DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services 42 CFR Parts 410, 414, 415, and 495 [CMS-1524-P] RIN 0938-AQ25 Medicare Program; Payment Policies Under the Physician Fee Schedule and Other

Revisions to Part B for CY 2012

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

ACTION: Proposed rule.

SUMMARY: This proposed rule addresses change s to the physicia n 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 re lative value of services. It also addresses, implements or discusses certain provisions of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively known as the Affordable Care Act) and the Medicare Improvements for

Patients and Providers Act of 2008. In additi on, this proposed rule discusses payments for Part B drugs; Physician Quality Reporting System; the Electronic Prescribing (eRx) Incentive Program; the Physician Resource-Use Feedback Program and the value modifier; productivity adjustment for ambulator y surgical center payment system and the ambulance, clinical laboratory, and durable medical equipment pros thetics ort hotics and supplies (DMEPOS) fee schedules; and other Pa rt B related issues. (See the Table of Contents for a listing of the specific issu es addressed in th is proposed rule.)CMS-1524-P 2

DATES : Comment date : To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on A u g u s t 3 0 , 2 0 1 1

. ADDRESSES: In commenting, please refer to file code CMS-1524-P. Because of staff and resource limitations, we cannot accept co mments by facsimile (FAX) transmission. You may submit comments in one of f our ways (please choose only one of the ways listed): 1. Electronically . You may submit electronic comments on this regulation to http://www.regulations.gov . Follow the instructions for "submitting a comment." 2. By regular mail . You may mail written comments to the following address

ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1524-P, P.O. Box 8013, Baltimore, MD 21244-8013.

Please allow sufficient time for mailed comme nts to be received before the close of the comment period. 3. By express or overnight mail . You may send written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1524-P, Mail Stop C4-26-05,CMS-1524-P 3

7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier . If you prefer, you may deli ver (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 Hube rt 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 fo r persons wishing to re tain a proof of filing by stamping in and retaining an extra c opy 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.CMS-1524-P 4

If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-1066 in advance to schedule your arrival with one of our

staff members.

Comments mailed to the addresses indicat ed as appropriate for hand or courier delivery may be delayed and receiv ed after the comment period.

FOR FURTHER INFORMATION CONTACT: Ryan Howe, (410) 786–3355, for issues related to the physician fee schedule practice expense methodology, direct practice expe nse inputs, and telehealth services. Elizabeth Truong, (410) 786–6005, or Sara Vitolo, (410) 786–5714, for issues related to potentially misvalued services. Ken Marsalek, (410) 786–4502, for issues re lated the multiple procedure payment reduction and pathology services. Sara Vitolo, (410) 786–5 714, for issues related to malpractice RVUs. Michael Moore, (410) 786-6830, for issues related to geograp hic practice cost

indices. Elizabeth Truong, (410) 786–6005, for issues re lated to the sustainable growth rate, or the anesthesia or physician fee schedule conversion factors. Bonny Dahm, (410)786-4006, for issues related to payment for covered outpatient drugs and biologicals. Claudia Lamm, (410)786-3421, for issues re lated to the chir opractic services demonstration budget neutrality issue. Jamie Hermansen, (410) 786-2064, or St ephanie Frilling, (410) 786-4507 for

issues related to the annual wellness visit.CMS-1524-P 5

Christine Estella, (410) 786-0485 , for issues related to the physician quality reporting system, incentives for Electronic Pres cribing (eRx) and Physician Compare. Gift Tee, (410) 786-9316, for issues re lated to the Physic ian Resource Use Feedback Program and physician value modifier. Stephanie Frilling, (410) 786-4507 for issu es related to the 3-day Payment

Window. Pam West, (410) 786-2302, for issues re lated to the technical corrections. Rebecca Cole or Erin Smith, (410) 786-4497, for issues related to physician payment not previously identified.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewi ng by the public, including any personally

identifiable or confidential business informa tion that is included in a comment. We post

all comments received before the close of the comment period on the regulations.gov Web site ( www.regulations.gov ) as soon as possible after they have been received: .

Follow the search instructions on that Web site to view public comments. Comments received timely will also be av ailable for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Cent ers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monda y through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an a ppointment to view public comments, phone

1-800-743-3951.CMS-1524-P 6

Table of Contents To assist readers in referencing secti ons contained in this preamble, we are providing a table of contents. Some of the i ssues 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 re gulations impact a ppears throughout the preamble and, therefore, is not di scussed exclusively in section VII. of this proposed rule. I. Background A. Development of the Relative Value System 1. Work RVUs 2. Practice Expense Rela tive Value Units (PE RVUs) 3. Resource-Based Malpractice RVUs 4. Refinements to the RVUs 5. Application of Budget Neut rality to Adjustments of RVUs B. Components of the Fee Schedule Payment Amounts C. Most Recent Changes to Fee Schedule II. Provisions of the Proposed Rule for the Physician Fee Schedule A. Resource-Based Practice Expens e (PE) Relative Value Units (RVUs) 1. Overview 2. Practice Expense Methodology a. Direct Practice Expense b. Indirect Practice Ex pense per Hour Data c. Allocation of PE to Services (1) Direct Costs (2) Indirect Costs d. Facility and Nonfacility Costs e. Services with Technical Co mponents (TCs) and Professional Components (PCs) f. PE RVU Methodology (1) Setup File (2) Calculate the Direct Cost PE RVUs (3) Create the Indirect Cost PE RVUs (4) Calculate the Final PE RVUs (5) Setup File Information (6) Equipment Cost Per Minute 3. Changes to Direct PE Inputs a. Inverted Equipment Minutes b. Labor and Supply Input Duplication c. AMA RUC Recommendations for Moderation Sedation Direct PE Inputs d. Updates to Price and Useful Life for Existing Direct Inputs 4. Development of Code-Specific PE RVUsCMS-1524-P 7

5. Physician Time for Select Services B. Potentially Misvalued Services Under the Physician Fee Schedule 1. Valuing Services Under the PFS 2. Identifying, Reviewing, and Validati ng the RVUs of Pote ntially Misvalued Services under the PFS a. Background b. Progress in Identifying and Re viewing Potentially Misvalued Codes c. Validating RVUs of Potentially Misvalued Codes 3. Consolidating Reviews of Potentially Misvalued Codes 4. Proposed Public Nomination Process 5. CY 2012 Identification and Review of Potentially Misvalued Services a. Code Lists b. Specific Codes (1) Codes Potentially Requiring Updates to Direct PE Inputs (2) Codes Without Direct Practice E xpense Inputs in the Non-Facility Setting (3) Codes Potentially Requiring Updates to Physician Work 6. Code-Specific Issues a. CY 2012 Codes with Site-of-Service Anomalies (1) Background (2) Revised Work RVUs for Code s with Site-of-Service Anomalies (A) Foot Arthrodesis (B) Submandibular Gland Excision (C) Urological Procedures (D) Epidural Lysis (E) Intrathecal Epidural Catheters and Pumps (F) Neurostimulators (G) Repair of Eye Wound b. Payment for Bone Density Tests C. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy 1. Background 2. CY 2012 Expansion of the MPPR Po licy to the Professional Component of Advance Imaging Services 3. Further Expansion of the MPPR Under Consideration for Future Year D. Malpractice RVUs 1. Overview of the Methodology for Calculation of Malpractice RVUs 2. Proposed Revisions to Malpractice RVUs for Certain Cardiothoracic Surgery Services E. Geographic Practice Cost Indices (GPCIs) 1. Background 2. Proposed GPCI Revisions for CY 2012 a. Physician Work GPCIs b. Practice Expense GPCIs (1) Affordable Care Act Anal ysis and Revisions for PE GPCIs (A) General Analysis for the CY 2012 PE GPCIs (B) Analysis of ACS Rental Data (C) Employee Wage AnalysisCMS-1524-P 8

(D) Purchased Services Analysis (E) Determining the PE GPCI Cost Share Weights (i) Practice Expense (ii) Employee Compensation (iii) Office Rent (iv) Purchased Services (v) Equipment, Supplies,, and other Misc Expenses (vi) Physician Work and Malpractice GPCIs (F) PE GPCI Floor for Frontier States (2) Summary of CY 2012 PE proposal c. Malpractice GPCIs 3. Payment Localities 4. Report from the Institute of Medicine III. Medicare Telehealth Services For The Physician Fee Schedule A. Billing and Payment for Telehealth Services 1. History 2. Current Telehealth Bi lling 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 2012 1. Smoking Cessation Services 2. Critical Care Services 3. Domiciliary or Re st Home Evaluation and Management Services 4. Genetic Counseling Services 5. Online Evaluation and Management Services 6. Data Collection Services 7. Audiology Services D. The Process for Adding HCPCS Code s as Medicare Telehealth Services E. Telehealth Consultations in Emergency Departments IV. Other Provisions of the Proposed Regulation A. Part B Drug Payment: Aver age Sales Price (ASP) Issues 1. Widely Available Market Pri ce (WAMP)/Average Manufacturer Price (AMP) 2. AMP Threshold and Price Substitutions a. AMP Threshold b. AMP Price Substitution (1) Inspector General Studies (2) Proposal (3) Timeframe for and Duration of Price Substitutions 3. ASP Reporting Update a. ASP Reporting Template Update b. Reporting of ASP Units and Sales Volume for Certain Products. B. Discussion of Budget Neutrality fo r the Chiropractic Services Demonstration C. Proposed Productivity Adjustment for the Ambulatory Surgical Center Payment System, and the Ambulance, Clinical Laboratory and DMEPOS Fee Schedules D. Section 105: Extension of Paymen t for Technical Component of Certain Physician Pathology ServicesCMS-1524-P 9

1. Background and Statutory Authority 2. Proposed Revisions to Payment fo r TC of Certain Physician Pathology Services E. Section 4103 of the Affordable Care Act: Medicare Coverage and Payment of the Annual Wellness Vis it Providing a Personalized Prevention Plan Covered Under Medicare Part B. 1. Incorporation of a Health Risk A ssessment as Part of the Annual Wellness Visit a. Background and Statutory Authorit y – Medicare Part B Coverage of an Annual Wellness Visit Providing Pers onalized Prevention Plan Services b. Implementation (1) Definition of a "Health Risk Assessment" (2) Proposed Changes to the Definiti ons of First Annual Wellness Visit and Subsequent Annual Wellness Visit 2. The Addition of a Health Risk Assessment as a Required Element for the Annual Wellness Visit beginning in 2012. a. Payment for AWV services with the inclusion of an HRA element. F. Quality Reporting Initiatives 1. Physician Payment, Efficiency, and Quality Improvements - Physician Quality Reporting System a. Program Background and Statutory Authority b. Methods of Participation (1) Individual Eligible Professionals (2) Group Practices (A) Background and Authority (B) Proposed Definition of Group Practice (C) Proposed Process for Physician Group Practices to Participate as Group Practices c. Proposed Reporting Period d. Proposed Reporting Mechanisms – Individual Eligible Professionals (1) Claims-based Reporting (2) Registry-based Reporting (A) Proposed Requirements for the Registry-based Re porting Mechanism - Individual Eligible Professionals (B) 2012 Proposed Qualificati on Requirements for Registries (3) EHR-based Reporting (A) Direct EHRs (i) Proposed Requirements for the Di rect EHR-based Reporting Mechanism – Individual Eligible Professionals (ii) 2012 Proposed Qualification Requirements for Direct EHRs (B) EHR Data Submission Vendors (i) 2012 Proposed Qualification Requirements for EHR Data Submission Vendors (C) Proposed Qualification Requi rements for EHR Direct and Data Submission Vendors and Their Products for the 2013 Physician Quality Reporting SystemCMS-1524-P 10

e Incentive Payments for the 2012 Physician Quality Reporting System (1) Proposed Criteria for Satisfactory Reporting of Individua l Quality Measures for Individual Eligible Professionals via Claims (2) Proposed 2012 Criteria for Satisfact ory Reporting of Individual Quality Measures for Individual Eligib le Professionals via Registry (3) Proposed Criteria for Satisfactory Reporting of Individua l Quality Measures for Individual Eligible Professionals via EHR (4) Proposed Criteria for Satisfact ory Reporting of Measures Groups via Claims – Individual Eligible Professionals (5) Proposed 2012 Criteria for Satisf actory Reporting of Measures Groups via Registry – Individual Eligible Professionals (6) Proposed 2012 Criteria for Sa tisfactory Reporting on Physician Quality Reporting System Measures by Gr oup Practices Under the GPRO f. 2012 Physician Quality Reporting System Measures (1) Statutory Requirements for the Sel ection of Proposed 2012 Physician Quality Reporting System Measures (2) Other Considerations for the Selection of Proposed 2012 Physician Quality Reporting System Measures (3) Proposed 2012 Physician Quality Reporting System Individual Measures (A) Proposed 2012 Physician Quality Reporting System Core Measures Available for Claims, Regist ry, and/or EHR-based Reporting (B) Proposed 2012 Physician Qua lity Reporting System Individual Measures for Claims and Registry Reporting (C) Proposed 2012 Measures Available for EHR-based Reporting (4) 2012 Physician Quality Repor ting System Measures Groups (5) Proposed 2012 Physician Quality Re porting System Quality Measures for Group Practices Selected to Pa rticipate in the GPRO (GPRO) g. Maintenance of Cer tification Program Incentive h. Feedback Reports i. Informal Review j. Future Payment Adjustments for the Physician Quality Reporting System 2. Incentives and Payment Adjustments for Electronic Prescribing (eRx) – The Electronic Prescribing Incentive Program a. Program Background and Statutory Authority b. Eligibility (1) Individual Eligible Professionals (A) Definition of Eligible Professional (2) Group practices (A) Proposed Definition of "Group Practice" (B) Proposed Process to Participate in the eRx Incentive Pr ogram – eRx GPRO c. Proposed Reporting Periods (1) Proposed Reporting Periods for the 2012 and 2013 eRx Incentives (2) Proposed Reporting Periods for the 2013 and 2014 eRx Payment Adjustments d. Proposed Criteria for Determini ng Successful Electronic Prescribers (1) Reporting the Electroni c Prescribing Quality Measure (2) The Reporting Denominator for the Electronic Prescribing MeasureCMS-1524-P 11

(3) The Numerator for the Electronic Prescribing Measure e. Required Functionalities and Part D Electronic Prescribing Standards (1) "Qualified" Electr onic Prescribing System (2) Part D Electronic Prescribing Standards f. Proposed Reporting Mechanisms for the 2012 and 2013 Reporting Periods (1) Claims-Based Reporting (2) Registry-Based Reporting (3) EHR-Based Reporting g. The 2012 and 2013 eRx Incentives (1) Applicability of 2012 and 2013 eRx Incentives for Eligible Professionals and eRx GPROs (2) Proposed Reporting Criteria for Be ing a Successful Electronic for the 2012 and 2013 eRx Incentives – Indivi dual Eligible Professionals (3) Proposed Criteria for Being a Succe ssful Electronic Prescriber 2012 and 2013 eRx Incentives – Group Practices (4) No Double Payments h. The 2013 and 2014 Electronic Prescribing Payment Adjustments (1) Proposed Limitations to the 2013 and 2014 eRx Payment Adjustments – Individual Eligible Professionals (2) Proposed Requirements for the 2013 and 2014 eRx Payment Adjustments – Individual Eligible Professionals (3) Proposed Requirements for the 2013 and 2014 eRx Payment Adjustments – Group Practices (4) Significant Hardship Exemptions (A) Proposed Significant Hardship Exemptions (i) Inability to Electronically Prescr ibe due to Local, State, or Federal Law or Regulation (ii) Eligible Professionals Who Pres cribe Fewer Than 100 Prescriptions During a 6-Month, Payment Adjustment Reporting Period (B) Process for Submitting Significant Hardship Exemptions – Individual Eligible Professionals G Physician Compare Website 1. Background and Statutory Authority 2. Proposed Plans H. Medicare EHR Incentive Program fo r Eligible Professionals for the 2012 Payment Year 1. Background 2. The Proposed Physician Quality Reporting System-Medicare EHR Incentive Pilot a. EHR Data Submission Vendor-Based Reporting Option b. EHR-based Reporting Option 3. Method for EPs to Indicate Election to Participate in the Physician Quality Reporting System-Medicare EHR Incen tive Pilot for Payment Year 2012 I. Improvements to the Physician Feedback Program and Establishment of the Value-Based Payment Modifier (Effect of Sections 3003 and 3007 of the Affordable Care Act on the Program)CMS-1524-P 12

