Monday, 

November 29, 2010 

Part II 

Department of 

Health and Human 

Services 

Center for Medicare & Medicaid Services 

42 CFR Parts 405, 409, 410 et al. 

Medicare Program; Payment Policies 

Under the Physician Fee Schedule and 

Other Revisions to Part B for CY 2011; 

Final Rule 

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73170 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 405, 409, 410, 411, 413, 

414, 415, and 424 

[CMS–1503–FC] 

RIN 0938–AP79 

Medicare Program; Payment Policies 

Under the Physician Fee Schedule and 

Other Revisions to Part B for CY 2011 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule with comment period. 

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 finalizes the calendar year 

(CY) 2010 interim relative value units 

(RVUs) and issues interim RVUs for new 

and revised procedure codes for CY 

2011. It also addresses, implements, or 

discusses certain provisions of both the 

Affordable Care Act (ACA) and the 

Medicare Improvements for Patients and 

Providers Act of 2008 (MIPPA). In 

addition, this final rule with comment 

period discusses payments under the 

Ambulance Fee Schedule (AFS), the 

Ambulatory Surgical Center (ASC) 

payment system, and the Clinical 

Laboratory Fee Schedule (CLFS), 

payments to end-stage renal disease 

(ESRD) facilities, and payments for Part 

B drugs. Finally, this final rule with 

comment period also includes a 

discussion regarding the Chiropractic 

Services Demonstration program, the 

Competitive Bidding Program for 

durable medical equipment, prosthetics, 

orthotics, and supplies (CBP DMEPOS), 

and provider and supplier enrollment 

issues associated with air ambulances. 

DATES: Effective date: These regulations 

are effective on January 1, 2011. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

provided below, no later than 5 p.m. on 

January 3, 2011. 

ADDRESSES: In commenting, please refer 

to file code CMS–1503–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–1503–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–1503–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– 

9994 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: 

Sara Vitolo, (410) 786–5714, for issues 

related to malpractice RVUs. 

Erin Smith, (410) 786–0763, for issues 

related to end-stage renal diseaserelated services for home dialysis. 

Michael Moore, (410) 786–6830, for 

issues related to geographic practice 

cost indices. 

Ken Marsalek, (410) 786–4502, for 

issues related to the physician 

practice information survey, the 

multiple procedure payment 

reduction, and payment for the 

technical component of pathology 

services. 

Regina Walker-Wren, (410) 786–9160, 

for issues related to outpatient mental 

health add-on provision and 

increased payment for certified nursemidwife services. 

Elizabeth Truong, (410) 786–6005, or 

Sara Vitolo, (410) 786–5714, for issues 

related to potentially misvalued 

services. 

Elizabeth Truong, (410) 786–6005, for 

issues related to the sustainable 

growth rate or anesthesia or physician 

fee schedule conversion factors. 

Dorothy Shannon, (410) 786–3396, for 

issues related to outpatient therapy 

services. 

Pamela West, (410) 786–2302, for issues 

related to payment for diabetes selfmanagement training programs and 

kidney disease education services. 

Ryan Howe, (410) 786–3355, for issues 

related to direct practice expense 

inputs and telehealth services. 

Sara Vitolo, (410) 786–5714, for issues 

related to pulmonary rehabilitation 

services, application of skin 

substitutes, canalith repositioning, 

intranasal/oral immunization, and the 

refinement panel. 

Roberta Epps, (410) 786–4503, for issues 

related to portable x-ray and bone 

density tests. 

Chava Sheffield, (410) 786–2298, for 

issues related to equipment utilization 

rate assumption for advanced imaging 

services. 

Chava Sheffield, (410) 786–2298, or 

Larry Chan, (410) 786–6864, for issues 

related the physician fee schedule 

practice expense methodology. 

Stephanie Frilling, (410) 786–4507, or 

Erin Smith, (410) 786–0763, for issues 

related to the incentive payment 

programs for primary care and general 

surgery services, and payment for the 

annual wellness visit and preventive 

services. 

Cheryl Gilbreath, (410) 786–5919, for 

issues related to payment for covered 

outpatient drugs and biologicals. 

Roechel Kujawa, (410) 786–9111, for 

issues related to ambulance services. 

Glenn McGuirk, (410) 786–5723, for 

clinical laboratory issues. 

Randall Ricktor, (410) 786–4632, for 

Federally Qualified Health Center 

Issues. 

Pauline Lapin, (410) 786–6883, for 

issues related to the chiropractic 

services demonstration BN issue. 

Troy Barsky, (410) 786–8873, or Kristin 

Bohl, (410) 786–8680, for issues 

related to physician self-referral. 

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Troy Barsky, (410) 786–8873, or Fred 

Grabau (410) 786–0206, for issues 

related to timely filing rules. 

Henry Richter, (410) 786–4562, or Lisa 

Hubbard, (410) 786–5472, for issues 

related to renal dialysis provisions 

and payments for end-stage renal 

disease facilities. 

Diane Stern, (410) 786–1133, for issues 

related to the physician quality 

reporting initiative and incentives for 

e-prescribing. 

Sheila Roman, (410) 786–6004, or 

Pamela Cheetham, 410–786–2259, for 

issues related to the Physician 

Resource Use Feedback Program and 

value-based purchasing. 

Joel Kaiser, (410) 786–4499, for issues 

related to the DME provisions. 

Sandra Bastinelli, (410) 786–3630, for 

issues related to provider and 

supplier enrollment issues. 

Rebecca Cole, (410) 786–4497, for issues 

related to physician payment not 

identified above. 

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: 

(1) The interim final work, practice 

expense, and malpractice RVUs 

(including the direct practice expense 

(PE) inputs and the equipment 

utilization rate assumption, and the 

applicability of a multiple procedure 

payment reduction (MPPR)), for new 

and revised CY 2011 HCPCS codes. 

These codes and their CY 2011 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 98 and 99. 

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 following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. 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 XI. 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 (MP) RVUs 

4. Refinements to the RVUs 

5. Adjustments to RVUs Are Budget 

Neutral 

B. Components of the Fee Schedule 

Payment Amounts 

C. Most Recent Changes to Fee Schedule 

D. Public Comments Received in Response 

to the CY 2011 PFS Proposed Rule 

II. Provisions of the Final 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 

(i) Direct costs 

(ii) Indirect costs 

d. Facility and Nonfacility Costs 

e. Services with Technical Components 

(TCs) and Professional Components 

(PCs) 

f. Alternative Data Sources and Public 

Comments on Final Rule for 2010 

g. 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. PE Revisions for CY 2011 

a. Equipment Utilization Rate 

b. HCPCS Code-Specific PE Issues 

(1) Biohazard Bags 

(2) PE Inputs for Professional Component 

(PC) Only and Technical Component 

(TC) Only Codes Summing to Global 

Only Codes 

(3) Equipment Time Inputs for Certain 

Diagnostic Tests 

(4) Cobalt-57 Flood Source 

(5) Venom Immunotherapy 

(6) Equipment Redundancy 

(7) Equipment Duplication 

(8) Establishing Overall Direct PE Supply 

Price Inputs Based on Unit Prices and 

Quantities 

c. AMA RUC Recommendations in CY 

2010 for Changes to Direct PE Inputs 

(1) Electrogastrography and Esophageal 

Function Test 

(2) 64-Slice CT Scanner and Software 

(3) Breath Hydrogen Test 

(4) Radiographic Fluoroscopic Room 

(5) Cystometrogram 

d. Referral of Existing CPT Codes for AMA 

RUC Review 

e. Updating Equipment and Supply Price 

Inputs for Existing Codes 

f. Other Issues 

B. Malpractice Relative Value Units (RVUs) 

1. Background 

2. Malpractice RVUs for New and Revised 

Services Effective Before the Next 5-Year 

Review 

3. Revised Malpractice RVUs for Selected 

Disc Arthroplasty Services 

C. 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. CY 2011 Identification and Review of 

Potentially Misvalued Services 

a. Codes on the Multispecialty Points of 

Comparison List 

b. Codes with Low Work RVUs Commonly 

Billed in Multiple Units Per Single 

Encounter 

c. Codes with High Volume and Low Work 

RVUs 

d. Codes with Site-of-Service-Anomalies 

e. Codes with ‘‘23-hour’’ Stays 

4. Expanding the Multiple Procedure 

Payment Reduction (MPPR) Policy to 

Additional Nonsurgical Services 

a. Background 

b. CY 2011 Expansion of the Imaging 

Technical Component MPPR Policy to 

Additional Combinations of Imaging 

Services 

c. CY 2011 Expansion of the MPPR Policy 

to Therapy Services 

5. High Cost Supplies 

a. Background 

b. Future Updates to the Prices of HighCost Supplies 

D. Geographic Practice Cost Indices 

(GPCIs) 

1. Background 

2. GPCI Update 

a. Physician Work GPCIs 

b. Practice Expense GPCIs 

(1) The Affordable Care Act Requirements 

for PE GPCIs 

(A) General Methodology for the CY 2011 

GPCIs 

(B) Phase-In of PE GPCIs 

(C) Data Analysis 

(D) Determining the PE GPCI Cost Share 

Weights 

(E) PE GPCI Floor for Frontier States 

(2) Summary of CY 2011 PE GPCIs 

c. Malpractice GPCIs 

d. Public Comments and CMS Responses 

on the Proposed 6th GPCI Update 

e. Summary of Final CY 2011 GPCIs 

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3. Payment Localities 

E. PFS Update for CY 2010: Rebasing and 

Revising of the Medicare Economic 

Index (MEI) 

1. Background 

2. Use of More Current Data 

3. Rebasing and Revising Expense 

Categories in the MEI 

a. Developing the Weights for Use in the 

MEI 

b. Physician’s Own Time 

c. Physician’s Practice Expenses 

(1) Nonphysician Employee Compensation 

(2) Office Expenses 

(3) Professional Liability Insurance (PLI) 

Expense 

(4) Medical Equipment Expenses 

(5) Medical Supplies Expenses 

(6) Other Professional Expenses 

4. Selection of Price Proxies for Use in the 

MEI 

a. Cost (Expense) Categories in the MEI 

(1) Physician’s Own Time (Physician 

Compensation) 

(2) Nonphysician Employee Compensation 

(3) Utilities 

(4) Chemicals 

(5) Paper 

(6) Rubber and Plastics 

(7) Telephone 

(8) Postage 

(9) All Other Services 

(10) All Other Products 

(11) Fixed Capital 

(12) Moveable Capital 

(13) Professional Liability Insurance (PLI) 

(14) Medical Equipment 

(15) Medical Materials and Supplies 

(16) Other Professional Expenses 

(b) Productivity Adjustment to the MEI 

5. Results of Rebasing 

6. Medicare Economic Index Technical 

Advisory Panel 

7. Summaries of Comments and the 

Associated Responses 

a. Timing of Rebasing and Revising the 

MEI 

b. PPIS Data 

c. Office Expenses 

d. Purpose of the MEI 

e. Technical Panel 

f. Other 

8. Adjustments to the RVU Shares To 

Match the Proposed Rebased MEI 

Weights 

F. Allowed Expenditures for Physicians’ 

Services and the Sustainable Growth 

Rate 

1. Medicare Sustainable Growth Rate 

2. Physicians’ Services 

3. Preliminary Estimate of the SGR for 2011 

4. Revised Sustainable Growth Rate for 

2010 

5. Final Sustainable Growth Rate for 2009 

6. Calculation of 2011, 2010, and 2009 

Sustainable Growth Rates 

a. 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 2011 

(4) Factor 4 Percentage Change in 

Expenditures for Physicians’ Services 

Resulting From Changes in Statute or 

Regulations in CY 2011 Compared With 

CY 2010 

b. Detail on the CY 2010 SGR 

(1) Factor 1 Changes in Fees for Physicians’ 

Services (Before Applying Legislative 

Adjustments) for 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 

c. Detail on the CY 2009 SGR 

(1) Factor 1 Changes in Fees for Physicians’ 

Services (Before Applying Legislative 

Adjustments) for 2009 

(2) Factor 2 The Percentage Change in the 

Average Number of Part B Enrollees from 

CY 2008 to CY 2009 

(3) Factor 3 Estimated Real Gross Domestic 

Product Per Capita Growth in CY 2009 

(4) Factor 4 Percentage Change in 

Expenditures for Physicians’ Services 

Resulting From Changes in Statute or 

Regulations in CY 2009 Compared With 

CY 2008 

G. The Update Adjustment Factor (UAF) 

1. Calculation under Current Law 

H. Physician and Anesthesia Fee Schedule 

Conversion Factors for CY 2011 

1. Physician Fee Schedule Update and 

Conversion Factor 

a. CY 2011 PFS Update 

b. CY 2011 PFS Conversion Factor 

2. Anesthesia Conversion Factor 

III. Code-Specific Issues for the PFS 

A. Therapy Services 

1. Outpatient Therapy Caps for CY 2011 

2. Alternatives to Therapy Caps 

a. Background 

b. Current Activities 

c. Potential Short-Term Approaches to 

Therapy Caps 

B. Diabetes Self-Management Training 

(DSMT) Services (HCPCS Codes G0108 

and G0109) 

1. Background 

2. Payment for DSMT Services 

C. End-Stage Renal Disease Related 

Services for Home Dialysis (CPT code 

90963, 90964, 90965, and 90966) 

1. End-Stage Renal Disease Home Dialysis 

Monthly Capitation Payment Services 

(CPT codes 90963, 90964, 90965, and 

90966) 

2. Daily and Monthly ESRD-Related 

Services (CPT Codes 90951 through 

90970) 

D. Portable X-Ray Set-Up (HCPCS code 

Q0092) 

E. Pulmonary Rehabilitation Services 

(HCPCS Code G0424) 

F. Application of Tissue Cultured Skin 

Substitutes to Lower Extremities (HCPCS 

Codes G0440 and G0441) 

G. Canalith Repositioning (CPT code 

95992) 

H. Intranasal/Oral Immunization Codes 

(CPT codes 90467, 90468, 90473, and 

90474) 

I. Refinement Panel Process 

J. Remote Cardiac Monitoring Services 

(CPT codes 93012, 93229, 93268, and 

93271) 

IV. Medicare Telehealth Services for the 

Physician Fee Schedule 

A. Billing and Payment for Telehealth 

Services 

1. History 

2. Current Telehealth Billing and Payment 

Policies 

B. Requests for Adding Services to the List 

of Medicare Telehealth Services 

C. Submitted Requests for Addition to the 

List of Telehealth Services for CY 2011 

1. Individual KDE Services 

2. Individual DSMT Services 

3. Group KDE, MNT, DSMT, and HBAI 

Services 

4. Initial, Subsequent, and Discharge Day 

Management Hospital Care Services 

5. Initial, Subsequent, Discharge Day 

Management, and Other Nursing Facility 

Care Services 

6. Neuropsychological Testing Services 

7. Speech-Language Pathology Services 

8. Home Wound Care Services 

9. Other Issues 

D. Summary of CY 2011 Telehealth 

Policies 

E. Telehealth Originating Site Facility Fee 

Payment Amount Update 

V. Addressing Interim Final Relative Value 

Units from CY 2010 and Establishing 

Interim Relative Value Units for CY 2011 

A. Background 

B. Addressing Interim Final RVUs from CY 

2010 

1. CY 2010 Interim Final Work RVUs 

Referred to the Refinement Panel 

2. CY 2010 Interim Final RVUs for which 

Public Comments Were Received 

a. Insertion of Breast Prosthesis (CPT code 

19340) 

b. Computed Tomographic Colonography 

(CPT code 74261) 

c. Myocardial Perfusion Imaging (CPT 

codes 78451, 78452, 78453, and 78454) 

d. Nerve Conduction Test (CPT code 

95905) 

e. Kidney Disease Education Services 

(HCPCS codes G0420 and G0421) 

f. Excision of Soft Tissue and Bone Tumors 

(CPT codes 21011 through 21016, 21552, 

21554 through 21558, 21930 through 

21933, 21395, 21936, 22900 through 

22905, 23071, 23073, 23075 through 

23078, 23200, 23210, 23220, 24071, 

24073, 24075 through 24077, 24079, 

24150 through 24153, 25071, 25073, 

25075 through 25078, 25170, 26111, 

26113, 26115 through 26118, 26250, 

26255, 26260, 26262, 27043, 27045, 

27047 through 27049, 27059, 27075 

through 27078, 27327 through 27329, 

27337, 27339, 27364, 27365, 27615, 

27616, 27618, 27619, 27632, 27634, 

27619, 27645 through 27647, 28039, 

28041, 28043, 28045 through 28047, 

28171, 28173, and 28175) 

g. Cryoablation of Prostate (CPT code 

55873) 

h. Urodynamics Studies (CPT Codes 51728 

and 51729) 

i. Coronary Computed Tomographic 

Angiography (CPT codes 75571, 75572, 

75573, and 75574) 

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j. Adjacent Tissue Transfer or 

Rearrangement (CPT codes 14301 and 

14302) 

k. Insertion of a Temporary Prostatic 

Urethral Stent (CPT code 53855) 

l. High Dose Rate Brachytherapy (CPT 

codes 77785, 77786, and 77787) 

m. Injection of Facet Joint (CPT codes 

64490, 64491, 64492, 64493, 64494, and 

64495) 

n. Knee Arthroscopy (CPT code 29870) 

3. Status of Interim Final Work RVUs for 

Potentially Misvalued Site-of-Service 

Anomaly Codes from CY 2009 and CY 

2010 

4. Other New, Revised, or Potentially 

Misvalued Codes with CY 2010 Interim 

Final RVUs Not Specifically Discussed 

in the CY 2011 Final Rule with Comment 

Period 

C. Establishment of Interim Final RVUs for 

CY 2011 

1. Establishment of Interim Final Work 

RVUs for CY 2011 

a. Background 

b. CY 2011 Interim Final Work RVUs for 

New and Revised Codes 

(i) CY 2011 New and Revised Codes that 

Do Not Represent Major New 

Comprehensive Services 

(1) Excision and Debridement (CPT codes 

11010, 11011, 11012, 11042, 11043, 

11044, 11045, 11046, 11047, and 97598) 

(2) Arthrodesis Including Discectomy (CPT 

code 22551) 

(3) Strapping Lower Extremity (CPT codes 

29540 and 29550) 

(4) Paraesophageal Hernia Procedures (CPT 

codes 43333 and 43335) 

(5) Vaginal Radiation Afterloading 

Apparatus for Clinical Brachytherapy 

(CPT codes 57155 and 57156) 

(6) Vagus Nerve Stimulator (CPT codes 

61885, 64568, 64569, and 64570) 

(7) Ultrasound of Extremity (CPT codes 

76881 and 76882) 

(8) Evaluation of Fine Needle Aspirate 

(CPT code 88172) 

(9) Immunization Administration (CPT 

code 90460 and 90461) 

(10) Diabetic Retinopathy Imaging (CPT 

code 92228) 

(11) Speech-Language Pathology Services 

(CPT codes 92508 and 92606) 

(12) Sleep Testing (CPT codes 95806 and 

95807) 

(13) Subsequent Hospital Observation Care 

(ii) Comprehensive Codes for a Bundle of 

Existing Component Services 

(iii) Work Budget Neutrality for Clinical 

Categories of CPT Codes 

c. CY 2011 Interim Final Work RVUs for 

Potentially Misvalued Codes 

(1) Excision and Debridement (CPT codes 

11043 and 11044) 

(2) Strapping Lower Extremity (CPT code 

29540) 

(3) Control Nasal Hemorrhage (CPT code 

30901) 

(4) Cystourethroscopy (CPT codes 52281 

and 52332) 

(5) Vaginal Radiation Afterloading 

Apparatus for Clinical Brachytherapy 

(CPT code 51755) 

(6) Obstetrical Care Codes (CPT codes 

59440, 59410, 59510, 59515, 59610, 

59614, 59618, and 59622) 

(7) Vagus Nerve Stimulator (CPT code 

61885) 

(8) Transforaminal Epidural Injection (CPT 

code 64483) 

(9) CT Thorax (CPT code 71250) 

(10) CT Spine (CPT code 72125) 

(11) CT Upper and CT Lower Extremity 

(CPT code 73200 and 73700) 

(12) Radiation Treatment Management 

(CPT code 77427) 

2. Establishment of Interim Final Direct PE 

Inputs for CY 2011 

a. Background 

b. CY 2011 Interim Final Direct PE Inputs 

for New, Revised, and Potentially 

Misvalued Codes 

(1) General Equipment Time 

(2) Equipment Time and Clinical Labor for 

Conscious Sedation 

(3) Equipment Time for Add-On Codes 

(4) Changes in Standard Uses of Certain 

Supplies 

(5) New Supply and Equipment Items 

(6) Endovascular Revascularization Stents 

(7) Nasal/Sinus Endoscopy Supply and 

Equipment Items 

3. Establishment of Interim Final 

Malpractice RVUs for CY 2011 

VI. Provisions of the Affordable Care Act 

A. Section 3002: Improvements to the 

Physician Quality Reporting System 

B. Section 3003: Improvements to the 

Physician Feedback Program and Section 

3007: Value-based payment modifier 

under the physician fee schedule 

1. Background 

2. Effect of the ACA of 2010 on the 

Program 

3. Phase II Proposed Changes 

4. Implementation of Sections 3003 and 

3007 of ACA 

5. Comments Sought on Specific Statistical 

Issues Related to ACA Sections 3003 and 

3007 

a. Risk Adjustment 

b. Attribution 

c. Benchmarking and Peer Groups 

d. Cost and Quality Measures and 

Compositing Methods 

C. Section 3102: Extension of the Work 

Geographic Index Floor and Revisions to 

the Practice Expense Geographic 

Adjustment under the Medicare 

Physician Fee Schedule, and Protections 

for Frontier States as amended by 

Section 10324 

D. Section 3103: Extension of Exceptions 

Process for Medicare Therapy Caps 

E. Section 3104: Extension of Payment for 

Technical Component of Certain 

Physician Pathology Services 

F. Section 3105 and 10311: Extension of 

Ambulance Add-Ons 

1. Amendment to Section 1834(l)(13) of the 

Act 

2. Amendment to Section 146(b)(1) of 

MIPAA 

3. Amendment to Section 1834(l)(12) of the 

Act 

G. Section 3107: Extension of Physician 

Fee Schedule Mental Health Add-On 

H. Section 3108: Permitting Physician 

Assistants to Order Post-Hospital 

Extended Care Services 

I. Section 3111: Payment for Bone Density 

Tests 

J. Section 3114: Improved Access for 

Certified Nurse-Midwife Services 

K. Section 3122: Extension of Medicare 

Reasonable Costs Payments for Certain 

Clinical Diagnostic Laboratory Tests 

Furnished to Hospital Patients in Certain 

Rural Areas 

L. Section 3134: Misvalued Codes Under 

the Physician Fee Schedule 

M. Section 3135: Modification of 

Equipment Utilization Factor for 

Advanced Imaging Services 

1. Adjustment in Practice Expense to 

Reflect Higher Presumed Utilization 

2. Adjustment in Technical Component 

‘‘Discount’’ on Single-Session Imaging to 

Consecutive Body Parts 

N. Section 3136: Revision for Payment for 

Power-Driven Wheelchairs 

1. Payment Rules for Power Wheelchairs 

2. Revision of Payment Amounts for Power 

Wheelchairs 

3. Elimination of Lump Sum Payment for 

Standard Power Wheelchairs 

O. Section 3139: Payment for Biosimilar 

Biological Products 

P. Section 3401: Revision of Certain Market 

Basket Updates and Incorporation of 

Productivity Improvements into Market 

Basket Updates That Do Not Already 

Incorporate Such Improvements 

1. ESRD Market Basket Discussion 

2. Productivity Adjustment regarding 

Ambulatory Surgical Center, Ambulance, 

Clinical Laboratory and DMEPOS Fee 

Schedules 

a. Ambulatory Surgery Centers (ASCs) 

b. Ambulance Fee Schedule (AFS) 

c. Clinical Lab Fee Schedule 

d. DMEPOS Fee Schedule 

Q. Section 4103: Medicare Coverage of 

Annual Wellness Visit Providing a 

Personalized Prevention Plan 

1. Background and Statutory Authority 

a. Medicare Coverage of Preventive 

Physical Examinations and Routine 

Checkups 

b. Requirements for Coverage of an Annual 

Wellness Visit 

2. Regulatory Revisions—Summary of 

Proposed Rule and Comments 

a. Revisions to § 411.15, Particular Services 

Excluded from Coverage 

b. Revisions to Part 410, Subpart B— 

Medical and Other Health Services 

(1) Definitions 

(2) Requirements of the First Annual 

Wellness Visit Providing Personalized 

Prevention Plan Services 

(3) Requirements of Subsequent Annual 

Wellness Visits Providing Personalized 

Prevention Plan Services 

3. Payment for the Annual Wellness Visit 

Providing Personalized Prevention Plan 

Services (PPPS) 

R. Section 4104: Removal of Barriers to 

Preventive Services in Medicare 

1. Definition of ‘‘Preventive Services’’ 

2. Deductible and Coinsurance for 

Preventive Services 

3. Extension of Waiver of Deductible to 

Services Furnished in Connection With 

or in Relation to a Colorectal Cancer 

Screening Test that Becomes Diagnostic 

or Therapeutic 

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73174 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

S. Section 5501: Expanding Access to 

Primary Care Services and General 

Surgery Services 

1. Section 5501(a): Incentive Payment 

Program for Primary Care Services 

a. Background 

b. Primary Care Incentive Payment 

Program (PCIP) 

(1) Primary Specialty Designation 

(2) Primary Care Percentage Calculation 

(3) Period of Claims Data for Primary Care 

Percentage Calculation 

(4) PCIP Payment 

(5) Summary of Final PCIP Policies 

2. Section 5501(b): Incentive Payment 

Program for Major Surgical Procedures 

Furnished in Health Professional 

Shortage Areas 

a. Background 

b. HPSA Surgical Incentive Payment 

Program (HSIP) 

3. Sections 5501(a) and (b) of the 

Affordable Care Act and Payment for 

Critical Access Hospital Professional 

Services Under the Optional Method 

T. Section 6003: Disclosure Requirements 

for In-Office Ancillary Services 

Exception to the Prohibition on 

Physician Self-Referral for Certain 

Imaging Services 

1. Background 

2. Disclosure Requirement 

a. Services the Trigger the Disclosure 

Requirement 

b. General Disclosure Requirements 

c. List of Alternate Suppliers 

d. Documentation of Disclosure 

e. Effective Date 

f. Other comments 

U. Section 6404: Maximum Period for 

Submission of Medicare Claims Reduced 

to Not More than 12 Months 

1. Background 

2. Provisions of ACA 

V. Section 6410 of the Affordable Care Act 

and Section 154 of MIPPA: Adjustments 

to the Metropolitan Statistical Areas 

(MSA) for Medicare Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies Competitive Acquisition 

Program 

1. Background 

2. Subdividing Large MSAs under Round 

2 

3. Exclusions of Certain Areas after Round 

2 and Prior to 2015 

4. Expansion of Round 2 

W. Section 10501(i)(3): Collection of 

HCPCS data for Development and 

Implementation of a Prospective 

Payment System for the Medicare 

Federally Qualified Health Center 

Program 

VII. Other Provisions of the Final Rule 

A. Part B Drug Payment: Average Sales 

Price (ASP) Issues 

1. ‘‘Carry Over’’ ASP 

2. Partial Quarter ASP Data 

3. Determining the Payment Amount for 

Drugs and Biologicals Which Include 

Intentional Overfill 

4. WAMP/AMP 

5. AMP Threshold and Price Substitutions 

6. Out of Scope Comments 

B. Ambulance Fee Schedule: Policy for 

Reporting Units when Billing for 

Ambulance Fractional Mileage 

1. History of Medicare Ambulance Services 

a. Statutory Coverage of Ambulance 

Services 

b. Medicare Regulations for Ambulance 

Services 

2. Mileage Reporting—Summary of the 

Provisions of the CY 2011 Proposed Rule 

a. Background and Current Process for 

Reporting Ambulance Mileage 

b. Concerns Regarding the Potential for 

Inaccuracies in Reporting Units and 

Associated Considerations 

c. Billing of Fractional Units for Mileage 

3. Analysis of and Responses to Public 

Comments 

a. Basis for Reconsideration of the 

Ambulance Mileage Reporting 

Requirements 

b. Appropriateness of Fractional Mileage 

Reporting Policy 

(1) Financial Impact of Fractional Mileage 

Policy 

c. Administrative Impact 

(2) Technical and Other Considerations 

(A) Ability to Measure Fractional Miles 

(B) Ambulance Provider versus Supplier 

Billing 

(C) Billing Software 

(D) Enforcement and Compliance 

(E) Air Ambulance 

(F) Miscellaneous Comments 

4. Applicability of the Fractional Billing 

Policy to Other Services 

5. Final Fractional Mileage Billing Policy 

C. Clinical Laboratory Fee Schedule: 

Signature on Requisition 

D. Discussion of Budget Neutrality for the 

Chiropractic Services Demonstration 

E. Provisions Related to Payment for Renal 

Dialysis Services Furnished by EndStage Renal Disease (ESRD) Facilities 

(1) Update to the Drug Add-on Adjustment 

to the Composite Rate 

(2) Estimating Per Patient Growth 

(3) Update to the Drug Add-on Adjustment 

(4) Update to the Geographic Adjustments 

to the Composite Rate 

(5) Updates to Core-Based Statistical Area 

(CBSA) Definitions 

(6) Updated Wage Index Values 

(7) Wage index Values for Areas With No 

Hospital Data 

(8) Reduction to the ESRD Wage Index 

Floor 

(9) Budget Neutrality Adjustment 

(10) ESRD Wage Index Tables 

F. Issues Related to the Medicare 

Improvements for Patients and Providers 

Act of 2008 (MIPPA) 

1. Section 131: Physician Payment, 

Efficiency, and Quality Improvements— 

Physician Quality Reporting System 

a. Program Background and Statutory 

Authority 

b. Incentive Payments for the 2011 

Physician Quality Reporting System 

c. 2011 Reporting Periods for Individual 

Eligible Professionals 

d. 2011 Physician Quality Reporting 

System Reporting Mechanisms for 

Individual Eligible Professionals 

(1) Final Requirements for Individual 

Eligible Professionals Who Choose the 

Claims-based Reporting Mechanism 

(2) Final Requirements for Individual 

Eligible Professionals Who Choose the 

Registry-based Reporting Mechanism 

(3) Final Requirements for Individual 

Eligible Professionals Who Choose the 

EHR based Reporting Mechanism 

(4) Final Qualification Requirements for 

Registries 

(5) Final Qualification Requirements for 

EHR Vendors and Their Products 

e. Criteria for Satisfactory Reporting of 

Individual Quality Measures for 

Individual Eligible Professionals 

f. Criteria for Satisfactory Reporting 

Measures Groups for Individual Eligible 

Professionals 

g. Reporting Option for Satisfactory 

Reporting on Quality Measures by Group 

Practices 

(1) Background and Authority 

(2) Definition of ‘‘Group Practice’’ 

(3) Process for Physician Group Practices to 

Participate as Group Practices and 

Criteria for Satisfactory Reporting 

A. Group Practice Reporting Option for 

Physician Group Practices with 200 or 

More NPIs GPRO I 

B. Group Practice Reporting Option for 

Group Practices of 2–199 NPIs—GPRO– 

II 

h. Statutory Requirements and Other 

Considerations for 2011 Physician 

Quality Reporting System Measures 

(1) Statutory Requirements for 2011 

Physician Quality Reporting System 

Measures 

(2) Other Considerations for 2011 

Physician Quality Reporting System 

Measures 

(3) Summary of Comments and Responses 

i. The Final 2011 Physician Quality 

Reporting System Quality Measures for 

Individual Eligible Professionals 

(1) 2011 Individual Quality Measures 

Selected From the 2010 Physician 

Quality Reporting System Quality 

Measures Set Available for Claims based 

Reporting and Registry-based Reporting 

(2) 2011 Individual Quality Measures 

Selected From the 2010 Physician 

Quality Reporting System Quality 

Measures Set Available for Registrybased Reporting Only 

(3) New Individual Quality Measures for 

2011 

(4) 2011 Measures Available for EHR-based 

Reporting 

(5) Measures Proposed for Inclusion in 

2011 Measures Groups 

j. 2011 Physician Quality Reporting System 

Quality Measures for Group Practices 

Selected to Participate in the Group 

Practice Reporting Option (GPRO I) 

k. Public Reporting of Physician Quality 

Reporting System Data 

l. Other Relevant ACA Provisions 

(1) Section 3002 (b)—Incentive Payment 

Adjustment for Quality Reporting 

(2) Section 3002(c)—Maintenance of 

Certification Programs and Section 

10327 Improvements to the Physician 

Quality Reporting System 

(3) Section 3002(d)—Integration of 

Physician Quality Reporting and EHR 

Reporting 

(4) Section 3002(e)—Feedback 

(5) Section 3002(f)—Appeals 

2. Section 132: Incentives for Electronic 

Prescribing (eRx)– The Electronic 

Prescribing Incentive Program 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73175 

a. Program Background and Statutory 

Authority 

b. The 2011 eRx Incentive 

(1) The 2011 Reporting Period for the eRx 

Incentive Program 

(2) Criteria for Determination of Successful 

Electronic Prescriber for Eligible 

Professionals 

(A) Reporting the Electronic Prescribing 

Measure 

(B) The Reporting Denominator for the 

Electronic Prescribing Measure 

(C) Qualified Electronic Prescribing 

System—Required Functionalities and 

Part D eRx Standards 

(D) The Reporting Numerator for the 

Electronic Prescribing Measure 

(E) Criteria for Successful Reporting of the 

Electronic Prescribing Measure 

(3) Determination of the 2011 Incentive 

Payment Amount for Individual Eligible 

Professionals Who Are Successful 

Electronic Prescribers 

(4) Reporting Option for Satisfactory 

Reporting of the Electronic Prescribing 

Measure by Group Practices 

(A) Definition of ‘‘Group Practice’’ 

(B) Process for Group Practices to 

Participate as Group Practices and 

Criteria for Successful Reporting of the 

Electronic Prescribing Measure by Group 

Practices 

c. The 2012 eRx Payment Adjustment 

(1) The eRx Payment Adjustment Reporting 

Period 

(2) Criteria for Determining Applicability 

of the 2012 eRx Payment Adjustment to 

Individual Eligible Professionals 

(3) Criteria for Determining Applicability 

of the 2012 eRx Payment Adjustment to 

Group Practices 

(4) Significant Hardship Exemption 

d. The 2013 eRx Payment Adjustment 

e. Public Reporting of Names of Successful 

Electronic Prescribers 

G. DMEPOS Provisions 

1. Medicare Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) Competitive Bidding Program 

(CBP) 

a. Legislative and Regulatory History of 

DMEPOS CBP 

b. Implementation of a National Mail Order 

DMEPOS Competitive Bidding Program 

(CBP) for Diabetic Testing Supplies 

(1) Future Competitions for Diabetic 

Testing Supplies 

(2) Definition of Mail Order Item 

(3) Special Rule in Case of Competition for 

Diabetic Testing Strips 

(4) Anti-switching Rule in Case of 

Competition for Diabetic Test Strips 

c. Off-the-Shelf (OTS) Orthotics Exemption 

d. Grandfathering Rules Resulting in 

Additional Payments to Contract 

Suppliers under the DMEPOS 

Competitive Bidding Program (CBP) 

e. Appeals Process 

(1) Purpose and Definitions: (§ 414.402) 

(2) Applicability 

(3) Contract Termination 

(4) Notice of Termination 

(5) Corrective Action Plan 

(6) Right to Request a Hearing by the CBIC 

Hearing Officer (HO) 

(7) Scheduling of the Hearing 

(8) Burden of Proof 

(9) Role of the Hearing Officer (HO) 

(10) CMS’s Final Determination 

(11) Effective Date of the Contract 

Termination 

(12) Effect of Contract Termination 

2. Changes to Payment Rules for Oxygen 

and Oxygen Equipment 

a. Background 

b. Furnishing Oxygen Equipment after the 

36-Month Rental Period (CAP) 

c. Furnishing Oxygen Equipment during 

the 36-Month Rental Period (CAP) 

H. Provider and Supplier Enrollment Issue: 

Air Ambulance Provision 

I. Technical Corrections 

1. Physical Therapy, Occupational Therapy 

and Speech-language Pathology 

2. Scope of Benefits 

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 2011 

VIII. Waiver of Proposed Rulemaking and 

Delay in Effective Date 

IX. Collection of Information Requirements 

A. ICRs Regarding Diagnostic X-ray Tests, 

Diagnostic Laboratory Tests, and Other 

Diagnostic Tests: Conditions (§ 410.32) 

B. ICRs Regarding General Exceptions to 

the Referral Prohibition Related to Both 

Ownership/Investment and 

Compensation (§ 411.355) 

C. ICRs Regarding Appeals Process for 

Termination of Competitive Bidding 

Contract (§ 414.423) 

D. ICRs Regarding Additional Provider and 

Supplier Requirements for Enrolling and 

Maintaining Active Enrollment status in 

the Medicare Program (§ 424.516) 

E. Additional Information Collection 

Requirements 

1. Part B Drug Payment 

2. Physician Quality Reporting Initiative 

(PQRI) 

3. Electronic Prescribing (eRx) Incentive 

Program 

X. Response to Comments 

XI. Regulatory Impact Analysis 

A. RVU Impacts 

1. Resource Based Work, PE, and 

Malpractice RVUs 

2. CY 2011 PFS Impact Discussion 

a. Changes in RVUs 

b. Combined Impact 

B. Geographic Practice Cost Indices (GPCIs) 

C. Rebasing and Revising of the MEI 

D. The Affordable Care Act Provisions 

1. Section 3002: Improvements to the 

Physician Quality Reporting System 

2. Sections 3003 and 3007: Improvements 

to the Physician Feedback Program and 

Value-Based Payment Under the 

Physician Fee Schedule 

2. Section 3103: Extension of Exceptions 

Process for Medicare Therapy Caps 

3. Section 3102: Extension of the Work 

Geographic Index Floor and Revisions to 

the Practice Expense Geographic 

Adjustment under the Medicare 

Physician Fee Schedule, and Protections 

for Frontier States as amended by 

Section 10324 

4. Section 3103: Extension of Exceptions 

Process for Medicare Therapy Caps 

5. Section 3104: Extension of Payment for 

Technical Component of Certain 

Physician Pathology Services 

6. Sections 3105 and 10311: Extension of 

Ambulance Add-Ons 

7. Section 3107: Extension of Physician Fee 

Schedule Mental Health Add-On 

8. Section 3108: Permitting Physician 

Assistants to Order Post-Hospital 

Extended Care Services 

9. Section 3111: Payment for Bone Density 

Tests 

10. Section 3114: Improved Access for 

Certified Nurse-Midwife Services 

11. Section 3122: Extension of Medicare 

Reasonable Costs Payments for Certain 

Clinical Diagnostic Laboratory Tests 

Furnished to Hospital Patients in Certain 

Rural Areas 

12. Section 3134: Misvalued Codes Under 

the PFS 

13. Section 3135: Modification of 

Equipment Utilization Factor For 

Advanced Imaging Services 

14. Section 3136: Revisions in Payments 

for Power Wheelchairs 

15. Section 3139: Payment for Biosimilar 

Biological Products 

16. Section 3401: Revisions of Certain 

Market Basket Updates and 

Incorporation of Productivity 

Adjustments 

17. Section 4103: Medicare Coverage of 

Annual Wellness Visit Providing a 

Personalized Prevention Plan 

18. Section 4104: Removal of Barriers to 

Preventive Services in Medicare 

19. Section 5501: Expanding Access to 

Primary Care Services and General 

Surgery Services 

20. Section 6003: Disclosure Requirements 

for In-office Ancillary Services Exception 

to the Prohibition of Physician Selfreferral for Certain Imaging Services 

21. Section 6404: Maximum Period for 

Submission of Medicare Claims Reduced 

to Not More Than 12 Months 

22. Section 6410 of Patient Accountability 

and Affordable Care Act and Section 154 

of MIPPA: Adjustments to the 

Metropolitan Statistical Areas (MSA) for 

Medicare Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

Competitive Acquisition Program 

23. Section 10501(i)(3): Collection of 

HCPCS Data for the Development and 

Implementation of a Prospective 

Payment System for the Medicare FQHC 

Program 

E. Other Provisions of the Proposed 

Regulation 

1. Part B Drug Payment: ASP Issues 

2. Ambulance Fee Schedule: Proposed 

Policy for Reporting Units when Billing 

for Ambulance Fractional Mileage 

3. Chiropractic Services Demonstration 

4. Renal Dialysis Services Furnished by 

ESRD Facilities 

5. Section 131(b) of the MIPPA: Physician 

Payment, Efficiency, and Quality 

Improvements—Physician Quality 

Reporting System 

6. Section 132 of the MIPPA: Incentives for 

Electronic Prescribing (eRx)—The eRx 

Incentive Program 

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73176 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

7. Durable Medical Equipment-Related 

Issues 

a. Off-the-Shelf (OTS) Orthotics Exemption 

b. Changes to Payment for Oxygen 

Equipment 

c. Diabetic Testing Supplies 

d. Metropolitan Statistical Areas 

8. Air Ambulance 

F. Alternatives Considered 

G. Impact on Beneficiaries 

H. Accounting Statement 

Regulations Text 

Addendum A—Explanation and Use of 

Addendum B 

Addendum B—Relative Value Units and 

Related Information Used In Determining 

Medicare Payments for CY 2011 

Addendum C—Codes With Interim RVUS 

Addendum D—Final 2011 Geographic 

Adjustment Factors (GAFS) 

Addendum E—Final 2011****Geographic 

Practice Cost Indicies (GPCIS) By State 

and Medicare Locality 

Addendum F—CY 2011 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 

Addendum I—[Reserved] 

Addendum J—List of CPT1/HCPCS Codes 

Used to Define Certain Designated 

Health Service Categories 2 Under 

Section 1877 of the Social Security Act 

Effective January 1, 2011 

Addendum K—CY 2011 ESRD Wage Index 

For Urban Areas Based On CBSA Labor 

Market Areas 

Addendum L— CY 2011 Wage Index For 

Rural Areas Based On CBSA Labor 

Market Areas 

Acronyms 

In addition, because of the many 

organizations and terms to which we 

refer by acronym in this proposed rule, 

we are listing these acronyms and their 

corresponding terms in alphabetical 

order below: 

AA Anesthesiologist assistant 

AACVPR American Association of 

Cardiovascular and Pulmonary 

Rehabilitation 

AANA American Association of Nurse 

Anesthetists 

ABMS American Board of Medical 

Specialties 

ABN Advanced Beneficiary Notice 

ACA ‘‘Affordable Care Act’’ 

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 

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–DE American Medical Association 

Drug Evaluations 

AACE American Association of Clinical 

Endocrinologists 

AADE American Association of Diabetes 

Educators 

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 

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) 

BPM Benefit Policy Manual 

BIPA Medicare, Medicaid, and SCHIP 

Benefits Improvement Protection Act of 

2000 (Pub. L. 106–554) 

BLS Bureau of Labor Statistics 

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 

CMHC Community mental health center 

CMP Civil money penalty 

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) 

CR Cardiac rehabilitation 

CRNA Certified registered nurse anesthetist 

CRP Canalith repositioning 

CRT Certified respiratory therapist 

CSW Clinical social worker 

CT Computed Tomography 

CTA Computed Tomography Angography 

CSC Computer Sciences Corporation 

CWF Common Working File 

CY Calendar year 

DEA Drug Enforcement Agency 

DOTPA Development of Outpatient 

Therapy Alternatives 

DHS Designated health services 

DHHS Department of Health and Human 

Services 

DME Durable medical equipment 

DMEPOS Durable medical equipment, 

prosthetics, orthotics, and supplies 

DOQ Doctors Office Quality 

DOS Date of service 

DRA Deficit Reduction Act of 2005 (Pub. L. 

109–171) 

DSMT Diabetes self-management training 

EGC Electrocardiogram 

E/M Evaluation and management 

EDI Electronic data interchange 

EEG Electroencephalogram 

EHR Electronic health record 

EKG Electrocardiogram 

EMG Electromyogram 

EMTALA Emergency Medical Treatment 

and Active Labor Act 

EOG Electro-oculogram 

EPO Erythopoeitin 

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 

FOTO Focus On Therapeutic Outcomes 

FQHC Federally Qualified Health Center 

FR Federal Register 

GAF Geographic adjustment factor 

GAO General Accounting Office 

GEM Generating Medicare [Physician 

Quality Performance Measurement Results] 

GFR Glomerular filtration rate 

GPRO Group Practice Reporting Option 

GPO Group purchasing organization 

GPCI Geographic practice cost index 

GPS Geographic Positioning System 

GSA General Services Administration 

HAC Hospital-acquired conditions 

HBAI Health and behavior assessment and 

intervention 

HCC Hierarchal Condition Category 

HCPAC Health Care Professional Advisory 

Committee 

HCPCS Healthcare Common Procedure 

Coding System 

HCRIS Healthcare Cost Report Information 

System 

HEMS Helicopter Emergency Medical 

Services 

HDRT High dose radiation therapy 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73177 

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 

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 Housing and Urban Development 

IACS Individuals Access to CMS Systems 

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 

IDTF Independent diagnostic testing facility 

IGI IHS Global Insight, Inc. 

IFC Interim final rule with comment period 

IMRT Intensity-Modulated Radiation 

Therapy 

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 

TJC Joint Commission 

JRCERT Joint Review Committee on 

Education in Radiologic Technology 

KDE Kidney disease education 

LCD Local coverage determination 

MA Medicare Advantage 

MA–PD Medicare Advantage-Prescription 

Drug Plans 

MAC Medicare Administrative Contractor 

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 

MGMA Medical Group Management 

Association 

MEI Medicare Economic Index 

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) 

MMSEA Medicare, Medicaid, and SCHIP 

Extension Act of 2007 (Pub. L. 110–173) 

MNT Medical nutrition therapy 

MOC Maintenance of certification 

MP Malpractice 

MPC Mulitspecialty Points of Comparison 

MPPR Multiple procedure payment 

reduction 

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 

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 code 

NF Nursing facility 

NISTA National Institute of Standards and 

Technology Act 

NP Nurse practitioner 

NPI National Provider Identifier 

NPP Nonphysician practitioner 

NQF National Quality Forum 

NBRC National Board for Respiratory Care 

NRC Nuclear Regulatory Commission 

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 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 

PAT Performance assessment tool 

PC Professional component 

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 

PPI Producer price index 

PPIS Physician Practice 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 

PTCA Percutaneous transluminal coronary 

angioplasty 

PTA Physical therapy assistant 

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 [AMAs 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 

STATS Short Term Alternatives for 

Therapy Services 

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 Alternative Therapy 

Services 

TC Technical Component 

TIN Tax identification number 

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 Veterans Administration 

VBP Value-based purchasing 

WAC Wholesale Acquisition Cost 

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WAMP Widely available market price 

WHO World Health Organization 

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 FARS/ 

DFARS 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 

eligible nonphysician practitioners 

(such as physician assistants, nurse 

practitioners, clinical nurse specialists, 

certified nurse-midwives, psychologists, 

or social workers) that are permitted to 

furnish and bill Medicare under the PFS 

for the services under discussion. 

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 were 

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 on our 

review of recommendations received 

from the American Medical 

Association’s (AMA) 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 physicians’ service in a 

final rule, published November 2, 1998 

(63 FR 58814), effective for services 

furnished in 1999. Based on the 

requirement to transition to a resourcebased 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 

nonphysicians (for example, registered 

nurses (RNs)) nominated by physician 

specialty societies and other groups. 

The CPEP panels identified the direct 

inputs required for each physicians’ 

service in both the office setting and 

out-of-office setting. We have since 

refined and revised these inputs based 

on recommendations from the 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 

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 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 topdown 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 2011 

using this methodology, unless 

otherwise noted. 

In the CY 2010 PFS final rule with 

comment period, we updated the PE/ 

hour (HR) data that are used in the 

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calculation of PE RVUs for most 

specialties (74 FR 61749). 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 

PE/HR values (74 FR 61752). 

3. Resource-Based Malpractice (MP) 

RVUs 

Section 4505(f) of the BBA amended 

section 1848(c) of the Act requiring us 

to implement resource-based 

malpractice (MP) RVUs for services 

furnished on or after CY 2000. The 

resource-based MP RVUs were 

implemented in the PFS final rule 

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. 

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 FiveYear Review of the physician work 

RVUs was published on November 22, 

1996 (61 FR 59489) and was effective in 

1997. The second Five-Year Review was 

published in the CY 2002 PFS final rule 

with comment period (66 FR 55246) and 

was effective in 2002. The third FiveYear Review of physician work RVUs 

was published in the CY 2007 PFS final 

rule with comment period (71 FR 

69624) and was effective on January 1, 

2007. (Note: Additional codes relating to 

the third Five-Year Review of physician 

work RVUs were addressed in the CY 

2008 PFS final rule with comment 

period (72 FR 66360).) The fourth FiveYear Review of physician 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). 

Changes due to the fourth Five-Year 

Review of physician work RVUs will be 

effective 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 AMAs 

Current Procedural Terminology (CPT) 

codes). As part of the CY 2007 PFS final 

rule with comment period (71 FR 

69624), we implemented a new bottomup 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 specialtyspecific PE/HR data used to develop PE 

RVUs. Therefore, the next Five-Year 

Review of PE RVUs will be addressed in 

CY 2014. 

In the CY 2005 PFS final rule with 

comment period (69 FR 66236), we 

implemented the first Five-Year Review 

of the MP 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. 

5. Adjustments to RVUs Are Budget 

Neutral 

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. 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. 

For CY 2010, we adopted a number of 

new payment policies for which we 

estimated the potential for a 

redistributive effect under the PFS, 

including the use of the new PPIS data 

to develop the specialty-specific PE/HR 

used for the PE RVUs (74 FR 61749 

through 61752) and the elimination of 

the reporting of all CPT consultation 

codes in order to allow for correct and 

consistent coding and appropriate 

payment for evaluation and 

management services under the PFS (74 

FR 61767 through 61775). In the CY 

2011 PFS proposed rule (75 FR 40047), 

we acknowledged that clinical 

experience with these new PFS policies 

has been growing over the first 6 months 

of CY 2010 and noted that as we seek 

to improve future PFS payment 

accuracy for services, we were 

interested in public comments on the 

perspectives of physicians and 

nonphysician practitioners caring for 

Medicare beneficiaries under the 

current PFS coding and payment 

methodologies for physicians’ services. 

Comment: Many commenters 

expressed various concerns regarding 

new Medicare coding and payment 

methodologies adopted for CY 2010 and 

continuing in CY 2011. Some 

commenters indicated that the effects of 

using PPIS data to develop the 

specialty-specific practice expense per 

hour (PE/HR) significantly reduced the 

payment for certain services and 

procedures. Commenters were 

concerned that the reductions in 

practice costs reflected in the PPIS data 

were inaccurate and that CMS reliance 

on the PPIS data caused undue hardship 

to certain specialties. Some commenters 

requested that CMS utilize new PE 

survey data for specific specialties. 

A number of commenters were also 

particularly concerned with the 

decision by CMS to no longer recognize 

the CPT consultation codes for Part B 

payment of evaluation and management 

(E/M) services beginning in CY 2010. 

Many commenters recommended 

resuming payment for consultation 

codes under the PFS to recognize the 

unique physician work and practice 

expenses when consultation services are 

furnished at the request of other 

practitioners. Several commenters 

argued that consultation services were 

especially important to ensuring highquality, coordinated care for complex 

patients and to prevent unnecessary, 

expensive tests. Based on findings from 

a survey of affected specialties, these 

commenters expressed concern that 

CMS policy decision to no longer 

recognize the CPT consultation codes 

for PFS payment purposes resulted in: 

(1) A reduction in the number of new 

Medicare patients seen by specialists; 

(2) a reduction in overall specialist time 

spent with individual Medicare 

patients; (3) a reduction in the number 

of consultations provided to hospital 

inpatients; (4) diminished continuity 

and coordination of care; and (5) the 

elimination of physicians’ office staff 

and postponement of physicians 

purchasing new equipment because of 

practice cost concerns. Finally, other 

commenters requested that, in the 

absence of recognition of the CPT 

consultation codes for PFS payment, 

CMS should revise the current 

prolonged services and new patient 

definitions in order to allow for higher 

payments for services that, prior to CY 

2010, would have been billed using the 

CPT consultation codes. Specifically, 

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the commenters believe that CMS 

should adopt the current CPT policy of 

identifying patients seen by physicians 

in a different subspecialty within a 

group practice as ‘‘new’’ patients, rather 

than continuing to use the same 

physician specialty as the decision 

point. In addition, some commenters 

encouraged CMS to adopt the CPT 

inpatient setting guidelines for 

determining whether a service meets the 

prolonged service criteria, which allow 

physicians to include time spent on a 

patients floor or unit performing tasked 

related to the patients care, rather than 

just face-to-face time as specified under 

current CMS policy. 

Response: We appreciate the concerns 

of the commenters regarding current 

PFS coding and payment 

methodologies. We welcome the 

perspective of physicians and 

nonphysician practitioners caring for 

Medicare beneficiaries. We understand 

that in some cases, recent policy 

changes under the PFS reduced 

payments for certain professional 

services, albeit with the goal of 

providing payment for services that 

appropriately reflects their relative 

value in the context of PFS payment for 

all other services. It is in the nature of 

any budget neutral payment system for 

changes, such as the use of PPIS data 

and the elimination of PFS payment for 

the CPT consultation codes, to have a 

somewhat differential impact on various 

groups of physicians and/or 

nonphysician practitioners. 

Furthermore, we note that all physicians 

benefited from the budget neutral 

increase in the payment levels for the 

other evaluation and management (E/M) 

CPT codes that resulted from the 

consultation code policy change. 

For CY 2010, we adopted the PPIS 

data for developing the PE RVUs as the 

most recent data on physicians office 

practice expenses that used a consistent 

survey instrument across all specialty 

and healthcare professional groups. The 

PPIS was a nationally representative 

survey providing the most up-to-date 

and comprehensive data available from 

51 specialties, using a survey 

instrument that was carefully designed, 

tested, and implemented. As discussed 

in the CY 2010 PFS final rule with 

comment period (75 FR 61751), because 

we recognized that some specialties 

would likely experience significant 

payment reductions with the use of the 

PPIS data, we adopted a 4-year 

transition from the previous PE RVUs to 

the PE RVUs developed using the new 

PPIS data in order to allow physicians 

and others time to adjust to the payment 

changes. We note that CY 2010 was the 

first year of the transition, with payment 

based upon 75 percent of the previous 

PE RVUs and 25 percent of the PE RVUs 

using the new PPIS data. This blend 

will move to 50/50 in CY 2011, and we 

intend to continue to closely monitor 

Medicare PFS utilization data to detect 

any emerging issues that may be of 

concern during this transition period, 

such as access problems for Medicare 

beneficiaries. To date, we have 

identified no specific problems that 

would warrant our proposal of a change 

with respect to the final CY 2010 policy 

regarding development of the PE RVUs 

based on the PPIS data. Going forward, 

as discussed further in section II.A.2.f. 

of this final rule with comment period, 

we remain interested in the thoughts of 

stakeholders regarding the MedPAC 

comment that ‘‘CMS should consider 

alternatives to collecting specialtyspecific cost data or options to decrease 

the reliance on such data.’’ We 

encourage interested parties to contact 

us at any time if they have information 

to share or discuss in this regard. 

In response to extensive public 

comment on the CY 2010 PFS proposal 

to eliminate payment for the CPT 

consultation codes, we explained our 

rationale in detail in the CY 2010 PFS 

final rule with comment period (75 FR 

61767 through 61775). Prior to the CY 

2010 PFS rulemaking cycle, we had 

made numerous attempts to resolve 

issues related to the reporting of the 

CPT consultation codes, including 

developing and implementing relevant 

guidance and educating physicians 

regarding documentation, transfer of 

care, and consultation policy. Despite 

these efforts, there was still substantial 

disagreement and inconsistency within 

the physician community regarding 

these issues. In addition, we believe that 

in most cases there is no substantial 

difference in physician work between 

E/M visits and services that would 

otherwise be reported with CPT 

consultation codes. Therefore, we 

continue to believe that E/M services 

that could previously have been 

reported using the CPT consultation 

codes may now be appropriately 

reported and paid using other E/M 

codes, specifically office and other 

outpatient, initial hospital and nursing 

facility care, and subsequent hospital 

and nursing facility care E/M codes. 

This policy allows for correct and 

consistent coding for E/M services 

furnished by physicians and 

nonphysician practitioners, as well as 

provides for appropriate payment for 

the specific services that were 

previously billed using the CPT 

consultation codes. 

While we continue to believe that 

promoting effective coordination of care 

must be an essential goal of our 

payment systems, we are currently not 

aware of any evidence that the CY 2010 

policy change to no longer recognize the 

CPT consultation codes is creating 

problems regarding care coordination 

and communication among physicians 

that negatively impact the health of 

Medicare beneficiaries. As we stated in 

the CY 2010 PFS final rule with 

comment period in response to similar 

hypothetical concerns expressed by 

some commenters (75 FR 61774), if we 

become aware of such evidence in the 

future, we would certainly consider 

whether there is an appropriate policy 

response to promote more effective 

coordination of care. However, we 

continue to believe it is premature to 

consider what the appropriate responses 

might be unless specific evidence of an 

issue affecting the health of Medicare 

beneficiaries comes to our attention. We 

will continue to be attentive to any 

concerns that develop about the effects 

of the policy on the goal of promoting 

effective coordination of care. 

In the CY 2010 PFS final rule with 

comment period (75 FR 61772), we 

explained that, although we estimated 

that there would be redistributional 

effects among specialties, we did not 

believe the estimated impacts of the 

change in consultation code policy were 

disproportionate to the goals we sought 

to achieve in finalizing the proposal. 

While we understand that commenters 

are concerned with the effects of this 

policy change and that these comments 

were submitted after only a half year’s 

experience with the revised policy, the 

commenters on the CY 2011 proposed 

rule did not fundamentally address the 

underlying issues that led to our 

decision to no longer recognize the 

consultation codes for PFS payment 

purposes. 

We appreciate the suggestions of the 

commenters regarding policy changes to 

the definitions of new patients and 

prolonged services. Regarding the 

definition of ‘‘new’’ patient, we note that 

we continue to consider requests on an 

ongoing basis for new Medicare 

physician specialty codes and may 

establish new codes upon evaluating the 

submissions based on the criteria listed 

in the Medicare Claims Processing 

Manual, Pub. 100–04, chapter 26, 

section 10.8. In fact, we have approved 

four new Medicare physician specialty 

codes in the past 2 years. These 

additions allow more patients of those 

subspecialties to be considered new 

based on the narrower range of services 

provided by the subspecialty within a 

broader specialty group practice. We 

encourage interested stakeholders to 

submit requests for new specialty codes 

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if they desire a specific code for a 

different medical specialty or 

subspecialty. We do not believe it is 

necessary to change our current policy 

to one that would routinely adopt the 

CPT policy of identifying patients seen 

by physicians in a different subspecialty 

as ‘‘new’’ patients because our current 

criteria for establishing new Medicare 

physician specialty codes already 

accounts for many of these scenarios. 

Medicare physician specialty codes 

describe the unique types of medicine 

that physicians practice. Therefore, we 

believe our current definition of ‘‘new’’ 

for reporting office visits to a group 

practice appropriately relies upon the 

Medicare definition of a different 

specialty so that that the differential 

physician resources required to care for 

a patient who is truly new to the 

physician’s unique type of medical 

practice are appropriately recognized. 

Finally, we note that our prolonged 

service criterion that allows counting 

only of face-to-face time for inpatients, 

as it does for outpatients, is 

longstanding. Given that the highest 

level initial hospital care E/M visit by a 

physician typically extends for 70 

minutes, in order to report the 

prolonged physician service CPT code 

in the inpatient setting, a physician 

would need to spend at least an 

additional 30 minutes caring for the 

patient. We are uncertain whether many 

inpatient E/M services that would 

otherwise be reported as CPT 

consultation codes extend beyond 100 

minutes, even if we were to consider 

adopting a policy change to allow 

counting of unit/floor time in addition 

to face-to-face time. If we were to 

consider such a policy change in the 

counting of physician time, we are also 

concerned that available documentation 

in the medical record could make 

evaluating the medical necessity of a 

prolonged service especially 

problematic. Therefore, we do not 

believe it would be appropriate to 

modify our interpretation of the 

counting of time for purposes of 

reporting the prolonged service 

inpatient codes. In most cases, we 

believe that the additional time that may 

be required for an E/M visit to a hospital 

inpatient that would otherwise be 

reported by a CPT consultation code 

may be appropriately paid through the 

Medicare payment for the level of initial 

or subsequent hospital care E/M code 

that is reported that takes into 

consideration the face-to-face time the 

consulting physician spends with the 

patient. 

We appreciate the commenters’ varied 

perspectives on caring for Medicare 

beneficiaries under the recent PFS 

coding and payment changes adopted 

for CY 2010 and continuing in CY 2011. 

While we did not make CY 2011 

proposals to modify our established 

policies regarding the use of the PPIS 

data to calculate the PE RVUs or the 

reporting of E/M visits that would 

otherwise be reported under the CPT 

consultation codes, and we are not 

modifying them for CY 2011, we will 

continue to monitor the impact of these 

policies. We look forward to continuing 

our dialogue with stakeholders 

regarding these and future policy 

changes under the PFS. 

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 MP RVUs) are adjusted by a 

geographic practice cost index (GPCI). 

The GPCIs reflect the relative costs of 

physician work, PE, and malpractice 

expense 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 × GPCI work) + 

(RVU PE × GPCI PE) + (RVU 

malpractice × GPCI malpractice)] × 

CF. 

C. Most Recent Changes to the Fee 

Schedule 

The CY 2010 PFS final rule with 

comment period (74 FR 61738) 

implemented changes to the PFS and 

other Medicare Part B payment policies. 

It also finalized some of the CY 2009 

interim RVUs and implemented interim 

RVUs for new and revised codes for CY 

2010 to ensure that our payment 

systems are updated to reflect changes 

in medical practice and the relative 

value of services. The CY 2010 PFS final 

rule with comment period also 

addressed other policies, as well as 

certain provisions of the MIPPA. 

As required by the statute at the time 

of its issuance on October 30, 2009, the 

CY 2010 PFS final rule with comment 

period announced the following for CY 

2010: The PFS update of ¥21.2 percent; 

the initial estimate for the sustainable 

growth rate of ¥8.8 percent; and the CF 

of $28.4061. 

On December 10, 2009, we published 

a correction notice (74 FR 65449) to 

correct several technical and 

typographical errors that occurred in the 

CY 2010 PFS final rule with comment 

period. This correction notice 

announced a revised CF for CY 2010 of 

$28.3895. 

On December 19, 2009, the 

Department of Defense Appropriations 

Act, 2010 (Pub. L. 111–118) was signed 

into law. Section 1011 of Public Law 

111–118 provided a 2-month zero 

percent update to the CY 2010 PFS 

effective only for dates of service from 

January 1, 2010 through February 28, 

2010. 

On March 2, 2010, the Temporary 

Extension Act of 2010 (Pub. L. 111–144) 

was signed into law. Section 2 of Public 

Law 111–144 extended through March 

31, 2010 the zero percent update to the 

PFS that was in effect for claims with 

dates of service from January 1, 2010 

through February 28, 2010. 

In addition, on April 15, 2010, the 

Continuing Extension Act of 2010 (Pub. 

L. 111–157) was signed into law. 

Section 4 of Public Law 111–157 

extended through May 31, 2010 the zero 

percent update to the PFS that was in 

effect for claims with dates of services 

from January 1, 2010 through March 31, 

2010. The provision was retroactive to 

April 1, 2010. 

In the May 11, 2010 Federal Register 

(75 FR 26350), we published a 

subsequent correction notice to correct 

several technical and typographical 

errors that occurred in the CY 2010 PFS 

final rule with comment period and the 

December 10, 2009 correction notice. 

The May 11, 2010 correction notice 

announced a revised CF for CY 2010 of 

$28.3868. 

On June 25, 2010, the Preservation of 

Access to Care for Medicare 

Beneficiaries and Pension Relief Act of 

2010 (Pub. L. 111–192) was signed into 

law. This law required application of a 

2.2 percent update to the PFS for claims 

with dates of services from June 1, 2010 

through November 30, 2010. As a result 

of this change, the PFS conversion 

factor was revised to $36.8729 for 

services furnished during this time 

period. 

On March 23, 2010 the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148) was signed into law. 

Shortly thereafter, on March 30, 2010, 

the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152) was signed into law. These two 

laws are discussed in this final rule with 

comment period and are collectively 

referred to as the ‘‘Affordable Care Act’’ 

(ACA) throughout this final rule with 

comment period. 

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73182 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

D. Public Comments Received in 

Response to the CY 2011 PFS Proposed 

Rule 

We received approximately 8,500 

timely pieces of correspondence 

containing multiple comments on the 

CY 2011 PFS proposed rule. We note 

that we received some comments that 

were outside the scope of the CY 2011 

PFS proposed rule, including public 

comments on new CY 2011 HCPCS 

codes that were not presented in the CY 

2011 PFS proposed rule and existing CY 

2010 HCPCS codes with final values for 

which we made no proposals for CY 

2011. These comments are not 

addressed in this CY 2011 PFS final rule 

with comment period. New and revised 

CY 2011 HCPCS codes and their CY 

2011 interim PFS work, malpractice, 

and PE RVUs are displayed in 

Addendum C to this final rule with 

comment period, and these values are 

open to public comment on this final 

rule with comment period. Summaries 

of the public comments that are within 

the scope of the proposals and our 

responses to those comments are set for 

the in the various sections of this final 

rule with comment period under the 

appropriate headings. 

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 CMS to 

develop a methodology for a resourcebased 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 American Medical 

Association’s (AMA’s) Relative Value 

Update Committee (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 (PE/HR) in developing the 

indirect 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). These surveys were 

conducted from 1995 through 1999. For 

several specialties that collected 

additional PE/HR data through 

supplemental surveys, we incorporated 

these data in developing the PE/HR 

values used annually. 

While the SMS was not specifically 

designed for the purpose of establishing 

PE RVUs, we found these data to be the 

best available at the time. The SMS was 

a multispecialty survey effort conducted 

using a consistent survey instrument 

and method across specialties. The 

survey sample was randomly drawn 

from the AMA Physician Master file to 

ensure national representativeness. The 

AMA discontinued the SMS survey in 

1999. 

As required by the Balanced Budget 

Refinement Act of 1999 (BBRA) (Pub. L. 

106–113), we also established a process 

by which specialty groups could submit 

supplemental PE data. In the May 3, 

2000 Federal Register, we issued the 

Medicare Program; Criteria for 

Submitting Supplemental Practice 

Expense Survey Data interim final rule 

(65 FR 25664) in which we established 

criteria for acceptance of supplemental 

data. The criteria were modified in the 

CY 2001 and CY 2003 PFS final rules 

with comment period (65 FR 65380 and 

67 FR 79971, respectively). In addition 

to the SMS, we previously used 

supplemental survey data for the 

following specialties: Cardiology; 

dermatology; gastroenterology; 

radiology; cardiothoracic surgery; 

vascular surgery; physical and 

occupational therapy; independent 

laboratories; allergy/immunology; 

independent diagnostic testing facilities 

(IDTFs); radiation oncology; medical 

oncology; and urology. 

Because the SMS data and the 

supplemental survey data were from 

different time periods, we historically 

inflated them by the Medicare Economic 

Index (MEI) to put them on as 

comparable a time basis as we could 

when calculating the PE RVUs. This 

MEI proxy was necessary in the past 

due to the lack of contemporaneous, 

consistently collected, and 

comprehensive multispecialty survey 

data. 

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 was designed to update the 

specialty-specific PE/HR data used to 

develop PE RVUs. The AMA and the 

CMS contractor, The Lewin Group 

(Lewin), analyzed the PPIS data and 

calculated the PE/HR for physician and 

nonphysician specialties, respectively. 

The AMA’s summary worksheets and 

Lewin’s final report are available on the 

CMS Web site at http://www.cms.gov/

PhysicianFeeSched/PFSFRN/

itemdetail.asp?filterType=none

&filterByDID=-99&sortByDID=4&sort

Order=descending&itemID=

CMS1223902&intNumPerPage=10. (See 

downloads labeled AMA PPIS 

Worksheets 1–3 and Physician Practice 

Expense non MDDO Final Report) 

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 

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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 Medicarerecognized 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 (75/25 for 

CY 2010, 50/50 for CY 2011, 25/75 for 

CY 2012, and 0/100 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, and we do not know how 

to blend these data with Medicarerecognized 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 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. 

Finally, 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. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61753), we 

miscalculated the indirect PE/HR for 

IDTFs as part of this update process. 

Therefore, for CY 2011, we are using a 

revised indirect PE/HR of $479.81 for 

IDTFs, consistent with our final policy 

to update the indirect PE/HR values 

from prior supplemental survey data 

that we are continuing to use in order 

to put these data on a comparable basis 

with the PPIS data. This revision 

changes the IDTF indirect percentage 

from 51 percent to 50 percent for CY 

2011. 

Previously, we had 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. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61752), we 

agreed that, under the current PE 

methodology, the PPIS data for 

registered dieticians should not be used 

in the calculation of PE RVUs since 

these dieticians are paid 85 percent of 

what a physician would be paid for 

providing the service. To include their 

survey data in the PE calculation would 

influence the ratesetting by 

incorporating what the services would 

be paid if performed by registered 

dieticians and not strictly what the 

payment rates would be if provided by 

physicians. We further stated that we 

would utilize the ‘‘All Physicians’’ 

PE/HR, as derived from the PPIS, in the 

calculation of resource-based PE RVUs 

in lieu of the PE/HR associated with 

registered dieticians. In the resourcebased PE methodology for CY 2010, 

while we removed the specialty of 

registered dieticians from the ratesetting 

step we did not assign the ‘‘All 

Physicians’’ PE/HR to services furnished 

by registered dieticians. Instead, we 

allowed the PE/HR for those services to 

be generated by a weighted average of 

all the physician specialties that also 

furnished the services. This method was 

consistent with our policy to not use the 

registered dietician PPIS PE/HR in 

calculating the PE RVUs for services 

furnished by registered dieticians but 

we did not actually crosswalk the 

specialty of registered dietician to the 

‘‘All Physicians’’ PE/HR data as we had 

intended according to the final policy. 

Nevertheless, we are affirming for CY 

2011 that the final resource-based PE 

RVUs have been calculated in 

accordance with the final policy 

adopted in the CY 2010 PFS final rule 

with comment period (74 FR 61752) for 

registered dietician services that 

crosswalks the specialty to the ‘‘All 

Physicians’’ PE/HR data. 

As provided in the CY 2010 PFS final 

rule with comment period (74 FR 

61751), CY 2011 is the second year of 

the 4-year transition to the PE RVUs 

calculated using the PPIS data. 

Therefore, in general, the CY 2011 PE 

RVUs are a 50/50 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 above. Note that the 

reductions in the PE RVUs for expensive 

diagnostic imaging equipment 

attributable to the change to an 

equipment utilization rate assumption 

of 75 percent (see 74 FR 61753 through 

61755 and section II.A.3. of this final 

rule with comment period) are not 

subject to the transition. 

CMS’ 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. Consistent with this policy, all 

new CY 2011 CPT codes will not be 

paid based on transitional PE RVUs in 

CY 2011. Instead, we will pay these 

services based on the fully implemented 

PE RVUs in CY 2011. Additionally, 

existing CPT codes for which the global 

period has changed in CY 2011 will not 

be subject to the PPIS PE RVU 

transition. We believe that changing the 

global period of a code results in the 

CPT code describing a different service 

to which the previous PE RVUs would 

no longer be relevant when the code is 

reported for a service furnished in CY 

2011. The five CY 2011 existing CPT 

codes with global period changes from 

CY 2010 to CY 2011 are: 11043 

(Debridement, muscle, and/or fascia 

(includes epidermis, dermis, and 

subcutaneous tissue, if performed); first 

20 sq cm or less); 11044 (Debridement, 

bone (includes epidermis, dermis, 

subcutaneous tissue, muscle and/or 

fascia, if performed); first 20 sq cm or 

less); 57155 (Insertion of uterine 

tandems and/or vaginal ovoids for 

clinical brachytherapy); 97597 

(Debridement (e.g., high pressure 

waterjet with/without suction, sharp 

selective debridement with scissors, 

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73184 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

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 square 

centimeters or less); and 97598 

(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 instructions(s) for 

ongoing care, per session, total 

wound(s) surface area; each additional 

20 square centimeters, or part thereof 

(List separately in addition to code for 

primary procedure)). 

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. 

(i) 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. 

(ii) 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 below. 

• For a given service, we use the 

direct portion of the PE RVUs calculated 

as described above 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. 

• 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 specialtyspecific indirect PE/HR data into the 

calculation. As a relatively extreme 

example for the sake of simplicity, 

assume in our example above 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. Alternative Data Sources and Public 

Comments on Final Rule for 2010 

In the CY 2010 PFS final rule with 

comment period (74 FR 61749 through 

61750), we discussed the Medicare 

Payment Advisory Commission’s 

(MedPAC’s) comment that in the future, 

‘‘CMS should consider alternatives to 

collecting specialty-specific cost data or 

options to decrease the reliance on such 

data.’’ We agreed with MedPAC that it 

would be appropriate to consider the 

future of the PE RVUs moving forward. 

We sought comments from other 

stakeholders on the issues raised by 

MedPAC for the future. In particular, we 

requested public comments regarding 

MedPAC’s suggestion that we consider 

alternatives for collecting specialtyspecific cost data or options to decrease 

the reliance on such data. We noted 

MedPAC’s comment that, ‘‘CMS should 

consider if Medicare or provider groups 

should sponsor future data collection 

efforts, if participation should be 

voluntary (such as surveys) or 

mandatory (such as cost reports), and 

whether a nationally representative 

sample of practitioners would be 

sufficient for either a survey or cost 

reports.’’ MedPAC also stated that one 

option for decreasing the reliance on 

specialty-specific cost data would be the 

elimination of the use of indirect PE/HR 

data in the last step of establishing the 

indirect cost portion of the PE RVUs as 

described previously. 

Almost all of the commenters on the 

CY 2010 PFS final rule with comment 

period that addressed this issue 

expressed a general willingness to work 

with CMS on methodological 

improvements or future data collection 

efforts. Although no commenters 

detailed a comprehensive overall 

alternative methodology, several 

commenters did provide suggestions 

regarding future data collection efforts 

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and specific aspects of the current 

methodology. 

The commenters on the CY 2010 PFS 

final rule with comment period that 

addressed the issue of surveys 

supported the use of surveys if they 

yielded accurate PE information. The 

few commenters that addressed the 

issue of cost reports were opposed to 

physician cost reports. The commenters 

varied with respect to their opinions 

regarding whether data collection efforts 

should be led by organized medicine, 

individual specialty societies, or CMS. 

Several commenters that addressed the 

issue of voluntary versus mandatory 

data collection efforts supported 

voluntary data collection efforts and 

opposed mandatory data collection 

efforts. 

Some commenters recommended no 

changes to the methodology or PE data 

in the near future. Other commenters 

indicated that the methodology and data 

changes needed to be made for CY 2011. 

Although most commenters did not 

directly address the use of the indirect 

PE/HR data, those that did 

predominately opposed the elimination 

of the use of these data. 

Many commenters addressed specifics 

of the PE methodology (as further 

described in section II.A.2.c. of this final 

rule with comment period). Some were 

opposed to the scaling factor applied in 

the development of the direct PE 

portion of the PE RVUs so that in the 

aggregate the direct portion of the PE 

RVUs do not exceed the proportion 

indicated by the survey data (See Step 

4 in g.(ii) below). Several of these 

commenters advocated the elimination 

of this direct scaling factor, while others 

indicated that the issue should be 

examined more closely. 

A few commenters recommended that 

physician work not be used as an 

allocator in the development of the 

indirect portion of the PE RVUs as 

described earlier in this section. A few 

indicated that physician time, but not 

physician work, should be used in the 

allocation. Other commenters suggested 

that indirect costs should be allocated 

solely on the basis of direct costs. 

We note that many of the issues raised 

by commenters on the CY 2010 PFS 

final rule with comment period are 

similar to issues raised in the 

development of the original resourcebased PE methodology and in 

subsequent revisions to the 

methodology, including the adoption of 

the bottom-up methodology. While we 

did not propose a broad methodological 

change or broad data collection effort in 

the CY 2011 PFS proposed rule, we 

invited comments on our summary of 

the issues raised by the commenters on 

the CY 2010 PFS final rule with 

comment period, as discussed in the CY 

2011 PFS proposed rule (75 FR 40050). 

The complete public comments on the 

CY 2010 PFS final rule with comment 

period are available for public review at 

http://www.regulations.gov by entering 

‘‘CMS–1413–FC’’ in the search box on 

the main page. 

Comment: A number of commenters 

believe the PPIS data are flawed and, 

therefore, should not be used to set the 

PE RVUs for all or certain categories of 

PFS services. Other commenters 

supported the adoption of the PPIS data 

and, whether ultimately favoring the 

adoption of the PPIS data or not, many 

commenters stated that the 4-year 

transition adopted by CMS is important 

to physicians and Medicare 

beneficiaries to ensure access to care. 

The commenters explained that the 

transition gives physician specialty 

societies the opportunity to collect new 

and more detailed data where 

appropriate for refinement and CMS the 

opportunity to more carefully analyze 

the new data and its appropriateness. 

Although once again the commenters 

did not provide specific 

recommendations on alternatives to a 

comprehensive survey of practice 

expenses or options to decrease the PFS 

reliance on specialty-specific cost data, 

the commenters offered the following 

suggestions regarding future practice 

expense data collection. 

• Select a reputable company with 

experience in health care market 

research. 

• Base changes on a comprehensive 

data source with adequate participation 

rates. 

• Have data independently reviewed 

in order to ensure accuracy. 

• Make data publicly available in 

time to allow for review and comment 

by stakeholders. 

Several commenters emphasized the 

administrative complexity and burden if 

CMS were to require all physicians to 

submit cost reports. One commenter 

supported a limited study of practice 

costs estimated by cost reports to 

determine if the current PE RVUs were 

appropriately paying physicians for the 

physician’s office costs of services. The 

commenter believes that cost reports 

would be more accurate than the PPIS 

methodology. Finally, several 

commenters indicated a willingness to 

engage CMS in more detailed discussion 

about potential refinements to the 

current PE/HR data. 

Response: We appreciate the 

commenters’ recommendations 

regarding factors we should consider in 

developing future practice expense data 

collection efforts in order to improve the 

accuracy of the information. While we 

are continuing the transition that was 

adopted in the CY 2010 PFS final rule 

with comment period (74 FR 61751) 

under the CY 2011 PFS to full 

implementation of the PPIS data for the 

CY 2013 PFS PE RVUs, we continue to 

remain interested in the thoughts of 

stakeholders regarding the MedPAC 

comment that ‘‘CMS should consider 

alternatives to collecting specialtyspecific cost data or options to decrease 

the reliance on such data.’’ More 

specifically, we encourage stakeholders 

to contact us at any time if they 

encounter additional information to 

share, develop further ideas or analyses 

that could inform our ongoing 

consideration of physicians’ practice 

expenses, or otherwise would like to 

discuss this topic further as part of an 

open dialogue with us. While to date, no 

stakeholders have presented a 

comprehensive overall alternative 

methodology, we remain interested in 

potential novel or refined approaches. 

We also continue to welcome more 

limited suggestions for improvements to 

our current PE methodology or future 

practice expense information collection 

activities. 

g. 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 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 

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73186 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

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 

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 specialtyspecific 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 specialtyspecific 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 specialtyspecific 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, MEI 

rebasing adjustment, and multiple 

procedure payment reduction (MPPR) 

adjustment. 

The final PE BN adjustment is 

calculated by comparing the results of 

Step 18 (prior to the MEI rebasing and 

MPPR adjustments) 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’’ 

below in this section.) 

As discussed in section II.E.5. of this 

final rule with comment period, we are 

rebasing and revising the Medicare 

Economic Index (MEI) for CY 2011. As 

discussed in section II.C.4. of this final 

rule with comment period, section 

1848(c)(2)(K) of the Act (as added by 

section 3134 of the ACA) specifies that 

the Secretary shall identify potentially 

misvalued codes by examining multiple 

codes that are frequently billed in 

conjunction with furnishing a single 

service. There is inherent duplication in 

the PE associated with those services 

which are frequently furnished together, 

so reducing PFS payment for the second 

and subsequent services to account for 

the efficiencies in multiple service 

sessions may be appropriate. Consistent 

with this provision of the ACA, we are 

adopting a limited expansion of the 

current MPPR policy for imaging 

services for CY 2011 and a new MPPR 

policy for therapy services. 

(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. 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73187 

TABLE 1—SPECIALTIES EXCLUDED FROM RATESETTING CALCULATION

Specialty code Specialty description 

42 .................................................................................................................... Certified nurse midwife. 

49 .................................................................................................................... Ambulatory surgical center. 

50 .................................................................................................................... Nurse practitioner. 

51 .................................................................................................................... Medical supply company with certified orthotist. 

52 .................................................................................................................... Medical supply company with certified prosthetist. 

53 .................................................................................................................... Medical supply company with certified prosthetist-orthotist. 

54 .................................................................................................................... Medical supply company not included in 51, 52, or 53. 

55 .................................................................................................................... Individual certified orthotist. 

56 .................................................................................................................... Individual certified prosthestist. 

57 .................................................................................................................... Individual certified prosthetist-orthotist. 

58 .................................................................................................................... Individuals not included in 55, 56, or 57. 

59 .................................................................................................................... Ambulance service supplier, e.g., private ambulance companies, 

funeral homes, etc. 

60 .................................................................................................................... Public health or welfare agencies. 

61 .................................................................................................................... Voluntary health or charitable agencies. 

73 .................................................................................................................... Mass immunization roster biller. 

74 .................................................................................................................... Radiation therapy centers. 

87 .................................................................................................................... All other suppliers (e.g., drug and department stores). 

88 .................................................................................................................... Unknown supplier/provider specialty. 

89 .................................................................................................................... Certified clinical nurse specialist. 

95 .................................................................................................................... Competitive Acquisition Program (CAP) Vendor. 

96 .................................................................................................................... Optician. 

A0 .................................................................................................................... Hospital. 

A1 .................................................................................................................... SNF. 

A2 .................................................................................................................... Intermediate care nursing facility. 

A3 .................................................................................................................... Nursing facility, other. 

A4 .................................................................................................................... HHA. 

A5 .................................................................................................................... Pharmacy. 

A6 .................................................................................................................... Medical supply company with respiratory therapist. 

A7 .................................................................................................................... Department store. 

1 ...................................................................................................................... Supplier of oxygen and/or oxygen related equipment. 

2 ...................................................................................................................... Pedorthic personnel. 

3 ...................................................................................................................... Medical supply company with pedorthic personnel. 

• 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 this 

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. 

Note: The use of any particular conversion 

factor (CF) in Table 2 to illustrate the PE 

calculation has no effect on the resulting 

RVUs. 

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73188 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations TABLE 2—CALCULATION OF PE RVU

S

UNDER

METHODOLOGY FOR

SELECTED

CODES

Step Source Formula 

99213 

Office visit, 

est Nonfacility 

33533 

CABG, arterial, single 

facility 

71020 

Chest x-ray 

Nonfacility 

71020–TC 

Chest x-ray 

Nonfacility 

71020–26 

Chest x-ray 

Nonfacility 

93000 

ECG, complete Nonfacility 

93005 

ECG, tracing Nonfacility 93010 ECG, report Nonfacility 

(1) Labor cost (lab) ......................................... Step 1 ......... AMA ...................... .................... 13.32 77.52 5.74 5.74 0.00 6.12 6.12 0.00 (2) Supply cost (sup) ...................................... Step 1 ......... AMA ...................... .................... 2.98 7.34 3.39 3.39 0.00 1.19 1.19 0.00 (3) Equipment cost (eqp) ................................ Step 1 ......... AMA ...................... .................... 0.19 0.65 8.17 8.17 0.00 0.12 0.12 0.00 (4) Direct cost (dir) .......................................... Step 1 ......... ............................... =(1) + (2) + 

(3).

16.50 85.51 17.31 17.31 0.00 7.43 7.43 0.00 

(5) Direct adjustment (dir adj) ......................... Steps 2–4 ... See footnote* ....... .................... 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 (6) Adjusted labor ........................................... Steps 2–4 ... =Lab * Dir adj ....... =(1)*(5) ....... 6.68 38.87 2.88 2.88 0.00 3.07 3.07 0.00 (7) Adjusted supplies ...................................... Steps 2–4 ... =Sup * Dir adj ....... =(2)*(5) ....... 1.50 3.68 1.70 1.70 0.00 0.60 0.60 0.00 (8) Adjusted equipment .................................. Steps 2–4 ... =Eqp * Dir adj ....... =(3)*(5) ....... 0.10 0.33 4.10 4.10 0.00 0.06 0.06 0.00 (9) Adjusted direct .......................................... Steps 2–4 ... ............................... =(6) + (7) + 

(8).

8.27 42.87 8.68 8.68 0.00 3.73 3.73 0.00 

(10) Conversion factor (CF) ............................ Step 5 ......... PFS ...................... .................... 36.87 36.87 36.87 36.87 36.87 36.87 36.87 36.87 (11) Adj labor cost converted ......................... Step 5 ......... =(Lab * Dir adj)/CF =(6)/(10) ..... 0.18 1.05 0.08 0.08 0.00 0.08 0.08 0.00 (12) Adj supply cost converted ....................... Step 5 ......... =(Sup * Dir adj)/CF =(7)/(10) ..... 0.04 0.10 0.05 0.05 0.00 0.02 0.02 0.00 (13) Adj equipment cost converted ................ Step 5 ......... =(Eqp * Dir adj)/CF =(8)/(10) ..... 0.00 0.01 0.11 0.11 0.00 0.00 0.00 0.00 (14) Adj. direct cost converted ....................... Step 5 ......... ............................... =(11) + (12) 

+ (13).

0.22 1.16 0.24 0.24 0.00 0.10 0.10 0.00 

(15) Work RVUs ............................................. Setup File ... PFS ...................... .................... 0.97 33.75 0.22 0.00 0.22 0.17 0.00 0.17 (16) Dir pct ...................................................... Steps 6,7 .... Surveys ................ .................... 0.26 0.18 0.29 0.29 0.29 0.29 0.29 0.29 (17) Ind pct ..................................................... Steps 6,7 .... Surveys ................ .................... 0.74 0.82 0.71 0.71 0.71 0.71 0.71 0.71 (18) Ind alloc formula (1st part) ...................... Step 8 ......... See Step 8 ........... .................... ((14)/(16))* 

(17) 

((14)/(16))* 

(17) 

((14)/(16))* 

(17) 

((14)/(16))* 

(17) 

((14)/(16))* 

(17) 

((14)/(16))* 

(17) 

((14)/(16))* 

(17) 

((14)/(16))* 

(17) 

(19) Ind alloc (1st part) ................................... Step 8 ......... ............................... See (18) ..... 0.65 5.29 0.58 0.58 0.00 0.25 0.25 0.00 (20) Ind alloc formulas (2nd part) ................... Step 8 ......... See Step 8 ........... .................... (15) (15) (15) + (11) (11) (15) (15) + (11) (11) (15) (21) Ind alloc (2nd part) .................................. Step 8 ......... ............................... See (20) ..... 0.97 33.75 0.30 0.08 0.22 0.25 0.08 0.17 (22) Indirect allocator (1st + 2nd) ................... Step 8 ......... ............................... =(19) + (21) 1.62 39.04 0.88 0.66 0.22 0.50 0.33 0.17 (23) Indirect adjustment (ind adj) .................... Steps 9–11 See footnote** 0.37 0.37 0.37 0.37 0.37 0.37 0.37 0.37 (24) Adjusted indirect allocator ....................... Steps 9–11 =Ind alloc * ind adj 0.60 14.47 0.33 0.24 0.08 0.19 0.12 0.06 (25) Ind. practice cost index (IPCI) ................. Steps 12–16 See Steps 12–16 1.11 0.83 0.90 0.90 0.90 0.92 0.92 0.92 (26) Adjusted indirect ...................................... Step 17 ....... = Adj ind alloc * 

IPCI.

=(24) * (25) 0.67 12.04 0.29 0.22 0.07 0.17 0.11 0.06 

(27) MEI rebasing adjustment ........................ Step 18 ....... PFS ...................... .................... 1.18 1.18 1.18 1.18 1.18 1.18 1.18 1.18 (28) MPPR adjustments ................................. Step 18 ....... PFS ...................... .................... 1.01 1.01 1.01 1.01 1.01 1.01 1.01 1.01 (29) PE RVU ................................................... Step 18 ....... =(Adj dir + Adj ind) 

* budn * MEI adj * MPPR adj.

=((14) + 

(26)) * budn * (27) * (28).

1.06 15.68 0.63 0.54 0.09 0.32 0.25 0.07 

Note: PE RVUs in Table 2, row 29, may not match the values in Addendum B due to rounding. * The direct adj = [current pe rvus * CF * avg dir pct]/[sum direct inputs] = [Step 2]/[Step 3]. ** The indirect adj = [current pe rvus * avg ind pct]/[sum of ind allocators] = [Step 9]/[Step 10]. 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73189 

3. PE Revisions for CY 2011 

a. Equipment Utilization Rate 

As part of the PE methodology 

associated with the allocation of 

equipment costs for calculating PE 

RVUs, we currently use an equipment 

utilization rate assumption of 50 percent 

for most equipment, with the exception 

of expensive diagnostic imaging 

equipment (which is equipment priced 

at over $1 million, for example, 

computed tomography (CT) and 

magnetic resonance imaging (MRI) 

scanners), for which we adopted a 90 

percent utilization rate assumption and 

provided for a 4-year transition 

beginning in CY 2010 (74 FR 61755). 

Therefore, CY 2010 is the first 

transitional payment year. Payment is 

made in CY 2010 for the diagnostic 

services listed in Table 3 (those that 

include expensive diagnostic imaging 

equipment in their PE inputs) of the CY 

2011 PFS proposed rule (75 FR 40054) 

based on 25 percent of the new PE RVUs 

and 75 percent of the prior PE RVUs for 

those services. 

Section 1848(b)(4)(C) of the Act (as 

added by section 3135(a) of the ACA) 

requires that with respect to fee 

schedules established for CY 2011 and 

subsequent years, in the methodology 

for determining PE RVUs for expensive 

diagnostic imaging equipment under the 

CY 2010 PFS final rule with comment 

period, the Secretary shall use a 

75 percent assumption instead of the 

utilization rates otherwise established in 

that rule. The provision also requires 

that the reduced expenditures 

attributable to this change in the 

utilization rate for CY 2011 and 

subsequent years shall not be taken into 

account when applying the budget 

neutrality limitation on annual 

adjustments described in section 

1848(c)(2)(B)(ii)(II) of the Act. 

As a result, the 75 percent equipment 

utilization rate assumption will be 

applied to expensive diagnostic imaging 

equipment in a non-budget neutral 

manner for CY 2011, and the resulting 

changes to PE RVUs will not be 

transitioned over a period of years. We 

will apply the 75 percent utilization rate 

assumption in CY 2011 to all of the 

services to which we currently apply 

the transitional 90 percent equipment 

utilization rate assumption in CY 2010. 

These services are listed in a file on the 

CMS Web site that is posted under 

downloads for the CY 2010 PFS final 

rule with comment period at http:// 

www.cms.gov/physicianfeesched/

downloads/CODES_SUBJECT_TO_

90PCT_USAGE_RATE.zip. These codes 

are also displayed in Table 3 at the end 

of this section. 

Comment: Several commenters argued 

that the 75 percent utilization rate 

assumption should not be applied 

because of the imprecise data on which 

the policy was based. The commenters 

explained that based on an independent 

survey, actual equipment utilization 

rates are close to 50 percent. In addition, 

the commenters postulated that rural 

imaging centers would be adversely 

affected by the change due to lower 

equipment utilization rates than nonrural centers. The commenters 

requested that CMS base equipment 

utilization rate assumptions on actual 

utilization data rather than assumptions. 

Several other commenters supported 

the implementation of the 75 percent 

utilization rate assumption, and 

MedPAC recommended that CMS 

explore increasing the equipment 

utilization rate assumption for 

diagnostic imaging equipment that costs 

less than $1 million. Finally, several 

commenters clarified that certain 

procedures were not subject to the 

provision, including nuclear cardiology 

services and therapeutic interventional 

radiology. 

Response: Section 1848(b)(4)(C) of the 

Act (as added by section 3135(a) of the 

ACA) requires that with respect to fee 

schedules established for CY 2011 and 

subsequent years, in the methodology 

for determining PE RVUs for expensive 

diagnostic imaging equipment under the 

CY 2010 PFS final rule with comment 

period, the Secretary shall use a 

75 percent assumption instead of the 

utilization rates otherwise established in 

that rule. We acknowledge that further 

data regarding actual equipment 

utilization in the physician’s office 

setting may be informative, but our use 

of such data to set the equipment 

utilization rate assumption for 

expensive diagnostic imaging 

equipment at a value other than 

75 percent would require a statutory 

change. 

We did not propose to expand the 

75 percent equipment utilization rate 

assumption for CY 2011 to other 

procedures beyond those that use CT 

and MRI scanners as listed in Table 4 of 

the CY 2011 PFS proposed rule (75 FR 

40055) and Table 3 at the end of this 

section. Any future changes in 

equipment utilization rate assumptions, 

including any expansion of the 

75 percent equipment utilization rate 

assumption to additional expensive 

diagnostic imaging equipment, would 

be made through the annual PFS notice 

and comment rulemaking cycle. 

Furthermore, any changes in equipment 

utilization rate assumptions for less 

costly diagnostic imaging equipment 

(less than $1 million) or for therapeutic 

imaging or other equipment would not 

be subject to the statutory provision that 

specifies a 75 percent assumption. We 

note that we are constantly reassessing 

our methodology for developing the PE 

RVUs and would propose any changes 

to the equipment utilization rate 

assumptions for these types of 

equipment through the annual PFS 

rulemaking cycle if we determine such 

changes could be appropriate. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal without 

modification. The 75 percent equipment 

utilization rate assumption will be 

applied to expensive diagnostic imaging 

equipment in a non-budget neutral 

manner for CY 2011, and the changes to 

the PE RVUs will not be transitioned 

over a period of years. We will apply the 

75 percent utilization rate assumption 

in CY 2011 to all of the services to 

which we currently apply the 

transitional 90 percent utilization rate 

assumption in CY 2010. The CY 2011 

codes are displayed in Table 3 at the 

end of this section that lists all the 

codes to which the 75 percent 

equipment utilization rate assumption 

applies for CY 2011. In addition, the 

codes subject to this policy are posted 

under the downloads for the CY 2011 

PFS final rule with comment period on 

the CMS Web site at http:// 

www.cms.gov/PhysicianFeeSched/ 

PFSFRN/list.asp#TopOfPage. 

Additionally, for CY 2011, we 

proposed to expand the list of services 

to which the higher equipment 

utilization rate assumption applies to 

include all other diagnostic imaging 

services that utilize similar expensive 

CT and MRI scanners. The additional 24 

CPT codes (listed in Table 4 of the CY 

2011 PFS proposed rule (75 FR 40055)) 

to which we proposed to apply the 75 

percent equipment utilization rate 

assumption also have expensive 

diagnostic imaging equipment (priced at 

over $1 million) included in their PE 

inputs. These services are 

predominantly diagnostic computed 

tomographic angiography (CTA) and 

magnetic resonance angiography (MRA) 

procedures that include similar 

expensive CT and MRI scanners in their 

direct PE inputs. We indicated in the CY 

2010 PFS final rule with comment 

period (74 FR 61754) that we were 

persuaded by PPIS data on angiography 

that the extrapolation of MRI and CT 

data (and their higher equipment 

utilization rate) may be inappropriate. 

However, this reference was limited to 

those procedures that include an 

angiography room in the direct PE 

inputs, such as CPT code 93510 (Left 

heart catheterization, retrograde, from 

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73190 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

the brachial artery, axillary artery or 

femoral artery; percutaneous). In 

contrast, CTA and MRA procedures 

include a CT room or MRI room, 

respectively, in the direct PE inputs, 

and the PPIS data confirm that a higher 

assumed utilization rate than 50 percent 

would be appropriate. The PPIS 

angiography room data that reflected a 

56 percent equipment utilization rate 

would not specifically apply to CTA 

and MRA procedures. Thus, on further 

review, we believe it is appropriate to 

include CTA and MRA procedures in 

the list of procedures for which we 

assume a 75 percent equipment 

utilization rate, and we proposed to do 

so beginning in CY 2011. 

Consistent with section 

1848(c)(2)(B)(v)(III) of the Act (as 

amended by section 3135 of the ACA), 

the reduced expenditures attributable to 

this change in the utilization rate 

assumption applicable to CY 2011 shall 

not be taken into account when 

applying the budget neutrality 

limitation on annual adjustments 

described in section 1848(c)(2)(B)(ii)(II) 

of the Act. 

As provided in the CY 2010 PFS final 

rule with comment period (74 FR 

61751), CY 2011 is the second year of 

the 4-year transition to the PE RVUs 

calculated using the PPIS data. We note 

that the reductions in the PE RVUs for 

expensive diagnostic imaging 

equipment attributable to the change to 

an equipment utilization rate 

assumption of 75 percent for CY 2011 

are not subject to the transition. 

Comment: Several commenters urged 

CMS not to finalize the proposed 

expansion of the list of procedures to 

which the 75 percent equipment 

utilization rate assumption would 

apply, pending further evaluation of 

equipment utilization data. While 

noting the statutory requirement of 

section 1848(b)(4)(C) of the Act (as 

added by section 3135(a) of the ACA), 

the commenters believe that CMS is not 

required to add additional services to 

the policy for CY 2011. Other 

commenters, including MedPAC, 

supported the proposed increase in the 

equipment utilization rate assumption 

from 50 percent to 75 percent for the 24 

additional services that use diagnostic 

imaging equipment priced at over $1 

million. 

Response: No commenters presented a 

rationale for not including the proposed 

24 additional services to the 75 percent 

equipment utilization rate assumption, 

when the proposed additions use the 

same diagnostic CT or MRI imaging 

equipment as the current codes to 

which the policy applies. We note that 

the 90 percent equipment utilization 

rate assumption that we finalized in the 

CY 2010 PFS final rule with comment 

period (74 FR 61755) applies to CT and 

MRI scanners when used as diagnostic 

imaging equipment, one of these two 

pieces of equipment is listed as a direct 

PE input for the proposed MRA and 

CTA services, and no commenters 

recommended that we remove the CT or 

MRI equipment inputs from the 

additional codes. Therefore, we 

continue to believe that it is appropriate 

to apply the 75 percent equipment 

utilization rate assumption beginning in 

CY 2011 to MRA and CTA procedures, 

as we proposed. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

include CTA and MRA procedures in 

the 75 percent equipment utilization 

rate assumption policy because they 

include expensive CT and MRI scanners 

that cost more than $1 million as direct 

PE inputs for these diagnostic imaging 

procedures. We are modifying our 

proposal, however, and will not include 

CPT code 77079 (Computed 

tomography, bone mineral density 

study, 1 or more sites; appendicular 

skeleton (peripheral) (e.g., radius, wrist, 

heel)) because, upon further analysis for 

this final rule with comment period, we 

noted that the procedure does not 

include a CT room in its direct PE 

inputs. 

For CY 2011, we are also adding to 

the 75 percent equipment utilization 

rate assumption policy three new CY 

2011 CPT codes for diagnostic imaging 

procedures that include a CT room in 

their direct PE inputs, specifically CPT 

codes 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 new 

codes for CY 2011, the work, PE, and 

malpractice RVUs for these CPT codes 

that are displayed in Addendum C to 

this final rule with comment period are 

interim final values that are open to 

comment. Similarly, the assignment of 

the 75 percent equipment utilization 

rate assumption to these CPT codes, 

which contributes to the development of 

their PE RVUs, is being made on an 

interim final basis. We refer readers to 

section V.C. of this final rule with 

comment period for further discussion 

of the establishment of interim final 

RVUs for CY 2011 new and revised 

codes. 

As a result of the CY 2011 changes, 

the 75 percent equipment utilization 

rate assumption will be applied to all 

diagnostic imaging procedures with 

nationally established rates under the 

PFS in CY 2011 and which include a CT 

or MRI scanner in their direct PE, 

consistent with the statutory 

requirement of section 1848(b)(4)(C) of 

the Act (as added by section 3135(a) of 

the ACA). 

Consistent with section 

1848(c)(2)(B)(v)(III) of the Act (as 

amended by section 3135 of the ACA), 

the reduced expenditures attributable to 

the change in the utilization rate 

assumption applicable to CY 2011 (from 

the CY 2011 transitional rate for the 90 

percent equipment utilization rate 

assumption for expensive diagnostic 

imaging equipment costing over $1 

million (CT and MRI scanners) that 

would have applied under the final 

policy established in the CY 2010 PFS 

final rule with comment period to the 

75 percent rate required under section 

1848(b)(4)(C) of the Act) shall not be 

taken into account when applying the 

budget neutrality limitation on annual 

adjustments described in section 

1848(c)(2)(B)(ii)(II) of the Act. 

Table 3 below lists the codes to which 

the 75 percent equipment utilization 

rate assumption applies for CY 2011. 

The codes subject to this policy are also 

posted under the downloads for the CY 

2011 PFS final rule with comment 

period on the CMS Web site at http:// 

www.cms.gov/PhysicianFeeSched/ 

PFSFRN/list.asp#TopOfPage. 

TABLE 3—FINAL CPT CODES SUBJECT TO 75 PERCENT EQUIPMENT UTILIZATION RATE ASSUMPTION IN CY 2011 

CPT code Short descriptor 

70336 ................................................................................................................................................................ Mri, temporomandibular joint(s). 

70450 ................................................................................................................................................................ Ct head/brain w/o dye. 

70460 ................................................................................................................................................................ Ct head/brain w/dye. 

70470 ................................................................................................................................................................ Ct head/brain w/o & w/dye. 

70480 ................................................................................................................................................................ Ct orbit/ear/fossa w/o dye. 

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TABLE 3—FINAL CPT CODES SUBJECT TO 75 PERCENT EQUIPMENT UTILIZATION RATE ASSUMPTION IN CY 2011— 

Continued 

CPT code Short descriptor 

70481 ................................................................................................................................................................ Ct orbit/ear/fossa w/dye. 

70482 ................................................................................................................................................................ Ct orbit/ear/fossa w/o & w/dye. 

70486 ................................................................................................................................................................ Ct maxillofacial w/o dye. 

70487 ................................................................................................................................................................ Ct maxillofacial w/dye. 

70488 ................................................................................................................................................................ Ct maxillofacial w/o & w/dye. 

70490 ................................................................................................................................................................ Ct soft tissue neck w/o dye. 

70491 ................................................................................................................................................................ Ct soft tissue neck w/dye. 

70492 ................................................................................................................................................................ Ct soft tissue neck w/o & w/dye. 

70496 ................................................................................................................................................................ Ct angiography, head. 

70498 ................................................................................................................................................................ Ct angiography, neck. 

70540 ................................................................................................................................................................ Mri orbit/face/neck w/o dye. 

70542 ................................................................................................................................................................ Mri orbit/face/neck w/dye. 

70543 ................................................................................................................................................................ Mri orbit/face/neck w/o & w/dye. 

70544 ................................................................................................................................................................ Mri angiography head w/o dye. 

70545 ................................................................................................................................................................ Mri angiography head w/dye. 

70546 ................................................................................................................................................................ Mri angiography head w/o & w/dye. 

70547 ................................................................................................................................................................ Mri angiography neck w/o dye. 

70548 ................................................................................................................................................................ Mri angiography neck w/dye. 

70549 ................................................................................................................................................................ Mri angiography neck w/o & w/dye. 

70551 ................................................................................................................................................................ Mri brain w/o dye. 

70552 ................................................................................................................................................................ Mri brain w/dye. 

70553 ................................................................................................................................................................ Mri brain w/o & w/dye. 

70554 ................................................................................................................................................................ Fmri brain by tech. 

71250 ................................................................................................................................................................ Ct thorax w/o dye. 

71260 ................................................................................................................................................................ Ct thorax w/dye. 

71270 ................................................................................................................................................................ Ct thorax w/o & w/dye. 

71275 ................................................................................................................................................................ Ct angiography, chest. 

71550 ................................................................................................................................................................ Mri chest w/o dye. 

71551 ................................................................................................................................................................ Mri chest w/dye. 

71552 ................................................................................................................................................................ Mri chest w/o & w/dye. 

71555 ................................................................................................................................................................ Mri angio chest w/or w/o dye. 

72125 ................................................................................................................................................................ CT neck spine w/o dye. 

72126 ................................................................................................................................................................ Ct neck spine w/dye. 

72127 ................................................................................................................................................................ Ct neck spine w/o & w/dye. 

72128 ................................................................................................................................................................ Ct chest spine w/o dye. 

72129 ................................................................................................................................................................ Ct chest spine w/dye. 

72130 ................................................................................................................................................................ Ct chest spine w/o & w/dye. 

72131 ................................................................................................................................................................ Ct lumbar spine w/o dye. 

72132 ................................................................................................................................................................ Ct lumbar spine w/dye. 

72133 ................................................................................................................................................................ Ct lumbar spine w/o & w/dye. 

72141 ................................................................................................................................................................ Mri neck spine w/o dye. 

72142 ................................................................................................................................................................ Mri neck spine w/dye. 

72146 ................................................................................................................................................................ Mri chest spine w/o dye. 

72147 ................................................................................................................................................................ Mri chest spine w/dye. 

72148 ................................................................................................................................................................ Mri lumbar spine w/o dye. 

72149 ................................................................................................................................................................ Mri lumbar spine w/dye. 

72156 ................................................................................................................................................................ Mri neck spine w/o & w/dye. 

72157 ................................................................................................................................................................ Mri chest spine w/o & w/dye. 

72158 ................................................................................................................................................................ Mri lumbar spine w/o & w/dye. 

72159 ................................................................................................................................................................ Mri angio spine w/o & w/dye. 

72191 ................................................................................................................................................................ Ct angiography, pelv w/o & w/dye. 

72192 ................................................................................................................................................................ Ct pelvis w/o dye. 

72193 ................................................................................................................................................................ Ct pelvis w/dye. 

72194 ................................................................................................................................................................ Ct pelvis w/o & w/dye. 

72195 ................................................................................................................................................................ Mri pelvis w/o dye. 

72196 ................................................................................................................................................................ Mri pelvis w/dye. 

72197 ................................................................................................................................................................ Mri pelvis w/o &w/dye. 

72198 ................................................................................................................................................................ Mri angio pelvis w/or w/o dye. 

73200 ................................................................................................................................................................ Ct upper extremity w/o dye. 

73201 ................................................................................................................................................................ Ct upper extremity w/dye. 

73202 ................................................................................................................................................................ Ct upper extremity w/o & w/dye. 

73206 ................................................................................................................................................................ Ct angio upper extr w/o & w/dye. 

73218 ................................................................................................................................................................ Mri upper extr w/o dye. 

73219 ................................................................................................................................................................ Mri upper extr w/dye. 

73220 ................................................................................................................................................................ Mri upper extremity w/o & w/dye. 

73221 ................................................................................................................................................................ Mri joint upper extr w/o dye. 

73222 ................................................................................................................................................................ Mri joint upper extr w/dye. 

73223 ................................................................................................................................................................ Mri joint upper extr w/o & w/dye. 

73225 ................................................................................................................................................................ Mri angio upr extr w/o & w/dye. 

73700 ................................................................................................................................................................ Ct lower extremity w/o dye. 

73701 ................................................................................................................................................................ Ct lower extremity w/dye. 

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TABLE 3—FINAL CPT CODES SUBJECT TO 75 PERCENT EQUIPMENT UTILIZATION RATE ASSUMPTION IN CY 2011— 

Continued 

CPT code Short descriptor 

73702 ................................................................................................................................................................ Ct lower extremity w/o & w/dye. 

73706 ................................................................................................................................................................ Ct angio lower extr w/o & w/dye. 

73718 ................................................................................................................................................................ Mri lower extremity w/o dye. 

73719 ................................................................................................................................................................ Mri lower extremity w/dye. 

73720 ................................................................................................................................................................ Mri lower extr w/& w/o dye. 

73721 ................................................................................................................................................................ Mri joint of lwr extre w/o dye. 

73722 ................................................................................................................................................................ Mri joint of lwr extr w/dye. 

73723 ................................................................................................................................................................ Mri joint of lwr extr w/o & w/dye. 

73725 ................................................................................................................................................................ Mri angio lower extr w or w/o dye. 

74150 ................................................................................................................................................................ Ct abdomen w/o dye. 

74160 ................................................................................................................................................................ Ct abdomen w/dye. 

74170 ................................................................................................................................................................ Ct abdomen w/o & w/dye. 

74175 ................................................................................................................................................................ Ct angio abdom w/o & w/dye. 

74176 ................................................................................................................................................................ Ct abd & pelvis w/o contrast. 

74177 ................................................................................................................................................................ Ct abdomen & pelvis w/contrast. 

74178 ................................................................................................................................................................ Ct abd & pelv 1+ section/regns. 

74181 ................................................................................................................................................................ Mri abdomen w/o dye. 

74182 ................................................................................................................................................................ Mri abdomen w/dye. 

74183 ................................................................................................................................................................ Mri abdomen w/o and w/dye. 

74185 ................................................................................................................................................................ Mri angio, abdom w/or w/o dye. 

74261 ................................................................................................................................................................ Ct colonography, w/o dye. 

74262 ................................................................................................................................................................ Ct colonography, w/dye. 

75557 ................................................................................................................................................................ Cardiac mri for morph. 

75559 ................................................................................................................................................................ Cardiac mri w/stress img. 

75561 ................................................................................................................................................................ Cardiac mri for morph w/dye. 

75563 ................................................................................................................................................................ Cardiac mri w/stress img & dye. 

75565 ................................................................................................................................................................ Card mri vel flw map add-on. 

75571 ................................................................................................................................................................ Ct hrt w/o dye w/ca test. 

75572 ................................................................................................................................................................ Ct hrt w/3d image. 

75573 ................................................................................................................................................................ Ct hrt w/3d image, congen. 

75574 ................................................................................................................................................................ Ct angio hrt w/3d image. 

75635 ................................................................................................................................................................ Ct angio abdominal arteries. 

76380 ................................................................................................................................................................ CAT scan follow up study. 

77058 ................................................................................................................................................................ Mri, one breast. 

77059 ................................................................................................................................................................ Mri, both breasts. 

77078 ................................................................................................................................................................ Ct bone density, axial. 

77084 ................................................................................................................................................................ Magnetic image, bone marrow. 

b. HCPCS Code-Specific PE Issues 

In this section, we discuss other 

specific CY 2011 proposals and changes 

related to direct PE inputs. The changes 

that follow were proposed in the CY 

2011 PFS proposed rule and included in 

the proposed CY 2011 direct PE 

database, which is available on the CMS 

Web site under the downloads for the 

CY 2011 PFS proposed rule at http:// 

www.cms.gov/PhysicianFeeSched/. The 

final direct PE database for CY 2011 is 

available under the downloads for the 

CY 2011 PFS final rule with comment 

period at the same location. 

(1) Biohazard Bags 

We identified 22 codes for which the 

supply item ‘‘biohazard bag’’ (SM004) is 

currently considered a direct PE input. 

The item is already properly accounted 

for in the indirect PE because it is not 

attributable to an individual patient 

service. Therefore, we proposed to 

remove the biohazard bag from the CY 

2011 direct PE database and noted that 

the changes in direct PE inputs for the 

associated services were reflected in the 

proposed CY 2011 direct PE database. 

We did not receive any public 

comments on our proposal to remove 

biohazard bags as a supply input. 

Therefore, we are finalizing our CY 2011 

proposal to remove the supply item as 

a direct PE input for the associated 

services. This change is reflected in the 

final CY 2011 direct PE database. 

(2) PE Inputs for Professional 

Component (PC) Only and Technical 

Component (TC) Only Codes Summing 

to Global Only Codes 

In the case of certain diagnostic tests, 

different but related CPT codes are used 

to describe global, professional, and 

technical components of a service. 

These codes are unlike the majority of 

other diagnostic test CPT codes where 

modifiers may be used in billing a single 

CPT code in order to differentiate 

professional and technical components. 

When different but related CPT codes 

are used to report the components of 

these services, the different CPT codes 

are referred to as ‘‘global only,’’ 

‘‘professional component (PC) only,’’ 

and ‘‘technical component (TC) only’’ 

codes. Medicare payment systems are 

programmed to ensure that the PE RVUs 

for global only codes equal the sum of 

the PE RVUs for the PC and TC only 

codes. However, it came to our attention 

that the direct PE inputs for certain 

global only codes do not reflect the 

appropriate summation of their related 

TC only and PC only component code 

PE inputs as they appear in the direct 

PE database. While the PFS payment 

calculations have been programmed to 

apply the correct PE RVUs for the global 

only code based on a summation of 

component code PE RVUs, the direct PE 

database has reflected incorrect inputs 

that are overridden by the payment 

system. Therefore, we proposed to 

correct the direct PE inputs for the 

global only codes so that the inputs 

reflect the appropriate summing of the 

PE inputs for the associated PC only and 

TC only codes. The proposed CY 2011 

direct PE database included PE 

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corrections to the 14 CPT codes listed in 

Table 4. 

TABLE 4—GROUPS OF RELATED CPT CODES WITH PROPOSED CHANGES TO PE INPUTS SO THAT INPUTS FOR

PROFESSIONAL COMPONENT (PC) ONLY AND TECHNICAL COMPONENT (TC) ONLY CODES SUM TO GLOBAL ONLY CODES

CPT Code Long descriptor 

93224 ...................... Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and 

storage, with visual superimposition scanning; includes recording, scanning analysis with report, physician review and 

interpretation. 

93225 ...................... Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and 

storage, with visual superimposition scanning; recording (includes connection, recording, disconnection). 

93226 ...................... Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and 

storage, with visual superimposition scanning; scanning analysis with report. 

93230 ...................... Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and 

storage without superimposition scanning utilizing a device capable of producing a full miniaturized printout; including 

recording, microprocessor-based analysis with report, physician review and interpretation. 

93231 ...................... Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and 

storage without superimposition scanning utilizing a device capable of producing a full miniaturized printout; recording 

(includes connection, recording, and disconnection). 

93232 ...................... Wearable electrocardiographic rhythm derived monitoring for 24 hours by continuous original waveform recording and 

storage without superimposition scanning utilizing a device capable of producing a full miniaturized printout; microprocessor-based analysis with report. 

93268 ...................... Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour 

attended monitoring, per 30 day period of time; includes transmission, physician review and interpretation. 

93270 ...................... Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour 

attended monitoring, per 30 day period of time; recording (includes connection, recording, and disconnection). 

93271 ...................... Wearable patient activated electrocardiographic rhythm derived event recording with presymptom memory loop, 24-hour 

attended monitoring, per 30 day period of time; monitoring, receipt of transmissions, and analysis. 

93720 ...................... Plethysmography, total body; with interpretation and report. 

93721 ...................... Plethysmography, total body; tracing only, without interpretation and report. 

93784 ...................... Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or 

longer; including recording, scanning analysis, interpretation and report. 

93786 ...................... Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or 

longer; recording only. 

93788 ...................... Ambulatory blood pressure monitoring, utilizing a system such as magnetic tape and/or computer disk, for 24 hours or 

longer; scanning analysis with report. 

Comment: A number of commenters 

expressed support for CMS’ proposal to 

ensure that the direct PE inputs for 

certain global only codes reflect the 

appropriate summation of their related 

TC only and PC only component code 

PE inputs as they appear in the direct 

PE database. One commenter questioned 

why the prior clinical labor time for the 

global only codes in the PE database did 

not match the direct PE inputs that must 

have been used in CY 2010 to generate 

the PE RVUs, given that the PE RVUs for 

the global only codes were the sum of 

the PE RVUs for the component codes. 

Response: We appreciate the 

commenters’ support for the proposal, 

and we are finalizing our correction of 

the direct PE inputs for the global only 

codes so that the inputs reflect the 

appropriate summing of the PE inputs 

for the associated PC only and TC only 

codes. In response to the commenter 

who questioned why prior clinical labor 

time for the global only codes in the PE 

database did not match the direct PE 

inputs that must have been used to 

generate the PE RVUs for payment, we 

note that Medicare payment systems are 

programmed to ensure that the PE RVUs 

for global only codes equal the sum of 

the PE RVUs for the PC and TC only 

codes. Therefore, rather than relying 

upon the direct PE inputs for the global 

only codes to determine the PE RVUs, 

which would have not resulted in 

values that equaled the summation of 

the component code PE RUVs, our PFS 

system was programmed so that the PE 

RVUs for the global only codes were set 

as the sum of the PE RVUS for the 

component codes. We expect the 

corrections to the inputs as incorporated 

in the direct PE database to alleviate any 

confusion caused by the prior inclusion 

of inputs associated with the global only 

codes that were not actually used to 

generate the PE RVUs. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

correct the direct PE inputs for the 

global only codes so that the inputs 

reflect the appropriate summing of the 

PE inputs for the associated PC only and 

TC only codes. The final CY 2011 direct 

PE database includes PE corrections to 

the 14 CPT codes listed in Table 4. 

(3) Equipment Time Inputs for Certain 

Diagnostic Tests 

In the CY 2011 PFS proposed rule (75 

FR 40056), we stated that we had 

recently identified equipment time PE 

inputs that we believed were incorrect 

for four CPT codes associated with 

certain diagnostic tests (each is 

displayed in Table 4): 

• CPT code 93225 is the TC only code 

that includes the connection, recording, 

and disconnection of the holter monitor 

(CMS Equipment Code EQ127) used in 

24-hour continuous 

electrocardiographic rhythm derived 

monitoring. The CY 2010 equipment 

time input for the holter monitor is 42 

minutes, which parallels the intraservice clinical labor input time for the 

CPT code. However, we believed that 

the equipment time should reflect the 

24 hours of continuous monitoring in 

which the device is used exclusively by 

the patient. Therefore, we proposed to 

change the monitor equipment time for 

CPT code 93225 to 1440 minutes, the 

number of minutes in 24 hours. 

• CPT code 93226 is the TC only code 

that includes the scanning analysis with 

report. We believed that the number of 

minutes the monitor (CMS Equipment 

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Code EQ127) is used in this service 

should parallel the intra-service clinical 

labor input time of 52 minutes during 

which the monitor is in use, instead of 

the CY 2010 equipment time of 1440 

minutes, because this code does not 

represent 24 hours of device use. 

Therefore, we proposed to change the 

monitor equipment time for CPT code 

93226 to 52 minutes. 

• CPT 93224 is the global only code 

that includes the connection, recording, 

and disconnection of the monitor (CMS 

Equipment Code EQ127) and the 

scanning analysis with report, as well as 

the physician review and interpretation. 

We proposed direct PE inputs for CPT 

code 93224 to include 1492 total 

minutes of monitor time (which 

represents the total monitor time we 

proposed for CPT codes 93225 and 

93226). 

• CPT code 93788 is the TC only code 

that describes the scanning analysis 

with report for ambulatory blood 

pressure monitoring. We believed that 

the equipment time input for the blood 

pressure monitor should parallel the 10 

minutes of clinical labor input for the 

CPT code since that is the time during 

which the monitor is in use. In CY 2010, 

the equipment time input for the 

monitor is 1440 minutes, which is 

appropriate only for CPT code 93786, 

the code that describes the 24 hours of 

ambulatory blood pressure monitoring 

recording. Therefore, we proposed to 

correct the equipment time input for the 

ambulatory blood pressure monitor in 

CPT code 93788 to 10 minutes. 

• CPT code 93784 is the global only 

code that includes the recording, the 

scanning analysis with report, and the 

physician interpretation and report for 

ambulatory blood pressure monitoring. 

We proposed to establish the direct PE 

inputs for CPT code 93784 to include 

1450 total minutes of time for the 

ambulatory blood pressure monitor 

(which represents the proposed total 

amount of monitor time included in 

CPT codes 93786 and 93788). 

The proposed CY 2011 direct PE 

database reflected these changes. 

Comment: Several commenters 

pointed out that the prior assignment of 

the 1440 minutes of holter monitor 

equipment time to CPT code 93226 

stemmed from discussions between 

CMS and provider groups that resulted 

in PE policies initially implemented in 

CY 2007 (72 FR 18910). The 

commenters recommended that CMS 

retain the 1440 minutes of holter 

monitor equipment for CPT code 93326, 

consistent with current policy, rather 

than reassign the 1440 minutes of holter 

monitor equipment time as proposed to 

CPT code 93226. 

Response: We agree with the 

commenters that it would be most 

appropriate to maintain our established 

policy for the equipment times 

associated with CPT codes 93225 and 

93226, based upon further description 

of the direct practice expenses 

experienced by the current providers 

that typically furnish these services to 

Medicare beneficiaries. Therefore, we 

are not adopting the equipment time 

changes that we proposed for CPT codes 

93225 and 93226. However, we are 

revising the direct PE inputs for CPT 

code 93224, a global only code, to 

include the total equipment time for the 

holter monitor that is incorporated in 

component codes CPT codes 93225 and 

93226, as discussed in section 

II.A.3.b.(2). of this final rule with 

comment period. The PE inputs for CPT 

code 93224 did not previously correctly 

reflect the summation of the direct PE 

inputs for the component codes. 

Comment: One commenter supported 

the proposed changes to the direct PE 

inputs for CPT codes 93784 through 

93788. However, the commenter was 

confused about why 1440 minutes of 

equipment time were assigned to CPT 

code 93786, which the commenter 

stated is used only for the technical 

component of scanning the data rather 

than recording the data. 

Response: As we stated in our 

proposal, we believe that the direct PE 

inputs for CPT code 93786 are currently 

correct because the code describes the 

recording of the data. We believe that 

the commenter may have inadvertently 

referred to CPT code 93786 instead of 

CPT code 93788, which is the technical 

component code that describes the 

scanning rather than the recording of 

the data. We proposed to remove the 

1440 minutes associated with the 

scanning analysis from the inputs for 

CPT code 93788, not CPT code 93786. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposals to 

change the ambulatory blood pressure 

monitor equipment times included as 

direct PE inputs for CPT codes 938784 

and 93788, while maintaining the 

current equipment time direct PE input 

for CPT code 93786. However, we are 

not finalizing our proposals to change 

the holter monitor equipment times 

included as direct PE inputs for CPT 

codes 93225 and 93226, but instead will 

maintain the inputs for CPT codes 

93225 and 93226 as they were for CY 

2010. We are also revising the direct PE 

inputs for CPT code 93224 to include 

the total equipment time for the holter 

monitor that is incorporated in CPT 

codes 93225 and 93226. The equipment 

times in the final CY 2011 direct PE 

database reflect these decisions. 

(4) Cobalt-57 Flood Source 

Stakeholders requested that CMS 

reevaluate the useful life of the Cobalt57 flood source (CMS Equipment Code 

ER001), given their estimate of 

approximately 271 days for the source’s 

half-life. The CY 2010 useful life input 

in the CY 2010 direct PE database for 

the Cobalt-57 flood source is 5 years. 

Using publicly available catalogs, we 

found that the Cobalt-57 flood source is 

marketed with a useful life of 2 years. 

Therefore, we proposed to change the 

useful life input from the current 5 years 

to 2 years. The Cobalt-57 flood source 

was included with the revised useful 

life input for 96 HCPCS codes in the 

proposed CY 2011 direct PE database. 

Comment: One commenter supported 

the proposal to change the useful life 

input from 5 years to 2 years for the 

Cobalt-57 flood source. 

Response: We appreciate the 

commenter’s support for our proposal. 

After consideration of the public 

comment we received, we are finalizing 

our CY 2011 proposal to change the 

useful life input in the direct PE 

database for the Cobalt-57 flood source 

from 5 years to 2 years. This change is 

included in the final CY 2011 direct PE 

database. 

(5) Venom Immunotherapy 

One stakeholder provided updated 

price information for the venoms used 

for the five venom immunology CPT 

codes, specifically 95145 (Professional 

services for the supervision of 

preparation and provision of antigens 

for allergen immunotherapy (specify 

number of doses); single stinging insect 

venom); 95146 (Professional services for 

the supervision of preparation and 

provision of antigens for allergen 

immunotherapy (specify number of 

doses); 2 single stinging insect venoms); 

95147 (Professional services for the 

supervision of preparation and 

provision of antigens for allergen 

immunotherapy (specify number of 

doses); 3 single stinging insect venoms); 

95148 (Professional services for the 

supervision of preparation and 

provision of antigens for allergen 

immunotherapy (specify number of 

doses); 4 single stinging insect venoms); 

95149 (Professional services for the 

supervision of preparation and 

provision of antigens for allergen 

immunotherapy (specify number of 

doses); 5 single stinging insect venoms). 

In the CY 2004 PFS final rule with 

comment period (68 FR 63206), we 

adopted a pricing methodology that 

utilizes the average price of a 1 milliliter 

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dose of venom and adds that price per 

dose as direct PE inputs for CPT codes 

95145 and 95146. When a patient 

requires three stinging insect venoms, as 

for CPT code 95147, the price input for 

a 3-vespid mix is used. This 3-vespid 

mix price is also used to value CPT 

codes 95148 (four venoms) and 96149 

(five venoms), with the single venom 

price added once to CPT code 97148 

and twice to CPT code 97149. 

As requested by the stakeholder, we 

updated the price inputs for the 1- 

milliliter dose of venom to $16.67 and 

for the 3-vespid mix to $30.22 in the 

proposed CY 2011 direct PE database. 

Comment: One commenter supported 

the proposal to update the price inputs 

for the venoms used for venom 

immunotherapy. 

Response: We appreciate the 

information provided by stakeholders 

regarding the price inputs for venom 

immunotherapy supplies, consistent 

with our interest in utilizing accurate 

market prices as the direct PE inputs for 

these items. 

After consideration of the public 

comment we received, we are finalizing 

our CY 2011 proposals to update the 

price inputs for the 1-milliliter dose of 

venom to $16.67 and for the 3-vespid 

mix to $30.22 in the CY 2011 direct PE 

database. These changes are included in 

the final CY 2011 direct PE database. 

(6) Equipment Redundancy 

Stakeholders recently brought to our 

attention that the ECG, 3-channel (with 

SpO2, NIBP, temp, resp) (CMS 

Equipment Code EQ011) incorporates 

all of the functionality of the pulse 

oximeter with printer (CMS Equipment 

Code EQ211). Therefore, in HCPCS 

codes where CMS Equipment Code 

EQ011 is present, CMS Equipment Code 

EQ211 is redundant. On this basis, we 

proposed to remove the pulse oximeter 

with printer (CMS Equipment Code 

EQ211) as an input for the 118 codes 

that also contain the ECG, 3-channel 

(with SpO2, NIBP, temp, resp) (CMS 

Equipment Code EQ011). We made 

these adjustments in the proposed CY 

2011 direct PE database. 

We received no public comments 

regarding this proposal to address the 

pulse oximeter equipment redundancy. 

Therefore we are finalizing our CY 2011 

proposal without modification. We have 

made these adjustments in the final CY 

2011 direct PE database. 

(7) Equipment Duplication 

We recently identified a number of 

CPT codes with duplicate equipment 

inputs in the PE database. We proposed 

to remove the duplicate equipment 

items and modified the proposed CY 

2011 direct PE database accordingly as 

detailed in Table 5. 

TABLE 5—CPT CODES WITH PROPOSED REMOVAL OF DUPLICATE EQUIPMENT ITEMS IN THE DIRECT PE DATABASE

CPT Code 

CMS 

equipment 

code for 

duplicate 

equipment 

Description of equipment 

19302 .............................. P-mastectomy w/1n removal ................................... EF014 

ED005 

light, surgical. 

camera, digital system, 12 megapixel (medical 

grade). 

19361 .............................. Breast reconstr w/lat flap ........................................ EF031 

EQ168 

table, power. 

light, exam. 

44157 .............................. Colectomy w/ileoanal anast .................................... EF031 

EQ168 

table, power. 

light, exam. 

44158 .............................. Colectomy w/neo-rectum pouch ............................. EF031 

EQ168 

table, power. 

light, exam. 

56440 .............................. Surgery for vulva lesion .......................................... EF031 

EQ170 

table, power. 

light, fiberoptic headlight w-source. 

57296 .............................. Revise vag graft, open abd ..................................... EF031 

EQ170 

table, power. 

light, fiberoptic headlight w-source. 

58263 .............................. Vag hyst w/t/o & vag repair .................................... EF031 table, power. 

59610 .............................. Vbac delivery ........................................................... EF031 table, power. 

67228 .............................. Treatment of retinal lesion ...................................... EL005 

EQ230 

lane, exam (oph). 

slit lamp (Haag-Streit), dedicated to laser use. 

76813 .............................. Ob us nuchal meas, 1 gest ..................................... ED024 film processor, dry, laser. 

77371 .............................. Srs, multisource ...................................................... EQ211 pulse oximeter w-printer. 

ED018 computer workstation, cardiac cath monitoring. 

EL011 room, angiography. 

93540 .............................. Injection, cardiac cath ............................................. EQ011 ECG, 3-channel (with SpO2, NIBP, temp, resp). 

EQ032 IV infusion pump. 

EQ088 contrast media warmer. 

EQ211 pulse oximeter w-printer. 

93542 .............................. Injection for heart x-rays ......................................... ED018 computer workstation, cardiac cath monitoring. 

EL011 room, angiography. 

EQ011 ECG, 3-channel (with SpO2, NIBP, temp, resp). 

EQ032 IV infusion pump. 

EQ088 contrast media warmer. 

EQ211 pulse oximeter w-printer. 

Comment: One commenter pointed 

out that the equipment duplication 

issue for CPT codes 93540 and 93542 is 

irrelevant because these codes would no 

longer be reported for Medicare in CY 

2011. The commenter stated that the 

codes are being replaced by a new set 

of diagnostic cardiac catheterization 

CPT codes. 

Response: We agree with the 

commenter’s assessment that our 

proposal for these codes is not relevant 

for CY 2011 because these codes are 

being deleted. 

Comment: One commenter reviewed 

the duplicate inputs and offered a 

correction regarding CPT code 19302 

(Mastectomy, partial (eg, lumpectomy, 

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tylectomy, quadrantectomy, 

segmentectomy); with axillary 

lymphadenectomy). The commenter 

pointed out that one of the line-items 

erroneously duplicated (light, surgical, 

EF014) for that code should have 

originally been applied to CPT code 

19304 (Mastectomy, subcutaneous). 

Response: We appreciate the 

commenter bringing this error to our 

attention and we agree with the 

commenter’s assessment. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

remove the duplicate equipment items 

from the CY 2011 direct PE database as 

detailed in Table 5, with modification to 

transfer the duplicate surgical light 

input from CPT code 19302 to CPT code 

19304. These changes are reflected in 

the final CY 2011 direct PE database. 

(8) Establishing Overall Direct PE 

Supply Price Inputs Based on Unit 

Prices and Quantities 

In the CY 2011 PFS proposed rule (75 

FR 40057), we stated that we had 

identified minor errors in total price 

inputs for a number of supply items due 

to mathematical mistakes in multiplying 

the item unit price and the quantity 

used in particular CPT codes for the 

associated services. We proposed to 

modify the direct PE database to 

appropriately include the overall supply 

price input for a supply item as the 

product of the unit price and the 

quantity of the supply item used in the 

CPT code. Most of the overall supply 

price input changes were small, and we 

adjusted the proposed CY 2011 direct 

PE database accordingly. The CPT and 

Level II HCPCS codes and associated 

supplies for nonfacility and facility 

settings that were subject to these 

corrections are displayed in Tables 6 

and 7, respectively. 

BILLING CODE 4120–01–P 

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BILLING CODE 4120–01–C 

Comment: Several commenters agreed 

that the overall supply price inputs 

should be equal to the product of the 

supply price and the quantity associated 

with each code. Some commenters 

pointed out that for many of the supply 

items displayed in Tables 6 and 7, the 

overall supply prices remained incorrect 

in the proposed CY 2011 direct PE 

database. The commenters speculated 

that an underlying programming error 

may have led to incorrect calculations. 

Response: In constructing the 

proposed CY 2011 direct PE database 

posted on the CMS web site, we 

inadvertently retained a display column 

of data that reflected our previous 

calculation error, despite our correct 

calculation of the values for PFS 

ratesetting purposes. We have corrected 

the underlying process error that led to 

the incorrect display. We have modified 

the direct PE database for the CY 2011 

PFS final rule with comment period to 

appropriately display the overall supply 

price input for a supply item as the 

product of the unit price and the 

quantity of the supply item used in the 

CPT code. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

modify the direct PE database to include 

the overall supply price input for a 

supply item as the product of the unit 

price and the quantity of the supply 

item used in the CPT code. We have 

modified the display column within the 

publicly available database to reflect the 

proper calculation. These changes are 

reflected in the final CY 2011 direct PE 

database. 

c. AMA RUC Recommendations in CY 

2010 for Changes to Direct PE Inputs 

In a March 2010 letter, the AMA RUC 

made specific PE recommendations that 

we considered in the CY 2011 PFS 

proposed rule (75 FR 40062 through 

40063). The proposed changes that 

follow were included in the proposed 

CY 2011 direct PE database, which is 

available on the CMS Web site under 

the downloads for the CY 2011 PFS 

proposed rule at http://www.cms.gov/ 

PhysicianFeeSched/. The final direct PE 

database for CY 2011 is available under 

the downloads for the CY 2011 PFS 

final rule with comment period at the 

same location. 

(1) Electrogastrography and Esophageal 

Function Test 

We proposed to accept the AMA RUC 

recommendations for the CY 2011 PE 

inputs for the following CPT codes: 

91132 (Electrogastrography, diagnostic, 

transcutaneous); 91133 

(Electrogastrography, diagnostic, 

transcutaneous; with provocative 

testing); 91038 (Esophageal function 

test, gastroesophageal reflux test with 

nasal catheter intraluminal impedance 

electrode(s) placement, recording, 

analysis and interpretation; prolonged 

(greater than 1 hour, up to 24 hours)). 

For CPT code 91038, we assumed a 

useful life of 5 years for the equipment 

item ‘‘ZEPHR impedance/pH reflux 

monitoring system with data recorder, 

software, monitor, workstation and 

cart,’’ based on its entry in the AHA’s 

publication, ‘‘Estimated Useful Lives of 

Depreciable Hospital Assets,’’ which we 

use as a standard reference. The 

proposed CY 2011 direct PE database 

was changed accordingly. 

(2) 64-Slice CT Scanner and Software 

The AMA RUC submitted an updated 

recommendation regarding the correct 

pricing of the 64-slice CT scanner and 

its accompanying software. Based on the 

documentation accompanying the 

recommendation, we accepted this 

recommendation and proposed to 

update the price input for the 64-slice 

scanner and software. This affected the 

following four CPT codes that use either 

the scanner, the software, or both: 75571 

(computed tomography, heart, without 

contrast material, with quantitative 

evaluation of coronary calcium); 75572 

(Computed tomography, heart, with 

contrast material, for evaluation of 

cardiac structure and morphology 

(including 3D image postprocessing, 

assessment of cardiac function, and 

evaluation of venous structures, if 

performed)); 75573 (Computed 

tomography, heart, with contrast 

material, for evaluation of cardiac 

structure and morphology in the setting 

of congenital heart disease (including 

3D image postprocessing, assessment of 

LV cardiac function, RV structure and 

function and evaluation of venous 

structures, if performed)); and 75574 

(Computed tomographic angiography, 

heart, coronary arteries and bypass 

grafts (when present), with contrast 

material, including 3D image post 

processing (including evaluation of 

cardiac structure and morphology, 

assessment of cardiac function, and 

evaluation of venous structure, if 

performed)). The proposed CY 2011 

direct PE database was modified 

accordingly. 

(3) Breath Hydrogen Test 

The AMA RUC provided 

recommendations regarding the PE 

inputs for CPT code 91065 (breath 


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hydrogen test (e.g., for detection of 

lactase deficiency, fructose intolerance, 

bacterial overgrowth, or oro-cecal 

gastrointestinal transit). We accepted 

the recommendations with two 

modifications. We folded the two pieces 

of equipment listed as ‘‘quinGas TableTop Support Stand, 3 Tank’’ and 

‘‘Drying Tube, Patient Sample’’ into the 

‘‘BreathTrackerDigital SC Instrument’’ 

and summed their inputs into one 

equipment line-item, since these 

equipment items are used together 

specifically for the service in question. 

We increased the useful life input of the 

‘‘BreathTrackerDigital SC Instrument’’ 

from 7 to 8 years based on our use of 

the American Hospital Association 

(AHA)’s publication entitled, ‘‘Estimated 

Useful Lives of Depreciable Hospital 

Assets’’ as a standard reference. 

Additionally, because the AMA RUC 

did not include equipment times in 

their recommendations for this CPT 

code, we used 53 minutes as the total 

time for all equipment items based on 

the total intra-service period for the 

clinical labor, consistent with our 

general policy for establishing 

equipment times. These modifications 

were reflected in the proposed CY 2011 

direct PE database. 

(4) Radiographic Fluoroscopic Room 

A recent AMA RUC review of services 

that include the radiographic 

fluoroscopic room (CMS Equipment 

Code EL014) as a direct PE input 

revealed that the use of the item is no 

longer typical for certain services in 

which it is specified within the current 

direct cost inputs. The AMA RUC 

recommended to CMS that the 

radiographic fluoroscopic room be 

deleted from CPT codes 64420 

(Injection, anesthetic agent; intercostal 

nerve, single); 64421 (Injection, 

anesthetic agent; intercostal nerves, 

multiple, regional block); and 64620 

(Destruction by neurolytic agent, 

intercostal nerve). We accepted these 

recommendations and, therefore, these 

changes were included in the proposed 

CY 2011 direct PE database. 

Comment: Several commenters 

generally expressed support for our 

acceptance of these AMA RUCrecommended direct PE inputs with the 

stated refinements. The AMA RUC 

expressed appreciation for CMS’ 

acceptance of the committee’s 

recommendations. 

Response: We appreciate the 

assistance of stakeholders in our efforts 

to utilize the most accurate direct PE 

inputs for PFS services. We also 

appreciate the judicious work of the 

AMA RUC in providing these 

recommendations in time for us to 

respond to them and include our 

proposals in the CY 2011 proposed rule. 

Comment: One commenter expressed 

concern about these recommendations 

on the basis of the flawed professional 

composition of the AMA RUC. The 

commenter stated that without fair 

representation by all specialties, 

including nonphysician practitioners 

who may bill Part B directly under the 

PFS, CMS’ reliance on the AMA RUC as 

representing the professional views and 

knowledge of all healthcare specialties 

for purposes of establishing the direct 

PE inputs for services paid under the 

PFS is deeply flawed. 

Response: As we have stated 

previously (69 FR 66243), because the 

AMA RUC is an independent 

committee, we are not in a position to 

set the requirements for AMA RUC 

membership. 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 for 

new and revised CPT codes in the 

context of what we believe is its broad 

expertise, we ultimately remain 

responsible for determining the direct 

PE inputs for all new or revised 

services. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposals to 

accept the AMA RUC recommendations, 

with certain changes described above, 

regarding the direct PE inputs for 

electrogastrography and esophageal 

function tests, the 64-slice CT scanner 

and software, the breath hydrogen test, 

and certain procedures that no longer 

require a radiographic fluoroscopic 

room. These decisions are reflected in 

the final CY 2011 direct PE database. 

(5) Cystometrogram 

The AMA RUC recently identified a 

rank order anomaly regarding CPT code 

51726 (Complex cystometrogram (i.e., 

calibrated electronic equipment)). 

Currently, this procedure has higher PE 

RVUs, despite being less resourceintensive than the three CPT codes for 

which it serves as the base: 51727 

(Complex cystometrogram (i.e., 

calibrated electronic equipment); with 

urethral pressure profile studies (i.e., 

urethral closure pressure profile), any 

technique); 51728 (Complex 

cystometrogram (i.e., calibrated 

electronic equipment); with voiding 

pressure studies (that is, bladder 

voiding pressure), any technique); and 

51729 (Complex cystometrogram (i.e., 

calibrated electronic equipment); with 

voiding pressure studies (that is, 

bladder voiding pressure) and urethral 

pressure profile studies (that is, urethral 

closure pressure profile), any 

technique). 

Since the AMA RUC’s general view is 

that CPT codes with a 0-day global 

period do not have pre-service time 

associated with the code, the AMA RUC 

recommended removing the nonfacility 

pre-service clinical labor time from the 

PE inputs for 51726. Additionally, the 

AMA RUC recommended that the 

nonfacility clinical intra-service staff 

time for CPT code 51276 be reduced 

from the 118 minutes of intra-service 

clinical labor time currently assigned to 

the code to 85 minutes of intra-service 

clinical labor time. These changes 

would resolve the rank order anomaly 

and bring the PE inputs for CPT code 

51726 into alignment with the other 

three codes. Finally, and for the reasons 

stated above, the AMA RUC 

recommended that CMS remove the 23 

minutes of pre-service nonfacility 

clinical labor time from CPT code 51725 

(Simple cystometrogram (CMG) (for 

example, spinal manometer)). We 

agreed with the AMA RUC 

recommendations, proposed to accept 

these recommendations for CY 2011 

and, therefore, changed the direct PE 

inputs for CPT codes 51725 and 51726 

in the nonfacility setting in the 

proposed CY 2011 direct PE database. 

Comment: Some commenters argued 

that the rank order anomaly resulted 

from clinical labor inputs that were too 

low in the more complex codes, rather 

than too high in the base codes. These 

commenters stated that the AMA RUC 

and CMS had addressed the wrong 

‘‘end’’ of the rank order anomaly in 

making the changes to the clinical labor 

minutes assigned to CPT codes 51725 

and 51726. Several commenters on the 

CY 2010 PFS final rule with comment 

period, where new CY 2011 CPT code 

51727, 51728, and 51729 were assigned 

interim direct PE inputs, also argued 

that CPT codes 51727, 51728, and 51729 

should have additional clinical labor 

inputs, including a greater number of 

minutes during the intra-service period 

and minutes during the pre-service 

period. 

Response: We have reviewed the 

direct PE inputs for all five CPT codes 

in this series and continue to agree with 

the AMA RUC’s recommendations 

regarding changes for CY 2011. 

Specifically, we believe the pre-service 

nonfacility clinical labor time for the 0- 

day global period CPT codes 51725 and 

51726 should be removed and the intraservice clinical labor time for CPT code 

51726 should also be reduced, 

consistent with the usual treatment of 

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other 0-day global codes. We believe the 

AMA RUC provided recommendations 

to us regarding the direct PE inputs for 

these four cystometrogram services that 

accurately reflect the costs of the 

resources (that is, the clinical labor, 

equipment, and supplies) typically 

required to furnish these services to 

Medicare beneficiaries. 

Comment: Several commenters 

requested that CMS change the supply 

inputs included in the direct PE 

database for the complex 

cystometrogram services. For example, 

the commenters requested that single 

dual sensor catheters replace the single 

sensor catheters currently included as 

direct PE inputs for these codes. The 

commenters stated that both the 

catheters and their price inputs are 

outdated. In other cases, the 

commenters explained that certain 

supplies in the database were not those 

typically used by certain physician 

specialties in performing the services. 

Response: We rely on our review of 

recommendations received from the 

AMA RUC in order to make changes to 

the clinical labor, supply, and 

equipment inputs for CPT codes within 

the direct PE database. We have no 

reason to believe that the supplies used 

in the complex cystometrogram 

procedures described by CPT codes 

51727, 51728, and 51729 are outdated 

because these were new codes for CY 

2010 and the AMA RUC recently 

addressed their direct PE inputs when 

initially recommending values for the 

services. We believe the AMA RUC’s 

extensive expertise and broad 

perspective generally allows it to 

accurately identify the direct PE inputs 

for new and revised CPT codes. We 

encourage stakeholders who believe that 

enhancements in technology or changes 

in medical practice have resulted in 

changes in the supplies or equipment 

typically used in furnishing a particular 

service to address these concerns with 

the AMA RUC. 

As we discuss further in section 

II.A.3.e. of this final rule with comment 

period with respect to our proposal 

regarding updating supply and 

equipment price inputs, we welcome 

public requests for updates to supply 

price and equipment price and useful 

life inputs associated with existing 

codes through the process we are 

adopting beginning in CY 2011. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

accept the recommendations of the 

AMA RUC regarding the revised direct 

PE inputs for CPT codes 51725 and 

52726. The final direct PE inputs are 

included in the final CY 2011 direct PE 

database. 

d. Referral of Existing CPT Codes for 

AMA RUC Review 

As part of our review of high cost 

supplies, we conducted a clinical 

review of the procedures associated 

with high cost supplies to confirm that 

those supplies currently are used in the 

typical case described by the CPT codes. 

While we confirmed that most high cost 

supplies could be used in the 

procedures for which they are currently 

direct PE inputs, we noted that one of 

the high cost supplies, fiducial screws 

(CMS Supply Code SD073) with a 

current price of $558, is included as a 

direct PE input for two CPT codes, 

specifically 77301 (Intensity modulated 

radiotherapy plan, including dosevolume histograms for target and critical 

structure partial tolerance 

specifications) and 77011 (Computed 

tomography guidance for stereotactic 

localization). The documentation used 

in the current pricing of the supply item 

describes a kit that includes 

instructions, skull screws, a drill bit, 

and a collar for the TALON® System 

manufactured by Best nomos. Best 

nomos’ literature describes the insertion 

of the screws into the patient’s skull to 

ensure accurate set-up. When CPT codes 

77301 and 77011 were established in CY 

2002 and CY 2003, respectively, we 

accepted the AMA RUC 

recommendations to include fiducial 

screws in the PE for these services. 

Upon further review, while we 

understand why this supply may still be 

considered a typical PE input for CPT 

code 77011, we do not now believe that 

fiducial screws, as described in the Best 

nomos literature, would typically be 

used in CPT code 77301, where the 

most common clinical scenario would 

be treatment of prostate cancer. 

Therefore, in order to ensure that CPT 

codes 77301 and 77011 are 

appropriately valued for CY 2011 

through the inclusion or exclusion of 

fiducial screws in their PE, in the CY 

2011 PFS proposed rule (75 FR 40063), 

we asked the AMA RUC to review these 

CPT codes with respect to the inclusion 

of fiducial screws in their PE. We 

requested that the AMA RUC make 

recommendations to us regarding 

whether this supply should be included 

in the PE or removed from the PE for 

CPT codes 77301 and 77011 in a 

timeframe that would allow us to adopt 

interim values for these codes for CY 

2011, should the AMA RUC recommend 

a change. Were the AMA RUC to 

continue to recommend the inclusion of 

fiducial screws in the PE for CPT code 

77301 and/or 77011 for CY 2011, we 

requested that the AMA RUC provide us 

with a detailed rationale for the 

inclusion of this specialized supply in 

the PE for the typical case reported 

under the relevant CPT code. We also 

requested that the AMA RUC furnish 

updated pricing information for the 

screws if they were to continue to 

recommend the screws as a PE input for 

one or both of these CPT codes in CY 

2011. 

Comment: The AMA RUC 

recommended that CMS remove the 

fiducial screws as a direct PE input from 

both CPT codes 77011 and 77301. 

Several commenters also agreed that the 

fiducial screws would not typically be 

used with CPT code 77301. 

Additionally, multiple commenters 

pointed out that the fiducial screws may 

now be reported using HCPCS supply 

code A4648 (Tissue marker, 

implantable, any type, each) when the 

markers are implanted. 

Response: We appreciate the 

responsiveness of the AMA RUC to our 

request and the interest of the other 

commenters in this issue. 

After consideration of the public 

comments we received and the AMA 

RUC recommendation following 

publication of the CY 2011 PFS 

proposed rule, for CY 2011, we are 

accepting the AMA RUC’s 

recommendation and removing fiducial 

screws from the direct PE database as 

inputs for CPT codes 77011 and 77301. 

Because the direct PE inputs for these 

codes are being revised on an interim 

final basis for CY 2011, the changes are 

subject to public comment on this final 

rule with comment period. 

e. Updating Equipment and Supply 

Price Inputs for Existing Codes 

Historically, we have periodically 

received requests to change the PE price 

inputs for supplies and equipment in 

the PE database. In the past, we have 

considered these requests on an ad hoc 

basis and updated the price inputs as 

part of quarterly or annual updates if we 

believed them to be appropriate. In the 

CY 2011 PFS proposed rule (75 FR 

49963), we proposed to establish a 

regular and more transparent process for 

considering public requests for changes 

to PE database price inputs for supplies 

and equipment used in existing codes. 

We proposed to act on public requests 

to update equipment and supply price 

inputs annually through rulemaking by 

following a regular and consistent 

process as discussed in the following 

paragraphs. We proposed to use the 

annual PFS proposed rule released in 

the summer and the final rule with 

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November 1 each year as the vehicle for 

making these changes. 

We would accept requests for 

updating the price inputs for supplies 

and equipment on an ongoing basis; 

requests must be received no later than 

December 31 of each calendar year to be 

considered for inclusion in the next 

proposed rule. In that next proposed 

rule, we would present our review of 

submitted requests to update price 

inputs for specific equipment or 

supplies and our proposals for the 

subsequent calendar year. We would 

then finalize changes in the final rule 

with comment period for the upcoming 

calendar year. Our review of the issues 

and consideration of public comments 

may result in the following outcomes 

that would be presented in the final rule 

with comment period: 

• Updating the equipment or supply 

price inputs, as requested. 

• Updating the equipment or supply 

price inputs, with modifications. 

• Rejecting the new price inputs. 

• Declining to act on the request 

pending a recommendation from the 

AMA RUC. 

To facilitate our review and 

preparation of issues for the proposed 

rule, at a minimum, we would expect 

that requesters would provide the 

following information: 

• Name and contact information for 

the requestor. 

• The name of the item exactly as it 

appears in the direct PE database under 

downloads for the most recent PFS final 

rule with comment period, available on 

the CMS Web site at http:// 

www.cms.gov/PhysicianFeeSched/ 

PFSFRN/list.asp#TopOfPage. 

In order to best evaluate the requests 

in the context of our goal of utilizing 

accurate market prices for these items as 

direct PE inputs, we also would expect 

requestors to provide multiple invoices 

from different suppliers/manufacturers. 

In some cases, multiple sources may not 

be available, whereupon a detailed 

explanation should be provided to 

support the request. When furnishing 

invoices, requestors should take into 

consideration the following parameters: 

++ May be either print or electronic 

but should be on supplier and/or 

manufacturer stationery (for example, 

letterhead, billing statement, etc.) 

++ Should be for the typical, 

common, and customary version of the 

supply or equipment that is used to 

furnish the services. 

++ Price should be net of typical 

rebates and/or any discounts available, 

including information regarding the 

magnitude and rationale for such 

rebates or discounts. 

++ If multiple items are presented on 

the same invoice, relevant item(s) 

should be clearly identified. 

We solicited public comments on this 

process, including the information that 

requestors should furnish to facilitate 

our full analysis in preparation for the 

next calendar year’s rulemaking cycle. 

Comment: Several commenters 

supported establishing a regular and 

more transparent process for 

considering public requests for changes 

to the direct PE price inputs for supplies 

and equipment used in existing codes. 

However, other commenters were 

concerned that the process might 

prevent CMS from making timely 

corrections to the database that are 

brought to the attention of the agency by 

specialty societies or other stakeholders. 

These commenters suggested creating an 

expedited process whereby mistakes 

could be corrected. 

Response: We appreciate the broad 

support for the proposal. We believe 

that this process, though regular, would 

not limit our ability to correct technical 

errors that are discovered by the agency 

or brought to our attention by 

stakeholders. On these occasions, we 

would continue to correct errors and 

issue correction notices to final rules 

when appropriate. The regular process 

for updating supply and equipment 

prices is intended to reflect significant 

changes in the market prices of supplies 

and equipment that are used in the 

direct PE database. It would not 

substitute for the timely correction of 

technical errors. 

Comment: Some commenters were 

concerned that the proposed process 

would necessitate a 12- to 24-month 

delay between CMS’ acknowledgement 

of a price update and the resulting 

change in PE RVU calculations. The 

commenters pointed out that the current 

ad hoc process has historically resulted 

in a fairly timely response from the 

agency in most circumstances and were 

concerned that the formalization of the 

process might result in unnecessary 

delays. One commenter suggested 

creating a process for quarterly updates 

to the supply and equipment price 

inputs. 

Response: We understand that some 

commenters are concerned about the 

timelines for price updates. However, 

we believe that the value of the 

transparency of the proposed process 

outweighs its potential for slowing the 

previous ad hoc process. Additionally, 

it is important to acknowledge that in 

most previous cases, price input 

updates would not have been 

immediately effective since such 

updates have always required CMS’ 

review, concurrence, and processing 

through the rate setting methodology 

prior to any change in Medicare 

payment rates. Additionally, many 

stakeholders already provide public 

comments to CMS regarding specific 

issues addressed in our annual rate 

setting for the PFS through the notice 

and comment rulemaking process. 

Therefore, we believe that the annual 

process offers both an economic use of 

stakeholders’ resources, as well as the 

best opportunity for broad public input 

into proposed price changes. These are 

qualities any accelerated alternative, 

such as quarterly updates, would lack. 

We believe that an annual update 

process most effectively promotes both 

timeliness and transparency, while also 

allowing for public comment and input 

regarding our proposals before the 

adoption of pricing changes that could 

have a significant effect on payment for 

services under the PFS. 

Comment: Some commenters asserted 

that it may be more difficult to obtain 

invoices for some supplies that are not 

frequently used and there should be 

acceptable alternative sources of 

information, including price lists or 

other information from the 

manufacturer. One commenter 

suggested that in the case of items that 

are not used in high volumes in 

physicians’ office, volume or other 

discounts are unlikely for physicians’ 

practices. 

Response: Even though the direct PE 

inputs should reflect the resource costs 

required for typical cases, we 

understand that there may be 

circumstances in which updated 

invoices or invoices that reflect volume 

or other discounts may be difficult to 

obtain. As stated in our proposal, we 

will consider a detailed written 

explanation in support of requests 

submitted without the documentation 

usually required. 

Comment: One commenter urged that 

the updating of supply and equipment 

prices be only for ‘‘like’’ items and not 

for ‘‘newer technology’’ items. The 

commenter requested that CMS refer the 

initial review of new supply and 

equipment inputs to the AMA RUC 

Practice Expense Subcommittee for 

review and recommendation back to 

CMS. Other commenters made specific 

requests for additions, deletions, or 

substitutions of supply and equipment 

items associated with particular codes. 

Response: We appreciate the 

opportunity to clarify that this regular 

and consistent process would only 

apply to the price inputs for supply and 

equipment items. As part of our review 

of equipment price inputs, we will also 

consider updates to the useful life of 

equipment insofar as that information is 

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supported by similar documentation. 

However, we will continue to encourage 

stakeholders who believe that there 

should be additions, deletions, or 

substitutions of direct PE inputs 

associated with particular codes to 

address these concerns through the 

AMA RUC, including when a 

stakeholder believes that enhanced 

technology has replaced older 

technology in the typical case of a 

particular service. We believe the AMA 

RUC recommendations are an efficient 

and effective mechanism to inform our 

review of changes to the clinical labor, 

supply, and equipment inputs within 

the direct PE database. 

Comment: One commenter was 

concerned about the potential for CMS 

to reject the requested price input 

outright and suggested that CMS be 

required to explain its rejection of the 

request for an updated price input. 

Response: We appreciate the concerns 

of the commenter and consider this 

perspective as providing additional 

support for instituting such a regular 

and transparent process. As we stated in 

the CY 2011 proposed rule (75 FR 

40063), we would present our review of 

submitted requests to update price 

inputs for specific equipment or 

supplies and our proposals for the 

subsequent calendar year in the annual 

proposed rule. This process would 

provide CMS an annual opportunity to 

explain our review and decisions 

regarding public requests for changes in 

direct PE price inputs. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to act 

on public requests to update equipment 

and supply price inputs annually 

through rulemaking by following a 

regular and consistent process as 

discussed in the preceding paragraphs. 

We will use the annual PFS proposed 

rule released in the summer and the 

final rule with comment period released 

on or about November 1 each year as the 

vehicle for making these changes. In 

order to make the most effective use of 

the rulemaking process and be 

responsive to the concerns of 

stakeholders that we consider the most 

recent evidence available, we ask that 

requests for updates to supply price 

inputs or equipment price or useful life 

inputs 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 

CMS 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. For example, requests 

received by December 31, 2010 will be 

considered in conjunction with the CY 

2012 PFS rulemaking cycle. We refer 

readers to the description earlier in this 

section of the minimum information we 

are requesting that stakeholders provide 

in order to facilitate our review and 

preparation of issues for the proposed 

rule. 

In the CY 2012 PFS proposed rule, 

scheduled to be released in the summer 

of CY 2011, we will present a review of 

any timely requests we receive to 

update supply price inputs or 

equipment price or useful life inputs. 

After reviewing the issues and 

responding to the public comments, we 

will finalize our decision as one of the 

outcomes listed below for each request 

in the final rule with comment period 

for CY 2012. 

• Updating the equipment or supply 

price inputs, as requested. 

• Updating the equipment or supply 

price inputs, with modifications. 

• Rejecting the new price inputs. 

• Declining to act on the request 

pending a recommendation from the 

AMA RUC. 

f. Other Issues 

We received other public comments 

on matters related to direct PE inputs 

that were not the subject of proposals in 

the CY 2011 PFS proposed rule. We 

thank the commenters for sharing their 

views and suggestions. Because we did 

not make any proposals regarding these 

matters, we do not generally summarize 

or respond to such comments in this 

final rule with comment period. 

However, we are summarizing and 

responding to several of the public 

comments in order to reiterate or clarify 

certain information. 

Comment: Several commenters stated 

that the clinical labor minutes for CPT 

code 37210 (Uterine fibroid 

embolization (UFE, embolization of the 

uterine arteries to treat uterine fibroids, 

leiomyomata), percutaneous approach 

inclusive of vascular access, vessel 

selection, embolization, and all 

radiological supervision and 

interpretation, intraprocedural 

roadmapping, and imaging guidance 

necessary to complete the procedure) 

are inconsistent with recommendations 

forwarded to CMS by the AMA RUC for 

CY 2007 and accepted by CMS in the 

CY 2007 PFS final rule with comment 

period (71 FR 69643). The commenters 

indicated that 10 minutes of clinical 

labor time were erroneously not 

attributed to this CPT code in the 

proposed CY 2011 direct PE database. 

Response: We agree with the 

commenters’ assessment and appreciate 

being informed of the error. The 10 

minutes of clinical labor time missing 

from the direct PE inputs for CPT code 

37210 have been incorporated and this 

change is reflected in the final CY 2011 

direct PE database. 

Comment: Several commenters 

expressed concerns regarding the 

current direct PE inputs for various 

services. One commenter submitted 

extensive information regarding a 

perceived disparity between the 

equipment inputs for echocardiography 

services and those for other ultrasound 

services. Another commenter requested 

that CMS ask the AMA RUC to establish 

nonfacility RVUs for the placement or 

insertion of high dose rate 

brachytherapy catheters/applicators 

because it is common practice, 

especially in gynecology, for physicians 

to perform such procedures in their 

offices or in freestanding clinics. One 

commenter stated that the proposed PE 

RVUs do not provide sufficient payment 

to cover the cost of prothrombin time 

(PT)/international normalized ratio 

(INR) home monitoring services and 

recommended that CMS alter the direct 

PE inputs for those services. Another 

commenter requested that CMS alter 

direct PE inputs for holter monitoring 

based on changes to the language in CPT 

code descriptors from the current ‘‘24 

hours’’ to ‘‘up to 48 hours,’’ even when 

the AMA RUC did not recommend such 

changes. 

Response: We did not propose CY 

2011 changes to the direct PE inputs for 

any of those services referenced by the 

commenters and, therefore, their direct 

PE inputs have already been finalized in 

a prior year’s PFS rulemaking. As we 

have previously stated in this section, 

we encourage stakeholders who believe 

a change is required in the direct PE 

inputs associated with a particular 

service in the typical case that is 

furnished in the facility or nonfacility 

setting to address these concerns with 

the AMA RUC with respect to codes that 

have been reviewed by the AMA RUC. 

The direct PE inputs for existing 

services paid under the PFS have all 

been adopted through rulemaking that 

has allowed for public notice and 

comment, so their current direct PE 

inputs are final unless we would make 

a proposal to change them in a future 

year. In most cases, we like to receive 

and review recommendations from the 

AMA RUC for new and revised codes or 

other codes for which another review 

has been conducted in order to assist us 

in determining whether we should make 

changes to the clinical labor, supply, 

and equipment inputs within the direct 

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PE database and, if so, what revisions 

should be made. 

Additionally, 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. 

Thus, we encourage stakeholders to 

contact us at any time if there are topics 

related to the direct PE inputs for 

physicians’ services that they would 

like to discuss. 

B. Malpractice Relative Value Units 

(RVUs) 

1. Background 

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 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 resourcebased 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). 

2. Malpractice RVUs for New and 

Revised Services Effective Before the 

Next 5-Year Review 

Currently, malpractice RVUs for new 

and revised codes effective before the 

next 5-Year Review (for example, 

effective CY 2011 through CY 2014) are 

determined by a direct crosswalk to a 

similar ‘‘source’’ code or a modified 

crosswalk to account for differences in 

work RVUs between the new/revised 

code and the source code. For the 

modified crosswalk approach, we adjust 

the malpractice RVUs for the new/ 

revised code to reflect the difference in 

work RVUs between the source code 

and the AMA RUC’s recommended 

work value (or the work value we are 

applying as an interim final value under 

the PFS) for the new code. For example, 

if the interim final work RVUs for the 

new/revised code are 10 percent higher 

than the work RVUs for the source code, 

the malpractice RVUs for the new/ 

revised code would be increased by 10 

percent over the source code RVUs. This 

approach presumes the same risk factor 

for the new/revised code and source 

code but uses the work RVUs for the 

new/revised code to adjust for risk-ofservice. The assigned malpractice RVUs 

for new/revised codes effective between 

updates remain in place until the next 

5-Year Review. 

For CY 2011, we explained that we 

will continue our current approach for 

determining malpractice RVUs for new/ 

revised codes that become effective 

before the next 5-Year Review and 

update. Under this approach we 

crosswalk the new/revised code to the 

RVUs of a similar source code and 

adjust for differences in work (or, if 

greater, the clinical labor portion of the 

fully implemented PE RVUs) between 

the source code and the new/revised 

code. Additionally, we stated that we 

would publish a list of new/revised 

codes and the analytic crosswalk(s) used 

for determining their malpractice RVUs 

in the CY 2011 final rule with comment 

period, which we have not previously 

done. We also explained that the CY 

2011 malpractice RVUs for new/revised 

codes would be implemented as interim 

final values in the CY 2011 PFS final 

rule with comment period, where they 

would be subject to public comment, 

and finalized in the CY 2012 PFS final 

rule with comment period. 

Comment: Several commenters 

supported the continuation of our 

current approach to determining 

malpractice RVUs for new/revised codes 

that become effective before the next 5- 

Year Review and update. The 

commenters stated that publication of 

the new/revised codes and the analytic 

crosswalk(s) used for determining their 

malpractice RVUs in the final rule is a 

move toward greater transparency. A 

few commenters requested that CMS 

provide the rationale used for selecting 

crosswalks for new/revised codes and 

subject the rationale to public comment. 

Response: For purposes of 

determining malpractice RVUs for the 

CY 2011 new/revised codes, we 

accepted all source code 

recommendations submitted by the 

AMA RUC. We understand that the 

AMA RUC-recommended source codes 

for new/revised codes were based on the 

expected similar specialty mix of 

practitioners furnishing the source code 

and the new/revised code. In other 

words, the medical specialties 

furnishing a source code were expected 

to be similar to the specialty mix 

furnishing the new/revised code. In 

adopting all of the AMA RUC’s source 

code recommendations for CY 2011, we 

agree with its assessment of these 

similarities in each new/revised code 

case. If we were to disagree with the 

AMA RUC’s malpractice source code 

recommendations in a future year for 

any new/revised codes, we would 

provide the rationale for both our 

difference of opinion and the alternative 

source code we select for purposes of 

establishing the interim final 

malpractice RVUs. 

After consideration of the public 

comments we received, we are 

continuing our current approach of 

assigning the interim final malpractice 

RVUs for new/revised codes based on 

the methodology described earlier in 

this section. We adjusted the 

malpractice RVUs of the CY 2011 new/ 

revised codes for differences 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 code. 

The source code crosswalks for the CY 

2011 new/revised codes are being 

adopted on an interim final basis and 

are subject to public comment on this 

CY 2011 final rule with comment 

period, as are the CY 2011 malpractice 

RVUs of the new/revised codes that are 

listed in Addendum C to this final rule 

with comment period. The malpractice 

RVUs for the CY 2011 new/revised 

codes will be finalized in the CY 2012 

PFS final rule with comment period, 

where we will also respond to the 

public comments received on the values 

that are included in this CY 2011 final 

rule with comment period. 

Table 8 lists the CY 2011 new/revised 

codes and their respective source codes 

for determining the interim final CY 

2011 malpractice RVUs. We are also 

posting this crosswalk on the CMS Web 

site under the downloads for the CY 

2011 PFS final rule with comment 

period at: http://www.cms.gov/ 

PhysicianFeeSched/PFSFRN/ 

list.asp#TopOfPage. 

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BILLING CODE 4120–01–C 

3. Revised Malpractice RVUs for 

Selected Disc Arthroplasty Services 

As discussed in the CY 2010 PFS 

proposed rule (74 FR 33539), we assign 

malpractice RVUs to each service based 

upon a weighted average of the risk 

factors of all specialties that furnish the 

service. For the CY 2010 review of 

malpractice RVUs, we used CY 2008 

Medicare payment data on allowed 

services to establish the frequency of a 

service by specialty. CPT code 22856 

(Total disc arthroplasty (artificial disc), 

anterior approach, including discectomy 

with end plate preparation (includes 

osteophytectomy for nerve root or spinal 

cord decompression and 

microdissection), single interspace, 

cervical) had zero allowed services for 

CY 2008. Therefore, our contractor 

initially set the level 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. 

We proposed to adopt our contractor’s 

initial malpractice RVUs for CPT code 

22856 in the CY 2010 proposed rule. 

Application of the average physician 

risk factor would have resulted in a 

significant decrease in malpractice 

RVUs for CPT code 22856 in CY 2010. 

Several commenters on the CY 2010 

PFS proposed rule expressed concern 

regarding the proposed malpractice 

RVUs for CPT code 22856, which 

represented a proposed reduction of 

more than 77 percent. The commenters 

stated that this service is predominantly 

furnished by neurosurgeons and 

orthopedic surgeons. Given the high risk 

factors associated with these specialty 

types and the changes in malpractice 

RVUs for comparable services, the 

commenters stated that a reduction in 

the malpractice RVUs of this magnitude 

for CPT code 22856 could not be 

correct. 

After consideration of the public 

comments, for CY 2010, we set the risk 

factor for CPT code 22856 as the 

weighted average risk factor of six 

comparable procedures mentioned by 

the commenters: CPT code 22554 

(Arthrodesis, anterior interbody 

technique, including minimal 

discectomy to prepare interspace (other 

than for decompression); cervical below 

C2); CPT code 22558 (Arthrodesis, 

anterior interbody technique, including 

minimal discectomy to prepare 

interspace (other than for 

decompression); lumbar); CPT code 

22857 (Total disc arthroplasty (artificial 

disc), anterior approach, including 

discectomy to prepare interspace (other 

than for decompression), single 

interspace, lumbar); CPT code 22845 

(Anterior instrumentation; 2 to 3 

vertebral segments (list separately in 

addition to code for primary 

procedure)); CPT code 63075 

(Discectomy, anterior, with 

decompression of spinal cord and/or 

nerve root(s), including 

osteophytectomy; cervical, single 

interspace); and CPT code 20931 

(Allograft for spine surgery only; 

structural (list separately in addition to 

code for primary procedure)). The 

weighted average risk factor for these 

services is 8.4. 

Since publication of the CY 2010 PFS 

final rule with comment period, 

stakeholders have mentioned that we 

made significant changes to the 

malpractice RVUs for CPT code 22856 

in CY 2010. The commenters also 

brought to our attention that other 

services are clinically similar to CPT 

code 22856 and have similar work RVUs 

and, therefore, some stakeholders 

believe these services should all have 

similar malpractice RVUs. Services 

mentioned by the stakeholders that are 

clinically similar to CPT code 22856 

include CPT code 22857; CPT code 

22861 (Revision including replacement 

of total disc arthroplasty (artificial disc), 

anterior approach, single interspace; 


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cervical); CPT code 22862 (Revision 

including replacement of total disc 

arthroplasty (artificial disc) anterior 

approach, lumbar); CPT code 22864 

(Removal of total disc arthroplasty 

(artificial disc), anterior approach, 

single interspace; cervical); and CPT 

code 22865 (Removal of total disc 

arthroplasty (artificial disc), anterior 

approach, single interspace; lumbar). 

After further review of this issue, for 

CY 2011 we proposed to apply the same 

risk factor used for CPT code 22856 to 

certain other services within this family 

of services (CPT codes 22857 through 

22865) for which there were no allowed 

services in CY 2008. CPT codes 22861 

and 22864 had zero allowed services in 

CY 2008 and our contractor initially set 

their malpractice RVUs in the same way 

as it did for CPT code 22856. Therefore, 

for CY 2011 we proposed to assign the 

weighted average risk factor used for 

CPT code 22856 (that is, the weighted 

average of the risk factors for CPT codes 

20931, 22554, 22558, 22845, 22857, and 

63075) to CPT codes 22861 and 22864. 

However, CPT codes 22857, 22862, and 

22865 are low volume services (allowed 

services under 100). Our policy for low 

volume services is to apply the risk 

factor of the dominant specialty as 

indicated by our claims data. Thus, for 

CY 2011 we proposed to continue to 

apply our policy for low volume 

services to CPT codes 22857, 22862, and 

22865. 

Comment: A few commenters 

expressed support for the proposed 

changes in malpractice RVUs for disc 

arthroplasty services that are similar to 

CPT code 22856. One commenter urged 

CMS to finalize the proposal in the CY 

2011 PFS final rule. 

Response: We appreciate the 

commenters’ support for our proposal. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

apply the same risk factor used for CPT 

code 22856 to CPT codes 22861 and 

22864 for purposes of setting the 

malpractice RVUs for these codes prior 

to the next 5-Year Review of malpractice 

RVUs. 

C. 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: The work, practice 

expense (PE), and malpractice 

components. 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 would reflect a 

‘‘global’’ concept in which pre-operative 

and post-operative physicians’ services 

related to the procedure would also be 

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. Finally, on March 23, 

2010, the ACA was enacted, further 

requiring the Secretary to periodically 

review and identify potentially 

misvalued codes and make appropriate 

adjustments to the relative values of 

those services identified as being 

potentially misvalued. Section 3134(a) 

of the ACA added a new section 

1848(c)(2)(K) of 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 ACA also added a new 

section 1848(c)(2)(L) of the Act which 

requires the Secretary to develop a 

validation process to validate the RVUs 

of potentially misvalued codes under 

the PFS and make appropriate 

adjustments. 

As discussed in section I.A.1. of this 

final rule with comment period, we 

establish physician work RVUs for new 

and revised codes based on our review 

of recommendations received from the 

AMA RUC. The AMA RUC also 

provides recommendations to CMS 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 CMS for work RVUs, the AMA RUC’s 

Practice Expense Subcommittee reviews 

direct PE (clinical labor, medical 

supplies, and medical equipment) for 

individual services and examines the 

many broad methodological issues 

relating to the development of PE RVUs. 

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, and 

publish the explanation for the basis of 

these adjustments 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. 

2. Identifying, Reviewing, and 

Validating the RVUs of Potentially 

Misvalued Services Under the PFS 

a. Background 

In its March 2006 Report to 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, 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 required to perform it. 

Over time, skill, and stress involved 

may decline as physicians become more 

familiar with the service and more 

efficient at providing it. The amount of 

physician work needed to furnish an 

existing service may decrease when new 

technologies are incorporated. Services 

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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 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 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 of the 

ACA) directed the Secretary to 

specifically examine potentially 

misvalued services in seven categories 

as follows: 

(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 since the implementation of 

the RBRVS (the so-called ‘‘Harvardvalued codes’’). 

(7) Other codes determined to be 

appropriate by the Secretary. 

Section 1848(c)(2)(K)(iii) of the Act 

(as added by section 3134 of the ACA) 

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 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. Finally, section 

1848(c)(2)(K)(iii)(V) of the Act (as added 

by section 3134 of the ACA) 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) (as added by section 

3134 of the ACA), and we plan to 

continue our work examining 

potentially misvalued codes in these 

areas over the upcoming years, 

consistent with the new legislative 

mandate on this issue. In the current 

process, the AMA RUC reviews 

potentially misvalued codes that are 

identified either by CMS or through its 

own processes and recommends revised 

work RVUs and/or direct PE inputs for 

those codes to CMS. CMS then assesses 

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, CMS and the AMA RUC 

have identified over 700 potentially 

misvalued codes. 

For example, in regard to the first 

category (codes and families of codes for 

which there has been the fastest 

growth), for CY 2009 CMS identified 

over 100 potentially misvalued codes 

for which an analysis of the utilization 

data showed an annual growth in 

allowed services of 10 percent (or more) 

for 3 consecutive years (73 FR 38586). 

Each of these codes had allowed charges 

of $1 million or more in CY 2007. We 

published this list in the CY 2009 PFS 

proposed rule (73 FR 38586 through 

38589) and requested that the AMA 

RUC immediately begin a review of the 

codes on this list. Meanwhile, in 

parallel with CMS’ efforts, the AMA 

RUC also initiated processes to identify 

and review potentially misvalued codes 

on an ongoing basis using certain 

screens, including screens for ‘‘CMS 

fastest growing procedures’’ and ‘‘high 

volume growth.’’ Both of these AMA 

RUC screens are applicable to the first 

category of potentially misvalued codes 

specified in the ACA. We plan to 

continue to analyze Medicare claims 

data over future years to identify 

additional services that exhibit rapid 

growth and high Medicare expenditures 

for referral to the AMA RUC for review 

as potentially misvalued codes. 

Pertaining to the second category 

specified in section 1848(c)(2)(K)(ii) of 

the Act (as added by section 3134 of the 

ACA) (codes or families of codes that 

have experienced substantial changes in 

practice expenses), in CY 2009 we 

requested that the AMA RUC continue 

its review of direct PE inputs, focusing 

particularly on high-volume codes 

where the PE payments are increasing 

significantly under the transition to the 

new PE methodology (73 FR 38589). 

The AMA RUC has responded by 

sending CMS recommendations for 

revised direct PE inputs for codes 

identified for PE review on an ongoing 

basis. 

Additionally in CY 2009, we began an 

initiative to review and update the 

prices for high-cost supplies in order to 

ensure the accuracy and completeness 

of the direct PE inputs. We discuss our 

most recent efforts in refining the 

process to update the prices of high-cost 

supplies in section II.C.5. of this final 

rule with comment period. 

For the third category of potentially 

misvalued codes identified in section 

1848(c)(2)(K)(ii) (as added by section 

3134 of the ACA) (codes that are 

recently established for new 

technologies or services), the AMA RUC 

routinely identifies such codes through 

a screen based on 3 years of Medicare 

claims data, and sends CMS 

recommendations for revised work 

RVUs and/or direct PE inputs for these 

codes on an ongoing basis. The AMA 

RUC may determine that a code for a 

new service requires reevaluation or 

does not require reevaluation, or it may 

conclude, on a case-by-case basis, that 

more than 3 years of claims data are 

necessary before the code can be 

reviewed. In that case, it would 

determine the appropriate future 

timeframe for review. 

We also note that in its June 2008 

Report to Congress entitled ‘‘Reforming 

the Health Care System’’ and in the 

context of a discussion about primary 

care, MedPAC acknowledges, ‘‘* * * 

Efficiency can improve more easily for 

other types of services, such as 

procedures, with advances in 

technology, technique, and other 

factors. Ideally, when such efficiency 

gains are achieved, the fee schedule’s 

relative value units (RVUs) for the 

affected services should decline 

accordingly, while budget neutrality 

would raise the RVUs for the fee 

schedule’s primary care services.’’ (page 

27). Section II.C.5. of this final rule with 

comment period includes a discussion 

regarding periodic updates to the costs 

of high-cost supplies. This discussion is 

highly relevant to new technology 

services, where growth in volume of a 

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service as it diffuses into clinical 

practice may lead to a decrease in the 

cost of expensive supplies. We also 

expect that other efficiencies in 

physician work and PE may be achieved 

after an initial period of relative 

inefficiency that reflects the ‘‘learning 

curve.’’ We plan to pay particular 

attention to the work values and direct 

PE inputs for these new services and the 

AMA RUC’s periodic review process to 

ensure that any efficiencies are captured 

under the PFS over time, recognizing 

that the appropriate timing for revaluing 

these services needs to be considered on 

a case-by-case basis depending on the 

growth rate in service volume. 

We have also addressed the fourth 

category (multiple codes that are 

frequently billed in conjunction with 

furnishing a single service) in 

rulemaking prior to the enactment of the 

ACA. As discussed in the CY 2009 PFS 

proposed rule (73 FR 38586), we have 

a longstanding policy of reducing 

payment for multiple surgical 

procedures performed on the same 

patient, by the same physician, on the 

same day. Over the ensuing years, the 

multiple procedure payment reduction 

(MPPR) policy has been extended to a 

number of nuclear diagnostic and 

diagnostic imaging procedures. We 

continue our work to recognize 

efficiencies in this area with a new CY 

2011 policy to expand the MPPR policy 

to additional combinations of imaging 

services and to therapy services for CY 

2011 as described in section II.C.4. of 

this final rule with comment period. 

We note the AMA RUC has also 

established a screen to identify services 

performed by the same physician on the 

same date of service 95 percent of the 

time or more. Over the past 2 years, the 

CPT Editorial Panel has established new 

bundled codes to describe a 

comprehensive service for certain 

combinations of these existing services 

that are commonly furnished together, 

and the AMA RUC has recommended 

work values and direct PE inputs to 

CMS for these comprehensive service 

codes that recognize the associated 

efficiencies. We look forward to working 

with the AMA RUC in this joint effort 

to examine codes commonly reported 

together and more appropriately value 

common combinations services. 

We address the fifth category of 

potentially misvalued codes (codes with 

low relative values, particularly those 

that are often billed multiple times for 

a single treatment) in section II.C.3.b. of 

this final rule with comment period. 

That is, we have provided a list of 

services with low work RVUs that are 

commonly reported with multiple units 

in a single encounter and requested that 

the AMA RUC review these codes that 

we have identified as potentially 

misvalued. 

The sixth category (codes which have 

not been subject to review since the 

implementation of the RBRVS (the socalled ‘‘Harvard-valued codes’’)) also 

continues to be addressed by CMS and 

the AMA RUC on an ongoing basis. As 

we noted in the CY 2009 PFS proposed 

rule (73 FR 38589), there were at that 

time approximately 2,900 codes, 

representing $5 billion in annual 

spending, that were originally valued 

using Harvard data and had not 

subsequently been evaluated by the 

AMA RUC. Consequently, in CY 2009, 

we requested that the AMA RUC engage 

in an ongoing effort to review the 

remaining Harvard-valued codes, 

focusing first on the high-volume, lowintensity codes (73 FR 38589). In 

response to our request, the AMA RUC 

initially conducted an analysis of 

Harvard-valued services with utilization 

above 10,000 services per year, which 

resulted in a list of 296 distinct services 

(73 FR 69883). The AMA RUC, in its 

public comment on the CY 2009 

proposed rule, stated that it believes it 

would be effective to limit any review 

to these 296 services and also noted that 

of the 296 services identified, 23 had 

already been identified by another 

screen and were in the process of being 

reviewed (73 FR 69883). To date, the 

AMA RUC has reviewed and submitted 

to CMS recommendations for revised 

work RVUs and/or direct PE inputs for 

a number of Harvard-valued codes, 

prioritizing those codes with utilization 

of over 1 million services. The AMA 

RUC and CMS intend to continue our 

ongoing assessment of Harvard-valued 

codes, next targeting codes with 

utilization of over 100,000 services. 

Finally, the seventh category of 

potentially misvalued codes in section 

1848(c)(2)(K)(ii) (as added by section 

3134 of the ACA) is all other codes 

determined to be appropriate by the 

Secretary. In this category, CMS has 

previously proposed policies and 

requested that the AMA RUC review 

codes for which there have been shifts 

in the site-of-service (site-of-service 

anomalies), as well as codes that qualify 

as ‘‘23-hour stay’’ outpatient services. 

The policies for valuation of both the 

site-of-service anomaly codes and the 

‘‘23-hour stay’’ codes are developed 

further in sections II.C.3.d. and e., 

respectively, of this final rule with 

comment period. For CY 2011, we have 

also identified codes with low work 

RVUs but that are high volume based on 

claims data as another category of 

potentially misvalued codes and 

referred these codes to the AMA RUC 

for review, as discussed in section 

II.C.3.b. of this final rule with comment 

period. In addition, for CY 2011 we 

have newly targeted key codes that the 

AMA RUC uses as reference services for 

valuing other services, termed 

‘‘multispecialty points of comparison’’ 

services, and referred these to the AMA 

RUC for review as potentially misvalued 

codes as described in section II.C.3.a. of 

this final rule with comment period. 

Finally, we note the AMA RUC has also 

established screens to identify 

potentially misvalued codes in 

additional categories, including codes 

with a high intra-service work per unit 

of time (IWPUT) and codes representing 

services that had been surveyed by one 

specialty, but are now performed by a 

different specialty. We will continue to 

review AMA RUC recommendations for 

revised work RVUs and/or direct PE 

inputs for codes that fall into these 

categories. 

As a result of the combined efforts of 

CMS and the AMA RUC to address 

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 new 

recommendations for revised work 

RVUs and/or PE inputs to CMS as 

discussed in the CY 2010 PFS final rule 

with comment period (74 FR 61778). 

Upon review of the AMA RUCrecommended work RVUs, CMS 

accepted the majority of the values as 

appropriate adjustments to the RVUs 

under the PFS, in accordance with 

section 1848(c) of the Act. However, for 

a number of codes, mainly the site-ofservice anomaly codes, we indicated 

that although we would accept the AMA 

RUC valuations for these codes on an 

interim basis through CY 2010, we had 

ongoing concerns about the 

methodology used by the AMA RUC to 

review these services (73 FR 69883 and 

74 FR 61776 through 61778, 

respectively). In the CY 2010 PFS final 

rule with comment period, we requested 

that the AMA RUC reexamine the siteof-service anomaly codes and use the 

building block methodology to revalue 

the services (74 FR 61777). In that same 

rule, we also stated that we would 

continue to examine these codes and 

consider whether it would be 

appropriate to propose additional 

changes in future rulemaking. We 

discuss our CY 2011 proposals with 

respect to these codes in section II.C.3.d. 

of this final rule with comment period. 

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c. Validating RVUs of Potentially 

Misvalued Codes 

In addition to identifying and 

reviewing potentially misvalued codes, 

section 1848(c)(2)(L) (as added by 

section 3134 of the ACA) specifies that 

the Secretary shall establish a formal 

process to validate relative value units 

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 (as 

added by section 3134 of the ACA). 

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. Currently, while CMS does 

assess the AMA RUC-recommended 

work RVUs to determine if the 

recommendations constitute appropriate 

adjustments to the RVUs under the PFS, 

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 (as 

added by section 3134 of the ACA). 

Therefore, 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 were 

interested in public comments regarding 

approaches, including the use of time 

and motion studies, to validate 

estimates of physician time and 

intensity that are factored into the work 

RVUs for services with rapid growth in 

Medicare expenditures, one of the 

categories that the statute specifically 

directs CMS to examine. We indicated 

that we plan to discuss the validation 

process in a future PFS rule once we 

have considered the matter further in 

conjunction with any public comments 

and other input from stakeholders that 

we receive. 

Comment: 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 CMS to 

rely solely on the AMA RUC to provide 

valuations for services under the PFS. A 

number of commenters expressed the 

belief that since CMS has reviewed the 

AMA RUC recommendations for codes 

and generally accepted these valuations 

in the past, these actions constitute a 

‘‘CMS validation process.’’ The 

commenters asserted that this current 

‘‘CMS validation process’’ more than 

meets the requirement of section 

1848(c)(2)(L) of the Act (as added by 

section 3134 of the ACA). 

In addition, 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. 

The commenters generally opposed 

applying different methodologies to 

valuing different services under the PFS 

and supported using a consistent 

methodology for all codes. Some 

commenters observed that it would be 

extremely difficult for CMS to establish 

a process by which to validate a sample 

of work RVUs under the PFS because of 

the relative nature of the system. 

Specifically, one commenter noted that 

the ‘‘advantages of a relative system are 

considerable—they allow scaling based 

on available funds and make it far easier 

for a payer such as Medicare to set rates 

for multiple services with a single 

adjustment to the conversion factor. 

However, one disadvantage of a relative 

system is that it cannot be externally 

validated unless all components are 

included in the validation. Services 

cannot be examined for absolute 

accuracy, only for relative precision. If 

we identify some component of the 

calculation used to generate the RVU 

that is incorrect, it is impossible to 

know whether this is a systemic error or 

an issue with an individual code. If it 

is a systemic error, then it does not 

invalidate the relative value system, 

which merely must operate on an even 

playing field.’’ That is, many 

commenters believe that as long as 

appropriate relativity is maintained in 

the work RVUs for services valued 

under the PFS, the specific methodology 

for valuing services is less important. 

Accordingly, many commenters 

expressed support for the AMA RUC’s 

use of ‘‘magnitude estimation’’ to 

develop the recommended value for a 

service and urged CMS to accept the 

AMA RUC’s recommendations as the 

most informed and best estimation of 

the true value of physician work for a 

service. 

In contrast, some commenters 

declared that ‘‘the flaws inherent in the 

RUC system are the lack of 

accountability and transparency.’’ These 

commenters believe that the AMA 

RUC’s composition as a professional 

panel puts cognitive services at a 

disadvantage and suggested that ‘‘the 

composition of the RUC needs to be 

modified to more accurately reflect the 

desired workforce composition. At 

present primary care specialties are 

under-represented which we [the 

commenters] believe contributes to the 

overvaluation of procedural codes and 

undervaluation of cognitive codes.’’ 

Similarly, other commenters noted that 

while certified registered nurse 

anesthetists (CRNAs) furnished 

approximately 32 million anesthesia 

services in the United States annually 

and can bill Medicare directly for their 

services, ‘‘the AMA RUC excludes 

CRNAs from directly participating in its 

deliberations because CRNAs are not 

physicians.’’ These commenters noted 

that ‘‘without fair representation by all 

specialties that bill Part B directly, CMS’ 

reliance on the AMA–RUC as 

representing the professional views and 

knowledge of all healthcare specialties 

is deeply flawed.’’ The commenters also 

advised that ‘‘while the RUC relies on 

persuasion and brokering deals, RVUs 

need to be validated empirically.’’ In 

general, these commenters believe that 

since section 1848(c)(2)(L) of the Act (as 

added by section 3134 of the ACA) 

expressly specifies that CMS has the 

authority to conduct surveys and 

studies and collect data, CMS should 

develop a process that uses empirical 

evidence as the basis for validation of 

work RVUs. 

Response: We agree with the 

commenters that the work before us to 

develop a formal validation process as 

specified by section 1848(c)(2)(L) of the 

Act (as added by section 3134 of the 

ACA) will be a challenging but 

worthwhile effort to ensure accurate 

valuation of physician work under the 

PFS. While we have reviewed AMA 

RUC recommendations for codes and 

frequently accepted these valuations in 

the past, we disagree with the 

commenters’ assertion that these actions 

constitute a formal CMS validation 

process as envisioned by section 

1848(c)(2)(L) of the Act (as added by 

section 3134 of the ACA). Section 

1848(c)(2)(L) of the Act (as added by 

section 3134 of the ACA) clearly 

specifies a new requirement that ‘‘the 

Secretary shall establish a process to 

validate relative value units under the 

fee schedule.’’ While we solicited 

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comments on the possibility of using 

time and motion studies to support a 

future validation process, we 

understand that these studies would 

require significant resources and we 

remain open to suggestions for other 

approaches to developing a validation 

process. 

In response to the commenters who 

raised the issue of the AMA RUC’s most 

commonly used approach for valuing 

codes, referred to as ‘‘magnitude 

estimation,’’ we note that the AMA RUC 

does not rely on a single consistent 

methodology to value codes. Based on 

our historical and current review of the 

AMA RUC recommendation summaries 

which accompany the work RVU 

recommendations for each code newly 

valued or revalued by the AMA RUC 

each year, we have noticed that the 

AMA RUC appears to use a variety of 

methodologies in its valuation process. 

For some codes, the AMA RUC uses 

magnitude estimation in conjunction 

with survey data from surveys 

conducted by the specialty societies to 

support the values. For other codes, the 

AMA RUC uses magnitude estimation to 

override the results of the survey data, 

recommending to CMS a value that is 

not based on survey data, but rather, 

justified in terms of its appropriate 

relativity within the system to other 

similar services. The AMA RUC may 

also elect to use a crosswalk approach 

in valuing a code by applying a work 

value from a currently valued code to 

the code under review based on the 

clinical similarity of the procedures or 

explicit considerations of pre-, intra-, 

and post-service time. In some 

instances, we note that the AMA RUC 

has asserted that it uses the building 

block methodology to value the code, a 

methodology we have historically 

supported (74 FR 61777). Since the 

AMA RUC uses a variety of 

methodologies for valuing codes, not 

just magnitude estimation supported by 

survey data, or our recommended 

methodology of valuation based on 

building blocks, we foresee that 

validation of the work RVUs will be 

complex, perhaps requiring an initial 

study of the all the possible valuation 

methodologies currently being 

employed by the AMA RUC so that we 

can better understand how relativity 

between services under the PFS has 

developed and been maintained over 

the years. 

As we have stated previously (69 FR 

66243), because the AMA RUC is an 

independent committee, we are not in a 

position to set the requirements for 

AMA RUC membership regarding 

primary care specialties or other types 

of practitioners. Concerned stakeholders 

should communicate directly with the 

AMA RUC regarding its professional 

composition. We note that we alone are 

responsible for all decisions about 

establishing the RVUs for purposes of 

PFS payment so, while the AMA RUC 

provides us with recommendations 

regarding the work and direct PE inputs 

for new and revised CPT codes in the 

context of its broad expertise, we 

determine the interim final RVUs for all 

new or revised services. Additionally, 

the interim RVUs are subject to public 

comment and we respond to those 

comments in a final rule when we adopt 

the final RVUs for the new and revised 

CPT codes. We believe that the formal 

validation process will further 

complement the ongoing work of the 

AMA RUC to provide recommendations 

to us regarding the valuation of PFS 

services. 

Comment: While a number of 

commenters strongly opposed CMS’ 

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. The commenters 

commended CMS 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 CMS to draw upon in any 

examination of possible approaches to 

developing a formal validation process. 

Furthermore, MedPAC advised that a 

formal validation process should 

include validating the fee schedule’s 

estimates of physician time. MedPAC 

noted that ‘‘Contract research for CMS 

and the Assistant Secretary for Planning 

and Evaluation has shown that some of 

the time estimates are likely too high. In 

addition, the Government 

Accountability Office has found that the 

fee schedule does not adequately 

account for efficiencies occurring when 

a physician furnishes multiple services 

for the same patient on the same day.’’ 

Finally, MedPAC suggested that CMS 

should consider alternative approaches, 

‘‘such as collecting data on a recurring 

basis from a cohort of practices and 

other facilities where physicians and 

nonphysician clinical practitioners 

work.’’ 

Some commenters noted that 

‘‘involving RUC experts, those who are 

most intimately acquainted with and 

possess the deepest level of expertise 

and experience makes the most sense’’ 

and stated that these individuals ‘‘are 

also those best equipped to provide 

insights and guidance to help shape an 

independent validation system.’’ A 

number of commenters asked CMS to 

confirm that stakeholders would be 

given the opportunity to comment on 

any specific proposals for a validation 

process that CMS plans to implement. 

Response: We thank the many 

commenters who generously offered to 

help and provided technical 

suggestions, including the use of 

statistical modeling and possible 

sources of data that we should consider 

in developing a validation process. We 

will review MedPAC’s suggestions to 

examine physician time in the formal 

validation process. We will also 

consider the commenters’ 

recommendation that we include the 

AMA RUC and other professional 

groups who also have a stake in 

ensuring appropriate payment for 

practitioners’ services. 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 (as added by section 3134 of 

the ACA). We note that MedPAC, in 

providing comments to the CY 2011 PFS 

proposed rule, ‘‘strongly supports efforts 

to improve the accuracy of the fee 

schedule’s RVUs.’’ 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 

that we have received in response to our 

solicitation in the CY 2011 proposed 

rule as well as other input from 

stakeholders. Moreover, 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 any policies. 

3. CY 2011 Identification and Review of 

Potentially Misvalued Services 

In this section, we discuss codes that 

may be potentially misvalued according 

to five different criteria: 

• Codes on the multi-specialty points 

of comparison list; 

• Codes with low work RVUs 

commonly billed in multiple units per 

single encounter; 

• Codes with high volume and low 

work RVUs; 

• Codes with site-of-service 

anomalies; and 

• Codes that qualify as ‘‘23-hour stay’’ 

outpatient services. 

a. Codes on the Multispecialty Points of 

Comparison List 

The AMA RUC uses a scale referred 

to as the multispecialty points of 

comparison (MPC) to evaluate the 

reasonableness of a specialty society’s 

recommended RVU value for a service. 

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The MPC list contains reference codes 

of established comparison services that 

are used in the valuation of new codes. 

The current MPC list consists of 316 

codes which the AMA RUC may use to 

compare and contrast the relativity of 

codes under review to existing relative 

values. Since the AMA RUC may use 

the values on the MPC list as a basis for 

relativity when determining the values 

for new, revised, and newly reviewed 

codes (including potentially misvalued 

codes), it is essential that the services on 

the MPC list be appropriately valued 

since any codes misvalued on the MPC 

list could contribute to the misvaluing 

of other codes under review. While we 

believe that the entire MPC list should 

be assessed to ensure that services are 

paid appropriately under the PFS, we 

prioritized the review of the MPC list, 

ranking the codes by allowed service 

units and charges based on CY 2009 

claims data. We proposed to refer the 

codes in Table 9 to the AMA RUC for 

review in CY 2011. 

TABLE 9—CODES ON THE MPC LIST

REFERRED FOR AMA RUC REVIEW

CPT code Short descriptor 

66984 ........ Cataract surg w/iol, 1 stage. 

97110 ........ Therapeutic exercises. 

43239 ........ Upper GI endoscopy, biopsy. 

20610 ........ Drain/inject, joint/bursa. 

78815 ........ Pet image w/ct, skull-thigh. 

45385 ........ Lesion removal colonoscopy. 

45380 ........ Colonoscopy and biopsy. 

11721 ........ Debride nail, 6 or more. 

17000 ........ Destruct premalg lesion. 

92980 ........ Insert intracoronary stent. 

74160 ........ Ct abdomen w/dye. 

71020 ........ Chest x-ray. 

11100 ........ Biopsy, skin lesion. 

66821 ........ After cataract laser surgery. 

52000 ........ Cystoscopy. 

92083 ........ Visual field examination(s). 

73721 ........ Mri jnt of lwr extre w/o dye. 

93010 ........ Electrocardiogram report. 

77334 ........ Radiation treatment aid(s). 

92250 ........ Eye exam with photos. 

95810 ........ Polysomnography, 4 or more. 

77003 ........ Fluoroguide for spine inject. 

11056 ........ Trim skin lesions, 2 to 4. 

76700 ........ Us exam, abdom, complete. 

77290 ........ Set radiation therapy field. 

77300 ........ Radiation therapy dose plan. 

43235 ........ Uppr gi endoscopy, diagnosis. 

71275 ........ Ct angiography, chest. 

95900 ........ Motor nerve conduction test. 

31231 ........ Nasal endoscopy, dx. 

95165 ........ Antigen therapy services. 

94060 ........ Evaluation of wheezing. 

31575 ........ Diagnostic laryngoscopy. 

Comment: While some commenters 

agreed with CMS that the entire MPC 

list should be assessed to ensure that 

services are paid appropriately under 

the PFS, and supported the proposal 

that the AMA RUC review the services 

listed in Table 9, a number of other 

commenters expressed surprise that 

CMS seemed to be suggesting that any 

code on the MPC list could be classified 

as potentially misvalued. Many 

commenters noted that the MPC list of 

codes is considered the ‘‘gold standard’’ 

within the PFS and it is used to help 

judge the appropriate relativity of 

procedures across specialties. A number 

of commenters assured CMS that the 

codes on the MPC list have been 

thoroughly vetted and, therefore, these 

commenters took issue with CMS for 

implying that the codes could somehow 

be considered potentially misvalued. 

Specifically, one commenter noted, 

‘‘[t]he assumption of the specialties, the 

RUC and CMS has been that these 

services are appropriately valued and 

well established.’’ Another commenter 

expressed the concern as follows: 

‘‘[c]hallenging the rank order of the MPC 

list essentially negates 20 years of RUC 

work. Obtaining new data to validate 

the old data inevitably leads to the 

problem of what should be done if the 

data yield different results. Is there any 

reason to believe that a newer survey is 

a more accurate survey, or that the data 

analysis and subsequent opinion of the 

current or future RUCs will be more 

valid than that of previous RUCs? 

Admittedly data collection methods 

have become more refined in the past 20 

years, but that neither means nor 

implies that relativity amongst 

physician services has changed.’’ Some 

commenters reminded CMS that the 

AMA RUC is already planning to review 

some codes on the MPC list in the 

coming year, while other commenters 

noted that some of the codes on the 

MPC list have been reviewed by the 

AMA RUC within the past 6 years. 

Some commenters did not believe that 

some of the well-established services on 

the MPC list would need another review 

and that the resources required to rereview such services could be better 

used elsewhere. Furthermore, some 

commenters believe that if a code has 

been surveyed as part of the potentially 

misvalued services initiative during the 

last 5 years and it is identified again 

using a different screen, that it need not 

be resurveyed again. 

Finally, several commenters noted 

that while reviewing all the codes on 

the MPC list would ‘‘be a substantial 

undertaking for the RUC, properly 

valuing these services will help restore 

equity in the physician payment 

system.’’ The commenters further 

suggested that CMS should specify to 

the AMA RUC what it considers good 

survey methodology, including the use 

of peer review and time studies. 

Response: We note that the vast 

majority of commenters, whether they 

supported or opposed our proposal, 

acknowledged the significant and 

central role that the MPC list plays in 

the valuation of services under the PFS. 

Because it is currently the ‘‘gold 

standard’’ to which other codes, across 

specialties, are compared, we agree with 

the commenters who suggested that 

codes on this list should be vetted, 

though we disagree that we should 

assume this has been done or occurs 

automatically and systematically. We 

also acknowledge that the AMA RUC 

recently has reviewed some of the codes 

and is planning to review more codes on 

the MPC list. Our proposal suggested 

prioritizing the review of the codes by 

ranking them according to utilization 

which, in our view, would potentially 

provide the most immediate benefit to 

the system. 

If a code on the MPC list has not been 

reviewed recently—certainly more 

recently than 6 years ago—we believe 

that the code is vulnerable to being 

potentially misvalued and that the 

misvaluation of an MPC code could 

disproportionately affect the correct 

valuation of other related services under 

the PFS. Given the rapid changes in 

medical practice, we have no reason to 

believe that the relativity of the MPC 

codes would not have changed over the 

past 20 years and we would expect that 

more recent survey data would more 

accurately reflect the physician work in 

current medical practice. If the codes 

are resurveyed and newer more accurate 

data are available, we would support 

using the most recent available data to 

value physician work under the PFS, 

which is consistent with our general 

policy to use the most current data 

whenever possible and practicable to 

update the PFS. 

Given the evolving review process of 

the AMA RUC over the past several 

years, CMS’ strong interest in ensuring 

current and appropriate physician work 

values for PFS services, and the 

increased emphasis on revaluing 

established services that are potentially 

misvalued, we are requesting that the 

AMA RUC provide a current and 

comprehensive recommendation on the 

appropriate physician work value, 

including describing and affirming the 

methodology for the recommended 

work value, for all of the codes listed in 

Table 9. To the extent the AMA RUC 

chooses to limit its work in reexamining 

MPC codes that have recently been 

evaluated, consistent with our usual 

practice, we will consider the context 

when we evaluate the AMA RUC’s 

recommendation for the value of the 

code. 

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Although valuation is ultimately our 

responsibility, the AMA RUC and CMS 

remain partners in ensuring the 

appropriate valuation of physician work 

for services under the PFS and we 

believe our proposal serves to enhance 

this process. Accordingly, after 

consideration of the public comments 

we received, we are finalizing our CY 

2011 proposal and we look forward to 

receiving the AMA RUC’s 

recommendations for the codes listed in 

Table 9. 

b. Codes With Low Work RVUs 

Commonly Billed in Multiple Units Per 

Single Encounter 

Consistent with section 

1848(c)(2)(K)(ii) of the Act (as added by 

section 3134 of the ACA) which 

identifies categories of potentially 

misvalued codes for our review, we 

believe services with low work RVUs 

that are commonly billed with multiple 

units in a single encounter are an 

additional appropriate category for 

identifying potentially misvalued codes. 

An example of a high multiple/low 

work RVU service is CPT code 95004 

(Percutaneous tests (scratch, puncture, 

prick) with allergenic extracts, 

immediate type reaction, including test 

interpretation and report by a physician, 

specify number of tests). For purposes of 

compiling a list of the high multiple/ 

low work RVU services, we defined a 

high multiple service as one that is 

commonly performed in multiples of 5 

or more per day. Then, we selected from 

high multiple services with work RVUs 

of less than or equal to 0.5 RVUs. We 

note that in selecting 5 per day as the 

minimum threshold for the number of 

common services performed in a 

multiple service encounter, we intended 

to establish a meaningful threshold 

which, in conjunction with the 

threshold for work RVUs of 0.5 RVUs or 

less, would produce a reasonable 

number of services for the RUC to 

review that have substantial total work 

RVUs for the comprehensive service 

furnished during a single treatment. 

That is, as a general example, with a 

work RVU threshold of 0.5 RVUs and a 

multiple threshold of 5 per day, the total 

work RVUs for a typical treatment 

would equate to 2.5 RVUs, which is 

approximately comparable to a high 

level office visit, an interpretation of a 

complex imaging procedure, or a minor 

surgical procedure. 

In the CY 2011 PFS proposed rule (75 

FR 40069), we requested that the AMA 

RUC review the codes in Table 10. 

TABLE 10—CODES WITH LOW WORK

RVUS THAT ARE COMMONLY BILLED

IN MULTIPLE UNITS REFERRED FOR

AMA RUC REVIEW

CPT code Short descriptor 

95904 ........ Sense nerve conduction test. 

17003 ........ Destruct premalg les, 2–14. 

95004 ........ Percut allergy skin tests. 

11101 ........ Biopsy, skin add-on. 

95024 ........ Id allergy test, drug/bug. 

76000 ........ Fluoroscope examination. 

95144 ........ Antigen therapy services. 

95010 ........ Percut allergy titrate test. 

88300 ........ Surgical path, gross. 

95027 ........ Id allergy titrate—airborne. 

95015 ........ Id allergy titrate—drug/bug. 

95148 ........ Antigen therapy services. 

c. Codes With High Volume and Low 

Work RVUs 

We believe that codes that have low 

work RVUs but are high volume based 

on claims data are another category of 

potentially misvalued codes. Although 

these codes have low work RVUs (less 

than or equal to 0.25 RVUs), the high 

utilization of these codes represents 

significant expenditures under the PFS 

such that their appropriate valuation is 

especially important. Table 11 contains 

a list of such codes and we requested 

that the AMA RUC review these codes 

in the CY 2011 PFS proposed rule (75 

FR 40069). 

TABLE 11: CODES WITH LOW WORK

RVUS THAT ARE HIGH VOLUME REFERRED FOR AMA RUC REVIEW

CPT code Short descriptor 

71010 .......... Chest x-ray. 

73510 .......... X-ray exam of hip. 

97035 .......... Ultrasound therapy. 

88313 .......... Special stains group 2. 

73630 .......... X-ray exam of foot. 

72100 .......... X-ray exam of lower spine. 

73030 .......... X-ray exam of shoulder. 

73562 .......... X-ray exam of knee, 3. 

73560 .......... X-ray exam of knee, 1 or 2. 

94010 .......... Breathing capacity test. 

77052 .......... Comp screen mammogram 

add-on. 

88304 .......... Tissue exam by pathologist. 

73564 .......... X-ray exam, knee, 4 or more. 

72170 .......... X-ray exam of pelvis. 

74000 .......... X-ray exam of abdomen. 

73610 .......... X-ray exam of ankle. 

11719 .......... Trim nail(s). 

73620 .......... X-ray exam of foot. 

92567 .......... Tympanometry. 

73110 .......... X-ray exam of wrist. 

73130 .......... X-ray exam of hand. 

93701 .......... Bioimpedance, cv analysis. 

72040 .......... X-ray exam of neck spine. 

92543 .......... Caloric vestibular test. 

Comment: A number of commenters 

agreed with CMS’ proposal for the AMA 

RUC to review codes with low work 

RVUs that are commonly billed with 

multiple units, and codes with high 

volume and low work RVUs. Other 

commenters did not support these 

proposals based on a belief that just 

because a code has low work RVUs, the 

conclusion should not necessarily be 

drawn that the code is potentially 

misvalued. 

Response: While we do not believe 

that low work RVUs automatically 

indicate that the code is misvalued, we 

believe that some codes in this category 

may be vulnerable to being potentially 

misvalued because they have not been 

subject to review recently, there are 

particular challenges associated with 

establishing appropriate low work RVUs 

for services, and these services would 

not likely be subject to AMA RUC 

revaluation without CMS’ 

recommendation. Accordingly, after 

consideration of the public comments 

we received, we are finalizing our CY 

2011 proposal and we look forward to 

receiving the AMA RUC’s 

recommendation for the codes listed in 

Tables 10 and 11. 

d. Codes With Site-of-ServiceAnomalies 

In previous years, we requested that 

the AMA RUC review codes that, 

according to the Medicare claims 

database, have experienced a change in 

the typical site of service since the 

original valuation of the code. For 

example, we have found services that 

originally were furnished in the 

inpatient setting but for which current 

claims data show the typical case has 

shifted to being furnished outside the 

inpatient setting. Since the procedures 

were typically performed in the 

inpatient setting when the codes were 

originally valued, the work RVUs for 

these codes would have been valued to 

include the inpatient physician work 

furnished, as well as to reflect the 

intensive care and follow-up normally 

associated with an inpatient procedure. 

If the typical case for the procedure has 

shifted from the inpatient setting to an 

outpatient or physician’s office setting, 

it is reasonable to expect that there have 

been changes in medical practice, and 

that such changes would represent a 

decrease in physician time or intensity 

or both. The AMA RUC reviewed and 

recommended to CMS revised work 

RVUs for 29 codes for CY 2009 and 11 

codes for CY 2010 that were identified 

as having site-of-service anomalies. 

In the CY 2010 PFS proposed and 

final rules with comment period (74 FR 

33556 and 74 FR 61777, respectively), 

we encouraged the AMA RUC to utilize 

the building block methodology when 

revaluing services with site-of-service 

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anomalies. Specifically, where the AMA 

RUC has determined in its review that 

changes in the inclusion of inpatient 

hospital days, office visits, and hospital 

discharge day management services 

(that is, the ‘‘building blocks’’ of the 

code) are warranted in the revaluation 

of the code, we asked the AMA RUC to 

adjust the site-of-service anomaly code 

for the work RVUs associated with those 

changes. 

Additionally, we suggested that in 

cases where the AMA RUC has adjusted 

the pre-service, intra-service and postservice times of the code under review, 

the AMA RUC should also make 

associated work RVU adjustments to 

account for those changes. However, we 

remained concerned that in the AMA 

RUC’s recommendations of the work 

RVUs for the CYs 2009 and 2010 siteof-service anomaly codes, the AMA 

RUC may have determined that 

eliminating or reallocating pre-service 

and post-service times, hospital days, 

office visits, and hospital discharge day 

management services was appropriate to 

reflect the typical case that is now 

occurring in a different setting, but the 

work RVUs associated with those 

changes may not have been 

systematically extracted or reallocated 

from the total work RVU value for the 

service. 

In the CYs 2009 and 2010 PFS final 

rules 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 site-of-service 

anomaly codes on an interim basis 

through CY 2010, we had ongoing 

concerns about the methodology used 

by the AMA RUC to review these 

services. We requested that the AMA 

RUC reexamine the site-of-service 

anomaly codes and use the building 

block methodology to revalue the 

services (74 FR 61777). We also stated 

that we would continue to examine 

these codes and consider whether it 

would be appropriate to propose 

additional changes in future 

rulemaking. 

Accordingly, in preparation for CY 

2011 rulemaking, we conducted a 

comprehensive analysis of the codes 

that the AMA RUC reviewed for CYs 

2009 and 2010 due to site-of-service 

anomaly concerns. We systematically 

applied the reverse building block 

methodology to the 29 codes from CY 

2009 and 11 codes from CY 2010 as 

follows: 

• First, we obtained the original work 

RVU value assigned to the code (this is 

the ‘‘starting value’’) and made a list of 

the building block services with RVUs 

that were originally associated with the 

code (that is, before the AMA RUC 

reviewed the code for site-of-service 

anomalies). 

• Next, we examined the AMA RUCrecommended changes to the building 

blocks of the code. 

• We then deducted the RVUs 

associated with the AMA RUC’s 

recommended eliminations from the 

code’s starting RVU value. 

Generally, the AMA RUC eliminated 

inpatient hospital visit building blocks 

from the value of the code since the siteof-service for the code has shifted from 

the inpatient setting to another setting. 

We noted in some cases, the AMA RUC 

left an inpatient hospital visit in the 

valuation of the code. We believe this is 

inconsistent with the change in the siteof-service to non-inpatient settings. 

Accordingly, we adhered to the 

methodology and deducted the RVUs 

associated with all inpatient hospital 

visits from the starting value. In cases 

where the AMA RUC recommended 

adding or substituting outpatient visits, 

we also added or substituted the RVUs 

associated with those changes to the 

starting value. If the AMA RUC 

recommended changes to the pre-, 

intra-, or post-service times, we 

calculated the incremental change in 

RVUs associated with that time and 

either added or deducted that RVU 

amount from the starting value. We 

noted that the RVU values associated 

with the incremental time change were 

calculated using the intensity associated 

with the particular pre-, intra-, or postperiod. For the intensity of the intraservice period, we utilized the original 

IWPUT associated with the code. The 

AMA RUC generally recommended 

allowing only half of a hospital 

discharge day management service for 

the site-of-service anomaly codes. That 

is, CPT code 99238 (Hospital discharge 

day management; 30 minutes or less) 

has a work RVU value of 1.28; therefore, 

half the value associated with CPT code 

99238 is 0.64. Accordingly, if a code 

had one CPT code 99238 listed as part 

of the original valuation, we deducted 

0.64 RVUs from the starting value. 

We standardized the methodology so 

that each of the site-of-service anomaly 

codes had half of a hospital discharge 

day management service value 

accounted in the valuation. Finally, we 

noted that while we eliminated the 

RVUs associated with all inpatient 

hospital visits built into the code’s 

starting value, because the typical case 

no longer occurs in the inpatient setting, 

we allowed for the possibility that in 

some cases, some part of the work 

which had been furnished in the 

inpatient setting may continue to be 

furnished even in the outpatient setting. 

Therefore, to be conservative in our 

deductions of work RVUs associated 

with the inpatient hospital codes from 

the starting values, we allowed the 

intra-time of any inpatient hospital 

visits included in the original valuation 

to migrate to the post-service period of 

the code. Accordingly, while we 

deducted the full RVUs of an inpatient 

hospital visit from the starting value, we 

added the intra-service time of the 

inpatient hospital visit to the postservice time of the code and accounted 

for the incremental change in RVUs. 

The following description provides an 

example of our methodology. 

CPT code 21025 (Excision of bone 

(e.g., for osteomyelitis or bone abscess); 

mandible) has a starting value of 11.07 

RVUs. Table 12 shows the building 

blocks that are included in the original 

valuation of the code. 

TABLE 12 

Pre-service time 

Median 

intra-service time 

Immediate 

post-service time 99231 99232 99238 99211 99212 99213 Original 

IWPUT 

75 min ..... 120 min .. 43 min .... 1 visit ...........

(0.76 RVUs) 

1 visit ...........

(1.39 RVUs) 

1 visit ...........

(1.28 RVUs) 

2 visits .........

(0.36 RVUs) 

2 visits .........

(0.96 RVUs) 

2 visits .........

(1.94 RVUs) 

0.0145 

The AMA RUC removed two inpatient 

hospital visits and reduced the 

outpatient visits from 6 to 4 visits. Table 

13 shows the building blocks that were 

recommended for CY 2009 by the AMA 

RUC after its review of the code for siteof-service anomalies. 

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TABLE 13 

Pre-service time 

Median 

intra-service time 

Immediate 

post-service time 99231 99232 99238 99211 99212 99213 Original 

IWPUT 

85 min ..... 90 min .... 30 min .... 2 visits ......... 2 visits ......... 0.0530 

Next we calculated the RVUs 

associated with the changes to the 

building blocks recommended by the 

AMA RUC. We note that the immediate 

post-service value of 0.38 RVUs (Table 

14) includes 30 minutes of intra-service 

time from inpatient hospital CPT code 

99231 (Level 1 subsequent hospital care, 

per day). Also, the median intra-service 

value of 0.44 RVUs (Table 14) was 

determined using the starting IWPUT 

value of 0.0145. Additionally, our 

methodology accounted for a half of a 

hospital discharge day management 

service (CPT code 99238) for the site-ofservice anomaly code. Table 14 shows 

the RVU changes to the building blocks 

that were calculated based on the 

methodology discussed above. 

TABLE 14 

Pre-service 

time 

Median intraservice time 

Immediate 

post-service 

time 

99231 99232 99238 99211 99212 99213 

0.22 RVUs ...... ¥0.44 RVUs .. 0.38 RVUs ..... ¥0.76 RVUs ¥1.39 RVUs ¥0.64 RVUs ¥0.36 RVUs .....................

In the final step, the RVUs associated 

with the changes to the building blocks 

recommended by the AMA RUC (Table 

14) were deducted from or added to the 

starting value of 11.07 RVUs, which 

resulted in the CY 2011 reverse building 

block value of 8.08 RVUs (11.07 + 0.22– 

0.44 + 0.38 – 0.76 – 1.39 – 0.64 – 0.36 

= 8.08). 

The methodology discussed above 

was applied to each of the site-of-service 

anomaly codes from CYs 2009 and 2010 

and the results are summarized in 

Tables 15 and 16. 

BILLING CODE 4120–01–P 

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BILLING CODE 4120–01–C 

For most codes in Tables 15 and 16, 

the CY 2011 reverse building block 

methodology produced a value that was 

somewhat lower than the AMA RUCrecommended value. While our results 

suggested that the majority of the codes 

with site-of-service anomalies continue 

to be overvalued under the AMA RUC’s 

most recent recommendations, we also 

found that the methodology may 

produce a result that is considerably 

reduced or, in several cases, a negative 

value. We understand that in previous 

years, stakeholders have expressed 

confusion as to why the application of 

a building block methodology would 

produce negative values. We believe in 

some cases, the starting value, that is, 

the original work RVU, may have been 

misvalued using building block inputs 

that were not consistent with the 

service, although the overall work value 

of the code may have been consistent 

with the values for other similar 

services. Moreover, a number of these 

services are the Harvard-valued codes, 

for which the RVUs were established 

many years ago based on historical 

inputs that may no longer be 

appropriate for the code. An attempt to 

extract the RVUs associated with these 

inappropriate inputs through the reverse 

building block methodology could 

produce aberrant results. Furthermore, 

in some cases, we noticed that the 

original IWPUT of the code was 

negative even before the code was 

reviewed by the AMA RUC for a site-ofservice anomaly. A negative value for 

the IWPUT is counterintuitive to the 

IWPUT concept, indicating that the 

code was originally misvalued at the 

building block level. At a minimum, we 

believe that in cases where the reverse 

building block methodology produced 

aberrant results, and where clinical 

review indicated a need for further 

analysis, the codes should be referred 

back to the AMA RUC for review and 

new valuation should be performed 

based on the building block 

methodology. 

We noted the application of the 

reverse building block methodology is 

an objective way to account for changes 

in the resources resulting from the 

change in the site-of-service in which 

the typical service is furnished. 

However, because relative values under 

the PFS are ‘‘relative,’’ that is, where 

work relative value units for a code are 

established relative to work relative 

value units for other codes, the 

recommended methodology of valuing 

services based on input building blocks 

is best applied within the context of the 

AMA RUC discussion. For example, we 

recognize that the AMA RUC looks at 

families of codes and may assign RVUs 

based on a particular code ranking 

within the family. This method of 

valuing services preserves relativity 

within the relative value scale for that 

code family. However, we have stated 

that we believe the relative value scale 

requires each service to be valued based 

on the resources used in furnishing the 

service as specified in section 

1848(c)(1)(A) of the Act, which defines 

the physician work component to 

include ‘‘the portion of the resources 

used in furnishing the service that 

reflects physician time and intensity in 

furnishing the service.’’ Furthermore, 

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.’’ Read together, 

these two sections of the statute support 

our intention to rely on the building 

block methodology to determine 

appropriate work RVUs for codes. 

We noted that we continue to rely on 

the extensive expertise provided by the 

AMA RUC to recommend appropriate 

input building blocks for codes. 

Additionally, the AMA RUC’s unique 

infrastructure and broad perspective 

permits the valuation of a code within 

the context of relativity to the entire 

relative value system. Therefore, we 

believe that the recommended 

methodology of valuing services based 

on input building blocks is best applied 

within the context of the AMA RUC 

discussion. 

Accordingly, in the CY 2011 PFS 

proposed rule (75 FR 40072), we 

requested that the AMA RUC review the 

CPT codes displayed in Tables 15 and 

16. In addition, where the application of 

the CY 2011 reverse building block 

methodology produced an aberrant 

result that is clearly not a reflection of 

physician work for the service, we 

requested that the AMA RUC review the 


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input building blocks and recommend 

an appropriate RVU value that is both 

consistent with the building blocks of 

the code and appropriate relative to the 

values for other codes in the family. For 

other codes where the application of the 

CY 2011 reverse building block 

methodology produced a result that is 

consistent with the physician work for 

the service, we encouraged the AMA 

RUC to confirm the values and 

recommend these work values for CY 

2011. In this way, we hoped to receive 

new AMA RUC recommendations for all 

of the codes in Tables 15 and 16 for CY 

2011. Furthermore, we indicated that if 

the recommendations that we received 

from the AMA RUC were not consistent 

with the building block methodology 

and not appropriate relative to the 

values of other services, and the 

application of the CY 2011 reverse 

building block methodology produced a 

result that CMS medical advisors 

believe is consistent with the work for 

the service, we proposed to adopt the 

CY 2011 reverse building block 

methodology values that are listed in 

Tables 15 and 16 for CY 2011. In cases 

where the reverse building block 

methodology produced a negative work 

value, we suggested that the AMA RUC 

review and revise the building blocks of 

the code so that a new valuation could 

be determined based on the building 

block methodology. For such codes, if 

the revised recommendations that we 

hoped to receive from the AMA RUC 

were still not consistent with the 

building block methodology upon 

revision, because we could not pay for 

these services based on negative work 

RVUs, we proposed to modify the AMA 

RUC-recommended values for these 

codes as CMS determined to be 

clinically appropriate and adopt the 

CMS-modified RVUs on a interim final 

basis for CY 2011. 

In their future work, we urged the 

AMA RUC to use the building block 

methodology when valuing services or 

provide CMS with extensive rationale 

for cases where the AMA RUC believes 

the building block methodology is 

inappropriate for a specific code. Since 

section 1848(c)(2)(L) of the Act (as 

added by section 3134 of the ACA) 

specifies that the Secretary shall 

establish a process to validate work 

RVUs of potentially misvalued codes 

under the PFS, as we have discussed 

earlier in this section, we believe codes 

that are valued using the building block 

methodology would be more likely to 

meet the standards of a systematic RVU 

validation process that could be 

developed in accordance with the 

requirements of the statute. 

Comment: While several commenters 

supported CMS’ recommendation to use 

the reverse building block methodology 

to value physician work for codes 

identified as having site-of-service 

anomalies, the majority of commenters 

strongly opposed the reverse building 

block methodology, expressing concern 

that the methodology produced very 

low or negative work RVUs for a 

number of the codes listed in Tables 14 

and 15. Several letter writing campaigns 

by groups of providers and beneficiaries 

affected by some of the codes listed in 

Tables 14 and 15 produced scores of 

comments expressing confusion and 

alarm that CMS appeared to be on the 

verge of finalizing negative work RVUs. 

Some commenters noted that the values 

calculated by the application of the 

reverse building block methodology 

would result in rank order anomalies 

across the PFS. 

Many commenters reiterated CMS’ 

observation that some of the codes were 

originally Harvard-valued, for which the 

RVUs were established many years ago 

based on historical inputs that may no 

longer be appropriate for the code, and 

an attempt to extract the RVUs 

associated with these inappropriate 

inputs through the reverse building 

block methodology would produce 

aberrant (that is, very low or negative) 

results. Some commenters disagreed 

with CMS’ statement that if the typical 

case for the procedure has shifted from 

the inpatient setting to an outpatient or 

physician’s office setting, it would be 

reasonable to expect that there have 

been changes in medical practice, and 

that such changes would represent a 

decrease in physician time, or intensity, 

or both. These commenters believe that 

that this assumption is fundamentally 

wrong and that the reverse actually may 

be true. One commenter noted, ‘‘When 

a procedure migrates from the inpatient 

to the outpatient setting, the physician 

work and practice expense actually 

increase. The result is more office visits, 

more utilization of office staff, more 

consumption of office supplies, and no 

decrease in legal liability to the 

physician (and in some instances 

increased legal liability as functions 

formerly performed by hospital staff are 

now done by physician office staff).’’ 

A number of commenters asserted 

that any mathematical or computational 

methodology used to value physician 

work is simply absurd. Many 

commenters stated their preference for 

the AMA RUC’s established valuation 

process which the commenters believe 

is based on specialty society survey 

data. Other commenters asserted that 

the AMA RUC’s use of magnitude 

estimation is the only methodology that 

makes sense in assigning physician 

work values to individual services 

because the PFS is a relative system and 

maintaining appropriate relativity 

between the services is paramount in 

valuing physician work. 

Response: We acknowledge that 

commenters overwhelmingly objected to 

the proposed reverse building block 

methodology because, in some cases, it 

produced very low or negative 

physician work values. While we 

explained in the proposed rule (75 FR 

40071 through 40072) the possible 

reasons why negative values could be 

generated in the application of the 

reverse building block methodology, the 

commenters generally disregarded this 

explanation and summarily dismissed 

the methodology as invalid based on the 

reasoning that negative work values are 

absurd. Responding to the commenters 

who were concerned that CMS was 

preparing to implement negative work 

RVUs imminently, we assure the 

commenters that at no time was this a 

possibility, as we made clear in the CY 

2011 PFS proposed rule (75 FR 40072) 

where we acknowledge that we could 

not pay for services based on negative 

work RUVs. As we stated in the 

proposed rule, in cases where the 

reverse building block methodology 

produced a negative work value, we 

suggested that the AMA RUC review 

and revise the building blocks of the 

code so that a new valuation could be 

determined based on the building block 

methodology. We further proposed that 

if we did not believe the AMA RUC 

recommended values were consistent 

with the building block methodology, 

we would modify the recommended 

values as we determined to be clinically 

appropriate and adopt the modified 

RVUs on an interim final basis for CY 

2011. 

The AMA RUC has not provided 

revised work recommendations to us for 

these codes for CY 2011. Therefore, in 

light of the strong public opposition to 

the reverse building block methodology 

and since we remain convinced that the 

values for the codes with site-of-service 

anomalies listed in Tables 14 and 15 

continue to be misvalued based on our 

clinical review of the building blocks for 

those services as recommended 

previously by the AMA RUC, we believe 

that the most appropriate action is to 

continue to await the further AMA RUC 

review of these codes that we requested 

in the CY 2011 PFS proposed rule (75 

FR 40072). However, after consideration 

of the public comments we received, we 

are modifying our CY 2011 proposal and 

we will not apply the reverse building 

block methodology to value any of these 

codes for CY 2011 as we proposed. We 

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are requesting that the AMA RUC 

reconsider its previously recommended 

values that have been applied on an 

interim basis in CYs 2009 and 2010, as 

applicable, and revise the work RVUs to 

better reflect the intensity of the services 

and the revised physician times and 

post-procedure visits included in the 

valuation of these codes. As we stated 

in the CY 2011 PFS proposed rule (75 

FR 40072), we suggest that the AMA 

RUC review and revise the building 

blocks of the codes so that a new 

valuation can be determined based on 

the building block methodology. Until 

we receive the revised values from the 

AMA RUC for CY 2012 and can make 

a determination regarding them, we will 

continue to accept the existing AMA 

RUC-recommended work RVUs listed in 

Tables 14 and 15 on an interim basis for 

CY 2011. We would follow our usual 

method of reviewing the AMA RUC 

recommendations in the context of the 

associated valuation methodologies it 

used for CY 2012 and would either 

accept the recommendations for these 

codes or provide alternative work values 

that would be adopted on an interim 

final basis for CY 2012 and open to 

public comment on the CY 2012 PFS 

final rule with comment period. 

e. Codes With ‘‘23-hour’’ Stays 

In the CY 2010 PFS proposed rule (74 

FR 33557), we requested that the AMA 

RUC review services that are typically 

performed in the outpatient setting and 

require a hospital stay of less than 24 

hours. We stated in the proposed rule 

that we believed these to be primarily 

outpatient services and expressed 

concern that the value of evaluation and 

management (E/M) visits for inpatients 

was inappropriately included in the 

valuation of codes that qualify as ‘‘23- 

hour stay’’ outpatient services. 

We received a number of comments in 

response to the discussion in the CY 

2010 proposed rule. The AMA RUC 

stated that it already values stays of less 

than 23 hours appropriately by reducing 

the hospital discharge day management 

service (that is, CPT code 99238), from 

1 day to a half day. The AMA RUC also 

explained that when the AMA RUC 

refers to 23-hour stay services in 

discussions at AMA RUC meetings, it is 

referring primarily to services that are 

reported in the Medicare claims 

database as typically outpatient 

services, but where the patient is kept 

overnight and, on occasion, even longer 

in the hospital. Because the AMA RUC 

believes the patient stays overnight in 

the hospital, it believes the inclusion of 

inpatient E/M visits to be appropriate in 

the valuation of this category of codes. 

We believe that the 23-hour stay issue 

encompasses several scenarios. The 

typical patient is commonly in the 

hospital for less than 24 hours, which 

often means the patient may indeed stay 

overnight in the hospital. On occasion, 

the patient may stay longer than a single 

night in the hospital; however, in both 

cases, 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. Accordingly, we 

believe that the valuation of the codes 

that fall into the 23-hour stay category 

should not reflect work that is typically 

associated with an inpatient service. For 

example, inpatient E/M visit codes such 

as CPT codes 99231 (Level 1 subsequent 

hospital care, per day); 99232 (Level 2 

subsequent hospital care, per day); and 

99233 (Level 3 subsequent hospital care, 

per day), should not be included at the 

full value in the valuation of 23-hour 

stay services. 

Currently, the valuation of 23-hour 

stay services is conducted in a 

nonuniform manner by the AMA RUC. 

The AMA RUC has indicated that it 

currently includes a half hospital 

discharge day management service and 

no hospital inpatient visits for 

outpatient services with expected 

hospital stays of 23 hours or less. In 

contrast, for those outpatient services 

where the AMA RUC believes that the 

recovery period could be longer than 23 

hours, the AMA RUC stated in its 

comment on the CY 2010 PFS proposed 

rule that it currently includes a full 

hospital discharge day management 

service and one or more inpatient E/M 

visits in the code’s value. However, we 

note the typical 23-hour stay service is 

billed as an outpatient service and so 

long as the typical case continues to be 

billed as an outpatient service, we 

believe the code should not incorporate 

physician work values for services that 

are typically associated with an 

inpatient service. In the CY 2010 PFS 

proposed rule and final rule with 

comment period (74 FR 33556 and 74 

FR 61777, respectively), we stated that 

we believed the use of inpatient E/M 

visit codes for services rendered in the 

post-service period for outpatient 23- 

hour stay procedures would result in 

overpayment for pre- and post-service 

work that would not be furnished. 

Accordingly, we proposed in the CY 

2010 proposed rule (74 FR 33556 

through 33557) not to allow any 

additional inpatient E/M service to be 

billed for care furnished during the 

post-procedure period when care is 

furnished for an outpatient service 

requiring less than a 24-hour hospital 

stay. 

However, we find it is plausible that 

while the patient receiving the 23-hour 

stay service remains a hospital 

outpatient, the patient would typically 

be cared for by the physician furnishing 

the procedure during that postprocedure period. 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 

agree that the intra-service time of the 

inpatient hospital visit may be included 

in the valuation for the 23-hour stay 

code. 

Accordingly, for CY 2011 we 

modified our proposed CY 2010 

approach and suggested that in the 

future, when the AMA RUC reviews 

new and potentially misvalued codes 

that are identified as 23-hour stay 

services, the AMA RUC would apply the 

following methodology: 

• Begin with the starting RVU value 

of the 23-hour stay code under review 

and decrease the hospital discharge day 

management service from one day to a 

half day. 

• Deduct the RVUs of inpatient 

hospital visits from the starting RVU 

value. 

• Reallocate the time associated with 

the intra-service portion of the inpatient 

hospital visits to the immediate postservice time of the 23-hour stay code 

under review. 

Example: A 23-hour stay code is 

currently valued at 15 RVUs and has 1 

hospital discharge day management 

service and 1 level 3 subsequent 

hospital care visit incorporated in this 

value. 

• Applying step (1): 15¥0.64* = 

14.36 

• Applying step (2): 14.36¥2** = 

12.36 

• Applying step (3): 12.36 + (30 

minutes x 0.0224)*** = 13.032 RVUs 

* Value associated with 1⁄2 hospital discharge 

day management service. 

** Value associated with an inpatient 

hospital visit, CPT code 99233. 

*** Value associated with the reallocated 

intra-service time multiplied by the postservice intensity of the 23-hour stay code. 

Finally, we note that since work 

relative value units are established by 

the Secretary in the context of relativity 

to other codes in the system, the 

recommended methodology for the 

evaluation of 23-hour stay codes is best 

applied within the context of relativity. 

We appreciate that the AMA RUC has 

the ability to assess the 23-hour stay 

code after application of the 

recommended methodology to ensure 

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appropriate relativity of this code and 

other codes within the system. We 

strongly encourage the AMA RUC to 

apply the recommended methodology to 

ensure the consistent and appropriate 

valuation of the physician work for 

these services. 

Comment: A number of commenters 

asserted that if a service is performed in 

the hospital and the patient stays 

overnight, the work of the physician is 

typically the same regardless of whether 

the hospital designates the patient 

receiving the services as an inpatient or 

outpatient. Other commenters 

supported CMS’ position in that it is 

appropriate for physicians’ services 

related to the post-procedure care of the 

patient to be recognized and the intraservice time of the inpatient hospital 

visit should be included in the 

valuation for the 23-hour stay code. 

Some commenters noted that recent 

issues associated with hospital 

observation care may also be impacting 

CPT observation care codes, and these 

commenters ‘‘request that any changes 

in the 23+ hour stay policy be deferred 

until after the RUC conducts its 

consideration of hospital observation 

services in February 2011.’’ 

Response: While some commenters 

advocated for a deferral on the issue of 

valuing 23-hour stay services, we note 

that a number of commenters supported 

CMS’ proposed approach. As we stated 

in the CY 2010 PFS proposed rule (74 

FR 33557) and affirmed in the CY 2011 

PFS proposed rule (75 FR 40072), we 

believe these services, for a typical 

patient, would be considered for 

Medicare purposes to be hospital 

outpatient services, not inpatient 

services, and our claims data support 

that the typical 23-hour stay service is 

billed as an outpatient service. 

Furthermore, since the typical patient 

commonly remains in the hospital for 

less than 24 hours, even if the stay 

extends overnight, and discharge from 

the hospital is therefore imminent, we 

believe the acuity of the typical patient 

is less than that of a typical inpatient 

who is admitted to the hospital, 

resulting in less intensity for the 

physician work to care for the hospital 

outpatient immediately following a 23- 

hour stay procedure. Accordingly, we 

believe that 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. Furthermore, we do not believe 

that it would be more beneficial to 

suspend valuing 23-hour services in the 

manner we discussed in the proposed 

rule until after the AMA RUC’s review 

of hospital observation care services. 

Even if the AMA RUC were to provide 

future recommendations to us for 

valuing surgical procedures in which 

hospital observation care services were 

substituted for hospital inpatient care 

visits, we believe that we should treat 

the valuation of the physician time in 

the same manner as discussed 

previously, that is, by valuing the intraservice time of the hospital observation 

care service in the immediate postservice time of the 23-hour stay code 

being valued. 

Accordingly, in light of the support 

from the commenters, we are finalizing 

our proposed approach to valuing 23- 

hour stay services by allowing the intraservice portion of the subsequent 

hospital care visits (or observation care 

visits in the future if the AMA RUC 

were to recommend them instead as 

building blocks for outpatient surgical 

services) furnished to outpatients in the 

hospital post-procedure to be allocated 

to the immediate post-service time of 

the procedure to account for the 

physician work in these cases. We 

encourage the AMA RUC to apply this 

methodology itself in the 

recommendations it provides to us for 

valuing 23-hour stay codes, in order to 

ensure the consistent and appropriate 

valuation of the physician work for 

these services. 

4. Expanding the Multiple Procedure 

Payment Reduction (MPPR) Policy to 

Additional Nonsurgical Services 

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 

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 currently 

applies 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 contiguous body areas are the 

focus of the imaging 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). Therefore, the 

MPPR policy currently applies only to 

procedures involving contiguous body 

areas within a family of codes, not 

across families, and to those procedures 

that are furnished in a single session. 

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 25 percent of the 

TC for each additional procedure when 

an MPPR scenario applies. We had 

originally planned to phase in the MPPR 

policy over a 2-year period, with a 25 

percent reduction in CY 2006 and a 50 

percent reduction in CY 2007 (70 FR 

70263). However, the Deficit Reduction 

Act of 2005 (DRA) (Pub. L. 109–171) 

capped the PFS payment amount for 

most imaging procedures at the amount 

paid under the hospital outpatient 

prospective payment system (OPPS). In 

view of the DRA, we determined that it 

would be prudent to retain the 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 

MPPR policy from the PFS budget 

neutrality provision. Most recently, 

effective July 1, 2010, section 3135(b) of 

the ACA increased 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. 

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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 on the 

same beneficiary on the same day. The 

GAO recommended the following: (1) 

Expanding the existing MPPR policy 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 also encouraged us to focus on 

service pairs that have the most impact 

on Medicare spending. 

In the 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. 

b. CY 2011 Expansion of the Imaging 

Technical Component MPPR Policy to 

Additional Combinations of Imaging 

Services 

Over the past 2 years, the AMA RUC 

has examined several services billed 90 

percent or more of the time together as 

part of the potentially misvalued service 

initiative and, in several cases, created 

one code to describe the complete 

service, with a value that reflects the 

expected efficiencies. Notwithstanding 

the bundling work of the RUC, there 

may be additional imaging and other 

diagnostic services that are furnished 

together less than 90 percent of the time 

where we could still expect efficiencies 

in the TC, and in some cases in the PC, 

resulting in potential overpayment for 

these services under current policy 

when furnished together. 

Section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA) 

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, we proposed a 

limited expansion of the current 

imaging MPPR policy for CY 2011. We 

will continue to review other possible 

expansions of the MPPR policy to the 

TC and/or PC of imaging procedures or 

other diagnostic tests for the future. Any 

further changes will be addressed in 

future rulemaking. 

In a related policy for hospital 

outpatient payment of imaging services, 

in the CY 2009 OPPS/ASC final rule 

with comment period (73 FR 68559 

through 68569), the OPPS adopted a 

policy to pay for two or more CT and 

CTA, MRI and MRA, or ultrasound 

procedures furnished in the same 

session through a single composite 

ambulatory payment classification 

(APC) group. These composite APC 

payments were based on the 11 families 

of codes subject to the MPPR under the 

PFS that were collapsed into 3 imaging 

families for the OPPS according to their 

modality—1 for ultrasound, 1 for CT 

and CTA, and 1 for MRI and MRA 

services. 

At that time, we stated our belief that 

the contiguous body area concept that 

was incorporated in the PFS imaging 

families was not necessary for potential 

efficiencies to be achieved in an imaging 

session. We provided examples to 

illustrate that we would not expect 

second and subsequent imaging services 

of the same modality involving 

noncontiguous body areas to require 

duplicate facility resources (comparable 

to the TC under the PFS) for clinical 

labor activities such as greeting the 

patient, providing education and 

obtaining consent, retrieving prior 

exams, setting up an intravenous 

infusion, and preparing and cleaning 

the room, any more than second and 

subsequent imaging procedures of the 

same modality involving contiguous 

body areas. While we noted that 

multiple imaging claims under the 

OPPS are generally within the same 

imaging modality and involve 

contiguous body areas the vast majority 

of the time, we estimated that the 

collapsed 3 families, as opposed to the 

11 PFS families, would add 12 percent 

additional claims to those eligible for a 

single composite APC payment under 

the OPPS based on the provision of 2 or 

more imaging services in a single 

session, allowing us to capture 

additional claims with efficiencies. 

Taking into consideration the OPPS 

policy that was adopted in the CY 2009 

OPPS/ASC final rule with comment 

period, for CY 2011 under the PFS, we 

proposed to apply the MPPR regardless 

of family, that is, the policy would 

apply to multiple imaging services 

furnished within the same family of 

codes or across families. This proposal 

would simplify the current imaging 

MPPR policy in a way that is consistent 

with the standard PFS MPPR policy for 

surgical procedures that does not group 

procedures by body region. Therefore, 

the MPPR would apply to CT and CTA, 

MRI and MRA, and ultrasound 

procedures services furnished to the 

same patient in the same session, 

regardless of the imaging modality, and 

not limited to contiguous body areas. 

Because of the different pieces of 

equipment used for CT/CTA, MRI/MRA, 

and ultrasound procedures, it would be 

unlikely that a single practitioner would 

furnish more than one imaging 

procedure involving 2 different 

modalities to one patient in a single 

session where the proposed MPPR 

policy would apply. On the other hand, 

while most multiple procedures 

furnished with a single modality in one 

session would involve procedures 

currently assigned to one of the 11 

imaging families, it would not be 

uncommon for more than one imaging 

procedure of the same modality to be 

furnished across families and, like the 

scenario for hospital outpatient imaging 

services, we would expect efficiencies 

to occur in these cases. Therefore, we 

believe that an expansion of the current 

imaging MPPR policy to account for 

efficiencies in such situations would 

allow us to pay more appropriately for 

these multiple imaging procedure 

sessions, consistent with our ongoing 

efforts to address misvalued services. 

The expansion of the imaging MPPR 

policy to include all of the current codes 

in a single family to which the standard 

50 percent reduction for second and 

subsequent procedures would apply 

would reduce payment for 20 percent 

more services than the current MPPR 

policy under the PFS. Thus, in CY 2011, 

we would capture additional 

efficiencies and pay more appropriately 

in these cases. We note that section 

1848(c)(2)B)(v)(VI) (as added by section 

3135(b) of the ACA)) specifies that 

reduced expenditures attributable to the 

increase in the imaging MPPR from 25 

to 50 percent in CY 2011 are excluded 

from the PFS budget neutrality 

adjustment. However, the reduced 

payment for code combinations that 

would newly be subject to the imaging 

MPPR policy under this proposal would 

be made in a budget neutral manner 

under the PFS, as these new 

combinations are not included under 

section 1848(b)(4)(D) (as added by 

section 3135(b) of the ACA), which 

addresses ‘‘single-session imaging to 

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consecutive body parts’’ under the 

established imaging MPPR policy. 

We also proposed to add the CY 2010 

codes displayed in Table 17 of the CY 

2011 PFS proposed rule (75 FR 40075) 

to the list of imaging services subject to 

the MPPR policy in CY 2011. These four 

codes (CPT codes 75771 through 75774) 

were newly created for CY 2010 and are 

similar to codes currently in imaging 

family 2, titled CT and CTA (Chest/ 

Thorax/Abdomen/Pelvis). 

We further note that new CY 2010 

CPT codes 74261 (Computed 

tomography (CT) colonography, 

diagnostic, including image 

postprocessing; without contrast 

material) and 74262 (Computed 

tomography (CT) colonography, 

diagnostic, including image 

postprocessing; with contrast material(s) 

including non-contrast images, if 

performed) were added to the CY 2010 

MPPR policy through the July 2010 PFS 

quarterly update, with a retroactive 

effective date of January 1, 2010. These 

codes replaced CPT code 0067T 

(Computed tomographic (CT) 

colonography (that is, virtual 

colonoscopy); diagnostic) in CY 2010, 

which was on the list of procedures 

subject to the imaging MPPR policy 

prior to CY 2010. 

As discussed earlier in this section, 

reduced expenditures attributable to the 

increase in the MPPR for multiple 

imaging procedures to consecutive body 

parts (that is, those previously 

designated in the same family of codes) 

are exempt from the budget neutrality 

provision of the PFS. However, the 

reduced expenditures attributable to the 

MPPR for combinations of multiple 

imaging procedures that we proposed 

for CY 2011 (the MPPR for multiple 

imaging procedures not involving 

consecutive body parts) would be 

subject to budget neutrality adjustment 

under the PFS. We note that this 

formulation for whether reduced 

expenditures are exempt from budget 

neutrality applies both to procedures 

currently subject to the imaging MPPR 

and to new codes that would be subject 

to the policy in CY 2011 and in future 

years. To the extent that imaging 

procedures described by the new codes 

are furnished in combination with other 

procedures that are subject to the 

imaging MPPR on consecutive body 

areas, the reduced expenditures 

attributable to the MPPR for these 

combinations would be exempt from the 

PFS budget neutrality adjustment. 

Comment: With one exception, the 

commenters uniformly opposed the 

proposal to consolidate the imaging 

families for application of the imaging 

MPPR and urged CMS not to finalize the 

proposal. The exception was MedPAC, 

which supported the policy as 

reasonable and consistent with the 

hospital OPPS policy on multiple 

imaging and the PFS MPPR policy for 

multiple surgical procedures, neither of 

which are limited to procedures 

involving contiguous body areas. 

Many commenters pointed out that 

the AMA RUC has worked to resolve 

any duplication in the direct PE inputs 

for services commonly furnished 

together over the past few years. The 

commenters stated that new bundled 

services were implemented in CY 2010 

and speculated that additional ones 

would be implemented in the future 

and, therefore, concluded that a general 

MPPR to adjust PFS payment when 

imaging services are commonly 

furnished together is not necessary. The 

commenters argued that any duplication 

in the PE should be resolved at the code 

pair level. The AMA RUC urged CMS to 

continue to work within the established 

processes and offered for its Practice 

Expense Subcommittee to review 

specific code pairs about which CMS 

was concerned regarding potential PE 

duplication and recommend a course of 

action that would be fair and consistent. 

Response: The imaging MPPR is not 

intended to supersede the AMA RUC 

process that values services described 

by CPT codes. We encourage the AMA 

RUC to continue examining code pairs 

for PE duplication based upon the 

typical case and appropriately valuing 

new comprehensive codes for bundled 

services that are established by the CPT 

Editorial Panel. However, we believe 

that it is necessary to address the PE 

duplication immediately for imaging 

code pairs that have not been recently 

reviewed or bundled into single 

comprehensive codes. We note that as 

more code combinations are bundled 

into a single complete service reported 

by one CPT code, they would no longer 

be subject to the MPPR. For example, 

there are new CY 2011 codes to describe 

abdominal and pelvic CT scans 

furnished together, specifically CPT 

codes 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). We are 

accepting the AMA RUC 

recommendations for the direct PE 

inputs for these codes for CY 2011 and, 

therefore, their TCs are valued 

accordingly. Whereas prior to CY 2011, 

the 50 percent imaging MPPR would 

have applied to the TC of the second 

service when an abdominal and pelvic 

CT were furnished in the same imaging 

session, this will no longer be the case 

in CY 2011. Instead, the TC payment for 

the comprehensive code will reflect the 

valuing of the specific services 

furnished in combination with one 

another. Thus, we believe our current 

and proposed MPPR formulations are 

consistent with the AMA RUC’s work to 

review code pairs for potential PE 

duplication and to appropriately value 

comprehensive codes for a bundle of 

component services. 

Comment: Numerous commenters 

opposed applying the MPPR to 

noncontiguous body area imaging 

services using the same modality and to 

combinations of imaging services 

involving different modalities. Many 

commenters indicated that there is no 

major duplication in clinical labor 

activities when two studies of 

noncontiguous body areas using a single 

imaging modality are furnished in the 

same session and even less duplication 

when imaging services are furnished in 

a separate session on the same day using 

different modalities. The commenters 

argued that the duplication in clinical 

labor activities that occurs in the preand post-operative periods for multiple 

surgical procedures does not apply to 

imaging services. 

More specifically, several commenters 

observed that the minimal duplicate 

costs of a few minutes of technician 

time do not justify a 50 percent payment 

reduction in the TC for the second 

service. Some commenters also believe 

that the imaging MPPR creates an 

incentive for physicians to order 

separate procedures on different days, 

thereby discouraging efficiencies. In 

addition, the commenters contended 

that the imaging MPPR is detrimental to 

patient care, access, and convenience. 

One commenter asserted that it is not 

appropriate to compare the OPPS 

composite ambulatory payment 

classification (APC) groups to officebased imaging as a justification for 

expanding the imaging MPPR under the 

PFS. The commenter cited an analysis 

of OPPS payment demonstrating that 

CMS pays hospitals for the second 

imaging study at nearly 100 percent of 

the amount paid for a single study, 

concluding that not until the third study 

would the payment be reduced from the 

sum of what would otherwise be paid 

under the OPPS if the studies were 

performed alone. 

Another commenter agreed that the 

current PFS imaging families could be 

further collapsed to eliminate the 

contiguous body area concept but 

opposed applying the MPPR across 

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modalities. The commenter suggested 

establishing three families to parallel 

the modality-based APC groups used 

under the OPPS, that is, CT/CTA, MRI/ 

MRA, and ultrasound. Another 

commenter noted that highly 

specialized clinics often treat complex 

conditions and perform multiple 

imaging services on noncontiguous 

body areas primarily for good patient 

care. As an example of a situation when 

complex imaging services are used to 

diagnose and treat significant medical 

conditions, the commenter indicated 

that a CT of the chest may be furnished, 

resulting in a diagnosis of lung cancer. 

In addition, the same commenter noted 

that appropriate treatment of the 

patient’s neurological signs and 

symptoms also requires a CT of the 

head, because primary lung tumors 

account for 50 percent of all metastatic 

brain tumors. The commenter explained 

that these medically necessary 

combinations of imaging services are 

often performed in a single imaging 

session. Results of the initial imaging 

service, contended the commenter, 

could change the course of treatment for 

the patient and it would be prudent not 

to delay or complicate a patient’s 

treatment plan. The commenter also 

pointed out that it is a convenience to 

the patient to have same day access for 

all imaging services. 

Another commenter acknowledged 

that while some efficiencies are gained 

in certain situations and settings when 

multiple imaging services are furnished 

together, the expanded MPPR policy 

would not appropriately pay for the 

additional studies required for the 

majority of patients with significant 

medical conditions. The commenter 

explained that highly organized clinics 

treating these complex patients often 

structure patient encounters so that 

there are intervening consultations with 

multiple providers and additional tests 

in between imaging services. 

Response: While most multiple 

procedures furnished with a single 

modality in 1 session would involve 

procedures currently assigned to 1 of 

the 11 imaging families, it would not be 

uncommon for more than 1 imaging 

procedure of the same modality to be 

furnished across families, and we would 

expect efficiencies to occur in these 

cases. As noted by MedPAC, the 

proposed PFS MPPR expansion to 

eliminate the concept of contiguous 

body areas as the basis for a payment 

reduction due to efficiencies is 

consistent with the established hospital 

OPPS policy on multiple imaging and 

the PFS MPPR policy for multiple 

surgical procedures, neither of which is 

limited to procedures involving 

contiguous body areas. While we 

acknowledge that the OPPS composite 

imaging APCs utilize a different 

payment methodology than an MPPR to 

reflect the level of efficiencies when 

multiple imaging services are furnished 

together, consideration of the specific 

body areas imaged is not an aspect of 

the OPPS policy. The OPPS 

methodology continues to distinguish 

among services using different imaging 

modalities in part because of the 

statutory requirement that APCs be 

clinically homogenous. This same 

limitation would not apply to an MPPR. 

Despite the differences in their payment 

methodologies, both the OPPS and the 

PFS strive to recognize the efficiencies 

in the TCs when multiple imaging 

services are furnished together. We 

continue to believe that there are 

significant efficiencies in the TCs when 

multiple imaging procedures of the 

same modality are furnished on 

noncontiguous body areas in the same 

imaging a session, and believe that an 

expanded imaging MPPR under the PFS 

is an important policy refinement to pay 

more appropriately for the 

comprehensive imaging service under 

such circumstances. 

Because most of the combinations of 

imaging services furnished in one 

session that are not now subject to the 

imaging MPPR occur within one 

modality, we believe it would be 

unnecessarily complex to continue 

separate families (even if fewer than 11) 

for different imaging modalities to 

address the limited circumstances when 

imaging services furnished with more 

than one modality are performed in a 

single imaging session. Even in these 

unusual cases, we would expect certain 

efficiencies in the TCs, such as the 

establishment of venous access only one 

time. Finally, the more general proposed 

policy would provide a streamlined 

basis for our further consideration of 

other possible expansions of an MPPR 

policy to the TC and/or PC of imaging 

procedures or other diagnostic tests in 

the future. 

Consistent with our current 

expectations for provider ordering 

practices under the established imaging 

MPPR policy for single modality, 

contiguous body area imaging studies, 

under an expanded MPPR we would not 

expect providers to order multiple 

imaging procedures of different 

modalities or for noncontiguous body 

areas on different days or order different 

imaging sessions on the same day 

simply to garner increased payment 

unless it were medically reasonable and 

necessary that the studies be furnished 

on different days or in different sessions 

on the same day. However, where it is 

medically necessary to have intervening 

consultations among multiple providers 

or other diagnostic tests furnished to a 

patient between imaging services on the 

same day to which the MPPR would 

otherwise apply, such cases would 

constitute separate imaging sessions and 

the MPPR would not apply. 

Comment: Many commenters 

addressed CMS’ assertion that because 

of the different pieces of equipment 

used for CT/CTA, MRI/MRA, and 

ultrasound procedures it would be 

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 

policy would apply. While most 

commenters agreed with this statement, 

the commenters questioned why CMS 

would implement the proposal if this 

were the case. When procedures are 

furnished across modalities, the 

commenters believe them to be separate 

and distinct procedures with little or no 

overlap and argue that efficiencies 

cannot be achieved. The commenters 

asserted that CMS offered no data to 

support its expectation that efficiencies 

would occur when different imaging 

modalities are furnished at the same 

time. Many commenters requested a 

more rigorous analysis, validated 

evidence to support the proposed 

expansion, and an opportunity for 

stakeholders to comment on the 

analysis. 

A number of the commenters agreed 

that specialized staff with different 

expertise and certification is often 

needed to furnish services within the 

different imaging modalities. When 

multiple imaging is necessary, the 

commenters explained that two 

appointments are created, and the 

patient is checked in twice, prepared 

and instructed twice, educated on each 

study independently, transported from 

one room to another, and furnished 

separate supplies such as contrast and 

IV tubing, following which the two 

rooms are cleaned. 

Response: We agree with the majority 

of commenters that in most cases a 

practitioner would not furnish more 

than one imaging procedure involving 

two different modalities to one patient 

in a single session. While there may be 

some instances where the MPPR applies 

to two different modalities used in a 

single session, the MPPR would not 

apply in most cases because this clinical 

scenario is uncommon. In response to 

the commenters who questioned why 

we proposed to apply an MPPR across 

modalities, we believe that if, in the 

unusual case, more than one imaging 

service of different modalities were 

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furnished to a patient in a single 

session, there would be some 

efficiencies in the TC, such as greeting 

the patient only one time and setting up 

one intravenous line. We acknowledge 

that the application of a general MPPR 

policy to numerous imaging service 

combinations may result in an 

overestimate of the 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 TCs of 

combinations of imaging services upon 

which we may consider building in the 

future. We do not believe that it is 

administratively efficient or necessary 

for appropriate payment to maintain 

modality-specific imaging families given 

the uncommon occurrences of pairs of 

imaging services involving different 

modalities furnished by one practitioner 

on the same day to a single patient that 

we observe in our claims data. 

Comment: Several commenters 

generally opposed the inclusion of 

nondiagnostic radiation oncology 

imaging procedures in any future 

expansion of the MPPR policy, given the 

clinical differences between radiation 

oncology and diagnostic imaging. In 

addition, one commenter noted that 

cardiologists commonly provide 

echocardiography services and 

peripheral vascular ultrasound tests. 

While both types of services use 

ultrasound technology that resembles 

the technology used in the ultrasound 

procedures currently subject to the 

imaging MPPR, the commenter reported 

that these services are furnished using a 

different machine and different staff 

who have different expertise so the 

imaging MPPR policy. 

Response: We did not propose to 

expand the existing contiguous body 

area MPPR policy, which currently 

includes only nonobstetrical chest, 

abdominal, and pelvic ultrasound 

services, to include peripheral vascular 

ultrasound services or echocardiography 

services in CY 2011. While we 

explained in the CY 2011 PFS proposed 

rule (75 FR 40074) that we would 

continue to review other possible 

expansions of the MPPR policy to the 

TC and/or PC of imaging procedures or 

other diagnostic tests for the future, we 

have not proposed to do so at this time. 

Further changes to include services 

such as nondiagnostic radiation 

oncology imaging services or 

echocardiography or peripheral vascular 

ultrasound services would be addressed 

in future rulemaking. 

Comment: A few commenters 

reported that it is often difficult for 

imaging providers to understand when 

an encounter begins and ends and, 

therefore, urged CMS to better define a 

single session. They explained that it is 

not always easy to identify when the use 

of the -59 modifier (Distinct procedural 

services), denoting a separate session 

under the current imaging MPPR policy, 

is appropriate. This ambiguity leaves 

the responsibility for determining 

whether imaging services are furnished 

in a separate session to the judgment of 

the imaging technologist, leading to 

inconsistent determinations and, 

therefore, variable payment for the same 

services furnished in similar clinical 

scenarios. One commenter specifically 

requested further parameters of a 

separate encounter be defined to 

include the same exam room, a specific 

timeframe, or a specific action. Another 

commenter noted that distinguishing 

separate sessions is a particular 

challenge for ultrasound imaging. 

Response: In the CY 2006 PFS final 

rule with comment period (70 FR 

70262), we indicated that a single 

imaging session is one encounter where 

a patient could receive one or more 

radiological studies. If a patient has a 

separate encounter on the same day for 

a medically necessary reason and 

receives a second imaging service, this 

would represent a separate session. 

Physicians would report the -59 

modifier to indicate multiple sessions 

and the MPPR would not apply. This 

same policy would continue in CY 2011 

under the consolidation of the imaging 

families to expand the imaging MPPR 

under the PFS. We believe that 

providers’ 5 years of previous 

experience with this policy should 

allow them to continue to appropriately 

distinguish separate imaging sessions by 

reporting the -59 modifier, even under 

the expanded MPPR policy. We may 

provide further subregulatory guidance 

to providers on this issue in the future 

in view of our CY 2011 expanded 

imaging MPPR policy if specific issues 

arise that we believe warrant further 

clarification regarding the 

characteristics of separate imaging 

sessions. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, without 

modification, to apply the 50 percent 

imaging MPPR to all of the ultrasound, 

CT, CTA, MRI, and MRA services to 

which the current contiguous body area 

and modality-specific policy applies, 

regardless of the specific combinations 

of imaging services furnished to the 

patient in a single session. We believe 

this proposal is consistent with our 

overall strategy to pay more 

appropriately for services that are 

commonly furnished together, 

consistent with section 1848(c)(2)(K) of 

the Act (as added by section 3134 of the 

ACA) that instructs the Secretary to 

identify multiple codes that are 

frequently billed in conjunction with 

furnishing a single service, and review 

and make appropriate adjustments to 

their relative values. 

As stated earlier in this section, 

expenditures attributable to the increase 

in the MPPR for multiple imaging 

procedures to consecutive body parts 

(that is, those previously designated in 

the same family of codes) are exempt 

from the budget neutrality provision of 

the PFS. However, the reduced 

expenditures attributable to the MPPR 

for new combinations of multiple 

imaging procedures that we are 

finalizing for CY 2011 (the MPPR for 

multiple imaging procedures not 

involving consecutive body parts) 

would be subject to budget neutrality 

adjustment under the PFS. We note that 

this formulation for whether reduced 

expenditures are exempt from budget 

neutrality applies both to procedures 

currently subject to the imaging MPPR 

and to new codes that are subject to the 

policy in CY 2011 and in future years. 

To the extent that imaging procedures 

described by the new codes are 

furnished in combination with other 

procedures that are subject to the 

imaging MPPR on consecutive body 

areas, the reduced expenditures 

attributable to the MPPR for these 

combinations would be exempt from the 

PFS budget neutrality adjustment. 

The complete list of codes subject to 

the CY 2011 MPPR policy for diagnostic 

imaging services is included in 

Addendum F to this final rule with 

comment period and the CY 2011 code 

additions to the MPPR policy are listed 

in Table 17. The codes being added to 

the policy are those we proposed, as 

well as new CY 2011 codes or newly 

covered codes that are clinically similar 

to the imaging codes subject to the 

MPPR in CY 2010. The new codes 

include CPT codes 74176 (Computed 

tomography, abdomen and pelvis; 

without contrast material); 74177 

(Computed tomography, abdomen and 

pelvis; with contrast material(s)); and 

74178 (Computed tomography, 

abdomen and pelvis; without contrast 

material in one or both body regions, 

followed by contrast material(s) and 

further sections in one or both body 

regions). The newly covered codes are 

CPT codes 72159 (Magnetic resonance 

angiography, spinal canal and contents, 

with or without contrast material) and 

73225 (Magnetic resonance 

angiography, upper extremity, with or 

without contrast material). These codes 

are being added on an interim final 

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basis and are open to public comment 

on this final rule with comment period. 

The complete list of CPT codes newly 

added to the diagnostic imaging MPPR 

for CY 2011 is displayed in Table 17 

below. 

TABLE 17—CPT CODE ADDITIONS TO THE DIAGNOSTIC IMAGING MPPR POLICY FOR CY 2011 

CPT code Short descriptor 

Subject to 

comment in 

CY 2011 

PFS final 

rule 

72159 .......................................... Mr angio spine w/o & w/dye .......................................................................................................... Yes. 

73225 .......................................... Mr angio upr extr w/o & w/dye ...................................................................................................... Yes. 

74176 .......................................... Ct abd & pelvis w/o contrast ......................................................................................................... Yes. 

74177 .......................................... Ct abdomen & pelvis w/contrast ................................................................................................... Yes. 

74178 .......................................... Ct abd & pelv 1+ section/regns .................................................................................................... Yes. 

75571 .......................................... Ct hrt w/o dye w/ca test ................................................................................................................ No. 

75572 .......................................... Ct hrt w/3d image .......................................................................................................................... No. 

75573 .......................................... Ct hrt w/3d image, congen ............................................................................................................ No. 

75574 .......................................... Ct angio hrt w/3d image ................................................................................................................ No. 

c. CY 2011 Expansion of the MPPR 

Policy to Therapy Services 

In the July 2009 GAO report entitled, 

‘‘Medicare Physician Payments: Fees 

Could Better Reflect Efficiencies 

Achieved when Services are Provided 

Together,’’ the GAO found efficiencies 

when multiple physical therapy services 

were furnished in one session and 

concluded that an MPPR policy could 

be appropriate for these services. In the 

report, the GAO noted that officials from 

the AMA RUC explained that time spent 

on pre-service and post-service therapy 

activities is spread across the number of 

services in a typical session in order to 

avoid duplication of the PE for the 

services. Nevertheless, the GAO found 

that there was duplication of certain 

activities in the intra-service period, and 

provided the example of time spent 

testing range of motion or muscle 

flexibility that was duplicated in 

commonly observed code pairs. 

In the typical clinical scenario for 

therapy services, we believe that 

therapy services are misvalued for PFS 

payment when multiple services are 

furnished to a patient in a single session 

because duplicate clinical labor and 

supplies are included in the PE of the 

services furnished. We believe this 

duplication should be accounted for 

under the PFS, as we currently account 

for efficiencies in multiple surgical and 

multiple diagnostic imaging procedures 

furnished in a single session. Over the 

past 2 years, the AMA RUC has 

examined several services billed 90 

percent or more of the time together as 

part of its potentially misvalued service 

initiative and, in several cases, created 

one code to describe the complete 

service, with a value that reflects the 

expected efficiencies. Notwithstanding 

the AMA RUC’s analyses, in most cases 

it has not created one code to describe 

a complete therapy service, in part 

because many of the core therapy CPT 

codes are timed codes based on 

increments of treatment time. 

Therefore, in the CY 2011 PFS 

proposed rule (75 FR 40075), we 

proposed a further step to implement 

section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA) that 

specifies that the Secretary shall 

identify potentially misvalued codes by 

examining multiple codes that are 

frequently billed in conjunction with 

furnishing a single service. For CY 2011 

we proposed an MPPR policy for the 

HCPCS codes listed in Table 18, 

specifically the separately payable 

‘‘always therapy’’ services that are only 

paid by Medicare when furnished under 

a therapy plan of care. These services 

are designated ‘‘always therapy’’ services 

regardless of who furnishes them and 

always require therapy modifiers to be 

reported, specifically -GP (Services 

rendered under outpatient physical 

therapy plan of care); -GO (Services 

rendered under outpatient occupational 

therapy plan of care); or -GN (Services 

rendered under outpatient speechlanguage pathology plan of care). The 

therapy codes are available in a file on 

the CMS Web site at: http:// 

www.cms.gov/TherapyServices/. We 

excluded both contractor-priced and 

bundled codes from Table 18 because, 

under our proposal, an MPPR would not 

be applicable for ‘‘always therapy’’ 

services furnished in combination with 

these codes. In the case of bundled 

codes that are not separately paid, there 

are no explicit efficiencies in the direct 

PE to be reflected in payment for the 

second and subsequent therapy services 

furnished to the patient on the same 

day. In the case of contractor-priced 

codes, there is no nationally established 

pricing that could be uniformly adjusted 

to reflect the expected efficiencies when 

multiple therapy services are furnished. 

TABLE 18—SEPARATELY PAYABLE

‘‘ALWAYS THERAPY’’ SERVICES PROPOSED AS SUBJECT TO THE CY 

2011 MPPR POLICY * 

CPT/ 

HCPCS 

code 

Short descriptor 

92506 ........ Speech/hearing evaluation. 

92507 ........ Speech/hearing therapy. 

92508 ........ Speech/hearing therapy. 

92526 ........ Oral function therapy. 

92597 ........ Oral speech device eval. 

92607 ........ Ex for speech device rx, 1hr. 

92608 ........ Ex for speech device rx addl. 

92609 ........ Use of speech device service. 

96125 ........ Cognitive test by hc pro. 

97001 ........ Pt evaluation. 

97002 ........ Pt re-evaluation. 

97003 ........ Ot evaluation. 

97004 ........ Ot re-evaluation. 

97010 ........ Hot or cold packs therapy. 

97012 ........ Mechanical traction therapy. 

97016 ........ Vasopneumatic device therapy. 

97018 ........ Paraffin bath therapy. 

97022 ........ Whirlpool therapy. 

97024 ........ Diathermy eg, microwave. 

97026 ........ Infrared therapy. 

97028 ........ Ultraviolet therapy. 

97032 ........ Electrical stimulation. 

97033 ........ Electric current therapy. 

97034 ........ Contrast bath therapy. 

97035 ........ Ultrasound therapy. 

97036 ........ Hydrotherapy. 

97110 ........ Therapeutic exercises. 

97112 ........ Neuromuscular reeducation. 

97113 ........ Aquatic therapy/exercises. 

97116 ........ Gait training therapy. 

97124 ........ Massage therapy. 

97140 ........ Manual therapy. 

97150 ........ Group therapeutic procedures. 

97530 ........ Therapeutic activities. 

97533 ........ Sensory integration. 

97535 ........ Self care mngment training. 

97537 ........ Community/work reintegration. 

97542 ........ Wheelchair mngment training. 

97750 ........ Physical performance test. 

97755 ........ Assistive technology assess. 

97760 ........ Orthotic mgmt and training. 

97761 ........ Prosthetic training. 

97762 ........ C/o for orthotic/prosth use. 

G0281 ........ Elec stim unattend for press. 

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TABLE 18—SEPARATELY PAYABLE

‘‘ALWAYS THERAPY’’ SERVICES PROPOSED AS SUBJECT TO THE CY 

2011 MPPR POLICY *—Continued 

CPT/ 

HCPCS 

code 

Short descriptor 

G0283 ........ Elec stim other than wound. 

G0329 ........ Electromagnetic tx for ulcers. 

*Excludes contractor-priced and bundled 

codes. 

We did not propose an MPPR policy 

for ‘‘sometimes therapy’’ services, 

specifically those services that may be 

furnished under a therapy plan of care 

or otherwise by physicians or NPPs as 

medical services. We believe that the 

care patterns are different for the latter 

group of services that may sometimes be 

furnished as therapy services, and we 

noted that they are less commonly 

furnished with multiple services in a 

single session than the ‘‘always therapy’’ 

services. In the discussion that follows, 

our reference to therapy services means 

those HCPCS codes designated annually 

as ‘‘always therapy’’ services by CMS. 

Based on CY 2009 PFS claims data, 

we identified over 500 therapy service 

code pairs billed for the same patient in 

a single session. We then reviewed a 

sample of the most common therapy 

code pairs, specifically those high 

volume code pairs with more than 

250,000 combined services per year, to 

examine the potential for duplication in 

the PE. These code pairs represented 

more than half of the occurrences of 

therapy services billed together. While 

we acknowledged that the PE inputs per 

service for some therapy services were 

included in the direct PE database based 

on one-half of the total PE inputs 

required for two services furnished in a 

single session, which would account for 

some duplication, this was not the case 

for all combinations of therapy services. 

Of the high volume therapy services 

examined, approximately one-fourth of 

the code pairs were not valued based on 

two services. In addition, we noted that 

the CY 2009 PFS claims data for 

services paid under the PFS (excluding 

services furnished in facility settings 

that were paid at PFS rates) show that 

when multiple therapy services are 

billed on a claim for the same date of 

service, the median number is four 

services per day. Therefore, even for 

those clinical labor times that may 

reflect the allocation of total time across 

two units of therapy services, we believe 

that some elements of the current PE 

inputs are duplicated based on current 

patterns of therapy service delivery 

where most multiple service claims 

involve delivery of more than two 

services in a session. 

