code 63655 and believed that the AMA RUC recommended work 
RVU of 11.56 was more appropriate. Commenters believed that there was 
no evidence that the work of this procedure, which includes a full 
laminectomy, has changed since April 2009. In addition, commenters 
noted that complete 2008 Medicare utilization data shows that 63655 was 
billed 51.2 percent in the inpatient hospital setting,

[[Page 73150]]

questioning whether it was appropriate for this service to be on the 
``site of service'' change list at all since it was so close to 50 
percent, the threshold which defines ``typical.''
    Response: Based on the public comments received, we referred CPT 
63655 to the CY 2011 Multi-Specialty Refinement Panel for further 
review. The refinement panel median work RVU was 11.56, which was 
consistent with the the AMA RUC recommendation to maintain the current 
work RVU for CPT code 63655. The current (CY 2011) work RVU for this 
service was developed when this service was typically furnished in the 
inpatient setting. As this service is now typically furnished in the 
outpatient setting, we believe that it is reasonable to expect that 
there have been changes in medical practice for these services, and 
that such changes would represent a decrease in physician time or 
intensity or both. However, the AMA RUC-recommendation and refinement 
panel results do not adequately reflect a decrease in physician work. 
We do not believe it is appropriate for this service, which is 
typically furnished on an outpatient basis, to continue to reflect work 
that is typically associated with an inpatient service. We note that 50 
percent defines ``typical'' for purposes of valuing services under the 
PFS. In order to ensure consistent and appropriate valuation of 
physician work, we believe it is appropriate to apply our methodology 
described previously to address 23-hour stay site-of-service anomalies. 
Therefore, we are finalizing a work RVU for CPT code 63655 of 10.92 for 
CY 2012. We are also finalizing the proposed refinements to time. CMS 
time refinements can be found in Table 16.
    As we discussed in the CY 2012 PFS proposed rule (76 FR 42802), CPT 
code 63685 (Insertion or replacement of spinal neurostimulator pulse 
generator or receiver, direct or inductive coupling) was identified for 
CY 2009 as potentially misvalued through the site-of-service anomaly 
screen. The AMA RUC reviewed this service and recommended the survey 
median work RVU of 6.00. The AMA RUC also recommended removing the 
inpatient subsequent hospital care visits to reflect the current 
outpatient place of service. While we accepted the AMA RUC's 
recommended work RVU for this code on an interim basis for CYs 2009 and 
2010 (with a slight adjustment to the work RVUs in CY 2010 due to the 
consultation code policy (74 FR 61775)), we referred the code back to 
the AMA RUC to be reexamined because we did not believe the AMA RUC-
recommended work RVU fully accounted for the reduction in inpatient 
building blocks to reflect the shift to the outpatient setting.
    Upon re-review for CY 2012, the AMA RUC affirmed its previous 
recommendation and ultimately recommended that the current work RVU for 
CPT code 63685 be maintained. We disagreed with the AMA RUC-recommended 
work RVU of 6.05 for CPT code 63685. As stated previously, we believed 
the appropriate methodology for valuing site-of-service anomaly codes 
entails not just removing the inpatient visits, but also accounting for 
the removal of the inpatient visits in the work value of the CPT code. 
Upon clinical review, we believed that the survey 25th percentile work 
RVU of 5.19 appropriately accounted for the removal of the inpatient 
visits, as well as the physician time and post-operative office visit 
changes. Therefore, we proposed a work RVU of 5.19 for CPT code 63685 
for CY 2012.
    Comment: Commenters disagreed with CMS' proposed work RVU, stating 
that they remained concerned that CMS still assumes that the starting 
values for these services were correct. Commenters noted that the AMA 
RUC originally valued this service using magnitude estimation based on 
comparison reference codes, which considers the total work of the 
service rather than the work of the component parts of the service, and 
requested CMS accept the AMA RUC-recommended work RVU and physician 
time.
    Response: Based on comments received, we referred CPT code 63685 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 5.78. The AMA RUC recommended 
maintaining the current work RVU of 6.05 for CPT code 63685. The 
current (CY 2011) work RVU for this service was developed when this 
service was typically furnished in the inpatient setting. As this 
service is now typically furnished in the outpatient setting, we 
believe that it is reasonable to expect that there have been changes in 
medical practice for these services, and that such changes would 
represent a decrease in physician time or intensity or both. However, 
the AMA RUC-recommendation and refinement panel results do not 
adequately reflect a decrease in physician work. That is, we do not 
believe that either the AMA RUC recommended work RVU or the refinement 
panel result adequately accounts for the removal of all the inpatient 
visits for this service which was originally identified as having a 
site-of-service anomaly. As we specified previously, we believe the 
appropriate methodology for valuing site-of-service anomaly codes 
entails both removing the inpatient visits and modifying the work RVU 
to adequately account for the removal of all the inpatient visits 
originally included. In order to ensure consistent and appropriate 
valuation of physician work, we believe it is appropriate to apply our 
methodology to address codes with site-of-service anomalies as 
discussed in detail in section III.A. of this final rule with comment 
period. After consideration of the public comments, refinement panel 
results, and our clinical review, we are assigning a work RVU for CY 
2012 of 5.19 for CPT code 63685.
    We received no public comments on the CY 2011 final rule with 
comment period interim work RVUs for CPT codes 63075 and 63076. We 
received no public comments on the Fourth Five-Year Review of Work 
proposed work RVUs for CPT code 62284. Finally, we also received no 
public comments on the CY 2012 PFS proposed rule proposed work RVUs for 
CPT codes 62360 and 62350. We believe these values continue to be 
appropriate and are finalizing them without modification (Table 15).
(26) Eye and Ocular Adnexa: Eyeball (CPT Codes 65285)
    As detailed in the CY 2012 PFS proposed rule (76 FR 42802), we 
identified CPT code 65285 (Repair of laceration; cornea and/orsclera, 
perforating, with reposition or resection of uveal tissue) as a 
potentially misvalued code through the site-of-service anomaly screen 
in 2009. The AMA RUC recommended removing the CPT code from the site-
of-service anomaly list and maintaining the CY 2008 work RVUs (14.43), 
physician times, and visits. In the CY 2010 PFS final rule with comment 
period, while we adopted the AMA RUC-recommended work value on an 
interim final basis and referred the service back to the AMA RUC to be 
reexamined, the work RVU for CPT code 65285 used under the PFS was 
increased to 14.71 based on the redistribution of RVUs that resulted 
from the our policy to no longer recognize the CPT consultation codes 
(74 FR 61775).
    In the CY 2012 PFS proposed rule (76 FR 42802), we proposed to 
apply the 23-hour stay methodology described in section III.A. of this 
final rule with comment period. That is, we reduced the one day of 
discharge management service to one-half day, and adjusted physician 
work RVUs and times accordingly. As a result, we proposed a work RVU of 
15.36 with refinements to

[[Page 73151]]

the time for CPT code 65285 for CY 2012. CMS time refinements can be 
found in Table 16. The AMA RUC recommended a work RVU of 16.00 for CPT 
code 65285 for CY 2012.
    Comment: Commenters disagreed with the CMS proposed work RVU of 
15.36, and requested that CMS accept the AMA RUC-recommended work RVU 
of 16.00 for CPT code 65285. Commenters stated that the AMA RUC-
recommended RVU was more appropriate because the intensity of and 
complexity of the procedure has increased due to enhanced microsurgical 
technology, improvements in suture and graft materials and new 
pharmaceuticals that control post operative complications. Commenters 
also disagreed with applying the site-of-service methodology of 
reducing the discharge management service to one-half day when the AMA 
RUC's valuation was not based on a building block methodology.
    Response: Based on the comments we received, we referred CPT code 
65285 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 16.00, which was 
consistent with the AMA RUC recommendation. The AMA RUC-recommended 
work value for this service included a full discharge day management 
service, which we do not believe is appropriate for an outpatient 
service. As this service is now typically furnished in the outpatient 
setting, we believe that it is reasonable to expect that there have 
been changes in medical practice for these services, and that such 
changes would represent a decrease in physician time or intensity or 
both. However, we do not believe the AMA RUC-recommendation and 
refinement panel results adequately reflect a decrease in physician 
work. We do not believe it is appropriate for this service to continue 
to reflect work that is typically associated with an inpatient service. 
In order to ensure consistent and appropriate valuation of physician 
work, we believe it is appropriate to apply our methodology to address 
site-of-service anomalies as discussed in section III.A. of this final 
rule with comment period. After consideration of the public comments, 
refinement panel results, and our clinical review, we are finalizing a 
work RVU of 15.36, with time refinements, for CPT code 65285.
    For CY 2012, we receive no public comments on the CY 2011 interim 
final work RVUs for CPT codes 65778 through 65780, 66174, 66175, and 
66761. We believe these values continue to be appropriate and are 
finalizing them without modification (Table 15).
(27) Eye and Ocular Adnexa: Posterior Segment (CPT Code 67028)
    CPT code 67028 (Intravitreal injection of a pharmacologic agent 
(separate procedure) was identified for review by the Five-Year 
Identification Workgroup through the High Volume CMS Fastest Growing 
Screen. For CY 2011, the AMA RUC reviewed the survey results, compared 
the code to other services, and concluded that CPT code 67028 was 
similar in both physician time and intensity to another eye injection 
code, CPT code 67500 (retrobulbar injection: Medication). Accordingly, 
the AMA RUC recommended accepting the specialty society recommended 
time and directly crosswalking the work RVUs of CPT code 67500 of 1.44 
to CPT code 67028. Upon clinical review, we agreed that these two 
services are similar and therefore assigned a CY 2011 interim final 
work RVU of 1.44 to CPT code 67028 (75 FR 73732).
    Comment: Commenters strongly disputed the AMA RUC-recommended work 
RVU for CPT code 67028 that CMS accepted as the interim final value for 
CY 2011. Commenters asserted that a comparison of CPT code 67028 to CPT 
code 67500 shows that the AMA RUC significantly underestimated the 
physician work of CPT code 67028. Commenters believed that injecting 
medication directly into the vitreous of the eye is more intense, 
carries more risk, requires more training and is inherently more 
stressful than injecting medication around the external areas of the 
eye and that this difference should be recognized in a relative value 
system with a higher physician work value. The commenters requested 
this code be discussed at the CY 2011 refinement panel and recommended 
a value of 2.12 work RVUs be finalized for CPT code 67028, instead of 
the interim final value of 1.44.
    Response: Based on comments received, we referred CPT code 67028 to 
the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel median work RVU was 1.96. Upon clinical review, we 
believe that the physician work of CPT code 67028 is similar to that of 
CPT code 67500. We find it compelling that the specialty-recommended 
time for this code is similar to the reference code and that the AMA 
RUC has also concluded that the services are similar in both time and 
intensity. Accordingly, we are assigning final work RVU of 1.44 to CPT 
code 67028 for CPT code 67028.
(28) Diagnostic Radiology: Chest, Spine, and Pelvis (CPT Codes 71250, 
72100, 72110, 72120, 72125, 72128, 72131, 72144, and 72170)
    As we discussed in the CY 2011 final rule with comment period (75 
FR 73340), CPT Code 71250 (Computed tomography, thorax; without 
contrast material) was identified as a potentially misvalued code by 
the Five-Year Review Identification Workgroup under the ``CMS Fastest 
Growing'' potentially misvalued codes screen. While the AMA RUC 
recommended the survey results for physician times, the AMA RUC 
believed maintaining the code's current value of 1.16 work RVUs was 
more appropriate, noting that this recommended value is slightly lower 
than the survey 25th percentile of 1.20. We disagreed with the AMA 
RUC's CY 2011 work RVU recommendation to maintain the current value for 
CPT code 71250 and similar codes. As we noted in the CY 2011 final rule 
with comment period (75 FR 73340), we were increasingly concerned over 
the validity of accepting work valuations based upon surveys conducted 
on existing codes as we have noticed a pattern of predictable survey 
results. Increasingly, rather than recommending the median survey value 
that has historically been most commonly used, the AMA RUC has been 
choosing to recommend the 25th percentile value, potentially responding 
to the same concern we have identified. Therefore, based on our concern 
that CT codes would continue to be misvalued if we were to accept the 
AMA RUC recommendation to maintain the current value, we assigned an 
alternative value of 1.00 work RVUs (the survey low value) to CPT code 
71250 on an interim final basis for CY 2011.
    Also in the CY 2011 final rule with comment period (75 FR 73341), 
we noted CPT codes 72125 (Computed tomography, cervical spine; without 
contrast material), 72128 (Computed tomography, thoracic spine; without 
contrast material), and 72131 (Computed tomography, lumbar spine; 
without contrast material) were also identified as potentially 
misvalued codes by the Five-Year Review Workgroup under the ``CMS 
Fastest Growing'' screen for potentially misvalued codes. For CPT code 
72125, the AMA RUC concurred with the specialty-recommended times but 
concluded that it was appropriate to maintain the current work RVUs of 
1.16. Similarly, for CPT codes 72128 and 72131, the AMA RUC accepted 
the survey physician times, but also disregarded the median survey work 
RVU results in favor of recommending

[[Page 73152]]

maintaining the current values. Upon clinical review of these codes in 
this family, we were concerned over the validity of the survey results 
since the survey 25th percentile values are very close to the current 
value of 1.16 RVUs for the code. As we stated previously, we were 
concerned that this pattern may indicate a bias in the survey results. 
Therefore, based on our concern that the CT codes would continue to be 
misvalued if we were to accept the AMA RUC recommendation to maintain 
the current values, we assigned alternative work RVUs of 1.00 (the 
survey low value) to CPT codes 72125, 72128, and 72131 on an interim 
final basis for CY 2011.
    Comment: Commenters acknowledged that the existing RVUs are 
available within the public domain and are accessible on the CMS Web 
site, however, the commenters doubted this influenced the RVU choices 
among the respondents. The commenters noted that the survey respondents 
are provided with reference codes to which they may compare services in 
order to maintain relativity within the system. Furthermore, some 
commenters noted that ``other data used by the RUC to validate the RVUs 
chosen by most respondents, such as the existing service period times 
and those of the reference services, are not readily available to the 
respondents and the RUC methodology of evaluating survey results is 
even less accessible.'' Thus, commenters ``believe CMS' conclusion that 
bias was interjected into the survey process is unwarranted.'' The 
commenters requested CMS accept the AMA RUC recommended work RVU 
instead.
    Response: Based on comments received, we referred CPT codes 71250, 
72125, 72128, and 72131 to the CY 2011 multi-specialty refinement panel 
for further review. The refinement panel median work RVUs were 1.02 for 
CPT code 71250, 1.07 for CPT code 72125, 1.00 for CPT code 72128, and 
1.00 for CPT code 72131. As a result of the refinement panel ratings 
and clinical review by CMS, we are assigning CY 2012 final work RVU of 
1.02 to CPT code 71250, 1.07 to CPT code 72125, 1.00 to CPT code 72128, 
and 1.00 to 72131.
(29) Diagnostic Radiology: Upper and Lower Extremities (CPT Codes 
73030-73700)
    As discussed in the CY 2011 final rule with comment period (75 FR 
73341), CPT codes 73200 (Computed tomography, upper extremity; without 
contrast material) and 73700 (Computed tomography, lower extremity; 
without contrast material) were identified as potentially misvalued 
codes by the Five-Year Review Workgroup under the ``CMS Fastest 
Growing'' screen for potentially misvalued codes. Our clinical review 
of CPT codes 73200 and 73700, as with the other CT codes previously 
discussed, concluded that maintaining the current values would result 
in an overvaluing of this type of service. Similar to the other CT 
codes previously discussed, the AMA RUC reviewed the survey results and 
accepted the survey physician times but recommended maintaining the 
current work RVUs of 1.09 for both of these services. We remain 
concerned over the validity of the survey results. Therefore, based on 
our concern that CT codes would continue to be misvalued if we were to 
accept the AMA RUC recommendation to maintain the current values, we 
assigned alternative work RVUs of 1.00 (the survey low RVU value) to 
CPT codes 73200 and 73700 on an interim final basis for CY 2011.
    Comment: Commenters believed the surveys were valid and noted the 
high response rate relative to other specialty societies' surveys 
conducted on codes with known current values. The commenters asserted 
the AMA RUC's review was rigorous and urged CMS to accept the AMA RUC 
recommended work RVUs for CT codes.
    Response: Based on comments received, we referred CPT codes 73200 
and 73700 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 1.00 for CPT code 
73200 and 1.00 for CPT code 73700. As a result of the refinement panel 
ratings and clinical review by CMS, we are assigning CY 2012 final work 
RVU of 1.00 to CPT code 73200 and 1.00 to CPT code 73700.
    Furthermore, for CY 2012, we received no public comments on the CY 
2011 interim final work RVUs for CPT codes 73080, 73510, 73610, and 
73630. We believe these values continue to be appropriate and are 
finalizing them without modification (Table 15).
(30) Diagnostic Ultrasound: Extremities (CPT Codes 76881-76882)
    As discussed in the CY 2011 final rule with comment period (75 FR 
73332), in October 2008, CPT code 76880 (Ultrasound, extremity, 
nonvascular, real time with image documentation) was identified by the 
Five-Year Review Identification Workgroup through its ``CMS Fastest 
Growing'' screen for potentially misvalued codes. In February 2009, the 
CPT Editorial Panel deleted CPT code 76880 and created two new codes, 
CPT codes 76881 (Ultrasound, extremity, nonvascular, real-time with 
image documentation; complete) and 76882 (Ultrasound, extremity, 
nonvascular, real-time with image documentation; limited anatomic 
specific) to distinguish between the comprehensive diagnostic 
ultrasound and the focused anatomic-specific ultrasound. For CPT code 
76881, the AMA RUC recommended work RVUs of 0.72. For CPT code 76882, 
the AMA RUC recommended 0.50 work RVUs. We noted the predecessor CPT 
code 76880 (Ultrasound, extremity, nonvascular, real time with image 
documentation) described a nonvascular ultrasound of the entire 
extremity and was assigned work RVUs of 0.59. In contrast, the new CPT 
codes describe a complete service, CPT code 76881, and a limited 
service, CPT code 76882 (defined as examination of a specific anatomic 
structure, such as a tendon or muscle). As such, for CPT code 76881, we 
did not believe an increase in work RVUs was justified given that this 
service will be reported for the evaluation of the extremity, as was 
CPT code 76800 which is being deleted for CY 2011. Therefore, we 
assigned a CY 2011 interim work RVU of 0.59 for this service, which is 
consistent with the value of the predecessor code. For CPT code 76882, 
we assigned a CY 2011 interim work RVU of 0.41 to maintain appropriate 
relativity with CPT code 76800.
    Comment: The commenters clarified that based on Medicare claims 
data, podiatry was the dominant provider of the predecessor code 76880 
and their specialty acknowledged that they more commonly furnish a 
limited ultrasound examination, which will now be reported as CPT code 
76882. CPT code 76881 will now be used for the more complete 
examination. The commenters maintained that the AMA RUC-recommended 
values for these two codes were more appropriate than CMS' CY 2011 
interim final values.
    Response: Based on comments received, we referred CPT codes 76881 
and 76882 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 0.63 for CPT code 
76881 and 0.49 for CPT code 76882. As a result of the refinement panel 
ratings and our clinical review, we are assigning CY 2012 final work 
RVU of 0.63 to CPT code 76881 and 0.49 to CPT code 76882.
    Furthermore, for CY 2012, we received no public comments on the CY 
2011 interim final work RVUs for CPT code 74962. We believe these 
values continue to be appropriate and are finalizing them without 
modification (Table 15).

[[Page 73153]]

(31) Radiation Oncology: Radiation Treatment Management (CPT Codes 
77427-77469)
    CPT code 77427 (Radiation treatment management, 5 treatments) was 
identified as a potentially misvalued code by the Five-Year 
Identification Workgroup's ``Site-of-Service Anomalies'' screen for 
potentially misvalued codes in 2007.
    As detailed in the CY 2011 PFS final rule with comment period (75 
FR73341), we assigned a work RVU of 3.37 for CPT code 77427 on an 
interim final basis for CY 2011. We agreed with the AMA RUC's use of 
the building block approach to value the treatment visits associated 
with CPT code 77427. The AMA RUC averaged the number of weekly E/M 
visits, that is, 4 of CPT code 99214 (Level 4 established patient 
office or other outpatient visit) and 2 of CPT code 99213 (Level 3 
established patient office or other outpatient visit) over 6 weeks to 
calculate an E/M building block of 1.32 RVUs. Similarly, to value the 
post-operative office visits associated with this code, the AMA RUC 
calculated a building block of 0.57 to account for the average over 6 
weeks of ``E/M visits after treatment planning.'' The AMA RUC then 
crosswalked the physician times for CPT code 77427 to CPT code 77315 
(Teletherapy, isodose plan (whether hand or computer calculated); 
complex (mantle or inverted Y, tangential ports, the use of wedges, 
compensators, complex blocking, rotational beam, or special beam 
considerations)) and used the value of CPT code 77315 as the remaining 
building block for CPT code 77427.
    Upon clinical review, we modified one of the building blocks that 
the AMA RUC used to calculate the work RVUs associated with the 
treatment E/M office visits. We believed instead of the average based 
upon 4 units of CPT code 99214 and 2 units of CPT code 99213, a more 
appropriate estimation was an average of 3 units of CPT code 99214 and 
3 units of CPT code 99213. Accordingly, we assigned a work RVU of 3.37 
on an interim final basis for CY 2011 for CPT code 77427 (75 FR73341, 
corrected in 76 FR 1670). The AMA RUC recommended a work RVU of 3.45 
for CPT code 77427 based on the use of 4 units of CPT code 99214 and 2 
units of CPT code 99213 (75 FR 73341).
    Comment: Commenters disagreed with the interim final work RVU of 
3.37, and supported the AMA RUC-recommended work RVU of 3.45 for CPT 
code 77427. Commenters agreed with the AMA RUC building block of 4 
units of 99214 and 2 units of 99213, and supported this conclusion with 
comparison to other services, CPT codes 95953 (work RVU = 3.30), 77263 
(work RVU = 3.14), and 90962 (work RVU = 3.15). Commenters requested 
that CMS accept the AMA-RUC building block of 4 units of 99214 and 2 
units of 99213 and a final work RVU of 3.45 for CPT code 77427.
    Response: We appreciate commenters' support for the building block 
method utilized for CPT code 77427. While commenters agree with the AMA 
RUC-recommended E/M building blocks, we continue to believe 3 units of 
CPT code 99214 and 3 units of CPT code 99213 is a more appropriate 
building block for CPT code 77427. Therefore, we are finalizing a work 
RVU of 3.37 for CPT code 77427 in CY 2012.
(32) Nuclear Medicine: Diagnostic (CPT Codes 78264)
    In the Fourth Five-Year Review (76 FR 32455), we identified CPT 
code 78264 as potentially misvalued through the Harvard-Valued--
Utilization > 30,000 screen.
    As detailed in the Fourth Five-Year Review, for CPT code 78264 
(Gastric emptying study), we proposed a work RVU of 0.80 for CPT code 
78264 for CY 2012. We believed the 25th percentile survey value was 
appropriate based on its similarity in physician work to other 
diagnostic tests. The AMA RUC reviewed the survey results and 
recommended the survey median work RVU of 0.95 for CPT code 78264 (76 
FR 32455).
    Comments: Commenters disagreed with the proposed work RVU of 0.80 
for CPT code 78264. Commenters noted that the work and time required to 
furnish the gastric emptying study has substantially changed since its 
last valuation 20 years ago when it was Harvard valued. Commenters 
supported the AMA RUC-recommended work RVU of 0.95 for CPT code 78264, 
the AMA survey median, which they state is supported by comparison to 
the key reference service, CPT code 78707 (work RVU = 0.96, total time 
= 22 minutes). Commenters also compared this service to CPT code 78453 
(work RVU=1.00, total time = 20 minutes), which they stated compared 
favorably to CPT code 78264 and had similar physician time. Commenters 
noted that a work RVU of 0.95 better maintains relativity among other 
services, and requested that CMS accept the AMA RUC-recommended work 
RVU of 0.95.
    Response: Based on comments we received, we referred CPT code 78264 
to the CY 2011 multi-specialty refinement panel for further review. 
Although commenters requested that we accept the AMA RUC-recommended 
work RVU of 0.95, the refinement panel ratings supported our proposed 
work RVU of 0.80. We also continue to believe that the 25th percentile 
survey value is more appropriate based on its similarity to other 
diagnostic test. Therefore, we are finalizing the proposed work RVU of 
0.80 for CPT code 78264 in CY 2012. We also finalized the proposed 
refinements to time, which can be found on the CMS Web site at: https://www.cms.gov/PhysicianFeeSched/.
(33) Pathology and Laboratory: Urinalysis (CPT Codes 88120, 88121, 
88172, 88173, and 88177)
    For CY 2011, the AMA's CPT Editorial Panel created two new 
cytopathology codes that describe in situ hybridization testing using 
urine samples: CPT code 88120 (Cytopathology, in situ hybridization 
(e.g., FISH), urinary tract specimen with morphometric analysis, 3-5 
molecular probes, each specimen; manual) and CPT code 88121 
(Cytopathology, in situ hybridization (e.g., FISH), urinary tract 
specimen with morphometric analysis, 3-5 molecular probes, each 
specimen; using computer-assisted technology). In the CY 2011 PFS final 
rule with comment period (75 FR 73170), we assigned a work RVU of 1.20 
for CPT code 88120 and a work RVU of 1.00 for CPT code 88121 on an 
interim basis for CY 2011. However, as detailed in the CY 2012 PFS 
proposed rule (76 FR 42796), we asked the AMA RUC to review the both 
the direct PE inputs and work values of the following codes in 
accordance with the consolidated approach to reviewing potentially 
misvlaued codes. Therefore, we are maintaining RVUs of 1.20 for CPT 
code 88120 and 1.00 for CPT code 88121 on an interim final basis for CY 
2012, pending the AMA RUC review of these services. For more 
information on CPT codes 88120 and 88121, see section II.B.5.b.1 of 
this final rule with comment period.
    In February 2010, the CPT Editorial Panel revised the descriptor 
for CPT code 88172 (Cytopathology, evaluation of fine needle aspirate; 
immediate cytohistologic study to determine adequacy of specimen(s)) 
and created a new code, CPT code 88177 (Cytopathology, evaluation of 
fine needle aspirate; immediate cytohistologic study to determine 
adequacy for diagnosis, each separate additional evaluation episode, 
same site), to report the first evaluation episode and each additional 
episode of cytopathology evaluation of fine needle aspirate. As 
detailed in the CY 2011 PFS final rule with comment period (75 FR 
73333), we maintained the CY 2010

[[Page 73154]]

work RVU of 0.60 on an interim final basis for CY 2011 because we did 
not believe that the work had changed. While CPT code 88172 was revised 
by the CPT Editorial Panel, the AMA RUC explanation did not adequately 
demonstrate increased work. The AMA RUC recommended work RVUs of 0.69 
based on comparing this code to several other services, which we did 
not find to be an appropriate methodology for valuing CPT code 88172 
(75 FR 73333).
    Comment: Commenters disagreed with the interim final work RVU of 
0.60 assigned to CPT code 88172. Commenters reiterated that CPT code 
88177 was added to differentiate reporting between the first episode 
and each additional episode of cytopathology evaluation of fine needle 
aspirate. Commenters stated that the first episode was more intense 
than the subsequent episodes, and requested that CMS accept the AMA 
RUC-recommended work RVU of 0.69.
    Response: Based on the comments we received, we referred CPT code 
88172 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 0.69. As a result of 
the refinement panel and our clinical review, we are assigning a work 
RVU of 0.69 to CPT code 88172 as a final value.
    For CY 2012, we received no public comments on the CY 2011 interim 
final work RVUs for CPT codes 88173 and 88177. We believe these values 
continue to be appropriate and are finalizing them without modification 
(Table 15).
(34) Immunization Administration for Vaccines/Toxoids (CPT Codes 90460-
90461)
    As detailed in the CY 2011 PFS final rule with comment period (75 
FR 73333), the CPT Editorial Panel revised the reporting of 
immunization administration in the pediatric population in order to 
better align the service with the evolving best practice model of 
delivering combination vaccines. In addition, effective January 1, 
2011, reporting and payment for these services is to be structured on a 
per toxoid basis rather than a per vaccine (combination of toxoids) 
basis as it was in prior years. We maintained the CY 2010 work RVUs for 
the related predecessor codes since these codes would be billed on a 
per toxoid basis in CY 2011. We assigned a work RVU of 0.17 for CPT 
code 90460 (Immunization administration through 18 years of age via any 
route of administration, with counseling by physician or other 
qualified health care profession; first vaccine/toxoid component) and a 
work RVU of 0.15 for CPT code 90461 (Immunization administration 
through 18 years of age via any route of administration, with 
counseling by physician or other qualified health profession; each 
additional vaccine/toxoid component (List separately in addition to 
code for primary procedure)) on an interim final basis for CY 2011. The 
AMA RUC recommended a work RVU of 0.20 for CPT code 90460 and 0.16 for 
CPT code 90461 (75 FR 73333).
    Comment: Commenters disagreed with the CMS-proposed work RVUs of 
0.17 for CPT code 90460 and 0.15 for CPT code 90461, and stated that 
the AMA RUC-recommended work RVUs of 0.20 for CPT code 90460 and 0.16 
for CPT code 90461 are more appropriate. Commenters noted that the 
immunization administration codes were revised to allow physicians to 
accurately report the work involved in counseling for vaccines with 
more than one component. Commenters stressed that it is inappropriate 
to crosswalk CPT codes 90460 and 90461 to their respective predecessor 
codes, 90471 and 90472, given the differences in work involved in 
patient counseling with CPT codes 90460 and 90461.
    Response: Based on comments we received, we referred CPT codes 
90460 and 90461 to the multi-specialty refinement panel for further 
review. The refinement panel median work RVUs were 0.23 for CPT code 
90460 and 0.17 for CPT code 90461, which were higher than the AMA RUC-
recommended values. However, we believe it is appropriate to value 
these services at the same rate as their predecessor codes. We do not 
agree with commenters that the addition of counseling in the code 
descriptor supports increasing the work RVUs because CPT codes 90460 
and 90461 were restructured to be reported on a per toxoid basis, 
rather than a per vaccine (combination of toxoids) basis as it was in 
prior years. After consideration of public comments, refinement panel 
results, and our clinical review, we are finalizing work RVUs of 0.17 
for CPT 90460 and 0.15 for CPT code 90461.
(35) Gastroenterology (CPT Codes 91010-91117)
    For CY 2011 the CPT Editorial Panel restructured a set of CPT codes 
used to describe esophageal motility and high resolution esophageal 
pressure topography services. The specialty societies surveyed their 
members, and the AMA RUC issued recommendations to us for the CY 2011 
PFS final rule with comment period.
    As stated in the CY 2011 PFS final rule with comment period (75 FR 
73338), in the esophageal motility and high resolution esophageal 
pressure topography set of services, for CY 2011 two CPT codes were 
deleted and the services are now reported under a revalued existing CPT 
code 91010 (Esophageal motility (manometric study of the esophagus and/
or gastroesophageal junction) study with interpretation and report; 2-
dimensional data) and a new add-on CPT code 91013 (Esophageal motility 
(manometric study of the esophagus and/or gastroesophageal junction) 
study with interpretation and report; with stimulation or perfusion 
during 2-dimensional data study (e.g., stimulant, acid or alkali 
perfusion) (List separately in addition to code for primary 
procedure)). We agreed with the AMA RUC that there was compelling 
evidence to change the work RVUs for the existing CPT code to account 
for the inclusion of procedures with higher work RVUs that would 
previously have been reported under the deleted code. We also agreed 
with the AMA RUC-recommended work RVUs for the add-on code. However, we 
did not believe that this structural coding change should result in an 
increase in aggregate physician work for the same services. Therefore, 
we believed it would be appropriate to apply work budget neutrality to 
this set of CPT codes. The work budget neutrality factor for these 2 
CPT codes was 0.8500. The AMA RUC-recommended work RVU, CMS-adjusted 
work RVU prior to the budget neutrality adjustment, and the CY 2011 
interim final work RVU for these esophageal motility and high 
resolution esophageal pressure topography procedure codes (CPT codes 
91010 and 91013) follow.

[[Page 73155]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.024

    Comment: Commenters disagreed with the application of work budget 
neutrality to this set of services and noted that the specialty 
societies and AMA RUC agreed that there was compelling evidence to 
change the work RVUs associated with these services. Specifically, 
commenters wrote that they believed that the current value for CPT code 
91010 was based on an incorrect assumption; and that advancements in 
technology have had an impact on physician work since the code was 
originally valued. They went on to state that esophageal manometry is a 
more comprehensive and complex study than it was years ago. Based on 
these arguments, commenters stated that work budget neutrality should 
not be applied to these codes, and urged CMS to accept the AMA RUC-
recommended values for these services.
    Response: Based on comments we received, we referred this set of 
esophageal motility and high resolution esophageal pressure topography 
procedures (CPT codes 91010 and 91013) to the CY 2011 multi-specialty 
refinement panel for further review. The refinement panel median work 
RVUs were 1.50 for CPT code 91010 and 0.21 for CPT code 91013, which 
were consistent with the AMA RUC-recommended values for these services. 
We continue to believe that the application of work budget neutrality 
is appropriate for this set of clinically related CPT codes. While we 
understand that technology has advanced since these codes were 
originally valued, we do not believe that these advancements have 
resulted in more aggregate physician work. As such, we believe that 
allowing an increase in utilization-weighted RVUs within this set of 
clinically related CPT codes would be unjustifiably redistributive 
among PFS services. After consideration of the public comments, 
refinement panel results, and our clinical review, we are finalizing a 
work RVU of 1.28 for CPT code 91010, and a work RVU of 0.18 for CPT 
code 91013 for CY 2012.
    We received no public comments on the CY 2011 final rule with 
comment period interim work RVUs for CPT codes 91038 and 91117. We 
believe these values continue to be appropriate and are finalizing them 
without modification (Table 15).
(36) Opthalmology: Special Opthalmological Services (CPT Codes 92081-
92285)
    In February, 2010 the CPT Editorial Panel established two codes for 
reporting remote imaging for screening retinal disease and management 
of active retinal disease. As detailed in the CY 2011 PFS proposed rule 
(75 FR 73333), for CPT code 92228 (Remote imaging for monitoring and 
management of active retinal disease (e.g., diabetic retinopathy) with 
physician review, interpretation and report, unilateral or bilateral), 
we assigned a work RVU of 0.30 to on an interim final basis for CY 
2011. We compared this code to another diagnostic service, CPT code 
92135 (Scanning computerized ophthalmic diagnostic imaging, posterior 
segment, (e.g., canning laser) with interpretation and report, 
unilateral) (Work RVUs = 0.35), which we believed was more equivalent 
than CPT code 92250 (Fundus photography with interpretation and report) 
(Work RVU = 0.44), the AMA RUC reference service, but had more pre- and 
intra-service time. Upon further review of CPT code 92228 and the time 
and intensity needed to furnish this service, we assigned a work RVU of 
0.30, the survey low value, on an interim final basis for CY 2011. The 
AMA RUC recommended a work RVU of 0.44 for CPT code 92228 for CY 2011 
(75 FR 73333).
    Comment: Commenters disagreed with the CMS interim final work RVU 
of 0.030, and requested that CMS accept the AMA RUC-recommended RVU of 
0.44. Commenters disagreed with CMS' use CPT code 92135 as a comparison 
service for the valuation of CPT code 92228. Commenters stated that CPT 
code 92250 more accurately reflects the service involved in CPT code 
92228. Furthermore, commenters raised concerns regarding a rank order 
anomaly with CPT code 92250, which they stated represents the same 
physician work as CPT code 92228, if CMS finalizes the interim final 
work RVU of 0.30 for CPT code 92228.
    Response: Based on the comments we received, we referred CPT code 
92228 to the CY 2011 multi-specialty refinement panel for further 
review. The refinement panel median work RVU was 0.37. As a result of 
the refinement panel ratings and our clinical review, we are finalizing 
a work RVU of 0.37 for CPT code 92228.
    For CY 2012, we received no public comment on the CY 2011 interim 
final work RVUs for CPT codes 92132 through 92134 and 9222. We believe 
these values continue to be appropriate and are finalizing them without 
modification (Table 15).
(37) Special Otorhinolaryngologic Services (CPT Codes 92504-92511)
    Section 143 of the MIPPA specifies that speech-language 
pathologists may independently report services they provide to Medicare 
patients. Starting in July 2009, speech-language pathologists were able 
to bill Medicare as independent practitioners. As a result, the 
American Speech-Language-Hearing Association (ASHA) requested that CMS 
ask the AMA RUC to review the speech-language pathology codes to newly 
value the professionals' services in the work and not the practice 
expense. ASHA indicated that it would survey the 12 speech-language 
pathology codes over the course of the CPT 2010 and CPT 2011 cycles. 
Four of these services were reviewed by the HCPAC or the AMA RUC and 
were included in the CY 2010 PFS final rule with comment period (74 FR 
61784 and 62146). For CY 2011, the HCPAC submitted work recommendations 
for the remaining eight codes.
    As detailed in the CY 2011 PFS final rule with comment period (75 
FR 7333), for CPT code 92508 (Treatment of speech, language, voice, 
communication, and/or auditory processing disorder; group, 2 or more 
individuals), we assigned a work RVU of 0.33 on an interim final basis 
for CY 2011. We derived the work RVU of 0.33 by dividing the value for 
CPT code 92507 (Treatment of speech, language, voice, communication, 
and/or auditory processing disorder; individual) (work RVU = 1.30) by 4 
participants based on our understanding from practitioners that 4 
accurately represented the typical number of participants in a group. 
Additionally, the work RVU of 0.33 was appropriate for this group 
treatment service relative to the work RVU of 0.27 for CPT code 97150 
(Therapeutic procedure(s), group (2 or more individuals)), which is 
furnished to a similar patient population, namely patients who have had 
a stroke. The

[[Page 73156]]

HCPAC recommended a work RVU of 0.43 for CPT code 92508 for CY 2011 (75 
FR 7333).
    Comment: Commenters disagreed with the interim final work RVU of 
0.33 for CPT code 92508, and asserted that the HCPAC recommendation of 
a work RVU of 0.43 was more appropriate. Commenters disagreed with 
using 4 participants to value CPT code 92508, requesting that CMS 
assume 3 as the typical number of participants in a group. Commenters 
also disagreed with CMS' comparison with CPT code 97150, asserting that 
this service is furnished to a dissimilar patient population by other 
professional groups. Commenters requested that we accept the HCPAC-
recommended work RVU of 0.43 for CPT code 92508.
    Response: Based on comments we received, we referred CPT code 92508 
to the CY 2011 multi-specialty refinement panel for further review. The 
refinement panel supported that HCPAC-recommended value of 0.43. As 
stated previously based on our understanding of this service, we 
believe that dividing the value for CPT code 92507 by 4 participants 
more appropriately values CPT code 92508. Furthermore, as stated in CY 
2012 PFS final rule with comment period (75 FR 7333), CPT code 97150 
(work RVU = 0.27) is furnished to a similar patient population. We 
believe a work RVU of 0.33 for CPT code 92508 creates appropriate 
relativity to CPT code 97150. After consideration of the public 
comments, refinement panel results, and our clinical review, we are 
finalizing a work RVU of 0.33 for CPT code 92508.
    As detailed in the Fourth Five-Year Review, for CPT code 92511 
(Nasopharyngoscopy with endoscope (separate procedure)) we proposed a 
work RVU of 0.61 for CY 2012. The AMA RUC recommended a work RVU of 
0.61 for this service as well. For CPT code 92511, the AMA RUC 
recommended the following times: pre-service evaluation time of 6 
minutes; pre-service (dress, scrub, wait) of 5 minutes; an intra-
service time of 5 minutes; and a post-service time of 5 minutes. We 
proposed a pre-service evaluation time for CPT code 92511 of 4 minutes, 
pre-service (dress, scrub, wait) of 5 minutes, an intra-service time of 
5 minutes, and a post-service time of 3 minutes to account for the E/M 
service begin provided on the same day (76 FR 32455).
    Comment: In its public comment to CMS on the Fourth Five-Year 
Review, the AMA RUC wrote that CMS agreed with the AMA RUC-recommended 
work RVU, but noted that CMS disagreed with the AMA RUC recommended 
pre-service and post-service time components due to an E/M service 
typically being provided on the same day of service. The AMA RUC 
recommends that CMS accept the AMA RUC-recommended pre-service 
evaluation time of 6 minutes and immediate post-service time of 5 
minutes for CPT code 92511.
    Response: In response to comments, we re-reviewed the descriptions 
of pre-service work and the recommended pre-service time packages for 
CPT code 92511. We disagree with the times recommended by the AMA RUC, 
and we do not believe the recommended times account for the overlap 
with an E/M service typically billed on the same day of service. We 
continue to believe our proposal to reduce the pre- and post-service 
time by 2 minutes is appropriate for this service. For CPT code 92511, 
we are finalizing a work RVU of 0.61. In addition, we are finalizing a 
pre-service evaluation time of 4 minutes, pre-service (dress, scrub, 
wait) time of 5 minutes, an intra-service time of 5 minutes, and a 
post-service time of 3 minutes for CPT code 92511. CMS time refinements 
can be found in Table 16.
    For CY 2012, we received no public comments on the CY 2011 interim 
final work RVUs for CPT Codes 92504, 92507, and 92508. We believe these 
values continue to be appropriate and are finalizing them without 
modification (Table 15).
    (38) Special Otorhinolaryngologic Services: Evaluative and 
Therapeutic Services (CPT Codes 92605-92618)
    As detailed in the CY 2011 PFS final rule with comment period (75 
FR 7333), for CPT code 92606 (Therapeutic service(s) for the use of 
non-speech generating device, including programming and modification), 
we published the AMA RUC-recommended work RVU of 1.40 in Addendum B to 
the final rule with comment period in accordance with our usual 
practice for bundled services. This service is currently bundled under 
the PFS and we maintained the bundled status for CY 2011.
    Comment: Commenters requested that CMS consider applying an active 
Medicare status to this service to be covered by Medicare.
    Response: As stated previously, CPT code 92606 is currently bundled 
and paid as a part of other services on the PFS. We do not pay 
separately for services that are included in other paid services, as 
this would amount to double payments for those services. We are 
maintaining the bundled status for CPT code 92606 for CY 2012.
    For CY 2012, we received no public comments on the CY 2011 interim 
final work RVUs for CPT codes 92607 through 92609. We believe these 
values continue to be appropriate and are finalizing them without 
modification (Table 15).
(39) Cardiovascular: Therapeutic Services and Procedures (CPT Codes 
92950)
    In the Fourth Five-Year Review, CMS identified CPT code 92950 
(Cardiopulmonary resuscitation (e.g., in cardiac arrest)) as 
potentially misvalued through the Harvard-Valued--Utilization >30,000 
screen. As detailed in the Fourth Five-Year Review of Work, for CPT 
code 92950 (Cardiopulmonary resuscitation (e.g., in cardiac arrest)), 
we proposed a work RVU of 4.00 for CY 2012. The AMA RUC reviewed the 
survey results and recommended the median survey work RVU of 4.50 for 
CPT code 92950. We recognized that patients that undergo this service 
are very ill; however, we did not believe that the typical patient met 
all the criteria for the critical care codes. Furthermore, the most 
currently available Medicare PFS claims data showed that CPT code 92950 
is typically furnished on the same day as an E/M visit. We believed 
some of the pre- and post- service time should not be counted in 
developing this procedure's work value. As described in section III.A., 
to account for this overlap, we reduced the pre-service evaluation and 
post service time by one-third. We believed that 1 minute pre-service 
evaluation time and 20 minutes post-service time accurately reflect the 
time required to conduct the work associated with this service.
    Comment: Commenters disagreed with the CMS-proposed work RVU of 
4.00 of CPT code 92950 and believe that the AMA RUC recommended work 
RVU of 4.50 is more appropriate. Additionally, commenters asserted that 
a patient requiring cardiopulmonary resuscitation is clearly as intense 
as critical care definition having a high probability of imminent life 
threatening deterioration. Furthermore, commenters note that 
utilization data show that CPR is not typically reported with an E/M 
code.
    Response: Based on the comments received, we referred CPT code 
92950 to the CY 2011 multi-specialty refinement panel for further 
review. Although the refinement panel median work RVU was 4.50, which 
was consistent with the AMA RUC-recommendation for this service. The 
Medicare PFS claims data show that there is an E/M visit billed on the 
same day as CPT code 92950 more

[[Page 73157]]

than 50 percent of the time. We do not believe it is appropriate for 
this service to reflect the aforementioned E/M visit overlap, which 
would result in duplicate recognition of activities associated with 
pre- and post- service times. In order to ensure consistent and 
appropriate valuation of physician work, we believe it is appropriate 
to apply our methodology to address services for which there is 
typically a same-day E/M service. Therefore, we are finalizing a work 
RVU for CPT code 92950 of 4.00 in CY 2012 with refinements to time. A 
complete list of CMS time refinements can be found in Table 16.
(40) Neurology and Neuromuscular Procedures: Sleep Testing (CPT Codes 
95800-95811)
    Sleep testing CPT codes were identified by the Five-Year Review 
Identification Workgroup as potentially misvalued codes through the 
``CMS Fastest Growing'' potentially misvalued codes screen. The CPT 
Editorial Panel created separate Category I CPT codes to report for 
unattended sleep studies. The AMA RUC recommended concurrent review of 
the family of sleep codes.
    As detailed in the CY 2011 PFS final rule with comment period (75 
FR 73334), we assigned a work RVU of 1.25 for CPT codes 95806 (Sleep 
study, unattended, simultaneous recording of, heart rate, oxygen 
saturation, respiratory airflow, and respiratory effort (e.g., 
thoracoabdominal movement)) and a work RVU of 1.28 for CPT code 95807 
(Sleep study, simultaneous recording of ventilation, respiratory 
effort, ECG or heart rate, and oxygen saturation, attended by a 
technologist) on an interim basis for CY 2011. The AMA RUC recommended 
work RVUs of 1.28 for CPT code 95806 and 1.25 for CPT code 95807. 
Although the AMA RUC-recommended values for these codes reflect the 
survey 25th percentile, we disagreed with the values and believed the 
values should be reversed because of the characteristics of the 
services. CPT code 95807 has 5 minutes more pre-service time but a 
lower AMA RUC-recommended value. We did not receive any public comments 
that disagreed with the interim final work values. Therefore, we are 
finalizing work RVUs of 1.25 for CPT code 95806 and 1.28 for CPT code 
95807.
    For CY 2012, we received no public comments on the CY 2011 interim 
final work RVUs for CPT codes 95800, 95801, 95803, 95805, 95808, 95810, 
and 95811. We believe these values continue to be appropriate and are 
finalizing them without modification (Table 15).
(41) Osteopathic Manipulative Treatment (CPT Codes 98925-98929)
    In the Fourth Five-Year Review (76 FR 32456 through 32458), we 
identified CPT codes 98925, 98928 and 98929 as potentially misvalued 
through the Harvard-Valued--Utilization > 30,000 screen. Additionally, 
the American Osteopathic Association identified CPT codes 98926 and 
98927 to be reviewed as part of this family since these were also 
identified to be reviewed by the AMA RUC Relativity Assessment 
Workgroup because these codes were identified through the Harvard-
Valued--Utilization > 100,000 screen.
    We reviewed CPT codes 98925 through 98929 and published proposed 
work RVUs in the Fourth Five-Year Review of Work (76 FR 32456 through 
32458). Based on comments we received during the public comment period, 
we referred CPT codes 98925 through 98929 to the CY 2011 multi-
specialty refinement panel for further review.
    For CPT code 98925 (Osteopathic manipulative treatment (OMT); 1-2 
body regions involved), we proposed a work RVU of 0.46 in the Fourth 
Five-Year Review (76 FR 32456). We also refined the time associated 
with CPT code 98925. Recent PFS claims data showed that this service is 
typically furnished on the same day as an E/M visit. While we 
understand that there are differences between these services, we 
believed some of the activities conducted during the pre- and post-
service times of the osteopathic manipulative treatment code and the E/
M visit overlapped and should not be counted in developing the work 
RVUs for this service. As described earlier in section III.A. of this 
final rule with comment period, we reduced the pre-service evaluation 
and post-service time by 1x3 to account for the overlap. We believed 
that 1 minute of pre-service evaluation time and 2 minutes post-service 
time accurately reflected the time required to conduct the work 
associated with this service.
    As detailed in the Fourth Five-Year Review (76 FR 32456), we 
calculated the value of the extracted time and subtracted it from the 
AMA RUC-recommended work RVU of 0.50. For CPT code 98925, we removed a 
total of 2 minutes from the AMA RUC-recommended pre- and post-service 
times, which amounts to the removal of .04 of a work RVU, resulting in 
a work RVU of 0.46. We noted that 70 percent of the survey respondents 
indicated that the work of furnishing this service has not changed in 
the past 5 years (current RVU = 0.45). We proposed a work RVU of 0.46, 
with refinement in time for CPT code 98925 for CY 2012. CMS time 
refinements can be found in Table 16. The AMA RUC recommended a work 
RVU of 0.50 for CPT code 98925.
    For CPT code 98926 (Osteopathic manipulative treatment (OMT); 3-4 
body regions involved), we proposed a work RVU of 0.71 in the Fourth 
Five-Year Review (76 FR 32456). We also refined the time associated 
with CPT code 98926. Recent PFS claims data showed that this service is 
typically furnished on the same day as an E/M visit. While we 
understand that there are differences between these services, we 
believed some of the activities conducted during the pre- and post-
service times of the osteopathic manipulative treatment code and the E/
M visit overlapped and should not be counted in developing the work 
RVUs for this service. As described earlier in section III.A. of this 
final rule with comment period, we reduced the pre-service evaluation 
and post-service time by one-third to account for the overlap. We 
believed that 1 minute of pre-service evaluation time and 2 minutes 
post-service time accurately reflected the time required to conduct the 
work associated with this service.
    As detailed in the Fourth Five-Year Review (76 FR 32456), we 
calculated the value of the extracted time and subtracted it from the 
AMA RUC-recommended work RVU of 0.75. For CPT code 98926, we removed a 
total of 2 minutes from the AMA RUC-recommended pre- and post-service 
times, which amounts to the removal of .04 of a work RVU, resulting in 
a work RVU of 0.71. We noted that 81 percent of the survey respondents 
indicated that the work of furnishing this service has not changed in 
the past 5 years (current RVU = 0.65). We proposed an alternative work 
RVU of 0.71, with refinement in time for CPT code 98926 for CY 2012. 
CMS time refinements can be found in Table 16. The AMA RUC recommended 
a work RVU of 0.75 for CPT code 98926.
    For CPT code 98927 (Osteopathic manipulative treatment (OMT); 5-6 
body regions involved), we proposed a work RVU of 0.96 in the Fourth 
Five-Year Review (76 FR 32457). We also refined the time associated 
with CPT code 98927. Recent PFS claims data showed that this service is 
typically furnished on the same day as an E/M visit. While we 
understand that there are differences between these services, we 
believed some of the activities conducted during the pre- and post-
service times of the osteopathic manipulative treatment code and the E/
M visit overlapped and should not be counted in developing the work 
RVUs

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for this service. As described earlier in section III.A. of this final 
rule with comment period, we reduced the pre-service evaluation and 
post-service time by one-third to account for the overlap. We believed 
that 1 minute of pre-service evaluation time and 2 minutes post-service 
time accurately reflected the time required to conduct the work 
associated with this service.
    As detailed in the Fourth Five-Year Review (76 FR 32457), we 
calculated the value of the extracted time and subtracted it from the 
AMA RUC-recommended work RVU of 1.00. For CPT code 98927, we removed a 
total of 2 minutes from the AMA RUC-recommended pre- and post-service 
times, which amounts to the removal of 0.04 of a work RVU, resulting in 
a work RVU of 0.96. We noted that 77 percent of the survey respondents 
indicated that the work of furnishing this service has not changed in 
the past 5 years (current RVU = 0.87). We proposed a work RVU of 0.96, 
with refinement in time for CPT code 98927 for CY 2012. CMS time 
refinements can be found in Table 16. The AMA RUC recommended a work 
RVU of 1.00 for CPT code 98927.
    For CPT code 98928 (Osteopathic manipulative treatment (OMT); 7-8 
body regions involved), we proposed a work RVU of 1.21 in the Fourth 
Five-Year Review (76 FR 32457). We also refined the time associated 
with CPT code 98928. Recent PFS claims data showed that this service is 
typically furnished on the same day as an E/M visit. While we 
understand that there are differences between these services, we 
believed some of the activities conducted during the pre- and post-
service times of the osteopathic manipulative treatment code and the E/
M visit overlapped and should not be counted in developing the work 
RVUs for this service. As described earlier in section III.A. of this 
final rule with comment period, we reduced the pre-service evaluation 
and post-service time by one-third to account for the overlap. We 
believed that 1 minute of pre-service evaluation time and 2 minutes 
post-service time accurately reflected the time required to conduct the 
work associated with this service.
    As detailed in the Fourth Five-Year Review (76 FR 32457), we 
calculated the value of the extracted time and subtracted it from the 
AMA RUC-recommended work RVU of 1.25. For CPT code 98928, we removed a 
total of 2 minutes from the AMA RUC-recommended pre- and post-service 
times, which amounts to the removal of 0.04 of a work RVU, resulting in 
a work RVU of 1.21. We noted that 67 percent of the survey respondents 
indicated that the work of furnishing this service has not changed in 
the past 5 years (current RVU = 1.03). We proposed a work RVU of 1.21, 
with refinement in time for CPT code 98928 for CY 2012. CMS time 
refinements can be found in Table 16. The AMA RUC recommended a work 
RVU of 1.25 for CPT code 98928.
    For CPT code 98929 (Osteopathic manipulative treatment (OMT); 9-10 
body regions involved), we proposed a work RVU of 1.46 in the Fourth 
Five-Year Review (76 FR 32457). We also refined the time associated 
with CPT code 98929. Recent PFS claims data showed that this service is 
typically furnished on the same day as an E/M visit. While we 
understand that there are differences between these services, we 
believed some of the activities conducted during the pre- and post-
service times of the osteopathic manipulative treatment code and the E/
M visit overlapped and should not be counted in developing the work 
RVUs for this service. As described earlier in section III.A. of this 
final rule with comment period, we reduced the pre-service evaluation 
and post-service time by 1x3 to account for the overlap. We believed 
that 1 minute of pre-service evaluation time and 2 minutes post-service 
time accurately reflected the time required to conduct the work 
associated with this service.
    As detailed in the Fourth Five-Year Review (76 FR 32457), we 
calculated the value of the extracted time and subtracted it from the 
AMA RUC-recommended work RVU of 1.50. For CPT code 98929, we removed a 
total of 2 minutes from the AMA RUC-recommended pre- and post-service 
times, which amounts to the removal of .04 of a work RVU, resulting in 
a work RVU of 1.46. We noted that 63 percent of the survey respondents 
indicated that the work of furnishing this service has not changed in 
the past 5 years (current RVU = 1.19). We proposed a work RVU of 1.46, 
with refinement in time for CPT code 98928 for CY 2012. CMS time 
refinements can be found in Table 16. The AMA RUC recommended a work 
RVU of 1.50 for CPT code 98929.
    Comment: Commenters disagreed with the CMS-proposed work RVUs for 
these osteopathic manipulative treatment services, and state that the 
AMA RUC-recommended RVUs of 0.50 for CPT code 98925, 0.75 for CPT code 
98926, 1.00 for CPT code 98927, 1.25 for CPT code 98928, 1.50 for CPT 
code 98929 are more appropriate. Commenters reminded CMS that the AMA 
RUC incorporated reductions in the pre- and post-service times 
recommended in the specialty's survey of the codes. Commenters noted 
that the proposed work RVUs were derived from the reverse building 
block methodology, which removed 0.04 from the AMA RUC-recommended RVUs 
for CPT codes 98925 through 98929 to account for the overlap with the 
E/M services.
    Commenters also found that the survey responses indicating that the 
work of furnishing these services had not changed in the past 5 years 
were irrelevant to valuing these services because there was compelling 
evidence that the methodology was flawed in the original valuation of 
these codes. Commenters requested that CMS accept the AMA RUC-
recommended work RVUs and physician time.
    Response: Based on the comments we received, we referred CPT codes 
98925, 98926, 98927, 98928, and 98929 to the CY 2011 multi-specialty 
refinement panel for further review. The refinement panel median work 
RVUs were 0.49, 0.74, 0.99, 1.24, 1.49 for CPT codes 98925, 98926, 
98927, 98928, and 98929, respectively. While the AMA RUC asserts that 
it reduced physician times to account for the E/M service on the same 
day, we do not believe the recommended physician times adequately 
account for the overlap in services with an E/M visit on the same day. 
We continue to believe that some of the activities in the pre- and 
post-service times of the osteopathic manipulative treatment codes and 
the E/M visit overlap, and that our proposal to remove 1 minute of pre- 
and 1 minute of post-service time appropriately accounts for this 
overlap. As detailed earlier in section III.A. of this final rule with 
comment period, we do not believe the overlap in activities should be 
counted in developing these procedures' work values. In order to ensure 
consistent and appropriate valuation of physician work, we are 
continuing with the application of our methodology, explained in the 
Fourth Five-Year Review (76 FR 32422), to address the overlapping 
activities when a service is typically billed on the same day as an E/M 
service. After consideration of the public comments, refinement panel 
results, survey responses, and our clinical review, we are finalizing 
the proposed work RVUs and refined times associated with these codes. 
CMS time refinements can be found in Table 16. We are finalizing work 
RVUs of 0.46 for CPT code 98925, 0.71 for CPT code 98926, 0.96 for CPT 
code 98927, 1.21 for CPT code 98928, 1.46 for CPT code 98929.

[[Page 73159]]

(42) Evaluation and Management: Initial Observation Care (CPT Codes 
99218-99220)
    In the Fourth Five-Year Review (76 FR 32458), we identified CPT 
codes 99218 through 99220 as potentially misvalued through the Harvard-
Valued--Utilization > 30,000 screen. The American College of Emergency 
Physicians (ACEP) submitted a public comment identifying CPT codes 
99218 through 99220 to be reviewed in the Fourth Five-Year Review. ACEP 
also identified CPT codes 99234 through 99236 as part of the family of 
services for AMA RUC review. For CPT codes 99218 (Level 1 initial 
observation care, per day), 99219 (Level 2 initial observation care, 
per day), and 99220 (Level 3 initial observation care, per day), we 
stated that we believed there were differences in physician work in the 
outpatient and inpatient settings, and proposed work RVUs of 1.28 for 
CPT code 99218, 2.14 for CPT code 99219, and 2.99 for CPT code 99220.
    We agreed with the AMA RUC that appropriate relativity must be 
maintained within and between the families of similar codes. However, 
we believed that while the work RVUs of the initial observation care 
codes (99218, 99219, and 99220) should be greater than those of the 
subsequent observation care codes (99224, 99225, and 99226), we did not 
believe the work RVUs of the initial observation care codes (99218, 
99219, and 99220) should be equivalent (or close) to the initial 
hospital care codes (99221, 99222, and 99223). We noted that we 
believed the acuity level of the typical patient receiving outpatient 
observation services would generally be lower than that of the 
inpatient level. We believed the work RVUs of the initial observation 
care codes should reflect the modest differences in patient acuity 
between the outpatient and inpatient settings. We compared the CY 2011 
work RVUs of the initial observation care codes to the CY 2011 interim 
final work RVUs of the subsequent observation care codes and found that 
the relativity existing between these codes was acceptable. We also 
believed that the CY 2011 work RVUs of the initial observation care 
codes maintained the proper rank order with the initial hospital care 
services. Therefore, we proposed to maintain the CY 2011 work RVUs for 
CPT codes 99218, 99219, and 99220. We accepted the survey median 
physician times for these codes, as recommended by the AMA RUC. CMS 
time refinements can be found in Table 16. The AMA RUC asserted that a 
rank order anomaly existed within this family of codes as the 
observation care codes have an analogous relationship to the initial 
hospital care codes (99221 through 99223), and recommended work RVUs of 
1.92 for CPT code 99218, 2.60 for CPT code 99219, and 3.56 for CPT code 
99220.
    Comment: Commenters disagreed with the proposed RVUs for CPT codes 
99218, 99219, and 99220. Commenters stressed that the physician work is 
the same whether the patient is in observation status or admitted to 
the hospital. Commenters stated that these initial observation care 
codes should be valued consistently with initial hospital care codes 
(99221, 99222, and 99223). Commenters stated that a patient's 
classification by a hospital as inpatient or outpatient does not 
necessarily equate to patient acuity relevance for a physician. 
Furthermore, commenters noted that hospital classification of patients 
as inpatient or outpatient may be in response to hospital policies, 
facility resource utilization, or other factors, while physician work 
is described within CPT guidelines for the E/M codes. Commenters 
requested that CMS accept the AMA RUC-recommended work RVUs of 1.92 for 
CPT code 99218, 2.60 for CPT code 99219, and 3.56 for CPT code 99220 
with the AMA RUC-recommended physician times.
    Response: Based on comments we received, we referred CPT codes 
99218, 99219, and 99220 to the CY 2011 multi-specialty refinement panel 
for further review. The refinement panel median work RVUs were 1.92 for 
CPT code 99218, 2.60 for CPT code 99219, and 3.56 for CPT code 99220. 
As a result of the refinement panel ratings and our clinical review, we 
are finalizing work RVUs of 1.92 for CPT code 99218, 2.60 for CPT code 
99219, and 3.56 for CPT code 99220. We are also finalizing the AMA RUC-
recommended physician times. CMS time refinements can be found in Table 
16.
(43) Evaluation and Management: Subsequent Observation Care (CPT Codes 
99224-99226)
    At the June 2009 CPT Editorial Panel meeting, three new codes were 
approved to report subsequent observation services in a facility 
setting. These codes are CPT code 99224 (Level 1 subsequent observation 
care, per day); CPT code 99225 (Level 2 subsequent observation care, 
per day); and CPT code 99226 (Level 3 subsequent observation care, per 
day). Observation services are outpatient services ordered by a 
patient's treating practitioner. In the CY 2011 PFS final rule with 
comment period (75 FR 73334), we assigned interim final work RVUs of 
0.54 to CPT code 99224, 0.96 to CPT code 99225, and 1.44 to CPT code 
99226 for CY 2011. As detailed in the CY 2011 PFS final rule with 
comment period, we stated that there are generally differences in 
patient acuity between the inpatient and outpatient settings. To 
account for these differences, we removed the pre- and post-services 
times from the AMA RUC-recommended values for subsequent observation 
care, reducing the values to approximately 75 percent of the values for 
the subsequent hospital care codes. The AMA RUC recommended work RVUs 
of 0.76 for CPT code 99224, 1.39 for CPT code 99225, and 2.00 for CPT 
99226.
    Comment: Commenters disagreed with the interim final RVUs for the 
CPT codes 99224, 99225, and 99226. Commenters stressed that the 
physician work is the same whether the patient is admitted to the 
hospital or in observation status, and should be valued consistently 
with subsequent hospital care codes (99231, 99232, and 99233). 
Commenters also disagreed with CMS removing the pre- and post-service 
time for valuation of these codes. Commenters stated that subsequent 
observation care involves physician time and work before and after the 
patient encounter. Commenters requested that CMS accept the AMA RUC-
recommended RVUs of 0.76 for 99224, 1.39 for 99225, and 2.00 for 99226, 
which correlate to the subsequent hospital care codes (99231, 99232, 
and 99233).
    Response: Based on the comments we received, we referred CPT codes 
99224, 99225, and 99226 to the CY 2011 multi-specialty refinement panel 
for further review. The refinement panel median work RVUs were 0.76 for 
99224, 1.39 for 99225, and 2.00 for 99226. As a result of the 
refinement panel ratings and our clinical review, we are finalizing 
work RVUs of 0.76 for 99224, 1.39 for 99225, and 2.00 for 99226. We are 
also finalizing the AMA RUC-recommended pre- and post-service times. 
CMS time refinements can be found in Table 16.
(44) Evaluation and Management: Subsequent Hospital Care (CPT Codes 
99234-99236)
    In the Fourth Five-Year Review (76 FR 32458), for CPT codes 99234 
(Level 1, observation or inpatient hospital care, for the evaluation 
and management of a patient including admission and discharge on the 
same date); 99235 (Level 2, observation or inpatient hospital care, for 
the evaluation and management of a patient including admission and 
discharge on the same

[[Page 73160]]

date); and 99236 (Level 3 observation or inpatient hospital care, for 
the evaluation and management of a patient including admission and 
discharge on the same date), we proposed a work RVUs of 1.92 for CPT 
code 99234, 2.78 for CPT code 99235, and 3.63 for CPT code 99236. We 
followed the same approach to valuing these observation same day admit/
discharge services as the AMA RUC--taking the corresponding initial 
observation care code of the same level, plus half the value of a 
hospital discharge day management service. However, we incorporated the 
Fourth Five-Year Review proposed values for CPT codes 99218, 99219, and 
99220 discussed previously. We also made corresponding physician time 
changes. CMS time refinements can be found in Table 16. The AMA RUC 
recommended 2.56 for CPT code 99234, 3.24 for CPT code 99235, and 4.20 
for CPT code 99236 based on the same methodology, but incorporated the 
AMA RUC-recommended RVUs for 99218, 99219, and 99220, respectively.
    Comment: Commenters disagreed with the proposed RVUs for CPT codes 
99234, 99235, and 99236. Commenters supported the methodology CMS and 
the AMA RUC used to value these services of taking the corresponding 
initial observation care code of the same level, plus half the value of 
a hospital discharge day management service, but commenters disagreed 
with the underlying initial observation care code RVUs. Commenters 
requested that CMS continue to apply the same methodology from the 
Fourth Five-Year Review. However, commenters requested that CMS use the 
AMA RUC-recommended RVUs, rather than the CMS proposed values for the 
initial observation care codes in the calculation of RVUs for CPT codes 
99234, 99235, and 99236. Commenters requested that CMS accept the AMA 
RUC-recommended RVUs of 2.56 for CPT code 99234, 3.24 for CPT code 
99235, and 4.20 for CPT code 99236 with the AMA RUC-recommended 
physician times.
    Response: Based on the comments we received, we referred CPT codes 
99224, 99225, and 99226 to the CY 2011 multi-specialty refinement panel 
for further review. The refinement panel median work RVUs were 2.56 for 
CPT code 99234, 3.24 for CPT code 99235, and 4.20 for CPT code 99236. 
As a result of the refinement panel ratings and our clinical review, we 
are finalizing work RVUs of 2.56 for CPT code 99234, 3.24 for CPT code 
99235, and 4.20 for CPT code 99236. We are also finalizing the AMA RUC-
recommended physician times. CMS time refinements can be found in Table 
16.
    As noted previously, for all CY 2011 new, revised, or potentially 
misvalued codes with CY 2011 interim final work RVUs that are not 
specifically discussed in this final rule with comment period, we are 
finalizing, without modification, the interim final direct PE inputs 
that we initially adopted for CY 2011. Table 15 provides a 
comprehensive list of all final values.
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BILLING CODE 4120-01-C
2. Finalizing CY 2011 Interim Direct PE RVUs for CY 2012
a. Background and Methodology
    In this section, we address interim final direct PE inputs as 
presented in the CY 2011 PFS final rule with comment period and 
displayed in the final CY 2011 direct PE database (as subsequently 
corrected on December 30, 2010) available on the CMS Web site under the 
downloads for the ``Payment Policies under Physician Fee Schedule and 
other Revisions to Part B for CY 2011; Corrections'' at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp.
    On an annual basis, the AMA RUC provides CMS with recommendations 
regarding direct PE inputs, including clinical labor, supplies, and 
equipment, for new, revised, and potentially misvalued codes. We review 
the AMA RUC-recommended direct PE inputs on a code-by-code basis, 
including the recommended facility PE inputs and/or nonfacility PE 
inputs, as clinically appropriate for the code. We determine whether we 
agree with the AMA RUC's recommended direct PE inputs for a service or, 
if we disagree, we refine the PE inputs to represent inputs that better 
reflect our estimate of the PE resources required for the service in 
the facility and/or nonfacility settings. We also confirm that CPT 
codes should have facility and/or nonfacility direct PE inputs and make 
changes based on our clinical judgment and any PFS payment policies 
that would apply to the code.
    In the CY 2011 PFS final rule with comment period (75 FR 73350), we 
addressed the general nature of some common refinements to the AMA RUC-
recommended direct PE inputs as well as the reasons for refinements to 
particular inputs. In the following subsections, we respond to comments 
we received regarding common refinements and the direct PE inputs 
specific to particular codes.
b. Common Refinements
(1) General Equipment Time
    As we stated in the CY 2011 PFS final rule with comment period (75 
FR 73350), many of the refinements to the AMA RUC direct PE 
recommendations were made in the interest of promoting a transparent 
and consistent approach to equipment time inputs. In the past, the AMA 
RUC had not always provided us with recommendations regarding equipment 
time inputs. In CY 2010, we requested that the AMA RUC provide 
equipment times along with the other direct PE recommendations, and we 
provided the AMA RUC with general guidelines regarding appropriate 
equipment time inputs. We appreciate the AMA RUC's willingness to 
provide us with these additional inputs as part of their direct PE 
recommendations.
    In general, the equipment time inputs correspond to the intra-
service portion of the clinical labor times. We have clarified that 
assumption to consider equipment time as the sum of the times within 
the intra-service period when a clinician is using the piece of 
equipment, plus any additional time the piece of equipment is not 
available for use for another patient due to its use during the 
designated procedure. In addition, when a piece of equipment is 
typically used during additional visits included in a service's global 
period, the equipment time should also reflect that use.
    Certain highly technical pieces of equipment and equipment rooms 
are less likely to be used by a clinician over the full course of a 
procedure and are typically available for other patients during time 
that may still be in the intra-service portion of the service. We 
adjust those equipment times accordingly. For example, CPT code 74178 
(Computed tomography, abdomen and pelvis; without contrast material in 
more than one body region) includes 3 minutes of intra-service clinical 
labor time associated with obtaining the patient's consent for the 
procedure. Since it would be atypical for this activity to occur within 
the CT room, we believe these 3 minutes should not be attributed to the 
CT room as equipment time. We refined the CY 2011 AMA RUC direct PE 
recommendations to conform to these equipment time policies.
    Comment: One commenter expressed concerns with CMS' overall 
methodology for computing equipment times. The commenter specifically 
addressed CMS' refinement of minutes allocated to an angiography room 
for a series of endovascular revascularization procedures. The 
commenter claimed that in the case of interventional radiology 
procedures, a nurse typically greets and gowns the patient, provides 
pre-service education, and obtains consent and vital signs in an 
angiography room or other procedure room. Additionally, the commenter 
asserted that since CMS provided general guidelines to the RUC 
regarding appropriate equipment time inputs, CMS should defer to the 
expertise of the AMA RUC and accept the recommendations for equipment 
times. Further, the commenter argued that by not allocating minutes for 
certain highly technical pieces of equipment and equipment rooms for 
greeting/gowning, obtaining vital signs or providing pre-service 
education, CMS is instituting a change in practice expense methodology 
without discussing it with stakeholders prior to implementation.
    Another commenter expressed similar concerns regarding CMS' 
refinements of equipment minutes allocated to a CT room for a series of 
new codes that describe combined CTs of the abdomen and pelvis. This 
commenter argued that equipment minutes should be allocated based on 
the full number of minutes in the clinical labor intraservice time 
since, for example, even when a CT technologist greets a patient in a 
different room, the CT room cannot be used for another patient. This 
commenter argued that current CMS allocation of room minutes is 
inconsistent with the historically accepted premise that if the 
technologists are involved with a patient, the room cannot be used for 
a different patient until after it has been cleaned and therefore 100 
percent of the clinical labor time should be attributed to ``Room 
Time.'' Both commenters argued that CMS should accept the direct PE 
input recommendations of the AMA RUC, without refining the equipment 
room minutes that were allocated for greeting/gowning, obtaining vital 
signs or providing pre-service education or obtaining consent.
    Response: We continue to believe that equipment minutes should be 
allocated as the sum of the intra-service minutes that a clinician 
typically uses a piece of equipment and the equipment is typically 
unavailable to other patients due to its use during the designated 
procedure. For many services, this means that the equipment is 
allocated the full number of minutes during the intra-service period. 
For example, for many services, the three clinical labor minutes 
attributed to a nurse for greeting and gowning the patient prior to the 
procedure are then also logically allocated to the exam table (EF023). 
We believe that this allocation reflects typical use of the equipment 
since it is logical to assume that the patient is usually greeted and 
gowned in the room that contains the exam table.
    In the case of services that require the use of certain highly 
technical pieces of equipment and equipment rooms, however, we believe 
it is inappropriate to assume that all of the same intra-service 
clinical labor activities typically make these equipment items 
unavailable for use in furnishing services to other patients. For 
example, we do not believe it is typical to occupy a CT room while 
gowning a patient, providing pre-service education, or

[[Page 73183]]

obtaining consent of a patient prior to performing a procedure since 
those activities are not dependent on access to the equipment. 
Therefore, we do not agree with the commenter's assertion that these 
highly technical pieces of equipment and equipment rooms are typically 
unavailable to other patients whenever any patient is greeted, gowned, 
provided pre-service education, or has vital signs taken. That is why 
we do not allocate equipment minutes in those cases. We reiterate that 
equipment minutes are allocated based on the time a clinician typically 
uses a piece of equipment and the equipment is typically unavailable to 
other patients due to its use during the designated procedure.
    While recent RUC recommendations have often reflected an agreement 
with that principle, some of the recommendations have required CMS 
refinements to make sure the equipment time minutes adhere to these 
principles. We note that we have only recently asked the RUC to provide 
CMS with recommendations regarding equipment time, and both CMS and the 
RUC considered the CY 2011 refinements to be technical modifications to 
the direct PE input recommendations instead of disagreements. 
Therefore, we do not agree with the commenters' premise that these 
refinements to equipment time are necessarily in conflict with the 
clinical judgment of the RUC.
    We understand commenters' concerns regarding the importance of 
accurate and consistent allocation of equipment minutes as direct PE 
inputs. We agree that equipment minutes have not always been allocated 
with optimal precision, and we believe that imprecise allocation of 
equipment minutes may be a factor in certain potentially misvalued 
codes. We point the reader to section II.B.5.b.1. of this final rule 
with comment period for an example of this issue.
    We believe that our CY 2011 refinements of equipment minutes for 
new and revised, and potentially misvalued codes most accurately 
reflect typical use of resources required to furnish PFS services to 
Medicare beneficiaries. We will continue to work to improve the 
accuracy of the equipment minutes and will address any further 
improvements in future rulemaking.
(2) Supply and Equipment Items Missing Invoices
    When clinically appropriate, the AMA RUC generally recommends the 
use of supply and equipment items that already exist in the direct PE 
database as inputs for new, revised, and potentially misvalued codes. 
Some recommendations include supply or equipment items that are not 
currently in the direct PE database. In these cases, the AMA RUC has 
historically recommended a new item be created and has facilitated CMS' 
pricing of that item by working with the specialty societies to provide 
sales invoices to us. We appreciate the contributions of the AMA RUC in 
that process.
    Despite the assistance of the AMA RUC for CY 2011, we did not 
receive adequate information for pricing the following new supply items 
included in the AMA RUC's CY 2011 direct PE recommendations: SC098 
(Catheter, angiographic, Berman); SD251 (Sheath Shuttle (Cook); SD255 
(Reentry Device (Frontier, Outback, Pioneer); SD257 (Tunneler); and 
SD258 (Vacuum Bottle). Therefore, for CY 2011, these supply items had 
no price inputs associated with them in the direct PE database. In the 
CY 2011 PFS final rule (75 FR 73351), we noted that we would consider 
any newly submitted information for these items as part of our annual 
supply and equipment price update process.
    Comment: One commenter pointed out that the ``vacuum bottle'' 
already has an established supply code, SD 144, and is referred to as 
``canister, vacuum, pleural (w-drainage line).'' The commenter also 
claimed that invoice pricing for the Sheath Shuttle (Cook) had already 
been submitted to CMS.
    Response: We agree with the commenter's assessment regarding the 
vacuum bottle being captured by the existing supply code SD144, and we 
have subsequently removed SD258 from the direct PE database. The only 
information we have received regarding the Sheath Shuttle was a page 
from the vendor's catalog that described the item. However, that 
information did not include a price, so we were unable to use that 
information in pricing the supply input.
    We remind stakeholders that we established a process that allows 
the public to submit requests for updates to supply price inputs or 
equipment price or useful life inputs in the CY 2011 PFS final rule 
with comment period (75 FR 73205 through 73207). As part of this 
established process, we ask that requests be submitted as comments to 
the PFS final rule with comment period each year, subject to the 
deadline for public comments applicable to that rule. Alternatively, 
stakeholders may submit requests to CMS on an ongoing basis throughout 
a given calendar year to PE_Price_Input_Update@cms.hhs.gov. Requests 
received by the end of a calendar year will be considered in rulemaking 
during the following year. We refer readers to the description 
available in the CY 2011 PFS final rule (75 FR 73206) that details the 
minimum information we request that stakeholders provide in order to 
facilitate our review and preparation of issues for the proposed rule.
c. Code-Specific Direct PE Inputs
(1) CT Abdomen and Pelvis
    For CY 2011, AMA CPT created a series of new codes that describe 
combined CTs of the abdomen and pelvis. Prior to 2011, these services 
would have been billed using multiple stand-alone codes for each body 
region. The new codes are: 74176 (Computed tomography, abdomen and 
pelvis; without contrast material); 74177 (Computed tomography, abdomen 
and pelvis; with contrast material); and 74178 (Computed tomography, 
abdomen and pelvis; without contrast material in one or both body 
regions, followed by with contrast material(s) and further sections in 
one or both body regions.)
    Comment: One commenter stated that there were discrepancies between 
the inputs for these codes and the AMA RUC recommendations that were 
not addressed as refinements in the CY 2011 PFS final rule with comment 
period. Specifically, the commenter suggested that CMS did not include 
a power injector recommended by the RUC. Another commenter stated that 
the clinical labor type in the codes should be a ``CT technologist'' 
(L046A) instead of a ``Radiologic Technologist'' (L041B).
    Response: We have reexamined the CY 2011 AMA RUC direct PE 
recommendations for these codes and confirmed that the RUC 
recommendation we received does not include power injector as an input 
for these codes. We also confirmed that the RUC recommendation included 
labor code ``Radiologic Technologist'' (L041B) for these codes. We also 
confirmed that the information the specialty society presented to the 
RUC also included the ``Radiologic Technologist'' as the clinical labor 
time for the service. However, we note that both the RUC and other 
commenters now believe the labor type was included in error, and all 
similar codes include the ``CT technologist'' (L046A) as the 
appropriate labor type, including the codes that describe a CT of the 
abdomen and a CT of the pelvis independently. Therefore, we consider 
the labor code included with the recommendation to be a technical 
oversight, and we have amended the labor category in each of the three 
codes to include a ``CT technologist'' (L046A).

[[Page 73184]]

    Comment: One commenter stated that each of these codes is missing 
the film jacket and CD supply inputs which are proxies for digital 
storage of images.
    Response: We did not accept the film jacket as a disposable supply 
item because film jackets are not disposable/consumable supplies. We 
did not incorporate the CD as a supply item since the codes also 
included x-ray film, which can also be a proxy for digital image 
storage. We mistakenly omitted these refinements from the list of 
refinements in the CY 2011 PFS final rule with comment period.
    After consideration of these comments, for CY 2012, we are 
finalizing the direct PE inputs, with the labor category refinement, 
for CPT codes 74176, 74177, and 74178.
(2) Endovascular Revascularization
    In the CY 2011 PFS final rule with comment period (75 FR 73351), we 
explained our refinements of the supply input recommendations from the 
AMA RUC for CPT codes describing certain endovascular revascularization 
services. The recommendations included two or three high-cost stents 
for each of the following six CPT codes: 37226 (Revascularization, 
femoral/popliteal artery(s), unilateral; with transluminal stent 
placement(s); 37227 (Revascularization, femoral/popliteal artery(s), 
unilateral; with transluminal stent placement(s) and atherectomy); 
37230 (Revascularization, tibial/peroneal artery, unilateral, initial 
vessel; with transluminal stent placement(s)); 37231 
(Revascularization, tibial/peroneal artery, unilateral, initial vessel; 
with transluminal stent placement(s) and atherectomy); 37234 
(Revascularization, tibial/peroneal artery, unilateral, each additional 
vessel; with transluminal stent placement(s) (List separately in 
addition to code for primary procedure)); and 37235 (Revascularization, 
tibial/peroneal artery, unilateral, each additional vessel; with 
transluminal stent placement(s) and atherectomy (List separately in 
addition to code for primary procedure)).
    Given the complex clinical nature of these services, their new 
pricing in the nonfacility setting under the PFS, and the high cost of 
each stent, we were concerned that inclusion of two or three stents 
could overestimate the number of stents used in the typical office 
procedure that would be reported under one of the CPT codes. Therefore, 
we examined CY 2009 hospital OPPS claims data for the combinations of 
predecessor codes that would have historically been reported for each 
case reported in under CY 2011 under a single comprehensive code. 
Because of the OPPS device-to-procedure claims processing edits, all 
prior cases would have included a HCPCS C-code for at least one stent 
on the claim for the case. Based on our analysis of these data, we 
determined that for each new CY 2011 comprehensive code, the 
predecessor code combinations would have used only one stent in 65 
percent or more of the cases. We had no reason to believe that when 
these new CPT codes were reported for procedures performed in the 
nonfacility setting, the typical patient would receive more than the 
one stent typically used in the hospital outpatient setting. Therefore, 
we refined the CY 2011 AMA RUC recommendations to include one stent in 
the direct PE inputs for each of the six endovascular revascularization 
stent insertion codes, including the add-on codes. These refinements 
were reflected in the final CY 2011 PFS direct PE database.
    Comment: One commenter asserted that the CMS analysis of the OPPS 
data was flawed because the predecessor codes included treatments of 
all vascular territories instead of only the lower extremities 
described by the new codes. Additionally, the commenter argued that 
hospital payment does not depend on correctly coding the number of 
stents, so the claims data are probably inaccurate. In order to account 
for the latter possibility, the commenter reported conducting a review 
of similar claims data that excluded all hospitals that reported only 
one unit for stents for all of their claims. After examining that data, 
the commenter reported that the percentage of one stent dropped 
``closer to 50 percent.'' The commenter argued that this analysis, 
combined with the former assertion regarding the limitations of 
anatomic non-specificity, invalidates the CMS' analysis that supported 
the refinement of the RUC-recommended direct PE inputs. Therefore, the 
commenter argued that CMS should accept the RUC recommendation without 
refinement and use the quantity of stents originally recommended in the 
direct PE database.
    Response: As we stated in the CY 2011 PFS final rule (75 FR 73351), 
we have no reason to believe that more than one stent is typically used 
in furnishing the services reported under one of the CPT code in the 
nonfacility setting. While the commenter did not submit detailed 
results from the data used in reaching conclusions, we believe it 
important to note that even after reviewing preferred data, the 
commenter reported results that continued to indicate that one stent 
was used in at least half of the cases. While we appreciate the 
commenter's arguments regarding the potential differences between the 
stents required in the lower extremities and the pooled data reported 
by hospitals in the predecessor codes, we believe the possibility of 
such disparity is likely more than offset by the difference in typical 
patient acuity in the hospital outpatient and nonfacility settings. 
Finally, we note that neither the AMA RUC nor the medical specialty 
society that reports the highest utilization of these codes submitted 
comments in opposition to refinement of these direct PE inputs.
    Comment: One commenter stated that there were discrepancies between 
the clinical labor inputs for these codes and the AMA RUC 
recommendations that were not addressed as refinements in the CY 2011 
PFS final rule with comment period.
    Response: We have reexamined the CY 2011 AMA RUC direct PE 
recommendations for these codes and confirmed that the labor minutes 
associated with the codes in the direct PE database match the AMA RUC 
recommendations regarding clinical labor inputs, which we accepted 
without refinement.
    Comment: One commenter alerted CMS that the minutes allocated for 
two particular equipment items (a printer and a stretcher) had been 
inverted in three of these codes.
    Response: We appreciate the commenter's informing us of the 
inverted minutes. We made a proposal to correct these inputs in the CY 
2012 PFS proposed rule, and we are finalizing that correction in 
section II.A.3.a. of this final rule with comment period.
    After consideration of all comments received, we are finalizing the 
direct PE inputs, as amended in section II.A.3.a. of this final rule 
with comment period, for these codes for CY 2012.
(3) Nasal/Sinus Endoscopy
    The CY 2011 AMA RUC recommendation for direct PE inputs for CPT 
code 31295 (Nasal/sinus endoscopy, surgical; with dilation of maxillary 
sinus ostium (e.g., balloon dilation), transnasal or via canine fossa), 
included irregular supply and equipment inputs. The AMA RUC recommended 
two similar, new supply items, specifically ``kit, sinus surgery, 
balloon (maxillary, frontal, or sphenoid)'' and ``kit, sinus surgery, 
balloon (maxillary)'' as supply inputs with a quantity of one-half for 
each item. In the CY 2011 PFS final rule with comment period (75 FR 
73351), we explained that we believed that this

[[Page 73185]]

recommendation was intended to reflect an assumption that each of these 
distinct supplies is used in approximately half of the cases when the 
service is furnished. We noted that, in general, the direct PE inputs 
should reflect the items used when the service is furnished in the 
typical case. Therefore, the quantity of supply items associated with a 
code should reflect the actual units of the item used in the typical 
case, and not be reflective of any estimate of the proportion of cases 
in which any supply item is used. We also noted, however, that 
fractional inputs are appropriate when fractional quantities of a 
supply item are typically used, as is commonly the case when the unit 
of a particular supply reflects the volume of a liquid supply item 
instead of quantity.
    Upon receipt of these recommendations, we requested that the AMA 
RUC clarify the initial recommendation by determining which of these 
supply items would be used in the typical case. The AMA RUC recommended 
that the supply item ``kit, sinus surgery, balloon (maxillary, frontal, 
or sphenoid)'' be included in the inputs for the code. We considered 
that recommendation, but we believed the item ``kit, sinus surgery, 
balloon (maxillary)'' to be more clinically appropriate based on the 
description of CPT code 32195.
    The AMA RUC recommendation for equipment inputs for the same code 
(CPT code 31295) included a parallel irregularity by distributing half 
of the equipment minutes to each of two similar pieces of equipment, 
one existing and one new: ``endoscope, rigid, sinoscopy'' (ES013) and 
``fiberscope, flexible, sinoscopy'' (ES035 and new for CY 2011). We 
believed that this recommendation was intended to reflect an assumption 
that each of these distinct pieces of equipment is used in 
approximately half of the cases in which the service is furnished. 
Again, we noted that, in general, the direct PE inputs should reflect 
the items used when the service is furnished in the typical case. 
Therefore, the equipment time inputs associated with a code should 
reflect the number of minutes an equipment item is used in the typical 
case, and not be distributed among a set of equipment items to reflect 
an estimate of the proportion of cases in which a particular equipment 
item might be used. Upon review of these items, we believed the new 
piece of equipment, ``fiberscope, flexible, sinoscopy'' to be more 
clinically appropriate based on the description of CPT code 32195. We 
refined the CY 2011 AMA RUC direct PE recommendations to conform to 
these determinations.
    Comment: Two commenters claimed that CMS had misunderstood the 
recommendation of the AMA RUC, that two kits are typically used each 
time that the maxillary sinus surgery is furnished, and that both the 
rigid and the flexible scope are used in furnishing the service. One of 
commenters also suggested that the service requires the use of a light 
pipe so the direct PE database should include a light pipe for the 
codes. Both commenters also suggested that CMS institute PE RVUs that 
directly reimburse the costs of furnishing the service as calculated by 
the commenters.
    As part of their CY 2012 recommendations, the AMA RUC provided a 
new recommendation regarding the disposable sinus surgery kits included 
as direct PE supply inputs for each of these three codes. When 
developing direct PE input recommendations for these new codes, the AMA 
RUC believed that the codes would be typically billed in one unit per 
patient encounter. Following implementation of these codes for Medicare 
purposes at the start of CY 2011, the RUC received reports that 
multiple units of services were being reported in the same patient 
encounter and that corresponding number of kits was not utilized. The 
RUC reported this information to CMS in conjunction with a request for 
preliminary claims data. The RUC then examined partial year sample 
claims data that overwhelmingly demonstrated each of the codes was 
typically billed with another code in the family and more often billed 
in multiples of three than singularly. Using this information to 
corroborate the reports the RUC had previously received, the RUC 
submitted a refined recommendation for CMS to consider for CY 2012. The 
new recommendation requests that CMS remove the disposable sinus 
surgery kits from each of the codes for CY 2012 and implement 
separately billable alpha-numeric HCPCS codes when possible to allow 
practitioners to be paid the cost of the disposable kits per patient 
encounter instead of per CPT code.
    Response: We agree with the RUC that only one kit is used when 
typically furnishing the maxillary sinus procedure. We also continue to 
believe that in the typical case only one of the scopes is used. 
Neither commenter submitted evidence to support their claims that more 
than one kit or scope is required to furnish these services. In 
response to the commenter's statement regarding the missing input for a 
light pipe, we confirmed that the RUC recommendations and the CY 2011 
direct PE database include minutes allocated to ``light, fiberoptic 
headlight w-source'' equipment (EQ170). We do not understand why the 
commenter requests that minutes should be allocated for an additional 
light source.
    We appreciate and agree with the RUC's concern that the CY 2011 
recommendations reflect an incorrect assumption about the number of 
services furnished per disposable sinus surgery kit used. We have 
considered the RUC's recommendation to remove the sinus surgery kits 
from the codes immediately and establish separately payable alpha-
numeric HCPCS codes to use to report using the kits in furnishing the 
services described by these codes, and we agree that it provides one 
potential long-term solution to the problem with the high-cost 
disposable supply inputs for these particular codes. However, the RUC's 
solution presents a series of potential problems that we have addressed 
previously in the context of the broader challenges regarding our 
ability to price high cost disposable supply items. For the most recent 
discussion of this issue, we direct the reader to our discussion in the 
CY 2011 PFS final rule with comment period (75 FR 73251). However, we 
will consider the recommendation of the RUC regarding these and similar 
supply items during preparation for future rulemaking.
    For CY 2012, we do not believe it would be appropriate to remove 
these items as supply inputs for these codes without providing an 
alternative means for paying practitioners for the resources associated 
with furnishing the related services. At the same time, however, we do 
not believe that it would be appropriate to maintain supply inputs that 
are based on an incorrect assumption about the relationship between how 
a service is furnished and how it is reported. Given the recent 
recommendation from the RUC, as well as our concurring interpretation 
of preliminary claims data for these codes, we believe that modifying 
the supply inputs for these codes is the most appropriate means for 
achieving accurate payment for CY 2012. Recognizing that these codes 
are typically billed in units of two, we believe that reducing the 
sinus surgery kit supply quantity to one-half for each of the codes 
will best reflect the number of kits used when the services are 
typically furnished. As part of our initial refinements, we only 
included the sinus surgery kit specific to the maxillary sinus in CPT 
code 32195. Since we now understand that the non-specific kits can be 
used when

[[Page 73186]]

furnishing more than one service to the same beneficiary on the same 
day, we believe that it would be appropriate to include one-half non-
specific sinus-surgery kit for each code, including CPT code 32195.
    After consideration of both the public comments and the 
recommendations of the AMA RUC, we are altering the direct PE inputs 
for these codes as follows. The ``kit, sinus surgery, balloon 
(maxillary, frontal, or sphenoid)'' (SA106) will be included in the 
direct PE database at the quantity of one-half for each of the three 
CPT codes: 31295, 31296, and 31297. The ``kit, sinus surgery, balloon 
(maxillary)'' (SA107) will be removed as an input for 31295 in the 
direct PE database. We are not allocating equipment for an additional 
scope or an additional light source for any of the codes. However, we 
are not finalizing the direct PE inputs for 31295, 31296, or 31297 for 
CY 2012. Instead, we will keep these direct PE inputs as interim final 
for CY 2012. We seek additional public comments regarding the 
appropriate direct PE inputs for these codes and we will continue to 
consider the AMA RUC's solution for future rulemaking.
(4) Insertion of Intraperitoneal Catheter
    For CY 2011, CPT created a new code to describe percutaneous 
procedures: 49418 (Insertion of tunneled intraperitoneal catheter 
(e.g., dialysis, intraperitoneal chemotherapy instillation, management 
of ascites), complete procedure, including imaging guidance, catheter 
placement, contrast injection when performed, and radiological 
supervision and interpretation; percutaneous).
    Comment: Two commenters stated that CMS had not addressed some of 
the direct PE input recommendations for CPT Code 49418 (Insertion of 
tunneled intraperitoneal catheter, complete procedure). In particular, 
the commenters suggested that a film jacket and a CD approved by the 
RUC as disposable supply inputs for the codes were not included in the 
direct PE database but were not were not addressed as refinements in 
the CY 2011 PFS final rule with comment period. Another commenter 
suggested that there were discrepancies between the clinical labor 
inputs for these codes and the AMA RUC recommendations that were not 
addressed as refinements in the CY 2011 PFS final rule with comment 
period.
    Response: We did not accept the film jacket as a disposable supply 
item because film jackets are not disposable/consumable supplies. This 
refinement was included in the CY 2011 PFS final rule (75 FR 73362). We 
did not incorporate the CD as a supply item for 49418 since the code 
also included x-ray film, which can also be a proxy for digital image 
storage. We mistakenly omitted this refinement from the list of 
refinement in the CY 2011 PFS final rule. We have reexamined the CY 
2011 AMA RUC direct PE recommendations for these codes and confirmed 
that the labor minutes associated with the codes in the direct PE 
database match the AMA RUC recommendations regarding clinical labor 
inputs, which we accepted without refinement.
    In addition to the public comments, we have reviewed the inputs for 
this code and are concerned with one of the disposable supplies 
included in the recommendation. We accepted an item called ``Y-set 
connection tubing'' (SD260). The invoice submitted with the 
recommendation describes an item that is used to replace a plastic 
catheter connecter included with a disposable flex-neck catheter. We 
are asking for public comment regarding the accuracy of this item.
    We are maintaining the direct PE inputs for CPT code 49418 for CY 
2012, but since we are seeking public comment regarding a particular 
supply item, we are keeping the direct PE inputs as interim for CY 
2012.
(5) In Situ Hybridization Testing
    We note that we also received comments on the interim final direct 
PE inputs for CPT codes 88120 (Cytopathology, in situ hybridization 
(e.g., FISH), urinary tract specimen with morphometric analysis, 3-5 
molecular probes, each specimen; manual) and 88121 (Cytopathology, in 
situ hybridization (e.g., FISH), urinary tract specimen with 
morphometric analysis, 3-5 molecular probes, each specimen; using 
computer-assisted technology). We addressed those comments in CY 2012 
PFS proposed rule and again in section II.B.5.b. of this final rule. We 
refer readers there for additional discussion of these codes. As we 
note in that section, for CY 2012 we are maintaining the current direct 
PE inputs for CPT codes 88120 and 88121, but they will remain interim 
and open for public comment.
(6) External Mobile Cardivascular Telemetry
    In the CY 2011 PFS final rule with comment period, after 
consideration of the public comments we received, we established a 
national price for CPT code 93229 (Wearable mobile cardiovascular 
telemetry with electrocardiographic recording, concurrent computerized 
real time data analysis and greater than 24 hours of accessible ECG 
data storage (retrievable with query) with ECG-triggered and patient 
selected events transmitted to a remote attended surveillance center 
for up to 30 days; technical support for connection and patient 
instructions for use, attended surveillance, analysis and physician 
prescribed transmission of daily and emergent data reports) instead of 
maintaining the code as contractor-priced as we had proposed for CY 
2011. We adopted the AMA RUC's recommendations for the clinical labor 
and supply inputs, and utilized price, utilization, and useful life 
information provided by commenters as equipment inputs for the cardiac 
telemetry monitoring device worn by the patient. In developing PE RVUS 
for this service, we classified the costs associated with the 
centralized monitoring equipment, including the hardware and software, 
workstation, webserver, and call recording system, as indirect costs.
    Comment: We received comments objecting to the manner in which CPT 
93229 was nationally priced. These objections included reiterations of 
earlier comments received on the CY 2011 PFS proposed rule that we 
should treat the centralized hardware and software as a direct cost 
similar to the treatment of the cardiac telemetry monitoring device 
worn by the patient and we should incorporate a new PE/HR value into 
the methodology for services such as remote cardiac monitoring.
    Response: As we noted in the CY 2011 PFS final rule, we believe it 
is more appropriate to classify the costs associated with the 
centralized monitoring equipment, including the hardware and software, 
workstation, webserver, and call recording system, as indirect costs 
since it is difficult to allocate those costs to services furnished to 
individual patients in a manner that adequately reflects the number of 
patients being tested. As we also indicated in the CY 2011 PFS final 
rule, it would be inappropriate to deviate from our standard PFS PE 
methodology to adopt a PE/HR that is specific to CPT code 93229 or any 
other set of cardiac monitoring codes based on data from two telemetry 
providers, from a subset of services provided by certain specialty 
cardiac monitoring providers, or from a certain group of specialty 
providers that overall furnish only a portion of cardiac monitoring 
services, nor to change our established indirect PE allocation 
methodology. We believe the current PE methodology appropriately 
captures the relative costs of these services in setting their PE RVUs, 
based on the conclusion we have drawn following our assessment of the 
centralized

[[Page 73187]]

monitoring system that is especially characteristic of services such as 
CPT code 93229. For these reasons, after careful consideration of the 
comments received on this issue, we continue to disagree with 
commenters who believe we should treat the centralized hardware and 
software as a direct cost and that we should incorporate a new PE/HR 
value into the methodology for services such as remote cardiac 
monitoring. We are finalizing, without modification, the development of 
PE RVUs for CPT 93229.
3. Finalizing CY 2011 Interim Final and CY 2012 Proposed Malpractice 
RVUs
    a. Finalizing CY 2011 Interim Final Malpractice RVUs
    Consistent with our malpractice methodology described in section 
II.C.1. of this final rule with comment period, for the CY 2011 PFS 
final rule, we developed malpractice RVUs for new codes and adjusted 
malpractice RVUs for revised codes by scaling the malpractice RVUs of 
the CY 2011 new/revised codes for differences in work RVUs between a 
source code and the new/revised codes. For CY 2011 we adopted the AMA 
RUC-recommended source code crosswalks for all new and revised codes on 
an interim final basis.
    Comment: Commenters supported the adoption of the AMA RUC-
recommended malpractice crosswalks for the CY 2011 new and revised 
codes and encouraged CMS to continue to adopt the AMA RUC 
recommendations in future rulemaking.
    Response: We thank commenters for their support of the CY 2011 
interim final malpractice crosswalks. We will continue to consider the 
AMA RUC-recommended malpractice crosswalks and public comments when 
determining the appropriate risk-of-service for new/revised codes. For 
CY 2012 we are finalizing, without modification, the CY 2011 interim 
final malpractice source code crosswalks. The CY 2011 interim final 
malpractice crosswalk, finalized for CY 2012, is available at the CMS 
Web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp.
    We did not receive any comments to the CY 2011 PFS final rule with 
comment period disagreeing with the malpractice crosswalk for any of 
the CY 2011 new and revised codes. However, we note that we did receive 
a comment to the CY 2012 PFS proposed rule for CPT codes 88120 
(Cytopathology, in situ hybridization (e.g., FISH), urinary tract 
specimen with morphometric analysis, 3-5 molecular probes, each 
specimen; manual) and 88121 (Cytopathology, in situ hybridization 
(e.g., FISH), urinary tract specimen with morphometric analysis, 3-5 
molecular probes, each specimen; using computer-assisted technology); 
both CPT codes had CY 2011 interim final PE, work, and malpractice 
RVUs. The commenter requested that we increase the physician work and 
malpractice RVUs assigned to CPT code 88121 to match the physician work 
and malpractice RVUs assigned to CPT code 88120. As discussed in detail 
in section II.B.5. of this final rule with comment period, we are 
holding the PE, work, and malpractice RVUs for CPT code 88120 and 88121 
as interim for CY 2012, pending re-review by the AMA RUC.
    Additionally, we received a comment to the CY 2011 PFS final rule 
requesting that we reevaluate the malpractice risk factor for a number 
of largely pediatric cardiothoracic surgery CPT codes. These CPT codes 
were not open for comment for CY 2011, however we addressed this 
malpractice comment in the CY 2012 PFS proposed rule (76 FR 42814), and 
it is discussed in greater detail in section II.A.3.d. of this final 
rule with comment period.
b. Finalizing CY 2012 Proposed Malpractice RVUs, Including Malpractice 
RVUs for Certain Cardiothoracic Surgery Services
    As described in the Five Year Review (76 FR 32469) for CPT codes 
with work RVU changes included in the Fourth Five-Year Review, the 
malpractice source code for nearly all reviewed codes was the code 
itself (a 1 to 1 crosswalk). For these CPT codes, we calculated the 
revised malpractice RVUs by scaling the current (CY 2011) malpractice 
RVU by the percent difference in work RVU between the current (CY 2011) 
work RVU and the proposed work RVU. However, there were three CPT codes 
included in the Five Year Review that were previously contractor priced 
and did not have current (CY 2011) work RVUs--CPT codes 33981 
(Replacement of extracorporeal ventricular assist device, single or 
biventricular, pump(s), single or each pump), 33982 (Replacement of 
ventricular assist device pump(s); implantable intracorporeal, single 
ventricle, without cardiopulmonary bypass), and 33983 (Replacement of 
ventricular assist device pump(s); implantable intracorporeal, single 
ventricle, with cardiopulmonary bypass). For all three CPT codes, we 
applied the AMA RUC-recommended malpractice crosswalks to obtain the 
appropriate malpractice RVUs. The crosswalk source code for CPT code 
33981 was CPT code 33976 (Insertion of ventricular assist device; 
extracorporeal, biventricular), and the crosswalk source for CPT codes 
33982 and 33983 was CPT code 33979 (Insertion of ventricular assist 
device, implantable intracorporeal, single ventricle). Consistent with 
the malpractice methodology, the malpractice RVUs for these three 
newly-valued CPT codes were developed by adjusting the malpractice RVU 
of the source codes for the difference in work RVU between the source 
code and the newly-valued codes.
    We received no comments on the malpractice crosswalks included in 
the Five-Year Review. We are finalizing the Five-Year Review 
malpractice crosswalks without modification for CY 2012.
    In the CY 2012 PFS proposed rule there were a number of codes for 
which we reviewed the physician work and practice expense. Like the 
Five-Year Review, for these CPT codes the source code for each code was 
the code itself (a 1-to-1 crosswalk). Therefore, we calculated the 
revised malpractice RVUs for these codes by scaling the current (CY 
2011) malpractice RVU by the percent difference in work RVU between the 
current (CY 2011) work RVU and the proposed work RVU (76 FR 42813).
    In addition to the scaling of malpractice RVUs to account for the 
proportionate difference between current and proposed work RVUs, there 
were 19 cardiothoracic surgery codes for which we proposed to scale the 
malpractice RVUs to account for the proportionate difference between 
the current and proposed revised specialty risk factor (76 FR 42813). 
These codes and their short descriptors are listed in Table 17. We 
assign malpractice RVUs to each service based upon a weighted average 
of the malpractice risk factors of all specialties that furnish the 
service. For the CY 2010 review of malpractice RVUs, we used CY 2008 
Medicare claims data on allowed services to establish the frequency of 
a service by specialty. For a number of cardiothoracic surgery CPT 
codes representing major open heart procedures performed primarily on 
neonates and infants, CY 2008 Medicare claims data showed zero allowed 
services. Therefore, our contractor set the number of services to 1, 
and assigned a risk factor according to the average risk factor for all 
services that do not explicitly have a separate technical or 
professional component (average risk factor = 1.95). In the CY 2010 PFS 
final rule with comment period, we published interim final malpractice 
RVUs for these codes calculated using the average physician risk 
factor, and finalized them in the CY

[[Page 73188]]

2011 PFS final rule with comment period. However, since publication of 
the CY 2010 PFS final rule with comment period, stakeholders expressed 
concern that the average risk factor was not appropriate for these 
services, and that a cardiac surgery risk factor would be more 
appropriate (cardiac surgery risk factor = 6.93). While these CPT codes 
continued to have little to no Medicare claims data, upon clinical 
review we agreed that these CPT codes represent cardiac surgery 
services and that the malpractice RVUs should be calculated using the 
cardiac surgery risk factor. Accordingly, we proposed to scale the 
malpractice RVUs for these CPT codes to reflect the proportionate 
difference between the average risk factor and the cardiac surgery risk 
factor.
    We also proposed to scale the malpractice RVUs to reflect a change 
in risk factor for CPT code 32442 (Removal of lung, total 
pneumonectomy; with resection of segment of trachea followed by 
broncho-tracheal anastomosis (sleeve pneumonectomy)). In the CY 2010 
review of malpractice RVUs we assigned CPT code 32442 the pulmonary 
disease risk factor (2.09) and published the interim final malpractice 
RVU calculated from this risk factor in the CY 2010 PFS final rule with 
comment period. This value was finalized in the CY 2011 PFS final rule 
with comment period. Since finalizing this value, stakeholders have 
suggested that a blended risk factor of thoracic surgery (6.49) and 
general surgery (5.91) would be more appropriate for this service. As 
described in the CY 2010 PFS final rule with comment period (74 FR 
61760), we do not use a blended risk factor for services with Medicare 
utilization under 100; instead, we use the malpractice risk factor of 
the specialty that performs the given service the most (the dominant 
specialty). As CPT code 32442 has Medicare utilization well below the 
100 occurrences threshold, and current Medicare claims data show that 
the dominant specialty for CPT code 32442 is thoracic surgery, we 
believed that the thoracic surgery risk factor is the appropriate risk 
factor for this service. Adjusting the malpractice RVU to reflect the 
thoracic surgery risk factor rather than the pulmonary disease risk 
factor resulted in a malpractice RVU of 13.21 for CPT code 32442. 
Therefore, we proposed a malpractice RVU of 13.21 for CPT code 32442 
for CY 2012.
[GRAPHIC] [TIFF OMITTED] TR28NO11.046

    Comment: Commenters noted their appreciation of our review and 
revisions to these 19 cardiothoracic surgery services. Commenters 
stated that setting the risk factor to the all physician average 
penalized the providers of these procedures, and expressed concern that 
this will occur again unless CMS considers using an assigned specialty 
for CPT codes with fewer than 100 claims per year. Commenters believe 
that it would be prudent to re-examine the use of claims data to 
identify the appropriate specialty for services with less than 100 
claims.
    Response: We appreciate commenters support for our proposal to 
revise the malpractice RVUs for certain cardiothoracic surgery 
services. We note commenters' concern with the malpractice methodology 
as it relates to services with less than 100 claims and will consider 
this recommendation for future rulemaking. We received no comments on 
the 1-to-1 crosswalks described previously for CPT codes with work and 
practice expense revisions in the CY 2012 PFS proposed rule. For CY 
2012, we are finalizing without modification, the proposed crosswalks,

[[Page 73189]]

as well as the proposed revisions to the malpractice risk factors for 
the cardiothoracic surgery services described previously.
4. Payment for Bone Density Tests
    Section 1848(b)(6) of the Act (as amended by section 3111(a) of the 
Affordable Care Act) changed the payment calculation for dual-energy x-
ray absorptiometry (DXA) services described by two specified DXA CPT 
codes for CY s 2010 and 2011. This provision required payment for these 
services at 70 percent of the product of the CY 2006 RVUs for these DXA 
codes, the CY 2006 CF, and the geographic adjustment for the relevant 
payment year.
    Effective January 1, 2007, the CPT codes for DXA services were 
revised. The former DXA CPT codes 76075 (Dual energy X-ray 
absorptiometry (DXA), bone density study, one or more sites; axial 
skeleton (e.g., hips, pelvis, spine)); 76076 (Dual energy X-ray 
absorptiometry (DXA), bone density study, one or more sites; 
appendicular skeleton (peripheral) (for example, radius, wrist, heel)); 
and 76077 (Dual energy X-ray absorptiometry (DXA), bone density study, 
one or more sites; vertebral fracture assessment) were deleted and 
replaced with new CPT codes 77080, 77081, and 77082 that have the same 
respective code descriptors as the predecessor codes. Section 1848(b) 
of the Act, as amended, specifies that the revised payment applies to 
two of the predecessor codes (CPT codes 76075 and 76077) and ``any 
succeeding codes,'' which are, in this case, CPT codes 77080 and 77082.
    As mentioned previously, section 1848(b) of the Act revised the 
payment for CPT codes 77080 and 77082 during CY 2010 and CY 2011. We 
provided for payment in CY s 2010 and 2011 under the PFS for CPT codes 
77080 and 77082 at the specified rates (70 percent of the product of 
the CY 2006 RVUs for these DXA codes, the CY 2006 CF, and the 
geographic adjustment for the relevant payment year). Because the 
statute specifies a payment calculation for these services for CY s 
2010 and 2011 as described previously, for those years we implemented 
the payment provision by imputing RVUs for these services that would 
provide the specified payment amount for these services when multiplied 
by the current year's conversion factor.
    As discussed in the CY 2012 PFS proposed rule (76 FR 42809 and 
42810), for CY 2012, the payment rate for CPT codes 77080 and 77082 
will be based upon resource-based, rather than imputed, RVUs, and the 
current year's conversion factor. The CY 2012 work, PE, and malpractice 
RVUs for these codes are shown in Table 18, CY 2012 RVUs for DXA CPT 
Codes 77080 and 77082, as well as in Addendum B of this final rule with 
comment period.
[GRAPHIC] [TIFF OMITTED] TR28NO11.047

    In addition to temporarily changing the payment rate for the two 
DXA CPT codes, section 3111(b) of the Affordable Care Act also 
authorizes the Secretary to enter into agreement with the Institute of 
Medicine of the National Academies to conduct a study on the 
ramifications of Medicare payment reductions for dual-energy x-ray 
absorptiometry (as described in section 1848(b)(6) of the Act) during 
years 2007, 2008, and 2009 on beneficiary access to bone mass density 
tests. This study has not yet been conducted. In the absence of this 
study, we have requested that the AMA RUC review CPT codes 77080 and 
77082 during CY 2012.
5. Other New, Revised, or Potentially Misvalued Codes With CY 2011 
Interim Final RVUs or CY 2012 Proposed RVUs Not Specifically Discussed 
in the CY 2012 Final Rule With Comment Period
    For all other new, revised, or potentially misvalued codes with CY 
2011 interim final RVUs or CY 2012 proposed RVUs that are not 
specifically discussed in this final rule with comment period, we are 
finalizing for CY 2012, without modification, the interim final or 
proposed work and malpractice RVUs and direct PE inputs. Unless 
otherwise indicated, we agreed with the time values recommended by the 
AMA RUC or HCPAC for all codes addressed in this section. The time 
values for all codes appear on the CMS Web site at: https://www.cms.gov/PhysicianFeeSched/.

C. Establishing Interim Final RVUs for CY 2012

1. Establishing Interim Final Work RVUs for CY 2012
a. Code-Specific Issues
    As previously discussed in section III.A of this final rule with 
comment period, on an annual basis, the AMA RUC and HCPAC provide CMS 
with recommendations regarding physician work values for new and 
revised CPT codes. This section discusses the families of clinically 
related CPT codes where CMS disagreed with the AMA RUC or HCPAC 
recommended physician work RVU or time values for a service for a CY 
2012 new or revised CPT code. The interim or interim final physician 
work RVUs for all new and revised codes, including those where CMS 
agreed with the recommended work RVU appear in Table 19 at the end of 
this section. Unless otherwise indicated, we agreed with the time 
values recommended by the AMA RUC or HCPAC for all codes addressed in 
this section. The time values for all codes appear on the CMS Web site 
at: https://www.cms.gov/PhysicianFeeSched/. We reviewed the AMA RUC's 
recommendations on physician work and time for 156 CY 2012 new and 
revised CPT codes. Upon clinical review, we agreed with the

[[Page 73190]]

AMA RUC's work RVU recommendation for 106 CPT codes, or 68 percent. We 
reviewed the HCPAC's recommendations on physician work and time for 8 
CPT codes. Upon clinical review, we agreed with the HCPAC's work RVU 
recommendation for 6 CPT codes, or 75 percent.
    We note that the AMA RUC also reviewed over 100 CPT codes 
describing molecular pathology services. These CPT codes are new for CY 
2012, however they will not be valid for Medicare purposes for CY 
2012--For CY 2012 Medicare will continue to use the current 
``stacking'' codes for the reporting and payment for these services. 
These molecular pathology codes appear in Addendum B to this final rule 
with the procedure status indicator of I (Not valid for Medicare 
purposes. Medicare uses another code for the reporting and payment for 
these services).
(1) Integumentary System: Skin, Subcutaneous, and Accessory Structures 
(CPT Codes 10060-10061, and 11056)
[GRAPHIC] [TIFF OMITTED] TR28NO11.048

    CPT code 10061 was identified by the AMA RUC Relativity Assessment 
Workgroup through the Harvard-Valued--Utilization > 100,000 screen. CPT 
code 10060 was identified as part of this family to be reviewed. We 
identified CPT code 11056 as part of the MPC List screen.
    After clinical review of CPT codes 10060 (Incision and drainage of 
abscess (e.g., carbuncle, suppurative hidradenitis, cutaneous or 
subcutaneous abscess, cyst, furuncle, or paronychia); simple or single) 
and 10061 (Incision and drainage of abscess (e.g., carbuncle, 
suppurative hidradenitis, cutaneous or subcutaneous abscess, cyst, 
furuncle, or paronychia); complicated or multiple) we believe that the 
current work RVUs of 1.22 and 2.45 respectively, accurately reflect the 
work associated with these services. Upon review, we found no evidence 
that the work for these services has changed.
    For the Third Five-Year Review for CY 2007, the HCPAC recommended 
increasing the work RVU for CPT code 10060 from 1.17 to 1.50 because 
the HCPAC believed the survey methodology used for this code in the 
original Harvard valuation was flawed. In reviewing this code for the 
Third Five-Year Review we compared the specialty society survey times 
with the Harvard-based times and found them comparable (71 FR 37236). 
As such, we found no grounds for increase, and ultimately maintained 
the work RVU of 1.17 for this service (71 FR 69733). For the CY 2010 
PFS, the work RVU for CPT code 10060 was increased to 1.22 based on the 
redistribution of RVUs resulting from the CMS policy to no longer 
recognize the CPT consultation codes.
    For CY 2012, the AMA RUC reviewed the survey results from 
physicians who perform this service. Citing the HCPAC rationale and 
recommendation in the Third Five-Year Review, the AMA RUC recommended 
the survey median work RVU of 1.50 for CPT code 10060 for CY 2012. We 
continue to believe that the original valuation of the service was 
appropriate, and since the work associated with the procedure has not 
changed, we believe that the current work RVU of 1.22 should be 
maintained. Therefore, we are assigning a work RVU of 1.22 to CPT code 
10060 on an interim final basis for CY 2012.
    We reviewed CPT code 11056 (Paring or cutting of benign 
hyperkeratotic lesion (e.g., corn or callus); 2 to 4 lesions), and are 
accepting the HCPAC-recommended work RVU of 0.50, the survey 25th 
percentile value, on an interim basis for CY 2012. We request that the 
specialty society re-review CPT code 11056 along with CPT codes 11055 
(Paring or cutting of benign hyperkeratotic lesion (e.g., corn or 
callus); single lesion) and 11057 (Paring or cutting of benign 
hyperkeratotic lesion (e.g., corn or callus); more than 4 lesions) as 
part of the family. Therefore, we are assigning a work RVU of 0.50 to 
CPT code 11056 on an interim basis for CY 2012, pending re-review of 
the family of services.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(2) Integumentary System: Nails (CPT codes 11719-11721)
[GRAPHIC] [TIFF OMITTED] TR28NO11.049

[[Page 73191]]

    We identified CPT code 11721 as part of the MPC List screen. The 
AMA RUC recommended that CPT codes 11721, along with CPT code 11719 and 
11720 be surveyed for CY 2012.
    After reviewing the survey data, the specialty society concluded 
that the survey data for CPT code 11719 (Trimming of nondystrophic 
nails, any number) was not reflective of the service, and is 
resurveying CPT code 11719 for CY 2013. We will review CPT code 11719 
at that time, along with G0127 (Trimming of dystrophic nails, any 
number) which is crosswalked to CPT code 11719.
    After clinical review of CPT code 11720 (Debridement of nail(s) by 
any method(s); 1 to 5.), and 11721 (Debridement of nail(s) by any 
method(s); 6 or more.), we believe that the current (CY 2011) work RVUs 
of 0.32 and 0.54 (respectively) continue to accurately account for the 
work of these services. The HCPAC also recommended maintaining the 
current (CY 2011) work RVUs for these services. Therefore, we are 
assigning a work RVU of 0.32 for CPT code 11720 and a work RVU of 0.54 
for CPT code 11721 on an interim final basis for CY 2012.
(3) Integumentary System: Repair (Closure) (CPT Codes 15271-15278, 
15777, 16020, 16025)
[GRAPHIC] [TIFF OMITTED] TR28NO11.050

    For CY 2012, the CPT Editorial Panel deleted 24 skin substitute 
codes and established a 2-tier structure with 8 new codes (CPT codes 
15271 through 15278) to report the application of skin substitute 
grafts, which are distinguished according to the anatomic location and 
surface area rather than by product description. Additionally, the CPT 
Editorial Panel created a new add-on code (CPT code 15777) to report 
implantation of a biological implant for soft ties reinforcement. For 
CY 2012, the AMA RUC Relativity Assessment Workgroup identified CPT 
codes 16020 and 16025 through its Different Performing Specialty from 
Survey screen.
    For CY 2011, we created 2 HCPCS codes, G0440 (Application of tissue 
cultured allogeneic skin substitute or dermal substitute; for use on 
lower limb, includes the site preparation and debridement if performed; 
first 25 sq cm or less) and G0441 (Application of tissue cultured 
allogeneic skin substitute or dermal substitute; for use on lower limb, 
includes the site preparation and debridement if performed; each 
additional 25 sq cm), that are recognized for payment under the PFS for 
the application of products described by the codes to the lower limb. 
These codes will be deleted for CY 2012. Providers reporting the 
application of tissue cultured allogeneic skin substitute or dermal 
substitutes to the lower limb for payment under the PFS in CY 2012 
should report under the appropriate new CPT code(s).
    After clinical review of CPT code 15272 (Application of skin 
substitute graft to trunk, arms, legs, total wound surface area up to 
100 sq cm; each additional 25 sq cm wound surface area, or part thereof 
(List separately in addition to code for primary procedure)), we 
believe that a work RVU of 0.33 accurately reflects the work for 
associated with this service. The AMA RUC reviewed the survey results 
for CPT code 15272 and recommended the survey 25th percentile work RVU 
of 0.59 for this service.
    However, we believe this value overstates the work of this 
procedure when compared to the base CPT code 15271 (Application of skin 
substitute graft to trunk, arms, legs, total wound surface area up to 
100 sq cm; first 25 sq cm or less wound surface area). We believe that 
CPT code 15272 is similar in intensity to CPT code 15341 (Tissue 
cultured allogeneic skin substitute; each additional 25 sq cm, or part 
thereof (List separately in addition to code for primary procedure)), 
and that the primary factor distinguishing the work of the two services 
is the intra-service physician time. CPT code 15341 has a work RVU of 
0.50, 15 minutes of intra-service time, and an IWPUT of 0.0333. CPT 
code 15272 has 10 minutes of intra-service time. Ten minutes of intra-
service work at the same intensity as CPT code 15341 is equal to a work 
RVU of 0.33 (10 minutes x 0.0333 IWPUT = 0.33 WRVU). Therefore, we are 
assigning a work RVU of 0.33 to CPT code 15272 on an interim final 
basis for CY 2012.
    After clinical review of CPT code 15276 (Application of skin 
substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, 
genitalia, hands, feet, and/or multiple digits, total wound surface 
area up to 100 sq cm; each additional 25 sq cm wound surface area, or 
part thereof (List separately in addition to code for primary 
procedure)), we believe that a work RVU of 0.50 accurately reflects the 
work associated with this service. The AMA RUC reviewed the survey 
results for CPT code 15276 and recommended a work RVU of 0.59 which 
corresponds to the the AMA RUC's recommended work RVU for CPT code 
15272. As discussed previously, we are assigning an interim final work 
RVU of 0.33 to CPT code 15272. We believe that the work associated with 
CPT code 15276, which describes work on the face, scalp, eyelids, 
mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple

[[Page 73192]]

digits, is more intense than the work associated with CPT code 15272, 
which describes work on the trunk, arms, legs. We believe that a work 
RVU of 0.50 for CPT code 15276 accurately captures the work associated 
with this service, and establishes the appropriate relativity between 
the services. Therefore, we are assigning a work RVU of 0.50 to CPT 
code 15276 on an interim final basis for CY 2012.
    CPT codes 16020 (Dressings and/or debridement of partial-thickness 
burns, initial or subsequent; small (less than 5 percent total body 
surface area)) and 16025 (Dressings and/or debridement of partial-
thickness burns, initial or subsequent; medium (e.g., whole face or 
whole extremity, or 5 percent to 10 percent total body surface area)) 
are typically billed on the same day as an E/M service. We believe some 
of the activities conducted during the pre- and post-service times of 
the procedure code and the E/M visit overlap and, therefore, should not 
be counted twice in developing the procedure's work value. As described 
earlier in section III.A. of this final rule with comment period, to 
account for this overlap, we reduced the pre-service evaluation and 
post-service time by one-third. For CPT code 16020 we reduced the pre-
service evaluation time from 7 minutes to 5 minutes and the post 
service time from 5 minutes to 3 minutes. For CPT code 16025 we reduced 
the pre-service evaluation time from 10 minutes to 7 minutes, and the 
post-service time from 5 minutes to 3 minutes. A complete listing of 
the times assigned to these CPT codes is available on the CMS Web site 
at: https://www.cms.gov/PhysicianFeeSched/.
    In order to determine the appropriate work RVUs for these services 
given the time changes, we calculated the value of the extracted time 
and subtracted it from the AMA RUC-recommended work RVUs. For CPT code 
16020, we removed a total of 4 minutes at an intensity of 0.0224 per 
minute, which amounts to the removal of 0.09 of a work RVU. The AMA RUC 
recommended a work RVU of 0.80, the current (CY 2011) work RVU. We are 
assigning an interim final work RVU of 0.71, with refinement to time, 
to CPT code 16020 for CY 2012. For CPT code 16025, we removed a total 
of 5 minutes at an intensity of 0.0224 per minute, which amounts to the 
removal of 0.11 of a work RVU. The AMA RUC recommended a work RVU of 
1.85, the current (CY 2011) work RVU. We are assigning an interim final 
work RVU of 1.74, with refinement to time, to CPT code 16025 for CY 
2012.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(4) Musculoskeletal: Hand and Fingers (CPT Code 26341)
[GRAPHIC] [TIFF OMITTED] TR28NO11.051

    For CY 2012, the CPT Editorial Panel created CPT codes 26341 and 
20517 to describe a new technique for treating Dupuytren's contracture 
by injecting an enzyme into the Dupuytren's cord for full finger 
extension and manipulation.
    After clinical review of CPT code 26341 (Manipulation, palmar 
fascial cord (ie, Dupuytren's cord), post enzyme injection (e.g., 
collagenase), single cord), we believe that a work RVU of 0.91 
accurately reflects the work associated with this service. The AMA RUC 
reviewed the survey results for CPT code 26341 and recommended a work 
RVU of 1.66, which corresponds to the survey 25th percentile value. We 
believe the service described by CPT code 26341 is analogous to CPT 
code 97140 (Manual therapy techniques (e.g., mobilization/manipulation, 
manual lymphatic drainage, manual traction), 1 or more regions, each 15 
minutes) which has a work RVU of 0.43. However, CPT code 97140 has no 
post-service visits (global period = XXX), while CPT code 26341 
includes 1 CPT code 99212 level 2 office or outpatient visit (global 
period = 010). To account for this difference, we added the work RVU of 
0.48 for CPT code 99212, to the work RVU of 0.43 for CPT code 97140, 
for a total work RVU of 0.91. Therefore, we are assigning an interim 
final work RVU of 0.91 to CPT code 26341 for CY 2012.
(5) Musculoskeletal: Application of Casts and Strapping (CPT Codes 
29581-29584)
[GRAPHIC] [TIFF OMITTED] TR28NO11.052

    For CY 2012 the CPT Editorial Panel revised the descriptor for CPT 
code 29581, and also created CPT codes 29582, 29583, and 29584 to 
describe the application of multi-layer compression to the upper and 
lower extremities. The CPT Editorial Panel and AMA RUC concluded that 
the revisions to the descriptor for CPT code 29581 were

[[Page 73193]]

editorial only, and the AMA RUC related specialty society (Society for 
Vascular Surgery) believed that resurveying CPT code 29581 was not 
necessary. As such, the AMA RUC recommended ``No Change'' for CPT code 
29581. The new CPT codes 29582, 29583, and 29584 were surveyed through 
the American Physical Therapy Association (the expected dominant 
providers of the services), and the HCPAC reviewed the results and 
issued recommendations to CMS for these 3 new CPT codes.
    After clinical review, we believe that CPT codes 29581 (Application 
of multi-layer compression system; leg (below knee), including ankle 
and foot), 29582 (Application of multi-layer compression system; thigh 
and leg, including ankle and foot, when performed), 29583 (Application 
of multi-layer compression system; upper arm and forearm) and 29584 
(Application of multi-layer compression system; upper arm, forearm, 
hand, and fingers) all describe similar services from a resource 
perspective and should be valued similarly. We believe CPT code 29581 
(work RVU = 0.60) is valued inappropriately high in relation to newly 
created, surveyed, and HCPAC-reviewed CPT codes 29582, 29583, and 
29584. We believe that the HCPAC recommended work RVUs of 0.35 for CPT 
code 29682, 0.25 for CPT code 29583, and 0.35 for CPT code 29584 
accurately reflect the work associated with these services. 
Additionally, we believe that the clinical conditions treated by CPT 
codes 29581 and 29583 are essentially the same, namely the treatment of 
venus ulcers and lymphedema. We recognize that there will be mild 
differences and variation in the application of a multi-layer 
compression system to the upper extremity versus the lower extremity, 
which is accounted for in the intra-service times of the codes. As 
such, we believe a work RVU of 0.25 appropriately accounts for the work 
associated with CPT code 29581. We believe that a survey that addresses 
all 4 CPT codes together as a family and gathers responses from all 
clinicians who furnish the services described by CPT codes 29581 
through 29584 would help assure the appropriate gradation in valuation 
of these 4 services. In sum, on an interim basis for CY 2012 we are 
assigning a work RVU of 0.25 to CPT code 29581, a work RVU of 0.35 to 
CPT code 29582, a work RVU of 0.25 to 29593, and a work RVU of 0.35 to 
CPT code 29584.
(6) Musculoskeletal: Endoscopy/Arthroscopy (CPT Codes 29826, 29880, 
29881)
[GRAPHIC] [TIFF OMITTED] TR28NO11.053

    CPT code 29826 was identified by the AMA RUC Relativity Assessment 
Workgroup through the Codes Reported Together 75 percent or More 
screen. This service is commonly performed with CPT codes 29824, 29827 
and 29828. In addition, as part of the Fourth Five-Year Review, CMS 
identified 29826 through the Harvard-Valued--Utilization > 30,000 
screen.
    Given that CPT code 29826 (Arthroscopy, shoulder, surgical; 
decompression of subacromial space with partial acromioplasty, with 
coraco-acromial ligament (ie, arch) release, when performed) is rarely 
performed as a stand-alone procedure (less than 1 percent of the time), 
the American Academy of Orthopaedic Surgeons (AAOS) sent us a request 
to change the global period from 090 to ZZZ. A global surgical period 
of 090 is reflects a major surgery with a 1-day preoperative period and 
a 90-day postoperative period included in the fee schedule payment 
amount. A global surgical period of ZZZ reflects a service that is 
related to another service and is always included in the global period 
of the other service. These are often referred to as ``add-on'' codes 
or services. We agreed to change the global surgical period for CPT 
code 29826, and CPT code 29826 was surveyed and presented as an add-on 
service with a ZZZ global period.
    After clinical review of CPT code 29826, we believe that the AMA 
RUC-recommended work RVU of 3.00, the survey 25th percentile value, 
accurately values the work associated with this service. We are 
assigning a work RVU of 3.00 to CPT code 29826 on an interim final 
basis for CY 2012.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(7) Respiratory: Lungs and Pleura (CPT Codes 32096-32854)

[[Page 73194]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.054

    The CPT Editorial Panel reviewed the lung resection family of codes 
for CY 2012 and deleted 8 codes, revised 5 codes and created 18 new 
codes to describe new thoracoscopic procedures and to clarify coding 
confusion between lung biopsy and lung resection procedures. For the 
wedge resection procedures, the revisions were based on three tiers; 
first, the approach, thoracotomy or thoracoscopy; second, the target to 
remove nodules or infiltrates; and lastly the intent, diagnostic or 
therapeutic (for nodules only, all infiltrates will be removed for 
diagnostic purposes).
    After clinical review of CPT code 32096 (Thoracotomy, with 
diagnostic biopsy(ies) of lung infiltrate(s) (e.g., wedge, incisional), 
unilateral), we believe a work RVU of 13.75 accurately reflects the 
work associated with this service compared to other related services. 
The AMA RUC reviewed the survey results, compared the code to other 
services, and concluded that the survey 25th percentile work RVU of 
17.00 appropriately accounts for the work and physician time required 
to perform this procedure. We determined that the work associated with 
CPT code 32096 was similar in terms of physician time and intensity to 
CPT code 44300 (Placement, enterostomy or cecostomy, tube open (e.g., 
for feeding or decompression) (separate procedure)). We believe 
crosswalking to the work RVU of CPT code 44300 appropriately accounts 
for the work associated with CPT code 32096. Therefore, we are 
assigning a work RVU of 13.75 for CPT code 32096 on an interim final 
basis for CY 2012.
    After clinical review of CPT code 32097 (Thoracotomy, with 
diagnostic biopsy(ies) of lung nodule(s) or mass(es) (e.g., wedge, 
incisional), unilateral), we believe a work RVU of 13.75 accurately 
reflects the work associated with this service compared to other 
related services. The AMA RUC reviewed the survey results, compared the 
code to other services, and recommended the survey 25th percentile work 
RVU of 17.00. We determined that the work associated with CPT code 
32096 was similar to CPT code 32096, to which we have assigned a work 
RVU of 13.75. Therefore, we are assigning a work RVU of 13.75 for CPT 
code 32097 on an interim final basis for CY 2012.
    After clinical review of CPT code 32098 (Thoracotomy, with 
biopsy(ies) of pleura), we believe a work RVU of 12.91 accurately 
reflects the work associated with this service compared to other 
related services. The AMA RUC reviewed the survey results, compared the 
code to other services, and recommended the survey 25th percentile work 
RVU of 14.99. We determined that the work associated with CPT code 
32098 was similar in terms of physician time and intensity to CPT code 
47100 (Biopsy of liver, wedge). We believe crosswalking to the work RVU 
of CPT code 47100 appropriately accounts for the work associated with 
CPT code 32098. Therefore, we are assigning a work RVU of 12.91 to CPT 
code 32098 on an interim final basis for CY 2012.
    After clinical review of CPT code 32100 (Thoracotomy; with 
exploration), we believe a work RVU of 13.75 accurately reflects the 
work associated with this service compared to other related services. 
The AMA RUC reviewed the survey results, compared the code to other 
services, and recommended a work RVU of 17.00. The AMA RUC concluded 
that CPT code 32100 is similar to new CPT code 32096, for which the AMA 
RUC recommended a work RVU of 17.00. We recognize the specialty society 
and AMA RUC assertion that CPT code 32100 should be valued the same as 
CPT codes 32096 and 32097 based on the assessment that the work is 
similar between these three services. We note that we assigned a work 
RVU of 13.75 to CPT codes 32096 and 32097. Accordingly, we are 
assigning a work RVU of 13.75 for CPT code 32100 on an interim final 
basis for CY 2012.
    After clinical review of CPT code 32505 (Thoracotomy; with 
therapeutic wedge resection (e.g., mass, nodule), initial), we believe 
a work RVU of 15.75 accurately reflects the work associated