1. Overview 2. Background 3. Future Considerations for Ph ase III Physician Feedback Program a. Phase III Physician Feedback Reports (Fall 2011) Feedback Program. (1) Physician Group Reports (2) Reports to Individual Physicians b. Refinement of the Physician F eedback Program in 2011: Individual Physicians /Medical Group Practices/Specialties c. Beyond 2011: Future Scale Up and Dissemination for Increased Physician Feedback Reporting 4. The Value-Based Payment Modifier: Section 3007 of the Affordable Care Act a. Measures of Quality of Care and Costs (1) Quality of Care Measures (A) Proposed Quality of Care Measures for the Value-Modifier. (B) Potential Quality of Care Measures for Additional Dimensions of Care in the Value Modifier (i) Outcome Measures (ii) Care Coordination/Transition Measures (iii) Patient Safety, Patient Experience and Functional Status (2) Cost Measures (A) Proposed Cost Measures for the Value Modifier (B) Potential Cost Measures for Future Use in the Value Modifier b. Assessing Physician Performanc e and Applying the Value Modifier c. Dates for Implementation of the Value Modifier d. Initial Performance Period e. Other Issues (1) Systems-Based Care (2) Special Circumstances for Physicia ns in Rural Areas and Other Underserved Communities J. Bundling of Payments for Services Provided to Outpatients Who Later Are Admitted as Inpatients: 3-Day Paym ent Window Policy and the Impact on Wholly Owned or Wholly Operated Physician Practices. 1. Introduction 2. Background 3. Applicability of the 3-day Payment Window Policy for Services Furnished in Physician Practices a. Payment Methodology b. Identification of Wholly Owned or Wholly Operated Physician Practices K. Hospital Discharge Care Coordination L. Technical Corrections 1. Outpatient Speech-Language Pathology Services: Conditions and Exclusions 2. Outpatient Diabetes Self-Management Training and Diabetes Outcome Measurements a. Proposed Changes to the Definition of Deemed Entity b. Proposed Changes to the Condition of Coverage Regarding Training OrdersCMS-1524-P 13

3. Practice Expense Relative Value Units (RVUs) V. Collection of Information Requirements A. Part B Drug Payment B. The Physician Quality Reporting Syst em (formerly the Physician Quality Reporting Initiative (PQRI)) C. Electronic Prescribing (eRx) Incentive Program D. Proposed Changes to the Medicare El ectronic Health Record (EHR) Incentive Program for Eligible Profe ssionals for the 2012 Payment Year VI. Response to Comments VII. Regulatory Impact Analysis A. Statement of Need B. Overall Impact C. RVU Impacts 1. Resource-Based Work, PE , and Malpractice RVUs 2. CY 2012 PFS Impact Discussion a. Changes in RVUs b. Combined Impact D. Effects of Proposal to Review Poten tially Misvalued Codes on an Annual Basis Under the PFS E. Effect of Proposed Re visions to Malpractice RUVs F. Effect of Proposed Changes to Ge ographic Practice Cost Indices (GPCIs) G. Effects of Proposed Changes to Medi care Telehealth Serv ices Under the Physician Fee Schedule H. Effects of Impact of Other Provisions of the Proposed Rule 1. Part B Drug Payment: ASP Issues 2. Discussion of Budget Neutrality for the Chiropractic Services Demonstration 3. Extension of Payment for Techni cal Component of Certain Physician Pathology Services 4. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a Personalized Prevention Plan: Incorporati on of a Health Risk Assessment as Part of the Annual Wellness Visit. 5. Physician Payment, Efficiency, and Quality Improvements - Physician Quality Reporting System 6. Incentives for Electronic Prescrib ing (eRx) - The Electronic Prescribing Incentive Program 7. Physician Compare Website 8. Medicare EHR Incentive Program 9. Physician Feedback Program/Value Modifier Payment 10. Bundling of Payments for Services Provided to Outpatients Who Later Are Admitted as Inpatients: 3-Day Paym ent Window Policy and the Impact on Wholly Owned or Wholly Operated Physician Offices I. Alternatives Considered J. Impact on Beneficiaries K. Accounting Statement L. Conclusion VIII. Addenda Referenced in this Proposed Rule and Available Only Through theCMS-1524-P 14

Internet on the CMS Web Site Regulations Text Acronyms In addition, because of the many organi zations and terms to which we refer by acronym in this proposed rule, we are listing these acronyms and their corresponding terms in alphabetical order as follows: AA Anesthesiologist assistant

AACE American Association of Clinical Endocrinologists

AACVPR American Association of Cardiovascular and Pulmonary

Rehabilitation

AADE American Association of Diabetes Educators

AANA American Association of Nurse Anesthetists ABMS American Board of Medical Specialties ABN Advanced Beneficiary Notice ACC American College of Cardiology

ACGME Accreditation Council on Graduate Medical Education ACLS Advanced cardiac life support ACP American College of Physicians ACR American College of Radiology ACS American Community Survey ADL Activities of daily living

AED Automated external defibrillator

AFROC Association of Freestand ing Radiation Oncology Centers

AFS Ambulance Fee ScheduleCMS-1524-P 15

AHA American Heart Association AHFS-DI American Hospital Formulary Service-Drug Information AHRQ [HHS] Agency for Healthcare Research and Quality

AMA American Medical Association AMA RUC [AMA's Specialty Society] Relative (Value) Update Committee

AMA-DE American Medical A ssociation Drug Evaluations AMI Acute Myocardial Infarction AMP Average Manufacturer Price AO Accreditation organization AOA American Osteopathic Association APA American Psychological Association

APC Administrative Procedures Act APTA American Physic al Therapy Association ARRA American Recovery and Re investment Act (Pub. L. 111-5) ASC Ambulatory surgical center ASP Average Sales Price ASPE Assistant Secretary of Planning and Evaluation (ASPE) ASRT American Society of Radiologic Technologists ASTRO American Society for Therapeutic Radiology and Oncology

ATA American Telemedicine Association AWP Average wholesale price

AWV Annual Wellness Visit BBA Balanced Budget Act of 1997 (Pub. L. 105-33)CMS-1524-P 16

BBRA [Medicare, Medicaid and State Child Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113) BIPA Medicare, Medicaid, and SCHI P Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)

BLS Bureau of Labor and Statistics BMD Bone mineral density BMI Body mass index BN Budget neutrality BPM Benefit Policy Manual CABG Coronary artery bypass graft CAD Coronary artery disease CAH Critical Access Hospital

CAHEA Committee on Allied Health Education and Accreditation CAP Competitive acquisition program CARE Continuity Assessment Record and Evaluation CBIC Competitive Bidding Implementation Contractor CBP Competitive Bidding Program

CBSA Core-Based Statistical Area

CDC Centers for Diseas e Control and Prevention CEM Cardiac Event Monitoring

CF Conversion Factor CFC Conditions for Coverage CFR Code of Federal RegulationsCMS-1524-P 17

CKD Chronic kidney disease CLFS Clinical laboratory fee schedule

CMA California Medical Association

CMD Contractor Medical Director CME Continuing medical education CMHC Community Mental Health Center CMPs Civil money penalties

CMS Centers for Medicare & Medicaid Services CNS Clinical Nurse Specialist CoP Condition of participation

COPD Chronic obstructiv e pulmonary disease CORF Comprehensive Outpatie nt 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 Procedur al Terminology (4th Edition, 2002, copyrighted by the Ameri can Medical Association) CQM Clinical quality measures

CR Cardiac rehabilitation

CRF Chronic Renal Failure CRNA Certified registered nurse anesthetistCMS-1524-P 18

CROs Clinical research organizations CRP Canalith repositioning CRT Certified respiratory therapist CSC Computer Sciences Corporation

CSW Clinical social worker CT Computed Tomography CTA Computed Tomography Angography CWF Common Working File

CY Calendar Year D.O. Doctor of Osteopathy DEA Drug Enforcement Agency DHHS Department of Health and Human Services DHS Designated health services DME Durable Medical Equipment DMEPOS Durable medical equipment, pr osthetics, orthotics, and supplies DOJ Department of Justice DOQ Doctors Office Quality

DOS Date of service DOTPA Development of Outpa tient Therapy Alternatives DRA Deficit Reduction Act of 2005 (Pub. L. 109-171) DSMT Diabetes Self-Management Training Services DXA CPT Dual energy X-ray absorptiometry E/M Evaluation and Management Medicare ServicesCMS-1524-P 19

ECG Electrocardiogram EDI Electronic data interchange EEG Electroencephalogram EGC Electrocardiogram

EHR Electronic health record EKG Electrocardiogram EMG Electromyogram EMTALA Emergency Medical Treatment and Active Labor Act EOG Electro-oculogram EPO Erythopoeitin EPs Eligible Professional eRx Electronic Prescribing ESO Endoscopy Supplies ESRD End-Stage Renal Disease

FAA Federal Aviation Administration

FAX Facsimile FDA Food and Drug Administration (HHS)

FFS Fee-for-service FISH In Situ Hybridization Testing FOTO Focus On Therapeutic Outcomes FQHC Federally Qualified Health Center FQHC Federally Qualified Health Center

FR Federal RegisterCMS-1524-P 20

FTE full time equivalent GAF Geographic adjustment factor GAFs Geographic Adjustment Factors GAO Government Accountability Office GEM Generating Medicare [Physician Quality Performance Measurement Results]

GFR Glomerular filtration rate

GME Graduate Medical Education GPCIs Geographic Practice Cost Indices GPO Group purchasing organization GPOs Group purchasing organizations GPRO Group Practice Reporting Option GPS Geographic Positioning System GQ Via asynchronous telecommunications system

GSA General Services Administration GT Growth Target HAC Hospital-acquired conditions

HBAI Health and Behavior Assessment and Intervention HCC Hierarchal Condition Category

HCPAC Health Care Profe ssionals Advisory Committee

HCPCS Healthcare Common Procedure Coding System HCRIS Healthcare Cost Report Information System HDL/LDL High-density lipoprotei n/Low-density lipoproteinCMS-1524-P 21

HDRT High dose radiation therapy HEMS Helicopter Emergency Medical Services HH PPS Home Health Prospective Payment System HHA Home health agency HHRG Home health resource group HHS [Department of] Health and Human Services

HIPAA Health Insurance Portabi lity and Accountability Act of 1996 (Pub. L. 104-191) HIT Health information technology HITECH Health Information Technology for Economic and Clinical Health Act (Title IV of Division B of the Recovery Act, together with Title XIII of Division A of the Recovery Act) HITSP Healthcare Information Technology Standards Panel HIV Human immunodeficiency virus HMO Health Maintenance Organization HOPD Hospital outpatient department HPSA Health Professional Shortage Area

HRA Health Risk Assessment

HRSA Health Resources Serv ices Administration (HHS) HSIP HPSA Surgical Incentive Program HUD Department of Housi ng and Urban Development HUD Housing and Urban Development IACS Individuals Access to CMS SystemsCMS-1524-P 22

IADL Instrumental activities of daily living

ICD International Classification of Diseases

ICF Intermediate care facilities

ICF International Classification of Functioning, Disability and Health

ICR Intensive cardiac rehabilitation ICR Information collection requirement IDE Investigational device exemption IDTF Independent diagnostic testing facility IFC Interim final rule with comment period IGI IHS Global Insight, Inc.

IME Indirect Medical Education IMRT Intensity-Modulated Radiation Therapy

INR International Normalized Ratio

IOM Institute of Medicine IOM Internet Only Manual IPCI indirect practice cost index IPPE Initial preventive physical examination IPPS Inpatient prospective payment system

IRS Internal Revenue Service

ISO Insurance services office

IVD Ischemic Vascular Disease IVIG Intravenous immune globulin IWPUT Intra-service work per unit of timeCMS-1524-P 23

JRCERT Joint Review Committee on E ducation in Radiologic Technology KDE Kidney Disease Education LCD Local coverage determination LOPS loss of protective sensation LUGPA Large Urology Group Practice Association

M.D. Doctor of Medicine MA Medicare Advantage program

MAC Medicare Administrative Contractor MA-PD Medicare Advantage-Prescription Drug Plans MAV Measure Applicability Validation MCMP Medicare Care Management Performance MCP Monthly Capitation Payment

MDRD Modification of Di et in Renal Disease MedCAC Medicare Evidence Developmen t and Coverage Advisory Committee (formerly the Medicare Covera ge Advisory Committee (MCAC)) MedPAC Medicare Payment Advisory Commission

MEI Medicare Economic Index MGMA Medical Group Management Association MIEA-TRHCA Medicare Improvements and Extension Act of 2006 (that is,

Division B of the Tax Relief and Health Care Act of 2006 (TRHCA) (Pub. L. 109-432) MIPPA Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275)CMS-1524-P 24

MMA Medicare Prescription Drug, Impr ovement, and Modernization Act of 2003 (Pub. L. 108-173)

MMEA Medicare and Medicaid Ex tenders Act of 2010 (Pub. L. 111–309) MMSEA Medicare, Medicaid, a nd SCHIP Extension Act of 2007 (Pub. L. 110-173) MNT Medical Nutrition Therapy

MOC Maintenance of certification MP Malpractice MPC Multispecialty Points of Comparison MPPR Multiple Procedure Payment Reduction Policy MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539) MRA Magnetic Resonance Angiography MRI Magnetic Resonance Imaging MSA Metropolitan Statistical Area MSP Medicare Secondary Payer MUE Medically Unlikely Edit

NAICS North American Indus try Classification System NBRC National Board for Respiratory Care NCCI National Correct Coding Initiative NCD National Coverage Determination NCQA National Committee for Quality Assurance NCQDIS National Coali tion of Quality Diagnostic Imaging Services NCQDIS National Coalition of Quality Diagnostic Imaging ServicesCMS-1524-P 25

NDC National Drug Codes NF Nursing facility NISTA National Institute of Standards and Technology Act NP Nurse practitioner

NPI National Provider Identifier NPP Nonphysician practitioner NPPES National Plan & Provider Enumeration System NPPs Nonphysician Practioners NQF National Quality Forum NRC Nuclear Regulatory Commission NSQIP National Surgical Qu ality Improvement Program NTSB National Transportation Safety Board NUBC National Uniform Billing Committee OACT [CMS] Office of the Actuary OBRA Omnibus Budget Reconciliation Act OCR Optical Character Recognition ODF Open door forum OES Occupational Employment Statistics OGPE Oxygen generating portable equipment OIG Office of the Inspector General OMB Office of Management and Budget ONC [HHS] Office of the National Coordinator for Health IT OPPS Outpatient prospective payment systemCMS-1524-P 26

OSCAR Online Survey and Ce rtification and Reporting PA Physician Assistant PACE Program of All-inclus ive Care for the Elderly

PACMBPRA Preservation of Access to Ca re for Medicare Beneficiaries and Pension Relief Act of 2010 (Pub. L. 111-192)

PAT Performance assessment tool PC Professional Components PCI Percutaneous coronary intervention PCIP Primary Care Incentive Payment Program PDP Prescription drug plan PE Practice Expense PE/HR Practice expense per hour PEAC Practice Expense Advisory Committee PECOS Provider Enrollment Chain and Ownership System PERC Practice Expense Review Committee PFS Physician Fee Schedule PGP [Medicare] Physician Group Practice

PHI Protected health information PHP Partial hospitalization program PIM [Medicare] Program Integrity Manual PLI Professional liability insurance

POA Present on admission

POC Plan of careCMS-1524-P 27

PODs Physician owned distributors PPATRA Physician Payment and Therapy Relief Act PPI Producer price index PPIS Physician Practice Expense Information Survey

PPPS Personalized Preventi on Plan Services PPS Prospective payment system PPTA Plasma Protein Therapeutics Association PQRI Physician Quality Reporting Initiative PR Pulmonary rehabilitation PRA Paperwork Reduction Act PSA Physician scarcity areas PT Physical therapy PTA Physical therapy assistant

PTCA Percutaneous translum inal coronary angioplasty PVBP Physician and Other Health Pr ofessional Value-Based Purchasing Workgroup QDCs (Physician Quality Reporti ng 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 Da ta Annual Payment Update ProgramCMS-1524-P 28

RIA Regulatory impact analysis RN Registered nurse RNAC Reasonable net acquisition cost RPA Radiology practitioner assistant RRT Registered respiratory therapist RUC [AMA's Specialty Society] Relative (Value) Update Committee

RVRBS Resource-Based Relative Value Scale

RVU Relative Value Unit

SBA Small Business Administration SCHIP State Children's Health Insurance Programs SDW Special Disability Workload SGR Sustainable growth rate SLP Speech-language pathology SMS Socioeconomic Monitoring Surveys SMS Monitoring Survey SMS [AMAs] Socioeconomic Monitoring System SNF Skilled Nursing Facility SOR System of record SRS Stereotactic radiosurgery SSA Social Security Administration SSI Social Security Income STARS Services Tracking and Reporting System STATS Short Term Alternatives for Therapy ServicesCMS-1524-P 29