In the CY 2011 proposed rule (75 FR 

40076), we stated that duplicate labor 

activities currently included in the PE 

for the service period for these high 

volume pairs of therapy services are as 

follows: clean room/equipment; 

education/instruction/counseling/ 

coordinating home care; greet patient/ 

provide gowning; obtain measurements, 

for example, ROM/strength/edema; and 

post-treatment patient assistance. The 

most common duplicate supply item 

included in the PE was the 

multispecialty visit pack. Examples of 

duplicated and unduplicated labor 

activities and supplies for two sample 

therapy code pairs and our estimates of 

potential clinically appropriate time and 

quantity reductions for multiple service 

sessions (which were also included in 

our proposed rule) are displayed in 

Table 19. We note that CY 2009 PFS 

claims data for these sample code pairs 

include over 3.4 million pairs of CPT 

codes 97112 (Therapeutic procedure, 1 

or more areas, each 15 minutes; 

neuromuscular reeducation of 

movement, balance, coordination, 

kinesthetic sense, posture, and/or 

proprioception for sitting and/or 

standing activities) and 97110 

(Therapeutic procedure, 1 or more areas, 

each 15 minutes; therapeutic exercises 

to develop strength and endurance, 

range of motion and flexibility) 

furnished by the same practitioner on 

the same day and over 500,000 pairs of 

CPT codes 97001 (Physical therapy 

evaluation) and 97140 (Manual therapy 

techniques (eg, mobilization/ 

manipulation, manual lymphatic 

drainage, manual traction), 1 or more 

regions, each 15 minutes). 

BILLING CODE 4120–01–P 

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BILLING CODE 4120–01–C 

In the CY 2011 PFS proposed rule (75 

FR 40078), we did not remove minutes 

for clinical labor tasks that were not 

duplicated. For example, for CPT code 

pair 97001 and 97140 the following 

tasks were not duplicated: post 

treatment patient assistance; prep and 

position patient; and prepare room, 

equipment, and supplies. In addition, 

we did not remove any supply items 

that would be required for only one of 

the separate services because these 

would not be duplicated in the PE 

applicable to the combination of 

services. We estimated no reduction for 

equipment time, even though 

efficiencies would be expected for 

equipment that is used in both services 

when they are furnished together. 

Finally, a corresponding reduction to 

the indirect expenses would be 

appropriate since indirect costs are 

allocated partially based on direct costs. 

For five high volume therapy code pairs 

that each occur over 2 million times in 

PFS claims for multiple therapy services 

and account for almost half of such 

claims, we estimated that the resulting 

reduction in the PE for the lower paying 

code would range from 28 to 56 percent. 

As we summarized in the CY 2011 

PFS proposed rule (75 FR 40078), given 

the duplicative clinical labor activities 

and supplies as shown in the code 

combination examples, we believe it 

would be appropriate to extend the 

MPPR policy that is currently applied to 

surgical services and the TC of imaging 

services, to the PE component of certain 

therapy services. Specifically, we 

proposed to apply a 50 percent payment 


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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. Because we believed it would be 

difficult to determine the precise 

beginning and end of therapy sessions 

and we did not believe that beneficiaries 

would typically have more than one 

therapy session furnished in a single 

day, we proposed to apply the 50 

percent MPPR policy to the PE 

component of subsequent therapy 

services furnished to the same patient 

on the same day, rather than limiting 

the proposed policy to services 

furnished in the same session. 

We noted that many therapy services 

are time-based CPT codes, so multiple 

units of a single code may be billed for 

a single session that lasts for a longer 

period of time than one unit of the code. 

The proposed MPPR policy would 

apply 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. 

Therefore, we proposed that full 

payment would be made for the service 

or unit with the highest PE and payment 

would be made at 50 percent of the PE 

component for the second and 

subsequent procedures or units of the 

same service. 

We proposed that the work and 

malpractice components of the therapy 

service payment would not be reduced. 

For therapy services furnished by an 

individual or group practice or ‘‘incident 

to’’ a physician’s service, the MPPR 

would apply to all ‘‘always therapy’’ 

services furnished to a patient on the 

same day, regardless of whether the 

services are furnished in one therapy 

discipline or multiple disciplines, for 

example, physical therapy, occupational 

therapy, or speech-language pathology. 

The MPPR policy would apply to both 

those services paid under the PFS that 

are furnished in the office setting and 

those 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 

by Medicare for outpatient therapy 

services. Table 20 provides a sample 

calculation of the current and proposed 

CY 2011 payment for multiple therapy 

services furnished in on the same day. 

For those services paid under the PFS, 

the PFS budget neutrality provision 

would apply so that the estimated 

reduced expenditures for therapy 

services would be redistributed to 

increase payment for other PFS services. 

TABLE 20—SAMPLE PAYMENT CALCULATION FOR MULTIPLE THERAPY SERVICES FURNISHED TO A SINGLE PATIENT ON

THE SAME DAY

Procedure 1 

Unit 1 

Procedure 1 

Unit 2 Procedure 2 

Current 

total 

payment 

Proposed 

CY 2011 

total 

payment 

Proposed payment calculation 

Work ............................... $7.00 $7.00 $11.00 $25.00 $25.00 no reduction 

PE ................................... $10.00 $10.00 $8.00 $28.00 $19.00 $10 + (0.5 × $10) + (0.5 × $8) 

Malpractice ..................... $1.00 $1.00 $1.00 $3.00 $3.00 no reduction 

Total ................................ $18.00 $18.00 $20.00 $56.00 $47.00 $18 + $7 + (0.5 × $10) + $1 + 

$11 

+ (0.5 × $8) + $1 

In the CY 2011 PFS proposed rule (75 

FR 40078), we stated that we believe the 

proposed therapy MPPR policy would 

provide more appropriate payment for 

therapy services that are commonly 

furnished together by taking into 

account the duplicative clinical labor 

activities and supplies in the PE that are 

not furnished more than once in the 

single therapy session. This approach 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 

1848(c)(2)(K) of the Act (as added by 

section 3134 of the ACA). We also 

believe this proposed policy is 

responsive to continued concerns about 

significant growth in therapy spending 

and to MedPAC and GAO 

recommendations regarding the 

expansion of MPPR policies under the 

PFS to account for additional 

efficiencies. We observed that paying 

more appropriately for therapy services 

based on PE relative values that are 

adjusted for the clinical scenario under 

which the services are furnished would 

result in reduced therapy expenditures, 

and beneficiaries would be able to 

receive more medically necessary 

outpatient therapy services before 

reaching the therapy cap. For a further 

discussion of potential alternatives to 

the therapy caps, we refer readers to 

section III.A.2. of this final rule with 

comment period. 

Comment: Many commenters opposed 

application of the proposed MPPR 

policy to therapy services. The 

commenters characterized the proposal 

as drastic, arbitrary, and unfair, 

resulting in across-the-board cuts based 

on flawed assumptions that would lead 

to therapy underpayments that would 

jeopardize access to necessary care and 

harm patients. The commenters 

requested that CMS withdraw the 

proposal, study the issue further, and 

share the analyses with the public. 

In contrast, MedPAC supported the 

general direction of the proposed policy, 

but suggested that CMS better justify 

how a 50 percent reduction would 

capture the duplicate inputs related to 

multiple therapy services performed in 

a single session. MedPAC also 

recommended that CMS request that the 

AMA RUC review the values of all 

outpatient therapy codes to ensure that 

the practice expenses are not 

duplicated, regardless of whether or not 

the current values of those codes 

assume that two services are furnished 

during a single visit. 

Numerous commenters requested a 

detailed justification for the proposed 

policy’s 50 percent reduction, including 

an explanation of the methodology used 

to calculate the new payments that 

would result. These commenters asked 

CMS to work with stakeholders to 

finalize a policy that would not 

adversely impact access to care, 

particularly in rural and other 

underserved areas. The commenters 

further urged consideration of other 

payment methods and alternatives to 

the therapy caps that would preserve 

and improve access to therapy services. 

The commenters stated that between 80 

to 90 percent of physical therapy 

services furnished in private practices 

would potentially be subject to the 

MPPR, concluding that the policy 

would result in payment decreases of 

19.2 percent and 17.8 percent for 

physical therapy services in facilities 

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and offices, respectively, notably more 

than the CMS’ impact estimate of 11 

percent for the proposed rule. 

The commenters provided analyses to 

show that the duplication of supplies is 

very limited and argued that a more 

thorough analysis of duplication based 

on expert clinical review would result 

in considerably lower estimates of 

duplication. For example, the AMA 

RUC explained that for a typical single 

session combination of 2 units of CPT 

code 97110 (Therapeutic procedure, 1 or 

more areas, each 15 minutes; 

therapeutic exercises to develop 

strength and endurance, range of motion 

and flexibility) and one unit of 97140 

(Manual therapy techniques (e.g., 

mobilization/manipulation, manual 

lymphatic drainage, manual traction), 1 

or more regions, each 15 minutes), a $12 

PE payment reduction from the MPPR 

would be applied to adjust for $3.60 in 

potentially duplicated costs. 

Before implementing an MPPR, the 

commenters urged CMS to take time to 

ensure that individual services were 

valued correctly based upon the 

resources needed to deliver them. The 

commenters advised CMS to conduct a 

more thorough analysis, taking into 

consideration the fact that the direct PE 

inputs for therapy services were already 

reduced to avoid duplication. The 

commenters alleged that CMS provided 

incorrect examples of duplication in the 

proposed rule examples by 

overestimating the duplication 

compared to the standard time allocated 

by the AMA RUC for certain activities. 

The commenters explained that PE for 

therapy services was valued by the 

AMA RUC based upon three units of 

service, not two units of service as 

stated by CMS in the proposed rule. 

Three units of service are typical, and 

the commenters contended that no 

duplication of PE exists when the 

typical three units of service are 

delivered using typical time allotments 

for clinical labor activities. The 

commenters submitted multiple 

examples of combinations of therapy 

services, using the most frequently 

billed therapy codes and providing 

valuations for each of the components of 

PE, such as pre-service and post-service 

physical therapy assistant activities. The 

commenters pointed out that in the case 

of single unit therapy claims, or claims 

with one therapeutic procedure and one 

modality, there would currently be 

underpayment based on how therapy 

services are valued. The commenters 

further argued that it would not be fair 

to apply the MPPR to all subsequent 

services when some of the code 

combinations are already undervalued. 

Many commenters observed that the 

AMA RUC has worked in good faith to 

resolve any duplication in the PE inputs 

over the past few years and pointed out 

that CMS has historically accepted over 

90 percent of the AMA RUC’s 

recommendations. In April 2010, some 

commenters reported that the AMA 

RUC reviewed high volume therapy 

code pairs that included the most 

frequently billed therapy CPT code 

97110, and the commenters conveyed 

the AMA RUC’s conclusion that there is 

no duplication in the work or PE inputs 

for the most frequently reported therapy 

codes. 

The commenters pointed out that 

single comprehensive codes for certain 

bundles of component services were 

implemented in CY 2010, and that 

additional ones would be created in the 

future. Therefore, the commenters 

disagreed with CMS’ reasoning for 

proposing a general MPPR that is not 

code pair-specific in the context of these 

ongoing efforts of the CPT Editorial 

Panel and the AMA RUC to revise the 

coding and values for services that are 

commonly furnished together. Instead, 

the commenters urged CMS to continue 

to work within the established processes 

and resolve duplication, where it exists, 

at the code pair level rather than with 

payment. 

Response: We appreciate the detailed 

information provided by the 

commenters regarding the historical 

AMA RUC process to value the therapy 

codes and the additional examples of 

the practice expenses as they apply to 

the many combinations of therapy 

services that may be reported. We 

understand that the AMA RUC valued 

many of the therapy services based on 

certain assumptions about the typical 

combinations of services furnished in a 

therapy session. However, as the 

commenters pointed out, there are 

numerous combinations of therapy 

services observed in the PFS claims data 

that we posted on the CMS Web site 

under supporting files for the CY 2011 

PFS proposed rule that are commonly 

furnished in the physician’s office 

setting. In the context of this large 

number of commonly observed 

combinations, we do not believe that 

our usual PFS methodology of valuing 

the typical service adequately accounts 

for the duplication in PE that occurs in 

the many possible therapy service 

combinations. Although they are 

frequent, they do not represent the 

typical case used by the AMA RUC in 

valuing the individual component 

services and, thus, do not fully account 

for duplications in PE. We proposed the 

therapy MPPR in order to pay more 

appropriately for therapy services in 

general by adjusting for the duplicate 

payment for the PE that may occur 

when combinations of therapy services 

are furnished together. 

We agree with the commenters that, 

when considering all claims for therapy 

services paid under the PFS, the median 

number of services is three. Thus, that 

number may have been appropriate for 

the AMA RUC to use in valuing therapy 

services. However, the median number 

of four services that we presented in the 

CY 2011 PFS proposed rule was based 

upon all claims for multiple therapy 

services, and did not include claims for 

a single therapy service. It was the 

multiple service claims that we 

examined for purposes of the MPPR 

analysis, and it is these claims to which 

the MPPR would apply. Therefore, we 

continue to believe that the median 

number of four is the appropriate 

reference point when evaluating an 

MPPR. We note further that when the 

AMA RUC valued certain therapy 

services based on the assumption that a 

combination of three types of therapy 

services would be furnished to the 

patient, then in the case of multiple 

service claims where the median 

number of services is four, some PE 

duplication would clearly occur for the 

typical multiple service case with more 

than three services. 

Although we continue to believe that 

50 percent would generally be an 

appropriate level for an MPPR for the PE 

component of payment for therapy 

services, consistent with the current 

PFS MPPR policies for imaging and 

surgical services and our PE overlap 

analysis of certain therapy code 

combinations for the CY 2011 PFS 

proposed rule, we acknowledge there 

are particular challenges associated with 

establishing an MPPR for therapy 

services to account for the duplication 

in PE. For example, the current coding 

structure for therapy services relies 

upon timed units in many cases, and as 

a result, the number of commonly 

observed combinations is very large. 

The PE overlaps vary depending upon 

the specific combinations of services 

furnished to the patient, which may 

include evaluation services, therapeutic 

procedures, and therapeutic modalities. 

The common occurrence of such a great 

variety of multiple therapy code 

combinations contrasts with the 

relatively lesser number of 

combinations and/or frequency of 

combinations of surgical procedures or 

diagnostic imaging procedures to which 

the established PFS MPPR policies 

apply. 

As the commenters pointed out, the 

direct PE inputs for certain therapy 

services were systematically established 

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based upon a standard AMA RUC 

methodology of three therapy services 

furnished in a session that included two 

therapeutic procedures and one 

therapeutic modality and that assigned 

certain PE inputs solely to the two 

therapeutic procedures. However, the 

scenarios utilized by the AMA RUC in 

this process are an incomplete 

representation of the usual 

combinations of services reported when 

therapy services are furnished in a 

practitioner’s office. For example, the 

most common combination of CPT 

codes for therapy services in CY 2009 

PFS claims data consisted of an average 

of 3.5 services which were comprised of 

some combination of one or more units 

of a single therapeutic procedure CPT 

code and one or more units of a single 

modality CPT code, rather than 3 total 

units of the services. The second most 

common combination was a therapeutic 

procedure CPT code alone, with an 

average of 2.8 units, while the AMA 

RUC relied upon 2 therapeutic 

procedures in a session for its 

assignment of certain PE inputs. Other 

commonly observed combinations of 

codes included 3.4 to 4.6 therapy 

services, with different numbers of 

therapeutic procedures and therapeutic 

modalities furnished to the patient than 

were assumed by the AMA RUC under 

the scenarios that were the basis for 

establishing the PE inputs for certain 

therapy CPT codes. Therefore, despite 

the AMA RUC’s consideration of 

multiple services for valuation, the 

therapy code combinations as actually 

reported by practitioners would 

typically have some additional 

duplication in their PE. Thus, while the 

current PFS values for therapy services 

may reflect some efficiencies in the PE 

for certain code combinations based on 

the AMA RUC approach to valuation (to 

the extent we accepted the AMA RUC 

recommendations), the actual 

efficiencies are not fully recognized in 

the PE inputs for the most commonly 

reported therapy code combinations, 

nor are they necessarily recognized in 

the many other common code 

combinations that were not considered 

by the AMA RUC as the typical case. 

Based on our review of the scenarios 

submitted by the commenters, we 

continue to believe that there is 

significant overlap in the PE when many 

combinations of therapy services are 

furnished together and that this overlap 

has not been adequately accounted for 

in the direct PE inputs that the AMA 

RUC has recommended to us for the 

component services. We believe the 

overlaps remain substantial and they 

can be potentially higher than 50 

percent for some combinations while 

lower for others. Our analysis of five 

high volume therapy code pairs as noted 

in the CY 2011 PFS proposed rule (75 

FR 40078) suggested a reduction in the 

PE for the lower paying code of 28 to 56 

percent to account for PE duplication. 

In response to the commenters who 

projected that the impact on physician’s 

office payment for physical therapy 

services would be greater than the 11 

percent reduction we modeled for the 

proposed rule (75 FR 40232), we note 

that an additional element of our 

analysis was the continued transition to 

setting the PE RVUs based on the PPIS 

data. The PPIS transition is expected to 

significantly increase payment for the 

PE component of therapy services in CY 

2011. While we acknowledge that the 

estimated change in PE RVUs due to the 

proposed therapy MPPR alone would 

result in a payment decrease for the 

specialty of physical and occupational 

therapy of somewhat more than 11 

percent, it is the combined 

consideration of all factors affecting the 

CY 2011 PE RVUs that resulted in the 

11 percent decrease for physical and 

occupational therapists in the proposed 

rule specialty impact table (75 FR 

40232). We note further that the 

estimated impact of all the PE RVU 

changes for physical and occupational 

therapy based upon our proposals for 

CY 2011 if there were no remaining 

transition to the new PE RVUs using the 

PPIS data would be ¥7 percent. 

Any MPPR policy, such as the MPPR 

that currently applies to surgical 

services and imaging procedures, is a 

relatively blunt payment policy tool that 

improves the overall accuracy of 

payment when combinations of services 

are furnished together but is not, by its 

nature, a specific policy that precisely 

values each code combination. A 

general MPPR is not unlike the wellestablished PFS pricing methodology 

that relies on the typical case, where we 

readily acknowledge that the clinician’s 

resources used to furnish a specific 

service to a specific patient on a specific 

day may be more or less than those used 

in the typical case. Similarly, while we 

believe that an MPPR would generally 

improve the accuracy of PFS payment 

when multiple therapy services are 

furnished to a single patient in a single 

session, we understand that for a 

specific combination of services for a 

given patient, the resources required 

may be more or less than those 

recognized for payment under the MPPR 

policy. In view of the requirements of 

section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA) 

which specify that the Secretary shall 

identify potentially misvalued codes by 

examining multiple codes that are 

frequently billed in conjunction with 

furnishing a single service and make 

RVU adjustments, we continue to 

believe it would be appropriate to 

expand the current PFS MPPR policies 

to address those scenarios where we 

conclude that combinations of services 

commonly furnished together are 

systematically overvalued. 

We believe the more specific 

valuation of common code 

combinations is best conducted with 

input from the AMA RUC as it evaluates 

single new comprehensive codes for a 

bundle of component services when 

those new codes are established by the 

CPT Editorial Panel. In such cases 

where a single code is used to report a 

comprehensive service, an MPPR would 

no longer apply, which would be 

appropriate because the potential for PE 

duplication would have been explicitly 

considered in determining the PE inputs 

for the comprehensive service. As we 

stated earlier in this section concerning 

the MPPR for imaging services, the 

MPPR is not intended to supersede the 

AMA RUC process. We encourage the 

AMA RUC to reexamine the values and 

direct PE inputs for therapy services, 

including code pairs, for duplication in 

the PE, and to recommend therapy 

services to the CPT Editorial Panel for 

consideration of bundling into 

comprehensive codes. However, we 

believe it is appropriate to use an MPPR 

to address the PE duplication that is 

currently present within the PFS RVUs 

for the therapy codes when more than 

one service is furnished to a patient. 

After consideration of the public 

comments we received, we are adopting, 

with modifications, our proposal to 

establish a MPPR policy for ‘‘always 

therapy’’ services for CY 2011. However, 

given the complexities involved in 

establishing an MPPR for the very large 

number of therapy codes and 

combinations, rather than the proposed 

50 percent payment reduction to the PE 

component of the second and 

subsequent ‘‘always therapy’’ services 

billed by the same practitioner or 

facility on the same date of service for 

the same patient, we are adopting a 25 

percent MPPR for ‘‘always therapy’’ 

services furnished in CY 2011. We 

continue to believe that a 50 percent 

MPPR for therapy services may be 

appropriate in light of our analysis of 

five high volume therapy code pairs that 

each occur over 2 million times in PFS 

claims for multiple therapy services and 

account for almost half of such claims, 

and for which we estimated that the 

resulting reduction in the PE for the 

lower paying code would range from 28 

to 56 percent. However, we believe a 25 

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percent MPPR represents an appropriate 

and conservative first step toward 

eliminating payment for duplicative PE 

when multiple ‘‘always therapy’’ 

services are furnished to the same 

patient by the same therapy provider on 

the same date of service. We note that 

a 25 percent MPPR represents half the 

proposed reduction, and is slightly less 

than the lower range of the reduction 

suggested by our analysis of high 

volume code pairs. During CY 2011 and 

future years, we will continue to refine 

our analyses and consider whether 

further modifications to the policy 

would be appropriate, including the 

possible adoption of a 50 percent MPPR 

or a different payment percentage 

reduction. Any further changes to the 

MPPR for therapy services will be 

addressed in future rulemaking, 

including the possible adoption of any 

alternative percentage payment 

reduction to the 25 percent MPPR that 

will be in place for CY 2011. We will 

also closely follow the work of the CPT 

Editorial Panel and the AMA RUC with 

respect to the coding and valuation for 

therapy services over the next few years 

as we assess the potential merits of 

further changes to the MPPR policy. We 

note that the typical reductions in total 

PFS payment for high utilization 

therapy code combinations due to the 

MPPR alone would fall within the range 

of 7 to 9 percent under our final policy, 

but this decrease will be mitigated by 

the continued transition to use of the 

PPIS data. As displayed in Table 101 of 

this final rule with comment period, we 

estimate that the CY 2011 impact on the 

PE RVUs of the new therapy MPPR and 

continued PPIS transition is a reduction 

in PFS payment to physical and 

occupational therapists of 

approximately ¥3 percent. 

The final list of CY 2011 CPT codes 

for ‘‘always therapy’’ services that are 

subject to the therapy MPPR is 

displayed in Table 21 at the end of this 

section. 

Comment: Some commenters pointed 

out that CMS’ analysis was based only 

on data from physicians and private 

practice therapists, which the 

commenters opposed as 

unrepresentative of the typical therapy 

session because the data represent only 

35 percent of outpatient therapy 

services paid under Medicare. The 

commenters objected that no data from 

skilled nursing facilities (SNFs), 

rehabilitation agencies, CORFs, and 

hospital outpatient departments were 

considered in the analysis. The 

commenters reported that application of 

the MPPR policy on a per-day basis 

would be inconsistent with the delivery 

of therapy services in provider settings 

where multiple sessions of the same or 

different disciplines of therapy on the 

same day are commonly furnished to 

‘‘captive’’ patients and would unfairly 

reduce payment for the resources used 

to provide these services. The 

commenters believe there is no 

duplication in the PE in such 

circumstances. Some commenters 

suggested that reductions should not be 

applied when there is a break in 

services into more than one session in 

the same day. 

Response: With respect to payment 

under the PFS, according to section 

1848(c)(1)(B) of the Act, the term 

‘‘practice expense component’’ means 

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. Under 

section 1848(c)(2)(C)(ii) of the Act, we 

are required to determine PE RVUs 

based on the relative practice expense 

resources involved in furnishing 

services. We develop these resourcebased PE RVUs by looking at the direct 

and indirect physician practice 

resources involved in furnishing each 

service. To establish the direct PE 

inputs for services paid under the PFS, 

we consider the typical clinical scenario 

in which those services are delivered 

and paid by Medicare. In the case of 

therapy services that are paid under the 

PFS, the scenarios we consider are 

office-based (not institutional) because 

these therapy services are the only ones 

that are actually paid under the PFS 

(section 1848 of the Act) and subject to 

all of the provisions of the PFS, 

including budget neutrality under 

section 1848(c)(2)(B)(ii)(II) of the Act. 

Section 1834(k)(3) of the Act then 

requires that we pay for all outpatient 

therapy services at the applicable PFS 

amount. Therefore, our analyses and 

policy development regarding the 

therapy MPPR were based solely on 

claims for office-based therapy services 

and, given the applicable statutory 

payment provisions; we do not believe 

it would have been appropriate for us to 

consider institutional patterns of care in 

setting PFS rates for therapy services. 

We are required to establish the 

values for services paid under the PFS 

(office-based services) so that therapy 

services are valued appropriately in the 

context of all other services paid under 

the PFS, and that means ensuring that 

therapy services are appropriately 

valued for the office setting. In the case 

of other services paid under the PFS 

that may be furnished in both facility 

and nonfacility settings, we generally 

establish separate but related facility 

and nonfacility values to differentially 

value the services when furnished in 

each of the two types of settings. 

However, therapy services are only paid 

under the PFS when furnished in the 

office setting, so we establish the PFS 

values for therapy services based on 

patterns of care in the office setting. 

This approach ensures equitable and 

relative treatment of all services paid 

under the PFS with respect to the 

statutory provisions that apply to the 

PFS, including year-to-year budget 

neutrality. In contrast to other services 

paid under the PFS, the statute then 

specifies that we pay for therapy 

services furnished in facility settings at 

the applicable PFS amount (which, as 

discussed above, is established based 

upon our resource-based methodology 

for services furnished in nonfacility 

settings). Although the statutory 

payment scheme for therapy services 

differs from most other services, we note 

that this treatment ensures that 

Medicare payment is the same across all 

settings for outpatient Part B therapy 

services. 

We acknowledge the commenters’ 

point that multiple therapy sessions 

furnished to one patient by one provider 

(one National Provider Identifier (NPI)) 

in a single day are more common in 

facility settings than in the office 

setting. However, we continue to believe 

that in these situations there would be 

some overlaps in the PE, including 

patient education and obtaining 

measurements, that would be 

appropriately accounted for through the 

therapy MPPR. Furthermore, given the 

nature of therapy services and the 

associated coding, we believe it would 

be very challenging to determine the 

medical necessity of multiple therapy 

sessions on one date of service or the 

precise beginning and ending of therapy 

sessions if we were to exclude from the 

MPPR those therapy services furnished 

by the same provider to a single patient 

on the same day but in different 

sessions, although we acknowledge that 

this modification would be consistent 

with our established policy for the 

imaging MPPR. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

apply the therapy MPPR when multiple 

therapy services are billed on the same 

date of service for the same patient by 

the same practitioner or facility under 

the same NPI, regardless of whether 

those therapy services are furnished in 

separate sessions. 

Comment: Many commenters objected 

to applying the MPPR across therapy 

disciplines because the commenters 

argued that physical therapy, 

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occupational therapy, and speechlanguage pathology (SLP) are separate 

and distinct interventions furnished 

independently by individually licensed 

professionals, each of which is certified 

to provide unique and specialized 

services that do not cross discipline or 

service lines. Several commenters 

explained that each discipline involves 

entirely different skills, equipment, 

supplies, and treatment goals, and 

separate disciplines are often located in 

different treatment settings. Individual 

plans of care, explained the 

commenters, are separately maintained 

for each therapy discipline and contain 

specific goals and treatments. Some 

commenters compared the proposal to 

claiming that services furnished to a 

single patient on the same day by a 

cardiologist and internal medicine 

specialist contain duplicative PE inputs. 

The same commenters described 

administrative contact with the patient 

in this scenario as distinct and separate, 

observing that greeting and gowning the 

patient, cleaning, and assistant activities 

are furnished independently by the 

second or subsequent discipline, and 

cannot be shared. 

The large majority of commenters 

argued that the proposal did not make 

logical distinctions between therapy 

treatments or specialties or even 

properly distinguish between the skills 

of rehabilitation practitioners. While 

physical therapists and occupational 

therapists report the same CPT codes, 

the commenters noted that the codes do 

not represent the same service and the 

plan and approach to treatments differ 

depending on the discipline. 

Response: We recognize that the 

therapy disciplines are separately 

qualified professionals who address 

specific impairments using separate and 

unique skills. However, in the office 

setting which is the basis for our valuing 

therapy services for payment under the 

PFS as discussed previously, although 

we believe it would be uncommon for 

services to be furnished to a single 

patient by different therapy disciplines 

and billed by a single provider (one NPI) 

on the same date of service, we continue 

to believe that there would be some 

overlap in the PE in this circumstance. 

The PE overlaps that we would 

anticipate include greeting the patient, 

obtaining vital signs, and post-visit 

phone calls. We do not agree with the 

commenters that we should accept such 

multiple discipline cases from the 

therapy MPPR that would otherwise 

apply. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

apply the therapy MPPR to all therapy 

services across the disciplines billed on 

the same date of service for the same 

patient by the same practitioner or 

facility under the same NPI. 

Comment: Several commenters 

pointed out that, unlike other therapy 

services, many SLP services contain 

therapist work in their PE because SLPs 

have no assistants. These commenters 

requested that the therapy MPPR not be 

implemented, or at least be delayed, 

until the AMA RUC completes its plan 

to recommend moving SLP work from 

PE to work. In addition to bundled 

codes, the commenters also requested 

that add-on codes, such as CPT code 

92608 (Evaluation for prescription for 

speech-generating augmentative and 

alternative communication device, faceto-face with the patient; each additional 

30 minutes (List separately in addition 

to code for primary procedure)), be 

exempted from the therapy MPPR, since 

the PE inputs for add-on codes 

explicitly take into consideration the PE 

inputs for a base code that is always 

reported. The commenters reported that 

the major SLP codes include a wide 

variety of service types and are 

essentially bundled already, meaning 

that SLP practitioners rarely bill two 

different services on the same day for 

the same patient. The commenters 

expressed concern because SLP services 

are furnished and valued differently 

than physical and occupational therapy, 

yet the proposed rule contained no SLP 

examples to justify including SLP codes 

in the MPPR or to estimate the impact 

on SLP services. 

Response: We note that most of the 

SLP codes will have been valued with 

therapist work in the work component 

of the SLP service RVUs by CY 2011, 

although we do not see the continued 

valuation of therapist work in the PE as 

an impediment to application of the 

MPPR to SLP services. Since many 

single SLP codes represent multiple 

component services that are reported 

using a single comprehensive code, the 

impact of the therapy MPPR on PFS 

payment for SLP services would be 

minimal. For those services that may 

occasionally be billed with more than 

one SLP code for a session, we see no 

basis for treating SLP services 

differently than other therapy services 

because we believe there would also be 

PE duplication in these cases. 

However, we agree with the 

commenters that add-on codes should 

not be subject to the MPPR for therapy 

services because their PE inputs already 

consider that the add-on code is always 

furnished along with a primary service. 

Therefore, after consideration of the 

public comments we received, we are 

removing add-on therapy CPT code 

92608 from the list of ‘‘always therapy’’ 

services that we proposed for 

application of the therapy MPPR policy. 

In addition, we are removing CPT code 

97010 (Application of a modality to 1 or 

more areas; hot or cold pack) which is 

a bundled code that was inadvertently 

included on the proposed list. These 

changes are reflected in the final list of 

codes subject to the therapy MPPR 

policy that is displayed in Table 21 at 

the end of this section. This policy 

parallels our treatment of the MPPR for 

surgical services, where surgical add-on 

codes are not subject to the surgical 

MPPR. 

Comment: Some commenters 

characterized the proposed therapy 

MPPR as contrary to the objectives of 

the ACA, which the commenters believe 

was designed to shift care to the most 

effective and efficient delivery setting to 

ensure beneficiary access to costeffective, high quality and coordinated 

care. Because therapy services do not 

involve expensive drugs or testing, yet 

they assist patients in avoiding or 

reducing other medical costs, many 

commenters believe that physical 

therapy is the most efficient and costeffective treatment to return patients to 

independent function. The commenters 

contended that growing Medicare 

expenditures for the treatment of 

common musculoskeletal problems 

could easily be controlled by earlier 

access of patients to physical therapy 

services. 

The commenters were concerned that 

lower therapy payments would 

exacerbate the shortage of therapists, 

lead to restricted access to therapy 

services, especially in rural areas, and 

result in patients who are more prone to 

injuries and functioning at a lower level. 

Undertreated functional impairments, 

argued the commenters, would lead to 

increased spending for medication and 

medical costs associated with decreased 

mobility, pain and falls, increased 

emergency room services, longer 

inpatient stays, quicker returns to the 

hospital setting, and earlier placement 

in nursing homes. 

In addition, some commenters were 

concerned that the MPPR would 

provide an incentive to schedule 

patients in a manner that would be 

inefficient, inappropriate, and 

inconvenient for patients. The 

commenters noted that research proves 

therapy is more effective for many 

elderly patients with several visits on 

the same day, separated by rest. The 

commenters indicated that patients in 

rural communities prefer multiple 

therapy service visits to minimize 

lengthy commutes. 

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Response: Through the CY 2011 

proposed rule and its associated public 

comment period, we have invited public 

involvement in the process of policy 

development regarding an MPPR for 

therapy services. We believe the therapy 

MPPR policy is fully consistent with 

section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA) 

which 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. Therefore, we do 

not agree with the commenters that the 

MPPR policy undermines the goals of 

the ACA but, instead, we believe the 

policy fulfills one of our statutory 

obligations by valuing more 

appropriately combinations of therapy 

services furnished to patients and paid 

under the PFS. We have no reason to 

believe that appropriately valuing 

services for payment under the PFS by 

reducing payment for duplication in the 

resource-based PE payment for the 

component services would contribute to 

therapist workforce shortages or limit 

patients’ access to medically reasonable 

and necessary therapy services. 

With respect to the ordering and 

scheduling of therapy services for 

Medicare beneficiaries, we require that 

Medicare-covered services be 

appropriate to patient needs and that a 

physician certifies each patient’s plan of 

care. We would not expect the adoption 

of an MPPR for therapy services to 

result in therapy services being 

furnished on separate days by one 

provider so that the provider may garner 

increased therapy payment unless this 

pattern of care is the most clinically 

appropriate for the patient. We agree 

with the commenters that this 

unprofessional behavioral response on 

the part of practitioners would be 

inefficient and inappropriate and could 

result in patient compliance problems 

with the plan of care. We will continue 

to monitor access to care and patterns of 

delivery for therapy services, with 

particular attention focused on 

identifying any changes in the delivery 

of same day therapy services that may 

be inappropriate. 

Comment: Several commenters noted 

that CMS has contracted with Computer 

Sciences Corporation (CSC) and RTI 

International to develop outpatient 

therapy payment alternatives and urged 

CMS to place a high priority on the 

development of an alternative payment 

approach for therapy services rather 

than applying the proposed MPPR. 

Many commenters supported bundled 

per-session codes that would vary based 

on the severity of the patient and the 

complexity of evaluation and treatment 

services, and some commenters believe 

this payment approach would be more 

equitable than the proposed MPPR. The 

commenters argued for a scientific 

approach to the development of 

alternatives to the current payment 

system, which the commenters believe 

contrasts with the analysis presented by 

CMS to support the MPPR. However, 

most commenters encouraged further 

study and development before 

implementation of any alternatives. 

Many commenters pledged to work with 

CMS in the future to further develop a 

bundled service approach based on 

episodes of care. 

Response: We appreciate the effort 

and useful information contributed by 

stakeholders to the discussion and 

development of alternatives to the 

therapy caps and we refer readers to 

section III.A.2. of this final rule with 

comment period for a further discussion 

of the public comments and our 

responses on this issue. We look 

forward to the continued cooperation of 

stakeholders as we continue our work in 

this area over the coming years. 

However, we do not believe short-term 

alternative payment options for therapy 

services are sufficiently developed to 

warrant immediate implementation, and 

the commenters on the CY 2011 PFS 

proposed rule generally shared that 

view. In contrast, we believe that we can 

implement an appropriate MPPR for 

therapy services beginning in CY 2011 

that would immediately provide more 

appropriate payment for the PE 

component of therapy services when 

multiple therapy services are furnished 

to one patient on one date of service by 

one provider. Paying more appropriately 

for therapy services in CY 2011 will 

allow patients to receive more medically 

necessary therapy services before 

reaching the therapy cap. To the extent 

that the therapy MPPR encourages the 

future bundling of therapy codes into a 

single comprehensive service that 

would be specifically valued, we 

support the exploration of that concept 

to capture the specific efficiencies 

associated with certain combinations of 

therapy services. 

Comment: Several commenters 

asserted that the therapy MPPR proposal 

violated the Administrative Procedure 

Act (APA), alleging the proposal was 

arbitrary and capricious. In addition, 

some commenters argued that CMS did 

not provide sufficient information 

regarding the data and analysis used to 

develop the policy to allow the 

informed public input from qualified 

providers of therapy services. 

Response: Consistent with the 

requirements of the APA, a full 

description of our analysis and the 

rationale we used as the basis for the 

proposed therapy MPPR policy was 

presented in the proposed rule, the 

public comments on our proposal have 

been reviewed, and our responses are 

provided in this final rule with 

comment period. Although many 

commenters requested that we share 

more data to support the proposed 

policy, several commenters 

demonstrated that they have their own 

access to Medicare data by submitting 

reports to us along with their comments 

in order to support their views or to 

refute the examples we presented in the 

proposed rule. We note further that we 

posted therapy utilization data on the 

CMS web site after publication of the 

proposed rule to provide additional 

information regarding the specific 

combinations and utilization of therapy 

services on PFS claims. The information 

was posted under downloads for the CY 

2011 PFS proposed rule at: http:// 

www.cms.gov/PhysicianFeeSched/ 

PFSFRN/list.asp#TopOfPage. Therefore, 

we believe the final MPPR for therapy 

services is being adopted in compliance 

with the notice and comment 

rulemaking process under the APA. 

In summary, after consideration of the 

public comments we received, we are 

adopting our CY 2011 proposal to apply 

an MPPR to the PE component of 

Medicare payment for the second and 

subsequent outpatient ‘‘always therapy’’ 

services, with a modification to apply a 

25 percent reduction for CY 2011 rather 

than the 50 percent reduction we had 

proposed. Specifically, beginning in CY 

2011 we are adopting an MPPR for 

‘‘always therapy’’ services under which 

a 25 percent reduction will be applied 

to the PE component of payment for the 

second and subsequent ‘‘always 

therapy’’ service(s) (those displayed in 

Table 21) that are furnished to a single 

patient by a single provider on one date 

of service in all settings where 

outpatient therapy services are paid 

under Part B. This policy applies to 

office-based therapy services paid under 

the PFS as well as to institutional 

therapy services paid under Part B at the 

PFS rates. We note that the MPPR 

would apply only when multiple 

therapy services are billed on the same 

date of service for one patient by the 

same practitioner or facility under the 

same NPI. This policy does not apply to 

add-on, bundled, or contractor-priced 

‘‘always therapy’’ codes. It does, 

however, apply to all ‘‘always therapy’’ 

services furnished on a single date of 

service by the same provider to a single 

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patient, including ‘‘always therapy’’ 

services furnished in different sessions 

or in different therapy disciplines. 

For those therapy services paid under 

the PFS, we are required to make a 

budget neutrality adjustment under 

section 1848(c)(2)(B)(ii)(II) of the Act. 

As a result, the estimated reduced 

expenditures for therapy services due to 

the 25 percent MPPR will be 

redistributed to increased CY 2011 

payments for other PFS services. We 

refer readers to XI.A.2. of this final rule 

with comment period for further 

discussion of the impact of this policy. 

The final list of CY 2011 ‘‘always 

therapy’’ CPT codes subject to the MPPR 

policy for therapy services is displayed 

in Table 21. 

TABLE 21—‘‘ALWAYS THERAPY’’ SERVICES SUBJECT TO THE CY 2011 

MPPR POLICY* 

CPT code Short descriptor 

92506 ....... Speech/hearing evaluation. 

92507 ....... Speech/hearing therapy. 

92508 ....... Speech/hearing therapy. 

92526 ....... Oral function therapy. 

92597 ....... Oral speech device eval. 

92607 ....... Ex for speech device rx, 1 hr. 

92609 ....... Use of speech device service. 

96125 ....... Cognitive test by hc pro. 

97001 ....... Pt evaluation. 

97002 ....... Pt re-evaluation. 

97003 ....... Ot evaluation. 

97004 ....... Ot re-evaluation. 

97012 ....... Mechanical traction therapy. 

97016 ....... Vasopneumatic device therapy. 

97018 ....... Paraffin bath therapy. 

97022 ....... Whirlpool therapy. 

97024 ....... Diathermy eg, microwave. 

97026 ....... Infrared therapy. 

97028 ....... Ultraviolet therapy. 

97032 ....... Electrical stimulation. 

97033 ....... Electric current therapy. 

97034 ....... Contrast bath therapy. 

97035 ....... Ultrasound therapy. 

97036 ....... Hydrotherapy. 

97110 ....... Therapeutic exercises. 

97112 ....... Neuromuscular reeducation. 

97113 ....... Aquatic therapy/exercises. 

97116 ....... Gait training therapy. 

97124 ....... Massage therapy. 

97140 ....... Manual therapy. 

97150 ....... Group therapeutic procedures. 

97530 ....... Therapeutic activities. 

97533 ....... Sensory integration. 

97535 ....... Self care mngment training. 

97537 ....... Community/work reintegration. 

97542 ....... Wheelchair mngment training. 

97750 ....... Physical performance test. 

97755 ....... Assistive technology assess. 

97760 ....... Orthotic mgmt and training. 

97761 ....... Prosthetic training. 

97762 ....... C/o for orthotic/prosth use. 

G0281 ...... Elec stim unattend for press. 

G0283 ...... Elec stim other than wound. 

G0329 ...... Electromagntic tx for ulcers. 

*Excludes contractor-priced, bundled, and 

add-on ‘‘always therapy’’ codes. 

5. High Cost Supplies 

a. Background 

MedPAC and the AMA RUC have 

long recommended that CMS establish a 

frequent price update process for highcost supplies that are direct PE inputs 

in the PE database for services paid 

under the PFS because of their 

speculation that prices for these items 

may decrease over time as competition 

increases and new technologies 

disseminate into medical practice. 

MedPAC in particular has perennially 

noted that it is important for CMS to 

update the prices of high-priced 

supplies on a regular basis as inaccurate 

prices can distort PE RVUs over time, 

contributing to the misvaluation of 

established services under the PFS. 

Most of the current prices for highcost supplies included in the direct PE 

database are from 2004 or earlier. There 

are currently 62 unique supplies with 

prices of $150 or more in the proposed 

CY 2011 PE database, which is available 

on the CMS Web site under the 

supporting data files for the CY 2011 

PFS proposed rule at http:// 

www.cms.gov/PhysicianFeeSched/. 

Finally, we note that we do not actually 

pay the supply prices included in the 

PE database but, instead, use them to 

develop the PE RVUs according to our 

standard PE methodology as described 

in section II.A.2. of this final rule with 

comment period. Payment for a 

procedure that uses a supply is based 

upon the PE RVUs that result from the 

PE methodology, and supplies are 

among the direct PE inputs for 

procedures. Therefore, it is the relativity 

of high-cost supply prices to prices for 

other PE items (equipment, low-cost 

supplies, and clinical labor) that is 

important. 

Accordingly, in the CY 2009 PFS 

proposed rule (73 FR 38582), we 

proposed a process to update the prices 

for high-cost supplies priced at $150 or 

more that are included in the PE inputs 

for procedures paid under the PFS PE 

methodology. The CY 2009 proposed 

rule described a publicly transparent 

process in which CMS would publish a 

list of the high-cost supplies in the PFS 

proposed rule (65 supplies were 

included in the CY 2009 PFS proposed 

rule), and specialty societies or other 

relevant organizations would provide 

acceptable documentation supporting 

the pricing for the supplies during the 

60-day public comment period. 

Furthermore, in that same proposed rule 

(73 FR 38582), we provided guidance on 

what constitutes valid, reliable 

documentation that reflects the typical 

price of the high-cost item in the 

marketplace. We outlined examples of 

acceptable documentation, such as a 

detailed description (including system 

components), sources, and current 

pricing information, confirmed by 

copies of catalog pages, invoices, and 

quotes from manufacturers, vendors, or 

distributors. We indicated that 

documentation that does not include 

specific pricing information such as 

phone numbers and addresses of 

manufacturers, vendors, or distributors 

or Web site links without pricing 

information would not be acceptable. 

We also noted that if acceptable 

documentation was not received within 

the proposed rule’s 60-day public 

comment period, we would use prices 

from the Internet, retail vendors, and 

supply catalogs to determine the 

appropriate cost, and that we would use 

the lowest price identified by these 

sources (73 FR 38582). Finally, we 

solicited public comments on 

alternatives that could be used to update 

pricing information in the absence of 

acceptable documentation provided by 

specialty societies or other interested 

organizations. 

In the CY 2009 PFS final rule with 

comment period (73 FR 69882), we 

indicated that we received many 

comments on the proposed process and, 

while some commenters expressed 

support, others believed the proposed 

process was flawed and burdensome. 

Moreover, although we received some 

data in response to our request for 

information on the 65 high-cost supplies 

with prices of $150 or more, much of 

what we received was not complete or 

did not represent typical market prices. 

In particular, we expressed concern that 

the submitted data often represented 

manufacturer list prices for the premier 

models of many supplies, while we 

believed there were less expensive 

alternatives. Therefore, we were unable 

to determine the most appropriate, 

typical supply prices for our PFS 

payment methodology that prices the 

typical service described by a HCPCS 

code. Rather than finalizing the 

proposed process for updating high-cost 

supplies and revising the prices for the 

65 supplies based on inadequate pricing 

information, we stated in the CY 2009 

PFS final rule with comment period (73 

FR 69882) that we would research the 

possibility of using an independent 

contractor to assist us in obtaining 

accurate pricing information. 

Furthermore, we informed the public 

that we planned to study the limitations 

of available pricing data and determine 

how to revise our proposed process to 

elicit better data. 

In the CY 2010 PFS proposed rule and 

final rule with comment period (74 FR 

33554 and 61776, respectively), we 

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stated that we were continuing to 

examine ways to obtain accurate pricing 

information for high-cost supplies. We 

noted again in the CY 2010 PFS 

proposed rule that we would depend 

upon the cooperation of the medical 

community to obtain typical prices in 

the marketplace, and we provided 

stakeholders with another opportunity 

to submit public comments on the 

process. In the CY 2010 PFS final rule 

with comment period, we 

acknowledged commenters’ general 

support for an initiative to ensure 

accurate pricing of high-cost supplies. 

In general, the commenters strongly 

preferred a transparent and public 

process, and we stated that we would 

consider this perspective as we explore 

the best way to ensure that accurate 

supply pricing information is used in 

the PFS payment methodology. 

b. Future Updates to the Prices of HighCost Supplies 

In working towards refining a process 

to update the prices of high-cost 

supplies and consistent with our 

intention expressed in the CY 2009 PFS 

final rule with comment period (73 FR 

69882), we contracted with an 

independent contractor during CY 2009 

to help us study the availability of 

accurate pricing information. We 

requested that the independent 

contractor, L&M Policy Research, 

research pricing information for the 65 

high-cost supplies listed in the CY 2009 

proposed rule (73 FR 38583 through 

38585) and determine what, if any, 

pricing information reflecting typical 

market prices could be obtained for 

these high-cost supplies. 

We first requested that the contractor 

explore publicly available sources to 

obtain typical market prices for these 

supplies. The contractor utilized supply 

vendor catalogs and web sites and 

directly contacted vendors, 

manufacturers, group purchasing 

organizations (GPOs), and any other 

suppliers that the contractor identified 

in their research in order to identify 

prices for each of the supplies. Where 

more than one version of a supply item 

appeared to match a description of a 

high-cost supply and/or more than one 

possible vendor or manufacturer was 

identified, the contractor attempted to 

obtain prices from the multiple sources. 

Upon review of the high-cost supply 

list, the contractor refined the list to 62 

unique high-cost items with prices of 

$150 or more for the study. The original 

list only consisted of 64 items but 

included one item inadvertently listed 

twice (CMS Supply Code SD207 (suture 

device for vessel closure (Perclose A– 

T))) and one item (CMS Supply Code 

SH079 (collagen implant)) that was 

deleted from the PE database after CY 

2007 because it was no longer used as 

an input for any codes. While the 

contractor was able to obtain prices for 

37 of the 62 unique supplies, the 

contractor was unable to obtain pricing 

information for the remaining 25 

supplies. Documentation of these prices, 

a requirement we discussed in the CY 

2009 PFS proposed rule (73 FR 38582), 

was only obtained for 25 of the 36 

supplies with new pricing information. 

For the remainder, while the contractor 

was given price quotes over the phone, 

the sales agents or customer service 

representatives declined to provide any 

form of written documentation, in some 

cases because company policies 

restricted providing pricing 

documentation to prospective customers 

without an account. Moreover, 

information on typical discounts was 

obtained for only seven products, and 

only one discount was documented. In 

the case of these products, companies 

disclosed the maximum available 

discounts, ranging from 18 percent to 45 

percent. Relative to prices currently 

included in the PE database, the 

contractor found higher prices for the 

majority of the medical supplies that 

were researched, specifically 23 

supplies with higher prices, 8 with 

lower prices, and 3 with the same price. 

The high-cost supplies studied by the 

contractor and their current database 

prices are displayed in Table 22. 

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BILLING CODE 4120–01–P 


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Next, we directed the contractor to 

access the United States General 

Services Administration (GSA) medical 

supply schedule to augment the results 

obtained through review of vendor 

materials and direct contact with 

vendors, manufacturers, and GPOs. We 

note that the GSA establishes long-term 

government-wide contracts with 

commercial firms for many products, 

negotiating contracts and determining 

prices to be fair and reasonable prior to 

placing them on schedule. Included on 

the schedule are thousands of medical 

supplies at prices that, in most cases, 

are established through competition. 

The GSA schedule is an open 

solicitation and a business of any size, 

if it is stable and financially sound, can 

request to be included on the schedule. 

GSA’s vendors usually are nationwide 


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vendors with substantial nongovernment sales, and products on the 

schedule must be manufactured in the 

U.S. or in a nation with a trade 

agreement with the United States. 

Submissions for the schedule are 

received 365 days per year, vendor 

contracts can be of varying lengths, and 

vendors can add or delete products from 

the schedule. Depending on the 

aggregate cost estimate associated with 

the vendor’s supply items, the time to 

achieve inclusion on the schedule can 

vary from as short as several months to 

as long as 2 years. The GSA has 

delegated authority to the Department of 

Veterans Affairs (VA) to procure 

medical supplies under the VA Federal 

Supply Schedules Program. 

Using the GSA general search engine 

under the category ‘‘Laboratory, 

Scientific, & Medical’’ available at 

https://www.gsaadvantage.gov/advgsa/ 

advantage/main/start_page.do, the 

contractor obtained nine prices for items 

similar to the high-cost supplies in the 

PE database and that are displayed in 

Table 20 from the publicly available 

information on the Internet, including 

pricing for one product for which its 

prior work did not yield an updated 

price. We believe that additional items 

that are similar to the high-cost supplies 

in the PE database and that may be used 

with the same procedures may be on the 

GSA schedule but we are still working 

through the crosswalk between our 

supplies and the way the supplies are 

presented on the GSA schedule. In the 

proposed rule (75 FR 40081), we stated 

that examples of high-cost supplies in 

the PE database that the contractor 

located on the GSA schedule include: 

(1) Kit, capsule, ESO, endoscopy wapplication supplies (ESO), priced at 

$450 in the PE database and $444 on the 

GSA schedule; and (2) tube, 

jejunostomy, priced at $195 the PE 

database and $60 to $83 on the GSA 

schedule, depending on the 

characteristics of the tube. We note that 

the price of the ‘‘jejunostomy’’ tube that 

we included in the proposed rule was 

incorrect. The actual price of that 

supply item in the PE database is 

$97.50, a lower value that is still 

substantially higher than the price range 

on the GSA schedule. 

Since the GSA medical supply 

schedule is a source for pricing 

information that is public and 

transparent and reflects the best 

government contract price for a product, 

we believe it is a desirable resource for 

us to use in a refined process for 

updating the prices of high-cost 

supplies. For historical context, CMS 

has previously proposed to use VA 

prices that result from the competitive 

marketplace as comparison points to 

limit the Medicare prices for oxygen and 

certain items of durable medical 

equipment and prosthetic devices (62 

FR 38100 through 38107, and 64 FR 

44227 through 44231) in 1997 and 1999, 

respectively. These prior proposals were 

based on our determination that the 

Medicare payment amounts for these 

items as durable medical equipment or 

prosthetics (not as physicians’ services) 

were not inherently reasonable. We 

noted, however, that our current interest 

in the GSA schedule for pricing highcost supplies for payment of physicians’ 

services is not based on considerations 

of inherent reasonableness, and we do 

not actually pay the prices in the PE 

database for supplies under the PFS. 

We further noted that public 

commenters on pricing high-cost 

supplies have consistently requested 

that we ensure that the pricing 

information used to update the prices is 

provided publicly. The commenters 

have observed that this transparency 

would enable stakeholders to evaluate 

and provide feedback to the agency on 

pricing accuracy (74 FR 61776). We also 

acknowledged that our past attempts 

over several years to identify typical 

market prices for the high-cost supplies 

have been inhibited by the limited 

availability of public data that meet the 

documentation requirements we have 

previously established. Individual 

vendors do not always publish their 

product prices or provide typical 

discounts. Moreover, discounts may 

vary depending on suppliers and the 

volume of supplies purchased. In the 

CY 2011 PFS proposed rule (75 FR 

40082), we explained that our 

understanding of the GSA medical 

supply schedule is that the publicly 

listed fair and reasonable prices on the 

schedule generally do not include 

volume and or certain other discounts 

that may be subsequently negotiated by 

the buyer. Consequently, we would 

consider the prices available on the GSA 

schedule to represent the ‘‘individual 

item ceiling’’ price for a single item 

purchase, which we believe would be 

appropriate to estimate the high-cost 

supply prices for physicians’ office 

purchases. We solicited public 

comments regarding the high-cost 

supplies in the direct PE database for 

the CY 2011 PFS proposed rule, 

available on the CMS Web site as noted 

earlier in this section, and the 

corresponding supplies or alternative 

items that could be used for the same 

function that are currently on the GSA 

supply schedule. We encouraged 

commenters to provide a detailed 

analysis of the current relationships 

between the items in the PE database 

and those on the GSA schedule. 

In the CY 2011 PFS proposed rule (75 

FR 40082), we described a refined 

process for regularly updating prices for 

high-cost supplies under the PFS and 

solicit comments on how we could 

improve on this process. The process 

could occur every 2 years beginning as 

soon as CY 2013, although we noted 

that we would propose the refined 

process through rulemaking before 

revising the prices for any high-cost 

supply item based on the GSA schedule. 

We could also consider establishing a 

different price update period depending 

on whether a high-cost supply was a 

new supply in the PE database or had 

been in use for some time, in which case 

we might expect that the price would 

have stabilized and, therefore, could be 

updated less frequently. In general, we 

would expect that the periodicity of 

updating prices for high-cost supplies 

that we eventually adopted would 

balance the associated administrative 

burden with the rate of price changes, 

to ensure that the associated procedures 

remain appropriately valued, rather 

than increasingly misvalued, over time. 

We envisioned that we would base 

high-cost supply price inputs on the 

publicly available price listed on the 

GSA medical supply schedule. Since 

the medical community would have 

several years to examine the GSA 

medical supply schedule before the 

refined process would be adopted, and 

we had found no apparent limitations 

on vendors placing products on the GSA 

schedule, beyond the schedule’s interest 

in competitive, best value 

procurements, stakeholders would have 

the opportunity to ensure that any highcost direct PE input for a PFS service 

that may currently be missing from the 

GSA medical supply schedule would be 

included before CMS needs to access 

the publicly available price for the item. 

If a supply price were not publicly 

available on the GSA medical supply 

schedule by the time CMS needs to 

access the price, we would propose to 

reduce the current price input for the 

supply by a percentage that would be 

based on the relationship between GSA 

prices at that time and the existing PE 

database prices for similar supplies 

(currently an average 23 percent 

reduction). We believe that this refined 

process would be desirable because it is 

consistent with commenters’ repeated 

requests for the updating methodology 

to be transparent and predictable. 

Moreover, the VA (with responsibility 

delegated by the GSA) determines 

whether prices are fair and reasonable 

by comparing the prices and discounts 

that a company offers the government 

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with the prices and discounts that the 

company offers to commercial 

customers. Therefore, using the GSA 

medical supply schedule as a source for 

publicly available prices would also 

better account for product-specific 

market dynamics than the alternative of 

an across-the-board percentage 

reduction for supplies not on the GSA 

schedule based on general price trends 

for the high-cost supplies on the 

schedule. That is, if the market price of 

a particular supply were not to drop 

according to broad trends for other highcost supplies, suppliers would have the 

opportunity to provide their price to the 

public on the GSA schedule in order to 

preclude any reduction in Medicare 

payment for procedures associated with 

that supply. 

Finally, we reiterated our interest in 

receiving detailed public comments on 

the refined process discussed above, 

including all aspects of the price update 

methodology that we have presented. 

Moreover, we believe a similar approach 

could potentially be appropriate to 

update the prices for other supplies in 

the PE database that would not fall 

under our definition of high-cost 

supplies, and we welcomed further 

public comments on that possible 

extension. We also invited further 

suggestions for alternative approaches to 

updating high-cost supply prices, 

specifically those that would result in a 

predictable, public, and transparent 

methodology that would ensure that the 

prices in the PE database reflect typical 

market prices. These principles are 

particularly important in order to ensure 

that the services that utilize the highcost supplies when provided in the 

physician’s office are appropriately 

valued under the PFS and continue to 

be appropriately valued over time. 

Comment: Many commenters agreed 

with the need for a frequent, transparent 

price update process for high-cost 

supplies based on publicly available 

sources of pricing information. MedPAC 

supported CMS’ description of the 

process update the prices of high-cost 

supplies presented in the CY 2011 PFS 

proposed rule: ‘‘As an initial step, it is 

reasonable to use the GSA schedule as 

a source for the prices of high-cost 

supply items and to reduce the prices of 

items not on the GSA schedule by the 

average difference between the GSA 

prices and the prices in CMS’ PE 

database for similar supplies.’’ 

Response: We appreciate the general 

affirmation by many stakeholders of the 

significance of accurate pricing of highcost supplies relative to other PE items 

(equipment, low-cost supplies, and 

clinical labor). We also value MedPAC’s 

support for the update process that we 

described for the prices of high-cost 

supplies. 

Comment: Many commenters asserted 

that because the medical supply prices 

on the GSA schedule reflect the best 

price for government entities, these 

prices are not representative of typical 

prices available to practitioners caring 

for Medicare beneficiaries. The 

commenters suggested that physicians 

in private practices do not have the 

requisite purchasing power to negotiate 

such large discounts on their own and 

that the sales environments for the 

government and private markets are 

vastly different. Therefore, the 

commenters argued, because the GSA 

schedule is a streamlined buying 

process that the government uses to buy 

products and services through registered 

vendors at pre-negotiated prices, the 

schedule does not provide an accurate 

reflection of prices faced by any 

physician practice. Some commenters 

also observed that the prices on this 

schedule have historically been used 

only by manufacturers and suppliers in 

the context of providing these high-cost 

supplies to the VA alone, and do not 

reflect prices to other non-governmental 

entities. 

Response: We appreciate the 

differences in the purchasing power of 

the federal government and individual 

practitioners. However, we have reason 

to believe that prices on the GSA 

schedule do not reflect the full volume 

discounts available to large purchasers 

like the Federal government. In fact, 

while the GSA has delegated the 

authority to the VA to procure medical 

supplies under the VA Federal Supply 

Schedules Program, we understand that 

the prices that appear on the schedule 

do not reflect the prices the VA itself 

would usually pay for a medical supply. 

Instead, the VA determines the schedule 

prices to be fair and reasonable prior to 

placing them on the schedule, and uses 

that schedule price as a starting point 

for its own negotiations with supply 

vendors for specific purchases. 

While several commenters explained 

how vendors provide the VA itself with 

discounts that are greater than those 

offered to other buyers, and a few 

additional commenters made 

uncorroborated claims that prices on the 

GSA supply schedule reflect discounts 

unavailable to other providers, we 

received no evidence that the prices 

contained on the schedule are atypical 

of medical supply prices in the private 

marketplace. We agree that the prices on 

the GSA schedule may reflect some 

discounting, but we do not believe that 

the prices reflect the full discounting 

available to the VA itself for many 

purchases. Instead, we believe that the 

discounting on the GSA schedule 

reflects what the VA has deemed 

reasonable for other government buyers 

in the context of prices and discounts 

that a vendor offers to commercial 

customers. 

We also believe that typical 

practitioners receive discounts from 

vendors’ listed prices for supply items 

for a variety of reasons, although we 

acknowledge that the basis for the 

discounts reflected on the GSA schedule 

may differ from the basis for the 

discounts that are available to typical 

practitioners. Therefore, we do not 

necessarily agree with the premise 

underlying many commenters’ concerns 

that the usefulness of the GSA schedule 

as a source for PFS high-cost supply 

prices is necessarily undermined solely 

because large government buyers benefit 

from some exclusive discounts. 

We believe that in a relative payment 

system, maintaining the relativity of 

discounting among the prices for supply 

items may be more significant than any 

concern associated with the reasons 

different buyers receive particular 

discounts. At the moment, we have no 

reason to believe that the prices on the 

GSA schedule are atypical of the nongovernment market, despite broad 

assertions by the commenters that the 

government may receive discounts for 

different reasons than those available to 

private purchasers. As we consider this 

high-cost supply update process for the 

future, we would be interested in 

receiving further public comments that 

substantiate the claims that medical 

supply prices on the GSA schedule are 

not representative of actual prices paid 

by typical practitioners caring for 

Medicare patients. 

Comment: Some commenters 

expressed concern that pricing high-cost 

supplies based on the GSA supply 

schedule could result in loss of 

appropriate relativity in PE RVUs 

because pricing for other supplies 

would be determined using other 

methodologies. 

Response: As stated earlier in this 

section, we do not actually pay the 

supply prices included in the PE 

database but instead use them to 

develop the PE RVUs according to our 

standard PE methodology as described 

in section II.A.2. of this final rule with 

comment period. However, we believe 

that inaccuracies in the prices for highcost supplies that are specific to a very 

few PFS services may 

disproportionately distort physician 

payment by leading to inaccurate PE 

RVUs for services using those high-cost 

supplies. We believe that neglecting to 

incorporate any discounts or typical 

reductions in the market price for a 

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high-cost supply that is sold to a 

practitioner for use in a specific service 

would result in a greater likelihood that 

the service would be misvalued under a 

relative payment system than would 

similar imprecision in the prices for 

lower-cost supplies that are commonly 

used in many services and where price 

changes are typically less extreme. 

Finally, we note that we also remain 

interested in the possibility of using the 

GSA supply schedule for all PFS supply 

and equipment price inputs, as we 

stated in the CY 2011 PFS proposed rule 

(75 FR 40082). 

Comment: One commenter suggested 

that using the GSA schedule for supply 

price inputs might allow a single 

supplier furnishing a small volume of a 

product at a divergent price to distort 

the PE RVU calculations. On the other 

hand, MedPAC stated that the current 

CMS’ process of ‘‘using price 

information voluntarily submitted by 

specialty societies, individual 

practitioners, suppliers, and product 

developers might not result in objective 

and accurate prices because each group 

has a financial stake in the process.’’ 

Another commenter recommended 

that if CMS were to use the GSA 

schedule prices as high-cost inputs, 

then CMS should guarantee that 

physicians may purchase supplies at the 

GSA schedule prices. The commenter 

claimed that failure to do so would 

result in inherently unfair, lower PE 

RVUs for certain procedures, which 

could ultimately create an access to care 

problem for Medicare beneficiaries. 

Response: We believe that our current 

system of accepting voluntarily 

submitted invoices for supply and 

equipment price direct PE inputs may 

be problematic for high-cost supplies 

because the prices for such supplies 

may be particularly susceptible to 

distortions that significantly influence 

the PE RVUs that we use for payment of 

the associated services. We also believe 

that any attempt to account for these 

distortions and more appropriately 

value the services must be transparent 

to the stakeholders. Because the prices 

on the GSA supply schedule are 

developed based on the interaction 

between parties that have competing 

financial interests (the VA and supply 

vendors), we believe that these prices 

are more likely to be representative of 

competitive market prices than are 

prices that are voluntarily submitted by 

individuals with financial stakes in the 

PFS payment process. We agree that 

distortions—whether price 

overstatements or understatements—in 

the values of the direct PE inputs, 

resulting in misvalued services, have 

the potential to create financial 

incentives for practitioners that are 

detrimental to ensuring access to 

medically necessary and reasonable care 

for Medicare beneficiaries. Based in part 

on prior analysis by MedPAC, we 

believe that the greater risk of misvalued 

PE RVUs results from overvaluing highcost supplies since we believe that 

prices for these items may generally 

decrease over time as competition 

increases. 

As we discussed in our response to a 

previous comment, we do not actually 

use the prices in the PE database for 

supplies but instead those prices are the 

basis for the PE RVUs for the associated 

services developed under the budget 

neutral PFS. Therefore, we do not agree 

with the commenter that we should 

guarantee that physicians may purchase 

supplies at the GSA schedule prices. 

Where our goal is for the high-cost 

supply prices we use for PFS ratesetting 

to reflect typical market prices for these 

items, especially in a relative sense, for 

many reasons different supplies may not 

be available to individual practitioners 

purchasing them at the prices in the PE 

database. The PFS is not a payment 

system that reimburses health care 

practitioners based on their individual 

costs, and the price available to an 

individual practitioner for a supply item 

may be high or lower than the price in 

the PE database that is used for setting 

the PFS PE RVUs for the associated 

procedure. 

Comment: One commenter claimed 

that no U.S. manufacturer sells 

cryoablation probes through the GSA 

supply schedule and, therefore, asserted 

that the pricing process for high-cost 

supplies described in the CY 2011 PFS 

proposed rule would be inappropriate 

for that particular supply. Other 

commenters reported difficulty locating 

particular medical supplies on the GSA 

supply schedule. 

Response: While we recognize that 

not all high-cost supplies are currently 

on the GSA supply schedule, as we 

stated in the CY 2011 PFS proposed rule 

(75 FR 40082), we believe that since we 

have provided the medical community 

several years to examine the GSA 

medical supply schedule before its use 

could be adopted under the PFS, 

stakeholders would have the 

opportunity to ensure that any high-cost 

direct PE input for a PFS service that 

may currently be missing from the GSA 

medical supply schedule would be 

included before CMS needs to access 

the publicly available price for the item. 

Furthermore, we have found that the 

use of multiple clinically related search 

terms under the GSA schedule search 

engine improves our ability to locate 

supply items that are related to those 

that we currently include in the direct 

PE database for the PFS. We believe that 

the mistaken assumption that certain 

supplies are unavailable on the GSA 

supply schedule, resulting from some 

commenters’ inconclusive searches, 

may have influenced many commenters’ 

responses to the process we discussed 

in the CY 2011 PFS proposed rule. 

Prior to adopting use of the GSA 

supply schedule to update the prices for 

high-cost supplies under the PFS, we 

believe it would be appropriate to work 

with interested stakeholders to consider 

developing a crosswalk between supply 

items included the direct PE database 

and the GSA supply schedule. 

Comment: One commenter contended 

that implementation of a process to 

update high-cost supply prices based on 

the GSA schedule would disadvantage 

all medical device companies that have 

chosen to provide devices directly to the 

armed services or facilities for the 

treatment of veterans. A few 

commenters speculated that many 

supply vendors would resist placing 

their products on the GSA schedule for 

a variety of reasons, including avoiding 

any unnecessary regulatory burden or 

the scrutiny of GSA audits. 

Response: We have no reason to 

believe that vendors who sell directly to 

the VA at discounts must incorporate 

negotiated discounted prices on the 

GSA schedule, so we do not believe that 

utilizing publicly available prices as 

direct PE inputs would have a 

disproportionately unfair impact on 

suppliers who sell directly to the VA. At 

the same time, we also understand that 

not every medical supply vendor would 

choose to place their products on the 

GSA schedule. That is why we stated in 

the proposed rule (75 FR 40082) that if 

a supply price were not publicly 

available on the GSA medical supply 

schedule by the time CMS needs to 

access the price, we would consider 

proposing to reduce the current price 

input in the PE database for the supply 

by a percentage that would be based on 

the relationship between GSA prices at 

that time and the existing PE database 

prices for similar supplies. Vendors 

would need to balance their concerns 

about placing their products on the GSA 

supply schedule with the alternative 

pricing policy that would apply. 

Comment: Several commenters 

objected to a reduction of supply price 

inputs based on the relationship 

between GSA prices at the time the 

prices are being updated and the 

existing PE database prices for similar 

supplies. Many of the commenters 

stated that the 23 percent reduction 

presented as an example in the CY 2011 

PFS proposed rule (75 FR 40082) was 

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based on a very small sample of items 

and appeared arbitrary. One commenter 

contended that the percentage reduction 

would need to be validated for 

application to current pricing and 

argued that it would be inappropriate 

for use on an item-specific basis. 

Additional commenters, including the 

AMA RUC, pointed out the discrepancy 

between the price of the ‘‘jejunostomy 

tube’’ supply item listed in the chart of 

high-cost supplies and in the direct PE 

database. These commenters were 

concerned that this discrepancy may 

have led CMS to incorrectly calculate 

the average difference between GSA 

prices and current prices in the direct 

PE database. One commenter reasoned 

that it would be unfair for CMS to 

change the price inputs for innovative 

medical devices by relying on 

‘‘speculation that prices for these items 

may decrease over time as competition 

increases and new technologies 

disseminate into medical practice.’’ 

Response: We appreciate the 

commenters’ concerns regarding the 

example of the 23 percent reduction 

mentioned in the CY 2011 PFS 

proposed rule. We provided that sample 

percentage as an example based on a 

current analysis of a small sample of 

supplies. We appreciate commenters 

correctly pointing out that we displayed 

an outdated price input for the supply 

item ‘‘jejunostomy tube’’ in the CY 2011 

PFS proposed rule (75 FR 40080 

through 40081). As we explained in the 

proposed rule, we are still working 

through the crosswalk between our 

supplies and the way the supplies are 

presented on the GSA schedule. We 

included the 23 percent figure as a 

rough guide based on a comparison of 

current GSA schedule and PE database 

prices for a small sample of high-cost 

supply items. 

Prior to implementing any price 

update based on GSA supply schedule 

prices, we would conduct a thorough 

analysis of the validity of the GSA 

pricing data in question. We believe that 

using such data for price comparisons, 

validated, and expanded to include all 

applicable supply items, may be more 

likely to approximate typical prices for 

these supplies than any available 

alternative—especially failing to update 

the high-cost supply price inputs with 

the necessary frequency. In cases where 

the prices for certain high-cost supplies 

do not follow the broad trends for other 

high-cost supplies, suppliers would 

have the opportunity to provide their 

price to the public on the GSA schedule 

in order to preclude any reduction in 

Medicare payment for procedures 

associated with that supply. 

Comment: Some commenters asserted 

that CMS should conduct independent 

market research similar in kind to the 

research CMS claims that the VA 

conducts in placing supply items and 

their associated prices on the GSA 

schedule. Another commenter 

recommended that CMS use a particular 

market research contractor to price these 

supplies. 

Response: As we stated in the CY 

2011 PFS proposed rule (75 FR 40079), 

we contracted with an independent 

contractor during CY 2009 to help us 

study the availability of accurate pricing 

information for high-cost supplies. We 

believe such research needs to be 

conducted with transparency, including 

using publicly available sources and 

contacting supply vendors directly. The 

contractor reported tremendous 

difficulty in identifying typical market 

prices using these methods. We have no 

reason to believe that a different 

contractor using similar methods would 

have greater success in acquiring market 

pricing information without utilizing a 

methodology that would be burdensome 

to practitioners or supply vendors or 

other stakeholders. Because the supply 

vendors in contact with the VA 

generally have a financial incentive to 

cooperate with their market research 

directly, we believe that the VA’s 

methodology in this case would yield 

more accurate information than 

information derived from market 

researchers who do not have such 

cooperation, like the contractor working 

previously on behalf of CMS. 

Comment: Several commenters, 

including the AMA RUC, recommended 

that CMS consider creating HCPCS 

codes to be reported by rendering 

physicians for high-cost supplies when 

used for the care of a patient during 

procedure. The supplies could then be 

removed from the direct PE database 

and appropriate pricing for these supply 

HCPCS codes could be determined by 

CMS on an annual basis. One 

commenter requested that CMS explore 

whether such a methodology would be 

budget neutral under the PFS, since the 

commenter did not support an approach 

that would reduce PFS payments for 

cognitive services. 

Response: We appreciate the 

commenters’ suggestions, but we believe 

creating separately reportable HCPCS 

codes for high-cost supplies and paying 

separately for these items would merely 

shift the pricing challenge rather than 

resolve it, and could compound the 

problem of misvaluing services by 

explicitly paying for high-cost supplies 

at the expense of other low-cost 

supplies, equipment, and clinical labor 

included in the PE component of PFS 

payment. We do not understand how 

this suggestion would help CMS price 

the supply items accurately, nor how it 

would lead to more appropriate 

payment for high-cost supplies under 

the relativity of the budget neutral PFS. 

This approach would be required to be 

budget neutral under the PFS and, to the 

extent that our current PE methodology 

pays less than the direct PE database 

cost for a supply item, payment for 

individual high-cost supplies at prices 

we establish could redistribute dollars 

from other PFS services to payment for 

these supply items if we were to pay 

more for them separately. Finally, 

unbundling payment for high-cost 

supplies from the associated procedures 

would be contrary to the current public 

policy interest in increasing the size of 

the payment bundles used for Medicare 

payment to encourage efficiencies in the 

delivery of services. 

Comment: Several commenters 

expressed a readiness to provide any 

additional information that may help 

CMS in pricing high-cost supplies, in 

lieu of using the GSA schedule prices 

for that purpose. 

Response: We appreciate commenters’ 

offers of assistance regarding the pricing 

of direct PE inputs. However, based on 

the public comments from stakeholders 

that we received on the process we 

proposed in the CY 2009 PFS proposed 

rule and the experience of the CMS’ 

contractor who attempted to acquire 

market pricing for supply items directly 

from supply vendors, we believe that 

use of the GSA schedule would have 

greater potential to provide us 

systematically and transparently with 

typical market prices for high-cost 

supply items that could be updated with 

an appropriate periodicity. 

Comment: Some commenters 

expressed concern that CMS had not 

presented any information about how 

prices for Medicare PE purposes would 

actually be developed from the GSA 

supply schedule and had not specified 

how the Agency would do so nor 

whether (or when) CMS intended to 

make the approach available for public 

comment. 

Response: We appreciate the 

commenters’ concerns regarding the 

practical implementation of a high-cost 

supply price update process based on 

prices on the GSA supply schedule. In 

the CY 2011 PFS proposed rule (75 FR 

40082), our discussion was intended to 

encourage broad stakeholder comment, 

including consideration of potential 

alternatives to the process presented. 

Prior to implementing a high-cost 

supply update methodology, such as the 

use of prices on the GSA schedule that 

was the focus of our proposed rule 

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discussion, we would expect to use 

annual rulemaking in order to propose 

a more detailed process that would be 

subject to modification based upon our 

consideration of the public comments. 

In summary, we appreciate the many 

public comments we received on our 

discussion of a process that would use 

GSA schedule prices to update the 

prices for high-cost supplies utilized for 

developing PE RVUs under the PFS. In 

the context of our explicit responsibility 

to review and adjust the PFS values for 

potentially misvalued services under 

section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA), we 

believe it is especially important to soon 

establish a periodic and transparent 

process to update the cost of high-cost 

supplies to reflect typical market prices 

so that these supply items are 

appropriately considered in our 

ratesetting methodology. While public 

commenters expressed some concerns 

regarding our discussion of use of the 

GSA supply schedule prices in such a 

process, at this point we remain 

optimistic that this approach has 

significant potential to be used under 

the PFS and, based on our several year 

history of work in this area, we do not 

see other viable alternatives at this 

point. We will continue to study the 

issue of how to update the prices for 

high-cost supplies over the upcoming 

months, and we encourage stakeholders 

to also further consider the process we 

discussed in CY 2011 rulemaking and 

provide their additional thoughts and 

perspectives to us on an ongoing basis. 

D. Geographic Practice Cost Indices 

(GPCIs) 

1. Background 

Section 1848(e)(1)(A) of the 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, 

work, 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 in 

Alaska for services furnished beginning 

January 1, 2009. 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 each year. As discussed 

in the CY 2009 PFS final rule with 

comment period (73 FR 69740), the CY 

2009 adjustment to the GPCIs reflected 

the fully implemented fifth 

comprehensive GPCI update. CY 2010 

would have typically included no 

adjustments to the GPCIs. However, 

section 3102(a) of the ACA amended 

section 1848(e)(1)(E) of the Act to 

extend the 1.0 work GPCI floor for 

services furnished through December 

31, 2010. Additionally, section 3102(b) 

of the ACA added a new subparagraph 

(H) to section 1848(e)(1) of the Act, 

which specifies that for CY 2010 and CY 

2011, the employee compensation and 

rent portions of the PE GPCI must reflect 

only one-half of the relative cost 

differences for each locality compared 

to the national average. The new 

subparagraph also includes a ‘‘hold 

harmless’’ provision for CY 2010 and CY 

2011 for any PFS locality that would 

otherwise receive a reduction to its PE 

GPCI resulting from the limited 

recognition of cost differences. 

Additionally, section 1848(e)(1)(I) of the 

Act (as added by section 10324(c) of the 

ACA) established a 1.0 PE GPCI floor for 

services furnished in frontier States 

effective January 1, 2011. In May 2010, 

we provided our Medicare contractors 

with an updated CY 2010 payment file 

that included the 1.0 work GPCI floor 

and the PE GPCIs calculated according 

to the methodology required by section 

1848(e)(1)(H) of the Act (as added by 

section 3102(b) of the ACA) for CY 

2010, to be used for payment of services 

furnished on or after January 1, 2010. 

For the CY 2011 PFS proposed rule, 

we completed the sixth review of the 

GPCIs and proposed new GPCIs. We 

noted that section 1848(e)(1)(E) of the 

Act (as amended by section 3102(a) of 

the ACA) extends the 1.0 work GPCI 

floor only through December 31, 2010. 

Under current statute, the 1.0 work 

GPCI floor will expire on January 1, 

2011. Therefore, the CY 2011 physician 

work GPCIs, and summarized 

geographic adjustment factors (GAFs), 

do not reflect the 1.0 work floor. 

However, section 1848(e)(1)(G) of the 

Act (as amended by section 134(b) of the 

MIPPA) set a permanent 1.5 work GPCI 

floor in Alaska for services furnished 

beginning January 1, 2009 and, as noted 

above, section 1848(e)(1)(I) of the Act 

(as added by section 10324(c) of the 

ACA) provides for a permanent 1.0 PE 

GPCI floor for frontier States effective 

January 1, 2011. Therefore, as required 

by the statute, the 1.5 work GPCI floor 

for Alaska and the 1.0 PE GPCI floor for 

frontier States will be in effect for CY 

2011. In addition to the limited 

recognition of certain cost differences 

for the PE GPCIs, section 1848(e)(1)(H) 

of the Act (as added by section 3102 (b) 

of the ACA) also requires us to complete 

an analysis of the data sources used and 

cost share weights assigned to the PE 

GPCIs. Implementation of the ACA 

provisions related to the CY 2011 PE 

GPCIs is discussed in more detail in the 

GPCI update section below. 

2. GPCI Update 

As discussed in the CY 2011 PFS 

proposed rule (75 FR 40083), the 

updated GPCI values were developed by 

Acumen, LLC (Acumen) under contract 

to CMS. As mentioned above, 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 described below. 

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 and 

calculated to reflect one-quarter of the 

relative cost differences for each locality 

compared to the national average. 

Physicians’ wages are not included in 

the occupation categories because 

Medicare payments are a key 

determinant of physicians’ earnings. 

Including physicians’ wages in the 

physician work GPCIs would, in effect, 

have made the indices dependent upon 

Medicare payments. 

The physician work GPCIs were 

updated in CYs 2001, 2003, 2005, and 

2008 using professional earnings data 

from the 2000 Census. However, wage 

and earnings data are no longer 

available from the Census long form and 

the 2000 data are outdated. Therefore, 

for the proposed sixth GPCI update, we 

used the 2006 through 2008 Bureau of 

Labor Statistics (BLS) Occupational 

Employment Statistics (OES) data as a 

replacement for the 2000 Census data. 

The use of BLS OES data as a 

replacement for the 2000 Census data is 

discussed in more detail in the update 

of the PE GPCIs section. As noted above, 

the 1.0 work GPCI floor is set to expire 

under current statute on December 31, 

2010. Therefore, the CY 2011 proposed 

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physician work GPCIs reflected the 

removal of this floor. 

b. Practice Expense GPCIs 

(1) The Affordable Care Act 

Requirements for PE GPCIs 

(A) General Methodology for the CY 

2011 GPCIs 

The ACA added a new subparagraph 

(H) to section 1848(e)(1) of the Act 

which revised the methodology for 

calculating the PE GPCIs for CY 2010 

and CY 2011 so that the employee 

compensation and rent portions of the 

PE GPCIs reflect only one-half of the 

relative cost differences for each locality 

compared to the national average. 

Additionally, under section 

1848(e)(1)(H)(iii) of the Act (as added by 

section 3102(b) of the ACA), each PFS 

locality is held harmless so that the PE 

GPCI will not be reduced as a result of 

the change in methodology for PE 

GPCIs. In accordance with section 

1848(e)(1)(H)(ii) of the Act (as added by 

section 3102(b) of the ACA), the 

employee compensation and rent 

components of the proposed CY 2011 

PE GPCIs were calculated to reflect onehalf of the cost differences for each PFS 

locality relative to the national average 

cost. Additionally, as required by the 

statute, physicians’ services furnished 

in each PFS locality would be adjusted 

by the higher of the locality’s PE GPCI 

calculated with the limited recognition 

of employee compensation and rent cost 

differences or the PE GPCI calculated 

without the limited recognition of cost 

differences. 

(B) Phase-In of PE GPCIs 

Section 1848(e)(1)(C) of the Act 

requires us to phase in GPCI 

adjustments over 2 years if there was 

more than 1 year between GPCI 

adjustments. In accordance with the 

statute, we proposed to phase in the 

updated PE GPCIs using one-half of the 

CY 2010 values and one-half of the fully 

implemented values (as described in 

this section). To apply the phase-in and 

hold harmless provisions of the Act, we 

calculated transitional PE GPCIs based 

on two scenarios. Under the first 

scenario, we calculated transitional CY 

2011 PE GPCIs using the full recognition 

of employee compensation and rent cost 

differences for each locality as 

compared to the national average. As 

discussed below, the first scenario 

reflects the ‘‘hold harmless’’ transitional 

PE GPCI value that would apply to any 

PFS locality receiving a reduction to its 

PE GPCI resulting from the application 

of the limited recognition of PE cost 

differences. The CY 2011 transitional PE 

GPCI values with full recognition of cost 

differences were calculated using onehalf of the CY 2010 PE GPCI values with 

full recognition of cost differences and 

one-half of the updated PE GPCIs with 

full recognition of cost differences. The 

first scenario represents the transitional 

PE GPCI values prior to the limited 

recognition of cost differences (the preACA CY 2011 transitional values). In 

other words, this scenario does not 

include the effects of sections 

1848(e)(1)(H)(i) and (ii) of the Act (as 

added by section 3102(b) of the ACA). 

For the second scenario, we 

calculated transitional CY 2011 PE 

GPCIs with the limited recognition of 

cost differences for the employee 

compensation and rent components (as 

required by sections 1848(e)(1)(H)(i) and 

(ii) of the Act (as added by section 

3102(b) of the ACA)). The CY 2011 

transitional PE GPCI values with the 

limited recognition of cost differences 

were calculated using one-half of the CY 

2010 PE GPCIs with the limited cost 

differences and one-half of the updated 

PE GPCIs with the limited cost 

differences. The hold harmless 

provision under section 

1848(e)(1)(H)(iii) of the Act (as added by 

section 3102(b) of the ACA) was applied 

by selecting the greater of the CY 2011 

transitional PE GPCI value calculated 

with the limited recognition of cost 

differences or the CY 2011 transitional 

PE GCPI value calculated with full 

recognition of cost differences (the preACA CY 2011 transitional values). The 

phase-in of the CY 2011 PE GPCIs and 

application of the hold harmless 

provision are illustrated in Table 23 

below. 

TABLE 23—PHASE-IN OF THE CY 2011 PE GPCIS

CY 2010 Updated GPCIs CY 2011 (transitional year) Hold harmless 

File 1: 

PE GPCI Without 

3102(b) of ACA.

Without ACA Without ACA (Updated Data).(1⁄2 of 2010) + (1⁄2 Updated GPCI) ............... Greater of File 1 Transitional 

Value or File 2 Transitional 

Value. 

File 2: 

PE GPCI With 

3102(b) of ACA.

With ACA ..... With ACA (Updated 

Data).

(1⁄2 of 2010 w/ACA) + (1⁄2 Updated GPCI w/ 

ACA).

(C) Data Analysis 

Section 1848(e)(1)(H)(iv) of the Act (as 

added by section 3102(b) of the ACA) 

also 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 (as added by 

section 3102(b) of the ACA) 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. 

This section also requires the 

Secretary to make appropriate 

adjustments to the PE GPCIs no later 

than by January 1, 2012. To begin to 

implement this statutory requirement 

based on our initial analysis, we 

proposed to implement changes in PE 

data sources and cost share weights 

discussed herein effective beginning in 

CY 2011. 

In accordance with section 

1848(e)(1)(H)(iv) of the Act (as added by 

section 3102(b) of the ACA), we initially 

analyzed the current methods and data 

sources used in the establishment of the 

PE GPCIs. With respect to the method 

used, we began with a review of the 

GAO’s 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 

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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, upon our 

reexamination of public comments we 

had received on the PE GPCIs for 

previous updates, we noted that the 

commenters predominately 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. 

One key component of the PE GPCI 

method that our analysis identified 

involved the office expense portion of 

the PE GPCIs and the cost share weight 

assigned to this component. Most 

significantly, we proposed that the 

weight for the office rent component be 

revised from 12.209 percent to 8.410 

percent to reflect our more detailed 

breakout of the types of office expenses 

that are determined in local markets 

instead of national markets. For 

example, for previous GPCI updates, we 

used the office expenses cost category as 

the cost share weight for office rent and, 

therefore, all individual components 

previously included in the office 

expenses category were adjusted for 

local area cost differences by the GPCIs. 

As discussed in section II.E. of this final 

rule with comment period, we proposed 

to disaggregate the broader office 

expenses component into 9 new cost 

categories as part of the proposed CY 

2011 MEI rebasing. The disaggregation 

of the office expenses category indicates 

that the fixed capital cost category, for 

which the consumer price index (CPI) 

for owner’s equivalent rent is the price 

proxy, is the office expense category 

applicable to the office rent component 

of the PE GPCI. Therefore, the fixed cost 

capital cost category is the only 

component of office expenses that we 

proposed to adjust for local area cost 

differences beginning in CY 2011. We 

proposed to assign other newly defined 

components of the office expenses 

category (for example, utilities, 

chemicals, paper, rubber and plastics, 

telephone, postage, and moveable 

capital) to the medical equipment, 

supplies, and other miscellaneous 

expenses cost component of the PE 

GPCIs. As discussed later in this 

section, the medical equipment, 

supplies, and other miscellaneous 

expenses component of the PE GPCIs is 

assumed to have a national market and, 

therefore, this component is not 

adjusted for local area cost differences. 

The proposed expense categories for 

the PE GPCIs, along with their 

respective cost share weights, are 

primarily derived from the 2006 

American Medical Association (AMA) 

Physician Practice Information Survey 

(PPIS) for self-employed physicians and 

selected self-employed non-medical 

doctor specialties. The PPIS is the most 

comprehensive, multispecialty, 

contemporaneous, and consistently 

collected PE data source available. It 

was developed by medical organizations 

and captures the costs of operating a 

medical practice, including office rents 

and nonphysician staff wages. 

Moreover, we also examined the 

feasibility of using the American 

Community Survey (ACS) and the 

Bureau of Labor and Statistics (BLS) 

Occupational Employment Statistics 

(OES) data for the employee 

compensation component of the PE 

GPCI. For previous updates, the 

employee compensation component was 

based on the 2000 Decennial Census 

long form data. Since the Census data 

are significantly outdated and the 2010 

Census no longer includes occupational 

wage data, we believe the ACS or BLS 

OES data might be viable alternatives. 

While the ACS 3-year public use 

microsample (PUMS) is currently 

available, it reflects only about 3 percent 

of households and the data exhibit 

significant variation due to the small 

sample. In particular, the ACS PUMS 

has fewer than 10 observations of 

pharmacists in the Manhattan; 

Beaumont, Texas; and Southern Maine 

localities. Therefore, we believe it 

would be premature to use the ACS data 

for determining GPCI values. The 2006, 

2007, and 2008 panels from the BLS 

OES represent a larger sample than the 

ACS PUMS and more recent data than 

the 2000 Census. As such, we proposed 

to use the BLS OES data for updating 

the GPCIs. We look forward to exploring 

the use of the full ACS data when they 

become available. Additionally, we 

explored other sources of rent data 

(including commercial rental data and 

survey data) for use in calculating the 

PE GPCIs. We could not identify a 

reliable alternative rental data source 

available on a national basis with 

coverage of nonmetropolitan areas. 

We do not believe there is a national 

data source better than the Housing and 

Urban Development (HUD) data for 

determining the relative cost differences 

in office rents. Therefore, based on our 

review of the available data sources, we 

proposed to use the 2010 apartment 

rental data produced by HUD at the 50th 

percentile as a proxy for the relative cost 

difference in physician office rents. 

In the proposed rule (75 FR 40085), 

we indicated that we believe our 

analysis 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 (as added by 

section 3102(b) of the ACA). A more 

detailed discussion of our analysis of 

current methods of establishing PE 

GPCIs and evaluation of data sources is 

included in Acumen’s draft report. 

Acumen’s draft report and associated 

analysis of the sixth GPCI update, 

including the PE GPCIs, was posted on 

the CMS Web site after display of the 

CY 2011 PFS proposed rule. The draft 

report may be accessed from the PFS 

Web site at: http://www.cms.gov/ 

PhysicianFeeSched/ under the 

‘‘Downloads’’ section of the CY 2011 

PFS proposed rule Web page. Acumen’s 

final report and associated analysis of 

the sixth GPCI update will be posted on 

the CMS Web site after publication of 

the CY 2011 PFS final rule with 

comment. 

(D) Determining the PE GPCI Cost Share 

Weights 

To determine the cost share weights 

for the CY 2011 GPCIs, we proposed to 

use the proposed 2006-based Medicare 

Economic Index (MEI) as discussed in 

section II.E. of this final rule with 

comment period. The proposed MEI was 

rebased and revised to reflect the 

weighted-average annual price change 

for various inputs needed to provide 

physicians’ services. As discussed in 

detail in that section, 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. 

For the cost share weight for the 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. For the employee 

compensation portion of the PE GPCIs, 

we used the nonphysician employee 

compensation category weight of 19.153 

percent. The fixed capital category 

weight of 8.410, for which the CPI for 

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owner’s equivalent rent is the price 

proxy, was used for the office rent 

component. To determine the medical 

equipment, supplies, and other 

miscellaneous expenses component, we 

removed professional liability (4.295 

percent), nonphysician employee 

compensation (19.153 percent), and 

fixed capital (8.410 percent) 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 19.876 percent. 

Furthermore, the physician 

compensation cost category and its 

weight of 48.266 percent reflected the 

proposed work GPCI cost share weight 

and the professional liability insurance 

weight of 4.295 percent was used for the 

malpractice GPCI cost share weight. In 

the proposed rule (75 FR 40085), we 

stated that we believe our analysis and 

evaluation of the weights assigned to 

each of the categories within the PE 

GPCIs meets the statutory requirements 

of section 1848(e)(1)(H)(iv) of the Act (as 

added by section 3102(b) of the ACA). 

The proposed cost share weights for 

the CY 2011 GPCIs are displayed in 

Table 24 below. 

TABLE 24—COST SHARE WEIGHTS FOR CY 2011 GPCI UPDATE

Expense category 

Current cost 

share 

weight 

(%) 

Proposed 

cost share 

weight 

(%) 

Physician Work ................................................................................................................................................................ 52 .466 48 .266 

Practice Expense ............................................................................................................................................................. 43 .669 47 .439 

—Employee Compensation ...................................................................................................................................... 18 .654 19 .153 

—Office Rent ............................................................................................................................................................ 12 .209 8 .410 

—Equipment, Supplies, Other .................................................................................................................................. 12 .806 19 .876 

Malpractice Insurance ...................................................................................................................................................... 3 .865 4 .295 

Total ................................................................................................................................................................................. 100 100 

(E) PE GPCI Floor for Frontier States 

Section 10324(c) of the ACA 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. In 

accordance with section 1848(e)(1)(I) of 

the Act (as added by section 10324(c) of 

the ACA), beginning in CY 2011, we 

applied a 1.0 PE GPCI floor for 

physicians’ services furnished in States 

determined to be frontier States. The 

statute requires us to define any State as 

a frontier State if at least 50 percent of 

the State’s counties are determined to be 

frontier counties, which the statute 

defines as counties that have a 

population density less than 6 persons 

per square mile. However, section 

1848(e)(1)(I) of the Act (as added by 

section 10324(c) of the ACA) also 

specifies that this provision shall not 

apply to States receiving a non-labor 

related share adjustment under section 

1886(d)(5)(H) of the Act (which 

excludes Alaska and Hawaii from 

qualifying as a frontier State). 

Consistent with the proposed FY 2011 

hospital inpatient prospective payment 

system (IPPS) 1.0 wage index floor for 

frontier States (as required by section 

10324(a) of the ACA) (75 FR 30920 

through 30921), we proposed to identify 

frontier counties by analyzing 

population data and county definitions 

based upon the most recent annual 

population estimates published by the 

U.S. Census Bureau. We divided each 

county’s population total by each 

county’s reported land area (according 

to the decennial census) in square miles 

to establish population density. We also 

proposed to update this analysis from 

time to time, such as upon publication 

of a subsequent decennial census, and if 

necessary, add or remove qualifying 

States from the list of frontier States 

based on the updated analysis. 

For a State that qualifies as a frontier 

State, in accordance with section 

1848(e)(1)(I) of the Act (as added by 

section 10324(c) of the ACA), we 

proposed that physicians’ services 

furnished within that State would 

receive the higher of the applicable PE 

GPCI value calculated according to the 

standard CY 2011 methodology or a 

minimum value of 1.00. Furthermore, in 

accordance with section 1848(e)(1)(I) of 

the Act (as added by section 10324(c) of 

the ACA), the frontier State PE GPCI 

floor is not subject to budget neutrality 

and would only be extended to 

physicians’ services furnished within a 

frontier State. 

For determining the proposed CY 

2011 PFS PE GPCI values, the frontier 

States are the following: Montana; 

Wyoming; North Dakota; Nevada; and 

South Dakota (as reflected in Table 25). 

TABLE 25—FRONTIER STATES UNDER SECTION 1848(E)(1)(I) OF THE ACT

[as Added by Section 10324(c) of the ACA] 

State Total 

counties 

Frontier 

counties 

Percent 

frontier 

counties 

Montana ................................................................................................................................................... 56 45 80 

Wyoming .................................................................................................................................................. 23 17 74 

North Dakota ............................................................................................................................................ 53 36 68 

Nevada ..................................................................................................................................................... 17 11 65 

South Dakota ........................................................................................................................................... 66 34 52 

(2) Summary of the CY 2011 PE GPCIs 

The PE GPCIs include three 

components: employee compensation, 

office rent, and medical equipment, 

supplies and miscellaneous expenses as 

discussed below: 

• Employee Compensation: We used 

the 2006 through 2008 BLS OES data to 

determine the proposed employee 

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compensation component of the PE 

GPCIs. The proposed employee 

compensation component accounted for 

40.4 percent of the total PE GPCIs. 

• Office Rents: Consistent with the 

previous GPCI update, we used the most 

recent residential apartment rental data 

produced by HUD (2010) at the 50th 

percentile as a proxy for the relative cost 

differences in physician office rents. 

The proposed office rent component 

accounted for 17.7 percent of the PE 

GPCIs. 

• Medical Equipment, Supplies, and 

other Miscellaneous Expenses: We 

assumed that items such as medical 

equipment and supplies have a national 

market and that input prices do not vary 

among geographic areas. As discussed 

in previous GPCI updates in the CY 

2005 and CY 2008 PFS proposed rules, 

specifically the fourth GPCI update (69 

FR 47503) and fifth GPCI update (72 FR 

38138), 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 proposed medical 

equipment, supplies, and miscellaneous 

expenses component was factored into 

the PE GPCIs with a component index 

of 1.000. The proposed medical 

equipment, supplies, and other 

miscellaneous expense component 

accounted for 41.9 percent of the PE 

GPCIs. 

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). The 

CY 2011 malpractice GPCI update 

reflects 2006 and 2007 premium data. 

d. Public Comments and CMS 

Responses on the Proposed 6th GPCI 

Update 

We received many public comments 

regarding the CY 2011 proposed GPCIs. 

Summaries of the comments and our 

responses follow. 

Comment: Many commenters 

requested that CMS delay 

implementation of the changes in 

underlying PE GPCI data and cost share 

weights until complete findings and 

recommendations from the Institute of 

Medicine’s study of geographic 

adjustment factors for physician 

payment, the Secretary’s Medicare 

Geographic Payment Summit, and the 

MEI technical advisory panel have been 

developed and considered. A few 

commenters acknowledged that the BLS 

OES data is the best data source for 

updating the GPCIs for CY 2011 but 

expressed concern that it provides data 

for MSAs and rest of state areas and not 

counties. The commenters believe that 

collecting data at the MSA level distorts 

the accuracy of the input costs and 

requested that CMS delay the update 

until the full ACS data can be evaluated 

and compared with the BLS OES data. 

A few commenters requested that CMS 

delay the GPCI update for CY 2011 as 

was done in the CY 2004 PFS final rule 

with comment period for the 4th GPCI 

update. 

Additionally, several commenters 

stated that a more comprehensive 

analysis and evaluation of the PE GPCI 

is required by the ACA, further noting 

that section 1848(e)(1)(H)(v) of the Act 

(as added by section 3102(b) of the 

ACA) allows CMS until January 1, 2012 

to implement the findings from the 

analysis of PE data. To that end, several 

commenters requested a more 

comprehensive analysis of the 

occupational groups used to determine 

the employee wage component of the PE 

GPCI to reflect the ‘‘true costs’’ incurred 

by physician groups in the delivery of 

health care to Medicare beneficiaries. 

The commenters cited pharmaceutical, 

accounting, legal, computer science, and 

management professionals as examples 

of the types of nonphysician labor costs 

that should be included in the 

determination of the employee 

compensation index. Several 

commenters also stated that HUD rental 

data does not reflect the ‘‘actual costs’’ 

of physician office rent and therefore 

should be replaced by another data 

source. 

Response: Section 1848(e)(1)(C) of the 

Act requires us to review and update the 

GPCIs at least every 3 years. When 

updating the GPCIs we believe we 

should use the best data that are 

currently available. As mentioned by 

the commenters, the BLS OES data are 

more timely data than the 2000 census 

data (which has been used for previous 

GPCI updates). We believe that the BLS 

OES data, which are currently available, 

are an appropriate and relevant data 

source for updating the work GPCIs and 

employee compensation component of 

the PE GPCIs. Also because of the 

timeliness of the data, we believe that 

using the BLS OES data would result in 

a more accurate reflection of the 

geographic practice cost differences 

among PFS localities than not updating 

the GPCIs for CY 2011. 

While we believe it is appropriate to 

finalize updated GPCIs for CY 2011 

using the most current data, we also 

acknowledge that there is much ongoing 

analysis that may inform future GPCI 

changes. Therefore, as discussed below, 

we are not using the revised cost share 

weights for the CY 2011 GPCIs that 

would apply under the revised and 

rebased MEI for CY 2011. We will 

address the GPCI cost share weights 

once again in the CY 2012 PFS proposed 

rule, and we may make additional 

proposals that would further modify the 

GPCI data and/or methods for CY 2012. 

Additionally, we will review the 

complete findings and 

recommendations from the Institute of 

Medicine’s study of geographic 

adjustment factors for physician 

payment, the Secretary’s Medicare 

Geographic Payment Summit, and the 

MEI technical advisory panel, and we 

will continue to study the issues as 

required by section 1848(e)(1)(H)(iv) of 

the Act (as added by section 3102(b) of 

the ACA). We will once again consider 

the GPCIs for CY 2012 in the context of 

our annual PFS rulemaking beginning in 

CY 2011 based on the information 

available at that time. The CY 2011 

GPCIs arising from the 6th GPCI update 

reflect our initial review and response to 

the currently available GPCI data, 

methods, and cost share weights. Once 

the full ACS data are available, we will 

reassess the occupational groups used to 

determine the employee compensation 

component of the PE GPCI and continue 

to explore the use of commercial rent 

data as part of our ongoing analysis of 

the GPCIs. We anticipate that further 

information, including our review of the 

full ACS data, may lead to proposed 

additional refinements to the GPCIs for 

future years. We have addressed the CY 

2011 GPCI cost share weights in 

response to other public comments 

received on the CY 2011 PFS proposed 

rule that are summarized later in this 

section. 

With regard to the commenters who 

expressed concern that the BLS OES 

data are not collected at the county 

level, we note that the 2000 Decennial 

Census data are only available at the 

county level for approximately 10 

percent of counties. For previous 

updates, the GAFs for more than 90 

percent of counties were developed 

based on MSAs or larger geographic 

areas (for example, data for all rural 

areas in a State were combined and used 

to proxy values for each rural county in 

a State). Therefore, using BLS OES data 

and disaggregating data to the county 

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level is not a significant departure from 

previous GPCI updates. 

Moreover, we acknowledge that in the 

CY 2004 PFS proposed and final rules 

(68 FR 49042 and 68 FR 63213 

respectively), we updated only the 

malpractice GPCI because the special 

tabulation of census data used for the 

physician work GPCI and employee 

compensation portion of the PE GPCI 

was not yet available. We explained that 

no acceptable data sources could be 

found to update the work GPCIs and the 

employee compensation portion of the 

practice expense GPCIs. Therefore, we 

made no changes to the work GPCIs and 

PE GPCIs for CY 2004. However, in view 

of the statutory requirement to update 

the GPCIs at least every 3 years, we do 

not believe it would be appropriate to 

finalize an update only for malpractice 

GPCIs for CY 2011, while delaying the 

update of the work GPCI and PE GPCI, 

when we currently have appropriate 

updated data available to us for this 

purpose. As discussed previously, we 

will review the GPCIs as part of the CY 

2012 PFS rulemaking cycle (beginning 

in CY 2011) based on the information 

available at that time, and we may 

propose changes to the GPCIs prior to 

the next 3-year GPCI update. 

Comment: Several commenters stated 

that the use of HUD rental data is not 

an appropriate proxy for determining 

the office rent index and suggested that 

CMS use data on actual physician office 

rents instead. Additionally, one 

commenter questioned CMS’ analysis of 

the Medical Group Management 

Association’s (MGMA’s) survey data on 

rent. The commenter raised questions as 

to why CMS rejected the use of MGMA 

rental data due to insufficiency in 

sample size and representation, despite 

admitting that the physician response 

rate on the MGMA survey was typical 

for surveys of business. 

Response: As we have previously 

explained in the CY 2005 and CY 2008 

final rules with comment period (69 FR 

66262 and 72 FR 66245 respectively), 

we recognize that apartment rents may 

not be a perfect proxy for measuring the 

relative cost differences in physician 

office rents. However, we believe the 

HUD rental data are the most 

comprehensive and valid indicator that 

is available of the real estate rental 

market in all areas of the country. We 

continue to believe that HUD rental data 

remain the best data source for 

determining the relative cost differences 

in physicians’ office rent among all 

areas of the country. The data are 

regularly updated and available 

nationally, and retain consistency areato-area and year-to-year. We would 

welcome any alternative rental data 

source that is available nationally with 

sufficient representation among PFS 

localities. 

With regard to our review of MGMA 

survey data, we have concerns with 

both the sample size and 

representativeness of the MGMA data. 

For example, the responses represent 

only about 2,250 physician practices 

nationwide and have disproportionate 

sample sizes by 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. 

Comment: One commenter expressed 

concern that the BLS OES wage data 

may result in the undervaluation of 

physician earnings because the data 

exclude incomes of self-employed 

professionals. 

Response: The GPCIs are not an 

absolute measure of physician earnings; 

rather, they are a measure of the relative 

cost differences for each of the three 

PFS components. We have no evidence 

to suggest that self-employment income 

would have different geographic 

variation than non-self-employed 

income. Absent such evidence, we 

would expect that including wage data 

from self-employed professionals would 

result in a geographic distribution of 

professional wages similar to the BLS 

OES data source. 

Comment: Many commenters stated 

that implementing PE GPCI changes in 

CY 2011 would reduce payment to 

urban areas and, therefore, would 

violate the ‘‘hold harmless’’ provision as 

required by the ACA. 

Response: Section 1848(e)(1)(H) of the 

Act (as added by section 3102 (b) of the 

ACA) requires that we apply a limited 

recognition of cost differences for the 

rent component and employee 

compensation component of the PE 

GPCI as compared to the national 

average. This section also includes a 

‘‘hold harmless’’ provision for CY 2010 

and CY 2011 for any PFS locality that 

would receive a reduction to its PE GPCI 

resulting from the limited recognition of 

PE cost differences. For CY 2010 and CY 

2011, we applied the limited 

recognition of PE cost differences and 

‘‘hold harmless provision’’ in accordance 

with the statutory requirement, which is 

specific only to the limited recognition 

of rent and employee wage cost 

differences. In other words, the ‘‘hold 

harmless’’ (non-budget neutral) 

provision under section 

1848(e)(1)(H)(iii) of the Act (as added by 

section 3102 (b) of the ACA) does not 

apply to the effects of updated data 

incorporated into the GPCIs as a result 

of our normal GPCI update process. As 

discussed earlier in this section, the 

proposed GPCI update reflected our 

preliminary review based on the best 

information currently available. We 

anticipate that further information may 

lead to proposed additional refinements 

to the GPCIs in future years. 

Comment: One commenter 

recommended that CMS track the ‘‘hold 

harmless’’ transitional GPCIs to 

determine whether certain regions of the 

country are underpaid as a result of the 

application of the limited recognition of 

PE cost differences. 

Response: The ‘‘hold harmless’’ 

provision under section 

1848(e)(1)(H)(iii) of the Act (as added by 

section 3102(b) of ACA) was applied by 

selecting the greater of the CY 2011 

transitional PE GPCI value calculated 

with the limited recognition of cost 

differences or the CY 2011 transitional 

PE GCPI value calculated with full 

recognition of cost differences. 

Therefore, no locality is ‘‘underpaid’’ by 

the application of the limited 

recognition of PE cost differences. 

Comment: One commenter requested 

that CMS consider applying a 1.0 GPCI 

floor to non-frontier States that serve 

significant rural populations. The 

commenter was not specific as to which 

GPCI (work, PE, or malpractice) the 

floor should be applied. 

Response: As discussed previously in 

this section, section 1848(e)(1)(I) of the 

Act (as added by section 10324(c) of the 

ACA) established a permanent 1.0 PE 

GPCI floor only for frontier States, and 

section 3102(a) of the ACA amended 

section 1848(e)(1)(E) of the Act to 

extend the 1.0 work GPCI floor for 

services furnished only through 

December 31, 2010. We do not 

otherwise have the authority to establish 

GPCI floors that do not consider the 

differences in physicians’ resource costs 

among localities. 

Comment: A few commenters 

requested that CMS release underlying 

data sources, including county level 

GPCI values and budget neutrality 

estimates, which would allow interested 

parties to replicate GPCI calculations. 

Response: We strive to be as 

transparent as possible in all of our 

proposals. To that end, we have made 

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numerous files available on the CMS 

Web site under the downloads for the 

CY 2011 PFS proposed rule to assist in 

the public’s review of the CY 2011 

proposal. These files include: The 

preliminary contractor’s report on data 

for the 6th GPCI update; the CY 2010 

through CY 2012 GPCIs, both as 

proposed (including the ACA 

provisions) and without the ACA 

provisions to permit isolation of the 

impacts of the updated data; and web 

links to the publicly available source 

data and copies of data files that are not 

otherwise publicly available, for 

example county and locality-specific 

RVUs from Medicare claims data and 

malpractice insurance premium data. In 

combination, this information allows 

the public to apply our methodology to 

replicate our calculations for the 

proposed GPCIs. 

Comment: Many commenters 

expressed concern about the proposed 

cost share weights for the rent 

component and medical equipment, 

supplies, and other miscellaneous 

component of the PE GPCI. The 

commenters stated that the proposed 

cost share weights would unjustifiably 

shift Medicare payment away from 

urban localities to rural localities. 

Several commenters suggested that 

portions of the ‘‘all other services’’ 

component of the office expenses cost 

category, (which includes maintenance 

services, storage, security and janitorial 

services, office equipment, information 

technology systems, and medical record 

systems) and the stand-alone ‘‘other 

professional services’’ cost category 

(which includes accounting services, 

legal services, office management 

services, continuing education, 

professional association memberships, 

journals, and professional care 

expenses) are wage-related and, 

therefore, should be adjusted for locality 

cost differences. Additionally, a few 

commenters stated that the cost share 

weight attributed to the rent component 

of the PE GPCI should vary by region 

because one national cost share weight 

for rent penalizes areas where office rent 

is a higher portion of practice expenses. 

Response: Although we typically 

update the GPCI cost share weights 

concurrently with the most recent MEI 

revision and rebasing, the commenters 

raised many points regarding the 

reallocation of labor-related costs from 

the medical equipment and supplies 

and miscellaneous component to the 

employee compensation component of 

the PE GPCI. After consideration of the 

public comments we received on this 

issue, we will continue to use the 

current GPCI cost share weights for CY 

2011. We have asked the Institute of 

Medicine to evaluate the accuracy of the 

geographic adjustment factors used for 

Medicare physician payment. The 

Institute of Medicine will prepare two 

reports for Congress and the Secretary of 

the Department of Health and Human 

Services. The first report, expected in 

spring 2011, will include an evaluation 

of the accuracy of geographic 

adjustment factors, 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. For more 

information on the Institute of 

Medicine’s study on Medicare 

geographic adjustment factors, we refer 

readers to the Institute of Medicine Web 

site: http://iom.edu/Activities/ 

HealthServices/ 

GeographicAdjustments.aspx. 

We will explore further the options 

that were raised to us by the 

commenters and the recommendations 

in the forthcoming Institute of Medicine 

report(s). We will also continue our 

analysis of the cost share weights 

attributed to the PE GPCI as required by 

section 1848(e)(1)(H)(iv) of the Act (as 

added by section 3102(b) of the ACA), 

including the possibility of assigning 

cost share weights to the rent 

component of the PE GPCI that vary 

among fee schedule areas. We will 

address the GPCI cost share weights 

again in the CY 2012 PFS proposed rule. 

Comment: MedPAC suggested an 

alternative method for calculating the 

PE GPCI. This alternative PE GPCI 

method would account for variations in 

the cost share of equipment and 

supplies across services. 

Response: We appreciate MedPAC’s 

suggestion of an alternative method that 

would vary the portion of PE that is 

geographically adjusted for locality 

differences based on the characteristics 

of individual services, rather than 

applying a uniform percentage across all 

PFS services. We recommend that 

MedPAC continue to analyze this or 

other alternative geographic adjustment 

methods, including their administrative 

feasibility. 

Comment: A few commenters stated 

that the ‘‘range of disparity’’ between the 

highest and lowest paid PFS localities is 

too large and contradicts data studies 

showing little to no distinction in 

physician practice expenses throughout 

the nation. For example, the 

commenters stated that the AMA’s 

analysis of its own PPIS data concluded 

that ‘‘expenses did not differ 

significantly by either metro location or 

Census region.’’ One commenter 

requested an explanation of the 

discrepancy between the AMA’s 

findings of no measurable practice 

expense distinctions and CMS’ findings 

that continue to show substantial 

distinctions in physician practice 

expenses among the Medicare payment 

localities. Another commenter stated 

that a 2007 survey conducted by the 

journal, Medical Economics, indicated 

that the average practice expenses are 

highest in the Midwestern States (which 

is contrary to the proposed CY 2011 

GPCIs). 

Response: We have reviewed the 

studies referenced by the commenters 

and compared their findings with the 

GPCI values calculated for the CY 2011 

PFS proposed rule. As mentioned by the 

commenters, both the AMA and Medical 

Economics studies aggregated perphysician expenses at the Census region 

level. The AMA PPIS analysis showed 

the Northeast as having the lowest perphysician expenses, followed by the 

Midwest then the West, with the South 

identified as having the highest 

expenses. Although there is about a 20 

percent difference in total expenses 

between the Northeast and South, the 

study noted that the difference was not 

significant after controlling for practice 

setting and physician specialty. The 

Medical Economics survey findings 

showed about a 30 percent difference in 

costs, with the East showing the lowest 

expenses and the Midwest with the 

highest. Both studies demonstrated that 

rural areas have the highest perphysician expenses and highly 

populated areas the lowest. 

To compare the variation of PE GPCI 

values calculated for the CY 2011 PFS 

proposed rule to the AMA and Medical 

Economics studies, we used PE RVUs to 

create weighted averages of the PE 

GPCIs by Census region. Additionally, 

because the AMA and Medical 

Economics data reported total perphysician practice expenses, whereas 

the GPCI is a cost index, we produced 

indices for each source to create 

comparable measures of variation. We 

then normalized each index to the 

lowest cost area from each data source. 

Consequently, the index values show 

the percent difference in costs relative 

to the lowest cost area. For example, the 

AMA study shows the Northeast as 

having the lowest per-physician 

expenses, thus establishing an index 

value of 1.00 for that area. For the AMA 

study, the Midwest index value is 1.07 

which signifies that costs in the 

Midwest are 7 percent above the 

Northeast AMA values. The PE GPCI 

data indicate that the Midwest has the 

lowest costs; and the South, with an 

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index value of 1.01, has costs that are 

1 percent above the Midwest GPCI 

values. When aggregated to the Census 

region, the PE GPCIs showed less 

variation in costs than the comparison 

data sources (AMA PPIS and Medical 

Economics). Using the PE GPCI data to 

calculate Census region indices 

produced only a 16 percent difference 

in costs between the most costly and 

least costly areas, equating to roughly 

half the variation found in the Medical 

Economics survey and about 75 percent 

of the variation found in the PPIS study. 

Table 26 compares the results on the 

disparity in costs by Census region. 

TABLE 26—CENSUS REGION COST INDICES BY DATA SOURCE

AMA Medical 

economics 

PE GPCI 

data 

PE GPCI components 

Rent Wages Office 

supplies 

Midwest ............................................................................ 1.07 1.29 1.00 1.00 1.04 1.00 

South ................................................................................ 1.21 1.20 1.01 1.12 1.00 1.00 

West ................................................................................. 1.11 1.06 1.14 1.47 1.17 1.00 

Northeast .......................................................................... 1.00 1.00 1.16 1.55 1.18 1.00 

Additionally, the conceptual 

approaches to the GPCIs and the data 

sources noted by the commenters are 

sufficiently different to make 

comparisons extremely difficult. The 

different rank ordering in the costs by 

regions, as shown in Table E4, may also 

reflect the different strategies used to 

measure costs. Specifically, the AMA 

and Medical Economics studies ordered 

areas based on total physicians’ 

expenses, whereas the GPCIs are 

intended to provide a local cost index 

that is then applied to each PFS 

component; work, practice expense, and 

malpractice expense. Based on our 

review of the AMA PPIS and Medical 

Economics studies, a key factor in 

explaining differences with the 

proposed GPCI values is differences in 

practice patterns across the different 

areas. Specifically, rural practitioners 

tend to see more patients, incurring 

higher expenses. However, as noted in 

the Medical Economics study, higher 

patient loads result in higher payment. 

To place this in the context of Medicare 

PFS payment, seeing more patients 

produces more billed services, allowed 

charges, and payments. Therefore, the 

greater number of patients seen by rural 

physicians is accounted for in total 

RVUs to the physician, rather than 

through the GPCI values. 

Moreover, the very low cost ranking 

of the Northeast in both the AMA PPIS 

and Medical Economics datasets 

suggests a possible influence of 

economies of scale. The GPCIs are 

designed to capture differences in the 

prices of inputs facing physicians in 

each region. The input prices are used 

to create GPCI values as a measure of 

the relative cost differences in operating 

a medical practice in one locality versus 

another. It is likely that the AMA and 

Medical Economics studies are 

capturing differences in the production 

of services, distinct from the input 

prices. In particular, the geographic 

differences may reflect differences in 

economies of scale in more and less 

urbanized areas. More rural 

practitioners are less likely to work in 

large practices, leading to higher perphysician costs, all else being equal. For 

example, a two-physician practice may 

need the same number of front office 

staff as a one-physician practice. When 

this expense is measured on a perphysician basis, the single physician 

pays twice as much for front office 

support. This type of variation can 

occur within localities and may reflect 

the practitioner’s choice to work in a 

small or large physician practice. 

Nevertheless, there is no mechanism 

within the existing GPCI approach to 

account for the influence of economies 

of scale, despite its potentially 

significant impact on the effective perunit costs of providing care. 

Comment: Several commenters 

recommended that CMS use data from 

a reliable survey of physicians’ 

practices, such as the AMA PPIS or the 

MGMA survey, to develop the office 

rent index and employee compensation 

index. 

Response: Because of the limited 

sample sizes of the AMA PPIS (n = 

2,137) and MGMA studies (n = 2,246), 

we do not believe that it would be 

possible to calculate reliable indices for 

all Medicare PFS localities based upon 

these data. As mentioned previously, 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. 

In light of the comments received 

suggesting the use of survey data to 

determine GPCI values and the typical 

response rates for existing physician 

surveys, we are continuing to consider 

the possibility of establishing a 

physician cost report and requiring a 

sufficiently large sample of physicians 

in each locality to report data on actual 

costs incurred. However, we believe that 

a physician cost report could take years 

to develop and implement, and could be 

prohibitively expensive. We also have 

some concerns about the administrative 

burden this approach would place on 

physician’s office staff. Therefore, we 

are requesting specific public comments 

regarding the potential benefits to be 

gained from establishing a physician 

cost report and whether this approach is 

appropriate to achieve potentially 

greater precision in measuring the 

relative cost differences in physicians’ 

practices among PFS localities. We are 

also requesting public comments on the 

potential administrative burden of 

requiring physicians to routinely 

complete and submit a cost report and 

whether this requirement should be 

mandatory for all physician practices. 

Additionally, we have asked the 

Institute of Medicine to look at the use 

of survey data in the context of their 

geographic adjustment analysis. It is 

also our understanding that MedPAC is 

considering the issue of data sources 

used to determine geographic payment 

adjustments under the PFS. 

Comment: One commenter stated that 

all geographic adjustment factors should 

be eliminated from the Medicare PFS 

‘‘except for those designed to achieve a 

specific public policy goal, for example, 

to encourage physicians to practice in 

underserved areas.’’ The commenter 

requested that CMS utilize the most 

broadly applicable methodology 

allowed by law to reduce geographic 

payment disparity. 

Response: We are required by section 

1848(b)(1)(C) and (e)(1)(A) of the Act to 

develop and apply separate GPCIs to 

adjust for resource cost differences 

among localities compared to the 

national average for each of the three 

PFS components: work, practice 

expense, and malpractice expense. The 

purpose of the GPCIs is not to reduce 

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geographic payment disparity; rather, 

the GPCIs distribute PFS payments 

among areas in order to adjust for area 

cost differences. In general the data 

show that urban areas usually are higher 

cost, while rural areas are lower cost. 

However, there are several provisions 

currently in place that have the effect of 

reducing geographic payment 

disparities. For example, the statute 

requires that only one-quarter of area 

cost differences in physician work be 

recognized, and we assign a 1.0 index to 

the medical equipment, supplies, and 

miscellaneous component of the PE 

GPCI because we believe there is a 

national market for these items. In 

addition, 34 States and 2 territories are 

‘‘Statewide’’ payment localities wherein 

all physicians, whether urban or rural, 

are paid the same. Moreover, many 

geographic areas are designated as 

Health Professional Shortage Areas 

(HPSAs). Physicians in these areas may 

be eligible for a 10 percent HPSA bonus 

payment in addition to the amount paid 

under the Medicare PFS for services 

they furnish. Beginning in CY 2011, 

general surgeons furnishing major 

surgical procedures in these areas may 

be eligible for the HPSA surgical 

incentive payment program (HSIP) that 

also pays 10 percent in addition to the 

amount paid under the PFS as discussed 

in section VI.S.2. of this final rule with 

comment period. For complete 

information on the HPSA bonus 

payment program and a list of eligible 

areas for both programs by zip code, we 

refer readers to the CMS Web site at: 

http://www.cms.hhs.gov/ 

hpsapsaphysicianbonuses/ 

01_overview.asp. All of these factors 

mentioned above have the effect of 

reducing geographic payment 

disparities under the Medicare PFS. 

Comment: One commenter 

encouraged CMS to follow the GAO’s 

recommendations, as outlined in the 

GAO’s March 2005 Report (GAO–05– 

119), for improving underlying GPCI 

data and methods by taking the 

following actions: 

• Transition from Census Bureau’s 

Decennial Census data to the annual 

ACS for earning and wage data. 

• Include physician assistant wage 

data to improve the measurement of the 

PE GPCI. 

• Consider the feasibility of using a 

commercial rent index or a residential 

rent index directly based on ACS data 

for determining the rent component of 

the PE GPCI. 

• Collect malpractice premium data 

from all States, accounting for at least 

half of the malpractice business in a 

State. 

• Standardize collection of 

malpractice premium data, for example 

by using data from Physician Insurer’s 

Association of America. 

Response: As previously discussed, 

the full ACS data were not available in 

time for the 6th GPCI update. We intend 

to explore the use of ACS data for 

determining the work GPCI and the 

employee compensation component of 

the PE GPCI, as well as evaluate its 

possible use as an office rent index once 

the data are fully available. We also 

intend to continue exploring the 

potential use of commercial rent data as 

part of our ongoing review and 

refinement of the GPCIs. 

Additionally, we have considered the 

use of physician assistant wages in 

calculating the employee compensation 

index. However, since physician 

assistants can furnish medical services 

and bill the Medicare program directly, 

their wages are influenced by Medicare 

PFS payment. Therefore, we have some 

concern that a circular effect could 

occur if we included physician 

assistants among the occupational 

groups comprising the employee 

compensation component, similar to our 

concern with including physicians’ 

salaries in the determination of the work 

GPCI. 

With regard to the collection of 

malpractice premium data, the CY 2011 

malpractice GPCI update reflects 2006 

and 2007 premium data which were 

also used for the CY 2010 update to the 

malpractice RVUs. As compared to 

previous malpractice RVU updates, we 

substantially increased the number of 

States from which we were able to 

collect rate filings. We were able to 

collect malpractice premium data from 

every State except for Mississippi and 

Puerto Rico. Premium data were 

selected from at least two companies in 

each State, with more selected if 

necessary to reach 50 percent of the 

market share in that State. To ensure 

consistency across States we collected 

premium data from State Departments 

of Insurance. For States where we were 

not able to collect rate fillings, we used 

premium information from the Medical 

Liability Monitor Survey data from 2005 

through 2008. 

e. Summary of Final CY 2011 GPCIs 

After consideration of the public 

comments received on the GPCIs, we are 

finalizing the 6th GPCI update using the 

most current data, with modifications; 

we are not finalizing the proposal to 

change the GPCI cost share weights for 

CY 2011. Instead, we are continuing to 

use the current GPCI cost share weights 

for determining the PE GPCI values and 

locality GAFs in CY 2011, and we will 

address the cost share weights again in 

the CY 2012 PFS proposed rule. As a 

result, the cost share weight for the 

physician work GPCI (as a percentage of 

the total) will be 52.5 percent (current 

and for CY 2011) rather than 48.3 

percent (as proposed), and the cost 

share weight for the PE GPCI will be 

43.7 percent (current and for CY 2011) 

rather than 47.4 percent (as proposed) 

with only a slight difference in the 

employee compensation component 

(18.7 percent rather than 19.2 percent as 

proposed). However, the cost share 

weight for the office rent component of 

the PE GPCI will be 12.2 percent 

(current and for CY 2011) rather than 

8.4 percent (as proposed), and the 

medical equipment, supplies, and other 

miscellaneous expenses component will 

be 12.8 percent (current and for CY 

2011) rather than 19.9 percent (as 

proposed). Moreover, the cost share 

weight for the malpractice GPCI will be 

3.9 percent (current and for CY 2011) 

rather than 4.3 percent (as proposed). 

Additionally, we will review the 

complete findings and 

recommendations from the Institute of 

Medicine’s study of geographic 

adjustment factors for physician 

payment, the Secretary’s Medicare 

Geographic Payment Summit, and the 

MEI technical advisory panel, and 

continue to study the issues as required 

by section 1848(e)(1)(H)(iv) of the Act 

(as added by section 3102(b) of the 

ACA). We will once again consider the 

GPCIs for CY 2012 in the context of our 

annual PFS rulemaking beginning in CY 

2011 based on the information available 

at that time. 

We are using the 2006 through 2008 

panels from the BLS OES data for 

updating the work GPCIs and the 

employee compensation component of 

the PE GPCIs. We are also using the 

2010 apartment rental data produced by 

HUD at the 50th percentile as a proxy 

for the relative cost difference in 

physicians’ office rents and 2006 and 

2007 malpractice premium data for 

determining the malpractice GPCIs. 

As required by section 

1848(e)(1)(H)(ii) and (iii) of the Act (as 

added by section 3102(b) of the ACA), 

the CY 2011 GPCIs reflect only one-half 

of the relative cost differences for the 

employee compensation and rent 

portions of the PE GPCI, and the ‘‘hold 

harmless’’ provision ensures that no 

locality receives a payment reduction 

resulting from the limited recognition of 

PE cost differences. For CY 2011, the 

‘‘hold harmless’’ provision was applied 

by selecting the greater of the CY 2011 

transitional PE GPCI value calculated 

with the limited recognition of cost 

differences or the CY 2011 transitional 

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PE GPCI value calculated with full 

recognition of cost differences. 

In accordance with section 

1848(e)(1)(I) of the Act (as added by 

section 10324(c) of the ACA), and 

consistent with the final FY 2011 

hospital IPPS (75 FR 5160 through 

5161), we applied a 1.0 PE GPCI floor 

for services furnished in frontier States. 

The frontier States are the following: 

Montana; Wyoming; North Dakota; 

Nevada; and South Dakota. As we 

indicated above in this section, section 

1848(e)(1)(E) of the Act (as amended by 

section 3102(a) of the ACA) extended 

the 1.0 work GPCI floor only through 

December 31, 2010. Therefore, the CY 

2011 physician work GPCIs and 

summarized GAFs do not reflect the 1.0 

work floor. 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 

2011. 

We are finalizing the CY 2011 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 

and the PE GPCI ‘‘hold harmless’’ 

provision were applied to the budget 

neutralized GPCIs. 

Typically when we complete a review 

and update of the GPCIs, the values 

shown represent the first year of the 2- 

year GPCI update transition. Although 

the CY 2011 GPCIs have been set on that 

basis, we note that we will be assessing 

the results of the various studies 

regarding the GPCIs and cost share 

weights (once they are completed), and 

exploring the use of the full ACS data. 

Based on these assessments, we may 

make additional proposals that would 

further modify the GPCIs for CY 2012, 

which would result in changes to the 

CY 2012 GPCIs shown in Addendum E 

to this final rule with comment period. 

Therefore, the final CY 2011 GPCIs may 

not reflect a true mid-point ‘‘phase-in’’ to 

the updated GPCIs, although, as noted 

above, they have been set for CY 2011 

on that basis. The CY 2011 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 localities; 34 

localities are Statewide areas. There are 

52 localities in the other 18 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, and Virginia suburbs, Puerto 

Rico, and the Virgin Islands are 

additional localities that make up the 

remainder 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 (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, most notably within the 

current California payment locality 

structure. 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 

contracted with Acumen to conduct a 

preliminary study of several options for 

revising the payment localities on a 

nationwide basis. The contractor’s 

interim report was posted on the CMS 

Web site on August 21, 2008, and we 

requested comments from the public. 

The report entitled, ‘‘Review of 

Alternative GPCI Payment Locality 

Structures,’’ remains accessible from the 

CMS PFS Web page under the heading 

‘‘Interim Study of Alternative Payment 

Localities under the PFS.’’ The report 

may also be accessed directly from the 

following link: http://www.cms.hhs.gov/ 

PhysicianFeeSched/ 

10_Interim_Study.asp#TopOfPage. 

We accepted public comments on the 

interim report through November 3, 

2008. The alternative locality 

configurations discussed in the report 

are described briefly below in this 

section. 

Option 1: CMS Core-Based Statistical 

Area (CBSA) Payment Locality 

Configuration 

This option uses the Office of 

Management and Budget (OMB’s) 

Metropolitan Statistical Area (MSA) 

designations for the payment locality 

configuration. MSAs would be 

considered as urban CBSAs. 

Micropolitan Areas (as defined by OMB) 

and rural areas would be considered as 

non-urban (rest of State) CBSAs. This 

approach would be consistent with the 

IPPS pre-reclassification CBSA 

assignments and with the geographic 

payment adjustments used in other 

Medicare payment systems. This option 

would increase the number of PFS 

localities from 89 to 439. 

Option 2: Separate High-Cost Counties 

from Existing Localities (Separate 

Counties) 

Under this approach, higher cost 

counties are removed from their existing 

locality structure and they would each 

be placed into their own locality. This 

option would increase the number of 

PFS localities from 89 to 214, using a 5 

percent GAF differential to separate 

high-cost counties. 

Option 3: Separate MSAs from 

Statewide Localities (Separate MSAs) 

This option begins with statewide 

localities and creates separate localities 

for higher cost MSAs (rather than 

removing higher cost counties from 

their existing locality as described in 

Option 2). This option would increase 

the number of PFS localities from 89 to 

130, using a 5 percent GAF differential 

to separate high-cost MSAs. 

Option 4: Group Counties Within a State 

Into Locality Tiers Based on Costs 

(Statewide Tiers) 

This option creates tiers of counties 

(within each State) that may or may not 

be contiguous but share similar practice 

costs. This option would increase the 

number of PFS localities from 89 to 140, 

using a 5 percent GAF differential to 

group similar counties into statewide 

tiers. 

As discussed in Acumen’s interim 

report, all four studied alternative 

locality configurations would increase 

the number of localities and separate 

higher cost areas from rural ‘‘rest of 

state’’ areas. As a result, payments to 

urban areas would increase, while rural 

areas would see a decrease in payment 

because they would no longer be 

grouped with higher cost ‘‘urbanized’’ 

areas. A number of public commenters 

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on the draft report expressed support for 

Option 3 (separate MSAs from 

Statewide localities) because the 

commenters believed this alternative 

would improve payment accuracy over 

the current locality configuration and 

could mitigate possible payment 

reductions to rural areas as compared to 

Option 1 (CMS CBSAs). Therefore, 

Acumen is conducting a more in-depth 

analysis of the dollar impacts that 

would result from the application of 

Option 3. For a detailed discussion of 

the public comments on the contractor’s 

interim locality study report, we refer 

readers to the CY 2010 PFS proposed 

rule (74 FR 33534) and subsequent final 

rule with comment period (74 FR 

61757). 

We note that the discussion of PFS 

payment localities and our preliminary 

study of alternative payment locality 

configurations in the CY 2011 PFS 

proposed rule was intended for 

informational purposes only. We did 

not make any proposals regarding the 

PFS locality configurations for CY 2011 

and, therefore, public comments on the 

PFS locality configurations are not 

within scope of the CY 2011 PFS 

proposed rule. We thank the 

commenters for sharing their views and 

suggestions; however, we are not 

summarizing or responding to ‘out of 

scope’ comments in this final rule with 

comment period. 

E. PFS Update for CY 2010: Rebasing 

and Revising of the Medicare Economic 

Index (MEI) 

1. Background 

The Medicare Economic Index (MEI) 

was originally required 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 such higher level is justified 

by year-to-year economic changes. We 

continued to use the MEI as part of the 

statutory update formula (specified 

under section 1848 of the Act) when the 

physician fee schedule was 

implemented in 1992 (56 FR 59511). 

Beginning July 1, 1975, and 

continuing through today, the MEI has 

served these purposes by reflecting the 

weighted-average annual price change 

for various inputs needed to furnish 

physicians’ services. As such, the index 

is necessarily a fixed-weight input price 

index, with an adjustment for the 

change in economy-wide, private 

nonfarm business multifactor 

productivity. The MEI is comprised of 

two broad categories: (1) Physician’s 

own time; and (2) physician’s practice 

expense (PE). 

The MEI was first published on June 

16, 1975 (40 FR 25446), and became 

effective for services furnished 

beginning July 1, 1975. The original MEI 

had a base period of 1971. The structure 

of the original MEI remained essentially 

unchanged from its original until the CY 

1993 final rule (57 FR 55896) in which 

we finalized a comprehensive rebasing 

and revision process with a 1989 base 

year. The new index was based in part 

on the recommendations of a 

Congressionally-mandated meeting of 

experts held in March 1987. The MEI 

was again rebased in the CY 1999 final 

rule (63 FR 58845), which moved the 

cost structure of the index from a 1989 

base to a 1996 base. The methodology 

for the productivity adjustment was 

revised in the CY 2003 final rule (67 FR 

80019) to reflect the percentage change 

in the 10-year moving average of 

economy-wide private nonfarm business 

multifactor productivity (previously the 

index was adjusted by a measure of 

labor productivity). The current form of 

the MEI was detailed in the CY 2004 

PFS final rule (68 FR 63239) which 

updated the cost structure of the index 

from a base year of 1996 to 2000. 

We proposed to rebase and revise the 

MEI and incorporate it into the CY 2011 

PFS update. The terms ‘‘rebasing’’ and 

‘‘revising’’, while often used 

interchangeably, actually denote 

different activities. Rebasing refers to 

moving the base year for the structure of 

costs of an input price index, while 

revising relates to other types of changes 

such as changing data sources, cost 

categories, or price proxies used in the 

price index. As is always the case with 

a rebasing and revising exercise, we 

have used the most recently available, 

relevant, and appropriate information to 

develop the proposed MEI cost category 

weights and price proxies. In the 

following sections of this final rule with 

comment period, we detail our 

proposals and respond to comments 

regarding the updated cost weights for 

the MEI expense categories, our 

rationale for selecting the price proxies 

in the MEI, and the results of the 

rebasing and revising of the MEI. 

2. Use of More Current Data 

The MEI was last rebased and revised 

in 2003 in the CY 2004 PFS final rule 

with comment period (68 FR 63239). 

The current base year for the MEI is 

2000, which means that the cost weights 

in the index reflect physicians’ expenses 

in 2000. However, we believe it is 

desirable to periodically rebase and 

revise the index so that the expense 

shares and their associated price proxies 

reflect more current conditions. For the 

CY 2011 PFS update, we are finalizing 

the proposal to rebase and revise the 

MEI to reflect appropriate physicians’ 

expenses in 2006. 

Compared to the 2000-based MEI, we 

proposed to make several changes to the 

MEI cost structure. First, we proposed to 

exclude the Pharmaceutical cost 

category as pharmaceuticals are neither 

paid for under the PFS nor are they 

included in the definition of 

‘‘physicians’ services’’ for purposes of 

calculating the physician update via the 

SGR system (for more details see the CY 

2010 PFS final rule with comment 

period (74 FR 61961 through 61962)). 

We also proposed to exclude the 

expenses associated with separately 

billable supplies since these items are 

not paid for under the PFS. Our primary 

data source, the 2006 Physician Practice 

Information Survey (PPIS), collected 

data on these costs enabling us to 

accurately remove them from the index. 

In addition, we proposed to include 

nine new cost categories that 

disaggregate the costs under the broader 

Office Expenses cost category. The 

2000-based MEI did not break these 

expenses into individual cost categories. 

As a result of comments received, which 

are described more fully below in this 

section, we are modifying this proposal 

to instead include ten detailed cost 

categories. As indicated in the CY 2011 

PFS proposed rule, we proposed to 

continue to adjust the MEI for economywide multifactor productivity based on 

changes in the 10-year moving average 

of private nonfarm business multifactor 

productivity. After considering the 

comments received, we are finalizing 

our proposal to continue to adjust the 

MEI for economy-wide multifactor 

productivity based on changes in the 10- 

year moving average of private nonfarm 

business multifactor productivity. 

3. Rebasing and Revising Expense 

Categories in the MEI 

The MEI is used in conjunction with 

the SGR system to update the PFS and 

represents the price component of that 

update. The proposed expense 

categories in the index, along with their 

respective weights, are primarily 

derived from data collected in the 2006 

AMA PPIS for self-employed physicians 

and selected self-employed non-medical 

doctor specialties. As noted, in addition 

to data on medical doctors, we included 

data from several non-medical doctor 

specialties in the MEI cost weight 

calculations (including optometrists, 

oral surgeons, podiatrists, and 

chiropractors) consistent with the 

definition of the term ‘‘physician’’ in 

section 1861(r) of the Act. In summary, 

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the term ‘‘physician’’ when used in 

connection with the performance of 

functions or actions an individual is 

legally authorized to perform means the 

following: (1) A doctor of medicine or 

osteopathy; (2) a doctor of dental 

surgery or of dental medicine; (3) a 

doctor of podiatric medicine; (4) a 

doctor of optometry; or (5) a 

chiropractor. For a complete definition, 

please see section 1861(r) of the Act. We 

weighted the expense data from the 

above-referenced specialties with the 

self-employed physician expense data 

using physician counts by specialty, the 

same methodology used in the AMA 

PPIS. 

The AMA PPIS data were used to 

determine the expenditure weights in 

the MEI for all of the major cost 

categories including total expenses, 

physicians’ earnings, physicians’ 

benefits, employed physician payroll, 

nonphysician compensation, office 

expenses, professional liability 

insurance (PLI), medical equipment, 

medical supplies, and other professional 

expenses. We are finalizing our proposal 

to further disaggregate both nonphysician compensation and office 

expenses into subcategories reflecting 

more detailed expenses. We used 

several data sources for further 

disaggregation of expenses including: 

data from the 2002 Bureau of Economic 

Analysis (BEA) Benchmark InputOutput table (I/O), the 2006 Bureau of 

the Census Current Population Survey 

(CPS), the 2006 Bureau of Labor 

Statistics (BLS) Occupational 

Employment Survey (OES), the 2006 

Employment Cost for Employee 

Compensation Survey (ECEC), and the 

2006 Internal Revenue Service (IRS) 

Statistics of Income (SOI) data. The 

development of each of the cost 

categories using these sources is 

described in detail below. 

a. Developing the Weights for Use in the 

MEI 

Developing a rebased and revised MEI 

requires selecting a base year and 

determining the appropriate expense 

categories. We proposed to rebase the 

MEI to CY 2006. We choose CY 2006 as 

the base year as: 1) this is the most 

recent year for which comprehensive 

physician expense data are available; 

and (2) we believe these data represent 

an accurate proxy for the physician 

expense distribution in CY 2011. 

Table 27 lists the set of mutually 

exclusive and exhaustive cost categories 

that make up the final rebased and 

revised MEI, including the addition of 

the All Other Products category we are 

adopting in response to public 

comments. 

TABLE 27—FINAL 2006 MEI COST CATEGORIES, WEIGHTS, AND PRICE PROXIES COMPARED TO THE 2000 MEI COST

CATEGORIES AND WEIGHTS

Cost category 

Final 2006- 

cost weights 

(1,2)

2000 Cost 

weights 2006 Price proxies 

Total ............................................................................................................... 100 .00 100 .000 

Physician’s Compensation (Own Time)(3) .................................................... 48 .266 52 .466 

Wages and Salaries ............................................................................... 43 .880 42 .730 AHE Total Nonfarm Private for 

Production & Nonsupervisory 

Employees.(5)

Benefits (3),(4) ........................................................................................... 4 .386 9 .735 ECI-Benefits Total Nonfarm Private.(6)

Physician’s Practice Expense ........................................................................ 51 .734 47 .534 

Nonphysician Employee Compensation ................................................. 19 .153 18 .654 

Nonphysician Employee Wages and Salaries ....................................... 13 .752 13 .809 

Prof/Tech Wages ............................................................................. 6 .006 5 .887 ECI-Wages/Salaries: Private Professional &Technical. 

Managerial Wages .......................................................................... 1 .446 3 .333 ECI-Wages/Salaries: Private 

Managerial. 

Clerical Wages ................................................................................ 4 .466 3 .892 ECI-Wages/Salaries: Private 

Clerical. 

Services Wages .............................................................................. 1 .834 0 .696 ECI-Wages/Salaries: Private 

Service. 

Nonphysician Employee Benefits (4) ....................................................... 5 .401 4 .845 ECI-Ben: Private Blend. 

Office Expenses ..................................................................................... 20 .035 12 .209 

Utilities ............................................................................................. 1 .266 ........................ CPI Fuel & Utilities.(7)

Chemicals ........................................................................................ 0 .723 ........................ PPI for Other Basic Organic 

Chemical Manufacturing.(8)

Paper ............................................................................................... 0 .657 ........................ PPI for Converted Paper. 

Rubber & Plastics ............................................................................ 0 .598 ........................ PPI for Rubber and Plastics. 

Telephone ........................................................................................ 1 .501 ........................ CPI for Telephone Services. 

Postage ........................................................................................... 0 .898 ........................ CPI for Postage. 

All Other Services ........................................................................... 3 .582 ........................ ECI Compensation Services Occupations. 

All Other Products ........................................................................... 0 .500 ........................ CPI–U All Items Less Food and 

Energy. 

Fixed Capital ................................................................................... 8 .957 ........................ CPI for Owner’s Equivalent Rent. 

Moveable Capital ............................................................................. 1 .353 ........................ PPI for Machinery and Equipment. 

PLI .......................................................................................................... 4 .295 3 .865 CMS-Prof. Liab. Phys. Premiums. 

Medical Equipment ................................................................................. 1 .978 2 .055 PPI-Medical Instruments & 

Equip. 

Pharmaceuticals and Medical Materials and Supplies ........................... 1 .760 4 .320 

Pharmaceuticals .............................................................................. ........................ 2 .309 

Medical Materials and Supplies ...................................................... 1 .760 2 .011 PPI Surg. Appliances and Supplies/CPI(U) Med Supplies. 

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TABLE 27—FINAL 2006 MEI COST CATEGORIES, WEIGHTS, AND PRICE PROXIES COMPARED TO THE 2000 MEI COST

CATEGORIES AND WEIGHTS—Continued 

Cost category 

Final 2006- 

cost weights 

(1,2)

2000 Cost 

weights 2006 Price proxies 

Other Professional Expenses ................................................................. 4 .513 ........................ CPI–U All Items Less Food and 

Energy. 

Other Expenses ...................................................................................... ........................ 6 .433 

(1) Due to rounding, weights may not sum to 100.000 percent. 

(2) Sources: 2006 Physician Practice Information Survey (PPIS), Center for Health Policy Research, American Medical Association; 2006 Employment Cost for Employee Compensation, U.S. Department of Labor, Bureau of Labor Statistics; 2006 Occupational Employment Statistics 

(OES), BLS; U.S. Department of Commerce, Bureau of Economic Analysis 2002 Benchmark Input Output Tables, and U.S. Department of Commerce, Bureau of the Census, 2006 Current Population Survey. 

(3) Includes employed physician payroll. 

(4) Includes paid leave. 

(5) Average Hourly Earnings (AHE) 

(6) Employment Cost Index (ECI) 

(7) Consumer Price Index (CPI) 

(8) Producer Price Index (PPI) 

The development of each of the cost 

categories in the final 2006 MEI is 

described, in detail, as follows. 

b. Physician’s Own Time 

The component of the MEI that 

reflects the physician’s own time is 

represented by the net income portion 

of business receipts. The proposed 2006 

cost weight associated with the 

physician’s own time (otherwise 

referred to as the Physician 

Compensation cost weight) is based on 

2006 AMA PPIS data for mean 

physician net income (physician 

compensation) for self-employed 

physicians and for the selected selfemployed specialties referenced 

previously in this rule. 

We proposed to continue to add 

employed physician compensation to 

self-employed physician compensation 

in order to calculate an aggregate 

Physician Compensation cost weight. By 

including the compensation of 

employed physicians in the Physician 

Compensation expense category, these 

expenses will be adjusted by the 

appropriate price proxies for a 

physician’s own time. The proposed 

2006 Physician Compensation cost 

weight is 48.266 percent as compared to 

a 52.466 percent share in the 2000-based 

MEI. We split the Physician 

Compensation component into two 

subcategories: Wages & Salaries; and 

Benefits. For self-employed physician’s 

compensation, the ratios for Wages & 

Salaries and Benefits were calculated 

using data from the PPIS. Self-employed 

physician wages & salaries accounted 

for 92.2 percent of physician 

compensation while physician benefits 

accounted for the remaining 7.8 percent. 

For employed physician payroll, the 

distribution for wages & salaries and 

benefits for 2006 was 85.8 percent and 

14.2 percent, respectively. This ratio 

was determined by calculating a 

weighted average of available SOI data 

for partnerships, corporations, and Scorporations specific to physicians and 

outpatient care centers. Based on these 

methods, the proposed 2006 Physician 

Wages & Salaries cost weight was 43.880 

percent and the proposed 2006 

Physician Benefits cost weight was 

4.386 percent. 

c. Physician’s Practice Expenses 

To determine the remaining 

individual Practice Expenses cost 

weights, we used mean expense data 

from the 2006 PPIS survey expressed as 

a percentage of total expenses. The 

detailed explanations for the derivation 

of the individual weights under Practice 

Expenses are listed below. 

(1) Nonphysician Employee 

Compensation 

The cost weight for Nonphysician 

Employee Compensation was developed 

using the 2006 AMA PPIS mean 

expenses for these costs. We further 

divided this cost share into Wages & 

Salaries and Benefits using 2006 BLS 

Employer Costs for Employee 

Compensation (ECEC) data for the 

Health Care and Social Assistance 

(private industry) category. Although 

this survey does not contain data only 

for offices of physicians, data are 

available to help determine the shares 

associated with wages & salaries and 

benefits for private industry health care 

and social assistance services (which 

include offices of physicians, hospitals, 

nursing homes, and offices of dentists). 

We believe these data provide a 

reasonable estimate of the split between 

wages and benefits for employees in 

physicians’ offices. Data for 2006 in the 

ECEC for Health Care and Social 

Assistance indicate that wages and 

benefits are 71.8 percent and 28.2 

percent of compensation, respectively. 

The 2000-based MEI included a wage 

and benefit split of 74.0 percent and 

26.0 percent of compensation. 

We proposed to use 2006 Current 

Population Survey (CPS) data and 2006 

BLS Occupational Employment 

Statistics (OES) data to develop cost 

weights for wages for nonphysician 

occupational groups. These are the same 

data sources that were used in the 2000- 

based MEI. We determined total annual 

earnings for offices of physicians using 

employment data from the CPS and 

mean annual earnings from the OES. To 

arrive at a distribution for these separate 

categories, we determined annual 

earnings for each of the four categories 

(which are Professional & Technical 

workers, Managers, Clerical workers, 

and Service workers), using the 

Standard Occupational Classification 

(SOC) system. We then determined the 

overall share of the total for each. The 

resulting proposed distribution, as well 

as the distribution from the 2000-based 

MEI, are presented in Table 28. 

TABLE 28—PERCENT DISTRIBUTION OF NONPHYSICIAN PAYROLL EXPENSE BY OCCUPATIONAL GROUP: 2006 AND 2000 

BLS Occupational Group 2006 

Expenditure shares 

2000 

Expenditure shares 

Total ......................................................................................................................................................... 100.000 100.000 

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TABLE 28—PERCENT DISTRIBUTION OF NONPHYSICIAN PAYROLL EXPENSE BY OCCUPATIONAL GROUP: 2006 AND 2000— 

Continued 

BLS Occupational Group 2006 

Expenditure shares 

2000 

Expenditure shares 

Professional & Technical Workers ................................................................................................... 43.671 42.635 

Managers .......................................................................................................................................... 10.517 24.138 

Clerical Workers ............................................................................................................................... 32.477 28.187 

Service Workers ............................................................................................................................... 13.336 5.040 

Values may not sum to 100 due to rounding. 

The decrease in the Managers 

expenditure share is directly related to 

a decrease in the total number of 

employees in Management occupations 

in physicians’ offices, in particular, 

‘‘Medical and health service managers.’’ 

The decrease in expenditure share may 

also be due, in part, to the methods used 

in this rebasing. That is, for the 2006- 

based MEI, we are using data limited to 

‘‘Offices of physicians.’’ In the 2000- 

based version of the index, the only data 

that were available to inform these 

estimates were inclusive of physician 

offices and clinics (‘‘Offices of 

physicians and clinics’’). An 

examination of 2006 CPS and OES data 

comparing ‘‘Outpatient care centers’’ to 

‘‘Offices of physicians’’ indicates that 

there is a higher share of management 

occupations in the ‘‘Outpatient care 

centers’’ than in ‘‘Offices of physicians’’. 

The increase in the Service Workers 

expenditures share is attributable to a 

substantive increase in the number of 

employees in service occupations, 

particularly, ‘‘Medical assistants and 

other health care support occupations’’. 

(2) Office Expenses 

The aggregate Office Expenses cost 

weight was derived using the 2006 

AMA PPIS and was calculated as the 

mean office expenses expressed as a 

percentage of mean total expenses. This 

calculation resulted in a 20.035 percent 

share of total costs in 2006 compared to 

a 12.209 percent share in the 2000-based 

index. The Office Expenses cost weight 

used in the 2000-based MEI was based 

on the AMA 1997 Socioeconomic 

Monitoring System (SMS) survey, which 

defined office expenses as rent, 

mortgage interest, depreciation on 

medical buildings, utilities, and 

telephones. The AMA expanded the 

office expense question in the 2006 PPIS 

survey to include additional expenses, 

described in more detail below in this 

section. 

As a result, and in order to provide for 

a higher level of precision in assigning 

appropriate price proxies to underlying 

costs, we proposed to further 

disaggregate the Office Expenses cost 

category into 9 detailed cost categories 

using the BEA 2002–Benchmark I/O 

data for Offices of Physicians, Dentists, 

and Other Health Practitioners (North 

American Industrial Classification 

System (NAICS) 621A00). In response to 

comments, and as described more fully 

below, we are finalizing those nine 

categories, as well as adding a tenth 

detailed cost category. 

The proposed Office Expenses cost 

categories and associated cost weights 

were developed by matching the BEA 

I/O data as closely as possible to the 

2006 AMA PPIS survey, which defined 

office expenses as ‘‘office (non-medical) 

equipment and office (nonmedical) 

supplies, as well as rent, mortgage, 

interest, maintenance, refrigeration, 

storage, security, janitorial, depreciation 

on medical buildings used in your 

practice, utilities, or other office 

computer systems (including 

information management systems/ 

electronic medical record systems) and 

telephone.’’ In most instances, the 

proposed underlying detailed cost 

categories and associated cost weights 

were chosen to be consistent with the 

NAICS 3-digit classification. BEA I/O 

expense data is published on a NAICSbasis. Some of the proposed underlying 

detailed cost categories such as All 

Other Services include various 3-digit 

NAICS codes for service related 

industries. Similar methods are used in 

the other legislatively-required market 

baskets developed by CMS. After we 

categorized the BEA I/O data, we 

calculated the relative share for each 

category as a percentage of the total 

office expenses categories within the 

I/O data. We then aged the 2002 weights 

forward to 2006 to derive the 2006 

detailed Office Expense cost weights as 

a percent of total Office Expenses. The 

methodology we used to age the data 

forward was to apply the annual price 

changes from each respective price 

proxy to the appropriate cost categories. 

We repeated this practice for each year 

of the interval from 2002 to 2006. We 

then applied the resulting 2006 

distributions to the aggregate 2006 AMA 

Office Expenses weight of 20.035 

percent to yield the detailed 2006 Office 

Expenses’ weights as a percent of total 

expenses. 

In response to public comments that 

are detailed in the subsequent sections 

of this rule, we conducted an additional 

review of the BEA I/O data used to 

disaggregate the Office Expense cost 

category, comparing the I/O’s detailed 

categories with the questions on the 

AMA PPIS survey. This review led to 

small revisions to the underlying Office 

Expense cost weights and resulted in 

the inclusion of one additional cost 

weight in that category: All Other 

Products. These products, which were 

previously assumed to be captured in 

the Other Professional Expenses 

category (as measured by the AMA PPIS 

survey), include a variety of 

miscellaneous products, such as 

miscellaneous wood and building 

products, that we believe respondents 

included in Office Expenses as 

maintenance expense. Table 27 provides 

the revised MEI weights. 

We believe the introduction of these 

new, more detailed categories for the 

2006-based index allow for an increased 

level of precision while maintaining 

appropriate levels of aggregation in the 

index. The individual price proxies are 

described in more detail in section 

II.E.4.of this final rule. 

The following is a description of the 

types of expenses included in each of 

the detailed Office Expense cost 

categories. 

• Utilities: The Utilities cost weight 

includes expenses classified in the fuel, 

oil and gas, water and sewage, and 

electricity industries. These types of 

industries are classified in NAICS and 

include NAICS 2211 (Electric power 

generation, transmission, and 

distribution), 2212 (Natural gas 

distribution), and 2213 (Water, sewage, 

and other systems). The cost weight for 

utilities is 1.266 percent. 

• Chemicals: The Chemicals cost 

weight includes expenses classified in 

the NAICS 325 (Chemical 

manufacturing), excluding 

pharmaceuticals and biologicals. This 

would include, but is not limited to, 

expenses such as soap and cleaning 

compounds, as well as photocopier 

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toners and laser printer toners. The cost 

weight for chemicals is 0.723 percent. 

• Paper: The Paper cost weight 

includes expenses classified in NAICS 

322 (paper manufacturing) and NAICS 

323 (printing and related support 

activities). This would include expenses 

associated with items such as paper, 

paperboard, sanitary paper products, 

and printing. The cost weight for paper 

is 0.657 percent. 

• Rubber and Plastics: The Rubber 

and Plastics cost weight includes 

expenses classified in NAICS 326 

(Plastics and Rubber Products 

Manufacturing). This would include, 

but is not limited to expenses associated 

with plastic bags, plastic trash cans, and 

plastic plumbing fixtures. The cost 

weight for Rubber and Plastics is 0.598 

percent. 

• Telephone: The Telephone cost 

weight includes expenses classified in 

NAICS 517 (Telecommunications) and 

NAICS 518 (Internet service providers), 

and NAICS 515 (Cable and other 

subscription programming). Telephone 

service, which is one component of the 

Telecommunications expenses, 

accounts for the majority of the 

expenditures in this cost category. The 

cost weight for Telephone services is 

1.501 percent. 

• Postage: The Postage cost weight 

includes expenses classified in NAICS 

491 (Postal services) and NAICS 492 

(Courier services). The cost weight for 

Postage is 0.898 percent. 

• All Other Services: The All Other 

Services cost weight includes other 

service expenses including, but not 

limited to, nonresidential maintenance 

and repair, machinery repair, janitorial, 

and security services. This cost weight 

does not include expenses associated 

with professional services such as 

accounting, billing, legal, and marketing 

which are included in the Other 

Professional Expenses cost weight 

derived using the AMA PPIS survey. 

The cost weight for All Other Services 

is 3.582 percent. 

• All Other Products: The All Other 

Products cost weight, which we are 

adding based upon our further review in 

response to public comments, includes 

other miscellaneous expenses, including 

but not limited to, a variety of 

miscellaneous building products (such 

as wood and concrete). The cost weight 

for All Other Products is 0.500 percent. 

• Fixed Capital: The Fixed Capital 

cost weight includes expenses for 

building leases, mortgage interest, and 

depreciation on medical buildings. The 

cost weight for Fixed Capital is 8.957 

percent. 

• Moveable Capital: The Moveable 

Capital cost weight includes expenses 

and depreciation costs for non-medical 

equipment including but not limited to, 

computer equipment and software and 

the rental and leasing of industrial 

machinery equipment. The cost weight 

for Moveable Capital is 1.353 percent. 

(3) Professional Liability Insurance (PLI) 

Expense 

The proposed weight for PLI expense 

was derived from the 2006 AMA survey 

and was calculated as the mean PLI 

expense expressed as a percentage of 

mean total expenses. This calculation 

resulted in a 4.295-percent share of total 

costs in 2006 compared to a 3.865- 

percent share in the 2000-based index. 

The increase in the weight for PLI 

reflects the current prices of premiums, 

as well as an update to the level of 

coverage purchased by physicians in 

2006 compared to 2000. 

(4) Medical Equipment Expenses 

The proposed weight for Medical 

Equipment was calculated using the 

2006 AMA PPIS mean expense data 

expressed as a percentage of mean total 

expenses. This calculation resulted in a 

1.978-percent share of total costs in 

2006 compared to a 2.055-percent share 

in the 2000-based index. By definition, 

this category includes the expenses 

related to depreciation, maintenance 

contracts, and the leases or rental of 

medical equipment used in diagnosis or 

treatment of patients. The category 

would also include the tax-deductible 

portion of the purchase price or 

replacement value of medical 

equipment, if not leased. 

(5) Medical Supplies Expenses 

The proposed weight for Medical 

Supplies was calculated using the 2006 

AMA PPIS mean expense data 

expressed as a percentage of mean total 

expenses. This calculation resulted in a 

1.760-percent share of total costs in 

2006 compared to a 2.011-percent share 

in the 2000-based index. By definition, 

this category includes the expenses 

related to medical supplies such as 

sterile gloves, needles, bandages, 

specimen containers, and catheters. 

Additionally, we proposed to exclude 

the expenses related to separately 

billable supplies as these expenses are 

not paid for under the PFS. The Medical 

Supply cost category does not include 

expenses related to drugs. 

(6) Other Professional Expenses 

The proposed weight for Other 

Professional expenses was calculated 

using the 2006 AMA PPIS mean 

expense data expressed as a percentage 

of mean total expenses. This calculation 

resulted in a 4.513-percent share of total 

costs in 2006. By definition, this 

category includes the expenses related 

to tax-deductible expenses for any other 

professional expenses not reported in 

another category from the PPIS. These 

expenses would include fees related to 

legal, marketing, accounting, billing, 

office management services, 

professional association memberships, 

maintenance of certification or 

licensure, journals and continuing 

education, professional car upkeep and 

depreciation, and any other general 

expenses or other professional expenses 

not reported elsewhere on the PPIS. 

In summary, we are finalizing the 

proposed 2006-based MEI cost 

categories and respective cost weights 

for all categories except for the 

underlying detailed Office Expense cost 

categories and cost weights. In response 

to public comments, we reexamined the 

BEA I/O data and compared it again 

with the specific types of costs sought 

by the AMA PPIS survey question on 

Office Expenses. Although we are 

finalizing the proposed Office Expense 

cost weight of 20.035 percent, our reevaluation resulted in slight changes to 

the underlying detail of the Office 

Expense cost categories and cost 

weights. Specifically, we are finalizing 

the nine proposed detailed cost 

categories and adding one additional 

detailed cost category, All Other 

Products. The final detailed cost 

categories and cost weights for the 

underlying Office Expense cost 

categories are shown in Table 27. 

Table 29 shows a comparison of the 

proposed MEI Office Expense cost 

categories and weights to the final MEI 

Office Expense cost categories and 

weights. In addition to adding the 

subcategory All Other Products, the 

final Office Expenses’ category weights 

were updated in response to public 

comments to reflect the removal of 

automobile-related expenses, which 

were in effect being double-counted, 

from the Movable Capital category. 

Further examination of the AMA’s PPIS 

questions showed that automobile costs, 

such as those associated with leasing 

and depreciation, were captured in the 

question related to other professional 

expenses and are, thus accounted for in 

Other Professional Expenses (with a 

final cost weight of 4.513 percent). 

Notably, that cost weight is not 

impacted as, again, those costs were 

captured there in the survey. 

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1U.S. Senate, Committee on Finance, Social 

Security Amendments of 1972. ‘‘Report of the 

Committee on Finance United States Senate to 

Accompany H.R. 1,’’ September 26, 1972, p. 191. 

TABLE 29—COMPARISON OF PROPOSED OFFICE EXPENSE COST CATEGORIES AND COST WEIGHTS TO

THE FINAL OFFICE EXPENSE COST

CATEGORIES AND COST WEIGHTS

Cost categories 

2006 

Final 

weight 

(%) 

2006 

Proposed 

weight 

(%) 

Office Expenses ....... 20.035 20.035 

Utilities ............... 1.266 1.139 

Chemicals .......... 0.723 0.679 

Paper ................. 0.657 0.616 

Rubber & Plastics .................. 0.598 0.563 

Telephone .......... 1.501 1.415 

Postage ............. 0.898 0.661 

All Other Services ................. 3.582 4.718 

All Other Products ................ 0.500 ................

Fixed Capital ..... 8.957 8.410 

Moveable Capital 1.353 1.834 

4. Selection of Price Proxies for Use in 

the MEI 

After the 2006 cost weights for the 

rebased and revised MEI were 

developed, we reviewed all of the price 

proxies to evaluate their 

appropriateness. As was the case in the 

development of the 2000-based MEI (68 

FR 63239), most of the proxy measures 

we considered are based on BLS data 

and are grouped into one of the 

following five categories: 

• Producer Price Indices (PPIs): PPIs 

measure price changes for goods sold in 

markets other than retail markets. These 

fixed-weight indexes are a measure of 

price change at the intermediate or final 

stage of production. They are the 

preferred proxies for physician 

purchases as these prices appropriately 

reflect the product’s first commercial 

transaction. 

• Consumer Price Indices (CPIs): CPIs 

measure changes in the prices of final 

goods and services bought by 

consumers. Like the PPIs, they are fixedweight indexes. Since they may not 

represent the price changes faced by 

producers, CPIs are used if there are no 

appropriate PPIs or if the particular 

expenditure category is likely to contain 

purchases made at the final point of 

sale. 

• Average Hourly Earnings (AHEs): 

AHEs are available for production and 

nonsupervisory workers for specific 

industries, as well as for the nonfarm 

business economy. They are calculated 

by dividing gross payrolls for wages & 

salaries by total hours. The series 

reflects shifts in employment mix and, 

thus, is representative of actual changes 

in hourly earnings for industries or for 

the nonfarm business economy. 

• ECIs for Wages & Salaries: These 

ECIs measure the rate of change in 

employee wage rates per hour worked. 

These fixed-weight indexes are not 

affected by employment shifts among 

industries or occupations and thus, 

measure only the pure rate of change in 

wages. 

• ECIs for Employee Benefits: These 

ECIs measure the rate of change in 

employer costs of employee benefits, 

such as the employer’s share of Social 

Security taxes, pension and other 

retirement plans, insurance benefits 

(life, health, disability, and accident), 

and paid leave. Like ECIs for wages & 

salaries, the ECIs for employee benefits 

are not affected by employment shifts 

among industries or occupations. 

When choosing wage and price 

proxies for each expense category, we 

evaluate the strengths and weaknesses 

of each proxy variable using the 

following four criteria: 

• Relevance: The price proxy should 

appropriately represent price changes 

for specific goods or services within the 

expense category. Relevance may 

encompass judgments about relative 

efficiency of the market generating the 

price and wage increases. 

• Reliability: If the potential proxy 

demonstrates a high sampling 

variability, or inexplicable erratic 

patterns over time, its viability as an 

appropriate price proxy is greatly 

diminished. Notably, low sampling 

variability can conflict with relevance— 

since the more specifically a price 

variable is defined (in terms of service, 

commodity, or geographic area), the 

higher the possibility of high sampling 

variability. A well-established time 

series is also preferred. 

• Timeliness of actual published 

data: For greater granularity and the 

need to be as timely as possible, we 

prefer monthly and quarterly data to 

annual data. 

• Public availability: For 

transparency, we prefer to use data 

sources that are publicly available. 

The BLS price proxy categories 

previously described meet the criteria of 

relevance, reliability, timeliness, and 

public availability. Below we discuss 

the price and wage proxies for the 

rebased and revised MEI (as shown in 

Table E4), along with a summary of the 

public comments we received on our 

proposals and our responses to those 

comments. 

a. Cost (Expense) Categories in the MEI 

(1) Physician’s Own Time (Physician 

Compensation) 

For the revised and rebased MEI, we 

proposed to continue to use the AHE for 

production and non-supervisory 

employees for the private nonfarm 

economy as the proxy for the Physician 

Wages & Salaries component (BLS series 

code: CEU0500000008). 

The AHE for the private nonfarm 

economy reflects general earnings 

including the impacts of supply, 

demand, and economy-wide 

productivity for the average worker in 

the economy. As such, use of this proxy 

is consistent with the original intent of 

the Congress for the change in the MEI 

to follow reflect changes in expenses of 

practice and general earnings levels.1

The current 2000-based MEI uses the 

ECI for Total Benefits (BLS series code: 

CIU2030000000000I) for total private 

industry as the price proxy for 

Physician Benefits. We proposed to 

continue using the same proxy for the 

2006-based MEI and received no public 

comment on this particular aspect of the 

index. This means that both the wage 

and benefit proxies for physician 

earnings are derived from the private 

nonfarm business sector and are 

computed on a per-hour basis. 

(2) Nonphysician Employee 

Compensation 

For the 2006-based MEI, we proposed 

to use the same ECI private series for 

each occupational group as in the 2000- 

based MEI. In particular, we proposed to 

use the ECI for Professional and 

Technical Workers, the ECI for 

Managerial Services, the ECI for 

Administrative Support Services, and 

the ECI for Service Occupations. 

As described in the CY 2008 PFS 

proposed rule (72 FR 38190), as a result 

of the discontinuation of the White 

Collar Benefit ECI for private workers, 

we proposed to continue to use a 

composite ECI benefit index. We are 

continuing to use the composite ECI for 

non-physician employees in the 

proposed rebased and revised MEI; 

however, we proposed to rebase the 

weights within that blend in order to 

reflect the more recent 2006 data. Table 

30 lists the four ECI series and 

corresponding weights used to construct 

the 2006 composite benefit index. 

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TABLE 30—CMS COMPOSITE PRICE

INDEX FOR NONPHYSICIAN EMPLOYEE BENEFITS

ECI series 

2006 

weight 

(%) 

Benefits, Private, Professional & Related .............................................. 44 

Benefits, Private, Management, 

Business, Financial ....................... 11 

Benefits, Private, Office & Administrative Support ............................... 32 

Benefits, Private, Service Occupations ............................................... 13 

(3) Utilities 

For the 2006-based MEI, we proposed 

to use the CPI for Fuel and Utilities 

(BLS series code #CUUR0000SAH2) to 

measure the price growth of this cost 

category. This cost category was not 

broken out separately in the 2000-based 

MEI. 

(4) Chemicals 

For the 2006-based MEI, we proposed 

to use the PPI for Other Basic Organic 

Chemical Manufacturing (BLS series 

code #PCU32519–32519) to measure the 

price changes of this cost category. We 

are using this industry-based PPI 

because BEA’s 2002 benchmark I/O data 

show that the majority of the office of 

physicians’ chemical expenses are 

attributable to Other Basic Organic 

Chemical Manufacturing (NAICS 

32519). This cost category was not 

broken out separately in the 2000-based 

MEI. 

(5) Paper 

For the 2006-based MEI, we proposed 

to use the PPI for Converted Paper and 

Paperboard (BLS series code 

#WPU0915) to measure the price growth 

of this cost category. This cost category 

was not broken out separately in the 

2000-based MEI. 

(6) Rubber and Plastics 

For the 2006-based MEI, we proposed 

to use the PPI for Rubber and Plastic 

Products (BLS series code #WPU07) to 

measure the price growth of this cost 

category. This cost category was not 

broken out separately in the 2000-based 

MEI. 

(7) Telephone 

For the 2006-based MEI, we proposed 

to use the CPI for Telephone Services 

(BLS series code #CUUR0000SEED) to 

measure the price growth of this cost 

category. This cost category was not 

broken out separately in the 2000-based 

MEI. 

(8) Postage 

For the 2006-based MEI, we proposed 

to use the CPI for Postage (BLS series 

code #CUUR0000SEEC01) to measure 

the price growth of this cost category. 

This cost category was not broken out 

separately in the 2000-based MEI. 

(9) All Other Services 

For the 2006-based MEI, we proposed 

to use the ECI for Compensation for 

Service Occupations (private industry) 

(BLS series code #CIU2010000300000I) 

to measure the price growth of this cost 

category. This cost category was not 

broken out separately in the 2000-based 

MEI. 

(10) All Other Products 

As noted previously, we are adding 

this category in this final rule with 

comment period in response to public 

comments. This category includes a 

variety of miscellaneous expenses such 

as miscellaneous building products; 

thus, we will use the CPI–U for All 

Items Less Food and Energy as a proxy 

for price changes. This cost category 

was not broken out separately in the 

2000-based MEI. 

(11) Fixed Capital 

For the 2006-based MEI, we proposed 

to use the CPI for Owner’s Equivalent 

Rent (BLS series code 

#CUUS0000SEHC) to measure the price 

growth of this cost category. This price 

index represents about 50 percent of the 

CPI for Housing, which was used in the 

2000-based MEI to proxy total Office 

Expenses. 

(12) Moveable Capital 

For the 2006-based MEI, we proposed 

to use the PPI for Machinery and 

Equipment (series code #WPU11) to 

measure the price growth of this cost 

category. This cost category was not 

broken out separately in the 2000-based 

MEI. 

(13) Professional Liability Insurance 

(PLI) 

Each year, we solicit PLI premium 

data for physicians from a sample of 

commercial carriers. This information is 

not collected through a survey form, but 

instead is requested directly from, and 

provided by (on a voluntary basis), 

several national commercial carriers. As 

we require for our other price proxies, 

the professional liability price proxy is 

intended to reflect the pure price change 

associated with this particular cost 

category. Thus, it does not include 

changes in the mix or level of liability 

coverage. To accomplish this result, we 

obtain premium information from a 

sample of commercial carriers for a 

fixed level of coverage, currently $1 

million per occurrence and a $3 million 

annual limit. This information is 

collected for every State by physician 

specialty and risk class. Finally, the 

State-level, physician-specialty data are 

aggregated by effective premium date to 

compute a national total, using counts 

of physicians by State and specialty as 

provided in the AMA publication, 

Physician Characteristics and 

Distribution in the U.S. 

The resulting data provide a quarterly 

time series, indexed to a base year 

consistent with the MEI, and reflect the 

national trend in the average 

professional liability premium for a 

given level of coverage, generally $1 

million/$3 million of claims-made 

mature policies. From this series, 

quarterly and annual percent changes in 

PLI are estimated for inclusion in the 

MEI. 

The most comprehensive data on 

professional liability costs are held by 

the State insurance commissioners, but 

these data are available only with a 

substantial time lag and hence, the data 

currently incorporated into the MEI are 

much timelier. We believe that, given 

the limited data available on 

professional liability premiums, the 

information and methodology described 

above produces an adequate proxy of 

the PLI price trends facing physicians. 

(14) Medical Equipment 

The Medical Equipment cost category 

includes depreciation, leases, and rent 

on medical equipment. We proposed to 

use the PPI for Medical Instruments and 

Equipment (BLS series code: 

WPU156201) as the price proxy for this 

category, consistent with the price 

proxy used in the 2000-based MEI and 

other CMS input price indexes. 

(15) Medical Materials and Supplies 

As was used in the 2000-based MEI, 

we proposed to use a blended index 

comprised of a 50/50 blend of the PPI 

Surgical Appliances (BLS series code: 

WPU156301) and the CPI–U for Medical 

Equipment and Supplies (BLS series 

code: CUUR0000SEMG). We believe 

physicians purchase the types of 

supplies contained within these proxies, 

including such items as bandages, 

dressings, catheters, intravenous (I.V.) 

equipment, syringes, and other general 

disposable medical supplies, via 

wholesale purchase, as well as at the 

retail level. Consequently, we proposed 

to combine the two aforementioned 

indexes to reflect those modes of 

purchase. 

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(16) Other Professional Expenses 

This category includes the residual 

subcategory of other professional 

expenses such as accounting services, 

legal services, office management 

services, continuing education, 

professional association memberships, 

journals, professional car expenses, and 

other general expenses and other 

professional expenses not captured 

elsewhere. Given this heterogeneous 

mix of goods and services, we are 

finalizing our proposal to use the CPI– 

U for All Items Less Food and Energy. 

In summary, we are finalizing the 

proposed 2006-based MEI price proxies 

with one modification. Since an 

additional cost category, All Other 

Products, was added to the office 

expense disaggregation, we are also 

finalizing the decision to use the CPI for 

All Items Less Food and Energy as the 

price proxy for that category. 

(b) Productivity Adjustment to the MEI 

The MEI has been adjusted for 

changes in productivity since its 

inception. In the CY 2003 PFS final rule 

(67 FR 80019), we implemented a 

change in the way the MEI was adjusted 

to account for those changes in 

productivity. The MEI used for the 2003 

physician payment update incorporated 

changes in the 10-year moving average 

of private nonfarm business multifactor 

productivity that were applied to the 

entire index. Previously, the index 

incorporated changes in productivity by 

adjusting the labor portions of the index 

by changes in the 10-year moving 

average of economy-wide private 

nonfarm business labor productivity. 

We proposed to continue to use the 

current method for adjusting the full 

MEI for multifactor productivity in the 

rebased and revised MEI, and are 

finalizing that proposal. 

As described in the CY 2003 PFS final 

rule, we believe this adjustment is 

appropriate because it explicitly reflects 

the productivity gains associated with 

all inputs (both labor and non-labor). 

We believe that using the 10-year 

moving average percent change in 

private nonfarm business multifactor 

productivity is appropriate for deriving 

a stable measure that helps alleviate the 

influence that a peak (or a trough) of a 

business cycle may have on the 

measure. The adjustment will be based 

on the latest available historical e 

private nonfarm business multifactor 

productivity data as measured and 

published by BLS. 

5. Results of Rebasing 

Table 31 illustrates the results of 

updating the MEI cost weights for 

Physician Compensation, Practice 

Expenses (excluding PLI), and PLI from 

a 2000-based cost distribution to a 2006- 

based cost distribution, including all the 

proposed and finalized revisions as 

specified in this final rule. 

TABLE 31—PERCENT DISTRIBUTION OF

SELECTED PHYSICIAN EXPENSES

USED TO CALIBRATE RVUS: CYS

2006 AND 2000 

CY 2006 

weight 

(%) 

CY 2000 

weight 

(%) 

Physician Compensation (Own Time) .... 48.266 52.466 

Practice Expenses 

(less PLI) ............... 47.439 43.669 

PLI ............................ 4.295 3.865 

The rebased and revised MEI has 

several differences as compared to the 

2000-based MEI; these changes have 

been discussed in detail in prior 

sections of this rule. Table E8 shows the 

average calendar year percent change for 

CY 2004 to CY 2011 for both the 2000- 

and 2006-based MEIs. The 2006-based 

MEI annual percent changes differ from 

the 2000-based MEI annual percent 

changes by 0.0 to 0.8 percentage point. 

For CYs 2007 through 2011, the annual 

percent change in the rebased and 

revised MEI was within 0.3 percentage 

point of the percent change in the 2000- 

based MEI. In the earlier years, there 

were larger differences between the 

annual percent change in the rebased 

and revised MEI and the 2000-based 

MEI. The majority of these differences 

can be attributed to the lower benefit 

cost weight, as measured by the 2006 

AMA data, and the exclusion of the 

Pharmaceuticals cost category. The 

remaining differences are attributable to 

the higher cost weight for PLI, as 

measured by the 2006 AMA data. 

TABLE 32—ANNUAL PERCENT

CHANGES IN THE 2000-BASED AND

REVISED 2006-BASED MEI 

Update year(A)

Final 

2006-based 

MEI 

Current 

2000-based 

MEI 

CY 2004 ............ 2.3 2.6 

CY 2005 ............ 1.8 2.6 

CY 2006 ............ 1.8 2.4 

CY 2007 ............ 1.6 1.9 

CY 2008 ............ 1.9 1.8 

CY 2009 ............ 1.6 1.6 

CY 2010 ............ 1.5 1.2 

CY 2011(B) ........ 0.4 0.3 

Average Change 

for CYs 2004- 

2011 .............. 1.6 1.8 

(A) Update year based on historical data 

through the second quarter of the prior calendar year. For example, the 2010 update is 

based on historical data through the second 

quarter 2009. 

(B) Based on historical data through the 2nd 

quarter 2010. 

As shown in Table 33, the percent 

change of the rebased and revised MEI 

for the CY 2011 PFS final rule is an 

increase of 0.4 percent, one tenth of a 

percentage point higher than the 2000- 

based MEI for the same period. The 

proposed rule included an estimated 

increase of 0.3 percent for 2011 based 

on projected data from IHS Global 

Insight, Inc. The 0.4 percent increase 

was calculated based on historical data 

through the second quarter of 2010, 

including revised data from the BLS on 

the 10-year moving average of BLS 

private nonfarm business multifactor 

productivity published on October 6, 

2010 (http://www.bls.gov/news.release/ 

pdf/prod3.pdf). The 0.1 percentage 

point difference in the MEI update 

factor from the 0.3-percent estimate 

indicated in the proposed rule to our 

current figure of 0.4 percent is primarily 

related to the incorporation of more 

recent historical data for private 

nonfarm business multifactor 

productivity. 

TABLE 33—ANNUAL PERCENT CHANGE

IN THE 2000-BASED AND REVISED

2006-BASED MEI FOR CY 2011 

2006–based 

MEI 

2000–based 

MEI 

CY 2011 ............ 0.4 0.3 

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73270 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

TABLE 34—ANNUAL PERCENT CHANGE IN THE REVISED AND REBASED MEI CY 2011, ALL CATEGORIES 1

Cost categories 

2006 

weight 2

(%) 

CY 2011 

percent 

change 

MEI Total, productivity adjusted ...................................................................................................................................... 100.000 0.4 

Productivity: 10-year moving average of MFP ................................................................................................................ N/A 1.2 

MEI Total, without productivity adjustment ...................................................................................................................... 100.000 1.6 

Physician Compensation (Own Time) 3 ................................................................................................................... 48.266 2.4 

Wages and Salaries .......................................................................................................................................... 43.880 2.5 

Benefits .............................................................................................................................................................. 4.386 1.7 

Physician’s Practice Expenses ................................................................................................................................. 51.734 0.7 

Nonphysician Employee Compensation ........................................................................................................... 19.153 1.5 

Nonphysician Employee Wages ................................................................................................................ 13.752 1.4 

Prof/Tech Wages ................................................................................................................................ 6.006 1.2 

Managerial Wages .............................................................................................................................. 1.446 1.2 

Clerical Wages .................................................................................................................................... 4.466 1.7 

Services Wages .................................................................................................................................. 1.834 1.7 

Nonphysician Employee Benefits .............................................................................................................. 5.401 1.6 

Other Practice Expenses .................................................................................................................................. 26.308 0.1 

Office Expenses ......................................................................................................................................... 20.035 0.6 

Utilities ................................................................................................................................................. 1.266 -3.1 

Chemicals ........................................................................................................................................... 0.723 -2.5 

Paper ................................................................................................................................................... 0.657 -0.3 

Rubber & Plastics ............................................................................................................................... 0.598 -0.3 

Telephone ........................................................................................................................................... 1.501 0.8 

Postage ............................................................................................................................................... 0.898 4.7 

All Other Services ............................................................................................................................... 3.582 1.8 

All Other Products ............................................................................................................................... 0.500 1.4 

Fixed Capital ....................................................................................................................................... 8.957 0.6 

Moveable Capital ................................................................................................................................ 1.353 0.1 

PLI 4 ................................................................................................................................................................... 4.295 -2.9 

Medical Equipment ............................................................................................................................................ 1.978 0.5 

Medical Materials and Supplies ........................................................................................................................ 1.760 0.4 

Other Professional Expenses ............................................................................................................................ 4.513 1.4 

1The estimates are based upon the latest available Bureau of Labor Statistics data on the 10-year moving average of BLS private nonfarm 

business multifactor productivity published on October 6, 2010 (http://www.bls.gov/news.release/pdf/prod3.pdf). 2The weights shown for the MEI components are the 2006 base-year weights, which may not sum to subtotals or totals because of rounding. 

The MEI is a fixed-weight, Laspeyres input price index whose category weights indicate the distribution of expenditures among the inputs to physicians’ services for CY 2006. To determine the MEI level for a given year, the price proxy level for each component is multiplied by its 2006 

weight. The sum of these products (weights multiplied by the price index levels) yields the composite MEI level for a given year. The annual percent change in the MEI levels is an estimate of price change over time for a fixed market basket of inputs to physicians’ services. 3The measures of Productivity, Average Hourly Earnings, Employment Cost Indexes, as well as the various Producer and Consumer Price Indexes can be found on the Bureau of Labor Statistics (BLS) Web site at http://stats.bls.gov. 4 Derived from a CMS survey of several major commercial insurers. 

N⁄A Productivity is factored into the MEI as a subtraction from the total index growth rate; therefore, no explicit weight exists for productivity in 

the MEI. 

6. Medicare Economic Index Technical 

Advisory Panel 

In the CY 2011 PFS proposed rule, we 

notified the public of our intent to 

convene a Medicare Economic Index 

Technical Advisory Panel (MEI TAP) to 

study all aspects of the MEI including 

its cost categories, their associated cost 

weights and price proxies, and the 

adjustment of the index by an economywide measure of multi-factor 

productivity. We will be convening the 

MEI TAP. More details regarding this 

issue can be found in the next section 

of this rule. 

7. Summary of Comments and the 

Associated Responses 

a. Timing of Rebasing and Revising the 

MEI 

Comment: Many commenters support 

the rebasing and revising of the MEI 

using CY 2006 as a base year and the 

incorporation of practice cost changes 

reflected in the 2006 AMA PPIS. Many 

of these commenters also indicated their 

support for the upcoming MEI technical 

advisory panel, but stressed that CMS 

should not delay moving forward with 

rebasing and revising the MEI for CY 

2011. Several people wrote that they 

believe that the rebasing, along with the 

addition of new product categories, will 

result in a more accurate distribution of 

expenses among physician 

compensation, practice expense, and 

professional liability. The commenters 

believe that the proposal to rebase to 

2006 will make the MEI more 

representative of current conditions in 

the health care marketplace and, in 

particular, more reflective of the higher 

burden of practice expenses in relation 

to physician compensation in modern 

physician practices. The commenters 

agree that the use of more current data 

and the expansion of the categories used 

in determining the MEI update are a 

technical improvement over the 2000- 

based MEI and urge CMS to proceed 

accordingly. 

Response: We agree with the 

commenters that the 2006-based MEI 

reflects a more current estimate of the 

cost distribution associated with 

furnishing physicians’ services. 

Therefore we are finalizing our 

proposals (with minor modifications 

described above) to rebase and revise 

the MEI, and are proceeding with 

implementation of the 2006-based MEI 

for CY 2011. 

Comment: Many commenters 

indicated CMS should postpone 

implementation of the rebased and 

revised MEI until the MEI technical 

advisory panel can conduct a 

comprehensive review of all aspects of 

the index. These commenters believe 

that it is premature to finalize proposals 

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that will significantly change the MEI 

prior to receiving recommendations 

from the technical advisory panel and 

therefore strongly support convening 

the technical advisory panel first and 

rebasing and revising the MEI 

afterwards. 

Response: We agree with the 

commenters that the MEI technical 

advisory panel should move forward 

(discussed in more detail below). 

However, we do not find any 

compelling technical reason to postpone 

finalizing the proposed changes to the 

index. We believe rebasing and revising 

the index for CY 2011 to reapportion the 

work, practice expense, and malpractice 

weights will allow the MEI to 

appropriately reflect more recent data. 

For these reasons we disagree with the 

commenters that support delaying the 

rebasing of the MEI until the technical 

panel has had a chance to convene and 

make further recommendations. Should 

we concur with recommendations from 

the technical advisory panel that would 

result in technical improvements to the 

MEI, we would propose any changes in 

a future rulemaking exercise. 

Comment: One commenter questioned 

the need for changes in the MEI in 2011, 

particularly since there is no statutory 

timeframe for these changes and the 

most recent changes in practice 

expenses from the PPIS survey are in 

the first year of a 4-year phase-in. 

Response: The current MEI reflects 

the physician practice cost structure for 

2000. Based on both our own analysis 

and supporting public comments, it is 

evident that this cost structure has 

changed from 2000 to 2006. 

Accordingly, we believe it is technically 

appropriate to update to a more recent 

base year for use in CY 2011. 

Comment: A commenter suggested 

that when rebasing is done in the future, 

CMS should propose phasing in the 

changes, perhaps over 2 years, in order 

to mitigate negative consequences. 

Response: We do not believe it would 

be appropriate to phase in changes to 

the MEI associated with rebasing and 

revising the index. These periodic 

efforts are done to ensure that the MEI 

is reflecting the latest available 

information and echoes current cost 

distributions associated with furnishing 

physicians’ services. Our approach is 

consistent across all of the Medicare 

market baskets in this regard and is 

likewise consistent with how technical 

improvements are incorporated into 

other published price indexes, such as 

the CPI or PPI. 

Comment: Some commenters asked 

CMS to delay rebasing the MEI until the 

summit on geographic practice costs 

and the IOM studies have been 

completed. 

Response: We believe that it is 

technically appropriate to update the 

MEI to reflect the more current cost 

structure as determined by using the 

2006 AMA PPIS data. We note that the 

MEI is constructed independent of the 

GPCIs. While the GPCI weights have 

historically been linked to the MEI cost 

weights, we do not believe it would be 

appropriate to postpone rebasing the 

MEI in anticipation of the summit’s or 

the IOM’s findings. 

b. PPIS Data 

Comment: Many commenters stated 

they, like CMS, are unaware of another 

more robust or more current source of 

available data on physician practice 

costs than the PPIS. Other commenters 

noted that CMS and the AMA have 

supported using PPIS data to update the 

practice expense per hour (PE/HR) 

calculations beginning in CY 2010. The 

commenters believe that if the data were 

sufficient to adjust PE/HR, then they are 

sufficient to update the MEI. Other 

commenters indicate they support 

periodic updates to the index, 

recognizing the difficulties associated 

with updating the MEI’s cost categories 

and weights on an annual basis. 

Response: We agree with the 

commenters that the PPIS is the most 

up-to-date and comprehensive data 

source available on physician practice 

costs. We also believe that the estimates 

derived from the PPIS are current, valid, 

and appropriate for use in rebasing and 

revising the MEI. Likewise, we concur 

that a variety of data-related issues 

would make updating the MEI on an 

annual basis difficult and believe that 

periodic revisions such as the one we 

are adopting in this final rule with 

comment period are more appropriate. 

Comment: A few commenters 

expressed general concerns over using 

data from the PPIS. One commenter 

specifically notes that the MEI changes 

are allegedly being proposed to reflect 

changes in medical practice based on 

research using PE data. The commenter 

has reviewed some of the research, 

including the research process and 

questioned the research data itself. 

Their concerns over the raw data source 

include issues related to sample design, 

sample geographic distribution, and 

sample size sufficiency. They 

questioned the choice of the data 

collection firm used by AMA. 

Response: We conducted an extensive 

review of the PPIS data and continue to 

believe it appropriately reflects the cost 

distributions of physicians. We note that 

we rely upon the physician community 

to complete the AMA surveys as 

accurately as possible since unlike other 

provider types (such as hospitals and 

skilled nursing facilities) physicians are 

not required to submit annual Medicare 

cost report data. 

Comment: Some commenters 

indicated that CMS did not make clear 

why the rebased MEI would be based on 

PPIS data from 2006. Several expressed 

concerns that the use of 4-year old data 

is questionable as data this old would 

not reflect physician expenses in 2011 

(and that more up-to-date data on 

physician costs is surely available). 

Response: As stated in the CY 2011 

PFS proposed rule (75 FR 40088), we 

chose to rebase the MEI to 2006 in order 

to incorporate the 2006 AMA PPIS data. 

We believe the 2006 AMA PPIS data is 

the most up-to-date, complete, 

statistically valid data source available. 

We welcome any recommendations for 

more up-to-date data sources available 

on physician expenses. We would also 

note that the 2006 data from the PPIS 

are used to provide the cost structure 

that is used in the MEI. The increase in 

the CY 2011 MEI ultimately reflects the 

input price inflation, adjusted for 

productivity, that physicians face based 

on a 2006 distribution of costs. It does 

not, nor is it intended to, reflect 

physician input cost levels for 2011. 

Comment: Some commenters noted 

that in the interest of transparency, CMS 

should publish on its Web site all data 

from the PPIS that were used in rebasing 

the MEI. 

Response: We understand the 

commenter’s request for transparency. 

Unfortunately, we are unable to publish 

the detailed micro level data from the 

AMA PPIS survey as it is proprietary 

information. We would suggest the 

commenter contact the AMA with their 

request. 

c. Office Expenses 

Comment: Several commenters 

appreciated the intent of the new 

subcategories found in Office Expenses 

to include more medical office-specific 

data and believe it will improve the 

index. 

Response: We agree with the 

commenters and believe that having 

greater detail under the Office Expense 

cost category in the MEI provides a 

technical improvement. 

Comment: Several commenters 

questioned the CMS proposal to create 

detailed categories under the broader 

Office Expense cost category. Some of 

the commenters had specific concerns 

about the particular subcategories. 

Examples included the following: 

• The Chemicals and Rubber & 

Plastics categories (all derived from the 

BEA) might not be relevant (or 

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73272 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

meaningful) to today’s physicians’ 

practice. 

• Computers, computer expenses, 

billing, and scheduling technology and 

electronic medical records are high-cost, 

non-optional office expenses for 

medical practices that are not 

adequately captured and would 

represent more appropriate categories. 

• CMS references data on the Office 

Expenses’ components derived from the 

BEA, but the agency provided no 

rationale to justify the changes in Office 

Expenses, nor did it provide a detailed 

accounting methodology or solicit 

advice on new inputs to the index. 

Response: We proposed to 

disaggregate the Office Expense cost 

category into more detailed cost 

categories as a result of a change to the 

question in the 2006 AMA PPIS survey 

that captured these types of costs. In 

addition, in rulemaking for the CY 2008 

Physician Fee Schedule, we received a 

comment from the industry about our 

use of the CPI for Housing to proxy 

Office Expenses (72 FR 66376). At that 

time, we notified the public of our 

intent to explore the feasibility of 

breaking the Office Expenses category 

into more descriptive cost categories 

during the next rebasing. 

In order to appropriately represent the 

information collected by the PPIS and to 

increase the level of precision of our 

price proxies, we proposed to 

disaggregate the Office Expense cost 

category and its associated weight into 

more detailed components and to proxy 

those costs with the most technically 

appropriate price proxies. Moreover, we 

believe it would be technically 

inappropriate to proxy the Office 

Expense cost category, which now 

includes a much broader range of 

expenses, by one price proxy, namely 

the CPI for Housing. For these reasons, 

we developed our proposals and 

solicited public comments. 

We disagree with the commenters’ 

assertion that the Chemicals and Rubber 

& Plastics categories are not relevant to 

today’s physician practice (and note that 

the commenters did not provide 

additional information or data to 

support the claim that the proposed 

categories are not relevant). The 

information we relied on came directly 

from the BEAs’ Benchmark I/O files for 

Offices of Physicians, Dentists, and 

Other Health Practitioners. The 

Chemicals cost category includes 

expenses for items such as soaps and 

cleaning compounds, as well as 

photocopier toners and laser printer 

toners. The Rubber and Plastics category 

includes expenses for items such as 

plastic plumbing fixtures, plastic bags, 

and plastic trash cans. Although we will 

continue to explore further additional 

disaggregation of expenses, we believe 

that the aforementioned costs are 

associated with, and relevant to, 

furnishing physicians’ services. 

As indicated previously, and in 

response to the comment, we conducted 

an additional review of the BEA I/O 

data used to disaggregate the Office 

Expense cost category, comparing the 

detailed underlying expenses with the 

questions on the AMA PPIS survey. 

This review led us to make small 

revisions to the underlying Office 

Expense cost weights, including the 

addition of another cost weight for the 

new subcategory, All Other Products. 

These products were initially assumed 

to be captured in Other Professional 

Expenses as measured by the AMA PPIS 

survey, but were determined to have 

been reported as Office Expenses. All 

Other Products would include a variety 

of miscellaneous products such as 

miscellaneous wood and apparel 

products. Table E4 provides the revised 

MEI weights. Also, as part of this 

additional analysis on the Office 

Expense categories, we determined that 

automobile-related expenses were 

captured in the PPIS question associated 

with Other Professional Expenses (and 

that its associated weight reflected 

respondents including those costs when 

answering that question). As a result, we 

removed automobile-related NAICSbased industry spending from the BEA 

I/O data that was being used to 

distribute expenses across the various 

Office Expense subcategories. As this 

spending was included in the Movable 

Capital subcategory for the proposed 

rule, the weight associated with that 

subcategory will be 1.353 rather than 

the 1.834 we proposed. 

We disagree with the commenters’ 

statements that the MEI does not 

adequately capture high-level or highcost technology expenses (and briefly 

note that Movable Capital includes only 

non-medical movable equipment). The 

Office Expense cost weight (20.035 

percent) was calculated using the 2006 

PPIS data, which specifically requested 

health information technology 

equipment and other nonmedical office 

equipment to be included in the Office 

Expense category as follows: 

Provide [your] share (dollar amount) of the 

specialty or department level’s share (dollar 

amount) of the practice’s total (dollar 

amount) for] 2006 office expenses, including 

office (non-medical) equipment and office 

(non-medical) supplies, as well as rent, 

mortgage interest, maintenance, refrigeration, 

storage, security, janitorial, depreciation on 

medical buildings used in your practice, 

utilities, or other office computer systems 

(including information management systems/ 

electronic medical record systems) and 

telephone. 

Given that the expenses related to 

information management systems and 

electronic medical record systems were 

included as ‘‘office expenses’’ in the 

2006 PPIS, the 20.035 percent weight 

would include these costs. 

Unfortunately, given the data 

limitations, it remains difficult to 

determine a percentage associated 

specifically with computer equipment, 

computer-related depreciation, and 

computer-related leasing. For this 

rebasing, the costs we classified as 

Moveable Capital are comprised of the 

expenses paid by Office of Physicians 

industry to the following industries 

based on NAICS classification: 

33329A ............................................ Other industrial machinery manufacturing. 

33331A ............................................ Vending, commercial, industrial, and office machinery manufacturing. 

333414 ............................................ Heating equipment, except warm air furnaces. 

333415 ............................................ Air conditioning, refrigeration, and warm air heating equipment manufacturing. 

33399A ............................................ Other general purpose machinery manufacturing. 

33411A ............................................ Computer terminals and other computer peripheral equipment manufacturing. 

334210 ............................................ Telephone apparatus manufacturing. 

334220 ............................................ Broadcast and wireless communications equipment. 

334290 ............................................ Other communications equipment manufacturing. 

334300 ............................................ Audio and video equipment manufacturing. 

334418 ............................................ Printed circuit assembly (electronic assembly) manufacturing. 

334613 ............................................ Magnetic and optical recording media manufacturing. 

335120 ............................................ Lighting fixture manufacturing. 

337110 ............................................ Wood kitchen cabinet and countertop manufacturing. 

337215 ............................................ Showcase, partition, shelving, and locker manufacturing. 

532400 ............................................ Commercial and industrial machinery and equipment rental and leasing. 

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2U.S. Senate, Committee on Finance, Social 

Security Amendments of 1972. ’’Report of the 

Committee on Finance United States Senate to 

Accompany H.R. 1,’’ September 26, 1972, p. 190. 

We believe technology-related 

expense are captured in the MEI and 

that the PPI for Machinery and 

Equipment is an appropriate price proxy 

to estimate price changes. However, we 

will actively monitor the data moving 

forward to ensure these types of 

expenses are adequately reflected in the 

MEI. 

Finally, we would note that the 

descriptions of the methodologies used 

to construct the subcategories under 

Office Expenses were both detailed and 

consistent with those provided in the 

recent proposed rules relating to the 

rebasing of other CMS market baskets. 

However, in response to the comment 

we hope the additional information 

provided here is helpful. 

Comment: One commenter found it 

most problematic that the CMS proposal 

related to Office Expenses would reduce 

the weight of rent within physician 

practice expenses. Currently, rent 

comprises 12.2 percent of the practice 

expense GPCI. Under the proposed rule, 

rent would be reduced to 8.4 percent. 

The commenter also noted that their 

attempt to validate the proposal, using 

BEA 2002 Benchmark I/O use files for 

NAICS 621A00 as described in the 

proposed rule were not successful. 

Response: We proposed to 

disaggregate the Office Expense cost 

weight in the 2006-based MEI in order 

to recognize and take advantage of the 

expansion of the AMA PPIS survey 

question to include additional expenses 

not included in the 2000-based survey. 

Consistent with the methodology used 

for other CMS market baskets, we relied 

upon the BEA I/O data to disaggregate 

the Office Expense cost category, which 

we described in the proposed rule. This 

methodology required a series of 

calculations including classifying costs 

as office expenses consistent with AMA 

PPIS survey. As noted elsewhere, and 

based on public comment, we have 

refined our methodology, as well as 

added additional detail in this final rule 

which we believe will be helpful in 

validating our estimates. The new 

methodology has resulted in a cost 

weight of 8.957 percent for Fixed 

Capital. Comments related to weights 

specifically associated with the PE 

GPCIs are found in section II.D. of this 

final rule with comment period. 

Comment: A commenter stated that it 

appeared that utility costs have been 

included twice in the MEI calculation. 

The HUD data used by CMS as a source 

for the rent data includes utilities. 

However, utilities have been included a 

second time as a new component of the 

‘‘Office Expense’’ category of ‘‘Other 

Practice Expenses’’ and it does not 

appear that the ‘‘Fixed Capital’’ (rent) 

component has been scaled down as a 

result. This error should be corrected, a 

new proposed rule published, and a 

new comment period opened. 

Response: We disagree with the 

commenter’s assertions that utilities 

expenses in the MEI are double counted. 

The Utilities cost weight in the MEI was 

derived using the BEA I/O data for 

NAICS 621A (Offices of Physicians, 

Offices of Dentist, and Offices of Other 

Practitioners). The BEA I/O data provide 

information regarding physicians’ 

purchases from other industries. 

Expenses classified in the Utilities cost 

weight, such as NAICS 22110 (Electric 

power generation, transmission, and 

distribution), were not included in the 

Fixed Capital cost weight; therefore, we 

did not include utility costs twice in the 

MEI calculation. The HUD data 

referenced by the commenter is used in 

conjunction with the GPCI rent update 

and is independent of the development 

of the cost weight for Utilities in the 

MEI. 

d. Purpose of the MEI 

Comment: Several commenters 

requested that CMS address the problem 

that the ‘‘market basket’’ of inputs, 

whose prices are measured in the MEI, 

is outdated and, despite periodic 

rebasing, has not been comprehensively 

revised since it was originally 

developed in 1973. They indicated that 

the MEI does not reflect the inputs 

involved in 21st century medical 

practice and claim that the costs 

associated with complying with an array 

of government-imposed regulatory 

requirements, including increasing 

staffing levels, costs related to Medicare 

prescription drug plans and formulary 

compliance, compliance with rules 

governing referrals and interactions 

with other providers, and others, are not 

accounted for in the index. They also 

indicate that the MEI has not been 

adjusted for modern practice costs such 

as computers, copiers, and new medical 

technology. 

Response: We disagree with the 

commenters’ statement that the MEI 

only measures changes in specific types 

of practice costs that existed in 1973. 

Since 1973, the MEI has been rebased 

four times. For each of those updates, 

the MEI methodology and data sources 

were thoroughly reviewed and 

evaluated to ensure that the index 

accurately reflected the cost 

distributions encountered by 

physicians. The revisions have included 

changes to the structure of the index, 

the price proxies used, the data sources 

used to develop the weights, the 

productivity adjustment, and, as 

proposed in the CY 2011 PFS proposed 

rule, disaggregating categories within 

the Office Expenses category into more 

detail. 

We also note that the MEI is a price 

index, not a cost index. Changes in 

physician costs are a function of 

changes in prices and changes in 

quantities. Examples of changes in 

quantities include purchasing more 

moveable equipment (such as health 

information technology), hiring 

additional office staff, or changing the 

mix of staff. The MEI was established in 

accordance with section 1842(b)(3) of 

the Act, which states the growth of 

prevailing charge levels is to be limited 

to growth in an ‘‘appropriate economic 

index’’. The relevant Senate Finance 

Committee report 2 provides slightly 

more detail on such an index, stating 

that: 

[I]t is necessary to move in the direction of 

an approach to reasonable charge 

reimbursement that ties recognition of fee 

increases to appropriate economic indexes so 

that the program will not merely recognize 

whatever increases in charges are established 

in a locality but would limit recognition of 

charge increases to rates that economic data 

indicate would be fair to all concerned and 

follow rather than lead any inflationary 

trends. 

Thus, in accordance with 

Congressional intent that the index 

reflect and follow inflationary trends, 

and since its inception in 1973, the MEI 

has been constructed as a fixed-weight 

price index that measures the 

inflationary trends of goods and services 

associated with furnishing physicians’ 

services. The data sources that are used 

to construct the weights have been 

updated regularly to include the modern 

inputs required by physicians in 

running their respective practices. The 

MEI then appropriately apportions the 

various costs into their respective 

categories and calculates the associated 

weights. It is this distribution of costs, 

and not the level of costs, that the MEI 

appropriately incorporates. Based on 

this distribution, the MEI measures the 

weighted input price inflation, adjusted 

by productivity, faced by physicians. 

The MEI is then incorporated into the 

SGR formula to derive the final PFS 

update. Having an accurate and 

contemporary distribution of input costs 

is critical to producing an accurate 

measure of price inflation and is the 

major reason we are moving forward to 

rebase and revise the MEI for CY 2011. 

Finally, to date, we have not received 

any proposals from the public on how 

the MEI should be revised and still meet 

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73274 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

its statutory requirements. We will 

continue to evaluate the validity and 

relevance of the index to ensure that it 

meets statutory requirements while 

adequately reflecting the evolution of 

the expense distribution associated with 

furnishing physicians’ services. 

Comment: A commenter asserted that 

the time gap between the two surveys, 

the PPIS and the SMS, may not be 

directly comparable, but a comparison 

of the two indicates that medical 

practice costs increased 79 percent from 

2000 to 2006. However, the MEI only 

increased 18 percent from 2000 to 2006. 

The commenter notes that every other 

available measure of physician expense 

growth shows faster growth than the 

MEI. 

Response: The MEI is strictly a fixedweight price index expressly designed 

to measure the change in price of a fixed 

basket of goods. Changes in physician 

costs are a function of changes in prices 

and changes in quantities. As other 

commenters have noted to CMS, and 

CMS agrees, cost increases are only 

reflected in the MEI’s weights to the 

extent the relative cost of an input 

changes over time. Comparing the MEI 

(reflecting price changes) to other cost 

metrics (that reflect both price changes, 

as well as changes in volume and mix) 

is inappropriate given the MEI’s 

definition and purpose. 

Comment: A commenter noted that 

the proposed revisions to the MEI do 

not do anything to improve the 

adequacy of the MEI. The commenter 

also noted that in the proposed rule, 

CMS estimated the 2011 MEI at just 0.3 

percent, and the addition of the new 

components that CMS has proposed 

based on BEA data does nothing to 

increase it. 

Response: The rebased and revised 

MEI is intended to more accurately 

reflect the cost structure of furnishing 

physicians’ services, as well as measure 

the input price inflation encountered by 

physicians. Accordingly, we disagree 

with the commenter and believe that the 

2006-based MEI offers numerous 

technical improvements. These 

improvements include updating the 

base year to reflect more current cost 

distributions, updating price proxies, 

and adding more detailed cost 

categories. 

Comment: A commenter stated that 

the MEI is used to annually update 

medical practice costs in the SGR 

calculation. Virtually all physician 

groups signed on to a January 2009 

letter arguing that the MEI’s price inputs 

as currently structured do not accurately 

reflect current medical practice costs. 

No action has been taken to remedy the 

situation. 

Response: We disagree with the 

commenter’s claim the MEI annually 

updates the medical practice cost in the 

SGR. The purpose of the MEI in the SGR 

is to measure price increases related to 

the furnishing of physician services. It 

is not intended to measure cost 

increases, but rather to reflect the cost 

structure associated with furnishing 

physicians’ services, and then 

subsequently measure the weighted 

price increases associated with that cost 

structure. We would also like to note 

that the MEI is currently part of the 

statutorily prescribed formula for 

physician payment updates and that 

revisions to the MEI are adopted 

through the notice and comment 

rulemaking process. 

e. Technical Panel 

Comment: Many commenters 

expressed their support for the 

convening of a Medicare Economic 

Index Technical Advisory Panel (MEI 

TAP). 

Response: We agree that the MEI TAP 

should be convened and will be moving 

forward accordingly. This process 

includes announcing the panel’s 

creation through an official CMS 

communication such as a Federal 

Register announcement. This 

announcement will provide details on 

the expected number of panel members, 

provide an opportunity for the public to 

nominate members, and inform the 

public of the objectives and scope of the 

panel’s activities. 

We will be asking this group of 

independent experts to evaluate only 

technical aspects of the MEI, including 

the index’s inputs, input weights, pricemeasurement proxies, and the 

productivity adjustment. 

Any formal recommendations made 

by the MEI TAP will be carefully 

considered by CMS. Suggested 

modifications that we believe would 

result in technical improvements to the 

MEI would appear in subsequent PFS 

proposed rules and be subject to public 

comment and the overall rulemaking 

process. 

Comment: Several commenters 

provided many suggestions on technical 

issues that they believe should be 

considered by the technical advisory 

panel. The commenters generally 

requested that the panel perform a 

thorough review of all aspects and 

elements of the MEI. 

Response: We appreciate the 

constructive comments on potential 

topics for the MEI technical advisory 

panel, which will be asked to fully 

evaluate the index. As noted above, 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. 

Comment: A commenter stated that 

any recommendations that are made by 

the panel should be published with an 

opportunity for comment before they are 

finalized. 

Response: Any substantive 

recommendations from the technical 

advisory panel that CMS believes will 

result in technical improvements to the 

MEI will be subject to the rulemaking 

process, including giving the 

opportunity to the public to review and 

comment. 

Comment: Some commenters request 

that CMS reach out to the medical 

community to ensure that the panel’s 

work is accurate and complete. Others 

indicated that pending the 

recommendations of the technical 

advisory panel, CMS should: (1) Include 

physicians and other stakeholders in the 

MEI revision process, so that the impact 

of any recommended changes can be 

studied prior to implementation; and 

(2) clearly state their rationale for 

proposed changes. 

Response: As mentioned previously, 

we will be reaching out to the public for 

suggestions as to the composition of an 

independent expert panel that will 

assist us in ensuring that the MEI is 

constructed accurately and completely, 

and fulfills its purpose to appropriately 

reflect the inflationary pressures faced 

by physicians in furnishing services. 

CMS will also present to the public any 

future proposed revisions to the MEI 

through notice and comment 

rulemaking, during which we will 

clearly state the rationale for any 

proposed changes and consider public 

comment before finalizing changes to 

the index. 

Comment: One commenter believes 

that one of the possible options for 

resolving the SGR problem involves 

replacing the SGR update formula with 

the MEI. The commenter noted that 

input from the MEI technical panel 

should better position the MEI as a 

viable alternative to the SGR update 

formula. 

Response: We welcome any technical 

comments the public has on the 

composition of the MEI, including the 

inputs, input weights, pricemeasurement proxies, and productivity 

adjustment. Any recommendations from 

the MEI TAP will be evaluated and 

considered for possible future 

rulemaking. However, we note that 

replacement of, or adjustments to, the 

SGR is outside the scope of the MEI 

TAP. 

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3U.S. Senate, Committee on Finance, Social 

Security Amendments of 1972, ‘‘Report of the 

Committee on Finance United States Senate to 

Accompany H.R. 1,’’ September 26, 1972, p. 191. 

f. Other 

Comment: Several commenters agreed 

with CMS’ proposal to remove 

pharmaceuticals and separately billable 

medical supplies, since these are not 

paid under the PFS. Even though this 

change lessens the weight given to the 

practice expense component of the 

index, it made sense to the commenters 

given the separate line-item payments 

for these goods. Further, incident-to 

drugs are now paid based on average 

sales price (ASP) and, since last-year’s 

changes, are no longer a factor in the 

SGR formula and the determination of 

the PFS conversion factor. 

Response: We agree with the 

commenters on the appropriateness of 

removing drugs and separately billable 

supplies from the MEI since they are not 

paid under the PFS and are no longer 

included as costs in the SGR formula. 

Comment: A commenter disagreed 

with the continued use of the AHE wage 

data for the total nonfarm business 

economy as a price proxy for physician 

income rather than using BLS data 

specific to all professional and technical 

workers. 

Response: We disagree with the 

commenter’s suggestion. We believe that 

the use of the average hourly earnings 

data for the total nonfarm business 

economy, which captures skill mix 

shifts in the labor force, is the most 

appropriate index for use as the price 

proxy for physician income in the MEI. 

The AHE for the nonfarm business 

economy reflects general earnings 

including the impacts of supply, 

demand, and economy-wide 

productivity for the average worker in 

the economy. Its use is consistent with 

the Congress’s original intent that the 

index be based on changes in expenses 

of practice and general earnings levels.3

It is also consistent with our use of the 

BLS private nonfarm business 

multifactor productivity measure to 

adjust the index as economy-wide wage 

increases reflect economy-wide 

productivity increases. Therefore, we 

are finalizing our proposal to continue 

to use average hourly earnings for the 

total private nonfarm economy as a 

price proxy for physician income in the 

2006-based MEI. 

Comment: A commenter stated that 

although CMS has expanded the 

designation of the data underlying some 

of the GPCI and MEI constructs over the 

designations of previous years, the 

descriptions used are sometimes either 

inconsistent or contradictory. For 

example, CMS noted that ‘‘for the 

proposed sixth GPCI update, we used 

the 2006 through 2008 Bureau of Labor 

Statistics (BLS) Occupational 

Employment Statistics (OES) data as a 

replacement for the 2000 Census data.’’ 

(75 FR 40083). In contrast, CMS used 

‘‘2006 Occupational Employment 

Statistics (OES), BLS’’ for the proposed 

2006 MEI expense weights. (75 FR 

40089, note (2)). The commenter 

believes it is impossible to discern from 

the proposed rule whether inconsistent 

data sets were used or whether there is 

simply a misprint. 

Response: Because the MEI and GPCIs 

serve different purposes and are not 

interdependent, we may use data from 

different years and, in some instances, 

different sources. Both the MEI and the 

GPCI use the OES. However, because 

the MEI is based to 2006 it is 

appropriate to use the 2006 BLS 

Occupational Employment Statistics 

data to disaggregate the nonphysician 

wages cost weight into more detailed 

occupational cost weights. 

For the proposed sixth GPCI update, 

CMS proposed to use OES data for 2006 

through 2008. The rationale for 

choosing this data for the proposed 

GPCI update was provided in the CY 

2011 PFS proposed rule (75 FR 40084). 

8. Adjustments to the RVU Shares To 

Match the Proposed Rebased MEI 

Weights 

As described in the previous section, 

CMS proposed to rebase the MEI for CY 

2011 based on the most current data and 

establish new weights for physician 

work, PE, and malpractice under the 

MEI. As stated in the previous section, 

the MEI was rebased to a CY 1996 base 

year beginning with the CY 1999 MEI 

(63 FR 58845), and to a CY 2000 base 

year beginning with the CY 2004 MEI 

(68 FR 63239). For both the CY 1999 

and CY 2004 rebasing, we made 

adjustments to ensure that estimates of 

aggregate PFS payments for work, PE, 

and malpractice were in proportion to 

the weights for these categories in the 

rebased MEI (63 FR 58829 and 69 FR 

1095). 

Consistent with past practice when 

the MEI has been rebased, we proposed 

to make adjustments to ensure that 

estimates of aggregate CY 2011 PFS 

payments for work, PE, and malpractice 

are in proportion to the weights for 

these categories in the rebased CY 2011 

MEI. 

As explained in the CY 2011 PFS 

proposed rule (75 FR 40095), to match 

the proportions for work, PE, and 

malpractice in the rebased CY 2011 MEI 

would necessitate increasing the 

proportion of aggregate CY 2011 PFS 

payments for PE and malpractice and 

decreasing the proportion for work. This 

could be accomplished by applying 

adjustments directly to the work, PE, 

and malpractice RVUs. However, as 

stated in the proposed rule (75 FR 

40095), we are cognizant of the public 

comments made during prior 

rulemaking on issues related to scaling 

the work RVUs. Many commenters have 

indicated a preference for the work 

RVUs to remain stable over time and for 

any necessary adjustments that would 

otherwise be made broadly to the work 

RVUs to be accomplished in an 

alternative manner. For example, in past 

5-Year Reviews of the work RVUs, many 

commenters cited stability in the work 

RVUs, among other reasons, in their 

requests that any required budget 

neutrality adjustments not be made 

directly to the work RVUs. Given these 

prior comments, for CY 2011, we 

proposed to make the necessary MEI 

rebasing adjustments without adjusting 

the work RVUs. Instead, we proposed to 

increase the PE RVUs and the 

malpractice RVUs. Furthermore, as 

noted in the proposed rule (75 FR 

40096), section 1848(c)(2)(B)(ii)(II) of 

the Act requires that changes to RVUs 

cannot cause the amount of 

expenditures for a year to differ by more 

than $20 million from what 

expenditures would have been in the 

absence of the changes. Therefore, as 

required by section 1848(c)(2)(B)(ii) of 

the Act, we proposed to make an 

adjustment to the CY 2011 conversion 

factor to ensure that the adjustments to 

the PE RVUs and the malpractice RVUs 

would not cause an increase in CY 2011 

PFS expenditures. 

Comment: A number of commenters 

expressed support for the use of the 

most current and accurate data as inputs 

to ‘‘formulas used by the Agency, 

whether the formula for the SGR, for 

practice expense inputs, malpractice 

expense inputs, or in this case to 

calculating the Medicare Economic 

Index.’’ These commenters supported 

the proposal to rebase and revise the 

MEI using the AMA PPIS data and the 

corresponding adjustments to the work, 

PE, and MP RVUs. Some commenters 

noted particularly that since the AMA 

PPIS has been deemed appropriate for 

the purpose of the PE RVU update 

process begun in CY 2010, using this 

same data source to inform the MEI 

costs and weights in CY 2011 is also 

appropriate because it will ensure that 

all of the major cost-based components 

of the fee schedule methodology will 

now be tied to cost data collected in the 

same year (2006). Furthermore, a 

number of commenters supported the 

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proposed policy to adjust the RVU 

shares on the basis that the changes 

appear to have a modest positive impact 

on many of the services that were 

negatively affected by the 

implementation of the AMA PPIS data 

in CY 2010. These services were 

typically ones that are more heavily 

weighted to PE than work. In contrast, 

numerous commenters expressed 

dissatisfaction with the proposed policy 

on the premise that it ‘‘penalizes health 

care work that is not technologyintensive,’’ that is, services that are 

typically more heavily weighted to 

physician work than PE, ‘‘when in fact 

it is the technology-intensive health 

expenses that are actually driving up 

costs.’’ A few of these commenters 

suggested that CMS insulate certain 

services that are work-intensive from 

the effects of the MEI rebasing. 

Response: We believe that using the 

most current and accurate data 

whenever practicable to update the PFS 

is a key principle for the payment 

system. We agree with the commenters 

that using the AMA PPIS data to rebase 

and revise the MEI in CY 2011 promotes 

consistency within the PFS. In using the 

AMA PPIS information to rebase and 

revise the MEI, the result is that the 

most current data drive the work RVU 

share down compared to the PE RVU 

and malpractice RVU shares. Since the 

PFS is both resource-based, relative, and 

budget neutral, if the data show that 

physicians’ resources (that is, costs) 

have shifted proportionately more to PE 

and malpractice, the proportion for 

work must come down. We have tried 

to accommodate the preferences of 

previous commenters to preserve the 

stability of work RVUs by proposing to 

make the necessary MEI rebasing 

adjustments without adjusting the work 

RVUs. However, given the PFS budget 

neutrality requirement, we cannot 

implement some commenters’ 

suggestion to insulate certain services 

that are work-intensive from the effects 

of the MEI rebasing without violating 

the inherent relativity of the system. 

That is, in order to insulate certain 

services from the effects of the MEI 

rebasing while adjusting the RVU shares 

to match the proportions for work, PE, 

and malpractice in the rebased MEI in 

a budget neutral manner as discussed 

previously, the individual work RVUs 

for those certain services would need to 

be increased. However, if we were to 

increase the work RVUs for those 

certain services, the services would no 

longer be appropriately valued relative 

to the other services under the PFS. 

Comment: Of the many commenters 

who supported CMS’ proposal to adjust 

the RVU shares to match the 

proportions for work, PE, and 

malpractice in the rebased CY 2011 

MEI, the vast majority also favored 

adjusting the RVU shares upward for PE 

and malpractice while making a 

corresponding adjustment to the 

conversion factor for budget neutrality 

without modifying the RVUs for work. 

These commenters stated that stability 

in the work RVUs was desirable. 

However, some commenters also 

expressed concern that CMS proposed 

an additional downward adjustment to 

the conversion factor when, under 

current law, the effect of the SGR update 

formula in December of 2010 and CY 

2011 would reduce PFS payments 

significantly. These commenters 

generally opposed the MEI rebasing and 

the adjustment to the RVUs to match the 

MEI weights; however, if CMS were to 

proceed with the policy, the 

commenters suggested that, at the very 

least the adjustments be phased in over 

2 or 4 years. A few commenters 

suggested replacing the SGR update 

formula entirely with the MEI. 

Response: We are sympathetic to the 

commenters’ concern that an additional 

downward adjustment to the conversion 

factor on top of the negative effect of the 

statutory SGR-based update is 

inopportune. However, as we explained 

in the proposed rule (75 FR 40095) and 

discussed previously in this section, 

rather than applying adjustments 

directly to the work, PE, and 

malpractice RVUs in order to match the 

rebased MEI weights for those 

categories, we believe that it is 

appropriate for the work RVUs to 

remain stable over time. The only way 

we can make the adjustments without 

affecting the work RVUs is to also make 

an adjustment to the conversion factor. 

We note that we did not receive a public 

comment suggesting that we make the 

downward adjustment to the work 

RVUs instead of the conversion factor in 

order to meet the requirements of 

section 1848(c)(2)(B)(ii) of the Act for 

budget neutrality. In response to the 

commenters that suggested replacing the 

SGR update with the MEI, we assume 

the commenters are making a general 

suggestion for a change in the current 

law, which is outside the purview of 

CMS. 

Comment: Many commenters 

addressed CMS’ proposal to convene a 

technical advisory panel to review all 

aspects of the MEI. In light of this 

proposal, the majority of commenters 

urged CMS to delay implementation of 

the MEI rebasing and any other MEI 

changes, including the proposed 

adjustment to the RVU shares, until the 

advice of the technical advisory panel is 

reviewed by CMS and recommendations 

for change, if any, are considered. 

Additionally, while the commenters 

generally supported convening an MEI 

technical advisory panel, some 

commenters, including MedPAC, 

advised that CMS should go ahead and 

implement the rebased and revised MEI 

and the proposed adjustment to the 

RVU shares in CY 2011. These 

commenters noted that if the 

recommendations of the advisory panel 

indicated that the MEI should be 

adjusted, CMS could propose future 

changes accordingly. 

Response: We acknowledge the 

overwhelming support from 

commenters for the MEI technical 

advisory panel and refer readers to 

section II.E.6 of this final rule with 

comment period for a more detailed 

discussion of our plans to convene the 

panel. We note that a more detailed 

summary of the public comments and 

our responses is included in that 

section. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to make 

MEI rebasing adjustments to the PFS 

work and PE RVUs and to adjust the 

conversion factor to maintain budget 

neutrality. In light of the substantial 

support in general for us to make 

adjustments to match the proportions of 

the work, PE, and malpractice RVU 

shares to the categories in the revised 

and rebased CY 2011 MEI and our 

decision, as described in section II.E.5 

of this final rule, to proceed with 

rebasing the MEI for CY 2011, we are 

finalizing our proposal to adjust the 

RVU shares for CY 2011 to align the 

RVU shares with the rebased MEI 

weights. Specifically, we will not be 

making an adjustment directly to the 

work RVUs. Instead, we are increasing 

the PE RVUs by an adjustment factor of 

1.181 and the malpractice RVUs by an 

adjustment factor of 1.358. The RVUs in 

Addendum B to this final rule with 

comment period reflect the application 

of these adjustment factors. We note that 

an application of the 1.358 adjustment 

factor to the malpractice RVUs for 

services with malpractice RVUs of 0.01 

will, due to rounding, result in 

malpractice RVUs of 0.01. 

Furthermore, section 

1848(c)(2)(B)(ii)(II) of the Act requires 

that changes to RVUs cannot cause the 

amount of expenditures for a year to 

differ by more than $20 million from 

what expenditures would have been in 

the absence of the changes. Therefore, as 

required by section 1848(c)(2)(B)(ii) of 

the Act, we are making an adjustment of 

0.9181 to the CY 2011 conversion factor 

to ensure that the 1.181 adjustment to 

the PE RVUs and the 1.358 adjustment 

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to the malpractice RVUs do not cause an 

increase in CY 2011 PFS expenditures. 

F. Allowed Expenditures for Physicians’ 

Services and the Sustainable Growth 

Rate 

1. 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-forservice 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 2011 

SGR, a revision to the CY 2010 SGR, and 

our final revision to the CY 2009 SGR. 

2. 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. 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 physicianadministered 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. 

Additionally, payment was made 

under the PFS for several new benefit 

categories in CY 2010 including 

pulmonary rehabilitation (PR), cardiac 

rehabilitation (CR), intensive cardiac 

rehabilitation (ICR), and kidney disease 

education (KDE) services. We note 

further that section 101 of the MIPPA 

added a new benefit category for 

‘‘additional preventive services’’ 

effective January 1, 2009. Although we 

neglected to identify and add these 

additional benefit categories when 

describing the scope of physicians’ 

services for purposes of the SGR in 

course of rulemaking for CY 2010 and 

CY 2009, respectively, we did include 

payments for these services in 

calculating target and actual PFS 

expenditures beginning in CY 2009 for 

additional preventive services and 

beginning in CY 2010 for PR, CR, ICR, 

and KDE services. 

Section 4103 of the ACA added a new 

benefit category for ‘‘personalized 

prevention plan services’’ (which 

include the annual wellness visit). 

Payment for these services will be made 

under the PFS, and payments for these 

services will be included in calculating 

target and actual PFS expenditures, 

beginning January 1, 2011. 

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 

the Medicare Administrative 

Contractors (MACs): 

• Physicians’ services. 

• Services and supplies furnished 

incident to physicians’ services, except 

for the expenditures for drugs and 

biologicals which are not usually selfadministered 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, NPs, and 

certified nurse specialists. 

• Screening tests for prostate cancer, 

colorectal cancer, and glaucoma. 

• Screening mammography, 

screening pap smears, and screening 

pelvic exams. 

• Diabetes outpatient selfmanagement 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. 

3. Preliminary Estimate of the SGR for 

2011 

Our preliminary estimate of the CY 

2011 SGR is -13.4 percent. We first 

estimated the CY 2011 SGR in March 

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2010, and we made the estimate 

available to the MedPAC and on our 

Web site. Table 35 shows the March 

2010 estimate and our current estimates 

of the factors included in the CY 2011 

SGR. The majority of the difference 

between the March estimate and our 

current estimate of the CY 2011 SGR is 

explained by adjustments to reflect 

several intervening legislative changes 

that occurred after our March estimate 

was prepared. 

TABLE 35—CY 2011 SGR CALCULATION

Statutory factors March estimate Current estimate 

Fees ................................................................................... 0.2 percent (1.002) ............................................................ 0.2 percent (1.002) 

Enrollment .......................................................................... 3.1 percent (1.031) ............................................................ 2.4 percent (1.024) 

Real Per Capita GDP ......................................................... 0.8 percent (1.008) ............................................................ 0.7 percent (1.007) 

Law and Regulation ........................................................... ¥4.4 percent (0.956) ........................................................ ¥16.2 percent (0.838) 

Total ............................................................................ ¥0.4 percent (0.996) ........................................................ ¥13.4 percent (0.866) 

Note: Consistent with section 1848(f)(2) of the Act, the statutory factors are multiplied, not added, to produce the total (that is, 1.002 × 1.024 × 

1.007 × 0.838 = 0.866). A more detailed explanation of each figure is provided in section II.F.6.a. of this final rule with comment period. 

4. Revised Sustainable Growth Rate for 

CY 2010 

Our current estimate of the CY 2010 

SGR is 8.3 percent. Table 36 shows our 

preliminary estimate of the CY 2010 

SGR that was published in the CY 2010 

PFS final rule with comment period (74 

FR 61965) and our current estimate. The 

majority of the difference between the 

preliminary estimate and our current 

estimate of the CY 2010 SGR is 

explained by adjustments to reflect 

several intervening legislative changes 

that have occurred since publication of 

the CY 2010 final rule with comment 

period. 

TABLE 36—CY 2010 SGR CALCULATION

Statutory factors Estimate from CY 2010 final rule Current estimate 

Fees ................................................................................... 0.9 percent (1.009) ............................................................ 0.9 percent (1.009) 

Enrollment .......................................................................... 1.2 percent (1.012) ............................................................ 1.6 percent (1.016) 

Real Per Capita GDP ......................................................... 0.7 percent (1.007) ............................................................ 0.7 percent (1.007) 

Law and Regulation ........................................................... ¥11.3 percent (0.887) ...................................................... 4.9 percent (1.049) 

Total ............................................................................ ¥8.8 percent (0.912) ........................................................ 8.3 percent (1.083) 

Note: A more detailed explanation of each figure is provided in section II.F.6.b. of this final rule with comment period. 

5. Final Sustainable Growth Rate for CY 

2009 

The SGR for CY 2009 is 6.4 percent. 

Table 37 shows our preliminary 

estimate of the CY 2009 SGR from the 

CY 2009 PFS final rule with comment 

period (73 FR 69904), our revised 

estimate from the CY 2010 PFS final 

rule with comment period (74 FR 

61966), and the final figures determined 

using the best available data as of 

September 1, 2010. 

TABLE 37—CY 2009 SGR CALCULATION

Statutory factors Estimate from CY 2009 final rule Estimate from CY 2010 final rule Final 

Fees ..................................................... 2.1 percent (1.021) ............................. 1.8 percent (1.018) ............................. 1.8 percent (1.018) 

Enrollment ............................................ ¥0.2 percent (0.998) .......................... ¥0.8 percent (0.992) .......................... ¥0.6 percent (0.994) 

Real Per Capita GDP .......................... 1.2 percent (1.012) ............................. 0.9 percent (1.009) ............................. 1.0 percent (1.010) 

Law and Regulation ............................. 4.2 percent (1.042) ............................. 4.1 percent (1.041) ............................. 4.1 percent (1.041) 

Total .............................................. 7.4 percent (1.074) ............................. 6.1 percent (1.061) ............................. 6.4 percent (1.064) 

Note: A more detailed explanation of each figure is provided in section II.F.6.b. of this final rule with comment period. 

6. Calculation of CYs 2011, 2010, and 

2009 Sustainable Growth Rates 

a. Detail on the CY 2011 SGR 

All of the figures used to determine 

the CY 2011 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 2011 

This factor is calculated as a 

weighted-average of the CY 2011 

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 2011 and are updated using the MEI. 

The MEI for CY 2011 is 0.4 percent. 

Diagnostic laboratory tests are estimated 

to represent approximately 10.6 percent 

of Medicare allowed charges included 

in the SGR for CY 2011. Medicare 

payments for these tests are updated by 

the Consumer Price Index for Urban 

Areas (CPI–U), which is 1.1 percent for 

CY 2011. However, section 3401 of the 

ACA reduces the CPI–U update applied 

to clinical laboratory tests by a 

productivity adjustment, but does not 

allow this adjustment to cause the 

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update to be negative. The applicable 

productivity adjustment for CY 2011 is 

1.2 percent. Adjusting the CPI–U update 

by the productivity adjustment results 

in a ¥0.1 percent (1.1 percent–1.2 

percent) update for CY 2011. However, 

since section 3401 of the ACA does not 

allow the productivity adjustment to 

result in a negative CLFS update, the 

result is that the CLFS update for CY 

2011 is 0.0 percent. Additionally, 

section 3401 of the ACA reduces the 

update applied to clinical laboratory 

tests by 1.75 percent for CYs 2011 

through 2015. Therefore, for CY 2011, 

diagnostic laboratory tests will receive 

an update of ¥1.75 percent. 

Additionally, as discussed in the CY 

2010 PFS final rule with comment 

period (74 FR 61961), 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. 

Therefore, drugs represent 0.0 percent of 

Medicare allowed charges included in 

the SGR in CY 2011. 

Table 38 shows the weighted-average 

of the MEI and laboratory price changes 

for CY 2010. 

TABLE 38—WEIGHTED-AVERAGE OF THE MEI AND LABORATORY PRICE CHANGES FOR CY 2011 

Weight Update 

Physician .................................................................................................................................................................. 0.894 0.4 

Laboratory ................................................................................................................................................................ 0.106 ¥1.8 

Weighted-average .................................................................................................................................................... 1.000 0.2 

We estimate that the weighted-average 

increase in fees for physicians’ services 

in CY 2011 under the SGR (before 

applying any legislative adjustments) 

will be 0.2 percent. 

(2) Factor 2—The Percentage Change in 

the Average Number of Part B Enrollees 

From CY 2010 to CY 2011 

This factor is our estimate of the 

percent change in the average number of 

fee-for-service enrollees from CY 2010 

to CY 2011. 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-forservice enrollees will increase by 2.4 

percent from CY 2010 to CY 2011. Table 

39 illustrates how this figure was 

determined. 

TABLE 39—AVERAGE NUMBER OF MEDICARE PART B FEE-FOR-SERVICE ENROLLEES FROM CY 2010 TO CY 2011 

[Excluding beneficiaries enrolled in MA plans] 

2010 2011 

Overall ........................................................................................................... 43.932 million ........................................................ 45.010 million 

Medicare Advantage (MA) ............................................................................. 11.683 million ........................................................ 11.998 million 

Net ................................................................................................................. 32.249 million ........................................................ 33.012 million 

Percent Increase ........................................................................................... ................................................................................ 2.4 percent 

An important factor affecting fee-forservice 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-forservice enrollment for CY 2011 becomes 

known. 

(3) Factor 3—Estimated Real Gross 

Domestic Product Per Capita Growth in 

2011 

We estimate that the growth in real 

GDP per capita from CY 2010 to CY 

2011 will be 0.7 percent (based on the 

10-year average GDP over the 10 years 

of 2002 through 2011). Our past 

experience indicates that there have also 

been changes in estimates of real per 

capita GDP growth made before the year 

begins and the actual change in GDP 

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 2011. 

(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 will affect expenditures 

in CY 2011 relative to CY 2010 are 

estimated to have an impact on 

expenditures of ¥16.2 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 updates. 

Furthermore, the ACA 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. 

b. Detail on the CY 2010 SGR 

A more detailed discussion of our 

revised estimates of the four elements of 

the CY 2010 SGR follows. 

(1) Factor 1—Changes in Fees for 

Physicians’ Services (Before Applying 

Legislative Adjustments) 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 using 

the PFS account for approximately 91.1 

percent of total allowed charges 

included in the SGR in CY 2010. These 

services were updated using the CY 

2010 MEI of 1.2 percent. We estimate 

that diagnostic laboratory tests represent 

approximately 8.9 percent of total 

allowed charges included in the SGR in 

CY 2010. Medicare payments for these 

tests are updated by the CPI–U, which 

is ¥1.4 percent for CY 2010. However, 

section 145 of the MIPPA, as modified 

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by section 3401 of the ACA, 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 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. 

Table 40 shows the weighted-average 

of the MEI, laboratory, and drug price 

changes for CY 2010. 

TABLE 40—WEIGHTED-AVERAGE OF THE MEI, LABORATORY, AND DRUG PRICE CHANGES FOR CY 2010 

Weight Update 

Physician .................................................................................................................................................................. 0.911 1.2 

Laboratory ................................................................................................................................................................ 0.089 ¥1.9 

Drugs ....................................................................................................................................................................... 0.000 0.0 

Weighted-average .................................................................................................................................................... 1.000 0.9 

After considering the elements 

described in Table 40, we estimate that 

the weighted-average increase in fees for 

physicians’ services in CY 2010 under 

the SGR (before applying any legislative 

adjustments) will be 0.9 percent. Our 

estimate of this factor in the CY 2010 

PFS final rule with comment period was 

0.9 percent (74 FR 61966). 

(2) Factor 2—The Percentage Change in 

the Average Number of Part B Enrollees 

From CY 2009 to CY 2010 

We estimate that the average number 

of Medicare Part B fee-for-service 

enrollees (excluding beneficiaries 

enrolled in Medicare Advantage plans) 

increased by 1.6 percent in CY 2010. 

Table 41 illustrates how we determined 

this figure. 

TABLE 41—AVERAGE NUMBER OF MEDICARE PART B FEE-FOR-SERVICE ENROLLEES FROM CY 2009 TO CY 2010 

[Excluding beneficiaries enrolled in MA plans] 

2009 2010 

Overall ........................................................................................ 42.846 million ............................................................................ 43.932 million 

Medicare Advantage (MA) ......................................................... 11.098 million ............................................................................ 11.683 million 

Net ............................................................................................. 31.748 million ............................................................................ 32.249 million 

Percent Increase ........................................................................ .................................................................................................... 1.6 percent 

Our estimate of the 1.6 percent change 

in the number of fee-for-service 

enrollees, net of Medicare Advantage 

enrollment for CY 2010 compared to CY 

2009, is a larger change than our 

original estimate of 1.2 percent in the 

CY 2010 PFS final rule with comment 

period (74 FR 61967). While our current 

projection based on data from 8 months 

of CY 2010 differs from our original 

estimate of 1.2 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 2010 fee-for-service 

enrollment. 

(3) Factor 3—Estimated Real Gross 

Domestic Product Per Capita Growth in 

CY 2010 

We estimate that the growth in real 

GDP per capita will be 0.7 percent for 

CY 2010 (based on the 10-year average 

GDP over the 10 years of CY 2001 

through CY 2010). 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 2010 

economic performance becomes 

available to us in CY 2011. 

(4) Factor 4—Percentage Change in 

Expenditures for Physicians’ Services 

Resulting From Changes in Statute or 

Regulations in CY 2010 Compared With 

CY 2009 

The statutory and regulatory 

provisions that will affect expenditures 

in CY 2010 relative to CY 2009 are 

estimated to have an impact on 

expenditures of 4.9 percent. These 

include the DODAA, TEA, and 

PACMBPRA which provided for 

physician updates. Also included are 

the MIPPA provisions regarding the 

physician update, Physician Quality 

Reporting Initiative (PQRI) and eprescribing bonuses, the work GPCIs, 

and payment provisions related to 

certain pathology services. Additionally, 

the ACA contained provisions regarding 

the work GPCIs, the policy on 

equipment utilization for imaging 

services, coverage of preventive 

services, and a physician enrollment 

requirement. 

c. Detail on the CY 2009 SGR 

A more detailed discussion of our 

final revised estimates of the four 

elements of the CY 2009 SGR follows. 

(1) Factor 1—Changes in Fees for 

Physicians’ Services (Before Applying 

Legislative Adjustments) for CY 2009 

This factor was calculated as a 

weighted-average of the CY 2009 

changes in fees that apply for the 

different types of services included in 

the definition of physicians’ services for 

the SGR in CY 2009. As we stated in the 

CY 2010 PFS final rule with comment 

period (74 FR 61965), although we 

removed drugs from the calculation of 

allowed and actual expenditures under 

sections 1848(d)(3)(C) and 1848(d)(4) of 

the Act retrospectively to the 1996/1997 

base year, we determined that we were 

only authorized to remove drugs from 

the calculation of the SGR beginning 

with CY 2010. Therefore, we did not 

remove drugs from the SGR calculations 

for previous years, including CY 2009. 

Consistent with this determination, the 

revisions to our estimate of the CY 2009 

SGR will be limited to revisions to 

reflect later data available as of 

September 1, 2010, that were not 

available when we published our 

previous estimates. 

Services paid using the PFS 

accounted for approximately 82.3 

percent of total Medicare-allowed 

charges included in the SGR for CY 

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2009 and are updated using the MEI. 

The MEI for CY 2009 was 1.6 percent. 

Diagnostic laboratory tests represented 

approximately 8.0 percent of total CY 

2009 Medicare allowed charges 

included in the SGR and were updated 

by the CPI–U, which was 5.0 percent for 

CY 2009. However, section 145 of the 

MIPPA, as modified by section 3401 of 

the ACA, reduced the update applied to 

clinical laboratory tests by 0.5 percent 

for CYs 2009 and 2010. Therefore, for 

CY 2009, diagnostic laboratory tests 

received an update of 4.5 percent. Drugs 

represented approximately 9.7 percent 

of total Medicare-allowed charges 

included in the SGR for CY 2009. We 

estimate a weighted-average change in 

fees for drugs included in the SGR of 1.6 

percent for CY 2009. Table 42 shows the 

weighted-average of the MEI, laboratory, 

and drug price changes for CY 2009. 

TABLE 42—WEIGHTED-AVERAGE OF THE MEI, LABORATORY, AND DRUG PRICE CHANGES FOR CY 2009 

Weight Update 

Physician .................................................................................................................................................................. 0.823 1.6 

Laboratory ................................................................................................................................................................ 0.080 4.5 

Drugs ....................................................................................................................................................................... 0.097 1.6 

Weighted-average .................................................................................................................................................... 1.000 1.8 

After considering the elements 

described in Table 42, we estimate that 

the weighted-average increase in fees for 

physicians’ services in CY 2009 under 

the SGR (before applying any legislative 

adjustments) was 1.8 percent. This 

figure is a final one based on complete 

data for CY 2009. 

(2) Factor 2—The Percentage Change in 

the Average Number of Part B Enrollees 

From CY 2008 to CY 2009 

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 ¥0.6 

percent. Our calculation of this factor is 

based on complete data from CY 2009. 

Table 43 illustrates the calculation of 

this factor. 

TABLE 43—AVERAGE NUMBER OF MEDICARE PART B FROM CY 2008 TO CY 2009 

[Excluding beneficiaries enrolled in MA plans] 

2008 2009 

Overall ...................................................................................... 41.958 million ........................................................................... 42.846 million 

Medicare Advantage (MA) ........................................................ 10.008 million ........................................................................... 11.098 million 

Net ............................................................................................ 31.950 million ........................................................................... 31.748 million 

Percent Change ........................................................................ .................................................................................................. ¥0.6 percent 

(3) Factor 3—Estimated Real Gross 

Domestic Product Per Capita Growth in 

CY 2009 

We estimate that the growth in real 

per capita GDP was 1.0 percent in CY 

2009 (based on the 10-year average GDP 

over the 10 years of CY 2000 through CY 

2009). This figure is a final one based on 

complete data for CY 2009. 

(4) Factor 4—Percentage Change in 

Expenditures for Physicians’ Services 

Resulting From Changes in Statute or 

Regulations in CY 2009 Compared With 

CY 2008 

Our final estimate for the net impact 

on expenditures from the statutory and 

regulatory provisions that affect 

expenditures in CY 2009 relative to CY 

2008 is 4.1 percent. These include the 

DRA provision regarding payments for 

imaging services, the Medicare, 

Medicaid, and SCHIP Extension Act of 

2007 (Pub. L. 110–173) (MMSEA) 

provision regarding the PQRI bonuses 

payable in CY 2009, and the MIPPA 

provisions regarding the physician 

update, mental health services, and the 

change in application of budget 

neutrality to the CF. 

G. The Update Adjustment Factor (UAF) 

Section 1848(d) of the Act provides 

that the PFS update is equal to the 

product of the MEI and the UAF. 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; 

+ 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 2011 in this case), the current 

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CY (that is, CY 2010) and the preceding 

CY (that is, CY 2009) 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 2009 allowed 

expenditures in this final rule with 

comment). 

Table 44 shows the historical SGRs 

corresponding to each period through 

CY 2011. 

TABLE 44—ANNUAL AND CUMULATIVE ALLOWED AND ACTUAL EXPENDITURES FOR PHYSICIANS’ SERVICES FROM APRIL 1, 

1996 THROUGH THE END OF THE CURRENT CALENDAR YEAR

Period 

Annual allowed 

expenditures 

($ in billions) 

Annual actual 

expenditures 

($ in billions) 

Cumulative 

allowed 

expenditures 

($ in billions) 

Cumulative 

actual 

expenditures 

($ in billions) 

FY/CY SGR 

(%) 

4/1/96–3/31/97 ..................................... 1 $46.8 $46.8 $46.8 $46.8 N/A 

4/1/97–3/31/98 ..................................... 48.3 47.0 95.2 93.9 FY 1998=3.2 

4/1/98–3/31/99 ..................................... 50.4 47.8 145.6 141.7 FY 1999=4.2 

1/1/99–3/31/99 ..................................... 12.7 12.4 (2) 141.7 FY 1999=4.2 

4/1/99–12/31/99 ................................... 40.3 37.0 (3) 178.8 FY 2000=6.9 

1/1/99–12/31/99 ................................... 53.0 49.5 185.8 178.8 FY 1999/2000 

1/1/00–12/31/00 ................................... 56.8 54.1 242.7 232.9 CY 2000=7.3 

1/1/01–12/31/01 ................................... 59.4 61.2 302.1 294.2 CY 2001=4.5 

1/1/02–12/31/02 ................................... 64.3 64.6 366.4 358.7 CY 2002=8.3 

1/1/03–12/31/03 ................................... 69.0 70.2 435.4 429.0 CY 2003=7.3 

1/1/04–12/31/04 ................................... 73.6 78.3 509.0 507.2 CY 2004=6.6 

1/1/05–12/31/05 ................................... 76.7 83.5 585.7 590.7 CY 2005=4.2 

1/1/06–12/31/06 ................................... 77.8 84.6 663.5 675.3 CY 2006=1.5 

1/1/07–12/31/07 ................................... 80.5 84.5 744.0 759.8 CY 2007=3.5 

1/1/08–12/31/08 ................................... 84.2 86.7 828.2 846.4 CY 2008=4.5 

1/1/09–12/31/09 ................................... 89.6 90.6 917.8 937.0 CY 2009=6.4 

1/1/10–12/31/10 ................................... 97.0 92.9 1,014.7 1,029.9 CY 2010=8.3 

1/1/11–12/31/11 ................................... 84.0 NA 1,098.7 NA CY 2011=¥13.4 

(1)Allowed expenditures in the first year (April 1, 1996–March 31, 1997) are equal to actual expenditures. All subsequent figures are equal to 

quarterly allowed expenditure figures increased by the applicable SGR. Cumulative allowed expenditures are equal to the sum of annual allowed 

expenditures. We provide more detailed quarterly allowed and actual expenditure data on our Web site at the following address: http:// 

www.cms.hhs.gov/SustainableGRatesConFact/. We expect to update the web site with the most current information later this month. 

(2)Allowed expenditures for the first quarter of 1999 are based on the FY 1999 SGR. 

(3)Allowed expenditures for the last three quarters of 1999 are based on the FY 2000 SGR. 

Consistent with section 1848(d)(4)(E) 

of the Act, Table 44 includes our second 

revision of allowed expenditures for CY 

2009, a recalculation of allowed 

expenditures for CY 2010, and our 

initial estimate of allowed expenditures 

for CY 2011. To determine the UAF for 

CY 2011, the statute requires that we 

use allowed and actual expenditures 

from April 1, 1996 through December 

31, 2010 and the CY 2011 SGR. 

Consistent with section 1848(d)(4)(E) of 

the Act, we will be making revisions to 

the CY 2010 and CY 2011 SGRs and CY 

2010 and CY 2011 allowed 

expenditures. Because we have 

incomplete actual expenditure data for 

CY 2010, 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 44 in 

the following statutory formula: 

UAF Target Actual

Actual

Target Actu

11 10 10

10

4 96 12 10 = 0 75 − × + − − . / / al

Actual SGR

4 96 12 10

10 11

0 33 / / . −

×

×

UAF11 = Update Adjustment Factor for 

CY 2011 = ¥2.9 percent 

Target10 = Allowed Expenditures for CY 

2010 = $97.0 billion 

Actual10 = Estimated Actual 

Expenditures for CY 2010 = $92.9 

billion 

Target 4/96–12/10 = Allowed Expenditures 

from 4/1/1996–12/31/2010 = 

$1,014.7 billion 

Actual 4/96–12/10 = Estimated Actual 

Expenditures from 4/1/1996–12/31/ 

2010 = $1,029.9 billion 

SGR11 = ¥13.4 percent (0.866) 

$. $.

$ . . $, . $, .

$. . . 97 0 92 9

92 9

0 75 1 014 7 1 029 9

92 9 0 866

0 33 2 − × + −

×

× =− . %9

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 –0.029 is 

between –0.07 and 0.03, the UAF for CY 

2010 will be –0.029. 

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 


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1.0 to –0.029 makes the UAF equal to 

0.971. 

H. Physician and Anesthesia Fee 

Schedule Conversion Factors for CY 

2011 

The CY 2011 PFS CF is $25.5217. The 

CY 2011 national average anesthesia CF 

is $15.8085. 

1. Physician Fee Schedule Update and 

Conversion Factor 

a. CY 2011 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 2011 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 MIEA– 

TRHCA provided a 1-year increase in 

the CY 2008 CF and specified that the 

CF for CY 2009 must be computed as if 

the 1-year increase had never applied. 

Section 101 of the MMSEA provided a 

6-month increase in the CY 2009 CF, 

from January 1, 2009, through June 30, 

2009, and specified that the CF for the 

remaining portion of CY 2009 and the 

CFs for CY 2010 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 2009 CF that applied during the 

first half of the year to the entire year, 

provided for a 1.1 percent increase to 

the CY 2010 CF, and specified that the 

CFs for CY 2011 and subsequent years 

must be computed as if the increases for 

CYs 2008, 2009, and 2010 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 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. Therefore, under current law, 

the CF in effect in December 2010 is 

$28.3868. 

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 2011 RVU changes would result 

in a decrease in Medicare physician 

expenditures of more than $20 million. 

Accordingly, we are increasing the CF 

by 1.0045 to offset this estimated 

decrease in Medicare physician 

expenditures due to the CY 2011 RVU 

changes. Furthermore, as discussed in 

section II.E.6 of this final rule with 

comment period, we are decreasing the 

CF by 0.9181 in order to offset the 

increase in Medicare physician 

payments due to the CY 2011 rescaling 

of the RVUs so that the proportions of 

total payments for the work, PE, and 

malpractice RVUs match the 

proportions in the final revised and 

rebased MEI for CY 2011. Accordingly, 

we calculate the CY 2011 PFS CF to be 

$25.5217. This final rule with comment 

period announces a reduction to 

payment rates for physicians’ services in 

CY 2011 under the SGR formula. These 

payment rates are currently scheduled 

to be reduced under the SGR system on 

December 1, 2010, and then again on 

January 1, 2011. The total reduction in 

MPFS rates between November 2010 

and January 2011 under the SGR system 

will be 24.9 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 are committed to 

permanently reforming the Medicare 

payment formula. 

We illustrate the calculation of the CY 

2011 PFS CF in Table 45. 

TABLE 45—CALCULATION OF THE CY 2011 PFS CF 

December 2010 Conversion Factor ................................................................................ ................................................................ $28.3868 

CY 2011 Medicare Economic Index ............................................................................... 0.4 percent (1.0040) 

CY 2011 Update Adjustment Factor ............................................................................... ¥2.9 percent (0.9710) 

CY 2011 RVU Budget Neutrality Adjustment ................................................................. 0.5 percent (1.0045) 

CY 2011 Rescaling to Match MEI Weights Budget Neutrality Adjustment .................... ¥8.2 percent (0.9181) 

CY 2011 Conversion Factor ........................................................................................... ..................................................................... $25.5217 

We note payment for services under 

the PFS will be calculated as follows: 

Payment = [(RVU work × GPCI work) 

+ (RVU PE × GPCI PE) + (RVU 

malpractice × GPCI malpractice)] × CF. 

2. Anesthesia Conversion Factor 

We calculate the anesthesia CF as 

indicated in Table 45. 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. Furthermore, as discussed in 

section II.E.6 of this final rule with 

comment period, we are rescaling the 

RVUs so that the proportions of total 

payments for the work, PE, and 

malpractice RVUs match the 

proportions in the final revised and 

rebased MEI for CY 2011. Accordingly, 

we are adjusting the anesthesia CF to 

reflect the RVUs adjustments being 

made to all other physician fee schedule 

services to match the revised and 

rebased MEI weights. 

As explained previously, in order to 

calculate the CY 2011 PFS CF, the 

statute requires us to calculate the CFs 

for CYs 2009, 2010, and 2011 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 December 

2010 is $16.6058. We illustrate the 

calculation of the CY 2011 anesthesia 

CF in Table 46. 

TABLE 46—CALCULATION OF THE CY 2011 ANESTHESIA CONVERSION FACTOR

December 2010 Anesthesia Conversion Factor ............................................................. ................................................................ $16.6058 

CY 2011 Medicare Economic Index ............................................................................... 0.4 percent (1.0040) 

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TABLE 46—CALCULATION OF THE CY 2011 ANESTHESIA CONVERSION FACTOR—Continued 

CY 2011 Update Adjustment Factor ............................................................................... ¥2.9 percent (0.9710) 

CY 2011 Anesthesia Adjustment .................................................................................... ¥2.3 percent (0.97651) 

CY 2011 Anesthesia Conversion Factor ........................................................................ ................................................................ $15.8085 

III. Code-Specific Issues for the PFS 

A. Therapy Services 

1. Outpatient Therapy Caps for CY 2011 

Section 1833(g) of the Act applies an 

annual, per beneficiary combined cap 

on expenses incurred for outpatient 

physical therapy and speech-language 

pathology services under Medicare Part 

B. A similar separate cap for outpatient 

occupational therapy services under 

Medicare Part B also applies. 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. The exceptions 

process for therapy caps has been 

extended through December 31, 2009 

pursuant to three subsequent 

amendments (in MEIA–TRHCA, 

MMSEA, and MIPPA). 

Section 1833(g)(5) of the Act (as 

amended by section 3103 of the ACA) 

extended the exceptions process for 

therapy caps through December 31, 

2010. The annual change in the therapy 

cap is computed by multiplying the cap 

amount for CY 2010, which is $1,860, 

by the MEI for CY 2011, and rounding 

to the nearest $10. This amount is added 

to the CY 2010 cap to obtain the CY 

2011 cap. Since the MEI for CY 2011 is 

0.4 percent, the therapy cap amount for 

CY 2011 is $1870. 

The agency’s authority to provide for 

exceptions to therapy caps (independent 

of the outpatient hospital exception) 

will expire on December 31, 2010, 

unless the Congress acts to extend it. If 

the current exceptions process expires, 

the caps will be applicable in 

accordance with the statute, except for 

services furnished and billed by 

outpatient hospital departments. 

Comment: The commenters 

unanimously requested repeal of the 

therapy caps, while characterizing caps 

as arbitrary and medically unfounded 

and the combination of cap amounts for 

PT and SLP services as groundless. A 

number of commenters argued that 

therapy caps restrict provision of 

medically necessary services to 

beneficiaries. Several commenters 

reported that patients are discharged for 

care prior to recovery due to payment 

restrictions and this leads to increased 

medical costs for Medicare. 

Response: Therapy caps are mandated 

by statute. We have no authority to 

repeal the caps, or to restructure the 

grouping of therapy disciplines to 

which the caps apply. However, we 

understand the concerns of the 

commenters, and we are actively 

exploring alternatives to therapy caps to 

inform the discussions about 

approaches to identify and pay for those 

therapy services that are necessary for 

patients to attain the best outcomes with 

the most efficient use of resources. 

2. Alternatives to Therapy Caps 

a. Background 

In section 4541 of the Balanced 

Budget Act of 1997 (Pub. L. 105–33) 

(BBA), the Congress enacted the 

financial limitations on outpatient 

therapy services (the ‘‘therapy caps’’ 

discussed above for physical therapy, 

occupational therapy, and speechlanguage pathology). At the same time, 

the Congress requested that the 

Secretary submit a Report to Congress 

that included recommendations on the 

establishment of a revised coverage 

policy for outpatient physical therapy 

services and outpatient occupational 

therapy services under the statute. The 

Balanced Budget Refinement Act of 

1999 (Pub. L. 106–113) (BBRA) placed 

the first of a series of moratoria on 

implementation of the limits. In 

addition, it required focused medical 

review of claims and revised the report 

requirements in section 4541(d)(2) of 

the BBA to request a report that 

included recommendations on the 

following: (A) The establishment of a 

mechanism for assuring appropriate 

utilization of outpatient physical 

therapy services, outpatient 

occupational therapy services, and 

speech-language pathology services; and 

(B) the establishment of an alternative 

payment policy for such services based 

on classification of individuals by 

diagnostic category, functional status, 

prior use of services (in both inpatient 

and outpatient settings), and such other 

criteria as the Secretary determines 

appropriate, in place of the limits. In 

1999, therapy services were not defined, 

but services documented as therapy 

were billed and reported when 

furnished by a variety of individuals in 

many different settings. These services 

were not identified in a way that would 

allow analysis of utilization or 

development of alternative payment 

policies. Since that time, we have 

clarified the definition of therapy 

services and applied the qualifications 

of therapists consistently to outpatient 

settings, which have facilitated analysis 

of therapy services. 

We have studied therapy services 

with the assistance of a number of 

contractors over the past 11 years. 

Reports of these projects are available 

on the CMS Web site at http:// 

www.cms.gov/TherapyServices/. On 

November 9, 2004, we delivered the 

Report to Congress, Number 137953, 

‘‘Medicare Financial Limitations on 

Outpatient Therapy Services’’ that 

referenced two utilization analyses. We 

periodically updated the utilization 

analyses and posted other contracted 

reports on the CMS web site in order to 

further respond to the requirements of 

the BBRA. Subsequent reports 

highlighted the expected effects of 

limiting services in various ways and 

presented plans to collect data about 

patient condition using available tools. 

The general belief was that if patient 

condition could be reliably described, 

that approach would ensure appropriate 

payment for appropriately utilized 

services. 

Over the past decade, significant 

progress has been made in identifying 

the outpatient therapy services that are 

billed to Medicare, the demographics of 

the beneficiaries who utilize those 

services, the types of services, the 

HCPCS codes used to bill the services, 

the allowed and paid amounts of the 

services, and the settings, geographic 

locations, and provider or supplier 

types where services are furnished. 

Some of the information that is 

necessary to ensure appropriate 

utilization and develop objective and 

equitable payment alternatives to 

therapy caps based on patient condition 

has proven difficult to develop. The 

influence of prior use of inpatient 

services on outpatient use of therapy 

services was not accessible due to 

systems issues and differences in the 

policies, billing, and reporting practices 

for inpatient and outpatient therapy 

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services. The weakness of the ICD–9– 

CM diagnostic codes in describing the 

condition of the rehabilitation patient 

obscured analyses of claims to assess 

the need for therapy services. The 

primary diagnosis on the claim is a poor 

predictor for the type and duration of 

therapy services required, which 

complicates assignment of patient 

cohorts for analysis. Although changes 

to the guidance in the Medicare Benefit 

Policy Manual (Pub. 100–02) on 

documentation of therapy services in 

2005 improved the consistency of 

records and facilitated chart review, it 

became increasingly obvious that 

neither claims analysis nor chart review 

could serve as a reliable and valid 

method to determine a patient’s need for 

services or to form the basis for 

equitable payment. We concluded that 

in order to develop alternative payment 

approaches to the therapy caps, we 

needed a method to identify patients 

with similar risk-adjusted conditions 

(cohorts) and then we would identify 

the therapy services that are necessary 

for the patients to attain the best 

outcomes with the most efficient use of 

resources. 

While we studied therapy utilization, 

a number of proprietary tools were 

developed by researchers in the 

professional community to assess the 

outcomes of therapy. Some tool 

sponsors collected sufficient 

information to predict with good 

reliability the amount or length of 

treatment that would result in the best 

expected outcomes. We encouraged the 

use of these proprietary tools in manual 

instructions, but proprietary tools do 

not serve our purposes because 

modification of proprietary tools may 

only be done by the tool sponsor. There 

now are some versions of the tools in 

the public domain and they are being 

utilized widely to identify patient 

conditions and, by some insurers, to pay 

for efficient and effective treatment. 

Examples of such tools include the 

National Outcomes Measurement 

System (NOMS) by the American 

Speech-Language Hearing Association 

and Patient Inquiry by Focus On 

Therapeutic Outcomes, Inc. (FOTO). 

In 2006, Focus on Therapeutic 

Outcomes, Inc. delivered to CMS a 

report titled, ‘‘Pay for Performance for 

Physical Therapy and Occupational 

Therapy,’’ which is also available on the 

CMS Web site at http://www.cms.gov/ 

TherapyServices. The purpose of this 

project was to simulate a pay-forperformance implementation, designed 

to align financial incentives with the 

achievement of better clinical outcomes 

from services that were delivered 

efficiently. The project, funded by HHS/ 

CMS Grant 18–P–93066/9–01, 

demonstrated the predictive validity of 

the risk-adjusted pay-for-performance 

model and the feasibility of reducing 

payments without affecting services to 

beneficiaries who need them. 

b. Current Activities 

The Tax Relief and Health Care Act of 

2006 (TRHCA) extended the therapy cap 

exceptions process through December 

31, 2007 and provided funds used for 

two CMS projects related to developing 

alternative payment approaches for 

therapy services that are based on 

beneficiary needs. A 5-year project titled 

‘‘Development of Outpatient Therapy 

Alternatives’’ (DOTPA), awarded to RTI 

International, was initiated in order to 

develop a comprehensive and uniform 

therapy-related data collection 

instrument, assess its feasibility, and 

determine the subset of the measures 

that we could routinely and reliably 

collect in support of payment 

alternatives. While DOTPA will identify 

measurement items relevant to payment, 

the project will not deliver a 

standardized measurement tool. We 

may either develop a tool or allow other 

tools to be used for payment purposes 

when they include those items that 

identify the following: (1) Beneficiary 

need; and (2) outcomes (that is 

effectiveness of therapy services). In 

addition to therapy caps, the DOTPA 

project considers our interest in valuebased purchasing by identifying 

components of value, including 

beneficiary need and the effectiveness of 

therapy services. The DOTPA project 

reports are available on the contractor’s 

Web site at http://optherapy.rti.org/. 

The data collection design and 

instrument development have been 

completed, and a Paperwork Reduction 

Act (PRA) package was submitted for 

approval of the data collection forms by 

the Office of Management and Budget 

(OMB). The Federal Register notice for 

the second round of public comment on 

this package was published on April 23, 

2010 (75 FR 21296). The PRA package 

has been approved; the contractor is 

recruiting potential participants in the 

data collection, developing training 

materials for participants, and updating 

the project web site. We did not seek 

public comments on the DOTPA project 

in the proposed rule. 

The TRCHA also funded the 2-year 

project contracted to Computer Sciences 

Corporation (CSC) entitled ‘‘Short Term 

Alternatives for Therapy Services’’ 

(STATS). STATS has provided 

recommendations regarding alternative 

payment approaches to therapy caps 

that could be considered before 

completion of the DOTPA project. The 

STATS project draws upon the 

analytical and clinical expertise of 

contractors and stakeholders to consider 

policies, measurement tools, and claims 

data that are currently available to 

provide further information about 

patient condition and the outcomes of 

therapy services. The final report, 

received September 13, 2010, included 

recommended actions we could take 

within 2 or 3 calendar years to replace 

the current cap limits on therapy 

services with a policy that pays 

appropriately for necessary therapy 

services. 

c. Potential Short-Term Approaches to 

Therapy Caps 

On June 30, 2009, we received a draft 

of the CSC report titled ‘‘STATS 

Outpatient Therapy Practice 

Guidelines,’’ a summary of expert 

workgroup discussions, and several 

short-term payment alternatives for 

consideration. CSC discussed options 

based on the assumption that short-term 

policy changes should facilitate the 

development of adequate function and/ 

or outcomes reporting tools. In the 

longterm, CSC recommended that 

payment be based on function or quality 

measurements that adequately perform 

risk adjustment for episode-based 

payment purposes. 

Based on the draft report, additional 

stakeholder input, and subsequent 

communications with the contractor, in 

the CY 2011 PFS proposed rule (75 FR 

40097 through 40099) we discussed 

several potential alternatives to the 

therapy caps that could lead to more 

appropriate payment for medically 

necessary and effective therapy services 

that are furnished efficiently. We 

solicited public comments on the 

proposed rule regarding all aspects of 

these alternatives, including the 

potential associated benefits or 

problems, clinical concerns, practitioner 

administrative burden, consistency with 

other Medicare and private payer 

payment policies, and claims processing 

considerations. We did not propose 

either short-term or long-term payment 

alternatives to the therapy caps. 

However, we referred readers to section 

II.C.4.(c) of the proposed rule for our CY 

2011 proposal to expand the MPPR 

policy to ‘‘always therapy’’ services 

furnished in a single session in order to 

pay more appropriately for therapy 

services, taking into consideration the 

expected efficiencies when services are 

furnished together. While we did not 

propose the adoption of an MPPR policy 

for therapy services specifically as an 

alternative to the therapy caps, we 

acknowledged that by paying more 

appropriately for combinations of 

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therapy services that are commonly 

furnished in a single session, 

practitioners would be able to furnish 

more medically necessary therapy 

services to a given beneficiary before 

surpassing the caps. We noted that the 

proposed MPPR policy would have the 

potential to reduce the number of 

beneficiaries impacted by the therapy 

caps in a given year. 

Comment: Many commenters stated 

that use of the financial cap on therapy 

services as a rationale for the proposed 

MPPR was unacceptable and not a 

sound basis for such a significant policy 

proposal. Quite a few commenters 

contrasted the cap alternatives research 

with the MPPR which, in the 

commenters’ opinion, did not reflect a 

similar level of analysis. Instead of 

implementing the proposed MPPR, a 

large majority of the commenters urged 

CMS to place a high priority in 

resources and funding for research to 

identify alternatives to the cap that 

would ensure patients receive medically 

necessary therapy services. 

While the commenters agreed that 

more therapy could be furnished to a 

beneficiary before surpassing the caps if 

the payments were reduced, the 

commenters believe that other, more 

serious access problems would result 

from arbitrary payment reductions 

under an MPPR. Many commenters 

were concerned that the proposed 

MPPR policy might restrict access to 

therapy services for patients with more 

severe problems, especially neurological 

problems and complex medical 

conditions. Less payment, explained the 

commenters, would force therapists to 

spend less time with patients, 

incentivize cutting corners, and 

encourage greater fraud and abuse. The 

commenters argued that the shortage of 

therapists, particularly physical 

therapists, would be exacerbated and 

access to therapy services would be 

severely jeopardized. 

Response: We appreciate the effort 

and resources contributed by 

stakeholders to the discussion and 

development of alternatives to therapy 

caps. We look forward to the continued 

cooperation of stakeholders as we 

continue our work in this area over the 

coming years. We refer readers to 

section II.C.4.(c) of this final rule with 

comment period for a detailed 

discussion of the public comments and 

our responses regarding the proposed 

therapy MPPR. 

The three specific short-term options 

that we discussed in the CY 2011 PFS 

proposed rule would not have required 

statutory changes when CSC originally 

delivered them. In CY 2011, some 

would require extension of the therapy 

cap exceptions process. Some would 

require moderate reporting changes that 

would yield more detailed information 

about patient function and progress to 

inform future payment approaches and 

facilitate the medical review of services 

above the therapy caps at the present 

time. Others require new coding and 

bundled per-session payment that 

would be a first step toward episodebased payment. They are not necessarily 

independent of each other. 

Under each of these alternatives, 

administrative simplification with 

respect to current policies, such as 

HCPCS code edits and ‘‘ICD–9–CM to 

HCPCS code’’ crosswalk edits that serve 

to limit utilization without regard to the 

patient’s clinical presentation, could be 

pursued in the context of these options. 

The first option would modify the 

current therapy caps exceptions process 

to capture additional clinical 

information regarding therapy patient 

severity and complexity in order to 

facilitate medical review. This approach 

would complement the DOTPA project, 

which is identifying items to measure 

patient condition and outcomes. We 

believe the first option may have the 

greatest potential for rapid 

implementation that could yield useful 

information in the short-term. In the CY 

2011 PFS proposed rule (75 FR 40097), 

we indicated that we were especially 

interested in detailed public comments 

on this option that could inform a 

potential proposal to adopt such an 

alternative through future rulemaking. 

The second option would involve 

introducing additional claims edits 

regarding medical necessity, in order to 

reduce overutilization. The third option 

would be to adopt a per-session bundled 

payment that would vary based on 

patient characteristics and the 

complexity of evaluation and treatment 

services furnished in the session. Each 

option would require significant 

provider and contractor education, and 

all would necessitate major claims 

processing systems changes. Moreover, 

some of the options may affect 

beneficiaries by changing the type or 

amount of services covered by Medicare 

or the beneficiary’s cost sharing 

obligations. 

Comment: Many commenters agreed 

that a long term solution to the therapy 

caps is desirable. Generally, the 

commenters supported an evidencebased payment system grounded in 

accurate, comprehensive analysis of the 

clinical characteristics of the wide range 

of therapy patients in diverse settings 

and the concept of bundled payment for 

episodes of care based on clinical 

characteristics of patients. Many 

commenters urged CMS to place a high 

priority in resources and funding for 

research to identify alternatives to the 

cap that would ensure patients receive 

medically necessary therapy services. 

The commenters asserted that such 

research would be a key factor in 

identifying clinically appropriate ways 

to control spending. Those who 

commented on this issue commended 

CMS for proposing alternatives that 

reflect in-depth analytical work, 

expressing appreciation to CMS and its 

contractor for the opportunity to 

participate on task forces and pledging 

continued assistance in trials of 

alternatives. The commenters also 

commend CMS for recommending better 

clinical information be included in 

payment decisions. 

MedPAC and some other commenters 

supported all three alternatives as 

reasonable steps consistent with the end 

goals of value for purchases based on 

the care needs of beneficiaries. Many 

commenters supported the first option 

or the third option, and very few 

supported the second option. Regardless 

of the alternative chosen, commenters 

consistently recommended further study 

and analysis, with a national 

demonstration or pilot project to test 

any alternative prior to implementation. 

Response: We continue to believe that 

the advice and assistance of 

stakeholders, including clinicians and 

practice administrators, are essential to 

the development of policies that are 

appropriate, realistic, and effective in 

allowing necessary therapy care while 

limiting overutilization. We appreciate 

the time and effort provided by the 

dedicated professionals involved in the 

STATS workgroups and DOTPA 

technical advisory panels. 

Comment: A commenter suggested 

that diagnoses cannot be used to predict 

medical necessity. The same commenter 

argued that if the patient were assessed 

using self-reported functional status 

measures that are risk-adjusted using 

many variables, it would be possible to 

predict outcomes, identify ineffective 

treatment, and reduce gaming without 

relying on clinician-generated estimates 

known to be biased and fraught with 

poor reliability and validity. 