[[Page 73195]]

with this service compared to other related services. The AMA RUC 
reviewed the survey results, compared the code to other services, and 
recommended the survey 25th percentile work RVU of 18.79. We recognize 
that CPT code 32505 has greater physician work and intensity compared 
to CPT code 32096, and we believe the additional 30 minutes of intra-
service work associated with CPT code 32505 accounts for the additional 
work RVUs assigned to this service as compared to CPT code 32096, and 
that this incremental difference is equivalent to 2.00 work RVUs. 
Accordingly, we are assigning a work RVU of 15.75 for CPT code 32505 on 
an interim final basis for CY 2012.
    After clinical review of CPT code 32507 (Thoracotomy; with 
diagnostic wedge resection followed by anatomic lung resection (List 
separately in addition to code for primary procedure)), we believe a 
work RVU of 3.00 accurately reflects the work associated with this 
service compared to other related services. The AMA RUC reviewed the 
survey results, compared the code to other services, and recommended 
the survey 25th percentile work RVU of 3.78. We believe that the work 
associated with this service is similar to the work of CPT code 32506 
and should be valued the same. Accordingly, we are assigning a work RVU 
of 3.00 to CPT code 32507 on an interim final basis for CY 2012.
    For CPT code 32663 (Thoracoscopy, surgical; with lobectomy (single 
lobe)), the AMA RUC recommended a work RVU of 24.64. Upon clinical 
review, we have determined that it is most appropriate to accept the 
AMA RUC recommended work RVU of 24.64 on a provisional basis, pending 
review of the open heart surgery analogs, in this case, CPT code 32480. 
We are requesting the AMA RUC look at the incremental difference in 
RVUs and times between the open and laparoscopic surgeries and 
recommend a consistent valuation of RVUs and time for CPT code 32663 
and other services within this family with this same issue. 
Accordingly, we are assigning a work RVU of 24.64 for CPT code 32663 on 
an interim basis for CY 2012.
    After clinical review of CPT code 32668 (Thoracoscopy, surgical; 
with diagnostic wedge resection followed by anatomic lung resection 
(List separately in addition to code for primary procedure)), we 
believe a work RVU of 3.00 accurately reflects the work associated with 
this service compared to other related services. The AMA RUC reviewed 
the survey results, compared the code to other services, and 
recommended the survey 25th percentile work RVU of 4.00. We believe 
that the work associated with this service is similar to the work of 
CPT code 32506, which we have valued at a work RVU of 3.00. 
Accordingly, we are assigning a work RVU of 3.00 to CPT code 32668 on 
an interim basis for CY 2012.
    For CPT code 32669 (Thoracoscopy, surgical; with removal of a 
single lung segment (segmentectomy)), the AMA RUC recommended a work 
RVU of 23.53. Upon clinical review, we have determined that it is most 
appropriate to accept the AMA RUC recommended work RVU of 23.53 on a 
provisional basis, pending review of the open heart surgery analogs, in 
this case CPT code 32480. We are requesting the AMA RUC look at the 
incremental difference in RVUs and times between the open and 
laparoscopic surgeries and recommend a consistent valuation for CPT 
32669 and other services within this family with this same issue. 
Accordingly, we are assigning a work RVU of 23.53 to CPT code 32669 on 
an interim basis for CY 2012.
    For CPT code 32670 (Thoracoscopy, surgical; with removal of two 
lobes (bilobectomy)) the AMA RUC recommended a work RVU of 28.52. Upon 
clinical review, we have determined that it is most appropriate to 
accept the AMA RUC recommended work RVU of 28.52 on a provisional 
basis, pending review of the open heart surgery analogs, in this case 
CPT code 32482. We are requesting the AMA RUC look at the incremental 
difference in RVUs and times between the open and laparoscopic 
surgeries and recommend a consistent valuation for CPT 32670 and other 
services within this family with this same issue. Accordingly, we are 
assigning a work RVU of 28.52 to CPT code 32670 on an interim basis for 
CY 2012.
    For CPT code 32671 (Thoracoscopy, surgical; with removal of lung 
(pneumonectomy)), the AMA RUC recommended a work RVU of 31.92. Upon 
clinical review, we have determined that it is most appropriate to 
accept the AMA RUC recommended work RVU of 31.92 on a provisional 
basis, pending review of the open heart surgery analogs, in this case 
CPT code 32440. We are requesting the AMA RUC look at the incremental 
difference in RVUs and times between the open and laparoscopic 
surgeries and recommend a consistent valuation for CPT 32671 and other 
services within this family with this same issue. Accordingly, we are 
assigning a work RVU of 31.92 to CPT code 32671 on an interim basis for 
CY 2012.
    For CPT code 32672 (Thoracoscopy, surgical; with resection-
plication for emphysematous lung (bullous or non-bullous) for lung 
volume reduction (LVRS), unilateral includes any pleural procedure, 
when performed), the AMA RUC recommended a work RVU of 27.00. Upon 
clinical review, we have determined that it is most appropriate to 
accept the AMA RUC recommended work RVU of 27.00 on a provisional 
basis, pending review of the open heart surgery analogs, in this case 
CPT code 32491. We are requesting the AMA RUC look at the incremental 
difference in RVUs and times between the open and laparoscopic 
surgeries and recommend a consistent valuation for CPT 32672 and other 
services within this family with this same issue. Accordingly, we are 
assigning a work RVU of 27.00 to CPT code 32672 on an interim basis for 
CY 2012.
    For CPT code 32673 (Thoracoscopy, surgical; with resection of 
thymus, unilateral or bilateral), the AMA RUC recommended a work RVU of 
21.13. Upon clinical review, we have determined that it is most 
appropriate to accept the AMA RUC recommended work RVU of 21.13 on a 
provisional basis, pending review of related CPT codes 60520 
(Thymectomy, partial or total; transcervical approach (separate 
procedure)), 60521 (Thymectomy, partial or total; sternal split or 
transthoracic approach, without radical mediastinal dissection 
(separate procedure)), and 60522 (Thymectomy, partial or total; sternal 
split or transthoracic approach, with radical mediastinal dissection 
(separate procedure)). At this time, we have concerns about appropriate 
relativity between the times and RVUs of these services. We are 
assigning a work RVU of 21.13 to CPT code 32673 on an interim basis for 
CY 2012.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(8) Cardiovascular: Heart and Pericardium

[[Page 73196]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.055

(A) Pediatric Cardiovascular Code (CPT Code 36000)
    The AMA RUC recommended that CMS consider a bundled status for CPT 
code 36000, (Introduction of needle or intracatheter, vein) because the 
AMA RUC and many specialty societies believe CPT code 36000 always is a 
component of other services. We agree with the AMA RUC recommendation 
and for CY 2012, CPT code 36000 will have a status code of B (bundled). 
We are publishing the RVUs for CPT code 36000 in the CY 2012 PFS, but 
Medicare will no longer make separate payment for this service.
(B) Renal Angiography Codes (CPT Codes 36251-36254)
    CPT codes 75722 and 75724 were identified through the Codes 
Reported Together 75 percent or More screen. These supervision and 
interpretation codes were commonly billed with the catheter placement 
code 36245. For CY 2012, the specialties submitted a code change 
proposal to the CPT Editorial Panel to bundle the services commonly 
reported together. The panel deleted CPT codes 75722 and 75724 and 
created 4 bundled services (CPT codes 36251, 36252, 36253, and 36254) 
for CY 2012.
    After clinical review of CPT code 36251 (Selective catheter 
placement (first-order), main renal artery and any accessory renal 
artery(s) for renal angiography, including arterial puncture and 
catheter placement(s), fluoroscopy, contrast injection(s), image 
postprocessing, permanent recording of images, and radiologic 
supervision and interpretation, including pressure gradient 
measurements when performed, and flush aortogram when performed; 
unilateral), we believe a work RVU of 5.35 accurately reflects the work 
associated with this service. The AMA RUC reviewed the survey results, 
compared the code to other services, and concluded that the work value 
for CPT code 36251 should be directly crosswalked to CPT code 31267 
(Nasal/sinus endoscopy, surgical, with maxillary antrostomy; with 
removal of tissue from maxillary sinus) (work RVU = 5.45). The AMA RUC 
recommended a work RVU of 5.45 for CPT code 36251. We determined that 
the work associated with CPT code 36251 is closely aligned in terms of 
physician time and intensity with CPT code 52341 (Cystourethroscopy; 
with treatment of ureteral stricture (e.g., balloon dilation, laser, 
electrocautery, and incision) (work RVU=5.35). We believe crosswalking 
to the work RVU of CPT code 52341 appropriately accounts for the work 
associated with CPT code 36251. Therefore, we are assigning a work RVU 
of 5.35 to CPT code 36251 on an interim final basis for CY 2012.
    After clinical review of CPT code 36252 (Selective catheter 
placement (first-order), main renal artery and any accessory renal 
artery(s) for renal angiography, including arterial puncture and 
catheter placement(s), fluoroscopy, contrast injection(s), image 
postprocessing, permanent recording of images, and radiologic 
supervision and interpretation, including pressure gradient 
measurements when performed, and flush aortogram when performed; 
bilateral), we believe a work RVU of 6.99 accurately reflects the work 
associated with this service. The AMA RUC reviewed the survey results, 
compared the code to other services, and concluded that the work value 
for CPT code 36252 should be directly crosswalked to CPT code 43272 
(Endoscopic retrograde cholangiopancreatography (ERCP); with ablation 
of tumor(s), polyp(s), or other lesion(s) not amenable to removal by 
hot biopsy forceps, bipolar cautery or snare technique) (work RVU = 
7.38). While the AMA RUC recommended a work RVU of 7.38 for CPT code 
36252. We believe the intensity of this service is akin to CPT code 
58560 (Hysteroscopy, surgical; with division or resection of 
intrauterine septum (any method)) (work RVU = 6.99). Accordingly, we 
are assigning a work RVU of 6.99 to CPT code 36252 on an interim final 
basis for CY 2012.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree

[[Page 73197]]

with the AMA RUC/HCPAC-recommended work RVUs and are setting as interim 
final the work RVUs listed in Table 19.
(C) IVC Transcatheter Procedures (CPT Codes 37191-37193)
    After clinical review of CPT code 37192 (Repositioning of 
intravascular vena cava filter, endovascular approach inclusive of 
vascular access, vessel selection, and all radiological supervision and 
interpretation, intraprocedural roadmapping, and imaging guidance 
(ultrasound and fluoroscopy)), we believe a work RVU of 7.35 accurately 
reflects the work associated with this service. The AMA RUC reviewed 
the survey results, compared the code to other services, and concluded 
that the survey 75th percentile intra-service time of 60 minutes and 
the 25th percentile of work RVU of 8.00 accurately describes the 
physician work involved in the service. We determined that the work 
associated with CPT code 37192 is similar to CPT code 93460 (Catheter 
placement in coronary artery(s) for coronary angiography, including 
intraprocedural injection(s) for coronary angiography, imaging 
supervision and interpretation; with right and left heart 
catheterization including intraprocedural injection(s) for left 
ventriculography, when performed), which has a work RVU of 7.35 and has 
the following times: 48 minutes pre-service, 50 minutes intra-service, 
and 30 minutes post-service. As such, we believe that the survey median 
intra-service time of 45 minutes appropriately accounts for the time 
required to furnish the intra-service work of this procedure. 
Therefore, we are assigning a work RVU of 7.35 to CPT code 37192, with 
a refinement to 45 minutes of intra-service time, on an interim final 
basis for CY 2012. A complete listing of the times associated with this 
code is available on the CMS Web site at: https://www.cms.gov/PhysicianFeeSched/.
    After clinical review of CPT code 37193 (Retrieval (removal) of 
intravascular vena cava filter, endovascular approach inclusive of 
vascular access, vessel selection, and all radiological supervision and 
interpretation, intraprocedural roadmapping, and imaging guidance 
(ultrasound and fluoroscopy)), we believe a work RVU of 7.35 accurately 
reflects the work associated with this service. The AMA RUC reviewed 
the survey results, compared the code to other services, and concluded 
that the survey 75th percentile intra-service time of 60 minutes and 
the 25th percentile of work RVU of 8.00 accurately describes the 
physician work involved in the service. We believe that the work 
associated with CPT code 37193 is similiar to CPT code 93460 (Catheter 
placement in coronary artery(s) for coronary angiography, including 
intraprocedural injection(s) for coronary angiography, imaging 
supervision and interpretation; with right and left heart 
catheterization including intraprocedural injection(s) for left 
ventriculography, when performed), which has a work RVU of 7.35 and the 
following times: 48 minutes pre-service, 50 minutes intra-service, and 
30 minutes post-service. As such, we believe that the survey median 
intra-service time of 45 minutes appropriately accounts for the time 
required to furnish the intra-service work associated with this 
procedure. Therefore, we are assigning a work RVU of 7.35 to CPT code 
37193, with a refinement to 45 minutes of intra-service time, on an 
interim final basis for CY 2012. A complete listing of the times 
associated with this code is available on the CMS Web site at: https://www.cms.gov/PhysicianFeeSched/.
    After clinical review of CPT code 37619 (Ligation of inferior vena 
cava), we believe a work RVU of 30.00 accurately reflects the work 
associated with this service. The AMA RUC reviewed the survey results, 
compared the code to other services, and concluded that the survey 
respondents underestimated the total physician work for this rarely 
performed service, by underestimating the significant post-operative 
work. The AMA RUC recommended a work RVU of 37.60 for CPT code 37619. 
We determined that the work associated with this service is more 
aligned with reference CPT code 37617 (Ligation, major artery (e.g., 
post-traumatic, rupture); abdomen) (work RVU = 23.97), therefore we 
believe the survey median work RVU of 30.00 is more appropriate. 
Accordingly, we are assigning a work RVU of 30.00 to CPT code 37619 on 
an interim final basis for CY 2012.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(9) Hemic and Lymphatic Systems: General, Bone Marrow or Stem Cell 
Services/Procedures (CPT Codes 38230 and 38232)
[GRAPHIC] [TIFF OMITTED] TR28NO11.056

    For CY 2012, the CPT Editorial Panel split CPT code 38230 into two 
separate codes: 38230 (Bone marrow harvesting for transplantation; 
allogeneic), and 38232 (Bone marrow harvesting for transplantation; 
autologous) to more accurately reflect current practice. For CY 2012, 
we changed the global period from 010 to 000 for CPT code 38230, and 
also assigned a global period of 000 to CPT code 38232, as these 
services rarely require overnight hospitalization and physician follow-
up in the days following the procedure.
    After clinical review of CPT codes 38230 and 38232, we believe that 
a work RVU of 3.09 appropriately accounts for the work associated with 
these services. The AMA RUC reviewed the specialty society survey 
results and, after comparison to similar CPT codes, the AMA RUC 
recommended the survey median work RVU of 4.00 for CPT code 38230, and 
the survey median work RVU of 3.50 for CPT code 38232. We believe that 
the work for these services is very similar and should be valued the 
same. CPT code 38230 currently (CY 2011) has a work RVU of 4.85 with a 
ten-day global period that includes 1 CPT code 99213 level 3 office or 
outpatient visit, and 1 CPT code 99238 discharge day management 
service. To

[[Page 73198]]

convert CPT code 38230 from a 10-day global period to a 0-day global 
period, one could subtract out the work RVUs for CPT code 99213 (work 
RVU = 0.97) and CPT code 99238 (work RVU = 1.28), resulting in a work 
RVU of 2.60. However, we believe that a work RVU of 2.60 would place 
these services too low compared to similar services. We believe that 
the CPT code 32830 survey 25th percentile work RVU of 3.09 accurately 
captures the intensity of these two services. Therefore, we are 
assigning a work RVU of 3.09 to CPT codes 32830 and 32832 on an interim 
final basis for CY 2012.
(10) Digestive: Liver (CPT Code 47000)
[GRAPHIC] [TIFF OMITTED] TR28NO11.057

    We identified CPT code 47000 (Biopsy of liver, needle; 
percutaneous) as potentially misvalued through the Harvard-Valued--
Utilization > 30,000 screen.
    After clinical review of CPT code 47000, we believe that the 
current (CY 2011) work RVU of 1.90 be maintained. The AMA RUC reviewed 
the specialty society survey data, and also concluded that a work RVU 
of 1.90 be maintained. We request that the AMA RUC and CPT Editorial 
Panel consider reviewing all the percutaneous biopsy CPT codes to 
incorporate imaging guidance into the RVU and descriptor where 
appropriate. We are assigning a work RVU of 1.90 to CPT code 47000 on 
an interim final basis for CY 2012.
(11) Digestive: Abdomen, Peritoneum, and Omentum (CPT Codes 49082-
49084)
[GRAPHIC] [TIFF OMITTED] TR28NO11.058

    The AMA RUC identified CPT codes 49080 and 49081 through the 
Harvard-Valued--Utilization > 100,000 screen. The related specialty 
societies noted that the services have evolved since the codes were 
initially established and need separate codes that distinguish 
paracentesis performed without imaging guidance and paracentesis 
performed with imaging guidance. For CY 2012, the CPT Editorial Panel 
deleted CPT codes 49080 and 49081 and created 3 new CPT codes, 49082, 
49083, and 49084, to more accurately describe the current medical 
practice.
    After clinical review of CPT code 49082 (Abdominal paracentesis 
(diagnostic or therapeutic); without imaging guidance), we believe that 
a work RVU of 1.24 accurately accounts for the work associated with 
this service. The AMA RUC recommended a work RVU of 1.35 for CPT code 
49082, which corresponds to the current (CY 2011) work RVU for CPT code 
49080 (CY 2011 descriptor: Peritoneocentesis, abdominal paracentesis, 
or peritoneal lavage (diagnostic or therapeutic); initial). For CPT 
code 49082 we believe that the survey response rate (9 of 517) is too 
low to produce a reliable estimate. We believe that CPT code 49082 is 
similar in time and intensity to CPT code 32562 (Instillation(s), via 
chest tube/catheter, agent for fibrinolysis (e.g., fibrinolytic agent 
for break up of multiloculated effusion); subsequent day) which has a 
work RVU of 1.24 and 10 minutes of intra-service time. Therefore, we 
are assigning a work RVU of 1.24, with a refinement to 10 minutes of 
intra-service time, to CPT code 49082 for CY 2012. A complete listing 
of the times associated with this CPT code is available on the CMS Web 
site at: https://www.cms.gov/PhysicianFeeSched/.
    After clinical review of CPT codes 49083 (Abdominal paracentesis 
(diagnostic or therapeutic); with imaging guidance) and 49084 
(Peritoneal lavage, including imaging guidance, when performed), we 
believe that a work RVU of 2.00 accurately accounts for the work 
associated with these services. After comparison to similar CPT codes, 
the AMA RUC recommended a work RVU of 2.00 for CPT code 49083 and a 
work RVU of 2.50 for CPT code 49084. We agree with the AMA RUC-
recommended work RVU of 2.00 for CPT code 49083, and believe that CPT 
code 49084 requires similar work and should be valued the same. 
Therefore, we are assigning a work RVU of 2.00 to CPT codes 49083 and 
49084 on an interim final basis for CY 2012.
(12) Nervous: Spine and Spinal Cord (CPT Codes 62367-62370)

[[Page 73199]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.059

    For CY 2012 the AMA RUC Relativity Assessment Workgroup identified 
CPT codes 62367, 62368, 95990, and 95991 as part of the Codes Reported 
Together 75 percent or More screen. For CY 2012, the CPT Editorial 
Panel created 2 new CPT codes, 62369 and 62370, to report electronic 
analysis of programmable implanted pump for intrathecal or epidural 
drug infusion with reprogramming and refill requiring and not requiring 
physician's skill and editorially revised 3 existing CPT codes, CPT 
code 62367 to report without reprogramming or refill and CPT codes 
95990 and 95991 to report refilling and maintenance of implantable pump 
or reservoir for drug delivery requiring and not requiring physician 
skill. The changes to CPT code 95990 and 95991 were editorial only and 
did not require a review of the physician work or practice expense.
    After clinical review of CPT code 62370 (Electronic analysis of 
programmable, implanted pump for intrathecal or epidural drug infusion 
(includes evaluation of reservoir status, alarm status, drug 
prescription status); with reprogramming and refill (requiring 
physician's skill)), we believe that a work RVU of 0.90 accurately 
accounts for the work associated with this service. After a comparison 
to similar services, the AMA RUC recommended a work RVU of 1.10 for CPT 
code 62370 based on a crosswalk to CPT code 56605 (Biopsy of vulva or 
perineum (separate procedure); 1 lesion). We believe that a work RVU of 
1.10 for CPT code 62370 is too high compared to similar services in 
this family. We find CPT code 62370 to be similar in intensity and 
complexity to CPT code 93281 (Programming device evaluation (in person) 
with iterative adjustment of the implantable device to test the 
function of the device and select optimal permanent programmed values 
with physician analysis, review and report; multiple lead pacemaker 
system) (work RVU = 0.90). We believe that a work RVU of 0.90, which is 
between the specialty society survey 25th percentile and median work 
RVU, appropriately reflects the work of CPT code 62370. Therefore, we 
are assigning a work RVU of 0.90 to CPT code 62370 on an interim final 
basis for CY 2012.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(13) Nervous: Extracranial Nerves, Peripheral Nerves, and Autonomic 
Nervous System (CPT Codes 64633-64636)
[GRAPHIC] [TIFF OMITTED] TR28NO11.060

    CPT code 64626 was identified by the AMA RUC's Five-Year Review 
Identification Workgroup as potentially misvalued through the Site-of-
Service Anomaly screen. The specialty society requested and the AMA RUC 
agreed that CPT codes 64622, 64623, 64626, 64627 be referred to CPT to 
clarify that imaging is required. For CY 2012, the CPT Editorial Panel 
deleted four CPT codes (64622-64623, and 64626-64627) and created four 
new CPT codes (64633-64636) to describe neurolysis reported per joint 
(2 nerves per each joint) instead of per nerve, under image guidance.
    After clinical review of CPT codes 64633 (Destruction by neurolytic 
agent, paravertebral facet joint nerve(s); cervical or thoracic, with 
image guidance (fluoroscopy or CT), single facet joint), 64634 
(Destruction by neurolytic agent, paravertebral facet joint nerve(s); 
cervical or thoracic, with image guidance (fluoroscopy or CT), each 
additional facet joint (List separately in addition to code for primary 
procedure)), 64635 (Destruction by neurolytic agent, paravertebral 
facet joint nerve(s); lumbar or sacral, with image guidance 
(fluoroscopy or CT), single facet joint), and 64636 (Destruction by 
neurolytic agent, paravertebral facet joint nerve(s); lumbar or sacral, 
with image guidance (fluoroscopy or CT), each additional facet joint 
(List separately in addition to code for primary procedure)), we 
believe that the specialty society survey 25th percentile work RVUs of 
3.84, 1.32, 3.78, and 1.16 (respectively) accurately reflect the work 
associated with these services. These are also the AMA RUC-recommended 
work RVUs for these services. For CPT codes 64635 and 64636, we believe 
that the survey median intra-service times of 28 minutes and 15 minutes 
(respectively) appropriately allow for the intra-service work 
associated with furnishing these services. The AMA RUC recommended an 
intra-service time of 30 minutes for CPT code 64635, and an intra-
service time of 20 minutes for CPT code 64636.

[[Page 73200]]

In sum, on an interim final basis for CY 2012 we are finalizing a work 
RVU of 3.84 for CPT code 64633 and a work RVU of 1.32 for CPT code 
64634, without refinement to the AMA RUC-recommended time. On an 
interim final basis for CY 2012 we are finalizing a work RVU of 3.78 
for CPT code 64635 and a work RVU of 1.16 for CPT code 64636, with 
refinement to the AMA RUC-recommended time. A complete listing of the 
times associated with these procedures is available on the CMS Web site 
at: https://www.cms.gov/PhysicianFeeSched/. Additionally, we request 
that the AMA RUC review CPT code 64681 (Destruction by neurolytic 
agent, with or without radiologic monitoring; superior hypogastric 
plexus) which was the reference service for CPT codes 64633 and 64635.
(14) Diagnostic Radiology: Abdomen (CPT Code 74174)
[GRAPHIC] [TIFF OMITTED] TR28NO11.061

    CPT codes 74175 and 72191 were identified by the AMA RUC Relativity 
Assessment Workgroup's Codes Reported Together 75 percent or More 
screen, with both services reported over 95 percent of the time 
together. For CY 2012, the CPT Editorial Panel created CPT code 74174 
which bundles the work of CPT codes 74175 and 72191 when reported 
together on the same date of service.
    We reviewed CPT code 74174 (Computed tomographic angiography, 
abdomen and pelvis; with contrast material(s), including noncontrast 
images, if performed, and image postprocessing), and are accepting the 
AMA RUC-recommended work RVUs and times on an interim basis for CY 
2012. We request that the AMA RUC review the component CPT codes: 74175 
(Computed tomographic angiography, abdomen, with contrast material(s), 
including noncontrast images, if performed, and image postprocessing) 
and 72191 (Computed tomographic angiography, pelvis, with contrast 
material(s), including noncontrast images, if performed, and image 
postprocessing). On an interim basis for CY 2012 we are assigning a 
work RVU of 2.20 to CPT code 74174.
(15) Pathology and Laboratory: Cytopathology (CPT Codes 88104, 88106, 
and 88108)
[GRAPHIC] [TIFF OMITTED] TR28NO11.062

    CPT code 88104 was identified through the AMA RUC Relativity 
Assessment Workgroup by the Harvard-Valued--Utilization > 100,000. 
Additionally, CPT codes 88106-88108 were identified as part of the 
Cytopathology family for AMA RUC review.
    After clinical review of CPT code 88104 (Cytopathology, fluids, 
washings or brushings, except cervical or vaginal; smears with 
interpretation), we believe that the current (CY 2011) work RVU of 0.56 
accurately reflects the work associated with this service. We also 
believe that 24 minutes of intra-service time, the survey median, and 
no pre- or post-service time is appropriate for this service. That AMA 
RUC also recommended a work RVU of 0.56 for CPT code 88104 and 24 
minutes of intra-service time with no pre- or post-service time. 
Therefore, we are maintaining the current work RVU of 0.56 and 24 
minutes of intra service time for CPT code 88104 on an interim final 
basis for CY 2012.
    After clinical review of CPT code 88106 (Cytopathology, fluids, 
washings or brushings, except cervical or vaginal; simple filter method 
with interpretation) we believe that a work RVU of 0.37 accurately 
reflects the work associated with this service. The AMA RUC reviewed 
the survey results for CPT code 88106 and recommended a work RVU of 
0.56. However, we believe that this value overstates the work of this 
service when compared to the CPT code 88104. We believe that CPT code 
88106 is similar in intensity to CPT code 88104, and that the primary 
factor distinguishing the work of the two services is the intra-service 
time. As previously, CPT code 88104 has a work RVU of 0.56, and 24 
minutes of intra-service time. For CPT code 88106, we believe 16 
minutes of intra-service time, the survey median, is appropriate for 
this service. Therefore, we believe that the work RVU for CPT code 
88106 should be reduced proportionately to reflect the lower intra-
service time in order to maintain relativity with the CPT code 88104.
    In calculating the RVU for CPT code 88106, we determined the RVU 
per minute (0.56/24 = 0.023) for the CPT code 88104. Then we multiplied 
the RVU per minute (0.023) of CPT code 88104 by the intra-service 
minutes for CPT code 88106 (0.023*16 = 0.37). We believe a work RVU of 
0.37 appropriately maintains relativity with CPT code 88104. Therefore, 
we are assigning a work RVU of 0.37 for CPT code 88106 and an intra-
service time of 16 minutes on an interim final basis for CY 2012. The 
times assigned to this CPT code are available on the CMS Web site at: 
https://www.cms.gov/PhysicianFeeSched/.
    After clinical review of CPT code 88108 (Cytopathology, 
concentration technique, smears and interpretation

[[Page 73201]]

(e.g., Saccomanno technique)), we believe that a work RVU of 0.44 
accurately reflects the work associated with this service. The AMA RUC 
reviewed the survey results for CPT code 88106 and recommended a work 
RVU of 0.56. However, we believe that this value overstates the work of 
this service when compared to CPT code 88104. We believe that CPT code 
88108 is similar in intensity to CPT code 88104, and that the primary 
factor distinguishing the work of the two services is the intra-service 
time. CPT code 88104 has a work RVU of 0.56, and 24 minutes of intra-
service time. For CPT code 88108, we believe 19 minutes of intra-
service time, the survey median, is appropriate for this service. 
Therefore, we believe that the work RVU for CPT code 88108 should be 
reduced proportionately to reflect the lower intra-service time in 
order to maintain relativity with CPT code 88104.
    In calculating the RVU for CPT code 88108, we determined the RVU 
per minute (0.56/24 = 0.023) for the CPT code 88104. Then we multiplied 
the RVU per minute (0.023) of CPT code 88104 by the intra-service 
minutes for CPT code 88108 (0.023*19 = 0.44). We believe a work RVU of 
0.44 appropriately maintains relativity with CPT code 88104. Therefore 
we are assigning a work RVU of 0.44 and an intra-service time of 19 
minutes to CPT code 88108 on an interim final basis for CY 2012. The 
times assigned to this CPT code are available on the CMS Web site at: 
https://www.cms.gov/PhysicianFeeSched/.
(16) Psychiatry: Psychiatric Therapeutic Procedures (CPT Code 90845, 
90867-90869)
[GRAPHIC] [TIFF OMITTED] TR28NO11.063

CPT code 90845 was first considered as part of the Fourth Five-Year 
Review. However, in that review process, the related specialty 
societies referred the family of services to the CPT Editorial Panel to 
consider a revision to the code descriptors. During the CPT review 
process, CPT recommended removing CPT code 90845 from the list of codes 
for revision, as CPT believed revisions to the descriptor were 
unnecessary because the work inherent in providing this service was the 
same regardless of provider.
    After clinical review of CPT code 90845 (Psychoanalysis), including 
a review of the information provided by the specialty societies and the 
AMA RUC, we believe that the current (2011) work RVU of 1.79 and the 
current times should be maintained for this code until the other codes 
in the family are revised by CPT and reviewed by the AMA RUC. The AMA 
RUC recommended a work RVU of 2.10 for CPT code 90845. We would like to 
refrain from establishing a new interim final value for CPT code 90845 
until we can view this CPT code relative to the revised codes in the 
family, which we anticipate reviewing for CY 2013. Therefore, we are 
maintaining the current work RVU of 1.79 and current times for CPT code 
90845 on an interim basis for CY 2012. A complete listing of the times 
associated with CPT code 90845 is available on the CMS Web site at: 
https://www.cms.gov/PhysicianFeeSched/.
    For CY 2011 the CPT Editorial Panel converted Category III codes 
0160T and 0161T to Category I status CPT codes 90867 and 90868, which 
were contractor priced on the Physician Fee Schedule. For CY 2012, the 
CPT Editorial Panel modified CPT codes 90867 and 90868, and created CPT 
code 90869. These three CPT codes are priced on the Physician Fee 
Schedule for CY 2012.
    After clinical review of CPT code 90867 (Therapeutic repetitive 
transcranial magnetic stimulation (TMS) treatment; initial, including 
cortical mapping, motor threshold determination, delivery and 
management), we believe that the AMA RUC-recommended survey median work 
RVU of 3.52 appropriately reflects the work associated with this 
service. However, we believe that the survey 75th percentile intra-
service time of 60 minutes appropriately accounts for the time required 
to furnish the intra-service work of this procedure. The AMA RUC 
recommended 65 minutes of intra-service time for CPT code 90867. We are 
assigning a work RVU of 3.52, with refinement to 60 minutes of intra-
service time, to CPT code 90867 on an interim final basis for CY 2012. 
A complete listing of the times associated with CPT code 90867 is 
available on the CMS Web site at: https://www.cms.gov/PhysicianFeeSched/.
    After clinical review of CPT code 90869 (Therapeutic repetitive 
transcranial magnetic stimulation (TMS) treatment; subsequent motor 
threshold re-determination with delivery and management), we believe 
that a work RVU of 3.00 appropriately accounts for the work associated 
with this service. The original specialty society recommendation to the 
AMA RUC for CPT code 90869 was for a work RVU of 3.00, and the AMA RUC 
recommended to us a work RVU of 3.20, the survey median. We believe 
that CPT code 90869 is similar in time and intensity to CPT code 95974 
(Electronic analysis of implanted neurostimulator pulse generator 
system (e.g., rate, pulse amplitude and duration, configuration of wave 
form, battery status, electrode selectability, output modulation, 
cycling, impedance and patient compliance measurements); complex 
cranial nerve neurostimulator pulse generator/transmitter, with 
intraoperative or subsequent programming, with or without nerve 
interface testing, first hour) (work RVU = 3.00), and the work should 
be valued the same. Therefore, we are assigning a work RVU of 3.00 to 
CPT code 90869 on an interim final basis for CY 2012.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and

[[Page 73202]]

not specifically discussed here, we agree with the AMA RUC/HCPAC-
recommended work RVUs and are setting as interim final the work RVUs 
listed in Table 19.
(17) Ophthalmology: Special Ophthalmological Services (92071 and 92072)
[GRAPHIC] [TIFF OMITTED] TR28NO11.064

    For the Fourth Five-Year Review, we identified CPT code 92070 
through the Harvard-Valued--Utilization > 30,000 screen. Upon review of 
this service, the specialty societies agreed that there are two 
distinct uses for CPT code 92070 that have substantially different 
levels of work. For CY 2012, the CPT Editorial Panel agreed and deleted 
CPT code 92070 and created two new CPT codes (92071 and 92072) to 
distinguish reporting of fitting of contact lens for treatment of 
ocular surface disease and fitting of contact lens for management of 
keratoconus.
    CPT code 92070 (Fitting of contact lens for treatment of disease, 
including supply of lens) is being deleted for CY 2012 and the 
utilization from CPT code 92070 is expected to be captured by new CPT 
code 92071(Fitting of contact lens for treatment of ocular surface 
disease). As CPT code 92070 was typically billed with an E/M service on 
the same day, we believe that CPT code 92071 will also be billed 
typically with an E/m service on the same day. We believe some of the 
activities conducted during the pre- and post-service times of the 
procedure code and the E/M visit overlap and, therefore, should not be 
counted twice in developing the procedure's work value. As described 
earlier in section III.A. of this final rule with comment period, to 
account for this overlap, we reduced the pre-service evaluation and 
post-service time by one-third. For CPT code 92071 we reduced the pre-
service evaluation time and the post service time from 5 minutes to 3 
minutes.
    In order to determine the appropriate work RVU for CPT code 92071, 
given the time change, we calculated the value of the extracted time 
and subtracted it from the AMA RUC-recommended work RVU. For CPT code 
92071, we removed a total of 4 minutes at an intensity of 0.0224 per 
minute, which amounts to the removal of 0.09 of a work RVU. The AMA RUC 
recommended a work RVU of 0.70, the current (CY 2011) work RVU for CPT 
code 92070. Therefore, we are assigning an interim final work RVU of 
0.61, with refinement to time, to CPT code 92071 for CY 2012. A 
complete listing of the times assigned to CPT code 92071 is available 
on the CMS Web site at: https://www.cms.gov/PhysicianFeeSched/.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(18) Special Otorhinolaryngologic Services: Audiologic Function Tests 
(CPT Codes 92558, 92587 and 92588)
[GRAPHIC] [TIFF OMITTED] TR28NO11.065

    We identified CPT code 92587 through the CMS Fastest Growing 
screen. For CY 2011, the specialty society surveyed this service, 
however, after reviewing the survey data, they concluded that more than 
one service is being represented under this code and requested the 
service be referred back to the CPT Editorial Panel for further 
clarification. For CY 2012, the CPT Editorial Panel created CPT code 
92558 to describe evoked otoacoustic emissions screening and revised 
CPT codes 92587 and 92588 clarify the otoaucoustic emissions 
evaluations.
    New CPT code 92558 (Evoked otoacoustic emissions; screening 
(qualitative measurement of distortion product or transient evoked 
otoacoustic emissions), automated analysis) describes a screening 
service that does not fall within the statutory definition of a 
physicians' service, per section 1848 of the Act. As such, CPT code 
92558 will have procedure status of X on the PFS for CY 2012, which 
indicates that this service is not within the statutory definition of 
``physicians' service'' for PFS payment purposes. We will not pay for 
CPT code 92558 under the PFS. We note that the HCPAC recommended a work 
RVU of 0.17, with 5 minutes of intra-service time and 2 minutes of 
immediate post-service time, for CPT code 92558.
    After clinical review of CPT code 92587 (Distortion product evoked 
otoacoustic emissions; limited evaluation (to confirm the presence or 
absence of hearing disorder, 3-6 frequencies) or transient evoked 
otoacoustic emissions, with interpretation and report), we believe that 
the survey 25th percentile work RVU of 0.35 accurately describes the 
work associated with this service. The HCPAC reviewed the survey 
results, and

[[Page 73203]]

after a comparison to similar CPT codes, recommended a work RVU of 0.45 
for CPT code 92587, which is between the survey 25th percentile and 
median values. We believe that CPT code 92587 is similar in time and 
intensity to CPT code 97124 (Therapeutic procedure, 1 or more areas, 
each 15 minutes; massage, including effleurage, petrissage and/or 
tapotement (stroking, compression, percussion)) (work RVU = 0.35), and 
that the survey 25th percentile value appropriately reflects the 
relativity of this service. Therefore, we are assigning a work RVU of 
0.35 to CPT code 92587 on an interim final basis for CY 2012.
    After clinical review of CPT code 92588 (Distortion product evoked 
otoacoustic emissions; comprehensive diagnostic evaluation 
(quantitative analysis of outer hair cell function by cochlear mapping, 
minimum of 12 frequencies), with interpretation and report), we believe 
that the survey 25th percentile work RVU of 0.55 accurately describes 
the work associated with this service. The HCPAC reviewed the survey 
results, and after a comparison to similar CPT codes, recommended the 
survey median work RVU of 0.62 for CPT code 92588. We believe that CPT 
code 92588 is similar in work to CPT code 92570 (Acoustic immittance 
testing, includes tympanometry (impedance testing), acoustic reflex 
threshold testing, and acoustic reflex decay testing) (work RVU = 
0.55), and that the survey 25th percentile work RVU of 0.55 
appropriately reflects the relativity of this service. Therefore, we 
are assigning a work RVU of 0.55 to CPT code 92588 on an interim final 
basis for CY 2012.
(19) Special Otorhinolaryngologic Services: Evaluative and Therapeutic 
Services (CPT Codes 92605 and 92618)
[GRAPHIC] [TIFF OMITTED] TR28NO11.066

    As a result of the Medicare Improvements for Patients and Providers 
Act of 2008, starting in July 2009, speech-language pathologists were 
able to bill Medicare independently as private practitioners. The 
American Speech-Language-Hearing Association (ASHA) requested that we, 
in light of the legislation, base speech-language pathology services on 
professional work values and not through the practice expense 
component. As a result, we requested that the AMA RUC review the 
speech-language pathology codes for professional work as requested by 
ASHA. After reviewing the survey data for CPT code 92605, the specialty 
society indicated and the HCPAC agreed that CPT code 92605 would be 
better captured as a ``per hour'' code. For CY 2012, the CPT Editorial 
Panel revised CPT code 92605 to indicate ``first hour'' and created a 
new add-on code (CPT code 92618) to capture each additional 30 minutes.
    Revised CPT code 92605 (CY 2012 long descriptor: Evaluation for 
prescription of non-speech-generating augmentative and alternative 
communication device, face-to-face with the patient; first hour) 
currently (CY 2011) has a procedure status indicator of B on the PFS, 
which indicates that payment for the service is always bundled into 
payment for other services not specified. We continue to believe that 
payment for this service is included in other services and, therefore, 
that CPT code 92605 should maintain the procedure status indicator of B 
on the PFS. As new CPT code 92618 (Evaluation for prescription of non-
speech-generating augmentative and alternative communication device, 
face-to-face with the patient; each additional 30 minutes (List 
separately in addition to code for primary procedure)) is the add-on 
procedure code to CPT code 92605, we believe that payment for that 
service should also be considered bundled into payment for other 
services, and therefore, should also have a procedure status indicator 
of B on the PFS. For CPT code 92605 the HCPAC recommended the survey 
25th percentile work RVU of 1.75. For CPT code 92618 the HCPAC 
recommended the survey 25th percentile work RVU of 0.65. We are 
publishing these RVUs in the CY 2012 PFS, however, as stated 
previously, both codes will have a procedure status indicator of B and 
will not be separately payable on the PFS.
(20) Cardiovascular: Cardiac Catheterization (93451-93568)

[[Page 73204]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.067

    In the CY 2012 final rule with comment period (75 FR 73334 through 
73337), we discussed generally the concept of bundling services and 
specifically, new CY 2011 CPT codes that describe the bundling of two 
or more existing component services performed together 95 percent or 
more of the time. As we noted in that rule, we expect this bundling of 
component services to continue over the next several years as the work 
efficiencies for services commonly furnished together are recognized. 
Stakeholders should expect that increased bundling of services into 
fewer codes will result in reduced PFS payment for a comprehensive 
service. Specifically, the decrease in RVUs assigned to the 
comprehensive service, as compared to the total RVUs of the sum of the 
individual component services, reflects the efficiencies in work and/or 
PE that occur when component services are furnished together.
    For CY 2011, the AMA RUC provided CMS with recommendations for 
several categories of new comprehensive services that historically have 
been reported under multiple component codes. These services fell into 
the three major clinical categories of: Endovascular revascularization, 
computed tomography (CT), and diagnostic cardiac catheterization. In 
the CY 2011 final rule with comment period, we acknowledged that while 
each category of services is unique, since bundling of component 
services is likely to occur more often in the coming years, we believe 
a consistent approach is especially important when valuing bundled 
services to ensure that RVUs reflect work efficiencies.
    As discussed in the CY 2011 final rule with comment period, the AMA 
RUC used a variety of methodologies in developing RVUs for 
comprehensive codes in these three categories of bundled services. To 
develop the RVUs for the comprehensive endovascular revascularization 
services, the AMA RUC generally recommended the median work RVUs from 
the physician survey performed by the specialty society. The 
recommended values for the comprehensive services are an average of 27 
percent lower than the summed RVUs of the component services (taking 
into consideration any MPPR that would currently apply) included in the 
bundle. To develop the RVUs for comprehensive CT services, the AMA RUC 
recommended taking the sum of 100 percent of the current work RVUs for 
the code with the highest RVUs and 50 percent for the second code. 
Under this methodology, the recommended work RVUs for the comprehensive 
CT codes are consistently approximately 25 percent lower than the sum 
of the RVUs for the component services (75 FR 7335 through 7336). We 
agreed in the CY 2011 final rule with comment period that the decreased 
work RVUs that the AMA RUC recommended for comprehensive services in 
these two categories reflected a reasonable estimation of the work 
efficiencies created by the bundling of the component services. 
Therefore, for CY 2011, we accepted as interim final work RVUs the AMA 
RUC-recommended values for endovascular revascularization and CT 
services, and we are finalizing our interim final work RVUs without 
modification for CY 2012 (Table 15) see section III.B.1. of this final 
rule with comment period.
    In contrast to the endovascular revascularization and CT codes, the 
AMA RUC recommended values for the comprehensive diagnostic cardiac 
catheterization codes did not appear to reflect the efficiencies in 
work and/or PE that occur when component services are furnished 
together. To develop the RVUs for comprehensive diagnostic cardiac 
catheterization services, the AMA RUC generally recommended the lower 
of either the sum of the current RVUs for the component services or the 
physician survey 25th percentile value. In most cases, the AMA RUC's 
recommendation for the comprehensive service was actually the sum of 
the current work RVUs for the component services, and we stated in the 
CY 2011 final rule with comment period that we were unsure how this 
approach is resource-based with respect to physician work. We also were 
concerned that the results of the physician survey overstated the work 
for these well-established procedures because the 25th percentile work 
RVU value was usually higher than the sum of the current RVUs for the 
component services. Finally, we noted that, in

[[Page 73205]]

contrast to the RVU survey results, survey physician times for the 
comprehensive codes were significantly reduced as compared to the 
summed minutes of the component codes.
    In contrast to the result of combining the component codes into 
comprehensive endovascular revascularization and CT bundles where 
efficiencies were reflected through significant reductions in the RVUs 
(average of 27 percent and 25 percent respectively), the AMA RUC-
recommended RVUs for the comprehensive codes for diagnostic cardiac 
catheterization were an average of only one percent lower. We noted 
that if we were to accept the AMA RUC's recommended values for these 
cardiac catheterization codes, we essentially would be agreeing with 
the presumption that there are negligible work efficiencies gained in 
the bundling of these services. On the contrary, we believed that the 
AMA RUC did not fully consider or account for the efficiency gains when 
the component services are furnished together, which was also supported 
by the significant reduction in reported service time on the survey. 
Therefore, in the CY 2011 final rule with comment period, we requested 
that the AMA RUC reexamine the cardiac catheterization codes as quickly 
as possible, given the significant PFS utilization and spending for 
these services, and put forward an alternative approach to valuing 
these services that would produce relative values that are resource-
based and account for efficiencies inherent in bundling.
    For CY 2011, we also stated that we believed the new comprehensive 
diagnostic cardiac catheterization codes would be overvalued under the 
AMA RUC's CY 2011 recommendations. To address this potential 
overvaluation, we employed an interim methodology to approximate the 
efficiencies garnered through the bundling of the component codes to 
determine alternative CY 2011 interim values for the cardiac 
catheterization codes based on the information that we had at the time. 
Given that the AMA RUC recommendations for the bundling of endovascular 
revascularization and CT codes resulted in average reductions in the 
RVUs of 27 percent and 25 percent respectively, we believed an 
approximation of work efficiencies garnered through the bundling of the 
component codes could be up to 27 percent. Since we were referring the 
cardiac catheterization codes back to the AMA RUC, requesting that the 
AMA RUC provide CMS with a better estimate of the work efficiencies, we 
believed at the time that applying a conservative estimate of the work 
efficiencies was appropriate as an interim measure. Accordingly, to 
account for efficiencies inherent in bundling, we set the work RVUs for 
all of the bundled CY 2011 cardiac catheterization codes for which we 
received AMA RUC recommendations to 10 percent less than the sum of the 
current work RVUs for the component codes, taking into consideration 
any MPPR that would apply under current PFS policy.
    At our request, the AMA RUC reviewed these codes again for CY 2012 
and reiterated its previous recommendations, maintaining that there are 
negligible work efficiencies gained in the bundling of these services. 
The AMA RUC noted that over the 20 years that cardiac catheterization 
services have been available to patients, several of the codes being 
bundled have been bundled and unbundled a number of times in the past 
and that in each instance, the CMS has retained the RVUs of component 
codes. In response to CMS' observation that the recently surveyed 
physician times of the new CY 2011 comprehensive codes were 
significantly reduced, the AMA RUC stated that the new times were 
correct and that the previous times were grossly overstated. That is, 
the previous times originating from the Harvard valuation process 
rather than the survey process were inaccurate. The AMA RUC explained 
that the specialty societies have not previously addressed inaccurate 
physician times in any of the previous bundling/unbundling 
opportunities, because the societies deemed physician time unimportant 
and stakeholders focused on the work RVUs of the services instead. 
Stakeholders also strongly argued that no one had previously validated 
the physician time for the services in place for 20 years, although 
they continued to urge CMS to accept that the RVUs developed through 
the same process remain unchanged.
    Comments: The commenters believed that cardiac catheterization 
codes were already under-valued, and therefore the AMA RUC could not 
find any additional efficiencies in its recommendation to CMS regarding 
the bundling of these codes. Commenters noted some of the component 
catheterization codes were reviewed by the AMA RUC in 2007 for PE which 
has already resulted in reduced payments for those services. Commenters 
also asserted that catheterization codes were developed and intended to 
be used in conjunction with one another and that each code represents a 
distinct portion of the catheterization procedure. The commenters 
surmised that there is no duplication in service time, equipment or 
supplies. Finally, commenters believed CMS did not base its 10-percent 
reduction of cardiac catheterization RVUs on any data analysis.
    Response: We disagree with the AMA RUC's recommendation that there 
are negligible efficiencies in physician work when the component 
services of diagnostic cardiac catheterization are performed together. 
Although the AMA RUC did not revise their estimate of physician work 
for these newly bundled services, we find it difficult to accept that 
there are no efficiencies in the 20 year evolution of cardiac 
catheterization services. Improvements in technologies associated with 
cardiac catheterization and the increased familiarity with performing 
these high frequency services support some reduction in both the 
physician times and the RVUs. We do not believe that the AMA RUC 
recommendations for CY 2012 fully considered these areas for additional 
efficiencies. Given the AMA RUC's valuation of newly bundled services 
for endovascular revascularization and CT codes, we were reasonably 
assured that the approximation of work efficiencies through bundling 
could be up to 27 percent. We ultimately used a very conservative 
estimate of 10 percent for the work efficiencies we would expect to be 
present when multiple component cardiac catheterization services are 
bundled together into a single comprehensive service for valuing these 
services for CY 2011.
    In lieu of a more specific estimate from the AMA RUC, and using the 
best information available to us at this time, we believe it is 
appropriate to assign as interim final for CY 2012 our CY 2011 interim 
values with a 10 percent reduction in work efficiencies. Specifically, 
for CY 2012, we are assigning the following interim final work RVUs for 
the following CPT codes: 2.72 for CPT code 93451 (Right heart 
catheterization including measurement(s) of oxygen saturation and 
cardiac output, when performed), 4.75 for CPT code 93452 (Left heart 
catheterization including intraprocedural injection(s) for left 
ventriculography, imaging supervision and interpretation, when 
performed), 6.24 for CPT code 93453 (Combined right and left heart 
catheterization including intraprocedural injection(s) for left 
ventriculography, imaging supervision and interpretation, when 
performed), 4.79 for CPT code 93454 (Catheter placement in coronary 
artery(s) including intraprocedural injection(s) for coronary 
angiography, imaging supervision and interpretation),

[[Page 73206]]

5.54 for CPT code 93455 (with catheter placement(s) in bypass graft(s) 
(internal mammary, free arterial, venous grafts) including 
intraprocedural injection(s) for bypass graft angiography with catheter 
placement(s) in bypass graft(s) (internal mammary, free arterial, 
venous grafts) including intraprocedural injection(s) for bypass graft 
angiography), 6.15 for CPT code 93456 (Catheter placement in coronary 
artery(s) including intraprocedural injection(s) for coronary 
angiography, imaging supervision and interpretation with right heart 
catheterization), 6.89 for CPT code 93457 (Catheter placement in 
coronary artery(s) including intraprocedural injection(s) for coronary 
angiography, imaging supervision and interpretation with catheter 
placement(s) in bypass graft(s) (internal mammary, free arterial, 
venous grafts) including intraprocedural injection(s) for bypass graft 
angiography and right heart catheterization), 5.85 for CPT code 93458 
(Catheter placement in coronary artery(s) including intraprocedural 
injection(s) for coronary angiography, imaging supervision and 
interpretation with left heart catheterization including 
intraprocedural injection(s) for left ventriculography, when 
performed), 6.60 for CPT code 93459 (Catheter placement in coronary 
artery(s) including intraprocedural injection(s) for coronary 
angiography, imaging supervision and interpretation with left heart 
catheterization including intraprocedural injection(s) for left 
ventriculography, when performed, catheter placement(s) in bypass 
graft(s) (internal mammary, free arterial, venous grafts) with bypass 
graft angiography), 7.35 for CPT code 93460 (Catheter placement in 
coronary artery(s) including intraprocedural injection(s) for coronary 
angiography, imaging supervision and interpretation with right and left 
heart catheterization including intraprocedural injection(s) for left 
ventriculography, when performed), 8.10 for CPT code 93461 (Catheter 
placement in coronary artery(s) including intraprocedural injection(s) 
for coronary angiography, imaging supervision and interpretation with 
right and left heart catheterization including intraprocedural 
injection(s) for left ventriculography, when performed, catheter 
placement(s) in bypass graft(s) (internal mammary, free arterial, 
venous grafts) with bypass graft angiography), 1.11 for CPT code 93563 
(Injection procedure during cardiac catheterization including image 
supervision, interpretation, and report; for selective coronary 
angiography during congenital heart catheterization), 1.13 for CPT code 
93564 (Injection procedure during cardiac catheterization including 
image supervision, interpretation, and report; for selective coronary 
angiography during congenital heart catheterization for selective 
opacification of aortocoronary venous or arterial bypass graft(s) 
(e.g., aortocoronary saphenous vein, free radial artery, or free 
mammary artery graft) to one or more coronary arteries and in situ 
arterial conduits (e.g., internal mammary), whether native or used for 
bypass to one or more coronary arteries during congenital heart 
catheterization, when performed), 0.86 for CPT code 93565 (Injection 
procedure during cardiac catheterization including image supervision, 
interpretation, and report; for selective coronary angiography during 
congenital heart catheterization for selective left ventricular or left 
arterial angiography), 0.86 for CPT code 93566 (Injection procedure 
during cardiac catheterization including image supervision, 
interpretation, and report; for selective coronary angiography during 
congenital heart catheterization for selective right ventricular or 
right atrial angiography), 0.97 for CPT code 93567 (Injection procedure 
during cardiac catheterization including image supervision, 
interpretation, and report; for selective coronary angiography during 
congenital heart catheterization for supravalvular aortography), and 
0.88 for CPT code 93568 (Injection procedure during cardiac 
catheterization including image supervision, interpretation, and 
report; for selective coronary angiography during congenital heart 
catheterization for pulmonary angiography).
[GRAPHIC] [TIFF OMITTED] TR28NO11.068

    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(21) Pulmonary: Other Procedures (CPT Codes 94060, 94726-94729, 94780 
and 94781)
    We identified CPT code 94060 through the MPC List screen. The AMA 
RUC Relativity Assessment Workgroup identified CPT codes 94240, 94260, 
94350, 94360, 94370, and 94725 through the Codes Reported Together 75 
percent or More screen. These codes are commonly billed together with 
CPT code 94720, 94360, 94240, and 94350. For CY 2012, the specialty 
society submitted a codes change proposal to the CPT Editorial Panel to 
bundle the services commonly reported together. As a result, CPT 
created CPT codes 94726, 94727, 94728, and 94729. For CY 2012, CPT also 
created CPT codes 94780 and 94781 to report car seat testing 
administered to the patient in the private physician's office.
    After clinical review, we determined that CPT codes 94060 
(Bronchodilation responsiveness, spirometry as in 94010, pre- and post-
bronchodilator

[[Page 73207]]

administration), 94726 (Plethysmography for determination of lung 
volumes and, when performed, airway resistance), 94727 (Gas dilution or 
washout for determination of lung volumes and, when performed, 
distribution of ventilation and closing volumes), and 94728 (Airway 
resistance by impulse oscillometry), involve very similar work and 
should have the same work RVU. CPT code 94240 (Functional residual 
capacity or residual volume: helium method, nitrogen open circuit 
method, or other method) (work RVU=0.26) is being deleted for CY 2012 
and the utilization associated with that service is expected to be 
captured under new CPT codes 94726 and 92727. We believe that a work 
RVU of 0.26 appropriately reflects the work associated with CPT codes 
94060, 94726, 94727, and 94728. We believe this value is further 
supported by CPT code 97012 (Application of a modality to 1 or more 
areas; traction, mechanical) (work RVU=0.25) which has similar time and 
intensity. The AMA RUC recommended a work RVU of 0.31 for CPT codes 
94060, 94726, 94727, and 94728, which corresponded to each surveys 25th 
percentile work RVU. We are assigning a work RVU of 0.26 to CPT codes 
94060, 94726, 94727, and 94728 on an interim final basis for CY 2012.
    After clinical review of CPT code 94729 (Diffusing capacity (e.g., 
carbon monoxide, membrane) (List separately in addition to code for 
primary procedure)), we believe that a work RVU of 0.17 accurately 
reflects the work associated with this service. Based on comparison to 
similar services, the AMA RUC recommended a work RVU of 0.19 for CPT 
code 94729. We believe that CPT code 94010 (Spirometry, including 
graphic record, total and timed vital capacity, expiratory flow rate 
measurement(s), with or without maximal voluntary ventilation) (work 
RVU=0.17) is similar in time and intensity to CPT code 94729, and that 
the codes should have the same work RVU. Therefore, we are assigning a 
work RVU of 0.17 to CPT code 94729 on an interim final basis for CY 
2012.
    For the CY 2012 new, revised, and potentially misvalued CPT codes 
reviewed in this family of services and not specifically discussed 
here, we agree with the AMA RUC/HCPAC-recommended work RVUs and are 
setting as interim final the work RVUs listed in Table 19.
(22) Neurology and Neuromuscular Procedures: Nerve Conduction Tests 
(CPT Codes 95885-95887)
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    CPT codes 95860, 95861, 95863 and 95864 were identified by the AMA 
RUC Relativity Assessment Workgroup through the Codes Reported Together 
75 percent or More screen. These codes are billed commonly with CPT 
code 95904. The specialty societies submitted a code change proposal to 
the CPT Editorial Panel to bundle the services commonly reported 
together. For CY 2012, the CPT Editorial Panel created 3 new add-on 
procedure codes: CPT codes 95885, 95886, and 95887. The CPT Editorial 
Panel noted, and the AMA RUC agreed, that these 3 new codes were 
approved with the intent that the specialties will take additional time 
and bring forward a more comprehensive coding solution which bundles 
services commonly performed together for CY 2013.
    We reviewed CPT codes 95885 (Needle electromyography, each 
extremity, with related paraspinal areas, when performed, done with 
nerve conduction, amplitude and latency/velocity study; limited), 95886 
(Needle electromyography, each extremity with related paraspinal areas 
when performed, done with nerve conduction, amplitude and latency/
velocity study; complete, five or more muscles studied, innervated by 
three or more nerves or four or more spinal levels), 95887 (Needle 
electromyography, non-extremity (cranial nerve supplied or axial) 
muscle(s) done with nerve conduction, amplitude and latency/velocity 
study), and are accepting the AMA RUC-recommended work RVUs and times 
on an interim basis, pending review of the other electromyography 
services for CY 2012. On an interim basis for CY 2012 we are assigning 
a work RVU of 0.35 to CPT code 95885, a work RVU of 0.92 to CPT code 
95886, and a work RVU of 0.73 to CPT code 95887.
(23) Neurology and Neuromuscular Procedures: Autonomic Function Tests 
(CPT Codes 95938 and 95939)
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    CPT code pairs 95925/95926 and 95928/95929 were identified by the 
AMA RUC Relativity Assessment Workgroup Codes Reported Together 75 
percent or More screen. For CY 2012, the CPT Editorial Panel created 
CPT code 95938 to capture the reporting of CPT codes 95925 and 95926 
together, and CPT codes 95939 to capture the reporting CPT codes 95928 
and 95929 together. The specialty society had obtained valid survey 
results for CPT code 95938 but not for 95939, as only 31 percent of the 
respondents indicated the vignette was typical. The AMA RUC and 
specialty societies agreed that a new survey should be conducted for CY 
2013.
    We reviewed CPT codes 95938 (Short-latency somatosensory evoked 
potential study, stimulation of any/all peripheral nerves or skin 
sites, recording from the central nervous system; in upper and lower 
limbs) and 95939 (Motor evoked potential study; in upper and lower 
limbs), and are accepting the AMA RUC-recommended work RVUs and times 
on an interim basis, pending resurvey of CPT code 95939. We also 
request that the AMA RUC review the component CPT codes 95925, 95926, 
95928, and 95929. On an interim basis for CY 2012 we are assigning a 
work RVU of 0.86 to CPT code 95938, and a work RVU of 2.25 to CPT code 
95939.
(24) Other CY 2012 New, Revised, and Potentially Misvalued CPT Codes 
Not Specifically Discussed Previously
    For all other CY 2012 new, revised, and potentially misvalued CPT 
codes not specifically discussed previously, we agree with the AMA RUC/
HCPAC recommended work RVUs and are setting as interim final the work 
RVUs listed in Table 19.
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2. Establishing Interim Final Direct PE RVUs for CY 2012
a. Background
    The AMA RUC provides CMS with recommendations regarding direct PE 
inputs, including clinical labor, supplies, and equipment, for new, 
revised, and potentially misvalued codes. We review the AMA RUC-
recommended direct PE inputs on a code-by-code basis, including the 
recommended facility PE inputs and/or nonfacility PE inputs, as 
clinically appropriate for the code. We determine whether we agree with 
the AMA RUC's recommended direct PE inputs for a service or, if we 
disagree, we refine the PE inputs to represent inputs that better 
reflect our estimate of the PE resources required for the service in 
the facility and/or nonfacility settings. We also confirm that CPT 
codes should have facility and/or nonfacility direct PE inputs and make 
changes based on our clinical judgment and any PFS payment policies 
that would apply to the code.
b. Methodology
    We have accepted for CY 2012, as interim final and without 
refinement, the direct PE inputs based on the recommendations submitted 
by the AMA RUC for the codes listed in Table 20. For the remainder of 
the AMA RUC's direct PE recommendations, we have accepted the PE 
recommendations submitted by the AMA RUC as interim final, but with 
refinements. These codes and the refinements to their direct PE inputs 
are listed in Table 21.
    Generally, we only establish interim final direct PE inputs for 
services when the RUC has provided a new recommendation. For CY 2012, 
we are establishing interim final direct PE inputs for several codes 
for which the RUC did not provide direct PE recommendations. In the 
case of these codes, we believe it is necessary to establish new 
interim final direct PE inputs for codes not recently reviewed by the 
RUC for the same reasons we explain in greater detail in section II.B 
(``Potentially Misvalued Services Under the Physician Fee Schedule'') 
of this final rule with comment period: In order to maintain 
appropriate relativity among those codes and other related codes or 
between the PE and work components of PFS payment. There are two 
situations that have prompted us to establish interim final direct PE 
inputs for particular codes without a corresponding direct PE 
recommendation from the RUC.
    The first situation occurs when the direct PE inputs of new, 
combined codes are developed without parallel review of the direct PE 
inputs of the component codes that describe the same services. For CY 
2012, this situation applies to three sets of codes. CPT has created a 
new code, 74174, to describe CTA of the abdomen and pelvis. Prior to CY 
2012, practitioners would have reported the combined service using two 
separate codes (74175 to describe CTA of the abdomen and 72191 to 
describe CTA of the pelvis). CPT similarly created a new combined code 
to describe short latency somatosensory evoked potential studies of the 
upper and lower limbs (95938). This combined service would have been 
previously reported using CPT codes 95925 (short latency somatosensory 
evoked potential studies of the upper limbs) and 95926 (short latency 
somatosensory evoked potential studies of the lower limbs). Finally, 
CPT created 95939 to describe central motor evoked potential study of 
the upper and lower limbs. This combined service would have been 
previously reported using component CPT codes 95928 (central motor 
evoked potential study of the upper limbs) and 95929 (central motor 
evoked potential study of the lower limbs).
    Since each of these sets of component and combined codes is used to 
report the same service, we believe that it is important to maintain 
relativity among the associated practice expense values. We received 
direct PE recommendations from the RUC for the new codes describing 
combined services, but we did not receive corresponding recommendations 
regarding the existing codes describing the component services. The new 
direct PE inputs for the combined services are not fully congruent with 
the current direct PE inputs for the component codes. Therefore, 
maintaining the direct PE inputs for the existing component codes until 
we receive a RUC recommendation would result in at least one year of 
incongruent practice expense values. Therefore, we believe that it 
would be inappropriate to develop PE values for these sets of codes 
based on these inputs. Since we do not have corresponding 
recommendations regarding the existing component codes, we cannot 
maintain appropriate relativity among the codes without either refining 
the direct PE inputs of the new combined codes to conform to the 
existing component codes or refining the direct PE inputs of the 
existing component codes to conform to the direct PE inputs of the new 
combined codes. The direct PE inputs for each of the existing component 
codes were developed over 5 years ago. Since the direct PE inputs for 
the new combined codes were developed more recently, we believe that 
they better reflect current typical practice. Therefore, in order to 
maintain appropriate relativity among these sets of codes that describe 
the same services and in order to use the most accurate information 
available, we used the direct PE inputs for the new, combined codes in 
order to develop appropriate refinements to the direct PE inputs for 
the existing, component codes. The refinements to the current PE inputs 
for these codes are included in Table 21 and they will be considered 
interim final for CY 2012. In conjunction with our request for 
comprehensive review of code families as described in section II.B. of 
this final rule with comment period, we encourage the RUC to review 
component codes when developing recommendations regarding combined 
codes.
    The second situation arises when the physician work values of 
particular codes are reviewed as part of the potentially misvalued code 
initiative without parallel review of the

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corresponding direct PE inputs. In these cases, we have reviewed the 
existing direct PE inputs of the services in the context of the new 
physician work and time recommendations and, when appropriate, 
established refined interim final direct PE inputs consistent with 
existing policies. These codes are: 70470 (Computed tomography, head or 
brain; without contrast material, followed by contrast material(s) and 
further sections), 73030 (Radiologic examination, pelvis; 1 or 2 
views), 73030 (Radiologic examination, shoulder; complete, minimum of 2 
views), 73620 (Radiologic examination, foot; 2 views), and 93971 
(Duplex scan of extremity veins including responses to compression and 
other maneuvers; unilateral or limited study). We are adopting on an 
interim final basis for CY 2012 the refinements to the current direct 
PE inputs for these codes as shown in Table 21, and these values are 
reflected in the CY 2012 PFS direct PE database. That database is 
available under downloads for the CY 2012 PFS final rule with comment 
period on the CMS Web site at: http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage.
c. Common and Code-Specific Refinements
    While Table 21 details the CY 2012 refinements of the AMA RUC's 
direct PE recommendations at the code-specific level, we discuss the 
general nature of some common refinements and the reasons for 
particular refinements in the following section.
(1) Changes in Physician Time
    Some direct PE inputs are directly affected by revisions in 
physician time described in section III.B.1 of this final rule with 
comment period. Specifically, changes in the intra-service portions of 
the physician time and changes in the number or level of postoperative 
visits associated with the global periods result in corresponding 
changes to direct PE inputs.
    Changes in Intra-service Physician Time in the Nonfacility Setting. 
For most codes valued in the nonfacility setting, a portion of the 
clinical labor time allocated to the intra-service period reflects 
minutes assigned for assisting the physician with the procedure. To the 
extent that we are refining the times associated with the intra-service 
portion of such procedures, we have adjusted the corresponding intra-
service clinical labor minutes in the nonfacility setting.
    For equipment associated with the intra-service period in the 
nonfacility setting, we generally allocate time based on the typical 
number of minutes a piece of equipment is being used and, therefore, 
not available for use with another patient during that period. In 
general, we allocate these minutes based on the description of typical 
clinical labor activities. To the extent that we are making changes in 
the clinical labor times associated with the intra-service portion of 
procedures, we have adjusted the corresponding equipment minutes 
associated with the codes.
    Changes in the Number or Level of Postoperative Office Visits in 
the Global Period. For codes valued with post-service physician office 
visits during a global period, most of the clinical labor time 
allocated to the post-service period reflects a standard number of 
minutes allocated for each of those visits. To the extent that we are 
refining the number or level of postoperative visits, we have modified 
the clinical staff time in the post-service period to reflect the 
change. For codes valued with post-service physician office visits 
during a global period, we allocate standard equipment for each of 
those visits. To the extent that we are making a change in the number 
or level of postoperative visits associated with a code, we have 
adjusted the corresponding equipment minutes. For codes valued with 
post-service physician office visits during a global period, a certain 
number of supply items are allocated for each of those office visits. 
To the extent that we are making a change in the number of 
postoperative visits, we have adjusted the corresponding supply item 
quantities associated with the codes. We note that many supply items 
associated with post-service physician office visits are allocated for 
each office visit (for example, a minimum multi-specialty visit pack 
(SA048) in the CY 2012 direct PE database). For these supply items, the 
quantities in the direct PE database should reflect the number of 
office visits associated with the code's global period. However, some 
supply items are associated with post-service physician office visits 
but are only allocated once during the global period because they are 
typically used during only one of the post-service office visits (for 
example, pack, post-op incision care (suture) (SA054) in the direct PE 
database). For these supply items, the quantities in the proposed 
notice direct PE database reflect that single quantity.
    These refinements are reflected in the final CY 2011 PFS direct PE 
database and detailed in Table 21.
(2) Equipment Minutes
    In general, the equipment time inputs correspond to the intra-
service portion of the clinical labor times. Certain highly technical 
pieces of equipment and equipment rooms are less likely to be used by a 
clinician over the full course of a procedure and are typically 
available for other patients during time that may still be in the 
intra-service portion of the service. We adjust those equipment times 
accordingly. We refer interested stakeholders to our extensive 
discussion of these policies in the context of our CY 2011 interim 
final direct PE inputs in section III.B.2 of this final rule with 
comment period. We are refining the CY 2012 AMA RUC direct PE 
recommendations to conform to these equipment time policies. These 
refinements are reflected in the final CY 2011 PFS direct PE database 
and detailed in Table 21.
(3) Moderate Sedation Inputs
    In section II.A.3 of this final rule with commenter period, we 
finalized a standard package of direct PE inputs for services where 
moderate sedation is considered inherent in the procedure. We refer 
interested parties to our extensive discussion of these policies as 
proposed and finalized in section III.A.3 of this final rule with 
comment period. We are refining the CY 2012 AMA RUC direct PE 
recommendations to conform to these policies. These refinements are 
reflected in the final CY 2012 PFS direct PE database and detailed in 
Table 21.
(4) Standard Minutes for Clinical Labor Tasks
    In general, the minutes associated with certain clinical labor 
tasks are standardized depending on the type of procedure, its typical 
setting, its global period, and the other procedures with which it is 
typically reported. In the case of some services, the RUC has 
recommended a numbers of minutes either greater or lesser than time 
typically allotted for certain tasks. In those cases, CMS clinical 
staff has reviewed the deviations from the standards to determine their 
clinical appropriateness. Where the recommended exceptions have not 
been accepted, we have refined the interim final direct PE inputs to 
match the standard times for those tasks and each of those refinements 
appears in Table 21.
(5) Supply and Equipment Invoices
    When clinically appropriate, the AMA RUC generally recommends the 
use of supply and equipment items that already exist in the direct PE 
database for new, revised, and potentially misvalued codes. Some 
recommendations include supply or equipment items that are not 
currently in the direct PE database. In these cases, the AMA RUC has 
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recommended a new item be created and has facilitated CMS' pricing of 
that item by working with the specialty societies to provide sales 
invoices to us. We appreciate the contributions of the AMA RUC in that 
process.
    We received invoices for several new supply and equipment items for 
CY 2012. We have accepted each of these items and added them to the 
direct PE database. In general, the prices listed on the submitted 
invoices match the items listed in the RUC direct PE recommendations. 
However, in some cases, the relationship between submitted invoices and 
the items listed on the direct PE recommendations is not clear. For 
example, some submitted invoices only list total charges that include 
all of the line items on the invoice, including charges for costs other 
than the price of the equipment listed on the recommendation. When the 
price for all of those line items is apparent, we subtract that amount 
from the total charges to determine the appropriate price of the 
equipment. For example, equipment item invoices often include line 
items reflecting a limited quantity of disposable supplies for use 
during procedures. When these supplies are built into the overall price 
of the equipment and they also appear as direct PE inputs, we subtract 
the price of the supplies from the overall price of the equipment since 
we have an empirical basis for determining the price of the excluded 
line item and the price of those supplies is built into the payment 
rate for the service. When we have no way of determining how much of 
the total price listed on the invoice includes amounts attributed to 
excluded line items, we cannot accept the invoice as acceptable 
information to establish or update a price input. In terms of the CY 
2012 direct PE recommendations, we point out that while we have 
accepted the RUC's recommendation for direct PE inputs for SBRT 
treatment delivery, we could not accept the accompanying invoices to 
update the price of the ``SRS system, SBRT, six systems, average'' 
equipment (ER083). Each of these invoices included line items that we 
would not accept as part of the cost of the equipment, such as costs 
for training technologists to use the equipment, and the price for 
these items were not separately identifiable. Therefore, we did not 
update the equipment price for ER083 in establishing interim final 
direct PE inputs for CY 2012.
(6) Application of Casts and Strapping (CPT codes 29581-29584)
    The RUC recommended establishing a new supply input for CPT codes 
29582 (Application of multi-layer venous wound compression system, 
below knee; thigh and leg, including ankle and foot, when performed), 
29583 (Application of multi-layer venous wound compression system, 
below knee; upper arm and forearm), and 29584 (Application of multi-
layer venous wound compression system, below knee; upper arm, forearm, 
hand, and fingers). Accompanying the RUC recommendations, we received 
an invoice that reflected a price of $16.39 per system when purchased 
as part of case of eight. In response to this recommendation, we have 
created a supply item called ``multi-layer compression system 
bandages'' (SG096) with a price input of $16.39. As discussed in 
section III.B.1.b. of this final rule for comment period, for CY 2012 
the CPT Editorial Panel revised the descriptor for CPT code 29581 
(Application of multi-layer compression system; leg (below knee), 
including ankle and foot), and also created CPT codes 29582, 29583, and 
29584 to describe the application of multi-layer compression to the 
upper and lower extremities. The CPT Editorial Panel and AMA RUC 
concluded that the revisions to the descriptor for CPT code 29581 were 
editorial only, and the specialty society believed that resurveying CPT 
code 29581 was not necessary. As such, the AMA RUC did not review the 
direct PE inputs for CPT code 29581. After clinical review, we believe 
that CPT codes 29581, 29582, 29583, and 29584 all describe similar 
services from a resource perspective. In line with this determination, 
we are treating all four codes as physical therapy services and 
replacing the supply input called ``dressing, multi layer system, 
venous ulcer'' (SG093) in 29581 with the new supply item ``multi-layer 
compression system bandages'' (SG096) on an interim basis for CY 
2012.In section III.B.1.b (Establishing Interim final RVUs for CY 2012) 
of this CY 2012 PFS final rule, we believe that a survey that addresses 
all 4 CPT codes together as a family and gathers responses from all 
clinicians who furnish the services described by CPT codes 29581 
through 29584 would help assure the appropriate gradation in valuation 
of these 4 services Therefore, for CY 2012 we are holding the work, 
practice expense, and malpractice values interim.
(7) Image Guidance for Biopsies
    The RUC submitted direct PE inputs for CPT codes CPT codes 47000 
(Biopsy of liver, needle; percutaneous) and 32405 (Biopsy, lung or 
mediastinum, percutaneous needle) including minutes allocated to a CT 
room. As reflected in Table 21, we refined both recommendations to 
exclude the CT room. For 47000, CPT instructs practitioners to report 
separate codes when image guidance is used to furnish the service. 
Therefore, it would be inappropriate to include the equipment used for 
image guidance as a direct PE input for 47000. For 32405, we note that 
the recommendations for the new nonfacility direct PE inputs for the 
code were developed using the direct PE inputs for recently CPT code 
49083 (Abdominal paracentesis (diagnostic or therapeutic); with imaging 
guidance) and that code does not include use of a CT room as a 
typically used resource. These refinements are reflected in the final 
CY 2012 PFS direct PE database.
(8) Extracranial Nerves, Peripheral Nerves, and Autonomic Nervous 
System
    For CY 2012, CPT created CPT Editorial Panel deleted four codes and 
created four new codes to describe neurolysis reported per joint (2 
nerves per each joint) instead of per nerve under image guidance. The 
new codes are: 64633 (Destruction by neurolytic agent, paravertebral 
facet joint nerve(s); cervical or thoracic, with image guidance 
(fluoroscopy or CT), single facet joint); 64634 (Destruction by 
neurolytic agent, paravertebral facet joint nerve(s); cervical or 
thoracic, with image guidance (fluoroscopy or CT), each additional 
facet joint (List separately in addition to code for primary 
procedure)); 64635 (Destruction by neurolytic agent, paravertebral 
facet joint nerve(s); lumbar or sacral, with image guidance 
(fluoroscopy or CT), single facet joint); and 64636 (Destruction by 
neurolytic agent, paravertebral facet joint nerve(s); lumbar or sacral, 
with image guidance (fluoroscopy or CT), each additional facet joint 
(List separately in addition to code for primary procedure)).
    The RUC submitted direct practice expense inputs for these new 
codes that describe existing services. For codes 64633 and 64635, in 
addition to the cannula (SD011), the radiofrequency generator (EQ214), 
and other inputs, the direct PE input recommendation included a very 
expensive supply item called ``kit, probe, radiofrequency, XIi-enhanced 
RF probe'' (SA100). The recommendation did not provide a rationale as 
to why this highly priced kit should be included as a direct PE input 
for these existing services when the four predecessor codes that 
described the services prior to CY 2012 included neither this item nor 
any similarly priced disposable supply. Therefore, we are refining the 
RUC recommendation by removing the supply item SA100

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from both 64633 and 64635. We note that the direct PE inputs for these 
codes are interim for CY 2012, and we will consider any submitted 
information regarding the use of this supply in furnishing these 
services prior to finalizing the direct PE inputs for CY 2013.
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3. Establishing Interim Final Malpractice RVUs for CY 2012
    According to our malpractice methodology discussed in section 
II.C.1. of this final rule with comment period, we have assigned 
malpractice RVUs for CY 2012 new and revised codes by utilizing a 
crosswalk to a source code with a similar malpractice risk-of-service. 
We have reviewed the AMA RUC-recommended malpractice source code 
crosswalks for CY 2012 new and revised codes, and we are accepting 
nearly all of them on an interim final basis for CY 2012. For four CPT 
codes describing multi-layer compression systems, we are assigning a 
source code crosswalk different from the source code crosswalks 
recommended by the AMA RUC and HCPAC.
    For CPT codes 29582 (Application of multi-layer venous wound 
compression system, below knee; thigh and leg, including ankle and 
foot, when performed), 29583 (Application of multi-layer venous wound 
compression system, below knee; upper arm and forearm), and 29584 
(Application of multi-layer venous wound compression system, below 
knee; upper arm, forearm, hand, and fingers), the AMA RUC recommended a 
malpractice source code crosswalk to CPT code 29540 (Strapping; ankle 
and/or foot). For CPT codes 29582 and 29584 the HCPAC recommended a 
malpractice source code crosswalk to CPT code 97124 (Therapeutic 
procedure, 1 or more areas, each 15 minutes; massage, including 
effleurage, petrissage and/or tapotement (stroking, compression, 
percussion)), and for CPT code 29583 the HCPAC recommended a 
malpractice source code crosswalk to CPT code 97762 (Checkout for 
orthotic/prosthetic use, established patient, each 15 minutes).
    In addition to providing recommendations on malpractice source code 
crosswalks, the AMA RUC also provides recommendations to us on 
utilization crosswalks, which are largely used to estimate utilization 
shifts for budget neutrality. CPT codes 29582, 29583, and 29584 are new 
for CY 2012. The AMA RUC recommended, and we agreed, that the estimated 
utilization for CPT codes 29582, 29583, and 29584 would have previously 
been reported using CPT code 97140 (Manual therapy techniques (e.g., 
mobilization/manipulation, manual lymphatic drainage, manual traction), 
1 or more regions, each 15 minutes). After review, we believe that CPT 
code 97140 provides the most appropriate malpractice source code 
crosswalk for CPT codes 29582, 29583, and 29584. Therefore, we are 
assigning CPT code 97140 as the malpractice source code

[[Page 73265]]

crosswalk for CPT codes 29582, 29583, and 29584 on an interim basis for 
CY 2012.
    As discussed in section III.B.1.b. of this final rule with comment 
period, for CY 2012 the CPT Editorial Panel revised the descriptor for 
CPT code 29581 (Application of multi-layer compression system; leg 
(below knee), including ankle and foot), and also created CPT codes 
29582, 29583, and 29584 to describe the application of multi-layer 
compression to the upper and lower extremities. The CPT Editorial Panel 
and AMA RUC concluded that the revisions to the descriptor for CPT code 
29581 were editorial only, and the specialty society believed that 
resurveying CPT code 29581 was not necessary. As such, the AMA RUC 
issued a recommendation of ``No Change'' to us for CPT code 29581. 
After clinical review, we believe that CPT codes 29581, 29582, 29583, 
and 29584 all describe similar services from a resource perspective. In 
line with this determination, we assigned CPT code 29581 the same 
interim work RVU as CPT code 29583. Because we find these services to 
be so similar, to we also believe that it is appropriate for CPT codes 
29581 and 29583 to have the same malpractice source code crosswalk. 
Therefore, we are assigning CPT code 97140 as the malpractice source 
code crosswalk for CPT code 29581 on an interim basis for CY 2012. In 
section III.B.1.b. of this final rule with comment period, we requested 
that the layer compression systems family of services be surveyed 
together and that the AMA RUC and HCPAC review their recommendations to 
us for these services. For CY 2012 we are holding the work, practice 
expense, and malpractice values interim pending resurvey and review.
    In addition to changes to the AMA RUC-recommended malpractice 
crosswalk mentioned previously, we also added HCPCS code G0451 to the 
malpractice crosswalk. As discussed in section III.B.1.b. of this final 
rule with comment period, for CY 2012 we created HCPCS code G0451 
(Development testing, with interpretation and report, per standardized 
instrument form) to replace CPT code 96110 (Developmental screening, 
with interpretation and report, per standardized instrument form), as 
CPT code 96110 will be excluded from payment on the physician fee 
schedule effective January 1, 2012. We assigned CPT code 96110 as the 
malpractice source code crosswalk for HCPCS code G0451.
    In accordance with our malpractice methodology, we have adjusted 
the malpractice RVUs of the CY 2012 new/revised codes for difference in 
work RVUs (or, if greater, the clinical labor portion of the fully 
implemented PE RVUs) between the source code and the new/revised code 
to reflect the specific risk-of-service for the new/revised codes. 
Table 22 lists the CY 2012 new/revised CPT codes and their respective 
source codes used to set the interim final CY 2012 malpractice RVUs. 
Revised CPT codes that are crosswalked to themselves (that is, CPT code 
27096 to 27096) are not listed.
BILLING CODE 4120-01-P

[[Page 73266]]

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[[Page 73267]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.126

[[Page 73268]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.127

BILLING CODE 4120-01-C

IV. Allowed Expenditures for Physicians' Services and the Sustainable 
Growth Rate

A. Medicare Sustainable Growth Rate (SGR)

    The SGR is an annual growth rate that applies to physicians' 
services paid by Medicare. The use of the SGR is intended to control 
growth in aggregate Medicare expenditures for physicians' services. 
Payments for services are not withheld if the percentage increase in 
actual expenditures exceeds the SGR. Rather, the PFS update, as 
specified in section 1848(d)(4) of the Act, is adjusted based on a 
comparison of allowed expenditures (determined using the SGR) and 
actual expenditures. If actual expenditures exceed allowed 
expenditures, the update is reduced. If actual expenditures are less 
than allowed expenditures, the update is increased.
    Section 1848(f)(2) of the Act specifies that the SGR for a year 
(beginning with CY 2001) is equal to the product of the following four 
factors:
    (1) The estimated change in fees for physicians' services;
    (2) The estimated change in the average number of Medicare fee-for-
service beneficiaries;
    (3) The estimated projected growth in real GDP per capita; and
    (4) The estimated change in expenditures due to changes in statute 
or regulations.
    In general, section 1848(f)(3) of the Act requires us to publish 
SGRs for 3 different time periods, no later than November 1 of each 
year, using the best data available as of September 1 of each year. 
Under section 1848(f)(3)(C)(i) of the Act, the SGR is estimated and 
subsequently revised twice (beginning with the FY and CY 2000 SGRs) 
based on later data. (The Act also provides for adjustments to be made 
to the SGRs for FY 1998 and FY 1999. See the February 28, 2003 Federal 
Register (68 FR 9567) for a discussion of these SGRs). Under section 
1848(f)(3)(C)(ii) of the Act, there are no further revisions to the SGR 
once it has been estimated and subsequently revised in each of the 2 
years following the preliminary estimate. In this final rule with 
comment, we are making our preliminary estimate of the CY 2012 SGR, a 
revision to the CY 2011 SGR, and our final revision to the CY 2010 SGR.
1. Physicians' Services
    Section 1848(f)(4)(A) of the Act defines the scope of physicians' 
services covered by the SGR. The statute indicates that ``the term 
physicians' services includes other items and services (such as 
clinical diagnostic laboratory tests and radiology services), specified 
by the Secretary, that are commonly performed or furnished by a 
physician or in a physician's office, but does not include services 
furnished to a Medicare+Choice plan enrollee.''
    We published a definition of physicians' services for use in the 
SGR in the November 1, 2001 Federal Register (66 FR 55316). We defined 
physicians' services to include many of the medical and other health 
services listed in section 1861(s) of the Act. Since that time, the 
statute has been amended to add new Medicare benefits. As the statute 
changed, we modified the definition of physicians' services for the SGR 
to include the additional benefits added to the statute that meet the 
criteria specified in section 1848(f)(4)(A).
    As discussed in the CY 2010 PFS final rule with comment period (74 
FR 61961), the statute provides the Secretary with clear discretion to 
decide whether physician-administered drugs should be included or 
excluded from the definition of ``physicians' services.'' Accordingly, 
we removed physician-administered drugs from the definition of 
``physicians' services'' in section 1848(f)(4)(A) of the Act for 
purposes of computing the SGR and the levels of allowed expenditures 
and actual expenditures beginning with CY 2010, and for all subsequent 
years. Furthermore, in order to effectuate fully the Secretary's policy 
decision to remove drugs from the definition of ``physicians' 
services,'' we removed physician-administered drugs from the 
calculation of allowed and actual expenditures for all prior years.
    Thus, for purposes of determining allowed expenditures, actual 
expenditures for all years, and SGRs beginning with CY 2010 and for all 
subsequent years, we are specifying that physicians' services include 
the following medical and other health services if bills for the items 
and services are processed and paid by Medicare carriers (and those 
paid through intermediaries where specified) or the equivalent services 
processed by

[[Page 73269]]

the Medicare Administrative Contractors:
     Physicians' services.
     Services and supplies furnished incident to physicians' 
services, except for the expenditures for drugs and biologicals which 
are not usually self-administered by the patient.
     Outpatient physical therapy services and outpatient 
occupational therapy services.
     Services of PAs, certified registered nurse anesthetists, 
certified nurse midwives, clinical psychologists, clinical social 
workers, nurse practitioners, and certified nurse specialists.
     Screening tests for prostate cancer, colorectal cancer, 
and glaucoma.
     Screening mammography, screening pap smears, and screening 
pelvic exams.
     Diabetes outpatient self-management training (DSMT) 
services.
     MNT services.
     Diagnostic x-ray tests, diagnostic laboratory tests, and 
other diagnostic tests (including outpatient diagnostic laboratory 
tests paid through intermediaries).
     X-ray, radium, and radioactive isotope therapy.
     Surgical dressings, splints, casts, and other devices used 
for the reduction of fractures and dislocations.
     Bone mass measurements.
     An initial preventive physical exam.
     Cardiovascular screening blood tests.
     Diabetes screening tests.
     Telehealth services.
     Physician work and resources to establish and document the 
need for a power mobility device.
     Additional preventive services.
     Pulmonary rehabilitation.
     Cardiac rehabilitation.
     Intensive cardiac rehabilitation.
     Kidney disease education services.
     Personalized prevention plan services.
2. Preliminary Estimate of the SGR for 2012
    Our preliminary estimate of the CY 2012 SGR is -16.9 percent. We 
first estimated the CY 2012 SGR in March 2011, and we made the estimate 
available to the MedPAC and on our Web site. Table 23 shows the March 
2011 estimate and our current estimates of the factors included in the 
CY 2012 SGR. The majority of the difference between the March estimate 
and our current estimate of the CY 2012 SGR is explained by net 
adjustments that reflect higher physician fees and fee-for-service 
enrollment after our March estimate was prepared. Estimates of 2012 
real per capita GDP are also lower than were included in our March, 
2011 estimate of the SGR.
[GRAPHIC] [TIFF OMITTED] TR28NO11.128

3. Revised Sustainable Growth Rate for CY 2011
    Our current estimate of the CY 2011 SGR is 6.0 percent. Table 24 
shows our preliminary estimate of the CY 2011 SGR that was published in 
the CY 2011 PFS final rule with comment period (75 FR 73278) and our 
current estimate. The majority of the difference between the 
preliminary estimate and our current estimate of the CY 2011 SGR is 
explained by adjustments to reflect two intervening legislative changes 
that have occurred since publication of the CY 2011 final rule with 
comment period.
[GRAPHIC] [TIFF OMITTED] TR28NO11.129

[[Page 73270]]

4. Final Sustainable Growth Rate for CY 2010
    The SGR for CY 2010 is 8.9 percent. Table 25 shows our preliminary 
estimate of the CY 2010 SGR from the CY 2010 PFS final rule with 
comment period (74 FR 61965), our revised estimate from the CY 2011 PFS 
final rule with comment period (75 FR 73278), and the final figures 
determined using the best available data as of September 1, 2011.
[GRAPHIC] [TIFF OMITTED] TR28NO11.130

5. Calculation of CYs 2012, 2011, and 2010 Sustainable Growth Rates
a. Detail on the CY 2012 SGR
    All of the figures used to determine the CY 2012 SGR are estimates 
that will be revised based on subsequent data. Any differences between 
these estimates and the actual measurement of these figures will be 
included in future revisions of the SGR and allowed expenditures and 
incorporated into subsequent PFS updates.
(1) Factor 1--Changes in Fees for Physicians' Services (Before Applying 
Legislative Adjustments) for CY 2012
    This factor is calculated as a weighted average of the CY 2012 
changes in fees for the different types of services included in the 
definition of physicians' services for the SGR. Medical and other 
health services paid using the PFS are estimated to account for 
approximately 89.4 percent of total allowed charges included in the SGR 
in CY 2012 and are updated using the percent change in the Medicare 
Economic Index (MEI). As discussed in section IV.C. of this final rule 
with comment period, the percent change in the MEI for CY 2012 is 0.6 
percent. Diagnostic laboratory tests are estimated to represent 
approximately 10.6 percent of Medicare allowed charges included in the 
SGR for CY 2012. Medicare payments for these tests are updated by the 
Consumer Price Index for Urban Areas (CPI-U), which is 3.6 percent for 
CY 2012. Section 3401(l) of the Affordable Care Act requires the 
Secretary to reduce the CPI-U update applied to clinical laboratory 
tests under the clinical laboratory fee schedule be reduced by a multi-
factor productivity adjustment (MFP adjustment) and, for each of years 
2011 through 2015, by 1.75 percentage points (percentage adjustment). 
The MFP adjustment will not apply in a year where the CPI-U is zero or 
a percentage decrease for a year. Further, the application of the MFP 
adjustment shall not result in an adjustment to the fee schedule of 
less than zero for a year. However, the application of the percentage 
adjustment may result in an adjustment to the fee schedule being less 
than zero for a year and may result in payment rates for a year being 
less than such payment rates for the preceding year. The applicable 
productivity adjustment for CY 2012 is 1.2 percent. Adjusting the CPI-U 
update by the productivity adjustment results in a 2.4 percent (3.6 
percent (CPI-U)- 1.2 percent (MFP adjustment) update for CY 2012. 
However, the percentage reduction of 1.75 percent is applied for CYs 
2011 through 2015, as discussed previously. Therefore, for CY 2012, 
diagnostic laboratory tests will receive an update of 0.7 percent 
(rounded). Table 26 shows the weighted average of the MEI and 
laboratory price changes for CY 2012.
[GRAPHIC] [TIFF OMITTED] TR28NO11.131

[[Page 73271]]

    We estimate that the weighted average increase in fees for 
physicians' services in CY 2012 under the SGR will be 0.6 percent.
(2) Factor 2--The Percentage Change in the Average Number of Part B 
Enrollees From CY 2011 to CY 2012
    This factor is our estimate of the percent change in the average 
number of fee-for-service enrollees from CY 2011 to CY 2012. Services 
provided to Medicare Advantage (MA) plan enrollees are outside the 
scope of the SGR and are excluded from this estimate. We estimate that 
the average number of Medicare Part B fee-for-service enrollees will 
increase by 3.5 percent from CY 2011 to CY 2012. Table 27 illustrates 
how this figure was determined.
[GRAPHIC] [TIFF OMITTED] TR28NO11.132

    An important factor affecting fee-for-service enrollment is 
beneficiary enrollment in MA plans. Because it is difficult to estimate 
the size of the MA enrollee population before the start of a CY, at 
this time we do not know how actual enrollment in MA plans will compare 
to current estimates. For this reason, the estimate may change 
substantially as actual Medicare fee-for-service enrollment for CY 2012 
becomes known.
(3) Factor 3--Estimated Real Gross Domestic Product Per Capita Growth 
in CY 2012
    We estimate that the growth in real GDP per capita from CY 2011 to 
CY 2012 will be 0.6 percent (based on the annual growth in the 10 year 
moving average of real GDP per capita (2003 through 2012)). Our past 
experience indicates that there have also been changes in estimates of 
real GDP per capita growth made before the year begins and the actual 
change in real GDP per capita growth computed after the year is 
complete. Thus, it is possible that this figure will change as actual 
information on economic performance becomes available to us in CY 2012.
(4) Factor 4--Percentage Change in Expenditures for Physicians' 
Services Resulting From Changes in Statute or Regulations in CY 2012 
Compared With CY 2011
    The statutory and regulatory provisions that will affect 
expenditures in CY 2012 relative to CY 2011 are estimated to have an 
impact on expenditures of -20.7 percent. The impact is primarily due to 
the expiration of the physician fee schedule update included in the 
Medicare and Medicaid Extenders Act (MMEA) which specified a physician 
fee schedule update for CY 2011 only. Additionally, section 3102 of the 
Affordable Care Act revised the methodology for calculating the PE 
GPCIs for CY 2010 and CY 2011 so that the employee compensation and 
rent components of the PE GPCIs reflect only one-half of the relative 
cost differences for each locality compared to the national average. 
This provision included a hold harmless so that no area's GPCI could 
decline and was not budget neutral. In addition, section 103 of the 
MMEA extended the floor of 1.0 on the work GPCI through the end of CY 
2011. This provision was also not budget neutral. The expiration of the 
methodological changes to the PE GPCIs and the floor of the work GPCI 
in CY 2012 will cause a reduction in spending in CY 2012 compared to CY 
2011.
b. Detail on the CY 2011 SGR
    A more detailed discussion of our revised estimates of the four 
elements of the CY 2011 SGR follows.
(1) Factor 1--Changes in Fees for Physicians' Services for CY 2011
    This factor was calculated as a weighted-average of the CY 2011 
changes in fees that apply for the different types of services included 
in the definition of physicians' services for the SGR in CY 2011.
    We estimate that services paid using the PFS account for 
approximately 92.1 percent of total allowed charges included in the SGR 
in CY 2011. These services were updated using the CY 2011 percent 
change in the MEI of 0.4 percent. We estimate that diagnostic 
laboratory tests represent approximately 7.9 percent of total allowed 
charges included in the SGR in CY 2011. Medicare payments for these 
tests are updated by the CPI-U, which was 1.1 percent for CY 2011. 
However, section 3401(l)(2)(iv)(subclause I) of the Affordable Care Act 
requires the Secretary to reduce the CPI-U update applied to clinical 
laboratory tests by a productivity adjustment, but does not allow the 
productivity adjustment to result in a negative CLFS update. The result 
is that the CLFS update for CY 2011 was 0.0 percent. Additionally, 
section 3401(1)(2)(iv)(II) of the Affordable Care Act reduces the 
update applied to clinical laboratory tests by 1.75 percent for CYs 
2011 through 2015. Therefore, for CY 2011, diagnostic laboratory tests 
received an update of -1.75 percent.
    Table 28 shows the weighted-average of the MEI and laboratory price 
changes for CY 2011.

[[Page 73272]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.133

    After considering the elements described in Table 28, we estimate 
that the weighted-average increase in fees for physicians' services in 
CY 2011 under the SGR was 0.2 percent. Our estimate of this factor in 
the CY 2011 PFS final rule with comment period was 0.2 percent (75 FR 
73279).
(2) Factor 2--The Percentage Change in the Average Number of Part B 
Enrollees From CY 2010 to CY 2011
    We estimate that the average number of Medicare Part B fee-for-
service enrollees (excluding beneficiaries enrolled in Medicare 
Advantage plans) increased by 1.8 percent in CY 2011. Table 29 
illustrates how we determined this figure.
[GRAPHIC] [TIFF OMITTED] TR28NO11.134

    Our estimate of the 1.8 percent change in the number of fee-for-
service enrollees, net of Medicare Advantage enrollment for CY 2011 
compared to CY 2010, is different than our original estimate of an 
increase of 2.4 percent in the CY 2011 PFS final rule with comment 
period (75 FR 73279). While our current projection based on data from 8 
months of CY 2011 differs from our original estimate of 2.4 percent 
when we had no actual data, it is still possible that our final 
estimate of this figure will be different once we have complete 
information on CY 2011 fee-for-service enrollment.
(3) Factor 3--Estimated Real Gross Domestic Product Per Capita Growth 
in CY 2011
    We estimate that the growth in real GDP per capita will be 0.6 
percent for CY 2011 (based on the annual growth in the 10-year moving 
average of real GDP per capita (2002 through 2011)). Our past 
experience indicates that there have also been differences between our 
estimates of real per capita GDP growth made prior to the year's end 
and the actual change in this factor. Thus, it is possible that this 
figure will change further as complete actual information on CY 2011 
economic performance becomes available to us in CY 2012.
(4) Factor 4--Percentage Change in Expenditures for Physicians' 
Services Resulting From Changes in Statute or Regulations in CY 2011 
Compared With CY 2010
    The statutory and regulatory provisions that affected expenditures 
in CY 2011 relative to CY 2010 are estimated to have an impact on 
expenditures of 3.3 percent. These include the Department of Defense 
Appropriations Act (DODAA), the Temporary Extension Act (TEA), and the 
Preservation of Access to Care for Medicare Beneficiaries and Pension 
Relief Act (PACMBPRA) which provided for physician fee schedule 
updates. Furthermore, the Affordable Care Act contained provisions 
regarding the policy on equipment utilization for imaging services, the 
multiple procedure payment reduction policy for imaging services, and 
the annual wellness visit providing personalized prevention plan 
services.
c. Detail on the CY 2010 SGR
    A more detailed discussion of our final revised estimates of the 
four elements of the CY 2010 SGR follows.
(1) Factor 1--Changes in Fees for Physicians' Services for CY 2010
    This factor was calculated as a weighted-average of the CY 2010 
changes in fees that apply for the different types of services included 
in the definition of physicians' services for the SGR in CY 2010.
    We estimate that services paid under the PFS account for 
approximately 91.3 percent of total allowed charges included in the SGR 
in CY 2010. These services were updated using the CY 2010 percent 
change in the MEI of 1.2 percent. We estimate that diagnostic 
laboratory tests represent approximately 8.7 percent of total allowed 
charges included in the SGR in CY 2010. Medicare payments for these 
tests are updated by the CPI-U, which was -1.4 percent for CY 2010. 
However, section 145 of the Medicare Improvements for Patients and 
Providers Act (MIPPA), reduced the update applied to clinical 
laboratory tests by 0.5 percent for CY 2009 and CY 2010. Therefore, for 
CY 2010, diagnostic laboratory tests received an update of -1.9 
percent. Since we removed physician-administered drugs from the 
definition of ``physicians' services'' for purposes of computing the 
SGR and the levels of allowed expenditures and actual

[[Page 73273]]

expenditures beginning with CY 2010, and for all subsequent years, 
drugs represent 0.0 percent of Medicare allowed charges included in the 
SGR in CY 2010 and later years.
    Table 30 shows the weighted-average of the MEI and laboratory price 
changes for CY 2010.
[GRAPHIC] [TIFF OMITTED] TR28NO11.135

    After considering the elements described in Table 30, we estimate 
that the weighted-average increase in fees for physicians' services in 
CY 2010 under the SGR was 0.9 percent. This figure is a final one based 
on complete data for CY 2010.
(2) Factor 2--The Percentage Change in the Average Number of Part B 
Enrollees From CY 2009 to CY 2010
    We estimate the change in the number of fee-for-service enrollees 
(excluding beneficiaries enrolled in MA plans) from CY 2009 to CY 2010 
was 1.1 percent. Our calculation of this factor is based on complete 
data from CY 2010. Table 31 illustrates the calculation of this factor.
[GRAPHIC] [TIFF OMITTED] TR28NO11.136

(3) Factor 3--Estimated Real Gross Domestic Product Per Capita Growth 
in CY 2010
    We estimate that the growth in real per capita GDP was 0.6 percent 
in CY 2010 (based on the annual growth in the 10-year moving average of 
real GDP per capita (CYs 2001 through 2010)). This figure is a final 
one based on complete data for CY 2010.
(d) Factor 4--Percentage Change in Expenditures for Physicians' 
Services Resulting From Changes in Statute or Regulations in CY 2010 
Compared With CY 2009
    Our final estimate for the net impact on expenditures from the 
statutory and regulatory provisions that affect expenditures in CY 2010 
relative to CY 2009 is 6.1 percent. The statutory and regulatory 
provisions that affected expenditures in CY 2010 relative to CY 2009 
include the DODAA, the TEA, and the Preservation of Access to Care for 
Medicare Beneficiaries and Pension Relief Act (PACMBPRA) which provided 
for physician fee schedule updates. Also included are the MIPPA 
provisions regarding the physician fee schedule update, PQRI and E-
prescribing incentives, the work GPCIs, and payment provisions related 
to certain pathology services. Additionally, the Affordable Care Act 
contained provisions regarding the work GPCIs, the policy on equipment 
utilization for imaging services, coverage of preventive services, and 
a physician enrollment requirement.

B. The Update Adjustment Factor (UAF)

    Section 1848(d) of the Act provides that the PFS update is equal to 
the product of the the UAF and the MEI. The UAF is applied to make 
actual and target expenditures (referred to in the statute as ``allowed 
expenditures'') equal. As discussed previously, allowed expenditures 
are equal to actual expenditures in a base period updated each year by 
the SGR. The SGR sets the annual rate of growth in allowed expenditures 
and is determined by a formula specified in section 1848(f) of the Act.
1. Calculation Under Current Law
    Under section 1848(d)(4)(B) of the Act, the UAF for a year 
beginning with CY 2001 is equal to the sum of the following--
     Prior Year Adjustment Component. An amount determined by--
    ++ Computing the difference (which may be positive or negative) 
between the amount of the allowed expenditures for physicians' services 
for the prior year (the year prior to the year for which the update is 
being determined) and the amount of the actual expenditures for those 
services for that year;
    ++ Dividing that difference by the amount of the actual 
expenditures for those services for that year; and
    ++ Multiplying that quotient by 0.75.
     Cumulative Adjustment Component. An amount determined by--
    ++ Computing the difference (which may be positive or negative) 
between the amount of the allowed expenditures for physicians' services 
from April 1, 1996, through the end of the prior year and the amount of 
the actual expenditures for those services during that period;

[[Page 73274]]

    ++ Dividing that difference by actual expenditures for those 
services for the prior year as increased by the SGR for the year for 
which the UAF is to be determined; and
    ++ Multiplying that quotient by 0.33.
    Section 1848(d)(4)(E) of the Act requires the Secretary to 
recalculate allowed expenditures consistent with section 1848(f)(3) of 
the Act. As discussed previously, section 1848(f)(3) specifies that the 
SGR (and, in turn, allowed expenditures) for the upcoming CY (CY 2012 
in this case), the current CY (that is, CY 2011) and the preceding CY 
(that is, CY 2010) are to be determined on the basis of the best data 
available as of September 1 of the current year. Allowed expenditures 
for a year generally are estimated initially and subsequently revised 
twice. The second revision occurs after the CY has ended (that is, we 
are making the second revision to CY 2010 allowed expenditures in this 
final rule with comment).
    Table 32 shows the historical SGRs corresponding to each period 
through CY 2012.
[GRAPHIC] [TIFF OMITTED] TR28NO11.137

    Consistent with section 1848(d)(4)(E) of the Act, Table 32 includes 
our second revision of allowed expenditures for CY 2010, a 
recalculation of allowed expenditures for CY 2011, and our initial 
estimate of allowed expenditures for CY 2012. To determine the UAF for 
CY 2012, the statute requires that we use allowed and actual 
expenditures from April 1, 1996 through December 31, 2011 and the CY 
2012 SGR. Consistent with section 1848(d)(4)(E) of the Act, we will be 
making revisions to the CY 2011 and CY 2012 SGRs and CY 2011 and CY 
2012 allowed expenditures. Because we have incomplete actual 
expenditure data for CY 2011, we are using an estimate for this period. 
Any difference between current estimates and final figures will be 
taken into account in determining the UAF for future years.
    We are using figures from Table 32 in the following statutory 
formula:
[GRAPHIC] [TIFF OMITTED] TR28NO11.138

[[Page 73275]]

    UAF12 = Update Adjustment Factor for CY 2012 = -4.0 
percent
    Target11 = Allowed Expenditures for CY 2011 = $103.4 
billion
    Actual11 = Estimated Actual Expenditures for CY 2011 = 
$101.1 billion
    Target4/96-12/11 = Allowed Expenditures for 4/1/1996-12/
31/2011 = $1,118.7 billion
    Actual4/96-12/11 = Estimated Actual Expenditures from 4/
1/1996-12/31/2011 = $1,133.3 billion
    SGR12 = -16.9 percent (0.831)
    [GRAPHIC] [TIFF OMITTED] TR28NO11.139
    
    Section 1848(d)(4)(D) of the Act indicates that the UAF determined 
under section 1848(d)(4)(B) of the Act for a year may not be less than 
-0.07 or greater than 0.03. Since -0.04 (-4 percent) is between -0.07 
and 0.03, the UAF for CY 2012 will be -0.04.
    Section 1848(d)(4)(A)(ii) of the Act indicates that 1.0 should be 
added to the UAF determined under section 1848(d)(4)(B) of the Act. 
Thus, adding 1.0 to -0.04 makes the UAF equal to 0.96.

C. The Percentage Change in the Medicare Economic Index (MEI)

    The MEI is authorized by section 1842(b)(3) of the Act, which 
states that prevailing charge levels beginning after June 30, 1973 may 
not exceed the level from the previous year except to the extent that 
the Secretary finds, on the basis of appropriate economic index data, 
that the higher level is justified by year-to-year economic changes. 
The current form of the MEI was detailed in the CY 2011 PFS final rule 
with comment period (75 FR 73262) which updated the cost structure of 
the index from a base year of 2000 to 2006.
    The MEI measures the weighted-average annual price change for 
various inputs needed to produce physicians' services. The MEI is a 
fixed-weight input price index, with an adjustment for the change in 
economy-wide multifactor productivity. This index, which has CY 2006 
base year weights, is comprised of two broad categories: (1) 
Physician's own time; and (2) physician's practice expense (PE).
    The physician's compensation (own time) component represents the 
net income portion of business receipts and primarily reflects the 
input of the physician's own time into the production of physicians' 
services in physicians' offices. This category consists of two 
subcomponents: (1) Wages and salaries; and (2) fringe benefits.
    The physician's practice expense (PE) category represents 
nonphysician inputs used in the production of services in physicians' 
offices. This category consists of wages and salaries and fringe 
benefits for nonphysician staff and other nonlabor inputs. The 
physician's PE component also includes the following categories of 
nonlabor inputs: Office expenses; medical materials and supplies; 
professional liability insurance; medical equipment; medical materials 
and supplies; and other professional expenses.
    Table 33 presents a listing of the MEI cost categories with 
associated weights and percent changes for price proxies for the 2012 
update. The CY 2012 final MEI update is 1.8 percent and reflects a 2.3 
percent increase in physician's own time and a 1.4 percent increase in 
physician's PE. Within the physician's PE, the largest increase 
occurred in chemicals, which increased 10.2 percent, and rubber and 
plastic products, which increased 5.2 percent.
    For CY 2012, the increase in the productivity adjusted MEI is 0.6 
percent, which reflects an increase in the MEI of 1.8 percent and a 
productivity adjustment of 1.2 percent based on the 10-year moving 
average of economy-wide private nonfarm business multifactor 
productivity. The Bureau of Labor Statistics (BLS) is the agency that 
publishes the official measure of private non-farm business MFP. Please 
see http://www.bls.gov/mfp which is the link to the BLS historical 
published data on the measure of MFP.
BILLING CODE 4120-01-P

[[Page 73276]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.140

[[Page 73277]]

BILLING CODE 4120-01-C

D. Physician and Anesthesia Fee Schedule Conversion Factors for CY 2012

    The CY 2012 PFS CF is $24.6712. The CY 2012 national average 
anesthesia CF is $15.5264.
1. Physician Fee Schedule Update and Conversion Factor
a. CY 2012 PFS Update
    The formula for calculating the PFS update is set forth in section 
1848(d)(4)(A) of the Act. In general, the PFS update is determined by 
multiplying the CF for the previous year by the percentage increase in 
the MEI times the UAF, which is calculated as specified under section 
1848(d)(4)(B) of the Act.
b. CY 2012 PFS Conversion Factor
    Generally, the PFS CF for a year is calculated in accordance with 
section 1848(d)(1)(A) of the Act by multiplying the previous year's CF 
by the PFS update.
    We note section 101 of the Medicare Improvements and Extension Act, 
Division B of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) 
provided a 1-year increase in the CY 2007 CF and specified that the CF 
for CY 2008 must be computed as if the 1-year increase had never 
applied. Section 101 of the Medicare, Medicaid, and SCHIP Extension Act 
of 2007 (MMSEA) provided a 6-month increase in the CY 2008 CF, from 
January 1, 2008, through June 30, 2008, and specified that the CF for 
the remaining portion of CY 2008 and the CFs for CY 2009 and subsequent 
years must be computed as if the 6-month increase had never applied. 
Section 131 of the MIPPA extended the increase in the CY 2008 CF that 
applied during the first half of the year to the entire year, provided 
for a 1.1 percent increase to the CY 2009 CF, and specified that the 
CFs for CY 2010 and subsequent years must be computed as if the 
increases for CYs 2007, 2008, and 2009 had never applied. Section 
1011(a) of the DODAA and section 5 of the TEA specified a zero percent 
update for CY 2010, effective January 1, 2010 through March 31, 2010. 
Section 4 of the Continuing Extension Act of 2010 (CEA) extended the 
zero percent update for CY 2010 through May 31, 2010. Subsequently, 
section 101(a)(2) of the PACMBPRA provided for a 2.2 percent update to 
the CF, effective from June 1, 2010 to November 30, 2010. Section 2 of 
the Physician Payment and Therapy Relief Act of 2010 (Pub. L. 111-286) 
extended the 2.2 percent through the end of CY 2010. Finally, section 
101 of the MMEA provided a zero percent update for CY 2011, effective 
January 1, 2011 through December 31, 2011, and specified that the CFs 
for CY 2012 and subsequent years must be computed as if the increases 
in previous years had never applied. Therefore, under current law, the 
CF that would be in effect in CY 2011 had the prior increases specified 
above not applied is $25.4999.
    In addition, when calculating the PFS CF for a year, section 
1848(c)(2)(B)(ii)(II) of the Act requires that increases or decreases 
in RVUs may not cause the amount of expenditures for the year to differ 
more than $20 million from what it would have been in the absence of 
these changes. If this threshold is exceeded, we must make adjustments 
to preserve budget neutrality. We estimate that CY 2012 RVU changes 
would result in a decrease in Medicare physician expenditures of more 
than $20 million. Accordingly, we are increasing the CF by 1.0018 to 
offset this estimated decrease in Medicare physician expenditures due 
to the CY 2012 RVU changes. We calculate the CY 2012 PFS CF to be 
$24.6712. This final rule with comment period announces a reduction to 
payment rates for physicians' services in CY 2012 under the SGR 
formula. These payment rates are currently scheduled to be reduced 
under the SGR system on January 1, 2012. The total reduction in MPFS 
rates between CY 2011 and CY 2012 under the SGR system will be 27.4 
percent. By law, we are required to make these reductions in accordance 
with section 1848(d) and (f) of the Act, and these reductions can only 
be averted by an Act of Congress. While Congress has provided temporary 
relief from these reductions every year since 2003, a long-term 
solution is critical. We will continue to work with Congress to fix 
this untenable situation so doctors and beneficiaries no longer have to 
worry about the stability and adequacy of their payments from Medicare 
under the Physician Fee Schedule.
    We illustrate the calculation of the CY 2012 PFS CF in Table 34.
    [GRAPHIC] [TIFF OMITTED] TR28NO11.141
    
    We note payment for services under the PFS will be calculated as 
follows:

Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU 
malpractice x GPCI malpractice)] x CF.
2. Anesthesia Conversion Factor
    We calculate the anesthesia CF as indicated in Table 35. Anesthesia 
services do not have RVUs like other PFS services. Therefore, we 
account for any necessary RVU adjustments through an adjustment to the 
anesthesia CF to simulate changes to RVUs. More specifically, if there 
is an adjustment to the work, PE, or malpractice RVUs, these 
adjustments are applied to the respective shares of the anesthesia CF 
as these shares are proxies for the work, PE, and malpractice RVUs for 
anesthesia services. Information regarding the anesthesia work, PE, and 
malpractice shares can be found at the following: https://www.cms.gov/center/anesth.asp.
    The anesthesia CF in effect in CY 2011 is $21.0515. As explained 
previously, in order to calculate the CY 2012 PFS CF, the statute 
requires us to calculate the CFs for all previous years

[[Page 73278]]

as if the various legislative changes to the CFs for those years had 
not occurred. Accordingly, under current law, the anesthesia CF in 
effect in CY 2011 had statutory increases not applied is $15.8085. The 
percent change from the anesthesia CF in effect in CY 2011 ($21.0515) 
to the CF for CY 2012 ($15.5264) is -26.2 percent. We illustrate the 
calculation of the CY 2012 anesthesia CF in Table 35.
[GRAPHIC] [TIFF OMITTED] TR28NO11.142

V. Other Physician Fee Schedule Issues

A. Section 105: Extension of Payment for Technical Component of Certain 
Physician Pathology Services

1. Background and Statutory Authority
    Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554), as 
amended by section 732 of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA) (Pub. L. 108-173), section 104 of 
division B of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) 
(Pub. L. 109-432), section 104 of the Medicare, Medicaid, and SCHIP 
Extension Act of 2007 (MMSEA) (Pub. L. 110-173), section 136 of the 
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) 
(Pub. L. 110-275) and section 3104 of the Affordable Care Act (Pub. L. 
111-148), as amended by section 105 of the Medicare and Medicaid 
Extenders Act of 2010 (MMEA) (Pub. L. 111-309), continued payment to 
independent laboratories for the technical component (TC) of physician 
pathology services for fee-for-service Medicare beneficiaries who are 
inpatients or outpatients of a covered hospital through CY 2011. The TC 
of physician pathology services refers to the preparation of the slide 
involving tissue or cells that a pathologist interprets. The 
professional component (PC) of physician pathology services refers to 
the pathologist's interpretation of the slide.
    When the hospital pathologist furnishes the PC service for a 
hospital patient, the PC service is separately billable by the 
pathologist. When an independent laboratory's pathologist furnishes the 
PC service, the PC service is usually billed with the TC service as a 
combined service.
    Historically, any independent laboratory could bill the Medicare 
contractor under the PFS for the TC of physician pathology services for 
hospital patients even though the payment for the costs of furnishing 
the pathology service (but not its interpretation) was already included 
in the bundled inpatient stay payment to the hospital. In the CY 2000 
PFS final rule with comment period (64 FR 59408 and 59409), we stated 
that this policy has contributed to the Medicare program paying twice 
for the TC service: (1) To the hospital, through the inpatient 
prospective payment rate, when the patient is an inpatient; and (2) to 
the independent laboratory that bills the Medicare contractor, instead 
of the hospital, for the TC service. While the policy also permits the 
independent laboratory to bill for the TC of physician pathology 
services for hospital outpatients, in this case, there generally would 
not be duplicate payment because we would expect the hospital to not 
also bill for the pathology service, which would be paid separately to 
the hospital only if the hospital were to specifically bill for it. We 
further indicated that we would implement a policy to pay only the 
hospital for the TC of physician pathology services furnished to its 
inpatients.
    Therefore, in the CY 2000 PFS final rule with comment period, we 
revised Sec.  415.130(c) to state that for physician pathology services 
furnished on or after January 1, 2001 by an independent laboratory, 
payment is made only to the hospital for the TC of physician pathology 
services furnished to a hospital inpatient. Ordinarily, the provisions 
in the PFS final rule with comment period are implemented in the 
following year. However, the change to Sec.  415.130 was delayed 1-year 
(until January 1, 2001), at the request of the industry, to allow 
independent laboratories and hospitals sufficient time to negotiate 
arrangements.
    Full implementation of Sec.  415.130 was further delayed by section 
542 of BIPA and section 732 of the MMA, which directed us to continue 
payment to independent laboratories for the TC of physician pathology 
services for hospital patients for a 2-year period beginning on January 
1, 2001 and for CYs 2005 and 2006, respectively. In the CY 2007 PFS 
final rule with comment period (71 FR 69788), we amended Sec.  415.130 
to provide that, for services furnished after December 31, 2006, an 
independent laboratory may not bill the carrier for the TC of physician 
pathology services furnished to a hospital inpatient or outpatient. 
However, section 104 of the MIEA-TRHCA continued payment to independent 
laboratories for the TC of physician pathology services for hospital 
patients through CY 2007, and section 104 of the MMSEA further extended 
such payment through the first 6 months of CY 2008.
    Section 136 of the MIPPA extended the payment through CY 2009. 
Section 3104 of the Affordable Care Act amended the prior legislation 
to extend the payment through CY 2010. Subsequent to publication of the 
CY 2011 PFS final rule with comment period, section 105 of the MMEA 
extended the payment through CY 2011.

[[Page 73279]]

2. Revisions to Payment for TC of Certain Physician Pathology Services
    Consistent with this statutory change, we proposed to revise Sec.  
415.130(d) to specify that for services furnished after December 31, 
2011, an independent laboratory may not bill the Medicare contractor 
for the TC of physician pathology services furnished to a hospital 
inpatient or outpatient. We would implement this provision effective 
for TC services furnished on or after January 1, 2012.
    We received the following comments.
    Comment: Several commenters indicated that it was unclear whether 
the TC payment is included in either the inpatient prospective payment 
rate or in the outpatient prospective payment system (OPPS) payment 
made to the hospital for the service. One commenter noted that there is 
no duplicate payment for outpatients because the hospital does not bill 
Medicare for the TC of outpatient pathology services in cases where the 
independent laboratory bills Medicare.
    Response: Payment for the costs of furnishing the pathology service 
(but not its interpretation) is already included in the bundled 
inpatient stay payment to the hospital. We continue to believe that 
this payment provision represents a duplicate payment for the TC 
service: (1) To the hospital, through the inpatient prospective payment 
rate, when the patient is an inpatient; and (2) to the independent 
laboratory that bills the Medicare contractor, instead of the hospital, 
for the TC service. We agree that there generally is no duplicate 
payment for outpatient services because the hospital does not bill 
Medicare when the independent laboratory bills Medicare.
    Comment: Commenters indicated that the proposal will shift costs to 
hospitals without any comparable change in reimbursement, resulting in 
administrative, financial, and operational hardships for both 
independent laboratories and hospitals. Under direct billing, 
laboratories submit a single bill to Medicare for both the TCs and the 
PCs. Without direct billing, laboratories will have to issue two bills, 
that is, one to Medicare for the PC and another to the hospitals for 
the TC, doubling their billing costs. Hospitals will incur additional 
costs of creating new billing systems. Such burdens will fall most 
heavily on small, rural, and critical access hospitals which often rely 
on independent labs for surgical pathology services. Some hospitals may 
choose not to provide surgical pathology services, thereby limiting 
access to care.
    Response: We believe that the Medicare savings, resulting from the 
elimination of duplicate payments, offset the disadvantages to 
hospitals and laboratories of any additional administrative burden to 
implement the provision. Medicare payment under the IPPS encompasses 
almost all services provided to the hospital inpatient during their 
admission. We do not believe it would be a substantial burden to 
hospitals to bill for services provided by independent laboratories 
because this is how they bill for all other laboratory services 
provided to hospital inpatients. Further, hospitals and independent 
laboratories have had ample time to address modifications to billing 
systems.
    Comment: A commenter noted that a demonstration project, mandated 
by the Affordable Care Act would allow laboratories to bill Medicare 
directly for a complex diagnostic test which is ordered by the 
patient's physician less than 14-days following the date of the 
patient's discharge from the hospital or critical access hospital. The 
demonstration will assess the impact of this billing process on access 
to care, quality of care, health outcomes, and expenditures. The 
commenter requested that we delay implementation of the provision until 
the demonstration project is complete.
    Response: Section 3113 of the Affordable Care Act requires the 
Secretary to conduct a demonstration project under Part B of title 
XVIII of the Act under which separate payments are made for certain 
complex diagnostic laboratory tests. The demonstration project is 
independent of our proposal and involves a limited number of pathology 
services, none of which are s paid under the PFS. We continue to 
believe that Medicare currently makes a duplicate payment for such 
services and we will not delay implementation of this provision until 
the demonstration project is complete.
    After consideration of all public comments, we are finalizing our 
proposal without modification. Absent additional legislation, for 
services furnished after December 31, 2011, an independent laboratory 
may not bill a Medicare contractor for the TC of physician pathology 
services for fee-for service Medicare beneficiaries who are inpatients 
or outpatients of a covered hospital. Accordingly, we are finalizing 
the proposed revisions to Sec.  415.130(d)(1) and (2) to reflect this 
change.

B. Bundling of Payments for Services Provided to Outpatients Who Later 
Are Admitted as Inpatients: 3-Day Payment Window Policy and the Impact 
on Wholly Owned or Wholly Operated Physician Practices

1. Introduction
    On June 25, 2010, the Preservation of Access to Care for Medicare 
Beneficiaries and Pension Relief Act of 2010 (PACMBPRA) (Pub. L. 111-
192) was enacted. Section 102 of this Act entitled, ``Clarification of 
3-Day Payment Window,'' clarified when certain services furnished to 
Medicare beneficiaries in the 3-days (or, in the case of a hospital 
that is not a subsection (d) hospital, during the 1-day) preceding an 
inpatient admission should be considered ``operating costs of inpatient 
hospital services'' and therefore included in the hospital's payment 
under the Hospital Inpatient Prospective Payment System (IPPS). This 
policy is generally known as the ``3-day payment window.'' Under the 3-
day payment window, a hospital (or an entity that is wholly owned or 
wholly operated by the hospital) must include on the claim for a 
Medicare beneficiary's inpatient stay, the technical portion of any 
outpatient diagnostic services and nondiagnostic services related to 
the admission provided during the payment window. The new law makes the 
policy pertaining to admission-related nondiagnostic services more 
consistent with common hospital billing practices. Section 102 of the 
PACMBPRA is effective for services furnished on or after June 25, 2010.
2. Background
    We discussed changes to the 3-day payment window policy in the 
interim final rule with comment period that was issued as part of last 
year's IPPS final rule (75 FR 50346). The PACMBPRA made no changes to 
the billing of ``diagnostic services'' furnished during the 3-day 
payment window, which are included in the ``operating costs of 
inpatient hospital services'' pursuant to section 1886(a)(4) of the 
Act. All diagnostic services furnished to a Medicare beneficiary by a 
hospital (or an entity wholly owned or wholly operated by the 
hospital), on the date of a beneficiary's admission or during the 3-
days (1-day for a non-subsection (d) hospital) immediately preceding 
the date of a beneficiary's inpatient hospital admission, continue to 
be included on the Part A bill for the beneficiary's inpatient stay at 
the hospital. In accordance with section 102(a)(1) of the PACMBPRA, for 
outpatient services

[[Page 73280]]

furnished on or after June 25, 2010, all nondiagnostic services, other 
than ambulance and maintenance renal dialysis services, provided by the 
hospital (or an entity wholly owned or wholly operated by the hospital) 
on the date of a beneficiary's inpatient admission and during the 3 
calendar days (1 calendar day for a nonsubsection (d) hospital) 
immediately preceding the date of admission are deemed related to the 
admission and, therefore, must be billed with the inpatient stay, 
unless the hospital attests that certain nondiagnostic services are 
unrelated to the hospital claim (that is, the preadmission 
nondiagnostic services are clinically distinct or independent from the 
reason for the beneficiary's inpatient admission). In such cases, the 
unrelated outpatient hospital nondiagnostic services are covered by 
Medicare Part B, and the hospital may separately bill for those 
services.
    Prior to the enactment of the 3-day payment window clarification 
under section 102 of the PACMBPRA, the term ``related to the 
admission'' was defined in section 40.3, Chapter 3, Inpatient Hospital 
Billing, of the Medicare Claims Processing Manual (Pub. 100-04) to mean 
an exact match between the principal ICD-9 CM diagnosis codes for the 
outpatient encounter and the inpatient admission. On November 5, 1990, 
section 4003(a) of the Omnibus Budget Reconciliation Act of 1990 (Pub. 
L. 101-508) amended the statutory definition of ``operating cost of 
inpatient hospital services'' in section 1886(a)(4) of the Act to 
include the costs of certain services furnished prior to admission. 
Section 4003(a) also required that these preadmission services be 
included on the Medicare Part A bill for the subsequent inpatient stay. 
With this amendment, section 1886(a)(4) of the Act defines the 
operating costs of inpatient hospital services to include diagnostic 
services (including clinical diagnostic laboratory tests) or other 
services related to the admission (as defined by the Secretary) that 
are furnished by the hospital (or by an entity that is wholly owned or 
wholly operated by the hospital) to the patient during the 3-days prior 
to the date of the patient's admission to the hospital.
    Section 1886(a)(4) of the Act was further amended by section 110 of 
the Social Security Amendments of 1994 (Pub. L. 103-432) enacted on 
October 31, 1994. This provision revised the payment window for 
hospitals that are excluded from the IPPS to include only those 
services furnished by the hospital or an entity wholly owned or wholly 
operated by the hospital during the 1-day (instead of the previous 3-
days) prior to the patient's hospital inpatient admission. The hospital 
and hospital units excluded from the IPPS and affected by this policy 
are psychiatric hospitals and units, inpatient rehabilitation hospitals 
and units, long-term care hospitals, children's hospitals, and cancer 
hospitals. In the FY 1996 IPPS final rule (60 FR 45840), we noted that 
the term ``day,'' as referenced in the 3-day or 1-day payment window 
policy refers to the entire calendar day immediately preceding the date 
of admission and not the 24-hour time period that immediately precedes 
the hour of admission.
    On February 11, 1998, we published a final rule (63 FR 6864), that 
responded to public comments received on a prior interim final rule on 
this policy. In that final rule, we confirmed that ambulance services 
and chronic maintenance of renal dialysis services are excluded from 
the 3-day payment window. This final rule with comment period also 
clarified that the payment window applies to outpatient services that 
are otherwise billable under Part B and does not apply to nonhospital 
services that are generally covered under Part A (such as home health, 
skilled nursing facility, and hospice). In addition the rule clarified 
the terms ``wholly owned or operated'' and ``admission-related'' for 
nondiagnostic services.
    The 1998 final rule (63 FR 6866) defined an entity as wholly owned 
or wholly operated if a hospital has direct ownership or control over 
another entity's operations. Specifically, 42 CFR 412.2(c)(5)(i) 
states, ``An entity is wholly owned by the hospital if the hospital is 
the sole owner of the entity. An entity is wholly operated by a 
hospital if the hospital has exclusive responsibility for conducting 
and overseeing the entity's routine operations, regardless of whether 
the hospital also has policymaking authority over the entity.'' The 
1998 final rule also stated ``that we have defined services as being 
related to the admission only when there is an exact match between the 
ICD-9-CM diagnosis code assigned for both the preadmission services and 
the inpatient stay'' and that ``[a]'' hospital-owned or hospital-
operated physician clinic or practice is subject to the payment window 
provision.'' Therefore, related preadmission nondiagnostic services 
provided by a wholly owned or wholly operated physician clinic or 
practice are also included in the 3-day (or 1-day) payment window 
policy, and services were considered related when there was an exact 
match between ICD-9 CM diagnosis codes for the outpatient encounter and 
the inpatient admission.
    Prior to the June 25, 2010 enactment of section 102(a)(1) of 
PACMBPRA (Pub. L. 111-192), the payment window policy for preadmission 
nondiagnostic services was rarely applied in the wholly owned or 
operated physician's office or clinic because, as we previously noted, 
the policy required an exact match between the principal ICD-9 CM 
diagnosis codes for the outpatient services and the inpatient 
admission. Because of the exact match policy, very few services 
furnished in a physician's office or clinic that is wholly owned or 
operated by the hospital would be subject to the policy. Because the 
policy applied only in such narrow circumstances, until the recent 
statutory change, we have not provided further guidance to wholly owned 
or wholly operated physician offices on how nondiagnostic services are 
to be included on hospital bills when the 3-day payment window applied. 
However, the statutory change to the payment window policy made by Pub. 
L. 111-192 significantly broadened the definition of nondiagnostic 
services that are subject to the payment window to include any 
nondiagnostic service that is clinically related to the reason for a 
patient's inpatient admission, regardless of whether the inpatient and 
outpatient diagnoses are the same.
    The FY 2012 IPPS proposed (76 FR 25960) and final rules (76 FR 
51705) further discuss the application of the 3-day payment window for 
both preadmission diagnostic and related nondiagnostic services 
furnished to a patient at wholly owned or wholly operated physician 
practices after June 25, 2010. We do not know how many physician 
offices are wholly owned or wholly operated. Our expectation is that 
most hospital-owned entities providing outpatient services would be 
considered part of the hospital, likely as an outpatient department, 
and not as separate physician clinics or practices or other entities 
such as clinical laboratories. However, we believe there may be at 
least some hospital clinics that meet the definition of a wholly owned 
or wholly operated physician practice. When a physician furnishes a 
service in a hospital, including an outpatient department of a 
hospital, Medicare pays the physician under the physician fee schedule, 
generally at a facility-based payment rate that is lower than the 
``nonfacility'' payment rate in order to avoid duplication of payment 
for supplies, equipment, and staff that are paid directly to the 
hospital by Medicare.