STS Society for Thoracic Surgeons TC Technical Components

TIN Tax identification number

TJC Joint Commission TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432) TTO Transtracheal oxygen UAF Update Adjustment Factor UPMC University of Pittsburgh Medical Center

URAC Utilization Review Accreditation Committee USDE United States Department of Education

USP-DI United States Phar macopoeia-Drug Information VA Department of Veterans Affairs VBP Value-based purchasing WAC Wholesale Acquisition Cost WAMP Widely available market price WAMP Widely Available Market Price WHO World Health Organization Addenda Available Only Through th e Internet on the CMS Web Site In the past, the Addenda referred to throughout the preamble of our annual PFS proposed and final rules with comment period were included in the printed Federal Register . However, beginning with the CY 2012 PFS proposed rule, the PFS Addenda will no longer appear in the Federal Register . Instead these Addenda to the annual proposed and final rules with comment period wi ll be available only th rough the Internet.CMS-1524-P 30

The PFS Addenda along with other supporting docu ments and tables referenced in this proposed rule are available through the Internet on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/ . Click on the link on the left side of the screen titled, "PFS Federal Regulations Noti ces" for a chronological list of PFS Federal Register and other related documents. For the CY 2012 PFS proposed rule, refer to item CMS-1524-P. For complete details on the availa bility of the Addenda referenced in this proposed rule, we refer readers to section VIII. of this propose d rule. Readers who experience any problems accessing any of the A ddenda or other documents referenced in this proposed rule and posted on the CMS Web site identified above should contact Erin Smith at (410) 786-4497. CPT (Current Procedural Terminology) Copyright Notice Throughout this proposed rule, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptio ns are copyright 2010 American Medical Association. All Rights Rese rved. CPT is a registered trademark of

the American Medical Associa tion (AMA). Applicable Fede ral Acquisition Regulations (FAR) and Defense Federal Acquis ition Regulations (DFAR) apply. I. Background Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Social Security Act (the Act), "Payment for Physicians' Services." The Act requires that payments under the physician fee schedule (PFS) are based on national uniform relative value units (RVUs) based on th e relative resources used in furnishing a service. Section 1848(c) of the Act require s that national RVUs be established for physician work, practice expense (PE), and malpractice expense. Before theCMS-1524-P 31

establishment of the resource-based relative value system, Medicare payment for physicians' services was based on reasonable charges. We note that throughout this proposed rule, unless otherwise noted, the term "practitioner" is used to describe both physicians and nonphysician practitioners (such as physician assistants, nurse practitioners, clinical nurse specialists, certifi ed nurse-midwives, psychologists, or social workers) that are permitted to furnish and bi ll Medicare under the PFS for their services. A. Development of the Relative Value System

1. Work RVUs The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act (O BRA) of 1989 (Pub. L. 101-239), and OBRA 1990, (Pub. L. 101-508). The fina l rule, published on November 25, 1991 (56 FR 59502), set forth the fee schedule for pa yment for physicians' services beginning January 1, 1992. Initially, only the physician work RVUs were resource-based, and the PE and malpractice RVUs were based on average allowable charges. The physician work RVUs established for the implementation of the fee schedule in January 1992 was developed with extens ive input from the physician community. A

research team at the Harvard School of Pub lic 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 vignett es for the original physician work RVUs, Harvard worked with pa nels 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 appropr iate adjustment ofCMS-1524-P 32

the conversion factor (CF), in a manner to as sure that fee schedule amounts for anesthesia

services are consistent with those for other se rvices of comparable value. We established a separate CF for anesthesia services, and we continue to utilize time units as a factor in determining payment for these services. As a result, there is a separate payment methodology for anesthesia services. We establish physician work RVUs for new and revised codes based, in part, on

our review of recommendations received from the American Medical Association's (AMA's) Specialty Society Relative Value Update Committee (RUC). 2. Practice Expense Relativ e Value Units (PE RVUs) Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, amende d 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 malpractic e 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 th e 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 pe riod from charge-based PE RVUs to

resource-based RVUs.

We established the resource-based PE RVUs for each physician's service in a final rule, published November 2, 1998 (63 FR 58814), effective for services furnished in 1999. Based on the requirement to transition to a resource-based system for PE over a 4-year period, resource-based PE RVUs did not become fully effective until 2002.CMS-1524-P 33

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 nonphysic ian health professionals (for example, registered nurses (RNs)) nomi nated by physician specialty so cieties and other groups. The CPEP panels identified th e direct inputs required for ea ch physician's service in both the office setting and out-of-office setting. We have since refined and revised these inputs based on recommendations from the AM A RUC. The AMA's SMS data provided aggregate specialty-specific inform ation on hours worked and PEs. Separate PE RVUs are established for pro cedures that can be performed in both a nonfacility setting, such as a phys ician's office, and a facility setting, such as a hospital outpatient department (HOPD). The differe nce between the fac ility and nonfacility RVUs reflects the fact that a facility typi cally 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 providi ng a particular service. Section 212 of the Balanced Budge t Refinement Act of 1999 (BBRA) (Pub. L. 106-113) directed the Secretary of Heal th and Human Services (the Secretary) to establish a process under which we accept and use, to the maximum extent practicable

and consistent with sound da ta 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 in terim 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 RegisterCMS-1524-P 34

(65 FR 65376) as part of a November 1, 2000 fi nal 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 cal culating 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 calculate d in CY 2012 using this methodology, unless

otherwise noted.

In the CY 2010 PFS final rule with co mment period (74 FR 61749), we updated the PE/hour (PE/HR) data that are used in the calculation of PE RVUs for most specialties. For this update, we used the Physician Practice Information Survey (PPIS) conducted by the AMA. The PPIS is a multispecialty, nationally representative, PE survey of both physicians and nonphysician practitioners (NPPs) using a survey instrument and methods highly consistent wi th 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 di agnostic testing facilities (I DTFs), we continued to use the supplemental survey data to determin e PE/HR values (74 FR 61752). Beginning in CY 2010, we provided for a 4-year transiti on for the new PE RVUs using the updated PE/HR data. In CY 2012, the third year of th e transition, PE RVUs are calculated based on a 75/25 blend of the new PE RVUs develope d using the PPIS data and the previous PE RVUs based on the SMS and supplemental survey data. 3. Resource-Based Malpractice RVUsCMS-1524-P 35

Section 4505(f) of the BBA amended section 1848(c) of the Act to require that we implement resource-based malpractice RVUs for services furnished on or after CY 2000. The resource-based malpractice RVUs were implemented in the PFS final rule published November 2, 1999 (64 FR 59380). The MP RVUs were based on malpractice insurance premium data collected from commercial a nd physician-owned insurers from all the States, the District of Columbia, and Puerto Rico. In the CY 2010 PFS final rule with comment period (74 FR 61758), we implement ed the Second Five-Year Review and update of the malpractice RVUs. In the CY 2011 PFS final rule with comment period, we described our approach for determining malpractice RVUs for new or revised codes

that become effective before the next Fi ve Year Review and update (75 FR 73208). Accordingly, to develop the CY 2012 malpr actice RVUs for new or revised codes we

crosswalked the new or revised code to the malpractice RVUs of a similar source code and adjusted for differences in work (or, if greater, the clinical labor portion of the fully implemented PE RVUs) between the source code and the new or revised code.

4. Refinements to the RVUs Section 1848(c)(2)(B)(i) of the Act requires that we re view all RVUs no less often than every 5 years. The First Five-Year Review of Work RVUs was published on November 22, 1996 (61 FR 59489) and was effective in 1997. The Second Five-Year Review of Work RVUs was published in the CY 2002 PFS final rule with comment period (66 FR 55246) and was effective in 2002. The Third Five-Year Review of Work RVUs was published in the CY 2007 PFS final rule with comment period (71 FR 69624) and was effective on January 1, 2007. The Four th Five-Year Review of Work RVUs was initiated in the CY 2010 PFS final rule with comment period where we solicitedCMS-1524-P 36

candidate codes from the public for this re view (74 FR 61941). Proposed revisions to work RVUs and corresponding changes to PE and malpractice RVUs affecting payment for physicians' services for the Fourth Five -Year Review of Work RVUs were published in a separate notice (76 FR 32410). We will review public comments, make adjustments to our proposals in response to comments, as appropriate, and include final values in the CY 2012 PFS final rule with comment period, e ffective for services furnished beginning January 1, 2012. In 1999, the AMA RUC established the Practice Expense Advisory Committee (PEAC) for the purpose of refining the dire ct PE inputs. Through March 2004, the PEAC provided recommendations to CMS for over 7,600 codes (all but a few hundred of the codes currently listed in the AMA's Current Procedural Terminology (CPT) codes). As part of the CY 2007 PFS final rule with comment period (71 FR 69624), we implemented a new bottom-up methodology for determining re source-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 th e specialty-specific PE/HR data used to develop PE RVUs, a dopting a 4-year transition to PE RVUs developed using the PPIS data.

In the CY 2005 PFS final rule with comment period (69 FR 66236), we implemented the First Five-Year Review of the malpractice RVUs (69 FR 66263). Minor modifications to the methodology were addr essed in the CY 2006 PFS final rule with comment period (70 FR 70153). The Sec ond Five-Year Review and update ofCMS-1524-P 37

resource-based malpractice RVUs was published in the CY 2010 PFS final rule with comment period (74 FR 61758) and was effective in CY 2010. In addition to the Five-Year Reviews, beginning for CY 2009, CMS and the

AMA RUC have identified and reviewed a nu mber of potentially misvalued codes on an

annual basis based on various iden tification screens. This annual review of work and PE RVUs for potentially misvalued codes was supplemented by section 3134 of the Affordable Care Act, which requires the agency to periodically identify, review and adjust values for potentially misvalued codes with an emphasis on the following categories: (1) codes and families of codes for which there has been the fastest growth; (2) codes or families of codes that have experienced substantial changes in practice expenses; (3) codes that are recently estab lished for new technologies or services; (4) multiple codes that are frequently billed in c onjunction 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 'Har vard valued codes'); and (7) other codes determined to be appropriate by the Secretary. 5. Application of Budget Neutra lity to Adjustments of RVUs Budget neutrality typically requires that expenditures not increase or decrease as a result of changes or revisions to policy. Ho wever, section 1848(c)(2 )(B)(ii)(II) of the Act requires adjustment only if the change in e xpenditures resulting from the annual revisions to the PFS exceeds a threshold amount. Specifi cally, 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 sectionCMS-1524-P 38

1848(c)(2)(B)(ii)(II) of the Act, if revisions to the R VUs cause expenditures to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million. B. Components of the Fee Schedule Payment Amounts To calculate the payment for every physic ian's service, the components of the fee schedule (physician work, PE, and malpr actice RVUs) are adjusted by a geographic practice cost index (GPCI). The GPCIs refl ect the relative costs of physician work, PE, and malpractice in an area compared to the national average costs for each component.

RVUs are converted to dollar amounts th rough 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 schedul e area can be expressed as: Payment = [(RVU work x GPCI work ) + (RVU PE x GPCI PE) + (RVU Malpractice x GPCI Malpractice)] x CF. C. Most Recent Changes to the Fee Schedule The CY 2011 PFS final rule with comment period (75 FR 73170) implemented changes to the PFS and other Me dicare Part B payment policie s. It also finalized many

of the CY 2010 interim RVUs and implemented interim RVUs for new and revised codes for CY 2011 to ensure that our payment systems are updated to reflect changes in medical practice and the relative values of services. The CY 2011 PFS final rule with comment period also addressed other policies, as well as certain provisions of the Affordable Care Act and the Medicare Impr ovements for Patients and Providers Act of 2008 (MIPPA).CMS-1524-P 39

In the CY 2011 PFS final rule with comme nt period, we announced the following for CY 2011: the total PFS update of - 10.1 percent; the initial estimate for the sustainable growth rate of -13.4 percent; and the CF of $25.5217. These figures were

calculated based on the statut ory provisions in effect on November 2, 2010, when the

CY 2011 PFS final rule was issued. On December 30, 2010, we published a corr ection notice (76 FR 1670) to correct

several technical and typographical errors that occurr ed in the CY 2011 PFS final rule with comment period. This correction noti ce announced a revised CF for CY 2011 of $25.4999. On November 30, 2010, the Physician Pa yment and Therapy Relief Act of 2010 (PPATRA) (Pub. L. 111-286) was signed in to law. Section 3 of Pub. L. 111–286 modified the policy finalized in the CY 2011 PFS final rule with comment period (75 FR 73241), effective January 1, 2011, rega rding the payment re duction applied to multiple therapy services provided to the same patient on the same day in the office setting by one provider and paid for under th e PFS (hereinafter, the therapy multiple procedure payment reduction (MPPR)). Th e PPATRA provision changed the therapy MPPR percentage from 25 to 20 percent of the PE component of payment for the second and subsequent "always" therapy services furn ished in the office setting on the same day to the same patient by one provider, and excep ted the payment reductio ns associated with the therapy MPPR from budget neutrality under the PFS. On December 15, 2010, the Medicare a nd Medicaid Extenders Act of 2010 (MMEA) (Pub. L. 111–309) was signed into law. Section 101 of Pub. L. 111–309 provided for a 1-year zero percent update for the CY 2011 PFS. As a result of theCMS-1524-P 40

MMEA, the CY 2011 PFS conversion f actor was revised to $33.9764. II. Provisions of the Proposed 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 ge neral categories of physicia n and practitioner expenses, such as office rent and personnel wages but excluding malpractice expenses, as specified in section 1848(c)(1 )(B) of the Act. Section 121 of the Social Security Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, required us to develop a methodology for a resource-based system for determining PE RVUs for each physician's service. We de velop PE RVUs by looking at the direct and indirect physician practi ce resources involved in furnishing each service. Direct expense categories include clinical labor, medical supplies, and medical equipment. Indirect expenses include ad ministrative 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 adjustme nts 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 commentCMS-1524-P 41

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 clin ical staff, equipment, and s upplies) typically required to provide each service. The costs of the res ources are calculated us ing the refined direct PE inputs assigned to each CPT code in our PE database, which are based on our review

of recommendations received from the AMA RU C. For a detailed explanation of the bottom-up direct PE methodology, including exampl es, we refer readers to the Five-Year

Review of Work Relative Value Units Under the PFS and Propos ed Changes to the Practice Expense Methodology proposed not ice (71 FR 37242) and the CY 2007 PFS final rule with comment period (71 FR 69629).

b. Indirect Practice Ex pense per Hour Data We use survey data on indirect prac tice expenses incurred per hour worked (PE/HR) in developing the indirect porti on of the PE RVUs. Prior to CY 2010, we primarily used the practice expense per hour (PE/HR) by specialty that was obtained from the AMA's Socioeconomic Monitoring Surveys (SMS). The AMA administered a new survey in CY 2007 and CY 2008, the Physician Practice Expense Information Survey (PPIS), which was expanded (relati ve to the SMS) to include nonphysician practitioners (NPPs) paid under the PFS. The PPIS is a multispecialty, nationally representative, PE survey of both physicians and NPPs using a consistent survey instrument and met hods highly consistentCMS-1524-P 42

with those used for the SMS and the supplemental surveys. The PPIS gathered information from 3,656 respondents across 51 physician specialty and healthcare professional groups. We believe the PPIS is the most comprehensive source of PE survey information available to date. Ther efore, we used the PPI S data to update the PE/HR data for almost all of the Medicare-recognized specialties that participated in the survey for the CY 2010 PFS. When we changed over to the PPIS da ta 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 sp ecialties resulting from the use of the PPIS data, we finalized a 4-year transition (75 percent old/25 percent new for CY 2010, 50 percent old /50 per cent new for CY 2011, 25 percent old /75 percent new for CY 2012, and 100 percent ne w for CY 2013) from the previous PE RVUs to the PE RVUs develope d using the new PPIS data. Section 303 of the Medicare Prescrip tion Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) added s ection 1848(c)(2)(H)(i) of the Act, which requires us to use the medical oncology suppl emental survey data submitted in 2003 for oncology drug administration services. Th erefore, the PE/HR for medical oncology, hematology, and hematology/oncology reflects the continued use of these supplemental survey data.CMS-1524-P 43