Several other commenters stated that 

clinicians’ judgment is essential to 

accurate outcomes assessment, and 

these commenters provided examples of 

clinical judgments believed essential to 

appropriate care planning. 

Response: None of the alternatives 

discussed in the proposed rule would 

require a measurement tool scored by 

either a clinician or the patient. We note 

the disagreement among the 

commenters on this point. 

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Comment: While generally supportive 

of the development of alternatives to 

therapy caps, many commenters 

expressed concern that there were 

insufficient data and details of the 

options discussed in the proposed rule 

to develop a rational payment system 

based on the options at this time. 

Several commenters suggested that 

sophisticated multivariate statistical 

methods with a long list of clinically 

appropriate risk-adjustment variables 

would be required. Another commenter 

recommended using risk-adjustment 

models built on large aggregate datasets 

to develop efficiency and effectiveness 

projections on which payments could be 

based. 

Response: We agree that the 

alternatives presented were not fully 

developed and that statistically sound 

methods of evaluation of the fully 

developed alternatives would be 

appropriate. We made no specific 

proposal to adopt an alternative 

beginning in CY 2011, but instead 

presented three potential options in 

order to gather additional public input 

on the overall concepts and the details 

to inform our future developmental 

work in this area. We will continue to 

review and consider all the information 

provided to us and acknowledge that, in 

the context of any future proposal, we 

would need to provide further detail as 

part of notice and comment rulemaking 

in order for the public to provide 

meaningful comment prior to the 

adoption of changes to therapy 

payment. 

Comment: Many commenters 

complained that therapy payments have 

decreased relative to inflation over the 

past 10 years. The commenters 

described the practitioner’s struggle to 

provide appropriate care and noted their 

fear of alternatives that could result in 

fewer resources with which to treat 

beneficiaries. Some commenters stated 

that Medicaid payments also decreased, 

leaving them with less flexibility to 

provide covered services to Medicare 

beneficiaries. Several commenters 

warned that those who bill therapy 

services will find ‘‘creative’’ ways to 

manage patients in the future, leading to 

reduced quality of care, or that 

therapists will be laid off, leading to 

access problems for beneficiaries. 

Some commenters recommended that 

CMS take time to consider the potential 

alternatives to therapy caps from all 

angles related to cost, including the 

costs of different health outcomes. 

Several commenters reported that 

outpatient physical therapy saves 

Medicare spending by preventing more 

expensive procedures and surgeries. 

Response: Achieving appropriate 

payment for quality services that 

quickly lead to good health outcomes is 

among the major goals of our payment 

policy. It is also our goal to limit 

overutilization of services, and to 

discourage the provision of services that 

are not medically reasonable and 

necessary or represent an abuse of 

Medicare funds. To that end, we will 

continue to develop policies aimed at 

paying for those therapy services that 

meet patients’ needs. The clear 

challenge is to identify those needs and 

the services required. 

Comment: One commenter was 

concerned that underlying therapy 

utilization data are flawed due to 

inconsistent coverage and payment 

policies that also negatively affect good 

clinical practice by restricting the 

therapist’s clinical judgment. The 

commenter provided detailed examples 

to illustrate inconsistencies in forms 

and billing rules between Part A and B 

providers and suppliers which in the 

aggregate, the commenter argued, 

impede CMS’ ability to analyze claims 

data for comparison purposes. 

Differences due to National Correct 

Coding Initiative (NCCI) and Medically 

Unlikely Edit (MUE) policies and most 

particularly local coverage 

determinations (LCDs) were also 

identified by the commenter as creating 

significant variations among contractors. 

The commenter was particularly 

concerned about requirements for 

specific ICD–9–CM and CPT code 

combinations, which limit therapy 

diagnoses or require specific diagnoses 

as primary. 

Response: We develop national and 

local policies and guidelines as needed 

to interpret statutory requirements and 

to limit, whenever possible, abusive 

behaviors while encouraging high 

quality care and good outcomes for 

beneficiaries. Since no one method is 

entirely effective in curbing incorrect or 

fraudulent billing practices, a number of 

approaches have been adopted. We 

attempt to coordinate these policies and 

we recognize that it is sometimes 

difficult for providers and suppliers to 

stay informed about changes, especially 

when they treat beneficiaries whose 

services are impacted by different 

payment policies. We will continue to 

work cooperatively with interested 

stakeholders, as we did with the STATS 

project, to identify and resolve concerns 

or conflicts regarding our policies. We 

intend that any claims data collected in 

a pilot study would be unencumbered 

by conflicts that have been identified. 

Comment: Many commenters stated 

that the options are identified as 

alternatives to the cap exceptions 

process, which expires December 31, 

2010. 

Response: The short-term alternatives 

discussed are potential alternatives to 

the therapy caps, and while it may be 

possible to implement some as 

modifications to the exceptions process, 

we recognize that Congress would have 

to act to extend the authority for a 

therapy cap exceptions process or to 

otherwise provide for certain 

alternatives to therapy caps. 

Option (1): Revise therapy caps 

exceptions process by requiring the 

reporting of new patient functionrelated Level II HCPCS codes and 

severity modifiers. 

This option would require that 

clinicians submit beneficiary functionrelated nonpayable HCPCS codes to 

replace the -KX modifier (Specific 

required documentation on file). Codes 

would not be submitted on every claim, 

but at episode onset and at periodic 

intervals (for example, progress report 

intervals of 12 sessions or 30 days— 

whichever is less). Codes would be 

submitted for all patients in order for 

the claims to be paid and not only those 

claims approaching or surpassing the 

therapy caps. The current -KX modifier 

is not useful to identify claims 

exceeding therapy caps, because it is 

used for services both before and after 

the caps are exceeded, and it must be 

used on the entire claim for facilities. 

New codes also would not identify 

claims above the cap, but they would 

perform the same function as the 

current -KX modifier to signal that 

documentation in the medical record 

supported medical necessity that should 

lead to an exception to the therapy caps. 

The codes would also provide more 

information for medical review. 

Six Level II HCPCS G-codes 

representing functions addressed in the 

plan of care and 5 (or 7) modifiers 

representing severity/complexity would 

be utilized to report information on the 

claim. Examples of six new functionrelated G-codes: 

• GXXXU—Impairments to body 

functions and/or structures—current. 

• GXXXV—Impairments to body 

functions and/or structures—goal. 

• GXXXW—Activity limitations and/ 

or participation restrictions—current. 

• GXXXX—Activity limitations and/ 

or participation restrictions—goal. 

• GXXXY—Environmental barriers— 

current. 

• GXXXZ—Environmental barriers— 

goal. 

Two potential severity/complexity 

scales have been suggested that would 

require the adoption of 5 or 7 new 

severity modifiers, respectively. Under 

one scenario, modifiers based on the 

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International Classification of Function 

would identify severity as follows: 

• None (0 to 4 percent). 

• MILD (5 to 24 percent). 

• MODERATE (25 to 49 percent). 

• SEVERE (50 to 95 percent). 

• COMPLETE (96 to 100 percent). 

Alternatively, a proportional severity/ 

complexity scale would use 7 modifiers 

to describe impairments, limitations, or 

barriers— 

• 0 percent; 

• 1 to 19 percent; 

• 20 to 39 percent; 

• 40 to 59 percent; 

• 50 to 79 percent; 

• 80 to 99 percent; or 

• 100 percent. 

Implementation of this general 

approach might require 6 months to 2 

years to modify claims processing for 

the current therapy caps and exceptions 

processing of claims, and to develop, 

pilot test, and refine coding before 

applying the approach nationally. While 

therapists initially would need to learn 

the new codes and update their billing 

systems, ultimately their reporting 

burden might be reduced because the 

-KX modifier would not be required on 

each claim line for patients with 

expenditures approaching or exceeding 

the therapy caps. This option could 

potentially result in a small reduction in 

outpatient therapy expenditures due to 

increased Medicare contractor scrutiny 

of episodes where functional severity 

scores did not change over time, or to 

other atypical reporting patterns 

associated with the new codes. 

In the longterm, these codes and 

modifiers could be mapped to reliable 

and validated measurement tools (either 

currently available tools in the public 

domain or newly developed tools from 

items on the DOTPA instrument or the 

Continuity Assessment Record and 

Evaluation (CARE) tool). If statistically 

robust patient condition information 

were collected from claims data, it may 

be possible to develop Medicare 

payment approaches for outpatient 

therapy services that could pay 

appropriately and similarly for efficient 

and effective services furnished to 

beneficiaries with similar conditions 

who have good potential to benefit from 

the services furnished. At a minimum, 

the new codes could allow contractors 

to more easily identify and limit the 

claims for beneficiaries who show no 

improvement over reasonable periods of 

time. 

Comment: Most commenters 

supported the concept of Option (1) 

although often not without concerns 

about the details of implementation. 

The commenters generally endorsed the 

concept of describing patients’ goals in 

terms of activity participation and 

environmental barriers, in addition to 

impairments based on the World Health 

Organization’s (WHO’s) International 

Classification of Functioning, Disability 

and Health (ICF). Some supported 

Option (1) as the best of the three 

options as it could begin providing a 

national overview of functional status 

and severity of patients which would be 

essential if CMS were to pursue future 

episode-based payment. The majority of 

commenters agreed with the concept of 

developing an infrastructure to work 

toward payment reform based on 

episodes of care, patient characteristics, 

functional status, rehabilitation 

complexity, severity, and outcomes. 

Many commenters supported Option (1) 

as the first step in a plan to move toward 

Option (3) that would introduce persession codes to bundle payment, as 

described in detail below, and 

ultimately episode-based payments, 

although a few suggested the severity 

codes could be used, after adequate 

testing and definition, to inform 

appropriate payment. Some commenters 

recommended developing Option (1) 

and suggested that further development 

should include: definition of terms 

(including the ICD–10 diagnosis codes 

in 2013), input from therapists, field 

testing, and data analysis to ensure that 

payment appropriately reflects patient 

complexity and risk before application 

of the codes to individual therapy 

disciplines. 

The commenters in favor of this 

option supported the use of ICF 

language in descriptions, but 

consistently preferred a 7-point rating 

scale for severity over the 5-point scale 

based on the ICF. Several commenters 

also noted that sufficient training would 

be required for contractors and 

providers of service under this option. 

Response: We appreciate the 

perspectives of the commenters who see 

Option (1) as a first step in the process 

of exploring alternatives to the therapy 

caps that could move toward payment 

based on the needs of beneficiaries. 

Comment: Many commenters opposed 

this option as burdensome, easy to 

‘‘game,’’ and lacking the potential for 

saving money. The commenters in 

opposition to the option claimed it 

could require a great deal of research to 

establish, validate and value codes, and 

then pilot test, refine, establish intertester reliability, and modify the claims 

processing process, which could take 2 

years. Instead, the same commenters 

recommended the use of valid and 

reliable measurement tools currently in 

the public domain and in use by 

clinicians. One commenter requested 

that CMS not use clinician-graded single 

item assessment scales of patient 

severity or complexity, unless such 

methodology possessed published 

reliability and validity on the selection 

and grading processes because there are 

more psychometrically sound published 

scales available that include a risk 

adjustment process to predict treatment 

success and number of visits and are 

less vulnerable to gaming. If scales were 

used, several commenters recommended 

that they must be sensitive and cardinal 

so each change would represent an 

equal increment. 

Response: We recognize that Option 

(1) is not yet fully developed and would 

require further study. As we consider 

this option further, we will also assess 

the feasibility of using currently 

available validated measurement scales 

in the public domain. The issues of 

‘‘gaming’’ and savings remain of interest 

in relationship to this and the other 

options. 

Comment: Several commenters voiced 

serious concerns about the concept of 

using function-related codes and 

severity modifiers on the claim to 

monitor patient improvement. The 

commenters were alarmed that 

contractors would deny services when 

improvement was insufficiently 

demonstrated, or when the beneficiary’s 

goal was to prevent deterioration of 

function. Several commenters were 

concerned that a contractor’s attention 

to function and severity modifiers might 

cause the contractor to unduly limit the 

therapy sessions a patient needed to 

maintain or increase functionality. 

A few commenters interpreted the 

statute to require only that a service be 

medically necessary to treat the 

underlying illness or condition, and not 

to require that the service lead to 

improvement. According to the 

commenters, a service required to 

maintain current function is medically 

necessary but the focus on identifying 

improvement would prevent those 

patients with progressive diseases from 

receiving therapy to prevent further 

decline in function when there is little 

probability of meeting an undefined 

improvement standard. A few 

commenters provided citations of court 

cases that rejected Medicare policies 

and practices that denied therapy 

services based on arbitrary rules of 

thumb without consideration of the 

patient’s individual condition. 

Therefore, the same commenters 

recommended that CMS omit reference 

to improvement standards in any 

proposal related to Option (1). 

Response: The policies for Medicare 

Part B outpatient therapy services 

require payment for therapy services 

that require the skills of a therapist. In 

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contrast, ‘‘Unskilled services are 

palliative procedures that are repetitive 

or reinforce previously learned skills, or 

maintain function after a maintenance 

program has been developed * * *. 

services related to activities for the 

general good and welfare of patients, for 

example, general exercises to promote 

overall fitness and flexibility and 

activities to provide diversion or general 

motivation, do not constitute therapy 

services for Medicare purposes’’ 

(Medicare Benefit Policy Manual, Pub. 

100–02, chapter 15, section 220.2.A.). 

We note that when the goal of therapy 

is to halt degeneration of function due 

to disease, therapy is not palliative or 

related to general welfare, but may be an 

active treatment with measurable 

outcomes. For that reason, we do not 

anticipate that function-related codes 

and severity modifiers would be used 

exclusively as a proxy for the 

determination of medical necessity. 

The Medicare policy goes on to state, 

‘‘ * * * services must be necessary for 

the establishment of a safe and effective 

maintenance program required in 

connection with a specific disease state. 

In the case of a progressive degenerative 

disease, service may be intermittently 

necessary to determine the need for 

assistive equipment and/or establish a 

program to maximize function * * *.’’ 

(Pub. L. 100–02, chapter 15, section 

220.2.A.). Further details concerning 

maintenance therapy and examples of 

covered services to patients with 

degenerative neurological diseases are 

found in Pub. 100–02, chapter 15, 

section 220.2.D. 

Option (2): Enhance existing therapy 

caps exceptions process by applying 

medical necessity edits when perbeneficiary expenditures reach a 

predetermined value. 

The existing automatic process for 

exceptions, and the revised exceptions 

process described in Option (1) above, 

pay practitioners indefinitely for 

services if they attest on the claim by 

appending a specific modifier to therapy 

HCPCS codes that the services being 

furnished are medically necessary and 

that supporting documentation is 

included in the medical record. Unless 

the local contractor uses claims edits or 

does post-payment review, these 

processes do not identify or limit 

unusually high annual per-beneficiary 

utilization. High utilization is not 

limited to beneficiaries with multiple or 

complex conditions. We would use 

existing therapy utilization data to 

develop annual per-beneficiary medical 

necessity payment edits, such as limits 

to the number of services per-session, 

per-episode, or per-diagnostic grouping, 

for exceptions to the therapy caps which 

would be set at benchmark payment 

levels that only a small percentage of 

beneficiaries would surpass in a single 

year. Once these levels were reached, 

additional claims would be denied and 

practitioners would need to appeal 

those denials if they wished to 

challenge Medicare’s nonpayment. 

This alternative would require 1 to 2 

years to implement as an expansion of 

existing policy, and its effects would be 

anticipated by analysis of the current 

utilization of therapy services. 

Additional practitioner burden would 

be incurred in the small number of cases 

exceeding the per beneficiary 

expenditure edits if the practitioner 

chose to appeal the medical necessity 

denial. 

Comment: Few commenters preferred 

Option (2) over the other two. In 

addition, the commenters stated that 

they were familiar with this approach 

because other insurers use a similar 

system of edits, so the adoption of 

Option (2) for Medicare patients would 

not represent an additional 

administrative burden. The commenters 

who favored this option reported that it 

would be the easiest for CMS to 

implement and would be the only 

option likely to save money in the very 

short-term. Some commenters who 

favored this option would still prefer 

the use of existing measurement tools to 

gather data about therapy services. One 

commenter pointed out that limits perdiagnosis should be based on reasonable 

data that reflect good patient outcomes. 

Most of the commenters who 

supported Option (2) also noted that 

this option could influence therapy 

utilization and possibly outcomes, 

creating flawed data that were not 

representative of needed services. The 

commenters were concerned that future 

payment policy decisions might later be 

based on those flawed data. 

Response: We agree that Option (2) 

has the benefit of being relatively easy 

to implement and we appreciate the 

perspective of some commenters on the 

low anticipated burden. We also 

recognize that a database of limited 

services would not be appropriate to use 

for estimating the full cost of medically 

necessary services. 

Comment: Some commenters took a 

neutral position on this option, finding 

that it could be part of a viable 

alternative to therapy caps but only after 

considerable study and development. 

MedPAC noted that Option (2) would 

implement more meaningful therapy 

caps in the interim, while longer-term 

solutions were being developed and 

tested. At the same time, MedPAC 

supported CMS’ efforts to identify 

medically unnecessary care and to 

implement payment systems that ensure 

that the program obtains value for its 

purchases. Other commenters were 

concerned that the benchmark levels for 

edits be realistic and not arbitrary. The 

commenters requested that CMS 

consider a method to deal with outliers 

without forcing denials and appeals. 

Response: Option (2) could be used in 

combination with other options. We 

recognize the description we provided 

was not specific about the edit levels 

and that further deliberation would be 

appropriate before edits could be 

implemented. 

Comment: The majority of 

commenters opposed Option (2). 

Although some commenters agreed that 

edits for medically unlikely services are 

useful and appropriate, they expressed 

concerns about this approach because 

edits can often be arbitrary, are not 

based on patient needs, and may 

improperly limit necessary services. 

Some commenters asserted that 

individuals with degenerative 

conditions may require shorter sessions 

over longer periods of time to address 

functional loss and slow deterioration 

and to maximize health outcomes. The 

commenters also opposed edits that 

would fail to address the affects of 

cognitive impairment on treatment. 

Several commenters cited the existing 

ICD–9–CPT code crosswalks, LCDs, 

NCCI edits, and MUEs as examples of 

similar edits that commenters often 

found to be clinically inappropriate. 

The commenters argued that current 

edits and policies based on unsupported 

information led to denials and appeals 

that were costly to therapists and CMS. 

The commenters urged CMS to avoid 

edits that lack clinical relevance or a 

scientific basis and create anomalies in 

claims data. 

Response: Option (2) was developed 

with input from therapy professionals 

based on their review of therapy 

utilization data. If this option were to be 

implemented, we would, at a minimum, 

review the advice and recommendations 

of stakeholders, along with any 

available utilization data to inform our 

decisions regarding the edit levels. 

Comment: A few commenters 

criticized Option (2) as scientifically 

flawed. One commenter reported that 

use of a combined effectiveness (that is, 

functional status change) and efficiency 

(that is, number of treatment visits) 

algorithm in a value-based payment 

process is one of the few methods where 

one could determine if the patient needs 

more or less treatment to reach optimal 

risk-adjusted gains in functional status. 

The same commenter referenced 

numerous research efforts that have 

analyzed functional status outcomes in 

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rehabilitation using sophisticated riskadjustment methods and requested that 

CMS use these as a basis for a new 

payment policy. 

Other commenters asserted that 

currently available utilization data are 

inadequate to develop predetermined 

edit values, citing studies of therapy 

utilization under contract to CMS and 

studies performed by industry that 

demonstrate why ICD–9 coding, lack of 

function/severity data, and lack of a 

definition for ‘‘episode’’ are problematic. 

Response: Current therapy utilization 

data reveal that one percent of 

beneficiaries who receive services incur 

costs that proportionately far exceed 

those of the other 99 percent of 

beneficiaries. However, we are also 

aware that without some knowledge of 

the condition of the beneficiary, it is 

impossible to determine which, if any, 

of those services were medically 

necessary. While it would be desirable 

to analyze more detailed utilization data 

that include patient function/severity 

outcomes for setting edit values, those 

data are not available to us in the shortterm. We believe that the existing 

limited utilization data, albeit not fully 

descriptive of patients, could inform 

potential future edit values for therapy 

services. 

Comment: If CMS plans to move 

forward with edits, many commenters 

strongly requested that professional 

organizations be consulted to determine 

whether such edits are clinically 

appropriate and realistic. Some 

commenters specifically urged CMS to 

await the results of the DOTPA pilot in 

the hope of capturing meaningful 

clinical differences between patients 

before applying edits. Before such edits 

could reliably be applied to payment, 

other commenters recommended that 

CMS design, test, and evaluate 

additional data on functional status and 

barriers to participation. Many 

commenters indicated that more data 

are needed; especially thresholds based 

on episodes, condition groupings, and 

similar criteria that could trigger 

medical review, but not support denial. 

To that end, some commenters stated 

that it might be possible to support this 

approach under Option (2), but after 

Option (1) was implemented. 

Response: We understand the 

commitment of stakeholders to the 

development of alternatives to the 

therapy caps based on clinically 

appropriate policies. We will consider 

the potential benefit of Option (1) to 

develop data on which to base the edits 

required under Option (2) as we further 

contemplate alternatives to the therapy 

caps. 

Comment: A few commenters 

opposed Option (2) edits because the 

edits would virtually eliminate the 

exceptions process mandated by law 

and replace it with denial of claims at 

a predetermined value, which may be 

inconsistent with the statutory 

requirement for an exceptions process. 

The same commenters stated that there 

would be no basis for edits until Option 

(1) was implemented to provide more 

detailed claims-based information. 

Several commenters reported research 

showing 10 percent of Part B patients in 

nursing facilities have highly complex 

problems, with multidisciplinary needs 

and inconsistent patterns of therapy 

service use. The commenters were 

concerned that denials would interfere 

with treatment of these complex 

patients with special needs. 

Response: Option (2) would require 

an existing exception to the therapy 

caps, which would be enhanced to 

allow limited billing and payment for 

medically necessary services that 

exceed the caps. The option could not 

be used if the exceptions process were 

not extended. However, the Deficit 

Reduction Act of 2005 that established 

exceptions to the caps for medically 

necessary therapy services also required 

implementation of clinically 

appropriate code edits in order to 

identify and eliminate improper 

payments for therapy services. CMS 

currently applies NCCI and MUE edits 

to therapy services that fail to meet a 

reasonable assumption of medical 

necessity. We view implementation of 

Option (2) as consistent with our 

current authority to create edits to 

control inappropriate billings. 

Benchmark levels for Option (2) 

would be based on existing therapy 

utilization data and limits would be set 

at levels that a high percentage of 

beneficiaries would not exceed. While it 

may be helpful to have more data 

related to patient condition as described 

in Option (1) before implementing 

Option (2), we do not consider such 

information vital to the development of 

limits that affect a very small percentage 

of beneficiaries whose service payments 

would so far exceed average payments 

that they would be likely to include 

inappropriate billings and would be 

unlikely to interfere with the delivery of 

medically necessary services. 

Comment: If the option of 

implementing edits were pursued, 

several commenters indicated that the 

edits should be variable based on 

clinical criteria, result in medical 

review instead of denials, and reflect 

issues of multidisciplinary care, care 

coordination, and clinical issues. 

Response: If Option (2) were to be 

further developed, we would consider 

the commenters’ suggestions prior to 

finalizing a plan for implementation, 

along with any new information 

available from additional research 

studies, OIG reports, or other sources. 

Option (3): Introduce per-session 

‘‘Evaluation/Assessment and 

Intervention’’ (E&I) codes to bundle 

payment for groups of current therapy 

HCPCS codes into a single per-session 

payment. 

As discussed in section II.C.4.(c) of 

this final rule with comment period, 

multiple therapy services are often 

furnished in a single session, and we 

proposed to expand the MPPR policy to 

‘‘always therapy’’ services in CY 2011 in 

order to take into consideration the 

efficiencies that occur when multiple 

services (the typical therapy scenario) 

are furnished in one session to a 

beneficiary. Furthermore, we note that 

section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA) 

regarding potentially misvalued codes 

under the PFS specifies that the 

Secretary may make appropriate coding 

changes, which may include 

consolidation of individual services into 

bundled codes for payment under the 

PFS, as part of her review and 

adjustment of the relative values for 

services identified as potentially 

misvalued. 

This option would require that 

practitioners submit a single new Level 

II HCPCS code to represent all the 

therapy services currently reported and 

paid separately for an outpatient 

therapy session. Payment for the HCPCS 

code would be based on patient 

characteristics (as identified through 

prior CMS contractor analyses) and the 

complexity of the evaluation/assessment 

and intervention services furnished 

during the session. The new coding 

requirements would not necessarily 

disrupt the current exceptions process 

or the revised exceptions process 

described in Option (1) above. 

Approximately 12 E&I codes would be 

needed for each discipline, taking into 

consideration the basic algorithm shown 

in Table 47. 

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TABLE 47—EVALUATION/ASSESSMENT & INTERVENTION LEVEL II HCPCS CODES

Evaluation/assessment complexity 

Minimal Moderate Significant 

Intervention level .................................................................................. None ................. E&I Code #1 ..... E&I Code #2 ..... E&I Code #3. 

Minimal ............. E&I Code #4 ..... E&I Code #5 ..... E&I Code #6. 

Moderate .......... E&I Code #7 ..... E&I Code #8 ..... E&I Code #9. 

Significant ......... E&I Code #10 ... E&I Code #11 ... E&I Code #12. 

We would need to develop and test 

operational definitions for each E&I 

code so that practitioners would be able 

to properly report services and 

appropriate relative values could be 

established for each per-session code. 

We believe that a pilot study might 

reveal that the different practice 

patterns for the three therapy 

professions (physical therapy, 

occupational therapy, and speechlanguage pathology) could necessitate 

separate relative value determinations 

for each E&I code by type of therapy 

service furnished. As a result, up to 36 

total new Level II HCPCS codes could 

be needed (12 per discipline). 

We anticipate that the definitions of 

E&I codes 1 through 3 and 7 through 12 

would describe services that may only 

be furnished by a ‘‘clinician’’ (therapist, 

physician, or non-physician 

practitioner). E&I codes 1 through 3 

would be reported for sessions that 

consisted only of evaluations. In 

addition, the definitions of E&I codes 4 

through 6 would describe services that 

could be furnished by or under the 

permissible supervision of all qualified 

outpatient therapy professionals. Based 

upon historical therapy utilization 

patterns, the vast majority of E&I codes 

submitted would likely fall in the 4 

through 9 code range. We would expect 

the RVUs under the PFS for all E&I 

codes to take into consideration the 

efficiencies when multiple services 

(those that would be currently reported 

under multiple CPT codes) are 

furnished. 

This option would require 2 to 4 years 

to add new codes and conduct a shortterm pilot study to refine coding and 

value the 12 new HCPCS codes (or 36 

if they are specific to each therapy 

discipline). There would be significant 

initial practitioner administrative 

burden to learn new codes and update 

billing systems. However, ultimately, 

with elimination of the practitioner’s 

reporting of 76 different codes and 

many of the associated claims 

processing edits, the administrative 

burden of reporting therapy services to 

Medicare would be minimized. 

This bundled approach to reporting 

and payment could result in more 

appropriate valuation of therapy 

services that reflects efficiencies when 

individually reported services are 

furnished in the same session. As a 

result, it could lead to reduced therapy 

expenditures, as well as a reduction in 

the number of beneficiaries affected by 

the therapy caps in a given year. 

Comment: The vast majority of 

commenters concurred that provider 

payments should be influenced by 

underlying beneficiary characteristics. 

Most commenters agreed that following 

research and development, an episodebased payment alternative would be the 

most feasible payment model for 

outpatient therapy services in the 

longterm, and some recommended it be 

developed in a performance-based 

model. The commenters generally 

supported this option as a foundation to 

those goals, but recommended expert 

therapist input into the process and 

further study to determine how such an 

approach might affect different therapy 

types and settings. Several commenters 

noted that it would be critical to ensure 

clear nomenclature, the availability of 

an appropriate reporting methodology, 

and adequate payment for these codes 

that reflects the resources used to 

provide these services. 

To assure appropriate payment for 

needed services, the commenters agreed 

that the outcomes resulting from 

provider interventions must be 

incorporated in payment models. The 

commenters believe that experience 

gained in a transparent development 

process could be carried over into future 

payment system reform. Therefore, the 

majority of commenters who supported 

Option (3) also requested that there be 

a transparent process of development 

and testing in which expert therapists 

from various settings were included. 

Many also argued that Option (3) should 

be developed only after Option (1) had 

been implemented and function and 

severity data had been collected to 

inform the development of Option (3). 

Response: We appreciate the support 

of commenters for Option (3) and their 

interest in moving toward long-term 

goals by implementing short-term 

approaches as an incremental step. We 

agree that the information presented in 

the proposed rule was limited regarding 

Option (3) and that further study would 

be necessary before a bundled persession payment approach could be 

implemented. We will consider the 

commenters’ recommendations to 

develop an episode-based payment 

alternative in the future. 

Comment: The concept of moving 

toward per-session codes that would be 

based on the severity of the patient and 

intensity of therapist clinical judgment 

and work involved in the provision of 

the therapy service was welcomed by 

many commenters. Those commenters 

who encouraged CMS to use this option 

to reduce the administrative burden of 

counting minutes and eliminate NCCI 

edits and MUEs anticipated 

corresponding improvement in the 

effective and efficient delivery of 

clinical interventions. The commenters 

urged CMS to ensure compliance of 

policies related to Option (3) with other 

payment policies, such as the delivery 

of medically necessary care driven by 

the development of an appropriate 

functional goal-based plan of care. 

Response: While a per-session 

payment methodology could result in 

modification of current policies 

regarding counting treatment time, it 

would not necessarily result in deleting 

claims edits. If we were to adopt such 

a methodology, we would assess the 

current claims processing edits and 

determine whether they continued to be 

appropriate and/or implement new edits 

to address potential issues under the 

revised payment approach. 

Comment: Some commenters 

suggested a modified definition of 

severity. The commenters recommended 

two separate severity tables of ‘‘severity 

or complexity,’’ one for evaluation and 

the other for intervention. For each table 

separately, severity/complexity of 

clinical presentation would be rated as 

low, moderate, or high. In all cases, the 

commenters believe CMS should 

identify the factors to be used to 

determine severity for both evaluations 

and interventions. The commenters 

urged that CMS defer to professional 

standards of practice and state law with 

respect to the provision of services in 

each category. Other commenters 

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recommended modifiers for complex 

patients and comprehensive 

multidisciplinary rehabilitation settings 

to facilitate application of special 

policies for those circumstances. 

Response: The tables presented in the 

proposed rule were illustrative of the 

potential Level II per-session HCPCS 

codes, and these codes would require 

further development prior to 

implementation. We appreciate the 

commenters’ suggestions and will 

consider them as we weigh this option. 

Comment: Some commenters who 

supported the general premise of Option 

(3) and some commenters who opposed 

it were not optimistic that per-session 

payment could be developed in a 

reliable and valid manner in the 

shortterm. 

Response: This alternative was 

developed as a short-term action that 

would start the process toward bundled 

payments for therapy episodes. The 

work completed by expert therapist 

advisors to the STATS workgroups laid 

a foundation that could facilitate 

development of the initial per-session 

HCPCS codes, which could reasonably 

be based on utilization data that 

demonstrated which services were 

historically billed together most of the 

time. We have analyzed data regarding 

common therapy code combinations. 

While a per-session payment approach 

could have a significant impact on 

payment for therapy services, we would 

not expect that developing and valuing 

per-session E&I codes would be a 

particularly lengthy or complex process. 

We note that over the past several years, 

the CPT Editorial Panel has bundled 

multiple services into a single code 

numerous times in different medical 

specialty areas and the AMA RUC has 

then valued the new comprehensive 

service by taking into account the 

expected efficiencies in the physician 

work and/or practice expense. 

Comment: Rather than consign the 

code definition and valuation processes 

integral to Option (3) to the CPT 

Editorial Panel and AMC RUC 

processes, which have little 

transparency, several commenters 

recommended that CMS develop Level 

II HCPCS codes for this purpose and 

allow for continued stakeholder input as 

to their valuation. Some commenters 

expressed appreciation for being 

included in the STATS process and 

suggested it as a model for future 

transparency in developing payment 

policies. 

Response: We appreciate the 

confidence stakeholders expressed 

regarding our capacity to develop 

HCPCS codes and values using a 

transparent process that includes input 

from stakeholders. If we were to move 

toward per-session payment in the 

future, we would need to consider the 

most appropriate approach to the 

development and valuation of new 

codes to describe those services. In the 

meantime, we note that if the CPT 

Editorial Panel were to develop new 

codes for comprehensive therapy 

services, as they have developed new 

CY 2011 comprehensive codes for 

cardiac catheterization and lower 

extremity endovascular 

revascularization services that bundle 

services that are commonly furnished 

together, we would consider those 

therapy codes for adoption under the 

PFS and would value them if we 

recognized them for PFS payment. 

Comment: Due to the nature of certain 

services when assessment and 

intervention are inseparable, some 

commenters asserted that interventions 

should not be included in this model 

but should be separately identified. The 

commenters provided the examples of 

active wound care management and 

prosthetic/orthotic management. 

Response: The details of therapy E&I 

codes have not been proposed or 

finalized. We appreciate the perspective 

of the commenters and will keep it in 

mind if we were to pursue the creation 

of per-session therapy codes in the 

future. 

Comment: While some commenters 

stated that Option (3) has the potential 

to simplify and increase consistency in 

coding for therapy services, several 

commenters who opposed this option 

and Option (1) mentioned that providers 

would learn to ‘‘game the system’’ and 

that all patients would be documented 

as severe on initial intake. 

Response: We too are concerned about 

approaches where providers could learn 

to game the system. The commenters 

who criticized this option generally 

preferred the edits in Option (2). 

Restriction on utilization of certain 

codes sometimes increases the risk of 

billing different codes, billing more of 

the same codes, or increasing patient 

visits, resulting in the same or greater 

cost to the Medicare program. The edits 

described in Option (2) would prevent 

high payments for individual 

beneficiaries, but might have little or no 

effect on the payments to providers or 

suppliers who increase the number of 

beneficiaries treated. Generally, we 

apply a number of different methods 

concurrently to reduce risk. 

At times, it may be difficult to know 

whether the clinical judgment and 

objective measurements have been 

accurately reported or documented in 

the record and whether the service 

furnished is appropriately represented 

by the billed HCPCS code. Providers 

focused on billing inappropriately may 

also document inappropriately. In the 

long term, we hope to incentivize 

honest and ethical providers and 

suppliers of services to furnish effective 

and efficient, high quality services. 

Possible fraudulent activity may be 

identified by aberrant billing patterns, 

and the new codes could facilitate the 

identification of such patterns. 

Several commenters expanded on the 

options presented as alternatives to the 

therapy caps or recommended options 

of their own. A few presented their own 

analyses of utilization to support their 

recommendations. 

Comment: Several commenters 

recommended incorporation of 

currently and publicly available 

validated tools to inform the collection 

of patient-specific information and 

move toward performance-based 

payment. A few commenters suggested 

that the study ‘‘Pay-for-Performance for 

Outpatient Physical Therapy and 

Occupational Therapy’’ that Focus On 

Therapeutic Outcomes (FOTO) 

completed in 2006 under Grant #18–P– 

93066–/0–01 might be a good template 

from which to start a process to replace 

caps and ultimately develop a valuebased purchasing process. The 

commenters suggested the FOTO 

predictive model could be used, after 

pilot testing, to develop a 

reimbursement process where care is 

based on need and payment is based on 

results. 

Response: We recognize the 

importance of demonstrating the 

application of a value-based purchasing 

approach to physical and occupational 

therapy services. We posted the FOTO 

study on the CMS Web site at: http:// 

www.cms.gov/TherapyServices/ 

downloads/P4PFinalReport06-01- 

06.pdf. 

We are aware that research continues 

on the functional status indicator and 

that other measurement tools are also 

available in the public domain. The 

STATS discussions resulted in some 

improvements in the feasibility of 

matching outcomes data to claims. 

However, there are a number of 

problems that would have to be resolved 

before any of the currently available 

versions of therapy outcomes tools 

could be incorporated into payment 

policy. The FOTO study did not address 

value-based purchasing for speechlanguage pathology services and there 

remain questions about applying the 

FOTO functional status indicator, or any 

self-reported measure, to certain 

cognitively impaired patients or to the 

Medicare population without further 

refinement. 

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As we continue to explore various 

options, we would be interested in the 

feasibility of using historical research, 

existing electronic input systems, and 

registry information to provide a 

conceptual framework for alternative 

payment systems. 

Comment: Although CMS did not 

discuss the option of establishing 

therapy payments based on episodes in 

the discussion of short-term options, 

many commenters encouraged CMS to 

pursue that goal. Using data obtained 

from the severity/complexity codes 

described in Option (1), DOTPA, and 

other data initiatives, several 

commenters urged CMS to undertake 

research to develop a new episodic 

prospective payment system for Part B 

therapy services. Some commenters 

described the details of a plan to base 

therapy episode payment on groups 

based on patient clinical characteristics, 

considering mean episode costs, 

adjusting for high and low outliers or 

interrupted episodes, setting a default 

payment for unmapped episode groups, 

and also adjusting for local wage indices 

and providing an annual market basket 

payment rate update. 

The opportunity for CMS to define 

sessions and episodes more clearly and 

the potential to support the overall goal 

of payment reform was eagerly 

anticipated by several commenters. The 

commenters applauded CMS for 

recognizing the potential opportunity to 

gather these data on episodes for 

payment of therapy services furnished 

in the institutional setting. 

Episode-based payment was 

recommended as an alternative to the 

proposed therapy MPPR by numerous 

commenters. The commenters explained 

that the fundamental problem with feefor-service payment is the incentive to 

over utilize therapy services in the 

outpatient setting and limit institutional 

providers from using resources flexibly. 

The commenters described analysis of a 

large database of Medicare beneficiaries 

as the basis for a methodology for 

grouping diagnosis codes to create 

episodes of care on which therapy 

payment would be based. The 

commenters noted that adjustment 

would be needed to payments for 

complex patients and readmissions. The 

same commenters supported episode 

payments for separate therapy 

disciplines based on a patient’s medical 

diagnosis and goals. A critical goal for 

these commenters was to identify and 

account for differences in the conditions 

and needs of patients in skilled nursing 

facilities as opposed to other outpatient 

therapy settings. 

Response: We did not discuss 

development of episode-based payments 

as an option in the CY 2011 PFS 

proposed rule because we recognize that 

substantially more research would be 

necessary to define the episodes and 

determine what resources would be 

needed for different groups or categories 

of patients before the episodes could be 

incorporated into a payment system, 

particularly one that also addressed 

quality, efficiency, and good health 

outcomes. However, the absence of 

discussion in our proposed rule of an 

episode-based payment methodology as 

a short-term therapy cap alternatives 

option should not be interpreted as our 

reluctance to pursue the definition of 

episodes or the refinement of the 

concept of episode-based payments. 

Comment: A number of commenters 

supported testing variables they believe 

to be important in making a clinical 

judgment concerning a patient’s 

severity, including: general type of 

patient (orthopedic, neurological, 

medical, etc.); impairment (body part 

treated); intake functional status; patient 

age; symptom acuity; surgical history; 

payer; gender; level of fear-avoidance of 

physical activities; and number of comorbid conditions. Other commenters 

urged inclusion of clinical judgment of 

severity based on medical condition, 

physical impairments resulting from 

these conditions, patient function, and 

ability to participate in activities of 

daily living. 

Response: As we progress in the 

analysis of payment alternatives to the 

therapy caps, we appreciate the 

information on variables believed to be 

critical by stakeholders who have 

conducted related research and/or 

furnished therapy services to a wide 

array of patients in different clinical 

settings. We welcome their expert 

contributions and collaboration with us 

on this important issue. 

In conclusion, we emphasize that we 

continue to be committed to developing 

alternatives to the therapy caps that 

would provide appropriate payment for 

medically necessary and effective 

therapy services furnished to Medicare 

beneficiaries based on patient needs, 

rather than the current therapy caps 

which establish financial limitations on 

Medicare payment for therapy services 

in some outpatient settings regardless of 

medical necessity. The Congress has 

repeatedly intervened to allow 

exceptions to these caps for certain time 

periods, and the current exceptions are 

automatically processed based on a 

practitioner’s attestation that medical 

necessity is documented in the chart for 

an individual patient. We believe that, 

ultimately, payment for therapy services 

should incentivize the most effective 

and efficient care, consistent with 

Medicare’s focus on value in its 

purchasing. 

The STATS contractor has worked 

closely with a broad variety of 

clinicians, administrators, scientists, 

researchers, and other contractors to 

develop the three alternatives presented 

in this discussion in CY 2011 

rulemaking for the PFS. We are grateful 

for all public comments on the proposed 

rule from interested stakeholders, 

including individual therapists from 

both facility and nonfacility outpatient 

settings paid under Medicare Part B. 

We are committed to finding 

alternatives to the current therapy cap 

limitations on expenditures for 

outpatient therapy services that will 

ensure that beneficiaries continue to 

receive those medically necessary 

therapy services that maximize their 

health outcomes. We continue to 

dedicate our resources to identifying 

alternatives that would encourage the 

most efficient and cost-effective 

treatments. We believe motivated 

therapists, with attention to the most 

cost-effective practices, can incorporate 

practice efficiencies that benefit patients 

by achieving the best possible results at 

the lowest cost. Our STATS and DOTPA 

projects, which are currently engaged in 

data collection and analysis to inform 

short-term and long-term alternatives to 

the therapy caps, respectively, lay the 

foundation for future payment 

alternatives for outpatient therapy 

services. We are optimistic that the 

STATS project has identified shortterm, feasible alternatives that may be 

tested in the future. The DOTPA project 

will create a tool and test its use to 

collect patient condition information 

that could then be applied to identify 

patient need for therapy services. 

Together, these projects may provide the 

basis for a long-term plan to reshape 

Medicare’s payment policy for 

outpatient therapy services to align with 

the value-based purchasing principles 

that are now guiding principles of the 

Medicare program. 

B. Diabetes Self-Management Training 

(DSMT) Services (HCPCS Codes G0108 

and G0109) 

1. Background 

Section 1861(s)(2)(S) of the Act 

provides for coverage of DSMT in 

outpatient settings without limiting this 

coverage to hospital outpatient 

departments. DSMT services consist of 

educational and training services 

furnished to an individual with diabetes 

by a certified provider in an outpatient 

setting. 

Section 1861(qq)(2)(A) of the Act 

stipulates that training must be 

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furnished by a ‘‘certified provider’’ 

which is a physician or other individual 

or entity that also provides other items 

or services for which payment may be 

made under Medicare. This program is 

intended to educate beneficiaries in the 

successful self-management of diabetes. 

The program includes instructions in 

self-monitoring of blood glucose; 

education about diet and exercise; an 

insulin treatment plan developed 

specifically for the patient who is 

insulin-dependent; and motivation for 

patients to use the skills for selfmanagement. DSMT services are 

reported under HCPCS codes G0108 

(Diabetes outpatient self-management 

training services, individual, per 30 

minutes) and G0109 (Diabetes 

outpatient self-management training 

services, group session (2 or more), per 

30 minutes). 

2. Payment for DSMT Services 

In accordance with section 1848(j)(3), 

Medicare payment for outpatient DSMT 

services is made under the PFS as 

specified in § 414.1 through § 414.48. 

When we created HCPCS codes G0108 

and G0109, the only direct costs 

included in the PE were registered nurse 

labor. Section 410.144(a)(4)(a) states that 

the DSMT team includes at least a 

registered dietitian and a certified 

diabetes educator. We initially did not 

establish work RVUs for DSMT services 

because we believed training would 

typically be performed by individuals 

other than a physician, such as a 

registered nurse (65 FR 83130). 

However, since that time, we have 

received requests from a number of 

stakeholders, including the American 

Association of Clinical Endocrinologists 

(AACE), the American Association of 

Diabetes Educators (AADE), and the 

Juvenile Diabetes Research Foundation, 

to include physician work in valuing 

DSMT services that is similar to the 

physician work that has been included 

in medical nutrition therapy (MNT) 

services since CY 2007 and kidney 

disease education (KDE) services since 

CY 2010. The stakeholders argued that 

because physicians coordinate DSMT 

programs, provide patient instruction, 

and communicate with referring 

physicians, physician work should be 

included in the RVUs for DSMT 

services. The stakeholders also 

requested that we reconsider the direct 

PE inputs for DMST services and 

include clinical labor for diabetes 

educators at a higher hourly rate instead 

of registered nurse labor. In addition, 

they stated that the supplies and 

equipment in the PE for DSMT services 

should be the same as for KDE services, 

with additional direct PE inputs for a 

diabetes educator curriculum, data 

tracking software, and DSMT program 

accreditation. 

For CY 2011, we proposed the 

following: 

• To assign physician work RVUs to 

DSMT services that are comparable, as 

adjusted for the service times of the 

HCPCS codes, to the work RVUs for 

MNT services. The rationale for the 

proposed work RVUs for the DSMT 

HCPCS G-codes was based on the 

similarity of DSMT services to MNT 

services in the individual (CPT code 

97803) and group (CPT code 97804) 

setting. 

• That HCPCS G0108 for 30 minutes 

of individual DSMT services would be 

crosswalked to CPT code 97803 

(Medical nutrition therapy; reassessment and intervention, 

individual, face-to-face with the patient, 

each 15 minutes) for purposes of 

assigning work RVUs, with the 

physician work RVUs for CPT code 

97803 multiplied by two to account for 

the greater time associated with HCPCS 

code G0108 (that is, 30 minutes). 

• That HCPCS G0109 for 30 minutes 

of group DSMT services would be 

crosswalked to CPT code 97804 

(Medical nutrition therapy; group (2 or 

more individuals(s)), each 30 minutes) 

for purposes of assigning work RVUs. 

• To modify the PE inputs for DSMT 

services to reflect the current equipment 

and supplies for the KDE HCPCS Gcodes implemented in the CY 2010 PFS 

final rule with comment period (74 FR 

61901) (that is, HCPCS codes G0420 

(Face-to-face educational services 

related to the care of chronic kidney 

disease; individual, per session, per one 

hour) and G0421 (Face-to-face 

educational services related to the care 

of chronic kidney disease; group, per 

session, per one hour)), based on the 

similarity in the equipment and 

supplies necessary for DSMT and KDE 

services. We made adjustments to some 

of the equipment times for the 30 

minute DSMT individual and group 

services as compared to the one hour 

individual and group KDE services. 

• To include a diabetes educator 

curriculum and data tracking software 

in the PE inputs for DSMT services, 

while noting that we did not include the 

DSMT program accreditation costs 

because it is our general practice not to 

include these costs in the PE inputs. 

• To utilize the same approach for 

clinical labor as we adopted for MNT 

services when we provided physician 

work RVUs for those services in CY 

2007 (71 FR 69645), rather than 

changing the current labor type for 

DSMT services. Specifically, we 

removed all of the clinical labor from 

the group DSMT code and most of the 

clinical labor from the individual DSMT 

code, given that we proposed work 

RVUs for both DSMT HCPCS codes for 

CY 2011. 

In the CY 2011 PFS proposed rule (75 

FR 40100), we stated our belief that 

these proposals would value DSMT 

services more consistently with other 

similar services that are paid under the 

PFS. As a result of our proposed CY 

2011 changes, the proposed work RVUs 

for HCPCS codes G0108 and G0109 

were 0.90 and 0.25, respectively. As 

described above, we also proposed to 

modify the direct PE inputs for these 

codes for CY 2011. 

Comment: Numerous commenters 

specifically supported the establishment 

of work RVUs for the DSMT services 

based on the work RVUs of the similar 

MNT services, CPT codes 97803 for 15 

minutes of individual MNT services and 

97804 for 30 minutes of group MNT 

services. Some commenters explained 

that addition of work RVUs would lead 

to higher payment rates for DSMT 

services, resulting in a significant 

positive impact on diabetes education 

practices and increased patient access to 

care for DSMT services. Several 

commenters suggested that this change 

would appropriately recognize the 

active role many physicians contribute 

to ensuring that their patients have 

access to DSMT services and providing 

care coordination and communication 

with the multidisciplinary DSMT team 

members. One commenter concurred 

with the proposal to update the direct 

PE inputs for the DSMT HCPCS codes 

based on those assigned to the HCPCS 

codes for KDE services. 

Response: We appreciate the 

commenters’ support for our proposal to 

establish work RVUs and to update the 

direct PE inputs for the DSMT services. 

In conducting our review of the 

public comments on this issue for this 

final rule with comment period, we 

examined newly available PFS claims 

data for same day billings from one 

provider for a single Medicare 

beneficiary. In response to that analysis 

and in accordance with our PFS 

methodology which values services as 

delivered to the typical patient, we note 

that we have made minor adjustments to 

some of the direct PE inputs for supplies 

and equipment times for both HCPCS Gcodes for DSMT services, G0108 and 

G0109, under our final CY 2011 policy. 

We made these refinements after a 

review of our PFS utilization data 

indicated that 2 units of HCPCS code 

G0108 (a total of 60 minutes) were 

typically billed together on the same 

day for the same patient, instead of the 

one unit of HCPCS code G0108 (30 

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minutes) which was used as the 

assumption for the typical session at the 

time of our CY 2011 proposal. As a 

result, we have assigned half of the 

amount of the direct inputs for supplies 

and equipment time in HCPCS code 

G0420 (60 minutes individual KDE 

services) to HCPCS code G0108 (30 

minutes individual DSMT services). 

Regarding the direct PE inputs for 

HCPCS code G0109, we continue to 

believe that there is a similarity among 

the group and individual DSMT and 

KDE services and the education 

practices when these services are 

delivered, as reflected in their PFS 

utilization patterns. For this reason, we 

have made minor modifications to the 

PE inputs for HCPCS code G0109 (30 

minutes of group DSMT services) to 

reflect half of each input for HCPCS 

code G0421 (60 minutes of group KDE 

services) that parallel the modifications 

we made for the individual DSMT 

HCPCS code described previously. We 

further note that these refinements to 

the direct PE inputs for DSMT services 

are based on the final adjustments that 

were made to the direct PE inputs for 

HCPCS codes G0420 and G0421 for KDE 

services, discussed in section V. B.2.e. 

of this final rule with comment period, 

because our approach to establishing the 

direct PE inputs for the DMST HCPCS 

G-codes is based on the inputs for KDE 

services. 

As a result, the modifications we 

made to the supplies and equipment 

inputs for the DSMT HCPCS G-codes, 

G0108 and G0109, equal half of the 

same supply and equipment times in 

the one hour HCPCS G-codes for KDE 

services, G0420 and G0421. 

In addition, because the $200 price of 

the diabetes educator curriculum does 

not meet the $500 floor we established 

for inclusion in the equipment database, 

we have bundled the diabetes educator 

curriculum price with the $500 data 

tracking software one because the 

patient’s curriculum information is 

typically recorded in the tracking 

software. The equipment descriptor for 

the data tracking software was modified 

to read: Diabetes education data tracking 

software, includes curriculum. 

Accordingly, we changed the price 

input from $500 to $700 and assigned 

the bundled equipment a total of 4 

minutes. In this way, we are including 

the cost of the curriculum in the direct 

PE inputs for DSMT services as we 

proposed for CY 2011, while remaining 

consistent with the established $500 

floor on inclusion of equipment in the 

PE database. 

After consideration of the public 

comments we received, we are 

finalizing the proposed work RVUs and 

direct PE input for DSMT services, with 

modification to make the PE 

adjustments described previously. The 

final CY 2011 direct PE database that 

lists the direct PE inputs is available on 

the CMS Web site under the downloads 

for the CY 2011 PFS final rule with 

comment period at: http:// 

www.cms.gov/PhysicianFeeSched/ 

PFSFRN/list.asp#TopOfPage. The final 

CY 2011 RVUs for HCPCS codes G0108 

and G0109 are displayed in Addendum 

B to this final rule with comment 

period. 

C. End-Stage Renal Disease Related 

Services for Home Dialysis (CPT codes 

90963, 90964, 90965, and 90966) 

1. End-Stage Renal Disease Home 

Dialysis Monthly Capitation Payment 

Services (CPT codes 90963, 90964, 

90965, and 90966) 

In the CY 2004 PFS final rule with 

comment period (68 FR 63216), we 

established new Level II HCPCS G-codes 

for end-stage renal disease (ESRD) 

monthly capitation payment (MCP) 

services. For center-based patients, 

payment for the G-codes varied based 

on the age of the beneficiary and the 

number of face-to-face visits furnished 

each month (for example, 1 visit, 2–3 

visits and 4 or more visits). Under the 

MCP methodology, the lowest payment 

applied when a physician provided one 

visit per month; a higher payment was 

provided for two to three visits per 

month. To receive the highest payment, 

a physician would have to provide at 

least four ESRD-related visits per 

month. However, payment for home 

dialysis MCP services only varied by the 

age of beneficiary. Although we did not 

initially specify a frequency of required 

visits for home dialysis MCP services, 

we stated that we ‘‘expect physicians to 

provide clinically appropriate care to 

manage the home dialysis patient’’ (68 

FR 63219). 

Effective January 1, 2009, the CPT 

Editorial Panel created new CPT codes 

to replace the G-codes for monthly 

ESRD-related services, and we accepted 

the new codes for use under the PFS in 

CY 2009. The CPT codes for monthly 

ESRD-related services for home dialysis 

patients include the following, as 

displayed in Table 32 of the CY 2011 

PFS proposed rule (75 FR 40101) and 

reprinted as Table 48 below: 90963, 

90964, 90965, and 90966. In addition, 

the clinical vignettes used for the 

valuation of CPT codes 90963, 90964, 

90965, and 90966 include scheduled 

(and unscheduled) examinations of the 

ESRD patient. 

Given that we pay for a physician (or 

nonphysician practitioner (NPP)) to 

evaluate the ESRD patient over the 

course of an entire month under the 

MCP, we believe that it is clinically 

appropriate for the physician (or NPP) 

to have at least one in-person, face-toface encounter with the patient per 

month. As such, for CY 2011 we 

proposed to require the MCP physician 

(or NPP) to furnish at least one inperson patient visit per month for home 

dialysis MCP services (as described by 

CPT codes 90963 through 90966). The 

proposed requirement would be 

effective for home dialysis MCP services 

beginning January 1, 2011. As stated in 

the CY 2011 PFS proposed rule (75 FR 

40100), we believe this requirement 

reflects appropriate, high quality 

medical care for ESRD patients being 

dialyzed at home and generally would 

be consistent with the current standards 

of medical practice. 

Comment: Many commenters stated 

that a monthly visit embodies the 

standard of care for home dialysis 

patients. However, many of the same 

commenters also stated that it may not 

always be feasible to furnish a face-toface visit every month for home dialysis 

patients due to extenuating 

circumstances. A number of 

commenters explained that, in contrast 

to patients who dialyze in a dialysis 

center, home dialysis patients would 

need to travel to the doctor’s office (or 

the physician would need to visit the 

patient’s home) which would be an 

undue burden on both the physician 

and the patient. To that end, several 

commenters urged CMS to provide 

flexibility in cases where a patient does 

not show up for their scheduled 

appointment and for those that cannot 

travel due to significant geographic 

distance between the patient and the 

nephrologist. For example, some 

specialty societies stated that pediatric 

home dialysis patients may experience 

exceptional circumstances due to the 

scarcity of pediatric nephrologists and 

remote geographic locations, making the 

monthly face-to-face visit requirement 

harder to fulfill. In these circumstances, 

one commenter requested that CMS 

consider allowing the MCP physician to 

furnish at least 1 visit every 3 months 

and allowing the other monthly visits to 

be furnished as a telehealth service. 

Additionally, several commenters 

explained that the monthly management 

of a home dialysis patient involves 

many tasks (in addition to face-to-face 

visits) including: Reviewing lab tests, 

treatment data and the dialysis 

prescription; monitoring the patient’s 

vascular access; and overseeing quality 

improvement activities (as well as 

incurring the practice expense 

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associated with managing the patient’s 

care). The commenters stated that the 

MCP physician should not be 

‘‘penalized’’ if the patient chooses not to 

attend the monthly visit. Moreover, 

many of the commenters who agreed 

that monthly visits are optimal care did 

not support a monthly visit requirement 

for the home dialysis MCP service. The 

commenters stated that the frequency of 

face-to-face visits should remain at the 

discretion of the nephrologist and 

patient. Several of the commenters who 

did not support a policy change also 

stated that requiring a monthly visit 

could create disincentives for providing 

beneficiaries with home dialysis therapy 

in circumstances where it may be 

difficult for the MCP physician to 

furnish a visit every month. The 

commenters explained that 

nephrologists may not want to 

encourage home dialysis therapy if they 

will not get paid as a result of a patient 

‘‘opting out’’ of a scheduled visit. 

Response: We continue to believe that 

furnishing monthly face-to-face visits is 

an important component of high quality 

medical care for ESRD patients being 

dialyzed at home and generally would 

be consistent with the current standards 

of medical practice. However, we also 

acknowledge that extenuating 

circumstances may arise that make it 

difficult for the MCP physician (or NPP) 

to furnish a visit to a home dialysis 

patient every month. Therefore, we will 

allow Medicare contractors the 

discretion to waive the requirement for 

a monthly face-to- face visit for the 

home dialysis MCP service on a case-bycase basis, for example, when the MCP 

physician’s (or NPP’s) notes indicate 

that the MCP physician (or NPP) 

actively and adequately managed the 

care of the home dialysis patient 

throughout the month. Additionally, as 

we explained in the CY 2004 PFS final 

rule with comment period (68 FR 63219 

through 63220), we also believe that the 

use of other practitioners working with 

the MCP physician (or NPP) to furnish 

the required monthly visit for the home 

dialysis MCP service could help 

alleviate scheduling issues and 

problems related to geographic distance. 

With regard to the comment on 

furnishing the proposed required visit 

for the home dialysis MCP as a 

telehealth service, we note that any 

interested parties may submit requests 

to add services to the list of Medicare 

telehealth services. Requests submitted 

before the end of CY 2010 will be 

considered for the CY 2012 PFS 

proposed rule. Requestors should be 

advised that each request to add a 

service to the list of Medicare telehealth 

services must include any supporting 

documentation the requestor wishes us 

to consider as we review the request. 

For more information on submitting a 

request for an addition to the list of 

Medicare telehealth services, including 

where to directly mail these requests, 

we refer readers to section IV.B. of this 

final rule with comment period and the 

CMS Web site at: http:// 

www.cms.hhs.gov/telehealth. 

Comment: Several commenters stated 

that the conditions for coverage for 

dialysis facilities require a monthly 

interaction between a clinician 

representing the facility and the home 

dialysis patient. The commenters 

believe that the conditions for coverage 

for dialysis facilities permit flexibility in 

the monthly visit requirement if the 

patient chooses to opt out of the 

monthly visit and requested that CMS 

align the proposed visit requirement for 

the home dialysis MCP service with the 

‘‘flexibility’’ permitted under the 

conditions for coverage for dialysis 

facilities. 

Response: With regard to conditions 

for coverage for dialysis facilities, 

§ 494.90(b)(4) of the regulations 

specifies that the dialysis facility must 

ensure that all dialysis patients are seen 

by a physician, nurse practitioner, 

clinical nurse specialist, or physician’s 

assistant providing ESRD care at least 

monthly. Section 494.100 requires ‘‘a 

dialysis facility that is certified to 

provide service to home patients to 

ensure that home dialysis services are at 

least equivalent to those provided to infacility patients and meet all applicable 

conditions of this part.’’ In addition, the 

interpretive guidance for part 494 

entitled ‘‘Conditions for Coverage for 

ESRD Facilities’’ specifies that a 

monthly visit is required for each home 

patient by a physician, an advanced 

practice registered nurse, or a physician 

assistant. The visit may be conducted in 

the dialysis facility, at the physician’s 

office, or in the patient’s home. The 

guidelines state that ‘‘any patient may 

choose not to be seen by a physician 

every month’’ but also specify that if 

there is a pattern of a patient 

consistently missing physician and or 

practitioner visits, the lack of medical 

oversight should be addressed with the 

patient in the plan of care. 

The requirement for at least one 

monthly visit with a clinician associated 

with the dialysis facility is a condition 

for coverage for the dialysis facility for 

purposes of participating in the 

Medicare program and not a direct 

factor in determining the payment 

amount for the dialysis facility. In other 

words, the clinician visit is not a 

component of the facility’s composite 

rate. However, as mentioned in the 

background section, the clinical 

vignettes used for the valuation of the 

home dialysis MCP service under the 

PFS include scheduled (and 

unscheduled) examinations of the ESRD 

patient. Given that physician or NPP 

visits are a factor in determining the 

PFS payment amount for the home MCP 

service that is furnished to the typical 

Medicare beneficiary, we do not believe 

that the monthly visit requirement for 

the home dialysis MCP service is 

analogous to the visit requirement under 

the conditions for coverage for dialysis 

facilities that has no implications for 

setting payment rates under the PFS. 

Therefore, we do not agree that the visit 

requirement for the home dialysis MCP 

service necessarily should be ‘‘aligned’’ 

with the conditions for coverage for 

dialysis facilities. 

Comment: One commenter suggested 

that CMS consider structuring the home 

dialysis MCP similar to the center-based 

MCP. Under this approach, the 

commenter suggested that a higher 

payment amount could be made for 

home dialysis MCP services with at 

least one in person, face-to-face visit per 

month. 

Response: We will consider the 

commenter’s suggestion as we continue 

to develop and refine Medicare payment 

policy for physicians and practitioners 

managing patients on dialysis. In the 

event we decide to make changes in the 

payment amount(s) for the home 

dialysis MCP services, we would do so 

in a future proposed rule where the 

public would have the opportunity to 

provide comments as afforded by the 

rulemaking process. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal, with 

modification. We will require the MCP 

physician (or NPP) to furnish at least 

one in-person patient visit per month 

for home dialysis MCP services (as 

described by CPT codes 90963 through 

90966). However, Medicare contractors 

will have the discretion to waive the 

monthly visit requirement for the home 

dialysis MCP service on a case-by-case 

basis. 

2. Daily and Monthly ESRD-Related 

Services (CPT Codes 90951 Through 

90970) 

In CY 2008, the AMA RUC submitted 

recommendations for valuing the new 

CY 2009 CPT codes displayed in Table 

48 that replaced the MCP HCPCS 

G-codes for monthly ESRD-related 

services. We accepted these codes for 

use under the PFS. 

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TABLE 48—MCP CODES RECOGNIZED UNDER THE PFS 

MCP Code Long descriptor 

90951 ...................... End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring 

for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more faceto-face physician visits per month. 

90952 ...................... End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring 

for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2–3 face-to-face 

physician visits per month. 

90953 ...................... End-stage renal disease (ESRD) related services monthly, for patients younger than 2 years of age to include monitoring 

for the adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face 

physician visit per month. 

90954 ...................... End-stage renal disease (ESRD) related services monthly, for patients 2–11 years of age to include monitoring for the 

adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face 

physician visits per month. 

90955 ...................... End-stage renal disease (ESRD) related services monthly, for patients 2–11 years of age to include monitoring for the 

adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2–3 face-to-face physician visits per month. 

90956 ...................... End-stage renal disease (ESRD) related services monthly, for patients 2–11 years of age to include monitoring for the 

adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician 

visit per month. 

90957 ...................... End-stage renal disease (ESRD) related services monthly, for patients 12–19 years of age to include monitoring for the 

adequacy of nutrition, assessment of growth and development, and counseling of parents; with 4 or more face-to-face 

physician visits per month. 

90958 ...................... End-stage renal disease (ESRD) related services monthly, for patients 12–19 years of age to include monitoring for the 

adequacy of nutrition, assessment of growth and development, and counseling of parents; with 2–3 face-to-face physician visits per month. 

90959 ...................... End-stage renal disease (ESRD) related services monthly, for patients 12–19 years of age to include monitoring for the 

adequacy of nutrition, assessment of growth and development, and counseling of parents; with 1 face-to-face physician 

visit per month. 

90960 ...................... End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 4 or more face-toface physician visits per month. 

90961 ...................... End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 2–3 face-to-face 

physician visits per month. 

90962 ...................... End-stage renal disease (ESRD) related services monthly, for patients 20 years of age and older; with 1 face-to-face physician visit per month. 

90963 ...................... End-stage renal disease (ESRD) related services for home dialysis per full month, for patients younger than 2 years of 

age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents. 

90964 ...................... End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 2–11 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents. 

90965 ...................... End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 12–19 years of age to include monitoring for the adequacy of nutrition, assessment of growth and development, and counseling of parents. 

90966 ...................... End-stage renal disease (ESRD) related services for home dialysis per full month, for patients 20 years of age and older. 

There are four additional CPT codes 

for ESRD-related services that are 

reported on a per-day basis. These daily 

CPT codes are: 90967 (End-stage renal 

disease (ESRD) related services for 

dialysis less than a full month of 

service, per day; for patients younger 

than 2 years of age); 90968 (End-stage 

renal disease (ESRD) related services for 

dialysis less than a full month of 

service, per day; for patients 2–11 years 

of age); 90969 (End-stage renal disease 

(ESRD) related services for dialysis less 

than a full month of service, per day; for 

patients 12–19 years of age); and 90970 

(End-stage renal disease (ESRD) related 

services for dialysis less than a full 

month of service, per day; for patients 

20 years of age and older). 

For the MCP codes displayed in Table 

32 of the CY 2011 PFS proposed rule, 

the AMA RUC initially recommended 

36 minutes of clinical labor time for the 

pre-service period. They also 

recommended an additional 6 minutes 

in the post-period for CPT codes 90960, 

90961, 90962, and 90966. For the four 

codes describing daily services (CPT 

codes 90967 through 90970), the AMA 

RUC recommended including 1.2 

minutes of clinical labor per day, which 

is the prorated amount of pre-service 

clinical labor included in the monthly 

codes. The AMA RUC also 

recommended that CPT codes 90952 

and 90953 be contractor-priced. 

In the CY 2009 PFS final rule with 

comment period (73 FR 69898), we 

asked the AMA RUC to reconsider their 

recommended PE inputs in the interest 

of making certain that they accurately 

reflected the typical direct PE resources 

required for these services. In addition, 

we asked the AMA RUC to review the 

physician times for CPT codes 90960 

and 90961 that are used in the 

calculation of the PE RVUs. We 

accepted the work values for the new 

CPT codes for ESRD-related services 

that were recommended by the AMA 

RUC. 

Since CY 2009, we have continued to 

calculate the PE RVUs for the entire 

series of MCP codes displayed in 

Table 32 of the CY 2011 PFS proposed 

rule (75 FR 40101) by using the direct 

PE inputs from the predecessor HCPCS 

G-codes, except for CPT codes 90952 

and 90953 which are contractor-priced. 

We have also continued to use the 

physician time associated with the 

predecessor HCPCS G-codes for CPT 

codes 90960 and 90961 for purposes of 

calculating the PE RVUs. 

In CY 2009, the AMA RUC submitted 

new recommendations for CPT codes 

90951 and 90954 through 90970. For 

each of the MCP codes (CPT code 90951 

and CPT codes 90954 through 90966), 

the AMA RUC recommended an 

increased pre-service clinical staff time 

of 60 minutes. For each of the daily 

dialysis service codes (CPT codes 90967 

through 90970), the AMA RUC 

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recommended an increased clinical 

labor time of two minutes, which is the 

prorated amount of clinical labor 

included in the monthly codes. The 

AMA RUC also recommended an 

additional 38 minutes of physician time 

for CPT codes 90960 and 90961. This 

resulted in a total physician time of 

128 minutes and 113 minutes, 

respectively, for these codes. The AMA 

RUC continued to recommend that CPT 

codes 90952 and 90953 be contractorpriced. 

For CY 2011, we proposed to accept 

these AMA RUC recommendations as 

more accurate reflections of the typical 

direct PE resources required for these 

services. Therefore, we proposed to 

develop the PE RVUs for CPT code 

90951 and CPT codes 90954 through 

90970 using the direct PE inputs as 

recommended by the AMA RUC and 

reflected in the proposed CY 2011 PE 

database, which is available on the CMS 

Web site under the supporting data files 

for the CY 2011 PFS proposed rule at: 

http://www.cms.gov/ 

PhysicianFeeSched/. We also proposed 

to use the AMA RUC-recommended 

physician times for CPT codes 90960 

and 90961. Consistent with the AMA 

RUC’s recommendations, we proposed 

to continue to contractor-price CPT 

codes 90952 and 90953. 

We did not receive public comment 

on our proposal to accept these AMA 

RUC recommendations as more accurate 

reflections of the typical direct PE 

resources required for these services. 

Therefore, we are finalizing our CY 2011 

proposal to develop the PE RVUs for 

CPT code 90951 and CPT codes 90954 

through 90970 using the direct PE 

inputs as recommended by the AMA 

RUC and reflected in the CY 2011 direct 

PE database, which is available on the 

CMS Web site under the supporting data 

files for the CY 2011 PFS final rule with 

comment period at: http:// 

www.cms.gov/PhysicianFeeSched/. We 

will also use the AMA RUCrecommended physician times for CPT 

codes 90960 and 90961. Consistent with 

the AMA RUC’s recommendations, we 

will continue to contractor-price CPT 

codes 90952 and 90953. 

D. Portable X–Ray Set-Up (HCPCS Code 

Q0092) 

When a portable x-ray is furnished to 

a single patient, as many as four 

component HCPCS codes may be billed 

and paid for the service, including the 

portable x-ray transportation (HCPCS 

code R0070 (Transportation of portable 

x-ray equipment and personnel to home 

or nursing home, per trip to facility or 

location, one patient seen)); the portable 

x-ray set-up (HCPCS code Q0092 (Setup of portable x-ray equipment)); and 

the professional and technical 

components of the x-ray service itself 

(CPT 70000 series). Currently, the direct 

PE database contains x-ray equipment in 

both the radiology codes in the 70000 

series of CPT and HCPCS code Q0092, 

the code for the set-up of a portable xray. In the technical component of the 

x-ray service is the direct PE input of a 

radiology room which contains x-ray 

equipment for the various radiology 

codes in the 70000 series of CPT. In 

addition, portable x-ray equipment is 

included as a direct PE input for HCPCS 

code Q0092. Thus, x-ray equipment 

currently is recognized within the direct 

PE values for two of the HCPCS codes 

that would be reported for the portable 

x-ray service, resulting in an 

overvaluation of the comprehensive 

portable x-ray service. 

Therefore, for CY 2011 we proposed 

to remove portable x-ray equipment as 

a direct PE input for HCPCS code 

Q0092, in order to pay more 

appropriately for the x-ray equipment 

used to furnish a portable x-ray service. 

We believe the resulting payment for the 

comprehensive portable x-ray service 

would more appropriately reflect the 

resources used to furnish portable x-ray 

services by providing payment for the xray equipment solely through payment 

for the technical component of the x-ray 

service that is furnished. 

Comment: Several commenters 

opposed the removal of portable x-ray 

equipment as a direct PE input for 

HCPCS code Q0092. The commenters 

believe the elimination of the 

equipment from HCPCS code Q0092 is 

inconsistent with longstanding CMS 

payment policy recognizing the unique 

and additional costs incurred by 

portable x-ray suppliers in furnishing 

services that involve special equipment 

requiring extra assembly and 

disassembly time. In addition, the 

commenters believe that the proposed 

equipment elimination conflicts with 

the statutory mandate of section 1848(c) 

of the Act that CMS calculate the PFS 

RVUs based on the actual resources 

used in furnishing a service because 

equipment is a legitimate direct PE 

component of the set-up component 

service (HCPCS code Q0092). 

Response: We agree that x-ray 

equipment is used to furnish a portable 

x-ray service and the equipment set-up 

is reported with HCPCS code Q0092. 

However, because the portable x-ray setup service would always be reported 

along with the technical component of 

the x-ray service (CPT 70000 series) that 

already includes x-ray equipment as a 

direct PE input, to include x-ray 

equipment again in the PE of the set-up 

code would clearly be duplicative. Only 

one item of equipment, that is, a single 

x-ray machine, is used in furnishing the 

portable x-ray service. We are, therefore, 

eliminating the portable x-ray 

equipment from HCPCS code Q0092 

and, instead, recognizing the cost of 

such equipment in the direct PE for the 

technical component of the x-ray 

service. 

Comment: According to several 

commenters, because CMS has not 

undertaken a review of all combinations 

of services paid under the PFS that 

together might comprise a 

‘‘comprehensive service’’ to identify 

potentially duplicative direct PE inputs 

when the services are furnished 

together, CMS should refrain from 

applying the proposed policy to 

suppliers of portable x-ray services. 

Response: While it would require an 

extensive analysis to review all 

combinations of PFS services that may 

be furnished together and identify 

potentially duplicative PE inputs, the 

PFS has several longstanding policies 

that were adopted to provide 

appropriate payment when certain 

services are furnished together. For 

example, existing multiple procedure 

payment reduction policies reduce 

payment for the second and subsequent 

surgical procedures or technical 

components of imaging services when 

furnished to the same patient by the 

same physician on the same day, based 

partly on the presence of efficiencies in 

the PE under such circumstances. 

Furthermore, as discussed in section 

II.C.4. of this final rule with comment 

period, we are adopting a new multiple 

procedure payment reduction policy for 

CY 2011 for therapy services because of 

the duplication in the PE when therapy 

services are furnished together. Finally, 

we note that for those CPT codes that 

are designated as add-on codes to 

primary services, we ensure that the 

direct PE inputs do not duplicate inputs 

in the primary services. Given our 

ongoing efforts to more appropriately 

value services furnished together, we 

believe that HCPCS code Q0092 

essentially functions as an ‘‘add-on’’ 

code to the primary service that it 

generally accompanies, which is the 

technical component of an x-ray service. 

Therefore, we believe it is fully 

consistent with our ongoing efforts to 

recognize efficiencies through payment 

policy when multiple services are 

furnished together to remove the 

duplicative x-ray equipment from the 

direct PE inputs for HCPCS code Q0092. 

Comment: A few commenters believe 

that elimination of x-ray equipment in 

HCPCS code Q0092 would have a 

negative impact on the financial status 

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of portable x-ray suppliers who are 

typically small business owners. 

According to the commenters, CMS 

should heed the statutory mandates of 

the Regulatory Flexibility Act (RFA) 

which require mitigation of such 

adverse effects. 

Response: We note that the RFA 

requires only that we analyze regulatory 

options for small businesses that 

include a justification for 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. The CY 

2011 PFS proposed rule included a 

regulatory impact analysis (75 FR 40230 

through 40245), as does section XI.A. of 

this final rule with comment period. As 

a specialty, the aggregate impact on 

portable x-ray suppliers from the PFS 

changes proposed for CY 2011 was an 

increase of 8 percent in the proposed 

rule (75 FR 40232), and it is an increase 

of 6 percent for CY 2011 as displayed 

in Table 101 of this final rule with 

comment period. Therefore, the 

combined effect of all final PFS policies 

for CY 2011 will not adversely impact 

portable x-ray suppliers. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

remove portable x-ray equipment as a 

direct PE input for HCPCS code Q0092. 

E. Pulmonary Rehabilitation Services 

(HCPCS Code G0424) 

In the CY 2010 PFS proposed rule (74 

FR 33614), we proposed to create new 

HCPCS G-code G0424 (Pulmonary 

rehabilitation, including aerobic 

exercise (includes monitoring), per 

session, per day) to describe the services 

of a pulmonary rehabilitation (PR) 

program as specified in section 144(a) of 

the Medicare Improvements for Patients 

and Providers Act of 2008 (MIPPA). 

Using CPT code 93797 (Cardiac rehab 

without telemetry) as a reference code, 

we proposed to assign 0.18 work RVUs 

and 0.01 malpractice RVUs to G0424. To 

establish PE RVUs, we reviewed the PE 

inputs of similar services, particularly 

those of the respiratory therapy HCPCS 

codes G0237 (Therapeutic procedures to 

increase strength or endurance or 

respiratory muscles, face to face, one on 

one, each 15 minutes (includes 

monitoring)) and G0238 (Therapeutic 

procedures to improve respiratory 

function, other than described by 

G0237, one on one, face to face, per 15 

minutes (includes monitoring)), as well 

as the cardiac rehabilitation codes, CPT 

codes 93797 and 93798 (Physician 

services for outpatient cardiac 

rehabilitation; with continuous ECG 

monitoring (per session)). In the CY 

2010 PFS final rule with comment 

period (74 FR 61886), we finalized our 

proposal with modifications to the code 

descriptor and PE inputs, as 

recommended by some commenters. 

Based on commenters’ 

recommendations from the CY 2010 PFS 

final rule with comment period and 

further information furnished by 

stakeholders, for CY 2011 we proposed 

to increase the work RVUs for HCPCS 

code G0424 to 0.28 for CY 2011 to be 

comparable to the work RVUs for 

cardiac rehabilitation with monitoring 

(CPT code 93798) in view of the 

monitoring required for HCPCS code 

G0424. 

We also proposed to increase the 

clinical labor time for the respiratory 

therapist from 15 minutes to 30 minutes 

and to crosswalk the PE equipment 

inputs for HCPCS code G0424 to those 

for respiratory treatment services 

(HCPCS code G0238), which include a 

1-channel ECG and a pulse oximeter. 

We retained the treadmill currently 

assigned to HCPCS code G0424 and 

adjusted the equipment time to 45 

minutes. While several public 

commenters recommended this 

equipment, these commenters also 

requested a full 60 minutes of 

respiratory therapist time be included in 

the PE for HCPCS code G0424, 

comparable to the 15 minutes of 

respiratory therapist time included in 

the one-on-one codes for 15 minutes of 

respiratory treatment services (HCPCS 

codes G0237 and G0238). However, 

because pulmonary rehabilitation 

services reported under HCPCS code 

G0424 can be furnished either 

individually or in groups, we believe 

that 30 minutes of respiratory therapist 

time would be more appropriate for 

valuing the typical pulmonary 

rehabilitation service. 

Comment: Many commenters 

applauded CMS for its proposal to 

increase the work RVUs for HCPCS code 

G0424 to 0.28. While the commenters 

supported the increase in work RVUs in 

the short term, they believe that an 

accurate, independent assessment of the 

work value associated with physician’s 

office-based pulmonary rehabilitation is 

the only reasonable way to determine 

actual physician work. The commenters 

stated that continuing to rely on work 

values related to cardiac rehabilitation 

is flawed, noting that the clinical 

characteristics of the cardiac 

rehabilitation patient are different from 

the pulmonary rehabilitation patient. 

Due to the expected frequency and 

duration of acute events, the 

commenters explained that the 

pulmonary rehabilitation patient would 

require greater physician involvement. 

Response: Until we gain more data 

and experience on the use of this code 

to report pulmonary rehabilitation 

services furnished to Medicare 

beneficiaries under the new 

comprehensive benefit, we believe using 

the work RVUs for cardiac rehabilitation 

with monitoring (CPT code 93798) as a 

crosswalk is appropriate for this service. 

We further note that the crosswalk 

methodology is commonly used by the 

AMA RUC in recommending work 

RVUs to us for new or revised codes. 

Comment: A number of commenters 

generally supported the increase in the 

clinical labor time for a respiratory 

therapist from 15 minutes to 30 

minutes. While the commenters 

generally agreed with CMS’ reasoning 

for not increasing the respiratory 

therapist time to 60 minutes, the 

commenters noted that in the 

physician’s office setting, pulmonary 

therapy items and services are routinely 

provided one-on-one, face-to-face, 

requiring 60 minutes of individualized 

therapy services by a respiratory 

therapist. Some commenters believe that 

the proposal to increase the respiratory 

therapist time to only 30 minutes would 

place physicians at an economic 

disadvantage in the provision of 

pulmonary rehabilitation items and 

services when furnished in an office 

setting due to the limited amount of 

office space available to treat more than 

one patient in the same time period. 

One commenter suggested that the 

respiratory therapist time be increased 

to 45 minutes or that CMS consider the 

development of a HCPCS code for the 

provision of pulmonary rehabilitation 

items and services to patients on a oneon-one, face-to-face per 15 minute basis 

to ensure that physicians can provide 

this service in the office setting. Another 

commenter believed that HCPCS code 

G0424 is undervalued at 0.46 PE RVUs 

in comparison to the PE RVUs for other 

PFS services that are conceptually 

similar but do not include a treadmill, 

arm ergometer, monitoring devices, or 

emergency carts. 

Response: Payment for services under 

the PFS is resource-based, and 

individual services are valued based 

upon the resources needed to provide 

the typical service. As we noted in the 

CY 2011 PFS proposed rule (75 FR 

40103), pulmonary rehabilitation 

services reported under HCPCS code 

G0424 can be furnished either 

individually or in groups and we 

continue to believe that 30 minutes of 

respiratory therapist time is appropriate 

for valuing the typical pulmonary 

rehabilitation service. We believe that 

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pulmonary rehabilitation in the 

physician’s office is most commonly 

furnished to a group of patients, rather 

than one-on-one for 60 minutes of 

respiratory therapist time. Regarding the 

commenter who was concerned that the 

PE for HCPCS code G0424 was 

undervalued in comparison to similar 

services that do not use the equipment 

necessary for HCPCS code G0424, we 

note that we have utilized the standard 

PFS PE methodology to develop the PE 

RVUs for HCPCS code G0424 based on 

the direct PE inputs we consider to be 

appropriate. 

Comment: One commenter suggested 

that the valuing of HCPCS code G0424 

is flawed and does not fully account for 

the inclusion of all professionals who 

are involved in the pulmonary 

rehabilitation program, specifically 

physical therapists. In addition, the 

commenter referenced the CY 2010 PFS 

final rule with comment (74 FR 61884) 

where CMS stated and recognized that 

physical therapists provide pulmonary 

rehabilitation services. The commenter 

believes that by only basing the value on 

services performed by respiratory 

therapists, CMS has miscalculated the 

payment for the comprehensive, 

multidisciplinary pulmonary 

rehabilitation program and 

recommended that CMS create a 

separate HCPCS code with a higher 

value that could be used to delineate 

those patients who require 

individualized physical therapy within 

the pulmonary rehabilitation program. 

Response: Like all services paid under 

the PFS, pulmonary rehabilitation is 

valued based on the staff type who 

would typically perform this service, a 

respiratory therapist. Because the items 

and services furnished by a pulmonary 

rehabilitation program are 

individualized, we expect that 

evaluations and individualized 

treatments would be conducted by one 

or more members of the 

multidisciplinary team of the 

pulmonary rehabilitation program with 

the appropriate expertise. Therefore, 

individualized treatment by a physical 

therapist would be furnished when 

required by the patient as part of the 

pulmonary rehabilitation plan of care. 

However, we do not believe 

individualized treatment would be 

typical and, therefore, we do not believe 

the creation of a separate HCPCS code 

with a higher value is necessary to 

recognize those cases that require 

individualized physical therapy as part 

of a pulmonary rehabilitation program. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

increase the work RVUs for HCPCS code 

G0424 to 0.28 for CY 2011 to be 

comparable to the work RVUs for 

cardiac rehabilitation with monitoring 

(CPT code 93798). In addition, we are 

finalizing our CY 2011 proposal to 

increase the clinical labor time for the 

respiratory therapist from 15 minutes to 

30 minutes and to crosswalk the PE 

equipment inputs for HCPCS code 

G0424 to those for respiratory treatment 

services (HCPCS code G0238), which 

include a 1-channel ECG and a pulse 

oximeter. 

F. Application of Tissue Cultured Skin 

Substitutes to Lower Extremities 

(HCPCS Codes G0440 and G0441) 

There are currently two biological 

products, Apligraf and Dermagraft, 

which are FDA-approved for the 

treatment of diabetic foot ulcers. While 

commonly used by podiatrists for this 

purpose, these products are also used by 

other specialists in the treatment of 

other clinical conditions, such as burns. 

Many Medicare contractors have 

established local coverage 

determinations specifying the 

circumstances under which these 

services are covered. In the case of 

diabetic foot ulcers, clinical studies of 

Apligraf application were based on up 

to 5 treatments over a 12-week period. 

In contrast, Dermagraft was applied 

weekly, up to 8 treatments over a 12- 

week period. 

The skin substitute CPT codes were 

reviewed and new codes were last 

created by the CPT Editorial Panel for 

CY 2006. There are currently 2 skin 

repair CPT codes that describe Apligraf 

application, one primary code, CPT 

code 15340 (Tissue cultured allogeneic 

skin substitute; first 25 sq cm or less) 

and one add-on code, 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 4 

codes that describe Dermagraft 

application, two initial codes based on 

body area, CPT codes 15360 (Tissue 

cultured allogeneic dermal substitute, 

trunk, arms, legs; first 100 sq cm or less, 

or 1% of body area of infants and 

children) and 15365 (Tissue cultured 

allogeneic dermal substitute, face, scalp, 

eyelids, mouth, neck, ears, orbits, 

genitalia, hands, feet, and/or multiple 

digits; first 100 sq cm or less, or 1% of 

body area of infants and children) and 

two add-on codes, CPT codes 15361 

(Tissue cultured allogeneic dermal 

substitute, trunk, arms, legs; each 

additional 100 sq cm, or each additional 

1% of body area of infants and children, 

or part thereof (List separately in 

addition to code for primary procedure)) 

and 15366 (Tissue cultured allogeneic 

dermal substitute, face, scalp, eyelids, 

mouth, neck, ears, orbits, genitalia, 

hands, feet, and/or multiple digits; each 

additional 100 sq cm, or each additional 

1% of body area of infants and children, 

or part thereof (List separately in 

addition to code for primary 

procedure)). 

In the CY 2011 PFS proposed rule (75 

FR 40103), we noted that several 

stakeholders had expressed concern 

about the appropriateness and equity of 

the coding and payment for these 

services, given their similar uses and the 

office resources required when the 

products are applied repeatedly over a 

number of weeks for treatment of lower 

extremity ulcers. They were concerned 

that current coding, with the associated 

payment policies and relative values, 

does not provide for appropriate 

payment for the services based on how 

they are furnished. In addition, some 

stakeholders believe that the current 

coding and payment provides a 

financial incentive for the selection of 

one tissue cultured product over 

another, rather than facilitating clinical 

decision-making based solely on the 

most clinically appropriate product for 

the patient’s case. For example, the 

Dermagraft and Apligraf application 

codes have 90-day and 10-day global 

periods, respectively, and their current 

values include several follow-up office 

visits. When patients are treated 

periodically with repeated applications 

of the products over several weeks, the 

patients may be seen in follow-up by the 

physician. However, those encounters 

would not be evaluation and 

management visits but, instead, would 

be procedural encounters that would 

typically be valued differently under the 

PFS than the follow-up office visits 

currently included in the values for the 

Dermagraft and Apligraf application 

codes. Furthermore, while different 

stakeholders indicated that debridement 

and site preparation are variably 

performed when these products are 

applied, the CPT codes for Dermagraft 

application allow separate reporting of 

these preparation services when they 

are performed, while the Apligraf 

application codes bundle these services. 

Since CY 2006, the PFS has accepted 

the AMA RUC work and PE 

recommendations for the Dermagraft 

and Apligraf application codes and has 

paid accordingly. 

With respect to Medicare payment 

policy, some Medicare contractors allow 

the use of modifier ¥58 (Staged or 

related procedure or service by the same 

physician during the postoperative 

period) to be reported with the skin 

substitute application codes and 

provide full payment for the service 

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each time it is performed, even if the 

subsequent application(s) is within the 

global period of the service. Other 

contractors do not allow the use of 

modifier ¥58 and, therefore, provide a 

single payment for a series of 

applications over 90 days or 10 days, as 

applicable to the particular code 

reported for the product’s initial 

application. 

Because of the current inconsistencies 

in valuing similar skin substitute 

application services and the common 

clinical scenarios for their use for 

Medicare beneficiaries, in the CY 2011 

PFS proposed rule (75 FR 40103), we 

stated that we believe it would be 

appropriate to temporarily create Level 

II HCPCS G-codes to report application 

of tissue cultured skin substitutes 

applied to the lower extremities in order 

to provide appropriate and consistent 

payment for the services as they are 

commonly furnished. Therefore, we 

proposed to create two new HCPCS Gcodes for CY 2011, GXXX1 (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 

GXXX2 (Application of tissue cultured 

allogeneic skin or dermal substitute; for 

use on lower limb, includes the site 

preparation and debridement if 

performed; each additional 25 sq cm), 

that would be recognized for payment 

under the PFS for the application of 

Apligraf or Dermagraft to the lower 

limb. These codes would not allow 

separate reporting of CPT codes for site 

preparation or debridement. We 

emphasized that we would expect that 

the use of these HCPCS G-codes for 

payment under Medicare would be 

temporary, while stakeholders work 

through the usual channels to establish 

appropriate coding for these services 

that reflects the current common 

clinical scenarios in which the skin 

substitutes are applied. Furthermore, we 

stated that we would expect to receive 

recommendations from the AMA RUC 

for appropriate work values and direct 

practice expense inputs for the 

applicable codes, according to the usual 

process for new or revised codes. 

Under the PFS, as a temporary 

measure, the HCPCS G-codes would be 

assigned a 0-day global period so 

payment would be made each a time a 

covered service was furnished. We 

proposed to base payment on the 

physician work relative values and the 

direct PE inputs for the existing CPT 

codes for Apligraf application, with 

adjustments for the global period 

differences because the HCPCS G-codes 

and the Apligraf application CPT codes. 

These CPT codes resemble the new 

HCPCS G-codes in terms of wound size 

description and the inclusion of site 

preparation and debridement in their 

current values so we believe they 

appropriately represent the physician 

work involved in the proposed HPCPCS 

G-codes. However, we proposed to 

adjust the work RVUs of the Apligraf 

application codes to derive the HCPCS 

G-code proposed CY 2011 work values 

by extracting the values for any office 

visits and discharge day management 

services because the HCPCS G-codes 

have a 0-day global period. In addition, 

we proposed to adjust the direct PE 

inputs of the Apligraf application codes 

to develop the proposed CY 2011 direct 

PE inputs of the HPCPS G-codes that 

have a 0-day global period. 

Our crosswalks and adjustments 

resulted in proposed CY 2011 work 

RVUs of 2.22 for HPCPCS code GXXX1 

and 0.50 for HCPCPS GXXX2. The 

proposed direct PE inputs for HCPCS 

codes GXXX1 and GXXX2 are included 

in the direct PE database for the CY 

2011 proposed rule that is posted on the 

CMS Web site at: http://www.cms.gov/ 

PhysicianFeeSched/PFSFRN/list.asp. 

We noted that many Medicare 

contractors currently have local 

coverage policies that specify the 

circumstances under which Medicare 

covers the application of skin 

substitutes. The local coverage policies 

may include diagnostic or prior 

treatment requirements, as well as 

frequency limitations on the number 

and periodicity of treatments. We stated 

our expectation that these policies 

would be updated in the context of the 

temporary new HCPCS G-codes that we 

proposed for use in CY 2011 to report 

the application of tissue cultured 

allogeneic skin or dermal substitutes. 

We proposed to establish the HCPCS Gcodes for temporary use in CY 2011 in 

order to improve the consistency and 

resource-based nature of PFS payments 

for skin substitute application services 

that require similar resources. However, 

we noted our continued interest in 

ensuring that skin substitutes are 

properly utilized for Medicare 

beneficiaries who will benefit from that 

treatment. We indicated that we would 

continue to monitor the utilization of 

these services and plan to identify any 

concerning trends in utilization that 

contractors may want to examine further 

through medical review or other 

approaches. 

Comment: While acknowledging 

concerns with the existing CPT codes 

for the application of skin substitutes, 

several commenters opposed the 

proposed HCPCS G-codes because the 

commenters believe that CMS should 

wait for new codes to be created by the 

CPT Editorial Panel and the associated 

recommendations to be developed by 

the AMA RUC for physician work and 

direct PE inputs for any new codes. The 

commenters argued that CMS’ proposal 

to create new temporary codes would 

circumvent or otherwise influence the 

well-established processes already 

underway to address issues identified 

by the stakeholders. Several 

commenters pointed out that CMS’ 

proposal would not treat the application 

of skin substitutes that are not tissue 

cultured similarly to the procedures for 

the application of Apligraf and 

Dermagraft. Because these commenters 

argued that inconsistencies in coding 

and payment for the other products 

would continue, several commenters 

recommended that CMS await a more 

comprehensive solution from the CPT 

Editorial Panel. 

On the other hand, a number of 

commenters supported the proposal to 

establish the two new HCPCS G-codes, 

and a few of these commenters 

recommended no changes to the 

proposed HCPCS code descriptors. 

However, one commenter who generally 

supported the proposal recommended 

that CMS expand the proposed HCPCS 

code descriptors to incorporate the 

application of a broader range of skin 

substitutes that were not tissue cultured, 

specifically to include the application of 

biologically active skin substitutes. 

Another commenter requested that 

CMS clarify the meaning of ‘‘dermal 

substitute.’’ This commenter also 

requested that CMS delete the words 

‘‘for use on lower limb’’ and allow the 

new codes to be used for application of 

tissue cultured skin or dermal 

substitutes on locations other than the 

lower limb. Consistent with this 

perspective, the commenter further 

recommended that CMS not recognize 

the existing CPT codes for application of 

Apligraf and Dermagraft on other areas 

of the body. The commenter argued that, 

as proposed, the HCPCS G-codes would 

lead to confusion and the potential for 

fraudulent billing because both a 

HCPCS G-code and a CPT code could 

describe the application of the same 

product to the lower extremities. The 

commenter believes that CMS should 

only recognize the proposed G-codes 

under the PFS for the application of 

tissue cultured skin or dermal 

substitutes to any body site, to allow for 

consistency in reporting and payment of 

these services. 

Several commenters requested that 

CMS provide guidance on the proper 

use of the current CPT codes and new 

HCPCS G-codes for reporting the 

application of skin substitutes. Other 

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commenters were concerned that the 

temporary HCPCS G-codes could create 

confusion, disrupt physician’s office 

billing policies, and otherwise burden 

coding staff and advised CMS to not 

finalize the proposal. 

Response: We appreciate the 

perspectives of stakeholders and we 

share the commenters’ desire for 

appropriate and consistent payment that 

is resource-based for the application of 

skin substitutes as these services are 

commonly furnished for appropriate 

clinical indications. We appreciate and 

value the work of the CPT Editorial 

Panel in evaluating the complexities 

and nuances in this area and look 

forward to reviewing any new codes 

created for CY 2012 or later years and 

the AMA RUC recommendations for the 

physician work and direct PE inputs for 

those new codes. We note that there are 

no new codes for CY 2011 that describe 

the application of skin substitutes and, 

therefore, new codes would not be 

available before CY 2012 at the earliest. 

In proposing to create two temporary 

HCPCS G-codes for CY 2011, we sought 

a fair and balanced temporary 

alternative to provide appropriate and 

equitable payment for the application of 

tissue cultured skin or dermal 

substitutes to the lower extremities. 

While we understand from stakeholders 

that the work of the CPT Editorial Panel 

is ongoing in this area, our proposal was 

specifically to establish temporary 

HCPCS G-codes that would allow for 

more appropriate reporting and 

payment under certain scenarios in the 

short term while a more comprehensive 

solution is being developed and refined 

by expert advisors. Because our 

proposal was so limited in scope and 

temporary, clearly it was not our 

intention to circumvent or unduly 

influence the CPT Editorial Panel or the 

AMA RUC as these groups proceed in 

their comprehensive work to establish 

new codes and values for the 

application of skin substitutes. We 

would also not expect that the 

characteristics of the temporary HCPCS 

G-codes, in terms of terminology in the 

code descriptors, global periods, work 

values, or direct PE inputs, should 

shape or otherwise affect the ongoing 

work of stakeholders who are 

developing a complete approach to 

coding for the application of skin 

substitutes. We acknowledge that new 

CPT codes and their AMA RUCrecommended values and direct PE 

inputs arising from these processes may 

appropriately differ in one or multiple 

characteristics from the temporary 

HCPCS G-codes. 

With regard to the commenters who 

were concerned about the limited scope 

of our proposal and suggested that we 

not proceed or that we broaden the 

scope of the proposed code descriptors 

to address inequities and 

inconsistencies that the commenters 

believe would persist under our 

proposal, we believe that the limited 

proposal continues to be the most 

appropriate temporary approach for CY 

2011. First, it was not our intention to 

comprehensively address the issue of 

coding revisions for the application of 

skin substitutes because we are aware of 

the ongoing work of the CPT Editorial 

Panel in this area and would not want 

to undermine its deliberative process. 

Moreover, based on the public 

comments we received, we have reason 

to believe that a revised coding structure 

for the application of skin substitutes 

will be available soon. Second, the 

HCPCS G-codes that we proposed had a 

0-day global period based on the FDAapproved indications and regimens for 

the application of the tissue cultured 

products to which the codes would 

apply, and we are not certain to what 

extent a 0-day global period would be 

appropriate for the application of other 

skin substitutes. Third, while several 

commenters provided suggestions 

regarding alternative language that 

could be used in the HCPCS G-code 

descriptors, it is unclear which skin 

substitutes products would be 

incorporated under the revised terms. 

Some of the suggested alternatives 

would use phrases such as ‘‘biologically 

active’’ that, as far as we know, are not 

fully defined in the medical community 

and are not currently used in the CPT 

code descriptors that describe the 

application of skin substitutes. Because 

of our uncertainty in this regard, we 

would be hesitant to make such 

significant revisions to the HCPCS Gcode descriptors without the 

opportunity for public notice and 

comment, which would allow 

stakeholders the opportunity to provide 

input about revised code descriptors 

and the appropriateness of the values 

for the HCPCS G-codes. In contrast, our 

proposal relied upon the use of terms in 

the HCPCS G-code descriptors that are 

already included in the descriptors for 

established CPT codes and, therefore, 

we do not believe we would be setting 

a precedent that would affect the 

current work of the CPT Editorial Panel 

on this issue. Finally, we do not see a 

need to further clarify terms, such as 

‘‘dermal substitute,’’ in the HCPCS Gcode descriptors because these are 

currently used in the CPT code 

descriptors and the same definitions 

would apply to the G-codes. 

Furthermore, we believe it would 

continue to be appropriate to recognize 

the existing CPT codes for the 

application of tissue cultured skin or 

dermal substitutes to areas of the body 

other than the lower extremities. We 

established the 0-day global period, the 

physician work values, and the direct 

PE inputs for the proposed HCPCS Gcodes based on the specific clinical 

scenarios where Apligraf or Dermagraft 

would be applied to treat lower 

extremity ulcers. We do not necessarily 

believe that the same global periods and 

values would be appropriate for the 

application of these products to other 

body areas under different clinical 

scenarios. The usual coding guidance 

that providers should report the most 

specific HCPCS code that describes the 

service furnished would apply in the 

case of the application of Apligraf or 

Dermagraft. If one of these products 

were applied to the lower extremities, 

we would expect the HCPCS G-codes to 

be reported, rather than the CPT codes, 

as the HCPCS G-codes are more specific 

to application in that body area. 

Finally, because it is our common 

practice to create one or more new 

HCPCS G-codes for payment under the 

PFS each year, we believe that 

physicians’ offices are experienced in 

integrating new codes into the reporting 

of services furnished and paid under the 

PFS. Not only are local coverage 

determinations commonly applicable to 

the application of skin substitutes, we 

also understand that there are a subset 

of physicians who regularly apply tissue 

cultured skin or dermal substitutes to 

lower extremities to treat ulcers. In this 

context, we believe that our national 

educational efforts, in addition to 

education by local contractors, will 

quickly disseminate information to the 

relevant practitioners about these new 

HCPCS G-codes and their appropriate 

use in CY 2011. 

After consideration of the public 

comments we received, we are 

finalizing our proposal, with editorial 

modification, to create two new HCPCS 

G-codes for reporting the application of 

tissue cultured skin substitutes and 

dermal substitutes to the lower 

extremities in CY 2011. For internal 

consistency, we are changing the 

descriptors of HCPCS codes GXXX1 and 

GXXX2 from the proposed language to 

both refer to ‘‘skin substitute or dermal 

substitute.’’ HCPCS code GXXX2 as 

proposed read ‘‘Application of tissue 

cultured allogeneic skin or dermal 

substitute; for use on lower limb, 

includes the site preparation and 

debridement if performed; each 

additional 25 sq cm.’’ The final codes 

are HCPCS code G0440 (Application of 

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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 

HCPCS code 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 will be recognized for payment 

under the PFS in CY 2011. 

Comment: A number of commenters 

supported the assignment of a 0-day 

global period to the application of tissue 

cultured skin or dermal substitutes. 

Many expressed the view that assigning 

a 0-day global period to the codes would 

allow the products to be prescribed and 

administered based on their clinical 

value, without concern for payment 

differences between products. The 

commenters who did not support the 0- 

day global period were those who 

believe that the proposal would further 

payment inequities between products 

used similarly. For example, one 

commenter reasoned that, insofar as a 

patient is likely to require multiple 

administrations of a skin substitute 

product during a 90-day period, 

providers would have a significant 

incentive to use the products whose 

application would be reported under the 

proposed codes rather than a product 

whose application procedure continues 

to have a 90-day global period. 

Another commenter addressed the 

bundling of site preparation and 

debridement into the proposed HCPCS 

codes GXXX1 and GXXX2. The 

commenter argued that the proposed 

values for the new codes HCPCS Gcodes would not be sufficient to account 

for this work. The commenter 

recommended that the proposed values 

should be adjusted upward or separate 

payment should be allowed for site 

preparation and/or debridement. 

In reviewing CMS’ proposed 

methodology for setting the physician 

work values for the HCPCS G-codes, one 

commenter contended that CMS should 

finalize a total of 2.86 works RVUs for 

GXXX1 instead of the proposed 2.22 

work RVUs. The commenter claimed 

that the work RVUs for GXXX1 should 

be crosswalked from CPT code 15340 

less only the physician work for the two 

post-procedure visits in CPT code 15340 

which are not included in HCPCS code 

GXXX1. 

Another commenter recommended 

that CMS review the proposed PE inputs 

for the new HCPCS G-codes. 

Specifically, the commenter explained 

that the only difference in clinical labor 

time between CPT code 15340 and 

HCPCS code GXXX1 should be an 

adjustment to account for the difference 

in the global period (10 days for CPT 

code 15340 and 0 days for HCPCS code 

GXXX1). The commenter also stated 

that HCPCS code GXXX1 should 

include all the pre-service clinical staff 

time in CPT code 15340, yet did not for 

the proposed rule. The commenter was 

unclear on whether the post-service 

clinical labor time was properly 

adjusted to account for the change in 

global period from CPT code 15340 to 

HCPCS code GXXX1. 

Response: We agree with the 

commenters that a 0-day global period 

is the most appropriate for the 

application of tissue cultured skin 

substitutes or dermal substitutes to the 

lower limb for purposes of the 

temporary HCPCS G-codes, pending a 

comprehensive change in coding 

established by the CPT Editorial Panel. 

As discussed in the previous response, 

we sought a fair and balanced temporary 

solution to provide appropriate and 

consistent payment for the application 

of tissue cultured skin substitutes or 

dermal substitutes to the lower limb. 

The commenters who did not support 

the 0-day global period were those who 

were more broadly against the creation 

of the new HCPCS G-codes codes 

because of potential payment 

imbalances between products that 

would be included in the new codes 

and those that would not be. No 

commenters asserted that the 0-day 

global period would be inappropriate 

for the codes to which we proposed to 

apply that period. 

The proposed physician work values 

for HCPSC G-codes G0440 and G0441 

(proposed as HCPCS codes GXXX1 and 

GXXX2, respectively) were crosswalked, 

with adjustment for the different global 

periods, from CPT codes 15340 and 

15341. CPT codes 15340 and 15341 

currently include site preparation and 

debridement and, as such, the 

additional reporting of a separate CPT 

code for these activities, if performed on 

the same site as the skin substitute 

application procedure, is not permitted. 

We believe that the values for both the 

current CPT codes and the HCPCS Gcodes are clinically appropriate for the 

services they describe, with payment for 

site preparation and debridement 

bundled if furnished. 

In response to a commenter’s concern, 

we reviewed the proposed valuation of 

the physician work for HCPCS codes 

G0440 and G0441 to ensure consistency 

with our proposed methodology, and we 

continue to believe that the appropriate 

work value for HCPCS code G0440 is 

2.22 RVUs as we proposed. HCPCS code 

G0440 was crosswalked to CPT code 

15340, with adjustments to account for 

the 0-day global period of the HCPCS Gcode. CPT code 15340, with a 10-day 

global period, is currently valued to 

include two CPT code 99212 (level 2 

established patient office or other 

outpatient visit) post-operative visits 

(0.48 RVUs each, 0.96 RVUs total) and 

half of one CPT code 99238 (Hospital 

discharge day management; 30 minutes 

or less) visit (1.28 RVUs each, 0.64 

RVUs total). CPT code 15340 has a 

current total physician work value of 

3.82 RVUs. To adjust for the 0-day 

global period for the minor procedure 

described by HCPCS code G0440, we 

believe it would be appropriate to 

deduct the value of both the two postoperative office visits and the discharge 

day visit. In the case of post-operative 

office visits, these may be separately 

reported and paid if medically 

reasonable and necessary. In addition, 

we also do not believe that a half 

discharge day visit should be a building 

block based on the clinical 

characteristics of the procedure 

described by HCPCS code G0440. When 

we make these adjustments to the work 

value of 3.82 RVUs for CPT code 15340, 

2.22 work RVUs, the value we proposed 

for HCPCS code G0440, remain. 

We also reviewed the proposed PE 

inputs included in the direct PE 

database for the CY 2011 PFS proposed 

rule. Like the physician work values, to 

determine the PE inputs we crosswalked 

HCPCS code G0440 from CPT code 

15340 and HCPCS code G0441 from 

CPT code 15341. As one commenter 

observed, the difference in the values 

should reflect the shift from a 10-day 

global period to a 0-day global period. 

However, for PE inputs, the change in 

global period typically affects both the 

pre- and post-service PE inputs. To 

establish the post-operative clinical 

labor time for HCPCS code G0440, we 

subtracted out the time associated with 

the two CPT code 99212 visits that were 

removed (32 minutes total) and the half 

discharge day visit (19 minutes total) 

that was eliminated, bringing the postoperative clinical labor time down from 

54 minutes to three minutes. For the 

pre-service activities, while 0-day global 

period procedures generally have 0 

minutes of pre-service clinical labor 

time allocated to them, we believe that 

5 minutes in the nonfacility setting and 

10 minutes in the facility setting reflect 

more appropriate pre-service clinical 

labor times in the instance of HCPCS 

code G0440. These revised pre- and 

post-service clinical labor times were 

reflected in the proposed CY 2011 direct 

PE database for HCPCS code G0440. 

While we valued the physician work 

and clinical labor time PE inputs 

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according to the crosswalk methodology 

as described in the CY 2011 PFS 

proposed rule (75 FR 40103 through 

40104), upon review of the new CY 

2011 HCPCS G-codes for this final rule 

with comment period, we noticed that 

we had not applied the proposed 

methodology to the PE inputs for 

equipment and supplies. Therefore, 

consistent with our proposal, we have 

adjusted the supply and equipment PE 

inputs for HCPCS codes G0440 and 

G0441 in the final CY 2011 PE database 

to reflect the shift to a 0-day global 

period from a 10-day global period for 

these HCPCS codes. As the equipment 

and supply PE inputs for the 10-day 

global period CPT codes reflect those 

necessary for multiple visits to the 

provider, the equipment and supply 

inputs for the new HCPCS G-codes 

codes should reflect more appropriate 

values for codes with a 0-day global 

period. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to value HCPCS 

codes G0440 and G0441 as 0-day global 

procedures into which site preparation 

and debridement are bundled. As we 

proposed, under our final policy we 

have crosswalked the physician work 

RVUs and direct PE inputs from CPT 

codes 15340 and 15341 to HCPCS codes 

G0440 and G0441, respectively, with 

adjustments. We have adjusted the work 

RVUs and the direct PE inputs (clinical 

labor, equipment, and supplies) to 

reflect the shift from a 10-day global 

period to a 0-day global period for the 

new HCPCS G-codes. 

Comment: Several commenters were 

concerned about the use of the -58 

modifier for 10-day and 90-day global 

surgical procedures for the application 

of skin substitutes when repeated 

application of a product within the 

global period is the typical case. The 

commenters were largely supportive of 

eliminating the use of the -58 modifier 

for the two new HCPCS codes which, 

the commenters remarked, has been the 

source of some confusion and has been 

interpreted inconsistently by Medicare 

contractors. The commenters explained 

that the change to a 0-day global period 

would result in no need for the -58 

modifier to be reported with the HCPCS 

G-codes. Several commenters 

recommended that CMS provide 

guidance on use of the -58 modifier with 

the existing CPT codes for the 

application of skin substitutes, most of 

which have 90-day global period and all 

of which would continue to be 

recognized for payment under the PFS. 

Response: Assignment of a 0-day 

global period for the two HCPCS Gcodes eliminates the need for use of the 

-58 modifier with these two new codes. 

We recognize that the -58 modifier may 

continue to be used in conjunction with 

the other CPT codes with 10-day or 90- 

day global periods for the application of 

skin substitutes. Specific determinations 

of the appropriate use of the -58 

modifier will continue to be the 

responsibility of individual Medicare 

contractors. 

In summary, after consideration of the 

public comments we received, we are 

finalizing our CY 2011 proposal, with 

modification to adjust the supply and 

equipment direct PE inputs, as well as 

editorial modification to the code 

descriptors for consistency, to create 

two new HCPCS G-codes for CY 2011, 

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 will be recognized for payment 

under the PFS for the application of 

products described by the codes to the 

lower limb. These codes do not allow 

separate reporting of CPT codes for site 

preparation or debridement. Providers 

reporting the application of tissue 

cultured allogeneic skin substitute or 

dermal substitutes to the lower limb for 

payment under the PFS in CY 2011 

should report HCPCS code G0440, along 

with HCPCS code G0441 if applicable 

based on wound size, and not CPT code 

15340, 15341, 15360, 16361, 15365, or 

15366. 

Under the PFS, as a temporary 

measure, the HCPCS G-codes are 

assigned a 0-day global period so 

payment is made each a time a covered 

service is furnished. As proposed, we 

are basing payment on the physician 

work relative values and the direct PE 

inputs for the existing CPT codes 15340 

and 15341 for Apligraf application, with 

adjustments for the global period 

differences between the HCPCS G-codes 

and the Apligraf application CPT codes. 

However, as we proposed, we have 

adjusted the work RVUs of the Apligraf 

application codes to derive the final CY 

2011 HCPCS G-code work values by 

extracting the values for any office visits 

and discharge day management services 

because the HCPCS G-codes have a 0- 

day global period. In addition, with 

modifications of our proposed PE 

equipment and supply inputs to be fully 

consistent with our crosswalk proposal, 

we have adjusted the direct PE inputs of 

the Apligraf application codes to 

develop the final CY 2011 direct PE 

inputs for the HPCPS G-codes that have 

a 0-day global period. 

Our crosswalks and adjustments 

result in CY 2011 final work RVUs of 

2.22 for HCPCS code G0440 and 0.50 for 

HCPCS G0441. The final direct PE 

inputs for HCPCS codes G0440 and 

G0442 are included in the direct PE 

database for the CY 2011 PFS final rule 

with comment period rule. 

G. Canalith Repositioning (CPT code 

95992) 

For CY 2009, CPT created a new code 

for canalith repositioning, specifically 

CPT code 95992 (Canalith repositioning 

procedure(s) (eg, Epley maneuver, 

Semont maneuver), per day). This 

service may be furnished by both 

physicians and therapists. Although we 

accepted the AMA RUC-recommended 

work RVUs and PE inputs, we initially 

bundled this procedure on an interim 

basis in the CY 2009 PFS final rule with 

comment period (73 FR 69896), 

indicating that we believed it would be 

paid through the E/M service that it 

would accompany. Subsequently, in 

view of concerns from therapists who 

cannot furnish E/M services, we 

clarified that therapists could report one 

of the generally defined therapy CPT 

codes when canalith repositioning was 

furnished. In the CY 2010 PFS final rule 

with comment period (74 FR 61766), we 

changed the code’s status under the PFS 

to ‘‘not recognized for payment under 

Medicare,’’ consistent with our 

expectation that another payable code 

would be reported when the service was 

furnished. 

Based on further information from 

stakeholders regarding the distinct and 

separate nature of this procedure from 

an E/M service and their request that we 

recognize this CPT code for payment, 

similar to our separate payment for most 

other procedures commonly furnished 

in association with an E/M service, we 

proposed to recognize CPT code 95992 

for payment under the CY 2011 PFS, 

consistent with our typical treatment of 

most other codes for minor procedures. 

In doing so, we proposed to change the 

code’s status to ‘‘A’’ and utilize the CY 

2009 RUC recommendations for work 

RVUs (0.75) and PE inputs for 

establishing its payment in CY 2011. 

(That is, status ‘‘A’’ means Active code. 

These codes are separately payable 

under the PFS if covered.) Because 

canalith repositioning (CPT code 95992) 

can be furnished by physicians or 

therapists as a therapy service under a 

therapy plan of care or by physicians as 

physicians’ services outside of a therapy 

plan of care, we would add CPT code 

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95992 to the ‘‘sometimes therapy’’ list on 

the therapy code abstract file. 

Comment: Many commenters 

supported CMS’ proposal to 

acknowledge the distinct and separate 

nature of CPT code 95992 from an E/M 

service by recognizing CPT code 95992 

for separate payment and agreed with 

the proposed use of the AMA RUCrecommended values for work RVUs 

(0.75) and PE inputs for establishing 

payment in CY 2011. 

Response: We appreciate the 

commenters’ support for our proposal. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

recognize CPT code 95992 for payment 

under the PFS. As a result, the code’s 

status has been changed to ‘‘A’’ in 

Addendum B to this final rule with 

comment period and the CY 2009 AMA 

RUC recommendations for work RVUs 

(0.75) and PE inputs will be used for 

establishing its payment in CY 2011. 

(That is, status ‘‘A’’ means Active code. 

These codes are separately payable 

under the PFS if covered.) CPT code 

95992 has also been added to the 

‘‘sometimes therapy’’ list on the therapy 

code abstract file. 

H. Intranasal/Oral Immunization Codes 

(CPT codes 90467, 90468, 90473, and 

90474) 

To ensure that the PE RVUs are 

consistent between the intranasal/oral 

and injectable immunization 

administration CPT codes that describe 

services that utilize similar PE 

resources, we proposed to crosswalk the 

PE values for CPT code 90471 

(Immunization administration (includes 

percutaneous, intradermal, 

subcutaneous, or intramuscular 

injections); one vaccine (single or 

combination vaccine/toxoid)) to CPT 

codes 90467 (Immunization 

administration younger than age 8 years 

(includes intranasal or oral routes of 

administration) when the physician 

counsels the patient/family; first 

administration (single or combination 

vaccine/toxoid), per day) and 90473 

(Immunization administration by 

intranasal or oral route; one vaccine 

(single or combination vaccine/toxoid)). 

Similarly, we also proposed to 

crosswalk the PE values for CPT code 

90472 (Immunization administration 

(includes percutaneous, intradermal, 

subcutaneous, or intramuscular 

injections); each additional vaccine 

(single or combination vaccine/toxoid) 

(List separately in addition to code for 

primary procedure)) to CPT codes 90468 

(Immunization administration younger 

than age 8 years (includes intranasal or 

oral routes of administration) when the 

physician counsels the patient/family; 

each additional administration (single 

or combination vaccine/toxoid), per day 

(List separately in addition to code for 

primary procedure)) and 90474 

(Immunization administration by 

intranasal or oral route; each additional 

vaccine (single or combination vaccine/ 

toxoid) (List separately in addition to 

code for primary procedure)). 

Comment: Many commenters 

expressed support for the proposal. One 

commenter questioned why the PE 

values are currently different and 

several other commenters urged CMS to 

utilize the AMA RUC recommendations 

and the resource-based methodology to 

develop PE RVUs for these services in 

CY 2011, rather than crosswalk the PE 

RVUs. 

Response: We appreciate the support 

from the commenters for our proposal. 

We would note that, even with the same 

direct PE inputs, somewhat different PE 

RVUs for the various CPT codes may 

result from our PE methodology that 

relies upon the historical specialty mix, 

as reflected in the most recent PFS 

utilization data, of providers who 

furnished the services to allocate the 

indirect PE. Therefore, because we 

believe it is especially important to have 

consistent PE values for payment of 

these similar services under the PFS, we 

are unable to utilize the AMA RUC 

direct PE input recommendations and 

the resource-based methodology to 

develop PE RVUs for these services. 

While in general we value services 

under the PFS with reference to the 

direct PE inputs recommended by the 

AMA RUC and our standard resourcebased approach to establishing PE 

RVUs, we note that we also commonly 

use crosswalks to other similar codes to 

establish the values for services in 

certain circumstances. In this instance, 

we believe a crosswalk is particularly 

appropriate in order to maintain 

appropriate relativity between similar 

services and avoid the potential for nonclinically-based bias in favor of one 

vaccine administration technique over 

another. 

Comment: A few commenters 

questioned why the CY 2011 proposed 

rule referenced ‘‘physician’’ counseling 

when identifying CPT codes 90467 and 

90468 and requested clarification that 

nurse practitioners (NPs) and physician 

assistants (PAs) also be included within 

the scope of this proposal. 

Response: We would like to clarify 

that the reference to ‘‘physician’’ 

counseling noted by the commenters is 

part of the official CPT code descriptors 

for CPT codes 90467 and 90468. 

Consistent with our usual interpretation 

of CPT codes that include the term 

physician in the code descriptor, for 

Medicare payment purposes this 

specificity does not exclude NPs or PAs 

from providing counseling to the 

patient/family that is within the NP’s or 

PA’s scope of practice. 

Comment: Several commenters 

recommended modifying the proposal 

by crosswalking the PE RVUs for CPT 

code 90466 (Immunization 

administration younger than age 8 years 

of age (includes percutaneous, 

intradermal, subcutaneous, or 

intramuscular injections) when the 

physician counsels the patient/family; 

each addition injection (single or 

combination vaccine/toxoid) per day 

(List separately in addition to code for 

primary procedure)) to CPT code 90468 

to achieve parity and reflect the 

additional clinical time and other 

practice expenses expended to provide 

immunizations to young children. 

Response: For CY 2011, the CPT 

Editorial Panel revised the reporting of 

immunization administration services 

for the pediatric population. As a result, 

CPT codes 90466 and 90468 have been 

deleted and replaced with CPT code 

90461 (Immunization administration 

through 18 years of age via any route of 

administration, with counseling by 

physician or other qualified health 

professional; each additional vaccine/ 

toxoid component (List separately in 

addition to code for primary 

procedure)). In addition, CPT codes 

90465 (Immunization administration 

younger than 8 years of age (includes 

percutaneous, intradermal, 

subcutaneous, or intramuscular 

injections) when the physician counsels 

the patient/family; first injection (single 

or combination vaccine/toxoid), per 

day) and 90467 were deleted and 

replaced with CPT code 90460 

(Immunization administration through 

18 years of age via any route of 

administration, with counseling by 

physician or other qualified health care 

professional; first vaccine/toxoid 

component). 

We agree with the commenters who 

believe that consistency in the PE RVUs 

across CPT codes with different code 

descriptors reflecting immunization 

services to different populations or 

using different routes of administration 

is desirable. As a matter of longstanding 

policy (69 FR 66307), we have 

crosswalked the nonfacility PE value 

from CPT code 96372 (Therapeutic, 

prophylactic, or diagnostic injection 

(specify substance or drug); 

subcutaneous or intramuscular) 

[predecessor CPT codes 90782 and 

90772] to the PE values for CPT code 

90471 and to the HCPCS G-codes for 

administration of specific vaccines. We 

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will continue this crosswalk for CY 

2011 and, as we proposed, also 

crosswalk the nonfacility PE value of 

CPT code 90471 to CPT code 90473. The 

PE value for CPT code 90472 is based 

on the direct PE inputs for that code, 

according to the usual PFS 

methodology. We will crosswalk the 

nonfacility PE value of CPT code 90472 

to CPT code 90474 for CY 2011 as we 

proposed. Finally, we are modifying our 

CY 2011 proposal and crosswalking the 

nonfacility PE RVUs for CPT codes 

90472 and 90474 to new CPT code 

90461 (replacement code for CPT codes 

90466 and 90468) for CY 2011. In 

addition, we will crosswalk the 

nonfacility PE RVUs for CPT codes 

90471 and 90473 to new CPT code 

90460 (replacement code for CPT codes 

90465 and 90467). 

After consideration of the public 

comments we received and the CY 2011 

changes in codes for pediatric 

immunization services by the CPT 

Editorial Panel, we are finalizing our CY 

2011 proposals, with the following 

modifications. In summary, for CY 2011 

we will— 

• Crosswalk the nonfacility PE RVUs 

for CPT codes 90472 and 90474 to new 

CPT code 90461; and 

• Crosswalk the nonfacility PE RVUs 

for CPT codes 90471 to 90473 to new 

CPT code 90460. 

I. 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 interim physician 

work RVUs for CPT codes with an 

interim final status in each year and 

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 individual would 

individually rate the work of the 

procedure. We believed that 

establishing the panel with a 

multispecialty group would balance the 

interests of those who commented on 

the work RVUs against 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 has based its recommendation to 

change a work value or to retain the 

interim value has hinged solely on the 

outcome of a statistical test on the 

ratings (an F-test). 

Depending on the number and range 

of codes that public commenters, 

typically specialty societies, request be 

subject to refinement, 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 final 

rule finalizing the RVUs for the codes. 

Typical panels have included 8 to 10 

physicians across the 4 groups. Over 

time, the statistical test used to evaluate 

the RVU ratings of individual panel 

members have become less reliable as 

the physicians in each group have 

tended to select a previously discussed 

value, rather than independently 

evaluating the work. In addition, the 

resulting RVUs have occasionally 

exhibited rank order anomalies (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 

ACA) 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. MedPAC has stated its belief 

that CMS has historically relied too 

heavily on specialty societies to identify 

services that are misvalued by accepting 

a high proportion of the 

recommendations of the AMA RUC. 

We believe the refinement panel 

process continues to provide 

stakeholders with a meaningful 

opportunity to review and discuss the 

interim work RVUs with a clinically 

diverse group of experts which then 

provides informed recommendations to 

CMS. Therefore, in the CY 2011 

proposed rule (75 FR 40105), 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. Specifically, for refinement 

panels beginning in CY 2011 (that is, for 

those codes with CY 2011 interim 

values that would be subject to 

refinement during CY 2011), we 

proposed to eliminate the use of the Ftest and instead base revised RVUs on 

the median work value of the panel 

members’ ratings. We believe this 

approach will 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. In addition, 

we clarified that we have the final 

authority to set the RVUs and, therefore, 

may make adjustments to the work 

RVUs resulting from refinement if 

policy concerns warrant their 

modification. 

Comment: Most commenters 

expressed support for the proposal to 

eliminate the F-test, including the 

increased transparency of the 

refinement panel process that the 

commenters believe would result from 

this change. Many commenters, 

including the AMA RUC, agreed with 

the use of the median work value of the 

panel members’ ratings and believe the 

median would provide a clearer view of 

the central tendency of the estimates 

provided by the survey respondents. On 

the other hand, several commenters 

believe the current process is effective 

and eliminates the effects of agreement 

between the panel members’ ratings. 

The AMA RUC recommended that 

CMS be mindful when assigning 

individuals to the refinement panel to 

ensure that all members, including 

CMDs, are not from the same specialties 

that were involved in the public 

comment originating the issue under 

review. Another commenter cautioned 

CMS that the refinement panels need to 

be balanced and should ensure that 

there is at least one representative on 

the panel who has direct experience 

with the procedure or service under 

review. 

Response: We appreciate the support 

of the commenters regarding our 

proposal to use the median work value 

of the panel members’ ratings and will 

move forward to finalize our proposal 

for refinement panels beginning in CY 

2011 (refinement of CY 2011 new/ 

revised codes with interim values). 

When identifying individuals for the 

refinement panel, including CMDs, we 

attempt to select individuals from each 

of the different specialties with an 

interest in the codes being refined, not 

just the specialty or specialties 

responsible for the public comment 

originating the request for refinement. 

We also take steps to ensure that the 

panel members have direct experience 

and knowledge of the procedure or 

service under review. We will certainly 

continue our efforts in this regard. 

However, we note that in recent years 

the number of physicians who are 

available to participate in the 

refinement panel has been limited at 

times, and some specialty societies have 

had difficulty obtaining representation 

for the panel. 

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Comment: Several commenters urged 

CMS to use a methodology that would 

allow the AMA RUC-recommended 

value to prevail when appropriately 

supported by the pertinent specialty 

societies and when the value is strongly 

supported by the rank order and 

resources of the procedure, since the 

PFS final rule with comment period is 

the first opportunity for the public to 

see the RVUs for the coming calendar 

year. These commenters also believe a 

full and fair review process is warranted 

prior to the publication of these values 

in the final rule with comment period. 

Response: We note that PFS payments 

for services are resource-based. When 

reviewing the AMA RUC 

recommendations, our decisions to 

value services are based on the 

resources needed to perform the typical 

service and, therefore, these decisions 

are based upon a thorough review of the 

AMA RUC recommendations in the 

context of the specific new or revised 

codes. In those cases where we reject 

the AMA RUC recommendations, we 

publish our rationale in the PFS final 

rule with comment period where we 

first make the values public. These 

values are published as interim final 

values that are subject to public 

comment. The public comment period 

serves as the opportunity for public 

review and we see no other alternative 

to this timing, given the timeframes in 

which the new or revised CPT codes 

and the AMA RUC recommendations 

regarding their values are available to us 

and in which the new or revised CPT 

codes must be incorporated into the PFS 

for payment. 

Comment: Several commenters 

expressed concerns about the proposal 

to allow CMS to have the final authority 

to set the work RVUs if policy concerns 

warrant modifications to the values 

derived from the refinement process. 

These commenters opposed this 

proposal and recommended that the 

decisions of the refinement panels 

remain unchanged by CMS. The 

commenters believe a major strength of 

the current process is that is gives 

stakeholders a strong incentive to 

participate, knowing that the outcomes 

of the process will not be overturned by 

CMS. 

Response: Although we appreciate the 

concerns raised by the commenters, by 

law, we retain the final responsibility 

and authority to set the RVUs and, 

therefore, may make adjustments to the 

work RVUs resulting from refinement if 

policy concerns (such as a rank order 

anomaly) warrant their modifications. 

Comment: One commenter urged 

CMS to make the refinement process 

transparent and open to the public. 

Response: We believe our proposal 

would make the refinement process 

more transparent, as noted by some 

commenters. We further believe that 

representation from specialty societies 

as part of the AMA RUC process for 

valuing the codes allows the input of 

physicians who have direct experience 

with the procedure or service under 

review. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

eliminate the use of the F-test for the 

refinement panels and, instead, we will 

base the revised RVUs on the median 

work value of the panel members’ 

ratings. In addition, we note that CMS 

retains the final authority to set the 

RVUs and, therefore, make adjustments 

to the work RVUs resulting from 

refinement if policy concerns warrant 

their modification. 

J. Remote Cardiac Monitoring Services 

(CPT codes 93012, 93229, 93268, and 

93271) 

In the CY 2011 PFS proposed rule (75 

FR 40105), we reiterated our concerns 

about the issue of developing PE RVUs 

for services that are utilized 24 hours a 

day, 7 days a week (24/7), such as those 

that require certain centralized 

monitoring system equipment and 

which have been discussed in earlier 

PFS rulemaking cycles, most recently in 

the CY 2010 PFS final rule with 

comment period (74 FR 61755). We 

stated that the PE equipment 

methodology was developed for 

equipment that is in use during 

standard physician’s office business 

hours and not equipment that is used in 

furnishing such continuous services, 

and that we would conduct further 

analysis of this issue. We indicated that 

services that were contractor-priced in 

CY 2009 remained contractor-priced in 

CY 2010 and that any proposed changes 

would be communicated through future 

rulemaking. 

In the CY 2011 PFS proposed rule (75 

FR 40105), we explained that since 

publication of the CY 2010 PFS final 

rule with comment period, we focused 

our additional analysis on 4 of the CPT 

codes that commenters have brought to 

our attention because they involve 

concurrent, remote, 24/7 attended 

monitoring of multiple patients from a 

central location: CPT code 93012 

(Telephonic transmission of postsymptom electrocardiogram rhythm 

strip(s); 24-hour attended monitoring, 

per 30 day period of time; tracing only); 

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); CPT 

code 93268 (Wearable patient activated 

electrocardiographic rhythm derived 

event recording with presymptom 

memory loop, 24-hour attended 

monitoring, per 30 day period of time; 

includes transmission, physician review 

and interpretation); and CPT 93271 code 

(Wearable patient activated 

electrocardiographic rhythm derived 

event recording with presymptom 

memory loop, 24-hour attended 

monitoring, per 30 day period of time; 

monitoring, receipt of transmissions, 

and analysis). 

We pointed out that of these four 

codes, CPT code 93229 is currently 

contractor-priced in CY 2010, meaning 

that the local Medicare contractors 

determine payment rates for the service 

within the PFS geographic areas in their 

jurisdiction. The three services that are 

currently nationally-priced on the PFS 

are in the first year of a 4-year transition 

to lower payment rates based on the use 

of the PPIS data adopted in the CY 2010 

PFS final rule with comment period. We 

refer readers to section II.A.2. of this 

final rule with comment period for a 

description of the general PFS PE 

methodology that is the basis for the 

following discussion of approaches to 

establishing PE RVUs for these four CPT 

codes. 

In the CY 2011 PFS proposed rule, we 

explained that we examined several 

alternative methods for developing PE 

RVUS upon which PFS payment rates 

for these four CPT codes could be based. 

Each of these services involves 

transmission of information from 

multiple patients who wear individual 

monitoring devices that transmit 

patient-specific information to 

centralized equipment that is 

simultaneously in use for multiple 

patients. We stated that we believed it 

would be most consistent with the 

principles underlying the PFS PE 

methodology to classify the centralized 

monitoring equipment as an indirect 

cost since it is servicing multiple 

patients at the same time. We explained 

that after classifying this equipment as 

an indirect cost, we used our standard 

methodology to calculate an indirect 

practice cost index value for each code 

based on the PE/HR survey data of the 

historical mix of specialties providing 

these services. We went on to state that 

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establishing payment rates for these 

codes based on this approach would 

result in decreases in the payment rates 

for these services, including the typical 

contractor’s price for CPT code 93229. 

For the three services that are nationally 

priced, these decreases would be 

relative to the lower payment rates 

based on the use of the PPIS data after 

the 4-year transition. 

In the CY 2011 PFS proposed rule, we 

acknowledged that we had also received 

PE/HR data from the Remote Cardiac 

Services Provider Group (RCSPG), a 

group of Independent Diagnostic 

Testing Facility (IDTF) suppliers of 

these types of services. We explained 

that for sensitivity analysis purposes, 

we substituted these data for the PE/HR 

data of the specialties performing these 

services, while continuing to treat the 

centralized monitoring equipment as an 

indirect cost. We stated that we found 

that establishing payment rates for these 

codes based on the approach of using 

the submitted RCSPG PE/HR data would 

again result in decreases in the payment 

rates for these services, including the 

typical contractor’s price for CPT code 

93229. As in the prior alternative, the 

decreases for the nationally priced 

codes would be relative to the payment 

rates reflecting the 4-year transition to 

the PPIS data. 

We indicated that although we 

believed that it would be most 

consistent with the principles 

underlying the PE methodology to 

classify the centralized monitoring 

equipment as an indirect cost, we also 

performed a sensitivity analysis of the 

payment rates if the centralized 

monitoring equipment were classified as 

a direct cost. In this simulation, we 

assumed that the centralized monitoring 

equipment was in year-round use, 7 

days per week for 24 hours per day. We 

found that establishing payment rates 

for these codes based on the approach 

of classifying the centralized monitoring 

equipment as a direct cost would again 

result in decreases in the payment rates 

for the nationally priced services 

relative to their payment rates after the 

4-year transition to the use of the PPIS 

data, as well as to the typical current 

contractor’s price for CPT code 93229. 

Finally, we explained that we 

considered proposing contractor-pricing 

for all four of these services for CY 2011 

but were cognizant of past public 

comments on this issue that had 

requested that all of these services be 

priced nationally on the PFS, including 

the one service (CPT code 93229) that is 

currently contractor-priced. 

In the CY 2011 PFS proposed rule, we 

also considered that the services 

currently priced nationally on the PFS 

were scheduled to receive lower 

payment rates under the 4-year 

transition to the PPIS data and that the 

contractor’s price for CPT 93229 was 

recently reduced in the area where the 

majority of the billings for this service 

currently occur. 

We concluded that after taking all 

these factors into consideration, we 

were not proposing CY 2011 

methodological or direct cost input 

changes for CPT codes 93012, 93268, or 

93271—the services that are nationally 

priced under the PFS. We proposed to 

continue contractor-pricing for CPT 

93229 for CY 2011. We solicited public 

comments on this issue, including 

responses to our analysis of alternative 

approaches to establishing PE RVUs for 

24/7 services, and further discussion of 

the issues we identified in our 

alternative pricing methodologies. In 

addition, while we had focused the 24/ 

7 services analysis up until that point in 

time on developing the PE RVUS for 

remote cardiac monitoring services, we 

observed that there may be 24/7 services 

in other areas of medicine, either 

currently paid under the PFS or in 

development for the future. Therefore, 

we also solicited public comments on 

these current or emerging 24/7 services, 

including descriptions of the 

similarities or differences between these 

other services and remote cardiac 

monitoring services, particularly with 

respect to the issues we identified in our 

analysis of alternative approaches to 

establishing PE RVUs for remote cardiac 

monitoring services under the PFS. 

Comment: Several commenters 

expressed concerns regarding CMS’ 

discussion of PFS payment for remote 

cardiac monitoring, which included no 

proposal of changes for CY 2011. The 

commenters pointed out the benefits of 

24/7 remote monitoring services for 

cardiac and other specialty services and 

argued that these types of services can 

differ in complexity and frequency from 

one another and from traditional 

medical services. In general, the 

commenters expressed interest in CMS 

accurately capturing the cost 

components for all of these services, 

primarily arguing for the consideration 

of these costs as direct costs. 

One commenter explained that the 

current methodology for assigning PE 

RVUs does not work for remote cardiac 

providers whose businesses are 

structured differently from physicians’ 

practices and, as a result, the RVUs 

assigned to the services do not reflect 

their proper relative cost. Although 

CMS focused its analysis on services 

characterized by concurrent, remote, 24/ 

7 attended monitoring of multiple 

patients from a single location, the 

commenter addressed cardiac event 

monitoring, pacemaker monitoring, 

Holter monitoring, International 

Normalized Ratio (INR) monitoring, and 

a number of new monitoring 

technologies such as cardiac telemetry 

under the umbrella term of remote 

cardiac monitoring. The commenter 

asserted that the IDTF providers of 

remote cardiac monitoring services 

operate on a 24/7 basis because the 

services that they furnish require roundthe-clock service and are, therefore, 

structured very differently from 

physicians’ offices and other IDTFs. The 

commenter argued that CMS should 

utilize PE/HR data submitted by RCSPG, 

a group of IDTF suppliers of these types 

of services, to the entire ranging of 

cardiac monitoring services furnished 

by these providers. Alternatively, the 

commenter indicated that CMS could 

use the all physician indirect 

percentage, use an indirect practice cost 

index (IPCI) of one, and add equipment 

costs to the PE formula for allocating 

indirect costs in setting the PE RVUs for 

cardiac monitoring services. Finally, the 

commenter requested that if CMS did 

not adopt one of the previous two 

suggestions, then CMS should 

temporarily suspend the phase-in of the 

use of PPIS data for cardiac monitoring 

services. Several other commenters also 

requested that CMS suspend the PPIS 

transition for remote cardiac monitoring 

services. 

Several commenters disagreed with 

CMS regarding the appropriateness of 

treating the centralized monitoring 

equipment as an indirect cost, arguing 

that the equipment is used specifically 

for patients that are receiving a specific 

service and, therefore, represents a 

direct cost like other medical 

equipment. The commenters contended 

that the centralized equipment is 

inherently different from other indirect 

practice expenses that are used to run a 

practice and are not tied directly to any 

one particular service. One commenter 

speculated that considering the cardiac 

monitoring equipment as an indirect 

expense would dilute the payment for 

this cardiac telemetry by distributing it 

to many people who are not providing 

it. Another commenter expressed 

concern that an indirect cost approach 

does not appropriately account for the 

significant differences in remote 

monitoring services and thus cannot 

accurately capture the cost components 

of each. 

With respect to the remote cardiac 

monitoring service described by CPT 

code 93229 which is contractor-priced, 

one commenter made several specific 

requests, namely that CMS: (1) 

Nationally price CPT code 93229 rather 

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than contractor-price the service; (2) 

consider the centralized monitoring 

equipment associated with CPT code 

93229 as a direct cost; (3) adjust the 

equipment utilization assumption for 

the centralized monitoring equipment 

from 100 percent to 50 percent; (4) use 

new direct cost inputs (for example, the 

cost of the monitoring device worn by 

patient) supplied by the commenter; (5) 

incorporate a new PE/HR, based on the 

cardiac monitoring industry-wide 

RCSPG PE/HR data applied to all 

cardiac monitoring services, based on 

data from two telemetry providers for 

CPT code 93229 that yields a PE/HR of 

$243.22 that would be applied to CPT 

code 93229, or based on data for 

telemetry and cardiac event monitoring 

(CEM) which results in a PE/HR of 

$214.79 that would be applied to 

telemetry and CEM services; and (6) 

apply an additional indirect allocation 

in the CMS PE methodology based on 

the equipment direct costs as previously 

recommended by one telemetry 

provider. The commenter provided 

equipment inputs and the associated 

prices and further recommended that 

CMS should continue to apply the 

clinical labor and supply input items 

associated with this services as 

recommended by the AMA RUC. 

Response: We appreciate the 

continuing interest of the commenters 

in the pricing of cardiac monitoring 

services under the PFS. After further 

review of this issue, while we continue 

to recognize there are some unique 

aspects to the services, we do not agree 

with the commenters that the PE for 

cardiac monitoring services cannot be 

appropriately valued using the PFS PE 

methodology. After our review, we 

believe that we can appropriately 

identify and price the direct cost inputs 

for these services. Furthermore, we note 

that the PPIS data for allocating indirect 

costs is from a multispecialty, nationally 

representative PE survey of both 

physicians and NPPS and, as the most 

comprehensive source of PE information 

available to date, appropriate for use for 

cardiac monitoring services. Therefore, 

we disagree that we should suspend the 

PE transition to the PPIS data or 

otherwise change our established 

methodology for setting the PE RVUs 

furnished by a subset of providers in a 

certain specialty area. 

We continue to believe that 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. This would be 

true for CPT code 93229 which has not 

previously been nationally priced. We 

believe that the ability to appropriately 

allocate costs to individual services is a 

key concept that should guide our 

adoption of the direct PE inputs for 

services paid under the PFS. Having 

drawn this conclusion, we plan to 

review the direct PE inputs for other 

nationally priced services that include 

centralized monitoring equipment 

under the PFS and, if we find that we 

have not consistently treated that 

equipment as an indirect cost, we may 

propose changes to the direct PE inputs 

for existing codes in a future PFS 

rulemaking cycle. 

We agree with several commenters 

that it would be appropriate at this time 

to nationally price CPT code 93229, 

especially in light of our conclusion 

regarding how the centralized 

monitoring system should be treated 

under the PFS PE methodology and the 

fact that the commenters have provided 

current prices and associated 

documentation for the direct PE inputs 

used in the typical case. Therefore, we 

are accepting the AMA RUC 

recommendations originally made for 

CY 2009 (73 FR 69896) for clinical labor 

and supplies for CPT code 93229 and 

are utilizing these direct PE inputs for 

CY 2011. With respect to the equipment 

inputs provided to us by one commenter 

who currently furnishes the majority of 

services described by CPT code 93229, 

under our final CY 2011 policy the only 

piece of equipment that would be 

appropriately treated as a direct PE 

input is the cardiac telemetry 

monitoring device worn by the patient. 

The other equipment items, including 

the monitoring system software and 

hardware, workstation, webserver, and 

call recording system are indirect 

practice costs. Therefore, we are 

accepting the commenter’s submission 

of $21,575 as the price for this device 

in the typical case, and applying a 50 

percent utilization rate and useful life of 

3 years as recommended by the 

commenter. 

We do not believe it would be 

appropriate 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 

monitoring system that is especially 

characteristic of services such as CPT 

code 93229. We note that these direct 

PE inputs are included in the final CY 

2011 direct PE database that is posted 

on the CMS Web site under downloads 

for this CY 2011 PFS final rule with 

comment period at: http:// 

www.cms.gov/PhysicianFeeSched/ 

PFSFRN/list.asp#TopOfPage. We 

further note that the CY 2011 payment 

for CPT code 93229 (without 

considering the negative PFS update 

that will apply for CY 2011 under 

current law) is close to the current 

typical contractor’s price for the service 

in CY 2010. 

After consideration of the public 

comments we received, we are 

establishing a national price for CPT 

code 93229 based on nationally set 

RVUs, instead of maintaining the code 

as contractor-priced as we proposed. We 

are adopting the AMA RUC’s 

recommendations for the clinical labor 

and supply inputs, and utilizing price, 

utilization, and useful life information 

provided by the commenters as 

equipment inputs for the cardiac 

telemetry monitoring device worn by 

the patient. The final CY 2011 RVUs for 

CPT code 93229 are displayed in 

Addendum B to this final rule with 

comment period. While we are making 

no changes to the direct PE inputs for 

other remote cardiac monitoring CPT 

codes for CY 2011, we will consider in 

the future whether changes could be 

appropriate if we conclude that these 

services utilize a centralized monitoring 

system that would most appropriately 

be treated an indirect cost. 

Comment: While most of the 

commenters addressed remote cardiac 

monitoring services specifically 

discussed in the CY 2011 PFS proposed 

rule, several commenters addressed 

other types of emerging 24/7 services. 

One commenter described a pilot 

program that utilizes telehealth to 

monitor certain health status indicators 

for cardiac patients. This monitoring 

occurs during the day and night and 

includes an assessment by a nurse. The 

commenter stated that the initial results 

of the pilot show a lower rate of hospital 

readmissions for participants. The 

commenter asserted that there is 

currently no payment for this service, 

and urged CMS to consider funding for 

these types of programs. 

Outside of cardiac monitoring, 

another commenter noted that there are 

many types of remote monitoring 

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services that provide important benefits, 

especially for chronically ill patients. 

The commenter explained that these 

may include health status monitoring 

services, activity and sensor monitoring 

services, and medication dispensing and 

monitoring services. The commenter 

asserted that the resource requirements 

for these types of services can differ in 

complexity and frequency and may 

involve varied resources, including 

equipment and other fees; training and 

coaching; data collection, monitoring 

and documentation; and personal 

emergency response. As such, the 

commenter recommended that CMS’ PE 

methodology for remote monitoring 

services be as transparent and flexible as 

possible to allow for these differences, 

and to accurately capture the cost 

components for each. Therefore, the 

commenter, concluded that a direct cost 

approach would be the most appropriate 

approach in most cases. 

Response: We thank the commenters 

for providing information on other 

current and emerging 24/7 services. We 

will consider appropriate payment for 

other 24/7 services under the PFS as 

specific codes for such services are 

created by the CPT Editorial Panel. 

Regarding direct PE inputs for other 

remote monitoring services, we 

acknowledge diversity in the direct and 

indirect costs to providers for furnishing 

various monitoring services—and all 

services—and believe that our current 

PE methodology, as discussed earlier in 

this section, is able to yield appropriate 

values across this wide range. As stated 

earlier in the context of remote cardiac 

monitoring, we believe that the ability 

to appropriately allocate costs to the 

services furnished to individual patients 

is a key concept that should guide our 

adoption of the direct PE inputs for 

services paid under the PFS, including 

remote monitoring and other 24/7 

services. 

We look forward to continuing a 

dialogue with stakeholders involved in 

developing and furnishing 24/7 services 

as medical practice evolves in order to 

ensure that the PFS pays appropriately 

for those 24/7 services that are covered 

by Medicare and paid as physicians’ 

services. 

IV. Medicare Telehealth Services for 

the Physician Fee Schedule 

A. Billing and Payment for Telehealth 

Services 

1. History 

Prior to January 1, 1999, Medicare 

coverage for services delivered via a 

telecommunications system was limited 

to services that did not require a faceto-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 

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 

§ 410.78(b), we generally require that a 

telehealth service be furnished via an 

interactive telecommunications system. 

Under § 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 statute 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 § 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 statute 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. 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 hospitalbased 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 HPSA, in a county that is not in 

a metropolitan statistical area (MSA), or 

must be an entity that participate in a 

Federal telemedicine demonstration 

project that has been approved by (or 

receives funding from) the Secretary as 

of December 31, 2000. Finally, section 

1834(m) of the statute does not require 

the eligible telehealth individual to be 

presented by a practitioner at the 

originating site. 

2. Current Telehealth Billing and 

Payment Policies 

As noted above, 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 

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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 medical nutrition 

therapy (MNT) 

• Neurobehavioral status exam 

• Individual health and behavior 

assessment and intervention (HBAI). 

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 authenticates 

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 as of December 31, 2000 

as specified in section 

1834(m)(4)(C)(i)(III) of the Act. 

As described above, certain 

professional services that are commonly 

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). 

B. Requests for Adding Services to the 

List of Medicare Telehealth Services 

As noted above, 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. 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 inperson 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 

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 MNT; 

neurobehavioral status exam; and initial 

and follow-up inpatient telehealth 

consultations for beneficiaries in 

hospitals and skilled nursing facilities 

(SNFs). 

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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 2010 are 

considered for the CY 2012 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/. 

C. Submitted Requests for Addition to 

the List of Telehealth Services for CY 

2011 

We received requests in CY 2009 to 

add the following services as Medicare 

telehealth services effective for CY 2011: 

(1) Individual kidney disease education 

(KDE) services; (2) individual diabetes 

self-management training (DSMT) 

services; (3) group KDE, DSMT, MNT, 

and HBAI services; (4) initial, 

subsequent, and discharge day 

management hospital care services; 

(5) initial, subsequent, discharge day 

management, and other nursing facility 

care services; (6) neuropsychological 

testing services; (7) speech-language 

pathology services; and (8) home wound 

care services. The following presents a 

discussion of these requests, including 

our proposed additions to the CY 2011 

telehealth list. 

1. Individual KDE Services 

The American Society of Nephrology, 

Dialysis Patient Citizens, AMGEN, and 

Kidney Care Partners submitted requests 

to add individual KDE services, 

reported by HCPCS code G0420 (Faceto-face educational services related to 

the care of chronic kidney disease; 

individual, per session, per one hour), 

to the list of approved telehealth 

services for CY 2011 on a category 1 

basis. 

Individual KDE services, covered 

under the new Medicare KDE benefit 

effective for services furnished 

beginning in CY 2010, are defined as 

face-to-face educational services 

provided to a patient with stage IV 

chronic kidney disease (CKD). We 

believe the interaction between a 

practitioner and a beneficiary receiving 

individual KDE services is similar to the 

education, assessment, and counseling 

elements of individual MNT services, 

reported by HCPCS code G0270 

(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), 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; reassessment 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 HCPCS 

code G0420 to the list of telehealth 

services for CY 2011 on a category 1 

basis and to revise our regulations at 

§ 410.78(b) and § 414.65(a)(1) to include 

individual KDE as a Medicare telehealth 

service. 

Comment: Several commenters 

expressed support for CMS’ proposal to 

add KDE services to the list of Medicare 

telehealth services for CY 2011. One 

commenter stated that the proposal 

would provide patients at risk for 

developing chronic kidney disease and 

ESRD with access to educational 

services that may help in controlling the 

progression of disease. Another 

commenter suggested that delivery of 

KDE services through telehealth would 

provide beneficiaries with the flexibility 

to interact with practitioners in a 

manner tailored to their needs, thus 

facilitating a more patient-centered 

approach. Another commenter noted 

that greater flexibility in the provision 

of KDE services is particularly 

important in rural areas where 

individuals do not have as much access 

to dialysis centers. 

Response: We agree with the 

commenters that adding KDE services to 

the list of Medicare telehealth services 

may be valuable to Medicare 

beneficiaries, especially insofar as it 

helps provide greater access to the 

services for beneficiaries in rural or 

other isolated areas. 

Comment: One commenter who 

supported the proposal also encouraged 

the CMS to maintain its existing policy 

regarding the qualified providers for 

KDE services in order to appropriately 

ensure the quality and content conveyed 

to patients in educational sessions and 

remain concordant with the intent of 

MIPPA. 

Response: We note that the addition 

of KDE to the list of Medicare telehealth 

services does not alter the qualifications 

for providers of KDE services as 

specified in § 410.48 of the regulations. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to add 

HCPCS code G0420 to the list of 

telehealth services for CY 2011 on a 

category 1 basis and to revise our 

regulations at § 410.78(b) and 

§ 414.65(a)(1) to include individual KDE 

as a Medicare telehealth service. 

2. Individual DSMT Services 

The Tahoe Forest Health System and 

the Marshfield Clinic submitted 

requests to add individual DSMT 

services, reported by HCPCS code 

G0108 (Diabetes outpatient selfmanagement training services, 

individual, per 30 minutes), to the list 

of telehealth services for CY 2011 on a 

category 1 basis. In the CY 2009 PFS 

final rule with comment period (73 FR 

69743), we stated that we believe 

individual DSMT services are not 

analogous to individual MNT services 

because of the element of skill-based 

training that is encompassed within 

individual DSMT services that is not an 

aspect of individual MNT services (or 

any other services currently approved 

for telehealth). Due to the statutory 

requirement that DSMT services include 

teaching beneficiaries the skills 

necessary for the self-administration of 

injectable drugs, we have stated our 

belief that DSMT, whether provided to 

an individual or a group, must be 

evaluated as a category 2 service as 

specified in the CY 2009 PFS proposed 

rule (73 FR 38516). Prior to CY 2011 

rulemaking, we had considered several 

previous requests to add DSMT to the 

list of Medicare telehealth services. We 

had not added individual DSMT to the 

list of telehealth services because we 

believe that skill-based training, such as 

teaching patients how to inject insulin, 

would be difficult to accomplish 

effectively without the physical 

presence of the teaching practitioner (70 

FR 45787 and 70157, and 73 FR 38516 

and 69743). 

In considering the new request to add 

individual DSMT services to the list of 

telehealth services in CY 2011, we took 

into account requestors’ argument that 

individual DSMT services are highly 

similar to individual MNT services and 

that injection training constitutes just a 

small proportion of DSMT services. 

Except for the component of individual 

DSMT services that involves instruction 

in self-administration of injectable drugs 

for eligible beneficiaries, we agreed with 

the requestors that individual DSMT 

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services are similar to individual MNT 

services, which are currently on the list 

of Medicare telehealth services. We note 

that Medicare coverage of DSMT 

services was initially authorized in the 

BBA. After more than a decade of 

Medicare coverage, the most recent 

information shows that DSMT continues 

to be significantly underutilized in the 

context of the eligible population of 

Medicare beneficiaries. While we are 

uncertain to what extent geographic 

barriers to care contribute to this 

underutilization, given the morbidity 

associated with poorly managed 

diabetes and the growing evidence-base 

regarding effective DSMT services, we 

believe it is very important to facilitate 

Medicare beneficiary access to these 

underutilized services. While we were 

previously concerned about treating the 

components of DSMT services 

differently in the context of considering 

DSMT services for the telehealth list, in 

the CY 2011 PFS proposed rule (75 FR 

40108), we stated our belief that our 

concern regarding the skill-based 

injection training component of DSMT 

services could be addressed by 

imposing a requirement that a minimum 

portion of the training be furnished inperson. We noted that for beneficiaries 

who meet the coverage criteria, 

Medicare covers 10 hours of DSMT 

services in the year following the initial 

training, as described in the Medicare 

Benefit Policy Manual (Pub. 100–02, 

Chapter 15, Section 300.3). Taking into 

consideration the initial year coverage 

of DSMT services, for CY 2011 we 

proposed that a minimum of 1 hour of 

instruction in injection training must be 

furnished in-person during the year 

following the initial DSMT service. 

Imposing this condition would allow us 

to expand access to DSMT services by 

adding individual DSMT services to the 

list of telehealth services, while 

ensuring effective injection training for 

beneficiaries. 

Therefore, we proposed to add HCPCS 

code G0108 to the list of telehealth 

services beginning in CY 2011. We also 

proposed that, as a condition of 

payment for individual DSMT services 

furnished as telehealth services to an 

eligible telehealth individual, a 

minimum of 1 hour of in-person 

instruction in the self-administration of 

injectable drugs must be furnished to 

the individual during the year following 

the initial DSMT service. The injection 

training may be furnished through 

either individual or group DSMT 

services. By reporting the –GT or –GQ 

modifier with HCPCS code G0108 as a 

telehealth service, the distant site 

practitioner would certify that the 

beneficiary has received or will receive 

1 hour of in-person DSMT services for 

purposes of injection training during the 

year following the initial DSMT service. 

Consistent with this proposal, we 

proposed to revise our regulations at 

§ 410.78(b) and § 414.65(a)(1) to include 

individual DSMT services as a Medicare 

telehealth service, with the exception of 

1 hour of in-person instruction in selfadministration of injectable drugs which 

must be furnished to the eligible 

telehealth individual as individual or 

group DSMT services during the year 

following the initial DSMT service. 

Comment: A number of commenters 

expressed support for CMS’ proposal to 

add DSMT services to the list of 

Medicare telehealth services. One 

commenter requested that CMS clarify 

that this proposal would permit NPs 

and PAs in all patient care settings to 

provide and bill for DSMT services 

furnished through telehealth 

technologies. 

Response: As we stated in the CY 

2011 PFS proposed rule (75 FR 40109), 

our proposal is consistent with the 

statutory requirements of section 

1834(m)(1) of the Act and as provided 

in § 410.141(e) that individual DSMT 

services may be furnished by a 

physician, individual, or entity that 

furnishes other services for which direct 

Medicare payment may be made and 

that submits necessary documentation 

to, and is accredited by, an accreditation 

organization approved by us as 

described in the Benefit Policy Manual 

(Pub. 100–04, chapter 15, section 300.2). 

However, consistent with the statutory 

requirements of section 1834(m)(1) of 

the Act and as provided in 

§ 410.78(b)(1) and (b)(2) of our 

regulations, Medicare telehealth 

services, including individual DSMT 

furnished as a telehealth service, can 

only be furnished by a licensed 

physician, PA, NP, CNS, certified nursemidwife, clinical psychologist, clinical 

social worker, or registered dietitian or 

nutrition professional. Additionally, the 

site of the beneficiary must conform 

with the statutory requirements of 

telehealth originating sites from section 

1834(m)(3)(C) of the Act and described 

in section IV.A. 2. of this final rule with 

comment period. 

Comment: One commenter requested 

that pharmacists be added to the list of 

eligible Medicare telehealth distant site 

practitioners. The commenter stated that 

since pharmacists are already providing 

valuable DSMT services to patients inperson, these practitioners should not 

be excluded from providing those same 

valuable services via telehealth. 

Response: Under section 1834(m) of 

the Act, payment is made for a Medicare 

telehealth service furnished by a 

physician or practitioner in a distant 

site. For purposes of Medicare 

telehealth services, the physician or 

practitioner must either be a physician 

as defined in section 1861(r) of the Act 

or another practitioner as defined in 

section 1842(b)(18)(C) of the Act. 

Because pharmacists do not fall within 

these statutory definitions, we do not 

have the authority to make payment to 

pharmacists as eligible distant site 

practitioners for Medicare telehealth 

services. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to add 

HCPCS code G0108 to the list of 

telehealth services beginning in CY 

2011. As a condition of payment for 

individual DSMT services furnished as 

telehealth services to an eligible 

telehealth individual, a minimum of 1 

hour of in-person instruction in the selfadministration of injectable drugs must 

be furnished to the individual during 

the year following the initial DSMT 

service. The injection training may be 

furnished through either individual or 

group DSMT services. By reporting the 

–GT or –GQ modifier with HCPCS code 

G0108 as a telehealth service, the 

distant site practitioner certifies that the 

beneficiary has received or will receive 

1 hour of in-person DSMT services for 

purposes of injection training during the 

year following the initial DSMT service. 

Consistent with this final policy, we are 

revising our regulations at § 410.78(b) 

and § 414.65(a)(1) to include individual 

DSMT services as a Medicare telehealth 

service, with the exception of 1 hour of 

in-person instruction in selfadministration of injectable drugs which 

must be furnished to the eligible 

telehealth individual as individual or 

group DSMT services during the year 

following the initial DSMT service. 

We note that, as specified in 

§ 410.141(e), individual DSMT services 

may be furnished by a physician, 

individual, or entity that furnishes other 

services for which direct Medicare 

payment may be made and that submits 

necessary documentation to, and is 

accredited by, an accreditation 

organization approved by CMS. 

However, consistent with the statutory 

requirements of section 1834(m)(1) of 

the Act and as provided in 

§ 410.78(b)(1) and (b)(2) of our 

regulations, Medicare telehealth 

services, including individual DSMT 

furnished as a telehealth service, can 

only be furnished by a licensed 

physician, PA, NP, CNS, certified nursemidwife, clinical psychologist, clinical 

social worker, or registered dietitian or 

nutrition professional. 

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3. Group KDE, MNT, DSMT, and HBAI 

Services 

The American Society of Nephrology, 

Dialysis Patient Citizens, AMGEN, 

Tahoe Forest Health Systems, Kidney 

Care Partners, the American 

Telemedicine Association, and the 

Marshfield Clinic submitted requests to 

add one or more of the following group 

services to the telehealth list for CY 

2011: 

• Group KDE services, reported by 

HCPCS code G0421 (Face-to-face 

educational services related to the care 

of chronic kidney disease; group, per 

session, per one hour); 

• Group MNT services, reported by 

CPT code 97804 (Medical nutrition 

therapy; group (2 or more individual(s)), 

each 30 minutes); 

• Group DSMT services, reported by 

HCPCS code G0109 (Diabetes outpatient 

self-management training services, 

group session (2 or more), per 30 

minutes); and/or 

• Group HBAI services, reported by 

CPT code 96153 (Health and behavior 

intervention, each 15 minutes, face-toface; group (2 or more patients)) and 

96154 (Health and behavior 

intervention, each 15 minutes, face-toface; family (with the patient present)). 

When furnished as individual 

services, HBAI and MNT services are 

currently on the list of Medicare 

telehealth services. Furthermore, we 

proposed to add individual KDE and 

DSMT services to the list of Medicare 

telehealth services beginning in CY 

2011 as described above. 

In the CY 2007 and CY 2010 PFS 

rulemaking cycles (70 FR 45787 and 

70157, and 74 FR 33543 and 61764), we 

stated that we did not believe that group 

services could be appropriately 

delivered through telehealth. In the CY 

2011 PFS proposed rule (75 FR 40109), 

we observed that currently there are no 

group services approved as Medicare 

telehealth services and that there is a 

different interactive dynamic between 

the practitioner and his or her patients 

in group services as compared to 

individual services. We previously had 

considered requests to add various 

group services to the list of Medicare 

telehealth services on a category 2 basis 

because we had believed that, especially 

given the interactive dynamic between 

practitioners and their patients, group 

services were not similar to other 

services on the list of Medicare 

telehealth services. Therefore, we had 

maintained that it was necessary to 

evaluate the addition of group services 

by comparing diagnostic findings or 

therapeutic interventions when services 

are furnished via telehealth versus when 

services are furnished in-person. 

In the CY 2011 proposed rule (75 FR 

40109), we stated that we continue to 

believe that the group dynamic may be 

a critical and defining element for 

certain services, and that this 

characteristic precludes many group 

services from being considered on a 

category 1 basis for addition to the list 

of Medicare telehealth services. For 

example, we believe that due to the 

therapeutic nature of the group dynamic 

that is integral to group psychotherapy, 

group psychotherapy is fundamentally 

different from other Medicare telehealth 

services and, therefore, could not be 

considered on a category 1 basis for 

addition to the telehealth services list. 

For the same reason, in the absence of 

evidence to the contrary, we do not 

believe group psychotherapy services 

could be appropriately delivered 

through telehealth. 

However, upon further consideration, 

with regard to the particular group 

education and training services for 

which we received requests for addition 

to the Medicare telehealth services list, 

for CY 2011 we concluded that we 

believe the group dynamic is not central 

to the core education and training 

components of these particular services, 

specifically DSMT, MNT, KDE, and 

HBAI services. We believe that these 

group services are sufficiently similar to 

the individual, related services that are 

already on the telehealth services list or 

were proposed for addition beginning in 

CY 2011. Specifically, we believe that 

for these group services, which consist 

principally of an information exchange 

for the purpose of education and 

training, the roles of, and interactions 

between, the patients and the 

practitioner are sufficiently similar to 

the related individual education and 

training services that the services can be 

furnished appropriately as a telehealth 

service. 

Therefore, we proposed to add HCPCS 

code G0421 for group KDE services, CPT 

code 97804 for group MNT services, 

HCPCS code G0109 for group DSMT 

services, and CPT codes 96153 and 

96154 for group HBAI services to the 

Medicare telehealth services list on a 

category 1 basis for CY 2011. 

Furthermore, because the concerns we 

raised above regarding adequate 

injection training with the addition of 

individual DSMT are also present for 

group DSMT, we proposed to require 

the same minimum of 1 hour of inperson instruction for injection training 

within the year following the initial 

DSMT service for any beneficiary that 

receives DSMT services via telehealth. 

By reporting the –GT or –GQ modifier 

with HCPCS code G0109, the distant 

site practitioner would certify that the 

beneficiary has received or will receive 

1 hour of in-person instruction in selfadministration of injectable drugs which 

must be furnished to the eligible 

telehealth individual as individual or 

group DSMT services during the year 

following the initial DSMT service. 

Consistent with this proposal to add 

these group education and training 

services, we also proposed to revise our 

regulations at § 410.78(b) and 

§ 414.65(a)(1) to include group KDE, 

MNT, DSMT, and HBAI services as 

Medicare telehealth services, with the 

exception of 1 hour of in-person 

instruction in self-administration of 

injectable drugs which must be 

furnished to the eligible telehealth 

individual as individual or group DSMT 

services in the year following the initial 

DSMT service. 

Comment: Many commenters agreed 

with CMS’ proposal to add group KDE, 

MNT, DSMT, and HBAI to the list of 

Medicare telehealth services for CY 

2011. Some commenters commended 

CMS’ willingness to expand the list of 

Medicare telehealth services and 

explained that the additions would 

facilitate beneficiary access to care. 

Many commenters also urged CMS to 

make further additions to the list of 

Medicare telehealth services beyond 

those proposed for CY 2011. 

Response: We believe adding these 

group services to the list of Medicare 

telehealth services will facilitate 

beneficiary access to care, and we 

appreciate the commenters’ shared 

interest in that goal. 

The process for requesting additional 

services to be added to the list of 

Medicare telehealth services is 

described in section IV.B. of this final 

rule with comment period. Requests for 

additions for CY 2012 must be received 

by the end of CY 2010. Further 

information is available about the 

process on the CMS web site at: http:// 

www.cms.gov/telehealth/. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to add 

HCPCS code G0421 for group KDE 

services, CPT code 97804 for group 

MNT services, HCPCS code G0109 for 

group DSMT services, and CPT codes 

96153 and 96154 for group HBAI 

services to the Medicare telehealth 

services list on a category 1 basis. 

Furthermore, because we have the same 

concerns for group DSMT services that 

we raised above regarding adequate 

injection training for individual DSMT 

services, we are requiring the same 

minimum of 1 hour of in-person 

instruction for injection training within 

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the year following the initial DSMT 

service for any beneficiary that receives 

DSMT services via telehealth. By 

reporting the –GT or –GQ modifier with 

HCPCS code G0109, the distant site 

practitioner would certify that the 

beneficiary has received or will receive 

1 hour of in-person DSMT services for 

purposes of injection training during the 

year following the initial DSMT service. 

Consistent with the addition of these 

group education and training services, 

we are also revising our regulations at 

§ 410.78(b) and § 414.65(a)(1) to include 

group KDE, MNT, DSMT, and HBAI 

services as Medicare telehealth services, 

with the exception of 1 hour of inperson instruction for injection training 

within the year following the initial 

DSMT service. 

As described above for individual 

DSMT services, we note that group 

DSMT services may be furnished by a 

physician, individual, or entity that 

furnishes other services for which direct 

Medicare payment may be made and 

that submits necessary documentation 

to, and is accredited by, an accreditation 

organization approved by CMS, as 

specified in § 410.141(e) for DSMT 

services. However, consistent with the 

statutory requirements of section 

1834(m)(1) of the Act and as provided 

in § 410.78(b)(1) and (b)(2) of our 

regulations, Medicare telehealth 

services, including group DSMT 

furnished as a telehealth service, can 

only be furnished by a licensed 

physician, PA, NP, CNS, certified nursemidwife, clinical psychologist, clinical 

social worker, or registered dietitian or 

nutrition professional. 

4. Initial, Subsequent, and Discharge 

Day Management Hospital Care Services 

The University of Louisville School of 

Medicine, the American Telemedicine 

Association, and Mille Lacs Health 

System submitted various requests to 

add initial hospital care services 

(reported by CPT codes 99221 (Level 1 

initial hospital care), 99222 (Level 2 

initial hospital care), and 99223 (Level 

3 initial hospital care)); subsequent 

hospital care services (reported by CPT 

codes 99231 (Level 1 subsequent 

hospital care), 99232 (Level 2 

subsequent hospital care), and 99233 

(Level 3 subsequent hospital care)); and/ 

or hospital discharge day management 

services (reported by CPT codes 99238 

(Hospital discharge day management; 30 

minutes or less) and 99239 (Hospital 

discharge day management; more than 

30 minutes) to the Medicare telehealth 

services list beginning in CY 2011, 

generally on a category 1 basis. Some of 

the requestors also recommended that 

we limit the delivery of these services 

through telehealth to the provision of 

services to patients with a psychiatric 

diagnosis or to those treated in a 

psychiatric hospital or licensed 

psychiatric bed. 

We appreciate the recommendations 

of the requestors to substantially expand 

the list of Medicare telehealth services. 

The requestors submitted a number of 

studies regarding the outcomes of 

telehealth services in caring for patients 

with psychiatric diagnoses. However, 

we note that the CPT codes for hospital 

care services are used to report care for 

hospitalized patients with a variety of 

diagnoses, including psychiatric 

diagnoses. In the CY 2011 PFS proposed 

rule (75 FR 40110), we stated our belief 

that it would not be appropriate to add 

services to the telehealth list only for 

certain diagnoses because the service 

described by a HCPCS code is 

essentially the same service, regardless 

of the patient’s diagnosis. When 

evaluating the addition of services for 

telehealth on a category 1 basis, our 

focus is on the roles of, and interactions 

among, the beneficiary, the physician or 

practitioner, and the telepresenter (if 

applicable), which generally are similar 

across diagnoses for services that may 

be reported with the same HCPCS 

codes. Even in the unique case of 

certain ESRD services, we limited 

additions to the list of Medicare 

telehealth services based on the 

appropriateness of certain specific 

codes, taking into consideration the full 

service descriptions (69 FR 47511). 

Therefore, we continue to believe that it 

is most appropriate to consider 

additions to the list of telehealth 

services based on the overall suitability 

of the services described by the relevant 

HCPCS codes to delivery through 

telehealth. 

In the CY 2005, CY 2008, and CY 

2009 PFS rulemakings (69 FR 47510 and 

66276, 72 FR 38144 and 66250, and 73 

FR 38517 and 69745, respectively), we 

did not add initial, subsequent, or 

discharge day management hospital care 

services to the list of approved 

telehealth services because of our 

concern regarding the use of telehealth 

for the ongoing evaluation and 

management (E/M) for the generally 

high acuity of hospital inpatients. While 

we continue to have some concern in 

this area, we also share the requestors’ 

interest in improving access for 

hospitalized patients to care furnished 

by treating practitioners. Therefore, we 

reevaluated these services in the context 

of the CY 2011 requests, including 

considering the possibility that these 

services could be added on a category 1 

basis based on their resemblance to 

services currently on the telehealth list, 

such as initial and follow-up inpatient 

telehealth consultations. The following 

presents a discussion of our review for 

the CY 2011 proposed rule of the 

subcategories of hospital care services 

included in these requests. 

Currently, one of the three codes for 

an initial hospital care service 

(specifically CPT codes 99221, 99222, or 

99223) is reported for the first hospital 

inpatient E/M visit to the patient by the 

admitting or a consulting practitioner 

when that visit is furnished in person. 

In addition, we note that currently there 

are several HCPCS G-codes on the 

Medicare telehealth services list that 

may be reported for initial and followup inpatient consultations through 

telehealth, specifically HCPCS codes 

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); G0408 (Follow-up inpatient 

telehealth consultation, complex, 

physicians typically spend 35 minutes 

or more communicating with the patient 

via telehealth); 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); and 

G0427 (Initial inpatient telehealth 

consultation, typically 70 minutes or 

more communicating with the patient 

via telehealth). 

While initial inpatient consultation 

services are currently on the list of 

approved telehealth services, there are 

no services on the current list of 

telehealth services that resemble initial 

hospital care for an acutely ill patient by 

the admitting practitioner who has 

ongoing responsibility for the patient’s 

treatment during the hospital course. 

Therefore, we were unable to consider 

initial hospital care services on a 

category 1 basis for the telehealth list for 

CY 2011. 

We reviewed the documentation 

submitted in support of adding the 

initial hospital care codes to the 

Medicare telehealth services list as 

category 2 requests. Most of the studies 

provided by the requestors were specific 

to the treatment of patients with 

particular diagnoses. Additionally, the 

studies were not specific to initial 

hospital care visits by admitting 

practitioners. Finally, most of the 

studies concluded that more research 

was required in order to establish 

medical equivalence between telehealth 

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and in-person services. Therefore, we 

received no information that provides 

robust support for the addition of initial 

hospital care services to the approved 

telehealth list on a category 2 basis. The 

initial hospital care codes describe the 

first visit to the hospitalized patient by 

the admitting practitioner who may or 

may not have seen the patient in the 

decision-making phase regarding 

hospitalization. We believe it is critical 

that the initial hospital visit by the 

admitting practitioner be conducted inperson to ensure that the practitioner 

with ongoing treatment responsibility 

comprehensively assesses the patient’s 

condition upon admission to the 

hospital through a thorough in-person 

examination. Therefore, we did not 

propose to add initial hospital care 

services to the Medicare telehealth 

services list for CY 2011. 

We again considered adding 

subsequent hospital care services 

reported by CPT codes 99231 through 

99233 to the telehealth list for CY 2011 

on a category 1 basis. In the CY 2005 

and CY 2008 PFS proposed rules (69 FR 

47511 and 72 FR 38155), we stated that 

the potential acuity of patients in the 

hospital setting precludes consideration 

of subsequent hospital visits as similar 

to existing telehealth services. However, 

as stated earlier, we also note that 

HCPCS codes for initial and follow-up 

inpatient consultation services are on 

the list of telehealth services. These E/ 

M services are furnished to high acuity 

hospitalized patients, although not by 

the admitting practitioner himself or 

herself. However, in light of the 

increasingly prevalent care model that 

entails multidisciplinary team care for 

patients with complex medical illnesses 

that involve multiple body systems, 

consulting practitioners may often play 

a key, intensive, and ongoing role in 

caring for hospitalized patients. 

Therefore, we believe that subsequent 

hospital care visits by a patient’s 

admitting practitioner may sufficiently 

resemble follow-up inpatient 

consultation services to consider these 

subsequent hospital care services on a 

category 1 basis for the telehealth list. 

While we still believe the potential 

acuity of hospital inpatients is greater 

than those patients likely to receive 

currently approved Medicare telehealth 

services, we also believe that it would 

be appropriate to permit some 

subsequent hospital care services to be 

furnished through telehealth in order to 

ensure that hospitalized patients have 

frequent encounters with their 

admitting practitioner. However, we 

also continue to believe that the 

majority of these visits should be inperson to facilitate the comprehensive, 

coordinated, and personal care that 

medically volatile, acutely ill patients 

require on an ongoing basis. 

Therefore, for CY 2011 we proposed 

that subsequent hospital care services, 

specifically CPT codes 99231, 99232, 

and 99233, be added to the list of 

telehealth services on a category 1 basis 

for CY 2011, but with some limitations 

on the frequency with which these 

services may be furnished through 

telehealth. Because of our concerns 

regarding the potential acuity of 

hospital inpatients, we proposed to 

limit the provision of subsequent 

hospital care services through telehealth 

to once every 3 days. We were confident 

that admitting practitioners would 

continue to make appropriate in-person 

visits to all patients who need such care 

during their hospitalization. Consulting 

practitioners should continue to use the 

inpatient telehealth consultation HCPCS 

G-codes, specifically G0406, G0407, 

G0408, G0425, G0426, or G0427 when 

reporting consultations furnished to 

inpatients via telehealth. 

Consistent with this proposal, we 

proposed to revise § 410.78(b) and 

§ 414.65(a)(1) to include subsequent 

hospital care services as Medicare 

telehealth services, with the limitation 

of one telehealth subsequent hospital 

care service every 3 days. 

We also considered adding hospital 

discharge day management services to 

the list of telehealth services. These 

services, reported by CPT codes 99238 

and 99239, include the final 

examination of the patient, discussion 

of the hospital stay, instructions for 

continuing care to all relevant 

caregivers, and preparation of discharge 

records, prescriptions, and referral 

forms. These services are furnished 

when a practitioner deems it medically 

reasonable and necessary to assess a 

patient’s readiness for discharge and to 

prepare a patient for discharge from an 

acute care environment to a less 

intensive setting. There are no services 

on the current list of telehealth services 

that resemble such preparation of a 

patient for discharge. We believe it is 

especially important that, if a 

practitioner furnishes a discharge day 

management service, the service be 

furnished in-person in order to allow 

the practitioner to comprehensively 

assess the patient’s status in preparation 

for discharge so that the patient will 

have a higher likelihood of making a 

successful transition to the less 

intensive setting. Therefore, we did not 

consider hospital discharge day 

management services for addition to the 

Medicare telehealth services list on a 

category 1 basis. 

We reviewed the documentation 

submitted by requestors in support of 

adding these codes to the Medicare 

telehealth services list on a category 2 

basis. Most of the submitted studies 

were specific to the treatment of 

patients with specific diagnoses and 

were not specific to discharge services. 

Additionally, most of the studies 

concluded that more research was 

required in order to establish medical 

equivalence between telehealth and inperson services. The submitted 

documentation did not provide the 

necessary evidence to alter our previous 

conclusion that hospital discharge day 

management services should be 

provided in-person in light of the acuity 

of hospitalized patients, their typically 

complex post-hospitalization care 

needs, and the importance of patient 

education by the admitting practitioner 

who had ongoing responsibility for the 

patient’s treatment during the hospital 

stay. Therefore, we did not propose to 

add hospital discharge day management 

services to the list of telehealth services 

for CY 2011. 

Comment: Many commenters 

expressed support for all of CMS’ 

proposed additions to the list of 

Medicare telehealth services, including 

subsequent hospital care services. One 

commenter urged CMS to focus on 

adding services where research 

demonstrates that technology can 

facilitate medically equivalent services 

and improve beneficiary access to 

providers, and to carefully monitor 

implementation of any new telehealth 

services to ensure that patients’ 

experience of the care is positive and 

that patient outcomes are not 

compromised. The commenter 

encouraged CMS’ continued attention to 

the evidence and the role of patient 

needs as CMS evaluates telehealth 

requests. The commenter cited CMS’ 

decision not to propose the addition of 

hospital discharge day management 

services as a Medicare telehealth service 

as an example of the agency applying 

appropriate rigor to best reflect patient 

needs and preferences. 

Response: We appreciate the support 

for our proposed additions, as well as 

our consideration and decisions 

regarding requested additions to 

telehealth services that we did not 

propose to add to the list of telehealth 

services for CY 2011. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to add 

subsequent hospital care services, 

specifically CPT codes 99231, 99232, 

and 99233, to the list of telehealth 

services on a category 1 basis for CY 

2011, but with the limitation of one 

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subsequent hospital care service 

furnished through telehealth every 3 

days. We are revising § 410.78(b) and 

§ 414.65(a)(1) accordingly to include 

subsequent hospital care services as 

Medicare telehealth services, with the 

limitation of one telehealth subsequent 

hospital care service every 3 days. We 

are also finalizing our decision not to 

add initial or discharge day 

management hospital care services to 

the list of Medicare telehealth services. 

5. Initial, Subsequent, Discharge Day 

Management, and Other Nursing 

Facility Care Services 

The American Telemedicine 

Association and the Marshfield Clinic 

submitted requests to add nursing 

facility care codes, covering the 

spectrum of initial (reported by CPT 

codes 99304 (Level 1 initial nursing 

facility care), 99305 (Level 2 initial 

nursing facility care) and 99306 (Level 

3 initial nursing facility care)); 

subsequent (reported by CPT codes 

99307 (Level 1 subsequent nursing 

facility care), 99308 (Level 2 subsequent 

nursing facility care), 99309 (Level 3 

subsequent nursing facility care), and 

99310 (Level 4 subsequent nursing 

facility care)); discharge day 

management (reported by CPT codes 

99315 (Nursing facility discharge day 

management; 30 minutes or less) and 

99316 (Nursing facility discharge day 

management; more than 30 minutes)); 

and other (reported by CPT code 99318 

(Evaluation and management of a 

patient involving an annual nursing 

facility assessment)) services, to the 

Medicare telehealth services list 

beginning in CY 2011. The commenters 

requesting the addition of these services 

expressed concerns regarding limited 

access to care if we did not allow these 

services to be furnished through 

telehealth, and requested that CMS 

acknowledge the recent Congressional 

inclusion of nursing facilities as 

telehealth originating sites by adding 

these codes to the list of Medicare 

telehealth services. 

In the CY 2010 PFS proposed and 

final rules (74 FR 33544 and 74 FR 

61762), we discussed concerns about 

potential disparities in patient acuity 

between nursing facility services and 

the current list of Medicare telehealth 

services. We also declined to add 

HCPCS codes to the Medicare telehealth 

services list that are used exclusively to 

describe Federally-mandated nursing 

facility visits. As discussed in the CY 

2010 PFS proposed rule (74 FR 33543), 

the long-term care regulations at 

§ 483.40(c) require that residents of 

SNFs receive initial and periodic 

personal visits. These regulations ensure 

that at least a minimal degree of 

personal contact between a practitioner 

and a SNF resident is maintained, both 

at the point of admission to the facility 

and periodically during the course of 

the resident’s stay. We continue to 

believe that these Federally-mandated 

visits should be conducted in-person, 

and not as Medicare telehealth services. 

Therefore, in the CY 2010 PFS final rule 

with comment period, we revised 

§ 410.78 to preclude physicians and 

other practitioners from furnishing the 

physician visits required under 

§ 483.40(c) through telehealth. 

We reviewed the use of telehealth for 

each of the subcategories of nursing 

facility services included in the requests 

for CY 2011. We identified the E/M 

services that fulfill Federal requirements 

for personal visits under § 483.40(c), 

and we did not propose for CY 2011 to 

add any HCPCS codes to the Medicare 

telehealth services list that are used 

exclusively to describe these Federallymandated visits. These codes include 

the CPT codes for initial nursing facility 

care (CPT codes 99304 through 99306) 

that are used to report the initial E/M 

visit that fulfills Federally-mandated 

requirements under § 483.40(c) and 

other nursing facility service (CPT code 

99318) that is only payable by Medicare 

if the visit is substituted for a Federallymandated visit under § 483.40(c). 

The nursing facility discharge day 

management services reported under 

CPT code 99315 and 99316 are E/M 

visits that prepare a nursing facility 

resident for discharge from the facility. 

There are no Medicare requirements 

that such a service be furnished. If a 

practitioner chooses to furnish this 

service, we continue to believe that an 

in-person visit is most appropriate in 

order to ensure the resident is prepared 

for discharge from the nursing facility. 

These services are furnished when a 

practitioner deems it medically 

reasonable and necessary to assess a 

patient’s readiness for and to prepare a 

patient being discharged from the 

monitored nursing facility environment 

to another typically less intensive 

setting. There are no services on the 

current list of telehealth services that 

resemble such preparation of a patient 

for discharge. As in the case of hospital 

discharge day management services, we 

believe it is especially important that, if 

a practitioner furnishes a nursing 

facility discharge day management 

service, the service be furnished inperson. The practitioner must be able to 

comprehensively assess the patient’s 

status in preparation for discharge so 

that the patient will have a higher 

likelihood of making a successful 

transition from the nursing facility to 

another setting. Therefore, we did not 

consider nursing facility discharge day 

management services for addition to the 

Medicare telehealth services list on a 

category 1 basis for CY 2011. When we 

considered the addition of these 

services under category 2, we had no 

evidence that nursing facility discharge 

services furnished through telehealth 

are equivalent to in-person discharge 

services. Therefore, we did not propose 

to add nursing facility discharge day 

management services to the CY 2011 

telehealth list. 

Subsequent nursing facility services, 

reported by CPT codes 99307 through 

99310, may be used to report either a 

Federally-mandated periodic visit under 

§ 483.40(c) or another E/M visit, prior to 

or after the initial nursing facility care 

visit, as long as the subsequent nursing 

facility care visit is medically 

reasonable and necessary for the 

resident’s care. While we continue to 

believe that many SNF residents have 

complex medical care needs, we believe 

that it is appropriate to consider the 

addition of these codes to the telehealth 

list on a category 1 basis. As we state 

above in the context of our discussion 

of subsequent hospital care services, the 

HCPCS codes for initial and follow-up 

inpatient consultation services for 

nursing facility patients are on the list 

of Medicare telehealth services, and 

subsequent nursing facility services are 

similar to those services. These E/M 

services are furnished to high acuity, 

complex SNF patients, although not by 

the admitting practitioner himself or 

herself. Therefore, we believe that 

subsequent nursing facility visits by a 

patient’s admitting practitioner 

sufficiently resemble follow-up 

inpatient consultation services to 

consider them on a category 1 basis for 

the telehealth list. We concluded for CY 

2011 that it would be appropriate to 

permit some subsequent nursing facility 

care services to be furnished through 

telehealth to ensure that complex 

nursing facility patients have frequent 

encounters with their admitting 

practitioner, although we continue to 

believe that the Federally-mandated 

visits should be in-person to facilitate 

the comprehensive, coordinated, and 

personal care that these complex 

patients require on an ongoing basis. 

Therefore, we proposed that 

subsequent nursing facility care 

services, specifically CPT codes 99307, 

99308, 99309 and 99310, be added to 

the list of Medicare telehealth services 

on a category 1 basis beginning in CY 

2011, with some limitations on 

furnishing these services through 

telehealth. Because of our concerns 

regarding the potential acuity and 

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complexity of SNF inpatients, we 

proposed to limit the provision of 

subsequent nursing facility care services 

furnished through telehealth to once 

every 30 days. We were especially 

interested in public comments, 

including any evidence regarding 

patterns of high quality care and clinical 

outcomes, regarding this proposal to 

limit the provision of subsequent 

nursing facility care services furnished 

through telehealth to once every 30 

days. We remain committed to ensuring 

that SNF inpatients receive appropriate 

in-person visits and that Medicare pays 

only for medically reasonable and 

necessary care. Currently and 

continuing in CY 2011, an unlimited 

number of initial and follow-up 

consultation services may be furnished 

through telehealth to these patients, so 

we believe that only a limited number 

of subsequent nursing facility care 

services by the admitting practitioner 

would be appropriate for SNF 

inpatients. Finally, we specified that 

subsequent nursing facility care services 

reported for a Federally-mandated 

periodic visit under § 483.40(c) may not 

be furnished through telehealth. In light 

of this CY 2011 proposal, we were 

confident that admitting practitioners 

would continue to make appropriate inperson visits to all patients who need 

such care during their SNF stay. 

Consistent with our proposal, we 

proposed to revise § 410.78(b) and 

§ 414.65(a)(1) to include subsequent 

nursing facility care services as 

Medicare telehealth services, with the 

limitation of one telehealth subsequent 

nursing facility care service every 30 

days. Federally-mandated periodic 

visits may not be furnished through 

telehealth, as specified currently in 

§ 410.78(e)(2). 

Comment: One commenter 

recommended that CMS limit the use of 

telehealth for subsequent nursing 

facility care services to CPT codes 99307 

and 99308, the lower two levels of care. 

The commenter stated that the 

subsequent nursing facility care services 

described by CPT codes 99309 and 

99310, the higher two levels of care, 

require a detailed to comprehensive 

history and examination, along with 

moderate to complex decisionmaking 

that warrant an in-person visit with the 

physician. The same commenter 

disagreed with the limitation of one 

telehealth subsequent nursing facility 

care service every 30 days and suggested 

that unless and until evidence of 

overutilization is obtained, the limit 

could hinder access to appropriate care 

under the telehealth benefit. The 

commenter agreed with the CMS policy 

that all Federally-mandated visits as 

defined by the long-term care 

regulations § 483.40(c) should be 

conducted in-person and not as 

Medicare telehealth services. 

Response: We appreciate the response 

to our specific request for public 

comment regarding the addition of 

subsequent nursing facility care services 

to the list of Medicare telehealth 

services with the limitation of one 

telehealth subsequent nursing facility 

care service every 30 days. As we stated 

in the proposed rule (75 FR 40112), we 

remain committed to ensuring that SNF 

inpatients receive appropriate in-person 

visits and that Medicare pays only for 

medically reasonable and necessary 

care. We received no new evidence from 

the commenter regarding patterns of 

high quality care and clinical outcomes 

in terms of our proposal to limit the 

provision of subsequent nursing facility 

care services furnished through 

telehealth to once every 30 days. 

Because we want to ensure that nursing 

facility patients with complex medical 

conditions have appropriately frequent 

medically reasonable and necessary 

encounters with their admitting 

practitioner, we continue to believe that 

it would be appropriate to permit the 

full range of subsequent nursing facility 

care services to be furnished through 

telehealth. At the same time, because of 

our concerns regarding the potential 

acuity and complexity of SNF 

inpatients, we want to ensure that these 

patients continue to receive in-person 

visits as appropriate to manage their 

care. We are adding these services as 

Medicare telehealth services with the 

limitation as we proposed, and we 

remain confident that admitting 

practitioners will continue to make 

appropriate in-person visits to all 

patients who need such care during 

their SNF stay. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to add 

subsequent nursing facility care 

services, specifically CPT codes 99307, 

99308, 99309 and 99310, to the list of 

Medicare telehealth services on a 

category 1 basis beginning in CY 2011, 

with limits to the provision of 

subsequent nursing facility care services 

furnished through telehealth to once 

every 30 days. We are revising 

§ 410.78(b) and § 414.65(a)(1) to include 

subsequent nursing facility care services 

as Medicare telehealth services, with the 

limitation of one telehealth subsequent 

nursing facility care service every 30 

days. Federally-mandated periodic 

visits may not be furnished through 

telehealth, as specified currently in 

§ 410.78(e)(2). 

6. Neuropsychological Testing Services 

The American Telemedicine 

Association submitted a request to add 

neuropsychological testing services, 

described by CPT codes 96119 

(Neuropsychological testing (for 

example, Halstead-Reitan 

Neuropsychological Battery, Wechsler 

Memory Scales and Wisconsin Card 

Sorting Test), per hour of the 

psychologist’s or physician’s time, both 

face-to-face time administering tests to 

the patient and time interpreting these 

test results and preparing the report); 

and 96119 (Neuropsychological testing 

(for example, Halstead-Reitan 

Neuropsychological Battery, Wechsler 

Memory scales and Wisconsin Card 

Sorting Test), with qualified health care 

professional interpretation and report, 

administered by technician, per hour of 

technician time, face-to-face), to the list 

of telehealth services for CY 2011 based 

on their similarity to other telehealth 

services. 

In the CY 2008 PFS final rule with 

comment period (72 FR 66251), we 

stated that we have received conflicting 

comments and data regarding the 

appropriateness of furnishing 

neuropsychological testing via 

telehealth. While we appreciate the 

recent request for addition of these same 

services to the Medicare telehealth 

services list, we did not believe that 

these services are similar to services 

currently on the Medicare telehealth 

services list and, therefore, we 

concluded that they would not be 

appropriate for consideration or 

addition under category 1 for CY 2011. 

In the CY 2011 request for the addition 

of the these services, we received no 

information to indicate that the 

diagnostic findings of 

neuropsychological testing through 

telehealth are similar to those based 

upon in-person testing, and therefore 

that testing through telehealth does not 

affect the patient’s diagnosis. 

Consequently, we did not propose to 

add neuropsychological testing services 

to the list of approved Medicare 

telehealth services for CY 2011. 

We received no public comments 

regarding our discussion of the request 

to add neuropsychological testing to the 

list of Medicare telehealth services. 

Therefore, we are finalizing our decision 

not to add neuropsychological testing to 

the list of Medicare telehealth services 

for CY2011. 

7. Speech-Language Pathology Services 

The Marshfield Clinic submitted a 

request to add various speech-language 

pathology services to the list of 

approved telehealth services for CY 

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2011. Speech-language pathologists are 

not permitted under section 

1842(b)(18)(C) of the Act to furnish and 

receive payment for Medicare telehealth 

services. Therefore, we did not propose 

to add any speech-language pathology 

services to the list of Medicare 

telehealth services for CY 2011. For 

further discussion of these services in 

the context of telehealth, we refer 

readers to the CY 2005 and CY 2007 PFS 

proposed and final rules with comment 

period (69 FR 47512 and 66276, and 71 

FR 48995 and 69657). 

Comment: One commenter stated that 

research has proven that audiology 

procedures offered via telehealth 

services have great potential. The 

commenter also stated that CMS should 

use its broad discretion in implementing 

programs to expand the list of available 

telehealth services to include audiology. 

Response: It is not within our 

administrative authority to pay speech 

language pathologists and 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 those terms are defined 

in section 1834(m)(4)(D) and (E) of the 

Act. 

After consideration of the public 

comment we received, we are finalizing 

our decision not to add various speechlanguage pathology services to the list of 

approved telehealth services for CY 

2011. 

8. Home Wound Care Services 

Wound Care Associates, LLC, 

submitted a request to add wound care 

in the home setting to the list of 

Medicare telehealth services. A patient’s 

home is not permitted under current 

statute to serve as an originating site for 

Medicare telehealth services. Therefore, 

we did not propose to add home wound 

care services to the list of Medicare 

telehealth services for CY 2011. 

We received no public comments 

regarding our discussion of the request 

to add wound care in the home setting 

to the list of Medicare telehealth 

services. Therefore, we are finalizing 

our decision not to add wound care in 

the home setting to the list of Medicare 

telehealth services for CY2011. 

9. Other Issues 

We received other public comments 

on matters related to Medicare 

telehealth services that were not the 

subject of proposals in the CY 2011 PFS 

proposed rule. We thank the 

commenters for sharing their views and 

suggestions. Because we did not make 

any proposals regarding these matters, 

we do not generally summarize or 

respond to such comments in this final 

rule with comment period. However, we 

are summarizing and responding to the 

following comments in order to reiterate 

certain information. 

Comment: One commenter requested 

an explanation of the acceptable time 

and format to request or recommend 

changes to the criteria set in 2003 by 

which CMS considers specific services 

for Medicare coverage when furnished 

through telehealth. 

Response: As we discussed in the CY 

2010 PFS final rule with comment 

period (74 FR 61766), our established 

criteria and process for reviewing 

requests to add to the list of approved 

Medicare telehealth services were 

subject to full notice and comment 

procedures in the CY 2003 PFS 

proposed and final rules. Since we did 

not make any proposals relating to the 

criteria or process for CY 2011, any 

potential revisions to the process for 

adding or deleting services from the list 

of approved Medicare telehealth 

services are outside the scope of this CY 

2011 final rule with comment period. 

Throughout the year, we regularly 

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. 

Thus, we encourage stakeholders to 

contact us at any time if there are topics 

related to physician payment policy that 

they would like to discuss. 

Comment: One commenter requested 

an explanation regarding how the 

payment rates for telehealth 

consultations are set in a manner that is 

consistent with section 1834(m)(2)(A) of 

the Act that requires Medicare to pay a 

practitioner who furnishes a telehealth 

service 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. 

Response: As we stated in the CY 

2009 PFS final rule with comment 

period (73 FR 69745), we established 

the RVUs for follow-up inpatient 

telehealth consultations at the same 

level as the RVUs established for 

subsequent hospital care (as described 

by CPT codes 99231 through 99233). For 

CY 2010, we established the RVUs for 

initial inpatient telehealth consultations 

at the same level as the RVUs for initial 

hospital care (as described by CPT codes 

99221 through 99223) (75 FR 61775). 

We believe this is appropriate because 

a physician or practitioner furnishing a 

telehealth service is paid an amount 

equal to the amount that would have 

been paid if the service had been 

furnished without the use of a 

telecommunication system. Since 

physicians and practitioners furnishing 

follow-up inpatient consultations in an 

in-person encounter must continue to 

utilize subsequent hospital care codes 

(as described by CPT codes 99231 

through 99233) and those furnishing 

initial inpatient consultations in an inperson encounter must generally utilize 

initial hospital care codes (as described 

by CPT codes 99221 through 99223), we 

believe it is appropriate that the RVUs 

for the subsequent and initial telehealth 

HCPCS G-codes are set at the same level 

as the subsequent and initial hospital 

care codes, respectively. 

D. Summary of CY 2011 Telehealth 

Policies 

In summary, we are finalizing our 

proposals to add the following 

requested services to the list of 

Medicare telehealth services for CY 

2011: 

• Individual and group KDE services 

(HCPCS codes G0420 and G0421, 

respectively); 

• Individual and group DSMT 

services, with a minimum of 1 hour of 

in-person instruction to be furnished in 

the year following the initial DSMT 

service to ensure effective injection 

training (HCPCS codes G0108 and 

G0109, respectively); 

• Group MNT and HBAI services 

(CPT codes 97804, and 96153 and 

96154, respectively); 

• Subsequent hospital care services, 

with the limitation for the patient’s 

admitting practitioner of one telehealth 

visit every 3 days (CPT codes 99231, 

99232, and 99233); and 

• Subsequent nursing facility care 

services, with the limitation for the 

patient’s admitting practitioner of one 

telehealth visit every 30 days (CPT 

codes 99307, 99308, 99309, and 99310). 

Furthermore, we are revising 

§ 410.78(b) and § 414.65(a)(1) 

accordingly. Specifically, we are adding 

individual and group KDE services, 

individual and group DSMT services, 

group MNT services, group HBAI 

services, and subsequent hospital care 

and nursing facility care services to the 

list of telehealth services for which 

payment will be made at the applicable 

PFS payment amount for the service of 

the practitioner. In addition, we have 

reordered the listing of services in these 

two sections and removed ‘‘initial and 

follow-up inpatient telehealth 

consultations furnished to beneficiaries 

in hospitals and SNFs’’ in § 410.78(b) 

because these are described by the more 

general term ‘‘professional 

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consultations’’ that is in the same 

section. Finally, we are continuing to 

specify that the physician visits 

required under § 483.40(c) may not be 

furnished as telehealth services. 

E. Telehealth Originating Site Facility 

Fee Payment Amount Update 

Section 1834(m) 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 2011 is 0.4 

percent. Therefore, for CY 2011, the 

payment amount for HCPCS code Q3014 

(Telehealth originating site facility fee) 

is 80 percent of the lesser of the actual 

charge or $24.10. The Medicare 

telehealth originating site facility fee 

and MEI increase by the applicable time 

period is shown in Table 49. 

TABLE 49—THE MEDICARE TELEHEALTH ORIGINATING SITE FACILITY

FEE AND MEI INCREASE BY THE APPLICABLE TIME PERIOD

Facility 

fee 

MEI 

increase 

(%) 

Period 

$20.00 N/A 10/01/2001–12/31/ 

2002 

$20.60 3.0 01/01/2003–12/31/ 

2003 

$21.20 2.9 01/01/2004–12/31/ 

2004 

$21.86 3.1 01/01/2005–12/31/ 

2005 

$22.47 2.8 01/01/2006–12/31/ 

2006 

$22.94 2.1 01/01/2007–12/31/ 

2007 

$23.35 1.8 01/01/2008–12/31/ 

2008 

$23.72 1.6 01/01/2009–12/31/ 

2009 

$24.00 1.2 01/01/2010–12/31/ 

2010 

$24.10 0.4 01/01/2011–12/31/ 

2011 

V. Addressing Interim Final Relative 

Value Units From CY 2010 and 

Establishing Interim Relative Value 

Units for CY 2011 

A. Background 

In accordance with section 1848(c) of 

the Act, CMS determines work, PE, and 

malpractice RVUs for each service paid 

under the PFS. On an annual basis, the 

AMA RUC provides CMS with 

recommendations regarding physician 

work values for new, revised, and 

potentially misvalued codes. Over the 

last several years, CMS, in conjunction 

with the AMA RUC, has identified and 

reviewed numerous potentially 

misvalued CPT codes. In 2006, the AMA 

RUC established the Five-Year Review 

Identification Workgroup to identify 

potentially misvalued services using the 

following screens: ‘‘New Technology;’’ 

‘‘Site-of-Service Anomalies;’’ ‘‘ High 

Volume Growth;’’ ‘‘CMS Fastest 

Growing;’’ ‘‘High Intra-Service Work per 

Unit Time (IWPUT);’’ ‘‘Services 

Surveyed by One Specialty—Now 

Performed by a Different Specialty;’’ 

‘‘Harvard-Valued, Utilization over 1 

Million;’’ ‘‘Harvard Valued, Utilization 

over 100,000;’’ and ‘‘Codes Reported 

Together/Bundled CPT Services.’’ 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 the next 

5-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, we agree the 

valuation is accurate), or, if we disagree, 

we determine an alternative value that 

better reflects our estimate of the 

physician work for the service. Because 

of the timing of the CPT Editorial Panel 

decisions, 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 sections 

III.I. and V.B.1. 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. 

B. Addressing Interim Final RVUs From 

CY 2010 

In this section, we address the interim 

final values published in Appendix C of 

the CY 2010 PFS final rule with 

comment period (74 FR 62144 through 

62146), as subsequently corrected in the 

December 10, 2009 (74 FR 65449) and 

May 11, 2010 correction notices (75 FR 

26350). We discuss the results of the CY 

2010 refinement panel, respond to 

public comments received on specific 

interim final values (including direct PE 

inputs) from CY 2010, address the status 

of the interim final values of a number 

of potentially misvalued codes from CY 

2009 and CY 2010, and address the 

other new, revised, or potentially 

misvalued codes with interim final 

values for CY 2010 that are not 

specifically discussed elsewhere in this 

final rule with comment period. 

We note that the final CY 2011 direct 

PE database that lists the direct PE 

inputs is available on the CMS Web site 

under the downloads for the CY 2011 

PFS final rule with comment period at: 

http://www.cms.gov/ 

PhysicianFeeSched/PFSFRN/ 

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list.asp#TopOfPage. The final CY 2011 

work, PE, and malpractice RVUs are 

displayed in Addendum B to this final 

rule with comment period. 

1. CY 2010 Interim Final Work RVUs 

Referred to the Refinement Panel 

We received public comments on 4 

CPT codes with CY 2010 interim final 

work values. We referred these services 

to the CY 2010 refinement panel for 

further review. For ease of discussion, 

we will be referring to these services as 

‘‘refinement codes.’’ Consistent with past 

practice (62 FR 59084), we convened a 

multispecialty 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 or two clinicians representing 

the commenting organization. 

• Two primary care clinicians 

nominated by the American Academy of 

Family Physicians and the American 

College of Physicians. 

• Three contractor medical directors 

(CMDs). 

• Clinicians with practices in related 

specialties who were expected to have 

knowledge of the services under review. 

We assembled a set of 300 reference 

services and asked the panel members 

to compare the clinical aspects of 

physician work for the refinement code 

to one or more of the reference services. 

In compiling the set of reference 

services, we attempted to include: (1) 

Services that are commonly performed 

for which the work RVUs are not 

controversial; (2) services that span the 

spectrum of work intensity; and (3) at 

least three services performed by each of 

the major specialties that furnish the 

refinement codes so that the perspective 

of relevant specialties would be 

represented. 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. 

We then analyzed the ratings for each 

refinement code based on a 

presumption that the interim final work 

RVUs were correct unless the ratings 

clearly indicated a different result. 

Ratings of work were analyzed for 

consistency among the four different 

groups (commenting organization, 

primary care physicians, CMDs, and 

related clinicians) represented on the 

panel. In addition, we used statistical 

tests to determine whether there was 

sufficient agreement among the groups 

of the panel and whether the agreedupon RVUs differed significantly from 

the interim final RVUs published in 

Addendum C of the CY 2010 final rule 

with comment period. We did not 

modify the interim final RVUs unless 

there was clear agreement for a change. 

If there was agreement across groups for 

change, but the groups did not agree on 

what the new RVUs should be, we 

eliminated the outlier group and looked 

for agreement among the remaining 

groups as the basis for new RVUs for the 

refinement code. This methodology is 

consistent with the historical refinement 

process as established in the November 

25, 1992 PFS final rule with comment 

period (57 FR 55938). 

Our decision to convene 

multispecialty panels of physicians and 

to apply the statistical tests described 

above 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 this final rule with comment 

period for a full discussion of the 

changes to the refinement process that 

we are adopting for refinement panels 

beginning in CY 2011. 

Table 50 lists those refinement codes 

reviewed under the CY 2010 refinement 

panel process described in this section. 

The table includes the following 

information: 

• CPT Code. This is the CPT code for 

a service. 

• Short Descriptor. This is an 

abbreviated version of the narrative 

description of the code. 

• CY 2010 Interim Final Work RVUs. 

The interim final work RVUs that 

appeared in the CY 2010 PFS final rule 

with comment period (74 FR 61949 

through 61953), as subsequently 

corrected in the December 10, 2009 (74 

FR 65449) and May 11, 2010 correction 

notices (75 FR 26350), are shown for 

each reviewed code. 

• Requested Work RVUs. This 

column identifies the work RVUs 

requested by the commenters. 

• CY 2011 Final Work RVUs. This 

column contains the final work RVUs 

after consideration by the refinement 

panel. 

We note that we are accepting the 

results of the CY 2010 refinement panel 

for all of these codes as the final work 

RVUs for CY 2011. These final values 

are also displayed in Addendum B to 

this final rule with comment period. 

TABLE 50—CPT CODES REVIEWED UNDER THE CY 2010 REFINEMENT PANEL PROCESS

CPT Code Mod Short descriptor CY 2010 interim 

final work RVUs 

Requested work 

RVUs 

CY 2011 final 

work RVUs 

74261 .......................................... 26 Ct colonography, w/o dye ................................. 2.28 2.40 2.40 

78451 .......................................... 26 Ht muscle image spect, sing ............................ 1.38 1.40 1.38 

78452 .......................................... 26 Ht muscle image spect, mult ............................ 1.62 1.75 1.62 

95905 .......................................... 26 Motor/sens nrve conduct test ........................... 0.05 0.15 0.05 

2. CY 2010 Interim Final RVUs for 

Which Public Comments Were Received 

a. Insertion of Breast Prosthesis (CPT 

Code 19340) 

CPT code 19340 (Immediate insertion 

of breast prosthesis following 

mastopexy, mastectomy or in 

reconstruction) was identified by CMS 

for AMA RUC review as requested by 

the specialty society. The AMA RUC 

recommended 13.78 work RVUs for CY 

2010, which CMS accepted. However, as 

noted by a public comment on the CY 

2010 PFS final rule with comment 

period, the interim final CY 2010 work 

RVUs published in the CY 2010 PFS 

final rule with comment period (74 FR 

61779, 62023 and 62144) for this service 

did not reflect the increases in the 

evaluation and management services for 

the post-operative visits associated with 

this service that resulted from the CY 

2010 changes to the consultation code 

policy. The work RVUs for CPT code 

19340 with these increases included are 

13.99 RVUs. This correction was 

included in the May 11, 2010 correction 

notice to the CY 2010 final rule with 

comment period (75 FR 26356). We are 

finalizing the interim work RVUs for 

CPT code 19340 of 13.99 for CY 2011. 

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b. Computed Tomographic 

Colonography (CPT Code 74261) 

For CPT code 74261, (Computed 

tomographic (CT) colonography, 

diagnostic, including image 

postprocessing; without contrast 

material), the AMA RUC recommended 

2.40 work RVUs. During the AMA RUC 

meeting, this code was compared to two 

CPT codes: 75635 (Computed 

tomographic angiography, abdominal 

aorta and bilateral iliofemoral lower 

extremity runoff, with contrast 

material(s), including noncontrast 

images, if performed, and image 

postprocessing (work RVUs = 2.40)) and 

78815 (Positron emission tomography 

(PET) with concurrently acquired 

computed tomography (CT) for 

attenuation correction and anatomical 

localization imaging; skull base to midthigh (work RVUs = 2.44)). Based on the 

comparisons of similar physician work, 

physician time, and intensity/ 

complexity measures, the AMA RUC 

determined that work RVUs of 2.40 

were appropriate for CPT code 74261. 

We disagreed with the AMA RUCrecommended work RVUs and believe 

CPT code 74263 (Computed 

tomographic (CT) colonography, 

screening, including image 

postprocessing) represents a more 

comparable service because it has 

virtually the same description of work, 

pre-, intra-, and post-service time for 

which the AMA RUC recommended 

work RVUs of 2.28. Therefore, we 

assigned interim final work RVUs of 

2.28 to CPT code 74261 for CY 2010. 

Comment: Several commenters 

disagreed with the interim final work 

RVUs assigned by CMS and believe that 

equalizing the work RVUs for diagnostic 

and screening computed tomographic 

colonography ignores the reality that 

patients referred for diagnostic study, by 

definition, have greater complexity. 

These commenters believed that for this 

reason and the increased time involved 

with a diagnostic study, higher work 

RVUs are necessary to maintain the 

proper relativity with the corresponding 

screening CPT code 74263. The 

commenters recommended that CMS 

accept the AMA RUC-recommended 

work RVUs of 2.40 for CPT code 74261 

and refer this code to the CY 2010 

refinement panel for review. 

Response: Based on the concerns 

expressed by the commenters, we 

referred this code to the CY 2010 

refinement panel for review. As a result 

of the statistical analysis of the CY 2010 

refinement panel ratings, we are 

assigning 2.40 work RVUs to CPT code 

74261 as the final value for CY 2011. 

c. Myocardial Perfusion Imaging (CPT 

Codes 78451, 78452, 78453, and 78454) 

For CPT code 78451 (Myocardial 

perfusion imaging, tomographic 

(SPECT) (including attenuation 

correction, qualitative or quantitative 

wall motion, ejection fraction by first 

pass or gated technique, additional 

quantification, when performed); single 

study, at rest or stress (exercise or 

pharmacologic)), the AMA RUC 

recommended 1.40 work RVUs, while 

the AMA RUC recommended 1.75 work 

RVUs for CPT code 78452 (Myocardial 

perfusion imaging, tomographic 

(SPECT) (including attenuation 

correction, qualitative or quantitative 

wall motion, ejection fraction by first 

pass or gated technique, additional 

quantification, when performed); 

multiple studies, at rest and/or stress 

(exercise or pharmacologic) and/or 

redistribution and/or rest reinjection). 

Upon review of the AMA RUC 

recommendations for these codes, it was 

unclear what methodology the AMA 

RUC used to calculate the recommended 

work RVUs for CPT code 78451. 

Therefore, we disagreed with the AMA 

RUC-recommended work RVUs of 1.40 

for CPT code 78451 and believe the 

work RVUs for the survey 25th 

percentile were more appropriate. 

Therefore, we assigned interim final 

work RVUs of 1.38 to CPT code 78451 

for CY 2010. 

For CPT code 78452, we disagreed 

with the reference code used, CPT code 

70496 (Computed tomographic 

angiography, head, with contrast 

material(s), including noncontrast 

images, if performed, and image 

postprocessing (work RVUs = 1.75)). We 

believe CPT code 78452 is comparable 

to CPT code 73219 (Magnetic resonance 

(eg, proton) imaging, upper extremity, 

other than joint; with contrast 

material(s) (work RVUs = 1.62)), which 

has the same pre-, intra-, and postservice time. Therefore, we assigned 

interim final work RVUs of 1.62 to CPT 

code 78452 for CY 2010. 

We accepted the CY 2010 

recommendations of the AMA RUC for 

the direct PE inputs for CPT codes 

78451, 78452, 78453, and 78454 (75 FR 

61955). 

Comment: Several commenters 

disagreed with the interim final work 

RVUs assigned by CMS for these two 

services. The commenters pointed out 

that the specialty and AMA RUC 

recommendations for both of these 

services already reflected a tremendous 

reduction from the work RVUs for the 

services as reported by multiple 

component codes in previous years and 

expressed disappointment that 

additional reductions were made by 

CMS. The commenters explained that in 

an effort to maintain relativity between 

CPT codes 78451 and 78452, the 

recommended RVUs for 78451 were 

derived by calculating the relationship 

between the median survey RVUs for 

CPT codes 78451 and 78452 and 

maintaining this relationship between 

the recommended RVUs for CPT codes 

78451 and 78452. That is, the survey 

work RVU relationship between CPT 

code 78451: 78452 is [1.50: 1.87], 

leading to the same relationship 

between the AMA RUC-recommended 

RVUs for 78451: 78452 of [1.40: 1.75]. 

The AMA RUC agreed that the 

computed work RVUs, 1.40 for CPT 

code 78451, maintain the relativity of 

the original survey data and provide an 

appropriate measure of the work for 

CPT code 78451. 

The commenters believe that CMS 

does not have the special expertise 

necessary to choose a different reference 

code than the code selected by the 

multispecialty AMA RUC panel and 

disagreed with the reference code used 

by CMS for establishing work RVUs for 

CPT code 78452. The AMA RUC 

pointed out that the reference code has 

no associated computer post-processing 

analysis, requires the interpretation of 

fewer images, and has no additional 

cine-motion images to analyze and 

interpret, all of which are included in 

the myocardial perfusion imaging 

procedures. 

The commenters requested that CMS 

accept the AMA RUC recommendations 

of 1.40 work RVUs for CPT code 78451 

and 1.75 work RVUs for CPT code 

78452 and refer these codes to the CY 

2010 refinement panel for review. 

Response: Based on the concerns 

expressed by the commenters, these 

codes were referred to the CY 2010 

refinement panel for review. As a result 

of the statistical analysis of CY 2010 

refinement panel ratings, the work 

RVUs for these codes were unchanged. 

Therefore, we are adopting the interim 

final values for these codes as final, 

with 1.38 work RVUs for CPT code 

78451 and 1.62 work RVUs for CPT 

code 78452 for CY 2011. 

Comment: Several commenters 

asserted that CMS had incorrectly 

crosswalked equipment time inputs for 

several myocardial perfusion imaging 

codes (CPT codes 78451, 78452, 78453, 

and 78454), rather than accepting the 

AMA RUC recommendations for these 

codes as CMS had stated in the CY 2010 

PFS final rule with comment period (74 

FR 61955). One commenter further 

suggested that the useful life of 5 years 

for the Cobalt-57 flood source was 

incorrect. 

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Response: We appreciate the 

commenters’ assistance, and we 

corrected the equipment times in the 

May 11, 2010 correction notice to the 

CY 2010 PFS final rule with comment 

period (75 FR 26356 and 26570). We are 

finalizing these direct PE inputs for CY 

2011. We also proposed to change the 

useful life of the Cobalt-57 flood source 

from 5 to 2 years for CY 2011 (75 FR 

40056). We address our final policies 

regarding this proposal in section 

II.A.3.b.(4) of this final rule with 

comment period. 

Comment: Several commenters 

expressed concern that CMS applied 

fully transitioned PE RVUs to the new 

and revised CY 2010 CPT codes, 

specifically CPT codes 78451, 78452, 

78453, and 78554. The commenters 

argued that the result of the lack of a 

transition to use of the PPIS data was an 

immediate 26 percent reduction for 

myocardial perfusion imaging services, 

simply because the CPT code 

descriptors had been revised to capture 

multiple procedure components. The 

commenters requested that the new CPT 

codes follow the same blend of new and 

previous PE RVUs that was applied to 

the existing CPT codes in CY 2010 and 

later years. 

Response: Our longstanding policy is 

that if the CPT Editorial Panel creates a 

new code for a given year, the new code 

would be paid at its fully implemented 

PFS amount and not at a transition rate 

for that year. Consistent with this 

policy, the new CY 2010 myocardial 

perfusion imaging codes, and all other 

new CY 2010 CPT codes, are not being 

paid based on transitional PE RVUs in 

CY 2010. We will continue to pay these 

services based on the fully implemented 

PE RVUs in CY 2011, the same approach 

we are applying to other CPT codes that 

were new for CY 2010 or CY 2011. 

d. Nerve Conduction Test (CPT Code 

95905) 

For CPT code 95905 (Motor and/or 

sensory nerve conduction, using 

preconfigured electrode array(s), 

amplitude and latency/velocity study, 

each limb, includes F-wave study when 

performed, with interpretation and 

report), the AMA RUC recommended 

0.05 work RVUs, which we accepted in 

the CY 2010 PFS final rule with 

comment (74 FR 61953). 

Comment: One commenter requested 

that CMS refer CPT code 95905 to the 

CY 2010 refinement panel for review. 

The commenter believes the AMA RUC 

erred in its recommendation to CMS in 

regard to the physician work involved. 

The commenter noted that when this 

code was discussed at the AMA RUC 

meeting, the commenter and other 

specialty societies that presented this 

code to the AMA RUC recommended 

assignment of 0.15 work RVUs. The 

commenter also believes that the 

undervaluation of the physician work 

for this service may undermine the 

ability of physicians to provide the 

service. 

Response: Based on the concerns 

expressed by the commenter, this code 

was referred to the CY 2010 refinement 

panel for review. As a result of the 

statistical analysis of the CY 2010 

refinement panel ratings, the work 

RVUs for this code were unchanged. 

Therefore, we are finalizing the interim 

final values for CPT code 95905 as 0.05 

work RVUs for CY 2011. 

e. Kidney Disease Education Services 

(HCPCS Codes G0420 and G0421) 

During rulemaking for CY 2010, we 

adopted policies to provide for the 

implementation of section 152(b) of the 

MIPPA which created a new benefit 

category for kidney disease education 

(KDE) services for Medicare 

beneficiaries diagnosed with Stage IV 

chronic kidney disease (CKD). The 

MIPPA also amended section 1848(j)(3) 

of the Act which allows for payment of 

KDE services under the PFS. For CY 

2010, we proposed and finalized the 

RVUs for the two HCPCS G-codes 

established for the payment of KDE 

services (74 FR 61901), G0420 (Face-toface educational services related to the 

care of chronic kidney disease; 

individual, per session, per one hour) 

and G0421 (Face-to-face educational 

services related to the care of chronic 

kidney disease; group, per session, per 

one hour). For purposes of valuing the 

HCPCS codes for KDE services, we 

based the work RVUs and the PE inputs, 

with minor modifications, on CPT codes 

for medical nutrition therapy (MNT) 

services, specifically CPT code 97802 

(Medical nutrition therapy; initial 

assessment and intervention, 

individual, face-to-face with the patient, 

each 15 minutes) and CPT code 97804 

(Medical nutrition therapy; group (2 or 

more individual(s)), each 30 minutes), 

because we believed these services to be 

similar. We crosswalked the work RVUs 

for HCPCS code G0420 from CPT code 

97802 and for HCPCS code G0421 from 

CPT code 97804. We multiplied the 

work RVUs for HCPCS code G0420 by 

four and the work RVUs for HCPCS 

code G0421 by two to account for the 

fact that we crosswalked a 15 minute 

code to a 60 minute code (CPT code 

97802 to HCPCS code G0420) and a 30 

minute code to a 60 minute code (CPT 

code 97804 to HCPCS code G0421). In 

order to determine the direct PE inputs 

for the KDE services, we indicated that 

we did not perform straight 

multiplication of the actual MNT inputs 

because we did not believe that the 

required equipment and supplies for the 

KDE services would increase in direct 

proportion to the increased time for the 

codes. For both HCPCS codes G0420 

and G0421, we noted that we did not 

increase the equipment time-in-use for 

the body analysis machine, printer, or 

scale, and that we did increase the 

inputs for the table, computer, paper, 

and other printed materials. 

Comment: Several commenters 

expressed support for the CY 2010 work 

RVUs for the KDE HCPCS codes G0420 

and G0421. However, one commenter 

requested that CMS include the supplies 

for the KDE services as directly 

proportional multiple units of the MNT 

services in order to appropriately pay 

for the costs of care, noting that HCPCS 

code G0420 (60 minutes) should have 4 

times as many supplies as those in CPT 

code 97802 (15 minutes) and HCPCS 

code G0421 (60 minutes) should have 2 

times as many as those in CPT code 

97804 (30 minutes). 

Response: We appreciate the 

commenters’ support for the interim 

final work 

Response: We appreciate the 

commenters’ support for the interim 

final work RVUs we established for 

HCPCS codes G0420 and G0421 for KDE 

services and we are finalizing those 

work RVUs for CY 2011. After reviewing 

the direct PE inputs for supplies in both 

the KDE HCPCS G-codes (G0420 and 

G0421) and the MNT CPT codes (CPT 

codes 97802 and 97804), we agree with 

the commenter that we had not 

increased the number of sheets of paper 

for either HCPCS code G0420 or G0421 

as we indicated we would (74 FR 

61901). Therefore, we have increased 

the number of paper sheets from 2 in 

CPT code 97802 (15 minutes) to 8 in 

HCPCS code G0420 (60 minutes) and 

from 2 in CPT code 97804 (30 minutes) 

to 4 in HCPCS code G0421 (60 minutes). 

We have also made conforming changes 

to the printer times for both KDE HCPCS 

G-codes in the equipment file because 

we base the printer time on the number 

of sheets of paper. We are adopting 

these modified direct PE inputs for 

HCPCS codes G0420 and G0421 as final 

for CY 2011. 

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f. Excision of Soft Tissue and Bone 

Tumors (CPT codes 21011 through 

21016, 21552, 21554 through 21558, 

21930 through 21933, 21395, 21936, 

22900 through 22905, 23071, 23073, 

23075 through 23078, 23200, 23210, 

23220, 24071, 24073, 24075 through 

24077, 24079, 24150 through 24153, 

25071, 25073, 25075 through 25078, 

25170, 26111, 26113, 26115 through 

26118, 26250, 26255, 26260, 26262, 

27043, 27045, 27047 through 27049, 

27059, 27075 through 27078, 27327 

through 27329, 27337, 27339, 27364, 

27365, 27615, 27616, 27618, 27619, 

27632, 27634, 27619, 27645 through 

27647, 28039, 28041, 28043, 28045 

through 28047, 28171, 28173, and 

28175) 

For CY 2010, the CPT Editorial Panel 

split 31 excision codes into 62 codes 

differentiated by the size of the excised 

lesion, 18 codes were revised, and 12 

additional codes were created. Although 

we had significant concerns with the 

pre-service times and the AMA RUCrecommended work RVUs for these 

codes for CY 2010, in the context of 

public comments on the CY 2010 

proposed rule regarding the site-ofservice anomaly codes, we agreed to 

accept the AMA RUC-recommended 

work values for these codes on an 

interim final basis for CY 2010 (74 FR 

61954). We also requested that the AMA 

RUC reexamine the minutes allocated 

for positioning of the patient for these 

codes. We noted that we would work 

with the AMA RUC to address our 

concerns about the valuation of these 

codes and would consider whether it 

would be appropriate to propose further 

changes in future rulemaking. We 

indicated that we did not agree with the 

AMA RUC’s recommendations for the 

inclusion of inpatient hospital care 

services in these codes, particularly in 

the cases of codes that would be 

reported for the smaller-sized tumors. 

As a result, we stated that we would 

monitor the frequency data for these 

codes and may propose further changes 

to the work RVUs in the future based on 

these data. We emphasized that the 

AMA RUC itself recommended that 

these services be re-reviewed to 

determine the accuracy of the utilization 

assumptions once 2 years of utilization 

data were available. 

In addition, we noted that the CPT 

2010 instructions regarding the use of 

the excision and resection of soft tissue 

and bone tumor codes advised that a 

complex repair may be separately 

reported. However, longstanding 

Medicare policy generally includes 

payment for all simple, intermediate, 

and complex repairs of procedural 

incisions and, therefore, Medicare 

would not separately pay for complex 

repairs associated with procedures 

reported by these codes. 

Comment: Several commenters were 

pleased that CMS agreed to accept the 

AMA RUC-recommended values for 

these new and revised codes. One 

commenter endorsed CMS’ decision to 

closely monitor the utilization rates for 

these codes and believes this would be 

important to ensure accurate payment. 

The commenters did not see a need for 

CMS or the AMA RUC to review the 

pre-service times assigned to the codes 

and stated that all of these times were 

derived from the AMA RUC’s preservice time package methodology, a 

methodology that CMS has historically 

supported. The commenters asserted 

that the times assigned are reflective of 

the actual patient positioning times. 

Therefore, the commenters urged CMS 

to withdraw the request that the AMA 

RUC revisit the pre-service times for 

these codes. The commenters asserted 

that further review would add extra 

time and work to the already significant 

workload of the AMA RUC and would 

not result in any changes. 

Response: We appreciate the 

commenters’ support for our acceptance 

of the AMA RUC-recommended values 

for these new and revised codes and we 

are finalizing the interim final work 

RVUs for these codes for CY 2011. As 

we stated in the CY 2010 PFS final rule 

with comment period, we will continue 

to monitor the frequency data for these 

codes and work with the AMA RUC to 

address our concerns and, if 

appropriate, propose further changes in 

future rulemaking. In addition, we are 

reiterating our request originally made 

in the CY 2010 PFS final rule with 

comment period (74 FR 61954) that the 

AMA RUC review the pre-service times 

for these codes and provide their 

recommendations to us. 

g. Cryoablation of Prostate (CPT code 

55873) 

In June 2008, CMS requested that the 

AMA RUC review the nonfacility direct 

PE inputs for CPT code 55873 

(Cryosurgical ablation of the prostate 

(includes ultrasonic guidance for 

interstitial cryosurgical probe 

placement). During this review, the 

AMA RUC recognized that this service 

was initially reviewed as a new code by 

the AMA RUC in February 2001. The 

AMA RUC believed that the intraservice physician time since the initial 

review had declined (from 200 minutes) 

as the service is now more commonly 

performed. The AMA RUC agreed with 

the specialty society that the service 

should be surveyed for physician work 

and also recommended revisions in the 

direct PE inputs. As a result of the AMA 

RUC review and input from the 

specialty society, the AMA RUC 

recommended 13.45 work RVUs and 

revisions to the direct PE inputs for this 

service for CY 2010. We reviewed these 

recommendations and accepted the 

AMA RUC-recommended work RVUs 

for this code and the direct PE inputs in 

the CY 2010 PFS final rule with 

comment (74 FR 61954 and 61955). 

Comment: One commenter expressed 

concern about the reduction in the work 

RVUs for CPT code 55873 and the lack 

of public notice given prior to the 

reduction. The commenter believes that 

the intra-service time was 

underestimated and could vary based on 

the skill set of the physician. The 

commenter requested that CMS reinstate 

the work RVUs as included in the CY 

2010 PFS proposed rule for CY 2010 (74 

FR 33740). 

Response: While we originally 

requested that the AMA RUC review the 

nonfacility direct PE inputs for CPT 

code 55873, we believe that it is 

appropriate for the AMA RUC to 

respond to its findings during a limited 

review by taking other actions that it 

believes to be appropriate for the 

particular circumstances, such as 

requesting that procedures be 

resurveyed. We followed our usual 

methodology for revised codes whereby 

we respond to the AMA RUC work 

recommendations and adopt interim 

final values in the final rule with 

comment period for the upcoming year. 

In this way, we facilitate appropriate 

payment for the services on an interim 

final basis while providing public notice 

and the opportunity for public comment 

prior to finalizing the values in the 

following year. 

We note that the RVUs for services 

paid under the PFS are resource-based, 

and individual services are valued 

based upon the typical resources used to 

provide the service. Because clinical 

utilization of this service has increased 

over the last several years and 

information from the current AMA RUC 

survey suggests there has been a 

decrease in intra-service time from 200 

to 100 minutes, we continue to believe 

the reduction in intra-service time and 

the revised work RVUs as recommended 

to us by the AMA RUC are clinically 

appropriate for this service. We 

commonly expect greater work 

efficiency as clinical experience with a 

new service increases over time, and 

this service fits that profile. Therefore, 

we are finalizing the interim final work 

RVUs of 13.60 for CPT code 55873 for 

CY 2011. 

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Comment: One commenter stated that 

the 162 minutes of clinical labor time 

for CPT code 55873 in the final CY 2010 

PFS direct PE database should be 168 

minutes. The commenter also indicated 

that supply code SD074 be included as 

an input for CPT code 55873 based on 

the AMA RUC’s CY 2010 

recommendations. 

Response: We appreciate the 

commenter bringing this information to 

our attention and agree with the 

commenter’s assessment. The 6 minutes 

of clinical labor time missing from the 

direct PE inputs for CPT code 55873 

have now been included, as has the 

filiform, and these changes are reflected 

in the final CY 2011 PFS direct PE 

database. We are finalizing these direct 

PE inputs for CPT code 55873 for CY 

2011. 

h. Urodynamics Studies (CPT Codes 

51728 and 51729) 

In February 2008, the AMA RUC 

identified CPT codes 51726 (Complex 

cystometrogram (ie, calibrated 

electronic equipment)); 51772 (Urethral 

pressure profile studies (UPP) (urethral 

closure pressure profile), any 

technique); 51795 (Voiding pressure 

studies (VP); bladder voiding pressure, 

any technique); and 51797 (Voiding 

pressure studies, intra-abdominal (ie, 

rectal, gastric, intraperitoneal) (List 

separately in addition to code for 

primary procedure)) through the ‘‘Codes 

Reported Together’’ potentially 

misvalued codes screen as combinations 

of codes that were reported together 

more than 95 percent of the time. The 

AMA RUC referred all four codes to the 

CPT Editorial Panel for creation of CPT 

codes for new comprehensive services 

and for reorganization of the coding 

structure to reflect the typical 

procedures performed. As a result, CPT 

codes 51772 and 51795 were deleted, 

CPT code 51797 was revised, and CPT 

codes 51727 (Complex cystometrogram 

(ie, calibrated electronic equipment); 

with urethral pressure profile studies 

(ie, urethral closure pressure profile), 

any technique); 51728 (Complex 

cystometrogram (ie, calibrated 

electronic equipment); with voiding 

pressure studies (i.e., bladder voiding 

pressure), any technique); and 51729 

(Complex cystometrogram (i.e., 

calibrated electronic equipment); with 

voiding pressure studies (ie, bladder 

voiding pressure) and urethral pressure 

profile studies (i.e., urethral closure 

pressure profile), any technique) were 

created for CY 2010. Accordingly, the 

AMA RUC reviewed the clinical labor 

inputs for the typical patient and made 

minor edits regarding the intra-service 

time for these services. In addition, the 

AMA RUC made adjustments to the 

medical supplies and equipment. As 

noted in the CY 2010 PFS final rule 

with comment period (74 FR 61955), we 

accepted these recommendations for the 

direct PE inputs on an interim final 

basis. 

Comment: Several commenters 

asserted that CPT codes 51728 and 

51729 should have additional clinical 

labor inputs, including a greater number 

of minutes during the intra-service 

period and minutes during the preservice period. These commenters also 

requested revisions to the PE supply 

inputs for the codes. 

Response: We discuss our CY 2011 

proposal and the final CY 2011 policy 

with respect to the direct PE inputs for 

CPT codes 51728 and 51729 in section 

II.A.3.c.(5) of this final rule with 

comment period. As we state there, we 

reviewed the direct PE inputs for these 

two CPT codes and three related CPT 

codes following revised AMA RUC 

recommendations for CY 2011. We 

agreed with the AMA RUC 

recommendations regarding changes for 

CY 2011. Specifically, we believe the 

pre-service nonfacility clinical labor 

time for the 0-day global period CPT 

codes 51725 (simple cystometrogram 

(CMG) (eg, spinal manometer)) and 

51726 should be removed and the intraservice clinical labor time for CPT code 

51726 should also be reduced, 

consistent with the usual treatment of 

other 0-day global codes. We believe the 

AMA RUC provided recommendations 

to us regarding the direct PE inputs for 

these cystometrogram services that 

accurately reflect the costs of the 

resources (that is, the clinical labor, 

equipment, and supplies) typically 

required to furnish these services to 

Medicare beneficiaries. 

Comment: Several additional 

commenters alerted CMS to incorrect 

supply inputs for CPT codes 51728 and 

51729. The commenters noted that the 

AMA RUC direct PE recommendations 

for CPT code 51728 included an 

additional beaker. In the case of CPT 

code 51729, the commenters stated that 

CMS did not include the recommended 

beaker and tubing in the direct PE 

database for the CY 2010 final rule with 

comment period. 

Response: We appreciate the 

commenters’ assistance, and we made 

these corrections in the May 11, 2010 

correction notice to the CY 2010 PFS 

final rule with comment period (75 FR 

26356 and 26478). We are finalizing 

these direct PE inputs, as corrected, for 

CPT codes 51728 and 51239 for CY 

2011. 

i. Coronary Computed Tomographic 

Angiography (CPT Codes 75571, 75572, 

75573, and 75574) 

In October 2008, the CPT Editorial 

Panel deleted eight Category III CPT 

codes (0144T through 0151T) and 

created four new codes for CY 2010, 

specifically CPT codes 75571 

(Computed tomography, heart, without 

contrast material, with quantitative 

evaluation of coronary calcium); 75572 

(Computed tomography, heart, with 

contrast material, for evaluation of 

cardiac structure and morphology 

(including 3D image postprocessing, 

assessment of cardiac function, and 

evaluation of venous structures, if 

performed)); 75573 (Computed 

tomography, heart, with contrast 

material, for evaluation of cardiac 

structure and morphology in the setting 

of congenital heart disease (including 

3D image postprocessing, assessment of 

LV cardiac function, RV structure and 

function and evaluation of venous 

structures, if performed)); and 75574 

(Computed tomographic angiography, 

heart, coronary arteries and bypass 

grafts (when present), with contrast 

material, including 3D image 

postprocessing (including evaluation of 

cardiac structure and morphology, 

assessment of cardiac function, and 

evaluation of venous structures, if 

performed)) to describe the evolution of 

the performance of cardiac and coronary 

computed tomography for specific 

clinical scenarios. We accepted the 

AMA RUC recommendations for direct 

PE inputs for these codes on an interim 

final basis for CY 2010 (74 FR 61955). 

Comment: Several commenters stated 

that the final CY 2010 PFS direct PE 

database included incomplete direct PE 

inputs for CPT codes 75572 and 75573. 

The commenters also submitted 

updated pricing information for the 64- 

slice CT scanner. 

Response: We appreciate the 

commenters’ assistance, and we 

corrected these errors in the May 11, 

2010 correction notice to the CY 2010 

PFS final rule with comment period (75 

FR 26356 and 26543). We are finalizing 

the direct PE inputs for CPT codes 

75571, 75572, 75573, and 75574, as 

corrected, for CY 2011. Additionally, we 

proposed an updated price for the 64- 

slice CT scanner and its accompanying 

software in the CY 2011 PFS proposed 

rule (75 FR 40062). We address that 

proposal and our final CY 2011 policy 

in section II.A.3.c.(2) of this final rule 

with comment period. 

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j. Adjacent Tissue Transfer or 

Rearrangement (CPT Codes 14301 and 

14302) 

CPT code 14300 (Adjacent tissue 

transfer or rearrangement, more than 30 

sq cm, unusual or complicated, any 

area) was identified by the Five-Year 

Review Identification Workgroup 

through its ‘‘Site-of-Service Anomalies’’ 

screen for potentially misvalued codes 

and subsequently identified through the 

‘‘CMS Fastest Growing’’ screen. The 

service was referred to the CPT Editorial 

Panel to clarify the coding for tissue 

transfers involving different size areas. 

As a result, CPT code 14300 was deleted 

and two new codes, CPT codes 14301 

(Adjacent tissue transfer or 

rearrangement, any area; defect 30.1 sq 

cm to 60.0 sq cm) and 14302 (Adjacent 

tissue transfer or rearrangement, any 

area; each additional 30.0 sq cm, or part 

thereof (List separately in addition to 

code for primary procedure)) were 

created. We accepted the AMA RUC 

recommendations for direct PE inputs 

on an interim final basis for CY 2010 (74 

FR 61955). 

Comment: One commenter stated that 

there were discrepancies between the 

AMA RUC recommendations and the 

direct PE inputs for CPT codes 14301 

and 14302. 

Response: We appreciate the 

commenters’ assistance, and we 

corrected these errors in the May 11, 

2010 correction notice to the CY 2010 

PFS final rule with comment period (75 

FR 26356 and 26368). Upon additional 

review of the direct PE inputs for 

consistency with the CY 2010 AMA 

RUC recommendations for this CY 2011 

final rule with comment period, we also 

found that the instrument pack for CPT 

code 14301 should be EQ138 

(instrument pack, medium ($1500 and 

up)) instead of EQ137 (instrument pack, 

basic ($500-$1499)). Furthermore, CPT 

code 14301 should have one SA054 

(pack, post-op incision care (suture)) as 

a supply input in both the nonfacility 

and facility settings. The final CY 2011 

PFS direct PE database reflects these 

additional corrections. We are finalizing 

the direct PE inputs for CPT codes 

14301 and 14302 for CY 2011. 

k. Insertion of a Temporary Prostatic 

Urethral Stent (CPT code 53855) 

CPT code 53855 (Insertion of a 

temporary prostatic urethral stent, 

including urethral measurement) was 

created for CY 2010 to describe the 

service previously reported under the 

Category III CPT code 0084T. We 

accepted the AMA RUC 

recommendations for direct PE inputs 

on an interim final basis for CY 2010 (74 

FR 61955). 

Comment: One commenter stated that 

CPT code 53855 was incorrectly missing 

supply codes SD074 and SH050 as 

inputs in the final CY 2010 PFS direct 

PE database. The commenter also noted 

that SJ038 was incorrectly substituted 

for SJ032. 

Response: We appreciate the 

commenter bringing these items to our 

attention and agree with the 

commenter’s assessment. The supply 

items for CPT code 53588 (filiform and 

one unit of lidocaine) have been 

included in the direct PE inputs and we 

have replaced petroleum jelly with 

lubricating jelly. These changes are 

reflected in the final CY 2011 PFS direct 

PE database. We are finalizing the 

revised direct PE inputs for CPT code 

53855 for CY 2011. 

l. High Dose Rate Brachytherapy (CPT 

codes 77785, 77786, and 77787) 

CPT codes 77785 (Remote 

afterloading high dose rate radionuclide 

brachytherapy; 1 channel); 77786 

(Remote afterloading high dose rate 

radionuclide brachytherapy; 2–12 

channels); and 77787 (Remote 

afterloading high dose rate radionuclide 

brachytherapy; over 12 channels) were 

identified by the Five-Year Review 

Identification Workgroup through the 

‘‘CMS Fastest Growing’’ and ‘‘High 

Volume Growth’’ potentially misvalued 

codes screens and later revised by the 

CPT Editorial Panel for CY 2009. As a 

result, the AMA RUC made 

recommendations for physician work 

and direct PE inputs for these revised 

services for CY 2009, which we 

accepted in the CY 2009 PFS final rule 

with comment period (73 FR 69892). 

Upon acceptance of the AMA RUC 

recommendations, we received several 

comments concerning the direct PE 

direct inputs (for example, supply costs 

and the useful life of the renewable 

sources) related to several high dose 

radiation therapy and placement CPT 

codes. In the CY 2010 PFS proposed 

rule (74 FR 33532), we requested that 

the AMA RUC revisit the direct PE 

inputs for these services. In response to 

our request, the AMA RUC reviewed the 

direct PE inputs for these services and 

made adjustments to the clinical labor 

staff type, changed the time for some 

activities, and edited the medical 

supplies and equipment for the typical 

patient scenario. In addition, the AMA 

RUC also recommended further 

discussion between the specialty and 

CMS regarding appropriate resolution of 

the PE input price for the Iridium-192 

brachytherapy source typically used in 

CPT codes 77785, 77786, and 77787. We 

accepted these direct PE 

recommendations for CY 2010 on an 

interim final basis (74 FR 61782). 

Comment: One commenter informed 

CMS of two concerns regarding CPT 

codes 77785, 77786, and 77787. The 

commenter stated that the AMA RUC 

summary direct PE output table 

included incorrectly doubled PE inputs 

for each of the codes. The commenter 

also pointed out that the medical 

physicist clinical labor time for CPT 

code 77786 should be 54 minutes 

instead of 29 minutes. 

Response: We appreciate the 

commenters’ assistance, and we 

corrected these errors in the May 11, 

2010 correction notice to the CY 2010 

PFS final rule with comment period (75 

FR 26356 and 26564). We are finalizing 

the direct PE inputs for CPT codes 

77785, 77786, and 77787, as corrected, 

for CY 2011. 

m. Injection of Facet Joint (CPT Codes 

64490, 64491, 64492, 64493, 64494, and 

64495) 

Facet joint injection services were 

identified by the Five-Year Review 

Identification Workgroup ‘‘High Volume 

Growth’’ potentially misvalued codes 

screen and referred to the CPT Editorial 

Panel to create an appropriate coding 

structure to report primary and 

additional injections. As a result, the 

four existing codes describing these 

services were deleted and CPT codes 

66490 (Injection(s), diagnostic or 

therapeutic agent, paravertebral facet 

(zygapophyseal) joint (or nerves 

innervating that joint) with image 

guidance (fluoroscopy or CT), cervical 

or thoracic; single level); 64491 

(Injection(s), diagnostic or therapeutic 

agent, paravertebral facet 

(zygapophyseal) joint (or nerves 

innervating that joint) with image 

guidance (fluoroscopy or CT), cervical 

or thoracic; second level (List separately 

in addition to code for primary 

procedure)); 64492 (Injection(s), 

diagnostic or therapeutic agent, 

paravertebral facet (zygapophyseal) joint 

(or nerves innervating that joint) with 

image guidance (fluoroscopy or CT), 

cervical or thoracic; third and any 

additional level(s) (List separately in 

addition to code for primary 

procedure)); 64493 (Injection(s), 

diagnostic or therapeutic agent, 

paravertebral facet (zygapophyseal) joint 

(or nerves innervating that joint) with 

image guidance (fluoroscopy or CT), 

lumbar or sacral; single level); 64494 

(Injection(s), diagnostic or therapeutic 

agent, paravertebral facet 

(zygapophyseal) joint (or nerves 

innervating that joint) with image 

guidance (fluoroscopy or CT), lumbar or 

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sacral; second level (List separately in 

addition to code for primary 

procedure)); and 64495 (Injection(s), 

diagnostic or therapeutic agent, 

paravertebral facet (zygapophyseal) joint 

(or nerves innervating that joint) with 

image guidance (fluoroscopy or CT), 

lumbar or sacral; third and any 

additional level(s) (List separately in 

addition to code for primary procedure)) 

were created for CY 2010. Accordingly, 

the AMA RUC reviewed the direct PE 

inputs as recommended by the specialty 

and made some minor edits to the 

clinical labor and medical supplies to 

reflect the typical patient service, which 

we accepted in the CY 2010 PFS final 

rule with comment on an interim final 

basis (74 FR 61955). 

Comment: Several commenters stated 

that the equipment and supplies listed 

in the final CY 2010 PFS direct PE 

database for CPT codes 64490, 64491, 

64492, 64493, 64494, and 64495 were 

incorrect and not consistent with the 

AMA RUC’s recommendations. 

Response: We verified that the 

equipment and supplies listed as direct 

inputs for these codes in the final CY 

2011 direct PE database match the CY 

2010 recommendations provided to us 

by the AMA RUC. We encourage 

stakeholders who believe a change is 

required in the direct PE inputs 

associated with a particular service in 

the typical case that is furnished in the 

facility or nonfacility setting to address 

these concerns with the AMA RUC. We 

are finalizing these direct PE inputs for 

CPT codes 64490, 64491, 64492, 64493, 

64494, and 64495 for CY 2011. 

n. Knee Arthroscopy (CPT Code 29870) 

In the CY 2008 PFS final rule (72 FR 

66238), we deferred the establishment of 

nonfacility direct PE inputs for CPT 

code 29870 (Arthroscopy, knee, 

diagnostic, with or without synovial 

biopsy (separate procedure)) and stated 

that the physicians performing 

arthroscopic services in the nonfacility 

setting should be given the opportunity 

to have a multispecialty review by the 

AMA RUC. We accepted the AMA RUC 

recommendations for nonfacility direct 

PE inputs in the CY 2010 PFS final rule 

with comment period on an interim 

final basis (74 FR 61955). 

Comment: One commenter indicated 

that the wrong arthroscopic system was 

approved by the AMA RUC for CPT 

code 29870. 

Response: We verified that the 

equipment input for this code in the 

final CY 2011 PFS direct PE database 

matches the recommendation provided 

to us by the AMA RUC. We encourage 

stakeholders who believe a change is 

required in the direct PE inputs 

associated with a particular service in 

the typical case that is furnished in the 

facility or nonfacility setting to address 

these concerns with the AMA RUC. We 

are finalizing the direct PE inputs for 

CPT code 298770 for CY 2011. 

3. Status of Interim Final Work RVUs for 

Potentially Misvalued Site-of-Service 

Anomaly Codes From CY 2009 and CY 

2010 

In previous years, we have requested 

that the AMA RUC review codes that, 

according to Medicare claims data, have 

experienced a change in the typical siteof-service since the original valuation of 

the code. The AMA RUC reviewed and 

recommended to CMS revised work 

RVUs for 29 codes for CY 2009 and 11 

codes for CY 2010 that were identified 

as having site-of-service anomalies. In 

the CYs 2009 and 2010 PFS final rules 

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 site-of-service 

anomaly codes on an interim final basis 

through CY 2010, we had ongoing 

concerns about the methodologies used 

by the AMA RUC to review these 

services. We requested that the AMA 

RUC reexamine the site-of-service 

anomaly codes and use the building 

block methodology to revalue the 

services (74 FR 61777). 

For CY 2011, as discussed in more 

detail in section II.C.3.d. of this final 

rule with comment period, we are 

requesting that the AMA RUC 

reconsider its previously recommended 

values, which have been applied on an 

interim final basis in CYs 2009 and 

2010, and revise the work RVUs to 

better reflect the intensity of the services 

and the revised physician times and 

post-procedure visits included in the 

valuation of these codes. Until we 

receive the revised values from the 

AMA RUC for CY 2012 and can make 

a determination regarding them, we are 

continuing to accept the existing AMA 

RUC-recommended work RVUs listed in 

Tables 14 and 15 in section II.C.3.d. of 

this final rule with comment period on 

an interim final basis for CY 2011. 

4. Other New, Revised, or Potentially 

Misvalued Codes With CY 2010 Interim 

Final RVUs Not Specifically Discussed 

in the CY 2011 Final Rule With 

Comment Period 

For all other CY 2010 new, revised, or 

potentially misvalued codes with CY 

2010 interim final RVUs that are not 

specifically discussed in this final rule 

with comment period, we are finalizing, 

without modification, the interim final 

work and malpractice RVUs and direct 

PE inputs that we initially adopted for 

CY 2010. 

C. Establishment of Interim Final RVUs 

for CY 2011 

In this section, we discuss the 

establishment of work, PE, and 

malpractice interim final RVUs for CY 

2011 and issues related to the processes 

for establishing these values. These CY 

2011 work, PE, and malpractice interim 

final RVUs, and the associated direct PE 

inputs, are open to comment on this CY 

2011 final rule with comment period. In 

general, the work, PE, and malpractice 

RVUs and the associated direct PE 

inputs for the CY 2011 new and revised 

codes will be finalized in the CY 2012 

PFS final rule with comment period, 

where we will also respond to the 

public comments received on the values 

and direct PE inputs that are adopted on 

an interim final basis in this CY 2011 

final rule with comment period. The 

final CY 2011 PFS direct PE database 

and the crosswalks for the malpractice 

RVUs for new and revised codes are 

posted on the CMS Web site under the 

downloads for the CY 2011 PFS final 

rule with comment period at: http:// 

www.cms.gov/PhysicianFeeSched/ 

PFSFRN/list.asp#TopOfPage. 

For CY 2011, we received AMA RUC 

recommendations for 325 new, revised, 

and potentially misvalued CPT codes 

and 93 recommended deletions. Of the 

325 codes, 84 were identified as 

potentially misvalued, 125 as new, and 

116 as revised. After subtracting out 

CPT codes for which no work RVU 

recommendation were given—including 

codes listed on the Clinical Lab Fee 

Schedule (CLFS), vaccine codes, and 

technical component only codes—there 

were 291 codes for which the AMA RUC 

provided work RVU recommendations 

for CY 2011: 82 CPT codes classified by 

the AMA RUC as potentially misvalued, 

108 as new, and 101 as revised. Of note, 

as displayed in Table 53, we consider 

204 of the AMA RUC work 

recommendations for CY 2011 new and 

established CPT codes to be for codes 

identified through, created as a result of, 

or valued in association with service(s) 

identified through a potentially 

misvalued code screen. Additionally, 

we received direct PE input 

recommendations from the AMA RUC 

for 325 CPT codes for CY 2011. 

For CY 2011, we note that the CPT 

Editorial Panel deleted CPT codes 

0160T (Therapeutic repetitive 

transcranial magnetic stimulation 

treatment planning) and 0161T 

(Therapeutic repetitive transcranial 

magnetic stimulation treatment delivery 

and management, per session) and 

created two new CPT codes, 90867 

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(Therapeutic repetitive transcranial 

magnetic stimulation treatment; 

planning) and 90868 (Therapeutic 

repetitive transcranial magnetic 

stimulation treatment; delivery and 

management, per session). Due to the 

timing of the creation of these codes, the 

AMA RUC was unable to provide work 

and PE recommendations for CY 2011. 

As a result, these codes will be 

contractor-priced for CY 2011. 

1. Establishment of Interim Final Work 

RVUs for CY 2011 

a. Background 

As we previously explained in section 

V.A. of this final rule with comment 

period, on an annual basis, the AMA 

RUC provides CMS with 

recommendations regarding physician 

work values for new, revised, and 

potentially misvalued codes. We review 

the AMA RUC-recommended work 

RVUs on a code-by-code basis. We 

determine whether we agree with the 

AMA RUC’s recommended work RVUs 

for a service (that is, we agree the 

valuation is accurate), or, if we disagree, 

we determine an alternative value that 

better reflects our estimate of the 

physician work for the service. 

As stated earlier, the AMA RUC 

provided work RVU recommendations 

for 291 CPT codes. Of the 291, we are 

accepting 207 (71 percent) of the AMA 

RUC-recommended values and 

providing alternative values for the 

remaining 84 (29 percent). Over the last 

several years our rate of acceptance of 

the AMA RUC recommendations has 

been higher, at 90 percent or greater. 

However, in response to concerns 

expressed by MedPAC, the Congress, 

and other stakeholders regarding the 

accurate valuation of services under the 

PFS, we have intensified our scrutiny of 

the work valuations of new, revised, and 

potentially misvalued codes. We note 

that most recently, the law was 

amended (section 1848(c)(2)(L) of the 

Act (as added by section 3134 of the 

ACA)) to add a new requirement 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. Furthermore, 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 (as added by 

section 3134 of the ACA). While we are 

currently in the planning stage of 

developing a formal validation process, 

we believe we should be incorporating, 

where appropriate, the validation 

principles specified in the law. That is, 

in reviewing the CY 2011 AMA RUC 

recommendations for valuing the work 

of new, revised, and potentially 

misvalued services, we have expended 

significant effort in evaluating whether 

the recommended values reflect the 

work elements, such as time, mental 

effort, and professional judgment, 

technical skill and physical effort, and 

stress due to risk, involved with 

furnishing the service. We subjected 

each of the CY 2011 codes to a rigorous 

clinical review, examining the pre-, 

post-, and intra-service components of 

the work. If we concluded that the AMA 

RUC’s recommended value for a code 

was not accurate, we looked for 

comparisons with other established 

reference codes with clinical similarity 

or analogous pre-, post-, and intraservice times, and, where applicable, 

employed the building block approach 

to inform our interim final decision to 

establish an alternative value that we 

believe is more appropriate. 

The AMA RUC has emphasized the 

need to value services ‘‘relative’’ to other 

services, explaining in its public 

comment on the CY 2011 PFS proposed 

rule that it will ‘‘continue to employ 

magnitude estimation in developing 

relative value recommendations as it is 

the cornerstone of the RBRVS (resourcebased relative value scale).’’ We agree 

that services paid under the PFS should 

be reviewed and valued in manner 

consistent with Medicare payment 

policy to maintain appropriate relativity 

between services and promote accurate 

pricing. In our review of the 291 CY 

2011 AMA RUC recommendations for 

work values, we noted that the AMA 

RUC used a variety of approaches and 

methodologies to arrive at the 

recommended work values. For some 

codes, the AMA RUC used magnitude 

estimation in conjunction with survey 

data from physician surveys conducted 

by the specialty societies to support the 

values. For other codes, the AMA RUC 

used magnitude estimation to override 

the results of the survey data, 

recommending to CMS a value that was 

not based on survey data but rather, 

justified in terms of its appropriate 

relativity within the system to other 

similar services. The AMA RUC may 

also elect to use a crosswalk approach 

in valuing a code by applying a work 

value from a currently valued code to 

the code under review based on the 

clinical similarity of the procedures or 

explicit considerations of pre-, intra-, 

and post-service times. In some 

instances, the AMA RUC asserted that it 

used the building block methodology to 

value the code, a methodology CMS has 

historically supported (74 FR 61776). 

We understand that the AMA RUC 

believes that it must approach valuation 

on a code-by-code basis, and depending 

on the context of the particular code, 

some methodologies may be better 

suited than others for valuation 

purposes. However, we remain 

concerned over the variations and some 

applications of the AMA RUC’s 

methodologies which, if we continue to 

accept them, could contribute to 

inaccuracy in the relativity of physician 

work valued under the PFS for different 

services. Our concerns at this time 

include the following methodological 

issues which we observed during our 

review of the CY 2011 AMA RUC work 

recommendations: 

• AMA RUC-recommended values 

without benefit of a survey: For a 

number of codes, the AMA RUC 

justified the work RVUs by crosswalking 

the codes to existing codes deemed 

comparable by the AMA RUC. Since the 

specialty society did not conduct a 

survey for these codes, there are no 

survey data to back up the 

recommended work RVUs. 

• Surveys conducted on existing 

codes produced predictable results: In 

providing recommendations for existing 

potentially misvalued codes, the AMA 

RUC often recommended maintaining 

the current work RVUs and supported 

this valuation by citing the survey 

results. Upon clinical review of a 

number of these cases, we are concerned 

over the validity of the survey results 

since the survey values often are very 

close to the current code values. 

Increasingly, rather than recommending 

the median survey value that has 

historically been most commonly used, 

the AMA RUC is choosing to 

recommend the 25th percentile value, 

potentially responding to the same 

concern we have identified. 

• AMA RUC deviated significantly or 

disregarded survey results completely: 

For the majority of codes, the AMA RUC 

cited the survey results in support of the 

work RVU recommendations and in 

many instances adopted either the 

survey median or 25th percentile value 

as the AMA RUC-recommended value. 

However, in some instances, the AMA 

RUC recommended work RVUs which 

deviated significantly from the survey 

results. Rather than using the survey 

data, the AMA RUC appears to have 

relied on another methodology to value 

the code, such as ‘‘magnitude 

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estimation’’ or crosswalk to a 

comparable code. 

In reviewing the 291 work RVU 

recommendations from the AMA RUC 

for CY 2011, we concluded that the 

strongest support for the valuation of a 

code occurred when the AMA RUC 

cited multiple germane methodologies 

that all yielded a similar value that was 

also supported by the survey. We 

tended to accept the AMA RUCrecommended values in these instances. 

However, we found the weakest and 

least convincing valuations occurred in 

cases where the AMA RUC either 

deviated significantly or disregarded the 

survey results in favor of tweaking 

various components of the code in order 

to justify a value which the AMA RUC 

believed was correct due to perceived 

‘‘magnitude estimation’’ for that code. 

We are concerned that such actions by 

the AMA RUC may create problems for 

any systematic validation processes that 

could be implemented in the future as 

required by section 1848(c)(2)(L) of the 

Act (as added by section 3134 of the 

ACA). 

Accordingly, for those CY 2011 codes 

for which we did not accept the AMA 

RUC recommendations and are instead 

establishing alternative interim final 

values, we discuss our decisions based 

on groupings of codes in the following 

sections. Table GG4 at the end of this 

section displays the AMA RUC 

recommendations and interim final 

work RVUs for CY 2011 new, revised, 

and potentially misvalued codes. b. CY 

2011 Interim Final Work RVUs for New 

and Revised Codes (1) CY 2011 New 

and Revised Codes that Do Not 

Represent Major New Comprehensive 

Services 

We provide an explanation in the 

following sections of our rationale for 

not accepting particular AMA RUCrecommended or Health Care 

Professional Advisory Committee 

(HCPAC)-recommended work RVUs for 

CY 2011 new and revised CPT codes 

that do not represent major new 

comprehensive services that are listed 

in Table 51 and discussed in the 

subsequent section. The issues are 

arranged by type of service in CPT code 

order and address only work RVUs. 

These codes are listed in Table 53, 

which includes a complete list of all 

new, revised, and potentially misvalued 

CPT codes with CY 2011 AMA RUC 

work RVU recommendations and CMS’ 

interim final decisions for CY 2011. 

(A) Excision and Debridement (CPT 

Codes 11010, 11011, 11012, 11042, 

11043, 10144, 11045, 11046, 11047, and 

97598) 

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. These codes were 

included with many other codes under 

review by the CPT Excision and 

Debridement Workgroup. CPT codes 

11010, 11011, 11012, and 11042 through 

11047 were reviewed by the AMA RUC 

and CPT codes 97597 and 97598 were 

reviewed by the HCPAC. 

The code descriptors for CPT codes 

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); 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 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) 

were revised to clarify to payors and 

providers that these codes describe 

debridement of a single traumatic 

wound caused by an open fracture 

which creates a single exposure, despite 

the number of fractures or dislocations 

in the same anatomic site. The AMA 

RUC and the specialty society agreed 

that the revisions made to these 

descriptors were editorial and the 

current work RVUs for these services 

correctly related to the typical patient 

and should be maintained, 

recommendations which we have 

accepted on an interim final basis for 

CY 2011. 

The CPT Editorial Panel revised the 

descriptor for CPT code 11042 

(Debridement subcutaneous tissue 

(includes epidermis and dermis, if 

performed); first 20 square centimeters 

or less). As a result, the AMA RUC 

reviewed the specialty-recommended 

work RVUs for this service, 1.12 work 

RVUs (the previous AMA RUC HCPAC 

recommendation as valued during the 

CY 2005 Five-Year Review of Work), 

and noted that they were higher than 

the current PFS value for this service 

(0.80 work RVUs). The AMA RUC 

determined that there was compelling 

evidence to consider new work RVUs 

for this service. The AMA RUC also 

reviewed the survey data for CPT code 

11042 and made slight changes to the 

pre-, intra-, and post-service times. This 

service was compared to the key 

reference CPT code 16020 (Dressings 

and/or debridement of partial-thickness 

burns, initial or subsequent; small (less 

than 5% total body surface area)) (work 

RVUs = 0.80) and MPC CPT code 56605 

(Biopsy of vulva or perineum (separate 

procedure); 1 lesion) (work RVUs = 

1.10). Based on these comparisons, the 

AMA RUC agreed that the previous 

AMA RUC HCPAC recommendation of 

1.12 work RVUs was an appropriate 

value as it would maintain relativity 

between the key reference code and the 

surveyed code. The AMA RUC 

recommended work RVUs of 1.12 for 

CPT code 11042. 

We disagree with the AMA RUCrecommended value for this service and 

are maintaining the current work RVUs 

of 0.80. We believe the AMA RUCrecommended value (1.12 work RVUs) 

was based on the old surveyed value. 

The reference code, CPT code 16020, 

has more overall time but is valued at 

0.80 work RVUs. In addition, the 

reference code has a size limitation that 

varies by individual body size, but the 

surveyed CPT code 11042 has an addon code (CPT code 11045) for each 

additional 20 square centimeters. 

Therefore, we are not accepting the 

AMA RUC recommendation and are 

assigning an alternative value of 0.80 

work RVUs to CPT code 11042 on an 

interim final basis for CY 2011. 

For CPT code 11045 (Debridement 

subcutaneous tissue (includes epidermis 

and dermis, if performed); each 

additional 20 square centimeters, or part 

thereof (List separately in addition to 

code for primary procedure)), which is 

the add-on code to CPT code 11042, the 

AMA RUC recommended 0.69 work 

RVUs. This value was obtained by 

applying a 14 percent reduction to the 

median work value of 0.80 to maintain 

the relativity between CPT codes 11042 

and 11045 of the survey data collected. 

Due to the reduction in work RVUs to 

CPT code 11042 by CMS, we reduced 

the AMA RUC-recommended work 

RVUs of 0.69 for CPT code 11045 and 

assigned 0.33 work RVUs to this service. 

This value was obtained by removing 

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the pre- and post-service time from the 

interim final RVUs of 0.80 for the 

primary procedure (CPT code 11042). 

Therefore, we are assigning an 

alternative value of 0.33 work RVUs to 

CPT code 11045 on an interim final 

basis for CY 2011. 

CPT codes 11043 (Debridement, 

muscle and/or fascia (includes 

epidermis, dermis, and subcutaneous 

tissue, if performed); first 20 square 

centimeters or less) and 11044 

(Debridement, bone (includes 

epidermis, dermis, subcutaneous tissue, 

muscle and/or fascia, if performed); first 

20 square centimeters or less) were 

surveyed as 90-day global codes. 

However, due to disagreement with the 

survey vignettes and the new global 

period (90 days), in addition to broad 

variations in surveyed facility length of 

stay, the AMA RUC requested that CMS 

change the global period to 0 days. CMS 

agreed and the codes were resurveyed as 

0-day global codes. 

For CPT code 11043, the AMA RUC 

recommended 3.00 work RVUs. The 

AMA RUC reviewed the survey data and 

compared the surveyed code to the key 

reference CPT code 15002 (Surgical 

preparation or creation of recipient site 

by excision of open wounds, burn 

eschar, or scar (including subcutaneous 

tissues), or incisional release of scar 

contracture, trunk, arms, le.g.s; first 100 

sq cm or 1% of body area of infants and 

children) (work RVUs = 3.65). The AMA 

RUC noted that the reference code had 

significantly more total service time as 

compared to the surveyed code and that 

the surveyed code was less intense to 

perform in comparison to the reference 

code. Based on this comparison, the 

AMA RUC recommended work RVUs of 

3.00, the survey 25th percentile for this 

service. 

The AMA RUC-recommended work 

inputs for this service include less 

clinical time and fewer follow-up E/M 

visits than are currently attributed to the 

performance of this service; however, 

the AMA RUC-recommended work RVU 

value decreased by only 0.14 RVUs. We 

disagree with the AMA RUCrecommended RVUs for this service and 

believe 2.00 work RVUs, the survey low 

value, reflects a more appropriate 

decrease in work RVU value given the 

recommended decrease in clinical time 

and follow-up E/M visits. Therefore, we 

are assigning an alternative value of 2.00 

work RVUs to CPT code 11043 on an 

interim final basis for CY 2011. 

For CPT code 11046 (Debridement, 

muscle and/or fascia (includes 

epidermis, dermis, and subcutaneous 

tissue, if performed); each additional 20 

square centimeters, or part thereof (List 

separately in addition to code for 

primary procedure)), which is the addon code to CPT code 11043, the RUC 

recommended 1.29 work RVUs, the 

survey 25th percentile. To maintain 

consistency and relativity between this 

add-on code and its primary code (CPT 

code 11043), for which we are 

recommending the survey low value as 

discussed above, and given the time and 

intensity the AMA RUC recommended 

to perform this service, we disagree with 

the AMA RUC-recommended work 

RVUs for this service and believe 0.70 

work RVUs, the survey low value, are 

more appropriate. Therefore, we are 

assigning an alternative value of 0.70 

work RVUs to CPT code 11046 on an 

interim final basis for CY 2011. 

For CPT code 11044, the AMA RUC 

recommended 4.56 work RVUs. The 

AMA RUC reviewed the survey data and 

compared the surveyed code to the 

reference CPT code 15004 (Surgical 

preparation or creation of recipient site 

by excision of open wounds, burn 

eschar, or scar (including subcutaneous 

tissues), or incisional release of scar 

contracture, face, scalp, eyelids, mouth, 

neck, ears, orbits, genitalia, hands, feet 

and/or multiple digits; first 100 sq cm 

or 1% of body area of infants and 

children) (work RVUs = 4.58). The AMA 

RUC noted that the reference code had 

the same intra-service time and that the 

surveyed code and the reference code 

required similar mental effort and 

judgment to perform. Based on this 

comparison, the AMA RUC 

recommended work RVUs of 4.56, the 

survey 25th percentile, and believes this 

value accurately reflects the relative 

physician work to perform this service 

and maintains proper rank order with 

CPT codes 11042 and 11043. The AMA 

RUC-recommended work inputs for this 

service include less clinical time and 

fewer follow-up E/M visits than are 

currently attributed to the performance 

of this service; however, the AMA RUCrecommended work RVUs increased. 

We disagree with the AMA RUCrecommended work RVUs for this 

service and believe 3.60 work RVUs, the 

survey low value, reflect a more 

appropriate decrease in work RVU value 

given the recommended decrease in 

clinical time and follow-up E/M visits. 

Therefore, we are assigning an 

alternative value of 3.60 work RVUs to 

CPT code 11044 on an interim final 

basis for CY 2011. 

For CPT code 11047 (Debridement, 

bone (includes epidermis, dermis, 

subcutaneous tissue, muscle and/or 

fascia, if performed); each additional 20 

square centimeters, or part thereof) the 

AMA RUC recommended 2.00 work 

RVUs, the survey median value. To 

maintain consistency and relativity 

between this add-on code and its 

primary code (CPT code 11044), for 

which we are recommending the survey 

low value as discussed above, and given 

the time and intensity the AMA RUC 

recommended to perform this service, 

we disagree with the AMA RUCrecommended value and believe 1.20 

RUVs, the survey low value, are more 

appropriate for this service. Therefore, 

we are assigning 1.20 work RVUs to CPT 

code 11047 on an interim final basis for 

CY 2011. 

For CY 2011, the services previously 

reported by CPT codes 11040 

(Debridement; skin, partial thickness) 

and 11041 (Debridement; skin, full 

thickness) will now be reported with 

revised CPT codes 97597 (Debridement 

(eg, high pressure waterjet with/without 

suction, sharp selective debridement 

with scissors, scalpel and forceps), open 

wound, (eg, 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 square centimeters or less) and 97598 

(Debridement (eg, 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; each additional 

20 square centimeters, or part thereof 

(List separately in addition to code for 

primary procedure)). The HCPAC 

recommended 0.54 work RVUs for CPT 

code 97597, which is a value between 

the CY 2010 values for CPT code 11040 

(0.50 work RVUs) and CPT code 97597 

(0.58 work RVUs), which we have 

accepted on an interim final basis in 

this final rule with comment period for 

CY 2011. However, the work RVUs for 

this CPT code were further subject to a 

work budget neutrality adjustment, as 

discussed in section V.C.1.b.(iii) of this 

final rule with comment period. 

For CPT code 97598, the HCPAC 

recommended 0.40 work RVUs, the 

survey 25th percentile. We disagree 

with the HCPAC-recommended value 

for this service and, given the similarity 

of code descriptors between the 11000 

series and the 97000 series CPT codes, 

we believe a more appropriate value 

would be 0.25 RVUs, the survey low 

value, as it is more consistent with the 

work RVU value associated with new 

add-on CPT code 11045, discussed 

above. We also believe the post-service 

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time for CPT code 97598 should be 

reduced to 0 minutes to coincide with 

the CPT codes in the 11000 series, 

which have 0 or 1 minute of postservice time. Therefore, we are assigning 

an alternative value of 0.25 work RVUs 

to CPT code 97598 and reducing the 

post-service time to 0 minutes on an 

interim final basis for CY 2011. 

However, the work RVUs for this CPT 

code were subject to a work budget 

neutrality adjustment, as discussed in 

section V.C.1.b.(iii) of this final rule 

with comment period. 

(B) Arthrodesis Including Discectomy 

(CPT Code 22551) 

As a result of CPT code 22554 

(Arthrodesis, anterior interbody, 

including disc space preparation, 

discectomy, osteophytectomy and 

decompression of spinal cord and/or 

nerve roots; cervical, below C2) being 

reviewed by the AMA RUC because of 

its identification by the Five-Year 

Review Identification Workgroup 

‘‘Codes Reported Together’’ potentially 

misvalued codes screen in February 

2008, CPT code 22551 ((Arthrodesis, 

anterior interbody, including disc space 

preparation, discectomy, 

osteophytectomy and decompression of 

spinal cord and/or nerve roots; cervical, 

below C2)) was created by the CPT 

Editorial Panel in October 2009, to 

describe fusion and discectomy of the 

anterior cervical spine. The AMA RUC 

recommended 24.50 work RVUs. The 

specialty society requested 25.00 work 

RVUs. Upon review of the AMA RUCrecommended value and the reference 

codes used, it was unclear why the 

AMA RUC decided not to accept the 

specialty society’s recommended value 

of 25.00 work RVUs. We disagree with 

the AMA RUC-recommended value of 

24.50 and believe work RVUs of 25.00 

are appropriate for this service. We are 

also requesting that the specialty society 

re-review with the AMA RUC the preservice times for codes in this family 

since concerns were noted in the AMA 

RUC recommendation about the preservice time for this service. Therefore, 

we are assigning an alternative value of 

25.00 work RVUs to CPT code 22551 on 

an interim final basis for CY 2011. 

(C) Strapping Lower Extremity (CPT 

Codes 29540 and 29550) 

CPT code 29540 (Strapping; ankle 

and/or foot) was identified by the FiveYear Review Identification Workgroup 

‘‘Harvard-Valued’’ potentially misvalued 

codes screen with utilization over 

100,000 screen in October 2009. The 

AMA RUC recommended this whole 

family of services be surveyed. 

For CPT code 29540, the HCPAC 

recommended 0.39 work RVUs. The 

HCPAC compared the total time 

required for CPT code 29540 to 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. We 

disagree with the HCPAC-recommended 

value for this service and believe work 

RVUs of 0.32 are appropriate. We 

believe CPT code 11720 (Debridement 

of nail(s) by any method(s); 1 to 5) (work 

RVUs = 0.32) is a more appropriate 

crosswalk. Therefore, we are assigning 

an alternative value of 0.32 work RVUs 

to CPT code 29540 on an interim final 

basis for CY 2011. 

For CPT code 29550 (Strapping; toes), 

the HCPAC recommended 0.25 work 

RVUs. The HCPAC compared this 

service to CPT code 97762 (Checkout for 

orthotic/prosthetic use, established 

patient, each 15 minutes) (work RVUs = 

0.25), which 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 

disagree with the HCPAC-recommended 

value for this service and believe work 

RVUs of 0.15, the survey low value, are 

appropriate, with 5 minutes of pre- and 

intra-service time and 1 minute of postservice time, as we believe the HCPACrecommended pre-service time of 7 

minutes is excessive. Therefore, we are 

assigning an alternative value of 0.15 

work RVUs to CPT code 29550 on an 

interim final basis for CY 2011. 