[[Page 73281]]

3. Applicability of the 3-Day Payment Window Policy for Services 
Furnished in Physician Practices
    In circumstances where the 3-day payment window applies to 
nondiagnostic services related to an inpatient admission furnished in a 
wholly owned or wholly operated physician practice, we proposed that 
Medicare would make payment under the physician fee schedule for the 
physicians' services that are subject to the 3-day payment window at 
the facility rate. As explained more fully later in this section, the 
services that are subject to the 3-day payment window would be billed 
to Medicare in a similar manner to services that are furnished in a 
hospital, including an outpatient department of a hospital. We proposed 
that, effective on or after January 1, 2012, when a physician furnishes 
services to a beneficiary in a hospital's wholly owned or wholly 
operated physician practice and the beneficiary is admitted as an 
inpatient within 3 days (or, in the case of non-IPPS hospitals, 1 day), 
the payment window will apply to all diagnostic services furnished and 
to any nondiagnostic services that are clinically related to the reason 
for the patient's inpatient admission regardless of whether the 
reported inpatient and outpatient diagnosis codes are the same.
    Comment: A few commenters expressed concern over the proposed 
phrase of ``physician clinics or practices,'' suggesting that CMS 
proposed to define the application of this provision too narrowly 
because the statutory provision on the 3-day payment window refers to 
``entity'' and not specifically to physician clinics or practices. 
Another commenter suggested the phrase ``Free-standing facility or 
clinic'' to be more appropriate for the 3-day window payment policy, 
and refers CMS to the definition of ``Free-standing facility'' set 
forth in 42 CFR 413.65(a)(2).
    Response: We appreciate commenters' attention to the discrepancy 
between the proposed term ``physician clinics or practices'' and the 
statutory reference to ``entity,'' and we agree that Public Law 111-192 
applies the 3-day payment window policy to services related to the 
admission including all diagnostic services and clinically related 
services that are not diagnostic services, other than ambulance and 
maintenance renal dialysis services, for which payment may be made 
under Medicare Part B and that are provided by a hospital (or an entity 
wholly owned or operated by the hospital) to a patient. We agree with 
commenters that the statute does not limit this provision solely to 
physician offices or clinics. The term ``entity'' applies to Part B 
entities that provide diagnostic or related nondiagnostic services 
which would include a host of entities including clinical laboratory 
facilities and ambulatory surgical centers, and any other entity 
providing Part B outpatient services. If these entities are wholly 
owned or wholly operated by a hospital per the definitions set forth in 
the 1998 IPPS final rule (63 FR 6866), the 3-day payment window would 
apply to the preadmission diagnostic and nondiagnostic services 
provided by those entities when those preadmission services are 
clinically related to a patients inpatient admission within the payment 
window. We will amend our proposed regulation text defining facility 
practice expense RVUs to use the term ``entity'' in Sec.  
414.22(b)(5)(1)(A) instead of ``physician practice'' as proposed ``(A) 
the facility PE RVUs apply to services furnished to patients in the 
hospital, skilled nursing facility, mental health center, ambulatory 
surgical center, or in a wholly owned or wholly operated entity 
furnishing preadmission services pursuant to Sec.  412.2(c)(5).''
    The principal focus of our CY 2012 proposed rule and our discussion 
in the IPPS FY 2012 final rule with comment period was on physician 
offices and clinics. We are concerned that hospitals may not realize 
that some of the services provided by wholly owned or wholly operated 
entities that might furnish preadmission services, other than physician 
practices and clinics, such as ambulatory surgical centers, are subject 
to the payment window. The purpose of this discussion in the CY 2012 
PFS proposed rule was to address how a wholly owned or wholly operated 
physician practice would bill for professional and technical services 
when provided within the 3-day payment window. We believe that 
physician practices are the majority of wholly hospital owned or wholly 
operated Part B entities providing nondiagnostic services that are 
related to an inpatient admission. We previously addressed 
applicability of the payment window policy to wholly owned or wholly 
operated entities in our 1998 final rule, and at that time emphasized 
that diagnostic services are always included in the 3-day payment 
window (75 FR 6866). In this final rule with comment period, we are 
addressing the policy's application to entities that are wholly owned 
or wholly operated physician practices and clinics, and we note that 
wholly owned or wholly operated entities providing diagnostic services 
always have been subject to the payment window. We encourage hospitals 
to bring any other wholly owned or wholly operated Part B entities into 
compliance with the 3-day payment window policy as discussed in this 
final rule. If needed, we will address specifics related to other Part 
B entities in future rulemaking.
    Although rural health clinics (RHCs) and Federally qualified health 
centers (FQHCs) would be considered ``entities,'' we are not applying 
the 3-day payment window policy to these entities. Medicare pays RHCs 
and FQHCs for their services through an all-inclusive rate that 
incorporates payment for all covered items and services provided to a 
beneficiary on a single day by an RHC/FQHC physician, physician 
assistant, nurse practitioner, clinical nurse midwife, clinical 
psychologist, clinical social worker, or visiting nurse; and related 
services and supplies (Publication 100-04 (Medicare Claims Processing 
Manual), chapter 19, section 20.1). RHCs and FQHCs can only bill and be 
paid for services included in their all-inclusive rate. Although the 
majority of those services are professional services, it is impossible 
to distinguish within the all-inclusive rate the amount of the payment 
for any particular patient that represents the professional versus the 
technical portion. As previously discussed, the 3-day payment window 
policy requires a hospital to include in its bill for an inpatient 
admission the technical portion of any outpatient diagnostic services 
and admission-related nondiagnostic services provided during the 
preadmission payment window. Professional services are not considered 
to be operating costs of inpatient hospital services and, accordingly, 
are not subject to the 3-day payment window policy. Given that the 3-
day payment window policy does not include professional services, and 
that RHCs and FQHCs are paid an all-inclusive rate within which the 
professional and technical portions are indeterminate, we do not 
consider RHC or FQHC services to be subject to the 3-day payment window 
policy. However, if in the future RHCs or FQHCs are no longer paid an 
all-inclusive rate, but rather, under a prospective or other payment 
system that allows distinction between the PC and TC for services, the 
3-day payment policy would apply in these settings In addition the list 
of covered services paid through the RHC and FQHC benefits is 
relatively small. Practitioners who furnish additional services in RHCs 
or FQHCs bill Medicare Part B for any additional

[[Page 73282]]

services provided to a Medicare beneficiary during an RHC or FQHC 
visit. Any such additional services would not be considered RHC or FQHC 
services, but rather, would be considered the practitioner's services. 
If a patient is admitted as an inpatient, the additional services 
payable under Part B are subject to the 3-day payment window. With 
regard to the comment suggesting that we adopt the definition of 
``free-standing facility'' in lieu of the term wholly owned or wholly 
operated entity, we believe the reference under section 1886(a)(4) of 
the Act to ``an entity wholly owned or operated by the hospital'' was 
intended to identify entities that have a significant degree of 
integration with the hospital but, for whatever reason, are not 
considered provider-based. As such, we do not believe it would be 
appropriate ``to use the term ``free-standing facility'' to describe 
wholly owned or wholly operated entities. As defined in Sec.  412.2 
(c)(5)(i), an entity is considered wholly owned or wholly operated by 
the hospital, and preadmission services furnished by the entity are 
subject to 3-day payment window policy, if the hospital is the sole 
owner of the entity or if the hospital has exclusive responsibility for 
conducting and overseeing the entity's routine operations, regardless 
of whether the hospital also has policymaking authority ``over the 
entity.'' We continue to believe that this is the appropriate 
description of entity wholly owned or operated by the hospital.
    Comment: Several commenters requested that CMS distinguish wholly 
owned and wholly operated physician practices from ``provider based'' 
physician practices and confirm that the proposed 3-day window payment 
policy makes no change in how provider-based physician practices 
currently bill Medicare for physician and non-physician practitioner 
services.
    Response: As described previously, we believe the statutory 
reference in section 1886(a)(4) to an entity wholly owned or wholly 
operated by the hospital was not intended to identify provider-based 
entities. Rather, we believe the language was intended to identify 
entities that have a significant degree of integration with the 
hospital but, for whatever reason, are not considered to have provider-
based status. As previously discussed, a hospital must include on the 
hospital claim for a Medicare beneficiary's inpatient stay, the 
technical portion of any outpatient diagnostic services and admission-
related nondiagnostic services provided by the hospital, or by an 
entity that is wholly owned or wholly operated by the hospital, during 
the payment window. Entities with provider-based status are considered 
to be part of the hospital and the hospital should already be including 
costs of related outpatient services provided within the 3-day payment 
window on the claim for the inpatient admission. We agree with the 
commenters that the proposed 3-day window payment policy, adopted in 
this final rule with comment period, makes no change in how provider-
based physician practices currently bill Medicare for the professional 
work of physician and non-physician practitioner services Those 
services are not subject to the 3-day payment window policy.
    Comment: A number of commenters wanted CMS to further define 
admission-related nondiagnostic services. Some commenters encouraged 
CMS to return to the definition of admission-related that requires an 
exact match on the ICD-9-CM diagnosis codes for the inpatient and 
outpatient claims. They suggested that if an exact match is no longer 
an appropriate definition of nondiagnostic admission-related, CMS 
should develop some equally clear and easy standard. Some commenters 
went on to suggest that CMS identify all the nondiagnostic services 
that should be considered ``clinically related'' to an inpatient 
admission and subject to the 3-day payment window payment policy.
    Response: We have stated that ``an outpatient service is related to 
the admission if it is clinically associated with the reason for a 
patient's inpatient admission'' (75 FR 50347). We believe that 
determining whether an outpatient service is ``clinically related'' 
requires knowledge of the specific clinical circumstances surrounding a 
patient's inpatient admission and can only be determined on a case by 
case basis. In the August 16, 2010 interim final rule with comment 
period (75 FR 50348), we indicated that we would develop a process for 
hospitals to attest on the outpatient hospital claim that nondiagnostic 
services are not clinically related to the admission when the hospital 
believes that certain provided outpatient services are unrelated. We 
discuss that mechanism for hospital billing of unrelated nondiagnostic 
services in the FY 2012 final rule (76 FR 51708). We also indicated 
that a hospital would be required to maintain documentation in the 
beneficiary's medical record to support their claim that the outpatient 
nondiagnostic services are unrelated to the beneficiary's inpatient 
admission. Because the 3-day payment window applies equally to services 
provided by the hospital or the hospital's wholly owned or wholly 
operated entities, we would expect hospitals to make the same 
determination and documentation for services provided by wholly owned 
or wholly operated entities. Therefore, we expect hospitals and their 
wholly owned and wholly operated entities to ascertain whether 
nondiagnostic services provided in the 3-day payment window are 
clinically related to the subsequent inpatient admission given the 
context of the patient's unique clinical circumstances. If the 
nondiagnostic services are related, we expect the wholly owned or 
wholly operated entity to use the appropriate payment modifier, 
discussed in greater detail under section V.B.3.a of this final rule 
with comment period, to indicate that services are clinically related 
to the subsequent inpatient admission. If the nondiagnostic services 
are not clinically related, we would expect the hospital or wholly 
owned or wholly operated entity to document the reason those services 
are not clinically related in the beneficiary's medical record, and we 
would expect the wholly owned or wholly operated entity to receive the 
full nonfacility payment for provided services. We note that all 
diagnostic services provided in the 3-day payment window prior to an 
inpatient admission are subject to the 3-day payment window policy.
a. Payment Methodology
    In the proposed rule, we indicated that we would establish a new 
Medicare HCPCS modifier that will signal claims processing systems to 
provide payment to wholly owned or wholly operated entities at the 
facility rate. We proposed to pay only the Professional Component (PC) 
for CPT/HCPCS codes with a Technical Component (TC)/PC split that are 
provided in the 3-day (or, in the case of non-IPPS hospitals, 1-day) 
payment window in a hospital's wholly owned or wholly operated 
physician practice. We proposed to pay at the facility rate for codes 
without a TC/PC split to avoid duplicate payment for the technical 
resources required to provide the preadmission services as those costs 
will be included on the hospital's inpatient claim for the related 
inpatient admission. The facility rate includes physician work, 
malpractice, and the facility practice expense, which is a payment to 
support services provided by the physician office when a physician 
treats patients at another facility. We proposed to modify our 
regulation at Sec.  414.22(b)(5)(i), which defines the sites of service 
that result in a facility practice expense RVU for payment, to add an 
entity that is wholly

[[Page 73283]]

owned or wholly operated by a hospital, as defined in Sec.  
412.2(c)(5)(ii) when that entity furnishes preadmission services.
    We indicated in the proposed rule that we would establish a new 
HCPCS modifier through sub-regulatory guidance. We said that we would 
require that this modifier be appended to the physician preadmission 
diagnostic and admission-related nondiagnostic services, reported with 
HCPCS codes, which are subject to the 3-day payment window policy. We 
stated that each wholly owned or wholly operated physician's practice 
would need to manage its billing processes to ensure that it billed for 
its physician services appropriately when a related inpatient admission 
has occurred.
    We stated that the hospital will be responsible for notifying the 
practice of related inpatient admissions for a patient who received 
services in a wholly owned or wholly operated physician practice within 
the 3-day (or, when appropriate, 1-day) payment window prior to the 
inpatient stay. We proposed to make the new modifier effective for 
claims with dates of service on or after January 1, 2012, and we 
proposed that wholly owned or wholly operated physician practices would 
receive payment at the facility rate for related nondiagnostic services 
and receive payment for only the professional component for diagnostic 
services effective for services furnished on or after January 1, 2012.
    Comment: Many commenters expressed concern that CMS has ``erred in 
their assumptions'' that the costs of preadmission services provided in 
entities wholly owned or wholly operated by a hospital are ``costs of 
the hospital.'' A few commenters suggested that it would be unlikely 
that outpatient visits furnished in a wholly owned or wholly operated 
entity would be documented in the medical record or captured in the 
hospital's accounting system before the inpatient admission and 
therefore, would not be properly included on the hospital's cost 
report. These commenters requested that CMS provide specific 
instructions on how hospitals should include the technical component 
costs of the physician office visit on hospital cost reports. Finally, 
a few commenters requested clarification on whether the facility cost 
involved with services furnished at a wholly owned or wholly operated 
entity are taken into account in determining prospective hospital 
inpatient payment under the IPPS. Another commenter asserted that even 
if the hospital includes charges for the wholly owned or wholly 
operated entity on the hospital's inpatient claim, the hospital's 
inpatient payment will not reflect this change until the costs are 
reflected in historical data used to calculate the prospective 
inpatient payment rates.
    Response: We expect hospitals to include the technical component 
portion of all diagnostic and clinically related nondiagnostic services 
furnished by wholly owned or wholly operated entities in the 3-day 
payment window on their cost report. Hospitals should accumulate the 
costs incurred and the adjustments required for these services and 
report as costs with related organizations on the Medicare cost report. 
The costs for these services should be reported on the Medicare cost 
report as routine and/or ancillary accordingly, to achieve a proper 
matching of revenues and expenses. Each year, the IPPS uses the most 
recent full year of cost report data available to establish the 
relative cost-based weights. For example, for the FY 2012 IPPS update, 
we used data from cost reports that began during FY 2009, that is, on 
or after October 1, 2008 and before October 1, 2009, in computing the 
relative weights.
    We expect that the cost of diagnostic and related nondiagnostic 
services that are provided in wholly owned or wholly operated entities 
during the 3-day payment window will be included in the data used to 
determine future IPPS relative payment weights. This cycle of having 
costs and charges reflected in the payment rates for future years is 
part of the longstanding methodology behind setting hospital 
prospective payment rates. Hospitals should already be including the 
costs of diagnostic services furnished by wholly owned or wholly 
operated entities on their cost report because the 3-day payment window 
policy for diagnostic services is longstanding. Furthermore, we note 
that the inclusion of charges for diagnostic and related nondiagnostic 
services that are provided in wholly hospital owned or wholly operated 
entities during the 3-day payment window on an inpatient claim could 
increase the probability that the claim for the inpatient admission 
would garner outlier payments.
    Comment: Many commenters requested that CMS delay implementation a 
full year so that hospitals and wholly owned or wholly operated 
entities may appropriately develop internal claims processing 
procedures to ensure hospital/entity coordination when billing services 
subject to the payment window. Many commenters objected to CMS's 
proposal to allow each wholly owned or wholly operated physician 
practice to manage its billing practices and requested additional 
guidance from CMS to ensure that they bill appropriately and for 
requiring that the hospital be responsible for notifying the physician 
practice of an inpatient admission. Several commenters noted that 
physician practices may use independent software systems for patient 
registration, scheduling, billing, and accounting and went on to stress 
that the coordination efforts to ensure appropriate billing will be a 
substantial burden on both the hospital and the physician practice and 
that CMS is essentially asking practices to hold claims for all 
Medicare encounters at least 7 to 10 days after every office service is 
rendered.
    Response: We appreciate commenters concerns for implementation and 
understand that each wholly owned or operated entity will face unique 
operational challenges as they incorporate the 3-day payment window 
policy into billing practices. While we understand that some entities 
may need to hold claims for a longer time period to comply with the 
policy, we note that the 3-day payment window policy is a hospital 
requirement. We believe that hospitals can assist their wholly owned or 
wholly operated entities in managing the unique aspects of billing for 
services subject to the payment window policy. In light of the 
consistent message from commenters that the billing and accounting 
systems are not yet coordinated, we are concerned that many hospitals 
and their wholly owned or wholly operated entities will not be able to 
establish the internal procedures and communication pathways needed to 
comply with the law by January 1, 2012. For this reason we will delay 
implementation until July 1, 2012.
    Beginning on January 1, 2012, CMS payment modifier PD (Diagnostic 
or related nondiagnostic item or service provided in a wholly owned or 
wholly operated entity to a patient who is admitted as an inpatient 
within 3 days, or 1 day) will be available, and wholly owned or wholly 
operated entities should begin to append the modifier to claims subject 
to the 3-day payment window at that time. We expect that hospitals and 
their wholly owned or wholly operated entities will continue working 
toward establishing internal processes to ensure compliance with 
section 102 of PACMBPRA as quickly as possible to achieve coordinated 
billing for services subject to the 3-day payment window policy. We 
will require hospitals and their wholly owned or wholly operated 
entities to fully coordinate their billing and to properly bill for 
diagnostic and related nondiagnostic services subject to the

[[Page 73284]]

3-day payment window policy beginning July 1, 2012. We encourage 
hospitals to adjust their internal processes as quickly as possible to 
ensure a smooth implementation.
    With regard to the comment that the hospital should not need to 
notify its wholly owned or wholly operated entities, we note that the 
3-day payment policy implemented on October 1, 1991, is an existing 
statutory requirement located in the statutory definition of hospital 
operating costs, and that the purpose of this final rule is to clarify 
the implementation of the policy when a entity that is wholly owned or 
wholly operated by a hospital furnishes preadmission diagnostic and 
related nondiagnostic services to a patient who is later admitted as an 
inpatient within the payment window. In the FY 2012 IPPS final rule we 
responded to a comment on this topic, stating that because the hospital 
owns the facility, it is our expectation that the hospital will be able 
to coordinate and track the patient activity of the facilities it owns. 
The full adoption of electronic medical record should help facilitate 
coordination and tracking of patients within and among hospital systems 
(76 FR 51709).
    Comment: One commenter asked if the ``minimally necessary'' privacy 
standard required by Health Insurance Portability and Accountability 
Act (HIPAA) would be met if hospital registration staff could access 
the patient database at a physician's office.
    Response: We believe that neither hospital nor entity staff would 
violate a patient's privacy by notifying each other about admissions or 
furnished services for purposes of coordinating billing under the 3-day 
payment window policy. Wholly owned or wholly operated entities can 
exchange this information for billing purposes. The HIPAA regulations 
at 45 CFR Sec. Sec.  164.502 and 164.506 allow a covered entity to use 
or disclose protected health information for ``treatment, payment, or 
health care operations.'' HIPAA covered entities should be able to 
carry out these requirements in accordance with those provisions.
    Comment: A few commenters expressed concern that if a hospital 
fails to notify the wholly owned or operated practice of an inpatient 
admission, and if the practice submits the claim to Medicare without 
the appropriate modifier, the practice risks an overpayment or charges 
of filing a false claim.
    Response: We expect hospitals and wholly owned or operated entities 
to ensure that claims submitted to Medicare for payment are in 
compliance with Medicare policy. We are delaying our proposed 
implementation from January 1, 2012 to July 1, 2012 to give hospitals 
and their wholly owned or wholly operated entities sufficient time to 
develop a compliant billing system and to develop a coordinated billing 
practice to ensure correct use of the new payment modifier. We would 
expect entities that find they have billed in error to submit a 
replacement claim, but we would expect this to be a rare occurrence.
    Comment: A few commenters inquired about physicians billing for 
subordinate personnel under an ``incident to'' arrangement for purposes 
of the 3-day payment window policy in the nonfacility setting. 
Commenters also asked if drug and biological therapies were considered 
services subject to the payment window policy, and a few commenters 
specifically asked if CMS will deny Medicare payments for the TC for 
any diagnostic imaging or diagnostic testing provided within the 3-days 
of a hospital admission.
    Response: The 3-day payment window makes no change to how an entity 
bills for physician services in the nonfacility setting. If, for 
example, an admitted hospital inpatient received services at a wholly 
owned or wholly operated entity prior to his admission, and some of 
those services were delivered by a nurse incident to the physician's 
service, the physician would still bill for those services under the 3-
day payment window policy. The 3-day payment window applies to all 
diagnostic and related nondiagnostic services provided within the 
window, including drug therapies and imaging services, assuming those 
services are related to the inpatient admission.
    We realize that the time frames associated with the global surgical 
package for many surgical services could overlap with the 3-day (or 1-
day) payment window policy. Global surgical payment rules apply to 
major and minor surgeries, and endoscopies. Section 40.1 of the Claims 
Processing Manual (100-04 chapter 12 Physician/Nonphysician 
Practitioners) defines the global surgical package. Procedures can have 
a global surgical period of 0, 10, or 90-days. Generally, the global 
period for major surgeries is 1 day prior to the surgical procedure and 
90 days immediately following the procedure. For minor surgeries, the 
global period is the day of the procedure and 10 days immediately 
following the procedure.
    Medicare payment for the global surgical package is based on the 
typical case for a procedure, and includes preoperative visits, intra-
operative services, and complications following surgery, postoperative 
visits, postsurgical pain management, supplies, and miscellaneous other 
services such as dressing changes and removal of sutures or staples. 
Medicare makes a single payment to the treating physician (or group 
practice) for the surgical procedure and any of the pre- and post-
operative services typically associated with the surgical procedure 
provided within the global surgical period (10 or 90-days). The same 
section of the Claims Processing Manual (100-04 chapter 12 Physician/
Nonphysician Practitioners) also discusses the services that are not 
included in payment for the global surgical period. In general, these 
services are unrelated to the surgery, are diagnostic or are part of 
the decision to pursue surgery, or are related to the surgery but are 
so significant they warrant an additional payment. Some examples of 
services not included in payment for the global surgical period include 
the initial evaluation of the problem by the surgeon to determine the 
need for major surgery; services of another physician; visits unrelated 
to the diagnosis for the surgical procedure unless the visits occur due 
to surgical complications; treatment that is not part of the normal 
recovery from surgery; diagnostic tests; distinct surgical procedures 
that are not re-operations; treatment for postoperative complications 
that require a return trip to the operating room; critical care 
unrelated to the surgery where a seriously injured or burned patient is 
critically ill and requires the constant attention of the physician; 
and immunosuppressive therapy for organ transplants.
    The time frames for application of the 3-day payment window and the 
global surgical package could overlap. In some cases, the application 
of the 3-day payment window is straightforward. For example, a patient 
could have minor surgery in a wholly owned or wholly operated 
physician's office and, due to complications, need to be admitted 
within 3-days to an acute care hospital paid under the IPPS for follow-
up surgery. Under the 3-day payment window policy, the practice expense 
portion of the initial surgery and any pre- and post-operative visits 
associated with the surgery (both those subject to the global surgery 
rules and separate diagnostic procedures) should be included on the 
hospital's Part A claim for the inpatient admission. The wholly owned 
or wholly operated physician practice would bill for the surgery 
performed for the inpatient as well as for the initial surgical 
procedure performed in the physician practice that

[[Page 73285]]

started the global period. The wholly owned or wholly operated 
physician practice would apply the HCPCS modifier to indicate that the 
3-day payment window applies to each of those services. Medicare would 
pay the physician practice for the initial surgical procedure and the 
related procedure following inpatient admission at the facility rate. 
Finally, any preadmission diagnostic tests conducted by the wholly 
owned or wholly operated physician practice in the 3-day payment window 
would be included on the physician practice's claim with the HCPCS 
modifier, and Medicare would pay the wholly owned or wholly operated 
physician practice only the professional portion of the service.
    However, the situation could arise where a global surgical period 
overlaps with the 3-day payment window, but the actual surgical 
procedure with the global surgical package occurred before the 3-day 
payment window. In this case, several post-operative services, such as 
follow-up visits, would occur during the global period, but the surgeon 
would not bill separately for those services. We proposed that services 
with a global surgical package would be subject to the 3-day payment 
window policy when wholly owned or wholly operated physician practices 
furnish preadmission diagnostic and nondiagnostic services that are 
clinically related to an inpatient admission when the date of the 
actual surgical procedure falls within the 3-day payment window policy. 
However, when the actual surgical procedure for a service that has a 
global surgical package is furnished on a date that falls outside the 
3-day payment window, the 3-day window policy would not apply. We do 
not believe it would be appropriate to require the wholly owned or 
wholly operated physician practice to unbundle the post operative 
services associated with the global surgical procedure so that the 
practice expense portion of those services could be paid under the PFS 
at the facility rate and the costs included on the hospital's inpatient 
claim. However, any service that a wholly owned or wholly operated 
physician practice would bill separately from the global surgical 
package, such as a separate initial evaluation of a problem by the 
surgeon to determine the need for surgery or separate diagnostic tests, 
would continue to be subject to the 3-day payment window policy.
    We did not receive any comments on our proposal to include 
diagnostic and related nondiagnostic services with a global surgical 
package in the 3-day payment window when the date of the surgical 
procedure falls within the 3 day payment window, and we are finalizing 
our policy without modification.
b. Identification of Wholly Owned or Wholly Operated Physician 
Practices
    The 1998 final rule (63 FR 6864) defined wholly owned or wholly 
operated as a hospital's direct ownership or control over another 
entity's operations. In that rule, we added the regulation at 42 CFR 
412.2(c)(5)(i) which states, ``An entity is wholly owned by the 
hospital if the hospital is the sole owner of the entity. An entity is 
wholly operated by a hospital if the hospital has exclusive 
responsibility for conducting and overseeing the entity's routine 
operations, regardless of whether the hospital also has policymaking 
authority over the entity.''
    Physician practices self-designate whether they are owned or 
operated by a hospital during the Medicare enrollment process. 
Currently, a physician practice enrolls in Medicare with CMS form 
``855B.'' This enrollment form reports pertinent practice information 
such as ownership, organizational structure, and operational duties. 
Likewise, hospitals enroll in Medicare using CMS form ``855A'' also 
reporting pertinent hospital information such as ownership, 
organizational structure and operational duties. Medicare 
Administrative Contractors update files of physician practices that are 
owned and operated by hospitals, and the files of hospitals that own 
those physician practices, in their claims processing systems and use 
that data to confirm an ownership relationship for identified physician 
practices. We will investigate the feasibility of establishing national 
system edits within the Common Working File to fully identify whether a 
physician practice is wholly owned or wholly operated by a hospital and 
to associate such practice with its affiliated hospital.
    Comment: Many commenters requested further clarification of the 
definition of ``wholly owned or wholly operated.'' A few commenters 
encouraged CMS to adopt the definition of ``wholly-owned'' as the term 
is described in 42 CFR 413.65(e)(1) which states ``The business 
enterprise is 100 percent owned by the main provider'' while other 
commenters requested examples of ownership interest and requested that 
CMS display a list of hospitals and their wholly owned or wholly 
operated entities. Other commenters encouraged CMS to modify the 
definition of ``wholly operated'' to provide more granularity than 
simply stating ``conducting and overseeing the entity's routine 
operations.''
    Response: While we appreciate commenters' suggestions on revising 
the definition of wholly owned or wholly operated, section 102 of the 
PACMBPRA only clarified the scope of services furnished to Medicare 
beneficiaries within the 3-days (or, in the case of a hospital that is 
not a subsection (d) hospital, during the 1 day) preceding an inpatient 
admission that should be considered ``operating costs of inpatient 
hospital services'' and, therefore, included in the hospital's 
inpatient payment. In describing the scope of services subject to the 
3-day window policy, section 102 did not change the existing statutory 
reference to ``an entity wholly owned or operated by the hospital.'' We 
have had in place longstanding definitions of these terms and, 
therefore, we did not propose a change to our longstanding definitions. 
We continue to believe that our longstanding definitions are consistent 
with the statute and appropriately descriptive for this purpose. 
Therefore, we will retain our current definitions.
    The 3-day payment window policy has been applicable for all 
preadmission diagnostic and related nondiagnostic services provided by 
wholly owned or wholly operated entities for over a decade. In 1998, we 
clarified the definition of ``wholly owned'' and ``wholly operated,'' 
and we responded to comments on specific owner and operator 
relationships (63 FR 6866). In this rule, we discussed several 
different illustrative examples of ownership and operational interests 
and how the 3-day payment window will apply in each circumstance. These 
examples provide guidelines to help each entity determine whether they 
believe they are wholly owned or wholly operated by a hospital. For 
ease of reference, we are reprinting those responses here:
     Arrangement: A hospital owns a physician clinic or a 
physician practice that performs preadmission testing for the hospital. 
Policy: A hospital-owned or hospital operated physician clinic or 
practice is subject to the payment window provision. The technical 
portion of preadmission diagnostic services performed by the physician 
clinic or practice must be included in the inpatient bill and may not 
be billed separately. A physician's professional service is not subject 
to the window.
     Arrangement: Hospital A owns Hospital B, which in turn 
owns Hospital C. Does the payment window apply if preadmission services 
are performed at Hospital C and the patient is admitted to Hospital A? 
Policy: Yes. We would consider that Hospital A owns both

[[Page 73286]]

Hospital B and Hospital C, and the payment window would apply in this 
situation.
     Arrangement: Corporation Z owns Hospitals A and B. If 
Hospital A performs preadmission services and the patient is 
subsequently admitted as an inpatient to Hospital B, are the services 
subject to the payment window? Policy: No. The payment window does not 
apply to situations in which both the admitting hospital and the entity 
that furnishes the preadmission services are owned by a third entity. 
The payment window includes only those situations in which the entity 
furnishing the preadmission services is wholly owned or operated by the 
admitting hospital itself.
     Arrangement: A hospital refers its patient to an 
independent laboratory for preadmission testing services. The 
laboratory does not perform testing by arrangement with the admitting 
hospital. Are the laboratory services subject to the payment window 
provisions? Policy: No. The payment window does not apply to situations 
in which the admitting hospital is not the sole owner operator of the 
entity performing the preadmission testing.
     Arrangement: Hospital A is owned by Corporations Y and Z 
in a joint venture. Corporation Z is the sole owner of Hospital B. Does 
the payment window apply when one of these hospitals furnishes 
preadmission services and the patient is admitted to the other 
hospital? Policy: No. As noted previously, the payment window provision 
does not apply to situations in which both the admitting hospital and 
the entity that furnishes the preadmission services are owned or 
operated by a third entity.
     Arrangement: A clinic is solely owned by Corporation Z and 
is jointly operated by Corporation Z and Hospital A. Does the payment 
window apply if preadmission services are furnished by the clinic and 
the patient is subsequently admitted to Hospital A? Policy: No. The 
payment window does not apply because Hospital A is neither the sole 
owner nor operator of the clinic.
    Comment: Some commenters caution CMS about using the 855 form as a 
definitive source of information on the owner and operator status of a 
physician practice or other entity stating, correctly, that the 855 
forms do not indicate whether a practice is wholly owned or wholly 
operated. Commenters suggest that CMS will need a different mechanism 
to identify ownership interests.
    Response: We agree that the 855 forms are not a complete record of 
wholly owned or wholly operated status, but we believe they may furnish 
contractors with some information to indicate entities with wholly 
owned or wholly operated status. We encourage entities to contact their 
Medicare claims processing contractor to update any 855 information 
that may be incomplete or out of date.
    After consideration of the public comments we received, we are 
finalizing our proposal with clarification of the term ``entity'' and a 
modification of the implementation date from January 1, 2012 to July 1, 
2012. The 3-day payment window policy applies to nondiagnostic services 
that are clinically related to an inpatient admission when preadmission 
services are furnished in a wholly owned or wholly operated entity and 
the patient is later admitted as an inpatient within the payment 
window. In such cases, Medicare will make payment for the preadmission 
services under the physician fee schedule at the facility rate. 
Specifically, a new Medicare HCPCS modifier PD will be available to 
wholly owned or wholly operated entities beginning January 1, 2012 and 
may be appended to Part B claims lines to identify preadmission 
services that are subject to the 3-day window policy. However, we will 
not formally implement the PD modifier for use by wholly hospital owned 
or wholly operated entities until July 1, 2012 in order to provide 
wholly owned or operated entities sufficient time to coordinate their 
billing practices for clinically related nondiagnostic preadmission 
services. The PD modifier will signal claims processing systems to 
provide payment only for the PC for CPT/HCPCS codes with a TC/PC split 
and to pay services without a PC/TC split at the facility rate when 
they are provided in the 3-day (or, in the case of non-IPPS hospitals, 
1-day) payment window. The facility rate will be paid for codes without 
a TC/PC split to avoid duplicate payment for the technical resources 
required to provide the services. We agree with commenters that the 
statutory term ``entity'' is broader than physician practices or 
clinics. Accordingly, we are modifying our proposal to revise our 
regulatory definition of facility practice expense RVUs at section 42 
CFR 414.22 by revising paragraph (b)(5)(i)(A) to include a wholly owned 
or wholly operated entity. In addition, the technical costs of 
diagnostic and related nondiagnostic services of the wholly owned or 
wholly operated entity subject to the 3-day payment window shall be 
included on the hospital's inpatient claim for the related inpatient 
admission and reflected appropriately on the hospital cost report. The 
definitions of ``wholly owned'' and ``wholly operated'' continue to be 
those set forth in the 1998 IPPS final rule (63 FR 6864), and this 
policy makes no change to the requirement that all diagnostic services 
furnished during the 3-day payment window must be included on the 
hospital claim for the inpatient admission.

C. Therapy Services--Outpatient Therapy Caps for CY 2012

    Section 1833(g) of the Act (as amended by section 4541 of the 
Balanced Budget Act of 1997) applies an annual, per beneficiary 
combined cap on expenses incurred for outpatient physical therapy and 
speech-language pathology services under Medicare Part B. A separate 
but identical cap also applies for outpatient occupational therapy 
services under Medicare Part B. The caps apply to expenses incurred for 
therapy services furnished in outpatient settings, other than in an 
outpatient hospital setting which is described under section 
1833(a)(8)(B) of the Act. The caps were in effect during 1999, from 
September 1, 2003 through December 7, 2003, and continuously beginning 
January 1, 2006. The caps are a permanent provision, that is, there is 
no end date specified in the statute for therapy caps.
    Beginning January 1, 2006, the DRA provided for exceptions to the 
therapy caps until December 31, 2006. Provisions for the exceptions 
process for therapy caps was further extended through December 31, 2010 
pursuant to four subsequent amendments (in MEIA-TRHCA, MMSEA, MIPPA, 
and Affordable Care Act). Section 1833(g)(5) of the Act (as amended by 
section 104 of the MMEA) extended the exceptions process for therapy 
caps through December 31, 2011.
    The therapy cap amounts are required to be updated each year based 
on the MEI. The updated cap amount for CY 2012 is computed by 
multiplying the cap amount for CY 2011, which is $1,870, by the MEI for 
CY 2012, and rounding to the nearest $10. This amount is added to the 
CY 2011 cap to obtain the CY 2012 cap. Since the MEI for CY 2012 is 0.6 
percent, the therapy cap amount for CY 2012 is $1,880.
    Our authority to provide for exceptions to therapy caps 
(independent of the statutory exclusion for outpatient hospital therapy 
services) will expire on December 31, 2011, unless the Congress acts to 
extend it. If the current exceptions process expires, the caps will be 
applicable in accordance with

[[Page 73287]]

the statute, except for services furnished and billed by outpatient 
hospital departments.

IV. Other Provisions of the Final Rule

A. Part B Drug Payment: Average Sales Price (ASP) Issues

    Section 1847A of the Act requires use of the average sales price 
(ASP) payment methodology for payment for drugs and biologicals 
described in section 1842(o)(1)(C) of the Act furnished on or after 
January 1, 2005. The ASP methodology applies to most drugs furnished 
incident to a physician's service, drugs furnished under the DME 
benefit, certain oral anti-cancer drugs, and oral immunosuppressive 
drugs.
1. Widely Available Market Price (WAMP)/Average Manufacturer Price 
(AMP)
    Section 1847A(d)(1) of the Act states that ``The Inspector General 
of HHS shall conduct studies, which may include surveys, to determine 
the widely available market prices (WAMP) of drugs and biologicals to 
which this section applies, as the Inspector General, in consultation 
with the Secretary, determines to be appropriate.'' Section 1847A 
(d)(2) of the Act states, ``Based upon such studies and other data for 
drugs and biologicals, the Inspector General shall compare the ASP 
under this section for drugs and biologicals with--
     The widely available market price (WAMP) for these drugs 
and biologicals, (if any); and
     The average manufacturer price (AMP) (as determined under 
section 1927(k) (1) of the Act) for such drugs and biologicals.''
    Section 1847A(d)(3)(A) of the Act states that, ``The Secretary may 
disregard the ASP for a drug or biological that exceeds the WAMP or the 
AMP for such drug or biological by the applicable threshold percentage 
(as defined in subparagraph (B)).'' Section 1847A(d)(3)(C) of the Act 
states that if the Inspector General (OIG) finds that the ASP for a 
drug or biological is found to have exceeded the WAMP or AMP by this 
threshold percentage, the OIG ``shall inform the Secretary (at such 
times as the Secretary may specify to carry out this subparagraph) and 
the Secretary shall, effective as of the next quarter, substitute for 
the amount of payment otherwise determined under this section for such 
drug or biological, the lesser of--
     The widely available market price for the drug or 
biological (if any); or
     103 percent of the average manufacturer price as 
determined under section 1927(k)(1) of the Act for the drug or 
biological.''
    The applicable threshold percentage is specified in section 
1847A(d)(3)(B)(i) of the Act as 5 percent for CY 2005. For CY 2006 and 
subsequent years, section 1847A(d)(3)(B)(ii) of the Act establishes 
that the applicable threshold percentage is ``the percentage applied 
under this subparagraph subject to such adjustment as the Secretary may 
specify for the WAMP or the AMP, or both.'' In the CY 2006 (70 FR 
70222), CY 2007 (71 FR69680), CY 2008 (72 FR 66258), CY 2009 (73 FR 
69752), and CY 2010 (74 FR 61904) PFS final rules with comment period, 
we specified an applicable threshold percentage of 5 percent for both 
the WAMP and AMP. We based this decision on the fact that data was too 
limited to support an adjustment to the current applicable threshold 
percentage.
    For CY 2011, we proposed to specify two separate adjustments to the 
applicable threshold percentages. When making comparisons to the WAMP, 
we proposed the applicable threshold percentage to remain at 5 percent. 
The applicable threshold percentage that we proposed for the AMP is 
addressed later in this section of the preamble. The latest WAMP 
comparison was published in 2008, and the OIG is continuing to perform 
studies comparing ASP to WAMP. Based on available OIG reports that have 
been published comparing WAMP to ASP, we did not have sufficient 
information at the time to determine that the 5 percent threshold 
percentage is inappropriate and should be changed. As a result, we 
believed that continuing the 5 percent applicable threshold percentage 
for the WAMP was appropriate for CY 2011. Therefore, we proposed to 
revise Sec.  414.904(d)(3) to specify the 5 percent WAMP threshold for 
CY 2011. After soliciting and reviewing comments, we finalized our 
proposal to continue the 5 percent WAMP threshold for CY 2011 (75 FR 
73469).
    For CY 2012, we again proposed to specify a separate adjustment to 
the applicable threshold percentage for WAMP comparisons. When making 
comparisons to the WAMP, we proposed the applicable threshold 
percentage to remain at 5 percent. We still do not have sufficient 
information to determine that the 5 percent threshold percentage is 
inappropriate and, as a result, we believe that continuing the 5 
percent applicable threshold percentage for the WAMP is appropriate for 
CY 2012. As we noted in the CY 2011 PFS final rule with comment period 
(75 FR 73470), we understand that there are complicated operational 
issues associated with the WAMP-based substitution policy. We continue 
to proceed cautiously in this area. We remain committed to providing 
stakeholders, including providers and manufacturers of drugs impacted 
by potential price substitutions with adequate notice of our intentions 
regarding such, including the opportunity to provide input with regard 
to the processes for substituting the WAMP for the ASP.
    Comment: Several commenters supported maintaining the WAMP 
threshold at 5 percent, and not making price substitutions based on 
WAMP data until a framework has been developed, proposed, and 
finalized. Commenters agreed the price substitutions based on WAMP 
should be treated separately from substitutions based on AMP. 
Commenters also cited concerns about the lack of a specific definition 
for WAMP that would allow for the consistent collection of data and 
concerns about the time periods used by the OIG in their comparisons as 
reasons to further delay price substitutions based on WAMP. One 
commenter suggested incorporating a final check against WAMP into the 
AMP substitution policy that is discussed in the following sections.
    Response: We agree with commenters concerns that the WAMP-based 
price substitutions currently are problematic. Unlike the OIG's AMP 
studies, the published WAMP studies do not show whether the prices for 
the examined groups of drugs consistently exceed the applicable 
percentage threshold across multiple quarters like the AMP studies. 
Because of the lack of data regarding WAMP to ASP comparisons and the 
dissimilar approaches in OIG studies, we will continue to treat WAMP 
separately from AMP in our ASP price substitution policies, and we will 
not implement a price substitution policy based on the comparison of 
WAMP to ASP at this time. For this reason, we decline to adopt the 
commenter's suggestion that we use WAMP as a final check on AMP-based 
price substitutions, which are discussed later in this rule. However, 
we will continue to work with the OIG and stakeholders to evaluate the 
relationship between WAMP and ASP, and based on comments, we will 
maintain the WAMP threshold at 5 percent. We will consider proposing a 
policy for the substitution of WAMP at a later date.
    After reviewing the comments, we will continue to maintain separate 
price substitution policies for comparisons based on WAMP and AMP. We 
are finalizing our proposal to continue the 5 percent WAMP threshold 
for CY2012

[[Page 73288]]

and regulation text at 42 CFR 414.904(d)(3)(iv).
2. AMP Threshold and Price Substitutions
    As mentioned previously in section V.A.1. of this final rule with 
comment period, when making comparisons of ASP to AMP, the applicable 
threshold percentage for CY 2005 was specified in statute as 5 percent. 
Section 1847A(d)(3) of the Act allows the Secretary to specify 
adjustments to this threshold percentage for years subsequent to 2005. 
For CY 2006 (70 FR 70222), CY 2007 (71 FR 69680), CY 2008 (72 FR 
66258), CY 2009 (73 FR 69752), and CY 2010 (74 FR 61904), the Secretary 
made no adjustments to the threshold percentage; it remained at 5 
percent.
    For CY 2011, we proposed, with respect to AMP substitution, to 
apply the applicable percentage subject to certain adjustments such 
that substitution of AMP for ASP will only be made when the ASP exceeds 
the AMP by 5 percent in two consecutive quarters immediately prior to 
the current pricing quarter, or three of the previous four quarters 
immediately prior to the current quarter. We further proposed to apply 
the applicable AMP threshold percentage only for those situations where 
AMP and ASP comparisons are based on the same set of National Drug 
Codes (NDCs) for a billing code (that is, ``complete'' AMP data).
    Furthermore, we proposed a price substitution policy to substitute 
103 percent of AMP for 106 percent of ASP for both multiple and single 
source drugs and biologicals as defined respectively at section 
1847(A)(c)(6)(C) and (D) of the Act. Specifically, we proposed that 
this substitution--
     Would occur when the applicable threshold percentage has 
been met for two consecutive quarters immediately prior to the current 
pricing quarter, or three of the previous four quarters immediately 
prior to the current quarter;
     Would permit for a final comparison between the OIG's 
volume-weighted 103 percent of AMP for a billing code (calculated from 
the prior quarter's data) and the billing code's volume weighted 106 
percent ASP (as calculated by CMS for the current quarter) to avoid a 
situation in which the AMP-based price substitution would exceed that 
quarter's ASP; and
     That the duration of the price substitution would last for 
only one quarter.
    We also sought comment on other issues related to the comparison 
between ASP and AMP, such as the following--
     Any effect of definitional differences between AMP and 
ASP, particularly in light of the definition of AMP as revised by 
section 2503 of the Affordable Care Act;
     The impact of any differences in AMP and ASP reporting by 
manufacturers on price substitution comparisons; and
     Whether and/or how general differences and similarities 
between AMP and manufacturer's ASP would affect comparisons between 
these two.
    In the CY 2011 PFS final rule with comment, we did not finalize our 
proposed adjustments to the 5 percent AMP threshold or our price 
substitution policy because of legislative changes, regulatory changes, 
and litigation that affected this issue. Specifically--
     A preliminary injunction issued by the United States 
District Court for the District of Columbia in National Association of 
Chain Drug Stores et al v. Health and Human Services, Civil Action No. 
1:07-cv-02017 (RCL) was still in effect;
     We were continuing to expect to develop regulations to 
implement section 2503 of the Affordable Care Act, which amended the 
definition of AMP, and section 202 of the Federal Aviation 
Administration Air Transportation Modernization and Safety Improvement 
Act (Pub. L. 111-226) as enacted on August 10, 2010, which further 
amended section 1927(k) of the Act; and
     We proposed to withdraw certain provisions of the AMP 
final rule published on July 17, 2007 (75 FR 54073).
    As a result, we finalized the portion of our proposal that sets the 
AMP threshold at 5 percent for CY 2011 and revised the regulation text 
accordingly (75 FR 73471).
    The preliminary injunction was vacated by the United States 
District Court for the District of Columbia on December 15, 2010. 
Currently, we continue to expect that regulations to implement section 
2503 of the Affordable Care Act and section 202 of the Federal Aviation 
Administration Air Transportation Modernization and Safety Improvement 
Act will be developed. However, these statutory amendments became 
effective on October 1, 2010 without regard to whether or not final 
regulations to carry out such amendments have been promulgated by such 
date. Moreover, our Medicaid final rule published on November 15, 2010 
finalized regulations requiring manufacturers to calculate AMP in 
accordance with section 1927(k)(1) of the Act (75 FR 69591). Since 
statutory and regulatory provisions exist and are currently utilized by 
manufacturers for the calculation and submission of AMP data, we 
revisited the AMP threshold and price substitution issues.
a. AMP Threshold
    Section 1847A(d)(3) of the Act allows the Secretary to specify 
adjustments to the AMP threshold percentage for years subsequent to 
2005, and to specify the timing for any price substitution. Therefore, 
for CY 2012, with respect to AMP substitution, we proposed (76 FR 
42829) to apply the applicable percentage subject to certain 
adjustments. Specifically, a price substitution of AMP for ASP will be 
made only when the ASP exceeds the AMP by 5 percent in two consecutive 
quarters immediately prior to the current pricing quarter, or three of 
the previous four quarters immediately prior to the current quarter.
    In general, the ASP methodology reflects average market prices for 
Part B drugs for a quarter. The ASP is based on the average sales price 
to all purchasers for a calendar quarter. The AMP, in turn, primarily 
represents the average price paid by wholesalers for drugs distributed 
to retail community pharmacies and by retail community pharmacies that 
purchase drugs directly from the manufacturers, and also includes a 
subset of drugs sold to other purchasers. Accordingly, while the ASP 
payment amount for a billing code may exceed its AMP for that billing 
code for any given quarter, this may reflect only a temporary 
fluctuation in market prices that would be corrected in a subsequent 
quarter. We believe this is demonstrated by how few billing codes 
exceed the applicable threshold percentage over multiple quarters. For 
example, in the Inspector General's report ``Comparison of Average 
Sales Prices and Average Manufacturer Prices: An Overview of 2009,'' 
only 11 of 493 examined billing codes exceeded the applicable threshold 
percentage over multiple quarters (OEI-03-10-00380). We are concerned 
that substitutions based on a single quarter's ASP to AMP comparison 
will not appropriately or accurately account for temporary 
fluctuations. We believe that applying this threshold percentage 
adjusted to reflect data from multiple quarters will account for 
continuing differences between ASP and AMP, and allow us to more 
accurately identify those drugs that consistently trigger the 
substitution threshold and thus warrant price substitution.
    We further proposed to apply the applicable AMP threshold 
percentage only for those situations where AMP and ASP comparisons are 
based on the same set of NDCs for a billing code (that

[[Page 73289]]

is, ``complete'' AMP data). Prior to 2008, the OIG calculated a volume-
weighted AMP and made ASP and AMP comparisons only for billing codes 
with such ``complete'' AMP data. In such comparisons, a volume-weighted 
AMP for a billing code was calculated when NDC-level AMP data was 
available for the same NDCs used by us to calculate the volume-weighted 
ASP. Beginning in the first quarter of 2008, the OIG also began to make 
ASP and AMP comparisons based on ``partial'' AMP data (that is, AMP 
data for some, but not all, NDCs in a billing code). For these 
comparisons, the volume-weighted AMP for a billing code is calculated 
even when only such limited AMP data is available. That is, the volume-
weighted AMP calculated by the Inspector General is based on fewer NDCs 
than the volume-weighted ASP calculated by CMS. Moreover, volume-
weighted ASPs are not adjusted by the Inspector General to reflect the 
fewer number of NDCs in the volume-weighted AMP.
    Because the OIG's partial AMP data comparison did not reflect all 
of the NDCs used in our volume-weighted ASP calculations, we discussed 
our concern about using the volume-weighted AMP in the CY 2011 PFS 
proposed rule. We believed that such AMP data may not adequately 
account for market-related drug price changes and may lead to the 
substitution of incomplete and inaccurate volume-weighted prices. 
Payment amount reductions that result from potentially inaccurate 
substitutions may impact physician and beneficiary access to drugs. 
Therefore, consistent with our authority as set forth in section 
1847A(d)(1) and (3) of the Act, we proposed in the CY 2011 PFS proposed 
rule that the substitution of 103 percent of AMP for 106 percent of ASP 
should be limited to only those drugs with ASP and AMP comparisons 
based on the same set of NDCs.
    In response to our CY 2011 proposed rule, the OIG changed its 
methodology for ``partial'' AMP data comparisons beginning with its 
report titled ``Comparison of First-Quarter 2010 Average Sales Prices 
and Average Manufacturer Prices: Impact on Medicare Reimbursement for 
Third Quarter 2010.'' Specifically, in addition to calculating a 
volume-weighted AMP based on ``partial'' data and identifying billing 
codes that exceeded the price substitution threshold, the OIG began to 
replace each missing NDC-level AMP with corresponding NDC-level ASP 
data. The OIG then calculated a volume-weighted AMP for the billing 
code. If the volume-weighted AMP continued to exceed the price 
substitution threshold, the report attributed this to an actual 
difference between ASPs and AMPs in the marketplace (OEI-03-10-00440).
    We appreciate that the Inspector General has acknowledged the 
importance of protecting beneficiary and physician access in its 
methodology change. However, section 1847(A)(d)(2)(B) of the Act 
specifically indicates that the comparison be made to AMP as determined 
under section 1927(k)(1) of the Act. Moreover, we continue to be 
concerned that comparisons based on partial AMP data may not adequately 
account for market-related drug price changes and may lead to the 
substitution of incomplete and inaccurate volume-weighted prices. 
Therefore, for CY 2012, we proposed to apply the applicable AMP 
threshold percentage only for those situations where AMP and ASP 
comparisons are based on the same set of NDCs for a billing code (that 
is, ``complete'' AMP data). Furthermore, we proposed to revise Sec.  
414.904(d)(3) to reflect corresponding regulatory text changes.
    Comment: One commenter supported the proposal to continue the use 
of a 5 percent applicable AMP threshold percentage. However, one 
commenter expressed specific concerns that a 5 percent threshold might 
not be accurate for CY 2012 given the changes to the statutory 
definition of AMP and the lack of detailed guidance available to the 
public about the reporting of AMP. Other commenters also expressed more 
general concerns about what they described as potential changes to the 
relationship of ASP and AMP because of the statutory changes to the 
definition of AMP.
    Response: We will discuss general comments on the relationship of 
AMP and ASP in the following sections. With respect to the applicable 
AMP threshold percentage, we have no specific information that 
indicates that the threshold percentage should be modified at this time 
and we agree with the comment supporting the continued use of the 5 
percent threshold. The 5 percent threshold has been in place since CY 
2005.
    Comment: Several commenters agreed with the concept of safeguards 
or limits on the application of AMP-based price substitutions. The 
commenters specifically agreed with basing price comparisons (and 
related calculations) on the same sets of NDCs because it is a more 
exact comparison than the use of unmatched sets of NDCs and is expected 
to more accurately reflect trends in the marketplace. One comment also 
suggested that AMP and ASP be calculated using the same sales volumes.
    Response: We will discuss comments about additional safeguards we 
will use in the application of AMP based price substitutions, including 
duration of the substitution, and the exclusion of codes that exceed 
AMP for only one quarter in the following sections. We agree that the 
use of ``complete'' AMP data is likely to provide a more accurate 
comparison than the use of unmatched sets of NDCs, and we believe that 
the use of ``complete'' data will result in consistent volume weighting 
for ASP and AMP.
    After reviewing the public comments, we are finalizing the 5 
percent threshold for AMP comparisons for CY 2012 and the corresponding 
regulation text at 42 CFR 414.904(d)(3)(iii) as proposed, except that 
we are correcting one typographical error in which we referred to ASP 
instead of AMP. We are also finalizing the proposal that specifies that 
the AMP for a billing code is calculated using the same set of NDCs 
used to calculate the ASP for the billing code and corresponding 
regulation text at 42 CFR 414.904(d)(3)(iii)(B).
b. AMP Price Substitution
(1) Inspector General Studies
    Section 1847A(d) of the Act requires the Inspector General to 
conduct studies of the widely available market price for drugs and 
biologicals to which section 1847A of the Act applies. However, it does 
not specify the frequency of when such studies should be conducted. The 
Inspector General has conducted studies comparing AMP to ASP for 
essentially each quarter since the ASP system has been implemented. 
Since 2005, the OIG has published 25 reports pertaining to the price 
substitution issue (see Table 36), of which 23 have identified billing 
codes with volume-weighted ASPs that have exceeded their volume-
weighted AMPs by the applicable threshold percentage.
BILLING CODE 4120-01-P

[[Page 73290]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.143

[[Page 73291]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.144

BILLING CODE 4120-01-C
    In the quarterly report comparing AMP to ASP, titled ``Comparison 
of Third-Quarter 2010 Average Sales Price and Average Manufacturer 
Prices: Impact on Medicare Reimbursement for First Quarter 2011'' (OEI-
03-11-00160), the Inspector General found that of 365 billing codes 
with ``complete'' AMP data in the third quarter of 2010, only 14 met 
the 5 percent threshold; that is, ASP exceeded AMP by at least 5 
percent. Eight of these 14 billing codes also exceeded the AMP by at 
least 5 percent in one or more of the previous four quarters; only two 
drugs had ASPs that exceeded the 5 percent threshold in all four 
quarters under review. This Inspector General report further indicates 
that, ``If reimbursement amounts for all 14 codes with complete AMP 
data had been based on 103 percent of the AMPs during the first quarter 
of 2011, we estimate that Medicare expenditures would have been reduced 
$10.3 million in that quarter alone.'' The savings found by the 
Inspector General constitute potential savings for the Medicare program 
and beneficiaries. Since the publication of the proposed rule, the OIG 
has released two additional AMP comparison studies (OEI-03-11-00540, 
and OEI-03-11-00360)., Report OEI-03-11-00360, entitled ``Comparison of 
Fourth Quarter 2010 Average Sales Prices and Average Manufacturer 
Prices: Impact on Medicare Reimbursement for Second Quarter 2011,'' has 
findings that indicate the potential for cost savings through the 
implementation of price substitution, and it states that ``of the 338 
drug codes with complete AMP data, 15 exceeded the 5 percent threshold. 
If reimbursement amounts for all 15 codes had been based on 103 percent 
of the AMPS in the second quarter of 2011, Medicare would have saved an 
estimated $1.3 million. Under CMS proposed price substitution policy, 
reimbursement amounts for 5 of the 15 drugs would have been reduced, 
saving an estimated $554,000.'' The more recent report describes more 
modest cost savings than the report cited in the proposed rule.
(2) Proposal
    As discussed previously, section 1847A(d)(3) of the Act provides 
authority for us to determine the applicable percentage subject to 
``such adjustment as the Secretary may specify for the widely available 
market price or the average manufacturer price, or both.'' We also have 
authority to specify the timing of any ASP substitution. Consistent 
with this authority, we proposed a policy to substitute 103 percent of 
AMP for 106 percent of ASP where the applicable percentage threshold 
has been satisfied for the two consecutive quarters immediately prior 
to the current pricing quarter, or for three of the previous four 
quarters immediately prior to the current pricing quarter. This policy 
would apply to single source drugs and biologicals, multiple source 
drugs, and biosimilar biological products as defined at section 
1847A(c)(6)(C), (D), and (H) of the Act.
    Comment: As mentioned previously, several commenters agreed with 
the concept of safeguards or limits on the application of AMP-based 
price substitutions. Of the commenters who specifically discussed the 
duration of ASP deviations above AMP, all agreed that deviations 
lasting only one quarter could be attributed to temporary market 
changes or fluctuations and should not trigger a piece substitution. 
There were no comments regarding which subsets of part B drugs or 
biologicals that the policy should apply to.
    Response: We agree with the commenters and believe that focusing on 
those drugs that consistently exceed the applicable percentage 
threshold over multiple quarters is appropriate because we believe such 
an approach will minimize the potential for disruption to

[[Page 73292]]

access in cases of temporary market fluctuations.
    After reviewing the public comments, we are finalizing our proposal 
that implements the substitution of 103 percent of AMP for 106 percent 
of ASP where the applicable percentage threshold has been satisfied for 
the two consecutive quarters immediately prior to the current pricing 
quarter, or for three of the previous four quarters immediately prior 
to the current pricing quarter and corresponding regulation text at 42 
CFR 414.904(d)(3)(iii)(A). This policy will apply to single source 
drugs and biologicals, multiple source drugs, and biosimilar biological 
products as defined at section 1847A(c)(6)(C), (D), and (H) of the Act.
(3) Timeframe for and Duration of Price Substitutions
    As stated in Sec.  414.804(a)(5), a manufacturer's average sales 
price must be submitted to CMS within 30 days of the close of the 
quarter. We then calculate an ASP for each billing code in accordance 
with the process outlined at Sec.  414.904. Then, as described in our 
CY 2005 PFS final rule (69 FR 66300), we implement these new prices 
through program instructions or otherwise at the first opportunity 
after we receive the data, which is the calendar quarter after receipt.
    Section 1847A(d)(3)(C) of the Act indicates that a price 
substitution would be implemented ``effective as of the next quarter'' 
after the OIG has informed us that the ASP for a drug or biological 
exceeds its AMP by the applicable percentage threshold. The OIG does 
not receive new ASPs for a given quarter until after we have finalized 
our calculations for the quarter. Also, the results of the OIG's 
pricing comparisons are not available until after the ASPs for a given 
quarter have gone into effect. Therefore, we anticipate that there will 
be a three-quarter lag for substituted prices from the quarter in which 
manufacturer sales occurred, though this will depend in great part upon 
the timeframe in which we obtain comparison data from the OIG. Table 37 
provides an example of this timeframe.
    Comment: Two commenters expressed concern about the three quarter 
lag, how the duration disconnects price substitution policy from the 
marketplace, and the potential for divergence between ASP and AMP 
during the lag period. One commenter suggested that the proposal not be 
implemented unless a shorter turnaround could be put in place; one 
commenter stated that the lag should not exceed the ASP methodology's 
two quarter lag. Another commenter stated that the associated 
regulation text at 42 CFR 414.904(d)(iii)(A) may not accurately 
describe the timeframes for the comparisons because the comparison is 
not actually done using data from quarters that immediately precede the 
substitution.
    Response: In developing our policy, we carefully considered the lag 
associated with the AMP based price substitution. ASPs reported to the 
OIG incorporate a two quarter lag between the reported sales and the 
time that an ASP is posted. Section 1847A(d)(3)(C) of the Act provides 
that the Secretary substitute prices as of the next quarter after the 
OIG informs the Secretary that the ASP exceed the AMP by the applicable 
threshold. This results in a minimum of a three quarter lag from the 
date that manufacturer sales occurred for the price substituted 
products and the price substitution. Given the current operational 
environment and the statutory requirement to implement price 
substitutions after the OIG provides information about drugs for which 
ASP exceed AMP by the applicable threshold (which is also reflected in 
regulation text at 42 CFR 414.904(d)(i)), it is not possible to reduce 
the lag at this time. We disagree with the assertion that the 
regulation text does not accurately describe the time frame for our 
price substitution policy. Our policy for comparisons between AMP and 
ASP is discussed later in this preamble and reflects the use of data 
from the most recent quarter where OIG data and ASPs are available.

[[Page 73293]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.145

    Given this lag in time, the ASP for a billing code may have 
decreased since the OIG's comparison. Therefore, consistent with our 
authorities in section 1847A(d)(3) of the Act and our desire to provide 
accurate payments consistent with these provisions, we believe that the 
timing of any substitution policy should permit a final comparison 
between the OIG's volume-weighted 103 percent AMP for a billing code 
(calculated from the data from sales three quarters prior) and the 
billing code's volume-weighted 106 percent ASP (as calculated by CMS 
for the upcoming quarter). In Table 37 for example, this comparison 
would be done between the HCPCS payment limits calculated for Q1-12, 
and the OIG's volume-weighted AMPs from their examination of Q4-11 
payment limits. This final comparison would assure the Secretary that 
the 106 percent ASP payment limit for the current pricing quarter 
continues to exceed 103 percent of the OIG's calculated AMP in order to 
avoid a situation in which the Secretary would inadvertently raise the 
Medicare payment limit through this price substitution policy. We 
specifically requested comments on this proposal.
    Comment: We did not receive any specific comments about this issue. 
However several commenters touched on issues related to the final 
comparison. One commenter expressed concerns that there is no mechanism 
to rescind a substitution, while another comment remarked about the 
fact that AMPs could be restated for up to 12 quarters, and stated the 
assumption that a restated AMP would be used in the final comparison. 
Another commenter (discussed in section VI.A.1. of this final rule with 
comment period) suggested that WAMP be incorporated into the proposed 
final check.
    Response: We appreciate the comments that have asked us to consider 
additional limits or safeguards related to the implementation of the 
AMP-based price substitution. As we developed the details of this 
proposal, we considered the lag period and the impact of brief periods 
where ASP exceeds AMP by more than the threshold percentage. At this 
time we still believe that when all of our limits (the comparison of 
``complete'' AMP data against ASPs for the same NDCs, the 5 percent 
threshold, the requirement that ASP exceed the threshold for more than 
one quarter, and the final check against 106 percent of ASP that would 
otherwise be applied in a quarter) are considered together, they create 
satisfactory safeguards to prevent the inadvertent or unnecessary 
triggering of a price substitution, which, in turn, could affect 
provider payments and access to drugs. We also do not believe that 
additional limits or safeguards, particularly ones that have not 
already been proposed, should be applied at this time because they will 
not be subject to public comment.

[[Page 73294]]

    We would like to clarify that our approach utilizes the OIG's 
calculation of AMP and does not incorporate the use of restated AMPs. 
We are not persuaded to incorporate restated AMPs into the calculation 
because, as discussed earlier in the rule and noted by commenters, AMP 
can fluctuate from quarter to quarter. The use of a restated AMP would 
require additional calculations and the incorporation of additional 
analysis similar to the safeguards finalized in this rule that confirm 
that the AMP to ASP comparison is not just a one quarter fluctuation 
that may not represent the actual state of the marketplace. The use of 
restated AMPs may also lead to comparisons that are beyond the 3 
quarter lag and changes the comparison from one based on a single 
quarter to being based on potentially changing data; the ASP 
methodology generally relies on data from a single time period. We 
believe that additional pricing variations, which could result from the 
use of restated AMPs over multiple quarters could further increase 
providers' uncertainty about payment rates. The final comparison 
between the OIG's volume-weighted 103 percent AMP for a billing code 
(calculated from the data from sales three quarters prior) and the 
billing code's volume-weighted 106 percent ASP (as calculated by CMS 
for the upcoming quarter) is intended to minimize the effect of the 
three quarter lag and further minimize the effect of AMP fluctuation on 
our substitution policy, and we believe that this final check, as well 
as the additional safeguards described in this rule, are sufficient. An 
additional check based on restated AMP is not necessary at this time.
    After reviewing the public comments, we are finalizing our proposal 
regarding the final comparison between AMP and ASP and the related 
regulation text at 42 CFR 414.904(d)(3)(ii)(B).
    ASP payment limits are calculated on a quarterly basis as per 
section 1847A(c)(5)(A) of the Act, and we are particularly mindful that 
the ASP-based payment allowance for a billing code may change from 
quarter to quarter. As such, we proposed that any price substitution 
based on the comparison that triggered its application would last for 
one quarter.
    Comment: Several commenters supported the one quarter duration for 
the price substitution.
    Response: We agree with the comments. No commenters provided 
alternatives to the one quarter duration of the price substitution.
    We are finalizing the one quarter duration for AMP-based price 
substitutions and the related regulation text at Sec.  
414.904(d)(3)(i). We note that in a subsequent quarter, the OIG may 
identify that a volume-weighted ASP continues to exceed the volume-
weighted AMP for a billing code that previously triggered a price 
substitution. In this scenario, if the criteria for the price 
substitution policy are met, we would substitute 103 percent of the 
OIG's updated volume-weighted AMP for that billing code.
(4) Implementation of AMP-Based Price Substitution and the Relationship 
of ASP to AMP
    In the preceding section, we have discussed various details, 
limitations, and safeguards regarding the AMP-based price 
substitutions. In general, comments regarding these items supported our 
proposals regarding those items, and agreed that we were being 
consistent with the cautious approach described in the proposal and 
previous rules. In this section, we will discuss whether the AMP based 
price substitutions should be implemented in CY 2012.
    In general, we believe that our proposal to substitute 103 percent 
of AMP for 106 percent of ASP provides us with a viable mechanism for 
generating savings for the Medicare program and its beneficiaries 
because it will allow Medicare to pay based on lower market prices for 
those drugs and biologicals that consistently exceed the applicable 
threshold percentage. Moreover, it will enable us to address a 
programmatic vulnerability identified by the OIG.
    In the CY 2010 proposed rule, we sought comment on other issues 
related to the comparison between ASP and AMP, and in the CY 2012 
proposed rule we sought comments on the following issues again--
     The effect of definitional differences between AMP and 
ASP, particularly in light of the definition of AMP as revised by 
section 2503 of the Affordable Care Act;
     The impact of any differences in AMP and ASP reporting by 
manufacturers on price substitution comparisons; and
     Whether and/or how general differences and similarities 
between AMP and manufacturer's ASP would affect comparisons between 
these two.
    Although most commenters agree with specific details of our 
proposals that we described and finalized, nearly all of the commenters 
were concerned about the impact of recent changes to the definition of 
AMP and how they would affect the relationship of AMP to ASP.
    Comment: Comments disagreeing with the proposed CY 2012 
implementation of the AMP-based price substitution policy generally 
related to the three previous bullet points and cited the following 
concerns:
     A lack of experience with the new definitions of AMP and 
an incomplete understanding of the relationship between ASP and the new 
definitions of AMP by the industry and CMS, particularly for AMP 
reporting of drugs with payment limits that are determined under the 
ASP methodology. Commenters indicated that the definition of AMP in the 
Affordable Care Act that describes drugs sold to retail community 
pharmacies is expected to increase AMP, but commenters expressed 
uncertainty about how the updated definition in the FAA Air 
Transportation Modernization and Safety Improvement Act would affect 
the AMP/ASP relationship.
     A lack of guidance in recent rulemaking and statutory 
provisions about assumptions that manufacturers should use in order to 
uniformly calculate AMP. In particular, commenters were concerned about 
how the phrase ``not generally dispensed through a retail community 
pharmacy,'' which was added in the updated definition of AMP in the FAA 
Air Transportation Modernization and Safety Improvement Act, might be 
defined in rulemaking;
     Uncertainty about how future rulemaking regarding the AMP 
would affect the ASP/AMP relationship;
     Inconsistency in how AMP and ASP incorporate prompt pay 
discounts; and
     Concern about any further reductions in payments to 
providers, particularly small practices and the potential effect on 
access to care.
    Commenters also stated that implementation of a price substitution 
policy in 2012 was not consistent with the ``slow and cautious'' 
approach that we have described in previous rulemaking. They 
recommended delaying the implementation of a price substitution policy 
until additional guidance about AMP has been finalized and more 
experience has been gained.
    Response: We agree that the definition of AMP has continued to 
evolve over time. The updated definitions of AMP in section 2503 of the 
Affordable Care act and section 202 of the Federal Aviation 
Administration Air Transportation Modernization and Safety Act (which 
includes injected, infused, implanted, instilled, and inhaled drugs) 
became effective on October 1, 2010 and remain in effect at this time. 
Although rulemaking that

[[Page 73295]]

pertains to specific issues and operational details regarding 
manufacturer reporting of AMP is pending, the current reporting 
process, including the updated definitions of AMP, is in place. 
Although we appreciate the comments that recommended that we delay the 
implementation of the AMP-based price substitution policy until a later 
time, we do not believe implementation of a price substitution policy 
should be further delayed for a number of reasons.
    First, we disagree that implementation of the policy in CY 2012 is 
inconsistent with a slow and cautious approach regarding price 
substitution. While additional guidance and experience with the new 
definitions of AMP would be helpful, our 6-years' experience in 
monitoring AMP and ASP have shown that very few ASP payment limits 
exceed the existing AMP threshold (even absent the safeguards that we 
are finalizing in this rule). Moreover, most of the drugs that exceed 
the threshold in previous reports are infrequently used. We understand 
that the updated definition of AMP encompasses sales of injected, 
infused, instilled, inhaled, and implanted drugs that are not generally 
dispensed through a retail community pharmacy, including a wider range 
of customers and discounted sales to non-pharmacy entities, and 
commenters' concerns that implementation of the most recent definition 
could decrease AMP for certain drugs. However, we do not have any 
specific information from commenters that persuades us to believe that 
the AMP-based price substitution policy will be applied frequently or 
to high cost/high volume items, despite the changes to the definition 
of AMP. Therefore, we believe that proceeding with implementation in 
2012 is consistent with a slow and cautious approach toward this 
policy.
    Second, we have worked closely with the OIG and have reviewed 25 
price substitution reports from the OIG over the past 6 years. The 
drugs and biologicals identified as candidates for price substitution 
were typically uncommonly used and many were inexpensive items. Based 
on this experience, we do not believe that this policy will 
substantially affect providers' financial situation, access to care for 
beneficiaries, the payment rate for highly utilized and expensive drugs 
and biologicals, or the manufacturers of these items. Further, we are 
finalizing in this rule additional safeguards to prevent the triggering 
of the price substitutions for drugs that do not consistently exceed 
the AMP threshold. We believe these safeguards are both consistent with 
a cautious approach and provide assurance that the price substitution 
policy will be applied only when appropriate.
    Finally, while the Affordable Care Act did change the definition of 
AMP, and AMP data captures sales differently than ASP, the Congress did 
not modify its mandate that the OIG compare AMP to ASP for purposes of 
section 1847A(d)(3), nor did it change how prompt pay discounts are 
treated under ASP. Thus, in our view, the statute requires the 
Secretary to use AMP, as modified by the Affordable Care Act and 
updated by the FAA Air Transportation Modernization and Safety 
Improvement Act, as the basis for a comparison value and an alternative 
payment limit for ASP, and we will not make further revisions to the 
proposed implementation of this policy at this time. We appreciate the 
comments that we have received regarding this proposal and we look 
forward to continuing to work with the OIG and stakeholders on this 
matter.
    In summary we are finalizing the implementation of an AMP based 
substitution policy to substitute 103 percent of AMP for 106 percent of 
ASP beginning in CY 2012 and proposed regulation text at 42 CFR 
414.904(d)(3), as described in the ASP section of this rule. We note 
that although this policy will become effective on January 1, 2012, 
because of the three quarter lag, the earliest that price substitutions 
could occur is April 1, 2012.
    Comment: Several commenters were also concerned that there is no 
mechanism for public notification and comments in advance of specific 
substitutions. Two commenters requested that CMS allow for dialogue 
about specific substitutions between the manufacturer and CMS.
    Response: Although there is no statutory requirement that CMS 
notify the public about specific price substitutions or to accept 
comments regarding specific substitutions, we agree that public 
notification about specific price substitutions is important and will 
help us operate in a transparent manner. CMS will post a list of the 
HCPCS codes for which the policy is applied at the time that a 
quarter's ASPs are first posted to the CMS ASP Web site (http://www.cms.gov/McrPartBDrugAvgSalesPrice/). This will provide 
approximately two weeks' notice before the substituted payment amount 
goes into effect. Our experience with ASP has shown that this two week 
notification regarding ASPs has provided stakeholders with time to 
comment and inquire about potential problems regarding the new 
quarter's prices, and time for CMS to respond. We will accept inquiries 
about the list at the CMS ASP emailbox at sec303aspdata@cms.hhs.gov. 
However, we have not proposed, nor are we implementing, a mechanism for 
dialogue with stakeholders regarding specific substitutions, such as 
formal dispute resolution procedures, due to the relatively tight 
timeframe and commenters' concerns about further increasing the lag 
period.
3. ASP Reporting Update
a. ASP Reporting Template Update
    For purposes of this part, unless otherwise specified, the term 
``drugs'' will hereafter refer to both drugs and biologicals. Sections 
1847A and 1927(b) of the Act specify quarterly ASP data reporting 
requirements for manufacturers. Specific ASP reporting requirements are 
set forth in section 1927(b)(3) of the Act. For the purposes of 
reporting under section 1847A of the Act, the term ``manufacturer'' is 
defined in section 1927(k)(5) of the Act and means any entity engaged 
in the following: Production; preparation, propagation, compounding, 
conversion or processing of prescription drug products; either directly 
or indirectly by extraction from substances of natural origin, or 
independently by means of chemical synthesis, or by a combination of 
extraction and chemical synthesis; or packaging, repackaging, labeling, 
relabeling, or distribution of prescription drug products. The term 
manufacturer does not include a wholesale distributor of drugs or a 
retail pharmacy licensed under State law. However, manufacturers that 
also engage in certain wholesaler activities are required to report ASP 
data for those drugs that they manufacture. Note that the definition of 
manufacturers for the purposes of ASP data reporting includes 
repackagers.
    Section 1927(b)(3)(A)(iii) of the Act specifies that manufacturers 
must report their average sales price and the number of units by NDC. 
As established by 42 CFR part 414 subpart J, manufacturers are required 
to report data at the NDC level, which includes the following elements: 
(1) The manufacturer ASP; (2) the Wholesale Acquisition Cost (WAC) in 
effect on the last day of the reporting period; (3) the number of units 
sold; and (4) the NDC. The reported ASP data are used to establish the 
Medicare payment amounts.
    Section 1927(b)(3)(A)(iii)(II) of the Act specifies that the 
manufacturer must report the WAC if it is required for payment to be 
made under section 1847A of the Act. In the 2004 IFC that

[[Page 73296]]

implemented the ASP reporting requirements for Medicare Part B drugs 
and biologicals (66 FR 17935), we specified that manufacturers must 
report the ASP data to CMS using our Addendum A template. In 2005, we 
expanded the template to include WAC and additional product description 
details (70 FR 70221). We also initiated additional changes to the 
template in 2008 (73 FR 76032).
    In order to facilitate more accurate and consistent ASP data 
reporting from manufacturers, we have proposed additional revisions to 
the Addendum A template. Specifically, we have proposed to revise 
existing reporting fields and add new fields to the Addendum A template 
as follows--
     To split the current NDC column into three separate 
reporting fields, corresponding to the three segments of an NDC;
     To add a new field to collect an Alternate ID for products 
without an NDC; and
     To expand the current FDA approval number column to 
account for multiple entries and supplemental numbers.
    We have also added a macro to the Addendum A template that will 
allow manufacturers to validate the format of their data prior to 
submission. This will help verify that data are complete and submitted 
to CMS in the correct format, thereby minimizing time and resources 
spent on identifying mistakes or errors. We note that the use of this 
macro does not preclude or supersede manufacturers' responsibility to 
provide accurate and timely ASP data in accordance with the reporting 
obligation under section 1927(b)(3) of the Act. We also note that 
manufacturers who misrepresent or fail to report manufacturer ASP data 
will remain subject to civil monetary penalties, as applicable and 
described in sections 1847A and 1927(b) of the Act and codified in 
regulations at Sec.  414.806.
    Comment: Two commenters requested that the ``Alternate ID'' field 
be increased to a 23-character capacity from the proposed 13 character 
limit. Both commenters cited specific instances where their products 
are identified by an alpha-numeric identification that would exceed the 
limit of the proposed field.
    Response: We agree with the importance of being able to accommodate 
Alternate IDs of various lengths. We have expanded the Alternate ID 
field to accommodate 23 characters. This will ensure the field is 
consistent with a variety of existing alternative product identifiers.
    Comment: A commenter objected to the description in the revised 
Addendum A user guide regarding the inclusion of negative and zero 
values as valid ASP, Units, and WAC. The commenter stated that the 
required inclusion of all discounts in the ASP could create negative or 
zero ASP, Units or WAC values. They believed that negative numbers are 
invalid for these fields and urged CMS to revise the User Guide to 
indicate that negative values are not ``valid'' for ASP, ASP units, and 
WAC in Addendum A. They also requested that the Guide instead instruct 
manufacturers who have negative values to report ``0.000'' as 
manufacturers are instructed to do when they have no ASP, ASP units or 
WAC to report.
    Response: We disagree with this comment. 1847A(c)(3) in the Act 
states, ``In calculating the manufacturer's average sales price under 
this subsection, such price shall include volume discounts, prompt pay 
discounts, cash discounts, free goods that are contingent on any 
purchase requirement, chargebacks, and rebates * * *.'' This allows for 
lagged discounts, which may in turn create a negative ASP value. We 
therefore maintain the request for negative numbers within the User 
Guide and Addendum A template.
    Comment: One commenter requested that the Agency provide the 
updated Addendum A template to manufacturers as soon as possible to 
facilitate internal system changes. The proposal for the reporting 
changes to be effective January 1, 2012 would appear to subject 
manufacturers to the new reporting format for the Q4 2011 reporting 
period due January 30, 2012. Manufacturers using their own systems, as 
well as those utilizing systems provided by a third party, will need 
adequate time to program and validate the system changes prior to the 
submission deadline.
    Response: We agree with the need to give manufacturers as much time 
as possible to incorporate the revisions to the Addendum A template 
into their administrative systems. The finalized template will be 
posted online as soon as possible following the publication of the CY 
2012 PFS final rule. However, we still require that this template be 
used to submit such data that is due at the end of January 2012. We 
also remind readers that submissions will continue to require 
certification that reported Average Sales Prices were calculated 
accurately and that all information and statements made in the 
submission are true, complete, and current.
    In summary we are finalizing our proposal to amend the Addendum A 
template, including the use of a data validation macro and with the 
expansion of the ``Alternate ID'' field. The companion Users' Guide and 
other documents will be available on our ASP Web site: https://www.cms.gov/McrPartBDrugAvgSalesPrice/ as soon as possible following 
the publication of this final rule.
b. Reporting of ASP Units and Sales Volume for Certain Products
    As required by 42 CFR part 414 subpart J, manufacturers report ASP 
price and volume data at the NDC level. This is appropriate for most 
drug and biological products because an NDC is usually associated with 
a consistent amount of product that is being sold. Our experience with 
manufacturer reporting of ASPs has revealed that a limited number of 
drug products, as defined by an NDC, might contain a variable amount of 
active ingredient. This situation is common for plasma derived clotting 
factors; for example, we are aware of one product where a vial 
described as nominally containing 250 international units (IUs) of 
clotting factor activity might actually contain between 220 and 400 
IUs. Although the exact factor activity is specified on the label, the 
amount of IUs contained in an NDC might vary between manufacturing 
lots. For these types of products, it is possible that vials with the 
same NDC but different amounts of clotting factor activity (as measured 
in IUs) might be sold during the same ASP reporting period. For drugs 
paid under Medicare Part B, such variability in the amount of drug 
product within an NDC appears to apply mostly to clotting factors that 
are prepared from plasma sources; it also applies to a few other 
products, including a plasma protein product used to treat antitrypsin 
deficiency.
    As stated in the section 1847A(b)(2) of the Act, for years after 
2004, the Secretary has the authority to ``establish the unit for a 
manufacturer to report and methods for counting units as the Secretary 
determines appropriate to implement.'' There are limited situations 
when ASP price and volume reporting by product NDC may affect the 
accuracy of subsequent pricing calculations done by us (for example, 
when an NDC is associated with a variable amount of drug product as 
described in the paragraph previously). We believe that in such cases 
it is appropriate to amend the definition of the ASP unit associated 
with the NDC that is reported to us by manufacturers for the purposes 
of calculating ASP. Under the authority in the section

[[Page 73297]]

1847A(b)(2) of the Act, we proposed that we will maintain a list of 
HCPCS codes for which manufacturers report ASPs for NDCs on the basis 
of a specified unit. The specified unit will account for situations 
where labeling indicates that the amount of drug product represented by 
an NDC varies. Our initial list appears in Table 38 and is limited to 
items with variable amounts of drug product per NDC as described 
previously. However, we proposed to update this list as appropriate 
through program instruction or otherwise because we believe that the 
ability to make changes in a subregulatory manner will provide us with 
the flexibility to quickly and appropriately react to sales and 
marketing practices for specific drug products, including the 
introduction of new drugs or drug products. We plan to amend the list 
as necessary and to keep updates on the CMS ASP Web site at: http://www.cms.gov/McrPartBDrugAvgSalesPrice/01_overview.asp. Our proposal 
would be effective for ASP reports received on or after January 1, 2012 
and would be reflected in our April 1, 2012 quarterly update.
    In conjunction with the proposals in the preceding paragraph and 
the expectation that nearly all ASP price and sales volume reporting 
will continue to be at the NDC level (that is, the reported ASP sales 
and volume will be associated with a non-variable amount that is 
represented by the NDC), we proposed a clarification to existing 
regulation text at Sec.  414.802. Current regulation text states that 
``Unit means the product represented by the 11-digit National Drug 
Code.'' We proposed to update the definition to account for situations 
when an alternative unit of reporting must be used; the definition of 
the term unit will continue to be based on reporting of ASP data per 
NDC unless otherwise specified by CMS to account for situations where 
the amount of drug product represented by an NDC varies.
    Comment: One commenter agreed with the proposal to revise reporting 
instructions for products which contain variable amounts of drug per 
NDC in order to align ASP reporting more closely with typical industry 
pricing conventions and to maintain the accuracy of ASP determinations, 
and recommended that CMS provide as much advance notice as possible 
about changes to the proposed list.
    Response: Based on the comment, we will finalize this provision and 
the associated regulation text at 42 CFR 414.802 that defines an ASP 
``unit.'' We plan to update the list of products that must be reported 
in units other than an NDC that is presented in Table 38, post it on 
the CMS ASP Web site (http://www.cms.gov/McrPartBDrugAvgSalesPrice/) 
soon after the rule is published, and incorporate updates for new 
products as discussed in the proposal.
BILLING CODE 4120-01-P

[[Page 73298]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.146

BILLING CODE 4120-01-C
    The instructions for reporting products with variable amounts of 
drug product, along with general instructions on completing the revised 
ASP Data Form (Addendum A), will be delineated in a User Guide that 
will be available on the ASP Web site. In the User Guide, we will also 
be revising our instructions for the reporting of dermal grafting 
products as follows--
     If an NDC is not associated with a dermal grafting 
product, manufacturers should enter the UPC or other unique identifier 
(such as an internal product number) in the alternate ID column; and
     Manufacturers should report ASP prices and sales volumes 
for dermal grafting products in units of area by square centimeter.
    The User Guide will be available on the CMS ASP Web site at: http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/01_overview.asp. The Web 
site will also contain the revised ASP Data Form (Addendum A) and 
examples of how ASP data must be reported and formatted for submission.
    We would also like to remind manufacturers that additional 
information about reporting ASP data to us is available (for examples, 
see the following: (69 FR 17936), (69 FR 66299), (70 FR 70215), (71 FR 
69665), (72 FR 66256), (73 FR 69751), and (74 FR 61904)). Also, a link 
to the ASP Frequently Asked Questions (FAQs) is posted in the ``Related 
Links Inside CMS'' section of the ASP Overview Web page. We welcome 
comments on the ASP reporting proposals that are described in this 
section.
4. Out of Scope Comments
    We received comments pertaining to: (1) Coding and pricing for new 
molecular diagnostic codes; (2) the continued use of G0440 and G0441 in 
2012 as well as general comments on the coding and payment of skin 
substitute products; (3) updating supplying and dispensing fees for 
Part B drugs; (4) low reimbursement rates in a HCPCS-based claims 
systems for pharmacies and other community based practices; (5) the 
exclusion of prompt pay discounts from ASP calculations; and, (6) a 
request to pay all Part B drugs under the Part D benefit.
    These comments are outside the scope of this rule, and therefore 
are not addressed in this final rule with comment period.

B. Discussion of Budget Neutrality for the Chiropractic Services 
Demonstration

    Section 651 of MMA requires the Secretary to conduct a 
demonstration for up to 2 years to evaluate the feasibility and 
advisability of expanding coverage for chiropractic services under 
Medicare. Current Medicare coverage

[[Page 73299]]

for chiropractic services is limited to manual manipulation of the 
spine to correct a subluxation described in section 1861(r)(5) of the 
Act. The demonstration expanded Medicare coverage to include: ``(A) 
care for neuromusculoskeletal conditions typical among eligible 
beneficiaries; and (B) diagnostic and other services that a 
chiropractor is legally authorized to perform by the State or 
jurisdiction in which such treatment is provided''. The demonstration 
was conducted in four geographically diverse sites, two rural and two 
urban regions, with each type including a Health Professional Shortage 
Area (HPSA). The two urban sites were 26 counties in Illinois and Scott 
County, Iowa, and 17 counties in Virginia. The two rural sites were the 
States of Maine and New Mexico. The demonstration, which ended on March 
31, 2007, was required to be budget neutral as section 651(f)(1)(B) of 
MMA mandates the Secretary to ensure that ``the aggregate payments made 
by the Secretary under the Medicare program do not exceed the amount 
which the Secretary would have paid under the Medicare program if the 
demonstration projects under this section were not implemented.''
    In the CY 2006, 2007, and 2008 PFS final rules with comment period 
(70 FR 70266, 71 FR 69707, 72 FR 66325, respectively), we included a 
discussion of the strategy that would be used to assess budget 
neutrality (BN) and the method for adjusting chiropractor fees in the 
event the demonstration resulted in costs higher than those that would 
occur in the absence of the demonstration. We stated that BN would be 
assessed by determining the change in costs based on a pre-post 
comparison of total Medicare costs for beneficiaries in the 
demonstration and their counterparts in the control groups and the rate 
of change for specific diagnoses that are treated by chiropractors and 
physicians in the demonstration sites and control sites. We also stated 
that our analysis would not be limited to only review of chiropractor 
claims because the costs of the expanded chiropractor services may have 
an impact on other Medicare costs for other services.
    In the CY 2010 PFS final rule with comment period (74 FR 61926), we 
discussed the evaluation of this demonstration conducted by Brandeis 
University and the two sets of analyses used to evaluate budget 
neutrality. In the ``All Neuromusculoskeletal Analysis,'' which 
compared the total Medicare costs of all beneficiaries who received 
services for a neuromusculoskeletal condition in the demonstration 
areas with those of beneficiaries with similar characteristics from 
similar geographic areas that did not participate in the demonstration, 
the total effect of the demonstration on Medicare spending was $114 
million higher costs for beneficiaries in areas that participated in 
the demonstration. In the ``Chiropractic User Analysis,'' which 
compared the Medicare costs of beneficiaries who used expanded 
chiropractic services to treat a neuromusculoskeletal condition in the 
demonstration areas, with those of beneficiaries with similar 
characteristics who used chiropractic services as was currently covered 
by Medicare to treat a neuromusculoskeletal condition from similar 
geographic areas that did not participate in the demonstration, the 
total effect of the demonstration on Medicare spending was a $50 
million increase in costs.
    As explained in the CY 2010 PFS final rule, we based the BN 
estimate on the ``Chiropractic User Analysis'' because of its focus on 
users of chiropractic services rather than all Medicare beneficiaries 
with neuromusculoskeletal conditions, as the latter included those who 
did not use chiropractic services and who may not have become users of 
chiropractic services even with expanded coverage for them (74 FR 61926 
through 61927). Users of chiropractic services are most likely to have 
been affected by the expanded coverage provided by this demonstration. 
Cost increases and offsets, such as reductions in hospitalizations or 
other types of ambulatory care, are more likely to be observed in this 
group.
    As explained in the CY 2010 PFS final rule (74 FR 61927), because 
the costs of this demonstration were higher than expected and we did 
not anticipate a reduction to the PFS of greater than 2 percent per 
year, we finalized a policy to recoup $50 million in expenditures from 
this demonstration over a 5-year period, from CYs 2010 through 2014 (74 
FR 61927). Specifically, we are recouping $10 million for each such 
year through adjustments to the chiropractic CPT codes. Payment under 
the PFS for these codes will be reduced by approximately 2 percent. We 
believe that spreading this adjustment over a longer period of time 
will minimize its potential negative impact on chiropractic practices.
    We are continuing the implementation of the required budget 
neutrality adjustment by recouping $10 million in CY 2012. Our Office 
of the Actuary estimates chiropractic expenditures in CY 2012 will be 
approximately $470 million based on actual Medicare spending for 
chiropractic services for the most recent available year. To recoup $10 
million in CY 2012, the payment amount under the PFS for the 
chiropractic CPT codes (CPT codes 98940, 98941, and 98942) will be 
reduced by approximately 2 percent. We are reflecting this reduction 
only in the payment files used by the Medicare contractors to process 
Medicare claims rather than through adjusting the RVUs. Avoiding an 
adjustment to the RVUs would preserve the integrity of the PFS, 
particularly since many private payers also base payment on the RVUs.
    The following is the summary of the public comments we received and 
our responses.
    Comment: One commenter, representing chiropractors, indicated that 
they continue to oppose our methodology for assuring budget neutrality 
under the demonstration. Instead of the application of an adjustment to 
the national chiropractor fee schedule, the commenter believes the 
Congressional intent was for CMS to make an adjustment to the totality 
of services payable under the Part B Trust Fund because of the language 
in section 651(f)(A) of the MMA, which directs the Secretary to 
``provide for the transfer from the Federal Supplementary Insurance 
Trust Fund * * * of such funds as are necessary for the costs of 
carrying out the demonstration projects under this section.'' The 
commenter states that more information is necessary to fully understand 
the findings provided by the evaluator, Brandeis University.
    Response: Section 651(f)(1)(B) of the MMA requires that the 
Secretary ``shall ensure that the aggregate payments made by the 
Secretary under the Medicare program do not exceed the amount which the 
Secretary would have paid under the Medicare program if the 
demonstration projects under this section were not implemented.'' The 
statute does not specify a particular methodology for ensuring budget 
neutrality, but leaves that decision to the Secretary. Our methodology 
meets the statutory requirement and appropriately impacts the 
chiropractic profession that is directly affected by the demonstration.
    With respect to the commenter that requested more information, we 
note that the final evaluation report, which describes, among other 
things, our methodology for calculating budget neutrality for this 
demonstration, is located on our Web site at the following URL: http://www.cms.gov/reports/downloads/Stason_ChiroDemoEvalFinalRpt_2010.pdf. 
The evaluation examined the impact of expanded coverage for

[[Page 73300]]

chiropractic care on Medicare expenditures and found that chiropractic 
users in the demonstration areas had higher Medicare expenditures than 
chiropractic users in comparison areas that did not have the expanded 
coverage. Therefore, as proposed and reiterated in the 2006, 2007, 
2008, 2009, 2010, and 2011 PFS rules, we are implementing this 
methodology and recouping from the chiropractor fee schedule codes. Our 
methodology meets the statutory requirement for budget neutrality and 
appropriately impacts the chiropractic profession that is directly 
affected by the demonstration.
    Comment: The same commenter representing chiropractors noted that 
the increase in costs from the demonstration was completely due to the 
Illinois site, and not the other four sites. The commenter ``has 
concerns that the Chicago area did not meet the criteria for an 
appropriate demonstration site for this project.'' The commenter 
believes it is ``premature to use demonstration findings to estimate 
the cost of a national roll out of the expansion of chiropractic 
services without further analysis of the demonstration project data.''
    Response: Section 651(c)(1) of the Act required the demonstration 
be conducted in 4 geographically diverse sites, specifically two rural 
and two urban regions, with each type including a HPSA. We discussed 
the design of this demonstration with the chiropractic industry and 
others prior to implementation. Based on these discussions, we included 
additional criteria for site selection in the design of this 
demonstration. The Chicago area met the site selection criteria for 
this demonstration. We refer readers to the January 28, 2005 notice (70 
FR 4130) for a discussion of our site selection criteria and the sites 
selected for participation based on these criteria.
    Regardless of the differences in the costs associated with the 
demonstration areas, the evaluation conducted by Brandeis University 
found that expanding coverage for chiropractic services under the 
demonstration resulted in increased Medicare expenditures, and the 
Secretary must recoup these costs in order to meet the budget 
neutrality requirement of the law.
    In response to the comment suggesting that the data from this 
demonstration should not be used to estimate the cost of a national 
rollout of the expansion of chiropractic services, we note the data 
from the demonstration is the only information CMS had at the time of 
the Report to the Congress for estimating the costs of a national 
rollout.
    After consideration of the public comments received, we are 
continuing the implementation of the required budget neutrality 
adjustment by recouping $10 million in CY 2012 by reducing the payment 
amount under the PFS for chiropractic codes (that is, CPT codes 98940, 
98941, and 98942) by approximately 2 percent.

C. Productivity Adjustment for the Ambulatory Surgical Center Payment 
System, and the Ambulance, Clinical Laboratory, and DMEPOS Fee 
Schedules

    Section 3401 of the Affordable Care Act requires that the update 
factor under certain payment systems be annually adjusted by changes in 
economy-wide productivity. The year that the productivity adjustment is 
effective varies by payment system. Specifically, section 3401 of the 
Affordable Care Act requires that in CY 2011 (and in subsequent years) 
update factors under the ambulatory surgical center (ASC) payment 
system, the ambulance fee schedule (AFS), the clinical laboratory fee 
schedule (CLFS) and the DMEPOS fee schedule be adjusted by changes in 
economy wide productivity. Section 3401(a) of the Affordable Care Act 
amends section 1886(b)(3)(B) of the Act to add clause (xi)(II) which 
sets forth the definition of this productivity adjustment. The statute 
defines the productivity adjustment to be equal to the 10-year moving 
average of changes in annual economy-wide private nonfarm business 
multifactor productivity (MFP) (as projected by the Secretary for the 
10-year period ending with the applicable fiscal year, year, cost 
reporting period, or other annual period). Historical published data on 
the measure of MFP is available on the Bureau of Labor Statistics' 
(BLS) Web site at http://www.bls.gov/mfp.
    As stated in the CY 2012 PFS proposed rule (76 FR 42834 and 35), 
the projection of MFP is currently produced by IHS Global Insight, Inc. 
(IGI). The methodology for calculating MFP for the ASC payment system, 
and the AFS, CLFS, and DMEPOS fee schedules was finalized in the CY 
2011 PFS final rule with comment period (75 FR 73394 through 73399). As 
described in the CY 2011 PFS final rule with comment period (75 FR 
73394), IGI replicates the MFP measure calculated by the BLS using a 
series of proxy variables derived from the IGI US macro-economic 
models. For CY 2012, we proposed to revise the IGI series used to proxy 
the labor index used in the MFP forecast calculation from man-hours in 
private nonfarm establishments (billions of hours--annual rate) to 
hours of all persons in private nonfarm establishments, (2005 = 
100.00), adjusted for labor composition effects. We proposed this 
revision after further analysis showed that the proposed series is a 
more suitable proxy for the BLS private nonfarm business sector labor 
input series since it accounts for the changes in skill-mix of the 
workforce over time (referred to above as labor composition effects). 
The BLS labor input series includes labor composition effects. We did 
not propose any additional changes to the IGI MFP forecast methodology 
or its application to the CPI-U update factors for the ASC payment 
system, and the AFS, CLFS, and DMEPOS fee schedules.
    We received one comment on our proposal to revise the labor proxy 
used to forecast MFP.
    Comment: A commenter stated that CMS did not explain what the 
practical effect on reimbursements is likely to be after incorporating 
the new labor proxy. The commenter claimed that without this 
information, stakeholders are unable to provide comments on the effect 
of this change. The commenter urged CMS to provide a full explanation 
of how the proposed change is likely to impact the various fee 
schedules to which it will apply and also requested that CMS delay the 
implementation of this proposal in order to give the full and fair 
opportunity to comment.
    Response: We disagree with the commenter's claim that we did not 
provide sufficient detail to comment on our proposal to revise the 
labor proxy used to calculate the MFP forecast. As stated in the CY 
2012 proposed rule, our proposal to revise the labor proxy was based on 
our determination of the most technically appropriate labor proxy that 
most closely approximates the BLS private nonfarm business sector labor 
input series that is used to calculate BLS historical MFP. We note that 
when we evaluated the various labor proxies, we found that the 
correlation coefficient between the proposed revised IGI labor proxy 
and the BLS labor proxy was 0.992 compared to a correlation coefficient 
between the IGI labor proxy for CY 2011 and the BLS labor proxy of 
0.987. Stated differently, the proposed IGI labor proxy is more 
consistent both in concept and in its movements with BLS' published 
labor proxy. Therefore, we believe that the proposal to revise the 
labor proxy is technically appropriate and helps achieve our objective 
to replicate the BLS historical MFP measure as closely as possible. We 
believe that enough detail was provided regarding the revised labor 
proxy for

[[Page 73301]]

stakeholders to comment since the proposed revision to the labor proxy 
was not based on the impact of this revision on the MFP forecast, but 
on the determination of a more technically suitable approximation of 
the BLS labor input series as explained in the proposed rule. However, 
in response to the comment, we note that the historical average growth 
in the revised IGI labor proxy tended to be just slightly higher than 
the historical average growth of the IGI labor proxy for CY 2011.
    Therefore, we are finalizing our proposal to use hours of all 
persons in private nonfarm establishments, (2005 = 100.00), adjusted 
for labor composition effects as the proxy for labor index used in the 
MFP forecast calculation.

D. Clinical Laboratory Fee Schedule: Signature on Requisition

1. History and Overview
    In the March 10, 2000 Federal Register (65 FR 13082), we published 
a proposed rule entitled ``Medicare Program; Negotiated Rulemaking: 
Coverage and Administrative Policies for Clinical Diagnostic Laboratory 
Services,'' to announce and solicit comments on the results of our 
negotiated rulemaking committee tasked to establish national coverage 
and administrative policies for clinical diagnostic laboratory services 
payable under Part B of Medicare.
    In the November 23, 2001 Federal Register (66 FR 58788), we 
published a final rule, which established these national coverage and 
administrative policies. In that final rule, we explained our policy on 
ordering clinical diagnostic laboratory services and revised regulatory 
language in Sec.  410.32. Our regulation at Sec.  410.32(a) includes a 
requirement that states ``[a]ll diagnostic x-ray tests, diagnostic 
laboratory tests, and other diagnostic tests must be ordered by the 
physician who is treating the beneficiary.'' In the November 23, 2001 
final rule (66 FR 58809), we added paragraph (d)(2) to Sec.  410.32 to 
require that the physician or qualified nonphysician practitioner (NPP) 
(that is, clinical nurse specialists, clinical psychologists, clinical 
social workers, nurse-midwives, nurse practitioners, and physician 
assistants) who orders the service must maintain documentation of 
medical necessity in the beneficiary's medical record. In both the 
March 10, 2000 proposed rule (65 FR 13089) and the November 23, 2001 
final rule (66 FR 58802), we noted that ``[w]hile the signature of a 
physician on a requisition is one way of documenting that the treating 
physician ordered the test, it is not the only permissible way of 
documenting that the test has been ordered.'' In the preamble of these 
rules, we described the policy of not requiring physician signatures on 
requisitions for clinical diagnostic laboratory tests, but implicitly 
left in place the existing requirements for a written order to be 
signed by the ordering physician or NPP for clinical diagnostic 
laboratory tests, as well as other types of diagnostic tests. We 
further stated, in the March 10, 2000 proposed rule (65 FR 13089) and 
the November 23, 2001 final rule (66 FR 58802), that we would publish 
instructions to Medicare contractors clarifying that the signature of 
the ordering physician or NPP on a requisition for a clinical 
diagnostic laboratory test, is not required for Medicare purposes.
    On March 5, 2002, we issued a program memorandum (Transmittal AB-
02-030, Change Request 1998) implementing the administrative policies 
set forth in the November 23, 2001 final rule, including the following 
instruction:

    Medicare does not require the signature of the ordering 
physician on a laboratory service requisition. While the signature 
of a physician on a requisition is one way of documenting that the 
treating physician ordered the service, it is not the only 
permissible way of documenting that the service has been ordered. 
For example, the physician may document the ordering of specific 
services in the patient's medical record.

    On January 24, 2003, we issued a program transmittal (Transmittal 
1787, Change Request 2410) to manualize the March 5, 2002 program 
memorandum. The transmittal page, entitled ``Section 15021, Ordering 
Diagnostic Tests, manualizes Transmittal AB-02-030, dated March 5, 
2002'', stated: ``In accordance with negotiated rulemaking for 
outpatient clinical diagnostic laboratory services, no signature is 
required for the ordering of such services or for physician pathology 
services.'' In the manual instructions in that transmittal (that is, 
Transmittal 1787), we stated in a note: ``No signature is required on 
orders for clinical diagnostic tests paid on the basis of the physician 
fee schedule or for physician pathology services.'' The manual 
instructions inadvertently omitted the reference to clinical diagnostic 
laboratory tests. Thus, the transmittal seemed to extend the policy set 
forth in the November 23, 2001 final rule (that no signature is 
required on requisitions for clinical diagnostic laboratory tests paid 
under the CLFS) to also apply to clinical diagnostic tests paid on the 
basis of the PFS and physician pathology services. In addition, the 
manual instructions used the term ``order'' instead of ``requisition,'' 
which we understand caused some confusion. In addition, when we 
transitioned from paper manuals to the current electronic Internet Only 
Manual (IOM) system, these manual instructions were inadvertently 
omitted from the new Benefit Policy Manual (BPM).
    On August 28, 2008, we issued a program transmittal (Transmittal 
94, Change Request 6100) to update the BPM to incorporate language that 
was previously contained in section 15021 of the Medicare Carriers 
Manual. The reissued language stated, ``No signature is required on 
orders for clinical diagnostic tests paid on the basis of the clinical 
laboratory fee schedule, the physician fee schedule, or for physician 
pathology services.'' After the publication of the August 2008 Program 
Transmittal (Transmittal 94), we received numerous inquiries from 
laboratories, diagnostic testing facilities, and hospital 
representatives who had questions about whether the provision applied 
to all diagnostic services, including x-rays, magnetic resonance 
imaging (MRIs), and other nonclinical laboratory fee schedule 
diagnostic services.
    To resolve any confusion surrounding the implementation of the CLFS 
policy in 2001 and subsequent transmittals, we restated and solicited 
public comments on our policy in the July 13, 2009 proposed rule (74 FR 
33641 and 33642), entitled ``Medicare Program; Payment Policies Under 
the Physician Fee Schedule and Other Revisions to Part B for CY 2010'' 
(CY 2010 PFS proposed rule). At that time, our policy was that the 
signature of a physician or NPP was not required on a requisition for 
clinical diagnostic laboratory tests paid on the basis of the CLFS. 
However, we were clear that we would still require that it must be 
evident, in accordance with our regulations at Sec.  410.31(d)(2) and 
(3), that the physician or NPP had ordered the services .
    We clarified that this policy regarding requisitions for clinical 
diagnostic laboratory tests would not supersede other applicable 
Medicare requirements (such as those related to hospital conditions of 
participation (CoPs)), which require the medical record to include an 
order signed by the physician or NPP who is treating the beneficiary. 
In addition, we stated that we did not believe that our policy 
regarding signatures on requisitions for clinical diagnostic laboratory 
tests supersedes other requirements mandated by professional standards 
of practice or obligations regarding orders and medical records 
promulgated by

[[Page 73302]]

Medicare, the Joint Commission, or State law; nor did we believe the 
policy would require providers to change their business practices.
    In the CY 2010 PFS proposed rule (74 FR 33641 and 33642), we also 
restated and solicited public comment on our longstanding policy, 
consistent with the principle in Sec.  410.32(a), that a written order 
for diagnostic tests including those paid under the CLFS and those that 
are not paid under the CLFS (for example, that are paid under the PFS 
or under the OPPS), such as X-rays, MRIs, and the technical component 
(TC) of physician pathology services, must be signed by the ordering 
physician or NPP. We were clear that the policy that signatures are not 
required on requisitions for clinical diagnostic laboratory tests paid 
under the CLFS applied only to requisitions (as opposed to written 
orders).
    Additionally, in the CY 2010 PFS proposed rule (74 FR 33642) we 
solicited public comments about the distinction between an order and a 
requisition. We noted that an ``order'' as defined in our IOM, 100-02, 
Chapter 15, Section 80.6.1, is a communication from the treating 
physician or NPP requesting that a diagnostic test be performed for a 
beneficiary. The order may conditionally request an additional 
diagnostic test for a particular beneficiary if the result of the 
initial diagnostic test ordered yields a certain value determined by 
the treating physician or NPP (for example, if test X is negative, then 
perform test Y). We further clarified in the CY 2010 PFS final rule 
with comment period (74 FR 61930) that an order may be delivered via 
any of the following forms of communication:
     A written document signed by the treating physician or 
NPP, which is hand-delivered, mailed, or faxed to the testing facility.
     A telephone call by the treating physician or NPP or his 
or her office to the testing facility.
     An electronic mail, or other electronic means, by the 
treating physician or NPP or his or her office to the testing facility.
    If the order is communicated via telephone, both the treating 
physician or NPP, or his or her office, and the testing facility must 
document the telephone call in their respective copies of the 
beneficiary's medical records.
    In contrast, in the CY 2010 PFS proposed rule (74 FR 33642), we 
defined a ``requisition'' as the actual paperwork, such as a form, 
which is furnished to a clinical diagnostic laboratory that identifies 
the test or tests to be performed for a patient. The requisition may 
contain patient information, ordering physician information, referring 
institution information, information on where to send reports, billing 
information, specimen information, shipping addresses for specimens or 
tissue samples, and checkboxes for test selection. We believed the 
requisition was ministerial in nature, assisting laboratories with the 
billing and handling of results, and serves as an administrative 
convenience to providers and patients. We believed that a written 
order, which may be part of the medical record, and the requisition, 
were two different documents, although a requisition that is signed may 
serve as an order.
    During the public comment period for the CY 2010 PFS proposed rule, 
we received numerous comments on these issues. Subsequently, in the CY 
2010 PFS final rule with comment period (74 FR 61931), we stated that 
we would continue to carefully consider the issue of physician 
signatures on requisitions and orders and that we planned to revisit 
these issues in the future.
    In the CY 2011 PFS proposed rule (75 FR 40162 through 40163), we 
proposed to require a physician's or NPP's signature on requisitions 
for clinical diagnostic laboratory tests paid on the basis of the CLFS. 
We stated that we believed this policy would result in a less confusing 
process because a physician's signature would be required for all 
requisitions and orders, eliminating the uncertainty over whether the 
documentation is a requisition or an order, whether the type of test 
being ordered requires a signature, or which payment system does or 
does not require a physician's or NPP's signature. We also stated that 
we believed the requirement would not increase the burden on physicians 
and it would be easier for the reference laboratory technicians to know 
whether a test was appropriately requested, which would minimize 
potential compliance problems for laboratories during the course of a 
subsequent Medicare audit because a signature would be consistently 
required. We solicited public comments on the CY 2011 PFS proposed 
rule.
    After careful consideration of all the comments received, we 
finalized our proposed policy without modification to require a 
physician's or NPP's signature on requisitions for clinical diagnostic 
laboratory tests paid under the CLFS in the CY 2011 PFS final rule with 
comment period (75 FR 73483), which became effective on January 1, 
2011. This policy did not affect physicians or NPPs who chose not to 
use requisitions to request clinical diagnostic laboratory tests paid 
under the CLFS. Such physicians or NPPs could continue to request such 
tests by other means, such as by using the annotated medical records, 
documented telephonic requests, or electronic requests.
2. Proposed Changes
    In the June 30, 2011 Federal Register (76 FR 38344), we proposed to 
retract the policy we finalized in the CY 2011 PFS final rule with 
comment period (75 FR 73483) and reinstate the prior policy that the 
signature of the physician or NPP is not required on a requisition for 
Medicare purposes for a clinical diagnostic laboratory test paid under 
the CLFS. We proposed this policy based on continued and new concerns 
noted by stakeholders regarding the practical effect of the finalized 
policy on beneficiaries, physicians, and NPPs.
    While we did not solicit further comments on the signature on 
requisition issue in the CY 2011 PFS final rule with comment period, we 
did receive additional feedback from industry stakeholders on the issue 
after its publication in the Federal Register. Industry stakeholders 
identified many scenarios where it would be difficult to obtain the 
physician's or NPP's signature on the requisition for clinical 
diagnostic laboratory tests paid under the CLFS. Industry stakeholders 
asserted that there are many different situations where the physician 
or NPP would direct staff to prepare requisitions for laboratory tests, 
but then would be unavailable to provide his or her signature on the 
requisition. As an example, and one that was raised by commenters on 
the CY 2011 PFS proposed rule, in the long-term care setting, the 
physician is typically not available in person on a daily basis. In 
these cases, the physician may keep abreast of the patient's condition 
by calling the nursing staff. If a patient's condition indicates that a 
clinical diagnostic laboratory test is required, the nursing staff 
typically transcribes the order from the physician over the telephone 
onto a requisition. The information has to be transmitted to the 
laboratory and, in this scenario, there is no physician's or NPP's 
signature on the requisition. Another example that occurs in many 
settings, including nursing homes, all types of hospitals (inpatient as 
well as outpatient), and physician offices, involves specimens that are 
packaged for transmission to the laboratory with a requisition by 
nursing staff. Because the specimen often is transferred directly from 
the patient to the nursing staff without, in most cases, a physician's 
or NPP's intervention, the

[[Page 73303]]

requisition that accompanies the specimen does not bear the signature 
of the physician or NPP.
    Even in cases where the physician or NPP sees the patient in his or 
her offices for an appointment and recommends that clinical diagnostic 
laboratory testing be performed, we now better understand that, 
typically, the information is transcribed from the medical record onto 
a paper requisition by office staff after the physician or NPP and the 
patient have concluded their interaction. In practice, we can see how 
requiring the physician or NPP to sign the paper requisition could, in 
some cases, be very inconvenient and disruptive to the physician, NPP, 
the beneficiary, and other patients. The physician or NPP may need to 
take time either during appointments with subsequent patients or 
between patient appointments to make sure that the requisition is 
signed for a particular patient prior to his or her departure from the 
office. In addition, a beneficiary might have to wait for a physician 
or NPP to complete the requisition signature process before the 
beneficiary could depart from the office.
    Another situation identified by industry stakeholders that we did 
not previously consider concerns physicians or NPPs who maintain 
several practice locations. A patient may see his or her physician or 
NPP only at one particular practice location. If that patient presents 
to the practice location with a medical issue that the physician or NPP 
believes warrants immediate laboratory testing, but the physician or 
NPP is physically at a different location that day, the physician or 
NPP may be able to direct his or her nursing staff to prepare a 
requisition for the laboratory test. But, if the physician or NPP must 
sign the requisition, there could be a delay of several days or longer 
before the physician or NPP is able to do so, which means the patient 
would have to wait to have the laboratory test performed.
    The aforementioned scenarios have detrimental implications for 
expeditious patient care that were not evident to us until the new 
policy was effectuated and we started hearing from stakeholders in the 
industry that would be negatively impacted by the policy. In response 
to a comment suggesting that physicians be educated about this new 
requirement to alleviate problems of non-compliance, we stated, in the 
CY 2011 PFS final rule with comment period (75 FR 73482), that we would 
update our manuals and direct the Medicare contractors to educate 
physicians and NPPs on this policy. After publication of the CY 2011 
PFS final rule with comment period, it became even clearer to us that 
some physicians, NPPs, and clinical diagnostic laboratories were not 
aware of, or did not understand, the policy. Therefore, in the first 
calendar quarter of 2011, we focused on developing educational and 
outreach materials to educate those affected by this policy. Further, 
we issued a statement that, once the educational campaign conducted in 
the first quarter of 2011 was fully underway, we would expect 
requisitions to be signed. While developing educational and outreach 
materials, we realized how difficult and burdensome the actual 
implementation of this policy was for physicians and NPPs and that, in 
some cases, the implementation of this policy could have a negative 
impact on patient care. At that point, we decided that the better 
course of action was to re-examine the policy.
    We re-examined our policy and our reasons for adopting this policy 
in light of industry stakeholders' comments received after publication 
of the CY 2011 PFS final rule with comment period and comments received 
on the CY 2011 PFS proposed rule. We reviewed our beliefs and 
assumptions regarding the effect of our policy on access to care and 
with respect to administrative burden on physicians and NPPs, the 
effect on innovation, and the impact on laboratories. We originally 
believed that the policy would not have a negative impact on 
beneficiary access to care. However, we now believe that we 
underestimated the potential impact on beneficiary health and safety. 
As discussed previously, care may be delayed under this policy in 
situations where the physician or NPP orders the test but is not 
available onsite to sign the requisition. For example, we understand 
there are concerns that certain populations of patients, such as 
nursing home patients and patients confined to their homes, may have 
laboratory tests ordered urgently by a distant physician or NPP to 
obtain information that is imminently needed in order to assess a need 
for immediate referral to a hospital, emergency department or other 
facility. If the ordering physician or NPP is not onsite, it is 
unlikely that he or she would be able to receive, sign, and return a 
requisition in the timeframe needed to respond to the patient's urgent 
clinical status. We had not anticipated this impact on care when we 
finalized our policy.
    We also believed that the administrative burden on physicians and 
NPPs would be minimal and would result in a less confusing process. 
Physicians and NPPs must document their orders, in some form, in one or 
more of the medical records of the patient. We still believe that 
signing a laboratory requisition at the time of the order, if the 
requisition is ready for signature, imposes little burden on the 
physician or NPP, while significantly increasing our ability to 
minimize improper payments due to fraud and abuse. However, we believe 
we may have underestimated the number of occasions in which the 
physician or NPP cannot perform both steps concurrently. We now 
understand that it is not always the case that a physician or NPP can 
perform both steps concurrently. For instance, a physician may sign an 
order at the time of delivering care, but the requisition may not be 
available for signature until sometime later. In that situation, the 
physician may need to interrupt a subsequent examination in order to 
sign a completed requisition so that the patient may leave with the 
requisition. Given recently released estimates of physician shortfalls 
in primary care (for example, as referenced in remarks by the Health 
Resources and Services Administration (HRSA) Administrator to the 
Bureau of Health Professions Advisory Committee on April 21, 2009), the 
cost of lost physician time must also be revalued upwards. 
Alternatively, the beneficiary may have to wait for the physician or 
NPP to conclude his or her subsequent appointment, which could be as 
long as 30 minutes or more. Neither of these situations--interrupting 
the physician or NPP in a subsequent appointment or making the 
beneficiary wait for an inconvenient period of time--is acceptable. 
Further, we believed that the policy resulted in a less confusing 
process because a physician or NPP signature would be required for all 
requisitions and orders, eliminating uncertainty over whether the 
documentation is a requisition or an order, whether the type of test 
being ordered requires a signature, or which payment system does or 
does not require a physician or NPP signature. However, based on 
industry stakeholder comments subsequent to the publication of the CY 
2011 PFS final rule with comment period, we now believe this process 
may not be less confusing. Further, industry stakeholders assured us 
that they had not been confused about the former physician/NPP 
signature policy and that they never intended for us to interpret their 
call for consistency in the signature process to mean that they should 
be burdened with an additional requirement when they were already 
signing the medical record.

[[Page 73304]]

    In addition, we believed that many stakeholders either had 
converted or were in the process of converting to an electronic health 
records process that would negate the need for a requisition. 
Electronic health records and electronic transmission of health 
information are key pieces of this Administration's economic recovery 
plan and, moreover, are key elements of our plan to improve healthcare 
quality and efficiency. From the additional stakeholder concerns 
subsequent to our CY 2011 PFS final rule with comment period, we are 
sensitive to the increasing migration of information transfer away from 
paper forms, such as requisitions, to the direct electronic submission 
of requests for services. After we adopted the new policy, stakeholders 
expressed their concerns that the requirement for a signature would 
increase paperwork, in direct opposition to our promotion of time-
saving electronic communications. We believe that the requirement for a 
signature on the requisition does not impact stakeholders who utilize 
an electronic process for ordering clinical diagnostic laboratory tests 
because the policy only applies to requisitions, which are paper forms. 
Our intent was not to suggest that a requisition was necessary in those 
cases. However, we recognize that members of the provider and supplier 
community still believe this regulation could inhibit their use of 
innovative technology and investment in healthcare IT resources. 
Therefore, we recognize that we underestimated the potential for 
paperwork burden.
    Finally, we believed that the policy would make it easier for a 
reference laboratory to know whether a test is appropriately requested 
and to minimize potential compliance problems. Specifically, we 
believed that the policy would improve a laboratory's ability to 
authenticate requisitions. However, based on industry stakeholder 
concerns received after the CY 2011 PFS final rule with comment period 
and comments submitted on the CY 2011 PFS proposed rule (75 FR 40161 
through 40163), we now believe this aspect of the policy is less 
financially beneficial than we had estimated, because the percentage of 
laboratory requests covered by the policy may be smaller than we 
predicted and may continue to shrink as new technology is adopted. We 
also believed the policy provided a mechanism for laboratories to 
fulfill their responsibility to ensure that they only provide and bill 
for services on the direct order of a physician or NPP because the 
signature on the requisition would provide documentation and evidence 
that the physician or NPP had ordered the service. However, industry 
stakeholders expanded on comments to the CY 2011 PFS proposed rule and 
informed us that there was a cost to adopting a rigid mechanism of 
establishing authenticity. Laboratories believe it is more efficient 
for them to use internal procedures and controls to ensure that they do 
not provide and bill for services without a physician authorization 
rather than through a Federal policy. Thus, we believe the expected 
benefits of the policy may be less than we originally estimated.
    In summary, there were many situations that we did not recognize as 
problematic until we finalized the requisition signature policy and 
stakeholders began to implement it. Upon review of the concerns that 
industry stakeholders raised after we finalized our policy in the CY 
2011 PFS final rule with comment period, and in reconsideration of 
comments to the CY 2011 PFS proposed rule, we proposed to retract the 
policy that was finalized in the CY 2011 PFS final rule with comment 
period, which required a physician's or NPP's signature on a 
requisition for clinical diagnostic laboratory tests paid under the 
CLFS (75 FR 73483). We proposed to reinstate our prior policy that the 
signature of the physician or NPP is not required on a requisition for 
a clinical diagnostic laboratory test paid under the CLFS for Medicare 
purposes.
    We remain concerned about the costs and impact of fraud and abuse 
on the Medicare program. The requirement that the treating physician or 
NPP must document the ordering of the test remains, as does our 
longstanding policy that requires orders, including those for clinical 
diagnostic laboratory tests, to be signed by the ordering physician or 
NPP. We believe that all parties share in the responsibility of 
ensuring that Medicare services are provided only in accordance with 
all applicable statutes and regulations, such as the requirement for a 
physician or NPP order. In many instances, such as in the case of 
orders originating in hospitals, we believe that retaining all the 
other requirements previously discussed, especially requiring the 
physician or NPP who orders the service to maintain documentation of 
medical necessity in the beneficiary's medical record according to 
Sec.  410.32(d)(2)(i), as well as the hospital CoPs on medical record 
services at Sec.  482.24, are sufficient. However, we note that 
hospital CoPs do not apply to other settings, such as private offices.
    We believe it is the responsibility of the clinical diagnostic 
laboratory, as it is for the provider of any service, to have 
sufficient processes and safeguards in place to ensure that all 
services are delivered only when ordered by a physician or NPP. This 
proposed rule does not preclude an individual laboratory from requiring 
a physician's or NPP's signature on the requisition. The laboratory may 
develop its own compliance procedures to ensure that it only furnishes 
services in response to a physician or NPP order. Such procedures could 
include internal audits, agreements with ordering physicians or NPPs to 
provide medical record evidence of the order in the event of an 
internal or external audit, steps to confirm the existence of an order 
under certain circumstances, or any other measures including the 
acceptance of risk by the clinical laboratory. We believe this 
financial and compliance responsibility was implicit in the 2001 final 
rule (66 FR 58788), was reiterated in the March 5, 2002 transmittal 
(Change Request 2410, Transmittal AB-02-030), and has remained a 
consistent element of the subsequent instructions.
    Comment: All commenters supported CMS's proposal to retract the 
policy requiring a physician's or NPP's signature on a requisition for 
clinical diagnostic laboratory tests paid under the CLFS, which was 
finalized in the CY 2011 PFS final rule with comment period. All 
commenters also supported the proposal to reinstate the prior policy 
that the signature of the physician or NPP is not required on a 
requisition for a clinical diagnostic laboratory test paid under the 
CLFS for Medicare purposes.
    Response: We thank the commenters for their support and, as 
discussed below, are finalizing our proposal without modification.
    After consideration of the public comments received, we are 
finalizing our proposal to retract the policy that was finalized in the 
CY 2011 PFS final rule with comment period, which required a 
physician's or NPP's signature on a requisition for clinical diagnostic 
laboratory tests paid under the CLFS (75 FR 73483) and to reinstate our 
prior policy that the signature of the physician or NPP is not required 
on a requisition for a clinical diagnostic laboratory test paid under 
the CLFS for Medicare purposes.