We do not use the PPIS data for reproduc tive endocrinology, sl eep medicine, and spine surgery since these specialties are not separately recognized by Medicare, nor do

we have a method to blend these data with Medicare-recognized specialty data. Supplemental survey data on independent labs, from the College of American Pathologists, were implemented for payments in CY 2005. Supplemental survey data from the National Coalition of Quality Diagnostic Imaging Services (NCQDIS), representing independent di agnostic testing facilities (ID TFs), were blended with supplementary survey data from the American College of Radiology (ACR) and implemented for payments in CY 2007. Neither IDTFs nor independent labs participated in the PPIS. Therefore, we continue to use the PE/HR that was developed from their supplemental survey data. Consistent with our past practice, the previous indire ct PE/HR values from the supplemental surveys for medical oncology, i ndependent laboratories, and IDTFs were updated to CY 2006 using the MEI to put them on a comparable basis with the PPIS data. Previously, we have established PE/HR values for various specialties without SMS or supplemental survey data by crosswal king 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 partic ipate 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 appr opriate crosswalk because these specialties

are more similar to each other wi th respect to physician time.CMS-1524-P 44

For registered dietician services, th e proposed resource-ba sed PE RVUs have

been calculated in accordance w ith the final policy that crosswalks the specialty to the "All Physicians" PE/HR data, as adopted in the CY 2010 PFS final rule with comment period (74 FR 61752) and discussed in more detail in the CY 2011 PFS final rule with comment period (75 FR 73183). There are four specialties whose utilizati on data will be newly incorporated into ratesetting for CY 2012. We are proposi ng to use proxy PE/HR values for these specialties by crosswalking values from other, similar specialties as follows: Speech Language Pathology from Physi cal Therapy; Hospice and Palliative Care from All Physicians; Geriatric Psychiat ry from Psychiatry; and Intensive Cardiac Rehabilitation from Cardiology. Additionally, since secti on 1833(a)(1)(K) of the Act (as amended by section 3114 of the Affordable Care Act) requ ires that payment for services provided by a certified nurse midwife be paid at 100 per cent of the PFS amount, th is specialty will no longer be excluded from the ra tesetting calculation. We ar e proposing to crosswalk the PE\HR data from Obstetrics/gynecology to Certified Nurse Midwife. These newly proposed changes are reflected in the "PE HR" file available on the CMS Web site under the supporting data files for the CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/

. As provided in the CY 2010 PFS final ru le with comment period (74 FR 61751), CY 2012 is the third year of the 4 year tran sition to the PE RVUs calculated using the PPIS data. Therefore, in general, the CY 2012 PE RVUs are a 25 percent/75 percent blend of the previous PE RVUs based on th e SMS and supplemental survey data and the new PE RVUS developed using the PPIS data as described previously.CMS-1524-P 45

c. Allocation of PE to Services To establish PE RVUs for specific serv ices, it is necessary to establish the

direct and indirect PE associated with each service. (1) Direct Costs The relative relationship between the dire ct cost portions of the PE RVUs for any two services is determined by the re lative relationship betw een the sum of the direct cost resources (that is, the clinical staff, equipment, and supplies) typically required to provide the services. The cost s of these resources are calculated from the refined direct PE inputs in our PE da tabase. For example, if one service has a direct cost sum of $400 from our PE database and another service has a direct cost sum of $200, the direct portion of the PE RVUs of the first service would be twice as much as the direct portion of the PE RVUs for the second service. (2) Indirect Costs Section II.A.2.b. of this proposed rule 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 incorporat e the survey data described earlier in the PE/HR discussion. The general approach to developing the i ndirect portion of

the PE RVUs is described as follows:

• For a given service, we use the direct portion of the PE RVUs calculated as previously desc ribed and the average percentage that direct costs represent of total costs (bas ed on survey data) across th e specialties that performCMS-1524-P 46

the service to determine an initial indirect allocator. For example, if the direct portion of the PE RVUs for a given se rvice were 2.00 and direct costs, on average, represented 25 percent of total co sts 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 wo rk RVUs or clinical labor portion of the direct portion of the PE RVUs to th is initial indirect allocator. In our example, if this service had work RVUs of 4.00 and the clinic al 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 i ndirect cost portions of the PE RVUs for any two services would be determined by the rela tive relationship betw een these indirect cost allocators. For exampl e, if one service had an i ndirect cost allocator of 10.00

and another service had an i ndirect cost allocator of 5.00, the indirect portion of

the PE RVUs of the first serv ice would be twice as great as the indirect portion of

the PE RVUs for the second service.

• We next incorporate the specialty-s pecific indirect PE/HR data into the calculation. As a relatively extreme exampl e for the sake of simplicity, assume in our previous example that, based on the surv ey data, the average indirect cost of the specialties performing the first servi ce with an allocator of 10.00 was half of the average indirect cost of the specialti es performing the second service with anCMS-1524-P 47

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 establis h 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 independent ly to yield two separate PE RVUs. Because Medicare makes a separate paymen t 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 Componen ts (TCs) and Professional Components (PCs) Diagnostic services are generally comprised of two components: a professional component (PC) and a techni cal 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 dir ect costs across all the specia lties that furnish the global components, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expens es 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.)CMS-1524-P 48

f. PE RVU Methodology For a more detailed description of the PE RVU methodology, we refer readers to the CY 2010 PFS final rule with comment period (74 FR 61745 through 61746). (1) Setup File First, we create a setup file for the PE methodology. The setup file contains the direct cost inputs, the ut ilization 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 th e 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 (aggreg ate direct and indirect) RVUs, the CF, and the average direct PE percentage from the survey data. Step 3 : Calculate the aggregate pool of dir ect 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 St ep 3 calculate a direct PE scaling adjustment so that the aggregate direct cost pool does not exceed the current aggregate direct cost pool a nd apply it to the direct costs from Step 1 for each

service.CMS-1524-P 49

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 th e CF. Note that the actual value of the

CF used in this calculation does not infl uence 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 cha nges 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 servic e do not vary by the PC, TC, and global components. Step 8 : Calculate the service level alloca tors for the indirect PEs based on the percentages calculated in Step 7. Th e 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 wher e this formula is modified:CMS-1524-P 50

• If the service is a global serv ice (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 al locator is: indirect percentage (direct PE RVUs/direct percentage) + clinical PE RVUs. (Note : For global services, the indirect allo cator is based on both the work RVUs

and the clinical labor PE RVUs. We do th is 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 di rect PE RVUs and the clinical labor PE RVUs. This also allows the global com ponent 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 wo rk RVUs, clinical PE RVUs, or both depending on whether the service is a globa l service and whether the clinical PE RVUs exceed the work RVUs (as desc ribed earlier in this step). Apply a scaling adjustment to the indirect allocators.CMS-1524-P 51

Step 9 : Calculate the current aggregat e 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 indi rect PE allocators for a service from Step 8 and the utilization da ta for that service. Step 11 : Using the results of Step 9 and Step 10, calculate an indirect PE adjustment so that the aggregate indir ect 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 aggr egate pools of specialty-specific ad justed indirect PE allocators for all PFS services for a specialty by adding the product of the adju sted indirect PE allocator for each

service and the utilization da ta for that service. Step 13 : Using the specialty-specific indirect PE/HR data, calculate specialty-specific aggregate pools of indi rect PE for all PFS services for that specialty by adding the product of the i ndirect PE/HR for the specialty, the physician time for the service, and the speci alty's utilization fo r the service across all services performed by the specialty. Step 14 : Using the results of Step 12 and Step 13, calculate the specialty-specific indirect PE scaling factors.CMS-1524-P 52

Step 15 : Using the results of Step 14, cal culate an indirect practice cost index at the specialty level by dividing each specialty-specific indirect scaling factor by the average indirect sca ling factor for the entire PFS. Step 16 : Calculate the indirect practice co st 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 specia lties that furnish the service. (Note : For services with TCs and PCs, we calculate the indirect practice cost index across the global components, PCs, and TCs. Under this method, the indirect practice cost index for a given service (for example, echocardiogram) does not vary by the PC, TC, and global component.) Step 17 : Apply the service level indirect practice cost index calculated in Step 16 to the service level adjusted indirect allocators calculated in Step 11 to get

the indirect PE RVUs. (4) Calculate the Final PE RVUs Step 18 : Add the direct PE RVUs from Step 6 to the indirect PE RVUs from Step 17 and apply the final PE budget neutrality (BN) adjustment. The final PE BN adjustment is cal culated by comparing the results of Step 18 to the current pool of PE RVUs. This final BN adjustment is required primarily because certain specialties ar e excluded from the PE RVU calculation for ratesetting purposes, but all specialties are included for purposes of calculating the final BN adjustment. (See "Specialties excluded from ratesetting calculation" later in this section.)CMS-1524-P 53

(5) Setup File Information

• Specialties excluded from ratesetti ng calculation: For the purposes of calculating the PE RVUs, we exclude cer tain specialties, such as certain nonphysician practitioners paid at a pe rcentage of the PFS and low-volume specialties, from the calculation. These specialties are include d for the purposes of calculating the BN adjustment. They are displayed in Table 1. We note that since specialty code 97 (physician assistant) is paid at a percentage of the PFS and

therefore excluded from the ratesetting calculation, this specialty has been added

to the table for CY 2012.

TABLE 1: SPECIALTIES EXCLUDED FROM RATESETTING CALCULATION Specialty Code Specialty Description 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 cer tified 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., dr ug and department stores) 88 Unknown supplier/provider specialty 89 Certified clinical nurse specialist 95 Competitive Acquisition Program (CAP) Vendor 96 Optician 97 Physician assistant A0 Hospital A1 SNF A2 Intermediate care nursing facility A3 Nursing facility, other A4 HHACMS-1524-P 54

Specialty Code Specialty Description 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 physic ian specialties: Crosswalk the utilization of certain specialties w ith relatively low PFS utilization to the associated specialties.

• Physical therapy utilization: Cros swalk the utilization associated with all physical therapy services to th e specialty of physical therapy.

• Identify professional and technical services not identified under the usual TC and 26 modifiers: Flag the serv ices that are PC and TC services, but do not use TC and 26 modifiers (for exampl e, electrocardiograms). This flag

associates the PC and TC with the associ ated global code for use in creating the indirect PE RVUs. For example, th e professional service, CPT code 93010 (Electrocardiogram, routine ECG with at least 12 leads; inte rpretation and report only), is associated with the global se rvice, 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, servi ces 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 ac count for 16 percent of any service that contains the assistant at surgery modifier.CMS-1524-P 55

● Work RVUs: The setup file contains th e 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); ge nerally 150,000 minutes. usage = equipment utilization assu mption; 0.75 for certain expensive diagnostic imaging equipment (see 74 FR 61753 through 61755 and section II.A.3. of the CY 2011 PFS final rule with comment period) and 0.5 for others. price = price of the particular piece of equipment.

interest rate = 0.11. life of equipment = useful life of th e particular piece of equipment. maintenance = factor for maintenance; 0.05. This interest rate was proposed and finalized during rulemaking for CY 1998 PFS (62 FR 33164). We solicit comment regardi ng reliable data on current prevailing

loan rates for small businesses. Note: The use of any particular conversion factor (CF) in Table 2 to illustrate the PE

calculation has no effect on the resulting RVUs.CMS-1524-P 56TABLE 2: CALCULATION OF PE RVUS UNDER METHODOLOGY FOR SELECTED CODESStep Source Formula99213Office visit,estnonfacility33533CABG,arterial,singlefacility71020Chest x-raynonfacility71020-TCChest xraynonfacility71020-26Chestxraynonfacility93000ECG,completenonfacility93005ECG,tracingnonfacility93010ECG, reportnonfacility(1) Labor cost (Lab) Step 1 DPEIdb 13.32 77.52 5.74 5.74 0.00 6.12 6.12 0.00(2) Supply cost (Sup) Step 1 DPEIdb 2.98 7.34 3.39 3.39 0.00 1.19 1.19 0.00(3) Equipment cost(Eqp.) Step 1 DPEIdb 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* 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55(6) Adjusted Labor Steps 2-4 =Lab * Dir Adj =(1)*(5) 7.26 42.27 3.13 3.13 0.00 3.34 3.34 0.00(7) Adjusted Supplies Steps 2-4 = Sup * Dir Adj =(2)*(5) 1.63 4.00 1.85 1.85 0.00 0.65 0.65 0.00(8) AdjustedEquipment Steps 2-4 = Eqp * Dir Adj =(3)*(5) 0.11 0.36 4.46 4.46 0.00 0.06 0.06 0.00(9) Adjusted direct Steps 2-4 =(6)+(7)+(8) 9.00 46.63 9.44 9.44 0.00 4.05 4.05 0.00(10) ConversionFactor (CF) Step 5 PFS 33.9764 33.9764 33.9764 33.9764 33.9764 33.9764 33.9764 33.9764(11) Adj. labor costconvertedStep 5 =(Lab * Dir Adj)/CF =(6)/(10) 0.21 1.24 0.09 0.09 0.00 0.10 0.10 0.00(12) Adj. supply costconverted Step 5 =(Sup * Dir Adj)/CF =(7)/(10) 0.05 0.12 0.05 0.05 0.00 0.02 0.02 0.00(13) Adj. equipmentcost converted Step 5 =(Eqp * Dir Adj)/CF =(8)/(10) 0.00 0.01 0.13 0.13 0.00 0.00 0.00 0.00(14) Adj. direct costconverted Step 5=(11)+(12)+(13) 0.26 1.37 0.28 0.28 0.00 0.12 0.12 0.00(15) Work RVU 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. (1stpart). Step 8 See (18) 0.77 6.40 0.68 0.68 0.00 0.29 0.29 0.00(20) Ind. Alloc.Formulas (2nd part).Step 8 See Step 8 (15) (15) (15) (11) (15) (15) (11) (15)(21) Ind. Alloc. (2ndpart).Step 8 See (20) 0.97 33.75 0.31 0.09 0.22 0.27 0.10 0.17(22) Indirect Allocator(1st + 2nd) Step 8 =(19)+(21) 1.74 40.15 0.99 0.77 0.22 0.56 0.39 0.17(23) IndirectAdjustment (Ind. Adj.) Steps 9-11 See footnote** 0.41 0.41 0.41 0.41 0.41 0.41 0.41 0.41(24) Adjusted indirectallocator Steps 9-11 =Ind Alloc * Ind Adj 0.71 16.30 0.40 0.31 0.09 0.23 0.16 0.07(25) Ind. PracticeCost Index (IPCI)Steps12-16See Steps 12 - 16 1.12 0.82 0.90 0.90 0.90 0.93 0.93 0.93(26) Adjusted Indirect Step 17= Adj.Ind Alloc *PCI=(24) * (25) 0.79 13.32 0.36 0.28 0.08 0.21 0.15 0.06CMS-1524-P 57Step Source Formula99213Office visit,estnonfacility33533CABG,arterial,singlefacility71020Chest x-raynonfacility71020-TCChest xraynonfacility71020-26Chestxraynonfacility93000ECG,completenonfacility93005ECG,tracingnonfacility93010ECG, reportnonfacility(29) PE RVU Step 18=(Adj Dir + Adj Ind) *budn=((14)+(26))* budn 1.05 14.68 0.64 0.56 0.08 0.33 0.27 0.06Note: 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]CMS-1524-P 58

3. Changes to Direct PE Inputs In this section, we discus s other specific CY 2012 pr oposals and changes related to direct PE inputs. The proposed change s that follow are included in the proposed CY 2012 direct PE database, which is available on the CMS Web site under the supporting data files for the CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/

. a. Inverted Equipment Minutes

It has come to our attention that th e minutes allocated for two particular equipment items have been inverted. Th is inversion affect s three codes: 37232 (Revascularization, endovascular, open or perc utaneous, tibial/peroneal artery, unilateral, each additional vessel; with transluminal angioplasty (List separately in addition to code for primary procedure)), 37233 (Revasculari zation, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, each addi tional vessel; with atherectomy, includes angioplasty within the same vessel, when perf ormed (List separately in addition to code for primary procedure)), and 37234 (Revas cularization, endova scular, open or percutaneous, tibial/peroneal ar tery, unilateral, each additional vessel; with transluminal stent placement(s), includes angioplasty within the same vessel, when performed (List separately in addition to code for primary procedure)). In each case, the number of minutes allocated to the "printer, dye s ublimation (photo, color)" (ED031) should be appropriately allocated to the "stretcher" (E F018). The number of minutes allocated to the stretcher should be appropriately allocate d to the printer. Th erefore, the proposed

CY 2012 database includes direct PE input corrections to th e times associated with the two equipment items in the three codes.CMS-1524-P 59

b. Labor and Supply Input Duplication We recently identified a number of CPT codes with inadvertently duplicated labor and supply inputs in the PE database. We are proposing to remove the duplicate labor and supply inputs in the proposed CY 2012 database as detailed in Table 3.