(D) Paraesophageal Hernia Procedures 

(CPT Codes 43333 and 43335) 

In February 2010, the CPT Editorial 

Panel deleted six existing codes and 

created ten new codes to remove 

obsolete and duplicative codes and add 

new codes to report current surgical 

techniques for paraesophageal hernia 

repair. For CPT code 43333 (Repair, 

paraesophageal hiatal hernia (including 

fundoplication), via laparotomy, except 

neonatal; with implantation of mesh or 

other prosthesis), the AMA RUC 

recommended 30.00 work RVUs. The 

AMA RUC recommended 33.00 work 

RVUs for CPT code 43335 (Repair, 

paraesophageal hiatal hernia (including 

fundoplication), via thoracotomy, 

except neonatal; with implantation of 

mesh or other prosthesis). While the 

AMA RUC-recommended values are the 

survey median values, we disagree with 

them. We adjusted the AMA RUCrecommended values for the codes 

without implantation of mesh or other 

prosthesis upward by 2.50 work RVUs 

to account for the differential between 

those codes and the parallel codes with 

implantation of mesh or other 

prosthesis. We note that 2.50 work 

RVUs was the lowest differential that 

was recommended by the AMA RUC 

between the with/without implantation 

of mesh or other prosthesis codes in this 

family. That is, for CPT code 43333, the 

revised work RVUs were established by 

adding 2.50 work RVUs to the AMA 

RUC-recommended work RVUs of 26.60 

for CPT code 43332 (Repair, 

paraesophageal hiatal hernia (including 

fundoplication), via laparotomy, except 

neonatal; without implantation of mesh 

or other prosthesis), which resulted in 

work RVUs of 29.10. Likewise, for CPT 

code 43335, the revised work RVUs 

were established by adding 2.50 work 

RVUs to the AMA RUC-recommended 

work RVUs of 30.00 for CPT code 43334 

(Repair, paraesophageal hiatal hernia 

(including fundoplication), via 

thoracotomy, except neonatal; without 

implantation of mesh or other 

prosthesis), resulting in work RVUs of 

32.50. Therefore, we are assigning 

alternative work RVUs of 29.10 to CPT 

code 43333 and 32.50 to CPT code 

43335 on an interim final basis for CY 

2011. However, the work RVUs for this 

CPT code were subject to a work budget 

neutrality adjustment, as discussed in 

section V.C.1.b.(iii) of this final rule 

with comment period. 

(E) Vaginal Radiation Afterloading 

Apparatus for Clinical Brachytherapy 

(CPT Codes 57155 and 57156) 

CPT Code 57155 (Insertion of uterine 

tandems and/or vaginal ovoids for 

clinical brachytherapy) was originally 

identified through the Five-Year Review 

Identification Workgroup ‘‘Site-ofService Anomalies’’ potentially 

misvalued codes screen in September 

2007 and was later revised by the CPT 

Editorial Panel to indicate insertion of a 

single tandem rather than tandems. 

For CY 2011, the AMA RUC 

recommended 5.40 work RVUs for CPT 

code 57155 (Insertion of uterine 

tandems and/or vaginal ovoids for 

clinical brachytherapy). This value was 

established based on the survey 25th 

percentile and a review of comparable 

services, specifically CPT codes 55920 

(Placement of needles or catheters into 

pelvic organs and/or genitalia (except 

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prostate) for subsequent interstitial 

radioelement application)(work RVUs = 

8.31); 50382 (Removal (via snare/ 

capture) and replacement of internally 

dwelling urethral stent via percutaneous 

approach, including radiological 

supervision and interpretation) (work 

RVUs = 5.50); and 52001 

(Cystourethroscopy with irrigation and 

evacuation of multiple obstructing clots) 

(work RVUs = 5.44). We disagree with 

the AMA RUC-recommended value for 

this service because the method used to 

derive the value lacked a defined logic. 

We believe work RVUs of 3.37 are 

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 (eg, ovarian, pericolic)), 

which we also believe is a more 

comparable code. Therefore, we are 

assigning an alternative value of 3.37 

work RVUs to CPT code 57155 on an 

interim final basis for CY 2011. 

For CPT code 57156 (Insertion of a 

vaginal radiation afterloading apparatus 

for clinical brachytherapy), the AMA 

RUC recommended 2.69 work RVUs, the 

survey 25th percentile. Given our 

decision to revise downward the work 

RVUs for CPT code 57185, a related 

code, upon review of the AMA RUC 

recommendations for CPT code 57156, 

we believe that the AMA RUCrecommended value of 2.69 is too high. 

In light of this, we are crosswalking the 

value of CPT code 57156 from 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. Therefore, we are assigning 

an alternative value of 1.87 work RVUs 

to CPT code 57156 on an interim final 

basis for CY 2011. 

(F) Vagus Nerve Stimulator (CPT Codes 

61885, 64568, 64569, and 64570) 

CPT code 61885 (Insertion or 

replacement of cranial neurostimulator 

pulse generator or receiver, direct or 

inductive coupling; with connection to 

a single electrode array) was identified 

by the Five-Year Review Identification 

Workgroup by its ‘‘Site-of-Service 

Anomalies’’ screen for potentially 

misvalued codes 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 6.44 work RVUs for CPT 

code 61885. Upon review of the AMA 

RUC recommendations, the method 

used to establish the AMA RUCrecommended value for this service 

lacked a defined logic. 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, an appropriately rigorous 

methodology was not used. 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 

disagree with the AMA RUCrecommended value and believe 6.05 

work RVUs, the survey 25th percentile, 

are appropriate for this service. 

Therefore, we are assigning an 

alternative value of 6.05 work RVUs to 

CPT code 61885 on an interim final 

basis for CY 2011. 

For CPT code 64568 (Incision for 

implantation of cranial nerve (eg, vagus 

nerve) neurostimulator electrode array 

and pulse generator), the AMA RUC 

recommended 11.19 work RVUs. 

Similar to the rationale provided by the 

AMA RUC for the valuation of CPT code 

61885, the method used to value this 

service lacked a defined logic. As with 

CPT code 61885 discussed above, to 

which this code is related, we disagree 

with the AMA RUC-recommended value 

for this service and believe the survey 

25th percentile, 9.00 work RVUs, is 

appropriate. Therefore, we are assigning 

an alternative value of 9.00 work RVUs 

to CPT code 64568 on an interim final 

basis for CY 2011. 

For CPT code 64569 (Revision or 

replacement of cranial nerve (eg, vagus 

nerve) neurostimulator electrode array, 

including connection to existing pulse 

generator), the AMA RUC recommended 

15.00 work RVUs, the survey median 

value, and 13.00 work RVUs, the survey 

median value, for CPT code 64570 

(Removal of cranial nerve (eg, vagus 

nerve) neurostimulator electrode array 

and pulse generator). Based on the 

reduction in work RVUs for CPT codes 

61885 and 64568 that we are adopting 

on an interim final basis for CY 2011 

and to maintain relativity for the codes 

in this family, we believe work RVUs of 

11.00, the survey 25th percentile, are 

appropriate for CPT code 64569 and 

work RVUs of 9.10, the survey 25th 

percentile, are appropriate for CPT code 

64570. Therefore, we are assigning an 

alternative value of 11.00 work RVUs to 

CPT code 64569 and 9.10 work RVUs to 

CPT code 64570 on an interim final 

basis for CY 2011. 

(G) Ultrasound of Extremity (CPT Codes 

76881 and 76882) 

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 and a 

total time of 25 minutes. For CPT code 

76882, the AMA RUC recommended 

0.50 work RVUs and a total time of 21 

minutes. 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 and a 

total time of 18 minutes. 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). 

We disagree with the AMA RUC 

recommendations for these services. For 

CPT code 76881, we do not believe an 

increase in work RVUs is 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 believe work 

RVUs of 0.59 are appropriate for this 

service, consistent with the value of the 

predecessor code. For CPT code 76882, 

we believe a value of 0.41 is more 

appropriate, representing a statistical 

computation based on maintaining the 

relationship between the AMA RUCrecommended values for CPT codes 

76881 and 76882. Therefore, we are 

assigning alternative work RVUs of 0.59 

to CPT code 76881 and 0.41 to CPT code 

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76882 on an interim final basis for CY 

2011. 

(H) Evaluation of Fine Needle Aspirate 

(CPT Code 88172) 

Due to confusion amongst payers and 

providers, 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. For CPT code 88172, the AMA 

RUC recommended work RVUs of 0.69 

based on comparing this code to several 

other services, without the use of an 

appropriate methodology. We disagree 

with the AMA RUC-recommended value 

and believe the current work RVUs of 

0.60 are appropriate and should be 

maintained for this service. Although 

the code has been revised, no 

explanation by the AMA RUC was 

provided to demonstrate an increase in 

work, and we do not believe the work 

has changed. Therefore, we are 

assigning an alternative value of 0.60 

work RVUs to CPT code 88172 on an 

interim final basis for CY 2011. 

(I) Immunization Administration (CPT 

Code 90460 and 90461) 

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. For CY 2011, the AMA RUC 

recommended 0.20 work RVUs 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 0.16 

work RVUs 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)). This is an increase from the 

current values for the predecessor 

services. The AMA RUC states that the 

increase in recommended work RVUs is 

due to increased time for patient 

education. 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 disagree with the 

AMA RUC-recommended values for 

these services and are maintaining the 

current work RVUs for the related 

predecessor codes of 0.17 RVUs for CPT 

code 90460 and 0.15 work RVUs for 

CPT code 90461 since these codes 

would be billed on a per toxoid basis in 

CY 2011. Therefore, we are assigning 

alternative values of 0.17 work RVUs to 

CPT code 90460 and 0.15 work RVUs to 

CPT code 90461 on an interim final 

basis for CY 2011. 

(J) Diabetic Retinopathy Imaging (CPT 

Code 92228) 

In February, 2010 the CPT Editorial 

Panel established two codes for 

reporting remote imaging for screening 

retinal disease and management of 

active retinal disease. For CPT code 

92228 (Remote imaging for monitoring 

and management of active retinal 

disease (eg, diabetic retinopathy) with 

physician review, interpretation and 

report, unilateral or bilateral), the AMA 

RUC recommended 0.44 work RVUs. 

The AMA RUC compared this service to 

CPT code 92250 (Fundus photography 

with interpretation and report) (Work 

RVUs = 0.44) due to similar times and 

believes this service is comparable to 

the service under review. We disagree 

with the reference service used by the 

AMA RUC and compared this code to 

another diagnostic service, CPT code 

92135 (Scanning computerized 

ophthalmic diagnostic imaging, 

posterior segment, (eg, scanning laser) 

with interpretation and report, 

unilateral) (Work RVUs = 0.35), which 

we believe is more equivalent but has 

more pre- and intra-service time. Upon 

further review of CPT code 92228 and 

the time and intensity needed to 

perform this service, we believe work 

RVUs of 0.30, the survey low value, are 

more appropriate. Therefore, we are 

assigning an alternative value of 0.30 

work RVUs to CPT code 92228 on an 

interim final basis for CY 2011. 

(K) Speech-Language Pathology Services 

(CPT Codes 92508 and 92606) 

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 speechlanguage 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. 

For CPT code 92508 (Treatment of 

speech, language, voice, 

communication, and/or auditory 

processing disorder; group, 2 or more 

individuals), the HCPAC recommended 

0.43 work RVUs which was derived by 

dividing the value for CPT code 92507 

(Treatment of speech, language, voice, 

communication, and/or auditory 

processing disorder; individual) (work 

RVUs = 1.30) by 3, as the specialty 

society stated to the AMA RUC that 

there are typically 3 participants in a 

group. We disagree with the HCPACrecommended value for this service and 

believe it is too high. We believe work 

RVUs of 0.33 are more appropriate, 

which was derived by dividing the 

value for CPT code 92507 by 4 

participants, as we understand from 

providers that 4 more accurately 

represents the typical number of 

participants in a group. Additionally, 

the work RVUs derived from dividing 

the RVUs for the related individual 

treatment code by 4, 0.33 RVUs, are 

appropriate for this group treatment 

service relative to the work RVUs 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. 

Therefore we are assigning alternative 

work RVUs of 0.33 to CPT code 92508 

on an interim final basis for CY 2011. 

For CPT code 92606 (Therapeutic 

service(s) for the use of non-speechgenerating device, including 

programming and modification), the 

HCPAC recommended 1.40 work RVUs, 

the survey median value. This service is 

currently bundled under the PFS and 

we will maintain this status for CY 

2011. We are publishing the AMA RUCrecommended value in Addendum B to 

this final rule with comment period in 

accordance with our usual practice for 

bundled services. 

(L) Sleep Testing (CPT Codes 95806 and 

95807) 

Sleep testing CPT codes were 

identified by the Five-Year Review 

Identification Workgroup as potentially 

misvalued codes through the ‘‘CMS 

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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. 

For CPT code 95806 (Sleep study, 

unattended, simultaneous recording of, 

heart rate, oxygen saturation, respiratory 

airflow, and respiratory effort (eg, 

thoracoabdominal movement)), the 

AMA RUC recommended 1.28 work 

RVUs. The AMA RUC recommended 

1.25 work RVUs for CPT code 95807 

(Sleep study, simultaneous recording of 

ventilation, respiratory effort, ECG or 

heart rate, and oxygen saturation, 

attended by a technologist). Although 

the AMA RUC-recommended values for 

these codes reflect the survey 25th 

percentile, we disagree with the values 

and believe 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. 

Therefore, we have assigned alternative 

values of 1.25 work RVUs to CPT code 

95806 and 1.28 work RVUs to CPT code 

95807 on an interim final basis for CY 

2011. 

(M) Subsequent Hospital Observation 

Care 

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). 

The AMA RUC reviewed the survey 

data for CPT code 99224 and accepted 

the following physician times: 5 

minutes of pre-service, 10 minutes of 

intra-service, and 5 minutes of postservice time. The AMA RUC believed 

this code was comparable in physician 

time and intensity to CPT code 99231 

(Level 1 subsequent hospital care, per 

day, for the evaluation and management 

of a patient), and recommended work 

RVUs of 0.76. Similarly, the AMA RUC 

reviewed the survey data for CPT code 

99225 and accepted the following 

physician times: 9 minutes of preservice, 20 minutes of intra-service, and 

10 minutes of post-service time. The 

AMA RUC believed this code was 

comparable in physician time and 

intensity to CPT code 99232 (Level 2 

subsequent hospital care, per day, for 

the evaluation and management of a 

patient), and recommended work RVUs 

of 1.39. Finally, the AMA RUC reviewed 

the survey data for CPT code 99226 and 

accepted the following physician times: 

10 minutes of pre-service, 30 minutes of 

intra-service, and 15 minutes of postservice time. The AMA RUC believed 

this code was comparable in physician 

time and intensity to CPT code 99233 

(Level 3 subsequent hospital care, per 

day, for the evaluation and management 

of a patient), and recommended work 

RVUs of 2.00. 

Observation services are outpatient 

services ordered by a patient’s treating 

practitioner. Admission of the patient to 

the hospital as an inpatient or the 

ending of observation services must also 

be ordered by the treating practitioner. 

CMS has stated that in only rare and 

exceptional cases would reasonable and 

necessary outpatient observation 

services span more than 48 hours. In the 

majority of cases, the decision whether 

to discharge a patient from the hospital 

following resolution of the reason for 

the observation care or to admit the 

patient as an inpatient can be made in 

less than 48 hours, usually in less than 

24 hours. Consequently, we believe that 

the acuity level of the typical patient 

receiving outpatient observation 

services would generally be lower than 

that of the inpatient level. We believe 

that if the patient’s acuity level is 

determined to be at the level of the 

inpatient, the patient should be 

admitted to the hospital as an inpatient. 

We note that CMS has publicly stated in 

a recent letter to the AHA that ‘‘it is not 

in the hospital’s or the beneficiary’s 

interest to extend observation care 

rather than either releasing the patient 

from the hospital or admitting the 

patient as an inpatient * * *’’ 

Consequently, we are not accepting 

the AMA RUC’s recommendation to 

value the subsequent observation care 

codes at the level of subsequent 

inpatient hospital care services. Instead, 

to recognize the differences in patient 

acuity between the two settings, we 

removed the pre- and post-services 

times from the AMA RUCrecommended values for subsequent 

observation care, reducing the values to 

approximately 75 percent of the values 

for the subsequent hospital care codes. 

Therefore, we are assigning alternative 

work RVUs of 0.54 to CPT code 99224, 

0.96 to CPT code 99225, and 1.44 to 

CPT code 99226 on an interim final 

basis for CY 2011. 

(2) Comprehensive Codes for a Bundle 

of Existing Component Services 

A subset of AMA RUC work RVU 

recommendations addressed valuing 

new CY 2011 CPT codes resulting from 

the bundling of two or more existing 

component services performed together 

95 percent or more of the time. We 

expect this bundling of component 

services to continue over the next 

several years as the AMA RUC further 

recognizes the work efficiencies for 

services commonly furnished together. 

Stakeholders should expect that 

increased bundling of services into 

fewer codes will result in reduced PFS 

payment for a comprehensive service by 

explicitly considering the efficiencies in 

work and/or PE that may 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. In some CY 2011 cases, the CPT 

Editorial Panel undertook relatively 

minor bundling, such as bundling the 

associated imaging with a procedure in 

a single new CPT code. In other cases, 

the CPT Editorial Panel bundled 

significant component codes for distinct 

procedures that were previously 

separately reported. This section focuses 

on the latter cases, and we note that 

these codes fall into three major clinical 

categories: Endovascular 

revascularization, computed 

tomography (CT), and diagnostic cardiac 

catheterization. While we acknowledge 

that 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 as part of the 

potentially misvalued codes initiative in 

order to ensure that we fully account for 

the resulting work efficiencies. 

Specifically, we recommend that the 

AMA RUC use, whenever possible, the 

building block approach, which is a 

consistent and transparent methodology 

based on the components of a code. 

The new CY 2011 comprehensive 

codes in these three clinical categories 

are displayed in Table 51 and our 

discussion of their work values follows. 

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TABLE 51—NEW CY 2011 COMPREHENSIVE CODES AND WORK RVUS FOR ENDOVASCULAR REVASCULARIZATION, CT, 

AND DIAGNOSTIC CARDIAC CATHETERIZATION SERVICES

CPT code Long descriptor 

AMA RUCrecommended 

work RVUs 

CY 2011 

interim 

final Work 

RVUs 

Endovascular Revascularization 

37220 ............... Revascularization, endovascular, open or percutaneous, iliac artery, unilateral, initial vessel; 

with transluminal angioplasty.

8.15 8.15 

37221 ............... Revascularization, endovascular, open or percutaneous, iliac artery, unilateral, initial vessel; 

with transluminal stent placement(s), includes angioplasty within the same vessel, when 

performed.

10.00 10.00 

37222 ............... Revascularization, endovascular, open or percutaneous, iliac artery, each additional 

ipsilateral iliac vessel; with transluminal angioplasty (List separately in addition to code for 

primary procedure).

3.73 3.73 

37223 ............... Revascularization, endovascular, open or percutaneous, iliac artery, each additional 

ipsilateral iliac vessel; with transluminal stent placement(s) (List separately in addition to 

code for primary procedure), includes angioplasty within the same vessel, when performed.

4.25 4.25 

37224 ............... Revascularization, endovascular, open or percutaneous, femoral/popliteal artery(s), unilateral; with transluminal angioplasty.9.00 9.00 

37225 ............... Revascularization, endovascular, open or percutaneous, femoral/popliteal artery(s), unilateral; with atherectomy, includes angioplasty within the same vessel, when performed.12.00 12.00 

37226 ............... Revascularization, endovascular, open or percutaneous, femoral/popliteal artery(s), unilateral; with transluminal stent placement(s), includes angioplasty within the same vessel, 

when performed.

10.49 10.49 

37227 ............... Revascularization, endovascular, open or percutaneous, femoral/popliteal artery(s), unilateral; with transluminal stent placement(s) and atherectomy, includes angioplasty within 

the same vessel, when performed.

14.50 14.50 

37228 ............... Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, initial vessel; with transluminal angioplasty.11.00 11.00 

37229 ............... Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, initial vessel; with atherectomy, includes angioplasty within the same vessel, when performed.14.05 14.05 

37230 ............... Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, initial vessel; with transluminal stent placement(s) , includes angioplasty within the same 

vessel, when performed.

13.80 13.80 

37231 ............... Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, initial vessel; with transluminal stent placement(s) and atherectomy, includes angioplasty 

within the same vessel, when performed.

15.00 15.00 

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).

4.00 4.00 

37233 ............... Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, 

each additional vessel; with atherectomy (List separately in addition to code for primary 

procedure), includes angioplasty within the same vessel, when performed.

6.50 6.50 

37234 ............... Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, 

each additional vessel; with transluminal stent placement(s) (List separately in addition to 

code for primary procedure), includes angioplasty within the same vessel, when performed.

5.50 5.50 

37235 ............... Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, 

each additional vessel; with transluminal stent placement(s) and atherectomy (List separately in addition to code for primary procedure), includes angioplasty within the same 

vessel, when performed.

7.80 7.80 

CT Abdomen/CT Pelvis 

74176 ............... Computed tomography, abdomen and pelvis; without contrast material .................................. 1.74 1.74 

74177 ............... Computed tomography, abdomen and pelvis; with contrast material ....................................... 1.82 1.82 

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.

2.01 2.01 

Diagnostic Cardiac Catheterization 

93451 ............... Right heart catheterization including measurement(s) of oxygen saturation and cardiac output, when performed.3.02 2.72 

93452 ............... Left heart catheterization including intraprocedural injection(s) for left ventriculography, imaging supervision and interpretation, when performed.4.32 4.75 

93453 ............... Combined right and left heart catheterization including intraprocedural injection(s) for left 

ventriculography, imaging supervision and interpretation, when performed.

5.98 6.24 

93454 ............... Catheter placement in coronary artery(s) including intraprocedural injection(s) for coronary 

angiography, imaging supervision and interpretation;.

4.95 4.79 

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TABLE 51—NEW CY 2011 COMPREHENSIVE CODES AND WORK RVUS FOR ENDOVASCULAR REVASCULARIZATION, CT, 

AND DIAGNOSTIC CARDIAC CATHETERIZATION SERVICES—Continued 

CPT code Long descriptor 

AMA RUCrecommended 

work RVUs 

CY 2011 

interim 

final Work 

RVUs 

93455 ............... with catheter placement(s) in bypass graft(s) (internal mammary, free arterial, venous 

grafts) including intraprocedural injection(s) for bypass graft angiography.

6.15 5.54 

93456 ............... with right heart catheterization ............................................................................................... 6.00 6.15 

93457 ............... 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.

7.66 6.89 

93458 ............... with left heart catheterization including intraprocedural injection(s) for left 

ventriculography, when performed.

6.51 5.85 

93459 ............... 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.

7.34 6.60 

93460 ............... with right and left heart catheterization including intraprocedural injection(s) for left 

ventriculography, when performed.

7.88 7.35 

93461 ............... 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.

9.00 8.10 

93563 ............... Injection procedure during cardiac catheterization including image supervision, interpretation, and report; for selective coronary angiography during congenital heart catheterization.2.00 1.11 

93564 ............... for selective opacification of aortocoronary venous or arterial bypass graft(s) (eg, 

aortocoronary saphenous vein, free radial artery, or free mammary artery graft) to one or 

more coronary arteries and in situ arterial conduits (eg, internal mammary), whether native 

or used for bypass to one or more coronary arteries during congenital heart catheterization, 

when performed.

2.10 1.13 

93565 ............... for selective left ventricular or left arterial angiography ......................................................... 1.90 0.86 

93566 ............... for selective right ventricular or right atrial angiography ....................................................... 0.96 0.86 

93567 ............... for supravalvular aortography ................................................................................................ 1.08 0.97 

93568 ............... for pulmonary angiography .................................................................................................... 0.98 0.88 

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. The approach of a 

uniform discount on the second CT 

service resembles an MPPR and, given 

the public concerns regarding our 

proposed expansion of current MPPR 

policies under the PFS for CY 2011 as 

discussed in section II.C.4. of this final 

rule with comment period, we are 

unsure how the AMA RUC’s 

recommended CT methodology actually 

considered the physician work required 

for the specific component services 

being bundled. Nevertheless, while we 

believe that the application of a 

consistent approach to valuing 

comprehensive services is desirable, we 

agree that the decreased work RVUs the 

AMA RUC recommended for 

comprehensive services in these two 

categories reflect a reasonable 

estimation of the work efficiencies 

created by the bundling of the 

component services. Therefore, we are 

accepting as interim final work RVUs 

the AMA RUC-recommended values for 

endovascular revascularization and CT 

services listed in Table 51 for CY 2011. 

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 are unsure how this approach is 

resource-based with respect to 

physician work. We are also concerned 

that the physician survey appears to 

have overstated the work for these wellestablished procedures so significantly 

that the 25th percentile value was 

usually higher than the sum of the 

current RVUs for the component 

services. Under this methodology, the 

AMA RUC-recommended RVUs for the 

comprehensive codes for diagnostic 

cardiac catheterization are an average of 

only one percent lower than the sum of 

the RVUs for the component services 

(taking into consideration any MPPR 

that would currently apply) included in 

the bundle. 

We do not find the AMA RUC’s 

methodology or the resulting values in 

this case to be acceptable for a major 

code refinement exercise of this nature. 

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 cardiac catheterization services. 

On the contrary, we believe that the 

AMA RUC did not fully consider or 

account for the efficiency gains when 

the component services are furnished 

together, including the significant 

reduction in service time. Rather, the 

AMA RUC appears to have considered 

only the summation of the component 

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services to the comprehensive service. 

Therefore, we are requesting that the 

AMA RUC reexamine these codes as 

quickly as possible, given the significant 

PFS utilization and spending for cardiac 

catheterization services, and put 

forward an alternative approach to 

valuing these services that would 

produce relative values that are 

resource-based and do not rely 

predominantly on the current 

component service values in a circular 

rationale. 

Since we believe that the new 

comprehensive diagnostic cardiac 

catheterization codes would be 

overvalued under the AMA RUC’s CY 

2011 recommendations, we have 

employed an interim methodology to 

determine alternative values for these 

services which we are assigning as the 

interim final work RVUs for CY 2011. 

To account for efficiencies inherent in 

bundling, we set the work RVUs for all 

of the 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. These 

values are displayed in Table 51 and in 

Addendum B and C to this final rule 

with comment period. We recognize 

that this interim methodology is not 

highly specific and further acknowledge 

that the use of another approach by the 

AMA RUC may have differential effects 

on the values of the new comprehensive 

services compared to the proportionate 

reduction on the sum of the RVUs for 

the component services that we have 

adopted as a temporary methodology. 

However, given the complexity of the 

component code combinations that 

contribute to the comprehensive cardiac 

catheterization codes and the apparent 

overstatement of physician work from 

the physician survey, we are unable to 

present a more refined, code-specific 

methodology for the interim final 

values. Instead, based upon a very 

conservative estimate of the work 

efficiencies we would expect to be 

present when multiple component 

services are bundled together into a 

single comprehensive service, we have 

set interim final work values for the 

cardiac catheterization codes using a 10 

percent reduction on the current values. 

As points of comparison, we note that 

the current MPPR policies under the 

PFS for imaging and surgical services 

reduce payment for the second and 

subsequent procedures by 50 percent on 

the TC and complete service, 

respectively, and, as discussed in detail 

in section II.C.4. of this final rule with 

comment period, we are adopting a 25 

percent MPPR on the PE component of 

payment for therapy services in CY 

2011. We further note that the servicespecific work efficiencies for the other 

two major categories of new bundled 

codes for CY 2011, specifically 

endovascular revascularization and CT, 

are generally between 20 and 35 

percent. 

(3) Work Budget Neutrality for Clinical 

Categories of CPT Codes 

Work budget neutrality, as a concept, 

is applied 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 

a clinical category of CPT codes may 

change, although the actual physician 

work for the services has not changed. 

When this occurs, work budget 

neutrality may be applied to adjust the 

work RVUs of each clinically related 

CPT 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 changes (increases or decreases) in 

physician work or from structural 

coding changes. We then determine 

whether the application of budget 

neutrality within sets of codes is 

appropriate. That is, if, within a set of 

clinically related codes, the aggregate 

work RVUs would increase under the 

RVUs we would be adopting for the 

upcoming year but 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. 

As the AMA RUC and CMS move to 

bundle and revalue more existing codes, 

creating significant structural coding 

changes, ensuring work budget 

neutrality is an important principle so 

that these changes are not unjustifiably 

redistributive among PFS services. This 

year, we found four sets of clinically 

related CPT codes where we believe the 

application of work budget neutrality is 

appropriate. That is, in these clinical 

areas, we believe the increases in 

aggregate work RVUs for the related 

services that would result from the work 

RVUs we would adopt (either the AMA 

RUC-recommended work RVUs or the 

alternative work RVUs determined by 

CMS) would not represent a true 

increase in the physician work for these 

services. These codes are in the areas of 

paraesophageal hernia procedures, 

obstetrical care, esophageal motility and 

high resolution esophageal pressure 

topography, and skin excision and 

debridement. 

Table 52 lists the CPT codes that are 

affected by an application of work 

budget neutrality in CY 2011. 

TABLE 52—CY 2011 WORK BUDGET NEUTRALITY (BN) FOR CLINICAL CATEGORIES OF NEW/REVISED CODES

CPT Code Short descriptor 

AMA RUCrecommended 

work RVUs 

CMSrecommended 

work RVUs 

pre-BN 

CY 2011 

interim final 

work RVUs 

Paraesophageal Hernia Procedures, BN Factor of 0.7374 

43283 ............... Lap esoph lengthening .................................................................................. 4.00 4.00 2.95 

43327 ............... Esoph fundoplasty lap ................................................................................... 18.10 18.10 13.35 

43328 ............... Esoph fundoplasty thor .................................................................................. 27.00 27.00 19.91 

43332 ............... Transab esoph hiat hern rpr .......................................................................... 26.60 26.60 19.62 

43333 ............... Transab esoph hiat hern rpr .......................................................................... 30.00 29.10 21.46 

43334 ............... Transthor diaphrag hern rpr .......................................................................... 30.00 30.00 22.12 

43335 ............... Transthor diaphrag hern rpr .......................................................................... 33.00 32.50 23.97 

43336 ............... Thorabd diaphr hern repair ........................................................................... 35.00 35.00 25.81 

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TABLE 52—CY 2011 WORK BUDGET NEUTRALITY (BN) FOR CLINICAL CATEGORIES OF NEW/REVISED CODES—Continued 

CPT Code Short descriptor 

AMA RUCrecommended 

work RVUs 

CMSrecommended 

work RVUs 

pre-BN 

CY 2011 

interim final 

work RVUs 

43337 ............... Thorabd diaphr hern repair ........................................................................... 37.50 37.50 27.65 

43338 ............... Esoph lengthening ......................................................................................... 3.00 3.00 2.21 

Obstetrical Care, BN Factor of 0.8922 

59400 ............... Obstetrical care ............................................................................................. 32.69 32.16 28.69 

59409 ............... Obstetrical care ............................................................................................. 14.37 14.37 12.82 

59410 ............... Obstetrical care ............................................................................................. 18.54 18.01 16.07 

59412 ............... Antepartum manipulation ............................................................................... 1.71 1.71 1.53 

59414 ............... Deliver placenta ............................................................................................. 1.61 1.61 1.44 

59425 ............... Antepartum care only .................................................................................... 6.31 6.31 5.63 

59426 ............... Antepartum care only .................................................................................... 11.16 11.16 9.96 

59430 ............... Care after delivery ......................................................................................... 2.47 2.47 2.20 

59510 ............... Cesarean delivery .......................................................................................... 36.17 35.64 31.80 

59514 ............... Cesarean delivery only .................................................................................. 16.13 16.13 14.39 

59515 ............... Cesarean delivery .......................................................................................... 22.00 21.47 19.15 

59610 ............... Vbac delivery ................................................................................................. 34.40 33.87 30.22 

59612 ............... Vbac delivery only ......................................................................................... 16.09 16.09 14.35 

59614 ............... Vbac care after delivery ................................................................................ 20.26 19.73 17.60 

59618 ............... Attempted vbac delivery ................................................................................ 36.69 36.16 32.26 

59620 ............... Attempted vbac delivery only ........................................................................ 16.66 16.66 14.86 

59622 ............... Attempted vbac after care ............................................................................. 22.53 22.00 19.63 

Esophageal Motility and High Resolution Esophageal Pressure Topography, BN Factor of 0.8500 

91010 ............... Esophagus motility study ............................................................................... 1.50 1.50 1.28 

91013 ............... Esophgl motil w/stim/perfus ........................................................................... 0.21 0.21 0.18 

Skin Excision and Debridement, BN Factor of 0.9422 

97597 ............... Rmvl devital tis 20 cm/< ................................................................................ 0.54 0.54 0.51 

97598 ............... Rmvl devital tis addl 20 cm< ......................................................................... 0.40 0.25 0.24 

For the paraesophageal hernia 

procedures, the CPT Editorial Panel 

deleted six existing CPT codes and 

created ten new codes to remove 

obsolete and duplicative codes and add 

new codes to report current surgical 

techniques for paraesophageal hernia 

procedures. Since in this case there 

would be more codes that describe the 

same physician work with a greater 

degree of precision, the aggregate 

increase in work RVUs that would result 

from our adoption of the CMSrecommended RVUs that are largely 

based on the AMA RUC’s work RVU 

recommendations would not represent a 

true increase in physician work. 

Therefore, we believe it would be 

appropriate to apply work budget 

neutrality to this set of codes. After 

reviewing the AMA RUC-recommended 

work RVUs, we adjusted the work RVUs 

for two codes (CPT codes 43333 and 

43335) as described previously in 

section V.C.1.b.(i)(4) of this final rule 

with comment period, and then applied 

work budget neutrality to the set of 

clinically related CPT codes. The work 

budget neutrality factor for these 12 

paraesophageal hernia procedure CPT 

codes is 0.7374. 

For the obstetrical care codes, the 

AMA RUC reviewed 17 existing 

obstetrical care codes as part of the 

potentially misvalued codes initiative. It 

recommended significant increases in 

the work RVUs for some of the 

comprehensive obstetrical care codes 

(incorporating more than one element of 

antepartum care, delivery, and/or 

postpartum care) largely to address the 

management of labor. While we 

generally agree with the resulting AMA 

RUC-recommended rank order of 

services in this family, the aggregate 

increase in work RVUs for the 

obstetrical services that would result 

from our adoption of the CMSrecommended work RVUs that are 

largely based on the AMA RUC work 

RVU recommendations is not indicative 

of a true increase in physician work for 

the services. Therefore, we believe it 

would be appropriate to apply work 

budget neutrality to this set of codes. 

After reviewing the AMA RUCrecommended work RVUs, we adjusted 

the work RVUs for several codes as 

described in the following section 

V.C.1.c.(6) of this final rule with 

comment period, and 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 is 0.8922. 

For esophageal motility and high 

resolution esophageal pressure 

topography, two CPT codes were 

deleted and the services will be reported 

under a revalued existing CPT code and 

a new add-on code in CY 2011. We 

agree with the AMA RUC that there is 

compelling evidence to change the work 

RVUs for the existing code to account 

for the inclusion of procedures with 

higher work RVUs that would 

previously have been reported under the 

deleted codes. We also agree with the 

AMA RUC-recommended work RVUs 

for the add-on code. While we agree 

with the AMA RUC’s recommendations 

for the new work RVUs for both codes, 

we do not believe that this structural 

coding change should result in an 

increase in aggregate physician work for 

the same services and, therefore, we 

believe it would be appropriate to apply 

work budget neutrality to this set of 

codes. The work budget neutrality factor 

for these 2 codes is 0.8500. 

In the skin excision and debridement 

category, two CPT codes were deleted 

and the services that would previously 

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have been reported under these codes 

will be reported under two existing 

codes in CY 2011. However, the two 

existing wound management codes have 

been 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. 

Once again, the increase in aggregate 

work RVUs that would result from our 

adoption of the CMS-recommended 

work RVUs that are largely based on the 

AMA RUC work RVU recommendations 

do not represent a true increase in 

physician work for these procedures. 

Therefore, we believe it would be 

appropriate to apply work budget 

neutrality to this set of codes. After 

reviewing the AMA RUC-recommended 

work RVUs, we adjusted the work RVUs 

for one code (CPT code 97598) as 

described previously in section 

V.C.1.b.(i)(1) of this final rule with 

comment period, and then applied work 

budget neutrality to the set of clinically 

related CPT codes. The budget 

neutrality factor for these 2 codes is 

0.9422. 

c. CY 2011 Interim Final Work RVUs for 

Potentially Misvalued Codes 

In the following section, we provide 

a discussion of our rationale for not 

accepting particular AMA RUCrecommended work RVUs for CY 2011 

CPT codes that have been identified as 

potentially misvalued through the AMA 

RUC’s screens and with CMS guidance. 

Table 53 lists all 291 CPT codes for 

which the AMA RUC has provided CMS 

with work RVU recommendations for 

CY 2011. Furthermore, the table 

displays the AMA RUC’s recommended 

work value as well as CMS’ interim final 

decisions for CY 2011. For CY 2011, the 

AMA RUC provided work RVU 

recommendations for a total of 82 codes 

identified as potentially misvalued in 

categories based on the screen that 

identified the codes, including 

‘‘Harvard-Valued;’’ ‘‘CMS Fastest 

Growing:’’ and ‘‘Site-of-Service 

Anomalies.’’ For CY 2011, CMS is not 

accepting 26 of the 82 AMA RUCrecommended work values for codes 

identified as potentially misvalued. We 

are instead providing alternative interim 

final work RVUs as discussed in the 

forthcoming section. 

(1) Excision and Debridement (CPT 

Codes 11043 and 11044) 

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. For CY 2011, the AMA 

RUC reviewed this family of codes 

which includes the two potentially 

misvalued codes, CPT codes 11043 and 

11044, and provided work RVU 

recommendations to CMS. Since the 

family also included other new and 

revised codes, we have consolidated the 

discussion of Excision and Debridement 

codes in section V.C.1.b.(i)(1), which 

discusses new and revised codes. 

Section V.C.1.b.(i)(1) provides the 

complete discussion of CMS’ interim 

final work RVU decisions for this family 

of codes. However, to summarize the 

CMS decisions in brief, we disagree 

with the AMA RUC’s CY 2011 work 

RVU recommendations and are 

assigning alternative values for both 

CPT codes 11043 and 11044 on an 

interim final basis for CY 2011. 

(2) Strapping Lower Extremity (CPT 

Code 29540) 

CPT code 29540 (Strapping; ankle 

and/or foot) was identified as a 

potentially misvalued code through the 

Five-Year Review Identification 

Workgroup under the ‘‘Harvard Valued’’ 

codes potentially misvalued codes 

screen for services with utilization over 

100,000. This code is also a member of 

a family of codes under review for CY 

2011 and as such, the full discussion for 

the Strapping Lower Extremity family is 

provided in section V.C.1.b.(i)(3), which 

discusses new and revised codes. 

However, to summarize the CMS 

decision in brief, we disagree with the 

AMA RUC’s CY 2011 work RVU 

recommendations and are assigning an 

alternative value of 0.32 RVUs to CPT 

code 29540 on an interim final basis for 

CY 2011. 

(3) Control Nasal Hemorrhage (CPT 

Code 30901) 

CPT code 30901 (Control nasal 

hemorrhage, anterior, simple (limited 

cautery and/or packing) any method) 

was 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. The AMA 

RUC agreed with the specialty society, 

stating that there is no compelling 

evidence to change the current work 

RVUs of 1.21. To support the current 

valuation, the AMA RUC compared CPT 

code 30901 to CPT code 36620 (Arterial 

catheterization or cannulation for 

sampling, monitoring or transfusion 

(separate procedure); percutaneous), 

and agreed that CPT code 30901 

required slightly more total service time 

to perform but required comparable 

intensity and complexity. The AMA 

RUC also compared CPT code 30901 to 

the key reference code CPT code 31231 

(Nasal endoscopy, diagnostic, unilateral 

or bilateral (separate procedure) and 

agreed that code CPT code 30901 would 

be relatively more intense/complex. We 

disagree with the AMA RUC’s CY 2011 

work RVU recommendation to maintain 

the current work RVUs of 1.21 for code 

CPT code 30901 because the AMA RUCrecommended work value does not 

appropriately account for the significant 

reduction in intra-service time. We 

believe the more appropriate work 

RVUs are 1.10, based on the survey 25th 

percentile. Therefore, we are assigning 

an alternative value of 1.10 work RVUs 

to CPT code 29540 on an interim final 

basis for CY 2011. 

(4) Cystourethroscopy (CPT Codes 

52281 and 52332) 

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. 

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 account for the time 

and work required to perform this 

procedure. We disagree with the CY 

2011 AMA RUC work RVU 

recommendation to maintain the current 

RVUs for this code because the 

physician time to perform 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 preservice time. Accounting for the 

reduction in pre-service time, we 

calculated work RVUs that are close to 

the survey 25th percentile. Therefore, 

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we are assigning 2.60 work RVUs to CPT 

code 52281 on an interim final basis for 

CY 2011. 

Similarly, for CPT code 52332, we 

disagree with the AMA RUC’s CY 2011 

work RVU recommendation to maintain 

the current value due to the same 

concerns, a significant reduction in preservice time. Based on the same 

building block rationale we applied to 

CPT code 52281, the other code within 

this family, we believe 1.47, which is 

the survey 25th percentile and 

maintains rank order, is a more 

appropriate valuation for 52332. 

Therefore, we are assigning an 

alternative value of 1.47 work RVUs to 

CPT code 52332 on an interim final 

basis for CY 2011. 

(5) Vaginal Radiation Afterloading 

Apparatus for Clinical Brachytherapy 

(CPT Code 51755) 

CPT code 57155 (Insertion of uterine 

tandems and/or vaginal ovoids for 

clinical brachytherapy) was identified 

as a potentially misvalued code by the 

Five-Year Review Identification 

Workgroup through the ‘‘Site-of-Service 

Anomalies’’ potentially misvalued codes 

screen. This code is a member of a 

family of codes under review for CY 

2011 and as such, the full discussion for 

the family is provided in section 

V.C.1.b.(1)(E), which discusses new and 

revised codes. However, to summarize 

the CMS decision in brief, we disagree 

with the AMA RUC’s CY 2011 work 

RVU recommendations and are 

assigning an alternative value of 3.37 

RVUs to CPT code 57155 on an interim 

final basis for CY 2011. 

(6) Obstetrical Care Codes (CPT Codes 

59440, 59410, 59510, 59515, 59610, 

59614, 59618, and 59622) 

As a result of being identified as 

potentially misvalued codes by the FiveYear Review Identification Workgroup 

‘‘High IWPUT’’ screen for potentially 

misvalued codes, the AMA RUC 

reviewed the CPT codes that define 

obstetrical care (CPT codes 59400 

through 59622). CPT codes 59400, 

59410, 59510, 59515, 59610, 59614, 

59618 and 59622 include antepartum 

care and/or delivery as well as 

postpartum care for which the AMA 

RUC recommended significantly 

increased work values. The AMA RUC 

recommended 32.69 work RVUs for CPT 

code 59400 (Routine obstetric care 

including antepartum care, vaginal 

delivery (with or without episiotomy, 

and/or forceps) and postpartum care); 

18.54 work RVUs for CPT code 59410 

(Vaginal delivery only (with or without 

episiotomy and/or forceps); including 

postpartum care); 36.17 work RVUs for 

CPT code 59510 (Routine obstetric care 

including antepartum care, cesarean 

delivery, and postpartum care); 22.00 

work RVUs for CPT code 59515 

(Cesarean delivery only; including 

postpartum care), 34.40 work RVUs for 

CPT code 59610 (Routine obstetric care 

including antepartum care, vaginal 

delivery (with or without episiotomy, 

and/or forceps) and postpartum care, 

after previous cesarean delivery); 20.26 

work RVUs for CPT code 59614 (Vaginal 

delivery only, after previous cesarean 

delivery (with or without episiotomy 

and/or forceps); including postpartum 

care), 36.69 work RVUs for CPT code 

59618 (Routine obstetric care including 

antepartum care, cesarean delivery, and 

postpartum care, following attempted 

vaginal delivery after previous cesarean 

delivery); and 22.53 work RVUs for CPT 

code 59622 (Cesarean delivery only, 

following attempted vaginal delivery 

after previous cesarean delivery; 

including postpartum care). For 

postpartum care with delivery, which is 

included in all of these codes, the AMA 

RUC recommended one CPT code 99214 

(Level 4 established patient office or 

other outpatient visit). 

We disagree with the AMA RUCrecommended work RVUs for these 

services and believe that one CPT code 

99213 visit (Level 3 established patient 

office or other outpatient visit) more 

accurately reflects the services 

furnished for this postpartum care visit. 

Therefore, for all CPT code 99214 blocks 

for CPT codes that include postpartum 

care following delivery visits, we have 

converted the CPT code 99214 visit to 

a CPT code 99213 visit and have revised 

the work RVUs accordingly. Therefore, 

we are adopting alternative work RVUs 

and are assigning 32.16 work RVUs to 

CPT code 59400; 18.01 work RVUs to 

CPT code 59410; 35.64 work RVUs to 

CPT code 59510; 21.47 work RVUs to 

CPT code 59515; 33.87 work RVUs to 

CPT code 59610; 19.73 work RVUs to 

CPT code 59614; 36.16 work RVUs to 

CPT code 59618; and 22.00 work RVUs 

to CPT code 59622, prior to the work 

budget neutrality adjustment as 

discussed in section V.C.1.b.(3) of this 

final rule with comment period, on 

interim final basis for CY 2011. 

(7) Vagus Nerve Stimulator (CPT Code 

61885) 

CPT code 61885 (Insertion or 

replacement of cranial neurostimulator 

pulse generator or receiver, direct or 

inductive coupling; with connection to 

a single electrode array) was identified 

as a potentially misvalued code by the 

Five-Year Review Identification 

Workgroup under the ‘‘Site-of-Service 

Anomalies’’ screen for potential 

misvalued codes. We discuss this code 

in the context of the Vagus Nerve 

Stimulator family, provided in section 

V.C.1.b.(i)(6), which discusses new and 

revised codes. However, to summarize 

the CMS decision in brief, we disagree 

with the AMA RUC’s CY 2011 work 

RVU recommendations and are 

assigning an alternative value of 6.05 

RVUs to CPT code 61885 on an interim 

final basis for CY 2011. 

(8) Transforaminal Epidural Injection 

(CPT Code 64483) 

CPT code 64483 (Injection(s), 

anesthetic agent and/or steroid, 

transforaminal epidural, with image 

guidance (fluoroscopy or CT), lumbar or 

sacral; single level) was identified as a 

potentially misvalued code through the 

Five-Year Review Identification 

Workgroup under the ‘‘CMS Fastest 

Growing’’ potentially misvalued codes 

screen. The AMA RUC compared 

components of this code (pre-, intra-, 

and post-service times, in addition to 

intensity) to a number of other codes, 

although the AMA RUC’s application of 

the crosswalk methodology was unclear 

to us. The AMA RUC recommended 

1.90 work RVUs; however, we disagree 

with AMA RUC’s CY 2011 work RVU 

recommendation and believe 1.75 work 

RVUs, based on the survey 25th 

percentile, more appropriately accounts 

for the significant reductions in pre-, 

intra-, and post-service time. Therefore, 

we are assigning an alternative value of 

1.75 work RVUs to CPT code 64483 on 

an interim final basis for CY 2011. 

(9) CT Thorax (CPT Code 71250) 

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. This service 

had never been surveyed by the AMA 

RUC until this review was conducted 

for CY 2011. The specialty 

recommended a pre-service time of 5 

minutes based on the survey results and 

the AMA RUC concurred. The AMA 

RUC also agreed that the surveyed intraservice of 15 minutes and immediate 

post-service time of 5 minutes were 

typical for the physician work required 

for the service. While the AMA RUC 

accepted the survey results for 

physician times based on its 

comparisons to similar services and 

other considerations, 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. 

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We disagree with the AMA RUC’s CY 

2011 work RVU recommendation to 

maintain the current value for CPT code 

71250 and similar codes. As we have 

previously discussed, we are 

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. That is, in 

providing recommendations for existing 

potentially misvalued codes in CY 2011, 

the AMA RUC often recommended 

maintaining the current work RVUs and 

supported this valuation by citing the 

survey results. Upon clinical review of 

a number of these cases, we are 

concerned over the validity of the 

survey results since the survey values 

often are very close to the current 

known value for the code. We are 

concerned that this may indicate a bias 

in the survey results since respondents 

would know the current value for the 

existing code at the time the survey is 

being conducted. Increasingly, rather 

than recommending the median survey 

value that has historically been most 

commonly used, the AMA RUC is 

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 are assigning an alternative 

value of 1.00 work RVUs (the survey 

low value) to CPT code 71250 on an 

interim final basis for CY 2011. 

(10) CT Spine (CPT Code 72125) 

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 

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 pre-service time 

of 5 minutes based on the survey 

results. The AMA RUC also agreed that 

the surveyed intra-service of 15 minutes 

and immediate post-service time of 5 

minutes were typical for the physician 

work required for the service. The AMA 

RUC compared this service to other 

comparable services and 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 survey work RVU 

results. Upon clinical review of these 

codes in this family, we are 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 are 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 are assigning 

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. 

(11) CT Upper and CT Lower Extremity 

(CPT Code 73200 and 73700) 

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 FiveYear Review Workgroup under the 

‘‘CMS Fastest Growing’’ screen for 

potentially misvalued codes. Similar to 

the other CT codes previously 

discussed, the AMA RUC reviewed the 

survey results and accepted the survey 

physician times, recommending 

maintaining the current work RVUs of 

1.09 for these services. Our clinical 

review of the codes, 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. 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 disagree with the AMA 

RUC’s CY 2011 work RVU 

recommendations. We are assigning 

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. 

(12) Radiation Treatment Management 

(CPT Code 77427) 

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. For CY 2011, 

the AMA RUC reviewed the specialty 

survey results and agreed that the 

surveyed physician time of 7 minutes 

pre-service, 70 minutes intra-service, 

and 10 minutes immediate post-service 

is appropriate. The AMA RUC also used 

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 postoperative 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. Accordingly, the AMA RUC 

calculated total work RVUs of 3.45 and 

recommended this value 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 believe instead of the average 

based upon 4 units of CPT code 99214 

and 2 units of CPT code 99213, a more 

appropriate estimation would be an 

average of 3 units of CPT code 99214 

and 3 units of CPT code 99213. 

Accordingly, we are assigning an 

alternative value of 2.92 work RVUs to 

CPT code 77427 on an interim final 

basis for CY 2011. 

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BILLING CODE 4120–01–C 

2. Establishment of Interim Final Direct 

PE Inputs for CY 2011 

a. Background 

As we previously explained in section 

V.A. of this final rule with comment 

period, 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. These recommendations, 

therefore, include inputs for all direct 

PE categories excluding supply prices 

and equipment prices and useful life 

inputs, which are specifically discussed 

in section II.A.3.e. of this final rule with 

comment period. 

We review the AMA RUCrecommended 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. 

We received direct PE input 

recommendations from the AMA RUC 

for 325 CPT codes for CY 2011, 

including those CPT codes where the 

AMA RUC recommended no changes to 

the direct PE inputs of existing codes. 

We note that we have included in this 

count those recommendations received 

from the AMA RUC that were provided 

for CY 2011 and addressed in the CY 

2011 PFS proposed rule. These 

recommendations are discussed in 

section II.A.3.c. of this final rule with 

comment period. We have accepted for 

CY 2011, as interim final and without 

refinement, the direct PE inputs based 

on the recommendations submitted by 

the AMA RUC for the 258 codes listed 

in Table 54. 

For the remainder of the AMA RUC’s 

direct PE recommendations for 67 

codes, 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 55. 

Accordingly, while Table 55 details 

the CY 2011 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. We note that the final CY 2011 

PFS direct PE database reflects the 

refined direct PE inputs that we are 

adopting on an interim final basis for 

CY 2011. That database is available 

under downloads for the CY 2011 PFS 

final rule with comment period on the 

CMS Web site at: http://www.cms.gov/

PhysicianFeeSched/PFSFRN/list.

asp#TopOfPage. 

b. CY 2011 Interim Final Direct PE 

Inputs for New, Revised, and Potentially 

Misvalued Codes 

(1) General Equipment Time 

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 did not always provide 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. Subsequent 

to that request, 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. 

We are refining the CY 2011 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 55. 

(2) Equipment Time and Clinical Labor 

for Conscious Sedation 

In services that include conscious 

sedation recovery, clinical labor and 

equipment time inputs are generally 

established using a distinctive logic. In 

the case of these services, clinical labor 

time is based on 15 minutes of 

registered nurse (RN) recovery 

monitoring for each hour monitored 

following the procedure to account for 

a typical 1:4 nurse to patient ratio. 

Times for equipment used during the 

recovery monitoring period, therefore, 

are equal to four times the number of 

RN minutes during the recovery 

monitoring period. 

Equipment time for pieces of 

equipment used in conscious sedation 

should generally include time to 

administer the anesthesia, time for the 

procedure, and time to monitor the 

patient following the procedures. 

Standard equipment and supplies for 

conscious sedation include: EQ011 

(ECG, 3-channel (with SpO2, NIBP, 

temp, resp)); EF019 (stretcher chair); 

EQ032 (IV infusion pump); and SA044 

(pack, conscious sedation). 

We are refining the CY 2011 AMA 

RUC direct PE recommendations to 

conform to these policies. These 

refinements are reflected in the final CY 

2011 PFS direct PE database and 

detailed in Table 55. 

(3) Equipment Time for Add-On Codes 

For add-on codes, only minutes 

allocated to the procedure itself are 

added to the time for the equipment, 

since any additional minutes would 

duplicate the equipment time already 

accounted for in the primary procedure 

that accompanies the add-on code. 

We are refining the CY 2011 AMA 

RUC PFS direct PE recommendations to 

conform to this policy. These 

refinements are reflected in the final CY 

2011 PFS direct PE database and 

detailed in Table 55. 

(4) Changes in Standard Uses of Certain 

Supplies 

As discussed in section II.A.3.b.(1) of 

this final rule with comment period, we 

are finalizing our proposal to remove 

the supply item ‘‘biohazard bag’’ from 

the direct PE database because the item 

is considered an indirect practice 

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expense. Additionally, as discussed in 

section II.A.3.b.(6) of this final rule with 

comment period, we are finalizing our 

CY 2011 proposal to remove the pulse 

oximeter with printer (CMS Equipment 

Code EQ211) as an input for the 118 

codes that also contain the ECG, 3- 

channel (with SpO2, NIBP, temp, resp) 

(CMS Equipment Code EQ011). 

We are refining the CY 2011 AMA 

RUC PFS direct PE recommendations to 

conform to these policies. These 

refinements are reflected in the final CY 

2011 PFS direct PE database and 

detailed in Table 55. 

(5) New Supply and Equipment Items 

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 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). 

We agree with the AMA RUC that these 

supply items are appropriate direct PE 

inputs for the associated procedures. 

However, because these items do not 

resemble current supplies in the PE 

database, we were unable to identify 

existing supplies with input prices to 

substitute for the AMA RUCrecommended direct PE inputs. We 

were also unable to estimate the prices 

for these new supply items based on 

analogy to existing supplies in the direct 

PE database because, as stated 

previously, they are not clinically 

similar to existing items in the direct PE 

database and we do not have 

information on the pricing of the new 

supply items. Therefore, our only 

alternative for these supply items for CY 

2011 was to accept them as direct PE 

inputs for the associated services based 

on the AMA RUC recommendations, but 

to price them at $0 for CY 2011. For CY 

2012, we will consider the prices for 

these supply items eligible to be 

updated through the process we are 

finalizing for CY 2011 that is described 

in section II.A.3.e. of this final rule with 

comment period. 

In the case of certain other direct PE 

recommendations for CY 2011, the 

AMA RUC has recommended new 

supply or equipment items that we 

believe to be already described by 

existing items in the direct PE database. 

Therefore, we are refining the AMA 

RUC CY 2011 direct PE 

recommendations to utilize existing 

supply and equipment items in the PE 

database where appropriate. These 

refinements are reflected in the final CY 

2011 PFS direct PE database and 

detailed in Table 55. 

(6) Endovascular Revascularization 

Stents 

In reviewing the supply input 

recommendations from the AMA RUC 

for CPT codes describing certain 

endovascular revascularization services, 

we considered the quantity of high-cost 

stents associated with some of the 

codes. The recommendations included 

two or three 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 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 

code. 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-toprocedure claims processing edits, all 

prior cases would have included 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 have no reason 

to believe that when these new CPT 

codes are reported for procedures 

performed in the nonfacility setting, 

patients would receive more than the 

one stent typically used in the hospital 

outpatient setting. Therefore, we are 

refining 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 are reflected 

in the final CY 2011 PFS direct PE 

database. 

(7) Nasal/Sinus Endoscopy Supply and 

Equipment Items 

The 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. We believe that this 

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. 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 note, 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. Additionally, 

in the case of certain services with 

global service periods, fractional 

quantities of supplies may be 

appropriate when fractional numbers of 

post-service office visits are associated 

with a code. 

Upon receipt of these 

recommendations, we requested that the 

AMA RUC clarify the initial 

recommendation by determining which 

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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 believe that 

the item ‘‘kit, sinus surgery, balloon 

(maxillary)’’ is 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’’ (new). 

We believe 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. 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. However, we note that in 

the case of certain services with global 

service periods, distribution of 

equipment minutes among similar 

equipment items may be appropriate 

when fractional numbers of post-service 

office visits are associated with a code. 

Upon review of these items, we believe 

that the new piece of equipment, 

‘‘fiberscope, flexible, sinoscopy,’’ is more 

clinically appropriate based on the 

description of CPT code 32195. 

We are refining the CY 2011 AMA 

RUC direct PE recommendations to 

conform to these determinations. These 

refinements are reflected in the final CY 

2011 PFS direct PE database and 

detailed in Table 55. 

TABLE 54—CPT CODES WITH ACCEPTED AMA RUC DIRECT PE 

RECOMMENDATIONS FOR CY 2011 

CODES

CPT 

Code Short descriptor 

11010 ...... Debride skin at fx site 

11011 ...... Debride skin musc at fx site 

11012 ...... Deb skin bone at fx site 

11045 ...... Deb subq tissue add-on 

11046 ...... Deb musc/fascia add-on 

11047 ...... Deb bone add-on 

TABLE 54—CPT CODES WITH ACCEPTED AMA RUC DIRECT PE 

RECOMMENDATIONS FOR CY 2011 

CODES—Continued 

CPT 

Code Short descriptor 

11900 ...... Injection into skin lesions 

11901 ...... Added skin lesions injection 

12001 ...... Repair superficial wound(s) 

12002 ...... Repair superficial wound(s) 

12004 ...... Repair superficial wound(s) 

12005 ...... Repair superficial wound(s) 

12006 ...... Repair superficial wound(s) 

12007 ...... Repair superficial wound(s) 

12011 ...... Repair superficial wound(s) 

12013 ...... Repair superficial wound(s) 

12014 ...... Repair superficial wound(s) 

12015 ...... Repair superficial wound(s) 

12016 ...... Repair superficial wound(s) 

12017 ...... Repair superficial wound(s) 

12018 ...... Repair superficial wound(s) 

15823 ...... Revision of upper eyelid 

19357 ...... Breast reconstruction 

20005 ...... I&d abscess subfascial 

20664 ...... Application of halo 

20930 ...... Sp bone algrft morsel add-on 

20931 ...... Sp bone algrft struct add-on 

22315 ...... Treat spine fracture 

22552 ...... Addl neck spine fusion 

22554 ...... Neck spine fusion 

22585 ...... Additional spinal fusion 

22851 ...... Apply spine prosth device 

23430 ...... Repair biceps tendon 

27065 ...... Remove hip bone les super 

27066 ...... Remove hip bone les deep 

27067 ...... Remove/graft hip bone lesion 

27070 ...... Part remove hip bone super 

27071 ...... Part removal hip bone deep 

29540 ...... Strapping of ankle and/or ft 

29550 ...... Strapping of toes 

29914 ...... Hip arthro w/femoroplasty 

29915 ...... Hip arthro acetabuloplasty 

29916 ...... Hip arthro w/labral repair 

30901 ...... Control of nosebleed 

31256 ...... Exploration maxillary sinus 

31267 ...... Endoscopy maxillary sinus 

31276 ...... Sinus endoscopy surgical 

31287 ...... Nasal/sinus endoscopy surg 

31288 ...... Nasal/sinus endoscopy surg 

33411 ...... Replacement of aortic valve 

33620 ...... Apply r&l pulm art bands 

33621 ...... Transthor cath for stent 

33622 ...... Redo compl cardiac anomaly 

33860 ...... Ascending aortic graft 

33863 ...... Ascending aortic graft 

33864 ...... Ascending aortic graft 

34900 ...... Endovasc iliac repr w/graft 

35471 ...... Repair arterial blockage 

36410 ...... Non-routine bl draw > 3 yrs 

37205 ...... Transcath iv stent percut 

37206 ...... Transcath iv stent/perc addl 

37207 ...... Transcath iv stent open 

37208 ...... Transcath iv stent/open addl 

37222 ...... Iliac revasc add-on 

37223 ...... Iliac revasc w/stent add-on 

37232 ...... Tib/per revasc add-on 

37233 ...... Tibper revasc w/ather add-on 

37765 ...... Stab phleb veins xtr 10–20 

37766 ...... Phleb veins—extrem 20+ 

38900 ...... Io map of sent lymph node 

43283 ...... Lap esoph lengthening 

43327 ...... Esoph fundoplasty lap 

43328 ...... Esoph fundoplasty thor 

TABLE 54—CPT CODES WITH ACCEPTED AMA RUC DIRECT PE 

RECOMMENDATIONS FOR CY 2011 

CODES—Continued 

CPT 

Code Short descriptor 

43332 ...... Transab esoph hiat hern rpr 

43333 ...... Transab esoph hiat hern rpr 

43334 ...... Transthor diaphrag hern rpr 

43335 ...... Transthor diaphrag hern rpr 

43336 ...... Thorabd diaphr hern repair 

43337 ...... Thorabd diaphr hern repair 

43338 ...... Esoph lengthening 

43605 ...... Biopsy of stomach 

43753 ...... Tx gastro intub w/asp 

47480 ...... Incision of gallbladder 

47490 ...... Incision of gallbladder 

49324 ...... Lap insert tunnel ip cath 

49327 ...... Lap ins device for rt 

49400 ...... Air injection into abdomen 

49412 ...... Ins device for rt guide open 

49419 ...... Insert tun ip cath w/port 

49421 ...... Ins tun ip cath for dial opn 

49422 ...... Remove tunneled ip cath 

50250 ...... Cryoablate renal mass open 

50542 ...... Laparo ablate renal mass 

50590 ...... Fragmenting of kidney stone 

50684 ...... Injection for ureter x-ray 

*51725 .... Simple cystometrogram 

*51726 .... Complex cystometrogram 

*51727 .... Cystometrogram w/up 

*51728 .... Cystometrogram w/vp 

*51729 .... Cystometrogram w/vp&up 

51736 ...... Urine flow measurement 

51741 ...... Electro-uroflowmetry first 

52281 ...... Cystoscopy and treatment 

52332 ...... Cystoscopy and treatment 

55866 ...... Laparo radical prostatectomy 

55876 ...... Place rt device/marker pros 

59400 ...... Obstetrical care 

59409 ...... Obstetrical care 

59410 ...... Obstetrical care 

59412 ...... Antepartum manipulation 

59414 ...... Deliver placenta 

59425 ...... Antepartum care only 

59426 ...... Antepartum care only 

59430 ...... Care after delivery 

59510 ...... Cesarean delivery 

59514 ...... Cesarean delivery only 

59515 ...... Cesarean delivery 

59610 ...... Vbac delivery 

59612 ...... Vbac delivery only 

59614 ...... Vbac care after delivery 

59618 ...... Attempted vbac delivery 

59620 ...... Attempted vbac delivery only 

59622 ...... Attempted vbac after care 

61781 ...... Scan proc cranial intra 

61782 ...... Scan proc cranial extra 

61783 ...... Scan proc spinal 

61885 ...... Insrt/redo neurostim 1 array 

62268 ...... Drain spinal cord cyst 

62269 ...... Needle biopsy spinal cord 

62281 ...... Treat spinal cord lesion 

62319 ...... Inject spine w/cath l/s (cd) 

63075 ...... Neck spine disk surgery 

63076 ...... Neck spine disk surgery 

63610 ...... Stimulation of spinal cord 

*64420 .... Nblock inj intercost sng 

*64421 .... Nblock inj intercost mlt 

64480 ...... Inj foramen epidural add-on 

64484 ...... Inj foramen epidural add-on 

64508 ...... Nblock carotid sinus s/p 

64561 ...... Implant neuroelectrodes 

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TABLE 54—CPT CODES WITH ACCEPTED AMA RUC DIRECT PE 

RECOMMENDATIONS FOR CY 2011 

CODES—Continued 

CPT 

Code Short descriptor 

64566 ...... Neuroeltrd stim post tibial 

64568 ...... Inc for vagus n elect impl 

64569 ...... Revise/repl vagus n eltrd 

64570 ...... Remove vagus n eltrd 

64581 ...... Implant neuroelectrodes 

64611 ...... Chemodenerv saliv glands 

*64620 .... Injection treatment of nerve 

64708 ...... Revise arm/leg nerve 

64712 ...... Revision of sciatic nerve 

64713 ...... Revision of arm nerve(s) 

64714 ...... Revise low back nerve(s) 

65778 ...... Cover eye w/membrane 

65780 ...... Ocular reconst transplant 

66761 ...... Revision of iris 

67028 ...... Injection eye drug 

69802 ...... Incise inner ear 

70010 ...... Contrast x-ray of brain 

71250 ...... Ct thorax w/o dye 

72125 ...... Ct neck spine w/o dye 

72128 ...... Ct chest spine w/o dye 

72131 ...... Ct lumbar spine w/o dye 

73080 ...... X-ray exam of elbow 

73200 ...... Ct upper extremity w/o dye 

73510 ...... X-ray exam of hip 

73610 ...... X-ray exam of ankle 

73630 ...... X-ray exam of foot 

73700 ...... Ct lower extremity w/o dye 

74430 ...... Contrast x-ray bladder 

*75571 .... Ct hrt w/o dye w/ca test 

*75572 .... Ct hrt w/3d image 

*75573 .... Ct hrt w/3d image congen 

*75574 .... Ct angio hrt w/3d image 

75954 ...... Iliac aneurysm endovas rpr 

75960 ...... Transcath iv stent rs&i 

75962 ...... Repair arterial blockage 

75964 ...... Repair artery blockage each 

76000 ...... Fluoroscope examination 

76942 ...... Echo guide for biopsy 

77003 ...... Fluoroguide for spine inject 

*77011 .... Ct scan for localization 

77012 ...... Ct scan for needle biopsy 

TABLE 54—CPT CODES WITH ACCEPTED AMA RUC DIRECT PE 

RECOMMENDATIONS FOR CY 2011 

CODES—Continued 

CPT 

Code Short descriptor 

*77301 .... Radiotherapy dose plan imrt 

77427 ...... Radiation tx management x5 

88120 ...... Cytp urne 3–5 probes ea spec 

88121 ...... Cytp urine 3–5 probes cmptr 

88172 ...... Cytp dx eval fna 1st ea site 

88173 ...... Cytopath eval fna report 

88177 ...... Cytp c/v auto thin lyr addl 

88300 ...... Surgical path gross 

88302 ...... Tissue exam by pathologist 

88304 ...... Tissue exam by pathologist 

88305 ...... Tissue exam by pathologist 

88307 ...... Tissue exam by pathologist 

88309 ...... Tissue exam by pathologist 

88363 ...... Xm archive tissue molec anal 

88367 ...... Insitu hybridization auto 

88368 ...... Insitu hybridization manual 

90460 ...... Imadm any route 1st vac/tox 

90461 ...... Imadm any route addl vac/tox 

90870 ...... Electroconvulsive therapy 

90935 ...... Hemodialysis one evaluation 

90937 ...... Hemodialysis repeated eval 

90945 ...... Dialysis one evaluation 

90947 ...... Dialysis repeated eval 

91013 ...... Esophgl motil w/stim/perfus 

*91038 .... Esoph imped funct test > 1h 

91117 ...... Colon motility 6 hr study 

*91132 .... Electrogastrography 

*91133 .... Electrogastrography w/test 

92081 ...... Visual field examination(s) 

92082 ...... Visual field examination(s) 

92132 ...... Cmptr ophth dx img ant segmt 

92133 ...... Cmptr ophth img optic nerve 

92134 ...... Cptr ophth dx img post segmt 

92504 ...... Ear microscopy examination 

92507 ...... Speech/hearing therapy 

92508 ...... Speech/hearing therapy 

92606 ...... Non-speech device service 

92607 ...... Ex for speech device rx 1hr 

92608 ...... Ex for speech device rx addl 

92609 ...... Use of speech device service 

93040 ...... Rhythm ecg with report 

TABLE 54—CPT CODES WITH ACCEPTED AMA RUC DIRECT PE 

RECOMMENDATIONS FOR CY 2011 

CODES—Continued 

CPT 

Code Short descriptor 

93041 ...... Rhythm ecg tracing 

93042 ...... Rhythm ecg report 

93224 ...... Ecg monit/reprt up to 48 hrs 

93225 ...... Ecg monit/reprt up to 48 hrs 

93226 ...... Ecg monit/reprt up to 48 hrs 

93227 ...... Ecg monit/reprt up to 48 hrs 

93228 ...... Remote 30 day ecg rev/report 

93270 ...... Remote 30 day ecg rev/report 

93271 ...... Ecg/monitoring and analysis 

93272 ...... Ecg/review interpret only 

93462 ...... L hrt cath trnsptl puncture 

93463 ...... Drug admin & hemodynmic meas 

93563 ...... Inject congenital card cath 

93564 ...... Inject hrt congntl art/grft 

93565 ...... Inject l ventr/atrial angio 

93652 ...... Ablate heart dysrhythm focus 

93922 ...... Upr/l xtremity art 2 levels 

93923 ...... Upr/lxtr art stdy 3+ lvls 

93924 ...... Lwr xtr vasc stdy bilat 

95800 ...... Slp stdy unattended 

95801 ...... Slp stdy unatnd w/anal 

95803 ...... Actigraphy testing 

95805 ...... Multiple sleep latency test 

95806 ...... Sleep study unatt&resp efft 

95807 ...... Sleep study attended 

95808 ...... Polysomnography 1–3 

95810 ...... Polysomnography 4 or more 

95811 ...... Polysomnography w/cpap 

95857 ...... Cholinesterase challenge 

95950 ...... Ambulatory eeg monitoring 

95953 ...... Eeg monitoring/computer 

96105 ...... Assessment of aphasia 

97598 ...... Rmvl devital tis addl 20 cm< 

99224 ...... Subsequent observation care 

99225 ...... Subsequent observation care 

99226 ...... Subsequent observation care 

*CPT codes discussed in more detail in section II.A.3.c. of this final rule with comment 

period. 

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4The 12 geographic areas are: Boston, MA, 

Syracuse, NY, Northern New Jersey, Greenville, SC, 

Miami, FL, Little Rock, AR, Indianapolis, IN, 

Cleveland, OH, Lansing, MI, Phoenix, AZ, Seattle, 

WA, and Orange County, CA. 

3. Establishment of Interim Final 

Malpractice RVUs for CY 2011 

According to our final policy as 

discussed in section II.B.2. of this CY 

2011 final rule with comment period, 

we have assigned malpractice RVUs for 

CY 2011 new and revised codes by a 

crosswalk to a similar source code. We 

have reviewed the malpractice source 

code AMA RUC recommendations for 

224 CY 2011 new and revised codes and 

we are accepting them all for CY 2011. 

According to our policy, we have 

adjusted the malpractice RVUs of the 

CY 2011 new/revised codes for 

differences 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 code. The source code 

crosswalks for the CY 2011 new/revised 

codes are subject to public comment on 

this CY 2011 final rule with comment 

period, as well as the CY 2011 

malpractice RVUs of the new/revised 

codes that are listed in Addendum C to 

this final rule with comment period. 

Table 8 lists the CY 2011 new/revised 

codes and their respective source codes 

for determining the interim final CY 

2011 malpractice RVUs. We are also 

posting the crosswalk on the CMS Web 

site under the downloads for the CY 

2011 PFS final rule with comment 

period at: http://www.cms.gov/ 

PhysicianFeeSched/PFSFRN/ 

list.asp#TopOfPage. 

VI. Provisions of the Affordable Care 

Act 

The following section addresses 

certain provisions of the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148), enacted on March 23, 

2010, as amended by the Health Care 

and Education Reconciliation Act of 

2010 (Pub. L. 111–152) enacted on 

March 30, 2010 (collectively known as 

the Affordable Care Act (ACA)). 

A. Section 3002: Improvements to the 

Physician Quality Reporting System 

Section 3002 of the ACA makes a 

number of changes to the Physician 

Quality Reporting System (previously 

referred to as the Physician Quality 

Reporting Initiative, or PQRI), including 

authorizing incentive payments through 

2014, and requiring a payment 

adjustment beginning in 2015, for 

eligible professionals who do not 

satisfactorily submit quality data. For a 

more detailed discussion of the 

provisions of section 3002 of the ACA, 

please refer to section VII.F.1. of this 

final rule with comment period. 

B. Section 3003: Improvements to the 

Physician Feedback Program and 

Section 3007: Value-Based Payment 

Modifier Under the Physician Fee 

Schedule 

1. Background 

As required under section 1848 (n) of 

the Act, as added by section 131(c) of 

MIPPA, we established and 

implemented by January 1, 2009, the 

Physician Resource Use Measurement & 

Reporting (RUR) Program (now referred 

to as the Physician Feedback Program) 

for purposes of providing confidential 

reports to physicians that measure the 

resources involved in furnishing care to 

Medicare beneficiaries. Section 1848(n) 

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 are continuing a phased 

implementation of the Physician 

Feedback Program. Phase I was 

discussed in the CY 2010 proposed and 

final rules (74 FR 33589, and 74 FR 

61844, respectively), and has been 

completed. Phase I consisted of several 

activities including extensive data 

analysis to inform decisions about 

topics such as measures, attribution, 

and risk adjustment and formative 

testing of report design with practicing 

physicians. We concluded Phase I by 

sending to individual practicing 

physicians in 12 geographic areas 4

several hundred reports that contained 

per capita and episode-based cost 

information. 

Phase I of the Physician Feedback 

Program focused on providing 

confidential feedback on resource use 

measures. Section 1848 (n)(1)(A)(iii) of 

the Act states that the Secretary may 

also include information on the quality 

of care furnished to Medicare 

beneficiaries by physicians (or groups of 

physicians) in the feedback reports. We 

believe that providing physicians with 

feedback on both quality and cost is 

consistent with the direction of other 

CMS value-based purchasing (VBP) 

initiatives. As a result, we decided to 

include quality measures in Phase II of 

the Physician Feedback Program and, in 

particular, we considered measures 

used in the Physician Quality Reporting 

System (previously referred to as the 

Physician Quality Reporting Initiative 

(PQRI)) and claims-based measures such 

as the measures used in the Generating 

Medicare Physician Quality 

Performance Measurement Results 

(GEM) project (74 FR 61846). 

Section 1848 (n)(1)(A)(ii) of the Act 

also states that the Secretary may 

provide reports at the physician group 

level. Accordingly, as part of Phase II of 

the Physician Feedback Program, we 

will also include reporting to group 

practices, defined as more than one 

physician practicing medicine together 

(74 FR 61846). In addition, we noted 

that the definition applies to the 

following types of physician groups: (1) 

Formally established single or multispecialty group practices; (2) physicians 

practicing in defined geographic 

regions; and (3) physicians practicing 

within facilities or larger systems of care 

(74 FR 61846). As we continue with 

Phase II, we plan to report to both 

physician group practices and their 

affiliated practitioners, recognizing that 

many physicians practice in 

arrangements other than solo practices. 

We believe that using both group and 

individual level reporting will also 

allow us to gain experience with the 

sample size issues that arise when 

individual physicians have too few 

Medicare beneficiaries with specific 

conditions to generate reliable 

information. (See the CY 2010 final rule 

with comment period (74 FR 61844) for 

a detailed discussion of plans for 

Phase II.) 

2. Effect of the ACA of 2010 on the 

Program 

The ACA contains two provisions 

relevant to the Physician Feedback 

Program. Section 3003 of the ACA 

continues the confidential feedback 

program and requires the Secretary, 

beginning in 2012, to provide reports 

that compare patterns of resource use of 

individual physicians to other 

physicians. In addition, section 3007 of 

the ACA requires the Secretary to apply 

a separate, budget-neutral payment 

modifier to the Fee-For-Service PFS 

payment formula. The value-based 

payment modifier, which will be phased 

in beginning January 1, 2015 through 

January 1, 2017, will provide for 

differential payment under the fee 

schedule to a physician or groups of 

physicians, and later, possibly to other 

eligible professionals, based upon the 

relative quality and cost of care of their 

Medicare beneficiaries. Accordingly, 

our goal is to have Medicare physicians 

receive a confidential feedback report 

prior to implementation of the valuebased payment modifier. We view these 

two provisions as complementary, as we 

expect the work done for the Physician 

Feedback Program under section 3003 of 

the ACA will inform our 

implementation of the value-based 

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payment modifier under section 3007 of 

the ACA. The approach used for 

performance assessment in the 

confidential feedback reports will serve 

as the foundation for implementing the 

value-based payment modifier. 

Specifically, throughout future phases 

of reports under the Physician Feedback 

Program, we will continue to enhance 

our measures and methods and improve 

the content of the reports based on both 

our research and the feedback of 

stakeholders before the value-based 

payment modifier begins to affect 

physician payments in 2015. 

We plan to engage in a large-scale 

effort to garner widespread stakeholder 

involvement with regard to how we 

continue to build and expand the 

confidential feedback program and 

transition to implementation of the 

value-based payment modifier. We 

recognize that such a payment modifier 

may have an impact on the delivery of 

care to Medicare beneficiaries. Reports 

that will be produced in the future 

based on changes as a result of section 

3003 of the ACA will contain both cost 

and quality data, and work done to 

improve these reports with regard to fair 

and actionable measures in each of 

these domains will aid our decision 

making in how to apply the value-based 

payment modifier. We intend to seek 

stakeholder input on various aspects of 

program design, including cost and 

quality measures, methodologies for 

compositing measures, and feedback 

report content and delivery. Such 

feedback may be gathered through 

rulemaking, open door forums, or other 

mechanisms. Below we summarize the 

public comments received on the 

changes we proposed to make to Phase 

II of the Physician Feedback Program. 

3. Summary of Comments and Phase II 

Proposed Changes 

a. Episode Groupers 

We intend that reports in Phase II of 

the Physician Feedback Program will be 

distributed in the fall of 2010. However, 

we proposed several changes to the 

program parameters for Phase II that 

were finalized in prior rules (75 FR 

40114). First, we proposed to 

discontinue our use of commerciallyavailable proprietary episode grouping 

software given limitations we noted in 

proprietary episode grouping software 

we used in previous phases of the 

program. In addition, we noted that 

section 3003 of the ACA requires that 

the Secretary develop a Medicarespecific episode grouper by January 1, 

2012, and make the details of the 

episode grouper available to the public. 

It is our intent that the Medicarespecific episode grouper will address 

the limitations we found in the 

proprietary software. 

We recognize that, because of its 

disease/condition-specific focus, 

episode-based cost information can be 

more meaningful and actionable for 

physicians than per capita information. 

We plan to provide such information in 

feedback reports after public grouper 

software is developed. Prior to that, we 

may consider other potential interim 

options for episode grouping to provide 

such information. As we indicated, we 

believe that our use of proprietary 

episode grouping software in the 

previous phases of the program had 

certain limitations (75 FR 40114). These 

software products were not intended for 

use with Medicare claims data, and we 

discovered several problems with the 

data outputs. Specifically, the groupers 

do not work well to create episodes for 

beneficiaries with multiple chronic 

conditions, which is a significant 

portion of Medicare beneficiaries. 

For example, when a beneficiary with 

a chronic disease is hospitalized for an 

acute condition, that beneficiary most 

likely also receives treatments unrelated 

to the condition for which he or she is 

hospitalized, but related to the chronic 

disease. The groupers, which are 

proprietary and often referred to as 

‘‘black boxes,’’ do not enable users to 

understand the coding to determine 

how to accommodate these issues. 

Therefore, we had to make several 

decisions about how to pre-process the 

claims data so that the groupers could 

recognize and attempt to deal with these 

issues in the clinical grouping logic. 

After report production in Phase I, we 

discovered several problems with the 

pre-processing, which resulted in 

inaccurate episode cost information 

being disseminated. 

Until a Medicare-specific episode 

grouping software is developed, we plan 

to produce reports for Phase II that 

contain annualized per capita cost 

information. More specifically, instead 

of episode-specific cost information, we 

plan to provide all patient per capita 

cost information, as well as per capita 

cost information for those beneficiaries 

with five common chronic diseases: (1) 

Diabetes; (2) congestive heart failure; (3) 

coronary artery disease; (4) chronic 

obstructive pulmonary disease; and (5) 

prostate cancer. This information will 

not be limited to the cost of treating the 

disease itself, but will provide total Part 

A/B per capita cost information, as well 

as service category breakdowns, for the 

care received by the subset of attributed 

beneficiaries with that disease. 

Comment: Many commenters were 

supportive of CMS’ decision to 

discontinue using the proprietary 

episode grouper software in Phase II and 

instead to develop a Medicare-specific 

grouper available to the public. Several 

of these commenters discussed the 

specific limitations of proprietary 

groupers and also the importance of 

developing and utilizing a Medicarespecific episode grouper available to the 

public. Many commenters urged CMS to 

include extensive testing and 

stakeholder input while developing the 

Medicare-specific grouper. These 

commenters asserted that it was 

important that the process to develop a 

Medicare-specific grouper be available 

to the public, as well as the 

methodology such a grouper will 

employ, remain transparent, and open 

for public review and recommendation. 

A few commenters expressed concern 

about CMS’ ability to create a fair and 

accurate Medicare-specific episode 

grouper in the timeline allotted for its 

implementation. One commenter 

specifically requested that CMS, to the 

extent possible, express concern about 

the timeline enacted by Congress. 

Another commenter opposed dropping 

the episode grouper in Phase II and 

requested that CMS use this time to test 

and explore different episode grouping 

methodologies. 

Response: We appreciate these 

comments in support of our proposal to 

discontinue our use of commerciallyavailable proprietary episode grouping 

software due to concerns over their 

suitability for use with Medicare claims 

and the pending development of a 

Medicare-specific episode grouper. Our 

research has documented that the 

currently available episode groupers, as 

they are now configured, present 

significant challenges to their use with 

our highly complex patient population. 

Therefore, we believe it is appropriate to 

discontinue use of the commercially 

available episode groupers for the Phase 

II reports and until a Medicare-specific 

episode grouper is available. We 

acknowledge the suggestion, however, 

that CMS test and explore different 

episode grouping methodologies. We are 

bound by statute to make the details of 

the developed Medicare-specific 

episode grouper available to the public 

and intend to do so. We also intend to 

involve the stakeholder community and 

to receive their input during the testing 

stage. We acknowledge that there are 

many challenges involved in deciding 

on the methodologies to utilize in 

developing the episode grouper. We also 

acknowledge that the statutorily 

required timeframe for development of 

the grouper is one of those challenges. 

We believe that the episode grouper is 

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5http://www.cms.gov/GEM. 

a useful element in appropriately 

providing effective and actionable cost 

measures for physician feedback. We 

intend to research and test many 

different methodologies in order to 

create a fair and appropriate episode 

grouper for the Medicare population 

and will incorporate episode-based cost 

measures into the physician feedback 

reports as early as possible. 

After considering all of the public 

comments received regarding this issue 

and for the reasons we explained above, 

we are finalizing our proposal to 

discontinue use of the commerciallyavailable proprietary episode grouping 

software for Phase II reports. 

b. Quality Measures 

We proposed to exclude data from the 

Physician Quality Reporting System in 

the Physician Feedback Program reports 

even though commenters have been 

generally supportive of including 

Physician Quality Reporting System 

measures in the reports (75 FR 40114). 

The first year of the Physician Quality 

Reporting System was 2007, 

participation was still quite low, and the 

first round of Physician Quality 

Reporting feedback reports contained 

errors that necessitated correction. To 

date, work by CMS’ Physician Feedback 

Program support contractor has been 

based upon claims data from 2007. 

Because of the low number of 

physicians reporting under the 

Physician Quality Reporting System in 

2007, and because providers have the 

flexibility to choose which measures to 

report under the Physician Quality 

Reporting System, we believe the 

resulting small numbers of physicians 

reporting an individual measure would 

greatly limit meaningful peer 

comparisons, and thus the number of 

providers who would receive a feedback 

report. Therefore for Phase II, we 

proposed to use the claims-based 

measures developed by CMS in the 

GEM project (75 FR 40115).5 This is a 

core set of 12 process quality measures 

developed by HEDIS that can be 

calculated using only administrative 

claims data. Several chronic conditions 

that are prevalent in the Medicare 

population are captured by this set of 

measures. However, in future phases of 

the program, we intend to explore the 

possibility of linking the Physician 

Feedback Program to the Electronic 

Health Record (EHR) incentive program 

for meaningful use of EHR technology 

(as added by the 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) 

(HITECH)), and the group practice 

reporting option (GPRO) in the 

Physician Quality Reporting System. 

Both of these programs offer measures 

and measure sets, as well as methods of 

reporting data which would be 

conducive to meaningful peer 

comparisons among physicians. 

Comment: Several commenters agreed 

with our proposal to not use Physician 

Quality Reporting System measures 

during Phase II. These commenters 

argued that the Physician Quality 

Reporting System measures are 

voluntarily reported, some reports have 

contained errors, and therefore, these 

data are inadequate for assessing quality 

for many providers. Several commenters 

voiced concerns and/or disagreement 

with using GEM measures as an 

alternative to the Physician Quality 

Reporting System measures. These 

commenters claimed that the GEM 

measures are too focused on primary 

care and prevention, are limited in 

scope (for example, do not contain any 

measures for prostate cancer, and breast 

and colorectal cancer measures are only 

related to screening), and have few, if 

any, measures pertaining to some 

specialties. Some commenters 

advocated for the future use of 

Physician Quality Reporting System 

measures claiming that more eligible 

professionals are participating in the 

program now. Several commenters 

agreed with CMS’ decision to explore 

linking the Physician Feedback Program 

with the EHR incentive program. 

Response: We appreciate these 

comments and we understand the 

commenters’ concern that the 12 core 

GEM measures may not fully measure 

the broad scope of care delivered to 

Medicare beneficiaries. However, the 

GEM measures serve as an initial core 

measure set, upon which a larger set can 

be built for purposes of including in 

future reports. We also believe that the 

GEM measures will yield sufficient 

information to allow peer group 

comparisons. In contrast, the Physician 

Quality Reporting System data available 

to us for the Phase II reports were very 

limited and would not provide 

sufficient data for the minimum case 

size and number of peers needed to 

report data for many physicians. We 

plan to take into account the limitations 

commenters raised as we explore our 

options for choosing and developing 

measures for subsequent phases of the 

Physician Feedback Program and the 

development of the value-based 

payment modifier. As part of this 

process, we fully intend to explore the 

possibility of linking this program to the 

EHR incentive program for meaningful 

use of electronic health records, and the 

GPRO option in the Physician Quality 

Reporting System. We recognize the 

need to develop a comprehensive 

measure set that will fairly measure 

both quality and resource use. We 

intend to work with the stakeholder 

community to create a fair, reasonable, 

and actionable set of measures that we 

expect to publish not later than January 

1, 2012 for future use in determining the 

value-based payment modifier. 

After considering all of the comments 

we received and for the reasons 

discussed above, we are finalizing our 

proposal to not include Physician 

Quality Reporting System data in the 

Phase II reports. 

c. Report Distribution 

We proposed to distribute reports 

electronically in Phase II, by leveraging 

the infrastructure used to distribute 

Physician Quality Reporting System 

feedback reports (75 FR 40155). We 

believe this infrastructure will enable 

groups to utilize an electronic portal to 

download their Phase II reports. 

Individual practitioners will be able to 

contact their MACs/fiscal intermediaries 

to receive an e-mailed copy of their 

reports. We have received feedback from 

physicians that the reports distributed 

in Phase I were too long and 

cumbersome to manage in hard copy. 

We proposed consolidating the report 

and disseminating it electronically for 

easier navigation. Below we summarize 

our responses to public comments we 

received regarding this proposal. 

Comment: Most commenters generally 

expressed support for our proposal to 

distribute reports electronically in Phase 

II utilizing the existing infrastructure 

that is used to distribute Physician 

Quality Reporting System feedback 

reports. One commenter in particular, 

noted that the Physician Quality 

Reporting System portal was 

cumbersome and that security issues 

created access problems. Many 

commenters stressed that the reports 

need to be easy to navigate and need to 

be easily understood. 

Response: We agree that electronic 

delivery is a desirable means of 

distribution for these reports and are 

continuing to evaluate and develop 

methods to make future reports easily 

accessible, user friendly and 

informative. We appreciate all of the 

feedback from commenters regarding 

this proposal. While we acknowledge 

that users have expressed difficulty in 

using the Physician Quality Reporting 

System portal, it was the best option for 

electronic dissemination of the Phase II 

reports. In the future we will consider 

all of the potential options available to 

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us and will take these suggestions into 

account when developing future means 

of report distribution. After taking into 

consideration the comments 

summarized above, we are finalizing our 

proposal to distribute Phase II reports 

electronically utilizing the existing 

infrastructure used to distribute 

Physician Quality Reporting System 

feedback reports. In the future, as we 

disseminate increasing numbers of 

reports, we will provide information 

regarding how individuals and groups 

can access their reports through subregulatory guidance and other means of 

notification. 

4. Implementation of Sections 3003 and 

3007 of the ACA 

Sections 3003 and 3007 of the ACA 

contain several important 

implementation dates. In addition to 

developing an episode grouper by 

January 1, 2012, we are required by the 

same date to publish the cost and 

quality measures we intend to use for 

purposes of the value-based payment 

modifier. The payment modifier will 

become effective for certain physicians 

and groups of physicians on January 1, 

2015, with a phased implementation so 

that all physicians paid under the PFS 

will be subject to the value-based 

payment modifier by January 1, 2017. 

On or after January 1, 2017, we have the 

authority to also apply the payment 

modifier to other eligible professionals. 

Through the rulemaking process in 

2013, we will begin implementing the 

program parameters for the value-based 

payment modifier. 

In anticipation of implementing 

sections 3003 and 3007 of the ACA, we 

intend to perform extensive data 

analysis and research, and to seek 

stakeholder input on issues related to 

cost and quality measures so that we 

can be prepared to publish, by January 

1, 2012, measures we intend to use for 

purposes of the value-based payment 

modifier. We intend for the work done 

in establishing cost and quality 

measures for purposes of the payment 

modifier to inform the continued 

dissemination of confidential feedback 

reports to both individual physicians 

and physician groups. Specifically, the 

measures chosen for purposes of the 

value-based payment modifier will be 

included in future phases of the 

confidential feedback reports. 

As noted previously, Phase I included 

reports to several hundred physicians. 

In Phase II, during Fall 2010, we 

anticipate disseminating reports to 

about 40 large physician groups and the 

approximately 2,000 physicians 

affiliated with those groups. We 

anticipate future phases of the reports to 

include additional dissemination to 

increasing numbers of practitioners and 

groups such that virtually every 

applicable Medicare practitioner 

receives a report prior to 

implementation of the value-based 

payment modifier. 

5. Summary of Comments Sought on 

Specific Statistical Issues Related to the 

ACA Sections 3003 and 3007 

We recognize that there are many 

important decisions to be made when 

implementing a program that compares 

physicians to their peers, especially 

when such information can lead to 

differential payment. Since the 

inception of the Physician Feedback 

program, all data have been price 

standardized which includes accounting 

for geographic adjustments. We have 

identified important statistical issues in 

previous rules, and as we have done in 

previous rules, we sought input on 

several of these topics as they relate to 

future phases of reports. These include, 

but are not limited to: risk adjustment; 

attribution; benchmarking; peer groups; 

minimum case sizes; cost and quality 

measures; and compositing methods. 

Specific parameters of the Physician 

Feedback Program are based on the most 

current information we have available to 

us. These parameters will continue to 

evolve and we will continue to evaluate 

them as the state of the art in these areas 

continues to improve. Therefore, in the 

proposed rule, we solicited public 

comment on the following statistical 

and methodological issues (75 FR 

40115). 

a. Risk Adjustment 

The cost data used in Phase I were 

risk adjusted. For the per capita costs, 

we used CMS’ Hierarchical Condition 

Categories (HCC) model developed for 

risk adjustment in Medicare Advantage 

plans. This model takes into account 

beneficiary characteristics such as age, 

sex, and Medicaid status, and then 

predicts costs for beneficiaries based on 

their unique mix of health conditions. 

Several other socioeconomic factors, 

such as the median income per capita in 

the county where the physician 

practices, were used. For the episodebased costs, we used the risk adjustment 

method built into the proprietary 

grouper software. Regression analyses 

indicated that these additional 

socioeconomic factors did little to 

improve the fit of the model. 

The cost data in Phase II are risk 

adjusted using the HCC model, but 

excluding the additional socioeconomic 

factors such as the median income per 

capita in the county where the 

physician practices, that had been used 

in Phase I. And since there are no 

episode-based costs in Phase II—only 

annual per capita costs—the HCC model 

will be the only method used. Other 

methods of risk adjustment, such as the 

CC (complications and co-morbidities) 

and MCC (major complications and comorbidities) indicators implemented in 

the 2008 MS–DRG system, were 

considered but not employed. 

The quality data included in Phase II 

will not be risk adjusted because the 

GEM measures are all clinical process 

measures, measure specifications 

provided detailed inclusion/exclusion 

criteria, and it is generally accepted that 

such measures need not be risk 

adjusted. Beneficiaries should receive 

the indicated preventive services (for 

example, breast cancer screening) 

regardless of their demographic 

characteristics or presence or absence of 

health conditions. 

We solicited comment on the 

appropriate method for risk adjusting 

cost data, as well as our reasoning for 

not risk adjusting clinical process 

quality measures (75 FR 40115) and the 

comments we received are summarized 

below. 

Comment: There were a number of 

comments regarding the need to risk 

adjust for socioeconomic and cultural 

differences (including English 

proficiency, literacy, poverty, and 

family structure) and multiple comorbidities in order to avoid creating a 

disincentive for physicians who treat 

disadvantaged or complex patient 

populations. If socioeconomic factors 

are not added to the HCC model, 

commenters suggested using an 

alternative method to account for these 

factors such as a stratified analysis and 

comparison among similar providers 

and/or similar patient groups. Similarly, 

some commenters suggested that 

patients with substance abuse and 

mental health co-morbidities should be 

stratified into a distinct cohort. Other 

commenters suggested that exclusions 

be allowed for patient non-adherence or 

for cases of terminal illness. While there 

was general agreement that process 

measures do not require risk 

adjustment, several of the commenters 

pointed out that socioeconomic factors 

can also impact process and claimsbased measures and risk adjustment of 

these measures should be considered on 

a measure by measure basis. 

Commenters asserted that outcome 

measures should be risk adjusted and 

some suggested that CMS use publically 

available risk models developed by 

specialty societies. Some commenters 

suggested that CMS provide evidence of 

the utility and reliability of using HCC 

to risk adjust per capita measures. 

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Several commenters suggested that CMS 

test multiple methodologies for risk 

adjustment and perform appropriate 

statistical analyses to determine 

variability among the different 

methodologies. Commenters 

emphasized the need to implement a 

methodology that would be transparent 

to the public and all stakeholders. 

Response: We thank the commenters 

for their thoughtful input. In Phase II 

reports, we will employ the same 

method of risk adjustment for per capita 

cost measures as we use in our Medicare 

Advantage (MA) program, that is, the 

hierarchal condition category (HCC) 

model. We will continue to seek 

stakeholder input as we consider these 

comments and ways to improve our risk 

adjustment methodology. 

b. Attribution 

Deciding which physician(s) is/are 

responsible for the care of which 

beneficiaries is an important aspect of 

measurement. We must strike a balance 

between only attributing cost 

information to physicians for the 

services they personally delivered, and 

attributing costs to physicians based on 

a more encompassing view of the 

services provided to each beneficiary so 

as to encourage better care coordination 

and accountability for patient outcomes. 

There are several methods that are 

generally used for attributing 

beneficiaries’ costs to physicians for the 

purposes of measuring and comparing 

performance. In Phase I, we used two 

different attribution methodologies. Half 

of the reports used the multipleproportional attribution, in which a 

beneficiary’s costs were summed, and 

then divided among the physicians who 

treated that beneficiary in the same 

proportion as their share of evaluation 

and management (E&M) services 

provided. The other half of the reports 

used the plurality-minimum method, in 

which a beneficiary’s entire cost (either 

for the episode or for the year) was 

attributed to the physician who 

performed the plurality of the E&M 

services, subject to a minimum 

percentage (in that case, 10 percent). 

In Phase II reports, we plan to use the 

plurality-minimum method with a 

minimum percentage threshold of E&M 

services of 20 percent for individual 

physicians and a minimum percentage 

threshold of E&M services of 30 percent 

of the E&M services for physician group 

level reports (75 FR 40116). These 

minimum threshold determinations 

were based on our analysis of the claims 

data. We recognize that other attribution 

methods exist, which may be either 

more or less appropriate given the 

aspect of care one is measuring. For 

example, it may be desirable to attribute 

the entire cost of a surgical episode to 

the performing surgeon. Another 

method for attributing costs is referred 

to as multiple-even, in which the entire 

beneficiary’s cost is attributed to 

multiple physicians who treated the 

beneficiary. 

We sought comment on the topic of 

attribution methodologies, including 

both of those we have already used in 

the program, as well as others. The 

comments we received are summarized 

below. 

Comment: Many commenters voiced 

concern about the plurality minimum 

attribution method that CMS has 

planned to use in its Phase II feedback 

reports. A number of commenters asked 

that we ensure that the plurality 

minimum method does not penalize 

primary care doctors by holding them 

accountable for all the services 

beneficiaries receive, since they only 

deliver a subset of all of the care a 

beneficiary receives. Other commenters 

were concerned that if there were too 

many visits to a specialist, the specialist 

might get penalized. Many commenters 

were opposed to the plurality minimum 

model, not wanting to be held 

accountable for care they do not 

influence. Others expressed concern 

that costs could be attributed incorrectly 

and also that unintended changes in 

referral patterns might result, as 

physicians might be influenced by the 

cost of care without regard to quality. 

One commenter requested that CMS 

consider attribution options built on 

threshold concepts or specific 

agreement between a physician/medical 

group and patient on responsibility for 

management of a specific condition 

with the goal of focusing measurement 

and attribution assignment on those 

patients who are truly under the care of 

the physician or group for the condition. 

Another commenter asked CMS to 

ensure that the same patient is 

attributed for resource use and quality, 

and additionally to clarify if patients 

will be attributed to primary care and 

specialists. Generally, specialty 

physician associations supported the 

multiple-proportional attribution 

method, pointing out that there is 

shared accountability in delivering 

preventive and many other services. 

One commenter believed that the 

multiple-even method should be used, 

and in the case of surgical episodes, the 

entire cost should be attributed to the 

performing surgeon. 

Other commenters believed that the 

plurality minimum method was 

acceptable, but strongly urged CMS to 

continually analyze whether this 

methodology results in fair and accurate 

reports under different clinical 

scenarios, especially those where 

multiple co-morbidities are present. In 

addition, these commenters urged CMS 

to statistically examine the impact of 

changing the minimum thresholds. 

Several commenters recommended that 

CMS test multiple attribution models 

and evaluate the results. Another 

commenter recommended extensive 

chart reviews in order to ensure that the 

claims data supports the attribution 

model used. Several commenters 

pointed out that the choice of 

attribution method will not influence 

patient behavior and suggested 

incorporating patient accountability, 

including compliance. There were 

several comments about hospital costs 

being attributed to physicians that 

suggested alignment with other 

programs such as Hospital Value-Based 

Purchasing. One commenter suggested 

using multiple models and not a single 

model of attribution. One commenter 

noted that the problem of small 

numbers may make it difficult to fairly 

assess the costs at the individual level. 

Overall, commenters pointed out that 

the method(s) used should be accurate, 

transparent, and not disadvantage small 

or rural practices. 

Response: We appreciate the input 

from commenters. We will continue to 

consider and evaluate how to apply 

attribution methods to physician 

feedback reports and seek stakeholder 

input. In Phase II reports, we plan to use 

the plurality-minimum method with a 

minimum percentage threshold of E&M 

services of 20 percent for individual 

physicians and a minimum percentage 

threshold of E&M services of 30 percent 

of the E&M services for physician group 

level reports. 

c. Benchmarking and Peer Groups 

Determining how to most relevantly 

compare physicians to a standard or to 

their peers is also an important policy 

aspect of the program. CMS’ research 

conducted in Phase I of the program 

indicated that physicians prefer to be 

compared only to those physicians most 

like them (that is, the narrowest peer 

group). We recognize the importance of 

fair comparison, but are also faced with 

the challenge that very narrow peer 

groups, especially among specialist and 

subspecialists are most often not large 

enough to make statistically significant 

comparisons. 

The individual-level reports in both 

phases of the program have contained, 

or will contain, two peer group 

comparisons: (1) Physicians in the same 

specialty in the same geographic area; 

and (2) physicians in the same specialty 

across all 12 geographic areas. In each 

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of these peer groups, a physician is 

shown where he or she falls on a 

distribution that specifically identified 

the 10th, 50th, and 90th percentiles. 

These benchmarks were finalized on an 

interim basis in the CY 2010 proposed 

rule (74 FR 33589). 

In determining differences among 

providers for episode-based measures in 

Phase I, we used a minimum frequency 

test. For per capita measures in Phase I, 

a physician had to have a case size of 

20 or more beneficiaries to be measured 

and compared. There was no minimum 

peer group size requirement. 

The original MIPPA mandate requires 

us to make comparisons among 

physicians on cost, and gives the 

Secretary the authority to include 

comparisons on quality. The use of 

quality measures in the program was 

finalized in the CY 2010 final rule (74 

FR 61846). In Phase II, comparisons 

with appropriate peer groups will be 

made for both measures of cost and 

quality. Phase II reports will be 

provided only to those physicians that 

have 30 or more patients for each of the 

cost measures. For the quality measures, 

we plan to use the measure 

specifications in the GEM project to 

define minimum case sizes, which are at 

least 11 beneficiaries. We also plan to 

impose a minimum peer group size of 

30 in Phase II for each of the cost and 

quality measures. A minimum sample 

size of 30 is generally accepted in the 

research community as the minimum 

sample size to represent a group and 

make comparisons. 

We solicited comment on the most 

appropriate and relevant peer groups for 

comparison, including the appropriate 

minimum case sizes and minimum peer 

group sizes. We were also interested in 

suggested methodologies that could be 

applied to small case sizes. The 

comments we received are summarized 

below. 

Comment: Several commenters 

recommended that CMS establish 

separate benchmark measures for 

teaching medical facilities. These 

commenters argued that the proposed 

methodology should take into account 

the multiple missions of academic 

clinical facilities because their cases are 

often more complex. Other commenters 

recommended that CMS establish 

benchmarks that compared physicians 

to other physicians with similar 

practices and/or who perform similar 

procedures and additionally take into 

account sub-specialties and geography 

as peer groups will vary. These 

commenters suggested that CMS work 

with specialty groups and communities 

to develop the best comparisons. Other 

commenters noted that CMS needs to 

account for issues such as the difference 

between a practicing surgeon and a 

surgeon who does little surgery but acts 

more as a manager of care. These 

commenters asserted that this type of 

differentiation can be identified through 

review of claims history and data 

accessible through specialty 

organizations. Several commenters 

recommended that hospitalists and 

hospital groups be benchmarked against 

other hospital-based physicians or 

groups, preferably in similar practice 

settings, for example, emergency 

departments. A number of commenters 

suggested that CMS use metrics such as 

measures of statistical precision, 

multiple metrics including mean, 

median, percentiles in defining 

parameters for peer groups rather than 

use arbitrary numbers for minimum 

sample size. One commenter 

recommended that a power analysis be 

conducted to identify an appropriate 

sample size to be used for 

benchmarking. 

Response: We appreciate the feedback 

we received from commenters and will 

take these into consideration for the 

future. While we will continue to 

explore these issues, in Phase II reports, 

we will use the peer group and 

minimum case size of 30 as outlined 

above and in the proposed rule. 

d. Cost and Quality Measures and 

Compositing Methods 

As mentioned above, and in previous 

rules, section 1848(n)(1)(A)(ii) of the Act 

gives the Secretary the authority to 

include both cost and quality 

information in the feedback reports. In 

Phase I, we chose to use only cost 

information, and used both per capita 

and episode cost measurements. As 

mentioned above, we previously 

finalized the use of quality measures in 

Phase II (74 FR 61846), but finalized our 

proposal to discontinue our use of 

episode cost measurements. 

Accordingly, we have yet to include any 

composite measures of cost or quality in 

the feedback reports. 

Section 3007 of the ACA requires us 

to establish a value-based payment 

modifier to pay physicians differentially 

based both on their quality of care and 

their costs of care using composites of 

both quality and cost measures. 

Accordingly, we will need to devise a 

methodology in the future for 

compositing cost measures and quality 

measures, including considering, among 

other things, possible methodologies to 

develop the value-based payment 

modifier. In the future, episode-based 

cost measures developed using the 

Medicare-specific episode grouper 

software also may be considered in 

developing a composite of cost 

measures. Other domains of measures 

that may be considered include patientlevel utilization statistics (for example, 

emergency department visits per 1,000 

patients) and structural measures such 

as whether a provider has adopted an 

electronic health record. We recognized 

that measure composites are 

methodologically and operationally 

complex and, therefore, we sought early 

comments on this topic (75 FR 40116). 

The comments we received are 

summarized below. 

Comment: Many commenters stressed 

the importance of measuring both 

quality and cost of care to ensure useful 

and meaningful comparisons of 

physician work. Several commenters 

asserted that focusing on cost measures 

alone was insufficient and urged CMS to 

include quality measures in the 

comparison to resource utilization 

feedback reports. These commenters 

asserted that composite measures of cost 

and quality provide the most 

meaningful context to capture and 

review resource utilization. Several 

comments focused on the challenge of 

measuring quality at the physician level 

and the importance that the measures be 

fair, meaningful and actionable, and 

accurately applied. Incorporation of 

standards and measures endorsed by the 

National Quality Forum (NQF) was also 

recommended as well as annual 

measure updates of quality measures. A 

number of commenters stressed the 

importance of maintaining the focus on 

quality and outcomes measurement. 

Types of quality measures suggested for 

inclusion in the reports included 

structure, patient safety, clinical 

processes of care, patient experience, 

care coordination and clinical 

outcomes, weighted toward clinical 

outcomes, care coordination, and 

patient experience. Several commenters 

remarked on the limitation of claimsbased measures for quality and one 

recommended that outcomes measures 

be based on clinical rather than 

administrative data. One commenter 

stated that ICD–10 will enhance 

evaluation of physician performance 

and suggested evaluation of quality be 

delayed until ICD–10 is implemented. 

One commenter suggested a disease 

focus on peripheral vascular disease. 

Several commenters suggested that CMS 

work with specialty societies on using 

available registries of physician level 

data as a source of physician quality 

performance. Many commenters stated 

that quality should be weighted higher 

than cost, but agreed both need to be 

reported. Many commenters encouraged 

CMS to work expeditiously with 

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stakeholders to improve quality 

measures for inclusion in the valuebased payment modifier. Some 

commenters acknowledged CMS’ 

recognition that measure composites are 

methodologically and operationally 

complex and urged CMS to carefully 

test and evaluate different composite 

methodologies before implementing the 

value-based payment modifier. These 

commenters argued that the first step in 

creating a composite measure is to 

identify the individual components (for 

example, individual measures) that 

should go into the composite, and 

therefore CMS should ensure that a 

reliable Medicare-specific episode 

grouper is in place as it would be 

essential to this initial process. One 

commenter suggested any composite 

measures developed by CMS should be 

reviewed by the multi-stakeholder 

consultative partnership defined in 

section 3014 of the ACA prior to any 

adoption into the physician payment 

program. 

Some commenters mentioned that the 

National Quality Forum and the 

American Medical Association’s 

Physician Consortium for Performance 

Improvement (PCPI) had developed 

guidance on creating composite 

measures. These commenters argued 

that CMS needed to engage in more 

empirical work on creating composite 

measures before implementing a 

modifier for physician payment. These 

commenters expressed concern that an 

accurate value-based payment modifier 

based on resource use would be ready 

for 2015, given the substantial statistical 

and methodological hurdles that must 

be overcome in creating cost and quality 

composites and a single cost and quality 

index. They concluded by saying that 

CMS should continue to seek 

stakeholder comment throughout the 

composite measure development 

process. One commenter urged CMS to 

ensure that compliance with preventive 

health service measurements be taken 

into account when developing the 

composite measures. 

Response: As required under the 

statute, we plan to identify the measures 

of resource use and quality that will 

comprise composites of cost and quality 

for the physician feedback reports and 

for the value-based payment modifier by 

January 1, 2012. We thank the 

commenters for their many thoughtful 

suggestions and recommendations on 

cost and quality measures and 

compositing methods. As we stated 

above, we solicited public comment to 

inform potential future policies on these 

issues, and the Physician Feedback 

Program in general. We thank the public 

for their thoughtful comments and 

appreciate the feedback received from 

stakeholders. In addition, a number of 

societies and organizations volunteered 

support and also volunteered to share 

research findings that they believe is 

applicable to this program. 

We fully expect to draw on the 

expertise of stakeholders as we continue 

to work on implementing the physician 

feedback program and implementation 

of the value-based payment modifier. 

Moreover, we plan to engage in open 

and continuing dialogue with 

stakeholders on both the Physician 

Feedback Program and value-based 

payment modifier. 

In addition to the comments we 

solicited and received on specific 

methodological issues related to 

production of the feedback reports, we 

also received a number of general 

comments and suggestions regarding the 

development of reports to ensure access, 

utility, and relevance. 

Comment: A number of commenters 

suggested that the reports be: 

Interactive, easy to understand, timely, 

actionable, inclusive of sufficient detail, 

inclusive of data on cost categories (for 

example, imaging use, prescriptions, 

hospitalizations, etc.) and impactful. 

Some commenters requested the 

capability to drill down on data, 

especially if a physician is shown to be 

a high cost outlier. One commenter 

requested that the physicians have the 

ability to review the reports and correct 

any data that they believe is inaccurate. 

Others reiterated that all methodologies 

and algorithms should be in the public 

domain along with clear plans for 

evaluating the viability and impact of 

the reports and reporting mechanisms. 

We received more than one suggestion 

for alignment with the HITECH payment 

incentive program and other programs, 

in order to alleviate reporting burden 

and variation. Another commenter 

supported the creation of group reports, 

but suggested CMS explore alternative 

ways to define and determine affiliation 

with a medical practice group rather 

than relying solely on tax identification 

numbers (TINs). Many strongly 

encouraged CMS to engage public 

stakeholders intensely and specifically 

mentioned the importance of working 

with specialists, specialty societies, 

clinical experts, treatment guideline 

developers, and manufacturers on the 

issues that specifically pertain to their 

respective interests and expertise in 

creating measures, composite measures, 

and performance reporting. Finally, a 

commenter requested that the reports 

include graphical and numerical 

illustrations of data. 

In addition, we received a number of 

comments on the value-based payment 

modifier although we did not solicit 

specific comments or make proposals. 

Our summary of these comments 

follows: 

Comment: A number of commenters 

supported the idea of a value-based 

payment modifier using the confidential 

feedback reports as the foundation and 

applauded CMS’ intentions for a 

transparent process seeking stakeholder 

input on the methodology through 

rulemaking and other public forums. 

However, other commenters expressed 

caution in proceeding given the lack of 

experience with the quality and 

resource measures which are yet to be 

published, and the evolutionary nature 

of the methodology to develop quality 

and resource scores that will comprise 

the value-based payment modifier. 

Several commenters recommended that 

the value-based payment modifier 

program be delayed until CMS could 

demonstrate that it has in place reliable 

and accurate methodologies for 

implementation. Several of these 

commenters urged CMS to thoroughly 

test out multiple models and 

methodologies and discuss advantages 

and disadvantages with the multiple 

stakeholders. 

Response: We appreciate the above 

input from stakeholders. We will 

continue to seek further stakeholder 

input and comment through future 

rulemaking and other venues, such as 

open door forums and listening 

sessions, as we continue to implement 

the Physician Feedback Program and 

develop the specifications to implement 

the value-based payment modifier. 

C. Section 3102: Extension of the Work 

Geographic Index Floor and Revisions 

to the Practice Expense Geographic 

Adjustment Under the Medicare 

Physician Fee Schedule, and Protections 

for Frontier States as Amended by 

Section 10324 

Section 1848(e)(1)(E) of the Act (as 

amended by section 3102(a) of the ACA) 

extended application of the 1.0 work 

GPCI floor for services furnished 

through December 31, 2010. In addition, 

section 1848(e)(1) of the Act (as 

amended by section 3102(b) of the ACA) 

specified that for CY 2010 and CY 2011, 

the employee wage and rent portions of 

the PE GPCI must reflect only one-half 

of the relative cost differences for each 

locality compared to the national 

average and includes a ‘‘hold harmless’’ 

provision for any PFS locality that 

would receive a reduction to its PE GPCI 

resulting from the limited recognition of 

cost differences. Section 1848(e)(1) of 

the Act (as amended by section 3102(b) 

of the ACA) also required an analysis of 

the current methods and data sources 

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used to determine the relative cost 

differences in office rent and employee 

wages compared to the national average 

and the cost share weights assigned to 

each PE GPCI component: employee 

wages, office rent, and supplies. Finally, 

section 1848(e)(1) of the Act (as 

amended by section 3102(b) of the ACA) 

required the Secretary to make 

appropriate adjustments to the PE GPCI 

by no later than January 1, 2012. In 

addition, section 1848(e)(1) of the Act 

(as amended by section 10324(c) of the 

ACA) established a 1.0 PE GPCI floor for 

services furnished in frontier states 

effective January 1, 2011. The 

provisions of the ACA related to the 

GPCIs are discussed in detail in section 

II.D. of this final rule with comment 

period. 

D. Section 3103: Extension of 

Exceptions Process for Medicare 

Therapy Caps 

Section 1833(g)(5) of the Act (as 

amended by section 3103 of the ACA) 

extended the exceptions process for 

spending limitations on therapy services 

in certain outpatient settings through 

December 31, 2010. Therapy caps are 

discussed in detail in section III.A. of 

this final rule with comment period. 

E. Section 3104: Extension of Payment 

for Technical Component of Certain 

Physician Pathology Services 

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), and 

section 136 of the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA) (Pub. L. 

110–275) was amended by section 3104 

of the ACA to continue payment to 

independent laboratories for the TC of 

physician pathology services for fee-forservice Medicare beneficiaries who are 

inpatients or outpatients of a covered 

hospital through CY 2010. The technical 

component (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 

through 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 

§ 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 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 

§ 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 § 415.130 was 

further delayed by section 542 of the 

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 MPFS final rule with comment 

period (71 FR 69624 and 69788), we 

amended § 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. Most 

recently, section 3104 of the ACA 

amended the prior legislation to extend 

the payment through CY 2010. 

Consistent with this legislative 

change, we proposed to revise 

§ 415.130(d) to: (1) Amend the effective 

date of our payment policy to reflect 

that for services furnished after 

December 31, 2010, an independent 

laboratory may not bill the Medicare 

contractor for the TC of physician 

pathology services furnished to a 

hospital inpatient or outpatient; and 

(2) reformat this subsection into 

paragraphs. 

Comment: One commenter urged 

CMS to implement the provision to 

continue to pay independent 

laboratories for the TC of physician 

pathology services for fee-for-service 

Medicare beneficiaries who are 

inpatients or outpatients of a covered 

hospital on a permanent basis which 

would eliminate the potential for 

complicated billing that occurs each 

time the provision is set to expire and 

is subsequently extended by. 

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. 

After consideration of the public 

comment we received we are finalizing 

the proposed policy to continue 

payment to independent laboratories for 

the TC of physician pathology services 

for fee-for-service Medicare 

beneficiaries who are inpatients or 

outpatients of a covered hospital for CY 

2010. Absent legislation that extends 

this provision, for services furnished 

after December 31, 2010, an 

independent laboratory may not bill the 

Medicare contractor for the TC of 

physician pathology services for fee-forservice Medicare beneficiaries who are 

inpatients or outpatients of a covered 

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hospital. Accordingly, we are finalizing 

the proposed revisions to § 415.130(d) to 

reflect this change. 

F. Sections 3105 and 10311: Extension 

of Ambulance Add-Ons 

1. Amendment to Section 1834(l)(13) of 

the Act 

Section 146(a) of the MIPPA amended 

section 1834(l)(13)(A) of the Act to 

specify that, effective for ground 

ambulance services furnished on or after 

July 1, 2008 and before January 1, 2010, 

the ambulance fee schedule amounts for 

ground ambulance services shall be 

increased as follows: 

• For covered ground ambulance 

transports which originate in a rural 

area or in a rural census tract of a 

metropolitan statistical area, the fee 

schedule amounts shall be increased by 

3 percent. 

• For covered ground ambulance 

transports which do not originate in a 

rural area or in a rural census tract of 

a metropolitan statistical area, the fee 

schedule amounts shall be increased by 

2 percent. 

Sections 3105(a) and 10311(a) of the 

ACA further amend section 

1834(l)(13)(A) of the Act to extend the 

payment add-ons described above for an 

additional year, such that these add-ons 

also apply to covered ground ambulance 

transports furnished on or after January 

1, 2010 and before January 1, 2011. We 

stated in the CY 2011 PFS proposed rule 

(75 FR 40117) that we are revising 

§ 414.610(c)(1)(i) to conform the 

regulations to this statutory 

requirement. This statutory requirement 

is self-implementing. A plain reading of 

the statute requires only a ministerial 

application of the mandated rate 

increase, and does not require any 

substantive exercise of discretion on the 

part of the Secretary. For further 

information regarding the extension of 

these payment add-ons, please see 

Transmittal 706 (Change Request 6972) 

dated May 21, 2010. 

2. Amendment to Section 146(b)(1) of 

MIPPA 

Section 146(b)(1) of the MIPPA 

amended the designation of rural areas 

for payment of air ambulance services. 

The statute specified that any area that 

was designated as a rural area for 

purposes of making payments under the 

ambulance fee schedule for air 

ambulance services furnished on 

December 31, 2006, shall continue to be 

treated as a rural area for purposes of 

making payments under the ambulance 

fee schedule for air ambulance services 

furnished during the period July 1, 2008 

through December 31, 2009. Sections 

3105(b) and 10311(b) of the ACA amend 

section 146(b)(1) of MIPPA to extend 

this provision for an additional year, 

through December 31, 2010. 

Accordingly, for areas that were 

designated as rural on December 31, 

2006, and were subsequently redesignated as urban, we have reestablished the ‘‘rural’’ indicator on the 

ZIP Code file for air ambulance services, 

effective January 1, 2010 through 

December 31, 2010. We stated in the CY 

2011 PFS proposed rule (75 FR 40118) 

that we are revising § 414.610(h) to 

conform the regulations to this statutory 

requirement. This statutory requirement 

is self-implementing. A plain reading of 

the statute requires only a ministerial 

application of a rural indicator, and 

does not require any substantive 

exercise of discretion on the part of the 

Secretary. For further information 

regarding the extension of this MIPPA 

provision, please see Transmittal 706 

(Change Request 6972) dated May 21, 

2010. 

3. Amendment to Section 1834(l)(12) of 

the Act 

Section 414 of the MMA added 

paragraph (12) to section 1834(l) of the 

Act, which specified that in the case of 

ground ambulance services furnished on 

or after July 1, 2004, and before January 

1, 2010, for which transportation 

originates in a qualified rural area (as 

described in the statute), the Secretary 

shall provide for a percent increase in 

the base rate of the fee schedule for such 

transports. The statute requires this 

percent increase to be based on the 

Secretary’s estimate of the average cost 

per trip for such services (not taking 

into account mileage) in the lowest 

quartile of all rural county populations 

as compared to the average cost per trip 

for such services (not taking into 

account mileage) in the highest quartile 

of rural county populations. Using the 

methodology specified in the July 1, 

2004 interim final rule (69 FR 40288), 

we determined that this percent 

increase was equal to 22.6 percent. As 

required by the MMA, this payment 

increase was applied to ground 

ambulance transports that originated in 

a ‘‘qualified rural area;’’ that is, to 

transports that originated in a rural area 

included in those areas comprising the 

lowest 25th percentile of all rural 

populations arrayed by population 

density. For this purpose, rural areas 

included Goldsmith areas (a type of 

rural census tract). Sections 3105(c) and 

10311(c) of the ACA amend section 

1834(l)(12)(A) of the Act to extend this 

rural bonus for an additional year 

through December 31, 2010. Therefore, 

as directed by the ACA, we are 

continuing to apply the rural bonus 

described above (in the same manner as 

in previous years), to ground ambulance 

services with dates of service on or after 

January 1, 2010 and before January 1, 

2011 where transportation originates in 

a qualified rural area. 

We stated in the CY 2011 PFS 

proposed rule (75 FR 40118) that we are 

revising § 414.610(c)(5)(ii) to conform 

the regulations to this statutory 

requirement. This statutory requirement 

is self-implementing. The statute 

requires a 1-year extension of the rural 

bonus (which was previously 

established by the Secretary), and does 

not require any substantive exercise of 

discretion on the part of the Secretary. 

For further information regarding the 

extension of this rural bonus, please see 

Transmittal 706 (Change Request 6972) 

dated May 21, 2010. 

A summary of the comments we 

received and our responses are included 

below. 

Comment: Despite the extension of 

the ambulance payment add-ons under 

the ACA as discussed above, one 

commenter stated that ‘‘it has become 

increasingly difficult to continue to 

operate with the reimbursement cuts 

that went into effect January 1, 2010’’. 

They expressed concern that Medicare 

payment rates for ambulance services 

are not keeping up with inflation in the 

industry. They were also concerned that 

this is the first time in nearly a decade 

that the ambulance industry will be 

experiencing negative growth. 

Response: We are not sure what 

reimbursement cuts the commenter is 

referring to in 2010. As discussed above, 

pursuant to sections 3105 and 10311 of 

the ACA, we are required to extend 

certain ambulance payment add-ons 

through December 31, 2010. Thus, as 

discussed above, we are revising our 

regulations to conform the regulations to 

these statutory requirements. To date, 

Congress has not extended these 

payment add-ons beyond December 31, 

2010, and thus we are not authorized to 

provide these add-ons beyond December 

31, 2010. 

Comment: One commenter stated that 

CMS must provide instructions to its 

contractors that direct them to reprocess 

claims paid at the original 2010 rates. 

Response: Several provisions of the 

ACA require retroactive adjustments to 

Medicare claims, including claims for 

ambulance services, because these 

provisions have effective dates prior to 

the ACA’s enactment or shortly 

thereafter. We are currently developing 

the best course of action for addressing 

past claims that were processed under 

pre-ACA rules. The volume of claims 

that must be adjusted is unprecedented 

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and a careful process must be deployed 

to ensure that new claims coming into 

the Medicare program are processed 

timely and accurately, even as we 

address making retroactive adjustments. 

Once this process has been developed, 

we will provide instructions to our 

contractors regarding adjusting 

ambulance claims that were paid under 

the pre-ACA rules in order to apply the 

payment add-ons required by the ACA. 

In this final rule with comment 

period, we are finalizing the revisions to 

§ 414.610(c)(1)(i), (c)(5)(ii), and (h), as 

discussed above and in the CY 2011 PFS 

proposed rule, in order to conform the 

regulations to the requirements set forth 

in sections 3105 and 10311 of the ACA. 

We note that in § 414.610(c)(1), we have 

made minor formatting revisions for 

clarification purposes. In addition, in 

§ 414.610(c)(1)(i), we have corrected a 

typographical error that appeared in the 

CY 2011 PFS proposed rule (75 FR 

40258) by changing ‘‘December 21’’ to 

‘‘December 31’’ to conform with the ACA 

requirements. As we discuss above, 

sections 3105 and 10311 of the ACA are 

self-implementing and do not require 

any substantive exercise of discretion by 

the Secretary. 

G. Section 3107: Extension of Physician 

Fee Schedule Mental Health Add-On 

Section 3107 of the ACA amended 

section 138(a)(1) of the MIPPA to 

continue the 5 percent increase in 

Medicare payment for specified mental 

health services through December 31, 

2010. This payment increase was 

originally authorized under section 138 

of the MIPPA from July 1, 2008 until 

December 31, 2009. Accordingly, 

payment for the 24 psychiatry CPT 

codes in Table 56, representing 

‘‘specified services,’’ remains increased 

by 5 percent through December 31, 

2010. 

TABLE 56—SPECIFIED MENTAL HEALTH SERVICES SUBJECT TO THE FIVE PERCENT INCREASE IN MEDICARE PAYMENT

THROUGH DECEMBER 31, 2010 

Office or Other Outpatient Facility 

Insight Oriented, Behavior Modifying and/or Supportive Psychotherapy: 

90804 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 20 

to 30 minutes face-to-face with the patient;) 

90805 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 20 

to 30 minutes face-to-face with the patient; with medical evaluation and management services) 

90806 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 45 

to 50 minutes face-to-face with the patient;) 

90807 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 45 

to 50 minutes face-to-face with the patient; with medical evaluation and management services) 

90808 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 75 

to 80 minutes face-to-face with the patient;) 

90809 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 75 

to 80 minutes face-to-face with the patient; with medical evaluation and management services) 

Interactive Psychotherapy: 

90810 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient;) 

90811 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an office or outpatient facility, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services) 

90812 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient;) 

90813 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services) 

90814 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient;) 

90815 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an office or outpatient facility, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services) 

Inpatient Hospital, Partial Hospital or Residential Care Facility 

Insight Oriented, Behavior Modifying and/or Supportive Psychotherapy: 

90816 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient;) 

90817 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with the patient; with medical evaluation and management services) 

90818 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient;) 

90819 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services) 

90821 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient;) 

90822 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with the patient; with medical evaluation and management services) 

Interactive Psychotherapy: 

90823 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with 

the patient;) 

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TABLE 56—SPECIFIED MENTAL HEALTH SERVICES SUBJECT TO THE FIVE PERCENT INCREASE IN MEDICARE PAYMENT

THROUGH DECEMBER 31, 2010—Continued 

90824 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 20 to 30 minutes face-to-face with 

the patient; with medical evaluation and management services) 

90826 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with 

the patient;) 

90827 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 45 to 50 minutes face-to-face with 

the patient; with medical evaluation and management services) 

90828 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with 

the patient;) 

90829 (Individual psychotherapy, interactive, using play equipment, physical devices, language interpreter, or other mechanisms of nonverbal communication, in an inpatient hospital, partial hospital or residential care setting, approximately 75 to 80 minutes face-to-face with 

the patient; with medical evaluation and management services) 

Comment: One commenter supported 

CMS’ proposal to continue the current 

5 percent increase in Medicare payment 

for specified mental health services 

through December 31, 2010. 

Response: We appreciate the support 

of our efforts to implement this 

mandated mental health add-on 

provision that extends the expiration of 

the 5 percent increase in payment for 

specified outpatient mental health 

services from January 1, 2010 to 

December 31, 2010. 

After consideration of the public 

comment we received, we are finalizing 

the extension of the 5 percent increase 

in Medicare payment under the PFS 

from January 1, 2010 to December 31, 

2010. 

H. Section 3108: Permitting Physician 

Assistants To Order Post-Hospital 

Extended Care Services 

The ACA included a selfimplementing provision relating to 

SNFs. Section 3108 of the ACA adds 

physician assistants (PAs) to the list of 

practitioners (that is, physicians, nurse 

practitioners (NPs), and clinical nurse 

specialists) that can perform the 

required initial certification and 

periodic recertification under section 

1814(a)(2)(B) of the Act with respect to 

the SNF level of care. Accordingly, we 

proposed to make appropriate revisions 

to include PAs in § 424.20(e)(2), in 

which we refer to NPs, clinical nurse 

specialists, and PAs collectively as 

‘‘physician extenders.’’ 

We received no comments on this 

proposal and, therefore, are finalizing 

this provision as proposed without 

further modification. 

I. Section 3111: Payment for Bone 

Density Tests 

Section 1848(b) of the Act (as 

amended by section 3111 of the ACA) 

changed the payment calculation for 

dual-energy x-ray absorptiometry (DXA) 

services described by two specified 

DXA CPT codes for CYs 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 conversion 

factor (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 (eg, 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 

by section 3111 of the ACA) 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. 

Section 1848(b) (as amended by 

section 3111 of the ACA) revised the 

payment for CPT codes 77080 and 

77082 during CY 2010 and CY 2011. We 

have provided payment in CY 2010 

under the PFS for CPT codes 77080 and 

77082 at the specified rates. (Additional 

information regarding the CY 2010 

payment rates for these services is 

available in CR 6973, published May 10, 

2010.) 

Because the statute specifies a 

payment amount for these services as 

described previously, we proposed to 

impute RVUs for CY 2011 that would 

provide the specified payment amount 

for these services when multiplied by 

the CY 2011 CF. Specifically, we 

divided the payment amount based on 

the statutory requirements by the CY 

2011 CF for the proposed rule and 

distributed the imputed total RVUs 

across the work, PE, and malpractice 

components proportionately to their CY 

2006 distribution. Therefore, these 

imputed RVUs for CPT codes 77080 and 

77082 were displayed in Addendum B 

to the CY 2011 proposed rule. 

Comment: Many commenters 

supported the ACA provision requiring 

a specific payment amount for DXA 

services. Several commenters requested 

that CMS include in the final rule a 

sample payment calculation for CPT 

codes 77080 and 77082 to clarify the 

calculation for these two codes and to 

facilitate proper processing of claims by 

Medicare contractors. In addition, one 

commenter requested that CMS 

recalculate any imputed RVUs for DXA 

services based on the final conversion 

factor reflected in the CY 2011 PFS final 

rule with comment period. 

Response: We appreciate the 

comments we received on our proposal. 

We note that any changes to the 

proposed rule calculation that resulted 

from changes between proposed rule 

values and final rule values have been 

incorporated in the final determination 

of the RVUs for these codes upon which 

PFS payment is based. That said, we are 

updating our calculation for this final 

rule with comment period to reflect the 

final CY 2011 conversion factor 

applicable under current law that is 

discussed in section II.H.1.b. of this 

final rule with comment period. A 

sample payment calculation for CPT 

code 77080 is included below. 

Sample CY 2011 Calculation of 

Medicare Payment Rates for CPT Code 

77080 (CY 2006 CPT Code 76075) 

As discussed above, section 1848(b) of 

the Act (as amended by section 3111 of 

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the ACA) required us to provide 

payment for CPT code 77080 at 70 

percent of the product of the CY 2006 

RVUs for the specified DXA code, the 

CY 2006 CF, and the geographic 

adjustment for the relevant payment 

year in which the service is furnished. 

The CY 2006 RVUs for CPT code 

76075 (77080) can be found in Table 57 

below. 

TABLE 57—CY 2006 RVUS FOR CPT CODE 77080 (CY 2006 CPT CODE 76075) 

CY 2006 CPT Code Mod CY 2006 Short 

descriptor 

2006 

Physician work 

RVUs 

2006 

Nonfacility 

PE RVUs 

2006 

Facility 

PE RVUs 

2006 

Malpractice 

RVUs 

76075 ......................... 26 .. Dxa bone density, axial ................................ 0.30 0.10 0.10 0.01 

76075 ......................... TC Dxa bone density, axial ................................ 0.00 3.10 NA 0.17 

76075 ......................... ....... Dxa bone density, axial ................................ 0.30 3.20 NA 0.18 

First, we multiplied the CY 2006 

RVUs listed in Table 57 above by the CY 

2006 CF, which was $37.8975. These 

results are shown in Table 58 below. 

TABLE 58—CY 2006 RVUS FOR CPT CODE 77080 MULTIPLIED BY THE CY 2006 CF 

CY 2006 CPT Code Mod 

CY 2006 

Physician work 

RVUs* 2006 CF 

CY 2006 

Nonfacility 

PE RVUs* 

2006 CF 

CY 2006 

Facility 

PE RVUs* 

2006 CF 

CY 2006 

Malpractice 

RVUs* 2006 CF 

76075 ..................................................... 26 $11.37 $3.79 $3.79 $0.38 

76075 ..................................................... TC NA 117.48 NA 6.44 

76075 ..................................................... .............................. 11.37 121.27 NA 6.82 

Second, we took 70 percent of the 

result to arrive at the CY 2011 national 

payment amounts for each component 

of the CPT code. These results are 

shown in Table 59 below. 

TABLE 59—CY 2011 NATIONAL PAYMENT AMOUNTS FOR CPT CODE 77080 

CY 2006 CPT Code Mod 

CY 2011 

Physician work 

payment amount 

CY 2011 

Nonfacility PE 

payment amount 

CY 2011 Facility 

PE payment 

amount 

CY 2011 

Malpractice 

payment amount 

76075 ............................................................................ 26 .. $7.96 $2.65 $2.65 $0.27 

76075 ............................................................................ TC NA 82.24 NA 4.51 

76075 ............................................................................ ....... 7.96 84.89 NA 4.78 

Third, in order to determine the CY 

2011 RVUs for CPT code 77080 (76075) 

that are displayed in Addendum B to 

this final rule with comment period, we 

divided the CY 2011 national payment 

amounts shown in Table 59 by the CY 

2011 CF (discussed in section II.G.1. of 

this final rule with comment period) of 

$25.5217. These results are shown in 

Table 60 and in Addendum B to this 

final rule with comment period. 

We note that RVUs under the PFS are 

generally resource-based and, therefore, 

are typically unaffected by changes to 

the CF. However, because the statute 

essentially sets a fixed payment amount 

for DXA services, the CF directly 

determines the RVUs for CPT code 

77080 as we must impute RVUs for the 

DXA services in CY 2011. Therefore, 

when there are changes to the PFS CF, 

we must make corresponding changes to 

the RVUs for CPT codes 77080 and 

77082 for CY 2010 and CY 2011 in order 

to maintain the fixed national payment 

amount specified in the statute, which 

is then subject to geographic adjustment 

as indicated below. 

TABLE 60—CY 2011 RVUS FOR CPT CODE 77080 

(NOTE: Calculated using the current law CY 2011 CF of $25.5217) 

CY 2011 CPT Code Mod 

CY 2011 

Physician 

work 

RVUs 

CY 2011 

Nonfacility 

PE RVUs 

CY 2011 

Facility 

PE RVUs 

CY 2011 

Malpractice 

RVUs 

77080 .................................................................................................... 26 .. 0.31 0.10 0.10 0.01 

77080 .................................................................................................... TC 0.00 3.22 NA 0.18 

77080 .................................................................................................... ....... 0.31 3.32 NA 0.19 

Finally, in order to provide payment 

for a specific DXA service furnished by 

a practitioner, the RVUs listed in Table 

60 would be multiplied by the CY 2011 

CF and subject to geographic adjustment 

based on the CY 2011 GPCIs that apply 

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to the location where the service is 

furnished. 

In summary, after consideration of the 

public comments we received, we are 

finalizing our proposed CY 2011 

payment methodology for CPT codes 

77080 and 77082 in accordance with the 

section 1848(b) of the Act (as amended 

by section 3111 of the ACA). In CY 

2011, payment for CPT codes 77080 and 

77082 will be made at 70 percent of the 

product of the CY 2006 RVUs for the 

specified DXA codes, the CY 2006 CF, 

and the CY 2011 geographic adjustment. 

J. Section 3114: Improved Access for 

Certified Nurse-Midwife Services 

Section 1833(a)(1)(K) of the Act (as 

amended by section 3114 of the ACA) 

increased the amount of Medicare 

payment made under the PFS for 

certified nurse-midwife (CNM) services. 

Currently, section 1833(a)(1)(K) of the 

Act specifies that the payment amount 

for CNM services is 80 percent of the 

lesser of the actual charge or 65 percent 

of the PFS amount for the same service 

furnished by a physician. Under section 

1833(a)(1)(K) of the Act (as amended by 

section 3114 of the ACA), effective for 

services furnished on or after January 1, 

2011, Medicare payment for CNM 

services is increased to 100 percent of 

the PFS amount for the same service 

furnished by a physician (or 80 percent 

of the actual charge if that is less). We 

proposed to revise our regulations at 

§ 414.54 (Payment for certified nursemidwives’ services) accordingly to 

reflect the increased payment for CNM 

services effective for services furnished 

on or after January 1, 2011. 

Although CNMs are currently paid 

under Medicare Part B for their 

professional services, there is no 

mention of CNMs under the regulatory 

provision that lists the providers and 

suppliers of services to whom payment 

is made under the Medicare Part B 

program. Accordingly, we proposed to 

make a technical revision to § 410.150 

(To whom payment is made) to specify 

that Medicare Part B pays CNMs for 

professional services in all settings, as 

well as services and supplies furnished 

incident to those services. 

CNMs are authorized under the 

statute to be paid directly for services 

that they are legally authorized to 

furnish under State law and that are of 

the type that would otherwise be 

covered if furnished by a physician or 

incident to a physician’s services. 

Additionally, there is no requirement 

for physician oversight or supervision of 

CNMs. Accordingly, CNMs are 

authorized to personally furnish 

diagnostic tests that fall under their 

State scope of practice without regard to 

the levels of physician supervision 

required under the diagnostic tests 

benefit. Therefore, we proposed to 

revise § 410.32(b)(2) (Exceptions to the 

levels of physician supervision required 

for diagnostic tests) to include CNMs 

who furnish diagnostic tests that fall 

within their State scope of practice. 

Comment: Several commenters 

welcomed the proposed increase in 

Medicare payment for CNM services 

effective January 1, 2011, stating that 

this policy would provide equitable 

payment under Medicare to CNMs. 

These commenters claimed that 

Medicare payment to CNMs at 100 

percent of the Medicare Part B PFS 

amount that would be paid to a 

physician (or 80 percent of the actual 

charge if that is less) represents policy 

reform resulting from advocacy over a 

number of years. The commenters 

believe that the Medicare payment 

increase will enable CNMs across the 

nation to expand services to women 

with disabilities of childbearing age, as 

well as to senior women who are 

Medicare patients. The commenters 

noted that previously the 35 percent 

payment differential between CNMs and 

other health professionals furnishing 

similar services limited the expansion of 

CNM services to Medicare patients. 

Additionally, the commenters asserted 

that CNMs serve a critical role as 

primary care providers for women 

throughout their lifespan and claimed 

that regulatory changes to unleash the 

potential of this group of providers were 

critically needed to fill the gaps in 

primary care. 

The commenters also supported CMS’ 

proposed technical revisions to 

§ 410.150 and § 410.32. The proposed 

changes to § 410.150 would include 

CNMs as a supplier of services to whom 

Medicare payment can directly be made 

for their professional services in all 

settings and for services and supplies 

furnished incident to their professional 

services. Additionally, the commenters 

believe that the proposed changes to 

§ 410.32 would clarify that when CNMs 

personally perform diagnostic tests, 

these health professionals are not 

subject to physician supervision for 

payment of diagnostic tests. 

Response: We appreciate the 

commenters’ support for implementing 

the new statutory provision that 

increases Medicare Part B payment for 

CNM services, effective January 1, 2011, 

from 80 percent of the lesser of the 

actual charge or 65 percent of the PFS 

amount that would be paid to a 

physician to 100 percent of the 

Medicare Part B PFS amount that would 

be paid to a physician or 80 percent of 

the actual charge if that is less. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

increase the Medicare Part B payment 

amount for CNM services under the PFS 

from 65 percent of the PFS amount that 

would be paid to a physician to 100 

percent of the PFS amount that would 

be paid to a physician, or 80 percent of 

the actual charge if that is less. We are 

also finalizing our proposed 

modification to § 414.54 to reflect this 

statutory change, with clarification to 

state that the amount paid to a CNM 

may not exceed 100 percent of the PFS 

amount that would be paid to a 

physician for the same service furnished 

on or after January 1, 2011. In addition, 

we are finalizing, without modification, 

our proposed revisions to § 410.32 and 

§ 410.150. 

K. Section 3122: Extension of Medicare 

Reasonable Costs Payments for Certain 

Clinical Diagnostic Laboratory Tests 

Furnished to Hospital Patients in 

Certain Rural Areas 

Section 416 of the MMA established 

a reasonable cost payment for outpatient 

clinical diagnostic laboratory tests 

furnished by hospitals with fewer than 

50 beds that are located in qualified 

rural areas for cost reporting periods 

beginning during the 2-year period 

beginning on July 1, 2004. 

Section 105 of the Tax Relief and 

Health Care Act of 2006 (Pub. L. 109– 

432) (TRHCA) extended the 2-year 

period in section 416(b) of the MMA for 

an additional cost-reporting year. 

Section 107 of the Medicare, 

Medicaid, and SCHIP Extension Act of 

2007 (Pub. L. 110–173) (MMSEA) 

extended the time period for cost 

reporting periods beginning on July 1, 

2004 and ending on June 30, 2008. For 

some hospitals with cost reports that 

began as late as June 30, 2008, this 

extension affected services performed as 

late as June 29, 2009, because this was 

the date those cost reports would have 

closed. 

Section 3122 of the ACA reinstitutes 

reasonable cost payment for clinical 

diagnostic laboratory tests performed by 

hospitals with fewer than 50 beds that 

are located in qualified rural areas as 

part of their outpatient services for cost 

reporting periods beginning on or after 

July 1, 2010 through June 30, 2011. For 

some hospitals with cost reports that 

begin as late as June 30, 2011, this 

reinstitution of reasonable cost payment 

could affect services performed as late 

as June 29, 2012, because this is the date 

those cost reports will close. 

We received no comments on this 

proposal and therefore are finalizing 

this provision without modification. 

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L. Section 3134: Misvalued Codes Under 

the Physician Fee Schedule 

Section 1848(c)(2)(K) of the Act (as 

added by section 3134 of the ACA) 

required the Secretary to periodically 

review and identify potentially 

misvalued codes and make appropriate 

adjustments to the relative values of 

those services identified as being 

potentially misvalued. Section 

1848(c)(2)(K) of the Act (as added by 

section 3134 of the ACA) further 

specified that the Secretary may use 

existing processes to receive 

recommendations on the review and 

appropriate adjustment of potentially 

misvalued services, as well as conduct 

surveys or implement other data 

collection activities, studies, or other 

analyses as the Secretary determines to 

be appropriate to facilitate the review 

and appropriate adjustment of the 

relative values of potentially misvalued 

codes. Finally, section 1848(c)(2)(L) of 

the Act (as added by section 3134 of the 

ACA) provided that the Secretary shall 

establish a process to validate relative 

value units under the PFS. 

We note that over the past several 

years, we have been working with the 

AMA RUC to identify approaches to 

addressing the issue of potentially 

misvalued services. Our CY 2011 

approaches to categories of potentially 

misvalued codes are discussed in 

section II.C. of this final rule with 

comment period. 

M. Section 3135: Modification of 

Equipment Utilization Factor for 

Advanced Imaging Services 

1. Adjustment in Practice Expense To 

Reflect Higher Presumed Utilization 

Section 1848(b)(4)(C) of the Act (as 

added by section 3135(a) of the ACA) 

adjusted the utilization rate beginning 

in CY 2011 for expensive diagnostic 

imaging equipment to a 75 percent 

assumption in the methodology for 

establishing the PE of the RVUs of 

procedures that use this equipment. 

In the CY 2010 PFS final rule with 

comment period (74 FR 61755), we 

finalized a policy to increase the 

utilization rate to 90 percent for 

expensive diagnostic equipment priced 

at more than $1 million (CT and MRI 

scanners), providing for a 4-year 

transition to the 90 percent utilization 

rate from the CY 2009 utilization rate of 

50 percent. Therefore, in CY 2010 we 

were transitioning to a 90 percent 

equipment utilization rate assumption, 

applying a 25/75 blend of the new and 

old PE RVUs, respectively, for the 

associated procedures. Section 

1848(b)(4)(C) of the Act (as added by 

section 3135(a) of the ACA) does not 

provide for any further transition and, 

therefore, we are assigning a 75 percent 

equipment utilization rate assumption 

to CT and MRI scanners, effective 

January 1, 2011. Under section 

1848(b)(4) of the Act (as amended by 

section 3135(a) of the ACA), this change 

in the equipment utilization rate 

assumption from CY 2010 to CY 2011 is 

not budget neutral under the PFS. The 

equipment utilization rate assumption 

remains at 50 percent for all other 

equipment included in the PFS PE 

methodology. Further discussion of our 

final CY 2011 policies regarding the 

equipment utilization rate assumption 

can be found in section II.A.3.a. of this 

final rule with comment period. 

2. Adjustment in Technical Component 

‘‘Discount’’ on Single-Session Imaging to 

Consecutive Body Parts 

Section 1848(b)(4)(D) of the Act (as 

added by section 3135(a) of the ACA) 

increased the established PFS multiple 

procedure payment reduction (MPPR) 

for the TC of certain single-session 

imaging services to consecutive body 

areas from 25 to 50 percent, effective 

July 1, 2010, and section 

1848(c)(2)(B)(v)(VI) of the Act (as added 

by section 3135(b) of the ACA) 

exempted this percent change from the 

PFS budget neutrality provision. This 

policy is discussed in detail in section 

II.C.4 of this final rule with comment 

period. 

Effective January 1, 2006, we adopted 

an MPPR of 25 percent for the TC of 

certain diagnostic imaging procedures, 

applied to the second and subsequent 

services when more than one service in 

one of 11 imaging families, defined by 

imaging modality and contiguous body 

area, is furnished in a single session (70 

FR 70261 through 70263). The 

established imaging MPPR applies to TC 

services and to the TC of global services. 

It does not apply to PC services or to the 

PC of global services. Under this policy, 

full payment was made for the TC of the 

highest priced procedure, while 

payment was made at 75 percent of the 

TC for each additional procedure. As of 

July 1, 2010 and continuing in CY 2011, 

payment is made at full payment for the 

TC of the highest paying procedure, 

while at 50 percent of the TC for each 

additional procedure, consistent with 

the new statutory provision. Further 

discussion of the MPPR policies 

affecting nonsurgical PFS services can 

be found in section II.C.4. of this final 

rule with comment period. 

N. Section 3136: Revision for Payment 

for Power-Driven Wheelchairs 

1. Payment Rules for Power Wheelchairs 

Durable medical equipment (DME) is 

defined at section 1861(n) of the Act 

and includes wheelchairs necessary for 

use in the patient’s home. Section 

1861(n) of the Act provides that 

wheelchairs included in the definition 

of DME ‘‘may include a power-operated 

vehicle that may be appropriately used 

as a wheelchair, but only where the use 

of such a vehicle is determined to be 

necessary on the basis of the 

individual’s medical and physical 

condition.’’ The general Medicare 

payment rules for DME are set forth in 

section 1834(a) of the Act and 42 CFR 

part 414, subpart D of our regulations. 

Section 1834(a)(1) of the Act and 

§ 414.210(a) of our regulations establish 

that the Medicare payment for a DME 

item is generally equal to 80 percent of 

either the lower of the actual charge or 

the fee schedule amount for the item 

less any unmet Part B deductible. The 

beneficiary coinsurance is generally 

equal to 20 percent of either the lower 

of the actual charge or the fee schedule 

amount for the item once the deductible 

is met. 

For Medicare payment purposes, 

power wheelchairs or power-driven 

wheelchairs are classified under various 

HCPCS codes based on the level of 

performance and functional 

characteristics of each power 

wheelchair that accommodate the 

specific needs of patients. Power 

wheelchairs classified under 

performance Groups 1 through 3 are 

covered under Medicare for use in the 

patient’s home. Power wheelchair 

groups were established in 2006 with 

the release of the Power Mobility Device 

Coding Guidelines published by the 

Durable Medical Equipment Regional 

Carriers (DMERCs) currently called the 

Durable Medical Equipment Medicare 

Administrative Contractors (DME 

MACs). The DMEPOS quality standards 

define certain power wheelchairs falling 

as ‘‘complex, rehabilitative’’ power 

wheelchairs, and these ‘‘complex, 

rehabilitative’’ power wheelchairs are 

treated as a separate product category 

for the purpose of implementing the 

DMEPOS Competitive Bidding Program 

(CBP) mandated by section 1847(a) of 

the Act. In both the quality standards 

and the DMEPOS CBP, complex, 

rehabilitative power wheelchairs are 

defined or identified as power 

wheelchairs classified as Group 2 power 

wheelchairs with power options that 

can accommodate rehabilitative features 

(for example, tilt in space) or Group 3 

power wheelchairs. Section 

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1847(a)(2)(A) of the Act, as amended by 

section 154(a)(1)(B) of MIPPA, excludes 

complex, rehabilitative power 

wheelchairs classified within Group 3 

from the DMEPOS CBP. 

With the exception of power 

wheelchairs furnished during calendar 

year 1990, power wheelchairs have been 

paid under the capped rental category of 

DME since January 1, 1989. The 

payment rules for capped rental DME 

are provided at section 1834(a)(7) of the 

Act and § 414.229 of our regulations. 

Payment for these items is generally on 

a monthly rental basis, with rental 

payments capped at 13 months. After a 

13-month period of continuous use 

during which rental payments are made, 

the statute and regulations require that 

the supplier transfer title to the 

wheelchair to the beneficiary. In 

addition, effective for power 

wheelchairs furnished on or after 

January 1, 1991, section 1834(a)(7) of 

the Act, as amended by section 

4152(c)(2)(D) of the Omnibus Budget 

Reconciliation Act of 1990 (Pub. L. 101– 

508), mandates that the supplier of the 

power wheelchair offer the patient the 

option to purchase rather than rent the 

item. Since 1991, over 95 percent of 

Medicare beneficiaries have exercised 

this lump-sum purchase option for 

power wheelchairs. 

Consistent with payment for other 

DMEPOS items, § 414.210(f)(1) permits 

payment for replacement of capped 

rental DME if the item has been in 

continuous use for the equipment’s 

reasonable useful lifetime or is lost, 

stolen, or irreparably damaged. Section 

414.210(f)(1) states the reasonable useful 

lifetime for equipment is determined 

through program instructions. In the 

absence of CMS program instructions, 

the carrier may determine the 

reasonable useful lifetime for 

equipment, but in no case can it be less 

than 5 years. Computation is based on 

when the equipment is delivered to the 

beneficiary, not the age of the 

equipment. If the beneficiary elects to 

obtain a new capped rental item after 

the reasonable useful lifetime, a new 13- 

month rental payment period would 

begin for the new equipment in 

accordance with the requirements of 

§ 414.229. 

Pursuant to section 1834(a)(7)(A)(i)(II) 

of the Act and § 414.229(b), the current 

capped rental fee schedule amounts 

applicable to wheelchairs for months 1 

thru 3 of the 13-month capped rental 

period are calculated to pay 10 percent 

of the purchase price recognized in the 

statute for the item. The rental fee 

schedule amounts for months 4 through 

13 of the 13-month capped rental period 

are calculated to pay 7.5 percent of the 

purchase price for the item. The 

purchase price is determined consistent 

with section 1834(a)(8) of the Act and 

§ 414.229(c) and § 414.220(e) and (f) and 

is calculated based on average allowed 

payments for the purchase of new items, 

and is updated by the covered item 

update, as required by section 

1834(a)(14) of the Act and § 414.229(d). 

The purchase fee schedule amount for 

new power wheelchairs acquired on a 

lump sum purchase basis is 100 percent 

of the purchase price calculated for the 

item, as discussed above. 

2. Revision of Payment Amounts for 

Power Wheelchairs 

Section 3136(a) of the ACA made 

several changes to section 1834(a)(7)(A) 

of the Act. Section 3136(a)(1) of the 

ACA amends section 1834(a)(7)(A) of 

the Act by adding a new subclause (III) 

to section 1834(a)(7)(A)(i) of the Act. 

Subclause (III) revises the capped rental 

fee schedule amounts for all power 

wheelchairs, modifying the current 

payment structure of 10 percent of the 

purchase price for months 1 through 3 

and 7.5 percent of that purchase price 

for months 4 through 13 that was 

previously discussed. 

The rental fee schedule amount for 

months 1 through 3 of the 13-month 

capped rental period for power 

wheelchairs is revised to 15 percent of 

the purchase price for the item. The 

rental fee schedule amounts for months 

4 through 13 of the 13-month capped 

rental period for power wheelchairs is 

revised to 6 percent of the purchase 

price for the item. The statutory 

provision does not change the 

methodologies used to calculate and 

subsequently update the purchase price 

of power wheelchairs. Therefore, the 

methodology described previously for 

determining the purchase price amounts 

will continue to apply. 

Pursuant to section 3136(c) of the 

ACA, the changes made by section 

3136(a) of the ACA apply to powerdriven wheelchairs furnished on or after 

January 1, 2011. Furthermore, as 

discussed previously, section 3136(c)(2) 

of the ACA states that the changes made 

by section 3136(a) of the ACA, 

including the new payment structure for 

power wheelchairs, do not apply to 

payment made for items and services 

furnished pursuant to contracts entered 

into under section 1847 of the Act for 

the DMEPOS CBP prior to January 1, 

2011, which applies to the 

implementation of the first round of the 

DMEPOS CBP. As a result, contract 

suppliers furnishing power wheelchairs 

in competitive bidding areas (CBA) 

pursuant to contracts entered into prior 

to January 1, 2011, as part of Round 1 

of the DMEPOS CBP will continue to be 

paid based under the current regulations 

using 10 percent of the purchase price 

for months 1 through 3 and 7.5 percent 

for each of the remaining months. We 

did not receive public comment on our 

proposed changes to § 414.202, 

§ 414.229, and § 414.408, and therefore 

we are finalizing our proposals without 

modification. 

3. Elimination of Lump Sum Payment 

for Standard Power Wheelchairs 

Section 3136(a)(2) of the ACA further 

amends section 1834(a)(7)(A)(iii) of the 

Act by inserting the term ‘‘complex, 

rehabilitative’’ before the term ‘‘powerdriven wheelchairs.’’ As a result, section 

1834(a)(7)(A)(iii) of the Act now extends 

the lump sum purchase option only to 

complex, rehabilitative power 

wheelchairs. As discussed above, 

‘‘complex, rehabilitative’’ power 

wheelchairs are power wheelchairs that 

are classified as: (1) Group 2 power 

wheelchairs with power options that 

can accommodate rehabilitative features 

(for example, tilt in space), or (2) Group 

3 power wheelchairs. We consider all 

other power wheelchairs to be standard 

power wheelchairs. Therefore, we 

proposed to interpret the language 

‘‘complex, rehabilitative’’ in section 

1834(a)(7)(A) of the Act consistent with 

this longstanding classification. As a 

result, the changes made by section 

3136 of the ACA to section 

1834(a)(7)(A)(iii) of the Act eliminate 

the lump sum purchase option for 

standard power wheelchairs. 

Pursuant to section 3136(c) of the 

ACA, the changes made to section 

1834(a)(7)(A)(iii) of the Act apply to 

power-driven wheelchairs furnished on 

or after January 1, 2011. The lump sum 

purchase payment option will no longer 

extend to standard power driven 

wheelchairs furnished on or after 

January 1, 2011. 

Furthermore, section 3136(c)(2) of the 

ACA states that the changes made by 

section 3136(a) of the ACA, including 

the limitation of the lump sum purchase 

payment option to complex, 

rehabilitative power wheelchairs, do not 

apply to payment made for items and 

services furnished pursuant to contracts 

entered into under section 1847 of the 

Act for the DMEPOS CBP prior to 

January 1, 2011, pursuant to the 

implementation of the first round of the 

DMEPOS CBP. As a result, contract 

suppliers furnishing power wheelchairs 

in CBAs in accordance with contracts 

entered into prior to January 1, 2011 as 

part of Round 1 of the DMEPOS CBP 

must continue to offer beneficiaries the 

lump sum purchase option for all power 

wheelchairs. 

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We proposed changes to § 414.229 

and § 414.408 to reflect our 

interpretation of these statutory 

requirements. 

Comment: Several commenters stated 

that the changes regarding the lump 

sum payment option will make it more 

difficult for many suppliers to furnish 

standard power wheelchairs because 

suppliers usually purchase wheelchairs 

from manufacturers using the full lump 

sum payments. One commenter stated 

that some homecare providers will need 

to arrange for loans to obtain sufficient 

finances to purchase wheelchairs that 

are then paid for by the Medicare 

program and beneficiaries over the 

longer 1-month payment period and if 

the recent capital markets for loans do 

not improve, CMS should consider a 

delay in implementing our regulations. 

Response: While we recognize that 

the regulatory changes require 

adjustments by standard power 

wheelchair suppliers, we do not believe 

that section 3136(a)(2) of the ACA 

provides flexibility to delay the 

implementation of this provision. 

Moreover, these concerns are related to 

the financial relationships developed by 

manufacturers of standard power 

wheelchairs with the suppliers who 

furnish patients with wheelchairs, 

which is not within the purview of our 

regulations. As we explained in the 

proposed rule (75 FR 40121), power 

wheelchairs have been paid under the 

capped rental category of DME since 

1989, and the option to purchase in 

addition to the rental payment method 

was established in 1991. Thus, section 

3136(a)(2) of the ACA and the regulatory 

changes implementing that provision 

are not establishing a new rental 

payment methodology. We expect 

suppliers will be able to adapt 

expeditiously to furnishing standard 

power wheelchairs under a rental 

payment structure. Finally, we believe 

that there may be some financial benefit 

to suppliers as a result of this change. 

As is the case for manual wheelchairs 

furnished to Medicare beneficiaries, 

suppliers of standard power 

wheelchairs furnished to Medicare 

beneficiaries on or after January 1, 2011, 

may be able to rent these items to 

multiple beneficiaries if the 

beneficiaries use the items for fewer 

than 13 continuous months. In many 

cases where a power wheelchair is 

rented to multiple beneficiaries, the 

supplier will receive more than 13 

monthly payments for the item, 

including payments based on 15 percent 

of the statutory purchase price for the 

first 3 months that each beneficiary 

rents the item. 

Comment: Several commenters raised 

a concern that the elimination of the 

lump sum payment method will cause 

a significant increase in monthly rental 

claims submitted for standard power 

wheelchairs; thereby, increasing 

administrative claims processing costs. 

One commenter noted that in the event 

claims processing contractors have 

difficulty processing claims, we did not 

discuss how to apply interest rates for 

Medicare overpayments or 

underpayments. 

Response: We appreciate this 

comment regarding the efficient 

implementation of the provision of 

section 3136 of the ACA, which 

includes a requirement that payment for 

all standard power wheelchairs be made 

on a monthly rental basis effective 

January 1, 2011. We are working with 

our contractors to make the necessary 

changes to the claims processing 

systems in order to be ready to process 

additional standard power wheelchair 

rental claims with dates of service on or 

after January 1, 2011. Also, we have 

coordinated within CMS and our 

partners to update educational materials 

for our beneficiaries. With regard to 

overpayments or underpayments, these 

issues will be handled in the same 

manner as overpayments or 

underpayments are handled for capped 

rental DME in general. 

Comment: Several commenters 

stressed the need to clarify the 

conditions of payment requirements for 

power wheelchairs that are rented after 

a break in service or change in patient 

condition. These commenters stated that 

because the majority of power 

wheelchairs have been paid under the 

lump sum purchase payment method, 

physicians and suppliers performed the 

documentation requirements set forth in 

§ 410.38(c)(2) prior to initial delivery of 

the standard power wheelchairs. These 

documentation requirements specify the 

physician or treating practitioner must 

conduct a face-to-face examination of 

the patient to determine that the power 

wheelchair is medically necessary 

before it is dispensed to the beneficiary. 

In addition, the supplier must perform 

an on-site evaluation of the patient’s 

home to develop supporting 

documentation for the initial delivery 

and payment for a power wheelchair. As 

a result of the elimination of the lump 

sum purchase option for standard power 

wheelchairs, more power wheelchairs 

will be paid under the rental payment 

method after January 1, 2011. Thus, the 

commenters urged that the regulations 

should clarify whether a new face-toface examination and home evaluation 

must be performed when a break in 

service of greater than 60 days occurs. 

Response: This comment is outside 

the scope of the CY 2011 PFS proposed 

rule. We did not propose any changes to 

the conditions of payment set forth in 

§ 410.28(c)(2). We again note, however, 

that payments on a rental basis for 

capped rental items, including power 

wheelchairs, have been made since 

January 1, 1989. The payment and 

coverage requirements identified by the 

commenters for power mobility devices 

(PMDs), including power-operated 

vehicles or scooters and standard and 

complex, rehabilitative power 

wheelchairs, must be met before the 

item is furnished to the beneficiary on 

either a purchase or rental basis. Section 

3136 of the ACA, which in part 

eliminates the purchase option for 

standard power wheelchairs furnished 

on or after January 1, 2011, has no 

impact on these requirements. They 

remain in effect for all PMDs furnished 

to Medicare beneficiaries on a purchase 

or rental basis, including rented power 

wheelchairs. Payment for capped rental 

items is limited to 13 months of 

continuous use, defined at § 414.230. 

Section 414.230(d) sets forth the criteria 

for a new rental period: during this 13- 

month capped rental period, a break in 

use of the equipment for more than 60 

continuous days, plus the days 

remaining in the rental month in which 

use ceases, would result in the start of 

a new period of continuous use and a 

new 13-month capped rental period if 

the supplier submits a new prescription, 

new medical necessity documentation, 

and documentation that describes the 

reason for the interruption in use and 

documents that medical necessity in the 

prior rental episode ended. Section 3136 

of the ACA has no impact on the 

requirements set forth in § 414.230 

regarding continuous use of capped 

rental items. 

Comment: One commenter requested 

a revision to the billing modifiers for 

Advance Beneficiary Notice of 

Noncoverage (ABN) to utilize when a 

supplier bills for furnishing a 

wheelchair that has features beyond 

what is covered by Medicare. 

Response: This comment is outside 

the scope of the CY 2011 PFS proposed 

rule because we did not propose any 

changes to the billing modifiers for 

ABNs. Nevertheless, we encourage 

interested parties to follow our HCPCS 

editorial process and submit coding 

recommendations by following the 

instructions found at our Web site at 

http://www.cms.gov/ 

MedHCPCSGenInfo. 

Comment: One commenter requested 

clarification on whether the beneficiary 

retains ownership of power wheelchair 

associated accessories (for example 

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elevated leg rests or adjustable height 

arms rests) during or after the rental 

period. These associated accessories are 

not included with the rental of the 

standard power wheelchair base 

equipment. 

Response: Payment for accessories for 

power wheelchairs that are not included 

in the basic equipment package for the 

wheelchair and are separately payable 

items under the inexpensive or 

routinely purchased (IRP) DME category 

is made on either a rental or lump sum 

purchase basis. If payment is made on 

a lump sum basis to the supplier for an 

associated accessory, then the 

beneficiary owns the accessory for use 

with the standard power wheelchair 

during and after the 13-month 

wheelchair rental period. If payment is 

made on a rental basis for an accessory 

in the IRP category and it appears that 

the beneficiary will use the wheelchair 

for the full 13-month capped rental 

period, the beneficiary may elect to 

purchase the accessory, and the 

Medicare allowed payment for purchase 

of the accessory would be equal to the 

lowed of the actual charge or the 

purchase fee schedule amount, less 

cumulative paid rental amounts. Title to 

an accessory for a power wheelchair 

that is not included in the basic 

equipment package for the wheelchair 

and is a separately payable item under 

the capped rental DME category is 

transferred to the beneficiary following 

the 13-month capped rental period. 

Comment: One commenter requested 

information on how to apply the 

calculation of the reasonable useful 

lifetime to a standard power wheelchair 

which had been in continuous use for 

10 months prior to being returned to a 

supplier and then after appropriate 

cleaning and servicing is placed with a 

different beneficiary. Also, the 

commenter requested how to apply the 

calculation of the reasonable useful 

lifetime if the standard power 

wheelchair is assigned to several 

beneficiaries under similar 

circumstances and remains in 

continuous use beyond 13 months 

because of use by multiple beneficiaries 

prior to title being transferred to the last 

beneficiary. 

Response: The regulations applicable 

to calculation of the reasonable useful 

lifetime are located at § 414.210(f) and 

state that computation of the reasonable 

useful lifetime of equipment is based on 

when the equipment is delivered to the 

beneficiary, not the age of the 

equipment. At the end of 13 months 

rental use of a DME item, the supplier 

must transfer title to the item, such as 

a power wheelchair, to the beneficiary 

in accordance with § 414.229(f)(2). If, 

following transfer of title, it is 

determined that the power wheelchair 

will not last for the entire reasonable 

useful lifetime, the supplier is required 

by § 414.210(e)(4) to replace the 

equipment at no cost to the beneficiary 

or the Medicare program. 

Comment: One commenter expressed 

concern that the proposed changes to 

§ 414.408(f)(1) will force suppliers to 

convert to a rental payment model of 

furnishing standard power wheelchairs 

prior to the end of the 3 year contract 

period for DMEPOS Round 1 Rebid 

CBAs although their bids included an 

assumption that the lump sum payment 

method would continue into subsequent 

years. Another commenter believed 

inequalities occur by continuing the 

option of a lump sum payment method 

for standard power wheelchairs in 

Round 1 Rebid CBAs but not in other 

geographic areas. 

Response: Section 3136(c)(2) of the 

ACA states that the change made by 

section 3136(a) of the ACA, eliminating 

the lump sum payment method for 

standard power wheelchairs, does not 

apply to payment made for items and 

services furnished pursuant to contracts 

entered into under section 1847 of the 

Act for the DMEPOS CBP prior to 

January 1, 2011 pursuant to the 

implementation of the first round of the 

DMEPOS competitive bidding program 

(CBP). We noted that although these 

changes will not apply to payment made 

for items and services furnished 

pursuant to the contracts awarded 

following the Round 1 Rebid, contract 

suppliers must prepare for the 

elimination of the lump sum payment 

method for standard power wheelchairs 

that will take effect at the end of the 3 

year contract period. When the Round 1 

contracts are recompeted, suppliers will 

submit bids for furnishing power 

wheelchairs on a rental only basis. 

Comment: One commenter suggested 

Medicare should consider implementing 

a serial number tracking program for 

power wheelchairs to improve antifraud efforts. 

Response: This comment is outside 

the scope of the CY 2011 PFS proposed 

rule. We appreciate the commenter’s 

suggestion and will consider studying 

the feasibility of a nationwide serial 

tracking program for power wheelchairs 

for future rulemaking efforts. We were 

informed that nationwide there are more 

than 106 styles of power wheelchairs 

available from 22 manufacturers. A 

nationwide serial tracking program 

would require significant program 

resources and stakeholder input which 

we would need to conduct prior to 

rulemaking. 

After considering the comments 

received, we are adopting, without 

modification, our proposed changes to 

§ 414.229 and § 414.408 that eliminate 

the lump sum payment option for 

standard power wheelchairs. 

O. Section 3139: Payment for Biosimilar 

Biological Products 

Section 3139 of the ACA amends 

section 1847A of the Act to provide for 

Medicare payment of biosimilar 

biological products using the average 

sale price (ASP) methodology. 

Section 1847A(c)(6)(H) of the Act, as 

added by the ACA, defines a biosimilar 

biological product as a biological 

product approved under an abbreviated 

application for a license of a biological 

product that relies in part on data or 

information in an application for 

another biological product licensed 

under section 351 of the Public Health 

Service Act (PHSA). The reference 

biological product for a biosimilar 

biological product is defined by the 

statute as the biological product 

licensed under such section 351 of the 

PHSA that is referred to in the 

application of the biosimilar biological 

product. 

The ACA also amends section 

1847A(b) of the Act by adding 

paragraph 8 to specify that the payment 

amount for a biosimilar biological 

product will be the sum of the following 

two amounts: The ASP of all NDCs 

assigned to the biosimilar biological 

product determined using the 

methodology in section 1847A(b)(6) of 

the Act, and 6 percent of the payment 

amount determined using the 

methodology in section 1847A(b)(4) of 

the Act for the corresponding reference 

biological product. Sections 7001 to 

7003 of the ACA also established a 

licensing pathway for biosimilar 

biological products, and in accordance 

with the statute, the effective date for 

Medicare ASP statutory provisions is 

July 1, 2010. We proposed to make 

conforming regulation text changes at 

§ 414.902 and § 414.904 and we 

solicited comments regarding our 

conforming changes. 

We anticipate that as biosimilar 

biological drug products are approved, 

we will receive ASP sales data through 

the ASP data submission process and 

publish national payment amounts in a 

manner that is consistent with our 

current approach to other drugs and 

biologicals that are paid under section 

1847A of the Act and set forth in 42 CFR 

part 414 subpart J. Until we have 

collected sufficient sales data as 

reported by manufacturers, payment 

limits will be determined in accordance 

with the provisions in section 

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1847A(c)(4) of the Act. If no 

manufacturer data is collected, prices 

will be determined by local contractors 

using any available pricing information, 

including provider invoices. More 

information about the ASP payment 

methodology and the data submission 

process may be found on the CMS Web 

site at http://www.cms.gov/

McrPartBDrugAvgSalesPrice/01_

overview.asp and in section VII.A.1., 

‘‘Carry Over ASP,’’ of this final rule with 

comment period. 

Comment: Several commenters 

supported the proposed regulation text 

changes. 

Response: Based on the comments 

that we received, we are finalizing our 

proposal and regulation text without 

additional modification. 

Comment: Several commenters 

requested that CMS assign biosimilars 

and other brand name drugs and 

biologicals separate HCPCS codes in 

order to facilitate the tracking of items 

paid under section 3139 of the ACA, as 

well as branded drugs and biologicals 

subject to fees under section 9008 of the 

ACA. 

Response: We appreciate the 

comments; however, our proposal did 

not address procedures for assignment 

of HCPCS codes, and so these comments 

are outside the scope of this rule. For 

more information about the HCPCS 

coding process, we refer you to http:// 

www.cms.gov/MedHCPCSGenInfo/. 

In summary, we are finalizing our 

proposed definitions of biosimilar 

biological, reference biological and our 

proposed payment methodology 

without additional modification. 

P. Section 3401: Revision of Certain 

Market Basket Updates and 

Incorporation of Productivity 

Improvements Into Market Basket 

Updates That Do Not Already 

Incorporate Such Improvements 

1. ESRD Market Basket Discussion 

Section 3401(h) of the ACA amended 

section 1881(b)(14)(F) of the Act and 

directs the Secretary to annually 

increase payment amounts established 

under the ESRD market basket. Please 

see section VII.E. of this final rule with 

comment for a detailed description of 

these provisions. 

2. Productivity Adjustment Regarding 

the Ambulatory Surgical Center 

Payment System, and the Ambulance, 

Clinical Laboratory and DMEPOS Fee 

Schedules 

Section 3401 of the ACA 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 ACA 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 schedules be 

adjusted by changes in economy-wide 

productivity. Section 3401(a) of the 

ACA 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) (the ‘‘MFP adjustment’’). 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. 

As stated in the PFS proposed rule (75 

FR 40123), the projection of MFP is 

currently produced by IHS Global 

Insight (IGI), an economic forecasting 

firm. As described in the CY 2011 PFS 

proposed rule, in order to generate a 

forecast of MFP, IGI replicated the MFP 

measure calculated by the BLS using a 

series of proxy variables derived from 

the IGI US Macro-economic models. 

These models take into account a very 

broad range of factors that influence the 

total U.S. economy. IGI forecasts the 

underlying proxy components such as 

Gross Domestic Product (GDP), capital, 

and labor inputs required to estimate 

MFP and then combines those 

projections according to the BLS 

methodology. 

In Table 34 of the proposed rule (75 

FR 40123), we identified each of the 

MFP component series employed by the 

BLS and the corresponding concepts 

estimated by IGI that appeared to be the 

best measure at the time of the proposed 

rule. IGI found that the historical growth 

rates of the BLS components used to 

calculate MFP and the IGI components 

identified and listed in the PFS 

proposed rule (75 FR 40123) were 

consistent across all series and therefore 

suitable proxies for calculating MFP. We 

proposed a method in which IGI uses 

the growth rates of the forecasted IGI 

concepts to project BLS’ components of 

MFP. The resulting MFP adjustment 

derived from using this method was 

proposed to be used under section 3401 

of the ACA to adjust the updates for the 

ASC payment system, the AFS, the 

CLFS, and the DMEPOS fee schedules. 

Since the proposed rule, BLS issued 

revised estimates of private nonfarm 

business MFP (released on August 24, 

2010). We also received public 

comments on the proposed calculation 

of the MFP adjustment. We summarize 

these comments and our responses 

below. 

Comment: Several commenters stated 

that CMS provided no details in the 

proposed rule on the data and 

calculations that it used in making the 

MFP estimates, instead referring readers 

to the BLS, which only provides 

historical data. The commenters stated 

that this level of information is 

insufficient for public comment. The 

commenters requested that CMS fully 

disclose the methods and data sources 

used for the MFP estimate for public 

comment before implementing the 

multifactor productivity adjustment to 

the ASC payment system and to the 

other payment systems. Another 

commenter stated that transparency is 

needed concerning the assumptions 

underlying the projection of MFP and 

the commenter asked that CMS address 

this in the final rule so a better 

understanding can be gained about how 

CMS arrived at its MFP adjustment. 

Response: The CY 2011 PFS proposed 

rule included a citation to the BLS Web 

site. This link provided a lengthy 

detailed description of the methodology 

that is used by the BLS to construct an 

estimate of MFP for the private nonfarm 

business sector, including a discussion 

of the underlying series used in the MFP 

calculation. For the forecasted estimate 

of MFP, we then identified in Table 34 

in the CY 2011 PFS proposed rule (75 

FR 40123) the forecasted series that 

closely align to the series used by BLS. 

The data source for these forecasted 

series is IGI, an economic forecasting 

firm. Following the methodology as 

described in the BLS documentation 

that we provided in the CY 2011 PFS 

proposed rule, a forecast of MFP was 

created using the IGI series. Given the 

information that was presented in the 

CY 2011 PFS proposed rule, we believe 

that we provided adequate information 

regarding the methods, calculations, and 

data sources used for the MFP estimate. 

In this final rule with comment period, 

we have included below a more detailed 

description of this methodology for even 

greater transparency. 

In response to the public comments 

we received requesting additional 

information on the assumptions 

underlying the projection of MFP, we 

note that the projection of MFP is not 

driven by specific assumptions. The 

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underlying series forecasted by IGI are 

derived from a set of complex economic 

forecasting models that project various 

components of the total U.S. economy. 

These models are intended to capture 

many drivers of economic growth in the 

U.S. economy. Therefore, the 

underlying series that IGI uses to 

calculate a forecast of MFP are products 

of this economy-wide macroeconomic 

model as opposed to being based on a 

specific set of assumptions. 

Comment: Several commenters 

expressed concern that current 

economic conditions are distorting the 

factor used for the productivity 

adjustment, potentially leading to 

unintended consequences. These 

commenters claim that the original 

intent of the productivity adjustment 

was to hold providers to a standard of 

productivity improvement achieved by 

the rest of the economy. However, the 

commenters stated that when 

productivity gains are driven by 

undesirable trends in the economy, this 

adjustment could lead to excessive cuts. 

The current ‘‘jobless recovery’’ is 

inflating productivity as output 

increases but a key input— 

employment—continues to stagnate. 

The commenters claim that cutting 

Medicare payments by this inflated 

figure could hurt hospitals and other 

health care providers and suppliers that 

have been one of the few sources of 

continued job growth in this economy. 

Response: We are required by law to 

implement section 3401 of the ACA, 

which requires that in CY 2011 (and in 

subsequent years) update factors under 

the ASC payment system, the AFS, the 

CLFS, and the DMEPOS fee schedules 

be adjusted by the 10-year moving 

average of changes in annual economywide multi-factor productivity for the 

private non-farm business sector. 

Although we believe that the IGI 

method of calculating a forecast of MFP 

discussed in the CY 2011 PFS proposed 

rule (75 FR 40123) is appropriate and 

accurately reflects the 10-year moving 

average of changes in annual economywide multi-factor productivity, in 

response to this comment, CMS and IGI 

reevaluated the series that are used to 

calculate MFP to ensure that the 

underlying components that are 

ultimately selected are those that will 

produce a measure of MFP that most 

closely tracks the official measure of 

MFP as published by BLS. While the 

concepts listed in Table 34 of the CY 

2011 PFS proposed rule were similar to 

the underlying concepts used by BLS (as 

discussed in the proposed rule), CMS 

and IGI subsequently determined that 

there are technically superior IGI series 

for output and labor that can be used to 

derive a calculation of MFP (still using 

the method as described in the proposed 

rule), that will ultimately result in a 

more appropriate forecast of MFP. The 

IGI method is described in more detail 

below and we note that the 

methodology is the same methodology 

as was described in the CY 2011 PFS 

proposed rule, which is aligned closely 

with the methodology employed by the 

BLS. For more information regarding the 

BLS method for estimating productivity 

we refer the commenter to the following 

link: http://www.bls.gov/mfp/mprtech.

pdf. 

Table 61 lists the MFP component 

series employed by the BLS and the 

corresponding concepts estimated by 

IGI as specified in Table 34 of the CY 

2011 PFS proposed rule and in this final 

rule. Please note that, in BLS’ revised 

MFP estimates published on August 24, 

2010, the index series was rebased from 

2000=100 to 2005=100. Thus, Table 61 

refers to the BLS series in 2005 dollars 

whereas Table 34 of the CY 2011 PFS 

proposed rule referred to the BLS series 

in 2000 dollars. 

TABLE 61—MULTIFACTOR PRODUCTIVITY COMPONENT SERIES EMPLOYED BY THE BUREAU OF LABOR STATISTICS AND

IHS GLOBAL INSIGHT

BLS series IGI series—proposed rule IGI series—final rule 

Real value-added output, constant 2005 dollars Real gross non-farm value added output, 

chained 2005 dollar billions.

Non-housing non-government non-farm real 

GDP, Billions of chained 2005 dollars—annual rate. 

Private non-farm business sector labor input; 

2005=100.00.

Hours of all persons—private nonfarm business sector; 1992=1.0.Man-hours in private nonfarm establishments, 

Billions of hours—annual rate. 

Aggregate capital inputs; 2005=100.00 ............. Real effective capital stock used for full employment GDP, chained 2005 dollar billions.Real effective capital stock used for full employment GDP, Billions of chained 2005 

dollars. 

In this final rule with comment 

period, we are finalizing the same IGI 

method as described in the CY 2011 PFS 

proposed rule, with minor technical 

improvements to the underlying 

concepts used to calculate MFP. We 

have also included a more detailed 

description below of the methodology 

(which was described in the proposed 

rule and which we are finalizing in this 

final rule with comment period) used to 

calculate MFP in response to the public 

comments we received. 

To create a forecast of BLS’ MFP 

index, the forecasted annual growth 

rates of the ‘‘non-housing, nongovernment, non-farm, real GDP’’, ‘‘manhours in private nonfarm 

establishments’’, and ‘‘real effective 

capital stock’’ series (ranging from 2009 

to 2020) are used to ‘‘grow’’ the levels of 

the ‘‘real value-added output,’’ ‘‘private 

non-farm business sector labor input,’’ 

and ‘‘aggregate capital input’’ series 

published by the BLS. Using these three 

key concepts, MFP is derived by 

subtracting the contribution of labor and 

capital inputs from output growth. 

However, in order to estimate MFP, 

we need to understand the relative 

contributions of labor and capital to 

total output growth. Therefore, two 

additional measures are needed to 

operationalize the estimation of the IGI 

MFP projection: Labor compensation 

and capital income. The sum of labor 

compensation and capital income 

represents total income. The BLS 

calculates labor compensation and 

capital income (in current dollar terms) 

to derive the nominal values of labor 

and capital inputs. IGI uses the ‘‘nongovernment total compensation’’ and 

‘‘flow of capital services from the total 

private non-residential capital stock’’ 

series as proxies for the BLS’ income 

measures. These two proxy measures for 

income are divided by total income to 

obtain the shares of labor compensation 

and capital income to total income. 

In order to estimate labor’s 

contribution and capital’s contribution 

to the growth in total output, the growth 

rates of the proxy variables for labor and 

capital inputs are multiplied by their 

respective shares of total income. These 

contributions of labor and capital to 

output growth are subtracted from total 

output growth to calculate the ‘‘change 

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in the growth rates of multifactor 

productivity’’: 

MFP = Total output growth—{(labor 

input growth*labor compensation share) 

+ (capital input growth * capital income 

share)} 

The change in the growth rates (also 

referred to as the compound growth 

rates) of the IGI MFP are multiplied by 

100 in order to calculate the percent 

change in growth rates (the percent 

change in growth rates are published by 

the BLS for its historical MFP measure). 

Finally, the growth rates of the IGI MFP 

are converted to index levels based to 

2005 to be consistent with the BLS’ 

methodology. 

For benchmarking purposes, the 

historical growth rates of IGI’s proxy 

variables were used to estimate a 

historical measure of MFP, which was 

compared to the historical MFP estimate 

published by the BLS. The comparison 

revealed that the growth rates of the 

components were consistent across all 

series, and therefore validated the use of 

the proxy variables in generating the IGI 

MFP projections. 

The resulting MFP index was then 

interpolated to a quarterly frequency 

using the Bassie method for temporal 

disaggregation. The Bassie technique 

utilizes an indicator (pattern) series for 

its calculations. IGI uses the index of 

output per hour (published by the BLS) 

as an indicator when interpolating the 

MFP index. 

As discussed below, for each of these 

payment systems, the update factor is 

the percentage increase (or percentage 

decrease for the CLFS) in the consumer 

price index for all urban consumers 

(CPI–U) (referred to as the ‘‘CPI–U 

update factor’’). 

For all four payment systems, section 

3401 of the ACA generally states that 

the Secretary shall reduce the CPI–U 

adjustment by the MFP adjustment. In 

order to calculate the MFP-adjusted 

updates to these payment systems, we 

proposed that the MFP percentage 

adjustment would be subtracted from 

the CPI–U update factor. For example, if 

the update factor (CPI–U) is 4.0 percent, 

and the projected MFP is 1.3 percent, 

the MFP–Adjusted update factor (or 

MFP–Adjusted CPI–U for these payment 

systems) would be a 2.7 percent 

increase. 

We proposed that the end of the 10- 

year moving average of changes in the 

MFP should coincide with the end of 

this CPI–U timeframe (75 FR 40123). 

Since the CPI–U update factor is 

reduced by the MFP adjustment to 

determine the annual update for these 

payment systems, we stated that we 

believe it is appropriate for the numbers 

associated with both parts of the 

calculation to be projected as of the 

same end date. In this way, changes in 

market conditions are aligned. 

In this final rule with comment 

period, we wanted to further clarify how 

for each payment system, the end of the 

10-year moving average of changes in 

the MFP will coincide with the period 

on which the CPI–U is calculated. In the 

case of the ASC payment system, the 

CPI–U projected for the 12-month 

period ending with the midpoint of the 

year involved, which is CY 2011 for this 

final rule with comment period. 

Therefore, the end of the 10-year 

moving average of changes in the MFP 

is projected so that it ends with the 

midpoint of the year involves, which is 

CY 2011 for this final rule with 

comment period. In the case of the AFS, 

CLFS, and DMEPOS fee schedules, the 

CPI–U is estimated for the period 

ending June 30th of the year preceding 

the update year itself, which is CY 2010 

for this final rule with comment period. 

Therefore, the end of the 10-year 

moving average of changes in the MFP 

is estimated so that it ends June 30th of 

the year preceding the update year 

itself, which is CY 2010 for this final 

rule with comment period. 

We proposed to round the final 

annual adjustment to the one-tenth of 

one percentage point level up or down 

as applicable according to conventional 

rounding rules (that is, if the number we 

are rounding is followed by 5, 6, 7, 8, 

or 9, we will round the number up; if 

the number we are rounding is followed 

by 0, 1, 2, 3, or 4, we will round the 

number down). 

In the following sections, we provide 

more information on the statutory 

requirements and proposals for each of 

the four payment systems. The statutory 

requirements for the ASC payment 

system were also addressed in the CY 

2011 OPPS/ASC final rule with 

comment period. We note that, in the 

CY 2011 PFS proposed rule (75 FR 

40123 through 40125), we described the 

legislative provision and outlined the 

methodology used to calculate and 

apply the MFP adjustment to determine 

the annual updates for ASC payment 

system, the AFS, the CLFS, and the 

DMEPOS fee schedules for CY 2011 and 

each subsequent year. We stated that we 

would set forth the final MFP 

adjustment for CY 2011 in this final rule 

with comment period. Also, we stated 

in the CY 2011 PFS proposed rule (75 

FR 40123) that once we finalize the 

methodology for determining and 

applying the MFP adjustment to the 

CPI–U update factors for these payment 

systems, for subsequent calendar years, 

as we have done in the past, we would 

notify the general public of the annual 

update to the AFS, CLFS, and DMEPOS 

fee schedules via CMS instruction and 

on the CMS Web site. These 

notifications would set forth both the 

CPI–U percentage increase (or, for the 

CLFS, the percentage decrease) and the 

MFP adjustment for the applicable year. 

For ASCs, for subsequent calendar 

years, as we have done in the past, we 

stated that we would continue to notify 

the general public of the annual update 

to the ASC payment amount via the 

annual OPPS/ASC rulemaking process. 

In summary, as discussed previously, 

we are finalizing the same IGI method 

as described in the CY 2011 proposed 

rule to calculate the MFP adjustment, 

with minor technical improvements to 

the underlying concepts used to 

calculate the MFP adjustment. 

Furthermore, as proposed, the MFP 

adjustment is calculated so that the end 

of the 10-year moving average of 

changes in the MFP will coincide with 

the end of the CPI–U timeframe for each 

of the four payment systems (that is, the 

ASC payment system, AFS, CLFS, and 

DMEPOS fee schedules) so that market 

conditions are aligned. Also, as 

proposed, we will round the final 

annual adjustment to the one-tenth of 

one percentage point level up or down 

as applicable according to conventional 

rounding rules. Using the methodology 

finalized previously, the final MFP 

adjustment for CY 2011 is 1.3 percent 

for the ASC payment system, and 1.2 

percent for the AFS, CLFS, and 

DMEPOS fee schedules. We are also 

finalizing our proposal to calculate the 

MFP-adjusted updates for the ASC 

payment system, the AFS, the CLFS and 

the DMEPOS fee schedules for CY 2011 

and each subsequent year by subtracting 

the MFP adjustment from each payment 

system’s CPI–U update factor, as further 

described in the following sections. 

a. Ambulatory Surgical Centers (ASCs) 

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

requires that, if the Secretary has not 

updated the ASC payment amounts in a 

calendar year, the payment amounts 

‘‘shall be increased by the percentage 

increase in the Consumer Price Index 

for all urban consumers (U.S. city 

average) as estimated by the Secretary 

for the 12-month period ending with the 

midpoint of the year involved.’’ Because 

the Secretary does update the ASC 

payment amounts annually, we adopted 

a policy, which we codified at 

§ 416.171(a)(2)(ii), to update the ASC 

conversion factor using the CPI–U for 

CY 2010 and subsequent calendar years. 

Therefore, the annual update to the ASC 

payment system is the CPI–U (referred 

to as the CPI–U update factor). Section 

3401(k) of the ACA amends section 

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1833(i)(2)(D) of the Act by adding a new 

clause (v) which requires that ‘‘any 

annual update under [the ASC payment] 

system for the year [after application of 

any reduction in any update for failure 

to report on quality measures, if the 

Secretary implements a quality 

reporting program for ASCs] shall be 

reduced by the productivity adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act’’ (which we refer to as the 

MFP adjustment) effective with the 

calendar year beginning January 1, 2011. 

Section 3401(k) of the ACA states that 

application of the MFP adjustment to 

the ASC payment system may result in 

the update to the ASC payment system 

being less than zero for a year and may 

result in payment rates under the ASC 

payment system for a year being less 

than such payment rates for the 

preceding year. 

In accordance with section 

1833(i)(2)(C)(i) of the Act, before 

applying the MFP adjustment, the 

Secretary first determines the 

‘‘percentage increase’’ in the CPI–U, 

which we interpret cannot be a negative 

number. Thus, in the instance where the 

percentage change in the CPI–U for a 

year is negative, we proposed to hold 

the CPI–U update factor for the ASC 

payment system to zero. Section 

1833(i)(2)(D)(v) of the Act, as added by 

section 3401(k) of the ACA, then 

requires that the Secretary reduce the 

CPI–U update factor (which would be 

held to zero if the CPI–U percentage 

change is negative) by the MFP 

adjustment, and states that application 

of the MFP adjustment may reduce this 

percentage change below zero. If the 

application of the MFP adjustment to 

the CPI–U percentage increase would 

result in an MFP-adjusted CPI–U update 

factor that is less than zero, then the 

annual update to the ASC payment rates 

would be negative and payments would 

decrease relative to the prior year. 

Table 62 provides illustrative 

examples of how we proposed the MFP 

adjustment would be applied to the ASC 

payment system. These examples show 

the implication of a positive CPI–U 

update factor with a smaller MFP 

adjustment, a positive CPI–U update 

factor with a large MFP adjustment, and 

a CPI–U update factor of zero. We 

discussed the application of the MFP 

adjustment to the CPI–U update factor 

for the ASC payment system under the 

OPPS/ASC CY 2011 proposed rule (75 

FR 46359). We solicited comment on the 

specific mathematical calculation of the 

MFP adjustment and noted that 

comments on the application of the 

MFP adjustment to the CPI–U update 

factor under the ASC payment system 

should be made to the OPPS/ASC CY 

2011 proposed rule (75 FR 46359). As 

discussed previously, we received and 

responded to comments on the 

calculation of the MFP adjustment and 

have finalized this methodology as 

described above. In the CY 2011 OPPS/ 

ASC final rule with comment period, we 

respond to any comments received and 

finalize the methodology for applying 

the MFP adjustment to the CPI–U 

update factor for ASCs. 

TABLE 62—MULTIFACTOR PRODUCTIVITY ADJUSTED PAYMENT UPDATE: 

ILLUSTRATIVE EXAMPLE

CPI–U 

(percent) 

MFP 

Adjustment 

(percent) 

MFP-Adjusted CPI–U 

update 

factor 

(percent) 

4.0 1.3 2.7 

4.0 4.7 ¥0.7 

0.0 0.2 ¥0.2 

b. Ambulance Fee Schedule (AFS) 

In accordance with section 

1834(l)(3)(B) of the Act, the AFS rates 

are required to be increased each year 

by the percentage increase in the CPI– 

U (U.S. city average) for the 12-month 

period ending with June of the previous 

year. We refer to this update as the 

Ambulance Inflation Factor (AIF). 

Section 3401(j) of the ACA amends 

section 1834(l)(3) of the Act to add a 

new subclause (C) which states that, for 

CY 2011 and each subsequent year, after 

determining the percentage increase 

under section 1834(l)(3)(B) of the Act 

(that is, the CPI–U percentage increase, 

or AIF), the Secretary shall reduce such 

percentage increase by the MFP 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act (as 

discussed previously). Section 3401(j) of 

the ACA further amends section 

1834(l)(3) of the Act to state that the 

application of subclause (C) (that is, the 

reduction of the CPI–U percentage 

increase by the MFP adjustment) may 

result in that percentage increase 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. 

In accordance with section 1834(l)(3) 

of the Act as amended by section 3401(j) 

of the ACA, before applying the MFP 

adjustment, the Secretary first 

determines the ‘‘percentage increase’’ in 

the CPI–U, which we interpret cannot 

be a negative number. Thus, in the 

instance where the percentage change in 

the CPI–U for a year is negative, we 

proposed to hold the AIF to zero. The 

statute then requires that the Secretary 

reduce the CPI–U percentage increase 

(which would be held to zero if the CPI– 

U percentage change is negative) by the 

MFP adjustment, and states that 

application of the MFP adjustment may 

reduce this percentage increase below 

zero. If the application of the MFP 

adjustment to the CPI–U percentage 

increase would result in an MFPadjusted AIF that is less than zero, then 

the annual update to the AFS would be 

negative and payments would decrease 

relative to the prior year. 

Table 63 provides illustrative 

examples of how we proposed the MFP 

adjustment would be applied to the 

AFS. Finally, we proposed to revise 

§ 414.610(f) to require that the AIF be 

reduced by the MFP adjustment as 

required by the statute in determining 

the annual update under the ambulance 

fee schedule for CY 2011 and each 

subsequent year, and to revise § 414.620 

to state that changes in payment rates 

resulting from the incorporation of the 

AIF and the MFP adjustment will be 

announced by CMS by instruction and 

on the CMS Web site, as we previously 

discussed. 

TABLE 63—EXAMPLES OF THE APPLICATION OF THE MULTIFACTOR PRODUCTIVITY ADJUSTMENT TO THE AMBULANCE FEE SCHEDULE

[In percent] 

A B C D 

CPI–U AIF 

 

MFP Adjustment 

 

Final 

update 

rounded 

2.0 2.0 1.3 0.7 

0.0 0.0 1.3 ¥1.3 

¥2.0 0.0 1.3 ¥1.3 

1.0 1.0 1.3 ¥0.3 

Comment: A few commenters stated 

that the payment rates for ambulances 

have consistently fallen further behind 

the actual cost of providing the service. 

One commenter stated that the annual 

update as adjusted by the MFP 

adjustment would create a permanent 

disparity between future increases in 

Medicare’s reimbursement for 

ambulance services and the increased 

costs of providing those services. The 

commenter stated that the two largest 

operational costs for ambulance services 

are personnel and fuel, neither of which 

readily lends itself to operational 

efficiencies. In particular, they claim 

that small and rural providers lack the 

volume of transports needed to obtain 

any meaningful economies of scale. 

These commenters acknowledge that the 

MFP adjustment is mandated by law, 

but they state that it will likely result in 

a net decrease in the already insufficient 

base reimbursement rate for air 

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ambulances. One commenter urged 

CMS to take whatever steps are within 

its authority to mitigate the potentially 

devastating effects of this new 

requirement. 

Response: As discussed previously 

and in the CY 2011 PFS proposed rule 

(75 FR 40124), we are required by law 

to implement section 3401(j) of the 

ACA, which requires that for CY 2011 

and each subsequent year, after 

determining the percentage increase 

under section 1834(l)(3)(B) of the Act 

(that is, the CPI–U percentage increase, 

or AIF), the Secretary shall reduce such 

percentage increase by the MFP 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act. In 

response to the request that we 

‘‘mitigate’’ any potentially negative 

effects of the MFP adjustment, we 

reiterate that we are required to apply 

the MFP adjustment to the AIF in the 

manner specified by the ACA, and we 

are not authorized by statute to 

implement measures to mitigate the 

effects of this adjustment. We note that 

certain temporary payment add-ons, 

currently codified at section 1834(l)(12) 

and (13) of the Act and at section 

146(b)(1) of the MIPAA, were extended 

by the ACA through December 31, 2010 

(see section VI.F(1) and (3). of this final 

rule). To date, Congress has not 

extended these payment add-ons 

beyond December 31, 2010. Therefore, 

we are finalizing the methodology for 

applying the MFP adjustment to the AIF 

for the AFS as described in the 

proposed rule. We did not receive any 

comments regarding the proposed 

changes to § 414.610(f) and § 414.620 as 

discussed above. Therefore, we are 

revising the regulation text in 

§ 414.610(f) and § 414.620 as proposed, 

with the following minor technical 

change. In § 414.610(f), for clarification 

purposes, we have made a technical 

revision to refer to the definition of the 

productivity adjustment in section 

1886(b)(3)(B)(xi)(II) of the Act. 

c. Clinical Laboratory Fee Schedule 

Section 1833(h)(2)(A)(i) of the Act, as 

amended by section 3401(l) of the ACA, 

states that the Secretary shall set the 

CLFS ‘‘for the 12-month period 

beginning July 1, 1984, adjusted 

annually (to become effective on 

January 1 of each year) by, subject to 

clause (iv) [as added by the ACA], a 

percentage increase or decrease equal to 

the percentage increase or decrease in 

the Consumer Price Index for All Urban 

Consumers (United States city average) 

minus, for each of the years 2009 

through 2010, 0.5 percentage points’’. 

Therefore, the adjustment to the fee 

schedule can be an increase or a 

decrease. 

Section 3401(l) of the ACA also adds 

new clause (iv) that applies in CY 2011 

and each subsequent year. This clause 

requires the Secretary to reduce the 

adjustment in clause (i): (1) By the MFP 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act for 2011 

and each subsequent year and (2) by 

1.75 percentage points for each year of 

2011 through 2015 (the ‘‘percentage 

adjustment’’). However, section 3401(l) 

of the ACA states that the MFP 

adjustment will not apply in a year 

where the adjustment to the fee 

schedule determined under clause (i) 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 under 

clause (i) of less than zero for a year. 

Therefore, we proposed to apply the 

MFP adjustment as follows: 

• If the CPI–U update factor is 

positive, it would be reduced by the 

MFP adjustment. However, if 

application of the MFP adjustment 

would result in a negative update, the 

update would be held to zero. 

• If the CPI–U update factor is zero or 

negative, the MFP adjustment would not 

be applied. 

Section 3401(l) of the ACA also states 

that the application of the percentage 

adjustment may result in an adjustment 

to the fee schedule under clause (i) 

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. Therefore, we are 

applying the percentage reduction of 

1.75 percentage points to any 

adjustment to the fee schedule under 

the CLFS as directed by section 3401(l) 

of the ACA. 

Table 64 provides illustrative 

examples of how we proposed these 

adjustments would be applied to fees 

under the CLFS. 

TABLE 64—EXAMPLES OF THE APPLICATION OF THE MULTIFACTOR PRODUCTIVITY ADJUSTMENT TO THE CLINICAL LAB FEE

SCHEDULE

A B C D E 

CPI–U MFP 

Adjustment 

Productivity 

adjusted update 

(¥1.75%) 

Percentage point reduction 

Resultant change to CLFS 

Greater of 0.0% or 

(Col. A)¥(Col. B) 

Col. C¥Col. D 

2.0% 1.3% 0.7% ¥1.75% ¥1.05% 

0.0% N/A 0.0% ¥1.75% ¥1.75% 

¥2.0% N/A 0.0% ¥1.75% ¥1.75% 

We did not receive any public 

comments on the proposed 

methodology for applying the MFP 

adjustment and the percentage 

adjustment to the CPI–U update factor 

for the CLFS. Therefore, we are 

finalizing the methodology for applying 

the MFP adjustment and the percentage 

adjustment to the CPI–U update factor 

for the CLFS as described in the 

proposed rule. 

d. DMEPOS Fee Schedule 

Sections 1834(a)(14), 1834(h)(4), and 

1842(s)(1) of the Act mandate annual 

updates to the fee schedule amounts 

established in accordance with these 

respective sections for covered items of 

durable medical equipment defined in 

section 1834(a)(13) of the Act, prosthetic 

devices, orthotics, and prosthetics 

defined in section 1834(h)(4)(B) and (C) 

of the Act, and parenteral and enteral 

nutrients, equipment, and supplies 

described in section 1842(s)(2)(D) of the 

Act. The annual updates for 2011 for 

these sections are based on the 

percentage increase in the CPI–U for the 

12-month period ending with June 2010. 

The annual updates for years 

subsequent to 2011 will be based on the 

percentage increase in the CPI–U for the 

12-month period ending with June of 

the previous year (that is, June 2011 for 

2012, June 2012 for 2013, etc.). Since 

1990 for durable medical equipment, 

prosthetic devices, orthotics, and 

prosthetics and since 2003 for 

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parenteral and enteral nutrients, 

equipment, and supplies, we have 

notified the public of these annual fee 

schedule updates through program 

instructions. 

Section 3401(m) of the ACA amends 

section 1834(a)(14) of the Act to add a 

new subparagraph (L) which provides 

that, for CY 2011 and each subsequent 

year, the fee schedule update factor 

based on the CPI–U for the 12-month 

period ending with June of the previous 

year is to be reduced by the MFP 

adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act (as 

discussed previously). Section 3401(m) 

of the ACA further amends section 

1834(a)(14) of the Act to state that the 

application of subparagraph (L) (that is, 

the reduction of the CPI–U percentage 

increase by the MFP adjustment) may 

result in that percentage increase 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. 

Section 3401(n) of ACA amends 

section 1834(h)(4)(A) of the Act to add 

a new clause (xi) which provides that, 

for CY 2011 and each subsequent year, 

the fee schedule update factor based on 

the CPI–U for the 12-month period 

ending with June of the previous year is 

to be reduced by the MFP adjustment 

described in section 1886(b)(3)(B)(xi)(II) 

of the Act (as discussed previously). 

Section 3401(n) of the ACA further 

amends section 1834(h)(4) of the Act to 

state that the application of 

subparagraph (A)(xi) (that is, the 

reduction of the CPI–U percentage 

increase by the MFP adjustment) may 

result in that percentage increase 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. 

Section 3401(o) of ACA amends 

section 1842(s)(1) of the Act to add a 

new subparagraph (B) and clause (ii) 

which provides that, for CY 2011 and 

each subsequent year, the fee schedule 

update factor based on the CPI–U for the 

12-month period ending with June of 

the previous year is to be reduced by the 

MFP adjustment described in section 

1886(b)(3)(B)(xi)(II) of the Act (as 

discussed above). Section 3401(o) of the 

ACA further amends section 1842(s)(1) 

of the Act to state that the application 

of subparagraph (B)(ii) (that is, the 

reduction of the CPI–U percentage 

increase by the MFP adjustment) may 

result in that percentage increase 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 MFP adjustments to the CPI–U 

percentage increases used in calculating 

the fee schedule adjustment factors for 

these DMEPOS items and services as 

mandated by sections 3401(m), (n), and 

(o) of ACA are simple mathematical 

calculations and are ministerial in 

nature. Therefore, we plan to implement 

these adjustments for 2011 and 

subsequent years as part of the annual 

program instructions related to the 

DMEPOS fees schedule updates. 

Comment: Several commenters stated 

that there were flawed assumptions 

underlying the statutory requirements of 

section 3401 of the ACA. Since the MFP 

measures the contributions to 

productivity of all sectors involved in 

production, the commenters argued that 

the indiscriminate application of the 

MFP to DMEPOS items was 

fundamentally flawed. 

Response: As discussed previously, 

sections 3401(m), (n), and (o) of the 

ACA require us to implement the MFP 

adjustments to the CPI–U percentage 

increases for DMEPOS items and 

services. Therefore, we are finalizing 

our proposal to apply the MFP 

adjustments to the CPI–U percentage 

increases for DMEPOS items and 

services for calendar year 2011 and 

subsequent years. 

Q. Section 4103: Medicare Coverage of 

Annual Wellness Visit Providing a 

Personalized Prevention Plan 

1. Background and Statutory Authority 

a. Medicare Coverage of Preventive 

Physical Examinations and Routine 

Checkups 

Section 1862(a)(7) of the Act 

explicitly prohibits Medicare payment 

for routine physical checkups with 

certain exceptions. One exception is for 

the Initial Preventive Physical Exam 

(also referred to as the ‘‘Welcome to 

Medicare’’ exam) established for new 

beneficiaries effective for services 

furnished on or after January 1, 2005. 

Section 4103 of the ACA has provided 

another exception to section 1862(a)(7) 

of the Act. Congress expanded Medicare 

coverage under Part B to include an 

Annual Wellness Visit (AWV) Providing 

Personalized Prevention Plan Services 

(hereinafter referred to as the annual 

wellness visit) in sections 1861(s)(2)(FF) 

and 1861(hhh) of the Act. This 

expanded benefit is effective on 

January 1, 2011. 

Preventive care has become an 

increasing focus of the Medicare 

program. For instance, section 101 of 

the MIPPA expanded Medicare’s 

authority to establish coverage for 

additional preventive services that meet 

specified criteria. Among other things, 

the AWV will encourage beneficiaries to 

obtain the preventive services already 

covered by Medicare, and that are 

appropriate for each individual 

beneficiary. 

b. Requirements for Coverage of an 

Annual Wellness Visit 

Section 4103 of the ACA provides for 

coverage of an AWV, which includes 

and/or takes into account a health risk 

assessment (HRA), and creates a 

personalized prevention plan for 

beneficiaries, subject to certain 

eligibility and other limitations. Section 

4103 of the ACA also requires the 

identification of elements that must be 

provided to a beneficiary as part of the 

first visit for personalized prevention 

plan services and requires the 

establishment of a yearly schedule for 

appropriate provision of such elements 

thereafter. 

The ACA specifies elements to be 

included in a personalized prevention 

plan, including establishment of, or 

update to, the individual’s medical and 

family history, a list of the individual’s 

current providers and suppliers and 

medications prescribed for the 

individual; measurement of height, 

weight, body-mass index (BMI) or waist 

circumference, and blood pressure; 

detection of any cognitive impairment; 

establishment or update of an 

appropriate screening schedule for the 

next 5 to 10 years; establishment or 

update of a list of risk factors and 

conditions (including any mental health 

conditions) for which interventions are 

recommended or underway; and 

furnishing of personalized health advice 

and referral, as appropriate, to health 

education or preventive counseling 

services or programs. The ACA also 

permits the Secretary to add other 

elements to the AWV determined to be 

appropriate. 

2. Regulatory Revisions—Summary of 

Proposed Rule and Comments 

The following is a summary of the 

provisions of the proposed rule and of 

the comments received. We received 75 

public comments on the proposed rule 

regarding the AWV. Commenters 

included national and state professional 

associations, medical societies and 

national medical advisory groups, 

hospital associations and hospitals, 

physicians, registered dietitians, 

occupational therapists, senior advisory 

groups, health insurance associations, 

manufacturers, and others. While a 

number of commenters expressed 

concern that the proposal was either too 

prescriptive, not sufficiently targeted to 

development of an individual’s 

personalized prevention plan, or was 

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not broad enough to include additional 

screening or prevention services; a large 

majority of commenters applauded 

CMS’ efforts in developing the rule and 

generally supported its major elements. 

Many suggested clarification and 

revision of the rule in a number of 

different areas, including the proposed 

definitions of ‘‘detection of any 

cognitive impairment,’’ and ‘‘health 

professional,’’ and the components of 

the first and subsequent AWVs. One 

special concern of a number of 

commenters was related to the health 

risk assessment (HRA). Some provisions 

of section 4103 of the ACA require the 

HRA be included in the new AWV, 

which is effective January 1, 2011. Other 

provisions of section 4103 of the ACA 

give the Secretary a longer period of 

time to develop an HRA in consultation 

with relevant groups and entities. 

a. Revisions to § 411.15, Particular 

Services Excluded From Coverage 

To conform the regulations to the 

statutory requirements of the ACA, we 

proposed to revise § 411.15 by 

specifying an exception to the routine 

physical checkups exclusion from 

coverage in § 411.15(a)(1) and modifying 

§ 411.15(k)(15). We proposed to add a 

provision to permit coverage of AWVs 

that meet the eligibility limitations and 

the conditions for coverage we are 

specifying in § 410.15 (Annual Wellness 

Visit Providing Personalized Prevention 

Plan Services). 

Coverage of the AWV is furnished 

under Medicare Part B only. As 

provided in the statute, this new 

coverage allows payment for an AWV if 

provided on or after January 1, 2011 for 

an individual who is no longer within 

12 months after the effective date of his 

or her first Medicare Part B coverage 

period, and has not received either an 

IPPE or an AWV within the past 12 

months. 

b. Revisions to Part 410, Subpart B— 

Medical and Other Health Services 

We proposed to add § 410.15, Annual 

wellness visits providing Personalized 

Prevention Plan Services: Conditions for 

and limitations on coverage, to codify 

the coverage of the annual wellness visit 

providing personalized prevention plan 

services. 

We proposed to define several terms 

in § 410.15(a), including: (1) Detection 

of any cognitive impairment; (2) Review 

of the individual’s functional ability and 

level of safety; (3) Health professional; 

(4) Establishment of, or update to the 

individual’s medical and family history; 

(5) Eligible beneficiary; (6) First annual 

wellness visit providing personalized 

prevention plan services; and (7) 

Subsequent annual wellness visit 

providing personalized prevention plan 

services. 

Further, the ACA allows the addition 

of any other element determined 

appropriate by the Secretary for 

inclusion in an AWV. We reviewed the 

relevant medical literature, current 

clinical practice guidelines, and the 

recommendations of the United States 

Preventive Services Task Force 

(USPSTF). Pursuant to that review, we 

proposed to add depression screening 

and functional status screening as 

elements of the first AWV only. In its 

December 2009 Recommendation 

Statement, the USPSTF recommends 

screening adults for depression when 

staff-assisted depression care supports 

are in place to assure accurate diagnosis, 

effective treatment and follow-up 

(Grade: B recommendation). That is, the 

USPSTF recommends the service; there 

is high certainty that the net benefit is 

moderate or there is moderate certainty 

that the net benefit is moderate to 

substantial. 

The USPSTF is currently updating its 

1996 recommendation regarding 

screening for hearing impairment in 

older adults as well as its 

recommendation on falls in the elderly. 

Until those recommendations can be 

published, functional status screening 

(including assessment of hearing 

impairment, ability to successfully 

perform activities of daily living, fall 

risk, and home safety) appears 

supportable by evidence only for the 

first AWV. 

We also proposed that the definition 

of the term ‘‘Establishment of, or an 

update to the individual’s medical and 

family history’’ include more than a list 

of all of an individual’s prescribed 

medications as provided in the statute, 

but also supplements such as vitamins 

and calcium that an individual may be 

exposed to or use. Supplements such as 

these are commonly used by many 

beneficiaries and the medical literature 

supports that their use be closely 

monitored by health professionals 

because they can interact with 

prescribed medications and may result 

in unintended medical problems in 

individual cases. The statute expressly 

permits the Secretary to add other 

elements such as this to the AWVs. 

To facilitate future consideration of 

coverage of additional elements in the 

definitions of the first and subsequent 

AWVs in § 410.15(a), we proposed that 

the determination of other required 

elements for those purposes will be 

made through the national coverage 

determination (NCD) process. The NCD 

process, as described in section 1862(l) 

of the Act, is evidence based, 

transparent, and furnishes the 

opportunity for public comment. 

(1) Definitions 

We proposed to add the following 

definitions to § 410.15(a): 

• Detection of any cognitive 

impairment, for purposes of this section, 

means assessment of an individual’s 

cognitive function by direct observation, 

with due consideration of information 

obtained by way of patient report, 

concerns raised by family members, 

friends, caretakers, or others. 

Comment: A number of commenters 

strongly supported the mandatory 

inclusion of ‘‘detection of any cognitive 

impairment’’ in the new AWV, but 

several suggested the proposed 

definition did not go far enough and 

needed to be clarified. One commenter 

suggested that the definition was ‘‘too 

vague and may be interpreted as 

optional by a provider unless a 

subjective memory complaint is raised 

by the individual or a concern is raised 

by family members, friends, caretakers, 

or others’’, and that a brief cognitive 

screening test was necessary ‘‘to 

accurately identify the presence of 

cognitive deficits, and to indicate 

whether additional testing is necessary 

***’’ Another commenter expressed 

concern that ‘‘physicians cannot 

accurately assess cognitive function 

* * * by relying on direct observation 

or by report of the patient or 

knowledgeable informant.’’ The 

commenter cited several recent 

publications and their own experience 

in support of revising the definition to 

include use of a standardized screening 

test. A number of commenters 

supporting the importance of the 

‘‘detection of cognitive impairment’’ 

element, however, agreed with the 

definition that is used in the proposed 

rule, which does not require a 

standardized screening tool. 

Response: We agree with the 

commenters that the ‘‘detection of 

cognitive impairment’’ is an important 

element of the AWV. 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).’’ 

Several commenters suggested 

revising the proposed definition by the 

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addition of a standardized screening 

tool. With the considerable variability in 

the range and causes of cognitive 

impairment, it is difficult to more 

specifically define this element without 

limiting it to specific diseases such as 

Alzheimer’s since dementia in and of 

itself is broadly defined. The American 

Psychiatric Association stated: ‘‘the 

essential features of a dementia are 

acquired multiple cognitive deficits that 

usually include memory impairment 

and at least one of the following 

phenomena in the absence of a delirium 

that might explain the deficit: aphasia, 

apraxia, agnosia, or a disturbance in 

executive functioning (the ability to 

think abstractly and to plan, initiate, 

sequence, monitor, and stop complex 

behavior) (http:// 

www.psychiatryonline.com/ 

content.aspx?aID=152634#152634).’’ 

However, an evidence-based, 

standardized screening tool is not 

currently available. The USPSTF noted: 

‘‘most 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). 

They concluded ‘‘that the evidence is 

insufficient to recommend for or against 

routine screening for dementia in older 

adults (I grade).’’ Since there is no 

nationally recognized screening tool for 

the detection of cognitive impairments 

at the present time, we are adopting the 

language in § 410.15(a) as proposed. 

We disagree with one of the 

commenter’s assertions that, in general, 

a physician cannot accurately assess 

cognitive function by direct observation 

or report of the patient or by report of 

the patient knowledgeable informant. 

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 will 

continue to actively 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. 

• Review of the individual’s 

functional ability and level of safety, for 

purposes of this section includes, at a 

minimum, assessment of the following 

topics: 

++ Hearing impairment; 

++ Ability to successfully perform 

activities of daily living; 

++ Fall risk; 

++ Home safety. 

Comment: One commenter asked 

CMS to add ‘‘assessment of level of 

support’’ to the proposed definition of 

‘‘review of the individual’s functional 

ability and level of safety’’ to recognize 

that the availability of a caregiver is an 

important indication of a beneficiary’s 

ability to function and of their level of 

safety. 

Response: We agree that family 

caregivers play an important role in the 

lives of the individuals they care for and 

support. However, we believe that the 

term as defined in the proposed rule is 

flexible enough to include a discussion 

of the availability of a caregiver as part 

of the review of functional ability and 

level of safety, if determined 

appropriate by the health professional 

furnishing the AWV. Therefore, we are 

not adopting this public comment and 

are adopting the definition as proposed. 

• Health professional, for purposes of 

this section means: 

++ A physician who is a doctor of 

medicine or osteopathy (as defined in 

section 1861(r)(1) of the Act); or 

++ A practitioner as described in 

clause (i) of section 1842(b)(18)(C) of the 

Act, that is, a physician assistant, nurse 

practitioner, or clinical nurse specialist 

(as defined in section 1861(aa)(5) of the 

Act); or 

++ A medical professional (including 

a health educator, registered dietitian, or 

nutritionist) or a team of medical 

professionals, who are working under 

the supervision of a physician as 

defined in this definition. 

Comment: A number of commenters 

requested clarification of specific 

elements of the definition of the term 

‘‘Health professional’’ and offered 

specific suggestions for revisions that 

might be made in the definition in the 

final rule. One commenter suggested 

that section 4103 of the ACA provided 

that the AWV could be performed by a 

health professional or a team of health 

professionals such as a registered nurse 

that works under the supervision of a 

physician. When registered nurses or 

other medical professionals who are not 

Medicare-recognized providers or 

practitioners perform the AWV under 

the supervision of a physician, the 

commenter assumes that the visit 

‘‘would be billed by the supervising 

physician who may or may not see the 

patient during the visit.’’ The 

commenter believed that because the 

AWV has its own benefit category then 

Medicare payments would not fall 

under the ‘‘incident to’’ benefit (section 

1861(s)(2)(B) of the Act and the 

’incident to’ criteria would not need to 

be met. 

Response: We agree with the 

commenter that the AWV has its own 

benefit category as provided in section 

1861(s)(2)(FF) and section 1861 (hhh) of 

the Act and, therefore, is not subject to 

the ‘‘incident to’’ rules. The commenter 

is also correct that our intent is that 

where the wellness visit is performed by 

a ‘‘team of medical professionals 

working under the supervision of a 

physician’’ it is the supervising 

physician who would bill Medicare Part 

B for the visit. In this final rule, we are 

clarifying that the visit would be 

furnished under the ‘‘direct supervision’’ 

(as defined in 42 CFR 410.32(b)(3)(ii)), 

of a physician (as defined in paragraph 

(i) of this definition). Direct supervision 

in the office setting means that the 

physician must be present in the office 

suite and immediately available to 

furnish assistance and direction 

throughout the performance of the 

procedure. It does not mean that the 

physician must be present in the room 

when the procedure is performed. In 

response to the public comment, we are 

amending the definition of the term 

‘‘health professional’’ in the final rule to 

read in paragraph (iii) as follows: 

‘‘A medical professional (including a 

health educator, a registered dietitian, or 

nutrition professional, or other licensed 

practitioner or a team of such medical 

professionals, working under the direct 

supervision (as defined in 42 CFR 

410.32(b)(3)(ii)) of a physician as 

defined in paragraph (i) of this 

definition.’’ 

Comment: A commenter asserted that 

the definition of ‘‘health professional’’ 

should recognize other potential 

members of the team beyond those 

listed in the examples in the statute. 

The commenter recommends that CMS 

‘‘specify who may or should be a part of 

the team and should define ‘medical 

professional’ as licensed health 

practitioners whose services are 

specifically covered and regulated by 

Medicare. Otherwise, in the 

commenter’s view, paraprofessionals, 

non-licensed providers or others may be 

inappropriately used as part of the team. 

The commenter supported the 

requirement ‘‘that the team should be 

directed by a physician,’’ but believes 

‘‘CMS should provide some standards 

for the members of the team as a 

protection for consumers and to assure 

that funding for this visit will be spent 

on authentic, appropriate and regulated 

services.’’ The commenter also suggested 

that occupational therapists be 

specifically included as a potential 

component of the team. 

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Another commenter asked CMS to 

clarify ‘‘how the required tasks in the 

visit will be performed and how care 

coordination will occur among the 

eligible medical professionals and/or 

team that provides the AWV.’’ 

Response: 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 

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 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 AWV. 

Comment: One commenter urged 

CMS to revise its proposed definition of 

‘‘Health professional’’ to include the 

phrase ‘‘practicing in any particular 

patient care setting.’’ The commenter 

believed that this clarification is needed 

to ‘‘encourage retail based practitioners 

to provide these services, thereby 

making this benefit more appealing for 

patients.’’ The commenter suggested that 

‘‘retail based health practitioners are 

uniquely positioned to ensure the 

optimal utilization of this new benefit.’’ 

Response: Although we are interested 

in encouraging the maximum use of the 

AWV and encourage all of the health 

professionals listed in section 

1861(hhh)(3) of the Act that are 

qualified to furnish this service to 

participate in providing this part B 

service, we are not adopting the 

commenter’s suggestion to include the 

phrase ‘‘practicing an any particular 

patient care setting.’’ This particular 

phrase is not used in section 

1861(hhh)(3) of the Act, which instead 

references specific health professionals 

that may furnish the AWV without 

regard to a particular physical location. 

Moreover, we note that the phrase ‘‘any 

particular patient care setting’’ is 

ambiguous, and may in fact 

unintentionally narrow the availability 

of the benefit or raise unnecessary 

questions regarding the setting. 

Therefore, we are not adopting the 

commenter’s suggested revision of that 

definition to include language on 

specific patient care settings. 

Comment: One commenter noted that 

certified nurse-midwives (CNMs) are 

not specifically mentioned in the ACA 

as it relates to the AWV, though nurse 

practitioners and clinical nurse 

specialists are enumerated among 

practitioners eligible to participate. The 

commenter requested that CMS review 

the education, background and scope of 

practice services under the Medicare 

program and ensure that CNMs are 

clearly eligible to provide the Medicare 

AWV. 

Response: Congress defined the term 

‘‘health professional’’ as including 

certain practitioners ‘‘described in 

clause (i) of section 1842(b)(18)(C)’’ of 

the Act. Clause (i) specifically includes 

physician assistants (PAs), nurse 

practitioners (NPs) and clinical nurse 

specialists. CNMs, in contrast, are 

identified in clause (iii) of 1842 

(b)(18)(C) of the Act. Given the 

specificity of the cross-reference to only 

clause (i), we presume that Congress 

acted intentionally by not including a 

reference to clause (iii). Thus, we 

believe additional legislation would be 

needed to recognize CNMs as a ‘‘health 

professional’’ under this section. 

However, we note, that it is possible 

that a CNM could be chosen by a 

physician as a member of the team of 

professionals under the physician’s 

supervision. 

Comment: One commenter requested 

that CMS clarify the language of the 

proposed rule in the definition of 

‘‘medical professional’’ in § 410.31(a). 

Section 4103 of the ACA uses the terms 

‘‘registered dietitian’’ or ‘‘nutrition 

professional’’ in its definition of 

‘‘medical professional’’ eligible to be 

involved in the AWV. The proposed 

rule used the term ‘‘nutritionist’’ instead 

of ‘‘nutrition professional.’’ The 

commenter asks CMS to replace the 

term ‘‘nutritionist’’ with ‘‘nutrition 

professional’’ in § 410.15(a). 

Response: We agree with the 

commenter and we are replacing the 

term ‘‘nutritionist’’ with the term 

‘‘nutrition professional’’ in § 410.15(a) of 

the final rule, which is consistent with 

the language used in section 4103 of the 

ACA. 

Comment: One commenter is 

concerned about the CMS proposal to 

require the term ‘‘physician’’ 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 a ‘‘physician as defined 

in section 1861(r) of the Act. 

Response: Section 4103 of the ACA 

does not specifically define what type of 

physician is eligible for performing or 

supervising the team of health 

professionals who will be performing or 

supervising the AWV. In developing the 

proposed rule, we considered the 

various types of physicians that are 

identified in section 1861(r)(2), (r)(3), 

(r)(4), and (r)(5) of the Act. These 

include doctors of dental surgery, 

doctors of podiatric medicine, doctors of 

optometry, and chiropractors, whose 

scope of medical practice is generally 

limited by State law to a particular part 

(or parts) of the human anatomy. Given 

the State licensing restrictions, some 

individuals who are physicians for 

certain limited purposes under 

section1861(r) of the Act could exceed 

their scope of practice if they attempted 

to furnish the AWV. Based on this 

information, we are leaving the 

definition of a physician unchanged in 

the final rule. 

• Establishment of, or an update to 

the individual’s medical and family 

history, for purposes of this section, 

means, at minimum, the collection and 

documentation of the following: 

++ Past medical and surgical history, 

including experiences with illnesses, 

hospital stays, operations, allergies, 

injuries, and treatments. 

++ Use or exposure to medications 

and supplements, including calcium 

and vitamins. 

++ Medical events experienced by the 

beneficiary’s parents and any siblings 

and children, including diseases that 

may be hereditary or place the 

individual at increased risk. 

Comment: A number of commenters 

requested that additional items be 

included in the definition of the term 

‘‘Establishment of, or an update to the 

individual’s medical and family 

history,’’ such as tobacco use, sexual 

history, history and results of pelvic 

exams, and falls history. 

Response: Our proposed definition at 

§ 410.15(a) was not intended to establish 

an exhaustive list of the elements of an 

individual’s medical and family history. 

We included the phrase ‘‘at minimum’’ 

to reflect that the listed criteria 

represent a floor and not a ceiling on the 

items included in the medical and 

family history. We agree that the items 

of additional information identified by 

the commenters are relevant and could 

be included in the medical and family 

history that is maintained by the health 

professional for the Medicare 

beneficiary. However, we believe that 

the term as defined in the proposed rule 

is flexible enough to encompass the 

additional items requested by the 

commenters. Therefore, we are not 

adopting the commenters’ specific 

language and are implementing the 

proposed definition in this final rule. 

• Eligible beneficiary, for purposes of 

this section, means an individual who is 

no longer within 12 months after the 

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effective date of his or her first Medicare 

Part B coverage period, and has not 

received either an initial preventive 

physical examination or an AWV 

providing a personalized prevention 

plan within the past 12 months. 

Comment: Several commenters 

suggested that CMS misinterpreted the 

eligibility criteria for the AWV and its 

relationship to the one-time initial 

preventive physical examination 

defined in section 1861(ww)(1) of the 

Act, which is only covered during the 

first 12 months after a beneficiary’s 

enrollment in Medicare Part B takes 

effect. 

In suggesting that CMS’ proposed 

definition was inappropriate, one 

commenter pointed to statutory 

language that states: ‘‘A beneficiary shall 

only be eligible to receive an initial 

preventive physical examination (as 

defined under subsection (ww)(1)) at 

any time during the 12-month period 

after the date that the beneficiary’s 

coverage begins under Part B and shall 

be eligible to receive personalized 

prevention plan services under this 

subsection provided that the beneficiary 

has not received such services within 

the preceding 12 month period.’’ The 

commenter argued that this language 

intends either an initial preventive 

physical examination or an AWV to be 

available during the 12-month period 

after an individual’s Part B coverage 

begins provided the individual has not 

received either service within the 

preceding 12-months. To further bolster 

this argument, the commenter points to 

clause (ii) of paragraph (G) directing the 

Secretary to ‘‘establish procedures to 

make beneficiaries aware of the option 

to select an initial preventive physical 

examination or personalized prevention 

plan services during the period of 12- 

months after the date that a beneficiary’s 

coverage begins under Part B, which 

shall include information regarding any 

relevant differences between such 

services.’’ 

Response: The statutory text cited by 

the commenter fails to reflect a later 

Congressional amendment. Specifically, 

Congress replaced the language of 

paragraph (G) by section 10402(b) of the 

ACA. That amendment replaced the text 

cited by the commenter so that the 

version of paragraph (G) that was 

enacted into law reads: ‘‘A beneficiary 

shall be eligible to receive only an 

initial preventive physical examination 

(as defined under subsection (ww)(1)) 

during the 12-month period after the 

date that the beneficiary’s coverage 

begins under Part B and shall be eligible 

to receive personalized prevention plan 

services under this subsection each year 

thereafter provided that the beneficiary 

has not received either an initial 

preventive physical examination or 

personalized prevention plan services 

within the preceding 12-month period.’’ 

This amendment clarifies that only an 

initial preventive physical examination 

is covered during the 12-month period 

after an individual’s Part B coverage 

begins, and that coverage of the new 

AWVs begins during the individual’s 

second year of Part B coverage. In other 

words, they were intended to be 

sequential, not concurrent, benefits. We 

believe the proposed definition of 

‘‘eligible beneficiary’’ included in the 

proposed rule correctly implements this 

aspect of sections 4103 and 10402(b) of 

the ACA. Therefore, we are finalizing 

the proposed definition without 

accepting the commenters’ suggestion. 

(2) Requirements of the First Annual 

Wellness Visit Providing Personalized 

Prevention Plan Services 

We proposed that the first AWV 

providing personalized prevention plan 

services for purposes of this benefit 

include the following: 

• Establishment of an individual’s 

medical and family history. 

• Establishment of a list of current 

providers and suppliers that are 

regularly 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 individual’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, including 

current or past experiences with 

depression or other mood disorders, 

based on the use of an appropriate 

screening instrument for persons 

without a current diagnosis of 

depression, which the health 

professional as defined in this section 

may select from various available 

screening questions or standardized 

questionnaires designed for this purpose 

and recognized by national professional 

medical organizations. 

• Review of the individual’s 

functional ability and level of safety, 

based on direct observation or the use 

of appropriate screening questions or a 

screening questionnaire, which the 

health professional as defined in this 

section may select from various 

available screening questions or 

standardized questionnaires designed 

for this purpose and recognized by 

national professional medical 

organizations. 

• Establishment of the following: 

++ A written screening schedule, such 

as a checklist, for the next 5 to 10 years 

as appropriate, based on 

recommendations of the USPSTF and 

the Advisory Committee on 

Immunization Practices, and the 

individual’s health status, screening 

history, and age-appropriate preventive 

services covered by Medicare. 

++ A list of risk factors and conditions 

for which primary, secondary or tertiary 

interventions are recommended or are 

underway, including any mental health 

conditions or any such risk factors or 

conditions that have been identified 

through an initial preventive physical 

examination (as described under 

§ 410.16), and a list of treatment options 

and their associated risks and benefits. 

• 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. 

• Any other element determined 

appropriate through the National 

Coverage Determination process. 

Comment: A number of commenters 

were supportive of the proposal to use 

the national coverage determination 

process and rely on the USPSTF 

recommendations in developing the 

definitions of the first and subsequent 

AWV definitions, along with the 

addition of any other elements in the 

future, since the services need to be 

based on evidence. One commenter 

suggested that CMS publish a notice in 

the Federal Register about 

consideration of other preventive 

services via the NCD process. The 

commenter expressed concern that 

many groups and members of the public 

were more familiar with the regulatory 

notification process than the NCD 

process. 

Response: We appreciate the 

commenter’s concerns regarding 

receiving timely information about 

topics that CMS is considering for 

coverage of preventive services via the 

NCD process. As discussed in the 

preamble, the NCD process is an 

evidence-based, transparent process and 

furnishes the opportunity for public 

comment, and is described in section 

1862(l) of the Act. The CMS Web site at 

http://www.cms.gov/mcd/ 

index_list.asp?list_type=nca contains a 

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list of all national coverage analyses that 

are currently under consideration. 

Those interested in receiving 

information via e-mail regarding 

national coverage analyses under 

consideration can sign up to receive email notifications via the CMS coverage 

listserv at http://www.cms.gov/ 

InfoExchange/ 

03_listserv.asp#TopOfPage. Given the 

relatively fast timeline described in 

section 1862(l) of the Act, we do not 

believe it is feasible to add a 

requirement for publication of a notice 

in the Federal Register whenever an 

NCD is opened. Therefore, we are not 

adopting the public comment. Please 

note that we do publish a listing in the 

Federal Register of all NCDs that are 

issued. This information is included in 

the quarterly notice issued pursuant to 

section1871(c) of the Act. 

Comment: Several commenters noted 

that we did not include the health risk 

assessment (HRA) in our proposal that 

section 4103 of the ACA ultimately 

requires to be part of the AWV. Several 

of these commenters strongly supported 

the CMS approach of not immediately 

implementing the HRA requirement on 

January 1, 2011. Some commenters 

noted that a separate ACA provision 

also concerns the establishment of an 

HRA, but used later deadlines. 

Specifically, section 1861(hhh)(4)(A) of 

the Act requires consultation to develop 

publically available guidelines for HRAs 

by March 23, 2011. One commenter 

noted that ‘‘the relative recent enactment 

of the Affordable Care Act provided 

CMS little time to establish standard 

processes related to a health risk 

assessment (HRA).’’ Another commenter 

stressed the need for a standardized 

HRA model or models that is/are 

recognized and accepted nationally. 

Another commenter urged us to act as 

expeditiously as possible in a 

consultative way by directly engaging 

the major medical organizations and 

stakeholders who represent physicians 

and other clinicians who see Medicare 

beneficiaries. One commenter 

recommended that the ‘‘HRA program 

should also be pilot-tested before widely 

imposed to determine such critical 

factors as the effectiveness of the 

guidelines and the administrative 

burden imposed on the physicians.’’ 

However, other commenters 

expressed the view that the HRA is such 

a fundamental element of the new AWV 

that it should be added to the final rule 

and required beginning January 1, 2011. 

One commenter indicated that the 

absence of an HRA ‘‘will delay the 

opportunity to improve beneficiaries’ 

health and to control costs as a result. 

We believe that the HRA is the lynchpin 

that makes the wellness visit more than 

another office visit and should be 

included as a required element 

beginning January 1, 2011.’’ Several of 

these commenters suggested that CMS 

should rely on the National Committee 

for Quality Assurance (NCQA) 

certification process, the Utilization 

Review Accreditation Committee 

(URAC) accreditation process, or 

another certification process that 

already exists effective January 1, 2011, 

at least as an interim measure. 

Response: We agree with commenters 

that the HRA is an important part of the 

AWV and we are working to fully 

implement this relevant provision of the 

ACA. However, because the statute has 

specified a time frame and procedures 

that require consultation with relevant 

groups and entities prior to publication 

of the required HRA guidelines, it is not 

possible to complete those procedures 

by January 1, 2011. Moreover, we do not 

believe it would be prudent to mandate 

an interim HRA without completing the 

consultation process that Congress has 

specifically required. The point of the 

consultation is to achieve a greater 

national consensus on the HRA to be 

used. As one of the large physician 

specialty groups has noted during the 

public comment period, a standardized 

HRA is needed to ‘‘ensure use of 

appropriate and robust HRA from a 

marketplace where considerable 

variation exists today.’’ We agree with 

this commenter that what is needed is 

an HRA ‘‘that has been standardized by 

the Department of Health and Human 

Services.’’ The development of an 

evidence-based, standardized model, 

nonetheless requires extensive work and 

input from a number of public agencies, 

professional societies and private 

organizations. It is important to 

carefully complete that process so that 

the evidence-based standard will have a 

sound scientific foundation and broad 

acceptance. 

Consistent with the statutory 

deadlines, and one commenter’s 

suggestion ‘‘that the Secretary of HHS 

expedite the development of a 

standardized HRA,’’ CMS is 

collaborating with the Centers for 

Disease Control and Prevention (CDC) 

which is directed by section 4004(f) of 

the ACA to develop a personalized 

prevention plan tool and has an indepth knowledge of HRAs. We 

understand that CDC is planning to 

convene an open scientific meeting in 

Atlanta at the beginning of 2011 to 

facilitate that development. This 

meeting should allow broad public 

input into the development of an 

evidence-based standardized HRA, as 

recommended by the American Medical 

Association (AMA) which urged ‘‘CMS 

to continue to develop the HRA 

guidelines, in consultation with the 

AMA and other relevant stakeholders 

representing physicians,’’ and the 

American College of Physicians (ACP) 

which recommended ‘‘that the agency 

engage directly with the most relevant 

stakeholders * * * to ensure that the 

HRA fulfills the vital role of promoting 

optimal preventive care and related 

interventions envisioned by the ACA.’’ 

CMS has also commissioned a 

technology assessment from the Agency 

for Healthcare Research and Quality 

(AHRQ) to be completed by the end of 

2010 that will help in the development 

of the HRA guidelines and model. 

While commenters have suggested 

that we require the use of one or more 

currently available assessment tools 

until an evidence-based standardized 

model is available, we believe it would 

be premature and inefficient to make 

such a recommendation at this time 

without adequate scientific review and 

broader stakeholder input. As noted in 

the proposed rule, HRA guidelines and 

standards are being developed by the 

CDC and when a model HRA instrument 

is available and determined by the 

Secretary to be appropriate for the use 

of Medicare beneficiaries, we will revise 

these regulations to include the HRA as 

an element in the definition of the 

AWV. 

Comment: Several comments 

expressed concern that there were too 

many required elements in the 

definition of the ‘‘First annual wellness 

visit’’ and that the definition should be 

modified so that some of the elements 

are discretionary based on an 

individual’s medical history or the 

results of an HRA and one suggested 

that CMS should ‘‘clarify the role that 

the HRA care plan plays in addressing 

these elements as a prelude to the office 

visit.’’ This commenter noted that the 

proposed CMS definition ‘‘assumes that 

the physician does not already know the 

patient’s medical and family history or 

other providers and suppliers involved 

in the patient’s care’’ which may not 

always be the case. 

One commenter stated that the AWV 

‘‘is supposed to deliver a service tailored 

to the specific needs of the patient based 

on some combination of the HRA 

results, medical history, and 

practitioner expertise. Some elements 

could be required for every patient 

because the level of appropriateness 

does not vary much from patient to 

patient based on age, gender, and other 

factors. However, there are some 

elements the need for which varies 

greatly from patient to patient and even 

over time.’’ This commenter 

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recommended ‘‘that CMS add general 

language stating that certain elements 

can be addressed, at least to some 

degree, as part of the HRA.’’ 

Response: We agree that a physician’s 

or other health professional’s need to 

include certain elements of the AWV 

may vary with the professional’s 

knowledge of the individual’s medical 

and family history and, in particular, 

with the results of an HRA, if available. 

However, until HRA guidelines have 

been developed and a standardized 

HRA model or models has/have been 

recognized and accepted nationally by 

the Secretary for use by Medicare 

beneficiaries, we do not believe it is 

appropriate to include more flexibility 

or alternatives to the proposed elements 

of the first wellness visit. Therefore, we 

are leaving the proposed elements (i) 

through (viii) of the definition of the 

first AWV unchanged in this final rule. 

(3) Requirements of Subsequent Annual 

Wellness Visits Providing Personalized 

Prevention Plan Services 

We proposed that subsequent AWVs 

providing personalized prevention plan 

services for purposes of this benefit 

include the following: 

• 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, as that list was 

developed for the first AWV providing 

personalized prevention plan services. 

• 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, as that term is defined in 

this section, that the individual may 

have. 

• An update to both of the following: 

++ The written screening schedule for 

the individual as that schedule was 

developed at the first AWV providing 

personalized prevention plan services. 

++ The list of risk factors and 

conditions for which primary, 

secondary or tertiary interventions are 

recommended or are under way for the 

individual as that list was developed at 

the first AWV providing personalized 

prevention plan services. 

• Furnishing of personalized health 

advice to the individual and a referral, 

as appropriate, to health education or 

preventive counseling services or 

programs as that advice and related 

services are defined in paragraph (a) of 

this section. 

• Any other element determined 

through the NCD process. 

We proposed that body-mass index 

(BMI) should be calculated at the first 

AWV and may be recalculated at 

subsequent AWVs, if indicated. Given 

the general stability of adult height, we 

would not expect the BMI to 

meaningfully change in the absence of 

significant weight change. In the 

proposed rule, we did not require 

measurement of the individual’s height 

in the subsequent annual visit. 

We proposed to add two distinct 

elements to the definition of the first 

AWV only: Depression screening and 

functional status and level of safety 

assessment. Our review of the medical 

literature and the USPSTF 

recommendations indicates that the 

optimum frequency for those services is 

unknown. In the proposed rule, we 

stated we believe it would be premature 

and beyond the current evidence to 

require depression screening and 

functional status assessment included in 

the definition of subsequent visits, but 

they may be performed at these visits, 

if indicated. 

Comment: A number of commenters 

expressed concern that the proposed 

definition of the term ‘‘Subsequent 

annual wellness visit * * *’’ did not 

include the depression screening and 

the functional ability and level of safety 

screening, elements (v) and (vi), 

respectively, that were included in the 

proposed definition of the term ‘‘First 

annual wellness visit.’’ One commenter 

noted that ‘‘while the USPSTF states 

that the optimal interval for screening is 

unknown, it does recognize that 

recurrent screening may be needed for 

certain patients.’’ At a minimum, the 

commenter suggested that ‘‘the 

regulations should require additional 

screening for depression after new 

chronic conditions are diagnosed and 

when reduction in functioning is 

noted.’’ The commenter also indicated 

that yearly screening for functional 

ability and level of safety ‘‘is important 

to determine changes in functional 

impairments identified in previous 

screening as well as any new 

limitations. Such screening will assist in 

determining care plans, further 

assessments, and other services to allow 

a beneficiary to remain in the 

community as long as possible.’’ 

Response: We agree that depression 

screening in older adults is important. 

We have reviewed the USPSTF 

guidelines (http:// 

www.uspreventiveservicestaskforce.org/ 

uspstf09/adultdepression/addeprrs.htm) 

and have decided not to include it as a 

required element for subsequent AWVs 

largely since the USPSTF states that ‘‘the 

optimum interval for screening for 

depression is unknown.’’ In addition, 

the USPSTF only recommends 

depression screening ‘‘when staffassisted depression care supports are in 

place to assure accurate diagnosis, 

effective treatment, and follow-up.’’ It is 

unclear if these supports are universally 

available in physician offices to allow 

adequate routine screening at the AWV. 

The USPSTF further notes: ‘‘recurrent 

screening may be most productive in 

patients with a history of depression, 

unexplained somatic symptoms, 

comorbid psychological conditions (for 

example, panic disorder or generalized 

anxiety), substance abuse, or chronic 

pain.’’ If an individual is determined to 

be in this category from prior screening, 

such as at the IPPE or through an HRA, 

then it would appear appropriate on an 

individual basis to continue screening 

and to tailor the AWV based on risk. 

Regarding functional ability and 

safety, 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. For 

the general Medicare population, there 

are no A or B recommendations by the 

USPSTF in these areas and thus we 

have decided not to add functional 

status and safety assessments as 

universally required elements for the 

subsequent AWV. The AWV 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. Since we closely 

monitor the USPSTF recommendations 

for updates or changes, if specific new 

or revised recommendations come out 

in the future, we may consider 

modifications at that time. 

Comment: Several commenters 

requested that we add additional 

screening elements to the first and 

subsequent AWVs regarding: (1) 

Alcohol use status; (2) Tobacco use or 

other substance use status; (3) Sexual 

health and incontinence; (4) Physical 

activity level; (5) Risk of falls; (6) 

Nutrition status including under 

nutrition and/or malnutrition; (7) Vision 

and eye health; (8) an assessment for 

osteoarthritis; and (9) assessment of gait 

and balance. 

Response: We appreciate the 

suggestions provided. The intent of the 

proposed definition for ‘‘establishment 

of, or an update to the individual’s 

medical and family history’’ means at a 

minimum the collection and 

documentation of the information 

outlined in the proposed definition of 

this term. Additional items like those 

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suggested by the commenters can be 

identified and discussed as part of the 

establishment of, or an update to the 

individual’s medical and family history. 

We do not believe that it is necessary to 

outline an exhaustive list of various 

items that may be included in the 

definition. We believe that physical 

activity level and risk of falls are 

adequately addressed in the definition 

of ‘‘review of the individual’s functional 

ability and level of safety’’. 

We recognize that the health 

professional (or supervising physician 

in the case of a team of medical 

professionals) furnishing the AWV is 

qualified and would be able to 

determine the specific additional 

information that needs to be discussed 

in order to establish a comprehensive 

medical and family history and provide 

the best care possible for the individual. 

In the future, as the medical science 

continues to evolve, CMS may consider 

adding other elements to the first and 

subsequent AWVs through use of the 

national coverage determination 

process, if considered appropriate. 

Comment: One commenter requested 

that the first and subsequent AWVs 

include a detailed current medications 

and supplements list as part of the 

individual’s medical and family history. 

Response: We agree that medications 

and supplements such as vitamins and 

calcium are an important part of an 

individual’s medical and family history. 

We included in the proposed definition 

of the ‘‘Establishment of, or an update to 

the individual’s medical and family 

history’’ provisions for the collection 

and documentation of use or exposure 

to medications and supplements, 

including calcium and vitamins. We 

believe the information included in the 

definition addresses the commenter’s 

concerns and, therefore, we are 

implementing element (i) of the first 

AWV and element (i) of the subsequent 

AWV, as proposed, in this final rule. 

Comment: One commenter suggested 

that measurement of BMI be viewed as 

a vital sign that should be included in 

both the first and subsequent AWVs. 

Response: We explained in the 

preamble to the proposed rule that 

‘‘body mass index (BMI) should be 

calculated at the first AWV and may be 

recalculated at subsequent visits if 

indicated. Given the general stability of 

adult height, we would not expect the 

BMI to meaningfully change in the 

absence of significant weight change, 

and therefore we are not requiring 

measurement of the individual’s height 

during subsequent AWVs. Accordingly, 

in this final rule, we are not adding the 

BMI requirement to the subsequent 

AWV. 

Comment: Several commenters 

suggested CMS should specify in the 

final rule that an individual’s family 

history of various diseases, obesity, or 

risk factors for a disease such as 

diabetes should be included in the list 

of risk factors and conditions for which 

primary, secondary or tertiary 

interventions are recommended for an 

individual as described in element 

(vii)(B) of the first AWV and element 

(v)(B) of the subsequent AWV. 

Response: We agree that the risk 

factors and conditions identified by the 

commenters should be reflected in the 

list of risk factors referenced in element 

(vii)(B) of the first AWV and element 

(V)(B) of the subsequent AWV for 

possible referral if the individual’s 

health professional determines that it is 

appropriate to do so, based on the 

information obtained during the first 

and/or subsequent AWV. Therefore, we 

believe no additional changes to the 

description of ‘‘individual’s medical and 

family history’’ as part of the elements 

of the first and subsequent AWVs are in 

order. 

Comment: We received a number of 

comments from physicians, health care 

providers, and others urging us to add 

voluntary advance care planning as an 

element to the definitions of both the 

‘‘first annual wellness visit’’ and the 

‘‘subsequent annual wellness visit.’’ 

They base their recommendation upon a 

number of recent research studies, and 

the inclusion by statute of a similar 

element in the existing initial 

preventive physical examination (IPPE) 

benefit. One commenter noted that ‘‘the 

new wellness visit was wisely designed 

to build on the initial preventive 

physical exam, providing an ongoing, 

systematic focus on wellness and 

prevention by harmonizing Medicare 

services into a coordinated benefit.’’ 

Another commenter stated that ‘‘the 

AWV provides an appropriate setting for 

providers to initiate voluntary 

conversations about future care wishes, 

as they counsel beneficiaries on other 

aspects of their health and achieving 

their personal health goals.’’ The 

commenter added that the ‘‘care plans 

discussed in the ’Welcome to Medicare 

visit’ should not be frozen in time, but 

revisited as an important component of 

patient wellness.’’ 

Response: We agree that voluntary 

advance care planning should be added 

as an element of the definitions of both 

the ‘‘first annual wellness visit’’ and the 

‘‘subsequent annual wellness visit’’ 

based on the evidence described below, 

and the inclusion of a similar element 

in the IPPE benefit (also referred to as 

the Welcome to Medicare visit), since 

January 1, 2009. We believe that this 

will help the physician to better align 

the personal prevention plan services 

with the patient’s personal priorities 

and goals. 

Recently, Detering and colleagues 

(British Medical Journal 2010; 

340:c1345) reported that ‘‘advance care 

planning improves end of life care and 

patient and family satisfaction and 

reduces stress, anxiety, and depression 

in surviving relatives.’’ Silveira and 

colleagues (New England Journal of 

Medicine 2010; 362:1211–8) reported 

that ‘‘data suggest that most elderly 

patients would welcome these 

discussions.’’ Lastly, a study by Fischer 

and colleagues (Journal of the American 

Geriatric Society 2010; 58:400–401) 

found ‘‘no evidence that these (advance 

directive) discussions or completing an 

advance directive lead to harm.’’ 

Based on the available evidence and 

other relevant information, we are 

adding to the final regulation a 

definition of the term ‘‘voluntary 

advance care planning’’ to read as 

follows: 

‘‘Voluntary advance care planning’’ 

means, for purposes of this section, 

verbal or written information regarding 

the following areas: 

(1) An individual’s ability to prepare 

an advance directive in the case where 

an injury or illness causes the 

individual to be unable to make health 

care decisions. 

(2) Whether or not the physician is 

willing to follow the individual’s wishes 

as expressed in an advance directive. 

This definition is based on the 

definition of ‘‘end-of-life planning’’, 

which is included as an element of the 

IPPE as described in section 

1861(ww)(3) of the Act. Thus, the 

addition of ‘‘voluntary advance care 

planning’’ to the AWVs extends to those 

visits a similar element to the one 

already in the one-time IPPE. 

We are also revising the definitions of 

the terms ‘‘First annual wellness visit’’ 

and ‘‘Subsequent annual wellness visit’’ 

by inserting a new element (ix) to the 

definition of the term ‘‘first annual 

wellness visit’’ and a new element (vii) 

to the definition of the term ‘‘subsequent 

annual wellness visit’’ in § 410.15 (a) of 

the final regulation text that would read 

as follows: ‘‘Voluntary advance care 

planning as that term is defined in this 

section upon agreement with the 

individual.’’ 

Comment: Commenters requested that 

we specifically require that certain 

referrals for various services be included 

as part of the personalized prevention 

plan including: (1) Community-based 

and other lifestyle management services; 

(2) kidney disease education services; 

(3) urogynecologist visits to discuss 

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incontinence issues; and (4) tobacco use 

cessation counseling and related 

services. 

Response: In the proposed rule, the 

definition for the first AWV included 

provisions for the furnishing of 

personalized health advice and a 

referral, as appropriate, to health 

education or preventive counseling 

services or programs aimed at reducing 

identified risk factors and improving 

self-management, including weight loss, 

physical activity, smoking cessation, fall 

prevention, and nutrition. Under the 

definition of the subsequent AWV, we 

included provisions for furnishing of 

personalized health advice to the 

individual and a referral as appropriate, 

to health education or preventive 

counseling services. 

We believe that the health 

professionals who are furnishing the 

AWVs whether they be first or 

subsequent visits are the most qualified 

to determine an appropriate list of 

referrals for education services and 

preventive counseling services for each 

individual. We believe that the 

proposed definitions for the first and 

subsequent AWVs address commenters’ 

concerns regarding community-based 

and lifestyle management services, 

kidney disease education services, 

referrals to further discuss treatment for 

incontinence issues, and tobacco use 

cessation counseling services. 

Comment: One commenter suggested 

that CMS require the identification of a 

family caregiver that provides care for 

and supports a beneficiary with chronic 

conditions. The commenter states that 

‘‘it is vitally important for medical 

professionals to know whether the 

beneficiary has a family caregiver or has 

a family member/friend who will fill 

that role.’’ 

Response: We appreciate the role that 

family caregivers provide in the lives of 

individuals with chronic conditions. We 

expect that the identification of a family 

care giver will be addressed when the 

health professional furnishing the AWV 

discusses the patient’s ability to 

successfully perform activities of daily 

living. However, we do not believe the 

identification of a caregiver should be 

required of beneficiaries who wish to 

take advantage of AWVs so we are not 

requiring such identification in the final 

rule. 

Comment: Several commenters 

suggested that CMS use its authority 

under section 4105 of the ACA to 

expand Medicare coverage of certain 

preventive services that are already 

available under Part B such as screening 

for abdominal aortic aneurysms, HIV 

screening, colorectal cancer screening, 

breast cancer screening 

(mammography), and counseling/ 

intensive behavioral (nutrition) 

counseling in accordance with the 

USPSTF recommendations for these 

services. Other commenters suggested 

using this authority to expand Medicare 

Part B coverage for preventive 

immunizations to include vaccinations 

such as herpes zoster and tetanus shots, 

which are currently covered under Part 

D in accordance with the 

recommendations of the Advisory 

Committee on Immunizations Practices 

(ACIP) for adults age 65 and older. 

Response: We appreciate the 

commenters’ support for expanded 

coverage of preventive services under 

the Part B program. Section 4105 of the 

ACA grants the Secretary the authority 

to modify or eliminate coverage of 

certain preventive services that are 

already available to certain beneficiaries 

to the extent that such modification or 

elimination of coverage is consistent 

with the recommendations of the 

USPSTF. Many of the items requested 

(including coverage of ultrasound 

screening for abdominal aortic 

aneurysms, medical nutrition therapy, 

certain colorectal cancer screening tests, 

and mammography) are already 

recognized as ‘‘preventive services’’ in 

section 1861(ww)(2) of the Act. Because 

those items are already covered by 

Medicare, we will need to further 

evaluate whether coverage for those 

items or services should be modified in 

light of the specific grades of the 

USPSTF as permitted under section 

4105 of the ACA. Due to the 

complexities of considering whether to 

modify or eliminate coverage of certain 

preventive services under Medicare Part 

B, we decided not to address this 

subject in the proposed rule, which 

focuses instead on implementation of 

section 4103 and 4104 of the ACA. 

We note that we may consider other 

expansions in Medicare coverage for 

‘‘additional preventive services’’ in the 

future through section 1861(ddd)(1) of 

the Act. Under the ‘‘additional 

preventive service’’ statute, however, the 

recommendations of the Advisory 

Committee on Immunizations Practices 

(ACIP) alone do not provide a basis for 

expanded coverage. Additional 

information regarding Medicare 

coverage for additional preventive 

services can be found in the Federal 

Register (November 19, 2008, (73 FR 

69869 through 69870 and 69933)) and 

§ 410.64. We will continue to monitor 

the USPSTF recommendations for 

updates or changes, and when 

appropriate, consider possible coverage 

through the NCD process. We also note 

that individuals can request a NCD 

using the procedures set forth in our 

Guidance Document: ‘‘Factors CMS 

Considers in Opening a National 

Coverage Determination,’’ available at 

http://www.cms.gov/mcd/ 

ncpc_view_document.asp?id=6. We also 

note that the Secretary has exercised the 

authority granted by section 

1861(ddd)(1) of the Act to add coverage 

under Part B of ‘‘additional preventive 

services’’ such as HIV screening for 

individuals at high risk consistent with 

the USPSTF recommendations. Since 

many of the items that the commenters 

requested are already covered as 

‘‘preventive services’’ or ‘‘additional 

preventive services,’’ we are not making 

any changes based on these comments 

at the present time. We will continue to 

monitor access to these preventive 

services and may exercise the authority 

granted by section 4105 of the ACA in 

the future. 

Comment: A commenter requested 

CMS to ‘‘consider whether there are 

opportunities to leverage its ‘coverage 

with evidence development’ process to 

help build the evidence base for new 

preventive services.’’ The commenter 

further suggested CMS ‘‘review those 

preventive services with a USPSTF 

grade of ‘I’ (‘insufficient evidence to 

recommend for or against’) and consider 

the development of a ‘coverage with 

evidence development’ initiative to help 

generate the data needed to fully assess 

certain preventive services’’ via 

partnerships with other federal 

agencies. 

Response: We are interested in 

increasing the evidence base concerning 

new preventive services. We will need 

to further consider whether the CED 

process could be used for items or 

services that currently are rated with an 

‘‘I.’’ We note that under § 410.64 of these 

regulations, an ‘‘additional preventive 

service’’ must have a grade of A or B 

recommendation by the USPSTF. 

Because this suggestion will require 

further study, we are not making any 

changes to our final rule at this time. 

Comment: Several commenters 

provided suggestions for continuing 

education and outreach regarding issues 

related to the new AWV. One 

commenter asked that we educate 

providers about evidence based 

recommendations for colorectal cancer 

screening and monitor adherence to 

guidelines via performance measures. 

Another commenter requested 

education and outreach materials 

regarding the AWV and materials that 

also explain the differences between the 

initial preventive physical examination 

and the new AWV. An additional 

commenter requested that we inform 

patients of the importance of preventive 

services including colorectal cancer 

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screening options (colonoscopy, 

sigmoidoscopy, and fecal occult blood 

tests). 

Response: We agree that it is 

important to raise awareness concerning 

the expanded Medicare coverage 

provided under the ACA. We will issue 

appropriate manual instructions and 

other educational information to the 

Medicare providers and beneficiaries, 

including an MLN Matters article 

(Medicare Learning Network) and 

information in the 2011 Medicare and 

You Handbook regarding 

implementation of the new AWV 

benefit. 

Comment: One commenter 

recommended that we eliminate the 

initial preventive physical examination 

since it is similar to the provisions of 

the new AWV. 

Response: We appreciate the attention 

being drawn to the similarity between 

the initial preventive physical 

examination and the new AWV. While 

we did model some of the elements of 

the new AWV after elements in the 

initial preventive physical exam, we 

note that these statutory provisions are 

separate and distinct benefits and that 

Medicare beneficiaries will be eligible to 

receive both of these benefits in 

sequence if the appropriate regulatory 

requirements are met. 

In summary, as a result of the 

comments received, we are making the 

following changes in this final rule: 

• We are amending the definition of 

the term ‘‘health professionals’’ to read 

in paragraph (iii) as follows: ‘‘A medical 

professional (including a health 

educator, a registered dietitian, or 

nutrition professional, or other licensed 

practitioner or a team of such medical 

professionals, working under the direct 

supervision (as defined in 

§ 410.32(b)(3)(ii)) of a physician as 

defined in paragraph (i) of this 

definition.’’ 

• We are adding to the final 

regulation the definition of the term 

‘‘voluntary advance care planning’’ to 

read as follows: 

‘‘Voluntary Advance care planning’’ 

means, for purposes of this section, 

verbal or written information regarding 

the following areas: 

(1) An individual’s ability to prepare 

an advance directive in the case where 

an injury or illness causes the 

individual to be unable to make health 

care decisions. 

(2) Whether or not the physician is 

willing to follow the individual’s wishes 

as expressed in an advance directive. 

• We are also revising the definitions 

of the terms ‘‘First AWV’’ and 

‘‘Subsequent AWV’’ by inserting a new 

element (ix) to the definition of the term 

‘‘first AWV’’ and a new element (vii) to 

the definition of the term ‘‘subsequent 

AWV’’ in § 410.15(a) of the final 

regulation text that would read as 

follows: ‘‘Voluntary advance care 

planning as that term is defined in this 

section upon agreement with the 

individual.’’ 

3. Payment for the Annual Wellness 

Visit Providing Personalized Prevention 

Plan Services (PPPS) 

Section 4103 of the ACA created a 

new benefit for an ‘‘annual wellness 

visit’’ (AWV) with personalized 

prevention plan services. The ACA 

amended section 1861(s)(2) of the Act 

by adding a new subparagraph (FF) to 

provide for coverage of the AWV 

beginning January 1, 2011. Section 4103 

of the ACA also added new subsection 

(hhh) to section 1861 of the Act to 

define ‘‘personalized prevention plan 

services’’ and to specify who may 

furnish these services. Finally, section 

4103 of the ACA amended section 

1848(j)(3) of the Act and provided for 

payment of AWVs under the PFS, and 

specifically excluded the AWV from the 

hospital OPPS. Therefore, a single 

payment under the PFS would be made 

when an AWV is furnished by a 

physician, physician assistant, nurse 

practitioner, or clinical nurse specialist, 

or by a medical professional or team of 

medical professionals, as determined 

appropriate by the Secretary, under the 

supervision of a physician. 

To allow for Medicare reporting and 

payment of the AWV, we proposed to 

create two new HCPCS G-codes for 

reporting the first wellness visit and 

creation of a personalized prevention 

plan and the subsequent visits available 

to the beneficiary every 12 months. 

Specifically, we proposed to establish 

the following two new HCPCS codes for 

CY 2011: GXXXA (AWV; includes a 

personalized prevention plan of service 

(PPPS), first visit) and GXXXB (AWV; 

includes a personalized prevention plan 

of service (PPPS), subsequent visit). A 

beneficiary’s first AWV to any 

practitioner would be reported to 

Medicare under HCPCS code GXXXA, 

even if the beneficiary had previously 

received an initial preventive physical 

examination (IPPE) that was covered by 

Medicare. Beneficiaries, in their first 12 

months of Part B coverage, would 

continue to be eligible only for an IPPE. 

After the first 12 months of Part B 

coverage, on or after January 1, 2011, 

beneficiaries would be eligible for an 

AWV described by HCPCS code GXXXA 

or GXXXB, provided that the beneficiary 

has not received an IPPE or AWV within 

the preceding 12-month period. 

Comment: Several commenters noted 

that the IPPE and the first AWV are very 

similar services with significant overlap. 

These commenters urged CMS not to 

develop a separate coding structure for 

the first AWV as it would be a burden 

for practitioners to review and 

determine the specific preventive 

service the beneficiary is eligible for on 

a given date. In addition, the 

commenters noted that a delay in 

information being available through the 

Common Working File (CWF) may 

cause practitioners to inaccurately 

determine a beneficiary’s eligibility for 

a particular service, be it the IPPE, the 

first AWV, or a subsequent AWV. One 

commenter requested that CMS clarify 

that a beneficiary may choose either an 

IPPE or a first AWV during the 

beneficiary’s first 12 months of Part B 

coverage. 

Response: The set of services 

described by the IPPE is very specific 

and while the services contained in the 

IPPE may be similar to the services 

included in the AWV, these are two 

separate benefits under Medicare. Just 

as there are component services 

specified for the IPPE, there are 

component services specified for the 

AWV. Moreover, according to section 

1861(hhh)(4)(G) of the Act (as added by 

section 4103(b) of the ACA), a 

beneficiary is eligible only for the IPPE 

during the 12-month period after the 

date the beneficiary’s coverage begins 

under Part B and is only eligible for the 

AWV each year thereafter. Therefore, in 

order to be able to identify the particular 

benefit and services furnished to a 

beneficiary and ensure coverage of the 

services, we believe that we must 

distinguish between the IPPE and the 

AWV through the use of distinct HCPCS 

codes. We understand that there may be 

instances where practitioners may 

experience a delay in the information 

available through the CWF, but we 

expect the situations where this would 

affect the services furnished (and 

subsequently billed) by a practitioner 

would be uncommon. The CWF will 

reflect the beneficiary’s eligibility for 

the IPPE or first or subsequent AWV 

based on all claims submitted to date to 

the Medicare contractors. Only under 

the limited circumstances where a 

practitioner previously furnished an 

IPPE or AWV to the beneficiary but had 

not yet submitted the claim to Medicare 

would a practitioner inaccurately 

determine a beneficiary’s eligibility for 

the IPPE or first or subsequent AWV. 

Comment: Several commenters urged 

CMS to recognize the CPT codes in the 

Preventive Medicine Services series, 

ranging from 99381 (Initial 

comprehensive preventive medicine 

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evaluation and management of an 

individual including an age and gender 

appropriate history, examination, 

counseling/anticipatory guidance/risk 

factor reduction interventions, and the 

ordering of laboratory/diagnostic 

procedures, new patient; infant (age 

younger than 1 year)) through 99397 

(Periodic comprehensive preventive 

medicine reevaluation and management 

of an individual including an age and 

gender appropriate history, 

examination, counseling/anticipatory 

guidance/risk factor reduction 

interventions, and the ordering of 

laboratory/diagnostic procedures, 

established patient; 65 years and older), 

for reporting and payment of the AWV, 

rather than creating the two new 

HPCPCS G-codes as proposed. The 

commenters noted that the practitioner 

could report the appropriate CPT code 

based on the beneficiary’s age and new 

or established patient status, allowing 

specific reporting of the AWV with a 

CPT code that would result in 

appropriate payment for the service 

provided to the beneficiary. In addition, 

the commenters urged CMS to use the 

existing CPT Editorial Panel and the 

AMA RUCs process to modify these 

existing codes so they would be 

applicable for AWV services. 

Response: Prior to the establishment 

of the IPPE benefit, Preventive Medicine 

Services CPT codes in the range from 

99381 through 99397 were excluded 

from Medicare coverage because 

preventive medicine evaluation and 

management services were noncovered 

by Medicare. When the IPPE benefit was 

implemented, we created HCPCS code 

G0402 (Initial preventive physical 

examination; face-to-face visit, services 

limited to new beneficiary during the 

first 12 months of Medicare enrollment) 

as we have specifically defined through 

the regulatory process the elements that 

are required for this service to be billed 

and paid by Medicare. We refer readers 

to the Medicare Claims Processing 

Manual, Pub. 100–04, chapter 18, 

section 80 for additional information 

regarding the components of the IPPE. 

When implementing the IPPE, we 

recognized that CPT codes describing 

preventive services were available, but 

we did not believe it was appropriate to 

use these existing CPT codes for the 

IPPE, given the general nature of the 

services they describe in contrast to the 

specific nature of the IPPE service. 

Similarly, in section VI.Q.2. of this 

final rule with comment period, we 

have adopted the final specific 

components of the AWV for CY 2011, 

consistent with the statutory 

requirements for the service. While we 

acknowledge that the elements of the 

preventive medicine evaluation and 

management (E/M) services reported by 

the CPT codes could significantly 

overlap with the components of the 

AWV, we believe that it is important to 

utilize specific HCPCS codes to identify 

the AWV as there are coverage 

periodicity requirements that apply to 

the AWV, as well as specific 

requirements regarding the elements of 

the AWV. While we understand the 

commenters’ request to use the 

established set of CPT codes for the 

AWV, we do not believe that the 

existing CPT code descriptors should be 

subject to adjustment and limitation 

based on this new benefit as these CPT 

codes are currently used by many 

practitioners to report noncovered 

preventive medicine E/M services 

furnished to Medicare beneficiaries. In 

addition, coverage for the AWV begins 

on January 1, 2011, and we believe that 

our authority to create and maintain 

Level II HCPCS codes allows us a 

mechanism to implement these codes 

quickly and effectively. While we would 

not necessarily be opposed to the use of 

CPT codes to report the AWV in the 

future if CPT codes existed that met our 

specific purposes, time does not allow 

for the establishment of new CPT codes 

or the revision of existing codes for the 

AWVs that are covered as of January 1, 

2011. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

adopt two new HCPCS G-codes for 

reporting the AWV in CY 2011. While 

we proposed these codes as GXXXA and 

GXXXB for the first and subsequent 

AWVs, respectively, the final codes and 

their descriptors are G0438 (Annual 

wellness visit; includes a personalized 

prevention plan of service (PPPS), first 

visit) and G0439 (Annual wellness visit; 

includes a personalized prevention plan 

of service (PPPS), subsequent visit). We 

note that practitioners furnishing a 

preventive medicine E/M service that 

does not meet the requirements for the 

IPPE or the AWV would continue to 

report one of the preventive medicine 

E/M services CPT codes in the range of 

99381 through 99397 as appropriate to 

the patient’s circumstances, and these 

codes continue to be noncovered by 

Medicare. 

A beneficiary would be eligible for 

one first AWV covered by Medicare that 

must include all of the required 

elements that we have adopted in our 

final policy for CY 2011, as discussed in 

section VI.Q.2. of this final rule with 

comment period. All subsequent AWVs 

would include the required elements for 

those visits as also described in section 

VI.Q.2. of this final rule with comment 

period. All AWVs other than the 

beneficiary’s first AWV would be 

reported as subsequent visits, even if a 

different practitioner furnished the 

subsequent AWV. We expect there to be 

continuity and communication among 

the practitioners caring for beneficiaries 

over time with respect to AWVs, and 

this would include the case where a 

different practitioner furnishing a 

subsequent AWV would update the 

information in the patient’s medical 

record based on the patient’s interval 

history since the previous AWV. 

As we stated in the CY 2011 PFS 

proposed rule (75 FR 40128), the first 

AWV described by HCPCS code GXXXA 

(G0438) is similar to the IPPE that is 

currently reported with HCPCS code 

G0402 (Initial preventive physical 

examination; face-to-face visit, services 

limited to new beneficiary during the 

first 12 months of Medicare enrollment). 

We believe that the physician work and 

nonfacility PE of the IPPE and the first 

AWV are very similar, given that both 

represent an initial beneficiary visit 

focused on prevention. In the CY 2010 

PFS final rule with comment period 

discussion of payment for the IPPE (74 

FR 61767), we noted that in the context 

of physician work and intensity, HCPCS 

code G0402 was most equivalent to CPT 

code 99204 (Level 4 new patient office 

or other outpatient visit). Therefore, for 

CY 2011, we proposed to crosswalk the 

same physician work RVUs of 2.43 from 

CPT code 99204 to HCPCS codes G0402 

and GXXXA (G0438). Similarly, we 

believe the direct PE inputs for all of 

these services are similar and, therefore, 

we proposed to assign the same direct 

PE inputs to HCPCS codes G0402 and 

GXXXA (G0438) as are included for CPT 

code 99204. We noted that currently, 

the direct PE inputs for HCPCS code 

G0402 also include preventive 

assessment forms, and we proposed to 

add this supply to the PE for HCPCS 

code GXXXA (G0438) as well because 

we believe it would be used in the first 

AWV. The proposed CY 2011 PE and 

malpractice RVUs for HCPCS code 

GXXXA (G0438) were displayed in 

Addendum B to the proposed rule (75 

FR 40640). We also noted that we 

proposed no facility PE RVUs for 

HCPCS code GXXXA (G0438) because 

only a single payment would be made 

under the PFS when this service is 

furnished. There is no separate facility 

payment for GXXXA (G0438) when a 

practitioner furnishes this service in the 

facility setting. 