[[Page 73305]]

E. Section 4103 of the Affordable Care Act: Medicare Coverage and 
Payment of the Annual Wellness Visit Providing a Personalized 
Prevention Plan Under Medicare Part B

1. Incorporation of a Health Risk Assessment as Part of the Annual 
Wellness Visit
a. Background and Statutory Authority--Medicare Part B Coverage of an 
Annual Wellness Visit Providing Personalized Prevention Plan Services
    Preventive care and beneficiary wellness are important to the 
Medicare program and have become an increasing priority. In section 
4103 of the Affordable Care Act, the Congress expanded Medicare Part B 
benefits to include an annual wellness visit providing personalized 
prevention plan services (hereinafter referred to as an annual wellness 
visit). The annual wellness visit is described more fully in section 
1861(hhh) of the Act, and coverage was effective for services furnished 
on or after January 1, 2011. Regulations for Medicare coverage of the 
annual wellness visit are established at 42 CFR 410.15. The annual 
wellness visit may be performed by a physician, nonphysician 
practitioner (physician assistant, nurse practitioner, or clinical 
nurse specialist), or a medical professional (including a health 
educator, a registered dietitian, or a nutrition professional, or other 
licensed practitioner) or a team of such medical professionals, working 
under the direct supervision of a physician. In summary, for CY 2011, 
the first annual wellness visit includes--
     Establishment of an individual's medical and family 
history;
     Establishment of a list of current medical providers and 
suppliers involved in providing medical care to the individual;
     Measurement of an individual's height, weight, body mass 
index (or waist circumference, if appropriate), blood pressure, and 
other routine measurements as deemed appropriate, based on the 
beneficiary's medical and family history;
     Detection of any cognitive impairment that the individual 
may have;
     Review of the individual's potential (risk factors) for 
depression;
     Review of the individual's functional ability and level of 
safety;
     Establishment of a written screening schedule for the 
individual such as a checklist for the next 5 to 10 years, as 
appropriate, based on recommendations of the United States Preventive 
Services Task Force, the Advisory Committee on Immunization Practices, 
and the individual's health status, screening history, and age-
appropriate preventive services covered by Medicare;
     Establishment of a list of risk factors for which primary, 
secondary or tertiary interventions are recommended or underway for the 
individual, including any mental health conditions or any such risk 
factors or conditions that have been identified through an initial 
preventive physical examination (IPPE), and a list of treatment options 
and their associated risks and benefits;
     Furnishing of personalized health advice to the individual 
and referrals, as appropriate, to health education or preventive 
counseling services or programs aimed at reducing identified risk 
factors and improving self-management; and
     Any other element determined appropriate through the 
national coverage determination process (NCD).
    In summary, for CY 2011, subsequent annual wellness visits 
include--
     An update of the individual's medical and family history;
     An update of the list of current providers and suppliers 
that are regularly involved in providing medical care to the 
individual;
     Measurement of an individual's weight (or waist 
circumference), blood pressure and other routine measurements as deemed 
appropriate, based on the individual's medical and family history;
     Detection of any cognitive impairment that the individual 
may have;
     An update to the written screening schedule for the 
individual;
     An update to the list of risk factors and conditions for 
which primary, secondary, or tertiary interventions are recommended or 
are underway for the individual;
     Furnishing of personalized health advice to the individual 
and referrals, as appropriate, to health education or preventive 
counseling services;
     Any other element determined appropriate through the NCD 
process.
    The annual wellness visit is specifically designed as a wellness 
visit that focuses on identification of certain risk factors, 
personalized health advice, and referral for additional preventive 
services and lifestyle interventions (which may or may not be covered 
by Medicare). The elements included in the annual wellness visit differ 
from comprehensive physical examination protocols with which some 
providers may be familiar since the annual wellness visit is a visit 
that is specifically designed to provide personalized prevention plan 
services as defined in the Act.
    Section 1861(hhh)(1)(A) of the Act specifies that a personalized 
prevention plan for an individual includes a health risk assessment 
(HRA) that meets the guidelines established by the Secretary. In 
general, an HRA is an evaluation tool designed to provide a systematic 
approach to obtaining accurate information about the patient's health 
status, injury risks, modifiable risk factors, and urgent health needs. 
This evaluation tool is completed prior to, or as part of, an annual 
wellness visit. The information from the HRA is reflected in the 
personalized prevention plan that is created for the individual.
    Although the annual wellness visit was effective on January 1, 
2011, section 4103 of the Affordable Care Act provided the Secretary 
additional time to establish guidelines for HRAs after consulting with 
relevant groups and entities (see section 1861(hhh)(4)(A) of the Act). 
A technology assessment from the Agency for Healthcare Research and 
Quality (AHRQ) was commissioned to describe key features of HRAs, to 
examine which features were associated with successful HRAs, and to 
discuss the applicability of HRAs to the Medicare population. The 
finalized technology assessment was posted on July 6, 2011 and is 
publicly available on the CMS Web site at http://www.cms.gov/determinationprocess/downloads/id79ta.pdf.
    We collaborated with the Centers for Disease Control and Prevention 
(CDC), due to their in-depth knowledge of HRAs, and because the CDC was 
directed by section 4004(f) of the Affordable Care Act to develop 
guidelines for a personalized prevention plan tool. In the November 16, 
2010 Federal Register (75 FR 70009), CDC issued a notice to solicit 
feedback regarding HRA guidance development. Public comments were 
received from numerous relevant groups and entities including: The 
American Academy of Family Physicians, the American Dietetic 
Association, the American Geriatrics Society, the American College of 
Cardiology, Care Continuum Alliance, physician practices, public health 
agencies, healthcare research groups, and the general public.
    The CDC convened a public meeting in Atlanta, Georgia in February 
2011 to facilitate the development of guidance for HRAs. (See the 
December 30, 2010 Federal Register (75 FR 82400)--announcement for 
``Development of Health Risk Assessment Guidance, Public Forum''). This 
meeting allowed broad public input from stakeholders and the general 
public into the

[[Page 73306]]

development of guidelines for evidence-based HRAs. The Interim Guidance 
for Health Risk Assessments developed by the CDC is available on the 
CMS Web site at http://www.cms.gov/coveragegeninfo/downloads/healthriskassessmentsCDCfinal.pdf. The CDC guidance resulted from a 
compilation and review of the current scientific evidence, the AHRQ 
technology assessment, and expert advice from those working in the 
field of HRA and wellness, and takes into account public feedback from 
the request for information and the public meeting. The CDC guidance 
includes questions and topics to be addressed as deemed appropriate for 
the beneficiary's age. Additional information regarding the CDC 
guidance development process is included as part of the guidance 
document. The CDC plans to publish ``A Framework for Patient-Centered 
Health Assessments, a Morbidity and Mortality Weekly Report (MMWR).'' 
The MMWR will include additional information applicable to the 
successful implementation of the HRA, such as the CDC interim guidance 
document, as well as information related to implementation, feedback, 
and follow-up that evidence suggests is critical for improving health 
outcomes using this process. We look forward to stakeholders engaging 
in the development of innovative tools or methods, which would provide 
health professionals the flexibility to adapt the HRA guidance to 
evaluate additional topics, as appropriate, to provide a foundation for 
development of a personalized prevention plan as part of the annual 
wellness visit. We also look forward to stakeholders engaging in the 
development of innovative electronic solutions for conducting a HRA and 
integration with electronic health records.
b. Implementation--Summary of Proposed Rule and Comments
    Consistent with section 1861(hhh) of the Act and the initial CDC 
guidance document, we proposed to amend 42 CFR 410.15 by: (1) Adding 
the term ``health risk assessment'' and its definition; (2) revising 
the definitions of ``first annual wellness visit providing personalized 
prevention plan services'' and ``subsequent annual wellness visit 
providing personalized prevention plan services;'' and (3) 
incorporating the use and results of an HRA into the provision of 
personalized prevention plan services during the annual wellness visit.
    The following is a summary of the provisions of the proposed rule 
and the comments received. We received 59 public comments from national 
and State professional associations, national medical advisory and 
patient advocacy groups, health insurance associations, health care 
systems, manufacturers, a government agency, and other national 
healthcare organizations. Thirty-two (32) comments supported 
incorporation of an HRA into the annual wellness visit and 5 were 
opposed. The remaining 22 comments provided feedback about the impact 
of the annual wellness visit as a whole requested modifications or 
additional elements to the annual wellness visit, and coverage for 
additional preventive services and vaccines.
    Most supporters generally agreed with the proposed major HRA 
components. One commenter indicated that the inclusion of the HRA would 
help make care more preventive and proactive, and help avoid long-term 
maladies associated with aging and chronic diseases. Some commenters 
expressed concern that the proposal was too prescriptive and did not 
allow for sufficient flexibility. Other commenters were concerned that 
the HRA components were not sufficiently targeted to specific diseases. 
One commenter was of the opinion that there was a lack of evidence for 
the usefulness of an HRA, and believed the best evidence on the 
efficacy of comprehensive health risk assessment for the elderly comes 
from highly specialized geriatric assessment clinics capable of 
targeting individuals at high risk and providing longitudinal follow-
up. This commenter believed that it would be impossible to replicate 
similar interventions without follow-up visits, and indicated that 
additional research is needed to determine how an HRA can be 
effectively translated into primary care practice.
    Regarding flexibility of the HRA, some commenters supported a more 
flexible approach to HRA development and use, while others requested 
that a standardized tool be developed and certified by either CMS or an 
outside accrediting organization. A few commenters believed the HRA 
would be difficult for health professionals to implement since the CDC 
guidance had not been published and work had not been completed on 
establishing standards for interactive web-based programs to furnish 
HRAs, referencing other components of section 4103 of the Affordable 
Care Act.
    In the proposed rule, we requested public comment on the overall 
impact and burden of the annual wellness visit on health professional 
practices, including the impact that incorporation and use of an HRA 
would have on health professionals and their practices. Two commenters 
believed that the incorporation of an HRA supports a systematic 
approach to patient wellness, providing a foundation for development of 
a personalized prevention plan and they supported the inclusion of a 
minimum set of topics as part of the HRA. Four commenters indicated 
that the use of an HRA would have a significant impact on health 
professional practices. One commenter stated that inclusion of an HRA 
would be somewhat or very difficult. Another was concerned that health 
professionals would be penalized if an individual refuses to complete 
an HRA or follow the personalized prevention plan recommendations. 
Another commenter was concerned with the lack of a publicly available 
HRA.
    Of those commenters that provided feedback on the potential burden 
of the HRA as part of both first and subsequent AWVs on health 
professional practices, the comments ranged from requesting that HRAs 
be optional and used at the discretion of a health professional, to 
requesting that the CDC develop a standardized HRA tool for use with 
the Medicare aged population. One commenter opined that a quality HRA 
will provide health professionals information that shows patient 
progress over time without adding additional effort on the 
practitioner. This same commenter also believed that HRAs could have a 
positive impact on health professional practices by helping patients 
understand their health care needs. Three commenters indicated that 
development and implementation of an HRA that meets CDC guidelines 
could be a significant burden. One commenter recommended that the HRA 
implementation date be extended to July 1, 2012. Three comments 
expressed concern with what they believed to be a rigid approach that 
would require questions for all Medicare beneficiaries in conjunction 
with prevention plan services that they believed would not be 
applicable for every beneficiary on an annual basis.
(1) Definition of a ``Health Risk Assessment''
    We proposed to revise Sec.  410.15 by adding the term ``health risk 
assessment'' and defining such term as an evaluation tool that meets 
the following requirements:
     Collects self-reported information about the beneficiary.
     Can be administered independently by the beneficiary or 
administered by a health professional prior to or as part of the AWV 
encounter.
     Is appropriately tailored to and takes into account the 
communication

[[Page 73307]]

needs of underserved populations, persons with limited English 
proficiency, and persons with health literacy needs.
     Takes no more than 20 minutes to complete.
     Addresses, at a minimum, the following topics:
    ++ Demographic data, including but not limited to age, gender, 
race, and ethnicity.
    ++ Self assessment of health status, frailty, and physical 
functioning.
    ++ Psychosocial risks, including but not limited to depression/life 
satisfaction, stress, anger, loneliness/social isolation, pain, or 
fatigue.
    ++ Behavioral risks, including but not limited to tobacco use, 
physical activity, nutrition and oral health, alcohol consumption, 
sexual practices, motor vehicle safety (seat belt use), and home 
safety.
    ++ Activities of daily living (ADLs), including but not limited to 
dressing, feeding, toileting, grooming, physical ambulation (including 
balance/risk of falls), and bathing.
    ++ Instrumental activities of daily living (IADLs), including but 
not limited to shopping, food preparation, using the telephone, 
housekeeping, laundry, mode of transportation, responsibility for own 
medications, and ability to handle finances.
    The standards outlined in the definition of the term health risk 
assessment represent a minimum set of topics that need to be addressed 
as part of an HRA, while allowing the health professional the 
flexibility to evaluate additional topics, as appropriate, to provide a 
foundation for development of a personalized prevention plan.
    Comment: Commenters requested flexibility regarding the elements 
included in the HRA and/or the time allotted for administration. Four 
comments indicated that the amount of time allotted for HRA 
administration was not adequate, given the number of HRA components.
    Response: We believe it is important to balance the 
comprehensiveness of the HRA with the potential burden on patients and 
health professional time constraints. The elements included in the HRA 
definition are those that experts in the field of HRAs advised are 
scientifically valid and for which there is evidence of effectiveness. 
In a study on HRA design, Mills and colleagues reported that there was 
a ``significant drop-off in completion after 20 minutes of engagement'' 
(Mills et al. J R Soc Med Sh Rep 2011;2:71. DOI 10.1258/
shorts.2011.011015). We believe that the components of the HRA that we 
proposed could be completed by most patients within 20 minutes.
    Comment: One commenter believes that information related to 
elements of the annual wellness visit could be collected efficiently 
through the HRA, such as family history, screening history, a list of 
providers and suppliers regularly involved in the individual's care, 
and current medications. Another commenter suggested that the HRA 
collect information about patient access to preventive services, 
including history of appropriate vaccinations.
    Response: We recognize that medical and family history (including 
current medications) and preventive services utilization history are 
important components of the annual wellness visit and for inclusion in 
the patient's medical record. While we agree that these topics are 
important components in the provision of personalized prevention plan 
services, we believe it is important to balance the comprehensiveness 
of the HRA with the potential burden on patients and health 
professional time constraints. Medical and family history (as defined 
in Sec.  410.15(a)) and development or update of the list of providers 
and suppliers that are involved in the patient's care are typically 
asked and reviewed by the health professional during the AWV encounter. 
Thus, we are not adopting the commenter's suggestions to add these 
topics as mandatory components of the HRA.
    Comment: A few commenters requested that CMS include falls 
screening in the HRA. One commenter believes that fall risk assessments 
should be consistent with the clinical practice guidelines established 
by major geriatric societies, which include recommendations for 
screening with further assessment and referral as indicated. Another 
commenter requested that functional status data be collected through 
the HRA to enhance the fall risk assessment during the annual wellness 
visit.
    Response: While we appreciate the suggestions offered by the 
commenters, the HRA is not meant to replace the patient and family 
history that is usually asked and reviewed by the health professional, 
but rather to be an adjunct to it, providing information on behaviors 
known only to the patient. It has been determined by medical providers 
and other experts in the field of HRA that risk for falls (for example, 
impaired balance) can best be assessed in a face-to-face encounter with 
a health professional. We note that a review of the beneficiary's level 
of safety is already required as part of the first annual wellness 
visit. Self assessment of health status, frailty, and physical 
functioning, along with physical activity and seat belt use (which is 
assessed as a safety measure), were included in the proposed definition 
of an HRA, which will be updated at each subsequent annual wellness 
visit. Discussion of these topics opens the possibility of additional 
provider inquiry in assessing other safety risks. Thus, we are not 
adopting the commenter's suggestion to add more detailed information 
about fall risk to the HRA.
    Comment: One commenter supported the emphasis on the beneficiary's 
role in completing the HRA and suggested that we expand upon this 
effort to further engage patients in the AWV and the provision of 
personalized prevention plan services by adding patient goals for 
health and wellness as components of the HRA.
    Response: Patient goals are identified through the process of 
shared decision-making where the health professional works with the 
patient to discover what is important to the patient and the patient's 
motivation to change behavior, as part of the provision of personalized 
prevention plan services during the annual wellness visit encounter. 
Thus, we are not adopting the commenter's suggestions to add patient 
goals as a component of the HRA.
    Comment: Other commenters requested that the HRA incorporate the 
collection of more detailed nutrition data and data that may help 
health professionals assess risk for diabetes, heart disease, and 
cancer.
    Response: Questions related to nutrition and hypertension were 
included in the proposed HRA definition. A more detailed nutrition 
assessment could be conducted by the provider if answers to the HRA 
questions indicate an issue with nutrition. Cancer risk can be 
identified through a complete patient history. As discussed in a 
previous response, the HRA is not meant to replace the patient and 
family history that is usually asked and reviewed by the health 
professional, but rather to be an adjunct to it, providing information 
on behaviors known only to the patient. Adding additional mandatory 
information as part of the HRA would increase the time it takes to 
complete the HRA, and we are mindful that adding too much information 
could be burdensome to patients. Thus, we are not mandating a more 
detailed nutritional assessment in the HRA.
    Comment: A few commenters suggested that the HRA include tobacco 
use questions, collect information about tobacco use screening, and 
utilization of tobacco use cessation counseling. One

[[Page 73308]]

commenter requested that counseling for tobacco use cessation be 
included as part of subsequent annual wellness visits.
    Response: We note that the definition of an HRA includes among 
other things, behavioral risks such as tobacco use. We agree that 
tobacco use cessation counseling is important for those individuals 
that use tobacco products. If positive tobacco use is identified during 
the annual wellness visit, additional questions can be asked by the 
health professional followed by the process of motivational 
interviewing (the health professional offers personalized information 
to the patient) and shared decision-making (the health professional 
works with the patient to discover what is important to the patient and 
the patient's motivation to change behavior) in the development of the 
personalized prevention plan during the annual wellness visit 
encounter.
    In Sec.  410.15(a), we defined first and subsequent annual wellness 
visits to include provisions for the furnishing of personalized health 
advice and referrals, as appropriate, to health education or preventive 
counseling services, including among other things, tobacco use 
cessation. We note that Medicare covers counseling to prevent tobacco 
use as an ``additional preventive service'' under Medicare Part B 
(additional information available in Pub. 100-03, Medicare National 
Coverage Determinations Manual, Chapter 1, Section 210.4.1). We believe 
that the health professionals who are furnishing the annual wellness 
visits, whether they are first or subsequent annual wellness visits, 
will establish or update an appropriate list of referrals for education 
services and preventive counseling services for each individual.
    Comment: One commenter supported and appreciated the recognition of 
the importance of behavioral risks as part of the HRA. However, the 
commenter suggested that ``sexual practices'' be replaced with a term 
that would provide a more comprehensive view of the individual's mental 
and physical health, such as ``sexual health.''
    Response: We agree with the comment and are changing the language 
in the final rule. Specifically, we are modifying paragraph (v)(D) of 
the definition of the term ``health risk assessment'' to read 
``Behavioral risks, including but not limited to, tobacco use, physical 
activity, nutrition and oral health, alcohol consumption, sexual 
health, motor vehicle safety (seat belt use), and home safety.''
    Comment: Many commenters were of the opinion that memory should be 
included in the HRA. One commenter agreed with the provisions of the 
proposed rule that did not include cognitive assessment as part of the 
HRA, however, the commenter believed that general questions about 
memory should be included in the HRA. Other commenters were concerned 
that an appropriate screening instrument for cognitive impairment was 
not included in either the HRA or annual wellness visit, and requested 
modifications to the definition of ``detection of any cognitive 
impairment'' to include use of an appropriate screening instrument.
    Response: We agree with commenters that detection of cognitive 
impairment is important. We note that ``detection of any cognitive 
impairment'' is already part of the annual wellness visit, consistent 
with the statutory elements described in section 1861(hhh)(2) of the 
Act. As Boustani and colleagues (Ann Internal Medicine 2003;138:927-
937) noted: ``Dementia causes a high burden of suffering for patients, 
their families, and society. For patients, it leads to increased 
dependency and complicates other comorbid conditions. For families, it 
leads to anxiety, depression, and increased time spent caring for a 
loved one. The annual societal cost of dementia is approximately $100 
billion (health care and related costs as well as lost wages for 
patients and family caregivers).'' Because information related to 
cognitive impairment is already addressed as part of the annual 
wellness visit, we do not believe it is necessary to duplicate the 
collection of this information through the HRA.
    We also note that an evidence-based, standardized screening tool 
for dementia is not currently available for assessment of cognitive 
impairments. The USPSTF noted: ``[M]ost screening tests have been 
evaluated in studies with small sample sizes, and the populations of 
patients on whom screening instruments have been tested have varied 
greatly, making it difficult to determine the overall performance of 
screening tests for dementia'' (http://www.uspreventiveservicestaskforce.org/3rduspstf/dementia/dementrr.pdf). 
Since there is no nationally recognized screening tool for the 
detection of cognitive impairments at the present time, we are not 
making any changes to the definition of ``detection of any cognitive 
impairment'' at this time. We believe that physicians can use their 
best clinical judgment in the detection and diagnosis of cognitive 
impairments, along with determining whether additional resources may 
need to be used in the course of screening and treatment of the 
patient.
    We appreciate the interest in the identification and development of 
an appropriate cognitive screening instrument. We are collaborating 
with the National Institute on Aging, the Department of Veterans 
Affairs, CDC, AHRQ, and other relevant stakeholders to assess the 
current methods for detecting cognitive impairment to develop 
recommendations for health professionals with respect to appropriate 
responses to both positive and negative cognitive impairment assessment 
results. We will continue to monitor advancements in screening, 
collaborate with the USPSTF, and will consider revising this element if 
the evidence is sufficient and a standardized screening test becomes 
available. Thus, at this time, we are not adopting the suggestion to 
include additional mandatory components related to memory or cognitive 
assessment within the HRA.
    Comment: Two comments supported inclusion of history of alcohol 
consumption in the HRA, but recommended that we add substance or drug 
use history to the HRA. One commenter indicated that illicit substance 
use and prescription drug misuse are significant concerns among older 
adults. Another commenter indicated that intravenous drug use is a risk 
factor for HIV transmission.
    Response: We are not adopting the commenters' suggestions to 
include these topics as mandatory components in the HRA to reflect a 
history of drug use. Other components included in the HRA definition, 
such as those pertaining to alcohol consumption, provide an opportunity 
for health professionals to ask additional questions related to 
additional areas of potential substance use, including prescription 
drug misuse and illicit drug use.
(2) Changes to the Definitions of ``First Annual Wellness Visit'' and 
``Subsequent Annual Wellness Visit''
    In Sec.  410.15, we adopted the components of the annual wellness 
visit, consistent with the statutory elements described in section 
1861(hhh)(2) of the Act. The first and subsequent annual wellness 
visits, as defined in Sec.  410.15(a), are meant to represent a 
beneficiary visit focused on prevention. Among other things, the annual 
wellness visit encourages beneficiaries to obtain the preventive 
services covered by Medicare that are appropriate for them. First and 
subsequent annual wellness visits also include elements that focus on 
the furnishing of personalized health advice and referral, as 
appropriate, to health education, preventive counseling services, 
programs aimed at improving

[[Page 73309]]

self-management, and community-based lifestyle interventions.
    We proposed to revise the definitions for first and subsequent 
annual wellness visits to incorporate the use and results of an HRA in 
the provision of personalized prevention plan services during the 
annual wellness visit. The HRA is integral to the provision of 
personalized prevention plan services, consistent with section 
1861(hhh) of the Act. We proposed to incorporate the HRA by revising 
the definitions for first and subsequent annual wellness visits as 
follows--
     Specify that the annual wellness visit take into account 
the results of an HRA;
     Add the review (and administration, if needed) of an HRA 
as an element of both first and subsequent annual wellness visits; and
     Specify that the establishment of a written screening 
schedule for the individual, such as a checklist, includes and takes 
into account the HRA.
    The HRA facilitates a systematic method for identifying health 
behaviors and risk factors known to the patient (for example: tobacco 
use, physical activity, and nutritional habits) for which the medical 
provider can discuss and provide tailored feedback aimed at reducing 
risk factors as well as reducing the potential for developing the 
diseases to which they are related.
    During the annual wellness visit encounter, the HRA information is 
utilized by the health professional in a thought process intended to 
develop a personalized prevention plan for the patient to improve 
health status and delay the onset of disease. For instance, if the 
information provided by the HRA indicated that the beneficiary had a 
current or past history of tobacco use, the health professional may 
deem it appropriate to perform those commonly used aspects of a 
clinical evaluation (for instance, listening to (auscultation) the 
heart and lungs) in order to provide the appropriate personalized 
health advice and referrals for additional preventive services such as 
tobacco use cessation counseling.
    We believe that the incorporation of the HRA will increase the 
efficiency of the health professional's effort during the annual 
wellness visit. For instance, during the annual wellness visit 
encounter, the health professional furnishing the annual wellness visit 
would review the information reported in the HRA, which would serve as 
the basis for a personalized prevention plan provided during the annual 
wellness visit encounter. The beneficiary would leave the visit with 
personalized health advice, appropriate referrals, and a written 
individualized screening schedule, such as a check list. We would not 
expect that the health professional would provide only general 
recommendations during the annual wellness visit encounter and then 
mail a personalized prevention plan that incorporates an HRA to the 
beneficiary outside of the annual wellness visit encounter. While the 
annual wellness visit is a wellness visit that focuses on wellness and 
disease prevention, a follow-up visit to treat an identified illness 
may be needed to address an urgent health issue. For example, if a 
beneficiary is determined to have high blood pressure, a follow- up 
visit for further review of symptoms and evaluation and management, 
along with determining whether additional interventions are necessary, 
may be performed after the completion of the annual wellness visit as a 
separate service.
    We also proposed changes to the definition of the term ``subsequent 
annual wellness visit providing personalized prevention plan services'' 
to clarify that the health professional should furnish personalized 
prevention plan services and updated information if there have been 
changes since the beneficiary's last annual wellness visit, whether 
that was a first annual wellness visit or a subsequent annual wellness 
visit. In the CY 2011 PFS final rule, we stated in the definition for 
subsequent annual wellness visits that certain elements should be 
updated based on information developed during the first annual wellness 
visit (for example, lists of risk factors and screening schedules). 
Since all annual wellness visits that follow the first annual wellness 
visit are considered subsequent annual wellness visits, the health 
professional should update elements that were developed during the 
previous annual wellness visit if there have been changes. We received 
one comment regarding the proposed changes to update elements of the 
annual wellness visit developed during the previous annual wellness 
visit. The commenter agreed with the proposed changes. The proposed 
changes to the definition for subsequent annual wellness visits, which 
we are finalizing in this final rule with comment period are as 
follows:
     Newly redesignated paragraph (iii) states ``an update of 
the list of current providers and suppliers that are regularly involved 
in providing medical care to the individual as that list was developed 
for the first annual wellness visit providing personalized prevention 
plan services or the previous subsequent annual wellness visit 
providing personalized prevention plan services''.
     Newly redesignated paragraph (vi)(B), states ``the list of 
risk factors and conditions for which primary, secondary or tertiary 
interventions are recommended or are underway for the individual as 
that list was developed at the first annual wellness visit providing 
personalized prevention plan services or the previous subsequent annual 
wellness visit providing personalized prevention plan services''.
    Comment: A few comments requested that the annual wellness visit 
and HRA be treated as a combined approach to satisfy the elements that 
comprise personalized prevention plan services. One commenter was of 
the opinion that the HRA only addresses two of the annual wellness 
visit components: potential risk factors for depression, and functional 
ability and level of safety. This same commenter believes that the HRA 
should not be considered another component of the annual wellness 
visit, but rather the mechanism that helps drive the content of the 
office visit and the provision of personalized prevention plan 
services. Another commenter expressed concerns about whether an annual 
wellness visit would be covered by Medicare Part B if a beneficiary 
declined to fill out or complete an HRA.
    Response: We agree with the commenters that an HRA is an important 
part of the annual wellness visit. We do not agree that the HRA must 
reflect all of the elements of the annual wellness visit, as this 
approach would be unduly duplicative and also burdensome to patients 
completing the HRA. As we discussed in the proposed rule, we believe 
that incorporation of the HRA supports a systematic approach to patient 
wellness and is integral to the furnishing of personalized prevention 
plan services during the annual wellness visit. The results of the HRA 
will facilitate and provide the foundation for the development of the 
personalized prevention plan. Thus, we are not making additional 
changes in response to these comments. While the statute requires that 
the HRA be included, and taken into account in the provision of 
personalized prevention plan services as part of the annual wellness 
visit, the statute and this rule do not speak to how a health 
professional should address items left blank. We expect that health 
professionals will act in good faith to assist beneficiaries to 
complete the items relevant to the development of a personalized 
prevention plan.
    In the proposed rule, we included language that specified that 
first and subsequent annual wellness visits providing personalized 
prevention plan

[[Page 73310]]

services take into account the results of a HRA. In response to the 
comments received, we are modifying the introductory text of the 
definition of the term ``first annual wellness visit providing 
personalized prevention plan services'' to specify that the first AWV 
includes and takes into account the results of an HRA, consistent with 
section 1861(hhh)(1) of the Act. We continue to believe that review 
(and administration, if needed) of the HRA are also integral pieces of 
the provision of personalized prevention plan services. Therefore, we 
are finalizing the addition of new paragraph (i) ``review (and 
administration, if needed) of a health risk assessment'' to the 
definition of the term ``first annual wellness visit providing 
personalized prevention plan services.''
    Comment: A few commenters expressed concern with what they believed 
to be a rigid approach that would require questions for all Medicare 
beneficiaries in conjunction with prevention plan services that they 
believed would not be applicable for every beneficiary on an annual 
basis.
    Response: We agree with the commenters that a patient may not need 
to complete a full HRA if he or she obtains an annual wellness visit 
every year as permitted by the statute, but update the HRA. Therefore, 
we are modifying the introductory text and new paragraph (i) of the 
definition of the term ``subsequent annual wellness visit providing 
personalized prevention plan services'' to specify that the HRA be 
updated as part of subsequent visits. These changes will reduce the 
burden for both patients and health professionals while ensuring that 
the HRA is updated to reflect relevant changes.
    Comment: Many commenters provided suggestions regarding 
administration of the HRA, specifically requesting that CMS allow a 
physician's office to mail the HRA to the beneficiary prior to the 
appointment or administer the HRA over the phone. Commenters asked for 
clarification about the staff that would be appropriate to administer 
the HRA.
    One commenter suggested a hierarchy of preferred administration 
methods, starting with internet-based systems, kiosk-style systems, 
automated telephone response systems, and paper-based mail-in systems. 
However, the same commenter, along with several others, opined that the 
paper-based system may be the most appropriate for Medicare 
beneficiaries. Commenters believed that beneficiaries may not be 
comfortable with or use the internet for health information.
    Response: As we stated in the proposed rule, we believe that the 
health professional should consider the beneficiary's needs when 
determining whether assistance would be needed for the beneficiary to 
complete the HRA, including whether administrative support by health 
professionals is necessary. We believe it is important that health 
professionals have the flexibility to address additional topics as 
appropriate, based on patient needs, consistent with our final rule. 
Thus, there is not only one type of HRA that will meet the CDC 
guidelines.
    While we appreciate the commenters' concerns, we are not assigning 
particular tasks or restrictions for specific members of the team in 
this final rule. We believe it is better for the supervising physician 
to assign specific tasks to qualified team members (as long as they are 
licensed in the State and working within their State scope of 
practice). This approach gives the physician and the team the 
flexibility needed to address the beneficiary's particular needs on a 
particular day.
    As we discussed in the proposed rule, the CDC plans to publish ``A 
Framework for Patient-Centered Health Assessments, a Morbidity and 
Mortality Weekly Report (MMWR).'' The MMWR will include additional 
information applicable for the successful implementation of the HRA, 
such as the CDC interim guidance document, as well as information 
related to implementation, feedback, and follow-up that evidence 
suggests is critical for improving health outcomes using this process.
    Comment: Some comments recommended that CMS identify HRA tools that 
meet the criteria outlined in the proposed rule and also provide for an 
accreditation or certification process for HRA instruments.
    Response: We believe it is important that health professionals have 
the flexibility to address additional topics as appropriate, based on 
patient needs, consistent with our final rule. Thus, there is not only 
one type of HRA that will meet the CDC guidelines.
    As we discussed in the proposed rule, the CDC plans to publish ``A 
Framework for Patient-Centered Health Assessments, a Morbidity and 
Mortality Weekly Report (MMWR).'' The MMWR will include additional 
information applicable for the successful implementation of the HRA, 
such as the CDC interim guidance document, as well as information 
related to implementation, feedback, and follow-up that evidence 
suggests is critical for improving health outcomes using this process. 
While we are not including requirements for accreditation or 
certification of HRA instruments in this final rule, we may consider a 
certification process in the future.
    We requested comments on the impact of the elements included in the 
definitions of first and subsequent annual wellness visits and 
requested comments on the modification of those annual wellness visit 
elements for which the Secretary has the authority to determine 
appropriateness.
    Comment: One comment indicated that the annual wellness visit 
helped health professionals address preventive services in a more 
organized manner and believed the annual wellness visit was being 
furnished without difficulty. Another offered support for the 
establishment of a written screening schedule. One commenter believed 
that the annual wellness visit provided little benefit for the patient 
and created more burdens for the physician, while another believed that 
the annual wellness visit elements were rigid and onerous compared to 
other preventive services.
    Some commenters requested that CMS include a comprehensive physical 
exam as part the annual wellness visit. Other commenters requested that 
additional biometric assessments and routine blood work also be 
included as part of the AWV. One indicated that furnishing and coding 
for a separate physical exam may be confusing for physicians and deter 
the provision of the annual wellness visit. One commenter said that the 
physical exam is necessary to develop an accurate and appropriate list 
of risk factors and conditions for which primary, secondary, and 
tertiary interventions are recommended or are underway. Other 
commenters requested that laboratory tests and blood work should also 
be included in the annual wellness visit since the commenter considers 
blood work and laboratory tests standards in physician practice.
    Response: In Sec.  410.15, we adopted the components of the annual 
wellness visit, consistent with the statutory elements described in 
section 1861(hhh)(2) of the Act. The first and subsequent annual 
wellness visits, as defined in Sec.  410.15(a), are meant to represent 
a beneficiary visit focused on prevention. The annual wellness visit is 
not a ``routine physical check-up'' that some beneficiaries may receive 
periodically from their physician or practitioner. The annual wellness 
visit is specifically designed as a wellness visit that focuses on 
identification of certain risk factors, personalized health advice, and 
referral for additional preventive services and lifestyle

[[Page 73311]]

interventions (which may or may not be covered by Medicare). Therefore, 
we are not adopting the suggestion to mandate a comprehensive physical 
examination as part of the annual wellness visit.
    Regarding requests that routine blood work be included in the 
annual wellness visit, we note that Medicare Part B already covers the 
following screenings that include blood work--
     Cardiovascular disease screenings once every 5 years 
(lipid panel, cholesterol, lipoprotein, and triglycerides); and
     Diabetes screening tests for beneficiaries that meet 
certain conditions (2 screening tests per year for beneficiaries 
diagnosed with pre-diabetes; 1 screening per year if previously tested, 
but not diagnosed with pre-diabetes, or if never tested). Given that 
these are separate Part B benefits, we are not adding routine blood 
work as a component of the annual wellness visit.
    Comment: We received several comments that supported the 
establishment of a written screening schedule that includes both 
services that are covered by Medicare as well as community-based 
services that may not be covered by Medicare. One commenter stated that 
coordination with wellness programs would greatly enhance the 
effectiveness of personalized prevention plan services as a tool to 
reduce individual health risks. Commenters explained that the 
discussion of appropriate preventive services should not be limited 
based on insurance coverage. Other commenters requested that health 
professionals consider providing voluntary HIV screening, and referrals 
for medical nutrition therapy, home health services, and outpatient 
rehabilitation services. Regarding mental health services, one 
commenter opined that there is a lack of mental health professionals 
involved in primary care and, thus, requested that CMS add a 
requirement to the annual wellness visit for referral to mental health 
professionals.
    Response: We appreciate the comments received and agree that it is 
important for health professionals that furnish the annual wellness 
visit to include information regarding appropriate preventive services, 
based on the beneficiary's current risk factors. That being said, the 
annual wellness visit includes the following element: ``furnishing of 
personalized health advice to the individual and a referral, as 
appropriate, to health education or preventive counseling services or 
programs aimed at reducing identified risk factors and improving self-
management, or community-based lifestyle interventions to reduce health 
risks and promote self-management and wellness, including weight loss, 
physical activity, smoking cessation, fall prevention, and nutrition.''
    We believe that the health professional who is furnishing an annual 
wellness visit will determine an appropriate list of referrals for 
education services and preventive counseling services for each 
individual as part of the provision of personalized prevention plan 
services. We believe that the definitions for first and subsequent 
annual wellness visits address commenters' concerns regarding referrals 
for community-based services, mental health issues, and medical 
nutrition therapy. Therefore, we are not making the requested changes.
(3) Additional Comments
    Comment: One commenter was concerned that the term ``physician'' is 
defined, for purposes of the definition of ``health professional,'' to 
be either a doctor of medicine or a doctor of osteopathy as defined in 
section 1861(r)(1) of the Act. The commenter suggests that we use the 
full definition of ``physician'' as defined in section 1861(r) of the 
Act, instead. The commenter stated that doctors accredited through the 
Council on Chiropractic Education are prepared to practice as primary 
care chiropractic physicians.
    Response: We did not propose to make any changes to the definition 
of ``physician'' as used in Sec.  410.15 in the proposed rule and this 
comment is outside the scope of our current rulemaking. We are not 
making any changes in this final rule.
    Comment: One commenter suggested that fall risk screening should be 
administered by physical therapists and other appropriately qualified 
professionals, along with requiring, for those individuals at risk for 
falls, that physical therapists create a plan of care.
    Response: While we appreciate the commenter's concerns, we are not 
assigning particular tasks for specific members of the team, such as 
those tasks suggested by the commenter, in this final rule. We believe 
it is better for the supervising physician to assign specific tasks to 
qualified team members (as long as they are licensed in the State and 
working within their State scope of practice). This approach gives the 
physicians and the team the flexibility needed to address the 
beneficiary's particular needs on a particular day. It also empowers 
the physician to determine whether specific medical professionals (such 
as physical or occupational therapists) who will be working on his or 
her wellness team are needed on a particular day. The physician is able 
to determine the coordination of various team members during the annual 
wellness visit.
    Comment: Another commenter requested that the Secretary use 
authority under Sec.  4105 of the Affordable Care Act to remove the 
IPPE referral requirement for abdominal aortic aneurysm screening, and 
make the one-time screening available via referral during the annual 
wellness visit.
    Response: This comment is outside the scope of our proposed 
rulemaking as we made no proposals with respect to section 4105 of the 
Affordable Care Act. Our current coverage for abdominal aortic aneurysm 
screening is established in Sec.  410.19. Thus, we are not making any 
changes based on this comment at the present time.
    Comment: One commenter expressed concern that the proposed rule did 
not include voluntary advanced care planning as part of the annual 
wellness visit and was disappointed that the proposed rule was silent 
on this issue.
    Response: In the proposed rule, we did not propose to add voluntary 
advanced care planning to the definitions for first or subsequent 
annual wellness visits. We are not making changes as suggested by this 
commenter at this time.
    Comment: We received a few comments regarding the relationship 
between the IPPE and the annual wellness visit. Some commenters 
recommended that we eliminate the IPPE since they believe that it is 
similar to the provisions of the annual wellness visit.
    Response: We appreciate the attention drawn to the similarity 
between the IPPE and the annual wellness visit. While we did model some 
elements of the annual wellness visit after elements in the IPPE, we 
note that these statutory provisions are separate and distinct benefits 
and that Medicare beneficiaries are eligible to receive both of these 
benefits in sequence if regulatory requirements are met.
    Comment: A few commenters were disappointed that CMS did not add 
screening for depression and screening for risk of falls to the 
elements included in subsequent annual wellness visits. Commenters 
disagreed with CMS' assertion that lack of information regarding 
optimal frequency for depression screening was a sufficient reason for 
not including depression screening in subsequent annual wellness 
visits, and that the risk of change over a 12-month period is 
significant.

[[Page 73312]]

    Response: We agree that depression screening is important. 
Effective October 14, 2011, Medicare covers screening for depression in 
adults as an ``additional preventive service.'' The decision memorandum 
is available on the CMS Coverage Web site at https://www.cms.gov/
medicare-coverage-database/details/nca-decision-
memo.aspx?NCAId=251&ver=6&NcaName=Screening+for+Depression+in+Adults&bc=
AiAAAAAAIAAA&. We believe that providing this screening as a separate 
Part B benefit will help to address the commenter's concerns.
    We also acknowledge that assessment of functional ability and level 
of safety are important, and we agree that for certain individuals, 
functional status and safety assessments (for example, fall prevention) 
may be important to consider on a more routine basis. The annual 
wellness visit does allow for an individualized approach with a 
personalized prevention plan. For certain individuals where these areas 
are determined to be priorities, specific evaluations may be voluntary 
parts of subsequent visits. We also note that the HRA (which is updated 
during subsequent annual wellness visits) includes components related 
to functional ability and level of safety such as self assessment of 
health status, frailty, physical functioning, and behavioral risks, 
such as seat belt use and home safety. Therefore, we are not making the 
suggested changes.
    Comment: We received several comments requesting that we expand or 
modify Medicare coverage of preventive services.
    Response: While we appreciate the commenters' support for expanded 
coverage of preventive services under the Part B program, we did not 
solicit comments concerning ``additional preventive services'' in our 
proposed rule and these comments are outside the scope of this 
rulemaking. To the extent that the public is seeking expanded coverage 
for additional preventive services under Sec.  410.64, we are required 
by statute to use the national coverage determination process. 
Information on how to request an NCD is available in our Guidance 
Document: ``Factors CMS Considers in Opening a National Coverage 
Determination,'' at http://www.cms.gov/mcd/ncpc_view_document.asp?id=6. We will also continue to monitor access to 
preventive services and may also consider using the authority granted 
by section 4105 of the Affordable Care Act in the future.
    Comment: One commenter recommended that CMS provide more education 
and outreach regarding the annual wellness visit. Others requested that 
CMS provide guidance to beneficiaries and health professionals 
regarding the elements included in the annual wellness visit.
    Response: We agree that it is important to provide information 
about Medicare's coverage of the annual wellness visit. We have 
conducted significant educational campaigns in 2011 to encourage the 
use of the annual wellness visit. We will issue other educational 
information to Medicare providers and beneficiaries, including an 
MLNMatters article regarding implementation of the changes to the 
annual wellness visit as described in this final rule.
(4) Summary
    In summary, as a result of the comments received, we are finalizing 
the provisions of the proposed rule, with the following modifications, 
in this final rule:
     We are modifying sub-paragraph (v)(C) of the definition of 
the term ``health risk assessment'' to read, ``Psychosocial risks, 
including but not limited to, depression/life satisfaction, stress, 
anger, loneliness/social isolation, pain, and fatigue'' to correct a 
typographical error in the proposed rule.
     We are modifying paragraph (v)(D) of the definition of the 
term ``health risk assessment'' to read, ``Behavioral risks, including 
but not limited to, tobacco use, physical activity, nutrition and oral 
health, alcohol consumption, sexual health, motor vehicle safety (seat 
belt use), and home safety.''
     We are modifying the introductory text of the definition 
of the term ``subsequent annual wellness visit providing personalized 
prevention plan services'' to read as follows: ``subsequent annual 
wellness visit providing personalized prevention plan services means 
the following services furnished to an eligible beneficiary by a health 
professional that include, and take into account the results of an 
updated health risk assessment, as those terms are defined:''
     We are modifying newly designated paragraph (i) of the 
definition of ``subsequent annual wellness visit providing personalized 
prevention plan services'' to read as follows: ``(i) Review (and 
administration, if needed) of an updated health risk assessment (as 
defined in this section).''
2. The Addition of a Health Risk Assessment as a Required Element for 
the Annual Wellness Visit Beginning in 2012
a. Payment for AWV Services With the Inclusion of an HRA Element
    In the CY 2011 PFS final rule with comment period (75 FR 73411), we 
stated ``that when the HRA is incorporated in the AWV, we will 
reevaluate the values for HCPCS codes G0438 and G0439''. As discussed 
in the CY 2011 PFS final rule with comment period, the services 
described by CPT codes 99204 and 99214 already include ``preventive 
assessment'' forms. For CY 2012, we believe that the current payment 
crosswalk for HCPCS codes G0438 and G0439 continue to be most 
accurately equivalent to a level 4 E/M new or established patient 
visit; and therefore, we proposed to continue to crosswalk HCPCS codes 
G0438 and G0439 to CPT codes 99204 and 99214, respectively.
    Comment: Commenters were generally supportive of the addition of 
the HRA element when furnishing AWV services effective January 1, 2012. 
However, many commenters disagreed that the CDC guidance that the HRA 
is best completed on-line and prior to an AWV visit was appropriate for 
the Medicare population. One commenter noted that ``access to a 
meaningful HRA requires accommodation for individuals with physical, 
sensory, or cognitive limitations'' and Medicare beneficiaries often 
have multiple co-morbidities that will limit their ability to complete 
an HRA without assistance from a health professional.
    Most commenters agreed that CPT codes 99204 and 99214 include 
``preventive assessment,'' but continued to believe the payment is 
insufficient for the complexity of the HRA elements created by CDC and 
that the administration of the HRA will place a burden on practitioners 
and, even more so on their office staff, for which they would not be 
compensated under the equivalent of a level 4 E/M office visit payment. 
We wish to clarify that not only does the physician work in 99204 and 
99214 include ``preventive assessment'' but that we finalized in our 
2011 PFS final rule with comment period (75 FR 73409) the addition of 
preventive assessment forms as a direct PE input to HCPCS codes G0438 
and G0439 as we had for HCPCS code G0402 (Initial preventive physical 
examination; face-to-face visit, services limited to new beneficiary 
during the first 12 months of Medicare enrollment) in addition to the 
PE inputs for CPT Codes 99204 and 99214.

[[Page 73313]]

    Many commenters did not identify a specific adjustment to account 
for the additional complexity introduced by the HRA, but indicated that 
they should be compensated for the additional time that their staff 
will have to dedicate to helping Medicare beneficiaries complete the 
HRA over the phone or in person at their AWV. A few commenters provided 
a specific recommendation for reflecting staff resources needed to 
support the HRA and suggested that CMS add the RVUs for CPT code 99420 
(Administration and interpretation of a Health Risk Assessment 
Instrument), which is currently not covered, to the current practice 
expense RVUs for the AWV. Some commenters requested that CMS add 
additional physician work RVUs to the AWV without specifying how much 
to add. One commenter suggested adding CPT code 99406 (smoking and 
tobacco use cessation visit, intermediate, greater than 3 minutes up to 
10 minutes) to the level 4 payment to reflect the additional physician 
work associated with adding the HRA element to the AWV visit.
    Response: We appreciate commenters' support of the addition of the 
HRA element. We agree with commenters that Medicare beneficiaries 
likely will need assistance from physician office staff in completing 
the HRA envisioned in the CDC Interim Guidance on Health Risk 
Assessments available at http://www.cms.gov/coveragegeninfo/downloads/healthriskassessmentsCDCfinal.pdf. Therefore, we will increase the PE 
RVUs from the current level 4 E/M service to include greater clinical 
labor time. We believe that some beneficiaries may be able to complete 
the HRA on their own, that others may need assistance completing the 
HRA, and that many will need some assistance completing more 
challenging questions. Because the CDC estimates that an HRA should 
take no more than 20 minutes to complete, we increased the clinical 
labor time for the initial AWV by half, 10 minutes, to reflect 
additional staff work across the range of beneficiary capability. For 
the subsequent AWV, typically we would expect Medicare beneficiaries to 
update the HRA. Therefore, we increased the clinical labor time for the 
subsequent AWV by 5 minutes. In response to the commenter request that 
we add the RVUs for CPT code 99420 (Administration and interpretation 
of a Health Risk Assessment Instrument) to the AWV RVUs, we note that 
our addition of 10 minutes to the initial AWV is similar to the 15 
minutes of clinical labor time the AMA RUC has valued for 99420. 
Currently this code is not covered, and CMS has not reviewed the RUC's 
recommended RVUs. The AMA RUC's valuation of 99420 also includes a 
paper booklet. We have not included that additional practice expense 
input into the RVUs for the AWV because it duplicates the ``preventive 
assessment forms'' already included in the direct PE inputs for HCPCS 
codes G0438 and G0439.
    We disagree with the commenters that believe review of the HRA 
during the AWV requires additional physician work. The level 4 E/M code 
RVUs that are used to establish payment for the initial and subsequent 
AWV already include physician review of preventive assessment forms. 
While we agree that greater staff time will be required to help 
Medicare beneficiaries to complete the HRA, we do not believe that 
review of the HRA during the visit constitutes more physician work than 
is already contemplated by a level 4 E/M visit.
    In consideration of public comments, we are finalizing our CY 2012 
proposal for the first and subsequent AWV services with modification. 
Beginning January 1, 2012, we will crosswalk G0438 and G0439 to CPT 
codes 99204 and 99214, with the addition of direct PE inputs for 
preventive assessment forms as finalized in CY 2011 final rule with 
comment period (75 FR 73409) and, for CY 2012, an increase the direct 
PE inputs for clinical labor time to recognize an additional 10 and 5 
minutes, respectively. We agree with commenters that furnishing a 
meaningful HRA to Medicare beneficiaries will require accommodation and 
that those beneficiaries may need assistance from physician office 
staff when completing the HRA. The following Table 39, shows the final 
total RVUs adjusted for the inclusion of additional clinical labor time 
to support beneficiary completion of the required HRA element during 
the first and subsequent AWV services furnished on or after January 1, 
2012.
[GRAPHIC] [TIFF OMITTED] TR28NO11.147

[[Page 73314]]

F. Quality Reporting Initiatives

1. Physician Payment, Efficiency, and Quality Improvements--Physician 
Quality Reporting System
a. Program Background and Statutory Authority
    The Physician Quality Reporting System is a quality reporting 
program that provides incentive payments and payment adjustments to 
identified eligible professionals who satisfactorily report data on 
quality measures for covered professional services furnished during a 
specified reporting period. The Physician Quality Reporting System was 
initially implemented in 2007 as a result of section 101 of Division B 
of the Tax Relief and Health Care Act of 2006. The Physician Quality 
Reporting System was extended and further enhanced as a result of the 
Medicare, Medicaid, and SCHIP Extension Act of 2008 (MMSEA), the 
Medicare Improvements for Patients and Providers Act of 2009 (MIPPA), 
which was enacted on July 15, 2008, and the Affordable Care Act, which 
was enacted on March 23, 2010.
    Changes to the Physician Quality Reporting System as a result of 
these laws, as well as information about the Physician Quality 
Reporting System in 2007, 2008, 2009, 2010, and 2011 are discussed in 
detail in the CY 2008 PFS proposed and final rules (72 FR 38196 through 
38204 and 72 FR 66336 through 66353, respectively), CY 2009 PFS 
proposed and final rules (73 FR 38558 through 38575 and 73 FR 69817 
through 69847, respectively), CY 2010 PFS proposed and final rules (74 
FR 33559 through 33600 and 74 FR 61788 through 61861, respectively), 
and CY 2011 PFS proposed and final rules (75 FR 73487 through 73552). 
Further detailed information, about the Physician Quality Reporting 
System, related laws, and help desk resources, is available on the CMS 
Web site at http://www.cms.gov/PQRS.
    We received numerous comments that were not related to our specific 
proposals for the 2012 Physician Quality Reporting System. While we 
appreciate the commenters' feedback, these comments are outside the 
scope of the issues addressed in this final rule with comment period.
b. Methods of Participation
    There are two ways an eligible professional may participate in the 
Physician Quality Reporting System: (1) as an individual eligible 
professional or (2) as part of a group practice under the Physician 
Quality Reporting System group practice reporting option (GPRO). The 
details of each method of participation are described in this section.
(1) Individual Eligible Professionals
    As defined at 42 CFR 414.90(b) the term ``eligible professional'' 
means any of the following: (1) a physician; (2) a practitioner 
described in section 1842(b)(18)(C) of the Act; (3) a physical or 
occupational therapist or a qualified speech-language pathologist; or 
(4) a qualified audiologist. For more information on which 
professionals are eligible to participate in the Physician Quality 
Reporting System, we refer readers to the ``List of Eligible 
Professionals'' download located in the ``How to Get Started section of 
the Physician Quality Reporting CMS Web site at: http://www.cms.gov/PQRS/03_How_To_Get_Started.asp#TopOfPage.
(2) Group Practices
(A) Background and Authority
    As required by section 1848(m)(3)(C)(i) of the Act, we established 
and have had in place since January 1, 2010, a process under which 
eligible professionals in a group practice are treated as 
satisfactorily submitting data on quality measures under the Physician 
Quality Reporting System if, in lieu of reporting measures under the 
Physician Quality Reporting System, the group practice reports measures 
determined appropriate by the Secretary, for example measures that 
target high-cost chronic conditions and preventive care, in a form and 
manner, and at a time specified by the Secretary. Section 
1848(m)(3)(C)(ii) of the Act requires that this process provide for the 
use of a statistical sampling model to submit data on measures, for 
example the model used under the Medicare Physician Group Practice 
(PGP) demonstration project under section 1866A of the Act. We 
established a GPRO for the Physician Quality Reporting System under 42 
CFR 414.90(g).
(B) Definition of Group Practice
    Under 42 CFR 414.90(b), a ``group practice'' means ``a single Tax 
Identification Number (TIN) with two or more eligible professionals, as 
identified by their individual National Provider Identifier (NPI), who 
have reassigned their Medicare billing rights to the TIN''. We proposed 
(76 FR 42840) to change the definition of ``group practice'' under 42 
CFR 414.90(b). Specifically, we proposed that under the Physician 
Quality Reporting System, a ``group practice'' would consist of a 
physician group practice, as defined by a TIN, with 25 or more 
individual eligible professionals (or, as identified by NPIs) who have 
reassigned their billing rights to the TIN.
    For the 2010 Physician Quality Reporting System, our definition of 
``group practice'' was limited to practices with 200 or more eligible 
professionals because our intent was to model the Physician Quality 
Reporting System GPRO after a quality reporting program that group 
practices may already be familiar with--the PGP demonstration. Since 
participation in the PGP demonstration was limited to large group 
practices, we wanted to initially limit participation in the Physician 
Quality Reporting System GPRO to similar large group practices. In 
2011, we expanded this definition to include practices with 2-199 
eligible professionals because we developed a second reporting option 
(GPRO II) specifically for smaller group practices that was based 
largely on the Physician Quality Reporting System reporting options for 
individual eligible professionals. We have since observed that many of 
these smaller group practices that self-nominated to participate in 
GPRO II for 2011 subsequently elected to opt out of participation in 
the GPRO II for 2011 so that members of the group practices can 
participate in the Physician Quality Reporting System individually 
instead. Out of 107 total groups that self-nominated for GPRO II, only 
25 group practices comprised of 2-10 eligible professionals and 15 
group practices comprised of 11-25 eligible professionals are still 
participating in GPRO II for 2011 at this time.
    Since the GPRO II seems to be a less attractive reporting option 
than GPRO I, we proposed (76 FR 42840) to consolidate GPRO I and II 
into a single GPRO. Since our experience with using the GPRO submission 
web interface under the Physician Quality Reporting System has been 
limited to larger practices or practices participating in demonstration 
projects, we hesitated to expand what we referred to as GPRO I to all 
group practices until we gain some experience with smaller practices on 
a larger scale. For example, we believe that participation under the 
Physician Quality Reporting System GPRO is a more effective method of 
participation for larger as opposed to smaller group practices. As 
described in section VI.F.1.e.6 of this final rule with comment period, 
a group practice must take extra steps to participate in the Physician 
Quality Reporting System GPRO, for example reporting on more measures 
overall than is required for individual eligible professionals. In 
contrast, members of a group practice who choose to participate in the

[[Page 73315]]

Physician Quality Reporting System as individual eligible professionals 
could satisfactorily report by reporting as few as 3 measures. We 
believe the additional reporting burden associated with participating 
under the Physician Quality Reporting System GPRO may make the GPRO 
less attractive for smaller practices. We also believe that smaller 
group practices are more closely akin to individual eligible 
professionals with respect to participation under the Physician Quality 
Reporting System. For these reasons, we proposed to change the 
definition of ``group practice'' at 42 CFR 414.90(b) to groups with 25 
or more eligible professionals.
    We recognize that a group's size can fluctuate throughout the year 
as professionals move from practice to practice. We allow for 
fluctuation of the group practice's size throughout the reporting 
period. However, we proposed (76 FR 42840) that the group practice's 
size after the group practice's participation is approved by CMS must 
continue to meet the definition of a group practice as proposed in 42 
CFR 414.90(b) for the entire reporting period.
    We also proposed (76 FR 42840) that under 42 CFR 414.90(g)(1), a 
group practice of any size (including solo practitioners) or comprised 
of multiple TINs participating in a Medicare approved demonstration 
project of other programs would also be deemed to be participating in 
the Physician Quality Reporting System GPRO. For example, the PGP 
demonstration, as well as the Medicare Shared Savings Program 
(governing accountable care organizations (ACOs)), and Pioneer ACO have 
incorporated or proposed to incorporate aspects of the Physician 
Quality Reporting System reporting requirements and incentives under 
those respective programs.
    Our intention to recognize (deem) group practices participating in 
such other programs or demonstration projects as having participated in 
the Physician Quality Reporting System was to ensure that such groups 
would not be barred from participating in the group practice reporting 
option under the eRx Incentive program, since we previously required 
and have proposed to continue to require that group practices 
interested in participating in the eRx Incentive Program GPRO also 
participate in the Physician Quality Reporting System GPRO. We are not 
changing the eligibility for group practices, including those 
participating in the programs mentioned previously, to participate in 
the eRx Incentive program. As discussed in the changes to the eRx 
Incentive Program in section VI.F.1.e.2. later in this final rule with 
comment period, however, a group practice must self-nominate to 
participate under the eRx Incentive Program's group practice reporting 
option. We invited comments on the proposed change to the definition of 
``group practice'' under 42 CFR 414.90(b) under the Physician Quality 
Reporting System and also, whether we should retain the existing 
definition under the regulation despite our proposal to retain only the 
GPRO I for 2012. Following is a summary of the comments received that 
were related to this proposal.
    Comment: Some commenters supported our proposed definition of group 
practice. One commenter supported our proposed definition of group 
practice due to low participation by smaller group practices in the 
2011 GPRO II. Other commenters supported our proposed inclusion of 
smaller group practices comprised of 25-199 eligible professionals into 
the 2011 GPRO I model.
    Response: We agree. For the reasons stated previously, we are 
finalizing our proposal to change the definition of ``group practice'' 
at 42 CFR 414.90(b) to groups with 25 or more eligible professionals.
    Comment: One commenter opposed our proposal to eliminate GPRO II 
and only allow group practices to participate under GPRO I. The 
commenter noted that the low participation rate was likely due to the 
limited number of measures groups available for reporting.
    Response: We appreciate the commenter's feedback. However, due to 
low participation in GPRO II in 2011 and the fact that the number of 
measures groups available for reporting in 2012 remains limited, we are 
eliminating the GPRO II reporting option for 2012. We are continuing to 
explore other options that would enable smaller group practices to 
participate in GPRO for future years of the program.
    Comment: Several commenters were opposed to our proposal to define 
group practices as groups consisting of 25 or more eligible 
professionals. These commenters urged us to continue to include groups 
consisting of 2-24 eligible professionals to participate in the 
Physician Quality Reporting System GPRO.
    Response: As stated previously, in 2011, we expanded the 2010 
definition of group practice to include groups comprised of 2-199 
eligible professionals because we developed GPRO II, but we proposed to 
eliminate the GPRO II reporting option due to low participation levels 
in GPRO II. To reflect our desire to continue to have group practices 
smaller than 200 eligible professionals participate in the 2012 
Physician Quality Reporting System GPRO, we proposed to change the 
definition of group practice to groups comprised of 25 or more eligible 
professionals. We are interested in allowing group practices comprised 
of less than 25 eligible professionals to participate in the Physician 
Quality Reporting System via the GPRO in the future. However, at this 
time, it is not operationally feasible for us to allow groups smaller 
than 25 eligible professionals to participate in GPRO, as the sampling 
methodology and method for reporting under the GPRO was designed to 
accommodate larger groups. We are thinking of ways to modify this GPRO 
to accommodate smaller groups in the future. Furthermore, it is not 
likely that group practices comprised of 2-24 eligible professionals 
will be able to meet the patient sample threshold for satisfactory 
reporting under the GPRO. We are working to develop the GPRO so that it 
may be a viable reporting option for group practices smaller than 25 
eligible professionals in future program years.
    Comment: One commenter stated that, although the commenter believed 
that it was reasonable to require that a group practice continue to 
meet the definition of a group practice while participating in the 
Physician Quality Reporting System GPRO, the commenter suggested that 
we provide notice to groups that fall below the group practice 
definition during the reporting period.
    Response: The group size is determined at the time of self-
nomination and during the first quarter vetting period. However, if we 
find that a group practice should fall below our finalized minimum 
group size of 25 at any point during the reporting period, if feasible, 
we will work with the group practice to inform the group practice of 
its remaining reporting options, since, as the group size would be 
smaller than our minimum group practice size threshold, the group would 
cease to be able to participate under the Physician Quality Reporting 
System GPRO.
    Based on the comments received and for the reasons stated above, we 
are finalizing our proposal to change the definition of ``group 
practice'' at 42 CFR 414.90(b) to recognize groups with 25 or more 
eligible professionals. In addition, as we did not receive comments to 
make a technical change to 42 CFR 414.90(g)(1) to eliminate the 
reference to group practices in demonstrations that are deemed to have 
participated in the Physician Quality Reporting System, we are 
finalizing that change to the regulation. We believe that this language 
is unnecessary given the regulation at 42 CFR 414.92(b). In addition, 
we believe

[[Page 73316]]

that retaining the reference at 42 CFR 414.90(g)(1) may cause confusion 
with regard to participation under the Physician Quality Reporting 
System or inappropriately suggest that duplicate Physician Quality 
Reporting System incentive payments are available to group practices 
under both the Physician Quality Reporting System and the other types 
of programs mentioned previously. We are also finalizing our proposal 
to make a technical change to 42 CFR 414.92(b), which defines group 
practices participating under the eRx GPRO discussed in section 
VI.F.2.b. of this final rule, to more broadly address group practices 
in other types of programs that incorporate Physician Quality Reporting 
System reporting requirements and incentives, so that the regulation 
does not solely reference demonstrations.
(C) Process for Physician Group Practices To Participate as Group 
Practices
    In order to participate in the Physician Quality Reporting System 
GPRO for 2012 and subsequent years, we proposed to require group 
practices to complete a self-nomination process and to meet certain 
technical and other requirements described in the proposed rule (76 FR 
42841 and 42842). As in prior years, we proposed to require these self-
nomination and additional process requirements so that we may identify 
which group practices are interested in participating in the Physician 
Quality Reporting System as a GPRO as well as to ensure that group 
practices participating in the GPRO understand the process for 
satisfactorily reporting Physician Quality Reporting System quality 
measures under the GPRO method of reporting.
    We proposed that the self-nomination statement would be submitted 
by the group practice wishing to participate in the GPRO for the first 
time via a web-based tool. However, we also stated that if it is not 
operationally feasible for us to collect self-nomination statements via 
a web-based tool for 2012, we would require group practices interested 
in participating in the Physician Quality Reporting System GPRO to 
submit a self-nomination statement via a letter accompanied by an 
electronic file submitted in a format specified by us (such as a 
Microsoft Excel file). At this time, it is not technically feasible to 
collect self-nomination statements via a web-based tool. Therefore, 
until the web-based tool is fully capable of accepting self-nomination 
statements, we are finalizing our proposal that group practices submit 
the self-nomination statement via a letter accompanied by an electronic 
file submitted in a format specified by us (such as a Microsoft Excel 
file) that includes the group practice's TIN(s) and name of the group 
practice, the name and email address of a single point of contact for 
handling administrative issues as well as the name and email address of 
a single point of contact for technical support purposes. However, once 
the web-based tool is capable of accepting self-nomination statements, 
which we anticipate will occur by the 2013 Physician Quality Reporting 
System, the web-based tool is the method for a group practice to submit 
a self-nomination statement for the respective program year.
    A group practice that submits an incomplete self-nomination 
statement (such as, a valid email address is not provided), would not 
be considered for inclusion in the 2012 Physician Quality Reporting 
System GPRO, though as we noted in the proposed rule, we would notify a 
group practice should we receive an incomplete self-nomination 
statement.
    We proposed that the Physician Quality Reporting System GPRO self-
nomination statement must also indicate the group practice's compliance 
with the following requirements:
     Agree to attend and participate in all mandatory GPRO 
training sessions.
     Is an established Medicare provider that has billed 
Medicare Part B on or after January 1 and prior to October 29 of the 
year prior to the reporting period for the respective year. For 
example, for purposes of participating in the 2012 Physician Quality 
Reporting System GPRO, the group practice must have billed Medicare 
Part B on or after January 1, 2011 and prior to October 29, 2011.
     Agree to have the results on the performance of their 
Physician Quality Reporting System measures publicly posted on the 
Physician Compare Web site.
     Obtain and/or have access to the identity management 
system specified by CMS (such as, but not limited to, the Individuals 
Authorized Access to CMS Computer Systems, or IACS) to submit Medicare 
clinical quality data to a CMS clinical data warehouse.
     Provide CMS access (upon request for health oversight 
purposes like validation) to review the Medicare beneficiary data on 
which Physician Quality Reporting System GPRO submissions are founded 
or provide to CMS a copy of the actual data (upon request for health 
oversight purposes like validation).
    To ensure that accurate data is being reported, we reserve the 
right to validate the data submitted by GPROs.
    For 2012 and future years, we proposed that a group practice that 
wishes to participate in both the Physician Quality Reporting System 
and eRx GPRO (see the eRx Incentive Program's section 
VI.F.2.(b).(2).(B) of this final rule with comment period) must 
indicate its desire to participate in both programs in its self-
nomination statement.
    In addition, in the proposed rule (76 FR 42841 and 42842), we 
stated that we were interested in testing the extraction of EHR data 
submitted by group practices through the GPRO web interface in 2012. 
Group practices wishing to participate in this test must state their 
interest to participate in the group practice's self-nomination letter.
    We further proposed (76 FR 42842) that group practices that wish to 
self-nominate must do so by January 31 of the calendar year in which 
the group practice wishes to participate in the Physician Quality 
Reporting System GPRO. For example, in order to participate in the GPRO 
for the 2012 Physician Quality Reporting System, the group practice 
will need to self-nominate by January 31, 2012. Upon receipt of the 
self-nomination statements, we would assess whether the participation 
requirements for the respective reporting period were met by each group 
practice using Medicare claims data from the year prior to the 
respective reporting period. We would not preclude a group practice 
from participating in the GPRO if we discover, from analysis of the 
Medicare claims data, that there are some eligible professionals 
(identified by NPIs) that are not established Medicare providers (that 
is, have not billed Medicare Part B on or after January 1 and prior to 
or on October 29 of the year prior to the respective reporting period) 
as long as the group has at least the minimum proposed number (that is, 
25) of established Medicare providers required to participate in the 
Physician Quality Reporting System as a group practice. Eligible 
professionals, as classified by their NPIs, who do not submit Medicare 
Part B claims for PFS covered professional services during the 
reporting period, however, will not be included in our payment 
calculations.
    Furthermore, we proposed (76 FR 42842) that group practices who 
have previously participated in the Physician Quality Reporting System 
GPRO would automatically be qualified to participate in the GPRO in 
2012 and future program years. For example, group practices that were 
selected to participate in the 2011

[[Page 73317]]

Physician Quality Reporting System GPRO I or GPRO II (provided the 
group practice is still comprised of at least 25 eligible 
professionals) would automatically be qualified to participate in the 
2012 Physician Quality Reporting System GPRO and will not need to 
complete the 2012 Physician Quality Reporting System GPRO qualification 
process. These practices will, however, need to notify CMS in writing 
of their desire to continue participation in the Physician Quality 
Reporting System GPRO for the respective program year.
    We indicated that we recognized that, for various reasons, there 
potentially could be a discrepancy between the number of eligible 
professionals (that is, NPIs) submitted by the practice during the 
self-nomination process and the number of eligible professionals 
billing Medicare under the practice's TIN as people move in and out of 
practices. Therefore, if we find more NPIs in the Medicare claims than 
the number of NPIs submitted by the practice during the self-nomination 
process and this will result in the practice being subject to different 
criteria for satisfactory reporting, we will notify the practice of 
this finding as part of the self-nomination process. At this point, the 
practice will have the option of either agreeing to be subject to the 
different criteria for satisfactory reporting or opting out of 
participation in the Physician Quality Reporting System GPRO to enable 
the members of their practice to participate in the Physician Quality 
Reporting System as individual eligible professionals.
    We invited public comment regarding our proposed process for group 
practices to participate in the Physician Quality Reporting System 
GPRO. We received the following comment regarding this proposal.
    Comment: One commenter stated that, instead of requiring group 
practices who have previously participated in the Physician Quality 
Reporting System GPRO in prior years to self-nominate each year, we 
should consider group practices who have formerly participated in the 
Physician Quality Reporting System GPRO as participating until the 
group practice opts out of GPRO participation.
    Response: We appreciate the commenter's feedback. However, we note 
that the self-nomination process that we have proposed and are 
finalizing applies only to group practices that wish to participate in 
the Physician Quality Reporting System GPRO for the first time. Group 
practices that have previously participated in the GPRO do not need to 
submit a self-nomination statement to indicate their desire to 
participate in the GPRO in future program years. However, we note that 
group practices that have previously participated in the GPRO may have 
to participate in other GPRO activities, such as attending 
informational sessions that demonstrate how to report under the GPRO 
for the respective program year.
    Based on the comments received and for the reasons stated 
previously, we are finalizing the self-nomination and participation 
processes for group practices under the Physician Quality Reporting 
System GPRO. As we noted previously, it was not technically feasible to 
develop a web-based tool by the time of this final rule, and therefore, 
for 2012, self-nomination statements must be submitted via a letter 
accompanied by and electronic file described previously.
c. Reporting Period
    Since the implementation of the Physician Quality Reporting System 
in 2007, depending on an eligible professional's chosen reporting 
mechanism, we have offered up to two different reporting periods for 
satisfactorily reporting Physician Quality Reporting System quality 
measures: a 12-month reporting period (from January 1 through December 
31of the respective program year) and a 6-month reporting period (from 
July 1 through December 31of the respective program year). Section 
1848(m)(5)(F) of the Act requires CMS to provide alternative reporting 
periods and criteria for measures groups and registry reporting. To 
comply with this provision, for 2012 and subsequent years, we proposed 
(76 FR 42842) to retain the 6-month reporting period option for the 
reporting of Physician Quality Reporting System measures groups via 
registry. We invited but received no comments on our proposal to retain 
the 6-month reporting period for measures groups via registry. For the 
reasons described previously, we are finalizing our proposal to retain 
the 6-month reporting period for 2012 and beyond. We are therefore 
modifying 42 CFR 414.90(f)(1)(ii)(B) to reflect this finalized 
proposal.
    Additionally, we proposed (76 FR 42842) to modify 42 CFR Sec.  
414.90(g)(1) to specify a 12-month reporting period (that is, January 
1through December 31of the respective program year) for the Physician 
Quality Reporting System GPRO. We received no comments regarding our 
proposal to modify 42 CFR Sec.  414.90(g)(1) to specify a 12-month 
reporting period (that is, January 1 through December 31of the 
respective program year) for the Physician Quality Reporting System 
GPRO for 2012 and beyond, and are therefore, finalizing this proposal. 
As such, we are making technical changes to modify the clause numbers 
under 42 CFR 414.90(g) to reflect our finalized proposal to indicate a 
12-month reporting period for the GPRO under 42 CFR 414.90.
    Furthermore, for 2012 and subsequent years, we proposed (76 FR 
42842) to modify 42 CFR 414.90(f)(1) to specify a 12-month reporting 
period (that is, January 1 through December 31of the respective program 
year), consistent with section 1848(m)(6)(C)(i)(II) of the Act, for the 
satisfactory reporting of Physician Quality Reporting System quality 
measures for claims, registry, and EHR-based reporting. In proposing 
these modifications to 42 CFR 414.90, we proposed to eliminate the 6-
month reporting period for claims and registry previously available 
under the Physician Quality Reporting System (with the exception of 
reporting measures groups via registry). Although we did not propose a 
6-month reporting period for claims and registry reporting, we note 
that the 12-month reporting period aligns with other CMS quality 
reporting programs. In addition, the elimination of the 6-month 
reporting period for claims and registry reporting (for reporting 
individual measures via registry) will align the reporting periods of 
these mechanisms with the EHR reporting mechanism and the GPRO. We 
further believe that the elimination of the 6-month reporting period 
for claims and registry reporting (for reporting individual measures 
via registry) will help to streamline and simplify the reporting 
requirements for the Physician Quality Reporting System without 
substantial burden to eligible professionals who may still 
satisfactorily report using the 12-month reporting period.
    We invited public comment on our proposal to eliminate the 6-month 
reporting period for claims and registry reporting (for reporting 
individual measures via registry). The following is a summary of the 
comments regarding this proposal.
    Comment: Some commenters supported our proposal to eliminate the 6-
month reporting period as we proposed. The commenters concurred with 
our desire to align our reporting periods with that of other CMS 
quality reporting programs.
    Response: We appreciate the commenters' support. We are finalizing 
our proposal to eliminate the 6-month reporting period claims and 
registry reporting (individual measures via registries).

[[Page 73318]]

    Comment: Several commenters were opposed to our proposal to 
eliminate the 6 month reporting period for reporting under the 
Physician Quality Reporting System. One commenter suggested that having 
an additional 6-month reporting period in which to report would allow 
eligible professionals to still correct errors that are detected after 
the distribution of interim feedback reports. Another commenter stated 
that the 6-month reporting period may be used by eligible professionals 
as an additional opportunity to meet the requirements for satisfactory 
reporting under the Physician Quality Reporting System.
    Response: As we noted previously, we are finalizing our proposal to 
retain the 6-month reporting option for reporting on measures groups 
via registry. Therefore, the 6-month reporting period is still 
available to those eligible professionals wishing to use this reporting 
period. As we stated in the proposed rule (76 FR 42842), we proposed to 
eliminate the 6-month reporting option (for certain mechanisms and 
types of measures) in order to streamline the program. We understand 
that this eliminates additional options under which eligible 
professionals may participate in the Physician Quality Reporting 
System. However, we believe that data based on a 12-month reporting 
period provides more meaningful insight to patient experience and care 
than data collected during a shorter, 6-month reporting period. The Tax 
Relief and Health Care Act of 2006 (TRHCA), enacted on December 20, 
2006, required the Secretary to implement the first reporting period on 
July 1, 2007. Therefore, a 6-month reporting period from July 1, 2007 
through December 31, 2007 was the first reporting period in which 
eligible professionals could report on quality measures under the 
Physician Quality Reporting System (then called the Physician Quality 
Reporting Initiative or PQRI). We retained the 6-month reporting option 
to encourage participation in the program. 2012 will mark the 6th year 
of the Physician Quality Reporting System. As such, we believe that 
eligible professionals have had ample time to familiarize themselves 
with the program and its requirements. Therefore, we believe our desire 
to streamline the program, align our reporting periods with other 
various CMS programs, and collect more meaningful data outweighs 
stakeholders' desire to retain the 6-month reporting period we are 
eliminating.
    Based on the comments received and for the reasons stated above, 
for 2012 and beyond, we are finalizing our proposal to modify 42 CFR 
414.90(f)(1) to specify a 12-month reporting period (that is, January 1 
through December 31of the respective program year) for the satisfactory 
reporting of Physician Quality Reporting System quality measures for 
claims, registry, and EHR-based reporting. In addition to the 12-month 
reporting period available for all reporting methods, we are also 
finalizing a 6-month reporting period (that is, July 1 through December 
31 of the respective program year) for reporting measures groups via 
registry.
d. Reporting Mechanisms--Individual Eligible Professionals
    For the purpose of reporting quality measures under the Physician 
Quality Reporting System, we proposed (76 FR 42842) to retain the 
claims-based, registry-based, and EHR-based reporting mechanism for 
2012 and beyond. Accordingly, we proposed to modify 42 CFR 414.9(f) to 
reflect this proposal. We proposed to retain these reporting mechanisms 
in order to provide eligible professionals with multiple mechanisms 
from which to satisfactorily report Physician Quality Reporting System 
quality measures. We hope that offering multiple reporting mechanisms 
will aid in encouraging participation in the Physician Quality 
Reporting System.
    We invited public comment concerning the general, proposed 
reporting mechanisms for the Physician Quality Reporting System for 
2012 and beyond. The following is a summary of the comments received 
that were related to our proposal to retain the claims, registry, and 
EHR-based reporting mechanisms for 2012 and beyond.
    Comment: One commenter suggested that the program move towards one 
method of reporting, rather than provide different methods of reporting 
under the Physician Quality Reporting System.
    Response: We appreciate the commenter's feedback. However, as we 
stated in the proposed rule (76 FR 42842), we believe it is important 
to provide eligible professionals with multiple reporting mechanisms to 
encourage and facilitate satisfactory participation in the Physician 
Quality Reporting System. We also note that eligible professionals 
continue to actively utilize all 3 reporting mechanisms. For example, 
the 2009 Reporting Experience indicates that in 2009, approximately 
190,000 eligible professionals and 33,000 eligible professionals 
participated in the Physician Quality Reporting System via the claims-
based and registry-based reporting mechanism, respectively. The EHR-
based reporting mechanism was not included as a Physician Quality 
Reporting System reporting mechanism until 2010.
    Comment: Several commenters supported our proposal to retain the 
claims, registry, and EHR-based reporting mechanisms for 2012 and 
beyond in order to provide multiple reporting mechanisms for which 
eligible professionals may use to report on Physician Quality Reporting 
quality measures.
    Response: We agree and appreciate the commenters' feedback. We are 
finalizing the claims, registry, and EHR-based reporting mechanisms for 
2012 and beyond.
    Comment: Some commenters encouraged us to provide resources to 
assist eligible professionals in choosing a reporting mechanism.
    Response: For 2012 and beyond, as in previous years, we will 
provide various resources to assist eligible professionals in choosing 
a reporting mechanism as well as general guidance on how to participate 
in the Physician Quality Reporting System through, for example, 
resources posed on the Physician Quality Reporting System Web site 
(http://www.cms.gov/PQRS/), national provider calls, special open door 
forums, and the QualityNet Help Desk.
    Based on the comments received and for the reasons explained 
previously, we are finalizing the claims, registry, and EHR-based 
reporting mechanisms under the Physician Quality Reporting System for 
2012 and beyond.
    As in previous years, the individual quality measures or measures 
groups an eligible professional selects will dictate the applicable 
reporting mechanism(s). In addition, while eligible professionals can 
attempt to qualify for a Physician Quality Reporting System incentive 
under multiple reporting mechanisms, the eligible professional must 
satisfy the criteria for satisfactory reporting for the respective 
program year, with respect to a single reporting mechanism to qualify 
for an incentive. We will not combine data submitted via multiple 
reporting mechanisms to determine incentive eligibility.
(1) Claims-Based Reporting
    As we noted previously, we proposed (76 FR 42843) to retain the 
claims-based reporting mechanism for the Physician Quality Reporting 
System for 2012 and beyond. For eligible professionals who choose to 
participate in the Physician Quality Reporting System by submitting 
data on individual quality measures or measures groups through the 
claims-based reporting mechanism, we proposed (76 FR 42843) that the 
eligible professional be required to submit the appropriate Physician 
Quality Reporting

[[Page 73319]]

System quality data codes (QDCs) on the professionals' Medicare Part B 
claims.
    QDCs for the eligible professional's selected individual Physician 
Quality Reporting System quality measures or measures group may be 
submitted to CMS at any time during the reporting period for the 
respective program year. However, as required by section 1848(m)(1)(A) 
of the Act, all claims for services furnished during the reporting 
period, would need to be processed by no later than two months after 
the end of the reporting period, to be included in the program year's 
Physician Quality Reporting System analysis. For example, all claims 
for services furnished for the 2012 Physician Quality Reporting System 
would need to be processed by no later than two months after the end of 
the reporting period for the 2012 Physician Quality Reporting System, 
that is, processed by February 22, 2013 for the reporting period that 
ends December 31, 2012.
    We invited public comment on our proposed requirements for eligible 
professionals who choose the claims-based reporting mechanism for 2012 
and beyond. The following is a summary of the comments we received 
regarding this proposal.
    Comment: Some commenters supported our proposal to retain the 
claims-based reporting mechanism, since many small practices may not be 
linked to registry or EHR systems.
    Response: We agree and appreciate the commenter's feedback.
    Based on the comments received and for the reasons stated in our 
responses and above, we are finalizing our proposal to retain the 
claims-based reporting mechanism under the Physician Quality Reporting 
System for 2012 and beyond.
(2) Registry-Based Reporting
    (A) Requirements for the Registry-based Reporting Mechanism--
Individual Eligible Professionals
    As stated previously, we proposed (76 FR 42843) to retain the 
registry-based reporting mechanism via a qualified registry (as defined 
in section VI.F.1.2.B.) for the Physician Quality Reporting System for 
2012 and beyond. With regard to specific requirements for registry-
based reporting for individual eligible professionals under the 
Physician Quality Reporting System, we proposed that, in order to 
report quality data on the Physician Quality Reporting System 
individual quality measures or measures groups for the respective 
program year through a qualified registry, an eligible professional or 
group practice would be required to enter into and maintain an 
appropriate legal arrangement with a qualified Physician Quality 
Reporting System registry. Such arrangements would provide for the 
registry's receipt of patient-specific data from the eligible 
professional and the registry's disclosure of quality measures results 
and numerator and denominator data on Physician Quality Reporting 
System quality measures or measures groups on behalf of the eligible 
professional to CMS. Thus, the registry would act as a Health Insurance 
Portability and Accountability Act of 1996 (Pub. L. 104-191) (HIPAA) 
Business Associate and agent of the eligible professional. Such agents 
are referred to as ``data submission vendors.'' The ``data submission 
vendors'' would have the requisite legal authority to provide clinical 
quality measures results and numerator and denominator data on 
individual quality measures or measures groups on behalf of the 
eligible professional for the Physician Quality Reporting System.
    We proposed that the registry, acting as a data submission vendor, 
would submit CMS-defined, registry-derived measures information to our 
designated database for the Physician Quality Reporting System, using a 
CMS-specified record layout, which will be provided to the registry by 
CMS. Similarly, we proposed that eligible professionals choosing to 
participate in the Physician Quality Reporting System through the 
registry-based reporting mechanism for the respective program year must 
select a qualified Physician Quality Reporting System registry and 
submit information on Physician Quality Reporting System individual 
quality measures or measures groups to the selected registry in the 
form and manner and by the deadline specified by the registry.
    We proposed to post a list of qualified registries for the 
Physician Quality Reporting System for the respective program year on 
the Physician Quality Reporting System section of the CMS Web site at 
http://www.cms.gov/pqrs, which would include the registry name, contact 
information, the measures and/or measures group (if qualified) for 
which the registry is qualified and intends to report for the 
respective program year, and information regarding the cost of the 
registry to eligible professionals. However, we do not anticipate 
making this list available prior to the start of the respective program 
year. That is, we do not anticipate making the list of qualified 
registries for the 2012 Physician Quality Reporting System available 
prior to the start of the 2012 program year. We anticipate posting the 
names of the Physician Quality Reporting System qualified registries 
for the respective reporting period in the following 3 phases based on: 
(1) the registry's success in submitting Physician Quality Reporting 
System quality measures results and numerator and denominator data on 
the quality measures in a prior Physician Quality Reporting System 
program year (2008, 2009, 2010, 2011, etc.); (2) the registry's 
submission of a letter indicating their continued interest in being a 
Physician Quality Reporting System registry by October 31 of the year 
prior to the program year (that is, by October 31, 2011 for the 2012 
program year); and (3) the registry's compliance with the Physician 
Quality Reporting System registry requirements for the respective 
program year as indicated by CMS' registry vetting process. The listing 
of a qualified registry will depend on which of the 3 proposed phases 
is most applicable to the registry. The manner in which we post the 
list of qualified registries is based on prior experience with 
participation in the Physician Quality Reporting System as a registry 
vendor.
    We invited public comment on our proposed process and requirements 
for using the registry-based reporting mechanism for individual 
eligible professionals. The following is a summary of the comments we 
received regarding this proposal.
    Comment: Several commenters supported our proposal to retain the 
registry reporting mechanism. One commenter stated that eligible 
professionals have met the criteria for satisfactory reporting at 
greater rates than when using the claims-based reporting mechanism. 
Some commenters stated that we should encourage use of registry-based 
reporting.
    Response: We appreciate the commenter's feedback and are finalizing 
our proposal to retain the registry-based reporting mechanism.
    Comment: One commenter noted that use of the registry-based 
reporting mechanism results in additional costs to the eligible 
professional wishing to participate in the Physician Quality Reporting 
System via the registry-based reporting mechanism.
    Response: We understand that the use of registries may result in 
additional costs to the eligible professional, as many registries 
charge for their services. However, we note that the registry-based 
reporting mechanism optional and is only one of three mechanisms that 
may be used to report Physician Quality Reporting System measures. 
There is no up-front, monetary cost associated with participating in 
the

[[Page 73320]]

Physician Quality Reporting System via the claims-based reporting 
mechanism.
    Comment: One commenter suggested that we develop a free, national 
registry that would meet the requirements for being a ``qualified'' 
registry so that a free registry option would be available for eligible 
professionals.
    Response: We respectfully disagree. As we noted previously, many 
but not all registries charge for their services. As such, it is 
possible for eligible professionals to elect a free registry on which 
to report Physician Quality Reporting System quality measures. As there 
are free registry options, we do not see the need for a national 
registry.
    Based on the comments received and for the reasons stated 
previously, we are finalizing the requirements described above for 
individual eligible professionals choosing the registry-based reporting 
option for the 2012 Physician Quality Reporting System and beyond.
(B) 2012 Qualification Requirements for Registries
    Although we proposed to establish the registry-based reporting 
mechanism as a way to report Physician Quality Reporting System quality 
measures for 2012 and beyond, we proposed (76 FR 42843 through 42845) 
the following qualification requirements only apply for the 2012 
program year. For the Physician Quality Reporting System in 2012, as in 
prior program years, we proposed to require a self-nomination process 
for registries wishing to submit Physician Quality Reporting System 
quality measures or measures groups on behalf of eligible professionals 
for services furnished during the applicable reporting periods in 2012. 
This qualification process allows us to ensure that registries are 
fully informed of the Physician Quality Reporting System reporting 
process and to ensure the registry is qualified, thereby improving the 
likelihood of accurate reporting.
    We note that third party intermediaries may participate in various 
capacities under the Physician Quality Reporting System. In addition, 
in an effort to encourage the electronic submission of quality measures 
data from eligible professionals' EHRs, we proposed EHR-based 
reporting, as discussed later in this section. As a result, we believe 
it is important to distinguish entities that collect their data from an 
EHR from those entities that collect their data from other sources. As 
such, as discussed here and later in this section, we proposed, the 
following two categories of third party intermediaries that would be 
able to submit Physician Quality Reporting System measures data on 
behalf of eligible professional: (1) a registry, as defined at 42 CFR 
414.90(b), which would be any data submission vendor submitting data 
from a source other than an EHR on behalf of eligible professionals 
that meets the proposed registry qualification requirements later in 
this section; and (2) EHR data submission vendors, which would be a 
data submission vendor that obtains its data from an eligible 
professional's EHR and that meets the 2012 EHR qualification 
requirements. However, for operational reasons, we may reserve the 
right to limit such entities to a single role such that the entity 
would need to decide whether it wants to serve as a registry or EHR 
data submission vendor but not both. We note that a registry could 
serve as an ``EHR data submission vendor'' to the extent that it 
obtains data from an eligible professional's EHR, but would need to 
meet the proposed 2012 EHR qualification requirements. To be considered 
a qualified registry for purposes of serving as a registry under the 
program and submitting individual quality measures on behalf of 
eligible professionals who choose the registry reporting mechanism for 
2012, we proposed that both registries new to the Physician Quality 
Reporting System and those previously qualified must:
     Be in existence as of January 1, 2012.
     Have at least 25 participants by January 1, 2012.
     Provide at least 1 feedback report, based on the data 
submitted to them for the 2012 Physician Quality Reporting System 
incentive reporting period, but if technically feasible, provide at 
least 2 feedback reports throughout the year to participating eligible 
professionals. Although it is not a requirement that registries provide 
interim feedback reports, we believe it is in the stakeholder's 
interest to require early registry collection of data for purposes of 
providing a feedback report to eligible professionals before the end of 
the 2012 Physician Quality Reporting System incentive reporting period 
to determine what steps, if any, an eligible professional should take 
or may rectify to meet the criteria for satisfactory reporting.
     For purposes of distributing feedback reports to eligible 
professionals, collect an eligible professional's email addresses and 
have documentation from the eligible professional authorizing the 
release of his or her email address.
     Not be owned and managed by an individual locally-owned 
single-specialty group (in other words, single-specialty practices with 
only 1 practice location or solo practitioner practices are prohibited 
from self-nominating to become a qualified Physician Quality Reporting 
System registry).
     Participate in ongoing 2012 Physician Quality Reporting 
System mandatory support conference calls hosted by CMS (approximately 
1 call per month), including an in-person registry kick-off meeting to 
be held at CMS headquarters in Baltimore, MD. Registries that miss more 
than one meeting will be precluded from submitting Physician Quality 
Reporting System data for the reporting year (2012).
     Be able to collect all needed data elements and transmit 
to CMS the data at the TIN/NPI level for at least 3 measures, which is 
the minimum amount of measures on which an eligible professional is 
required to report, in the 2012 Physician Quality Reporting System 
(according to the posted 2012 Physician Quality Reporting System 
Measure Specifications);
     Be able to calculate and submit measure-level reporting 
rates or, upon request, the data elements needed to calculate the 
reporting rates by TIN/NPI.
     Be able to calculate and submit, by TIN/NPI, a performance 
rate (that is, the percentage of a defined population who receive a 
particular process of care or achieve a particular outcome based on a 
calculation of the measure's numerator and denominator specifications) 
for each measure on which the TIN/NPI reports or, upon request the 
Medicare beneficiary data elements needed to calculate the performance 
rates.
     Be able to separate out and report on Medicare Part B FFS 
patients.
     Provide the name of the registry.
     Provide the reporting period start date the registry will 
cover.
     Provide the reporting period end date the registry will 
cover.
     Provide the measure numbers for the Physician Quality 
Reporting System quality measures on which the registry is reporting.
     Provide the measure title for the Physician Quality 
Reporting System quality measures on which the registry is reporting.
     Report the number of eligible instances (reporting 
denominator).
     Report the number of instances a quality service is 
performed (performance numerator).
     Report the number of performance exclusions, meaning the 
quality action was not performed for a valid reason as defined by the 
measure specification.
     Report the number of reported instances, performance not 
met (eligible professional receives credit for

[[Page 73321]]

reporting, not for performance), meaning the quality action was not 
performed for no valid reason as defined by the measure specification.
     Be able to transmit this data in a CMS-approved XML 
format.
     Comply with a CMS-specified secure method for data 
submission, such as submitting the registry's data in an XML file 
through an identity management system specified by CMS or another CMS-
approved method, such as use of appropriate Nationwide Health 
Information Network specifications, if technically feasible.
     Submit an acceptable ``validation strategy'' to CMS by 
March 31, 2012. A validation strategy ascertains whether eligible 
professionals have submitted accurately and on at least the minimum 
number (80 percent) of their eligible patients, visits, procedures, or 
episodes for a given measure, which, as described in section 
VI.F.1.e.2., is the minimum percentage of patients on which an eligible 
professional must report on any given measure. Acceptable validation 
strategies often include such provisions as the registry being able to 
conduct random sampling of their participant's data, but may also be 
based on other credible means of verifying the accuracy of data content 
and completeness of reporting or adherence to a required sampling 
method.
     Perform the validation outlined in the strategy and send 
the results to CMS by June 30, 2013 for the 2012 reporting year's data.
     Enter into and maintain with its participating 
professionals an appropriate Business Associate agreement that provides 
for the registry's receipt of patient-specific data from the eligible 
professionals, as well as the registry's disclosure of quality measure 
results and numerator and denominator data and/or patient-specific data 
on Medicare beneficiaries on behalf of eligible professionals who wish 
to participate in the Physician Quality Reporting System.
     Obtain and keep on file signed documentation that each 
holder of an NPI whose data are submitted to the registry has 
authorized the registry to submit quality measure results and numerator 
and denominator data and/or patient-specific data on Medicare 
beneficiaries to CMS for the purpose of Physician Quality Reporting 
System participation. This documentation must be obtained at the time 
the eligible professional signs up with the registry to submit 
Physician Quality Reporting System quality measures data to the 
registry and must meet any applicable laws, regulations, and 
contractual business associate agreements.
     Provide CMS access (upon request for health oversight 
purposes like validation) to review the Medicare beneficiary data on 
which 2012 Physician Quality Reporting System registry-based 
submissions are founded or provide to CMS a copy of the actual data 
(upon request).
     Provide CMS a signed, written attestation statement via 
mail or email which states that the quality measure results and any and 
all data including numerator and denominator data provided to CMS are 
accurate and complete.
     Use Physician Quality Reporting System measure 
specifications and the CMS provided measure calculation algorithm, or 
logic, to calculate reporting rates or performance rates unless 
otherwise stated. CMS will provide registries a standard set of logic 
to calculate each measure and/or measures group they intend to report 
in 2012.
     Provide a calculated result using the CMS supplied measure 
calculation logic and XML file for each measure that the registry 
intends to calculate. The registries will be required to show that they 
can calculate the proper measure results (that is, reporting and 
performance rates) using the CMS-supplied logic and send the calculated 
data back to CMS in the specified format.
    In addition to meeting all the requirements specified previously 
for the reporting of individual quality measures via registry, for 
registries that intend to report on 2012 Physician Quality Reporting 
System measures groups, we proposed that both registries new to the 
Physician Quality Reporting System and those previously qualified must:
     Indicate the reporting period chosen for each eligible 
professional who chooses to submit data on measures groups.
     Base reported information on measures groups only on 
patients to whom services were furnished during the 2012 reporting 
period.
     Agree that the registry's data may be inspected or a copy 
requested by CMS and provided to CMS under our oversight authority.
     Be able to report consistent with the reporting criteria 
requirements, as specified in section IV.F.1.e.2.
    We noted in the proposed rule that we intended to post the final 
2012 Physician Quality Reporting System registry requirements on the 
Physician Quality Reporting System section of the CMS Web site at 
http://www.cms.gov/pqrs by November 15, 2011 or shortly thereafter. We 
anticipate that new registries that wish to self-nominate for 2012 
would be required to do so by January 31, 2012.
    Furthermore, we proposed (76 FR 42845) that registries that were 
``qualified'' for 2011 and wish to continue to participate in 2012 will 
not need to be ``re-qualified'' for 2012, but instead are only required 
to demonstrate that they can meet the new 2012 data submission 
requirements. For technical reasons, however, we did not expect to be 
able to complete this vetting process for the new 2012 data submission 
requirements until mid-2012. Therefore, for 2012, we indicated we may 
not be able to post the names of registries that are qualified for the 
2012 Physician Quality Reporting System until we have determined the 
previously qualified registries that wish to be qualified for the 2012 
Physician Quality Reporting System are in compliance with the new 
registry requirements.
    We proposed that registries ``qualified'' for 2011, who are 
successful in submitting 2011 Physician Quality Reporting System data, 
and wish to continue to participate in 2012 would indicate their desire 
to continue participation for 2012 by submitting a self-nomination 
statement via a web-based tool to CMS indicating their continued 
interest in being a Physician Quality Reporting System registry for 
2012 and their compliance with the 2012 Physician Quality Reporting 
System registry requirements by no later than October 31, 2011. 
Additionally, registries that were qualified but unsuccessful in 
submitting 2011 Physician Quality Reporting System data (that is, fail 
to submit 2011 Physician Quality Reporting System data per the 2011 
Physician Quality Reporting System registry requirements) must go 
through a full self-nomination vetting process for 2012.
    We further proposed that by March 31, 2012, registries that are 
unsuccessful at submitting registry data in the correct data format for 
2011 must be able to meet the 2012 Physician Quality Reporting System 
registry requirements and go through the full vetting process again. 
This would include CMS receiving the registry's self-nomination by 
March 31, 2012. We proposed that the aforementioned registry 
requirements would also apply for the purpose of a registry qualifying 
to submit the electronic prescribing measure for the 2012 eRx Incentive 
Program. We anticipate finalizing the list of 2012 Physician Quality 
Reporting System registries by Summer 2012.
    For eligible professionals considering this reporting mechanism, we 
point out that even though a registry is listed as

[[Page 73322]]

``qualified,'' we cannot guarantee or assume responsibility for the 
registry's successful submission of the required Physician Quality 
Reporting System quality measures results or measures group results or 
required data elements submitted on behalf of a given eligible 
professional.
    We invited public comments on the proposed requirements to be 
considered a qualified registry for purposes of the 2012 Physician 
Quality Reporting System. We also sought comment on disallowing 
previously-qualified registries from submitting data on Physician 
Quality Reporting System quality measures in future years if it is 
found that the data the registries provide are found to be 
significantly inaccurate (76 FR 42845). The following is a summary of 
the comments received regarding those proposals.
    Comment: One commenter supported our proposal to have registries 
and EHRs (including both direct EHR-based reporting and EHR data 
submission vendors) provide at least two feedback reports throughout 
the year to participating eligible professionals, if technically 
feasible.
    Response: We appreciate the commenter's support and are finalizing 
this requirement.
    Comment: One commenter sought clarification on the terms ``needed 
data elements.''
    Response: The type of data we are referring to is the same type of 
data we required in prior years; however, the specific data elements 
will be addressed in subsequent guidance. We anticipate that the data 
elements will be similar to the elements contained within the 2011 
Physician Quality Reporting System Registry XML Specifications which 
are posted on the PQRS section of the CMS Web site at http://www.cms.gov/PQRS/20_AlternativeReportingMechanisms.asp#TopOfPage. This 
information is made available within 4-6 weeks of the publication of 
this final rule to allow interested vendors the opportunity to evaluate 
their systems for the needed functionality and implement any new 
capabilities as needed.
    Comment: One commenter was opposed to our requirement that 
registries qualified for 2012 only report on Medicare Part B FFS 
patients.
    Response: We appreciate the commenter's feedback. However, as the 
Physician Quality Reporting System is a Medicare program, we would like 
to concentrate the data we collect on data that assesses the quality of 
care our beneficiaries receive. Furthermore, since we can only receive 
data on Medicare beneficiaries via claims, which is another reporting 
mechanism we are finalizing for 2012 and beyond, and we are interested 
in collecting the same type of data throughout each reporting 
mechanism, we are finalizing the requirement that registries only 
report on Medicare Part B FFS patients.
    Comment: One commenter was opposed to our proposed vetting 
timelines to qualify registries for the 2012 Physician Quality 
Reporting System. The commenter urged us to accelerate the 
qualification process for registries.
    Response: We appreciate the commenter's feedback. However, we must 
allow sufficient time after the publication of the qualification 
requirements in this final rule with comment period for vendors to 
decide if they wish to participate in the Physician Quality Reporting 
System and become qualified. After self-nomination, we attempt to allow 
ample time for vendors to submit test files and resubmit them if their 
first submission is unacceptable. We would like to give every 
interested vendor as much time to qualify as is possible without 
delaying the dissemination of this information (who is a qualified 
vendor) to eligible professionals who may wish to use one of these 
systems or vendors to participate in the Physician Quality Reporting 
System.
    Comment: Some commenters urged us to post the list of qualified 
registries for the Physician Quality Reporting System prior to the 
start of the respective program year. Some commenters also asked that 
we post cost information. Commenters believed that providing the list 
of registries earlier, as well as posting cost information, would help 
eligible professionals make a more informed decision with respect to 
purchasing registries.
    Response: We understand that it would benefit eligible 
professionals to have the list of qualified 2012 Physician Quality 
Reporting System registries available earlier. However, due to the time 
it takes to vet registries for qualification for the Physician Quality 
Reporting System, we anticipate that we will not be able to post the 
list of qualified registries prior to the start of the respective 
program year. However, we will make every effort to post the list of 
qualified registries for each respective year as soon as possible. With 
respect to posting registry cost information, upon further 
consideration, we are not posting cost information with our list of 
qualified registries.
    Comment: Although several commenters supported our proposal to add 
a the new EHR data submission vendor classification, several commenters 
opposed our proposal to limit entities that may qualify as both a 
registry and EHR data submission vendor to a single role such that the 
entity would need to decide whether it wants to serve as a registry or 
EHR data submission vendor but not both. These commenters stated that 
these entities should be allowed to qualify as both qualified 
registries and qualified EHR data submission vendors.
    Response: We appreciate the commenters' feedback and understand 
that some entities who believe they fulfill the qualification 
requirements for both registries and EHR data submission vendors desire 
to be qualified for reporting under the Physician Quality Reporting 
System as both. However, we believe this requirement is necessary to 
separate vendors qualifying as registries and EHR data submission 
vendors, and therefore, we are finalizing this requirement.
    Comment: One commenter supported the idea of disqualifying 
registries that submit inaccurate data in future program years. 
Although one commenter was not opposed to disqualifying registries that 
submit inaccurate information in future program years, the commenter 
noted that we should allow for reporting errors that are outside a 
registry's control.
    Response: We are aware of many of the issues registries encounter 
during the collection of data they receive from the eligible 
professionals for whom they provide services. However, we do, as part 
of its vetting process, require registries to attest to the accuracy of 
their data and have a validation process in place to ensure the data is 
complete and accurate. As we move towards implementing the Value-Based 
Modifier, the collection of accurate data will become increasingly 
important. We anticipate adopting in future rulemaking the option of 
disqualifying a registry from future Physician Quality Reporting System 
reporting if their data is inaccurate for future years of the program. 
Details about this option, including the basis for disqualifying a 
registry for submission of inaccurate data, will be addressed in future 
rulemaking.
    Based on the comments received and for the reasons explained 
previously, we are finalizing the proposed requirements that registries 
must complete in order to be ``qualified'' for 2012. Although we 
proposed the use of a web-based tool, but it has not yet been developed 
to handle self-nomination requests; therefore, we are finalizing 
submission of this self-nomination statement via a letter to CMS.
    As we indicated, we anticipate finalizing the list of 2012 
Physician

[[Page 73323]]

Quality Reporting System registries by Summer 2012. We understand that 
it would benefit eligible professionals to have the list of qualified 
2012 Physician Quality Reporting System registries available earlier. 
However, due to the time it takes to vet these registries, we may not 
be able to finalize and post the list of 2012 Physician Quality 
Reporting System registries until Summer 2012.
(3) EHR-Based Reporting
    For 2012 and beyond, we proposed (76 FR 42846) that eligible 
professionals who choose to participate in the Physician Quality 
Reporting System via the EHR-based reporting mechanism have the option 
of submitting quality measure data obtained from their Physician 
Quality Reporting System qualified EHR to CMS either: (1) Directly from 
his or her qualified EHR, in the CMS-specified manner, or (2) 
indirectly from a qualified EHR data submission vendor (on the eligible 
professional's behalf), in the CMS-specified manner. We invited but 
received no public comments on our proposal to allow for EHR-based 
reporting for 2012 and beyond via a qualified direct EHR-based 
reporting or qualified EHR data submission vendor. Therefore, we are 
finalizing our proposal to allow eligible professionals to submit 
quality measure data obtained from their Physician Quality Reporting 
System qualified EHR to CMS either: (1) Directly from his or her 
qualified EHR, in the CMS-specified manner or (2) indirectly from a 
qualified EHR data submission vendor (on the eligible professional's 
behalf), in the CMS-specified manner.
(A) Direct EHR-Based Reporting
(i) Requirements for the Direct EHR-Based-Reporting Mechanism--
Individual Eligible Professionals
    For 2012 and beyond, we proposed to retain the EHR-based reporting 
mechanism via a qualified EHR (as defined in section VI.F.1.d.(3).(b)) 
for the purpose of satisfactorily reporting Physician Quality Reporting 
System quality measures. We proposed the following requirements for 
individual eligible professionals associated with EHR-based reporting: 
(1) Selection of a Physician Quality Reporting System qualified EHR 
product and (2) submission of Medicare clinical quality data extracted 
from the EHR directly to CMS, in the CMS-specified manner.
    We proposed (76 FR 42846) that, in addition to meeting the 
appropriate criteria for satisfactory reporting of individual measures 
for the 2012 Physician Quality Reporting System EHR reporting option, 
eligible professionals who choose the EHR-based reporting mechanism for 
the 2012 Physician Quality Reporting System would be required to have a 
Physician Quality Reporting System qualified EHR product. We understand 
that eligible professionals may have purchased Certified EHR Technology 
for purposes of reporting under the Medicare and Medicaid EHR Incentive 
Programs. Such Certified EHR Technology may or may not be qualified for 
purposes of the 2012 Physician Quality Reporting System. Eligible 
professionals would need to ensure that their Certified EHR Technology 
is also qualified for purposes of the 2012 Physician Quality Reporting 
System to participate in the Physician Quality Reporting System via the 
EHR-based reporting mechanism for 2012.
    For 2012, we proposed to modify the current list of EHR vendors 
qualified under the Physician Quality Reporting System to indicate 
which of the qualified vendors' products have also received a 
certification for the purposes of the EHR Incentive Programs.
    We invited public comment on the 2012 proposed qualifications for 
direct EHR-based reporting. The following is a summary of the comments 
we received regarding these proposals.
    Comment: Some commenters were opposed to our requirement that 
Certified EHR Technology must also be qualified for purposes of 
reporting 2012 Physician Quality Measures. Therefore, one commenter 
opposed all requirements for EHR qualification that did not align with 
the requirements for Certified EHR Technology. One commenter stated 
that eligible professionals should not have the added burden of having 
to determine which Certified EHR Technology systems are also qualified 
for purposes of reporting 2012 Physician Quality Reporting System 
measures.
    Response: We appreciate the commenters' feedback. However, at this 
time, it is not technically feasible to automatically qualify Certified 
EHR Technology to report 2012 Physician Quality Reporting System 
measures. As we stated in the proposed rule (76 FR 42846), the 
certification process for EHR technology does not test the EHR 
product's ability to output a file that meets the Physician Quality 
Reporting System measures file specifications. We are currently 
exploring ways to further align these two programs' reporting 
requirements for future years so that Certified EHR Technology may be 
used to satisfy both the Medicare EHR Incentive Program and the 
Physician Quality Reporting System without any additional testing.
    For the reasons stated previously, we are finalizing these 
requirements for individual eligible professionals choosing the direct 
EHR-based reporting-based reporting mechanism. We anticipate that 
testing for qualified direct EHR-based reporting products will occur in 
late 2012, immediately followed by the submission of the eligible 
professional's actual 2012 Physician Quality Reporting System data in 
early 2013. This entire final test/production data submission timeframe 
for 2012 is expected to be December 2012 through February 2013. We are 
currently vetting newly self-nominated EHR vendor products for possible 
qualification for the 2012 Physician Quality Reporting System program 
year. Similar to prior years, we expect to list the 2012 Physician 
Quality Reporting System qualified EHR products by January 2012.
(ii) 2012 Qualification Requirements for Direct EHR-Based Reporting 
Products
    For EHR-based reporting products to be qualified to be used to 
directly report 2012 Physician Quality Reporting System quality 
measures data on behalf of eligible professionals, we proposed (76 FR 
42846) that a test of quality data submission from eligible 
professionals who wish to report 2012 quality measure data directly 
from their qualified EHR product would be required.
    For EHR-based reporting vendors wishing to qualify EHR products for 
participation in the 2012 Physician Quality Reporting System-Medicare 
Incentive Pilot for the Medicare EHR Incentive Program (discussed in 
section VI.H. of this final rule with comment period), we proposed (76 
FR 42846) a separate, accelerated vetting process for EHR vendors and 
their products. This vetting process would be the same process as the 
vetting process for EHR vendor products for the 2012 Physician Quality 
Reporting System that is currently underway. We will begin the vetting 
process for these additional EHR vendors and their products in the 
beginning of 2012 and anticipate that the vetting process be completed 
by Summer/Fall 2012.
    We further proposed that any EHR vendor interested in having one or 
more of their products being ``qualified'' to submit quality data 
extracted from an EHR to CMS on eligible professionals' behalf for the 
2012 Physician Quality Reporting System would be required to self-
nominate. We anticipate that the self-nomination deadline will occur no 
later than December 31, 2011. We

[[Page 73324]]

expect to post instructions for self-nomination by the 4th quarter of 
CY 2011 on the Physician Quality Reporting System section of CMS Web 
site.
    We invited public comment on the proposed 2012 qualification 
requirements for EHR products capable of directly reporting. The 
following is a summary of the comments we received regarding this 
proposal.
    Comment: One commenter was opposed to our proposed vetting 
timelines to qualify EHRs for the 2012 Physician Quality Reporting 
System. The commenter urged us to accelerate the process to qualify EHR 
systems.
    Response: We appreciate the commenter's feedback. However, we must 
allow sufficient time after the publication of the qualification 
requirements in this final rule with comment period for vendors to 
decide if they wish to participate in the Physician Quality Reporting 
System and become qualified. After self-nomination, we attempt to allow 
ample time for vendors to submit test files and resubmit them if their 
first submission is unacceptable. We would like to give every 
interested vendor as much time to qualify as is possible without 
delaying the dissemination of this information (who is a qualified 
vendor) to eligible professionals who may wish to use one of these 
systems or vendors to participate in the Physician Quality Reporting 
System.
    Comment: Some commenters urged us to align our EHR qualification 
requirements with the requirements needed to become Certified EHR 
Technology under the EHR Incentive Program.
    Response: We agree with the recommendation to align the EHR 
Incentive Program with the Physician Quality Reporting System, 
particularly with respect to reporting clinical quality measure results 
under the Physician Quality Reporting System-Medicare EHR Incentive 
Pilot discussed in the following section VI.H. of this final rule with 
comment period. We are also exploring ways to align the format for 
receiving the measures data used by both programs.
    Comment: One commenter was opposed to all qualification 
requirements for EHRs (including both direct EHR-based reporting and 
EHR data submission vendors) that exceed the requirements to become 
Certified EHR Technology (which is the EHR technology used in the EHR 
Incentive Program).
    Response: We are unsure of the specific objection the commenter is 
expressing with respect to EHR requirements. CMS only requires EHR 
vendors who desire to have their products directly submit quality 
measure data to CMS for the Physician Quality Reporting System to 
undergo a vetting and testing process in order to determine if the 
product(s) can properly directly submit data to CMS. This testing 
process will help to provide more certainty for an eligible 
professional who is relying on their software to participate in the 
Physician Quality Reporting System. Without this testing, we believe 
there would be a risk of a given product not being able to export the 
quality data in the format that CMS can receive and process it.
    Based on the comments received and for the reasons stated above, we 
are finalizing the qualification requirements as proposed for direct 
EHR products.
(B) EHR Data Submission Vendors
(i) Requirements for the EHR Data Submission Vendor-Based Reporting 
Mechanism--Individual Eligible Professionals
    For 2012 and beyond, we proposed (76 FR 42846) a second EHR-based 
reporting mechanism via a qualified EHR data submission vendor (as 
defined in 42 CFR 414.90(b)) for the purpose of satisfactorily 
reporting Physician Quality Reporting System quality measures. We 
proposed the following requirements for individual eligible 
professionals associated with indirect EHR-based reporting-based 
reporting: (1) Selection of a Physician Quality Reporting System 
qualified EHR data submission vendor and (2) submission of Medicare 
clinical quality data extracted from the EHR to a qualified ``EHR data 
submission vendor'' (which may include some current registries, EHR 
vendors, and other entities that are able to receive and transmit 
clinical quality data extracted from an EHR) to CMS, in the CMS-
specified manner. For eligible professionals who choose to 
electronically submit Medicare clinical quality data extracted from 
their EHR to a qualified EHR data submission vendor, the EHR data 
submission vendor would then submit the Physician Quality Reporting 
System measures data to CMS in a CMS-specified manner on the eligible 
professional's behalf for the respective program year.
    For 2012, we proposed that in order for an eligible professional to 
submit Medicare clinical quality data extracted from his or her EHR to 
CMS via an EHR data submission vender, the eligible professional must 
enter into and maintain an appropriate legal arrangement with a 
qualified 2012 EHR data submission vendor that is capable of receiving 
and transmitting Medicare clinical quality data extracted from an EHR. 
Such arrangements would provide for the EHR data submission vendor's 
receipt of beneficiary-specific data from the eligible professional and 
the EHR data submission vendor's disclosure of the beneficiary-specific 
data on behalf of the eligible professional to CMS. Thus, the EHR data 
submission vendor would act as a Health Insurance Portability and 
Accountability Act of 1996 (Pub. L. 104-191) (HIPAA) Business Associate 
and agent of the eligible professional. Such agents are referred to as 
``EHR data submission vendors.'' The ``EHR data submission vendors'' 
would have the requisite legal authority to provide beneficiary-
specific data on the 2012 Physician Quality Reporting System EHR 
measures on behalf of the eligible professional to CMS for the 
Physician Quality Reporting System.
    We also proposed that eligible professionals choosing to 
participate in the 2012 Physician Quality Reporting System through the 
EHR-based reporting mechanism via an EHR data submission vendor for 
2012 must select a qualified Physician Quality Reporting System EHR 
data submission vendor and submit information on Physician Quality 
Reporting System EHR measures to the selected EHR data submission 
vendor in the form and manner, and by the deadline specified by the EHR 
data submission vendor.
    We invited but received no public comments on the proposed 
requirements for individual eligible professionals using EHR data 
submission vendors to submit Physician Quality Reporting System quality 
measures data. Therefore, we are finalizing the 2012 qualification 
requirements as proposed for individual eligible professionals using 
EHR data submission vendors to submit Physician Quality Reporting 
System quality measures data.
    We will also be vetting those self-nominated EHR data submission 
vendors for possible qualification to submit 2012 Physician Quality 
Reporting System measures on eligible professionals' behalf under the 
EHR-based reporting mechanism. We expect to list the entities that are 
EHR data submission vendors qualified to submit 2012 Physician Quality 
Reporting System EHR measures on eligible professionals' behalf by mid-
2012.
    Please note that we cannot assume responsibility for the successful 
submission of data from eligible professionals' EHRs. In addition, 
eligible professionals who decide to submit the Physician Quality 
Reporting System measures directly from his or

[[Page 73325]]

her EHR should begin attempting submission soon after the opening of 
the clinical data warehouse in order to assure the eligible 
professional has a reasonable period of time to work with his or her 
EHR and/or its vendors to correct any problems that may complicate or 
preclude successful quality measures data submission through that EHR.
(ii) 2012 Qualification Requirements for EHR Data Submission Vendors
    Similar to our 2012 qualification requirements for vendors that 
provide EHR products that are qualified as being capable of directly 
reporting, we proposed that qualified EHR data submission vendors that 
wish to submit 2012 quality measures data obtained from an eligible 
professional's qualified EHR product to CMS on the eligible 
professional's behalf would have to meet certain 2012 qualification 
requirements, explained in detail the proposed rule (76 FR 42847).
    We invited public comment on the proposed qualification 
requirements on the 2012 for EHR data submission vendors who wish to 
submit Physician Quality Reporting System quality measures data. Please 
note that some of the issues raised by commenters regarding the 2012 
qualification requirements for registries, which were addressed 
previously, were similar or the same as those raised about the 
qualification requirements for EHR data submission vendors. Therefore, 
we addressed many of those issues previously. The following is a 
summary of the comments we received regarding these ERH data submission 
vendor proposals.
    Comment: One commenter was opposed to our proposed timelines to 
qualify EHRs for the 2012 Physician Quality Reporting System. The 
commenter urged that we accelerate the process to qualify EHRs for the 
2012 Physician Quality Reporting System to provide earlier notice to 
eligible professionals as to which EHR vendors have been qualified.
    Response: We appreciate the commenter's feedback. However, we must 
allow sufficient time after the publication of the qualification 
requirements in this final rule with comment period for vendors to 
decide if they wish to participate in the Physician Quality Reporting 
System and become qualified. After self-nomination, we attempt to allow 
ample time for vendors to submit test files and resubmit them if their 
first submission is unacceptable. We would like to give every 
interested vendor as much time to qualify as is possible without 
delaying the dissemination of this information (who is a qualified 
vendor) to eligible professionals who may wish to use one of these 
systems or vendors to participate in the Physician Quality Reporting 
System.
    Comment: Some commenters urged us to align our EHR qualification 
requirements (for both direct EHR-based reportingand EHR data 
submission vendors) with the requirements needed to become Certified 
EHR Technology under the EHR Incentive Program.
    Response: We agree with the recommendation to align the EHR 
Incentive Program with the Physician Quality Reporting System, 
particularly with respect to reporting clinical quality measure results 
under the Physician Quality Reporting System-Medicare EHR Incentive 
Pilot discussed in section VI.F.4. of this final rule with comment 
period. We are also exploring ways to align the format for receiving 
the measures data used by both programs.
    Based on the comments received and for the reasons stated above, we 
are finalizing the 2012 qualification requirements as proposed for EHR 
data submission vendors who wish to submit Physician Quality Reporting 
System quality measures data.
    EHR data submission vendors that wish to submit 2012 quality 
measures data obtained from an eligible professional's EHR product to 
CMS on the eligible professional's behalf must submit test data in late 
2012 followed by the submission of the eligible professional's actual 
2012 Physician Quality Reporting System data in early 2013.
    For data submission vendors wishing to qualify for participation in 
the 2012 Physician Quality Reporting System-Medicare Incentive Pilot 
for the Medicare EHR Incentive Program (discussed in section VI.H. of 
this final rule with comment period), these data submission vendors 
must undergo a separate, accelerated vetting process for EHR data 
submission vendors. Although the requirements for becoming a qualified 
EHR data submission vendor are different than becoming a qualified EHR 
product for direct EHR-based reporting, the vetting process will be the 
same process as the vetting process for EHR vendor products for the 
2012 Physician Quality Reporting System that is currently underway. We 
will begin the vetting process for these EHR data submission vendors in 
the beginning of 2012 and anticipate that the vetting process will be 
completed by Summer/Fall 2012.
    Any EHR data submission vendor interested in being ``qualified'' to 
submit quality data extracted from an EHR to CMS on eligible 
professionals' behalf for the 2012 Physician Quality Reporting System 
is required to self-nominate. We anticipate that the self-nomination 
deadline will occur no later than December 31, 2011. We expect to post 
instructions for self-nomination by the 4th quarter of CY 2011 on the 
Physician Quality Reporting System section of CMS Web site.
    EHR data submission vendors who wish to submit 2012 Physician 
Quality Reporting System quality measure data must also meet the 
following qualification requirements:
     Not be in a beta test form.
     Be in existence as of January 1, 2012
     Have at least 25 active users.
     Participate in ongoing Physician Quality Reporting 
mandatory support conference calls hosted by CMS (approximately one 
call per month). Failure to attend more than one call per year would 
result in the removal of the EHR data submission vendor from the 2012 
EHR qualification process.
     Have access to the identity management system specified by 
CMS (such as, but not limited to, the Individuals Authorized Access to 
CMS Computer Systems, or IACS) to submit clinical quality data 
extracted to a CMS clinical data warehouse.
     Submit a test file containing dummy Medicare clinical 
quality data to a CMS clinical data warehouse via an identity 
management system specified by CMS during a timeframe specified by CMS. 
In 2011, the requirement to submit a test file could have contained 
real or dummy data. However, for privacy reasons, we have decided to 
only provide for the submission of test files containing dummy data. We 
have finalized revisions to 42 CFR 414.90 to reflect this change.
     Submit a file containing the eligible professional's 2012 
Physician Quality Reporting System Medicare clinical quality data 
extracted from the EHR for the entire 12-month reporting period via the 
CMS-specified identify management system during the timeframe specified 
by us in early 2013.
     Provide at least 1 feedback report, based on the data 
submitted to them for the 2012 Physician Quality Reporting System 
incentive reporting period, but if technically feasible, provide at 
least 2 feedback reports throughout the year to participating eligible 
professionals.
     Be able to collect all needed data elements and transmit 
to CMS the data at the beneficiary level.
     Be able to separate out and report on Medicare Part B FFS 
patients.

[[Page 73326]]

     Provide the measure numbers for the quality measures on 
which the data submission vendor is reporting.
     Be able to transmit this data in a CMS-approved XML format 
utilizing a Clinical Document Architecture (CDA) standard such as 
Quality Reporting Data Architecture (QRDA).
     Comply with a CMS-specified secure method for data 
submission, such as submitting the EHR data submission vendor's data in 
an XML file through an identity management system specified by CMS or 
another approved method, such as use of appropriate Nationwide Health 
Information Network specifications, if technically feasible.
     Enter into and maintain with its participating 
professionals an appropriate Business Associate agreement that provides 
for the data submission vendor's receipt of patient-specific data from 
the eligible professionals, as well as the data submission vendor's 
disclosure of patient-specific data on Medicare beneficiaries on behalf 
of eligible professionals who wish to participate in the Physician 
Quality Reporting System.
     Obtain and keep on file signed documentation that each 
holder of an NPI whose data are submitted to the data submission vendor 
has authorized the data submission vendor to submit patient-specific 
data on Medicare beneficiaries to CMS for the purpose of Physician 
Quality Reporting System participation. This documentation must be 
obtained at the time the eligible professional signs up with the data 
submission vendor to submit Physician Quality Reporting System quality 
measures data to the data submission vendor and must meet any 
applicable laws, regulations, and contractual business associate 
agreements.
     Provide CMS access (upon request for health oversight 
purposes like validation) to review the Medicare beneficiary data on 
which 2012 Physician Quality Reporting System EHR-based submissions are 
founded or provide to CMS a copy of the actual data (upon request).
     Provide CMS a signed, written attestation statement via 
mail or email which states that the quality measure results and any and 
all data including numerator and denominator data provided to CMS are 
accurate and complete.
     Use Physician Quality Reporting System measure 
specifications and the CMS provided measure calculation algorithm, or 
logic, to calculate reporting rates or performance rates unless 
otherwise stated. CMS will provide EHR data submission vendors a 
standard set of logic to calculate each measure and/or measures group 
they intend to report in 2012.
     Provide a calculated result using the CMS supplied measure 
calculation logic and XML file for each measure that the EHR data 
submission vendor intends to calculate. The data submission vendors 
will be required to show that they can calculate the proper measure 
results (that is, reporting and performance rates) using the CMS-
supplied logic and send the calculated data back to CMS in the 
specified format.
    For EHR data submission vendors participating in the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot for 2012 
(discussed in section VI.H. of this final rule with comment period) and 
wish to also submit Medicare clinical quality data extracted from an 
EHR for the purposes of the 2012 Physician Quality Reporting System 
incentive, these EHR data submission vendors must meet the following 
requirements in addition to the requirements stated previously:
     Be able to collect all needed data elements and transmit 
to CMS the data at the TIN/NPI level.
     Be able to calculate and submit measure-level reporting 
rates or, upon request, the data elements needed to calculate the 
reporting rates by TIN/NPI.
     Be able to calculate and submit, by TIN/NPI, a performance 
rate (that is, the percentage of a defined population who receive a 
particular process of care or achieve a particular outcome based on a 
calculation of the measure's numerator and denominator specifications) 
for each measure on which the TIN/NPI reports or, upon request the 
Medicare beneficiary data elements needed to calculate the reporting 
rates.
     Report the number of eligible instances (reporting 
denominator).
     Report the number of instances a quality service is 
performed (reporting numerator).
     Report the number of performance exclusions, meaning the 
quality action was not performed for a valid reason as defined by the 
measure specification.
     Report the number of reported instances, performance not 
met (eligible professional receives credit for reporting, not for 
performance), meaning the quality action was not performed for no valid 
reason as defined by the measure specification.
     Be able to transmit this data in a CMS-approved XML 
format.
     Submit an acceptable ``validation strategy'' to CMS by 
March 31, 2012. A validation strategy ascertains whether eligible 
professionals have submitted accurately and on at least the minimum 
number (80 percent) of their eligible patients, visits, procedures, or 
episodes for a given measure, which, as described in section 
VI.F.1.e.2. of this final rule with comment period, is the minimum 
percentage of patients on which an eligible professional must report on 
any given measure. Acceptable validation strategies often include such 
provisions as the EHR data submission vendor being able to conduct 
random sampling of their participant's data, but may also be based on 
other credible means of verifying the accuracy of data content and 
completeness of reporting or adherence to a required sampling method.
     Perform the validation outlined in the strategy and send 
the results to CMS by June 30, 2013 for the 2012 reporting year's data.
     Enter into and maintain with its participating 
professionals an appropriate Business Associate agreement that provides 
for the data submission vendor's receipt of patient-specific data from 
the eligible professionals, as well as the data submission vendor's 
disclosure of quality measure results and numerator and denominator 
data on Medicare beneficiaries on behalf of eligible professionals who 
wish to participate in the Physician Quality Reporting System.
     Obtain and keep on file signed documentation that each 
holder of an NPI whose data are submitted to the data submission vendor 
has authorized the data submission vendor to submit quality measure 
results and numerator and denominator data on Medicare beneficiaries to 
CMS for the purpose of Physician Quality Reporting System 
participation. This documentation must be obtained at the time the 
eligible professional signs up with the data submission vendor to 
submit Physician Quality Reporting System quality measures data to the 
data submission vendor and must meet any applicable laws, regulations, 
and contractual business associate agreements.
     Use Physician Quality Reporting System measure 
specifications and the CMS provided measure calculation algorithm, or 
logic, to calculate reporting rates or performance rates unless 
otherwise stated.
     Provide a calculated result using the CMS supplied measure 
calculation logic and XML file for each measure that the EHR data 
submission vendor intends to calculate. The data submission vendors are 
required to show that they can calculate the proper measure results 
(that is, reporting and performance rates) using the CMS-supplied logic 
and send the calculated data back to CMS in the specified format.