TABLE 3: LABOR AND SU PPLY INPUT DUPLICATION

CPT Code Short Code Descriptor CMS Labor/Supply Code Description of Labor/Supply 12011 Repair superficial wound(s) SA 048 pack, minimum multi-specialty visit 15360 Apply cult derm sub t/a/l SA054 pack, post-op incision care (suture) 19361 Breast reconstr w/lat flap L037D RN/LPN/MTA 21147 Reconstruct midface lefort SA054 pack, post-op incision care (suture) 23515 Treat clavicle fracture SA052 p ack, post-op incision care (staple) Repair radius & ulna SA052 pack, post-op incision care (staple) 25415 Repair radius & ulna SA052 pack, post-op incision care (staple) 28005 Treat foot bone lesion SA054 pack, post-op incision care (suture) 28456 Treat midfoot fracture SA054 pack, post-op incision care (suture) 28485 Treat metatarsal fracture SA054 pack, post-op incision care (suture) 32998 Perq rf ablate tx pul tumor SG079 tape, surgical paper 1in (Micropore) Artery bypass graft L037D RN/LPN/MTA 35501 Artery bypass graft SA048 pack, minimum multi-specialty visit Artery bypass graft L037D RN/LPN/MTA 35509 Artery bypass graft SA048 pack, minimum multi-specialty visit Artery bypass graft L037D RN/LPN/MTA 35601 Artery bypass graft SA048 pack, minimum multi-specialty visit Access av dial grft for eval SB00 8 drape, sterile, c-arm, fluoro Access av dial grft for eval SH026 Conray Inj (iothalamate 43%) 36147 Access av dial grft for eval SK 093 x-ray ID card (flashcard) 37231 Tib/per revasc stent & ather SK034 film, x-ray 14in x 17in 45541 Correct rectal prolapse SJ032 lubricating jelly (K-Y) (5gm uou) 45550 Repair rectum/remove sigmoid SJ032 lubricating jelly (K-Y) (5gm uou) Remove in/ex hem grp w/fistu SD003 anoscope Remove in/ex hem grp w/fistu SD003 anoscope 46258 Remove in/ex hem grp w/fistu SD003 anoscope Remove in/ex hem grps & fiss SD003 anoscope Remove in/ex hem grps & fiss SD003 anoscope 46261 Remove in/ex hem grps & fiss SD003 anoscope 58563 Hysteroscopy ablation SB027 gown, staff, impervious 64704 Revise hand/foot nerve SA054 pack, post-op incision care (suture) 64726 Release foot/toe nerve SA054 p ack, post-op incision care (suture) 64782 Remove limb nerve lesion SA054 pack, post-op incision care (suture) 65810 Drainage of eye SA082 pack, ophthalmology visit (w-dilation) Treatment of retinal lesion L038A COMT/COT/RN/CST Treatment of retinal lesion SA082 pack, ophthalmology visit (w-dilation) 67228 Treatment of retinal lesion SH049 lidocaine 2% w-epi inj (Xylocaine w-epi) 76813 Ob us nuchal meas 1 gest SK022 film, 8inx10in (ultrasound, MRI) 78730 Urinary bladder retention SB044 underpad 2ft x 3ft (Chux)CMS-1524-P 60

CPT Code Short Code Descriptor CMS Labor/Supply Code Description of Labor/Supply 88365 Insitu hybridization (fish) SM016 eye shield, splash protection 91038 Esoph imped funct test > 1h SJ016 denture cup 95875 Limb exercise test SC051 syringe 10-12ml

c. AMA RUC Recommendations for M oderation Sedation Direct PE Inputs For services described by certain c odes, the direct PE database includes nonfacility inputs that reflect the assumption that moderation sedation is inherent in the procedure. These codes are listed in Ta ble 4. The AMA RUC has recently provided

CMS with a recommendation that standardiz es the nonfacility dire ct PE inputs that account for moderate sedation as typically fu rnished as part of these services. Specifically, the RUC recommended that the di rect PE inputs allocated for moderate sedation include the following: Clinical Labor Inputs: Registered Nurse (L 051A) time that includes two minutes of time to initiate sedation, the numb er of minutes associated w ith the physician intra-service work time, and 15 minutes for every hour of pa tient recovery time for post-service patient monitoring. Supply Inputs: "Pack, conscious sedation" (SA044) that includes: an angiocatheter 14g-24g, bandage, strip 0.75in x 3in, catheter, suction, dressing, 4in x 4.75in (Tegaderm), electrode, ECG (single), electrode, ground, gas, oxygen, gauze, sterile 4in x 4in, gloves, sterile, gown, surgical, sterile, iv infusion set, kit, iv starter, oxygen mask (1) and tubing (7ft), pulse oximeter sensor probe wrap, stop cock, 3-wa y, swab-pad, alcohol, syringe 1ml, syringe-needle 3ml 22-26g, tape, surgical paper 1in (Micropore), tourniquet, and

non-latex 1in x 18in. Equipment Inputs: "table, instrument, mob ile" (EF027), "ECG, 3-channel (with SpO2,CMS-1524-P 61

NIBP, temp, resp)" (EQ011), "IV infusion pump" (EQ032), "pulse oxymetry recording software (prolonged monitoring)" (EQ212), and "blood pressure monitor, ambulatory, w-battery charger" (EQ269).

We have reviewed this recommendation a nd generally agree w ith these inputs. However, we note that the equipment item "ECG, 3-channel (with SpO2, NIBP, temp, resp)" (EQ011) incorporates the functionality of the equipment items "pulse oxymetry recording software (prolonged monitoring) " (EQ212), and "blood pressure monitor, ambulatory, w-battery charger" (EQ269). Th erefore we have not included these two items as standard nonfacility inputs for moderation sedation. We propose to accept the AMA RUC recommendation with the refinement as

stated. The CY 2012 direct PE database refl ects these proposed changes and is available on the CMS Web site under the supporting da ta files for the CY 2012 PFS proposed rule

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

. TABLE 4: INHERENT MO DERATE SEDATION CODES VALUED IN THE NONFACILITY SETTING

CPT Code Short Descriptor 19298 Place breast rad tube/caths 20982 Ablate bone tumor(s) perq 22520 Percut vertebroplasty thor 22521 Percut vertebroplasty lumb 22526 Idet single level 22527 Idet 1 or more levels 31615 Visualization of windpipe 31620 Endobronchial us add-on 31622 Dx bronchoscope/wash 31623 Dx bronchoscope/brush 31624 Dx bronchoscope/lavage 31625 Bronchoscopy w/biopsy(s) 31626 Bronchoscopy w/markers 31627 Navigational bronchoscopy 31628 Bronchoscopy/lung bx each 31629 Bronchoscopy/needle bx eachCMS-1524-P 62

CPT Code Short Descriptor 31634 Bronch w/balloon occlusion 31635 Bronchoscopy w/fb removal 31645 Bronchoscopy clear airways 31646 Bronchoscopy reclear airway 31656 Bronchoscopy inj for x-ray 32201 Drain percut lung lesion 32550 Insert pleural cath 32553 Ins mark thor for rt perq 35471 Repair arterial blockage 35472 Repair arterial blockage 35475 Repair arterial blockage 35476 Repair venous blockage 36147 Access av dial grft for eval 36148 Access av dial grft for proc 36200 Place catheter in aorta 36245 Place catheter in artery 36481 Insertion of catheter vein 36555 Insert non-tunnel cv cath 36557 Insert tunneled cv cath 36558 Insert tunneled cv cath 36560 Insert tunneled cv cath 36561 Insert tunneled cv cath 36563 Insert tunneled cv cath 36565 Insert tunneled cv cath 36566 Insert tunneled cv cath 36568 Insert picc cath 36570 Insert picvad cath 36571 Insert picvad cath 36576 Repair tunneled cv cath 36578 Replace tunneled cv cath 36581 Replace tunneled cv cath 36582 Replace tunneled cv cath 36583 Replace tunneled cv cath 36585 Replace picvad cath 36590 Removal tunneled cv cath 36870 Percut thrombect av fistula 37183 Remove hepatic shunt (tips) 37184 Prim art mech thrombectomy 37185 Prim art m-thrombect add-on 37186 Sec art m-thrombect add-on 37187 Venous mech thrombectomy 37188 Venous m-thrombectomy add-on 37203 Transcatheter retrieval 37210 Embolization uterine fibroidCMS-1524-P 63

CPT Code Short Descriptor 37220 Iliac revasc 37221 Iliac revasc w/stent 37222 Iliac revasc add-on 37223 Iliac revasc w/stent add-on 37224 Fem/popl revas w/tla 37225 Fem/popl revas w/ather 37226 Fem/popl revasc w/stent 37227 Fem/popl revasc stnt & ather 37228 Tib/per revasc w/tla 37229 Tib/per revasc w/ather 37230 Tib/per revasc w/stent 37231 Tib/per revasc stent & ather 37232 Tib/per revasc add-on 37233 Tibper revasc w/ather add-on 37234 Revsc opn/prq tib/pero stent 37235 Tib/per revasc stnt & ather 43200 Esophagus endoscopy 43201 Esoph scope w/submucous inj 43202 Esophagus endoscopy biopsy 43216 Esophagus endoscopy/lesion 43217 Esophagus endoscopy 43234 Upper gi endoscopy exam 43235 Uppr gi endoscopy diagnosis 43236 Uppr gi scope w/submuc inj 43239 Upper gi endoscopy biopsy 43453 Dilate esophagus 43456 Dilate esophagus 43458 Dilate esophagus 44385 Endoscopy of bowel pouch 44386 Endoscopy bowel pouch/biop 44388 Colonoscopy 44389 Colonoscopy with biopsy 44390 Colonoscopy for foreign body 44391 Colonoscopy for bleeding 44392 Colonoscopy & polypectomy 44393 Colonoscopy lesion removal 44394 Colonoscopy w/snare 44901 Drain app abscess percut 45303 Proctosigmoidoscopy dilate 45305 Proctosigmoidoscopy w/bx 45307 Proctosigmoidoscopy fb 45308 Proctosigmoidoscopy removal 45309 Proctosigmoidoscopy removal 45315 Proctosigmoidoscopy removalCMS-1524-P 64

CPT Code Short Descriptor 45317 Proctosigmoidoscopy bleed 45320 Proctosigmoidoscopy ablate 45332 Sigmoidoscopy w/fb removal 45333 Sigmoidoscopy & polypectomy 45335 Sigmoidoscopy w/submuc inj 45338 Sigmoidoscopy w/tumr remove 45339 Sigmoidoscopy w/ablate tumr 45340 Sig w/balloon dilation 45378 Diagnostic colonoscopy 45379 Colonoscopy w/fb removal 45380 Colonoscopy and biopsy 45381 Colonoscopy submucous inj 45382 Colonoscopy/control bleeding 45383 Lesion removal colonoscopy 45384 Lesion remove colonoscopy 45385 Lesion removal colonoscopy 45386 Colonoscopy dilate stricture 47000 Needle biopsy of liver 47382 Percut ablate liver rf 47525 Change bile duct catheter 48511 Drain pancreatic pseudocyst 49021 Drain abdominal abscess 49041 Drain percut abdom abscess 49061 Drain percut retroper absc 49411 Ins mark abd/pel for rt perq 49418 Insert tun ip cath perc 49440 Place gastrostomy tube perc 49441 Place duod/jej tube perc 49442 Place cecostomy tube perc 49446 Change g-tube to g-j perc 50021 Renal abscess percut drain 50200 Renal biopsy perq 50382 Change ureter stent percut 50384 Remove ureter stent percut 50385 Change stent via transureth 50386 Remove stent via transureth 50387 Change ext/int ureter stent 50592 Perc rf ablate renal tumor 50593 Perc cryo ablate renal tum 57155 Insert uteri tandems/ovoids 58823 Drain pelvic abscess percut 66720 Destruction ciliary body 69300 Revise external ear 77371 Srs multisourceCMS-1524-P 65

CPT Code Short Descriptor 77600 Hyperthermia treatment 77605 Hyperthermia treatment 77610 Hyperthermia treatment 77615 Hyperthermia treatment 92960 Cardioversion electric ext 93312 Echo transesophageal 93314 Echo transesophageal 93451 Right heart cath 93452 Left hrt cath w/ventrclgrphy 93453 R&l hrt cath w/ventriclgrphy 93454 Coronary artery angio s&i 93455 Coronary art/grft angio s&i 93456 Rhrt coronary artery angio 93457 Rhrt art/grft angio 93458 Lhrt artery/ventricle angio 93459 Lhrt art/grft angio 93460 R&l hrt art/ventricle angio 93461 R&l hrt art/ventricle angio 93464 Exercise w/hemodynamic meas 93505 Biopsy of heart lining 93566 Inject r ventr/atrial angio 93568 Inject pulm art hrt cath 93642 Electrophysiology evaluation d. Updates to Price and Useful Life for Existing Direct Inputs

In the CY 2011 PFS final rule with comme nt period (75 FR 73205), we finalized a process to act on public requests to update equipment and supply price and equipment useful life inputs through annual rulemaking beginning with the CY 2012 PFS proposed

rule. During 2010, we received a request to update the price of "tray, bone marrow biopsy-aspiration" (SA062) from $24.27 to $34.47. The request included multiple invoices that documented updated prices for the supply item. We also received a request to update the useful life of "holter monitor" (EQ127) from 7 years to 5 years, based on its entry in the AHA's publication, ''Estimated Usef ul Lives of Deprecia ble Hospital Assets,'' which we use as a standard reference. In each of these cases, we are proposing to acceptCMS-1524-P 66

the updated inputs, as requeste d. The CY 2012 direct PE data base reflects these proposed changes and is available on the CMS Web site under the supporting data files for the CY 2012 PFS proposed rule at http://www.cms.gov/ PhysicianFeeSched/

. 4. Development of Code-Specific PE RVUs When creating G codes, we often deve lop work, PE, and malpractice RVUs by crosswalking the RVUs from similar (reference) codes. In most of these cases, the PE RVUs are directly crosswalked pending the availa bility of utilization data. Once that data is available, we crosswalk the direct PE inputs and develop PE RVUs using the regular practice expense methodology, including allocators that are derived from utilization data. For CY 2012, we are using this process to de velop PE RVUs for the following services: G0245 (Initial physician evaluation and management of a diabetic patient with diabetic sensory neuropathy resulting in a loss of protective sensation (LOPS) which must include: (1) the diagnosi s of LOPS, (2) a patient history, (3) a physical examination that consists of at least the following elements: (a ) visual inspection of the forefoot, hindfoot and toe web spaces, (b) evaluation of a prot ective sensation, (c) evaluation of foot structure and biomechanics, (d) evaluation of vascular status and sk in integrity, and (e)

evaluation and recommendation of footw ear and (4) patient education); G0246 (Follow-up physician evaluation and management of a diabetic patient with diabetic sensory neuropathy resulting in a loss of protective sensation (LOPS) to include at least the following: (1) a patient history, (2) a physic al examination that includes: (a) visual inspection of the forefoot, hindfoot and to e web spaces, (b) evaluation of protective sensation, (c) evaluation of foot structure a nd biomechanics, (d) evaluation of vascular status and skin integrity, and (e) evaluati on and recommendation of footwear, and (3)CMS-1524-P 67

patient education); G0247 (Routine foot care by a physician of a diab etic patient with diabetic sensory neuropathy resu lting in a loss of protective sensation (LOPS) to include, the local care of superficial wounds (for exampl e, superficial to muscle and fascia) and at least the following if presen t: (1) local care of superfic ial wounds, (2) debridement of corns and calluses, and (3) trimming and de bridement of nails); G0341 (Percutaneous islet cell transplant, includes portal vein catheterization and infusion); G0342(Laparoscopy for islet cell transplant, includes portal vein catheterization and infusion); G0343 (Laparotomy for islet ce ll transplant, incl udes portal vein catheterization and infusion); and G0365 (Vessel mapping of vessels for hemodialysis access (services for preoperative vessel mappi ng prior to creation of hemodialysis access using an autogenous hemodial ysis conduit, including ar terial inflow and venous outflow)). The values in Addendum B reflect the updated PE RVUs. In addition, there is a series of G-code s describing surgical pathology services with PE RVUs historically valued outsid e of the regular PE methodology. These codes are: G0416 (Surgical pathology, gross and microscopic examin ation for prostate needle saturation biopsy sampling, 1-20 specimens) ; G0417 (Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, 21-40 specimens); G0418 (Surgical pathology, gross and microscopic examination for prostate needle saturation biopsy sampling, 41-60 sp ecimens); and G0419 (Surgical pathology, gross and microscopic examination for pr ostate needle saturation biopsy sampling, greater than 60 specimens.) The PE RVUs fo r these codes were established as described

in the CY 2009 PFS final rule with comment period (73 FR 69751). In reviewing these values for CY 2012, we noted that because the PE RVUs established through rulemakingCMS-1524-P 68

in CY 2009 were neither developed using the regular PE methodology nor directly crosswalked from other codes, the PE RVUs fo r these codes were not adjusted to account for the CY 2011 MEI rebasing and revising, wh ich is discussed in the CY 2011 PFS final rule with comment period (75 FR 73262 ) . While it was technically appropriate to insulate the PE RVUs from that adjustment in CY 2011, upon further review, we believe adjusting these PE RVUs woul d result in more accurate payment rates relative to the RVUs for other PFS services. Therefore, we are proposing to adjust the PE RVUs for these codes by 1.182, the adjustment rate that accounted for the MEI rebasing and revising for CY 2011. The PE RVUs in Addendum B reflect the proposed updates. 5. Physician Time for Select Services

As we describe in section II.A.2.f. of th is proposed rule with comment period, in creating the indirect practice cost index, we calculate speci alty-specific aggregate pools

of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service across all services performed by the specialty. During a review of the physician time data for the CY 2012 PFS rulemaking, we noted an anomaly regarding the physician time allotted to a series of group service codes

that are listed in Table 5. We believe that the time associated with these codes reflects the typical amount of time spent by the practi tioner in furnishing the group service. However, because the services are billed pe r patient receiving the service, the time for these codes should be divided by the typical num ber of patients per session. In reviewing

the data used in the valuation of work RVUs for these services, we noted that in one vignette for these services, the typical group se ssion consisted of 6 patients. ThereforeCMS-1524-P 69

we are proposing adjusted times for these se rvices based on 6 patients. However, we seek comment on the typical number of pa tients seen per session for each of these

services. As a result of our review, we are also proposing to update our physician time file to reflect the physician time associated with certain G-codes that were previously missing from the file. Our proposed time values fo r these G-codes as well as the group service codes described previously can be found in the proposed CY 2012 Physician Time file,

which is available on the CMS Web site under the supporting data files for the CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/

. 