Moreover, in the CY 2011 PFS 

proposed rule (75 FR 40128), we also 

indicated that we believe that a 

subsequent AWV described by HCPCS 

code GXXXB (G0439) is most similar, 

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from the perspectives of physician work 

and PE, to CPT code 99214 (Level 4 

established patient office or other 

outpatient visit). The subsequent AWV 

is a patient visit for PPPS that includes 

certain required elements, such as 

updating information regarding the 

patient’s history, risk factors, and 

regular medical care providers and 

suppliers since the prior AWV, and 

obtaining routine measurements. We 

believe the physician work and direct 

PE of a subsequent AWV are similar, in 

terms of E/M visit level, to the first 

AWV, which we proposed to value like 

a level 4 new patient office or other 

outpatient visit, as we had previously 

valued the IPPE. However, the 

subsequent AWV would typically be for 

an established patient and, as described 

earlier in this section, we proposed that 

only certain AWV elements must be 

furnished in the first AWV. As a result, 

in the CY 2011 PFS proposed rule (75 

FR 40129), we stated that we believe it 

would be most appropriate to value the 

subsequent AWV based upon an E/M 

visit for an established patient. 

Therefore, for CY 2011 we proposed to 

crosswalk the same physician work 

RVUs of 1.50 from CPT code 99214 to 

HCPCS code GXXXB (G0439). 

Furthermore, we believe the direct PE 

inputs for these two services are also 

similar and, therefore, we proposed to 

assign the same direct PE inputs to 

HCPCS code GXXXB (G0439) as were 

assigned to CPT code 99214. We note 

that we also proposed to add the same 

preventive assessment forms to the PE 

for HCPCS code GXXXB (G0439) as we 

proposed to add for HCPCS code 

GXXXA (G0438) because we believe this 

supply would be used in both the first 

and subsequent AWVs. The proposed 

CY 2011 PE and malpractice RVUs for 

HCPCS code GXXXB were displayed in 

Addendum B to the CY 2011 PFS 

proposed rule (75 FR 40640). Similar to 

our treatment of HCPCS code GXXXA 

(G0438) for the first AWV, we proposed 

no facility PE RVUs for HCPCS code 

GXXXB (G0439) as only a single 

payment would be made under the PFS 

when this service is furnished. There is 

no separate facility payment for GXXXB 

(G0439) when a practitioner furnishes 

this service in the facility setting. 

Comment: A number of commenters 

supported the proposed payment for the 

first and subsequent AWVs based on a 

crosswalk to level 4 new and 

established patient office and other 

outpatient visits. Several commenters 

recommended that CMS vary the 

payment for the AWV based on the 

visit’s complexity, arguing that 

beneficiaries with multiple health risk 

factors would require additional 

practitioner time and intensity for the 

AWV. One commenter recommended 

that CMS value the first and subsequent 

AWVs based on the values applicable to 

level 5 new and established patient 

office and other outpatient visits, 

arguing that the typical Medicare 

beneficiary would have multiple health 

risk factors that would need to be 

addressed in the AWV through a 

complex plan specific to that 

beneficiary’s situation. Other 

commenters argued that CMS should 

recognize the preventive medicine E/M 

services CPT codes from 99381 through 

99387, whose values vary based on age 

and new or established patient status, to 

ensure appropriate payment for the first 

and subsequent AWVs. Furthermore, 

one commenter also pointed out that the 

existing preventive medicine E/M 

services CPT codes are currently being 

revalued by the AMA RUC as part of the 

Fourth 5-Year Review of Work to ensure 

that the values for the services are 

commensurate with the level of 

practitioner work involved in furnishing 

the medical service. 

A few commenters noted that they 

currently bill preventive medicine 

services E/M CPT codes 99381 through 

99397 which are noncovered in 

Medicare, and indicated as such with 

status ‘‘N’’ (Noncovered service), in 

conjunction with Medicare-covered E/M 

visits. The commenters requested that 

CMS clarify whether practitioners 

would continue to be able to bill 

additional preventive services in the 

CPT code range of 99381 through 99397 

in conjunction with the AWV. 

Response: As discussed earlier in this 

section, we are adopting the final 

HCPCS codes G0438 and G0439 for 

reporting the first and subsequent 

AWVs, rather than recognizing the CPT 

codes for preventive medicine E/M 

services as covered only for purposes of 

the AWVs. With respect to the values 

for those preventive medicine E/M 

services CPT codes that some 

commenters believe would be 

appropriate for payment of the first and 

subsequent AWVs, we have not adopted 

the values for Medicare because the 

codes are noncovered by Medicare. 

Nevertheless, we publish the AMA 

RUC-recommended work values and the 

PE RVUs that result from application of 

our standard PE methodology to the 

AMA RUC-recommended PE inputs in 

Addendum B for the CPT codes. We 

compared the values we proposed for 

HCPCS codes G0438 and G0439 with 

the preventive medicine E/M services 

CPT codes because of the commenters’ 

reasoning that these AMA RUCrecommended values would result in 

appropriate payment for AWVs. The 

values we proposed for HCPCS codes 

G0438 based on the work value and 

direct PE inputs for a level 4 new 

patient office or other outpatient visit 

are actually slightly higher (2.43 work 

RVUs; 2.14 fully implemented 

nonfacilty PE RVUs) than the new 

patient, 65 years and older CPT 

preventive medicine E/M services code 

(2.06 work RVUs; 1.87 nonfacility PE 

RVUs). In contrast, the values we 

proposed for HCPCS code G0439 based 

on the work value and direct PE inputs 

for a level 4 established patient office or 

other outpatient visit are slightly lower 

(1.50 work RVUs; 1.59 nonfacilty PE 

RVUs) than the establish patient, 65 

years and old CPT preventive services 

code (1.71 work RVUs; 1.62 nonfacility 

RVUs). We note that if the AMA RUC 

provides revised recommendations to us 

for these preventive medicine E/M 

services CPT codes for a future year, we 

may conduct this analysis again based 

on that new information. 

As discussed above, we note that 

additional preventive medicine services 

E/M CPT codes 99381 through 99397, 

noncovered by Medicare and indicated 

with status ‘‘N,’’ may be furnished in 

conjunction with Medicare-covered E/M 

visits, including the AWV. However, we 

believe that it would be difficult to 

distinguish an AWV from another 

preventive medicine E/M service 

furnished in the same encounter that 

would be reported under a preventive 

medicine services E/M CPT code as 

there is substantial overlap in the 

components of CPT codes 99381 

through 99397 and HCPCS codes G0438 

and G0439 reported for the AWV. 

Based on the final elements of the first 

and subsequent AWVs as adopted in 

section VI.Q.2. of this final rule, we do 

not believe that the first and subsequent 

AWVs would usually require the 60 or 

40 minutes of physician face-to-face 

time that is typically associated with the 

level 5 new or established patient office 

or other patient visit, respectively. We 

continue to believe, as we proposed, 

that the typical physician time would be 

45 or 25 minutes of face-to-face time, 

like that of the level 4 new or 

established patient office or other 

outpatient visit, respectively. We also 

believe the direct PE inputs for the 

AWV may be appropriately crosswalked 

to the direct PE inputs for the level 4 

new or established patient office or 

other outpatient visit, with the addition 

of preventive assessment forms to both 

HCPCS codes G0438 and G0439, as we 

also proposed. 

Comment: One commenter suggested 

that the upcoming definition of a health 

risk assessment (HRA) may add more 

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work to the AWV. The commenter 

recommended that once the HRA has 

been established, CMS should 

incorporate the RVUs from CPT code 

99420 (Administration and 

interpretation of health risk assessment 

instrument (eg, health hazard appraisal) 

into the RVUs associated with the AWV 

to ensure that the costs of the HRA are 

recognized as part of the AWV service. 

Response: As discussed previously in 

this section, the HRA guidelines and the 

model HRA tool are not yet available. 

As is our standard process, when more 

information becomes available on the 

nature of a particular service or the 

elements of the services change, we 

reevaluate the valuation of the services. 

Therefore, when the HRA is 

incorporated into the AWV, we will 

reevaluate the values for HCPCS codes 

G0438 and G0439. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

crosswalk the physician work RVUs of 

2.43 from CPT code 99204 (level 4 new 

patient office or other outpatient visit) 

to HCPCS codes G0402 (IPPE) and 

G0438 (first AWV) and the physician 

work RVUs of 1.50 from CPT code 

99214 (level 4 established patient office 

or outpatient visit) to HCPCS code 

G0439 (subsequent AWV). Similarly, we 

believe the direct PE inputs for all of 

these services are similar and, therefore, 

we are assigning the same direct PE 

inputs to HCPCS codes G0402 and 

G0438 as are included for CPT code 

99204 and the same direct PE inputs to 

HCPCS code G0439 as are assigned to 

CPT code 99214. Preventive assessment 

forms have been added as supplies to 

both HCPCS codes G0438 and G0439. 

The final direct PE inputs for these 

codes are included in the final CY 2011 

direct PE database available under 

downloads for the CY 2011 PFS final 

rule with comment period on the CMS 

web site at: http://www.cms.gov/ 

PhysicianFeeSched/PFSFRN/ 

list.asp#TopOfPage. The final work, PE, 

and malpractice RVUs for HCPCS codes 

G0438 and G0439 are displayed in 

Addendum B to this final rule with 

comment period. There is no separate 

facility payment for HCPCS code G0438 

or G0439 when a practitioner furnishes 

either service in the facility setting. 

In the CY 2011 PFS proposed rule (75 

FR 40129), we noted that while we 

believe there could be overlap in the 

direct PE, malpractice expense, and 

physician work in both history taking 

and examination of the patient in the 

context of the initial or subsequent 

AWV and another E/M service, we did 

not propose to limit the level of a 

medically necessary E/M visit when 

furnished and billed with an AWV. As 

we stated in the CY 2005 PFS final rule 

with comment period with respect to 

the IPPE (69 FR 66289 through 66290), 

we do not want to prohibit the reporting 

of an appropriate level of service when 

it is necessary to evaluate and treat the 

beneficiary for acute and chronic 

conditions. However, at the same time, 

we believe the practitioner is better able 

to discuss health promotion, disease 

prevention, and the educational 

opportunities available with 

beneficiaries when their health status 

has been stabilized and the beneficiary 

is physically receptive. Therefore, 

depending on the clinical 

circumstances, a CPT code for a 

medically necessary E/M visit may be 

reported and appended with CPT 

modifier-25 (Significant, separately 

identifiable evaluation and management 

service by the same physician on the 

same day of the procedure or other 

service) to designate the E/M visit as a 

separately identifiable service from the 

initial or subsequent AWV. However, in 

the CY 2011 PFS proposed rule (75 FR 

40129) we explained that we believe 

this scenario would be uncommon, and 

that we expect that no components of an 

encounter attributable to the AWV 

would be used in determining the level 

of a separate E/M visit that would also 

be reported. 

Comment: A few commenters 

disagreed with CMS’ assertion that 

reporting a significant, separately 

identifiable E/M visit for the same 

encounter as an AWV would be 

unusual. The commenters believe that 

reporting an E/M visit with an AWV 

would be typical, as the age and health 

conditions of the typical Medicare 

beneficiary would likely result in 

problem-oriented E/M services being 

furnished in association with the AWV 

in order to fully address the medical 

problems that were identified in the 

encounter. The commenters explained 

that providing this care during the same 

encounter as the AWV would be both 

clinically appropriate and convenient 

for the beneficiary. 

Response: While we continue to 

believe that a practitioner is better able 

to discuss health promotion, disease 

prevention, and health education 

opportunities with beneficiaries when 

their health status has been stabilized 

and the beneficiary is physically 

receptive to prevention, the goal of the 

AWV, we acknowledge that the AWV 

encounter may provide an annually 

recurring opportunity for a beneficiary 

to receive medical care for his or her 

health problems. However, we continue 

to believe that a beneficiary who has an 

acute medical problem or condition 

would not receive optimal benefit from 

the AWV, which focuses on health 

promotion in the longer term. We 

encourage practitioners to be thoughtful 

regarding the best timing of the AWV to 

maximize its impact on beneficiary 

health since the AWV is covered by 

Medicare no more frequently than once 

every 12 months. Therefore, as we 

proposed, depending on the clinical 

circumstances, a CPT code for a 

medically necessary E/M visit may be 

reported and appended with CPT 

modifier ¥25 (Significant, separately 

identifiable evaluation and management 

service by the same physician on the 

same day of the procedure or other 

service) to designate the E/M visit as a 

separately identifiable service from the 

initial or subsequent AWV. 

With respect to beneficiary costsharing, section 4103(c)(1) of the ACA 

amended section 1833(a)(1) of the Act 

and added subparagraph (X), referring to 

the PPPS to state that the amount paid 

shall be 100 percent of the lesser of the 

actual charge for the services or the 

amount determined under the payment 

basis determined under section 1848 of 

the Act, thereby eliminating 

coinsurance for the AWV. Finally, 

section 4103(c)(4) of the ACA amended 

section 1833(b) of the Act to specify that 

the Part B deductible will not apply to 

the AWV. 

Comment: Many commenters 

expressed support for CMS’ proposal to 

waive the beneficiary deductible and 

coinsurance for the AWV. The 

commenters noted that this waiver 

would likely encourage more 

beneficiaries to receive an AWV. 

Response: We appreciate the 

commenters’ support for our proposal to 

eliminate the beneficiary cost-sharing 

for the AWV as the statute requires. We 

refer readers to section VI.R. of this final 

rule with comment period for further 

discussion of the waiver of the 

deductible and coinsurance for 

preventive services beginning in CY 

2011. 

In summary, for CY 2011 we are 

adopting the following new HCPCS Gcodes for reporting the AWV: G0438 

(Annual wellness visit; includes a 

personalized prevention plan of service 

(PPPS), first visit); and G0439 (Annual 

wellness visit; includes a personalized 

prevention plan of service (PPPS), 

subsequent visit). These codes are 

valued for payment under the PFS using 

a crosswalk methodology for the work 

RVUs and direct PE inputs from the 

level 4 new and established patient 

office or other outpatient visit CPT 

codes. The final work, PE, and 

malpractice RVUs for HCPCS codes 

G0438 and G0439 are displayed in 

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Addendum B to this final rule with 

comment period. The deductible and 

coinsurance for the AWV is waived 

when coverage begins in CY 2011. 

Finally, the CPT code for a medically 

necessary E/M visit may be reported and 

appended with CPT modifier ¥25 

(Significant, separately identifiable 

evaluation and management service by 

the same physician on the same day of 

the procedure or other service) to 

designate the E/M visit as a separately 

identifiable service from the initial or 

subsequent AWV when both are 

provided in the same encounter. 

R. Section 4104: Removal of Barriers to 

Preventive Services in Medicare 

1. Definition of ‘‘Preventive Services’’ 

Section 4104 of the ACA revised 

section 1861(ddd) of the Act and added 

paragraph (3), which defined the term 

‘‘preventive services’’ as follows: 

• The specific services currently 

listed in section 1861(ww)(2) of the Act 

with the explicit exclusion of 

electrocardiograms (as specified in 

section 1861(ww)(2)(M) of the Act); 

• The initial preventive physical 

examination (IPPE) established by 

section 611 of the MMA and defined in 

section 1861(ww)(1) of the Act; and 

• The annual wellness visit including 

personalized preventive plan services, 

as specified by section 1861(hhh) of the 

Act as added by section 4103 of the 

ACA. We refer readers to section VI.Q. 

of this final rule with comment period 

for the CY 2011 provisions related to the 

coverage of and payment for the annual 

wellness visit. The regulations regarding 

coverage of the IPPE are specified in 

§ 410.16 and remain unchanged by the 

ACA. 

The specific preventive services 

included in the definition of ‘‘preventive 

services’’ in section 1861(ddd)(3)(A) of 

the Act as cross-referenced to section 

1861(ww)(2) of the Act, excluding 

electrocardiograms, include the 

following: 

• Pneumococcal, influenza, and 

hepatitis B vaccine and administration. 

• Screening mammography. 

• Screening pap smear and screening 

pelvic exam. 

• Prostate cancer screening tests. 

• Colorectal cancer screening tests. 

• Outpatient diabetes selfmanagement training (DSMT). 

• Bone mass measurement. 

• Screening for glaucoma. 

• Medical nutrition therapy (MNT) 

services. 

• Cardiovascular screening blood 

tests. 

• Diabetes screening tests. 

• Ultrasound screening for abdominal 

aortic aneurysm (AAA). 

• Additional preventive services 

identified for coverage through the 

national coverage determination (NCD) 

process. 

In the CY 2011 PFS proposed rule (75 

FR 41029), we indicated that at that 

time the only additional preventive 

service identified for coverage through 

the NCD process was HIV testing. A 

proposed NCD for smoking cessation 

services for asymptomatic patients was 

released in May 2010 on the CMS Web 

site at: http://www.cms.gov/mcd/ 

index_list.asp?list_type=nca. We stated 

that we would address the applicability 

of section 1861(ddd)(3)(A) of the Act (as 

added by section 4104 of the ACA) to 

these services if an NCD establishing 

them as additional preventive services 

was finalized. As of August 25, 2010, 

CMS finalized an NCD for ‘‘Counseling 

to Prevent Tobacco Use’’ and established 

smoking cessation services for 

asymptomatic patients, thus qualifying 

them as ‘‘additional preventive services’’ 

as defined at section 1861(ddd)(3)(A) of 

the Act, as cross-referenced to section 

1861(ww)(2) of the Act. 

We proposed to add the definition of 

‘‘preventive services’’ in § 410.2 to 

implement the provisions of section 

1861(ddd)(3) of the Act (as added by 

section 4104 of the ACA). 

Comment: Many commenters 

supported CMS’ definition of 

‘‘preventive services,’’ observing that the 

definition was fully aligned with section 

1861(ddd)(3) of the Act (as added by 

section 4104 of the ACA). 

Response: We appreciate the support 

of the commenters and are adopting this 

definition of ‘‘preventive services’’ in 

this final rule with comment period. 

Comment: Several commenters 

expressed confusion about Medicare’s 

definition of ‘‘preventive services’’ and 

its relationship to those services with a 

United States Preventive Services Task 

Force (USPSTF) recommendation grade 

of A [An ‘‘A’’ rating means the USPSTF 

recommends the service. There is high 

certainty that the net benefit is 

substantial.] or B [A ‘‘B’’ rating means 

the USPSTF recommends the service. 

There is high certainty that the net 

benefit is moderate or there is moderate 

certainty that the net benefit is moderate 

to substantial.]. 

Response: It appears that some of the 

commenters’ confusion may be due to 

the use of two similar terms in the 

Medicare Act. In section 1861(ddd) of 

the Act, Congress defined two terms of 

art. The term, ‘‘preventive services,’’ is 

described in section 1861(ddd)(3) of the 

Act and in this final rule with comment 

period in § 410.2. Congress also defined 

the term ‘‘additional preventive 

services’’ and that term was previously 

defined in § 410.64 of our regulations. 

Under section 1861(ddd)(1) of the Act, 

in order for the Secretary to add an 

‘‘additional preventive service,’’ the 

Secretary is required to use the national 

coverage determination process. 

Moreover, in addition to other 

standards, the item or service must be 

recommended with a grade of A or B by 

the USPSTF. 

In section 1861(ddd)(3) of the Act (as 

added by section 4104 of the ACA), 

Congress expanded Medicare coverage 

under Part B to encourage the use of 

‘‘preventive services.’’ Among other 

things, Congress removed some of the 

Part B cost-sharing obligations to 

encourage patients to obtain certain of 

these services. We note that ‘‘additional 

preventive services’’ are one of the 

categories of specific services that are 

covered under section 1861(ww)(2) of 

the Act and, therefore, also fall within 

the term ‘‘preventive services’’ based on 

the cross-reference in section 

1861(ddd)(3)(A) of the Act. Other 

specific services that are listed in 

section 1861(ww)(2) of the Act and that 

are included in the definition of 

‘‘preventive services’’ are not required to 

have a grade A or B recommendation 

from the USPSTF. As we stated in the 

CY 2011 PFS proposed rule (75 FR 

40130), ‘‘[n]ot all preventive services 

described in subparagraph (A) of section 

1861(ddd)(3) of the Act are 

recommended by the USPSTF with a 

grade of A or B, and, therefore, some of 

the preventive services do not meet the 

criteria in sections 1833(a)(1) and (b)(1) 

of the Act for the waiver of the 

deductibles and coinsurance.’’ We hope 

that this technical explanation helps to 

eliminate any confusion concerning the 

two separate terms of art. 

Comment: Several commenters 

observed that some services, such as 

intensive behavioral (nutrition) 

counseling, have been given a grade A 

or B recommendation by the USPSTF 

but are not listed as ‘‘additional 

preventive services’’ in the CY 2011 PFS 

proposed rule. Another commenter 

requested that CMS identify all 

USPSTF-recommended services as 

‘‘additional preventive services’’ and, 

therefore, recognize them as having a 

benefit category under Medicare, even if 

their coinsurance and deductible are not 

waived because their USPSTF 

recommendation is not a grade A or B. 

Response: Under section 1861(ddd)(1) 

of the Act and our regulations in 

§ 410.64, an item or service must meet 

other standards in addition to having 

received a grade of A or B 

recommendation by the USPSTF in 

order for the Secretary to determine that 

an item is an ‘‘additional preventive 

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service.’’ As we previously noted, 

‘‘additional preventive services’’ must 

also be established by using the NCD 

process. While some of the services 

recommended by the commenters for 

addition to Medicare’s list of ‘‘additional 

preventive services’’ have a grade A or 

B recommendation by the USPSTF, this 

recommendation alone is not sufficient 

for those services to be included as 

‘‘additional preventive services’’ that are 

covered by Medicare Part B. For 

instance, some of the USPSTF 

recommendations may be directed to a 

particular patient population (for 

example, pediatric services) that may 

not include Medicare beneficiaries. 

However, we acknowledge the 

potential value to Medicare 

beneficiaries of those preventive 

services recommended by the USPSTF 

for populations covered by Medicare 

based on the medical evidence that led 

to the grade A or B recommendation. 

While certain preventive services with 

such a recommendation may not yet be 

covered by Medicare, these services 

have the potential to improve the health 

of beneficiaries. Therefore, we plan to 

proactively pursue Medicare coverage of 

‘‘additional preventive services’’ with a 

grade A or B USPSTF recommendation 

through our current processes on our 

own initiative in light of our 

commitment to the health and wellness 

of Medicare beneficiaries. 

Comment: A few commenters 

suggested the inclusion of additional 

services in the definition of ‘‘preventive 

services,’’ including items or services 

that have not been reviewed by the 

USPSTF or where there is no NCD. In 

addition, several commenters urged 

CMS to recognize recommendations 

from organizations other than the 

USPSTF when considering services for 

inclusion as ‘‘additional preventive 

services.’’ 

Response: Because the term 

‘‘preventive services,’’ is specifically 

defined by statute in section 

1861(ddd)(3) of the Act, we do not have 

unlimited authority to simply add items 

or services to this definition. As we 

have noted, however, the Secretary may 

add items or services as ‘‘additional 

preventive services’’ if the item or 

service meets the existing criteria in 

§ 410.64. Among other things, the 

statute specifically requires that a new 

‘‘additional preventive service’’ must 

have a grade A or B recommendation by 

the USPSTF. 

We do not have the authority under 

section 1861(ddd)(1)(B) of the Act to 

add ‘‘additional preventive services’’ 

based on the recommendations of other 

groups or organizations. We recognize 

that in other sections of the ACA, 

Congress specifically recognized the 

expertise of other organizations with 

respect to coverage of preventive health 

services. For instance, in section 1001 of 

the ACA, Congress amended section 

2713 of the Public Health Service Act so 

that certain group health plans and 

health insurance issuers must provide 

coverage of preventive health services 

that were recommended by several other 

organizations. The Medicare statute, 

however, does not permit 

recommendations from other advisory 

bodies to substitute for 

recommendations from the USPSTF 

regarding Medicare coverage of 

‘‘additional preventive services.’’ 

Comment: A number of commenters 

supported CMS’ inclusion of certain 

vaccines in the definition of ‘‘preventive 

services.’’ Other commenters were 

concerned that the USPSTF does not 

currently review or provide 

recommendations regarding vaccine or 

vaccine administration and instead 

urged CMS to consider 

recommendations from the CDC’s 

Advisory Committee on Immunization 

Practices (ACIP). Several commenters 

requested that vaccines such as 

diphtheria, pertussis, herpes zoster, 

tetanus, hepatitis A vaccine, 

meningococcal vaccine, measlesmumps-rubella, and varicella be 

considered ‘‘additional preventive 

services’’ as they are recommended by 

the ACIP. The commenters requested 

that CMS provide coverage for all 

vaccines recommended by the ACIP 

under Part B, noting that currently some 

vaccines are covered under Part B while 

others are covered under Part D. 

Response: Medicare has covered 

certain vaccines and their 

administration under Part B, including 

influenza, pneumococcal, and hepatitis 

B, as a result of a specific statute, 

section 1861(s)(10) of the Act. Those 

services are specifically cross-referenced 

in section 1861(ww)(2)(A) of the Act, 

and are included in the definition of 

‘‘preventive services’’ by section 

1861(ddd)(3)(A) of the Act. While we 

acknowledge that the ACIP currently 

makes recommendations concerning 

immunizations, section 1861(ddd)(1) of 

the Act does not permit us to use 

recommendations from the ACIP as the 

basis for coverage of vaccines as 

‘‘additional preventive services.’’ As the 

commenters observed, vaccines that are 

not covered by Medicare Part B may be 

covered by Part D. 

Comment: Several commenters 

requested that CMS not wait for an NCD 

for smoking cessation services but, 

instead, proactively identify smoking 

cessation services as preventive services 

effective for CY 2011. 

Response: The Medicare statute 

requires the Secretary to use the 

national NCD process when considering 

adding services as an ‘‘additional 

preventive service.’’ Consistent with the 

public process and timeframes required 

by section 1862(l) of the Act, our NCD 

expanding coverage for counseling to 

prevent tobacco use for asymptomatic 

patients was effective on August 25, 

2010. Thus, the ‘‘additional preventive 

services’’ covered by Medicare Part B 

currently include services described by 

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). 

Comment: Several commenters 

requested coverage of routine HIV 

testing for all individuals, including 

persons at low risk for HIV infection, 

regardless of risk, based on more recent 

data, or based upon the C rating of the 

USPSTF. 

Response: We are not able to accept 

the public comment to extend coverage 

for HIV screening for all individuals 

under the Medicare program because 

the USPSTF grade A or B 

recommendation was limited to specific 

populations and the USPSTF 

specifically made a grade C 

recommendation about HIV screening 

for ‘‘adolescents and adults who are not 

at increased risk for HIV infection.’’ Our 

statute and regulations only permit 

coverage of ‘‘additional preventive 

services’’ which have been 

recommended with a grade of A or B by 

the USPSTF and do not permit coverage 

as ‘‘additional preventive services’’ of 

services with grade C recommendations. 

As a result of the NCD, Medicare 

covers screening of at risk individuals 

for HIV described by three HCPCS 

codes, specifically G0432 (Infectious 

agent antigen detection by enzyme 

immunoassay (EIA) technique, 

qualitative or semi-qualitative, multiplestep method, HIV–1 or HIV–2, 

screening); G0433 (Infectious agent 

antigen detection by enzyme-linked 

immunosorbent assay (ELISA) 

technique, antibody, HIV–1 or HIV–2, 

screening); and G0435 (Infectious agent 

antigen detection by rapid antibody test 

or oral mucosa transudate, HIV–1 or 

HIV–2, screening)). These HCPCS codes 

are all listed in Table 65 of the following 

section because their beneficiary costsharing will be waived in CY 2011. 

Comment: Several commenters 

encouraged CMS to develop 

transparency in its interactions with the 

USPSTF and CMS coverage 

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determinations. The commenters urged 

CMS to support increased opportunities 

for stakeholders to participate in the 

USPSTF process. 

Response: As required by section 

1862(l) of the Act, the NCD process 

includes an opportunity for public 

comment on a proposed decision. With 

respect to any proposed NCD for an 

‘‘additional preventive service,’’ we 

include a summary of the USPSTF 

recommendations in our proposed 

decision memorandum. The Secretary is 

required to respond to the public 

comments when issuing a final 

determination. We believe that this 

process is open and transparent and that 

the public comments have improved the 

quality of our final decisions. 

While some commenters have 

requested greater opportunities for 

public participation prior to the 

USPSTF recommendations, the process 

that the USPSTF utilizes in making its 

expert recommendations is beyond the 

scope of this rulemaking. The USPSTF, 

first convened by the U.S. Public Health 

Service in 1984, and since 1998 

sponsored by the AHRQ, is an 

independent panel of private-sector 

experts in prevention and primary care 

that makes recommendations that are 

independent of the U.S. government. 

The USPSTF conducts impartial 

assessments of the scientific evidence 

for the effectiveness of a broad range of 

clinical preventive services, including 

screening, counseling, and preventive 

medications. The mission of the 

USPSTF is to evaluate the benefits of 

individual services based on age, 

gender, and risk factors for disease; 

make recommendations about which 

preventive services should be 

incorporated routinely into primary 

medical care and for which populations; 

and identify a research agenda for 

clinical preventive care. The USPSTF 

has partners from the fields of primary 

care, public health, health promotion, 

policy, and quality improvement. 

Liaisons from these groups and from 

Federal health agencies, including CMS, 

contribute their expertise in the peer 

review of draft USPSTF documents and 

help disseminate the work of the 

USPSTF to their members. 

After consideration of the public 

comments we received, we are 

finalizing our proposed definition of 

preventive services. Specifically, 

preventive services include the IPPE; 

the AWV; pneumococcal, influenza, and 

hepatitis B vaccine and administration; 

screening mammography; screening pap 

smear and screening pelvic exam; 

prostate cancer screening tests; 

colorectal cancer screening tests; 

outpatient diabetes self-management 

training (DSMT); bone mass 

measurement; screening for glaucoma; 

medical nutrition therapy (MNT) 

services; cardiovascular screening blood 

tests; diabetes screening tests; 

ultrasound screening for abdominal 

aortic aneurysm (AAA); and additional 

preventive services identified for 

coverage through the NCD process. To 

date, two items or services have been 

added as ‘‘additional preventive 

services’’ by NCDs. These services are 

HIV screening for at risk individuals 

and smoking and tobacco cessation 

counseling for asymptomatic 

individuals. 

We are adopting the proposed 

definition of ‘‘preventive services’’ in 

§ 410.2 to implement the provisions of 

section 1861(ddd)(3) of the Act (as 

added by section 4104 of the ACA), with 

modification of § 410.2(3) to read 

‘‘Annual Wellness Visit (AWV), 

providing Personalized Prevention Plan 

Services (PPPS) (as specified by section 

1861(hhh)(1) of the Act)’’ to utilize 

wording that is consistent with final 

§ 410.15, Annual Wellness Visits 

Providing Personalized Prevention Plan 

Services: Conditions for and Limitations 

on Coverage. 

Furthermore, in this final rule with 

comment period, we are making a 

technical revision to § 410.64 

(Additional Preventive Services) to 

conform with section 1861(ddd)(1) of 

the Act, as amended by section 4104 of 

the ACA. We are revising § 410.64(a) by 

removing the words ‘‘not otherwise 

described in this subpart’’ and adding 

the words ‘‘not described in 

subparagraphs (1) or (3) of § 410.2 of 

this subpart’’ in their place. This change 

reflects section 1861(ddd)(1) of the Act 

(as amended by section 4104(a)(2) of the 

ACA). 

2. Deductible and Coinsurance for 

Preventive Services 

Section 4104(b)(4) of the ACA 

amended section 1833(a)(1) of the Act 

by requiring 100 percent Medicare 

payment for the IPPE and for those 

Medicare-covered preventive services 

recommended by the United States 

Preventive Services Task Force 

(USPSTF) with a grade of A or B for any 

indication or population and that are 

appropriate for the individual. In other 

words, this provision waived any 

coinsurance that would otherwise be 

applicable under section 1833(a)(1) of 

the Act for the IPPE and for those items 

and services listed in section 

1861(ww)(2) of the Act (excluding 

electrocardiograms) to which the 

USPSTF has given a grade of A or B 

recommendation. In addition, section 

4103(c)(1) of the ACA amended section 

1833(a)(1) of the Act to waive the 

coinsurance for the AWV. The 

coinsurance represents the beneficiary’s 

share of the payment to the provider or 

supplier for furnished services. 

Coinsurance generally refers to a 

percentage (for example, 20 percent) of 

the Medicare payment rate for which 

the beneficiary is liable and is 

applicable under the PFS, while 

copayment generally refers to an 

established amount that the beneficiary 

must pay that is not necessarily related 

to a particular percentage of the 

Medicare payment, and is applicable 

under the OPPS. We refer readers to the 

CY 2011 OPPS/ASC final rule with 

comment period for provisions related 

to payment for preventive services, 

including waiver of the deductible and 

copayment, under the OPPS. 

Section 4104(c) of the ACA amended 

section 1833(b)(1) of the Act to waive 

the Part B deductible for preventive 

services described in subparagraph (A) 

of section 1861(ddd)(3) of the Act that 

have a grade of A or B recommendation 

from the USPSTF for any indication or 

population and are appropriate for the 

individual. In addition, section 

1833(b)(1) of the Act (as amended by 

section 4103(c)(4) of the ACA) waived 

the Part B deductible for the AWV 

including personalized prevention plan 

services. These provisions are effective 

for services furnished on or after 

January 1, 2011. Section 101(b)(2) of the 

MIPPA previously amended section 

1833(b) of the Act to waive the 

deductible for the IPPE effective January 

1, 2009. 

Not all preventive services described 

in subparagraph (A) of section 

1861(ddd)(3) of the Act are 

recommended by the USPSTF with a 

grade of A or B and, therefore, some of 

the preventive services do not meet the 

criteria in sections 1833(a)(1) and (b)(1) 

of the Act for the waiver of the 

deductible and coinsurance. However, 

with certain exceptions noted below, 

the changes made by section 4104 of the 

ACA do not affect most of the 

preexisting provisions in sections 

1833(a) and 1833(b) of the Act (codified 

in regulations in § 410.160(b) and 

§ 410.152) that waive the deductible and 

coinsurance for specific services. For 

example, section 1833(a)(1)(D) of the 

Act already waives the coinsurance and 

section 1833(b)(3) of the Act already 

waives the deductible for clinical 

laboratory tests (including tests 

furnished for screening purposes). 

Section 4104 of the ACA does not 

change these provisions and, therefore, 

the waiver of both the deductible and 

coinsurance remain in place for all 

clinical laboratory tests, regardless of 

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whether the particular clinical 

laboratory test meets the USPSTF 

grading criteria specified in sections 

1833(a)(1) and 1833(b)(1) of the Act (as 

amended by section 4104 of the ACA) 

for waiver of the deductible and 

coinsurance as a preventive service. 

Similarly, both the deductible and 

coinsurance were already waived, prior 

to the ACA, for influenza and 

pneumococcal vaccines and their 

administration, and the deductible (but 

not the coinsurance) was already 

waived for screening mammography, 

screening pelvic exams, colorectal 

cancer screening procedures, ultrasound 

screening for abdominal aortic 

aneurysms, and the IPPE. 

As discussed in the CY 2011 PFS 

proposed rule (75 FR 40130), the 

following preventive services listed in 

section 1833(ddd)(3)(A) of the Act (as 

added by section 4104 of the ACA) are 

not recommended by the USPSTF with 

a grade of A or B for any indication or 

population: digital rectal examination 

furnished as a prostate cancer screening 

service; glaucoma screening; DSMT 

services; and barium enema furnished 

as a colorectal cancer screening service. 

Specifically, HCPCS code G0102 

(Prostate cancer screening; digital rectal 

exam), which does not have a grade of 

A or B from the USPSTF for any 

indication or population, will continue 

to be subject to the deductible and 

coinsurance as there is no statutory 

provision to the contrary. However, the 

deductible and coinsurance for HCPCS 

code G0103 (Prostate cancer screening; 

prostate specific antigen test (PSA)) will 

continue to be waived in accordance 

with sections 1833(a)(1)(D) and 

1833(b)(3) of the Act (applying to 

clinical laboratory tests), even though 

this service also does not have a grade 

of A or B from the USPSTF. 

Glaucoma screening services, 

described by HCPCS codes G0117 

(Glaucoma screening for high risk 

patients furnished by an optometrist or 

ophthalmologist) and G0118 (Glaucoma 

screening for high risk patient furnished 

under the direct supervision of an 

optometrist or ophthalmologist), will 

continue to be subject to the deductible 

and coinsurance because these services 

are not recommended with a grade of A 

or B by the USPSTF for any indication 

or population and there is no other 

statutory provision to exempt them. 

Similarly, DSMT services are currently 

not rated by the USPSTF, and there is 

no other statutory provision to except 

them from applicability of the 

deductible and coinsurance. Therefore 

the deductible and coinsurance 

requirements will continue to apply. 

Barium enemas furnished as 

colorectal cancer screening tests, 

described by HCPCS codes G0106 

(Colorectal cancer screening; alternative 

to G0104, screening sigmoidoscopy, 

barium enema) and G0120 (Colorectal 

cancer screening; alternative to G0105, 

screening colonoscopy, barium enema), 

do not have a grade of A or B from the 

USPSTF for any indication or 

population. However, the deductible 

does not apply to barium enemas 

furnished as colorectal cancer screening 

tests, because colorectal cancer 

screening tests are explicitly excluded 

from the deductible in section 

1833(b)(8) of the Act. However, there is 

no specific exclusion of barium enemas 

from the coinsurance requirement in 

section 1833(b)(1) of the Act and, 

therefore, this requirement, as 

applicable, continues to apply to barium 

enemas. We note that the USPSTF has 

given a grade A recommendation to 

screening colonoscopy, screening 

flexible sigmoidoscopy, and fecal occult 

blood screening tests, and that, as a 

result, both the deductible and 

coinsurance are waived for these 

colorectal cancer screening tests under 

section 4104 of the ACA. 

In developing recommendations 

regarding preventive services for the CY 

2011 PFS proposed rule, we recognized 

that the USPSTF may make 

recommendations that are specific to a 

clinical indication or population, at 

times including characteristics such as 

gender and age in its recommendations. 

In accordance with section 4014 of the 

ACA, we proposed to waive the 

deductible and coinsurance for a 

Medicare-covered preventive service, 

with no limits on the indication or 

population, as long as that service is 

recommended by the USPSTF with a 

grade of A or B for at least one 

indication and/or population. However, 

we noted that all existing Medicare 

coverage policies for such services, 

including any limitations based on 

indication or population would 

continue to apply. In some cases, 

national coverage policies may currently 

limit Medicare coverage based on the 

indication or population, consistent 

with the USPSTF recommendations 

with a grade of A or B for the indication 

or population. In other cases where 

Medicare does not explicitly noncover 

preventive services for a specific 

population or indication, we stated that 

we would expect that, particularly in 

those cases where the USPSTF 

recommendation grade is a D (that is, 

the USPSTF recommends against the 

service because there is moderate or 

high certainty that the service has no net 

benefit or that the harms outweigh the 

benefits), practitioners would only order 

those preventive services that are 

clinically appropriate for the 

beneficiary. We noted that if we had 

concerns in the future about the 

appropriateness of preventive services 

for an indication or population in light 

of the USPSTF’s recommendations, we 

may consider using our authority under 

section 1834(n)(1) of the Act (as added 

by section 4105 of the ACA) to modify 

Medicare coverage of any preventive 

service to be consistent with the 

recommendations of the USPSTF. 

We note also that the USPSTF ceased 

to make recommendations with regard 

to vaccines and vaccine administration 

after CY 1996, so as not to conflict with 

the recommendations of the CDC’s 

ACIP. However, the USPSTF’s most 

recent vaccine recommendations gave a 

grade of B to influenza and 

pneumococcal vaccines and their 

administration and a grade of A to 

hepatitis B vaccine and its 

administration. While sections 

1833(a)(1) and 1833(b)(1) of the Act (as 

amended by section 4104 of the ACA) 

require that a preventive service receive 

a grade A or B recommendation from 

the USPSTF for the coinsurance and 

deductible to be waived, the statute 

does not specify that the recommended 

grade must be furnished by the USPSTF 

within any given timeframe. The 

USPSTF grades from 1996 for these 

vaccination services are the most 

current USPSTF grades and have never 

been withdrawn. Therefore, we believe 

that these preventive services meet the 

requirements of the statute for the 

waiver of the deductible and 

coinsurance. We also noted that the 

CDC’s ACIP currently recommends 

influenza, pneumococcal, and hepatitis 

B vaccines. 

We proposed to update § 410.160(b), 

which lists the services for which 

expenses incurred are not subject to the 

Part B annual deductible and do not 

count toward meeting that deductible. 

Specifically, we proposed to revise 

§ 410.160(b)(2) to include influenza and 

hepatitis B vaccines and their 

administration, in addition to 

pneumococcal vaccine and its 

administration. In addition, in 

§ 410.160(b), we also proposed to add 

exceptions for bone mass measurement, 

MNT services, and the AWV. 

In § 410.152, we proposed to revise 

paragraph (l) to establish the amount of 

payment under the applicable payment 

system for providers and suppliers of 

the services listed in paragraph (1). 

Table 38 of the CY 2011 PFS proposed 

rule (75 FR 40131 through 40135) 

identified the HCPCS codes that we 

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proposed to identify as ‘‘preventive 

services,’’ in addition to the IPPE and 

the AWV, as well as the most recent 

USPSTF grade, if any, that was the basis 

for our policy with regard to waiver of 

the deductible and coinsurance. Table 

38 also identified the Medicare payment 

system under which the HCPCS code 

would be paid when furnished outside 

of the facility setting. 

Comment: Many commenters 

supported CMS’ proposal to waive the 

deductible and coinsurance for those 

Medicare-covered preventive services 

with a grade A or B USPSTF 

recommendation for any indication or 

population, as well as for the IPPE and 

the AWV. The commenters 

acknowledged that CMS did not 

propose to modify current Medicare 

policy that may cover a preventive 

service only under specific 

circumstances. The commenters 

supported CMS’ proposal to rely on 

practitioners’ clinical judgment to order 

preventive services that are clinically 

appropriate for specific beneficiaries. 

Many commenters noted that CMS’ 

‘‘quick implementation’’ of this 

provision underscores the agency’s 

commitment to removing barriers to 

preventive health care. 

A few commenters expressed concern 

regarding how CMS may incorporate 

USPSTF recommendations into the 

Medicare benefit structure in the future 

and cautioned CMS not to adopt 

policies that would result in Medicare 

not covering important preventive 

services for an older population. For 

example, the USPSTF recommendations 

for mammography in women do not 

apply to individuals age 75 or older, and 

the commenters were concerned that 

future changes to CMS policies could 

result in Medicare not covering 

important preventive services for an 

older population. 

Response: We appreciate the 

commenters’ support for our proposal to 

waive the beneficiary deductible and 

coinsurance for most preventive 

services beginning in CY 2011. We 

continue to believe that is appropriate to 

waive the beneficiary deductible and 

coinsurance for preventive services with 

a grade A or B recommendation by the 

USPSTF for any indication or 

population, if Medicare covers the 

particular service under Part B. 

However, we reiterate that if we develop 

concerns in the future about the 

appropriateness of preventive services 

for an indication or population in light 

of the USPSTF’s recommendations, we 

may consider using our authority under 

section 1834(n)(1) of the Act (as added 

by section 4105 of the ACA) to modify 

Medicare coverage of any preventive 

service to be consistent with the 

recommendations of the USPSTF. 

Comment: Several commenters 

expressed concern over the USPSTF 

rating of I for glaucoma screening [An 

‘‘I’’ rating means that the USPSTF 

concludes that the current evidence is 

insufficient to assess the balance of 

benefits and harms of the service. 

Evidence is lacking, of poor quality, or 

conflicting, and the balance of benefits 

and harms cannot be determined]. 

Others were concerned about the rating 

of D for prostate cancer screening [A ‘‘D’’ 

rating means that the USPSTF 

recommends against the service. There 

is moderate or high certainly that the 

service has no net benefit or that the 

harms outweigh the benefits]. Other 

commenters noted the lack of a specific 

USPSTF rating for DSMT services. The 

commenters argued that because these 

services were covered by Medicare as 

preventive services, the beneficiary costsharing should be waived to ensure 

access to these services. 

Response: Glaucoma screening, digital 

prostrate screening, and DSMT services 

are covered by Medicare under Part B 

and are specific categories of 

‘‘preventive services’’ included in 

section 1861(ddd)(3)(A) of the Act (as 

added by section 4014 of the ACA). 

However, as these services do not have 

a USPSTF grade A or B 

recommendation, the deductible and 

coinsurance cannot be waived. Thus, 

the coinsurance and deductible will 

continue to apply to these services 

when they are furnished to a Medicare 

beneficiary. 

Comment: Some commenters were 

concerned that ultrasound screening for 

abdominal aortic aneurysm (AAA), 

while a preventive service covered by 

Medicare and with a grade B 

recommendation from the USPSTF, 

would continue to require a physician 

referral in order for the preventive 

service to be furnished and for the 

waiver of cost-sharing to apply. 

Furthermore, the commenters objected 

to the current requirement that coverage 

of ultrasound screening for AAA relies 

upon a referral as a result of the IPPE 

because the IPPE is only available to 

beneficiaries during their first 12 

months of Part B enrollment. 

Response: Ultrasound screening for 

AAA is a preventive service covered by 

Medicare, with certain restrictions set 

forth in § 410.19 of our regulations. 

Because this service has a grade B 

recommendation from the USPSTF, the 

deductible and coinsurance will be 

waived beginning in CY 2011 for 

covered services. While we appreciate 

the commenters’ concerns regarding the 

existing requirements for ultrasound 

screening for AAA, the current 

requirement for a referral as a result of 

the IPPE is required by section 

1861(s)(2)(AA) of the Act and continues 

to apply. 

Comment: In the context of many 

commenters’ recommendations to add 

new preventive services for coverage 

under Part B as ‘‘additional preventive 

services,’’ most commenters also 

recommended that the beneficiary costsharing for these services be waived. 

The services addressed by the 

commenters included services with 

current grade A or B USPSTF 

recommendations, those with other 

grade USPSTF recommendations, those 

that have never been reviewed by the 

USPSTF, those with recommendations 

from other advisory organizations but 

the USPSTF, and other vaccines for 

which the USPSTF no longer makes 

recommendations. 

Response: As discussed earlier in this 

section, the statute permits us to add 

‘‘additional preventive services’’ to 

Medicare coverage only if those services 

have a grade A or B recommendation 

from the USPSTF. Other grade USPSTF 

recommendations or recommendations 

from other advisory groups, including 

the ACIP, cannot substitute for the grade 

A or B USPSTF recommendation. In the 

event that we add ‘‘additional 

preventive services’’ in the future, as we 

have HIV screening for at risk 

individuals and smoking and tobacco 

cessation counseling for asymptomatic 

individuals in CY 2010, the Medicare 

deductible and coinsurance will be 

waived for those services. 

Comment: One commenter expressed 

concern that CMS was limiting the 

waiver of beneficiary cost-sharing to 

only those vaccines covered under 

Medicare Part B. The commenter 

contended that the ACIP recommends 

vaccines that are covered under 

Medicare Part D, and not Part B, and 

therefore not subject to the waiver. 

Response: We recognize that many 

preventive vaccines such as herpes 

zoster and hepatitis A are covered for 

beneficiaries under Medicare Part D and 

the commenter is correct that Medicare 

Part D is not included in section 

1861(ddd) of the Act (as amended by 

section 4104 of the ACA). Section 

1861(ddd)(1)(C) of the Act limits 

‘‘additional preventive services’’ to those 

appropriate for individuals entitled to 

benefits under Medicare Part A or 

enrolled under Medicare Part B only. In 

addition, the statute only permits 

expansions if the item or services based 

on a grade of A or B recommendation 

by the USPSTF. 

Comment: Several commenters 

appreciated the clarity of Table 38 in the 

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CY 2011PFS proposed rule (75 FR 

40131 through 40135), and requested 

that a table such as this be made 

available on the CMS Web site that 

reflects CMS’ final policies regarding 

preventive services and beneficiary costsharing on a HCPCS code-specific basis. 

Other commenters requested additional 

provider and beneficiary educational 

materials to clarify preventive services 

benefits under Medicare, to identify 

which preventive services would 

continue to be subject to beneficiary 

cost-sharing, and to specify which 

preventive services would meet the 

requirements for the waiver of 

deductible and coinsurance where 

Medicare would make 100 percent 

payment. 

Response: We are in the process of 

developing educational materials that 

will reflect and communicate to 

beneficiaries and providers the CY 2011 

changes to beneficiary cost-sharing for 

preventive services under Medicare. We 

agree with the commenters that it is 

critical to effectively educate 

beneficiaries and providers about the 

preventive services covered by Medicare 

and specifically those services that will 

be paid at 100 percent by Medicare 

beginning in CY 2011 to help expand 

access to these important services. MLN 

Matters articles, quick reference guides, 

and the Medicare and You Handbook 

will all be developed and/or updated to 

reflect the provisions of the ACA and 

are examples of some the provider and 

beneficiary educational materials that 

will be available. We appreciate the 

recommendations of the commenters 

regarding the format for specific 

information that we could make 

available on the CMS web site, and we 

will keep these suggestions in mind as 

we further refine our educational 

strategy. 

After consideration of the public 

comments we received, we are 

finalizing our proposal to waive the 

deductible and coinsurance for most 

preventive services, and for the IPPE 

and the AWV, beginning in CY 2011. 

Table 65 displays the HCPCS codes 

that we are finalizing as ‘‘preventive 

services’’ under section 1861(ddd)(3)(A) 

of the Act (as added by section 4014 of 

the ACA) and identifies the HCPCS 

codes for the IPPE and the AWV. Table 

65 also indicates the most recent 

USPSTF grade, if any, that is the basis 

for our policy with regard to waiver of 

the deductible and coinsurance, as 

applicable, and the Medicare payment 

system under which the HCPCS code 

would be paid when furnished outside 

of the facility setting. 

Since the publication of the CY 2011 

PFS proposed rule, final Level II HCPCS 

codes have been assigned for the AWV, 

as well as the ‘‘additional preventive 

services’’ for HIV screening for at risk 

individuals and smoking and tobacco 

cessation counseling for asymptomatic 

individuals. Therefore, these services 

and their associated Level II HCPCS 

codes are all displayed in Table 65. In 

addition, beginning in CY 2011, 

Medicare will no longer recognize CPT 

code 90658 (Influenza virus vaccine, 

split virus, when administered to 

individuals 3 years of age and older, for 

intramuscular use) but, instead will use 

5 new HCPCS Q codes to report 

influenza vaccines that would otherwise 

have been reported under CPT code 

90658. Therefore, these HCPCS Q-codes 

are included in Table 65, and they will 

be recognized as of January 1, 2011. CPT 

code 90658 is no longer displayed in the 

table. Finally, it has come to our 

attention since publication of the CY 

2011 PFS proposed rule that CPT code 

86689 (HTLV or HIV antibody, 

confirmatory test (e.g., Western Blot)) 

describes a diagnostic test, not 

specifically an HIV screening test that 

would be reported for a screening 

service that is covered by Medicare, 

and, therefore, this CPT is not included 

in Table 65. 

We are adopting proposed § 410.152 

to specify the amounts of payment, with 

modification of (13) to read ‘‘Annual 

Wellness Visit (AWV), providing 

Personalized Prevention Plan Services 

(PPPS)’’ and proposed § 410.160 to 

specify exclusion from the Part B annual 

deductible, with modification of (12) to 

read ‘‘Annual Wellness Visit (AWV), 

providing Personalized Prevention Plan 

Services (PPPS).’’ These modifications 

utilize wording that is consistent with 

final § 410.15, Annual Wellness Visits 

Providing Personalized Prevention Plan 

Services: Conditions for and Limitations 

on Coverage. 

Section 10501(i)(2) of the ACA 

amended the definition of Federally 

Qualified Health Center (FQHC) services 

as defined in section 1861(aa)(3)(A) of 

the Act by replacing the specific 

references to services provided under 

section 1861(qq) and (vv) of the Act 

(diabetes outpatient self-management 

training services and medical nutrition 

therapy services, respectively) with 

preventive services as defined in section 

1861(ddd)(3) of the Act, as established 

by section 4014(a)(3) of the ACA. These 

changes are effective for services 

provided on or after January 1, 2011. 

Accordingly, we are proposing to 

conform the regulations to the new 

statutory requirement by adding a new 

section § 405.2449 which would add the 

new preventive services definition to 

the definition of FQHC services effective 

for services provided on or after January 

1, 2011. 

Section 1861(ddd)(3) of the Act 

defines ‘‘preventive services’’ as 

consisting of the following three 

components: 

• Screening and preventive services 

described in section 1861(ww)(2) of the 

Act (other than electrocardiograms 

described in subparagraph (M) of that 

subsection). 

• An initial preventive physical 

examination, as defined in section 

1861(ww) of the Act. 

• Personalized prevention plan 

services as defined in section 

1861(hhh)(1) of the Act. 

We proposed to add each of these 

three components into the new 

Medicare FQHC preventive services 

definition in a new § 405.2449. 

Section 4104(b) of the ACA, as 

amended by section 10406 of the ACA, 

waives coinsurance for preventive 

services by adding section 1833(a)(1)(Y) 

to the Act to require waiver of 

coinsurance for preventive services that 

are recommended with a grade of A or 

B by the USPSTF for any indication or 

population. This provision is 

specifically designed to remove barriers 

to affording and obtaining such 

preventive services under Medicare. 

In addition, section 10501(i)(3)(B)(ii) 

of the ACA added section 1833(a)(1)(Z) 

to the Act to require a 20 percent 

coinsurance on all FQHC services after 

implementation of the FQHC 

prospective payment system. We believe 

we can give both section 1833(a)(1)(Y) 

and (Z) of the Act, and the definition of 

FQHC services (revised to include the 

broader scope of preventive services) 

their best effect by providing Medicare 

payment at 100 percent for preventive 

services as defined at section 1861 

(ddd)(3) of the Act, effective January 1, 

2011. 

Section 1833(b)(4) of the Act 

stipulates that the Medicare Part B 

deductible shall not apply to FQHC 

services. The ACA makes no change to 

this provision; therefore Medicare will 

continue to waive the Part B deductible 

for all FQHC services, including 

preventive services added by the ACA. 

We received a number of public 

comments on the addition of preventive 

services to the Medicare FQHC benefit. 

These comments included questions 

regarding how these benefits are paid 

and clarification on the waiver of 

coinsurance on these benefits in the 

Medicare FQHC setting. The comments 

are addressed individually below. 

Comment: One commenter indicated 

that prior to enactment of the ACA, 

many health centers provided added 

preventive services as part of the 

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primary and preventive care offered at 

the center. Yet when provided to 

Medicare beneficiaries, they received no 

additional reimbursement. The 

commenter noted that since the 

inception of the Medicare FQHC benefit 

in 1992, Medicare added thirteen new 

services to its coverage, yet those 

services have not been included as 

FQHC services, except for diabetes self 

management training and medical 

nutrition therapy which were added by 

the Deficit Reduction Act. 

Response: We recognize that prior to 

enactment of the ACA, many FQHCs 

may have provided some or all of the 

same preventive services since added to 

the Medicare FQHC benefit package by 

the ACA. We also agree that many new 

preventive services have been added to 

Medicare since 1992, and except for 

diabetes self management training and 

medical nutrition therapy, which were 

added by the Deficit Reduction Act of 

2005, these services had not been 

specifically added to the Medicare 

FQHC benefit package under the law. 

We believe the addition of these 

preventive services to the Medicare 

FQHC benefit through provisions in the 

ACA, along with the waiver of 

beneficiary cost sharing for these 

services in the Medicare FQHC setting, 

eliminates both prior statutory 

restrictions from Medicare coverage in 

the FQHC setting as well as potential 

financial barriers beneficiaries might 

otherwise face in obtaining these 

services. 

Comment: One commenter requested 

further clarification in both this 

preamble and the final regulation text at 

§ 405.2449 on the application of the 

waiver of coinsurance in the FQHC 

setting and CMS’ statement that it will 

allow 100 percent reimbursement for 

these preventive services. The 

commenter stated that health centers are 

reimbursed 100 percent of their costs for 

the provision of influenza, 

pneumococcal, and Hepatitis B 

vaccinations, in accordance with 

Section 1861(s)(10)(A) of the Act. The 

commenter further noted that this 

reimbursement is done separately and 

outside the Medicare FQHC upper 

payment limit. The commenter asserted 

that the payment limit negatively 

impacts an overwhelming majority of 

health centers, and therefore encouraged 

CMS to use a similar method to 

determine the reimbursement for these 

new FQHC preventive services. The 

commenter further asserted that using a 

similar method to determine 

reimbursement would allow for health 

centers to provide more comprehensive 

preventive care to their patients, 

alleviate the financial restrictions faced 

by health centers in providing these 

critical services, and would be in the 

best interests of CMS, health centers, 

and their patients. Finally, the 

commenter noted that because the list of 

new preventive services includes the 

provision of influenza, pneumococcal 

and hepatitis B vaccinations, CMS must 

ensure that health centers do not lose 

their current reimbursement structure 

for these services. 

Response: No coinsurance will be 

imposed upon ACA-added preventive 

services in Medicare FQHCs. 

Accordingly, final settlement with 

FQHCs will reflect the policy that no 

coinsurance amounts will be subtracted 

from the reasonable cost of ACA-added 

preventive benefits. Final settlement is 

determined on the basis of the Medicare 

cost report, the CMS–222–92. We made 

no proposal to exempt ACA-added 

preventive services from tests of 

reasonableness such as the Medicare 

FQHC upper payment limits. Further, 

we do not agree that CMS should use 

the same methodology presently 

employed to pay FQHCs for influenza 

and pneumococcal vaccinations (see 

discussion of Hepatitis B vaccinations 

below) to pay for new Medicare FQHC 

preventive services added by the ACA. 

We believe the average cost per-visit 

payment methodology, which is the 

general payment methodology 

employed by Medicare to pay for 

Medicare FQHC services, was implicit 

in the proposal as we proposed no 

changes to Medicare FQHC payment 

regulations to implement this new 

preventive services addition. In 

addition, we believe the general 

payment methodology for Medicare 

FQHCs, which is based on an allinclusive-cost-per-visit, is better suited 

and most appropriate for payment of 

new preventive services such as the 

annual wellness visit. It is our belief 

that the Medicare FQHC per-visit upper 

payment limits ($126.10 urban and 

$109.14 rural in CY 2011) remain 

reasonable and adequate not only for 

existing Medicare FQHC services but 

also for new preventive services as well. 

Accordingly, we cannot accept the 

comment to exclude new preventive 

services from the Medicare FQHC upper 

payment limits. The Medicare FQHC 

upper payment limits and the general 

per-visit payment methodology 

employed to pay for Medicare FQHC 

services will apply to new Medicare 

FQHC preventive services. 

While we clarify the waiver of 

coinsurance and application of 

Medicare FQHC payment methodology 

and upper payment limits to new 

preventive services in this preamble, we 

cannot accept the comment to provide 

further clarification within the final 

regulation text at § 405.2449. Section 

405.2449 is placed within Medicare 

FQHC regulations which pertain to the 

description of Medicare FQHC services 

and not payment. We made no proposal 

to change payment and accordingly 

make no changes to Medicare FQHC 

payment regulations. 

Finally, we note that we did not 

propose, nor are we making any changes 

to, how influenza, pneumococcal and 

hepatitis B vaccinations are paid in 

Medicare FQHCs. Accordingly, health 

centers will not lose their current 

reimbursement structure for these 

services. We agree that health centers 

are reimbursed 100 percent of their 

costs for the provision of influenza and 

pneumococcal vaccinations. We further 

agree that payment for influenza and 

pneumococcal vaccinations in Medicare 

FQHCs is done separately and outside 

the Medicare FQHC upper payment 

limit. However, we note for clarification 

purposes that prior to the effective date 

of the ACA provisions adding new 

preventive services to the Medicare 

FQHC benefit, the waiver of Part B 

coinsurance did not extend to Hepatitis 

B vaccinations. Hepatitis B vaccinations 

were covered in Medicare FQHCs in 

accordance with Section 1861(aa)(3)(A) 

of the Act which through reference to 

section 1861(aa)(1)(A) of the Act 

included all section 1861(s)(10) of the 

Act services including section 

1861(s)(10)(B) of the Act, Hepatitis B 

vaccinations. The waiver of the 20 

percent Medicare Part B coinsurance in 

Section 1833(a)(3)(A) of the Act 

extended only to Section 1861(s)(10)(A) 

of the Act services and not to section 

1861(s)(10)(B) of the Act Hepatitis B 

vaccinations. To summarize this 

clarification, prior to the effective date 

of the ACA provisions adding new 

preventive services to the Medicare 

FQHC benefit, the waiver of Medicare 

Part B coinsurance did not extend to 

Section 1861(s)(10)(B) of the Act 

Hepatitis B vaccinations, hence these 

services were subject to Medicare Part B 

coinsurance and paid at 80 percent (not 

100 percent) of reasonable costs in 

accordance with the provisions in 

section 1833(a)(3) of the Act. Effective 

with implementation of ACA provisions 

on January 1, 2011, Part B coinsurance 

on Hepatitis B vaccinations is waived as 

they are now included in the definition 

of ‘‘preventive services’’ in section 

1861(ddd)(3)(A) of the Act as crossreferenced to section 1861(ww)(2) of the 

Act. 

Consistent with our response to 

public comment above, and in 

conformance with the preventive 

services definition in section 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73419 

1861(ddd)(3) of the Act, we are 

finalizing this new Medicare FQHC 

preventive services provision without 

modification. We will conform the 

regulations to the new statutory 

requirements by adding a new section 

§ 405.2449, adding the new preventive 

services definition to the definition of 

FQHC services effective for services 

provided on or after January 1, 2011. 

BILLING CODE 4120–01–P 

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BILLING CODE 412–01–C 

3. Extension of Waiver of Deductible to 

Services Furnished in Connection With 

or in Relation to a Colorectal Cancer 

Screening Test That Becomes Diagnostic 

or Therapeutic 

Section 4104(c) of the ACA amended 

section 1833(b) of the Act to waive the 

Part B deductible for colorectal cancer 

screening tests that become diagnostic. 

Specifically, section 1833(b)(1) of the 

Act (as amended by section 4104(c)(2) of 

the ACA) waived the deductible with 

respect to a colorectal cancer screening 

test regardless of the code that is billed 

for the establishment of a diagnosis as 

a result of the test, or for the removal of 

tissue or other matter or other procedure 

that is furnished in connection with, as 

a result of, and in the same clinical 

encounter as a screening test. We 

proposed that all surgical services 

furnished on the same date as a planned 

screening colonoscopy, planned flexible 

sigmoidoscopy, or barium enema be 

considered to be furnished in 

connection with, as a result of, and in 

the same clinical encounter as the 

screening test. In the event of a 

legislative change to this policy (for 

example, a statutory change that would 

waive the coinsurance for these related 

services in addition to the deductible), 

we would reassess the appropriateness 

of this proposed definition of services 

that are furnished in connection with, as 

a result of, and in the same clinical 

encounter as the colorectal cancer 

screening test that becomes diagnostic. 

We also noted that the beneficiary’s 

annual deductible would likely be met 

when any surgical procedure (related or 

not) is furnished on the same day as the 

scheduled screening test. 

We proposed to implement this 

provision by creating a HCPCS modifier 

that providers and practitioners would 

append to the diagnostic procedure 

code that is reported instead of the 

screening colonoscopy or screening 

flexible sigmoidoscopy HCPCS code or 

as a result of the barium enema when 

the screening test becomes a diagnostic 

service. The claims processing system 

would respond to the modifier by 

waiving the deductible for all surgical 

services on the same date as the 

diagnostic test. We proposed that 

coinsurance would continue to apply to 

the diagnostic test and to other services 

furnished in connection with, as a result 

of, and in the same clinical encounter as 

the screening test. 

Comment: Many commenters 

expressed support for CMS’ proposal to 

waive the deductible in cases where a 

screening colonoscopy for colorectal 

cancer becomes diagnostic. The 

commenters believe that the proposal to 

waive the Medicare deductible for any 

surgical service performed on the same 

day and in the same clinical encounter 

as a screening colonoscopy if the service 

is appended with a modifier is a sound 

approach to implementing the policy. 

However, a few commenters 

requested that CMS also waive the 

coinsurance for a procedure that was a 

planned colorectal cancer screening test, 

regardless of the code that is billed for 

the establishment of a diagnosis as a 

result of the test, or for the removal of 

tissue or other matter or other procedure 

that is furnished in connection with, or 

as a result of, and in the same clinical 

encounter as a screening test. The 

commenters were concerned that 

beneficiaries may refrain from 

undergoing a covered colorectal cancer 

screening test if coinsurance could 

apply to a resulting diagnostic test and 

other services furnished in the same 

encounter as the planned colorectal 

cancer screening test. As an alternative, 

several commenters recommend that 

CMS not apply a coinsurance 

requirement to the part of the procedure 

that is screening in nature. 

Response: We appreciate the 

commenters’ support for our proposal, 

including the proposed administrative 

requirements for practitioners and 

providers to identify the circumstances 

under which the waiver of the 

deducible would apply. As stated above, 

section 1833(b)(1) of the Act (as 

amended by section 4104(c)(2) of the 

ACA) waived the Part B deductible for 

colorectal cancer screening tests that 

become diagnostic. The statute does not 

currently permit waiver of coinsurance 

for these circumstances as the 20 

percent coinsurance applies to all 

service furnished under the PFS unless 

there is a specific statutory exception. 

We believe that a statutory change 

would be necessary in order to waive 

the coinsurance for these related 

services, in addition to the waiver of the 

deductible. 

In response to those commenters who 

suggested, as an alternative, that we 

identify the screening portion of the 

diagnostic test in order to waive the 

coinsurance for only that portion, we 

are unable to identify a portion of a 

diagnostic test that is ‘‘screening’’ 

because a HCPCS code for a diagnostic 

test would be reported and, therefore, 

we would consider the whole test to be 

diagnostic in nature. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

waive the deductible for colorectal 

cancer screening tests that become 

diagnostic. Providers and practitioners 

would append new HCPCS modifier -PT 

(Colorectal cancer screening test, 

converted to diagnostic test or other 

procedure) to the diagnostic procedure 

code that is reported instead of the 

screening colonoscopy or screening 

flexible sigmoidoscopy HCPCS code or 

as a result of the barium enema when 

the screening test becomes a diagnostic 

service. The claims processing system 

would respond to the modifier by 

waiving the deductible for all surgical 

services on the same date as the 

diagnostic test. Coinsurance would 

continue to apply to the diagnostic test 

and to other services furnished in 

connection with, as a result of, and in 

the same clinical encounter as the 

screening test. 

S. Section 5501: Expanding Access to 

Primary Care Services and General 

Surgery Services 

1. Section 5501(a): Incentive Payment 

Program for Primary Care Services 

a. Background 

Section 5501(a) of the ACA revised 

section 1833 of the Act by adding a new 

paragraph (x), ‘‘Incentive Payments for 

Primary Care Services.’’ Section 1833(x) 

of the Act states that in the case of 

primary care services, furnished on or 

after January 1, 2011 and before January 

1, 2016 by a primary care practitioner, 

there shall also be paid on a monthly or 

quarterly basis an amount equal to 10 

percent of the payment amount for such 

services under Part B. 

Section 1833(x)(2)(A) of the Act (as 

added by section 5501(a) of the ACA) 

defines a primary care practitioner as: 

(1) A physician, as described in section 

1861(r)(1) of the Act, who has a primary 

specialty designation of family 

medicine, internal medicine, geriatric 

medicine, or pediatric medicine; or (2) 

a nurse practitioner, clinical nurse 

specialist, or physician assistant as 

defined in section 1861(aa)(5) of the 

Act, and in all cases, for whom primary 

care services accounted for at least 60 

percent of the allowed charges under 

Part B for the practitioner in a prior 

period as determined appropriate by the 

Secretary. 

Section 1833(x)(2)(B) of the Act (as 

added by section 5501(a)(2)(B) of the 

ACA) defines primary care services as 

those services identified by the 

following HCPCS codes as of January 1, 

2009 (and as subsequently modified by 

the Secretary, as applicable): 

• 99201 through 99215 for new and 

established patient office or other 

outpatient E/M visits; 

• 99304 through 99340 for initial, 

subsequent, discharge, and other 

nursing facility E/M services; new and 

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established patient domiciliary, rest 

home (eg, boarding home), or custodial 

care E/M services; and domiciliary, rest 

home (eg, assisted living facility), or 

home care plan oversight services; and 

• 99341 through 99350 for new and 

established patient home E/M visits. 

These codes are displayed in Table 66. 

All of these codes remain active in CY 

2011 and there are no other codes used 

to describe these services. 

TABLE 66—PRIMARY CARE SERVICES ELIGIBLE FOR PRIMARY CARE INCENTIVE PAYMENTS IN CY 2011 

CPT Code Description 

99201 ............................................................................................................. Level 1 new patient office or other outpatient visit. 

99202 ............................................................................................................. Level 2 new patient office or other outpatient visit. 

99203 ............................................................................................................. Level 3 new patient office or other outpatient visit. 

99204 ............................................................................................................. Level 4 new patient office or other outpatient visit. 

99205 ............................................................................................................. Level 5 new patient office or other outpatient visit. 

99211 ............................................................................................................. Level 1 established patient office or other outpatient visit. 

99212 ............................................................................................................. Level 2 established patient office or other outpatient visit. 

99213 ............................................................................................................. Level 3 established patient office or other outpatient visit. 

99214 ............................................................................................................. Level 4 established patient office or other outpatient visit. 

99215 ............................................................................................................. Level 5 established patient office or other outpatient visit. 

99304 ............................................................................................................. Level 1 initial nursing facility care. 

99305 ............................................................................................................. Level 2 initial nursing facility care. 

99306 ............................................................................................................. Level 3 initial nursing facility care. 

99307 ............................................................................................................. Level 1 subsequent nursing facility care. 

99308 ............................................................................................................. Level 2 subsequent nursing facility care. 

99309 ............................................................................................................. Level 3 subsequent nursing facility care. 

99310 ............................................................................................................. Level 4 subsequent nursing facility care. 

99315 ............................................................................................................. Nursing facility discharge day management; 30 minutes. 

99316 ............................................................................................................. Nursing facility discharge day management; more than 30 minutes. 

99318 ............................................................................................................. Other nursing facility services; evaluation and management of a patient involving an annual nursing facility assessment. 

99324 ............................................................................................................. Level 1 new patient domiciliary, rest home, or custodial care visit. 

99325 ............................................................................................................. Level 2 new patient domiciliary, rest home, or custodial care visit. 

99326 ............................................................................................................. Level 3 new patient domiciliary, rest home, or custodial care visit. 

99327 ............................................................................................................. Level 4 new patient domiciliary, rest home, or custodial care visit. 

99328 ............................................................................................................. Level 5 new patient domiciliary, rest home, or custodial care visit. 

99334 ............................................................................................................. Level 1 established patient domiciliary, rest home, or custodial care 

visit. 

99335 ............................................................................................................. Level 2 established patient domiciliary, rest home, or custodial care 

visit. 

99336 ............................................................................................................. Level 3 established patient domiciliary, rest home, or custodial care 

visit. 

99337 ............................................................................................................. Level 4 established patient domiciliary, rest home, or custodial care 

visit. 

99339 ............................................................................................................. Individual physician supervision of a patient in home, domiciliary or 

rest home recurring complex and multidisciplinary care modalities; 

30 minutes. 

99340 ............................................................................................................. Individual physician supervision of a patient in home, domiciliary or 

rest home recurring complex and multidisciplinary care modalities; 

30 minutes or more. 

99341 ............................................................................................................. Level 1 new patient home visit. 

99342 ............................................................................................................. Level 2 new patient home visit. 

99343 ............................................................................................................. Level 3 new patient home visit. 

99344 ............................................................................................................. Level 4 new patient home visit. 

99345 ............................................................................................................. Level 5 new patient home visit. 

99347 ............................................................................................................. Level 1 established patient home visit. 

99348 ............................................................................................................. Level 2 established patient home visit. 

99349 ............................................................................................................. Level 3 established patient home visit. 

99350 ............................................................................................................. Level 4 established patient home visit. 

b. Primary Care Incentive Payment 

Program (PCIP) 

(1) Primary Specialty Designation 

For primary care services furnished 

on or after January 1, 2011 and before 

January 1, 2016, we proposed to provide 

a 10 percent incentive payment to 

primary care practitioners, identified as 

the following: (1) In the case of 

physicians, enrolled in Medicare with a 

primary specialty designation of 08- 

family practice, 11-internal medicine, 

37-pediatrics, or 38-geriatrics; or (2) in 

the case of nonphysician practitioners 

(NPPs), enrolled in Medicare with a 

primary care specialty designation of 

50-nurse practitioner, 89-certified 

clinical nurse specialist, or 97-physician 

assistant; and (3) for whom the primary 

care services displayed in Table 66 

accounted for at least 60 percent of the 

allowed charges under Part B for such 

practitioner during the time period that 

is specified by the Secretary, and 

proposed in this section. Hereinafter, we 

refer to practitioners with these primary 

Medicare specialty designations as 

potential primary care practitioners and 

the potential primary care practitioner’s 

ratio of primary care allowed charges to 

allowed charges under Part B 

(multiplied by 100) as the primary care 

percentage. 

Comment: Many commenters 

expressed support for the PCIP and 

general appreciation for the increased 

payment for primary care services. 

Some commenters approved of the 

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proposed inclusion of nonphysician 

practitioners (NPPs) in the program, but 

asked for clarification on the practice 

settings where these practitioners may 

furnish PCIP-eligible services. However, 

several commenters disagreed with the 

proposed specialty limitations for the 

PCIP. The commenters recommended 

that several additional specialties be 

eligible for the PCIP including, but not 

limited to, neurology, chiropractics, 

infectious disease, endocrinology, and 

certified nurse-midwives. The 

commenters contended that many 

practitioners in these other specialties 

provide primary care services and have 

the requisite education and training, 

similar to the potential primary care 

practitioners in the designated 

specialties to which payment under the 

PCIP was proposed. 

Response: We appreciate the 

commenters’ support of the PCIP. We 

recognize that a variety of specialties 

may provide primary care services as 

defined broadly under the statute by the 

E/M codes displayed in Table 66 and, in 

some cases, these specialist 

practitioners may truly function as 

‘‘primary care practitioners’’ in the 

common use of the term (providing first 

contact, coordinated, continuous care 

for certain patients under their care). 

However, section 1833(x) of the Act (as 

added by section 5501(a) of the ACA) 

specifies in the definition of primary 

care practitioner the physician 

specialties that are considered as 

primary care for purposes of the PCIP. 

Under section 1833(x)(2)(A)(i)(I) of the 

Act, only physicians with a primary 

specialty designation of family 

medicine, internal medicine, geriatric 

medicine, or pediatric medicine are 

considered potential primary care 

physicians. The provision does not 

authorize us to add other Medicare 

specialty designations to the definition 

of a primary care practitioner for 

purposes of the PCIP. Therefore, as 

proposed, we will identify physicians 

that have a primary specialty 

designation of family medicine, internal 

medicine, geriatric medicine, or 

pediatric medicine (along with nurse 

practitioners, clinical nurse specialists, 

and physician assistants) for further 

evaluation as potential primary care 

practitioners for purposes of the PCIP. 

We note that the PCIP does not place 

limitations on the setting of the primary 

care services for which a primary care 

practitioner may be paid an incentive 

payment. However, as a practical 

matter, the statutorily defined primary 

care services to which the PCIP applies 

may limit the setting of the services on 

which a PCIP payment is based. For 

example, there are no inpatient hospital 

care E/M services on the list of primary 

care services for purposes of the PCIP. 

The PCIP payment is an amount equal 

to 10 percent of the payment for primary 

care services furnished by the primary 

care practitioner. 

Comment: Several commenters 

commended CMS for proposing that the 

PCIP payment would be in addition to 

payments under other incentive 

programs under Medicare, arguing that 

this policy is particularly important to 

encourage the delivery of primary care 

services to underserved Medicare 

populations. However, some 

commenters recommended that CMS 

increase the amount of PCIP payments 

because the commenters believe that 10 

percent is an insufficient financial 

incentive to encourage primary care 

practice over specialty practice as a 

career path for medical and other health 

professional students. 

Response: We appreciate the 

commenters’ suggestions that primary 

care should continue to be a Medicare 

priority and acknowledge that payment 

incentives are one of many factors that 

may influence health professional 

student career choice. While we 

recognize the importance of encouraging 

primary care practice and ensuring the 

accessibility of primary care services, 

section 1833(x) of the Act (as added by 

section 5501(a) of the ACA) explicitly 

states the incentive payment amount, 

and does not grant authority to the 

Secretary to adjust the payment amount. 

According to this provision, primary 

care practitioners (those who meet the 

specialty designation and primary care 

percentage criteria) qualify for an 

incentive payment equaling 10 percent 

of the payment amount under Part B for 

the primary care services they furnish. 

Therefore, we are maintaining the PCIP 

incentive payment amount at 10 

percent, as we proposed. The statute 

also specifies that the PCIP payment is 

to be determined without regard to any 

payment for the primary care service 

under section 1833(m) of the statute 

(currently, the HPSA physician bonus 

payment program). Therefore, we are 

also adopting as final our proposal to 

make any PCIP payment in addition to, 

but determined without regard to, any 

HPSA physician bonus payment. 

(2) Primary Care Percentage Calculation 

In the CY 2011 PFS proposed rule (74 

FR 10137), we proposed to use the most 

current full year of claims data to 

identify primary care practitioners 

eligible for the PCIP for a CY based on 

the practitioner’s primary specialty (as 

identified on claims) and the 

practitioner’s primary care percentage 

calculated based on the primary care 

services displayed in Table 66. We 

commonly use the most recent full year 

of claims data for purposes of 

establishing annual payment amounts 

under a number of Medicare’s fee-forservice programs. A potential primary 

care practitioner would be eligible for 

the PCIP in a CY if the practitioner’s 

primary care percentage, calculated as 

the practitioner’s allowed charges for 

primary care services (identified in 

Table 66) (the numerator) divided by his 

or total allowed charges under Part B 

(the denominator) and multiplied by 

100, meets or exceeds the 60 percent 

threshold. We note that the 

practitioner’s specialty is applied to the 

claim by the claims processing system 

and reflects the practitioner’s primary 

specialty designation for purposes of 

Medicare enrollment on the date the 

claim is processed, which would 

usually be close to the date on which 

the service was actually furnished to the 

beneficiary. We would identify primary 

care practitioners eligible for the PCIP 

for a year by the individual physician/ 

practitioner national provider identifier 

(NPI) number using the most current 

full year of claims data available. 

Comment: Many commenters 

described problems potential primary 

care practitioners would likely 

encounter in meeting the 60 percent 

eligibility threshold requirement for the 

PCIP. The commenters pointed to a few 

reasons why a potential primary care 

practitioner’s primary care percentage 

may not meet the 60 percent threshold. 

Most commenters believe that the 

denominator in the primary care 

percentage calculation, or ‘‘allowed 

charges under Part B’’ as CMS proposed, 

was too broad, and would limit the 

number of potential primary care 

practitioners who would qualify for the 

PCIP. For example, the commenters 

speculated that under the proposed 

threshold calculation, more than onethird of family practitioners and more 

than 60 percent of general internists 

would not qualify for the PCIP. 

Generally, the commenters requested 

that CMS interpret the phrase ‘‘allowed 

charges under this part’’ in section 

1833(x) of the Act (as added by section 

5501(a)(2)(A)(ii) of the ACA) more 

narrowly to decrease the denominator in 

the primary care percentage calculation 

and thereby increase the number of 

potential primary care practitioners who 

would qualify for the PCIP. 

Several commenters, including 

MedPAC, recommended that CMS use 

only the total allowed charges under the 

PFS, rather than all charges under Part 

B, as the denominator in the potential 

primary care practitioner’s primary care 

percentage calculation. The commenters 

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argued that a potential primary care 

practitioner’s billings under his or her 

NPI for Part B services not paid under 

the PFS (including laboratory services, 

drugs, and durable medical equipment 

(DME)) would depend upon the 

organizational structure of the potential 

primary care practitioner’s practice and, 

therefore, would be unrelated to 

whether the practitioner was serving as 

a ‘‘true primary care practitioner’’ for 

Medicare beneficiaries under his or her 

care. The commenters asserted that 

under other sections of the Act, 

‘‘allowed charges under this part’’ has 

been interpreted by CMS to mean 

‘‘allowed charges under the PFS.’’ The 

commenters did not believe that 

potential primary care practitioners 

serving as ‘‘true primary care 

practitioners’’ should be penalized with 

respect to PCIP eligibility because they 

furnish non-PFS Part B services to their 

patients. 

In addition, other commenters argued 

that ‘‘true primary care practitioners’’ 

caring for their patients across all 

settings in accordance with a traditional 

primary care model commonly furnish 

other types of services to their patients 

that are paid under the PFS but that are 

not defined as primary care services 

under the PCIP, such as inpatient 

hospital care and emergency department 

visits. The commenters were concerned 

that providing hospital care to their 

patients consistent with the goal of 

improved continuity of care would 

disadvantage ‘‘true primary care 

practitioners’’ with respect to the 

primary care percentage calculation 

and, ultimately, eligibility for the PCIP. 

Several commenters emphasized that 

potential primary care practitioners in 

rural areas would be more likely to 

provide a wider variety of services to 

their patients due to the lack of other 

more specialized providers in their area, 

which could make them less likely to 

qualify for the PCIP. Many commenters 

contended that the amount of these 

specific non-primary care PFS allowed 

charges would be sufficiently large to 

prevent ‘‘true primary care practitioners’’ 

from meeting the 60 percent primary 

care percentage threshold. MedPAC and 

several other commenters recommended 

that CMS remove hospital E/M visits 

from the denominator of the primary 

care percentage calculation, explaining 

that this approach would neither 

penalize nor reward potential primary 

care practitioners who provide hospital 

care to their patients with respect to 

eligibility for the PCIP. 

Response: We understand 

commenters’ concerns regarding the 

criteria for the PCIP eligibility 

determination, and in particular the 

total amount of allowed charges used in 

the denominator for calculation of the 

potential primary care practitioner’s 

primary care percentage. We also 

believe that it is important that the 

eligibility determination be based on a 

fair representation of potential primary 

practitioners’ services so that ‘‘true 

primary care practitioners’’ may meet or 

exceed the qualifying primary care 

percentage threshold for the PCIP, 

regardless of how they may have chosen 

to organize their medical practice. 

We agree with some commenters who 

suggested that section 1833(x)(2)(A)(ii) 

of the Act (as added by section 5501(a) 

of the ACA) allows some flexibility in 

implementing the PCIP primary care 

percentage calculation, based on the 

phrase in the 60 percent threshold 

specification that states, ‘‘at least 60 

percent of the allowed charges under 

this part for such physician or 

practitioner in a prior period as 

determined appropriate by the 

Secretary.’’ 

We considered several refinements to 

determine a potential primary care 

practitioner’s allowed charges 

consistent with the goal of eliminating 

potential biases that could affect ‘‘true 

primary care practitioners’’ who practice 

under certain conditions and structural 

constraints. We reviewed recent 

Medicare claims data by specialty 

designation to determine which Part B 

services accounted for the highest 

allowed charges for primary care 

practitioners, focusing on those services 

that are not defined as primary care 

services and, therefore, contribute to 

increasing the magnitude of the 

denominator in the primary care 

percentage. We found that many 

potential primary care practitioners had 

significant allowed charges for hospital 

inpatient care and emergency 

department visits, which are not 

considered primary care services for 

purposes of the PCIP, consistent with 

the observations of some commenters. 

Due to the high allowed charges for 

these hospital visits compared to other 

primary care services, ‘‘true primary care 

practitioners’’ providing hospital 

inpatient and emergency department 

care for their patients would be less 

likely to qualify for the PCIP. We also 

found that rural practitioners, 

specifically family physicians, may be 

disproportionately unlikely to qualify 

for the PCIP because they typically 

provide a wider variety of services, 

including hospital inpatient care and 

emergency department visits, than their 

urban counterparts. This difference in 

the profile of potential primary care 

practitioners’ services was even greater 

for family physicians in frontier states. 

Our review of non-PFS Part B services 

furnished by potential primary care 

practitioners, including laboratory 

services, drugs, and DME, showed that 

allowed charges for these services were 

typically only a small percentage of the 

total amount of a potential primary care 

practitioner’s allowed charges under 

Part B. However, while less influential 

than the inclusion of hospital visits in 

the denominator of the primary care 

percentage for purposes of determining 

whether a potential primary care 

practitioner meets the PCIP eligibility 

threshold, we believe that the inclusion 

of the non-PFS services in the 

denominator could also lead to bias 

against ‘‘true primary care practitioners’’ 

who provide a full spectrum of care to 

their patients. 

Therefore, in an effort to eliminate 

potential bias against potential primary 

care practitioners who are ‘‘true primary 

care practitioners’’ with certain primary 

care practice patterns, we are modifying 

our proposal and will remove certain 

services from the total allowed charges 

that is the denominator of the primary 

care percentage calculation. In the CY 

2011 PFS proposed rule (74 FR 40136), 

we proposed to use all allowed charges 

under Part B as the denominator in the 

calculation to determine whether a 

potential primary care practitioner 

meets the 60 percent eligibility 

threshold requirement. Following our 

analysis of Medicare claims data, we 

will remove all non-PFS allowed 

charges and allowed charges for 

evaluation and management (E/M) 

services furnished to hospital inpatients 

and outpatients by potential primary 

care practitioners from the total allowed 

charges under Part B. The specific E/M 

services that we are removing from the 

denominator for purposes of the 

primary care percentage calculation are 

displayed in Table 67. We note that we 

are not removing hospital inpatient 

consultation E/M services from the 

denominator, either face-to-face or via 

telehealth, because we believe these E/ 

M services do not reflect the types of 

services that would be furnished by 

‘‘true primary care practitioners’’ serving 

a primary care function for their 

patients as reflected in their primary 

care practice patterns. 

In other words, PFS charges excluding 

allowed charges for hospital E/M 

services will be the denominator in the 

final primary care percentage 

calculation for PCIP eligibility 

determination: [primary care services/ 

(PFS charges—hospital E/M charges)] 

multiplied by 100. The potential 

primary care practitioner primary care 

percentage calculation is subject to 

traditional rounding rules with respect 

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to the 60 percent eligibility threshold, 

meaning 59.5 percent and above will be 

rounded to 60 percent. 

These refinements remove the largest 

categories of non-primary care allowed 

charges furnished by ‘‘true primary care 

practitioners’’ from the primary care 

percentage calculation used for 

determination of PCIP eligibility, 

typically decreasing the magnitude of 

the denominator and resulting in a 

higher proportion of primary care to 

non-primary care services for a given 

potential primary care practitioner. 

Limiting the allowed charges to the PFS 

also removes drugs, laboratory services, 

and DME from the denominator 

calculation. While these non-PFS 

allowed charges are not a large 

percentage of most potential primary 

care practitioners’ allowed charges 

under Part B, we acknowledge the 

commenters’ assertions that many 

potential primary care practitioners who 

are ‘‘true primary care practitioners’’ 

furnish these services to their patients 

under certain primary care practice 

models. Therefore, we also believe it is 

appropriate to remove the non-PFS 

allowed charges from the denominator 

of the primary care percentage 

calculation. In effect, removing allowed 

charges for hospital E/M and non-PFS 

services from the total allowed charges 

in the denominator of the primary care 

percentage calculation allows 

significantly more potential primary 

care practitioners to qualify for the 

PCIP, while still limiting the payment 

incentive to ‘‘true primary care 

practitioners’’ who predominantly serve 

a primary care function for their 

patients. With use of this revised 

denominator in the primary care 

percentage calculation, we estimate that 

over 80 percent of physicians who 

currently are enrolled in Medicare with 

a primary specialty designation of 

family medicine and almost 60 percent 

of physicians with a designation of 

internal medicine would qualify for the 

PCIP based on CY 2009 claims data. 

This revised calculation removes bias 

with respect to eligibility of ‘‘true 

primary care practitioners’’ for the PCIP 

based on the specific primary care 

practice characteristics and model they 

utilize in caring for their patients. 

TABLE 67—EXCLUDED HOSPITAL EVALUATION AND MANAGEMENT SERVICES FROM THE DENOMINATOR FOR THE PCIP 

PRIMARY CARE PERCENTAGE CALCULATION

CPT Code Description 

99217 ...................................................................................................................................... Observation care discharge day management. 

99218 ...................................................................................................................................... Level 1 initial observation care, per day. 

99219 ...................................................................................................................................... Level 2 initial observation care, per day. 

99220 ...................................................................................................................................... Level 3 initial observation care, per day. 

99221 ...................................................................................................................................... Level 1 initial hospital care, per day. 

99222 ...................................................................................................................................... Level 2 initial hospital care, per day. 

99223 ...................................................................................................................................... Level 3 initial hospital care, per day. 

99231 ...................................................................................................................................... Level 1 subsequent hospital care, per day. 

99232 ...................................................................................................................................... Level 2 subsequent hospital care, per day. 

99233 ...................................................................................................................................... Level 3 subsequent hospital care. 

99234 ...................................................................................................................................... Level 1 observation or inpatient hospital care. 

99235 ...................................................................................................................................... Level 2 observation or inpatient hospital care. 

99236 ...................................................................................................................................... Level 3 observation or inpatient hospital care. 

99238 ...................................................................................................................................... Hospital discharge day management; 30 minutes or 

less. 

99239 ...................................................................................................................................... Hospital discharge day management; more than 30 

minutes. 

99281 ...................................................................................................................................... Level 1 emergency department visit. 

99282 ...................................................................................................................................... Level 2 emergency department visit. 

99283 ...................................................................................................................................... Level 3 emergency department visit. 

99284 ...................................................................................................................................... Level 4 emergency department visit. 

99285 ...................................................................................................................................... Level 5 emergency department visit. 

Comment: A number of commenters 

recommended that CMS add additional 

services commonly furnished by ‘‘true 

primary care practitioners’’ to the list of 

primary care services for purposes of 

calculation of the primary care 

percentage and payment of the incentive 

payments themselves, which are made 

at 10 percent of the Medicare payment 

for primary care services. Among the 

numerous services recommended as 

additions by the commenters are 

hospital E/M visits, preventive services 

such as immunizations, certain 

diagnostic tests, and services related to 

home health. The commenters argued 

that, by increasing the numerator of the 

primary care percentage calculation 

used for determining PCIP eligibility, 

more potential primary care 

practitioners would qualify for the PCIP. 

Moreover, several commenters argued 

that, when furnished by ‘‘true primary 

care practitioners,’’ these additional 

services are, in fact, primary care 

services and therefore should be subject 

to the incentive payment. The 

commenters suggested the phrase, ‘‘and 

as subsequently modified by the 

Secretary’’ in section 1833(x)(2)(B) of the 

Act (as added by section 5501(a) of the 

ACA) following the HCPCS codes 

defined as primary care services, could 

be read to provide CMS authority to add 

services to the list of primary care 

services. However, some commenters 

expressed concern that adding services, 

such as hospital E/M visits, to the list 

primary care services would qualify 

many hospitalists for the PCIP with the 

result that the PCIP would be applied 

inappropriately to practitioners 

predominantly furnishing hospital 

services. If CMS were to contemplate 

adding hospital E/M services to the list 

of primary care services, the 

commenters argued that CMS should 

exclude clinicians with hospitalists’ 

claim patterns, even when those 

practitioners have a potential primary 

care specialty designation. 

Response: While we appreciate 

commenters’ interest in increasing the 

number of practitioners qualifying for 

the PCIP, we do not believe that section 

1833(x)(2)(B) of the Act (as added by 

section 5501(a) of the ACA) authorizes 

us to add services to the list of primary 

care services specified in the Act. 

Section 1833(x)(2)(B) of the Act (as 

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added by section 5501(a) of the ACA) 

clearly specifies the HCPCS codes that 

are considered primary care services for 

purposes of the PCIP, stating ‘‘The term 

‘primary care services’ means services 

identified, as of January 1, 2009, by the 

following HCPCS codes (and as 

subsequently modified by the Secretary) 

* * *.’’ This phrase appears in other 

sections of the Act, and we have 

consistently interpreted it to refer to the 

same services that may be reported 

under different HCPCS codes when 

those codes change over time. We do 

not believe the phrase ‘‘and as 

subsequently modified by the Secretary’’ 

authorizes us to add codes (additional 

services) to the definition of primary 

care services. 

Comment: Several commenters 

expressed concern regarding the 

reduced likelihood that ‘‘true primary 

care practitioners’’ in rural areas would 

qualify for the PCIP because primary 

care practitioners in remote areas 

commonly furnish a greater variety of 

services than those on the list of specific 

primary care services. The commenters 

recommended that rural practitioners be 

qualified for the PCIP based on another 

primary care percentage threshold that 

better suits the practice patterns of rural 

practitioners, including accounting for 

hospital E/M visits without penalizing 

the practitioners. Some commenters 

asserted that the PCIP would only 

benefit those practitioners furnishing 

services in health professional shortage 

areas (HPSAs) based on their belief that 

the PCIP was limited to primary care 

practitioners furnishing primary care 

services in HPSAs or that primary care 

practitioners would benefit at the cost of 

other specialty practitioners because of 

considerations of budget neutrality 

under the PFS. 

Response: We appreciate the concerns 

of the commenters regarding rural 

practitioners and their special practice 

patterns. As discussed earlier in this 

section, we have modified our primary 

care percentage calculation for purposes 

of comparison with the 60 percent PCIP 

eligibility threshold so that all potential 

primary care practitioners, including 

potential primary care practitioners in 

rural areas, will not miss the PCIP 

eligibility threshold as a result of 

furnishing hospital visits to their 

patients. With regard to applying special 

criteria for the primary care percentage 

calculation for rural practitioners, we 

note that section 1833(x) of the Act does 

not include any provision that would 

make the location of the primary care 

services or the primary care practitioner 

a factor for PCIP eligibility; the same 

eligibility determination is applicable to 

all potential primary care practitioners. 

In contrast to the HPSA physician 

bonus payment program and the HPSA 

Surgical Incentive Program (HSIP), the 

PCIP does not consider geographic 

location in determining practitioner 

eligibility or the primary care services 

for which the incentive payments will 

be made. Although practitioners in rural 

areas will benefit from the PCIP in the 

same way as practitioners in other 

regions, as we note above, PCIP 

payments will be made in addition to 

the regular Part B payments for primary 

care services furnished by eligible 

primary care practitioners and, if 

applicable, the HPSA physician bonus 

payment will also be made. Finally, we 

note that primary care incentive 

payments are not subject to the budget 

neutrality adjustment under the PFS, so 

PCIP payments will not affect payment 

for other services for which payment is 

made under the PFS. 

After consideration of the public 

comments we received, we are 

finalizing our policy for calculation of 

the primary care percentage, with 

certain modifications from the proposed 

policy. The numerator of the primary 

care percentage for each NPI is the sum 

of the allowed charges for the primary 

care services listed in Table 66, as we 

proposed. However, the denominator is 

the allowed charges under the PFS 

minus the allowed charges for the 

hospital E/M services listed in Table 67, 

which is a change from our proposal. 

We will calculate the primary care 

percentage for each NPI of a potential 

primary care practitioner and, if the 

calculation rounds to 60 percent or 

greater, the potential primary care 

practitioner with that NPI will qualify to 

receive PCIP payments for the 

applicable year. 

(3) Period of Claims Data for Primary 

Care Percentage Calculation 

As we discussed in the CY 2011 PFS 

proposed rule (74 FR 40137), we 

proposed to use CY 2009 PFS claims 

data, processed through June 30, 2010, 

for determining PCIP practitioner 

eligibility for CY 2011. This would 

ensure analysis of about 99 percent of 

CY 2009 claims to determine 

practitioner eligibility for PCIP payment 

beginning January 2011. We note that 

the MMA changed the requirements for 

critical access hospital (CAH) billing for 

practitioners’ professional services and, 

therefore, modifications were made to 

the Medicare claims processing system 

to require CAHs to identify the 

practitioner furnishing a service on the 

CAH claim for that professional service. 

However, because the rendering 

practitioner has only been identified on 

CAH claims since July 1, 2009, for the 

first year of the PCIP we are proposing 

to identify eligible practitioners using 

only 6 months of CAH data for those 

CAHs paid under the optional method. 

Thereafter, we would update the list of 

practitioners eligible for the PCIP 

annually based on the most recent 

available full year of PFS and CAH 

claims data. 

To the extent practitioners were paid 

under the PFS during the historical 

claims data year for some primary 

services, and CAHs were paid under the 

optional method for those same 

practitioners’ other professional 

services, we would aggregate the 

historical claims data from all settings 

by the practitioner’s NPI in order to 

determine whether the practitioner is 

eligible for PCIP payments. We 

proposed that for all potentially eligible 

primary care practitioners (both 

practitioners paid under the PFS and 

practitioners for whose professional 

services CAHs are paid under the 

optional method), the period of claims 

data used for the annual determination 

of the practitioner’s primary care 

percentage would lag the PCIP payment 

year by 2 years (for example, CY 2010 

claims data would be used for the CY 

2012 PCIP). This 2-year lag is consistent 

with other areas of the Medicare 

program where we rely on information 

from claims data to inform payment in 

a future year, such as the use of CY 2009 

PFS utilization data in the 

establishment of certain aspects of CY 

2011 PFS payment rates. 

Under the proposed PCIP eligibility 

determination method, it would be 

necessary to revise the list of PCIPeligible primary care practitioners based 

on updated claims data regarding 

primary specialty designation and 

primary care percentage each year. The 

revised list of primary care practitioners 

developed prior to the beginning of the 

next CY would establish a practitioner’s 

eligibility for PCIP payments for the full 

next CY. That is, once eligible for the 

PCIP for a given CY, the practitioner 

would receive PCIP payments for 

primary care services furnished 

throughout that full CY. We would then 

reassess the practitioner’s PCIP 

eligibility for the next year’s payments. 

As a result, under our proposal, a 

practitioner newly enrolling in 

Medicare during a CY would not be 

eligible for the PCIP until Medicare 

claims data reflecting the practitioner’s 

primary care specialty and primary care 

percentage that equals or exceeds the 60 

percent threshold were available to 

establish the practitioner’s eligibility for 

the next PCIP year. Similarly, an 

enrolled practitioner’s change in 

primary specialty designation (either to 

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or from a primary care specialty) would 

not affect that practitioner’s eligibility 

for the PCIP until the practitioner’s 

claims reflecting the change were 

available for analysis in preparation for 

the next applicable CY PCIP. In the CY 

2011 PFS proposed rule (74 FR 40138), 

we indicated that, given the statutory 

requirement for PCIP eligibility that a 

potential primary care practitioner’s 

primary care services account for at 

least 60 percent of the allowed charges 

under Part B for the practitioner in a 

prior period as determined by the 

Secretary, we saw no clear alternative 

methodologies that would allow PCIP 

payments to be made to those 

practitioners newly enrolling in 

Medicare without the 2-year lag in 

eligibility determination that was 

described previously. However, given 

our general interest in supporting 

primary care practitioners and entry 

into primary care practice by new 

physicians and nonphysician 

practitioners in order to ensure that 

Medicare beneficiaries have access to 

these important services, we asked for 

public comments on alternative 

approaches for establishing PCIP 

eligibility for newly enrolled 

practitioners that would be consistent 

with the statutory requirement. 

Comment: Several commenters 

opposed the proposed 2-year lag in the 

data used for PCIP eligibility 

determination (for example, CY 2009 

claims data for CY 2011 PCIP payment). 

The commenters contended that the 2- 

year lag would not accurately represent 

changes in practice or changes in 

specialty designation, and requested 

that CMS exercise flexibility in 

determining the prior period in order to 

more closely align the eligibility and 

payment periods. Some commenters 

recommended that CMS decrease the 

timeframe of claims data used for 

eligibility determination to less than a 

year in order to use claims data from the 

year immediately prior to the incentive 

payment year. Other commenters 

suggested that CMS repeat the eligibility 

determination for potential primary care 

practitioners more frequently than 

annually, allowing multiple 

opportunities for potential primary care 

practitioners to meet the primary care 

percentage threshold because the 

commenters believe that practitioners 

may experience seasonal variations in 

their practice patterns. 

The commenters were especially 

concerned about the eligibility 

determination for practitioners who 

newly enroll in Medicare because there 

would be no Medicare claims data for 

these practitioners from the 2 years 

prior to the PCIP payment year. The 

commenters were concerned that all 

newly enrolled potential primary care 

practitioners would, therefore, be 

ineligible for the PCIP for up to 2 years 

during their initial period of practice. 

The commenters contended that the 2- 

year interval would discourage, or at a 

minimum not encourage, primary care 

practice as a career choice. A few 

commenters also raised concerns about 

the corresponding 2-year lag time in 

PCIP eligibility for practitioners who 

change their Medicare-enrolled 

specialty to one that would make them 

potential primary care practitioners. 

The commenters recommended a 

variety of approaches for CMS to 

consider in addressing PCIP eligibility 

for newly enrolled potential primary 

care practitioners. The commenters’ 

recommendations included using claims 

data for a 6-month prior period in order 

to limit the lag time; making a lump 

sum PCIP payment after the conclusion 

of the PCIP payment year once 

eligibility could be confirmed; placing 

PCIP payments into escrow accounts to 

be paid after the potential primary care 

practitioner’s first year of practice if the 

primary care percentage threshold was 

met; or presuming the eligibility of all 

practitioners with the designated 

enrolled specialties until claims data 

demonstrated that they did not qualify 

for the PCIP. 

Response: We appreciate the 

commenters’ interest in closely aligning 

the period of claims data used to 

determine PCIP eligibility with the time 

period where the primary care services 

subject to the incentive payment would 

be furnished in order to identify those 

primary care practitioners with the most 

current primary care practice patterns 

for the PCIP. For practitioners who were 

enrolled in Medicare 2 years prior to the 

PCIP payment year, as we proposed, we 

believe it is important to consider a full 

year of claims data rather than a shorter 

period, in order to account for seasonal 

variations in care patterns and more 

accurately represent the totality of PFS 

services provided by the potential 

primary care practitioner. Medical 

practices often experience fluctuations 

in the services that they provide over a 

year. A longer data period helps to 

smooth the variation and, therefore, 

better represents the totality of the 

potential primary care practitioner’s 

practice. Due to the time necessary to 

receive and process claims data, using 

the claims data from the full year prior 

to the PCIP payment year for calculating 

the primary care percentage would 

delay incentive payments until after the 

third quarter of the PCIP payment year 

for all eligible primary care 

practitioners, a delay which we believe 

is not desirable because the statute 

indicates that we should make quarterly 

or monthly PCIP payments. Therefore, 

we believe that the 2-year lag method, 

as described in the CY 2011 PFS 

proposed rule (74 FR 40137), is the most 

appropriate approach to determining 

eligibility for most potential primary 

care practitioners because it allows for 

a review of a full year of claims data 

without delaying incentive payments for 

most eligible primary care practitioners. 

However, we recognize the special 

circumstances of newly enrolled 

potential primary care practitioners, in 

that they do not have the claims history 

from 2 years prior to the PCIP payment 

year to determine their eligibility. We 

believe it is important to give potential 

primary care practitioners newly 

enrolling in Medicare in the year 

immediately preceding the PCIP 

payment year the opportunity to qualify 

for the PCIP with minimal delay. 

Therefore, for these practitioners, we 

will determine PCIP eligibility based on 

a different prior period than for those 

practitioners who are already enrolled 

in Medicare and who have Medicare 

claims data from 2 years prior to the 

PCIP payment year available for 

analysis. Section 1833(x) of the Act (as 

added by Section 5501(a) of the ACA) 

gives the Secretary the authority to 

establish the period of allowed charges 

used to assess the potential primary care 

practitioner’s primary care percentage 

with regard to the minimum 60 percent 

threshold required for PCIP eligibility. 

For newly enrolled potential primary 

care practitioners only, we will use the 

available claims data from the year 

immediately preceding the PCIP 

payment year (for example, CY 2010 

claims data for CY 2011 PCIP payment) 

to determine PCIP eligibility. We will 

use all claims data available for the 

newly enrolled potential primary care 

practitioner from that prior year to 

determine PCIP eligibility, with no 

minimum time period that the potential 

primary care practitioner must have 

been enrolled in Medicare in that prior 

year. Therefore, a newly enrolled 

potential primary care practitioner 

would need to wait no more than one 

year and potentially significantly less 

than one year following enrollment and 

first billing in order for the primary care 

services furnished by that eligible 

primary care practitioner to be subject to 

the PCIP in the year following the 

practitioner’s initial enrollment. 

Due to the processing lag for claims 

data from the previous CY, PCIP 

payments for newly enrolled primary 

care practitioners will be delayed until 

after the end of the third quarter of the 

PCIP payment year, although the PCIP 

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payments will ultimately be made for all 

primary care services the eligible 

practitioners furnished throughout the 

full PCIP payment year. Following that 

first PCIP eligibility determination in 

the year immediately following the 

potential primary care practitioner’s 

enrollment in Medicare, PCIP eligibility 

will be determined as specified 

previously for a practitioner who was 

enrolled in Medicare 2 years prior to the 

PCIP payment year. 

For example, if a practitioner newly 

enrolled in Medicare any time during 

CY 2010 with a primary specialty 

designation of family medicine and 

furnished services that were billed to 

Medicare, in CY 2011 we will evaluate 

the family physician’s CY 2010 claims 

data to determine whether the physician 

meets the 60 percent primary care 

percentage eligibility threshold for CY 

2011 payment under the PCIP. We 

would not be able to make this 

assessment until the CY 2010 claims 

data are substantially complete and, 

therefore, would anticipate making a 

determination regarding the physician’s 

eligibility some time after the midpoint 

of CY 2011. If the family physician is 

eligible for the PCIP, we would make a 

lump sum payment for those primary 

care services furnished earlier in CY 

2011 prior to the determination of 

eligibility and then we would begin 

making quarterly PCIP payments 

following the third quarter of CY 2011. 

For the same physician for the CY 2012 

PCIP payment year, we would again 

refer to CY 2010 claims data to assess 

whether the physician is eligible for the 

PCIP and, if applicable (eligibility could 

potentially change with more complete 

CY 2010 data than were available for the 

CY 2011 determination), make quarterly 

PCIP payments to that physician in CY 

2012. 

The use of a different prior period in 

the case of newly enrolled potential 

primary care practitioners will allow us 

more quickly to assess whether the 

practitioner qualifies for the PCIP and 

make any applicable PCIP payment, 

while allowing PCIP payments for 

established primary care practitioners to 

be made timely for each quarter of the 

PCIP payment year based on the use of 

a different prior period to determine the 

eligibility of previously enrolled 

potential primary care practitioners. The 

use of the more recent prior period for 

PCIP eligibility determination will not 

apply to practitioners who are already 

enrolled in Medicare 2 years prior to the 

PCIP payment year, but switch their 

specialty designation to a potential 

primary care specialty in the year 

immediately preceding the PCIP 

payment year. As we explained in the 

CY 2011 PFS proposed rule (74 FR 

40138) and discuss further below, we do 

not want to encourage practitioners to 

change their specialty designation 

merely for the purpose of garnering 

PCIP payments. Moreover, if we were to 

make an accommodation for 

practitioners enrolled in Medicare who 

change their specialty to a potential 

primary care practitioner specialty after 

the data year used for PCIP eligibility 

determination, we would also need to 

devise a process to remove practitioners 

from PCIP eligibility if they changed to 

a non-primary care specialty during that 

same period. We believe the incentives 

and the practice challenges experienced 

by newly enrolling practitioners are not 

the same as those for established 

practitioners and, on balance, we 

continue to believe it is appropriate to 

establish PCIP eligibility based upon 

claims data for a full CY. This policy 

will also ensure greater predictability of 

payment, which is an important 

objective of the PCIP and Medicare 

payment policy in general. 

We do not agree with commenters 

who recommended that we make PCIP 

payments to newly enrolled potential 

primary care practitioners based on a 

self-certification process or 

presumptions about eligibility. Making 

incentive payments prior to review of a 

practitioner’s eligibility based on claims 

data would inevitably result in 

inappropriate PCIP payments to 

potential primary care practitioners. 

Any such payments would constitute 

overpayments subject to recoupment, 

which would place a burden on our 

claims processing systems and on the 

practitioners themselves. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 proposal to use 

Medicare claims data for the year 2 

years prior to the PCIP payment year to 

determine PCIP eligibility for those 

potential primary care practitioners who 

were enrolled in Medicare in that year. 

However, we are modifying the 

proposed policy to use claims data from 

the year immediately preceding the 

PCIP payment year in order to 

determine PCIP eligibility for potential 

primary care practitioners who newly 

enroll in Medicare in the year 

immediately preceding the PCIP 

payment year. The PCIP payments to 

newly enrolled potential primary care 

practitioners, if applicable, will be made 

as a lump sum for those primary care 

services furnished earlier in the PCIP 

payment year by the eligible primary 

care practitioner as a soon as an 

eligibility determination can be made in 

the PCIP payment year. Quarterly PCIP 

payments for these eligible primary care 

practitioners will begin following the 

third quarter of the PCIP payment year. 

In the CY 2011 PFS proposed rule (74 

FR 40138), we stated that we plan to 

monitor changes in the primary 

specialty designations of enrolled 

practitioners over time and would 

expect not to see significant changes in 

the specialties of currently enrolled 

practitioners as a result of the PCIP 

payments. We would expect that 

physicians changing their primary 

specialty to one of the primary care 

specialties of family medicine, internal 

medicine, geriatric medicine, or 

pediatric medicine and who would be 

newly eligible for the PCIP are 

furnishing primary care services to the 

patients in their practices. Consistent 

with our past policies, we would expect 

that physicians changing their primary 

specialty designation under Medicare 

would make such changes only so that 

their primary specialty designation is 

fully consistent with the specific or 

unique type of medicine they practice. 

If we find that physicians are changing 

their specialty designations (for 

example, cardiologists who designate 

their primary specialty as internal 

medicine, although they practice 

cardiology) in order to take advantage of 

the PCIP payments, we would 

considering making future revisions to 

eliminate such an outcome. 

Comment: Several commenters agreed 

that CMS should review the specialty 

designations of physicians and 

nonphysician practitioners to ensure 

there is no gaming of the system in 

order for practitioners to qualify for the 

PCIP. 

Response: We appreciate the 

commenters’ support and plan to follow 

closely the changes in the Medicare 

primary specialty designations of 

physicians and nonphysician 

practitioners. As we stated previously, if 

we find that practitioners are changing 

their specialty designations in order to 

become eligible for PCIP payments 

rather than to reflect their actual 

practice, we may consider making 

future revisions to address this problem. 

(4) PCIP Payment 

We proposed in the CY 2011 PFS 

proposed rule (74 FR 40138) that PCIP 

payments would be calculated by the 

Medicare contractors and made 

quarterly on behalf of the eligible 

primary care practitioner for the 

primary care services furnished by the 

practitioner in that quarter, consistent 

with the established Medicare HPSA 

physician bonus program (Medicare 

Claims Processing Manual, Pub. 100–04, 

Chapter 12, Section 90.4.4) and the 

proposed HSIP described in section 

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III.S.2. of this final rule with comment 

period. The primary care practitioners’ 

professional services may be paid under 

the PFS based on a claim for 

professional services or, where the 

practitioner has reassigned his or her 

benefits to a CAH paid under the 

optional method, to the CAH based on 

an institutional claim. 

Comment: Several commenters 

supported CMS’ proposal to make 

incentive payments quarterly. These 

commenters agreed that quarterly 

payments would mitigate the 

administrative burden and better 

account for the practice patterns of the 

various types of primary care 

practitioners submitting claims for 

primary care services. 

Response: We appreciate the 

commenters’ support of the quarterly 

PCIP payments. We agree that the 

quarterly payments would work well 

with the billing cycles of many 

practitioners and would be consistent 

with Medicare payment policies for 

other incentive programs. 

As discussed in CY 2011 PFS 

proposed rule (74 FR 40138), eligible 

primary care practitioners would be 

identified on a claim based on the NPI 

of the rendering practitioner. If the 

claim is submitted by a practitioner’s 

group practice or a CAH, the rendering 

practitioner’s NPI must be included on 

the line-item for the primary care 

service (identified in Table 66) in order 

for a determination to be made 

regarding whether or not the service is 

eligible for payment of the PCIP. We 

note that, in order to be eligible for the 

PCIP, physician assistants, clinical 

nurse specialists, and nurse 

practitioners must be billing for their 

services under their own NPI and not 

furnishing services incident to 

physicians’ services. Regardless of the 

specialty area in which they may be 

practicing, these specific NPPs would be 

eligible for the PCIP based on their 

enrolled potential primary care 

practitioner specialty if their historical 

primary care percentage equals or 

exceeds the 60 percent threshold. 

In the CY 2011 PFS proposed rule (75 

FR 41038), we indicated that section 

1833(x)(4) of the Act (as added by 

section 5501(a) of the ACA) specifies 

that ‘‘there shall be no administrative or 

judicial review under section 1869, or 

section 1878, or otherwise, respecting 

the identification of primary care 

practitioners.’’ We believe that the 

inclusion of this language is intended to 

provide a means for the practical 

implementation of this provision. We 

explained that we must develop a 

process and identify primary care 

practitioners before we can make 

payments under the PCIP to the eligible 

primary care practitioners. The statute 

gives CMS the authority to make final 

determinations of eligible primary care 

practitioners that are not subject to 

appeal through the various channels 

normally available to practitioners, in 

order for the timely payments under the 

PCIP to occur. In contrast, if the 

eligibility determinations that we must 

make under this provision were subject 

to appeal, the timely implementation of 

this program could be jeopardized and 

payments under the PCIP could be 

significantly delayed. However, we 

stated that we did not believe that the 

‘‘no administrative or judicial review’’ 

clause precludes CMS from correcting 

errors resulting from clerical or 

mathematical mistakes. Therefore, we 

indicated that practitioners would have 

the opportunity to notify CMS of 

clerical or mathematical errors that may 

have occurred during the process of 

identifying eligible primary care 

practitioners for PCIP payment and that 

may have resulted in a mistaken 

eligibility determination for the PCIP. 

Comment: Several commenters 

supported the review of the PCIP 

eligibility determinations for clerical or 

mathematical mistakes. The 

commenters agreed that a review of the 

data calculations may be necessary 

when errors are suspected. Some 

commenters further asked for 

clarification and transparency regarding 

the formula and data that are used for 

eligibility determinations. Finally, 

several commenters requested that CMS 

provide notification to individual 

qualifying primary care practitioners 

even if the PCIP payment is made to the 

group practice under a reassignment 

arrangement. 

Response: We appreciate the support 

of the commenters for a review when 

suspected clerical or mathematical 

mistakes are identified. As described 

earlier in this section, the formula used 

to determine the primary care 

percentage for a potential primary care 

practitioner is the practitioner’s allowed 

charges from the applicable data year 

(the prior period) for primary care 

services (listed in Table 66) divided by 

the total allowed charges under the PFS, 

excluding hospital E/M visits (listed in 

Table 67), and multiplied by 100. The 

specialty designation and allowed 

charges used to identify a potential 

primary care practitioner and calculate 

the primary care percentage are based 

on the claims data that are submitted by 

the practitioner during the applicable 

prior year for eligibility determination 

for the PCIP payment year, which 

depends on whether the potential 

primary care practitioner was newly 

enrolled in Medicare in the year 

immediately prior to the PCIP payment 

year or previously enrolled in Medicare. 

Those data will be reviewed when we 

are assessing a suspected mistake. 

We note that Medicare contractors 

will post a list of individual primary 

care practitioners eligible for the PCIP 

for a year, along with their NPIs, on 

their web sites. We do not anticipate 

providing individual notices to PCIPeligible primary care practitioners for 

each year. Rather, primary care 

practitioners, including those who have 

reassigned their benefits, can confirm 

their eligibility for the PCIP for a year 

without direct individual notification. 

In the CY 2011 PFS proposed rule (75 

FR 41038), we further noted that section 

1833(x)(3) of the Act (as added by 

section 5501(a) of the ACA) authorizes 

payment under the PCIP as an 

additional payment amount for 

specified primary care services without 

regard to any additional payment for the 

service under section 1833(m) of the 

Act. Therefore, an eligible primary care 

physician furnishing a primary care 

service in a HPSA may receive both a 

HPSA physician bonus payment under 

the established program and a PCIP 

payment under the new program 

beginning in CY 2011, but the PCIP 

payment is made without regard to the 

HPSA physician bonus payment 

amount. In addition, payments for 

outpatient CAH services under section 

1834(g)(2)(B) of the Act (as amended by 

section 5501(a) of the ACA) would not 

be affected by the PCIP payment 

amounts made to the CAH on behalf of 

the primary care practitioner. 

(5) Summary of Final PCIP Policies 

In summary, after consideration of the 

public comments we received, we are 

finalizing our CY 2011 proposals for the 

PCIP, with modification. Practitioners 

with a designated primary Medicareenrolled specialty of family medicine, 

internal medicine, geriatric medicine, 

pediatric medicine, nurse practitioner, 

clinical nurse specialist, or physician 

assistant and whose primary care 

percentage, calculated as primary care 

allowed charges divided by PFS allowed 

charges excluding hospital E/M visits, 

and then multiplied by 100, exceeds 60 

percent will be eligible for the PCIP. The 

primary care percentage will be 

calculated based on claims data from 2 

years prior to the PCIP payment year for 

practitioners enrolled in Medicare in 

that year, and from the year 

immediately prior to the PCIP payment 

year for practitioners newly enrolling in 

that year. Beginning immediately 

following the first quarter of CY 2011, 

incentive payments for primary care 

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services furnished by eligible 

practitioners will be paid quarterly after 

the conclusion of the calendar quarter, 

in addition to payments by Medicare for 

the primary care services and other 

incentive program payments. The list of 

eligible primary care practitioners will 

be updated annually based upon our 

analysis of claims data from the 

subsequent reference period. 

Accordingly, we are finalizing our 

regulation at new § 414.80 to specify the 

requirements of the PCIP. While we are 

finalizing our proposed definition of 

primary care services in § 414.80(a), we 

are revising our proposed definition of 

eligible primary care practitioners in 

§ 414.80(a)(i)(B) and (ii)(B) to specify 

that at least 60 percent of the 

physician’s or practitioner’s allowed 

charges under the PFS (excluding 

hospital evaluation and management 

visits) during a reference period 

specified by the Secretary are for 

primary care services. We are finalizing 

§ 414.80(b) as proposed to provide 

eligible primary care practitioners a 10 

percent incentive payment for primary 

care services, in addition to the amount 

that would otherwise be paid for their 

professional services under Part B. 

Quarterly PCIP payments will be made 

to eligible practitioners or to CAHs paid 

under the optional method that are 

billing on behalf of practitioners for 

their professional services for identified 

primary care services. 

2. Section 5501(b): Incentive Payment 

Program for Major Surgical Procedures 

Furnished in Health Professional 

Shortage Areas 

a. Background 

Section 1833(m) of the Act provides 

for an additional 10 percent incentive 

payment when physicians’ services are 

furnished to a covered individual in an 

area designated as a geographic Health 

Professional Shortage Area (HPSA) as 

identified by the Secretary prior to the 

beginning of such year. Section 5501(b) 

of the ACA revises section 1833 of the 

Act by adding new subparagraph (y), 

‘‘Incentive Payments for Major Surgical 

Procedures Furnished in Health 

Professional Shortage Areas.’’ 

In the case of major surgical 

procedures furnished by a general 

surgeon on or after January 1, 2011 and 

before January 1, 2016, in an area 

designated under section 332(a)(1)(A) of 

the Act as a geographic HPSA, they 

would be paid on a monthly or quarterly 

basis an amount equal to 10 percent of 

the payment amount for eligible services 

under Part B. Section 1833(y)(2)(A) of 

the Act (as added by section 5501(b) of 

the ACA) defines a general surgeon as 

a physician who is described in section 

1861(r)(1) of the Act and who has 

designated a CMS specialty code of 02- 

general surgery as his or her primary 

specialty code in the physician’s 

enrollment in Medicare under section 

1866(j) of the Act. 

Section 1833(y)(2)(B) of the Act (as 

added by section 5501(b) of the ACA) 

defines major surgical procedures as 

surgical procedures for which a 10-day 

or 90-day global period is used for 

payment under the PFS under section 

1848(b) of the Act. In Addendum B to 

the CY 2010 PFS final rule with 

comment period (74 FR 62017 through 

62143), as corrected in the correction 

notice (74 FR 65455 through 65457), we 

identified 489 10-day global procedure 

codes and 3,796 90-day global 

procedure codes for a total of 4,285 

surgical procedure codes that would 

have met the surgical procedure criteria 

for the incentive payment if it were 

applicable in CY 2010. 

b. HPSA Surgical Incentive Payment 

Program (HSIP) 

For services furnished on or after 

January 1, 2011 and before January 1, 

2016, in the CY 2011 PFS proposed rule 

(75 FR 40139) we proposed to provide 

a 10 percent incentive payment to 

general surgeons, identified by their 

enrollment in Medicare with a primary 

specialty code of 02-general surgery, in 

addition to the amount they would 

otherwise be paid for their professional 

services under Part B, when they 

furnish a major surgical procedure in a 

location defined by the Secretary as of 

December 31 of the prior year as a 

geographic HPSA. As with the PCIP 

described above, we stated in the CY 

2011 PFS proposed rule (75 FR 40139) 

that we did not believe surgeons would 

change their Medicare specialty 

designation in order to take advantage of 

the HSIP payments. However, we 

described our plan to monitor the 

specialty designations of enrolled 

physicians, and if we were to find that 

surgeons were changing their primary 

specialty designation to general surgery 

in order to take advantage of the HSIP 

payments, we would consider making 

future revisions to eliminate such an 

outcome. 

Consistent with the established 

Medicare HPSA physician bonus 

program, we proposed that HSIP 

payments be calculated by Medicare 

contractors based on the criteria for 

payment discussed earlier in this 

section, and payments would be made 

quarterly on behalf of the qualifying 

general surgeon for the qualifying major 

surgical procedures. The surgeons’ 

professional services would be paid 

under the PFS based on a claim for 

professional services or, when a 

physician has reassigned his or her 

benefits to a CAH paid under the 

optional method, to the CAH based on 

an institutional claim. 

Qualifying general surgeons would be 

identified on a claim for a major surgical 

procedure based on the primary 

specialty of the rendering physician, 

identified by his or her NPI, of 02- 

general surgery. If the claim is 

submitted by a physician’s group 

practice or a CAH, the rendering 

physician’s NPI must be included on the 

line-item for the major surgical 

procedure in order for a determination 

to be made regarding whether or not the 

procedure is eligible for payment under 

the HSIP. 

For HSIP payment to be applicable, 

the major surgical procedure must be 

furnished in an area designated by the 

Secretary as of December 31 of the prior 

year as a geographic HPSA. We stated 

that we would provide HSIP payments 

for major surgical procedures furnished 

by general surgeons in the same HPSAs 

as we currently recognize for purposes 

of payment of all physicians under the 

established Medicare HPSA physician 

bonus program under section 1833(m) of 

the Act. 

Each year, we publish a list of zip 

codes eligible for automatic payment of 

the HPSA physician bonus payment at: 

http://www.cms.gov/ 

hpsapsaphysicianbonuses/ 

01_overview.asp. We proposed to use 

the same list of zip codes for automatic 

payment of the incentive payment for 

qualifying surgical procedures furnished 

by general surgeons. We also proposed 

to create a new HCPCS code modifier to 

identify circumstances when general 

surgeons furnish qualifying surgical 

procedures in areas that are designated 

as HPSAs as of December 31 of the prior 

year, but that are not on the list of zip 

codes eligible for automatic payment. 

The new modifier would be appended 

to the major surgical procedure on 

claims submitted for payment, similar to 

the current process for payment of the 

Medicare HPSA physician bonus when 

the geographic HPSA is not a HPSA 

identified for automatic payment. 

Consistent with the statutory 

requirement, we would define major 

surgical procedures as those for which 

a 10-day or 90-day global period is used 

for payment under the PFS. For CY 

2011, approximately 4,300 10-day and 

90-day global surgical procedures codes 

were identified in Addendum B to the 

CY 2011 PFS rule (75 FR 40262 through 

40641) under the far right column 

labeled ‘‘Global’’ and designated with 

‘‘010’’ or ‘‘090,’’ respectively. 

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We further noted that section 

1833(y)(3) of the Act (as added by 

section 5501(b)(1) of the ACA) 

authorizes payment under the HSIP as 

an additional payment amount for 

specified surgical services without 

regard to any additional payment for the 

service under section 1833(m) of the 

Act. Therefore, a general surgeon may 

receive both a HPSA physician bonus 

payment under the established 

Medicare HPSA physician bonus 

program and a HSIP payment under the 

new program beginning in CY 2011, but 

the HSIP payment would be made 

without regard to the HPSA physician 

bonus payment amount. In addition, 

payments for outpatient CAH services 

under section 1834(g)(2)(B) of the Act 

(as amended by section 5501(b) of the 

ACA) would not be affected by the HSIP 

payment amounts made to the CAH on 

behalf of the general surgeon. 

Accordingly, for CY 2011, we 

proposed to revise § 414.2 and add the 

definitions of ‘‘HPSA’’ and ‘‘major 

surgical procedure.’’ We also proposed 

to revise § 414.67 to move the existing 

provisions to paragraph (a) to be 

grouped as the ‘‘Health Professional 

Shortage Area (HPSA) physician bonus 

program’’ and adding a new paragraph 

(b) for the ‘‘HPSA surgical incentive 

payment program’’ provisions. Section 

414.67(b) would state that general 

surgeons who furnish identified 10-day 

and 90-day global period surgical 

procedures in an area designated by the 

Secretary as of December 31 of the prior 

year as a geographic HPSA that is 

recognized by Medicare for the HPSA 

physician bonus program as specified 

under renumbered § 414.67(a)(1) would 

receive a 10 percent incentive payment 

in addition to the amount that would 

otherwise be paid for their professional 

services under Part B. Physicians 

furnishing services in areas that are 

designated as geographic HPSAs prior to 

the beginning of the year but not 

included on the published list of zip 

codes for which automated HPSA 

surgical incentive payments are made 

would report a specified HCPCS code 

modifier to receive the HSIP payment. 

Quarterly incentive payments would be 

made to physicians or to CAHs paid 

under the optional method when billing 

on behalf of physicians for their 

professional services. 

Comment: A number of commenters 

supported CMS’ proposal to implement 

the HSIP. A few commenters 

recommended expanding the geographic 

eligibility criteria for the HSIP to 

increase the number of qualifying 

procedures furnished by general 

surgeons for which the incentive 

payment would be made. These 

commenters suggested that CMS 

introduce three modifications to the 

proposed criteria in order to provide the 

incentive payment for major surgical 

procedures furnished by general 

surgeons to Medicare beneficiaries who 

have limited access to general surgical 

care. Specifically, the commenters 

recommended that CMS additionally 

provide the incentive payment for: (1) 

Qualifying surgical procedures 

performed by a general surgeon in a 

hospital adjacent to a recognized HPSA; 

(2) qualifying surgical procedures 

performed by a general surgeon who 

resides in a recognized HPSA; and (3) 

qualifying surgical procedures 

performed by a general surgeon who has 

an office in a recognized HPSA. The 

commenters argued that the proposed 

policy would narrowly limit the 

availability of the general surgery 

incentive payments by linking payments 

only to surgical procedures furnished in 

established HPSAs. The commenters 

concluded that the proposed policy 

would result in relatively fewer general 

surgeons receiving the incentive 

payments and would not capture 

surgical procedures furnished in all of 

the nation’s geographic areas in which 

there is a shortage of general surgeons. 

Response: We appreciate the 

commenters’ support for our proposal. 

Regarding commenters’ requests for 

expansion of the locations for surgery 

when we would provide the incentive 

payment for major surgical procedures 

furnished by general surgeons, we do 

not believe that we have the authority 

to expand the care settings beyond the 

statutorily prescribed location, that is, 

‘‘major surgical procedures * * * by a 

general surgeon in an area that is 

designated (under section 332(a)(1)(A) 

of the Public Health Service Act) as a 

health professional shortage area.’’ 

Section 1833(y) of the Act (as added by 

section 5501(b) of the ACA) relies solely 

on section 332(a)(1)(A) of the Public 

Health Service Act to identify qualifying 

HPSAs and expressly notes that the 

HPSA must be identified by the 

Secretary prior to the beginning of the 

HSIP payment year. 

Comment: One commenter requested 

that CMS extend HSIP payment to 

physician assistants who are trained as 

first assistants at surgery. The 

commenter encouraged CMS to provide 

the 10 percent incentive payment to 

physician assistants, trained in surgical 

specialties, who ensure both that 

beneficiaries in rural areas have access 

to appropriate surgical care and that 

general surgeons furnishing surgical 

procedures in these locations are 

appropriately supported by physician 

assistants trained in surgical specialties. 

Response: Section 1833(y)(2) of the 

Act (as added by section 5501(b) of the 

ACA) specifically limits HSIP eligibility 

to those physicians (a doctor of 

medicine or osteopathy legally 

authorized to practice medicine and 

surgery by the State in which he 

performs such function or action 

according to the definition in section 

1861(r)(1)) of the Act who have 

designated 02-general surgery as their 

primary specialty code in Medicare’s 

physician enrollment. On the other 

hand, physician assistants are not 

doctors of medicine or osteopathy and 

these practitioners are identified in 

Medicare enrollment with the specialty 

code 97-physician assistant. Therefore, 

we do not believe we have the statutory 

authority to extend HSIP payment to 

physician assistants who provide 

surgical support for major surgeries 

furnished by general surgeons in 

recognized HPSAs. 

After consideration of the public 

comments we received, we are 

finalizing our CY 2011 HSIP proposal, 

with modification regarding the 

proposal to create a new HCPCS code 

modifier to identify circumstances when 

general surgeons furnish services in 

areas that are designated as HPSAs as of 

December 31 of the prior year, but that 

are not on the list of zip codes eligible 

for automatic payment. Under our final 

policy, under these circumstances 

practitioners would report the existing 

modifier-AQ (Physician providing a 

service in a HPSA) that is used for the 

established Medicare HPSA physician 

bonus program because we would make 

incentive payments under the HSIP for 

surgical procedures furnished by 

general surgeons in the same HPSAs 

that are recognized for the Medicare 

HPSA physician bonus program. 

In summary, the HSIP provides a 10 

percent incentive payment quarterly to 

qualifying physicians enrolled as 

general surgeons in Medicare (or to the 

CAHs to which they have reassigned 

their benefits) for qualifying 10-day and 

90-day global surgical procedures 

furnished on or after January 1, 2011 

and before January 1, 2016 by those 

general surgeons in recognized 

geographic HPSAs. CMS will make 

automatic payments when the zip code 

for the location of service is found in the 

applicable file for the payment year on 

the CMS web site for the HPSA 

physician bonus program at: http:// 

www.cms.gov/ 

hpsapsaphysicianbonuses/ 

01_overview.asp. Existing HCPCS 

modifier-AQ should be appended to the 

major surgical procedure on claims 

submitted for payment to identify 

circumstances when general surgeons 

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furnish services in areas that are 

designated as HPSAs as of December 31 

of the prior year, but that are not on the 

list of zip codes eligible for automatic 

payment. 

We are also finalizing our proposed 

revisions to the Code of Federal 

regulations related to the HSIP, with 

minor modification. We are revising 

§ 414.2 as we proposed to add the 

definitions of ‘‘HPSA’’ and ‘‘major 

surgical procedure.’’ We also are 

revising § 414.67 as we proposed to 

move the existing provisions to 

paragraph (a) to be grouped as the 

‘‘Health Professional Shortage Area 

(HPSA) physician bonus program’’ and 

adding new paragraph (b) for the ‘‘HPSA 

surgical incentive payment program’’ 

provisions. We are finalizing our 

proposal for § 414.67(b) to state that 

general surgeons who furnish identified 

10-day and 90-day global period 

surgical procedures in an area 

designated by the Secretary as of 

December 31 of the prior year as a 

geographic HPSA that is recognized by 

Medicare for the HPSA physician bonus 

program as specified under renumbered 

§ 414.67(a)(1) would receive a 10 

percent incentive payment in addition 

to the amount that would otherwise be 

paid for their professional services 

under Part B. We are modifying the 

proposal to specify in § 414.67(b)(3) that 

physicians furnishing services in areas 

that are designated as geographic HPSAs 

prior to the beginning of the year but not 

included on the published list of zip 

codes for which automated HPSA 

surgical incentive payments are made 

would report HCPCS modifier-AQ to 

receive the HSIP payment and to change 

the term ‘‘bonus’’ to ‘‘incentive’’ when 

referring to the HSIP. Quarterly 

incentive payments will be made to 

physicians or to CAHs paid under the 

optional method when billing on behalf 

of physicians for their professional 

services. 

3. Sections 5501(a) and (b) of the ACA 

and Payment for Critical Access 

Hospital Professional Services Under 

the Optional Method 

Section 1834(g) of the Act established 

the payment rules for outpatient 

services furnished by a CAH. In 1999, 

section 403(d) of the Balanced Budget 

Refinement Act of 1999 (Pub. L. 106– 

113) (BBRA) amended section 1834(g) of 

the Act to provide for two methods of 

payment for outpatient services 

furnished by a CAH. Specifically, 

section 1834(g)(1) of the Act, as 

amended by the BBRA, specifies that 

the amount of payment for outpatient 

services furnished by a CAH is equal to 

the reasonable costs of the CAH in 

furnishing such services. (The physician 

or other practitioner furnishing the 

professional service receives payment 

under the PFS.) In the alternative, the 

CAH may make an election, under 

section 1834(g)(2) of the Act, to receive 

amounts that are equal to ‘‘the 

reasonable costs’’ of the CAH for facility 

services plus, with respect to the 

professional services, the amount 

otherwise paid for professional services 

under Medicare, less the applicable 

Medicare deductible and coinsurance 

amount. The election made under 

section 1834(g)(2) of the Act is 

sometimes referred to as ‘‘method II’’ or 

‘‘the optional method.’’ Throughout this 

section we refer to this election as ‘‘the 

optional method.’’ 

In 2000, section 202 of the Medicare, 

Medicaid and SCHIP Benefits 

Improvement and Protection Act of 

2000 (Pub. L. 106–554) (BIPA) amended 

section 1834(g)(2)(B) of the Act to 

increase the payment for professional 

services under the optional method to 

115 percent of the amount otherwise 

paid for professional services under 

Medicare. In addition, in 2003 section 

405(a)(1) of the MMA amended section 

1834(g)(1) of the Act by inserting the 

phrase ‘‘equal to 101 percent of’’ before 

the phrase ‘‘the reasonable costs.’’ 

However, section 405 of the MMA did 

not make a corresponding change to 

section 1834(g)(2)(A) of the Act 

regarding the amount of payment for 

facility services under the optional 

method. In 2010, section 3128 of the 

ACA amended section 1834(g)(2)(A) of 

the Act by inserting the phrase ‘‘101 

percent of’’ before ‘‘the reasonable costs.’’ 

Section 5501(a) of the ACA amends 

section 1833 of the Act by adding a new 

paragraph (x), ‘‘Incentive Payments for 

Primary Care Services,’’ that authorizes 

additional Part B payments to primary 

care practitioners for primary care 

services. Section 5501(b) of the ACA 

further amends section 1833 of the Act 

by adding new paragraph (y), ‘‘Incentive 

Payments for Major Surgical Procedures 

Furnished in Health Professional 

Shortage Areas,’’ that authorizes 

additional Part B payments for major 

surgical procedures furnished by 

general surgeons in HPSAs. Sections 

5501(a)(3) and 5501(b)(3) of the ACA 

make conforming amendments to 

section 1834(g)(2)(B) of the Act, which 

refers to payment to the CAH for 

professional services under the optional 

method, by adding at the end of section 

1834(g)(2)(B) of the Act the following 

phrase, ‘‘Subsections (x) and (y) of 1833 

of the Act shall not be taken into 

account in determining the amounts 

that would otherwise be paid pursuant 

to the preceding sentence.’’ As such, 

section 1834(g)(2)(B) of the Act (as 

amended by sections 5501(a)(2) and 

5501(b)(2) of the ACA) requires that 

under the optional method, the 115 

percent adjustment payment to the CAH 

for professional services is calculated 

without considering the incentive 

payments for primary care services 

furnished by primary care practitioners 

and major surgical procedures furnished 

by general surgeons in HPSAs as these 

terms are defined under sections 

1833(x) and (y) of the Act. 

The regulations implementing section 

1834(g)(2)(B) of the Act, payment to the 

CAH for professional services under the 

optional method, are in 

§ 413.70(b)(3)(ii)(B). In order to 

implement the amendments to section 

1834(g)(2)(B) of the Act as specified by 

sections 5501(a)(2) and 5501(b)(2) of the 

ACA, we are proposing to amend the 

regulations in § 413.70(b)(3)(ii)(B) to 

state that, effective for primary care 

services furnished by primary care 

practitioners and major surgical 

procedures furnished by general 

surgeons in HPSAs on or after January 

1, 2011 and before January 1, 2016, the 

additional incentive payment amounts 

as specified in § 414.67 and § 414.80 are 

not included in the determination of the 

payment for professional services made 

to the CAH under the optional method. 

Accordingly, we are proposing that 

payment for professional services to the 

CAH at 115 percent of the PFS amount 

under the optional method would not 

take into account the additional Part B 

incentive payments for primary services 

furnished by primary care practitioners 

and major surgical procedures furnished 

by general surgeons in HPSAs as 

provided in § 414.67 and § 414.80. 

Comment: Several commenters 

supported CMS’ proposal to make HSIP 

and PCIP payments to CAHs paid under 

the optional method for qualifying 

services furnished by eligible 

practitioners who have reassigned their 

billing rights to the CAHs. No 

commenters addressed CMS’ proposal 

to calculate the 115 percent adjustment 

payment to the CAH for professional 

services without considering the 

incentive payments for primary care 

services furnished by primary care 

practitioners and major surgical 

procedures furnished by general 

surgeons in HPSAs. 

Response: We appreciate the 

commenters’ support for our proposal to 

include qualifying professional services 

billed by CAHs paid under the optional 

method furnished by eligible 

practitioners in the PCIP and HSIP. 

After considering the public 

comments we received, we are 

finalizing our CY 2011 proposal to 

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include CAHs paid under the optional 

method in the PCIP and HSIP. Payment 

to a CAH paid under the optional 

method, will be made quarterly, for 

eligible professional services furnished 

by qualifying physicians and 

nonphysician practitioners who have 

reassigned their billing rights to the 

CAH. Furthermore, we are finalizing our 

CY 2011 proposal to specify that 

payment for professional services to the 

CAH at 115 percent of the PFS amount 

under the optional method would not 

take into account the additional Part B 

incentive payments for primary services 

furnished by primary care practitioners 

and major surgical procedures furnished 

by general surgeons in HPSAs. We are 

amending § 413.70(b)(3)(ii)(B) as we 

proposed to reflect this final policy. 

T. Section 6003: Disclosure 

Requirements for In-Office Ancillary 

Services Exception to the Prohibition on 

Physician Self-Referral for Certain 

Imaging Services 

1. Background 

Section 1877 of the Act (also known 

as the physician self-referral law): (1) 

Prohibits a physician from making 

referrals for certain ‘‘designated health 

services’’ (DHS) payable by Medicare to 

an entity with which he or she (or an 

immediate family member) has a 

financial relationship (ownership or 

compensation), unless an exception 

applies; and (2) prohibits the entity from 

submitting claims to Medicare (or 

billing another individual, entity, or 

third party payer) for those DHS 

rendered as a result of a prohibited 

referral. The statute establishes a 

number of exceptions and grants the 

Secretary the authority to create 

regulatory exceptions that pose no risk 

of program or patient abuse. 

Section 1877(b)(2) of the Act, entitled 

‘‘In-office Ancillary Services’’ sets forth 

the exception that permits a physician 

in a solo or group practice to order and 

provide designated health services 

(DHS), other than most durable medical 

equipment and parenteral and enteral 

nutrients, in the office of the physician 

or group practice, provided that certain 

criteria are met. The requirements of the 

in-office ancillary services exception are 

described at § 411.355(b). 

Section 6003 of the ACA amended 

section 1877(b)(2) of the Act by creating 

a new disclosure requirement for the inoffice ancillary services exception to the 

prohibition on physician self-referral. 

Specifically, section 6003 of the ACA 

provided that, with respect to referrals 

for magnetic resonance imaging (MRI), 

computed tomography (CT), positron 

emission tomography (PET), and any 

other DHS specified under section 

1877(h)(6)(D) of the Act that the 

Secretary determines appropriate, the 

referring physician inform a patient in 

writing at the time of the referral that 

the patient may obtain the service from 

a person other than the referring 

physician or someone in the physician’s 

group practice and provide the patient 

with a list of suppliers who furnish the 

service in the area in which the patient 

resides. 

In the CY 2011 PFS proposed rule, we 

proposed regulations related to section 

6003 of the ACA. We are finalizing that 

proposal with modification. We 

received approximately 45 comments 

related to this section. Most commenters 

offered support for the proposed rule 

and some stated that it was consistent 

with the intent of the legislation, which 

was to provide choice for patients, as 

well as a degree of protection against 

conflicts of interest. Others stated that 

disclosure might be a first step towards 

ending abuses in self referral, but 

questioned the overall effectiveness of 

the disclosure requirement in reducing 

overutilization. These commenters were 

nonetheless supportive of the 

reasonable mechanisms used to 

implement the requirement. 

We are finalizing some elements of 

the proposal without modification. 

Elements that remain unchanged from 

the proposed rule include: application 

of the disclosure requirement to 

advanced imaging services only; the 

general disclosure requirements that the 

notice should be written in a manner 

sufficient to be reasonably understood 

by all patients and be given to the 

patient at the time of the referral; the list 

must include the requisite number of 

suppliers; the information about these 

suppliers must include name, address, 

and phone number; these suppliers are 

to be located within a 25-mile radius of 

the physician’s office location at the 

time of the referral; and the effective 

date of January 1, 2011. 

Elements that we are finalizing with 

changes include: reducing the number 

of suppliers that must be included from 

10 to 5; removing the requirement that 

the supplier’s distance from the 

physician’s office be listed on the 

disclosure; clarifying that as long as the 

requisite number of suppliers are 

included in the alternate list, the 

physician may also list providers on the 

notice; and removing the requirement 

that the physician obtain the patient’s 

signature on the notice and retain a 

copy of the disclosure in the patient’s 

medical record. 

2. Disclosure Requirement 

Based upon the comments received, 

we have finalized § 411.355(b)(7) in a 

manner that addresses concerns of the 

industry while also maintaining the 

intended purpose of the provision. The 

comments received during the public 

comment period are discussed more 

fully below. 

a. Services That Trigger the Disclosure 

Requirement 

We proposed that the disclosure 

requirement should apply to only the 

advanced imaging services listed in 

section 6003 of the ACA (MRI, CT, and 

PET). We solicited comments regarding 

whether other radiology or imaging 

services under section 1877(h)(6)(D) of 

the Act should be included in the 

requirement. We are finalizing this 

element as proposed. 

Comment: Most commenters were 

supportive of our proposal to apply the 

disclosure requirement only to those 

advanced imaging services listed in 

section 6003 of the ACA. A commenter 

stated that expanding application of the 

provision beyond the named services 

would add to confusion and increase 

negative effects on physician practices. 

The commenter noted that creating lists 

of alternate suppliers for the named 

services will be less burdensome than 

adding any other radiology services. 

Multiple commenters who were 

opposed to expanding the disclosure 

requirement stated that a disclosure 

requirement for diagnostic services such 

as x-rays or ultrasound services would 

place significant burden on physician 

groups and could interrupt continuity of 

care for patients, as these tests are often 

performed in the office immediately 

after the physician has ordered the test. 

Only one commenter urged CMS to 

fully exercise the authority granted by 

the Affordable Care Act and apply the 

disclosure requirement to all radiology 

services covered by section 

1877(h)(6)(D) of the Act. The commenter 

stated that the disclosure requirement 

benefits Medicare beneficiaries through 

greater transparency regarding their 

freedom to choose a supplier of medical 

services and that there is no reason to 

draw a distinction between MRI, CT, 

and PET referrals and referrals for other 

radiology services. This commenter also 

did not believe that the burden on the 

referring physicians would be materially 

different if the list of affected imaging 

services is expanded to cover all 

radiology services, as it would only 

entail expanding the list that will serve 

as the notice to patients. 

Response: We are finalizing this 

requirement as proposed and applying 

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the disclosure requirement to only the 

advanced imaging services specified in 

section 6003 of the ACA, which are 

MRI, CT, and PET services. We decline 

to expand the disclosure requirement to 

any of the other radiology or imaging 

services that fall under section 

1877(h)(6)(D) of the Act. X-ray and 

ultrasound services in particular are 

much more likely to be performed on 

the same day as the original visit 

compared to many advanced imaging 

services. Therefore, disclosures related 

to these additional services would not 

be as useful to the patient. We do not 

find that the benefit of expanding this 

disclosure requirement to other 

radiology services would outweigh the 

additional burden that would be placed 

on physicians. 

Comment: One commenter requested 

that CMS clarify that any CT imaging 

service that is furnished integral to a 

procedure defined as a radiation therapy 

service for purposes of the physician 

self-referral law is exempt from this 

disclosure requirement. The commenter 

provided the example of CT guidance 

used to localize tumors and focus the 

beam during the delivery of external 

beam radiation therapy treatments. Such 

imaging, although involving CT, is 

integral to the performance of radiation 

therapy treatments that are included in 

the DHS category of radiation therapy 

services and supplies. 

Response: The disclosure requirement 

applies to all in-office referrals for CT 

imaging services that are categorized as 

‘‘radiology and certain other imaging 

services’’ by the list of CPT/HCPCS 

Codes (as defined in § 411.351). We 

note, however, that the request by a 

radiation oncologist for radiation 

therapy or ancillary services necessary 

for, and integral to, the provision of 

radiation therapy does not constitute a 

‘‘referral,’’ as defined in § 411.351, if 

certain criteria are satisfied. The 

disclosure requirement would not apply 

to any request that is not a ‘‘referral’’ as 

defined in § 411.351. 

Comment: A commenter requested 

that CMS remove CPT code 77014 

(computed tomography guidance for 

placement of radiation therapy fields) 

from the DHS category of ‘‘radiology and 

certain other imaging services,’’ and add 

it to the category of ‘‘radiation therapy 

services and supplies,’’ as such 

categories are set forth in the list of 

CPT/HCPCS Codes. The commenter 

asserts that this would be appropriate 

because while the code is for a service 

that involves imaging, the service is 

distinct from the other radiology codes 

and integral to the delivery of radiation 

therapy. The commenter noted that 

when a radiation oncologist performs 

radiation therapy services, it is not 

considered a referral under the law. 

However, if CPT code 77014 is included 

in the list of radiology services, it could 

be considered a referral and therefore 

radiation oncologists could be required 

to fulfill the disclosure requirements for 

this service if it remains on the list of 

radiology services codes subject to the 

new disclosure requirements. According 

to the commenter, because CPT code 

77014 is so integral to the delivery of 

certain radiation therapy treatments, it 

would be completely impractical, if not 

impossible, for a radiation oncologist to 

fulfill the disclosure requirements for 

this service. 

Response: As noted in section X.B.3 

of this preamble, we are removing CPT 

code 77014 from the list of CPT/HCPCS 

Codes because the service is always 

integral to, and performed during, a 

nonradiological medical procedure. 

Therefore, under § 411.351, this service 

is excluded from the definition of 

‘‘radiology and certain other imaging 

services’’ and is not subject to the 

disclosure requirement. We are not 

adding this code to the radiation 

therapy services category on the list of 

CPT/HCPCS Codes because it does not 

satisfy the definition of ‘‘radiation 

therapy services and supplies’’ as set 

forth in § 411.351. As a practical matter, 

in many cases the service would not 

constitute a ‘‘referral’’ (as defined in 

§ 411.351) if requested by a radiation 

oncologist pursuant to a consultation. 

Comment: A commenter requested 

that CMS stipulate that CPT code 77011, 

currently defined as ‘‘computed 

tomography guidance for stereotactic 

localization,’’ is not subject to this 

disclosure requirement whenever it is 

furnished as part of a therapeutic or 

palliative radiation therapy service. This 

commenter stated that this clarification 

is essential since CPT code 77011 is not 

listed in Addendum I to the 2010 PFS 

final rule with comment period either as 

a radiology service or as a radiation 

therapy service. 

Response: This code is for a service 

that is integral to the performance of a 

nonradiological medical procedure and 

is performed either during the 

nonradiological procedure or 

immediately after the procedure to 

confirm placement of an item. 

Therefore, the service is excluded from 

the DHS category of ‘‘radiology and 

certain other imaging services’’ and is 

not subject to the disclosure 

requirement. The disclosure 

requirement applies only to MRI, CT, 

and PET services identified as 

‘‘radiology and certain other imaging 

services’’ on the list of CPT/HCPCS 

Codes; MRI, CT, and PET services not 

identified as such on that list are not 

subject to the disclosure requirement. 

Comment: Other commenters urged 

CMS to expand the disclosure 

requirement to other DHS that they 

perceive to be subject to abuse under the 

in-office ancillary services exception. 

These DHS included: physical therapy, 

anatomic pathology and radiation 

therapy services. 

Response: Section 6003 of the ACA 

does not grant the Secretary the 

authority to expand application of this 

disclosure requirement to DHS other 

than those in section 1877(h)(6)(D) of 

the Act. We did not propose expansion 

beyond these services and did not 

solicit comments regarding other DHS 

categories that should have this 

requirement. The requested expansion 

to other DHS is beyond the Secretary’s 

authority under this provision and 

cannot be accomplished in this 

rulemaking. 

Comment: One commenter suggested 

that CMS expand the disclosure 

requirement to radiology practices and 

IDTFs so that they are also required to 

provide a list of alternate suppliers 

when self-referring for imaging studies 

in order to offer a more level playing 

field. Two commenters suggested that 

we require the same disclosure for 

hospitals to avoid the perception of 

conflict of interest in all settings. 

Response: The first comment appears 

to incorrectly assume that section 6003 

of the ACA would never apply to 

radiology practices and IDTFs. Section 

6003 of the ACA applies to physicians 

who make a ‘‘referral’’ (as defined in 

section 1877(h)(5) of the Act and 

§ 411.351 of our regulations) for certain 

advanced imaging services and rely on 

the in-office ancillary services exception 

to ensure their compliance with the 

physician self-referral prohibition. 

While many requests by radiologists for 

diagnostic imaging services will not 

constitute a ‘‘referral’’ as defined in the 

statute and our regulations, some 

requests by radiologists for advanced 

imaging services could implicate the 

self-referral prohibition, and such 

referrals would be subject to the 

disclosure requirement if the referring 

physician relies on the in-office 

ancillary services exception to ensure 

compliance with the physician selfreferral prohibition. Similarly, the 

disclosure requirement would also 

apply when a physician relies on the inoffice ancillary services exception to 

protect referrals for advanced imaging 

services furnished and billed by an 

IDTF that is wholly owned by the 

physician or his or her group practice. 

We have no statutory authority to 

make the disclosure requirement apply 

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to requests for advanced imaging 

services that are not ‘‘referrals.’’ 

Mandating a similar disclosure 

requirement for hospitals would have to 

be accomplished under separate 

rulemaking and authority. 

b. General Disclosure Requirements 

We proposed that the disclosure 

notice should be written in a manner 

sufficient to be reasonably understood 

by all patients and must, as the ACA 

requires, be given to the patient at the 

time of the referral. The notice must 

indicate to the patient that the services 

may be obtained from a person other 

than the referring physician or his or her 

group practice and include a list of 

other suppliers who provide the service 

being referred (MRI, CT, or PET). We are 

finalizing this proposal without 

modification. 

Comment: One commenter requested 

CMS to clarify how often the disclosure 

notice needs to be provided. The 

commenter asked if a physician can 

meet the requirement by giving patients 

the list of suppliers upon initiation of 

the physician-patient relationship and 

annually thereafter to ensure updated 

information is given, or if the 

information must be disclosed each time 

a patient is referred for MRI, CT or PET. 

Another commenter expressed concern 

regarding informing a patient in person 

at the time of the referral. This 

commenter described the situation 

where diagnostic tests are ordered after 

the patient has a previous abnormal 

diagnostic test; often they communicate 

this to the patient via phone call and do 

not want to require the patient to come 

into the office to receive the disclosure. 

The commenter asked if the disclosure 

could be mailed to the patient after the 

verbal notification via phone call. 

Response: The statute requires the 

disclosure to be made ‘‘in writing at the 

time of the referral.’’ In order to satisfy 

this element of the statute, we believe 

the disclosure must be presented to the 

patient each time one of the listed 

advanced imaging services is referred. 

Patients should receive the disclosure 

each time these services are needed, not 

just for the initial service. The patient 

should be made aware that he or she 

may obtain the services from another 

supplier any time advanced imaging is 

ordered. For subsequent referrals made 

via phone call, the written disclosure 

must still be provided to the patient and 

adequately documented as further 

described in the Documentation of 

Disclosure subsection below. Mailing or 

e-mailing the disclosure to the patient 

would be acceptable if verbal 

notification has also occurred. 

Comment: Some commenters 

requested that CMS post a draft 

disclosure document that physicians 

can use as a model to ensure that all 

notices are drafted in a neutral, 

comprehensive, and consistent manner. 

Response: We do not plan to post 

standard disclosure language to be used 

for this requirement. Each physician 

office will be responsible for drafting 

the language employed in the notice. 

Because we are not setting out specific 

language that must be included in the 

disclosure, physicians will have more 

flexibility in drafting the notice. 

Comment: Several commenters 

requested that CMS allow physicians to 

make it clear on the disclosure that 

there is no intended endorsement or 

recommendation of the facilities named 

on the list furnished by the referring 

physician. 

Response: If the physician chooses to 

include language informing patients that 

inclusion of other suppliers is not 

intended as an endorsement or 

recommendation of those suppliers, 

there is nothing in section 6003 of the 

ACA or this final rule with comment 

that would preclude him or her from 

doing so. 

c. List of Alternate Suppliers 

We proposed that the notice list 10 

alternate suppliers (as defined in section 

1861(d) of the Act) located within a 25- 

mile radius of the physician’s office at 

the time of the referral, unless there are 

fewer than 10 suppliers in the 25-mile 

radius, in which case the physician 

must list all suppliers up to ten in that 

area. In the proposed rule, we required 

the notice to include the name, address, 

phone number, and distance from the 

physician’s office at the time of the 

referral. In this final rule with comment, 

we are decreasing the number of 

suppliers that must be listed to 5; and 

removing the distance from the 

physician’s office from the information 

about the suppliers that must be listed 

in the disclosure notice. The final rule 

does not expand the list of alternate 

suppliers to include providers as part of 

the 5 required suppliers but is discussed 

further below. We are finalizing our 

proposal that the suppliers be located 

within a 25-mile radius of the 

physician’s location at the time of the 

referral. 

We solicited comments related to 

whether there are procedures or 

circumstances in which it may be 

difficult or impractical to provide the 

written disclosure prior to the provision 

of advanced imaging services. We are 

finalizing this rule without creating 

such an exception. 

We also solicited comments regarding 

an alternative notice that includes a 

‘‘reasonable’’ list of other suppliers with 

general requirements for the disclosure 

to patients, while providing that if the 

physician meets the more specific 

requirements set forth in the proposed 

rule he or she will be deemed to have 

a ‘‘reasonable’’ disclosure. We are not 

finalizing this in the final rule as we did 

not receive comments in support of this 

alternative. 

Comment: A number of commenters 

asked that the list of alternate suppliers 

include hospitals. Two commenters 

stated CMS has taken an overly literal 

interpretation of ‘‘suppliers’’ and has 

incorrectly excluded hospitals from the 

list of alternate sites. The commenters 

also noted that in many areas, especially 

rural, the community hospital is the 

largest or only remaining independent 

provider of imaging services. Another 

pair of commenters stated that 

providing a partial list of options is 

inconsistent with transparency, 

inconsistent with collaborative 

alignment between providers and 

suppliers, and that including both 

providers and suppliers would be more 

consistent with ‘‘informing a patient’s 

decision-making regarding his or her 

own care.’’ 

Several commenters urged CMS to 

allow, and even to require, that 

physicians include hospitals and CAHs 

in the written list of alternate suppliers 

who provide imaging services. The 

commenters stated that hospitals are 

often the only provider of this service 

within the 25-mile radius of the 

physician’s office and allowing 

physicians to include hospitals and 

CAHs would provide patients with more 

options. 

Finally, one commenter pointed out 

that including hospitals in the list of 

alternate suppliers would be consistent 

with the integrated and coordinated care 

models that are of interest to the Federal 

government, health plans, members of 

Congress and healthcare delivery 

reformers. The commenter also believes 

that this would increase convenience for 

its patients while preserving their 

ability to make decisions about their 

care. 

One commenter supported CMS’ 

proposal to limit the required disclosure 

list to suppliers of services. The 

commenter stated that this would 

protect the Medicare program from the 

higher imaging costs and Part B co-pays 

for beneficiaries associated with 

imaging services provided by hospital 

outpatient departments. The commenter 

encouraged CMS to finalize the 

proposed supplier only list. 

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Response: Section 6003 of the ACA 

requires physicians to provide patients 

with a written list of alternate 

‘‘suppliers’’ (as defined in section 

1861(d) of the Act). The ACA does not 

afford the flexibility requested by 

commenters to allow physicians to 

satisfy the disclosure requirement by 

furnishing a list that includes hospitals 

and other providers. However, 

physicians are not precluded from 

listing hospitals in the disclosure notice 

as long as the required number of 

suppliers is also included. For example, 

in rural areas where no other suppliers 

exist in the 25-mile radius, we 

encourage physicians to list a hospital 

on the disclosure notice as an alternate 

location for the patient to receive the 

referred imaging service if the hospital 

is the closest option. 

Comment: Many of the commenters 

supported our proposal that the 

disclosure notice include suppliers 

located within a 25-mile radius of the 

physician’s location at the time of the 

referral, rather than in the area in which 

the patient resides. 

Two commenters suggested that CMS 

set different radii requirements for rural 

versus urban areas. One of the two 

commenters stated that in an urban 

setting, there could be many more than 

10 suppliers within a 25-mile setting 

placing making it difficult for the 

referring physician to make a decision 

regarding which providers to include in 

the written notification. The commenter 

noted that in a rural setting with fewer 

than 10 suppliers, the burden of 

identifying and providing all of the 

suppliers in the 25-mile radius is 

excessive for the physician. 

Finally, a commenter objected to our 

concern in the proposed rule preamble 

that ‘‘physicians located in large 

metropolitan areas will draft a list that 

includes suppliers located mostly at the 

edges of the 25-mile radius, thereby 

increasing the chances that the patient 

will choose to receive imaging services 

from the referring physician’s practice.’’ 

The commenter asserted that physicians 

will strive to create lists that include the 

highest quality suppliers in the area. 

Response: We are finalizing this 

requirement as proposed. We believe a 

list of suppliers located within a 25-mile 

radius of the physician’s office is 

reasonable and large enough to generate 

a list that will be useful for patients. 

This same distance has also been used 

in other physician self-referral 

exceptions including the intra-family 

rural referrals exception (§ 411.355(j)) 

and the physician recruitment exception 

(§ 411.357(e)). In addition, we are 

reducing the number of required 

suppliers on the disclosure notice and 

believe this will help address the issue 

in some rural area settings where there 

may only be a few suppliers within a 

25-mile radius. 

Comment: One commenter indicated 

that requiring a list of 10 suppliers was 

excessive. Several commenters 

requested that we decrease the required 

number of alternate suppliers from 10 to 

5 and one commenter suggested we 

reduce it to 3 in order to meet patient 

choice and reduce the compliance 

burden for medical groups and smaller 

practices. The commenters stated that 

listing 10 suppliers would be too 

burdensome on physicians and might be 

confusing for beneficiaries if too many 

choices are presented. 

Response: We agree with the 

commenters and are decreasing the 

required number of alternate suppliers 

from 10 to 5. We believe a list of 5 

suppliers is reasonable, not 

burdensome, and supports patient 

choice. 

Comment: A commenter supported 

the inclusion of the proposed 

information of the disclosure notice 

because it is easily understood and 

contains useful information. One 

commenter recommended that the 

referring physician provide the name 

and telephone number for the alternate 

suppliers and that other information, 

such as the address and distance, 

should be included at the referring 

physician’s discretion. A different 

commenter stated that the distance from 

the referring physician’s office location 

at the time of the referral should not be 

included in the notice because it can be 

measured in a variety of ways and may 

vary greatly depending on the route 

taken between the listed supplier and 

the physician’s offices. The commenter 

believes patients may get upset if the 

distance noted on the supplier list is 

different from what they actually 

encountered and recommends that the 

list simply state that all of the suppliers 

are within a 25-mile radius of the 

referring physician’s office. 

Response: We are modifying the 

proposal in the final rule to remove the 

requirement that the distance from the 

referring physician’s office at the time of 

the referral be included on the list 

provided to the patient. All alternate 

suppliers listed must be located within 

the 25-mile radius of the physician’s 

office location at the time of the referral. 

Any reasonable method for measuring 

distance will be acceptable. 

We are finalizing the other 

information required in the notice as 

proposed so that it must include the 

name, address and phone number of 

each supplier. This provides patients 

with the most useful information in 

making a decision about receiving the 

service from the referring physician or 

from another supplier. 

Comment: Two commenters requested 

that CMS provide an exception to 

providing the disclosure notice to the 

patient at the time of referral, especially 

for services furnished on an emergency 

or time-sensitive basis as the 

commenters believe it is impractical to 

think that the list will be given and 

signed by the patient in an emergency 

or other time-sensitive case. 

Response: We do not believe it is 

necessary to grant an exception to the 

disclosure requirement in cases of an 

emergency or time-sensitive nature. In 

those situations, physicians should 

make a reasonable attempt to provide 

the notice to the patient and document 

that the attempt was made. We believe 

the occurrence of emergencies in 

physician offices that require a referral 

for advanced imaging under the inoffice ancillary services exception is 

rare enough that it does not warrant 

granting an exception. We believe 

having the physician make a reasonable 

attempt would not prevent or impede 

beneficiaries from receiving the 

necessary services. In most emergencies 

that arise in a physician’s office, 

patients will be transferred to the 

emergency department of the nearest 

hospital rather than referred for imaging 

at the physician’s office. 

Comment: A commenter asked about 

compilation of the list of alternate 

suppliers and how physicians should go 

about this task. The commenter asked if 

a search of the internet or a telephone 

directory would be adequate. Also the 

commenter asked if Medicare 

contractors will have a list of entities 

providing such services. Another 

commenter recommended that CMS 

create a publicly available database of 

providers of the specified services and 

maintain this information online and in 

the Medicare provider directory that is 

published annually because, according 

to the commenter, it should be less work 

for CMS to create this list than it is for 

practices, since much of this 

information can be gleaned from 

information already furnished by 

practitioners to Medicare. 

Response: We are not prescribing any 

one method for physicians to craft the 

list of alternate suppliers. A physician is 

able to use any reasonable means that he 

or she chooses in order to compile the 

list of five alternate suppliers. We do 

not plan to create a standard form or a 

publicly available database for this 

disclosure requirement nor will we 

require Medicare contractors to furnish 

lists of all entities providing such 

services. Some physicians may choose 

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to compile the list of suppliers from an 

internet search, others may know 

suppliers in the 25-mile radius who 

provide quality imaging and list these. 

We are not limiting a physician’s 

methods of creating the list so long as 

the other requirements of this disclosure 

requirement are satisfied. 

Comment: A commenter requested 

that CMS emphasize that the list of 

alternate suppliers must provide the 

same service for which the patient has 

been referred, for example a 64-slice CT 

as opposed to a 16-slice CT. 

Response: The disclosure is meant to 

inform patients that they ‘‘may obtain 

the services for which the individual is 

being referred’’ from another supplier 

who furnishes such services in the area. 

The referring physician should list 

suppliers that are able to perform the 

services for which the patient is being 

referred. Listing suppliers that are 

unable to perform the needed test does 

not provide the patient with meaningful 

choices about his or her care. 

Comment: Several commenters 

suggested that the quality of alternate 

suppliers should be indicated on the 

information provided to patients. Other 

commenters recommended that only 

credentialed facilities are listed on the 

notice, or that credentialed facilities be 

given special designation on the 

disclosure notice. 

Response: We are not requiring any 

quality indication on the list of alternate 

suppliers at this time. Because the 

referring physician will most likely be 

reviewing the results of the advanced 

imaging service that the patient 

receives, it is reasonable to think that 

the physician will include quality 

suppliers on the list. We are not 

convinced to limit the list of suppliers 

to those who receive accreditation. 

Nothing in the statute or this final rule 

with comment prevents physicians from 

furnishing a list that designates a 

supplier’s credentialing status. 

Comment: Two commenters requested 

that CMS provide clarification on the 

frequency with which the physician 

must review and update the list of 

suppliers. For example, commenters 

asked if the notice should be reviewed 

for accuracy if a supplier relocates or 

any contact information changes. In 

addition, one of the commenters asked 

about the obligation of the referring 

physician to ensure that the suppliers 

listed are accepting new Medicare 

patients. 

Response: We suggest that the list of 

suppliers should be reviewed annually 

for accuracy and updated at that time, 

if necessary. We do not believe an 

annual update would be overly 

burdensome for physicians. We believe 

an inaccurate list of alternate facilities 

would lead to beneficiary confusion and 

that annually reviewing and modifying 

the notice as needed would ensure that 

patients receive complete and accurate 

information in accordance with this 

disclosure requirement. 

In addition, referring physicians are 

not obligated to list only suppliers that 

are accepting new Medicare patients; 

however, as the disclosure notice is 

intended to allow patients to make 

informed choices, referring physicians 

should make a reasonable effort to 

ensure that the suppliers listed in the 

disclosure are viable options for all of 

their patients for the services being 

referred. 

d. Documentation of Disclosure 

We proposed that, in order to 

document that this disclosure notice 

was satisfied, a record of the patient’s 

signature on the disclosure notification 

must be maintained as an element of the 

patient’s medical record. We are 

modifying this proposal in this final 

rule with comment to remove the 

patient signature requirement. 

Comment: Many commenters stated 

that the burden of obtaining and 

retaining the patient’s signature in the 

medical record is burdensome. Other 

commenters noted that, as suppliers 

move toward maintaining electronic 

health records, an additional paperwork 

requirement seems counter to these 

goals and recommended that CMS 

include an electronic alternative to the 

maintenance of a signed copy of the 

disclosure notice in patients’ medical 

records. Another commenter noted that 

because the notification of alternate 

suppliers is not a clinical document, it 

might not belong in a patient’s medical 

record. A commenter asked if the 

disclosure document must be 

maintained in the patient’s main 

medical record or if it could be 

maintained instead with the patient’s 

radiological documentation, which can 

be maintained electronically in a PACS 

system with the physician’s orders for 

the study. 

A commenter recommended that CMS 

accept as sufficient documentation, a 

note in the patient’s chart that a member 

of the staff provided the letter and 

explained it to the patient. Another 

suggestion from a commenter was that 

physicians maintain a dated notification 

log at the front desk that patients will 

sign once they have received and 

reviewed their disclosure lists. These 

logs will then be retained and filed by 

the office for potential review by 

regulators or accreditors. 

One commenter supported the 

requirement to maintain a copy of the 

disclosure in the patient’s medical 

record. 

Response: We acknowledge that 

obtaining the patient’s signature and 

maintaining a copy of such in the 

medical record may be burdensome. In 

this final rule with comment we are 

removing the requirement to obtain the 

patient’s signature on the disclosure and 

to maintain this documentation in the 

medical record. Nevertheless, as a 

matter of prudent business practices, 

physicians should be able to document 

or otherwise establish that they have 

complied with the disclosure 

requirement. For example, the physician 

could document in the patient’s chart 

that the notice was given to the patient. 

e. Effective Date 

We proposed that the new disclosure 

requirement shall apply only to services 

furnished on or after the effective date 

of these final regulations, January 1, 

2011. We did not receive any comments 

suggesting any alternate effective date. 

We are finalizing the effective date as 

proposed. 

f. Other Comments 

Comment: Some commenters 

submitted comments addressing topics 

beyond the scope of this proposal. 

These comments included detailed 

discussions of the in-office ancillary 

services exception, services that should 

be excluded from that exception, 

MedPAC’s analysis on the issue, as well 

as questions about the anti-markup 

payment limitation (§ 414.50) and a 

request that we respond to comments 

we requested regarding incentive 

payment or shared savings 

arrangements. 

Response: These comments are 

beyond the scope of this rulemaking and 

are not addressed in this final rule with 

comment. If these issues are addressed 

in the future, we will publish a notice 

of proposed rulemaking that will be 

open to public comment at that time. 

U. Section 6404: Maximum Period for 

Submission of Medicare Claims 

Reduced to Not More Than 12 Months 

1. Background 

Sections 1814(a)(1), 1835(a), and 

1842(b)(3)(B) of the Act establish time 

limits for filing Medicare Part A and B 

claims. Prior to the enactment of the 

ACA, under sections 1814(a)(1) and 

1835(a) of the Act, providers could file 

for Part A and Part B claims, 

respectively, ‘‘* * * no later than the 

close of the period of 3 calendar years 

following the year in which such 

services are furnished (deeming any 

services furnished in the last 3 calendar 

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months of any calendar year to have 

been furnished in the succeeding 

calendar year) except that, where the 

Secretary deems that efficient 

administration so requires, such period 

may be reduced to not less than 1 

calendar year* * *’’. Prior to the 

enactment of the ACA, CMS was 

authorized to establish a minimum time 

limit for provider-submitted Part A and 

Part B claims of at least 1 calendar year 

from the date of service, and a 

maximum time limit not to exceed 4 

years and 3 months after the date of 

service. 

Additionally, prior to the enactment 

of the ACA, under section 1842(b)(3)(B) 

of the Act, Part B claims for physician 

and other supplier services could be 

filed with Medicare ‘‘* * * no later than 

the close of the calendar year following 

the year in which such service is 

furnished (deeming any service 

furnished in the last 3 months of any 

calendar year to have been furnished in 

the succeeding calendar year) * * *’’. 

Therefore, prior to the enactment of the 

ACA, we were authorized to establish a 

minimum time limit for filing Part B 

claims of 15 months and a potential 

maximum of 27 months after the service 

was furnished, depending on what 

month of the year the service was 

furnished. 

Section 424.44 of the regulations 

implements sections 1814(a)(1), 1835(a), 

and 1842(b)(3)(B) of the Act. In order to 

effectively administer the Medicare 

Program, we, through regulations, 

modified the potential minimum and 

maximum time periods for filing Part A 

claims. At § 424.44(a), we adopted the 

minimum time limit of 15 months and 

potential maximum of 27 months after 

the service was furnished that was 

permitted under section 1842(b)(3)(B) of 

the Act for Part B claims and uniformly 

applied that 15 to 27 month time limit 

to both Part A and B claims. Also, under 

§ 424.44(b), we allowed providers and 

suppliers the opportunity to file claims 

after the 15 to 27 month deadline for 

filing claims expired when the failure to 

file ‘‘ * * * was caused by error or 

misrepresentation of an employee, 

intermediary, carrier, or agent of the 

Department that was performing 

Medicare functions and acting within 

the scope of its authority.’’ 

2. Provisions of the ACA 

Section 6404 of the ACA amended 

sections 1814(a)(1), 1835(a), and 

1842(b)(3)(B) of the Act regarding 

Medicare fee-for-service (FFS) claims for 

services furnished on or after January 1, 

2010. Under section 6404(b)(1) of the 

ACA, all claims for services furnished 

on or after January 1, 2010 must be filed 

within 1 calendar year after the date of 

service. Section 6404 of the ACA did 

not amend sections 1814(a)(1), 1835(a), 

and 1842(b)(3)(B) of the Act for services 

furnished before January 1, 2010. 

However, section 6404(b)(2) of the ACA 

created a new requirement that claims 

for services furnished before January 1, 

2010 must be filed on or before 

December 31, 2010. Thus, the statutory 

provisions prior to the enactment of the 

ACA remain in effect for pre-2010 

services, subject to this new 

requirement. The practical effect of this 

change is that any claims for services 

furnished before October 1, 2009 will 

follow the existing regulations. But for 

services furnished during the last 3 

months of 2009, providers and suppliers 

must file claims no later than December 

31, 2010. For services furnished 

between October 1, 2009 and December 

31, 2009, providers and suppliers will 

only have 12 to 15 months to file a 

claim, whereas before the ACA 

amendments, they would have had an 

additional year to file their claims, or 24 

to 27 months. 

The majority of the comments that we 

received for the proposed rule were 

supportive of our proposed exceptions 

at § 424.44(b)(2) and (3) concerning 

retroactive entitlement situations and 

dual-eligible beneficiary situations. 

However, some commenters encouraged 

us to either expand those proposed 

exceptions or suggested other new 

exceptions. 

Comment: One commenter stated that 

CMS should instruct Medicare 

Intermediaries to process claims where 

provider representatives are submitting 

retroactive claims within 6 months from 

the Social Security Administration’s 

(SSA) notification date due to SSA’s 

delay in processing beneficiaries’ 

retroactive Medicare entitlement. 

Moreover, the commenter cited to an 

OIG evaluation report dated January 

2006 (A–13–05–15028), which stated 

that the average number of years where 

beneficiaries are awarded retroactive 

Medicare benefits is about 8 years. 

Therefore, the commenter asserted that 

when SSA corrects the error and sends 

a notification letter to beneficiaries, 

providers should be allowed to submit 

claims to Medicare Intermediaries as 

long as the claims are submitted within 

6 months from the notification letter 

from SSA and as long as supporting 

documentation is attached to the claims. 

Response: As stated in the CY 2011 

PFS proposed rule, if CMS or one of its 

contractors determines that one of the 

exceptions to the time limits for filing 

claims applies, then the time to file a 

claim will be extended. We will update 

its internet only manual instructions to 

its contractors so that Medicare’s 

contractors are aware of the new timely 

filing requirements, the exceptions to 

those requirements, and process claims 

in accordance with these new 

requirements. 

Comment: Two commenters disagreed 

that services furnished between October 

1, 2009 through December 31, 2009 

must be billed by December 31, 2010 

and asserted that our proposed language 

at § 424.44(a) is in contravention of 

explicit statutory language. 

Response: We disagree with the 

commenter because section 6404(b)(2) 

of the ACA clearly states that—‘‘In the 

case of services furnished before January 

1, 2010, a bill or request for payment 

under section 1814(a)(1), 1842(b)(3)(B), 

or 1835(a) of the Act shall be filed not 

later than December 31, 2010’’. 

Therefore, because the statute 

specifically addresses this issue, we 

must require that services furnished 

between October 1, 2009 through 

December 31, 2009 be filed by December 

31, 2010. 

Comment: Two commenters suggested 

that CMS create an additional exception 

to the timely filing rules to permit 

providers to submit claims for services 

at the request of a Medicaid State 

Agency or its agent under the terms of 

the regulation prior to these current 

revisions; that is, by the end of the 

calendar year following the year in 

which the services were delivered (with 

services delivered in the last quarter of 

a calendar year being treated as though 

they were delivered in the next calendar 

year). The commenters believe that this 

type of additional exception would 

permit Medicaid State Agencies to 

assure proper billing of services to 

Medicare, as an appropriate third party 

payer, without overtaxing providers or 

Medicare contractors by requiring them 

to submit multiple claims at varying 

times. Additionally, a third commenter 

stated that the third condition of the 

exception at § 424.44(b)(3) could be 

interpreted to mean that the Medicaid 

agency must recover their payment from 

a provider or supplier prior to the 

provider or supplier billing Medicare. 

The commenter believes that it would 

be a better practice to notify providers 

of the Medicaid agency’s intention to 

recover prior to performing the actual 

recovery. 

Response: We were not persuaded to 

modify the rule in order to create an 

additional exception to permit providers 

and suppliers to submit claims for 

services at the request of a Medicaid 

State Agency prior to the State Medicaid 

Agency actually recovering the 

payment. Providers and suppliers do 

not necessarily have to wait for 

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Medicaid to recover its payment (see 

§ 424.44(b)(3)) in order to utilize an 

exception to the timely filing rules in 

retroactive entitlement situations 

because the proposed exception at 

§ 424.44(b)(2) may be used by providers 

and suppliers in order to file claims 

prior to a State Medicaid Agency 

recovering its payments. As we stated in 

§ 424.44(b)(2), if CMS or one of its 

contractors determines that at the time 

the service was furnished the 

beneficiary was not entitled to Medicare 

and the beneficiary subsequently 

received notification of Medicare 

entitlement effective retroactively to the 

date of the furnished service, then the 

time limit to file a claim may be 

extended. 

Comment: Three commenters 

suggested that an exception to the 

timely filing rules should be created for 

Medicare beneficiaries who are 

retroactively disenrolled from a 

Medicare Advantage plan so that all 

claims for services provided to the 

beneficiary while enrolled in the 

Medicare Advantage plan (upon 

retroactive disenrollment) can be 

submitted for coverage and payment to 

original Medicare. The commenters 

stated that a beneficiary may be 

retroactively disenrolled from that plan 

under a variety of circumstances. 

Moreover the commenters asserted that 

if a retroactively disenrolled beneficiary 

is unable to have claims for services 

submitted to original Medicare because 

some of those services were delivered 

more than a year prior to the date of 

actual disenrollment, then the 

beneficiary will be unable to be made 

whole and the ability to disenroll from 

a Medicare Advantage plan will be 

rendered pyrrhic at best. 

Response: We modified the final rule 

based on these comments and created 

an additional exception for retroactive 

disenrollment from Medicare Advantage 

plans at § 424.44(b)(4). Although we did 

not receive a comment requesting an 

exception for retroactive disenrollment 

from Program of All-inclusive Care for 

the Elderly (PACE) provider 

organizations, we included retroactive 

disenrollment from PACE in the 

exception at § 424.44(b)(4) because 

beneficiaries, providers, and suppliers 

could also be disadvantaged in 

retroactive disenrollment PACE 

situations. 

Comment: Two commenters suggested 

that an exception to the timely filing 

rules should be created when a private 

payer recovers its payment from the 

provider 11 months or more after the 

date of service. The commenters stated 

that hospitals routinely experience 

payment retractions from private payers 

that are outside the hospitals’ control 

and that may prevent a Medicare claim 

from being filed within one year of the 

date of service. 

Response: We were not persuaded to 

modify the rule by these comments 

because providers are already required 

‘‘to maintain a system that, during the 

admission process, identifies any 

primary payers other than Medicare, so 

that incorrect billing and Medicare 

overpayments can be prevented’’. See 

§ 489.20(f). Also, section 1862(b)(6) of 

the Act states—‘‘* * * no payment may 

be made for any item or service 

furnished under part B unless the entity 

furnishing such item or service 

completes (to the best of its knowledge 

and on the basis of information obtained 

from the individual to whom the item 

or service is furnished) the portion of 

the claim form relating to the 

availability of other health benefit 

plans’’. Therefore, we are not modifying 

the rule based on this comment because 

creating an exception to the timely filing 

limitations for these situations would 

allow providers and suppliers to 

circumvent the statutory and regulatory 

requirements stated above. 

Comment: Two commenters suggested 

that CMS create an exception to the 

timely filing rules for Medicare 

Secondary Payer (MSP) claims when the 

initial payment determination by the 

primary payer is not received by the 

hospital in sufficient time to permit 

timely filing of the MSP claim. A third 

commenter recommended that in cases 

where Medicare is not the primary 

payer, the filing deadline be extended to 

12 months from the date the payment is 

made for the products or services by the 

payer immediately primary to Medicare 

(that is, the primary payer when 

Medicare is the secondary payer, and 

the secondary payer when Medicare is 

tertiary). 

Response: We were not persuaded to 

modify the rule by these comments 

because Medicare may make conditional 

payments for services when a payer that 

is primary to Medicare does not pay 

promptly. ‘‘Prompt’’ or ‘‘promptly’’, 

when used in connection with primary 

payments, except as provided in 

§ 411.50, for payments by liability 

insurers, means payment within 120 

days after receipt of the claim. See 42 

CFR part 411 subparts B through H and 

411.21 and 411.24 for the definitions of 

conditional payment and promptly. 

Moreover, because providers are already 

required ‘‘to maintain a system that, 

during the admission process, identifies 

any primary payers other than 

Medicare, so that incorrect billing and 

Medicare overpayments can be 

prevented’’ (See § 489.20(f)) we do not 

believe a provider’s ability to meet the 

new 1 calendar year timely filing 

requirement will be compromised by 

the commenter’s concerns. 

Comment: Three commenters 

suggested that CMS create an exception 

to the timely filing rules so that 

hospitals are permitted to file inpatient 

Part B only claims for any inpatient 

cases that are retrospectively reviewed 

by a Medicare Recovery Audit 

Contractor (RAC) or other review entity 

and determined not to be medically 

necessary in an inpatient setting. The 

commenters pointed out that with the 

reduction of the timely filing period to 

one year from the date of service, 

legitimate rebilling opportunities are 

limited since Medicare RAC’s may audit 

Medicare claims that were paid up to 3 

years ago. 

Response: We were not persuaded to 

modify the rule by these comments 

because Medicare’s billing guidelines 

instruct providers regarding what types 

of inpatient services may be billed to 

Part A and to Part B. Therefore, it is the 

responsibility of a provider to correctly 

submit claims to Medicare by coding the 

services appropriately. 

Comment: In the CY 2011 PFS 

proposed rule, CMS solicited comments 

regarding whether CMS should provide 

a regulatory definition of ‘‘date of 

service’’ and, if so, how should it define 

this term. One commenter suggests that 

the ‘‘date of service’’ be defined through 

administrative instructions as the 

‘‘through date’’ on the Medicare claim 

(UB–04 form locator 6, statement covers 

period). A second commenter stated that 

CMS should adopt as a final rule the 

guidance on ‘‘Date of Service’’ provided 

in MLN Matters Number 7080 and 

Transmittal 734, Change Request 7080. 

CMS Manual System, Pub 100–20 OneTime Notification, July 30, 2010. This 

guidance provides that for institutional 

claims that include span dates, the 

‘‘Through’’ date on the claim will be 

used to determine the date of service for 

claims filing timeliness; for professional 

claims (CMS–1500 Form and 837P) 

submitted by physicians and other 

suppliers that include span dates of 

service, the guidance states that the line 

item ‘‘From’’ date will be used to 

determine the date of service and filing. 

Response: We decided not to define 

‘‘date of service’’ in the final rule 

because, as we stated in the CY 2011 

PFS proposed rule, we recognize that for 

many Part A and B services it is difficult 

to craft a uniform rule that will apply a 

consistent date of service standard. 

Therefore, we decided to address the 

‘‘date of service’’ issue via sub-regulatory 

guidance. We issued sub regulatory 

guidance on what constitutes the ‘‘date 

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of service’’ for some items and services 

on May 7, 2010 via Change Request 

6960 and on July 30, 2010 via Change 

Request 7080 to our Medicare 

contractors and it is our intention to 

provide additional sub-regulatory 

guidance as the need arises for different 

Part A and B services. 

Comment: One commenter believed 

an exception should be created for 

claims for consumers who retroactively 

enroll in original Medicare Part B, such 

as consumers who successfully apply 

for equitable relief. For example, a 

person may choose to take Part A 

(because it is premium free) but may 

mistakenly choose not to enroll in 

Medicare Part B due to cost or because 

they believe that other insurance for 

which they already pay a premium, 

such as retiree coverage or coverage 

through a group health plan provided by 

a small employer, will pay medical 

costs. As a result, insurance that is 

supposed to pay secondary to Medicare 

incorrectly pays primary. The 

commenter goes on to assert that if the 

insurance plan discovers that a person 

was eligible for Medicare Part B but did 

not enroll and therefore the plan was 

supposed to pay secondary, the insurer 

can recoup payments made back to the 

date the enrollee became Medicare Part 

B eligible. In some instances, a person 

may obtain a retroactive Medicare Part 

B start date back to the original date of 

Medicare eligibility. This retroactive 

start date can be a few months to a few 

years and is not limited by statute. As 

a result, providers from which 

secondary insurer’s recouped payment 

would need the ability to submit claims 

to Medicare for services provided over 

one year in the past. In these cases, 

because the consumer is already 

enrolled in Medicare Part A and not Part 

B, the commenter is concerned that 

claims would not fall under the 

language of § 424.44(2)(ii) as the 

consumer is already entitled to 

Medicare. 

Response: Although this comment 

was unclear, we believe the commenter 

wants CMS to create an exception to the 

time limits for filing claims specifically 

for Part B services. We were not 

persuaded to modify the rule by these 

comments because if a beneficiary is 

granted equitable relief under section 

1837(h) of Act, the beneficiary may still 

be able to use the exception at 

§ 424.44(b)(2). Of course, all of the 

conditions for § 424.44(b)(2) will need 

to be satisfied in order for an exception 

to be granted in a particular case. It is 

important to note that all of the 

exceptions in § 424.44(b) (including the 

exception for § 424.44(b)(2)) are not 

limited to just Part A services; the 

exceptions may also be granted for Part 

B services when applicable. 

Comment: One commenter asked 

whether the 4 years from date of service 

limitation specified in § 424.44(b)(1) 

applies when the SSA makes an 

administrative error in determining a 

beneficiary’s retroactive entitlement 

decision since the SSA is not 

considered an agent or contractor to 

CMS. Or, would this be covered under 

§ 424.44(b)(2) or § 424.44(b)(3) without 

the 4 year limitation? The commenter 

recommended that CMS clarify in the 

final rule that the 4 year limitation does 

not apply when the result of a 

retroactive Medicare decision was due 

to SSA’s administrative error in 

incorrectly and untimely processing of 

beneficiaries eligibility determinations. 

Response: Section 424.44(b)(1) only 

applies to errors or misrepresentations 

that are made by an employee, Medicare 

contractor (including Medicare 

Administrative Contractor, 

intermediary, or carrier), or agent of the 

Department that was performing 

Medicare functions and acting within 

the scope of its authority. It does not 

apply to errors or misrepresentations 

made by the SSA; therefore, the 4 year 

restriction for § 424.44(b)(1) would not 

apply because § 424.44(b)(2) and (3) 

could be used in situations where the 

SSA makes an error. However, it is 

important to note that errors or 

misrepresentations by the SSA are not 

one of the conditions that must be met 

in order for an extension of time to be 

granted under § 424.44(b)(2) and (3). 

Comment: Two commenters 

recommended that if the SSA cannot 

locate a copy of the original retroactive 

notification letter that was sent to the 

beneficiary, then CMS should allow 

providers or beneficiaries to submit the 

notification letter that they received 

from SSA that clearly indicates the 

beneficiary’s retroactive entitlement 

date and the date in which the 

notification of SSA’s retroactive 

decision was made. Therefore, the 

regulations and guidelines should 

address alternate proof of coverage in 

the event a copy of the actual Notice of 

Award is unavailable. 

Response: We were not persuaded to 

modify the rule by these comments 

because we believe these types of 

documentation or proof of retroactive 

entitlement issues should be addressed 

via sub-regulatory guidance. Therefore, 

we will consider these comments when 

we update our internet only manual 

instructions to our contractors. 

Comment: One commenter suggested 

that there should be an exception to 

account for claims filed for beneficiaries 

granted Medicare entitlement 

retroactively because of the 30+ years of 

systemic errors of SSA’s Special 

Disability Workload (SDW). The 

commenter stated that this issue is 

currently in bill form before both houses 

of Congress and that failing a legislative 

solution this proposed rule would bar 

States from perfecting rightful claims for 

services provided over the years under 

Medicaid that should have been 

provided by Medicare. The commenter 

goes on to state that States will have 

great difficulty in reaching out to 

providers over 30 years of services to 

recoup third party liability from 

Medicare. Despite such difficulty, States 

should retain the right to file claims and 

they should not be barred by this 

proposed rule. The proposed rule states 

that ‘‘we believe that limiting this 

exception to 4 years after the dates of 

service strikes an appropriate balance 

between fairness and equity for 

providers, suppliers, and beneficiaries 

and administrative finality for the 

Medicare program’’. The commenter 

asserts that the proposed rule does not 

show any consideration of States’ 

interests in pursuing third party liability 

against Medicare based on systemic 

failures by SSA, the agency responsible 

for determining Medicare eligibility. 

Response: The commenter’s statement 

that States should retain the right to file 

claims is outside the scope of this rule; 

therefore, we will not address that 

particular comment. We were not 

persuaded to modify the rule by the 

other comments because § 424.44(b)(1) 

only applies to errors or 

misrepresentations that are made by an 

employee, Medicare contractor 

(including Medicare Administrative 

Contractor, intermediary, or carrier), or 

agent of the Department that was 

performing Medicare functions and 

acting within the scope of its authority. 

It does not apply to errors or 

misrepresentations made by the SSA; 

therefore, the 4 year restriction for 

§ 424.44(b)(1) would not apply in the 

situation described by the commenter, 

but § 424.44(b)(2) and (3) could be used 

in situations where the SSA makes an 

error. However, it is important to note 

that errors or misrepresentations by the 

SSA are not one of the conditions that 

must be met in order for an extension 

of time to be granted under 

§ 424.44(b)(2) and (3). 

Comment: One commenter suggested 

that CMS consider allowing the 

exception for dually-eligible 

beneficiaries at § 424.44(b)(3) to apply if 

any one of the three conditions are met 

as opposed to all of the conditions. 

Response: We were not persuaded to 

modify the rule by this comment 

because it would make the dual-eligible 

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exception meaningless. The first 

condition of § 424.44(b)(3) states—‘‘At 

the time the service was furnished the 

beneficiary was not entitled to 

Medicare’’. That first condition could 

apply to every service a person has ever 

received during his or her lifetime prior 

to becoming a Medicare beneficiary. 

Therefore, under the commenter’s 

suggestion the exception would be 

meaningless. 

Comment: One commenter suggested 

that the first condition of the exception 

at § 424.44(b)(3) include cases in which 

Medicare coverage is unknown to the 

Medicaid agency at the time of service 

instead of using the condition that at the 

time the service was furnished the 

beneficiary was not entitled to 

Medicare. 

Response: We were not persuaded to 

modify the rule by this comment 

because if the beneficiary was already 

entitled to Medicare at the time the 

service was furnished, then the provider 

or supplier could have taken the 

necessary actions to find out that the 

individual was a Medicare beneficiary. 

For example, the provider could have 

asked the beneficiary prior to 

admission, checked with CMS, etc. 

Comment: One commenter stated that 

the second condition of the exception at 

§ 424.44(b)(3) assumes that because the 

beneficiary is notified about retroactive 

Medicare coverage that the provider of 

service and the State Medicaid Agency 

is concurrently notified, which may not 

always be the case. Because this is a 

direct communication between the 

Medicare program and its beneficiary, 

CMS should address how providers and 

the Medicaid agency will evidence dual 

eligibility to Medicare’s contractors in 

an effort to meet this condition. 

Response: We were not persuaded to 

modify the rule by these comments even 

though we agree that it is possible that 

providers, suppliers, and State Medicaid 

Agencies may not be notified 

concurrently about a beneficiary’s 

retroactive Medicare entitlement. 

However, the exception at § 424.44(b)(3) 

does not prevent providers and 

suppliers from requesting an exception 

to the time limits for filing a claim 

because the provider or supplier will 

always be notified about a beneficiary’s 

retroactive entitlement whenever a State 

Medicaid Agency recovers its payment. 

Pursuant to § 424.44(b)(5)(iii), the date 

when the State Medicaid Agency 

actually recovers its payment from the 

provider or supplier is when the 

extension of time to file the claim 

through the last day of the 6th calendar 

month is triggered. In other words, 

assuming that all three of the conditions 

for § 424.44(b)(3) are met, providers and 

suppliers will possess the ability to file 

a claim through the last day of the 6th 

calendar month after the date the State 

Medicaid Agency recovers its payment. 

Unlike the 4 year restriction 

(§ 424.44(b)(5)(i)) placed on the 

exception at § 424.44(b)(1), which is 

commonly referred to as the exception 

for ‘‘administrative error,’’ there is no 

similar time restriction regarding when 

a provider or supplier may request an 

exception under § 424.44(b)(3). 

Therefore, providers and suppliers 

should note that once the State 

Medicaid Agency recovers its payment 

for the services, providers and suppliers 

will only have through the last day of 

the 6th calendar month after that 

recovery date to file a claim (assuming 

that all three of the conditions for 

§ 424.44(b)(3) are met). 

Comment: One commenter 

recommends that CMS define 

‘‘retroactive Medicare’’ for the purpose 

of these proposed exceptions. The 

commenter stated that they understand 

retroactive Medicare to be the extension 

of benefits to a date in the past but 

believe that confirmation or clarification 

of this definition should be issued by 

CMS. 

Response: Although this comment 

was unclear, we believe the commenter 

wants CMS to clarify what Medicare 

entitlement effective retroactively to or 

before the date of the furnished service 

means. We were not persuaded to 

modify the rule by this comment 

because we did not use the term 

‘‘retroactive Medicare’’ in the regulation 

text. Instead, the regulation text used 

the following language—‘‘the beneficiary 

subsequently received notification of 

Medicare entitlement effective 

retroactively to or before the date of the 

furnished service’’— which we believe 

makes it clear that a beneficiary is 

receiving his or her Medicare 

entitlement beginning at some date in 

the past. 

Comment: One commenter 

recommends that in States which have 

a contract with the SSA to determine 

eligibility for Medicaid at the same time 

a determination is made for receipt of 

Social Security Income (SSI) benefits 

(see section 1634(a) of the Act), that 

CMS should clarify if Medicare 

retroactivity will include requests for 

prior month premium payments. 

Response: Although this comment 

was unclear, we believe the commenter 

wants to know whether the exceptions 

to the time limits for filing claims is 

limited to just Part A services. Because 

the commenter refers to requests for 

prior month premium payments, we 

believe that the commenter is concerned 

about what happens when State 

Medicaid Agencies pay Part B 

premiums on behalf of dual-eligible 

beneficiaries. If a beneficiary receives 

notification of Medicare entitlement 

(Part A) effective retroactively to or 

before the date of a furnished service 

and a State Medicaid Agency (or the 

beneficiary or anyone else) pays for that 

beneficiary’s Part B monthly premium 

retroactively to or before the date of a 

Part B furnished service, then those 

‘‘old’’ Part B services for that beneficiary 

may be granted an extension to the time 

limits for filing as long as the other 

conditions for that particular exception 

are also met. In other words, the 

exceptions for § 424.44(b)(2) and (3) are 

not limited to just Part A services; the 

exceptions may also be granted for Part 

B services when applicable. 

Comment: One commenter stated that 

the ACA provision essentially provides 

providers with a 12 month period in 

which to file claims for services for 

which they have reason to believe 

Medicare may be responsible. However, 

in the exceptions proposed by CMS, a 

provider only has 6 months to file a 

claim. Consistency with the ACA would 

suggest that the time to file a claim 

under each exception should be 

extended through the last day of the 

12th month following the month in 

which the exception applies. The 

commenter also stated that with regard 

to the proposed exceptions, the time 

limit should be based on the month in 

which the error or misrepresentation is 

corrected and the provider is notified of 

that fact. There may be some time 

between when the error or 

misrepresentation is corrected and 

when the provider is notified of that fact 

and the extended time limit should 

begin when the provider becomes aware 

of the correction. A second commenter 

stated that the timeframe for filing 

claims applicable to services provided 

to beneficiaries who become 

retroactively entitled to Medicare 

(regardless of whether they are dualeligible beneficiaries) should be 

extended to the later of: (1) The date 

that is 12 months after the date that the 

beneficiary is notified of retroactive 

Medicare entitlement, or (2) the date 

that is 12 months after the provider or 

supplier becomes aware of retroactive 

Medicare entitlement. 

Response: We are modifying 

§ 424.44(b)(5)(ii) based on these 

comments because we agree that in 

retroactive entitlement situations there 

could be situations where a provider or 

supplier may not be notified of a 

beneficiary’s retroactive entitlement in 

order to utilize the exception at 

§ 424.44(b)(2). Therefore, we are 

modifying § 424.44(b)(5)(ii) so that 

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notification to either party (that is, the 

beneficiary or the provider/supplier) for 

the first time about a beneficiary’s 

retroactive entitlement will trigger when 

the extension of time to file the claim 

through the last day of the 6th calendar 

month begins. We understand that this 

rule may result in two extension of time 

triggers if the beneficiary and the 

provider/supplier are not notified on the 

same day (one for when the beneficiary 

is first notified and one for when the 

provider or supplier is first notified); 

however, we agree with the commenter 

that it would be unfair to providers and 

suppliers to limit the exception based 

only on when the beneficiary receives 

notification. 

We are also modifying 

§ 424.44(b)(5)(i) based on these 

comments because we agree that there 

may be situations where a provider or 

supplier may be able to utilize the 

exception under § 424.44(b)(1) 

commonly referred to as the 

‘‘administrative error’’ exception, but the 

provider or supplier is not notified 

about the correction until it is too late 

to utilize the exception. Therefore, we 

are modifying § 424.44(b)(5)(i) so that 

notification to either party (that is, the 

beneficiary or the provider/supplier) for 

the first time about the administrative 

error correction will trigger when the 

extension of time to file the claim 

through the last day of the 6th calendar 

month begins. We understand that this 

rule may result in two extension of time 

triggers if the beneficiary and the 

provider/supplier are not notified on the 

same day (one for when the beneficiary 

is first notified and one for when the 

provider or supplier is first notified); 

however, we agree with the commenter 

that it would be unfair to providers and 

suppliers to limit the exception based 

only on when the ‘‘administrative error’’ 

is actually corrected. 

However, we were not persuaded to 

modify the rule for dual-eligible 

situations (see § 424.44(b)(3)) because 

the extension of time to file a claim 

through the last day of the 6th calendar 

month is triggered in dual-eligible 

situations when the State Medicaid 

Agency recovers its payment from the 

provider or supplier. Therefore, 

providers and suppliers will always 

receive sufficient notification in dualeligible situations because the date that 

the State Medicaid Agency recovers its 

payment will be the provider’s or 

supplier’s notice that they have through 

the last day of the 6th calendar month 

in order to file a claim (assuming of 

course that CMS or its contractors 

determines that all the conditions in 

§ 424.44(b)(3) are met and grants an 

extension). 

Also, we were not persuaded to 

modify the rule based on the comment 

that the time to file a claim under each 

exception should be extended through 

the last day of the 12th month following 

the month in which the exception 

applies. Because the triggering events 

for the exceptions at § 424.44(b)(1), (2), 

and (3) cannot occur without the 

provider or supplier actually being 

notified, we believe that an extension of 

time to file a claim through the last day 

of the 6th calendar month after those 

triggering events gives providers and 

suppliers sufficient time to submit their 

claims. 

Comment: Two commenters requested 

that CMS create an additional exception 

for those instances where the issuance 

of new Medicare provider numbers are 

delayed due to no fault of the provider. 

The commenter stated that numerous 

Medicare contractors are taking 60 to 

120 days or longer to process and 

finalize CMS enrollment applications. 

Additionally, and more importantly, 

many State survey agencies are 

extremely behind on initial Medicare 

State surveys. In some cases, it is taking 

2 years for the State to conduct the 

required survey for the providers. These 

delays significantly restrict a provider’s 

ability to submit claims for services 

furnished prior to the effective date of 

the Medicare billing privileges and the 

commenter hopes that CMS would work 

with the provider community to process 

claims under these circumstances. 

Another commenter recommended that 

CMS should provide an exception for 

provider enrollment delays caused by 

the MAC or CMS Regional Office that 

are outside the control of the provider. 

The commenter recommended that CMS 

should extend the time to file a claim 

through the last day of the 6th calendar 

month following the month in which 

provider enrollment was completed 

with an additional 30 days allowed for 

each full or partial month between the 

effective date of the provider enrollment 

and the approval date of the provider 

enrollment. This additional time is 

necessary to accommodate Medicare’s 

sequential billing requirement. 

Response: We were not persuaded to 

modify the rule based on these 

comments because regulations at 

§ 424.520, § 424.521, and § 489.13 

already establish an effective billing 

date for providers and suppliers and 

those regulations have already 

established limitations on retroactive 

billing for providers and suppliers. 

Comment: Two commenters stated 

that the Medicare Secondary Payer rules 

do allow a provider to file with 

Medicare if the otherwise primary payer 

is going to take awhile to pay. 

Notwithstanding, there have been 

situations which would warrant 

enumeration in an exceptions 

regulation. Providers have experienced 

situations where an insurance company 

has executed a retroactive denial of a 

previously paid claim after a year. When 

this happens, the timely filing clock 

should start with the denial date. Thus, 

the commenter recommends that: 

• CMS should continue to allow for 

payment when a primary payer may 

take a substantial amount of time to pay; 

• CMS should allow for a claim to be 

considered timely if it is filed within 1 

year from the date that the primary 

payer has made its payment 

determination; and 

• CMS should allow for a claim to be 

considered timely if it is filed within 1 

year from the date that the primary 

payer retroactively denied a prior 

previously paid claim. 

Response: We were not persuaded to 

modify the rule by these comments 

because Medicare may make conditional 

payments for services when a payer that 

is primary to Medicare does not pay 

promptly. ‘‘Prompt’’ or ‘‘promptly’’, 

when used in connection with primary 

payments, except as provided in 

§ 411.50, for payments by liability 

insurers, means payment within 120 

days after receipt of the claim. See 42 

CFR part 411 subparts B through H and 

411.21 for the definitions of conditional 

payment and promptly. 

Also, section 1862(b)(6) of the Act 

states—‘‘* * * no payment may be 

made for any item or service furnished 

under part B unless the entity 

furnishing such item or service 

completes (to the best of its knowledge 

and on the basis of information obtained 

from the individual to whom the item 

or service is furnished) the portion of 

the claim form relating to the 

availability of other health benefit 

plans’’. Moreover, because providers are 

already required ‘‘to maintain a system 

that, during the admission process, 

identifies any primary payers other than 

Medicare, so that incorrect billing and 

Medicare overpayments can be 

prevented’’ (See 489.20(f)) we do not 

believe a provider’s ability to meet the 

new 1 calendar year timely filing 

requirement will be compromised by 

the commenter’s concerns. 

Comment: One commenter stated that 

providers have reported that they are 

experiencing a need to cancel 

previously processed Part B claims in 

order to submit benefits exhaust claims. 

Depending on the time frame for this, 

providers may be unable to resubmit the 

Part B charges. Providers need either a 

mechanism for submitting benefits 

exhaust claims for older dates of service 

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that does not require the cancelling of 

previously processed claims or they 

need an exception granted for 

resubmitting claims that had been 

processed timely but needed to be 

cancelled to submit benefits exhaust 

claims. The commenter recommends 

that CMS should provide a mechanism 

for submitting benefits exhaust claims 

for older dates of service that does not 

require the cancelling of previously 

processed claim. 

Response: We are not aware of the 

specific scenario described by the 

commenter; however, we will monitor 

this issue and determine whether any 

additional sub-regulatory guidance is 

needed in this area. 

Comment: One commenter stated that 

there have been cases in which a facility 

has been under a payment ban and the 

lifting of the remedy was not 

communicated to the facility in a timely 

manner, thus prohibiting the timely 

filing of claims. The commenter 

recommended that CMS should start the 

timely filing clock with the date that the 

lifting of a payment ban is 

communicated to the provider. 

Response: We were not persuaded to 

modify the rule by this comment 

because if the failure to file a claim 

timely was the result of an error or 

misrepresentation that was made by an 

employee, Medicare contractor 

(including Medicare Administrative 

Contractor, intermediary, or carrier), or 

agent of the Department that was 

performing Medicare functions and 

acting within the scope of its authority, 

then the provider may be able to utilize 

the exception under § 424.44(b)(1) 

commonly referred to as the 

‘‘administrative error’’ exception in 

order to file a claim. 

Comment: One commenter stated that 

when a provider is trying to adjust a 

claim for the purpose of returning 

money to the Medicare program, timely 

filing should not apply. Conversely, 

when a provider finds an error that had 

caused an underpayment, the provider 

should be allowed to file an amended 

claim and receive the increased 

compensation. Therefore, the 

commenter recommends that CMS 

should provide that timely filing under 

amended § 424.44 not apply when a 

provider is trying to adjust a claim for 

the purpose of returning money to the 

Medicare program, or, conversely, when 

a provider finds an error that had 

caused an underpayment. 

Response: We were not persuaded to 

modify the rule by these comments 

because the timely filing provision of 

section 6404 of the ACA and subsequent 

final rule amending § 424.44 is not 

intended to address requests for redeterminations of initial determinations 

by Medicare contractors such as those 

described by the commenter. The 

regulations for such requests are 

detailed in 42 CFR part 405, subparts G, 

H, and I. 

Comment: One commenter stated that 

they regularly file claims within 1 

calendar year after the date of service 

that are either rejected or denied and 

that are subsequently approved after 

being re-filed. In certain instances, the 

date of re-filing, because of the time 

period before the rejection or denial, is 

more than one year after the date of 

service. The commenter recommends 

that the timely filing rule should be and 

is satisfied when an original claim is 

timely filed within 1 calendar year after 

the date of service, regardless of the date 

of any resubmission. 

Response: We were not persuaded to 

modify the rule by this comment 

because, for example, if a provider or 

supplier fails to include a particular 

item or service on its initial claim, fails 

to include all the necessary information 

in order for an initial determination to 

be made on that claim or fails to file the 

claim on a form prescribed by us, then 

a provider or supplier cannot attempt to 

re-file that claim more than 1 calendar 

year after the date that the service was 

furnished. An incomplete or rejected 

claim cannot act as a placeholder for a 

claim that has yet to be filed because 

that would clearly be a way for 

providers and suppliers to avoid the 1 

calendar year requirement stated in 

section 6404 of the ACA. Moreover, it 

would create a multitude of problems 

for CMS to deal with operationally or 

administratively because CMS would 

need to have the ability to track all 

rejected claims or all claims that failed 

to receive an initial determination and 

be able to match those rejected or 

incomplete claims up with all of the 

complete or valid claims that would 

eventually be filed months or years later 

so that an initial determination could be 

made. 

Comment: One commenter stated that 

it is unnecessary to impose an 

additional restriction to the exception 

for claims filed for services provided to 

dual-eligible individuals. The third 

condition for the exception at 

§ 424.44(b)(3) that a State Medicaid 

Agency recovers the Medicaid payment 

for the furnished service from a provider 

or supplier 11 months or more after the 

date of service is too restrictive and 

CMS should have used a different time 

period. 

Response: We agreed with the 

commenter that the 11 months or more 

after the date of service requirement in 

§ 424.44(b)(3)(iii) was too restrictive and 

therefore we modified the final rule 

based on these comments by changing 

the time period from 11 months to 6 

months or more after the service was 

furnished. 

Comment: One commenter suggests 

that CMS amend the third condition of 

§ 424.44(b)(3) to read as follows— ‘‘A 

State Medicaid agency or Provider 

recovered the Medicaid payment for the 

furnished service from the provider or 

supplier 11 months or more after the 

date of service.’’ The commenter stated 

that occasionally providers identify 

retroactive Medicare coverage after 

Medicaid has paid without receiving 

notification from the State Medicaid 

agency. The provider needs to have the 

ability to correct the payer order when 

necessary before their existing payment 

is recouped. 

Response: We were not persuaded to 

modify the rule by these comments 

because when a provider refunds a 

payment that is made to it by a State 

Medicaid Agency, the provider is not 

recovering a State Medicaid payment. 

Instead, when the State Medicaid 

Agency accepts that refunded payment 

from the provider, we consider the State 

Medicaid Agency to actually be 

recovering that Medicaid payment. 

Therefore, when a State Medicaid 

Agency accepts a provider’s refunded 

payment 6 months or more after the 

service was furnished, then the third 

condition of § 424.44(b)(3) will be met. 

Of course, the first two conditions of 

§ 424.44(b)(3) will also need to be met 

in order for an extension to be granted 

under § 424.44(b)(3). 

Comment: One commenter stated that 

due to the limited home infusion benefit 

under Medicare Part B, home infusion 

suppliers often bill Medicare for the 

purpose of obtaining Medicare denial 

billing remittance advices, which are 

required by other payers. It would be 

unreasonably costly and confusing for 

home infusion suppliers to receive 

timely filing limit denials for services 

provided to individuals for whom the 

supplier is unaware of retroactive 

Medicare entitlement during the 

allowable filing period. The commenter 

urged CMS to ensure that infusion 

suppliers do not have to face this 

situation. 

Response: Although this comment 

was unclear, we believe the commenter 

is concerned that home infusion 

suppliers will be disadvantaged by the 

exception at § 424.44(b)(2). If the 

conditions for § 424.44(b)(2) are met, 

then home infusion suppliers will be 

able to utilize that exception the same 

as any other provider or supplier and 

therefore will not be adversely impacted 

by this rule. 

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Comment: One commenter urges CMS 

to make communication about this new 

deadline a priority for the Agency. This 

should include a prominent banner on 

the CMS Web site home page as well as 

clear and concise written 

communications with Medicare 

providers. It is important that providers 

not have claims rejected due to lack of 

awareness of new claims submission 

deadlines. 

Response: Although this comment is 

outside the scope of this rule, we issued 

sub-regulatory guidance regarding 

section 6404 of the ACA on May 7, 2010 

via Change Request 6960 and on July 30, 

2010 via Change Request 7080. As a 

result of issuing that sub-regulatory 

guidance, two provider education 

articles were posted to CMS’s Medlearn 

Matters Web site educating providers 

and suppliers about the new 1 calendar 

year timely filing requirement. 

In order to effectuate the changes 

made by the ACA, we are finalizing our 

proposed changes to § 424.44, with four 

modifications. First, we are including 

another exception at § 424.44(b) by redesignating § 424.44(b)(4) of the 

proposed rule to § 424.44(b)(5) and 

designating the new exception for 

retroactive disenrollment from Medicare 

Advantage plans or Program of Allinclusive Care for the Elderly (PACE) 

provider organizations as § 424.44(b)(4). 

We are adding this new exception so 

that beneficiaries, providers, and 

suppliers may be granted an extension 

to file claims in Medicare Advantage 

situations when the following 

conditions are met: 

• At the time the service was 

furnished the beneficiary was enrolled 

in a Medicare Advantage plan or PACE 

provider organization. 

• The beneficiary was subsequently 

disenrolled from the Medicare 

Advantage plan or Program of Allinclusive Care for the Elderly (PACE) 

provider organization effective 

retroactively to or before the date of the 

furnished service. 

• The Medicare Advantage plan or 

Program of All-inclusive Care for the 

Elderly (PACE) provider organization 

recovered its payment for the furnished 

service from a provider or supplier 6 

months or more after the service was 

furnished. 

In these situations, if we or one of our 

contractors determines that all of the 

conditions are met, then the time to file 

a claim will be extended through the 

last day of the 6th calendar month 

following the month in which the 

Medicare Advantage plan or Program of 

All-inclusive Care for the Elderly 

(PACE) provider organization recovered 

its payment for the furnished service 

from the provider or supplier. 

The second modification changes 

§ 424.44(b)(5)(ii) because in retroactive 

entitlement situations there could be 

situations where a provider or supplier 

may not be notified of a beneficiary’s 

retroactive entitlement in order to 

utilize the exception at § 424.44(b)(2). 

Therefore, we are modifying 

§ 424.44(b)(5)(ii) so that notification to 

either party (that is, the beneficiary or 

the provider/supplier) for the first time 

about a beneficiary’s retroactive 

entitlement will trigger when the 

extension of time to file the claim 

through the last day of the 6th calendar 

month begins. 

The third modification changes 

§ 424.44(b)(5)(i) because there may be 

situations where a provider or supplier 

may be able to utilize the exception 

under § 424.44(b)(1) commonly referred 

to as the ‘‘administrative error’’ 

exception, but the provider or supplier 

is not notified about the correction until 

it is too late to utilize the exception. 

Therefore, we are modifying 

§ 424.44(b)(5)(i) so that notification to 

either party (that is, the beneficiary or 

the provider/supplier) for the first time 

about the administrative error correction 

will trigger the beginning of the 

extension of time to file the claim 

through the last day of the 6th calendar 

month. 

The fourth modification changes the 

11 months or more after the date of 

service requirement in § 424.44(b)(3)(iii) 

to 6 months or more after the date of 

service because the 11 months or more 

requirement was too restrictive. 

V. Section 6410 of the Affordable Care 

Act and Section 154 of MIPPA: 

Adjustments to the Metropolitan 

Statistical Areas (MSA) for Medicare 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

Competitive Acquisition Program 

In the July 13, 2010 proposed rule we 

proposed a number of revisions to the 

DMEPOS CBP as a result of changes to 

the statute made by both the Medicare 

Improvements for Patients and Provider 

Act of 2008 (MIPPA) and the ACA of 

2010. Since both MIPPA and the ACA 

specify requirements for Metropolitan 

Statistical Area (MSA) selection for 

Round 2 and subsequent rounds, we 

outlined our proposals for 

implementing the statutory 

requirements related to MSA selection 

and the phase in of competitive bidding 

areas under the DMEPOS CBP. First, we 

proposed to use the authority provided 

by the statute at section 1847(a)(1)(D)(ii) 

of the Act, as amended by MIPPA, to 

subdivide MSAs with populations of 

greater than 8,000,000 under Round 2 of 

the DMEPOS CBP. Second, we proposed 

to exclude certain areas from 

competitive bidding after Round 2 as 

mandated by section 1847(a)(1)(D)(iii) of 

the Act, as amended by MIPPA. Third, 

we proposed to implement the 

requirement of section 6410 of the ACA 

to expand Round 2 of the program by 

adding 21 of the largest MSAs based on 

total population to the original 70 

already selected for Round 2. 

1. Background 

Section VII.H of this final rule 

provides background on the DMEPOS 

CBP, including a description of many of 

the changes made to the program by 

section 154 of the MIPPA. In this 

section, we provide additional 

information regarding changes made by 

both section 154(a) of the MIPPA and 

section 6410 of the ACA. In addition to 

the changes discussed previously in this 

final rule, MIPPA also added 

subparagraph (D) to section 1847(a)(1) of 

the Act. Section 1847(a)(1)(D)(ii) of the 

Act, as added by MIPPA, addresses 

Round 2 of the DMEPOS CBP, and 

section 1847(a)(1)(D)(iii) of the Act 

addresses subsequent rounds of the 

Program. 

Section 1847(a)(1)(D)(ii)(II) of the Act 

specifies that the Secretary shall 

implement DMEPOS competitive 

bidding in the areas previously selected 

for Round 2 of the program and also 

allows the Secretary, in implementing 

Round 2 of the program, to subdivide 

MSAs with populations of greater than 

8,000,000 into separate CBAs. Section 

1847(a)(1)(D)(iii) of the Act imposes 

new requirements on the Secretary for 

competitions occurring before 2015 in 

subsequent rounds of the program. For 

such competitions (other than national 

mail order), the following areas are to be 

excluded from the program: (I) rural 

areas; (II) MSAs not selected under 

Round 1 or 2 with a population of less 

than 250,000; and (III) certain areas with 

low population density within a 

selected MSA. These requirements do 

not apply to a national mail order 

program. 

Finally, MIPPA required that we 

implement Round 2 of the DMEPOS 

CBP in the same MSAs that were 

designated as of June 1, 2008. In 2010, 

section 6410(a) of the ACA amended 

sections 1847(a)(1)(B)(i)(II) and (D)(ii) of 

the Act to expand Round 2 of the 

program from 70 MSAs to 91 MSAs by 

adding the next 21 largest MSAs by total 

population not already selected for 

Rounds 1 or 2. 

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2. Subdividing Large MSAs Under 

Round 2 

We have selected MSAs for Round 1 

and for Round 2 consistent with 

MIPPA’s requirement. For Round 1, 

CBAs generally were comparable to 

MSAs, however, for Round 2 we 

proposed to subdivide MSAs of 

8,000,000 or more in population. The 

authority to subdivide MSAs into 

separate areas for competitive bidding 

purposes is set forth in section 

1847(a)(1)(D)(ii)(II) of the Act which 

states, ‘‘[t]he Secretary may subdivide 

metropolitan statistical areas with 

populations (based upon the most 

recent data from the Census Bureau) of 

at least 8,000,000 into separate areas for 

competitive acquisition purposes.’’ We 

have identified three MSAs which, 

based on the 2009 estimate from the 

Census Bureau data, we subdivided 

under section 1847(a)(1)(D)(ii)(II) of the 

Act: (1) Chicago-Naperville-Joliet, 

Illinois-Indiana-Wisconsin (IL–IN–WI) 

MSA with a population of 9,569,624; (2) 

Los Angeles-Long Beach-Santa Ana, 

California (CA) MSA with a population 

of 12,872,808; and (3) New YorkNorthern New Jersey-Long Island, New 

York-New Jersey-Pennsylvania (NY–NJ– 

PA) MSA with a population of 

19,006,798. We proposed to divide these 

MSAs into separate CBAs because we 

believe this approach would create more 

manageable CBAs for contract suppliers 

to serve and allow more small suppliers 

to be considered for participation in the 

program. 

We considered certain factors when 

deciding whether to subdivide the 

MSAs with populations of at least 

8,000,000. We considered the 

geographic, social, and economic 

integration of each of the MSAs. We 

applied all of these factors when 

grouping counties into CBAs and we 

believe it is also appropriate to use these 

factors to determine: (1) Whether or not 

to subdivide an MSA into separate 

CBAs, and (2) if the decision is made to 

subdivide the MSA, how to subdivide 

the MSA. We considered the following 

factors, generally in the order in which 

they are listed: 

• Geographic size of the MSA and the 

location of the counties within each 

MSA compared to neighboring counties. 

• The driving distances from north to 

south and east to west within each MSA 

and county. 

• The total population and the 

population of FFS Medicare 

beneficiaries using DMEPOS items 

subject to competitive bidding. 

• The DMEPOS allowed charges for 

items subject to competitive bidding. 

• Comparably sized Round 1 and 

Round 2 MSAs based on beneficiary 

counts and allowed charges for 

competitive bid items. 

• The interstate highway 

infrastructures of the MSAs. 

• The current service patterns of 

suppliers in each county of the MSA. 

We used each of the factors to the 

extent practical to develop initial 

proposals for reasonable and workable 

subdivisions of these highly and 

densely populated MSAs. We believe 

consideration of these factors will help 

us meet our goal of subdividing large 

and densely populated MSAs and 

creating CBAs that are attractive to 

suppliers and incentivize them to bid 

competitively for a contract. With this 

goal in mind, we proposed to establish 

CBAs that provide for a good volume of 

DMEPOS business for winning bidders, 

avoid obvious geographic obstacles, 

mimic existing supplier service 

patterns, and, to the extent possible, do 

not cross State lines. We stated that we 

believed the factors we have selected 

will achieve those objectives. 

We found that counties clearly 

delineate areas within a MSA, and as we 

have done for Round 1 by identifying 

CBAs by counties and zip codes, we 

proposed to subdivide the MSAs at a 

county level. Since the Office of 

Management and Budget (OMB) defines 

the MSAs by counties and county-based 

subdivisions are stable, we use counties 

to subdivide CBAs. When subdividing 

an MSA into counties, we consider 

counties that share social, economic, 

and geographic integration. We have 

first summarized the proposed 

subdivisions, then summarized the 

comments and finalized the CBAs. 

The Chicago-Naperville-Joliet, IL–IN– 

WI MSA comprises 14 counties within 

3 States: Illinois, Indiana, and 

Wisconsin. This MSA has 207,106 

beneficiaries and $218,161,562 of 

DMEPOS allowed charges subject to the 

DMEPOS CBP. Using the factors that we 

indentified, we proposed to subdivide 

the Chicago-Naperville-Joliet, IL–IN–WI 

MSA into four separate CBAs: IndianaChicago Metro CBA; South-WestChicago-Metro CBA; Central-Chicago 

Metro CBA; and Northern-Chicago 

Metro CBA. 

The Los Angeles-Long Beach-Santa 

Ana, CA MSA comprises two counties: 

Los Angeles County and Orange County. 

The MSA has 173,631 fee-for-service 

beneficiaries receiving DMEPOS subject 

to competitive bidding and 

$244,523,957 in DMEPOS allowed 

charges subject to the DMEPOS CBP. As 

mentioned previously, we proposed to 

subdivide MSAs using counties, and 

since the Los Angeles-Long Beach-Santa 

Ana, CA MSA only has two counties, it 

offers only one subdivision along the 

county lines. Hence, we proposed to 

divide the MSA by the two counties 

creating two CBAs: Los Angeles County 

CBA and Orange County CBA. We also 

proposed to use the authority in section 

1847(a)(3)(A) of the Act to exclude 

certain areas within the Los AngelesLong Beach-Santa Ana, CA MSA. We 

believe these areas meet the requirement 

of section 1847(a)(3)(A) of the Act; they 

are rural areas with a low population 

density within an urban area that are 

not competitive. In the April 10, 2007 

DMEPOS CBP final rule (72 FR 17992), 

we finalized our regulations at 

§ 414.410(c) that defined the factors we 

consider when determining an area is 

considered a low population density 

area or an area that would not be 

competitive. Based on our review of the 

County Subdivision Population from the 

2000 Census from the U.S. Census 

Bureau, and using the factors set forth 

in the April 10, 2007 final rule, we 

proposed to exclude the area of Los 

Angeles County north of the San Gabriel 

Mountains. This large geographic area 

has a population of about 357,000, 

which is only 4 percent of the total 

population of Los Angeles County, and 

is separated from the rest of the county 

by the San Gabriel Mountains. The area 

north of the San Gabriel Mountains has 

one major road and many terrains which 

make this area remote. The majority of 

the population in Los Angeles County 

lives south of the San Gabriel 

Mountains. We believe that excluding 

this area will create a more manageable 

CBA that still provides sufficient 

volume of DMEPOS items while 

avoiding the geographic obstacle of the 

mountains. We believe including this 

area in the DMEPOS CBP would result 

in fewer small suppliers being 

considered for participation under the 

program, because we would not expect 

small suppliers to have the resources to 

serve these more remote areas. As a 

result, we expect that it will increase the 

number of bids submitted for the CBAs 

within the Los Angeles-Long BeachSanta Ana, CA MSA. 

The Los Angeles County includes the 

two islands of Santa Catalina and San 

Clemente off the west coast. We 

proposed that the two islands be 

included as a part of the Los Angeles 

County CBA in order to ensure that 

beneficiaries presently residing on these 

islands or who move to these islands in 

the future are ensured access to 

competitively bid items by contract 

suppliers. San Clemente Island is a 

military base with a current population 

of zero; and therefore, the inclusion of 

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this area in the CBA would not result in 

this island being a part of the supplier 

service area at this time. 

The New York-Northern New JerseyLong Island, NY–NJ–PA MSA comprises 

23 counties in three States: New York, 

New Jersey and Pennsylvania. The MSA 

has 344,879 FFS beneficiaries receiving 

DMEPOS subject to the DMEPOS CBP 

and $350,449,795 in allowed charges for 

DMEPOS items subject to competitive 

bidding. We proposed to subdivide the 

New York-Northern New Jersey-Long 

Island, NY–NJ–PA MSA into five CBAs. 

The proposed Nassau-Brooklyn-Queens 

CBA would be contiguous to Suffolk 

County and would consist of the 

western part of Long Island and extend 

to the eastern part of New York City. 

The proposed Suffolk County CBA 

would consist of the eastern part of 

Long Island and would encompass most 

of Long Island. The proposed BronxManhattan NY CBA would include the 

entire area of Manhattan and the Bronx. 

The proposed North-West NY Metro 

CBA would be situated north and west 

of New York City and would extend into 

New Jersey and Pennsylvania. The 

proposed Southern NY Metro CBA 

included Staten Island and would 

extend south to Ocean County, New 

Jersey. 

At the March 17, 2010 meeting of the 

Program Advisory and Oversight 

Committee (PAOC), we presented these 

proposals for subdividing these three 

large MSAs. Various members of the 

PAOC had the following suggestions for 

subdividing these MSAs: 

• Draw the boundaries of CBAs using 

the interstate highways rather than the 

divisions by County. 

• Determine the current servicing 

areas of suppliers by MSA and product 

category by using a scatter plot. 

• Use the Hudson River to divide the 

CBAs for the New York MSA. 

• Carve out Pike and Putnam 

Counties from the New York MSA due 

to their location and their low 

population density. 

• Include Manhattan as a separate 

CBA, due to its unique nature as a self 

contained area. 

• Consider State licensure 

requirements when we divide the MSAs 

into CBAs. 

• In the LA County CBA, exclude the 

area north of the San Gabriel Mountains 

from the CBA. 

• Consider traffic patterns when 

dividing the Los Angeles MSAs into 

CBAs. 

In the July 13, 2010 proposed rule, we 

stated that we would consider the 

PAOC’s advice and recommendations 

and further invited comments on the 

proposed subdivision of the three 

MSAs. 

Comment: One commenter suggested 

that CMS use main travel arteries to 

subdivide MSAs. The commenter 

further explained that using zip codes or 

county boundaries may be unworkable 

across a large MSA if the travel arteries 

do not correspond to the physical 

boundary lines for counties and zip 

codes. 

Response: We examined travel 

arteries used by suppliers and supplier 

service and traffic patterns closely in 

developing the proposed CBAs. The 

commenter provided no rationale for 

use of travel arteries alone to establish 

CBA boundaries, nor did the commenter 

provide a specific methodology or 

information to use in making selections 

regarding which of the various 

highways to use as boundaries. We 

believe it is appropriate to consider 

travel arteries as one factor when 

designing CBAs. However, using this 

factor alone would result in unworkable 

CBAs. For example, if the interstate 

highway system in the ChicagoNaperville-Joliet, IL–IN–WI MSA, 

consisting of 11 different interstate 

highways (I–55, I–57, I–65, I–80, I–88, I– 

90, I–94, I–190, I–290, I–294, and I– 

355), were used as boundaries for CBAs, 

this would result in approximately 30 

different, very small CBAs. As noted 

above, the numerous highway systems 

that cut through the MSAs were 

considered in determining which 

counties to include in each proposed 

CBA; therefore, travel arteries were 

considered and used to develop the 

CBAs. 

In phasing in the competitive bidding 

program, we adopted the definition of 

the term ‘‘Metropolitan Statistical Area’’ 

consistent with that issued by the OMB. 

The MSA comprises the central county 

or counties containing the core, plus 

adjacent outlying counties having a high 

degree of social and economic 

integration with the central county as 

measured through commuting. Using 

OMB’s standards for MSAs, we have 

found that counties clearly delineate 

areas within a MSA. Therefore, as we 

have done for Round 1, we will 

continue to identify CBAs by counties 

and zip codes. For the large MSAs, 

although we used the counties as the 

basis for determining the CBAs, we 

considered various factors when 

determining how to subdivide and 

group each county within the MSA, 

including which major travel arteries 

serve which counties or group of 

counties in a geographic location. 

Comment: One commenter suggested 

that CMS should not finalize regulations 

expanding the DMEPOS CBP to 

implement Round 2 until the impact of 

implementation of Round 1 of the 

program on Medicare beneficiaries, 

suppliers and providers is fully 

evaluated and understood. 

Response: Section 1847(a)(1)(B)(i)(II) 

of the Act mandates that competitions 

occur in 2011 for Round 2 of the CBP. 

We did not receive comments on the 

specific CBAs proposed for the ChicagoNaperville-Joliet, IL–IN–WI MSA and 

are finalizing the CBAs in that MSA as 

proposed. The counties that comprise 

each of the final CBAs for this MSA are 

shown in Table 68. The DMEPOS 

allowed amount, beneficiary count 

subject to competitive bidding, and the 

general population that comprise these 

four final CBAs are shown in this table. 

TABLE 68—CHICAGO-NAPERVILLE-JOLIET, IL–IN–WI 

CBA name/county 

DMEPOS 

allowed 

Charles *

DMEPOS 

beneficiary 

count subject 

to competitive 

bidding *

General 

population **

Indiana-Chicago Metro CBA: 

Lake, IN .................................................................................................................... $18,600,917 16,637 493,800 

Jasper, IN ................................................................................................................. 1,238,119 1,191 32,544 

Newton, IN ................................................................................................................ 580,842 393 13,933 

Porter, IN .................................................................................................................. 4,856,838 4,526 162,181 

CBA Total .......................................................................................................... 25,276,716 22,747 702,458 

South-West-Chicago-Metro CBA: 

Will, IL ....................................................................................................................... 13,523,185 12,522 681,097 

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TABLE 68—CHICAGO-NAPERVILLE-JOLIET, IL–IN–WI—Continued 

CBA name/county 

DMEPOS 

allowed 

Charles *

DMEPOS 

beneficiary 

count subject 

to competitive 

bidding *

General 

population **

Grundy, IL ................................................................................................................. 1,417,511 1,405 47,958 

Kendall, IL ................................................................................................................. 978,215 1,052 103,460 

DeKalb, IL ................................................................................................................. 2,358,319 2,323 106,321 

Kane, IL .................................................................................................................... 9,273,504 9,082 507,579 

CBA Total .......................................................................................................... 27,550,734 26,384 1,446,415 

Central-Chicago Metro CBA: 

Cook, IL .................................................................................................................... 124,854,279 116,360 5,294,664 

DuPage, IL ................................................................................................................ 16,945,135 18,492 930,528 

CBA Total .......................................................................................................... 141,799,414 134,852 6,225,192 

Northern-Chicago Metro CBA: 

Lake, IL ..................................................................................................................... 12,352,802 12,482 712,453 

McHenry, IL .............................................................................................................. 7,020,768 6,852 318,641 

Kenosha, WI ............................................................................................................. 4,161,128 3,789 164,465 

CBA Total .......................................................................................................... 23,534,698 23,123 1,195,559 

MSA Total .................................................................................................. 218,161,562 207,106 9,569,624 

*Source: Medicare claims from 10/1/08 to 9/30/09 for items subject to competitive bidding. 

**Source U.S. Census Bureau 2009 population estimates. 

We did not receive comments on the 

specific CBAs proposed for the Los 

Angeles-Long Beach-Santa Ana, CA 

MSA and are finalizing the CBAs in that 

MSA as proposed, with one exception, 

based on further consideration of issues 

raised by the PAOC. We will not 

include Santa Catalina Island and San 

Clemente Island in the Los Angeles 

County CBA as initially proposed. We 

discussed the factors to consider when 

excluding low population density areas 

from a CBA in the April 10, 2007 

DMEPOS CBP final rule (72 FR 17992). 

Exclusion of low population density 

areas results in smaller CBAs that may 

reduce supplier costs in servicing the 

CBAs. Lower supplier costs may result 

in lower bids, which would increase 

savings under the program. Although an 

area may be a low population density 

area, in accordance with existing 

regulations at § 414.410(c), it cannot be 

excluded from a CBA unless a 

determination is made that the area is 

non-competitive based on one or more 

of the following factors: Low utilization 

of DMEPOS items by Medicare 

beneficiaries receiving fee-for-service 

benefits relative to similar geographic 

areas; low number of DMEPOS 

suppliers relative to similar geographic 

areas; or low number of Medicare feefor-service beneficiaries relative to 

similar geographic areas. The island of 

San Clemente has a population of zero 

and including the island in the program 

would therefore result in no savings. 

Approximately 70 Medicare 

beneficiaries receiving $57,000 in 

DMEPOS items and services reside on 

the island of Santa Catalina. This area 

can therefore be considered a noncompetitive area given the low number 

of Medicare beneficiaries and low level 

of DMEPOS utilization, especially 

considering that the total allowed 

charges for DMEPOS for Los Angeles 

County as a whole is over $200 million. 

We took into consideration, when 

deciding whether to finalize this 

proposal, comments from the March 17, 

2010, meeting of the PAOC, during 

which a supplier of DMEPOS 

highlighted the high costs of furnishing 

items to Santa Catalina Island, 20 miles 

off the coast of mainland California and 

accessible only by boat, helicopter, or 

amphibious aircraft. Contract suppliers, 

and in particular small suppliers, that 

do not have a location near the ferry 

ports for this island would be burdened 

by having to serve this area in 

accordance with their contract, and we 

expect that this may have an impact on 

the bids submitted for this CBA. 

Medicare beneficiaries who are 

residents of Santa Catalina Island and 

require delivery of DMEPOS items must 

currently make special arrangement 

with suppliers for delivery of those 

DMEPOS items. Suppliers are not 

currently obligated to serve this island, 

so it is the beneficiary and not the 

supplier that bears the cost of any 

additional expense associated with 

delivery of items. Under the DEMPOS 

CBP, the supplier would be obligated to 

serve this island, if it were included in 

the CBA, and the additional expense of 

delivering items to this remote island 

are therefore transferred from the 

beneficiary to the supplier. Although we 

originally proposed to include Santa 

Catalina Island in the Los Angeles CBA 

to ensure access to DMEPOS items for 

these beneficiaries, we have further 

examined this issue and believe that 

beneficiaries will continue to have the 

ability to make special arrangements for 

delivery of these items if this area is not 

included in the CBA. We therefore 

believe that excluding the islands of San 

Clemente and Santa Catalina from the 

Los Angeles CBA is consistent with 

existing regulations at § 414.410(c). 

The counties that comprise each of 

the final CBAs for this MSA are shown 

in Table 69. The DMEPOS allowed 

amount, beneficiary count subject to 

competitive bidding, and the general 

population that comprise these two final 

CBAs are shown in this table. 

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TABLE 69—LOS ANGELES-LONG BEACH-SANTA ANA, CA 

CBA name 

DMEPOS 

allowed 

amount *

DMEPOS 

beneficiary 

count *

General 

population **

Los Angeles County CBA*** ............................................................................................ $201,244,121 137,408 9,862,049 

CBA Total ................................................................................................................. 201,244,121 137,408 9,862,049 *

Orange County CBA ........................................................................................................ 43,279,836 36,223 3,010,759 

CBA Total ................................................................................................................. 43,279,836 36,223 3,010,759 

MSA Total .......................................................................................................... 244,523,957 173,631 12,872,808 

*Source: Medicare claims from 10/1/08 to 9/30/09 for items subject to competitive bidding. 

**Source U.S. Census Bureau 2009 population estimates. ***The counts and amounts are not adjusted for the area excluded north of the San Gabriel Mountains. 

We did not receive comments on the 

specific CBAs proposed for the New 

York-Northern New Jersey-Long Island, 

NY–NJ–PA MSA. However, we have 

decided to make three changes based on 

further consideration of issues raised by 

the PAOC. We carefully considered the 

PAOC suggestion noted in the proposed 

rule to exclude Pike and Putnam 

counties from the New York-Northern 

New Jersey-Long Island, NY–NJ–PA 

MSA in order to result in a smaller and 

more manageable CBA than the 

proposed North-West NY Metro CBA. 

This proposed North-West NY Metro 

CBA is a large area situated north and 

west of New York City and covering the 

three states of New York, New Jersey, 

and Pennsylvania. Pike County, 

Pennsylvania is a low population 

density area and makes up only 0.3 

percent of the total DMEPOS utilization 

for the New York-Northern New JerseyLong Island, NY–NJ–PA MSA. 

Therefore, we believe that excluding 

Pike County from the North-West NY 

Metro CBA is consistent with existing 

regulations at § 414.410(c). In addition, 

the PAOC pointed out that excluding 

Pike County, PA, would help reduce the 

burden of suppliers having to comply 

with different state licensure 

requirements. As noted in the proposed 

rule, the PAOC also suggested that CMS 

consider state licensure requirements 

when dividing the MSAs into CBAs. To 

eliminate the complexity of complying 

with different state licensure 

requirements, we have decided to split 

the proposed North-West NY Metro 

CBA into two CBAs: One containing the 

New Jersey counties of Bergen, Essex, 

Hudson, Morris, Passaic, and Sussex; 

and one containing the New York 

counties of Putnam, Rockland, and 

Westchester. To summarize, with regard 

to the proposed North-West NY Metro 

CBA, the PAOC suggested excluding 

Pike and Putnam counties to reduce the 

size of this large CBA we proposed for 

the area in the north and west of the 

MSA. It was noted by the PAOC that 

removing Pike County would also 

reduce complications of multi-state 

licensing as Pennsylvania licensing 

rules and requirements would no longer 

be an issue. Based on the advice to 

reduce the size of the proposed NorthWest NY Metro CBA and reduce multistate licensure complexities, we are 

removing Pike County from the CBA 

and are splitting the CBA into two new 

CBAs: A fairly large CBA containing the 

New Jersey counties from the proposed 

North-West NY Metro CBA; and a 

smaller CBA containing the New York 

counties from the proposed North-West 

NY Metro CBA. As a result of this 

change, there is now no need to remove 

Putnam County from the CBA as the 

three county area of Putnam, Rockland, 

and Westchester counties in New York 

will be served by suppliers contracted to 

furnish items in this area, which is now 

significantly smaller than the proposed 

North-West NY Metro CBA. 

In further response to the PAOC’s 

advice to consider State licensure 

requirements when subdividing the 

MSAs into separate CBAs, we have 

decided to remove Richmond County, 

NY from the proposed South New York 

Metro, leaving this CBA to be comprised 

of six counties in New Jersey. We are 

therefore moving Richmond County, NY 

to the Nassau-Brooklyn-Queens-County 

Metro CBA and have changed the name 

of the CBA to Nassau-Brooklyn-QueensRichmond County Metro CBA. We note 

that Hudson River is in between 

Richmond County and the other 

counties in the Nassau-BrooklynQueens-Richmond County Metro CBA 

but we took into consideration the 

social integration of this area in that 

there is a major bridge/highway 

connecting Richmond County to Long 

Island. Also, we believe that for each 

final CBA set forth in this rule, the 

supplier servicing patterns supports our 

decision. We determined that both large 

and small suppliers in the MSA 

generally furnish items within the CBAs 

we proposed. The counties, DMEPOS 

allowed amount and beneficiary count 

subject to competitive bidding and the 

general populations that comprise each 

CBAs based on our final provisions are 

shown in Table 70. 

TABLE 70—NEW YORK-NORTHERN NEW JERSEY-LONG ISLAND, NY–NJ–PA 

CBA name/county 

DMEPOS 

allowed 

amount *

DMEPOS 

beneficiary 

count *

General 

population **

Nassau-Brooklyn-Queens-Richmond County Metro CBA: 

Nassau, NY .............................................................................................................. $30,888,889 29,857 1,351,625 

Kings, NY .................................................................................................................. 47,044,915 44,893 2,556,598 

Queens, NY .............................................................................................................. 33,406,236 32,798 2,293,007 

Richmond, NY .......................................................................................................... 7,054,863 6,626 487,407 

CBA Total .......................................................................................................... 118,394,903 114,174 6,688,637 

Suffolk County CBA: 

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TABLE 70—NEW YORK-NORTHERN NEW JERSEY-LONG ISLAND, NY–NJ–PA—Continued 

CBA name/county 

DMEPOS 

allowed 

amount *

DMEPOS 

beneficiary 

count *

General 

population **

Suffolk, NY ................................................................................................................ 31,950,806 31,476 1,512,224 

CBA Total .......................................................................................................... 31,950,806 31,476 1,512,224 

Bronx-Manhattan NY CBA: 

Bronx, NY ................................................................................................................. 19,791,646 17,002 1,391,903 

New York, NY ........................................................................................................... 26,483,792 26,414 1,634,795 

CBA Total .......................................................................................................... 46,275,438 43,416 3,026,698 

Northern NJ Metro CBA: 

Hudson, NJ ............................................................................................................... 13,622,910 12,644 595,419 

Bergen, NJ ................................................................................................................ 19,948,837 20,278 894,840 

Passaic, NJ ............................................................................................................... 10,266,137 10,233 490,948 

Essex, NJ ................................................................................................................. 9,911,767 10,735 770,675 

Morris, NJ ................................................................................................................. 9,094,758 9,830 487,548 

Sussex, NJ ............................................................................................................... 2,905,240 2,819 150,909 

CBA Total .......................................................................................................... 65,749,650 66,540 3,390,339 

North East NY CBA Metro: 

Putnam, NY .............................................................................................................. 1,997,668 1,876 99,244 

Rockland, NY ............................................................................................................ 6,421,317 6,265 298,545 

Westchester, NY ....................................................................................................... 16,971,210 17,220 953,943 

CBA Total .......................................................................................................... 25,390,195 25,361 1,351,732 

Southern NY Metro CBA: 

Hunterdon, NJ .......................................................................................................... 2,709,880 2,356 129,031 

Union, NJ .................................................................................................................. 10,466,838 10,654 523,249 

Middlesex, NJ ........................................................................................................... 15,803,473 16,649 789,102 

Monmouth, NJ .......................................................................................................... 14,979,747 15,110 642,448 

Ocean, NJ ................................................................................................................. 20,913,022 21,600 569,111 

Somerset, NJ ............................................................................................................ 4,941,838 5,425 324,563 

CBA Total .......................................................................................................... 69,814,798 71,794 2,977,504 

MSA Total .......................................................................................................... 358,968,794 354,235 19,006,798 

In summary, we are finalizing our 

proposal to divide the ChicagoNaperville-Joliet, IL–IN–WI MSA into 

four CBAs. We are finalizing, with the 

modification discussed above, two 

CBAs in the Los Angeles-Long BeachSanta Ana, CA MSA. Lastly, we are 

finalizing, with modifications discussed 

above, six CBAs in the New YorkNorthern New Jersey-Long Island, NY– 

NJ–PA MSA. 

3. Exclusions of Certain Areas after 

Round 2 and Prior to 2015 

Section 154(a) of MIPPA amended the 

statute by requiring that competition 

under Round 2 takes place in 2011 and 

by adding section 1847(a)(1)(D)(iii) of 

the Act that requires us to exclude the 

following areas from the competitive bid 

program for competitions after Round 2 

of the program and before 2015: 

• Rural Areas. 

• Metropolitan Statistical Areas not 

selected under Round 1 or Round 2 with 

a population of less than 250,000. 

• Areas with a low population 

density within a MSA that is otherwise 

selected consistent with section 

1847(a)(3)(A) of the Act. 

We proposed to incorporate these 

requirements and timeframes in 

proposed § 414.410(c). 

We received no comments on this 

proposal and therefore are finalizing 

this provision without modification. 

4. Expansion of Round 2 

Section 6410(a) of the ACA expanded 

the areas to be included in Round 2 of 

the program. As amended by section 

6410(a) of the ACA, section 

1847(a)(1)(B)(i)(II) of the Act requires 

that the competition for Round 2 of the 

program occur in 91 of the largest MSAs 

in 2011. Prior to this change, Round 2 

was to include 70 MSAs. Section 

1847(a)(1)(D)(ii)(II) of the Act, as added 

by section 6410(a) of the ACA, specifies 

that the additional 21 MSAs to be 

included in Round 2 ‘‘include the next 

21 largest metropolitan statistical areas 

by total population’’ (after those already 

selected Round 2). The 2009 annual 

population estimates from the U.S. 

Census Bureau are the most recent 

estimates of population that will be 

available prior to the Round 2 

competition mandated to take place in 

2011. Therefore, we proposed to use 

these estimates to determine the 

additional 21 MSAs to be included in 

Round 2 of the program. Table 71 is a 

list of the additional 21 MSAs added to 

Round 2. 

TABLE 71—ADDITIONAL 21 MSAS ADDED TO ROUND 2 

21 Additional MSAs 2009 Total 

population 

Philadelphia-Camden-Wilmington, PA–NJ–DE–MD ................................................................................................................................ 5,968,252 

Washington-Arlington-Alexandria, DC–VA–MD–WV ............................................................................................................................... 5,476,241 

Boston-Cambridge-Quincy, MA–NH ........................................................................................................................................................ 4,588,680 

Phoenix-Mesa-Scottsdale, AZ ................................................................................................................................................................. 4,364,094 

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TABLE 71—ADDITIONAL 21 MSAS ADDED TO ROUND 2—Continued 

21 Additional MSAs 2009 Total 

population 

Seattle-Tacoma-Bellevue, WA ................................................................................................................................................................. 3,407,848 

St. Louis, MO–IL ...................................................................................................................................................................................... 2,828,990 

Baltimore-Towson, MD ............................................................................................................................................................................ 2,690,886 

Portland-Vancouver-Beaverton, OR–WA ................................................................................................................................................ 2,241,841 

Providence-New Bedford-Fall River, RI–MA ........................................................................................................................................... 1,600,642 

Buffalo-Niagara Falls, NY ........................................................................................................................................................................ 1,123,804 

Rochester, NY ......................................................................................................................................................................................... 1,035,566 

Tucson, AZ .............................................................................................................................................................................................. 1,020,200 

Honolulu, HI ............................................................................................................................................................................................. 907,574 

Albany-Schenectady-Troy, NY ................................................................................................................................................................ 857,592 

Worcester, MA ......................................................................................................................................................................................... 803,701 

Oxnard-Thousand Oaks-Ventura, CA ..................................................................................................................................................... 802,983 

Springfield, MA ........................................................................................................................................................................................ 698,903 

Bradenton-Sarasota-Venice, FL .............................................................................................................................................................. 688,126 

Poughkeepsie-Newburgh-Middletown, NY .............................................................................................................................................. 677,094 

Stockton, CA ............................................................................................................................................................................................ 674,860 

Boise City-Nampa, ID .............................................................................................................................................................................. 606,376 

We received no comments on this 

proposal and therefore are finalizing 

this provision without modification. 

W. Section 10501(i)(3): Collection of 

HCPCS Data for Development and 

Implementation of a Prospective 

Payment System for the Medicare 

Federally Qualified Health Center 

Program 

The Omnibus Budget Reconciliation 

Act (OBRA) of 1989 amended the Act by 

creating new FQHC benefit programs 

under both Medicare and Medicaid. The 

Medicare FQHC benefit provides 

coverage for a full range of primary care 

services, including physician and 

certain nonphysician services (PAs, 

NPs), clinical social worker, 

psychologist services, and preventive 

services. FQHCs are ‘‘safety net’’ 

providers (for example, community 

health centers and programs serving 

migrants, the homeless, public housing 

centers, and tribal groups). The main 

purpose of the FQHC program is to 

enhance the provision of primary care 

services in underserved urban and rural 

communities. FQHCs typically enhance 

the availability of care to vulnerable 

populations, including Medicare, 

Medicaid, SCHIP, and the uninsured. 

Most of these health centers receive 

HRSA grants for services to the 

uninsured. 

Medicare pays FQHCs on the basis of 

reasonable cost, subject to an upper 

payment limit on the reasonableness of 

incurred cost. Actual Medicare 

reasonable cost is determined based 

upon a Medicare cost report filed by the 

FQHC after the end of its fiscal year. 

Prior to the start of the year, an interim 

all-inclusive per-visit payment amount, 

based upon an estimate of Medicare 

reasonable costs, is calculated for each 

Medicare FQHC. During the year, this 

interim all-inclusive per-visit payment 

amount is paid for each covered visit 

between a Medicare beneficiary and an 

FQHC health professional. After the end 

of the Medicare FQHC’s cost reporting 

year, interim per-visit payments are 

reconciled to actual Medicare 

reasonable costs based upon the 

Medicare cost report filed by the FQHC. 

Section 10501(i)(3) of the ACA now 

amends this current Medicare FQHC 

payment policy with an entirely 

different payment system, effective with 

cost reporting periods beginning on or 

after October 1, 2014. 

Section 10501(i)(3)(A) of the ACA 

amended section 1834 of the Act by 

adding a new subsection (o), 

Development and Implementation of 

Prospective Payment System. This 

subsection provides the statutory 

framework for development and 

implementation of a prospective 

payment system for Medicare FQHCs. 

Section 1834(o)(1)(B) of the Act, as 

established by the ACA, addresses 

collection of data necessary to develop 

and implement the new Medicare FQHC 

prospective payment system. 

Specifically, section 1834(o)(1)(B) of the 

Act, Collection of Data and Evaluation, 

grants the Secretary of HHS the 

authority to require FQHCs to submit 

such information as may be required in 

order to develop and implement the 

Medicare FQHC prospective payment 

system, including the reporting of 

services using HCPCS codes. Section 

1834(o)(1)(B) of the Act requires that the 

Secretary impose this data collection 

submission requirement no later than 

January 1, 2011. Accordingly, we 

proposed to add a new paragraph (d) to 

§ 405.2470 to require Medicare FQHCs 

to begin reporting all services furnished 

using HCPCS codes for these services 

starting January 1, 2011. Beginning 

January 1, 2011, we proposed that the 

Medicare FQHC would be required to 

report on Medicare FQHC claims all 

pertinent service(s) provided for each 

Medicare FQHC visit (defined in 

§ 405.2463). This additional reporting 

would include the information needed 

to develop and implement a PPS for 

FQHCs. For example, corresponding 

HCPCS code(s) would be required to be 

reported along with the presently 

required Medicare revenue code(s) for 

the Medicare FQHC visit(s). We noted in 

our proposal that our Medicare FQHC 

claims processing system would be 

revised to accept the addition of the 

new reporting requirements effective 

January 1, 2011. In our proposal, we 

also noted that the proposed new data 

collection effort would be for 

informational and data gathering 

purposes only, and would not be 

utilized to determine Medicare payment 

to the FQHC. Until the FQHC 

prospective payment system is 

implemented in 2014 and the Medicare 

claims processing system is revised to 

reflect such a system, we noted that 

Medicare FQHC payment would 

continue in the current manner 

(utilizing revenue codes and the interim 

per-visit payment rate methodology). 

In our proposed rule, we further noted 

that Medicare FQHCs would be required 

to adhere to the information collection 

requirements in accordance with the 

content and terms of their Medicare 

agreement as stipulated at § 405.2434. 

We indicated in the proposed rule that 

failure to do so could result in the 

termination of the FQHC’s Medicare 

agreement in accordance with 

§ 405.2436 of the Medicare FQHC 

regulations. 

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At the time of publication of the 

proposed rule, we noted that we did not 

foresee additional claims or other 

information collection needs beyond 

collection of HCPCS codes. 

Accordingly, we did not propose 

additional information collection 

requirements at that time. However, we 

solicited public comment on any 

additional information FQHCs believe 

may be necessary in order to develop 

and implement a prospective payment 

system for Medicare FQHCs. 

We received a number of comments 

on the proposed information collection 

requirements. We address these 

comments as follows: 

Comment: One commenter requested 

that CMS ensure that its systems are 

appropriately updated to be able to 

accept HCPCS codes from Medicare 

FQHCs. 

Response: CMS will work to assure 

that its contracts are provided with 

adequate notice allowing for claims 

processing systems to accept these new 

reporting requirements. 

Comment: One commenter requested 

that health centers be given adequate 

time to learn the new reporting 

requirements, and to work with health 

centers that might need additional 

assistance. 

Response: CMS, through its 

Contractors, presently works to assist 

and train all providers in Medicare 

reporting requirements, particularly 

new requirements such as the collection 

of HCPCS information from Medicare 

FQHCs. Medicare contractors have a 

variety of assistance measures at their 

disposal to train Medicare FQHCs in 

HCPCS coding. Assistance measures 

include seminars, web learning portals, 

and telephone information lines. We 

note that there are numerous private 

sector training and educational 

opportunities in HCPCS coding as well. 

With the specific language regarding 

HCPCS data collection from Medicare 

FQHCs included in the ACA itself, and 

the resultant lead time prior to January 

1, 2011 implementation of the reporting 

requirements, we believe health centers 

have had sufficient time to prepare 

themselves to meet these requirements. 

Comment: One commenter suggested 

that data collection begin with a 

representative sample of health centers, 

and that it generally be phased in across 

the nation, in order to ensure that CMS 

not penalize health centers that might 

need additional assistance. 

Response: With the tight ACA 

implementation time frames for 

implementation of a Medicare FQHC 

prospective payment system, as well as 

the limited total number of FQHCs, we 

believe both provider sampling and 

phase-in approaches to information 

collection requirements would 

jeopardize CMS’ ability to meet 

statutory requirements for the Medicare 

FQHC PPS. Accordingly, we cannot 

accept comments to delay or limit 

collection of Medicare FQHC data we 

believe necessary to meet the statutory 

requirements. 

Comment: One commenter suggested 

that HHS estimate the additional 

administrative burden placed on FQHCs 

and, if that is significant, increase 

reimbursement proportionately during 

the proposed collection period. 

Response: Medicare FQHCs are paid 

on the basis of reasonable cost. 

Administrative costs attributable to 

added information collection 

requirements that might be incurred by 

Medicare FQHCs are already to be 

reported by the Medicare FQHC on its 

Medicare costs report and included as 

part of its Medicare FQHC all-inclusive 

rate. 

Comment: One commenter suggested 

that HHS use the quality measures 

reported to CMS as part of its 

meaningful use of electronic health 

record requirements, instead of coding 

additional information into the claims. 

Response: We do not believe that 

quality measures reported to CMS as 

part of meaningful use requirements 

would be sufficient in scope or 

representative in breadth in order to 

establish a National Medicare PPS 

sample which would be representative 

of the entire population of Medicare 

FQHCs. Accordingly, we cannot accept 

this comment. 

As a result of these comments, we are 

making no changes to our proposal to 

require FQHCs to begin the reporting of 

services using HCPCS codes. 

Accordingly, we are finalizing this 

provision without modification. We will 

add a new paragraph (d) to § 405.2470 

to require Medicare FQHCs to begin 

reporting all services furnished using 

HCPCS codes for these services starting 

January 1, 2011. 

We received no public comment 

suggesting collection of additional 

information collection requirements 

beyond HCPCS codes. Therefore we add 

no additional Medicare FQHC 

information collection requirements, 

beyond the collection of the 

aforementioned HCPCS data 

requirements, in this final rule. 

VII. Other Provisions of the Proposed 

Regulation 

A. Part B Drug Payment: Average Sales 

Price (ASP) Issues 

1. ‘‘Carry Over’’ ASP 

The average sales price (ASP) 

payment methodology is authorized 

under section 303(c) of the MMA, which 

amends Title XVIII of the Act by adding 

section 1847A. This section establishes 

the use of the ASP methodology for 

payment for Medicare Part B drugs and 

biologicals described in section 

1842(o)(1)(C) of the Act furnished on or 

after January 1, 2005. For purposes of 

this part, unless otherwise specified, the 

term ‘‘drugs’’ will hereafter refer to both 

drugs and biologicals. 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. 

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) of the Act. 

Although delays in reporting have been 

uncommon, they create a risk that: (1) 

Could result in the publication of 

payment limits that do not reflect prices 

for drug products, and (2) could result 

in inaccurate payments, the need for 

correction of files and unintentional 

ASP payment limit variability. 

As a result of these concerns, we 

sought to establish a process for 

addressing situations where 

manufacturers fail to report 

manufacturer ASP data in a timely 

fashion, that is within 30 days after the 

end of a quarter. The proposal in CY 

2011 PFS proposed rule was intended to 

allow us to calculate and report ASP 

payment limits for a given quarter 

within the existing timelines and would 

not affect CMS or the OIG’s authority to 

assess civil monetary penalties 

associated with untimely or false ASP 

reporting. 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. 

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 product, either 

directly or indirectly by extraction from 

substances of natural origin, or 

independently by means of chemical 

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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. 

In accordance with section 1847A of 

the Act, manufacturers are required to 

report data on the National Drug Code 

(NDC) level, which include the 

following elements: the manufacturer 

ASP for drugs; the Wholesale 

Acquisition Cost (WAC) in effect on the 

last day of the reporting period; the 

number of units sold; and the NDC. 

Currently, when manufacturer ASP data 

or specific data elements are not 

available, we calculate an ASP price for 

a billing code based on other applicable 

and available pricing data from 

manufacturers for that drug. This 

alternative method used when 

manufacturer data are not available for 

a billing code includes WAC prices from 

compendia. WAC prices tend to be 

higher than manufacturer ASP prices. 

Although problems with reporting 

have been uncommon, we have recently 

encountered situations where delays in 

manufacturer ASP reporting could have 

led to significant ASP payment limit 

fluctuations for highly used HCPCS 

codes. The greatest potential impact 

occurs when data for high volume drug 

products within a HCPCS code that is 

represented by a limited number of 

NDCs have not been reported and 

cannot be included in the ASP volume 

weighted calculations described in 

section 1847A(b) of the Act. For 

multisource drugs, such a situation is 

likely to artificially increase or decrease 

Medicare ASP payment limits, which in 

turn would affect beneficiary cost 

sharing amounts. Such artificial 

fluctuations of the ASP payment limit 

could provide the appearance of 

instability unrelated to market forces 

and could also create access issues for 

providers and beneficiaries and 

confusion that could ultimately affect 

product demand in the marketplace. 

In order to minimize the possibility of 

ASP payment limit fluctuations due to 

missing data, we proposed a process, 

consistent with our authority in section 

1847A(c)(5)(B) of the Act, to update 

ASPs based on the manufacturer’s ASP 

calculated for the most recent quarter 

for which data is available. Specifically, 

we proposed to carry over the 

previously reported manufacturer ASP 

for an NDC(s) when missing 

manufacturer ASP and/or WAC data 

could cause significant changes or 

fluctuations in ASP payment limits for 

a billing code, and efforts by CMS to 

obtain manufacturer-reported ASP 

before Medicare ASP payment limits 

publication deadlines are not 

successful. For example, the most 

recently reported manufacturer ASP 

prices for products on the market would 

be carried over to the next quarter if a 

manufacturer’s entire submission were 

not received, manufacturer ASP price 

data for specific NDCs have not been 

reported, or when only WAC data has 

been reported; however, NDCs that have 

zero sales or are no longer being 

manufactured will not be subjected to 

this process. Also, we proposed to apply 

the carryover process only in cases 

where missing data results in a 10 

percent or greater change in the ASP 

payment limit compared to the previous 

quarter. Based on experience with ASP 

methodology since 2004, we believe that 

this percentage threshold constitutes 

significant change. We specifically 

sought comments on our use of 10 

percent as the threshold amount. In 

order to better represent actual market 

trends, that is, actual increases or 

decreases in manufacturer reported ASP 

for the group of NDCs that represent the 

HCPCS code, we also proposed that the 

manufacturer ASP payment amounts for 

the individual NDCs that are carried 

over will be adjusted by the weighted 

average of the change in the 

manufacturer ASP for the NDCs that 

were reported during both the most 

recently available quarter and the 

current quarter. We requested comments 

about whether other methods to account 

for marketplace price trends could be a 

better substitute for applying the 

weighted average change. The previous 

quarter’s sales volumes will be carried 

over. An example of the proposed 

process appears in Table 72. 

We proposed to apply this process to 

both single source drugs and multiple 

source drugs. However, we are 

concerned that including single source 

drugs in the carry over process could 

create an incentive for nonreporting in 

situations where ASPs for a single 

source drug are falling and the 

manufacturer stops reporting ASPs in an 

effort to preserve a higher payment 

amount despite the risk of significant 

statutory penalties for such an action. 

Therefore, we specifically requested 

comments on this option and the effect 

of limiting this proposal to multiple 

source drugs only. We noted that we 

would consider these comments 

carefully before including both single 

source and multisource drugs in the 

process. 

TABLE 72—ASP CARRYOVER EXAMPLE FOR NDCS IN A SPECIFIC HCPCS CODE

Previous 

quarter 

reported NDCs 

Previous 

quarter 

reported 

volume 

Previous 

quarter 

ASP 

Current 

quarter 

reported 

NDCs 

Current 

quarter 

reported 

volume 

Current 

quarter 

ASP 

Current 

quarter 

NDCs for 

calculation 

Current 

quarter 

volume for 

calculation 

Current 

quarter 

price for 

calculation 

12345–6789–10 2000 $1.000 12345–6789–10 2500 $0.980 12345–6789–10 2500 $0.980 

12345–6789–11 3000 1.000 12345–6789–11 1700 0.980 12345–6789–11 1700 0.980 

12345–6789–12 5000 1.000 12345–6789–12 5500 0.980 12345–6789–12 5500 0.980 

45678–1234–90 9000 1.100 (2) (2) (2) 45678–1234–90 9000 1 1.078 

45678–1234–99 27000 1.100 (2) (2) (2) 45678–1234–99 27000 1 1.078 

1This result is obtained by calculating the weighted average price change in NDCs available (that is, 12345–6789–10 thru 12345–6789–12) in 

both the previous and current quarters, which is ¥2% [(0.98–1.00)*100], and applying that change to the previous quarter’s manufacturer ASP 

for the missing NDCs (that is, 45678–1234–90 and 45678–1234–99). The last two columns on the right would be used to calculate the weighted 

ASP and payment limits for the 5 NDCs as a HCPCS code and accounts for missing prices for two high volume NDCs that represent most of the 

units sold within the HCPCS code and therefore heavily influence the price calculation for the HCPCS code. 2 Missing. 

Our proposed approach was intended 

to establish a straightforward and 

transparent solution that minimizes the 

effect of missing manufacturer ASP data 

on Medicare ASP payment limits. We 

believe that the availability of a 

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mechanism to minimize non-marketrelated price fluctuations is desirable 

when efforts to obtain manufacturer’s 

ASP data by deadlines have not been 

successful. Our proposed mechanism 

was not intended to alter or adjust 

reported prices and will not be used to 

do so, but instead is intended to more 

accurately represent prices in the 

marketplace in the rare circumstance 

where manufacturer ASP data for 

particular drug product(s) is missing. 

Based on our experience with ASP 

reporting since 2004, we do not believe 

that this process will be used frequently. 

However, as we stated previously, 

recent concerns about delays in 

reporting of manufacturer ASP data 

have led to this proposal. 

We also remind manufacturers that 

significant civil monetary penalties 

(CMP) for not reporting or 

misrepresenting manufacturer ASP data 

are authorized under sections 

1847A(d)(4) and 1927(b)(3)(C) of the Act 

and codified in regulations at § 414.806. 

This proposal should not be interpreted 

to mean that CMS and the OIG will 

refrain from collecting such penalties 

for ASP reporting violations. Late or 

missing reports will not be tolerated. 

This proposed policy would be 

implemented regardless of any efforts by 

the OIG to impose CMPs for 

nonreporting. 

We would also like to remind 

manufacturers that additional specific 

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, 

Frequently Asked Questions are posted 

in the related links inside CMS section 

of the ASP Overview Web page at http:// 

www.cms.hhs.gov/

McrPartBDrugAvgSalesPrice/01_

overview.asp#TopOfPage, and the 

downloads section of the same Web 

page contains a link to the ASP Data 

Form (Addendum A), which includes 

examples of how ASP data must be 

reported and formatted for submission. 

In particular, we would like to remind 

manufacturers to report sales volume in 

quantities of NDC units sold (not vials 

or other units of sale), and to use a zero 

(that is, the character ‘‘0’’) instead of a 

blank when reporting items that did not 

have any sales in a particular quarter. In 

addition, manufacturers should report 

both the ASP and the WAC for each 

NDC, the expiration date for the last lot 

sold, if applicable, and the date of first 

sale for an NDC. 

We received several comments about 

our proposals. In general, comments 

supported our proposal, including the 

use of a weighted average when 

calculating the carry over amounts, but 

the comments also requested 

clarification about certain details. We 

did not receive any comments that 

would lead us to reconsider the 10 

percent threshold that we proposed. 

Comment: Several commenters 

specifically requested that CMS clarify 

what will be done to obtain a 

manufacturer’s ASP information before 

carrying over previous manufacturer 

ASP information. The comments 

recommended that CMS establish 

contact with manufacturers using 

contact information from the 

manufacturer’s submission before 

applying the carryover policy. 

Response: We follow a routine 

internal quality check process that 

prompts communication with contacts 

listed on manufacturers’ ASP 

submissions when we believe that ASP 

data may be late, missing, or 

incomplete. The process includes 

contacting the manufacturer as 

recommended above. Our experience 

with using the reported contact 

information to reach the manufacturer 

generally has been satisfactory, and we 

plan to continue using it to manage and 

track submissions and to coordinate 

follow-up action by CMS or other 

agencies. However, we also believe that 

the carryover policy will serve as a 

backup in the event information cannot 

be obtained in a timely manner. Again, 

we reiterate that sections 1847A and 

1927 of the Act require manufacturers to 

report ASP quarterly, and that that 

section 1847A(d)(5) of the Act provides 

for significant CMPs in situations when 

misreporting of ASP data occurs. 

Comment: A few commenters 

requested that we clarify how we 

determine whether products are no 

longer being sold. The comments agreed 

with our approach to exclude from the 

carryover process products with no 

sales or those products that are no 

longer manufactured. 

Response: In most cases, the 

manufacturers’ ASP reports clearly 

establish whether a product is still being 

sold because manufacturers are required 

to report NDCs with zero sales. As noted 

above, CMS also contacts the 

manufacturers, as needed, in order to 

clarify information. If a situation arises 

where the product’s sales status is not 

clear and we are unable to get 

clarification from the manufacturer, we 

use multiple sources of information, 

including but not limited to internal 

quality checks, compendia data, and 

public information about drug products 

to determine the product’s status. Our 

experience has shown that this 

approach is effective, and we would use 

this approach to determine whether to 

apply the carryover policy if 

information supplied by the 

manufacturer was not available or not 

clear. Based on our experience, we 

believe that this approach will be 

sufficient to prevent the use of carryover 

data from products that are not sold 

during a quarter. We also would like to 

reiterate that manufacturers have a 

reporting obligation for NDCs with zero 

sales (71 FR 69676). In other words, the 

reporting obligation for an NDC ends 

only after the expiration date of the last 

lot sold. As mentioned above, a zero 

(the character ‘‘0’’) should be used to 

report the number of units of a drug 

product sold if that product had no 

reportable sales for a quarter. 

Comment: A commenter requested 

that CMS announce the exact deadline 

for the application of the carryover 

policy each quarter. 

Response: The ASP reporting 

deadline is specified in regulation text 

at § 414.804, which states that data must 

be submitted to CMS within 30 days 

after the close of a quarter. We decline 

to provide an additional ‘‘grace period’’ 

beyond the stated statutory and 

regulatory deadline—not only have we 

not proposed such a grace period, but 

also we believe such a policy could be 

misconstrued as permitting late 

submission of manufacturer data. As we 

stated earlier, our proposal was not 

intended (nor should it be construed) to 

affect manufacturers’ obligations to 

submit ASP data timely, and penalties 

for noncompliance with the timely 

reporting requirement continue to 

apply. For these reasons, we decline to 

adopt the commenter’s suggestion. 

Comment: A commenter 

recommended that the carryover policy 

not be used for more than one quarter 

due to a concern about the accuracy of 

payment amounts based on data that is 

more than 2 quarters old. 

Response: We will not specify the 

duration for the carryover policy at this 

time in order to prevent a situation 

where prolonged nonreporting of ASP 

data could influence ASP payment limit 

calculations. Based on our experience, 

reporting problems and delays with a 

duration of 2 or more quarters would be 

unlikely. 

Comment: Commenters recommended 

that CMS carry over prices only if there 

is a manufacturer rebate agreement in 

place and a ‘‘track record’’ of four or 

more quarters of data have been 

reported. 

Response: We disagree with these 

comments. First of all, the carryover 

process is unrelated to the 

manufacturer’s reporting obligations 

under sections 1847A and 1927 and the 

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ASP regulations—in other words, our 

proposal does not serve to relieve 

manufacturers of any reporting 

obligations. Rather, our proposal is 

intended to solve the problem of how to 

accurately calculate ASP in instances 

where we do not have complete 

information. Thus, applying the 

carryover process only to certain 

manufacturers as the commenter 

suggests is not only unnecessary, but 

also, in our view, not appropriate. In 

addition, although we appreciate the 

commenter’s desire to establish a 

baseline, for the reasons stated above, 

we do not believe that implementing a 

standard whereby we apply the 

carryover process only after a 

manufacturer has submitted four or 

more quarters of data is advisable. Such 

a policy would be contrary to our intent 

in making this proposal, which is to 

provide us with a standard procedure 

for addressing missing data. Further, we 

have no information indicating that 

manufacturers with four or more 

quarters of reporting are any more or 

less likely to fail to submit data for a 

particular product in future reporting 

periods. Therefore, we will not be 

modifying our policy based on these 

comments. 