[[Page 73327]]

    For 2012, the EHR data submission vendor must submit clinical 
quality data on Medicare beneficiaries extracted from eligible 
professionals' EHRs to our designated database for the Physician 
Quality Reporting System using a CMS-specified record layout, which 
will be provided to the EHR data submission vendor by CMS. In addition, 
for purposes of also reporting 2012 Physician Quality Reporting System 
quality measures, the EHR data submission vendor must to submit patient 
level Medicare clinical quality data extracted from the eligible 
professional's EHR using the same CMS-specified record layout that 
qualified EHR products must be able to produce for purposes of an 
eligible professional directly submitting the 2012 Physician Quality 
Reporting System EHR measures to CMS.
(C) Qualification Requirements for Direct EHR-Based Reporting Data 
Submission Vendors and Their Products for the 2013 Physician Quality 
Reporting System
    As in prior years, unlike the qualification process for registries, 
EHR vendors, which include vendors that provide EHR products that 
qualify for direct EHR-based reporting and EHR data submission vendors, 
are tested for qualification a year ahead of the program year in which 
the EHR vendor intends to submit Physician Quality Reporting System 
quality measures on behalf of individual eligible professionals or 
where its product(s) are available for use by eligible professionals to 
submit Physician Quality Reporting System measures directly to CMS.
    We proposed EHR vendor testing for the 2013 Physician Quality 
Reporting System program year to qualify new EHR vendors and EHR data 
submission vendors and their EHR products for submission of Medicare 
beneficiary quality data extracted from EHR products to the CMS 
Medicare clinical quality data warehouse for the 2013 Physician Quality 
Reporting System.
    In order for EHR vendors to be qualified to report 2013 Physician 
Quality Reporting System data to CMS, we proposed that EHR vendors 
would be required to meet the following requirements:
     Not be in a beta test form.
     Be in existence as of January 1, 2012.
     Have at least 25 active users.
     Participate in ongoing Physician Quality Reporting 
mandatory support conference calls hosted by CMS (approximately one 
call per month). Failure to attend more than one call per year would 
result in the removal of the EHR data submission vendor from the 2012 
EHR qualification process.
     Indicate the reporting option the vendor seeks to qualify 
for its users to submit in addition to individual measures.
     Have access to the identity management system specified by 
CMS (such as, but not limited to, the Individuals Authorized Access to 
CMS Computer Systems, or IACS) to submit Medicare clinical quality data 
extracted to a CMS clinical data warehouse.
     Submit a test file containing dummy Medicare clinical 
quality data to a CMS clinical data warehouse via an identity 
management system specified by CMS during a timeframe specified by CMS. 
In 2011, the requirement to submit a test file could have contained 
real or dummy data. However, for privacy reasons, we have decided to 
only provide for the submission of test files containing dummy data. We 
proposed revisions to 42 CFR 414.90 to reflect this change.
     Submit a file containing the eligible professional's 2012 
Physician Quality Reporting System Medicare clinical quality data 
extracted from the EHR for the entire 12-month reporting period via the 
CMS-specified identify management system during the timeframe specified 
by us in early 2013.
     Provide at least 1 feedback report, based on the data 
submitted to them for the 2012 Physician Quality Reporting System 
incentive reporting period, and if technically feasible, provide at 
least two feedback reports throughout the year to participating 
eligible professionals.
     Be able to collect all needed data elements and transmit 
to CMS the data at the beneficiary level.
     Be able to separate out and report on Medicare Part B FFS 
patients.
     Provide the measure numbers for the quality measures on 
which the data submission vendor is reporting.
     Be able to transmit this data in a CMS-approved XML format 
utilizing a Clinical Document Architecture (CDA) standard such as 
Quality Reporting Data Architecture (QRDA).
     Comply with a CMS-specified secure method for data 
submission, such as submitting the EHR vendor's data in an XML file 
through an identity management system specified by CMS or another 
approved method, such as use of appropriate Nationwide Health 
Information Network specifications, if technically feasible.
     Enter into and maintain with its participating 
professionals an appropriate Business Associate agreement that provides 
for the data submission vendor's receipt of patient-specific data from 
the eligible professionals, as well as the data submission vendor's 
disclosure of patient-specific data on Medicare beneficiaries on behalf 
of eligible professionals who wish to participate in the Physician 
Quality Reporting System.
     Obtain and keep on file signed documentation that each 
holder of an NPI whose data are submitted to the data submission vendor 
has authorized the data submission vendor to submit patient-specific 
data on Medicare beneficiaries to CMS for the purpose of Physician 
Quality Reporting System participation. This documentation must be 
obtained at the time the eligible professional signs up with the data 
submission vendor to submit Physician Quality Reporting System quality 
measures data to the data submission vendor and must meet any 
applicable laws, regulations, and contractual business associate 
agreements.
     Provide CMS access (upon request for health oversight 
purposes like validation) to review the Medicare beneficiary data on 
which 2012 Physician Quality Reporting System EHR-based submissions are 
founded or provide to CMS a copy of the actual data (upon request).
     Provide CMS a signed, written attestation statement via 
mail or email which states that the quality measure results and any and 
all data including numerator and denominator data provided to CMS are 
accurate and complete.
     Use Physician Quality Reporting System measure 
specifications and the CMS provided measure calculation algorithm, or 
logic, to calculate reporting rates or performance rates unless 
otherwise stated. CMS would provide EHR vendors a standard set of logic 
to calculate each measure and/or measures group they intend to report 
in 2012.
     Provide a calculated result using the CMS supplied measure 
calculation logic and XML file for each measure that the EHR vendor 
intends to calculate. The data submission vendors would be required to 
show that they can calculate the proper measure results (that is, 
reporting and performance rates) using the CMS-supplied logic and send 
the calculated data back to CMS in the specified format.
    This is the same self-nomination process described in the 
``Requirements for Electronic Health Record (EHR) Vendors to 
Participate in the 2012 Physician Quality Reporting System EHR 
Program,'' posted on the Physician Quality Reporting System section of 
the CMS Web site at http://www.cms.gov/

[[Page 73328]]

PQRS/20--AlternativeReportingMechanisms.aspTopOfPage. For 
2013, we proposed that these requirements would apply not only for the 
purpose of a vendor's EHR product being qualified so that the product's 
users may submit 2013 Medicare beneficiary data extracted from the EHR 
for the 2013 Physician Quality Reporting System in 2014, but also for 
the purpose of a vendor's EHR product being qualified to electronically 
submit Medicare beneficiary data extracted from the EHR for reporting 
the electronic prescribing measure for the eRx Incentive Program 2013 
incentive and 2014 payment adjustment. Similarly, we proposed that 
these requirements would apply not only for the purposes of an EHR data 
submission vendor being qualified to submit 2013 Medicare beneficiary 
data from eligible professionals' EHRs for the 2013 Physician Quality 
Reporting System in 2014 but also for the purpose of an EHR data 
submission vendor being qualified to electronically submit Medicare 
beneficiary data extracted from the EHR for reporting the electronic 
prescribing measure for the eRx Incentive Program 2013 incentive and 
2014 payment adjustment.
    We also proposed that if an EHR vendor misses more than one 
mandatory support call or meeting, the vendor and their product and/or 
EHR data submission vendor would be disqualified for the Physician 
Quality Reporting System reporting year, which is covered by the call.
    For the 2013 Physician Quality Reporting System, we proposed that 
previously qualified and new vendors and/or EHR data submission vendors 
would need to incorporate any new EHR measures (that is, 
electronically-specified measures), as well as update their electronic 
measure specifications and data transmission schema should either or 
both change, finalized for the Physician Quality Reporting System for 
2013 if they wish to maintain their Physician Quality Reporting System 
qualification.
    We invited public comment related to our proposed qualification 
requirements for EHR direct and data submission vendors and their 
products for the 2013 Physician Quality Reporting System. The comments 
received regarding this proposal have been addressed previously.
    Based on the comments received and for the reasons previously 
stated, we are finalizing the qualification requirements for EHR direct 
and data submission vendors and their products for the 2013 Physician 
Quality Reporting System.
    Any EHR vendor interested in having one or more of their EHR 
products ``qualified'' to submit quality data extracted from their EHR 
products to the CMS Medicare clinical quality data warehouse for the 
2013 Physician Quality Reporting System must submit their self-
nomination statement by January 31, 2012. Whereas, in prior program 
years, EHR vendors have submitted self-nomination statements via mail, 
we proposed to have EHR vendors submit self-nomination statements via a 
web-based tool, if technically feasible for us to develop such a tool. 
However, at this time, it is not technically feasible to collect self-
nomination statements via a web-based tool. Therefore, as we proposed 
as an alternative, we will accept self-nomination statements from EHR 
vendors that wish to be qualified for the 2013 Physician Quality 
Reporting System via email. We expect to post instructions for 
submitting the self-nomination statement and the 2013 EHR vendor 
requirements in the 4th quarter of CY 2011. Specifically, for the 2013 
Physician Quality Reporting System, in order to ensure EHR vendors' 
interest in participating in the 2013 Physician Quality Reporting 
System, only EHR vendors that self-nominate by January 31, 2012 to 
participate in the EHR Program testing during calendar year 2012 will 
be considered qualified EHR vendors for the 2013 Physician Quality 
Reporting System.
e. Incentive Payments for the 2012 Physician Quality Reporting System
    In accordance with 42 CFR 414.90(c)(3), eligible professionals that 
satisfactorily report 2012 Physician Quality Reporting System measures 
can qualify for an incentive equal to 0.5 percent of the total 
estimated part B allowed charges for all covered professional services 
furnished by the eligible professional (or, in the case of a group 
practice participating in the GPRO, the group practice) during the 
applicable reporting period. We proposed (76 FR 42850) modifying the 
incentive payment language in 42 CFR 414.90(c) so that the language is 
more consistent with section 1848 of the Act. We are finalizing this 
proposal. We are also making technical changes to renumber the clauses 
under 42 CFR 414.90(c).
(1) Criteria for Satisfactory Reporting of Individual Quality Measures 
for Individual Eligible Professionals via Claims
    Section 1848(m)(3)(A) of the Act established the criteria for 
satisfactorily submitting data on individual quality measures as 
submitting data on at least three measures in at least 80 percent of 
the cases in which the measure is applicable. For claims-based 
reporting, if fewer than three measures are applicable to the services 
of the professional, the professional may meet the criteria by 
submitting data on one or two measures for at least 80 percent of 
applicable cases where the measures are reportable. For years after 
2009, section 1848(m)(3)(D) of the Act authorizes the Secretary, in 
consultation with stakeholders and experts, to revise the criteria for 
satisfactorily reporting data on quality measures.
    Accordingly, we proposed (76 FR 42850) the following criteria for 
satisfactory reporting via the claims-based reporting mechanism for 
individual eligible professionals specializing in internal medicine, 
family practice, general practice, or cardiology:
     Report on at least one Physician Quality Reporting System 
core measure as identified in Table 46 of this proposed rule.
     Report on at least two additional measures that apply to 
the services furnished by the professional.
     Report each measure for at least 50 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    We proposed the requirement of the reporting of Physician Quality 
Reporting System core measures for certain specialties to introduce 
measures reporting according to specialty for eligible professionals 
specializing in internal medicine, family practice, general practice, 
or cardiology. However, we did not propose this core measure 
requirement for all other specialties. Therefore, for all other 
specialties, we proposed (76 FR 42851) to retain similar reporting 
criteria as finalized for the in the 2011 MPFS final rule. 
Specifically, we proposed the following criteria for satisfactory 
reporting via the claims-based reporting mechanism:
     Report on at least three measures that apply to the 
services furnished by the professional; and
     Report each measure for at least 50 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    To the extent that an eligible professional has fewer than three 
Physician Quality Reporting System measures that apply to the eligible 
professional's services and the eligible professional is reporting via 
the claims-based reporting mechanism, we proposed (76 FR 42851) that 
the eligible

[[Page 73329]]

professional would be able to meet the criteria for satisfactorily 
reporting data on individual quality measures by meeting the following 
two criteria--
     Report on all measures that apply to the services 
furnished by the professional (that is one to two measures); and
     Report each measure for at least 50 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    As in prior years, we also proposed (76 FR 42851) that, for 2012, 
an eligible professional who reports on fewer than three measures 
through the claims-based reporting mechanism may be subject to the 
Measure Applicability Validation (MAV) process, which would allow us to 
determine whether an eligible professional should have reported quality 
data codes for additional measures. This process was applied in prior 
years, including the 2011 Physician Quality Reporting System. We 
proposed that these criteria for satisfactorily reporting data on fewer 
than three individual quality measures would apply for the claims-based 
reporting mechanism only because, unlike registry and EHR-based 
reporting, the reporting of Physician Quality Reporting System quality 
measures via claims is not handled by an intermediary but rather 
directly by the eligible professional.
    For 2012, in order to encourage reporting on measures that are 
applicable to the eligible professional's practice as well as encourage 
eligible professionals to perform the clinical quality actions 
specified in the measures, we proposed (76 FR 42851) not to count 
measures that are reported through claims that have a zero percent 
performance rate. That is, if the recommended clinical quality action, 
as indicated in the numerator of the quality measure, is not performed 
on at least one patient for a particular measure or measures group 
reported by the eligible professional via claims, we will not count the 
measure (or measures group) as a measure (or measures group) reported 
by an eligible professional. This requirement is also consistent with 
the registry and EHR-based reporting criteria for satisfactory 
reporting in section VI.F.1.e of this final rule with comment period.
    We invited and received public comments on our proposed 2012 
criteria for satisfactory reporting of data on individual Physician 
Quality Reporting System quality measures for individual eligible 
professionals via claims. We also sought public comment as to whether 
geriatricians should be included as a specialty required to report on 
2012 Physician Quality Reporting System core measures. In addition, we 
sought public comment on whether other specialties should be included 
in the 2012 Physician Quality Reporting System core measure reporting 
requirement. The following is a summary of the comments we received 
regarding these proposals.
    Comment: Some commenters supported our proposal to require the 
reporting of the 2012 Physician Quality Reporting System core measures. 
One commenter asked whether nurse practitioners and physician 
assistants working in family practice, internal medicine, general 
practice, and cardiology would be required to report on at least 1 
Physician Quality Reporting System core measure. Other commenters 
suggested that we include geriatricians as a specialty required to 
report on at least 1 Physician Quality Reporting System core measure, 
whereas others did not. One commenter suggested that hospitalists also 
be required to report on the 2012 Physician Quality Reporting System 
core measures, whereas one commenter stated that hospitalists cannot 
report on the 2012 Physician Quality Reporting System core measures.
    Response: We appreciate the commenters' feedback and question. We 
continue to recognize the importance of and encourage reporting on 
these Physician Quality Reporting System core measures, which are aimed 
at promoting cardiovascular care. However, due to some operational 
limitations, such as having insufficient time to properly update our 
analysis systems to check for an eligible professional's specialty, we 
are not finalizing our proposed requirement that physicians practicing 
in internal medicine, family practice, general practice, and cardiology 
report on at least 1 Physician Quality Reporting System core measure. 
Therefore, eligible professionals specializing in these specialties may 
still report on these measures under the program, but are not required 
to meet the proposed reporting criterion regarding the core measures. 
For purposes of earning a 2012 incentive, we are only finalizing the 
claims based reporting criteria for satisfactory reporting that we 
proposed for all other individual eligible professionals. Therefore, 
individual eligible professionals practicing in internal medicine, 
family practice, general practice and cardiology must meet that 
criterion for satisfactory reporting for the claims-based mechanism.
    Comment: Some commenters opposed our proposal to require eligible 
professionals practicing in internal medicine, family practice, general 
practice, and cardiology to report on the 2012 Physician Quality 
Reporting System core measures as it posed an additional reporting 
burden on these eligible professionals.
    Response: We appreciate the commenters' feedback but respectfully 
disagree. As these measures are those that we expect eligible 
professionals practicing in internal medicine, family practice, general 
practice, and cardiology to report as they address high priority care 
areas for eligible professionals practicing in these specialties, we do 
not believe requiring these eligible professionals to report on at 
least 1 2012 Physician Quality Reporting System core measure would have 
posed an additional reporting burden on these eligible professionals. 
However, as described previously, due to operational limitations, we 
are not finalizing this criterion for satisfactory reporting and 
therefore, we are not requiring these specialties to report on the 2012 
Physician Quality Reporting System core measures. However, we still 
encourage these specialties to report on these Physician Quality 
Reporting System core measures when appropriate.
    Comment: A few commenters supported our proposal to lower the 
reporting threshold from 80 to 50 percent of the eligible 
professional's Medicare Part B PFS patients seen during the reporting 
period to which the measure applies.
    Response: We appreciate the commenter's feedback and are finalizing 
this reporting threshold of 50 percent of the eligible professional's 
Medicare Part B PFS patients seen during the reporting period to which 
the measure applies for claims-based reporting.
    Comment: One commenter opposed our proposal to not count measures 
reported via claims with a zero percent performance rate, because it is 
sufficient that eligible professionals make the effort to report 
Physician Quality Reporting System measures.
    Response: We appreciate the commenter's feedback. However, we are 
interested in moving away from pro forma reporting. We are interested 
in concentrating on the collection of meaningful data. Therefore, for 
the reasons we stated previously, we are finalizing our proposal to not 
count measures reported via claims with a zero percent performance 
rate.
    Comment: One commenter opposed our proposal to require eligible 
professionals that report on less than 3

[[Page 73330]]

measures to undergo the MAV process, particularly since the program has 
not specifically identified which measures may be applicable to 
eligible professionals' respective practices.
    Response: We provided this process as a way for eligible 
professionals to participate in the Physician Quality Reporting System 
when they may not have 3 measures applicable to their practice (which 
is the minimum number of measures eligible professionals must otherwise 
report). We believe it is important to have a process to check 
instances where eligible professionals report on less than 3 measures 
to ensure the that the minimum reporting requirement of reporting at 
least 3 measures is, in fact, impracticable.
    Based on the comments received and for the reasons stated 
previously, we are finalizing the 2012 criteria for satisfactory 
reporting of data on individual Physician Quality Reporting System 
quality measures via claims, described in Table 40. As we indicate 
above, Table 40 reflects the criteria for satisfactory reporting of 
data on Physician Quality Reporting System quality measures via claims 
for all eligible professionals.
[GRAPHIC] [TIFF OMITTED] TR28NO11.148

    In addition, an eligible professional who reports on fewer than 
three measures through the claims-based reporting mechanism may be 
subject to the Measure Applicability Validation (MAV) process, which 
will allow us to determine whether an eligible professional should have 
reported quality data codes for additional measures. Under the MAV 
process, when an eligible professional reports on fewer than 3 
measures, we will perform a review to determine whether there are other 
closely related measures (such as those that share a common diagnosis 
or those that are representative of services typically provided by a 
particular type of eligible professional). If an eligible professional 
who reports on fewer than 3 measures in 2012 reports on a measure that 
is part of an identified cluster of closely related measures and does 
not report on any other measure that is part of that identified cluster 
of closely related measures, then the eligible professional will not 
qualify as a satisfactory reporter in the 2012 Physician Quality 
Reporting System or earn an incentive payment.
(2) 2012 Criteria for Satisfactory Reporting of Individual Quality 
Measures for Individual Eligible Professionals via Registry
    Under our authority of section 1848(m)(3)(D) of the Act to revise 
the reporting criteria for the satisfactory reporting of measures, we 
proposed (76 FR 42852) the following criteria for satisfactory 
reporting via the registry-based reporting mechanism: (1) criteria for 
individual eligible professionals practicing in internal medicine, 
family practice, general practice, or cardiology and (2) criteria for 
all other eligible professionals. For the reasons stated previously, we 
distinguished eligible professionals in internal medicine, family 
practice, general practice, or cardiology from all other eligible 
professionals for the purposes of establishing criteria for 
satisfactory reporting. Therefore, for eligible professionals 
specializing in internal medicine, family practice, general practice, 
or cardiology, we proposed (76 FR 42852) the following criteria for 
satisfactory reporting--
     Report on at least one Physician Quality Reporting System 
core measure as identified in Table 28 of the proposed rule (76 FR 
42863);
     Report on at least two additional measures that apply to 
the services furnished by the professional; AND
     Report each measure for at least 80 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    For the same reasons stated for establishing different reporting 
criteria for all other eligible professionals under the claims-based 
reporting mechanism, we proposed the following criteria for 
satisfactory reporting via the registry-based reporting mechanism--
     Report on at least three measures that apply to the 
services furnished by the professional; AND
     Report each measure for at least 80 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    In addition, as in prior years, for 2012, we proposed not to count 
measures that are reported through registries that have a zero percent 
performance rate, calculated by dividing the measure's numerator by the 
measure's denominator. That is, if the recommended clinical quality 
action, that is the action denoted in the quality measure's numerator, 
is not performed on at least one patient for a particular measure or 
measures group reported by the eligible professional via registry, we 
will not count the measure (or measures group) as a measure (or 
measures group) reported by an eligible professional. We proposed to 
disregard measures (or measures groups) that are reported through a 
registry that have a zero percent performance rate in the 2012 
Physician Quality Reporting System, because we are assuming that the 
measure was not applicable to the eligible professional and was likely 
reported from EHR-derived data (or from data mining) and was 
unintentionally submitted from the registry to us. We also sought to 
avoid the possibility of intentional submission of spurious data solely 
for the purpose

[[Page 73331]]

of receiving an incentive payment for reporting.
    We invited public comment on the proposed criteria for satisfactory 
reporting of individual quality measures for individual eligible 
professionals via registry. The following is a summary of the comments 
we received. We also sought public comment as to whether geriatricians 
should be included as a specialty required to report all 2012 Physician 
Quality Reporting System core measures. In addition, we sought public 
comment on whether other specialties should be included in the 2012 
Physician Quality Reporting System core measure reporting requirement. 
The following is a summary of the comments we received.
    Comment: One commenter stated that eligible professionals reporting 
via registry should report on quality scores on a sample drawn from all 
the eligible professional's patients.
    Response: We appreciate the commenter's feedback. However, as we 
may collect information on Medicare Part B FFS patients via claims, we 
are only requiring that eligible professionals who report on Physician 
Quality Reporting System quality measure via registry report on their 
Medicare Part B FFS patients.
    Based on the comments received and for the reasons stated 
previously, we are finalizing the 2012 criteria for satisfactory 
reporting of data on individual Physician Quality Reporting System 
quality measures for individual eligible professionals via registry 
described in Table 41. However, for the same operational reasons we 
discussed previously regarding claims-based reporting, we are not 
finalizing the criteria for satisfactory reporting that we proposed for 
eligible professionals practicing in internal medicine, family 
practice, general practice, and cardiology. Therefore, Table 41 
reflects the criteria for satisfactory reporting of data on Physician 
Quality Reporting System quality measures via registry for all eligible 
professionals.
[GRAPHIC] [TIFF OMITTED] TR28NO11.149

    (3) Criteria for Satisfactory Reporting of Individual Quality 
Measures for Individual Eligible Professionals via EHR
    Section 1848(m)(3)(A) of the Act established the criteria for 
satisfactorily submitting data on individual quality measures as at 
least three measures in at least 80 percent of the cases in which the 
measure is applicable. For years after 2009, section 1848(m)(3)(D) of 
the Act authorizes the Secretary, in consultation with stakeholders and 
experts, to revise the criteria for satisfactorily reporting data on 
quality measures. Accordingly, we proposed the following options for 
satisfactory reporting of individual quality measures by individual 
eligible professionals participating in the 2012 Physician Quality 
Reporting System via the EHR-based reporting mechanism:
    First, we proposed (76 FR 42854) that an eligible professional 
would meet the criteria for satisfactory reporting under the Physician 
Quality Reporting System if the eligible professional, using a 
Physician Quality Reporting System ``qualified'' EHR product (if the 
eligible professional is also participating in the EHR Incentive 
Program via the Physician Quality Reporting System-EHR Incentive Pilot 
discussed in section VI.H. of this final rule with comment period, the 
eligible professional's EHR product must also be Certified EHR 
Technology), reports on three core measures for 80 percent of the 
eligible professional's Medicare Part B FFS patients seen during the 
reporting period to which each measure applies as identified in Table 
28 of the proposed rule (76 FR 42863), which are identical to the 
Medicare EHR Incentive Program core measures included in Table 7 of the 
Medicare and Medicaid EHR Incentive Program final rule (75 FR 44410). 
For all core measures identified in Table 28 of the proposed rule 
except for the measures titled ``Preventive Care and Screening: Body 
Mass Index (BMI) Screening and Follow-up'' and ``Measure pair: a. 
Tobacco Use Assessment, b. Tobacco Cessation Intervention'', insofar as 
the denominator for one or more of the core measures is 0, implying 
that the eligible professional's patient population is not addressed by 
these measures, we proposed (76 FR 42854) that eligible professionals 
would be required to report up to three alternate core measures as 
identified in Table 28 of the proposed rule and which are identical to 
the Medicare EHR Incentive Program alternate core measures included in 
Table 7 of the Medicare and Medicaid EHR Incentive Program final rule, 
(75 FR 44410). In addition, we proposed that the eligible professional 
would be required to report on three additional measures of their 
choosing that are available for the Medicare EHR Incentive Program in 
Table 6 of the Medicare and Medicaid EHR Incentive Program final rule 
(75 FR 44398 through 44408) (as identified in 29 of the proposed rule).
    Section 1848(m)(7) of the Act (``Integration of Physician Quality 
Reporting and EHR Reporting''), as added by section 3002(d) of the 
Affordable Care Act, requires us to move towards the integration of EHR 
measures with respect to the Physician Quality Reporting System. 
Section 1848(m)(7) of the Act specifies that by

[[Page 73332]]

no later than January 1, 2012, the Secretary shall develop a plan to 
integrate reporting on quality measures under the Physician Quality 
Reporting System with reporting requirements under subsection (o) of 
section 1848 of the Act relating to the meaningful use of EHRs. Such 
integration shall consist of the following:
    (A) The selection of measures, the reporting of which both would 
demonstrate--
    (i) Meaningful use of an EHR for purposes of the Medicare EHR 
Incentive Program; and
    (ii) Quality of care furnished to an individual; and
    (B) Such other activities as specified by the Secretary.
    We proposed the aforementioned criteria for satisfactory reporting 
via an EHR, which is identical to the criteria for achieving meaningful 
use for reporting clinical quality measures under the EHR Incentive 
Program as finalized in the Medicare and Medicaid Electronic Health 
Record Incentive Program final rule (75 FR 44409 through 44411), in an 
effort to align the Physician Quality Reporting System with the 
Medicare EHR Incentive Program.
    In addition to the reporting criteria proposed (76 FR 42854) 
previously, we proposed alternative reporting criteria for satisfactory 
reporting using the EHR-based reporting mechanism that is similar to 
the criteria finalized in the CY 2011 MPFS Final Rule with comment 
period (75 FR 73497 through 73500). For the reasons set forth for 
establishing different criteria for satisfactory reporting via claims 
and registry, we proposed to adopt two different criteria for 
satisfactory reporting, depending on an eligible professional's 
specialty. For eligible professionals specializing in internal 
medicine, family practice, general practice, and cardiology, we 
proposed the following criteria:
     Report on ALL Physician Quality Reporting System core 
measure as identified in Table 28 of the proposed rule (76 FR 42863) 
AND
     Report each measure for at least 80 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    We understood that by requiring eligible professionals specializing 
in internal medicine, family practice, general practice, and cardiology 
to report all Physician Quality Reporting System core measures, we 
would be requiring such professionals to report more measures than 
eligible professionals who do not practice within those specialties. We 
believe, however, that requiring these specialists to report on all 
Physician Quality Reporting System core measures would not add an 
additional burden to these eligible professionals because the reporting 
of measures is done entirely through the EHR. Furthermore, because we 
are proposing to require these specialties to report on all Physician 
Quality Reporting System core measures and recognize that some of the 
Physician Quality Reporting System core measures may not be applicable 
to all of these eligible professionals' specialties, we proposed to 
allow the reporting of these Physician Quality Reporting System core 
measures with a zero percent performance rate. That is, the reporting 
of a Physician Quality Reporting System core measure that is not 
applicable to the eligible professional's practice in this instance 
will not preclude an eligible professional from meeting the criteria 
for satisfactory reporting.
    For the reasons we stated previously for creating separate 
reporting criteria for all other eligible professionals for claims and 
registry reporting, we proposed (76 FR 42854) the following criteria 
for satisfactory reporting using the EHR-based reporting mechanism--
     Report on at least three Physician Quality Reporting 
System EHR measures of the eligible professional's choosing; AND
     Report each measure for at least 80 percent of the 
eligible professional's Medicare Part B FFS patients for whom services 
were furnished during the reporting period to which the measure 
applies.
    We invited public comment on the proposed criteria for satisfactory 
reporting of individual quality measures by individual eligible 
professionals via an EHR-based reporting mechanism in the 2012 
Physician Quality Reporting System. We also sought public comment as to 
whether geriatricians should be included as a specialty required to 
report all 2012 Physician Quality Reporting System core measures. In 
addition, we sought public comment on whether other specialties should 
be included in the 2012 Physician Quality Reporting System core measure 
reporting requirement. In addition to the comments summarized and 
addressed previously regarding our proposal to require certain 
specialties to report on core measures, the following is a summary of 
the remaining comments we received regarding these proposals.
    Comment: Several commenters supported the proposed criteria for 
EHR-based reporting for the 2012 Physician Quality Reporting System 
that aligns with the EHR Incentive Program. In general, the commenters 
supported our efforts to align the Physician Quality Reporting System 
and EHR Incentive Program.
    Response: Aligning the Physician Quality Reporting System and EHR 
Incentive Program is a top priority, as we seek to minimize the 
reporting burden that the various CMS quality reporting programs may 
pose on eligible professionals who choose to participate in more than 
one program.
    After considering the comments and for the reasons we stated 
previously, we are only finalizing the criteria for satisfactory 
reporting via EHR for the 2012 Physician Quality Reporting System 
described in Table 42. For the operational reasons discussed 
previously, we are not finalizing the criteria for satisfactory 
reporting via EHR that we proposed for eligible professionals 
practicing in internal medicine, family practice, general practice, and 
cardiology. Therefore, Table 42 reflects the criteria for satisfactory 
reporting of data on Physician Quality Reporting System quality 
measures via EHR for all eligible professionals.
BILLING CODE 4120-01-P

[[Page 73333]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.150

BILLING CODE 4120-01-C
(4) Criteria for Satisfactory Reporting of Measures Groups via Claims--
Individual Eligible Professionals
    Under Sec.  414.90(b), ``measures group'' is defined as ``a subset 
of four or more Physician Quality Reporting System measures that have a 
particular clinical condition or focus in common.'' For 2012 and 
beyond, we proposed that individual eligible professionals have the 
option to report measures groups in addition to individual quality 
measures to qualify for the Physician Quality Reporting System 
incentive, using claims or registries.
    For the reasons we proposed (76 FR 42855) different criteria for 
satisfactorily reporting individual quality measures depending on 
specialty, specifically our desire to introduce core measures 
applicable to certain specialties and promote cardiovascular care, we 
proposed two different criteria for

[[Page 73334]]

satisfactorily reporting measures groups. We proposed the following 
criteria for satisfactory reporting of 2012 Physician Quality Reporting 
System measures groups:
    We proposed that eligible professionals specializing in internal 
medicine, family practice, general practice, and cardiology may meet 
the criteria for satisfactory reporting of Physician Quality Reporting 
System measures groups via claims by reporting in the following manner:
     Report at least one Physician Quality Reporting System 
measures group; AND
     If the measures group does not contain at least one 
Physician Quality Reporting System core measure, then one Physician 
Quality Reporting System core measure; AND
     For each measures group and, if applicable, Physician 
Quality Reporting System core measure reported, report on at least 30 
Medicare Part B FFS patients for each measures group that is reported.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    We also proposed that eligible professionals specializing in 
internal medicine, family practice, general practice, and cardiology 
may meet the criteria for satisfactorily reporting Physician Quality 
Reporting System measures groups via claims by reporting in the 
following manner:
     Report at least one Physician Quality Reporting System 
measures group; BUT
     If the measures group does not contain at least one 
Physician Quality Reporting System core measure, then one Physician 
Quality core measure.
     For each measures group and, if applicable, Physician 
Quality Reporting System core measure reported, report on at least 50 
percent of the eligible professional's Medicare Part B FFS patients 
seen during the reporting period to whom the measures group applies; 
but report no less than 15 Medicare Part B PFS patients for each 
measures group reported.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    For all other eligible professionals, in order to meet the criteria 
for satisfactory reporting of Physician Quality Reporting measures 
groups via claims, we proposed that the eligible professional must:
     Report at least one Physician Quality Reporting System 
measures group; AND
     Report on at least 30 Medicare Part B FFS patients for 
each measures group that is reported.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    Alternatively, eligible professionals not specializing in internal 
medicine, family practice, general practice, and cardiology may meet 
the criteria for satisfactorily reporting Physician Quality Reporting 
System measures groups via claims by reporting in the following manner:
     Report at least one Physician Quality Reporting System 
measures group; AND
     For each measures group reported, report each on at least 
50 percent of the eligible professional's Medicare Part B FFS patients 
seen during the reporting period to whom the measures group applies; 
BUT
     Report no less than 15 Medicare Part B PFS patients for 
each measures group reported.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    Aside from the Physician Quality Reporting System core measure 
reporting requirement for eligible professionals specializing in 
internal medicine, family practice, general practice, or cardiology, we 
proposed to retain the same criteria for satisfactory reporting of 
measures groups via claims as the 2011 criteria for satisfactory 
reporting of measures groups via claims for the 12-month reporting 
period that was finalized in the 2011 MPFS Final Rule with comment 
period, because we believe consistent reporting criteria will in turn 
lead to a greater chance that eligible professionals meet the criteria 
for satisfactory reporting (76 FR 42854). Therefore, as in 2011, we 
proposed that an eligible professional must satisfactorily report on 
all individual measures within the measures group in order to meet the 
criteria for satisfactory reporting via measures groups.
    For 2012, in order to ensure that the Physician Quality Reporting 
System measures on which eligible professionals report are applicable 
to their respective practices, we proposed (76 FR 42854) not to count 
measures within measures groups that are reported through claims or 
registry that have a zero percent performance rate. That is, if the 
recommended clinical quality action is not performed on at least one 
patient for a particular measure reported by the eligible professional 
via claims or registry, we will not count the measures group as a 
measures group reported by an eligible professional. Furthermore, this 
proposed requirement is consistent with the reporting options for 
individual quality measures, which are discussed previously. Since we 
proposed to retain the requirement that an eligible professional must 
satisfactorily report on all individual measures contained within a 
measures group in order to meet the criteria for satisfactory reporting 
via measures groups, if an eligible professional reports a measure 
contained within a measures group with a zero percent performance rate, 
the eligible professional will fail to meet the criteria for the 
satisfactory reporting of measures groups.
    We invited public comment on the 2012 criteria for satisfactory 
reporting on measures groups via claims for individual eligible 
professionals. We also sought public comment as to whether 
geriatricians should be included as a specialty required to report at 
least 1 proposed 2012 Physician Quality Reporting System core measure 
for measures group reporting. In addition, we sought public comment on 
whether other specialties should be included in the 2012 Physician 
Quality Reporting System core measure reporting requirement for 
measures groups. The following is a summary of the comments we 
received.
    Comment: One commenter was opposed to the proposed criterion that 
measures with a zero percent performance rate will not be counted.
    Response: We appreciate the commenter's feedback. However, as we 
stated previously, we are interested in moving away from pro forma 
reporting. We are interested in concentrating on the collection of 
meaningful data. Therefore, for the reasons we stated previously, we 
are finalizing our proposal to only count measures reported via claims, 
registry, and EHR with a zero percent performance rate.
    Based on the comments received and for the reasons stated 
previously, we are finalizing the 2012 criteria for satisfactory 
reporting of measures groups via claims for individual eligible 
professionals described in Table 43. For the operational reasons 
discussed previously, however, we are not finalizing our proposals for 
eligible professionals practicing in internal medicine, family 
practice, general practice, and cardiology. Therefore, Table 43 
reflects the final criteria for satisfactory reporting of data on 
Physician Quality Reporting System quality measures groups via claims 
for all eligible professionals.

[[Page 73335]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.151

    An eligible professional could also potentially qualify for the 
Physician Quality Reporting System incentive payment by satisfactorily 
reporting both individual measures and measures groups. However, only 
one incentive payment will be made to the eligible professional.
(5) 2012 Criteria for Satisfactory Reporting of Measures Groups via 
Registry--Individual Eligible Professionals
    As with the reporting of measures groups via claims, we proposed 
(76 FR 42857) different criteria for the satisfactory reporting of 
Physician Quality Reporting System measures groups via registry 
depending on the eligible professional's specialty. For eligible 
professionals specializing in internal medicine, family practice, 
general practice, or cardiology, in order to meet the criteria for the 
satisfactory reporting of Physician Quality Reporting measures groups 
via registry, during the 12-month reporting period, we proposed that 
the eligible professional must--
     Report at least 1 Physician Quality Reporting System 
measures group; AND
     If the measures group does not contain at least 1 
Physician Quality Reporting System core measure, then 1 Physician 
Quality Reporting System core measure; AND
     Report on at least 30 Medicare Part B FFS patients for 
each measures group and, if applicable, Physician Quality Reporting 
System core measure reported.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    Alternatively, we proposed that the eligible professional 
specializing in internal medicine, family practice, general practice, 
or cardiology may meet the criteria for the satisfactory reporting of 
Physician Quality measures groups via registry by doing the following 
during the 12-month reporting period:
     Report at least one Physician Quality Reporting System 
measures group; AND
     If the measures group does not contain at least 1 
Physician Quality Reporting System core measure, then 1 Physician 
Quality Reporting System core measure; AND
     Report each measures group and, if applicable, Physician 
Quality Reporting System core measure for at least 80 percent of the 
eligible professional's Medicare Part B FFS patients seen during the 
reporting period to whom the measures group applies; BUT
     Report each measures group on no less than 15 Medicare 
Part B FFS patients seen during the reporting period to which the 
measures group applies.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    In order to meet the criteria for the satisfactory reporting of 
Physician Quality Reporting measures groups via registry, during the 6-
month reporting period, we proposed that the eligible professional 
must--
     Report at least one Physician Quality Reporting System 
measures group; AND
     If the measures group does not contain at least 1 
Physician Quality core measure, then 1 Physician Quality core measure; 
AND
     Report each measures group and, if applicable, Physician 
Quality Reporting System core measure for at least 80 percent of the 
eligible professional's Medicare Part B FFS patients seen during the 
reporting period to whom the measures group applies; BUT
     Report each measures group on no less than 8 Medicare Part 
B FFS patients seen during the reporting period to which the measures 
group applies.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    For all other eligible professionals, in order to meet the criteria 
for the satisfactory reporting of Physician Quality Reporting System 
measures groups via registry, we proposed that, during the 12-month 
reporting period, the eligible professional must--
     Report at least 1 Physician Quality Reporting System 
measures group; AND
     Report each measures group for at least 30 Medicare Part B 
FFS patients.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    Alternatively, we proposed that an eligible professional not 
specializing in internal medicine, family practice, general practice, 
or cardiology may meet the criteria for the satisfactory reporting of 
Physician Quality Reporting System measures groups via registry by 
doing the following during the 12-month reporting period:

[[Page 73336]]

     Report at least one Physician Quality Reporting System 
measures group; AND
     For each measures group reported, report on at least 80 
percent of the eligible professional's Medicare Part B FFS patients 
seen during the reporting period to whom the measures group applies; 
BUT
     Report no less than 15 patients for each measures group 
reported.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    For all other eligible professionals, in order to meet the criteria 
for the satisfactory reporting of Physician Quality Reporting System 
measures groups via registry during the 6-month reporting period, we 
proposed that, during the proposed 6-month reporting period, the 
eligible professional must--
     Report at least 1 Physician Quality Reporting System 
measures group; AND
     For each measures group reported, report on at least 80 
percent of the eligible professional's Medicare Part B FFS patients 
seen during the reporting period to whom the measures group applies; 
BUT
     Report each measures group on no less than least 8 
Medicare Part B FFS patients for each measures group reported.
     Measures groups containing a measure with a zero percent 
performance rate will not be counted.
    Aside from the Physician Quality Reporting System core measure 
reporting requirement for eligible professionals specializing in 
internal medicine, family practice, general practice, or cardiology, we 
proposed to retain the same criteria for satisfactory reporting of 
measures groups via registry as the 2011 criteria for satisfactory 
reporting of measures groups via registry finalized in the 2011 MPFS 
Final Rule with comment period. Therefore, as in 2011, an eligible 
professional must satisfactorily report on all individual measures 
within the measures group in order to meet the criteria for 
satisfactory reporting via measures groups. We proposed to retain the 
same criteria, because, since eligible professionals are already 
familiar with this reporting criteria, we believe having consistent 
reporting criteria will in turn lead to a greater chance that eligible 
professionals meet the criteria for satisfactory reporting.
    For 2012, in order to ensure that the Physician Quality Reporting 
System measures on which eligible professionals report are applicable 
to their respective practices, we proposed not to count measures within 
measures groups that are reported through claims or registry that have 
a zero percent performance rate. That is, if the recommended clinical 
quality action is not performed on at least one patient for a 
particular measure reported by the eligible professional via claims or 
registry, we will not count the measures groups as a measures group 
reported by an eligible professional. Furthermore, this requirement is 
consistent with the reporting options for individual quality measures, 
which were discussed previously. Since we proposed to retain the 
requirement that an eligible professional must satisfactorily report on 
all individual measures contained within a measures group in order to 
meet the criteria for satisfactory reporting via measures groups, if an 
eligible professional reports a measure contained within a measures 
group with a zero percent performance rate, the eligible professional 
will fail to meet the criteria for the satisfactory reporting of 
measures groups.
    We also sought public comment as to whether geriatricians should be 
included as a specialty required to report at least 1 proposed 2012 
Physician Quality Reporting System core measure for measures group 
reporting. In addition, we sought public comment on whether other 
specialties should be included in the 2012 Physician Quality Reporting 
System core measure reporting requirement for measures groups. The 
summary of these comments and our responses was discussed previously in 
this final rule with comment period.
    We invited but received no public comment on the proposed 2012 
criteria for satisfactory reporting on measures groups via registry for 
individual eligible professionals. Therefore, for the reasons stated 
previously, we are finalizing the 2012 criteria for satisfactory 
reporting of data on measures groups via registry described in Table 
44. However, for the operational reasons discussed previously, we are 
not finalizing our proposals regarding eligible professionals 
practicing in internal medicine, family practice, general practice, and 
cardiology. Therefore, Table 42 reflects the final criteria for 
satisfactory reporting of data on Physician Quality Reporting System 
quality measures via EHR for all eligible professionals.
BILING CODE 4120-01-P

[[Page 73337]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.152

BILING CODE 4120-01-C
    An eligible professional could also potentially qualify for the 
Physician Quality Reporting System incentive payment by satisfactorily 
reporting both individual measures and measures groups. However, only 
one incentive payment will be made to the eligible professional.
    (6) 2012 Criteria for Satisfactory Reporting on Physician Quality 
Reporting System Measures by Group Practices Under the Group Practice 
Reporting Option (GPRO)
    Instead of participating as an individual eligible professional, an 
eligible professional in a group practice may participate in the 
Physician Quality Reporting System under the Physician Quality 
Reporting System GPRO. However, an individual eligible professional who 
is affiliated with a group practice participating in the Physician 
Quality Reporting System GPRO that satisfactorily submits Physician 
Quality Reporting System quality measures will only be able to earn an 
incentive as part of the group practice and not as an individual 
eligible professional.
    We proposed (76 FR 42859) that group practices interested in 
participating in GPRO must self-nominate. As stated in section 
VI.F.1.e.6. of this final rule with comment period, for group practices 
selected to participate in the Physician Quality Reporting System GPRO 
for 2012, we finalized a 12-month reporting period beginning January 1, 
2012. For 2012, we proposed (76 FR 32859) to use the same GPRO 
reporting methods that we have used in prior years. Specifically, we 
proposed that group practices participating in GPRO submit information 
on measures within a common set of 30 NQF-endorsed quality measures 
using a web interface based on the GPRO web interface used in the 2011 
Physician Quality Reporting System GPRO. As part of the data submission 
process for 2012 GPRO, we proposed that during 2012, each group 
practice would be required to report quality measures with respect to 
services furnished during the 2012 reporting period (that is, January 
1, 2012, through December 31, 2012) on an

[[Page 73338]]

assigned sample of Medicare beneficiaries. Once the beneficiary 
assignment has been made for each group practice, which we anticipated 
would be done during the fourth quarter of 2012, we proposed to provide 
each group practice selected to participate in the Physician Quality 
Reporting System GPRO with access to a web interface that would include 
the group's assigned beneficiary samples and the final GPRO quality 
measures. We proposed to pre-populate the web interface with the 
assigned beneficiaries' demographic and utilization information based 
on all of their Medicare claims data. The group practice would be 
required to populate the remaining data fields necessary for capturing 
quality measure information on each of the assigned beneficiaries.
    In 2011, to distinguish the criteria in GPRO I and II for 
satisfactory reporting between small vs. large groups, we established 
different reporting criteria dependent on the group's size. Although we 
are consolidating the GPRO for 2012, we still recognize the need to 
equalize the reporting burden by establishing different reporting 
criteria for small vs. large groups. Therefore, we proposed to 
establish the following two criteria for the satisfactory reporting of 
Physician Quality Reporting System quality measures under the 2012 
GPRO, based on the size of the group practice:
     For group practices comprised of 25-99 eligible 
professionals participating in the GPRO, we proposed that the group 
practice must report on all GPRO measures included in the web interface 
(listed in Table 55 of the proposed rule (76 FR 42880)). During the 
submission period, the group practice will need to access the web 
interface and populate the data fields necessary for capturing quality 
measure information on each of the assigned beneficiaries up to 218 
beneficiaries (with an over-sample of 327 beneficiaries) for each 
disease module and preventive care measure. We further proposed that if 
the pool of eligible assigned beneficiaries for any disease module or 
preventive care measure is less than 218, then the group practice would 
need to populate the remaining data files for 100 percent of eligible 
assigned beneficiaries for that disease module or preventive care 
measure. For each disease module or preventive care measure, we 
proposed that the group practice must report information on the 
assigned patients in the order in which they appear in the group's 
sample (that is, consecutively).
     For group practices comprised of 100 or more eligible 
professionals, we proposed that the group practices must report on all 
Physician Quality Reporting System GPRO quality measures. During the 
submission period, the group practice would need to populate the 
remaining data fields in the web interface necessary for capturing 
quality measure information on each of the assigned beneficiaries up to 
411 beneficiaries (with an over-sample of 616 beneficiaries) for each 
disease module and preventive care measure. We further proposed that if 
the pool of eligible assigned beneficiaries for any disease module or 
preventive care measure is less than 411, then the group practice must 
populate the remaining data fields for 100 percent of eligible assigned 
beneficiaries for that disease module or preventive care measure. For 
each disease module or preventive care measure, we proposed that the 
group practice must report information on the assigned patients in the 
order in which they appear in the group's sample (that is, 
consecutively). In determining the appropriate reporting criteria for 
group practices comprised of 100 or more eligible professionals, we 
sought to use the same criteria we finalized in the 2011 MPFS Final 
Rule with comment period for GPRO I (75 FR 73506) because group 
practices are already familiar with this reporting process. We hope 
that establishing the same process for reporting under the GPRO as used 
in prior years will provide a likelier chance for meeting the criteria 
for satisfactory reporting under the GPRO. In addition, we sought to 
align the criteria for satisfactory reporting under the Physician 
Quality Reporting System with CMS' PGP demonstration, which collects 
data from large group practices in an effort to coordinate the overall 
care delivered to Medicare patients.
    As we discussed previously with our definition of group practice, 
we allow for fluctuation of the group practice's size throughout the 
reporting period, provided that the group size contains at least 25 
eligible professionals, which is the minimum group practice size for 
participation in the Physician Quality Reporting System GPRO. However, 
as we established in 2011, for purposes of determining which reporting 
criteria the group must satisfy, a group practice's size will be the 
size of the group at the time the group's participation is approved by 
CMS (75 FR 73504). For example, if a group practice is comprised of 100 
eligible professionals at the time it self-nominates for participation 
as a GPRO in 2012, and the group practice's size then drops to 99 
eligible professionals at the time the group practice's participation 
is approved by CMS, the group practice would need to meet the reporting 
criteria for a group size of 99.
    We invited public comment on the proposed requirements for 
satisfactory reporting via the Physician Quality Reporting System GPRO 
reporting option. The following is a summary of the comments we 
received that were related to the proposed 2012 criteria for 
satisfactory reporting for group practices in the Physician Quality 
Reporting System GPRO.
    Comment: Some commenters urged us to modify the GPRO web interface 
to minimize burden of use of the web interface, particularly by 
minimizing the manual processes required to populate the remaining 
fields.
    Response: The patient data can be extracted from an EHR and 
uploaded into the web interface, which eliminates the need for manual 
abstraction. CMS will continue development efforts to enhance tool so 
that there is decreased burden on group practices reporting via the web 
interface.
    After considering the comments and for the reasons stated 
previously, we are finalizing all of the proposed 2012 criteria for 
satisfactory reporting for group practices participating in the 
Physician Quality GPRO. Table 45 summarizes the criteria for the 
satisfactory reporting of data on quality measures by group practice 
under the 2012 Physician Quality Reporting GPRO. Group practices 
participating in the 2012 Physician Quality Reporting System GPRO, 
regardless of size, are required to report on all of the measures 
listed in Table 71 of this final rule with comment period. These 
quality measures are grouped into preventive care measures and five 
disease modules: heart failure, diabetes, coronary artery disease, 
hypertension, and chronic obstructive pulmonary disease (COPD).

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[GRAPHIC] [TIFF OMITTED] TR28NO11.153

    Furthermore, although we are requiring that the group practices 
participating in the GPRO to report on a certain number of consecutive 
patients, such as either 218 or 411 beneficiaries depending on the 
group's size, we will allow the ``skipping'' of patients for valid 
reasons, such as a beneficiary's medical records not being found or not 
being able to confirm a diagnosis. However, excessive skipping of 
patients may cause us to question the accuracy or validity of the data 
being reported to us by the group practices. Due to the variance in 
group patterns, measures, and disease modules, however, it is difficult 
to establish a ``skip threshold'' for the satisfactory reporting of 
GPRO measures. Therefore, it is our intent to examine each group 
practice's skip patterns. We may request the group to provide 
additional information to help explain or support the skips to help 
better inform us on what levels of skipping could potentially be 
considered excessive skipping in a future year.
    We intend to post the final 2012 Physician Quality Reporting System 
GPRO participation requirements for group practices, including 
instructions for submitting the self-nomination statement and other 
requested information, on the Physician Quality Reporting System 
section of the CMS Web site at http://www.cms.gov/PQRS by November 15, 
2011 or shortly thereafter.
    The Physician Quality Reporting System GPRO web interface will be 
updated as needed to include the 2012 Physician Quality Reporting 
System GPRO measures (that is, to eliminate measures that have been 
retired as well as add additional measures that will be finalized for 
2012). We intend to provide the selected physician groups with access 
to this pre-populated database by no later than the first quarter of 
2012. For purposes of pre-populating this GPRO web interface, we will 
assign beneficiaries to each group practice using a patient assignment 
methodology modeled after the patient assignment methodology used in 
the PGP & MCMP demonstrations. We will use Medicare Part B claims data 
for dates of service on or after January 1, 2011, and submitted and 
processed by approximately October 31, 2011, to assign Medicare 
beneficiaries to each group practice. Assigned beneficiaries will be 
limited to those Medicare Part B FFS beneficiaries with Medicare Parts 
A and B claims for whom Medicare is the primary payer. Assigned 
beneficiaries will not include Medicare Advantage enrollees. A 
beneficiary will be assigned to the group practice that provides the 
plurality of a beneficiary's office or other outpatient office 
evaluation and management allowed charges. Beneficiaries with only one 
office visit to the group practice will be eliminated from the group 
practice's assigned patient sample for purposes of the 2012 Physician 
Quality Reporting System GPRO. We will pre-populate the GPRO web 
interface with the assigned beneficiaries' demographic and utilization 
information based on their Medicare claims data.
f. 2012 Physician Quality Reporting System Measures
(1) Statutory Requirements for the Selection of the Final 2012 
Physician Quality Reporting System Measures
    Under section 1848(k)(2)(C)(i) of the Act, the Physician Quality 
Reporting System quality measures shall be such measures selected by 
the Secretary from measures that have been endorsed by the entity with 
a contract with the Secretary under subsection 1890(a) of

[[Page 73340]]

the Act (currently, that is the National Quality Forum, or NQF). 
However, in the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the NQF, section 1848(k)(2)(C)(ii) of the Act 
authorizes the Secretary to specify a measure that is not so endorsed 
as long as due consideration is given to measures that have been 
endorsed or adopted by a consensus organization identified by the 
Secretary, such as the AQA alliance. In light of these statutory 
requirements, we believe that, except in the circumstances specified in 
the statute, each 2012 Physician Quality Reporting System quality 
measure must be endorsed by the NQF. Additionally, section 
1848(k)(2)(D) of the Act requires that for each 2012 Physician Quality 
Reporting System quality measure, ``the Secretary shall ensure that 
eligible professionals have the opportunity to provide input during the 
development, endorsement, or selection of measures applicable to 
services they furnish.''
    The statutory requirements under section 1848(k)(2)(C) of the Act, 
subject to the exception noted previously, require only that the 
measures be selected from measures that have been endorsed by the 
entity with a contract with the Secretary under section 1890(a) (that 
is, the NQF) and are silent with respect to how the measures that are 
submitted to the NQF for endorsement were developed. The basic steps 
for developing measures applicable to physicians and other eligible 
professionals prior to submission of the measures for endorsement may 
be carried out by a variety of different organizations. We do not 
believe there needs to be any special restrictions on the type or make-
up of the organizations carrying out this basic process of development 
of physician measures, such as restricting the initial development to 
physician-controlled organizations. Any such restriction would unduly 
limit the basic development of quality measures and the scope and 
utility of measures that may be considered for endorsement as voluntary 
consensus standards for purposes of the Physician Quality Reporting 
System.
    The following is a summary of comments we received.
    Comment: Several commenters suggested that we only include NQF-
endorsed measures for reporting for the 2012 Physician Quality 
Reporting System. Some of these commenters strongly urged that all new 
measures finalized for inclusion in the 2012 Physician Quality 
Reporting System be submitted to the NQF for endorsement. Other 
commenters stated that, should we include quality measures for 
reporting under the 2012 Physician Quality Reporting System that are 
not NQF-endorsed, we ensure that these quality measures undergo a 
review process similar to NQF's endorsement procedures.
    Response: We agree that endorsement of measures by the NQF is an 
important criterion for inclusion in the 2012 Physician Quality 
Reporting System. However, section 1848(k)(2)(C)(ii) of the Act 
provides an exception to the requirement that measures be endorsed by 
the NQF. We may exercise this exception authority in a specified area 
or medical topic for which a feasible and practical measure has not 
been endorsed by the NQF, so long as due consideration is given to 
measures that have been endorsed by the NQF. For this reason, we retain 
the ability to include non-NQF endorsed measures in the Physician 
Quality Reporting System. We encourage the measure owners to submit all 
non-NQF measures that are included in the 2012 Physician Quality 
Reporting System for endorsement by the NQF, if the measures have not 
already been submitted for endorsement. In future years, we may 
consider removing a measure from the program if the measure owner has 
opportunities to submit the measure to the NQF for review but does not 
do so.
(2) Other Considerations for the Selection of 2012 Physician Quality 
Reporting System Measures
    In addition to reviewing the 2011 Physician Quality Reporting 
System measures for purposes of developing the 2012 Physician Quality 
Reporting System measures, we reviewed and considered measure 
suggestions for the 2012 Physician Quality Reporting System.
    With respect to the selection of new measures, we applied the 
following considerations, which include many of the same considerations 
applied to the selection of 2009, 2010 and 2011 Physician Quality 
Reporting System quality measures proposed (76 FR 42864) for inclusion 
in the 2012 Physician Quality Reporting System quality measure set 
previously described:
     High Impact on Healthcare.
    ++ Measures that are high impact and support CMS and HHS priorities 
for improved quality and efficiency of care for Medicare beneficiaries. 
These current and long term priority topics include the following: 
prevention; chronic conditions; high cost and high volume conditions; 
elimination of health disparities; healthcare-associated infections and 
other conditions; improved care coordination; improved outcomes; 
improved efficiency; improved patient and family experience of care; 
effective management of acute and chronic episodes of care; reduced 
unwarranted geographic variation in quality and efficiency; and 
adoption and use of interoperable HIT.
    ++ Measures that are included in, or facilitate alignment with, 
other Medicare, Medicaid, and CHIP programs in furtherance of 
overarching healthcare goals.
    ++ NQF Endorsement.
    ++ Measures must be NQF-endorsed by August 15, 2011, in order to be 
considered for inclusion in the 2012 Physician Quality Reporting System 
quality measure set except, as provided under section 1848(k)(2)(C)(ii) 
of the Act.
    ++ Section 1848(k)(2)(C)(ii) of the Act provides an exception to 
the requirement that the Secretary select measures that have been 
endorsed by the entity with a contract under section 1890(a) of the Act 
(that is, the NQF).
     Address Gaps in the Physician Quality Reporting System 
Measure Set.
    ++ Measures that increase the scope of applicability of the 
Physician Quality Reporting System measures to services furnished to 
Medicare beneficiaries and expand opportunities for eligible 
professionals to participate in the Physician Quality Reporting System.
     Measures of various aspects of clinical quality including 
outcome measures, where appropriate and feasible, process measures, 
structural measures, efficiency measures, and measures of patient 
experience of care.
    Other considerations that we applied to the selection of proposed 
measures for 2012, regardless of whether the measure was a 2011 
Physician Quality Reporting System measure or not, were--
     Measures that are functional, which is to say measures 
that can be technically implemented within the capacity of the CMS 
infrastructure for data collection, analysis, and calculation of 
reporting and performance rates;
     Measures that address gaps in the quality of care 
delivered to Medicare beneficiaries;
     Measures impacting chronic conditions (chronic kidney 
disease, diabetes mellitus, heart failure, hypertension and 
musculoskeletal);
     Measures involving care coordination;
     Measures applicable across care settings (such as, 
outpatient, nursing facilities, domiciliary, etc.);

[[Page 73341]]

     Measures conducive to leveraging capabilities of an 
electronic health record (EHR);
     Measures whose detailed specifications will be completed 
and ready for implementation in the 2012 Physician Quality Reporting 
System;
     Broadly applicable measures that could be used to create a 
core measure set required of all participating eligible professionals; 
and
     Measures groups that reflect the services furnished to 
beneficiaries by a particular specialty.
    In the 2012 Physician Quality Reporting System, as in the 2011 
Physician Quality Reporting System, for some measures that are useful, 
but where data submission is not feasible through all otherwise 
available Physician Quality Reporting System reporting mechanisms, we 
proposed that a measure may be included for reporting solely through 
specific reporting mechanism(s) in which its submission is feasible.
    However, we stress that inclusion of measures that are not NQF 
endorsed or AQA adopted is an exception to the requirement under 
section 1848(k)(2)(C)(i) of the Act that measures be endorsed by the 
NQF. We may exercise this exception authority in a specified area or 
medical topic for which a feasible and practical measure has not been 
endorsed by NQF, so long as due consideration is given to measures that 
have been endorsed by the NQF.
    We invited comments on our proposed approach in selecting measures. 
The following is a summary of the comments we received regarding other 
considerations we have taken into account with regard to selecting 2012 
Physician Quality Reporting System measures.
    Comment: Several commenters supported the inclusion of proposed 
2012 Physician Quality Reporting System measures that are either not 
endorsed by NQF or pending NQF-endorsement. However, some commenters 
suggested that we properly vet these non-NQF-endorsed measures prior to 
including them for reporting under the 2012 Physician Quality Reporting 
System.
    Response: For measures that we finalize that are not currently NQF-
endorsed, we are exercising our authority under section 
1848(k)(2)(C)(i) of the Act to, among other reasons, address gaps in a 
specified area or medical topic. We note that, prior to rulemaking, we 
review these submitted measures with the measure owners prior to 
including these measures for reporting under the 2012 Physician Quality 
Reporting System. Among other factors, we examine the utility of each 
quality measure that was submitted, the feasibility of reporting the 
measure, as well as our ability to analyze the data provided by the 
reporting of the measure.
    Comment: One commenter stated that the following measures should be 
retired from reporting in the 2012 Physician Quality Reporting System, 
because they have been retired by the measure owner or are no longer 
applicable for quality reporting purposes:
    135: Chronic Kidney Disease (CKD): Influenza 
Immunization.
    79: End Stage Renal Disease (ESRD): Influenza 
immunization in Patients with ESRD.
    175: Pediatric Stage Renal Disease (ESRD): 
Influenza Immunization.
    The commenter stated that Physician Quality Reporting System 
measure no. 110 titled ``Preventive Care and Screening: Influenza 
Immunization for Patients >= 50 Years Old'' has been updated to 
incorporate the influenza immunization measures. Therefore, the 
commenter encouraged reporting of Physician Quality Reporting System 
measure no. 110 in lieu of these retired measures. Another commenter 
also supported retiring Physician Quality Reporting System measure 
79.
    Response: We agree and are not finalizing those measures for 
reporting under the 2012 Physician Quality Reporting System.
    Comment: One commenter suggested that we retire Physician Quality 
Reporting System measure 199 titled ``Heart Failure: Patient 
Education'' because this measure is no longer available for quality 
reporting.
    Response: We agree and are not finalizing this measure for 
reporting under the 2012 Physician Quality Reporting System.
    Comment: One commenter suggested that we implement a ``test 
measure'' process, whereby a measure would be tested for validity, 
feasibility, and reliability prior to being included for reporting 
under the Physician Quality Reporting System.
    Response: Although we do not currently employ such a ``test 
measure'' process, we note that we review all quality measures 
submitted for inclusion for reporting under the Physician Quality 
Reporting System prior to proposing these measures for inclusion. We 
also note that we view implementation of a measure in the Physician 
Quality Reporting System as a vehicle for testing measures.
    Comment: One commenter stated that, as the number of measures and 
available reporting options have grown substantially since the 
implantation of the Physician Quality Reporting System in 2007, we 
should look at the long-term value of the measures we finalize for 
inclusion as 2012 Physician Quality Reporting System measures.
    Response: We appreciate and agree with the commenter's feedback. 
For example, when selecting measures for inclusion in the 2012 
Physician Quality Reporting System, we took into consideration medical 
topics or areas not addressed in the 2011 Physician Quality Reporting 
System quality measures set, as well as which measures would encourage 
reporting by a broader scope of eligible professionals.
    Comment: Some commenters stated that the process of submitting, 
reviewing, proposing, and finalizing measures for inclusion in the 2012 
Physician Quality Reporting System is too slow. One commenter urged us 
to work with the NQF and measure developers to make the measure 
selection process more efficient.
    Response: We understand that there is a need for measures to be 
reviewed, tested, and endorsed by the NQF in a timely fashion. We are 
committed to working with the NQF and measure owners to ultimately meet 
this goal. We welcome suggestions on how to improve the process for 
selecting measures for inclusion under the Physician Quality Reporting 
System.
    Comment: One commenter suggested that we collaborate more with 
medical specialty boards when developing measures.
    Response: We note that we typically do not develop measures. 
Rather, we solicit measures that have been developed by other measure 
developers for possible inclusion for reporting in the Physician 
Quality Reporting System through an annual Call for Measures. The Call 
for Measures for the 2013 program year has passed. However, information 
about our annual Call for Measures is typically posted on our Web site 
at http://www.cms.gov/PQRS/15_MeasuresCodes.asp#TopOfPage. We 
encourage all medical specialty boards to submit measure suggestions 
during our future Call for Measures sessions.
    Comment: Some commenters were opposed to including quality measures 
for reporting under the 2012 Physician Quality Reporting System that 
were not developed by physicians.
    Response: We appreciate the commenters' feedback but respectfully 
disagree. Although we welcome measures developed by physicians, we do 
not believe there needs to be any restrictions on the type of 
professional or organizations carrying out the basic

[[Page 73342]]

development of measures for physicians and other eligible 
professionals, such as restricting the initial development to 
physician-controlled organizations. While we agree that expertise in 
measure development is important in the measure development and 
consensus processes, any such restriction would unduly limit the basic 
development of quality measures and the scope and utility of measures 
that may be considered for endorsement as voluntary consensus 
standards. To ensure that all measures may be appropriately reported 
under the Physician Quality Reporting System, we review all measures 
prior to proposing these measures for reporting. In addition, we note 
that physicians are not the only types of professionals eligible to 
participate in the Physician Quality Reporting System.
    Comment: One commenter supported the inclusion of NQF-endorsed 
measures related to influenza, pneumococcal, Hepatitis A, and Hepatitis 
B vaccinations as we have recognized the importance of collection care 
information related to these diseases.
    Response: We appreciate the commenter's support and are finalizing 
measures that are related to influenza, pneumococcal disease, Hepatitis 
A, and Hepatitis B vaccinations for the 2012 Physician Quality 
Reporting System. As described in the following further detail, 
measures involving these diseases are available for reporting as 
individual measures under the claims, registry, and EHR-based reporting 
mechanism.
    Comment: One commenter supported the inclusion of Hepatitis C 
measures available for reporting under the 2012 Physician Quality 
Reporting System. However, the commenter notes that only a subset of 
eligible professionals is able to report on these measures.
    Response: We appreciate the commenter's support of the finalized 
Hepatitis C measures. We encourage the commenter, as well as other 
professional organizations and measure developers, to submit additional 
Hepatitis C measures that cover a broader scope of eligible 
professionals during the Physician Quality Reporting System Call for 
Measures for future program years.
    Comment: Several commenters suggested other considerations that we 
should take into account when selecting Physician Quality Reporting 
System measures, such as--
     Focusing on including measures that are related to the 
following medical topics: anesthesia, hematology, cardiology, abdominal 
aortic aneurysm (AAA) screening, pelvic prolapsed, gynecologic cancer, 
chronic obstructive pulmonary disease (COPD), elevated blood pressure, 
and gastroenterology;
     Whether measures test an eligible professional's basic 
competencies, rather than providing meaningful data on patient care; 
and
     Whether measures focus on care coordination.
    Response: We appreciate the commenters' suggestions and will take 
these other considerations into account in future program years. We 
note that we largely depend on the development of measures by 
professional organizations and other measure developers and encourage 
professional organizations and other measure developers to fund and 
develop measures that address the priority areas identified by the 
commenters. In addition, if there are specific measures that commenters 
would like us to consider for future years to address these areas, 
measure suggestions may be submitted during our annual Call for 
Measures. Although the deadline to submit new measures via this year's 
Call for Measures for suggesting possible measures for the 2012 
Physician Quality Reporting System has passed, measure suggestions may 
be submitted for consideration for possible inclusion under the 2014 
Physician Quality Reporting System and beyond.
    We typically host a Call for Measures each year and consider the 
measures provided for the next program year. However, we note that next 
year, we will not host a Call for Measures for measures to be included 
in the 2013 program year. This is due our need to concentrate our 
efforts to convert International Classification of Diseases (ICD) codes 
(which classify all diagnoses, symptoms, and procedures recording in 
conjunction with care in the United States) from ICD-9 to ICD-10. This 
conversion affects quality measures included in the Physician Quality 
Reporting System, as these measures currently contain ICD-9 codes. We 
believe that the transition from ICD-9 to ICD-10 is necessary to update 
care classifications. However, we urge these commenters to submit these 
specific measure suggestions for consideration in a future Call for 
Measures. Information on the Call for Measures will be available on the 
Physician Quality Reporting System Web site at http://www.cms.gov/PQRS// when it becomes available.
    Comment: One commenter suggested that we provide feedback in 
instances where measures or measures groups that were submitted for 
inclusion for reporting for the 2012 Physician Quality Reporting System 
were not ultimately proposed as 2012 Physician Quality Reporting System 
quality measures or measures groups.
    Response: We agree and believe that such feedback will be 
invaluable to measure developers and owners with regard to developing 
and suggesting quality measures to be included in future program years. 
We usually provide this feedback to measure developers for those 
individual measures and measures groups that were submitted for 
inclusion but ultimately not proposed as 2012 Physician Quality 
Reporting System individual measures or measures groups.
    Comment: Some commenters noted that, at times, although CMS has 
allowed for certain measures to be reported under various CMS programs, 
the description of some of these measures (for example, measure titles) 
may vary across the various CMS programs. CMS suggested that we 
synthesize the measure information we provide, such as measure title 
and number, with other various CMS programs.
    Response: We appreciate the commenters' feedback and agree with the 
commenters. We understand that consistent displays of information on 
reportable measures across various CMS programs will facilitate greater 
ease of reporting for those eligible professionals who participate in 
programs other than the Physician Quality Reporting System. However, we 
note that we are faced with operational limitations that prevent us 
from posting consistent measure information, such as varied rulemaking 
and measure review timeframes. When possible, we provide measure 
information that is consistent with other CMS programs.
    Comment: Several commenters asked that the finalized 2012 Physician 
Quality Reporting System individual measures be grouped according to 
medical specialty applicability. Commenters believed that grouping 
measures in this way would make it easier for eligible professionals to 
decide on which measures to report. Commenters also noted the 
importance of identifying clusters of measures prior to potentially 
subjecting eligible professionals to the Measure Applicability 
Validation (MAV) process.
    Response: We understand the importance of providing guidance on 
which measures to report. Although the measures that we are finalizing 
in this final rule with comment period are not listed according to 
medical specialty, we note that that we provide further guidance on 
disease clusters in subregulatory guidance on our Web site

[[Page 73343]]

at http://www.cms.gov/PQRS//. For example, the Physician Quality 
Reporting System 2009 Reporting Experience, which includes information 
on some measures available for reporting in 2012, provides information 
on top measures on which certain specialties have reported in past 
program years. Information on the MAV process is available in our 
``2011 Physician Quality Reporting System Measure-Applicability 
Validation Process'' document available at http://www.cms.gov/PQRS/25_AnalysisAndPayment.asp#TopOfPage. Eligible professionals are also 
encouraged to contact the QualityNet Help Desk for guidance on 
satisfactory reporting. Furthermore, eligible professionals who are 
participating in the Physician Quality Reporting System for the first 
time may find it helpful to visit the ``How to Get Started'' section of 
our Web site, available at http://www.cms.gov/PQRS/03_How_To_Get_Started.asp#TopOfPage, which provides detailed information on all 
Physician Quality Reporting System quality measures available for 
reporting.
    Comment: Several commenters proposed new measures and measures 
topics for inclusion in the 2012 Physician Quality Reporting System 
that were not specifically proposed in the proposed rule.
    Response: We appreciate the commenters' suggestions on new measures 
and measure topics. However, as we stated in the proposed rule (76 FR 
42862), section 1848(k)(2)(D) of the Act requires that the public have 
the opportunity to provide input during the selection of measures. We 
also are required to provide an opportunity for public comment on 
provisions of policy or regulation that are established via notice and 
comment rulemaking. Measures that are not included in this final rule 
with comment period for inclusion in the 2012 Physician Quality 
Reporting System that are recommended to us via comments on the 
proposed rule have not been placed before the public to comment on the 
selection of those measures within the rulemaking process. Even when 
measures have been published in the Federal Register, but in other 
contexts and not specifically proposed as Physician Quality Reporting 
System measures, we do not believe that such publication provides the 
best opportunity for public comment on those measures' potential 
inclusion in the Physician Quality Reporting System. Thus, such 
additional measures recommended for selection for the 2012 Physician 
Quality Reporting System via comments on the CY 2012 PFS proposed rule 
are not included in the 2012 measure set. As such, while we welcomed 
all constructive comments and suggestions, and may consider such 
recommended measures for inclusion in future measure sets for the 
Physician Quality Reporting System and other programs to which such 
measures may be relevant, we are not able to consider such additional 
measures for inclusion in the final 2012 Physician Quality Reporting 
System measure set.
    In addition, as in prior years, we again note that we do not use 
notice and comment rulemaking as a means to update or modify measure 
specifications. Quality measures that have completed the consensus 
process have a designated party (usually, the measure developer/owner) 
who has accepted responsibility for maintaining the measure. In 
general, it is the role of the measure owner, developer, or maintainer 
to make changes to a measure. Therefore, comments requesting changes to 
a specific Physician Quality Reporting System measure's title, 
definition, and detailed specifications or coding should be directed to 
the measure developer identified in Tables 52 through 55. Contact 
information for the 2011 Physician Quality Reporting System measure 
developers is listed in the ``2011 Physician Quality Reporting System 
Quality Measures List,'' which is available on the CMS Web site at 
http://www.cms.gov/PQRS/15_MeasuresCodes.asp#TopOfPage.
    Based on the criteria previously discussed, we proposed (76 FR 
42862 and 42863) to include the individual measures listed in Tables 29 
through 31 in the 2012 Physician Quality Reporting System individual 
quality measure set. We believe that each measure we proposed and are 
finalizing for reporting under the 2012 Physician Quality Reporting 
System meets at least one criterion for the selection of Physician 
Quality Reporting System measures described previously. We are also 
proposed (76 FR 42873) to include 24 measures groups in the 2012 
Physician Quality Reporting System quality measure set, which were 
listed in Tables 32 through 55 of the proposed rule. The proposed 
individual measures selected for the 2012 Physician Quality Reporting 
System were categorized as follows--
     2012 Physician Quality Reporting System Core Measures 
Available for Either Claims, Registry, and/or EHR-based Reporting;
     2012 Physician Quality Reporting System Individual Quality 
Measures Available for Either Claims-based Reporting and/or Registry-
based Reporting; and
     2012 Physician Quality Reporting System Measures Available 
for EHR-based Reporting.
    Please note that some individual measures we proposed in Tables 32 
through 55 of the proposed rule for reporting for the 2012 Physician 
Quality Reporting System may be available for reporting in other CMS 
programs, such as the Medicare and Medicaid EHR Incentive Program as 
well as the Medicare Shared Savings Program. Please note that, in some 
instances, we have made technical changes in measure titles because the 
respective measure owners have updated these measure titles. We note 
that measure titles, in some instances, may vary from program to 
program. If an eligible professional intends to report the same 
measures for multiple CMS programs, it is important to check the full 
measure specifications, NQF measure number (if applicable), as well as 
any other identifying measure features to determine whether the 
measures are the same.
(3) 2012 Physician Quality Reporting System Individual Measures
    This section focuses on the 2012 Physician Quality Reporting System 
Individual Measures available for reporting via claims, registry, and/
or EHR-based reporting. For the proposed 2012 Physician Quality 
Reporting System measures that were selected for reporting in 2011, 
please note that detailed measure specifications, including the 
measure's title, for the 2012 individual Physician Quality Reporting 
System quality measures may have been updated or modified during the 
NQF endorsement process or for other reasons prior to 2012. The 2012 
Physician Quality Reporting System quality measure specifications for 
any given individual quality measure may, therefore, be different from 
specifications for the same quality measure used in prior years. 
Specifications for all 2012 individual Physician Quality Reporting 
System quality measures, whether or not included in the 2011 Physician 
Quality Reporting System program, must be obtained from the 
specifications document for 2012 individual Physician Quality Reporting 
System quality measures, which will be available on the Physician 
Quality Reporting System section of the CMS Web site on or before 
December 31, 2011.
    The following is a summary of general comments received that were 
related to the proposed 2012 Physician Quality Reporting System 
individual quality measures.

[[Page 73344]]

    Comment: Some commenters were pleased to note that the proposed 
2012 Physician Quality Reporting System individual measures include 
ample measures from which certain specialties may report, such as 
vascular surgeons, and audiologists.
    Response: We appreciate the commenter's feedback and are pleased 
that the 2012 Physician Quality Reporting System provides many measures 
on which these eligible professionals can report.
    Comment: Some commenters suggested that measures that have been 
updated or retired by the respective measure owners be excluded from 
the 2012 Physician Quality Reporting System.
    Response: We update and retire measures that have been either 
updated or retired by the respective measure owners.
    Comment: Several commenters suggested specific quality measures 
and/or measure topics be included in the 2012 Physician Quality 
Reporting System that we did not propose in the proposed rule, such 
as--
     NQF 492: Participation in a practice-based or 
individual quality database registry with a standard measure set (NQF 
492);
     NEQ 493: Participation by a physician or other 
clinician in systematic clinical database registry that includes 
consensus endorsed quality measures;
     Measures related to fluid management; and
     Measures related to oncology.
    Response: We appreciate the commenters' feedback. However, we are 
obligated by section 1848(k)(2)(D) of the Act to give eligible 
professionals an opportunity to provide input on measures recommended 
for selection, which we do via the proposed rule. Since the specific 
measures suggested previously were not proposed for inclusion, these 
additional measures and/or measure topics cannot be included for 
reporting under the 2012 Physician Quality Reporting System. However, 
we will take these measure suggestions into consideration for future 
program years.
    We describe the individual quality measures we are finalizing for 
the 2012 Physician Quality Reporting System as follows: (The measures 
specifications for all finalized 2012 Physician Quality Reporting 
System measures will be available at http://www.cms.gov/PQRS/15_MeasuresCodes.asp#TopOfPage.)
(A) 2012 Physician Quality Reporting System Core Measures Available for 
Claims, Registry, and/or EHR-Based Reporting
    The prevention of cardiovascular conditions is a top priority for 
CMS and HHS. In fact, in 2011, HHS launched the Million Hearts 
campaign, which is aimed at preventing 1 million heart attacks and 
strokes across the next 5-years through clinical- and community-based 
prevention strategies. Therefore, in conjunction with the Million 
Hearts campaign and in an effort to encourage eligible professionals to 
monitor their performance with respect to the prevention of 
cardiovascular conditions, we proposed (76 FR 42863) to adopt a 2012 
Physician Quality Reporting System set of core measures, identified in 
Table 28 of the proposed rule, aimed at promoting cardiovascular care.
    We invited public comment on the proposed 2012 Physician Quality 
Reporting System core measures available for claims, registry, and/or 
EHR-based reporting. The following is a summary of those comments.
    Comment: Several commenters supported the proposed set of 2012 
Physician Quality Reporting System core measures. While commenters 
generally supported the development of a set of Physician Quality 
Reporting System core measures, some of these commenters urge us to 
create additional core measure sets related to other disease modules 
(such as diabetes) for future program years.
    Response: We appreciate the commenters' feedback and are finalizing 
all proposed 2012 Physician Quality Reporting System core measures. We 
will explore the development of additional Physician Quality Reporting 
System core measure sets for future program years.
    Comment: Some commenters opposed the inclusion of the following two 
measures as 2012 Physician Quality Reporting System core measures, 
because they are not NQF-endorsed--
     Preventive Care and Screening: Blood Pressure Measurement; 
and
     Preventive Care: Cholesterol-LDL test performed.
    Response: We appreciate the commenters' feedback. However, as 
stated previously, we believe these measures address important gaps in 
the Physician Quality Reporting System quality measure set and are 
integral to the Million Hearts campaign goal of preventing heart 
attacks and strokes.
    Comment: Several commenters provided suggestions for other measures 
that should be included as a 2012 Physician Quality Reporting System 
core measure, such as--
     Coronary Artery Disease (CAD): Oral Antiplatelet Therapy 
Prescribed for Patients with CAD
     Diabetes Mellitus: High Blood Pressure Control in Diabetes 
Mellitus
     Coronary Artery Disease (CAD): Lipid Control
    Preventive Care and Screening: Body Mass Index (BMI) Screening and 
Follow-Up
     A lipid profile measure
    Response: We appreciate the commenters' feedback. However, we did 
not propose these measures for inclusion in the 2012 Physician Quality 
Reporting System as core measures. We are obligated by section 
1848(k)(2)(D) of the Act to give eligible professionals an opportunity 
to provide input on measures recommended for selection, which we do via 
the proposed rule. Therefore, we are not finalizing these additional 
measures that commenters suggested for reporting under the 2012 
Physician Quality Reporting System as core measures. However, since 
these measures are otherwise still generally reportable under the 
Physician Quality Reporting System via the claims, registry, and/or 
EHR-based reporting mechanisms, we encourage eligible professionals to 
report on these measures.
    Comment: Some commenters suggested we establish a Physician Quality 
Reporting System core measure set addressing other medical topics, such 
as heart failure, ophthalmology, gastroenterology, and coronary artery 
disease.
    Response: We appreciate the commenters' feedback and we are 
interested in developing measure sets that focus on other medical 
areas. We will take these core measures suggestions into consideration 
for future program years.
    Based on the comments received and for the reasons stated 
previously, we are finalizing the 2012 Physician Quality Reporting 
System core measures listed in the following Table 46. Please note that 
the measure titled ``Proportion of adults 18-years and older who have 
had their BP measured within the preceding 2-years'' has been updated 
to ``Preventive Care and Screening: Blood Pressure Measurement.'' 
Therefore, this new measure title, when listed, will be used in Tables 
47 through 72.
    As stated previously, we are not requiring that eligible 
professionals report on these core measures. However, we view the 
reporting of these measures as a top priority to report and strongly 
encourage all eligible professionals to report on these measures. We 
are also listing these finalized Physician Quality

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Reporting System core measures in Tables 48 and 49.
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(B) 2012 Physician Quality Reporting System Individual Measures for 
Claims and Registry Reporting
    For 2012, we proposed (76 FR 42863) to retain all measures 
currently used in the 2011 Physician Quality Reporting System. We 
believe these 2011 Physician Quality Reporting System measures meet the 
statutory considerations as well as other factors we used in 
determining which measures to include for reporting under the 2012 
Physician Quality Reporting System. The retention of these measures 
also promotes program consistency. These proposed measures included 55 
registry-only measures currently used in the 2011 Physician Quality 
Reporting System, and 144 individual quality measures for either 
claims-based reporting or registry-based reporting (75 FR 40186 through 
40190, and 52489 through 52490). These proposed measures do not include 
any measures that were proposed to be included as part of the following 
measures groups: Back Pain, COPD, IBD, Sleep Apnea, Epilepsy, Dementia, 
Parkinson's, Elevated Blood Pressure, and Cataracts.
    As we stated in the proposed rule (76 FR 42864), in 2011, Physician 
Quality Reporting System measure 197 was titled ``Coronary 
Artery Disease (CAD): Drug Therapy for Lowering LDL-Cholesterol.'' For 
2012, we are changing the title of measure 197 to ``Coronary 
Artery Disease: Lipid Control'', because the measure owner, AMA-PCPI, 
has changed the title of the measure. Aside from the title change, 
measure 197's NQF number as well as its NQF-endorsement status 
has not changed. However, as noted previously, eligible professionals 
should check the measure specifications for measure 197, as 
the specifications on how to report on measure 197 for the 
2012 Physician Quality Reporting System may change from 2011.
    In addition, we proposed (76 FR 42864) the 26 new individual 
measures for inclusion in the 2012 Physician Quality Reporting System 
in order to provide eligible professionals with more Physician Quality 
Reporting System quality measures on which they can select from to 
report. The following 2 proposed measures are NQF-endorsed:
     Anticoagulation for Acute Pulmonary Embolus Patients.
     Pregnancy Test for Female Abdominal Pain Patients.
    The remaining 24 measures we proposed (76 FR 42864) were either 
pending NQF endorsement or would have to be adopted under the exception 
to NQF endorsement provided under section 1848(k)(2)(C)(ii) of the Act. 
In selecting these proposed measures, we took into account other 
considerations listed in section VI.F.1.f.2.. of the proposed rule. 
Specifically, fwe proposed to include the following measures for 
reporting under the 2012 Physician Quality Reporting System because the 
measures impact chronic conditions:
     Chronic Wound Care: Use of Wound Surface Culture Technique 
in Patients with Chronic Skin Ulcers.
     Chronic Wound Care: Use of Wet to Dry Dressings in 
Patients with Chronic Skin Ulcers.
     Hypertension: Blood Pressure Control.
    We proposed the following measures because these measures involve 
care coordination:

[[Page 73346]]

     Coronary Artery Disease (CAD): Symptom Management.
    We proposed the following measures for reporting under the 
Physician Quality Reporting System because these measures are 
applicable across care settings:
     Substance Use Disorders: Counseling Regarding Psychosocial 
and Pharmacologic Treatment Options for Alcohol Dependence.
     Substance Use Disorders: Screening for Depression Among 
Patients with Substance Abuse or Dependence.
     Cardiac Rehabilitation Patient Referral From an Outpatient 
Setting.
    We proposed (76 FR 42864) the following measures because we believe 
the measures address gaps in the Physician Quality Reporting System 
measure set:
     Barrett's Esophagus.
     Ultrasound Determination of Pregnancy Location for 
Pregnant Patients with Abdominal Pain.
     Rh Immunoglobulin (Rhogam) for Rh Negative Pregnant Women 
at Risk of Fetal Blood Exposure.
     Surveillance after Endovascular Abdominal Aortic Aneurysm 
Repair (EVAR).
     Referral for Otology Evaluation for Patients with Acute or 
Chronic Dizziness.
     Image Confirmation of Successful Excision of Image-
Localized Breast Lesion.
     Improvement in Patient's Visual Function within 90-Days 
Following Cataract Surgery.
     Patient Satisfaction within 90-Days Following Cataract 
Surgery.
    We proposed the following measures because we believe the measures 
increase the scope of applicability of the Physician Quality Reporting 
System measures to services furnished to Medicare beneficiaries and 
expand opportunities for eligible professionals to participate in the 
Physician Quality Reporting System:
     Radical Prostatectomy Pathology Reporting.
     Immunohistochemical (IHC) Evaluation of HER2 for Breast 
Cancer Patients .
    We proposed the following measures because the measures are high 
impact and support CMS and HHS priorities for improved quality and 
efficiency of care for Medicare beneficiaries.
     Statin Therapy at Discharge after Lower Extremity Bypass 
(LEB).
     Rate of Open AAA Repair without Major Complications 
(discharged to home no later than post-operative day 7).
     Rate of EVAR without Major Complications (discharged to 
home no later than POD 2).
     Rate of Carotid Endarterectomy for Asymptomatic Patients, 
without Major Complications (discharged to home no later than post-
operative day 2).
    We proposed the following measures because the measures have a high 
impact on health care:
     Preoperative Diagnosis of Breast Cancer.
     Sentinel Lymph Node Biopsy for Invasive Breast Cancer.
     Biopsy Follow-up.
    Of these newly proposed 26 measures, 13 would be reportable via 
registry-only. The remaining 13 measures would be available for claims 
and registry reporting. Although we proposed to designate certain 
measures as registry-only measures, we indicated we could not guarantee 
that there would be a registry qualified to submit each registry-only 
measure for 2012. We rely on registries to self-nominate and identify 
the measures for which they would like to be qualified to submit 
quality measures results and numerator and denominator data on quality 
measures. If no registry self-nominates to submit measure results and 
numerator and denominator data on a particular measure for 2012, then 
an eligible professional would not be able to report that particular 
measure.
    We believe that the addition of Physician Quality Reporting System 
quality measures will encourage eligible professionals to participate 
in the Physician Quality Reporting System, as there are more measures 
that may be applicable to eligible professionals.
    We invited public comment on the proposed 2012 Physician Quality 
Reporting System individual quality measures that are available for 
claims and/or registry-based reporting identified in Table 30 of the 
proposed rule (76 FR 42865). The following is a summary of the comments 
we received.
    Comment: One commenter supported the inclusion of all 2011 
Physician Quality Reporting System individual quality measures 
available for claims and registry-based reporting. Several commenters 
supported the following proposed 2012 Physician Quality Reporting 
System individual measures available for claims and/or registry-based 
reporting that were available for reporting in 2011:
     End Stage Renal Disease (ESRD): Influenza Immunization in 
Patients with ESRD.
     End Stage Renal Disease (ESRD): Plan of Care for 
Inadequate Hemodialysis in ESRD Patients.
     End Stage Renal Disease (ESRD): Plan of Care for 
Inadequate Peritoneal Dialysis.
     Functional Deficit: Change in Risk-Adjusted Functional 
Status for Patients with Hip Impairments.
     Functional Deficit: Change in Risk-Adjusted Functional 
Status for Patients with Lower Leg, Foot or Ankle Impairments.
     Functional Deficit: Change in Risk-Adjusted Functional 
Status for Patients with Lumbar Spine Impairments.
     Functional Deficit: Change in Risk-Adjusted Functional 
Status for Patients with Shoulder Impairments.
     Functional Deficit: Change in Risk-Adjusted Functional 
Status for Patients with Elbow, Wrist or Hand Impairments.
     Functional Deficit: Change in Risk-Adjusted Functional 
Status for Patients with Neck, Cranium, Mandible, Thoracic Spine, Ribs, 
or Other General Orthopedic Impairments.
     Diabetes Mellitus: Urine Screening for Microalbumin or 
Medical Attention for Nephropathy in Diabetic Patients.
     Hemodialysis Vascular Access Decision-Making by Surgeon to 
Maximize Placement of Autogenous Arterial Venous (AV) Fistula.
     Referral for Otologic Evaluation for Patients with 
Congenital or Traumatic Deformity of the Ear.
     Measure pair: a. Tobacco Use Assessment, b. Tobacco 
Cessation Intervention.
     Preventive Care and Screening: Influenza Immunization for 
Patients >= 50 Years Old.
     Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 
Mellitus.
     Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control 
in Diabetes Mellitus.
     Diabetes Mellitus: High Blood Pressure Control in Diabetes 
Mellitus.
     Heart Failure: Angiotensin-Converting Enzyme (ACE) 
Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left 
Ventricular Systolic Dysfunction (LVSD).
     Coronary Artery Disease (CAD): Beta-Blocker Therapy for 
CAD Patients with Prior Myocardial Infarction (MI).
     Preventive Care and Screening: Pneumonia Vaccination for 
Patients 65 Years and Older.
     Coronary Artery Disease (CAD): Oral Antiplatelet Therapy 
Prescribed for Patients with CAD.
     Heart Failure: Beta-Blocker Therapy for Left Ventricular 
Systolic Dysfunction (LVSD).
     Coronary Artery Disease (CAD): Lipid Control.
     Heart Failure: Warfarin Therapy for Patients with Atrial 
Fibrillation.
     Ischemic Vascular Disease (IVD): Blood Pressure 
Management.

[[Page 73347]]

     Ischemic Vascular Disease (IVD): Use of Aspirin or Another 
Antithrombotic.
     Endoscopy & Polyp Surveillance: Colonoscopy Interval for 
Patients with a History of Adenomatous Polyps--Avoidance of 
Inappropriate Use.
    One commenter was opposed to the measure titled ``End Stage Renal 
Disease (ESRD): Influenza Immunization in Patients with ESRD'' because 
the commenter believes reporting of this measure will create a higher 
burden for dialysis facility staff.
    Response: We are finalizing all of the measures commenters 
supported, except for the following measure, because, as stated 
previously, the measure is being retired by the respective measure 
owner:
     End Stage Renal Disease (ESRD): Influenza Immunization in 
Patients with ESRD
    Comment: Several commenters supported the inclusion of all 26 newly 
introduced individual measures for reporting under the 2012 Physician 
Quality Reporting System via the claims and/or registry-based reporting 
mechanisms. Some commenters supported specific newly proposed 2012 
Physician Quality Reporting System individual quality measures 
available for claims and/or registry-based reporting, such as--
     Substance Use Disorders: Counseling Regarding Psychosocial 
and Pharmacologic Treatment Options for Alcohol Dependence;
     Substance Use Disorders: Screening for Depression Among 
Patients with Substance Abuse or Dependence;
     Cardiac Rehabilitation Patient Referral From an Outpatient 
Setting;
     Immunohistochemical (IHC) Evaluation of HER2 for Breast 
Cancer Patients;
     Image Confirmation of Successful Excision of Image-
Localized Breast Lesion;
     Preoperative Diagnosis of Breast Cancer;
     Sentinel Lymph Node Biopsy for Invasive Breast Cancer;
     Biopsy Follow-up;
     Barrett's Esophagus;
     Radical Prostatectomy Pathology Reporting;
     Immunohistochemical (IHC) Evaluation of HER2 for Breast 
Cancer Patients;
     Substance Use Disorders: Counseling Regarding Psychosocial 
and Pharmacologic Treatment Options for Alcohol Dependence; and
     Substance Use Disorders: Screening for Depression Among 
Patients with Substance Abuse or Dependence.
    Response: We appreciate the commenters' support and are finalizing 
these newly-proposed 26 measures specified previously as 2012 Physician 
Quality Reporting System quality measures available for claims and/or 
registry-based reporting.
    Comment: A few commenters noted that the following measures that we 
indicated were not NQF-endorsed in the proposed rule (76 FR 42864), in 
fact, received NQF endorsement:
     Cardiac Rehabilitation Patient Referral From an Outpatient 
Setting.
     Ultrasound Determination of Pregnancy Location for 
Pregnant Patients with Abdominal Pain.
     Rh Immunoglobulin (Rhogam) for Rh Negative Pregnant Women 
at Risk of Fetal Blood Exposure.
    One commenter also requested that the measure titled ``Rh 
Immunoglobulin (Rhogam) for Rh Negative Pregnant Women at Risk of Fetal 
Blood Exposure'' be also be reported via claims, rather than only via 
the registry-based reporting mechanism.
    Response: We appreciate the commenters' comment and note that these 
measures are endorsed by the NQF. Therefore, we are finalizing these 
measures for reporting via the claims and/or registry-based reporting 
mechanism for the 2012 Physician Quality Reporting System. The 
corresponding NQF numbers for these measures are indicated in the 
following Table 47. Furthermore, 'since we agree with the commenter, we 
are allowing the reporting of the measure titled ``Rh Immunoglobulin 
(Rhogam) for Rh Negative Pregnant Women at Risk of Fetal Blood 
Exposure'' to also be reported via claims as well as registry.
    Comment: With respect to the measure titled ``Patient Satisfaction 
within 90 Days Following Cataract Surgery'', one commenter wondered 
whether there was an alternative NQF-endorsed measure that may be 
reported to indicate patient satisfaction.
    Response: An alternative NQF-endorsed measure addressing patient 
satisfaction was not submitted for possible inclusion in the 2012 
Physician Quality Reporting System. We also note that the measure is to 
be reported whether or not the patient was satisfied with their care. 
Rather, the measure analytics will calculate the percentage of patients 
who were satisfied or not satisfied with their care.
    Comment: Some commenters suggested that all measures be reportable 
via claims, at least for the first year in which the measure is 
introduced for reporting in the Physician Quality Reporting System. One 
commenter suggested that we reconsider the inclusion of measures that 
are only reportable via a registry that is only open to certain 
eligible professionals.
    Response: We appreciate the commenters' feedback. However, some 
measures are not conducive to collection via claims because they may 
require data that is not available at the time a claim form is 
submitted. For example, some outcome measures that look at 
complications which may occur within a specific post-operative period 
would be difficult to collect from claims. In bundled or global 
payments, there may not be additional claims coming to CMS with charges 
in which the eligible professional could report a complication. Other 
measures can be difficult to collect via claims due to their 
complexity. Additionally, each year one or more registries request 
being vetted (qualified) to report on any and all Physician Quality 
Reporting System measures which would give a specific specialty an 
opportunity to report any new measures.
    In addition, we understand the concern that certain eligible 
professionals may not be able to report on registry-only measures. 
However, we believe it is beneficial that we provide as many measures 
as possible on which eligible professionals may report so as to 
increase participation and eligible professionals' reporting success 
rates. We believe the inclusion of registry-only measures provides a 
greater set of measures on which to satisfactorily report.
    Comment: One commenter suggested that we update the following 2011 
Physician Quality Reporting System measure titles to reflect their new 
measure titles:
     Measure 7: Coronary Artery Disease (CAD): Beta-
Blocker Therapy- Prior Myocardial Infarction (MI) or Left Ventricular 
Systolic Dysfunction (LVEF  Measure 53: Asthma: Pharmacologic Therapy for 
Persistent Asthma.
     Measure 64: Asthma: Assessment of Asthma Control.
     Measure 81: Adult Kidney Disease: Hemodialysis 
Adequacy: Solute.
     Measure 82: Adult Kidney Disease: Peritoneal 
Dialysis Adequacy: Solute.
     Measure 32: Stroke and Stroke Rehabilitation: 
Discharged on Antithrombotic Therapy.
     Measure 36: Stroke and Stroke Rehabilitation: 
Rehabilitation Services Ordered.
     Measure 224: Melanoma: Overutilization of Imaging 
Studies in Melanoma.
     Measure 121: Adult Kidney Disease: Laboratory 
Testing (Lipid Profile).

[[Page 73348]]

     Measure 122: Adult Kidney Disease: Blood Pressure 
Management.
     Measure 123: Adult Kidney Disease: Patients on 
Erythropoiesis-Stimulating Agent (ESA) Hemoglobin Level > 12.0 g/dL.
     Measure 197: Coronary Artery Disease (CAD): Lipid 
Control.
     Measure 110: Preventive Care and Screening: 
Influenza Immunization.
    Response: We appreciate the commenter's feedback and are finalizing 
these measures for reporting under the Physician Quality Reporting 
System. The updated measure titles for Physician Quality Reporting 
System measure s 7, 53, 64, 81, 82, 32, 36, 224, and 121 are 
provided in our final list of measures identified in Tables 48 and 49 
as well as in Tables 50 through 71, which contain our final 2012 
Physician Quality Reporting System measures groups.
    Comment: One commenter expressed concern that we are retiring the 
measure titled ``End Stage Renal Disease (ESRD): Plan of Care for 
Inadequate Hemodialysis in ESRD Patients'' due to its lack of 
endorsement by the NQF.
    Response: We are not retiring this measure, which is Physician 
Quality Reporting System measure  81. As we stated previously, 
however, we are updating the title of this measure to ``Adult Kidney 
Disease: Hemodialysis Adequacy: Solute.''
    Comment: One commenter suggested that we correct the title to 
Physician Quality Reporting System measure  186 as the measure 
is titled ``Chronic Wound Care: Use of Compression System in Patients 
with Venous Ulcers.''
    Response: We appreciate the commenter's feedback and are updating 
this measure title in our list of finalized measures in the following 
Table 47.
    Comment: One commenter suggested that we update Physician Quality 
Reporting System measures  5, 8, and 198 to reflect new joint 
copyright between the AMA-PCPI and ACC. Another commenter suggested 
that we update Physician Quality Reporting System measures  
53, 64, 224, and 231 to reflect new joint copyright ownership between 
the AMA-PCPI and NCQA. Another commenter suggested that we update 
Physician Quality Reporting System measures  6, 7, 118, 196, 
and 197 to reflect new joint copyright ownership between the AMA-PCPI 
and AHA.
    Response: We appreciate the commenter's' feedback will reflect 
these changes in copyright ownership in all of these measures, which 
are listed in Tables 48 and 49.
    Comment: One commenter suggested that we update the description of 
Physician Quality Reporting System measure  108 and  
117 to reflect the correct measure developers, who are AMA-PCPI/NCQA 
and NCQ respectively.
    Response: We appreciate the commenter's feedback and are updating 
the measure descriptions of Physician Quality Reporting System measures 
 108 and  117 accordingly.
    Comment: One commenter stated that Physician Quality Reporting 
System measures  67, 68, 69, and 70 state the measures' 
clinical topic, hematology.
    Response: We appreciate the commenter's feedback and will include 
the measures' clinical topic, hematology, in the measure titles for 
Physician Quality Reporting System measures  108 and 117 in 
the finalized measures listed in the following Tables 48 and 49.
    Comment: One commenter suggested that we retire the following 
measure that we proposed for reporting via claims, registry, and/or 
EHR-based reporting under the 2012 Physician Quality Reporting System: 
Physician Quality Reporting System 200: Heart Failure: 
Warfarin Therapy for Patients with Atrial Fibrillation because the 
commenter claims the use of warfarin therapy to treat Atrial 
Fibrillation is no longer consistent with evidence-based clinical 
guidelines.
    Response: We agree that the Physician Quality Reporting System 
quality measure 200 is no longer consistent with the evidence-
based clinical guidelines. However, we believe it is important to 
retain this measure for the EHR-based reporting mechanism for the 2012 
Physician Quality Reporting System in order to align with the EHR 
Incentive Program. Therefore, as specified in the following Table 48, 
we are only finalizing this measure for reporting under the EHR-based 
reporting mechanism only. We note that the measure owner has modified 
the measure specifications of Physician Quality Reporting System 
quality measure 200 to allow for the use of additional 
therapies that are more consistent with the updated guidelines. We note 
that, for future program years, we will revisit the inclusion of this 
measure in the Physician Quality Reporting System and EHR Incentive 
Program. We emphasize our belief that eligible professionals should 
follow standard clinical guidelines related to the treatment of Atrial 
Fibrillation.
    Comment: One commenter suggested that we retire the following 
measure that we proposed for reporting via claims and/or registry under 
the 2012 Physician Quality Reporting System: Measure 6, which 
the commenter described as ''Use of High Risk-Medications in the 
Elderly,'' because the commenter believes that the measure may not 
represent the most up-to-date evidence-based clinical guidelines.
    Response: We appreciate the commenter's feedback. However, 
Physician Quality Reporting System measure 6 is ``Coronary 
Artery Disease (CAD): Antiplatelet Therapy,'' not ``Use of High Risk-
Medications in the Elderly.'' ``Use of High Risk-Medications in the 
Elderly'' is not a measure that we proposed for inclusion in the 2012 
Physician Quality Reporting System. For 2012, we are finalizing 
Physician Quality Reporting System measure 6 for reporting via 
claims and/or registry.
    Comment: One commenter opposed the inclusion of the following newly 
proposed 2012 Physician Quality Reporting System individual measures:
     Chronic Wound Care: Use of Wound Surface Culture Technique 
in Patients with Chronic Skin Ulcers.
     Chronic Wound Care: Use of Wet to Dry Dressings in 
Patients with Chronic Skin Ulcers.
    The commenter believes that these measures will encourage eligible 
professionals to use more expensive dressings without improving quality 
of care.
    Response: We appreciate the commenter's feedback. However, we 
believe these measures will create a positive impact to on providing 
care to patients with chronic wounds. We encourage the commenter to 
review the revised measure specifications within the Physician Quality 
Reporting System. These measures are calculated as ``inverse'' 
measures. Therefore, a lower rate indicates a better performance/
control or quality indicator.
    For the reasons stated previously, we proposed to include, but are 
not finalizing, the following measures for claims and/or registry-based 
reporting in the 2012 Physician Quality Reporting System:
     135: Chronic Kidney Disease (CKD): Influenza 
Immunization.
     79: End Stage Renal Disease (ESRD): Influenza 
immunization in Patients with ESRD.
     175: Pediatric Stage Renal Disease (ESRD): 
Influenza Immunization.
    Furthermore, as shown in the following Table 47, we are not 
finalizing the following measures for the following reasons:
     Physician Quality Reporting System measure 94 
titled ``Otitis Media with Effusion (OME): Diagnostic Evaluation--
Assessment of Tympanic Membrane Mobility'': this measure underwent NQF 
review, but did not receive endorsement from the NQF.

[[Page 73349]]

     Physician Quality Reporting System measure 153 
titled ``Chronic Kidney Disease (CKD): Referral for Arteriovenous (AV) 
Fistula'': this measure owner has removed this measure for purposes of 
quality reporting.
     Physician Quality Reporting System measure 202 
titled ``Ischemic Vascular Disease (IVD): Complete Lipid Profile'' and 
Physician Quality Reporting System measure 203 titled 
``Ischemic Vascular Disease (IVD): Low Density Lipoprotein (LDL-C) 
Control'': these measures have been combined into a single measure 
titled ``Ischemic Vascular Disease (IVD): Complete Lipid Profile and 
LDL Control 
or registry-based reporting in the 2012 Physician Quality Reporting 
System. We proposed (76 FR 42877) an Epilepsy measures group for 
inclusion in the 2012 Physician Quality Reporting System. As described 
in further detail later in this section, we are not finalizing the 
proposed Epilepsy measures group. However, we are still finalizing 
three of the measures from this measures group for reporting as 
individual measures. Table 47 lists a total of 240 individual measures 
available for claims and/or registry-based reporting under the 2012 
Physician Quality Reporting System.
    We note that the final measures available for claims and/or 
registry-based reporting listed in Table 47 that do not have NQF 
measure numbers (as indicated by ``N/A'') are not currently endorsed by 
the NQF. These measures are awaiting review and endorsement by the NQF. 
Therefore, for these measures, for reasons previously explained, we are 
exercising our authority under section 1848(k)(2)(C)(i) of the Act to 
include these measures for reporting via the claims and/or registry-
based reporting mechanisms.
    The 2012 Physician Quality Reporting System individual measures for 
either claims-based reporting or registry-based reporting are listed in 
Table 47 by their Physician Quality Reporting System Measure Number (to 
the extent the measure is part of the 2011 Physician Quality Reporting 
System measure set) and Title, along with the name of the measure's 
developer/owner and NQF measure number, if applicable. The Physician 
Quality Reporting System Measure Number is a unique identifier assigned 
by CMS to all measures in the Physician Quality Reporting System 
measure set. Once a Physician Quality Reporting System Measure Number 
is assigned to a measure, it will not be used again to identify a 
different measure, even if the original measure to which the number was 
assigned is subsequently retired from the Physician Quality Reporting 
System measure set. A description of the measures listed in Table 47 
can be found in the ``2011 Physician Quality Reporting System Quality 
Measures List,'' which is available on the Measures and Codes page of 
the Physician Quality Reporting System section of the CMS Web site at 
http://www.cms.hhs.gov/PQRS to the extent the measure is part of the 
2011 Physician Quality Reporting System measure set. New measures that 
we are adding to the Physician Quality Reporting System measure set for 
2012 are designated with a Physician Quality Reporting System Measure 
Number of ``TBD.'' As we stated previously, the final 2012 Physician 
Quality Reporting System core measures are also listed in Table 47.
BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C
(C) 2012 Measures Available for EHR-Based Reporting
    For 2012, we proposed (76 FR 42871) to again accept Physician 
Quality Reporting System data from EHRs for a limited subset of 2012 
Physician Quality Reporting System quality measures.
    Section 1848(m)(7) of the Act (``Integration of Physician Quality 
Reporting and EHR Reporting''), as added by section 3002(d) of the 
Affordable Care Act, requires that by no later than January 1, 2012, 
the Secretary shall develop a plan to integrate reporting on quality 
measures under the Physician Quality Reporting System with reporting 
requirements under the EHR Incentive Program under section 1848(o) of 
the Act relating to the meaningful use of EHRs. Such integration shall 
consist of the following:
    (A) The selection of measures, the reporting of which would both 
demonstrate--
    (i) Meaningful use of an EHR for purposes of the Medicare EHR 
Incentive Program; and
    (ii) Quality of care furnished to an individual; and
    (B) Such other activities as specified by the Secretary.
    To align the Physician Quality Reporting System with the Medicare 
EHR Incentive Program, we proposed (76 FR 42871) to include all 
clinical quality measures available for reporting under the Medicare 
EHR Incentive Program (75 FR 44398 through 44408) -in the 2012 
Physician Quality Reporting System for purposes of reporting data on 
quality measures under the EHR-based reporting option. In 2011, we 
included 14 of the 44 EHR Incentive Program measures under the 2011 
Physician Quality Reporting System EHR reporting mechanism. In order to 
better align Physician Quality Reporting System measures with those 
under the EHR Incentive Program, for 2012, we proposed to have the rest 
of the 44 clinical quality measures in the Medicare EHR Incentive 
Program available for EHR-based reporting under the 2012 Physician 
Quality Reporting System.
    Furthermore, for 2012, we proposed to retain the following 6 
additional measures that were available for reporting under the EHR-
based reporting mechanism under the 2011 Physician Quality Reporting 
System:
     Measure  39: Screening or Therapy for 
Osteoporosis for Women Aged 65 Years and Older.
     Measure  47: Advance Care Plan.
     Measure  48: Urinary Incontinence: Assessment of 
Presence or Absence of Urinary Incontinence in Women Aged 65 Years and 
Older.

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     Measure  124: Health Information Technology 
(HIT): Adoption/Use of Electronic Health Records (EHR).
     Measure  173: Preventive Care and Screening: 
Unhealthy Alcohol Use--Screening.
     Measure  238: Drugs to be Avoided in the Elderly.
    We believe these measures meet the criteria listed previously for 
inclusion for reporting under the Physician Quality Reporting System.
    We invited public comment on the proposed EHR-based individual 
quality measures available for reporting under the 2012 Physician 
Quality Reporting System. The following is a summary of the comments we 
received.
    Comment: Several commenters support the inclusion of all 44 EHR 
measures that are also available for reporting under the EHR Incentive 
Program in order to align reporting requirements and options for the 
Physician Quality Reporting System and EHR Incentive Program.
    Response: We appreciate the commenters' support and are finalizing 
the inclusion of all 44 EHR measures that are also available for 
reporting under the EHR Incentive Program as 2012 Physician Quality 
Reporting System measures available for EHR-based reporting.
    Comment: Some commenters supported the following specific proposed 
2012 Physician Quality Reporting System measures available for EHR-
based reporting as they address important medical topics:
     Preventive Care and Screening: Body Mass Index (BMI) 
Screening and Follow-up
     Hypertension (HTN): Blood Pressure Measurement
     Measure pair: a. Tobacco Use Assessment, b. Tobacco 
Cessation Intervention
     Preventive Care and Screening: Influenza Immunization for 
Patients >= 50 Years Old
     Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control 
in Diabetes Mellitus
     Heart Failure: Angiotensin-Converting Enzyme (ACE) 
Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left 
Ventricular Systolic Dysfunction (LVSD)
     Coronary Artery Disease (CAD): Oral Antiplatelet Therapy 
Prescribed for Patients with CAD
     Heart Failure: Warfarin Therapy for Patients with Atrial 
Fibrillation
     Ischemic Vascular Disease (IVD): Blood Pressure Management
     Ischemic Vascular Disease (IVD): Use of Aspirin or Another 
Antithrombotic
    Response: We appreciate the commenters' feedback and are finalizing 
all of the measures commenters supported for EHR-based reporting for 
the 2012 Physician Quality Reporting System.
    Comment: One commenter suggested that we collaborate with NQF to 
develop health information technology-based quality measures.
    Response: With respect to EHR measures that we have adopted from 
the EHR Incentive Program, we note that we are collaborating with NQF 
to develop these quality measures.
    Comment: One commenter suggested that all commonly reported 
Physician Quality Reporting System measures be available for EHR-based 
reporting.
    Response: We appreciate the commenter's feedback. However, each 
measure's method of reporting is determined by the measure owners and 
developers. Therefore, we cannot affect the method in which measures 
may be reported.
    We proposed to include but are not finalizing the following measure 
for EHR-based reporting in the 2012 Physician Quality Reporting System, 
because we believe that use of electronic health records is already 
addressed in most of the measures we are finalizing:
     ``Health Information Technology: Adoption/Use of 
Electronic Health Records''
    Based on the comments received and for the reasons stated 
previously, we are finalizing the 70 measures identified in Table 48 
for EHR-based reporting under the 2012 Physician Quality Reporting 
System. As we stated previously, the final 2012 Physician Quality 
Reporting System core measures are also listed in Table 48.
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BILLING CODE 4120-01-C
(4) 2012 Physician Quality Reporting System Measures Groups
    We proposed (76 FR 42873) to retain the following 14 2011 Physician 
Quality Reporting System measures groups for the 2012 Physician Quality 
Reporting System: (1) Diabetes Mellitus; (2) Adult Kidney Disease 
(formerly CKD); (3) Preventive Care; (4) CABG; (5) Rheumatoid 
Arthritis; (6) Perioperative Care; (7) Back Pain; (8) CAD; (9) Heart 
Failure; (10) IVD; (11) Hepatitis C; (12) HIV/AIDS; (13) CAP, and (14) 
Asthma. For 2012, we proposed that the CABG, CAD, Heart Failure, and 
HIV/AIDS measures groups would continue to be reportable through the 
registry-based reporting mechanism only, while the remaining Diabetes 
Mellitus, CKD, Preventive Care, Rheumatoid Arthritis, Perioperative 
Care, Back Pain, IVD, Hepatitis C, CAP, and Asthma measures groups 
would continue to be reportable through either claims-based reporting 
or registry-based reporting. We proposed to retain these measures 
groups for the 2012 Physician Quality Reporting System particularly 
because we believe the measures groups reflect the services furnished 
to beneficiaries by a particular specialty. We also believe that 
retaining these measures groups would provide consistency from program 
year to program year.
    In addition to the 14 measures groups previously discussed, we 
proposed (76 FR 42873 through 42879) the following 10 new measures 
groups for 2012 to provide eligible professionals with more measures 
groups on which to report:
     Chronic Obstructive Pulmonary Disease (COPD).
     Inflammatory Bowel Disease.
     Sleep Apnea.
     Epilepsy.
     Dementia.
     Parkinson's.
     Elevated Blood Pressure.
     Radiology.
     Cardiovascular Prevention, which contains individual 
measures from the Physician Quality Reporting System core measure set 
previously discussed.
     Cataracts.
    These are the measures groups that were presented to us by measure 
owners and developers for inclusion for reporting under the 2012 
Physician Quality Reporting System. Section 1848(k)(2)(C)(ii) of the 
Act provides an exception to the requirement that measures be endorsed 
by the NQF. We may exercise this exception authority in a specified 
area or medical topic for which a feasible and practical measure has 
not been endorsed by NQF, so long as due consideration is given to 
measures that have been endorsed by the NQF. For the measures contained 
within these measures groups that are not currently NQF-endorsed, we 
proposed to exercise this authority due to our interest in all of the 
proposed 10 measures group's topics. We believe that each of these 
additional measures groups address gaps in the Physician Quality 
Reporting System measures groups and will also allow for greater 
reporting options for individual eligible professionals, thereby 
increasing participation in the Physician Quality Reporting System.
    Finally, as in previous program years, for 2012, we proposed (76 FR 
42873) that the measures included in any proposed 2012 measures group 
be reportable either as individual measures or as part of a measures 
group, except for the Back Pain measures group, which would continue to 
be reportable only as part of a measures group and not as individual 
measures in 2012.
    As with measures group reporting in prior program years, we 
proposed that each eligible professional electing to report a group of 
measures for 2012 must report all measures in the group that are 
applicable to each patient or encounter to which the measures group 
applies at least up to the minimum number of patients required by the 
applicable reporting criteria.
    We invited public comment on our proposed retention of all 2011 
Physician Quality Reporting System measures groups, as well as our 
newly proposed measures groups for the 2012 Physician Quality Reporting 
System. The following is a summary of the comments received that were 
related to the proposed 2012 Physician Quality Reporting System 
measures groups.
    Comment: Some commenters supported our proposal to continue the 
measures group method of reporting.
    Response: We believe that reporting measures in this manner will 
allow us to collect information on patient experience and care that 
related to a particular disease.
    Comment: Some commenters supported the following measures groups 
for inclusion as a 2012 Physician Quality Reporting System measures 
group because they address important medical topics: Coronary Artery 
Disease; Heart Failure; Sleep Apnea; Hepatitis C; Elevated Blood 
Pressure; Epilepsy; Hypertension; Cardiovascular Prevention; Cataracts; 
Parkinson's; Diabetes; Dementia; and Radiology.
    Response: We appreciate the commenters' feedback and are finalizing 
all of the proposed measures groups for the 2012 Physician Quality 
Reporting System, except for the Epilepsy measures group and Radiology 
measures group. With respect to the Epilepsy measures group, 2 of the 
proposed 5 measures under this measures group did not receive NQF-
endorsement. Since these measures have undergone review by the NQF but 
did not receive endorsement, we are not finalizing these measures for 
the 2012 Physician Quality Reporting System. Because a measures group 
must contain at least 4 measures, we are not finalizing the Epilepsy 
measures group. However, we are retaining the remaining 3 measures in 
the proposed Epilepsy measures group for reporting as individual 
measures via the claims and/or registry-based reporting mechanisms. 
With respect to the Radiology measures group, the measure owner 
withdrew the measure group for consideration as a 2012

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Physician Quality Reporting System measures group.
    Furthermore, we note that, although we are finalizing the 
Parkinson's measures group, we are not finalizing the following measure 
contained within this measures group because the measure was reviewed 
by NQF but not endorsed: Parkinson's Disease Medical and Surgical 
Treatment Options.
    Although we are finalizing the Elevated Blood Pressure measures 
group, we are not finalizing the following measures contained within 
this measures group because, because these measures differ from other 
Physician Quality Reporting System measures in that they are survey-
based; therefore, it is not operationally feasible for us to analyze 
data collected under these measures:
     Overall Hypertension Care Satisfaction
     Patient Self-care Support
    Comment: Some commenters made specific suggestions to the proposed 
2012 Radiology measures group, such as renaming the Radiology measures 
group, reducing the number of measures contained within the Radiology 
measures group, reconsidering the measures contained with the Radiology 
measures group so that the measures contained in this measures group 
have similar denominators, and splitting the Radiology measures group 
into two Radiology measures groups.
    Response: We appreciate the commenters' feedback. However, as we 
noted previously, we are not finalizing the Radiology measures group 
for 2012, because the Radiology measures group was withdrawn by the 
measure owner for consideration as a 2012 Physician Quality Reporting 
System measures group.
    Comment: One commenter suggested that the Pulmonary Rehabilitation 
measures group that was submitted for possible inclusion as a 2012 
Physician Quality Reporting System measures group be included as a 2012 
Physician Quality Reporting System measures group.
    Response: We reviewed all measures groups that were submitted for 
possible inclusion as a 2012 Physician Quality Reporting System 
measures group, including the Pulmonary Rehabilitation measures group. 
Upon review of the measures and feedback received from the NQF, 2 of 
the 5 proposed measures contained within the Pulmonary Rehabilitation 
measures group did not pass review, thereby leaving only 3 measures 
available for reporting under the Pulmonary Rehabilitation measures 
group. Since a Physician Quality Reporting System measures group must 
consist of at least 4 measures, the Pulmonary Rehabilitation measures 
group no longer contained enough measures to be classified as a 
Physician Quality Reporting System measures group. However, we are 
interested in including a pulmonary rehabilitation measures group and 
encourage professional organizations and measure developers to submit 
such a measures group for inclusion as a Physician Quality Reporting 
System in future program years.
    Comment: One commenter suggested that the measure titled 
``Counseling for Women'' be included in the Epilepsy measures group.
    Response: We appreciate the commenter's feedback. However, as we 
stated previously, we are not finalizing the Epilepsy measures group 
inclusion under the 2012 Physician Quality Reporting System.
    Comment: Several commenters urged us to have all measures contained 
within these measures groups also available for reporting as individual 
measures. Some commenters requested that all measures contained within 
specific measures groups, such as Radiology and IBD, be reportable as 
individual Physician Quality Reporting System measures.
    Response: We proposed (76 FR 42873) that measures included in the 
Back Pain measures group will not be available for reporting as 
individual measures. Although we proposed that measures contained 
within the proposed 2012 Physician Quality Reporting System measures 
groups also be available for individual reporting, except for the COPD 
measures group (which contains 2011 Physician Quality Reporting System 
measures that were previously available for reporting as individual 
measures), we are not allowing any measures contained in either the 
back pain measures group or any of the newly finalized 2012 Physician 
Quality Reporting System measures groups to be reportable as individual 
measures, unless a measure contained in a measures group has been 
identified as a 2012 Physician Quality Reporting System individual 
measure in Table 47. Some of the measures contained in the finalized 
measures groups do not lend themselves to reporting as individual 
measures. Therefore, for 2012, only measures contained in the following 
measures groups will be available for reporting as individual measures: 
Diabetes Mellitus; Adult Kidney Disease; Preventive Care; CABG; 
Rheumatoid Arthritis; Perioperative Care; CAD; Heart Failure; IVD; 
Hepatitis C; HIV/AIDS; CAP, Asthma; Cardiovascular Prevention; and 
COPD.
    Comment: Some commenters suggested that all measures groups be 
reported via claims and registry, such as the Dementia measures group. 
One commenter suggested that the Parkinson's and Dementia measures 
groups be reportable via claims as well as registry, since there are 
currently no registries which report on these measures groups, at least 
until registries for these conditions become available.
    Response: Reporting methods are chosen based on the most effective 
way to accurately collect data needed to calculate the measure. Due to 
the limitations of claims-based reporting, some measures are reportable 
only through a registry. Due to the way the measures within these 
measures groups are analyzed, the Dementia and Parkinson's measures 
groups fall within this category of measures groups that cannot be 
reported via claims. With respect to the Parkinson's and Dementia 
measures groups, although no registries are currently qualified to 
report on these measures groups, we anticipate that qualified 
registries will be available to report on these measures for the 2012 
Physician Quality Reporting System. Therefore, the Dementia and 
Parkinson's measures groups may only be reportable via registry.
    Comment: Some commenters suggested that we ensure that there is an 
analytically sound method to grouping measures within measures groups, 
particularly when measure denominators differ.
    Response: We appreciate the commenters' feedback and agree that 
ensuring accurate reporting analysis is essential. As in prior years, 
the reporting rate calculations for the 2012 Physician Quality 
Reporting System will only include instances that qualify for the 
denominator of the respective measure. When denominators differ for 
measures within a measures group, eligible professionals will not be 
held accountable for reporting on measures that are not applicable for 
purposes of the requiring that eligible professionals report on 
measures with a performance rate other than zero. However, eligible 
professionals are still required to report on these measures. The 
performance rate calculation only includes denominator eligible and 
successfully reported instances, so the requirement to have each 
measure within the group have a performance rate above zero percent 
will not be adversely affected by instances that are not denominator 
eligible.
    Comment: One commenter suggested that we remove the following 
measure from the Radiology measures group: Cumulative Count of 
Potential High

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Dose Radiation Imaging Studies: CT Scans and Cardiac Nuclear Medicine 
Scans. The commenter believes that removing this measure will allow for 
the measure denominators of the measures contained within the Radiology 
measures group to consistent with the use of CT scans alone.
    Response: We appreciate the commenter's feedback and interest in 
aligning the measure denominators contained within the Radiology 
measures group. However, because the measure owner has withdrawn this 
measures group for consideration for reporting under the 2012 Physician 
Quality Reporting System, we are not finalizing the proposed Radiology 
measures group.
    Comment: Several commenters suggested that we include or develop 
other measures groups that were not proposed as a 2012 Physician 
Quality Reporting System measures group, such as: Oncology, Stroke, 
Cardiac Imaging, Colorectal Cancer, Thyroid Disease, Pain Management, 
Physical Therapy, Colorectal Cancer Screening, and Cancer Care.
    Response: We appreciate the commenter's feedback. However, because 
we did not propose these measures groups for inclusion in the 2012 
Physician Quality Reporting System and there was not opportunity for 
the public to comment on these measures, we are not finalizing any of 
these suggestions. However, we will take these measures group's 
suggestions into consideration for future program years.
    Based on the comments received and for the reasons stated in our 
responses, we are finalizing the measures groups that are identified in 
Tables 50 through 71. As we explained previously, we are finalizing all 
proposed 2012 Physician Quality Reporting System measures groups, 
except for the Epilepsy and Radiology measures groups.
    We also note that, although we are finalizing these measures 
groups, we have made the following changes to these final 2012 
Physician Quality Reporting System measures groups:
     Adult Kidney Disease measures group: As indicated in Table 
50, we are not finalizing Physician Quality Reporting System 
153 titled ``Chronic Kidney Disease (CKD): Referral for 
Arteriovenous (AV) Fistula'' for reporting in this measures group 
because, as we stated previously, the measure owner has removed this 
measure for reporting in 2012. Instead, we are adding Physician Quality 
Reporting System measure 110 titled ``Preventive Care and 
Screening: Influenza Immunization'' for reporting within the Adult 
Kidney Disease measures group.
     IVD measures group: As indicated in Table 58, we are not 
finalizing Physician Quality Reporting System measures 202 
titled ``Ischemic Vascular Disease (IVD): Complete Lipid Profile'' and 
203 titled ``Ischemic Vascular Disease (IVD): Low Density 
Lipoprotein (LDL-C)'' for reporting in the IVD measures group. As 
stated previously, these two measures have been combined into a single 
measure titled ``Ischemic Vascular Disease (IVD): Complete Lipid 
Profile and LDL Control 202 and 203, we are requiring that eligible 
professionals report on this new measure in the IVD measures group.
     IBD Measures Group: As indicated in Table 64, we are 
updating measure title ``Inflammatory Bowel Disease (IBD): Assessment 
of Inflammatory Bowel Disease Activity and Severity'' to ``Inflammatory 
Bowel Disease: Type Anatomic Location and Activity All Documented'' as 
the measure owner has updated the title of this measure.
     Parkinson's Measures Group: As indicated in Table 67, we 
are not finalizing the measure titled ``Parkinson's Disease Related 
Safety Issues Counseling'' for reporting within the Parkinson's 
measures group.
     Elevated Blood Pressure: As indicated in Table 68, we are 
not finalizing the measures titled ``Overall Hypertension Care 
Satisfaction'' and ``Patient Self-care Support'' for reporting within 
this measures group.
    Some measures in the 2012 measures groups are also 2011 individual 
Physician Quality Reporting System measures. Specifically, measures 
contained in the following measures groups will be available for 
reporting as individual measures: Diabetes Mellitus; Adult Kidney 
Disease; Preventive Care; CABG; Rheumatoid Arthritis; Perioperative 
Care; CAD; Heart Failure; IVD; Hepatitis C; HIV/AIDS; CAP, and Asthma.
    The title of each such measure is preceded with its Physician 
Quality Reporting System Measure Number in Tables 50 through 71. As 
stated previously, the Physician Quality Reporting System Measure 
Number is a unique identifier assigned by us to all measures in the 
Physician Quality Reporting System measure set. Once a Physician 
Quality Reporting System Measure Number is assigned to a measure, it 
will not be used again, even if the measure is subsequently retired 
from the Physician Quality Reporting System measure set. Measures that 
are not preceded by a number (in other words, those preceded by 
``TBD'') in Tables 50 through 71 were never part of a Physician Quality 
Reporting System measure set prior to 2012. A number will be assigned 
to such measures for 2012. Furthermore, please note that, in some 
instances, the measure titles have been updated to reflect measure 
title updates by the respective measure owners.
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BILLING CODE 4120-01-C
    As with measures group reporting in prior years of the Physician 
Quality Reporting System, each eligible professional electing to report 
a group of measures for 2012 must report all measures in the group that 
are applicable to each patient or encounter to which the measures group 
applies at least up to the minimum number of patients required by the 
applicable reporting criteria. We note that the specifications for 
measures groups do not necessarily contain all the specification 
elements of each individual measure making up the measures group. This 
is based on the need for a common set of denominator specifications for 
all the measures making up a measures group in order to define the 
applicability of the measures group. Therefore, the specifications and 
instructions for measures groups will be provided separately from the 
specifications and instructions for the individual 2012 Physician 
Quality Reporting System measures. We will post the detailed 
specifications and specific instructions for reporting measures groups 
on the Physician Quality Reporting System section of the CMS Web site 
at http://www.cms.hhs.gov/PQRS by no later than December 31, 2011.
    Additionally, the detailed measure specifications and instructions 
for submitting data on these 2012 measures groups that were also 
included as 2011 Physician Quality Reporting System measures groups may 
be updated or modified by the measure developer prior to 2012. 
Therefore, the 2012 Physician Quality Reporting System measure 
specifications for any given measures group could be different from 
specifications and submission instructions for the same measures group 
used for 2011. For example, the measure developer may change the codes 
contained in the measure's denominator. These measure specification 
changes do not materially impact the intended meaning of the measures 
or the strength of the measures.
(5) 2012 Physician Quality Reporting System Quality Measures for Group 
Practices Selected To Participate in the GPRO (GPRO)
    For 2012, we proposed (76 FR 42879) that group practices selected 
to participate in the 2012 Physician Quality Reporting System GPRO 
would be required to report on 41 proposed measures listed in Table 55 
of the proposed rule. Specifically, for the 2012 Physician Quality 
Reporting System, we proposed to retain most of the measures available 
for reporting under the 2011 Physician Quality Reporting System GPRO 
because of our continued interest in the reporting of those measures, 
as well as to maintain program consistency from year to year. However, 
for 2012, we proposed to retire the following measures that were 
required under the 2010 and 2011 GPRO (that is, GPRO I for 2011):
     Diabetes Mellitus: Hemoglobin A1c Testing.
     Diabetes Mellitus: Lipid Profile
     Hypertension (HTN): Blood Pressure Measurement.
    Furthermore, we proposed to add the following Physician Quality 
core measures that were not available for reporting via the GPRO for 
the 2011 Physician Quality Reporting System:
     Ischemic Vascular Disease (IVD): Use of Aspirin or another 
Antithrombotic.
     Measure pair: a. Tobacco Use Assessment, b. Tobacco 
Cessation Intervention.
     Ischemic Vascular Disease (IVD): Complete Lipid Profile 
and LDL Control  Proportion of adults 18 years and older who have had their 
blood pressure measured within the preceding 2-years.
    In addition to adding the Physician Quality Reporting System core 
measures that were not available for reporting under the GPRO for the 
2011 Physician Quality Reporting System, we proposed to add the 
following measures for reporting under the 2012 Physician Quality 
Reporting System GPRO:
     Chronic Obstructive Pulmonary Disease (COPD): 
Bronchodilator Therapy.
     Adult Weight Screening and Follow-up.
     Ischemic Vascular Disease (IVD): Blood Pressure Management 
Control.

[[Page 73382]]

     Chronic Obstructive Pulmonary Disease (COPD): Spirometry 
Evaluation.
     30 Day Post Discharge Physician Visit.
     Medication Reconciliation: Reconciliation After Discharge 
from an Inpatient Facility.
     Diabetes: Aspirin Use.
     Falls: Screening for Fall Risk.
     Osteoporosis: Management Following Fracture of Hip, Spine 
or Distal Radius for Men and Women Aged 50 Years and Older.
     Diabetes Mellitus: Tobacco Non Use.
     Coronary Artery Disease (CAD): LDL-level dl.
     Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 
Mellitus (less than 8 percent).
     Chronic Obstructive Pulmonary Disease (COPD): Smoking 
Cessation Counseling Received.
     Monthly International Normalized Ratio (INR) for 
Beneficiaries on Warfarin.
    We proposed (76 FR 42879) these new measures because they are NQF-
endorsed measures that are consistent with other CMS quality reporting 
initiatives. We believe it is in the stakeholders' interest to align 
measures in different initiatives. We proposed that group practices 
selected to participate in the Physician Quality Reporting System GPRO 
would be required to report on all measures listed in Table 55.
    We invited public comment on the proposed 2012 Physician Quality 
Reporting System measures for group practices selected to participate 
in the 2012 Physician Quality Reporting System GPRO. The following is a 
summary of the comments we received.
    Comment: Some commenters suggested we retain the following 3 
measures that we proposed to retire for the 2012 Physician Quality 
Reporting System GPRO because they address important medical topics 
relevant to the commenters' respective specialties:
     Diabetes Mellitus: Hemoglobin A1c Testing;
     Diabetes Mellitus: Lipid Profile; and
     Hypertension (HTN): Blood Pressure Measurement.
    Response: We appreciate the commenters' feedback. However, as 
stated previously, due to our desire to align these 2012 Physician 
Quality Reporting System GPRO measures with other CMS programs, we are 
retiring these measures.
    Comments: Several commenters supported inclusion of the following 
measures as reportable measures for physician groups participating in 
the 2012 Physician Quality Reporting System GPRO because they either 
addressed important medical topics relevant to the commenters' 
respective specialties and/or they are measures included in other CMS 
programs:
     Measure pair: a. Tobacco Use Assessment, b. Tobacco 
Cessation Intervention.
     Ischemic Vascular Disease (IVD): Blood Pressure Management 
Control.
     Adult Weigh Screening and Follow-up.
     Medication Reconciliation: Reconciliation After Discharge 
from an Inpatient Facility.
     Diabetes: Aspirin Use.
     Diabetes Mellitus: Tobacco Non-Use.
     Coronary Artery Disease (CAD): LDL-level dl.
     Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 
Mellitus ( Monthly INR for Beneficiaries on Warfarin.
     Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient.
     Coronary Artery Disease (CAD): Beta-Blocker Therapy for 
CAD Patients with Prior Myocardial Infarction (MI).
     Ischemic Vascular Disease (IVD): Blood Pressure 
Management.
    Response: `In an effort to reduce the number of measures group 
practices report under the GPRO we proposed so that the number of 
measures required for reporting are closer to 26, which is the number 
of measures available for reporting under the Physician Quality 
Reporting System GPRO I in 2011 (76 FR 73537), we are finalizing all of 
the measures for inclusion in the 2012 Physician Quality Reporting 
System GPRO measure set, except for the following measures:
     Ischemic Vascular Disease (IVD): Blood Pressure Management 
Control.
     Coronary Artery Disease (CAD): LDL-level dl.
     Coronary Artery Disease (CAD): Beta-Blocker Therapy for 
CAD Patients with Prior Myocardial Infarction (MI).
    We are not retaining these measures because we seek to align the 
Physician Quality Reporting System GPRO with the Medicare Shared 
Savings Program. These measures were not included for reporting under 
the Medicare Shared Savings Program (``Medicare Program; Medicare 
Shared Savings Program: Accountable Care Organizations'' displayed in 
the October 20, 2011 Federal Register at http://www.ofr.gov/OFRUpload/OFRData/2011-27461_PI.pdf.
    Also due to our desire to align the measures available for 
reporting under the 2012 Physician Quality Reporting System GPRO with 
the measures available for reporting under the Medicare Shared Savings 
Program, we are not finalizing the following measures in the 2012 
Physician Quality Reporting System GPRO measure set:
     Diabetes Mellitus: Urine Screening for Microalbumin for 
Medical Attention for Nephropathy in Diabetic Patients.
     Heart Failure: Weight Measurement.
     Heart Failure: Patient Education.
     Hypertension (HTN): Plan of Care.
     Chronic Obstructive Pulmonary Disease (COPD): Spirometry 
Evaluation.
     Ischemic Vascular Disease (IVD): Use of Aspirin of another 
Antithrombotic.
     30-Day Post Discharge Physician Visit.
     Osteoporosis: Management Following Fracture of Hip, Spine 
or Distal Radius for Men and Women Aged 50 Years and Older.
     Coronary Artery Disease (CAD): LDL-level dl.
     Chronic Obstructive Pulmonary Disease (COPD): Smoking 
Cessation Counseling Received.
    We believe our effort to align various CMS programs will encourage 
participation in the Physician Quality Reporting System. Since 
increasing participation in the Physician Quality Reporting System is a 
top priority, we believe our desire to align various CMS programs 
outweighs our interest in maintaining measures that were previously 
available for reporting under the Physician Quality Reporting System. 
We further believe that the measures that we finalize for reporting 
under the 2012 Physician Quality Reporting System GPRO, as identified 
in Table 71, sufficiently address the conditions and care measured by 
the measures we are not finalizing.
    Comment: One commenter stated that, since group practices 
participating in the Physician Quality Reporting System GPRO must 
report on all measures listed in Table 71, only NQF-endorsed measures 
should be included for reporting by physician groups participating in 
the 2012 Physician Quality Reporting System GPRO.
    Response: We appreciate the commenter's feedback. We note that, 
unlike the criteria for satisfactory reporting for individual eligible 
professionals, group practices may report measures with a zero percent 
performance rate. Therefore, it does not harm group practices 
participating under the GPRO to report on the measures we are 
finalizing for the GPRO, regardless of whether the measures are NQF-
endorsed. We also note that we have authority under section 
1848(k)(2)(C)(ii) of the Act to select measures that are not NQF-

[[Page 73383]]

endorsed. We believe the non-NQF endorsed measures we are finalizing 
below address critical areas of health care.
    Comment: One commenter urged us to minimize the reporting burden on 
group practices by reducing the number of measures on which group 
practices participating in the Physician Quality Reporting System may 
report.
    Response: As stated previously, we are only finalizing 30 of the 40 
measures we proposed. We hope this will notably reduce the reporting 
burden on group practices participating in the Physician Quality 
Reporting System GPRO.
    Comment: One commenter was concerned that the reporting of the 
measure titled ``Monthly INR for Beneficiaries on Warfarin'' will have 
the unintended consequence of having eligible professionals avoid 
patients who are non-compliant with treatment recommendations.
    Response: We agree that the personal preferences of beneficiaries 
play an important role in their health behaviors. However, the lack of 
patient adherence may also represent a legitimate dimension of care, as 
it could be indicative of poor communication between providers and 
their patients. As INR is important for patients on warfarin, we are 
retaining this measure as proposed. In addition, as discussed in the 
public reporting requirements in section VI.G. of this final rule with 
comment period, we believe publicly reporting certain measures provides 
greater incentive for providers to coordinate care and influence 
patient behavior.
    Comment: One commenter opposed our proposal to retire the measure 
titled ``Plan of Care for Inadequate Hemodialysis'' because the 
retirement of this measure will only leave nephrologists with only one 
Physician Quality Reporting System measure on which to report.
    Response: We understand the need to have adequate number of 
measures available under which eligible professionals practicing in 
many specialties report. In this instance, however, we do not believe 
that retiring this measure for reporting under the GPRO will affect the 
ability for eligible professionals to satisfactorily reporting. We note 
that group practices participating in the GPRO must report on all 
measures listed in Table 71, regardless of whether the measures are 
applicable to the group practice.
    Comment: One commenter suggested that the measures available for 
reporting under the Physician Quality Reporting System GPRO include 
more measures that pertain to otolaryngologists.
    Response: We appreciate the commenter's feedback. However, we give 
eligible professionals an opportunity to provide input on measures 
recommended for selection via the proposed rule, and therefore, 
additional measures and/or measure topics cannot be included for 
reporting under the 2012 Physician Quality Reporting System. However, 
we will take these GPRO measure suggestions into consideration for 
future program years.
    Comment: Some commenters requested that the measure specifications 
for the proposed GPRO measures be available for review prior to its 
inclusion as GPRO measures.
    Response: As we stated previously, we do not use notice and comment 
rulemaking as a means to update or modify measure specifications. 
Questions regarding measure specifications should be directed to the 
measure developers, who are all listed in Table 55 of the proposed rule 
(76 FR 42880). Contact information for the 2011 Physician Quality 
Reporting System measure developers is listed in the ``2011 Physician 
Quality Reporting System Quality Measures List,'' which is available on 
the CMS Web site at http://www.cms.gov/PQRS/15_MeasuresCodes.asp#TopOfPage.
    Based on the comments received and for the reasons stated 
previously, we are finalizing the 29 measures for physician groups 
participating in the 2012 Physician Quality Reporting System GPRO 
listed in Table 71. Table 71 also indicates which measures are also 
available for reporting under the Medicare Shared Savings Program.
    We also note that, in an effort to align the 2012 Physician Quality 
Reporting System GPRO measures with the measures available for group 
reporting under the Medicare Shared Savings Program, we are not 
finalizing the following measures for the 2012 Physician Quality 
Reporting System GPRO:
     Coronary Artery Disease (CAD): Beta-Blocker Therapy for 
CAD Patients with Prior Myocardial Infarction (MI)
     Diabetes Mellitus: Urine Screening for Microalbumin or 
Medical Attention for Nephropathy in Diabetic Patients
     Heart Failure: Weight Measurement
     Hypertension (HTN): Plan of Care
     Ischemic Vascular Disease (IVD): Blood Pressure Management 
Control
     Chronic Obstructive Pulmonary Disease (COPD): Spirometry 
Evaluation
     30-Day Post Discharge Physician Visit
     Osteoperosis: Management Following Fracture of Hip, Spine 
or Distal Radius for Men and Women Aged 50 Years and Older
     Coronary Artery Disease (CAD): LDL-level dl
     Chronic Obstructive Pulmonary Disease (COPD): Smoking 
Cessation Counseling Received
     Heart Failure: Warfarin Therapy for Patients with Atrial 
Fibrillation
    We are also not finalizing the measure titled ``Monthly INR for 
Beneficiaries on Warfarin'' because, as we stated with Physician 
Quality Reporting System measure 200, the use of Warfarin to 
treat heart disease is no longer consistent with clinical guidelines.
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TR28NO11.185

BILLING CODE 4120-01-C
    We intend to provide a separate measures specifications document 
and other supporting documents for group practices participating in the 
2012 Physician Quality Reporting System GPRO. We anticipate that the 
group practice measures specifications document will be available by 
November 15, 2011 or shortly thereafter on the Physician Quality 
Reporting System section of the CMS Web site at http://www.cms.hhs.gov/PQRS.
g. Maintenance of Certification Program Incentive
    Section 1848(k)(4) of the Act requires the Secretary to address a 
mechanism whereby an eligible professional may provide data on quality 
measures through a maintenance of certification program (Maintenance of 
Certification Program) operated by a specialty body of the American 
Board of Medical Specialties (ABMS). In addition, section 1848(m)(7) of 
the Act (``Additional Incentive Payment'') authorizes an additional 0.5 
percent incentive payment for years 2011 through 2014 if certain 
requirements are met. In accordance with section 1848(m)(7)(B) of the 
Act governing the ``Additional Incentive Payment,'' in order to qualify 
for the additional incentive payment, an eligible professional must--
     Satisfactorily submit data on quality measures under the 
Physician Quality Reporting System for a year and have such data 
submitted--
    ++ On their behalf through a Maintenance of Certification Program 
that meets the criteria for a registry under the Physician Quality 
Reporting System; or
    ++ In an alternative form and manner determined appropriate by the 
Secretary; and
    ++ More frequently than is required to qualify for or maintain 
board certification status:
    ++ Participate in such a Maintenance of Certification Program for a 
year; and
    ++ Successfully completes a qualified Maintenance of Certification 
Program practice assessment for such year.
    Section 1848(m)(7)(C)(i) of the Act defines ``Maintenance of 
Certification Program'' as a continuous assessment program, such as a 
qualified ABMS Maintenance of Certification Program, or an equivalent 
program (as determined by the Secretary), that advances quality and the 
lifelong learning and self-assessment of board certified specialty 
physicians by focusing on the competencies of patient care, medical 
knowledge, practice-based learning,

[[Page 73386]]

interpersonal and communications skills and professionalism. Such a 
program shall require a physician to do the following:
     Maintain a valid, unrestricted medical license in the 
United States.
     Participate in educational and self-assessment programs 
that require an assessment of what was learned.
     Demonstrate, through a formalized, secure examination, 
that the physician has the fundamental diagnostic skills, medical 
knowledge, and clinical judgment to provide quality care in their 
respective specialty.
     Successful completion of a qualified Maintenance of 
Certification Program practice assessment.
    As defined in section 1848(m)(7)(C)(ii) of the Act, a ``qualified 
Maintenance of Certification Program practice assessment'' means an 
assessment of a physician's practice that--
     Includes an initial assessment of an eligible 
professional's practice that is designed to demonstrate the physician's 
use of evidence-based medicine;
     Includes a survey of patient experience with care; and
     Requires a physician to implement a quality improvement 
intervention to address a practice weakness identified in the initial 
assessment and then to remeasure to assess performance after such 
intervention.
    To qualify for the additional incentive payment, section 
1848(m)(7)(B)(iii) of the Act also requires the Maintenance of 
Certification Program to submit to CMS, on behalf of the eligible 
professional, information:
     In a form and manner specified by the Secretary, that the 
eligible professional more frequently than is required to qualify for 
or maintain board certification status, participates in the Maintenance 
of Certification Program for a year and successfully completes a 
qualified Maintenance of Certification Program practice assessment for 
such year;
     Upon request by the Secretary, information on the survey 
of patient experience with care; and
     As the Secretary may require, on the methods, measures, 
and data used under the Maintenance of Certification Program and the 
qualified Maintenance of Certification Program practice assessment.
    In order to qualify for the additional 0.5 percent incentive 
payment in 2011, eligible professionals were required to participate 
more frequently in each of the following four parts of the Maintenance 
of Certification Program:
     Maintain a valid unrestricted license in the United 
States. For 2011, physicians simply needed to maintain a valid 
unrestricted license in the United States to meet the requirement for 
``more frequent'' participation with respect to this part (75 FR 73541 
through 73546).
     Participate in educational and self-assessment programs 
that require an assessment of what was learned.
     Demonstrate, through a formalized secure examination, that 
the physician has the fundamental diagnostic skills, medical knowledge, 
and clinical judgment to provide quality care in their respective 
specialty.
     Successfully complete a qualified maintenance of 
certification program practice assessment.
    We received requests from the American Board of Medical 
Specialties, as well as various specialty organizations, to revise the 
criteria for satisfying the Maintenance of Certification Program 
additional incentive, because these entities believe that more frequent 
participation in all four parts of the Maintenance of Certification 
Program is too narrow. In the proposed rule, we noted that we further 
considered the language under section 1848(m)(7)(B)(ii)(I) of the Act 
and we believe it can be interpreted more broadly. In particular, we 
noted that the requirement that a professional ``more frequently than 
is required to qualify for or maintain board certification status 
participates in such a Maintenance of Certification Program'' could 
refer to the program as a whole, such that any element performed more 
frequently than is required satisfies the general requirement. The 
nature of the various components of the Maintenance of Certification 
Program also suggest that it is not necessary that each of the four 
elements of the program be performed more frequently. We previously 
stated we believe that the ``more frequently'' requirement does not 
apply to the first part, which states that a physician maintain a valid 
unrestricted license, as there is no way a physician may maintain a 
valid unrestricted license ``more frequently.'' As such, we believe 
that the more frequently requirement could be satisfied based on any of 
the other elements of the program (that is, educational and self-
assessment program; secure examination; or practice assessment). 
Specifically, we believe that if a professional more frequently than is 
required satisfies one or more of those parts of a program, the more 
frequently requirement would be met. Accordingly, we proposed (76 FR 
42881-42882) that in order to earn an additional 0.5 percent incentive 
for 2012 through 2014, for each respective year, an eligible 
professional must participate more frequently than is required in at 
least one of the following three parts of the Maintenance of 
Certification Program, as well as ``more frequent'' participation in 
the practice assessment component. With respect to how to assess 
whether a professional completes one of the elements of a program 
``more frequently,'' we believe that this would be tied to the specific 
requirements of Board certification for the professional. Given that 
different specialties have different certification requirements 
(physician examination requirements to maintain Board certification 
varies widely depending on specialty), we do not believe it is 
appropriate to impose a uniform requirement for all professionals and 
therefore, we believe that the board could determine for a particular 
program element the more frequent requirement for the professional. 
However, we believe that a minimum threshold would need to be met such 
that the professional would have to do something more frequently or 
more than what is ordinarily required for a particular part of the 
program, as well as ``more frequent'' participation in the practice 
assessment component.
    Therefore, in order to earn an additional 0.5 percent incentive for 
2012 through 2014, an eligible professional would be required to 
participate more frequently than is required in at least one of the 
following three parts of the Maintenance of Certification Program, as 
well as ``more frequent'' successful completion of a qualified 
maintenance of certification program practice assessment:
     Maintain a valid unrestricted license in the United 
States. For 2011, physicians simply needed to maintain a valid 
unrestricted license in the United States to meet the requirement for 
``more frequent'' participation with respect to this part (75 FR 73541 
through 73546).
     Participate in educational and self-assessment programs 
that require an assessment of what was learned.
     Demonstrate, through a formalized secure examination, that 
the physician has the fundamental diagnostic skills, medical knowledge, 
and clinical judgment to provide quality care in their respective 
specialty.
    Therefore, we proposed for 2012, 2013, and 2014 the following for 
each year (76 FR 42882 and 42883):
     An eligible professional wishing to be eligible for the 
additional Physician Quality Reporting System incentive payment of 0.5 
percent must meet the requirements for satisfactory reporting for the 
Physician Quality Reporting

[[Page 73387]]

System, for the applicable program year (that is, to qualify for the 
additional 0.5 percent incentive payment for 2012, meet the 2012 
requirements for satisfactory reporting), based on the 12-month 
reporting period (January 1 through December 31 of the respective 
program year).
     For purposes of satisfactory reporting under the Physician 
Quality Reporting System, we proposed (76 FR 42882) that the eligible 
professional may participate as an individual eligible professional 
using either individual Physician Quality Reporting System measures or 
measures groups and submitting the Physician Quality Reporting System 
data via claims, a registry, or an EHR or participate under the GPRO 
option. As an alternative to this reporting option, we proposed that 
eligible professionals may satisfactorily report under the Physician 
Quality Reporting System based on submission of Physician Quality 
Reporting System data by a Maintenance of Certification Program, 
provided that the Maintenance of Certification Program has qualified as 
a Physician Quality Reporting System registry for 2012. As indicated 
previously, an eligible professional would not necessarily have to 
qualify for the Physician Quality Reporting System through a 
Maintenance of Certification Program serving as a registry. Rather, we 
proposed that an eligible professional may qualify for the additional 
incentive, without regard to the method by which the eligible 
professional has met the basic requirement of satisfactory reporting 
under the Physician Quality Reporting System. We received no comments 
regarding our proposal to allow eligible professionals to qualify for 
the additional incentive without regard to the method by which the 
eligible professional has met the basic requirement of satisfactory 
reporting under the Physician Quality Reporting System and are 
therefore, we are finalizing this proposal.
     In addition to meeting the requirements for satisfactory 
reporting for the Physician Quality Reporting System for a program 
year, the eligible professional must have data with respect to the 
eligible professional's participation in a Maintenance of Certification 
Program submitted on his or her behalf by a qualified medical specialty 
board or other entity sponsoring a Maintenance of Certification 
Program. For each eligible professional that wishes to qualify for the 
Maintenance of Certification Program Incentive, the qualified medical 
specialty board or other entity sponsoring a Maintenance of 
Certification Program must submit data to CMS with respect to the 
following:
     An eligible professional must, more frequently than is 
required to qualify for or maintain board certification, participate in 
a Maintenance of Certification Program for a year and successfully 
complete a qualified Maintenance of Certification Program practice 
assessment for such year. With regard to the ``more frequently'' 
requirement as it applies to the elements of a Maintenance of 
Certification Program itself (other than completing a qualified 
Maintenance of Certification Program practice assessment), the 
Maintenance of Certification Program must certify that the eligible 
professional has ``more frequently'' than is required to qualify for or 
maintain board certification ``participated in a Maintenance of 
Certification Program for a year''. The Maintenance of Certification 
Program will determine what a physician must do to more frequently 
participate in a Maintenance of Certification Program and so certify 
that the eligible professional has met this requirement. While we do 
not believe that the ``more frequently'' requirement is applicable to 
the licensure requirement, given that one cannot be licensed ``more 
frequently'' than is required, the Maintenance of Certification Program 
has the discretion to determine which element(s) of a Maintenance of 
Certification Program must be completed more frequently. We believe 
that making this change will reduce burden on physicians and will 
increase participation while being consistent with the requirement to 
``more frequently'' participate in a Maintenance of Certification 
Program.
     With respect to the Maintenance of Certification Program 
practice assessment, which is specifically delineated in section 
1848(m)(7)(B)(ii) of the Act as being required more often than is 
necessary to qualify for or maintain board certification, we believe we 
need to be more specific regarding our interpretation of the phrase 
``more frequently.'' Additionally, we are aware that some specialty 
boards have varying Maintenance of Certification Program requirements 
for physicians to maintain board certification, based on the date of 
original certification. Some, we believe, may not be required to 
participate in a Maintenance of Certification Program at all in order 
to maintain board certification. Accordingly, we recognize that ``more 
often'' may vary among physicians certified by the same specialty 
board. We interpret the statutory provisions as requiring participation 
in and successful completion of at least one Maintenance of 
Certification Program practice assessment per year. Therefore, as a 
basic requirement, the physician must participate and successfully 
complete at least one Maintenance of Certification Program practice 
assessment for each year the physician participates in the Maintenance 
of Certification Program Incentive, regardless of whether or how often 
the physician is required to participate in a Maintenance of 
Certification Program to maintain board certification.
    We are also aware that ABMS boards are at various stages in 
implementing the practice assessment modules, and some may not have 
such assessment modules in place. However, inasmuch as we interpret the 
statute to require a Maintenance of Certification Program practice 
assessment at least once per program year as part of the Maintenance of 
Certification Program, eligible professionals who do not have 
available, through their boards or otherwise, a Maintenance of 
Certification Program practice assessment are not eligible for the 0.5 
percent incentive.
    We believe that the experience of care survey provides particularly 
valuable information and proposed that a qualified Maintenance of 
Certification Program practice assessment must include a survey of 
patient experience with care. The Secretary may request information on 
the survey of patient experience with care, under section 
1848(m)(7)(B)(iii) of the Act. In view of the importance of this 
information, and the lack of readily available alternative sources, we 
proposed to require that Maintenance of Certification Programs submit 
information about the patient experience of care survey(s) used by 
physicians to fulfill the Maintenance of Certification Program practice 
assessment. We are not, at this time, requesting the results of the 
survey for the eligible professionals for whom information is being 
submitted by the Maintenance of Certification Program. We may, however, 
request such information for appropriate validation purposes and may 
propose to request such data for future years of the Maintenance of 
Certification Program Incentive.
    Some Maintenance of Certification Programs underwent a self-
nomination process in 2011 to enable their members to be eligible for 
this Physician Quality Reporting System Maintenance of Certification 
Program Incentive for 2011 Physician Quality Reporting System. We 
proposed (76 FR 42883) that a Maintenance of Certification Program that 
was approved after undergoing the self-nomination process in 2011 must 
submit a self-nomination statement for

[[Page 73388]]

each year the Maintenance of Certification Program intends to 
participate in the Physician Quality Reporting System Maintenance of 
Certification Program. In the self-nomination statement, we proposed 
that the previously approved program must provide us with updates to 
its program in its self-nomination statement. We proposed that this 
self-nomination statement be submitted to CMS via a web-based tool. We 
received no comments regarding the self-nomination process for those 
Maintenance of Certification Programs that underwent a self-nomination 
process in 2011. Therefore, we are finalizing the proposed 
requirements.
    For Maintenance of Certification Programs new for 2012, we proposed 
(76 FR 42883) that Maintenance of Certification Programs wishing to 
enable their diplomates to be eligible for an additional Physician 
Quality Reporting System incentive payment for the 2012 Physician 
Quality Reporting System would need to go through a self-nomination 
process by January 31, 2012. We proposed that the board must include 
all of the following information in their self-nomination statement to 
us:
     Provide detailed information regarding the Maintenance of 
Certification Program with reference to the statutory requirements for 
such program;
     Indicate the organization sponsoring the Maintenance of 
Certification Program, and whether the Maintenance of Certification 
Program is sponsored by an ABMS board. If not an ABMS board, indicate 
whether and how the program is substantially equivalent to the ABMS 
Maintenance of Certification Program process;
     Indicate that the program is in existence as of January 1, 
2012;
     Indicate that the program has at least 1 active 
participant;
     The frequency of a cycle of Maintenance of Certification 
Program for the specific Maintenance of Certification Program of the 
sponsoring organization; including what constitutes ``more frequently'' 
for the Maintenance of Certification Program itself and for the 
practice assessment for the specific Maintenance of Certification 
Program of the sponsoring organization;
     Confirmation from the board that the practice assessment 
will occur and be completed in the year the physician is participating 
in the Maintenance of Certification Program Incentive;
     What was, is, or will be the first year of availability of 
the Maintenance of Certification Program practice assessment for 
completion by an eligible professional;
     What data is collected under the patient experience of 
care survey and how this information would be provided to CMS;
     Describe how the Maintenance of Certification Program 
monitors that an eligible professional has implemented a quality 
improvement process for their practice; and
     Describe the methods, and data used under the Maintenance 
of Certification Program, and provide a list of all measures used in 
the Maintenance of Certification Program for 2011 and to be used for 
2012, including the title and descriptions of each measure, the owner 
of the measure, whether the measure is NQF endorsed, and a link to a 
Web site containing the detailed specifications of the measures, or an 
electronic file containing the detailed specifications of the measures.
    We proposed (76 FR 42883) that sponsoring organizations who desire 
to participate as a Maintenance of Certification Program must provide 
CMS the following information below in a CMS-specified file format by 
no later than the end of the first quarter of 2012:.
     The name, NPI and applicable TIN(s) of the eligible 
professional who would like to participate in this process;
     Attestation from the board that the information provided 
to CMS is accurate and complete.
     The board has signed documentation from the eligible 
professional that the eligible professional wishes to have the 
information released to us;
     Information from the patient experience of care survey;
     Information certifying that the eligible professional has 
participated in a Maintenance of Certification Program for a year, more 
frequently than is required to qualify for or maintain board 
certification status, including the year that the physician met the 
board certification requirements for the Maintenance of Certification 
Program, and the year the eligible professional participated in a 
Maintenance of Certification Program ``more frequently'' than is 
required to maintain or qualify for board certification; and
     Information certifying that the eligible professional has 
completed the Maintenance of Certification Program practice assessment 
at least one time each year the eligible professional participates in 
the Maintenance of Certification Program Incentive.
    We proposed (76 FR 42883) that specialty boards that also desire to 
send Physician Quality Reporting System information to us on behalf of 
eligible professionals must meet the requirements for registry data 
submission and should follow the directions for self-nomination to 
become a qualified registry. Boards may also participate as registries 
for Physician Quality Reporting System data provided that they meet the 
registry requirements. As an alternative to requiring boards to either 
operate a qualified Physician Quality Reporting System registry or to 
self-nominate to submit Maintenance of Certification Program data to us 
on behalf of their members, we proposed to continue to allow the 
various boards to submit the Maintenance of Certification Program data 
to the ABMS and having ABMS submit the information on behalf of the 
various boards and their member eligible professionals to CMS. We 
received no comments on our proposed requirements for specialty boards 
that wish to send Physician Quality Reporting System information to us 
on behalf of eligible professionals and therefore, we are finalizing 
these requirements.
    To the extent an eligible professional participates in multiple 
Maintenance of Certification Programs and meets the requirements under 
section 1848(m)(7) of the Act (Additional Incentive Payment) under 
multiple programs, we note that the eligible professional can qualify 
for only one additional 0.5 percent incentive per year.
    We invited public comment on the requirements we proposed for 
earning a 0.5 percent incentive for participation in the Maintenance of 
Certification Program incentive. The following is a summary of the 
comments we received related to the Maintenance of Certification 
Program incentive.
    Comment: Several commenters generally supported the Maintenance of 
Certification Program incentive and the requirements for earning such 
an incentive. One commenter asked whether or not CMS had a plan to 
allow physicians who are not Board-certified to participate in the 
Maintenance of Certification Program Incentive.
    Response: We appreciate the commenters' support. Currently, we do 
not have a plan to allow physicians who are not Board-certified to 
participate in the Maintenance of Certification Program Incentive, 
because we defer to the various specialty boards to specify the 
particular actions a physician must complete to meet the ``more 
frequently'' requirement.
    Comment: Another commenter asked that American Osteopathic 
Association and its Osteopathic Continuous Certification (OCC) 
program(s) be recognized as equivalent to the American Board of Medical 
Specialties (ABMS) Maintenance of Certification Programs for the 
purpose of qualifying

[[Page 73389]]

for a Maintenance of Certification Program incentive.
    Response: We cannot approve an organization's certification program 
for participation in the Maintenance of Certification Program incentive 
unless the organization meets all of the requirements we are 
finalizing.
    Comment: One commenter was opposed to having physicians report 
Maintenance of Certification Program details that they must also report 
to hospitals. The commenter suggested that we eliminate this 
duplicative reporting.
    Response: Our proposal calls for Maintenance of Certification data 
to be submitted in one of two ways. First, the data can be submitted 
directly from the qualified Maintenance of Certification Program 
entity. Secondly, the data can be submitted by an ABMS Maintenance of 
Certification registry, if the ABMS chooses to proceed down this path. 
We do not believe that either of these mechanisms places additional 
burden on the provider, hospitals or specialties societies.
    Comment: Some commenters stated that the requirements to earn a 
Maintenance of Certification Program incentive are generally too 
burdensome for both physicians and medical specialty boards.
    Response: We appreciate the commenter's feedback. However, the 
general requirements for earning the Maintenance of Certification 
Program incentive are specified in section 1848(m)(7) of the Act. 
Therefore, physicians must meet all of the below requirements to be 
eligible for a Maintenance of Certification Program incentive.
    Comment: Several commenters supported our proposal to reinterpret 
the definition of ``more frequently'' to apply to one of three parts, 
in addition to requiring a practice assessment, instead of applying to 
each of the four parts. Some of these commenters expressed support in 
giving the respective medical specialty boards more deference in 
applying the ``more frequently'' requirement for earning a Maintenance 
of Certification Program incentive.
    Response: Based on the comments we received and for the reasons we 
explained previously, we are finalizing the ``more frequently'' 
requirement for the Maintenance of Certification Program incentive.
    Comment: Some commenters supported our decision to refrain from 
requiring the reporting of patient experience of care survey data at 
this time.
    Response: We appreciate the commenters' feedback and are not 
requiring the reporting of patient experience of care survey data at 
this time.
    After considering the comments and for the reasons stated 
previously, we are finalizing our proposals regarding the Maintenance 
of Certification Program incentive. We are also finalizing the 
requirements for the 2013 and 2014 Maintenance of Certification Program 
additional incentive. With respect to dates specific to the Maintenance 
of Certification Program additional incentive, we are finalizing dates 
that correspond to the additional incentive year. Specifically, new 
Maintenance of Certification that wish to enable their diplomats to be 
eligible for the additional Physician Quality Reporting System 0.5 
percent for 2013 and/or 2014 must go through the same nomination 
process by January 31, 2013 and January 31, 2014, respectively.
    In addition, with respect to its self-nomination statement, a 
Maintenance of Certification Program wishing to enable its diplomats to 
earn a 2013 and 2014 Maintenance of Certification Program additional 
incentive must indicate that the program is in existence as of January 
1, 2012 for the 2012 additional incentive, January 1, 2013 for the 2013 
additional incentive, and January 1, 2014 for the 2014 additional 
incentive. With respect to the information required in the self-
nomination statement, sponsoring organizations that desire to 
participate as a Maintenance of Certification Program must provide this 
information to CMS in a CMS-specified file format by no later than the 
end of the first quarter of 2013 and 2014 for the 2014 and 2014 
Maintenance of Certification additional incentive.
h. Feedback Reports
    Section 1848(m)(5)(H) of the Act requires the Secretary to provide 
timely feedback to eligible professionals on the performance of the 
eligible professional with respect to satisfactorily submitting data on 
quality measures. Since the inception of the program in 2007, the 
Physician Quality Reporting System has provided eligible professionals 
who have reported Physician Quality Reporting System data on quality 
measures feedback reports at the TIN/NPI level detailing participation 
in the Physician Quality Reporting System, including reporting rate and 
performance rate information. For 2008, we improved the format and 
content of feedback reports based on stakeholder input. We also 
developed an alternate report distribution method whereby each eligible 
professional can directly request and receive a feedback report. 
Starting in 2011, we provided an opportunity for eligible professionals 
to request their NPI-level feedback reports via the Communication 
Support Page at https://www.qualitynet.org/portal/server.pt/community/communications_support_system/234.
    In accordance with Section 1848(m)(5)(H) of the Act, we will 
continue to provide feedback reports to individuals and group practices 
that attempt to report on at least one Physician Quality Reporting 
System quality measure. We proposed (76 FR 42884) to provide feedback 
reports for 2012 and beyond, on or about the time of issuance of the 
incentive payments, consistent with our current practice.
    We received the following comment regarding this proposal.
    Comment: One commenter questioned why annual feedback reports are 
provided around the time Physician Quality Reporting System incentive 
payments are distributed.
    Response: We disseminate annual feedback reports at the same time 
incentive payments are made so that the provider has adequate 
information available to understand how the incentive payment was 
calculated. Therefore, we will continue to distribute annual feedback 
reports around the time Physician Quality Reporting System incentive 
payments are distributed.
    Comment: One commenter stated that we should improve the 
accessibility of feedback reports, as eligible professionals in the 
past have had trouble accessing these feedback reports. Another 
commenter stated that annual feedback reports should be distributed 
before the issuance of incentive payments.
    Response: We believe that providing annual feedback reports on or 
about the issuance of incentive payments is timely. However, we would 
like to increase accessibility, speed, and ease of distributing 
feedback reports to eligible professionals. Therefore, we are working 
with finding other ways, aside from accessing feedback reports through 
Carried/MACs or with the use of an IACS account. For example, in 
addition to being able to access feedback reports through this 
traditional method, eligible professionals may request 2010 Physician 
Quality Reporting System NPI-level feedback reports via the 
Communication Support Page. We believe that accessing feedback reports 
through the Communication Support Page is a faster method of receiving 
feedback reports. We welcome any suggestions on improving accessibility 
to Physician Quality Reporting System feedback reports.