### TABLE 5: GROUP EDUCATI ON AND THERAPY CODES WITH PROPOSED TIME CHANGES

CPT Code Short Descriptor 90849 Multiple family group psytx 90853 Group psychotherapy 90857 Intac group psytx 92508 Speech/hearing therapy 96153 Intervene hlth/behave group 97150 Group therapeutic procedures 97804 Medical nutrition group G0271 Group mnt 2 or more 30 mins G0421 Ed svc ckd grp per session G0109 Diab manage trn ind/group

B. Potentially Misvalued Services Under the Physician Fee Schedule 1. Valuing Services Under the PFS

As discussed in section I. of this proposed rule, 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 compone nts: work, practi ce expense (PE), and malpractice. Section 1848(c )(1)(A) of the Act defines the work component to includeCMS-1524-P 70

"the portion of the resources used in furnis hing the service that re flects physician time and intensity in furnishing the service." A dditionally, the statute provides that the work component shall include activitie s that occur before and afte r direct patient contact. Furthermore, the statute specifies that with respect to surgical procedures, the valuation of the work component for the code must reflect a "global" concept in which pre-operative and post-operative physicians' se rvices related to the procedure are also

included. In addition, section 1848 (c)(2)(C)(i) of the Act specifies that "the Secretary shall

determine a number of work relative valu e units (RVUs) for the service based on the

relative resources inco rporating physician time and intens ity required in furnishing the

service." As discussed in de tail in sections I.A.2. and I. A.3. of this proposed rule, the

statute also defines the PE and malpractice components and provides specific guidance in

the calculation of the RVUs for each of thes e components. Section 1848(c)(1)(B) of the Act defines the PE component as "the porti on of the resources used in furnishing the service that reflects the genera l categories of expenses (such as office rent and wages of personnel, but excluding malpractice expe nses) comprising practice expenses." Section 1848(c)(2)(C)(ii) of th e Act specifies that the "S ecretary shall determine a number of practice expense relative value uni ts 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 Secr etary to conduct a periodic review, not less often than every 5 years, of the RVUs established under the PFS. On March 23, 2010, the Affordable Care Act was en acted, further requiri ng the Secretary to periodically identify and review and iden tify potentially misvalued codes, and makeCMS-1524-P 71

appropriate adjustments to the relative values of those services identified as being potentially misvalued. Section 3134(a) of th e Affordable Care Act added a new section 1848(c)(2)(K) of the Act which requires the Secretary to pe riodically identify potentially misvalued services using certain criteria, and to review and make appropriate adjustments

to the relative values for thos e services. Section 3134(a) of the Affordable Care Act 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 certain potenti ally misvalued codes under the PFS, identified using the same categorical crite ria used to identify potentially misvalued codes, and to make appropriate adjustments.

As discussed in section I.A.1. of this proposed rule, we generally establish physician work RVUs for new and revised codes based on our review of

recommendations received from the AMA RUC. We also receive recommendations from the AMA RUC regarding direct PE inputs for services, which we evaluate in order to develop the PE RVUs under the PFS. The AMA RUC also provides recommendations to

us on the values for codes that have been id entified as potentially mi svalued. To respond to concerns expressed by MedPAC, the C ongress, and other stakeholders regarding

accurate valuation of services under the PFS, the AMA RUC created the Five-Year Review Identification Workgroup in 2006. In addition to providing recommendations to us for work RVUs and physician times, th e AMA RUC's Practice Expense Subcommittee reviews direct PE inputs (clinical labor, me dical supplies, and medical equipment) for

individual services. In accordance with section 1848(c) of the Act, we determine appropriate adjustments to the RVUs, taking into acc ount the recommendations provided by theCMS-1524-P 72

AMA RUC and MedPAC, explain the basis of these adjustments, and respond to public comments in the PFS proposed and final rules. We note that secti on 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 the Congress, MedPAC noted that "misvalued

services can distort th e 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' servic es under the PFS can become misvalued over time for a number of reasons: For example, MedPAC stated, "when a new service is added to the physician fee schedule, it may be assigned a relatively high value because of the time, technical skill, and psychological stress that are of ten required to furnish that service. Over time, the work required for cer tain services would be expected to decline as physicians become more familiar with the se rvice and more efficient in furnishing it." That is, the amount of physician work needed to furnish an existi ng service may decrease when new technologies are incorporated. Se rvices can also become overvalued when practice expenses decline. This can happe n when the costs of equipment and supplies fall, or when equipment is used more freque ntly, reducing its cost per use. Likewise, services can become undervalued when physic ian work increases or practice expenses rise. In the ensuing years since MedPAC's 2006 report, additional groups of potentiallyCMS-1524-P 73

misvalued services have been identifie d by the Congress, CMS, MedPAC, the AMA RUC, and other stakeholders. In recent years CMS and the AMA RUC ha ve taken increasingly significant steps to address potentially misvalued codes. As MedPAC noted in its March 2009 Report to the Congress, in the interven ing years since MedPAC made the initial recommendations, "CMS and the AMA RUC have taken several step s to improve the review process." Most recently, section 1848(c)(2)(K)( ii) of the Act (as added by section 3134(a) of the Affordable Care Act) directed the Secretar y to specifically examine, as determined appropriate, potentially misvalued servic es in seven categories as follows:

● Codes and families of codes for which there has been the fastest growth.

● Codes or families of codes that have experienced substantial changes in practice expenses.

● Codes that are recently establishe d for new technologies or services.

● Multiple codes that are frequently b illed in conjunction with furnishing a single

service.

● Codes with low relative values, particul arly those that are often billed multiple times for a single treatment.

● Codes which have not been subject to review since the implementation of the RBRVS (the so-called 'Harvard-valued codes').

● Other codes determined to be appropriate by the Secretary. Section 1848(c)(2)(K)(iii) of the Act also specifies th at the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued servic es. In addition, the Secretary may conduct surveys, otherCMS-1524-P 74

data collection activities, studi es, or other analyses, as the Secretary determines to be appropriate, to facilitate the review and appropriate adjust ment of potentially misvalued

services. This section also authorizes the use of analytic contractors to identify and analyze potentially misvalue d codes, conduct surveys or collect data, and make recommendations on the review and appropria te adjustment of potentially misvalued services. Additionally, this section provides th at the Secretary may coordinate the review and adjustment of the RVUs with the period ic review described in section 1848(c)(2)(B) of the Act. Finally, secti on 1848(c)(2)(K)(iii)(V) of the Act specifies that the Secretary may make appropriate coding revisions (including using existing processes for consideration of coding changes) which may in clude consolidation of individual services into bundled codes for payment under the physician fee schedule. b. Progress in Identifying and Revi ewing Potentially Misvalued Codes Over the last several years, CMS, in conjunction with the AMA RUC, has

identified and reviewed nume rous potentially misvalued codes in all seven of the categories specified in section 1848(c)(2)(K)(ii) of the Act, a nd we plan to continue our work examining potentially misvalued codes in these areas over the upcoming years, consistent with the new legislative requirements on this issue. In th e current process, we request the AMA RUC to review potentially misvalued codes that we identify and make

recommendations on revised work RVUs and/or direct PE inputs for those codes to us. The AMA RUC, through its own processes, al so might identify and review potentially misvalued procedures. We then assess th e recommended revised work RVUs and/or direct PE inputs and, in accordance with secti on 1848(c) of the Act, we determine if the recommendations constitute appropriate adju stments to the RVUs under the PFS.CMS-1524-P 75

Since CY 2009, as a part of the annual potentially misvalued code review, we have reviewed over 700 potentially misvalued c odes to refine work RVUs and direct PE inputs in addition to continuing the comprehens ive Five-Year Review process. We have adopted appropriate work RVUs and direct PE inputs for these servi ces as a result of

these reviews. Our prior reviews of codes under the potentially misval ued codes initiative has included codes in all seven categories specified in section 1848(c)(2)(K )(ii) of the Act. That is, we have reviewed and assi gned more appropriate values to--

● Codes and families of codes for which there has been the fastest growth;

● Codes or families of codes that have experienced substantial changes in practice expenses;

● Codes that were recently establishe d for new technologies or services;

● Multiple codes that are frequently b illed in conjunction with furnishing a single service;

● Codes with low relative values, particul arly those that are often billed multiple times for a single treatment;

● Codes which had not been subject to review since the implementation of the RBRVS ('Harvard valued'); and

● Codes potentially misvalued as determined by the Secretary. In this last category, we have prev iously proposed policies in CYs 2009, 2010, and 2011, and requested that the AMA RUC re view codes for which there have been shifts in the site-of-service (that is, codes that were originally valued as being furnished in the inpatient setting, but that are now predominantly furnis hed on an outpatient basis),CMS-1524-P 76

as well as codes that qualify as "23-hour stay" outpatient serv ices (these services typically have lengthy hospital outpatient recovery periods). We note that a detailed discussion of the extensive prior reviews of potentially misvalued codes is included in the CY 2011 PFS final rule with comment period (75 FR 73215 through 73216). In CY 2011, we identified additional code s under section 1848(c )(2)(K)(ii) of the Act that we believe are ripe for review and referred them to the AMA RUC (75 FR 73215 through 73216). Specifically, we identified pot entially misvalued c odes in the category

of "Other codes determined to be appropriate by the Secretar y," referring lists of codes with low work RVUs but that are high volume based on claims data as well as targeted key codes that the AMA RUC uses as refere nce services for valuing other services, termed "multispecialty points of comparison" services. Since the publication of the CY 2011 PFS final rule with comment period, we

released the Fourth Five-Year Review of Work (76 FR 32410), which discussed the

identification and review of an additional 173 potentially misvalued codes. We initiated

the Fourth Five-Year Review of work RVUs by soliciting public comments on potentially

misvalued codes for all services included in the CY 2010 PFS final rule with comment period that was published in the Federal Register on November 25, 2009. In addition to the codes submitted by the commenters, we identified a number of potentially misvalued codes and requested the AMA RUC to re view and provide recommendations. Our identification of potentially mi svalued codes for the Fourth Five--Year Review focused on two Affordable Care Act categories: si te-of-service anomaly codes and ''Harvard

'valued' codes. As discussed in the Fourth Five-Year Review of Work (76 FR 32410), we

sent the AMA RUC an initial list of 219 code s for review. Consistent with our pastCMS-1524-P 77

practice, we requested the AMA RUC to review codes on a "family" ba sis rather than in isolation in order to ensure that appropria te relativity in the system was retained. Consequently, the AMA RUC included additional codes for review, resu lting in a total of

290 codes for the Fourth Five-Year Review of Work. Of those 290 codes, 53 were subsequently sent to the CPT Editorial Pane l to consider coding changes, 14 were not reviewed by the AMA RUC (and subsequently not reviewed by us) because the specialty society that had originally requested the review in its public comments on the CY 2010 PFS final rule with comment period elected to withdraw the codes, 36 were not reviewed by the AMA RUC because their values were se t as interim final in the CY 2011 PFS final rule with comment period, and 14 were not reviewed by us because they were

noncovered services under Medi care. Therefore, the AMA RUC reviewed 173 of the 290 codes initially identified for the Fourth Fi ve-Year Review of Wo rk, and provided the

recommendations that were addressed in deta il in the Fourth Five-Y ear Review of Work (76 FR 32410). In addition, under the Fourth Five-Year Review of Work, we reviewed recommendations for five additional potentially misvalued codes from the Health Care Professionals Advisory Committee (HCP AC), a deliberative body of nonphysician practitioners that also convenes during th e AMA RUC meeting. The HCPAC represents physician assistants, chiropractors, nurses, o ccupational therapists, optometrists, physical therapists, podiatrists, psychologists, audiol ogists, speech pathologists, social workers, and registered dieticians. In summary, since CY 2009, CMS and th e AMA RUC have a ddressed a number of potentially misvalued codes. For CY 2009, the AMA RUC recommended revised work values and/or PE inputs for 204 misv alued services (73 FR 69883). For CY 2010,CMS-1524-P 78

an additional 113 codes were identified as misvalued and the AMA RUC provided us

new recommendations for revised work RVUs a nd/or PE inputs for these codes to us as

discussed in the CY 2010 PFS final rule with comment period (74 FR 61778). For CY 2011, CMS reviewed and adopted more a ppropriate values for 209 codes under the annual review of potentially misvalued codes. For CY 2012, we recently released the Fourth Five-Year Review of Work, which discussed the review of 173 potentially misvalued codes and proposed appropriate adju stments to RVUs. In section II.B.5.of this proposed rule, we also provide a list of codes identified for futu re consideration as part of the potentially misvalued codes initiative, that is , in addition to the c odes that are part of

the Fourth Five-Year Review of Work, as discussed in that section, we are requesting the

AMA RUC review these codes and submit recommendations to us. c. Validating RVUs of Po tentially Misvalued Codes In addition to identifying and review ing potentially misvalued codes, section 3134(a) of the Affordable Care Act added a new section 1848(c)(2)(L) of the Act, which specifies that the Secretary shall establish a formal process to validate RVUs value units under the PFS. The validation process may incl ude validation of work elements (such as time, mental effort and professional judgme nt, 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-se rvice components of work. The Secretary is directed to validate a sampling of the work RVUs of codes identi fied through any of the seven categories of potentially misvalued codes specified by section 1848(c)(2)(K)(i i) of the Act. Furthermore, the Secretary may conduct the validation using methods similar to those used to review potentially misvalued codes, including conducting surveys, other dataCMS-1524-P 79

collection activities, studies, or other anal yses as the Secretary determines to be appropriate to facilitate the valid ation of RVUs of services. In the CY 2011 PFS proposed rule (75 FR 40068), we solicited public comments on possible approaches and me thodologies that we should consider for a validation process. We received a number of co mments regarding possible approaches and methodologies for a validation process. As di scussed in the CY 2011 PFS final rule with comment period (75 FR 73217), some commenters were skeptical that there could be viable alternative methods to the existing AMA RUC code review process for validating physician time and intensity that would preser ve the appropriate relativity of specific physician's services under the current paym ent system. These commenters generally urged us to rely solely on the AMA RUC to provide valuations for services under the

PFS. While a number of commenters strongly opposed our plans to develop a formal validation process, many other commenters expressed support for the development and establishment of a system-wide validation proc ess of the work RVUs under the PFS. As

noted in the CY 2011 PFS final rule with comment period (75 FR 73217 through 73218), these commenters commended us for seeking new approaches to validation, as well as being open to suggestions from the public on this process. A number of commenters submitted technical advice and offered their time and expertise as resources for us to draw upon in any examination of possible appr oaches to developing a formal validation

process. However, in response to our solicitati on of comments regarding time and motion studies, a number of commenters opposed the approach of using time and motion studiesCMS-1524-P 80

to validate estimates of physician time and intensity, stating that properly conducted time and motion studies are extraordinarily expens ive and, given the thousands of codes paid under the PFS, it would be unlikely that all code s could be studied. As we stated in the CY 2011 PFS final rule with comment peri od (75 FR 73218), we understand that these studies would require significant resources a nd we remain open to suggestions for other approaches to developing a formal validation process. We note that MedPAC suggested in its comment letter (75 FR 73218) that we should consider "collecting data on a recurring basis from a cohort of practices and other facilities where physicians and nonphysician clinical practitioners work.'' As we stated previ ously, we intend to establish a more extensive validation process of RV Us in the future in accordance with the requirements of section 1848(c )(2)(L) of the Act.