Comment: One commenter agreed 

with carrying over a weighted average 

price, but suggested that the carryover 

weighting calculation be based on the 

manufacturer’s own NDCs within the 

given HCPCS code rather than the NDCs 

for all manufacturers within a given 

HCPCS code instead of weighting based 

on all manufacturers NDCs in the 

HCPCS code. The commenter believes 

that price changes for the 

manufacturer’s own NDCs in the same 

HCPCS code will better represent price 

changes for the manufacturer’s missing 

NDCs. 

The commenter also recommended 

that CMS only use all other 

manufacturers’ NDCs in the carryover 

weighting calculation as proposed if a 

manufacturer has not reported any data 

for any NDCs in the code. 

Response: We disagree with these 

comments. We believe that basing 

weighting calculations on all of the 

reported NDCs in the code is the best 

approach because it permits us to 

maintain ASP stability without 

potentially providing manufacturers 

with an incentive not to report their 

ASP data. We are concerned that basing 

the carryover weighting calculation 

solely on the manufacturer’s own NDCs 

in the applicable code could incentivize 

manufacturer non-reporting, 

particularly in situations where a 

manufacturer has multiple NDCs that 

comprise a large share of sales for a 

HCPCS code. Indeed, we are aware of 

situations where a very wide variety of 

price changes have been reported for a 

single manufacturer’s multisource 

products for a single code. If we were to 

calculate the weight for the carryover 

data using only the NDCs that the 

manufacturer reported, then a 

manufacturer might decide to risk 

sanction and purposefully report only a 

subset of NDCs for the quarter in order 

to increase the ASP payment limit for 

the HCPCS code, and this would result 

in inaccurate payment limits. For 

example, if a manufacturer omitted data 

for a single NDC in a code that had a 

price decrease and only reported one or 

two NDCs in that code that had price 

increases, the carryover weighting 

calculations could be skewed toward 

overpayment if only the manufacturer’s 

own price changes were used in the 

carryover calculation. Again, we 

reiterate that that Section 1847A of the 

statute requires manufacturers to report 

ASP quarterly, and that that section 

1847A(d)(5) of the Act provides for 

significant CMPs in situations when 

misreporting of ASP data occurs. 

Comment: Two commenters 

recommended that CMS expand our 

proposed regulation text at § 414.904(i) 

to include more detail such as the 10 

percent threshold, a requirement that 

we make contact with a manufacturer 

before applying the carryover policy, 

and that the policy not be applied to 

products with zero sales or products 

that are no longer being manufactured. 

Response: Based on these comments, 

we will update the regulation text at 

§ 414.904(i) to state that the carryover 

policy will apply only if the ASP 

payment limit change due to missing 

data is significant. Our threshold for a 

‘‘significant’’ change is 10 percent up or 

down. We do not believe that adding 

further detail to the regulation text is 

necessary at this time because the 

preamble language and the clarifications 

sufficiently detail our approach. 

Comment: In the proposed rule, we 

specifically requested comments about 

the applicability of our proposals to 

single source and multiple source drugs. 

One commenter agreed with our 

concerns that despite the potential for 

civil monetary penalties, single source 

drug manufacturers still could perceive 

an incentive not to report ASPs in order 

to maximize the margin between the 

ASP payment and the actual price for 

which providers acquire drugs. The 

commenter stated that the carryover 

process, if applied to single source 

drugs, could provide purchasers with an 

incentive to buy increased quantities of 

the product because of the widening gap 

between their purchase price and 

Medicare payments. Further, because of 

the potential for increased sales volume, 

manufacturers of single source drugs 

may determine that the gains in volume 

outweigh the statutory penalties. The 

commenter recommended applying the 

carryover policy only to multiple source 

drugs because the absence of data for 

one product within a multiple source 

code could result in payment rate 

instability from quarter to quarter 

unrelated to market forces. 

Response: We are persuaded by the 

comment to finalize our proposal with 

limitation that the carryover policy 

applies to multiple source drugs only 

because we agree that including single 

source drugs in the policy could result 

in inappropriate ASP payment limits for 

a HCPCS code and may unintentionally 

provide an incentive for nonreporting of 

single source drugs despite the 

likelihood of CMPs. In contrast, we 

believe that for multiple source drugs 

the carryover process can improve 

payment stability and keep the payment 

calculation more in line with market 

forces. Moreover, multiple source drugs 

present less risk for nonreporting 

because data from more than one 

manufacturer is used in pricing 

calculations and thus, the impact of one 

manufacturer’s missing data is 

decreased. For these reasons and based 

on the comment we received, we will 

limit our carryover policy to 

multisource drugs. However, we will 

continue to monitor manufacturers’ 

reporting practices for single source 

drugs, biologicals, and multiple source 

drugs. 

In summary, we are finalizing our 

proposal as follows: When a 

manufacturer’s reported data for a 

multiple source drug product with sales 

during a quarter is missing, and efforts 

by us to obtain manufacturer reported 

ASP data before Medicare ASP payment 

limits publication deadlines have not 

been successful, we will use the 

following process to calculate the 

payment limit for that drug product’s 

billing code: First, we will determine 

whether calculating the payment limit 

without accounting for the missing data 

would result in a 10 percent or greater 

change in the ASP payment limit 

compared to the previous quarter. In 

that event, we will use (that is, carry 

forward) the most recent data available 

for that multiple source drug product(s) 

(that is, the individual NDCs), adjusted 

by the weighted average of the change 

in the manufacturer ASP for the NDCs 

that were reported during both the most 

recently available quarter and the 

current quarter. The previous quarter’s 

sales volumes also will be carried over 

for the NDCs with missing data. The 

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carryover process as described above 

applies, for example, if a manufacturer’s 

entire submission was not received, 

manufacturer ASP price data for specific 

multiple source NDCs has not been 

reported, or when WAC data only has 

been reported. However, single source 

drugs and biologicals, and multiple 

source drug NDCs that have zero sales 

or that have been permanently 

discontinued by the manufacturer will 

not be subject to this process. We are 

also finalizing § 414.804(i) with minor 

modifications as described elsewhere in 

this section. 

Our process is intended to more 

accurately represent prices in the 

marketplace if manufacturer ASP data 

for particular drug product(s) is missing. 

Based on our experience with ASP 

reporting since 2004, we do not believe 

that this process will be used frequently. 

2. Partial Quarter ASP Data 

Section 1847A(c)(4) of the Act states 

that, ‘‘In the case of a drug or biological 

during an initial period (not to exceed 

a full calendar quarter) in which data on 

the prices for sales for the drug or 

biological is not sufficiently available 

from the manufacturer to compute an 

average sales price for the drug or 

biological, the Secretary may determine 

the amount payable under this section 

for the drug or biological based on—(A) 

the wholesale acquisition cost; or (B) the 

methodologies in effect under this part 

on November 1, 2003, to determine 

payment amounts for drugs or 

biologicals.’’ 

When a new drug product enters the 

market, the first date of sale rarely 

coincides with the beginning of a 

calendar quarter. Therefore, the ASP 

data for many new drug products falls 

into partial quarter status during the 

first quarter of sales. We are taking this 

opportunity to describe our policy 

regarding how we use data from the first 

quarter of sales in the calculation of 

ASP payment limits. 

In accordance with section 

1847A(c)(4)(A) of the Act, our policy 

has been to price new single source 

drugs and biologicals at WAC for the 

first quarter (unless the date of first sale 

is on the first day of the quarter), and 

to add new NDCs for multisource drugs 

and product line expansions of single 

source drugs and biologicals to the ASP 

calculation for a quarter as soon as these 

products are reported. 

We believe that the approaches for 

single source drugs, biologicals, and 

multisource drugs are consistent with 

the statute, particularly section 

1847A(c)(4) of the Act, and we intend to 

continue this policy. 

Although this section of the rule did 

not contain any proposals, we received 

several comments about our description 

of current policy. 

Comment: Several commenters asked 

that CMS clarify how our policy 

coincides with previously published 

preamble language from the CY 2005 

PFS rule (69 FR 66302) that states that 

the initial period ‘‘start[s] on the date 

that sales of the drug begin and end[s] 

at the beginning of the quarter after we 

receive information from the 

manufacturer regarding ASP for the first 

full quarter of sales.’’ 

Response: We believe our clarification 

is consistent with previously published 

materials referenced by the commenters, 

and we appreciate the opportunity to 

better explain our approach. The CY 

2011 PFS proposed rule discussion 

pertains to our determination of the 

ASP-based payment limits under 

section 1847A of the Act using data 

from the drug’s first quarter of sales—in 

other words, how we calculate payment 

once we have received ASP data from 

the manufacturer for a drug. These 

payment limits become effective two 

quarters after the drug’s first quarter of 

sales. In contrast, our preamble 

discussion in the CY2005 PFS rule 

pertained to payment under section 

1847A of the Act in quarters before 

sufficient ASP data that is needed to 

calculate payment limits has been 

reported to CMS—that is, the CY2005 

preamble discusses payment for drugs 

that are administered on dates of service 

during their first or second quarter of 

sales. 

The ASP reporting and publishing 

time table has a two quarter lag, so 

payment limits calculated using data 

reported from the first quarter of sales 

become effective two quarters later. By 

way of example only, a manufacturer’s 

prices for a new single source drug first 

sold on January 10 would be reflected 

in the ASP data that a manufacturer 

reports to CMS no later than April 30, 

and that data would be considered 

partial quarter data because sales began 

after the first day of the quarter. If CMS 

determines that the drug should be 

added to the national price files (that is, 

the drug is not priced by a contractor/ 

MAC), payment limits using the data 

from January 10 to March 31 would then 

be calculated and become effective for 

the first quarter of sales from July 1 to 

September 30 of that year. In this 

example, the first full quarter of sales of 

the new drug would take place between 

April 1 and June 30. ASP data from the 

new drug’s first full quarter of sales 

would be reported to CMS no later than 

July 30, and payment limits calculated 

using this data would become effective 

for the period October 1 to December 31. 

Our approach is consistent with the 

initial period for ASP based payment 

limit calculations described in the CY 

2005 PFS final rule (69 FR 66302), 

which states that the ‘‘time period will 

start on the date that sales of the drug 

begin and end at the beginning of the 

quarter after we receive information 

from the manufacturer regarding ASP 

for the first full quarter of sales.’’ 

Comment: Commenters also requested 

that CMS clarify whether we use 100 

percent or 106 percent of WAC to set 

payment limits after new drugs are 

introduced. 

Response: As we mentioned above, 

our discussion of partial quarter data in 

the 2011 PFS proposed rule is limited 

to situations where national payment 

limit determinations under section 

1847A of the Act are being made using 

reported data from the first quarter of a 

drug’s sales. 

The national payment limits for single 

source drugs that are calculated from 

partial quarter data and are published in 

CMS’s quarterly ASP price files use 106 

percent of WAC. This percentage is 

consistent with sections 1847A(c)(4)(A) 

and 1847A(b) of the Act and is also 

described in Chapter 17 Section 20.1.3 

of the Medicare Claims Processing 

Manual. 

Comment: Commenters requested that 

CMS make regulation text changes to 

clarify that 106 percent of WAC is 

applied as a payment limit for the 

period that starts on the date that sales 

of the drug begin and ends at the 

beginning of the quarter after we receive 

information from the manufacturer 

regarding ASP for the first full quarter 

of sales. 

Response: Our policy is consistent 

with existing regulation text language at 

§ 414.904, the manual, and preamble 

language. Therefore, we are not making 

any regulation text changes. 

Comment: One commenter asked that 

CMS clarify what ‘‘product line 

expansions of single source drugs’’ 

means. 

Response: For the purpose of the 

discussion of partial quarter ASP data 

above, the term ‘‘line expansion’’ refers 

to an additional package size or sizes of 

a single source drug or biological; by 

way of example only, a new larger vial 

size of a new antibiotic that is 

introduced for sale nine months after 

the drug’s initial sales begin would 

represent a line expansion. Sales data 

for such new, additional NDCs is 

incorporated into the weighted ASP 

payment limit calculation for single 

source drugs beginning with the first 

quarter of sales that is reported to CMS. 

In other words, data for NDCs added to 

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a single source drug code that is already 

priced using the weighted average 

calculations is not considered partial 

quarter data. 

Comment: CMS received several 

comments that request other changes to 

the regulations in connection with the 

first quarter of sales. These comments 

included recommendations that CMS— 

• Develop regulation text changes 

that describes an apparent expansion of 

the initial period described in section 

1847A(c)(4)(A) of the Act; 

• Define when invoice pricing may be 

used if payments are made under 

section 1847A; 

• Discuss the determination of 

payment amounts made under section 

1847A for dates of service during the 

first or second quarter of a drug’s sales; 

• Add additional information 

requirements to ASP reporting 

templates used by manufacturers; and 

• Clarify how payments are 

calculated when a drug leaves the 

market. 

Response: As noted previously, our 

discussion of partial quarter data is 

limited to and pertains to the use of less 

than a full quarter’s worth of data to 

calculate an ASP-based payment limit, 

not to other issues such as the payment 

limit for drugs administered during the 

first quarter of sales, or reporting 

procedures. Thus, these comments are 

outside the scope of this rule. 

We will continue to apply the policy 

as previously clarified in this section 

and described in the proposed rule. 

3. Determining the Payment Amount for 

Drugs and Biologicals Which Include 

Intentional Overfill 

The methodology for developing 

Medicare drug payment allowances 

based on the manufacturers’ submitted 

ASP data is specified in 42 CFR part 

414, subpart K. We initially established 

this regulatory text in the CY 2005 PFS 

final rule with comment period (69 FR 

66424). We further described the 

formula used to calculate the payment 

amount for each HCPCS billing code in 

the CY 2006 PFS proposed rule (70 FR 

45844) and final rule with comment 

period (70 FR 70217). With enactment 

of the Medicare, Medicaid and SCHIP 

Extension Act (MMSEA) (Pub. L. 110– 

173), the formula we use changed 

beginning April 1, 2008. Section 112(a) 

of the MMSEA amended section 

1847A(b) of the Act to require CMS to 

calculate payment amounts using a 

specified volume-weighting 

methodology. In addition, section 112(b) 

of the MMSEA sets forth a special rule 

for determining the payment amount for 

certain drugs and biologicals. We 

addressed these changes in the CY 2009 

PFS proposed and final rules (73 FR 

38520 and 69571, respectively). 

For each billing code, we calculate a 

volume weighted, ASP based payment 

amount using the ASP data submitted 

by manufacturers. Manufacturers submit 

ASP data to CMS at the 11-digit 

National Drug Code (NDC) level, 

including the number of units of the 11- 

digit NDC sold and the manufacturer’s 

ASP for those units. We determine the 

number of billing units in an NDC based 

on the amount of drug in the package. 

For example: A manufacturer sells a box 

of 4 vials of a drug. Each vial contains 

20 milligrams (mg); the billing code is 

per 10 MG. The number of billing units 

in this NDC for this billing code is (4 

vials × 20mg)/10mg = 8 billable units. 

Beginning April 1, 2008, we use a two 

step formula to calculate the payment 

amount for each billing code. We sum 

the product of the manufacturer’s ASP 

and the number of units of the 11 digit 

NDC sold for each NDC assigned to the 

billing and payment code, and then 

divide this total by the sum of the 

product of the number of units of the 11 

digit NDC sold and the number of 

billing units in that NDC for each NDC 

assigned to the billing and payment 

code. This process is discussed further 

in the CY2009 Physician Fee Schedule 

rule at 73 FR 69752. 

The provisions in section 112 of the 

MMSEA were self implementing for 

services on and after April 1, 2008. 

Because of the limited time between 

enactment and the implementation date, 

it was not feasible to undertake and 

complete rulemaking on this issue prior 

to implementing the required changes. 

As a result of the legislation, we revised 

§ 414.904 to codify the changes to the 

determination of payment amounts 

consistent with section 112 of the 

MMSEA. 

Since that time, we have become 

aware of situations where 

manufacturers, by design, include a 

small amount of ‘‘intentional overfill’’ in 

containers of drugs. We understand that 

this ‘‘intentional overfill’’ is intended to 

compensate for loss of product when a 

dose is prepared and administered 

properly. For instance, a hypothetical 

drug is intended to be delivered at a 0.5 

mg dose that must be drawn into a 

syringe from a vial labeled for single use 

only. The vial is labeled to contain 0.5 

mg of product but actually contains 

1.5mg of product. The additional 1.0 mg 

of product is included, by design, and 

is intended to be available to the 

provider so as to ensure a full 0.5 mg 

dose is administered to the patient. 

Our ASP payment calculations are 

based on data reported to us by 

manufacturers. This data includes the 

‘‘volume per item’’. In our ‘‘Appendix 

A—Average Sales Price Reporting Data 

Elements’’ available on our Web site at 

http://www.cms.gov/

McrPartBDrugAvgSalesPrice/, we define 

‘‘volume per item’’ as, ‘‘The amount in 

one item (ex., 10 ml in one vial, or 500 

tablets in one bottle). Enter ‘‘1’’ for 

certain forms of drugs (for example, 

powders and sheets) when ‘‘Strength of 

the Product’’ indicates the amount of the 

product per item.’’ In order to accurately 

calculate Medicare ASP payment limits 

under section 1847A of the Act, we 

interpret ‘‘the amount in one item’’ to be 

the amount of product in the vial or 

other container as indicated on the FDA 

approved label. 

It has been longstanding Medicare 

policy that in order to meet the general 

requirements for coverage under the 

‘‘incident to’’ provision, services or 

supplies should represent an expense 

incurred by the physician or entity 

billing for the services or supplies (See 

Medicare Benefit Policy Manual 

(Publication # 100–02), Chapter 15, 

Sections 50.3, 60.1.A). Such physicians’ 

services and supplies include drugs and 

biologicals under section 1861(s)(2)(A) 

of the Act. In accordance with this 

policy, providers may only bill for the 

amount of drug product actually 

purchased and that the cost of the 

product must represent an expense to 

the physician. 

We further understand that when a 

provider purchases a vial or container of 

product, the provider is purchasing an 

amount of drug defined by the product 

packaging or label. Any excess product 

(that is, overfill) is provided without 

charge to the provider. In accordance 

with our current policy as explained 

above, providers may not bill Medicare 

for overfill harvested from single use 

containers, including overfill amounts 

pooled from more than one container, 

because that overfill does not represent 

a cost to the provider. Claims for drugs 

and biologicals that do not represent a 

cost to the provider are not 

reimbursable, and providers who submit 

such claims may be subject to scrutiny 

and follow up action by CMS, its 

contractors, and OIG. 

Because such overfill is currently not 

included in the calculation of payment 

limits under the methodology in section 

1847A of the Act and does not represent 

an incurred cost to a provider, we 

proposed to update our regulations at 42 

CFR part 414 Subpart K to clearly state 

that Medicare ASP payment limits are 

based on the amount of product in the 

vial or container as reflected on the 

FDA-approved label. We also proposed 

to update our regulations at Subpart J to 

clearly state that payment for amounts 

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of free product, or product in excess of 

the amount reflected on the FDAapproved label, will not be made under 

Medicare. 

We received several comments 

supporting our proposal. Several other 

comments raised concerns about 

whether our proposal attempts to 

regulate or even prohibit the use of 

overfill. Our policy is not intended to 

limit the use of intentional overfill 

during the care of beneficiaries or in 

medical practice; such measures are 

beyond CMS’ authority. Rather, we are 

clarifying our ASP pricing and payment 

policies, describing how we utilize 

manufacturer reported data, and 

updating our regulations at 42 CFR part 

414. The following is a summary of the 

comments we received and our 

responses. 

Comments: Several commenters 

supported our proposal, agreeing that a 

provider does not incur a cost in 

obtaining the intentional overfill 

amount. One commenter noted that 

statute, regulations, and policies 

effective since CY 1965 regarding the 

‘‘incident to’’ provision have required 

the provider to incur costs in order to 

receive Medicare payment. Another 

commenter supported the proposal 

because it protects the Medicare Trust 

Fund and the taxpayer, reduces fraud 

and abuse, and ensures quality patient 

care by reducing the influence of profit 

rather than clinical efficacy on medical 

decisions for the patient. One 

commenter agreed with the CMS 

proposal because of the variations in the 

amount of overfill that could be found 

in each vial or packaging. This 

commenter also noted previous OIG 

reports that expressly excluded 

intentional overfill in the calculation of 

acquisition costs because of variability 

in the amount of and different practices 

for the use of overfill. Some 

commenters, in support of the proposal, 

mentioned ongoing litigation which 

alleges that some manufacturers 

provided kickbacks to providers by 

marketing and furnishing intentional 

overfill and encouraging providers to 

bill federal health care programs to 

increase the providers’ profits and sales 

volumes for the drugs. 

Response: We appreciate the 

comments in support of our proposal. 

We believe these comments help to 

illustrate the variety of perspectives 

regarding overfill. 

Comments: Several commenters 

expressed concern that our proposed 

regulation changes are, in effect, a 

restriction on providers’ ability to use 

intentional overfill. Comments 

emphasized that intentional overfill is 

provided to account for loss of drug 

during dosage preparation, and some 

comments noted that the FDA allows for 

intentional overfill to be included in the 

packaging to account for this loss of 

drug. Similarly, comments noted that 

current United States Pharmacopeia 

(USP) 797 standards for compounding 

sterile injections also allow for the use 

of overfill during drug preparation. 

Some comments suggested we work 

closely with the FDA and the USP to 

address the issue of intentional overfill 

in the manufacturing and packaging of 

the drugs. One comment suggested that 

we require providers to comply with 

USP 797 standards regarding the use of 

overfill. Commenters asserted that any 

regulation of intentional overfill should 

be imposed upon manufacturers rather 

than providers. 

Response: We disagree with the 

commenters that believe our proposal 

would restrict the clinical use of 

intentional overfill. The comments that 

suggest that we impose requirements or 

implement standards regarding the 

amount or clinical use of overfill are 

beyond the scope of this rulemaking. In 

response to the commenters’ concerns, 

however, we believe it is necessary to 

reiterate the distinction between the 

amount of drug product that is 

contained in a vial or other packaging 

for use in the care of a beneficiary and 

the amount of drug product that 

manufacturers report to CMS for pricing 

purposes and used to calculate payment 

limits under section 1847A of the Act. 

Our policy discussion is limited to the 

latter issue. Our policy is not intended 

to allow, prohibit, or otherwise regulate 

the amount of overfill that 

manufacturers include in a container, or 

how that overfill is used in clinical 

practice. Indeed, we do not have the 

authority to regulate the manufacturing 

of drugs or biologicals or the practice of 

medicine. The appropriate use of drug 

products, including sterile products, 

depends on numerous factors, 

including, but not limited to: approved 

labeling, State law, the setting in which 

the product is prepared and used, how 

the product is stored, sterility, and 

chemical stability. For many drugs, 

overfill quantities are small and are not 

completely used. In many settings, 

harvesting small amounts of overfill, 

when appropriate, can make up for 

doses that are lost or are discarded 

because of an error, short stability, or 

accidental contamination, for example. 

Our proposal does not pertain to, or 

apply to, any of these issues. The intent 

of this proposal is merely to clarify that 

the Medicare ASP payment limit is 

based on the amount of drug 

conspicuously indicated on the FDA 

label, and that no payment will be made 

for any intentional overfill included as 

free drug for the proper preparation of 

a single therapeutic dose. 

Comments: Some commenters 

estimated significant increases in 

Medicare costs if the proposal is 

finalized. These estimates were based 

on concerns that our policy would 

prohibit the use of overfill. These 

commenters emphasized that providers 

would be required to use additional 

vials and drugs if the use of intentional 

overfill were prohibited. They stated 

that the proposal will not reduce 

Medicare costs, but will transfer the 

costs associated with intentional overfill 

from the pharmaceutical companies to 

the providers and, in turn, to the 

Medicare and its beneficiaries. Several 

commenters stated that providers 

minimize wastage and cost through the 

use of intentional overfill and efforts to 

schedule patients efficiently. 

Response: Because we disagree that 

our proposal limits utilization of 

overfill, we accordingly disagree that 

our proposal will increase costs. We are 

not prohibiting the use of overfill, thus 

we do not anticipate providers or other 

entities buying additional amounts of 

drug as a result of this policy. Further, 

we do not believe that our policy will 

require significant changes in 

procedures or practices for most 

providers and suppliers because most 

providers and suppliers use overfill in 

clinically appropriate circumstances, 

and we therefore do not believe that our 

policy will cause them to incur 

significant costs on that basis. 

However, as we stated in our 

proposal, we believe it is inappropriate 

for a provider or supplier to bill 

Medicare for any amount of intentional 

overfill beyond the labeled amount in a 

single-use vial or package, and we agree 

with the commenters that such 

inappropriate billing does not occur 

routinely. 

Comments: Several commenters 

expressed concern that the proposed 

intentional overfill policy may cause 

lower reimbursement rates for overhead 

costs relating to procurement, 

preparation, and dispensing of affected 

drugs. Several comments expressed 

concern about the burden of tracking 

doses that are prepared as a service for 

providers who bill under Medicare Part 

B. Some commenters stated that the 

intentional overfill proposal is 

impossible to apply to multi-dose vials 

or packages, and will cause unnecessary 

administrative burden to maintain 

accurate inventory and medical records 

regarding overfill and drug wastage from 

single-dose vials. 

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Response: We disagree with these 

comments. As we stated previously, our 

policy on intentional overfill pertains to 

payment under section 1847A of the 

Act—it is not an attempt to mandate or 

direct how the contents of a drug 

product package are used. Our policy 

relates to the providers and suppliers 

who furnish drugs or biologicals under 

Part B and who bill for such services. 

We have no authority under section 

1847A of the Act to dictate how entities 

that prepare and sell doses of drugs for 

use in various clinical settings set their 

rates. We would expect that providers 

and suppliers who purchase prepared 

doses from these entities have incurred 

a cost for them. For these reasons, we do 

not anticipate that our policy will affect 

entities that do not bill separately for 

Part B drugs, such as entities that 

prepare doses of sterile products for sale 

to providers or suppliers who bill 

Medicare for the drug. 

This proposal also is not intended to 

affect the current cost or waste-saving 

batch processes in place when using 

multiple-dose vials or packages. Instead, 

the intent of this proposal is to clarify 

that the ASP payment limit is currently 

based on the amount of drug indicated 

on the FDA label, and that no payment 

will be made for any intentional overfill. 

We expect that providers will 

continue to maintain accurate medical 

records for all beneficiaries as well as 

accurate inventory records of all drugs 

that were actually purchased and 

appropriately billed to Medicare. 

Comment: One commenter noted an 

increased burden upon CMS to examine 

the beneficiaries’ records to verify that 

no intentional overfill was billed to 

Medicare. 

Response: For the reasons stated 

above, we do not believe that our 

proposal will significantly affect 

procedures used in most clinical 

settings. We therefore do not expect an 

additional burden for the agency to 

track and monitor this policy beyond 

the procedures that are in place right 

now. 

Comment: One commenter noted that 

the proposal is contrary to our current 

policy regarding discarded drugs and 

specifically stated that billing Medicare 

for discarded drug is only appropriate 

for single-use vials, and that the 

provider must make good faith efforts to 

schedule patients to efficiently deliver 

the drugs to patients in a clinically 

appropriate manner, and that any 

discarded drug amount billed to 

Medicare must not be used on any other 

patient. 

Response: We disagree with this 

comment. Although our policy on 

discarded drugs may appear to be 

similar to our proposed policy for 

overfill (in that they both pertain to how 

providers and suppliers deal with drug 

product that remains in a package after 

a dose has been administered), there is 

a key distinction. Our policy on 

discarded drugs acknowledges that 

providers and suppliers acting in good 

faith to minimize wastage should not be 

financially burdened when, for clinical 

reasons, it is not possible or advisable 

to use the full labeled amount of drug 

product in a single-use vial—in other 

words, we permit, in limited 

circumstances, billing for drugs for 

which the provider or supplier incurred 

a cost, but that the provider or supplier 

did not administer. In contrast, our 

policy on intentional overfill applies to 

drug product for which the provider or 

supplier did not incur a cost, that is, 

amounts of drug that are beyond the 

labeled amount. Thus, in addition to 

complying with the overfill policy, we 

expect providers to continue to make 

good faith efforts to efficiently minimize 

the amount of discarded drug by 

facilitating clinically appropriate 

methods of administering the required 

dose to each beneficiary and is 

consistent with the discarded drug 

policy in Chapter 17 Section 40 of the 

Medicare Claims Processing Manual 

(http://www.cms.gov/manuals/ 

downloads/clm104c17.pdf). 

Comments: Several commenters 

agreed with our position that intentional 

overfill is considered free product for 

which the provider did not incur a cost. 

However, other commenters stated that 

the purchase of a drug includes not only 

the amount of drug identified on the 

FDA label, but also encompasses the 

entire package including accompanying 

items such as syringes, diluents, and 

intentional overfill that is required to 

assure the drug is prepared and 

administered properly. One commenter 

suggested that it is more appropriate to 

see any excessive overfill as an in-kind 

discount that reduces the per-unit price 

of a drug. This commenter believes that 

manufacturers have factored overfill 

into the pricing of their products and 

that providers indirectly pay for overfill 

regardless of its use. Some commenters 

also that intentional overfill is within 

the Discount Exception and Safe Harbor 

under the Anti-Kickback statute. These 

commenters believe that CMS should 

similarly interpret intentional overfill as 

a discount and require accurate 

reporting of the price of the item (taking 

into consideration the discount) by the 

manufacturer, but not should not 

require the provider to reduce the 

amount billed or refrain from billing for 

the overfill. 

Response: We acknowledge that drugs 

and biologicals are supplied in various 

containers or kits that include 

accessories and diluents, as well as a 

variable amount of intentional overfill 

to ensure that the single dose is 

prepared and administered 

appropriately. Sections 1847A(b)(2) and 

(b)(5) of the Act require that payment 

limit calculations be carried out without 

regard to any diluents or special 

packaging for the drug. We believe these 

statutory provisions support our 

position that overfill is not an in-kind 

discount. Further, we have authority 

under section 1847A(c)(3) of the Act to 

identify price concessions that must be 

included in the ASP calculation. 

However, we have a practical reason for 

declining to consider overfill to be a 

discount for purposes of the ASP 

calculation—namely, operational 

feasibility. The amount of overfill in 

vials varies from drug to drug and often 

is not easily or consistently quantifiable 

because actual fill amounts may also 

vary slightly due to the manufacturing 

process. In contrast, manufacturer sales 

data, ASP calculations, and ASP 

payment limits use exact quantities of 

drug that are represented by exact 

monetary values. Payment limits are 

currently calculated using the amount of 

drug that is reported by manufacturers 

to CMS each quarter. We base our price, 

in part, on the quantity indicated on the 

drug package, which does not indicate 

an overfill amount. The calculation of 

the Medicare payment limit is based on 

the reported data from the 

manufacturer. We do not have access to 

information that would permit us to 

account for overfill in the ASP 

calculation. Further, we are concerned 

that attempting to account for a variable 

amount of overfill could result in price 

instability or inaccuracy. 

The application of safe harbor 

provisions to this proposal is outside 

the scope of this rule. 

Comments: Some commenters 

suggested the issue of intentional 

overfill should be addressed in the ASP 

calculations. One commenter 

specifically suggested that the ASP 

calculation methodology be changed to 

consider intentional overfill when 

defining the units relevant to the 

calculation of the Medicare payment 

limit per billing code. 

Response: Manufacturers are 

currently reporting ASP and sales data 

based on the labeled amount of the drug 

product. The intent of this proposal is 

to clarify that the ASP payment limit is 

based on the amount of drug clearly 

identified as the amount on the FDA 

label and packaging. We do not intend 

to change the ASP calculation 

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methodology to include intentional 

overfill because of the operational 

difficulty in accurately identifying the 

amount of overfill. 

Comments: Many commenters 

suggested CMS clarify the applicability 

of the proposal to specific providers. 

Other commenters suggested that the 

proposal be applied and enforced 

prospectively only in the physician 

office setting and not in hospitals or 

other provider settings. Another 

commenter noted that drugs furnished 

in the outpatient department are 

reimbursed based on ASP when 

separately payable, and requests 

clarification regarding whether this 

proposal must be required of hospital 

outpatient clinics paid under the 

Hospital Outpatient Prospective 

Payment System (OPPS). This 

commenter also requested that CMS 

clarify whether this proposal applies to 

acute care hospitals, skilled nursing 

facilities, dialysis facilities and other 

providers or suppliers of services under 

bundled payment methodologies. 

Another commenter requested the 

proposal not be applied to dialysis 

facilities. The commenter stated that 

intentional overfill is included in their 

costs reports, that the ‘‘incident-to’’ 

provision does not apply to dialysis 

facilities, and that the policy may cause 

confusion during the transition into the 

new End Stage Renal Disease payment 

bundle. 

Response: Section 1847A(a)(1) of the 

Act specifies that the ASP methodology 

applies to drugs or biologicals described 

in section 1842(o)(1)(C) of the Act, 

which indicates that the ASP-based 

payment limit in 1847A of the Act 

affects a physician, supplier or any 

other person that bills for Part B covered 

drugs that are not paid under a cost or 

prospective payment system. We did 

not propose to change the manner in 

which we calculate ASP-based payment 

limits to reflect the setting in which the 

drug was provided, and we believe that 

not only would such a policy be unduly 

complicated, but also would likely be 

beyond our authority under the ASP 

statute. We note that regardless of the 

benefit category for a drug or biological, 

if it is paid under section 1847A of the 

Act, we calculate the payment limit 

without regard to overfill—thus, the fact 

that certain providers or suppliers do 

not furnish drugs on an ‘‘incident to’’ 

basis is irrelevant to our policy for the 

ASP calculation. This rule’s scope is 

limited to the payment of overfill under 

section 1847A of the Act. 

Comment: One comment suggested 

that we encourage providers to the use 

intentional overfill and bill Medicare 

only for the amount administered to the 

patient, but not the wasted amount. The 

commenter also suggested that drug 

billing code increments be reduced for 

those drugs that are dosed in smaller 

amounts than what is currently on the 

billing code. For example, if a patient 

dose is 710mg but the billing increment 

is 100mg, then the provider must bill 

Medicare for 800mg and waste the left 

over 90mg. 

Response: We are continuing to work 

closely to review all billing codes to 

assure that such codes describe drugs at 

the most clinically appropriate dosage 

descriptors. As stated in the discarded 

drug policy (Chapter 17 Section 40 of 

the Medicare Claims Processing Manual; 

http://www.cms.gov/manuals/

downloads/clm104c17.pdf), Medicare 

will continue to make payment for the 

administered amount of drug plus any 

appropriately discarded drug that sums 

to the labeled amount on a single-use 

vial or package. 

Comments: Some commenters 

disagree that Medicare has a 

longstanding policy that an expense 

must be incurred by the provider in 

order for payment to be made by 

Medicare. One commenter stated that 

there is no existing law or regulation 

that prohibits a provider from billing for 

intentional overfill or for any free 

product. This commenter further 

discussed previous OIG reports that 

identified providers were using 

intentional overfill which would alter 

their costs, and added that CMS did not 

express any concerns about these 

overfill utilization practices. Another 

commenter recommended that CMS 

determine overfill amounts for all 

injectable drugs and validate whether 

excess product pooled from more than 

one container and billed to Medicare 

does not represent a cost to the 

provider. 

Response: We believe our preamble 

adequately describes the longstanding 

Medicare policy based upon section 

1861(s)(2)(A) of the Act. We maintain 

that services or supplies reimbursed by 

Medicare under the ‘‘incident-to’’ 

provision should represent an expense 

incurred by the physician or entity 

billing for the drugs, services or 

supplies. Our policy clarifies that we 

will not pay for intentional overfill. For 

reasons described elsewhere in this 

preamble, we do not intend to track 

overfill amounts for injectable drugs. 

Comments: Some commenters 

requested that CMS define what is 

meant by ‘‘intentional’’ overfill since 

many injectable drugs include a variable 

amount of overfill to allow the labeled 

dose to be appropriately prepared and 

administered to the patient. One 

comment cited that the USP 

recommends a 10 percent overfill by 

volume for liquid medicines, and stated 

that the example in the proposal 

describing a 100 percent overfill is 

inconsistent with USP guidelines. 

Response: We described ‘‘intentional’’ 

overfill in the proposed rule (75 FR 

40155) and we agree that the amount of 

intentional overfill may vary from 

product to product; however, we are not 

aware of an absolute limit on the 

amount of overfill. In summary, the 

preamble describes intentional overfill 

as any amount of drug greater than the 

amount identified on the conspicuous 

FDA approved label on the outside of 

the package, and characterizes overfill 

as excess or free product that does not 

represent a cost to the provider. 

After reviewing the public comments, 

we are finalizing our proposal to update 

our regulations at 42 CFR part 414 

Subpart J to clearly state that Medicare 

ASP payment limits are based on the 

amount of product in the vial or 

container as reflected on the FDAapproved label, and Subpart K to clearly 

state that payment for amounts of 

product in excess of the amount 

reflected on the FDA-approved label, 

will not be made under Medicare. We 

are finalizing the regulations as 

proposed. These provisions will be 

effective January 1, 2011. 

4. 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, ‘‘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 

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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—(i) the widely available market price 

for the drug or biological (if any); or (ii) 

103 percent of the average manufacturer 

price.* * *’’ 

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 

FR 69680), 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 for the 

AMP is addressed below in this section 

of the preamble. Although the latest 

WAMP comparison was published in 

2008, 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 do not have sufficient 

information to determine that the 5 

percent threshold percentage is 

inappropriate. As a result, we believe 

that continuing the 5 percent applicable 

threshold percentage for the WAMP is 

appropriate for CY 2011. Therefore, we 

proposed to revise § 414.904(d)(3) to 

include the CY 2011 date. 

As we noted in the CY 2010 PFS final 

rule with comment period (74 FR 

61904), we understand that there are 

complicated operational issues 

associated with this 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. 

We solicited comments on our 

proposal to continue the applicable 

threshold percentage at 5 percent for the 

WAMP for 2011. 

The following is a summary of the 

comments we received and our 

responses: 

Comment: Several commenters 

supported maintaining the threshold at 

5 percent. Other commenters 

commended CMS for the cautious 

approach toward determining price 

substitutions based on WAMP to ASP 

comparisons, and supported the 

exclusion of WAMP from the price 

substitution proposal discussed 

elsewhere in this rule. One comment 

suggested the AMP threshold be 

increased to reflect recent changes to the 

definition of AMP but did not provide 

a specific percentage. One commenter 

suggested that OIG also review whether 

existing discrepancies in the various 

reporting rules for bundled 

arrangements and price concessions 

have impacted the reported pricing for 

the same products under AMP and ASP. 

Response: We appreciate the 

comments supporting the continuation 

of the 5 percent threshold. As we noted 

in the CY 2010 PFS rule (74 FR 61904), 

we understand there are complex 

operational issues associated with 

potential payment substitutions. We 

will continue to proceed cautiously in 

this area and provide stakeholders, 

particularly manufacturers of drugs 

impacted by potential price 

substitutions, with adequate notice of 

our intentions regarding such, include 

the opportunity to provide input with 

regard to the processes for substituting 

the WAMP or the AMP for the ASP. As 

part of our approach we intend to 

continue to work closely with the OIG 

to develop a better understanding of the 

issues that may be related to certain 

drugs for which the WAMP and AMP 

may be lower than the ASP over time. 

After reviewing the public comments, 

we are finalizing our proposal to 

continue the 5 percent WAMP threshold 

for CY2011. 

5. AMP Threshold and Price 

Substitutions 

As mentioned elsewhere in 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, and to 

specify the timing for any price 

substitution. 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 

adjustment such that comparisons of 

ASP to AMP 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 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 

percentage has been satisfied for a 

number of calendar quarters as 

discussed elsewhere in this rule (that is, 

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 volumeweighted 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 

Secretary would inadvertently raise the 

Medicare payment limit through this 

price substitution policy; 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: 

• Any effect of definitional 

differences between AMP and ASP, 

particularly in light of the revised 

definition of AMP per the ACA; 

• 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 

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AMP and manufacturer’s ASP would 

affect comparisons between these two. 

Comment: CMS received a number of 

comments pertaining to its proposals 

regarding the AMP threshold. Some 

commenters generally agreed that any 

proposal should be transparent, 

cautious, and should account for interquarter price fluctuations. Some 

commenters also supported our 

proposal to limit the price substitution 

to those HCPCS codes for which ASP 

and AMP comparisons are based on the 

same set of NDCs. One commenter 

requested that CMS specifically note 

that the volume used to calculate the 

volume-weighted AMP is identical to 

that used in the calculation of the 

volume-weighted ASP. Other 

commenters supported maintaining the 

applicable threshold at 5 percent for CY 

2011. 

Response: We appreciate the 

comments regarding our proposed AMP 

threshold policies. Since the publication 

of the PFS proposed rule, the 

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) is still 

in effect. Additionally, CMS continues 

to expect to develop regulations that 

will implement the provisions of section 

2503 of the ACA, which amended the 

definition of AMP. Moreover, section 

202 of the Federal Aviation 

Administration Air Transportation 

Modernization and Safety Improvement 

Act (Pub. L. 111–226), (enacted on 

August 10, 2010) has further amended 

section 1927(k) of the Act. Finally, on 

September 3, 2010, we proposed to 

withdraw certain provisions of the AMP 

final rule published on July 17, 2007 (75 

FR 54073). 

In light of these factors and comments 

received, we are finalizing our proposal 

that the AMP applicable threshold be 5 

percent for CY 2011. However, we are 

not finalizing our proposed adjustments 

to the 5 percent AMP threshold that 

would specifically apply the applicable 

percentage such that comparisons of 

ASP to AMP 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; and 

• 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). 

We appreciate the submitted 

comments and will take them into 

account when we revisit the price 

substitution and AMP threshold issues 

in future rulemaking. 

Comment: We received a number of 

comments regarding our price 

substitution proposed policies. Some 

commenters supported our proposal 

that any substitution would last only for 

a single quarter. The majority of 

commenters requested that any proposal 

should not be implemented until after 

CMS published regulations on the 

revised definition of AMP. A few 

commenters also recommended that 

CMS provide adequate notice to 

manufacturers prior to making a price 

substitution. One commenter suggested 

that additional OIG comparison studies 

are needed to examine the impact of the 

new definition of AMP. Several 

commenters requested clarification on 

and suggested changes to our proposed 

regulatory language. Another 

commenter requested clarification on 

the timing of price substitutions and 

suggested that any price substitution 

policies should not be implemented 

until the lag time between when the 

comparison is made and when the 

substitution would be implemented was 

decreased. One commenter noted that 

the OIG studies are not a reliable 

indicator of predicted savings since the 

substitution timeframes within the 

studies differed from that in our 

proposal. All commenters agreed that 

any price substitution policy should not 

be implemented until after the 

preliminary injunction is vacated. 

Moreover, several commenters 

provided additional information related 

to the comparison between ASP and 

AMP, including: 

• How ASP and AMP each 

encompass different sales and rebate 

data and are calculated based on 

differing statutory definitions; 

• The impact of restated AMP data on 

comparisons; and 

• The effect of price substitutions on 

physician acquisition of drugs. 

Response: We appreciate the 

comments submitted regarding our price 

substitution proposal. As discussed 

above, recent legislative and regulatory 

changes have further affected this issue. 

After careful review and 

consideration of the comments received, 

we will not be finalizing our price 

substitution proposal at this time and 

thus we will not be finalizing the 

proposed regulation text at section 

414.904(d). Specifically, we are not 

finalizing our proposal for a 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. This 

proposal specifically would have— 

• Occurred when the applicable 

percentage had been satisfied for a 

number of calendar quarters as 

discussed elsewhere in this rule; 

• Permitted 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 Secretary would 

inadvertently raise the Medicare 

payment limit through this price 

substitution policy; and 

• Had the duration of the price 

substitution lasting for only one quarter. 

We are finalizing the portion of our 

proposal that sets the AMP threshold at 

5 percent CY2011 and have revised the 

regulations text accordingly. We remain 

committed to proceeding cautiously as 

we continue to evaluate the impact of 

any future policy developments in this 

area. 

6. Out of Scope Comments 

We received comments pertaining to: 

(1) Part B payment for insulin; (2) bona 

fide service fees; (3) price concessions 

and bundled arrangements in the 

calculation of manufacturer ASP data; 

(4) updating supplying and dispensing 

fees for Part B drugs; (5) developing 

standards for manufacturers to not 

submit related ASP data; (6) low 

reimbursement in a HCPCS-based 

claims systems for pharmacies; (7) 

claims processing, claims rejection, and 

payment delays in Medicare Part B as 

compared to Part D; and (8) publishing 

reimbursement rates for 

radiopharmaceuticals on contractor Web 

sites. These comments are outside the 

scope of this rule, and therefore are not 

addressed in this final rule with 

comment period. 

B. Ambulance Fee Schedule Issue: 

Policy for Reporting Units When Billing 

for Ambulance Fractional Mileage 

Under the ambulance fee schedule, 

the Medicare program pays for 

transportation services for Medicare 

beneficiaries when other means of 

transportation are contraindicated and 

all other applicable medical necessity 

requirements are met. Ambulance 

services are classified into different 

levels of ground (including water) and 

air ambulance services based on the 

medically necessary treatment provided 

during transport. These services include 

the following levels of service: 

• For Ground— 

++ Basic Life Support (BLS) 

(emergency and nonemergency). 

++ Advanced Life Support, Level 1 

(ALS1) (emergency and nonemergency). 

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++ Advanced Life Support, Level 2 

(ALS2). 

++ Specialty Care Transport (SCT). 

++ Paramedic ALS Intercept (PI). 

• For Air— 

++ Fixed Wing Air Ambulance (FW). 

++ Rotary Wing Air Ambulance 

(RW). 

1. History of Medicare Ambulance 

Services 

a. Statutory Coverage of Ambulance 

Services 

Under sections 1834(l) and 1861(s)(7) 

of the Act, Medicare Part B 

(Supplementary Medical Insurance) 

covers and pays for ambulance services, 

to the extent prescribed in regulations, 

when the use of other methods of 

transportation would be contraindicated 

by the beneficiary’s medical condition. 

The House Ways and Means Committee 

and Senate Finance Committee Reports 

that accompanied the 1965 Social 

Security Amendments suggest that the 

Congress intended that— 

• The ambulance benefit cover 

transportation services only if other 

means of transportation are 

contraindicated by the beneficiary’s 

medical condition; and 

• Only ambulance service to local 

facilities be covered unless necessary 

services are not available locally, in 

which case, transportation to the nearest 

facility furnishing those services is 

covered (H.R. Rep. No. 213, 89th Cong., 

1st Sess. 37 and Rep. No. 404, 89th 

Cong., 1st Sess. Pt 1, 43 (1965)). 

The reports indicate that 

transportation may also be provided 

from one hospital to another, to the 

beneficiary’s home, or to an extended 

care facility. 

b. Medicare Regulations for Ambulance 

Services 

Our regulations relating to ambulance 

services are set forth at 42 CFR part 410, 

subpart B, and 42 CFR part 414, subpart 

H. Section 410.10(i) lists ambulance 

services as one of the covered medical 

and other health services under 

Medicare Part B. Therefore, ambulance 

services are subject to basic conditions 

and limitations set forth at § 410.12 and 

to specific conditions and limitations as 

specified in § 410.40 and § 410.41. Part 

414, subpart H, describes how payment 

is made for ambulance services covered 

by Medicare. 

2. Mileage Reporting—Provisions of the 

CY 2011 Proposed Rule 

In the CY 2011 PFS proposed rule (75 

FR 40159–40161, issued July 13, 2010), 

we proposed that, effective for claims 

with dates of service on and after 

January 1, 2011, ambulance providers 

and suppliers would be required to 

report mileage rounded up to the 

nearest tenth of a mile on all claims for 

mileage totaling up to 100 covered 

miles, as further discussed below. We 

stated that we would revise the 

instructions set forth in our Claims 

Processing Manual to reflect the revised 

billing procedures. In this section, we 

describe our proposals in the CY 2011 

PFS proposed rule, including the 

background and current process for 

reporting ambulance mileage, the 

proposed fractional mileage billing 

policy, and our reasons for proposing 

revisions to the current mileage 

reporting policy. 

a. Background and Current Process for 

Reporting Ambulance Mileage 

Historically, the Medicare FFS claims 

processing system lacked the capability 

to accept and process fractional unit 

amounts reported in any claim format. 

Therefore, the standard for reporting 

units for ambulance mileage was to bill 

in whole number increments. Thus, if 

the total units of service for ambulance 

mileage included a fractional amount, 

providers and suppliers of ambulance 

services (hereafter referred to 

collectively as ‘‘providers and 

suppliers’’) were instructed to round the 

fraction up to the next whole number. 

Claims billed with fractional units of 

service were, at that time, returned as 

unprocessable as CMS’ claims 

processing systems could not accept nor 

adjudicate fractional unit amounts 

properly. 

Consequently, in Change Request (CR) 

1281 (Transmittal AB–00–88, issued on 

September 18, 2000), we instituted an 

operational procedure requiring wholeunit reporting of mileage on ambulance 

claims. Specifically, we instructed 

providers and suppliers that ‘‘If mileage 

is billed, the miles must be whole 

numbers. If a trip has a fraction of a 

mile, round up to the nearest whole 

number.’’ Our instructions also stated 

that ‘‘1’’ should be reported for trips 

totaling less than a single mile. This was 

an operational instruction based on 

Medicare’s FFS system limitations and 

capabilities at the time, as our claims 

processing systems were not capable of 

accepting and processing claims 

submitted with fractional units of 

service. Since then, our claims 

processing system functionality has 

evolved to the point where this 

rounding process is no longer necessary 

for ambulance transports, as it is now 

possible for our FFS systems to capture 

and accurately process fractional units 

on both paper and electronic forms. 

Based on our prior instructions, 

providers and suppliers continue to 

report loaded mileage as whole-number 

units on both paper and electronic 

claims. Providers and suppliers utilize 

the appropriate HCPCS code for 

ambulance mileage to report the number 

of miles traveled during a Medicarecovered trip rounded up to the nearest 

whole mile at a minimum of 1 unit for 

the purpose of determining payment for 

mileage. Transmittal AB–00–88 

established a list of HCPCS codes 

accepted by Medicare for the purpose of 

billing mileage. Providers and suppliers 

were instructed to use these specific 

HCPCS codes and enter the total 

number of covered miles in the ‘‘units’’ 

field of the claim form. For example, if 

a covered trip from the point of pickup 

(POP) to the Medicare-approved 

destination (see § 414.40 for a list of 

approved destinations) totaled 9.1 

miles, the provider would enter the 

appropriate HCPCS code for covered 

mileage and a ‘‘10’’ in the units field. 

Providers and suppliers billing for trips 

totaling, for example, 0.5 covered miles, 

would enter ‘‘1’’ in the units field along 

with the appropriate HCPCS code for 

mileage. 

b. Concerns Regarding the Potential for 

Inaccuracies in Reporting Units and 

Associated Considerations 

Often an ambulance provider will 

transport a distance that is either not an 

exact whole number of miles or less 

than one whole mile during a covered 

trip. Based on our current instructions, 

providers and suppliers billing for 

ambulance services must round up the 

total billable mileage to the nearest 

whole mile for trips that include a 

fraction of a mile or less than one whole 

mile. Because of those instructions, a 

provider or supplier is required to bill 

as much as 0.9 of a mile more than what 

was actually traveled. 

We have been contacted by suppliers 

on several occasions with concerns 

regarding our current instructions for 

reporting ambulance mileage. Certain 

suppliers believe that our instructions 

require them to bill inaccurately. One 

company in particular stated that they 

routinely need to bill for trips totaling 

less than 1 mile. The beneficiaries that 

are being transported by this company 

live in the immediate vicinity of the 

facility to which they are being 

transported, and therefore, the number 

of loaded miles for each trip totals 

approximately one half of a mile. The 

company was concerned that since 

Medicare requires that they enter a ‘‘1’’ 

in the units field of their claims for 

mileage, they are being overpaid by 

Medicare for mileage based on the 

service they actually provided. 

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However, the company’s main 

concern revolved around the risk of 

creating an appearance of impropriety. 

Although our instructions clearly state 

that providers and suppliers should, as 

a matter of procedure, round up 

fractional mileage amounts to the 

nearest whole mile, some providers and 

suppliers indicated that they wanted to 

bill as accurately as possible and that 

they only wanted to be paid for the 

service they actually provided. We 

thoroughly considered these concerns 

while reevaluating the procedure for 

reporting units for fractional mileage 

amounts. 

As we stated in the CY 2011 PFS 

proposed rule (75 FR 40160), our first 

priority in considering the issues raised 

by ambulance providers and suppliers 

was to ascertain the basis for the current 

mileage reporting instructions. As 

previously discussed, the original 

instructions for reporting fractional 

mileage were published in Transmittal 

AB–00–88, issued on September 18, 

2000. We instructed providers and 

suppliers to round fractional mileage 

amounts ‘‘up to the nearest whole mile’’ 

and to enter ‘‘1’’ for fractional mileage 

totaling less than one mile. This 

particular process had also been in 

place prior to issuance of the 

transmittal. The reason for the 

procedure was that our claims 

processing systems were not capable of 

accepting and processing claims 

submitted with fractional units of 

service—even if the service was 

commonly measured in fractional 

amounts, as with ambulance mileage. 

In the CY 2011 PFS proposed rule (75 

FR 40160), we then explored whether a 

change in our procedure would be: (1) 

Appropriate; (2) possible considering 

our current system capabilities and 

industry standards of measurement; and 

(3) applicable to any service other than 

ambulance mileage. As to the 

appropriateness of changing the 

procedure for reporting units of service 

on provider claims for fractional 

ambulance mileage, we stated in the 

proposed rule (75 FR 40160) that we 

believe that we should make every effort 

to create and implement policies and 

processes that create the best 

opportunity for accuracy in billing. It is 

not our intention to put providers and 

suppliers in a position where they are 

required to bill inaccurately for the 

service they provide. We continue to 

strive toward ensuring that providers 

and suppliers bill and are paid only for 

services actually provided. In the CY 

2011 PFS proposed rule (75 FR 40160), 

we stated that we believe that changing 

our current procedure for reporting 

units of service to require reporting of 

fractional mileage will help to ensure 

that providers and suppliers can submit 

claims that more precisely reflect actual 

mileage, and are reimbursed more 

accurately for the services they actually 

provided. We originally instituted a 

policy of accepting and processing only 

whole units because at that time system 

limitations prevented us from accepting 

and processing fractional ambulance 

mileage. 

Second, we considered in the CY 

2011 PFS proposed rule (75 FR 40160) 

whether it is currently possible for our 

claims processing systems to accept and 

process fractional unit amounts on both 

paper and electronic claims. Upon 

reevaluating our system capabilities, we 

found that technological advancements 

in Optical Character Recognition (OCR) 

and electronic claim submission have 

made it possible for our FFS systems to 

capture and accurately process 

fractional units on both paper and 

electronic claims. We note that our 

systems currently have the capability to 

accept fractional units with accuracy up 

to as much as one thousandth of a unit 

(that is, to 3 decimal places). 

We also considered in the CY 2011 

PFS proposed rule (75 FR 40160) 

whether ambulance providers and 

suppliers have the capability to measure 

fractional mileage. This was an 

important point because if providers 

and suppliers are not able to measure 

mileage with any more specificity than 

the nearest whole number mile, then 

there would be no need to modify the 

current procedure for billing fractional 

mileage. In that case, providers and 

suppliers would continue to report 

mileage as whole numbers since they 

could measure no more accurately than 

that. We stated in the proposed rule that 

both analog and digital motor vehicle 

odometers are designed to measure 

mileage accurately to within a minimum 

of a tenth of a mile. While we found that 

some vehicle odometers measure 

mileage more accurately than a tenth of 

a mile, most odometers are accurate to 

the nearest tenth of a mile. Additionally, 

aircraft geographic positioning system 

(GPS) technology provides the means to 

accurately determine billable mileage to 

the tenth of a mile. 

Third, we considered whether a 

policy of billing fractional units would 

be applicable to any other service 

besides ambulance mileage. The units of 

service field on both the electronic and 

paper claim is used to report the 

quantity of services or supplies 

provided to Medicare beneficiaries and 

is used to report a wide range of services 

and supplies including, but not limited 

to: number of office visits; anesthesia 

minutes; quantity of drugs 

administered; covered miles. Although 

Medicare currently makes payment 

based on fractional units for some 

services (for example, calculation of 

payment after conversion of anesthesia 

time reported in minutes to time units), 

there is currently no requirement that 

providers bill fractional units on the 

claim. We stated that if we were to 

implement a policy of requiring 

reporting of fractional units for other 

types of services or supplies, we would 

first need to evaluate whether it is 

possible to do so considering industry 

standards of measurement. As discussed 

in the CY 2011 PFS proposed rule (75 

FR 40160), we found that providers and 

suppliers of ambulance services have 

the capability to determine fractional 

mileage using standard onboard 

equipment, that is, an odometer, GPS, 

and/or other similar equipment used to 

measure distance traveled. We stated 

that this would enable us to readily 

implement a fractional unit billing 

policy for ambulance mileage; whereas 

applicability to other areas (such as 

anesthesia, drugs, etc.) would require 

more analysis to determine whether a 

fractional unit billing policy is feasible, 

efficacious, and cost effective. 

Additionally, this issue was first raised 

by ambulance suppliers who were 

concerned about overbilling and being 

overpaid by Medicare. Therefore, we 

stated in the proposed rule (75 FR 

40160) that we believe it is most 

reasonable to first address the area 

where concerns have been raised (that 

is, ambulance mileage) and consider 

applicability of this procedure to other 

types of services and items in the future. 

Finally, and perhaps most 

importantly, we considered that our 

claims processing system should be 

configured to process claims as 

accurately as possible so as to provide 

for more accurate payments and to 

safeguard Medicare dollars. As 

previously discussed, we found that 

ambulance providers and suppliers 

currently have the capability to measure 

mileage accurately to within a minimum 

of a tenth of a mile using devices (for 

example, odometers, and GPS 

technology, etc.) already equipped 

onboard their vehicles. We stated in the 

CY 2011 PFS proposed rule (75 FR 

40160) that we believe that requiring 

ambulance providers and suppliers to 

round (and report) fractional ambulance 

mileage up to the next tenth of a mile 

strikes a proper balance between 

ensuring that the claims processing 

system adjudicates a claim as accurately 

as the system will permit without 

unduly burdening the ambulance 

community. 

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Based on all of the considerations 

noted previously, we proposed that our 

claims processing instructions for 

submission of claims for ambulance 

mileage should be revised to reflect the 

current functionality of our claims 

processing systems so as to maximize 

the accuracy of claims payment, as 

further discussed in this section (75 FR 

40160). 

c. Billing of Fractional Units for Mileage 

It is both reasonable and prudent that, 

in order to ensure accuracy of payment, 

we facilitate and allow submission of 

the most accurate information on all 

Medicare ambulance claims. 

Furthermore, since our claims 

processing systems are currently 

capable of accepting and processing 

fractional units of service, we believe 

that ambulance mileage should be billed 

to and paid by Medicare in fractional 

amounts to enhance payment accuracy. 

Based on all the considerations 

discussed previously, in the CY 2011 

PFS proposed rule (75 FR 40161), we 

proposed to require that claims for 

mileage submitted by ambulance 

providers and suppliers for an 

ambulance transport (ground and air) be 

billed in fractional units, by rounding 

up to the nearest tenth of a mile (with 

the exception discussed below). As 

previously discussed, we believe that 

requiring ambulance providers and 

suppliers to round (and report) 

fractional mileage up to the next tenth 

of a mile would allow us to provide for 

more accurate claims payment without 

unduly burdening the ambulance 

community. 

Therefore, in the CY 2011 PFS 

proposed rule (75 FR 40161), we 

proposed that, effective for claims with 

dates of service on and after January 1, 

2011, ambulance providers and 

suppliers would be required to report 

mileage rounded up to the nearest tenth 

of a mile for all claims for mileage 

totaling up to 100 covered miles. 

Providers and suppliers would submit 

fractional mileage using a decimal in the 

appropriate place (for example, 99.9). 

Since standard vehicle mileage (analog, 

digital, and GPS) is or can be calculated 

accurately to the nearest tenth of a mile, 

we proposed that the mileage billed to 

Medicare by ambulance providers and 

suppliers be reported by rounding up to 

the next tenth of a mile. 

We also stated in the proposed rule 

(75 FR 40161) that although the 

electronic claim formats can 

accommodate fractional mileage when 

mileage is equal to or greater than 100 

covered miles (for example, 100.0), the 

paper claim cannot. Because the Form 

CMS–1500 paper claim currently only 

supports four characters (including the 

decimal point) in the units field (Item 

24G), we also proposed that mileage 

equal to or greater than 100 covered 

miles continue to be reported in whole 

number miles on both paper and 

electronic claims. We proposed that 

providers and suppliers would round 

up fractional mileage to the next whole 

number for mileage that exceeds 100 

covered miles and report the resulting 

whole number in the units’ field. We 

stated that we would revise the 

instructions set forth in our Claims 

Processing Manual to reflect the revised 

procedures for submitting and paying 

claims for fractional ambulance mileage. 

3. Analysis of and Responses to Public 

Comments 

We received approximately 131 

comments in response to the proposed 

rule. We received comments from, 

among others, public and private 

ambulance companies, national 

ambulance organizations, local fire and 

EMS departments as well as other 

interested parties such as attorneys and 

consultants. The responses we received 

pertained primarily to the proposed 

rule’s financial and administrative 

impact, the impact on patient care, and 

the overall impact on the ambulance 

services industry. A summary of the 

comments and our responses are 

included below. 

a. Basis for Reconsideration of the 

Ambulance Mileage Reporting 

Requirements 

Comment: A few commenters 

believed that the concerns discussed in 

the proposed rule regarding certain 

suppliers’ belief that the current mileage 

reporting requirement forced them to 

bill inaccurately, were an attempt by 

CMS to achieve budgetary savings by 

using the concerns of a few companies 

as justification. These commenters 

stated that CMS should have addressed 

the suppliers’ concerns by educating 

providers and suppliers about its 

current policy of rounding up to the 

next whole mile so that they would be 

aware that this billing practice is 

appropriate, and suggested that CMS 

include the current whole mile billing 

policy in the regulations to further 

reinforce this, rather than implement 

the new fractional mileage policy. They 

stated that any change to the ambulance 

mileage reporting requirement would be 

unreasonable and unfounded. The 

commenters believed that if accuracy 

was a priority, then CMS should have 

implemented the fractional mileage 

billing policy in Transmittal AB–00–88, 

issued September 18, 2000. 

Response: While the impetus for 

reconsidering our policy on ambulance 

mileage billing was the concerns raised 

by ambulance suppliers wishing to bill 

accurately, our basis for moving forward 

with the proposed policy was that the 

conditions that dictated the original 

mileage billing policy have now 

changed. As we stated in the proposed 

rule (75 FR 40160), technological 

advancements in our system capabilities 

enabled us to reconsider our policy for 

reporting ambulance mileage. We were 

originally not capable of receiving or 

processing fractional unit amounts on 

electronic or paper claims, and thus, 

initially, it was necessary to implement 

a policy that required providers and 

suppliers to round mileage up to the 

nearest whole mile—even though that 

amount exceeded the miles actually 

traveled. As discussed in the CY 2011 

PFS proposed rule (75 FR 40159), under 

the current policy, the result could be 

overpayment for mileage of up to 0.9 of 

a mile. 

Therefore, this change to our policy 

regarding ambulance mileage billing 

represents a reasonable and appropriate 

change to improve payment accuracy. 

The fact that we did not implement 

such a policy in the Transmittal cited by 

commenters does not negate the fact 

that the change is both needed and 

appropriate. Again, the original policy 

for rounding mileage up to the nearest 

whole number mile was based on the 

fact that we could not capture and 

process fractional mileage on a 

Medicare claim. To ignore the current 

systems’ capability to more accurately 

process claims than what was possible 

10 years ago would unnecessarily 

perpetuate a less accurate method of 

processing claims and would result in 

less accurate payments than is possible 

with current system capabilities. 

For the reasons discussed previously 

and in the CY 2011 PFS proposed rule, 

we continue to believe that it is 

reasonable and appropriate to revise our 

claims processing instructions as 

discussed in the proposed rule to 

require that ambulance mileage be 

reported in fractional amounts by 

rounding up to the next tenth of a mile. 

b. Appropriateness of Fractional 

Mileage Reporting Policy 

As we discussed in the CY 2011 PFS 

proposed rule (75 FR 40160), we believe 

that reporting of and payment based on 

fractional ambulance mileage is 

appropriate because it permits 

ambulance providers and suppliers to 

submit claims that more precisely 

reflect actual mileage and to be 

reimbursed more accurately for the 

services they provide. Although many 

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commenters agreed that billing and 

payment accuracy are important, 

commenters cited various concerns 

regarding the appropriateness of the 

policy. 

(1) Statutory Compliance and Financial 

Impact of Fractional Mileage Policy 

Comment: Many commenters believed 

that the fractional mileage reporting 

policy does not adhere to the ‘‘budget 

neutrality principles’’ set forth in 42 

U.S.C. 1395m(l)(3)(B). These 

commenters interpreted 42 

U.S.C.1395m(l)(3)(B) as requiring that 

CMS pay the same amount for 

ambulance services after 

implementation of the fee schedule as it 

did prior to the fee schedule with an 

inflation adjustment, and stated that in 

order to comply with this statute, the 

fractional mileage policy must be 

implemented in a manner such that any 

savings generated by this policy are 

reinvested in the ambulance fee 

schedule. 

Furthermore, commenters asked that 

CMS comply with the ‘‘requirement and 

commitment made during negotiated 

rulemaking to ensure that no money is 

taken out of the system.’’ Commenters 

cited to the February 27, 2002 final rule 

implementing the ambulance fee 

schedule, in which we stated that we 

would monitor payment data and make 

adjustments to the conversion factor 

(CF) if the actual experience under the 

fee schedule is significantly different 

from the assumptions used to establish 

the original CF. (67 FR 9102 and 9102). 

Several commenters stated that the 

fractional mileage policy alters the fee 

schedule and therefore requires 

reconsideration of the conversion factor 

(CF) used to set the ambulance fee 

schedule payment amounts so that no 

money is removed from the system. 

Some commenters believed that the 

policy will have a greater effect on 

ground ambulance services and 

recommended a greater proportional 

increase to the CF for ground ambulance 

transports versus air ambulance rates. 

Response: Section 1834(l)(3)(B) of the 

Act (42 U.S.C. 1395m(l)(3)(B)) does not 

require that we pay the same aggregate 

amount for ambulance services after 

implementation of the fee schedule as 

we did before implementation of the 

ambulance fee schedule, or that we 

ensure that any savings generated by the 

fractional mileage policy be put back 

into the ambulance fee schedule. Rather, 

this statutory section sets forth the 

ambulance inflation factor to be used to 

update the ambulance fee schedule rates 

each year. Section 1834(l)(3)(B) of the 

Act requires that we set the ambulance 

fee schedule rates each year at the same 

level as the previous year increased by 

the percentage increase in the CPI–U 

(U.S. city average) for the 12-month 

period ending in June of the previous 

year (as discussed in section VI.P. of 

this final rule with comment period, 

effective January 1, 2011, the annual 

update to the fee schedule rates is 

subject to a productivity adjustment). 

We have interpreted this provision at 

§ 414.610(f) as requiring that the CF, the 

air ambulance rates and the mileage 

rates be updated annually by the 

ambulance inflation factor set forth in 

the statute. The fractional mileage 

billing policy does not alter the payment 

rates set under the ambulance fee 

schedule; rather, it is a change to our 

operational instructions for reporting 

ambulance mileage intended to improve 

billing and payment accuracy. After 

implementation of the fractional 

mileage billing policy, we will continue 

to update the rates each year as required 

by section 1834(l)(3)(B) of the Act, and 

thus we believe this policy is consistent 

with section 1834(l)(3)(B) of the Act. 

Furthermore, we note that while section 

1834(l)(3)(A) of the Act required the 

Secretary to ensure that the aggregate 

amount of payments made for 

ambulance services during 2000 

(originally expected to be the first year 

of the ambulance fee schedule) did not 

exceed the aggregate amount of 

payments that would have been made 

for such services during such year 

absent the fee schedule, it did not set 

forth a budget neutrality requirement for 

subsequent years. 

While some commenters stated that 

the fractional mileage billing policy 

alters the fee schedule and therefore 

requires reconsideration of the 

conversion factor (CF) used to set the 

ambulance fee schedule payment 

amounts so that no money is removed 

from the system (citing to the February 

27, 2002 final rule implementing the 

ambulance fee schedule), we believe 

that commenters have misunderstood 

our statements in the February 27, 2002 

final rule. In the February 27, 2002 final 

rule, we stated that we would monitor 

payment data and make adjustments to 

the conversion factor (CF) if the actual 

experience under the fee schedule is 

significantly different from the 

assumptions used to establish the 

original CF as discussed in the February 

27, 2002 final rule (67 FR 9102 and 

9103). 

As stated previously, the fractional 

ambulance mileage billing policy does 

not change the rates under the 

ambulance fee schedule. Rather, it is a 

change to our operational procedures for 

reporting ambulance mileage intended 

to improve billing and payment 

accuracy. We do not believe that it is 

appropriate to adjust the CF or air 

ambulance rates as a result of this 

policy, as further discussed below. 

In the February 27, 2002 final rule 

implementing the ambulance fee 

schedule (67 FR 9102–9103, 9127, 

9134), we stated that we would monitor 

the payment data and adjust the CF and 

the air ambulance rates if actual 

experience under the fee schedule 

proved to be significantly different from 

the assumptions used to determine the 

initial CF and air ambulance rates (for 

example, the relative volumes of the 

different levels of service (service mix) 

and the extent to which providers and 

suppliers charge below the fee schedule 

(low billers)). Thus, in the February 27, 

2002 final rule, we finalized 

§ 414.610(g), which at that time stated, 

in part, that the ‘‘Secretary will annually 

review rates and will adjust the CF and 

air ambulance rates if actual experience 

under the fee schedule is significantly 

different from the assumptions used to 

determine the initial CF and air 

ambulance rates.’’ 

In each of the 4 years following 

implementation of the ambulance fee 

schedule, we reevaluated the effects of 

the relative volume of different levels of 

ambulance service (service mix) and the 

extent to which ambulance providers 

and suppliers bill less than the 

ambulance fee schedule (low billers) to 

determine whether the assumptions 

used to set the CF were accurate when 

compared to actual billing data. We 

found only insignificant differences in 

the observed data versus our 

assumptions. The differences observed 

in any single year were not significant 

enough to warrant a change to the CF in 

any of the years we monitored. (See 71 

FR 69624, 69717, and 69718). 

Consequently, in the December 1, 2006 

final rule (71 FR 69717–69718), we 

discontinued our annual review of the 

original CF assumptions and the air 

ambulance rates, and revised 

§ 410.610(g) to state, in part, that the 

‘‘Secretary monitors payment and billing 

data on an ongoing basis and adjusts the 

CF and air ambulance rates as 

appropriate to reflect actual practices 

under the fee schedule.’’ 

We do not believe that adjustments to 

the CF or the air ambulance rates are 

appropriate as a result of the fractional 

mileage billing policy. First, as 

discussed previously, the fractional 

mileage billing policy has no effect on 

the fee schedule rates; rather, it is an 

operational procedure for reporting 

ambulance mileage. Second, the 

purpose of this policy is to improve 

billing and payment accuracy for 

ambulance mileage. As discussed 

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previously, under the current whole 

mile reporting policy, ambulance 

providers and suppliers are billing as 

much as 0.9 of a mile more than what 

is actually traveled. Commenters suggest 

that adjustments to the CF and the air 

ambulance rates are necessary to make 

up for the fact that ambulance providers 

and suppliers will be permitted to 

round up only to the nearest tenth of a 

mile rather than the nearest whole mile, 

resulting in lower mileage 

reimbursement on some claims 

compared to under the current policy. 

The purpose of the fractional mileage 

billing policy is to provide for more 

accurate billing and payment for 

ambulance transports, which we do not 

believe can be achieved if we were to 

make the adjustments suggested by 

commenters. Furthermore, we note that 

the current regulation at § 410.610(g) 

requires us to monitor billing and 

payment data and adjust the CF and air 

ambulance rates ‘‘as appropriate’’ to 

reflect actual practices under the fee 

schedule. This regulation does not 

require that we adjust the fee schedule 

rates prospectively each time we adopt 

operational procedures that differ from 

those in place prior to implementation 

of the fee schedule. 

Furthermore, we believe that the 

policy does not have a significant 

bearing on the original CF assumptions 

that were discussed in the February 27, 

2002 final rule (67 FR 9102–03, 9115– 

16), and for this reason too, we do not 

believe that adjustments to the CF and 

air ambulance rates would be 

appropriate. Having reevaluated the CF 

during the 4 years after implementation 

of the ambulance fee schedule and 

finding no significant differences in the 

observed data versus our original 

assumptions, we believe that we will 

continue to find insignificant 

differences, if any at all, after 

implementation of the fractional 

mileage billing policy, such that 

changing the CF or air ambulance rates 

would be unnecessary. 

However, as required by § 410.610(g), 

we will continue to monitor the billing 

and payment data on an ongoing basis, 

and will consider adjusting the CF and 

air ambulance rates in the future if (and 

to the extent) we determine appropriate 

to reflect actual experience under the 

fee schedule after the policy is 

implemented. 

Comment: The commenters believed 

that the proposed rule would lower 

ambulance reimbursement that is 

already too low and noted that the fee 

schedule rates have not been increased 

in the last 2 years. Most of the same 

commenters cited a May 2007 

Government Accountability Office 

(GAO) report detailing GAO’s research 

findings which indicated that 

Medicare’s reimbursement for 

ambulance services averages between 6 

percent and 17 percent less than the 

cost to ambulance companies for the 

services they provide. 

Response: We reiterate that the 

fractional ambulance mileage billing 

policy does not change the ambulance 

fee schedule rates. The base payment 

rate and mileage reimbursement rate 

will not be changed by the fractional 

mileage billing policy. The fractional 

mileage billing policy is strictly an effort 

to improve billing and payment 

accuracy, and as such, we believe that 

it is both reasonable and appropriate to 

implement this policy. 

In response to the comment that the 

fee schedule rates have not been 

increased in the past 2 years, we note 

that the ambulance inflation factor for 

CY 2008 was 2.7 percent and in CY 

2009 it was increased to 5 percent, and 

thus the CF, air ambulance rates and 

mileage rates were increased by 2.3 

percent over the previous calendar year 

in accordance with the section 

1834(l)(3)(B) of the Act. However, we 

recognize that the fee schedule rates 

were not increased in CY 2010 because 

the CPI–U for the 12 month period 

ending with June 2009 was negative, 

resulting in no increase to the rates 

under the statutory formula set forth in 

section 1834(l)(3)(B) of the Act. 

The 2007 GAO report cited by 

commenters estimated that between 39 

percent and 56 percent of ambulance 

providers and suppliers will realize a 

profit under the ambulance fee schedule 

after expiration of the temporary 

payment provisions in the MMA. The 

GAO also noted in the same report that 

providers’ expected Medicare margins 

will vary greatly depending on their 

ability to keep their operating cost low, 

and because of that variance, they were 

not able to conclude with any certainty 

whether providers and suppliers would 

see a decrease, increase, or no change in 

their profitability as it relates to the 

Medicare reimbursement rates after 

expiration of the temporary payment 

provisions in the MMA. 

We seriously considered the findings 

in the May 2007 GAO report and, 

although we were not bound to the GAO 

findings, we agreed with their 

recommendation that CMS monitor 

utilization of ambulance transports to 

ensure that Medicare payments are 

adequate to provide for beneficiary 

access to ambulance services, 

particularly in ‘‘super rural’’ areas. We 

note that in the years since the May 

2007 GAO report, certain temporary 

payment provisions originally set forth 

in § 414 of the MMA have been 

increased and extended in subsequent 

legislation to address these issues. 

Specifically, § 414(d) of the MMA added 

section 1834(l)(13) of the Act which set 

forth payment increases of 1 percent 

and 2 percent for urban and rural 

ground transports, respectively. Section 

146(a) of the MIPPA modified section 

1834(l)(13) of the Act to increase these 

percentages to 2 percent and 3 percent 

for urban and rural transports, 

respectively, and to extend these 

increases through December 31, 2009. 

Subsequently, sections 3105(a) and 

10311(a) of the ACA extended these 

increases through December 31, 2010. 

Furthermore, section 414(c) of the MMA 

added section 1834(l)(12) of the Act 

which provided a ‘‘super rural’’ bonus 

for certain ground transports that 

originate in qualified rural areas 

effective through December 31, 2009. 

Sections 3105(c) and 10311(c) of the 

ACA extended this super rural bonus 

through December 31, 2010. Finally, we 

note that section 146(b)(1) of the 

MIPPA, as amended by sections 3105(b) 

and 10311(b) of the ACA, provides that 

any area that was designated as a rural 

area for purposes of making payment for 

air ambulance services furnished on 

December 31, 2006, shall continue to be 

treated as a rural area for purposes of 

making payment for air ambulance 

services furnished during the period 

July 1, 2008 through December 31, 2010. 

We have implemented these payment 

add-ons in § 414.610(c)(1), (c)(5)(ii) and 

(h), respectively. 

Comment: Several commenters stated 

that cutting already low reimbursement 

rates for ambulance providers and 

suppliers would result in cutbacks that 

would make it difficult to stay in 

business and would, therefore, have a 

negative impact on patient care. Many 

commenters also noted that smaller 

companies would be impacted the most 

by lowered reimbursement rates, stating 

that small companies need the extra 

revenue to stay in business. Some 

commenters suggested that mileage 

charges are the only means ambulance 

providers and suppliers have of 

recovering increasing, variable costs for 

ancillaries—such as oxygen supplies, 

disposable supplies, etc.—that are not 

separately payable under the fee 

schedule. Other commenters believed 

that reporting mileage more accurately 

will be too costly and would increase 

the cost of doing business. Another 

commenter responded that the payment 

made for mileage represents payment 

for the variable cost of transporting 

patients and that even short trips have 

a cost associated with them. The same 

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commenter pointed out that lowering 

the mileage reimbursement would not 

adequately reimburse ambulance 

providers and suppliers for the cost of 

transporting their patients. 

Response: As previously stated, the 

fractional mileage billing policy is an 

effort to improve billing and payment 

accuracy. The policy does not modify 

the reimbursement rates under the 

ambulance fee schedule. While we 

remain cognizant of the need for 

ambulance providers and suppliers to 

remain financially solvent, we must also 

ensure that providers and suppliers bill 

accurately and that we pay accurately. 

We believe the payment implications of 

the fractional mileage billing policy are 

modest when considering the difference 

in reimbursement on a claim by claim 

basis, and should not have a significant 

impact on the overall financial viability 

of individual ambulance providers and 

suppliers or on patient care. We 

recognize that there is a cost of doing 

business. However, as discussed 

previously, we believe that it is both 

reasonable and appropriate to 

implement the policy to provide for 

more accurate billing and payment for 

ambulance mileage under Medicare. We 

do not believe that it is appropriate to 

continue the current whole mileage 

reporting procedure, which results in 

less accurate billing and payment, in 

order to provide extra revenue for 

providers and suppliers. 

Comment: One commenter responded 

that the lower reimbursement would 

‘‘trickle down’’ to other payers. In other 

words, the commenter believes that 

other payers would follow CMS’ lead by 

adopting similar mileage reporting 

requirements, thereby potentially 

lowering reimbursement from other 

payers as well. 

Response: While other payers may 

choose to adopt similar requirements for 

reporting ambulance mileage, we would 

not have any involvement in that 

decision. As previously discussed, we 

believe that it is reasonable and 

appropriate to implement the fractional 

mileage billing policy under Medicare 

to provide for more accurate billing and 

payment for Medicare ambulance 

services. 

c. Administrative Impact 

Comment: Many commenters stated 

that the fractional mileage policy would 

be administratively burdensome for 

medical and billing staff and would 

distract their medical staff from their 

first priority which is caring for the 

patient. The same commenters also 

suggested that the policy would be 

particularly burdensome for small 

ambulance companies. One commenter 

stated that imposing a requirement to 

capture fractional mileage would 

complicate the already overwhelming 

documentation requirements that they 

face. Another commenter believed that 

the fractional mileage billing policy 

creates undue hardship on an 

ambulance industry which is already 

overburdened and underfunded. 

Response: We believe that capturing 

fractional mileage amounts in trip 

documentation and on claims will not 

create any undue burden on the 

ambulance industry. Proper 

documentation of trip details, including 

mileage traveled, is already a 

longstanding Medicare requirement that 

remains unchanged and, we believe, 

uncompromised by the requirement to 

capture the additional digit beyond the 

decimal point. As we stated in the 

proposed rule, we believe that 

implementation of the policy is a 

reasonable and appropriate measure to 

ensure that claims are adjudicated and 

paid as accurately as possible. 

Comment: Many commenters 

responded that the fractional mileage 

billing policy would make it difficult for 

ambulance providers and suppliers to 

comply with State and local laws which 

prohibit billing fractional mileage. 

Several commenters cited the City of 

Los Angeles as an example of a locality 

requiring that mileage be rounded to a 

whole number. 

Response: We are not aware of any 

State or local law(s) that regulate how 

claims must be submitted to Medicare. 

We did not find any language in the City 

of Los Angeles or the Los Angeles 

County ordinances that governs claims 

submission to other payers, including 

Medicare. Further, even if there were a 

State or local law that specified a billing 

requirement that differed from 

Medicare’s requirement, the Medicare 

requirement would, nevertheless, be 

controlling for claims submitted for 

Medicare payment. We note that the 

fractional mileage billing policy applies 

only to claims submitted to Medicare 

and does not dictate how a provider or 

supplier reports mileage to other payers. 

Thus, while we recognize the possibility 

that the requirements for billing 

ambulance mileage to State-funded or 

other payers may differ, we believe that 

the fractional mileage billing policy is 

reasonable and appropriate to ensure 

that claims submitted to Medicare more 

accurately reflect the service(s) rendered 

and that our payments to providers and 

suppliers are as accurate as possible. 

Comment: Several commenters stated 

that, if the fractional mileage billing 

policy is implemented, the requirements 

for billing ambulance mileage to 

Medicare will be different than for other 

payers, and it would make it difficult for 

ambulance providers and suppliers to 

maintain compliance with the differing 

billing requirements. One commenter 

stated that since other payers allow 

whole number reporting of mileage, 

their ambulance company would be 

forced to manually change claims in 

order to submit fractional mileage to 

Medicare. 

Response: We understand that payer 

requirements may, and often do, vary, 

and that providers and suppliers may 

need to comply with different payer 

billing requirements. Each payer sets its 

own requirements for billing and 

payment. We believe that most billing 

systems are capable of accommodating 

the reality of varying billing 

requirements amongst different payers. 

While additional changes to billing 

systems or procedures may be necessary 

in some cases to enable mileage to be 

reported differently for different payers, 

as we stated previously, we continue to 

believe that implementation of the 

fractional mileage billing policy is 

reasonable and appropriate to ensure 

more accurate reporting and payment of 

ambulance mileage under Medicare. 

After considering the comments, for 

the reasons discussed previously and in 

the CY 2011 PFS proposed rule, we 

continue to believe that it is reasonable 

and appropriate to revise our claims 

processing instructions to require 

reporting of and payment based on 

fractional mileage, as further discussed 

below. 

(2) Technical and Other Considerations 

(A) Ability To Measure Fractional Miles 

Comment: Many commenters 

responded that most ambulance 

companies do not have the ability to 

measure fractional mileage because their 

odometer does not show tenths of a 

mile. These commenters stated that 67 

percent of all new ambulances are Ford 

models which do not have a tenths 

display on the odometer. One 

commenter stated that digital 

odometers, in particular, only show 

whole miles. Another commenter asked 

that CMS prove its assertion that most 

vehicle odometers display tenths of a 

mile. Yet another commenter suggested 

that we provide guidance for 

ambulances that do not display tenths of 

a mile on the odometer. We also 

received a response from a commenter 

who believed that GPS can sometimes 

be unreliable. 

Response: Based on the statement 

from many commenters that most new 

ambulances are Ford models, we 

reviewed owner’s manuals for the Ford 

E250, E350, E450 as well as the F350 

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and F450 vehicles. Our research 

revealed that Ford E series and F series 

vehicle (typically trucks or vans) chassis 

typically provide the base for the Ford 

ambulance prep package. We reviewed 

Ford’s gauge specifications for model 

years 1996 through 2010. In model years 

prior to 2004, the standard analog 

odometer reflected tenths of a mile. 

Model years 2004 and later include 

standard digital odometers that show 

fractional miles as well as a separate trip 

odometer that also displays mileage to 

the tenth of a mile. Additionally, the 

ambulance prep package includes an 

optional onboard trip computer and 

navigation system. 

We also researched other vehicle 

chassis models that may provide the 

base for other ambulance prep packages 

and may currently be in use by some 

providers or suppliers. We reviewed 

owner’s manuals for the Dodge Ram 

3500 and 4500 for model years 2008 and 

2009 and we also researched GM/ 

Chevrolet G4500 and 3500 for model 

years 2009 and 2010. We found that 

both Dodge and Chevrolet model 

vehicle gauges include odometers and/ 

or trip odometers that display fractional 

mileage. Chevrolet models also include 

a retroactive reset feature on the trip 

odometer that will calculate the 

distance traveled since the engine was 

last started in the event the trip 

odometer is not reset at the beginning of 

the trip. 

We found through our research that in 

many cases, trip odometers are 

mentioned as separate devices from the 

basic odometer, particularly in newer 

model cars that utilize both digital 

gauges. We also found that in some 

cases, the basic digital odometer does 

not, in fact, have a tenths display. In 

those cases, we found that the tenths 

display appears only on the trip 

odometer. In the proposed rule, we did 

not specify the types of odometers that 

that may be used to measure fractional 

mileage, and thus we are clarifying in 

this final rule with comment period that 

mileage may be measured using a 

separate trip odometer as well. 

In light of our review of Ford vehicle 

chassis and the assertion that most new 

ambulances are Ford vehicles as well as 

our review of the other vehicle chassis 

models as discussed above, we believe 

that most ambulance companies have 

the ability to measure fractional mileage 

to the tenth of a mile. However, we 

recognize that there may be some 

ambulance companies that have a small 

number of vehicles wherein the gauges 

are damaged, missing, or otherwise 

unusable, or that may be using nonstandard vehicles that do not have a 

fractional mileage display on the 

odometer, trip odometer, GPS 

navigation, trip computer, or other 

onboard device that measures distance 

traveled. We believe that tools used to 

measure distance traveled (such as GPS 

navigation equipment) are readily 

available to the average consumer at a 

low cost. As such, ambulance providers 

and suppliers are responsible for 

ensuring that they have the necessary 

equipment to measure fractional 

mileage to the tenth of a mile, and 

ensuring that onboard vehicle gauges 

measuring trip mileage are in working 

order. If they are not able to repair said 

gauges, they are responsible for ensuring 

that they have the necessary equipment 

to measure mileage accurately to the 

tenth of a mile. Additionally, for those 

ambulance providers and suppliers who 

have vehicles that include a separate 

trip odometer, ambulance providers and 

suppliers are still responsible for 

ensuring that trip mileage is measured 

and reported accurately—even if they 

fail to reset the trip odometer at the 

beginning of a trip. For example, if the 

driver fails to reset the trip odometer at 

the beginning of the trip, he or she 

would simply document the mileage at 

the end of the trip and subtract the 

mileage for the previous trip from the 

total which would leave a remaining 

balance that should correspond to the 

distance of the current trip. 

With regard to the statement that GPS 

can sometimes be unreliable, CMS is not 

aware of data that confirms or refutes 

this statement. However, in order to 

continue to provide ambulance 

providers and suppliers with flexibility 

in how they can measure fractional 

mileage, use of GPS devices will 

continue to be acceptable for the 

purpose of measuring fractional 

mileage. 

(B) Ambulance Provider Versus 

Supplier Billing 

Comment: We received responses 

from several commenters who believe 

that the fractional mileage billing policy 

establishes different requirements for 

Part A versus Part B ambulance 

providers and suppliers. These 

commenters stated that neither 

electronic nor paper institutional claims 

can accommodate fractional unit 

amounts. They cited 42 U.S.C. 

1395m(l)(1) which requires that all 

ambulance services be paid under the 

same fee schedule. Many commenters 

believed that Part A providers and Part 

B suppliers, respectively, will be treated 

differently under the fractional mileage 

billing policy and will, therefore, be 

paid differently. 

Response: Per the version 4010A1 

Implementation Guide and the version 

5010 TR3 specifications, the ANSI 837I 

(institutional) electronic claim format 

has the capability to accept fractional 

unit amounts up to 3 decimal places, 

and thus both ambulance providers and 

suppliers will be able to bill fractional 

mileage on electronic claims. The 

commenters are correct that the Form 

UB–04 paper institutional claim does 

not currently support fractional unit 

amounts. However, the National 

Uniform Billing Committee (NUBC) has 

recently approved a change to the Form 

UB–04 that will allow fractional unit 

billing, and this change is scheduled to 

take effect in July 2011. Currently, less 

than 0.5 percent of all institutional 

providers bill Medicare using the paper 

Form UB–04. Based on the low number 

of providers billing ambulance services 

on the Form UB–04 and the fact that the 

form is expected to be capable of 

accepting fractional unit amounts in 

July 2011, we are delaying the 

implementation date for ambulance 

providers billing on the paper Form 

UB–04. If the Form UB–04 is capable of 

accepting fractional mileage unit 

amounts by the end of July 2011 as 

scheduled, ambulance providers billing 

on the paper Form UB–04 will be 

required to submit fractional mileage in 

accordance with this final rule with 

comment period for dates of service on 

and after August 1, 2011. If paper Form 

UB–04 is not capable of accepting 

fractional mileage by July 31, 2011, then 

implementation of the fractional 

mileage policy for these ambulance 

providers will be further delayed until 

January 1, 2012 to allow ample time for 

any changes to the UB–04 to be 

implemented. As with other claim 

types, ambulance providers billing on 

the paper Form UB–04 will report 

fractional mileage on all claims for 

mileage totaling up to 100 miles. 

We note that delayed implementation 

of the fractional mileage billing policy 

for the small number of providers using 

Form UB–04 does not result in suppliers 

and providers receiving different rates 

under the ambulance fee schedule. As 

discussed previously, the fractional 

mileage billing policy does not change 

the rates under the ambulance fee 

schedule for providers or suppliers. It is 

strictly a change to our operational 

instructions for reporting ambulance 

mileage intended to improve billing and 

payment accuracy. Thus, after 

implementation of the fractional 

mileage billing policy, providers and 

suppliers will continue to be paid under 

the same fee schedule and there will be 

no differentiation in rates between 

providers and suppliers. 

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(C) Billing Software 

Comment: We received a few 

comments stating that billing systems 

will need to be modified to 

accommodate the fractional mileage 

billing policy. Three commenters stated 

that modification of billing software 

would be too costly, with one 

commenter further stating that the 

change would create a hardship for the 

billing software developer. Another 

commenter believed that changing their 

billing system would mean that they 

would have to report fractional mileage 

to all payers, not just Medicare. 

Response: While minor changes to 

billing software may be required, any 

billing software that is compliant with 

ANSI 837 electronic claim standards 

should have the capability to accept and 

submit fractional unit amounts in the 

appropriate field. For providers and 

suppliers using paper claim forms to 

submit claims to Medicare, again, we 

believe that only minor changes to the 

units field will be required in order to 

submit fractional mileage amounts. 

As discussed previously, we 

understand that payer requirements 

may—and often do—vary, and that 

providers and suppliers may need to 

comply with different payer billing 

requirements. However, the requirement 

to bill fractional mileage to Medicare 

does not necessarily mean that 

providers and suppliers will have to 

also submit fractional mileage to other 

payers. Each payer sets its own 

requirements for billing and payment. 

We believe that most billing systems are 

capable of accommodating the reality of 

varying billing requirements amongst 

different payers. While additional 

changes to billing systems or procedures 

may be necessary in some cases to 

enable mileage to be reported differently 

for different payers, as we stated 

previously, we continue to believe that 

implementation of the fractional 

mileage billing policy is reasonable and 

appropriate to ensure more accurate 

reporting of and payment for ambulance 

mileage under Medicare. 

(D) Enforcement and Compliance 

Comment: One commenter stated that 

the fractional mileage billing policy 

would be impossible to verify and/or 

enforce. 

Response: Upon implementation of 

the fractional mileage billing policy, 

ambulance providers and suppliers will 

still be subject to the same statutory and 

regulatory requirements regarding 

documentation, fraudulent billing, and 

pre- and post-payment review. 

Comment: One commenter requested 

guidance for providers and suppliers 

who cannot comply with the fractional 

mileage billing policy. 

Response: We believe that providers 

and suppliers are capable of complying 

with the new policy. As discussed 

above, we believe that most ambulance 

companies have the ability to measure 

fractional mileage using standard 

onboard devices. Furthermore, we 

believe that tools used to measure 

distance traveled (such as GPS 

navigation) are readily available to the 

average consumer at a low cost. Thus, 

in those instances where gauges are 

damaged, missing or otherwise 

unusable, or where companies are using 

non-standard vehicles that do not 

include a device to measure fractional 

mileage, ambulance providers and 

suppliers are responsible for ensuring 

that they have the necessary equipment 

to measure fractional mileage to the 

tenth of a mile. Furthermore, billing 

software that is compliant with the 

ANSI 837 electronic claim format is 

capable of capturing and submitting 

fractional unit amounts, and fractional 

mileage units can be captured on paper 

claims (with the exception of paper 

Form UB04 claims as discussed 

previously). We believe that 

implementing the fractional mileage 

policy is a reasonable and appropriate 

measure to ensure more accurate billing 

and payment of Medicare ambulance 

transports and thus, ambulance 

providers and suppliers (except for 

providers billing on Form UB–04 as 

discussed previously) are expected to 

comply effective January 1, 2011 with 

the fractional mileage billing policy 

finalized in this final rule with 

comment period. 

(E) Air Ambulance 

Comment: One commenter responded 

that the air ambulance segment of the 

ambulance industry is overpaid by 

Medicare and suggested that we look to 

generate savings by changing the 

reimbursement for air ambulance 

mileage to be based on nautical miles 

instead of statutory miles. 

Response: As we stated in the 

proposed rule, our claims processing 

system should be configured to process 

claims as accurately as possible so as to 

provide more accurate Medicare 

payments. Thus, we believe that the 

fractional mileage billing policy is a 

reasonable and appropriate measure to 

enhance billing and payment accuracy 

for both air and ground transports. The 

issue of basing air ambulance 

reimbursement on nautical miles versus 

statutory miles was not discussed or 

proposed in the CY 2011 PFS proposed 

rule, and thus we are not addressing this 

issue in this final rule with comment 

period. 

Comment: A few commenters 

suggested that the fractional mileage 

billing policy will affect ground 

ambulance transports but not air 

ambulance transports. 

Response: The fractional mileage 

billing policy will be applied in the 

same manner to, and will affect, both 

ground and air ambulance transports. 

However, since the fractional mileage 

billing policy does not apply to mileage 

exceeding 100 miles, we recognize that 

it may impact a greater percentage of 

ground transports than air transports, as 

a larger percentage of air transports may 

exceed 100 miles. We analyzed claim 

payment data for all Part B ambulance 

claims paid in 2008. If the fractional 

mileage billing policy had been 

implemented in 2008, approximately 92 

percent of all claims for air ambulance 

mileage would have been impacted 

versus 99 percent of all claims for 

ground ambulance mileage. However, 

since air ambulance companies receive 

higher mileage reimbursement rates, we 

found that the average financial impact 

per claim would have been greater for 

air ambulance versus ground ambulance 

transports. Thus, when we consider 

both factors together, it is not clear 

whether the overall impact will be 

greater for ground ambulance 

companies than for air ambulance 

companies. Regardless of any potential 

differential impact, we believe that 

implementation of the fractional 

mileage billing policy is a reasonable 

and appropriate measure to ensure more 

accurate reporting of mileage and more 

accurate payments under Medicare for 

both ground and air transports. 

(F) Miscellaneous Comments 

Comment: One commenter questioned 

whether the new rounding rule would 

create no reimbursement for 0.49 miles. 

Response: No. The correct rounding, 

based on the fractional mileage billing 

policy, would be to always round up the 

hundredths place. Therefore, the 

provider or supplier in the commenter’s 

example would bill 0.5 miles. Likewise, 

if the provider or supplier traveled 0.43 

miles, they would bill 0.5 miles on their 

claim. CMS would apply the normal 

calculations for determining the 

payment amount using the fractional 

mileage units reported. 

4. Applicability of the Fractional Billing 

Policy to Other Services 

We received no comments regarding 

the applicability of the fractional unit 

billing policy to other services. 

Therefore, for the reasons discussed in 

the CY 2011 PFS proposed rule (75 FR 

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40160), we are applying the fractional 

unit billing policy only to ambulance 

mileage. 

5. Final Fractional Mileage Billing 

Policy 

For the reasons discussed above and 

in the CY 2011 PFS proposed rule (75 

FR 40159), we believe that it is 

reasonable and appropriate to 

implement the fractional mileage billing 

policy as proposed in the CY 2011 PFS 

proposed rule effective for claims with 

dates of service on and after January 1, 

2011 (with the exception discussed 

below relating to providers billing on 

paper Form UB–04). 

Therefore, effective for claims with 

dates of service on and after January 1, 

2011, ambulance providers and 

suppliers (except for providers billing 

on paper Form UB–04) are required to 

report mileage rounded up to the 

nearest tenth of a mile on all claims for 

mileage totaling up to 100 covered 

miles. Providers and suppliers must 

submit fractional mileage using a 

decimal in the appropriate place (for 

example, 99.9). For example, if the total 

miles traveled equals 1.59 miles, then 

the provider or supplier must report 

‘‘1.6’’ on the claim for mileage. Likewise, 

if the total mileage equals 1.53 miles, 

the provider or supplier must report 

‘‘1.6’’ on the claim. 

Although the electronic claim formats 

can accommodate fractional mileage 

when mileage is equal to or greater than 

100 covered miles (for example, 100.0), 

as discussed in the proposed rule, the 

paper claim cannot. The Form CMS– 

1500 paper claim currently only 

supports four characters (including the 

decimal point) in the units field (Item 

24G). Therefore, we are finalizing our 

proposal that mileage equal to or greater 

than 100 covered miles must continue 

to be reported in whole number miles 

on both paper and electronic claims. 

Providers and suppliers must round up 

fractional mileage to the next whole 

number for mileage that exceeds 100 

covered miles and report the resulting 

whole number in the unit field. The 

instructions set forth in our Claims 

Processing Manual will be updated to 

reflect the revised procedures for 

submitting and paying claims for 

fractional ambulance mileage. 

Because the changes to the paper 

Form UB–04 necessary to accommodate 

fractional units are scheduled to be 

completed in July 2011, implementation 

of this policy for ambulance providers 

that are permitted to bill using the Form 

UB–04 is delayed until August 1, 2011 

(that is, ambulance providers permitted 

to bill on paper form UB–04 will be 

required to report fractional mileage in 

accordance with this final rule with 

comment period for dates of service on 

and after August 1, 2011). If the paper 

Form UB–04 is not capable of accepting 

fractional mileage by July 31, 2011, then 

implementation of this policy for these 

ambulance providers will be further 

delayed until January 1, 2012. As with 

other claim types, upon implementation 

of the fractional mileage policy for 

providers billing on the paper Form 

UB–04, these providers will report 

fractional mileage on all claims for 

mileage totaling up to 100 miles. 

As discussed previously, providers 

and suppliers are responsible for 

ensuring that they have the necessary 

equipment to measure fractional 

mileage to the tenth of a mile, and 

ensuring that onboard vehicle gauges 

measuring trip mileage are in working 

order. If they are not able to repair said 

gauges, they are responsible for ensuring 

that they have the necessary equipment 

to measure mileage accurate to the tenth 

of a mile. Tools that may be used to 

measure trip mileage include, but are 

not limited to: Digital or analog 

odometers, trip odometers, GPS 

navigation, onboard trip computers or 

navigation systems. 

C. Clinical Laboratory Fee Schedule: 

Signature on Requisition 

In the March 10, 2000 Federal 

Register, we published the ‘‘Medicare 

Program; Negotiated Rulemaking: 

Coverage and Administrative Policies 

for Clinical Diagnostic Laboratory 

Services’’ proposed rule (65 FR 13082) 

announcing and soliciting comments on 

the results of our negotiated rulemaking 

committee tasked to establish national 

coverage and administrative policies for 

clinical diagnostic laboratory tests 

under Part B of Medicare. In our final 

rule published in the November 23, 

2001 Federal Register (66 FR 58788), we 

explained our policy on ordering 

clinical diagnostic laboratory services 

and amended § 410.32 to make our 

policy more explicit. Our regulation at 

§ 410.32(a) states the requirement that 

‘‘[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, we added 

paragraph (d)(2) to § 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 

(NPs), and physician assistants (PAs)) 

who order the service must maintain 

documentation of medical necessity in 

the beneficiary’s medical record (66 FR 

58809). In the preamble discussions to 

the March 10, 2000 proposed rule and 

November 23, 2001 final rule (65 FR 

13089 and 66 FR 58802, respectively), 

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 those 

preambles, 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 preambles of the 

proposed and final rules that we would 

publish an instruction to Medicare 

contractors clarifying that the signature 

of the ordering physician is not required 

for Medicare purposes on a requisition 

for a clinical diagnostic laboratory test 

(65 FR 13089 and 66 FR 58802). 

On March 5, 2002, we published a 

program transmittal implementing the 

administrative policies set forth in the 

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.’’ (Transmittal AB–02–030, 

Change Request 1998, dated March 5, 

2002). 

On January 24, 2003, we published a 

program transmittal in order to 

manualize the March 5, 2002 

Transmittal. (Transmittal 1787, Change 

Request 2410, dated January 24, 2003). 

The cover note to the transmittal states, 

‘‘Section 15021, Ordering Diagnostic 

Tests, manualizes Transmittal AB–02– 

030, dated March 5, 2002. 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 

in a note, we stated: ‘‘No signature is 

required on orders for clinical 

diagnostic services paid on the basis of 

the physician fee schedule or for 

physician pathology services.’’ The 

manual instructions did not explicitly 

reference clinical diagnostic laboratory 

tests as the cover note did. Rather, the 

transmittal seemed to extend the policy 

set forth in the Federal Register (that no 

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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 some members of 

the industry have asserted caused 

confusion. 

When we transitioned from paper 

manuals to the current electronic 

Internet Only Manual system, these 

manual instructions were inadvertently 

omitted from the new Benefit Policy 

Manual (BPM). 

In August 2008, we issued a program 

transmittal (Transmittal 94, Change 

Request 6100, dated August 29, 2008) to 

update the BPM to incorporate language 

that was previously contained in section 

15021 of the Medicare Carriers Manual. 

The reissued language states, ‘‘No 

signature is required on orders for 

clinical diagnostic tests paid on the 

basis of the CLFS, the physician fee 

schedule, or for physician pathology 

services.’’ Based on further review, we 

determined that there are no clinical 

diagnostic laboratory tests paid under 

the PFS. After Transmittal 94 was 

published, we received numerous 

inquiries from laboratory, diagnostic 

testing, and hospital representatives 

who had questions about whether the 

provision applied to all diagnostic 

services, including x-rays, MRIs, and 

other nonclinical laboratory fee 

schedule diagnostic services. 

To resolve any existing confusion 

surrounding the implementation of the 

policy in 2001 and subsequent 

transmittals, we restated and solicited 

public comments on our policy in the 

CY 2010 PFS proposed rule (74 FR 

33641). Our current policy is that a 

physician’s signature is not required on 

a requisition for clinical diagnostic 

laboratory tests paid on the basis of the 

CLFS. However, it must be evident, in 

accordance with our regulations at 

§ 410.32(d)(2) and (3), that the physician 

ordered the services. 

We note that we solicited and 

received comments on this signature 

requirement during the notice and 

comment period for the March 10, 2000 

proposed rule in the context of our 

proposal to add paragraph (d)(2)(i) to 

§ 410.32 to require that the practitioner 

who orders a diagnostic laboratory test 

must maintain documentation of 

medical necessity in the beneficiary’s 

medical record. The majority of 

comments supported the adoption of a 

policy that the signature of the 

practitioner on a requisition for a 

clinical diagnostic laboratory test paid 

under the CLFS is not the only way of 

documenting that the test has been 

ordered and, thus, should not be 

required provided such documentation 

exists in an alternate form. 

This policy regarding requisitions for 

clinical diagnostic laboratory tests does 

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 who is treating the 

beneficiary. Nor do we believe that 

anything in 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 

Medicare, the Joint Commission (TJC), 

or State law; nor do we believe the 

policy would require providers to 

change their business practices. 

We also restated and solicited public 

comment on our longstanding policy 

consistent with the principle in 

§ 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 TC 

of physician pathology services, must be 

signed by the ordering physician or 

NPP. That is, the policy that signatures 

are not required on requisitions for 

clinical diagnostic laboratory tests paid 

based on the CLFS applies only to 

requisitions (as opposed to written 

orders) (74 FR 33642). 

Additionally, we solicited public 

comments about the distinction between 

an order and a requisition (74 FR 

33642). We note that an ‘‘order’’ as 

defined in our IOM, 100–02, Chapter 15, 

Section 80.6.1, is a communication from 

the treating physician/practitioner 

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 to a 

certain value determined by the treating 

physician/practitioner (for example, if 

test X is negative, then perform test Y). 

As set forth in the CY 2010 PFS final 

rule (FR 74 61930), an order may be 

delivered via any of the following forms 

of communication: 

• A written document signed by the 

treating physician/practitioner, which is 

hand-delivered, mailed, or faxed to the 

testing facility. 

• A telephone call by the treating 

physician/practitioner or his or her 

office to the testing facility. 

• An electronic mail, or other 

electronic means, by the treating 

physician/practitioner or his or her 

office to the testing facility. 

If the order is communicated via 

telephone, both the treating physician/ 

practitioner, 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 the CY 2010 PFS proposed rule (74 

FR 33642), we defined a ‘‘requisition’’ as 

the actual paperwork, such as a form, 

which is provided to a clinical 

diagnostic laboratory that identifies the 

test or tests to be performed for a 

patient. It may contain patient 

information, ordering physician 

information, referring institution 

information, information about where to 

send reports, billing information, 

specimen information, shipping 

addresses for specimens or tissue 

samples, and checkboxes for test 

selection. We believe it is ministerial in 

nature, assisting laboratories with 

billing and handling of results, and 

serves as an administrative convenience 

to providers and patients. We believe 

that a written order, which may be part 

of the medical record, and the 

requisition, are two different 

documents, although a requisition that 

is signed may serve as an order. We 

welcomed comments from the public 

about the distinction between 

requisitions and orders. 

During the proposed and final 

rulemaking process for CY 2010, we 

received numerous comments on these 

issues, including, among others: 

Expressions of continued confusion 

over the difference between an ‘‘order’’ 

and a ‘‘requisition’’; requests that we 

develop a single policy for all outpatient 

laboratory services, without the 

distinction for those paid under the 

CLFS or the PFS; and concerns about 

reference laboratory technicians who 

believed compelled to perform a test in 

order to protect the viability of the 

specimen although they did not have 

the proper documentation. (See 74 FR 

61929 through 61931 for a complete 

discussion of the comments received 

and responses to these issues.) In the CY 

2010 PFS final rule with comment 

period (74 FR 61931), we stated that, in 

light of the issues and concerns raised 

during the comment period, and our 

desire to create policy that will address 

the concerns in a meaningful, clear and 

thoughtful way, we would continue to 

carefully consider the issues of 

physician signatures on requisitions and 

orders and that we plan to revisit these 

issues in the future paying particular 

attention to the definitions of order and 

requisition. 

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Since the publication of the CY 2010 

PFS final rule with comment period, we 

have considered an approach that 

would address the concerns raised. 

Therefore, in the CY 2011 PFS proposed 

rule (75 FR 40162), 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 believe that 

this policy would result in a less 

confusing process because a physician’s 

signature would then 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. 

We also stated that we believe that it 

would not increase the burden on 

physicians because it is our 

understanding that, in most instances, 

physicians are annotating the patient’s 

medical record with either a signature 

or an initial (the ‘‘order’’), as well as 

providing a signature on the paperwork 

that is provided to the clinical 

diagnostic laboratory that identifies the 

test or tests to be performed for a patient 

(the ‘‘requisition’’) as a matter of course. 

Further, we stated that this policy 

would make it easier for the reference 

laboratory technicians to know whether 

a test is appropriately requested, and 

potential compliance problems would 

be minimized for laboratories during the 

course of a subsequent Medicare audit 

because a signature would be 

consistently required. We stated in the 

CY 2011 OPPS/ASC proposed rule that 

this minimizes confusion and provides 

a straightforward directive for 

laboratories to meet. 

Comment: Some commenters stated 

that physicians continue to be 

unfamiliar with when a signature is 

required and when it is not required on 

requisitions for physician pathology 

services, x-ray services, and services 

other than clinical diagnostic laboratory 

tests paid under the CLFS. The 

commenters also asked for consistency 

in signature requirements between 

services required under the CLFS and 

the Physician Fee Schedule (PFS). 

Response: We proposed to require a 

physician’s or NPP’s signature on 

requisitions for clinical diagnostic 

laboratory tests paid under the CLFS. 

We did not propose to change, and we 

are not changing, the signature 

requirements for other services. One of 

the reasons we made this proposal is 

because we believed that it would be 

less confusing for a physician’s 

signature to 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. 

Comment: Some commenters were 

supportive of our proposal. 

Response: We appreciate the 

commenters’ support of our proposed 

policy, which we are finalizing in this 

rule. 

Comment: The commenters seemed to 

interpret the proposed policy to mean 

that clinical diagnostic laboratory tests 

requested by telephone or electronic 

means would not be acceptable because 

they would not contain a signature. The 

commenters stated that there must be a 

way to validate electronic requests for 

services by the physician or NPP and 

that, as the medical world moves toward 

electronic records, everything must be 

annotated (that is, ‘‘signed’’) in some 

way to authenticate that the service is 

ordered by the physician. 

Response: Our proposed policy does 

not concern electronic or telephonic 

requests, because we do not consider 

these types of requests to be 

requisitions. As we discussed 

previously, a requisition is the actual 

paperwork, such as a form, that is 

provided to a clinical diagnostic 

laboratory that identifies the test or tests 

to be performed for a patient. It may 

contain patient information, ordering 

physician information, referring 

institution information, information 

about where to send reports, billing 

information, specimen information, 

shipping addresses for specimens or 

tissue samples, and checkboxes for test 

selection. We believe it is ministerial in 

nature, assisting laboratories with the 

billing and handling of results, and 

serves as an administrative convenience 

to providers and patients. When a 

physician or NPP chooses to use a 

requisition to request a clinical 

diagnostic laboratory test paid under the 

CLFS, under the policy we are adopting 

in this rule, the physician or NPP must 

sign the requisition. 

Comment: The commenters pointed 

out that it should be evident from the 

medical record that the physician 

actually ordered the service. 

Response: We did not propose to 

change any requirements with respect to 

orders. As discussed above, a 

requisition is the actual paperwork, 

such as a form, which is provided to a 

clinical diagnostic laboratory that 

identifies the test or tests to be 

performed for a patient. Our proposal 

only applies to signatures on 

requisitions for clinical diagnostic 

laboratory tests paid under the CLFS. A 

signature on a requisition should be 

sufficient for a clinical diagnostic 

laboratory to verify that a physician or 

NPP is requesting a clinical diagnostic 

laboratory test. 

Comment: The commenters stated 

that the patient rarely takes the 

requisition to the laboratory himself/ 

herself because the patient does not go 

to the laboratory. These commenters 

seemed to believe that, in those cases, 

a paper request for clinical diagnostic 

laboratory services would have to be 

created where there may not have been 

a need for one to exist. The commenters 

suggested that only the medical record, 

and not any other paper materials, 

should be signed or initialed by the 

physician. 

Response: As stated previously, a 

requisition is the actual paperwork, 

such as a form, which is provided to a 

clinical diagnostic laboratory that 

identifies the test or tests to be 

performed for a patient. Under our 

proposed policy, which we are 

finalizing in this rule, if a physician or 

NPP chooses to use a requisition to 

request a clinical diagnostic laboratory 

test paid under the CLFS, the physician 

or NPP must sign the form. However, 

this policy does not require a physician 

or NPP to use a requisition to request a 

clinical diagnostic laboratory test paid 

under the CLFS. Many physicians and 

NPPs currently request clinical 

diagnostic laboratory tests using an 

order, such as an annotated medical 

record or documented telephonic 

request, and they may continue to do so 

without being impacted by our new 

policy for requisitions. 

Comment: The commenters suggested 

that physicians would need to be 

educated about the new signature 

requirement on requisitions for clinical 

diagnostic laboratory tests paid under 

the CLFS to alleviate problems such as 

physician non-compliance with this 

policy because they are unaware of it or 

do not understand it. Some commenters 

stated that they firmly believe that the 

physician will neglect to sign any 

document that directs the clinical 

diagnostic laboratory to perform a 

service. In order to incentivize 

physicians to provide a signature, some 

commenters suggested tying the 

physician’s ability to bill for a service to 

the requirement to provide a signature. 

Response: We understand the need to 

educate physicians and NPPs. As such, 

in addition to updating our manuals, we 

will direct the Medicare contractors to 

educate physicians and NPPs 

concerning this issue. We did not 

propose to adopt a policy linking the 

physician’s ability to bill for a service to 

the requirement to provide a signature 

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and we are not adopting such policy in 

this final rule. 

Comment: The commenters believe 

that medical personnel are already 

required to provide an extensive amount 

of identifying information on the 

requisition. The commenters stated that 

either the physician or NPP is 

completing the paperwork but then, in 

most cases, not signing it or initialing it 

to confirm that the required service was 

documented by a medical practitioner. 

Response: If physicians and NPPs are 

completing extensive written 

documentation concerning each 

beneficiary on requisitions, the addition 

of a signature should not be an issue. 

Comment: The commenters expressed 

continued confusion over the terms 

‘‘requisition’’ and ‘‘order.’’ The 

commenters stated that CMS should 

define ‘‘requisition’’ and ‘‘order’’ in the 

CMS Internet Only Manual (IOM) 

system. 

Response: We recognize that there is 

confusion around the definition of these 

terms. However, as we stated above, we 

define an ‘‘order’’ (IOM, 100–02, Chapter 

15, Section 80.6.1) as a communication 

from the treating physician/practitioner 

requesting that a diagnostic test be 

performed for a beneficiary. We further 

provided that an order may be delivered 

via any of the following forms of 

communication: (1) A written document 

signed by the treating physician/ 

practitioner, which is hand-delivered, 

mailed, or faxed to the testing facility; 

(2) a telephone call by the treating 

physician/practitioner or his or her 

office to the testing facility; or (3) an 

electronic mail, or other electronic 

means, by the treating physician/ 

practitioner or his or her office to the 

testing facility. If the order is 

communicated via telephone, both the 

treating physician/practitioner, or his or 

her office, and the testing facility must 

document the telephone call in their 

respective copies of the beneficiary’s 

medical records. We define a 

‘‘requisition’’ as the actual paperwork, 

such as a form, which is provided to a 

clinical diagnostic laboratory that 

identifies the test or tests to be 

performed for a patient. It may contain 

patient information, ordering physician 

information, referring institution 

information, information about where to 

send reports, billing information, 

specimen information, shipping 

addresses for specimens or tissue 

samples, and checkboxes for test 

selection. We believe it is ministerial in 

nature, assisting laboratories with 

billing and handling of results, and 

serves as an administrative convenience 

to providers and patients. We believe 

that a written order, which may be part 

of the medical record, and the 

requisition, are two different 

documents, although a requisition that 

is signed may serve as an order. We are 

revising our manuals to reflect our new 

requirement for physicians’ and NPPs’ 

signatures on requisitions for clinical 

diagnostic laboratory tests paid under 

the CLFS. 

Comment: The commenters note that 

there is no corresponding suggested 

change in the language of the Code of 

Federal Regulations (CFR) concerning 

the physician signature issue. 

Response: We have determined that a 

change to § 410.32(d)(2) is not necessary 

with respect to this issue because this 

provision involves orders not 

requisitions. We articulated our policy 

regarding requisitions for clinical 

diagnostic laboratory tests in our 

manuals and in preamble language. 

Therefore, we are changing our manuals 

to reflect our new policy. 

Comment: The commenters suggested 

that the requirement to provide some 

type of signature represents an undue 

burden on the clinical diagnostic 

laboratory, especially in the long term 

care world where standing orders in the 

form of a ‘‘plan of care’’ are maintained 

in the beneficiary’s records onsite and 

tests are ordered by the long term care 

staff as required based on directions 

provided by the physician. The 

commenters asserted that the physician 

rarely appears onsite at the facility to 

sign requests for medical services and, 

as a result, an exception for these types 

of facilities is warranted. However, 

commenters also pointed to a Drug 

Enforcement Administration (DEA) 

requirement for long term care facilities 

which states that, ‘‘The facility must 

provide or obtain laboratory services 

only when ordered by the attending 

physician.’’ 

Response: Again, the change in policy 

discussed in this final rule only affects 

requisitions and does not affect orders. 

The policy that we proposed and are 

adopting as final in this rule is that a 

physician’s or NPP’s signature is 

required on requisitions for clinical 

diagnostic laboratory tests paid under 

the CLFS. 

Comment: The commenters suggested 

that the following language was clear 

and should stand as the entire policy 

here: ‘‘A physician’s signature is not 

required on a requisition for clinical 

diagnostic laboratory tests paid on the 

basis of the Clinical Laboratory Fee 

Schedule (CLFS); however, it must be 

evident, in accordance with regulations 

at § 410.32(d)(2) and (3), that the 

physician ordered the services.’’ 

Response: We appreciate the 

commenters’ viewpoint. However, for 

the reasons discussed previously, we are 

finalizing our proposal, without 

modification, to require a physician’s or 

NPP’s signature on requisitions for 

clinical diagnostic laboratory tests paid 

under the CLFS. 

Comment: The commenters suggested 

that a pre-printed physician signature or 

letterhead showing the physician’s 

name should serve in the place of a 

‘‘signature.’’ 

Response: A pre-printed signature or 

letterhead cannot be construed as a 

document, the contents of which a 

physician or NPP has affirmed. In order 

to discourage fraud and abuse, and to 

affirm that a medical service was 

ordered by a medical practitioner who 

currently works in the practice, a 

signature is required. 

Comment: The commenters stated 

that the services are transcribed from 

the medical record onto the requisition 

by office staff, not written and signed by 

the physician. The commenters seemed 

to indicate that the medical record that 

would be maintained in the physician’s 

office, but not necessarily the 

requisition, would be signed or 

annotated in some way. 

Response: It seems that the 

commenters believe that a physician or 

his/her representative has no problem 

providing a signature or annotation for 

the medical record. In addition, some 

commenters consider the ‘‘requisition’’ 

to be the medical record and use it for 

a dual purpose—as the beneficiary’s file 

and as the request for services. 

After careful consideration of all the 

comments received, we are finalizing 

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. This policy does not 

affect physicians or NPPs who choose 

not to use requisitions to request 

clinical diagnostic laboratory tests paid 

under the CLFS. Such physicians or 

NPPs can continue to request such tests 

by other means, such as by using the 

annotated medical records, documented 

telephonic requests, or electronically. 

We will make changes to our manuals 

to reflect this final policy. 

D. 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 

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 

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demonstration expanded Medicare 

coverage to include ‘‘A) care for 

neuromusculoskeletal conditions 

typical among eligible beneficiaries; 

B) and diagnostic and other services that 

a chiropractor is legally authorized to 

perform by the State or jurisdiction in 

which such treatment is provided’’ and 

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 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 to 

Medicare was a $114 million increase in 

costs. 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 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 to 

Medicare 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, including 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 bythe 

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 2011. Our Office of 

the Actuary estimates chiropractic 

expenditures in CY 2011 to be 

approximately $524 million based on 

actual Medicare spending for 

chiropractic services for the most recent 

available year. To recoup $10 million in 

CY 2011, the payment amount under the 

PFS for the chiropractic CPT codes (that 

is, 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 relative value units 

(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. 

We received no comments on this 

policy and we will continue the 

implementation of the required budget 

neutrality adjustment in CY 2011 by 

reducing the payment amount under the 

PFS for chiropractic codes (that is, CPT 

codes 98940, 98941, and 98942) by 

approximately 2 percent resulting in a 

$10 million recoupment. This is the 

second year of an adjustment which is 

required in order to satisfy the budget 

neutrality requirement in section 651 of 

MMA and that is being made over a 

5-year period to recoup the costs of a 

demonstration that expanded Medicare 

coverage for chiropractic services. This 

reduction will only be reflected in the 

payment files used by Medicare 

contractors to process Medicare claims 

and not through an adjustment to the 

RVUs. 

E. Provisions Related to Payment for 

Renal Dialysis Services Furnished by 

End-Stage Renal Disease (ESRD) 

Facilities 

Subsequent to the July 13, 2010 

publication of the CY 2011 PFS 

proposed rule (75 FR 40040) we 

published in the Federal Register, on 

August 12, 2010 a final rule entitled 

‘‘End-Stage Renal Disease Prospective 

Payment System’’ (75 FR 49030). In that 

rule, we established a case-mix adjusted 

bundled PPS for renal dialysis services 

furnished beginning January 1, 2011, in 

accordance with the statutory 

provisions set forth in section 153(b) of 

MIPPA. The ESRD PPS is mandated to 

replace the current basic case-mix 

adjusted composite payment system and 

the methodologies for the 

reimbursement of separately billable 

outpatient ESRD services. 

As explained in the ESRD PPS final 

rule (75 FR 49162), section 

1881(b)(14)(E)(i) of the Act requires a 4- 

year transition (phase-in) from the 

current composite payment system to 

the ESRD PPS, and section 

1881(b)(14)(E)(ii) of the Act allows 

ESRD facilities to make a one-time 

election to be excluded from the 

transition. Electing to be excluded from 

the 4-year transition means that the 

ESRD facility receives payment for renal 

dialysis services based on 100 percent of 

the payment rate established under the 

ESRD PPS, rather than a blended rate for 

each year of the transition based in part 

on the payment rate under the current 

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payment system and in part on the 

payment rate under the ESRD PPS. 

For renal dialysis services furnished 

during CY 2011, ESRD facilities that 

elect to go through the ESRD PPS the 

transition would be paid a blended 

amount that will consist of 75 percent 

of the basic case-mix adjusted 

composite payment system and the 

remaining 25 percent would be based on 

the ESRD PPS payment. Thus, we must 

continue to update the basic case-mix 

adjusted composite payment system 

during the ESRD PPS 4-year transition 

(CYs 2011 through 2013). 

For a historical perspective of the 

basic case-mix adjusted composite rate 

payment system for ESRD facilities that 

furnish outpatient dialysis services, see 

the following PFS final rules with 

comment period: 

• CY 2005 (69 FR 66319 through 

66334). 

• CY 2006 (70 FR 70161 through 

70171). 

• CY 2007 (71 FR 69681 through 

69688). 

• CY 2008 (72 FR 66280 through 

66285). 

• CY 2009 (73 FR 69754 through 

69761). 

• CY 2010 (74 FR 61921 through 

61926). 

In the CY 2011 PFS proposed rule (75 

FR 40165 through 40168), we outlined 

the proposed updates to the basic casemix adjusted composite payment system 

established under section 1881(b)(12) of 

the Act, which included updates to the 

drug add-on, as well as the wage index 

values used to adjust the labor 

component of the composite rate. 

Specifically, as described in more detail 

below in this section, we proposed the 

following: 

• A zero growth update to the drug 

add-on, resulting in a proposed 14.7 

percent add-on adjustment to the 

composite rate for 2011 required by 

section 1881(b)(12)(F) of the Act to 

maintain a $20.33 per treatment drug 

add-on amount. 

• An update to the wage index 

adjustment to reflect the latest available 

wage data, including a revised budget 

neutrality (BN) adjustment factor of 

1.056929. 

• A reduction to the ESRD wage 

index floor from 0.6500 to 0.6000. 

We received very few comments on 

our proposals. The ESRD payment 

related comments are discussed below 

in this section. 

1. Update to the Drug Add-on 

Adjustment to the Composite Rate 

In the CY 2011 PFS proposed rule (75 

FR 40165), we described the drug 

payment methodology used to update 

the drug add-on adjustment to the 

composite rate. Since we now have 4 

years of drug expenditure data based on 

ASP pricing, we proposed to continue 

estimating growth in drug expenditures 

based on the trends in available data. 

We did not receive any comments 

objecting to the drug add-on update 

methodology, and therefore, we used 

the proposed update methodology to 

compute the drug add-on adjustment for 

CY 2011. We used trend analysis from 

drug expenditure data to update the per 

treatment drug add-on adjustment. We 

then removed growth in enrollment for 

the same time period from the 

expenditure growth, so that the residual 

reflects per patient expenditure growth 

(which includes price and utilization 

combined). 

To estimate drug expenditure growth 

using trend analysis, we looked at the 

average annual growth in total drug 

expenditures between 2006 and 2009. 

First, we estimated the total drug 

expenditures for all ESRD facilities in 

CY 2009. For this final rule, we used the 

final CY 2006 through CY 2009 ESRD 

claims data with dates of service for the 

same timeframe updated through June 

30, 2010 (that is, claims with dates of 

service from January 1 through 

December 31, 2009, that were received, 

processed, paid, and passed to the 

National Claims History File as of June 

30, 2010). 

Using the full-year 2009 drug 

expenditure figure, we calculated the 

average annual change in drug 

expenditures from 2006 through 2009. 

This average annual change showed an 

increase of 1.9 percent for this 

timeframe. We used this 1.9 percent 

increase to project drug expenditures for 

both CY 2010 and CY 2011. 

2. Estimating Per Patient Growth 

Once we had the projected growth in 

drug expenditures from 2010 to 2011 

(1.9 percent), to calculate the per patient 

expenditure growth between CYs 2010 

and 2011, we removed the enrollment 

component by using the estimated 

growth in enrollment data between CY 

2010 and CY 2011, which was 

approximately 3.6 percent. Specifically, 

we divided the total drug expenditure 

factor between 2010 and 2011 (1.019) by 

enrollment growth of 3.6 percent (1.036) 

for the same timeframe. The result is a 

per patient growth factor equal to 0.984 

(1.019/1.036=0.984). Thus, we are 

projecting a 1.6 percent decrease in per 

patient growth in drug expenditures 

between 2010 and 2011. 

3. Update to the Drug Add-on 

Adjustment 

As previously discussed, we estimate 

a 1.9 percent increase in drug 

expenditures between CY 2010 and CY 

2011. Combining this reduction with a 

3.6 percent increase in enrollment, as 

described above, we are projecting a 1.6 

percent decrease in per patient growth 

of drug expenditures between CY 2010 

and CY 2011. A 1.6 percent decrease in 

the per patient drug add-on of $20.33 

would result in a decrease of 33 cents 

(.016*20.33=.33). Hence a decrease of 33 

cents in the drug add-on would result in 

negative update equal to 0.2 percent 

(.33/138.53, 138.53 is the 2011 base 

composite rate). Therefore, we are 

projecting that the combined growth in 

per patient utilization and pricing for 

CY 2011 would result in a negative 

update equal to 0.2 percent. However, as 

we have done previously, we proposed 

a zero update to the drug add-on 

adjustment. We believe this approach is 

consistent with the language under 

section 1881(b)(12)(F) of the Act which 

states in part that ‘‘the Secretary shall 

annually increase’’ the drug add-on 

amount based on the growth in 

expenditures for separately billed ESRD 

drugs. Our understanding of the statute 

contemplates ‘‘annually increase’’ to 

mean a positive or zero update to the 

drug add-on. 

Also, as required by section 

1881(b)(14)(F), as amended by section 

3401(h) of the Affordable Care Act, a 2.5 

percent ESRD market basket increase, as 

established in the ESRD PPS final rule 

(75 FR 49161), is applied to the current 

basic case-mix adjusted composite rate 

portion of the blended payment amount, 

resulting in a CY 2011 composite rate of 

$138.53 ($135.15*1.025). This 2.5 

percent market basket increase does not 

apply to the drug add-on adjustment to 

the composite rate. Since the drug addon is calculated as a percentage of the 

composite rate, we note that the drug 

add-on percentage would be reduced 

from 15.0 to 14.7 as a result of the 

increase to the composite rate in CY 

2011. 

Comment: Several commenters agreed 

with CMS’ decision to apply a zero 

update to the drug add-on adjustment. 

Response: We appreciate the 

commenters’ support that we continue 

with a zero update to the drug add-on 

adjustment. 

Accordingly, after a review of the 

public comments, we are finalizing the 

proposed policy decisions to apply a 

zero update to the drug add-on, 

maintain a $20.33 per treatment drug 

add-on amount, as well as apply a 14.7 

percent add-on adjustment to the 

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composite rate for CY 2011. Also, as 

previously discussed a 2.5 percent 

ESRD market basket increase is applied 

to the current basic case-mix adjusted 

composite rate portion of the blended 

payment amount, resulting in a CY 2011 

composite rate of $138.53 

($135.15*1.025). 

Comment: One commenter agreed 

with our decision to continue to use the 

ASP+6 percent methodology for 

separately billable drugs. 

Response: This comment is out of the 

scope of the proposed ESRD provisions, 

however, we appreciate the 

commenters’ support of our use of the 

ASP+6 percent methodology. 

4. Update to the Geographic 

Adjustments to the Composite Rate 

In the CY 2011 PFS proposed rule (75 

FR 40165), we proposed to update the 

wage index adjustment to reflect the 

latest available wage data. The purpose 

of the wage index is to adjust the 

composite rates for differing wage levels 

covering the areas in which ESRD 

facilities are located. The wage indexes 

are calculated for each urban and rural 

area. In addition, we generally have 

followed wage index policies used 

under the inpatient hospital prospective 

payment system (IPPS), but without 

regard to any approved geographic 

reclassification authorized under 

sections 1886(d)(8) and (d)(10) of the 

Act or other provisions that only apply 

to hospitals paid under the IPPS (70 FR 

70167). Therefore, for purposes of the 

ESRD wage index methodology, the 

hospital wage data we use is preclassified, pre-floor hospital data and 

unadjusted for occupational mix. 

5. Updates to Core-Based Statistical 

Area (CBSA) Definitions 

In the CY 2006 PFS final rule with 

comment period (70 FR 70167), we 

announced our adoption of the OMB’s 

CBSA-based geographic area 

designations to develop revised urban/ 

rural definitions and corresponding 

wage index values for purposes of 

calculating ESRD composite rates. The 

CBSA-based geographic area 

designations are described in OMB 

Bulletin 03–04, originally issued June 6, 

2003, and is available online at http:// 

www.whitehouse.gov/omb/bulletins/ 

b03-04.html. In addition, OMB has 

published subsequent bulletins 

regarding CBSA changes, including 

changes in CBSA numbers and titles. 

We note that this and all subsequent 

ESRD rules and notices are considered 

to incorporate the CBSA changes 

published in the most recent OMB 

bulletin that applies to the hospital 

wage index used to determine the 

current ESRD wage index. The OMB 

bulletins may be accessed online at 

http://www.whitehouse.gov/omb/ 

bulletins/index.html. 

6. Updated Wage Index Values 

In the CY 2007 PFS proposed rule (71 

FR 69685), we proposed to update the 

ESRD wage index values annually. The 

ESRD wage index values for CY 2011 

were developed from FY 2007 wage and 

employment data obtained from the 

Medicare hospital cost reports. As we 

indicated, the ESRD wage index values 

are calculated without regard to 

geographic classifications authorized 

under sections 1886(d)(8) and (d)(10) of 

the Act and utilize pre-floor hospital 

data that is unadjusted for occupational 

mix. 

Comment: One commenter wanted 

CMS to consider the wage index 

policies that are adopted under the IPPS 

and that similar wage index policies 

should be developed for ESRD facilities. 

Response: We appreciate the 

commenters concern as to how ESRD 

are geographically classified and 

although we did not propose a change 

in the geographic reclassification for 

ESRD facilities at this time, we will take 

the commenters suggestions into 

consideration in future rulemaking. 

Comment: MedPAC commented that 

the statutory update to the composite 

rate for CY 2011 will benefit both rural 

and urban facilities, and they urge CMS 

to monitor access to dialysis care 

especially in rural areas. 

Response: We agree with MedPAC’s 

recommendation and we plan to 

continue to monitor access to dialysis 

care in rural areas and the impact or 

influence these effects may have for the 

ESRD basic case-mix adjusted 

composite payment rate system wage 

index. 

7. Wage Index Values for Areas With No 

Hospital Data 

In the CY 2011 PFS proposed rule (75 

FR 40167), we proposed to use the 

methodology established in CY 2006 for 

wage index values for areas with no 

hospital data. While adopting the CBSA 

designations, we identified a small 

number of ESRD facilities in both urban 

and rural geographic areas where there 

are no hospital wage data from which to 

calculate ESRD wage index values. The 

affected areas were rural Puerto Rico, 

rural Massachusetts (Barnstable Town, 

MA (CBSA 12700), and Providence-New 

Bedford-Fall River, RI–MA (CBSA 

39300)), and the urban area of 

Hinesville, GA (CBSA 25980). As with 

prior years, for CY 2011, we calculated 

the ESRD wage index values for those 

areas as follows: 

• For the urban area of HinesvilleFort Stewart, GA (CBSA 25980), which 

is an urban area without specific 

hospital wage data, we applied the same 

methodology used to impute a wage 

index value that we used in CY 2010. 

Specifically, we used the average wage 

index value for all urban areas within 

the State of Georgia. 

• For rural Massachusetts, we 

adopted an alternative methodology we 

used for CY’s 2008, 2009 and 2010, 

which we proposed to use to determine 

the wage index value for rural 

Massachusetts for CY 2011. Specifically, 

for rural areas without hospital wage 

data, we proposed to use the average 

wage index values from all contiguous 

CBSAs as a reasonable proxy for that 

rural area. In determining the imputed 

rural wage index, we interpreted the 

term ‘‘contiguous’’ to mean sharing a 

border. In the case of Massachusetts, the 

entire rural area consists of Dukes and 

Nantucket Counties. We determined 

that the borders of Dukes and Nantucket 

counties are contiguous with CBSA 

12700, Barnstable Town, MA, and 

Providence-New Bedford-Fall River, RI– 

MA. For purposes of rural 

Massachusetts, we proposed to use the 

same methodology for CY 2011. 

• For rural Puerto Rico, because all 

geographic areas in Puerto Rico were 

subject to the wage index floor in CY 

2011, we proposed to apply the ESRD 

wage index floor to rural Puerto Rico as 

well. For CY 2011, the ESRD wage index 

floor is 0.60. Therefore, we proposed to 

apply the ESRD wage index floor to 0.60 

to facilities that are located in rural 

Puerto Rico. We note, however, that 

there are currently no ESRD facilities 

located in rural Puerto Rico. 

We received no comments on our 

proposals for the wage areas as 

previously discussed with no hospital 

data. Therefore, we are finalizing our 

policies for wage areas with no hospital 

data. Also, we will continue to evaluate 

existing hospital wage data and possibly 

wage data from other sources such as 

the Bureau of Labor Statistics, to 

determine if other methodologies might 

be appropriate for imputing wage index 

values for areas without hospital wage 

data for CY 2010 and subsequent years. 

To date, no data from other sources, 

superior to that currently used in 

connection with the IPPS wage index 

has emerged. Therefore, for ESRD 

purposes, we continue to believe this is 

an appropriate policy. Also, the wage 

index values associated with these areas 

are located in the addenda section of 

this final rule. 

Also, in the CY 2011 PFS proposed 

rule (75 FR 40167), we reported an 

additional urban area—Anderson, SC 

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(CBSA 11340)—with no hospital data. 

For this urban area, we proposed to use 

the same methodology we have used for 

the other urban area with no hospital 

data, that is, Hinesville-Fort Stewart, GA 

(CBSA 25980). However, since the 

publication of the CY 2011 PFS 

proposed rule, we have received 

hospital wage data for this area, and 

therefore, the methodology we proposed 

no longer applies. 

8. Reduction to the ESRD Wage Index 

Floor 

In the PFS proposed rule (75 FR 

40167), we proposed to continue to 

reduce the wage index floor to the 

composite rate portion of the blend 

during the transition. For CY 2011, we 

proposed that the ESRD wage index 

floor would be reduced from 0.65 to 

0.60. We believe maintaining the wage 

index floor provides some relief for 

ESRD facilities going through the 

transition that have low wage index 

values. 

For CY 2011, all urban areas in Puerto 

Rico that have a wage index are eligible 

for the ESRD wage index floor of 0.60. 

Currently there are no ESRD facilities 

located in rural Puerto Rico, however, 

should any facilities open in rural 

Puerto Rico, as previously discussed, we 

intend to apply the CY 2011 wage index 

floor of 0.60 to these rural facilities. 

We received no comments on our 

proposal regarding the reduction to the 

ESRD wage index floor with regard to 

the composite rate portion of the blend 

during the transition. Therefore, we are 

finalizing our policy to reduce the wage 

index floor as proposed. 

9. Budget Neutrality Adjustment 

We have previously interpreted the 

statute as requiring that the geographic 

adjustment be made in a budget neutral 

manner. Given our application of the 

ESRD wage index, this means that 

aggregate payments to ESRD facilities in 

CY 2011 would be the same as aggregate 

payments that would have been made if 

we had not made any changes to the 

geographic adjustments. We note that 

this BN adjustment only addresses the 

impact of changes in the geographic 

adjustments. A separate BN adjustment 

was developed for the case-mix 

adjustments required by the MMA. 

Since we did not propose any changes 

to the case-mix measures for basic casemix adjusted payment system for CY 

2011, the current case-mix BN 

adjustment of 0.9116 would remain in 

effect for CY 2011. Consistent with prior 

rulemaking, for CY 2011, we will apply 

the wage-index BN adjustment factor of 

1.056929 directly to the ESRD wage 

index values to the composite rate 

portion of the blend. Because the ESRD 

wage index is only applied to the laborrelated portion of the composite rate, we 

computed the BN adjustment factor 

based on that proportion (53.711 

percent). 

To compute the CY 2011 wage index 

BN adjustment factor, we used the FY 

2007 pre-floor, pre-reclassified, nonoccupational mix-adjusted hospital data 

to compute the wage index values, 2009 

outpatient claims (paid and processed 

as of June 30, 2010), and geographic 

location information for each facility 

which may be found through Dialysis 

Facility Compare Web page on the CMS 

Web site at http://www.cms.hhs.gov/ 

DialysisFacilityCompare/. The FY 2011 

hospital wage index data for each urban 

and rural locale by CBSA may also be 

accessed on the CMS Web site at http:// 

www.cms.hhs.gov/AcuteInpatientPPS/ 

WIFN/list.asp. The wage index data are 

located in the section entitled, ‘‘FY 2011 

Occupational Mix Adjusted and 

Unadjusted Average Hourly Wage and 

Pre-Reclassified Wage Index by CBSA.’’ 

Using treatment counts from the 2009 

claims and facility-specific CY 2010 

composite rates, we computed the 

estimated total dollar amount each 

ESRD provider would have received in 

CY 2010. The total of these payments 

became the target amount of 

expenditures for all ESRD facilities for 

CY 2011. Next, we computed the 

estimated dollar amount that would 

have been paid for the same ESRD 

facilities using the ESRD wage index for 

CY 2011. The total of these payments 

becomes the new CY 2011 amount of 

wage-adjusted composite rate 

expenditures for all ESRD facilities. 

After comparing these two dollar 

amounts (target amount divided by the 

new CY 2011 amount), we calculated an 

adjustment factor that, when multiplied 

by the applicable CY 2011 ESRD wage 

index value, would result in aggregate 

payments to ESRD facilities that would 

remain within the target amount of 

composite rate expenditures. When 

making this calculation, the ESRD wage 

index floor value of 0.60 is applied 

whenever appropriate. The wage BN 

adjustment factor for CY 2011 is 

1.056929. 

To ensure BN, we also must apply the 

BN adjustment factor to the wage index 

floor 0.60, which results in an adjusted 

wage index floor of 0.6342 (0.6000 x 

1.056929) for CY 2011. This budget 

neutrality factor is not applied to the 

wage index values for the ESRD PPS 

portion of the blend. 

10. ESRD Wage Index Tables 

The CY 2011 ESRD final wage index 

tables are located in Addenda K and L 

of this final rule with comment period. 

Also, we indicated in the ESRD PPS 

final rule (75 FR 49117), we would 

finalize the CY 2011 ESRD PPS wage 

index tables in this final rule. The wage 

index tables lists two separate columns 

of wage index values. The first column 

lists the wage index values will be 

applied under the composite rate 

portion and includes the budget 

neutrality adjustment of 1.056929. The 

second column lists the wage index 

values that will be applied under the 

ESRD PPS beginning January 1, 2011. 

F. Issues Related to the Medicare 

Improvements for Patients and 

Providers Act of 2008 (MIPPA) 

1. Section 131: Physician Payment, 

Efficiency, and Quality Improvements— 

Physician Quality Reporting System 

a. Program Background and Statutory 

Authority 

Section 101 of Division B of the Tax 

Relief and Health Care Act of 2006—the 

Medicare Improvements and Extension 

Act of 2006 (Pub. L. 109–432) (MIEA– 

TRHCA), which was enacted on 

December 20, 2006, required us to 

implement a physician quality reporting 

system in 2007, which we named the 

Physician Quality Reporting Initiative 

(PQRI). The Physician Quality Reporting 

System is a quality reporting program 

that provides an incentive payment to 

identified eligible professionals who 

satisfactorily report data on quality 

measures for covered professional 

services furnished during a specified 

reporting period. Under section 

1848(k)(3)(B) of the Act, the term 

‘‘eligible professional’’ means any of the 

following: (1) A physician; (2) a 

practitioner described in section 

1842(b)(18)(C); (3) a physical or 

occupational therapist or a qualified 

speech-language pathologist; or (4) a 

qualified audiologist. 

The PQRI was extended and further 

enhanced as a result of the MMSEA, 

which was enacted on December 29, 

2007, and the MIPPA, which was 

enacted on July 15, 2008. Changes to the 

PQRI as a result of these laws, as well 

as information about the PQRI in 2007, 

2008, 2009, and 2010, 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), and CY 2010 PFS 

proposed and final rules (74 FR 33559 

through 33600 and 74 FR 61788 through 

61861, respectively). Further detailed 

information, about the PQRI program, 

related laws, and help desk resources, is 

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available on the CMS Web site at 

http://www.cms.gov/PQRI. 

The ACA makes a number of changes 

to the PQRI, including the following: 

Authorizing incentive payments 

through 2014; requiring a payment 

adjustment beginning in 2015 for 

eligible professionals who do not 

satisfactorily report data on quality 

measures in the applicable reporting 

period for the year; requiring timely 

feedback to participating eligible 

professionals; requiring the 

establishment of an informal appeals 

process whereby eligible professionals 

may seek a review of the determination 

that an eligible professional did not 

satisfactorily submit data on quality 

measures for purposes of qualifying for 

a PQRI incentive payment; making 

available an additional incentive 

payment for those eligible professionals 

satisfactorily reporting data on quality 

measures for a year and having such 

data submitted on their behalf through 

a Maintenance of Certification Program 

and participating in a Maintenance of 

Certification Program practice 

assessment more frequently than is 

required to qualify for or maintain board 

certification status; requiring the 

establishment of a Physician Compare 

Web site; and requiring the 

development of a plan to integrate 

reporting on quality measures relating to 

the meaningful use of electronic health 

records (EHRs). Whereas in the past we 

only had the authority to continue the 

PQRI incentive payments for a specified 

period of time, we believe the changes 

authorized by the ACA (particularly the 

fact that the payment adjustments are 

authorized for 2015 and each 

subsequent year) lend permanency to 

the PQRI. To reflect this transition from 

the PQRI being a temporary initiative to 

a permanent quality reporting program, 

we are hereafter referring to the PQRI as 

the ‘‘Physician Quality Reporting 

System.’’ We will be updating our 

documents and the relevant Web sites to 

reflect this name change over time. 

In the CY 2011 PFS proposed rule (75 

FR 40162) we proposed to add § 414.90 

to title 42 of the Code of Federal 

Regulations to implement the provisions 

of the Physician Quality Reporting 

System. 

We received several comments from 

the public on the CY 2011 PFS proposed 

rule related to the Physician Quality 

Reporting System. General comments 

about the Physician Quality Reporting 

System are addressed as follows. 

Comment: We received positive 

feedback supporting the Physician 

Quality Reporting System program as a 

whole, particularly efforts that 

encourage eligible professional 

reporting through registries, 

Maintenance of Certification Programs, 

and EHRs. We also received positive 

feedback regarding our proposals for 

providing timely feedback and the 

establishment of an informal appeals 

process. 

Response: We appreciate the 

commenters’ positive feedback. We 

believe that these options provide 

eligible professionals with greater 

flexibility. 

Comment: We received one comment 

expressing dissatisfaction with the 

Physician Quality Reporting System 

program as a whole. The commenter 

stated that while they have been 

reporting Physician Quality Reporting 

System data for the past few years, they 

have not received the incentive 

payment. As a result, the commenter 

feels that their clinical professionalism 

and patient service is not improved by 

the program and that it diminishes the 

time they spend on direct patient care. 

Response: We are sorry that the 

commenter has not received a Physician 

Quality Reporting System incentive. We 

are hopeful that the improvements that 

we are making to the Physician Quality 

Reporting System will make it easier for 

eligible professionals to participate 

satisfactorily. We recommend that all 

participating eligible professionals 

review their Physician Quality 

Reporting System feedback report. In 

addition to providing performance 

information, eligible professionals who 

are not incentive eligible will be able to 

use their feedback report to determine 

why they did not qualify for an 

incentive payment. We encourage any 

eligible professional who has questions 

about the information contained in their 

feedback report to contact the 

QualityNet Help Desk at 866–288–8912 

or qnetsupport@sdps.org. The Help Desk 

is available from 7 a.m. to 7 p.m. Central 

Time to answer a variety of questions 

about the Physician Quality Reporting 

System from general program questions 

to feedback report availability and 

access. The help desk can provide 

detailed information about the reasons 

that an eligible professional failed to 

earn an incentive as well. 

Comment: Some commenters urged us 

to aggressively provide additional 

Physician Quality Reporting System 

education and training opportunities. 

One commenter requested we provide 

more ‘‘hands-on’’ Physician Quality 

Reporting System education and 

training opportunities at the local level 

by the state/regional contractors. 

Response: We appreciate the 

commenters’ valuable input. We will 

continue to work with national and 

regional stakeholder organizations to 

educate their members on Physician 

Quality Reporting System program 

requirements. We also expect to 

continue to host monthly national 

provider calls in which we would 

provide guidance on specific topics and 

provide updated educational materials 

and resources. To augment our portfolio 

of educational materials and resources, 

we also anticipate providing a series of 

educational videos to help educate 

eligible professionals on Physician 

Quality Reporting System program 

requirements. 

Comment: One commenter expressed 

disappointment with the exclusion of 

eligible professionals in institutional 

settings. Other commenters urged us to 

identify and adopt a Physician Quality 

Reporting System reporting mechanism 

that could apply to all eligible 

professionals in all settings, including 

eligible therapists providing services in 

CORFs, SNFs Part B, and outpatient 

departments of a hospital. 

Response: As we stated in the CY 

2010 PFS final rule with comment 

period (74 FR 61791), for professionals 

who practice in an institutional setting 

where the provider of service is an 

institution and not a physician or other 

professional paid under the PFS or 

where claims submission does not 

identify the professional by his or her 

NPI, we are unable to make the 

determination of satisfactory reporting 

and calculate earned incentive payment 

amounts at the individual eligible 

professional level without extensive 

modifications to the claims processing 

systems of CMS and providers, which 

would represent a material 

administrative burden to us and to 

providers. It would also require 

modifications to the industry standard 

claims formats, which would require 

substantial time to effect through 

established processes and structures 

that we do not maintain or control. We 

have also found that most institutions 

that employ eligible professionals do 

not tie the individual professional to the 

service rendered to an individual 

patient. In this case, there are no 

individual provider identifiers available 

to use in processing these claims. 

Comment: One commenter was 

concerned that one of the analytical 

changes that was made to facilitate 

satisfactory Physician Quality Reporting 

System reporting may have had an 

unintended consequence on radiologists 

by overly inflating their eligible cases, 

or reporting denominator. Specifically, 

the commenter is requesting that, for 

radiology, we look at the CPT/ICD–9 

combinations only for the specific line 

item in which the CPT/ICD–9 

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combination is present rather than 

across any dates of service. 

Response: We are aware of this issue 

and are currently analyzing the impact. 

We believe there are only a handful of 

measures where this is a concern 

because the measure specifications tie a 

procedure to a diagnosis. We are 

working with the appropriate measure 

developers/owners to analyze the 

specifications for these measures to see 

if they can be changed for 2011 to lessen 

the impact. 

Comment: One commenter 

encouraged us to consider strategies to 

move the Physician Quality Reporting 

System toward a more robust role in 

quality improvement. Individual 

clinicians and smaller group practices’ 

self-selection of measures, the small 

number of measures required to be 

reported, and variations in the required 

sample sizes make the measures less 

meaningful than they could be if the 

program was more structured and 

rigorous. 

Response: The commenter brings up a 

number of valid points. As the program 

matures and we phase out the 

incentives for satisfactory reporting and 

phase in payment adjustments for 

failing to satisfactorily report, we 

envision continuing to make further 

refinements to the program to address 

the commenter’s concerns. Any such 

changes would be described in notice 

and comment rulemaking prior to 

implementation. 

Comment: Another commenter urged 

us to transition to rewarding 

performance, not just reporting. Changes 

made now should lay the groundwork 

for moving towards this goal. 

Response: As we noted in the CY 

2011 PFS proposed rule (75 FR 40114 

through 40115), section 3007 of the 

ACA requires the Secretary to apply a 

separate, budget-neutral payment 

modifier to the FFS PFS payment 

formula. The payment modifier, which 

will be phased in beginning January 1, 

2015 through January 1, 2017, will 

provide for differential payment under 

the fee schedule to a physician or 

groups of physicians, and later, possibly 

to other eligible professionals, based 

upon the relative quality and cost of 

care of their Medicare beneficiaries. 

Comment: One commenter was 

concerned that eligible professionals 

would not decide to participate in the 

Physician Quality Reporting System. 

The commenter was concerned that 

given the current status of the industry 

in trying to meet 5010/ICD10 

regulations and incentive requirements 

for achieving the meaningful use of EHR 

adoption, the additional reporting 

requirements will serve as a 

disincentive. 

Response: We are unclear what 

additional reporting requirements the 

commenter is referring to nor are we 

clear on how they relate to the 5010/ 

ICD10 regulations and the incentive 

requirements for achieving the 

meaningful use of EHR adoption. 

However, if the commenter is concerned 

that eligible professionals may not be 

motivated to participate in the 

Physician Quality Reporting System in 

light of other quality programs and/or 

requirements, we agree that this is a 

valid concern. 

Upon consideration of the comments, 

we are finalizing our proposal to add 

§ 414.90 to title 42 of the Code of 

Federal Regulations to implement the 

provisions of the Physician Quality 

Reporting System as discussed in this 

section. We made certain technical 

changes to § 414.90 as appropriate to 

reflect the change in the name of the 

PQRI to ‘‘Physician Quality Reporting 

System,’’ to eliminate the unnecessary 

use of acronyms, and to add crossreferences to relevant statutory or 

regulatory provisions where 

appropriate, to specify the particular 

program year addressed in this 

rulemaking, and to make other technical 

changes as noted. 

b. Incentive Payments for the 2011 

Physician Quality Reporting System 

For years 2011 through 2014, section 

3002(a) of the ACA extends the 

opportunity for eligible professionals to 

earn a Physician Quality Reporting 

System incentive payment for 

satisfactorily reporting Physician 

Quality Reporting System quality 

measures. For the 2011 Physician 

Quality Reporting System, section 

1848(m)(2)(B) of the Act, as amended by 

section 3002(a) of the ACA, authorizes 

a 1.0 percent incentive, and for 2012 

through 2014, a 0.5 percent incentive, 

for qualified eligible professionals who 

satisfactorily submit Physician Quality 

Reporting System quality measures data. 

The following is a summary of the 

comments we received regarding the 

2011 Physician Quality Reporting 

System incentive payment amount. 

Comment: One commenter expressed 

support for the extension of the 

Physician Quality Reporting System 

incentives through 2014 for eligible 

professionals who satisfactorily report. 

Response: We appreciate the 

commenters’ positive feedback. 

Comment: Some commenters 

expressed concern that the incentive 

payment is too small to motivate eligible 

professionals to report Physician 

Quality Reporting System measures, 

even if they are providing quality care 

in their practice, or to drive quality. The 

commenters stated that added 

administrative cost and time should be 

considered when setting the incentive 

and disincentive rates, in an effort to 

better reflect the financial incentive to 

begin utilizing the measures and 

financial disincentives to maintain such 

practice. Commenters were specifically 

concerned that the incentives are not 

commensurate with the burden of 

reporting. 

Response: While we understand 

commenters’ concerns with the costs 

and burdens associated with satisfactory 

reporting under the Physician Quality 

Reporting System, we have neither the 

authority to change the basis for 

calculation of the incentive payment nor 

the authority to change the incentive 

amount. We continue to seek ways to 

minimize impact on eligible 

professionals, such as by continuing to 

offer multiple reporting options in order 

to give eligible professionals the 

flexibility to choose the option that best 

fits their practice. Furthermore, we note 

that under section 1848(a)(8) of the Act, 

beginning 2015, eligible professionals 

who do not satisfactorily report 

Physician Quality Reporting System 

measures will be subject to a payment 

adjustment. Eligible professionals who 

participate in the Physician Quality 

Reporting System prior to 2015 receive 

the added benefit of familiarizing 

themselves with the Physician Quality 

Reporting System prior to the 

implementation of the payment 

adjustment. Moreover, beginning 2015, 

eligible professionals who satisfactorily 

report under the Physician Quality 

Reporting System will avoid the 

payment adjustment. 

Comment: One commenter requested 

clarification and examples on how the 

incentive payment calculations are 

determined and an explanation of what 

is meant by ‘‘allowable.’’ 

Response: As stated in the CY 2011 

PFS proposed rule (75 FR 40169), the 

Physician Quality Reporting System 

incentive payment amount is calculated 

using estimated Medicare Part B PFS 

allowed charges for all covered 

professional services, not just those 

charges associated with the reported 

quality measures. ‘‘Allowed charges’’ 

refers to total charges, including the 

beneficiary deductible and coinsurance, 

and is not limited to the 80 percent paid 

by Medicare or the portion covered by 

Medicare where Medicare is secondary 

payer. Amounts billed above the PFS 

amounts for assigned and non-assigned 

claims will not be included in the 

calculation of the incentive payment 

amount. In addition, since, by definition 

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under section 1848(k)(3)(A) of the Act, 

‘‘covered professional services’’ are 

limited to services for which payment is 

made under, or is based on, the PFS and 

which are furnished by an eligible 

professional, other Part B services and 

items that may be billed by eligible 

professionals, but are not paid under or 

based upon the Medicare Part B PFS, are 

not included in the calculation of the 

incentive payment amount. 

Therefore, eligible professionals and 

group practices that satisfactorily report 

quality data under the 2011 Physician 

Quality Reporting System will qualify 

for an incentive payment equal to 1.0 

percent of their total estimated Medicare 

Part B PFS allowed charges for the all 

covered professional services furnished 

by the eligible professional during the 

applicable 2011 Physician Quality 

Reporting System reporting period. For 

satisfactory reporting at the individual 

level in 2011, 1.0 percent of allowed 

charges will be paid at the TIN/NPI 

level. For satisfactory reporting at the 

group practice level in 2011, 1.0 percent 

of allowed charges will be paid at the 

TIN level. 

c. 2011 Reporting Periods for Individual 

Eligible Professionals 

Under section 1848(m)(6)(C) of the 

Act, the ‘‘reporting period’’ for the 2008 

Physician Quality Reporting System and 

subsequent years is defined to be the 

entire year, but the Secretary is 

authorized to revise the reporting period 

for years after 2009 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. For 

the 2011 Physician Quality Reporting 

System, we proposed the following 

reporting periods: (1) 12-Month 

reporting period for claims-based 

reporting and registry-based reporting 

(that is, January 1, 2011 through 

December 31, 2011); (2) 12-month 

reporting period for EHR-based 

reporting (that is, January 1, 2011 

through December 31, 2011; and (3) 6- 

month reporting period for claims-based 

reporting and registry-based reporting 

(that is, July 1, 2011 through December 

31, 2011). Additionally, we proposed 

the 12-month reporting period for the 

group practice reporting option (GPRO) 

for both the Physician Quality Reporting 

System and the Electronic Prescribing 

(eRx) Incentive Program Prescribing 

Incentive Program (January 1, 2011 

through December 31, 2011). 

The following is a summary of the 

comments we received regarding the 

proposed reporting periods. 

Comment: We received comments 

generally supporting the proposed 

reporting periods as well as comments 

specifically supporting the 6-month 

reporting period for registry-based 

reporting. 

Response: We appreciate the 

commenters’ positive feedback. As these 

comments support our proposed 

reporting periods and for the reasons 

discussed, we are finalizing the 

reporting periods, as proposed. 

Comment: One commenter was 

opposed to the elimination of the 6- 

month reporting period for claims-based 

reporting as this would create an 

unnecessary obstacle for the reporting 

mechanism that is available to nearly all 

eligible professionals. 

Response: We agree with the 

commenter’s urging of the preservation 

of the 6-month reporting period for 

2011, and, as such, we did not propose 

to eliminate the 6-month reporting 

period for claims-based reporting. In an 

effort to encourage participation by 

eligible professionals who may not be 

ready to do so at the beginning of the 

year, for the 2011 Physician Quality 

Reporting System, there will continue to 

be both a 12-month and 6-month 

reporting period for all reporting 

options except for EHR reporting and 

the group practice reporting option. 

Comment: Another commenter 

requested that we consider a 6-month 

reporting period for registry-based 

reporting. 

Response: We proposed a 6-month 

reporting period for registry-based 

reporting in the CY 2011 PFS proposed 

rule (75 FR 40169). As previously 

stated, for the 2011 Physician Quality 

Reporting System, there will continue to 

be a 12-month and 6-month reporting 

period for all reporting options except 

for EHR reporting and the group 

practice reporting option. 

Comment: One commenter requested 

that we consider providing both 6- 

month and 12-month EHR-based 

reporting options, consistent with the 6- 

month reporting period options 

available for the claims-based and 

registry-based reporting mechanisms. 

Response: As we stated in the CY 

2010 PFS final rule with comment 

period (74 FR 61794), we may consider 

including a 6-month reporting period 

for EHR reporting in future years once 

we have additional experience with 

EHR reporting in the Physician Quality 

Reporting System. At this time, no data 

has yet been collected from EHRs for the 

Physician Quality Reporting System. 

EHR data submission for the 2010 

Physician Quality Reporting System 

will not occur until early 2011. 

Therefore, we are not adding a 6-month 

reporting period for EHR-based 

reporting at this time. 

Comment: One commenter opposed 

tying the incentive amount to the 

reporting period in which the eligible 

professional satisfactorily reports. 

Response: Section 1848(m)(1)(A) of 

the Act specifies that the incentive 

payment is based on the covered 

professional services furnished during 

the reporting period for which the 

eligible professional or group practice 

satisfactorily reports. Therefore, we are 

obligated to tie the incentive amount to 

the reporting period in which the 

eligible professional satisfactorily 

reports. We note, however, the incentive 

is not limited to the charges for the 

services associated with the measures 

being reported. Rather the incentive is 

calculated based on all of covered 

professional services furnished during 

the applicable reporting period. 

Upon consideration of the comments 

received, we will finalize the 2011 

reporting periods as proposed. As 

discussed previously, if an eligible 

professional only satisfactorily reports 

for the 6-month reporting period, then 

the professional’s incentive payment 

will be calculated based on the eligible 

professional’s charges for covered 

professional services furnished between 

July 1, 2011 and December 31, 2011 

only. Services furnished prior to July 1, 

2011 would not be included in the 

professional’s incentive payment 

calculation. 

We are also deleting the definition for 

the term ‘‘quality reporting period’’ 

proposed at § 414.90(b) since the 

reporting period is defined at 

§ 414.90(g)(1). 

d. 2011 Physician Quality Reporting 

System Reporting Mechanisms for 

Individual Eligible Professionals 

For the 2011 Physician Quality 

Reporting System, we proposed to retain 

the claims-based, registry-based, and 

EHR-based reporting mechanism from 

2010 and invited comments on other 

options that could be included in the 

2011 Physician Quality Reporting 

System. We also discussed in the CY 

2011 PFS proposed rule that we 

continue to consider significantly 

limiting the claims-based mechanism of 

reporting clinical quality measures in 

future program years (75 FR 40170). 

The following is a summary of the 

comments received with regard to the 

proposed 2011 Physician Quality 

Reporting System reporting mechanisms 

and our intent to lessen reliance on the 

claims-based reporting mechanism 

beyond 2011. 

Comment: Several commenters 

supported the proposed reporting 

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mechanisms for the 2011 Physician 

Quality Reporting System, including 

strong support for the continuation of 

claims-based reporting and continued 

availability of multiple reporting 

mechanisms. Many commenters noted 

that claims-based reporting is the only 

reporting mechanism available to all 

eligible professionals. One commenter 

believes claims-based reporting may be 

a more accurate reporting method 

overall and that it would be unduly 

burdensome and costly to force 

practitioners into changing their 

established reporting methods. Another 

commenter thought CMS should not 

totally discontinue claims-based 

reporting as some practitioners, such as 

radiologists, work at several different 

locations where they may not 

consistently have access to a registry or 

EHR. One commenter noted that many 

small practices may not yet be linked to 

EHR systems. Commenters also noted 

that registry reporting frequently 

requires additional costs, which adds 

another burden on eligible professionals 

who wish to participate in the Physician 

Quality Reporting System. Another 

commenter stated that in the transition 

to payment adjustments beginning in 

2015, where it is crucial to encourage 

greater participation, it would be 

premature to eliminate claims-based 

reporting. Other commenters urged us to 

delay eliminating or lessening our 

reliance on claims-based reporting until 

eligible professionals can demonstrate 

that they understand how to use and 

capture quality data via EHRs or 

registers and can consistently and 

successfully do so. Finally, another 

commenter encouraged us to provide a 

one or two year transition period if we 

want to proceed with eliminating 

claims-based reporting in future years. 

Response: We appreciate the 

commenters’ positive feedback. We 

agree with some of the reasons cited by 

commenters for retaining claims-based 

reporting and/or retaining multiple 

reporting mechanisms. For these 

reasons and in the discussion that 

follows, we are retaining, for 2011, the 

three 2010 Physician Quality Reporting 

System reporting mechanisms for 

individual eligible professionals, 

including claims-based reporting. 

Comment: While a majority of 

commenters requested that we delay or 

reconsider lessening our reliance on 

claims-based reporting after 2011, some 

commenters recommended that the 

claims-based reporting option be phased 

out with the expectation that registrybased and EHR-based reporting will 

become the mainstay of the program, 

especially as EHR adoption increases. 

Commenters noted that claims-based 

reporting has been problematic for 

eligible professionals and that 

transitioning the Physician Quality 

Reporting System away from claimsbased reporting would maximize the 

potential of registries and EHRs for 

quality measurement reporting. One 

commenter requested clarification 

around the timing for phasing out 

claims-based reporting in order to assist 

eligible professionals’ decision-making 

around how and when to implement 

various parts of an EHR or registry. 

Response: In addition to the reasons 

offered by commenters, our ability to 

lessen our reliance on the claims-based 

reporting mechanism is dependent on 

there being an adequate number and 

variety of registries available and/or 

EHR reporting options. We believe that 

it would be premature to eliminate the 

claims-based reporting mechanism for 

2011 and doing so would create a 

barrier to participation. For 2009, 

approximately 75 percent of eligible 

professionals used claims-based 

reporting. We do not anticipate phasing 

out claims-based reporting while it 

continues to be actively used by eligible 

professionals. 

Comment: One commenter requested 

that we allow certified registered nurse 

anesthetists (CRNAs) to submit 

Physician Quality Reporting System 

data through an EHR-based reporting 

mechanism. 

Response: CRNAs are not precluded 

from reporting via a qualified Physician 

Quality Reporting System EHR. 

However, CRNAs may find the current 

measures available for Physician 

Quality Reporting System EHR reporting 

to be beyond their scope of practice. 

Additionally, CRNAs tend to collect the 

majority of their data in operating rooms 

and may require specific EHR products 

which, due to their specialization, may 

have Physician Quality Reporting 

System qualification later on their 

timeline. 

Comment: One commenter expressed 

support for the use of registries as a 

recognized instrument to leverage 

existing clinical data collection efforts. 

Response: We appreciate the 

supportive comment and agree that 

registries may be able to augment data 

collection efforts, particularly for 

measures that are more difficult to 

collect and require longer time horizons 

to get complete data information. 

Comment: One commenter expressed 

concern about the discrepancy between 

claims-based reporting and registry 

reporting. Physician Quality Reporting 

System analysis for 2007 and 2008 

showed that providers who did registry 

reporting had a 90 percent success rate 

for earning a Physician Quality 

Reporting System bonus and claimsbased reporting had a 50 percent 

success rate. Due to this large 

discrepancy, the commenter believed 

that it will be very important to know 

which reporting method results in 

actual performance improvement based 

on patient outcomes and whether 

methods are subject to manipulation. 

The commenter encouraged us to ensure 

the processes and resulting data of the 

reporting methods are reliable and not 

susceptible to manipulation. 

Response: We understand the 

commenter’s concerns about the 

differences in the registry results 

compared to the claims results. We are 

continually assessing the accuracy and 

reliability of all data submitted under 

the Physician Quality Reporting System. 

We compare the data that is submitted 

to us from registries against claims data 

and are exploring reasons for any 

discrepancies found. 

Comment: Some commenters, in the 

spirit of harmonization, noted that 

several aspects of the Physician Quality 

Reporting System are different from the 

Hospital Inpatient Quality Reporting 

Program, formerly known as the 

Reporting Hospital Quality Data Annual 

Payment Update Program (RHQDAPU). 

One commenter stated that while we are 

moving away from claims-based quality 

measures for eligible professionals, they 

are moving toward claims-based quality 

measures for hospitals. The commenter 

strongly encouraged us to harmonize 

their programs and make this same 

conclusion for the Hospital Inpatient 

Quality Reporting Program. 

Response: We understand the 

commenters’ desire for harmonization of 

our various quality reporting programs 

and we attempt to do so when practical 

and feasible. We note, however, that the 

Physician Quality Reporting System and 

the Hospital Inpatient Quality Reporting 

Program are separate and distinct 

programs. The two programs apply to 

two different types of providers, have 

different goals, and are governed by 

different laws and requirements. 

Claims-based submission for the 

Physician Quality Reporting System 

provides a means to submit additional 

data, using QDCs, beyond what is 

required for billing. Claims as used for 

hospital quality reporting does not 

require the submission of additional 

QDCs to be added to applicable patient 

claims. 

Based upon consideration of the 

comments received and for the reasons 

previously explained, we are retaining 

the claims, registry, and EHR reporting 

mechanisms for use by individual 

eligible professionals for the 2011 

Physician Quality Reporting System. As 

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in previous years, depending on which 

Physician Quality Reporting System 

individual quality measures or measures 

groups an eligible professional selects, 

one or more of the 2011 reporting 

mechanisms may not be available for 

reporting a particular 2011 Physician 

Quality Reporting System individual 

quality measure or measures group. In 

addition, while eligible professionals 

can attempt to qualify for a Physician 

Quality Reporting System incentive 

under multiple reporting mechanisms, 

an eligible professional must satisfy the 

2011 criteria for satisfactory reporting 

with respect to a single reporting 

mechanism to qualify for a 2011 

incentive. For example, an eligible 

professional who starts submitting 

individual Physician Quality Reporting 

System measures via claims in January 

2011 and then switches to registry-based 

reporting for services furnished after 

April 2011 would be able to qualify for 

a 2011 Physician Quality Reporting 

System incentive based on a 12-month 

reporting period only if he or she 

satisfies the appropriate reporting 

criteria for either claims-based reporting 

or registry-based reporting for this 

reporting period. We will not combine 

data submitted via multiple reporting 

mechanisms to determine incentive 

eligibility. 

(1) Final Requirements for Individual 

Eligible Professionals Who Choose the 

Claims-Based Reporting Mechanism 

For eligible professionals who choose 

to participate in the 2011 Physician 

Quality Reporting System by submitting 

data on individual quality measures or 

measures groups through the claimsbased reporting mechanism, we 

proposed the eligible professional 

would be required to submit the 

appropriate Physician Quality Reporting 

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 2011. However, 

as required by section 1848(m)(1)(A) of 

the Act, all claims for services furnished 

between January 1, 2011 and December 

31, 2011, would need to be processed by 

no later than February 28, 2012, to be 

included in the 2011 Physician Quality 

Reporting System analysis. 

We did not receive any comments 

specific to the requirements for 

individual eligible professionals who 

choose claims-based reporting. 

Therefore, we are finalizing the 

requirements as proposed (75 FR 40171) 

and previously discussed. Eligible 

professionals should refer to the ‘‘2011 

Physician Quality Reporting System 

Implementation Guide’’ to facilitate 

satisfactory reporting of QDCs for 2011 

Physician Quality Reporting System 

individual measures on claims and to 

the ‘‘Getting Started with 2011 Physician 

Quality Reporting System Reporting of 

Measures Groups’’ to facilitate 

satisfactory reporting of QDCs for 2011 

Physician Quality Reporting System 

measures groups on claims. By no later 

than December 31, 2010, both of these 

documents will be posted on the 

Physician Quality Reporting System 

section of the CMS Web site at http:// 

www.cms.gov/pqri. 

(2) Final Requirements for Individual 

Eligible Professionals Who Choose the 

Registry-Based Reporting Mechanism 

We proposed that in order to report 

quality data on the 2011 Physician 

Quality Reporting System individual 

quality measures or measures groups 

through a qualified clinical registry, an 

eligible professional must enter into and 

maintain an appropriate legal 

arrangement with a qualified 2011 

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 CMSspecified record layout, which would 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 2011 would need to 

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. 

In addition to meeting the proposed 

requirements specific to registry-based 

reporting, we proposed that eligible 

professionals who choose to participate 

in the Physician Quality Reporting 

System through the registry-based 

reporting mechanism would need to 

meet the relevant criteria proposed for 

satisfactory reporting of individual 

measures or measures groups that all 

eligible professionals must meet in 

order to satisfactorily report for the 

Physician Quality Reporting System 

2011. 

We did not receive any comments 

specific to the requirements for 

individual eligible professionals who 

choose registry-based reporting. 

Therefore, we are finalizing the 

requirements for individual eligible 

professionals who choose the registrybased reporting mechanism as proposed 

(75 FR 40171 through 40173) and 

previously discussed. 

We will post a list of qualified 

registries for the 2011 Physician Quality 

Reporting System on the Physician 

Quality Reporting System section of the 

CMS Web site at http://www.cms.gov/ 

pqri, which will include the registry 

name, contact information, and the 2011 

measures and/or measures group and 

eRx reporting (if qualified) for which the 

registry is qualified and intends to 

report. However, we do not anticipate 

making this list available prior to the 

start of the 2011 program year as we had 

proposed. We proposed to post the 

names of the 2011 Physician Quality 

Reporting System qualified registries in 

3 phases starting with a list of those 

registries qualified for the 2011 

Physician Quality Reporting System 

based on: (1) Being a qualified registry 

for a prior Physician Quality Reporting 

System program year that successfully 

submitted 2008 and/or 2009 Physician 

Quality Reporting System quality 

measures results and numerator and 

denominator data on the quality 

measures; (2) having received a letter 

indicating their continued interest in 

being a Physician Quality Reporting 

System registry for 2011 by October 31, 

2010; and (3) the registry’s compliance 

with the 2011 Physician Quality 

Reporting System registry requirements. 

As discussed further in section VII.F.1.j. 

of this final rule with comment period, 

we proposed and are finalizing new 

requirements for the 2011 Physician 

Quality Reporting System registries. 

Since there are new requirements that 

did not apply to previously qualified 

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registries, we will need to ensure that 

the previously qualified registries meet 

the new requirements for 2011. While 

we fully expect all of the previously 

qualified registries to meet the new 

registry requirements for the 2011 

Physician Quality Reporting System, we 

do not expect to be able to determine 

previously qualified registries’ 

compliance with these new registry 

requirements for 2011 until the middle 

of 2011. Thus, by Summer 2011, we 

expect to post a list of registries (this list 

will include both registries that were 

previously qualified and those that selfnominate to be newly qualified for 

2011) that are conditionally qualified to 

submit numerator and denominator data 

on 2011 Physician Quality Reporting 

System measures and measures groups 

and Physician Quality Reporting System 

measure results. After we receive a test 

file from the registries, we will finalize 

the list of 2011 Physician Quality 

Reporting System registries. We 

anticipate finalizing the list of 2011 

Physician Quality Reporting System 

registries by Fall 2011. 

An eligible professional’s ability to 

report Physician Quality Reporting 

System quality measures results and 

numerator and denominator data on 

Physician Quality Reporting System 

quality measures or measures groups 

using the registry-based reporting 

mechanism should not be impacted by 

the list of qualified registries for the 

2011 Physician Quality Reporting 

System being made available after the 

start of the reporting period. First, 

registries will not begin submitting 

eligible professionals’ Physician Quality 

Reporting System quality measures 

results and numerator and denominator 

data on the quality measures or 

measures groups to CMS until 2012. 

Second, if an eligible professional 

decides that he or she is no longer 

interested in submitting quality 

measures results and numerator and 

denominator data on Physician Quality 

Reporting System individual quality 

measures or measures groups through 

the registry-based reporting mechanism 

after the complete list of qualified 

registries becomes available, this does 

not preclude the eligible professional 

from attempting to meet the criteria for 

satisfactory reporting through another 

2011 Physician Quality Reporting 

System reporting mechanism. 

In any event, even though a registry 

is listed as ‘‘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. 

(3) Final Requirements for Individual 

Eligible Professionals Who Choose the 

EHR-Based Reporting Mechanism 

For 2011, in addition to meeting the 

criteria for satisfactory reporting of at 

least 3 individual measures, we 

proposed the following requirements 

associated with EHR-based reporting: (1) 

Selection of a Physician Quality 

Reporting System qualified EHR 

product; and (2) submission of clinical 

quality data extracted from the EHR to 

a CMS clinical data warehouse in the 

CMS-specified manner and format (75 

FR 40172). Similar to the 2010 

Physician Quality Reporting System, a 

test of quality data submission from 

eligible professionals who wish to 

report 2011 quality measure data 

directly from their qualified EHR 

product will be required and is 

anticipated to occur in early 2012 

immediately followed by the 

submission of the eligible professional’s 

actual 2011 Physician Quality Reporting 

System data. This entire final test/ 

production 2011 data submission 

timeframe is expected to be January 

2012 through March 2012. As discussed 

in the CY 2010 PFS final rule with 

comment period (74 FR 61801 through 

61802), we are currently vetting newly 

self-nominated EHR vendor products for 

possible qualification for the 2011 

Physician Quality Reporting System 

program year. We expect to list any 

additional Physician Quality Reporting 

System qualified EHR products by 

January 2011. It is expected that these 

newly qualified products would be able 

to submit 2011 Physician Quality 

Reporting System data in early 2012. 

The following is a summary of the 

comments we received regarding the 

proposed requirements for individual 

eligible professionals whose choose the 

EHR-based reporting mechanism for the 

2011 Physician Quality Reporting 

System. 

Comment: One commenter 

recommended that we consider 

accepting measure rates from EHRs 

rather than just numerator and 

denominator data. Rates generated 

within the system will be more readily 

available for local quality improvement 

purposes and timely feedback to eligible 

professionals and office staff. Timely 

feedback has been and will continue to 

be a problem for this program. System 

characteristics that promote and 

facilitate local improvement efforts 

should be designed in from the outset. 

Response: We agree that an EHR’s 

ability to calculate measure results 

locally will provide useful and timely 

information to eligible professionals 

who are participating in the Physician 

Quality Reporting System. However, 

receiving individual data elements 

allows us to ensure that measure results 

are calculated in a more standardized 

fashion across eligible professionals. 

Individual data elements can also more 

readily be combined with other data 

from other sources. Additionally, if 

measure specifications change, there 

would be no need to recode the EHR to 

account for these specification changes. 

Rather we can make one change to the 

measures engine to obviate the need for 

a change to the EHR itself. 

Comment: One commenter finds 

problematic the definition of a qualified 

EHR as one incorporating eRx 

functionality. Such functionality is 

unnecessary and costly for eligible 

professionals who do not prescribe. As 

a result, the current proposed definition 

of EHR could disenfranchise 

practitioners lacking prescriptive 

authority by automatically denying 

them the opportunity to use EHRs for 

reporting performance measures. 

Another commenter requested 

clarification on whether the electronic 

prescription function is E-Prescribing, 

which requires the patient’s pharmacy 

benefits information, or E-Prescription 

Writing, which does not. 

Response: We believe the commenters 

are referring to the eRx functionality 

required of a certified EHR for the EHR 

Incentive Program, which is beyond the 

scope of this final rule with comment 

period. This final rule is limited to the 

use of EHRs in the Physician Quality 

Reporting System and eRx Incentive 

Programs as one of multiple reporting 

mechanisms available to eligible 

professionals to report on Physician 

Quality Reporting System measures 

and/or the electronic prescribing quality 

measure. 

Upon consideration of the comments 

and for the reasons we highlighted 

based on our experience thus far with 

EHR-based reporting, eligible 

professionals who choose the EHRbased reporting mechanism for the 2011 

Physician Quality Reporting System 

will be required to (in addition to 

meeting the appropriate criteria for 

satisfactory reporting of individual 

measures): 

• Have a Physician Quality Reporting 

System qualified EHR product; 

• 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 from the 

EHR to a CMS clinical data warehouse; 

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• Submit a test file containing real or 

dummy clinical quality data extracted 

from the EHR to a CMS clinical data 

warehouse via an identity management 

system specified by CMS during a 

timeframe specified by CMS; 

• Submit a file containing the eligible 

professional’s 2011 Physician Quality 

Reporting System clinical quality data 

extracted from the EHR for the entire 

reporting period (that is, January 1, 2011 

through December 31, 2011) via the 

CMS-specified identify management 

system during the timeframe specified 

by CMS in early 2012. 

Measures groups reporting continues 

to not be an option for EHR-based 

reporting of quality measures for the 

2011 Physician Quality Reporting 

System. 

We also cannot assume responsibility 

for the successful submission of data 

from eligible professionals’ EHRs. Any 

eligible professional who chooses to 

submit Physician Quality Reporting 

System data extracted from an EHR 

should contact the EHR product’s 

vendor to determine if the product is 

qualified and has been updated to 

facilitate 2011 Physician Quality 

Reporting System quality measures data 

submission. Such professionals also 

should begin attempting submission 

soon after the opening of the clinical 

data warehouse in order to assure the 

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. 

The specifications for the electronic 

transmission of the 2011 Physician 

Quality Reporting System measures 

identified in Tables 81 and 82 of this 

final rule with comment period as being 

available for EHR-based reporting in 

2011 are posted in the Alternative 

Reporting Mechanisms page of the 

Physician Quality Reporting System 

section of the CMS Web site. The 

requirements that an EHR vendor must 

meet in order for one or more of its 

products to be considered qualified for 

purposes of an eligible professional 

submitting 2011 Physician Quality 

Reporting System data extracted from 

the EHR product(s) were described in 

the CY 2010 PFS final rule with 

comment period (74 FR 61800 through 

61802) and are posted on the 

Alternative Reporting Mechanisms page 

of the Physician Quality Reporting 

System section of the CMS Web site. We 

expect to post the names of the EHR 

vendors and the specific product(s) and 

version(s) that are qualified for the 2011 

Physician Quality Reporting System on 

the Alternative Reporting Mechanisms 

page of the Physician Quality Reporting 

System section of the CMS Web site by 

January 2011. 

(4) Final Qualification Requirements for 

Registries 

For the 2011 Physician Quality 

Reporting System, we proposed to 

require a self-nomination process for 

registries wishing to submit 2011 

Physician Quality Reporting System 

quality measures or measures groups on 

behalf of eligible professionals for 

services furnished during the applicable 

reporting periods in 2011 (75 FR 40173). 

To be considered a qualified registry for 

purposes of submitting individual 

quality measures and measures groups 

on behalf of eligible professionals who 

choose this reporting mechanism, we 

proposed that both registries new to the 

Physician Quality Reporting System and 

those previously qualified must: 

• Be in existence as of January 1, 

2011; 

• Have at least 25 participants by 

January 1, 2011; 

• Provide at least 1 feedback report 

per year to participating eligible 

professionals; 

• Not be owned and managed by an 

individual locally-owned singlespecialty group (in other words, singlespecialty practices with only 1 practice 

location or solo practitioner practices 

would be prohibited from selfnominating to become a qualified 

Physician Quality Reporting System 

registry); 

• Participate in ongoing 2011 

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 

(2011); 

• Be able to collect all needed data 

elements and transmit to CMS the data 

at the TIN/NPI level for at least 3 

measures in the 2011 Physician Quality 

Reporting System (according to the 

posted 2011 Physician Quality 

Reporting System Measure 

Specifications); 

• Be able to calculate and submit 

measure-level reporting rates or 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) for each 

measure on which the TIN/NPI reports 

or the data elements needed to calculate 

the reporting 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 of 

quality service performed (numerator); 

• Report the number of performance 

exclusions; 

• Report the number of reported 

instances, performance not met (eligible 

professional receives credit for 

reporting, not for performance); 

• 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 approved method such as 

over the NHIN (national health 

information network) if technically 

feasible; 

• Submit an acceptable ‘‘validation 

strategy’’ to CMS by March 31, 2011. 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. 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, 2012 for the 2011 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 on behalf of eligible 

professionals who wish to participate in 

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the Physician Quality Reporting System 

program; 

• 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 measures and numerator 

and denominator data 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 (if requested 

for validation purposes) to review the 

Medicare beneficiary data on which 

2011 Physician Quality Reporting 

System registry-based submissions are 

founded or provide to CMS a copy of 

the actual data (if requested); 

• Provide the reporting option 

(reporting period and reporting criteria) 

that the eligible professional has 

satisfied or chosen; and 

• Provide CMS a signed, written 

attestation statement via mail or e-mail 

which states that the quality measure 

results and any and all data including 

numerator and denominator data 

provided to CMS are accurate and 

complete. 

For registries that intend to report on 

2011 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 12-month reporting period of 

January through December 2011 or the 

6-month reporting period of July 1, 2011 

through December 31, 2011; 

• 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 data on all 

applicable measures in a given measures 

group on either 30 or more Medicare 

Part B FFS patients from January 1, 2011 

through December 31, 2011, or on 80 

percent of applicable Medicare Part B 

FFS patients for each eligible 

professional (with a minimum of 15 

patients during the January 1, 2011, 

through December 31, 2011, reporting 

period or a minimum of 8 patients 

during the July 1, 2011, through 

December 31, 2011, reporting period). 

Although these proposed qualification 

requirements for 2011 registries are 

similar to those in previous years, we 

noted that registries would no longer be 

permitted to include non-Medicare 

patients for measures group reporting. 

Additionally, in an effort to reduce the 

variation in measures results across 

registries and better allow eligible 

professional comparisons, we also 

proposed that all current and future 

registries would have to meet the 

following new requirements: 

• 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 

2011. 

• 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 CMSsupplied logic and send the calculated 

data back to CMS in the specified 

format. 

• Provide us the individual data 

elements used to calculate the measures 

if so requested by CMS for validation 

purposes, if aggregated data submission 

is still the selected method of data 

collection. Registries that are subject to 

validation will be asked to send discrete 

data elements for a measure (determined 

by CMS) in the required data format for 

us to recalculate the registries’ reported 

results. Validation will be conducted for 

several measures at a randomly selected 

sample of registries in order to validate 

their data submissions. 

We also invited comments on an 

alternative considered in which 

registries would be required to send 

CMS beneficiary-level data provided to 

the registry by the eligible professional 

and CMS would use the data to 

calculate the eligible professional’s 

measure results (that is, reporting and 

performance rates). 

The following is a summary of the 

comments we received regarding the 

proposed qualification requirements 

and self-nomination process for 

registries for the 2011 Physician Quality 

Reporting System. 

Comment: One commenter supported 

the CMS proposal to limit registries 

based on size and sophistication. The 

intent of allowing registry reporting was 

to allow physicians to benefit from an 

infrastructure that could enable real 

time reporting and comparison with 

other groups. A registry from a single 

physician practice does not meet the 

intent of why registry reporting was 

allowed and should not be allowed for 

registry reporting. 

Response: We believe that the costs 

(time and money) associated with 

creating and testing a registry for 

Physician Quality Reporting System 

qualification are not insignificant. This 

and the increased potential for 

individual practices to ‘‘game’’ Physician 

Quality Reporting System has 

influenced our decision to require 

registries to report on larger numbers of 

eligible professionals or be third party 

vendors. 

Comment: One commenter indicated 

that it is not clear if reporting needs to 

be at both the TIN and NPI level or the 

TIN or NPI level and recommended that 

all quality reporting be required to 

include NPI information and feedback at 

that level. 

Response: Reporting from registries is 

to be submitted at the individual TIN/ 

NPI level. Feedback is available at the 

individual NPI level as well as a TIN’s 

rolled-up NPI report, that is, all NPIs 

under a particular TIN. For reporting 

2011 measures groups via a registry, we 

will no longer accept data from nonMedicare beneficiaries. This will allow 

a better comparison of registrysubmitted data and measure 

calculations to ensure accurate reporting 

and meaningful feedback reports to 

eligible professionals. 

Comment: Some commenters 

supported the proposal that registries 

would no longer use their own measure 

calculation logic or measure flows to 

calculate measure results but instead 

use a CMS-specified standard set of 

logic for calculating measures. Some 

commenters supported the proposal 

based on the fact that registry data 

results have been inconsistent in the 

past, and the results do not yield 

reliable information for eligible 

professionals to analyze their 

performance results for practice 

improvement. 

Response: We agree with the 

commenter and plan to provide 

registries with a calculation flow 

diagram for each measure they intend to 

report and also provide the registry with 

a use case. As part of their qualification 

process, registries will need to calculate 

the measure reporting and performance 

rates and send this information to CMS 

or our contractor in the specified XML 

format. 

Comment: One commenter, while 

supporting the use of a CMS-specified 

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measure calculation logic, suggested 

that at least three months be provided 

to account for the development time 

necessary to convert measures to use 

CMS’s algorithms. The actual 

development effort for a registry, 

however, would be proportionate to the 

quantity of measures supported by a 

registry. 

Response: We respect and appreciate 

the time requirements of registries as 

they attempt qualification. We try to 

balance the needs of the registries with 

the importance of letting eligible 

professionals know which registries are 

qualified so they can begin selecting and 

reporting to their registry of choice. 

Comment: Another commenter who 

supported the use of a CMS-specified 

measure calculation logic, suggested 

that we make the logic public prior to 

implementation in order to determine 

the best logic and calculations for 

measure results. 

Response: We do not believe that 

public input for measure logic 

calculation beyond what is already 

allowed for measure development and 

endorsement is prudent. We attempt to 

use the measures as the developer 

intended and only make changes when 

necessary for implementation purposes 

or as required by Medicare policy. 

Comment: Some commenters opposed 

the proposal for registries to use a CMSspecified logic to calculate measures 

results. One commenter stated they do 

not believe requiring registries to use a 

CMS-specified measure calculation 

logic will lessen the observed variation 

in measure results. The commenter 

believes the rate calculation from the 

numerator and denominator data 

involves simple arithmetic and is 

unlikely to be the cause of the observed 

variation. The more likely cause is a 

variation in how the data is collected or 

defined within the system. Another 

commenter was concerned that a CMSdeveloped logic might not accurately 

calculate measure reporting or 

performance rates in all instances for all 

eligible professionals since it will likely 

be based on claims and may not be 

appropriate to examine the data that is 

submitted to registries. 

Response: We appreciate these 

comments and agree that a CMSspecified logic may not eliminate all of 

the data variations or inconsistencies 

but believe providing a specific logic 

calculation will help reduce these data 

differences. 

Comment: One commenter believes 

that registries should have reasonable 

latitude in interpreting the measure 

flows or logic provided by us to account 

for variability in the ways that data are 

collected by the registries. 

Response: While this may seem like a 

good idea on the surface, this proposal 

would allow too much data variation 

and prevent us and outside stakeholders 

from comparing an eligible 

professional’s performance. This is 

contrary to our desire to increase 

standardization in the way registries 

calculate measure reporting and 

performance rates. 

Comment: A few commenters did not 

support the alternative approach in 

which registries would be required to 

send us discrete data elements and we 

would calculate the results for eligible 

professionals. 

Response: We do not intend to adopt 

this method of registry data submission 

for the 2011 Physician Quality 

Reporting System. 

Comment: One commenter requested 

that we publish the list of registries and 

EHR products qualified for purposes of 

submitting Physician Quality Reporting 

System data prior to the beginning of 

the reporting year. 

Response: We strive to qualify 

registries and EHRs in as timely a 

manner as is possible, however while 

we do not guarantee successful 

submission of data by an EHR or a given 

registry, we want to be as thorough as 

possible in vetting these systems to 

increase the likelihood of successful 

data submission. To date, we have not 

had any qualified registries who have 

not successfully reported data to us. We 

do try to post a partial list of qualified 

registries (based on successful 

participation in a prior year) prior to the 

start of the next reporting period. 

Comment: One commenter urged us 

to include additional information 

related to the registries such as the 

physician participants’ success rate, the 

number of participants and the cost. 

Response: We agree that providing 

cost information may be helpful to 

eligible professionals as they choose a 

qualified registry. There has been 

considerable objection by the registries 

to listing this information on our Web 

site as the registries report that 

comparison of their fees is misleading 

since some of the registries solely report 

Physician Quality Reporting System 

information on behalf of eligible 

professionals to us while others provide 

additional information and tools to their 

participants. 

Upon considering the comments 

received, we are finalizing the 2011 

qualification requirements as proposed 

(75 FR 40173 through 40175), including 

the new requirements for registries to: 

• Use Physician Quality Reporting 

System measure specifications and a 

standard set of measure calculation 

logic provided by CMS to calculate 

reporting rates or performance rates 

unless otherwise stated; 

• Provide a calculated result using 

the CMS-supplied logic and XML file 

for each measure that the registry 

intends to calculate; and 

• Provide us the individual data 

elements used to calculate the measures 

if so requested by CMS for validation 

purposes. 

We intend to post the final 2011 

Physician Quality Reporting System 

registry requirements on the Physician 

Quality Reporting System section of the 

CMS Web site at http://www.cms.gov/ 

PQRI by November 15, 2010 or shortly 

thereafter. We anticipate that new 

registries that wish to self-nominate for 

2011 would be required to do so by 

January 31, 2011. 

Similar to the 2010 Physician Quality 

Reporting System, registries that were 

‘‘qualified’’ for 2010 and wish to 

continue to participate in 2011 will not 

need to be ‘‘re-qualified’’ for 2011 but 

instead demonstrate that they can meet 

the new 2011 data submission 

requirements. For technical reasons, 

however, we do not expect to be able to 

complete this vetting process for the 

new 2011 data submission requirements 

until mid-2011. Therefore, we will not 

be able to post the names of registries 

that are qualified for the 2011 Physician 

Quality Reporting System until we have 

determined the previously qualified 

registries that wish to be qualified for 

the 2011 Physician Quality Reporting 

System are in compliance with the new 

registry requirements. 

Nevertheless, registries ‘‘qualified’’ for 

2010, who were successful in 

submitting 2010 Physician Quality 

Reporting System data, and wish to 

continue to participate in 2011 will 

need to indicate their desire to continue 

participation for 2011 by submitting a 

letter to CMS indicating their continued 

interest in being a Physician Quality 

Reporting System registry for 2011 and 

their compliance with the 2011 

Physician Quality Reporting System 

registry requirements by no later than 

October 31, 2010. Additionally, 

registries that are unsuccessful 

submitting 2010 Physician Quality 

Reporting System data (that is, fail to 

submit 2010 Physician Quality 

Reporting System data per the 2010 

Physician Quality Reporting System 

registry requirements) will need to go 

through a full self-nomination vetting 

process for 2011. 

Similar to the 2010 Physician Quality 

Reporting System, if a qualified 2010 

Physician Quality Reporting System 

registry fails to submit 2010 Physician 

Quality Reporting System data per the 

2010 Physician Quality Reporting 

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System registry requirements, the 

registry will be considered unsuccessful 

at submitting 2010 Physician Quality 

Reporting System data and will need to 

go through the full self-nomination 

process again to participate in the 2011 

Physician Quality Reporting System. By 

March 31, 2011, registries that are 

unsuccessful at submitting quality 

measures results and numerator and 

denominator data for 2010 will need to 

be able to meet the 2011 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, 2011. As 

discussed in another section of this final 

rule with comment period, the 

aforementioned registry requirements 

will also apply for the purpose of a 

registry qualifying to submit the 

electronic prescribing measure for the 

2011 Electronic Prescribing Incentive 

Program. 

(5) Final Qualification Requirements for 

EHR Vendors and Their Products 

The EHR vendor qualification process 

for the 2011 Physician Quality 

Reporting System was finalized in the 

2010 PFS final rule with comment 

period (74 FR 61800 through 61802) and 

is currently underway. We anticipate 

the 2011 EHR vendor vetting process 

will be complete in early 2011, at which 

point those EHR products meeting all of 

the 2011 vendor requirements will be 

listed on the Physician Quality 

Reporting System section of the CMS 

Web site as a ‘‘qualified’’ Physician 

Quality Reporting System EHR product. 

During 2011, we proposed to use the 

same self-nomination process described 

in the ‘‘Requirements for Electronic 

Health Record (EHR) Vendors to 

Participate in the 2011 Physician 

Quality Reporting System EHR Testing 

Program’’ posted on the Physician 

Quality Reporting System section of the 

CMS Web site at http://www.cms.gov/

PQRI/20_AlternativeReporting

Mechanisms.asp#TopOfPage, to qualify 

additional EHR vendors and their EHR 

products to submit quality data 

extracted from their EHR products to the 

CMS clinical quality data warehouse for 

the 2012 Physician Quality Reporting 

System. Specifically, we proposed that 

the 2011 Physician Quality Reporting 

System EHR test vendors, who, if their 

testing is successful, may report 2012 

Physician Quality Reporting System 

data to CMS, must meet the following 

requirements: 

• Be able to collect and transmit all 

required data elements according to the 

2012 EHR Specifications. 

• Be able to separate out and report 

on Medicare Part B FFS patients only. 

• Be able to include TIN/NPI 

information submitted with an eligible 

professional’s quality data. 

• Be able to transmit this data in the 

CMS-approved format. 

• Comply with a secure method for 

data submission. 

• Not be in a beta test form. 

• Have at least 25 active users. 

Additionally, we proposed that 

previously qualified Physician Quality 

Reporting System EHR vendors and 

2012 EHR test vendors must participate 

in ongoing Physician Quality Reporting 

System mandatory support conference 

calls hosted by CMS (approximately one 

call per month). 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 

data extracted from the EHR for the 

2012 Physician Quality Reporting 

System in 2013, but also for the purpose 

of a vendor’s EHR product being 

qualified so that the product’s users may 

electronically submit data extracted 

from the EHR for the electronic 

prescribing measure for the 2012 eRx 

Incentive Program in 2013. We 

proposed that if a vendor misses more 

than one mandatory support call or 

meeting, the vendor and their product 

would be disqualified for the Physician 

Quality Reporting System reporting 

year, which is covered by the call. 

We proposed that previously qualified 

vendors and new vendors will need to 

incorporate any new EHR measures 

(that is, electronically-specified 

measures) added to the Physician 

Quality Reporting System for the 

reporting year they wish to maintain 

their Physician Quality Reporting 

System qualification, as well as update 

their electronic measure specifications 

and data transmission schema should 

either or both change. 

The following is a summary of the 

comments received regarding the 

proposed 2012 EHR vendor 

qualification requirements and/or 

process. 

Comment: We received a comment 

disagreeing that an EHR should be 

required to support all new measures. 

The commenter noted that an EHR 

might not collect all the necessary data 

points for all measures and that this is 

not required for the EHR Incentive 

Program. 

Response: While the commenter 

makes a valid point, selecting an 

appropriate EHR can be challenging for 

eligible professionals. As such, we are 

requiring qualified EHRs to be able to 

report all Physician Quality Reporting 

System measures with electronic 

specifications. We believe that this will 

lessen the burden on eligible 

professionals in deciding which system 

to purchase. That is, either the EHR is 

qualified for the Physician Quality 

Reporting System (completely) or not at 

all. 

Upon consideration of these 

comments, we are finalizing the 2012 

EHR vendor qualification requirements 

that will be used to vet EHR vendors in 

2011 for 2012 Physician Quality 

Reporting System data submission in 

2013 as proposed in the CY 2011 PFS 

proposed rule (75 FR 40175 through 

40176). 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 clinical quality data 

warehouse for the 2012 Physician 

Quality Reporting System will be 

required to submit their self-nomination 

letter by January 31, 2011. Instructions 

for submitting the self-nomination letter 

will be provided in the 2012 EHR 

vendor requirements, which we expect 

to post in the 4th quarter of CY 2010. 

Specifically, for the 2012 Physician 

Quality Reporting System, only EHR 

vendors that self-nominate to participate 

in the 2012 EHR Test Program will be 

considered qualified EHR vendors for 

the 2012 Physician Quality Reporting 

System. 

e. Criteria for Satisfactory Reporting of 

Individual Quality Measures for 

Individual Eligible Professionals 

Section 1848(m)(3)(A) of the Act 

established the criteria for satisfactorily 

submitting data on individual quality 

measures as at least 3 measures in at 

least 80 percent of the cases in which 

the measure is applicable. If fewer than 

3 measures are applicable to the services 

of the professional, the professional may 

meet the criteria by submitting data on 

1 or 2 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 

provides additional authority to the 

Secretary, in consultation with 

stakeholders and experts, to revise the 

criteria for satisfactorily reporting data 

on quality measures. Based on this 

authority and the input we have 

previously received from stakeholders, 

we proposed (75 FR 40176), for 2011, 

the following 2 criteria for claims-based 

reporting of individual measures by 

individual eligible professionals: 

• Report on at least 3 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 

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services were furnished during the 

reporting period to which the measure 

applies. 

To the extent that an eligible 

professional has fewer than 3 Physician 

Quality Reporting System measures that 

apply to the eligible professional’s 

services, we proposed the eligible 

professional would be able to meet the 

criteria for satisfactorily reporting data 

on individual quality measures by 

meeting the following 2 criteria: 

• Report on all measures that apply to 

the services furnished by the 

professional (that is 1 to 2 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. 

We also proposed for 2011 the 

requirement that an eligible professional 

who reports on fewer than 3 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. Under the proposed MAV 

process, when an eligible professional 

reports on fewer than 3 measures, we 

propose to review 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). We further 

proposed that if an eligible professional 

who reports on fewer than 3 measures 

in 2011 reports on a measure that is part 

of an identified cluster of closely related 

measures and did not report on any 

other measure that is part of that 

identified cluster of closely related 

measures, then the eligible professional 

would not qualify as a satisfactory 

reporter in the 2011 Physician Quality 

Reporting System or earn an incentive 

payment. In 2011, we proposed that 

these criteria for satisfactorily reporting 

data on fewer than 3 individual quality 

measures would apply for the claimsbased reporting mechanism only. 

For the 2011 Physician Quality 

Reporting System, we proposed the 

following 2 criteria for satisfactory 

reporting of data on individual 

Physician Quality Reporting System 

quality measures for registry-based and 

EHR-based reporting: 

• Report on at least 3 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. 

We also proposed, in 2011, not to 

count measures that are reported 

through a registry or EHR that have a 

zero percent performance rate. That is, 

if the recommended clinical quality 

action is not performed on at least 1 

patient for a particular measure or 

measures group reported by the eligible 

professional via a registry or EHR, we 

will not count the measure (or measures 

groups) 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 or EHR that 

have a zero percent performance rate in 

the 2011 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 or EHR to CMS. We also seek to 

avoid the possibility of intentional 

submission of spurious data solely for 

the purpose of receiving an incentive 

payment for reporting. 

The following is a summary of the 

comments received regarding the 

criteria for satisfactory reporting of 

individual quality measures for 

individual eligible professionals. 

Comment: We received several 

comments in support of the proposal to 

decrease the reporting sample from 80 

percent to 50 percent of applicable cases 

where the measures are reportable as 

this would encourage greater Physician 

Quality Reporting System participation. 

One commenter expressed support for 

the lower percentage due to the errors 

and complexity seen to date with 

claims-based reporting in the Physician 

Quality Reporting System. Other 

commenters noted that a less restrictive 

requirement is a step forward in 

decreasing the costs and burdens 

associated with Physician Quality 

Reporting System participation. 

Response: We appreciate the 

commenters’ positive feedback. In 

lowering the reporting threshold for 

claims-based reporting from 80 percent 

to 50 percent, we are, as indicated by a 

commenter, acknowledging the 

complexity of claims-based reporting. 

As stated in the CY 2011 PFS proposed 

rule (75 FR 40176), a major reason that 

eligible professionals who participate in 

the Physician Quality Reporting System 

via claims-based reporting fail to do so 

satisfactorily is that they fail to report at 

the required 80 percent. As shown in 

the quarterly QDC Error Reports that we 

post on the CMS Physician Quality 

Reporting System Web site at http:// 

www.cms.gov/PQRI, eligible 

professionals often do not report QDCs 

on claims that are eligible for inclusion 

in a measure’s denominator or report 

QDCs on claims that are not eligible for 

inclusion in a measure’s denominator. 

When an eligible professional fails to 

report QDCs on eligible cases, it 

negatively impacts their reporting rate 

for that measure or measures group. 

When an eligible professional reports 

QDCs on ineligible cases, it neither 

improves nor negatively impacts their 

reporting rate for that measure or 

measures group. Thus, while lowering 

the reporting threshold may decrease 

the number of cases on which an 

eligible professional is required to 

report, it is still crucial that eligible 

professionals carefully review and 

understand the measure specifications 

for each measure or measures group 

they intend to report in order to be able 

to properly identify eligible cases. 

Comment: A few commenters 

supportive of the proposal to reduce the 

reporting sample requirement from 80 

percent to 50 percent recommended we 

also use our existing authority to apply 

the new 50 percent threshold 

retrospectively to the 2010 Physician 

Quality Reporting System. 

Response: We finalized the 2010 

Physician Quality Reporting System 

criteria for satisfactory reporting by 

individual eligible professionals in the 

CY 2010 PFS final rule with comment 

(74 FR 61802 through 61807). Therefore, 

we are not applying the 50 percent 

threshold retrospectively to the 2010 

Physician Quality Reporting System. 

Any eligible professional who would 

have participated in the 2010 Physician 

Quality Reporting System had they 

known that we were lowering the 

reporting threshold for claims-based 

reporting to 50 percent would be 

disadvantaged. Such eligible 

professionals are not likely to be able to 

start participating in the 2010 Physician 

Quality Reporting System and meet the 

2010 criteria for satisfactory reporting in 

the time between publication of this 

final rule with comment period and 

December 31, 2010. 

Comment: A couple of commenters 

requested that the threshold for registrybased and EHR-based reporting also be 

reduced to 50 percent in order to 

facilitate overall participation via an 

EHR or registry. 

Response: As we stated in the CY 

2011 PFS proposed rule (75 FR 40177), 

we do not believe that reducing the 

reporting sample to 50 percent for 

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registry-based reporting and EHR-based 

reporting would substantially impact 

the portion of participating eligible 

professionals who qualify for the 

Physician Quality Reporting System 

incentive. Over 90 percent of eligible 

professionals submitting data through 

registries were incentive eligible. The 

level of effort for EHR-reporting should 

be the same regardless of whether the 

reporting threshold is 50 percent, 80 

percent, or 100 percent since the EHR 

could theoretically be programmed to 

submit data on all eligible cases to CMS. 

Comment: A few commenters 

opposed the proposal to weaken the 

standard for claims-based reporting 

from 80 percent to 50 percent. The 

commenters stated it was unclear why 

we would suggest that we want to move 

toward more meaningful reporting 

mechanisms such as registries and 

EHRs, while at the same time lowering 

the bar for claims-based reporting. 

Another commenter suggested that we 

strengthen the reporting requirements. 

Response: In light of the Physician 

Quality Reporting System payment 

adjustments that are required by section 

1848(a)(8) of the Act beginning in 2015 

for eligible professionals who do not 

satisfactorily report and the fact that 

claims-based reporting still remains the 

only reporting mechanism that is 

available to all eligible professionals, we 

believe that it is important to take steps 

to facilitate Physician Quality Reporting 

System reporting where feasible. As we 

have seen from Physician Quality 

Reporting System results from prior 

years, meeting the 80 percent reporting 

threshold for claims-based reporting is 

challenging because of the multiple 

billing codes as specified by the 

measure developer, that can place 

patients in the denominator of a 

measure combined with the inability to 

resubmit claims solely for the purpose 

of adding a QDC. Thus far, we have not 

experienced the same issues with other 

reporting mechanisms. As we stated in 

the CY 2011 PFS proposed rule (75 FR 

40176), we believe that lowering the 

reporting threshold for claims-based 

reporting will encourage greater 

participation in the Physician Quality 

Reporting System without increasing 

the likelihood that professionals will 

selectively report based on whether the 

performance expectation of a measure is 

met for that particular patient. Once a 

substantial proportion of eligible 

professionals begin participating in the 

Physician Quality Reporting System, we 

envision that we will gradually 

strengthen the reporting requirements. 

Comment: A few commenters 

recommended we remove the restriction 

on registry reporting for those eligible 

professionals that cannot report 3 

measures, especially given that our 

results show that those who report via 

a registry are roughly twice as 

successful as those who report via 

claims. 

Response: We have received similar 

comments to this effect in the past. We 

continue to maintain that permitting an 

eligible professional to report fewer than 

3 measures through the registry-based 

reporting mechanism (if fewer than 3 

measures apply to him or her) would be 

inefficient. It would be analytically 

difficult in that if an eligible 

professional submits fewer than 3 

measures via registries, we would not 

know whether the eligible professional 

did so because only 2 measures applied 

to him or her or because the registry 

only accepts data for 2 of the 

professional’s measures and he or she is 

reporting the third measure via claims. 

We also look for the most favorable 

method of reporting (that is, did the 

eligible professional report via a 

different method for a longer reporting 

period as well as whether an eligible 

professional satisfactorily reported 

under a different reporting option if he 

or she did not satisfactorily report for a 

particular reporting period. Accepting 

fewer than 3 measures from registries 

would increase the amount of crosschecking already required, which would 

impact the timeline for paying 

incentives. 

Comment: Some commenters 

recommended we change the reporting 

requirements for individual eligible 

professionals with respect to increasing 

the number of required measures and/or 

requiring reporting on a standard cluster 

of measures. One commenter 

recommended that we create a standard 

risk-adjusted list of Physician Quality 

Reporting System quality measures for 

all eligible professionals that we would 

update annually. Similarly, another 

commenter suggested that we assign a 

core set of measures that applies across 

eligible professions. The commenter 

also suggested that we assign sets of 

measures for individual and small group 

practice participants for high-volume 

conditions, based on services provided 

to their patient population. Additional 

recommendations for strengthening the 

reporting requirements include, 

requiring eligible professionals to 

stratify measures by patient race, 

ethnicity, preferred language and 

gender, constructing composites for the 

current measures groups, using a 

reliability threshold of 0.70 in lieu of, or 

in conjunction with, a minimum sample 

size, increasing the sample size for 

larger group practices, and maintaining 

the reporting threshold of 80 percent for 

claims-based reporting. 

Response: We appreciate the 

constructive feedback and agree with 

the potential benefit of core measures, 

moving to more sets or groups of 

measures, and being more specific as to 

which measures eligible professionals 

should report in order to achieve more 

consistency of reporting across eligible 

professionals in the future. 

After consideration of the comments 

and for the reasons we previously 

explained, the final 2011 criteria for 

satisfactory reporting of data on 

individual Physician Quality Reporting 

System quality measures for individual 

eligible professionals are summarized in 

Table 73 and are arranged by reporting 

mechanism and reporting period. 

TABLE 73—2011 CRITERIA FOR SATISFACTORY REPORTING OF DATA ON INDIVIDUAL PHYSICIAN QUALITY REPORTING

SYSTEM QUALITY MEASURES, BY REPORTING MECHANISM AND REPORTING PERIOD

Reporting mechanism Reporting criteria Reporting period 

Claims-based reporting ........... • Report at least 3 PQRI measures, or 1–2 measures if less 

than 3 measures apply to the eligible professional; and 

• Report each measure for at least 50% of the eligible professional’s Medicare Part B FFS patients seen during the 

reporting period to which the measure applies.

January 1, 2011–December 31, 2011. 

Claims-based reporting ........... • Report at least 3 PQRI measures, or 1–2 measures if less 

than 3 measures apply to the eligible professional; and 

• Report each measure for at least 50% of the eligible professional’s Medicare Part B FFS patients seen during the 

reporting period to which the measure applies.

July 1, 2011–December 31, 2011. 

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TABLE 73—2011 CRITERIA FOR SATISFACTORY REPORTING OF DATA ON INDIVIDUAL PHYSICIAN QUALITY REPORTING

SYSTEM QUALITY MEASURES, BY REPORTING MECHANISM AND REPORTING PERIOD—Continued 

Reporting mechanism Reporting criteria Reporting period 

Registry-based reporting ......... • Report at least 3 PQRI measures (measures with a 0% 

performance rate will not be counted); and 

• Report each measure for at least 80% of the eligible professional’s Medicare Part B FFS patients seen during the 

reporting period to which the measure applies.

January 1, 2011–December 31, 2011. 

Registry-based reporting ......... • Report at least 3 PQRI measures (measures with a 0% 

performance rate will not be counted); and 

• Report each measure for at least 80% of the eligible professional’s Medicare Part B FFS patients seen during the 

reporting period to which the measure applies.

July 1, 2011–December 31, 2011. 

EHR-based reporting ............... • Report at least 3 PQRI measures (measures with a 0% 

performance rate will not be counted); and 

• Report each measure for at least 80% of the eligible professional’s Medicare Part B FFS patients seen during the 

reporting period to which the measure applies.

January 1, 2011–December 31, 2011. 

For the 2011 Physician Quality 

Reporting System, we are finalizing a 

total of 5 reporting options, or ways, in 

which an eligible professional may meet 

the criteria for satisfactory reporting on 

individual measures. Each reporting 

option consists of the criteria for 

satisfactory reporting such data and 

results on individual quality measures 

relevant to a given reporting mechanism 

and reporting period. Eligible 

professionals must meet the 

requirements for at least 1 of these 5 

reporting options using a single 

reporting mechanism in order to qualify 

for a 2011 Physician Quality Reporting 

System incentive for satisfactorily 

reporting individual measures. CMS 

will not combine data received via 

different reporting mechanisms to 

determine whether the reporting criteria 

are met. It is possible, however, for 

eligible professionals to potentially 

qualify as satisfactorily reporting 

individual quality measures under more 

than one of the reporting criteria, 

reporting mechanisms, and/or for more 

than one reporting period. In this case, 

only one incentive payment will be 

made to an eligible professional based 

on the longest reporting period for 

which the eligible professional 

satisfactorily reports. 

f. Criteria for Satisfactory Reporting 

Measures Groups for Individual Eligible 

Professionals 

For the 2011 Physician Quality 

Reporting System, we proposed that 

individual eligible professionals have 

the option to report measures groups 

instead of individual quality measures 

to qualify for the 2011 Physician Quality 

Reporting System incentive, using 

claims or registries. The criteria that we 

proposed for 2011 for satisfactory 

reporting of measures groups through 

claims-based or registry-based reporting 

for either the 12-month or 6-month 

reporting period are as follows: (1) For 

claims-based reporting, the reporting of 

at least 1 measures group for at least 50 

percent of patients to whom the 

measures group applies, during the 

reporting period; or (2) for registrybased reporting, the reporting of at least 

1 measures group for at least 80 percent 

of patients to whom the measures group 

applies during the reporting period. 

Eligible professionals, for both claimsbased and registry-based reporting 

under these criteria, would be required 

to submit data on a minimum of 15 

unique Medicare Part B FFS patients for 

the 12-month reporting period and a 

minimum of 8 Medicare Part B FFS 

patients for the 6-month reporting 

period. 

Additionally for 2011, we proposed to 

retain the criteria, available only for the 

12-month reporting period, based on 

reporting on at least 1 measures group 

for at least 30 unique patients for whom 

services were furnished between 

January 1, 2011, and December 31, 2011, 

to whom the measures group applies. As 

in previous years, we proposed that for 

2011, the patients, for claims-based 

reporting, would be limited to Medicare 

Part B FFS patients. Finally, for registrybased reporting in 2011, in contrast to 

prior program years, we proposed to 

require that the minimum patient 

numbers or percentages must be met by 

Medicare Part B FFS patients 

exclusively and not non-Medicare Part 

B FFS patients. 

The following is a summary of the 

comments received regarding the 

proposed criteria for reporting measures 

groups for individual eligible 

professionals. 

Comment: One commenter strongly 

supported the proposed Physician 

Quality Reporting System measures 

group reporting option for claims-based 

and registry reporting, especially the 

change in the reporting threshold for 

claims-based reporting from 80 percent 

to 50 percent . 

Response: We appreciate the 

commenter’s positive feedback. 

Comment: A few commenters 

supported the proposal that for registry 

reporting of measures groups for 2011 

that the minimum patient numbers or 

percentages must be met by Medicare 

Part B FFS patients exclusively and 

exclude data on non-Medicare Part B 

FFS patients. It is thought that this will 

reduce the difficulty of analyzing the 

data we received from registries where 

patients other than Medicare Part B FFS 

patients are included. Another 

commenter was concerned that this 

change eliminates any benefit that 

eligible professionals had for using the 

registry more broadly than just for 

Medicare patients. The commenter also 

noted that registries are most useful for 

improved patient care when all patients 

in the practice with a particular 

condition are included in the system. 

Response: We appreciate the 

supportive comment. We believe that 

limiting the reporting sample for 

registry-based reporting of measures 

groups to Medicare Part B FFS patients 

will facilitate validation of registrysubmitted data against the Medicare 

claims data. 

Comment: One commenter supported 

our proposal to eliminate the 

requirement for reporting on 

consecutive patients for registry-based 

reporting of measures groups. 

Response: We appreciate the 

commenter’s support. We assume that 

the commenter is referring to a 

requirement in the 2008 and 2009 

Physician Quality Reporting System 

where eligible professionals were 

required to report on patients seen 

consecutively by date of service. We 

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note that we removed the requirement 

for reporting on consecutive patients for 

registry-based reporting of measures 

groups for the 2010 Physician Quality 

Reporting System. We did not propose 

nor are we requiring eligible 

professionals to report on consecutive 

patients when reporting measures 

groups for the 2011 Physician Quality 

Reporting System. 

Based on the comments, the final 

2011 criteria for satisfactory reporting of 

data on measures groups are 

summarized in Table 74 and are 

arranged by reporting mechanism and 

reporting period. 

TABLE 74—2011 CRITERIA FOR SATISFACTORY REPORTING ON MEASURES GROUPS, BY REPORTING MECHANISM AND

REPORTING PERIOD

Reporting mechanism Reporting criteria Reporting period 

Claims-based reporting ............................ • Report at least 1 PQRI measures group; January 1, 2011–December 31, 2011. 

• Report each measures group for at least 30 Medicare 

Part B FFS patients.

Claims-based reporting ............................ • Report at least 1 PQRI measures group; January 1, 2011–December 31, 2011. 

• Report each measures group for at least 50% of the eligible professional’s Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; and 

• Report each measures group on at least 15 Medicare 

Part B FFS patients seen during the reporting period to 

which the measures group applies.

Claims-based reporting ............................ • Report at least 1 PQRI measures group; July 1, 2011–December 31, 2011. 

• Report each measures group for at least 50% of the eligible professional’s Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; and 

• Report each measures group on at least 8 Medicare Part 

B FFS patients seen during the reporting period to which 

the measures group applies.

Registry-based reporting ......................... • Report at least 1 PQRI measures group (measures 

groups with a 0% performance rate will not be counted); 

January 1, 2011–December 31, 2011. 

• Report each measures group for at least 30 Medicare 

Part B FFS patients.

Registry-based reporting ......................... • Report at least 1 PQRI measures group (measures 

groups with a 0% performance rate will not be counted); 

January 1, 2011–December 31, 2011. 

• Report each measures group for at least 80% of the eligible professional’s Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; and 

• Report each measures group on at least 15 Medicare 

Part B FFS patients seen during the reporting period to 

which the measures group applies.

Registry-based reporting ......................... • Report at least 1 PQRI measures group (measures 

groups with a 0% performance rate will not be counted); 

July 1, 2011–December 31, 2011. 

• Report each measures group for at least 80% of the EP’s 

Medicare Part B FFS patients seen during the reporting 

period to whom the measures group applies; and 

• Report each measures group on at least 8 Medicare Part 

B FFS patients seen during the reporting period to which 

the measures group applies.

As illustrated in Table 74, there are a 

total of 6 reporting options, or ways in 

which eligible professionals may meet 

the criteria for satisfactory reporting of 

measures groups for the 2011 Physician 

Quality Reporting System. As we stated 

previously, eligible professionals may 

potentially qualify as satisfactorily 

reporting for the 2011 Physician Quality 

Reporting System on measures groups 

under more than one of the reporting 

criteria, reporting mechanisms, and/or 

for more than one reporting period; 

however, only one incentive payment 

will be made to an eligible professional 

based on the longest reporting period for 

which the eligible professional 

satisfactorily reports. In addition, 

although an eligible professional could 

submit data under multiple reporting 

mechanisms, CMS will not combine 

data received from different reporting 

mechanisms to determine whether the 

eligible professional satisfactorily 

reported. Similarly, 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 

based on the longest reporting period for 

which the eligible professional 

satisfactorily reports. 

g. Reporting Option for Satisfactory 

Reporting on Quality Measures by 

Group Practices 

(1) Background and Authority 

Section 1848(m)(3)(C)(i) of the Act 

required the Secretary to establish and 

have in place a process by January 1, 

2010 under which eligible professionals 

in a group practice (as defined by the 

Secretary) shall be 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, such as 

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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, such as the model 

used under the Medicare Physician 

Group Practice (PGP) demonstration 

project under section 1866A of the Act. 

A group practice reporting option 

(GPRO) was established for the 2010 

Physician Quality Reporting System in 

the CY 2010 PFS final rule with 

comment period (74 FR 61807 through 

61811). 

For the 2011 Physician Quality 

Reporting System, we proposed to 

continue to allow a group practice, as a 

whole (that is, for the TIN(s)), to 

participate in the 2011 Physician 

Quality Reporting System and to submit 

Physician Quality Reporting System 

quality measures for 2011 and qualify to 

earn an incentive (75 FR 40178–40183). 

If, however, an individual eligible 

professional is affiliated with a group 

practice participating in the GPRO and 

the group practice satisfactorily reports 

under the GPRO, the eligible 

professional will be considered as 

satisfactorily reporting Physician 

Quality Reporting System quality 

measures data at the individual level 

under that same TIN (that is, for the 

same TIN/NPI combination). 

(2) Definition of ‘‘Group Practice’’ 

As stated previously, section 

1848(m)(3)(C)(i) of the Act authorized 

the Secretary to define ‘‘group practice.’’ 

For purposes of determining whether a 

group practice satisfactorily submits 

Physician Quality Reporting System 

quality measures data, we proposed that 

for the 2011 Physician Quality 

Reporting System a ‘‘group practice’’ 

would consist of a physician group 

practice, as defined by a TIN, with 2 or 

more individual eligible professionals 

(or, as identified by NPIs) who have 

reassigned their billing rights to the TIN. 

This proposed definition for group 

practice is different from the 2010 

Physician Quality Reporting System 

definition of group practice in that we 

proposed to change the minimum group 

size from 200 to 2 to enable more group 

practices to participate in the Physician 

Quality Reporting System GPRO in 

2011. 

As our intent is to build on an 

existing quality reporting program with 

which group practices may already be 

familiar, we proposed to be consistent 

with the PGP demonstration and use 

one GPRO process, which we refer to as 

‘‘GPRO I’’ that would be available only 

to similar large group practices. For 

group practices that have fewer than 200 

members, we proposed, if technically 

feasible, an alternative GPRO process 

which we refer to as ‘‘GPRO II’’. 

In order to participate in the 2011 

Physician Quality Reporting System 

through the GPRO, we proposed to 

require group practices to complete a 

self-nomination process and to meet 

certain technical and other 

requirements. For 2011, we proposed 

that group practices must participate in 

the Physician Quality Reporting System 

group practice reporting option in order 

to be eligible to participate in the eRx 

group practice reporting option for the 

2011 Physician Quality Reporting 

System. As this is the current 

requirement under the 2010 Physician 

Quality Reporting System and eRx 

Incentive Program, we proposed that a 

group practice wishing to participate in 

both the Physician Quality Reporting 

System group practice reporting option 

and the electronic prescribing group 

practice reporting option must notify 

CMS of its desire to do so at the time 

that it self-nominates to participate in 

the Physician Quality Reporting System 

group practice reporting option. 

In addition, we proposed that group 

practices that are participating in 

Medicare demonstration projects, as 

approved by the Secretary, would also 

be considered group practices for 

purposes of the 2011 Physician Quality 

Reporting System GPRO. Specifically, 

for the 2011 Physician Quality 

Reporting System we proposed to deem 

group practices participating in the PGP, 

Medicare Care Management 

Performance (MCMP), and EHR 

demonstrations to be participating in 

the Physician Quality Reporting System 

GPRO since many of the measures being 

reported under these demonstration 

programs are similar to Physician 

Quality Reporting System measures. As 

a result, such practices do not need to 

separately self-nominate to participate 

in the Physician Quality Reporting 

System GPRO, although it would be 

necessary for such groups to meet the 

requirements for incentive qualification 

under their respective approved 

demonstration project. For example, the 

MCMP demonstration sites would be 

required to meet the requirements for 

earning a Physician Quality Reporting 

System incentive specified under the 

MCMP demonstration. 

For purposes of the 2011 eRx 

Incentive Program, however, we 

proposed that group practices 

participating in CMS-approved 

demonstration projects previously 

discussed would be required to meet the 

proposed 2011 eRx Incentive Program 

GPRO requirements or the proposed 

2011 eRx Incentive Program 

requirements for individual eligible 

professionals in order to qualify for a 

2011 eRx incentive. Such group 

practices would not be able to qualify 

for a 2011 eRx incentive via 

participation in an approved 

demonstration project since there is no 

eRx requirement under these 

demonstrations. 

We also sought comment on 

alternatives for expanding GPRO in 

2011. One option that we considered 

was to expand GPRO I to include 

smaller group practices. Specifically, we 

considered allowing groups of 100 or 

more eligible professionals to 

participate in the Physician Quality 

Reporting System under GPRO using the 

same reporting mechanism and 

reporting criteria required under the 

2010 Physician Quality Reporting 

System GPRO and proposed for the 

2011 Physician Quality Reporting 

System GPRO I. We also considered 

modifying the definition of ‘‘group 

practice’’ to include groups that have 

and use multiple TINs. 

The following is a summary of the 

comments received regarding the 

proposed definition of ‘‘group practice’’ 

and the alternatives that were 

considered. 

Comment: Several commenters 

expressed support for the proposed 

2011 definition of a group practice as 2 

or more individual eligible professionals 

who have reassigned their billing rights 

to the appropriate TIN, as opposed to a 

group practice with 200 or more 

individual eligible professionals as was 

the case in 2010. Commenters believed 

that this will greatly expand the 

opportunities for participation in the 

group practice reporting option and 

aligns with the current environment. 

Response: We agree that our proposed 

definition of ‘‘group practice’’ will 

expand opportunities to participate in 

the group practice reporting option. To 

allow for expanded use of the group 

practice reporting option, we are 

finalizing our proposal to define ‘‘group 

practice’’ as 2 or more individual 

eligible professionals. However, as 

noted in the discussed that follows, we 

are modifying the definition of ‘‘group 

practice’’ with respect to group practices 

participating in Medicare demonstration 

projects approved by the Secretary.’’ 

Rather than including such group 

practices in the definition of ‘‘group 

practice’’ at § 414.90(b), we are 

indicating that such practices are 

deemed to be participating in the 

Physician Quality Reporting System at 

§ 414.90(g)(1). 

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Monday, 

November 29, 2010 

Book 2 of 2 Books 

Pages 73503–73934 

Part II—Continued 

Department of 

Health and Human 

Services 

Center for Medicare & Medicaid Services 

42 CFR Parts 405, 409, 410 et al. 

Medicare Program; Payment Policies 

Under the Physician Fee Schedule and 

Other Revisions to Part B for CY 2011; 

Final Rule 

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Comment: One commenter believes 

that the GPRO requirement that 

physicians reassign their billing rights 

to the taxpayer identification number 

(TIN) could be problematic for some 

practices where individual physicians 

continue billing Medicare on their 

behalf rather than reassigning to the 

group practice. Yet, these practices still 

function as a group and use the same 

data systems. It was recommended that 

we reconsider the reassignment 

requirement, as well as continue to add 

more specialty-specific measures groups 

in an effort to make the GPRO a more 

viable and attractive option. 

Response: We understand that there 

are various scenarios that may occur 

that would result in an individual 

eligible professional not reassigning his 

or her billing rights to a group TIN as 

required for inclusion in the GPRO I 

group. However, Physician Quality 

Reporting System GPRO I patient 

assignment, sample selection and 

incentive calculations are based at the 

TIN/NPI level. We believe it would be 

burdensome on the GPRO as well as the 

individual eligible professionals to track 

all individual NPIs who may practice 

periodically with their group while 

accounting for the instances when the 

NPI is not providing services to 

beneficiaries assigned to the group. 

Comment: One commenter requested 

that we expand the definition of ‘‘group 

practice’’ to include non-physician 

providers. 

Response: We are finalizing our 

proposal to define ‘‘group practice’’ as a 

single TIN with 2 or more eligible 

professionals, as identified by their 

individual NPI, who have reassigned 

their billing rights to the TIN, but as 

noted in the following discussion, we 

are modifying our definition with 

respect to group practices participating 

in Medicare demonstration projects 

approved by the Secretary. Therefore, 

although the term ‘‘physician group’’ 

may sometimes be used when referring 

to group practices, it is not intended to 

infer that group practices are only 

physicians. 

Comment: A couple of commenters 

commended us for taking positive steps 

to reduce the reporting burden for 

eligible professionals. The commenters 

were specifically referring to our 

proposal to deem group practices 

participating in the PGP, MCMP, and 

EHR demonstrations to be participating 

in the Physician Quality Reporting 

System such that all eligible 

professionals participating in these 

demonstrations automatically will 

receive Physician Quality Reporting 

System bonus payments. The 

commenters requested that we extend 

this same waiver to all types of 

providers who participate in 

demonstrations. One commenter noted 

that the majority of participants in the 

PGP demonstration are hospitals and, 

like the Physician Quality Reporting 

System program, many of the measures 

that hospitals report to the RHQDAPU 

program overlap with the measures 

required for participation in the 

demonstration. 

Response: We agree with trying to 

lessen the burden on eligible 

professionals who are participating in 

demonstrations when practical and 

feasible. We specifically focused on 

these three demonstrations because 

their participants are required to report 

on measures that are very similar to the 

Physician Quality Reporting System 

GPRO I measures and to do so using a 

process very similar to the Physician 

Quality Reporting System GPRO I 

process for their demonstrations. At this 

time, we are not aware of other 

demonstrations that require the same 

measures and reporting processes. 

Therefore, we are not granting waivers 

with regard to the group practice 

reporting option to providers who are 

participating in demonstrations other 

than the PGP, MCMP, and EHR 

demonstrations. In addition, this waiver 

does not apply to any quality reporting 

program other than the Physician 

Quality Reporting System. We also 

further note that demonstration 

participants will not automatically 

receive Physician Quality Reporting 

System incentive payments. Rather, 

they must meet the requirements for 

Physician Quality Reporting System 

incentive qualification under their 

respective approved demonstration 

project. 

Comment: One commenter noted that 

practices participating in either the 

MCMP or EHR demonstrations could 

consist of solo practitioner practices. In 

addition, practices participating in the 

PGP, MCMP, or EHR demonstrations 

could consist of multiple TINs. The 

commenter requested clarification on 

whether such practices would still be 

considered a ‘‘group practice’’ for 

purposes of the Physician Quality 

Reporting System GPRO. 

Response: Our intent, in proposing to 

include practices that are participating 

in these demonstrations in the 

definition of ‘‘group practice’’ was to 

reduce the burden on eligible 

professionals who are already reporting 

using a process similar to the Physician 

Quality Reporting System GPRO I 

method and on similar measures, 

regardless of the composition of the 

actual group. Therefore, we are 

modifying the definition of ‘‘group 

practice’’ with respect to group practices 

participating in Medicare demonstration 

projects approved by the Secretary.’’ 

Rather than including such group 

practices in the definition of ‘‘group 

practice’’ at § 414.90(b), we are 

indicating that such practices are 

deemed to be participating in the 

Physician Quality Reporting System at 

§ 414.90(g)(1). In addition, we are 

clarifying at § 414.90(g)(1) that such 

practices are ‘‘group practices of any size 

(including solo practitioners) or 

comprised of multiple TINs 

participating in a Medicare 

demonstration project approved by the 

Secretary.’’ 

Based on these comments, we are 

finalizing the proposed definition of 

‘‘group practice’’ with the changes 

discussed previously for purposes of the 

2011 Physician Quality Reporting 

System group practice reporting option. 

We recognize that a group’s size can 

fluctuate throughout the year as 

professionals move from practice to 

practice. Therefore, a group practice’s 

size, for purposes of determining which 

reporting criteria the group must satisfy, 

will be the size of the group at the time 

the group’s participation in one of the 

2011 GPRO options is approved by 

CMS. 

We also recognize 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. 

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 

would result in the practice being 

subject to different criteria for 

satisfactory reporting, then 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 being subject to the 

different criteria for satisfactory 

reporting, justifying why they should 

not be subject to the different criteria for 

satisfactory reporting, or opting out of 

participation in the Physician Quality 

Reporting System as a group practice. 

For example, if we determine that a 

group practice that self-nominates for 

GPRO II has more than 199 eligible 

professionals billing Medicare under the 

practice’s TIN, the practice would have 

the option of agreeing to participate in 

the Physician Quality Reporting System 

under GPRO I, explaining why the 

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practice actually has fewer than 200 

eligible professionals (for example, 

some of the eligible professionals who 

billed Medicare have since retired), or 

opting out of participation in the 

Physician Quality Reporting System 

GPRO for 2011. If a group practice that 

self-nominates for GPRO I has fewer 

than 200 NPIs billing Medicare under 

the practice’s TIN, then we will give the 

practice the opportunity to participate 

in GPRO II. 

(3) Process for Physician Group 

Practices To Participate as Group 

Practices and Criteria for Satisfactory 

Reporting 

(A) Group Practice Reporting Option for 

Physician Group Practices With 200 or 

More NPIs—GPRO I 

As stated previously, we proposed 

that group practices interested in 

participating in GPRO I must selfnominate to do so. For group practices 

selected to participate in the Physician 

Quality Reporting System GPRO I for 

2011, we proposed to retain the existing 

12-month reporting period beginning 

January 1, 2011. We proposed that 

group practices participating in GPRO I 

submit information on a proposed 

common set of 26 NQF-endorsed quality 

measures using a data collection tool 

based on the GPRO Tool used in the 

2010 Physician Quality Reporting 

System GPRO by 36 participating group 

practices to report quality measures 

under the Physician Quality Reporting 

System. As part of the data submission 

process for 2011 GPRO I, we proposed 

that during 2012, each group practice 

would be required to report quality 

measures with respect to services 

furnished during the 2011 reporting 

period (that is, January 1, 2011, through 

December 31, 2011) on an assigned 

sample of Medicare beneficiaries. 

Once the beneficiary assignment has 

been made for each group practice, 

which we anticipate will be done during 

the fourth quarter of 2011, we proposed 

to provide each group practice selected 

to participate in the Physician Quality 

Reporting System GPRO I with access to 

a database (that is, a data collection tool) 

that will include the group’s assigned 

beneficiary samples and the final GPRO 

I quality measures. We proposed to prepopulate the data collection tool with 

the assigned beneficiaries’ demographic 

and utilization information based on all 

of their Medicare claims data. The group 

practice will be required to populate the 

remaining data fields necessary for 

capturing quality measure information 

on each of the assigned beneficiaries. 

Identical to the sampling method used 

in the PGP demonstration, we proposed 

that the random sample must consist of 

at least 411 assigned beneficiaries. If the 

pool of eligible assigned beneficiaries is 

less than 411, then the group practice 

must report on 100 percent, or all, of the 

assigned beneficiaries to satisfactorily 

participate in the group practice 

reporting option. For each disease 

module or preventive care measure, the 

group practice would be required to 

report information on the assigned 

patients in the order in which they 

appear in the group’s sample (that is, 

consecutively). These proposed 

reporting criteria are identical to the 

reporting criteria used in the PGP 

demonstration and in the 2010 

Physician Quality Reporting System 

GPRO. 

For 2011, we proposed an exclusive 

reporting mechanism for eligible 

professionals identified as part of the 

group practice with respect to the group 

as identified by the TIN. However, 

eligible professionals who are part of the 

group practice, and who separately 

practice with respect to another TIN to 

which the eligible professional has 

reassigned benefits, could separately 

qualify as individual eligible 

professionals with respect to the other 

practice (TIN). 

We invited comments on our proposal 

for 2011 to retain 200 as the number of 

NPIs for a TIN required for each group 

practice under the GPRO I. We also 

invited comment on our proposal to 

allow those ‘‘qualified’’ for 2010 GPRO 

to be rolled over for automatic 

qualification for 2011 GPRO I. 

The following is a summary of the 

comments received regarding the 

proposed process for physician group 

practices with 200 or more NPIs (that is, 

GPRO I). 

Comment: A commenter expressed 

support for continuation of GPRO I. 

Response: We appreciate the 

commenter’s support. We are finalizing 

the GPRO I as proposed. We believe that 

this process provides an effective means 

of collecting quality data from large 

group practices. 

Comment: A commenter expressed 

support for our proposal that 2010 

GPRO participants would not need to go 

through the self-nomination process to 

participate in 2011. 

Response: We appreciate the time and 

effort taken by the commenter to state 

support of our proposal to not have 

2010 GPRO participants go through self 

nomination process for GPRO I 

participation for 2011. We will not 

require 2010 GPRO participants to go 

through the self-nomination process for 

2011 but they will need to inform us of 

their desire to participate in the 2011 

GPRO I. 

Comment: To encourage group 

reporting for large practices, and to 

reduce the risk to individual eligible 

professionals if the practices do not 

qualify for an incentive, one commenter 

requested that we allow the individual 

eligible professionals within GPRO I to 

continue reporting through traditional 

methods. Thus, those participants might 

be eligible for incentives if the group 

practice does not satisfactorily submit 

data. 

Response: We considered the 

feasibility of analyzing Physician 

Quality Report System data submissions 

for GPRO I participants at the individual 

NPI level, but we decided against this 

option. Analyzing Physician Quality 

Reporting System data submissions for 

GPRO I participants at the individual 

NPI level would require individual 

eligible professionals who are part of a 

group practice participating in GPRO I 

to collect and report quality data in 

multiple ways, which would be 

inefficient. In addition, doing so would 

require additional CMS resources and 

potentially delay availability of the 

incentive payments for all participants. 

Furthermore, we believe that a group 

practice should have little difficulty in 

satisfactorily reporting under GPRO I 

since they will receive feedback prior to 

submission of the data to CMS. 

Comment: We received a few 

comments on the proposed reporting 

criteria for GPRO I. One commenter 

suggested that the GPRO reporting 

requirements be limited to 411 patients 

in total, rather than 411 patients per 

measure, in order to reduce the 

associated resource burdens to 

participation. Another commenter was 

concerned with the considerable 

resources required to complete the data 

collection tool for this sample in such 

a short time frame. Given the 

methodology used, the commenter 

believes a smaller sample size would 

provide an accurate representation of a 

group’s performance and urges us to 

reevaluate the sample sizes required. 

Response: The sample size for GPRO 

I is based on research done through the 

PGP demonstration. Since 2010 is the 

first year that GPRO was used for the 

Physician Quality Reporting System, 

there is insufficient data to warrant 

changing the sample size at this time. 

We note, however, that the GPRO I is for 

group practices with 200 or more 

eligible professionals. On average, these 

group practices typically have 20,000 

patients assigned to each group practice. 

Thus, the number of measures and the 

required sample size is considered to be 

equitable for practices with this volume 

of patients and eligible professionals. 

We will continue to evaluate the 

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number and types of measures and 

modules for future program years. 

Comment: One commenter 

recommended that group practices with 

50 or more eligible professionals be 

eligible to participate in GPRO I. 

Response: The GPRO I is based on the 

methodology researched through the 

PGP demonstration project. We would 

like to further explore the impact of a 

smaller patient sample size before 

implementing GPRO I for group 

practices less than 200 NPI’s. We are, 

however, finalizing a group practice 

option for groups with less than 200 

eligible professionals (GPRO II) that 

group practices with 2–199 eligible 

professionals can participate in for 

2011. With the implementation of GPRO 

II for 2011 it would be a potential drain 

on resources to also implement GPRO I 

for smaller practice at the same time. 

For the reasons discussed previously 

and after taking into consideration the 

comments, we are finalizing the process 

group practices will be required to use 

to report data on quality measures for 

the 2011 as a group practice under 

GPRO I and the associated criteria for 

satisfactory reporting of data on quality 

measures by GPRO I practices, which 

are summarized in Table 75. Group 

practices participating in the Physician 

Quality Reporting System GPRO I as a 

group practice will be required to report 

on all of the measures listed in Table 75 

of this final rule with comment period. 

These quality measures are grouped into 

preventive care measures and four 

disease modules: heart failure, diabetes, 

coronary artery disease, and 

hypertension. 

TABLE 75—2011 PROCESS FOR PHYSICIAN GROUP PRACTICES TO PARTICIPATE AS GROUP PRACTICES AND CRITERIA

FOR SATISFACTORY REPORTING OF DATA ON QUALITY MEASURES BY GROUP PRACTICES FOR GPRO I 

Reporting mechanism Reporting criteria Reporting period 

A pre-populated data collection tool provided by CMS.• Report on all measures included in the data collection 

tool (26 measures); and.

January 1, 2011–December 31, 2011. 

• Complete the tool for the first 411 consecutively ranked 

and assigned beneficiaries in the order in which they appear in the group’s sample for each disease module or 

preventive care measure. If the pool of eligible assigned 

beneficiaries is less than 411, then report on 100% of assigned beneficiaries.

As stated in the CY 2011 PFS 

proposed rule (75 FR 40179), group 

practices interested in participating in 

GPRO I must submit a self-nomination 

letter accompanied by an electronic file 

submitted in a format specified by CMS 

(such as, a Microsoft Excel file) that 

includes the group practice’s TIN(s) and 

name of the group practice, the name 

and e-mail address of a single point of 

contact for handling administrative 

issues, as well as the name and e-mail 

address of a single point of contact for 

technical support purposes. We will 

validate that the group practice consists 

of a minimum of 200 NPIs and will 

supply group practices with this list. 

The self-nomination letter must also 

indicate the group practice’s compliance 

with the following requirements: 

• Agree to attend and participate in 

all mandatory GPRO training sessions; 

and 

• Have billed Medicare Part B on or 

after January 1, 2010 and prior to 

October 29, 2010. 

We are not finalizing our proposal 

requiring group practices to indicate in 

their self-nomination letter that they 

have an active IACS user account. This 

was a requirement that we proposed to 

retain from the 2010 Physician Quality 

Reporting System GPRO selfnomination process. However, since an 

active IACS user account will not be 

needed to submit 2010 Physician 

Quality Reporting System GPRO data to 

us, we have decided not to require an 

IACS user account for the 2011 

Physician Quality Reporting System 

GPRO I. Although access to a CMS 

identity management system will not be 

required for submitting 2011 PQRI 

GPRO I data to us, a group practice will 

need to have access to a CMS identity 

management system in order to access 

their 2011 PQRI feedback report. 

We intend to post the final 2011 

Physician Quality Reporting System 

GPRO I participation requirements for 

group practices, including instructions 

for submitting the self-nomination letter 

and other requested information, on the 

Physician Quality Reporting System 

section of the CMS Web site at http:// 

www.cms.gov/PQRI by November 15, 

2010 or shortly thereafter. Group 

practices that wish to self-nominate for 

2011 will be required to do so by 

January 31, 2011. Upon receipt of the 

self-nomination letters we will assess 

whether the participation requirements 

were met by each self-nominated group 

practice using 2010 Medicare claims 

data. We will not preclude a group 

practice from participating in the GPRO 

I if we discover, from analysis of the 

2010 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, 2010 and prior to or on 

October 29, 2010) as long as the group 

has at least 200 established Medicare 

providers. NPIs who are not established 

Medicare providers, however, would 

not be included in our incentive 

payment calculations. Group practices 

that were selected to participate in the 

2010 Physician Quality Reporting 

System GPRO will automatically be 

qualified to participate in the 2011 

Physician Quality Reporting System 

GPRO I and will not need to complete 

the 2011 Physician Quality Reporting 

System GPRO I self-nomination process. 

The 2010 Physician Quality Reporting 

System GPRO Tool will be updated as 

needed to include the 2011 Physician 

Quality Reporting System GPRO I 

measures. We believe that use of the 

GPRO data collection tool allows group 

practices the opportunity to calculate 

their own performance rates for 

reporting quality measures. 

As stated in the CY 2011 PFS 

proposed rule (75 FR 40180 through 

40181), 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 I 

tool, we will assign beneficiaries to each 

group practice using a patient 

assessment methodology modeled after 

the patient assignment methodology 

used in the PGP demonstration. Based 

on our desire to model the Physician 

Quality Reporting System GPRO I after 

the PGP demonstration, we will also 

consider applying any refinements 

made to the methodology used in the 

PGP demonstration prior to January 1, 

2011 to the 2011 Physician Quality 

Reporting System. We anticipate using 

Medicare claims data for dates of service 

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on or after January 1, 2011 and 

submitted and processed by 

approximately October 31, 2011 (that is, 

the last business day of October 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 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 1 office visit to 

the group practice will be eliminated 

from the group practice’s assigned 

patient sample for purposes of the 2011 

Physician Quality Reporting System 

GPRO I. We will pre-populate the GPRO 

I tool with the assigned beneficiaries’ 

demographic and utilization 

information based on their Medicare 

claims data. 

Upon receipt of the pre-populated 

data collection tool, the group practice 

will need to populate the remaining 

data fields necessary for capturing 

quality measure information on each of 

the assigned beneficiaries up to 411 

beneficiaries for each disease module 

and preventive care measure. 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 files for 100 percent of eligible 

assigned beneficiaries for that disease 

module or preventive care measure. For 

each disease module or preventive care 

measure, 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). 

(B) Group Practice Reporting Option for 

Group Practices of 2–199 NPIs—GPRO– 

II 

As discussed previously, section 

1848(m)(3)(C) of the Act authorized us 

to define the term ‘‘group practice’’ and 

required us to establish a process under 

which eligible professionals in group 

practices shall be treated as 

satisfactorily submitting data on 

Physician Quality Reporting System 

quality measures, but was not 

prescriptive with regard to the 

characteristics of this process. Although 

for 2010 we did not provide a process 

for groups of less than 200 NPIs to 

report under the GPRO, we believe that 

there are significant potential benefits to 

allowing reporting at the group level 

generally. Thus, based on this authority 

we proposed a new group practice 

reporting option (GPRO II) for groups of 

2–199 NPIs in a TIN for 2011 (75 FR 

40181). For GPRO II in 2011, we 

proposed to require groups of eligible 

professionals who decide to report as a 

group to self-nominate. We did not 

propose to preclude a group practice 

from participating in the GPRO II if we 

discover, from analysis of the 2010 

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, 2010 and prior to or on) as 

long as the group has at least 2 

established Medicare providers. October 

29, 2010 NPIs who are not established 

Medicare providers, however, would 

not be included in our incentive 

payment calculations. 

We also proposed that selfnominating groups would need to 

indicate in this letter if the group 

intends to report as a group for the eRx 

Incentive Program and the reporting 

mechanism the group intends to use to 

report as a group for the eRx Incentive 

Program. 

Since GPRO II would be a new 

process available to groups in 2011, we 

proposed to initially pilot the GPRO II 

process with a limited number of 

groups. We proposed to select the first 

500 groups that meet the proposed 

eligibility requirements to participate in 

the 2011 GPRO II. We proposed to use 

the postmark to determine the order in 

which groups self-nominated for GPRO 

II. We proposed to consider only selfnomination letters postmarked between 

January 3, 2011 and January 31, 2011. 

We did not propose to consider letters 

postmarked prior to January 3, 2011 to 

prevent groups from self-nominating 

before the GPRO II requirements are 

finalized and to discourage groups from 

self-nominating for GPRO II prior to 

reviewing the final GPRO II 

requirements. 

For purposes of quality data 

submission, we proposed, for the GPRO 

II, to allow eligible professionals to 

submit their data through claims or 

through a qualified GPRO registry to the 

extent registries are technically capable 

of collecting, calculating and 

transmitting the required data to CMS 

and that we are able to accept such data 

from registries. 

For GPRO II, we proposed that in 

addition to reporting a specific number 

of individual measures, the group 

would have to report one or more 

proposed 2011 Physician Quality 

Reporting System measures groups 

depending on the size of the group 

practice. 

For purposes of satisfying the 

requirements under section 

1848(m)(3)(C)(i) of the Act for groups of 

2–199 NPIs, we proposed that in order 

to be treated as satisfactorily reporting 

under GPRO II, the group practice 

would be required to report on 50 

percent or more (if submitting through 

claims) of all Medicare Part B patients 

who fit into the measures group 

denominator or 80 percent or more of 

Medicare patients if using a registry to 

report. 

Additionally, to earn a Physician 

Quality Reporting System incentive 

payment for all allowed Medicare Part 

B services that are provided by the TIN, 

we proposed that a group practice must 

report on three to six individual 2011 

Physician Quality Reporting System 

measures, depending on the size of the 

group. We proposed that the group 

practice may select from among any of 

the 2011 Physician Quality Reporting 

System measures on which to submit 

data, provided the measures selected are 

not duplicated in the measures group(s) 

reported. 

We proposed that, to satisfactorily 

report individual Physician Quality 

Reporting System measures, a group 

must report each measure at the same 

rate (percentage) as determined by the 

method of submission as individual 

eligible professionals. For example, if 

reporting via claims, to satisfactorily 

report individual measures, each 

measure would need to be reported on 

at least 50 percent of eligible Medicare 

Part B FFS patients. 

An alternative which we considered 

and sought comment on was to require 

that the individual measures be selected 

from a more limited set of measures, 

such as measures closely linked to 

improved population health, or other 

measures perceived to address the 

greatest potential benefit from improved 

performance. A second alternative that 

we considered and sought comment on 

was to require group practices, as part 

of the self-nomination process, to 

designate whether they were a 

multispecialty group with primary care, 

a multispecialty group without primary 

care, or a single specialty group, and if 

so, the specialty. Depending on what 

type of specialty the group is, we would 

identify a set of Physician Quality 

Reporting System measures pertaining 

to the group’s specialty and require the 

group practice to report on the 

identified set of specialty-specific 

Physician Quality Reporting System 

measures. 

If a group practice participating in the 

2011 Physician Quality Reporting 

System GPRO II wants to also 

participate in the 2011 eRx Incentive 

Program as a small group, we proposed 

that the group would need to indicate 

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that preference in their self-nomination 

letter and would need to report on a 

specified number of unique encounters 

based on their group size. For GPRO II 

reporting in the 2011 eRx Incentive 

Program, we proposed the following 

reporting mechanisms: claims, a GPRO 

eRx qualified registry or a GPRO 

qualified EHR. As with the 2011 eRx 

Incentive Program for individual 

eligible professionals and the 2011 eRx 

Incentive Program GPRO I, at least 10 

percent of a GPRO II group’s charges 

would need to be comprised of codes in 

the denominator of the electronic 

prescribing measure and the group 

would need to use an electronic 

prescribing system that meets the 

requirements of the 2011 electronic 

prescribing measure. Similar to 

proposed GPRO I, if a GPRO II group 

self-nominates to report the electronic 

prescribing measure as a group, we 

proposed that all members of the group 

practicing under the group’s TIN would 

be ineligible to report as an individual 

electronic prescriber. 

The following is a summary of the 

comments received regarding our 

proposal on the GPRO II option and 

process for group practices to report 

Physician Quality Reporting System 

quality data measures. 

Comment: We received favorable 

support for the proposed addition of 

GPRO II as a group reporting option, 

including the requirement to selfnominate and report a measures group 

along with 3 individual relevant 

performance measures. One commenter 

stated that GPRO II will help spur more 

eligible professionals, specifically those 

with 2–199 member practices, to 

participate in the Physician Quality 

Reporting System. 

Response: We appreciate the 

commenters’ support and are finalizing 

our proposal to add GPRO II as a group 

reporting option. We note, however, that 

the number of measures groups and 

individual measures on which a group 

practice will be required to report will 

vary by the group practice’s sizes. The 

specific requirements are described in 

Table 76 of this final rule with comment 

period. 

Comment: Some commenters opposed 

the proposed cap of the first 500 groups 

that self-nominate for GPRO II. 

Commenters were primarily concerned 

that this would be too limiting. Another 

commenter noted that this reporting 

option has the advantage of mid-year 

interim feedback reports to assist 

participating groups in determining 

whether their Physician Quality 

Reporting System data is being captured 

appropriately. One commenter 

recommended that all self-nominations 

postmarked in the month of January 

2011 be accepted for this reporting 

option. Another commenter urged us to 

expand GPRO II quickly beyond the 

initial cap of 500 practices. 

Response: We appreciate the 

commenters’ enthusiasm for this new 

reporting option and would like to be 

able to make it available to as many 

groups as possible, but will need to 

initially limit the number of groups 

participating in GPRO II for operational 

reasons. We will accept at least 500 

groups, but could potentially accept 

more depending on our ability to handle 

a higher volume of groups participating 

in this option. We expect that we will 

be able to expand this option further in 

future years to make it available to more 

groups. In addition, we would like to 

clarify that we did not propose to 

provide interim feedback reports for 

group practices participating in GPRO 

II. Rather, we proposed to provide 

interim feedback reports for individual 

eligible professionals who submitted 

measures group data via claims during 

the first 2 months of 2011. However, as 

noted in this section, we are not 

finalizing this proposal. 

Comment: Since we proposed to limit 

participation in GPRO II to 500 groups 

in 2011, it was recommended that we 

strive for diversity of specialty 

representation rather than just a firstcome, first-served approach. 

Response: We appreciate the 

commenter’s suggestions. As stated 

previously, we will accept as many 

groups as resources allow and select a 

minimum of 500 GPRO II practices for 

2011. 

Comment: One commenter requested 

that GPRO II be made available to 

groups of any size. The commenter 

believed this would allow group 

practices to decide whether to 

participate in GPRO I or GPRO II 

depending on which option works best 

for their practice. 

Response: We appreciate the 

commenter’s valuable input. As we 

explore ways to further expand the 

GPRO II in future years we may 

consider making it available to groups of 

any size. 

Comment: One commenter suggested 

that we reduce the number of individual 

and group measures required to report 

for GPRO II. Other commenters stated 

that the requirement to report at least 1 

measures group would disadvantage 

those group practices for which none of 

the existing measures groups applies or 

there are a limited number of applicable 

measures groups. 

Response: We understand the 

commenters’ concerns and are revising 

the criteria for satisfactory reporting. 

Whereas we proposed to require group 

practices to report on a specified 

percentage of patients for both 

individual measures and measures 

groups, we are requiring, for 2011, that 

group practices report on a specified 

percentage of patients for the individual 

measures only. For measures groups, 

group practices will need to report on 

only the specified minimum number of 

patients (see Table 76 of this final rule 

with comment period). In addition, we 

believe that, on average, the total 

reporting burden per eligible 

professional in a group practice is less 

than the reporting burden for eligible 

professionals reporting individually. For 

example, for a group of 5 eligible 

professionals that is required to report 

on 1 measures group and 3 individual 

measures, this means that the group is 

required to report on less than 2 

measures per eligible professionals 

compared to 3 measures or 1 measures 

group per individual eligible 

professional. 

With respect to the commenter’s 

concerns that groups with a limited 

number of applicable measures groups 

could be disadvantaged, we believe that 

as we increase the numbers of measures 

groups available, this would be less of 

a concern over time. In the meantime, 

eligible professionals in group practices 

that do not have any applicable 

measures groups are still able to report 

individual measures as individual 

eligible professionals and meet the 

criteria for satisfactory reporting 

individually. 

Comment: One commenter requested 

that we not restrict the selection of 

Physician Quality Reporting System 

measures (for example, only population 

health measures) for GPRO II, given that 

multi-specialty groups with primary 

care, multi-specialty groups without 

primary care, and single specialty 

groups will be participating in this 

reporting option. Restrictions to select 

Physician Quality Reporting System 

measures may limit the diversity of 

practices that elect to report through 

this option. Similarly, another 

commenter was concerned that 

requiring so many primary care 

measures will make it difficult for 

specialists, such as psychiatrists, to 

participate in large numbers. 

Response: The commenters appear to 

be suggesting that we are placing 

restrictions on the selection of measures 

for the GPRO II, which is not correct. 

While GPRO I groups are required to 

report on a standard set of 26 measures, 

the GPRO II groups can select any 2011 

Physician Quality Reporting System 

individual measures and measures 

groups that are relevant to their practice 

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as long as they report the required 

number of individual measures and 

measures groups for their group size 

(see Table 76 of this final rule with 

comment period). However, in future 

years and in future rulemaking we 

expect to reconsider alternative 

reporting requirements, including the 

alternatives of identifying a core set of 

measures for which broad reporting may 

be required. 

Comment: One commenter requested 

that we clearly indicate how we derived 

the performance results for each 

individual professional if we post 

performance information derived from 

the GPRO II on the Physician Compare 

Web site. The commenter was 

concerned that the reported 

performance that will be attributed to an 

individual eligible professional through 

GPRO II will not necessarily reflect 

individual performance. 

Response: We appreciate the 

commenter’s feedback. To date, we have 

not made any Physician Quality 

Reporting System performance rates 

publicly available. We value input from 

external stakeholders. Opinions and 

alternatives that are provided will assist 

us in future policy decisions as we 

develop our plans for the Physician 

Compare Web site. With respect to the 

commenter’s concern that performance 

information derived from GPRO II will 

be attributed to an individual eligible 

professional, group practice reporting is 

attributed to the entire group, not to the 

individual. Additionally, we do not 

intend to publicly report Physician 

Quality Reporting System performance 

results for 2011. 

Upon consideration of the comments 

received, group practices that wish to 

participate in the GPRO II will need to 

self-nominate. The self-nomination 

process will consist of sending a letter 

with the name of the group, the TIN, an 

e-mail address of the contact person, 

and the names and NPIs of all of the 

eligible professionals practicing under 

that group’s TIN. The self-nomination 

letter must also be accompanied by an 

electronic file submitted in a format 

specified by CMS (such as Microsoft 

Excel) with the group practice’s TIN and 

NPIs. Self-nomination letters should be 

sent to: GPRO II, c/o CMS, 7500 

Security Blvd., Mail Stop S3–02–01, 

Baltimore, MD 21244, and must be 

postmarked by January 31, 2011, for 

consideration in the program. We are 

also finalizing our proposal to initially 

limit the number of groups participating 

in GPRO II. We seek to make this option 

available to as many groups as possible 

but have limited resources. Therefore, as 

stated previously, we will accept at least 

500 groups, but could potentially accept 

more depending on our ability to handle 

a higher volume of groups participating 

in this option. We expect that we will 

be able to expand this option further in 

future years to make it available to more 

groups. 

Table 76 sets forth the final criteria for 

satisfactory reporting under the 2011 

Physician Quality Reporting System 

GPRO II and requirements for each 

group based on their respective group 

size (number of eligible professionals). 

As stated previously, GPRO II groups 

will be required to report on a specified 

percentage of patients for reporting the 

individual measures only. To 

satisfactorily report measures groups for 

the 2011 Physician Quality Reporting 

System GPRO II, the group practice 

need only report on the minimum 

number of patients specified in Table 76 

for their group size. In addition, since 

we will not have the ability to 

determine whether the registries can 

ensure that only unique patients are 

counted, GPRO II groups must report 

the 2011 Physician Quality Reporting 

System data via claims unless the only 

measures groups that apply to the 

practice are one of the four registry-only 

measures groups listed in section 

VII.F.2.(i).(5). of this final rule with 

comment period. Group practices that 

must report on one of the four registryonly measures groups in order to meet 

the criteria for satisfactory reporting will 

be able to use the registry-reporting 

mechanism to submit their 2011 

Physician Quality Reporting System 

data and must submit all of their 2011 

Physician Quality Reporting System 

GPRO II data via the registry reporting 

mechanism. However, we anticipate 

that the list of registries qualified to 

submit 2011 Physician Quality 

Reporting System GPRO II data will not 

be available until summer 2011. Group 

practices will need to indicate the 

reporting mechanism they intend to use 

for the 2011 Physician Quality 

Reporting System GPRO II in their selfnomination letter. 

TABLE 76—2011 PROCESS FOR PHYSICIAN GROUP PRACTICES TO PARTICIPATE AS GROUP PRACTICES AND CRITERIA

FOR SATISFACTORY REPORTING OF DATA ON QUALITY MEASURES BY GROUP PRACTICES FOR GPRO II 

Group size (number of eligible 

professionals) 

Number of 

measures 

groups 

required to be 

reported 

Minimum 

number of 

medicare part 

b 

patients in 

denominator 

for satisfactory 

reporting of 

measures 

groups 

Number of 

individual 

measures required to be 

reported 

Percent of 

medicare part 

b patients in 

denominator 

for satisfactory 

reporting of 

individual 

measures via 

claims 

(%) 

Percent of 

medicare part 

b patients in 

denominator 

for satisfactory 

reporting of 

individual 

measures via 

registries 

(%) 

Required number 

of unique visits 

where an 

e-prescription was 

generated to be a 

successful 

electronic prescriber 

2–10 ................................................... 1 35 3 50 80 75 

11–25 ................................................. 1 50 3 50 80 225 

26–50 ................................................. 2 50 4 50 80 475 

51–100 ............................................... 3 60 5 50 80 925 

101–199 ............................................. 4 100 6 50 80 1875 

We are not finalizing our proposal to 

analyze the individual professional’s 

data to see if they satisfactorily reported 

at the individual TIN/NPI level if the 

group does not satisfactorily report as a 

GPRO II group. We have determined 

that this is neither practical nor feasible 

for us. This should have no impact on 

how groups will report Physician 

Quality Reporting System data under 

GPRO since claims will identify both 

the TIN and the individual eligible 

professional rendering the service 

regardless of whether we analyze the 

claims at the group or individual level. 

Although there will be some risk to 

eligible professionals who are part of a 

GPRO II group if the group fails to 

satisfactorily report, we believe this risk 

is outweighed by the additional 

resources that would be required to 

process a group’s data at both the group 

and individual levels and the fact that 

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all participants’ incentive payments 

could potentially be delayed. 

h. Statutory Requirements and Other 

Considerations for 2011 Physician 

Quality Reporting System Measures 

(1) Statutory Requirements for 2011 

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 

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 proposed 

2011 Physician Quality Reporting 

System quality measure would need to 

be endorsed by the NQF. Additionally, 

section 1848(k)(2)(D) of the Act requires 

that for each 2011 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 development of 

physician measures, such as restricting 

the initial development to physiciancontrolled 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. 

(2) Other Considerations for 2011 

Physician Quality Reporting System 

Measures 

As stated previously, in addition to 

reviewing the 2010 Physician Quality 

Reporting System measures for purposes 

of developing the proposed 2011 

Physician Quality Reporting System 

measures, we reviewed and considered 

measure suggestions including 

comments received in response to the 

CY 2010 PFS proposed and final rules 

with comment period. Additionally, 

suggestions and input received through 

other venues, such as an invitation for 

measures suggestions via the Listening 

Session held February 2, 2010, were 

also reviewed and considered for 

purposes of our development of the list 

of proposed 2011 Physician Quality 

Reporting System quality measures. 

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 and 2010 Physician 

Quality Reporting System quality 

measures for inclusion in the 2011 

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; improved end-of-life/palliative 

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 June 1, 2010, in order to be 

considered for inclusion in the 2011 

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). 

++ 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 

are 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 development of 

physician measures, such as restricting 

the initial development to physiciancontrolled 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. The 

requirements under section 

1848(k)(2)(C) of the Act pertain only to 

the selection of measures and not to the 

development of measures. 

• 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 measures for 2011, 

regardless of whether the measure was 

a 2010 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. For example, we 

proposed to replace existing 2010 

Physician Quality Reporting System 

measures #114 and #115 with updated 

and improved measure #TBD 

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(Preventive Care and Screening: 

Tobacco Use: Screening and Cessation 

Intervention), which is less technically 

challenging to report. 

• In the 2011 Physician Quality 

Reporting System, as in the 2010 

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, a measure may 

be included for reporting solely through 

specific reporting mechanism(s) in 

which its submission is feasible. 

In the proposed rule, we invited 

comments on the implication of 

including or excluding any given 

measure or measures for our proposed 

2011 Physician Quality Reporting 

System quality measure set, as well as 

feedback relative to our proposed 

approach in selecting measures (75 FR 

40185). We indicated that while we 

welcome 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 were not able to 

consider such additional measures for 

inclusion in the final 2011 measure set. 

As discussed previously, 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 by other applicable 

statutes to provide opportunity for 

public comment on provisions of policy 

or regulation that are established via 

notice and comment rulemaking. 

Measures that were not included in the 

proposed rule for inclusion in the 2011 

Physician Quality Reporting System that 

are recommended to CMS 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, such publication does not 

provide true opportunity for public 

comment on those measures’ potential 

inclusion in the Physician Quality 

Reporting System. Thus, such 

additional measures recommended for 

selection for the 2011 Physician Quality 

Reporting System via comments on the 

CY 2011 PFS proposed rule cannot be 

included in the 2011 measure set. 

However, as discussed previously, we 

will consider comments and 

recommendations for measures, which 

may not be applicable to the final set of 

2011 Physician Quality Reporting 

System measures, for purposes of 

identifying measures for possible use in 

the Physician Quality Reporting System 

in future years or other initiatives to 

which those measures may be pertinent. 

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 

proposed Physician Quality Reporting 

System measure’s title, definition, and 

detailed specifications or coding should 

be directed to the measure developer 

identified in Tables 78 through 96. 

Contact information for the 2010 

Physician Quality Reporting System 

measure developers is listed in the 

‘‘2010 PQRI Quality Measures List,’’ 

which is available on the Physician 

Quality Reporting System section of the 

CMS Web site at http://www.cms.gov/ 

PQRI. 

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. 

(3) Summary of Comments and 

Responses 

The following is summary of the 

comments we received regarding the 

statutory requirements and other 

considerations for the selection of 2011 

Physician Quality Reporting System 

measures. 

Comment: Some commenters strongly 

support the adoption of NQF-endorsed 

measures only. One commenter stated 

that the AQA is no longer doing 

measure evaluation work and should 

not be allowed to approve measures for 

the Physician Quality Reporting System 

as a way to sidestep the well-designed 

and well-executed process of the NQF. 

Response: We agree that endorsement 

of measures by the NQF is an important 

criteria for inclusion in the Physician 

Quality Reporting System. However, 

section 1848(k)(2)(C)(i) 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 

this reason, we retain the ability to 

include non-NQF endorsed measures in 

the Physician Quality Reporting System. 

Once those measures work through the 

NQF process, we may remove those that 

were not endorsed by the NQF from the 

program. 

Comment: A few commenters 

opposed our conclusion that any 

organization can develop quality 

measures. The AMA-specialty society 

quality consortium, the PCPI, should be 

recognized by us to specify the quality 

measures and adequately test them for 

inclusion in the Meaningful Use 

program. 

Response: We do not believe there 

needs to be any special restrictions on 

the type or make up of the organizations 

carrying out the basic development of 

measures for physicians and other 

eligible professionals, such as restricting 

the initial development to physiciancontrolled 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. In 

addition, physicians are not the only 

types of professionals eligible to 

participate in the Physician Quality 

Reporting System. 

Comment: Another commenter 

encouraged us to allow for other means 

for measure endorsement due to NQF’s 

lack of timeliness and consistency 

issues. 

Response: As stated previously, 

section 1848(k)(2)(C)(i) 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. In 

certain circumstance, we have exercised 

this exception authority to include 

measures that have not yet gone through 

the NQF endorsement process to 

address measure gaps. 

Comment: Many commenters 

requested that we encourage the 

development and use of measures in 

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specific areas or topics. The specific 

areas or topics that commenters 

recommended as priorities included 

sub-specialty specific measures, 

measures that reflect the day-to-day 

treatment of cancer patients, riskadjusted outcome measures (as opposed 

to process measures), measures that 

better reflect patient preferences, patient 

experience, functional status, and care 

coordination, measures that capture 

demographic data in ways that enable 

measures to be stratified and used to 

identify and address health disparities, 

measures that address high-burden 

disease areas especially prevalent in the 

Medicare beneficiary population, 

broader measures to enhance accurate 

identification and treatment of atrial 

fibrillation, measures that will be 

retooled for future use in EHR reporting, 

measures that must be retooled for the 

impending ICD–10–CM/PCS 

compliance date, and measures to 

capture whether patients have received 

preventive vaccinations. 

Response: We appreciate the 

commenters’ recommendations for 

expanding criteria for measure selection 

and prioritization. We note, however, 

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, we urge them to submit the 

specific measure suggestions via the 

2012 Call for Measures. Information on 

the 2012 Call for Measures will be 

posted on the Physician Quality 

Reporting System section of the CMS 

Web site when it becomes available. We 

anticipate conducting the 2012 Call for 

Measures in late 2010 or early 2011. 

Comment: One commenter suggested 

the proposed addition of Physician 

Quality Reporting System measures for 

2011 be re-visited in context with the 

August 2010 publication of 69 NQFendorsed® ambulatory performance 

measures. 

Response: We appreciate the 

commenter’s valuable input. As stated 

previously and in the proposed rule (75 

FR 40185), we are not able to consider 

additional measures for inclusion in the 

final 2011 Physician Quality Reporting 

System measure set beyond what we 

proposed. However, we may consider 

them for inclusion in future measure 

sets for the Physician Quality Reporting 

System. 

Comment: A few commenters 

recommended that we implement more 

meaningful and impactful measures. 

Some of the actions specifically 

recommended by the commenters 

include: 

• Require the collection of patient 

experience surveys, if there is an NQFendorsed survey available for that 

professional; 

• Remove measures that ‘‘document’’ 

the presence of evaluation, assessment, 

and counseling as there is no 

relationship between such measures and 

patient outcome; 

• Consider adding measures from 

NQF’s Ambulatory Care Measures Using 

Clinically Enriched Administrative Data 

that are appropriate for the Medicare 

population; and 

• Develop measures that will fill gaps 

in the Physician Quality Reporting 

System measure set and that adhere to 

key criteria for robust measures. 