[[Page 73390]]

    For the reasons stated previously, for 2012 and beyond, we are 
finalizing our proposal to provide feedback reports to individuals and 
group practices that attempt to report on at least one Physician 
Quality Reporting System quality measure on or about the time of 
issuance of the incentive payments.
    In addition, we believe it would be beneficial for eligible 
professionals to also receive interim feedback reports. Therefore, we 
proposed (76 FR 42884) to provide interim feedback reports, which would 
be simplified versions of the feedback reports we currently provide, to 
eligible professionals reporting individual measures and measures 
groups through the claims-based reporting mechanism for 2012 and 
beyond, and issue them in the summer of the respective program year. We 
believe interim feedback reports would be particularly valuable to 
eligible professionals reporting measures groups, because it would let 
an eligible professional know how many more cases he or she needs to 
report to satisfy the criteria for satisfactory reporting for claims-
based reporting of measures groups.
    We invited public comment on our proposal to provide interim 
feedback reports related to reporting via the claims-based reporting 
mechanism for 2012 and beyond. The following is a summary of comments 
we received.
    Comment: Several commenters supported our proposal to provide 
interim feedback reports. However, some commenters suggested that we 
allow stakeholders to comment on the form and content of these interim 
feedback reports.
    Response: We appreciate the commenters' support in our proposal to 
provide interim feedback reports and are finalizing our proposal to 
provide interim feedback reports for claims-based reporting for 2012 
and beyond. However, as the form and content of these feedback reports 
are already being developed, we cannot make changes related to the form 
and content of these interim feedback reports for 2012. However, for 
interim feedback reports that will be developed for future program 
years, we expect to provide an opportunity for the public to provide 
suggestions regarding the form and content of these interim feedback 
reports.
    Comment: Some commenters suggested that we provide interim feedback 
reports that provide reporting information via other reporting 
mechanisms aside from claims, such as registry and EHR.
    Response: We appreciate the commenters' feedback. However, since we 
do not receive data from the registry and EHR reporting mechanisms 
until the following calendar year, it is not technically feasible for 
us to develop interim feedback reports that provide reporting 
performance related to registry and/or EHR-based reporting. However, as 
stated in previously in section VI.F.1.d, we are finalizing our 
proposal to require registries and EHR vendors to provide such feedback 
reports, if technically feasible.
    After considering the issues raised in the comments we received and 
for the reasons stated previously, we are finalizing our proposal to 
provide interim feedback reports for eligible professionals reporting 
individual measures and measures groups through the claims-based 
reporting mechanism for 2012 and beyond. These reports will be a 
simplified version of annual feedback reports that we currently provide 
for such eligible professionals and will be based on claims for dates 
of service occurring on or after January 1 and processed by March 31 of 
the respective program year (that is, January 1, 2012 and processed by 
March 31, 2012 for the 2012 program year). We expect that we would be 
able to make these interim feedback reports available to eligible 
professionals in the summer of the respective program year (that is, 
summer 2012 for the 2012 program year).
i. Informal Review
    Under 42 CFR 414.90(i), eligible professionals or group practices 
may seek an informal review of the determination that the eligible 
professional or group practice did not satisfactorily submit data on 
quality measures under the Physician Quality Reporting System.
    To maintain program consistency until we have further experience 
with the informal review process that we implemented for the 2011 
Physician Quality Reporting System, we proposed (76 FR 42884) to 
largely retain the same informal review process that was finalized in 
the 2011 MPFS final rule with comment period (75 FR 73549 through 
73551) for 2012 and beyond. Specifically, we proposed to base the 
informal process on our current inquiry process whereby an eligible 
professional can contact the Quality Net Help Desk (Help Desk) (via 
phone or email) for general Physician Quality Reporting System and eRx 
Incentive Program information, information on Physician Quality 
Reporting System feedback report availability and access, and/or 
information on Physician Quality Reporting System Portal password 
issues.
    For purposes of the informal process required under section 
1848(m)(5)(E) of the Act, we proposed the following inquiry process:
     An eligible professional electing to utilize the informal 
process must request an informal review within 90 days of the release 
of his or her feedback report, irrespective of when an eligible 
professional actually accesses his/her feedback report.
     An eligible professional may request an informal review 
through use of a web-based tool, if technically feasible. We believe 
use of the web-based tool will provide a more efficient way to record 
informal review requests, as the web-based tool will guide the eligible 
professional through the creation of an informal review requests. For 
example, the web-based tool will prompt an eligible professional of any 
necessary information s/he must provide. If not technically feasible, 
we proposed that an eligible professional may request the informal 
review by notifying the Quality Net Help Desk via email at 
qnetsupport@sdps.org. In the request for an informal review, the 
eligible professional must summarize his or her concern(s) of the 
eligible professional and the reason(s) for requesting an informal 
review.
     We further proposed (76 FR 42884) that CMS would provide 
the eligible professional with a response to his or her request for an 
informal review within 90 days of receiving the original request. In 
2011, we proposed to provide the eligible professional with a response 
to his or her request for an informal review within 60 days of 
receiving the original request. However, we anticipate that the volume 
of informal review requests will grow as participation in the Physician 
Quality Reporting System grows, particularly as we move towards the 
implementation of the 2015 payment adjustment. Furthermore, we believe 
that the time it takes for CMS to calculate data on Physician Quality 
Reporting System quality measures will be greater than in 2011, since 
we are proposing additional individual measures and measures groups. 
For these reasons, we proposed to amend 42 CFR 414.90(i)(2) to indicate 
that CMS will provide a written response within 90 days of the receipt 
of the original request for an informal review.
     As this process is informal and the statute does not 
require a formal appeals process, we will not include a hearing or 
evidence submission process, although the eligible professional may 
submit information to assist in the review.

[[Page 73391]]

     Based on our informal review, we will provide a written 
response. Where we find that the eligible professional did 
satisfactorily report, we proposed to provide the applicable incentive 
payment.
     Given that this is an informal review process and given 
the limitations on review under section 1848(m)(5)(E) of the Act, 
decisions based on the informal review will be final, and there will be 
no further review or appeal.
    We invited public comment on the proposed informal review process 
for 2012 and beyond. The following is a summary of the comments 
regarding the informal review process.
    Comment: Some commenters were opposed to our proposal to extend the 
time CMS must provide a response to the eligible professional's request 
for an informal review from 60 days to 90 days. One commenter 
acknowledged CMS anticipating a higher volume of informal review 
requests, but the commenter stated that 90 days was too long of a 
waiting period for eligible professionals to receive a response to 
their request for an informal review. Another commenter stated that 
extending the time CMS must provide a response does not provide 
eligible professionals with the opportunity to make a second request 
for a review within the 90 day window that eligible professionals are 
given to request an informal review.
    Response: We appreciate the commenter's feedback. However, as we 
stated previously, we anticipate a higher volume of requests for 
informal review, particularly as we move towards the 2015 payment 
adjustment and continue to align with various CMS programs to encourage 
participation in the Physician Quality Reporting System. We believe 
that the time it takes for CMS to calculate data on Physician Quality 
Reporting System quality measures will be greater than in 2011, since 
we are proposing additional individual measures and measures groups. 
With respect to being able to request a second review, we note that all 
informal review decisions are final. Eligible professionals will not 
have the opportunity to request a second review. Therefore, for the 
reasons we noted, we are finalizing our proposal to extend the time CMS 
must provide a response to the eligible professional's request for an 
informal review from 60 days to 90 days.
    Comment: One commenter urged us to create a hearing of evidentiary 
process to allow eligible professionals to submit additional evidence.
    Response: As stated previously, we did not establish a hearing or 
evidentiary process because this review is informal. We understand 
that, in some instances, an eligible professional may need to provide 
additional information. Therefore, should we need additional 
information to process a request for an informal review, we will 
request this additional information. We note, however, that the need 
for additional information will not affect the deadline for CMS to 
provide a decision to the eligible professional.
    Comment: One commenter was concerned with our proposal to use the 
Help Desk as the basis for our informal review process, because the 
commenter stated that practices have had difficulties obtaining 
reliable information from the Help Desk.
    Response: We appreciate the commenter's feedback. However, the 
webbased tool is the finalized method under which we are accepting 
requests for informal review. The Help Desk, however, will perform 
informal review functions related to analysis of the informal review. 
We believe the informal review process, using the web-based tool in 
conjunction with the Help Desk, is the most efficient and most 
beneficial to the eligible professional. With respect to the 
commenter's concern that the Help Desk may provide inaccurate 
information, we will monitor the Help Desk for accuracy of the 
information provided.
    Based on the comments received and for the reasons stated 
previously, for 2012 and beyond, we are finalizing the Physician 
Quality Reporting System informal review process, as proposed. Eligible 
professionals wishing to submit a request for an informal review are 
required to do so via a web-based tool, the Communication Support Page. 
Information on the Communication Support Page, including the link to 
the Page, will be available at http://www.cms.gov/PQRS//. Eligible 
professionals who have difficulty accessing the Communication Support 
Page, such as those eligible professionals who do not have internet 
access, may contact the Help Desk for assistance in submitting a 
request for an informal review. We also note that, with respect to 
informal reviews for the 2011 Physician Quality Reporting System, we 
stated (75 FR 73550) that eligible professionals wishing to submit a 
request for an informal review do so by submitting an email to the 
QualityNet Help Desk at qnetsupport@sdps.org. As we believe that 
submitting the informal review request via a web-based tool is a more 
efficient and secure method of receiving these informal review 
requests, we are also allowing use of the web-based tool to submit 
informal review requests for the 2011 Physician Quality Reporting 
System. We are finalizing our proposal to modify 42 CFR 414.90 to 
reflect these finalized proposals.
j. Future Payment Adjustments for the Physician Quality Reporting 
System
    Beginning in 2015, a payment adjustment will apply under the 
Physician Quality Reporting System. Specifically, under section 
1848(a)(8) of the Act, as added by section 3002(b) of the Affordable 
Care Act, with respect to covered professional services furnished by an 
eligible professional during 2015 or any subsequent year, if the 
eligible professional does not satisfactorily submit data on quality 
measures for covered professional services for the quality reporting 
period for the year, the fee schedule amount for services furnished by 
such professionals during the year shall be equal to the applicable 
percent of the fee schedule amount that would otherwise apply to such 
services. The applicable percent is--
     98.5 percent for 2015; and
     98.0 percent for 2016 and each subsequent year.
    Under section 1848(a)(8)(C)(iii) of the Act provides that, for 
purposes of the payment adjustment, the ``quality reporting period'' 
with the respect to a year, is a period specified by the Secretary. In 
order to maintain consistency and program continuity, similar to the 
12-month reporting period we are proposed for 2012, we proposed a 12-
month reporting period for the 2015 payment adjustment. Specifically, 
in the proposed rule, we proposed (76 FR 42884-42885) that the 
reporting period for purposes of the 2015 payment adjustment would be 
the 2013 calendar year, that is, January 1, 2013 through December 31, 
2013.
    Comment: Several commenters opposed our proposal to establish CY 
2013 as the reporting period for the 2015 payment adjustment, because 
they felt the report period for the 2015 payment adjustment should 
occur later in time. These commenters believed that the reporting 
period for the 2015 payment adjustment should mirror the reporting 
periods for the Physician Quality Reporting System incentives (i.e., a 
CY 2012 reporting period for the 2012 incentive). Some commenters 
suggested CY 2014 or CY 2015 as the reporting period for the 2015 
payment adjustment. One commenter urged us to align the reporting 
periods for Physician Quality Reporting System incentives as well as 
payment adjustments as closely as possible.
    Response: We considered using a CY 2014 and CY 2015 reporting 
period for

[[Page 73392]]

the 2015 payment adjustment. However, it is not operationally feasible 
to create a full calendar year reporting period for the 2015 payment 
adjustment any later than CY 2013 and still avoid retroactive payments 
or the reprocessing of claims.
    Section 1848(a)(8) of the Act requires that a payment adjustment be 
applied to covered professional services furnished by an eligible 
professional in in the particular payment adjustment year. Therefore, 
using 2015 as an example, we believe it is necessary to reduce the PFS 
amount concurrently for PFS allowed charges for covered professional 
services furnished in 2015. If we do not reduce the PFS amount 
concurrently with claims submissions in 2015, we would need to 
potentially recoup or provide added payments after the determination is 
made about whether the payment adjustment applies, or alternatively, 
hold claims until such a determination is made. In addition, we note 
that if such retroactive adjustments were made it may require a 
reconciliation of beneficiary co-payments. As a result, we need to 
determine whether eligible professionals have satisfactorily reported 
under the Physician Quality Reporting System based on a reporting 
period that occurs prior to 2015.
    As for the suggestion that we use CY 2014 as the reporting period, 
we do not believe this would allow sufficient time for eligible 
professionals to report the Physician Quality reporting System 
measures, or allow us enough time to collect and analyze the data 
submitted by eligible professionals in order to avoid retroactive 
adjustments to payments in 2015, because we will not receive this data 
until months after the reporting period. Once we have completed our 
analysis, we also need time to make the necessary system changes to 
begin applying the payment adjustments to the appropriate individuals. 
All of this must occur prior to January 1, 2015, and so using a CY 2014 
reporting period would not be feasible. We believe that the reporting 
period we proposed will allow a full calendar year for eligible 
professionals (which is consistent with the reporting periods finalized 
for the 2012 incentive) to meet the criteria for satisfactory reporting 
for purposes of the 2015 payment adjustment, while still providing us 
with enough time to collect and analyze the data submitted by eligible 
professionals for the 2015 payment adjustment without having to make 
retroactive payment adjustments in 2015. With regard to using a shorter 
reporting period (that is, less than 12 months), we may consider, in 
future notice and comment rulemaking, additional reporting periods that 
are less than 12 months for the 2015 payment adjustment, so that 
eligible professionals have additional opportunities to meet the 
requirements for the 2015 payment adjustment.
    Therefore, for the reasons we've explained, we are finalizing our 
proposal to establish CY 2013 (that is, January 1, 2013 through 
December 31, 2013) as the reporting period for the 2015 payment 
adjustment. At this time, we are not aware of any viable alternatives 
that would allow us to address the issues we noted and still provide a 
full-year reporting period that falls after 2013. We will, however, 
continue to explore options for potentially using a reporting period 
closer to the time in which the payment adjustment is applied for 
future years of the payment adjustment.
    Based on the reporting period we are finalizing in this final rule 
with comment period, if we determine that an eligible professional or 
group practice has not satisfactorily reported data on quality measures 
for the January 1, 2013 through December 31, 2013 reporting period for 
purposes of the 2015 payment adjustment, then the fee schedule amount 
for services furnished by the eligible professional or group practice 
during 2015 would be 98.5 percent of the fee schedule amount that would 
otherwise apply to such services. We intend to address the remaining 
requirements for the 2015 payment adjustment in future rulemaking.
2. Incentives and Payment Adjustments for Electronic Prescribing 
(eRx)--The Electronic Prescribing Incentive Program
a. Program Background and Statutory Authority
    Electronic prescribing is the transmission using electronic media, 
of prescription or prescription-related information between the 
prescriber, dispenser, pharmacy benefit manager (PBM), or health plan, 
either directly or through an intermediary, including an electronic 
prescribing network. To encourage the use of electronic prescribing 
among eligible professionals, section 132 of the Medicare Improvements 
for Patients and Providers Act of 2008 (MIPPA) amended section 1848(m) 
of the Act to establish the eRx Incentive Program. The eRx Incentive 
Program provides a combination of incentive payments and payment 
adjustments through 2014 to eligible professionals who are successful 
electronic prescribers. No eRx incentive payments or payment 
adjustments are authorized beyond 2014.
    From 2009 through 2013, the Secretary is authorized to provide 
eligible professionals who are successful electronic prescribers an 
incentive payment equal to a percentage of the eligible professional's 
total estimated Medicare Part B PFS allowed charges (based on claims 
submitted not later than 2 months after the end of the reporting 
period) for all covered professional services furnished by the eligible 
professional during the respective reporting period. However, section 
1848(m)(2)(D) of the Act, as added by section 4101(f)(2)(B) of Title IV 
of Division B of the American Recovery and Reinvestment Act of 2009 
(Pub. L. 111-5) (ARRA), which also authorized the Medicare EHR 
Incentive Program, specifies that the eRx incentive does not apply to 
an eligible professional, if, for the EHR reporting period, the 
eligible professional earns an incentive payment under the Medicare EHR 
Incentive Program beginning in 2011.
    The applicable electronic prescribing percent for incentive 
payments under the eRx Incentive Program are as follows:
     2.0 percent for 2009.
     2.0 percent for 2010.
     1.0 percent for 2011.
     1.0 percent for 2012.
     0.5 percent for 2013.
    In addition, for years 2012 through 2014, under section 
1848(a)(5)(A) of the Act, a PFS payment adjustment applies to eligible 
professionals who are not successful electronic prescribers at an 
increasing rate through 2014. Specifically, if the eligible 
professional is not a successful electronic prescriber for the 
respective reporting period for the year, the PFS amount for covered 
professional services during the year shall be a percentage less than 
the PFS amount that would otherwise apply. The applicable electronic 
prescribing percent for payment adjustments under the eRx Incentive 
Program are as follows:
     1.0 percent in 2012.
     1.5 percent in 2013.
     2.0 percent in 2014.
    We believe the purpose of the eRx Incentive Program for 2012 and 
beyond is to continue to encourage significant expansion of electronic 
prescribing by authorizing a combination of financial incentives and 
payment adjustments. We proposed to modify the incentive and payment 
adjustment language in 42 CFR 414.92 to provide language more 
consistent with section 1848 of the Act (please note that in the 
proposed rule we inadvertently listed ``section 1848(k)'' instead of 
``section 1848'').

[[Page 73393]]

    We believe that the criteria used to determine who is a successful 
electronic prescriber for purposes of the eRx incentive are not 
required to be identical to the criteria used to determine the 
applicability of the eRx payment adjustment. In general, we believe 
that an incentive should be broadly available to encourage the widest 
possible adoption of electronic prescribing, even for low volume 
prescribers. On the other hand, we believe that a payment adjustment 
should be applied primarily to assure that those who have a large 
volume of prescribing do so electronically, without penalizing those 
for whom the adoption and use of an electronic prescribing system may 
be impractical given the low volume of prescribing. We also believe 
that eligible professionals who have met the requirements for receiving 
an incentive payment under the eRx Incentive Program for a particular 
year have sufficiently demonstrated their adoption and use of 
electronic prescribing technology and thus should not be subject to the 
payment adjustment in a future year.
    Individual eligible professionals do not have to participate in the 
Physician Quality Reporting System in order to participate in the eRx 
Incentive Program (and vice versa). The provisions of the eRx Incentive 
Program are codified at 42 CFR 414.92.
    In prior years, we have proposed and finalized the details of the 
eRx Incentive Program through an annual rulemaking process. Through 
this annual rulemaking process, we have previously established the 
criteria for avoiding the 2012 eRx payment adjustment in the 2011 PFS 
Final Rule with comment period (75 FR 73562 through 73565), as well as 
issued a final rule entitled ``Changes to the Electronic Prescribing 
(eRx) Incentive Program'' (76 FR 54953 through 54969), in which we 
proposed additional changes to the 2012 payment adjustment, as well as 
the electronic prescribing quality measure for certain reporting 
periods in 2011. We also established requirements for the 2013 eRx 
payment adjustment in the 2011 PFS Final Rule with comment period (75 
FR 7356).
    In this final rule with comment period, we are finalizing our 
comprehensive requirements for the 2012 and 2013 incentive payments, 
additional requirements for the 2013 payment adjustment, and 
requirements for the 2014 payment adjustment. We believe that 
finalizing criteria for the eRx Incentive Program for 2012 and beyond 
will provide eligible professionals with more time to familiarize 
themselves with the details of the eRx Incentive Program. We hope this 
will lead to increased, successful participation in the eRx Incentive 
Program. Details regarding requirements for the eRx Incentive Program 
for 2012 and 2013 incentive payments, additional requirements for the 
2013 payment adjustment, and the requirements for the 2014 payment 
adjustment, including our rationale for finalizing such requirements, 
are described in the following section. We received comments that were 
not related to our specific proposals for the 2012 through 2014 eRx 
Incentive Program, and, while we appreciate the commenters' feedback, 
these comments are outside the scope of the issues addressed in this 
final rule with comment period and are not included.
b. Eligibility
    For the 2012 and 2013 incentive payments and 2013 and 2014 payment 
adjustments, we proposed the following two ways eligible professionals 
may participate in the eRx Incentive Program: (1) as an individual 
eligible professional; or (2) as part of a group practice participating 
in the group practice reporting option (GPRO) for the eRx Incentive 
Program (eRx GPRO) (76 FR 42886). Professionals eligible to participate 
in the eRx Incentive Program are defined at 42 CFR 414.92(b) and more 
information is available on the eRx Incentive Program section of the 
CMS Web site at: http://www.cms.gov/ERxIncentive/05_Eligible%20Professionals.asp#TopOfPage.
(1) Individual Eligible Professionals
(A) Definition of Eligible Professional
    As in the 2011 eRx Incentive Program, we proposed that, for 
individual eligible professionals participating in the eRx Incentive 
Program for purposes of the 2012 and 2013 incentive payments and 2013 
and 2014 payment adjustments, the determination of whether an eligible 
professional is a successful electronic prescriber will be made at the 
individual professional level, based on the National Provider 
Identifier (NPI) number (76 FR 42886). As some individuals (identified 
by NPIs) may be associated with more than one practice or Tax 
Identification Number (TIN), for the 2012 and 2013 incentive payments 
and 2013 and 2014 payment adjustments, we proposed that the 
determination of whether an eligible professional is a successful 
electronic prescriber will continue to be made for each unique TIN/NPI 
combination. Then, as in previous years, incentive payments would then 
be made to the applicable holder of the TIN. We proposed continuing to 
use the TIN/NPI combination as the unit of analysis to maintain program 
continuity, as individual eligible professionals are already familiar 
with this level of analysis and payment. We invited public comment on 
our proposal to continue analyzing data using the TIN/NPI combination 
while providing payment to the applicable holder of the TIN. We 
received no comments on our proposal to continue analyzing data using 
the TIN/NPI combination while providing payment to the applicable 
holder of the TIN and are therefore, finalizing this proposal.
    As in prior program years, we proposed that individual eligible 
professionals who wish to participate in the eRx Incentive Program for 
purposes of the 2012 and 2013 incentive payments and 2013 and 2014 
payment adjustments may simply start participating (76 FR 42886). 
Individual eligible professionals are not required to register or 
notify CMS they intend to participate; rather, they may simply begin to 
report the eRx measure. We invited public comment on the proposed 
process for individual eligible professionals to participate in the eRx 
Incentive Program. We received no comments regarding our proposal, and 
therefore, we are finalizing our proposal that individual eligible 
professionals who wish to participate in the eRx Incentive Program for 
purposes of the 2012 and 2013 incentive payments and 2013 and 2014 
payment adjustments may simply start participating.
(2) Group Practices
    As required under section 1848(m)(3)(C) of the Act, we established 
a process under which eligible professionals in a group practice (as 
defined by the Secretary) would be treated as having met the 
requirements for submitting data on electronic prescribing quality 
measures for covered professional services for a reporting period (or, 
for purposes of the payment adjustment under section 1848(a)(5) of the 
Act, for a reporting period for a year) if, in lieu of reporting the 
electronic prescribing measure, the group practice reports measures 
determined appropriate by the Secretary, such as measures that target 
high-cost chronic conditions and preventive care, in a form and manner, 
and at a time specified by the Secretary. Specifically, we first 
established the eRx group practice reporting option (eRx GPRO) in 2010, 
which was further modified in the 2011 PFS Final Rule (75 FR 73502). In 
addition to determining whether an eligible professional is a 
successful electronic prescriber for incentive

[[Page 73394]]

payment and payment adjustment purposes based on separately analyzing 
whether the individual eligible professionals are successful electronic 
prescribers, we proposed to also make the determination that the group 
practice, as a whole, is a successful electronic prescriber in 
accordance with section 1848(m)(3)(C) of the Act for those group 
practices that wish to participate in the eRx GPRO.
(A) Definition of ``Group Practice''
    Section 1848(m)(3)(C)(i) of the Act authorizes the Secretary to 
define ``group practice,'' which CMS defined by referencing our 
regulation at Sec.  414.90 (b). For the 2011 eRx Incentive Program, 
under Sec.  414.92(b), a group practice is--
    (1) Defined at Sec.  414.90(b), that is participating in the 
Physician Quality Reporting System; or
    (2)(a) In a Medicare approved demonstration project that is deemed 
to be participating in the Physician Quality Reporting System group 
practice reporting option; and
    (b) Has indicated its desire to participate in the electronic 
prescribing group practice option.
    However, for purposes of determining whether a group practice is a 
successful electronic prescriber for CYs 2012 through 2014, we proposed 
to modify the definition of the ``group practice'' at 42 CFR 414.92(b) 
to be consistent with modifications we proposed for the definition of 
``group practice'' at 42 CFR 414.90(b) for the 2012 Physician Quality 
Reporting System (76 FR 42886).
    In particular, we proposed to modify the definition of group 
practice under the Physician Quality Reporting System definition at 42 
CFR 414.90(b) by defining a group practice as a single TIN with at 
least 25 or more eligible professionals, as identified by their 
individual NPI, who have reassigned their Medicare billing rights to 
the TIN. Given that the definition of ``group practice'' at 42 CFR 
414.92(b) follows the Physician Quality Reporting System definition, we 
proposed to apply the modification to the definition for group practice 
under the eRx Incentive Program.
    Although we noted this proposed change would eliminate group 
practices comprised of 2 to 24 eligible professionals for the purpose 
of the eRx GPRO, we believed changing the definition of ``group 
practice'' would not pose a significant burden to these small group 
practices, because they could still participate as individual eligible 
professionals. For 2010, out of 107 group practices that self-nominated 
to participate in GPRO II for the Physician Quality Reporting System, 
68 of these group practices qualified to participate in the eRx 
Incentive Program under GPRO II. However, during the opt-out period 
which ended on May 12, 2011, 6 of these 68 group practices dropped out 
of GPRO II participation, leaving only 62 group practices to 
participate in GPRO II for 2010. Due to the low participation of only 
62 groups, we believed that participation in the eRx GPRO should be 
limited to only those group practices with 25 or more eligible 
professionals. We noted that participating under GPRO II may be more 
burdensome for very small group practices than participating as 
eligible professionals. For example, with respect to the payment 
adjustment, additional limitations may apply to eligible professionals 
as individuals that are not applied to group practices, which present 
an additional burden to the group practice.
    We also proposed (76 FR 42866) to modify the language that 
references Medicare demonstrations to more broadly recognize other 
similar Medicare programs that group practices may be participating in 
so that such practices may be eligible to participate in the eRx 
Incentive Program. We received no comments related to our proposal to 
more broadly recognize Medicare programs other than the PQRS GPRO where 
group practices may be participating. Therefore, we are finalizing this 
modification at 42 CFR 414.92(b). We are also modifying 42 CFR 414.92 
to make clear that all group practices must indicate their desire to 
participate in the eRx GPRO.
    We invited public comment on our proposed definition of group 
practice and below is a summary of the comments we received and our 
responses.
    Comment: One commenter was concerned with our proposal to change 
the definition of group practice under the eRx Incentive Program to 
groups comprised of 25 or more eligible professionals, consistent with 
our proposal to change the definition of group practice under the 
Physician Quality Reporting System. The commenter was concerned that 
this definition change would preclude smaller groups from participating 
in the eRx GPRO.
    Response: As we stated previously, in 2011, we allowed groups of 2-
24 individual eligible professionals to participate as a group practice 
under the eRx GPRO II. Unfortunately, the turnout for these smaller 
group practices electing to participate under the eRx GPRO II was low. 
Therefore, due to low participation last year in the eRx GPRO by groups 
comprised of 2-24 eligible professionals, we are finalizing our 
proposal to use the definition of group practice under the Physician 
Quality Reporting System, which excludes groups comprised of 2-24 
eligible professionals from participating in the eRx GPRO. We note that 
these smaller group practices may continue to report the electronic 
prescribing measure for purposes of the 2012 and 2013 incentives and 
2013 and 2014 payment adjustments as individual eligible professionals.
    Based on the comments received and for the reasons stated above, we 
are finalizing our proposed definition of group practice at Sec.  
414.92(b) for purposes of participating under the eRx GPRO. However, we 
are making minor technical changes to the clause numbers under 42 CFR 
414.92(b) to more accurately reflect this changed definition of group 
practice.
(B) Process To Participate in the eRx Incentive Program--eRx GPRO
    We proposed (76 FR 42881) that if a group practice wishes to 
participate in the eRx Incentive Program under the eRx GPRO, the group 
practice must self-nominate to do so. To self-nominate, we proposed 
that the group practice follow the requirements for self-nomination 
under the Physician Quality Reporting System, as well as specifically 
indicate its intent to participate in the eRx Incentive Program as a 
group practice.
    If a group practice self-nominates to participate in the eRx GPRO 
for a calendar year, then we proposed to consider that the group 
practice is participating in the eRx GPRO for purposes of both the 
incentive payment (with respect to any incentive payment reporting 
period that occurs during the calendar year) and the payment adjustment 
(with respect to any payment adjustment reporting period that occurs 
during the calendar year). For example, the 2013 payment adjustment 
reporting period occurs during calendar year 2012 (January 1, 2012 
through June 30, 2012).
    We invited public comment on the requirements for eligible 
professionals to participate as an eRx GPRO for purposes of the eRx 
Incentive Program. The following is a summary of the comments we 
received regarding this proposal.
    Comment: Some commenters opposed our proposal to require a group 
practice wishing to participate as a group under the eRx GPRO to also 
participate in the Physician Quality Reporting System, since some 
practitioners, such as dermatologists, may not be able to participate 
in the Physician Quality Reporting System GPRO due to a lack of

[[Page 73395]]

measures that are applicable to their respective specialties.
    Response: We appreciate the commenters' feedback. However, as in 
prior years and for operational reasons, we must require that all group 
practices wishing to participate as a group under the eRx GPRO also 
participate in the Physician Quality Reporting System. From an 
operational standpoint, group practices participating in the eRx GPRO 
must meet all the requirements of participating as a group practice 
under the Physician Quality Reporting System GPRO to ensure that the 
group practice is fully aware of requirements for participating as a 
group practice under the eRx GPRO. All GPRO educational sessions we 
hold focus on reporting under the GPRO for purposes of both programs. 
Furthermore, it is easier to keep track of which group practices are 
participating under the GPRO option for both the Physician Quality 
Reporting System and the eRx Incentive Program by requiring that group 
practices participating in the eRx GPRO also participate in the 
Physician Quality Reporting System GPRO. Please note, however, that 
this is not a requirement that group practices meet the requirements 
for satisfactory reporting under the Physician Quality Reporting System 
in order to participate in the eRx GPRO. We also note this does not 
preclude individuals within group practices from participating in the 
eRx Incentive Program as individuals.
    Comment: We received one comment on the self-nomination process. 
The commenter felt the process is overly burdensome.
    Response: In determining what should be included in the self-
nomination process, we attempted to balance what we believed was 
necessary to determine a group practice's intent to participate in the 
eRx GPRO versus the burden to the group practice. For example, we 
believe it is necessary to require group practices to indicate their 
intent to participate in the eRx Incentive Program under the eRx GPRO 
in writing to keep track of who is participating under the eRx 
Incentive Program under the eRx GPRO so the eligible professionals 
associated under the respective group practice may be analyzed at the 
group level. We believe that the requirement to submit a self-
nomination statement is not an unduly burdensome task for a group 
practice. With respect to the additional requirements we are 
finalizing, such as requiring that group practices wishing to 
participate in the eRx Incentive Program under the eRx GPRO attend 
scheduled training sessions, we believe that these requirements provide 
group practices with needed guidance on how to meet the requirements 
for becoming a successful electronic prescribers as group practices. 
This added guidance, in our opinion, will lead to a greater probability 
that group practices participating under the eRx GPRO will qualify to 
earn the 2012 and 2013 incentives as well as fulfill criteria for the 
2013 and 2014 payment adjustments.
    After considering the comments received and for the reasons stated 
in our responses, we are finalizing our proposal that, in order for a 
group practice to participate as a group under the eRx GPRO, the group 
practice must self-nominate for each calendar year the group wishes to 
participate in the eRx GPRO. If a group practice self-nominates to 
participate in the eRx GPRO for a calendar year, then we will consider 
that the group practice to be participating in the eRx GPRO as a group 
practice for purposes of both the incentive payment and the payment 
adjustment. Therefore, if an eligible professional is part of a group 
practice participating in the eRx GPRO for a respective program year, 
the eligible professional in the group practice is precluded from 
participating as an individual eligible e professional for purposes of 
both the 2012 and 2013 incentives and 2013 and 2014 payment 
adjustments. For example, the 2013 payment adjustment reporting period 
occurs during calendar year 2012 (January 1, 2012 through June 30, 
2012). Therefore, any group practice participating in the eRx GPRO 
during calendar year 2012 would be considered to be participating in 
the eRx GPRO for both the 2012 incentive and 2013 payment adjustment.
    Also, as we clarified in the proposed rule (76 FR 42887), a group 
practice that is deemed to be participating in the Physician Quality 
Reporting System, such as an ACO participating under the Medicare 
Shared Savings Program, will not be deemed participating as a group 
practice in the eRx Incentive Program. To participate in the eRx 
Incentive Program under the eRx GPRO, such group practices must self-
nominate to do so. Instructions for submitting the self-nomination 
statement are the same as the instructions for submitting a self-
nomination statement for the Physician Quality Reporting System. Each 
year, we expect to notify a group practice of the selection decision 
with respect to participation in the eRx GPRO during the first quarter 
of the year.
c. Reporting Periods
(1) Reporting Periods for the 2012 and 2013 eRx Incentives
    Section 1848(m)(6)(C)(i)(II) of the Act defines ``reporting 
period'' under the eRx Incentive Program for years after 2008 to be the 
entire year. We also have authority under section 1848(m)(6)(C)(ii) of 
the Act to revise the reporting period if the Secretary determines such 
revision is appropriate, produces valid results on measures reported, 
and is consistent with the goals of maximizing scientific validity and 
reducing administrative burden. We proposed (76 FR 42887), the entire 
calendar year as the reporting period for purposes of the 2012 and 2013 
incentive payment (January 1, 2012 through December 31, 2012 for the 
2012 incentive and January 1, 2013 through December 31, 2013 for the 
2013 incentive, respectively). Accordingly, we proposed to modify 42 
CFR 414.92(d)(1).
    We invited public comment on the proposed reporting periods for the 
2012 and 2013 incentives. The following is a summary of the comment we 
received regarding these proposals.
    Comment: One commenter supported our proposals to base the 2012 and 
2013 incentives off of 12-month reporting periods.
    Response: We appreciate the commenter's feedback and are finalizing 
our proposed reporting periods for the 2012 and 2013 incentives.
    Based on the comment received and for the reasons stated above, we 
are finalizing the reporting period for the 2012 incentive as the 12-
month period of January 1, 2012 through December 31, 2012, and 
reporting period for the 2013 incentive as the 12-month period of 
January 1, 2013 through December 31, 2013, and finalizing the changes 
to the regulation at Sec.  414.92(d)(1).
(2) Reporting Periods for the 2013 and 2014 eRx Payment Adjustments
    Under our authority under section 1848(m)(6)(C)(ii) of the Act, in 
the 2011 PFS final rule with comment period, we finalized two different 
reporting periods: A 6-month reporting period (between January 1, 2011 
and June 30, 2011) for purposes of the 2012 payment adjustment for both 
individual eligible professionals and group practices participating in 
the eRx GPRO (75 FR 73562 through 73563) and a 12-month reporting 
period (between January 1, 2011 and December 31, 2011) for purposes of 
the 2013 payment adjustment for individual eligible professionals and 
group practices

[[Page 73396]]

participating in the eRx GPRO (75 FR 73565).
    In addition to the 12-month reporting period finalized in the 2011 
PFS final rule with comment period, in the proposed rule we proposed 
(76 FR 32887), for both individual eligible professionals and group 
practices participating in the eRx GPRO, an additional 6-month 
reporting period (between January 1, 2012 and June 30, 2012) for 
purposes of the 2013 payment adjustment.
    For similar reasons, for the 2014 payment adjustment, we proposed a 
12-month reporting period (between January 1, 2012 and December 31, 2 
012) that would apply to individual eligible professionals and a 6-
month reporting period (between January 1, 2013 and June 30, 2013) that 
would apply to both individual eligible professionals and group 
practices, so that two different reporting periods would provide 
eligible professionals with two opportunities to be successful 
electronic prescribers.
    We invited public comment on the proposed reporting periods for the 
2013 and 2014 payment adjustments. The following is a summary of the 
comments we received regarding these proposals.
    Comment: Several commenters supported our proposed reporting 
periods for the 2013 and 2014 payment adjustment, including our 
proposal to provide multiple reporting periods. A few commenters 
opposed, however, our proposal to provide multiple reporting periods 
for the 2013 and 2014 payment adjustments, stating that having multiple 
reporting periods leads to greater program complexity. Rather, a few 
commenters suggested that we should use a single, 12-month reporting 
period that would provide us with 12 months of data.
    Response: We appreciate the commenter's feedback. However, we 
believe that, in this instance, our interest in providing eligible 
professionals and group practices with additional opportunities to 
become successful electronic prescribers outweighs our interest in 
streamlining the program and collecting 12 months of data. Furthermore, 
we note that eligible professionals are not required to qualify for the 
2013 and 2014 payment adjustments under multiple reporting periods. 
Eligible professionals may choose under which respective reporting 
period the eligible professionals plan to satisfy the requirements for 
the 2013 and 2014 payment adjustments. We note that the main purpose of 
having eligible professionals report on the electronic prescribing 
measure is to ensure electronic prescribing systems are being utilized, 
not to collect data. Therefore, we are finalizing the proposed 
reporting periods for the 2013 and 2014 payment adjustments.
    Comment: Several commenters were opposed to our proposed reporting 
periods for the 2013 and 2014 payment adjustments and suggested that we 
instead finalize reporting periods for the 2013 and 2014 payment 
adjustments that occur later in time. For example, some commenters 
believed that the 2013 and 2014 payment adjustments should be based on 
data reported in 2013 and 2014, respectively. Another commenter 
suggested a 9-month reporting period (that is, January 1, 2012 through 
September 1, 2012) for the 2013 payment adjustment.
    Response: We appreciate the commenters' feedback. However, as we 
stated in the 2011 PFS Final Rule (75 FR 73562), under section 
1848(a)(5)(D) of the Act, we have the discretion to define the 
''reporting period'' for purposes of the payment adjustment with 
respect to a year. We interpreted the payment adjustment provision 
under section 1848(a)(5) of the Act as having the 2012 payment 
adjustment applied to reduce the PFS amount concurrently with claims 
submissions in 2012. Accordingly, we believe that it is necessary to 
apply the 2013 and 2014 payment adjustment concurrently with claim 
submissions in 2013 and 2014, respectively.
    With respect to the suggested 9-month reporting period, for 
operational reasons, we cannot finalize a reporting period that ends 
later than June 30, 2012 for the 2013 payment adjustment and June 30, 
2013 for the 2014 payment adjustment. The process required to perform a 
full analysis of eligible professionals' claims data can take more than 
five months to complete. This is due to numerous factors, including the 
allowance of a one month run-out for claims processing (for example, 
through July 29, 2012, for claims with dates of service of January 1, 
2012, through June 30, 2012). Additionally, the time required to 
perform the data analyses to determine non-successful electronic 
prescribers, and to update the systems to make the appropriate 
reductions to Physician Fee Schedule payments for claims submitted on 
or after January 1, 2012 and January 1, 2013 respectively can take up 
to four months to complete. Taking into account these operational 
issues, we believe that finalizing a reporting period ending on June 
30, 2012 and June 30, 2013 for the 2013 and 2014 respective payment 
adjustments will allow us to avoid having to recoup overpayments.
    After considering the comments received and for the reasons 
explained in our responses, we are finalizing the 6-month reporting 
periods for the 2013 and 2014 payment adjustments. Specifically, in 
addition to the 12-month reporting period finalized in the 2011 PFS 
final rule with comment period, we are finalizing an additional 6-month 
reporting period (that is, January 1, 2012 through June 30, 2012) for 
purposes of the 2013 payment adjustment. For the 2014 payment 
adjustment, we are finalizing a 6-month reporting period (between 
January 1, 2013 and June 30, 2013) for both individual eligible 
professionals and group practices participating in the eRx GPRO. We 
also are finalizing a 12-month reporting period (between January 1, 
2012 and December 31, 2012) for individual eligible professionals for 
the 2014 payment adjustment. As for group practices, we note that there 
was some ambiguity in the proposed rule (76 FR 42985), with regard to a 
12-month reporting period for group practices participating in the eRx 
GPRO for the 2014 payment adjustment. Although we proposed criteria for 
being a successful electronic prescriber for group practices reporting 
from January 1, 2012 through December 31, 2012, for the 2014 payment 
adjustment (76 FR 42985 through 42986), we only proposed that the 12-
month reporting period for the 2014 payment adjustment (that is, 
January 1, 2012 through December 31, 2012) would apply to individual 
eligible professionals (76 FR 42887). Additionally, at 42 CFR 
414.92(f)(1), we proposed regulatory changes that would provide for 
this 12-month reporting period (76 FR 42946). Since, as discussed in 
section VI.F.1.e.(6). of this final rule with comment period, we are 
finalizing the proposed criteria for being a successful electronic 
prescriber pertaining to a 12-month period for group practices for 
purposes of the 2014 payment adjustment, we are also finalizing the 12-
month reporting period (that is, January 1, 2012 through December 31, 
2012) for group practices participating under the eRx GPRO for the 2014 
payment adjustment. We believe this will afford group practices 
additional options for reporting for purposes of the 2014 payment 
adjustment.
    Therefore, we are finalizing the proposed changes to the regulation 
at 42 CFR 414.92(f)(1).
d. Standard for Determining Successful Electronic Prescribers
    Section 1848(m)(3)(B) of the Act governs the requirements for being 
a ``successful electronic prescriber,'' for

[[Page 73397]]

purposes of the incentive payment under section 1848(m)(2) of the Act 
and the payment adjustment under section 1848(a)(5) of the Act. The 
Secretary is authorized to use one of two possible criteria for 
determining whether an eligible professional is a successful electronic 
prescriber. One criterion, under section 1848(m)(3)(B)(ii) of the Act, 
is based on the eligible professional's reporting, in at least 50 
percent of the reportable cases, on any electronic prescribing quality 
measures that have been established under the Physician Quality 
Reporting System, and are applicable to services furnished by the 
eligible professional for the reporting period. However, for years 
after 2009, section 1848(m)(3)(D) of the Act permits the Secretary in 
consultation with stakeholders and experts to revise the criteria for 
submitting data on electronic prescribing quality measures under 
section 1848(m)(3)(B)(ii) of the Act.
    The second criterion, under section 1848(m)(3)(B)(iii) of the Act, 
is based on the electronic submission by the eligible professional of a 
sufficient number (as determined by the Secretary) of prescriptions 
under Part D during the reporting period. If the Secretary decides to 
use this standard, then, in accordance with section 1848(m)(3)(B)(iv) 
of the Act, the Secretary is authorized to use Part D data to assess 
whether a sufficient number of prescriptions have been submitted by 
eligible professionals. However, under section 1848(m)(3)(B)(i) of the 
Act, if the Secretary decides the standard based on a sufficient number 
of electronic Part D prescriptions applies for a particular reporting 
period, then the standard based on the reporting on electronic 
prescribing quality measures does not apply.
    We considered use of the second criterion for determining 
successful prescribing under the eRx Incentive Program. While we 
recognize the benefits of using Part D data as the standard for 
determining successful electronic prescribers, we believe use of Part D 
prescriptions for analysis may be premature. For example, there is 
uncertainty as to the accuracies of reporting electronic prescribing 
activities using Part D data. For example, if an electronic 
prescription is converted to a facsimile when reaching the pharmacy on 
Part D data, the transmission is still reported as a pure, electronic 
prescribing event. Furthermore, use of Part D data would require a 
complete overhaul of the current requirements for the eRx Incentive 
Program. For instance, if we choose to shift to the use of Part D data, 
the program would have to adopt a new form of measurement, a new form 
of analysis other than use of an eligible professionals' TIN/NPI (TIN 
data is not available in Part D data sets), and new criteria for 
eligible professionals and eRx GPROs to become successful electronic 
prescribers. Therefore, we did not propose to use the second criterion.
    For the reasons stated previously, we proposed (76 FR 42888) to 
continue to require eligible professionals to report on the electronic 
prescribing quality measure used in 2011 to determine whether an 
eligible professional is a successful electronic prescriber for the 
remainder of the eRx Incentive Program. We proposed, however, to modify 
the electronic prescribing quality measure's specifications and use 
modified reporting criteria based on the authority provided under 
section 1848(m)(3)(D) of the Act (76 FR 42888). We invited public 
comment on the continued use of reporting the electronic prescribing 
quality measure for purposes of the ``successful electronic 
prescriber'' determination under the program. We received no comments 
regarding our proposal to continue use of the electronic prescribing 
quality measure standard and therefore, we are finalizing our proposal 
to use the electronic prescribing quality measure standard for purposes 
of determining whether an eligible professional is a successful 
electronic prescriber. Our proposals and final decisions with regard to 
the criteria for being a successful electronic prescriber under this 
standard for the 2012 and 2013 eRx Incentives and the 2013 and 2014 eRx 
payment adjustments are discussed in the following sections 
VI.F.2.g.(2)., VI.F.2.g.(3)., and VI.F.2.h.(2). of this final rule with 
comment period.
(1) Reporting the Electronic Prescribing Quality Measure
    The electronic prescribing quality measure, similar to the 
Physician Quality Reporting System measures, has two basic elements, 
which include: (1) A denominator that defines the patient population on 
which the eligible professional's performance is being measured; and 
(2) a reporting numerator, which identifies whether or not a clinical 
quality action was performed. The final details of the electronic 
prescribing measure specified later in this section apply to the 
following eRx Incentive Program years: The 2012 eRx incentive payment; 
the 2013 eRx incentive payment; the 2013 eRx payment adjustment; and 
the 2014 eRx payment adjustment.
    Under section 1848(k)(2)(C)(i) of the Act, the electronic 
prescribing quality measure, which was initially introduced under the 
Physician Quality Reporting System, shall be a measure selected by the 
Secretary that has been endorsed by the entity with a contract with the 
Secretary under section 1890(a) of the Act. Currently, that entity is 
the National Quality Forum (NQF). The electronic prescribing measure we 
proposed to retain, NQF Measure 0486: Adoption of Medication 
e-Prescribing, was endorsed by the NQF in 2011. However, pursuant to 
the changes finalized in the 2011 ``Changes to the Electronic 
Prescribing (eRx) Incentive Program'' final rule, we modified the 
description statement of the NQF-endorsed electronic prescribing 
measure to allow for use of Certified EHR Technology to report the 
electronic prescribing quality measure (76 FR 54954-54956). This 
modification has not yet been reviewed by the NQF. In light of this, we 
are not aware of any other NQF-endorsed measure related to electronic 
prescribing by eligible professionals that would be appropriate for use 
in the eRx Incentive Program. Therefore, we believe that the use of 
this eRx measure falls within the exception under section 
1848(k)(2)(C)(ii) of the Act.
(2) The Denominator for the Electronic Prescribing Measure
    The denominator for the electronic prescribing quality measure 
consists of specific billing codes for covered professional services.
    As initially authorized under section 1848(k)(2)(A)(ii) of the Act, 
and further established through rulemaking and under section 
1848(m)(2)(B)(i) of the Act, we may modify the codes making up the 
denominator of the electronic prescribing measure. For 2011, we 
expanded the scope of the denominator codes for 2010 to covered 
professional services outside the professional office and outpatient 
setting, such as professional services furnished in skilled nursing 
facilities or the home care setting (75 FR 73555). For purposes of 
reporting periods during CYs 2012 and 2013 (for the 2012 and 2013 
incentives and the 2013 and 2014 payment adjustments), we proposed (76 
FR 42888) to retain these CPT and HCPCS codes in the denominator of the 
electronic prescribing measure, because we believe that these codes 
represent the types of services for which prescriptions are likely to 
be generated. Therefore, if we were to measure an eligible 
professional's performance on the electronic prescribing measure, we 
would want to do so only for patients who saw the professional for such 
services. Although in prior years we

[[Page 73398]]

only permitted eligible professionals to report the electronic 
prescribing measure's numerator in connection with a service in the 
measure's denominator, and proposed to continue this requirement for 
purposes of the 2012 and 2013 incentives, in contrast, for the 2013 and 
2014 payment adjustments, we proposed to depart from this requirement, 
as discussed in section VI.F.2.i. of this final rule with comment 
period.
    We invited public and only received the following comment on our 
proposal to retain the denominator codes contained in the 2011 
electronic prescribing measure:
    Comment: One commenter requested that codes 90804, 90806, 96151, 
and 96152, which reflect psychotherapy services, be removed from the 
denominator of the electronic prescribing measure, because the 
commenter believed prescriptions should not be generated for these 
types of services.
    Response: We appreciate the commenter's feedback, but we disagree. 
We believe these codes represent the types of services for which 
prescriptions may be generated and therefore, are appropriate to 
include in the denominator of the electronic prescribing measure. We 
point out, however, that by finalizing these denominator codes, we are 
not attempting to promote or discourage the generation of prescriptions 
for these psychotherapy services.
    Based on the comment received and for the reasons explained in our 
responses, we are finalizing our proposal to retain the denominator 
codes contained in the 2011 electronic prescribing measure. 
Specifically, we are finalizing for the 2012 and 2013 eRx program years 
the following denominator CPT and HCPCS codes in the denominator of the 
electronic prescribing measure: 90801, 90802, 90804, 90805, 90806, 
90807, 90808, 90809, 90862, 92002, 92004, 92012, 92014, 96150, 96151, 
96152, 99201, 99202, 99203, 99204, 99205, 99211, 99212, 99213, 99214, 
99215, 99304, 99305, 99306, 99307, 99308, 99309, 99310, 99315, 99316, 
99324, 99325, 99326, 99327, 99328, 99334, 99335, 99336, 99337, 99341, 
99342, 99343, 99344, 99345, 99347, 99348, 99349, 99350, G0101, G0108, 
and G0109 (75 FR 73555).
(3) The Reporting Numerator for the Electronic Prescribing Measure
    Currently, the electronic prescribing measure's numerator consists 
of a single code, G8553, which indicates that the prescription was 
generated and transmitted via a qualified electronic prescribing system 
(and below, we discuss in greater detail what constitutes a ``qualified 
system''). For purposes of reporting the electronic prescribing quality 
measure for the 2012 and 2013 incentives and the 2013 and 2014 payment 
adjustment, we proposed (76 FR 42888-42889) that an eligible 
professional or group practice participating in the eRx GPRO can report 
the code associated with the measure's numerator whenever a 
prescription is generated and transmitted electronically. We invited 
public comment on the proposed numerator for the electronic prescribing 
measure for CYs 2012 through 2013 eRx Incentive Program, but, we did 
not receive any comments related to the proposed electronic prescribing 
measure's numerator G-code for CYs 2012 and 2013. Therefore, for CYs 
2012 and 2013 of the eRx Incentive Program, we are finalizing G-8553 
for electronic prescribing measure's numerator.
    We intend to post the final electronic prescribing measure 
specifications on the ``eRx Measure'' page of the eRx Incentive Program 
section of the CMS Web site at http://www.cms.gov/ERXIncentive by no 
later than--
     December 31, 2011 for the reporting periods that occur 
during calendar year 2012.
     December 31, 2012 for the reporting periods that occur 
during calendar year 2013.
    In the event that additional changes are needed to the measure 
specifications for years after 2012, we will do so via notice and 
comment rulemaking prior to posting the final measure specifications 
for that year.
e. Required Functionalities and Part D Electronic Prescribing Standards
    As discussed in greater detail below, for purposes of the 2012 and 
2013 incentive and 2013 and 2014 payment adjustment, we proposed (76 FR 
42889) that when the eligible professional or group practice reports 
the measure's numerator G-code, the eligible professional or group 
practice must have and regularly use a ``qualified'' electronic 
prescribing system, which we further proposed to define as either a 
system with the four functionalities previously identified in the 
electronic prescribing measure specifications, or Certified EHR 
Technology, as defined at 42 CFR 495.4 and 45 CFR 170.102. We also made 
proposals with regard to the Part D electronic prescribing standards 
for the electronic prescribing measures. Our proposed technological 
requirements of the electronic prescribing quality measure are 
discussed below.
(1) ``Qualified'' Electronic Prescribing System
    We are aware that there are significant numbers of eligible 
professionals who are interested in participating in the eRx Incentive 
Program but currently do not have an electronic prescribing system or 
Certified EHR Technology. Generally, the electronic prescribing measure 
does not require the use of any particular system or transmission 
network; only that the system be a ``qualified'' system. If the 
professional does not have general access to an electronic prescribing 
system or Certified EHR Technology in the practice setting, the 
eligible professional will not be able to report the electronic 
prescribing measure. In addition to not being eligible for an incentive 
payment, an eligible professional who does not report the electronic 
prescribing measure for 2012 or 2013 will be subject to the 2013 or 
2014 eRx payment adjustment, unless an exception applies.
    We proposed (76 FR 4289) to continue to recognize as a 
``qualified'' electronic prescribing system for purposes of the 
electronic prescribing quality measure any system that can perform the 
four functionalities that were identified and required under the 
program in 2010 and 2011 (76 FR 42889). We invited public comment on 
our proposal that the definition of a ``qualified electronic 
prescribing system,'' include systems that have these four 
functionalities. We did not receive any comments regarding our proposal 
to retain the same functionalities. Therefore, for years 2012 through 
2014 of the eRx Incentive Program, we are finalizing our decision to 
recognize as a ``qualified'' electronic prescribing system, a system 
that can do the following:
     Generate a complete active medication list incorporating 
electronic data received from applicable pharmacies and PBMs, if 
available.
     Enable eligible professionals to select medications, print 
prescriptions, electronically transmit prescriptions, as well as 
provide notifications (that is, signals to warn the prescriber of 
possible undesirable or unsafe situations including potentially 
inappropriate dose or route of administration of a drug, drug-drug 
interactions, allergy concerns, or warnings and cautions). This 
functionality must be enabled.
     Provide information related to lower cost, therapeutically 
appropriate alternatives (if any). The ability of an electronic 
prescribing system to receive tiered formulary information, if

[[Page 73399]]

available, would again suffice for this requirement for reporting the 
electronic prescribing measure during the reporting periods occurring 
in CYs 2012 and 2013 until this function is more widely available in 
the marketplace.
     Provide information on formulary or tiered formulary 
medications, patient eligibility, and authorization requirements 
received electronically from the patient's drug plan (if available).
    For reporting periods that occur in CYs 2012 and 2013, we also 
proposed to expand the definition of a ``qualified'' electronic 
prescribing system to include Certified EHR Technology, as defined at 
42 CFR 495.4 and 45 CFR 170.102, because we believe the technological 
requirements for electronic prescribing under the EHR Incentive Program 
are similar to the technological requirements for the eRx Incentive 
Program. We believe expanding the definition of a ``qualified'' 
electronic prescribing system in this way will align the requirements 
of the eRx and the Medicare EHR Incentive Program and potentially 
reduce unnecessary investment in multiple technologies for purposes of 
meeting the requirements for each program. This proposal was consistent 
with changes we finalized for certain reporting periods in CY 2011 for 
the 2011 eRx incentive and the 2013 eRx payment adjustment in the 
September 6, 2011 final rule entitled ``Medicare Program; Changes to 
the Electronic Prescribing (eRx) Incentive Program'' (76 FR 54953, 
54956).
    We invited public comment on the proposed requirements of a 
``qualified'' electronic prescribing system for purposes of reporting 
the electronic prescribing measure. The following is a summary of the 
comments we received regarding these proposals.
    Comment: Several commenters supported our proposal to retain our 
modification of the electronic prescribing measure to allow for use of 
Certified EHR Technology. Commenters supported our efforts to align the 
eRx Incentive Program and EHR Incentive Program in this manner. 
Commenters also believed that allowing for use of Certified EHR 
Technology reduces burden on eligible professionals.
    Response: We appreciate the commenters' supportive feedback and are 
finalizing our proposal to expand the definition of a ``qualified'' 
electronic prescribing system to include Certified EHR Technology for 
the reasons we and commenters noted.
    Therefore, in summary, for reporting periods that occur during CYs 
2012 and 2013 of the eRx Incentive Program, we are finalizing our 
proposal that a ``qualified'' electronic prescribing system for the 
electronic prescribing quality measure is one that either meets the 
four functionalities noted, or is Certified EHR Technology, as defined 
at 42 CFR 495.4 and 45 CFR 170.102 (regardless of whether the Certified 
EHR Technology has all four functionalities noted).
(2) Part D Electronic Prescribing Standards
    Section 1848(m)(3)(B)(v) of the Act specifies that to the extent 
practicable, in determining whether an eligible professional is a 
successful electronic prescriber, ``the Secretary shall ensure that 
eligible professionals utilize electronic prescribing systems in 
compliance with standards established for such systems pursuant to the 
Part D Electronic Prescribing Program under section 1860D-4(e) of the 
Act''. The Part D standards for electronic prescribing systems 
establish which electronic standards Part D sponsors, providers, and 
dispensers must use when they electronically transmit prescriptions and 
certain prescription related information for Part D covered drugs that 
are prescribed for Part D eligible individuals.
    To be a qualified electronic prescribing system under the eRx 
Incentive Program, electronic systems must convey the information 
listed previously using the standards currently in effect for the Part 
D electronic prescribing program. The latest Part D electronic 
prescribing standards, and those that had previously been adopted, can 
be found on the CMS Web site at http://www.cms.gov/eprescribing.
    To ensure that eligible professionals utilize electronic 
prescribing systems that meet these requirements, the electronic 
prescribing measure requires that those functionalities required for a 
``qualified'' electronic prescribing system are equivalent to the 
adopted Part D electronic prescribing standards. We proposed (76 FR 
42889 and 42890) to modify the Part D electronic prescribing standards 
required for a ``qualified'' electronic prescribing system under the 
eRx Incentive Program to have these standards consistent with current, 
CMS Part D electronic prescribing standards.
    The Part D electronic prescribing standards currently in place that 
are relevant to the four functionalities described previously are as 
follows:
     Generate medication list--Use the National Council for 
Prescription Drug Programs (NCPDP) Prescriber/Pharmacist Interface 
SCRIPT Standard, Implementation Guide, Version 8 Release 1 or 10.6, 
October 2005 (hereinafter ``NCPDP SCRIPT 8.1 or 10.6'') Medication 
History Standard. Use of NCPDP SCRIPT 10.6 is a new option for use in 
the eRx Incentive Program.
     Transmit prescriptions electronically--Use the NCPDP 
SCRIPT 8.1or 10.6 for the transactions listed at Sec.  423.160(b)(2).
     Provide information on lower cost alternatives--Use the 
NCPDP Formulary and Benefits Standard, Implementation Guide, Version 1, 
Release 0 (Version 1.0), October 2005 (hereinafter ``NCPDP Formulary 
and Benefits 1.0'').
     Provide information on formulary or tiered formulary 
medications, patient eligibility, and authorization requirements 
received electronically from the patient's drug plan use:
    ++ NCPDP Formulary and Benefits 1.0 for communicating formulary and 
benefits information between prescribers and plans.
    ++ Accredited Standards Committee (ASC) X12N 270/271-Health Care 
Eligibility Benefit Inquiry and Response, Version 4010, May 2000, 
Washington Publishing Company, 004010X092 and Addenda to Health Care 
Eligibility Benefit Inquiry and Response, Version 4010A1, October 2002, 
Washington Publishing Company, 004010X092A1 for communicating 
eligibility information between the plan and prescribers.
    ++ NCPDP Telecommunication Standard Specification, Version 5, 
Release 1 (Version 5.1), September 1999, and equivalent NCPDP Batch 
Standard Batch Implementation Guide, Version 1, Release 1 (Version 
1.1), January 2000 for communicating eligibility information between 
the plan and dispensers.
    We did not receive any comments regarding our proposals related to 
part D electronic prescribing standards and therefore, we are 
finalizing our proposal that, for purposes of the 2012 and 2013 eRx 
Incentive Program, ``qualified'' electronic prescribing systems must 
meet all of the part D electronic prescribing standards specified.
    Above, we specified the current Part D electronic prescribing 
standards that are relevant to the four functionalities. Should these 
Part D electronic prescribing standards subsequently change, we note 
that the eligible professional's electronic prescribing system must, at 
all times during the respective reporting period, comply with the 
current Part D electronic prescribing standards. For example, on 
October 24, 2011, CMS proposed to update some of the previously stated 
Part D electronic prescribing standards to the four functionalities (76 
FR 65916). Specifically, CMS proposed to update

[[Page 73400]]

Accredited Standards Committee (ASC) X12N 270/271-Health Care 
Eligibility Benefit Inquiry and Response, Version 4010 to Version 5010. 
If CMS finalizes its proposal, an eligible professional's electronic 
prescribing system must comply with the Version 5010 update by the 
effective date that would be specified in the final rule.
    There are Part D electronic prescribing standards that are in 
effect for functionalities that are not commonly utilized at this time. 
One example is Rx Fill Notification, which is discussed in the Part D 
electronic prescribing final rule (73 FR 18926). For purposes of the 
eRx Incentive Program for CYs 2012 through 2014, we again are not 
requiring that an electronic prescribing system contain all 
functionalities for which there are available Part D electronic 
prescribing standards since many of these functionalities are not 
commonly available. For those ``qualified'' electronic prescribing 
systems that have the four functionalities previously described, such 
systems must use the adopted Part D electronic prescribing standards 
listed previously for electronic messaging only.
    There are other aspects of the functionalities for a ``qualified'' 
system that are not dependent on electronic messaging and are part of 
the software of the electronic prescribing system, for which Part D 
standards for electronic prescribing do not pertain and are not 
required for purposes of the eRx Incentive Program. For example, the 
requirements in the second functionality that require the system to 
allow professionals to select medications, print prescriptions, and 
conduct alerts are functions included in the particular software, for 
which Part D standards for electronic messaging do not apply.
    As stated previously, in this final rule with comment period, we 
are finalizing our proposal to expand the definition of a ``qualified'' 
electronic prescribing system under the electronic prescribing quality 
measure to also recognize Certified EHR Technology. Among other 
requirements, Certified EHR Technology must be able to electronically 
generate and transmit prescriptions and prescription-related 
information in accordance with certain standards, some of which have 
been adopted for purposes of electronic prescribing under Part D. 
Similar to the electronic prescribing systems that have the four 
functionalities previously noted, Certified EHR Technology also must be 
able to check for drug-drug interactions and check whether drugs are in 
a formulary or a preferred drug list, although the certification 
criteria do not specify any standards for the performance of those 
functions. We believe that it is acceptable that not all of the Part D 
eRx standards are required for Certified EHR Technology in light of our 
desire to better align the requirements of the eRx and the Medicare EHR 
Incentive Programs, and potentially reduce unnecessary investment in 
multiple technologies for purposes of meeting the requirements for each 
program. Furthermore, to the extent that an eligible professional uses 
Certified EHR Technology to electronically prescribe under Part D, he 
or she would still be required to comply with the applicable Part D 
standards to do so.
f. Reporting Mechanisms for the 2012 and 2013 Reporting Periods
    For purposes of the January 1, 2011 through December 31, 2011 
reporting period for the 2011 incentive payment and 2013 payment 
adjustment, an eligible professional (and eRx GPRO, for purposes of the 
2011 incentive) may report on the electronic prescribing measure to 
meet the criteria for being a successful electronic prescriber via 
three reporting mechanisms--claims, qualified registry, and qualified 
EHR product. However, for purposes of the 2012 payment adjustment, due 
to operational limitations, only the claims-based reporting mechanism 
was available for purposes of reporting on the electronic prescribing 
measure for the 2012 payment adjustment (75 FR 73563).
    For reporting periods that occur during CY 2012 and 2013, to 
provide eligible professionals and groups practices with multiple 
mechanisms to report on the electronic prescribing measure for purposes 
of reporting the electronic prescribing measure for the 2012 and 2013 
incentive payments and 2013 and 2014 payment adjustments, we proposed 
(76 FR 42890) the following three reporting mechanisms--claims, 
qualified registry, and qualified EHR (including both direct EHR-based 
reporting and EHR data submission vendors). However, as in the past, we 
indicated we would not combine data on the electronic prescribing 
measure submitted via multiple reporting mechanisms. Combining data 
received via multiple reporting mechanisms would add significant 
complexity to our analytics and potentially delay incentive payments. 
Therefore, we proposed that an eligible professional or eRx GPRO would 
need to meet the relevant reporting criteria for the incentive or 
payment adjustment using a single reporting mechanism.
    For reporting periods that occur during CYs 2012 and 2013, we also 
proposed that a group practice that wishes to participate in the eRx 
Incentive Program as an eRx GPRO for a particular calendar year would 
have to indicate which reporting mechanism the group practice intends 
to use to report the electronic prescribing measure. That is, the group 
practice would need to indicate at the time it self-nominates which 
reporting mechanism (claims, qualified registry, qualified direct EHR-
based reporting, or qualified EHR data submission vendor) the group 
practice intends to use for purposes of participating in the eRx GPRO.
    The following is a summary of the comments we received regarding 
these proposals.
    Comment: One commenter supported our proposal to allow multiple 
reporting mechanisms to report the electronic prescribing measure for 
purposes of the payment adjustment, particularly for those group 
practices that are transitioning to the use of EHR systems.
    Response: We appreciate the commenter's feedback. We are finalizing 
the claims, registry, and EHR-based reporting mechanisms for the12-
month reporting periods that apply to the 2012 and 2013 incentives and 
2014 payment adjustment. However, because the EHR and/or registry would 
no longer need to search for the codes in the electronic prescribing 
measure's denominator for purposes of the 6-month reporting periods 
that apply to the 2013 and 2014 payment adjustments, CMS would need to 
be able to release new file specifications to reflect this change in 
time to reliably test the submission of the results from EHRs and 
registries prior to the actual data submission occurring in July. We 
will not be able to release the new file specifications in time to 
conduct this additional testing, which raises the chances of an 
eligible professional failing to successfully report through no fault 
of their own. Therefore, we are not finalizing the registry and EHR-
based reporting mechanisms for the 6-month reporting periods pertaining 
to the 2013 and 2014 payment adjustments. In addition, we note that if 
we had allowed use of registry and EHR-based reporting for the 6-month 
reporting periods for the 2013 and 2014 payment adjustments, this would 
require registry and EHR vendors to submit electronic prescribing data 
for an additional instance during 2012 and 2013 (that is, in addition 
to the data submission for the 12-month reporting period). Since 
providing an additional submission instance of electronic prescribing 
data has not been a function of qualified registries and EHRs in past

[[Page 73401]]

program years, CMS would need to vet vendors to ensure their systems 
allow for interim submissions. At this time, it is not operationally 
feasible to vet these vendors to ensure their systems allow for a 
submission instance.
    We do not believe that the lack of registry and EHR-based reporting 
mechanisms for the 6-month reporting periods for the 2013 and 2014 
payment adjustments would substantially prevent eligible professionals 
and group practices from meeting the criteria for being successful 
electronic prescribers, because eligible professionals may still report 
on the electronic prescribing measure during these reporting periods 
via claims and via all three reporting mechanisms (claims, registry, 
and EHR) for the 12-month 2014 payment adjustment reporting period. We 
note that, according to the 2009 Reporting Experience available on our 
Web site at www.cms.gov/eRxincentive/, the claims-based reporting 
mechanism was the most widely used reporting mechanism in 2009. 
Therefore, it follows that we anticipate that most eligible 
professionals and group practices participating in the eRx Incentive 
Program for the 2013 and 2014 payment adjustment would do so via the 
claims-based reporting mechanism.
    Comment: One commenter urged us to allow group practices 
participating in the eRx GPRO to change their method of reporting 
during the reporting period.
    Response: We appreciate the commenter's feedback. However, because 
it would be a substantial operational burden to analyze group practice 
reporting via multiple reporting mechanisms, we must require that group 
practices choose only one method of reporting during the reporting 
period. Regardless, we note that all three reporting mechanisms--
claims, registry, and EHR--are available for reporting under the eRx 
GPRO.
    After considering the comments received and for the reasons stated 
in our responses, we are finalizing the following reporting mechanisms 
for the 12-month reporting periods for the 2012 and 2013 incentives, 
and the 2014 payment adjustment: claims, registry, and EHR. The 
requirements for each reporting mechanism with respect to the 2012 and 
2013 incentives and 2013 and 2014 payment adjustments are described 
below. In this final rule, we also are finalizing the claims-based 
reporting mechanism for the 6-month reporting periods pertaining to the 
2013 and 2014 payment adjustments; however, as we explained previously, 
we are not finalizing registry or EHR-based reporting for these 6-month 
reporting periods. We are therefore modifying 42 CFR 414.92 to reflect 
that only the claims-based reporting mechanism may be used for purposes 
of the 6-month 2013 and 2014 payment adjustment reporting periods.
(1) Claims-Based Reporting
    For purposes of reporting the electronic prescribing quality 
measure for the 2012 and 2013 incentives and the 2013 and 2014 payment 
adjustments, we proposed (75 FR 42890 and 42891) to again retain the 
claims-based reporting mechanism that has been used since the 
implementation of the eRx Incentive Program in 2009. We did not propose 
any prerequisites, such as registration, to begin reporting on the 
electronic prescribing quality measure via claims. Retaining the 
claims-based mechanism allows eligible professionals and group 
practices to begin to report on the electronic prescribing quality 
measure without the added cost of submitting data to a registry or 
purchasing an EHR system (if the eligible professional is using a 
standalone eRx system) as eligible professionals already report PFS 
charges via claims.
    The following is a summary of the only comment we received 
regarding this proposal.
    Comment: One commenter urged us to continue to offer the claims-
based reporting mechanism until the registry and EHR-based reporting 
mechanisms are widely used.
    Response: We agree and are finalizing the claims-based reporting 
mechanism.
    We are finalizing the claims-based reporting mechanism for purposes 
of reporting the electronic prescribing quality measure for the 2012 
and 2013 incentives and the 2013 and 2014 payment adjustments. 
Accordingly, we are modifying 42 CFR 414.92 to reflect our decision to 
finalize this proposal.
    In the proposed rule, we also proposed that if an eligible 
professional or group practice chooses the claims-based reporting 
mechanism, the eligible professional or group practice must directly 
submit data on the electronic prescribing quality measure (76 FR 
42890). For eligible professionals and group practices participating in 
the eRx GPRO using the claims-based reporting mechanism for purposes of 
reporting the electronic prescribing measure during a 12-month 
incentive or payment adjustment reporting period, we proposed that all 
claims for services must be processed by us no later than two months 
after the respective reporting period, for the claim to be included in 
our data analysis. (For example, for an eligible professional using the 
12-month, 2014 payment adjustment reporting period, all claims for 
services between January 1, 2012 and December 31, 2012 must be 
processed no later than February 22, 2013 to be included in our data 
analysis.) For eligible professionals and group practices using the 
claims-based reporting mechanism for purposes of reporting the 
electronic prescribing measure during a 6-month payment adjustment 
reporting period, we proposed that all claims for services must be 
processed by us by no later than one month after the respective 
reporting period, for the claim to be included in our data analysis. 
(For example, for an eligible professional using the 6-month, 2013 
payment adjustment reporting period, all claims for services between 
January 1, 2012 and June 30, 2012 must be processed no later than July 
27, 2012, for the claims to be included in our data analysis.) We 
invited but did not receive any public comment regarding the processing 
of claims. Therefore, for the reasons explained, we are finalizing 
these requirements. We believe that these requirements for using the 
claims-based reporting mechanism will allow sufficient time for 
eligible professionals to report the electronic prescribing measure, 
allow us to collect and analyze the data submitted by eligible 
professionals, and avoid retroactive adjustments of payments.
(2) Registry-Based Reporting
    For purposes of reporting for the 2012 and 2013 incentives and the 
2013 and 2014 payment adjustments, we proposed (76 FR 42891) to 
continue the registry-based reporting mechanism first introduced under 
the 2010 eRx Incentive Program. We believed this would provide an 
opportunity for individual eligible professionals and group practices 
who choose to participate in the Physician Quality Reporting System via 
registry to use the same reporting mechanism for reporting the 
electronic prescribing measure, and this would provide eligible 
professionals and group practices with another alternative reporting 
mechanism. In addition, unlike claims-based reporting, although there 
may be a cost associated with submitting data to a registry, reporting 
of the electronic prescribing measure to CMS is done entirely by the 
registry.
    We also proposed that only registries qualified to submit quality 
measure results and numerator and denominator data on quality measures 
on behalf of eligible professionals for the Physician Quality Reporting 
System for the applicable calendar year would be qualified to submit 
measure results and numerator and denominator data on the

[[Page 73402]]

electronic prescribing measure on behalf of eligible professionals for 
the eRx Incentive Program.
    Some registries that self-nominate to become a qualified registry 
for the Physician Quality Reporting System may not choose to self-
nominate to become a qualified registry for purposes for the eRx 
Incentive Program. We proposed that registries that want to qualify 
would need to submit measure results and numerator and denominator data 
on the electronic prescribing measure for reporting periods that occur 
during CYs 2012 and 2013 at the time that they submit their self-
nomination letter for the 2012 and 2013 Physician Quality Reporting 
System, respectively. The self-nomination process and requirements for 
registries for the Physician Quality Reporting System, which also will 
apply to the registries for the eRx Incentive Program, are discussed in 
the Physician Quality Reporting System section VI.F.1.(d).(2). of this 
final rule with comment period. We will post a final list of qualified 
registries for the eRx Incentive Program for CYs 2012 and 2013 on the 
eRx Incentive Program section of the CMS Web site at http://www.cms.gov/ERXIncentive when we post the final list of qualified 
registries for the Physician Quality Reporting System for 2012 and 2013 
respectively on the Physician Quality Reporting System section of the 
CMS Web site.
    Since we proposed a 12-month reporting period for purposes of the 
2012 and 2013 incentive and 6 and 12- month reporting periods for 
purposes of the 2013 and 2014 payment adjustments (as described in the 
section previously), we further proposed that qualified registries 
would need to submit the electronic prescribing measure for the eRx 
Incentive Program to us in two separate transmissions, based on the 
proposed reporting periods for the 2012 and 2013 incentive payments and 
2013 and 2014 payment adjustments. Specifically, we proposed that 
qualified registries would need to submit 2012 and 2013 data on the 
electronic prescribing measure in two separate submissions:
     Following the end of the respective 6-month payment 
adjustment reporting period (between July 1, 2012 and August 19, 2012, 
for purposes of the 2013 eRx payment adjustment, and between July 1, 
2013 and August 19, 2013, for purposes of the 2014 eRx payment 
adjustment); and
     Following the end of the 12-month reporting period for the 
2012 and 2013 incentives and 2014 payment adjustment.
    We invited public comment but received no comments on our proposed 
requirements for registry-based reporting for purposes of reporting for 
the 2012 and 2013 incentives, as well as for reporting during the 6-
month and 12-month reporting periods for the 2013 and 2014 payment 
adjustments. We are modifying 42 CFR 414.92 to finalize the 
requirements for registry-based reporting for purpose of the 12-month 
reporting periods for the 2012 and 2013 incentives, and the 2014 
payment adjustment. As stated previously, due to the operational issues 
associated with ensuring that qualified registries are able to allow 
for an additional submission instance, we are not finalizing registry-
based reporting for the 6-month reporting periods for the 2013 and 2014 
payment adjustments, and therefore, are not finalizing the 
corresponding registry requirements that we proposed. Therefore, 
qualified registries must submit the electronic prescribing quality 
measure for the eRx Incentive Program to us in one transmission, for 
the 12-month reporting periods applicable for the 2012 and 2013 
incentive payments and the 2013 and 2014 payment adjustments. 
Specifically, qualified registries must submit 2012 and 2013 data on 
the electronic prescribing quality measure following the end of the 
respective 12-month reporting period for the 2012 and 2013 incentives 
and the 2014 payment adjustment.
(3) EHR-Based Reporting
    For purposes of reporting for the 2012 and 2013 incentives and the 
2014 payment adjustment, we proposed (76 FR 42891-42892) to retain the 
EHR-based reporting mechanism to encourage the use of EHR technology as 
well as provide eligible professionals and group practices with a third 
reporting option. We proposed this reporting mechanism to provide an 
opportunity for eligible professionals and group practices who choose 
to participate in the Physician Quality Reporting System via EHR, as 
well as eligible professionals who participate in the Medicaid or 
Medicare EHR Incentive Program, to use the same reporting mechanism for 
reporting the electronic prescribing measure under the eRx Incentive 
Program.
    We proposed that EHR technology and EHR data submission vendors (as 
described by the Physician Quality Reporting System) ``qualified'' to 
submit extracted Medicare clinical quality data to us for the Physician 
Quality Reporting System would be able to be used by an eligible 
professional or group practice to submit data on the electronic 
prescribing measure for the 2012 and 2013 incentives and 2014 payment 
adjustment. The proposed self-nomination process and requirements for 
direct EHR-based reporting products and EHR data submission vendors for 
the Physician Quality Reporting System as discussed previously the 
proposed rule (76 FR 42846) would apply to the EHR products and EHR 
data submission vendors for the eRx Incentive Program. We hoped this 
third reporting option for eligible professionals and group practices 
would encourage the use of EHR technology.
    We also proposed that direct EHR-based reporting vendors and EHR 
data submission vendors must indicate their desire to have one or more 
of their EHR products approved for use in the eRx Incentive Program for 
the reporting periods that occur in CYs 2012 and 2013 at the same time 
they self-nominate for the respective 2012 and 2013 Physician Quality 
Reporting System. We further noted that a list of approved EHR 
technology, their vendors (including the technology's version that is 
approved) for the eRx Incentive Program would be posted on the eRx 
Incentive Program section of the CMS Web site at http://www.cms.gov/ERXIncentive when we posted the list of approved EHR technology for the 
Physician Quality Reporting System.
    We also proposed that eligible professionals using their approved 
EHR systems must submit the electronic prescribing measure for the eRx 
Incentive Program to us in two separate submissions--
     Following the end of the respective 6-month payment 
adjustment reporting period (between July 1, 2012 and August 19, 2012, 
for purposes of the 2013 eRx payment adjustment, and between July 1, 
2013 and August 19, 2013, for purposes of the 2014 eRx payment 
adjustment); and
     Following the end of the 12-month reporting period for the 
2012 and 2013 incentives and 2014 payment adjustment.
    Similarly, we proposed that EHR data submission vendors must submit 
the electronic prescribing measure to on behalf of eligible 
professionals to us in two separate submissions:
     Following the end of the respective 6-month payment 
adjustment reporting period (between July 1, 2012 and August 19, 2012, 
for purposes of the 2013 eRx payment adjustment, and between July 1, 
2013 and August 19, 2013, for purposes of the 2014 eRx payment 
adjustment); and
     Following the end of the 12-month reporting period for the 
2012 and 2013

[[Page 73403]]

incentives and 2014 payment adjustment.
    We invited public comment but received no comments on our proposed 
requirements for EHR-based reporting for purposes of reporting for the 
2012 and 2013 incentives and the 2013 and 2014 payment adjustments. As 
noted previously, however, we are not finalizing EHR-based reporting 
for the 6-month reporting periods for the 2013 and 2014 payment 
adjustments. Therefore, in this final rule with comment period, we are 
only finalizing the requirements discussed previously for reporting the 
electronic prescribing measure via the EHR-based reporting mechanism 
for the 12-month reporting period for the 2012 and 2013 incentives and 
the 2014 payment adjustment. We are modifying 42 CFR 414.92 to reflect 
these final requirements for EHR-based reporting.
g. The 2012 and 2013 eRx Incentives
    42 CFR 414.92(d) governs the requirements for individual eligible 
professionals to qualify to receive an incentive payment. We proposed 
(76 FR 42892) to modify 42 CFR 414.92(d) to add the words ``being a,'' 
so that the provision reads:

    In order to be considered a successful electronic prescriber and 
qualify to earn an electronic prescribing incentive payment (subject 
to paragraph (c)(3) of this section), an individual eligible 
professional, as identified by a unique TIN/NPI combination, must 
meet the criteria for being a successful electronic prescriber under 
section 1848(m)(3)(B) of the Act and as specified by CMS during the 
reporting period specified in paragraph (d)(1) of this section and 
using one of the reporting mechanisms specified in paragraph (d)(2) 
of this section. Although an eligible professional may attempt to 
qualify for the electronic prescribing incentive payment using more 
than one reporting mechanism (as specified in paragraph (d)(2) of 
this section), the eligible professional will receive only one 
electronic prescribing incentive payment per TIN/NPI combination for 
a program year.

    We invited but did not receive any public comment on our proposal 
to make the technical change to 42 CFR 414.92(d). Therefore, since we 
believe this change provides more clarity to the provision, we are 
finalizing this proposed change.
(1) Applicability of 2012 and 2013 eRx Incentives for Eligible 
Professionals and Group Practices
    Section 1848(m)(2)(B) of the Act imposes a limitation on the 
applicability of the eRx incentive payment. The Secretary is authorized 
to choose 1 of 2 possible criteria for determining whether or not the 
limitation applies to an eligible professional (or group practice)--
     Whether Medicare Part B allowed charges for covered 
professional services furnished by the eligible professional (or group 
practice) for the codes to which the electronic prescribing quality 
measure applies are less than 10 percent of the total Medicare Part B 
PFS allowed charges for all such covered professional services 
furnished by the eligible professional during the reporting period; OR
     Whether the eligible professional submits (both 
electronically and non-electronically) a sufficient number (as 
determined by the Secretary) of prescriptions under Part D (which can, 
again, be assessed using Part D drug claims data). If the Secretary 
decides to use this criterion, the criterion based on the reporting on 
electronic prescribing measures would no longer apply.
    Based on our proposal to make the determination of whether an 
eligible professional or group practice is a ``successful electronic 
prescriber'' based on submission of the electronic prescribing measure 
(the first criterion), we proposed (76 FR 42892) to apply the criterion 
under section 1848(m)(2)(B)(i) of the Act for the limitation for both 
the 2012 and 2013 incentives. We invited but received no public comment 
on our proposal. Therefore, the 2012 and/or 2013 incentive is not 
applicable if the Medicare Part B allowed charges for covered 
professional services furnished by the eligible professional (or group 
practice) for the codes to which the electronic prescribing quality 
measure applies are less than 10 percent of the total Medicare Part B 
PFS allowed charges for all covered professional services furnished by 
the eligible professional or group practice during the reporting 
period.
    For purposes of the 2012 and 2013 incentives, this analysis would 
be performed during the first quarters of 2013 and 2014 respectively by 
dividing the eligible professional's or participating group practice's 
total 2012 and 2013 respective Medicare Part B PFS allowed charges for 
all such covered professional services submitted for the measure's 
denominator codes by the eligible professional's or group practices' 
total Medicare Part B PFS allowed charges for all covered professional 
services. If the result is 10 percent or more, then the statutory 
limitation will not apply and a successful electronic prescriber would 
qualify to earn the electronic prescribing incentive payment. If the 
result is less than 10 percent, then the statutory limitation will 
apply, and the eligible professional or group practice will not earn an 
electronic prescribing incentive payment even if he or she meets the 
reporting criteria for being a successful electronic prescriber. 
Although an individual eligible professional or group practice may 
decide to conduct his or her own assessment of how likely this 
statutory limitation is expected to apply to him or her before deciding 
whether or not to report the electronic prescribing measure, an 
individual eligible professional or group practice may report the 
electronic prescribing measure without regard to the statutory 
limitation for the incentive payment.
(2) Reporting Criteria for Being a Successful Electronic for the 2012 
and 2013 eRx Incentives--Individual Eligible Professionals
    Section 1848(m)(3)(D) of the Act authorizes the Secretary to revise 
the criteria for submitting data on the electronic prescribing measure 
under section 1848(m)(3)(B)(ii) of the Act, which requires the measure 
to be reported in at least 50 percent of the cases in which the measure 
is reportable.
    For the 2012 and 2013 incentives, to maintain program consistency 
from year to year, we proposed (76 FR 42892) to make the determination 
of whether an individual eligible professional is a successful 
electronic prescriber for purposes of the incentive based on a count of 
the number of times (minimum threshold of 25) an eligible professional 
reports that at least one prescription created during the denominator-
eligible encounter is generated using a qualified electronic 
prescribing system, which would include Certified EHR Technology (that 
is, reports the G8553 code when the eligible professional bills for one 
of the services included in the measure's denominator). We believe this 
criterion adequately addresses the goal of the eRx Incentive Program, 
specifically to promote the use of electronic prescribing systems.
    We invited public comment on the proposed criteria for successful 
electronic prescriber and the following is a summary of the comments we 
received.
    Comment: One commenter supported our proposed criteria for being a 
successful electronic prescriber for purposes of the 2012 and 2013 
incentives, further stating that reporting the electronic prescribing 
measure for 25 unique visits is a reasonable and attainable threshold.
    Response: We appreciate the commenter's feedback and are finalizing 
our proposal to base the determination of whether or not an eligible 
professional is a successful electronic

[[Page 73404]]

prescriber for the 2012 and 2013 incentives by reporting on the 
electronic prescribing measure for at least 25 unique visits.
    Comment: A few commenters suggested that we reduce the number of 
times an eligible professional is required to report the electronic 
prescribing measure for purposes of the 2012 and 2013 incentives to 10 
unique visits, similar to the reporting requirements for the 2013 and 
2014 payment adjustments.
    Response: We appreciate the commenters' feedback. However, we 
proposed this reporting criterion for the 2012 and 2013 incentives 
because the criterion parallels the criterion established for the 2011 
incentive. We believe that it is in the eligible professional's best 
interest to provide uniform year-to-year reporting requirements for 
purposes of earning an incentive. In addition, we note that whereas the 
10 count criteria for reporting the electronic prescribing measure for 
a payment adjustment applies to a 6-month reporting period, this 25 
count criteria for earning an incentive applies to a 12-month reporting 
period. Since the requirement to report 25 times is based on a longer 
reporting period, we believe it is reasonable to require a higher 
reporting threshold for purposes of the 2012 and 2013 incentives, than 
what was required for the 2012 payment adjustment (which was based on a 
shorter, 6-month reporting period).
    Comment: Several commenters encouraged us to align the reporting 
requirements for the 2012 and 2013 incentives with the reporting 
requirements for the 2013 and 2014 payment adjustments by allowing the 
reporting of the electronic prescribing measure's numerator for non-
denominator-eligible visits.
    Response: We appreciate the commenters' feedback. However, as we 
stated previously, we do not believe that the reporting criteria for 
becoming a successful electronic prescriber for the incentives and 
payment adjustments need to be identical. Rather, we believe that, 
although the incentives and payment adjustments were both implemented 
to encourage the use of electronic prescribing, the criteria to become 
a successful electronic prescriber for purposes of the 2012 and 2013 
incentives should be more stringent.
    After considering the comments received and for the reasons stated 
in our responses, for the 2012 and 2013 incentives, we are finalizing 
the criteria for being a successful electronic prescriber as proposed 
for individual eligible professionals . A summary of the finalized 
criteria for being a successful electronic prescriber for purposes of 
the 2012 and 2013 incentives are described in the following Tables 73 
and 74.
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[[Page 73405]]

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(3) Criteria for Being a Successful Electronic Prescriber 2012 and 2013 
eRx Incentives--Group Practices
    Under section 1848(m)(3)(B) of the Act, in order to qualify for the 
incentive payment, an eligible professional or group practice must be a 
``successful electronic prescriber.'' To simplify the reporting 
criteria for group practices using the eRx GPRO used in prior years, we 
proposed (76 FR 42893) that, for the 2012 and 2013 incentive payments, 
to be a successful prescriber, a group practice using the eRx GPRO must 
report the electronic prescribing measure's numerator for at least 625 
unique visits (for group practices comprised of 25-99 eligible 
professionals) or 2,500 unique visits (for group practices comprised of 
100 or more eligible professionals) during the applicable reporting 
period. To obtain these reporting criteria, we multiplied the smallest 
group practice size for each respective threshold (that is, 25 for the 
first threshold and 100 for the second threshold) by the number of 
unique visits (25) an individual eligible professional must report on 
the electronic prescribing measure in order to qualify for an incentive 
payment. Although this may be a higher reporting threshold for group 
practices using the eRx GPRO comprised of 25-50 eligible professionals 
and group practices using the eRx GPRO comprised of 101-199 eligible 
professionals than in 2011, we believe it is still quite feasible for 
these group practices to meet the respective reporting threshold as 
this would be the reporting threshold should the members of the group 
practice choose to participate in the eRx Incentive Program as 
individual eligible professionals.
    We invited but received no public comments on the proposed criteria 
for determining successful electronic prescribers for group practices 
reporting under the eRx GPRO reporting option for purposes of earning 
the 2012 and 2013 incentives. Therefore, we are finalizing the criteria 
as proposed. The

[[Page 73406]]

criteria for being successful electronic prescribers for group 
practices using the eRx GPRO reporting option for purposes of the 
2012and 2013 incentive are summarized in the following Tables 75 and 
76.
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BILLING CODE 4120-01-C
(4) No Double Payments
    We are prohibited from making double payments under section 
1848(m)(3)(C)(iii) of the Act, which requires that payments to a group 
practice shall be in lieu of the payments that would otherwise be made 
under the eRx Incentive Program to eligible professionals individually 
in the group practice for being a successful electronic prescriber. 
Accordingly, we proposed (76 FR 42893) to make incentive payments to 
group practices based on the determination that the group practice, as 
a whole, is a successful electronic prescriber for the respective 
program year. An individual eligible professional who is affiliated 
with a group practice participating in the eRx GPRO reporting option 
that meets the requirements of being a successful electronic prescriber 
under a group practice would not be eligible to earn a separate eRx 
incentive payment on the basis of the individual eligible professional 
meeting the criteria for successful electronic reporter at the 
individual level.
    We invited but received no public comment on our proposal to 
prohibit double payments and are therefore finalizing this proposal. We 
also proposed to make a technical change to 42 CFR 414.92(g)(5)(ii) to 
modify ``another'' to ``a'' to clarify the provision. However, we 
inadvertently listed the wrong provision. The provision that we 
intended to modify was 42 CFR 414.92(e)(2)(ii). Since we believe this 
technical change will not substantively affect the regulation and 
believe this technical change will clarify this provision, we are 
making a technical change to modify ``another'' to ``a'' under 42 CFR 
414.92(e)(2)(ii).
h. The 2013 and 2014 Electronic Prescribing Payment Adjustments
    As previously stated, for 2012, 2013, and 2014, if the eligible 
professional is not a successful electronic prescriber for the 
reporting period for the year, the PFS amount for covered professional 
services furnished by such professionals during the year shall be less 
than the PFS amount that would otherwise apply by--
     1.0 percent for 2012;
     1.5 percent for 2013; and
     2.0 percent for 2014.
    We proposed (76 FR 42893) to modify 42 CFR 414.92 to provide 
further explanation of the requirements for individual eligible 
professionals and group practices for the 2013 and 2014 payment 
adjustment, as described later in this section. Paragraph 42 CFR 
414.92(f) was designated to address ``public reporting of an eligible 
professional's or group practice's Electronic Prescribing Incentive 
Program data.'' However, we are redesignating this paragraph as 42 CFR 
414.92(g). In its place, we are redesignating paragraph (f) so that 
414.92(f) addresses the requirements for the 2013 and 2014 payment 
adjustments.

[[Page 73408]]

(1) Limitations to the 2013 and 2014 eRx Payment Adjustments--
Individual Eligible Professionals
    Whereas we believe that an incentive should be broadly available to 
encourage the widest possible adoption of electronic prescribing, even 
for low volume prescribers, we believe that a payment adjustment should 
be applied primarily to assure that those who have a large volume of 
prescribing do so electronically, without penalizing those for whom the 
adoption and use of an electronic prescribing system may be impractical 
given the low volume of prescribing. We proposed (76 FR 42893 through 
42899) limitations on the applicability of the 2013 and 2014 payment 
adjustments. Specifically, we proposed that the 2013 and 2014 payment 
adjustments would not apply if:
     An eligible professional is not an MD, DO, podiatrist, 
nurse practitioner, or physician assistant as of June 30, 2012, for 
purposes of the 2013 payment adjustment and June 30, 2013, for purposes 
of the 2014 payment adjustment. Since these eligible professionals do 
not generally prescribe, we have excluded these eligible professionals 
from the eRx Incentive Program.
    For purposes of determining whether an eligible professional is an 
MD, DO, podiatrist, nurse practitioner, or physician assistant we would 
use National Plan and Provider Enumeration System (NPPES) data. It is 
an eligible professional's responsibility to ensure that his or her 
primary taxonomy code in NPPES is accurate. However, in 2011, we also 
established a G-code, (G8644) that eligible professionals can use to 
report to us that they do not have prescribing privileges. We proposed 
to retain the reporting of this G-code for purposes of the 2013 and 
2014 payment adjustments. For purposes of the 2013 payment adjustment, 
we proposed that eligible professionals who report this G-code must do 
so on a claim with dates of services during the 6-month reporting 
period (January 1, 2012 and June 30, 2012). For purposes of the 2014 
payment adjustment, we proposed that eligible professionals who report 
this G-code must do so on a claim with dates of services during the 6-
month reporting period (January 1, 2013 and June 30, 2013) so that we 
are able to distinguish whether a professional is reporting this G-code 
for the 2013 payment adjustment or the 2014 payment adjustment.
     The eligible professional's Medicare Part B allowed 
charges for covered professional services to which the electronic 
prescribing quality measure applies are less than 10 percent of the 
total Medicare Part B PFS allowed charges for all covered professional 
services furnished by the eligible professional during the respective 
payment adjustment reporting period. This is a required limitation 
under section 1848(m)(2)(B) of the Act. This calculation will be 
performed by dividing the eligible professional's total 2011 Medicare 
Part B PFS allowed charges for all such covered professional services 
submitted for the measure's denominator codes by the eligible 
professional's total Medicare Part B PFS allowed charges for all 
covered professional services (as assessed at the TIN/NPI level). If 
the result is 10 percent or more, then the statutory limitation will 
not apply. If the result is less than 10 percent, then the statutory 
limitation will apply. For the 12-month incentive and payment 
adjustment reporting periods, this calculation is expected to take 
place in the first quarter of the year following the reporting period 
(for example, in the first quarter of 2013 for the 12-month reporting 
period for the 2012 incentive). For the 6-month payment adjustment 
reporting period, this calculation is expected to take place within the 
calendar year for the respective 6-month reporting period (for example, 
within 2012 for the 6-month reporting period for the 2013 payment 
adjustment).
     An eligible professional does not have at least 100 cases 
(that is, claims for patient services) containing an encounter code 
that falls within the denominator of the electronic prescribing measure 
for dates of service during: the 6-month reporting period (January 1, 
2012 through June 30, 2012) for the 2013 payment adjustment or the 6-
month reporting period (January 1, 2013 through June 30, 2013) for the 
2014 payment adjustment. If an eligible professional has less than 100 
denominator-eligible instances in a 6-month period, this will be an 
indicator to us that the professional likely has a small Medicare 
patient population.
    We invited but received no public comment on our proposed 
limitations to the 2013 and 2014 eRx payment adjustments for individual 
eligible professionals. Therefore, we are finalizing all of the above 
limitations to the 2013 and 2014 eRx payment adjustments for individual 
eligible professionals as proposed, as set forth at 42 CFR 414.92.
(2) Requirements for the 2013 and 2014 eRx Payment Adjustments--
Individual Eligible Professionals
    Section 1848(a)(5) of the Act requires a payment adjustment to be 
applied with respect to covered professional services furnished by an 
eligible professional in 2013 and 2014, if the eligible professional is 
not a successful electronic prescriber, as set forth in section 
1848(m)(3)(B) of the Act, for the reporting period for the year. 
Section 1848(m)(3)(D) of the Act authorizes the Secretary to revise the 
criteria for submitting data on the electronic prescribing quality 
measure. In the 2011 PFS Final Rule with comment period, we established 
the same reporting criteria for being a successful electronic 
prescriber for purposes of the 2011 incentive and the 2013 payment 
adjustment, based on a 12-month reporting period in 2011 (75 FR 73565). 
In order to create another opportunity for an eligible professional to 
become a successful electronic prescriber for purposes of the 2013 
payment adjustment, we proposed (76 FR 42894) that, based on the 
proposed 6-month reporting period, an eligible professional would be a 
successful electronic prescriber if he/she reports the electronic 
prescribing measure's numerator, that is, at least 1 prescription for 
Medicare Part B PFS patients was created during an encounter was 
generated and transmitted electronically using a qualified electronic 
prescribing system at least 10 times during the 6-month payment 
adjustment reporting period (that is, January 1, 2012 through June 30, 
2012). Unlike the reporting criteria for the incentive payments where 
the numerator must be reported in connection with a denominator-
eligible visit, for purposes of the 2013 and 2014 payment adjustments, 
we proposed that an eligible professional would be able to report the 
measure's numerator for any Medicare Part B PFS service provided during 
the reporting period, regardless of whether the code for such service 
appears in the denominator, because we recognize that eligible 
professionals may generate prescriptions during encounters that are not 
necessarily included in the measure's denominator.
    We also sought to provide more than one opportunity for eligible 
professionals to avoid the 2014 payment adjustment by becoming a 
successful electronic prescriber. Therefore, consistent with the final 
criteria for successful electronic prescribing for purposes of the 2013 
payment adjustment, we proposed (76 FR 42894 and 42895) the following 
criteria for an

[[Page 73409]]

eligible professional to be a successful electronic prescriber for 
purposes of the 2014 payment adjustment: (1) An eligible professional 
meets the criteria for the 2013 incentive, that is, reports that at 
least one prescription for a Medicare Part B PFS patient created during 
an encounter was generated and transmitted electronically using a 
qualified electronic prescribing system for at least 25 denominator-
eligible encounters during the 12-month payment adjustment reporting 
period (that is, January 1, 2012 through December 31, 2012), or (2) An 
eligible professional reports the electronic prescribing measure's 
numerator (that is, that at least 1 prescription for a Medicare Part B 
PFS patient created during an encounter was generated and transmitted 
electronically using a qualified electronic prescribing system) at 
least 10 times during the 6-month payment adjustment reporting period 
(that is, January 1, 2013 through June 30, 2013).
    As with the 2012 and 2013 incentive payments, we proposed that the 
determination of whether an eligible professional is subject to the 
payment adjustment would be made at the individual professional level, 
based on the NPI and for each unique TIN/NPI combination.
    We proposed the previous criteria for being a successful electronic 
prescriber for purposes of the 2013 and 2014 payment adjustments 
because, aside from not requiring the reporting of the electronic 
prescribing measure's numerator for denominator-eligible encounters 
(which only applies to the 6-month, 2013 and 2014 payment adjustment 
reporting periods), they are consistent with the criteria for being a 
successful electronic prescriber for purposes of the 2012 and 2013 
payment adjustments that were finalized in the CY 2011 PFS final rule 
with comment period (75 FR 73562 through 73565).
    We invited public comment on the proposed criteria for being a 
successful electronic prescriber for the 2013 and 2014 payment 
adjustments for individual eligible professionals. The following is a 
summary of the comments received regarding these proposals.
    Comment: Some commenters supported our proposal to simplify the 
payment adjustment reporting criteria by proposing criteria for the 
2013 and 2014 payment adjustments (to report on the electronic 
prescribing measure's numerator for at least 10 unique visits during 
the respective 6-month reporting periods for the 2013 and 2014 payment 
adjustments) that are parallel to criteria established for the 2011 
payment adjustment, aside from not requiring the reporting of the 
electronic prescribing measure's numerator for denominator-eligible 
encounters.
    Response: We appreciate the commenters' support. For the 2013 and 
2014 payment adjustments, we are finalizing the proposed reporting 
criteria for being a successful electronic prescriber for individual 
eligible professionals. Note that, for the 6-month reporting periods 
alone for 2013 and 2014 payment adjustments, eligible professionals are 
not required to report on an electronic prescribing event tied to a 
denominator-eligible encounter. Rather, eligible professionals may 
report on an electronic prescribing event for any unique visit.
    Comment: Several commenters supported our proposal to allow 
reporting of the electronic prescribing measure for visits not 
associated with the electronic prescribing measure's denominator for 
purposes of the 2013 and 2014 payment adjustments.
    Response: We appreciate the commenters' support of our proposal and 
are finalizing our proposal to allow for reporting of the electronic 
prescribing measure for visits not associated with the electronic 
prescribing measure's denominator for purposes of the 2013 and 2014 
payment adjustments.
    Comment: One commenter stated that the criteria we proposed for 
individual eligible professionals to become successful electronic 
prescribers for purposes of the 2013 and 2014 payment adjustment is too 
low. The commenter stated that, similar to the criteria required for 
achieving meaningful use under the EHR Incentive Program, we should 
require eligible professionals to report on at least 40 percent of all 
electronic prescriptions. At a minimum, the commenter believed the 
eligible professionals should use the 2012 and 2013 incentive criteria 
for purposes of the 2013 and 2014 payment adjustment.
    Response: We appreciate the commenters' feedback. However, we 
proposed these criteria for being a successful electronic prescriber 
for the 2013 and 2014 payment adjustments because we believe these 
criteria achieve our goal of encouraging eligible professionals to 
utilize electronic prescribing systems. Furthermore, as we noted, we 
previously finalized criteria for being a successful electronic 
prescriber for the 2013 payment adjustment that are identical to the 
criteria finalized for the 2011 incentive. Likewise, we proposed and 
are finalizing criteria for becoming a successful electronic prescriber 
for the 2014 payment adjustment that are identical to the criteria we 
finalized for the 2012 incentive.
    After considering the comments received and for the reasons stated 
above, we are finalizing the proposed criteria for individual eligible 
professionals to be successful electronic prescribers for purposes of 
the 2013 and 2014 payment adjustments. Specifically, for purposes of 
the 2013 payment adjustment, an individual eligible professional is a 
successful electronic prescriber if an eligible professional reports 
the electronic prescribing measure's numerator at least 10 times during 
the 6-month 2013 payment adjustment reporting period (that is, January 
1, 2012 through June 30, 2012, regardless of whether the encounter is 
associated with at least one denominator code of the electronic 
prescribing measure). For purposes of the 2014 payment adjustment, an 
eligible professional is a successful electronic prescriber if: (1) An 
eligible professional reports that at least one prescription for 
Medicare Part B PFS patients created during an encounter was generated 
and transmitted electronically using a qualified electronic prescribing 
system for at least 25 denominator-eligible visits during the 12-month 
payment adjustment reporting period (that is, January 1, 2012 through 
December 31, 2012) (note that this is the same criteria for the 2013 
incentive); or (2) an eligible professional reports the electronic 
prescribing measure's numerator at least 10 times during the 6-month 
payment adjustment reporting period (that is, January 1, 2013 through 
June 30, 2013). Tables 77 and 78 reflect the final criteria we are 
adopting in this final rule with comment period for being a successful 
electronic prescriber for an individual eligible professional for 
purposes of the 2013 and 2014 payment adjustments, respectively.

[[Page 73410]]

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[[Page 73411]]

(3) Requirements for the 2013 and 2014 eRx Payment Adjustments--Group 
Practices
    Under section 1848(m)(3)(C) of the Act, we are also required to 
establish and have in place a process under which eligible 
professionals in a group practice shall be treated as a successful 
electronic prescriber for purposes of the payment adjustment. For 
purposes of the 2013 and 2014 payment adjustments, we proposed (76 FR 
42895) that if a group practice chooses to participate in the eRx GPRO 
during CYs 2012 and 2013, respectively, then the group practice would 
be evaluated for applicability of the 2013 and 2014 payment adjustment 
as a group practice.
    We proposed (76 FR 42895) an eRx GPRO would be a successful 
electronic prescriber for purposes of the 2013 payment adjustment if, 
during the 6-month reporting period (January 1, 2012 through June 30, 
2012), a group practice reports the electronic prescribing measure's 
numerator (that is, that at least 1 prescription for Medicare Part B 
PFS patients created during an encounter was generated and transmitted 
electronically using a qualified electronic prescribing system) at 
least 625 times (for group practices comprised of 25 to 99 eligible 
professionals) or 2,500 times (for group practices comprised of 100+ 
eligible professionals).
    Similarly, for the 2014 payment adjustment, we proposed (76 FR 
42895) the following: A group practice would be a successful electronic 
prescriber if the group practice meets the 2012 criteria for being a 
successful electronic prescriber for purposes of the 2012 incentive 
payment. In other words, the group practice would need to report the 
electronic prescribing measure's numerator for at least 625 (for group 
practices comprised of 25 to 99 eligible professionals) or 2,500 (for 
group practices comprised of 100 or more eligible professionals) times 
for encounters associated with at least 1 of the denominator code that 
occurs between January 1, 2012 and December 31, 2012. In addition, we 
proposed that a group practice would also be a successful electronic 
prescriber for purposes of the 2014 payment adjustment if, during the 
6-month reporting period (January 1, 2013 through June 30, 2013), a 
group practice reports the electronic prescribing measure's numerator 
(that is, that at least 1 prescription for Medicare Part B PFS patients 
created during an encounter was generated and transmitted 
electronically using a qualified electronic prescribing system) at 
least 625 times (for group practices with 25 to 99 eligible 
professionals) or 2,500 times (for group practices with 100+ eligible 
professionals).
    We invited but received no public comments on the proposed criteria 
for being a successful electronic prescriber for group practices under 
the eRx GPROs for the 2013 and 2014 electronic prescribing payment 
adjustments. Therefore, we are finalizing our proposed criteria for the 
2013 and 2014 payment adjustment as proposed. 79 and 80 summarize the 
criteria for being a successful electronic prescriber for a group 
practice for purposes of the 2013 and 2014 payment adjustments, 
respectively.
BILLING CODE 4120-01-P
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[[Page 73412]]

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[[Page 73413]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.193

BILLING CODE 4120-01-C
    In addition, in accordance with the limitation under section 
1848(m)(2)(B)(i) of the Act, the 2013 or 2014 payment adjustment does 
not apply to a group practice in which less than 10 percent of the 
group practice's estimated total allowed charges for the respective 6-
month or 12-month payment adjustment reporting period are comprised of 
services which appear in the denominator of the 2012 or 2013 electronic 
prescribing measure. To be consistent with how this limitation is 
applied to group practices for purposes of the incentive, we proposed 
to determine whether this limitation applies to a group practice for 
the payment adjustment at the TIN level. Because we received no public 
comment on this proposal, we are finalizing this proposal as proposed.
(4) Significant Hardship Exemptions
    Section 1848(a)(5)(B) of the Act provides that the Secretary may, 
on a case-by-case basis, exempt an eligible professional from the 
application of the payment adjustment, if the Secretary determines, 
subject to annual renewal, that compliance with the requirement for 
being a successful electronic prescriber would result in a significant 
hardship.
(A) Significant Hardship Exemptions
    In the CY 2011 PFS final rule with comment period (75 FR 73564 
through 75 FR 73565), we finalized two circumstances under which an 
eligible professional or eRx GPRO can request consideration for a 
significant hardship exemption for the 2012 eRx payment adjustment:
     The eligible professional or group practice practices in a 
rural area with limited high speed internet access.
     The eligible professional or group practice practices in 
an area with limited available pharmacies for electronic prescribing.
    For the 2013 and 2014 payment adjustments, we proposed (76 FR 
42896) to retain these two significant hardship exemption categories.
    After publication of the CY 2011 PFS Final Rule with comment 
period, we received numerous requests to expand the categories under 
the significant hardship exemption for the payment adjustment. Some 
stakeholders recommended specific circumstances of significant hardship 
for our consideration (for example, eligible professionals who have 
prescribing privileges but do not prescribe under their NPI, eligible 
professionals who prescribe a high volume of narcotics, and eligible 
professionals who electronically prescribe but typically do not do so 
for any of the services included in the electronic prescribing 
measure's denominator), while others strongly suggested we consider 
increasing the number of specific hardship exemption categories. We 
believe that many of the circumstances raised by stakeholders may pose 
a significant hardship and limit eligible professionals and group 
practices in their ability to meet the requirements for being 
successful electronic prescribers either because of the nature of their 
practice or because of the limitations of the electronic prescribing 
measure itself, and as a result, such professionals might be unfairly 
penalized. Therefore, in the final rule entitled ``Medicare Program; 
Changes to the Electronic Prescribing (eRx) Incentive Program'' that 
was published in the September 6, 2011 Federal Register, (76 FR 54963), 
we expanded the categories under the significant hardship exemption for 
the 2012 payment adjustment. Because we believe the reasons why we 
expanded the categories under the significant hardship exemption for 
the 2012 payment adjustment also apply to the 2013 and 2014 payment 
adjustments, we proposed (76 FR 42896) to retain the following 
significant hardship exemptions for the 2013 and 2014 payment 
adjustments:
     Inability to electronically prescribe due to local, state, 
or Federal law or regulation
     Eligible professionals who prescribe fewer than 100 
prescriptions during a 6-month, payment adjustment reporting period
(i) Inability to Electronically Prescribe Due to Local, State, or 
Federal Law or Regulation
    We proposed (76 FR 42896-42897) that, to the extent that local, 
State, or Federal law or regulation limits or prevents an eligible 
professional or group practice that otherwise has general prescribing 
authority from electronically prescribing (for example, eligible 
professionals who prescribe a large volume of narcotics, which may not 
be electronically prescribed in some states, or eligible professionals 
who practice in a State that prohibits or limits the transmission of 
electronic prescriptions via a third party network such as 
Surescripts), the eligible professional or group practice would be able 
to request consideration for an exemption from application of the 2013 
and/or 2014 payment adjustments, which would be reviewed on a case-by-
case basis. We believe eligible professionals in this situation face a 
significant hardship with regard to the requirements for being 
successful electronic prescribers because while they may meet the 10 
percent threshold for applicability of the payment adjustment, or the 
100 denominator-eligible cases limit in a 6-month payment adjustment 
reporting period, they may not have sufficient opportunities to meet 
the requirements for being a successful electronic prescriber because 
Federal, State, or local law or regulation limit the number of 
opportunities that an eligible professional or group practice has to 
electronically prescribe.
(ii) Eligible Professionals Who Prescribe Fewer Than 100 Prescriptions 
During a 6-Month, Payment Adjustment Reporting Period
    We proposed (76 FR 42897) that an eligible professional who has 
prescribing privileges, but prescribes fewer than 100 prescriptions 
during a 6-month, payment adjustment reporting period (for example, a 
nurse practitioner who may not write prescriptions under his or her own 
NPI, a physician who decides to let his Drug Enforcement Administration 
registration expire during the reporting period without renewing it, 
or, for purposes of the 2013 payment adjustment, an eligible 
professional who prescribed fewer than 100 prescriptions between 
January 1, 2012 and June 30, 2012 regardless of whether the 
prescriptions were electronically prescribed or not), yet

[[Page 73414]]

still meets the 10 percent threshold for applicability of the payment 
adjustment, would be able to request consideration for a significant 
hardship exemption from application of the 2013 and/or 2014 payment 
adjustment, which would be reviewed on a case-by-case basis. We believe 
that it is a significant hardship for eligible professionals who have 
prescribing privileges, but infrequently prescribe, to become 
successful electronic prescribers because the nature of their practice 
may limit the number of opportunities an eligible professional or group 
practice to prescribe, much less electronically prescribe.
    We invited public comments on our proposal to modify 42 CFR 414.92 
to include the significant hardship exemption categories we proposed 
for the 2013 and 2014 payment adjustments. The following is a summary 
of the comments we received.
    Comment: Several commenters supported our proposed significant 
hardship exemption categories. Some commenters sought clarification on 
who may apply for significant hardship exemptions.
    Response: We appreciate the commenters' feedback and are finalizing 
the proposed significant hardship exemption categories for the 2013 and 
2014 payment adjustments. We have provided examples of who may 
potentially qualify for an exemption under each finalized significant 
hardship exemption category. However, we note that the examples 
provided are not exhaustive. Any eligible professional who believes he 
or she qualifies for an exemption under any of the significant hardship 
exemption categories may request consideration for an exemption.
    Comment: Some commenters supported our specific proposal to adopt 
the significant hardship exemption category for eligible professionals 
who are unable to electronically prescribe due to local, State, or 
Federal law or regulation for the 2013 and 2014 payment adjustments.
    Response: We appreciate the commenters' support. Based on the 
comments received and for the reasons explained in our responses, we 
are finalizing this significant hardship exemption category.
    Comment: One commenter asked whether the significant hardship 
exemption category for eligible professionals who are unable to 
electronically prescribe due to local, State, or Federal law or 
regulation applies to physicians who cannot submit electronic 
prescriptions of controlled substances because their vendor software is 
not yet compliant with Federal and/or state requirement.
    Response: We appreciate the commenter's question. Such a scenario 
may or may not fall under this particular significant hardship 
exemption category. As we indicated, this significant hardship 
exemption is aimed at addressing instances where an eligible 
professional would find it a significant hardship to submit a 
substantial portion of their prescriptions electronically because 
local, State, or Federal law or regulation limits or prevents an 
eligible professional or group practice that otherwise has general 
prescribing authority from electronically prescribing. Our analysis, 
however, is fact-specific, so we would need to look at the particular 
law, the details about why the professional's vendor software is in 
``non-compliance'', and the professional's particular circumstances to 
determine whether a significant hardship exists and an exemption can be 
granted under this category. For example, we understand that the Drug 
Enforcement Agency (DEA) has proposed (75 FR 16236) but not yet 
finalized requirements for the transmission of electronic prescriptions 
of controlled substances, and that system vendors are awaiting these 
finalizing requirements so that its electronic prescribing systems may 
allow for the transmission of electronic prescriptions of controlled 
substances in a manner that is compliant with current Federal law. 
However, whether or not we would grant a exemption under this 
significant hardship exemption category would depend on the amount of 
controlled substances an eligible professional prescribes relative to 
other prescriptions. We also note that this significant hardship 
exemption category is not intended for eligible professionals to 
refrain from updating their respective electronic prescribing systems 
in order to qualify for and exemption under this significant hardship 
exemption category.
    Comment: Some commenters specifically supported the proposed 
significant hardship exemption category for eligible professionals who 
prescribe fewer than 100 prescriptions during a 6-month, payment 
adjustment reporting period.
    Response: We appreciate the commenters' support and are finalizing 
this significant hardship exemption category for purposes of the 2013 
and 2014 payment adjustment.
    Comment: One commenter suggested that we ensure that all physicians 
who cannot or do not write prescriptions be sufficiently accounted for 
in our proposed significant hardship exemption categories.
    Response: We respectfully disagree. We believe the significant 
hardship exemptions, as well as the limitations we are finalizing for 
the 2013 and 2014 payment adjustments, adequately encompass the 
scenarios in which it would be a significant hardship to comply with 
the criteria for being successful electronic prescribers for the 2013 
and/or 2014 payment adjustments.
    Comment: Some commenters recommended additional significant 
hardship exemption categories to the 2013 and 2014 payment adjustments. 
Specifically, commenters requested the following be added as 
significant hardship exemption categories for the 2013 and 2014 payment 
adjustments: (1) Eligible professionals who are eligible for Social 
Security benefits or nearing retirement; (2) eligible professionals who 
work solely within skilled nursing facilities or hospital settings; (3) 
eligible professionals who attempted to report the electronic 
prescribing measure for purposes of the 2013 and 2014 payment 
adjustments but encountered problems when reporting the electronic 
prescribing measure; (4) eligible professionals who elect not to 
purchase an electronic prescribing system; and (5) eligible 
professionals whose patients prefer paper prescriptions.
    Response: We appreciate the commenters' feedback but respectfully 
disagree. With respect to eligible professionals who are over 60, 
eligible for social security benefits, or nearing retirement; eligible 
professionals who work solely in skilled nursing homes or hospital 
settings; eligible professionals who experienced system problems when 
attempting to report the electronic prescribing measure; eligible 
professionals simply electing not to purchase an electronic prescribing 
system; or eligible professionals whose patients prefer paper 
prescriptions, most of these scenarios were raised by commenters during 
the comment period and addressed in the CY 2011 PFS final rule, as well 
as the 2011 ``Medicare Program; Changes to the Electronic Prescribing 
(eRx) Incentive Program'' final rule. As we stated in the CY 2011 PFS 
final rule (75 FR 73564) and the 2011 eRx final rule (76 FR 54962), we 
believe these instances do not constitute significant hardships in the 
manner that these significant hardship exemption categories that we are 
finalizing do. We believe that encouraging the use of electronic 
prescribing outweighs the cost of purchasing an electronic prescribing 
system, because we believe use of these systems will readily provide 
patient prescription history

[[Page 73415]]

leading to better management of patient prescriptions and greater 
patient safety and care.
    Specifically, with respect to eligible professionals who are over 
60, eligible for social security benefits, or nearing retirement, we 
believe that these eligible professionals still have the ability to use 
electronic prescribing systems. With respect to eligible professionals 
who practice off-site, such as those practicing in nursing homes, we 
note that although these eligible professionals may not readily have an 
electronic prescribing system available, these eligible professionals 
still have the ability to provide an electronic prescription. With 
respect to system errors, in general, we understand that problems may 
occur with regard to successful reporting of the eRx measure. However, 
we do not believe that such errors constitute a significant hardship 
under section 1848(a)(5)(B) of the Act. Rather, these are reporting 
errors that may have prevented an eligible professional from 
successfully reporting the eRx measure.
    Comment: Commenters requested the following as additional 
significant hardship exemption categories for the 2013 and 2014 payment 
adjustments: Eligible professionals who plan to adopt EHR technology 
for purposes of participating in the EHR Incentive Program.
    Response: With respect to providing a significant hardship 
exemption for eligible professionals planning to adopt Certified EHR 
Technology to participate in the EHR Incentive Program, we note that we 
finalized such a significant hardship exemption category for the 2012 
payment adjustment because the certification and listing of certified 
EHR technologies (certified Complete EHRs and certified EHR Modules) on 
the ONC Certified HIT Products List (CHPL) did not begin until 
September 2010 (76 FR 54957). As such, eligible professionals may have 
delayed purchasing an EHR system. This is no longer the case. The list 
of Certified EHR Technology has been available for over a year, and the 
EHR Incentive Program has been implemented. Therefore, we believe that 
this significant hardship exemption category is no longer applicable to 
the 2013 and 2014 payment adjustments.
    Comment: Commenters requested the following additional significant 
hardship exemption categories for the 2013 and 2014 payment 
adjustments: Eligible professionals who report the electronic 
prescribing measure at least 10 times during CYs 2012 and 2013 for the 
2013 and 2014 respective payment adjustments, but did not do so during 
the first 6-months of 2012 and 2013.
    Response: We disagree with commenters suggestion for this 
significant exemption hardship category, because it would be contrary 
to the reporting periods we are finalizing for the 2013 and 2014 
payment adjustments.
    Based on the comments received and for the reasons stated in our 
responses, we are finalizing the following significant hardship 
exemption categories for the 2013 and 2014 payment adjustments, which 
will be reflected under 42 CFR 414.92:
     The eligible professional or group practice practices in a 
rural area with limited high speed internet access.
     The eligible professional or group practice practices in 
an area with limited available pharmacies for electronic prescribing.
     Inability to electronically prescribe due to local, state, 
or Federal law or regulation.
     Eligible professionals who prescribe fewer than 100 
prescriptions during a 6-month, payment adjustment reporting period.
(B) Process for Submitting Significant Hardship Exemptions--Individual 
Eligible Professionals and Group Practices
    To request a significant hardship exemption for any of the proposed 
categories, we proposed (76 FR 42897) that an eligible professional 
provide to us by the end of the 2013 and/or 2014 payment adjustment 
reporting periods (that is June 30, 2012 for the 2013 payment 
adjustment and June 30, 2013 for the 2014 payment adjustment), the 
following:
     The name of the practice and other identifying information 
(for example: TIN, NPI, mailing address, and email address of all 
affected eligible professionals.
     The significant hardship exemption category(ies) that 
apply.
     A justification statement describing how compliance with 
the requirement for being a successful electronic prescriber for the 
respective 2013 and/or 2014 payment adjustment during the reporting 
period would result in a significant hardship to the eligible 
professional. And that the justification statement be specific as to 
the category under which the eligible professional or group practice is 
submitting its request and include an explanation how the exemption 
applies.
     An attestation of the accuracy of the information 
provided.