While we received a modest number of comments specifically addressing technical and methodological as pects of developing a validat ion system, we believe it would be beneficial to provide an additio nal opportunity for stakeholders to submit comments on data sources and possible me thodologies for developing a system-wide validation system. We are part icularly interested in comments regarding data sources and studies which may be used to validate estima tes of physician time and intensity that could be factored into the work RVUs, especially for services with rapid growth in Medicare expenditures, which is one of the Affordab le Care Act categories that the statute specifically directs us to examine. We ar e also soliciting comments regarding MedPAC's suggestion of "collecting data on a recurring basis from a cohort of practices and other facilities where physicians and nonphysician clinical practitio ners work.''CMS-1524-P 81

We plan to discuss the validation process in more detail in a future PFS rule once

we have considered the matter further in co njunction with the pub lic comments received on the CY 2011 rulemaking, as well as this proposed rule. We note that any proposals we would make on the formal validation pro cess would be subject to public comment,

and we would consider those comments before finalizing the policies. 3. Consolidating Reviews of Potentially Misvalued Codes As previously discussed, we are statut orily required to review the RVUs of services paid under the PFS no less often than every 5 years. In the past, we have satisfied this requirement by conducting period ic reviews of work, PE, and malpractice RVUs for established services every 5 y ears in what is commonly known as CMS' Five-Year Reviews of Work, PE, and Ma lpractice RVUs. Recently, on May 24, 2011, we released the proposed notice regarding the Fourth Five-Year Review of Work RVUs. The most recent comprehensive Five-Year Re view of PE RVUs occurred for CY 2010; the same year we began using the Physician Practice Information Survey (PPIS) data to update the PE RVUs. The last Five-Year Revi ew of Malpractice R VUs also occurred for

CY 2010. These Five-Year Reviews have hist orically included codes identified and nominated by the public for review, as we ll as those identified by CMS and the AMA

RUC. In addition to the Five-Year Reviews, beginning for CY 2009, CMS and the

AMA RUC have identified and reviewed a nu mber of potentially misvalued codes on an annual basis using various identification screens, such as codes with high growth rates, codes that are frequently bill ed together in one encounter, and codes that are valued as inpatient services but that are now predominat ely furnished as outpatient services. TheseCMS-1524-P 82

annual reviews have not include d codes identified by the public as potentially misvalued since historically, the public has the opportunity to submit potentially misvalued codes during the Five-Year Review process. With the enactment of the Affordable Care Act in 2010, which endorsed our initiative to identify and review poten tially misvalued codes and emphasized the importance of our ongoing work in this area to improve accuracy a nd appropriateness of payments under the PFS, we believe that cont inuing the annual identif ication and review of potentially misvalued codes is necessary. Given that we are engaging in extensive reviews of work RVUs and direct PE inputs of potentially misvalued codes on an annual basis, we believe that separa te and "freestanding" Five-Y ear Reviews of Work and PE may have become redundant with our annua l efforts. Therefore, for CY 2012 and forward, we propose to consolidate the formal Five-Year Review of Work and PE with the annual review of potentially misvalued code s. That is, we would begin meeting the statutory requirement to review work and PE RVUs for potentially misvalued codes at least once every 5 years through an annual proc ess, rather than once every 5 years. Furthermore, to allow for public input and to preserve the public's ab ility to identify and nominate potentially misvalued codes for re view, we are proposing a process by which the public could submit codes for our potential review, al ong with supporting documentation, on an annual basis. Our review of these codes would be incorporated into our potentially misvalued codes initiative. This propos al is further discussed in section II.B.4. of this proposed rule. We are soliciting comments on our proposal to

consolidate the formal Five-Year Reviews of Work and PE with the annual review of potentially misvalued codes.CMS-1524-P 83

We note that while we are proposing to review the physician work RVUs and direct PE inputs of potentially misvalued c odes on an annual basis, we are not proposing at this time to review malpractice RVUs on an annual basis. As discussed in section II.D. of this proposed rule, in ge neral, malpractice RVUs are based on malpractice insurance premium data on a specialty level. The la st comprehensive review and update of the malpractice RVUs occurred for CY 2010 using data obtained from the PPIS data. Since

it is not feasible to conduct such extensive physician su rveys to obtain updated specialty level malpractice insuran ce premium data on an annua l basis, we believe the comprehensive review of malpractice RVUs should continue to occur at 5-year intervals Furthermore, in identifying and review ing potentially misvalued codes on an annual basis, we note that this new proposed process presents us w ith the opportunity to review simultaneously both the work RVUs a nd the direct PE inputs, in conjunction, for each code. Heretofore, the work RVUs and direct PE inputs of potentially misvalued codes were commonly reviewed separately and at different times. For example, a code may have been identified as potentially misvalued based sole ly on its work RVUs so the

AMA RUC would have reviewed the code a nd provided us with recommendations on the physician times and work RVUs. However, th e code's direct PE inputs would not have necessarily been reviewed c oncurrently and therefore, the AMA RUC would not have necessarily provided us with recommendations fo r any changes in the di rect PE inputs of the code that could have been necessary to ensure that the PE RVUs of the code are determined more appropriately. Therefore, while this code may have been recently

reviewed and revised under th e potentially misvalued codes initiative for physician work, the PE component of the code could still be potentially misvalued. Going forward, weCMS-1524-P 84

believe combining the review of both physician work and PE for each code under our potentially misvalued codes initiative will more accurately align the review of these

codes and lead to more accurate and a ppropriate payments under the PFS. Finally, it is important to note that the c ode-specific resource based relative value framework under the PFS system is one in which services are ra nked relative to each other. That is, the work RVUs assigned to a code are based on the physician time and intensity expended on that particular serv ice as compared to the physician time and intensity of the other services paid under the PFS. This concept of relativity to other services also applies to the PE RVUs, pa rticularly when it comes to reviewing and assigning correct direct PE inputs that are relative to other similar services. Consequently, we are emphasizing the need to re view codes that are id entified as part of the potentially misvalued initiative to ensure that appropriate relativ ity is constructed and maintained in several key relationships:

● The work and PE RVUs of codes ar e ranked appropriately within the code family. That is, the RVUs of services with in a family should be ranked progressively so

that less intensive services and/or services that require less physic ian time and/or require fewer or less expensive direct PE inputs should be assigned lower work or PE RVUs relative to other codes within the family. Fo r example, if a code for treatment of elbow

fracture is under review unde r the potentially misvalued codes initiative, we would expect the work and PE RVUs for all the codes in the family also be reviewed in order to ensure that relativity is a ppropriately constructed and maintained within this family. Furthermore, as we noted in the CY 2010 PFS final rule with comment period (74 FR 61941), when we submit codes to th e AMA RUC and request their review, inCMS-1524-P 85

order to maintain relativity, we emphasized th e importance of reviewing the base code of a family. The base code is the most important code to review because it is the basis for

the valuation of other codes w ithin the family and allows for all related codes to be reviewed at the same time (74 FR 61941).

● The work and PE RVUs of codes are appropriately relative based on comparison of physician time and/or intensity and/or direct inputs to other services furnished by physicians in the same speci alty. To continue the example shown previously, if a code for treatment of elbow fracture is under review, we would expect this code to be compared to other codes, su ch as codes for treatment of humerus fracture, or other codes furnished by physicians in the sa me specialty, in order to ensure that the work and PE RVUs are appropriate ly relative within the specialty.

● The work and PE RVUs of codes are ap propriately relative when compared to services across specialties. While it may be challenging to compare codes that describe completely unrelated services, since the en tire PFS is a budget neutral system where payment differentials are dependent on the re lative differences between services, it is essential that services across sp ecialties are appropriately valu ed relative to each other. To illustrate the point, if a service furnis hed primarily by dermatology is analogous in physician time and intensity to another service furnished primarily by allergy/immunology, then we would expect the work RVUs for the two services to be similar, even though the two services may be otherwise unrelated. 4. Proposed Public Nomination Process Under the previous Five-Year Review s, the public was provided with the opportunity to nominate potentially misvalue d codes for review. To allow for publicCMS-1524-P 86

input and to preserve the pub lic's ability to identify and nominate potentially misvalued codes for review under our annual potentia lly misvalued codes initiative, we are proposing a process by which on an annual ba sis the public could submit codes, along with documentation supporting th e need for review. We are proposing that stakeholders may nominate potentially misvalued code s by submitting the code with supporting documentation during the 60-day public comm ent period following the release of the annual PFS final rule with comment peri od. We would evaluate the supporting

documentation and decide whether the nominated code should be reviewed as potentially misvalued during the following year. If we we re to receive an overwhelming number of nominated codes that qualifie d as potentially misvalued in any given year, we would prioritize the codes for review and could d ecide to hold our review of some of the potentially misvalued codes for a future year . We note that we may identify additional potentially misvalued codes for review by the AMA RUC based on the seven statutory categories under section 1848(c )(2)(K)(ii) of the Act. We encourage stakeholders who believe they have identified a potentially misvalued code, supported by documentation, to nominate codes through the public process. We emphasize that in order to en sure that a nominated code will be fully considered to qualify as a pot entially misvalued code to be reviewed under our annual process, accompanying documentation must be provided to show evid ence of the code's inappropriate valuation, either in terms of inappropriate physician times, work RVUs, and/or direct PE inputs. The AMA RUC developed certain "Guidelines for Compelling

Evidence" for the Third Five-Year Review wh ich we believe could be applicable for members of the public as they gather supporting documentation for codes they wish toCMS-1524-P 87

publicly nominated for the annual review of potentially misvalued codes. The specific

documentation that we would seek under this proposal includes the following:

● Documentation in the peer reviewed me dical literature or other reliable data that there have been changes in physician wo rk due to one or more of the following: ++ Technique. ++ Knowledge and technology. ++ Patient population.

++ Site-of-service. ++ Length of hospital stay. ++ Physician time.

● An anomalous relationship between th e code being proposed for review and other codes. For example, if code "A" desc ribes a service that requires more work than codes "B," "C," and "D," but is neverthele ss valued lower. The commenter would need to assemble evidence on service time, technical skill, patient severity, complexity, length of stay and other factors for the code bei ng considered and the codes to which it is compared. These reference services ma y be both inter- and intra-specialty.

● Evidence that technology has changed physician work, that is, diffusion of technology.

● Analysis of other data on time and e ffort measures, such as operating room logs or national and other representative databases.

● Evidence that incorrect assumptions were made in the previous valuation of the service, such as a misleading vignette, surv ey, or flawed crosswalk assumptions in a previous evaluation;CMS-1524-P 88

● Prices for certain high cost supplies or other direct PE inputs that are used to

determine PE RVUs are inaccurate a nd do not reflect current information.

● Analyses of physician time, work RVU, or direct PE inputs using other data sources (for example, Department of Vete ran Affairs (VA) National Surgical Quality Improvement Program (NSQIP), the Societ y for Thoracic Surgeons (STS), and the Physician Quality Reporting Initiative (PQRI) databases).

● National surveys of physician time and intensity from professional and management societies and organizati ons, such as hospital associations.

We note that when a code is nomin ated, and supporting documentation is provided, we would expect to receive a de scription of the reasons for the code's misvaluation with the submitted materials. That is, we would require a description and summary of the evidence is required that shows how the service may have changed since the original valuation or may have been in appropriately valued due to an incorrect assumption. We would also appreciate specific Federal Register citations, if they exist,

where commenters believe the nominated codes were previously valu ed erroneously. We are also proposing to consid er only nominations of activ e codes that are covered by

Medicare at the time of the nomination.

After we receive the nominated c odes during the 60-day comment period following the release of the annual PFS fina l rule with comment period, we intend to review the supporting documentation and determin e whether they appear to be potentially misvalued codes appropriate for review under the annual process. We are proposing that, in the following PFS proposed rule, we would publish a list of the c odes received under the public nomination process during the prev ious year and indicat e whether the codesCMS-1524-P 89

would be included in our annua l review of potentially misval ued codes. We would also

indicate the codes that we w ould not be including in our a nnual review, whether due to

insufficient documentation or for other reasons . Under this proposed process, the first opportunity for the public to nominate codes would be during the public comment period

for the CY 2012 PFS final rule with comment period. We would publish in the CY 2013 PFS proposed rule, the list of nominated codes, and whether they will be reviewed as potentially misvalued codes. We would re quest the AMA RUC review these potentially misvalued codes identified by the public, along with any other codes identified by us, and provide to us recommendations for appropriate physician times, work RVUs, and direct PE inputs. We are soliciting public comment s on this proposed code nomination process and we will consider any suggestions to modify and improve the proposed process.

5. CY 2012 Identification and Review of Potentially Misvalued Services

a. Code Lists While we anticipate receiving nominati ons from the public for potentially misvalued codes in conjunction with rulemaki ng, we believe it is imperative that we

continue the work of the review initiatives over the last severa l years and drive the agenda forward to identify, review, and adjust values for potentially misvalued codes for

CY 2012. In the CY 2011 PFS proposed rule (75 FR 40068 through 40069), we identified, and referred to the AMA RUC, a list of pot entially misvalued code s in three areas:

● Codes on the AMA RUC's multi-specia lty points of comparison (MPC) list (used as reference codes in th e valuation of other codes),CMS-1524-P 90

● Services with low work RVUs that are billed in multiples (a statutory category); and

● Codes that have low work RVUs fo r which CMS claims data show high volume (that is, high utilization of these codes represents a significant dollar impact in the payment system). Our understanding is that the AMA RUC is currently working towards reviewing these codes at our request. We intend to provide an update and discuss any RVU adjustments to codes that have been identif ied as potentially misvalued in the CY 2012 PFS final rule, as they move through the review process. Meanwhile, for CY 2012, we are continuing with the work to identify and review

additional services under the potentially misvalued codes initi ative. Stakeholders have noted that many of the services previously identified under the pot entially misvalued

codes initiative were concentr ated in certain specialties. To develop a robust and representative list of codes fo r review under the potentially mi svalued codes initiative, we examined the highest PFS expenditure services by specialty (based on our most recently available claims data and using the specialty categories listed in the PFS specialty impact table, see Table 64 in section VII.B. of this proposed rule) and identified those that have not been reviewed since CY 2006 (which was the year we completed the Third Five-Year Review of Work and before we began our potentially misvalued codes initiative). In our examination of the highest PFS e xpenditure codes for each specialty (we used the specialty categories listed in the PFS specialty impact table, see Table 64 in section VII.B. of this proposed rule), we noted that E/M services consistently appeared in the top 20 high PFS expenditure services. We noted as well that most of the E/MCMS-1524-P 91

services have not been reviewed since the co mprehensive review of services for the Third

Five-Year Review of Work in CY 2006. Theref ore, after an examin ation of the highest PFS expenditure codes for each specialty, we ha ve developed two code lists of potentially misvalued codes which we are proposing to refer to the AMA RUC for review. First, we are requesting that the AMA RUC conduct a comprehensive review of all E/M codes, including the codes listed in Table 6. During the inte rvening years, there has been significant interest in delivery syst em reform, such as patient-centered medical homes and making the primary care physician th e focus of managing the patient's chronic

conditions. The chronic condi tions challenging the Medica re population include heart disease, diabetes, respirator y disease, breast cancer, alle rgy, Alzheimer's disease, and

factors associated with obesit y. Thus, as the focus of prim ary care has evolved from an episodic treatment-based orientation to a fo cus on comprehensive patient-centered care management in order to meet the challenges of preventing and managing chronic disease,

we believe a more current review of E/M codes is warranted. We note that although physicians in primary care specialties bill a hi gh percentage of their services using the E/M codes, physicians in non-primary care spec ialties also bill these codes for some of

their services. Since we believe the focus of primary car e has evolved to meet the challenges of preventing and managing chronic disease since the last comprehensive review of the E/M codes, we would like the AMA RUC to prioritiz e review of the E/M codes and provide us with recommendations on the physician times, work RVUs and direct PE inputs of at

least half of the E/M codes lis ted in Table 6 by July 2012 in order for us to include any

revised valuations for these codes in the CY 2013 PFS final rule with comment period.CMS-1524-P 92

We would expect the AMA RUC to review th e remaining E/M codes listed in Table 6 by July 2013 in order for us to complete the co mprehensive re-evaluation of E/M services

and include the revised valuations for thes e codes in the CY 2014 PFS final rule with comment period.