Response: We appreciate the 

commenter’s feedback regarding the use 

of more meaningful and impactful 

measures in the Physician Quality 

Reporting System. We appreciate the 

time and effort taken in providing your 

recommendation and, as stated 

previously, we urge the commenter to 

work with professional organizations 

and other measure developers to fund 

and develop measures that address the 

priority areas identified by the 

commenter and/or submit 

recommendations for specific measures 

that the commenter would like us to 

consider for future years via the 2012 

Call for Measures. 

Comment: One commenter urged us 

to be mindful of the resources required 

to translate quality data into improved 

provider performance. Therefore, we 

should ensure appropriate phasing-in of 

new measures into our current quality 

reporting programs. 

Response: We appreciate the 

commenter’s valuable input. While we 

strive to identify gaps of care and ensure 

that specialties have measures to report, 

we also recognize that there is a level of 

effort associated with translating the 

quality data reported into better care. As 

such, we are adding a limited set of new 

measures that focuses on identified gaps 

and ensures specialties have measures 

to report. 

Comment: One commenter requested 

that we further explore and discuss the 

phase-in dates in context with the ICD– 

10–CM/PCS transition date. 

Response: We are planning for 

implementation of ICD–10 and are 

working in collaboration with the 

Physician Quality Reporting System 

measure developers/owners towards the 

coding transition. More information on 

the phase-in dates for this transition 

will be provided once it becomes 

available. 

i. The Final 2011 Physician Quality 

Reporting System Quality Measures for 

Individual Eligible Professionals 

For 2011, we proposed to include a 

total of 200 measures (this includes both 

individual measures and measures that 

are part of a proposed 2011 measures 

group) on which individual eligible 

professionals can report for the 2011 

Physician Quality Reporting System (75 

FR 40185 through 40198). 

The following is a summary of the 

comments received on the proposed 

2011 Physician Quality Reporting 

System measures in general and 

comments on the measures from the 

2010 Physician Quality Reporting 

System not proposed for inclusion in 

the 2011 Physician Quality Reporting 

System. 

Comment: One commenter suggested 

that we consider publishing a list of 

reportable measures for each eligible 

profession. This would make the 

reporting process more clear and 

accessible to professionals trying to 

participate in the program by helping 

them quickly determine which 

measures are relevant to their practices. 

Response: In August 2010, we posted 

on the Analysis and Payment page of 

the Physician Quality Reporting System 

section of the CMS Web site http://www.

cms.gov/pqri, a 1st quarter 2010 

aggregate QDC error report by specialty. 

For each 2010 Physician Quality 

Reporting System measure, this report 

lists the specialties that submitted valid 

QDCs for the measure during the 1st 

quarter of 2010. Thus, an eligible 

professional could use this report to 

ascertain whether a measure is 

reportable by his or her profession. 

Comment: One commenter suggested 

that it would be useful for participating 

eligible professionals, as well as other 

stakeholders, if we developed a table 

that clearly summarizes the status of a 

measure’s NQF endorsement, AQA 

endorsement, owner, and how the 

measure aligns with meaningful use 

clinical quality measure requirements. 

Response: Tables 78 through 97 of 

this final rule with comment period 

includes the status of each measure’s 

NQF endorsement, as well as AQA 

endorsement if applicable and the 

measure is not NQF endorsed. In 

addition, Tables 55 and 56 of the CY 

2011 PFS proposed rule (75 FR 40193), 

which lists the measures available for 

EHR reporting in 2011, includes 

information as to whether a measure is 

included in the EHR Incentive Program 

for program years 2011 and 2012. We 

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note, however, that the electronic 

specifications for measures that are 

included in the Physician Quality 

Reporting System and Electronic Health 

Record Incentive Program may be 

different. Eligible professionals should 

refer to the measure specifications for 

the appropriate program. 

Comment: We received numerous 

comments in support of the 2010 

Physician Quality Reporting System 

quality measures proposed for inclusion 

in the 2011 Physician Quality Reporting 

System. Specific measures or measures 

topics on which we received favorable 

support include the measures on 

osteoporosis, audiology, speechlanguage pathology, and measures 9, 

106, 107, 124, 126, 127, 128, 130, 131, 

134, 148, 149, 150, 151, 154, 155, 173, 

181, 188, 189, 190, and 200. 

Commenters often cited the 

applicability of a specific measure to 

their specialty and/or profession. 

Response: We appreciate the feedback 

and are finalizing our proposals to 

include these measures in the 2011 

Physician Quality Reporting System 

measure set. These measures address 

one or more of the considerations for 

measures selected for inclusion in the 

2011 Physician Quality Reporting 

System previously discussed. 

Comment: A couple of commenters 

asked us to reconsider the proposal to 

retire Measure #135, Chronic Kidney 

Disease (CKD): Influenza Immunization. 

Although the measure was considered 

for endorsement by NQF but was 

ultimately not endorsed, the measure is 

adopted by the AQA. 

Response: On August 26, 2010, we 

published a correction notice in the 

Federal Register (75 FR 52487) 

indicating we inadvertently included 

this measure in the table that lists the 

2010 Physician Quality Reporting 

System measures not proposed to be 

included in the 2011 Physician Quality 

Reporting System. As such, we are 

including Measure #135 in the 2011 

Physician Quality Reporting System 

individual measures set only. We are 

not, however, finalizing our proposal to 

include Measure #135 from the CKD 

Measures Group. The reporting 

requirements for Measure #135 are 

different from the other measures in the 

CKD measures group. 

Comment: A couple of commenters 

recommended keeping Measure #136, 

Melanoma: Follow-Up Aspects of Care, 

for purposes of reporting to the 2011 

Physician Quality Reporting System. 

The commenters believe that although 

the measure is no longer endorsed by 

the National Quality Forum, it is still a 

valuable tool in clinician quality 

improvement. The commenters also 

noted that this measure is most effective 

as part of a set with Measures #137: 

Melanoma: Continuity of Care—Recall 

System and #138: Melanoma: 

Coordination of Care, which are 

maintained in the list of measures 

available for 2011 Physician Quality 

Reporting System. 

Response: We are finalizing our 

proposal to not include Measure #136 in 

the 2011 Physician Quality Reporting 

System measure set. As stated in the 

proposed rule, (75 FR 40186) and by the 

commenter, Measure #136 was 

considered by NQF for possible 

endorsement but ultimately was not 

NQF-endorsed. We note, also, that we 

proposed and are finalizing a new 

melanoma measure, Melanoma: 

Overutilization of Imaging Studies in 

Stage 0–1A Melanoma, for the 2011 

Physician Quality Reporting System. 

This measure meets one or more of the 

considerations for measures selected for 

inclusion in the 2011 Physician Quality 

Reporting System. 

Comment: We received one comment 

in support of our proposal to retire 

Measure #139 Cataracts: Comprehensive 

Preoperative Assessment for Cataract 

Surgery with Intraocular Lens (IOL) 

Placement. Another commenter, 

however, requested that this measure be 

retained because it evaluates safe and 

appropriate use of cataract surgery. 

Response: We appreciate the 

commenters’ feedback. Based on the fact 

that the measure was reviewed for 

endorsement by the NQF and ultimately 

not endorsed, we are finalizing our 

proposal to not include this measure in 

the 2011 Physician Quality Reporting 

System measure set. 

Comment: In addition to the quality 

measures and measures groups for 

individual eligible professionals we had 

proposed in Tables 52 through 54 of the 

CY 2011 PFS proposed rule (75 FR 

40186 through 40192), several 

commenters suggested quality measures, 

measures groups, and/or topics for 

which additional measures or measures 

groups should be added for the 2011 

Physician Quality Reporting System. 

Specifically, commenters recommended 

that we adopt— 

• A measure for AAA ultrasound 

screening; 

• A COPD measures group; 

• A stroke measures group comprised 

of the following 5 measures: (1) Deep 

vein thrombosis (DVT) prophylaxis; (2) 

Discharged on antithrombotic therapy; 

(3) Patients with atrial fibrillation/flutter 

receiving anticoagulant therapy; (4) 

Thrombolytic therapy; and (5) 

Discharged on statin medication; 

• A measures group that focuses on 

quality measures common to every longterm care resident, which could include 

Physician Quality Reporting System 

measures #47, 110, 111, 130, 154, and 

155; 

• Appropriate Follow-Up Interval for 

Normal Colonoscopy in Average Risk 

Patients; and 

• Comprehensive Colonoscopy 

Documentation. 

Response: As stated previously, we 

have not included in this final rule with 

comment period for the 2011 Physician 

Quality Reporting System any 

individual and measures groups that 

were not identified in the CY 2011 PFS 

proposed rule as proposed 2011 

Physician Quality Reporting System 

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. Thus, such additional measures 

recommended via comments on the 

proposed rule cannot be included in the 

2011 Physician Quality Reporting 

System quality measure set. However, 

we have captured these 

recommendations and will have them 

available for consideration in 

identifying measure sets/groups for the 

Physician Quality Reporting System for 

future years and other initiatives to 

which those measures or measures 

groups may apply. 

Comment: Some commenters asked 

that we reconsider measures or 

measures groups that had been 

previously submitted to us as 

suggestions for 2011 Physician Quality 

Reporting System measures but were 

not proposed for inclusion in the 2011 

Physician Quality Reporting System 

measure set. Specifically, commenters 

requested that we reconsider inclusion 

of the Parkinson’s disease and epilepsy 

measurement sets in the Physician 

Quality Reporting System program, a 

diabetic retinopathy measures group 

with 2 measures, and a cataracts 

measures group with 2 measures. 

Response: All measures or measures 

groups that were previously submitted 

to us as suggestions for 2011 Physician 

Quality Reporting System measures 

were reviewed for possible inclusion in 

the 2011 Physician Quality Reporting 

System measure set. Upon review, 

however, some measures either failed to 

meet the threshold criteria for inclusion 

in the 2011 Physician Quality Reporting 

system measure set (as described 

previously) or did not meet the 

definition of ‘‘measures group’’ proposed 

and finalized at 42 CFR 414.90. These 

measures that did not pass the review 

process were not proposed for inclusion 

in the 2011 Physician Quality Reporting 

System measure set. 

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Comment: Several commenters 

recommended changes to the detailed 

specifications or coding for one or more 

of the proposed measures or measures 

groups. Many of the requests were 

specifically concerned that measures be 

expanded to include additional 

professionals to whom the measure(s) 

may apply. 

Specifically, one commenter 

requested that any measure used by 

primary care physicians be expanded to 

include not just the office, but home and 

domiciliary codes as well. One 

commenter requested that the 

denominator codes for the CAP 

measures group be expanded to include 

other infectious pneumonia ICD–9–CM 

diagnostic codes than ‘‘acute’’ 

pneumonia diagnosis codes so 

pulmonologists can have sufficient 

numbers of patients to report this 

measures group. A few commenters 

requested that the age range for the 

proposed asthma measures group be 

expanded, instead of being restricted to 

5 to 50 years of age. One commenter 

requested that the Initial Hospital Admit 

Evaluation and Management codes 

(99221, 99222, and 99223) be removed 

from the denominators of measures #32, 

#33 and #36 and added to measures 

#56–59 for 2011. The commenter also 

requested that an exemption be given to 

eligible professionals penalized for not 

reaching an 80 percent reporting 

threshold on measures #32, #33, and 

#36 because of the unintended effect of 

substituting the 99221, 99222, and 

99223 series codes for the consultation 

99251–99255 series that had been 

eliminated from the Medicare program. 

Lastly, another commenter requested 

that allowable performance exclusion 

codes be created for measures #201 and 

#202. 

Response: Although the Secretary is 

required to provide opportunities for 

public comment on selected measures 

and do so through notice and comment 

rulemaking, we do not use notice and 

comment rulemaking as a means to 

update or modify measure 

specifications. In general, it is the role 

of the measure owner, developer, or 

maintainer to make substantive changes 

to the measures, such as the changes 

suggested by the commenters. The 

measure maintainer and/or the 

developer/owner of a measure included 

in the final set of 2011 Physician 

Quality Reporting System measures is 

identified in the ‘‘Measure developer’’ 

column of Tables M6 through M24. In 

addition, for those measures which are 

NQF-endorsed, the NQF has an 

established maintenance process that 

could be accessed to recommend the 

changes suggested by the commenters. 

Comment: One commenter supported 

our proposal to replace Physician 

Quality Reporting System Measures 

#114 and #115 with the Preventive Care 

and Screening: Tobacco Use: Screening 

and Cessation Intervention measure 

(NQF Measure Number 0028). Another 

commenter, however, requested that 

Physician Quality Reporting System 

Measures #114 and #115 be included in 

the 2011 Physician Quality Reporting 

System as these measures are included 

in the EHR Incentive Program clinical 

quality measures and thus will be of 

great interest for eligible professionals to 

report on. 

Response: Although Physician 

Quality Reporting System Measures 

#114 and #115 are included as clinical 

quality measures under the EHR 

Incentive Program, we have decided, for 

the Physician Quality Reporting System, 

to replace Physician Quality Reporting 

System Measures #114 Preventive Care 

and Screening: Inquiry Regarding 

Tobacco Use and #115 Preventive Care 

and Screening: Advising Smokers and 

Tobacco Users to Quit with an NQFendorsed measure, Preventive Care and 

Screening: Tobacco Use: Screening and 

Cessation Intervention. We believe this 

measure is more comprehensive and 

less technically challenging than 

Physician Quality Reporting System 

Measures #114 and #115. We may 

consider aligning the preventive care 

and screening measures related to 

tobacco use and smoking under these 2 

programs in future years. 

Comment: One commenter stressed 

the importance of publishing the 

detailed Physician Quality Reporting 

System specifications for individual 

measures and measures groups by 

November 15, 2010. 

Response: We will make every 

attempt to post the detailed 

specifications and specific instruction 

for reporting 2011 individual and 

measures groups on the Physician 

Quality Reporting System section of the 

CMS Web site at http://www.cms.hhs.

gov/PQRI as close to November 15, 2010 

as possible. In any event, the detailed 

specifications will be posted by no later 

than December 31, 2010. 

Based on the criteria previously 

discussed and our review of these 

comments, we are including the 

individual measures listed in Tables M6 

through M10 in the final 2011 Physician 

Quality Reporting System individual 

quality measure set. We are also 

including 14 measures groups in the 

final 2011 Physician Quality Reporting 

System quality measure set, which are 

listed in Tables M11 through M24. The 

individual measures selected for the 

2011 Physician Quality Reporting 

System can be categorized as follows: 

• 2011 Individual Quality Measures 

Selected From the 2010 Physician 

Quality Reporting System Quality 

Measures Set Available for Claims-based 

Reporting and Registry-based Reporting; 

• 2011 Individual Quality Measures 

Selected From the 2010 Physician 

Quality Reporting System Quality 

Measures Set Available for Registrybased Reporting Only; 

• New Individual Quality Measures 

for 2011; and 

• 2011 Measures Available for EHRbased Reporting. 

In addition, we are retiring the 5 

measures in Table 77 because they did 

not meet one or more of the 

considerations for selection of 2011 

measures. Specifically, we retired 

Physician Quality Reporting System 

Measures #136, #139, and #174 for 2011 

because they were considered by NQF 

for possible endorsement but ultimately 

were not NQF-endorsed. In addition, we 

are replacing 2010 Physician Quality 

Reporting System Measures #114 and 

#115 with an updated and improved 

measure (#TBD ‘‘Preventive Care and 

Screening: Tobacco Use: Screening and 

Cessation Intervention’’), which is less 

technically challenging to report. 

TABLE 77—2011 PHYSICIAN QUALITY REPORTING SYSTEM QUALITY MEASURES NOT INCLUDED IN THE 2011 PHYSICIAN

QUALITY REPORTING SYSTEM

Physician Quality 

Reporting System 

Measure No. 

Measure title 

114 ....................................... Preventive Care and Screening: Inquiry Regarding Tobacco Use. 

115 ....................................... Preventive Care and Screening: Advising Smokers and Tobacco Users to Quit. 

136 ....................................... Melanoma: Follow-Up Aspects of Care. 

139 ....................................... Cataracts: Comprehensive Preoperative Assessment for Cataract Surgery with Intraocular Lens (IOL) Placement. 

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TABLE 77—2011 PHYSICIAN QUALITY REPORTING SYSTEM QUALITY MEASURES NOT INCLUDED IN THE 2011 PHYSICIAN

QUALITY REPORTING SYSTEM—Continued 

Physician Quality 

Reporting System 

Measure No. 

Measure title 

174 ....................................... Pediatric End-Stage Renal Disease (ESRD): Plan of Care for Inadequate Hemodialysis. 

(1) 2011 Individual Quality Measures 

Selected From the 2010 Physician 

Quality Reporting System Quality 

Measures Set Available for ClaimsBased Reporting and Registry-Based 

Reporting 

For 2011, we proposed to retain 171 

measures currently used in the 2010 

Physician Quality Reporting System. 

These 171 proposed measures include 

45 registry-only measures currently 

used in the 2010 Physician Quality 

Reporting System, and 126 individual 

quality measures for either claims-based 

reporting or registry-based reporting (75 

FR 40186 through 40190 and 52489 

through 52490). These 171 proposed 

measures did not include any measures 

that are proposed to be included as part 

of the 2011 Back Pain measures group. 

Similar to the 2010 Physician Quality 

Reporting System, for 2011, we 

proposed that any 2011 Physician 

Quality Reporting System measures that 

are included in the Back Pain measures 

group would not be reportable as 

individual measures through claimsbased reporting or registry-based 

reporting. 

Although they were ultimately not 

NQF-endorsed, we proposed to exercise 

our exception authority under section 

1848(k)(2)(C)(ii) of the Act and include 

measures #188, #189, and #190, since 

we are not aware of any other NQFendorsed measures that are available to 

audiologists. 

The following is a summary of the 

comments received on the proposed 

2011 individual quality measures 

selected from the 2010 Physician 

Quality Reporting System quality 

measures set available for claims-based 

reporting and registry-based reporting. 

Comment: A commenter urged us to 

continue to allow reporting of measure 

#175, Plan of Care for Inadequate 

Hemodialysis in 2011, regardless of 

NQF endorsement since this was 

approved by the AQA in 2008. 

Response: We are unclear whether the 

commenter is referring to measure #174, 

which is the Pediatric ESRD: Plan of 

Care for Inadequate Hemodialysis 

measure or measure #175, which is the 

Pediatric ESRD: Influenza Immunization 

measure since both of these are AQA 

adopted measures. For the reasons 

described previously, we are not 

retaining measure #174 for the 2011 

Physician Quality Reporting System. We 

are, however, retaining measure #175 

for the 2011 Physician Quality 

Reporting System. 

Comment: A commenter supported 

the 2011 proposed measures selected 

from the 2010 Physician Quality 

Reporting System measure set available 

for either claims-based reporting or 

registry-based reporting but noted there 

have been inquiries about how the 

process component of Measure #193: 

Perioperative Temperature Management 

is defined. As a result, the commenter 

pointed out that this measure is 

undergoing revision. 

Response: We appreciate the 

commenter’s valuable input and will 

continue to monitor the status of this 

measure. 

For the reasons discussed previously 

and based on the comments received, 

we are finalizing in the 2011 Physician 

Quality Reporting System quality 

measure set the 171 2010 Physician 

Quality Reporting System measures that 

were proposed to be available in the 

2010 Physician Quality Reporting 

System for claims and registry reporting 

identified in Table 78. The 171 

individual 2010 Physician Quality 

Reporting System measures selected for 

inclusion in the 2011 Physician Quality 

Reporting System quality measure set as 

individual quality measures for either 

claims-based reporting or registry-based 

reporting are listed by their Physician 

Quality Reporting System Measure 

Number and Title in Table 78, 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 78 can be 

found in the ‘‘2010 PQRI 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/PQRI. 

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BILLING CODE 4120–01–C 

Please note that detailed measure 

specifications, including the measure’s 

title, for 2010 individual Physician 

Quality Reporting System quality 

measures may have been updated or 

modified during the NQF endorsement 

process or for other reasons prior to 

2011. The 2011 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 2011 

individual Physician Quality Reporting 

System quality measures, whether or 

not included in the 2010 Physician 

Quality Reporting System program, 

must be obtained from the specifications 

document for 2011 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, 2010. 

(2) 2011 Individual Quality Measures 

Selected From the 2010 Physician 

Quality Reporting System Quality 

Measures Set Available for RegistryBased Reporting Only 

We proposed to include 45 registryonly individual measures from the 2010 

Physician Quality Reporting System (75 

FR 40191). As in the 2010 Physician 

Quality Reporting System, we proposed 

to designate these measures as registryonly measures for 2011 to relieve 

ongoing analytical difficulties 

encountered with claims-based 

reporting of these measures in prior 

program years. The following is a 

summary of the comments received on 

the proposed registry-only measures. 

Comment: One commenter expressed 

concern over our proposal to limit 

measure #174, Pediatric End-Stage 

Renal Disease (ESRD): Plan of Care for 

Inadequate Hemodialysis, to registrybased reporting for 2011. The 

commenter stated that since there are 

only two pediatric ESRD measures 

included in the Physician Quality 

Reporting System for 2010 and we 

require eligible professionals who report 

via a registry to report 3 measures, it is 

difficult for pediatric nephrologists to 

participate in this valuable program. 

Further, the commenter indicated that 

even if participation could be based on 

the reporting of two measures, the 

registry process itself is not available to 

the vast majority of pediatric 

nephrologists who practice in small, 

academic departments, none of whose 

other members care for Medicare 

beneficiaries. Thus, the commenter 

suggested that similar to the provision 

that allows one of the pediatric ESRD 

measures (influenza immunization) to 

be reported in this individual manner, 

a mechanism be made available 

allowing pediatric dialysis centers to 

report adequacy results separately. In 

the absence of changes in the 

requirement to report at least three 

measures, separate reporting of 

individual measures would allow more 

pediatric nephrologists to participate in 

the Physician Quality Reporting System 

and advance the ultimate goal of quality 

improvement. 

Response: We appreciate the 

comment and interest expressed on 

behalf of the pediatric nephrology 

community. For the 2011 Physician 

Quality Reporting System, we have 

decided not to include Physician 

Quality Reporting System Measure 

#174, since this measure was recently 

reviewed by NQF but not endorsed. As 

a result, only 1 of the 2 individual 

measures identified by the commenter 

as being relevant to pediatric 

nephrologists, #175, Pediatric End-Stage 

Renal Disease (ESRD): Influenza 

Immunization, is included in the final 

2011 Physician Quality Reporting 

System measure set. This measure is 

available for claims-based reporting. 

Eligible professionals who have fewer 

than 3 applicable measures can still 

participate in the 2011 Physician 

Quality Reporting System via claims. 

Such eligible professionals would need 

to report on the applicable measure 

available for claims-based reporting via 

claims and meet the appropriate criteria 

for satisfactory reporting of individual 

measures in order to qualify for a 2011 

Physician Quality Reporting System 

incentive payment. 

For the reasons discussed previously 

and based on the comments received, 

we are finalizing in the 2011 Physician 

Quality Reporting System quality 

measure set 44 of the 45 proposed 2010 

Physician Quality Reporting System 

measures identified in Table 78 of the 

proposed rule for registry reporting 

only. As stated previously, we are not 

finalizing Physician Quality Reporting 

System Measure #174 because the 

measure was reviewed for endorsement 

by NQF but not ultimately endorsed. 

The 44 2010 Physician Quality 

Reporting System measures selected for 

the 2011 Physician Quality Reporting 

System that are available for registry 

reporting only are listed in Table 79 of 

this final rule with comment period. 

These measures are listed by their 

Physician Quality Reporting System 

Measure Number and Title, along with 

the name of the measure’s developer/ 

owner and NQF endorsement status, if 

applicable. A description of the 

measures listed in Table 79 can be 

found in the ‘‘2010 PQRI 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/PQRI. 

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BILLING CODE 4120–01–C 

Although we are designating certain 

measures as registry-only measures, we 

cannot guarantee that there will be a 

registry qualified to submit each 

registry-only measure for 2011. 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 2011, then an 

eligible professional would not be able 

to report that particular measure. 

We note also that detailed measure 

specifications, including a measure’s 

title, for 2010 Physician Quality 

Reporting System quality measures may 

have been updated or modified during 

the NQF endorsement process or for 

other reasons prior to 2011. Therefore, 

the 2011 Physician Quality Reporting 

System quality measure specifications 

for any given quality measure may be 

different from specifications for the 

same quality measure used for 2010. 

Specifications for all 2011 individual 


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Physician Quality Reporting System 

quality measures, whether or not 

included in the 2010 Physician Quality 

Reporting System, must be obtained 

from the specifications document for 

2011 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, 2010. 

(3) New Individual Quality Measures for 

2011 

We proposed to include in the 2011 

Physician Quality Reporting System 

quality measure set 20 measures that 

were not included in the 2010 Physician 

Quality Reporting System quality 

measures set provided that each 

measure obtains NQF endorsement by 

June 1, 2010 and its detailed 

specifications are completed and ready 

for implementation in the Physician 

Quality Reporting System by August 15, 

2010 (75 FR 40192). Besides having 

NQF endorsement, we proposed that the 

development of a measure is considered 

complete for the purposes of the 2011 

Physician Quality Reporting System if 

by August 15, 2010: (1) The final, 

detailed specifications for use in data 

collection for the Physician Quality 

Reporting System have been completed 

and are ready for implementation, and 

(2) all of the Category II Current 

Procedural Terminology (CPT II) codes 

required for the measure have been 

established and will be effective for 

CMS claims data submission on or 

before January 1, 2011. 

Due to the complexity of their 

measure specifications, we proposed 

that 8 of these 20 measures would be 

available as registry-only measures for 

the 2011 Physician Quality Reporting 

System. The remaining 15 measures 

were proposed to be available for 

reporting through either claims-based 

reporting or registry-based reporting. 

The following is a summary of the 

comments received on the 20 new 

individual quality measures proposed 

for 2011. 

Comment: We received numerous 

comments in support of the proposed 

additional quality measures for the 2011 

Physician Quality Reporting System. 

One commenter stated that the new 

Physician Quality Reporting System 

measures will help to spur additional 

eligible professional participation in the 

Physician Quality Reporting System. 

Several comments were received 

specifically in support of the following 

‘Change in Risk-Adjusted Functional 

Status’ measures, developed by FOTO: 

• Change in Risk-Adjusted Functional 

Status for Patients with Knee 

Impairments 

• Change in Risk-Adjusted Functional 

Status for Patients with Hip 

Impairments 

• Change in Risk-Adjusted Functional 

Status for Patients with Lower Leg, Foot 

or Ankle Impairments 

• Change in Risk-Adjusted Functional 

Status for Patients with Lumbar Spine 

Impairments 

• Change in Risk-Adjusted Functional 

Status for Patients with Shoulder 

Impairments 

• Change in Risk-Adjusted Functional 

Status for Patients with Elbow, Wrist or 

Hand Impairments 

• Change in Risk-Adjusted Functional 

Status for Patients with a Functional 

Deficit of the Neck, Cranium, Mandible, 

Thoracic Spine, Ribs or other General 

Orthopedic Impairment 

Commenters stated these measures 

support ‘‘improved quality and 

efficiency of care for Medicare 

beneficiaries including: High cost and 

high volume conditions; improved 

outcomes; improved efficiency; 

improved patient and family experience 

of care; reduced unwarranted variation 

in quality and efficiency.’’ We also 

received support for the inclusion of the 

following measures: 

• Hypertension (HTN): Plan of Care; 

• Heart Failure (HF): Left Ventricular 

Function (LVF) Testing; 

• Reminder System for Mammograms 

measure; 

• Preventive Care and Screening: 

Tobacco Use: Screening and Cessation 

Intervention; 

• Recording of Performance Status 

Prior to Lung or Esophageal Cancer 

Resection; and 

• Pulmonary Function Tests Before 

Major Anatomic Lung Resection. 

Response: We appreciated the 

commenters’ support of the proposed 

measures and agree with the reasons 

stated by the commenters. We are 

finalizing all of the proposed new 

measures supported by the commenters. 

The new individual quality measures 

for the 2011 Physician Quality 

Reporting System are identified in Table 

80 of this final rule with comment 

period. 

Comment: Several commenters 

expressed support for the inclusion of 

the new care transitions measures 

developed by the AMA–PCPI as these 

measures are based on evidence-based 

processes that have been shown to 

reduce readmissions, limit medication 

errors, and improve the patient 

perspective of their care. The measures’ 

developer, however, commented that 

the measures were not designed for 

individual physician level 

measurement. The measures are 

specified at the facility (hospital) level, 

using the UB04 administrative data to 

identify the denominator population. 

Response: We appreciate the 

commenters’ support for the new care 

transitions measures. Based on the 

measure developer’s comments, 

however, we are not finalizing our 

proposal to include the following 

measures in the final 2011 Physician 

Quality Reporting System measure set: 

• Care Transitions: Reconciled 

Medication List Received by Discharged 

Patients (Inpatient Discharges to Home/ 

Self Care or Any Other Site of Care); 

• Care Transitions: Transition Record 

with Specified Elements Received by 

Discharged Patients (Inpatient 

Discharges to Home/Self Care or Any 

Other Site of Care); 

• Care Transitions: Timely 

Transmission of Transition Record 

(Inpatient Discharges to Home/Self Care 

or Any Other Site of Care); and 

• Care Transitions: Transition Record 

with Specified Elements Received by 

Discharged Patients (Emergency 

Department Discharges to Ambulatory 

Care [Home/Self Care] or Home Health 

Care. 

Comment: One commenter 

recommended that the proposed 

Hypertension (HTN): Plan of Care 

measure not be included in the final set 

of 2011 Physician Quality Reporting 

System measures, claiming that this 

measure was developed as a ‘‘test 

measure’’ and was not designed for 

individual physician accountability, but 

rather internal quality improvement. 

Response: We appreciate the 

commenter’s input but are finalizing our 

proposal to include this measure in the 

2011 Physician Quality Reporting 

System measure set. This measure meets 

the considerations for the selection of 

2011 Physician Quality Reporting 

System measures and is also a clinical 

quality measure under the EHR 

Incentive Program. 

Based on the reasons discussed 

previously and upon consideration of 

the comments received, we are 

finalizing in the 2011 Physician Quality 

Reporting System quality measure set 16 

of the 20 proposed 2011 Physician 

Quality Reporting System measures 

identified in Table 80 of the proposed 

rule. In addition to not finalizing our 

proposal to include the 4 new care 

transitions measures previously listed, 

we note that 3 measures—Thoracic 

Surgery: Recording of Performance 

Status Prior to Lung or Esophageal 

Cancer Resection; Thoracic Surgery: 

Pulmonary Function Test Before Major 

Anatomic Lung Resection 

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(Pneumonectomy, Lobectomy, or 

Formal Segmentectomy); and 

Melanoma: Overutilization of Imaging 

Studies in Stage 0–1A Melanoma—that 

were proposed to be available for either 

registry or claims reporting will be made 

available for registry reporting only for 

the 2011 Physician Quality Reporting 

System. Upon further analysis of these 

measures, we have determined that 

these measures would be analytically 

challenging to collect via claims and, 

therefore, are not finalizing such 

measures for the claims-based reporting 

option for the 2011 Physician Quality 

Reporting System. 

The titles of the 16 additional, or new, 

Physician Quality Reporting System 

measures for 2011 are listed in Table 80 

along with the name of the measure 

developer, the reporting mechanism(s) 

available (that is, whether the measure 

will be reportable using claims, 

registries, or both), and the NQF 

Measure Number, if applicable. 

TABLE 80—NEW INDIVIDUAL QUALITY MEASURES FOR 2011 

Measure title NQF measure 

number 

Measure 

developer 

Reporting 

mechanism(s) 

Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Knee 

Impairments.

0422 FOTO Registry. 

Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Hip Impairments.0423 FOTO Registry. 

Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Lower 

Leg, Foot or Ankle Impairments.

0424 FOTO Registry. 

Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Lumbar 

Spine Impairments.

0425 FOTO Registry. 

Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Shoulder Impairments.0426 FOTO Registry. 

Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Elbow, 

Wrist or Hand Impairments.

0427 FOTO Registry. 

Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Neck, 

Cranium, Mandible, Thoracic Spine, Ribs, or Other General Orthopedic Impairment.

0428 FOTO Registry. 

Hypertension (HTN): Plan of Care ..................................................................................... 0017 AMA–PCPI Claims, Registry. 

Heart Failure (HF): Left Ventricular Function (LVF) Testing .............................................. 0079 CMS Registry. 

Melanoma: Overutilization of Imaging Studies in Stage 0–IA Melanoma .......................... 0562 AMA–PCPI Registry. 

Radiology: Reminder System for Mammograms ............................................................... 0509 AMA–PCPI Claims, Registry. 

Asthma: Tobacco Use: Screening—Ambulatory Care Setting ........................................... Not applicable AMA–PCPI Claims, Registry. 

Asthma: Tobacco Use: Intervention—Ambulatory Care Screening ................................... Not applicable AMA–PCPI Claims, Registry. 

Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention ... 0028 AMA–PCPI Claims, Registry. 

Thoracic Surgery: Recording of Performance Status Prior to Lung or Esophageal Cancer Resection.0457 Society of 

Thoracic 

Surgery 

(STS) 

Registry. 

Thoracic Surgery: Pulmonary Function Tests Before Major Anatomic Lung Resection ... 0458 Society of 

Thoracic 

Surgery 

(STS) 

Registry. 

(4) 2011 Measures Available for EHRBased Reporting 

For 2011, we proposed to again accept 

Physician Quality Reporting System 

data from EHRs for a limited subset (22) 

of the proposed 2011 Physician Quality 

Reporting System quality measures, 

contingent upon the successful 

completion of our 2010 EHR data 

submission process and a determination 

that accepting data from EHRs on 

quality measures for the 2011 Physician 

Quality Reporting System continues to 

be practical and feasible. The 22 

measures we proposed to be available 

for EHR-based reporting in the 2011 

Physician Quality Reporting System 

include the 10 measures available for 

EHR-based reporting in the 2010 

Physician Quality Reporting System and 

12 additional measures that overlap 

with the clinical quality measures used 

in the EHR incentive program 

established by the American Recovery 

and Reinvestment Act (ARRA) (75 FR 

40193). 

The following is a summary of the 

comments received on the proposed 

electronic submission of these 22 

measures. 

Comment: Commenters were pleased 

that we proposed the addition of new 

measures for EHR-based reporting as 

this will permit additional physician 

specialties to participate using this 

reporting mechanism. We specifically 

received support for the following 

proposed measures for EHR-based 

reporting: 

• Measure #1: Diabetes Mellitus: 

Hemoglobin A1c Poor Control in 

Diabetes Mellitus; 

• Measure #2: Diabetes Mellitus: Low 

Density Lipoprotein (LDL–C) Control in 

Diabetes Mellitus; 

• Measure #3: Diabetes Mellitus: High 

Blood Pressure Control in Diabetes 

Mellitus; 

• Measure #5: Heart Failure: 

Angiotensin-Converting Enzyme (ACE) 

Inhibitor or Angiotensin Receptor 

Blocker (ARB) Therapy for Left 

Ventricular Systolic Dysfunction 

(LVSD); 

• Measure #7: Coronary Artery 

Disease (CAD): Beta-Blocker Therapy for 

CAD Patients with Prior Myocardial 

Infarction (MI); 

• Measure #110: Preventive Care and 

Screening: Influenza Immunization for 

Patients ≥50 Years Old; 

• Measure #111: Preventive Care and 

Screening: Pneumonia Vaccination for 

Patients 65 Years and Older; 

• Measure #128: Preventive Care and 

Screening: Body Mass Index (BMI) 

Screening and Follow-Up; 

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• Measure #173: Preventive Care & 

Screening: Unhealthy Alcohol Use— 

Screening; 

• Measure #TBD: Hypertension 

(HTN): Blood Pressure Measurement; 

• Measure #TBD: Preventive Care and 

Screening: Tobacco Use: Screening and 

Cessation Intervention; 

• Measure #TBD: Body Mass Index 

(BMI) 2 Through 18 Years of Age. 

Response: We appreciate the 

commenters’ support of our proposal to 

expand the number of measures 

available for EHR reporting and for the 

measures previously listed. We are 

finalizing our proposal to have all of the 

measures previously listed available for 

2011 Physician Quality Reporting 

System EHR reporting. 

Comment: One commenter was 

concerned by the limited number of 

quality measures available for EHR 

reporting. The commenter stated that 

the current list of quality measures for 

reporting via EHR does not facilitate 

widespread participation because the 22 

measures proposed for EHR reporting 

will restrict the number and type of 

eligible professionals able to report with 

their EHR system. This commenter 

believed the future requirements to 

align the Physician Quality Reporting 

System and EHR incentive programs 

highlight the importance of expanding 

this list. 

Response: We agree with the 

commenter and are working to expand 

the list of electronically specified 

measures for future years. However, 

EHR-derived measures data will be 

accepted for the Physician Quality 

Reporting System directly from a 

qualified EHR for the first time in early 

2011 (with 2010 Physician Quality 

Reporting System data). For this reason, 

we believe that a limited set of measures 

this early in the process will increase 

the program’s chance of being 

successful in accepting this quality data. 

Comment: A few commenters noted 

that many current measures are not 

specified for electronic reporting and 

that additional resources are needed to 

work with measure developers to respecify or ‘‘retool’’ measures to be 

effectively collected via EHRs. One 

commenter noted that a hybrid 

approach of data collected via EHR and 

manual abstraction may potentially be 

needed. 

Response: As noted previously, we 

are planning to continue to 

electronically specify measures to add 

to the list of those measures that are 

currently electronically specified for 

future years. 

Comment: Because the following 

measures were not included in the Final 

Rule for Stage 1 of the EHR Incentive 

Program, one commenter suggested that 

they be removed from the list of 2011 

EHR-based measures in favor of 

measures that are included in the EHR 

Incentive Program: Measures #39, 41, 

47, 48, 142, 173, and Drugs to Be 

Avoided in the Elderly. 

Response: While we are required to 

develop a plan to integrate the reporting 

of quality measures under the Physician 

Quality Reporting System with 

reporting under the EHR Incentive 

Program, they are two distinct programs. 

Therefore, we believe that it may be 

appropriate to have different measures 

in each of them and are retaining such 

measures in the Physician Quality 

Reporting System for 2011. However, 

we note that we are not finalizing our 

proposal to have Physician Quality 

Reporting System Measures #41 and 

#142 available for 2011 Physician 

Quality Reporting System EHR 

reporting. The electronic specifications 

and Quality Reporting Document 

Architecture (QRDA) for submitting 

these measures electronically were not 

fully developed. 

Based on the reasons discussed 

previously and upon consideration of 

the comments received, we are 

finalizing the option of accepting 

clinical quality data extracted from 

qualified EHRs on 20 of the 22 proposed 

2011 Physician Quality Reporting 

System quality measures identified in 

Tables 81 and 82 of the proposed rule. 

We are not finalizing our proposal to 

have Physician Quality Reporting 

System Measures #41 and #142 

available for 2011 Physician Quality 

Reporting System EHR reporting 

because the specifications for 

submitting these measures 

electronically are not ready. The final 

2011 measures available for EHR-based 

reporting are identified in Tables 81 and 

82 of this final rule with comment 

period. 

TABLE 81—2011 MEASURES AVAILABLE FOR EHR-BASED REPORTING FROM 2010 PHYSICIAN QUALITY REPORTING

SYSTEM

Physician Quality 

Reporting System Measure title Measure developer NQF Measure No. 

1 .......................... *** Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes 

Mellitus.

NCQA ............................................. 0059 

2 .......................... *** Diabetes Mellitus: Low Density Lipoprotein (LDL–C) Control in Diabetes Mellitus.NCQA ............................................. 0064 

3 .......................... *** Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus NCQA ............................................. 0061 

5 .......................... *** Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or 

Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular 

Systolic Dysfunction (LVSD).

AMA–PCPI ..................................... 0081 

7 .......................... *** Coronary Artery Disease (CAD): Beta-Blocker Therapy for CAD 

Patients with Prior Myocardial Infarction (MI).

AMA–PCPI ..................................... 0070 

110 ...................... **Preventive Care and Screening: Influenza Immunization for Patients 

≥ 50 Years Old.

AMA–PCPI ..................................... 0041 

111 ...................... ***Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older.NCQA ............................................. 0043 

112 ...................... ***Preventive Care and Screening: Screening Mammography ............. NCQA ............................................. 0031 

113 ...................... ***Preventive Care and Screening: Colorectal Cancer Screening ........ NCQA ............................................. 0034 

124 ...................... Health Information Technology (HIT): Adoption/Use of Electronic 

Health Records (EHR).

CMS/QIP ........................................ 0488 

*This measure is a Core clinical quality measure for the Electronic Health Record Incentive Program under the ARRA HITECH regulation for 

program years 2011–2012. The electronic specifications for measures that are included in the PQRI and Electronic Health Record Incentive Program may be different. Eligible professionals should refer to the measure specifications for the appropriate program. **This measure is an Alternate Core clinical quality measure for the Electronic Health Record Incentive Program under the ARRA HITECH regulation for program years 2011–2012. The electronic specifications for measures that are included in the PQRI and Electronic Health Record Incentive Program may be different. Eligible professionals should refer to the measure specifications for the appropriate program. 

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***This measure is included in the Electronic Health Record Incentive Program under the ARRA HITECH regulation for program years 2011– 

2012. The electronic specifications for measures that are included in the PQRI and Electronic Health Record Incentive Program may be different. 

Eligible professionals should refer to the measure specifications for the appropriate program. 

TABLE 82—ADDITIONAL MEASURES AVAILABLE FOR EHR-BASED REPORTING IN 2011 

Physician Quality 

Reporting System Measure title Measure developer NQF Measure No. 

39 ........................ Screening or Therapy for Osteoporosis for Women Aged 65 Years 

and Older.

AMA–PCPI/NCQA .......................... 0046 

47 ........................ Advance Care Plan ................................................................................ AMA–PCPI/NCQA .......................... 0326 

48 ........................ Urinary Incontinence: Assessment of Presence or Absence of Urinary 

Incontinence in Women Aged 65 Years and Older.

AMA–PCPI/NCQA .......................... 0098 

128 ...................... * Preventive Care and Screening: Body Mass Index (BMI) Screening 

and Follow-up.

CMS/Quality Insights of Pennsylvania.0421 

173 ...................... Preventive Care and Screening: Unhealthy Alcohol Use—Screening .. AMA–PCPI ..................................... AQA Adopted 

TBD .................... * Hypertension (HTN): Blood Pressure Measurement ........................... AMA–PCPI ..................................... 0013 

TBD .................... Drugs to be Avoided in the Elderly ........................................................ NCQA ............................................. 0022 

TBD .................... ** Weight Assessment and Counseling for Children and Adolescents .. NCQA ............................................. 0024 

TBD .................... * Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention.AMA–PCPI ..................................... 0028 

TBD .................... ** Childhood Immunization Status .......................................................... NCQA ............................................. 0038 

* This measure is a Core clinical quality measure for the Electronic Health Record Incentive Program under the ARRA HITECH regulation for 

program years 2011–2012. The electronic specifications for measures that are included in the PQRI and Electronic Health Record Incentive Program may be different. Eligible professionals should refer to the measure specifications for the appropriate program. 

** This measure is an Alternate Core clinical quality measure for the Electronic Health Record Incentive Program under the ARRA HITECH 

regulation for program years 2011–2012. The electronic specifications for measures that are included in the PQRI and Electronic Health Record 

Incentive Program may be different. Eligible professionals should refer to the measure specifications for the appropriate program. 

*** This measure is included in the Electronic Health Record Incentive Program under the ARRA HITECH regulation for program years 2011– 

2012. The electronic specifications for measures that are included in the PQRI and Electronic Health Record Incentive Program may be different. 

Eligible professionals should refer to the measure specifications for the appropriate program. 

(5) Measures Proposed for Inclusion in 

2011 Measures Groups 

We proposed to retain the following 

13 2010 Physician Quality Reporting 

System measures groups for the 2011 

Physician Quality Reporting System: (1) 

Diabetes Mellitus; (2) 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; and (13) CAP. For 2011, we 

proposed that the CABG, CAD, Heart 

Failure, and HIV/AIDS measures groups 

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, and 

CAP measures groups will continue to 

be reportable through either claimsbased reporting or registry-based 

reporting for the 2011 Physician Quality 

Reporting System (75 FR 40193). 

In addition to the 13 measures groups 

that we proposed to retain from the 

2010 Physician Quality Reporting 

System, we proposed 1 new Asthma 

Measures Group, which could be 

reported through either claims-based 

reporting or registry-based reporting. 

Finally, as in previous program years, 

for 2011, we proposed that the measures 

included in any proposed 2011 

measures group be reportable either as 

individual measures or as part of a 

measures group, except for the Back 

Pain measures group, which will 

continue to be reportable only as part of 

a measures group and not as individual 

measures in 2011 (75 FR 40193 through 

40197). 

As with measures group reporting in 

the 2008, 2009, and 2010 Physician 

Quality Reporting System, we proposed 

that each eligible professional electing 

to report a group of measures for 2011 

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. The 

following is a summary of the comments 

received on the proposed 2011 measures 

groups. 

Comment: One commenter expressed 

support for the movement to greater use 

of measures groups as a method of 

Physician Quality Reporting System 

participation, as they are easier to 

manage and monitor. 

Response: We appreciate the 

commenter’s positive feedback and 

continue to encourage eligible 

professionals to report on measures 

groups. As we have stated in prior years, 

we believe that measures groups can 

present a more complete picture of the 

quality of care provided clinical 

condition or clinical focus than 

individual measures reporting. 

Comment: We received favorable 

support for the proposed inclusion of 

the following measures groups: 

• Asthma. 

• Back Pain. 

• CAD. 

• CAP. 

• CABG. 

• Diabetes Mellitus. 

• Heart failure. 

Some of the reasons stated by 

commenters include that these are 

important chronic conditions and 

collecting information on the treatment 

of these conditions could lead to 

improved care and treatment, which 

would result in reduced costs. 

Response: We agree. For these 

reasons, we are finalizing our proposal 

to include all of these measures groups 

in the 2011 Physician Quality Reporting 

System. 

Comment: One commenter proposed 

the removal of Measure #135, Chronic 

Kidney Disease (CKD): Influenza 

Immunization, from the CKD Measures 

Group to ensure maximum satisfactory 

reporting. The commenter noted that 

Measure #135 differs from other 

measures in the CKD Measures Group in 

its method of reporting. Whereas 

measures in the CKD Measures Group 

are Patient Process (where the measures 

are reported once per reporting period), 

Measure #135 is now Patient Periodic 

(where the measure is reported during 

certain periods of time). The commenter 

is concerned that this difference in 

reporting methods may be too confusing 

for satisfactory reporting. 

Response: We agree with the 

commenter’s recommendation and are 

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removing Measure #135, Influenza, from 

the CKD Measures Group for the reasons 

cited by the commenter. However, the 

CKD Influenza Measure #135 will still 

be reportable as an individual measure. 

Comment: One commenter supported 

the proposed retention of the 2010 HIV/ 

AIDS Physician Quality Reporting 

System measures group for the 2011 

Physician Quality Reporting System, but 

encouraged, to the extent feasible, HIV/ 

AIDS quality measures that can be 

reported through the claims-based 

method in addition to the registry-based 

method. 

Response: We are pleased with the 

commenter’s support for the HIV/AIDS 

measures group. Based on the current 

processing of claims data, it was 

determined that the claims system will 

not accurately capture these measures. 

Registry reporting provides an intricate 

process to capture these measures 

accurately. 

Comment: For the 2011 Physician 

Quality Reporting System measures 

group on preventive care, the addition 

of a process measure for HIV screening 

of ‘‘high-risk’’ patients, as endorsed by 

the National Quality Forum and 

USPSTF previously (level ‘‘A’’ 

recommendation), be added. The 

commenter urged that this measure be 

modified if and when coverage is 

expanded to include routine HIV 

screening, consistent with the 

recommendations of the Centers for 

Disease Control and Prevention (CDC). 

Response: We appreciate the 

commenter’s suggestion to add HIV 

screening of ‘‘high risk’’ patients into the 

Preventive Care Measures Group. 

Measure groups are created based on 

measures with a particular clinical 

condition or focus. The current 

Preventive Care Measures Group is 

intended for a more general patient 

population and would not be 

appropriate for the addition of the HIV 

measure(s) suggested by the commenter. 

The commenter should consider 

utilizing the 2012 Call for Measures as 

an avenue for submitting suggestions for 

possibly creating a new measure group 

for screening ‘‘high risk’’ patients. We 

also urge the commenter to direct such 

suggestions to the appropriate measure 

developer/owner(s) for consideration. 

Based on the reasons discussed 

previously and upon consideration of 

the comments received, we are 

finalizing the following proposed 2011 

measures groups: (1) Diabetes Mellitus; 

(2) Preventive Care; (3) CABG; (4) 

Rheumatoid Arthritis; (5) Perioperative 

Care; (6) Back Pain; (7) CAD; (8) Heart 

Failure; (9) IVD; (10) Hepatitis C; (11) 

HIV/AIDS; (12) CAP; and (13) Asthma. 

We are also finalizing the proposed CKD 

measures group for 2011 with one 

modification. As stated previously, we 

are removing Measure #135: Chronic 

Kidney Disease (CKD): Influenza 

Immunization from the CKD measures 

group for 2011 because the reporting 

requirements for this measure are 

different from the reporting 

requirements for the other measures in 

this measures group. The following 4 

measures groups are reportable through 

the registry-based reporting mechanism 

only: (1) CABG; (2) CAD; (3) Heart 

Failure; and (4) HIV/AIDS. 

The measures selected for inclusion 

in each of the 2011 measures groups are 

identified in Tables 83 through 96 of 

this final rule with comment period. 

Some measures selected for inclusion in 

these 14 measures groups are current 

2010 individual Physician Quality 

Reporting System measures. The title of 

each such measure is preceded with its 

Physician Quality Reporting System 

Measure Number in Tables 83 through 

96. As stated previously, 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, 

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 83 through 96 were never part 

of a Physician Quality Reporting System 

measure set prior to 2011. A number 

will be assigned to such measures for 

2011. 

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BILLING CODE 4120–01–C 

As with measures group reporting in 

the 2008, 2009, and 2010 Physician 

Quality Reporting System, each eligible 

professional electing to report a group of 

measures for 2011 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. The measures selected 

for the Back Pain Measures Group 

continue to be reportable only as part of 

a measures group and not as individual 

measures for the 2011 Physician Quality 

Reporting System. Measures selected for 

inclusion in all other 2011 Physician 

Quality Reporting System measures 

groups are reportable either as 

individual measures or as part of a 

measures group. 

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 2011 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/PQRI by no later than 

December 31, 2010. 

Additionally, the detailed measure 

specifications and instructions for 

submitting data on those 2011 measures 

groups that were also included as 2010 

Physician Quality Reporting System 

measures groups may be updated or 

modified prior to 2011. 

Therefore, the 2011 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 2010. These measure 

specification changes do not materially 

impact the intended meaning of the 

measures or the strength of the 

measures. 

j. 2011 Physician Quality Reporting 

System Quality Measures for Group 

Practices Selected To Participate in the 

Group Practice Reporting Option 

(GPRO I) 

For 2011, we proposed that group 

practices selected to participate in the 

2011 Physician Quality Reporting 

System GPRO I would be required to 

report on 26 proposed measures listed 

in Table 97 of the proposed rule (75 FR 

40197 through 40198). We proposed 

these measures because they are NQFendorsed measures currently collected 

as part of the PGP and/or MCMP 

demonstrations and in the 2010 

Physician Quality Reporting System 

GPRO. 

The following is a summary of the 

comments received on the proposed 

2011 Physician Quality Reporting 

System quality measures for group 

practices selected to participate in the 

group practice reporting option 

(GPRO I). 

Comment: We received a comment 

noting general support for the 26 

proposed GPRO I measures. Another 

commenter expressed specific support 

for the diabetes measures proposed for 

the Group Practice Reporting Option 

(GPRO), ‘‘Diabetes Mellitus: Hemoglobin 

A1c Testing’’ and ‘‘Diabetes Mellitus: 

Lipid Profile.’’ 

Response: We appreciate the positive 

feedback and are finalizing the 26 GPRO 

I measures as proposed. We believe 

these measures target high-cost chronic 

conditions and preventive care. 

Comment: A couple of commenters 

encouraged us to expand the list of 

GPRO I measures and/or develop 

different measure sets to address the 

care delivered in different group 

practices. One commenter encouraged 

us to adopt additional diabetes 

measures into the GPRO to ensure the 


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most comprehensive evidence-based 

assessment of diabetes care. 

Response: We agree that in order to 

make GPRO I more broadly applicable 

we would need to expand the list of 

GPRO I measures and/or develop 

different measures to address the care 

delivered in different group practices. 

As we stated in the proposed rule (75 

FR 40180), we hosted a listening session 

on February 2, 2010, to solicit input on 

a number of aspects of the Physician 

Quality Reporting System, including the 

measures for the 2011 Physician Quality 

Reporting System GPRO. We did not, 

however, receive any suggestions for 

additional disease modules for GPRO I. 

Therefore, we encourage commenters to 

use the 2012 Call for Measures as an 

avenue to submit specific measures for 

us to consider for future expansion of 

the GPRO I measure set. As stated 

previously, additional measures 

recommended for selection for the 2011 

Physician Quality Reporting System via 

comments to the proposed rule cannot 

be included in the 2011 Physician 

Quality Reporting System measure set. 

Comment: With regard to the 26 

GPRO measures, one commenter asked 

us to consider whether some of the 

testing and patient education measures 

are sufficiently proximate to the desired 

clinical outcome to justify the effort of 

data collection, analysis, and 

comparative reporting. 

Response: We value the commenter’s 

thoughtful input and agree that as we 

expand the Physician Quality Reporting 

System measure set, including the 

GPRO I measure set, in future years we 

may want to consider whether the 

measures lead to the desired outcomes. 

Based on the reasons discussed 

previously and after considering the 

comments, for the 2011 Physician 

Quality Reporting System, group 

practices selected to participate in the 

Physician Quality Reporting System 

GPRO I will be required to report on all 

measures listed in Table 97. 

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BILLING CODE 4120–01–C 

A separate measures specifications 

manual and other supporting 

documents will be available for group 

practices participating in the 2011 

Physician Quality Reporting System 

GPRO I. We anticipate that the group 

practice measures specifications manual 

will be available by November 15, 2010 

or shortly thereafter on the Physician 

Quality Reporting System section of the 

CMS Web site at http:// 

www.cms.hhs.gov/PQRI. 

k. Public Reporting of Physician Quality 

Reporting System Data 

Section 1848(m)(5)(G) of the Act 

requires the Secretary to post on the 

CMS Web site, in an easily 

understandable format, a list of the 

names of eligible professionals (or group 

practices) who satisfactorily submitted 

data on quality measures for the 

Physician Quality Reporting System and 

the names of the eligible professionals 

(or group practices) who are successful 

electronic prescribers. In addition, 

section 10331(a)(1) of the ACA, requires 

the Secretary to develop a Physician 

Compare Internet Web site by January 1, 

2011, on which information on 

physicians enrolled in the Medicare 

program and other eligible professionals 

who participate in the Physician Quality 

Reporting System would be posted. 

In accordance with section 

1848(m)(5)(G) of the Act, we proposed 

to continue to make public the names of 

eligible professionals and group 

practices that satisfactorily submit 

quality data for the 2011 Physician 

Quality Reporting System. Previously, 

we intended to post such information 

on the Healthcare Provider Directory. To 

meet the ACA deadline of January 1, 

2011, we proposed to use the current 

Healthcare Provider Directory 

(previously known as the Physician and 

Other Health Care Professional 

Directory) as a foundation for the 

Physician Compare Web site. Therefore, 

we proposed to post the names of the 

2011 Physician Quality Reporting 

System satisfactory reporters on the 

Physician Compare Web site that must 

be developed by January 1, 2011. 

Specifically, we proposed to post the 

names of eligible professionals who: (1) 

Submit data on the 2011 Physician 

Quality Reporting System quality 

measures through one of the reporting 

mechanisms available for the 2011 

Physician Quality Reporting System; (2) 

meet one of the proposed satisfactory 

reporting criteria of individual measures 

or measures groups for the 2011 

Physician Quality Reporting System as 

previously described; and (3) qualify to 

earn a Physician Quality Reporting 

System incentive payment for covered 

professional services furnished during 

the applicable 2011 Physician Quality 

Reporting System reporting period, for 

purposes of satisfying the requirements 

under section 1848(m)(5)(G)(i) of the 

Act, on the Physician Compare Web site 

(75 FR 40198). Similarly, for purposes of 

publicly reporting the names of group 

practices, on the Physician Compare 

Web site, for 2011, we proposed to post 

the names of group practices that: (1) 

Submit data on the 2011 Physician 

Quality Reporting System quality 

measures through one of the proposed 

group practice reporting options; (2) 

meet the proposed criteria for 

satisfactory reporting under the 

respective group practice reporting 

option; and (3) qualify to earn a 

Physician Quality Reporting System 

incentive payment for covered 

professional services furnished during 

the applicable 2011 Physician Quality 

Reporting System reporting period for 

purposes of satisfying the requirements 

under section 1848(m)(5)(G)(i) of the 

Act. 

We did not propose to make 

performance information publicly 

available at either the group practice or 

individual level for 2011 Physician 

Quality Reporting System. However, we 

note that section 10331 of the ACA 

requires that not 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 publicly available through 

Physician Compare, information on 

physician performance, including 

measures collected under the Physician 

Quality Reporting System. Consistent 

with section 10331 of the ACA, we 

expect, in the future, to publicly report 

performance information based on the 

Physician Quality Reporting System. 

The following is a summary of the 

comments we received regarding the 

public reporting of Physician Quality 

Reporting System data required under 

section 1848(m)(5)(G)(i) of the Act and 

Physician Compare Web site required 

under section 10331 of the ACA. 

Comment: Many commenters 

supported the development of a 

Physician Compare Web site. Some 

commenters supported public reporting 

of the names of eligible professionals 

who satisfactorily report Physician 

Quality Reporting System measures 

and/or who are successful e-prescribers, 

noting that this is an appropriate first 

step in CMS’ efforts to further 

transparency. Another commenter 

supported public reporting of the names 

of eligible professionals who participate 

in the Physician Quality Reporting 

System or Maintenance of Certification 

Programs as a way to enhance informed 

consumer choice based on quality and 

outcomes. 

Response: We appreciate the 

commenters’ support. We note, 

however, that we did not propose to 

publicly report the names of eligible 

professionals who participate in the 

Physician Quality Reporting System or 

Maintenance of Certification Programs. 

Instead, we proposed to publicly report 

the names of eligible professionals who 

satisfactorily report 2011 Physician 

Quality Reporting System measures and 

are finalizing our proposal to post the 

names of eligible professionals who 

satisfactorily report 2011 Physician 

Quality Reporting System measures on 

the Physician Compare Web site. 

Comment: Some commenters agreed 

with CMS’ decision to not publicly 

report individual or group level 

Physician Quality Reporting System 

performance results at this time. Many 


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of the commenters believe that it would 

be premature to do so. One commenter 

believed that CMS’ decision to not post 

2011 Physician Quality Reporting 

System performance data will allow 

eligible professionals to analyze their 

2010 data and resolve any identified 

concerns with the GPRO reporting and 

analysis process. Another commenter 

noted that a different level of scrutiny 

is required to report performance rates. 

A commenter generally opposes the use 

of quality data for the purpose of 

physician profiling because it could 

exacerbate gaps in quality and access 

through risk avoidance and by 

inhibiting collaborative efforts by the 

profession to improve care for all 

patients. 

Response: Although we are not 

planning to post 2011 Physician Quality 

Reporting System performance results, 

we note that section 10331 of the ACA 

requires that not 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 publicly available through 

Physician Compare, information on 

physician performance, including 

measures collected under the Physician 

Quality Reporting System. Therefore, 

consistent with section 10331 of the 

ACA, we expect, in the future, to 

publicly report performance information 

based on the Physician Quality 

Reporting System. It is conceivable that 

we could begin publicly reporting 

performance information based on the 

Physician Quality Reporting System 

starting with 2012 Physician Quality 

Reporting System performance results. 

If and when we move towards public 

reporting of physician performance 

information, as contemplated under 

section 10331 of the ACA, we will need 

to consider and address the 

commenters’ concerns. 

Comment: As we move towards 

posting performance information, one 

commenter urged us to start with 

posting measure results on group 

practices only until there is sufficient 

experience and data to determine 

which, if any, measures can be reported 

at the individual practitioner level with 

relative certainty that the information 

portrayed is accurate. Specifically, we 

should monitor the group practice level 

reporting for unintended consequences 

before reporting performance 

information at the individual 

practitioner level. 

Response: We appreciate the 

commenter’s valuable input. We are 

committed to taking steps to ensure that 

the information portrayed is accurate. 

As we develop our plans for posting 

performance information on the 

Physician Compare Web site, we may 

consider initially limiting the 

performance information to measure 

results at the group practice level as 

suggested by the commenter. As stated 

previously, we will discuss our plans 

for posting performance information in 

more detail in future notice and 

comment rulemaking. 

Comment: Some commenters 

suggested that we work with 

stakeholders to— 

• Identify how best to relay this 

information in a user-friendly manner to 

the public; 

• Develop reliable, comparable 

benchmarks, with a sufficient sample 

size to ensure validity; 

• Ensure that specific reporting and 

performance results are indeed quality 

indicators; 

• Ensure that the site accurately 

represents physician performance and 

facilitates consumer decision-making; 

• Provide an opportunity for 

physicians, other eligible professionals, 

and group practices to review their data 

before it is made public. As with 

Hospital Compare, eligible professionals 

should have the right to suppress any 

data that are inaccurate; and 

• Establish a method for ensuring that 

any publicly reported information is— 

++ Correctly attributed to those 

involved in the care; 

++ Appropriately risk-adjusted; and 

++ Accurate, user-friendly, relevant 

and helpful to the consumer/patient. 

CMS must educate consumers/patients 

about the publicly reported performance 

measures and corresponding 

benchmarks. 

Response: We agree with commenters 

on the importance of receiving 

stakeholder input on the Physician 

Compare Web site. We are required, by 

section 10331(d) of the ACA to take into 

consideration input provided by multistakeholder groups, consistent with 

section 1890(b)(7) and 1890(A) of the 

Act, as added by section 3014 of the 

ACA, in selecting quality measures for 

the Physician Compare Web site. In 

addition, on October 27, 2010, we held 

a Town Hall Meeting to solicit input 

from stakeholders on the further 

expansion of the Physician Compare 

Web site (75 FR 58411 and 58412). 

Finally, as we stated in the CY 2011 PFS 

proposed rule, we will be working on a 

plan to expand the information that is 

publicly reported on the Physician 

Compare in future years, which will be 

described in future rulemaking. 

Stakeholders would have an 

opportunity to comment on any plans 

described in future rulemaking as well. 

Comment: One commenter voiced 

concerns about various issues and 

challenges that need to be resolved 

before any performance information is 

made public. Specific issues include 

measure gaps, challenges associated 

with risk adjustment and attribution, 

accuracy of the data, and eligible 

professionals’ ability to control the 

factors that influence their performance. 

Response: We agree that these issues 

will need to be addressed as we move 

towards public reporting of performance 

information on individual eligible 

professionals. We look forward to 

receiving input from stakeholders on 

these and other important 

methodological considerations as we 

develop our plans for the expansion of 

the Physician Compare Web site to 

include performance information. 

Comment: A few commenters 

suggested that physicians be given an 

opportunity to review and appeal any 

data that will be made public prior to 

the data being made public. 

Commenters stated that physicians also 

should be given an opportunity to 

comment and make changes to the data 

on the Physician Compare Web site 

should the information be incorrect. 

Response: With respect to the 

development and implementation of a 

plan for making physician performance 

information publicly available on the 

Physician Compare Web site, section 

10331(b) of the ACA specifically 

requires the Secretary, to the extent 

practicable, to include processes by 

which a physician or other eligible 

professional whose performance 

measures is being publicly reported has 

a reasonable opportunity, as determined 

by the Secretary, to review his or her 

individual results before they are made 

public. Thus, as we describe our plans 

for making physician performance 

information publicly available on the 

Physician Compare Web site in future 

notice and comment rulemaking, we 

anticipate addressing the commenter’s 

suggestions in further detail. 

Comment: Some commenters had 

concerns about the posting of the names 

of eligible professionals and group 

practices who satisfactorily report 

Physician Quality Reporting System 

measures. Some commenters requested 

that CMS delay posting this information 

until problems with the Physician 

Quality Reporting System are addressed 

and both success rates and participation 

rates improve significantly. Commenters 

were concerned that this information 

could be misinterpreted or misperceived 

by the public. Some commenters noted 

that successful reporting of the mostly 

process measures that comprise the 

Physician Quality Reporting System 

would not be a valid surrogate for 

patients to evaluate the actual quality of 

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care or quality of service provided by an 

individual practitioner. Furthermore, 

consumers already face a challenge 

when attempting to evaluate providers. 

The commenter thinks it will be even 

more confusing for consumers to 

understand the difference between 

claims-based or registry reporting and 

which is more accurate or reflects actual 

quality of care. Commenters stressed the 

importance of educating consumers 

about why eligible professionals may 

choose not to participate in the 

Physician Quality Reporting System. 

Another commenter noted that 

consumers must be made aware that 

non-participation in the Physician 

Quality Reporting System is not an 

indication that an eligible professional 

or group practice provides low quality 

care. Finally, a commenter also 

suggested that this information be 

accompanied with explanatory language 

regarding the limitations of posting this 

data. 

Response: While we understand the 

commenters’ concerns, section 

1848(m)(5)(G)(i) of the Act requires us to 

post on a CMS Web site the names of 

eligible professionals and group 

practices that satisfactorily submit data 

on quality measures under the 

Physician Quality Reporting System. We 

intend to provide explanatory language 

on the Web site that would address 

many of the commenters’ concerns, 

including information about the 

intended uses and/or limitations of the 

information being presented in the form 

of a disclaimer. 

Comment: One commenter urged 

CMS to consider how the appeals 

process will be connected to the 

Physician Compare Web site. The 

commenter questioned whether the Web 

site would be updated if professionals 

are successful during the appeals 

process. 

Response: We are assuming that the 

commenter is referring to the informal 

appeals process required under section 

1848(m)(5)(I) of the Act and discussed 

in section VII.F.1.e. of this final rule 

with comment period. To the extent that 

an eligible professional seeks a review 

of our determination that he or she did 

not satisfactorily report and our review 

results in a determination that the 

professional did satisfactorily report, we 

anticipate that we would update the 

Physician Compare Web site to indicate 

that the professional satisfactorily 

reported Physician Quality Reporting 

System quality measures. 

Comment: We received a few 

comments related to public reporting 

and maintenance of certification. One 

commenter offered to work with us to 

provide information on Maintenance of 

Certification Program status for posting 

on the Physician Compare Web site and 

the value as it relates to quality, safety, 

efficiency, and patient experiences of 

physician care. The commenter would 

also like the Physician Compare Web 

site to include a link to ABMS. Another 

commenter urged us to make available 

information on whether a physician 

received an additional bonus for 

successfully meeting Maintenance of 

Certification Program requirements. A 

third commenter was concerned that 

public reporting of physicians who 

satisfy the Physician Quality Reporting 

System requirements through the 

Maintenance of Certification Program 

Part IV pathway could inadvertently 

lead to confusion about whether those 

same physicians have satisfied all of the 

requirements of the Boards’ 

Maintenance of Certification Program 

programs. 

Response: We agree that it may be 

valuable to consumers to have 

information on an eligible professional’s 

Maintenance of Certification Program 

status and would be interested in 

exploring the feasibility of posting this 

information on the Physician Compare 

Web site in the future. We could also 

explore posting information on whether 

a physician or other eligible 

professional received the additional 0.5 

percent incentive associated with 

participation in a Maintenance of 

Certification Program. However, as 

noted by one of the commenters, we feel 

that this information could be 

misinterpreted and would not be as 

valuable as information on an eligible 

professional’s Maintenance of 

Certification Program status. As we 

describe in section VII.F.1.l.(1) of this 

final rule with comment period, in order 

for an eligible professional to qualify for 

this additional 0.5 percent incentive, 

not only does he or she have to 

satisfactorily participate in the 

Physician Quality Reporting System, 

participate in a qualified Maintenance 

of Certification Program, and 

successfully complete a Maintenance of 

Certification Program practice 

assessment, but he or she must 

participate in the qualified Maintenance 

of Certification Program and 

successfully complete a Maintenance of 

Certification Program practice 

assessment more frequently than is 

required to qualify for or maintain board 

certification status. 

After considering the comments, we 

intend to post the names of eligible 

professionals who: (1) Submit data on 

the 2011 Physician Quality Reporting 

System quality measures through one of 

the reporting mechanisms available for 

the 2011 Physician Quality Reporting 

System; (2) meet one of the satisfactory 

reporting criteria of individual measures 

or measures groups for the 2011 

Physician Quality Reporting System; 

and (3) qualify to earn a Physician 

Quality Reporting System incentive 

payment for covered professional 

services furnished during the applicable 

2011 Physician Quality Reporting 

System reporting period for purposes of 

satisfying the requirements under 

section 1848(m)(5)(G)(i) of the Act, on 

the Physician Compare Web site that 

will be developed by January 1, 2011. 

Similarly, for purposes of satisfying 

the requirements under section 

1848(m)(5)(G)(i) of the Act with respect 

to group practices, on the Physician 

Compare Web site, we intend to post the 

names of group practices that: (1) 

Submit data on the 2011 Physician 

Quality Reporting System quality 

measures through GPRO I or GPRO II; 

(2) meet the criteria for satisfactory 

reporting under the GPRO I or GPRO II; 

and (3) qualify to earn a Physician 

Quality Reporting System incentive 

payment for covered professional 

services furnished during the applicable 

2011 Physician Quality Reporting 

System reporting period for group 

practices. 

We will discuss our plans for further 

expansion of the Physician Compare 

Web site in future notice and comment 

rulemaking. 

l. Other Relevant ACA Provisions 

(1) Section 3002(b)—Incentive Payment 

Adjustment for Quality Reporting 

Beginning 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 ACA, 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 for 2015 is 98.5 

percent and for 2016 and each 

subsequent year it is 98.0 percent. In the 

proposed rule, we stated that we will 

address this provision of the ACA in 

future notice and comment rulemaking 

(75 FR 40199). 

The following is a summary of 

comments received regarding the 

incentive payment adjustment for 

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quality reporting required under section 

3002(b) of the ACA. 

Comment: Some commenters 

expressed opposition to the use of 

payment adjustments under the 

Physician Quality Reporting System 

program. One commenter believes 

participation should remain voluntary 

as the Physician Quality Reporting 

System has not yet been shown to 

improve patient outcomes and therefore 

does not warrant penalties for 

nonparticipating eligible professionals. 

Other commenters stated that, to be 

successful, performance measurement 

should be nonpunitive and transparent. 

Response: While we acknowledge the 

commenters’ concerns, we note that 

section 1848(a)(8) of the Act, as added 

by the ACA, requires us to implement 

a payment adjustment for eligible 

professionals who do not satisfactorily 

report Physician Quality Reporting 

System measures beginning in 2015. In 

the meantime, we will continue to 

assess whether we can make additional 

improvements to the Physician Quality 

Reporting System to facilitate 

satisfactory reporting and to encourage 

greater participation prior to 

implementation of the payment 

adjustments required under section 

1848(a)(8) of the Act beginning for 2015. 

We will address our plans for 

implementing the payment adjustment 

that begins in 2015 in future notice and 

comment rulemaking. 

(2) Section 3002(c)—Maintenance of 

Certification Programs and Section 

10327 Improvements to the Physician 

Quality Reporting System 

Section 3002(c) of the ACA amends 

section 1848(k)(4) of the Act to require 

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’’), as 

added by section 10327(a) of the ACA, 

provides for 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, 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 selfassessment of board certified specialty 

physicians by focusing on the 

competencies of patient care, medical 

knowledge, practice-based learning, 

interpersonal and communications 

skills and professionalism. Such a 

program shall require a physician to do 

the following: 

(1) Maintain a valid, unrestricted 

medical license in the United States; 

(2) Participate in educational and selfassessment programs that require an 

assessment of what was learned; 

(3) 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; 

(4) 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— 

(1) Includes an initial assessment of 

an eligible professional’s practice that is 

designed to demonstrate the physician’s 

use of evidence-based medicine; 

(2) Includes a survey of patient 

experience with care; and 

(3) 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: 

(1) 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; 

(2) If requested by the Secretary, 

information on the survey of patient 

experience with care; and 

(3) 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. 

Section 1848(m)(7) of the Act 

(‘‘Additional Incentive Payment’’) 

further specifies that the additional 0.5 

percent incentive payment is available 

only for years 2011, 2012, 2013, and 

2014. For years after 2014, if the 

Secretary determines it to be 

appropriate, the Secretary may 

incorporate participation in a 

Maintenance of Certification Program 

and successful completion of a qualified 

Maintenance of Certification Program 

practice assessment into the composite 

of measures of quality for care furnished 

pursuant to the physician fee schedule 

payment modifier. 

To implement the provisions under 

sections 1848(k)(4) and 1848(m)(7) of 

the Act (‘‘Additional Incentive 

Payment’’), we proposed for 2011 to 

require the following (75 FR 40199 and 

40200): 

• An eligible professional wishing to 

be eligible for the additional Physician 

Quality Reporting System incentive 

payment of 0.5 percent must meet the 

proposed requirements for satisfactory 

Physician Quality Reporting System 

reporting, for program year 2011, based 

on the 12-month reporting period, due 

to the statutory language that the 

eligible professional must satisfactorily 

report ‘‘for a year.’’ For purposes of 

satisfactory reporting under the 

Physician Quality Reporting System, we 

proposed 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 

one of the GPRO options (I or II). 

Alternatively, 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 

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73542 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

Physician Quality Reporting System 

registry for 2011. 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. 

• In addition to meeting the proposed 

requirements for satisfactory reporting 

for the Physician Quality Reporting 

System for program year 2011, the 

eligible professional must have data 

submitted on his or her behalf through 

a Maintenance of Certification Program, 

for the Maintenance of Certification 

Program in which the eligible 

professional participates. Although the 

Maintenance of Certification Program 

need not become a qualified registry for 

data submission for Physician Quality 

Reporting System purposes, the 

Maintenance of Certification Program 

must meet the criteria for a registry for 

submission of the Maintenance of 

Certification Program data as specified 

below. 

• 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. We 

believe that the ‘‘more frequently’’ 

requirement applies both to the 

elements of the Maintenance of 

Certification Program itself and the 

requirement to successfully complete a 

qualified Maintenance of Certification 

Program practice assessment. With 

regard to the elements other than 

completing a qualified Maintenance of 

Certification Program practice 

assessment, we proposed to require that 

the Maintenance of Certification 

Program 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’’ as required by section 10327 

of the ACA. We did not propose to 

specify with respect to participation 

how an eligible professional must meet 

the ‘‘more frequently’’ requirement, but 

rather that the Maintenance of 

Certification Program so certify that the 

eligible professional has met this 

requirement. We noted that we did not 

believe that the ‘‘more frequently’’ 

requirement is applicable to the 

licensure requirement, given that one 

cannot be licensed ‘‘more frequently’’ 

than is required. However, we stated 

that the eligible professional must ‘‘more 

frequently’’ than is required to qualify 

for or maintain board certification, 

participate in educational and selfassessment 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; and successfully 

complete a qualified Maintenance of 

Certification Program practice 

assessment. 

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 stated 

that we believe we needed to be more 

specific regarding our interpretation of 

the phrase ‘‘more frequently’’ (75 FR 

40200). Additionally, we stated that we 

were 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 interpreted the 

statutory provisions as requiring 

participation in and successful 

completion of at least one Maintenance 

of Certification Program practice 

assessment. Therefore, we proposed, as 

a basic requirement, participation in 

and successful completion in at least 

one Maintenance of Certification 

Program practice assessment. For 

physicians who are not required to 

participate in a Maintenance of 

Certification Program to maintain board 

certification, ‘‘more often’’ would be 

more than 0, and therefore only once. 

For physicians, however, who are 

otherwise required by the specialty 

board to participate in a Maintenance of 

Certification Program to maintain board 

certification status, these physicians 

would need to complete the 

Maintenance of Certification Program 

practice assessment a second time in 

order to qualify for the additional 

incentive payment. If a Maintenance of 

Certification Program practice 

assessment were required more than 

once during a particular cycle, the 

eligible professional would be required 

to complete the Maintenance of 

Certification Program practice 

assessment a third time in order to 

qualify for the additional incentive. 

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 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 as to the survey of 

patient experience with care for the 

eligible professional regarding whom 

information is being submitted by the 

Maintenance of Certification Program. 

We proposed that Maintenance of 

Certification Programs wishing to enable 

their members to be eligible for an 

additional Physician Quality Reporting 

System incentive payment for the 2011 

Physician Quality Reporting System 

will need to go through a selfnomination process by January 31, 2011. 

We proposed the board will need to 

include all of the following information 

in their self-nomination letter to CMS: 

• 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 the 

program is substantially equivalent to 

the ABMS Maintenance of Certification 

Program process. 

• The frequency of a cycle of 

Maintenance of Certification Program 

for the specific Maintenance of 

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Certification Program of the sponsoring 

organization; including what constitutes 

‘‘more frequently’’ for the Maintenance 

of Certification Program practice 

assessment for the specific Maintenance 

of Certification Program of the 

sponsoring organization. 

• 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. 

• How the Maintenance of 

Certification Program monitors that an 

eligible professional has implemented a 

quality improvement process for their 

practice. 

• 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 2010 and to 

be used for 2011, 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 that sponsoring 

organizations who desire to participate 

as a Maintenance of Certification 

Program will need to be able to provide 

CMS the following information 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 CMS; 

• Information from the 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 one additional time 

more than is required to qualify for or 

maintain board certification, including 

the year of the original Maintenance of 

Certification Program practice 

assessment or that a Maintenance of 

Certification Program practice 

assessment is not required for the 

eligible professional, and the year of the 

additional Maintenance of Certification 

Program practice assessment 

completion. 

We proposed that specialty boards 

that also desire to send Physician 

Quality Reporting System information 

to CMS on behalf of eligible 

professionals should be able to meet the 

proposed 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 CMS on 

behalf of their members, we also 

considered having the various boards 

submit the Maintenance of Certification 

Program data to the ABMS and having 

ABMS channel the information from the 

various boards to CMS (75 FR 40200). 

The following is a summary of the 

comments received on the proposed 

requirements for qualifying for the 

additional 0.5 percent incentive for 

2011, the proposed mechanism for 

receiving Maintenance of Certification 

Program data from the specialty boards, 

as well as on the alternative mechanism 

that we considered. 

Comment: Commenters raised 

concerns as to whether the CY 2011 PFS 

proposed rule uses the term 

‘‘Maintenance of Certification Program’’ 

in a manner that may be confusing to 

the public and unnecessarily raises 

trademark concerns. Specifically, the 

commenter recommended changes 

related to the use of the acronym 

‘‘MOCP,’’ such as referring to 

‘‘maintenance of certification program’’ 

(all lower-case letters) or using different 

letters for the acronym. 

Response: We appreciate the 

commenter’s input. We will not use any 

acronym, including ‘‘MOCP.’’ Instead, 

we will spell out the term ‘‘Maintenance 

of Certification Program’’ using capital 

letters as it is done in section 1848(m)(7) 

of the Act (‘‘Additional Incentive 

Payment’’). 

Comment: Several commenters 

provided positive feedback regarding 

the availability of an additional 0.5 

percent incentive payment for meeting 

specific maintenance of certification 

requirements, including support for the 

inclusion of patient experience of care 

surveys as a required element of the 

Maintenance of Certification Program 

practice assessment component. 

Response: We appreciate the 

commenter’s support of the additional 

Maintenance of Certification Program 

incentive for eligible professionals 

participating in the 2011 Physician 

Quality Reporting System, authorized 

by the ACA. 

Comment: One commenter believes 

that the ‘‘maintenance of certification’’ 

reporting option is premature. The 

commenter noted that the state of New 

Jersey may not currently have 

operational and tested ‘‘practice 

assessment’’ capability and funding for 

this program may not be available. 

Response: While we recognize that 

this option may not be a feasible option 

for all eligible professionals, we are 

required to have this option available 

for the 2011 Physician Quality 

Reporting System under section 

1848(m)(7) of the Act (‘‘Additional 

Incentive Payment’’). We note that 

participation in this option is voluntary 

and is not required to participate in the 

Physician Quality Reporting System or 

earn the Physician Quality Reporting 

System incentive. Therefore, eligible 

professionals who do not have the 

ability to participate in a maintenance of 

certification program can still 

participate in the Physician Quality 

Reporting System for 2011 and 

potentially qualify for a 1 percent 

incentive payment by satisfactorily 

reporting 2011 Physician Quality 

Reporting System measures. 

Participation in a maintenance of 

certification program provides eligible 

professionals an opportunity to earn an 

additional 0.5 percent incentive above 

and beyond what they could earn by 

satisfactorily reporting Physician 

Quality Reporting System measures. 

Comment: One commenter urged us 

to implement regulations that would 

ensure that all eligible professionals 

have access to the additional 0.5 percent 

incentive. 

Response: While we appreciate the 

commenter’s support for the additional 

0.5 percent incentive, we note that 

section 1848(m)(7) of the Act 

(‘‘Additional Incentive Payment’’) 

explicitly ties the additional 0.5 percent 

incentive to participation in a 

Maintenance of Certification Program. 

Section 1848(m)(7)(C)(i) of the Act 

specifies that the term ‘‘Maintenance of 

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Certification Program’’ means ‘‘a 

continuous assessment program * * * 

that advances quality and the lifelong 

learning and self-assessment of board 

certified specialty physicians * * *.’’ 

This suggests that Maintenance of 

Certification Programs apply only to 

physicians and only physicians can 

participate in a Maintenance of 

Certification Program and qualify for 

this additional 0.5 percent incentive 

payment. We do not believe we have the 

authority to broaden the applicability of 

this additional 0.5 percent incentive 

payment. 

Comment: One commenter 

recommended that we allow eligible 

professionals who complete a Part IV 

Maintenance of Certification practice 

assessment be eligible for an additional 

0.5 percent bonus if they are also 

satisfactorily report Physician Quality 

Reporting System measures, regardless 

of whether they satisfactorily reported 

through claims or another registry 

method. In contrast, other commenters 

believe the requirements for receiving a 

Maintenance of Certification Program 

payment are too onerous for both 

eligible professionals and Maintenance 

of Certification Program boards and 

should not be tied to satisfactorily 

reporting Physician Quality Reporting 

System measures. 

Response: Section 1848(m)(7)(B)(i)(I) 

of the Act specifically requires that 

‘‘* * * in order to qualify for the 

additional incentive payment* * *, an 

eligible professional 

shall* * *satisfactorily submit data on 

quality measures for [the Physician 

Quality Reporting System] for a year.’’ 

As stated in the proposed rule (75 FR 

40199), we proposed that an 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 one of the GPRO 

options (I or II).’’ We also 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 satisfactorily reporting 

under the PQRI [that is, the Physician 

Quality Reporting System].’’ Therefore, 

eligible professionals wishing to qualify 

for the additional 0.5 percent incentive 

payment can satisfactorily report 

Physician Quality Reporting System 

measures using any available Physician 

Quality Reporting System method and 

are not limited to a specific one. 

Comment: Although the ABMS has 

issued guidelines for Maintenance of 

Certification Program, one commenter 

believes that the individual boards have 

a fair amount of latitude in how they 

implement those guidelines. As a result, 

the commenter favors the plan to have 

individual specialty boards meet the 

CMS criteria if they wish to be deemed 

to verify individual eligible professional 

qualification for Physician Quality 

Reporting System incentives. 

Response: We recognize the 

variability in the boards’ maintenance of 

certification program requirements and 

appreciate the commenter’s support of 

our proposal to allow individual boards 

to verify that their eligible professionals 

have met the appropriate maintenance 

of certification program requirements 

for the additional 0.5 percent incentive. 

Accordingly, we are finalizing the 

requirement to have the various boards 

submit information to us on eligible 

professionals’ behalf attesting that an 

eligible professional has more 

frequently than is required to qualify for 

or maintain board certification status, 

participated in a maintenance of 

certification program for a year and 

successfully completed a qualified 

Maintenance of Certification Program 

practice assessment for such year. 

Comment: Some commenters 

requested additional clarification on the 

requirements for qualifying for the 

additional 0.5 percent incentive so that 

eligible professionals can understand 

the necessary processes needed to 

qualify. One commenter requested more 

information on how Maintenance of 

Certification Program would work for 

specialty boards, such as the American 

Board of Internal Medicine (ABIM), that 

oversee the maintenance of certification 

processes for multiple subspecialties. 

Response: As discussed previously, 

we recognize that there is variability in 

the boards’ maintenance of certification 

program requirements. Therefore, 

eligible professionals will need to work 

with their specific Maintenance of 

Certification Program for information as 

to the processes of that program as it 

relates to qualifying for the additional 

0.5 percent incentive. 

We did not propose any requirements 

for self-nomination of each subspecialty 

of a board. Rather the board would have 

to provide information to CMS on each 

Maintenance of Certification Program 

that the board sponsors, where it 

sponsors more than one. 

Comment: In response to the request 

in the proposed rule for input on an 

alternative to requiring Boards to either 

operate a qualified Physician Quality 

Reporting System registry or to selfnominate to submit Maintenance of 

Certification Program data to CMS on 

behalf of their members (75 FR 40201), 

one commenter noted that many of the 

ABMS member boards do not have the 

capacity to develop and implement 

CMS-approved registries to support 

their diplomates’ participation in the 

Maintenance of Certification Program 

pathway for Physician Quality 

Reporting System reporting. The 

commenter suggested that developing a 

registry that can be shared across 

multiple Boards will allow for an 

efficient and cost-effective approach to 

facilitate participation in Physician 

Quality Reporting System reporting for 

their diplomates. Such a registry could 

collect and submit physician quality 

improvement data, provide attestation 

that the quality improvement data was 

collected as part of a qualified ABMS 

MOC® Part IV activity, and also serve as 

an intermediary in transmitting 

successful maintenance of certification 

participation in the Physician Quality 

Reporting System to CMS. Depending 

upon the vendor(s) identified to support 

the registry function, the commenter felt 

that this may also provide a mechanism 

for submission of patient experience of 

care surveys. 

Response: We note that we did not 

propose to require boards to implement 

Physician Quality Reporting System 

qualified registries to support their 

diplomates’ participation in the 

Maintenance of Certification Program 

pathway for Physician Quality 

Reporting System reporting. We merely 

highlighted that boards may wish to 

self-nominate to become a qualified 

Physician Quality Reporting System 

registry to facilitate eligible 

professionals’ reporting of Physician 

Quality Reporting System data, as well 

as participation in the Maintenance of 

Certification Pathway. To the extent that 

a board or other entity wishes to become 

a qualified registry for the purposes of 

Physician Quality Reporting System 

data submission, the board or other 

entity must self-nominate to do so and 

meet all of the registry qualification 

requirements described in section 

VII.F.1.(4). of this final rule with 

comment period. In addition, to the 

extent an entity wishes to submit 

Physician Quality Reporting System 

data and/or data regarding participation 

in Maintenance of Certification 

Program(s) on behalf multiple boards, 

the entity will need to comply with the 

appropriate registry and/or Maintenance 

of Certification Program qualification 

requirements. More specifically, in 

order to submit data on participation in 

the Maintenance of Certification 

Pathway for multiple boards, the entity, 

must include the following information 

for each Maintenance of Certification 

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Program that it wishes to submit data on 

in their self-nomination letter to CMS: 

• 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 the 

program is substantially equivalent to 

the ABMS Maintenance of Certification 

Program process. 

• The frequency and cycle of 

Maintenance of Certification for the 

specific Maintenance of Certification 

Program of the sponsoring organization; 

including what constitutes ‘‘more 

frequently’’ for the Maintenance of 

Certification Program practice 

assessment for the specific Maintenance 

of Certification Program of the 

organization. 

• 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 information on the survey would 

be provided to CMS. 

• How the Maintenance of 

Certification Program monitors that an 

eligible professional has implemented a 

quality improvement process for their 

practice. 

• 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 2010 and to 

be used in 2011, 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. 

With respect to submitting data on 

Maintenance of Certification Program 

participation, the qualified entity must 

submit: 

• The name, NPI, and applicable 

TIN(s) of the eligible professional who 

would like to participate in this process; 

• Attestation from each board that the 

information provided to CMS is 

accurate and complete; 

• Signed documentation from the 

eligible professional that the eligible 

professional wishes to have their 

information released to CMS; 

• Information on the patient 

experience of care survey; 

• Information from the appropriate 

board attesting 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 qualify for board 

certification; and 

• Information from the appropriate 

board certifying that the eligible 

professional has completed the 

Maintenance of Certification Program 

practice assessment one additional time 

more than is required to qualify or 

maintain board certification, including 

the year of the original Maintenance of 

Certification Program practice 

assessment or that a Maintenance of 

Certification Program practice 

assessment is not required for the 

eligible professional, and the year of the 

additional Maintenance of Certification 

Program practice assessment 

completion. 

Comment: Several comments 

indicated that we misinterpreted the 

intent of the ‘‘more frequently’’ 

requirement under section 

1848(m)(7)(B)(ii) of the Act. 

Specifically, some commenters believe 

the intent of the ‘‘more frequently’’ 

requirement applies specifically to the 

Maintenance of Certification Program 

Part IV, practice assessment, 

requirement only and not to Parts II or 

III of the Maintenance of Certification 

Program (that is, the educational and 

self-assessment programs and the 

formalized, secure examination portion 

of the Maintenance of Certification 

Program). To that end, commenters 

requested the final rule provide 

additional clarification regarding the 

implementation of the ‘‘more frequently’’ 

requirement. One commenter also 

requested that we work closely with the 

ABMS to determine a means for 

implementing this provision which 

would be the least disruptive to existing 

maintenance of certification programs. 

One commenter noted that adding a 

requirement to participate in a 

maintenance of certification program 

‘‘more frequently’’ than is required by 

the specialty board undermines the 

boards’ standards and their expertise. 

Response: As discussed in the 

proposed rule (75 FR 40199 through 

40201), we believe that, as constructed, 

sections 1848(m)(7)(C)(i)(II) and 

1848(m)(7)(C)(i)(III) of the Act applies 

the ‘‘more frequently’’ requirement to 

both the Maintenance of Certification 

Program itself and the successful 

completion of a Maintenance of 

Certification Program practice 

assessment. While we understand the 

commenter’s question of this 

interpretation, we do not interpret the 

legislation as applying the ‘‘more 

frequently’’ requirement simply to the 

practice assessment activity. Rather we 

interpret the legislation as providing an 

additional incentive for eligible 

professionals who are actively pursuing 

activities involved in a continuous 

assessment program, such as a qualified 

ABMS Maintenance of Certification 

Program or an equivalent program. 

However, with respect to the ‘‘more 

frequently’’ requirement as it relates to 

the Maintenance of Certification 

Program itself, as opposed to the ‘‘more 

frequently’’ requirement for the practice 

assessment, we do not specify how an 

eligible professional must meet the more 

frequently requirement. Rather, we 

require only that the Maintenance of 

Certification Program indicate that the 

eligible professional has met the 

requirement. 

Comment: A few comments opposed 

linking payers to the Maintenance of 

Certification Program. 

Response: We are unclear what the 

commenters mean with respect to 

linking Medicare to the Maintenance of 

Certification Program. As we noted 

previously, participation in a 

Maintenance of Certification Program is 

not required for an eligible professional 

to earn a Physician Quality Reporting 

System incentive. Rather, participation 

in a Maintenance of Certification 

Program provides eligible professionals 

an opportunity to earn an additional 0.5 

percent incentive above and beyond 

what they could earn under the 

Physician Quality Reporting System. 

Comment: Several commenters 

suggested the ‘‘more frequently’’ 

requirement be based on the March 

2009 ABMS MOC® Standards adopted 

by the ABMS, which applies to the 24 

ABMS member boards. Under these 

standards, ‘‘more frequently’’ would 

mean that a Part IV activity must be 

completed every 1 to 4 years, by 

physicians who voluntarily decide to 

participate in the Maintenance of 

Certification Program Physician Quality 

Reporting System pathway. One of the 

commenters believes that diplomates 

should not be expected to participate 

more frequently than once a year in a 

process of collecting and reporting 

performance data and then acting on 

those results. 

Response: With regard to the 

commenters’ suggestion to adopt the 

standards adopted by ABMS in 2009, 

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we believe that by requiring the 

Maintenance of Certification Program to 

confirm that their eligible professionals 

meet the requirements ‘‘more 

frequently’’ than required will allow 

flexibility for the Maintenance of 

Certification Programs that have 

differing cycles of completion. Since we 

are looking to see that both the 

Maintenance of Certification Program 

itself and the practice assessment 

completed once more than required, we 

feel that a broader interpretation rather 

than an exact instance provides a greater 

opportunity for participation. For 

example, if an eligible professional’s 

cycle states that they must complete one 

practice assessment activity every two 

to five years, more frequently would be 

completion of an additional activity 

within that cycle. If an eligible 

professional’s cycle states they must 

complete two practice assessment 

activities during a cycle (for example, 

every two to five years), they would 

have to complete an additional activity 

(total of three) within their cycle. 

Comment: Although several 

commenters favor measuring patients’ 

experience with care, some suggested 

that we waive the requirement for 

reporting patient experience until 2012, 

once a definitive ABMS standard has 

been adopted. One commenter 

suggested that we work with the Boards 

to monitor the adoption of accurate and 

applicable patient experience 

methodologies. Another commenter 

requested clarification on why the 

patient experience is required for the 

Physician Quality Reporting System 

Maintenance of Certification Program 

practice assessment when many 

specialty boards do not require a survey 

of patient experience to satisfy practice 

assessment or maintenance of 

certification requirements. 

Response: We agree that the survey of 

patient experience is an important 

mechanism for improving quality of 

care. While we appreciate the intent of 

the comments of ensuring a standard is 

available under ABMS Maintenance of 

Certification Programs, this additional 

0.5 percent incentive is also available to 

non-ABMS boards as long as the process 

is substantially similar to the ABMS 

Maintenance of Certification Program 

process. The survey of patient 

experience with care is a required part 

of the practice assessment as defined 

under section 1848(m)(7)(B)(iii) of the 

Act. Therefore, we will finalize this 

requirement of a survey of patient 

experience with care as a required 

element of the practice assessment. 

Comment: One commenter requested 

that we provide CRNAs with the 

opportunity to report quality measures 

through a nursing maintenance of 

certification program mechanism. 

Conversely, other commenters 

expressed that the rule should clearly 

state that physicians who are not 

participating in the ABMS MOC® are 

not eligible for the additional 0.5 

percent incentive via the Maintenance 

of Certification pathway. One 

commenter specifically objected to the 

proposed rule language that, if not an 

ABMS Board, a program that is 

‘‘substantially equivalent’’ to the ABMS 

Maintenance of Certification Program 

process may participate. The commenter 

noted that to be ‘‘substantially 

equivalent’’ to the ABMS Maintenance 

of Certification Program, any other 

program would have to first assure that 

its physicians had (1) successfully 

completed an Accreditation Council for 

Graduate Medical Education (ACGME)- 

approved training in their specialty, (2) 

successfully completed all the 

requirements of the ABMS Member 

Board to be certified, and (3) engaged in 

the ABMS Maintenance of 

Certification® program that is sponsored 

by the relevant Member Board. Items 

one and two are essential and should be 

included in any reference to the concept 

of ‘‘substantially equivalent.’’ 

Response: Under section 

1848(m)(7)(C)(i) of the Act, a 

Maintenance of Certification Program is 

‘‘a continuous assessment program such 

as a qualified American Board of 

Medical Specialties Maintenance of 

Certification Program or an equivalent 

program (as determined by the 

Secretary).’’ Therefore, eligible 

professionals participating in an 

equivalent program (that is, one that 

satisfies the definition of ‘‘Maintenance 

of Certification Program’’ under section 

1848(m)(7)(C)(i) of the Act and 

§ 414.90(b), that has a ‘‘qualified 

Maintenance of Certification Program 

practice assessment’’ as defined under 

section 1848(m)(7)(ii) of the Act and 

§ 414.90(b), and meets the selfnomination process as proposed and 

previously described) will be able to 

submit Maintenance of Certification 

Program data on behalf of eligible 

professionals for purposes of the eligible 

professional qualifying for the 

additional 0.5 percent incentive. This 

additional 0.5 percent incentive 

payment is not limited to only those 

eligible professionals who participate in 

an ABMS MOC®. However, as 

previously stated, we believe that the 

definition of the term ‘‘Maintenance of 

Certification Program’’ under section 

1848(m)(7)(C)(i) of the Act limits 

applicability of Maintenance of 

Certification Programs to physicians. 

Therefore, this additional 0.5 percent 

incentive would not apply to other 

eligible professionals, such as CRNAs. 

Comment: One commenter supports 

creation of a mechanism whereby an 

eligible professional may provide data 

on quality measures through a 

Maintenance of Certification Program 

operated by a member specialty body of 

the American Board of Medical 

Specialties or American Osteopathic 

Association. Specifically, the 

commenter expressed support for the 

American Board of Radiology (ABR) and 

American Osteopathic Board of 

Radiology (AOBR) Maintenance of 

Certification Programs. 

Response: We appreciate the 

commenter’s support of the additional 

0.5 incentive for eligible professionals 

participating in the 2011 Physician 

Quality Reporting System, authorized 

by the ACA. With respect to the specific 

Maintenance of Certification Programs 

that the commenter is in support of, 

these entities must follow the selfnomination process finalized in this 

final rule with comment period. 

After considering the comments 

received and for the reasons we 

previously articulated, we are 

implementing the requirements that an 

eligible professional must meet to 

qualify for the additional 0.5 percent 

incentive authorized by section 

1848(m)(7) of the Act (‘‘Additional 

Incentive Payment’’), previously 

described. We are also implementing 

the requirements for entities to selfnominate to submit Maintenance of 

Certification Program data on behalf of 

eligible professionals as proposed and 

previously described. We do not 

anticipate completing the qualification 

process until mid-2011. We will 

conditionally qualify entities until we 

complete testing of the entities’ ability 

to submit Maintenance of Certification 

Program data to us in the specified 

manner. We anticipate posting the 

names of these conditionally qualified 

entities on the Physician Quality 

Reporting System section of the CMS 

Web site in Spring 2011 and we will 

update this list with the entities 

qualified for 2011 as soon as we finish 

testing the entities’ ability to submit 

Maintenance of Certification Program 

data to us in the specified manner. 

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, the 

eligible professional can qualify for only 

one additional 0.5 percent incentive per 

year. 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73547 

(3) Section 3002(d)—Integration of 

Physician Quality Reporting and EHR 

Reporting 

Section 1848(m)(7) of the Act 

(‘‘Integration of Physician Quality 

Reporting and EHR Reporting’’), as 

added by section 3002(d) of the ACA 

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 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) 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 EHR incentive program; 

and 

(ii) Quality of care furnished to an 

individual; and 

(B) Such other activities as specified 

by the Secretary. 

In an effort to align the Physician 

Quality Reporting System with the EHR 

Incentive Program, we proposed and 

finalized many ARRA core clinical 

quality measures for inclusion in the 

2011 Physician Quality Reporting 

System (see section VII.F.1.i.(4)) of this 

final rule with comment period), to 

demonstrate meaningful use of EHR and 

quality of care furnished to individuals. 

We are working towards a plan to 

integrate reporting on quality measures 

to make available by January 1, 2012. 

The following is a summary of 

comments received regarding the 

integration of Physician Quality 

Reporting System and EHR reporting. 

Comment: With respect to the 

integration of the Physician Quality 

Reporting System and the EHR 

Incentive Program, one commenter 

requested clarification on how we will 

deal with eligible professionals 

excluded from one program or the other 

in the alignment process. The 

commenter noted that we have not 

provided a feasible way for physicians 

excluded from the EHR Incentive 

Program to be able to participate in a 

program that combines these two 

initiatives. For example, pathologists 

employed at independent laboratories 

may be eligible for the EHR incentive 

but cannot participate in the Physician 

Quality Reporting System because of the 

billing mechanism they use. 

Response: While we appreciate the 

commenter’s interest in participating in 

both the Physician Quality Reporting 

System and the EHR Incentive Program, 

we note that these are two different, 

distinct programs. In addition, the term 

‘‘eligible professional’’ is defined 

differently under these programs. We 

understand that, as a consequence, 

professionals may be eligible for one 

program but not the other. While we 

encourage participation in both the 

Physician Quality Reporting System and 

the EHR Incentive Program, we are not 

able to change the criteria for 

participation eligibility in each program 

in order to accommodate professionals 

who would like to participate in both 

programs, but do not meet the eligibility 

requirements for both. 

Regarding the specific concern that 

pathologists who bill through 

independent laboratories are unable to 

participate in the Physician Quality 

Reporting System, independent 

laboratories are suppliers and do not fit 

into the Physician Quality Reporting 

System definition of ‘‘eligible 

professional’’ under section 

1848(k)(3)(B) of the Act. Pathologists 

who bill directly to Medicare, however, 

are eligible to participate in the 

Physician Quality Reporting System. 

Comment: Many commenters 

expressed support for linking the 

Physician Quality Reporting System 

with the EHR Incentive Program as it 

will reduce the burden and variability of 

reporting and streamline administrative 

processes for health care providers and 

for CMS and offered suggestions for us 

to consider as we develop our plan to 

integrate quality measures reporting 

under the two programs. One 

commenter, while favoring alignment of 

measures between the Physician Quality 

Reporting System and EHR Incentive 

Program, points out that the purpose of 

each is different, which will make it 

difficult to achieve this integration. The 

commenter stated that quality reporting 

is only one of the meaningful use 

features, so Physician Quality Reporting 

System measures should qualify for that 

objective. Commenters stated that 

Physician Quality Reporting System 

incentives should not require 

participation in meaningful use, and 

meaningful use incentives should not 

specifically require participation in the 

Physician Quality Reporting System. 

Commenters particularly supported 

alignment of the quality measures, 

noting that the degree to which any of 

the measures could share a dual 

purpose would be an added advantage 

for those who are trying to implement 

these programs. Another commenter 

suggested that we consult with specialty 

societies on a phased-in approach for 

integrating Physician Quality Reporting 

System and meaningful use measures 

that allow attestation in 2012 followed 

by incremental targeted percentage 

requirements would promote a smooth 

transition to full integration of 

Physician Quality Reporting System and 

meaningful use measures. Another 

commenter requested that we make it 

clear how we plan to update the 

outpatient measures required for 

meaningful use based on any changes 

implemented in the Physician Quality 

Reporting System. 

Response: We appreciate the 

commenters’ valuable input and will 

take the opinion offered by the 

commenters into consideration as we 

work towards making a plan to integrate 

reporting on quality measures available 

by January 1, 2012. 

Comment: One commenter expressed 

concern that if we use the same 

proposed methodology for excluding 

measures with a zero percent 

performance rate in the Physician 

Quality Reporting System program that 

it does for assessing compliance with 

HITECH Meaningful Use measures then 

many physicians will be deemed ‘‘not 

capable’’ when attempting to 

demonstrate reporting capability of 

quality data. This is because eligible 

professionals are allowed the flexibility 

to demonstrate compliance with 

meaningful use capability when 

reporting clinical quality measures by 

reporting a zero denominator. 

Response: A zero percent performance 

rate indicates that the eligible 

professional is reporting on a measure 

that is not clinically relevant to their 

practice. We do not preclude practices 

from doing this. However, since the 

Physician Quality Reporting System 

does not mandate a certain core set of 

measures and eligible professionals can 

select which measures apply to them, 

eligible professionals should be able to 

find 3 measures which pertain to their 

practice. We do recognize that eligible 

professionals may be somewhat limited 

for 2011 as there are only 20 measures 

available for Physician Quality 

Reporting System EHR reporting and 

those eligible professionals who wish to 

report measures without electronic 

specifications for the Physician Quality 

Reporting System will need to do so 

using a qualified registry or through 

claims (if claims-based reporting is 

permitted for the selected measure). We 

intend to discuss our plan to integrate 

reporting on quality measures under the 

Physician Quality Reporting System 

with reporting requirements under the 

EHR Incentive Program in future notice 

and comment rulemaking prior to 

implementation of the plan. 

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(4) Section 3002(e)—Feedback 

Section 3002(e) of the ACA amends 

section 1848(m)(5) of the Act by adding 

subparagraph (H), which 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. 

We will continue to provide feedback 

reports to individuals and group 

practices that satisfactorily submit 

Physician Quality Reporting System 

quality measure and thus qualify to earn 

a Physician Quality Reporting System 

incentive. 

We believe that the requirements 

under section 1848(m)(5)(H) of the Act, 

as added by section 3002(e) of the ACA, 

for ‘‘timely’’ feedback reports is met by 

providing the feedback reports on or 

about the time of issuance of the 

incentive payments. Thus, we proposed 

to provide 2011 feedback reports on or 

about the time of issuance of the 2011 

incentive payments in 2012, consistent 

with our current practice. In addition, 

we proposed to provide interim 

feedback reports for eligible 

professionals reporting 2011 measures 

groups through the claims-based 

reporting mechanism. These reports 

would be similar in content and format 

to the reports that we currently provide 

for such eligible professionals using 

claims for dates of service between 

January 1, 2011 and February 28, 2011. 

We indicated that we expected that we 

would be able to make these interim 

feedback reports available to eligible 

professionals in June 2011. We stated 

that 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 also indicated that 

we intend to continue to explore 

methods to facilitate Physician Quality 

Reporting System feedback report 

distribution, as discussed in the 

proposed rule (75 FR 40201). 

The following is a summary of 

comments received regarding our 

proposal to provide timely feedback 

reports for the Physician Quality 

Reporting System. 

Comment: We received some positive 

comments regarding our proposal to 

provide timely feedback. One 

commenter stated that eligible 

professionals will benefit from timely 

feedback reports on whether they are 

satisfactorily submitting data on quality 

measures. While some commenters 

supported our proposal to provide 

interim feedback reports for those who 

are reporting measures groups via 

claims, other commenters urged us to 

focus our efforts on providing other 

options for interim feedback. One 

commenter stated that the timeframe for 

feedback should be revised to a point 

during the reporting period so that 

eligible providers can act on the 

information they receive and that this 

was the legislation’s intention. 

Commenters indicated that providing 

feedback after the close of the reporting 

period or just ahead of incentive 

payments is of minimal value since 

eligible professionals are not able to 

assess their reporting status and revise 

their reporting practices as needed. 

Commenters specifically recommended 

receiving quarterly or monthly feedback 

reports or upon request. 

Response: We appreciate the 

commenters’ suggestions to provide 

more interim feedback reports in a 

timely manner. Although section 

1848(m)(5) of the Act requires us to 

provide ‘‘timely feedback’’ to eligible 

professionals on satisfactorily 

submitting data on quality measures, it 

is not a requirement to distribute 

‘‘interim’’ feedback reports. While we 

agree that eligible professionals would 

benefit from timely, interim feedback, 

we have determined that we will not be 

able to complete the programming and 

development work necessary to provide 

the proposed interim feedback reports 

for eligible professionals who report 

2011 measures groups using the claimsbased reporting mechanism in the time 

frame that we proposed for the 2011 

Physician Quality Reporting System. If 

we were to provide these interim 

feedback reports for 2011, they would 

more than likely not be available until 

late 2011. Since receiving interim 

feedback this late in the reporting 

period would be of little utility to 

eligible professionals, we are not 

finalizing our proposal to provide 

eligible professionals who report 

measures groups using the claims-based 

reporting mechanism with interim 

feedback reports for 2011. We intend, 

instead, to provide these interim 

feedback reports for 2012. In addition, 

as discussed further in section VII.F.2 of 

this final rule, we plan to provide an 

interim eRx report in the fall of 2011, 

which will include 2012 eRx payment 

adjustment information. We also will 

continue to provide timely annual 

feedback reports and anticipate 

providing additional interim reports for 

2012. Furthermore, we are working 

internally to improve eligible 

professionals’ electronic access to 

Physician Quality Reporting System and 

eRx reports by report type, program, and 

year for 2011. 

Comment: Several commenters were 

disappointed by our proposal and 

suggested that it does not meet the 

statutory requirements and requested 

that we revise our proposal to increase 

the timeliness and frequency of the 

reports. One commenter suggested we 

revise the feedback report proposal to 

expedite the reports and ensure that the 

process improves successful 

participation in the Physician Quality 

Reporting System. Several comments 

specifically recommended that interim 

feedback reports be provided to all 

Physician Quality Reporting System 

participants, regardless of reporting 

mechanism used, rather than only to 

those reporting measures groups via 

claims-based reporting, as proposed. 

Other commenters specifically 

requested that interim feedback reports 

be provided to those reporting 

individual quality measures. Other 

commenters recommended we provide 

more frequent, or real-time, feedback 

reports to ensure that this process 

improves successful participation in the 

Physician Quality Reporting System. 

One commenter specifically encouraged 

CMS to provide feedback reports 

throughout the process, so that 

participants are aware of their progress 

in the program. Another commenter 

recommended that the system be 

redesigned to automatically generate a 

report as soon as the requirements for an 

individual eligible professional have 

been satisfied, much like what most of 

the registry systems do and why they 

have such a high level of successful 

completion. Another commenter 

suggested including the most recent 

Physician Quality Reporting System 

data available in the confidential 

feedback reports. Issuing the reports at 

the time of the incentive payment, as 

proposed, may discourage many from 

participating in the program the 

following year given that they are not 

certain whether or not they were 

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successful the previous year and renders 

the reports not useful for quality 

improvement. The commenters believe 

the lack of timeliness of feedback 

reports is one of the major reasons for 

dissatisfaction with the Physician 

Quality Reporting System. 

Response: Section 1848(m)(5)(HH) of 

the Act requires that we provide timely 

feedback to eligible professionals on the 

performance of the eligible professional 

with respect to satisfactorily submitting 

data on Physician Quality Reporting 

System measures but does not define 

the term ‘‘timely’’ or specify a deadline 

for providing feedback. As we stated in 

the proposed rule (75 FR 40201), we 

believe that this requirement is met by 

providing a timely, annual feedback 

report at or about the time of issuance 

of the incentive payments. In addition 

to providing an annual feedback report, 

we also proposed to provide an interim 

feedback report for eligible professionals 

who submit measures groups via claims. 

Although, for the reasons discussed 

previously, we are not finalizing our 

proposal to provide this interim 

feedback report for 2011, we intend to 

do so for 2012. The processing of claims 

data from the NCH file, along with the 

necessary programming required to 

produce reports and subsequently 

distribute to eligible professionals is 

time intensive. We are actively working 

to facilitate this process so that the 

interim feedback reports for claimsbased reporting of measures groups and 

other interim feedback reports can be 

available for the 2012 Physician Quality 

Reporting System. We are continuing to 

work on ways to provide eligible 

professionals with timely and accurate 

feedback reports while working with the 

limitations of the claims-based reporting 

method. We also intend to work with 

registries and EHR vendors to explore 

ways in which we can leverage these 

alternative reporting mechanisms to 

provide interim feedback reports. 

Comment: One commenter suggested 

that the interim feedback reports be 

provided for the first quarter of data 

instead of 2 months of data as proposed. 

Response: While we agree that interim 

feedback reports for the first quarter of 

data would be valuable, we do not, for 

the reasons stated previously, have the 

technical ability to make interim 

feedback reports based on just the first 

2 months of data available before July 1, 

2011. We agree with commenters that 

interim feedback reports need to be 

issued at a point during the reporting 

period that eligible professionals can act 

upon the information to increase their 

chances of reporting satisfactorily, 

especially when they are required to 

report on percentage of applicable cases 

or patients. As stated previously, since 

the utility of receiving feedback reports 

in late 2011, (at the earliest) is minimal, 

we are not finalizing our proposal to 

provide eligible professionals who 

report measures groups using the 

claims-based reporting mechanism with 

interim feedback reports for 2011. 

Comment: While we received 

favorable comments regarding our 

efforts to streamline and simplify 

distribution of Physician Quality 

Reporting System feedback reports, 

some commenters suggested that we 

continue to improve access to the 

feedback reports. Commenters noted 

that many individual eligible 

professionals and small practices still 

have difficulty obtaining their feedback 

reports. Commenters noted the 

numerous problems and issues using 

the Physician Quality Reporting System 

portal to download these reports. One 

commenter suggested that the feedback 

reports should be published for all 

eligible professionals without requiring 

them to submit a request. 

Response: We are preparing, in the 

near future, to launch tools to provide 

eligible professionals access to all 

reporting years and report types via the 

CMS portal. We anticipate this level of 

access to be ready in mid- to late 2011. 

CMS security system access 

requirements are mandated by the 

information systems and security 

component of CMS and unfortunately 

cannot be changed by the Physician 

Quality Reporting System or eRx 

program requirements. A quick 

reference guide on IACS accounts, 

which is the current identity 

management system required for 

accessing feedback reports, is currently 

under development to assist eligible 

professionals with accessing their 

feedback reports. 

Comment: One commenter 

recommended providing aggregate data 

to specialty societies so that they can 

assist in educating members on the 

program and potential issues. Another 

commenter suggested that we improve 

upon the aggregate quality data error 

reports by individual measures, 

currently distributed 4 times per year, 

by increasing their frequency to 

monthly. 

Response: We appreciate the 

commenter’s valuable input. As we 

explore ways to provide more timely 

feedback, we will also evaluate 

commenter’s suggestion and explore its 

feasibility. 

Comment: One commenter requested 

clarification as to whether eligible 

professionals could utilize the informal 

appeals process to dispute data 

contained in the interim feedback 

reports. 

Response: We would expect that 

initial questions arising from the interim 

reports would be addressed by the 

QualityNet Help Desk, as is done today 

with the annual feedback reports. As 

discussed below, the main difference 

between the current inquiry process via 

the QualityNet Help Desk and the 

informal appeals process is that we have 

established timeframes around when 

requests for an informal review must be 

submitted and when a response must be 

provided. 

Upon consideration of the comments 

and for the reasons we discussed 

previously, we are finalizing our 

proposal to provide feedback reports to 

all Physician Quality Reporting System 

participants on or about the time of 

issuance of the incentive payments. We 

also finalize our proposal to provide 

interim feedback reports for eligible 

professionals reporting measures groups 

through the claims-based reporting 

mechanism. For the 2011 Physician 

Quality Reporting System, however, we 

do not believe that we will have the 

technical capability needed to issue 

these interim feedback reports until the 

second half of the year. Since we do not 

believe that these interim feedback 

reports would be of much value at that 

point, we do not anticipate generating 

interim feedback reports for eligible 

professionals reporting measures groups 

until the 2012 Physician Quality 

Reporting System. For 2012, we also 

anticipate being able to provide 

additional interim feedback reports. 

(5) Section 3002(f)—Appeals 

Section 1848(m)(5)(I) of the Act, as 

amended and added by section 

3002(f)(2) of the ACA, requires that the 

Secretary establish and have in place, 

no later than January 1, 2011, an 

informal process for eligible 

professionals to seek a review of the 

determination that an eligible 

professional did not satisfactorily 

submit data on quality measures under 

the Physician Quality Reporting System. 

We note that except as provided under 

the informal process under section 

1848(m)(5)(I) of the Act, section 

1848(m)(5)(E) of the Act, as amended by 

section 3002(f) of the ACA, specifies 

that, with respect to the Physician 

Quality Reporting System, there shall be 

no administrative or judicial review 

under section 1869, section 1878, or 

otherwise, of— 

(1) The determination of measures 

applicable to services furnished by 

eligible professionals under the 

Physician Quality Reporting System; 

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(2) The determination of satisfactory 

reporting under the Physician Quality 

Reporting System; and 

(3) The determination of any 

Physician Quality Reporting System 

incentive payment and Physician 

Quality Reporting System payment 

adjustment. 

We proposed to base the informal 

process on our current inquiry process 

whereby an eligible professional can 

contact the Quality Net Help Desk (via 

phone or e-mail) 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 (75 FR 40201). 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. 

• An eligible professional can request 

the informal review by notifying the 

Quality Net Help Desk via e-mail at 

qnetsupport@sdps.org. The e-mail 

requesting the initiation of the informal 

review process should summarize the 

concern(s) of the eligible professional 

and the reason(s) for requesting an 

informal review. 

• 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. 

• 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. 

• 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. 

The following is a summary of 

comments received on the proposed 

informal appeals process and our 

responses. 

Comment: Several comments 

expressed support for the establishment 

of an informal appeals process, 

believing that eligible professionals’ 

ability to challenge the results of the 

program is a necessary step to 

encouraging participation in the 

program and in promoting transparency. 

One commenter specifically indicated 

that having 90 days to electronically file 

an ‘‘informal appeal’’ is a sufficient 

amount of time and that having the 

ability to electronically submit these 

requests will help to ensure a timely, 

streamlined process. Another 

commented that the current lack of 

recourse for eligible professionals has 

contributed to a lack of interest in, and 

even skepticism, about the Physician 

Quality Reporting System. 

Response: We appreciate the 

commenters’ support of the informal 

appeals process and are hopeful that 

providing eligible professionals with an 

avenue to request an informal review of 

the determination that they did not 

satisfactorily report will encourage 

greater participation in the Physician 

Quality Reporting System. 

Comment: Some commenters felt the 

period for requesting an informal review 

should be extended. One commenter 

suggested extending the timeframe to 

file an appeal through the end of the 

following year. Another commenter 

recommended extending the timeframe 

to the end of the reporting year, as those 

in large practices may not see their 

Physician Quality Reporting System 

report for a month or two after CMS 

sends it. Some commenters suggested 

that any results that are successfully 

appealed should be incorporated in 

public reporting of physician 

performance. 

Response: While we understand the 

commenters’ desire to extend the 

timeframe for submitting a request for 

an informal review, doing so could 

potentially impact the timeliness of 

future years’ Physician Quality 

Reporting System incentive payments, 

because we would not be able to start 

analyzing the next year’s data until we 

have completed our analysis of the 

current year’s data. Therefore, we are 

requiring eligible professionals to 

submit their requests for an informal 

review within 90 days of the feedback 

reports becoming available, as proposed. 

Comment: One commenter indicated 

that eligible professionals who 

successfully obtain an incentive 

payment are unlikely to a request a 

review. The commenter believes the 

review for those who are unsuccessful is 

unlikely to overturn the initial 

adjudication, since it can only be based 

on data present in the CMS system as 

there is no opportunity for evidence 

submission. The commenter feels that 

eligible professionals submitting data 

could easily be given feedback 

immediately about whether the data set 

was complete or not, both in terms of 

the individual data points and the 

number of eligible patients. 

Response: We agree with the 

commenter’s assertion that eligible 

professionals who are successful in 

obtaining a Physician Quality Reporting 

System incentive are unlikely to request 

an informal review. With respect to the 

claim that the ‘‘review for those who are 

unsuccessful is unlikely to overturn the 

initial adjudication, since it can only be 

based on data present in the CMS 

system as there is no opportunity for 

evidence submission,’’ we disagree. 

CMS strives to ensure the accuracy of 

our initial determinations. However, 

recognizing errors may arise, CMS 

implemented the informal review 

process whereby Physician Quality 

Reporting System participants may 

request via the Quality Net Help Desk a 

review of the determination that the 

eligible professional did not 

satisfactorily submit data. In prior 

program years, the informal review 

method has resulted in supplemental 

payments for some eligible professionals 

despite the restriction on submitting 

additional evidence. This informal 

process has proven to be successful in 

finding errors in prior years, and we 

believe it will continue to do so. While 

we agree that it would be ideal to be 

able to provide immediate feedback as 

to whether the data set was complete or 

not both in terms of the individual data 

points and the number of eligible 

patients, this would not be technically 

feasible under the current claims 

processing system. However, we do 

intend to provide interim feedback 

reports as previously described. 

Comment: In support of implementing 

a successful informal review process, 

some commenters recommended that 

the Quality Net Help Desk be expanded 

with additional telephone lines and 

more trained, experienced, and 

qualified staff. Commenters reported 

that some eligible professionals have 

faced challenges getting through to a 

CMS staff person and/or accessing the 

information they need through the 

existing Quality Net Help Desk. Another 

commenter stated that they believe the 

Quality Net Help Desk should be able to 

help eligible professionals and their 

staff immediately. 

Response: We agree that in 

implementing an informal review 

process that utilizes the existing inquiry 

support framework additional resources 

will be needed and anticipate putting 

additional resources towards the 

Quality Net Help Desk. 

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Comment: Some commenters felt the 

proposed process was too informal to 

provide a fair and appropriate appeal. 

One commenter suggested the agency 

consider basing the informal process on 

the current inquiry process as merely a 

starting point and plan to expand the 

process in the future. Similarly, other 

commenters indicated that the appeals 

process needs to be a structured, 

transparent, and user-friendly appeals 

process so that eligible professionals 

have an avenue to quickly remedy 

erroneous determinations. 

Response: We note that section 

1848(m)(5)(I) of the Act does not require 

a formal appeals process; rather, it only 

requires an informal process for eligible 

professionals to seek a review of the 

determination that an eligible 

professional did not satisfactorily 

submit data on quality measures under 

the Physician Quality Reporting System. 

We believe that the process that we 

proposed and are finalizing adequately 

allows an eligible professional to seek 

an informal review of the determination 

that the professional did not 

satisfactorily report. However, we agree 

that a timely response to eligible 

professionals who are questioning the 

outcome of their Physician Quality 

Reporting System reporting rate 

calculation will benefit the eligible 

professional. We plan to communicate 

the informal review process to eligible 

professionals through education and 

outreach. We also agree that the process 

needs to be user friendly and are using 

the lessons learned from inquiries 

received related to previous program 

years in determining the most timely 

and user-friendly method for the 

informal appeals process. 

Comment: Another commenter 

suggested as payment adjustments begin 

to apply in 2015, we work with 

Congress to implement a more formal 

appeals process that includes 

standardized and transparent rules for 

submitting and reviewing evidence. 

Response: For the 2011 Physician 

Quality Reporting System, we plan to 

implement the informal review process 

as described previously and required 

under section 1848(m)(5)(I) of the act. 

We plan to use any lessons learned from 

this process to make further 

enhancements to the process in future 

years. 

Upon consideration of the comments, 

we are finalizing the informal review 

process as proposed and previously 

described. As stated in the proposed 

rule, we anticipate posting, by 

December 31, 2011 (75 FR 40202) on the 

CMS Physician Quality Reporting 

System Web site, further information 

regarding the operational aspects of the 

informal review process for the 2011 

Physician Quality Reporting System. As 

we are implementing this informal 

review process beginning with the 2011 

Physician Quality Reporting System and 

our expectation that we will be unable 

to generate 2011 Physician Quality 

Reporting System interim feedback 

reports prior to the start of the July 1, 

2011 reporting period, we anticipate 

that eligible professionals will first have 

an opportunity to avail themselves of 

this informal process when the 2011 

Physician Quality Reporting System 

feedback reports are made available in 

2012. 

2. Section 132: Incentives for Electronic 

Prescribing (eRx)—The Electronic 

Prescribing Incentive Program 

a. Program Background and Statutory 

Authority 

As described in the CY 2011 PFS 

proposed rule (75 FR 40202 through 

40203), Electronic Prescribing (eRx) is 

the transmission using electronic media, 

of prescription or prescription-related 

information between prescriber, 

dispenser, pharmacy benefit manager 

(PBM), or health plan, either directly or 

through an intermediary, including an 

eRx network. The intention of the 2011 

eRx Incentive Program, which is 

separate from, and in addition to, 

incentive payments that eligible 

professionals may earn through the 

Physician Quality Reporting System, is 

to continue to encourage significant 

expansion of the use of electronic 

prescribing by authorizing a 

combination of financial incentives and 

payment adjustments. 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). We proposed to add § 414.92 to 

title 42 of the Code of Federal 

Regulations to implement and codify 

the provisions of the eRx Incentive 

Program. 

For 2011, which is the third year of 

the eRx Incentive Program, the Secretary 

is authorized to provide eligible 

professionals who are successful 

electronic prescribers an incentive 

payment equal to 1.0 percent of the 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 2011 

reporting period. The applicable 

electronic prescribing percent (1.0 

percent) authorized for the 2011 eRx 

Incentive Program is different from that 

(2.0 percent) authorized for the 2009 

and 2010 eRx Incentive Program. Under 

section 1848(m)(2)(C) of the Act, the 

incentive payments for successful 

electronic prescribers for future years 

are authorized as follows: 

• 1.0 percent for 2012. 

• 0.5 percent for 2013. 

In addition, 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–HITECH) which authorized 

the Medicare EHR Incentive Program, 

specifies that the eRx incentive does not 

apply to an eligible professional (or 

group practice), if, for the EHR reporting 

period, the eligible professional (or 

group practice) earns an incentive 

payment under the Medicare EHR 

Incentive Program beginning in 2011. 

For the eRx Incentive Program, when 

reporting the G-codes for purposes of 

qualifying for the incentive payment for 

electronic prescribing in 2011, we 

proposed that the eligible professional 

must have and regularly use a 

‘‘qualified’’ electronic prescribing 

system, as defined in the electronic 

prescribing measure specifications. 

In addition, under section 

1848(a)(5)(A) of the Act, a PFS payment 

adjustment applies beginning in 2012 to 

those professionals who are not 

successful electronic prescribers. 

Specifically, 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 as previously referenced 

shall be less than the PFS amount that 

would otherwise apply over the next 

several years by— 

• 1.0 percent for 2012. 

• 1.5 percent for 2013. 

• 2.0 percent for 2014. 

We believe that the criteria for 

determination of successful electronic 

prescriber for the eRx incentive 

payment are not required to be identical 

to the criteria that will be used to 

determine the applicability of the 

payment adjustment that begins in 2012. 

In general, we believe that an incentive 

should be broadly available to 

encourage the widest possible adoption 

of eRx, 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. Under section 

1848(m)(6)(A) of the Act, the definition 

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of ‘‘eligible professional’’ for purposes of 

eligibility for the eRx Incentive Program 

is identical to that for the Physician 

Quality Reporting System under section 

1848(k)(3)(B) of the Act. Eligible 

professionals include physicians, other 

practitioners, physical and occupational 

therapists, qualified speech-language 

pathologists, and qualified audiologists. 

However, as we have noted in prior 

years, for purposes of the eRx Incentive 

Program, eligibility is further restricted 

by scope of practice to those 

professionals who have prescribing 

authority. Detailed information about 

the types of professionals that are 

eligible to participate in the eRx 

Incentive Program is available on the 

eRx Incentive Program section of the 

CMS Web site at http://www.cms.gov/ 

ERXIncentive. 

As in the 2010 eRx Incentive Program, 

we proposed for 2011 that the eRx 

Incentive Program continue to be an 

incentive program in which 

determination of whether an eligible 

professional is a successful electronic 

prescriber will be made at the 

individual professional level, based on 

the NPI. Inasmuch as some individuals 

(identified by NPIs) may be associated 

with more than one practice or TIN, the 

determination of whether an eligible 

professional is a successful electronic 

prescriber will be made to the holder of 

each unique TIN/NPI combination (75 

FR 40202). Then, as in previous years, 

payment will be made to the applicable 

holder of the TIN. For 2011, the 

determination of whether an eligible 

professional is a successful electronic 

prescriber will continue to be made for 

each unique TIN/NPI combination. 

However, section 1848(m)(3)(C) of the 

Act required the Secretary by January 1, 

2010 to establish and have in place a 

process under which eligible 

professionals in a group practice (as 

defined by the Secretary) would be 

treated as meeting 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. Therefore, in 

addition to making incentive payments 

for 2011 to individual eligible 

professionals based on separately 

analyzing whether the individual 

eligible professionals are successful 

electronic prescribers, we proposed to 

also make incentive payments to group 

practices based on 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 (75 FR 40203). 

The following is a summary of the 

general comments received on the CY 

2011 PFS proposed rule related to the 

eRx Incentive Program and our 

responses. 

Comment: Some commenters 

provided overall support for the eRx 

Incentive Program. Specific aspects of 

the program for which the commenters 

voiced support include the numerator 

and denominator codes, the reporting 

mechanisms, what constitutes a 

‘‘qualified’’ electronic prescribing 

system, the criteria for being a 

successful electronic prescriber for 

purposes of the 2011 incentive payment, 

and the 10 percent limitation under 

section 1848(m)(2)(B) of the Act. 

Response: We appreciate the 

commenters’ positive feedback. 

Comment: A couple of commenters 

highlighted the importance of providing 

eligible professionals feedback on 

whether they have successfully 

completed all requirements for this 

program and establishing an appeals 

process to allow eligible professionals to 

appeal decisions that affect their 

eligibility to take part in the eRx 

Incentive Program or that affect their 

ability to get eRx incentives. 

Response: We agree with the 

commenters on the importance of 

feedback to eligible professionals. In 

addition to providing an annual 

feedback report, we anticipate making 

interim feedback reports for the program 

available to any eligible professional 

who bills for a denominator-eligible 

case during the first half of 2011. We 

anticipate that interim feedback reports 

will be available in the fall of 2011 and 

will include information related to the 

2012 eRx payment adjustment. 

Although there is a required informal 

review process for the Physician Quality 

Reporting System, we are not 

establishing such a process for the eRx 

Incentive Program (nor are we required 

to do so). We expect that any questions 

arising from the interim feedback 

reports or the eligibility for an eRx 

incentive will be addressed by the 

Quality Net Help Desk as is currently 

done. 

Comment: One commenter urged us 

to make available to individual eligible 

professionals the percentage of their 

prior year’s Medicare charges that 

resulted from the outpatient CPT codes 

included in the electronic prescribing 

measure’s specifications. 

Response: Unfortunately, we do not 

have resources to calculate and provide 

feedback to eligible professionals 

regarding the composition of their 

charges. Most electronic billing systems, 

however, will have this functionality 

and should be able to provide eligible 

professional who use such billing 

systems with this information. In 

addition, eligible professionals who 

participate in the eRx Incentive Program 

will receive feedback reports with 

information on the percentage of an 

eligible professional’s charges that 

resulted from the denominator codes 

included in the electronic prescribing’s 

specifications. 

Comment: One commenter sought 

guidance for physicians whose patients 

participate in the Medicaid PACE 

program and use a contracted pharmacy 

that may not be able to receive 

electronic prescriptions. The commenter 

asked whether these visits would be 

excluded from the requirements of the 

eRx Incentive Program. 

Response: The eRx Incentive Program 

requires that an eligible professional use 

a qualified eRx system to electronically 

prescribe during the office visit. Hence, 

if the qualified system used by the 

eligible professional meets the 

requirements for a qualified eRx system, 

as described below and listed on the 

CMS eRx Incentive Web site at http:// 

www.cms.gov/erxincentive, and the 

prescription is sent electronically, then 

the eligible professional will be able to 

report the electronic prescribing event 

even if the pharmacy was not able to 

receive the prescription electronically. 

The use of a pharmacy that cannot 

receive an electronic prescription does 

not invalidate the electronic prescribing 

event and the eligible professional 

would still get credit for electronically 

prescribing as long as he or she reports 

this event for a denominator-eligible 

visit. 

Upon consideration of the comments, 

we are finalizing our proposal to add 

§ 414.92 to title 42 of the Code of 

Federal Regulations to implement and 

codify the provisions of the eRx 

Incentive Program. Details regarding the 

specific aspects of the eRx Incentive 

Program that are being finalized, 

including our rationale, are described 

below. We have made some technical 

changes to the regulations at § 414.92, 

such as eliminating the unnecessary use 

of acronyms and inserting or revising 

cross-references as needed. 

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b. The 2011 eRx Incentive 

(1) The 2011 Reporting Period for the 

eRx Incentive Program 

Section 1848(m)(6)(C)(i)(II) of the Act 

defines ‘‘reporting period’’ for the 2011 

eRx Incentive Program to be the entire 

year. Section 1848(m)(6)(C)(ii) of the 

Act, however, authorizes the Secretary 

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 the 2011 eRx 

Incentive Program reporting period for 

purposes of the 2011 incentive payment 

to be the entire calendar year (January 

1, 2011 through December 31, 2011) 

based on the definition of ‘‘reporting 

period’’ specified under section 

1848(m)(6)(C)(i)(II) of the Act. We 

proposed that successful electronic 

prescribers would be eligible to receive 

an incentive payment equal to 1.0 

percent of the total estimated allowed 

Medicare Part B charges (based on 

claims submitted by no later than 

February 28, 2012) for all covered 

professional services furnished January 

1, 2011 through December 31, 2011. 

We did not receive any comments 

related to the proposed reporting period 

for the 2011 eRx incentive. Therefore, 

the reporting period for the 2011 eRx 

incentive will be the entire 2011 

calendar year, or January 1, 2011 

through December 31, 2011. 

(2) Criteria for Determination of 

Successful Electronic Prescriber for 

Eligible Professionals 

Under section 1848(m)(3)(B) of the 

Act, in order to qualify for the incentive 

payment, an eligible professional must 

be a ‘‘successful electronic prescriber,’’ 

which the Secretary is authorized to 

identify using 1 of 2 possible criteria. 

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 

reporting system, under subsection 

1848(k) of the Act and are applicable to 

services furnished by the eligible 

professional during a reporting period. 

We applied this criterion in 2009. 

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 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 the latter standard, then, 

in accordance with section 

1848(m)(3)(B)(iv) of the Act, the 

Secretary is authorized to use Part D 

drug claims 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 

standard based on a sufficient number 

(as determined by the Secretary) of 

electronic Part D prescriptions is 

applied for a particular reporting period, 

then the standard based on the reporting 

on electronic prescribing measures 

would no longer apply. 

For 2011, we proposed to continue to 

require eligible professionals to report 

on the electronic prescribing measure 

used in the 2009 and 2010 eRx Incentive 

Program to determine whether an 

eligible professional is a successful 

electronic prescriber, but we also 

proposed to again use modified measure 

specifications and to use modified 

reporting criteria based on the authority 

provided under section 1848(m)(3)(D) of 

Act, as discussed below (75 FR 40203). 

(A) Reporting the Electronic Prescribing 

Measure 

We proposed, for purposes of the 

2011 incentive payment and 2012 and 

2013 payment adjustments, to retain the 

3 reporting mechanisms available to 

individual eligible professionals to 

report the electronic prescribing 

measure in 2010 to maintain program 

stability. First, we proposed to again 

retain the claims-based reporting 

mechanism that is used in the 2009 and 

2010 eRx Incentive Program. In 

addition, similar to the Physician 

Quality Reporting System, for the eRx 

Incentive Program, we proposed to 

continue the registry-based reporting 

mechanism and, we also proposed that 

the EHR-based reporting mechanism be 

available for the electronic prescribing 

measure for 2011 (75 FR 40203). 

We 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 2011 

Physician Quality Reporting System 

would be qualified to submit measure 

results and numerator and denominator 

data on the electronic prescribing 

measure on behalf of eligible 

professionals for the 2011 eRx Incentive 

Program (75 FR 40204). 

We proposed that qualified registries 

would need to submit the electronic 

prescribing measure for the 2011 eRx 

Incentive Program to CMS in two 

separate transmissions. Such qualified 

registries would first need to submit 

2011 data on the electronic prescribing 

measure between July 1, 2011 and 

August 19, 2011, following the end of 

the 2012 payment adjustment reporting 

period (which is the first 6 months of 

2011), for purposes of the eRx payment 

adjustment described in section 

VII.F.2.c. of this final rule with 

comment period. The second 

submission for purposes of the 2011 

incentive would occur following the 

end of the 2011 incentive payment 

reporting period (which is the whole 

calendar year of 2011). 

Similarly, we proposed that only EHR 

products ‘‘qualified’’ to potentially be 

able to submit clinical quality data 

extracted from the EHR to CMS for the 

2011 Physician Quality Reporting 

System would be considered ‘‘qualified’’ 

for the purpose of an eligible 

professional potentially being able to 

submit data on the electronic 

prescribing measure for the 2011 eRx 

Incentive Program (75 FR 40204). The 

self-nomination process and 

requirements for EHR vendors for the 

Physician Quality Reporting System 

would continue to apply to the EHR 

vendors for the 2011 eRx Incentive 

Program. 

We proposed that eligible 

professionals who want to use a 

qualified EHR to submit the electronic 

prescribing measure for the 2011 eRx 

Incentive Program would be required to 

transmit 2011 electronic prescribing 

measure data to CMS in two separate 

transmissions. Such eligible 

professionals would first need to submit 

2011 data on the electronic prescribing 

measure between July 1, 2011 and 

August 19, 2011, following the end of 

the 2012 payment adjustment reporting 

period, for purposes of the eRx payment 

adjustment described in section 

VII.F.2.c. of this final rule with 

comment period. The second 

submission for purposes of the 2011 

incentive would occur following the 

end of the 2011 incentive payment 

reporting period. 

The following is a summary of the 

comments received regarding the 

proposed mechanisms for reporting the 

electronic prescribing measure in 2011 

for purposes of the 2011 incentive 

payment, and for purposes of the 2012 

and 2013 payment adjustments 

described in sections VII.F.2.c. and d. of 

this final rule with comment period. 

Comment: Some commenters agreed 

with retaining the same reporting 

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mechanisms for 2011 that were in place 

for 2010, particularly our decision to 

continue offering claims-based reporting 

and the inclusion of an EHR-based 

reporting mechanism. 

Response: We appreciate the 

commenters’ positive feedback and are 

finalizing our proposal to include a 

claims, registry, and EHR reporting for 

the 2011 eRx incentive. 

Comment: One commenter thinks the 

requirement to submit electronic 

prescribing measure data in two 

submissions is burdensome for eligible 

professionals and suggests exploring 

alternatives where only one submission 

is required. 

Response: We proposed two data 

submissions during 2011 for EHR-based 

reporting and registry-based reporting 

for different purposes. One was a 

submission between July 1, 2011 and 

August 19, 2011, that was intended to 

be solely for purposes of the 2012 

payment adjustment. The second 

submission, which was to occur 

following the end of the 2011 incentive 

payment reporting period, was solely for 

purposes of the 2011 incentive payment. 

For purposes of the 2012 payment 

adjustment, we will not be able to 

finalize the registry and EHR-based 

reporting mechanisms because it will 

not be operationally feasible for us to 

accept the data submissions from the 

EHRs and registries in the timeframe 

needed for us to be able to have 

sufficient time to be analyze the data 

and make the determination whether an 

eligible professional is subject to the 

2012 payment adjustment prior to 

January 1, 2012. Therefore, there will 

not be two submissions of electronic 

prescribing measure data from registries 

and EHRs during 2011. 

Eligible professionals who intend to 

use the EHR-based reporting mechanism 

to submit data on the electronic 

prescribing measure for purposes of the 

2011 incentive payment will need to 

submit the electronic prescribing 

measure data via their EHR following 

the end of the 2011 incentive payment 

reporting period. Similarly, registries 

that are submitting electronic 

prescribing data on behalf of eligible 

professionals or group practices for 

purposes of the 2011 incentive payment 

will need to do so following the end of 

the 2011 incentive reporting period. If 

an eligible professional chooses to use a 

qualified registry or qualified EHR for 

purposes of submitting electronic 

prescribing measure data for the 2011 

incentive, we will not combine data 

from multiple reporting mechanisms. 

Therefore, an eligible professional must 

make sure that the required number of 

eRx events for purposes of the 2011 

incentive payment is reported to us via 

a single reporting mechanism. 

After considering the comments and 

for the reasons previously explained, we 

are finalizing our proposal to provide a 

claims, registry, and EHR reporting 

mechanism for the 2011 eRx incentive. 

As in 2010, not all registries qualified to 

submit quality measures on behalf of 

eligible professionals for the 2011 

Physician Quality Reporting System 

will be qualified to submit quality 

measures results and numerator and 

denominator data on the electronic 

prescribing measure under the eRx 

Incentive Program. The electronic 

prescribing measure is reportable by an 

eligible professional any time he or she 

bills for one of the procedure codes for 

Part B services included in the 

measure’s denominator. 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 submitting electronic 

prescribing measures that require 

reporting at each eligible visit, such as 

the electronic prescribing measure. 

Registries need to indicate their desire 

to qualify to submit measure results and 

numerator and denominator data on the 

electronic prescribing measure for the 

2011 eRx Incentive program at the time 

that they submit their self-nomination 

letter for the 2011 Physician Quality 

Reporting System. The self-nomination 

process and requirements for registries 

for the Physician Quality Reporting 

System, which also will apply to the 

registries for the 2011 eRx Incentive 

Program, are discussed in section 

VII.F.1. of this final rule with comment 

period. We will post a final list of 

qualified registries for the 2011 eRx 

Incentive Program 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 2011 Physician Quality 

Reporting System on the Physician 

Quality Reporting System section of the 

CMS Web site. 

Similarly, EHR vendors are required 

to indicate their desire to have one or 

more of their EHR products qualified for 

the purpose of an eligible professional 

potentially being able to submit data on 

the electronic prescribing measure for 

the 2011 eRx Incentive Program at the 

time when they submit their selfnomination letter for the 2011 Physician 

Quality Reporting System. A list of 

qualified EHR vendors and their 

products (including the version that is 

qualified) for the 2011 eRx Incentive 

Program will be posted on the eRx 

Incentive Program section of the CMS 

Web site at http://www.cms.gov/ 

ERXIncentive when we post the list of 

qualified EHR products for the 2011 

Physician Quality Reporting System on 

the Physician Quality Reporting System 

section of the CMS Web site. 

Although we are finalizing three 

reporting mechanisms for use by eligible 

professionals for the 2011 eRx incentive, 

for purposes of the 2012 eRx payment 

adjustment, we are finalizing only the 

claims-based reporting mechanism 

given that, for operational reasons, we 

will not have the ability to accept 

registry and EHR data in the timeframe 

that we need to be able to complete our 

analysis of the data and make the 

determination of whether an eligible 

professional is subject to the 2012 

payment adjustment prior to January 1, 

2012. As discussed in the proposed rule 

(75 FR 40208), all claims for services 

furnished between January 1, 2011 and 

June 30, 2011, must be processed by no 

later than one month after the reporting 

period to be included in our analysis for 

purposes of the 2012 payment 

adjustment. Accordingly, to the extent 

an eligible professional intends to use a 

registry or EHR to submit electronic 

prescribing measure data for purposes of 

qualifying for the 2011 incentive, the 

eligible professional would still need to 

submit electronic prescribing measure 

data on claims for services furnished 

between January 1, 2011 and June 30, 

2011, in order to avoid the 2012 

payment adjustment. 

(B) The Reporting Denominator for the 

Electronic Prescribing Measure 

The electronic prescribing measure, 

similar to the Physician Quality 

Reporting System measures, has two 

basic elements, which include: (1) a 

reporting denominator that defines the 

circumstances when the measure is 

reportable; and (2) a reporting 

numerator. 

The denominator for the electronic 

prescribing measure consists of specific 

billing codes for covered professional 

services. The measure becomes 

reportable when any one of these 

procedure codes is billed by an eligible 

professional for Part B covered 

professional services. As initially 

required under section 1848(k)(2)(A)(ii) 

of the Act, and further established 

through rulemaking and under section 

1848(m)(2)(B) of the Act, we may 

modify the codes making up the 

denominator of the electronic 

prescribing measure. As such, 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 

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skilled nursing facilities or the home 

care setting. 

For 2011, we proposed to retain the 

2010 electronic prescribing measure’s 

denominator codes. The following is a 

summary of the comments received 

regarding the proposed denominator 

codes for the 2011 electronic prescribing 

measure. 

Comment: A couple of commenters 

supported our proposal to retain the 

denominator codes from denominator of 

the 2010 electronic prescribing measure 

denominator. Conversely, other 

commenters opposed retaining the 2010 

electronic prescribing denominator 

codes because they do not allow for 

surgeons to effectively participate in the 

eRx Incentive Program. The commenters 

did not suggest additional codes for 

inclusion in the electronic prescribing 

measure’s denominator though. 

Response: With respect to the 

commenters’ suggestions to add other 

denominator codes that were not 

proposed, we are not able to do so since 

the public would not have had an 

opportunity to comment on these 

additional codes. We welcome, 

however, specific suggestions for 

additional codes for consideration for 

the 2012 electronic prescribing measure. 

We believe that the existing 

denominator codes are representative of 

the types of services in which 

prescriptions are most often generated. 

Comment: Another commenter was 

concerned that we have unnecessarily 

restricted the electronic prescribing’s 

denominator by associating a 

prescription with a patient visit. The 

commenter noted that a vast majority of 

prescriptions in an internal medicine or 

family practice office are generated 

outside of a patient visit through the 

prescription renewal workflow while 

new prescriptions—the minority—are 

often coincident with the patient visit. 

The commenter believes that this sets 

up a cascade of filters that may prevent 

many otherwise successful providers 

from meeting the denominator criteria. 

The commenter stated that pharmacies 

either have, or can easily acquire, the 

capability to report the manner in which 

the prescription was received and CMS 

should consider a determined number 

of pharmacy claims of electronic 

prescriptions for Medicare beneficiaries, 

where the prescriber and manner of 

prescription delivery are clearly 

defined, as acceptable minimum criteria 

to determine a successful electronic 

prescriber. The commenter believes that 

the infrastructure to support this is laid 

in the requirements that Medicare D 

claims be submitted electronically to 

CMS and would allow CMS to identify 

successful electronic prescribers 

independent of the office-generated 

claims. 

Response: As we stated in the 

proposed rule (75 FR 40203), we believe 

that the completeness and accuracy of 

the Part D data with respect to whether 

a prescription was submitted 

electronically is unknown, which is 

why we are continuing to require 

reporting on an electronic prescribing 

measure. As stated previously, we 

welcome suggestions for additional 

denominator codes for use in future 

years but believe that the existing 

denominator codes are generally 

representative of the types of services in 

which prescriptions are often generated. 

Comment: One commenter supported 

the proposal to ‘‘expand the scope of the 

denominator codes for 2010 to 

professional services outside the 

professional office and outpatient 

setting, such as professional services 

furnished in skilled nursing facilities or 

the home-care setting.’’ 

Response: We are unclear why the 

commenter is providing feedback on the 

2010 denominator codes as the scope of 

the rule is limited to the 2011 electronic 

prescribing measure. The 2010 

denominator codes were finalized in the 

2010 PFS final rule with comment 

period (74 FR 61852). Since the 2010 

denominator codes already reflected our 

desire to include some professional 

services outside the professional office 

and outpatient setting, for 2011, we did 

not propose any changes to the 

denominator codes. Therefore, for 2011, 

we are retaining the 2010 denominator 

codes for the reasons listed by the 

commenter. Accordingly, after 

considering the comments, we are 

finalizing the following CPT codes in 

the denominator of the electronic 

prescribing measure for 2011: 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, G0109. We 

believe these codes represent the types 

of services for which prescriptions are 

likely to be generated. 

There are no diagnosis codes in the 

measure’s denominator and there are no 

age/gender requirements in order for a 

patient to be included in the measure’s 

denominator (that is, reporting of the 

electronic prescribing measure is not 

further limited to certain ages or a 

specific gender). For purposes of both 

the incentive payment and payment 

adjustments discussed in sections 

VII.F.2.c. and d. of this final rule with 

comment period, eligible professionals 

who do not bill for one of the procedure 

codes for Part B covered professional 

services included in the measure’s 

denominator will have no occasion to 

report the electronic prescribing 

measure. In other words, the measure is 

not applicable unless the professional 

bills for one of the codes included in the 

measure’s denominator. In addition, in 

order to qualify for an incentive or avoid 

the payment adjustment, eligible 

professionals are not required to report 

this measure in all cases in which the 

measure is applicable. There are specific 

reporting thresholds, or reported 

electronic prescribing events, that an 

eligible professional must meet in order 

to be considered a ‘‘successful electronic 

prescriber’’ for purposes of the 2011 

incentive payments, which are 

described in section VII.F.2.b.(2).(E). of 

this final rule with comment period. In 

addition, there are specific reporting 

thresholds that an eligible professional 

must meet in order to be considered a 

‘‘successful electronic prescriber’’ for 

purposes of the 2012 and 2013 payment 

adjustments, which are described in 

sections VII.F.2.c. and d. of this final 

rule with comment period, respectively. 

By no later than December 31, 2010, 

we will post the final specifications of 

the measure on the ‘‘eRx Measure’’ page 

of the eRx Incentive Program section of 

the CMS Web site at http:// 

www.cms.gov/ERXIncentive. 

(C) Qualified Electronic Prescribing 

System—Required Functionalities and 

Part D eRx Standards 

To report the electronic prescribing 

measure in 2011, we again proposed 

that the eligible professional must report 

one of the measure’s numerator G-codes, 

as discussed below. However, when 

reporting any of the G-codes in 2011, we 

proposed that the professional must 

have and regularly use a ‘‘qualified’’ 

electronic prescribing system, as 

defined in the electronic prescribing 

measure specifications. If the 

professional does not have general 

access to an eRx system in the practice 

setting, then the eligible professional 

does not have any data to report for 

purposes of the incentive payment. For 

2011, we proposed to retain what 

constitutes a ‘‘qualified’’ electronic 

prescribing system as a system based 

upon certain required functionalities 

that the system can perform. We 

proposed to retain the same 

functionalities that were required in 

2010. 

In addition, section 1848(m)(3)(B)(v) 

of the Act specifies that to the extent 

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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).’’ 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. For 2011, we proposed that 

to be a qualified electronic prescribing 

system, electronic systems must convey 

the information for the required 

functionalities using the standards 

currently in effect for the Part D 

electronic prescribing program. 

We did not receive any comments on 

the proposed required functionalities or 

Part D eRx standards. For this reason, 

we are finalizing the required 

functionalities and Part D eRx standards 

as described below. 

Required Functionalities for a 

‘‘Qualified’’ Electronic Prescriber System 

For 2011, a ‘‘qualified’’ electronic 

prescribing system is one that can do 

the following: 

(a) Generate a complete active 

medication list incorporating electronic 

data received from applicable 

pharmacies and PBMs, if available. 

(b) Allow eligible professionals to 

select medications, print prescriptions, 

electronically transmit prescriptions, 

and conduct alerts (written or acoustic 

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. 

(c) Provide information related to 

lower cost, therapeutically appropriate 

alternatives (if any). The ability of an 

electronic prescribing system to receive 

tiered formulary information, if 

available, would again suffice for this 

requirement for 2011 and until this 

function is more widely available in the 

marketplace. 

(d) Provide information on formulary 

or tiered formulary medications, patient 

eligibility, and authorization 

requirements received electronically 

from the patient’s drug plan (if 

available). 

Part D Electronic Prescribing Standards. 

To be a qualified electronic 

prescribing system under the 2011 eRx 

Incentive Program, electronic systems 

must convey the information listed 

previously under (a) through (d) using 

the standards currently in effect for the 

Part D electronic prescribing program. 

Additional Part D electronic prescribing 

standards were implemented April 1, 

2009. These 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 

utilize the adopted Part D electronic 

prescribing standards. The Part D 

electronic prescribing standards 

relevant to the four functionalities for a 

‘‘qualified’’ system in the electronic 

prescribing measure described 

previously and listed as (a), (b), (c), and 

(d), currently are as follows: 

(a) Generate medication list—Use the 

National Council for Prescription Drug 

Programs (NCPDP) Prescriber/ 

Pharmacist Interface SCRIPT Standard, 

Implementation Guide, Version 8, 

Release 1, October 2005 (hereinafter 

‘‘NCPDP SCRIPT 8.1’’) Medication 

History Standard; 

(b) Transmit prescriptions 

electronically—Use the NCPDP SCRIPT 

8.1 for the transactions listed at 

§ 423.160(b)(2); 

(c) 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’’); 

(d) Provide information on formulary 

or tiered formulary medications, patient 

eligibility, and authorization 

requirements received electronically 

from the patient’s drug plan—use— 

(1) NCPDP Formulary and Benefits 1.0 

for communicating formulary and 

benefits information between 

prescribers and plans; 

(2) 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; and 

(3) 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. 

However, 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 2011 Electronic 

Prescribing Program, 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 required 

functionalities previously described, a 

‘‘qualified’’ system must use the adopted 

Part D electronic prescribing standards 

for electronic messaging. 

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 qualification (b) 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. 

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. 

The electronic prescribing measure does 

not require the use of any particular 

system or transmission network; only 

that the system be a ‘‘qualified’’ system 

having the functionalities previously 

described based on Part D electronic 

prescribing standards. If the 

professional does not have general 

access to an electronic prescribing 

system in the practice setting, the 

eligible professional would not be able 

to report the 2011 electronic prescribing 

measure. In addition to not being 

eligible for a 2011 incentive payment, 

an eligible professional who does not 

report the electronic prescribing 

measure for 2011 may be subject to the 

2012 eRx payment adjustment discussed 

in section VII.F.2.c. of this final rule 

with comment period. 

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(D) The Reporting Numerator for the 

Electronic Prescribing Measure 

The proposed criteria for reporting for 

purposes of being a 2011 successful 

electronic prescriber are designed to 

reward those eligible professionals who 

demonstrate that they have adopted a 

qualified electronic prescribing system 

and used the system in a substantial 

way to electronically prescribe. 

Accordingly, for the 2011 electronic 

prescribing measure, we proposed to 

retain the following numerator G-code 

from the 2010 electronic prescribing 

measure’s numerator: G8553 (At least 1 

prescription created during the 

encounter was generated and 

transmitted electronically using a 

qualified electronic prescribing system) 

(75 FR 40206). 

We did not receive any comments 

related to the proposed electronic 

prescribing measure numerator G-code 

for 2011. Therefore, we are finalizing Gcode G8553 for the 2011 electronic 

prescribing measure’s numerator. 

We intend to post the final 2011 

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, 2010. 

Because the electronic prescribing 

quality measure will apply only when 

an eligible professional furnishes 

services indicated by one of the codes 

included in the measure’s denominator, 

for claims-based reporting, for example, 

it will not be necessary for an eligible 

professional to report G-codes for the 

electronic prescribing measure on 

claims not containing one of the 

denominator codes. However, if 

reporting a G-code, the G-code data 

submission will only be considered 

valid if it appears on the same Medicare 

Part B claim containing one of the 

electronic prescribing quality measure’s 

denominator codes. 

In addition, if the eligible professional 

submits a Medicare Part B claim 

containing one of the electronic 

prescribing measure’s denominator 

codes, he or she can report the 

numerator G-code only when the 

eligible professional furnishes services 

indicated by the G-code included in the 

measure’s numerator. That is, only 

when at least 1 prescription created 

during the encounter is generated and 

transmitted electronically using a 

qualified electronic prescribing system. 

(E) Criteria for Successful Reporting of 

the Electronic Prescribing Measure 

As discussed previously, section 

1848(m)(3)(D) of the Act authorizes the 

Secretary to revise the criteria for 

submitting data on the electronic 

prescribing measure from the criteria 

specified 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 2010 eRx incentive, 

we revised the criteria for successful 

electronic prescriber such that an 

eligible professional shall be treated as 

a successful electronic prescriber for a 

reporting period based on the eligible 

professional’s reporting of the electronic 

prescribing measure which counts the 

generation and reporting of one or more 

prescriptions associated with a patient 

visit electronically for a minimum of 25 

unique visits per year of applicable 

cases in the denominator of the 

electronic prescribing for 2010. For 

2011, we again proposed to make the 

determination of whether an eligible 

professional is a successful electronic 

prescriber for purposes of the eRx 

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 encounter is generated using a 

qualified electronic prescribing system 

(that is, reports the G8553 code). 

The following is a summary of 

comments received regarding the 

criteria for the determination of a 

successful electronic prescriber for 

eligible professionals for the 2011 eRx 

incentive payment. 

Comment: One commenter requested 

that we define and share for public 

comment the actual number of Part D 

prescriptions that would suffice to 

document successful electronic 

prescribing. 

Response: We did not propose to use 

Part D prescriptions as the standard to 

determine whether an eligible 

professional is a successful e-prescriber 

for purposes of the 2011 eRx incentive 

payment. As stated in the proposed rule 

(75 FR 40203), we may consider doing 

so in the future. At such time, we would 

define the actual number of Part D 

prescriptions that would be required to 

be prescribed electronically via notice 

and comment rulemaking. 

Comment: Several commenters 

supported the electronic prescribing 

measure reporting threshold of 25, 

while others stated that they support 

our plan to reduce the electronic 

prescribing measure reporting burden 

from 50 percent of all applicable 

services to reporting just 25 times. 

Response: We appreciate the 

commenters’ feedback regarding the 

proposed electronic prescribing measure 

reporting threshold for purposes of the 

2011 eRx incentive payment. For 2011, 

we are finalizing our proposal to require 

that professionals report on 25 unique 

electronic prescribing events in order to 

be considered a successful e-prescriber 

for the purpose of qualifying for a 2011 

eRx incentive payment. We believe that 

this reporting threshold simplifies the 

reporting burden and encourages 

participation. 

Comment: Some commenters 

expressed concern that the reporting 

threshold of 25 unique visits is too low 

a standard for incentive payments as it 

is unclear how this threshold will drive 

improvements for all Medicare 

beneficiaries. A more robust standard 

was recommended. One commenter 

specifically recommended a reporting 

threshold of between 250–500 

prescriptions per year per eligible 

professional and 25,000–50,000 per year 

per GPRO I group practice. Another 

commenter recommended that we 

require eligible professionals to transmit 

more than 40 percent of written 

prescriptions electronically, which is in 

line with the EHR Incentive Program. 

Response: We appreciate the 

commenters’ valuable input. We have 

reviewed several eRx Incentive Program 

management reports in order to 

determine the feasibility of using the 

‘‘25’’ visit threshold and we believe that 

this threshold simplifies the eRx 

reporting burden. In establishing this 

threshold we also took into account the 

many valid circumstances that would 

prevent eligible professionals who have 

adopted a qualified electronic 

prescribing system from having 25 

unique electronic prescribing events 

during the calendar year and variations 

in practice characteristics. Our goal is to 

increase participation in the eRx 

Incentive Program and, more 

importantly, to encourage the continued 

adoption and use of electronic 

prescribing systems. 

After considering the comments 

received and for the reasons previously 

explained, we are finalizing our 

proposal to make the determination of 

whether an eligible professional is a 

successful electronic prescriber for 

purposes of the CY 2011 incentive 

payment 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 encounter is generated using a 

qualified electronic prescribing system 

(that is, reports the G8553 code) during 

the 2011 reporting period (that is, 

January 1, 2011 through December 31, 

2011). 

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(3) Determination of the 2011 Incentive 

Payment Amount for Individual Eligible 

Professionals Who Are Successful 

Electronic Prescribers 

Section 1848(m)(2)(B) of the Act 

imposes a limitation on the electronic 

prescribing incentive payment. The 

Secretary is authorized to choose 1 of 2 

possible criteria for determining 

whether or not the limitation applies to 

a successful electronic prescriber. The 

first criterion is based upon whether the 

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 reporting 

period. The second criterion is based on 

whether the eligible professional 

submits (both electronically and nonelectronically) 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 the latter criterion, then, in 

accordance with section 1848(m)(2)(B) 

of the Act, the criterion based on the 

reporting on electronic prescribing 

measures would no longer apply. The 

statutory limitation also applies with 

regard to the application of the payment 

adjustment. Based on our proposal to 

make the determination of whether an 

eligible professional is a ‘‘successful 

electronic prescriber’’ based on 

submission of the electronic prescribing 

measure, we proposed to apply the 

criterion under section 1848(m)(2)(B)(i) 

of the Act for the limitation for both the 

2011 incentive payment and the 2012 

payment adjustment (the application of 

the limitation with regard to the 2012 

eRx payment adjustment is discussed in 

section VII.F.2.c.(3). of this final rule 

with comment period). 

Since, as discussed previously, we 

proposed for 2011 to make the 

determination of whether an eligible 

professional is a ‘‘successful electronic 

prescriber’’ based on submission of the 

electronic prescribing measure, we also 

proposed to retain the requirement to 

analyze the claims submitted by the 

eligible professional at the TIN/NPI 

level to determine whether the 10 

percent threshold is met in determining 

the receipt of an electronic prescribing 

incentive payment for 2011 by an 

eligible professional (75 FR 40206). For 

purposes of the 2011 eRx incentive 

payment, this calculation is expected to 

take place in the first quarter of 2012 

and 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 and a 

successful electronic prescriber will 

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 will not earn an electronic 

prescribing incentive payment even if 

he or she electronically prescribes and 

reports a G-code indicating that he or 

she generated and transmitted a 

prescription electronically at least 25 

times for those eligible cases that occur 

during the 2011 reporting period. 

Although an individual eligible 

professional 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 may report the 

electronic prescribing measure without 

regard to the statutory limitation for the 

incentive payment. 

The following is a summary of the 

comments received on the 

determination of the 2011 incentive 

payment amount for individual eligible 

professionals who are successful 

electronic prescribers. 

Comment: Several commenters felt we 

should allow eligible professionals to 

earn an incentive both for the eRx 

Incentive Program as well as for the 

Medicare EHR Incentive Program. The 

commenters did not think these 

incentives should be mutually 

exclusive, claiming that the eRx 

payment adjustment applies even if the 

eligible professional is participating in 

both programs. 

Response: We do not have the 

authority to allow eligible professionals 

to earn an incentive under the eRx 

Incentive Program and the Medicare 

EHR Incentive Program. Section 

1848(m)(2)(D) of the Act specifies that 

the incentive under the eRx Incentive 

Program shall not apply to an eligible 

professional (or, in the case of a group 

practice) if, for the EHR reporting period 

the eligible professional (or group 

practice) receives an incentive payment 

under the EHR Incentive Program with 

respect to a certified EHR technology 

that has the capability of electronic 

prescribing. 

We will, however, be developing a 

plan, as described under section 

1848(m)(7) of the Act (‘‘Integration of 

Physician Quality Reporting and EHR 

Reporting’’), to integrate measure 

reporting requirements under the 

Physician Quality Reporting System, 

eRx Incentive Program, and the EHR 

Incentive Program, with respect to 

selection of measures to demonstrate 

meaningful use under the EHR Incentive 

Program, quality of care furnished to an 

individual, and such other activities as 

specified by the Secretary. 

With regards to the commenters’ 

statement that the eRx payment 

adjustment still applies even if an 

eligible professional participates in both 

programs, this is not accurate. The eRx 

payment adjustment applies only to the 

extent that the eligible professional is 

not a successful electronic prescriber. 

We would also like to clarify that the 

limitation under section 1848(m)(2)(D) 

of the Act with respect to EHR incentive 

payments does not preclude the 10 

percent limitation under section 

1848(m)(2)(B)(i) of the Act from 

applying with regard to the eRx 

payment adjustment to an eligible 

professional who earns an EHR 

incentive. 

Comment: One commenter requested 

that we clarify the way in which we 

intend to calculate the group eRx 

incentives if individual members of the 

group have received Medicare EHR 

incentives. 

Response: We will assess the group 

practice’s data first to determine eRx 

incentive eligibility. If the group 

practice is eligible for an eRx incentive, 

then we will filter out the allowed 

charges for all NPIs who earn an EHR 

incentive before calculating the group’s 

incentive amount. 

Comment: We also received feedback 

pertaining to the eRx Incentive Program 

and EHR Incentive Program having 

different threshold criteria. Specifically, 

the commenter was concerned that the 

in order to qualify for the EHR 

incentive, eligible professionals must 

use a qualified EHR to generate and 

transmit 40 percent of all permissible 

prescriptions electronically but for the 

eRx Incentive Program, the threshold is 

25 successful electronic prescriptions 

during the reporting period for purposes 

of the incentive payment. Since eligible 

professionals must still participate in 

the eRx Incentive Program to avoid the 

2012 payment adjustment, a commenter 

stated that having different threshold 

criteria for the two programs causes 

confusion and recommended the 

establishment of a consistent threshold 

for electronic prescriptions. Another 

commenter felt that different thresholds 

are appropriate given that the EHR 

Incentive Program is voluntary and the 

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eRx Incentive Program is mandatory to 

maintain full payment. 

Response: We note that the EHR 

Incentive Program and the eRx Incentive 

Program are two separate, distinct 

programs with different purposes and 

underlying statutory provisions. 

Professionals eligible for the eRx 

Incentive Program are encouraged to be 

successful electronic prescribers using 

qualified electronic prescribing systems. 

The Medicare EHR Incentive Program 

will provide incentive payments to 

eligible professionals (EPs), eligible 

hospitals, and critical access hospitals 

(CAHs) that are meaningful users of 

certified EHR technology. Electronic 

prescribing is merely one component of 

the EHR Incentive Program. 

As such, we believe, at this time that 

it is appropriate to have different 

reporting thresholds. However, as noted 

previously, we will be developing a 

plan, as described under section 

1848(m)(7) of the Act (‘‘Integration of 

Physician Quality Reporting and EHR 

Reporting’’), to integrate measure 

reporting requirements under the 

Physician Quality Reporting System, 

eRx Incentive Program, and the EHR 

Incentive Program. In the plan, we will 

study potential ways to address the 

commenters’ concerns. 

(4) Reporting Option for Satisfactory 

Reporting of the Electronic Prescribing 

Measure by Group Practices 

Section 1848(m)(3)(C) of the Act 

required that we establish and have in 

place a process under which eligible 

professionals in a group practice shall 

be treated as a successful electronic 

prescriber. In addition, 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 in the group practice for 

being a successful electronic prescriber. 

For 2011, we proposed to make 

incentive payments to group practices 

based on the determination that the 

group practice, as a whole, is a 

successful electronic prescriber for 2011 

(75 FR 40207). An individual eligible 

professional who is affiliated with a 

group practice participating in the group 

practice reporting option that 

successfully meets the requirements for 

group practices would not be eligible to 

earn a separate eRx incentive payment 

for 2011 on the basis of his or her 

successfully reporting the electronic 

prescribing measure at the individual 

level. 

The following is a summary of the 

comments received regarding the two 

group practice options for reporting the 

electronic prescribing measure in 2011. 

Comment: One commenter supports 

the proposed eRx GPRO II, including 

the proposed reporting criteria for GPRO 

II groups. 

Response: We appreciate the 

commenter’s positive feedback and are 

finalizing the eRx GPRO II as proposed. 

We believe that the eRx GPRO II will 

expand opportunities for group 

practices to participate in the eRx 

Incentive Program. 

Comment: One commenter 

appreciated that we have recognized the 

burden of claims-based reporting for the 

Physician Quality Reporting System and 

the eRx Incentive Program but the 

commenter was ‘‘disappointed that a 

GPRO-specific alternative for the eRx 

Incentive Program was not proposed. 

Most groups using [electronic 

prescribing technology] can readily 

obtain detailed information on 

physician utilization of the system.’’ The 

commenter felt that this data could be 

easily reported, in detail, on the GPRO 

I data collection tool and urges CMS to 

consider this alternative for 2011 

reporting. 

Response: We assume that the ‘‘GPROspecific alternative’’ that the commenter 

is referring to is the addition of the 

electronic prescribing measure to the 

GPRO I data collection tool so that the 

groups participating in GPRO I can use 

this data collection tool to submit 

quality measures data for both the 

Physician Quality Reporting System and 

the eRx Incentive Program. Similar 

suggestions have been considered in the 

past but were not implemented due to 

fiscal concerns and concerns about the 

timing of when an updated GPRO I data 

collection tool could be available. We 

will continue to explore the feasibility 

of adding the electronic prescribing 

measure to the GPRO I data collection 

tool so that practices can use the data 

collection tool to submit the electronic 

prescribing measure instead of claims, a 

qualified registry, or a qualified EHR. 

Based on these comments, we are 

finalizing two group practice reporting 

options for the eRx Incentive Program 

for 2011—GPRO I and GPRO II. GPRO 

I is the reporting option for large group 

practices with 200 or more eligible 

professionals and GPRO II is the 

reporting option for group practices 

with fewer than 200 eligible 

professionals. The reporting criteria 

under these 2 options differ depending 

on the size of the group practice. 

Eligibility and reporting requirements 

for the 2011 eRx GPRO I and GPRO II 

are described below. We believe that 

these 2 options will encourage greater 

participation in the eRx Incentive 

Program by reducing overall reporting 

burden for eligible professionals who 

are part of a group practice. 

(A) Definition of ‘‘Group Practice’’ 

Section 1848(m)(3)(C)(i) of the Act 

authorizes the Secretary to define 

‘‘group practice.’’ For purposes of 

determining whether a group practice is 

a successful electronic prescriber for 

2011, we proposed that consistent with 

the definition of group practice 

proposed for the Physician Quality 

Reporting System group practice 

reporting option (GPRO), a ‘‘group 

practice’’ would be defined as a single 

Taxpayer Identification Number (TIN) 

with 2 or more eligible professionals, as 

identified by their individual National 

Provider Identifier (NPI), who have 

reassigned their Medicare billing rights 

to the TIN. ‘‘Group practice’’ would also 

include group practices participating in 

Medicare demonstration projects 

approved by the Secretary (75 FR 

40207). 

In addition, we proposed to restrict 

participation in the 2011 eRx GPRO to 

group practices participating in the 2011 

Physician Quality Reporting System 

GPRO (either through GPRO I or GPRO 

II) or group practices that are deemed to 

be participating in the 2011 Physician 

Quality Reporting System GPRO (that is, 

group practices participating in a CMSapproved Medicare demonstration) that 

have indicated their desire to participate 

in the 2011 eRx GPRO (75 FR 40207). 

We also proposed that a group 

practice that wishes to participate in the 

2011 eRx Incentive Program under the 

group practice reporting option will 

have to indicate how the group practice 

intends to report the electronic 

prescribing measure. That is, the group 

practice will need to indicate in its selfnomination letter which reporting 

mechanism (that is, claims, registries or 

EHRs) the group practice intends to use 

for purposes of participating in the 2011 

eRx Incentive Program group practice 

reporting option. 

We did not receive any comments 

related to the proposed definition of 

‘‘group practice’’ for purposes of the eRx 

Incentive Program. For this reason, we 

are finalizing our proposal as previously 

described. 

Unlike individual eligible 

professionals who may choose not to 

participate in the Physician Quality 

Reporting System, to be eligible to earn 

an electronic prescribing incentive in 

2011, group practices that wish to 

participate in the electronic prescribing 

group practice reporting option will be 

required to participate in the Physician 

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73560 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

Quality Reporting System group 

practice reporting option or be deemed 

to be participating in the Physician 

Quality Reporting System group 

practice reporting option based on the 

practice’s participation in an approved 

Medicare demonstration project. 

Participation in the eRx Incentive 

Program, including participation in the 

electronic prescribing group practice 

reporting option is, however, optional 

for group practices that are participating 

in the Physician Quality Reporting 

System under the group practice 

reporting option. If a group practice 

wishes to participate in the 2011 eRx 

Incentive Program under the group 

practice reporting option, the group 

practice must indicate its desire to do so 

at the time that the group practice selfnominates to participate in the 2011 

Physician Quality Reporting System 

group practice reporting option. 

However, group practices are not 

required to indicate their intent to 

participate in the 2011 eRx Incentive 

Program as individual eligible 

professionals, when the group practice 

self-nominates to participate in the 2011 

Physician Quality Reporting System 

group practice reporting option. 

As discussed in section VII.F.1.g. of 

this final rule with comment period, 

group practices interested in 

participating in the 2011 Physician 

Quality Reporting System through the 

group practice reporting option will be 

required to submit a self-nomination 

letter to CMS, requesting to participate 

in the 2011 Physician Quality Reporting 

System group practice reporting option. 

Instructions for submitting the selfnomination letter will be posted on the 

Physician Quality Reporting System 

section of the CMS Web site by 

November 15, 2010. A group practice 

that had indicated their desire to 

participate in the eRx Incentive Program 

group practice reporting option when 

they self-nominated to participate in the 

2011 Physician Quality Reporting 

System group practice reporting option 

will be notified of the selection decision 

with respect to participation in the eRx 

Incentive Program at the same time that 

it is notified of the selection decision for 

the Physician Quality Reporting System 

group practice reporting option. 

(B) Process for Group Practices To 

Participate as Group Practices and 

Criteria for Successful Reporting of the 

Electronic Prescribing Measure by 

Group Practices 

For group practices selected to 

participate in the electronic prescribing 

group practice reporting option for 

purposes of the 2011 eRx incentive 

payment, we proposed that the 

reporting period would be January 1, 

2011 to December 31, 2011 (75 FR 

40207). We proposed that group 

practices selected to participate in the 

2011 eRx Incentive Program and qualify 

for the eRx incentive payment through 

the group practice reporting option 

would be able to choose to report the 

electronic prescribing measure through 

the claims-based, the registry-based, or, 

the EHR-based reporting mechanism. 

In order for a group practice 

participating in the Physician Quality 

Reporting System GPRO I to be 

considered a successful electronic 

prescriber for purposes of the 2011 eRx 

incentive, we proposed that the group 

practice would have to report that at 

least 1 prescription during an encounter 

was generated and transmitted 

electronically using a qualified 

electronic prescribing system in at least 

2,500 instances during the reporting 

period. In order for a group practice 

participating in the Physician Quality 

Reporting System GPRO II to be 

considered a successful electronic 

prescriber, we proposed that the group 

practice would have to report that at 

least 1 prescription during an encounter 

was generated and transmitted 

electronically using a qualified 

electronic prescribing system for 75– 

1,875 instances, based on the group’s 

size (75 FR 40208). 

Section 1848(m)(2)(B) of the Act 

specifies that the 10 percent threshold 

limitation on the applicability of the 

electronic prescribing incentive applies 

to group practices as well as individual 

eligible professionals. Therefore, in 

determining whether a group practice 

will receive an electronic prescribing 

incentive payment for 2011 by meeting 

the proposed reporting criteria 

previously described, we would 

determine based on the claims, whether 

10 percent of a group practice’s charges 

comprised of codes in the denominator 

of the electronic prescribing measure. 

We did not receive any comments 

related to the proposed process for 

group practices to participate as group 

practices and the proposed criteria for 

successful reporting of the electronic 

prescribing measure by group practices 

for purposes of the 2011 eRx Incentive. 

Therefore, for purposes of the 2011 eRx 

incentive, we are finalizing our proposal 

to require GPRO I practices to report the 

electronic prescribing measure for 2,500 

instances during the January 1, 2011 

through December 31, 2011. We are also 

finalizing our proposal to require GPRO 

II practices to report the electronic 

prescribing measure for the number of 

instances specified in Table 76 (see 

section VII.F.1.g.(3).(B). of this final rule 

with comment period) during the 

January 1, 2011 through December 31, 

2011 reporting period. We believe these 

are reasonable thresholds to 

demonstrate use of electronic 

prescribing technology. 

In addition, we are finalizing our 

proposal to allow group practices 

participating in the 2011 eRx Incentive 

Program under GPRO I and GPRO II to 

submit data on the electronic 

prescribing measure using claims, a 

qualified registry, or a qualified EHR for 

purposes of qualifying for the 2011 eRx 

incentive payment. In addition, for 

purposes of the 2011 eRx incentive, we 

will not combine data on the electronic 

prescribing submitted via multiple 

reporting mechanisms. That is, a group 

practice must meet the relevant 2011 

GPRO reporting criteria for the 2011 

incentive using a single reporting 

mechanism. Combining data received 

via multiple reporting mechanisms 

would add significant complexity to our 

analytics and potentially delay 

incentive payments. 

c. The 2012 eRx Payment Adjustment 

Section 1848(a)(5) of the Act requires 

that with respect to covered professional 

services furnished by an eligible 

professional in 2012, if the eligible 

professional is not a successful 

electronic prescriber for the reporting 

period for the year, the fee schedule 

amount for such services furnished by 

such professional during 2012 shall be 

equal to 99 percent of the fee schedule 

amount that would otherwise apply to 

such PFS services. 

The following is a summary of general 

comments received regarding the eRx 

payment adjustment and our responses. 

Comment: Some commenters were 

opposed to implementation of the eRx 

payment adjustment because of the eRx 

Incentive Program is relatively new. 

Commenters noted that we have not 

released any summary results regarding 

how many eligible professionals are 

reporting and how many are earning 

incentives, eligible professionals have 

not received feedback reports on their 

progress for 2009 or 2010, and there is 

no evidence that the program is 

working. As a result, commenters 

suggested that CMS should ensure that 

eligible professionals who attempt to 

report but are unsuccessful due to the 

data submission process are not 

penalized. 

Response: Section 1848(a)(5) of the 

Act requires us to implement a payment 

adjustment beginning with covered 

professional services furnished by an 

eligible professional during 2012, if the 

eligible professional is not a successful 

electronic prescriber. We do not have 

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the authority to delay implementation of 

this payment adjustment. 

Comment: One commenter suggested 

that we exercise additional flexibility in 

assigning payment adjustments 

carefully by reviewing each eligible 

professional’s circumstances prior to 

assigning any payment adjustments. 

Response: Although we value the 

commenter’s input, this suggestion is 

not technically feasible. Given the short 

period of time between the end of the 

data submission period for the 2012 eRx 

payment adjustment and when we 

would have to begin adjusting eligible 

professional’s 2012 payments, it would 

not be feasible for us to review every 

eligible professional’s circumstances 

individually. In addition, section 

1848(a)(5) (A)(i) of the Act requires us 

to apply the payment adjustment ‘‘if the 

eligible professional is not a successful 

electronic prescriber.’’ We believe that 

the criteria for becoming a successful 

electronic prescriber for purposes of the 

payment adjustment that we have 

proposed and are finalizing below are 

reasonable in that we have limited the 

number of electronic prescribing events 

required to avoid the payment 

adjustment. Furthermore, as discussed 

further in section VII.F.2.c.(4). of this 

final rule with comment period we have 

provided a process whereby eligible 

professionals can request a significant 

hardship exception on a case-by-case 

basis under section 1848(a)(5)(B) of the 

Act. 

Comment: Several commenters urged 

us to synchronize the eRx Incentive 

Program and EHR Incentive Program so 

that eligible professionals who receive 

Medicare EHR incentives will be 

exempt from the eRx payment 

adjustments. Commenters stated that the 

EHR Incentive Program provides an 

opportunity and payment adjustment 

that did not exist when the original eRx 

Incentive Program regulations were put 

in place, and adjustments should be 

made due to the amount of overlap 

between programs. As it is, the eRx 

Incentive Program and the EHR 

Incentive Program represent a form of 

‘‘double jeopardy’’ for physicians. For 

instance, a physician who gets the first 

year ‘‘meaningful use’’ subsidy via 

Medicaid could also be penalized for 

not using electronic prescribing. Also, 

commenters claimed that in some cases, 

in order to avoid the eRx payment 

adjustment, a physician would have to 

purchase a stand-alone electronic 

prescribing program and then transition 

to a full EHR once the certification 

standards are determined. Furthermore, 

the list of ‘‘certified’’ EHRs for the EHR 

Incentive Program will not be available 

until January 2011. Another commenter 

stated that it is unfair to penalize 

eligible professionals who are working 

in good faith to adopt a comprehensive 

EHR under the EHR Incentive Program. 

Another commenter suggested that 

every effort be made to align the EHR 

Incentive Program and the eRx payment 

adjustment to remove the burden from 

eligible professionals of having to 

submit electronic prescribing measure 

data more than once. 

Response: We agree with the desire to 

align the EHR Incentive Program and 

the eRx payment adjustment and 

understand the commenters’ concerns. 

The EHR Incentive Program and the eRx 

Incentive Program are governed by 

different laws, and have different 

reporting requirements. While section 

1848(m)(2)(D) explicitly limits eligible 

professionals or group practices that 

receive an EHR incentive from 

qualifying for an eRx incentive payment 

in the same year, there is not a similar 

statutory provision that explicitly limits 

an eligible professional or group 

practice that receives an EHR incentive 

from being subject to the eRx payment 

adjustment. At this time an eligible 

professional who wishes to participate 

in the EHR Incentive Program would 

also have to participate in the eRx 

Incentive Program during 2011 to avoid 

an eRx payment adjustment in 2012 

since the two programs have different 

requirements with respect to electronic 

prescribing. Eligible professionals, 

however, are not penalized for 

participating in both programs. Rather, 

an eligible professional who qualifies 

for an eRx incentive and a Medicare 

EHR incentive cannot earn an eRx 

incentive for the same year. However, 

we are making the effort to study 

possible methods of aligning the two 

programs by developing a plan, as 

described under section 1848(m)(7) of 

the Act (‘‘Integration of Physician 

Quality Reporting and EHR Reporting’’), 

to integrate measure reporting 

requirements under Physician Quality 

Reporting System, eRx Incentive 

Program and the EHR Incentive 

Program. 

We note that although section 

1848(m)(2) precludes an eligible 

professional who has earned an 

incentive payment under the EHR 

Incentive Program from also earning an 

eRx incentive payment, the statute does 

not preclude the eligible professional 

from being subject to the eRx payment 

adjustment. In order to avoid the eRx 

payment adjustment, an eligible 

professional participating in the 

Medicare EHR Incentive Program still 

must meet the relevant eRx payment 

adjustment criteria for being a 

successful electronic prescriber. 

(1) The eRx Payment Adjustment 

Reporting Period 

For purposes of the 2012 eRx payment 

adjustment, we proposed to make a 

determination of whether an eligible 

professional or a group practice is a 

successful electronic prescriber based 

on the January 1, 2011 through June 30, 

2011 reporting period (75 FR 40208). 

For eligible professionals and group 

practices using the claims-based 

reporting mechanism, we proposed that 

all claims for services furnished 

between January 1, 2011 and June 30, 

2011 must be processed by no later than 

one month after the reporting period, for 

the claim to be included in our data 

analysis. 

The following is a summary of 

comments received on the proposed 

reporting period for the 2012 eRx 

payment adjustment and our proposal to 

require claims to be submitted by no 

later than 1 month after the reporting 

period. 

Comment: Several commenters 

expressed a desire for us to revise or 

delay the 2012 eRx payment adjustment 

reporting period, asserting that basing 

the 2012 eRx payment adjustment on 

electronic prescribing activity in 2011 

conflicts with the law. Although some 

commenters acknowledged the need for 

time to complete a data analysis to 

determine if an eligible professional was 

a successful electronic prescriber prior 

to 2012, these commenters expressed 

opposition to the shorter reporting 

period. Other commenters believed that 

payment adjustments for 2012 should be 

based on a reporting period in 2012 

rather than a reporting period in 2011. 

Commenters preferred that the reporting 

period for the 2012 and 2013 payment 

adjustments be the full 2012 and 2013 

calendar years, respectively. One 

commenter requested an April 1 

through September 30, 2011 for the 

2012 payment adjustment. One 

commenter noted that some 

organizations might have planned an 

implementation of a qualified electronic 

prescribing system prior to January 1, 

2012, to avoid the 2012 eRx payment 

adjustment. Such organizations would 

now have to complete that 

implementation more than six months 

in advance, potentially causing a 

significant financial burden for the 

organization. Another commenter stated 

that the 2012 eRx payment adjustment 

may cause some practices to reduce 

their Medicare patient roster (or refuse 

to accept new Medicare patients) in 

order to reduce the size of the payment 

adjustment, because they claim they 

would not have adequate time to meet 

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the proposed 2011 requirements to 

avoid the payment adjustment in 2012. 

Response: With respect to 

commenters’ claims that the proposed 

reporting period for purposes of 

applying the 2012 eRx payment 

adjustment conflicts with the law, 

section 1848(a)(5) of the Act requires 

that the PFS amount for covered 

professional services furnished by an 

eligible professional during 2012, be 

reduced by 1 percent during 2012, if the 

eligible professional is not a successful 

electronic prescriber for the reporting 

period for the year. 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. 

While we appreciate the commenters’ 

suggestions to use data from the entire 

2011 calendar year, a later part of 2011, 

or from 2012 for such an assessment for 

purposes of applying the 2012 eRx 

payment adjustment for services 

furnished in 2012, we believe it is 

necessary to reduce the PFS amount 

concurrently with claims submissions 

in 2012. The alternatives to reducing the 

PFS amount concurrently with claims 

submissions in 2012 would be having to 

recoup payments after the 

determination is made about whether 

the payment adjustment applies, 

providing added payments if the claims 

are paid at the reduced amount before 

the determination is made about 

whether the payment adjustment 

applies, or holding claims until the 

determination is made about whether 

the payment adjustment applies. As a 

result, we need to determine whether 

eligible professionals are successful 

electronic prescribers prior to 2012, 

based on a reporting period that also 

takes place prior to 2012. We believe 

that the proposed reporting period of 

the first six months of 2011 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 in 2012. 

Avoiding retroactive adjustments would 

not be possible if the determination of 

a successful electronic prescriber for 

purposes of the 2012 payment 

adjustment was based on reporting for 

the entire 2011 calendar year or a later 

portion of the 2011 calendar year. After 

the end of the reporting period, we must 

allow some time for claims for services 

furnished during the reporting period to 

be submitted and processed before it is 

available for analysis. 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, 2012. 

Comment: One commenter suggested 

we be consistent with EHR Incentive 

Program submission guidelines by 

allowing electronic prescribing measure 

data to be submitted for up to two 

months after the close of the reporting 

period, rather than the proposed one 

month. 

Response: As we explained 

previously, we need sufficient time 

following the close of the 6-month 

reporting period to determine whether 

an eligible professional is a successful 

electronic prescriber and must do so 

prior to 2012, when the eRx payment 

adjustment would be assessed (if 

applicable). Accordingly, we cannot 

allow claims to be submitted for up to 

two months after the close of the 

reporting period. 

After considering the comments and 

for the reasons we explained previously, 

we are finalizing a 6-month reporting 

period, from January 1, 2011 through 

June 30, 2011, for the 2012 eRx payment 

adjustment. 

(2) Criteria for Determining 

Applicability of the 2012 eRx Payment 

Adjustment to Individual Eligible 

Professionals 

As we explained previously, section 

1848(a)(5) of the Act requires a payment 

adjustment be applied with respect to 

covered professional services furnished 

by an eligible professional in 2012, if 

the eligible professional is not a 

successful electronic prescriber for the 

reporting period for the year. Section 

1848(m)(3)(B) of the Act sets forth the 

requirements for being a successful 

electronic prescriber. As we discussed 

in section VII.F.2.b.(2). of this final rule 

with comment period, for the 2011 eRx 

Incentive Program, we decided to 

continue to require eligible 

professionals to report on the electronic 

prescribing measure to determine 

whether an eligible professional is a 

successful electronic prescriber. Details 

about the electronic prescribing quality 

measure are discussed in section 

VII.F.2.b.(2).(C) and (D) of this final rule 

with comment period. 

In addition, based on the authority 

under section 1848(m)(3)(D) of the Act 

to revise the criteria for submitting data 

on the electronic prescribing quality 

measure, we proposed that the 2012 eRx 

payment adjustment would not apply to 

the following: 

(1) An eligible professional who is not 

a physician (includes MDs, DOs, and 

podiatrists), nurse practitioner, or 

physician assistant as of June 30, 2011. 

(2) An eligible professional who 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 

between January 1, 2011 through June 

30, 2011. 

(3) An eligible professional who is a 

successful electronic prescriber for the 

January 1, 2011 through June 30, 2011 

reporting period. Specifically, we 

proposed that to be a successful 

electronic prescriber for purposes of 

avoiding the 2012 eRx payment 

adjustment, the eligible professional 

must report that at least 1 prescription 

for Medicare Part B FFS patients created 

during an encounter that is represented 

by 1 of the codes in the denominator of 

the 2011 electronic prescribing measure 

was generated and transmitted 

electronically using a qualified eRx 

system at least 10 times during the 2012 

eRx payment adjustment reporting 

period (that is, January 1, 2011 through 

June 30, 2011). (75 FR 40208). 

The limitation with respect to the 

electronic prescribing measures 

required under section 1848(m)(2)(B)(i) 

of the Act also applies to the eRx 

payment adjustment. Therefore, we 

proposed that if less than 10 percent of 

the eligible professional’s estimated 

total allowed charges for the January 1, 

2011 through June 30, 2011 reporting 

period are comprised of services which 

appear in the denominator of the 2011 

electronic prescribing measure, then the 

eligible professional would not be 

subject to the 2012 eRx payment 

adjustment (75 FR 40209). As with the 

2011 eRx incentive payment, we 

proposed that the determination of 

whether an eligible professional is 

subject to the payment adjustment will 

be made at the individual professional 

level, based on the NPI and for each 

unique TIN/NPI combination. 

The following is a summary of the 

comments received on the proposed 

criteria for determining the applicability 

of the 2012 eRx payment adjustment to 

individual eligible professionals and our 

responses. 

Comment: A couple of commenters 

suggested that regardless of the payment 

adjustment exemption criteria, any 

eligible professional who qualifies for 

the incentive payment should be 

exempt from the payment adjustment. 

The commenters specifically requested 

an exemption for eligible professionals 

who are successful electronic 

prescribers for the 2011 eRx incentive. 

Response: As discussed previously, 

section 1848(a)(5) of the Act requires 

that the PFS amount for covered 

professional services furnished by an 

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eligible professional, who is not a 

successful electronic prescriber, must be 

reduced by 1 percent for services 

furnished during 2012. With regard to 

applying the required 2012 eRx 

payment adjustment, we believe it is 

necessary to reduce the PFS amount 

concurrently with claims submissions 

in 2012, and so we need to determine 

if the 2012 eRx payment adjustment is 

applicable to eligible professionals prior 

to 2012. This assessment would not be 

possible if the successful electronic 

prescriber determination was based on 

eRx incentive payment eligibility 

criteria for 2011, given that we cannot 

determine successful electronic 

prescribers for purposes of the 2011 eRx 

incentive until 2012. 

After considering the comments 

received, we are finalizing the criteria 

for determining applicability of the 2012 

eRx payment adjustment to individual 

eligible professionals as proposed and 

previously described. As stated in the 

proposed rule (75 FR 40208 and 40209), 

we believe that that limiting the 

application of the payment adjustment 

to those professionals who generally 

have prescribing privileges and who 

have a sufficient number of 

denominator-eligible cases is 

appropriate. We also believe that the 

reporting threshold of 10 unique 

electronic prescribing events between 

January 1, 2011 and June 30, 2011 is 

achievable. As stated previously, 

although we proposed to allow 

reporting of the electronic prescribing 

measure via claims, a qualified registry, 

or a qualified EHR, we are finalizing 

only the claims-based reporting 

mechanism for purposes of the 2012 

payment adjustment. It is not 

operationally feasible for us to accept 

the data submissions from the EHRs and 

registries in the timeframe needed for us 

to be able to have sufficient time to be 

analyze the data and make the 

determination whether an eligible 

professional is subject to the 2012 

payment adjustment prior to January 1, 

2012. 

For purposes of determining whether 

an eligible professional is a physician 

(includes MDs, DOs, and podiatrists), 

nurse practitioner, or physician 

assistant we will use National Plan & 

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. Since there are concerns about 

the reliability of the specialty 

information contained in NPPES, we are 

also establishing a G-code that eligible 

professionals can use to report to us that 

they do not have prescribing privileges. 

Eligible professionals who do not have 

prescribing privileges must report this 

G-code on at least one claim with dates 

of service between January 1, 2011 and 

June 30, 2011, and processed by no later 

than one month after the reporting 

period. 

(3) Criteria for Determining 

Applicability of the 2012 eRx Payment 

Adjustment to Group Practices 

As required by 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 eRx payment 

adjustment. Thus, we proposed that for 

purposes of the 2012 eRx payment 

adjustment, a payment adjustment 

would not be applied to a group practice 

participating in the 2011 eRx GPRO if 

the group practice is participating in 

either the 2011 Physician Quality 

Reporting System GPRO I or the 2011 

Physician Quality Reporting System 

GPRO II and meets the proposed 2011 

criteria for successful electronic 

prescribing for the 2011 eRx incentive 

(75 FR 40209). For purposes of the 2012 

eRx payment adjustment, however, we 

proposed that the 2011 eRx incentive 

criteria for successful electronic 

prescribing would need to be satisfied 

during the 2012 eRx payment 

adjustment reporting period of January 

1, 2011 through June 30, 2011, for the 

same operational reasons that we 

proposed a 6-month reporting period for 

the payment adjustment for individual 

eligible professionals. 

For purposes of determining whether 

the eRx payment adjustment applies to 

a group practice, we proposed to 

analyze each unique TIN/NPI 

combination so as not to disadvantage 

eligible professionals who may have 

joined the group practice after January 

1, 2011 (75 FR 40209). 

In addition, in accordance with the 

limitation under section 

1848(m)(2)(B)(i) of the Act, we proposed 

that the 2012 eRx payment adjustment 

would not apply to an eRx GPRO in 

which less than 10 percent of the group 

practice’s estimated total allowed 

charges for the January 1, 2011 through 

June 30, 2011 reporting period are 

comprised of services which appear in 

the denominator of the 2011 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. 

For the same reasons that we 

proposed a 6-month reporting period for 

the 2012 eRx payment adjustment for 

group practices, we also proposed to use 

only claims processed by no later than 

1 month after the reporting period in 

our analysis, consistent with our 

proposed approach for analyzing 

individual eligible professional claims. 

Similarly, we proposed that registries 

would need to submit eRx data for 

services furnished January 1, 2011 

through June 30, 2011 to CMS between 

July 1, 2011 and August 19, 2011, so 

that we may include registry data in our 

analysis. We also proposed that group 

practices participating in the eRx group 

practice reporting option via EHR-based 

reporting would be required to submit 

eRx data for services furnished January 

1, 2011 through June 30, 2011 to CMS 

between July 1, 2011 and August 19, 

2011 (75 FR 40209). 

The following is a summary of the 

comments received on the proposed 

criteria for determining applicability of 

the 2012 eRx payment adjustment to 

group practices, including the proposed 

criteria for successful reporting of the 

electronic prescribing measure for group 

practices, and our proposed analytical 

approach. 

Comment: One commenter suggested 

that we lower the reporting criteria for 

group practices if we finalize our 

proposal to use the 6-month reporting 

period beginning January 1, 2011 to 

determine whether a group practice is 

subject to the 2012 payment adjustment. 

The commenter noted that in 

determining the volume for the group 

incentive payment, we assume that not 

all eligible professionals in the practice 

would be electronically prescribing. The 

commenter believes that the same 

assumption should be applied for 

purposes of the payment adjustment 

determination. 

Response: As we stated in the 

proposed rule (75 FR 40209), we do not 

believe that group practices would be 

disadvantaged by having to satisfy the 

criteria for being a successful eprescriber for the 2011 eRx incentive in 

6 months to avoid the 2012 eRx 

payment adjustment. When compared to 

the criteria for individual eligible 

professionals reporting the electronic 

prescribing measure for purposes of the 

payment adjustment, the criteria for 

being a successful electronic prescriber 

for the 2011 eRx payment adjustment 

for group practices enable group 

practices, on average, to avoid the 

incentive by electronically prescribing a 

fewer number of prescriptions per 

eligible professionals than what 

individual eligible professionals are 

required to do. Therefore, we are not 

lowering the reporting criteria for 

successful electronic prescribers for 

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purposes of determining applicability of 

the 2012 eRx payment adjustment to 

group practices. By having the same 

reporting criteria for purposes of both 

the payment adjustment and incentive 

payment, group practices have the 

added advantage of knowing that they 

have successfully electronically 

prescribed for purposes of the 2011 

incentive payment once they have 

successfully electronically prescribed 

for purposes of the 2012 payment 

adjustment, since the reporting periods 

for the 2011 incentive and 2012 

payment adjustment overlap. 

After consideration of the comments 

received and for the reasons we 

discussed previously, we are finalizing 

the criteria for determining applicability 

of the 2012 eRx payment adjustment to 

group practices. However, for the 

reasons discussed previously with 

regard to the reporting mechanisms for 

submitting data on the electronic 

prescribing measure during 2011 for 

purposes of the 2012 payment 

adjustment, we are finalizing only the 

claims-based reporting mechanism. 

Thus, for the 2012 eRx payment 

adjustment, we are not finalizing eRx 

data submission by group practices via 

a qualified registry or qualified EHR. 

In addition, while we had proposed to 

analyze each unique TIN/NPI 

combination to see whether the 

payment adjustment applies on an 

individual basis if the group practice 

fails to satisfy the criteria that would 

exempt the group practice from being 

subject to the 2012 eRx payment 

adjustment, we are unable to finalize 

this proposal as this would add 

significant time to our data analyses and 

could delay our ability to determine 

applicability of the 2012 payment 

adjustment in a timely fashion. 

(4) Significant Hardship Exemption 

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, such in the case of an eligible 

professional who practices in a rural 

area without sufficient Internet access. 

Therefore, we proposed that in addition 

to meeting the criteria for a successful 

electronic prescriber, an eligible 

professional or group practice may also 

be exempt from application of the 2012 

eRx payment adjustment, if, during the 

2012 eRx payment adjustment reporting 

period (that is, January 1, 2011 through 

June 30, 2011), one of the following 

circumstances applies to the eligible 

professional or group practice: 

• The eligible professional or group 

practice practices in a rural area with 

limited high speed internet access; or 

• The eligible professional or group 

practice practices in an area with 

limited available pharmacies for 

electronic prescribing. 

We proposed to add two additional 

‘‘G’’ codes to the 2011 electronic 

prescribing measure’s specifications 

describing these 2 circumstances. 

Eligible professionals or group practices 

to whom one or more of these 

circumstances apply would be required 

to report the appropriate G-code at least 

once between January 1, 2011 and June 

30, 2011 using their selected 2011 eRx 

reporting mechanism. Reporting of one 

of these two G-codes prior to June 30, 

2011 will indicate to us that the eligible 

professional or group practice would 

like to be considered for an exemption 

from the 2012 payment adjustment 

under the significant hardship 

exception (75 FR 40209). 

The following is a summary on the 

comments we received regarding our 

proposal for the significant hardship 

exemption and our responses. 

Comment: One commenter supported 

the proposed process for the significant 

hardship exemption and did not offer 

any other circumstances that should 

also be considered a significant 

hardship. 

Response: We appreciate the 

commenter’s supportive comments. 

Comment: While our 

acknowledgement of hardship 

circumstances was appreciated, several 

commenters suggested we add more 

hardship exemption categories, or 

offered additional hardship 

circumstances for our consideration. 

Specifically, commenters requested that 

the following hardship circumstances be 

added to the payment adjustment 

exemption list: (1) Physicians who are 

nearing the end of their careers, (2) 

physicians who are currently eligible for 

Social Security benefits or will be 

eligible for Social Security benefits by 

2014, (3) physicians who plan on 

participating in the EHR incentive 

program beginning in 2012, 2013, or 

2014, (4) DEA e-prescribers, (5) small 

practices (that is, 1 to 2 physicians), (6) 

practices located in Health Professional 

Shortage Areas (HPSAs), (7) physicians 

who cannot meet the requirements due 

to patient preference, and (8) hospitalbased eligible professionals. 

Commenters stated that physicians 

nearing retirement age or in small 

practices may find it difficult to justify 

the cost of implementing these systems. 

Several commenters noted that many 

physicians have postponed purchasing 

electronic prescribing software in order 

to take advantage of the EHR incentives. 

Finally, commenters argued that 

physicians who electronically prescribe 

controlled substances should have 

additional time to comply with the eRx 

Incentive Program requirements as the 

DEA compliant electronic prescribing 

applications are not yet available. 

Response: We appreciate the 

commenters’ feedback and are actively 

working on G-codes for eligible 

professionals to report the significant 

hardship categories we proposed for the 

2012 eRx payment adjustment. We do 

not believe, however, that any of the 

suggested additional hardship categories 

constitute a circumstance that limits an 

eligible professional’s access to 

electronic prescribing in the way that 

the two hardship exemptions we 

proposed do. We also believe that 

eligible professionals who are nearing 

retirement or are eligible for Social 

Security benefits still have the 

opportunity to purchase and use 

electronic prescribing technology even 

though they may not have a business 

case for doing so. With respect to the 

other hardship exemptions specifically 

requested by commenters (such as, 

hospital-based eligible professionals, 

DEA e-prescribers and physicians who 

cannot meet the requirements due to 

patient preferences), we believe that we 

have already taken these circumstances 

into account when we established the 

reporting threshold for the electronic 

prescribing and the other criteria that 

would subject an eligible professional to 

the eRx payment adjustment. Therefore, 

we are finalizing the two hardship 

exemption G-codes that we proposed. 

Comment: A couple of commenters 

requested that we further define terms 

such as ‘‘rural areas,’’ areas with ‘‘limited 

high speed internet access,’’ and 

‘‘limited availability of pharmacies.’’ 

Response: We are actively working to 

develop G-codes for eligible 

professionals to report the eRx hardship. 

Once we finalize the G-codes, we will 

provide additional guidance with 

regards to the hardship exemptions 

categories associated with the eRx 

payment adjustment along with 

education and outreach with regard to 

the 2012 payment adjustment under the 

eRx Incentive Program. 

After considering the comments 

received, we are finalizing the following 

hardship exemptions for purposes of the 

2012 eRx payment adjustment: 

• Eligible professionals who practice 

in a rural area without sufficient high 

speed internet access; and 

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• Eligible professionals who practice 

in an area without sufficient available 

pharmacies for electronic prescribing. 

We are creating G-codes to address 

these 2 situations. Since the hardship 

exception must be renewed on an 

annual basis, we have deleted the 

proposed language at § 414.92(c)(2)(ii) 

that listed specific circumstances that 

constitute a ‘‘significant hardship.’’ For 

future years and in future rulemaking, 

we will address the circumstances that 

will constitute a significant hardship for 

each year. 

Eligible professionals for whom one 

or more of these circumstances apply 

must report the appropriate G-code at 

least once between January 1, 2011 and 

June 30, 2011 using claims. Group 

practices who wish to participate in the 

2011 eRx GPRO and for whom one or 

more of these circumstances apply must 

request a hardship exemption at the 

time they self-nominate by indicating 

the appropriate G-code in their selfnomination letter to CMS. Reporting of 

one of these G-codes prior to June 30, 

2011 will indicate to us that the eligible 

professional or group practice would 

like to be considered for an exemption 

from the eRx 2012 payment adjustment 

under the significant hardship 

exception. 

d. The 2013 eRx Payment Adjustment 

Section 1848(a)(5) of the Act also 

requires that with respect to covered 

professional services furnished by an 

eligible professional in 2013, if the 

eligible professional is not a successful 

electronic prescriber for the reporting 

period for the year, the fee schedule 

amount for such services furnished by 

such professional during 2013 shall be 

equal to 98.5 percent of the fee schedule 

amount that would otherwise apply to 

such PFS services. 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 eRx 

payment adjustment. 

For purposes of the 2013 eRx payment 

adjustment, we proposed to use the 

proposed criteria for successful 

electronic prescriber for the proposed 

2011 eRx incentive payment to 

determine whether an eligible 

professional or a group practice is a 

successful electronic prescriber for 

purposes of the 2013 eRx payment 

adjustment. In addition, we proposed 

that the reporting period for the 2013 

eRx payment adjustment would be 

January 1, 2011 through December 31, 

2011 (75 FR 40210). We believe that 

matching the criteria that will be 

applied for the 2013 eRx payment 

adjustment with the criteria that will be 

applied for the 2011 eRx incentive 

payment in an earlier year would be the 

most effective means of encouraging 

eligible professionals and group 

practices to adopt and use electronic 

prescribing systems since anyone who 

does not qualify for an incentive in 2011 

would be subject to a payment 

adjustment in 2013. 

The following is a summary of the 

comments received on our proposal for 

the 2013 eRx payment adjustment. 

Comment: We received comments 

similar to the ones opposing the 

proposed 2012 eRx payment adjustment 

reporting period, with regard to the 

proposed 2013 eRx payment adjustment 

reporting period. One commenter 

suggested that the proposed reporting 

period for purposes of the 2013 eRx 

payment adjustment be changed so the 

2012 and 2013 eRx payment 

adjustments do not overlap. Another 

commenter suggested that the 2013 

payment adjustment be based on claims 

reported during the first half of 2012 to 

better reflect expected increases in eRx 

adoption, including increases due to the 

EHR Incentive Program. 

Response: We understand the 

commenters’ concerns that the reporting 

periods for purposes of the 2012 and 

2013 eRx payment adjustments overlap. 

We note that section 1848(a)(5)(C)(D) 

gives us the authority to specify the 

reporting period with respect to a year. 

As such, we may consider revisiting in 

the 2012 PFS rulemaking process 

additional reporting periods in 2012 for 

purposes of the 2013 eRx payment 

adjustment since having multiple 

reporting periods for purposes of the 

payment adjustment will maximize 

opportunities for eligible professionals 

to avoid the 2013 payment adjustment. 

After considering the comments 

received and for the reasons we 

previously explained, we are finalizing 

our proposal to use the 2011 eRx 

incentive payment criteria for successful 

electronic prescriber as described in 

section VII.F.2.b. of this final rule with 

comment period to determine whether 

an eligible professional or a group 

practice is a successful electronic 

prescriber for purposes of the 2013 eRx 

payment adjustment based on the 

January 1, 2011 through December 31, 

2011 reporting period. However, we 

may consider revisiting the criteria for 

the 2013 payment adjustment in the 

context of 2012 reporting periods in the 

2012 PFS proposed and final rules. 

e. Public Reporting of Names of 

Successful Electronic Prescribers 

Section 1848(m)(5)(G) of the Act 

requires the Secretary to post on the 

CMS Web site, in an easily 

understandable format, a list of the 

names of eligible professionals (or group 

practices) who satisfactorily submit data 

on quality measures for the Physician 

Quality Reporting System and the 

names of the eligible professionals (or 

group practices) who are successful 

electronic prescribers. As required by 

section 1848(m)(5)(G) of the Act, we 

proposed to make public the names of 

eligible professionals and group 

practices who are successful electronic 

prescribers for the 2011 eRx Incentive 

Program on the Physician Compare Web 

site that we are required to establish by 

January 1, 2011 under section 10331 of 

the ACA. 

The following is a summary of the 

comments received regarding public 

reporting of successful electronic 

prescribers. 

Comment: A few commenters 

expressed concerns about posting the 

names of successful e-prescribers. One 

commenter was concerned that the 

public would not be able to correctly 

identify a successful e-prescriber as a 

professional who has met the reporting 

requirements for the eRx Incentive 

Program. One commenter was 

concerned that individuals using this 

information to make health care 

decisions may do so without fully 

understanding the methodology and the 

program requirements. The commenters 

suggested that CMS take appropriate 

measures to ensure the accuracy of the 

list of successful e-prescribers and to 

provide the appropriate disclaimers for 

the Web site listing. 

Response: We will make every effort 

to ensure that the list of successful eprescribers that we will post on the 

Physician Compare Web site is accurate. 

We also intend to include explanatory 

language with information on the 

intended uses and/or limitations of this 

data. 

Based on the comments received, we 

are finalizing our proposal to post the 

names of eligible professionals and 

group practices who are successful 

electronic prescribers for purposes of 

the 2011 eRx incentive on the Physician 

Compare Web site. We anticipate that 

the names of individual eligible 

professionals and group practices who 

are successful electronic prescribers for 

the 2011 eRx Incentive Program will be 

available in 2012 after the 2011 

incentive payments are paid. 

To comply with section 1848(m)(5)(G) 

of the Act, we specifically intend to post 

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the names of individual eligible 

professionals who report the electronic 

prescribing measure at least 25 times 

during the 2011 reporting period for 

patient encounters included in the 

measure’s denominator, without regard 

to whether the limitation under section 

1848(m)(2)(B) of the Act applies to the 

eligible professional and without regard 

to whether the eligible professional 

actually qualifies to earn an incentive 

payment. In addition, since the 

Physician Quality Reporting System and 

the eRx Incentive Program are two 

separate programs and individual 

eligible professionals are not required to 

participate in both programs to earn an 

incentive under either program, we 

point out that it is possible for an 

eligible professional who participates in 

both incentive programs to be listed 

both as an individual eligible 

professional who satisfactorily submits 

data on quality measures for the 

Physician Quality Reporting System and 

is a successful electronic prescriber 

under the eRx Incentive Program. 

Likewise, if an eligible professional 

participated in both incentive programs 

but did not meet the respective 

requirements for both programs, he or 

she may be listed as an individual 

eligible professional who satisfactorily 

submits data on quality measures for the 

Physician Quality Reporting System 

only or as a successful electronic 

prescriber under the eRx Incentive 

Program only. 

Similarly, for purposes of publicly 

reporting the names of group practices, 

on the Physician Compare Web site, we 

intend to post the names of group 

practices that report the electronic 

prescribing measure the required 

number of times during the 2011 

reporting period for patient encounters 

included in the measure’s denominator 

without regard to whether the limitation 

under section 1848(m)(2)(B) of the Act 

applies to the group practice or whether 

the group practice actually qualifies to 

earn an incentive payment. Although 

any group practice participating in the 

eRx Incentive Program under the group 

practice reporting option would also 

have to participate in a Physician 

Quality Reporting System group 

practice reporting option, the criteria for 

satisfactory reporting of Physician 

Quality Reporting System measures for 

group practices are different from the 

criteria for successful reporting of the 

electronic prescribing measure by group 

practices. Therefore, it is possible for a 

group practice to be listed as a group 

practice that satisfactorily submits data 

on quality measures for the Physician 

Quality Reporting System but not as a 

successful electronic prescriber under 

the eRx Incentive Program, or vice 

versa. 

G. DMEPOS Provisions 

1. Medicare Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies (DMEPOS) Competitive 

Bidding Program (CBP) 

a. Legislative and Regulatory History of 

DMEPOS CBP 

Medicare pays for most DMEPOS 

furnished after January 1, 1989 pursuant 

to fee schedule methodologies set forth 

in section 1834 of the Act, as added by 

section 4062 of the Omnibus Budget 

Reconciliation Act of 1987 (OBRA ’87) 

(Pub. L. 100–203). Specifically, sections 

1834(a)(1)(A) and (B), and 1834 (h)(1)(A) 

of the Act provide that Medicare 

payment for these items is equal to 80 

percent of the lesser of the actual charge 

for the item or the fee schedule amount 

for the item. We implemented this 

payment methodology at 42 CFR Part 

414, Subpart D of our regulations. 

Sections 1834(a)(2) through (a)(5) and 

1834(a)(7) of the Act, and implementing 

regulations at § 414.200 through 

§ 414.232 (with the exception of 

§ 414.228), set forth separate payment 

categories of durable medical equipment 

(DME) and describe how the fee 

schedule for each of the following 

categories is established: 

• Inexpensive or other routinely 

purchased items (section 1834(a)(2) of 

the Act and § 414.220 of the 

regulations); 

• Items requiring frequent and 

substantial servicing (sections 1834(a)(3) 

of the Act and § 414.222 of the 

regulations); 

• Customized items (section 

1834(a)(4) of the Act and § 414.224 of 

the regulations); 

• Oxygen and oxygen equipment 

(section 1834(a)(5) of the Act and 

§ 414.226 of the regulations); 

• Other items of DME (section 

1834(a)(7) of the Act and § 414.229 of 

the regulations). 

For a detailed discussion of payment 

for DMEPOS under fee schedules, see 

the final rule published in the April 10, 

2007 Federal Register (72 FR 17992). 

Blood glucose testing strips or 

diabetic testing strips are covered under 

the Medicare DME benefit in accordance 

with section 1861(n) of the Act. Other 

supplies that are necessary for the 

effective use of DME are also covered 

under the Medicare DME benefit in 

accordance with longstanding program 

instructions at section 110.3 of chapter 

15 of the Medicare Benefit Policy 

Manual. 

Section 1847 of the Act, as amended 

by section 302(b)(1) of the MMA, 

requires the Secretary to establish and 

implement a DMEPOS CBP. Under the 

DMEPOS CBP, Medicare sets payment 

amounts for selected DMEPOS items 

and services furnished to beneficiaries 

in competitive bidding areas (CBAs) 

based on bids submitted by qualified 

suppliers and accepted by Medicare. For 

competitively bid items, these new 

payment amounts, referred to as ‘‘single 

payment amounts (SPA),’’ replace the 

fee schedule payment methodology. 

Section 1847(b)(5) of the Act provides 

that Medicare payment for these 

competitively bid items and services is 

made on an assignment-related basis 

equal to 80 percent of the applicable 

SPA, less any unmet Part B deductible 

described in section 1833(b) of the Act. 

Section 1847(b)(2)(A)(iii) of the Act 

prohibits the awarding of contracts to 

any entity unless the total amounts to be 

paid to contractors in a CBA are 

expected to be less than the total 

amounts that would otherwise be paid 

under the fee schedule methodologies 

set forth in section 1834(a) of the Act. 

This requirement guarantees savings to 

both the Medicare program and 

beneficiaries under the program. The fee 

schedule methodologies will continue 

to set payment amounts for 

noncompetitively bid DMEPOS items 

and services. The program also includes 

provisions to ensure beneficiary access 

to quality DMEPOS items and services. 

Section 1847(b)(2)(A) and 1847(b)(4)(B) 

of the Act, respectively, limits 

participation in the program to 

suppliers who have met applicable 

quality and financial standards and 

requires the Secretary to maintain 

beneficiary access to multiple suppliers. 

When first enacted by the Congress, 

section 1847(a)(1)(B) of the Act required 

the Secretary to phase in the DMEPOS 

CBP in a manner so that the competition 

under the program occurred in 10 of the 

largest metropolitan statistical areas 

(MSAs) in 2007. The program was to be 

expanded into 70 additional MSAs in 

2009, and then into additional areas 

after 2009. 

In the May 1, 2006 Federal Register 

(72 FR 25654), we issued a proposed 

rule that would implement the DMEPOS 

CBP for certain DMEPOS items and 

services and solicited public comment 

on our proposals. In the April 10, 2007 

Federal Register (72 FR 17992), we 

issued a final rule addressing the 

comments on the proposed rule and 

establishing the regulatory framework 

for the DMEPOS CBP in accordance 

with section 1847 of the Act. 

Consistent with the requirements of 

section 1847 of the Act and the 

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competitive bidding regulations, we 

began implementation of the program by 

conducting the first round of 

competition in 10 of the largest MSAs 

in 2007. We limited competition during 

this first round of the program to 

DMEPOS items and services included in 

10 selected product categories, 

including mail order diabetic supplies. 

The bidding window opened on May 

15, 2007 and was extended to allow 

bidders adequate time to prepare and 

submit their bids. We then evaluated 

each submission and awarded contracts 

consistent with the requirements of 

section 1847(b)(2) of the Act and 

§ 414.414. Following the bid evaluation 

process, we awarded over 329 contracts 

to qualified suppliers. 

The DMEPOS CBP was effective on 

July 1, 2008. Beginning on that date, 

Medicare coverage for competitively bid 

DMEPOS items and services furnished 

in the first 10 CBAs was limited to items 

and services furnished by contract 

suppliers and/or grandfathered 

suppliers of oxygen and oxygen 

equipment and rented DME, unless an 

exemption applies as stated in the 

regulation. For further discussion of the 

DMEPOS CBP and the bid evaluation 

process, see the final rule published in 

the April 10, 2007 Federal Register (72 

FR 17992). 

On July 15, 2008, the MIPPA was 

enacted. Section 154 of the MIPPA 

amended section 1847 of the Act to 

make certain limited changes to the 

DMEPOS CBP. Section 154(a) of the 

MIPPA delayed competition under the 

program and amended section 

1847(a)(1)(D)(i) of the Act to terminate 

the competitive bidding contracts 

effective June 30, 2008 and prohibit 

payment based on the contracts. 

Section 154(a) of the MIPPA required 

the Secretary to conduct a second 

competition to select suppliers for 

Round 1 in 2009 (‘‘Round 1 Rebid’’). The 

Round 1 Rebid includes the ‘‘same items 

and services’’ and is to be conducted in 

the ‘‘same areas’’ as the 2007 Round 1 

competition, with certain limited 

exceptions. Specifically, we were 

required to exclude the product category 

of negative pressure wound therapy 

(NPWT) items and services and the San 

Juan, Puerto Rico CBA from the Round 

1 Rebid. In addition, section 154(a) of 

the MIPPA permanently excluded group 

3 complex, rehabilitative wheelchairs 

from the DMEPOS CBP by amending the 

definition of ‘‘items and services’’ in 

section 1847(a)(2) of the Act. Section 

154(a) of the MIPPA delayed 

competition for Round 2 of the 

DMEPOS CBP from 2009 to 2011, and 

subsequent competitions under the 

program to after 2011. Finally, section 

154(a) of the MIPPA specifically 

addresses the phase in of a competition 

for national mail order items and 

services by specifying that such 

competitions may be phased in after 

2010. 

b. Implementation of a National Mail 

Order DMEPOS Competitive Bidding 

Program (CBP) for Diabetic Testing 

Supplies 

Section 1847(a)(2)(A) of the Act 

mandates competitive bidding programs 

for supplies used in conjunction with 

durable medical equipment, such as 

blood glucose monitors used by 

beneficiaries with diabetes to test their 

blood glucose levels. Replacement of 

supplies used with these monitors are 

referred to under the DMEPOS CBP as 

diabetic supplies or diabetic testing 

supplies such as blood glucose test 

strips and lancets. In the April 10, 2007 

final rule (72 FR 17992) implementing 

the DMEPOS CBP, we established 

regulations to implement competitions 

on a regional or national level for 

certain items such as diabetic testing 

supplies that are furnished on a mail 

order basis. We explained our rationale 

for establishing a national DMEPOS CBP 

for items furnished on a mail order basis 

in the May 1, 2006 proposed rule (71 FR 

25669) and April 10, 2007 final rule (72 

FR 18018). In the case of diabetic 

supplies and other items furnished by 

local neighborhood pharmacies, 

establishing a competition for items 

furnished on a mail order basis would 

exempt local pharmacies from 

competing with national mail order 

suppliers while preserving the choice of 

the beneficiary to go to any local 

pharmacy to pick up their diabetic 

supplies. Manufacturers and suppliers 

have stated to CMS at different meetings 

on numerous occasions that the choice 

for beneficiaries to obtain diabetic 

supplies from local pharmacies with 

licensed pharmacists in house who can 

provide instructions and guidance to 

beneficiaries related to their testing 

needs is important and needs to be 

preserved. 

In the January 16, 2009 Federal 

Register (74 FR 2873), we published an 

interim final rule implementing certain 

changes to the DMEPOS CBP. 

Specifically, the rule implemented 

certain MIPPA provisions that delayed 

implementation of Round 1 of the 

program, required CMS to conduct a 

second Round 1 competition in 2009, 

and mandated certain changes for both 

the Round 1 Rebid and subsequent 

rounds of the program. In the January 

16, 2009 interim final rule, we indicated 

that we would be considering 

alternatives for competition of diabetic 

testing supplies in future notice and 

comment rulemaking. We explained 

that we believed it was consistent with 

section 1847(a) to employ competitive 

bidding for diabetic suppliers in both 

the mail order and traditional retail 

markets, in part due to concerns raised 

about the bifurcation of the method of 

delivery of diabetic supplies and the 

difficulty in defining what constitutes 

‘‘mail order’’ for purposes of 

competition. 

In the July 13, 2010, proposed rule (75 

FR 40211), we discussed alternatives for 

competition of diabetic testing supplies 

and proposed the implementation of a 

revised national mail order DMEPOS 

CBP for diabetic testing supplies. Under 

the proposed mail order DMEPOS CBP, 

we would award contracts to suppliers 

to furnish these items across the nation 

to beneficiaries who elect to have 

replacement diabetic testing supplies 

delivered to their residence. Suppliers 

wishing to furnish these items through 

mail order to Medicare beneficiaries 

would be required to submit bids to 

participate in the national mail order 

DMEPOS CBP for diabetic testing 

supplies. In addition, we proposed to 

revise the national mail order program 

for diabetic testing supplies DMEPOS 

CBP by implementing the following 

changes: 

• Revision of § 414.402 to include 

definitions of: ‘‘National mail order 

DMEPOS CBP,’’ ‘‘Mail order item,’’ and 

‘‘Non-mail order item.’’ We proposed 

these new definitions to establish a clear 

distinction between mail order items 

and non-mail order items. These revised 

definitions would apply to all future 

competitions for mail order items and 

services. 

• Addition of § 414.411 to implement 

the special rule mandated by section 

1847(b)(10)(A) of the Act for 

competitions for diabetic testing strips 

following the Round 1 Rebid. Section 

1847(b)(10)(A) requires suppliers 

bidding in competitions to furnish 

diabetic testing strips after the Round 1 

Rebid to demonstrate that their bid 

covers at least 50 percent of all types of 

diabetic testing strips furnished by 

suppliers. If the supplier is not able to 

satisfy this requirement, the Secretary 

must reject that bid. 

• Revision of § 414.422 to include an 

additional term in contracts of mail 

order suppliers of diabetic testing 

supplies following the Round 1 Rebid. 

The proposed term would prohibit 

suppliers from influencing or 

incentivizing beneficiaries to change 

their brand of glucose monitor and test 

strips. 

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73568 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

(1) Future Competitions for Diabetic 

Testing Supplies 

Section 1847(a)(1)(A) of the Act 

mandates the establishment of DMEPOS 

CBP for items described in section 

1847(a)(2)(A) of the Act, including 

diabetic testing supplies. Section 

1847(a)(1)(B)(ii) of the Act authorizes 

the phase in of items and services under 

these programs beginning with the 

highest cost and highest volume items 

and services or those items and services 

that are determined to have the largest 

savings potential. Current Medicare 

claims data from fiscal year 2009 shows 

that over 62 percent of beneficiaries 

currently receive their replacement 

diabetic testing supplies from mail order 

suppliers. Mail order diabetic testing 

supplies account for approximately one 

billion dollars in allowed charges per 

year and are therefore high volume 

items. We believe that a national mail 

order DMEPOS CBP for diabetic testing 

supplies would result in large savings as 

a result of competition between entities 

that would factor into their bids savings 

from volume discount purchasing of 

quantities of supplies needed on a 

national rather than local basis. 

Therefore, we believe that implementing 

a national mail order DMEPOS CBP for 

diabetic testing supplies is the best 

option for meeting the requirements of 

the statute referenced above as long as 

certain refinements discussed below are 

made to the program to address 

concerns about the mail order/non-mail 

order bifurcation. 

We have heard from industry groups 

and suppliers that furnish diabetic 

testing supplies on a national mail order 

basis of their concerns that national 

chain pharmacies that furnish diabetic 

testing supplies through both a national 

mail order business and local retail 

pharmacies will encourage beneficiaries 

to obtain these items from local retail 

locations by offering certain incentives 

to Medicare beneficiaries for switching 

from mail order to local retail. Based on 

our experience from Round 1, we 

believe DMEPOS CBP for mail order 

diabetic testing supplies would be 

subject to manipulation without a 

clearer definition of what we mean by 

mail order. We agree with the industry 

groups and suppliers that have 

indicated that this practice will harm 

businesses that only furnish diabetic 

testing supplies on a mail order basis. In 

order to address these concerns, we are 

proposing to add to § 414.402 a 

definition of ‘‘National mail order 

DMEPOS CBP.’’ We proposed to define 

that term as a program whereby 

contracts are awarded to suppliers for 

the furnishing of mail order items across 

the nation. We believe that 

implementing a national competitive 

bidding program for diabetic supplies 

would preserve beneficiary choice to 

purchase testing supplies in person 

from any local pharmacy that is an 

enrolled Medicare supplier that 

furnishes diabetic supplies, while 

clarifying the definition of mail order 

will provide significant savings 

potential for beneficiaries and the 

program. Savings would be generated in 

the near future from national SPAs for 

supplies furnished on a mail order or 

home delivery basis and on a long term 

basis for all diabetic supplies as a result 

of the requirement of section 

1834(a)(1)(F) of the Act (as amended by 

section 6410(b) of the ACA) to either 

competitively bid in all areas or adjust 

prices in all areas by January 1, 2016. 

We believe that more beneficiaries will 

elect to choose the mail order/home 

delivery option, thereby further 

increasing short term savings under the 

program. Even if this is not the case, and 

the percentage of beneficiaries choosing 

the mail order/home delivery option 

remains at the current rate of 62 percent, 

savings for the remaining 38 percent 

must be achieved by no later than 

January 1, 2016, as a result of the 

requirements of section 1834(a)(1)(F) of 

the Act. 

We considered other alternatives for 

establishing DMEPOS CBP for diabetic 

testing supplies that would eliminate 

the mail order/non-mail order 

bifurcation and associated concerns. 

These alternatives include the 

following: 

• A national competition among all 

types of suppliers for all replacement 

diabetic supplies. Under this 

alternative, all beneficiaries would 

receive their replacement diabetic 

supplies from contract suppliers 

responsible for furnishing diabetic 

supplies throughout the nation using 

any method of delivery as long as the 

supplies are delivered on a timely basis. 

• Competitions in regional CBAs 

among all types of suppliers for all 

replacement diabetic supplies. Under 

this alternative, all beneficiaries would 

receive their replacement diabetic 

supplies from contract suppliers 

responsible for furnishing diabetic 

supplies throughout a designated region 

of the country using any method of 

delivery to a beneficiary’s home as long 

as the supplies are delivered on a timely 

basis. 

• Competitions in local CBAs among 

all types of suppliers for all replacement 

diabetic supplies. Under this 

alternative, all beneficiaries would 

receive their replacement diabetic 

supplies from contract suppliers 

responsible for furnishing diabetic 

supplies throughout the local area using 

any method of delivery to a 

beneficiary’s home as long as the 

supplies are delivered on a timely basis. 

We believe that the first option to bid 

on a national basis for all diabetic 

supplies, would result in most 

beneficiaries using mail order and might 

generate more savings than a national 

competition for diabetic supplies 

furnished on a mail order basis only. 

However, this first option would likely 

eliminate the beneficiary choice to 

obtain replacement diabetic supplies on 

a non-mail order basis from any 

enrolled supplier that is a pharmacy or 

other local supplier storefront where a 

licensed pharmacist is on hand to offer 

guidance and consultation to the 

beneficiary. We believe the other two 

options would also diminish this 

choice. In addition, the alternatives of 

regional or local competitions are not 

likely to result in savings at or above the 

level that can be generated from a 

national competition for mail order 

supplies. Suppliers participating in a 

national program may be able to obtain 

volume purchasing discounts for the 

quantities of supplies needed 

nationwide. Therefore, we did not 

propose any of these alternatives but we 

solicited public comment on 

alternatives for establishing DMEPOS 

CBP for diabetic testing supplies. 

In § 414.411, we proposed to establish 

a national mail order DMEPOS CBP 

with competitions taking place after 

2010 for the purpose of awarding 

contracts to suppliers to furnish 

replacement diabetic testing supplies 

across the nation, with additional 

program refinements described below. 

We note that the decision to proceed 

with a national mail order competition 

after 2010 does not prevent us from 

phasing in competitions for non-mail 

order diabetic supplies or from 

conducting competitions for diabetic 

supplies in general in the future 

consistent with section 1847(a)(1) of the 

Act. 

Comment: We received 31 comments 

in response to our proposed regulation 

to implement a national mail order 

DMEPOS CBP for diabetic testing 

supplies. There were several 

commenters that supported the proposal 

made by CMS and a few commenters 

that were opposed to our proposal. The 

commenters in favor of our proposal 

stated they wanted CMS to preserve the 

local storefront option for the 

beneficiary. A few commenters 

specifically stated that CMS should 

maintain retail pharmacies as a 

necessary safety valve, ensuring that 

beneficiaries will have immediate local 

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access to their specific diabetic testing 

supplies. In addition, several 

commenters who supported our 

conducting separate auctions stated that 

our proposal to conduct one 

competition between mail order 

companies and those with a local 

storefront would not be fair because 

these companies have different business 

models, different overhead costs and 

different operational structures. 

Numerous commenters stated that 

beneficiaries get better service from a 

local storefront than they would get 

from a mail order company because 

local storefronts preserve a face-to-face 

pharmacy/patient relationship. 

We also received several comments 

opposed to our proposal to conduct 

separate competitions because they 

believed that gives the local storefronts 

an unfair advantage because they are 

paid more than mail order companies 

for the same product. They suggest that 

CMS should conduct a competition for 

both mail order and non mail order 

under one program. 

Response: We agree with those 

commenters who stated that we need to 

preserve beneficiary choice and access 

to local storefronts to get their diabetic 

testing supplies. We believe that our 

proposal preserves the beneficiaries’ 

choice to go to their local pharmacy to 

pick up their diabetic supplies or 

request that they be sent through the 

mail by a national mail order DMEPOS 

contract supplier. Also, we believe that 

both mail order suppliers and storefront 

suppliers are able to provide the 

necessary services and education to 

their beneficiaries. Therefore, we 

believe our proposal to bid diabetic 

testing supplies when provided through 

the mail will preserve beneficiaries’ 

choice while ensuring they receive 

quality services. We also agree that to 

bid storefronts and mail order 

companies in the same auction may 

make it difficult for small storefronts to 

compete against large mail order 

suppliers. We also believe the difference 

in payment between mail order 

companies and retail stores will not 

harm mail order companies because we 

expect that more beneficiaries will 

choose to obtain their test strips from 

mail order companies to lower their coinsurance payment, generating more 

business for mail order suppliers. In 

addition, non-mail order diabetic 

supplies were not included the first 

round of the competitive bidding 

program and the issue with regard to 

payment for these items under the 

program will be addressed in the future 

as additional items subject to the 

program are phased in. 

Comment: One commenter stated that 

CMS should phase in a regional 

program, rather than moving 

immediately into a national program, 

since CMS and mail order suppliers are 

without sufficient knowledge base or 

experience with the operation of a largescale competitive bidding program and 

its impact on beneficiaries’ access to 

quality care. 

Response: We disagree with this 

comment. We believe that the option to 

bid on a national basis for all mail order 

diabetic supplies would result in large 

savings because of the volume purchase 

power of bidders providing these items 

on a national basis. Currently our data 

shows that over 62 percent of Medicare 

beneficiaries receive their testing 

supplies through the mail, we see no 

real benefit of bidding on a regional 

basis because most mail order suppliers 

operate nationally. We also believe that 

we have experience conducting the 

DMEPOS CBP since we have 

successfully completed the bidding and 

contract offers for Round 1 Rebid and 

the program will begin January 1, 2011. 

We have established a process and will 

evaluate and monitor contract suppliers 

to ensure beneficiaries’ have access to 

quality products. 

Comment: One commenter stated that 

diabetic testing supplies should be 

excluded from DMEPOS CBP because 

CMS does not have any experience with 

this product category with respect to 

competitive bidding, as diabetic 

supplies were not included in any prior 

demonstration project. Several 

commenters suggested that CMS should 

not initiate the bidding process for the 

national mail order DMEPOS CBP until 

it has had sufficient time to evaluate the 

rebid of Round 1. 

Response: Section 1847(a)(1)(A) of the 

Act mandates the establishment of 

DMEPOS CBP for items described in 

section 1847(a)(2)(A) of the Act, 

including diabetic testing supplies. 

Section 1847(a)(1)(B)(ii) of the Act 

authorizes the phase in of items and 

services under these programs 

beginning with the highest cost and 

highest volume items and services or 

those items and services that are 

determined to have the largest savings 

potential. Current Medicare claims data 

identifies diabetic testing supplies as a 

high cost/high volume item. Mail order 

diabetic testing supplies account for 

approximately one billion dollars in 

allowed charges per year and the 

majority of these payments are for mail 

order diabetic testing supplies. In 

addition, CMS does have experience 

bidding these items as they were 

included in both Round 1 and the 

Round 1 rebid. 

Comment: One commenter stated that 

section 1834(a)(1)(F) of the Act does not 

compel CMS to adjust prices for all 

items by January 1, 2016, or any other 

specific date. The commenter stated that 

CMS could elect to continue to exclude 

diabetic testing supplies provided 

through local retail storefronts. 

Response: We are required by section 

1834(a)(1)(F) of the Act to either 

competitively bid in all areas of the 

country or adjust prices for all phased 

in items in areas where competitive 

bidding programs are not implemented 

by January 1, 2016. We intend to 

address specific issues related to 

implementation of clauses (ii) and (iii) 

of section 1834(a)(1)(F) of the Act as 

part of separate rulemaking mandated 

by section 1834(a)(1)(G) of the Act. 

After consideration of the public 

comments we received, we are not 

making any changes to this section of 

the proposed rule on the future 

competitions of diabetic testing 

supplies. 

(2) Definition of Mail Order Item 

We proposed to define ‘‘mail order 

item’’ in § 414.402 to mean any item (for 

example, diabetic testing supplies) 

shipped or delivered to the beneficiary’s 

home, regardless of the method of 

delivery. We also proposed to define 

‘‘non-mail order item’’ as any item (for 

example, diabetic testing supplies) that 

a beneficiary or caregiver purchases at a 

local pharmacy or supplier storefront 

rather than having the item delivered to 

the beneficiary’s home. For round 1 of 

the program, this means that 

beneficiaries that do not obtain their 

testing supplies through mail order may 

purchase these items at a local 

pharmacy or local storefront. Therefore, 

the only items excluded from the mail 

order definition and mail order 

competition would be those that a 

beneficiary or caregiver purchases at a 

local pharmacy or local supplier 

storefront and are not delivered to the 

beneficiary’s home. These revised 

definitions of mail order item and nonmail order item are intended to clearly 

identify which items is truly mail order. 

In addition, we believe this definition 

will preserve the choice of the 

beneficiary to obtain replacement 

diabetic supplies in person from a local 

pharmacy and eliminate the 

circumvention of the mail order 

program. 

As previously discussed, for Round 1 

and the Round 1 Rebid of the DMEPOS 

CBP, we defined mail order contract 

supplier in our regulations at § 414.402 

to mean a contract supplier that 

furnishes items through the mail. We 

further defined mail order in program 

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instructions to mean ‘‘items ordered 

remotely (that is, by telephone, e-mail, 

internet or mail) and delivered to 

beneficiary’s residence by common 

carriers (for example, U.S. Postal 

Service, Federal Express, United Parcel 

Service) and does not include items 

obtained by beneficiaries from local 

storefronts.’’ The intent of the Round 1 

definition was to distinguish between 

mail order supplies (items shipped or 

delivered directly to the beneficiary’s 

home, regardless of the method of 

delivery) and non-mail order supplies 

(items that a beneficiary or caregiver 

picks up in person at a local pharmacy 

or storefront). Manufacturers and 

suppliers of blood glucose monitors and 

test strips have expressed on numerous 

occasions the importance of maintaining 

the patient option of obtaining diabetic 

testing supplies from a local pharmacy 

that provides full time access to a 

licensed pharmacist who can provide 

instructions and guidance to the 

beneficiary or caregiver related to the 

use of the diabetic supplies (the 

pharmacy pickup option). This is the 

‘‘non-mail order’’ option we attempted to 

separate from the mail order option with 

the Round 1 definition of mail order. 

During implementation of Round 1 of 

the program, we discovered that 

suppliers that did not successfully 

compete and win a contract under the 

program tried to adopt certain 

approaches to circumvent the mail order 

definition. In the first round of 

competitive bidding, suppliers that lost 

their bid to be a contract supplier for 

mail order diabetic testing supplies 

considered ways to change their 

delivery methods to circumvent the 

mail order DMEPOS CBP. For example, 

some mail order suppliers considered 

purchasing a fleet of cars to deliver 

these items to the beneficiary’s home so 

as not to be considered a mail order 

supplier. Other suppliers attempted to 

enter into special ‘‘private’’ 

arrangements with well known delivery 

services and claimed that because of 

such arrangements they should not be 

considered mail order suppliers. These 

alternative home delivery methods do 

not provide any benefits to the patient 

beyond what the traditional mail order 

home delivery method offers. They are 

simply ways to continue furnishing 

diabetic supplies on a home delivery 

basis after submitting a bid for mail 

order that does not result in the award 

of a contract under the DMEPOS CBP. 

Without a clear distinction between 

mail order (home delivery option) and 

non-mail order (pharmacy pickup 

option), suppliers could continue to 

attempt to make arrangements as they 

did in the initial Round 1 competition 

to circumvent the DMEPOS CBP. We 

consider these practices to be 

inconsistent with the DMEPOS CBP 

statute and regulations currently in 

effect, and our proposal is intended to 

further clarify the existing definition of 

mail order. Such arrangements prevent 

beneficiaries and the Medicare program 

from realizing savings afforded by the 

mail order DMEPOS CBP and is unfair 

to winning suppliers who bid in good 

faith for a contract for furnishing 

supplies to the home delivery market. 

This proposed definition of mail order 

item would not apply to the Round 1 

Rebid competition because of the 

specific requirement of MIPPA to rebid 

Round 1 in 2009 for the same items and 

services included in the initial Round 1 

competition. However, for a national 

competition, it is imperative that the 

new definition of mail order item be in 

place because of the implications such 

a program would have on the entire 

mail order delivery market in the United 

States. In these future competitions, we 

will continue to emphasize in our 

educational efforts the basic distinction 

between mail order (items shipped or 

delivered to the beneficiary’s home, 

regardless of the method of delivery) 

and non-mail order (items that a 

beneficiary or caregiver picks up in 

person at a local pharmacy or 

storefront). In addition, we will 

continue to take appropriate and 

necessary action against suppliers that 

furnish mail order items and bill for 

them as if they were non-mail order 

items. 

As previously mentioned, an 

alternative DMEPOS CBP for 

replacement diabetic supplies would be 

to hold a national competition among 

all types of suppliers for all replacement 

diabetic supplies. One benefit to this 

approach is that it would eliminate the 

need to differentiate between mail order 

and non-mail order supplies; however, 

it would likely eliminate the pharmacy 

pickup choice since most local 

pharmacies would not be able to service 

the entire CBA if they did not also 

operate a national mail order service. 

We solicited comment on our 

proposed definition of ‘‘mail order’’ and 

its impact on future rounds of bidding. 

We received several comments 

regarding the proposed definition of 

mail order both in favor of and against 

the definition. 

Comment: Several commenters agreed 

with the proposed definition because 

they believe it will result in a clear 

distinction between mail order and nonmail order and reduce the ability of 

suppliers to game the program. A few 

commenters opposed the proposed 

change in definition stating that the 

definition is too broad and therefore, 

could be applied to any DMEPOS item 

delivered to a patient’s home. 

Response: We agree that it is 

important to revise the definition of 

mail order to make a clear distinction 

between mail order and non mail order. 

We believe we cannot make the 

necessary distinction between mail 

order and non-mail order under our 

current definition. With the revised 

definition, beneficiaries will have a 

clear choice to make; they or their 

caregiver can either go to a retail store 

or get their items shipped or delivered 

to their home by any means. If they 

choose to get their items delivered to 

their home they would have their 

supplies delivered by a DMEPOS 

contract supplier who meets our 

qualifications to be a mail order 

supplier of diabetic testing supplies. We 

agree that the definition is broad with 

respect to DMEPOS items in general. 

However, for the reasons previously 

stated, we believe it is necessary to have 

this specific definition of mail order 

item for diabetic testing supplies that 

includes any item shipped or delivered 

to the beneficiary’s home, regardless of 

the method of delivery. However, 

competitions for mail order items may 

not be necessary or appropriate for 

rented equipment or for items that 

require the presence of the supplier in 

the home for inspection, equipment set 

up, and other purposes. We believe that 

mail order competitions may be more 

appropriate for purchased items that do 

not require these in home services. 

Comment: Several commenters 

advocated for exemption from bidding 

as a local storefront and from the 

program when providing diabetic 

testing supplies delivered to the 

patient’s home. These commenters 

believe that this service is necessary for 

some beneficiaries who have difficulty 

getting to a pharmacy. The commenters 

stated that the proposed definition of 

mail order prevents them from 

continuing to service snow bird 

beneficiaries. The commenter supported 

the policy that independent pharmacies 

do not have to bid to continue to 

provide diabetic testing supplies to 

beneficiaries that come into their store, 

but they would also like to continue to 

provide supplies to these beneficiaries 

via mail when they temporarily relocate 

as a snowbird. Several commenters also 

stated that they would like CMS to 

exempt from competitive bidding 

companies that deliver diabetic testing 

supplies directly to a beneficiary’s home 

using their specially trained employees. 

Response: We disagree. We do not 

believe that such an exception is 

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warranted because contract suppliers 

will be able to deliver these items to the 

beneficiary’s home in these situations. If 

the beneficiary or their caregiver would 

normally pick up the beneficiary’s 

supplies in person at a local pharmacy 

they may switch for any reason or any 

period of time and obtain these items 

from a contract mail order supplier. 

Delivery of the supplies from a local 

store is no different than delivery thru 

the mail or some other means from a 

remote location. It would be unfair to 

exempt these companies from 

competitive bidding while still allowing 

them to provide these items when they 

deliver them to the patient’s home. We 

believe that home delivery companies 

should have to bid in the DMEPOS CBP 

and be awarded a contract to continue 

to deliver these items to the home. We 

are not aware of what services are being 

provided by the specially trained 

employees that commenters refer to that 

are different than services that a mail 

order contract supplier would perform. 

The contract suppliers must meet all of 

the supplier and quality standards 

necessary for furnishing the items. The 

supplier of the glucose monitor is 

responsible for ensuring that the 

beneficiary is educated and trained on 

the use of their monitor. Since there are 

no in-home services necessary for 

furnishing replacement diabetic testing 

supplies, we do not understand the 

point these commenters are trying to 

make. We believe that mail order 

suppliers are qualified and capable of 

providing any education and services 

related to the furnishing of the 

replacement diabetic testing supplies. 

Finally, it is important to note that our 

current rules provide great flexibility in 

arranging for the furnishing of 

replacement diabetic testing supplies. 

The program allows beneficiaries to 

receive a 3-month supply of diabetic test 

strips and beneficiaries can order and 

obtain their supplies 5 days in advance 

of the start of the next 3-month period. 

Comment: Several commenters stated 

that mail order companies provide the 

same type of instruction and guidance 

that local pharmacies provide by 

offering hotlines, working with patients 

to educate and coach them on the use 

of glucose monitors, and continued 

patient counseling and monitoring. 

Response: As previously discussed, 

we believe that mail order suppliers are 

qualified and capable of providing any 

necessary services related to the 

furnishing of replacement diabetic 

testing supplies. The same supplier 

standards and quality standards that 

apply to local storefronts that furnish 

these items also apply to mail order 

suppliers. Local home delivery 

companies state that because they have 

local presence they can offer better 

service from specially trained 

employees to meet the needs of the 

beneficiaries. We believe that employees 

of mail order companies are also well 

trained and both companies train their 

employees to address beneficiaries’ 

needs. 

After consideration of the public 

comments received, we are finalizing 

our proposal without modification. 

(3) Special Rule in Case of Competition 

for Diabetic Testing Strips 

Following Round 1 Rebid of the 

program, any competition for diabetic 

testing strips, such as a national mail 

order program for diabetic testing 

supplies proposed in this rule, must 

include the special rule set forth in 

section 1847(b)(10)(A) of the Act. Under 

that section, a supplier must 

demonstrate that their bid to furnish 

diabetic testing strips covers the 

furnishing of a sufficient number of 

different types of diabetic testing strip 

products that, in the aggregate and 

taking into account volume for the 

different products, account for at least 

50 percent of all such types of products 

on the market. Section 1847(a)(10)(A) of 

the Act also specifies that the volume 

for the different products may be 

determined in accordance with data 

(which may include market based data) 

recognized by the Secretary. When a 

beneficiary needs to obtain replacement 

test strips, they must obtain the specific 

brand of test strips products that work 

with their brand and model of blood 

glucose monitor. The test strips are not 

manufactured in a way that allows use 

of different brands of test strips in 

different brands of monitors. Therefore, 

when replacement test strips are 

furnished, the supplier must ensure that 

the specific brand and model of test 

strips that the patient requires for use 

with their purchased monitor is 

furnished. 

Section 1847(b)(10)(B) of the Act 

mandates the DHHS OIG conduct a 

study before 2011 to generate volume 

data for the various products that could 

be used for this purpose. 

Under the DMEPOS CBP, bidding 

suppliers are required to provide 

information on the products they plan 

to furnish if awarded a contract. We 

proposed to use this information and 

information on the market share 

(volume) of the various diabetic testing 

strip products to educate suppliers on 

meeting the requirements of this special 

rule. In addition, it may be necessary to 

obtain additional information from 

suppliers such as invoices or purchase 

orders to verify that the requirements in 

the statute have been met. 

We proposed that suppliers be 

required to demonstrate that their bids 

cover the minimum 50-percent 

threshold provided in the statute, but 

we invited comments on whether a 

higher threshold should be used. We 

have proposed the 50-percent threshold 

in part because we believe that all 

suppliers have an inherent incentive to 

furnish a wide variety of types of 

diabetic testing products to generate a 

wider customer referral base. The 50- 

percent threshold would ensure that 

beneficiaries have access to mail order 

delivery of the top-selling diabetic test 

strip products. In addition, as explained 

below, we proposed an ‘‘anti-switching 

provision’’ that we believe should 

obviate the need to establish a threshold 

of greater than 50 percent for the 

purpose of implementing this special 

rule because the contract suppliers 

would not be able to carry a limited 

variety of products and switch 

beneficiaries to those products. 

For purposes of implementing the 

special rule in section 1847(b)(10)(A) of 

the Act, we proposed to define ‘‘diabetic 

testing strip product’’ as a specific brand 

and model of test strip, as that is the 

best way to distinguish among different 

products. Therefore, we plan to use 

market based data for specific brands 

and models of diabetic test strips to 

determine the relative market share or 

volume of the various products on the 

market that are available to Medicare 

beneficiaries. We plan to review a 

variety of data, including but not 

limited to data furnished in the OIG 

report, to determine the market share of 

the various products. The special rule 

mandated by section 1847(b)(10)(A) of 

the Act applies to all competitions for 

diabetic testing strips after the Round 1 

Rebid of the DMEPOS CBP. Therefore, 

we would apply this rule to non-mail 

order competitions and local 

competitions conducted for diabetic 

testing strips after the Round 1 Rebid of 

the DMEPOS CBP. 

Comment: Several commenters 

supported the requirement for suppliers 

to demonstrate that their bids cover 50 

percent of the diabetic testing strips on 

the market. Other commenters noted 

problems associated with implementing 

the 50-percent rule. A few commenters 

stated that this rule provides an 

advantage to large manufacturers by 

encouraging suppliers to carry more of 

their products and disadvantages small 

manufacturers with limited product 

lines. 

Response: This special rule is 

mandated by the statute which 

stipulates a supplier must demonstrate 

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that its bid to furnish diabetic testing 

strips covers the furnishing of a 

sufficient number of different types of 

diabetic testing strip products that, in 

the aggregate and taking into account 

volume for the different products, to 

account for at least 50 percent of all 

such types of products on the market. 

Suppliers are able to decide from which 

manufacturers to obtain their diabetic 

testing supplies from, but we are 

required to ensure that suppliers are in 

compliance with the special rule before 

awarding a contract to them under the 

DMEPOS CBP. 

Comment: Several commenters are 

concerned that products developed 

between bidding cycles will be frozen 

out of the program for up to 3 years and 

suppliers could be discouraged from 

offering new products until the next 

bidding cycle or up to 3 years after the 

product’s release. 

Response: We disagree that the 50- 

percent rule creates a disincentive for 

manufacturers and innovators to 

develop new and progressive 

technology. This rule does not prevent 

suppliers from offering new products to 

their customers. In fact, suppliers may 

choose to offer new products in order to 

gain market share under the DMEPOS 

CBP. In addition, we believe that the 

anti-switching rule would create a 

strong incentive for contract suppliers to 

carry a wide range of products well 

beyond the 50-percent threshold in 

order to increase their volume of 

business. Contract supplier would have 

to carry the brand test strips that work 

with new products that are successfully 

marketed to Medicare beneficiaries. 

Comment: Several commenters stated 

that the minimum 50-percent threshold 

required by the statute may be 

insufficient to ensure that suppliers 

carry a wide array of available products. 

Other commenters recommended that 

CMS require suppliers to carry a more 

clinically diverse array of products. 

Without this change they believe 

suppliers could limit the range of 

diabetic testing supplies by only 

offering the lowest cost versions of those 

supplies. 

Response: We disagree. We believe 

that the 50-percent threshold is 

sufficient to ensure that contract 

suppliers offer the products that 

physicians and beneficiaries prefer 

because it will be extremely difficult for 

suppliers to limit the number of 

products they offer to the lowest cost 

versions unless those are also the top 

selling products. We believe that the top 

selling products are widely used 

because physicians and beneficiaries 

prefer them rather than because they are 

the cheapest products available. We do 

not believe that physicians and 

pharmacists would continue to 

recommend products to beneficiaries if 

they did not meet the needs of the 

specific beneficiaries. Likewise, we do 

not believe that beneficiaries who 

choose certain products would continue 

to use those products and make them 

top-selling products if they did not 

adequately meet their needs. Due to 

widespread manufacturer rebates, tradeins, and other discounts, beneficiaries 

and other consumers are able to 

purchase new glucose monitor products 

at little or no cost. Therefore, 

beneficiaries who are unhappy with 

their choice of glucose monitor product, 

can easily switch to another brand of 

monitor. It would be extremely difficult 

for suppliers who only elect to furnish 

products that are not top-selling 

products to reach the 50-percent 

threshold. 

Comment: One commenter stated that 

the 50-percent rule is a strong 

beneficiary protection and that the 50- 

percent rule will not work without 

enforcement of the anti-switching rule. 

Response: We agree that the 50- 

percent threshold would ensure that 

beneficiaries have access to mail order 

delivery of the top-selling diabetic test 

strip brands and models. We also agree 

that the 50-percent rule would be more 

effective with implementation of the 

anti-switching rule. 

Comment: One commenter 

recommended that when CMS 

determines the product list they should 

identify the brands and products that 

have been furnished through the mail. 

This is important because market share 

data for mail order and retail medical 

supply establishments are not the same. 

Response: We agree. The DHHS OIG 

is conducting a study to generate 

volume data for various diabetic testing 

strip products furnished on a mail order 

basis. We will use this data in providing 

guidance to implement this special rule 

for mail order contract suppliers to 

ensure that their bids cover at least 50 

percent of the volume of testing strip 

products currently furnished to 

beneficiaries via mail order. The OIG is 

required to complete their study before 

2011 and will make their data available 

to the public. 

Comment: A few commenters believe 

that the proposed rule does not indicate 

how CMS will determine compliance 

with the percentage standard. The 

commenters urge CMS to do more than 

analyze a supplier’s bid to determine 

compliance. They suggest CMS develop 

mechanisms to ‘‘look back’’ at a 

supplier’s actual performance over a 

period of time, preferably on a monthly 

basis for the first year of the program’s 

operation. Also, CMS could review 

supplier’s records, such as invoices and 

purchase orders, to verify compliance 

with the requirement. 

Response: We agree with this 

comment and the need for CMS to 

ensure compliance with the special rule. 

Suppliers will be required to submit 

information to document that their bid 

covers at least 50 percent of the 

products available to beneficiaries. In 

addition, contract suppliers will be 

required to submit quarterly reports that 

include information on the items that 

the contract supplier has furnished for 

the quarter. These quarterly reports will 

indicate the approximate number of 

items furnished, manufacturer, model 

and model number of the items 

furnished. The quarterly reports will 

enable us to monitor access to different 

products under the program. 

Comment: One commenter stated that 

the 50-percent rule fails to meets the 

non-discrimination requirement. 

Response: We disagree. The nondiscrimination requirement does not 

conflict with the 50-percent rule. 

Contract suppliers must furnish the 

same products to Medicare patients that 

they furnish to their other customers 

and these products must make up at 

least 50 percent of the volume of items 

available. Neither requirement prevents 

the supplier from meeting the other 

requirement. The non-discrimination 

requirement will be fully enforced along 

with the special 50-percent rule. 

Comment: A commenter 

recommended that CMS consult with 

patient advocates, providers, and 

industry experts to determine whether 

the methodology used by CMS for 

determining the different types and 

amounts of products on the market is 

consistent with what is actually 

available to Medicare beneficiaries 

today. 

Response: We agree and will consider 

whether or not it is necessary to consult 

with patient advocates, providers, and 

industry experts to determine the types 

and volume products available to 

Medicare beneficiaries. The statute also 

mandates that the OIG conduct a study 

to generate volume data for various 

diabetic testing strip products that could 

be used to make this determination. 

Comment: A commenter suggested 

that CMS should consider adopting a 

generic substitution requirement for 

diabetic testing supplies. 

Response: This comment is outside 

the scope of this rulemaking. 

After consideration of the public 

comments we received, we are 

finalizing our proposal without 

modification. 

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(4) Anti-Switching Rule in Case of 

Competition for Diabetic Test Strips 

As previously noted, we believe that 

an anti-switching requirement will help 

ensure compliance with the 50-percent 

rule and creates an incentive for 

contract suppliers to offer a wide variety 

of testing strip products. Therefore, we 

proposed to prohibit suppliers awarded 

contracts for diabetic testing supplies 

from influencing or incentivizing the 

beneficiary by persuading, pressuring, 

or advising them to switch from their 

current brand or for new beneficiaries 

from their preferred brand of glucose 

monitor and testing supplies. The 

contract supplier may not furnish 

information about alternative brands to 

the beneficiary to influence the 

beneficiary’s decision unless the 

beneficiary requests such information. 

We proposed that contract suppliers for 

diabetic testing supplies must furnish 

the brand of diabetic testing supplies 

that work with the home blood glucose 

monitor selected by the beneficiary. In 

the case where the beneficiary is 

receiving a monitor for the first time or 

a replacement monitor, the contract 

supplier would be subject to the 

requirements of § 414.420 in order to 

protect beneficiaries from feeling forced 

or incentivized to use a particular type 

or brand of monitor. We continue to 

believe the proper role of the contract 

supplier is to furnish diabetic testing 

strips and other supplies to 

beneficiaries, not to interfere with the 

beneficiary’s selection of the type of 

monitor and supplies. This requires the 

supplier to furnish the brand of testing 

supplies that work with the blood 

glucose monitor product that the 

beneficiary, and not the supplier of the 

testing supplies, selects. If the 

beneficiary needs a blood glucose 

monitor for the first time, or needs to 

replace their existing blood glucose 

monitor, and neither the beneficiary nor 

their physician has determined which 

brand or type of monitor to obtain, the 

beneficiary may continue to ask for 

assistance from the supplier to select a 

monitor and the supplier should show 

them the full range of products. 

However, if the beneficiary has already 

selected a monitor and simply needs 

replacement diabetic testing supplies, 

the supplier must furnish the brands of 

testing supplies that work with the 

brand monitor that the beneficiary has 

selected. We believed that our proposal 

would preserve the integrity of the 

clinical decision regarding choice of 

glucose monitoring system and would 

result in contract suppliers offering a 

wide variety of diabetic testing supply 

products. 

We proposed to amend § 414.422 to 

add the anti-switching requirement to 

the terms of the contract for a supplier 

of diabetic testing supplies. A supplier 

would be in breach of their contract and 

subject to the sanctions set forth under 

§ 414.423(g), including termination, if 

they violate this term. 

Comment: Numerous commenters 

stated that CMS should adopt a strong 

anti-switching rule and stated that this 

rule is an important improvement to the 

DMEPOS CBP and will protect 

beneficiaries’ access to supplies. 

Response: We agree that the antiswitching rule will help protect 

beneficiaries from being influenced or 

incentivized to use a particular type of 

brand of glucose monitor. 

Comment: One commenter also 

recommended that the anti-switching 

rule should be actively monitored to 

ensure that beneficiaries are adequately 

protected. 

Response: We agree. The antiswitching rule will be actively 

monitored by requiring contract 

suppliers to submit quarterly reports 

that include information of the items 

that the contract supplier has furnished 

for the quarter. We will be analyzing the 

quarterly reports to determine changes 

in the rates that various brands are 

provided. We will also be monitoring 

beneficiary complaints to determine if 

this is an issue. 

Comment: One commenter stated 

suppliers should be required to submit 

evidence to CMS such as copies of 

agreements with manufactures to 

demonstrate how they will obtain 

adequate quantities of testing supplies 

in order to furnish the supplies sought 

by beneficiaries in a timely manner. 

This is to prevent suppliers from 

influencing a beneficiary’s choice of 

products by not being able to fill certain 

orders. 

Response: We disagree. The antiswitching rule does not require the 

supplier to increase their capacity for 

furnishing sufficient quantities of all of 

the various products available. It is 

intended to prevent the supplier from 

actively influencing or incentivizing the 

beneficiary to switch to a different 

glucose monitor product. If the contract 

supplier does not stock a specific 

product or is out of inventory of a 

specific product they carry and which 

the beneficiary needs, the beneficiary 

can go to any other contract supplier to 

see if they carry the product they need 

in stock. 

Comment: A few commenters were 

concerned about the anti-switching rule 

because they believe that this rule will 

prevent suppliers from consulting with 

beneficiaries regarding the various 

features of the different products and 

the selection of diabetic supplies that 

best meet the patient’s needs. 

Response: The anti-switching policy 

impacts those beneficiaries who are 

already using a specific monitor or 

whose physician ordered a specific 

brand. The anti-switching policy 

prevents suppliers from influencing or 

incentivizing beneficiaries to switch 

monitors. This policy has no impact on 

situations where the beneficiary has not 

yet selected a monitor or initiates 

discussions with the supplier about 

changing to a new type of monitor. 

Comment: One commenter stated that 

the anti-switching rule prevents 

beneficiaries from having access to 

lower cost glucose monitors and test 

strips, unless they specifically request 

information about less costly 

alternatives from their supplier. In 

addition, the commenter stated that the 

DMEPOS CBP should provide 

incentives to use lower cost alternatives 

and not prohibit their use. 

Response: We disagree. The purpose 

of this policy is to prevent beneficiaries 

from being influenced to switch from 

their current brand to a lower cost brand 

to increase a supplier’s profit. The 

beneficiary’s choice should not be 

influenced by the supplier’s ability to 

obtain the product at a lower cost, rather 

than the product that the beneficiary 

prefers. This policy does not prevent a 

beneficiary from initiating a discussion 

with suppliers or their physician to 

determine the most appropriate brand. 

The contract supplier can discuss the 

features or how to operate the glucose 

monitor selected by the beneficiary, 

even if information is not requested by 

the beneficiary. 

Comment: One commenter stated that 

CMS should enforce the anti-switching 

rule by prohibiting mail order suppliers 

from counseling patients on blood 

glucose monitors and supplies, preapproving suppliers’ marketing 

materials and establishing a hotline for 

beneficiaries. 

Response: We disagree. As previously 

stated, the contract supplier can discuss 

the features or how to operate the 

glucose monitor selected by the 

beneficiary even if this information is 

not requested by the beneficiary. We 

established a 1–800 Medicare number 

which is a beneficiary dedicated hotline 

that beneficiaries are to call when they 

have questions or concerns related to 

their Medicare needs. In addition, the 

presence of local ombudsman will be 

available for beneficiaries and suppliers 

for their Medicare related needs when 

the DMEPOS CBP is implemented. 

Comment: One commenter 

recommended that CMS take steps to 

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appropriately inform and educate 

beneficiaries in advance about their 

rights under the anti-switching 

provisions. The commenter also 

recommended that a special education 

effort be implemented during the new 

Round 1 Rebid and any future rounds of 

bidding aimed at eliminating any 

confusion that beneficiaries have 

regarding their ability to continue 

receiving their replacement supplies at 

their retail pharmacies. 

Response: We agree. We have 

designed and will conduct an extensive 

beneficiary educational campaign on the 

Round 1 Rebid. In addition, for future 

rounds of competition we will continue 

to conduct future educational 

campaigns to educate beneficiaries on 

all aspects of the program, including the 

anti-switching provisions and the 50- 

percent rule. 

After consideration of the public 

comments we received, we are 

finalizing our proposal without 

modification 

c. Off-the-Shelf (OTS) Orthotics 

Exemption 

In the April 10, 2007 final rule (72 FR 

17992), we established § 414.404(b)(1), 

which sets forth several exemptions to 

the DMEPOS CBP. These exceptions are 

applicable to providers, physicians, and 

treating practitioners that furnish 

certain DMEPOS items under Medicare 

Part B. The exempted items are limited 

to crutches, canes, walkers, folding 

manual wheelchairs, blood glucose 

monitors, and infusion pumps that are 

DME. For an explanation as to why 

these items were exempt see the 

DMEPOS Competitive Bidding final rule 

(CMS–1270–F) published April 10, 

2007, (72 FR 17992). For the exemptions 

to apply, the items must be furnished by 

a physician or treating practitioner to 

his or her own patients as part of his or 

her professional service. The items are 

to be billed under a billing number 

assigned to the physician, the treating 

practitioner (if possible), or a group 

practice to which the physician or 

treating practitioner has reassigned the 

right to receive Medicare payment. 

The April 10, 2007 final rule also 

established an exemption for a physical 

therapist in private practice (as defined 

in § 410.60(c)) or an occupational 

therapist in private practice (as defined 

in § 410.59(c)) to furnish competitively 

bid OTS orthotics without submitting a 

bid and being awarded a contract under 

the DMEPOS CBP, provided that the 

items are furnished only to the 

therapist’s own patients as part of a 

physical or occupational therapy 

service. 

Section 154(d) of MIPPA amended 

section 1847(a) of the Act by adding 

paragraph (7), which expands the 

exemptions from the DMEPOS CBP for 

certain OTS orthotics to physicians or 

other practitioners (as defined by the 

Secretary) if furnished to their own 

patients as part of their professional 

service. Section 1847(a)(7) of the Act, as 

added by MIPPA, also expanded the 

exemption from the program to 

hospitals for certain OTS orthotics, 

crutches, canes, walkers, folding manual 

wheelchairs, blood glucose monitors, 

and infusion pumps if these items are 

furnished to the hospital’s own patients 

during an admission or on the date of 

discharge. 

The DMEPOS CBP Round 1 Rebid 

interim final rule with comment period 

(IFC) included the expanded exemption 

for certain DMEPOS items as provided 

by MIPPA for hospitals. We noted in the 

IFC that we would address the 

expanded exemption of OTS orthotics 

for hospitals, physicians and other 

practitioners in future rulemaking. 

We proposed to revise current 

provisions at § 414.404(b)(1)(i) to 

incorporate the provision of section 

1847(a)(7)(A)(i) and (ii) of the Act that 

exempts from the program OTS 

orthotics furnished by physicians and 

other practitioners to their own patients 

as part of their professional service or by 

hospitals to the hospital’s own patients 

during an admission or on the date of 

discharge. 

Comment: One commenter submitted 

a question requesting clarification on 

whether a supplier owned by a hospital 

or provider affiliated with a hospital 

would qualify for the hospital 

exemption. 

Response: The OTS orthotics 

exemption for hospitals is limited to 

hospitals that furnish OTS orthotics to 

their own patients during an admission 

or on the date of discharge. The 

exemption for a hospital does not apply 

to suppliers or providers owned by or 

affiliated with a hospital. This 

exemption applies only to entities that 

meet the definition at section 1861(e) of 

the Act. 

Comment: One commenter suggested 

that CMS include small independent 

pharmacies in the definition of ‘‘other 

practitioners’’ and exempt OTS orthotics 

furnished by small independent 

pharmacies from bidding and contract 

requirements under the DMEPOS CBP. 

Response: We disagree. There are 

several factors we consider in 

determining which suppliers qualify for 

an exemption. As discussed in the April 

10, 2007, Federal Register (72 FR 

18029) we exempted physical and 

occupational therapists, from bidding in 

the DMEPOS CBP and being awarded a 

contract so that they could continue to 

provide competitively bid OTS orthotics 

to their own patients when these items 

are furnished as part of their 

professional service. MIPPA has 

extended this exemption to include OTS 

orthotics furnished by physicians, 

certain other practitioners, and hospitals 

to their own patients. The MIPPA 

expanded exemption does not include 

OTS orthotics furnished to the general 

public by suppliers such as pharmacies. 

Therefore, we do not agree that this 

exemption should be applied to small 

independent pharmacies who sell these 

products to the general public and they 

are not furnished as an integral part of 

a treatment service furnished by the 

pharmacy. Also, the term treating 

practitioner is defined at § 414.402 of 

the regulations and includes physician 

assistants, nurse practitioners, and 

clinical nurse specialists in accordance 

with the definition of these terms as 

defined at section 1861(aa)(5) of the Act. 

We do not believe that the statutory 

language that extended the OTS orthotic 

exemption to physicians, certain other 

practitioners, and hospitals was 

intended to extend the exemption to 

small independent pharmacies that 

provide products to the general public. 

Comment: One commenter supported 

the OTS orthotics exemption for 

physicians, practitioners, and hospitals. 

Response: We agree. 

After consideration of the public 

comments we received, we are 

finalizing our proposal without 

modification. 

d. Grandfathering Rules Resulting in 

Additional Payments to Contract 

Suppliers Under the DMEPOS 

Competitive Bidding Program (CBP) 

Section 1847(a)(4) of the Act requires 

that in the case of rented DME and 

oxygen and oxygen equipment, the 

Secretary shall establish a 

‘‘grandfathering’’ process. This 

requirement was implemented through 

regulations at § 414.408(j) that were 

published in the April 10, 2007 Federal 

Register (72 FR 17992). The 

grandfathering process allows 

beneficiaries who were renting DME 

items or receiving oxygen and oxygen 

equipment prior to the start of a 

DMEPOS CBP from a supplier who did 

not win a contract to continue to rent 

the equipment from that noncontract 

supplier if that supplier chooses to 

become a grandfathered supplier. Under 

§ 414.408(i)(2), when the beneficiary 

decides to use a contract supplier 

instead of a grandfathered supplier to 

receive their oxygen equipment and 

supplies, the contract supplier receives 

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a minimum of 10 monthly payments for 

taking over the furnishing of oxygen and 

oxygen equipment. When a beneficiary 

decides to use a contract supplier to 

furnish capped rental DME, section 

§ 414.408(h)(2) restarts the 13-month 

capped rental period. These rules were 

established, in part, based on advice 

from the Program Advisory and 

Oversight Committee (PAOC) and are 

intended to give bidding suppliers an 

assurance that they would be 

compensated in these situations and 

would not have to factor into their bids 

the cost of receiving as few as one 

monthly payment for beneficiaries near 

the end of the 13-month cap for capped 

rental items and 36-month cap for 

oxygen equipment. 

At the time these rules were 

developed, the supplier was mandated 

by the statute to transfer title to the 

equipment to the beneficiary after the 

both the 13-month cap for capped rental 

items and the 36-month cap for oxygen 

equipment. Section 144(b) of the MIPPA 

repealed the transfer of title requirement 

for oxygen equipment, as established by 

DRA, replacing that requirement with 

the 36-month rental cap. Under the 

revised oxygen payment provisions, 

suppliers now get the equipment back 

when the beneficiary no longer needs it. 

Also, at the time these rules were 

developed, the beneficiary had the 

option to acquire standard power 

wheelchairs on a lump sum purchase 

basis, an option which greater than 95 

percent of the beneficiaries selected, 

based upon historic claims data. 

Therefore, those items generally would 

not be affected by the grandfathering 

rules. However, as discussed in section 

VI.V. of this final rule with comment 

period, section 3136 of the Affordable 

Care Act eliminates the lump sum 

purchase option for standard power 

wheelchairs. This new policy applies to 

items furnished under the DMEPOS 

CBP beginning with Round 2 of the 

program. Over 200,000 beneficiaries 

received standard power wheelchairs 

nationwide in 2009, and the Medicare 

allowed charges for these wheelchairs 

was over $650 million, including both 

rental and purchase options. Therefore, 

this large volume of capped rental items 

will be subject to the grandfathering 

rules effective with Round 2 of the 

DMEPOS CBP, thus increasing the 

overall magnitude of the effect these 

rules have on the program and 

beneficiaries. 

In some cases, the grandfathering 

rules described above place a financial 

burden on beneficiaries who are near 

the end of the 13 or 36-month rental cap 

periods. If a beneficiary’s existing 

supplier chooses not to be a 

grandfathered supplier, the beneficiary 

will be required to switch to a contract 

supplier in order for Medicare to 

continue to pay for the furnishing of the 

rental equipment. In such cases, the 

beneficiary will be responsible for 

additional co-insurance amounts. Based 

on experience from the initial Round 1 

competition in 2008, we believe that 

most suppliers will choose to 

grandfather and therefore these rules 

will have no impact on these situations. 