We also proposed that eligible professionals or group practices would 
be required, upon request, to provide additional supporting 
documentation if there is insufficient information to justify the 
request or make the determination whether a significant hardship 
exists.
    We also proposed that eligible professionals or group practices 
would be able to submit significant hardship exemption requests using 
the web-based tool or interface (that we are also using for requests 
for exemptions due to significant hardships for the 2012 payment 
adjustment). We proposed that the following two hardships also be 
reportable by G-code on claims in addition to using the web-based tool 
or interface:
     The eligible professional or group practice practices in a 
rural area with limited high speed internet access (report G-code 
G9642).
     The eligible professional or group practice practices in 
an area with limited available pharmacies for electronic prescribing 
(report G-code G8643).
    We also proposed that once we have completed our review of the 
eligible professional's or group practice's request and made a 
decision, we will notify the eligible professional or group practice of 
our decision and all such decisions would be final. Eligible 
professionals or group practices will not have the opportunity to 
request reconsiderations of their requests for significant hardship 
exemption. We invited public comment on the proposed process for 
individual eligible professionals and group practices for submitting 
these requests for significant hardship exemptions to us (including 
comments on the type of information we proposed eligible professionals 
must submit, the proposed options for how the information could be 
submitted, and the proposed timeframes for submission). The following 
is a summary of the comments received related to our proposed process 
for submitting requests for significant hardship exemptions.
    Comment: Some commenters support the use of a web-based tool 
whereby eligible professionals and group practices may submit requests 
for significant hardship exemptions.
    Response: We appreciate the commenter's feedback and are finalizing 
our proposal to allow for use of a web-based tool to submit requests 
for significant hardship exemption requests. Eligible professionals 
wishing to request a significant hardship exemption to the 2013 and 
2014 payment adjustments may do so through the Communications Support 
Page, available at https://www.qualitynet.org/portal/server.pt/community/communications_support_system/234.

[[Page 73416]]

    Comment: One commenter urged us to allow for the submission of 
significant hardship requests via other methods aside from a web-based 
tool, such as via telephone, because eligible professionals requesting 
significant hardship exemptions may not have access to the internet.
    Response: We appreciate the commenter's feedback. However, we 
believe that the web-based tool provides the most efficient method of 
submitting a significant hardship request. In limited instances where 
eligible professionals may not be able to submit a significant hardship 
request via the web-based tool due to lack of internet access, eligible 
professionals may call the QualityNet Help Desk for assistance on 
requesting a hardship.
    Comment: One commenter suggested that, although eligible 
professionals need only request one significant hardship exemption, 
eligible professionals may apply for more than one significant hardship 
exemption request if more than one category applies.
    Response: If an eligible professional believes that more than one 
significant hardship exemption category applies to his/her practice, s/
he must request a significant hardship exemption under at least one 
significant hardship exemption category. However, the eligible 
professional may indicate that more than one significant hardship 
exemption category applies to his or her practice in the eligible 
professional's justification statement.
    Comment: A few commenters suggested that we extend the deadline to 
submit significant hardship exemptions for purposes of the 2013 and 
2014 payment adjustment, noting that we provided an extended deadline 
to submit significant hardship exemption requests for purposes of the 
2012 payment adjustment.
    Response: We did finalize an extended deadline of November 1, 2011 
to submit requests for significant hardship exemptions for the 2012 
payment adjustment (76 FR 54964). We note, however, that the extension 
of the deadline for submitting requests for significant hardship 
exemptions for the 2012 payment adjustment was a unique situation, as 
new significant hardship exemption categories were finalized after the 
publication of the 2011 PFS Final Rule. However, we also noted that, 
due to the deadline extension, we may have to reprocess claims in 
instances where significant hardship requests were not reviewed in 
time. We believe that the deadlines we proposed for submitting requests 
for significant hardship exemptions for the 2013 and 2014 payment 
adjustments (that is, June 30, 2012 and June 30, 2013 respectively) 
provide eligible professionals with ample time to submit requests for 
significant hardship exemptions. Therefore, we are finalizing our 
proposed deadlines for submitting requests for significant hardship 
exemptions from the 2013 and 2014 payment adjustments. We note that, 
although we are making every attempt to do so, there is a possibility 
we may not have the Communications Support Page available for 
submitting requests for significant hardship exemptions by January 1, 
2012. We do not expect that such a delay would adversely affect 
eligible professionals because, although eligible professionals may 
need time to prepare and develop its request (and that time remains 
unchanged), the time needed to actually submit the request through the 
Web page should not take a substantial amount of time (that is, we 
would not expect that it would take an eligible professional 6 months 
to do a single web-based submission). We recognize, however, that 
eligible professionals may not want to be limited with regard to the 
particular day(s) it submits its request before the deadline. 
Therefore, in the event there is a delay in making the Communication 
Support Page available for submitting requests for significant hardship 
exemptions, we may extend the deadline for submitting requests for 
significant hardship exemptions for the 2013 payment adjustment.
    Based on the comments received and for the reasons stated 
previously, we are finalizing the following process for submitting a 
request for a significant hardship exemption under the significant 
hardship exemption categories we are finalizing for the 2013 and 2014 
payment adjustments.
    Eligible professionals and group practices may report the following 
G-codes for the following significant hardship exemption categories on 
claims for services rendered during the respective 2013 and 2014 6-
month reporting periods.
     The eligible professional or group practice practices in a 
rural area with limited high speed internet access (report G-code 
G9642).
     The eligible professional or group practice practices in 
an area with limited available pharmacies for electronic prescribing 
(report G-code G8643).
    Eligible professionals may submit requests for a significant 
hardship exemption category with respect to any of the finalized 
significant hardship exemption categories via a web-based tool, the 
Communication Support Page, which is available at https://www.qualitynet.org/portal/server.pt/community/communications_support_system/234. More information on this web-based tool is available on our 
Web site at http://www.cms.gov/ERXincentive/. To request a significant 
hardship exemption via the web-based tool for any of the categories we 
are finalizing, including a request under the two significant hardship 
exemptions categories that are also reportable via G-code, an eligible 
professional must provide to us by June 30, 2012 for the 2013 payment 
adjustment and June 30, 2013 for the 2014 payment adjustment, the 
following--
     The name of the practice and other identifying information 
(for example: TIN, individual NPI, mailing address, and email address 
of all affected eligible professionals;
     The significant hardship exemption category(ies) that 
apply;
     A justification statement describing how compliance with 
the requirement for being a successful electronic prescriber for the 
respective 2013 and/or 2014 payment adjustment during the reporting 
period would result in a significant hardship to the eligible 
professional; and
     An attestation of the accuracy of the information 
provided--
    ++ The justification statement should be specific to the category 
under which the eligible professional or group practice is submitting 
its request and must explain how the exemption applies to the 
professional. For example, if the eligible professional is requesting a 
significant hardship exemption due to Federal, State, or local law or 
regulation, he or she must cite the applicable law and how the law 
restricts the eligible professional's ability to electronically 
prescribe. We will review the information submitted by each eligible 
professional on a case-by-case basis. In addition, an eligible 
professional or group practice must, upon request, provide additional 
supporting documentation if there is insufficient information (such as, 
but not limited to, a TIN or NPI that we cannot match to the Medicare 
claims, a certification number for the Certified EHR Technology that 
does not appear on the list of Certified EHR Technology, or an 
incomplete justification for the significant hardship exemption 
request) to justify the request or make the determination of whether a 
significant hardship exists.

[[Page 73417]]

G. Physician Compare Web Site

1. Background and Statutory Authority
    Section 10331(a)(1) of the Affordable Care Act (42 U.S.C. 1395w-5 
note) requires that, by no later than January 1, 2011, we develop a 
Physician Compare Internet Web site with information on physicians 
enrolled in the Medicare program under section 1866(j) of the Act as 
well as information on other eligible professionals who participate in 
the Physician Quality Reporting System under section 1848 of the Act 
(42 U.S.C. 1395w-4). Public reporting of performance results on 
standardized quality measures currently exists on http://www.medicare.gov for the following:
     Hospitals (Hospital Compare).
     Dialysis facilities (Dialysis Facility Compare).
     Nursing homes (Nursing Home Compare).
     Home health facilities (Home Health Compare).
    As an initial step towards providing information on the quality of 
care for services furnished by physicians and other professionals to 
Medicare beneficiaries, we have enhanced the existing Physician and 
Other Health Care Professionals directory at http://www.medicare.gov to 
develop a similar Compare Web site specific to physicians and other 
professionals. In accordance with section 10331 of the Affordable Care 
Act, we launched the first phase of the Physician Compare Internet Web 
site on December 30, 2010. This initial phase included the posting of 
the names of eligible professionals that satisfactorily submitted 
quality data for the 2009 Physician Quality Reporting System.
2. Final Plans
    Section 10331(a)(2) of the Affordable Care Act also requires that, 
no later than January 1, 2013, and with respect to reporting periods 
that begin no earlier than January 1, 2012, we implement a plan for 
making information on physician performance publicly available through 
the Physician Compare Web site. To the extent that scientifically sound 
measures are developed and are available, we are required to include, 
to the extent practicable, the following types of measures for public 
reporting:
     Measures collected under the Physician Quality Reporting 
System.
     An assessment of patient health outcomes and functional 
status of patients.
     An assessment of the continuity and coordination of care 
and care transitions, including episodes of care and risk-adjusted 
resource use.
     An assessment of efficiency.
     An assessment of patient experience and patient, 
caregiver, and family engagement.
     An assessment of the safety, effectiveness, and timeliness 
of care.
     Other information as determined appropriate by the 
Secretary.

As required under section 10331(b) of the Affordable Care Act, in 
developing and implementing the plan, we must include, to the extent 
practicable, the following:
     Processes to ensure that data made public are 
statistically valid, reliable, and accurate, including risk adjustment 
mechanisms used by the Secretary.
     Processes for physicians and eligible professionals whose 
information is being publically reported to have a reasonable 
opportunity, as determined by the Secretary, to review their results 
before posting to Physician Compare.
     Processes to ensure the data published on Physician 
Compare provides a robust and accurate portrayal of a physician's 
performance.
     Data that reflects the care provided to all patients seen 
by physicians, under both the Medicare program and, to the extent 
applicable, other payers, to the extent such information would provide 
a more accurate portrayal of physician performance.
     Processes to ensure appropriate attribution of care when 
multiple and other providers are involved in the care of the patient.
     Processes to ensure timely statistical performance 
feedback is provided to physicians concerning the data published on 
Physician Compare.
     Implementation of computer and data infrastructure and 
systems used to support valid, reliable, and accurate reporting 
activities.
    Section 10331(d) of the Affordable Care Act requires us to consider 
input from multi-stakeholder groups in selecting quality measures for 
Physician Compare. In developing the plan for making information on 
physician performance publicly available through the Physician Compare 
Web site, section 10331(e) of the Affordable Care Act requires the 
Secretary, as the Secretary deems appropriate, to consider the plan to 
transition to value-based purchasing for physicians and other 
practitioners that was developed under section 131(d) of the Medicare 
Improvements for Patients and Providers Act of 2008.
    We are required, under section 10331(f) of the Affordable Care Act, 
to submit a report to the Congress by January 1, 2015 on the Physician 
Compare Web site developed, and include information on the efforts and 
plans to collect and publish data on physician quality and efficiency 
and on patient experience of care in support of value-based purchasing 
and consumer choice. Section 10331(g) of the Affordable Care Act 
provides that any time before that date, we may continue to expand the 
information made available on Physician Compare.
    We believe section 10331 of the Affordable Care Act supports our 
overarching goals to foster transparency and public reporting by 
providing consumers with quality of care information to make informed 
decisions about their health care, while encouraging clinicians to 
improve on the quality of care they provide to their patients. In 
accordance with section 10331 of the Affordable Care Act, we intend to 
utilize the Physician Compare Web site to publicly report physician 
performance results.
    For purposes of implementing a plan to publicly report physician 
performance, we plan to use data reported under the existing Physician 
Quality Reporting System as an initial step for making public physician 
``measure performance'' information on Physician Compare. By ``measure 
performance,'' we mean the percent of times that a particular clinical 
quality action was reported as being performed, or a particular outcome 
was attained, for the applicable persons to whom a measure applies as 
described in the denominator for the measure.
    The Physician Quality Reporting System is a readily available 
source of measures performance data. First implemented in 2007, the 
program has grown to include over 200 measures (see tables 47 through 
72 in section VI.F.1.f. of this final rule with comment period for a 
list of the measures available for reporting in 2012). The measures 
used in the Physician Quality Reporting System cover a wide range of 
health conditions and topics and include measures applicable to most 
physician specialties and other clinicians. Work is underway to ensure 
consistency of quality measures reported under the Physician Quality 
Reporting System and the EHR Incentive Program.
    The first phase of the plan to make information on physicians and 
other eligible professionals who participate in the Physician Quality 
Reporting System publically available was completed through the launch 
of the Physician Compare Web site and the posting of the names of those 
eligible professionals who satisfactorily participated in the Physician 
Quality Reporting System.

[[Page 73418]]

    During the second phase of the plan, occurring in 2011 through 
2012, we will continue to work towards the development and improvement 
of the Web site. Our plans for Physician Compare Web site development 
during this second phase include monthly data refreshes and a 
semiannual Web site release to incorporate updates and improvements to 
the Web site. Updates will include the addition of the names of 
eligible professionals who are successful electronic prescribers, as 
required by section 1848(m)(5)(G) of the Act, as well as the names of 
those eligible professionals who participate in the EHR Incentive 
Program, as required by section 1848(o)(3)(D) of the Act. Additional 
enhancements planned include the addition of links to specialty board 
Web sites that can provide more information on an eligible 
professional's board certification status and improved Web site 
functionality and layout.
    Moving towards the reporting of physician performance information, 
we proposed to take an initial step by making public the performance 
rates of the quality measures that group practices submit under the 
2012 Physician Quality Reporting System group practice reporting option 
(GPRO) (76 FR 42899). We also proposed to publicly report the 
performance rates of the quality measures that the group practices 
participating in the Physician Group Practice demonstration report on 
the Physician Compare Web site as early as 2013 for performance 
information collected in CY 2012. We would make public the measure 
performance for each of the measures included in the 2012 Physician 
Quality Reporting System GPRO. Since the quality measures in GPRO are 
reported for the group as a whole, the information on measure 
performance would also apply to the group as a whole, rather than to 
individual physicians within a group.
    Public reporting of the group practices' 2012 measure performance 
results at the group practice level would begin public reporting at the 
earliest time specified by the statute. We believe the design of the 
GPRO (see section VI.F.b.2. of this final rule with comment pe) 
facilitates making public groups' performance results. All groups 
participating in the GPRO would be reporting on the same set of 
clinical quality measures, which allows for comparison of the results 
across groups.
    To eliminate the risk of calculating performance rates based on a 
small denominator, we proposed to set a minimum patient sample size 
threshold (76 FR 42899). A minimum threshold of 25 patients would have 
to be met in order for the group practice's measure performance rate to 
be reported on the Physician Compare Web site. If the threshold of 25 
patients is not met for a particular measure, the group's performance 
rate for that measure would be suppressed and not publicly reported. In 
determining the minimum patient sample size, we took into consideration 
the minimum patient sample size used by other Compare Web sites that 
publicly report measure performance data. We wanted to ensure that we 
used a number large enough to accurately reflect measure performance, 
but not so large that it would limit the number of groups for which 
measure performance could be reported. In taking into consideration the 
minimum patient sample size used by other Compare Web sites that 
publicly report measure performance data, we also considered a minimum 
patient sample size of 10 patients, 20 patients and 30 patients. As we 
are proposing to report measure performance at a group level and a 
majority of the other Compare Web sites use minimum sample sizes of 
between 20 and 30 patients, we concluded that a minimum patient sample 
size of 25 would meet our criteria (76 FR 42899).
    We also proposed that group practices participating in the 2012 
Physician Quality Reporting System GPRO would agree in advance to have 
their reporting performance results publicly reported as part of their 
self-nomination to participate in the 2012 Physician Quality Reporting 
System GPRO. Finally, we proposed to modify the GPRO web interface for 
2012 to calculate the numerator, denominator, and measure performance 
rate for each measure from the data that the group practices use to 
populate the tool and provide each group practice this information at 
the time of data submission. This feature would allow the group 
practice the opportunity to review their measure performance results 
before they are made public in accordance with section 10331(b) of the 
Affordable Care Act. For groups reporting using GPRO information that 
is made public in 2013, we did not propose to post information with 
respect to the measure performance of individual physicians or eligible 
professionals associated with the group. However, we proposed to 
identify the individual eligible professionals who were associated with 
the group during the reporting period.
    We believe a staged approach to public reporting of physician 
information allows for the use of information currently available while 
we develop the infrastructure necessary to support the collection of 
additional types of measures and public reporting of individual 
physicians' quality measure performance results. Implementation of 
subsequent phases of the plan will need to be developed and addressed 
in future notice and comment rulemaking, as needed. We invited comments 
regarding our proposals to: (1) To publicly report group practices' 
measure performance results in 2013 based on group practices' 2012 
Physician Quality Reporting System performance results under GPRO; and 
(2) utilize a minimum patient sample size of 25 for reporting and 
displaying measure performance on the Physician Compare Web site.
    We received several comments from the public on the CY 2012 PFS 
proposed rule related to the Physician Compare Web site. General 
comments about the Physician Compare Web site are addressed as follows.
    Comment: CMS received positive feedback supporting our staged 
approach to developing the Physician Compare Web site, including 
improvements planned for our second phase development and public 
reporting of physician information and performance.
    Response: We appreciate the commenters' positive feedback. We 
believe a staged approach to the Web site development and public 
reporting of physician information and performance will allow us to use 
the information currently available while we continue to work towards 
improvement of the Web site and develop the infrastructure necessary to 
support the collection of additional types of information and measures.
    Comment: CMS received several comments expressing concerns over the 
accuracy of the physician information currently being displayed on the 
Physician Compare Web site. Specifically, the comments mentioned 
inaccuracies around basic physician information, specialties, 
licensure, and practice location/affiliation. Commenters urged CMS to 
validate the accuracy of successful participation in the various CMS 
quality measure reporting programs.
    Response: We appreciate the commenters' feedback. We are committed 
to including accurate and up-to-date provider information on the 
Physician Compare Web site and continue to work towards the necessary 
steps to make improvements. We look forward to engaging the provider 
community toward that end. The provider information used to populate 
the Physician Compare Web site comes from the Provider Enrollment, 
Chain, and Ownership System (PECOS) and an

[[Page 73419]]

external data source. In order for a physician or other health care 
professional's information to appear on the Physician Compare Web site, 
their enrollment record in PECOS must be current and in ``approved'' 
status, a valid physical location or address must be identified and the 
provider must have a valid State license and NPI. There is a 45-60 day 
lag for new enrollment, updates, and changes to take place in PECOS. 
Currently, physicians and eligible professionals can find instructions 
on how to update and correct their information on the Physician Compare 
Web site under the ``Note to Provider'' section located on the ``About 
the Data'' page. In general, most updates or corrections to provider 
information can be made through PECOS, either via Internet-based PECOS 
or a paper process. Corrections can also be requested through the Web 
site's feedback tool function.
    Comment: CMS also received several comments expressing concern 
around the eventual reporting of measures performance on the Physician 
Compare Web site. These comments included general concerns about the 
accuracy of the data to be reported, as well as specific concerns 
regarding the lack of measures available to assess safety, 
effectiveness and timeliness of care, and continuity and coordination 
of care. Several comments stated that CMS must ensure that measure 
performance data is properly attributed to the correct provider or 
practice and that data is risk adjusted.
    Response: We appreciate the commenters' feedback. As required under 
section 10331(b) of the Affordable Care Act, in developing and 
implementing the plan to include performance data on Physician Compare, 
we must include, to the extent practicable, processes to ensure that 
data made public are statistically valid, reliable, and accurate, 
including risk adjustment mechanisms used by the Secretary, as well as 
processes to ensure appropriate attribution of care when multiple and 
other providers are involved in the care of the patient. We are 
committed to working towards reported measures that are accurate and 
complete.
    Comment: Several commenters urged CMS to provide a specific 
mechanism whereby providers can report and correct data errors. Many 
commenters suggested that a 30-day timeframe to correct errors should 
be implemented by CMS.
    Response: We appreciate the commenters' feedback. Through regular 
data refreshes, CMS is working toward more accurate and up-to-date 
information on Physician Compare. We intend to conduct monthly 
refreshes and semi-annual updates as technically feasible. We look 
forward to engaging with providers and stakeholders to further address 
these concerns.
    Comment: CMS received comments urging CMS to develop appropriate 
disclaimer language to note potential issues with accuracy and to avoid 
any misinterpretation of data. Many of the comments requested that CMS 
work with the provider community to develop disclaimers and one comment 
suggested the use of a ``splash page'' whereby Web site users would 
have to read the disclaimer and ``accept'' before seeing the data.
    Response: We appreciate the commenters' feedback. We look forward 
to the opportunity to work with providers and external stakeholders and 
discuss options for presenting performance information in a way that is 
accurate and understood by consumers. CMS will take the idea of 
creating a disclaimer ``splash page'' into consideration. Currently, 
the Physician Compare Web site has disclaimer language to explain that 
the Physician Quality Reporting System is a voluntary program. The 
disclaimer includes some of the numerous reasons why physicians or 
other healthcare professionals, who are committed to providing high 
quality care to their patients, may have chosen not to report quality 
information under the Physician Quality Reporting System.
    Comment: One commenter expressed concern over whether a 
psychiatrist's performance can ever be accurately reflected on 
Physician Compare because many of the measure categories prescribed by 
the Affordable Care Act (i.e., patient health outcomes and functional 
status, continuity and coordination of care and care transitions, 
patient experience and patient, caregiver, and family engagement, etc.) 
fail to account for environmental factors affecting patient outcomes.
    Response: We appreciate the commenter's feedback. CMS is committed 
to working with providers and external stakeholders toward the aim of 
presenting accurate performance data on Physician Compare, and the 
various specialties represented therein. CMS recognizes that measures 
around patient outcomes, patient experience, etc. are inherently 
dependent on patient factors and this is not unique to psychiatry. As 
required under section 10331(b) of the Affordable Care Act, in 
developing and implementing the plan to include performance data on 
Physician Compare, we must include, to the extent practicable, 
processes to ensure that data made public are statistically valid, 
reliable, and accurate, including risk adjustment mechanisms used by 
the Secretary. As such, CMS will need to account for patient factors 
affecting patient outcomes through risk-adjustment, exclusions, and/or 
appropriate disclaimer language to explain how patient factors beyond 
the control of the physician or other eligible professional can affect 
patient outcomes.
    Comment: One commenter urged CMS to assure that the physician 
information provided to the public on the Physician Compare Web site is 
based on quality data and not cost and claims data.
    Response: We appreciate the commenters' feedback. As we proposed in 
the proposed rule (76 FR 42899) and are finalizing below, CMS will only 
publicly report group practices' measure performance results in 2013 
based on group practices' 2012 Physician Quality Reporting System 
performance results under GPRO at this time. We did not propose to make 
cost and claims data public.
    Comment: One commenter stated that implementation of the Physician 
Compare Web site is intertwined with Section 3003 of the Affordable 
Care Act, which requires Medicare to confidentially report both quality 
and cost data to individual physicians and groups. The commenter 
expressed concerns over the public reporting of ``confidential'' data 
and urged CMS to clarify what, if any, ``confidential'' information it 
plans to make available to the public.
    Response: We appreciate the commenters' feedback. The Physician 
Compare Web site is mandated by section 10331 of the Affordable Care 
Act, which authorizes CMS to publicly report information on physician 
performance. Section 3003 of the Affordable Care Act amends a separate 
program, the Physician Feedback Program. While these two sections both 
address quality data, section 10331 does not classify the quality data 
as ``confidential.'' In this final rule, we are finalizing our proposal 
to publicly report group practices' measure performance results in 2013 
based on group practices' 2012 Physician Quality Reporting System 
performance results under GPRO. Section 10331 of the Affordable Care 
Act also requires CMS to include, to the extent practicable, measures 
collected under the Physician Quality Reporting System. Based on 
established CMS data security procedures and as otherwise required by 
law, all patient data will be confidential

[[Page 73420]]

and protected. Therefore, on the Physician Compare Web site, patient 
data will be aggregated and no patient identifiers will be made public.
    Comment: One commenter urged CMS to develop public reporting 
formats that are consistent with established public reporting formats 
(that is, Consumer Union).
    Response: We appreciate the commenters' feedback. We will take into 
consideration the idea of using a data report format for Physician 
Compare consistent with established formats, as feasible. We look 
forward to engaging providers, stakeholders, and consumers in further 
considering this issue.
    Comment: One commenter expressed that they would like to review how 
CMS intends to integrate data from other payers.
    Response: We appreciate the commenters' feedback. In this final 
rule, we are finalizing our proposal to only publicly report group 
practices' measure performance results in 2013 based on group 
practices' 2012 Physician Quality Reporting System performance results 
under GPRO. The Physician Quality Reporting System only utilizes 
Medicare Part B data. Implementation of subsequent plans for reporting 
quality data, including any plan to utilize data from other payers, 
will need to be developed and addressed in future notice and comment 
rulemaking, as needed.
    Comment: We received comments suggesting that National Committee 
for Quality Assurance recognition information and participation 
information in other established, medical society-driven educational 
and voluntary quality of care initiatives be included on the Physician 
Compare Web site.
    Response: We appreciate the commenter's feedback. We will take into 
consideration incorporating recognition and participation in other 
established, medical society-driven educational and voluntary quality 
of care initiatives information on Physician Compare. Currently, the 
Physician Compare Web site includes on the names of those physicians 
and other eligible professionals who satisfactorily report data under 
the Physician Quality Reporting System, as well as the names of those 
professionals who are successful electronic prescribers under the 
Electronic Prescribing (eRx) Incentive Program. Section 1848(o)(3)(D) 
of the HITECH Act requires the Secretary to list in an easily 
understandable format the names, business addresses, and business phone 
numbers of the Medicare EPs and, as determined appropriate by the 
Secretary, of group practices receiving incentive payments for being 
meaningful EHR users under the Medicare FFS program on our Internet Web 
site. As such, we plan to add information for Medicare eligible 
professionals who received incentive payments for being meaningful EHR 
users under the Medicare FFS program in 2012.
    Comment: CMS received a number of comments expressing concern over 
how hospital related data will be incorporated on the Physician Compare 
Web site. Specifically, commenters were concerned about reporting 
performance for physicians who treat hospital inpatients and the lack 
of performance measures within the Physician Quality Reporting System 
appropriate for the hospital setting. Commenters urged CMS to make 
hospital affiliation information available on Physician Compare.
    Response: We appreciate the commenters' feedback. We agree that 
illustrating hospital and physician integration and alignment is 
important. We will take into consideration the potential option of 
incorporating hospital affiliation information on Physician Compare.
    Comment: CMS received comments requesting us to clarify how the 
group practice data displayed on Physician Compare will reflect the 
performance of eligible professionals who are employed in hospitals and 
health systems, how physician-to-group attribution will be managed and 
how both provider-level and group-level will reside on the same Web 
site.
    Response: We appreciate the commenter's feedback. In this final 
rule, we are finalizing our proposal to publicly report group 
practices' measure performance results in 2013 based on group 
practices' 2012 Physician Quality Reporting System performance results 
under GPRO as an initial step towards public reporting of physician 
performance. We believe that reporting at the group practice level will 
reflect the performance of the group practice or health system as a 
whole. We believe reporting at the group level encourages the group's 
shared responsibility for patient health outcomes and care 
coordination. While we intend to identify those eligible professionals 
who have assigned their Medicare Part B billing rights to the group 
practice's tax identification number, performance rates will not be 
displayed on the individual eligible professionals' profile on 
Physician Compare in 2013. Implementation of subsequent plans for 
reporting physician performance will need to be developed and addressed 
in future notice and comment rulemaking, as needed.
    Comment: CMS received several comments urging CMS to ensure that 
the Physician Compare Web site is user-friendly and that the public can 
understand the data being reporting. Specifically, commenters stressed 
the importance of provider input on the design and content of the Web 
site and that CMS implement a public education program to help users 
understand the data and use information properly.
    Response: We appreciate the commenters' feedback. We will consider 
engaging providers and external stakeholders, as well as consumers, to 
provide input into the design and content of Physician Compare.
    Comment: We received several comments about the data review period 
and appeal process for performance measures reported on the Physician 
Compare Web site. Specifically, one commenter urged CMS to clarify the 
review process for group practices and one requested that group 
practices should have the opportunity to review comparative benchmark 
data, before data is publicly reported. Other commenters urged CMS to 
provide physicians with an opportunity to review their data and allow 
physicians to request corrections to the data. Commenters recommended 
at least a 60-day to 6-month time period be provided for physicians to 
review the data before it is made public on Physician Compare.
    Response: We appreciate the commenters' feedback. Section 10331(b) 
of the Affordable Care Act requires CMS to establish processes for 
physicians and eligible professionals whose information is being 
publically reported to have a reasonable opportunity, as determined by 
the Secretary, to review their results before posting to Physician 
Compare. In this final rule, we are finalizing our proposal to publicly 
report group practices' measure performance results in 2013 based on 
group practices' 2012 Physician Quality Reporting System performance 
results under GPRO as an initial step towards public reporting of 
physician performance. We are also finalizing our proposal to modify 
the group practice data collection tool or ``GPRO Web Interface''. The 
GPRO web interface will calculate and display the denominator, 
numerator and measure performance rate for each measure from the data 
that the group practice uses to populate the GPRO web interface. This 
feature will allow the group practice to review its measure performance 
prior to posting on the Physician Compare Web site. Group practices 
participating in GPRO currently receive comparative benchmark data in 
their feedback

[[Page 73421]]

reports and they will continue to receive comparative benchmark data. 
CMS will take into consideration the suggested time period for 
reviewing data and will address in future rulemaking.
    Comment: Commenters expressed concern that the specialty list on 
Physician Compare is inaccurate or incomplete.
    Response: We appreciate the commenters' feedback. We are committed 
to including accurate and complete information for all specialties on 
the Physician Compare web site. We look forward to engaging the 
provider community toward that end.
    Comment: CMS received comments supporting the inclusion of 
physician board certification information on Physician Compare. 
Commenters stressed the importance of distinguishing between credible 
certification bodies and other organizations, as well as including 
accurate information that is not reliant on self-reported data. 
Commenters support a link from the Physician Compare site to other Web 
sites with board certification information until a data sharing 
agreement that would allow board certification information directly on 
the Physician Compare Web site can be finalized.
    Response: We appreciate the commenters' feedback and support. We 
agree that board certification is valuable information for consumers 
and therefore, we are exploring the possibility of, and our options 
for, including board certification information on the Physician Compare 
web site (e.g., through links to other Web sites; through data sharing, 
which would allow the information to be integrated with the Physician 
Compare Web site and displayed directly on the provider's profile 
page).
    Comment: One commenter advocated that CMS customize the Physician 
Compare Web site content to educate users on the growing specialty of 
hospital medicine. The commenter suggested a link to the Hospital 
Compare Web site for those physicians in the hospital medicine 
specialty as quality in this specialty is tied to hospital quality.
    Response: We appreciate the commenters' feedback. We are committed 
to working with providers and external stakeholders so that 
beneficiaries have the information necessary to be informed users of 
the Physician Compare web site. We will consider linking from Physician 
Compare to Hospital Compare as appropriate.
    Comment: CMS received one comment supporting the reporting of group 
level performance on Physician Compare. The commenter believes that 
group practices will have a sufficient volume of patients to facilitate 
comparisons and it would be easier for groups to report on a core set 
of measures.
    Response: We appreciate the commenters' feedback and support. As we 
indicated, in this final rule we are finalizing our proposal to 
publicly report Physician Compare group practices' measure performance 
results in 2013 based on group practices' 2012 Physician Quality 
Reporting System performance results under GPRO.
    Comment: Multiple commenters expressed concern about the 
feasibility of reporting individual level performance on Physician 
Compare. Specifically, commenters mentioned inadequate sample size to 
make valid comparisons across eligible professionals, problems with 
attribution and the risk for patient de-selection by providers seeking 
to improve their measure performance.
    Response: We appreciate the commenters' feedback. In this final 
rule with comment period, we are only taking the initial step of 
reporting physician performance data by publicly reporting group 
practices' measure performance results in 2013 based on group 
practices' 2012 Physician Quality Reporting System performance results 
under GPRO. We believe that additional time is needed to develop the 
infrastructure necessary to support the collection of additional types 
of measures and public reporting of individual physicians' quality 
measure performance results.
    Comment: CMS received multiple comments urging CMS to take the 
necessary steps to enable reporting reliable comparative information at 
the individual provider level as soon as possible.
    Response: We appreciate the commenters' feedback. As stated 
previously, we believe that additional time is needed to develop the 
infrastructure necessary to support the collection of additional types 
of measures and public reporting of individual physicians' quality 
measure performance results. We will continue to assess the feasibility 
of individual level reporting. The implementation of subsequent plans 
for reporting physician performance will need to be developed and 
addressed in future notice and comment rulemaking, as needed.
    Comment: CMS received one comment urging CMS to populate Physician 
Compare with a core set of measures that are meaningful to patients. 
The commenter stated that the core set should include cross-cutting 
measures applicable to any physician as well as measures that apply to 
specific subsets of physicians. It was emphasized that patient 
experience, care coordination, functional status and other outcome 
measures should be the basis for the initial set of core measures.
    Response: We appreciate the commenters' feedback. With regard to 
our final decision to publicly report group practices' measure 
performance results in 2013 based on group practices' 2012 Physician 
Quality Reporting System performance results under GPRO, all groups 
participating in GPRO would be reporting on the same set of clinical 
quality measures. The implementation of subsequent plans for reporting 
physician performance will need to be developed and addressed in future 
notice and comment rulemaking, as needed.
    Comment: One commenter supported our proposal to use a minimum 
sample size of 25 patients for a measure to be reported on Physician 
Compare. Another commenter expressed concern over the minimum sample 
size of 25 patients. The commenter stated that 25 patients within a 
group practice for any specific measure is not an adequate 
representation of the practice's performance and is too small to enable 
consumers to see meaningful differences in provider performance.
    Response: We appreciate the commenters' feedback. A majority of the 
other Compare Web sites use minimum sample sizes of between 20 and 30 
patients and we concluded that a minimum patient sample size of 25 
would meet our need for a number large enough to reflect measure 
performance, but not so large as to limit the number of groups for 
which measure performance can be reported.
    Upon consideration of the comments and for the reasons we 
previously explained, we are finalizing our proposal to publicly report 
group practices' measure performance results in 2013 based on group 
practices' 2012 Physician Quality Reporting System performance results 
under GPRO. We are finalizing our proposal to use a minimum sample size 
of 25 patients for reporting and displaying measure performance on the 
Physician Compare Web site. Group practices participating in 2012 
Physician Quality Reporting System GPRO must agree in advance to have 
their reporting performance results publicly reported as part of their 
self-nomination to participate in the 2012 Physician Quality Reporting 
System GPRO. We are also finalizing our proposal to modify the GPRO web

[[Page 73422]]

interface for 2012 to calculate the numerator, denominator and measure 
performance rate for each measure from the data that the group 
practices use to populate the web interface. This modification will 
allow the group practice the opportunity to preview their measure 
performance results before they are made public in 2013. In addition, 
as we discussed in the Medicare Shared Savings Program (MSSP) final 
rule, which displayed at the Federal Register on October 20, 2011, 
http://www.ofr.gov/OFRUpload/OFRData/2011-27461_PI.pdf, because 
Accountable Care Organizations (ACO) will be considered to be group 
practices under the Physician Quality Reporting System GPRO under the 
Shared Savings Program, we believe ACO performance on the quality 
measures reported using the GPRO web interface should be reported on 
Physician Compare in the same way that we are reporting on the 
performance of other group practices that participate in the Physician 
Quality Reporting System GPRO. Therefore, performance data on quality 
measures reported on by ACOs on behalf of its eligible professionals in 
group practices using the GPRO web interface will also be reported on 
the Physician Compare Web site in the same way as for the group 
practices that report under the Physician Quality Reporting System as 
discussed in this section.

H. Medicare EHR Incentive Program for Eligible Professionals for the 
2012 Payment Year

1. Background
    We proposed (76 FR 42899) changes to the method by which eligible 
professionals (EPs) would report clinical quality measures (CQMs) for 
the 2012 payment year for the Medicare EHR Incentive Program. 
Specifically, we proposed (76 FR 42900) that eligible professionals may 
satisfy the meaningful use objective to report CQMs to CMS by reporting 
them through: (1) Attestation; or (2)participation in the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot. We received some 
comments that were not related to our proposals for the Medicare EHR 
Incentive Program for payment year 2012. While we appreciate the 
commenters' feedback, these comments are outside the scope of the 
issues addressed in this final rule.
2. Attestation
    We proposed (76 FR 42900) that for the 2012 payment year, EPs may 
continue to report CQM results as calculated by Certified EHR 
Technology by attestation, as for the 2011 payment year.
    Comment: Several commenters supported our proposal to continue 
reporting CQM results as calculated by Certified EHR Technology by 
attestation for the 2012 payment year.
    Response: We appreciate the commenters' support and are finalizing 
our proposal to allow EPs to continue to report CQM results as 
calculated by Certified EHR Technology by attestation for the 2012 
payment year.
    Comment: One commenter was disappointed in our proposal to continue 
attestation due to our inability to receive electronically the 
information necessary for CQM reporting based solely on the use of PQRI 
2009 Registry XML Specification content exchange standards as is 
required for Certified EHR Technology. The commenter urged us to 
rectify this situation.
    Response: We appreciate the commenters' feedback. We are working to 
have the capability to receive CQM data reported electronically via 
Certified EHR Techology for the 2013 payment year. However, we note 
that attestation is only one method by which EPs may report the CQMs. 
In fact, EPs may submit CQM data through participation in the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot that is described 
in the following section.
    Based on the comments received and for the reasons stated in our 
responses, we are finalizing our proposal to allow EPs to continue to 
report CQM results as calculated by Certified EHR Technology by 
attestation for the 2012 payment year as proposed. We are revising 42 
CFR 495.8(a)(2)(ii) as proposed.
3. The Physician Quality Reporting System-Medicare EHR Incentive Pilot
    In addition to attestation, we proposed (76 FR 42900) to establish 
a Pilot mechanism through which EPs participating in the Medicare EHR 
Incentive Program may report CQM information electronically using 
Certified EHR Technology for the 2012 payment year.
    We proposed to modify 42 CFR 495.8(a)(2) by adding a new paragraph 
to allow for the reporting of CQMs for the Medicare EHR Incentive 
Program via the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot. Section 1848(o)(2)(B)(ii) of the Act provides 
authority for the Secretary to accept information on CQMs 
electronically on a Pilot basis. We proposed that EPs may participate 
in the Pilot on a voluntary basis, and that those EPs who choose not to 
participate may instead continue to attest to the results of the CQMs 
as calculated by Certified EHR Technology, consistent with the CQM 
reporting method for the 2011 payment year. However, we encourage 
participation in the Pilot based on our desire to adequately pilot 
electronic submission of CQMs and to move to a system of reporting 
where EPs can satisfy both the CQM reporting requirements for the EHR 
Incentive Program and the reporting requirements for the Physician 
Quality Reporting System EHR-based reporting mechanism with a single 
submission to their respective EHR systems, who will then provide 
calculated results to CMS in the form and manner specified for each 
respective program. To participate in the Physician Quality Reporting 
System-Medicare EHR Incentive Pilot, we proposed that EPs would be 
required to electronically report the CQMs using Certified EHR 
Technology via one of two options that are based on the existing 
reporting platforms of the Physician Quality Reporting System. As 
described later in this section, one option would be based on the 
infrastructure used for the Physician Quality Reporting System EHR data 
submission vendor reporting mechanism as described in section 
VI.F.1.d.3.B of this final rule with comment period. The second option 
would be based on the infrastructure used for the Physician Quality 
Reporting System EHR reporting mechanism as described in section 
VI.F.1.d.3.A of this final rule with comment period. EPs who seek to 
participate in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot must also participate in the Physician Quality 
Reporting System itself, because the Pilot will rely on the 
infrastructure used for the Physician Quality Reporting System.
    To move towards the integration of reporting on quality measures 
under the Physician Quality Reporting System with the reporting 
requirements of the Medicare EHR Incentive Program, as required by 
section 1848(m)(7) of the Act (``Integration of Physician Quality 
Reporting and EHR Reporting''), we proposed that participation in the 
Physician Quality Reporting System-Medicare EHR Incentive Pilot would 
require EPs to submit information on the same CQMs that were adopted 
for EPs for the Medicare EHR Incentive Program and included in Tables 6 
and 7 of the July 28, 2010 final rule (75 FR 44398 through 44410). We 
proposed that EPs participating in this Pilot must submit information 
on the three core measures included in Table 7, up to

[[Page 73423]]

three of the alternate core measures included in Table 7 insofar as the 
denominator for one or more of the core measures is zero, and three 
additional measures from the measures included in Table 6, as is 
otherwise required by the final rule to successfully demonstrate 
meaningful use (75 FR 44409 through 44411). EPs who elect to 
participate in this Physician Quality Reporting System-Medicare EHR 
Incentive Pilot would still be required to report information on the 
CQMs as required under the Stage 1 criteria established for the 
Medicare EHR Incentive Program regardless of which option they select 
as described later in this section. As the reporting of CQMs is only 
one of the 15 core meaningful use objectives for EPs for the Medicare 
EHR Incentive Program, an EP who elects to participate in the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot would still be 
required to meet and attest to the remaining 14 core objectives and 
required menu set objectives using the attestation module on the CMS 
Web site for the program. Consequently, participation in this Pilot 
only applies to the method of reporting for meeting the meaningful use 
CQM objective in the EHR Incentive Program (42 CFR 495.6(d)(10)).
    To participate in the Physician Quality Reporting System-Medicare 
EHR Incentive Pilot, we proposed EPs would be required to 
electronically report the CQMs by choosing one of the options described 
later in this section. By submitting the required information through 
the Pilot, we proposed that an EP could submit data on the same sample 
of beneficiaries to his/her EHR system to meet the core objective for 
reporting CQMs for the Medicare EHR Incentive Program for the 2012 
payment year and the requirements for satisfactory reporting under the 
Physician Quality Reporting System. After attesting to all other 
meaningful use objectives, the EP's attestation file would be placed in 
a holding status with respect to the CQM objective only, until the EP 
reports the CQMs via one of the Physician Quality Reporting System-
Medicare EHR Incentive Pilot options. Thus, the EP would not know if 
he/she successfully met the requirements for the Medicare EHR Incentive 
Program with respect to the CQM objective until the CQMs are received 
at the end of the submission period for measures for the Physician 
Quality Reporting System (we expect this would be 2 months after the 
close of the reporting period, which is the CY 2012, and no later than 
February 28, 2013). As explained later in this section, any EP 
participating in this Pilot would be required to report CQMs based on a 
full calendar year, regardless of the EP's year of participation in the 
Medicare EHR Incentive Program.
    We also proposed (76 FR 42901) that an EP who selects one of the 
Pilot options and subsequently determines that completion of the Pilot 
is unfeasible may go back into the Medicare EHR Incentive Program 
attestation module on the CMS Web site and complete attestation for the 
CQMs assuming it is within the reporting timeframes established under 
the EHR Incentive Program. Although it is possible that an EP may find 
completion of the Pilot unfeasible, we note that participating in the 
Pilot provides the following advantage to EPs: participation in this 
Physician Quality Reporting System-Medicare EHR Incentive Pilot would 
allow for the receipt of EHR Incentive Program and Physician Quality 
Reporting System incentives, provided an EP meets the provisions 
described later in this section. We noted that although the EHR 
Incentive Program requires EPs to use Certified EHR Technology, for 
purposes of participating in the Physician Quality Reporting System-
Medicare EHR Incentive Pilot, an EP's Certified EHR Technology must 
also conform to the qualifications for an EHR under the Physician 
Quality Reporting System.
    Comment: Several commenters supported our proposal to establish the 
Physician Quality Reporting System-Medicare EHR Incentive Pilot. These 
commenters lauded our efforts to align the Physician Quality Reporting 
System and EHR Incentive Program.
    Response: We appreciate the commenters' feedback and are finalizing 
our proposal to allow EPs to report CQMs for the EHR Incentive Program 
through the Physician Quality Reporting System-Medicare EHR Incentive 
Pilot for the 2012 payment year.
    Comment: Although one commenter supported our proposal to establish 
the Physician Quality Reporting System-Medicare EHR Incentive Pilot, 
the commenter urged that we defer implementation of the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot for an additional 
year.
    Response: We appreciate the commenters' feedback. However, we note 
that participation in the Physician Quality Reporting System-Medicare 
EHR Incentive Pilot is voluntary. An EP may continue to use attestation 
as a method of reporting CQMs for the 2012 payment year to satisfy this 
meaningful use objective under the EHR Incentive Program. In fact, an 
EP may report the CQMs by attestation even if the EP also chooses to 
participate in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot.
    Comment: Some commenters opposed our proposal to require a CQM 
reporting period of 1 calendar year regardless of the EP's year of 
participation in the Medicare EHR Incentive Program.
    Response: We appreciate the commenters' feedback. While the EHR 
Incentive Program only requires a 90-day EHR reporting period for EPs 
for their first payment year, EPs participating in the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot must report 
clinical quality measures based on a full calendar year of data for two 
main reasons. First, as described in section VI.F.1, the Physician 
Quality Reporting System has established a 12-month reporting period 
with respect to the EHR reporting mechanism. Since the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot is intended to 
allow reporting under both the Physician Quality Reporting System and 
the EHR Incentive Program, it is essential that, for purposes of 
participating in this Pilot, the reporting periods be identical. 
Second, unlike Certified EHR Technology that submits data submitted by 
EPs at any point throughout the year, qualified direct EHRs and EHR 
data submission vendors are only required to submit data to CMS once, 
following the end of the 12-month calendar year reporting period.
    Comment: Some commenters opposed our proposal that the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot would only 
collect data about Medicare patients.
    Response: We appreciate the commenters' feedback. However, as 
described in section VI.F.1, the Physician Quality Reporting System 
only collects data related to Medicare patients. Since the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot is intended to 
allow reporting under both the Physician Quality Reporting System and 
EHR Incentive Program, the type of data collected must only be from 
Medicare patients.
    Comment: One commenter stated that the Physician Quality Reporting 
System-Medicare EHR Incentive Pilot is unlikely to attract volunteers, 
unless EHR vendors encourage participation in this Pilot.
    Response: We appreciate the commenter's feedback. We encourage EPs 
to participate in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot. We believe that the Physician Quality Reporting 
System-

[[Page 73424]]

Medicare EHR Incentive Pilot provides a way for EPs to submit data on a 
single sample set of beneficiaries to satisfy the requirements for two 
programs: the Physician Quality Reporting System and the EHR Incentive 
Program.
    Comment: Several commenters did not believe that EPs would be 
willing to have their EHR Incentive Program incentive payments delayed 
in order to participate in the Physician Quality Reporting System-
Medicare EHR Incentive Pilot. These commenters urged us to find a 
solution to provide timely payments.
    Response: We appreciate the commenters' feedback. Once the data 
from an EP participating in the Physician Quality Reporting System-
Medicare EHR Incentive Pilot is received and CMS determines that the EP 
has successfully reported the CQMs under the Pilot, the EP would 
receive his/her incentive payment under the EHR Incentive Program if 
the EP has successfully demonstrated meaningful use. We also note that 
if, for some reason, an EP finds that he or she cannot successfully 
participate in the Pilot, the EP may also report on CQMs through 
attestation within the established timeframes of the EHR Incentive 
Program.
    Please note that if an EP chooses to report CQMs through 
attestation and also participate in the Physician Quality Reporting 
System-Medicare EHR Incentive Pilot, for purposes of receiving an EHR 
Incentive Program incentive, an EP's attestation file would not need to 
be placed in a holding status for the CQM objective. However, as stated 
previously, the analysis of data for purposes of the Physician Quality 
Reporting System incentive will not be made until after the submission 
period for measures for the Physician Quality Reporting System.
    Based on the comments received and for the reasons stated in our 
responses, we are finalizing our proposal to allow EPs to report CQMs 
for the EHR Incentive Program through the Physician Quality Reporting 
System-Medicare EHR Incentive Pilot for the 2012 payment year as 
proposed.
a. EHR Data Submission Vendor-Based Reporting Option
    As discussed further in the Physician Quality Reporting System 
section VI.F.1(d).(3).(b). of this final rule with comment period, we 
proposed (76 FR 42901) that EPs participating in the Physician Quality 
Reporting System may choose to report the Physician Quality Reporting 
System measures to CMS via a Physician Quality Reporting System 
qualified EHR data submission vendor. For purposes of the Physician 
Quality Reporting System, a Physician Quality Reporting System 
qualified EHR data submission vendor will receive data from an EP's EHR 
and subsequently reformat and transmit the data in aggregate form on 
behalf of the EP to CMS. We noted that we expect to post a list of the 
2012 Physician Quality Reporting System EHR data submission vendors 
that are qualified to submit data from an EP's Certified EHR Technology 
to CMS on the EP's behalf on the Physician Quality Reporting System 
section of the CMS Web site (http://www.cms.gov/pqrs) by summer 2012.
    Under this option, the Physician Quality Reporting System qualified 
EHR data submission vendor would calculate the CQMs from the EP's 
Certified EHR Technology and then submit the calculated results to CMS 
on the EP's behalf via a secure portal for purposes of this Pilot. We 
explained that under this option, the calculated results would be 
different from what is required by the July 28, 2010 final rule in that 
the data would be: (1) Limited to Medicare patients rather than all 
patients; and (2) based on a CQM reporting period of 1 calendar year 
regardless of the EP's year of participation in the Medicare EHR 
Incentive Program.
    The following is a summary of the comments we received on the 
proposed EHR data submission vendor-based reporting option under the 
Physician Quality Reporting System-Medicare EHR Incentive Pilot.
    Comment: Some commenters supported the proposed EHR data submission 
vendor-based reporting option of the Physician Quality Reporting 
System-Medicare EHR Incentive Pilot.
    Response: We appreciate the commenters' feedback and are finalizing 
the EHR data submission vendor-based reporting option under the 
Physician Quality Reporting System-Medicare EHR Incentive Pilot as 
proposed.
    Comment: Some commenters believed that, in order to earn a 
Physician Quality Reporting System incentive through participation in 
the Physician Quality Reporting System-Medicare EHR Incentive Pilot, an 
EP's data submission vendor was required to submit patient-level data 
from which we would calculate CQM results using a uniform calculation 
process. One commenter asked why providing aggregate-level data would 
not suffice for meeting the CQM reporting objective through 
participation in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot.
    Response: We appreciate the commenters' feedback. We note that 
incentives for either the Physician Quality Reporting System or the 
Medicare EHR Incentive Program, are earned under each respective 
program. For purposes of the Pilot, a qualified EHR data submission 
vendor would submit individual-level data as well as the calculated 
results of the CQMs to us. While the submission of calculated results 
is required for an eligible professional using this EHR data submission 
vendorbased reporting option to qualify for an incentive under the EHR 
Incentive Program, the Physician Quality Reporting System, as described 
previously in section VI.F.1 of this final rule, receives individual-
level data from claims and EHR-based reporting to analyze whether an 
eligible professional has met the requirements for satisfactory 
reporting under the Physician Quality Reporting System. Therefore, in 
order for us to be able to calculate measure data for purposes of 
earning a Physician Quality Reporting System incentive, we are 
requiring CQM data elements to be submitted by an EP's qualified EHR 
data submission vendor at an individual level. Further, the Physician 
Quality Reporting System requires this individual-level data to be 
submitted in the QRDA format. We believe it is useful to utilize a 
standard (such as CDA of which QRDA is a subset) where one exists in 
our quality reporting initiatives.
    Based on the comments received and for the reasons stated in our 
responses, we are finalizing the EHR data submission vendor-based 
reporting option for the Physician Quality Reporting System-Medicare 
EHR Incentive Pilot as proposed.
b. Direct EHR-Based Reporting Option
    As discussed further in the Physician Quality Reporting System 
section VI.F.1.(d).(3).(a). of this final rule with comment period, we 
proposed (76 FR 42901) that EPs participating in the Physician Quality 
Reporting System via the direct EHR-based reporting mechanism can 
choose to report the Physician Quality Reporting System measures to CMS 
directly from the EP's EHR. Therefore, under this direct EHR-based 
reporting option, we proposed (76 FR 42901) that an EP participating in 
the Physician Quality Reporting System-Medicare EHR Incentive Pilot 
would submit CQM data directly from his or her Certified EHR Technology 
to CMS via a secure portal using the infrastructure of the Physician 
Quality Reporting System EHR reporting mechanism. We proposed that in 
order to participate in the Physician Quality Reporting System-Medicare 
EHR Incentive Pilot under this option, the

[[Page 73425]]

EP's Certified EHR Technology must also be a 2012 Physician Quality 
Reporting System qualified EHR. We expect to post a list of the 2012 
Physician Quality Reporting System qualified EHRs on the Physician 
Quality Reporting System section of the CMS Web site prior to January 
1, 2012. Due to this Physician Quality Reporting System-Medicare EHR 
Incentive Pilot, we proposed to have an additional vetting process for 
EHR vendors wishing to participate in the Pilot. We expect to post a 
list of these additional 2012 qualified EHR vendors, if applicable, and 
their products in the summer of 2012.
    Under this direct EHR-based reporting option, the data would be 
different from what is required by the July 28, 2010 final rule in that 
it would be: (1) limited to Medicare patients rather than all patients; 
(2) patient-level data from which we may calculate CQM results using a 
uniform calculation process, rather than aggregate results calculated 
by the EP's Certified EHR Technology; and (3) based on a CQM reporting 
period of 1 calendar year regardless of the EP's year of participation 
in the Medicare EHR Incentive Program.
    In addition, we proposed (76 FR 42901) that if an EP successfully 
submits all required CQM data from Certified EHR Technology, which also 
must be a Physician Quality Reporting System qualified EHR product, 
directly to CMS, then the EP would also meet the criteria for 
satisfactory reporting under the 2012 Physician Quality Reporting 
System, which would also qualify the EP for an incentive under the 2012 
Physician Quality Reporting System.
    The following is a summary of the comments we received related to 
the direct EHR-based reporting option under the Physician Quality 
Reporting System-Medicare EHR Incentive Pilot.
    Comment: Several commenters supported the proposed direct EHR-based 
reporting option of the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot.
    Response: We appreciate the commenters' feedback and are finalizing 
the direct EHR-based reporting option under the Physician Quality 
Reporting System-Medicare EHR Incentive Pilot.
    Comment: Several commenters urged CMS to align the Physician 
Quality Reporting System qualification requirements for EHRs with the 
certification requirements for Certified EHR Technology so that a 
single EHR system could serve reporting requirements for both programs.
    Response: We appreciate the comementers' feedback. We are working 
to align the EHR system requirements for the Physician Quality 
Reporting System and the EHR Incentive Program. However, for purposes 
of participating in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot under the direct EHR-based reporting option, Certified 
EHR Technology must also meet the qualification requirements stated 
under section VI.F.1.d.3 of this final rule with comment period. There 
are currently distinct differences between Certified EHR Technology and 
EHR systems that are qualified under the Physician Quality Reporting 
System. For example, as required by ONC's regulations (see 45 CFR part 
170), Certified EHR Technology must include certain functionalities, 
such as the ability to create a summary of care record for transitions 
of care, the ability to calculate and submit clinical quality measures 
specified for the EHR Incentive Program, and must also have certain 
structured data elements that use specific language (for example, 
SNOMED, LOINC). On the other hand, an EHR that is ``qualified'' under 
the Physician Quality Reporting System is one that can capture all 
Physician Quality Reporting System measures, extract the data elements 
needed to calculate the measures, place the data elements in a QRDA 
format, and successfully transmit that data into the CMS portal. 
Therefore, it is necessary that an EHR system be qualified so as to 
ensure the system has the capability to report on Physician Quality 
Reporting System measures.
    We note that there are EHR systems that are both ``qualified'' to 
report Physician Quality Reporting System quality measures and 
classified as Certified EHR Technology for purposes of reporting under 
the EHR Incentive Program. A list of EHR products that are both 
``qualified'' and Certified EHR Technology will be made available on 
the Physician Quality Reporting System Web site, available at https://www.cms.gov/PQRS/.
    Based on the comments received and for the reasons stated in our 
responses, we are finalizing the EHR-based reporting option under the 
Physician Quality Reporting System-Medicare EHR Incentive Pilot as 
proposed.
    The Medicare EHR Incentive Program clinical quality measures, 
including the core and alternate core measures, and the 38 additional 
measures, are found in the Physician Quality Reporting System's Table 
48 of this final rule with comment period.
4. Method for EPs to Indicate Election To Participate in the Physician 
Quality Reporting System-Medicare EHR Incentive Pilot for Payment Year 
2012
    We proposed (76 FR 42902) that EPs who wish to participate in the 
Physician Quality Reporting System-Medicare EHR Incentive Pilot would 
be able to indicate within the EHR Incentive Program attestation module 
their intent to fulfill the meaningful use objective of reporting CQMs 
by participating in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot. The EHR Incentive Program attestation module is 
available on the CMS Web site at https://www.cms.gov/EHRIncentivePrograms/32_Attestation.asp#TopOfPage. The following is a 
summary of the comments we received that were related to this proposal.
    Comment: Several commenters sought further clarification on how EPs 
may participate in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot.
    Response: We appreciate the commenters' feedback. We will provide 
additional guidance on the process for participating in the Pilot, 
which will be available on the EHR Incentive Program Web site, 
available at http://www.cms.gov/ehrincentiveprograms/, as well as the 
Physician Quality Reporting System Web site, available at https://www.cms.gov/PQRS/.
    Based on the comments received and for the reasons stated 
previously, we are finalizing our method to indicate election to 
participate in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot as proposed.

I. Establishment of the Value-Based Payment Modifier and Improvements 
to the Physician Feedback Program

1. Overview
    In the proposed rule, we described the statutory requirements 
governing the Physician Feedback Program and the Physician Value-Based 
Payment Modifier (``value modifier''), which will be applied to the 
Physician Fee Schedule starting in 2015 for certain physicians and 
groups of physicians and, starting in 2017 for all physicians and other 
eligible professionals as the Secretary determines appropriate (76 FR 
42908). In particular, we proposed that certain of the quality of care 
measures in the Physician Quality Reporting System and the Electronic 
Health Records (EHR) Incentive Program be used to evaluate the quality 
of care in the value modifier (76 FR 42909 through 42912). In addition, 
we described how the quality of care measures that

[[Page 73426]]

physicians report in the Physician Quality Reporting System will be 
used in the confidential feedback reports we provide to physicians 
under the Physician Feedback Program (76 FR 42903 through 42907). We 
explained that we are using the Physician Feedback Program reports to 
help develop and test different methodologies that we could use to 
calculate the value modifier.
    In this final rule with comment period, we emphasize the connection 
between our physician quality programs--the Physician Quality Reporting 
System, the EHR Incentive Program, the value modifier, and the 
Physician Feedback Program. Our primary interests in aligning these 
programs are to increase the quality of care for Medicare 
beneficiaries, to provide a common basis to do so that does not 
increase physician reporting burden, and to provide fair and meaningful 
information to physicians on ways to improve the quality of care they 
furnish.
    We also emphasized in the proposed rule that given the complexity 
of measuring physician performance and calculating the value modifier, 
we are proceeding cautiously with transparency and outreach in a 
variety of ways to obtain stakeholder input. We discuss in this final 
rule with comment period several ways we plan to engage stakeholders to 
obtain input as we move forward to implement the value modifier over 
the coming years.
2. The Value-Based Payment Modifier
    Section 1848(p) of the Act requires the Secretary to ``establish a 
payment modifier that provides for differential payment to a physician 
or a group of physicians'' under the physician fee schedule ``based 
upon the quality of care furnished compared to cost * * * during a 
performance period.'' The provision requires that ``such payment 
modifier be separate from the geographic adjustment factors'' 
established for the physician fee schedule. In addition, section 
1848(p)(4)(C) of the Act requires that the value modifier be 
implemented in a budget-neutral manner. Budget neutrality means that 
payments will increase for some physicians but decrease for others, but 
the aggregate amount of Medicare spending in any given year for 
physicians' services will not change as a result of application of the 
value modifier.
    Section 1848(p)(4)(B)(iii) of the Act requires the Secretary to 
apply the value modifier beginning January 1, 2015 to specific 
physicians and groups of physicians the Secretary determines 
appropriate. This section also requires the Secretary to apply the 
value modifier with respect to all physicians and groups of physicians 
(and may apply to eligible professionals as defined in subsection 
(k)(3)(B) of the Act as the Secretary determines appropriate) beginning 
not later than January 1, 2017.
    We view the value modifier as an important component in revamping 
how care and services are paid for under the physician fee schedule. 
Currently, payments under the physician fee schedule are generally 
based on the relative resources involved with furnishing each service, 
and are adjusted for differences in resource inputs among geographic 
areas. Thus, all physicians in a geographic area are paid the same 
amount for individual services regardless of the quality of care or 
outcomes of services they furnish.
    Although the fee schedule payments will soon be adjusted depending 
upon whether eligible professionals are satisfactory reporters of 
Physician Quality Reporting System quality measures, successful 
electronic prescribers and meaningful users of electronic health 
records (EHRs), these adjustments do not currently take into account 
performance on the quality measures collected under these programs. In 
addition, the fee schedule does not take into account the overall costs 
of services furnished or ordered by physicians for individual Medicare 
beneficiaries. These limitations mean that the physician fee schedule 
does not contain incentives for physicians to focus on: (1) The quality 
and outcomes of all the care furnished to beneficiaries; (2) the 
relative value of each service they furnish or order; or (3) the 
cumulative costs of their own services and the services that their 
beneficiaries receive from other providers.
    We noted in the proposed rule that Medicare is beginning to 
implement value-based payment adjustments for other types of services, 
including hospital services, skilled nursing facilities, home health 
agencies, and ambulatory surgical centers (76 FR 42908). In 
implementing value-based purchasing initiatives generally, we seek to 
meet the following goals:
     Improving quality.
    ++ Value-based payment systems and public reporting should rely on 
a mix of standards, processes, outcomes, and patient experience 
measures, including measures of care transitions and changes in patient 
functional status. Across all programs, we seek to move as quickly as 
possible to the use of outcome and patient experience measures. To the 
extent practicable and appropriate, we believe these outcome and 
patient experience measures should be adjusted for risk or other 
appropriate patient population or provider characteristics.
    ++ To the extent possible, and recognizing differences in payment 
system readiness and statutory requirements and authorities, measures 
should be aligned across Medicare and Medicaid's public reporting and 
payment systems. We seek to evolve a focused core set of measures 
appropriate to each specific provider category that reflects the level 
of care and the most important areas of service and measures for a 
particular provider.
    ++ The collection of information should minimize the burden on 
providers to the extent possible. As part of that effort, we will 
continuously seek to align our measures with the adoption of meaningful 
use standards for health information technology (HIT), so the 
collection of performance information is part of care delivery.
    ++ To the extent practicable, measures used by us should be 
nationally endorsed by a multi-stakeholder organization. Measures 
should be aligned with best practices among other payers and the needs 
of the end users of the measures.
     Lowering per-capita growth in expenditures.
    ++ Providers should be accountable for the costs of care, and be 
rewarded for reducing unnecessary expenditures and be responsible for 
excess expenditures.
    ++ In reducing excess expenditures, reductions should not 
compromise patient care and providers should continually improve the 
quality of care they deliver.
    ++ To the extent possible, and recognizing differences in payers' 
value based purchasing initiatives, providers should apply -quality-
improving and cost-reducing redesigned care processes to their entire 
patient population.
    Section 1848(p)(4)(A) of the Act requires us to publish, not later 
than January 1, 2012, three items related to the establishment of the 
value modifier: (a) the quality of care and cost measures established 
by the Secretary for purposes of the modifier; (b) the dates for 
implementation of the value modifier; and (c) the initial performance 
period for application of the value modifier in 2015. In the proposed 
rule we made proposals for each of these requirements and we discuss 
each below.
a. Measures of Quality of Care and Costs
(1). Quality of Care Measures
    Section 1848(p)(2) of the Act requires that physician quality of 
care be

[[Page 73427]]

evaluated, to the extent practicable, based on a composite of measures 
of the quality of care furnished. Section 1848(p)(2)(B) of the Act 
requires that the Secretary establish appropriate measures of the 
quality of care furnished by a physician or a group of physicians to 
Medicare beneficiaries such as measures that reflect health outcomes. 
The statute requires the measures to be risk adjusted as determined 
appropriate by the Secretary. Section 1848(p)(2)(B)(ii) of the Act 
requires the Secretary to seek endorsement of the quality of care 
measures by the entity with a contract under section 1890(a) of the 
Act, which is the National Quality Forum.
(A) Quality of Care Measures for the Value-Modifier
    For purposes of section 1848(p)(4)(A)(i) of the Act, we proposed to 
use performance on: (1) The measures in the core set of the Physician 
Quality Reporting System for 2012; (2) all measures in the Group 
Practice Reporting Option of the Physician Quality Reporting System for 
2012; and (3) the core measures, alternate core, and 38 additional 
measures in the EHR Incentive Program measures for 2012 (76 FR 42909). 
We requested comment on the proposed measures, on our interest to 
establish a core measure set for the value modifier, and whether to 
include additional (or exclude) measures from the Physician Quality 
Reporting System in the quality of care measures for the value 
modifier.
    We also proposed that, to the extent that the 2013 measures adopted 
for the Physician Quality Reporting System and EHR Incentive Program 
are different than those used in 2012, we would consider, through 
rulemaking next year, revising the value modifier quality measures 
applicable to 2013 to be consistent with the revisions made to the 
measures for those programs.
    Comment: Most commenters appreciated CMS' proposal to use a 
consistent set of quality of care measures across various quality 
programs. Despite this support, some commenters recommended using 
either one core set of measures or multiple sets of core measures for 
different types of physicians or conditions. For example, one commenter 
recommended requiring physicians to report on only a ``small set of 
core measures that would be applicable to all physicians plus some 
limited number of applicable measures chosen by the physician or group 
practice.'' Other commenters suggested that we start with a small core 
set of measures initially and then transition to a larger set over 
time. By contrast, many commenters urged CMS to use a different core 
set of measures for different physician specialties (rather than the 
same measures for all physicians) in the value modifier.
    MedPAC suggested that ``the use of a large number of [quality] 
measures in the value modifier could increase the year-to-year 
statistical variability, and therefore uncertainty, into the annual 
calculation of each physician's or physician group's value modifier.'' 
MedPAC recommended that we concentrate on a few key population-based 
outcomes, patient experience, and clinical process measures. A few 
commenters supported including outcome measures that assess the rate of 
potentially preventable hospital admissions for six ambulatory care 
sensitive conditions at the group practice level: diabetes, bacterial 
pneumonia, dehydration, COPD, urinary tract infection, and heart 
failure.
    Many physician specialty societies indicated that the proposed 
quality measures did not have measures relevant to the practice of 
their physicians or to the conditions they treat and, therefore, it 
would not be possible to calculate a quality composite for them. Most 
prominently in this category were surgeons and surgical specialties, 
hospital-based physicians, and medical subspecialists. Some medical 
specialists, for example cardiologists and endocrinologists, commented 
that proposed measures which seemed applicable to them did not measure 
the quality of care provided by subspecialists. These commenters stated 
that they would work with us to develop relevant clinical measures and 
to assist in obtaining National Quality Forum endorsement of new 
measures.
    Of the proposed measures in the EHR Incentive program set for 2012, 
several commenters opposed including PQRS measure 200 (Heart 
Failure: Warfarin Therapy for Patients with Atrial Fibrillation) 
because clinical guidelines have been updated and those changes are not 
currently reflected in the PQRS measure.
    A number of commenters suggested that the value modifier's quality 
of care measures should directly correspond to the proposed condition-
specific cost measures. One commenter suggested that for hospital-based 
physicians, CMS align the quality measures in the hospital value-based 
purchasing program with the physician value modifier.
    Response: We appreciate commenters' support for our proposals to 
use a consistent set of measures across quality improvement programs 
and to use of a core set of measures for the value modifier. We 
recognize that the proposed core sets of quality measures for 
individual physicians--the Physician Quality Reporting System core set 
(which focuses on cardiovascular conditions) and the core, alternative 
core, and additional EHR Incentive Program measures (which focus on 
several chronic conditions and preventive measures)--and the core set 
for physicians in groups--the Group Practice Reporting Option measures 
(which also focus on chronic conditions and preventive measures)--do 
not cover the full range of conditions prevalent in the Medicare 
population or varied physician specialties. We have focused on these 
quality of care measures for the value modifier because they assess 
highly prevalent and high-cost conditions in the Medicare population 
and we encourage physicians to take these conditions into account when 
treating their patients. We further believe that the proposed measures 
are an appropriate starting point for the value modifier because they 
also include preventive services and thus, are important measures of 
the quality of care that these beneficiaries receive.
    We agree with commenters' concerns about PQRS measure 200 
and we will not include it in the value modifier for the initial 
performance period because its specifications have not been updated.
    We anticipate assessing physician performance for more conditions 
and/or by specialty in subsequent years after the methodological issues 
surrounding the value modifier are finalized. We believe that we will 
ultimately need to include quality of care measures applicable to most 
physicians and highly prevalent conditions, as well as measures for 
specific types of physicians, in order to calculate a value modifier 
for every physician by 2017. We agree with commenters that we should 
concentrate on outcome, patient experience, and clinical process 
measures in the value modifier. As a first step in that direction, we 
will include outcome measures that assess the rate of potentially 
preventable hospital admissions for two of the six ambulatory care 
sensitive conditions at the group practice level that we have used in 
the Physician Feedback Program reports: heart failure and chronic 
obstructive pulmonary disease. We have chosen these two measures 
because they are important conditions among Medicare FFS beneficiaries 
and, based on our 2010 Physician Feedback Program group reports, 
contain sample sizes sufficient for reliable measurement.

[[Page 73428]]

    In addition, we also clarify that we do not seek to evaluate 
individual physicians on each measure we proposed or include in a 
future set of measures, but rather to assess physician performance 
using quality of care measures for the types of care they provide and 
the measures they report.
    Nonetheless, we agree with commenters that we should match our 
quality of care measures with the cost measures that we have proposed 
for specific conditions. In the discussion below, we proposed per 
capita cost measures for beneficiaries with four chronic conditions 
(chronic obstructive pulmonary disease; heart failure; coronary artery 
disease; and diabetes) in the value modifier. To match these cost 
measures with the quality of care measures, we anticipate that we will 
propose in next year's rulemaking to include the additional measures 
for each of these conditions from the Physician Quality Reporting 
System measure groups that are not already included in the measure set 
we are finalizing in this final rule with comment period.
    We agree that we should use NQF-endorsed measures of quality where 
appropriate. In addition, we will reach out to physician specialty 
organizations for conditions where we lack measures or for conditions 
where we have cost measures but insufficient quality measures in order 
to develop a robust value modifier.
    We are finalizing our proposal, for individual physicians to whom 
the value modifier will apply, to include the core set of the Physician 
Quality Reporting System for 2012 and the core measures, alternate 
core, and additional measures in the EHR incentive program for 2012 
(except for PQRS measure 200 as discussed previously). These 
measures are listed in Table 80.
BILLING CODE 4120-01-P

[[Page 73429]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.194

[[Page 73430]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.195

    For physicians practicing in groups, the measures we are finalizing 
for the value modifier include all measures in the Group Practice 
Reporting Option of the Physician Quality Reporting System for 2012 and 
the rates of potentially preventable hospital admissions for two 
ambulatory care sensitive conditions at the group practice level: heart 
failure and chronic obstructive pulmonary disease. These measures are 
listed in Table 81.

[[Page 73431]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.196

[[Page 73432]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.197

BILLING CODE 4120-01-C
    We expect to update these quality of care measures based on the 
measures finalized in subsequent rulemaking under the Physician Quality 
Reporting System and the EHR Incentive Program for the initial 
performance year. By doing so, we anticipate the value modifier would 
use the same quality of care measures that are included in the 
Physician Quality Reporting System and/or the EHR Incentive Program for 
the initial performance year. To the extent physicians are already 
reporting the quality of care measures under the Physician Quality 
Reporting System and/or the EHR Incentive Program, this step would 
reduce program inconsistencies and reduce the reporting burden on 
physicians.
(B) Potential Quality of Care Measures for Additional Dimensions of 
Care in the Value Modifier
    We explained in the proposed rule that one of the goals of this 
notice and comment rulemaking is to identify potential measures that 
could provide a richer picture of the quality of care furnished by a 
physician (76 FR 42911). For example, we indicated that we are 
interested in quality measures that assess the care provided by 
specialists. We specifically requested comment from specialists about 
measures that were not included in the list of proposed measures. In 
addition, we also requested comment on outcome, care coordination/
transition, patient safety, patient experience, and functional status 
measures (which are discussed below) as well as the 28 administrative 
claims measures (described below with respect to the 2010 Physician 
Feedback reports disseminated in 2011) and whether we should include 
them in the value modifier. We especially urged the physician community 
and private payers that have been engaged in pay-for-performance 
programs to identify other quality measures that they have used and to 
describe their experience with these measures. We requested comment on 
how these measures align with current private sector quality 
measurement initiatives.
    Comment: As previously noted commenters supported CMS' efforts to 
develop quality measures applicable to specialists. The commenters 
urged CMS to add measures that provide an accurate and comprehensive 
view of how physicians perform in practice. Commenters, including the 
surgical community, suggested measures related to vascular surgery 
lower extremity bypass, surgical site infection, urinary tract 
infection, colon surgery, and surgery in the elderly. The 
anesthesiology community suggested perioperative and pain management 
measures. Pathologists suggested very specific measures related to 
Barrett's esophagus and radical prostatectomy reporting as well as 
immunohistochemical evaluation for breast cancer. Other commenters 
suggested adding measures for adult immunization (including Hepatitis A 
and B), stroke, rheumatoid arthritis, pelvic prolapse, infection 
prevention as well as measures to prevent unnecessary emergency room 
visits and decrease hospital readmissions. The commenters recommended 
CMS develop a process to address outdated elements among proposed 
measures. Several commenters opposed use of administrative claims-based 
measures because of their inability to capture information that may 
influence a physician's care. Several commenters questioned the use of 
the proposed cardiac and diabetes measures, because they believed these 
measures do not reflect the specialized care given. Additionally, 
commenters opposed the claims-based measure ``Use of high risk 
medication in the Elderly'' because the list of medications has not 
been updated regularly.
    Response: We thank commenters for sharing their views. We will be 
working internally and reaching out to stakeholders to consider these 
comments and to make proposals in future rulemakings to refine the 
quality measures included in the value modifier. We do not plan at this 
time to include the 28 administrative claims-based measures we used in 
the individual 2010 Physician Feedback

[[Page 73433]]

Program reports in the value modifier: thus the ``Use of High Risk 
medications in the Elderly'' measure will not be included in the value 
modifier. A substantial number of these 28 administrative claims-based 
measures rely on drug-related data that we cannot obtain for all 
Medicare beneficiaries because not all Medicare beneficiaries are 
enrolled in a Medicare Part D plan. In addition, some of the 
administrative claims-based measures overlap with the Physician Quality 
Reporting System measures we are adopting for the value modifier, and 
thus are duplicative.
(i) Outcome Measures
    As discussed previously, we sought comment on the use of measures 
in the future that assess the rate of potentially preventable hospital 
admissions for six ambulatory care-sensitive conditions at the practice 
group level: diabetes, bacterial pneumonia, dehydration, chronic 
obstructive pulmonary disease (COPD), urinary tract infection, and 
heart failure (76 FR 42912). We also sought comment on an all-cause 
hospital readmission measure.
    We also sought suggestions on other outcome measures that would be 
appropriate measures of the quality of care furnished for purposes of 
the value modifier, such as measures that examine emergency room use 
for ambulatory care sensitive conditions. We indicated we were 
interested in outcome measures that can be calculated from existing 
Medicare claims data and do not require additional reporting by 
physicians. In addition, we stated we were particularly interested in 
comments on potential measures of complications that would be 
appropriate to include in the value modifier (76 FR 42912).
    Comment: The majority of commenters supported CMS' interest in 
moving to a system that focuses on outcome measures. They strongly 
emphasized such measures should be indicative of physician performance 
and control. Many commenters suggested that all outcome measures must 
be risk-adjusted appropriately to account for the complexity and 
severity of the patient's condition(s). Commenters urged us to ensure 
that the risk adjustment methodology would be sufficient such that 
physicians are not discouraged from caring for the highly complex 
patients. The commenters noted that physicians should not be held 
accountable for patient factors outside of their control that may 
influence outcomes such as patient adherence or other patient 
attributes (such as education, literacy, socioeconomic status). Two 
commenters expressed concern with an all-cause hospital readmission 
measure that had not yet been developed and which would assess 
physicians on an event over which physicians do not have complete 
control.
    Response: We thank commenters for their support for outcome 
measures. We agree with commenters that we should move toward including 
in the value modifier quality of care measures that assess patient 
outcomes. As discussed previously, as a first step in that direction we 
are finalizing outcome measures that assess the rate of potentially 
preventable hospital admission at the group practice level for heart 
failure and chronic obstructive pulmonary disease. We anticipate 
proposing in next year's rulemaking to include outcome measures that 
assess the rate of potentially preventable hospital admissions for 
other ambulatory care sensitive conditions at the group practice level. 
As we move forward, we will take concerns about risk adjustment of 
these measures into consideration as we incorporate them into the value 
modifier.
(ii) Care Coordination/Transition Measures
    We also noted in the proposed rule that care transitions such as 
transition of a beneficiary from an inpatient setting to the community 
or to a post-acute setting are important aspects of quality of care 
furnished (76 FR 42912). We requested input about these and other 
potential aspects of care coordination/transitions for which measures 
could be developed and/or used for purposes of the value modifier.
    Comment: Many commenters generally supported the use of care 
coordination and transition measures but cited the need for a robust 
risk-adjustment methodology with these measures. Conversely, several 
commenters opposed the use of care coordination/transition measures, 
citing that use of these measures ``requires a level of coordination 
which may only be found in highly integrated care systems such as an 
accountable care organization (ACO) or comprehensive medical homes.'' 
Indeed, many commenters recommended that we focus on integrated groups 
and systems of care where care coordination was implemented and could 
be measured. The commenters also voiced concern over creating care 
coordination measures when providers are not presently reimbursed for 
this type of care. Many commenters, especially hospital-based 
providers, also pointed out that data was often simply not available to 
them or did not exist (that is, the patient had no primary care 
physician with whom to communicate).
    Response: We thank the commenters for their suggestions. As we 
noted in the proposed rule, to the extent that we develop care 
coordination/transition measures, we will propose them in future 
rulemaking for inclusion in the value modifier. We continue to believe 
that care coordination/transitions are important aspects of quality of 
care furnished and we will be working with stakeholders to develop 
appropriate measures.
(iii) Patient Safety, Patient Experience, and Functional Status
    We explained in the proposed rule that measures of patient safety, 
patient experience, and functional status were important dimensions of 
care for the value modifier (76 FR 42912). We sought comment about 
potential patient safety measures that could be developed and/or used 
for purposes of the value modifier. To the extent commenters were aware 
of potential measures of patient safety, patient experience, or 
functional status that we could use, we welcomed such suggestions.
    Comment: Many commenters favored the inclusion of patient safety, 
experience of care, and functional status measures in the value 
modifier and offered general suggestions for inclusion of such 
measures. Many commenters supported patient experience measures for 
general and specialty physicians and there were also recommendations 
for the use of standard assessment tools and patient experience tools 
which could be used.
    Response: We thank commenters for their suggestions and agree that 
this is an important area for development of measures and the 
infrastructure to support them. We will consider them in the future as 
we focus on additional areas where physician value can be improved.
(2) Cost Measures
    Section 1848(p)(3) of the Act requires that cost measures used in 
the value modifier be evaluated, to the extent practicable, based on a 
composite of appropriate measures of costs established by the 
Secretary. This composite would eliminate the effect of geographic 
adjustments in payment rates and account for risk factors and other 
factors so that physicians and groups of physicians would be compared 
on an equal basis. In other words, comparisons of the quality of care 
furnished compared to cost would be on an ``apples-to-apples'' basis so 
that physicians in high cost areas would not be penalized unfairly and

[[Page 73434]]

physicians in low-cost areas would not be rewarded unjustly.
(A) Cost Measures for the Value Modifier
    We proposed to use total per capita cost measures and per capita 
cost measures for beneficiaries with four chronic conditions (COPD; 
heart failure; coronary artery disease; and diabetes) in the value 
modifier (76 FR 42913). Our 2010 Physician Feedback Program reports use 
a total per capita cost measure and per capita cost measures for the 
overall costs for beneficiaries with these four chronic conditions. 
These per capita cost measures are adjusted for geographic differences 
and they are risk adjusted to ensure geographic and clinical 
comparability, as required by section 1848(p)(3) of the Act.
    We explained that these cost measures would be compared to the 
quality of care furnished for use in determining the value modifier.
    Comment: Most commenters agreed with our proposal to use in the 
initial years of the value modifier both total per capita cost measures 
and per capita cost measures for COPD; heart failure; coronary artery 
disease; and diabetes. Commenters urged CMS to clarify which 
beneficiaries will be included for assessing costs in each of these 
four chronic conditions. Many commenters suggested CMS move quickly to 
the use of episode-based cost measures. Commenters also requested that 
CMS move forward with the episode grouper in a transparent fashion and 
suggested that CMS have public sessions through an appropriate venue to 
apprise the public of our progress.
    Several commenters questioned CMS' methodology to eliminate 
geographic differences in Medicare's payment and, in particular, how 
the Geographic Price Cost Indices (GPCIs) would be handled. In 
addition, commenters stated that the risk adjustment methodology we 
currently use for the cost measures in the Physician Feedback Program 
was not sufficiently robust to adequately account for the differences 
among patient populations especially those that cared for high acuity 
populations. Many commenters said that until a risk adjustment 
methodology could adequately adjust for patient factors outside of the 
physician's control like severity of disease or patient adherence, it 
would not be possible to calculate a meaningful composite of cost for 
the value modifier. Many commenters expressed the desire for increased 
communication and transparency about the methodology for the composites 
that will comprise the value modifier.
    Response: We believe that total per capita cost measures are useful 
overall measures of the volume of healthcare services furnished to 
beneficiaries. In addition, the total per capita costs for patients 
with diabetes, coronary artery disease, COPD, and heart failure can 
provide information on the volume of care provided to these patients. 
We also agree that episode-specific costs of care are valuable measures 
and we intend to evaluate how to include them in the value modifier in 
future years, as further discussed below.
    We believe that the current risk adjustment methodology, the 
hierarchal condition categories model (HCC), reasonably predicts high- 
and low-cost beneficiaries.\1\ In addition, the model's explanatory 
power has increased over recent years and it is recalibrated regularly 
for more recent diagnoses and expenditure data. We are unaware of 
generally used risk adjustment models that can adjust broadly for 
patient factors cited by the commenters; nor did commenters present 
evidence that the HCC model was inadequate or disadvantages physicians 
that care for certain types of patients.
---------------------------------------------------------------------------

    \1\ RTI, ``Evaluation of the CMS-HCC Risk Adjustment 
Methodology,'' (March 2011), available at: https://www.cms.gov/MedicareAdvtgSpecRateStats/downloads/Evaluation_Risk_Adj_Model_2011.pdf (recent overview of the HCC model and the development of 
the methodology over the past several years).
---------------------------------------------------------------------------

    The methodology we currently use in the Physician Feedback Program 
reports to ensure we compare Medicare payments on an ``apples-to-
apples'' basis equalizes the differences in payment rates due to 
geography among the same class of providers.\2\ Thus, the effects of 
the GPCIs are removed from our payments. In other words, actual 
Medicare payments are adjusted such that a given service is priced at 
the same level across all providers within the same facility type or 
setting, regardless of geographic area or differences in Medicare 
payment rates among facilities.
---------------------------------------------------------------------------

    \2\ For additional information about price standardization, see 
``Methodology and Process Specifications for the Physician Quality 
Reporting System Group Practice Reporting Option Quality and 
Resource Use Reports'' (September 2011) available at: http://www.cms.gov/PhysicianFeedbackProgram/Downloads/2010_GPRO_QRUR_Detailed_Methodology.pdf.
---------------------------------------------------------------------------

    We agree with commenters that our risk adjustment and price 
standardization methodologies must be transparent. In the next several 
months, we will host public events to further gather input on the value 
modifier and explain the price standardization and risk adjustment 
methodologies so that physicians and other stakeholders have a full 
understanding of our efforts to ensure fair and accurate calculation of 
per capita costs.
    After consideration of the public comments we received, we are 
finalizing our proposal to use total per capita cost measures and per 
capita cost measures for beneficiaries with four specific chronic 
conditions (chronic obstructive pulmonary disease, heart failure, 
coronary artery disease, and diabetes) in the value modifier.
(B) Potential Cost Measures for Future Use in the Value Modifier
    Section 1848(n)(9)(A) of the Act requires us to develop by January 
1, 2012, an episode grouper that combines separate, but clinically 
related items and services into an episode of care for an individual, 
as appropriate. We explained that during 2012 we will test and plan how 
to use an ``episode grouper'' (76 FR 42913).
    As a transition to implementing the episode grouper, we explained 
that we could use cost measures based on the inpatient hospital 
Medicare Severity Diagnosis Related Groups (MS-DRG) classification 
system. We requested comment on whether we should pursue the MS-DRG 
approach in the near term while we develop episode-based cost measures 
for a significant number of high-cost and high-volume conditions in the 
Medicare program. In addition, we specifically sought comment on the 
resource and cost measures used in private sector initiatives and how 
they are used to profile physicians compared to the quality of care 
provided.
    Comment: Commenters indicated that CMS should rapidly transition to 
episode-based cost measures and also communicate with stakeholders 
frequently about the status of the episode grouper and the methodology 
as it evolves. A number of commenters did not think that the use of an 
MS-DRG approach in the short run was useful.
    Response: We agree with commenters that the use of episode-based 
costs can be a valuable input into the value modifier. Prior to 
incorporating episode-based costs into the value modifier, we will hold 
stakeholder events to share our progress on the episode grouper to 
ensure transparency of the methodology underlying any grouping of the 
costs of various items and services.
b. Implementation of the Value Modifier
    We explained in the proposed rule that there a number of issues 
related to the implementation of the value modifier including steps for 
both measurement of performance and application of payment adjustments 
(76 FR 42913). Although we did not make

[[Page 73435]]

proposals, we stated that our plan is to begin implementing the value 
modifier through the rulemaking process during 2013 as required by 
section 1848(p)(4)(B)(i) of the Act. We requested input from 
stakeholders as we work on these issues.
    Comment: Many commenters doubted whether meaningful composites of 
quality and cost that capture physician ``value'' could be developed in 
time for 2017, if ever. Many commenters cited the challenges of how to 
assign patients to physicians and the adequacy of risk adjustment 
methods to ensure that physicians are not discouraged from caring for 
patients with highly complex conditions. Others cited the lack of 
meaningful quality measures for many types of physicians as a challenge 
to the calculation of the value modifier. Many commenters suggested 
that we appeal to the Congress for a substantial delay in the timeline 
for implementation of the physician value modifier.
    Response: We appreciate commenters' concerns and recognize the 
challenges before us as we move to a payment system that begins to 
encourage physicians to focus on the relative value of each service 
they furnish or order, the cumulative cost of their own services and 
services that their beneficiaries receive, and the quality and outcomes 
of the care furnished to beneficiaries.
    We realize that for some physicians, the transition to a focus on 
value will require a new way of thinking about the practice of 
medicine. And, it is important that value is being assessed in a manner 
which acknowledges and takes into account the diversity of patient 
conditions and physician practices. Given this backdrop, we stated that 
we intend to move deliberately and carefully because we recognize the 
complexities of calculating a reliable and valid measure of value that 
could be used to differentiate payment.
    Notwithstanding this caution, we have used the 2010 Physician 
Feedback Program reports to help develop attribution methodologies for 
physicians and physician groups and to use them as a mechanism to gain 
feedback into the value modifier and its methodologies. In addition, we 
have standardized Medicare costs and applied the HCC risk adjustment 
model to physician per capita costs in these reports. As discussed 
previously, we will be convening public events to further explore these 
issues and to gather stakeholder input based on these reports and the 
methodologies we have applied.
    We also will use the next several months, before the 2013 physician 
fee schedule rulemaking process begins, to explore various ways to 
develop composites of cost and quality that could be used in the value 
modifier and to hold listening sessions and engage in other activities 
with stakeholders to gain input into the value modifier. We will 
continue our work to implement the statutory directives and plan to 
propose in next year's physician fee schedule rulemaking a methodology 
for the value modifier.
    Comment: Many commenters stated that CMS should focus the value 
modifier in 2015 and 2016 on large integrated group practices. Some 
commenters supported that CMS focus initially on cost and quality 
outliers. Other commenters recommended that we focus on physicians who 
treat patients with the most prevalent and costly conditions. Other 
commenters suggested that because the proposed quality of care measures 
focused on chronic conditions, we should apply the value modifier 
starting in 2015 to physicians treating these conditions.
    Response: We thank these commenters for their comments and will 
address these issues in future rulemaking.
c. Initial Performance Period
    Section 1848(p)(4)(B)(ii)(I) of the Act requires the Secretary to 
specify an initial performance period for the application of the value 
modifier with respect to 2015. We proposed that the initial performance 
period be the full calendar year 2013, that is, January 1, 2013 through 
December 31, 2013 (76 FR 42913). The value modifier that would apply to 
items and services furnished by specific physicians and groups of 
physicians under the 2015 physician fee schedule would be based on 
performance during 2013. We proposed this performance period because 
some claims for 2013 (which could be used in cost or quality measures) 
may not be fully processed until 2014. As such, we will need adequate 
lead time to collect performance data, assess performance, and 
construct and compute the value modifier during 2014 so that it can be 
applied to specific physicians starting January 1, 2015, as required by 
statute. As we have done in other payment systems, we plan to use 
claims that are paid within a specified time period, such as, 90 days 
after 2013, for assessment of performance and application of the value 
modifier for 2015. We will propose the specific cut-off period as part 
of the more detailed methodology for computation and application of the 
value modifier in future rulemaking(s). We requested comment on this 
proposed performance period.
    Comment: Commenters strongly opposed the use of 2013 as the initial 
performance period given ``the myriad methodological issues involved.'' 
Many commenters stated it was unfair to have the initial performance 
period begin January 1, 2013 before the methodology to compute the 
value modifier is finalized in November 2013. Some commenters suggested 
that the gap between the performance period and the payment adjustment 
period was too long. Some commenters suggested we were not required to 
use a full year as the performance period. Other commenters suggested 
that ``unless and until there is evidence that it is possible to 
accurately measure value without penalizing those physicians who treat 
the most difficult patients,'' CMS should not move forward with 
specifying a performance year. Other commenters suggested CMS designate 
calendar year 2015 as a ``practice year'' to allow for additional 
physician acceptance of the methodology we use to calculate the value 
modifier.
    Response: Section 1848(p)(4)(B)(iii) of the Act requires us to 
apply the payment modifier to specific physicians and physician groups 
the Secretary determines appropriate for items and services furnished 
beginning January 1, 2015. We proposed calendar year 2013 as the 
initial performance period because it provides physicians with 
substantial lead time to participate in the Physician Quality Reporting 
System and the EHR Incentive Program and to begin to take the necessary 
steps to report quality and use the results to improve the quality of 
their care. Indeed, there is still an opportunity to participate in the 
Physician Quality Reporting System program for the 2011 program year, 
two years before the initial performance period for the value modifier. 
As we discussed above, we do not seek to evaluate individual physicians 
on each of the quality of care measures used in the value modifier, but 
rather assess physician performance using quality of care measures for 
the types of care they provide. We strongly encourage physicians to 
participate in the Physician Quality Reporting System program and the 
EHR Incentive Program sooner rather than later and to choose to report 
quality of care measures that best reflect their practice and patient 
population. Although we have not yet proposed the value modifier 
methodology, our primary interest at this point is to increase the 
quality of care for Medicare beneficiaries. We note that we also plan 
to propose a value modifier in rulemaking during 2012,

[[Page 73436]]

prior to the initial performance period. Thus, we believe it is 
reasonable to encourage physicians to report appropriate quality 
measures well in advance and irrespective of the exact value modifier 
methodology at this time.
    We explored using 2015 as the performance period and making 
retroactive adjustments in 2016 to claims paid for care furnished in 
2015. This retroactive approach would require us to reprocess all 2015 
claims so that each claim shows actual amounts paid. Additionally, 
retroactive adjustments affect beneficiary cost sharing amounts, which 
also would need to be adjusted retrospectively. Requiring physicians to 
collect or refund small cost sharing amounts is operationally complex 
and confusing for beneficiaries. These same two issues arise if we were 
to use calendar year 2014 as the performance period for the 2015 
payment adjustment year.
    We also examined whether we could use an abbreviated period (such 
as, 6 months) or a period that crossed years (such as, July 1-June 30) 
as the performance period. The former approach is unlikely to yield 
sufficient volume of cases to develop reliable measures for individual 
physicians and the latter approach is inconsistent with reporting 
periods currently established for the Physician Quality Reporting 
System and the EHR Incentive Program.
    Despite these challenges, we are still seeking other ways to close 
the gap between the performance period and the payment adjustment 
period. In the interim, however, we are finalizing our proposal that 
calendar year 2013 be the initial performance period, because it aligns 
with the Physician Quality Reporting System and the EHR Incentive 
Program and because the alternatives are more onerous to physicians and 
beneficiaries than our original proposal. We will reexamine the initial 
performance period in future rulemakings as we seek to provide more 
timely feedback to physicians.
d. Other Issues
    We also requested comment on two issues related to the development 
of the value modifier, although we did not make proposals to address 
either issue in the proposed rule. First, section 1848(p)(5) of the Act 
requires the Secretary, as appropriate, to apply the value-based 
modifier in a manner that promotes systems-based care. We sought 
comment on how we might determine the scope of systems-based care and 
how best to promote it in applying the value modifier. Second, section 
1848(p)(6) of the Act requires the Secretary in applying the value 
modifier, as appropriate, to take into account the special 
circumstances of physicians or groups of physicians in rural areas and 
other underserved communities. We requested comment on how we should 
identify physicians or groups of physicians in rural areas and other 
underserved communities, the specific special circumstances they face, 
and once identified, how these special circumstances should be taken 
into account for purposes of applying the value modifier (76 FR 42914).
    Comment: CMS received many comments promoting systems-based care. 
These commenters suggested that applying the value modifier at the 
group level reinforced systems-based care. Hospital-based physicians 
stated that aligning the value modifier and the hospital value based 
purchasing program on both cost and quality would encourage systems-
based care. Another commenter suggested that using a value modifier 
that would apply to all physicians in a specific region would encourage 
systems-based care. Other commenters indicated that establishment of 
medical homes and ``Independence at Home'' for the sickest, most costly 
patients encouraged systems-based care. Commenters stated that these 
two programs emphasize coordination of care by providing services early 
before beneficiary medical conditions become more serious and costly to 
treat. Other commenters supported the concept of a coordinated surgical 
home model. Another commenter encouraged CMS to work with specialty 
societies to define systems-based care for the purpose of the value 
modifier.
    Response: We thank these commenters for their comments and will 
take them into account as we progress in our thinking of ways to 
promote systems-based care in the value modifier program, and 
particularly how to incorporate care transition/coordination measures 
into the program.
    Comment: One commenter said we should expand our inquiry beyond 
identifying rural physicians and examine whether beneficiaries in rural 
areas have sufficient access to care by looking at the breadth and 
level of services available to them. This commenter also emphasized the 
importance of mid-level providers such as nurse practitioners and 
physician assistants and that the value modifier should apply to them. 
Commenters stressed that rural providers are already overworked and the 
value modifier should be simple and not require additional staff or 
technology. One commenter suggested we work with the Veterans 
Administration due to their extensive experience and analytic 
capabilities. CMS also received comment to consult and work with the 
Indian Health Service to understand the organizational structures of 
tribal hospitals and clinics. One commenter also suggested that a 
modifier that reflects a regional practice mode would ``facilitate 
measurement in rural and underserved communities because it emphasizes 
a broader perspective and one that is more relevant for providers and 
patients.''
    Response: We thank these commenters for their input and will take 
these comments and the information provided into account as we progress 
with the methodology for the value modifier.
3. Physician Feedback Program
    Section 1848(n) requires us to provide confidential reports to 
physicians that measure the resources involved in furnishing care to 
Medicare beneficiaries. Section 1848(n)(1)(A)(iii) of the Act also 
authorizes us to include information on the quality of care furnished 
to Medicare beneficiaries by a physician or group of physicians. We 
have completed two phases of the Physician Feedback Program. By the end 
of 2011, we intend to implement Phase III of the Physician Feedback 
Program by providing reports on both resource use and quality measures 
to physician groups that participated in the Group Practice Reporting 
Option (GPRO-1) in 2010 and to physicians practicing in the following 
States: Iowa, Kansas, Missouri, and Nebraska. As we explained 
previously, many of the methodological issues that we are addressing in 
the Physician Feedback Program reports will assist us as we implement 
the value modifier.
a. Alignment of Physician Quality Reporting System Quality of Care 
Measures With the Physician Feedback Reports
    We explained in the proposed rule that we are using the quality 
measures reported in the Physician Quality Reporting System in the 
Physician Feedback Program reports that we disseminate this year (76 FR 
42903). We took this step because use of Physician Quality Reporting 
System measures aligns both quality initiatives and reduces potential 
program inconsistencies, ensures we do not measure the same clinical 
process or outcome using different data sources or methodologies, and 
does not place new reporting burdens on physicians. Although we did not 
make any proposals in this area, we requested

[[Page 73437]]

comment on using the performance data in the Physician Quality 
Reporting System in the Physician Feedback Program.
    Comment: Most commenters supported using the Physician Quality 
Reporting System's quality measures in the Physician Feedback Program 
reports. These commenters frequently also requested a closer alignment 
of all of our physician quality improvement programs. A number of 
commenters, including hospital-based physicians such as hospitalists, 
surgeons, and certain specialists and sub-specialists, noted that the 
Physician Quality Reporting System measures did not include measures to 
assess their performance or apply to elements of their practice. Many 
commenters expressed interest in working with us to identify the 
measures that captured the seminal elements of their practice.
    Response: We plan to continue to use the quality of care measures 
reported in the Physician Quality Reporting System to reduce physician 
burden, align physician reporting and support a common infrastructure 
for the measurement of physician value. We appreciate the commenter's 
interest in working with us as we refine the Physician Feedback Program 
to make the reports more meaningful and relevant to more physicians.
b. 2010 Physician Group and Individual Reports Disseminated in 2011
    We described in the proposed rule how we intended to create 
physician feedback reports for the 35 large medical group practices 
(each with 200 or more physicians) that chose to participate in the 
Physician Quality Reporting System Group Practice Reporting Option 
(GPRO-1) in 2010 (76 FR 42903). In addition, we described how we 
planned to disseminate Physician Feedback Program reports to individual 
physicians paid under the Physician Fee Schedule within four States: 
Iowa, Kansas, Missouri, and Nebraska (76 FR 42904). We explained that 
we chose these four States because the Medicare Administrative 
Contractor serving these States could assist us in emailing these 
reports to a substantial number of physicians because of its robust 
electronic communications infrastructure.
    We stated in the proposed rule that deciding which physician(s) is/
are responsible for the care of which beneficiaries is an important 
aspect of measurement (76 FR 42907). When attributing beneficiary cost 
information to physicians, we stated that we must balance between costs 
for delivered services that are within the physician's control and 
costs for delivered services that are not within their control. We 
recognized that attribution rules have the potential to alter 
incentives regarding how physicians coordinate and deliver care to 
beneficiaries and seek to encourage better care coordination and 
accountability for patient outcomes. In addition, determining how to 
make relevant comparisons of physicians to a standard or to their peers 
is also an important policy aspect of the Physician Feedback Program.
    In light of these issues, we indicated that the individual 
physician reports that we are disseminating this year will allow more 
Medicare beneficiaries to be matched to physicians for purposes of 
assessing the quality of care furnished and the associated resources. 
In addition, we indicated that the reports will stratify physicians by 
specialty and by the conditions they treat, which allow both cost and 
clinical measures to reflect procedures and services that best portray 
physician practice patterns. Finally, we stated we intended to examine 
whether to provide reports to groups of physicians who submit Medicare 
claims under a single tax identification number (TIN) to see if we can 
provide feedback reports that cover more physicians. Although we did 
not make any proposals in this area, we requested comment on these and 
any other issues to ensure that the future Physician Feedback Program 
reports provide meaningful and actionable information.
    Comment: Many commenters agreed with our examination of alternative 
attribution methods to assign beneficiaries that would allow increased 
numbers of beneficiaries to be matched to physicians but they also 
questioned our ability to do so. Many commenters cited the recent 
Government Accountability Office (GAO) report, ``Medicare Physician 
Feedback program: CMS Faces Challenges with Methodology and 
Distribution of Physician Reports,'' that described the challenges 
involved with developing and disseminating physician feedback 
reports.\3\ In particular, the GAO recommended that we use 
methodological approaches that increase the number of physicians 
eligible to receive a report, such as: (1) Multiple provider 
attribution methods, which could also enhance credibility of the 
reports with physicians; and (2) distributing feedback reports that 
include only resource use information, if quality information is 
unavailable.
---------------------------------------------------------------------------

    \3\ Medicare Physician Feedback Program: CMS Faces Challenges 
with Methodology and Distribution of Physician Reports, GAO-11-720 
(August 12, 2011), available at http://www.gao.gov/new.items/d11720.pdf
---------------------------------------------------------------------------

    Response: We worked closely with the GAO in its review of the 
Physician Feedback Program by providing them our plans to improve and 
expand the program, and we concur with their recommendations to:
     Use methodological approaches that increase the number of 
physicians eligible to receive a report, such as (a) multiple provider 
attribution methods, which could also enhance credibility of the 
reports with physicians and (b) distributing feedback reports that 
include only resource use information, if quality information is 
unavailable.
     Conduct statistical analyses of the impact of key 
methodological decisions on reliability.
     Identify factors that may have prevented physicians from 
accessing their reports and, as applicable, develop strategies to 
improve the process for distributing reports and facilitating 
physicians' access to them.
     Obtain input from a sample of physicians who received 
feedback reports on the usefulness and credibility of the performance 
measures contained in the reports and consider using this information 
to revise future reports.
    As we discussed with GAO, we are taking steps this year to address 
many of the issues that they raised regarding the first two phases of 
the Physician Feedback program.
    For example, on September 26, 2011, we distributed physician 
reports to the physician groups that participated in the Group 
Reporting Option in the Physician Quality Reporting System in 2010. 
These reports represent the first time performance on a wide-range of 
quality of care and cost measures can be viewed in the same report for 
Medicare beneficiaries in large group practices across the country. As 
recommended by the GAO, we invited all report recipients to provide us 
input on the usefulness and credibility of the performance measures 
contained in the report so that we could improve the reports for future 
years. We will be releasing publicly the general findings from these 
reports. This analysis will include statistical analysis of the impact 
of key methodological decisions on reliability that the GAO recommended 
that we conduct.
    In addition, the reports that we are producing for individual 
physicians in Iowa, Kansas, Missouri, and Nebraska will contain quality 
performance data on the 28 administrative claims-based measures 
described in the proposed rule (76 FR 42904 through 42907) for all 
physicians and performance on the Physician Quality Reporting System

[[Page 73438]]

measures for those physicians who satisfactorily reported in 2010. For 
the cost measures, we will categorize physicians' Medicare fee for 
service patients based on the level of care provided to them in 2010 as 
measured by outpatient Evaluation and Management (``E/M'') office 
visits and total professional costs. Using this approach, we expect to 
be able to attribute all Medicare beneficiaries who were enrolled in 
Medicare for at least one full year to physicians practicing in those 
four States during 2010.
    This approach addresses the GAO's recommendations to use 
methodological approaches to increase the number of physicians eligible 
to receive a report. We will invite report recipients to provide us 
input to increase the usefulness and credibility of future individual 
physician reports and we will be conducting statistical analysis of the 
impact of our methodological decisions on reliability as recommended by 
the GAO. In addition, we have taken steps this year to overcome the 
barriers that have prevented physicians from accessing their reports in 
the past and we will be working on developing future strategies to 
improve the process for distributing the reports in the future, as 
recommended by the GAO.
    Comment: Many commenters supported measuring physician performance 
and creating peer groups for comparisons based on specialty or even 
more narrowly, subspecialty. By contrast, other commenters supported 
measuring physician performance and creating peer groups for 
comparisons by patient condition. In either case, many commenters 
stated that without a method to identify and compare physicians caring 
for the highest acuity patients, we might be unfairly biasing any cost 
comparisons or encouraging physicians to avoid caring for the most 
complex Medicare patients. Commenters varied in their support of group 
versus individual physician level reporting. Several commenters cited 
the need for large enough numbers of cases to apply confidence 
intervals and noted that reliable results were critical to acceptance 
of the Physician Feedback Program reports.
    Response: Using the data from the 2010 group and individual 
physician feedback reports disseminated in 2011, we plan to evaluate 
the reliability for quality of care and cost measures and comparison 
groups included in the reports. We will use this analysis to inform how 
we move forward with the Physician Feedback Program to ensure that they 
contain valid and reliable measures that are fair and meaningful to 
physicians' efforts to improve quality while reducing costs.

J. Physician Self-Referral Prohibition: Annual Update to the List of 
CPT/HCPCS Codes

1. General
    Section 1877 of the Act prohibits a physician from referring a 
Medicare beneficiary for certain designated health services (DHS) to an 
entity with which the physician (or a member of the physician's 
immediate family) has a financial relationship, unless an exception 
applies. Section 1877 of the Act also prohibits the DHS entity from 
submitting claims to Medicare or billing the beneficiary or any other 
entity for Medicare DHS that are furnished as a result of a prohibited 
referral.
    Section 1877(h)(6) of the Act and Sec.  411.351 of our regulations 
specify that the following services are DHS:
     Clinical laboratory services.
     Physical therapy services.
     Occupational therapy services.
     Outpatient speech-language pathology services.
     Radiology services.
     Radiation therapy services and supplies.
     Durable medical equipment and supplies.
     Parenteral and enteral nutrients, equipment, and supplies.
     Prosthetics, orthotics, and prosthetic devices and 
supplies.
     Home health services.
     Outpatient prescription drugs.
     Inpatient and outpatient hospital services.
2. Annual Update to the Code List
a. Background
    In Sec.  411.351, we specify that the entire scope of four DHS 
categories is defined in a list of CPT/HCPCS codes (the Code List), 
which is updated annually to account for changes in the most recent CPT 
and HCPCS publications. The DHS categories defined and updated in this 
manner are as follows:
     Clinical laboratory services.
     Physical therapy, occupational therapy, and outpatient 
speech-language pathology services.
     Radiology and certain other imaging services.
     Radiation therapy services and supplies.
    The Code List also identifies those items and services that may 
qualify for either of the following two exceptions to the physician 
self-referral prohibition:
     Dialysis-related drugs furnished in or by an ESRD facility 
(Sec.  411.355(g)).
     Preventive screening tests, immunizations, or vaccines 
(Sec.  411.355(h)).
    The definition of DHS at Sec.  411.351 excludes services that are 
reimbursed by Medicare as part of a composite rate (unless the services 
are specifically identified as DHS and are themselves payable through a 
composite rate, such as home health and inpatient and outpatient 
hospital services). Effective January 1, 2011, EPO and other dialysis-
related drugs furnished by an ESRD facility (except drugs for which 
there are no injectable equivalents or other forms of administration) 
are being paid under the ESRD PPS promulgated in the final rule 
published on August 12, 2010 in the Federal Register (75 FR 49030). 
Drugs for which there are no injectable equivalents or other forms of 
administration will be payable under the ESRD PPS beginning January 1, 
2014.
    The Code List was last updated in Addendum J of the CY 2011 PFS 
final rule with comment period (75 FR 73831 through 73841) and revised 
in a subsequent correction notice (76 FR 1670).
b. Response to Comments
    We received no public comments relating to the Code List that 
became effective January 1, 2011.
c. Revisions Effective for 2012
    The updated, comprehensive Code List effective January 1, 2012, is 
listed as Addendum J in this final rule with comment period and is 
available on our Web site at http://www.cms.gov/PhysicianSelfReferral/40_List_of_Codes.asp#TopOfPage.
    Additions and deletions to the Code List conform the Code List to 
the most recent publications of CPT and HCPCS and to changes in 
Medicare coverage policy and payment status.
    The following Tables 83 and 84, identify the additions and 
deletions, respectively, to the comprehensive Code List that become 
effective January 1, 2012. Tables 83 and 84 also identify the additions 
and deletions to the list of codes used to identify the items and 
services that may qualify for the exception in Sec.  411.355(g) 
(regarding dialysis-related outpatient prescription drugs furnished in 
or by an ESRD facility) and in Sec.  411.355(h) (regarding preventive 
screening tests, immunizations, and vaccines).
    In Table 82, we specify additions that reflect new CPT and HCPCS 
codes that become effective January 1, 2012, or that became effective 
since our last update. We also include additions that reflect changes 
in Medicare coverage policy or

[[Page 73439]]

payment status that become effective January 1, 2012, or that became 
effective since our last update.
    Table 83 reflects the deletions necessary to conform the Code List 
to the most recent publications of the CPT and HCPCS, and to changes in 
Medicare coverage policy and payment status. In addition, we are 
deleting CPT code 96110 from the category of ``physical therapy, 
occupational therapy, and outpatient speech-language pathology 
services'' because the code was revised. It has been replaced by HCPCS 
code G0451, which is listed in Table 82.
    We will consider comments regarding the codes listed in 83 and 84. 
Comments will be considered if we receive them by the date specified in 
the ``DATES'' section of this final rule with comment period. We will 
not consider any comment that advocates a substantive change to any of 
the DHS defined in Sec.  411.351.
[GRAPHIC] [TIFF OMITTED] TR28NO11.198

[[Page 73440]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.199

K. Technical Corrections

1. Outpatient Speech-Language Pathology Services: Conditions and 
Exclusions
    We proposed and are now finalizing a technical correction to the 
heading of the condition of coverage at Sec.  410.62(b) for outpatient 
speech-language pathology services. The heading was inadvertently 
changed in the course of rulemaking for CY 2009 when a new paragraph 
was added at Sec.  410.62(c) to recognize speech-language pathologists 
in private practice. The section heading at Sec.  410.62(b) currently 
reads ``Special provisions for services furnished by speech-language 
pathologists in private practice.'' We did not receive public comments 
on our proposal to make a technical correction to Sec.  410.62(b), as 
such, we are finalizing the change to reinstate the correct heading at 
Sec.  410.62(b) to read ``Condition for coverage of outpatient speech-
language pathology services furnished to certain inpatients of a 
hospital or a CAH or SNF.''
2. Outpatient Diabetes Self-Management Training and Diabetes Outcome 
Measurements
    We proposed to make two technical corrections to Subpart H of the 
regulations for Outpatient Diabetes Self-Management Training and 
Diabetes Outcome Measurements at Sec.  410.140 to the definition of 
``deemed entity'' and at Sec.  410.141(b)(1) entitled ``training 
orders''. We did not receive public comments on either proposal; as a 
result we are finalizing both of these technical corrections as 
proposed and discussed below.
    a. Changes to the Definition of Deemed Entity
    We proposed and are now finalizing the following technical 
corrections to the definition of ``deemed entity'' in Sec.  410.140 
to--
     Remove the following phrases to clarify the purpose of the 
reference to an approved entity:
    ++ ``[B]y CMS to furnish and receive Medicare payment for the 
training''.
    ++ ``Upon being approved''.
    ++ ``CMS refers to this entity as an ``approved entity''''.
     Remove an incorrect reference to Sec.  410.141(e) and 
replacing it with Sec.  410.145(b).
    The final revisions read as follows:
    Deemed entity means an individual, physician, or entity accredited 
by an approved organization, but that has not yet been approved by CMS 
under Sec.  410.145(b) to furnish training.
b. Changes to the Condition of Coverage Regarding Training Orders
    We proposed and are now finalizing the following technical 
correction to Sec.  410.141(b)(1) entitled ``training orders'' to:
     Remove the cross-reference ``Sec.  410.32(a)'' and adding 
the cross-reference ``Sec.  410.32(a)(2)''.
     Remove the term ``it'' and adding the phrase ``the 
training'' in its place.
    The final revisions read as follows:

[[Page 73441]]

    Training orders. Following an evaluation of the beneficiary's need 
for the training, the training is ordered by the physician (or 
qualified nonphysician practitioner) (as defined in Sec.  410.32(a)(2)) 
treating the beneficiary's diabetes.
3. Practice Expense Relative Value Units (RVUs)
    In the CY 2012 PFS proposed rule (76 FR 42920), we proposed 
technical corrections to the regulation at Sec.  414.22(b) to include 
examples of the settings in which the facility or nonfacility practice 
expense (PE) RVUs are applied and to clarify that the settings list was 
not exhaustive. We proposed adding ``hospice'' after ``community mental 
health center'' under Sec.  414.22(b)(5)(i)(A) as a setting in which 
facility PE RVUs apply. We proposed revising the language under Sec.  
414.22(b)(5)(i)(B) to include ``comprehensive outpatient rehabilitation 
facility (CORF)'' as a setting in which nonfacility PE RVUs are 
applied, and we proposed to revise the description of outpatient 
therapy services.
    Comment: We received one comment from an association representing 
speech-language pathologists and audiologists requesting that we add 
audiology services in our proposed revision of paragraph (b)(5)(i)(C) 
of the regulation at Sec.  414.22(b) that specifies the nonfacility 
practice expense RVUs are always applied to outpatient therapy services 
and CORF services billed under the physician fee schedule. Following 
this logic, the commenters requested that we remove the facility 
practice expense RVUs from 15 of the CPT codes on the Audiology Code 
list at http://www.cms.gov/PhysicianFeeSched/ and always pay for 
audiology services at the nonfacility practice expense RVU amount.
    Response: Our proposed revision to the regulation at Sec.  
414.22(b)(5)(i)(C) was merely a technical change to reflect more 
accurately our current policy to apply the nonfacility PE RVUs for 
outpatient therapy and CORF services billed under the PFS, and to add a 
parenthetical description of outpatient therapy services. We did not 
propose to make any changes in our current policy regarding the 
settings in which the facility or nonfacility PE RVUs are applied. 
Under sections 1833(a)(8) and (9), and 1834(k) of the Act, payment for 
all outpatient therapy services, including physical therapy, 
occupational therapy, speech-language pathology and CORF services, is 
made at the ``applicable fee schedule amount'' which is the payment 
amount determined under the PFS. Audiology services are not included 
within the definition of outpatient therapy services subject to this 
payment basis. As a result, we will continue to pay for audiology 
services under the physician fee schedule, applying nonfacility or 
facility PE RVUs, as appropriate based on the setting in which services 
are furnished.
    We are finalizing the following technical corrections to the 
regulation at Sec.  414.22(b):
     In paragraphs (b)(5)(i)(A) and (B), we--
    ++ Included additional examples of the settings in which the 
facility or nonfacility practice expense (PE) RVUs are applied, 
respectively; and
    ++ Clarified that the lists of settings are not exhaustive; and 
amended these lists to include additional place of service examples.
     In paragraph (b)(5)(i)(A) we added ``hospice'' to the list 
of places of service after ``community mental health center.''
     In paragraph (b)(5)(i)(B), we--
    ++ Revised the language to be more consistent with (b)(5)(i)(A) and 
to include the ``comprehensive outpatient rehabilitation facility 
(CORF)'' as a place of service example; and
    ++ Clarified this provision by removing the text regarding the use 
of the nonfacility PE RVUs for services in `` * * * a facility or 
institution other than the hospital, skilled nursing facility, 
community mental health center, or ASC'' because this phrase does not 
accurately reflect the places of service where the nonfacility PE RVUs 
are applied.
     In paragraph (b)(5)(i)(C), we--
    ++ Revised the paragraph introduction by adding ``and CORF'' after 
``outpatient therapy'' and before ``services'' and, to more accurately 
define the term ``outpatient therapy services,'' to add ``(including 
physical therapy, occupational therapy and speech-language pathology 
services)'' after ``therapy services'' and before ``CORF services 
billed under * * *''.
    The final revisions to Sec.  414.22(b)(5)(i)(A), (B), and (C) read 
as follows:
    (A) Facility practice expense RVUs. The facility practice expense 
RVUs apply to services furnished to patients in places of service 
including, but not limited to, a hospital, a skilled nursing facility, 
a community mental health center, a hospice, or an ambulatory surgical 
center.
    (B) Nonfacility practice expense RVUs. The nonfacility practice 
expense RVUs apply to services furnished to patients in places of 
service including, but not limited to, a physician's office, the 
patient's home, a nursing facility, or a comprehensive outpatient 
rehabilitation facility (CORF).
    (C) Outpatient therapy and CORF services. Outpatient therapy 
services (including physical therapy, occupational therapy, and speech-
language pathology services) and CORF services billed under the 
physician fee schedule are paid using the nonfacility practice expense 
RVUs.

VII. Waiver of Proposed Rulemaking and Collection of Information 
Requirements

A. Waiver of Proposed Rulemaking and Delay in Effective Date

    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. This procedure can be waived, however, if an agency finds 
good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    We utilize HCPCS codes for Medicare payment purposes. The HCPCS is 
a national drug coding system comprised of Level I (CPT) codes and 
Level II (HCPCS National Codes) that are intended to provide uniformity 
to coding procedures, services, and supplies across all types of 
medical providers and suppliers. Level I (CPT) codes are copyrighted by 
the AMA and consist of several categories, including Category I codes 
which are 5-digit numeric codes, and Category III codes which are 
temporary codes to track emerging technology, services, and procedures. 
The AMA issues an annual update of the CPT code set each Fall, with 
January 1 as the effective date for implementing the updated CPT codes. 
The HCPCS, including both Level I and Level II codes, is similarly 
updated annually on a CY basis. Annual coding changes are not available 
to the public until the Fall immediately preceding the annual January 
update of the PFS. Because of the timing of the release of these new 
codes, it is impracticable for us to provide prior notice and solicit 
comment on these codes and the RVUs assigned to them in advance of 
publication of the final rule that implements the PFS. Yet, it is 
imperative that these coding changes be

[[Page 73442]]

accounted for and recognized timely under the PFS for payment because 
services represented by these codes will be provided to Medicare 
beneficiaries by physicians during the CY in which they become 
effective. Moreover, regulations implementing HIPAA (42 CFR parts 160 
and 162) require that the HCPCS be used to report health care services, 
including services paid under the PFS. We assign interim RVUs to any 
new codes based on a review of the AMA RUC recommendations for valuing 
these services. We also assign interim RVUs to certain codes for which 
we did not receive specific AMA RUC recommendations, but that are 
components of new combined codes. We set interim RVUs for the component 
codes in order to conform them to the value of the combined code. 
Finally, we assign interim RVUs to certain codes for which we received 
AMA RUC recommendations for only one component (work or PE) but not 
both. By reviewing these AMA RUC recommendations for the new codes, we 
are able to assign RVUs to services based on input from the medical 
community and to establish payment for them, on an interim basis, that 
corresponds to the relative resources associated with furnishing the 
services. We are also able to determine, on an interim final basis, 
whether the codes will be subject other payment policies. If we did not 
assign RVUs to new codes on an interim basis, the alternative would be 
to either not pay for these services during the initial CY or have each 
Medicare contractor establish a payment rate for these new codes. We 
believe both of these alternatives are contrary to the public interest, 
particularly since the AMA RUC process allows for an assessment of the 
valuation of these services by the medical community prior to our 
establishing payment for these codes on an interim basis. Therefore, we 
believe it would be contrary to the public interest to delay 
establishment of fee schedule payment amounts for these codes.
    For the reasons previously outlined in this section, we find good 
cause to waive the notice of proposed rulemaking for the interim RVUs 
for selected procedure codes identified in Addendum C and to establish 
RVUs for these codes on an interim final basis. We are providing a 60-
day public comment period.
    Section II.C. of this final rule with comment period discusses the 
identification and review of potentially misvalued codes by the AMA 
RUC, as well as our review and decisions regarding the AMA RUC 
recommendations. Similar to the AMA RUC recommendations for new and 
revised codes previously discussed, due to the timing of the AMA RUC 
recommendations for the potentially misvalued codes, it was 
impracticable for CMS to solicit public comment regarding specific 
proposals for revision prior to this final rule with comment period. We 
believe it is in the public interest to implement the revised RVUs for 
the codes that were identified as misvalued, and that have been 
reviewed and re-evaluated by the AMA RUC, on an interim final basis for 
CY 2012. The revisions of RVUs for these codes will establish a more 
appropriate payment that better corresponds to the relative resources 
associated with furnishing these services. A delay in implementing 
revised values for these misvalued codes would not only perpetuate the 
known misvaluation for these services, it would also perpetuate a 
distortion in the payment for other services under the PFS. 
Implementing the changes now allows for a more equitable distribution 
of payments across all PFS services. We believe a delay in 
implementation of these revisions would be contrary to the public 
interest, particularly since the AMA RUC process allows for an 
assessment of the valuation of these services by the medical community 
prior to the AMA RUC's recommendation to CMS. For the reasons 
previously described, we find good cause to waive notice and comment 
procedures with respect to the misvalued codes identified in Tables 19 
through 22 and to revise RVUs for these codes on an interim final 
basis. We are providing a 60-day public comment period.
    We ordinarily provide a 60-day delay in the effective date of the 
provisions of a rule in accordance with the Administrative Procedure 
Act (APA) (5 U.S.C. 553(d)), which requires a 30-day delayed effective 
date, and the Congressional Review Act (5 U.S.C. 801(a)(3)), which 
requires a 60-day delayed effective date for major rules. However, we 
can waive the delay in the effective date if the Secretary finds, for 
good cause, that the delay is impracticable, unnecessary, or contrary 
to the public interest, and incorporates a statement of the finding and 
the reasons in the rule issued (5 U.S.C. 553(d)(3); 5 U.S.C. 808(2)).

B. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Section 4103 of the Affordable Care Act expanded Medicare Part B to 
include coverage for an annual wellness visit providing personalized 
prevention plan services (hereinafter referred to as an annual wellness 
visit) in section 1861(s)(2)(FF) of the Act, effective January 1, 2011. 
In 42 CFR 410.15, we adopted the components of the annual wellness 
visit, consistent with the statutory elements described in section 
1861(hhh)(2) of the Act. The first and subsequent annual wellness 
visits, as defined in 42 CFR 410.15(a), are meant to represent a 
beneficiary visit focused on prevention. Among other things, the annual 
wellness visit encourages beneficiaries to obtain the preventive 
services covered by Medicare that are appropriate for them. First and 
subsequent annual wellness visits also include elements that focus on 
the furnishing of personalized health advice and referral, as 
appropriate, to health education, preventive counseling services, 
programs aimed at improving self-management, and community-based 
lifestyle interventions.
    Medicare beneficiaries will likely need assistance from physician 
office staff in completing an HRA as envisioned in the CDC interim 
guidance. The physician office staff time for assisting a beneficiary 
in completing an HRA is estimated to be 10 minutes (.16 hours) for a 
first annual wellness visit. During subsequent annual wellness visits, 
we would typically expect that the HRA would be updated, making 
physician staff time estimated at 5 minutes (.08 hours). The number of 
beneficiaries that received the annual wellness visit during the first 
10 months of 2011 was 1.6 million. Based on this information, the 
estimated hour burden for the initial HRA is 256,000 total hours. 
However, for purposes of OMB review and approval, the average annual 
burden which accounts both the initial HRA and subsequent HRAs is 
200,000

[[Page 73443]]

hours. An average burden of 7.5 minutes (0.125 hours) multiplied by 1.6 
million beneficiaries.
    The final rule with comment period imposes collection of 
information requirements as outlined in the regulation text and 
specified in various section of this final rule with comment period. 
However, this final rule with comment period also makes reference to 
several associated information collections that are not discussed in 
the regulation text contained in this document. The following is a 
discussion of these information collections, some of which have already 
received OMB approval.
1. Part B Drug Payment
    The discussion of average sales price (ASP) issues in section 
VI.A.1 of this final rule with comment period pertains to payment for 
Medicare Part B drugs and biologicals under the ASP methodology. Drug 
manufacturers are required to submit ASP data to us on a quarterly 
basis. The ASP reporting requirements are set forth in section 1927(b) 
of the Act. In order to facilitate more accurate and consistent ASP 
data reporting from manufacturers, we proposed the following:
     To revise existing reporting fields and add new fields to 
the Addendum A template.
     To add a macro to the Addendum A template that will allow 
manufacturers to validate the format of their data prior to submission.
     To maintain a list of HCPCS codes for which manufacturer's 
report ASPs for NDCs on the basis of a specified unit.
     A clarification to existing regulation text at Sec.  
414.802. Current regulation text states that ``Unit means the product 
represented by the 11 digit National Drug Code.'' We proposed to update 
the definition to account for situations when an alternative unit of 
reporting must be used.
    Additionally, we will also be revising our instructions for the 
reporting of dermal grafting products in a user guide available on the 
ASP Web site at: http://www.cms.gov/McrPartBDrugAvgSalesPrice/.
    The burden associated with this requirement is the time and effort 
required by manufacturers of Medicare Part B drugs and biologicals to 
calculate, record, and submit the required data to CMS. The Addendum A 
template is currently approved under OMB control number 0938-0921. For 
the first year, we estimate that collection of the additional data 
elements will take approximately 2 additional hours for each submission 
of data, or 12 hours per response, at a cost of $252 per response. 
Based on the current number of respondents, we estimate that this 
requirement will affect approximately 180 manufacturers. Since 
manufacturers will respond 4 times per year, we estimate that, on an 
annual basis, the annual number of responses will be 720 (180 
manufacturers x 4 responses) and the total annual hours burden will be 
8,640 hours (720 annual responses x 12 annual hours per response). 
Please note that this is a corrected annual hour burden estimate; the 
34,560 hour estimate in the proposed rule (76 FR 42921) resulted from a 
mathematical error. We estimate the annual cost burden to be $181,440 
($252 per response x 720 responses). Once manufacturers adjust to the 
changes associated with electronic reporting after the first year, we 
anticipate that the burden estimate will decrease.
    We invited comments on this burden analysis, including the 
underlying assumptions used in developing our burden estimates and 
received no comments. We have corrected a mathematical error associated 
with the total annual burden which decreases the hourly burden. The 
cost estimate remains unchanged. Operational aspects and comments 
regarding the ASP template were discussed in section VI.A.3 of this 
rule where we finalized our proposal to amend the Addendum A template, 
including the use of a data validation macro with the expansion of the 
``Alternate ID'' field. A companion Users' Guide, and other documents 
will be posted on the CMS ASP Web site.
2. The Physician Quality Reporting System
    Section VI.F.1. of this final rule with comment period discusses 
the background of the Physician Quality Reporting System, provides 
information about the measures and reporting mechanisms that will be 
available to eligible professionals and group practices who choose to 
participate in the 2012 Physician Quality Reporting System, and the 
criteria for satisfactory reporting in 2012.
a. Estimated Participation in the 2012 Physician Quality Reporting 
System
    With respect to satisfactory submission of data on quality measures 
by eligible professionals, eligible professionals include physicians, 
other practitioners as described in section 1842(b)(18)(c) of the Act, 
physical and occupational therapists, qualified speech-language 
pathologists, and qualified audiologists. Eligible professionals may 
choose whether to participate and, to the extent they satisfactorily 
submit data on quality measures for covered professional services, they 
can qualify to receive an incentive payment. To qualify to receive an 
incentive payment for 2012, the eligible professional (or group 
practice) must meet one of the criteria for satisfactory reporting 
described in section VI.F.1.e. or VI.F.1.f. of this final rule with 
comment period (or section VI.F.1.g. for group practices).
    Because this is a voluntary program, it is difficult to accurately 
estimate how many eligible professionals will opt to participate in the 
Physician Quality Reporting System in CY 2012. Information from the 
``Physician Quality Reporting System 2009 Reporting Experience Report'' 
(hereinafter 2009 Experience Report) which is available on the 
Physician Quality Reporting System section of the CMS Web site at 
http://www.cms.hhs.gov/pqrs, indicates that eligible professionals from 
nearly 120,000 unique TIN/NPI combinations satisfactorily submitted 
Physician Quality Reporting System quality measures data for the 2009 
Physician Quality Reporting System. Therefore, for purposes of 
conducting a burden analysis for the 2012 Physician Quality Reporting 
System, we will assume that all eligible professionals who attempted to 
participate in the 2009 Physician Quality Reporting System will also 
attempt to participate in the 2012 Physician Quality Reporting System.
    We invited but received no public comment on our estimates 
regarding the projected participation in the 2012 Physician Quality 
Reporting System. However, for the reasons explained below, we believe 
that more eligible professionals will participate in the Physician 
Quality Reporting System in 2012 than in 2009.
    According to the 2009 Experience Report, the number of eligible 
professionals eligible to participate and actually participating in the 
Physician Quality Reporting System has increased each year from 2007 
through 2009. Participation in the Physician Quality Reporting System 
has increased from 98,696 out of 621,840 eligible professionals in 2007 
to 164,828 out of 977,415 eligible professionals in 2008 to 221,858 out 
of 1,042,260 eligible professionals in 2009.
    With respect to participation in 2008, 66,132 more eligible 
professionals participated in the 2008 Physician Quality Reporting 
System (then called the Physician Quality Reporting Initiative or PQRI) 
than in 2007. The percentage of eligible professionals participating in 
2008 also increased from 16 percent in 2007 to 17 percent in 2008. We 
believe that this increase

[[Page 73444]]

was due to a number of factors, including but not exclusive to:
     An increased number of professionals eligible to 
participate in the Physician Quality Reporting System in 2008: The 
number of professionals eligible to participate increased from 621,840 
to 977,415 professionals from 2007 to 2008.
     Increased familiarity with the program: The Physician 
Quality Reporting System was first implemented in 2007. As such, we 
believe that our efforts to educate the public on the Physician Quality 
Reporting System through education and outreach efforts as well as 
general increased familiarity of the availability of earning incentives 
by satisfactorily reporting Physician Quality Reporting System measures 
led to an increase in program participation.
     The introduction of the registry-based reporting 
mechanism: In 2007, the claims-based reporting mechanism was the only 
reporting mechanism available for reporting Physician Quality Reporting 
System quality measures. In 2008, eligible professionals were able to 
submit data on Physician Quality Reporting System quality measures via 
the registry-based reporting mechanism as well.
     The introduction of reporting Physician Quality Reporting 
System quality measures via measures groups in addition to reporting 
measures individually: The reporting of Physician Quality Reporting 
System quality measures via measures groups was not available in 2007. 
However, in 2008, eligible professionals had the option of reporting 
Physician Quality Reporting System quality measures via measures groups 
via claims and registry.
     An increased number of measures and measures groups 
available for reporting under the Physician Quality Reporting System.
    With respect to participation in 2009, 64,648 more eligible 
professionals participated in the 2009 Physician Quality Reporting 
System (then called the Physician Quality Reporting Initiative or PQRI) 
than in 2008. The percentage of eligible professionals participating in 
2008 also increased from 17 percent in 2008 to 21 percent in 2009. We 
believe that this increase was due to a number of factors, including 
but not exclusive to:
     An increased number of professionals eligible to 
participate in the Physician Quality Reporting System in 2008: The 
number of professionals eligible to participate increased from 977,415 
to 1,042,260 professionals from 2008 to 2009.
     Increased familiarity with the program.
     An increased incentive payment amount for satisfactory 
reporting from 1.5 percent in 2008 to 2.0 percent in 2009.
     An increased number of measures and measures groups 
available for reporting under the Physician Quality Reporting System.
    Accordingly, we expect participation in the 2012 Physician Quality 
Reporting System to increase due to a number of factors, including but 
not exclusive to:
     Increased familiarity with the program: 2012 will mark the 
6th year since the Physician Quality Reporting System was first 
implemented.
     The availability of the EHR-based reporting mechanism: As 
described in further detail in section VI.F.1.d.3 of this final rule 
with comment period, for 2012, we finalized two options under EHR-based 
reporting mechanism by which eligible professionals may utilize to 
submit data on Physician Quality Reporting System quality measures: The 
EHR data submission vendor and direct EHR options.
     An increased number of measures and measures groups 
available for reporting under the Physician Quality Reporting System: 
As described in further detail in section VI.F.1.f of this final rule 
with comment period, we have added additional measures available for 
claims, registry, and/or EHR-based reporting as well as additional 
measures groups available for claims and/or registry reporting.
     The establishment of CY 2013 as the reporting period for 
the 2015 payment adjustment. As described in greater detail in section 
VI.F.1.j of this final rule with comment period, we finalized our 
proposal to establish CY 2013 as the reporting period for the 2015 
payment adjustment. We expect that more eligible professionals will 
attempt to meet the criteria for satisfactory reporting in 2012 before 
the 2015 payment adjustment reporting period commences on January 1, 
2013.
     Alignment and incorporation of certain Physician Quality 
Reporting System reporting requirements under other CMS programs, such 
as the EHR Incentive Program and the Medicare Shared Savings Program. 
In an effort to align various CMS quality reporting programs, we have 
created reporting requirements under other CMS programs that are 
similar or identical to those required under the Physician Quality 
Reporting System. For example, as described in greater detail under 
section VI.F.1.e.3 of this final rule with comment period, we 
established reporting criteria that satisfy both the Physician Quality 
Reporting System incentive and fulfill the CQM requirement for 
achieving meaningful use under the EHR Incentive Program (75 FR 44409 
through 44411). In addition, as described in section VI.F.4 of this 
final rule with comment period, the EHR Incentive Program established 
the Physician Quality Reporting System-Medicare EHR Incentive Pilot, 
whereby eligible professionals may data on the same sample of 
beneficiaries to fulfill the requirements for satisfactory reporting 
under the Physician Quality Reporting System while also fulfilling the 
CQM reporting requirements for achieving meaningful use under the EHR 
Incentive Program.
    As finalized in the final rule entitled ``Medicare Program; 
Medicare Shared Savings Program: Accountable Care Organizations,'' 
displayed in the Federal Register on October 20, 2011, the Medicare 
Shared Savings Program also incorporated certain Physician Quality 
System reporting requirements and incentives whereby eligible 
professionals within Accountable Care Organizations (ACOs) may earn 
under a group practice reporting option (GPRO) a Physician Quality 
Reporting System incentive under the Medicare Shared Savings Program.
    Furthermore, as stated in section VI.I of this final rule, under 
the Physician Feedback Program, we plan to use the Physician Quality 
Reporting System quality measures in the Physician Feedback reports we 
disseminate, and we are finalizing certain measures from the Physician 
Quality Repoting System and EHR Incentive Program for purposes of the 
Physician value modifier, which will be applied beginning in CY 2015.
    According to the 2009 Experience Report, we have seen a 1 percent 
and 4 percent increase in participation in the Physician Quality 
Reporting System from 2007 to 2008 and 2008 to 2009 respectively. Based 
on our above assumptions, we believe we will see at least a 1 percent 
increase in the number of eligible professionals participating in the 
Physician Quality Reporting System from 2011 to 2012. Information on 
participation rates for the 2010 and 2011 Physician Quality Reporting 
System is not yet available. Therefore, for purposes of determining how 
many eligible professionals will participate in 2012, we will assume a 
1 percent increase in participation each program year from 2009 through 
2012. Therefore, we assume that 224,076 eligible professionals (a 1 
percent increase from 221,858) participated in the 2010 Physician 
Quality Reporting System. We then assume that 226,316 eligible 
professionals participated in the 2011 Physician Quality Reporting 
System (a 1

[[Page 73445]]

percent increase from 224,076). Based on these assumptions, we estimate 
that at least 228,579 eligible professionals will participate in the 
2012 Physician Quality Reporting System (a 1 percent increase from 
226,316).
b. Burden Estimate on Participation in the 2012 Physician Quality 
Reporting System--Individual Eligible Professionals
    As we stated in the proposed rule (76 FR 42921), we believe that 
the burden for eligible professionals who are participating in the 
Physician Quality Reporting System for the first time in 2012 will be 
considerably higher than the burden for eligible professionals who have 
participated in the Physician Quality Reporting System in prior years. 
As described below, some preparatory steps are needed to begin 
participating in the Physician Quality Reporting System. To the extent 
that we did not retire the measures that an eligible professional has 
reported in a prior year and there are no changes to the measure's 
specifications from a prior year, such preparatory steps will not need 
to be repeated in subsequent years.
    For individual eligible professionals, in the proposed rule (76 FR 
42922), we noted that the burden associated with the requirements of 
this reporting initiative will be the time and effort associated with 
eligible professional's practice identifying applicable Physician 
Quality Reporting System quality measures for which they can report the 
necessary information, collecting the necessary information, and 
reporting the information needed to report the eligible professional's 
or group practice's measures.
    We believe it is difficult to definitively quantify the burden 
because eligible professionals may have different processes for 
integrating the data collection for the Physician Quality Reporting 
System measures into their practice's work flows. Moreover, we expect 
that the time needed for an eligible professional to review the quality 
measures and other information, select measures applicable to his or 
her patients and the services he or she furnishes to them, and 
incorporate the use of quality data codes into the office work flows 
will vary along with the number of measures that are potentially 
applicable to a given professional's practice.
    Since a majority of eligible professionals participate via claims 
or registry-based reporting of individual measures, they will generally 
be required to report on at least three measures to earn a Physician 
Quality Reporting System incentive. Therefore, we will assume that each 
eligible professional who attempts to submit Physician Quality 
Reporting System quality measures data via claims or registry reporting 
is attempting to earn a Physician Quality Reporting System incentive 
payment and reports on an average of three measures for this burden 
analysis.
    This burden analysis focuses on those new to the Physician Quality 
Reporting System. We will assign 5 hours as the amount of time needed 
for eligible professionals to review the 2012 Physician Quality 
Reporting System Measures List, review the various reporting options, 
select the most appropriate reporting option, identify the applicable 
measures or measures groups for which they can report the necessary 
information, review the measure specifications for the selected 
measures or measures groups, and incorporate reporting of the selected 
measures or measures groups into the office work flows. This estimate 
is based on our assumption that an eligible professional will need up 
to 2 hours to review the 2012 Physician Quality Reporting System 
Measures List, review the reporting options, and select a reporting 
option and measures on which to report and 3 hours to review the 
measure specifications for up to 3 selected measures or up to 1 
selected measures group and to develop a mechanism for incorporating 
reporting of the selected measures or measures group into the office 
work flows.
    In the proposed rule (76 FR 42922), based on information from the 
Physician Voluntary Reporting Program (PVRP), which was a predecessor 
to the Physician Quality Reporting System, we provided an estimated 
labor cost of $60/hour. However, in an effort to provide a more 
accurate labor cost estimate of participation for the 2012 Physician 
Quality Reporting System, we conducted an informal poll among a small 
sample of participants in the 2011 Physician Quality Reporting System 
to determine what employees within an eligible professional's practice 
are involved with Physician Quality Reporting System activities. The 
poll revealed that a billing clerk typically handles administrative 
details with respect to participating under the Physician Quality 
Reporting System (such as submitting self-nomination statements), 
whereas a computer analyst typically handles the reporting of Physician 
Quality Reporting System quality measures. Based on this information, 
we are changing our estimated labor costs associated with participating 
in the Physician Quality Reporting System.
    For purposes of this burden estimate, we will assume that a billing 
clerk will handle the administrative duties associated with 
participating in the 2012 Physician Quality Reporting System. According 
to information published by the Bureau of Labor Statistics, available 
at http://www.bls.gov/oes/current/oes433021.htm, the mean hourly wage 
for a billing clerk is $16.00/hour. Therefore, for purposes of handling 
administrative duties, we estimate an average labor cost of $16.00/
hour.
    In addition, for purposes of this burden estimate, we will assume 
that a computer analyst will engage in the duties associated with the 
reporting of 2012 Physician Quality Reporting System quality measures. 
According to information published by the Bureau of Labor Statistics, 
available at http://www.bls.gov/oes/current/oes151121.htm, the mean 
hourly wage for a computer analyst is $39.06/hour, or approximately 
$40.00/hour. Therefore, for purposes of reporting on 2012 Physician 
Quality Reporting System quality measures, we estimate an average labor 
cost of $40.00/hour.
    We continue to expect the ongoing costs associated with Physician 
Quality Reporting System participation to decline based on an eligible 
professional's familiarity with and understanding of the Physician 
Quality Reporting System, experience with participating in the 
Physician Quality Reporting System, and increased efforts by CMS and 
stakeholders to disseminate useful educational resources and best 
practices. We also continue to expect the ongoing costs associated with 
Physician Quality Reporting System participation to decline as we align 
the participation requirements in the Physician Quality Reporting 
System with the reporting requirements in the Medicare and Medicaid 
Electronic Health Record (EHR) Incentive Program such that an eligible 
professional may only need to submit data to CMS one time for multiple 
purposes.
    We believe the burden associated with actually reporting the 
Physician Quality Reporting System quality measures will vary depending 
on the reporting mechanism selected by the eligible professional.
(1) Burden Estimate on Participation in the 2012 Physician Quality 
Reporting System via the Claims-Based Reporting Mechanism--Individual 
Eligible Professionals
    For the claims-based reporting option being finalized, eligible 
professionals must gather the required information, select the 
appropriate quality data codes

[[Page 73446]]

(QDCs), and include the appropriate QDCs on the claims they submit for 
payment. The Physician Quality Reporting System will collect QDCs as 
additional (optional) line items on the existing HIPAA transaction 837-
P and/or CMS Form 1500 (OCN: 0938-0999). We do not anticipate any new 
forms and or any modifications to the existing transaction or form. We 
also do not anticipate changes to the 837-P or CMS Form 1500 for CY 
2012.
    Based on our experience with the PVRP, we continue to estimate that 
the time needed to perform all the steps necessary to report each 
measure (that is, reporting the relevant quality data code(s) for a 
measure) on claims will ranges from 15 seconds (0.25 minutes) to over 
12 minutes for complicated cases and/or measures, with the median time 
being 1.75 minutes. At an average labor cost of $40/hour per practice, 
the cost associated with this burden will range from $0.17 in labor to 
about $8.00 in labor time for more complicated cases and/or measures, 
with the cost for the median practice being $1.67.
    The total estimated annual burden for this requirement will also 
vary along with the volume of claims on which quality data is reported. 
In previous years, when we required reporting on 80 percent of eligible 
cases for claims-based reporting, we found that on average, the median 
number of reporting instances for each of the Physician Quality 
Reporting System measures was 9. Since we are reducing the required 
reporting rate by over one-third to 50 percent in this final rule, then 
for purposes of this burden analysis we will assume that an eligible 
professional will need to report each selected measure for 6 reporting 
instances. The actual number of cases on which an eligible professional 
is required to report quality measures data will vary, however, with 
the eligible professional's patient population and the types of 
measures on which the eligible professional chooses to report (each 
measure's specifications includes a required reporting frequency).
    Based on the assumptions discussed previously, we estimate the 
total annual reporting burden per individual eligible professional 
associated with claims-based reporting will range from 4.5 minutes 
(0.25 minutes per measure x 3 measures x 6 cases per measure) to 180 
minutes (12 minutes per measure x 3 measures x 6 cases per measure), 
with the burden to the median practice being 31.5 minutes (1.75 minutes 
per measure x 3 measures x 6 cases). We estimate the total annual 
reporting cost per eligible professional associated with claims-based 
reporting will range from $3.06 ($0.17 per measure x 3 measures x 6 
cases per measure) to $144.00 ($8.00 per measure x 3 measures x 6 cases 
per measure), with the cost to the median practice being $30.06 per 
eligible professional ($1.67 per measure x 3 measures x 6 cases per 
measure).
b. Burden Estimate on Participation in the 2012 Physician Quality 
Reporting System via the Registry-Based Reporting Mechanism--Individual 
Eligible Professionals
    For registry-based reporting, there will be no additional time 
burden for eligible professionals to report data to a registry as 
eligible professionals opting for registry-based reporting will more 
than likely already be reporting data to the registry for other 
purposes and the registry will merely be re-packaging the data for use 
in the Physician Quality Reporting System. Little, if any, additional 
data will need to be reported to the registry solely for purposes of 
participation in the 2012 Physician Quality Reporting System. However, 
eligible professionals will need to authorize or instruct the registry 
to submit quality measures results and numerator and denominator data 
on quality measures to CMS on their behalf. We estimate that the time 
and effort associated with this will be approximately 5 minutes per 
eligible professional.
    Registries interested in submitting quality measures results and 
numerator and denominator data on quality measures to CMS on their 
participants' behalf in 2012 will need to complete a self-nomination 
process in order to be considered qualified to submit on behalf of 
eligible professionals unless the registry was qualified to submit on 
behalf of eligible professionals for prior program years and did so 
successfully. We estimate that the self-nomination process for 
qualifying additional registries to submit on behalf of eligible 
professionals for the 2012 Physician Quality Reporting System will 
involve approximately 1 hour per registry to draft the letter of intent 
for self-nomination. We estimate that each self-nominated entity will 
also spend 2 hours for the interview with CMS officials and 2 hours 
calculating numerators, denominators, and measure results for each 
measure the registry wishes to report using a CMS-provided measure 
flow. However, the time it takes to produce calculated numerators, 
denominators, and measure results using the CMS-provided measure flows 
could vary depending on the registry's experience and the number and 
type of measures for which the registry wishes to submit on behalf of 
eligible professionals. Additionally, part of the self-nomination 
process involves the completion of an XML submission by the registry, 
which we estimate to take approximately 5 hours, but may vary depending 
on the registry's experience. We estimate that the registry staff 
involved in the registry self-nomination process will have an average 
labor cost of $16/hour. Therefore, assuming the total burden hours per 
registry associated with the registry self-nomination process is 10 
hours, we estimate that the total cost to a registry associated with 
the registry self-nomination process will be approximately $160 ($16 
per hour x 10 hours per registry).
    The burden associated with the registry-based reporting 
requirements of the Physician Quality Reporting System will be the time 
and effort associated with the registry calculating quality measures 
results from the data submitted to the registry by its participants and 
submitting the quality measures results and numerator and denominator 
data on quality measures to CMS on behalf of their participants. We 
expect that the time needed for a registry to review the quality 
measures and other information, calculate the measures results, and 
submit the measures results and numerator and denominator data on the 
quality measures on their participants' behalf will vary along with the 
number of eligible professionals reporting data to the registry and the 
number of applicable measures. However, we believe that registries 
already perform many of these activities for their participants. 
Therefore, there may not necessarily be a burden on a particular 
registry associated with calculating the measure results and submitting 
the measures results and numerator and denominator data on the quality 
measures to CMS on behalf of their participants. Whether there is any 
additional burden to the registry as a result of the registry's 
participation in the Physician Quality Reporting System will depend on 
the number of measures that the registry intends to report to CMS and 
how similar the registry's measures are to CMS' Physician Quality 
Reporting System measures.
(2) Burden Estimate on Participation in the 2012 Physician Quality 
Reporting System via the EHR-Based Reporting Mechanism--Individual 
Eligible Professionals
    For EHR-based reporting for the CY 2012 Physician Quality Reporting 
System, the individual eligible professional may either submit the 
quality measures data directly to CMS

[[Page 73447]]

from their EHR or utilize an EHR data submission vendor to submit the 
data to CMS on the eligible professionals' behalf. To submit data to 
CMS directly from their EHR, the eligible professional must have access 
to a CMS-specified identity management system, such as IACS, which we 
believe takes less than 1 hour to obtain. Once an eligible professional 
has an account for this CMS-specified identity management system, he or 
she will need to extract the necessary clinical data from his or her 
EHR, and submit the necessary data to the CMS-designated clinical data 
warehouse. With respect to the requirement for an eligible professional 
to submit a test file, we believe that doing so will take less than 1 
hour. With respect to submitting the actual 2012 data file in 2013, we 
believe that this will take an eligible professional no more than 2 
hours, depending on the number of patients on which the eligible 
professional is submitting. We believe that once the EHR is programmed 
by the vendor to allow data submission to CMS, the burden to the 
eligible professional associated with submission of data on Physician 
Quality Reporting System quality measures should be minimal as all of 
the information required to report the measure should already reside in 
the eligible professional's EHR. We did not introduce the EHR-based 
reporting mechanism into the Physician Quality Reporting System until 
2010. We are still in the process of analyzing 2010 data. As such, we 
believe it is difficult to predict how many eligible professionals may 
choose to participate in the 2012 Physician Quality Reporting System 
via the EHR-based reporting mechanism.
    An EHR vendor interested in having their product(s) used by 
eligible professionals to submit the Physician Quality Reporting System 
quality measures data to CMS or interested in submitting data obtained 
from an EHR to CMS on behalf of eligible professionals is required to 
complete a self-nomination process in order for the vendor and/or its 
product(s) to be considered qualified for 2012. It is difficult to 
definitively quantify the burden associated with the EHR self-
nomination process as there is variation regarding the technical 
capabilities and experience among vendors. For purposes of this burden 
analysis, however, we estimate that the time required for an EHR vendor 
to complete the self-nomination process will be similar to the time 
required for registries to self-nominate, which is approximately 10 
hours at $16/hour for a total of $160/EHR vendor ($16/hour x 10 hours/
EHR vendor).
    The burden associated with the EHR vendor programming its EHR 
product(s) to extract the clinical data that the eligible professional 
must submit to CMS for purposes of reporting 2012 Physician Quality 
Reporting System quality measures will be dependent on the EHR vendor's 
familiarity with the Physician Quality Reporting System, the vendor's 
system capabilities, as well as the vendor's programming capabilities. 
Some vendors already have these necessary capabilities and for such 
vendors, we estimate that the total burden hours will be 40 hours at a 
rate of $40/hour for a total burden estimate of $1,600 ($40/hour x 40 
hours per vendor). However, given the variability in the capabilities 
of the vendors, we believe those vendors with minimal experience will 
have a burden of approximately 200 hours at $40/hour, for a total 
estimate of $8,000 per vendor ($40/hour x 200 hours/EHR vendor).
(3) Burden Estimate on Participation in the 2012 Physician Quality 
Reporting System--Group Practices
    With respect to the criteria for satisfactorily reporting data on 
the quality measures for group practices under the 2012 Physician 
Quality Reporting System discussed in section VI.F.1. of this final 
rule with comment period, group practices interested in participating 
in the 2012 Physician Quality Reporting System through the group 
practice reporting option (GPRO) must complete a self-nomination 
process similar to the self-nomination process required of registries 
and EHR vendors. Therefore, assuming it takes 2 hours for a group 
practice to decide whether to participate as a group or individually, 
approximately 2 hours per group practice to draft the letter of intent 
for self-nomination, gather the requested information, and provide this 
requested information, and an additional 2 hours undergoing the vetting 
process with CMS officials, we estimate a total of 6 hours associated 
with the self-nomination process. Assuming that the group practice 
staff involved in the group practice self-nomination process have the 
same average practice labor cost as the average practice labor cost 
estimates we used for individual eligible professionals of $16/hour, we 
estimate that the total cost to a group practice associated with the 
group practice self-nomination process will be approximately $96 ($16/
hour x 6 hours per group practice).
    The burden associated with the group practice reporting 
requirements for the 2012 Physician Quality Reporting System is the 
time and effort associated with the group practice submitting the 
quality measures data. For practices participating under the GPRO, this 
will be the time associated with the physician group completing the 
data collection tool. The information collection components of this 
data collection tool have been reviewed by OMB and are currently 
approved under OMB control number 0938-0941, with an expiration date of 
December 31, 2011, for use in the Physician Group Practice, Medicare 
Care Management Performance (MCMP), and EHR demonstrations. Based on 
burden estimates for the PGP demonstration, which uses the same data 
submission methods, we estimate the burden associated with a physician 
group completing the data collection tool will be approximately 79 
hours per physician group. Based on an average labor cost of $40 per 
physician group, we estimate the cost of data submission per physician 
group associated with participating in the 2012 Physician Quality 
Reporting System GPRO will be $3,160 ($40/hour x 79 hours per group 
practice).
(4) Burden Estimate on Participation in the Maintenance of 
Certification Program Incentive
    Eligible professionals who wish to qualify for the additional 0.5 
percent incentive payment authorized under section 1848(m)(7) of the 
Act (``Additional Incentive Payments'') for 2012 will need to more 
frequently than is required to qualify for or maintain board 
certification status participate in a qualified Maintenance of 
Certification Program for 2012 and successfully complete a qualified 
Maintenance of Certification Program practice assessment for 2012. We 
believe that a majority of the eligible professionals who will attempt 
to qualify for this additional 0.5 percent incentive payment will be 
those who are already enrolled and participating in a Maintenance of 
Certification Board. The amount of time that it will take for the 
eligible professional to participate in the Maintenance of 
Certification Program more frequently than is required to qualify for 
or maintain board certification status will vary based on what each 
individual board determines constitutes ``more frequently.'' We expect 
that the amount of time needed to complete a qualified Maintenance of 
Certification Program practice assessment will be spread out over time 
since a quality improvement component is often required. Information 
from an informal poll of a few ABMS member

[[Page 73448]]

boards indicates that the time an individual eligible professional 
spends to complete the practice assessment component of the Maintenance 
of Certification ranges from 8 to 12 hours.
    We requested comments on this burden analysis for physicians 
participating in the Maintenance of Certification Program incentive, 
including the underlying assumptions used in developing our burden 
estimates. Below is a summary of the comments we received.
    Comment: One commenter believed that a more disciplined approach 
for estimating the time and effort it takes to earn an incentive under 
the Maintenance of Certification Program incentive should be adopted. 
Another commenter stated that our estimates regarding the length of 
time it takes to complete the processes required to earn a Maintenance 
of Certification Program incentive does not fully encompass all 
activities necessary to participate in a Maintenance of Certification 
Program.
    Response: We appreciate the commenters' feedback. As noted above, 
it is difficult to determine the time and effort it takes to earn an 
incentive under the Maintenance of Certification Program incentive due 
to varying specialties, as well as degrees of experience, and 
therefore, varying requirements for participation. We also note that, 
for purposes of this burden estimate, we did not take into account the 
time and effort it takes for a physician to maintain board 
certification status under an established Maintenance of Certification 
Program. Rather, we provided an estimate based on the additional time 
and effort it will take for eligible professionals to meet the 
additional requirements for earning the additional 0.5 percent 
Maintenance of Certification Program incentive.
3. Electronic Prescribing (eRx) Incentive Program
a. Estimate on Participation in the 2012, 2013, and 2014 eRx Incentive 
Program
    The electronic prescribing measure was first reportable under the 
Physician Quality Reporting System before it was used for the eRx 
Incentive Program, which began in 2009. According to the 2009 
Experience Report, the number of eligible professionals participating 
reporting the electronic prescribing measure increased from 4,973 out 
of approximately 500,000 eligible professionals to 92,132 out of 
670,000 eligible professionals from 2008 to 2009. This is an increase 
of least 12 percent (from 1 percent in 2008 to 13 percent in 2009). As 
discussed in section VI.F.2.h.1 in this final rule, we finalized 
limitations whereby a 2013 or 2014 payment adjustment will not apply to 
an eligible professional. However, we still believe that, due to the 
implementation of the 2013 and 2014 payment adjustments, as well as the 
expansion of the reporting mechanisms for purposes of reporting the 
electronic prescribing measure for the 2013 and 2014 payment 
adjustments, we expect that there will be a significant increase in 
eligible professionals who participate in the eRx Incentive Program for 
CYs 2012 through 2014 from 2009 participation rates. Therefore, for 
purposes of conducting a burden analysis for the 2012 through 2014 eRx 
Incentive Program, we will assume that, based on participation rates in 
2009, there will be an increase of at least 12 percent of eligible 
professionals participating in the eRx Incentive Program from 2012 
through 2014. Therefore, for purposes of this burden analysis, we 
estimate that more than 100,800 unique TIN/NPI combinations will 
participate in the 2012, 2013, and 2014 eRx Incentive Program for 
purposes of the 2013 and 2014 payment adjustment (see the ``2009 
Reporting Experience,'' which is available on the Physician Quality 
Reporting System section of the CMS Web site at http://www.cms.hhs.gov/
pqrs). Although this estimate only accounts for approximately 15 
percent of all professionals eligible to participate in the eRx 
Incentive Program, we believe that participation may be offset by the 
limitations and significant hardship exemptions we are finalizing for 
the 2013 and 2014 payment adjustment.
b. Burden Estimate on Participation in the eRx Incentive Program--
Individual Eligible Professionals
    Section VI.F.2. of this final rule with comment period discusses 
the background of the eRx Incentive Program. For the programs for 2012 
through 2014, eligible professionals and group practices may choose 
whether to participate and, to the extent they meet--(1) certain 
thresholds with respect to the volume of covered professional services 
furnished; and (2) the criteria for being a successful electronic 
prescriber described in section VI.F.2. of this final rule with comment 
period, they will qualify to receive an incentive payment for 2012 and 
2013 and/or avoid being subject to the 2013 and 2014 payment 
adjustment.
    In section VI.F.2.g. of this final rule with comment period, we 
describe the requirements for eligible professionals and group 
practices to be successful electronic prescribers in order to earn a 
2012 and/or 2013 incentive payment. For the 2012 and 2013 incentives, 
as discussed in section VI.F.2.g.2. of this final rule with comment 
period, each eligible professional must to report the electronic 
prescribing measure's numerator indicating that at least one 
prescription generated during an encounter was electronically submitted 
at least 25 instances during the reporting period in association with a 
denominator-eligible visit.
    In section VI.F.2.h. of this final rule with comment period, we 
finalized additional requirements for eligible professionals and group 
practices can meet for the 2013 payment adjustment, as well as 
finalized requirements for being a successful electronic prescriber for 
the 2014 payment adjustment. For the 2013 and 2014 payment adjustment, 
each eligible professional must report the electronic prescribing 
measure's numerator at least 10 instances during the reporting period.
    We expect the ongoing costs associated with participation in the 
eRx Incentive Program to decline based on an eligible professional's 
understanding of the eRx Incentive Program, experience with 
participating in the eRx Incentive Program, and increased efforts by 
CMS and stakeholders to disseminate useful educational resources and 
best practices.
    Similar to the Physician Quality Reporting System, one factor in 
the burden to individual eligible professionals is the time and effort 
associated with individual eligible professionals reviewing the 
electronic prescribing measure to determine whether it is applicable to 
them, reviewing and selecting one of the available reporting options 
(for purposes of the 2012 and 2013 incentives and the 2013 and 2014 
payment adjustments, the electronic prescribing quality measure is 
reportable through claims-based reporting, registry-based reporting, or 
through EHRs) and selecting one, gathering the required information, 
and incorporating reporting of the measure into their office work 
flows. Since the eRx Incentive Program consists of only 1 measure to 
report, we estimate 2 hours as the amount of time that will be needed 
for individual eligible professionals to prepare for participation in 
the eRx Incentive Program. At an average cost of approximately $40/hour 
per practice, we estimate the total preparation costs to individual 
eligible professionals will be approximately $80 (2 hours x $40/hour).
    Another factor that we believe influences the burden to eligible 
professionals is how they choose to report the electronic prescribing

[[Page 73449]]

measure. Our burden estimates for participating in the eRx Incentive 
Program via each of three finalized reporting mechanisms (that is, 
claims, registry, and EHR) are described in this section.
(1) Burden Estimate on Participation in the eRx Incentive Program via 
the Claims-Based Reporting Mechanism--Individual Eligible Professionals
    For eligible professionals who choose to do so via claims, we 
estimate that the burden associated with the requirements of this 
incentive program will be the time and effort associated with gathering 
the required information and identifying when it is appropriate to 
include the measure's quality data code (QDC) on the claims they submit 
for payment. For claims-based reporting, the measure's QDC will be 
collected as additional (optional) line items on the existing HIPAA 
transaction 837-P and/or CMS Form 1500. We do not anticipate any new 
forms and or modifications to the existing transaction or form. We also 
do not anticipate changes to the 837-P or CMS Form 1500 for CY 2012.
    Based on the information from the PVRP for the amount of time it 
takes a median practice to report one measure one time on claims (1.75 
minutes) and our requirement that eligible professionals report the 
measure 25 times for purposes of the incentive payment, we estimate the 
burden associated with claims-based data submission to will be 43.75 
minutes (1.75 minutes per case x 1 measure x 25 cases per measure). 
This equates to a cost of approximately $29.17 (1.75 minutes per case x 
1 measure x 25 cases per measure x $40/hour) per individual eligible 
professional. For purposes of the 2013 and 2014 eRx payment adjustment, 
an eligible professional is required to report the measure only 10 
times, and therefore, we estimate the burden associated with claims-
based submission will be 17.5 minutes (1.75 minutes per case x 1 
measure x 10 cases per measure). This equates to a cost of 
approximately $9.67 (1.75 minutes per case x 1 measure x 10 cases per 
measure x $40/hour) per individual eligible professional.
(2) Burden Estimate on Participation in the eRx Incentive Program via 
the Registry-Based Reporting Mechanism--Individual Eligible 
Professionals and Group Practices
    Because registry-based reporting of the electronic prescribing 
measure to CMS was added to the eRx Incentive Program for 2010 and 
eligible professionals are not required to indicate how they plan to 
report the electronic prescribing measure each year, it is difficult to 
accurately estimate how many eligible professionals will opt to 
participate in the eRx Incentive Program through the registry-based 
reporting mechanism in CYs 2012 through 2014. We do not anticipate, 
however, any additional burden for eligible professionals to report 
data to a registry as eligible professionals opting for registry-based 
reporting will more than likely already be reporting data to the 
registry for other purposes. Little, if any, additional data will need 
to be reported to the registry for purposes of participation in the 
2012, 2013, and 2014 eRx Incentive Program since the only information 
that the registry will need to report to us is the number of times the 
eligible professional electronically prescribed. However, eligible 
professionals will need to authorize or instruct the registry to submit 
quality measures results and numerator and denominator data on the 
electronic prescribing measure to CMS on their behalf. We estimate that 
the time and effort associated with this will be approximately 5 
minutes for each eligible professional that wishes to authorize or 
instruct the registry to submit quality measures results and numerator 
and denominator data on the electronic prescribing measure to CMS on 
their behalf.
    Based on our final decision to consider only registries qualified 
to submit Physician Quality Reporting System quality measures results 
and numerator and denominator data on quality measures to CMS on their 
participants' behalf for the 2012 and 2013 Physician Quality Reporting 
System reporting periods to be qualified to submit results and 
numerator and denominator data on the electronic prescribing measure 
for the respective eRx Incentive Program reporting periods that occur 
in 2012 and 2013, there will be no need for a registry to undergo a 
separate self-nomination process for the eRx Incentive Program and 
therefore, no additional burden associated with the registry self-
nomination process.
    There will also be a burden to the registry associated with the 
registry calculating results for the electronic prescribing measure 
from the data submitted to the registry by its participants and 
submitting the quality measures results and numerator and denominator 
data on the electronic prescribing quality measure to CMS on behalf of 
their participants. We expect that the time needed for a registry to 
review the electronic prescribing measure's specifications, calculate 
the measure's results, and submit the measure's results and numerator 
and denominator data on their participants' behalf will vary along with 
the number of eligible professionals reporting data to the registry. 
However, we believe that registries already perform many of these 
activities for their participants. Since the eRx Incentive Program 
consists of only one measure, we believe that the burden associated 
with the registry reporting the measure's results and numerator and 
denominator to CMS on behalf of their participants will be minimal.
(3) Burden Estimate on Participation in the eRx Incentive Program via 
the EHR-Based Reporting Mechanism--Individual Eligible Professionals 
and Group Practices
    For the EHR-based reporting mechanism, the eligible professional 
must either extract the necessary clinical data from his or her EHR and 
submit the necessary data to the CMS-designated clinical data warehouse 
or have an EHR data submission vendor extract the necessary clinical 
data from his or her EHR and submit the necessary data to CMS on the 
professional's behalf. Because this manner of reporting quality data to 
CMS was first added to the eRx Incentive Program in 2010 and eligible 
professionals are not required to (and were not previously required to) 
indicate to us how they intend to report the electronic prescribing 
measure, it is difficult to estimate how many eligible professionals 
will opt to participate in the eRx Incentive Program through the EHR-
based reporting mechanism for reporting periods that occur in CYs 2012 
and 2013. We believe that once an eligible professional's EHR is 
programmed by the vendor to allow data submission to CMS, the burden to 
the eligible professional associated with submission of data on the 
electronic prescribing measure should be minimal. The eligible 
professional who chooses to submit the electronic prescribing measure 
data directly to CMS from his or her EHR will have to have access to a 
CMS-specified identity management system, such as IACS. We believe it 
takes less than 1 hour to obtain access to the identity management 
system.
    Because only EHR products and data submission vendors qualified for 
2012 and 2013 Physician Quality Reporting System reporting periods may 
be used to submit data on the electronic prescribing measure for the 
respective eRx Incentive Program reporting periods that occur in CYs 
2012 and 2013, there is no need for EHR vendors and/or their products 
to undergo a separate self-nomination process for the eRx Incentive 
Program and therefore, no

[[Page 73450]]

additional burden associated with the self-nomination process for the 
eRx Incentive Program.
    There will also be a burden to the EHR vendor associated with the 
EHR vendor programming its EHR product(s) to extract the clinical data 
that the eligible professional and/or vendor will need to submit to CMS 
for purposes of reporting the electronic prescribing measure. The time 
needed for an EHR vendor to review the measure's specifications and 
program its product to submit data on the measure to the CMS-designated 
clinical data warehouse will be dependent on the EHR vendor's 
familiarity with the electronic prescribing measure, the vendor's 
system capabilities, as well as the vendor's programming capabilities. 
Since only EHR products qualified for 2012 and 2013 Physician Quality 
Reporting System reporting periods will qualify for the respective eRx 
Incentive Program reporting periods that occur in CY 2012 or 2013, and 
the eRx Incentive Program consists of only one measure, we believe that 
any burden associated with the EHR vendor to program its product(s) to 
submit data on the electronic prescribing measure to the CMS-designated 
clinical data warehouse will be minimal.
(4) Burden Estimate on Participation in the eRx Incentive Program--
Group Practices
    Finally, with respect to the criteria for group practices to be 
successful electronic prescribers for the 2012 and 2013 incentive, as 
well as with regard to the 2013 and 2014 payment adjustments, as 
discussed in section VI.F.2. of this final rule with comment period, 
respectively, group practices have the same options as individual 
eligible professionals in terms of the form and manner for reporting 
the electronic prescribing measure (that is, group practices have the 
option of reporting the measure through claims, a qualified registry, 
or a qualified EHR product). There are only 2 differences between the 
requirements for an individual eligible professional and a group 
practice: (1) The fact that a group practice must self-nominate; and 
(2) a difference in the number of times that a group practice must 
report the electronic prescribing measure.
    We do not anticipate any additional burden associated with the 
group practice self-nomination process since we limit the group 
practices to those selected to participate in the Physician Quality 
Reporting System GPRO. The practice only will need to indicate its 
desire to participate in the eRx GPRO at the same time it self-
nominates for the Physician Quality Reporting System GPRO and indicate 
how it intends to report the electronic prescribing measure.
    In terms of the burden to group practices comprised of 25 to 99 
eligible professionals associated with submission of the electronic 
prescribing measure, we believe that this will be similar to the burden 
to individual eligible professionals for submitting the electronic 
prescribing measure. In fact, overall, there could be less burden 
associated with a practice participating as a group rather than as 
individual eligible professionals because the total number of reporting 
instances required by the group could be less than the total number of 
reporting instances that will be required if each member of the group 
separately reported the electronic prescribing measure. Thus, we 
believe that the burden to a group practice associated with reporting 
the electronic prescribing measure could range from almost no burden 
(for groups who choose to do so through a qualified EHR or registry) to 
18.22 hours (1.75 minutes per measure x 1 measure x 625 cases per 
measure) for a group practice that chooses to report the electronic 
prescribing measures through the claims submission process. 
Consequently, the total estimated cost per group practice to report the 
electronic prescribing measure could be as high as $1,043.75 ($1.67 per 
measure x 1 measure x 625 cases per measure).
    In terms of the burden to group practices comprised of 100 or more 
eligible professionals associated with submission of the electronic 
prescribing measure, we believe that this will be similar to the burden 
to individual eligible professionals for submitting the electronic 
prescribing measure. In fact, overall, there could be less burden 
associated with a practice participating as a group rather than as 
individual eligible professionals because the total number of reporting 
instances required by the group could be less than the total number of 
reporting instances that will be required if each member of the group 
separately reported the electronic prescribing measure. Thus, we 
believe that the burden to a group practice associated with reporting 
the electronic prescribing measure could range from almost no burden 
(for groups who choose to do so through a qualified EHR or registry) to 
72.92 hours (1.75 minutes per measure x 1 measure x 2500 cases per 
measure) for a group practice that chooses to report the electronic 
prescribing measures through the claims submission process. 
Consequently, the total estimated cost per group practice to report the 
electronic prescribing measure could be as high as $4,175 ($1.67 per 
measure x 1 measure x 2500 cases per measure).
    As with individual eligible professionals, we believe that group 
practices that choose to participate in the eRx GPRO through the 
registry-based reporting mechanism of the electronic prescribing 
measure will more than likely already be reporting data to the 
registry. Little, if any, additional data will need to be reported to 
the registry for purposes of participation in the eRx Incentive Program 
for CYs 2012 through 2014 beyond authorizing or instructing the 
registry to submit quality measures results and numerator and 
denominator data on the electronic prescribing measure to CMS on their 
behalf. We estimate that the time and effort associated with this 
registry option will be approximately 5 minutes for each group practice 
that wishes to authorize or instruct the registry to submit quality 
measures results and numerator and denominator data on the electronic 
prescribing measure to CMS on their behalf.
    For group practices that choose to participate in the eRx Incentive 
Program for CYs 2012 through 2014 via the EHR-based reporting of the 
electronic prescribing mechanism, once the EHR is programmed by the 
vendor to allow data submission to CMS, the burden to the group 
practice associated with submission of data on the electronic 
prescribing measure should be minimal.
4. Medicare Electronic Health Record (EHR) Incentive Program for 
Eligible Professionals for the 2012 Payment Year
    The EHR Incentive Program (discussed in section VI.H. of this final 
rule with comment period) is a voluntary program whereby eligible 
professionals (EPs) may earn an incentive payment for demonstrating 
meaningful use of certified EHR technology, which includes among other 
requirements, the submission of clinical quality measures (CQMs). The 
``Electronic Health Record Incentive Program'' final rule (75 FR 44314 
through 75 FR 44588) describes the CQMs and the CQM reporting 
mechanisms that will be available to EPs who choose to participate in 
the EHR Incentive Program (75 FR 44380) and established the criteria 
for achieving meaningful use in Stage 1, which includes CY 2012. In 
that final rule, for CY 2012, we estimated that approximately 385,954 
Medicare EPs will be eligible to receive an incentive under the EHR 
Incentive Program (75 FR 44518). Section VI.H.2. of this final rule 
with comment period finalizes

[[Page 73451]]

changes to the EHR Incentive Program for EPs for the 2012 payment year 
with respect to the reporting of CQMs for purposes of achieving 
meaningful use. Aside from continuing the attestation method of 
reporting CQMs, we will allow the reporting of CQMs for purposes of 
meeting the CQM objective for demonstrating meaningful use through 
participation in the Physician Quality Reporting System-Medicare EHR 
Incentive Pilot. Eligible professionals may participate in the Pilot by 
submitting CQMs via (1) a Physician Quality Reporting System qualified 
EHR data submission vendor or (2) an EHR-based reporting option using 
the EP's certified EHR technology, which must also be a Physician 
Quality Reporting System qualified EHR.
    Because the EHR Incentive Program is a voluntary program, EPs may 
choose whether to participate and attest that they have met the 
meaningful use objectives and measures. Registration for the EHR 
Incentive Program opened in January 2011. At this time, we do not have 
sufficient data available on participation in the EHR Incentive Program 
by EPs to revise the final rule's estimate of how many EPs will opt to 
participate in the EHR Incentive Program for payment year 2012.
    We believe the burden associated with actually reporting CQMs will 
vary depending on the reporting mechanism selected by the EP. 
Attestation to the objectives and measures is the only method available 
for EPs to demonstrate that they have met the meaningful use criteria 
in 2011. Attestation was first available on April 18, 2011 and we do 
not yet have sufficient data on the 2011 participation in the EHR 
Incentive Program. Therefore, it is difficult to estimate the level of 
participation in the Pilot versus the number of EPs that will prefer to 
attest to the CQMs. However, we believe that the number of EPs who 
choose to participate via attestation will largely be those who are not 
participating in both the EHR Incentive Program and Physician Quality 
Reporting System. This is because EPs participating in the Physician 
Quality Reporting System will be more likely to participate in the 
Pilot.
    As we estimated in the EHR Incentive Program final rule, we 
estimate that it will take 8 hours and 52 minutes for an EP to attest 
that during the EHR reporting period, the EP used certified EHR 
technology, specify the technology, and satisfied all Stage 1 
meaningful use core criteria for payment year 2012 (75 FR 44518). We 
estimate that it will further take an additional 0.5 hours to select 
and attest to the clinical quality measures, in the format and manner 
specified by CMS (75 FR 44517).
    There will be no additional time burden for eligible professionals 
to report CQM data to a qualified EHR data submission vendor as EPs who 
choose this option for the Pilot will more than likely already be 
reporting data to the qualified EHR data submission vendor for other 
purposes, such as the Physician Quality Reporting System, and the 
qualified EHR data submission vendor will merely be re-packaging the 
data for use in the EHR Incentive Program. Furthermore, EPs more than 
likely will not need to authorize or instruct the qualified EHR data 
submission vendor to submit CQM data to CMS on their behalf because 
this likely will have already been done as a requirement for reporting 
via a qualified EHR data submission vendor under the Physician Quality 
Reporting System.
    Qualified EHR data submission vendors interested in submitting CQM 
data to CMS on their participants' behalf will not need to complete a 
self-nomination process in order to be considered qualified to submit 
on behalf of EPs as this process will have already been performed for 
the Physician Quality Reporting System. Therefore, we believe that 
there is no additional burden aside from the burden associated with 
being a Physician Qualified Reporting System qualified EHR data 
submission vendor for such vendors to submit CQMs on behalf of EPs.
    For EPs who choose to participate in the Pilot via direct data 
submission to CMS from the EP's certified EHR technology, an EP must 
have access to a CMS-specified identity management system, such as 
IACS, to participate in the Physician Quality Reporting System or eRx 
Incentive Program. EPs that choose the EHR-based reporting pilot to 
report CQMs will do so only if they are participating in the Physician 
Quality Reporting System. As such, we believe there will be no 
additional burden on EPs to have access to a CMS-specified identity 
management system if the EP is already participating in the Physician 
Quality Reporting System. With respect to submitting the actual 2012 
data file in 2013, we believe that this will take an EP no more than 2 
hours, depending on the number of patients on which the EP is 
submitting. We believe that once the EHR is programmed by the vendor to 
allow data submission to CMS and the EP participates in the Physician 
Quality Reporting System, the additional burden to the EP associated 
with electronic submission of the CQMs should be minimal. Since this is 
a new reporting mechanism for the EHR Incentive Program 2012 payment 
year, it is difficult to predict the level of participation in EHR-
based reporting. However, we believe that the number of EPs who choose 
to participate in the EHR-based reporting option for the Pilot will be 
the same as the number of eligible professionals who choose the EHR-
based reporting mechanism for the Physician Quality Reporting System. 
This is primarily because in addition to being certified EHR 
technology, the technology used under this reporting option will need 
to be qualified according to the Physician Quality Reporting System 
qualification process.
    The burden associated with the EHR vendor programming its EHR 
product(s) to extract the clinical data that the EP or vendor needs to 
submit to CMS for purposes of reporting CQMs will be dependent on the 
EHR vendor's familiarity with the EHR Incentive Program and Physician 
Quality Reporting System, the vendor's system capabilities, as well as 
the vendor's programming capabilities. As we already are requiring 
qualified EHRs vendors to perform these functions under the Physician 
Quality Reporting System, the burden for submitting CQMs under the EHR 
Incentive Program will be similar to the EHR vendor reporting burden 
under the Physician Quality Reporting System. For vendors who already 
have these necessary capabilities, we estimate the total burden hours 
to be 40 hours at a rate of $40/hour for a total burden estimate of 
$800 ($40/hour x 40 hours per vendor). However, given the variability 
in the capabilities of the vendors, those vendors with minimal 
experience will have a burden of approximately 200 hours at $40/hour, 
for a total estimate of $8,000 per vendor ($40/hour x 200 hours per EHR 
vendor).
    To obtain copies of the supporting statement and any related forms 
for the paperwork collections referenced above, access CMS' Web site at 
http://www.cms.gov/PaperworkReductionActof1995/PRAL/list.asp#TopOfPage 
or email your request, including your address, phone number, OMB 
number, and CMS document identifier, to Paperwork@cms.hhs.gov, or call 
the Reports Clearance Office at (410) 786-1326.
    If you comment on these information collection and recordkeeping 
requirements, please do either of the following:
    1. Submit your comments electronically as specified in the 
ADDRESSES section of this final rule with comment period; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and

[[Page 73452]]

Budget, Attention: CMS Desk Officer, [CMS-1524-FC] Fax: (202) 395-5806; 
or Email: OIRA_submission@omb.eop.gov.

VIII. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

IX. Regulatory Impact Analysis

A. Statement of Need

    This final rule with comment period is necessary in order to make 
payment and policy changes under the Medicare PFS and to make required 
statutory changes under the Affordable Care Act and MIPPA and other 
statutory changes. This final rule with comment period is also 
necessary to make changes to the Part B drug payment policy and other 
related Part B related policies.

B. Overall Impact

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999) and the Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. A regulatory impact analysis (RIA) must be prepared for 
major rules with economically significant effects ($100 million or more 
in any 1 year). This final rule with comment period has been designated 
as ``economically'' significant, under section 3(f)(1) of Executive 
Order 12866 and hence also a major rule under the Congressional Review 
Act. Accordingly, the rule has been reviewed by the Office of 
Management and Budget. We have prepared an RIA, that to the best of our 
ability presents the costs and benefits of the final rule with comment 
period. We solicited comment on the RIA provided. We received one 
comment regarding the RIA.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities, if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, small entities 
include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Most hospitals and most other providers and 
suppliers are small entities, either by nonprofit status or by having 
revenues of $7.0 million to $34.5 million in any 1 year (for details 
see the SBA's Web site at http://www.sba.gov/content/table-small-business-size-standards (refer to the 620000 series)). Individuals and 
States are not included in the definition of a small entity. The RFA 
requires that we analyze regulatory options for small businesses and 
other entities. A RFA analysis must include a justification concerning 
the reason action is being taken, the kinds and number of small 
entities the rule affects, and an explanation of any meaningful options 
that achieve the objectives with less significant adverse economic 
impact on the small entities.
    For purposes of the RFA, physicians, NPPs, and suppliers including 
IDTFs are considered small businesses if they generate revenues of $10 
million or less based on SBA size standards. Approximately 95 percent 
of physicians are considered to be small entities. There are over 1 
million physicians, other practitioners, and medical suppliers that 
receive Medicare payment under the PFS.
    Because we acknowledge that many of the affected entities are small 
entities, the analysis provided here and throughout the preamble of 
this final rule with comment period constitutes our Final Regulatory 
Flexibility Act (FRFA) analysis for the remaining provisions. This 
includes alternatives considered for the various final policies in this 
rule. We solicited public comment on the IRFA analysis provided in the 
proposed rule, but did not receive any comments that were in scope. We 
conclude that this final rule with comment has a significant impact on 
a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. 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 for Medicare payment regulations and has fewer than 
100 beds. We are not preparing an analysis for section 1102(b) of the 
Act because the Secretary has determined that this final rule with 
comment period would not have a significant impact on the operations of 
a substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2011, that 
threshold is approximately $136 million. This final rule with comment 
period does not contain mandates that will impose any costs on State, 
local, or tribal governments in aggregate, or by the private sector, of 
$136 million respectively.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. This final rule with comment period will not have a 
substantial direct effect on State or local governments, preempt 
States, or otherwise have a Federalism implication.
    We have prepared the following analysis, which together with the 
information provided in the rest of this preamble, meets all assessment 
requirements. The analysis explains the rationale for and purposes of 
this final rule with comment period; details the costs and benefits of 
the rule; analyzes alternatives; and presents the measures we would use 
to minimize the burden on small entities. As indicated elsewhere in 
this final rule with comment period, we are implementing a variety of 
changes to our regulations, payments, or payment policies to ensure 
that our payment systems reflect changes in medical practice and the 
relative value of services. We provide information for each of the 
policy changes in the relevant sections of this final rule with comment 
period. We are unaware of any relevant Federal rules that duplicate, 
overlap, or conflict with this final rule with comment period. The 
relevant sections of this final rule with comment period contain a

[[Page 73453]]

description of significant alternatives if applicable.

C. RVU Impacts

1. Resource-Based Work, PE, and Malpractice RVUs
    Section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or 
decreases in RVUs may not cause the amount of expenditures for the year 
to differ by more than $20 million from what expenditures would have 
been in the absence of these changes. If this threshold is exceeded, we 
make adjustments to preserve budget neutrality.
    Our estimates of changes in Medicare revenues for PFS services 
compare payment rates for CY 2011 with final payment rates for CY 2012 
using CY 2010 Medicare utilization for all years. To the extent that 
there are year-to-year changes in the volume and mix of services 
provided by physicians, the actual impact on total Medicare revenues 
will be different than those shown in Table 84. The payment impacts 
reflect averages for each specialty based on Medicare utilization. The 
payment impact for an individual physician would be different from the 
average, based on the mix of services the physician furnishes. The 
average change in total revenues would be less than the impact 
displayed here because physicians furnish services to both Medicare and 
non-Medicare patients and specialties may receive substantial Medicare 
revenues for services that are not paid under the PFS. For instance, 
independent laboratories receive approximately 85 percent of their 
Medicare revenues from clinical laboratory services that are not paid 
under the PFS.
    Table 84 shows only the payment impact on PFS services. We note 
that these impacts do not include the effect of the January 2012 
conversion factor changes under current law. The annual update to the 
PFS conversion factor is calculated based on a statutory formula that 
measures actual versus allowed or ``target'' expenditures, and applies 
a sustainable growth rate (SGR) calculation intended to control growth 
in aggregate Medicare expenditures for physicians' services. This 
update methodology is typically referred to as the ``SGR'' methodology, 
although the SGR is only one component of the formula. Medicare 
physician fee schedule payments for services are not withheld if the 
percentage increase in actual expenditures exceeds the SGR. Rather, the 
PFS update, as specified in section 1848(d)(4) of the Act, is adjusted 
to eventually bring actual expenditures back in line with targets. If 
actual expenditures exceed allowed expenditures, the update is reduced. 
If actual expenditures are less than allowed expenditures, the update 
is increased. We currently estimate that the statutory formula used to 
determine the physician update will result in a CY 2012 conversion 
factor of 24.6712 which represents a PFS update of -27.4 percent. By 
law, we are required to make these reductions in accordance with 
section 1848(d) and (f) of the Act, and these reductions can only be 
averted by an Act of the Congress. While the Congress has provided 
temporary relief from these reductions for every year since 2003, a 
long-term solution is critical. We are committed to working with the 
Congress to permanently reform the SGR methodology for Medicare 
physician fee schedule updates so doctors and patients no longer have 
to worry about the stability and adequacy of their payments from 
Medicare.
    The following is an explanation of the information represented in 
Table 84:
     Column A (Specialty): The Medicare specialty code as 
reflected in our physician/supplier enrollment files.
     Column B (Allowed Charges): The aggregate estimated PFS 
allowed charges for the specialty based on CY 2010 utilization and CY 
2011 rates. That is, allowed charges are the PFS amounts for covered 
services and include coinsurance and deductibles (which are the 
financial responsibility of the beneficiary). These amounts have been 
summed across all services furnished by physicians, practitioners, and 
suppliers within a specialty to arrive at the total allowed charges for 
the specialty.
     Column C (Impact of Work and Malpractice (MP) RVU 
Changes): This column shows the estimated CY 2012 impact on total 
allowed charges of the changes in the work and malpractice RVUs, 
including the impact of changes due to potentially misvalued codes. 
These impacts are primarily due to the multiple procedure payment 
reduction (MPPR) for the professional component of advanced imaging 
services.
     Column D (Impact of PE RVU Changes--Full): This column 
shows the estimated CY 2012 impact on total allowed charges of the 
changes in the PE RVUs if there were no remaining transition to the 
full use of the PPIS data.
     Column E (Impact of PE RVU Changes--Tran): This column 
shows the estimated CY 2012 impact on total allowed charges of the 
changes in the PE RVUs under the third year of the 4-year transition to 
the full use of the PPIS data. This column also includes the impact of 
the MPPR policy and, and the impact of changes due to potentially 
misvalued codes.
     Column F (Combined Impact--Full): This column shows the 
estimated CY 2012 combined impact on total allowed charges of all the 
changes in the previous columns if there were no remaining transition 
to the new PE RVUs using the PPIS data.
     Column G (Combined Impact--Tran): This column shows the 
estimated CY 2012 combined impact on total allowed charges of all the 
changes in the previous columns under the third year of the 4-year 
transition to the new PE RVUs using the PPIS data. These are the 
combined impacts for CY 2012.
BILLING CODE 4120-01-P

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[[Page 73455]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.201

BILLING CODE 4120-01-C
2. CY 2012 PFS Impact Discussion
a. Changes in RVUs
    The most widespread specialty impacts of the RVU changes are 
generally related to several factors. First, as discussed in section 
II.A.2. of this final rule with comment period, we are currently 
implementing the third year of the 4-year transition to new PE RVUs 
using the PPIS data that were adopted in the CY 2010 PFS final rule 
with comment period. The impacts of the third year of the transition 
are generally consistent with the impacts that would be expected based 
on the impacts displayed in the CY 2011 PFS final rule with comment 
period.
    The second general factor contributing to the CY 2012 impacts shown 
in Table 84 is a secondary effect of the CY 2011 rescaling of the RVUs 
so that, in the aggregate, they match the work, PE, and malpractice 
proportions in the revised and rebased MEI for CY 2011. That is, the 
rebased MEI had a greater proportion attributable to malpractice and PE 
and, correspondingly, a lesser proportion attributable to work. 
Specialties that have a high proportion of total RVUs attributable to 
work, such as emergency medicine, experienced a decrease in aggregate 
payments as a result of this rescaling, while specialties that have a 
high proportion attributable to PE, such as diagnostic testing 
facilities, experienced an increase in aggregate payments. (For further 
details on the MEI rebasing, see the discussion beginning on (75 FR 
73262) in the CY 2011 PFS final rule.)
    Table 86 also includes the impacts resulting from our expansion of 
the current MPPR policy to the professional component of advanced 
imaging services. We estimate that this policy will redistribute 
approximately $50 million through a small increase in the conversion 
factor and a small adjustment to all PE RVUs. We estimate that this 
change would primarily reduce payments to the specialties of radiology 
and interventional radiology. Finally, Table 84 also reflects the 
impacts of our final adjustments to improve the accuracy of the time 
associated with the work RVUs for certain services, including group 
therapy services, as discussed previously in section II.A. of this 
final rule with comment period.
    Comment: We received comments asking for clarification of the 
secondary effect of the CY 2011 rescaling of the RVUs for the revised 
and rebased MEI.
    Response: As stated in the CY 2012 PFS proposed rule (ADD CITATION 
TO PAGE), a general factor contributing to the CY 2012 impacts is an 
effect of the CY 2011 rescaling of the RVUs so that, in the aggregate, 
they match the work, PE, and malpractice proportions in the revised and 
rebased MEI for CY 2011. That is, the rebased MEI had a greater 
proportion attributable to malpractice and PE and, correspondingly, a 
lesser proportion attributable to work. Specialties that have a high 
proportion of total RVUs attributable to work, such as emergency 
medicine, experienced a decrease in aggregate payments as a result of 
this rescaling, while specialties that have a high proportion 
attributable to PE, such as diagnostic testing facilities, experienced 
an increase in aggregate payments. This occurs because we allocate 
indirect practice expenses to the code level partly on the basis of the 
direct practice expenses and the physician work RVUs. The rescaling of 
the RVUs for the revised and rebased MEI slightly increased the 
proportion of the indirect allocation based on the direct practice 
expenses and decreased the proportion based on the work RVUs.
b. Combined Impact
    Column G of Table 84 displays the estimated CY 2012 combined impact 
on total allowed charges by specialty of all the final RVU and MPPR 
changes. These impacts range from an increase of 4 percent for 
physical/occupational therapy and portable x-ray suppliers to

[[Page 73456]]

a decrease of 6 percent for radiation oncology and radiation therapy 
centers. Again, these impacts are estimated prior to the application of 
the negative CY 2012 Conversion Factor (CF) update applicable under the 
current statute.
    Table 85 shows the estimated impact on total payments for selected 
high-volume procedures of all of the changes discussed previously. We 
have included CY 2012 payment rates with and without the effect of the 
CY 2012 negative PFS CF update for comparison purposes. We selected 
these procedures because they are the most commonly furnished by a 
broad spectrum of physician specialties. There are separate columns 
that show the change in the facility rates and the nonfacility rates. 
For an explanation of facility and nonfacility PE, we refer readers to 
Addendum A of this final rule with comment period.
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BILLING CODE 4120-01-C

D. Effects of Annual Review Process for Potentially Misvalued Codes 
Under the PFS

    The process we are adopting in this final rule with comment period 
to consolidate the Five-Year Reviews of Work and PE RVUs with the 
annual review of potentially misvalued codes, is not anticipated to 
have a budgetary impact in CY 2012. As noted previously, to the extent 
that we have finalized revised RVUs for codes identified under the 
potentially misvalued codes initiative for CY 2012, Table 84 includes 
the estimated CY 2012 impact on total allowed charges of the changes in 
the RVUs for these codes.

E. Effect of Final Revisions to Malpractice RVUs

    As discussed in section III.B.3.b. of this final rule with comment 
period, we revised the malpractice risk factors assigned to a limited 
number of cardiothoracic surgery services. The utilization of many of 
these services is zero, while the others have a very low utilization. 
Therefore, we estimate no significant budgetary impact from the final 
changes to the MP RVUs due to the very low utilization of these 
services.

F. Effect of Final Changes to Geographic Practice Cost Indices (GPCIs)

    As discussed in section II.D. of this final rule with comment 
period, we are required to update the GPCI values at least every 3 
years and phase in the adjustment over 2 years (if there has not been 
an adjustment in the past year). For CY 2012, we are finalizing 
revisions to the PE GPCIs for each Medicare locality, as well as the 
cost share weights for all three GPCI components. Moreover, the final 
revised PE GPCI values are a result of our analysis of the PE 
methodology as required by section 1848(e)(1)(H)(iv) of the Act. The 
final GPCIs rely upon the 2006-2008 American Community Survey (ACS) 
data to determine the relative cost differences in the office rent 
component of the PE GPCIs. In addition, we are finalizing the use of 
2006-2008 Bureau of Labor and Statistics (BLS) Occupational Employment 
Statistics (OES) data to determine the employee compensation component. 
Further, we are finalizing that the occupations to be used in the 
calculation of the employee compensation component will include the 
full range of non-physician occupations which are employed within the 
offices of physicians industry. Lastly, we are finalizing a purchased 
services index that will be used to geographically adjust for 
differences in the labor-related share of the industries occupying the 
``All Other Services'' and ``Other Professional Expenses'' 2006-based 
MEI categories.
    We are finalizing a cost share weight for the PE GPCIs of 47.439 
percent. For the employee compensation portion of the PE GPCIs, we are 
using the non-physician employee compensation category weight of 19.153 
percent. The fixed capital and utilities MEI categories were combined 
to achieve a total office rent weight of 10.223 percent. In order to 
calculate the purchased services index, we are finalizing our proposal 
to merge the corresponding weights of the ``All Other Services'' and 
``Other Professional Expenses'' MEI categories to form a combined 
purchased services weight of 8.095. We are finalizing a cost share 
weight for the medical equipment, supplies, and other miscellaneous 
expenses component of 9.968 percent. Furthermore, the physician 
compensation cost category and its weight of 48.266 percent reflects 
the work GPCI cost share weight; the professional liability insurance 
weight of 4.295 percent reflects the malpractice GPCI cost share 
weight. A more detailed discussion on the final CY 2012 GPCI cost share 
weights can be found in section II.D. of this final rule with comment 
period.
    Additionally, section 1848(e)(1)(E) of the Act (as amended by 
section 103 of the Medicare and Medicaid Extenders Act of 2010) 
extended the 1.000 work GPCI floor through December 31, 2011. 
Therefore, the CY 2012 GPCIs reflect the sunset of the 1.000 work GPCI 
floor. Section 1848(e)(1)(G) of the Act (as amended by section 134(b) 
of the MIPPA) established a permanent 1.500 work GPCI floor in Alaska 
beginning January 1, 2009; therefore, the 1.500 work GPCI floor in 
Alaska will remain in place for CY 2012. Moreover, section 
1848(e)(1)(I) of the Act (as added by section 10324(c) of the 
Affordable Care Act) established a permanent 1.000 PE GPCI floor for 
services furnished in frontier States effective January 1, 2011.
    Addendum D to this final rule with comment period shows the 
estimated effects of the revised GPCIs on locality Geographic 
Adjustment Factors (GAFs) for CY 2012. The GAFs reflect the use of 
revised GPCI data and the updated cost share weights. The GAFs are a 
weighted composite of each locality's work, PE, and malpractice GPCIs 
using the national GPCI cost share weights. While we do not actually 
use the GAFs in computing the PFS payment for a specific service, they 
are useful in comparing the estimated overall costs and payments for 
different localities. The cumulative effects of all of the GPCI 
revisions, including the updated underlying GPCI data, updated cost 
share weights, and provisions of the Affordable Care Act, are reflected 
in the CY 2012 GPCI values that are displayed in Addendum E in this 
final rule with comment period.
    Table 86 illustrates the impact of moving from the current law CY 
2011 GAFs to the final CY 2012 GAFs by PFS locality. The table first 
shows the impact under current law and regulation, and then shows the 
impact due to the final rule modifications. As shown in the table, the 
primary driver of the CY 2012 impact is the current law expiration of 
the non-budget neutral increases to the CY 2011 GPCIs for lower cost 
areas that was required by the Affordable Care Act and the MMEA. The 
table is sorted by total impact from largest reductions to largest 
increases. When the overall impacts directly resulting from our final 
changes to the PE GPCI are isolated, these final rule impacts are much 
smaller (Column F) than the impacts due to current law and regulation. 
Specifically, the PE GPCI final rule changes cause a change in GAF 
values of less than or equal to one percentage point for approximately 
nine out of ten localities. The following description explains the 
information represented in Table 86 in more detail:
     Column (A): Medicare Locality--The PFS geographic 
locality.
     Column (B): CY 2011 GAF--The current CY 2011 Geographic 
Adjustment Factor for the locality, which includes the non-budget 
neutral increases to the CY 2011 GPCIs for lower expense areas 
authorized by the Affordable Care Act and the Medicare and Medicaid 
Extenders Act. These figures also reflect the first year of the 2-year 
transition to the latest GPCIs that began in 2011.
     Column (C): CY 2012 GAF (Current Law/Reg)--The CY 2012 
Geographic Adjustment Factor for the locality under current law and 
regulations, which includes the expiration of the non-budget neutral 
increases to the CY 2011 GPCIs for lower expense areas authorized by 
the Affordable Care Act and the MMEA. These numbers also reflect the 
end of the transition to the latest GPCIs that began in 2011.
     Column (D): CY 2012 GAF (Final):--The final CY 2012 
Geographic Adjustment Factor for each locality. The two largest drivers 
of the differences between the GAFs in column (C) and Column (D) are: 
The utilization of residential rent data from the Census Bureau's ACS 
data instead of the Department of Housing and Urban Development's FMR 
data, and the benchmarking of the GPCI practice expense weights to the 
2006-based MEI

[[Page 73460]]

cost share weights. The Geographic Adjustment Factors in this column 
are for 2012 and do not reflect any temporary increases to work and 
practice expense required by the Affordable Care Act.
     Column (E): Percent Change CY 2011 to CY 2012 (current)--
Impact of the expiration of the non-budget neutral increases to the CY 
2011 GPCIs for lower expense areas authorized by the Affordable Care 
Act and the MMEA and the end of the transition to the latest GPCIs that 
began in 2011.
     Column (F): Percent Change CY 2012 (No NPRM) to CY 2012 
(NPRM)--Impact of the four regulatory changes described previously.
     Column (G): Percent Change Combined Impact CY 2011 to CY 
2012--Combined impact of all changes from CY 2011 to CY 2012.
[GRAPHIC] [TIFF OMITTED] TR28NO11.204

[[Page 73461]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.205

[[Page 73462]]

[GRAPHIC] [TIFF OMITTED] TR28NO11.206

BILLING CODE 4120-01-C

G. Effects of Final Changes to Medicare Telehealth Services Under the 
Physician Fee Schedule

    As discussed in section II.E. of this final rule with comment 
period, we are finalizing our policy to add several new codes to the 
list of telehealth services and revise the criteria for adding services 
to the list of telehealth services. While we expect these changes to 
increase access to care in rural areas, based on recent utilization of 
similar services already on the telehealth list, we estimate no 
significant budgetary impact from the additions. In addition, the final 
revision to the telehealth criteria will be effective for CY 2013 PFS 
telehealth services, with no impact in CY 2012.

H. Effects of the Impacts of Other Provisions of the Final Rule With 
Comment Period

1. Part B Drug Payment: ASP Issues
    Application of our proposals for ``ASP Reporting Template Update'' 
and ``Reporting of ASP Units and Sales Volume for Certain Products,'' 
as discussed in section VI.A. of this final rule with comment period 
involve revisions to the existing ASP reporting template which will 
facilitate the accuracy and efficiency of data transfer from 
manufacturers. Any impacts are dependent on the status and quality of 
quarterly manufacturer data submissions, so we cannot quantify 
associated savings.
    Finally, as discussed in section VI.A. of this final rule with 
comment period, we provided for appropriate price substitutions that 
account for market-related pricing changes and would allow Medicare to 
pay based off lower market prices for those drugs and biologicals that 
consistently exceed the applicable threshold percentage. Based on 
estimates published in various OIG reports (see section VI.A. for a 
list of citations), we believe that this proposal will generate minor 
savings for the Medicare program and its beneficiaries since any 
substituted prices would be for amounts less than the calculated 106 
percent of the ASP.
2. Chiropractic Services Demonstration
    As discussed in section VI.B. of this final rule with comment 
period, we are continuing the recoupment of the $50 million in 
expenditures from this demonstration in order to satisfy the budget 
neutrality requirement in section 651(f)(1)(b) of the MMA. We initiated 
this recoupment in CY 2010 and this will be the third year. As 
discussed in the CY 2010 PFS final rule with comment period, we 
finalized a policy to recoup $10 million each year through adjustments 
to the PFS for all chiropractors in CYs 2010 through 2014. To implement 
this required budget neutrality adjustment, we are recouping $10 
million in CY 2012 by reducing the payment amount under the PFS for the 
chiropractic CPT codes (that is, CPT codes 98940, 98941, and 98942) by 
approximately 2 percent.
3. Extension of Payment for Technical Component of Certain Physician 
Pathology Services
    As discussed in section V.A. of this final rule with comment 
period, we are implementing the provision that specifies that for 
services furnished after December 31, 2011, an independent laboratory 
may not bill the Medicare contractor for the TC of physician pathology 
services furnished to a hospital inpatient or outpatient. The savings 
associated with implementing this provision are estimated to be 
approximately $80 million for CY 2012.
4. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a 
Personalized Prevention Plan: Incorporation of a Health Risk Assessment 
as Part of the Annual Wellness Visit
    As discussed in section VI.E. of this final rule with comment 
period, section 1861(s)(2)(FF) of the Act, as described more fully in 
section 1861(hhh), of the Act (as added by section 4103 of the 
Affordable Care Act) provides Medicare coverage for an annual wellness 
visit. Regulations for Medicare coverage of the AWV are established at 
42 CFR 410.15. The annual wellness visit is covered with no coinsurance 
or deductible when furnished by a health professional as that term is 
defined in 42 CFR 410.15. The annual wellness visit entails the 
creation of a personalized prevention plan for an individual and 
includes elements, such as updating medical and family history, 
identifying providers that regularly provide medical care to the 
individual, measurement of height, weight, and body mass index, 
identification of risk factors, the provision of personalized health 
advice, and development of a screening schedule (such as a checklist), 
and referrals as appropriate for additional preventive services. 
Section 1861(hhh)(1)(A) of the Act specifies that a personalized 
prevention plan for an individual includes a HRA that meets the 
guidelines established by the Secretary and takes into account the 
results of a HRA. We are proposing to incorporate the use and results 
of an HRA as part of the provision of personalized prevention plan 
services during the AWV. The estimated impact of incorporating the HRA 
as part of the

[[Page 73463]]

AWV is unknown for CY 2012. We specifically requested public comment on 
the following:
     The impact of use of the HRA on health professional 
practices.
     The burden on health professional practices of 
incorporating an HRA into subsequent AWVs, as well as the first AWV.
     The impact of the elements included in the definitions of 
first and subsequent AWVs.
     Modification of those AWV elements for which the Secretary 
has authority to determine appropriateness.
    A discussion of the comments we received, our responses, and our 
final policy for CY 2012 is available in section VI.E. of this final 
rule with comment period. Our final policy to increase payment for the 
AWV to acknowledge the increased clinical staff time required to 
incorporate the HRA into the AWV is subject to budget neutrality.
5. Physician Payment, Efficiency, and Quality Improvements--Physician 
Quality Reporting System
    As discussed in section VI.F.1 of this final rule with comment 
period, we are finalizing several different reporting options for 
eligible professionals who wish to participate in the 2012 Physician 
Quality Reporting System. Although there may be some cost incurred by 
CMS for maintaining the Physician Quality Reporting System measures and 
their associated code sets, and for expanding an existing clinical data 
warehouse to accommodate the final registry-based reporting, EHR-based 
reporting, and group practice reporting options for the 2012 Physician 
Quality Reporting System, we do not anticipate a significant cost 
impact on the Medicare program.
    With respect to the potential incentive payments that may be made 
to satisfactory reporters under the 2012 Physician Quality Reporting 
System, we estimate this amount for individual eligible professionals 
would be approximately $60 million. This estimate is derived from 
looking at our 2009 incentive payment of approximately $235 million and 
then accounting for the fact that the 2009 incentive payment was 2.0 
percent of an eligible professional's total estimated Medicare Part B 
PFS allowed charges for all such covered professional services 
furnished by the eligible professional during the 2009 reporting 
period. For 2012, the incentive payment is 0.5 percent of an eligible 
professional's total estimated Medicare Part B PFS allowed charges for 
all covered professional services furnished by an eligible professional 
during the 2012 reporting period. Although we expect that the lower 
incentive payment percentage for 2012 would reduce the total outlay by 
approximately one-fourth, we also expect more eligible professionals to 
participate in the 2012 Physician Quality Reporting System because we 
are finalizing multiple methods of data submission, additional 
alternative reporting methods, methods to align the Physician Quality 
Reporting System with the EHR Incentive Program and the Medicare Shared 
Savings Program, and CY 2013 as the reporting period for the 2015 
payment adjustment. We also believe that some eligible professionals 
will qualify for the additional 0.5 percent incentive authorized under 
section 1848(m)(7) of the Act (``Additional Incentive Payment'').
    With respect to estimated costs associated with reporting by 
individual eligible professionals, one factor that influences the cost 
to individual eligible professionals is the time and effort associated 
with identifying applicable Physician Quality Reporting System quality 
measures and reviewing and selecting a reporting option. This burden 
will vary with each individual eligible professional by the number of 
applicable measures, the eligible professional's understanding of the 
Physician Quality Reporting System, experience with Physician Quality 
Reporting System participation, and the method(s) selected by the 
eligible professional for reporting of the measures, and incorporating 
the reporting of the measures into the office work flows.
    In the proposed rule (72 FR 42938), we estimated an average 
practice labor cost of $40/hour for our impact analysis. However, in an 
effort to provide a more accurate labor cost estimate of participation 
for the 2012 Physician Quality Reporting System, we conducted an 
informal poll among a small sample of participants in the 2011 
Physician Quality Reporting System to determine what employees within 
an eligible professional's practice are involved with Physician Quality 
Reporting System activities. The poll revealed that a billing clerk 
typically handles administrative details with respect to participating 
under the Physician Quality Reporting System (such as submitting self-
nomination statements), whereas a computer analyst typically handles 
the reporting of Physician Quality Reporting System quality measures. 
Based on this information, we are changing our estimated labor costs 
associated with participating in the Physician Quality Reporting 
System.
    For purposes of this impact analysis, we will assume that a billing 
clerk will handle the administrative duties associated with 
participating in the 2012 Physician Quality Reporting System. According 
to information published by the Bureau of Labor Statistics, available 
at http://www.bls.gov/oes/current/oes433021.htm, the mean hourly wage 
for a billing clerk is $16.00/hour. Therefore, for purposes of handling 
administrative duties, we estimate an average labor cost of $16.00/
hour.
    In addition, for purposes of this impact analysis, we will assume 
that a computer analyst will engage in the duties associated with the 
reporting of 2012 Physician Quality Reporting System quality measures. 
According to information published by the Bureau of Labor Statistics, 
available at http://www.bls.gov/oes/current/oes151121.htm, the mean 
hourly wage for a computer analyst is $39.06/hour, or approximately 
$40.00/hour. Therefore, for purposes of reporting on 2012 Physician 
Quality Reporting System quality measures, we estimate an average labor 
cost of $40.00/hour.
    Participation in the CY 2012 Physician Quality Reporting System by 
individual eligible professionals and group practices is voluntary and 
individual eligible professionals and group practices may have 
different processes for integrating the collection of the Physician 
Quality Reporting System measures into their practice's work flows. 
Given this variability and the multiple reporting options that we 
provide, it is difficult to definitively estimate the impact of the 
Physician Quality Reporting System on providers. Furthermore, we 
believe that costs for eligible professionals who are participating in 
the Physician Quality Reporting System for the first time in 2012 would 
be considerably higher than the cost for eligible professionals who 
participated in the Physician Quality Reporting System in prior years. 
Some preparatory steps are needed to begin participating in the 
Physician Quality Reporting System. To the extent that we are retaining 
measures that an eligible professional has reported in a prior year and 
there are no changes to the measure's specifications from a prior year, 
such preparatory steps do not need to be repeated in subsequent years. 
In addition, for many eligible professionals, the cost of participating 
in the Physician Quality Reporting System is offset by the incentive 
payment, if earned.
    Assuming that it takes an individual eligible professional 
approximately 5 hours to review the Physician Quality

[[Page 73464]]

Reporting System quality measures, review the various reporting 
options, select the most appropriate reporting option, identify the 
applicable measures for which they can report the necessary 
information, and incorporate reporting of the selected measures into 
their office work flows, we estimate that the cost to eligible 
professionals associated with preparing to report Physician Quality 
Reporting System quality measures will be approximately $200 per 
individual eligible professional ($40 per hour x 5 hours).
    Another factor that influences the cost to individual eligible 
professionals is how they choose to report the Physician Quality 
Reporting System measures (that is, whether they select the claims-
based, registry-based or EHR-based reporting mechanism we are 
finalizing). For the claims-based reporting mechanism, estimates from 
the PVRP indicate the time needed to perform all the steps necessary to 
report quality data codes (QDCs) for 1 measure on a claim ranges from 
15 seconds (0.25 minutes) to 12 minutes for complicated cases or 
measures. In previous years, when we required reporting on 80 percent 
of eligible cases for claims-based reporting, we found that on average, 
the median number of reporting instances for each of the Physician 
Quality Reporting System measures was 9. Since we reduced the required 
reporting rate by over one-third to 50 percent, then for purposes of 
this impact analysis we will assume that an eligible professional will 
need to report each selected measure for 6 reporting instances, or 6 
cases. Assuming that an eligible professional, on average, will report 
3 measures since a majority of eligible professionals participate in 
the Physician Quality Reporting System by reporting individual measures 
via claims or registry and that an eligible professional reports on an 
average of 6 reporting instances per measure, we estimate that the cost 
to an individual eligible professional associated with the claims-based 
reporting option of Physician Quality Reporting System measures will 
range from approximately $2.64 (0.25 minutes per reporting instance x 6 
reporting instances per measure x 3 measures x $40/hour) to $144.00 (12 
minutes per reporting instance x 6 reporting instances per measure x 3 
measures x $40/hour). If an eligible professional satisfactorily 
reports, these costs will more than likely be negated by the incentive, 
if earned. For the 2009 Physician Quality Reporting System, which had a 
2.0 percent incentive, the mean incentive amount was close to $2,000 
for an individual eligible professional. For the registry-based 
reporting option, individual eligible professionals will generally 
incur a cost to submit data to registries. We estimate that fees for 
using a qualified registry will range from no charge, or a nominal 
charge, for an individual eligible professional to use a registry to 
several thousand dollars, with a majority of registries charging fees 
ranging from $500 to $1,000. However, our impact analysis is limited to 
the incremental costs associated with Physician Quality Reporting 
System reporting, which we believe are minimal. We believe that many 
eligible professionals who select the registry-based reporting option 
will already be utilizing the registry for other purposes and will not 
need to report additional data to the registry specifically for 
Physician Quality Reporting System. The registries also often provide 
the eligible professional services above and beyond what is required 
for the Physician Quality Reporting System.
    For the EHR-based reporting option, an individual eligible 
professional generally will incur a cost associated with purchasing an 
EHR product. Although we do not believe that the majority of eligible 
professionals will purchase an EHR solely for the purpose of 
participating in Physician Quality Reporting System, cost estimates for 
EHR adoption by eligible professionals from the EHR Incentive Program 
final rule (75 FR 44549) show that an individual eligible professional 
who chooses to do so will have to spend anywhere from $25,000 to 
$54,000 to purchase and implement an EHR and up to $18,000 annually for 
ongoing maintenance.
    Although we believe that the majority of eligible professionals 
attempting to qualify for the additional 0.5 percent incentive payment 
authorized by section 1848(m)(7) of the Act will be those who are 
already required by their Boards to participate in a Maintenance of 
Certification Program, individual eligible professionals who wish to 
qualify for the additional 0.5 percent incentive payment and are not 
currently participating in a Maintenance of Certification Program will 
also have to incur a cost for participating in a Maintenance of 
Certification Program. The manner in which fees are charged for 
participating in a Maintenance of Certification Program vary by 
specialty. Some Boards charge a single fee for participation in the 
full cycle of Maintenance of Certification Program. Such fees appear to 
range anywhere from over $1,100 to nearly $1,800 per cycle. Some Boards 
have annual fees that are paid by their diplomates. On average, ABMS 
diplomates pay approximately $200.00 per year for participating in 
Maintenance of Certification Program. Some Boards have an additional 
fee for the Maintenance of Certification Program Part III secure 
examination, but most Boards do not have additional charges for 
participation in practice/quality improvement activities.
    With respect to the final group practice requirements for 
satisfactorily submitting quality measures data for the CY 2012 
Physician Quality Reporting System discussed in section VI.F.1 of this 
final rule with comment period, group practices interested in 
participating in the CY 2012 Physician Quality Reporting System through 
the group practice reporting option (GPRO) may also incur a cost. 
However, for groups that satisfactorily report for the 2012 Physician 
Quality Reporting System, we believe these costs will be completely 
offset if the group practice earns the incentive payment since the 
group practice will be eligible for an incentive payment equal to 0.5 
percent of the entire group's total estimated Medicare Part B PFS 
allowed charges for covered professional services furnished by the 
group practice during the reporting period.
    One factor in the cost to group practices will be the costs 
associated with the self-nomination process. Similar to our estimates 
for staff involved with the claims-based reporting option for 
individual eligible professionals, we also estimate that the group 
practice staff involved in the group practice self-nomination process 
will have an average administrative labor cost of $16/hour. Therefore, 
assuming 2 hours for a group practice to decide whether to participate 
as a group or have members of the practice participate individually and 
4 hours for the self-nomination process, we estimate the total cost to 
a group practice associated with the group practice self-nomination 
process will be approximately $96 ($16/hour x 6 hours per group 
practice).
    For groups participating under the GPRO process that are comprised 
of 25 or more eligible professionals, another factor in the cost to the 
group will be the time and effort associated with the group practice 
completing and submitting the GPRO web interface. Based on the 
Physician Group Practice (PGP) demonstration's estimate that it takes 
approximately 79 hours for a group practice to complete the data 
collection, which uses the same data submission methods as those we 
have finalized, we estimate the cost

[[Page 73465]]

associated with a physician group completing the GPRO web interface 
will be approximately $4,740 ($40/hour x 79 hours per group practice).
    In addition to costs incurred by individual eligible professionals 
and group practices, registries and EHR vendors may also incur some 
costs related to the final requirements for the 2012 Physician Quality 
Reporting System. Registries interested in becoming ``qualified'' to 
submit on behalf of individual eligible professionals will also have to 
incur a cost associated with the vetting process, calculating quality 
measures results from the data submitted to the registry by its 
participants, and submitting the quality measures results, as well as 
numerator and denominator data on quality measures, to CMS on behalf of 
their participants. We estimate the registry self-nomination process 
will cost approximately $400 per registry ($40 per hour x 10 hours per 
registry). This cost estimate includes the cost of submitting the self-
nomination letter to CMS and completing the final CMS vetting process. 
Our estimate of $40 per hour average labor cost for registries is based 
on the assumption that registry staff include computer analysts. We do 
not believe that there are any additional costs for registries 
associated with a registry calculating quality measures results from 
the data submitted to the registry by its participants and submitting 
the quality measures results and numerator and denominator data on 
quality measures to CMS on behalf of their participants under the final 
program for 2012. We believe that the majority of registries already 
perform these functions for their participants.
    An EHR vendor interested in having its product(s) be used by 
individual eligible professionals to submit the final Physician Quality 
Reporting System measures to CMS for 2012 will have to complete the 
vetting process during 2012 and program its EHR product(s) to extract 
the clinical data that the eligible professional will need to submit to 
CMS for purposes of reporting the final 2012 quality measures in 2013 
as well. Previously qualified vendors will need to only update their 
electronic measure specifications and data transmission schema during 
2012 to incorporate any new EHR measures we are finalizing to maintain 
their qualification for the 2012 Physician Quality Reporting System. 
Therefore, for EHR vendors that were not previously qualified, we 
estimate the cost associated with completing the self-nomination 
process, including the vetting process with CMS officials, will be $400 
($40/hour x 10 hours per EHR vendor). Our estimate of a $40 per hour 
average labor cost for EHR vendors is based on the assumption that 
vendor staff include computer analysts. We believe that the cost 
associated with the time and effort needed for an EHR vendor to review 
the quality measures and other information and program the EHR product 
to enable individual eligible professionals to submit Physician Quality 
Reporting System quality measures data to the CMS-designated clinical 
warehouse will be dependent on the EHR vendor's familiarity with the 
Physician Quality Reporting System, the vendor's system's capabilities, 
as well as the vendor's programming capabilities. Some vendors already 
have the necessary capabilities and for such vendors, we estimate the 
total cost will be approximately $1,600 ($40/hour x 40 hours per 
vendor). However, given the variability in the capabilities of the 
vendors, we believe an estimate for those vendors with minimal 
experience will be approximately $8,000 per vendor ($40/hour x 200 
hours per EHR vendor).
[GRAPHIC] [TIFF OMITTED] TR28NO11.207

[[Page 73466]]

6. Incentives for Electronic Prescribing (eRx)--The Electronic 
Prescribing Incentive Program
    Section VI.F.2. of this final rule with comment period describes 
the Electronic Prescribing (eRx) Incentive Programs finalized for CYs 
2012 through 2014. To be considered a successful electronic prescriber 
in CYs 2012 through 2014, an individual eligible professional must meet 
the final requirements described in section VI.F.2. of this final rule 
with comment period.
    From 2009, over 90,000 eligible professionals participated in the 
eRx Incentive Program. We anticipate that despite a decrease in the 
applicable quality incentive percent from 2 percent in 2009 to 1 
percent (of total estimated Medicare Part B allowed charges for covered 
professional services) in 2012 and 0.5 percent in 2013, more eligible 
professionals (and group practices) will choose to participate in the 
eRx Incentive Program due to the 2013 and 2014 payment adjustments of 
1.5 percent and 2.0 percent, respectively (reduction of the physician 
fee schedule amount that would otherwise apply to such services in 2013 
and 2014), for eligible professionals who are not successful electronic 
prescribers. In order to become a successful electronic prescriber for 
purposes of the 2013 and 2014 payment adjustments under the 6-month 
payment adjustment reporting periods, we are finalizing more 
opportunities to report on the electronic prescribing measure by 
concentrating only on the numerator of the measure. Similar to the 
percentage increase from the 2008 to 2009 eRx Incentive Program, as 
well as taking into account the limitations and significant hardship 
exemptions we are finalizing for the 2013 and 2014 payment adjustments, 
we anticipate a 12 percent increase in the number of eligible 
professionals participating in the eRx Incentive Program from 2012 
through 2014. Therefore, for purposes of this burden analysis, we 
estimate that more than 100,800 unique TIN/NPI combinations will 
participate in the 2012, 2013, and 2014 eRx Incentive Program
    Although, as we stated previously, we expect participation in the 
eRx Incentive Program to increase due to the implementation of the 2013 
and 2014 payment adjustments, we do not believe this expected increase 
in participation will affect the number of eligible professionals 
participating in the eRx Incentive Program for purposes of earning an 
incentive. For the 2009 eRx Incentive Program, based on an incentive of 
2.0 percent of eligible professionals' total estimated Medicare Part B 
allowed charges for covered professional services, approximately $148 
million in total incentives were paid to eligible professionals with a 
mean incentive amount of approximately $3,000. Whereas the applicable 
quality incentive percent for 2009 was 2.0 percent, the applicable 
percent for the 2012 and 2013 incentives are 1.0 percent and 0.5 
percent, respectively. Since the applicable quality percent for the 
2012 incentive is half that of the 2009 incentive, we estimate that $74 
million in total incentives will be paid to eligible professionals for 
the 2012 incentive. Since the applicable quality percent for the 2013 
incentive is one-fourth that of the 2009 incentive, we estimate that 
$37 million in total incentives will be paid to eligible professionals 
for the 2013 incentive. Therefore, for the 2012 and 2013 incentives, we 
estimate that a total of $111 million will be distributed to eligible 
professionals who become successful electronic prescribers.
    With respect to the costs of participating in the eRx Incentive 
Program for eligible professionals and group practices, we estimate 
that the cost impact of the eRx Incentive Programs for CYs 2012 through 
2014 on the Medicare program will be the cost incurred for maintaining 
the electronic prescribing measure and its associated code set, and for 
maintaining the existing clinical data warehouse to accommodate the 
registry-based reporting and EHR-based reporting options for the 
electronic prescribing measure. However, we do not believe that the 
program for CYs 2012 through 2014 have a significant administrative 
cost impact on the Medicare program since much of this infrastructure 
has already been established for the eRx Incentive Program.
    Individual eligible professionals and group practices may have 
different processes for integrating data collection on the electronic 
prescribing measure into their practices' work workflows. Given this 
variability and the multiple reporting options that we are finalizing, 
it is difficult to accurately estimate the impact of the eRx Incentive 
Program for CYs 2012 through 2014 on providers. Furthermore, we believe 
that costs for eligible professionals who will participate in the eRx 
Incentive Program for the first time will be considerably higher than 
the cost for eligible professionals who participated in the eRx 
Incentive Program in prior years, as there are preparatory steps that 
an eligible professional will need to take to begin participating in 
the program. In addition, for many eligible professionals (especially 
those who participated in the eRx Incentive Program in prior years), we 
believe the cost of participating in the eRx Incentive Program in 2012 
or 2013 will be offset by the incentive payment, if earned. As a result 
of the payment adjustment that begins in 2012 and continues until 2014, 
the cost of not participating in the eRx Incentive Program for CYs 2012 
through 2014 could be higher than the cost of participating in the form 
of reduced Medicare payments as a result of the payment adjustment (if 
applicable).
    Any eligible professional who wishes to participate in the eRx 
Incentive Program must have a qualified electronic prescribing system 
in order to participate. Therefore, a one-time potential cost to some 
individual eligible professionals will be the cost of purchasing and 
using an electronic prescribing system, which varies by the commercial 
software package selected, the level at which the professional 
currently employs information technology in his or her practice and the 
training needed. One study indicated that a midrange complete 
electronic medical record with electronic prescribing functionality 
costs $2,500 per license with an annual fee of $90 per license for 
quarterly updates of the drug database after setup costs while 
standalone prescribing, messaging, and problem list system may cost 
$1,200 per physician per year after setup costs. Hardware costs and 
setup fees substantially add to the final cost of any software package. 
(Corley, S.T. (2003). ``Electronic prescribing: a review of costs and 
benefits.'' Topics in Health Information Management 24(1):29-38.). 
These are the estimates that we are using for our impact analysis.
    Similar to the Physician Quality Reporting System, one factor in 
the cost to individual eligible professionals is the time and effort 
associated with individual eligible professionals reviewing the 
electronic prescribing measure to determine whether it is applicable to 
them, reviewing the available reporting options and selecting one, 
gathering the required information, and incorporating reporting of the 
measure into their office work flows. Since the eRx Incentive Program 
consists of only 1 quality measure, we estimate 2 hours as the amount 
of time needed for individual eligible professionals to prepare for 
participation in the eRx Incentive Program. Information obtained from 
the PVRP, which was a predecessor to the Physician Quality Reporting 
System and was the first step for physician quality

[[Page 73467]]

reporting through certain quality metrics, indicated an average labor 
cost per practice of approximately $40/hour. To account for salary 
increases over time, we use an average practice labor cost of $40/hour 
for our estimates, based on an assumption of an average annual increase 
of approximately 3 percent. At an average cost of approximately $40/
hour, we estimate the total preparation costs to individual eligible 
professionals to be approximately $80 ($40/hour x 2 hours).
    Another factor that influences the cost to individual eligible 
professionals is how they choose to report the electronic prescribing 
measure (that is, whether they select the claims-based, registry-based 
or EHR-based reporting mechanism). For claims-based reporting, there 
will be a cost associated with reporting the appropriate QDC on the 
claims an individual eligible professional submits for payment. Based 
on the information from the PVRP described previously for the amount of 
time it takes a median practice to report one measure one time (1.75 
minutes) and the requirement to report 25 electronic prescribing events 
during 2012, we estimate the annual estimated cost per individual 
eligible professional to report the electronic prescribing measure via 
claims-submission will be $43.75 (1.75 minutes per case x 1 measure x 
25 cases per measure x $40/hour). We believe that for most successful 
electronic prescribers who earn an incentive, these costs will be 
negated by the incentive payment received given that the average 
incentive for eligible professionals who qualified for a 2009 eRx 
incentive was around $3,000.
    For eligible professionals who select the registry-based reporting 
mechanism, we do not anticipate any additional cost for individual 
eligible professionals to report data to a registry, as individual 
eligible professionals opting for registry-based reporting are more 
than likely already reporting data to the registry. Little if any, 
additional data will need to be reported to the registry for purposes 
of participation in the eRx Incentive Program for CYs 2012 through 
2014. Individual eligible professionals using registries for Physician 
Quality Reporting System will likely experience minimal, if any, 
increased costs charged by the registry to report this 1 additional 
measure.
    For EHR-based reporting, the eligible professional must extract the 
necessary clinical data from his or her EHR, and submit the necessary 
data to the CMS-designated clinical data warehouse. Once the EHR is 
programmed by the vendor to allow data submission to CMS, the cost to 
the individual eligible professional associated with the time and 
effort to submit data on the electronic prescribing measure should be 
minimal.
    With respect to the requirements for group practices for the 2012 
and 2013 incentives and 2013 and 2014 payment adjustments discussed in 
section VI.F.2. of this final rule with comment period, group practices 
have the same options as individual eligible professionals in terms of 
the form and manner for reporting the electronic prescribing measure 
(that is, group practices have the option of reporting the measure 
through claims, a qualified registry, or a qualified EHR product). 
There are only 2 differences between the requirements for an individual 
eligible professional and a group practice: (1) the fact that a group 
practice must self-nominate; and (2) the number of times a group 
practice must report the electronic prescribing measure. Overall, there 
could be less cost associated with a practice participating in the eRx 
Incentive Program as a group rather than the individual members of the 
group separately participating. We do not believe that there are any 
additional costs associated with the group practice self-nomination 
process since we are limiting the group practices to those selected to 
participate in the 2012, 2013, and/or 2014 respective Physician Quality 
Reporting System GPRO. The practices only must indicate their desire to 
participate in the eRx GPRO at the time they self-nominate for the 
Physician Quality Reporting System GPRO.
    The costs for a group practice reporting to an EHR or registry 
should be similar to the costs associated with registry and EHR 
reporting for an individual eligible professional, as the process is 
the same with the exception that more electronic prescribing events 
must be reported by the group. For similar reasons, the costs for a 
group practice reporting via claims should also be similar to the costs 
associated with claims-based reporting for an individual eligible 
professional. Therefore, we estimate that the costs for group practices 
who are selected to participate in the eRx Incentive Program for CYs 
2012 through 2014 will range from $799.17 (1.75 minutes per case x 1 
measure x 625 cases per measure x $40/hour) for groups comprised of 25-
99 eligible professionals participating to $2,916.67 (1.75 minutes per 
case x 2500 cases per measure x $40/hour) for the groups comprised of 
100 or more eligible professionals.
    We believe that the costs to individual eligible professionals and 
group practices associated with meeting the requirements for the 2013 
and 2014 payment adjustments will be similar to the costs of an 
eligible professional or group practice reporting the electronic 
prescribing measure for purposes of the 2012 and 2013 incentives. 
Specifically, we believe that the cost of reporting the electronic 
prescribing measure in one instance for purposes of the payment 
adjustment is identical to the cost of reporting the electronic 
prescribing measure for one instance on claims for purposes of the 
incentive payment. The only difference will be in the total costs for 
an individual eligible professional. Group practices are required to 
report the electronic prescribing measure for the same number of 
electronic prescribing events for both the 2012 and 2013 incentives and 
the 2013 and 2014 payment adjustments. Individual eligible 
professionals, however, are required to report the electronic 
prescribing measure for only 10 electronic prescribing events for 
purposes of the 2013 and 2014 payment adjustments, as opposed to 25 
electronic prescribing events for purposes of the 2012 and 2013 
incentives.
    Based on our decision to consider only registries qualified to 
submit quality measures results and numerator and denominator data on 
quality measures to CMS on their participant's behalf for the 2012, 
2013, and 2014 Physician Quality Reporting System to be qualified to 
submit results and numerator and denominator data on the electronic 
prescribing measure for eRx Incentive Program for CYs 2012, 2013, and 
2014, respectively, we do not estimate any cost to the registry 
associated with becoming a registry qualified to submit the electronic 
prescribing measure for CYs 2012 through 2014.
    The cost for the registry will be the time and effort associated 
with the registry calculating results for the electronic prescribing 
measure from the data submitted to the registry by its participants and 
submitting the quality measures results and numerator and denominator 
data on the eRx quality measure to CMS on behalf of their participants. 
We believe such costs will be minimal as registries will already be 
required to perform these activities for Physician Quality Reporting 
System.
    Likewise, based on our decision to consider only EHR products 
qualified for the Physician Quality Reporting System for CYs 2012, 
2013, and 2014 to be qualified to submit results and numerator and 
denominator data on the electronic prescribing measure for the eRx 
Incentive Program for CYs 2012, 2013, and 2014, there is no need for

[[Page 73468]]

EHR vendors to undergo a separate self-nomination process for the eRx 
Incentive Program. Therefore, there will be no additional cost 
associated with the self-nomination process.
    The cost to the EHR vendor associated with the proposed EHR-based 
reporting requirements of this reporting initiative is the time and 
effort associated with the EHR vendor programming its EHR product(s) to 
extract the clinical data that the individual eligible professional 
needs to submit to CMS for reporting the electronic prescribing 
measure. Since we determined that only EHR products qualified for the 
Physician Quality Reporting System are qualified for the eRx Incentive 
Program, and the eRx Incentive Program consists of only one measure, we 
believe that any burden associated with the EHR vendor to program its 
product(s) to enable individual eligible professionals to submit data 
on the electronic prescribing measure to the CMS-designated clinical 
data warehouse will be minimal.
7. Physician Compare Web Site
    Section VI.G.2. of this final rule with comment period discusses 
the background of the Physician Compare Web site. As described in 
section VI.G.2. of this final rule with comment period, we are 
developing aspects of the Physician Compare Web Site in stages. We are 
finalizing our proposal to include performance information with respect 
to the 2012 Physician Quality Reporting System GPRO measures. As 
reporting of physician performance rates on the Physician Compare Web 
Site will be performed directly by us using the data that we collect 
under the 2012 Physician Quality Reporting System GPRO, we do not 
anticipate any notable impact on eligible professionals with respect to 
the posting of information on the Physician Compare Web Site.
8. Medicare EHR Incentive Program
    Section VI.H.2. of this final rule with period finalizes changes to 
the EHR Incentive Program for EPs for the 2012 payment year with 
respect to the reporting of CQMs for achieving meaningful use. Aside 
from continuing the attestation method of reporting CQMs, we are 
allowing the reporting of CQMs for purposes of demonstrating meaningful 
use through participation in the Physician Quality Reporting System-
Medicare EHR Incentive Pilot via-- (1) a Physician Quality Reporting 
System qualified EHR data submission vendor or (2) using an EP's 
certified EHR technology, which also must be a Physician Quality 
Reporting System qualified EHR.
    We believe the impact associated with actually reporting CQMs will 
vary depending on how the EP chooses to do so. We believe that the 
number of EPs who choose to participate via attestation will largely be 
those who are not participating in both the EHR Incentive Program and 
Physician Quality Reporting System as this is the method of reporting 
most favorable to EPs not participating in the Physician Quality 
Reporting System. EPs participating in the Physician Quality Reporting 
System will be more likely to participate in the pilot. Therefore, 
based on the previously mentioned assumptions, we do not believe there 
will be any additional impact on EPs that is specific to participation 
in the pilot. EPs must participate in the Physician Quality Reporting 
System in order to participate in the pilot.
9. Physician Feedback Program/Value Modifier Payment
    The changes to the Physician Feedback Program in section VI.I. of 
this final rule with comment period would not impact CY 2012 physician 
payments under the Physician Fee Schedule. However, we expect that our 
decision to use the Physician Quality Reporting System quality measures 
in the Physician Feedback reports and in the value modifier to be 
implemented in CY 2015 may result in increased participation in the 
Physician Quality Reporting System in CY 2012. We anticipate that as we 
approach implementation of the value modifier, physicians will 
increasingly participate in the Physician Quality Reporting System to 
determine and understand how the value modifier could affect their 
payments.
10. Bundling of Payments for Services Provided to Outpatients Who Later 
Are Admitted as Inpatients: 3-Day Payment Window Policy and the Impact 
on Wholly Owned or Wholly Operated Physician Offices
    Medicare collects ownership information obtained in the 855A and 
855B enrollment forms completed upon a facility or a practitioner's 
Medicare enrollment. The 855 forms are self-selecting enrollment forms 
that may be updated as necessary. The enrollment forms do not 
specifically require complete information on whether a physician office 
is wholly owned or wholly operated by a hospital. While we believe that 
most hospital owned entities providing physician services will be 
considered part of the hospital and operating as hospital outpatient 
departments; there will be at least some hospital owned or operated 
entities that will meet the definition of ``wholly-owned or wholly-
operated'' and will be subject to the 3-day payment window policy. We 
are unable to accurately estimate and verify the number of wholly owned 
or wholly operated entities enrolled in Medicare and furnishing health 
services to Medicare beneficiaries that will be subject to the 3-day 
payment window policy under the PFS because the 855 forms do not 
explicitly capture information on sole ownership or operation. We do 
not believe that our discussion in section V.B. of this final rule with 
comment period regarding the entities to which this policy applies 
changes our assessment that this policy would impact a small number of 
providers/suppliers. We note that the application of the 3-day window 
policy is limited to diagnostic or related nondiagnostic services that 
are provided during the defined payment window by entities that are 
wholly owned or operated by the hospital to which the patient is 
ultimately admitted. The 3-day payment window policy would not apply to 
the majority of services provided by a hospital's wholly-owned or 
wholly-operated physician offices. Furthermore, the effects of applying 
the 3-day window policy would be limited to the practice expense 
component of the payment rate, and the professional component is not 
affected by the 3-day window payment policy. We are unable to estimate 
the impact of this final policy at this time. However, we note that if 
we were able to estimate the effects of this policy on Part B payments, 
the program savings would be redistributed across all other services 
paid under the PFS in accordance with due to the PFS budget neutrality 
provisions.
11. Clinical Laboratory Fee Schedule: Signature on Requisition
    As discussed in section VI.D. of this final rule with comment 
period, we are retracting the policy that was finalized in the CY 2011 
PFS final rule with comment period, which required a physician's or 
NPP's signature on a requisition for clinical diagnostic laboratory 
tests paid under the CLFS and are reinstating our prior policy that the 
signature of the physician or NPP is not required on a requisition for 
a clinical diagnostic laboratory test paid under the CLFS for Medicare 
purposes. There are no expenditures or fiscal impact on the Medicare 
program associated with this policy. While this policy may have an 
effect on beneficiaries, we believe that any effect would be positive 
because we are changing a requirement that might have

[[Page 73469]]

impeded access to care in some cases. This policy does not impact 
payment rates under the CLFS, or any other part of the Medicare 
program.

I. Alternatives Considered

    This final rule with comment period contains a range of policies, 
including some provisions related to specific statutory provisions. The 
preceding preamble provides descriptions of the statutory provisions 
that are addressed, identifies those policies when discretion has been 
exercised, presents rationale for our policies and, where relevant, 
alternatives that were considered.

J. Impact on Beneficiaries

    There are a number of changes in this final rule with comment 
period that would have an effect on beneficiaries. In general, we 
believe that many of the final changes, including the refinements of 
the Physician Quality Reporting System with its focus on measuring, 
submitting, and analyzing quality data will have a positive impact and 
improve the quality and value of care provided to Medicare 
beneficiaries.
    The regulatory provisions may affect beneficiary liability in some 
cases. Most changes in aggregate beneficiary liability due to a 
particular provision would be a function of the coinsurance (20 percent 
if applicable for the particular provision after the beneficiary has 
met the deductible). To illustrate this point, as shown in Table 87, 
the CY 2011 national payment amount in the nonfacility setting for CPT 
code 99203 (Office/outpatient visit, new) is $102.95, which means that 
in CY 2011 a beneficiary would be responsible for 20 percent of this 
amount, or $20.59. Based on this final rule with comment period, 
including the negative update, the CY 2012 national payment amount in 
the nonfacility setting for CPT code 99203, as shown in Table 87, is 
$76.23, which means that, in CY 2012, the beneficiary coinsurance for 
this service would be $15.25. Most policies discussed in this final 
rule with comment period that impact payment rates, such as the 
expansion of the MPPR to the professional component of imaging 
procedures, would similarly impact beneficiaries' coinsurance.

K. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 89, we have 
prepared an accounting statement showing the estimated expenditures 
associated with this final rule with comment period. This estimate 
includes the estimated CY 2012 incurred benefit impact associated with 
the estimated CY 2012 PFS conversion factor update based on a 
midsession review of the FY 2012 President's Budget.
[GRAPHIC] [TIFF OMITTED] TR28NO11.208

L. Conclusion

    The analysis in the previous sections, together with the remainder 
of this preamble, provides a Final Regulatory Flexibility Act Analysis. 
The previous analysis, together with the remainder of this preamble, 
provides a Regulatory Impact Analysis.

X. Addenda Referenced in This Final Rule With Comment Period and 
Available Only Through the Internet on the CMS Web Site

    This section lists the Addenda referred to throughout the preamble 
of this final rule with comment period. Beginning with the CY 2012 PFS 
proposed rule, the PFS Addenda A, B, C, D, E, F, G, and H will no 
longer appear in the Federal Register. In addition, beginning with the 
CY 2012 PFS final rule with comment period, the Designated Health 
Services Code List (Addendum J) will no longer appear in the Federal 
Register. Instead, these Addenda, along with other supplemental 
documents, will be available through the Internet.
    Readers who experience any problems accessing any of the Addenda 
that are posted on the CMS Web sites identified in this section should 
contact Erin Smith at (410) 786-4497.
    The following PFS Addenda for CY 2012 PFS final rule with comment 
period rule with are available through the Internet on the CMS Web site 
at http://www.cms.gov/PhysicianFeeSched/. Click on the link on the left 
side of the screen titled, ``PFS Federal Regulations Notices'' for a 
chronological list of PFS Federal Register and other related documents. 
For the CY 2012 PFS final rule with comment period, refer to item CMS-
1524-FC.

Addendum A--Explanation and Use of Addendum B
Addendum B--Relative Value Units and Related Information Used in 
Determining Medicare Payments for CY 2012
Addendum C--[Reserved]
Addendum D--CY 2012 Geographic Adjustment Factors (GAFs)
Addendum E--CY 2012 Geographic Practice Cost Indices (GPCIs) by States 
and Medicare Locality
Addendum F--CY 2012 Diagnostic Imaging Services Subject to the Multiple 
Procedure Payment Reduction
Addendum G--CPT/HCPCS Imaging Codes Defined by Section 5102(b) of the 
DRA
Addendum H--CY 2011 ``Always Therapy'' Services Subject to the Multiple 
Procedure Payment Reduction

    The Designated Health Services Code List Addendum for CY 2012 PFS 
final rule with comment period entitled ``Addendum J: List of CPT \1\/
HCPCS Codes Used to Define Certain Designated Health Service Categories 
\2\ Under Section 1877 of the Social Security Act Effective January 1, 
2012'' is available through the Internet on the CMS Web site at http://www.cms.gov/PhysicianSelfReferral/40_List_of_Codes.asp#TopOfPage.

[[Page 73470]]

List of Subjects

42 CFR Part 410

    Health facilities, Health professions, Kidney diseases, 
Laboratories, Medicare, Reporting and recordkeeping requirements, Rural 
areas, X-rays.

42 CFR Part 414

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and recordkeeping.

42 CFR Part 415

    Health facilities, Health professions, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 495

    Administrative practice and procedure, Electronic health records, 
Health facilities, Health professions, Health maintenance organizations 
(HMO), Medicaid, Medicare, Penalties, Privacy, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble of this final rule with 
comment period, the Centers for Medicare & Medicaid Services amends 42 
CFR chapter IV as set forth below:

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

0
1. The authority citation for part 410 continues to read as follows:

    Authority: Secs. 1102, 1834, 1871, and 1893 of the Social 
Security Act (42 U.S.C. 1302, 1395m, 1395hh, and 1395ddd).

0
2. Amend Sec.  410.15(a) as follows:
0
A. Amending the definition of ``First annual wellness visit providing 
personalized prevention plan services'' by--
0
i. Revising the introductory text.
0
ii. Redesignating paragraphs (i) through (ix) as paragraphs (ii) 
through (x).
0
iii. Adding a new paragraph (i).
0
iv. Revising newly redesignated paragraph (viii)(A).
0
B. Adding the definition of ``Health risk assessment''.
0
C. In the definition of ``Subsequent annual wellness visit providing 
personalized prevention plan services''.
0
i. Revising the introductory text.
0
ii. Redesignating paragraphs (i) through (vii) as paragraphs (ii) 
through (viii).
0
iii. Adding a new paragraph (i).
0
iv. Revising newly redesigned paragraphs (iii) and (vi)(B).
    The revisions and additions read as follows:

Sec.  410.15  Annual wellness visits providing Personalized Prevention 
Plan Services: Conditions for and limitations on coverage.

    (a) * * *
    First annual wellness visit providing personalized prevention plan 
services means the following services furnished to an eligible 
beneficiary by a health professional that include, and take into 
account the results of, a health risk assessment, as those terms are 
defined in this section:
    (i) Review (and administration if needed) of a health risk 
assessment (as defined in this section).
* * * * *
    (viii) * * *
    (A) A written screening schedule for the individual such as a 
checklist for the next 5 to 10 years, as appropriate, based on 
recommendations of the United States Preventive Services Task Force and 
the Advisory Committee on Immunization Practices, and the individual's 
health risk assessment (as that term is defined in this section), 
health status, screening history, and age-appropriate preventive 
services covered by Medicare.
* * * * *
    Health risk assessment means, for the purposes of this section, an 
evaluation tool that meets the following criteria:
    (i) Collects self-reported information about the beneficiary.
    (ii) Can be administered independently by the beneficiary or 
administered by a health professional prior to or as part of the AWV 
encounter.
    (iii) Is appropriately tailored to and takes into account the 
communication needs of underserved populations, persons with limited 
English proficiency, and persons with health literacy needs.
    (iv) Takes no more than 20 minutes to complete.
    (v) Addresses, at a minimum, the following topics:
    (A) Demographic data, including but not limited to age, gender, 
race, and ethnicity.
    (B) Self assessment of health status, frailty, and physical 
functioning.
    (C) Psychosocial risks, including but not limited to, depression/
life satisfaction, stress, anger, loneliness/social isolation, pain, 
and fatigue.
    (D) Behavioral risks, including but not limited to, tobacco use, 
physical activity, nutrition and oral health, alcohol consumption, 
sexual health, motor vehicle safety (seat belt use), and home safety.
    (E) Activities of daily living (ADLs), including but not limited 
to, dressing, feeding, toileting, grooming, physical ambulation 
(including balance/risk of falls), and bathing.
    (F) Instrumental activities of daily living (IADLs), including but 
not limited to, shopping, food preparation, using the telephone, 
housekeeping, laundry, mode of transportation, responsibility for own 
medications, and ability to handle finances.
* * * * *
    Subsequent annual wellness visit providing personalized prevention 
plan services means the following services furnished to an eligible 
beneficiary by a health professional that include, and take into 
account the results of an updated health risk assessment, as those 
terms are defined in this section:
    (i) Review (and administration, if needed) of an updated health 
risk assessment (as defined in this section).
* * * * *
    (iii) An update of the list of current providers and suppliers that 
are regularly involved in providing medical care to the individual as 
that list was developed for the first annual wellness visit providing 
personalized prevention plan services or the previous subsequent annual 
wellness visit providing personalized prevention plan services.
* * * * *
    (vi) * * *
    (B) The list of risk factors and conditions for which primary, 
secondary or tertiary interventions are recommended or are underway for 
the individual as that list was developed at the first annual wellness 
visit providing personalized prevention plan services or the previous 
subsequent annual wellness visit providing personalized prevention plan 
services.
* * * * *

0
3. In Sec.  410.62 amend paragraph (b) by revising the heading to read 
as follows:

Sec.  410.62  Outpatient speech-language pathology services: Conditions 
and exclusions.

* * * * *
    (b) Condition for coverage of outpatient speech-language pathology 
services furnished to certain inpatients of a hospital or a CAH or SNF. 
* * *
* * * * *

Sec.  410.78  [Amended]

    4. In Sec.  410.78, amend paragraph (b) introductory text by 
removing the phrase ``and individual and group health and behavior 
assessment and intervention services furnished by an interactive 
telecommunications system if the following conditions are met:'' and 
adding in its place the phrase ``individual and group health and 
behavior assessment and intervention

[[Page 73471]]

services, and smoking cessation services furnished by an interactive 
telecommunications system if the following conditions are met:''.

0
5. Amend Sec.  410.140 by revising the definition of ``Deemed entity'' 
to read as follows:

Sec.  410.140  Definitions.

* * * * *
    Deemed entity means an individual, physician, or entity accredited 
by an approved organization, but that has not yet been approved by CMS 
under Sec.  410.145(b) to furnish training.
* * * * *

Sec.  410.141  [Amended]

0
6. Amend Sec.  410.141(b)(1) by:
0
A. Removing the term ``it'' and adding the phrase ``the training'' in 
its place.
0
B. Removing the cross-reference ``Sec.  410.32(a)'' and adding the 
cross-reference ``Sec.  410.32(a)(2)'' in its place.

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

0
7. The authority citation for part 414 continues to read as follows:

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

0
8. Amend Sec.  414.22 by revising paragraphs (b)(5)(i)(A) through (C) 
to read as follows:

Sec.  414.22  Relative value units (RVUs).

* * * * *
    (b) * * *
    (5) * * *
    (i) * * *
    (A) Facility practice expense RVUs. The facility practice expense 
RVUs apply to services furnished to patients in places of service 
including, but not limited to, a hospital, a skilled nursing facility, 
a community mental health center, a hospice, or an ambulatory surgical 
center, or in a wholly owned or wholly operated entity providing 
preadmission services under Sec.  412.2(c)(5).
    (B) Nonfacility practice expense RVUs. The nonfacility practice 
expense RVUs apply to services furnished to patients in places of 
service including, but not limited to, a physician's office, the 
patient's home, a nursing facility, or a comprehensive outpatient 
rehabilitation facility (CORF).
    (C) Outpatient therapy and CORF services. Outpatient therapy 
services (including physical therapy, occupational therapy, and speech-
language pathology services) and CORF services billed under the 
physician fee schedule are paid using the nonfacility practice expense 
RVUs.
* * * * *

Sec.  414.65  [Amended]

0
9. In Sec.  414.65, amend paragraph (a)(1) introductory text by 
removing the phrase ``and individual and group health and behavior 
assessment and intervention furnished via an interactive 
telecommunications system is equal to the current fee schedule amount 
applicable for the service of the physician or practitioner.'' and 
adding in its place the phrase ``individual and group health and 
behavior assessment and intervention, and smoking cessation services 
furnished via an interactive telecommunications system is equal to the 
current fee schedule amount applicable for the service of the physician 
or practitioner.''

0
10. Amend Sec.  414.90 as follows:
0
A. In paragraph (b), by revising the definition of ``Group practice''.
0
B. In paragraph (c)(2) introductory text, by removing the phrases 
``during the applicable reporting period. For purposes of this 
paragraph,'' at the end of the paragraph and adding the phrase ``during 
the reporting period.'' in its place.
0
C. Adding paragraph (c)(4) introductory text.
0
D. Redesignating paragraphs (c)(2)(i) through (c)(2)(iii) as paragraphs 
(c)(4)(i) through (c)(4)(iii), respectively.
0
E. Revising paragraph (f)(1).
0
F. Removing paragraph (f)(2).
0
G. Redesignating paragraph (f)(3) as paragraph (f)(2).
0
H. Revising newly redesignated paragraph (f)(2) introductory text.
0
I. In newly redesignated paragraph (f)(2)(ii), removing the phrase 
``behalf; or'' and adding the phrase ``behalf.'' in its place.
0
J. In newly redesignated paragraph (f)(2)(iii), removing the phrase 
``containing real or dummy'' and adding in its place the phrase 
``containing dummy''.
0
K. Revising paragraphs (g)(1) and (g)(3).
0
L. Redesignating paragraphs (g)(4) and (g)(5) as paragraphs (g)(5) and 
(g)(6).
0
M. Adding a new paragraph (g)(4).
0
N. In newly redesignated paragraph (g)(5), by removing the ``.'' and 
adding ``; and'' in its place.
0
O. Revising newly redesignated paragraph (g)(6).
0
P. Revising paragraphs (i)(1) and (i)(2) introductory text.
    The revisions and additions read as follows:

Sec.  414.90  Physician Quality Reporting System.

* * * * *
    (b) * * *
    Group practice means a physician group practice, as defined by a 
TIN, with 25 or more individual eligible professionals (or, as 
identified by NPIs) who have reassigned their billing rights to the 
TIN.
* * * * *
    (c) * * *
* * * * *
    (2) For purposes of this paragraph--
* * * * *
    (4) For purposes of this paragraph--
* * * * *
    (f) * * *
    (1) Reporting periods. For purposes of this paragraph, the 
reporting period is--
    (i) The 12-month period from January 1 through December 31 of such 
program year.
    (ii) A 6-month period from July 1 through December 31 of such 
program year.
    (A) For 2011, such 6-month reporting period is not available for 
EHR-based reporting of individual Physician Quality Reporting System 
quality measures.
    (B) For 2012 and subsequent program years, such 6-month reporting 
period from July 1 through December 31 of such program year is only 
available for registry-based reporting of Physician Quality Reporting 
System measures groups by eligible professionals.
    (2) Reporting mechanisms. For program year 2011 and subsequent 
program years, an eligible professional who wishes to participate in 
the Physician Quality Reporting System must report information on the 
individual Physician Quality Reporting System quality measures or 
Physician Quality Reporting System measures groups identified by CMS in 
one of the following manners:
    (g) * * *
    (1) Meets the participation requirements specified by CMS for the 
Physician Quality Reporting System group practice reporting option;
* * * * *
    (3) Reports measures in the form and manner specified by CMS;
    (4) For purposes of paragraph (g), the reporting period is the 12-
month period from January 1 through December 31 of such program year;
* * * * *
    (6) Payments to a group practice under this paragraph must be in 
lieu of the payments that would otherwise be made under the Physician 
Quality Reporting System to eligible

[[Page 73472]]

professionals in the group practice for meeting the criteria for 
satisfactory reporting for individual eligible professionals.
    (i) If an eligible professional, as identified by an individual 
NPI, has reassigned his or her Medicare billing rights to a TIN 
selected to participate in the Physician Quality Reporting System group 
practice reporting option for a program year, then for that program 
year the eligible professional must participate in the Physician 
Quality Reporting System via the group practice reporting option. For 
any program year in which the TIN is selected to participate in the 
Physician Quality Reporting System group practice reporting option, the 
eligible professional cannot individually qualify for a Physician 
Quality Reporting System incentive payment by meeting the requirements 
specified in paragraph (f) of this section.
    (ii) If, for the program year, the eligible professional 
participates in the Physician Quality Reporting System under a TIN that 
is not selected to participate in the Physician Quality Reporting 
System group practice reporting option for that program year, then the 
eligible professional may individually qualify for a Physician Quality 
Reporting System incentive by meeting the requirements specified in 
paragraph (f) of this section under that TIN.
* * * * *
    (i) * * *
    (1) To request an informal review, an eligible professional (or in 
the case of reporting under paragraph (g) of this section, group 
practices) must submit a request to CMS within 90 days of the release 
of the feedback reports. The request must be submitted in writing and 
summarize the concern(s) and reasons for requesting an informal review 
and may also include information to assist in the review.
    (2) CMS will provide a written response within 90 days of the 
receipt of the original request.
* * * * *

0
11. AmendSec.  414.92 as follows:
0
A. In paragraph (b), by adding the definition of ``Certified electronic 
health record technology''.
0
B. In paragraph (b), in the definition of ``Group practice,'' by 
redesignating paragraphs (i), (ii)(A), and (ii)(B) as paragraphs 
(i)(A), (i)(B) and (ii), respectively.
0
C. In paragraph (b), in the definition of ``Group practice,'' by 
revising newly redesginated paragraph (i)(B).
0
D. In paragraph (c)(2) introductory text, by revising the paragraph 
heading.
0
E. In paragraph (c)(2)(ii) introductory text, removing the phrase 
``significant hardship exemption from the 2012 eRx payment adjustment 
if one of the following circumstances apply:'' and adding the phrase 
``significant hardship exemption from a eRx payment adjustment if one 
of the following circumstances apply:'' in its place.
0
F. Redesignating paragraphs (c)(2)(ii)(A) through (F) as paragraphs 
(c)(2)(ii)(A)(1) through (c)(2)(ii)(A)(6), respectively.
0
G. Adding paragraphs (c)(2)(ii)(A) introductory text, (c)(2)(ii)(B), 
and (c)(2) (iii).
0
H. In paragraph (d) introductory text, by removing the phrase ``must 
meet the criteria for successful'' and the phrase ``must meet the 
criteria for being a successful'' is added in its place.
0
I. In paragraph (d)(1), by removing the phrase ``For purposes of this 
paragraph in 2011,'' is removed and adding in its place the phrase 
``For purposes of this paragraph,''.
0
J. In paragraph (d)(2) introductory text, by removing the phrase ``For 
program year 2011, an eligible professional'' and adding the phrase 
``An eligible professional'' in its place.
0
K. In paragraph (e)(2)(ii), by removing the phrase ``under another 
TIN'' and adding the phrase ``under a TIN'' in its place.
0
L. Redesignating paragraph (f) as (g).
0
M. Adding a new paragraph (f).
0
The revisions and additions read as follows:

Sec.  414.92  Electronic Prescribing Incentive Program.

* * * * *
    (b) * * *
    Certified electronic health record technology means an electronic 
health record vendor's product and version as described in 45 CFR 
170.102.
    Group practice
* * * * *
    (i) * * *
    (B) In a Medicare-approved demonstration project or other Medicare 
program, under which Physician Quality Reporting System requirements 
and incentives have been incorporated; and
* * * * *
    (c) * * *
    (2) Payment adjustment.* * *
    (ii) * * *
    (A) From the 2012 payment adjustments by meeting one of the 
following:
* * * * *
    (B) From the 2013 and 2014 payment adjustments by meeting one of 
the following:
    (1) The eligible professional or group practice is located in a 
rural area without high speed internet access.
    (2) The eligible professional or group practice is located in an 
area without sufficient available pharmacies for electronic 
prescribing.
    (3) The eligible professional or group practice is unable to 
electronically prescribe due to local, State, or Federal law or 
regulation.
    (4) The eligible professional or group practice has limited 
prescribing activity, as defined by an eligible professional generating 
fewer than 100 prescriptions during a 6-month reporting period.
    (iii) Other limitations to the payment adjustment. An eligible 
professional (or in the case of a group practice under paragraph (b) of 
this section, a group practice) is exempt from the application of the 
payment adjustment under paragraph (c)(2) of this section if one of the 
following applies:
    (A) The eligible professional is not an MD, DO, podiatrist, nurse 
practitioner, or physician assistant.
    (B) The eligible professional does not have at least 100 cases 
containing an encounter code that falls within the denominator of the 
electronic prescribing measure for dates of service during the 6-month 
reporting period specified in paragraph (f)(1) of this section.
* * * * *
    (f) Requirements for individual eligible professionals and group 
practices for the payment adjustment. In order to be considered a 
successful electronic prescriber for the electronic prescribing payment 
adjustment, an individual eligible professional (or, in the case of a 
group practice under paragraph (b) of this section, a group practice), 
as identified by a unique TIN/NPI combination, must meet the criteria 
for being a successful electronic prescriber specified by CMS, in the 
form and manner specified in paragraph (f)(2) of this section, and 
during the reporting period specified in paragraph (f)(1) of this 
section.
    (1) Reporting periods. (i) For purposes of this paragraph (f), the 
reporting period for the 2013 payment adjustment is either of the 
following:
    (A) The 12-month period from January 1, 2011 through December 31, 
2011.
    (B) The 6-month period from January 1, 2012 through June 30, 2012.
    (ii) For purposes of this paragraph (f), the reporting period for 
the 2014 payment adjustment is either of the following:
    (A) The 12-month period from January 1, 2012 through December 31, 
2012.

[[Page 73473]]

    (B) The 6-month period from January 1, 2013 through June 30, 2013.
    (2) Reporting mechanisms. An eligible professional (or, in the case 
of a group practice under paragraph (e) of this section, a group 
practice) who wishes to participate in the Electronic Prescribing 
Incentive Program must report information on the electronic prescribing 
measure identified by CMS to one of the following:
    (i) For the 6- and 12-month reporting periods under paragraph 
(f)(1) of this section, CMS, by no later than 2 months after the end of 
the applicable 12-month reporting period or by no later than 1 month 
after the end of the applicable 6-month reporting period, on the 
eligible professional's Medicare Part B claims for covered professional 
services furnished by the eligible professional during the reporting 
period specified in paragraph (f)(1) of this section.
    (ii) For the 12-month reporting period under paragraph (f)(1) of 
this section, a qualified registry (as defined in paragraph (b) of this 
section) in the form and manner and by the deadline specified by the 
qualified registry selected by the eligible professional. The selected 
qualified registry submits information, as required by CMS, for covered 
professional services furnished by the eligible professional during the 
reporting period specified in paragraph (f)(1) of this section to CMS 
on the eligible professional's behalf.
    (iii) For the 12-month reporting period under paragraph (f)(1) of 
this section, CMS by extracting clinical data using a secure data 
submission method, as required by CMS, from a qualified electronic 
health record product (as defined in paragraph (b) of this section) by 
the deadline specified by CMS for covered professional services 
furnished by the eligible professional during the reporting period 
specified in paragraph (f)(1) of this section. Prior to actual data 
submission for a given program year and by a date specified by CMS, the 
eligible professional must submit a test file containing dummy clinical 
quality data extracted from the qualified electronic health record 
product selected by the eligible professional using a secure data 
submission method, as required by CMS.
* * * * *

0
12. In Sec.  414.802 amend the definition of ``Unit'' by revising the 
first sentence to reads as follows:

Sec.  414.802  Definitions.

* * * * *
    Unit means the product represented by the 11-digit National Drug 
Code, unless otherwise specified by CMS to account for situations where 
labeling indicates that the amount of drug product represented by a 
National Drug Code varies. * * *
* * * * *
0
13. Amend Sec.  414.904 by revising paragraph (d)(3) to read as 
follows:

Sec.  414.904  Average sales price as the basis for payment.

* * * * *
    (d) * * *
    (3) Widely available market price and average manufacturer price. 
If the Inspector General finds that the average sales price exceeds the 
widely available market price or the average manufacturer price by the 
applicable threshold percentage specified in paragraph (d)(3)(iii) or 
(iv) of this section, the Inspector General is responsible for 
informing the Secretary (at such times as specified by the Secretary) 
and the payment amount for the drug or biological will be substituted 
subject to the following adjustments:
    (i) The payment amount substitution will be applied at the next 
average sales price payment amount calculation period after the 
Inspector General informs the Secretary (at such times specified by the 
Secretary) about billing codes for which the average sales price has 
exceeded the average manufacturer price by the applicable threshold 
percentage, and will remain in effect for 1 quarter after publication.
    (ii) Payment at 103 percent of the average manufacturer price for a 
billing code will be applied at such times when--
    (A) The threshold for making price substitutions, as defined in 
paragraph (d)(3)(iii) of this section is met; and
    (B) 103 percent of the average manufacturer price is less than the 
106 percent of the average sales price for the quarter in which the 
substitution would be applied.
    (iii) The applicable percentage threshold for average manufacturer 
price comparisons for CYs 2005 through 2011 is 5 percent. For CY 2012, 
the applicable percentage threshold for average sales price comparisons 
is reached when--
    (A) The average sales price for the billing code has exceeded the 
average manufacturer price for the billing code by 5 percent or more in 
2 consecutive quarters, or 3 of the previous 4 quarters immediately 
preceding the quarter to which the price substitution would be applied; 
and
    (B) The average manufacturer price for the billing code is 
calculated using the same set of National Drug Codes used for the 
average sales price for the billing code.
    (iv) The applicable percentage threshold for widely available 
market price comparisons for CYs 2005 through 2012 is 5 percent.
* * * * *

PART 415--SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS, 
SUPERVISING PHYSICIANS IN TEACHING SETTINGS, AND RESIDENTS IN 
CERTAIN SETTINGS

0
14. The authority citation for part 415 continues to read as follows:

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

Sec.  415.130  [Amended]

0
15. In Sec.  415.130, amend paragraphs (d)(1) and (d)(2) by removing 
the date ``December 31, 2010'' and adding the date ``December 31, 
2011'' in its place.

PART 495--STANDARDS FOR THE ELECTRONIC HEALTH RECORD TECHNOLOGY 
INCENTIVE PROGRAM

0
16. The authority citation for part 495 continues to read as follows:

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

0
17. Amend Sec.  495.8 as follows:
0
A. In paragraph (a)(2)(ii), by removing the phrase ``selected by CMS 
electronically to CMS (or in the case of Medicaid EPs, the States) in 
the manner specified by CMS (or in the case of Medicaid EPs, the 
States).'' and adding the phrase ``selected by CMS to CMS (or in the 
case of Medicaid EPs, the States) in the form and manner specified by 
CMS (or in the case of Medicaid EPs, the States).'' in its place.
0
B. Adding a new paragraph (a)(2)(v) to read as follows:

Sec.  495.8  Demonstration of meaningful use criteria.

    (a) * * *
    (2) * * *
    (v) Exception for Medicare EPs for PY 2012--Participation in the 
Physician Quality Reporting System-Medicare EHR Incentive Pilot. In 
order to satisfy the clinical quality measure reporting objective in 
Sec.  495.6(d)(10), aside from attestation, an EP participating in the 
Physician Quality Reporting System may also participate in the 
Physician Quality Reporting System-Medicare EHR Incentive Pilot through 
one of the following methods:
    (A) Submission of data extracted from the EP's certified EHR 
technology through a Physician Quality Reporting System qualified EHR 
data submission vendor; or

[[Page 73474]]

    (B) Submission of data extracted from the EP's certified EHR 
technology, which must also be through a Physician Quality Reporting 
System qualified EHR.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program).

    Dated: October 26, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: October 31, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2011-28597 Filed 11-1-11; 4:15 pm]
BILLING CODE 4120-01-P
```