However, in those limited situations in 

which the beneficiary does not use a 

grandfathered supplier and the 

beneficiary is near the end of the 13 or 

36-month rental cap period, the impact 

on the beneficiary could be significant. 

As mentioned above, our current 

grandfathering rules will result in a 

limited number of beneficiaries facing 

additional co-insurance payments. To 

illustrate the impact some beneficiaries 

may face as a result of these rules, a 

beneficiary who has already made 12 

coinsurance payments for a capped 

rental item could make as many as 12 

additional copayments as a result of 

restarting the capped rental period 

when they transition from a noncontract 

supplier to a contract supplier at the 

beginning of a DMEPOS CBP. In another 

example, a beneficiary who has already 

made 35 coinsurance payments for 

oxygen and oxygen equipment could 

make as many as 9 additional 

copayments as a result of the rule that 

provides a minimum of 10 monthly 

payments when they transition from a 

noncontract supplier to a contract 

supplier at the beginning of a DMEPOS 

CBP. As stated above, we expect that 

most noncontract suppliers will choose 

to become grandfathered suppliers, 

therefore limiting the number of 

instances where these rules would 

apply. However, in light of the 

beneficiary impact in the those extreme 

cases illustrated above, and in light of 

the recent legislative changes by the 

MIPPA and the Affordable Care Act as 

explained above, we are reevaluating 

whether or not changes to these 

grandfathering rules are necessary. As 

discussed above, as a result of the 

MIPPA, suppliers of oxygen equipment 

no longer lose title to the equipment 

after receiving the 36th payment and 

this may warrant reconsideration of the 

minimum number of payments they 

should receive as contract suppliers 

when a beneficiary transitions to them 

from a noncontract supplier at the 

beginning of a DMEPOS CBP. In 

addition, we believe it is important to 

reevaluate the policy that restarts the 

13-month capped rental period in 

situations where a beneficiary 

transitions from a noncontract supplier 

to a contract supplier at the beginning 

of a DMEPOS CBP. 

We received nine public comments on 

the grandfathering rules resulting in 

additional payments to contract 

suppliers under the DMEPOS CBP. In 

the proposed rule we solicited public 

comments on whether or not the current 

rules should be changed to reduce the 

number of payments the contract 

supplier would receive in these 

situations above the 13 and 36-month 

limits set forth under the standard 

payment rules in section 1834(a) of the 

Act. We requested comments only and 

did not propose any regulation changes. 

Therefore, the comments received will 

be taken into consideration in future 

proposed rulemaking. 

e. Appeals Process 

The April 10, 2007 DMEPOS CBP 

final rule finalized § 414.422(g)(1), 

which states that ‘‘any deviation from 

contract requirements, including a 

failure to comply with governmental 

agency or licensing organization 

requirements, constitutes a breach of 

contract.’’ In the event we determine 

that a contract supplier’s actions 

constitute a breach of contract, 

§ 414.422(g)(2) authorizes us to take one 

or more of the following actions: 

• Require the contract supplier to 

submit a corrective action plan. 

• Suspend the contract supplier’s 

contract. 

• Terminate the contract. 

• Preclude the contract supplier from 

participating in the DMEPOS CBP. 

• Revoke the supplier number of the 

contract supplier, or 

• Avail itself of other remedies 

allowed by the statute. 

We proposed to add a new § 414.423 

to establish an appeals process for 

contracts terminated under section 

1847(a) and (b) of the Act. Proposed 

§ 414.423 would set forth policies and 

procedures relating to our 

determinations of a breach of contract 

and the appeals process for contract 

suppliers that are considered to be in 

breach of contract. In addition, we 

proposed to add new definitions to 

§ 414.402 that are used in the proposed 

§ 414.423. 

Given the impact that termination has 

on a contract supplier, we believe it is 

appropriate for contract suppliers whose 

contract(s) may be terminated due to a 

breach of contract to have access to an 

appeals process that will reconsider that 

termination. In establishing this process 

we reviewed other appeals processes, 

such as the appeals process under Part 

D located at § 423.641 through 

§ 423.668, Subpart N—Medicare 

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Contract Determinations and Appeals, 

to consider essential steps to ensure 

suppliers have access to an appropriate 

review of certain CMS decisions. We 

proposed a simplified process that 

would not result in disruption to the 

program by having suppliers going in 

and out of the program. For this reason, 

we proposed a process for review and 

reconsideration before the contract is 

actually terminated. This proposal 

would avoid the necessity to reinstate 

retroactively suppliers because the 

contracts would generally not be 

terminated before the full review 

process has occurred. This would 

protect the supplier because we 

generally would not terminate a 

supplier until a final decision is made. 

Another feature of this process that may 

be beneficial to some suppliers is 

allowing them to submit a corrective 

action plan (CAP) depending upon the 

nature of the breach. We believe our 

proposal would allow most suppliers to 

correct identified deficiencies. 

(1) Purpose and Definitions: (§ 414.402) 

We are proposed to amend § 414.402 

to define the following terms: 

• Affected party means a contract 

supplier that has been notified that their 

DMEPOS CBP contract will be 

terminated for a breach of contract. 

• Breach of contract means any 

deviation from contract requirements, 

including a failure to comply with a 

governmental agency or licensing 

organization requirements. 

• Corrective Action Plan (CAP) means 

a contract supplier’s written document 

with supporting information that 

describes the actions the contract 

supplier would take within a specified 

timeframe to remedy the breach of 

contract. 

• Hearing Officer (HO) means an 

individual, who was not involved with 

the CBIC recommendation to terminate 

a DMEPOS Competitive Bidding 

Program contract, who is designated by 

CMS to review and make an unbiased 

and independent recommendation 

when there is an appeal of CMS’s initial 

determination to terminate a DMEPOS 

Competitive Bidding Program contract. 

• Parties to the hearing means the 

DMEPOS contract supplier and CMS. 

(2) Applicability 

The appeals process proposed in this 

regulation would allow contract 

suppliers the opportunity for a review of 

the following: 

• A CMS determination under 

§ 414.422(g)(1) that the contract supplier 

breached its contract entered into as 

part of the DMEPOS CBP; and 

• Certain agency actions taken under 

§ 414.422(g)(2). 

The proposed appeals process would 

not apply to any other actions made by 

CMS, nor would the existence of other 

appeals processes preclude us from 

terminating a DMEPOS CBP contract. In 

other words, the proposed appeals 

process would be in addition to—and 

would not replace—existing CMS 

regulations regarding other appeals 

mechanisms. For example, a contract 

may be terminated because a supplier’s 

National Supplier Clearinghouse (NSC) 

number has been revoked or inactivated. 

In this case, the supplier would not 

appeal the decision to inactivate or 

revoke its number through this appeals 

process. Instead, the supplier would 

continue to appeal the inactivation or 

revocation of its supplier number 

through the NSC’s appeals process. We 

would postpone the contract 

termination decision until the supplier 

completes the NSC appeals process 

unless there are multiple findings of 

breach of contract. 

Under our proposal, when we issue a 

termination decision, it would be final 

and binding unless a postponement of 

the termination decision is allowed by 

proposed § 414.423. 

(3) Contract Termination 

We proposed that this appeals process 

applies in situations where the supplier 

has received a notice that we have 

determined that they are in breach of 

contract and that their contract is 

therefore subject to termination. A 

contract may be terminated for any 

violation of the terms of the contract. 

Examples of violations include, but are 

not limited to, situations where the 

contract supplier— 

• Has committed or participated in 

false, fraudulent, or abusive activities 

affecting the Medicare program, 

including the submission of false or 

fraudulent data or claims; 

• Experiences financial difficulties so 

that they are unable to effectively 

provide the necessary services to a 

Medicare beneficiary; or 

• Fails to meet the nondiscrimination policy and provides 

different items to beneficiaries located 

in a competitive bidding area (CBA) 

than it provides to its non-Medicare 

beneficiaries at § 414.422(c). 

(4) Notice of Termination 

We proposed that the CBIC would 

work with suppliers to informally 

resolve performance deficiencies under 

its DMEPOS CBP contract prior to 

sending a recommendation to CMS that 

the supplier’s contract be terminated. If 

the CBIC cannot informally resolve the 

supplier’s deficiencies and recommends 

that we terminate the supplier’s 

contract, we will review the CBIC’s 

recommendation to terminate the 

supplier’s contract. If we find that a 

breach occurred, we would begin the 

contract termination process by sending 

out a notice of termination to the 

supplier. 

We also proposed requirements for 

the notice of termination so that 

suppliers are informed of the basis for 

CMS’s action as well as their options to 

respond to this action. The notice would 

explain all actions we plan to take in 

response to the supplier’s breach, such 

as the ability to submit a CAP or our 

determination to preclude a supplier 

from participating in future rounds of 

competitive bidding if found in breach 

of contract. If the supplier decides to 

appeal any of these decisions the 

supplier would submit an appeal in 

response to the notice to terminate. If 

we consider a supplier to be in breach 

of its contract, either in part or in whole, 

we would notify the contract supplier of 

the termination by certified mail. The 

notice would indicate that the contract 

supplier has been found to be in breach 

of contract and that the supplier’s 

contract will be terminated within 45 

days of the date of the notification of 

termination. The notice would be sent 

by the CBIC using certified mail on the 

same date that the notification is signed. 

The notification will be mailed on the 

date that it is signed. This is the same 

date as indicated on the notification. 

Our proposal required the notice to 

include, at a minimum, the following 

information: 

• The reasons for the termination in 

sufficient detail to allow the contract 

supplier to understand the nature of its 

breach of contract; 

• Depending on the nature of the 

breach, whether the supplier may be 

allowed to submit a CAP in lieu of 

requesting a hearing by the HO; 

• The right to request a hearing by the 

HO; 

• The address to which the written 

request for a hearing must be mailed; 

• The address to which the CAP must 

be mailed; and 

• The effective date of the 

termination of the contract, if a CAP is 

not submitted or if a request for a 

hearing has not been filed timely. 

We believe that this information will 

be sufficient to provide the supplier 

with the basis for CMS’s action, as well 

as their options in responding to our 

decision. 

In addition, our proposal required the 

notice to indicate any additional 

penalties that may result from the 

termination, such as, not being eligible 

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to bid in future rounds of competitive 

bidding. An appeal of the termination 

would include the appeal of any other 

results from the termination that are 

permissible under § 414.423, such as 

preclusion from participation in future 

rounds of the DMEPOS CBP. We believe 

this information may help the supplier 

to decide whether to appeal the notice 

of termination. 

(5) Corrective Action Plan 

We proposed a process by which a 

contract supplier may be able to submit 

a CAP to address the breach of contract. 

Depending on the nature of the breach 

of contract, we proposed that the notice 

to the supplier would indicate whether 

a contract supplier would be allowed to 

provide the CBIC with a written CAP 

instead of submitting a request for a 

hearing by a HO. For example, under 

this proposal we would not allow a CAP 

if the supplier has been excluded from 

any federal program, debarred by any 

federal agency, or convicted of a 

healthcare-related crime. We may also 

not allow a CAP that would result in 

negative consequences to the 

beneficiaries or the program caused by 

delaying the termination of the contract. 

We proposed the following timelines 

for situations where the contract 

supplier is allowed to provide a written 

CAP: 

• If the supplier decides to submit a 

CAP, the CAP must be received by the 

CBIC within 30 days from the date on 

the notice of termination. 

• If the supplier decides not to submit 

a CAP, the supplier retains the right to 

request a review by a HO within 30 days 

from the date of the notice of 

termination. While the CAP is being 

evaluated, the termination action would 

be postponed. We believe that 30 days 

is a sufficient amount of time for 

suppliers to prepare and submit a CAP 

and this would also ensure that there 

are no unnecessary delays in the 

appeals process. 

We proposed to require the CAP to 

demonstrate that the contract supplier 

has a plan to remedy all of the 

deficiencies that were identified in its 

notice of termination and must specify 

the timeframes for correcting these 

deficiencies. The CBIC would review 

the CAP to ensure that the contract 

supplier would be taking the 

appropriate measures in a timely 

manner to remedy the breach of 

contract. What constitutes a timely 

manner is dependent on the type of 

deficiency that is being corrected. Once 

the nature of the deficiency is identified 

the CBIC and CMS would make a caseby-case determination concerning what 

constitutes a timely manner for 

correcting the deficiency. However, we 

expect most deficiencies to be corrected 

within 90 days or less. Further guidance 

of what constitutes a timely manner 

would be communicated to the contract 

supplier by the CBIC as part of the 

review process. 

As part of the review process, the 

CBIC would provide guidance, in 

accordance with CMS instructions, 

regarding the type of documentation 

that the CAP and the follow up report 

must provide to substantiate that the 

deficiencies have been corrected. To 

make a determination if a CAP would be 

considered acceptable, we would 

discuss any deficiencies related to the 

CAP with the supplier, and as a result 

of these discussions, the CBIC may 

allow a supplier to make revisions to its 

CAP during the review process. 

Suppliers will only revise their CAP 

one-time during the review process. The 

timeframe for the review process would 

vary upon the circumstances for each 

case. If the supplier does not submit an 

acceptable CAP during the review 

process, the supplier would receive a 

new notice that their CAP is not 

acceptable or has not been implemented 

consistent with the supplier’s original 

submission and its contract would be 

terminated within 45 days. Every 

supplier that submits a CAP will have 

a one-time opportunity to revise their 

CAP based upon deficiencies identified 

by the CBIC. Failure to develop and 

implement an approved CAP would 

result in a new notice to the supplier of 

the termination of the DMEPOS CBP 

contract and provide notice that the 

supplier may request a hearing on this 

termination. We proposed that once an 

acceptable CAP has been completed the 

contract supplier must provide a followup report within 5 days of the agreed 

upon date for the completion of the CAP 

to verify that all of the deficiencies 

identified in the CAP have been 

corrected consistent with the 

timeframes specified in the CAP, as 

approved by the CMS. We believe that 

5 days is a sufficient time for a supplier 

to submit a report to the CBIC outlining 

all steps that have been completed to 

correct the identified deficiencies. 

(6) Right To Request a Hearing by the 

CBIC Hearing Officer (HO) 

We proposed that a contract supplier 

that has received a notice that we 

consider the supplier in breach of 

contract has the right to request a 

hearing before a HO who was not 

involved with the original breach of 

contract determination. We consider 

this process to be a reconsideration of 

the original decision, and, consistent 

with other Medicare appeals provisions, 

we believe it is important that an 

individual not involved in making the 

initial recommendation conduct the 

reconsideration of the initial decision. 

As mentioned previously, the HO would 

be an individual who is designated by 

CMS to review and to make an unbiased 

and independent recommendation of 

whether to terminate the supplier’s 

DMEPOS CBP contract. The notice to 

the contract supplier would also 

identify the location to which a request 

for hearing must be sent. 

We proposed that a contract supplier 

may appeal the notice of termination by 

submitting a written request to the CBIC 

for a hearing by a HO. The written 

request should include any evidence to 

support its appeal. The HO is not 

required to allow evidence submitted in 

addition to evidence beyond the 

evidence submitted along with the 

written request. The hearing request 

must be received by the CBIC within 30 

days from the date of the termination 

letter. A request for a hearing must be 

sent to the address identified on the 

notice. Failure to request a hearing 

within the allotted 30 days would result 

in a termination of the supplier’s 

contract, as of the effective date of 

termination identified in the notice to 

the supplier. There would be no 

extension to this 30-day timeframe. We 

believe suppliers have sufficient time to 

decide whether or not to request a 

hearing and the deficiencies identified 

in the notice may pose a risk to the 

DMEPOS CBP. The date the request is 

received by the CBIC determines if the 

hearing request was timely filed. 

We would require that the request for 

hearing be filed by a supplier’s 

authorized official, because an 

authorized official of the company 

signed the contract and this ensures the 

validity of the request. The authorized 

official must be an official of the 

company who is identified on the 

supplier’s CMS 855-S form as an 

authorized official of the supplier. A 

supplier may appoint someone other 

than the authorized official to be a 

representative for them at the hearing. 

However, the representative may not be 

an individual who has been disqualified 

or suspended from acting as a 

representative by the Secretary or 

otherwise prohibited by law. The 

request for a hearing must be filed with 

the CBIC at the address identified on the 

notice of termination. 

(7) Scheduling of the Hearing 

We proposed that within 30 days from 

the receipt of a supplier’s timely hearing 

request the HO would contact the 

parties to schedule a hearing. The 

request for a hearing would result in the 

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postponement of the date of the contract 

termination. The only exception to this 

rule is when a supplier has been 

excluded from any federal program, 

debarred by any federal agency, or 

convicted of a healthcare related crime; 

in that situation the supplier’s contract 

would be terminated immediately. In 

the hearing request the contract supplier 

may ask for the hearing to be held in 

person or by telephone. The HO would 

send a notice to the parties to the 

hearing indicating the time and place 

for the hearing at least 30 days before 

the date of the hearing. The HO may, on 

his or her own motion, or at the request 

of a party, change the time and place for 

the hearing, but must give the parties to 

the hearing a 30 day notice of the 

change. 

We proposed to require that the HO’s 

notice scheduling the hearing must 

provide, at a minimum, the following 

information: 

• Date, time, and location of the 

scheduled hearing; 

• Description of the hearing 

procedure; 

• Issues to be resolved; 

• Requirement that the contract 

supplier bears the burden of proof to 

demonstrate that it is not in breach of 

contract; and 

• Provide an opportunity for the 

supplier to submit additional evidence 

if requested by the HO. 

We believe this information provides 

the supplier with sufficient information 

regarding the hearing date, time, and 

matters that would be addressed at that 

time. We solicited comment on the 

content of this notice and the 

procedures for scheduling a hearing. 

(8) Burden of Proof 

We proposed that the contract 

supplier would present to the HO the 

basis for its disagreement with the 

termination notice and would have the 

burden of proof to demonstrate to the 

HO with supporting evidence that it is 

not in breach of its contract and that the 

termination action is not appropriate. 

The supplier’s supporting evidence 

must be submitted with its request for 

a hearing. The supporting evidence and 

the request for a hearing must be 

submitted together and received by the 

HO within 30 days from the date 

identified on the notice of termination. 

In the absence of good cause, the HO 

may not allow evidence to be submitted 

in addition to the evidence submitted 

along with the written request. We also 

have the opportunity to submit evidence 

to the HO within 30 days of receiving 

the notice announcing the hearing. The 

HO will share all evidence submitted, 

both from the supplier and CMS, in 

preparation for the hearing with all 

affected parties within 15 days prior to 

the scheduled date of the hearing. 

(9) Role of the Hearing Officer (HO) 

Our proposal requires that the HO 

conduct a thorough and independent 

review. Such a review requires the 

consideration of all information and 

documentation relevant to the hearing 

and submitted consistent with this 

proposal. Consistent with this goal, we 

propose that the HO is responsible for 

all of the following: 

• Sharing all evidence submitted, 

from both the supplier and CMS, in 

preparation for the hearing with all 

affected parties within 15 days prior to 

the scheduled date of the hearing. 

• Conducting the hearing and 

deciding the order in which the 

evidence and the arguments of the 

parties would be presented. 

• Determining the rules on 

admissibility of the evidence. 

• Examining the witnesses, in 

addition to the examinations conducted 

by CMS and the contract supplier. 

• Determining the rules for requesting 

documents and other evidence from 

other parties. 

• Ensuring a complete recording of 

the hearing is available and provided to 

all parties to the hearing and the CBIC. 

• Preparing a file of the record of the 

hearing which includes all evidence 

submitted as well as any relevant 

documents identified by the HO and 

considered as part of the hearing. 

• Complying with all applicable 

provisions of 42 USC Title 18 and 

related provisions of the Act, the 

applicable regulations issued by the 

Secretary, and manual instructions 

issued by CMS. 

The HO would make a 

recommendation based on the 

information presented and submitted. 

The HO would issue a written 

recommendation to CMS within 30 days 

of the close of the hearing, unless the 

HO requests an extension from CMS and 

demonstrates to CMS that he or she 

needs an extension due to complexity of 

the matter or heavy work load. The HO’s 

recommendation would include the 

rationale for his or her recommendation 

regarding the termination of the 

supplier’s contract and the HO would 

submit this recommendation to CMS for 

its determination. 

(10) CMS’s Final Determination 

We proposed that the HO’s 

recommendation is submitted to CMS, 

and the agency would make the final 

determination regarding whether the 

supplier’s contract would be terminated. 

Our determination would be based upon 

on the record of the hearing, evidence, 

and documents considered by the HO as 

part of the HO recommendation. 

Information submitted after the hearing 

would not be considered. Our decision 

would be made within 30 days of the 

receipt of the HO’s recommendation. If 

our decision is to terminate the contract, 

the supplier would be notified of the 

effective date of termination by certified 

mail. Our decision regarding the 

termination of the contract is final and 

binding. 

(11) Effective Date of the Contract 

Termination 

We proposed that suppliers who 

submit a CAP or request a hearing 

would have the termination date 

identified on the notice delayed. The 

only exception to this rule is when a 

supplier has been excluded from any 

federal program, debarred by any federal 

agency, or convicted of a healthcare 

related crime; in that situation the 

contract would be terminated 

immediately. For terminations that do 

not meet these exceptions, the effective 

date of a final termination would be 

determined as follows: 

• The termination of a supplier’s 

DMEPOS CBP contract is effective on 

the date specified in the initial notice of 

termination, which will be 45 days from 

the date of the notice, unless the 

supplier requests a hearing with the HO 

or the supplier submits a CAP. 

• After reviewing the HO 

recommendation, if we terminate a 

supplier’s contract the effective date of 

the termination would be the date 

specified in the post-hearing notice sent 

to the supplier indicating CMS’s final 

determination to terminate the contract. 

(12) Effect of Contract Termination 

Under our proposal, once a supplier’s 

contract is terminated for breach of 

contract under the DMEPOS CBP, the 

contract supplier is no longer a 

DMEPOS CBP contract supplier for any 

DMEPOS CBP product category for 

which it was awarded a contract. This 

termination applies to all areas and 

product categories because there is only 

one contract that encompasses all CBAs 

and product categories for which the 

supplier was awarded a contract. We 

would not make payment and would 

reject claims for DMEPOS competitive 

bid items and services furnished by a 

supplier whose contract has been 

terminated after the effective date of the 

termination for the remainder of the 

contract period. 

We recognize that a supplier’s 

termination would impact beneficiaries 

within the CBA. Therefore, we proposed 

that terminated suppliers must notify all 

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beneficiaries within the CBA who are 

receiving rented competitively bid items 

of the termination of their contract 

status so that the beneficiaries can make 

arrangements to receive equipment and 

suppliers through other contract 

suppliers. After we have made our final 

determination and sent notification to 

the supplier, the supplier must notify 

beneficiaries within 5 days of receipt of 

the contract supplier’s final notice of 

termination. This notice must inform 

beneficiaries that they will have to 

select a new contract supplier to furnish 

their DMEPOS items in order for 

Medicare to pay for these items. For 

beneficiary protection, we also proposed 

that contract suppliers who fail to give 

proper notification to beneficiaries may 

be prevented from participating in 

future rounds of DMEPOS CBP. We also 

proposed that rental items may not be 

picked up from the beneficiary’s home 

until after the last day of the rental 

month for which the supplier has 

already received payment. We proposed 

both of these policies to protect the 

beneficiary and to ensure that suppliers 

do not pick up equipment from a 

beneficiary for a time period for which 

they have already been paid to provide 

the service. 

Comment: A commenter supported 

CMS’s appeals process for contract 

suppliers whose competitive bidding 

contract was terminated due to breach 

of contract. The commenter stated that 

‘‘including an appeals process under 

DMEPOS CBP protects contract 

providers from arbitrary or mistaken 

decisions by CMS or its contractors and 

preserves the continuity of care for the 

beneficiaries they are serving.’’ 

Response: We agree that the appeals 

process does provide protection for 

contract suppliers and preserves 

continuity of care for the beneficiaries 

they serve. 

Comment: A commenter who was 

concerned with the timeline required 

for communication between terminated 

suppliers and beneficiaries. The 

commenter suggested that CMS 

lengthen the period of time to afford 

providers ample opportunity to develop, 

mail and disseminate this critical 

information. 

Response: We agree and have 

increased the period of time from 5 to 

15 days of receipt of contract suppliers’ 

final notice of termination. We believe 

that 15 days would be a good balance 

to ensure the beneficiaries receive 

information timely and suppliers will 

have enough time to notify the 

beneficiaries. Therefore, a contract 

supplier, whose contract was 

terminated, has 15 days from the receipt 

of the final notice of termination to 

notify each beneficiary currently renting 

a competitive bid item. This change will 

not impact any other of the timeframes 

or provisions described in this 

regulation. We also proposed that rental 

items may not be picked up from the 

beneficiary’s home until after the last 

day of the rental month for which the 

supplier has already received payment. 

We proposed both of these policies to 

protect the beneficiary and to ensure 

that suppliers do not pick up equipment 

from a beneficiary for a time period for 

which they have already been paid to 

provide the service. 

Comment: A commenter opposed the 

proposed appeals process because they 

believed, ‘‘the proposed process is 

biased and burdened with inherent CMS 

conflict of interests that disadvantage 

suppliers.’’ This commenter 

recommended CMS adopt the appeals 

process used for DMEPOS claims which 

includes a hearing by an administrative 

law judge (ALJ) and the Departmental 

Appeals Board (DAB) or the process 

used under government contracting and 

FAR requirements.’’ In addition, the 

commenter questioned whether the 

termination occurs at the supplier 

number level or the product category 

level. The commenter has questioned if 

a supplier has contracts for more than 

one of the product categories, and is 

determined to be in breach of contract 

in one category, does the termination 

apply to just that one product or to all? 

The commenter also stated that the 

process should include an appeal to a 

federal court. 

Response: We disagree with this 

comment and feel that our process does 

provide for an independent and 

unbiased review by the CBIC hearing 

officer who was not involved in the 

original recommendation. It is not in the 

best interest of the program to terminate 

contracts if the supplier has not 

breached their contract; therefore, this 

action will not be taken lightly. This 

process allows CMS contractor’s hearing 

officers to conduct an independent 

review of the issues. Only after 

considering the HO’s recommendation 

will CMS make a final determination 

regarding these issues. We believe this 

process provides suppliers with ample 

opportunities to have their positions 

reviewed and considered. Therefore, we 

are not including review by the ALJ or 

the DAB. Our process provides for 

different levels of review of breach of 

contract, one at the recommendation 

level, one at the CBIC hearing officer 

level, and one at the CMS Administrator 

level. We believe this process does 

provide for an extensive review by 

allowing for reconsideration before a 

contract is actually terminated, which 

may include the use of a corrective 

action plan. As stated in the final 

regulation, these contracts are not 

procurement contracts are not subject to 

the FAR requirements; therefore, the 

FAR is not applicable. The rule does not 

address federal court review that might 

otherwise exist. As we stated in the 

proposed rule § 414.423(k)(4) CMS’s 

decisions regarding contract 

terminations are final and binding. In 

response to the question regarding the 

scope of the termination, if a supplier is 

terminated due to a breach of contract 

all locations associated with that 

contract will be terminated, regardless 

of the competitive bid product category 

they provide. In addition, we have 

added clarifying language to 

§ 414.423(l)(1). 

After consideration of the public 

comments we received, we are revising 

the time for the supplier to notify the 

beneficiary once the supplier has been 

notified of their contract termination. 

Therefore, we have revised 

§ 414.423(l)(2)(i) of the regulation to 

state that the supplier whose contract 

was terminated must notify the 

beneficiary within 15 days of receipt of 

the final notice of termination. In 

addition, we are clarifying the 

regulation language by adding language 

to § 414.423(l)(1) to state that ‘‘all 

locations of the contract supplier’’ may 

no longer furnish competitive bid items 

to beneficiaries within a CBA and be 

reimbursed by Medicare for these items 

after the effective date of the 

termination. 

2. Changes to Payment Rules for Oxygen 

and Oxygen Equipment 

a. Background 

The general Medicare payment rules 

for DME are set forth in section 1834(a) 

of the Act and 42 CFR part 414, subpart 

D of our regulations. Section 1834(a)(1) 

of the Act and § 414.210(a) of our 

regulations establish the Medicare 

payment for a DME item as equal to 80 

percent of either the lower of the actual 

charge or the fee schedule amount for 

the item. The beneficiary coinsurance is 

equal to 20 percent of either the lower 

of the actual charge or the fee schedule 

amount for the item once the deductible 

is met. 

The specific payment rules for oxygen 

and oxygen equipment under the 

existing fee schedules are set forth in 

section 1834(a)(5) of the Act and 

§ 414.226 of our regulations. Suppliers 

are paid a monthly payment amount for 

furnishing medically necessary oxygen 

contents (for both stationary and 

portable) and stationary oxygen 

equipment described under the class 

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described in § 414.226(c)(1)(i). 

Equipment in the stationary class 

includes stationary oxygen 

concentrators, which concentrate 

oxygen from room air; stationary liquid 

oxygen systems, which use oxygen 

stored as a very cold liquid in cylinders 

and tanks; and gaseous oxygen systems, 

which administer compressed oxygen 

directly from cylinders. 

A monthly add-on payment is also 

made to suppliers furnishing medically 

necessary portable oxygen equipment 

falling under one of two classes 

described in § 414.226(c)(1)(ii) and (iii). 

Equipment in these classes includes 

traditional portable equipment, that is, 

portable liquid oxygen systems and 

portable gaseous oxygen systems, and 

oxygen generating portable equipment 

(OGPE), that is, portable oxygen 

concentrators and oxygen transfilling 

equipment used to fill portable tanks or 

cylinders in the home. Both the liquid 

and gaseous oxygen systems (for 

stationary and traditional portable 

systems) require on-going delivery of 

oxygen contents. 

Section 1834(a)(5)(F) of the Act, as 

amended by section 144(b) of MIPPA, 

limits the monthly rental payments to 

suppliers for oxygen equipment to 36 

months of continuous use, although 

monthly payments for furnishing 

gaseous or liquid oxygen contents 

continue after the 36-month equipment 

rental cap is reached for gaseous or 

liquid systems. In the CY 2009 PFS final 

rule with comment period (73 FR 69875 

through 69876), we discussed section 

144(b) of MIPPA and included a 

detailed discussion of how section 

5101(b) of the DRA previously required 

suppliers to transfer title to oxygen 

equipment to the beneficiary at the end 

of the 36-month rental period. Section 

144(b) of the MIPPA repealed this 

requirement to transfer title to the 

oxygen equipment to the beneficiary 

and allows suppliers to retain title to the 

oxygen equipment after 36 monthly 

rental payments are made for the 

equipment. 

Section 414.210 establishes the 

requirements for the replacement of 

DME, including oxygen equipment. 

Section 414.210(f)(1) states that if an 

item of DME, which includes oxygen 

equipment, has been in continuous use 

by the patient for the equipment’s 

reasonable useful lifetime or if the 

original equipment is lost, stolen, or 

irreparably damaged, the patient may 

elect to obtain a new piece of 

equipment. In such circumstances, 

§ 414.420(f)(2) authorizes payment for 

the new oxygen equipment in 

accordance with § 414.226(a). Section 

414.210(f)(1) states that the reasonable 

useful lifetime for DME, which includes 

oxygen equipment, is determined 

through program instructions. In the 

absence of CMS program instructions, 

the carrier may determine the 

reasonable useful lifetime for 

equipment, but in no case can it be less 

than 5 years. Computation is based on 

when the equipment is delivered to the 

beneficiary, not the age of the 

equipment. If the beneficiary elects to 

obtain new oxygen equipment after the 

reasonable useful lifetime, the payment 

is made for a new 36-month rental 

period in accordance with § 414.226(a). 

We proposed to revise the payment 

rule for oxygen and oxygen equipment 

at § 414.226(g)(1) to address situations 

where beneficiaries relocate outside the 

service area of a supplier during the 36- 

month rental payment cap period for the 

oxygen equipment. 

Beneficiaries are experiencing great 

difficulties in finding suppliers willing 

to furnish oxygen equipment in 

situations where only a few months are 

left in the 36-month rental payment 

period at the time they relocate. For 

example, if a beneficiary is in the 30th 

rental month, the new supplier would 

be entitled to only 6 months of rental 

payments and then would have to 

continue to furnish the oxygen and 

oxygen equipment during any period of 

medical need for the remainder of the 

reasonable useful lifetime of the 

equipment. This creates a financial 

disincentive for oxygen suppliers to 

furnish oxygen and oxygen equipment 

to beneficiaries in these situations. 

The proposed changes to the payment 

rules for oxygen and oxygen equipment 

would apply to oxygen and oxygen 

equipment furnished under Part B and 

would also apply to oxygen and oxygen 

equipment furnished under programs 

implemented in accordance with 

section 1847(a) of the Act. 

b. Furnishing Oxygen Equipment After 

the 36-Month Rental Period (Cap) 

In the CY 2010 PFS final rule with 

comment period (74 FR 61887 through 

61890), we finalized § 414.226(g)(1) 

which, in accordance with section 

1834(a)(5)(F)(ii)(I) of the Act, requires 

the supplier that furnishes oxygen 

equipment during the 36-month rental 

period to continue furnishing the 

oxygen equipment after the 36-month 

rental period. The supplier is required 

to continue to furnish the equipment 

during any period of medical need for 

the remainder of the reasonable useful 

lifetime of the equipment. As we noted 

when finalizing this rule, section 

1834(a)(5)(F)(ii)(I) does not provide any 

exceptions to this requirement. If the 

beneficiary relocates outside the 

supplier’s normal service area at some 

time after the 36-month rental period 

but before the end of the reasonable 

useful lifetime of the equipment, the 

supplier must make arrangements for 

the beneficiary to continue receiving the 

equipment at his or her new place of 

residence. This responsibility for 

furnishing the equipment does not 

transfer to another supplier. 

We revised § 414.226(f) to conform 

our regulations to this new MIPPA 

requirement. We deleted the transfer of 

ownership requirement and added the 

new requirement that the supplier must 

continue furnishing the oxygen 

equipment after the 36-month rental 

period during any period of medical 

need for the remainder of the reasonable 

useful lifetime of the equipment. It is 

important to note that § 414.226(g)(1)(ii) 

does not apply this same requirement in 

situations where the beneficiary 

relocates outside of the supplier’s 

normal service area during the 

36-month rental period. 

c. Furnishing Oxygen Equipment During 

the 36-Month Rental Period (CAP) 

Section § 414.226(g)(1) contains the 

requirement that the supplier that 

furnishes oxygen and oxygen equipment 

for the first month of the 36th month of 

the rental cap period must continue to 

furnish the equipment for the entire 36- 

month period of continuous use, with 

limited exceptions. One exception at 

§ 414.226(g)(1)(ii) applies when a 

beneficiary permanently relocates his or 

her residence during the 36-month 

rental period outside of the current 

supplier’s normal service area. This 

exception was proposed in the ‘‘Home 

Health Prospective Payment System 

Rate Update for Calendar Year 2007 and 

Deficit Reduction Act of 2005 Changes 

to Medicare Payment for Oxygen 

Equipment and Capped Rental Durable 

Medical Equipment; Proposed Rule’’ 

published in the August 3, 2006 Federal 

Register (71 FR 44094) and was 

intended to reduce the burden on the 

supplier in these situations. This 

approach is also consistent with the 

regulations addressing capped rental 

items described in § 414.229. We 

addressed this issue in the context of 

other capped rental DME, not including 

oxygen and oxygen equipment, in the 

July 10, 1995 Federal Register (60 FR 

35494) in response to comments. The 

discussion states that since the 

implementation of the capped rental 

payment methodology on January 1, 

1989, we received no reports of 

beneficiaries having difficulty obtaining 

access to capped rental DME after 

relocating outside the supplier’s service 

area. Since enactment of the capped 

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rental DME payment category in section 

4062 of the Omnibus Budget 

Reconciliation Act of 1987 (OBRA ’87) 

(Pub. L. 100–203), representatives of the 

DME industry indicated that suppliers 

would be able to accommodate 

beneficiaries in these situations, and 

this has proven to be true for capped 

rental items. In fact, we have found this 

to be the case to this day. 

For this reason, we believed that 

beneficiaries would not encounter 

problems obtaining access to oxygen 

and oxygen equipment in similar 

situations, that is, following the 

36-month cap imposed by section 144(b) 

of MIPPA. However, since the changes 

to the payment rules for oxygen and 

oxygen equipment mandated by the 

DRA became effective in 2006 and the 

36-month rental cap imposed by MIPPA 

was reached for the first time in January 

2009, we have received many reports of 

beneficiaries relocating prior to the end 

of the 36-month rental payment cap 

period and having difficulty finding an 

oxygen supplier in the new location. We 

have learned that many suppliers are 

unwilling to provide services in 

situations where there are a few number 

of months left in the 36-month rental 

payment period. 

We do not believe that beneficiaries 

have encountered similar issues 

following the 36-month rental cap, 

which most likely is the result of 

different statutory requirements for 

these two periods (that is, during and 

after the 36-month rental period). 

Section 1834(a)(5)(F)(ii) of the Act 

requires the supplier that furnishes the 

oxygen equipment during the 36-month 

rental payment period to continue 

furnishing the equipment after the 

36-month rental payment period. 

Consistent with this requirement, we 

established regulations at § 414.226(f)(1) 

that require the supplier to furnish the 

equipment or make arrangements for 

furnishing the equipment in situations 

where the beneficiary relocates outside 

the supplier’s normal service area. Since 

no such requirement currently applies 

in situations where the beneficiary 

relocates prior to the end of the 36- 

month rental payment period, and in 

fact current regulations at 

§ 414.226(g)(1)(ii) absolve the supplier 

of the obligation to continue furnishing 

oxygen equipment in these situations, 

beneficiaries are experiencing 

difficulties finding suppliers of oxygen 

equipment in their new locations that 

are willing to accommodate them. As 

noted above, we have not seen this 

problem in the capped rental DME 

context. The requirement at 

§ 414.226(g)(1) to furnish oxygen 

equipment for the entire 36-month 

rental cap period was established in the 

course of implementing section 5101(b) 

of the DRA in order to safeguard the 

beneficiary from situations where 

suppliers might discontinue service and 

pick up oxygen equipment prior to the 

end of the 36-month rental cap in order 

to avoid losing title to the equipment. 

As mentioned earlier, the transfer of 

title of oxygen and oxygen equipment 

after the 36th paid rental month was 

repealed. The exception to this rule at 

§ 414.226(g)(1)(ii) was established based 

on our experience that suppliers of 

capped rental DME have accommodated 

beneficiaries in these situations, which, 

unfortunately, has not been our 

experience in the context of oxygen 

equipment. 

In order to address this vulnerability 

facing beneficiaries as a result of 

regulations currently in effect, we 

proposed to revise the exception at 

§ 414.226(g)(1)(ii) to apply only to 

situations where the beneficiary 

relocates before the 18th paid rental 

month to an area that is outside the 

normal service area of the supplier that 

initially furnished the equipment. We 

proposed to revise the regulation to 

require the supplier that furnishes the 

oxygen equipment and receives 

payment for month 18 or later to either 

furnish the equipment for the remainder 

of the 36-month rental payment period 

or, in the case where the beneficiary has 

relocated outside the service area of the 

supplier, make arrangements for 

furnishing the oxygen equipment with 

another supplier for the remainder of 

the 36-month rental payment period. 

The supplier that is required to furnish 

the equipment on the basis of this 

requirement must also furnish the 

equipment after the 36-month rental 

payment period in accordance with the 

requirements of section 1834(a)(5)(F)(ii) 

and § 414.226(f). 

The proposed revision would mean 

that a supplier does not have to 

continue to furnish the oxygen 

equipment if the beneficiary relocates 

outside the normal service area before 

the 18th paid rental month during a 

period of continuous use. Under the 

current rule, a supplier does not have to 

furnish the oxygen equipment if the 

beneficiary relocated before the 36th 

paid rental month during a period of 

continuous use. The current rule was 

established based on the long term, 

demonstrated ability of suppliers of 

capped rental DME to accommodate 

beneficiaries in situations where they 

relocate near the end of a capped rental 

payment period. 

Comment: We received a total of 8 

comments on our proposal to require 

oxygen suppliers to continue to furnish 

medically necessary oxygen equipment 

for the remainder of the reasonable 

useful lifetime of the equipment to 

beneficiaries who relocate on or after 

the 18th rental month. All the 

comments were opposed to the 

proposed requirement. Some of the 

commenters questioned whether the 

statute gives us the authority to 

establish this requirement before the 

36th month rental payment. Others 

objected to the financial and 

coordination-of-benefits burden they 

believe that this requirement would 

cause for suppliers. Other objections 

were that the proposed requirement did 

not consider the effect on beneficiaries 

who relocate on a temporary basis 

during winter months (‘‘snow birds’’), or 

the access problems that it might cause 

in rural areas. Recommended 

alternatives included starting the rental 

period over at the time of relocation or 

keeping the current policy that only 

requires suppliers to continue 

furnishing oxygen equipment to 

beneficiaries who relocate outside of 

their service area if 36 rental amounts 

have already been paid. 

Response: In addition to considering 

the comments on the proposed rule, we 

analyzed complaint data from 

beneficiaries from January 2009 to 

September 2010 which is data collected 

by the regional offices. In the limited 

situations where beneficiaries receiving 

oxygen equipment for less than 36 

months relocated during this time and 

initially had trouble locating an oxygen 

supplier in their new location, CMS 

caseworkers in the CMS Regional 

Offices and the Office of the Medicare 

Beneficiary Ombudsman were able to 

locate suppliers to serve each and every 

beneficiary, usually within a matter of 

days. This means that, although supply 

arrangements and/or access to oxygen 

and oxygen equipment in these 

situations may have been briefly 

delayed, suppliers stepped forward to 

provide access to oxygen and oxygen 

equipment in these situations. Based on 

this information and certain comments 

received, we have decided not to 

finalize this proposed revision at this 

time. If in the future, beneficiaries’ 

access to oxygen equipment becomes a 

problem following the relocation of 

beneficiaries, we may consider this 

proposal or similar proposals. 

H. Provider and Supplier Enrollment 

Issue: Air Ambulance Provision 

The National Transportation Safety 

Board (NTSB) is an independent Federal 

agency charged by the Congress with 

investigating transportation accidents, 

determining their probable cause, and 

making recommendations to prevent 

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73582 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

similar accidents from occurring. Based 

on information derived from testimony 

provided at the NTSB public hearing 

and investigations into recent helicopter 

air ambulance accidents, the NTSB 

made several specific recommendations 

to the Secretary on September 24, 2009. 

Specifically, the NTSB recommended 

that the Secretary develop minimum 

safety accreditation standards for 

helicopter air ambulance operators that 

augment the operating standards of 14 

CFR 135 by including for all flights with 

medical personnel on board: (a) 

Scenario-based pilot training; (b) 

implementation of preflight risk 

evaluation programs; and (c) the 

installation of FAA-approved terrain 

awareness warning systems, night 

vision imaging systems, flight data 

recording systems for monitoring and 

autopilots if a second pilot is not used. 

In response to the NTSB concerns, the 

Secretary noted that the 

recommendations to CMS were similar 

to those being made to the Federal 

Aviation Administration (FAA). While 

we have expertise to regulate health and 

safety requirements that suppliers and 

providers of healthcare should meet, we 

do not have the expertise to determine 

aircraft safety requirements. The 

Secretary stated that, ‘‘we believe the 

FAA should determine the minimum 

level of safety that HEMS operators 

should meet and CMS should adopt 

regulations that require any HEMS 

operator that enrolls in Medicare to 

meet those requirements.’’ The Secretary 

also added that, ‘‘while we do not 

believe CMS should augment FAA 

regulations, we do believe that CMS’ 

regulations should ensure that only 

those HEMS operators that maintain the 

minimum level of requirements 

established by the FAA through its 

regulations are enrolled or maintain 

enrollment in the Medicare program.’’ 

The FAA proposed Federal regulations 

to address the NTSB’s concerns in their 

October 12, 2010 proposed rule (75 FR 

62640) entitled ‘‘Air Ambulance and 

Commercial Helicopter Operations, Part 

91 Helicopter Operations, and Part 135 

Aircraft Operations; Safety Initiatives 

and Miscellaneous Amendments.’’ 

In the April 21, 2006 Federal 

Register, we published the 

‘‘Requirements for Providers and 

Suppliers to Establish and Maintain 

Medicare Enrollment’’ final rule. This 

final rule implemented section 

1866(j)(1)(A) of the Act. In this final 

rule, we required that all providers and 

suppliers (other than physicians or 

practitioners who have elected to ‘‘optout’’ of the Medicare program) must 

complete an enrollment form and 

submit specific information to CMS in 

order to obtain Medicare billing 

privileges. Section 424.515 required that 

ambulance service providers continue to 

resubmit enrollment information in 

accordance with § 410.41(c)(2), which 

states, ‘‘Upon a carrier’s request, 

complete and return the ambulance 

supplier form designated by CMS and 

provide the Medicare carrier with 

documentation of compliance with 

emergency vehicle and staff licensure 

and certification requirements in 

accordance with State and local laws.’’ 

This final rule also established 

§ 424.510(d)(2)(iii) which states, 

‘‘Submission of all documentation, 

including all applicable Federal and 

State licensure and regulatory 

requirements that apply to the specific 

provider or supplier type related to 

providing health care services, required 

by CMS under this or other statutory or 

regulatory authority, or under the 

Paperwork Reduction Act of 1995, to 

establish the provider or supplier’s 

eligibility to furnish Medicare covered 

items or services to beneficiaries in the 

Medicare program.’’ 

While the Airline Deregulation Act 

(Pub. L. 95–504) preempts a State, 

political subdivision of a State, or 

political authority of at least two States 

from enacting or enforcing a law, 

regulation, or other provision having the 

force and effect of law related to a price, 

route, or service of an air carrier that 

may provide air transportation, air 

ambulances remain subject to Federal 

laws and regulations. In accordance 

with § 424.516(a)(2), providers and 

suppliers must adhere to all Federal 

regulations and State laws and 

regulations, as required, based on the 

type of services or supplies the provider 

or supplier type will furnish and bill 

Medicare. 

In § 424.510(d)(iii), we proposed to 

clarify that ambulance suppliers and 

other providers and suppliers include 

documentation regarding all applicable 

Federal and State certifications. 

Accordingly we proposed to revise 

§ 424.510(d)(iii) from ‘‘Submission of all 

documentation, including all applicable 

Federal and State licenses and 

regulatory requirements that apply to 

the specific provider or supplier type 

that relate to providing health care 

service, required by CMS under this or 

other statutory or regulatory authority, 

or under the Paperwork Reduction Act 

of 1995, to establish the provider or 

supplier’s eligibility to furnish Medicare 

covered items or services to 

beneficiaries in the Medicare program,’’ 

to ‘‘Submission of all documentation, 

including all applicable Federal and 

State licenses, certifications (including, 

but not limited to FAA certifications), 

and regulatory requirements that apply 

to the specific provider or supplier type 

that relate to providing health care 

service, required by CMS under this or 

other statutory or regulatory authority, 

or under the Paperwork Reduction Act 

of 1995, to establish the provider or 

supplier’s eligibility to furnish Medicare 

covered items or services to 

beneficiaries in the Medicare program.’’ 

When revoked or suspended, we are 

requiring that the specific pilot 

certifications (for example, 

instrumentation and medical), and the 

airworthiness certifications be reported. 

We proposed to add new paragraph 

(e)(3) to clarify that Medicare enrolled 

providers and suppliers must report a 

revocation or suspension of a Federal or 

State license or certification, including 

but not limited to FAA certifications. 

The certifications, when revoked, that 

need to be reported are the specific pilot 

certifications, such as instrument and 

medical certified; as well as 

airworthiness certificates. This revision 

will clarify that fixed-wing ambulance 

operators and helicopter air ambulance 

operators are responsible for notifying 

the designated Medicare contractor for 

their State when FAA revokes or 

suspends any license or certification. 

Moreover, fixed-wing ambulance 

operators and helicopter air ambulance 

operators must maintain all 

requirements as specified in 14 CFR 

parts 91, 119, and 135. 

We stated our belief that requiring 

fixed wing ambulance and helicopter air 

ambulance operators to notify their 

Medicare contractor of a suspension or 

revocation of a license or certification 

will ensure that any action taken by the 

FAA or other regulating authority will 

have a direct link to the operator’s 

ability to maintain their Medicare 

enrollment. We also stated that such a 

policy will help improve aircraft safety 

for operators that are enrolled in 

Medicare and providing services to 

Medicare beneficiaries. We believe that 

allowing providers and suppliers to selfreport licensure or certification 

revocations and suspensions within a 30 

day period via the Medicare enrollment 

application (such as, the Internet-based 

Provider Enrollment Chain and 

Ownership System (PECOS) or the 

paper CMS–855) promotes compliance 

with the Medicare reporting 

requirements found in § 424.516. In 

addition, by reporting a licensure or 

certification revocation or suspension 

within 30 days, the provider or supplier 

avoids the Medicare contractor bringing 

an action to revoke its Medicare billing 

privileges and establishing a Medicare 

enrollment bar, see § 424.535(c). Thus, 

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by complying with the reporting 

responsibilities found in § 424.516 and 

voluntarily terminating from the 

Medicare program, the air ambulance 

supplier can submit an initial 

application to enroll in the Medicare 

program as soon as the licensure or 

certification revocation or suspension 

action is resolved with the applicable 

licensing or certification organization. If 

the supplier does not self-report a 

licensure, certification revocation or a 

suspension action, then the supplier’s 

enrollment in the Medicare program 

will be automatically revoked for a 

period of one to three years. 

In § 424.502, we proposed to define 

the term, ‘‘voluntary termination’’ as it is 

currently used in the Medicare program 

and throughout this regulation in the 

context of the provider enrollment 

requirements: We proposed that the 

term, ‘‘voluntary termination’’ means an 

air ambulance supplier that submits 

written confirmation to CMS of its 

decision to discontinue enrollment in 

the Medicare program. 

Furthermore, we stated our belief that 

an air ambulance supplier can make the 

decision to voluntarily terminate their 

business relationship with the Medicare 

program at any time, including when 

the provider or supplier makes the 

decision that they will no longer furnish 

services to Medicare beneficiaries. In 

those situations, where an air 

ambulance supplier does not meet their 

reporting responsibilities and notify the 

Medicare program of a Federal or State 

licensure or certification revocation or 

suspension within 30 days of the 

reportable event, we believe that it is 

appropriate that CMS or the Medicare 

contractor revoke the supplier’s 

Medicare billing privileges using 

§ 424.535(a)(1). We believe that this 

change will clarify that CMS or our 

Medicare contractor may revoke 

Medicare billing privileges when these 

types of suppliers do not report a 

revocation or suspension of a Federal or 

State license or certification. 

Comment: Several comments received 

agreed with CMS’ enrollment 

requirements and believe the FAA has 

the appropriate resources to develop, 

monitor, and enforce aviation or 

aviation safety related standards. The 

commenters believe that the sole 

authority of the FAA to regulate matters 

of aviation safety assures continuity in 

regulations and further believe any 

change to the authority would have 

serious consequences for safe operations 

since CMS lacks the expertise and 

resources to develop and enforce such 

standards. 

Response: We agree with the 

commenters; and therefore, are 

finalizing the proposal without 

modification. 

Comment: Several commenters 

believe CMS missed an opportunity 

through this proposed rule to improve 

system safety for Medicare beneficiaries 

through an accreditation process. 

Response: Currently, we do not have 

the statutory authority to establish an 

accreditation program for fixed-wing air 

ambulance operators and air ambulance 

operators. 

Comment: Several commenters noted 

that the preamble language might cause 

confusion as stated, ‘‘fixed-wing air 

ambulance operators and HEMS 

operators must maintain all 

requirements as specified in 14 CFR part 

135.’’ 

Response: We are clarifying that all 

fixed-wing air ambulance operators and 

helicopter air ambulance operators must 

adhere to all applicable FAA regulations 

as specified in 14 CFR parts 91, 119 and 

135 or risk having their Medicare 

enrollment revoked or suspended. 

I. Technical Corrections 

1. Physical Therapy, Occupational 

Therapy and Speech-Language 

Pathology 

We proposed to revise § 409.23(c) by 

making a minor technical correction to 

remove an extraneous cross-reference 

which was initially proposed in the CY 

2008 PFS proposed rule (72 FR 38122, 

72 FR 38193, and 72 FR 38221). This 

cross-reference refers the reader to 

‘‘paragraph (c)(1)(ii) of this section,’’ a 

paragraph also proposed in the CY 2008 

PFS proposed rule, but never finalized. 

In the CY 2008 PFS final rule with 

comment period, we inadvertently 

neglected to remove the associated 

cross-reference from the regulations 

text. Therefore, we proposed to rectify 

that oversight by making an appropriate 

correction in the regulations text, along 

with other minor formatting revisions 

by making the following changes: 

• To make a minor clarification to the 

section heading and introductory text of 

§ 409.23 (along with a conforming 

revision to the corresponding 

regulations text at § 409.20(a)(3)) by 

revising the existing phrase ‘‘speech 

therapy’’ to read ‘‘speech-language 

pathology services,’’ so that it more 

accurately reflects the currently used 

terminology for this type of therapeutic 

treatment. 

• To make a minor wording change in 

the provision at § 409.17(d) (which is 

incorporated by reference in 

§ 409.23(c)(2)), in order to clarify that 

the former provision’s reference to 

‘‘hospital’’ policies and procedures can 

alternatively refer, depending on the 

particular context, to SNF policies and 

procedures. 

We did not receive public comment 

on this proposal; and therefore, are 

finalizing this proposal without 

modification. 

2. Scope of Benefits 

Currently, § 410.3(b)(2) states that the 

specific rules on payment are set forth 

in subpart E of part 410. However, the 

specific payment rules are actually 

listed in subpart I of part 410. Therefore, 

we proposed correct this referencing 

error by making a technical correction to 

§ 410.3(b)(2). 

We did not receive public comment 

on this proposal; and therefore, are 

finalizing this proposal without 

modification. 

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 

§ 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 § 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 

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73584 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

publications. The DHS categories 

defined and updated in this manner are: 

• 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 (§ 411.355(g)). 

• Preventive screening tests, 

immunizations, or vaccines 

(§ 411.355(h)). 

The Code List was last updated in 

Addendum I of the CY 2010 PFS final 

rule with comment period (74 FR 62177 

through 62188) and revised in a 

subsequent correction notice (75 FR 

26350). 

b. Response to Comments 

We received no public comments 

relating to the Code List that became 

effective January 1, 2010. 

c. Revisions Effective for 2011 

The updated, comprehensive Code 

List effective January 1, 2011 appears 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. 

Tables 98 and 99 identify the 

additions and deletions, respectively, to 

the comprehensive Code List that 

became effective January 1, 2010. Tables 

98 and 99 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 

§ 411.355(g) (regarding dialysis-related 

outpatient prescription drugs furnished 

in or by an ESRD facility) and in 

§ 411.355(h) (regarding preventive 

screening tests, immunizations, and 

vaccines). 

In Table 98, we specify additions that 

reflect new CPT and HCPCS codes that 

become effective January 1, 2011, or that 

became effective since our last update. 

We also include additions that reflect 

changes in Medicare coverage policy or 

payment status that become effective 

January l, 2011, or that became effective 

since our last update. 

Table 99 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 codes 

94667 and 94668 (Chest wall 

manipulation) from the category of 

‘‘physical therapy, occupational therapy, 

and outpatient speech-language 

pathology services’’ because these 

services are not generally considered to 

be physical therapy services. Also, we 

are deleting CPT code 77014 (CT scan 

for therapy guide) from the category 

‘‘radiology and certain other imaging 

services.’’ This service is always integral 

to the performance of, and performed 

during, a non-radiological medical 

procedure. Therefore, under § 411.351, 

this service is excluded from the 

definition of ‘‘radiology and certain 

other imaging services.’’ 

Lastly, we are deleting the drugs 

currently listed as qualifying for the 

exception for ‘‘EPO and other dialysisrelated drugs’’ furnished in or by an 

ESRD facility. Beginning 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) will be 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 definition of DHS at § 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). 

Accordingly, EPO and other dialysisrelated outpatient prescription drugs 

furnished by an ESRD facility (except 

drugs for which there are no injectable 

equivalents or other forms of 

administration) will not be DHS 

beginning January 1, 2011. When 

dialysis-related drugs for which there 

are no injectable equivalents or other 

forms of administration are bundled 

into the ESRD PPS beginning January 1, 

2014, and furnished by an ESRD facility, 

they will no longer meet the definition 

of DHS and, therefore, will not be 

subject to the physician self-referral 

prohibition. In the meantime, those 

drugs remain DHS. If we determine that 

any of those drugs may qualify for the 

exception for dialysis-related drugs at 

411.355(g), we will announce them 

through the annual update to the Code 

List that appears in the PFS final rule. 

We will consider comments regarding 

the codes listed in Tables 98 and 99. 

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 § 411.351. 

TABLE 98 ADDITIONS TO THE PHYSICIAN SELF-REFERRAL LIST OF

CPT 1/HCPCS CODES

CLINICAL LABORATORY SERVICES 

0058T ......... Cryopreservation ovary tiss. 

0059T ......... Cryopreservation oocyte. 

G0432 ........ EIA HIV–1/HIV–2 screen. 

G0433 ........ ELISA HIV–1/HIV–2 screen. 

G0434 ........ Drug screen multi drug class. 

G0435 ........ Oral HIV–1/HIV–2 screen. 

PHYSICAL THERAPY, OCCUPATIONAL 

THERAPY, AND OUTPATIENT SPEECHLANGUAGE PATHOLOGY SERVICES 

95992 ......... Canalith repositioning proc. 

RADIOLOGY AND CERTAIN OTHER 

IMAGING SERVICES 

72159 ......... Mr angio spine w/o&w/dye. 

73225 ......... Mr angio upr extr w/o&w/dye. 

74176 ......... Ct angio abd & pelvis. 

74177 ......... Ct angio abd&pelv w/contrast. 

74178 ......... Ct angio abd & pelv 1+ regns. 

76881 ......... Us xtr non-vasc complete. 

76882 ......... Us xtr non-vasc lmtd. 

92132 ......... Cmptr ophth dx img ant segmt. 

92133 ......... Cmptr ophth img optic nerve. 

92134 ......... Cptr ophth dx img post segmt. 

92227 ......... Remote dx retinal imaging. 

92228 ......... Remote retinal imaging mgmt. 

RADIATION THERAPY SERVICES AND 

SUPPLIES 

49327 ......... Lap ins device for rt. 

49412 ......... Ins device for rt guide open. 

57156 ......... Ins vag brachytx device. 

A4650 ......... Implant radiation dosimeter. 

DRUGS USED BY PATIENTS UNDERGOING 

DIALYSIS 

[No additions] 

PREVENTIVE SCREENING TESTS, 

IMMUNIZATIONS AND VACCINES 

90662 ......... Flu vacc prsv free inc antig. 

90670 ......... Pneumococcal vacc 13 val im. 

G0432 ........ EIA HIV–1/HIV–2 screen. 

G0433 ........ ELISA HIV–1/HIV–2 screen. 

G0435 ........ Oral HIV–1/HIV–2 screen. 

Q2035 ........ Afluria vacc, 3 yrs & >, im. 

Q2036 ........ Flulaval vacc, 3 yrs & >, im. 

Q2037 ........ Fluvirin vacc, 3 yrs & >, im. 

Q2038 ........ Fluzone vacc, 3 yrs & >, im. 

Q2039 ........ NOS flu vacc, 3 yrs & >, im. 

1 CPT codes and descriptions only are copyright 2010 AMA. All rights are reserved and 

applicable FARS/DFARS clauses apply. 

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TABLE 99—DELETIONS TO THE PHYSICIAN SELF-REFERRAL LIST OF

CPT 1 HCPCS CODES

CLINICAL LABORATORY SERVICES 

0104T ...... At rest cardio gas rebreathe. 

0140T ...... Exhaled breath condensate ph. 

G0430 ...... Drug screen multi class. 

PHYSICAL THERAPY, OCCUPATIONAL 

THERAPY, AND OUTPATIENT SPEECHLANGUAGE PATHOLOGY SERVICES 

94667 ....... Chest wall manipulation. 

94668 ....... Chest wall manipulation. 

RADIOLOGY AND CERTAIN OTHER 

IMAGING SERVICES 

76150 ....... X-ray exam, dry process. 

76880 ....... Us exam, extremity. 

77014 ....... Ct scan for therapy guide. 

RADIATION THERAPY SERVICES AND 

SUPPLIES 

[No deletions]. 

DRUGS USED BY PATIENTS UNDERGOING 

DIALYSIS 

J0630 ....... Calcitonin salmon injection. 

J0636 ....... Inj calcitriol per 0.1 mcg. 

J0882 ....... Darbepoetin alfa, esrd use. 

J0895 ....... Deferoxamine mesylate inj. 

J1270 ....... Injection, doxercalciferol. 

J1750 ....... Inj iron dextran. 

J1756 ....... Iron sucrose injection. 

J1955 ....... Inj levocarnitine per 1 gm. 

J2501 ....... Paricalcitol. 

J2916 ....... Na ferric gluconate complex. 

J2993 ....... Reteplase injection. 

J2995 ....... Inj streptokinase/250000 IU. 

J2997 ....... Alteplase recombinant. 

J3364 ....... Urokinase 5000 IU injection. 

P9041 ...... Albumin (human), 5%, 50 ml. 

P9045 ...... Albumin (human), 5%, 250 ml. 

P9046 ...... Albumin (human), 25%, 20 ml. 

P9047 ...... Albumin (human), 25%, 50 ml. 

Q0139 ...... Ferumoxytol, esrd use. 

Q4081 ...... Epoetin alfa, 100 units ESRD. 

PREVENTIVE SCREENING TESTS, 

IMMUNIZATIONS AND VACCINES 

90658 ....... Flu vaccine, 3 yrs & >, im. 

1 CPT codes and descriptions only are copyright 2010 AMA. All rights are reserved and 

applicable FARS/DFARS clauses apply. 

VIII. 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 

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 also assign interim RVUs 

to any new codes based on a review of 

the AMA RUC recommendations for 

valuing these services. 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 outlined above 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 discussed above, 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 2011. 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 described above, we find good 

cause to waive notice and comment 

procedures with respect to the 

misvalued codes identified in Tables 53, 

54, and 55, and to revise RVUs for these 

codes on an interim final basis. We are 

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73586 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

providing a 60-day public comment 

period. 

Furthermore, in this final rule with 

comment period, we are making a 

technical revision to § 410.64 

(Additional Preventive Services) to 

conform with section 1861(ddd)(1), as 

amended by section 4104 of the ACA. 

We are revising § 410.64(a) by removing 

the words ‘‘not otherwise described in 

this subpart’’ and adding the words ‘‘not 

described in subparagraphs (1) or (3) of 

§ 410.2 of this subpart’’ in their place. 

This change reflects section 

1861(ddd)(1) of the Act (as amended by 

section 4104(a)(2) of the ACA). While 

this change was not discussed in the CY 

2011 PFS proposed rule (74 FR 40129), 

we are making this change pursuant to 

the ‘‘good cause’’ exception to APA 

notice and comment rulemaking. Under 

the good cause exception, public 

participation procedures are not 

required ‘‘when the agency for good 

cause finds (and incorporates the 

finding and a brief statement of reasons 

therefore in the rules issued) that notice 

and public procedure thereon are 

impracticable, unnecessary, or contrary 

to the public interest’’ (5 U.S.C. 553(b)). 

Section 410.64(a) previously reflected 

section 1861(ddd)(1) of the Act, which 

was subsequently amended. The 

revision to the regulations merely 

incorporates the new statutory language 

for consistency, and is not an 

interpretation or clarification. Therefore, 

we believe it is appropriate to waive 

advanced notice and public comment 

on this change for good cause, due to 

the technical nature of the revision to 

the regulations. 

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)). 

IX. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

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. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements 

(ICRs): 

A. ICRs Regarding Diagnostic X-ray 

Tests, Diagnostic Laboratory Tests, and 

Other Diagnostic Tests: Conditions 

(§ 410.32) 

Section 410.32(d)(2)(i) requires the 

physician or qualified nonphysician 

practitioner (as defined in 

§ 410.32(a)(2)) who orders the service 

must maintain documentation of 

medical necessity in the beneficiary’s 

medical record. In addition, both the 

medical record and the laboratory 

requisition (or order) would be required 

to be signed by the physician or 

qualified nonphysician practitioner (as 

defined in § 410.32(a)(2)) who orders the 

service. The burden associated with 

these requirements would be the time 

and effort necessary for a physician or 

qualified nonphysician practitioner to 

sign the medical record or laboratory 

requisition (or order). There is also a 

recordkeeping requirement associated 

with maintaining the documentation of 

medical necessity in the beneficiary 

medical record. While these 

recordkeeping and reporting 

requirements are subject to the PRA, we 

believe the associated burden is exempt 

from the PRA in accordance with 5 CFR 

1320.3(b)(2). We believe that the time, 

effort, and financial resources necessary 

to comply with the aforementioned 

information collection requirements is 

incurred by persons in the normal 

course of their activities and therefore 

considered to be usual and customary 

business practices. 

B. ICRs Regarding General Exceptions to 

the Referral Prohibition Related to Both 

Ownership/Investment and 

Compensation (§ 411.355) 

Section 411.355(b)(7)(i) states that 

with respect to magnetic resonance 

imaging, computed tomography, and 

positron emission tomography, the 

referring physician must provide 

written notice to the patient at the time 

of the referral that the patient may 

receive the same services from a person 

other than one described in 

§ 411.355(b)(1). The written notice must 

include a list of other suppliers (as 

defined in § 400.202 of this title) that 

provide the services for which the 

individual is being referred. In response 

to public comments received, we are 

finalizing this provision to require that 

the list must include a minimum of 5 

suppliers within a 25-mile radius of the 

referring physician’s office location at 

the time of the referral, rather than the 

proposed 10 suppliers. The notice 

should be written in a manner sufficient 

to be reasonably understood by all 

patients and should include for each 

supplier on the list, at a minimum, the 

supplier’s name, address, and telephone 

number. 

This rule finalizes section 

411.355(b)(7)(ii) to state that if the 

referring physician makes a referral 

within an area with fewer than 5 other 

suppliers within the 25-mile radius of 

the physician’s office location at the 

time of the referral, the physician shall 

list all of the other suppliers of the 

imaging service that are present within 

a 25-mile radius of the referring 

physician’s office location. Provision of 

the written list of alternate suppliers 

will not be required if no other 

suppliers provide the services for which 

the individual is being referred within 

the 25-mile radius. These physicians 

must still disclose to the patient that the 

patient may receive these services from 

a person other than one described in 

§ 411.355(b)(1) in a manner sufficient to 

reasonably be understood by all 

patients. 

The burden associated with the 

requirements contained in this section 

would be the time and effort necessary 

for a physician to develop a standard 

disclosure. There would also be burden 

associated with the time and effort 

necessary for a physician to provide the 

disclosure to the patient. Based upon 

public comments received, we have 

removed the requirement that a 

physician must obtain the patient’s 

signature on the disclosure and 

maintain a copy of this document in the 

medical record. Physicians must retain 

adequate assurance that the information 

was shared with the patient so that this 

information can be verified. 

Our estimate that it would take 1 hour 

for a physician’s office to develop a 

standard disclosure remains the same in 

this final rule with comment to account 

for physicians drafting the disclosure 

notice and listing the 5 alternate 

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suppliers. Our estimate that 71,000 

physicians will be required to comply 

with these requirements remains 

unchanged from the proposed rule. The 

total burden associated with the 

development of the standard disclosure 

remains 71,000 hours at a cost of 

$1,042,280. Although the physician no 

longer must have the patient sign the 

disclosure and enter it into the medical 

record, we have not changed the 

estimate that it will take each physician 

1 minute to provide the disclosure to 

the patient. Each provider will make 

approximately 106 disclosures. The 

total estimated annual burden for this 

requirement remains 125,433 hours at a 

cost of $10,536,400. 

C. ICRs Regarding Appeals Process for 

Termination of Competitive Bidding 

Contract (§ 414.423) 

Section 414.423(c)(1)(i) states that 

CMS has the option to allow a DMEPOS 

supplier to provide a written CAP to 

remedy the deficiencies identified in the 

notice, when CMS determines that the 

delay in the termination date caused by 

allowing a CAP will not cause harm to 

beneficiaries. As stated in 

§ 414.423(c)(2)(i) a CAP must be 

submitted within 30 calendar days from 

the date on the notification letter. If the 

supplier decides not to submit a CAP 

the supplier may within 30 days of the 

date on the termination letter request a 

hearing by a CBIC hearing officer. 

The burden associated with this 

requirement is the time and effort 

necessary for a supplier that has 

received a termination notice to develop 

and submit a CAP. We estimate that 10 

suppliers will need to comply with this 

requirement annually. Similarly, we 

estimate that it will take a supplier an 

average of 3 hours to develop a CAP. 

The total estimated annual burden 

associated with this requirement is 30 

hours at a cost of $2,250. 

Section 414.423(e)(2) requires that if 

CMS accepts the CAP, including 

supplier’s designated timeframe for its 

completion, the supplier must provide a 

follow-up report within 5 days after the 

supplier has fully implemented the CAP 

that verifies that all of the deficiencies 

identified in the CAP have been 

corrected in accordance with the 

timeframes accepted by CMS. The 

burden associated with this requirement 

is the time and effort necessary for a 

supplier to develop and submit a 

follow-up report. While this 

requirement is subject to the PRA, we 

believe the associated burden is exempt 

under 5 CFR 1320.3(h)(6). In accordance 

with 5 CFR 1320.3(h)(6), a request for 

facts or opinions addressed to a single 

person is not defined as information 

collection requirements and is therefore 

exempt from the PRA. 

Section 414.423(f)(1) states that a 

supplier who has received a notice that 

CMS considers them in breach of 

contract or that their CAP is not 

acceptable has the right to request a 

hearing before a CBIC HO who was not 

involved with the original 

determination. Section 414.423(f)(2) 

further specifies that a supplier who 

wishes to appeal the termination notice 

must submit a written request to the 

CBIC. The request for a hearing must be 

received by the CBIC within 30 calendar 

days from the date of the notice to 

terminate. 

The burden associated with this 

section is the time and effort necessary 

for a supplier to develop and submit a 

written request for a hearing by a CBIC 

Hearing Officer. We estimate that it will 

take a supplier 8 hours to develop and 

submit a request for a hearing. We 

believe 5 suppliers will be subject to 

this requirement on an annual basis. 

The total estimated annual burden 

associated with developing and 

submitting a written request for a 

hearing by a CBIC Hearing Officer is 40 

hours at a cost of $3,000. 

Section 414.423 requires a contract 

supplier whose contract has been 

terminated to notify all beneficiaries 

who are receiving rented competitive 

bid items or competitive bid items 

received on a recurring basis, of the 

termination of their contract. The notice 

to the beneficiary from the supplier 

whose contract was terminated must be 

provided within 5 days of receipt of the 

notice of termination. The notification 

to the beneficiaries must inform the 

beneficiaries that they are going to have 

to select a new contract supplier for 

these items. 

The burden associated with this 

section is the time and effort necessary 

for a supplier to develop and distribute 

notification of its termination to all 

beneficiaries receiving rented 

competitive bid items or competitive 

bid items received on a recurring basis. 

We estimate that it will take a supplier 

3 hours to develop and distribute a 

notice announcing its termination to all 

of its beneficiaries receiving rented 

competitive bid items or competitive 

bid items received on a recurring basis. 

We believe 2 suppliers will be subject 

to this requirement on an annual basis. 

The total estimated annual burden 

associated with this requirement is 6 

hours at a cost of $450. 

D. ICRs Regarding Additional Provider 

and Supplier Requirements for Enrolling 

and Maintaining Active Enrollment 

Status in the Medicare Program 

(§ 424.516) 

Section 424.516(e)(2) would require a 

provider or supplier to report a 

revocation or suspension to the 

applicable Medicare contractor within 

30 days of any revocation or suspension 

of a Federal or State license or 

certification. Similarly, proposed 

§ 424.516(e)(2) states that within 30 

days of a voluntary withdrawal or 

involuntary termination from the 

Medicare program, the provider or 

supplier must report a voluntary 

withdrawal or involuntary termination 

to the applicable Medicare contractor. 

The burden associated with the 

requirements in § 424.516(e)(2) and (3) 

is the time and effort necessary for a 

provider or supplier to report the 

required information to the applicable 

Medicare contractor. While these 

requirements are subject to the PRA, 

each submission will be evaluated on a 

case-by-case basis. 

TABLE 100—ESTIMATED ANNUAL RECORDKEEPING AND REPORTING BURDEN

Regulation section(s) OMB control No. Respondents Responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting (in 

$) 

Total 

labor 

cost of 

reporting 

(in $) 

Total capital/ 

maintenance 

costs (in $) 

Total cost 

(in $) 

§ 411.355 ................. 0938–New ............... 71,000 71,000 1 71,000 14.68 1,042,280 0 1,042,280 

71,000 7,454,760 0.0167 125,433 83.79 *10,536,400 0 10,536,400 

§ 414.423 ................. 0938–New ............... 10 10 3 30 75.00 2,250 0 2,250 

5 5 8 40 75.00 3000 0 3000 

2 2 3 6 75.00 450 0 450 

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TABLE 100—ESTIMATED ANNUAL RECORDKEEPING AND REPORTING BURDEN—Continued 

Regulation section(s) OMB control No. Respondents Responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting (in 

$) 

Total 

labor 

cost of 

reporting 

(in $) 

Total capital/ 

maintenance 

costs (in $) 

Total cost 

(in $) 

Total ................. ................................. 71,017 7,525,777 ...................... 196,509 ...................... ...................... ...................... 11,584,380 

* The annual cost burden for this provision was calculated by taking 106 disclosures per year per physician x $1.40 per disclosure = $148.40 a year per physician x 

71,000 physicians = $10,536,400. 

E. Additional Information Collection 

Requirements 

This final rule with comment period 

imposes collection of information 

requirements as outlined in the 

regulation text and specified above. 

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 VII.A.1 of this 

final rule with comment period does not 

contain any new information collection 

requirements with respect 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. 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. While the burden associated with 

this requirement is subject to the PRA, 

it is currently approved under OMB 

control number 0938–0921 with a June 

31, 2012, expiration date. 

2. The Physician Quality Reporting 

System (Formerly the Physician Quality 

Reporting Initiative (PQRI)) 

Section VII.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 2011 Physician Quality Reporting 

System, and the criteria for satisfactory 

reporting in 2011. 

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 2011, the 

eligible professional (or group practice) 

must meet one of the criteria for 

satisfactory reporting described in 

section VII.F.1.e. or VII.F.1.f. of this 

final rule with comment period (or 

section VII.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 2011. 

Information from the ‘‘Physician Quality 

Reporting System 2007 Reporting 

Experience Report,’’ which is available 

on the Physician Quality Reporting 

System section of the CMS Web site at 

http://www.cms.hhs.gov/pqri, indicates 

that nearly 110,000 unique TIN/NPI 

combinations attempted to submit 

Physician Quality Reporting System 

quality measures data via claims for the 

2007 Physician Quality Reporting 

System. Therefore, for purposes of 

conducting a burden analysis for the 

2011 Physician Quality Reporting 

System, we will assume that all eligible 

professionals who attempted to 

participate in the 2007 Physician 

Quality Reporting System will also 

attempt to participate in the 2011 

Physician Quality Reporting System. 

Furthermore, we believe that the burden 

for eligible professionals who are 

participating in the Physician Quality 

Reporting System for the first time in 

2011 will be considerably higher than 

the burden for eligible professionals 

who have participated in the Physician 

Quality Reporting System in prior years. 

For individual eligible professionals, 

the burden associated with the 

requirements of this reporting initiative 

is the time and effort associated with 

eligible professionals 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 accurately quantify the 

burden because eligible professionals 

may have different processes for 

integrating the Physician Quality 

Reporting System into their practice’s 

work flows. Moreover, 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 is expected to vary along 

with the number of measures that are 

potentially applicable to a given 

professional’s practice. Since eligible 

professionals are generally required to 

report on at least 3 measures to earn a 

Physician Quality Reporting System 

incentive, we will assume that each 

eligible professional who attempts to 

submit Physician Quality Reporting 

System quality measures data is 

attempting to earn a Physician Quality 

Reporting System incentive payment 

and reports on an average of 3 measures 

for this burden analysis. 

Because we anticipate even greater 

participation in the 2011 Physician 

Quality Reporting System than in 

previous years, including participation 

by eligible professionals who are 

participating in the Physician Quality 

Reporting System for the first time in 

2011, we will assign 5 hours as the 

amount of time needed for eligible 

professionals to review the 2011 

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 2011 Physician Quality 

Reporting System Measures List, review 

the reporting options, and select a 

reporting option and measures on which 

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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. 

Information from the PVRP, which 

was a predecessor to the Physician 

Quality Reporting System, indicated an 

average labor cost of $50 per hour. To 

account for salary increases over time, 

we will use an average practice labor 

cost of $58 per hour in our estimates 

based on an assumption of an average 

annual increase of approximately 3 

percent. Thus, we estimate the cost for 

an eligible professional associated with 

preparing to report Physician Quality 

Reporting System quality measures 

would be approximately $290 per 

eligible professional ($58 per hour x 5 

hours). 

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 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. For claims-based 

reporting, eligible professionals must 

gather the required information, select 

the appropriate 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 no modifications to the 

existing transaction or form. We also do 

not anticipate changes to the 837–P or 

CMS Form 1500 for CY 2011. 

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 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 $58 per hour per practice, the 

cost associated with this burden ranges 

from $0.24 in labor to about $11.60 in 

labor time for more complicated cases 

and/or measures, with the cost for the 

median practice being $1.69. 

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 claimsbased 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 proposed to reduce the 

required reporting rate by over one-third 

to 50 percent, 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 would 

be 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 

above, we estimate the total annual 

reporting burden per eligible 

professional associated with claimsbased reporting to range from 4.5 

minutes (0.25 minutes per measure × 3 

measures × 6 cases per measure) to 180 

minutes (12 minutes per measure × 3 

measures × 6 cases per measure), with 

the burden to the median practice being 

31.5 minutes (1.75 minutes per measure 

× 3 measures × 6 cases). We estimate the 

total annual reporting cost per eligible 

professional associated with claimsbased reporting to range from $4.32 

($0.24 per measure × 3 measures × 6 

cases per measure) to $208.80 ($11.60 

per measure × 3 measures × 6 cases per 

measure), with the cost to the median 

practice being $30.42 per eligible 

professional ($1.69 per measure × 3 

measures × 6 cases per measure). 

For registry-based reporting, there 

would be no additional time burden for 

eligible professionals to report data to a 

registry as eligible professionals opting 

for registry-based reporting would more 

than likely already be reporting data to 

the registry for other purposes and the 

registry would merely be re-packaging 

the data for use in the Physician Quality 

Reporting System. Little, if any, 

additional data would need to be 

reported to the registry for purposes of 

participation in the 2011 Physician 

Quality Reporting System. However, 

eligible professionals would 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 would 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 2011 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 

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 2011 Physician 

Quality Reporting System involves 

approximately 1 hour per registry to 

draft the letter of intent for selfnomination. It is estimated 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 complete the measure flow 

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 is estimated 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 have an average labor cost of 

$50 per hour. Therefore, assuming the 

total burden hours per registry 

associated with the registry selfnomination process is 10 hours, we 

estimate the total cost to a registry 

associated with the registry selfnomination process to be approximately 

$500 ($50 per hour × 10 hours per 

registry). 

The burden associated with the 

registry-based reporting requirements of 

this voluntary reporting initiative is 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. 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 

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measures on their participants’ behalf is 

expected to 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. 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 will 

determine the time burden to the 

registry. 

For EHR-based reporting, the eligible 

professional must have access to a CMSspecified 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 must 

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 

our requirement for an eligible 

professional to submit a test file, we 

believe that doing so would take less 

than 1 hour. With respect to submitting 

the actual 2011 data file in 2012, we 

believe that this would 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. 

Because this manner of reporting quality 

data to CMS was new to the Physician 

Quality Reporting System for 2010 and 

no EHR data submissions have taken 

place yet, it is difficult to estimate how 

many eligible professionals will opt to 

participate in the Physician Quality 

Reporting System through the EHR 

mechanism in CY 2011. 

An EHR vendor interested in having 

their product(s) be used by eligible 

professionals to submit Physician 

Quality Reporting System quality 

measures data to CMS was required to 

complete a self-nomination process in 

order for the vendor’s product(s) to be 

considered ‘‘qualified’’ for 2011. It is 

difficult to accurately quantify the 

burden associated with the EHR selfnomination 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, that is approximately 

10 hours at $50 per hour for a total of 

$500 per EHR vendor ($50 per hour × 

10 hours per EHR vendor). 

The burden associated with the EHR 

vendor programming its EHR product(s) 

to extract the clinical data that the 

eligible professional needs to submit to 

CMS for purposes of reporting 2010 

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 the total burden 

hours to be 40 hours at a rate of $50 per 

hour for a total burden estimate of 

$2,000 ($50 per hour × 40 hours per 

vendor). However, given the variability 

in the capabilities of the vendors, those 

vendors with minimal experience 

would have a burden of approximately 

200 hours at $50 per hour, for a total 

estimate of $10,000 per vendor ($50 per 

hour × 200 hours per EHR vendor). 

With respect to the process for group 

practices to be treated as satisfactorily 

submitting quality measures data under 

the 2011 Physician Quality Reporting 

System discussed in section VII.F.1. of 

this final rule with comment, group 

practices interested in participating in 

the 2011 Physician Quality Reporting 

System through one of the group 

practice reporting options (GPRO I or 

GPRO II) will need to complete a selfnomination process similar to the selfnomination process required of 

registries and EHR vendors. Therefore, 

assuming 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 selfnomination process have the same 

average practice labor cost as the 

average practice labor cost estimates we 

used for individual eligible 

professionals of $58 per hour, we 

estimate the total cost to a group 

practice associated with the group 

practice self-nomination process to be 

approximately $348 ($58 per hour × 6 

hours per group practice). 

The burden associated with the group 

practice reporting requirements of this 

voluntary reporting initiative is the time 

and effort associated with the group 

practice submitting the quality measures 

data. For practices participating under 

the GPRO I process, this would 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 would be approximately 79 hours 

per physician group. Based on an 

average labor cost of $58 per physician 

group, we estimate the cost of data 

submission per physician group 

associated with participating in the 

Physician Quality Reporting System 

GPRO I would be $4,582 ($58 per hour 

× 79 hours per group practice). 

For group practices participating 

under the GPRO II process, the burden 

associated with submitting the 

Physician Quality Reporting System 

quality measures data would be the time 

associated with the group practice 

submitting the required data to CMS via 

claims or a registry. We would expect 

that data submission under GPRO II 

would take no more time than the time 

it would take an individual eligible 

professional to submit via claims or 

registry. We believe it would be 

appropriate to multiply the appropriate 

burden estimates for each reporting 

mechanism for individual eligible 

professionals by the number of eligible 

professionals in a group to obtain the 

burden estimates for data submission 

under GPRO II. For example, based on 

our estimate of 15.75 minutes per 

eligible professional under claims-based 

reporting, we would expect that a 2- 

person group would have a burden of 

31.50 minutes for claims-based 

submission under GPRO II. 

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 

2011 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 2011 and successfully 

complete a qualified Maintenance of 

Certification Program practice 

assessment for 2011. We believe that a 

majority of the eligible professionals 

who would attempt to qualify for this 

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additional 0.5 percent incentive 

payment would be those who are 

already enrolled and participating in a 

Maintenance of Certification Board. The 

amount of time that it would 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 would vary based on 

what each individual board determines 

constitutes ‘‘more frequently.’’ The 

amount of time needed to complete a 

qualified Maintenance of Certification 

Program practice assessment is expected 

to be spread out over time since a 

quality improvement component is 

often required. Information from an 

informal poll of a few ABMS member 

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 invited comments on this burden 

analysis, including the underlying 

assumptions used in developing our 

burden estimates and received no 

comments. 

3. Electronic Prescribing (eRx) Incentive 

Program 

We believe it is difficult to accurately 

estimate how many eligible 

professionals will opt to participate in 

the eRx Incentive Program in CY 2011. 

Information from the 2009 eRx Incentive 

Program indicates that nearly 90,000 

eligible professionals participated in the 

first year of the program. We believe, 

however, that the number of 

participants will increase in light of the 

payment adjustment that will start in 

2012. Therefore, for purposes of 

conducting a burden analysis for the 

2011 eRx Incentive Program, we will 

assume that as many eligible 

professionals who attempted to 

participate in the 2007 Physician 

Quality Reporting System will attempt 

to participate in the 2011 eRx Incentive 

Program. As such, we can estimate that 

nearly 110,000 unique TIN/NPI 

combinations will participate in the 

2011 eRx Incentive Program (see the 

‘‘PQRI 2007 Reporting Experience 

Report,’’ which is available on the 

Physician Quality Reporting System 

section of the CMS Web site at http:// 

www.cms.hhs.gov/pqri). 

Section VII.F.2 of this final rule with 

comment discusses the background of 

the eRx Incentive Program. Section 

VII.F.2.b.(2) of this final rule with 

comment provides information on how 

eligible professionals and group 

practices can qualify to be considered a 

successful electronic prescriber in 2011 

in order to earn an incentive payment. 

For 2011, 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 to be considered a successful 

electronic prescriber described in 

section VII.F.2.b.(2) of this final rule 

with comment, they can qualify to 

receive an incentive payment for 2011 

and/or avoid being subject to the 

payment adjustment that goes into effect 

in 2012. 

For the 2011 eRx Incentive Program, 

as discussed in section VII.F.2. of this 

final rule with comment, each eligible 

professional will need to report the Gcode indicating that at least one 

prescription generated during an 

encounter was electronically submitted 

at least 25 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 

familiarity with and 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 the available reporting 

options (for purposes of the 2011 

incentive, this measure will be 

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 needed for 

individual eligible professionals to 

prepare for participation in the eRx 

Incentive Program. At an average cost of 

approximately $58 per hour per 

practice, we estimate the total 

preparation costs to individual eligible 

professionals to be approximately $116 

(2 hours × $58 per hour). 

Another factor that influences the 

burden to eligible professionals is how 

they choose to report the electronic 

prescribing measure. For eligible 

professionals who choose to do so via 

claims, we estimate that the burden 

associated with the requirements of this 

incentive program is the time and effort 

associated with gathering the required 

information, selecting the appropriate 

quality data codes (QDCs), and 

including the appropriate QDCs on the 

claims they submit for payment. For 

claims-based reporting, the QDCs 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 no 

modifications to the existing transaction 

or form. We also do not anticipate 

changes to the 837–P or CMS Form 1500 

for CY 201. 

Based on the information from the 

PVRP described above 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 to report the 

measure 25 times for purposes of the 

incentive payment, we estimate the 

burden associated with claims-based 

data submission to be 43.75 minutes 

(1.75 minutes per case × 1 measure × 25 

cases per measure). This equates to a 

cost of approximately $42.29 (1.75 

minutes per case × 1 measure × 25 cases 

per measure × $58 per hour) per 

individual eligible professional. For 

purposes of the 2012 eRx payment 

adjustment, where an eligible 

professional is required to report the 

measure only 10 times, we estimate the 

burden associated with claims-based 

submission to be 17.5 minutes (1.75 

minutes per case × 1 measure × 10 cases 

per measure). This equates to a cost of 

approximately $16.92 (1.75 minutes per 

case × 1 measure × 10 cases per measure 

× $58 per hour) per individual eligible 

professional. 

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 to us 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 CY 2011. 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 would more than likely 

already be reporting data to the registry 

for other purposes. Little, if any, 

additional data would need to be 

reported to the registry for purposes of 

participation in the 2011 eRx Incentive 

Program. However, eligible 

professionals would need to authorize 

or instruct the registry to submit quality 

measures results and numerator and 

denominator data on the electronic 

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prescribing measure to CMS on their 

behalf. We estimate that the time and 

effort associated with this would 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 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 2011 Physician Quality 

Reporting System to be qualified to 

submit results and numerator and 

denominator data on the electronic 

prescribing measure for the 2011 eRx 

Incentive Program, there would 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 would 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. The time 

needed for a registry to review the 

electronic prescribing measure and 

other information, calculate the 

measure’s results, and submit the 

measure’s results and numerator and 

denominator data on the measure on 

their participants behalf is expected to 

vary along with the number of eligible 

professionals reporting data to whom 

the measure applies. 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 

would be minimal. 

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 CMSdesignated clinical data warehouse. 

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 

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 in CY 

2011. 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. 

Since we are considering only EHR 

products qualified for the 2010 

Physician Quality Reporting System to 

be qualified for the 2011 eRx Incentive 

Program, there will be no need for EHR 

vendors to undergo a separate selfnomination process for the 2011 eRx 

Incentive Program and therefore, no 

additional burden associated with the 

self-nomination process. 

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 needs to submit to 

CMS for purposes of reporting the 

proposed 2011 electronic prescribing 

measure. The time needed for an EHR 

vendor to review the measure and other 

information and program each qualified 

EHR product to enable eligible 

professionals 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 

the 2011 Physician Quality Reporting 

System will be qualified for the 2011 

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 eligible 

professionals to submit data on the 

electronic prescribing measure to the 

CMS-designated clinical data warehouse 

would be minimal. 

Finally, with respect to the process for 

group practices to be treated as 

successful electronic prescribers under 

the 2011 eRx Incentive Program 

discussed in section VII.F.2. of this final 

rule with comment, group practices will 

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 would 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 will have to self-nominate; and 

(2) the number of times that a group 

practice will be required to report the 

electronic prescribing measure. 

We do not anticipate any additional 

burden associated with the group 

practice self-nomination practice since 

we are limiting the group practices to 

those selected to participate in the 2011 

Physician Quality Reporting System 

GPRO I or Physician Quality Reporting 

System GPRO II. The practice only will 

need to indicate their desire to 

participate in the eRx GPRO at the same 

time they self-nominate for either 

Physician Quality Reporting System 

GPRO I or Physician Quality Reporting 

System GPRO II and indicate how they 

intend to report the electronic 

prescribing measure. 

In terms of the burden to group 

practices associated with submission of 

the electronic prescribing measure, we 

believe that this would 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 

would 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 × 1 measure × 2500 cases 

per measure) for a GPRO I group who 

chooses to report the electronic 

prescribing measures through claims 

submission. Consequently, the total 

estimated cost per group practice to 

report the electronic prescribing 

measure could be as high as $4,225 

($1.69 per measure × 1 measure × 2500 

cases per measure). 

As with individual eligible 

professionals, we believe that group 

practices that choose to participate in 

the 2011 eRx GPRO through registrybased reporting of the electronic 

prescribing measure would more than 

likely already be reporting data to the 

registry. Little, if any, additional data 

would need to be reported to the 

registry for purposes of participation in 

the 2011 eRx Incentive Program 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 

would be approximately 5 minutes for 

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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 2011 eRx Incentive 

Program through EHR-based reporting of 

the electronic prescribing measure, 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. 

We invited comments on this burden 

analysis, including the underlying 

assumptions used in developing our 

burden estimates and received none. 

X. 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. 

XI. Regulatory Impact Analysis 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), 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 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Order 12866 directs 

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). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). We estimate, as 

discussed below in this section, that the 

PFS provisions included in this final 

rule with comment period will 

redistribute more than $100 million in 

1 year. Therefore, we estimate that this 

rulemaking is ‘‘economically significant’’ 

as measured by the $100 million 

threshold, and hence also a major rule 

under the Congressional Review Act. 

Accordingly, we have prepared a 

Regulatory Impact Analysis that to the 

best of our ability presents the costs and 

benefits of the rulemaking. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses, if a rule has a significant 

impact on a substantial number of small 

entities. For purposes of the RFA, we 

estimate that most hospitals and most 

other providers are small entities as that 

term is used in the RFA (including 

small businesses, nonprofit 

organizations, and small governmental 

jurisdictions). The great majority of 

hospitals and most other health care 

providers and suppliers are small 

entities, either by being nonprofit 

organizations or by meeting the SBA 

definition of a small business (having 

revenues of less than $34.5 million in 

any 1 year) (for details see the SBA’s 

Web site at http://sba.gov/idc/groups/ 

public/documents/sba_homepage/ 

serv_sstd_tablepdf.pdf (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. We 

prepare a regulatory flexibility analysis 

unless we certify that a rule would not 

have a significant economic impact on 

a substantial number of small entities. 

The 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. 

For purposes of the RFA 

approximately 85 percent of suppliers of 

DMEPOS are considered small 

businesses according to the SBA size 

standards. Our most recent claims 

information includes 47,000 entities 

billing Medicare for DMEPOS each year. 

Total annual estimated Medicare 

expenditures for DMEPOS suppliers are 

approximately $10.1 billion in CY 2009, 

for which $8.1 billion was fee-forservice (FFS) and $2 billion was for 

managed care. 

For purposes of the RFA, 

approximately 80 percent of clinical 

diagnostic laboratories are considered 

small businesses according to the SBA 

size standards. 

Ambulance providers and suppliers 

for purposes of the RFA are also 

considered to be small entities. 

In addition, most ESRD facilities are 

considered small entities for purposes of 

the RFA, either based on nonprofit 

status or by having revenues of $34.5 

million or less in any year. We note that 

a considerable number of ESRD 

facilities are owned and operated by 

large dialysis organizations (LDOs) or 

regional chains, which would have total 

revenues more than $34.5 million in any 

year if revenues from all locations are 

combined. However, the claims data we 

use to estimate payments for this RFA 

and RIA does not identify which 

dialysis facilities are parts of an LDO, 

regional chain, or other type of 

ownership. Each individual dialysis 

facility has its own provider number 

and bills Medicare using this number. 

Therefore, we consider each ESRD 

facility to be a small entity for purposes 

of the RFA. We consider a substantial 

number of entities to be significantly 

affected if the final rule with comment 

period has an annual average impact on 

small entities of 3 to 5 percent or more. 

The majority of ESRD facilities will 

experience impacts of approximately 2 

percent of total revenues. There are 976 

nonprofit ESRD facilities with a 

combined increase of 2.1 percent in 

overall payments relative to current 

overall payments. We note that although 

the overall effect of the wage index 

changes is budget neutral, there are 

increases and decreases based on the 

location of individual facilities. The 

analysis and discussion provided in this 

section and elsewhere in this final rule 

with comment period complies with the 

RFA requirements. 

Because we acknowledge that many of 

the affected entities are small entities, 

the analysis discussed throughout the 

preamble of this final rule with 

comment period constitutes our 

regulatory flexibility analysis for the 

remaining provisions and addresses 

comments received on these issues. 

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. Any such regulatory impact 

analysis must conform to the provisions 

of section 604 of the RFA. For purposes 

of section 1102(b) of the Act, we define 

a small rural hospital as a hospital that 

is located outside of a metropolitan 

statistical area and has fewer than 100 

beds. We do not believe this final rule 

with comment period has impact on 

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significant operations of a substantial 

number of small rural hospitals because 

most dialysis facilities are freestanding. 

While there are 180 rural hospital-based 

dialysis facilities, we do not know how 

many of them are based at hospitals 

with fewer than 100 beds. However, 

overall, the 180 rural hospital-based 

dialysis facilities will experience an 

estimated 2.1 percent increase in 

payments. As a result, this rule will not 

have a significant impact on small rural 

hospitals. Therefore, the Secretary has 

determined that this final rule with 

comment period will 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 (UMRA) 

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 2010, that 

threshold is approximately $135 

million. This final rule with comment 

period will not mandate any 

requirements for State, local, or tribal 

governments in the aggregate, or by the 

private sector, of $135 million. Medicare 

beneficiaries are considered to be part of 

the private sector and as a result a more 

detailed discussion is presented on the 

Impact of Beneficiaries in section XI.G. 

of this regulatory impact analysis. 

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. 

We have examined this final rule with 

comment period in accordance with 

Executive Order 13132 and have 

determined that this regulation would 

not have any 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 will use to minimize the burden on 

small entities. As indicated elsewhere in 

this rule, 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 rule contain a 

description of significant alternatives if 

applicable. 

A. 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 2010 with final 

payment rates for CY 2011 using CY 

2009 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 101. 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 101 shows only the payment 

impact on PFS services. We note that 

these impacts do not include the effect 

of the December 2010 and January 2011 

conversion factor changes under current 

law. The following is an explanation of 

the information represented in Table 

101: 

• 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 

2009 utilization and CY 2010 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 2011 

impact on total allowed charges of the 

changes in the work and malpractice 

RVUs, including the impact of changes 

due to new, revised, and potentially 

misvalued codes. 

• Column D (Impact of PE RVU and 

Multiple Procedure Payment Reduction 

Changes—Full): This column shows the 

estimated CY 2011 impact on total 

allowed charges of the changes in the PE 

RVUs if there were no remaining 

transition to the full use of the new PPIS 

data. This column also includes the 

impact of the various MPPR and 

imaging equipment utilization polices, 

and the impact of changes due to new, 

revised, and potentially misvalued 

codes. 

• Column E (Impact of PE RVU and 

Multiple Procedure Payment Reduction 

Changes—Tran): This column shows 

the estimated CY 2011 impact on total 

allowed charges of the changes in the PE 

RVUs under the second year of the 4- 

year transition to the full use of the new 

PPIS data. This column also includes 

the impact of the various MPPR and 

imaging equipment utilization policies, 

and the impact of changes due to new, 

revised, and potentially misvalued 

codes. 

• Column F (Impact of MEI Rebasing): 

This column shows the estimated CY 

2011 impact on total allowed charges of 

the CY 2011 rescaling of the RVUs so 

that the proportions of total payments 

based on the work, PE, and malpractice 

RVUs match the proportions in the final 

revised and rebased MEI for CY 2011. 

• Column G (Combined Impact— 

Full): This column shows the estimated 

CY 2011 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 H (Combined Impact— 

Tran): This column shows the estimated 

CY 2011 combined impact on total 

allowed charges of all the changes in the 

previous columns under the second year 

of the 4-year transition to the new PE 

RVUs using the PPIS data.

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2. CY 2011 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 second year 

of the 4-year transition to new PE RVUs 

using the new PPIS data that were 

adopted in the CY 2010 PFS final rule 

with comment period (74 FR 61751). 

The impacts of using the new PPIS data 

are generally consistent with the 

impacts discussed in the CY 2010 PFS 

final rule with comment period (74 FR 

61983 through 61984). 

The second general factor 

contributing to the CY 2011 impacts 

shown in Table 101 is 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, 

as discussed in section II.E.5. of this 

final rule with comment period, the 

revised and rebased MEI has 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 anesthesiology, are estimated to 

experience a decrease in aggregate 

payments as a result of this rescaling, 

while specialties that have a high 

proportion attributable to PE, such as 

radiation oncology, are estimated to 

experience an increase in aggregate 

payments. Malpractice generally 

represents a small proportion of total 

payments and the rescaling of the 

malpractice RVUs is not the primary 

driver of the specialty impacts. As 

discussed in section II.E.7. of this final 

rule with comment period, the rescaling 

of the RVUs to match the rebased MEI 

is budget neutral overall. 

Finally, another significant factor 

contributing to the impacts shown in 

Table 101 (but on a specialty-specific 

rather than widespread level) is the final 

policies regarding new, revised, and 

potentially revised codes resulting from 

our CY 2011 acceptance of 70 percent of 

the AMA RUC work RVU 

recommendations and the majority of 

the direct PE input recommendations. 

We have incorporated alternative RVUs 

and direct PE inputs for some codes in 

accordance with our recommended 

policies. We note that some specialties, 

such as radiation oncology, 

ophthalmology, and IDTFs that 

commonly furnish potentially 

misvalued codes that have been 

examined by the AMA RUC and newly 


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valued for CY 2011, experience 

decreases in aggregate payment as a 

result of these changes. 

Table 101 also includes the impacts 

resulting from our regulatory change to 

expand the current 50 percent MPPR 

policy to therapy services, but at an 

MPPR rate of 25 percent on the PE 

component payment for therapy 

services. Under the PFS, we estimate 

that this change would primarily reduce 

payments to the specialties of physical 

therapy and occupational therapy. In 

order to maintain budget neutrality, we 

redistributed the PFS savings back into 

other services paid under the PFS by 

increasing all PE RVUs by 

approximately 0.5 percent. 

Because providers in settings outside 

of the PFS, such as outpatient hospital 

departments, are also paid using the 

PFS payment rates and policies for 

physical therapy services, we estimated 

that this will reduce (not redistribute) 

payments in those settings for therapy 

services by approximately 7 percent in 

CY 2011. 

In addition, Table 101 includes the 

impacts resulting from the regulatory 

change to the scope of the current 

contiguous body area MPPR policy for 

imaging services from contiguous body 

areas to include noncontiguous body 

areas. We estimate that this change 

would primarily reduce payments to the 

specialties of IDTF and radiology. In 

order to maintain budget neutrality, we 

redistributed these savings back into 

other services paid under the PFS by 

increasing all PE RVUs by 

approximately 0.1 percent. 

Table 101 also reflects the impacts 

resulting from certain ACA provisions, 

including reductions in payment under 

section 3135 of the ACA which amends 

section 1848(b)(4) of the Act to increase 

the equipment utilization rate 

assumption for expensive diagnostic 

imaging equipment, and, effective July 

1, 2010, to increase the level of the 

MPPR for contiguous body areas from 

25 percent to 50 percent. The expansion 

of the MPPR policy is further discussed 

in section II.C.4. of this final rule with 

comment period, while the discussions 

of the provisions of section 3135 of the 

ACA are found in sections VI.M. and 

II.A.3.a. of this final rule with comment 

period. As required by sections 

1848(c)(2)(B)(v)(V) and (VI) of the Act 

(as added by sections 3135(a) and (b) of 

the ACA), these changes are not budget 

neutral and result in program savings. 

We note that in section XI.D of this 

final rule with comment period, we 

provide discussions of the budget 

impacts of individual ACA provisions 

not elsewhere discussed in this section. 

Additionally, while column H in Table 

101 illustrates the estimated combined 

CY 2011 impact on total allowed 

charges by specialty of all the final RVU 

and MPPR changes and the MEI 

rebasing, including several ACA 

provisions that directly affect the 

determination of PFS payments as 

discussed previously, we note that other 

ACA provisions discussed in section 

XI.D. of this final rule with comment 

period could also result in additional 

impacts on individual practitioners or 

specialties, depending on their practice 

patterns. Since the effects of a number 

of the ACA provisions are dependent on 

the practice patterns of practitioners, we 

would expect these impacts to be nonuniform among specialties. For 

example, as discussed further in section 

XI.D.19 of this final rule with comment 

period, section 1833(x) of the Act (as 

added by section 5501(a) of the ACA) 

provides for a 10 percent incentive 

payment for primary care services 

furnished by primary care practitioners. 

Accordingly, potentially eligible 

primary care specialties designated 

under the statute (including family 

practice and geriatric medicine), are 

expected to experience an estimated 

aggregate increase in payment of 

between 4 and 9 percent, which 

includes the estimated impacts under 

the PFS displayed in column H of Table 

101 and the new primary care incentive 

payments. We note that in general the 

payment impact for an individual 

physician may be different from the 

average, based on the mix of services the 

physician furnishes and his or her 

eligibility for the primary care incentive 

payment program. 

b. Combined Impact 

Column H of Table 101 displays the 

estimated CY 2011 combined impact on 

total allowed charges by specialty of all 

the final RVU and MPPR changes. These 

impacts range from an increase of 6 

percent for portable x-ray suppliers to a 

decrease of 15 percent for diagnostic 

testing facilities. There is generally a 

slightly positive net effect of our final 

policies on primary care specialties, 

such as family practice, internal 

medicine, and geriatrics. Again, these 

impacts are estimated prior to the 

application of the negative CY 2011 CF 

update applicable under the current 

statute. 

Comment: One commenter requested 

that the specialty impact table 

incorporate the impact of payment 

changes for other Medicare Part B 

services that are not paid under the PFS. 

Response: The purpose of Table 101 

is to isolate the impacts by specialty for 

services paid under the PFS. To the 

extent that changes in payment for other 

Part B services are adopted in this final 

rule with comment period and have 

significant impacts upon providers, 

those impacts are discussed elsewhere 

in this section. 

Table 102 shows the estimated impact 

on total payments for selected highvolume procedures of all of the changes 

discussed previously, including the 

effect of the CY 2011 negative PFS CF 

update. 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 

B. 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 2011, we are finalizing new 

GPCIs for each Medicare locality. The 

updated GPCIs reflect the first year of 

the 2-year phase-in. The new GPCIs rely 

upon the 2010 HUD data for 

determining the relative cost differences 

in the office rent component of the PE 

GPCIs, as well as the 2006 through 2007 

professional malpractice premium data 

for determining the malpractice GPCIs. 

The 2006 through 2008 Bureau of Labor 

and Statistics (BLS) Occupational 

Employment Statistics (OES) data were 

used as a replacement for 2000 Census 

data for determining the physician work 

GPCIs and the employee compensation 

component of the PE GPCIs. However, 

as discussed in section II.D. of this final 

rule with comment period, we are 

continuing to use the current cost share 

weights for determining the PE GPCI 

values and locality GAFs. 

Additionally, the updated GPCIs 

reflect several provisions required by 

changes included in the ACA. Section 

1848(e)(1)(H) of the Act (as added by 

section 3102(b) of the ACA) specifies 

that for CYs 2010 and 2011, the 

employee wage and rent portions of the 

PE GPCIs reflect only one-half of the 

relative cost differences for each locality 

compared to the national average and 

includes a ‘‘hold harmless’’ provision for 

any PFS locality that would receive a 

reduction to its PE GPCI resulting from 

the limited recognition of cost 

differences. Section 1848(e)(1)(E) of the 

Act (as amended by section 3102(a) of 

the ACA) extends the 1.000 work GPCI 

floor only through December 31, 2010. 

Therefore, the CY 2011 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 and, therefore, the 1.500 

work GPCI floor in Alaska will remain 

in place for CY 2011. Moreover, section 

1848(e)(1)(I) of the Act (as added by 

section 10324(c) of the ACA) establishes 

a 1.000 PE GPCI floor for services 

furnished in frontier states effective 

January 1, 2011. We estimate the 

combined impact of these provisions on 

a fiscal year cash basis to be $580 

million for FY 2011. 

As required by the statute, the 

updated GPCIs would be phased in over 

a 2-year period. Addendum D to this 

final rule with comment period shows 

the estimated effects of the revised 

GPCIs on locality GAFs for the 

transitional year (CY 2011) by State and 

Medicare locality. The GAFs reflect the 

use of updated underlying GPCI data 

and the ACA provisions. The GAFs are 

a weighted composite of each area’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 actual effect on payment for any 

specific service would deviate from the 

estimated payment based on the GAF to 

the extent that the proportions of work, 

PE, and malpractice expense RVUs for 

the specific service differ from those of 

the GAF. The most significant changes 

would occur in 12 payment localities, 

where the GAF increases or decreases 

by more than 2 percent. The cumulative 

effects of all of the GPCI revisions, 

including the updated underlying GPCI 

data and provisions of the ACA, are 

reflected in the CY 2012 GPCI values 

that are displayed in Addendum E to 

this final rule with comment period. 

C. Rebasing and Revising of the MEI 

As discussed in section II.E.5. of this 

final rule with comment period, we 

finalized the rebasing and revision of 

the MEI for the CY 2011 PFS. Using the 

new 2006 MEI weights in place of the 

2000 weights and implementing the 

revisions to the MEI results in a slightly 

higher projected MEI increase for CY 

2011 than would have been the case 

without the rebasing and revision of the 

MEI. The MEI update for CY 2011 is 0.4 

percent under the 2006-based MEI, 

while the MEI update for CY 2011 

would have been 0.3 percent under the 

2000-based MEI. After CY 2011, the 

2006-based MEI updates are forecasted 

to be either the same or slightly lower 

(0.1 to 0.2 percentage point) than the 

forecasted 2000-based MEI updates. 

D. The Affordable Care Act Provisions 

1. Section 3002: Improvements to the 

Physician Quality Reporting System 

For the impact of this provision see 

section XI.E.6. of this final rule with 

comment period. 

2. Sections 3003 and 3007: 

Improvements to the Physician 

Feedback Program and Value-Based 

Payment Under the Physician Fee 

Schedule 

As discussed in section VI.B. of this 

final rule with comment period, these 

provisions: (1) continue the confidential 

feedback program and requires the 

Secretary, beginning in 2012, to provide 

reports that compare patterns of 

resource use of individual physicians to 

other physicians; and (2) require the 

Secretary to apply a separate, budgetneutral, value-based payment modifier 

to the payment calculation for PFS 

services furnished by certain 

practitioners beginning in CY 2015. 

There is no budgetary impact associated 

with these provisions for CY 2011. 

3. Section 3102: Extension of the Work 

Geographic Index Floor and Revisions 

to the Practice Expense Geographic 

Adjustment under the Medicare 

Physician Fee Schedule, and Protections 

for Frontier States as Amended by 

Section 10324 

For the impact of this provision see 

section XI.B. of this final rule with 

comment period. 

4. Section 3103: Extension of Exceptions 

Process for Medicare Therapy Caps 

This provision extends the exceptions 

process for therapy caps through 

December 31, 2010. Therapy caps are 

discussed in detail in section III.A.1. of 

this final rule with comment period. We 

estimate the impact on a fiscal year cash 

basis to be $1.16 billion for FY 2011. 

5. Section 3104: Extension of Payment 

for Technical Component of Certain 

Physician Pathology Services 

As discussed in section VI.E. of this 

final rule with comment period, this 

provision continues payment to 

independent laboratories for the TC of 

physician pathology services for fee-forservice Medicare beneficiaries who are 

inpatients or outpatients of a covered 

hospital through CY 2010. We estimate 

the impact on a fiscal year cash basis to 

be $80 million for FY 2011. 

6. Sections 3105 and 10311: Extension 

of Ambulance Add-Ons 

As discussed in section VI.F. of this 

final rule with comment period, these 

provisions require the extension of 

certain add-on payments for ground 

ambulance services, and the extension 

of certain rural area designations for 

purposes of air ambulance payment. As 

further discussed in section VI.F. of this 

final rule with comment period, we are 

amending the Medicare program 

regulations to conform the regulations to 

these provisions of the ACA. These 

statutory provisions are essentially 

prescriptive and do not allow for 

discretionary alternatives on the part of 

the Secretary. 

As discussed in the July 1, 2004 

interim final rule (69 FR 40288), in 

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determining the super-rural bonus 

amount under section 1834(l)(12) of Act, 

we followed the statutory guidance of 

using the data from the Comptroller 

General (GAO) of the U.S. We obtained 

the same data as the data that were used 

in the GAO’s September 2003 Report 

titled ‘‘Ambulance Services: Medicare 

Payments Can Be Better Targeted to 

Trips in Less Densely Populated Rural 

Areas’’ (GAO report number GAO–03– 

986) and used the same general 

methodology in a regression analysis as 

was used in that report. The result was 

that the average cost per trip in the 

lowest quartile of rural county 

populations was 22.6 percent higher 

than the average cost per trip in the 

highest quartile. As required by section 

1834(l)(12) of the Act, this percent 

increase is applied to the base rate for 

ground ambulance transports that 

originate in qualified rural areas, which 

were identified using the methodology 

set forth in the statute. Payments for 

ambulance services under Medicare are 

determined by the point of pick-up (by 

zip code area) where the beneficiary is 

loaded on board the ambulance. We 

determined that ground ambulance 

transports originating in 7,842 zip code 

areas (which were determined to be in 

‘‘qualified rural areas’’) out of 42,879 zip 

code areas, according to the July 2010 

zip code file, will realize increased base 

rate payments under this provision. 

However, the number and level of 

services that might occur in these areas 

for CY 2011 is unknown at this time. 

While many elements may factor into 

the final impact of sections 3105(a) 

through (c) and 10311(a) through (c) of 

the ACA, we estimate the impact of all 

these provisions to be $10 million for 

FY 2011. 

7. Section 3107: Extension of Physician 

Fee Schedule Mental Health Add-On 

As discussed in section VI.G. of this 

final rule with comment period, this 

provision extends application of the five 

percent increase in Medicare payment 

for specified mental health services only 

through CY 2010. We estimate the 

impact on a fiscal year cash basis to be 

$20 million for FY 2011. 

8. Section 3108: Permitting Physician 

Assistants to Order Post-Hospital 

Extended Care Services 

As discussed in section VI.H. of this 

final rule with comment period, this 

provision adds PAs to the list of 

practitioners (that is, physicians, nurse 

practitioners (NPs), and clinical nurse 

specialists) that can perform the 

required initial certification and 

periodic recertifications under section 

1814(a)(2)(B) of the Act with respect to 

the SNF level of care. There is no 

budgetary impact associated with this 

provision. 

9. Section 3111: Payment for Bone 

Density Tests 

As discussed in section VI.I. of this 

final rule with comment period, this 

provision requires payment for dualenergy x-ray absorptiometry (DXA) 

services furnished during CYs 2010 and 

2011 at 70 percent of the Medicare rate 

paid in CY 2006, with the applicable 

geographic adjustment for CY 2011. We 

estimate the impact on a fiscal year cash 

basis to be $60 million for FY 2011. 

10. Section 3114: Improved Access for 

Certified Nurse-Midwife Services 

As discussed in section VI.J. of this 

final rule with comment period, this 

provision increased the amount of 

Medicare payment made under the PFS 

for certified nurse-midwife (CNM) 

services. There is no significant 

budgetary impact associated with this 

provision. 

11. Section 3122: Extension of Medicare 

Reasonable Costs Payments for Certain 

Clinical Diagnostic Laboratory Tests 

Furnished to Hospital Patients in 

Certain Rural Areas 

As discussed in section VI.K. of this 

final rule with comment period, this 

provision reinstitutes reasonable cost 

payment for clinical diagnostic 

laboratory tests performed by hospitals 

with fewer than 50 beds that are located 

in qualified rural areas as part of their 

outpatient services for cost reporting 

periods beginning on or after July 1, 

2010 through June 30, 2011. For some 

hospitals with cost reports that begin as 

late as June 30, 2011, this reinstitution 

of reasonable cost payment could affect 

services performed as late as June 29, 

2012, because this is the date those cost 

reports will close. 

12. Section 3134: Misvalued Codes 

Under the PFS 

As discussed in section II.C. of this 

final rule with comment period, section 

1848 (c)(2)(K) of the Act (as added by 

section 3134 of the ACA) requires the 

Secretary to periodically review and 

identify potentially misvalued codes 

and make appropriate adjustments to 

the relative values of those services 

identified as being potentially 

misvalued. The impacts of our CY 2011 

policy changes under this provision are 

included in the discussion of RVU 

impacts in section XI.A. of this final 

rule and summarized by specialty in 

Table Q1 of this final rule with 

comment period. 

13. Section 3135: Modification of 

Equipment Utilization Factor for 

Advanced Imaging Services 

As discussed in section VI.M. of this 

final rule with comment period, for 

services furnished on or after July 1, 

2010, section 1848(b)(4)(D) of the Act 

(as added by section 3135(b) of the 

ACA) adjusts the technical component 

MPPR for multiple imaging studies 

provided in a single imaging session on 

contiguous body parts within families of 

codes from 25 percent to 50 percent as 

of July 1, 2010. For services furnished 

on or after January 1, 2011, section 

1848(b)(4)(C) of the Act (as added by 

section 3135(a) of the ACA) increases 

the equipment utilization rate to 75 

percent for expensive diagnostic 

imaging equipment, changing the CY 

2011 utilization rate adopted in the CY 

2010 PFS final rule with comment 

period to the 75 percent rate. We 

estimate the impact on a fiscal year cash 

basis to be savings to the Medicare 

program of $160 million for FY 2011. 

14. Section 3136: Revisions in Payments 

for Power Wheelchairs 

As discussed in section VI.N. of this 

final rule with comment period, this 

provision requires the Secretary to 

revise the capped rental fee schedule 

amounts for all power wheelchairs 

effective for power wheelchairs 

furnished on or after January 1, 2011. 

Under the monthly capped rental 

payment structure, the fee schedule will 

pay 15 percent (instead of 10 percent) of 

the purchase price for the first 3 months 

and 6 percent (instead of 7.5 percent) for 

the remaining rental months not to 

exceed 13 months. In addition, the lump 

sum (up front) purchase payment will 

be eliminated for standard power-driven 

wheelchairs. For complex rehabilitative 

power-driven wheelchairs, the 

provision permits payment to be made 

on a lump sum purchase method or a 

monthly rental method. These changes 

are prescriptive in the statute and do not 

allow for alternatives. 

We expect the changes mandated by 

section 3136 of the ACA as a whole to 

achieve program savings as a result of 

total payments per standard power 

wheelchair being less than 100 percent 

of the purchase fee schedule amount. 

This decrease in expenditures is 

expected for two reasons. Primarily, the 

provision will eliminate the lump sum 

payment method for standard powerdriven wheelchairs and instead 

payment will be made under the 

monthly rental method resulting in 

lower aggregate payments because many 

beneficiaries who use standard power 

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as 13 months. In addition, we note that 

currently a significantly lower volume 

of power-driven wheelchairs are paid 

under the monthly payment method. 

The payment impact of increasing 

monthly rental payments in the initial 3 

months will be offset both by the 

savings achieved from eliminating the 

lump sum payment method for standard 

power-driven wheelchairs and by 

decreasing payments for the remaining 

months of rental from 7.5 percent to 6 

percent of the purchase price for all 

power-driven wheelchairs. We 

compared the estimates of current 

payments for power-driven wheelchairs 

to estimates of payments resulting from 

the changes required by section 3136 of 

the ACA which showed an estimated 

payment impact of a decrease in 

expenditures of approximately $780 

million over a 5-year period. The FY 

2011 cash savings was $120 million. 

15. Section 3139: Payment for 

Biosimilar Biological Products 

In Section VI.O. of this rule we 

discussed the provisions of the ACA 

that establish the definition of 

biosimilar, and reference biological 

product as well as the payment 

methodology for these products under 

Section 1847A of the Act. We noted that 

while these provisions are effective July 

1, 2010, per statute, we do not expect to 

make payment for biosimilar products 

until after such products are approved 

by the FDA. We do not expect this 

provision to have any impact on 

spending. 

16. Section 3401: Revisions of Certain 

Market Basket Updates and 

Incorporation of Productivity 

Adjustments 

As discussed in section VI.P. of this 

final rule with comment period, section 

3401 of the ACA amends section 

1881(b)(14)(F) of the Act so that in CY 

2011, there is a full ESRD market basket 

update to the composite rate component 

of the blended payment amount under 

the new ESRD PPS. This provision is 

estimated to be a cost to the Medicare 

program of $40 million (does not 

include coinsurance). 

Section 3401 of the ACA also 

incorporates a productivity adjustment 

into the update factors for certain 

payment systems. Specifically, section 

3401 requires that in CY 2011 (and in 

subsequent years), update factors under 

the ASC payment system, the AFS, the 

CLFS, and the DMEPOS fee schedules 

be adjusted by the productivity 

adjustment. We estimate the impact to 

be savings to the Medicare program of 

$20 million, $30 million, $50 million, 

and $60 million for the ASC payment 

system, the AFS, the CLFS, and the 

DMEPOS fee schedules respectively, for 

FY 2011. 

17. Section 4103: Medicare Coverage of 

Annual Wellness Visit Providing a 

Personalized Prevention Plan 

As discussed in section VI.Q. of this 

final rule with comment period, for 

services furnished on or after January 1, 

2011, section 1861(s)(2)(FF) of the Act 

(as added by section 4103 of the ACA) 

provides Medicare coverage, with no 

coinsurance or deductible, for an annual 

wellness visit. The annual wellness visit 

entails the creation of a personalized 

prevention plan for an individual that 

ultimately will include a health risk 

assessment and also includes other 

elements, such as updating the family 

history, identifying providers that 

regularly provide medical care to the 

individual, body mass index 

measurement, development of a 

screening service schedule, and 

identification of risk factors. We 

estimate the impact on a fiscal year cash 

basis to be $110 million for FY 2011. 

18. Section 4104: Removal of Barriers to 

Preventive Services in Medicare 

As discussed in section VI.R. of this 

final rule with comment period, for 

services furnished on or after January 1, 

2011, sections 1833(a)(1) and 1833(b) of 

the Act (as amended by section 4104 of 

the ACA) waive the deductible and 

coinsurance requirements for most 

preventive services, and waive the 

deductible for colorectal cancer 

screening tests that are reported with 

other codes. Services to which no 

coinsurance or deductible would be 

applied are the annual wellness visit, 

the initial preventive physical 

examination, and any covered 

preventive service if it is recommended 

with a grade of A or B by the United 

States Preventive Services Task Force. 

We estimate that this new benefit will 

result in an increase in Medicare 

payments. We estimate the impact on a 

fiscal year cash basis to be $110 million 

for FY 2011. 

19. Section 5501: Expanding Access to 

Primary Care Services and General 

Surgery Services 

As discussed in section VI.S. of this 

final rule with comment period, for 

services furnished on or after January 1, 

2011 and before January 1, 2016, 

sections 1833(x) and (y) of the Act (as 

added by section 5501 of the ACA) 

provides for a 10 percent incentive 

payment applied to primary care 

services furnished by primary care 

practitioners, as well as a 10 percent 

incentive payment for major surgical 

procedures furnished by general 

surgeons practicing in geographic health 

professional shortage areas. Under the 

final CY 2011 policies, we estimate the 

impact on a fiscal year cash basis to be 

$240 million for section 1833(x) of the 

Act and $10 million for section 1833(y) 

of the Act for FY 2011. 

20. Section 6003: Disclosure 

Requirements for In-office Ancillary 

Services Exception to the Prohibition of 

Physician Self-referral for Certain 

Imaging Services 

In section VI.T of this final rule with 

comment period, we discuss our 

revisions to § 411.355(b)(2) to include a 

new disclosure requirement created by 

section 6003 of the ACA and related to 

the in-office ancillary services exception 

to the physician self-referral 

prohibition. We are finalizing this 

provision with some modification, 

including reducing the number of 

required suppliers on the disclosure 

from 10 to 5 and removing the 

requirement that a record of the signed 

disclosure notification be maintained as 

a part of the patient’s medical record. 

Physicians are now able to document 

the disclosure without the patient’s 

signature. 

Comment: Two commenters disagreed 

with the estimated impact in the 

proposed rule related to section 6003 of 

the ACA. The commenter noted that 

requiring physicians to list 10 suppliers 

is excessive and places an unnecessary 

administrative burden on the referring 

physicians. The commenters also 

expressed concern that it will take 

longer to create and maintain the 

disclosure notice than we proposed. The 

commenters did not provide alternative 

values for calculating the impact of this 

provision. 

Response: We have addressed the 

commenters’ concerns regarding the 

administrative burden related to this 

new disclosure requirement in the final 

rule by reducing the number of 

suppliers that must be listed from 10 to 

5. In addition, we have removed the 

requirement that the disclosure notice 

be signed by the patient and a copy of 

this maintained in the medical record. 

We believe that our previous economic 

estimates are appropriate taking into 

account the public comments received 

in response to the estimated values 

included in the proposed rule and the 

changes that have been finalized in this 

rule. 

We believe that the provisions in 

section VI.T. of this final rule with 

comment period will have a minor 

economic impact on the affected 

physicians who self-refer for advanced 

imaging services under the in-office 

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ancillary services exception. We did not 

receive any public comments addressing 

the estimated number of physicians 

impacted by this provision. The burden 

associated for these physicians remains 

de minimis as we have reduced the 

number of suppliers to be listed and 

have reduced the requirements for 

effective disclosure by eliminating the 

patient signature maintained as part of 

the medical record. We still believe 

physicians will incur a one-time cost 

associated with developing the 

disclosure notice. 

21. Section 6404: Maximum Period for 

Submission of Medicare Claims 

Reduced to Not More Than 12 Months 

As discussed in section VI.U. of this 

final rule with comment period, section 

6404 of the ACA reduces the maximum 

time period for filing Medicare claims to 

no more than 12 months after the date 

of service. Under the new law, claims 

for services furnished on or after 

January 1, 2010, must be filed within 1 

calendar year after the date of service. 

In addition, section 6404 of the ACA 

provides that claims for services 

furnished before January 1, 2010, must 

be filed no later than December 31, 

2010. Section 6404 of the ACA also 

permits the Secretary to make certain 

exceptions to the 1-year filing deadline. 

This final rule with comment period 

would create three new exceptions to 

the 1-year filing deadline. 

The budgetary impact related to this 

provision is significant as future 

payment of claims for services incurred 

will now be made at an earlier date, 

relative to the 12-month submission 

expiration. This is reflected by the Part 

A and Part B payment amounts of $60 

and $50 million for FY 2011. However, 

for purposes of the RIA, the economic 

impact of this provision is noneconomically significant, as to the 

interest lost on money now required to 

pay claims prior to the 12-month 

submission expiration is minimal. 

Providers and suppliers have 

established billing practices for the 

submission of claims for payment to the 

Medicare program. Although this final 

rule with comment period would 

require providers and suppliers to 

submit Medicare FFS claims within 12 

months from the date of service, we 

believe providers and suppliers would 

easily revise their billing practices on a 

one-time basis, and suffer no economic 

impact. In fact, analysis of Medicare 

claims data shows that more than 99 

percent of Part A and Part B claims are 

filed in 12 months or less. Lastly, 

providers, suppliers, or the small 

number of beneficiaries that 

occasionally submit claims may benefit 

from the availability of the three new 

exceptions to the timely filing rule. 

However, we believe the impact on 

program costs would be negligible. 

We did not receive any comments on 

the RIA for this provision. 

22. Section 6410 of Patient 

Accountability and Affordable Care Act 

and Section 154 of MIPPA: Adjustments 

to the Metropolitan Statistical Areas 

(MSA) for Medicare Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies Competitive Acquisition 

Program 

For the impact of this provision see 

section XI.E.7.c. of this final rule with 

comment period. 

23. Section 10501(i)(3): Collection of 

HCPCS Data for the Development and 

Implementation of a Prospective 

Payment System for the Medicare FQHC 

Program 

As discussed in section VI.W. of this 

final rule with comment period, section 

10501(i)(3) of the ACA establishes a 

process by which we will collect claims 

level data, using HCPCS codes, from 

FQHCs. This data will be used to 

determine the time, scope, and intensity 

of services provided by FQHCs in 

anticipation of the establishment of a 

prospective payment system to be 

implemented beginning in 2014. We 

further noted that the proposed new 

data collection effort would be for 

informational and data gathering 

purposes only, and would not be 

utilized to determine Medicare payment 

to the FQHC. Because this provision 

does not affect payment to FQHCs, there 

is no impact. 

E. Other Provisions of the Final Rule 

1. Part B Drug Payment: ASP Issues 

Application of our policies for ‘‘Carry 

Over ASP’’ and ‘‘Partial Quarter ASP 

Data,’’ as discussed in section VII.A. of 

this final rule with comment period, are 

dependent on the status and quality of 

quarterly manufacturer data 

submissions, so we cannot quantify 

associated savings. 

Furthermore, we do not expect that 

our policy for determining the payment 

amount for drugs and biologicals that 

include intentional overfill, as 

discussed in section VII.A of this final 

rule with comment period, will impact 

payments made by the Medicare 

program. 

Finally, as discussed in section VII.A 

of this final rule with comment period, 

we are not finalizing our price 

substitution policy at this time and as a 

result there is no impact to the program 

as no changes to policy are being made. 

2. Ambulance Fee Schedule: Policy for 

Reporting Units When Billing for 

Ambulance Fractional Mileage 

As discussed in section VII.B. of this 

final rule with comment period, we are 

implementing fractional mileage billing 

for all providers and suppliers of 

ambulance services. Effective for dates 

of service on and after January 1, 2011, 

ambulance providers and suppliers 

(except for providers eligible to bill on 

the Form UB–04) will be required to 

report mileage rounded up to the 

nearest tenth of a mile, rather than the 

nearest whole mile, on all claims for 

mileage totaling up to 100 covered 

miles, and we will pay based on that 

amount. Implementation of the 

fractional mileage billing policy will be 

delayed until August 1, 2011 for 

ambulance providers submitting claims 

on the Form UB–04, unless updates to 

allow billing fractional units on the 

Form UB–04 are not completed by July 

2011. In that case, implementation of 

the fractional mileage billing policy is 

delayed for ambulance providers 

eligible to bill on the Form UB–04 until 

January 1, 2012. 

By requiring that providers and 

suppliers round up to the nearest tenth 

of a mile rather than the nearest whole 

mile, providers and suppliers will be 

submitting claims for anywhere between 

0.1 and 0.9 of a mile less per claim and 

Medicare will pay based on that 

amount. In our analysis (using 2008 

claim data) for the proposed rule, we 

indicated that Medicare could 

potentially save at least $45 million per 

year in payments for base mileage billed 

by suppliers, and perhaps as much as 

$80 million per year when considering 

other types of ambulance mileage 

payments such as those for rural 

mileage and those made to institutional 

providers. Further analysis has revealed 

that, once adjusted for other factors such 

as premium offsets and MA savings, the 

potential annual savings totals 

approximately $30 million for supplierbilled base mileage alone. We continue 

to anticipate that the total savings will 

likely increase when considering other 

ambulance mileage payments such as 

for rural mileage, institutional provider 

payments, etc. However, we were not 

able to further analyze the potential 

additional savings using available data. 

Although implementation of the 

fractional mileage billing policy for 

institutional providers billing on paper 

claims is delayed in the final rule with 

comment period, the volume of 

institutional paper billers is 

insignificant—less than 1 percent of all 

institutional billers submits claims on 

the Form UB–04—and therefore, will 

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not significantly impact any potential 

savings. 

3. Chiropractic Services Demonstration 

As discussed in section VII.D. 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 second 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 2011 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. 

4. Renal Dialysis Services Furnished by 

ESRD Facilities 

The ESRD related provisions are 

discussed in sections VI.P.1. and VII.E. 

of this final rule with comment period. 

To understand the impact of the 

changes affecting payments to different 

categories of ESRD facilities, it is 

necessary to compare estimated 

payments under the current year (CY 

2010 payments) to estimated payments 

under the revisions to the composite 

rate payment system (CY 2011 

payments) as discussed in section VII.E. 

of this final rule with comment period. 

To estimate the impact among various 

classes of ESRD facilities, it is 

imperative that the estimates of current 

payments and estimates of proposed 

payments contain similar inputs. 

Therefore, we simulated payments only 

for those ESRD facilities for which we 

are able to calculate both current CY 

2010 payments and proposed CY 2011 

payments. 

Also, as explained in the ESRD PPS 

final rule (74 FR 49162 through 49164), 

section 1881(b)(14)(E)(i) of the Act 

requires a 4-year transition (phase-in) 

from the current composite payment 

system to the ESRD PPS, and section 

1881(b)(14)(E)(ii) allows ESRD facilities 

to make a one-time election to be 

excluded from the transition. As of 

January 1, 2011, ESRD facilities that 

elect to go through the transition would 

be paid a blended amount that will 

consist of 75 percent of the basic casemix adjusted composite payment system 

and the remaining 25 percent would be 

based on the ESRD PPS payment. 

Therefore, these final rates listed in the 

impact table (Table Q3) reflect only the 

composite rate portion of the blended 

payment amounts for facilities going 

through the first year of the 4-year 

transition under the new ESRD PPS. 

ESRD providers were grouped into the 

categories based on characteristics 

provided in the Online Survey and 

Certification and Reporting (OSCAR) 

file and the most recent cost report data 

from the Healthcare Cost Report 

Information System (HCRIS). We also 

used the June 2010 update of CY 2009 

National Claims History file as a basis 

for Medicare dialysis treatments and 

separately billable drugs and 

biologicals. Since the December 2009 

update of the CY 2009 National Claims 

History File is incomplete, we updated 

the data. The description of the updates 

for the separately billable drugs is 

described in section VII.E. of this final 

rule with comment period. To update 

the treatment counts we used the ratio 

of the June 2009 to the December 2008 

updates of the CY 2008 National Claims 

History File figure for treatments. This 

was an increase of 12.4 percent. Due to 

data limitations, we are unable to 

estimate current and proposed 

payments for 32 of the 5431 ESRD 

facilities that bill for ESRD dialysis 

treatments. 

Table 103 shows the impact of this 

year’s changes to CY 2011 payments to 

hospital-based and independent ESRD 

facilities. The first column of Table 103 

identifies the type of ESRD provider, the 

second column indicates the number of 

ESRD facilities for each type, and the 

third column indicates the number of 

dialysis treatments. The fourth column 

shows the effect of all changes to the 

ESRD wage index for CY 2011 as it 

affects the composite rate payments to 

ESRD facilities. The fourth column 

compares aggregate ESRD wage-adjusted 

composite rate payments in CY 2011 to 

aggregate ESRD wage-adjusted 

composite rate payments in CY 2010. In 

CY 2010, ESRD facilities receive 100 

percent of the CBSA wage-adjusted 

composite rate. The overall effect to all 

ESRD providers in aggregate is zero 

because the CY 2011 ESRD wage index 

has been multiplied by a budget 

neutrality adjustment factor to comply 

with the statutory requirement that any 

wage index revisions be done in a 

manner that results in the same 

aggregate amount of expenditures as 

would have been made without any 

changes in the wage index. The fifth 

column shows the effect of changes to 

the ESRD wage index in CY 2011 and 

the effect of section 3401(h) of the ACA, 

which amends section 1881(b)(14)(F) of 

the Act to revise the ESRD market 

basket increase factor. Effective January 

1, 2011, there is a full ESRD bundled 

market basket update to the composite 

rate component of the blended payment 

amount under the payment system. We 

apply an ESRD market basket increase 

factor of 2.5 percent for those facilities 

electing to go through the ESRD PPS 

transition. The sixth column shows the 

overall effect of the changes in 

composite rate payments to ESRD 

providers, including the drug add-on. 

The overall effect is measured as the 

difference between the CY 2011 

payment with all changes in this rule 

and current CY 2010 payment. This 

payment amount is computed by 

multiplying the wage-adjusted 

composite rate with the drug add-on for 

each provider times the number of 

dialysis treatments from the CY 2009 

claims. The CY 2011 payment is the 

composite rate for each provider (with 

the 14.7 percent drug add-on) times 

dialysis treatments from CY 2009 

claims. The CY 2010 current payment is 

the composite rate for each provider 

(with the current 15.0 percent drug addon) times dialysis treatments from CY 

2009 claims. 

The overall impact to ESRD providers 

in aggregate is 2.2 percent as shown in 

Table 103. Most ESRD facilities will see 

an increase in payments as a result of 

the ACA provision. While section 

3401(h) of the ACA modifies the ESRD 

bundled market basket, which we will 

be a 2.5 percent increase to the ESRD 

composite rate portion of the blended 

payment amount, this 2.5 percent 

increase does not apply to the drug addon to the composite rate. For this 

reason, the impact of all changes in this 

final rule with comment period is a 2.2 

percent increase for all ESRD providers. 

Overall, payments to ineligible 

professional independent ESRD 

facilities will increase by 2.2 percent 

and payments to hospital-based ESRD 

facilities will increase by 2.1 percent. 

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TABLE 103—IMPACT OF CY 2011 CHANGES IN PAYMENTS TO HOSPITAL-BASED AND INDEPENDENT ESRD FACILITIES

[Percent change in composite rate payments to ESRD facilities] 

1 2 3 4 5 6 

Number of 

facilities 

Number of 

dialysis 

treatments 

(in millions) 

Effect of 

changes in 

wage index 1

(percent) 

Effect of 

changes in 

wage index 

and of affordable Care Act 

provision 2

(percent) 

Overall effect 

of wage index 

affordable 

Care Act & 

Drug Add-on 3

(percent) 

All Providers: 5,399 38.6 0.0 2.5 2.2 

Independent .................................................................. 4,821 34.9 0.0 2.5 2.2 

Hospital Based .............................................................. 578 3.7 ¥0.1 2.4 2.1 

By Facility Size: 

Less than 5000 treatments ........................................... 2105 5.9 0.1 2.5 2.3 

5000 to 9999 treatments .............................................. 2,049 14.8 0.1 2.6 2.3 

Greater than 9999 treatments ...................................... 1,245 17.9 ¥0.1 2.4 2.2 

Type of Ownership: 

Profit .............................................................................. 4,423 31.8 0.0 2.5 2.3 

Nonprofit ....................................................................... 976 6.7 ¥0.1 2.4 2.1 

By Geographic Location: 

Rural ............................................................................. 1,178 6.2 0.1 2.6 2.4 

Urban ............................................................................ 4,221 32.4 0.0 2.5 2.2 

By Region: 

New England ................................................................ 165 1.3 ¥0.6 1.8 1.6 

Middle Atlantic .............................................................. 603 4.8 ¥0.4 2.1 1.8 

East North Central ........................................................ 885 6.0 0.2 2.7 2.4 

West North Central ....................................................... 403 2.1 ¥0.1 2.4 2.2 

South Atlantic ................................................................ 1,211 8.8 0.0 2.5 2.2 

East South Central ....................................................... 422 2.9 0.2 2.7 2.4 

West South Central ...................................................... 729 5.6 0.4 2.9 2.6 

Mountain ....................................................................... 323 1.8 0.2 2.7 2.4 

Pacific ........................................................................... 619 5.0 0.1 2.6 2.4 

Puerto Rico & Virgin Islands ........................................ 39 0.4 ¥2.4 0.0 ¥0.2 

Notes: Payments have been adjusted to reflect budget neutrality. 

2010 includes the MIPPA 1% increase and site neutral rates. 

2010 & 2011 are 100 percent new CBSA wage adjusted composite rate. 

1This column shows the overall effect of wage index changes on ESRD providers. Composite rate payments are computed using the final CY 

2011 wage indexes which are compared to composite rate payments using the current CY 2010 wage indexes. 2This column shows the effect of the changes in the Wage Indexes and the ACA provision which includes an ESRD Bundled Market Basket 

(2.5 percent) increase to the composite rate. This provision is effective January 1, 2011. 3This column shows the percent change between CY 2011 and CY 2010 composite rate payments to ESRD facilities. The CY 2011 payments 

include the CY 2011 wage adjusted composite rate, a 2.5% increase due to the ACA, effective January 1, 2011, and the drug add-on of 14.7%. 

The CY 2010 payments include the CY 2010 wage adjusted composite rate, a 1% increase and site neutral rates effective January 1, 2009 and 

the drug add-on of 15.0%. This column shows the effect of wage index, ACA, and drug add-on changes. While the ACA provision includes a 

2.5% increase to the composite rate, this increase does not apply to the drug add-on to the composite rate. For this reason, the impact of all 

changes in this final rule with comment period is a 2.2% increase for all ESRD providers. 

5. Section 131(b) of the MIPPA: 

Physician Payment, Efficiency, and 

Quality Improvements—Physician 

Quality Reporting System 

As discussed in section VII.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 2011 

Physician Quality Reporting System. 

Although there may be some cost 

incurred in the Physician Quality 

Reporting System and their associated 

code sets, and for expanding an existing 

clinical data warehouse to accommodate 

registry-based reporting and EHR-based 

reporting for the Physician Quality 

Reporting System, we do not anticipate 

a significant cost impact on the 

Medicare program. 

Participation in the CY 2011 

Physician Quality Reporting System by 

individual eligible professionals is 

voluntary and individual eligible 

professionals and group practices may 

have different processes for integrating 

the Physician Quality Reporting System 

into their practice’s work flows. Given 

this variability and the multiple 

reporting options that we provide, it is 

difficult to accurately 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 

2011 will be considerably higher than 

the cost for eligible professionals who 

participated in Physician Quality 

Reporting System in prior years. In 

addition, for many eligible 

professionals, the cost of participating 

in the Physician Quality Reporting 

System is offset by the incentive 

payment received. 

With respect to the potential incentive 

payment that will be made for the 2011 

Physician Quality Reporting System, we 

estimate this amount to be 

approximately $100 million. This 

estimate is derived from looking at our 

2008 incentive payment of more than 

$95 million and then accounting for the 

fact that the 2008 incentive payment 

was 1.5 percent of an eligible 

professional’s total estimated Medicare 

Part B PFS allowed charges for all 

covered professional services furnished 

during the 2008 reporting period. For 

2011, the incentive payment is 1.0 

percent of an eligible professional’s total 

estimated Medicare Part B PFS allowed 

charges for all covered professional 

services furnished during the 2011 

reporting period. Although we expect 

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that the lower incentive payment 

amount for 2011 would reduce the total 

outlay by approximately one-third, we 

also expect more eligible professionals 

to participate in the 2011 Physician 

Quality Reporting System as there are 

more methods of data submission and 

additional alternative reporting periods 

and that some eligible professionals 

would qualify for the additional 0.5 

percent incentive authorized under 

section 1848(m)(7) of the Act 

(‘‘Additional Incentive Payment’’). 

One factor that influences the cost to 

individual eligible professionals is the 

time and effort associated with 

individual eligible professionals 

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 familiarity, and 

understanding of the Physician Quality 

Reporting System I, 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. 

Information obtained from the Physician 

Voluntary Reporting Program (PVRP), 

which was a predecessor to the 

Physician Quality Reporting System and 

was the first step for the reporting of 

physician quality of care through certain 

quality metrics, indicated an average 

labor cost per practice of approximately 

$50 per hour. To account for salary 

increases over time, we will use an 

average practice labor cost of $58 per 

hour for our estimates, based on an 

assumption of an average annual 

increase of approximately 3 percent. 

Therefore, assuming that it takes an 

individual eligible professional 

approximately 5 hours to review the 

PQRI 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 

would be approximately $290 per 

individual eligible professional ($58 per 

hour × 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 claimsbased, registry-based or EHR-based 

reporting mechanism). For claims-based 

reporting, 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 claimsbased reporting, we found that on 

average, the median number of reporting 

instances for each of the PQRI 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 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 

claims-based reporting of Physician 

Quality Reporting System measures 

would range from approximately $4.35 

(0.25 minutes per reporting instance × 6 

reporting instances per measure × 3 

measures × $58 per hour) to $208.80 

(12 minutes per reporting instance × 6 

reporting instances per measure × 3 

measures × $58 per hour). If an eligible 

professional satisfactorily reports, these 

costs will more than likely be negated 

by the incentive earned. For the 2007 

PQRI, which had a 1.5 percent incentive 

for a 6-month reporting period, the 

mean incentive amount was close to 

$700 for an individual eligible 

professional and the median incentive 

payment amount was over $300. 

For registry-based reporting, 

individual eligible professionals must 

generally incur a cost to submit data to 

registries. Estimated fees for using a 

qualified registry 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. Many eligible professionals 

who select registry-based reporting were 

already utilizing the registry for other 

purposes and would 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 Physician Quality 

Reporting System. 

For EHR-based reporting, 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 would 

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 would 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 would 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 would 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 the Part IV practice/ 

quality improvement activities. 

With respect to the process for group 

practices to be treated as satisfactorily 

submitting quality measures data for the 

CY 2011 Physician Quality Reporting 

System discussed in section VII.F.1 of 

this final rule with comment period, 

group practices interested in 

participating in the CY 2011 Physician 

Quality Reporting System through the 

group practice reporting option (GPRO) 

I or GPRO II may also incur a cost. 

However, for groups that satisfactorily 

report for 2011 Physician Quality 

Reporting System, we believe these 

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costs would be completely offset by the 

incentive payment earned since the 

group practice would be eligible for an 

incentive payment equal to 1 percent of 

the entire group’s total estimated 

Medicare Part B PFS allowed charges for 

covered professional services furnished 

during the reporting period. 

One factor in the cost to group 

practices would 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 

has an average labor cost of $58 per 

hour. Therefore, assuming 2 hours for a 

group practice to decide whether to 

participate individually or as a group 

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 to be 

approximately $348 ($58 per hour × 6 

hours per group practice). 

For groups participating under the 

GPRO I process, another factor in the 

cost to the group would be the time and 

effort associated with the group practice 

completing and submitting the proposed 

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. 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 tool, which uses the same 

data submission methods as those we 

have finalized, we estimate the cost 

associated with a physician group 

completing the data collection tool 

would be approximately $4,582 ($58 per 

hour × 79 hours per group practice). 

For group practices participating 

under the GPRO II process, the costs 

associated with submitting the 

Physician Quality Reporting System 

quality measures data will be the time 

associated with the group practice 

submitting the required data to CMS via 

claims or, if applicable, a registry. The 

costs for a group practice reporting to a 

registry is similar to the costs associated 

with registry reporting for an individual 

eligible professional, as the process is 

the same with the exception that more 

patients and more measures must be 

reported in GPRO II compared to an 

individual eligible professional. 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. Overall, there is 

significantly less burden associated with 

a group practice participating in 

Physician Quality Reporting System via 

GPRO II than doing so as individual 

eligible professionals. Participation in 

GPRO II requires the group practice as 

a whole to report a fewer number of 

measures on a fewer number of people 

since eligible professionals within a 

group who share patients will not be 

required to separately report measures 

for those shared patients. Therefore, 

assuming that an average group practice 

will spend 20 hours for data 

submission, we estimate the cost of data 

submission under GPRO II would be 

approximately $1,160 (20 hours for data 

submission × $58 per hour). Smaller 

groups may need less time for data 

submission as they would be required to 

report fewer measures and presumably 

have a smaller patient population while 

larger groups may need more time for 

data submission since they would be 

required to report more measures and 

presumably have a larger patient 

population. 

In addition to costs incurred by 

eligible professionals and group 

practices, registries and EHR vendors 

may also incur some costs related to the 

Physician Quality Reporting System. 

Registries interested in becoming 

‘‘qualified’’ to submit on behalf of 

individual eligible professionals would 

also have to incur a cost associated with 

the vetting process and with 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 estimate the registry self-nomination 

process will cost approximately $500 

per registry ($50 per hour × 10 hours per 

registry). This cost estimate includes the 

cost of submitting the self-nomination 

letter to CMS and completing the CMS 

vetting process. Our estimate of $50 per 

hour average labor cost for registries is 

based on the assumption that registry 

staff include IT professionals whose 

average hourly rates range from $36 to 

$84 per hour depending on experience, 

with an average rate of nearly $50 per 

hour for a mid-level programmer. 

Because we are finalizing new 

requirements for 2011, the 2010 

qualified registries will incur similar 

costs associated with the selfnomination process. 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. 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 

Physician Quality Reporting System 

measures to CMS for 2012 will have to 

complete a vetting process during 2011 

and program its EHR product(s) to 

extract the clinical data that the eligible 

professional needs to submit to CMS for 

purposes of reporting 2012 quality 

measures in 2013 as well. We specified 

that previously qualified vendors will 

need to only update their electronic 

measure specifications and data 

transmission schema during 2011 to 

incorporate any new EHR measures to 

maintain their qualification for the 2012 

Physician Quality Reporting System. 

Therefore, for EHR vendors that were 

not previously qualified, the cost 

associated with completing the selfnomination process, including the 

vetting process with CMS officials, is 

estimated to be $500 ($50 per hour × 10 

hours per EHR vendor). Our estimate of 

a $50 per hour average labor cost for 

EHR vendors is based on the 

assumption that vendor staff include IT 

professionals whose average hourly 

rates range from $36 to $84 per hour 

depending on experience, with an 

average rate of nearly $50 per hour for 

a mid-level programmer. 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 to be 

approximately $2,000 ($50 per hour × 

40 hours per vendor). However, given 

the variability in the capabilities of the 

vendors, we believe an estimate for 

those vendors with minimal experience 

would be approximately $10,000 per 

vendor ($50 per hour × 200 hours per 

EHR vendor). 

6. Section 132 of the MIPPA: Incentives 

for Electronic Prescribing (eRx)—The 

eRx Incentive Program 

Section VII.F.2. of this final rule with 

comment period describes the 2011 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73609 

Electronic Prescribing (eRx) Incentive 

Program. To be considered a successful 

electronic prescriber in CY 2011, an 

individual eligible professional will 

need to meet the requirements described 

in section VII.F.2. of this final rule with 

comment period. 

We estimate that the cost impact of 

the eRx Incentive Program on the 

Medicare program would 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 registry-based reporting 

and EHR-based reporting for the 

electronic prescribing measure. 

However, we do not believe that this 

provision has a significant cost impact 

on the Medicare program since much of 

this infrastructure has already been 

established for the Physician Quality 

Reporting System program. 

Individual eligible professionals and 

group practices may have different 

processes for integrating the eRx 

Incentive Program into their practices’ 

work flows. Given this variability and 

the multiple reporting options that we 

provide, it is difficult to accurately 

estimate the impact of the eRx Incentive 

Program on providers. Furthermore, we 

believe that costs for eligible 

professionals who are participating in 

the eRx Incentive Program for the first 

time in 2011 will be considerably higher 

than the cost for eligible professionals 

who participated in the eRx Incentive 

Program in prior years. In addition, for 

many eligible professionals (especially 

those who participated in the eRx 

Incentive Program in prior years), the 

cost of participating in the eRx Incentive 

Program for 2011 will be offset by the 

incentive payment received. As a result 

of the payment adjustment that begins 

in 2012, the cost of not participating in 

the eRx Incentive Program for 2011 

could be higher than the cost of 

participating in the form of reduced 

Medicare payments. 

For the 2009 eRx Incentive Program, 

approximately $148 million in total 

incentives were paid to eligible 

professionals with a median incentive 

amount of about $1,600. We estimate 

that the total incentive payments for the 

2011 eRx Incentive Program (which will 

be paid in 2012) will be similar. We 

anticipate that despite a decrease in the 

incentive payment amount from 2 

percent in 2010 to 1 percent of total 

estimated Medicare Part B allowed 

charges for covered professional 

services in 2011, more eligible 

professionals (and groups) will choose 

to participate in the 2011 eRx Incentive 

Program to avoid a prospective 1 

percent payment penalty in 2012 for not 

demonstrating that they are successful 

electronic prescribers. 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 onetime potential cost to some individual 

eligible professionals would be the cost 

of purchasing and using an eRx 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 intend 

to use 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 the reporting of 

physician quality of care through certain 

quality metrics, indicated an average 

labor cost per practice of approximately 

$50 per hour. To account for salary 

increases over time, we will use an 

average practice labor cost of $58 per 

hour for our estimates, based on an 

assumption of an average annual 

increase of approximately 3 percent. At 

an average cost of approximately $58 

per hour, we estimate the total 

preparation costs to individual eligible 

professionals to be approximately $116 

($58 per hour × 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, registrybased or EHR-based reporting 

mechanism). For claims-based 

reporting, there would 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 above 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 2011, we estimate the annual 

estimated cost per individual eligible 

professional to report the electronic 

prescribing measure via claimssubmission to be $42.29 (1.75 minutes 

per case × 1 measure × 25 cases per 

measure × $58 per hour). We believe 

that for most successful electronic 

prescribers who earn an incentive, these 

costs would be negated by the incentive 

payment received given that the median 

incentive for eligible professionals who 

qualified for a 2009 eRx incentive was 

around $1,600. 

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 registrybased reporting are more than likely 

already reporting data to the registry. 

Little, if any, additional data would 

need to be reported to the registry for 

purposes of participation in the CY 2011 

eRx Incentive Program. 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 CMSdesignated 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 process for group 

practices to be treated as successful 

electronic prescribers under the CY 

2011 eRx Incentive Program discussed 

in section VII.F.2 of this final rule with 

comment period, group practices have 

the same option as individual eligible 

professionals in terms of the form and 

manner for reporting the eRx measure 

(that is, group practices have the option 

of reporting the measure through claims, 

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73610 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

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 would have to self-nominate; 

and (2) the number of times a group 

practice would be required to report the 

eRx 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 2011 

Physician Quality Reporting System 

GPRO I or Physician Quality Reporting 

System GPRO II. The practices only will 

need to indicate their desire to 

participate in the eRx GPRO at the time 

they self-nominate for either Physician 

Quality Reporting System GPRO I or 

Physician Quality Reporting System 

GPRO II. 

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 CY 2011 eRx Incentive Program 

as a group would range from $126.88 

(1.75 minutes per case × 1 measure × 75 

cases per measure × $58 per hour) for 

the smallest groups participating under 

GPRO II to $4,229.17 (1.75 minutes per 

case × 2,500 cases per measure × $58 per 

hour) for the groups participating under 

GPRO I. 

We believe that the costs to individual 

eligible professionals and group 

practices associated with avoiding the 

eRx payment adjustment that goes into 

effect in 2012 would be similar to the 

costs of an eligible professional or group 

practice reporting the electronic 

prescribing measure for purposes of the 

2011 eRx incentive. Specifically, we 

believe that the cost of reporting the eRx 

measure in one instance for purposes of 

the payment adjustment is identical to 

the cost of reporting the eRx measure for 

one instance on claims for purposes of 

the incentive payment. The only 

difference would be in the total costs for 

an individual eligible professional. 

Group practices are required to report 

the eRx measure for the same number of 

eRx events for both the 2011 incentive 

and the 2012 payment adjustment. 

Individual eligible professionals, 

however, are required to report the eRx 

measure only for 10 eRx events for 

purposes of the 2012 payment 

adjustment as opposed to 25 eRx events 

for purposes of the 2011 incentive. 

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 participants’ 

behalf for the 2011 Physician Quality 

Reporting System to be qualified to 

submit results and numerator and 

denominator data on the eRx measure 

for the CY 2011 eRx Incentive Program, 

we do not estimate any cost to the 

registry associated with becoming a 

registry qualified to submit the eRx 

measure for CY 2011. 

The cost for the registry would be the 

time and effort associated with the 

registry calculating results for the eRx 

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 

would already be required to perform 

these activities for the Physician Quality 

Reporting System. 

Likewise, based on our decision to 

consider only EHR products qualified 

for the CY 2011 Physician Quality 

Reporting System to be qualified to 

submit results and numerator and 

denominator data on the electronic 

prescribing measure for the CY 2011 

eRx Incentive Program, there would be 

no need for 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 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 CY 2011 eRx measure. Since we 

determined that only EHR products 

qualified for the 2011 Physician Quality 

Reporting System will be qualified for 

the CY 2011 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 eRx measure to the 

CMS-designated clinical data warehouse 

will be minimal. 

7. Durable Medical Equipment-Related 

Issues 

a. Off-the-Shelf (OTS) Orthotics 

Exemption 

In section VII.G. of this final rule with 

comment period, we are expanding the 

exemptions from the CBP for certain 

OTS orthotics to physicians, other 

practitioners (as defined by the 

Secretary), or by hospitals if furnished 

to their own patients as part of their 

professional service. 

The exemption is a self-implementing 

mandate required by section 154(d) of 

MIPPA, which added section 1847(a)(7) 

of the Act. Section 1847(a)(7)(A) of the 

Act expanded the exemptions from the 

CBP for certain OTS orthotics to 

physicians, other practitioners (as 

defined by the Secretary), or hospitals if 

furnished to their own patients as part 

of their professional service. Section 

1847(a)(7)(B) of the Act, as added by 

section 154(d) of MIPPA, also expanded 

the exemption from CBP for certain 

DME items (crutches, canes, walkers, 

folding manual wheelchairs, blood 

glucose monitors, and infusion pumps) 

when furnished by hospitals to the 

hospital’s own patients during an 

admission or on the date of discharge. 

We believe this exemption will have 

a negligible impact on physicians, other 

practitioners, and hospitals. The 

exemption allows physicians, other 

practitioners, and hospitals to continue 

to provide these items to their own 

patients without submitting a bid and 

becoming a contract supplier. This 

exemption also allows continued access 

to these items for beneficiaries when 

these items are furnished by physicians, 

other practitioners, and hospitals to 

their own patients. 

b. Changes to Payment for Oxygen 

Equipment 

We are not finalizing our proposal 

pertaining to oxygen and oxygen 

equipment; and therefore, the impact 

analysis associated with this proposal is 

not being finalized. 

c. Diabetic Testing Supplies 

We are establishing requirements for 

conducting a national competition for 

furnishing diabetic testing supplies on a 

mail order basis. Specifically this final 

rule with comment period will establish 

3 requirements: A new definition for 

what constitutes mail order; a rule that 

requires contract suppliers to provide at 

a minimum 50 percent of all of the 

different types of diabetic testing 

products on the market by brand and 

model name; and a prohibition against 

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influencing and incentivizing 

beneficiaries to switch their brand of 

monitor and testing supplies. 

Currently, based on claims data from 

FY 2009, over 62 percent of 

beneficiaries receive their replacement 

diabetic testing supplies from mail order 

suppliers. The new mail order 

definition will not impact these 

beneficiaries because they can continue 

to obtain their items through mail order. 

The remaining 38 percent of 

beneficiaries may continue to obtain 

these items from a local pharmacy. We 

do not expect this rule to have any 

adverse effects on beneficiaries because 

the new definition of mail order item is 

reflective of the way that beneficiaries 

currently get their diabetic testing 

supplies. However, we believe that by 

clarifying this definition, we will 

protect beneficiaries from paying higher 

co-payment amounts and we anticipate 

program savings that would have been 

eroded by suppliers circumventing our 

definition to continue to provide items, 

even if not awarded a contract under 

competitive bidding and to obtain the 

higher fee schedule payment amount. 

This definition is also consistent with 

the way that suppliers currently do 

business by either providing items 

through mail order or at a local 

storefront. For these reasons we believe 

this new definition will have minimal 

impact. 

Also, we considered the option to not 

bifurcate bidding based on delivery 

method and to bid for diabetic testing 

supplies regardless of how the items 

were obtained. We rejected this 

approach because it would force 

companies with different business 

models to compete against each other, 

by requiring local pharmacies to 

compete with national mail order 

suppliers in order to win a contract to 

be able to furnish diabetic testing 

supplies. 

In order to implement a national mail 

order competition for diabetic supplies, 

we are also implementing the special 

‘‘50 percent rule’’ mandated by MIPPA. 

This final rule with comment period 

requires a bidder to demonstrate that its 

bid covers types of diabetic testing strip 

products that, in the aggregate and 

taking into account volume for the 

different products, cover 50 percent (or 

such higher percentage as the Secretary 

may specify) of all such types of 

products. The 50 percent threshold 

would ensure that beneficiaries have 

access to mail order delivery of the topselling diabetic test strip products from 

every contract supplier. We plan to use 

the information that bidding suppliers 

provide on their bidding Form B where 

suppliers list the products they plan to 

furnish. We believe this requirement 

will have a minimal impact on suppliers 

because most suppliers currently 

provide a wide range of the brands and 

models in order to gain market share. 

The statute states that suppliers are 

required to carry at least 50 percent of 

all brands on the market. However, the 

Secretary can establish suppliers to 

carry a higher percentage of brands. We 

have adopted the 50 percent criteria 

because we believe this is reflective of 

what suppliers are currently doing and 

ensures appropriate access for 

beneficiaries. 

In addition to the 50 percent rule we 

are establishing an anti-switching 

requirement. This provision would 

prevent contract suppliers from 

influencing or incentivizing 

beneficiaries by persuading, pressuring, 

or advising them to switch from their 

current brand to a brand provided by 

the supplier. We believe this 

requirement will protect the beneficiary 

and physician choice of glucose 

monitoring systems. The decision 

concerning the type of monitor and 

testing supplies that a beneficiary 

chooses should not be made by the 

supplier but rather by the beneficiary 

and their physician. We believe that this 

provision will have a minimal impact 

on suppliers because suppliers currently 

offer a variety of products and generally 

do not require beneficiaries to switch 

from the brands they are familiar with 

and customarily use. 

d. Metropolitan Statistical Areas 

In section VII.V. of this final rule with 

comment period, we implement section 

6410 of the ACA regarding adjustments 

to the DMEPOS CBP. We believe that 

the provisions pertaining to subdividing 

metropolitan statistical areas (MSAs) 

with populations of at least 8,000,000 

for the purpose of establishing 

competitive bidding areas (CBAs) under 

Round 2 of the DMEPOS CBP will have 

a positive impact on most suppliers, 

particularly small suppliers. The 

authority provided by section 

1847(a)(1)(D)(ii)(II) of the Act will be 

used to create CBAs that are smaller 

than the highly and densely populated 

MSAs of: Chicago-Naperville-Joliet, IL– 

IN–WI; Los Angeles-Long Beach-Santa 

Ana, CA; and New York-Northern New 

Jersey-Long Island, NY–NJ–PA. This 

results in more manageable service areas 

for suppliers to navigate when 

furnishing items. More importantly, it 

ensures more timely delivery of items 

and services to beneficiaries located 

throughout each of the MSAs. It also 

benefits small suppliers because they 

will have smaller geographic areas to 

cover as contract suppliers than the 

large MSAs, which in some cases, might 

prevent them from being considered for 

participation under the program. The 

larger suppliers will still have the 

opportunity to bid in all of the CBAs 

within each MSA. We expect that 

subdividing the large MSAs of Chicago, 

Los Angeles, and New York would not 

have a negative impact on program 

savings, as long as each CBA is large 

enough to be attractive to suppliers for 

bidding purposes. 

Table 104 considers FY cash impact 

on the entire Medicare program, 

including Medicare Advantage for FYs 

2011 thru 2015, of the provisions of this 

final rule with comment period related 

to the establishment of CBAs during 

Round 2 and prior to calendar year 

2015. The FY–CY distinction is an 

important one when comparing savings. 

For example, the savings for the 

DMEPOS CBP will be for 9 months of 

FY 2013, but for 12 months of CY 2013. 

Table 104 considers the impact on 

program expenditures, and does not 

include beneficiary coinsurance. 

Finally, the estimates in Table 104 

incorporate spillover effects from the 

competitive acquisition program onto 

the Medicare Advantage program. The 

expectation is that the 21 additional 

MSAs added to the DMEPOS CBP 

would lower prices for DME products in 

FFS and would lead to lower prices in 

the Medicare Advantage market. The 

table below considers FY cash impact of 

the above provisions on the entire 

Medicare program, including Medicare 

Advantage for the FY. 

TABLE 104—IMPACT OF ADDING 21 

MSAS TO ROUND 2 OF THE MEDICARE DMEPOS COMPETITIVE BIDDING PROGRAM

FY Cost 

(in $ millions) 

2011 ................................ 0 

2012 ................................ 0 

2013 ................................ ¥40 

2014 ................................ ¥70 

2015 ................................ ¥110 

Subdividing the large MSAs of Chicago, 

Los Angeles, and New York is 

considered to have little to no fiscal 

impact. The exceptions to the DMEPOS 

CBP involving rural areas, MSAs with 

populations less than 250,000, and low 

population density areas in selected 

MSAs before 2015 are considered to 

have little to no impact because the 

baseline never considered these areas as 

subject to competitive bidding prices. 

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8. Air Ambulance 

In section VII.H. of this final rule with 

comment period, we present our 

provision regarding air ambulance and 

provider and supplier enrollment. We 

note that this provision is an 

administrative initiative that may result 

in Medicare program savings but at this 

time those savings are inestimable. We 

believe the probable costs providers or 

suppliers will incur as a result of this 

rule to be negligible. 

F. Alternatives Considered 

This final rule with comment period 

contains a range of policies, including 

some provisions related to specific 

MIPPA and ACA 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 

final policies and, where relevant, 

alternatives that were considered. 

G. 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 

proposed changes, including the 

refinements of the PQRI with its focus 

on measuring, submitting, and 

analyzing quality data, the expansion of 

the list of Medicare-approved telehealth 

services, the incentive payments for 

primary care services furnished by 

primary care practitioners in any 

location and major surgical procedures 

furnished by general surgeons in 

HPSAs, the waiver of beneficiary costsharing for most preventive services, 

and the annual wellness visit 

provisions, 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. For 

example, the waiver of the deductible 

and coinsurance for the annual wellness 

visit, the IPPE, and preventive services 

with a grade of A or B from the USPSTF 

would reduce beneficiary liability for 

these services. 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 102, the CY 2010 

national payment amount in the 

nonfacility setting for CPT code 99203 

(Office/outpatient visit, new) is $76.93 

which means that in CY 2010 a 

beneficiary would be responsible for 20 

percent of this amount, or $15.39. Based 

on this final rule with comment period, 

the CY 2011 national payment amount 

in the nonfacility setting for CPT code 

99203, as shown in Table 102, is $77.59, 

which means that, in CY 2011, the 

beneficiary coinsurance for this service 

would be $15.52 

Additionally, beneficiary liability 

would also be impacted by the effect of 

the aggregate cost (savings) of the 

provisions on the standard calculation 

of the Medicare Part B premium rate 

(generally 25 percent of the provision’s 

cost or savings). 

Most policies discussed in this final 

rule with comment period that impact 

payment rates, such as the expansion of 

the MPPR to therapy services and the 

increased discount on the TC of 

multiple imaging procedures from 25 

percent to 50 percent, would similarly 

impact beneficiaries’ coinsurance. 

H. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/circulars/ 

a004/a-4.pdf), in Table 105, we have 

prepared an accounting statement 

showing the estimated expenditures 

associated with this final rule with 

comment period. This estimate includes 

the estimated FY 2011 cash benefit 

impact associated with certain ACA and 

MIPPA provisions, and the CY 2011 

incurred benefit impact associated with 

the estimated CY 2011 PFS conversion 

factor update based on the Mid-Session 

Review of the FY 2011 President’s 

Budget baseline. 

TABLE 105—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES

Category Transfers 

CY 2011 Annualized Monetized Transfers.Estimated decrease in expenditures of $17.6 billion for PFS conversion factor update. 

From Whom To Whom? ...... Federal Government to physicians, other practitioners and providers and suppliers who receive payment under 

Medicare. 

FY 2011 Annualized Monetized Transfers.Estimated increase in expenditures of $1.97 billion for Affordable Care Act provisions. 

From Whom To Whom? ...... Federal Government to providers. 

In accordance with the provisions of 

Executive Order 12866, this final rule 

with comment period was reviewed by 

the Office of Management and Budget. 

List of Subjects 

42 CFR Part 405 

Administrative practice and 

procedure, Health facilities, Health 

professions, Kidney diseases, Medical 

devices, Medicare, Reporting and 

recordkeeping requirements, Rural 

areas, X-rays. 

42 CFR Part 409 

Health facilities, Medicare. 

42 CFR Part 410 

Health facilities, Health professions, 

Kidney diseases, Laboratories, 

Medicare, Reporting and recordkeeping 

requirements, Rural areas, X-rays. 

42 CFR Part 411 

Kidney diseases, Medicare, Physician 

Referral, Reporting and recordkeeping 

requirements. 

42 CFR Part 413 

Health facilities, Kidney diseases, 

Medicare, Reporting and recordkeeping 

requirements. 

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 424 

Emergency medical services, Health 

facilities, Health professions, Medicare, 

Reporting and recordkeeping 

requirements. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73613 

PART 405—FEDERAL HEALTH 

INSURANCE FOR THE AGED AND 

DISABLED 

■ 1. The authority for part 405 

continues to read as follows: 

Authority: Secs. 1102, 1861, 1862(a), 1871, 

1874, 1881, and 1886(k) of the Social 

Security Act (42 U.S.C. 1302, 1395x, 

1395y(a), 1395hh, 1395kk, 1395rr and 

1395ww(k)), and sec. 353 of the Public 

Health Service Act (42 U.S.C. 263a). 

Subpart X—Rural Health Clinic and 

Federally Qualified Health Center 

Services 

■ 2. A new § 405.2449 is added to read 

as follows 

§ 405.2449 Preventive services. 

For services furnished on or after 

January 1, 2011, preventive services 

covered under the Medicare Federally 

qualified health center benefit are those 

preventive services defined in section 

1861(ddd)(3) of the Act, and § 410.2 of 

this chapter. Specifically, these include 

the following: 

(a) The specific services currently 

listed in section 1861(ww)(2) of the Act, 

with the explicit exclusion of 

electrocardiograms. 

(b) The Initial Preventive Physical 

Examination (IPPE) (as specified by 

section 1861(ww)(1) of the Act as added 

by section 611 of the Medicare 

Prescription Drug, Improvement and 

Modernization Act of 2003 (Pub. L. 108– 

173) and § 410.16 of this chapter); and 

(c) The Personalized Prevention Plan 

Services (PPPS), also known as the 

‘‘Annual Wellness Visit’’ (as specified by 

section 1861(hhh) of the Act as added 

by section 4103 of the Affordable Care 

Act (Pub. L. 111–148) and § 410.15 of 

this chapter). 

■ 3. Section 405.2470 is amended by 

adding a new paragraph (d) to read as 

follows: 

§ 405.2470 Reports and maintenance of 

records. 

* * * * * 

(d) Collection of additional claims 

data. Beginning January 1, 2011, a 

Medicare FQHC must report on its 

Medicare claims such information as the 

Secretary determines is needed to 

develop and implement a prospective 

payment system for FQHCs including, 

but not limited to all pertinent HCPCS 

(Healthcare Common Procedure Coding 

System) code(s) corresponding to the 

service(s) provided for each Medicare 

FQHC visit (as defined in § 405.2463). 

PART 409—HOSPITAL INSURANCE 

BENEFITS 

■ 4. The authority citation for part 409 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

Subpart B—Inpatient Hospital Services 

and Inpatient Critical Access Hospital 

Services 

§ 409.17 [Amended] 

■ 5. Amend § 409.17(d) by removing the 

phrase ‘‘hospital policies and 

procedures.’’ and adding in its place the 

phrase ‘‘the provider’s policies and 

procedures.’’. 

Subpart C—Posthospital SNF Care 

■ 6. Section 409.20 is amended by 

revising paragraph (a)(3) to read as 

follows: 

§ 409.20 Coverage of services. 

(a) * * * 

(3) Physical therapy, occupational 

therapy, and speech-language pathology 

services. 

* * * * * 

■ 7. Section 409.23 is revised to read as 

follows: 

§ 409.23 Physical therapy, occupational 

therapy, and speech-language pathology 

services. 

Medicare pays for physical therapy, 

occupational therapy, or speechlanguage pathology services as 

posthospital SNF care if they are 

furnished— 

(a) By (or under arrangements made 

by) the facility and billed by (or 

through) the facility; 

(b) By qualified physical therapists, 

physical therapist assistants, 

occupational therapists, occupational 

therapy assistants, or speech-language 

pathologists as defined in part 484 of 

this chapter; and 

(c) In accordance with a plan that 

meets the requirements of § 409.17(b) 

through (d) of this part. 

PART 410—SUPPLEMENTARY 

MEDICAL INSURANCE (SMI) 

BENEFITS 

■ 8. 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). 

Subpart A—General Provisions 

■ 9. Section 410.2 is amended by adding 

the definition of ‘‘Preventive services’’ in 

alphabetical order to read as follows: 

§ 410.2 Definitions. 

* * * * * 

Preventive services means all of the 

following: 

(1) The specific services listed in 

section 1861(ww)(2) of the Act, with the 

explicit exclusion of electrocardiograms; 

(2) The Initial Preventive Physical 

Examination (IPPE) (as specified by 

section 1861(ww)(1) of the Act); and 

(3) Annual Wellness Visit (AWV), 

providing Personalized Prevention Plan 

Services (PPPS) (as specified by section 

1861(hhh)(1) of the Act). 

§ 410.3 [Amended] 

■ 10. Amend § 410.3(b)(2) by removing 

the reference ‘‘subpart E’’ and adding in 

its place the reference ‘‘subpart I.’’ 

Subpart B—Medical and Other Health 

Services 

■ 11. Section 410.15 is added to read as 

follows: 

§ 410.15 Annual wellness visits providing 

Personalized Prevention Plan Services: 

Conditions for and limitations on coverage. 

(a) Definitions. For purposes of this 

section— 

Detection of any cognitive impairment 

means assessment of an individual’s 

cognitive function by direct observation, 

with due consideration of information 

obtained by way of patient report, 

concerns raised by family members, 

friends, caretakers or others. 

Eligible beneficiary means an 

individual who is no longer within 12 

months after the effective date of his or 

her first Medicare Part B coverage 

period and who has not received either 

an initial preventive physical 

examination or an annual wellness visit 

providing a personalized prevention 

plan within the past 12 months. 

Establishment of, or an update to the 

individual’s medical and family history 

means, at minimum, the collection and 

documentation of the following: 

(i) Past medical and surgical history, 

including experiences with illnesses, 

hospital stays, operations, allergies, 

injuries and treatments. 

(ii) Use or exposure to medications 

and supplements, including calcium 

and vitamins. 

(iii) Medical events in the 

beneficiary’s parents and any siblings 

and children, including diseases that 

may be hereditary or place the 

individual at increased risk. 

First annual wellness visit providing 

personalized prevention plan services 

means the following services furnished 

to an eligible beneficiary by a health 

professional as those terms are defined 

in this section: 

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73614 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

(i) Establishment of an individual’s 

medical and family history. 

(ii) Establishment of a list of current 

providers and suppliers that are 

regularly involved in providing medical 

care to the individual. 

(iii) 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. 

(iv) Detection of any cognitive 

impairment that the individual may 

have, as that term is defined in this 

section. 

(v) Review of the individual’s 

potential (risk factors) for depression, 

including current or past experiences 

with depression or other mood 

disorders, based on the use of an 

appropriate screening instrument for 

persons without a current diagnosis of 

depression, which the health 

professional may select from various 

available standardized screening tests 

designed for this purpose and 

recognized by national medical 

professional organizations. 

(vi) Review of the individual’s 

functional ability and level of safety, 

based on direct observation or the use 

of appropriate screening questions or a 

screening questionnaire, which the 

health professional as defined in this 

section may select from various 

available screening questions or 

standardized questionnaires designed 

for this purpose and recognized by 

national professional medical 

organizations. 

(vii) Establishment of the following: 

(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 status, screening 

history, and age-appropriate preventive 

services covered by Medicare. 

(B) A list of risk factors and 

conditions for which primary, 

secondary or tertiary interventions are 

recommended or are 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 (as described under 

§ 410.16 of this subpart), and a list of 

treatment options and their associated 

risks and benefits. 

(viii) 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. 

(ix) Voluntary advance care planning 

(as defined in this section) upon 

agreement with the individual. 

(x) Any other element determined 

appropriate through the national 

coverage determination process. 

Health professional means— 

(i) A physician who is a doctor of 

medicine or osteopathy (as defined in 

section 1861(r)(1) of the Act); or 

(ii) A physician assistant, nurse 

practitioner, or clinical nurse specialist 

(as defined in section 1861(aa)(5) of the 

Act); or 

(iii) A medical professional (including 

a health educator, a registered dietitian, 

or nutrition professional, or other 

licensed practitioner) or a team of such 

medical professionals, working under 

the direct supervision (as defined in 

§ 410.32(b)(3)(ii)) of a physician as 

defined in paragraph (i) of this 

definition. 

Review of the individual’s functional 

ability and level of safety means, at 

minimum, assessment of the following 

topics: 

(i) Hearing impairment. 

(ii) Ability to successfully perform 

activities of daily living. 

(iii) Fall risk. 

(iv) Home safety. 

Subsequent annual wellness visit 

providing personalized prevention plan 

services means the following services 

furnished to an eligible beneficiary by a 

health professional as those terms are 

defined in this section: 

(i) An update of the individual’s 

medical and family history. 

(ii) 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. 

(iii) 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. 

(iv) Detection of any cognitive 

impairment that the individual may 

have, as that term is defined in this 

section. 

(v) An update to the following: 

(A) The written screening schedule 

for the individual as that schedule is 

defined in paragraph (a) of this section 

for the first annual wellness visit 

providing personalized prevention plan 

services. 

(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. 

(vi) Furnishing of personalized health 

advice to the individual and a referral, 

as appropriate, to health education or 

preventive counseling services or 

programs as that advice and related 

services are defined in paragraph (a) of 

this section. 

(vii) Voluntary advance care planning 

(as defined in paragraph (a) of this 

section) upon agreement with the 

individual. 

(viii) Any other element determined 

appropriate through the national 

coverage determination process. 

Voluntary advance care planning 

means, for purposes of this section, 

verbal or written information regarding 

the following areas: 

(i) An individual’s ability to prepare 

an advance directive in the case where 

an injury or illness causes the 

individual to be unable to make health 

care decisions. 

(ii) Whether or not the physician is 

willing to follow the individual’s wishes 

as expressed in an advance directive. 

(b) Conditions for coverage of annual 

wellness visits providing personalized 

prevention plan services. Medicare Part 

B pays for first and subsequent annual 

wellness visits providing personalized 

prevention plan services that are 

furnished to an eligible beneficiary, as 

described in this section, if they are 

furnished by a health professional, as 

defined in this section. 

(c) Limitations on coverage of an 

annual wellness visit providing 

personalized prevention plan services. 

Payment may not be made for either a 

first or a subsequent annual wellness 

visit providing personalized prevention 

plan services that is performed for an 

individual who is— 

(1) Not an eligible beneficiary as 

described in this section. 

(2) An eligible beneficiary as 

described in this section and who has 

had either an initial preventive physical 

examination as specified in § 410.16 of 

this subpart or either a first or a 

subsequent annual wellness visit 

providing personalized prevention plan 

services performed within the past 12 

months. 

(d) Effective date. Coverage for an 

annual wellness visit providing 

personalized prevention plan services is 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73615 

effective for services furnished on or 

after January 1, 2011. 

■ 12. Section 410.32 is amended by 

adding paragraph (b)(2)(vii) to read as 

follows: 

§ 410.32 Diagnostic x-ray tests, diagnostic 

laboratory tests, and other diagnostic tests: 

Conditions. 

* * * * * 

(b) * * * 

(2) * * * 

(vii) Diagnostic tests performed by a 

certified nurse-midwife authorized to 

perform the tests under applicable State 

laws. 

* * * * * 

■ 13. Section 410.64 is amended by 

revising paragraph (a) introductory text 

to read as follows: 

§ 410.64 Additional Preventive Services 

(a) Medicare Part B pays for 

additional preventive services not 

described in paragraph (1) or (3) of the 

definition of ‘‘preventive services’’ under 

§ 410.2, that identify medical conditions 

or risk factors for individuals if the 

Secretary determines through the 

national coverage determination process 

(as defined in section 1869(f)(1)(B) of 

the Act) that these services are all of the 

following: 

* * * * * 

■ 14. Section 410.78 is amended by 

revising paragraph (b) introductory text 

to read as follows: 

§ 410.78 Telehealth services. 

* * * * * 

(b) General rule. Medicare Part B pays 

for office or other outpatient visits, 

subsequent hospital care services (with 

the limitation of one telehealth visit 

every 3 days), subsequent nursing 

facility care services (not including the 

Federally-mandated periodic visits 

under § 483.40(c) and with the 

limitation of one telehealth visit every 

30 days), professional consultations, 

psychiatric diagnostic interview 

examination, neurobehavioral status 

exam, individual psychotherapy, 

pharmacologic management, end-stage 

renal disease-related services included 

in the monthly capitation payment 

(except for one ‘‘hands on’’ visit per 

month to examine the access site), 

individual and group medical nutrition 

therapy services, individual and group 

kidney disease education services, 

individual and group diabetes selfmanagement (DSMT) training services 

(except for one hour of in-person 

services to be furnished in the year 

following the initial DSMT service to 

ensure effective injection training), and 

individual and group health and 

behavior assessment and intervention 

services furnished by an interactive 

telecommunications system if the 

following conditions are met: 

* * * * * 

Subpart I—Payment for SMI Benefits 

■ 15. Section 410.150 is amended by 

adding paragraph (b)(20) to read as 

follows: 

§ 410.150 To whom payment is made. 

* * * * * 

(b) * * * 

(20) To a certified nurse-midwife for 

professional services furnished by the 

certified nurse-midwife in all settings 

and for services and supplies furnished 

incident to those services. Payment is 

made only if no facility or other 

provider charges or is paid any amount 

for the furnishing of the professional 

services of the certified nurse-midwife. 

■ 16. Section 410.152 is amended by 

revising paragraph (l) to read as follows: 

§ 410.152 Amount of payment. 

* * * * * 

(l) Amount of payment: Preventive 

services. Medicare Part B pays 100 

percent of the Medicare payment 

amount established under the 

applicable payment methodology for the 

service setting for providers and 

suppliers for the following preventive 

services: 

(1) Pneumococcal (as specified in 

paragraph (h) of this section), influenza, 

and hepatitis B vaccine and 

administration. 

(2) Screening mammography. 

(3) Screening pap tests and screening 

pelvic exam. 

(4) Prostate cancer screening tests 

(excluding digital rectal examinations). 

(5) Colorectal cancer screening tests 

(excluding barium enemas). 

(6) Bone mass measurement. 

(7) Medical nutrition therapy (MNT) 

services. 

(8) Cardiovascular screening blood 

tests. 

(9) Diabetes screening tests. 

(10) Ultrasound screening for 

abdominal aortic aneurysm (AAA). 

(11) Additional preventive services 

identified for coverage through the 

national coverage determination (NCD) 

process. 

(12) Initial Preventive Physical 

Examination (IPPE). 

(13) Annual Wellness Visit (AWV), 

providing Personalized Prevention Plan 

Services (PPPS). 

■ 16. Section 410.160 is amended by— 

■ A. Revising paragraph (b)(2). 

■ B. Adding paragraphs (b)(10) through 

(13). 

The revisions and additions read as 

follows: 

§ 410.160 Part B annual deductible. 

* * * * * 

(b) * * * 

(2) Pneumococcal, influenza, and 

hepatitis b vaccines and their 

administration. 

* * * * * 

(10) Bone mass measurement. 

(11) Medical nutrition therapy (MNT) 

services. 

(12) Annual Wellness Visit (AWV), 

providing Personalized Prevention Plan 

Services (PPPS). 

(13) Additional preventive services 

identified for coverage through the 

national coverage determination (NCD) 

process. 

* * * * * 

PART 411—EXCLUSIONS FROM 

MEDICARE AND LIMITATIONS ON 

MEDICARE PAYMENT 

■ 17. The authority citation for part 411 

continues to read as follows: 

Authority: Secs. 1102, 1860D–1 through 

1860D–42, 1871, and 1877 of the Social 

Security Act (42 U.S.C. 1302, 1395w-101 

through 1395w-152, 1395hh, and 1395nn). 

Subpart A—General Exclusions and 

Exclusion of Particular Services 

■ 18. Section 411.15 is amended by— 

■ A. Revising paragraph (a)(1). 

■ B. Adding new paragraph (k)(16). 

The revision and addition read as 

follows: 

§ 411.15 Particular services excluded from 

coverage. 

* * * * * 

(a) * * * 

(1) Examinations performed for a 

purpose other than treatment or 

diagnosis of a specific illness, 

symptoms, complaint, or injury, except 

for screening mammography, colorectal 

cancer screening tests, screening pelvic 

exams, prostate cancer screening tests, 

glaucoma screening exams, ultrasound 

screening for abdominal aortic 

aneurysms (AAA), cardiovascular 

disease screening tests, diabetes 

screening tests, a screening 

electrocardiogram, initial preventive 

physical examinations that meet the 

criteria specified in paragraphs (k)(6) 

through (k)(15) of this section, 

additional preventive services that meet 

the criteria in § 410.64 of this chapter, 

or annual wellness visits providing 

personalized prevention plan services. 

* * * * * 

(k) * * * 

(16) In the case of an annual wellness 

visit providing a personalized 

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73616 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

prevention plan, subject to the 

conditions and limitations specified in 

§ 410.15 of this subpart. 

* * * * * 

Subpart J—Financial Relationships 

Between Physicians and Entities 

Furnishing Designated Health Services 

■ 19. Section 411.355 is amended by 

adding paragraph (b)(7) to read as 

follows: 

§ 411.355 General exceptions to the 

referral prohibition related to both 

ownership/investment and compensation. 

* * * * * 

(b) * * * 

(7) Disclosure requirement for certain 

imaging services. 

(i) With respect to magnetic resonance 

imaging, computed tomography, and 

positron emission tomography services 

identified as ‘‘radiology and certain 

other imaging services’’ on the List of 

CPT/HCPCS Codes, the referring 

physician must provide written notice 

to the patient at the time of the referral 

that the patient may receive the same 

services from a person other than one 

described in paragraph (b)(1) of this 

section. Except as set forth in paragraph 

(b)(7)(ii) of this section, the written 

notice must include a list of at least 5 

other suppliers (as defined in § 400.202 

of this chapter) that provide the services 

for which the individual is being 

referred and which are located within a 

25-mile radius of the referring 

physician’s office location at the time of 

the referral. The notice should be 

written in a manner sufficient to be 

reasonably understood by all patients 

and should include for each supplier on 

the list, at a minimum, the supplier’s 

name, address, and telephone number. 

(ii) If there are fewer than 5 other 

suppliers located within a 25-mile 

radius of the physician’s office location 

at the time of the referral, the physician 

must list all of the other suppliers of the 

imaging service that are present within 

a 25-mile radius of the referring 

physician’s office location. Provision of 

the written list of alternate suppliers 

will not be required if no other 

suppliers provide the services for which 

the individual is being referred within 

the 25-mile radius. 

* * * * * 

PART 413—PRINCIPLES OF 

REASONABLE COST 

REIMBURSEMENT; PAYMENT FOR 

END–STAGE RENAL DISEASE 

SERVICES; OPTIONAL 

PROSPECTIVELY DETERMINED 

PAYMENT RATES FOR SKILLED 

NURSING FACILITIES 

■ 20. The authority citation for part 413 

continues to read as follows: 

Authority: Secs. 1102, 1812(d), 1814(b), 

1815, 1833(a), (i), and (n), 1861(v), 1871, 

1881, 1883, and 1886 of the Social Security 

Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 

1395g, 1395l(a), (i), and (n), 1395x(v), 

1395hh, 1395rr, 1395tt, and 1395ww); and 

sec. 124 of Public Law 106–133 (113 Stat. 

1501A–332). 

Subpart E—Payments to Providers 

■ 21. Section 413.70 is amended by 

adding a sentence at the end of 

paragraph (b)(3)(ii)(B) to read as follows: 

§ 413.70 Payment for services of a CAH. 

* * * * * 

(b) * * * 

(3) * * * 

(ii) * * * 

(B) * * * Effective for primary care 

services furnished by primary care 

practitioners (as defined in § 414.80(a)) 

and major surgical procedures furnished 

by general surgeons in health 

professional shortage areas (as defined 

in § 414.2) furnished on or after January 

1, 2011 and before January 1, 2016, 

incentive payments specified under 

§ 414.80 and § 414.67(b), respectively, of 

this title must not be included in 

determining payment made under this 

paragraph. 

* * * * * 

PART 414—PAYMENT FOR PART B 

MEDICAL AND OTHER HEALTH 

SERVICES 

■ 22. 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)). 

Subpart A—General Provisions 

■ 23. Section 414.2 is amended by 

adding the definitions of ‘‘Health 

Professional Shortage Area’’ and ‘‘Major 

surgical procedure’’ in alphabetical 

order to read as follows: 

§ 414.2 Definitions. 

* * * * * 

Health Professional Shortage Area 

(HPSA) means an area designated under 

section 332(a)(1)(A) of the Public Health 

Service Act as identified by the 

Secretary prior to the beginning of such 

year. 

Major surgical procedure means a 

surgical procedure for which a 10-day or 

90-day global period is used for 

payment under the physician fee 

schedule and section 1848(b) of the Act. 

* * * * * 

■ 24. Section 414.26 is amended by— 

■ A. Redesignating paragraph (c) as 

paragraph (d). 

■ B. Adding a new paragraph (c). 

The addition reads as follows: 

§ 414.26 Determining the GAF. 

* * * * * 

(c) Adjusting the practice expense 

index to account for the Frontier State 

floor. 

(1) General criteria. Effective on or 

after January 1, 2011, CMS will adjust 

the practice expense index for 

physicians’ services furnished in 

qualifying States to recognize the 

practice expense index floor established 

for Frontier States. A qualifying State 

must meet the following criteria: 

(i) At least 50 percent of counties 

located within the State have a 

population density less than 6 persons 

per square mile. 

(ii) The State does not receive a nonlabor related share adjustment 

determined by the Secretary to take into 

account the unique circumstances of 

hospitals located in Alaska and Hawaii. 

(2) Amount of adjustment. The 

practice expense value applied for 

physicians’ services furnished in a 

qualifying State will be not less than 

1.00. 

(3) Process for determining 

adjustment. (i) CMS will use the most 

recent population estimate data 

published by the U.S. Census Bureau to 

determine county definitions and 

population density. This analysis will 

be periodically revised, such as for 

updates to the decennial census data. 

(ii) CMS will publish annually a 

listing of qualifying Frontier States 

receiving a practice expense index floor 

attributable to this provision. 

* * * * * 

Subpart B—Physicians and Other 

Practitioners 

■ 25. Section 414.54 is revised to read 

as follows: 

§ 414.54 Payment for certified nursemidwives’ services. 

(a) For services furnished after 

December 31, 1991, allowed amounts 

under the fee schedule established 

under section 1833(a)(1)(K) of the Act 

for the payment of certified nursemidwife services may not exceed 65 

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percent of the physician fee schedule 

amount for the service. 

(b) For certified nurse-midwife 

services furnished on or after January 1, 

2011, allowed amounts may not exceed 

100 percent of the physician fee 

schedule amount that would be paid to 

a physician for the services. 

■ 26. Section 414.65 is amended by 

revising paragraph (a)(1) introductory 

text to read as follows: 

§ 414.65 Payment for telehealth services. 

(a) * * * 

(1) The Medicare payment amount for 

office or other outpatient visits, 

subsequent hospital care services (with 

the limitation of one telehealth 

subsequent hospital care service every 3 

days), subsequent nursing facility care 

services (not including the Federallymandated periodic visits under 

§ 483.40(c) and with the limitation of 

one telehealth nursing facility care 

service every 30 days), professional 

consultations, psychiatric diagnostic 

interview examination, neurobehavioral 

status exam, individual psychotherapy, 

pharmacologic management, end-stage 

renal disease-related services included 

in the monthly capitation payment 

(except for one ‘‘hands on’’ visit per 

month to examine the access site), 

individual and group medical nutrition 

therapy services, individual and group 

kidney disease education services, 

individual and group diabetes selfmanagement training (DSMT) services 

(except for 1 hour of in-person DSMT 

services to be furnished in the year 

following the initial DSMT service to 

ensure effective injection training), 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. 

* * * * * 

■ 27. Section 414.67 is revised to read 

as follows: 

§ 414.67 Incentive payments for services 

furnished in Health Professional Shortage 

Areas. 

(a) Health Professional Shortage Area 

(HPSA) physician bonus program. A 

HPSA physician incentive payment will 

be made subject to the following: 

(1) HPSA bonuses are payable for 

services furnished by physicians as 

defined in section 1861(r) of the Act in 

areas designated as of December 31 of 

the prior year as geographic primary 

medical care HPSAs as defined in 

section 332(a)(1)(A) of the Public Health 

Service Act. 

(2) HPSA bonuses are payable for 

services furnished by psychiatrists in 

areas designated as of December 31 of 

the prior year as geographic mental 

health HPSAs if the services are not 

already eligible for the bonus based on 

being in a geographic primary care 

HPSA. 

(3) Physicians eligible for the HPSA 

physician bonus are entitled to a 10 

percent incentive payment above the 

amount paid for their professional 

services under the physician fee 

schedule. 

(4) Physicians furnishing services in 

areas that are designated as geographic 

HPSAs prior to the beginning of the year 

but not included on the published list 

of zip codes for which automated HPSA 

bonus payments are made must use the 

AQ modifier to receive the HPSA 

physician bonus payment. 

(b) HPSA surgical incentive payment 

program. A HPSA surgical incentive 

payment will be made subject to the 

following: 

(1) A major surgical procedure as 

defined in § 414.2 of this part is 

furnished by a general surgeon on or 

after January 1, 2011 and before January 

1, 2016 in an area recognized for the 

HPSA physician bonus program under 

paragraph (a)(1) of this section. 

(2) Payment will be made on a 

quarterly basis in an amount equal to 10 

percent of the Part B payment amount 

for major surgical procedures furnished 

as described in paragraph (b)(1) of this 

section, in addition to the amount the 

physician would otherwise be paid. 

(3) Physicians furnishing services in 

areas that are designated as geographic 

HPSAs eligible for the HPSA physician 

bonus program under paragraph (a)(1) of 

this section prior to the beginning of the 

year but not included on the published 

list of zip codes for which automated 

HPSA surgical incentive payments are 

made should report HCPCS modifier 

-AQ to receive the HPSA surgical 

incentive payment. 

(4) The payment described in 

paragraph (b)(2) of this section is made 

to the surgeon or, where the surgeon has 

reassigned his or her benefits to a 

critical access hospital (CAH) paid 

under the optional method, to the CAH 

based on an institutional claim. 

■ 28. Section 414.80 is added to read as 

follows: 

§ 414.80 Incentive payment for primary 

care services. 

(a) Definitions. As defined in this 

section— 

Eligible primary care practitioner 

means one of the following: 

(i) A physician (as defined in section 

1861(r)(1) of the Act) who meets all of 

the following criteria: 

(A) Enrolled in Medicare with a 

primary specialty designation of 08- 

family practice, 11-internal medicine, 

37-pediatrics, or 38-geriatrics. 

(B) At least 60 percent of the 

physician’s allowed charges under the 

physician fee schedule (excluding 

hospital inpatient care and emergency 

department visits) during a reference 

period specified by the Secretary are for 

primary care services. 

(ii) A nurse practitioner, clinical 

nurse specialist, or physician assistant 

(as defined in section 1861(aa)(5) of the 

Act) who meets all of the following 

criteria: 

(A) Enrolled in Medicare with a 

primary specialty designation of 50- 

nurse practitioner, 89-certified clinical 

nurse, or 97-physician assistant. 

(B) At least 60 percent of the 

practitioner’s allowed charges under the 

physician fee schedule (excluding 

hospital inpatient care and emergency 

department visits) during a reference 

period specified by the Secretary are for 

primary care services. 

Primary care services means— 

(i) New and established patient office 

or other outpatient evaluation and 

management (E/M) visits; 

(ii) Initial, subsequent, discharge, and 

other nursing facility E/M services; 

(iii) New and established patient 

domiciliary, rest home (for example, 

boarding home), or custodial care E/M 

services; 

(iv) Domiciliary, rest home (for 

example, assisted living facility), or 

home care plan oversight services; and 

(v) New and established patient home 

E/M visits. 

(b) Payment. 

(1) For primary care services 

furnished by an eligible primary care 

practitioner on or after January 1, 2011 

and before January 1, 2016, payment is 

made on a quarterly basis in an amount 

equal to 10 percent of the payment 

amount for the primary care services 

under Part B, in addition to the amount 

the primary care practitioner would 

otherwise be paid for the primary care 

services under Part B. 

(2) The payment described in 

paragraph (b)(1) of this section is made 

to the eligible primary care practitioner 

or, where the physician has reassigned 

his or her benefits to a critical access 

hospital (CAH) paid under the optional 

method, to the CAH based on an 

institutional claim. 

■ 29. A new § 414.90 is added to read 

as follows: 

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73618 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

§ 414.90 Physician Quality Reporting 

System. 

(a) Basis and scope. This section 

implements the following provisions of 

the Act: 

(1) 1848(a)—Payment Based on Fee 

Schedule. 

(2) 1848(k)—Quality Reporting 

System. 

(3) 1848(m)—Incentive Payments for 

Quality Reporting. 

(b) Definitions. As used in this 

section, unless otherwise indicated— 

Covered professional services means 

services for which payment is made 

under, or is based on, the Medicare 

physician fee schedule as provided 

under section 1848(k)(3) of the Act and 

which are furnished by an eligible 

professional. 

Eligible professional means any of the 

following: 

(i) A physician. 

(ii) A practitioner described in section 

1842(b)(18)(C) of the Act. 

(iii) A physical or occupational 

therapist or a qualified speech-language 

pathologist. 

(iv) A qualified audiologist (as 

defined in section 1861(ll)(3)(B) of the 

Act). 

Group practice means a single 

Taxpayer 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. 

Maintenance of Certification Program 

means a continuous assessment 

program, such as qualified American 

Board of Medical Specialties 

Maintenance of Certification Program or 

an equivalent program (as determined 

by the Secretary), that advances quality 

and the lifelong learning and selfassessment of board certified specialty 

physicians by focusing on the 

competencies of patient care, medical 

knowledge, practice-based learning, 

interpersonal and communication skills, 

and professionalism. Such a program 

must include the following: 

(i) The program requires the physician 

to maintain a valid unrestricted license 

in the United States. 

(ii) The program requires a physician 

to participate in educational and selfassessment programs that require an 

assessment of what was learned. 

(iii) The program requires a physician 

to 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. 

(iv) The program requires successful 

completion of a qualified maintenance 

of certification program practice 

assessment. 

Maintenance of Certification Program 

Practice Assessment means an 

assessment of a physician’s practice 

that— 

(i) Includes an initial assessment of an 

eligible professional’s practice that is 

designed to demonstrate the physician’s 

use of evidence-based medicine; 

(ii) Includes a survey of patient 

experience with care; and 

(iii) Requires a physician to 

implement a quality improvement 

intervention to address a practice 

weakness identified in the initial 

assessment under paragraph (h) of this 

section and then to remeasure to assess 

performance improvement after such 

intervention. 

Measures group means a subset of 

four or more Physician Quality 

Reporting System measures that have a 

particular clinical condition or focus in 

common. The denominator definition 

and coding of the measures group 

identifies the condition or focus that is 

shared across the measures within a 

particular measures group. 

Physician Quality Reporting System 

means the physician reporting system 

under section 1848(k) of the Act for the 

reporting by eligible professionals of 

data on quality measures and the 

incentive payment associated with this 

physician reporting system. 

Performance rate means the 

percentage of a defined population who 

receives a particular process of care or 

achieve a particular outcome for a 

particular quality measure. 

Reporting rate means the percentage 

of patients that the eligible professional 

indicated a quality action was or was 

not performed divided by the total 

number of patients in the denominator 

of the measure. 

Qualified registry means a medical 

registry or a maintenance of certification 

program operated by a specialty body of 

the American Board of Medical 

Specialties that, with respect to a 

particular program year, has selfnominated and successfully completed 

a vetting process (as specified by CMS) 

to demonstrate its compliance with the 

Physician Quality Reporting System 

qualification requirements specified by 

CMS for that program year. The registry 

may act as a data submission vendor, 

which has the requisite legal authority 

to provide Physician Quality Reporting 

System data (as specified by CMS) on 

behalf of an eligible professional to 

CMS. 

Qualified electronic health record 

product means an electronic health 

record vendor’s product and version 

that, with respect to a particular 

program year, has self-nominated and 

successfully completed a vetting process 

(as specified by CMS) to demonstrate 

the product’s compliance with the 

Physician Quality Reporting System 

qualification requirements specified by 

CMS for a program year. The 

requirements and process for an 

electronic health record product to be 

qualified for the purpose of the 

Physician Quality Reporting System is 

separate from the standards, 

implementation specifications, and 

certification criteria established for the 

EHR Incentive Program specified in part 

495. 

(c) Incentive payments. With respect 

to covered professional services 

furnished during a reporting period by 

an eligible professional, if — 

(1) There are any quality measures 

that have been established under the 

Physician Quality Reporting System that 

are applicable to any such services 

furnished by such professional (or in the 

case of a group practice under paragraph 

(g) of this section, such group practice) 

for such reporting period; and 

(2) The eligible professional (or in the 

case of a group practice under paragraph 

(g) of this section, the group practice) 

satisfactorily submits (as determined 

under paragraph (f) of this section for 

eligible professionals and paragraph (g) 

of this section for group practices) to the 

Secretary data on such quality measures 

in accordance with the Physician 

Quality Reporting System for such 

reporting period, in addition to the 

amount otherwise paid under section 

1848 of the Act, there also must be paid 

to the eligible professional (or to an 

employer or facility in the cases 

described in section 1842(b)(6)(A) of the 

Act or, in the case of a group practice) 

under paragraph (g) of this section, to 

the group practice, from the Federal 

Supplementary Medical Insurance Trust 

Fund established under section 1841 of 

the Act an amount equal to the 

applicable quality percent (as specified 

in paragraph (c)(3) of this section) of the 

eligible professional’s (or, in the case of 

a group practice under paragraph (g) of 

this section, the group practice’s) total 

estimated allowed charges for all 

covered professional services furnished 

by the eligible professional (or, in the 

case of a group practice under paragraph 

(g) of this section, by the group practice) 

during the applicable reporting period. 

For purposes of this paragraph, 

(i) The eligible professional’s (or, in 

the case of a group practice under 

paragraph (g) of this section, the group 

practice’s) total estimated allowed 

charges for covered professional 

services furnished during a reporting 

period are determined based on claims 

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processed in the National Claims 

History (NCH) no later than 2 months 

after the end of the applicable reporting 

period; 

(ii) In the case of an eligible 

professional who furnishes covered 

professional services in more than one 

practice, incentive payments are 

separately determined for each practice 

based on claims submitted for the 

eligible professional for each practice; 

(iii) Incentive payments earned by an 

eligible professional (or in the case of a 

group practice under paragraph (g) of 

this section, by a group practice) for a 

particular program year will be paid as 

a single consolidated payment to the 

TIN holder of record. 

(3) Applicable quality percent. The 

applicable quality percent is as follows: 

(i) For 2011, 1.0 percent; and 

(ii) For 2012, 2013, and 2014, 0.5 

percent; 

(d) Additional incentive payment. (1) 

Through 2014, if an eligible professional 

meets the requirements described in 

paragraph (d)(2) of this section, the 

applicable percent for such year, as 

described in paragraphs (c)(3)(i) and (ii) 

of this section, must be increased by 0.5 

percentage points. 

(2) In order to qualify for the 

additional incentive payment described 

in paragraph (d)(1) of this section, an 

eligible professional must meet the 

following requirements: 

(i) The eligible professional must— 

(A) Satisfactorily submit data on 

quality measures for purposes of this 

section for a year; and 

(B) Have such data submitted on their 

behalf through a Maintenance of 

Certification program (as defined in 

paragraph (b) of this section) that meets: 

(1) The criteria for a registry (as 

specified by CMS); or 

(2) An alternative form and manner 

determined appropriate by the 

Secretary. 

(ii) The eligible professional, more 

frequently than is required to qualify for 

or maintain board certification status— 

(A) Participates in a maintenance of 

certification program (as defined in 

paragraph (b) of this section) for a year; 

and 

(B) Successfully completes a qualified 

maintenance of certification program 

practice assessment (as defined in 

paragraph (b) of this section) for such 

year. 

(iii) A Maintenance of Certification 

Program submits to the Secretary, on 

behalf of the eligible professional, 

information— 

(A) In a form and manner specified by 

the Secretary, that the eligible 

professional has successfully met the 

requirements of paragraph (d)(2)(ii) of 

this section, which may be in the form 

of a structural measure); 

(B) If requested by the Secretary, on 

the survey of patient experience with 

care (as described in paragraph (b) of 

this section); and 

(C) 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. 

(e) Use of consensus-based quality 

measures. For each program year, CMS 

will publish the final list of measures 

and the final detailed measure 

specifications for all quality measures 

selected for inclusion in the Physician 

Quality Reporting System quality 

measure set for a given program year on 

a CMS Web site by no later than 

December 31 of the prior year. 

(1) General rule. Subject to paragraph 

(e)(2) of this section, for purposes of 

reporting data on quality measures for 

covered professional services furnished 

during a year, subject to paragraph (f) of 

this section, the quality measures 

specified under this paragraph must be 

such measures selected by the Secretary 

from measures that have been endorsed 

by the entity with a contract with the 

Secretary under section 1890(a) of the 

Act. 

(2) Exception. 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 

entity with a contract under section 

1890(a) of the Act, the Secretary may 

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. 

(3) Opportunity to provide input on 

measures. For each quality measure 

adopted by the Secretary under this 

paragraph, the Secretary ensures that 

eligible professionals have the 

opportunity to provide input during the 

development, endorsement, or selection 

of quality measures applicable to 

services they furnish. 

(f) Requirements for individual 

eligible professionals to qualify to 

receive an incentive payment. In order 

to qualify to earn a Physician Quality 

Reporting System incentive payment for 

a particular program year, an individual 

eligible professional, as identified by a 

unique TIN/NPI combination, must 

meet the criteria for satisfactory 

reporting specified by CMS for such 

year by reporting on either individual 

Physician Quality Reporting System 

quality measures or Physician Quality 

Reporting System measures groups 

identified by CMS during a reporting 

period specified in paragraph (f)(1) of 

this section and using one of the 

reporting mechanisms specified in 

paragraph (f)(2) of this section. 

Although an eligible professional may 

attempt to qualify for the Physician 

Quality Reporting System incentive 

payment by reporting on both 

individual Physician Quality Reporting 

System quality measures and measures 

groups, using more than one reporting 

mechanism (as specified in paragraph 

(f)(2) of this section), or reporting for 

more than one reporting period, he or 

she will receive only one Physician 

Quality Reporting System incentive 

payment per TIN/NPI combination for a 

program year. 

(1) Reporting periods. For purposes of 

this paragraph, the reporting period 

with respect to program year 2011 is— 

(i) The 12-month period from January 

1 through December 31 of such program 

year; or 

(ii) The 6-month period from July 1 

through December 31 of such program 

year. 

(2) Exceptions. In program year 2011, 

the 6-month reporting period is not 

available for EHR-based reporting of 

individual Physician Quality Reporting 

System quality measures or for reporting 

by group practices under the process 

described in paragraph (g) of this 

section. 

(3) Reporting mechanisms. For 

program year 2011, 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 the 

following manner: 

(i) Reporting the individual Physician 

Quality Reporting System quality 

measures or Physician Quality 

Reporting System measures groups to 

CMS, by no later than 2 months after the 

end of the applicable reporting period, 

on the eligible professional’s Medicare 

Part B claims for covered professional 

services furnished during the applicable 

reporting period. 

(ii) Reporting the individual 

Physician Quality Reporting System 

quality measures or Physician Quality 

Reporting System measures groups to a 

qualified registry (as specified 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 registry will submit 

information, as required by CMS, for 

covered professional services furnished 

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73620 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

by the eligible professional during the 

applicable reporting period to CMS on 

the eligible professional’s behalf; or 

(iii) Reporting the individual 

Physician Quality Reporting System 

quality measures to CMS by extracting 

clinical data using a secure data 

submission method, as required by 

CMS, from a qualified EHR 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 

applicable reporting period. 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 real or 

dummy clinical quality data extracted 

from the qualified EHR product selected 

by the eligible professional using a 

secure data submission method, as 

required by CMS. 

(g) Requirements for group practices 

to qualify to receive an incentive 

payment. A group practice (as defined 

in paragraph (b) of this section) will be 

treated as satisfactorily submitting data 

on quality measures under Physician 

Quality Reporting System for covered 

professional services for a reporting 

period, if, in lieu of reporting Physician 

Quality Reporting System measures, the 

group practice— 

(1) Meets the participation 

requirements specified by CMS for the 

Physician Quality Reporting System 

group practice reporting option or is a 

group practice of any size (including 

solo practitioners) or comprised of 

multiple TINs participating in a 

Medicare approved demonstration 

project that is deemed to be 

participating in the Physician Quality 

Reporting System group practice 

reporting option; 

(2) Is selected by CMS to participate 

in the Physician Quality Reporting 

System group practice reporting option; 

(3) Reports measures specified by 

CMS in the form and manner, and at a 

time specified by CMS; and 

(4) Meets other requirements for 

satisfactory reporting specified by CMS. 

(5) No double payments. 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 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 another 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. 

(h) Limitations on review. Except as 

specified in paragraph (i) of this section, 

there is no administrative or judicial 

review under section 1869 or 1879 of 

the Act, or otherwise of— 

(1) The determination of measures 

applicable to services furnished by 

eligible professionals under the 

Physician Quality Reporting System; 

(2) The determination of the payment 

limitation; and 

(3) The determination of any 

Physician Quality Reporting System 

incentive payment and the Physician 

Quality Reporting System payment 

adjustment. 

(i) Informal review. Eligible 

professionals (or in the case of reporting 

under paragraph (g) of this section, 

group practices) may seek an informal 

review of the determination that an 

eligible professional (or in the case of 

reporting under paragraph (g) of this 

section, group practices) did not 

satisfactorily submit data on quality 

measures under the Physician Quality 

Reporting System. 

(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 or 

via e-mail 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 60 days of the receipt 

of the original request. 

(i) All decisions based on the informal 

review will be final. 

(ii) There will be no further review or 

appeal. 

(j) Public reporting of an eligible 

professional’s or group practice’s 

Physician Quality Reporting System 

data. For each program year, CMS will 

post on a public Web site, in an easily 

understandable format, a list of the 

names of eligible professionals (or in the 

case of reporting under paragraph (g) of 

this section, group practices) who 

satisfactorily submitted Physician 

Quality Reporting System quality 

measures. 

■ 30. A new § 414.92 is added to read 

as follows: 

§ 414.92 Electronic Prescribing Incentive 

Program. 

(a) Basis and scope. This section 

implements the following provisions of 

the Act: 

(1) Section 1848(a)—Payment Based 

on Fee Schedule. 

(2) Section 1848(m)—Incentive 

Payments for Quality Reporting. 

(b) Definitions. As used in this 

section, unless otherwise indicated— 

Covered professional services means 

services for which payment is made 

under, or is based on, the Medicare 

physician fee schedule which are 

furnished by an eligible professional. 

Electronic Prescribing Incentive 

Program means the incentive payment 

program established under section 

1848(m) of the Act for the adoption and 

use of electronic prescribing technology 

by eligible professionals. 

Eligible professional means any of the 

following healthcare professionals who 

have prescribing authority: 

(i) A physician. 

(ii) A practitioner described in section 

1842(b)(18)(C) of the Act. 

(iii) A physical or occupational 

therapist or a qualified speech-language 

pathologist. 

(iv) A qualified audiologist (as 

defined in section 1861(ll)(3)(B) of the 

Act). 

Group practice means a group 

practice that is— 

(i) Defined at § 414.90(b), that is 

participating in the Physician Quality 

Reporting System; or 

(ii) (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. 

Qualified electronic health record 

product means an electronic health 

record product and version that, with 

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respect to a particular program year, is 

designated by CMS as a qualified 

electronic health record product for the 

purpose of the Physician Quality 

Reporting System (as described in 

§ 414.90) and the product’s vendor has 

indicated a desire to have the product 

qualified for purposes of the product’s 

users to submit information related to 

the electronic prescribing measure. 

Qualified registry means a medical 

registry or a Maintenance of 

Certification Program operated by a 

specialty body of the American Board of 

Medical Specialties that, with respect to 

a particular program year, is designated 

by CMS as a qualified registry for the 

purpose of the Physician Quality 

Reporting System (as described in 

§ 414.90) and that has indicated its 

desire to be qualified to submit the 

electronic prescribing measure on behalf 

of eligible professionals for the purposes 

of the Electronic Prescribing Incentive 

Program. 

(c) Incentive payments and payment 

adjustments. (1) Incentive payments. 

Subject to paragraph (c)(3) of this 

section, with respect to covered 

professional services furnished during a 

reporting period by an eligible 

professional, if the eligible professional 

is a successful electronic prescriber for 

such reporting period, in addition to the 

amount otherwise paid under section 

1848 of the Act, there also must be paid 

to the eligible professional (or to an 

employer or facility in the cases 

described in section 1842(b)(6)(A) of the 

Act) or, in the case of a group practice 

under paragraph (e) of this section, to 

the group practice, from the Federal 

Supplementary Medical Insurance Trust 

Fund established under section 1841 of 

the Act an amount equal to the 

applicable electronic prescribing 

percent (as specified in paragraph 

(c)(1)(ii) of this section) of the eligible 

professional’s (or, in the case of a group 

practice under paragraph (e) of this 

section, the group practice’s) total 

estimated allowed charges for all 

covered professional services furnished 

by the eligible professional (or, in the 

case of a group practice under paragraph 

(e) of this section, by the group practice) 

during the applicable reporting period. 

(i) For purposes of paragraph (c)(1) of 

this section, 

(A) The eligible professional’s (or, in 

the case of a group practice under 

paragraph (e) of this section, the group 

practice’s) total estimated allowed 

charges for covered professional 

services furnished during a reporting 

period are determined based on claims 

processed in the National Claims 

History (NCH) no later than 2 months 

after the end of the applicable reporting 

period; 

(B) In the case of an eligible 

professional who furnishes covered 

professional services in more than one 

practice, incentive payments are 

separately determined for each practice 

based on claims submitted for the 

eligible professional for each practice; 

(C) Incentive payments earned by an 

eligible professional (or in the case of a 

group practice under paragraph (e) of 

this section, by a group practice) for a 

particular program year will be paid as 

a single consolidated payment to the 

TIN holder of record. 

(ii) Applicable electronic prescribing 

percent. The applicable electronic 

prescribing percent is as follows: 

(A) For the 2011 and 2012 program 

years, 1.0 percent. 

(B) For the 2013 program year, 0.5 

percent. 

(iii) Limitation with respect to 

electronic health record (EHR) incentive 

payments. The provisions of this 

paragraph do not apply to an eligible 

professional (or, in the case of a group 

practice under paragraph (e) of this 

section, a group practice) if, for the 

electronic health record reporting 

period the eligible professional (or 

group practice) receives an incentive 

payment under section 1848(o)(1)(A) of 

the Act with respect to a certified 

electronic health record technology (as 

defined in section 1848(o)(4) of the Act) 

that has the capability of electronic 

prescribing. 

(2) Incentive payment adjustment. 

Subject to paragraphs (c)(1)(ii) and (c)(3) 

of this section, with respect to covered 

professional services furnished by an 

eligible professional during 2012, 2013, 

or 2014, if the eligible professional (or 

in the case of a group practice under 

paragraph (e) of this section, the group 

practice) is not a successful electronic 

prescriber (as specified by CMS for 

purposes of the payment adjustment) for 

an applicable reporting period (as 

specified by CMS) the fee schedule 

amount for such services furnished by 

such professional (or group practice) 

during the program year (including the 

fee schedule amount for purposes of 

determining a payment based on such 

amount) is equal to the applicable 

percent (as specified in paragraph 

(c)(2)(i) of this section) of the fee 

schedule amount that would otherwise 

apply to such services under section 

1848 of the Act. 

(i) Applicable percent. The applicable 

percent is as follows: 

(A) For 2012, 99 percent; 

(B) For 2013, 98.5 percent; and 

(C) For 2014, 98 percent. 

(ii) Significant hardship exception. 

CMS may, on a case-by-case basis, 

exempt an eligible professional (or in 

the case of a group practice under 

paragraph (e) of this section, a group 

practice) from the application of the 

payment adjustment under paragraph 

(c)(2) of this section if, CMS determines, 

subject to annual renewal, that 

compliance with the requirement for 

being a successful electronic prescriber 

would result in a significant hardship. 

(3) Limitation with respect to 

electronic prescribing quality measures. 

The provisions of paragraphs (c)(1) and 

(c)(2) of this section do not apply to an 

eligible professional (or, in the case of 

a group practice under paragraph (e) of 

this section, a group practice) if for the 

reporting period the allowed charges 

under section 1848 of the Act for all 

covered professional services furnished 

by the eligible professional (or group, as 

applicable) for the codes to which the 

electronic prescribing measure applies 

are less than 10 percent of the total of 

the allowed charges under section 1848 

of the Act for all such covered 

professional services furnished by the 

eligible professional (or the group 

practice, as applicable). 

(d) Requirements for individual 

eligible professionals to qualify to 

receive an incentive payment. 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 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. 

(1) Reporting period. For purposes of 

this paragraph in 2011, the reporting 

period with respect to a program year is 

the entire calendar year. 

(2) Reporting mechanisms. For 

program year 2011, an eligible 

professional who wishes to participate 

in the Electronic Prescribing Incentive 

Program must report information on the 

electronic prescribing measure 

identified by CMS to— 

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73622 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

(i) CMS, by no later than 2 months 

after the end of the applicable 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 

(d)(1) of this section; 

(ii) 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 will 

submit information, as required by 

CMS, for covered professional services 

furnished by the eligible professional 

during the reporting period specified in 

paragraph (d)(1) of this section to CMS 

on the eligible professional’s behalf; or 

(iii) 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 

(d)(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 real or 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. 

(e) Requirements for group practices 

to qualify to receive an incentive 

payment. (1) A group practice (as 

defined in paragraph (b) of this section) 

will be treated as a successful electronic 

prescriber for covered professional 

services for a reporting period if the 

group practice meets the criteria for 

successful electronic prescriber 

specified by CMS in the form and 

manner and at the time specified by 

CMS. 

(2) No double payments. Payments to 

a group practice under this paragraph 

must be in lieu of the payments that 

would otherwise be made under the 

Electronic Prescribing Incentive 

Program to eligible professionals in the 

group practice for being a successful 

electronic prescriber. 

(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 electronic prescribing group practice 

reporting option for a program year, 

then for that program year the eligible 

professional must participate in the 

Electronic Prescribing Incentive 

Program via the group practice reporting 

option. For any program year in which 

the TIN is selected to participate in the 

Electronic Prescribing Incentive 

Program group practice reporting 

option, the eligible professional cannot 

individually qualify for an electronic 

prescribing incentive payment by 

meeting the requirements specified in 

paragraph (d) of this section. 

(ii) If, for the program year, the 

eligible professional participates in the 

Electronic Prescribing Incentive 

Program under another TIN that is not 

selected to participate in the Electronic 

Prescribing Incentive Program group 

practice reporting option for that 

program year, then the eligible 

professional may individually qualify 

for an electronic prescribing incentive 

by meeting the requirements specified 

in paragraph (d) of this section under 

that TIN. 

(f) Public reporting of an eligible 

professional’s or group practice’s 

Electronic Prescribing Incentive 

Program data. For each program year, 

CMS will post on a public Web site, in 

an easily understandable format, a list of 

the names of eligible professionals (or in 

the case of reporting under paragraph (e) 

of this section, group practices) who are 

successful electronic prescribers. 

Subpart D—Payment for Durable 

Medical Equipment and Prosthetic and 

Orthotic Devices 

■ 31. Section 414.202 is amended by 

adding the definition of ‘‘Complex 

rehabilitative power-driven wheelchair. 

§ 414.202 Definitions. 

* * * * * 

Complex rehabilitative power-driven 

wheelchair means a power-driven 

wheelchair that is classified as— 

(1) Group 2 power wheelchair with 

power options that can accommodate 

rehabilitative features (for example, tilt 

in space); or 

(2) Group 3 power wheelchair. 

* * * * * 

■ 32. Section 414.229 is amended by— 

■ A. Revising paragraphs (a)(3), (d)(1), 

and (h). 

■ B. Adding paragraphs (a)(4), (a)(5), 

and (b)(3). 

The revisions and additions read as 

follows: 

§ 414.229 Other durable medical 

equipment-capped rental items. 

(a) * * * 

(3) For power-driven wheelchairs 

furnished on or after January 1, 2006 

through December 31, 2010, payment is 

made in accordance with the rules set 

forth in paragraphs (f) or (h) of this 

section. 

(4) For power-driven wheelchairs that 

are not classified as complex 

rehabilitative power-driven 

wheelchairs, furnished on or after 

January 1, 2011, payment is made in 

accordance with the rules set forth in 

paragraph (f) of this section. 

(5) For power-driven wheelchairs 

classified as complex rehabilitative 

power-driven wheelchairs, furnished on 

or after January 1, 2011, payment is 

made in accordance with the rules set 

forth in paragraphs (f) or (h) of this 

section. 

(b) * * * 

(3) For power-driven wheelchairs 

furnished on or after January 1, 2011, 

the monthly fee schedule amount for 

rental equipment equals 15 percent of 

the purchase price recognized as 

determined under paragraph (c) of this 

section for each of the first 3 months 

and 6 percent of the purchase price for 

each of the remaining months. 

* * * * * 

(d) * * * 

(1) Suppliers must offer beneficiaries 

the option of purchasing power-driven 

wheelchairs at the time the supplier first 

furnishes the item. On or after January 

1, 2011, this option is available only for 

complex rehabilitative power-driven 

wheelchairs. Payment must be on a 

lump-sum fee schedule purchase basis if 

the beneficiary chooses the purchase 

option. The purchase fee is the amount 

established in paragraph (c) of this 

section. 

* * * * * 

(h) Purchase of power-driven 

wheelchairs furnished on or after 

January 1, 2006. (1) Suppliers must offer 

beneficiaries the option to purchase 

power-driven wheelchairs at the time 

the equipment is initially furnished. 

(2) Payment is made on a lump-sum 

purchase basis if the beneficiary chooses 

this option. 

(3) On or after January 1, 2011, this 

option is available only for complex 

rehabilitative power-driven 

wheelchairs. 

Subpart F—Competitive Bidding for 

Certain Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) 

■ 33. Section 414.402 is amended by 

adding the definitions of ‘‘Affected 

party,’’ ‘‘Breach of contract,’’ ‘‘Corrective 

action plan (CAP),’’ ‘‘Hearing officer,’’ 

‘‘Mail order item,’’ ‘‘National mail order 

DMEPOS competitive bidding program,’’ 

‘‘Non-mail order item’’ and ‘‘Parties to 

the hearing’’ in alphabetical order to 

read as follows: 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73623 

§ 414.402 Definitions. 

Affected party means a contract 

supplier that has been notified that their 

DMEPOS CBP contract will be 

terminated for a breach of contract. 

* * * * * 

Breach of contract means any 

deviation from contract requirements, 

including a failure to comply with a 

governmental agency or licensing 

organization requirements, constitutes a 

breach of contract. 

* * * * * 

Corrective action plan (CAP) means a 

contract supplier’s written document 

with supporting information that 

describes the actions the contract 

supplier will take within a specified 

timeframe to remedy a breach of 

contract. 

* * * * * 

Hearing officer (HO) means an 

individual, who was not involved with 

the CBIC recommendation to terminate 

a DMEPOS Competitive Bidding 

Program contract, who is designated by 

CMS to review and make an unbiased 

and independent recommendation 

when there is an appeal of CMS’s initial 

determination to terminate a DMEPOS 

Competitive Bidding Program contract. 

* * * * * 

Mail order item means any item (for 

example, diabetic testing supplies) 

shipped or delivered to the beneficiary’s 

home, regardless of the method of 

delivery. 

* * * * * 

National mail order DMEPOS 

competitive bidding program means a 

program whereby contracts are awarded 

to suppliers for the furnishing of mail 

order items across the nation. 

* * * * * 

Non-mail order item means any item 

(for example, diabetic testing supplies) 

that a beneficiary or caregiver picks up 

in person at a local pharmacy or 

supplier storefront. 

Parties to the hearing means the 

DMEPOS contract supplier and CMS. 

* * * * * 

■ 34. Section 414.404 is amended by 

revising paragraph (b)(1)(i) to read as 

follows: 

§ 414.404 Scope and applicability. 

* * * * * 

(b) * * * 

(1) * * * 

(i) The items furnished are limited to 

crutches, canes, walkers, folding manual 

wheelchairs, blood glucose monitors, 

and infusion pumps that are DME, and 

off-the-shelf (OTS) orthotics. 

* * * * * 

■ 35. Section 414.408 is amended by— 

■ A. Revising paragraph (f)(1). 

■ B. Redesignating paragraph (h)(2) 

through (h)(7) as paragraphs (h)(3) 

through (h)(8), respectively. 

■ C. Adding new paragraph (h)(2). 

■ D. In newly designated paragraphs 

(h)(3)(i) and (ii), remove the phrase 

‘‘(h)(2)’’ and insert in its place the phrase 

‘‘(h)(3).’’ 

The revision and addition reads as 

follows: 

§ 414.408 Payment rules. 

* * * * * 

(f) * * * 

(1) The single payment amounts for 

new purchased durable medical 

equipment, including power 

wheelchairs that are purchased when 

the equipment is initially furnished and 

enteral nutrition equipment are 

calculated based on the bids submitted 

and accepted for these items. For 

contracts entered into beginning on or 

after January 1, 2011, payment on a 

lump sum purchase basis is only 

available for power wheelchairs 

classified as complex rehabilitative 

power wheelchairs. 

* * * * * 

(h) * * * 

(2) For contracts entered into 

beginning on or after January 1, 2011, 

the monthly fee schedule amount for 

rental of power wheelchairs equals 15 

percent of the single payment amounts 

calculated for new durable medical 

equipment under paragraph (f)(1) of this 

section for each of the first 3 months, 

and 6 percent of the single payment 

amounts calculated for these items for 

each of the remaining months 4 through 

13. 

* * * * * 

■ 36. Section 414.410 is amended as 

follows: 

■ A. Revising paragraphs (a)(2) and 

(a)(3). 

■ B. Adding a new paragraph (a)(4). 

The revisions and addition read as 

follows: 

§ 414.410 Phase-in implementation of 

competitive bidding programs. 

(a) * * * 

(2) In CY 2011, in an additional 91 

MSAs (the additional 70 MSAs selected 

by CMS as of June 1, 2008, and the next 

21 largest MSAs by total population 

based on 2009 population estimates, 

and not already phased in as of June 1, 

2008). CMS may subdivide any of the 91 

MSAs with a population of greater than 

8,000,000 into separate CBAs, thereby 

resulting in more than 91 CBAs. 

(3) After CY 2011, additional CBAs 

(or, in the case of national mail order for 

items and services, after CY 2010). 

(4) For competitions (other than for 

national mail order items and services) 

after CY 2011 and prior to CY 2015, the 

following areas are excluded: 

(i) Rural areas. 

(ii) MSAs not selected under 

paragraphs (a)(1) or (a)(2) of this section 

with a population of less than 250,000. 

(iii) An area with low population 

density within an MSA not selected 

under paragraphs (a)(1) or (a)(2) of this 

section. 

* * * * * 

■ 37. Section 414.411 is added to read 

as follows: 

§ 414.411 Special rule in case of 

competitions for diabetic testing strips 

conducted on or after January 1, 2011. 

(a) National mail order competitions. 

A supplier must demonstrate that their 

bid submitted as part of a national mail 

order competition for diabetic testing 

strips covers the furnishing of a 

sufficient number of different types of 

diabetic testing strip products that, in 

the aggregate, and taking into account 

volume for the different products, 

includes at least 50 percent of all the 

different types of products on the 

market. A type of diabetic testing strip 

means a specific brand and model of 

testing strips. 

(b) Other competitions. CMS may 

apply this special rule to non-mail order 

or local competitions for diabetic testing 

strips. 

■ 38. Section 414.422 is amended by 

adding paragraph (e)(3) to read as 

follows: 

§ 414.422 Term of contracts. 

* * * * * 

(e) * * * 

(3) Contract suppliers for diabetic 

testing supplies must furnish the brand 

of diabetic testing supplies that work 

with the home blood glucose monitor 

selected by the beneficiary. The contract 

supplier is prohibited from influencing 

or incentivizing the beneficiary by 

persuading, pressuring, or advising 

them to switch from their current brand 

or for new beneficiaries from their 

preferred brand of glucose monitor and 

testing supplies. The contract supplier 

may not furnish information about 

alternative brands to the beneficiary 

unless the beneficiary requests such 

information. 

* * * * * 

■ 39. Section 414.423 is added to read 

as follows: 

§ 414.423 Appeals Process for Termination 

of Competitive Bidding Contract. 

This section implements an appeals 

process for suppliers that CMS has 

determined are in breach of their 

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73624 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

Medicare DMEPOS Competitive Bidding 

Program contracts and where CMS has 

taken action to terminate the supplier’s 

contract. Except as specified in this 

regulation termination decisions made 

under this section are final and binding. 

(a) Terminations for breach of 

contract. CMS may terminate a 

supplier’s DMEPOS Competitive 

Bidding Program contract when it 

determines that the supplier has 

violated any of the terms of its contract. 

(b) Notice of termination. 

(1) CMS notification. If CMS 

determines a supplier to be in breach of 

its contract either in part or in whole, 

it will notify the Medicare DMEPOS 

supplier of the termination by certified 

mail. 

(2) Content of the notice. The CMS 

notice will include the following: 

(i) The reasons for the termination. 

(ii) The right to request a hearing by 

a CBIC Hearing Officer, and depending 

on the nature of the breach, the supplier 

may also be allowed to submit a CAP in 

lieu of requesting a hearing by a CBIC 

Hearing Officer, as specified in 

paragraph (c)(1)(i) of this section. 

(iii) The address to which the written 

request for a hearing must be mailed. 

(iv) The address to which the CAP 

must be mailed, if applicable. 

(v) Penalties that will accompany the 

termination, such as not being eligible 

to bid in future rounds of competitive 

bidding. 

(vi) The effective date of termination 

is 45 days from the date of the 

notification letter unless a timely 

hearing request has been filed or a 

corrective action plan (CAP) has been 

submitted within 30 days of the date on 

the notification letter. 

(c) Corrective action plan (CAP). (1) 

Option for corrective action plan (CAP). 

(i) CMS has the option to allow a 

DMEPOS supplier to provide a written 

corrective action plan (CAP) to remedy 

the deficiencies identified in the notice, 

when CMS determines that the delay in 

the termination date caused by allowing 

a CAP will not cause harm to 

beneficiaries, for example, we would 

not allow a CAP if the supplier has been 

excluded from any Federal program, 

debarred by a Federal agency, or 

convicted of a healthcare-related crime. 

(ii) If a supplier chooses not to submit 

a CAP or if CMS determines that a 

supplier’s CAP is insufficient, the 

supplier may request a hearing on the 

termination. 

(2) Submission of a CAP. (i) A 

corrective action plan must be 

submitted within 30 days from the date 

on the notification letter. If the supplier 

decides not to submit a corrective action 

plan the supplier may within 30 days of 

the date on the termination letter 

request a hearing by a CBIC hearing 

officer. 

(ii) Suppliers will only have the 

opportunity to submit a CAP when they 

are first notified that they have been 

determined to be in breach of contract. 

If the CAP is not acceptable or properly 

implemented, suppliers will receive a 

subsequent termination notice. 

(d) The purpose of the corrective 

action plan. (1) For the supplier to 

eliminate all of the deficiencies that 

were identified in the notice to 

terminate its contract to avoid contract 

termination. 

(2) To identify the timeframes by 

which the supplier will implement each 

of the components of the CAP. 

(e) Review of the CAP. (1) The CBIC 

will review the CAP. Suppliers may 

only revise their CAP one-time during 

the review process based on the 

deficiencies identified by the CBIC. The 

CBIC will submit a recommendation to 

CMS concerning whether the CAP 

includes the steps necessary to remedy 

the contract deficiencies as identified in 

the notice of termination. 

(2) If CMS accepts the CAP, including 

supplier’s designated timeframe for its 

completion; the supplier must provide a 

follow-up report within 5 days after the 

supplier has fully implemented the CAP 

that verifies that all of the deficiencies 

identified in the CAP have been 

corrected in accordance with the 

timeframes accepted by CMS. 

(3) If the supplier does not implement 

an acceptable CAP the supplier will 

receive a subsequent notice that their 

contract will be terminated within 45 

days of the date on that notice. 

(f) Right to request a hearing by the 

CBIC hearing officer (HO). (1) A 

supplier who has received a notice that 

CMS considers the supplier in breach of 

contract or that the supplier’s CAP is 

not acceptable has the right to request 

a hearing before an HO who was not 

involved with the original 

determination. 

(2) A supplier who wishes to appeal 

the termination notice must submit a 

written request to the CBIC. The request 

for a hearing must be received by the 

CBIC within 30 days from the date of 

the notice to terminate. 

(3) A request for hearing must be in 

writing and submitted by an authorized 

official of the supplier. 

(4) The appeals process for the 

Medicare DMEPOS Competitive Bidding 

Program is not to be used in place of 

other existing appeals processes that 

apply to other parts of the Medicare. 

(5) If the supplier is given the 

opportunity to submit a CAP and a CAP 

is not submitted and the supplier fails 

to timely request a hearing, this will 

result in the termination of the 

supplier’s DMEPOS Competitive 

Bidding Program contract effective 45 

days from the date on the notice to 

terminate received by the supplier. 

(g) The CBIC Hearing Officer 

schedules and conducts the hearing. (1) 

Within 30 days from the receipt of the 

supplier’s timely request for a hearing 

the hearing officer will contact the 

parties to schedule the hearing. 

(2) The hearing may be held in person 

or by telephone at the supplier’s 

request. 

(3) The scheduling notice to the 

parties must indicate the time and place 

for the hearing and must be sent to the 

supplier 30 days before the date of the 

hearing. 

(4) The HO may, on his or her own 

motion, or at the request of a party, 

change the time and place for the 

hearing, but must give the parties to the 

hearing 30 days notice of the change. 

(5) The HO’s scheduling notice must 

provide the parties to the hearing and 

the CBIC the following information: 

(i) Description of the hearing 

procedure. 

(ii) The general and specific issues to 

be resolved. 

(iii) The supplier has the burden to 

prove it is not in violation of the 

contract. 

(iv) The opportunity for parties to the 

hearing to submit additional evidence to 

support their positions, if requested by 

the HO. 

(v) All evidence submitted, both from 

the supplier and CMS, in preparation 

for the hearing with all affected parties 

within 15 days prior to the scheduled 

date of the hearing. 

(h) Burden of proof. (1) The burden of 

proof is on the Competitive Bidding 

Program contract supplier to 

demonstrate to the HO with convincing 

evidence that it has not breached its 

contract or that termination is not 

appropriate. 

(2) The supplier’s supporting 

evidence must be submitted with its 

request for a hearing. 

(3) If the Medicare DMEPOS supplier 

fails to submit this evidence at the time 

of its submission, the Medicare 

DMEPOS supplier is precluded from 

introducing new evidence later during 

the hearing process, unless permitted by 

the hearing officer. 

(4) CMS also has the opportunity to 

submit evidence to the HO within 10 

days of receiving a notice announcing 

the hearing. 

(5) The HO will share all evidence 

submitted by the supplier and/or CMS, 

with all parties to the hearing and the 

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Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73625 

CBIC within 15 days prior to the 

scheduled date of the hearing. 

(i) Role of the Hearing Officer. The 

HO will conduct a thorough and 

independent review of the evidence 

including the information and 

documentation submitted for the 

hearing and other information that the 

HO considers pertinent for the hearing. 

The role of the HO includes, at a 

minimum, the following: 

(1) Conducts the hearing and decides 

the order in which the evidence and the 

arguments of the parties are presented; 

(2) Determines the rules on 

admissibility of the evidence; 

(3) Examines the witnesses, in 

addition to the examinations conducted 

by CMS and the contract supplier; 

(4) The CBIC may assist CMS in the 

appeals process including being present 

at the hearing, testifying as a witness, or 

performing other, related ministerial 

duties. 

(5) Determines the rules for requesting 

documents and other evidence from 

other parties; 

(6) Ensures a complete record of the 

hearing is made available to all parties 

to the hearing; 

(7) Prepares a file of the record of the 

hearing which includes all evidence 

submitted as well as any relevant 

documents identified by the HO and 

considered as part of the hearing; and 

(8) Complies with all applicable 

provisions of 42 USC Title 18 and 

related provisions of the Act, the 

applicable regulations issued by the 

Secretary, and manual instructions 

issued by CMS. 

(j) Hearing Officer recommendation. 

(1) The HO will issue a written 

recommendation to CMS within 30 days 

of the close of the hearing unless an 

extension has been granted by CMS 

because the HO has demonstrated that 

an extension is needed due to the 

complexity of the matter or heavy 

workload. 

(2) The recommendation will explain 

the basis and the rationale for the HO’s 

recommendation. 

(3) The hearing officer must include 

the record of the hearing, along with all 

evidence and documents produced 

during the hearing along with its 

recommendation. 

(k) CMS’ final determination. (1) 

CMS’ review of the HO recommendation 

will not allow the supplier to submit 

new information. 

(2) After reviewing the HO 

recommendation, CMS’ decision will be 

made within 30 days from the date of 

receipt of the HO’s recommendation. 

(3) A CMS decision to terminate will 

indicate the effective date of the 

termination. 

(4) This decision is final and binding. 

(l) Effect of contract termination. A 

contract supplier whose contract has 

been terminated— 

(1) All locations included in the 

contract can no longer furnish 

competitive bid items to beneficiaries 

within a CBA and the supplier cannot 

be reimbursed by Medicare for these 

items after the effective date of the 

termination. 

(2) Must notify all beneficiaries who 

are receiving rented competitive bid 

items or competitive bid items received 

on a recurring basis, of the termination 

of their contract. 

(i) The notice to the beneficiary from 

the supplier whose contract was 

terminated must be provided within 15 

days of receipt of the final notice of 

termination. 

(ii) The notification to the 

beneficiaries must inform the 

beneficiaries that they are going to have 

to select a new contract supplier to 

furnish these items in order for 

Medicare to pay these items. 

(m) Effective date of the contract 

termination. (1) A supplier’s DMEPOS 

CBP contract is terminated effective on 

the termination date specified in the 

notice to the supplier, unless the 

supplier timely requests a hearing with 

the HO or the supplier has submitted a 

CAP under paragraph (c) of this section. 

(2) If a supplier requests an HO 

review of the CMS decision to terminate 

its contract, and CMS based upon the 

HO’s recommendation terminates the 

supplier’s contract, the effective date of 

the termination will be the date 

specified in the post-hearing notice to 

the supplier indicating CMS’s final 

determination to terminate the contract. 

(3) For violations of the terms of the 

supplier’s DMEPOS CBP contract that 

may harm beneficiaries, such as a 

supplier providing an inferior product 

that causes harm to the beneficiary, no 

delays of the effective date of the 

termination will be allowed. 

Subpart H —Fee Schedule for 

Ambulance Services 

■ 39. Section 414.610 is amended as 

follows: 

■ A. Revising paragraph (c)(1)(i). 

■ B. Redesignating (c)(1)(ii) as (c)(1)(iii). 

■ C. Adding a new paragraph (c)(1)(ii). 

■ D. Revising paragraphs (c)(5)(ii), (f), 

and (h). 

The revisions and addition read as 

follows: 

§ 414.610 Basis of payments. 

* * * * * 

(c) * * * 

(1) * * * 

(i) For services furnished during the 

period July 1, 2004 through December 

31, 2006, ambulance services originating 

in— 

(A) Urban areas (both base rate and 

mileage) are paid based on a rate that is 

1 percent higher than otherwise is 

applicable under this section; and 

(B) Rural areas (both base rate and 

mileage) are paid based on a rate that is 

2 percent higher than otherwise is 

applicable under this section. 

(ii) For services furnished during the 

period July 1, 2008 through December 

31, 2010, ambulance services originating 

in— 

(A) Urban areas (both base rate and 

mileage) are paid based on a rate that is 

2 percent higher than otherwise is 

applicable under this section; 

(B) Rural areas (both base rate and 

mileage) are paid based on a rate that is 

3 percent higher than otherwise is 

applicable under this section. 

* * * * * 

(5) * * * 

(ii) For services furnished during the 

period July 1, 2004 through December 

31, 2010, the payment amount for the 

ground ambulance base rate is increased 

by 22.6 percent where the point of 

pickup is in a rural area determined to 

be in the lowest 25 percent of rural 

population arrayed by population 

density. The amount of this increase is 

based on CMS’s estimate of the ratio of 

the average cost per trip for the rural 

areas in the lowest quartile of 

population compared to the average cost 

per trip for the rural areas in the highest 

quartile of population. In making this 

estimate, CMS may use data provided 

by the GAO. 

* * * * * 

(f) Updates. The CF, the air 

ambulance base rates, and the mileage 

rates are updated annually by an 

inflation factor established by law. The 

inflation factor is based on the 

consumer price index for all urban 

consumers (CPI–U) (U.S. city average) 

for the 12-month period ending with 

June of the previous year and, for 2011 

and each subsequent year, is reduced by 

the productivity adjustment described 

in section 1886(b)(3)(B)(xi)(II) of the 

Act. 

* * * * * 

(h) Treatment of certain areas for 

payment for air ambulance services. 

Any area that was designated as a rural 

area for purposes of making payments 

under the ambulance fee schedule for 

air ambulance services furnished on 

December 31, 2006, must be treated as 

a rural area for purposes of making 

payments under the ambulance fee 

schedule for air ambulance services 

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furnished during the period July 1, 2008 

through December 31, 2010. 

■ 40. Section 414.620 is revised to read 

as follows: 

§ 414.620 Publication of the ambulance fee 

schedule. 

(a) Changes in payment rates resulting 

from incorporation of the annual 

inflation factor and the productivity 

adjustment as described in § 414.610(f) 

will be announced by CMS by 

instruction and on the CMS Web site. 

(b) CMS will follow applicable 

rulemaking procedures in publishing 

revisions to the fee schedule for 

ambulance services that result from any 

factors other than those described in 

§ 414.610(f). 

Subpart J—Submission of 

Manufacturer’s Average Sales Price 

Data 

■ 41. Section 414.804 is amended by— 

■ A. Redesignating paragraph (a)(6) as 

(a)(7). 

■ B. Adding new paragraph (a)(6). 

■ C. Reserving paragraph (b). 

■ The addition reads as follows: 

§ 414.804 Basis of payment. 

(a) * * * 

(6) The manufacturer’s average sales 

price must be calculated based on the 

amount of product in a vial or other 

container as conspicuously reflected on 

the FDA approved label as defined by 

section 201(k) of the Food, Drug, and 

Cosmetic Act. 

(b) [Reserved] 

Subpart K—Payment for Drugs and 

Biologicals Under Part B 

■ 42. Section 414.902 is amended by 

adding the definitions of ‘‘Biosimilar 

biological product’’ and ‘‘Reference 

biological product’’ in alphabetical order 

to read as follows: 

§ 414.902 Definitions. 

* * * * * 

Biosimilar biological product means a 

biological product approved under an 

abbreviated application for a license of 

a biological product that relies in part 

on data or information in an application 

for another biological product licensed 

under section 351 of the Public Health 

Service Act (PHSA) as defined at section 

1847A(c)(6)(H) of the Act. 

* * * * * 

Reference biological product means 

the biological product licensed under 

such section 351 of the PHSA that is 

referred to in the application of the 

biosimilar biological product as defined 

at section 1847A(c)(6)(I) of the Act. 

* * * * * 

■ 43. Section 414.904 is amended by— 

■ A. Adding paragraphs (a)(3), (i), and 

(j). 

■ B. Revising paragraph (d)(3). 

The revisions and additions read as 

follows: 

§ 414.904 Average sales price as the basis 

for payment. 

(a) * * * 

(3) For purposes of this paragraph— 

(i) CMS calculates an average sales 

price payment limit based on the 

amount of product included in a vial or 

other container as reflected on the FDAapproved label. 

(ii) Additional product contained in 

the vial or other container does not 

represent a cost to providers and is not 

incorporated into the ASP payment 

limit. 

(iii) No payment is made for amounts 

of product in excess of that reflected on 

the FDA-approved label. 

* * * * * 

(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 5 percent or more 

in CYs 2005 through 2011 the payment 

limit in the quarter following the 

transmittal of this information to the 

Secretary is the lesser of the widely 

available market price or 103 percent of 

the average manufacturer price. 

* * * * * 

(i) If manufacturer ASP data is not 

available prior to the publication 

deadline for quarterly payment limits 

and the unavailability of manufacturer 

ASP data significantly changes the 

quarterly payment limit for the billing 

code when compared to the prior 

quarter’s billing code payment limit, the 

payment limit is calculated by carrying 

over the most recent available 

manufacturer ASP price from a previous 

quarter for an NDC in the billing code, 

adjusted by the weighted average of the 

change in the manufacturer ASPs for the 

NDCs that were reported for both the 

most recently available previous quarter 

and the current quarter. 

(j) Biosimilar biological products. 

Effective July 1, 2010, the payment 

amount for a biosimilar biological drug 

product (as defined in § 414.902 of this 

subpart) is the sum of the average sales 

price of all NDCs assigned to the 

biosimilar biological product as 

determined under section 1847A(b)(6) 

of the Act and 6 percent of the amount 

determined under section 1847A(b)(4) 

of the Act for the reference drug product 

(as defined in § 414.902 of this subpart). 

PART 415—SERVICES FURNISHED BY 

PHYSICIANS IN PROVIDERS, 

SUPERVISING PHYSICIANS IN 

TEACHING SETTINGS, AND 

RESIDENTS IN CERTAIN SETTINGS 

■ 44. 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). 

Subpart C—Part B Carrier Payments 

for Physician Services to Beneficiaries 

in Providers 

■ 45. Section 415.130 is amended by 

revising paragraph (d) to read as 

follows: 

§ 415.130 Conditions for payment: 

Physician pathology services. 

* * * * * 

(d) Physician pathology services 

furnished by an independent laboratory. 

(1) The technical component of 

physician pathology services furnished 

by an independent laboratory to a 

hospital inpatient or outpatient on or 

before December 31, 2010, may be paid 

to the laboratory by the contractor under 

the physician fee schedule if the 

Medicare beneficiary is a patient of a 

covered hospital as defined in 

paragraph (a)(1) of this section. 

(2) For services furnished after 

December 31, 2010, an independent 

laboratory may not bill the Medicare 

contractor for the technical component 

of physician pathology services 

furnished to a hospital inpatient or 

outpatient. 

(3) For services furnished on or after 

January 1, 2008, the date of service 

policy in § 414.510 of this chapter 

applies to the TC of specimens for 

physician pathology services. 

PART 424—CONDITIONS FOR 

MEDICARE PAYMENT 

■ 46. The authority citation for part 424 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

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

1395hh). 

Subpart B—Certification and Plan of 

Treatment Requirements 

■ 47. Section 424.20 is amended by 

revising paragraph (e)(2) to read as 

follows: 

§ 424.20 Requirements for posthospital 

SNF care. 

* * * * * 

(e) * * * 

(2) A physician extender (that is, a 

nurse practitioner, a clinical nurse 

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specialist, or a physician assistant as 

those terms are defined in section 

1861(aa)(5) of the Act) who does not 

have a direct or indirect employment 

relationship with the facility but who is 

working in collaboration with a 

physician. For purposes of this 

section— 

(i) Collaboration. (A) Collaboration 

means a process whereby a physician 

extender works with a doctor of 

medicine or osteopathy to deliver health 

care services. 

(B) The services are delivered within 

the scope of the physician extender’s 

professional expertise, with medical 

direction and appropriate supervision as 

provided for in guidelines jointly 

developed by the physician extender 

and the physician or other mechanisms 

defined by Federal regulations and the 

law of the State in which the services 

are performed. 

(ii) Types of employment 

relationships. (A) Direct employment 

relationship. A direct employment 

relationship with the facility is one in 

which the physician extender meets the 

common law definition of the facility’s 

‘‘employee,’’ as specified in § 404.1005, 

§ 404.1007, and § 404.1009 of title 20 of 

the regulations. When a physician 

extender meets this definition with 

respect to an entity other than the 

facility itself, and that entity has an 

agreement with the facility for the 

provision of nursing services under 

§ 409.21 of this subchapter, the facility 

is considered to have an indirect 

employment relationship with the 

physician extender. 

(B) Indirect employment relationship. 

(1) When a physician extender meets 

the definition of a direct employment 

relationship in paragraph (e)(2)(ii)(A) of 

this section with respect to an entity 

other than the facility itself, and that 

entity has an agreement with the facility 

for the provision of nursing services 

under § 409.21 of this subchapter, the 

facility is considered to have an indirect 

employment relationship with the 

physician extender. 

(2) An indirect employment 

relationship does not exist if the 

agreement between the entity and the 

facility involves only the performance of 

delegated physician tasks under 

§ 483.40(e) of this chapter. 

* * * * * 

Subpart C—Claims for Payment 

■ 48. Section 424.44 is amended by 

revising paragraphs (a), (b), and (e) to 

read as follows: 

§ 424.44 Time limits for filing claims. 

(a) Time limits. (1) Except as provided 

in paragraphs (b) and (e) of this section, 

for services furnished on or after 

January 1, 2010, the claim must be filed 

no later than the close of the period 

ending 1 calendar year after the date of 

service. 

(2) Except as provided in paragraphs 

(b) and (e) of this section and except for 

services furnished during the last 3 

months of 2009, for services furnished 

before January 1, 2010, the claim must 

be filed— 

(i) On or before December 31 of the 

following year for services that were 

furnished during the first 9 months of a 

calendar year; and 

(ii) On or before December 31st of the 

second following year for services that 

were furnished during the last 3 months 

of the calendar year. 

(3) For services furnished during the 

last 3 months of CY 2009 all claims 

must be filed no later than December 31, 

2010. 

(b) Exceptions to time limits. 

Exceptions to the time limits for filing 

claims include the following: 

(1) The time for filing a claim will be 

extended if CMS or one of its 

contractors determines that a failure to 

meet the deadline in paragraph (a) of 

this section was caused by error or 

misrepresentation of an employee, 

Medicare contractor (including 

Medicare Administrative Contractor, 

intermediary, or carrier), or agent of 

HHS that was performing Medicare 

functions and acting within the scope of 

its authority. 

(2) The time for filing a claim will be 

extended if CMS or one of its 

contractors determines that a failure to 

meet the deadline in paragraph (a) of 

this section is caused by all of the 

following conditions: 

(i) At the time the service was 

furnished the beneficiary was not 

entitled to Medicare. 

(ii) The beneficiary subsequently 

received notification of Medicare 

entitlement effective retroactively to or 

before the date of the furnished service. 

(3) The time for filing a claim will be 

extended if CMS or one of its 

contractors determines that a failure to 

meet the deadline in paragraph (a) of 

this section is caused by all of the 

following conditions: 

(i) At the time the service was 

furnished the beneficiary was not 

entitled to Medicare. 

(ii) The beneficiary subsequently 

received notification of Medicare 

entitlement effective retroactively to or 

before the date of the furnished service. 

(iii) A State Medicaid agency 

recovered the Medicaid payment for the 

furnished service from a provider or 

supplier 6 months or more after the 

service was furnished. 

(4) The time for filing a claim will be 

extended if CMS or one of its 

contractors determines that a failure to 

meet the deadline in paragraph (a) of 

this section is caused by all of the 

following conditions: 

(i) At the time the service was 

furnished the beneficiary was enrolled 

in a Medicare Advantage plan or 

Program of All-inclusive Care for the 

Elderly (PACE) provider organization. 

(ii) The beneficiary was subsequently 

disenrolled from the Medicare 

Advantage plan or Program of Allinclusive Care for the Elderly (PACE) 

provider organization effective 

retroactively to or before the date of the 

furnished service. 

(iii) The Medicare Advantage plan or 

Program of All-inclusive Care for the 

Elderly (PACE) provider organization 

recovered its payment for the furnished 

service from a provider or supplier 6 

months or more after the service was 

furnished. 

(5) Extension of time. (i) If CMS or one 

of its contractors determines that a 

failure to meet the deadline specified in 

paragraph (a) of this section was caused 

by error or misrepresentation of an 

employee, Medicare contractor 

(including Medicare Administrative 

Contractor, intermediary, or carrier), or 

agent of HHS that was performing 

Medicare functions and acting within 

the scope of its authority, the time to file 

a claim will be extended through the 

last day of the sixth calendar month 

following the month in which either the 

beneficiary or the provider or supplier 

received notification that the error or 

misrepresentation referenced in 

paragraph (b)(1) of this section was 

corrected. No extension of time will be 

granted for paragraph (b)(1) when the 

request for that exception is made to 

CMS or one of its contractors more than 

4 years after the date of service. 

(ii) If CMS or one of its contractors 

determines that both of the conditions 

are met in paragraph (b)(2) of this 

section but that all of the conditions in 

paragraph (b)(3) are not satisfied, the 

time to file a claim will be extended 

through the last day of the sixth 

calendar month following the month in 

which either the beneficiary or the 

provider or supplier received 

notification of Medicare entitlement 

effective retroactively to or before the 

date of the furnished service. 

(iii) If CMS or one of its contractors 

determines that all of the conditions are 

met in paragraph (b)(3) of this section, 

the time to file a claim will be extended 

through the last day of the sixth 

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calendar month following the month in 

which the State Medicaid agency 

recovered the Medicaid payment for the 

furnished service from the provider or 

supplier. 

(iv) If CMS or one of its contractors 

determines that all of the conditions are 

met in paragraph (b)(4) of this section, 

the time to file a claim will be extended 

through the last day of the sixth 

calendar month following the month in 

which the Medicare Advantage plan or 

Program of All-inclusive Care for the 

Elderly (PACE) provider organization 

recovered its payment for the furnished 

service from the provider or supplier. 

* * * * * 

(e) As specified in § 424.520 and 

§ 424.521 of this subpart, there are 

restrictions on the ability of the 

following newly-enrolled suppliers to 

submit claims for items or services 

furnished prior to the effective date of 

their Medicare billing privileges: 

(1) Physician or nonphysician 

practitioner organizations. 

(2) Physicians. 

(3) Nonphysician practitioners. 

(4) Independent diagnostic testing 

facilities. 

* * * * * 

Subpart P—Requirements for 

Establishing and Maintaining Medicare 

Billing Privileges 

■ 49. Section 424.502 is amended by 

adding a definition of ‘‘Voluntary 

termination’’ to read as follows: 

§ 424.502 Definitions. 

* * * * * 

Voluntary termination means that a 

provider or supplier, including an 

individual physician or nonphysician 

practitioner, submits written 

confirmation to CMS of its decision to 

discontinue enrollment in the Medicare 

program. 

■ 50. Section 424.510 is amended by 

revising paragraph (d)(2)(iii) to read as 

follows: 

§ 424.510 Requirements for enrolling in 

the Medicare program. 

(d) * * * 

(2) * * * 

(iii) Submission of all documentation, 

including— 

(A) All applicable Federal and State 

licenses, certifications including, but 

not limited to Federal Aviation 

Administration; and 

(B) Documentation associated with 

regulatory and statutory requirements 

necessary to establish a provider’s or 

supplier’s eligibility to furnish Medicare 

covered items or services to 

beneficiaries in the Medicare program. 

■ 51. Section 424.516 is amended by 

adding a new paragraph (e)(3) to read as 

follows: 

§ 424.516 Additional provider and supplier 

requirements for enrolling and maintaining 

active enrollment status in the Medicare 

program. 

(e) * * * 

(3) Within 30 days of any revocation 

or suspension of a Federal or State 

license or certification including 

Federal Aviation Administration 

certifications, an air ambulance supplier 

must report a revocation or suspension 

of its license or certification to the 

applicable Medicare contractor. The 

following FAA certifications must be 

reported: 

(i) Specific pilot certifications 

including but not limited to instrument 

and medical certifications. 

(ii) Airworthiness certification. 

* * * * * 

Authority: 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, 2010. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: October 29, 2010. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

Addendum A: Explanation and Use of 

Addenda B and C 

The Addenda on the following pages 

provide various data pertaining to the 

Medicare fee schedule for physicians’ 

services furnished in CY 2011. Addendum B 

contains the RVUs for work, nonfacility PE, 

facility PE, and malpractice expense, and 

other information for all services included in 

the PFS. Addendum C contains the list of 

HCPCS codes that have interim work, PE, 

and/or malpractice expense RVUs for CY 

2011 and are open for comment on this final 

rule with comment period. 

(1) Addendum B, CY 2011 Relative Value 

Units and Related Information Used in 

Determining Medicare Payments 

In previous years, we have listed many 

services in Addendum B that are not paid 

under the PFS. To avoid publishing as many 

pages of codes for these services, we are not 

including clinical laboratory codes or the 

alpha-numeric codes (Healthcare Common 

Procedure Coding System (HCPCS) codes not 

included in CPT) not paid under the PFS in 

Addendum B. 

Addendum B contains the following 

information for each CPT code and alphanumeric HCPCS code, except for: alphanumeric codes beginning with B (enteral and 

parenteral therapy); E (durable medical 

equipment); K (temporary codes for 

nonphysicians’ services or items); or L 

(orthotics); and codes for anesthesiology. 

Please also note the following: 

• An ‘‘NA’’ in the ‘‘Nonfacility PE RVUs’’ 

column of Addendum B means that CMS has 

not developed a PE RVU in the nonfacility 

setting for the service because it is typically 

performed in the hospital (for example, an 

open heart surgery is generally performed in 

the hospital setting and not a physician’s 

office). If there is an ‘‘NA’’ in the nonfacility 

PE RVU column, and the contractor 

determines that this service can be performed 

in the nonfacility setting, the service will be 

paid at the facility PE RVU rate. 

• Services that have an ‘‘NA’’ in the 

‘‘Facility PE RVUs’’ column of Addendum B 

are typically not paid under the PFS when 

provided in a facility setting. These services 

(which include ‘‘incident to’’ services and the 

technical portion of diagnostic tests) are 

generally paid under either the hospital 

outpatient prospective payment system or 

bundled into the hospital inpatient 

prospective payment system payment. In 

some cases, these services may be paid in a 

facility setting at the PFS rate (for example, 

therapy services), but there would be no 

payment made to the practitioner under the 

PFS in these situations. 

1. CPT/HCPCS code. This is the CPT or 

alpha-numeric HCPCS number for the 

service. Alpha-numeric HCPCS codes are 

included at the end of this Addendum. 

2. Modifier. A modifier is shown if there 

is a technical component (modifier TC) and 

a professional component (PC) (modifier-26) 

for the service. If there is a PC and a TC for 

the service, Addendum B contains three 

entries for the code. A code for: the global 

values (both professional and technical); 

modifier-26 (PC); and modifier TC. The 

global service is not designated by a modifier, 

and physicians must bill using the code 

without a modifier if the physician furnishes 

both the PC and the TC of the service. 

Modifier-53 is shown for a discontinued 

procedure, for example, a colonoscopy that is 

not completed. There will be RVUs for a code 

with this modifier. 

3. Status indicator. This indicator shows 

whether the CPT/HCPCS code is included in 

the PFS and whether it is separately payable 

if the service is covered. An explanation of 

types of status indicators follows: 

A = Active code. These codes are 

separately payable under the PFS if covered. 

There will be RVUs for codes with this 

status. The presence of an ‘‘A’’ indicator does 

not mean that Medicare has made a national 

coverage determination regarding the service. 

Contractors remain responsible for coverage 

decisions in the absence of a national 

Medicare policy. 

B = Bundled code. Payments for covered 

services are always bundled into payment for 

other services not specified. If RVUs are 

shown, they are not used for Medicare 

payment. If these services are covered, 

payment for them is subsumed by the 

payment for the services to which they are 

incident (for example, a telephone call from 

a hospital nurse regarding care of a patient). 

C = Contractors price the code. Contractors 

establish RVUs and payment amounts for 

these services, generally on an individual 

case basis following review of 

documentation, such as an operative report. 

E = Excluded from the PFS by regulation. 

These codes are for items and services that 

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CMS chose to exclude from the PFS by 

regulation. No RVUs are shown, and no 

payment may be made under the PFS for 

these codes. Payment for them, when 

covered, continues under reasonable charge 

procedures. 

I = Not valid for Medicare purposes. 

Medicare uses another code for the reporting 

of, and the payment for these services. (Codes 

not subject to a 90 day grace period.) 

M = Measurement codes, used for reporting 

purposes only. There are no RVUs and no 

payment amounts for these codes. CMS uses 

them to aid with performance measurement. 

No separate payment is made. These codes 

should be billed with a zero (($0.00) charge 

and are denied) on the MPFSDB. 

N = Non-covered service. These codes are 

noncovered services. Medicare payment may 

not be made for these codes. If RVUs are 

shown, they are not used for Medicare 

payment. 

R = Restricted coverage. Special coverage 

instructions apply. If the service is covered 

and no RVUs are shown, it is contractorpriced. 

T = There are RVUs for these services, but 

they are only paid if there are no other 

services payable under the PFS billed on the 

same date by the same provider. If any other 

services payable under the PFS are billed on 

the same date by the same provider, these 

services are bundled into the service(s) for 

which payment is made. 

X = Statutory exclusion. These codes 

represent an item or service that is not within 

the statutory definition of ‘‘physicians’ 

services’’ for PFS payment purposes. No 

RVUs are shown for these codes, and no 

payment may be made under the PFS, (for 

example, ambulance services and clinical 

diagnostic laboratory services.) 

4. Description of code. This is the code’s 

short descriptor, which is an abbreviated 

version of the narrative description of the 

code. 

5. Physician work RVUs. These are the 

RVUs for the physician work in CY 2011. 

6. Fully implemented nonfacility PE RVUs. 

These are the fully implemented resourcebased PE RVUs for nonfacility settings. 

7. CY 2011 transitional nonfacility PE 

RVUs. These are the CY 2011 resource-based 

PE RVUs for nonfacility settings. 

8. Fully implemented facility PE RVUs. 

These are the fully implemented resourcebased PE RVUs for facility settings. 

9. CY 2011 Transitional facility PE RVUs. 

These are the CY 2011 resource-based PE 

RVUs for facility settings. 

10. Malpractice expense RVUs. These are 

the RVUs for the malpractice expense for CY 

2011. 

Note: The BN reduction resulting from the 

chiropractic demonstration is not reflected in 

the RVUs for CPT codes 98940, 98941, and 

98942. The required reduction will only be 

reflected in the files used for Medicare 

payment. 

11. Global period. This indicator shows the 

number of days in the global period for the 

code (0, 10, or 90 days). An explanation of 

the alpha codes follows: 

MMM = Code describes a service furnished 

in uncomplicated maternity cases, including 

ante partum care, delivery, and postpartum 

care. The usual global surgical concept does 

not apply. See the Physicians’ Current 

Procedural Terminology for specific 

definitions. 

XXX = The global concept does not apply. 

YYY = The global period is to be set by the 

contractor (for example, unlisted surgery 

codes). 

ZZZ = Code related to another service that 

is always included in the global period of the 

other service. (Note: Physician work and PE 

are associated with intra-service time and, in 

some instances, with the post-service time.) 

(2) Addendum C, Codes with Interim RVUs 

Addendum C, Codes with Interim RVUs, 

includes the columns and indicators 

described above for Addendum B, plus an 

additional column to indicate which 

component, or components, of each code’s 

RVUs are interim final for CY 2011 and, 

therefore, open for public comment: work, 

PE, and/or malpractice expense. This 

column, headed ‘‘RVUs Open for Comment’’ 

and located between the columns for the 

‘‘Description’’ and ‘‘Physician Work RVUs,’’ 

displays the indicators below. 

W = Physician work RVUs are interim for 

CY 2011 and open for comment. 

PE = Nonfacility and facility PE RVUs are 

interim for CY 2011 and open for comment. 

MP = Malpractice expense RVUs are 

interim for CY 2011 and open for comment. 

BILLING CODE 4120–01–P 

mstockstill on DSKH9S0YB1PROD with RULES3

73630 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.000</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73631 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.001</GPH>
73632 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.002</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73633 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.003</GPH>
73634 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.004</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73635 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.005</GPH>
73636 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.006</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73637 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.007</GPH>
73638 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.008</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73639 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.009</GPH>
73640 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.010</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73641 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.011</GPH>
73642 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.012</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73643 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.013</GPH>
73644 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.014</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73645 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.015</GPH>
73646 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.016</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73647 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.017</GPH>
73648 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.018</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73649 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.019</GPH>
73650 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.020</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73651 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.021</GPH>
73652 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.022</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73653 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.023</GPH>
73654 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.024</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73655 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.025</GPH>
73656 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.026</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73657 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.027</GPH>
73658 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.028</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73659 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.029</GPH>
73660 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.030</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73661 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.031</GPH>
73662 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.032</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73663 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.033</GPH>
73664 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.034</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73665 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.035</GPH>
73666 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.036</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73667 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.037</GPH>
73668 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.038</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73669 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.039</GPH>
73670 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.040</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73671 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.041</GPH>
73672 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.042</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73673 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.043</GPH>
73674 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.044</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73675 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.045</GPH>
73676 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.046</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73677 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.047</GPH>
73678 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.048</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73679 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.049</GPH>
73680 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.050</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73681 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.051</GPH>
73682 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.052</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73683 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.053</GPH>
73684 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.054</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73685 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.055</GPH>
73686 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.056</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73687 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.057</GPH>
73688 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.058</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73689 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.059</GPH>
73690 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.060</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73691 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.061</GPH>
73692 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.062</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73693 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.063</GPH>
73694 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.064</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73695 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.065</GPH>
73696 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.066</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73697 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.067</GPH>
73698 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.068</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73699 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.069</GPH>
73700 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.070</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73701 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.071</GPH>
73702 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.072</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73703 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.073</GPH>
73704 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.074</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73705 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.075</GPH>
73706 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.076</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73707 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.077</GPH>
73708 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.078</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73709 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.079</GPH>
73710 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.080</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73711 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.081</GPH>
73712 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.082</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73713 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.083</GPH>
73714 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.084</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73715 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.085</GPH>
73716 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.086</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73717 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.087</GPH>
73718 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.088</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73719 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.089</GPH>
73720 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.090</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73721 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.091</GPH>
73722 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.092</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73723 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.093</GPH>
73724 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.094</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73725 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.095</GPH>
73726 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.096</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73727 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.097</GPH>
73728 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.098</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73729 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.099</GPH>
73730 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.100</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73731 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.101</GPH>
73732 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.102</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73733 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.103</GPH>
73734 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.104</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73735 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.105</GPH>
73736 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.106</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73737 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.107</GPH>
73738 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.108</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73739 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.109</GPH>
73740 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.110</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73741 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.111</GPH>
73742 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.112</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73743 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.113</GPH>
73744 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.114</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73745 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.115</GPH>
73746 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.116</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73747 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.117</GPH>
73748 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.118</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73749 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.119</GPH>
73750 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.120</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73751 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.121</GPH>
73752 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.122</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73753 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.123</GPH>
73754 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.124</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73755 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.125</GPH>
73756 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.126</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73757 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.127</GPH>
73758 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.128</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73759 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.129</GPH>
73760 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.130</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73761 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.131</GPH>
73762 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.132</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73763 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.133</GPH>
73764 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.134</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73765 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.135</GPH>
73766 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.136</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73767 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.137</GPH>
73768 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.138</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73769 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.139</GPH>
73770 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.140</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73771 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.141</GPH>
73772 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.142</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73773 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.143</GPH>
73774 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.144</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73775 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.145</GPH>
73776 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.146</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73777 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.147</GPH>
73778 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.148</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73779 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.149</GPH>
73780 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.150</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73781 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.151</GPH>
73782 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.152</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73783 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.153</GPH>
73784 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.154</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73785 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.155</GPH>
73786 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.156</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73787 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.157</GPH>
73788 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.158</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73789 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.159</GPH>
73790 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.160</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73791 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.161</GPH>
73792 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.162</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73793 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.163</GPH>
73794 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.164</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73795 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.165</GPH>
73796 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.166</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73797 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.167</GPH>
73798 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.168</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73799 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.169</GPH>
73800 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.170</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73801 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.171</GPH>
73802 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.172</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73803 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.173</GPH>
73804 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.174</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73805 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.175</GPH>
73806 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.176</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73807 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.177</GPH>
73808 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.178</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73809 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.179</GPH>
73810 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.180</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73811 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.181</GPH>
73812 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.182</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73813 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.183</GPH>
73814 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.184</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73815 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.185</GPH>
73816 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.186</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73817 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.187</GPH>
73818 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.188</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73819 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.189</GPH>
73820 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.190</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73821 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.191</GPH>
73822 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.192</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73823 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.193</GPH>
73824 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.194</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73825 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.195</GPH>
73826 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.196</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73827 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.197</GPH>
73828 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.198</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73829 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.199</GPH>
73830 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.200</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73831 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.201</GPH>
73832 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.202</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73833 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.203</GPH>
73834 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.204</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73835 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.205</GPH>
73836 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.206</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73837 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.207</GPH>
73838 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.208</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73839 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.209</GPH>
73840 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.210</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73841 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.211</GPH>
73842 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.212</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73843 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.213</GPH>
73844 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.214</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73845 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.215</GPH>
73846 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.216</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73847 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.217</GPH>
73848 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.218</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73849 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.219</GPH>
73850 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.220</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73851 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.221</GPH>
73852 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.222</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73853 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.223</GPH>
73854 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.224</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73855 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.225</GPH>
73856 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.226</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73857 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.227</GPH>
73858 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.228</GPH>
Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 73859 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.229</GPH>
73860 Federal Register / Vol. 75, No. 228 / Monday, November 29, 2010 / Rules and Regulations 

[FR Doc. 2010–27969 Filed 11–2–10; 4:15 pm] 

BILLING CODE 4120–01–C 


mstockstill on DSKH9S0YB1PROD with RULES3ER29NO10.230</GPH>