TABLE 6: E/M CODES REFE RRED FOR AMA RUC REVIEW

CPT Code Short Descriptor 99201 Office/outpatient visit new 99202 Office/outpatient visit new 99203 Office/outpatient visit new 99204 Office/outpatient visit new 99205 Office/outpatient visit new 99211 Office/outpatient visit est 99212 Office/outpatient visit est 99213 Office/outpatient visit est 99214 Office/outpatient visit est 99215 Office/outpatient visit est 99217 Observation care discharge 99218 Initial observation caree 99219 Initial observation care 99220 Initial observation care 99221 Initial hospital care 99222 Initial hospital care 99223 Initial hospital care 99224 Subsequent observation care 99225 Subsequent observation care 99226 Subsequent observation care 99231 Subsequent hospital care 99232 Subsequent hospital care 99233 Subsequent hospital care 99234 Observ/hosp same date 99235 Observ/hosp same date 99236 Observ/hosp same date 99238 Hospital discharge day 99239 Hospital discharge day 99281 Emergency dept visit 99282 Emergency dept visit 99283 Emergency dept visit 99284 Emergency dept visit 99285 Emergency dept visit 99291 Critical care first hour 99292 Critical care addl 30 min 99304 Nursing facility care init 99305 Nursing facility care initCMS-1524-P 93

CPT Code Short Descriptor 99306 Nursing facility care init 99307 Nursing fac care subseq 99308 Nursing fac care subseq 99309 Nursing fac care subseq 99310 Nursing fac care subseq 99315 Nursing fac discharge day 99316 Nursing fac discharge day 99318 Annual nursing fac assessmnt 99324 Domicil/r-home visit new pat 99325 Domicil/r-home visit new pat 99326 Domicil/r-home visit new pat 99327 Domicil/r-home visit new pat 99328 Domicil/r-home visit new pat 99334 Domicil/r-home visit est pat 99335 Domicil/r-home visit est pat 99336 Domicil/r-home visit est pat 99337 Domicil/r-home visit est pat 99341 Home visit new patient 99342 Home visit new patient 99343 Home visit new patient 99344 Home visit new patient 99345 Home visit new patient 99347 Home visit est patient 99348 Home visit est patient 99349 Home visit est patient 99350 Home visit est patient 99354 Prolonged service office 99355 Prolonged service office 99356 Prolonged service inpatient 99357 Prolonged service inpatient 99406 Behav chng smoking 3-10 min 99407 Behav chng smoking > 10 min 99460 Init nb em per day hosp 99461 Init nb em per day non-fac 99462 Sbsq nb em per day hosp 99463 Same day nb discharge 99464 Attendance at delivery 99465 Nb resuscitation 99466 Ped crit care transport 99467 Ped crit care transport addl 99468 Neonate crit care initial 99469 Neonate crit care subsq 99471 Ped critical care initial 99472 Ped critical care subsq 99475 Ped crit care age 2-5 init 99476 Ped crit care age 2-5 subsq 99477 Init day hosp neonate care 99478 Ic lbw inf < 1500 gm subsqCMS-1524-P 94

CPT Code Short Descriptor 99479 Ic lbw inf 1500-2500 g subsq 99480 Ic inf pbw 2501-5000 g subsq 92002 Eye exam new patient 92004 Eye exam new patient 92012 Eye exam established pat 92014 Eye exam & treatment

Second, we are also providing a select li st of high PFS expenditure procedural codes representing services furnished by an ar ray of specialties, as listed in Table 7. These procedural codes have not been re viewed since CY 2006 (before we began our potentially misvalued codes initiatives in CY 2008) and, based on the most recently available data, have CY 2010 allowed charges of greater than $10 million at the specialty level (based on the specialty categories listed in the PFS specialty impact table and CY 2010 Medicare claims data). A number of the codes in Table 7 would not otherwise be identified as poten tially misvalued services using the screens we have used in recent years with the AMA RUC or based on one of the six specific stat utory categories under section 1848(c)(2)(k)(i i) of the Act. However, we id entified the potentially misvalued

codes listed in Table 7 under the seventh st atutory category, "other codes determined to be appropriate by the Secretary." We select ed these codes based on the fact that they have not been reviewed for at least 6 years, and in many cases the last review occurred more than 10 years ago. They represent high Medicare expenditures under the PFS; thus, we believe that a review to assess changes in physician work and update direct PE inputs is warranted. Furthermore, since these c odes have significant impact on PFS payment on a specialty level, a review of the relativity of the code to ensure that the work and PE RVUs are appropriately relative within the sp ecialty and across speci alties, as discussed previously, is essential. Fo r these reasons, we have identi fied these codes as potentiallyCMS-1524-P 95

misvalued and are requesting that the AMA RU C review the codes listed in Table 7 and provide us with recommendations on the physic ian times, work RVUs and direct PE inputs in a timely manner. That is, similar to our request for the AMA RUC to review E/M codes in a timely manner, we are requesti ng that the AMA RUC review at least half of the procedural codes listed in Table 7 by July 2012 in order for us to include any

revised valuations for these codes in the CY 2013 PFS final rule with comment period.

TABLE 7: SELECT LIST OF PR OCEDURAL CODES REFERRED FOR AMA RUC REVIEW CPT Code Short Descriptor 95117 Immunotherapy Injections 33533 Cabg, Arterial, Single 33405 Replacement Of Aortic Valve 33430 Replacement Of Mitral Valve 93015 Cardiovascular Stress Test 93880 Extracranial Study 93000 Electrocardiogram, Complete 17311 Mohs, 1 Stage, H/N/Hf/G 17312 Mohs Addl Stage 17004 Destroy Premlg Lesions 15+ 45378 Diagnostic Colonoscopy 43235 Uppr Gi Endoscopy, Diagnosis 47562 Laparoscopic Cholecystectomy 47563 Laparo Cholecystectomy/Graph 49505 Prp I/Hern Init Reduc >5 Yr 96413 Chemo, Iv Infusion, 1 Hr 96367 Tx/Proph/Dg Addl Seq Iv Inf 96365 Ther/Proph/Diag Iv Inf, Init 62311 Inject Spine L/S (Cd) 35476 Repair Venous Blockage 36870 Percut Thrombect Av Fistula 35475 Repair Arterial Blockage 95903 Motor Nerve Conduction Test 95819 Eeg, Awake And Asleep 95861 Muscle Test, 2 Limbs 22612 Lumbar Spine Fusion 63047 Removal Of Spinal Lamina 22851 Apply Spine Prosth Device 76830 Transvaginal Us, Non-ObCMS-1524-P 96

CPT Code Short Descriptor 67028 Injection Eye Drug 92235 Eye Exam With Photos 66982 Cataract Surgery, Complex 27447 Total Knee Arthroplasty 27130 Total Hip Arthroplasty 27236 Treat Thigh Fracture 69210 Remove Impacted Ear Wax 31237 Nasal/Sinus Endoscopy, Surg 88342 Immunohistochemistry 88112 Cytopath, Cell Enhance Tech 88312 Special Stains Group 1 97140 Manual Therapy 90862 Medication Management 90801 Psy Dx Interview 90805 Psytx, Off, 20-30 Min W/E&M 94720 Monoxide Diffusing Capacity 94240 Residual Lung Capacity 77014 Ct Scan For Therapy Guide 77301 Radiotherapy Dose Plan, Imrt 77421 Stereoscopic X-Ray Guidance 70450 Ct Head/Brain W/O Dye 70553 Mri Brain W/O & W/Dye 72148 Mri Lumbar Spine W/O Dye 20610 Drain/Inject, Joint/Bursa 53850 Prostatic Microwave Thermotx 50590 Fragmenting Of Kidney Stone 76872 Us, Transrectal 35301 Rechanneling Of Artery 98941 Chiropractic Manipulation 98940 Chiropractic Manipulation 98942 Chiropractic Manipulation 90806 Psytx, Off, 45-50 Min 90818 Psytx, Hosp, 45-50 Min 90808 Psytx, Office, 75-80 Min 72141 Mri Neck Spine W/O Dye 73221 Mri Joint Upr Extrem W/O Dye 70551 Mri Brain W/O Dye 92083 Visual Field Examination(S) 97530 Therapeutic Activities 97112 Neuromuscular Reeducation 97001 Pt Evaluation

b. Specific CodesCMS-1524-P 97

On an ongoing basis, public stakeholders (including physician specialty societies, beneficiaries, and other members of the public) bring concerns to us regarding direct PE inputs and physician work. In the past, we would consider these concerns and address them through proposals in annual rulemaking, tec hnical corrections, or by requesting that

the AMA RUC consider the issue. Since last year's rulemaking, the public has brought a series of issues to our attention that relate directly to direct PE inputs and physic ian work. We believe that some of these issues will serve as exampl es of codes that might be brought forward by the public as potentially misvalued in th e proposed nomination process as discussed previously in section II.B .4. of this proposed rule. (1) Codes Potentially Requiring Updates to Direct PE Inputs

Abdomen and Pelvis CT. For CY 2011, AMA CPT created a series of new codes

that describe combined CTs of the abdome n and pelvis. Prior to 2011, these services would have been billed using multiple sta nd- alone codes for each body region. The new codes are: 74176 (Computed tomography, a bdomen and pelvis; without contrast material); 74177 (Computed tomography, abdomen and pelvis; with contrast material); and 74178 (Computed tomography, abdomen and pelv is; without contrast material in one or both body regions, followed by with contrast material(s) and further sections in one or both body regions.)

As stated in the CY 2011 PFS final rule with comment period (75 FR 73350), we accepted the AMA RUC- recommended direct PE inputs for these codes, with refinements to the equipment minutes to assure that the time associated with the equipment items reflected the time during th e intra-service period when a clinician isCMS-1524-P 98

using the piece of equipment, plus any a dditional time the piece of equipment is not available for use for another patient due to its use during the designated procedure. We believe that the direct PE inputs of the new codes reflect the typica l resources required to furnish the services in question. However, stakeholders have alerted us that the resulting PE RVUs for the new

codes reflect an anomalous rank order in comparison to the previously existing stand-alone codes. Specifi cally, the PE RVUs for the co des that describe CT scans without contrast for either body region ar e greater than the PE RVUs for 74176, which describes a CT scan of both body regions. We believe that the anomalous rank order of the PE RVUs for this series of codes may be the result of outdated direct PE inputs for the previously existing stand -alone codes. The physician work for those codes was last reviewed by the AMA RUC during the Third Five-Year Review of Work for CY 2007. However, the direct PE inputs for the c odes have not been reviewed since 2003. Therefore, we are requesting that the AMA RUC review the both the direct PE inputs and work values of the following codes in accord ance with the consolidated approach to reviewing potentially misvalued codes as out lined in section II.B.2.c. of this proposed

rule:

● 72192 Computed tomography, pelv is; without contrast material

● 72193 Computed tomography, pelv is; with contrast material(s)

● 72194 Computed tomography, pelvis; w ithout contrast material, followed by contrast material(s) and further sections

● 74150 Computed tomography, abdome n; without contrast material

● 74160 Computed tomography, abdome n; with contrast material(s)CMS-1524-P 99

● 74170 Computed tomography, abdomen; without contrast material, followed by contrast material(s) and further sections Tissue Pathology. A stakeholder informed us that the direct PE inputs associated with a particular tissue examination code ar e atypical. Specifically, the stakeholder suggested that the AMA RUC re lied upon an atypical clinical vignette in identifying the direct PE inputs for the serv ice associated with CPT code 88305 (Level IV - Surgical pathology, gross and microscopic examinati on Abortion - spontaneous/missed, Artery, biopsy, Bone marrow, biopsy, Bone exostosis, Brain/meninges, other than for tumor resection, Breast, biopsy, not requiring microscopic evaluati on of surgical margins, Breast, reduction mammoplasty, Bronchus , biopsy, Cell block, any source, Cervix, biopsy, Colon, biopsy, Duodenum, biopsy, Endocer vix, curettings/biopsy, Endometrium, curettings/biopsy, Esophagus, biopsy, Extremity, amputation, traumatic, Fallopian tube, biopsy, Fallopian tube, ectopic pregnancy, Femoral head, fracture, Fingers/toes, amputation, non-traumatic, Gingiva/oral mucosa , biopsy, Heart valve, Joint, resection, Kidney, biopsy, Larynx, biopsy, Leiomyoma(s) , uterine myomectomy - without uterus, Lip, biopsy/wedge resection, Lung, transbr onchial biopsy, Lymph node, biopsy, Muscle, biopsy, Nasal mucosa, biopsy, Nasophar ynx/oropharynx, biopsy, Nerve, biopsy, Odontogenic/dental cyst, Omentum, biopsy, Ov ary with or without tube, non-neoplastic, Ovary, biopsy/wedge resection, Parathyroid gland, Peritoneum, biopsy, Pituitary tumor, Placenta, other than third trimester, Pl eura/pericardium - biopsy/tissue, Polyp, cervical/endometrial, Polyp, colo rectal, Polyp, stomach/small intestine, Prostate, needle biopsy, Prostate, TUR, Salivary gland, biopsy, Sinus, paranasal biopsy, Skin, other than cyst/tag/debridement/plastic repair, Small intestine, biopsy, Soft tissue, other thanCMS-1524-P 100

tumor/mass/lipoma/debridement, Spleen, St omach, biopsy, Synovium, Testis, other than tumor/biopsy/castration, Thyroglossal duct/ brachial cleft cyst, Tongue, biopsy, Tonsil, biopsy, Trachea, biopsy, Ureter, biopsy, Urethra, biopsy, Urin ary bladder, biopsy, Uterus,

with or without tubes and ova ries, for prolapse, Vagina, bi opsy, Vulva/labia, biopsy). The stakeholder claims that in furnishing the typical service, the required material includes a single block of tissu e and 1-3 slides. The stakeh older argues that the typical costs for the service amount is approximat ely $18, but the PE RVUs for 2011 result in a national payment rate of $69.65 for the technical component of the service. Because the direct PE inputs associated with this code have not been reviewed since 1999, we are asking that the AMA RUC review both the direct PE inputs and work values of this code as soon as possible in accordance with the co nsolidated approach to reviewing potentially

misvlaued codes as outlined in section II.B.2.c . of this proposed rule though the work for this code was reviewed in April 2010. In Situ Hybridization Testing . We received comments from the Large Urology Group Practice Association (LUGPA) regard ing two new cytopathology codes that describe in situ hybridization testing of urine specimens. Prior to CY 2011, all in situ hybridization testing was code d and billed using CPT Code s 88365 (In situ hybridization (eg, FISH), each probe), 88367 (Morphometr ic analysis, in situ hybridization (quantitative or semi-quantitative) each probe ; using computer-assisted technology) and 88368 (Morphometric analysis, in situ hybridizat ion (quantitative or semi-quantitative) each probe; manual). The appropriate CPT code listed would be billed one time for each probe used in the performance of the test, re gardless of the medium of the specimen (that is, blood, tissue, tumor, bone marrow or urine).CMS-1524-P 101

For CY 2011, the AMA's CPT Editorial Panel created two new cytopathology codes that describe in situ hybridization testing using urine samples: CPT code 88120 (Cytopathology, in situ hybridization (eg, FISH), urinary tract specimen with morphometric analysis, 3-5 molecular probe s, each specimen; manual) and CPT code 88121 (Cytopathology, in situ hybridization (eg, FISH), urinary tract specimen with morphometric analysis, 3-5 molecular probes, each specimen; using computer-assisted technology). Because the descriptors indicate that th e new codes account for approximately 4 probes, whereas 88367 and 88368 describe each probe, there are more PE RVUs

associated with the new codes than with the previously existing code s that are currently still used for any specimen except for urine. However, because th e previously existing codes are billed per probe, the payment for a test using a different specimen type could vary depending upon the number of probes. Fo r example, a practitioner furnishing a test involving a blood specimen and using two probes would bill CPT code 88368 (total RVUs: 6.28) three times with the result of 18.84 RVUs. A practitioner furnishing the same test but using a urine sample instead of a blood sample would receive payment

based on the 13.47 RVUs associated with CPT code 88120. CMS accepted the RUC- recommended work va lues and direct PE inputs, without refinement, for the two new cytopathology code s that describe in situ hybridization testing using urine samples. We have revi ewed the direct PE recommendations made by the AMA RUC and, at this time, believ e that these input s are appropriate. However, we share LUGPA's concer ns regarding the potential payment discrepancies between the code s that describe the same te st using different specimenCMS-1524-P 102

media. Therefore, we are asking the AMA RU C to review the both the direct PE inputs and work values of the following codes in ac cordance with the consolidated approach to reviewing potentially misvlaued codes as out lined in section II.B.2.c. of this proposed rule: CPT codes 88365 (In situ hybridiz ation (eg, FISH), each probe); 88367 (Morphometric analysis, in situ hybridizati on (quantitative or semi-quantitative) each probe; using computer-assisted technology); and 88368 (Morphometric analysis, in situ hybridization (quantitative or semi -quantitative) each probe; manual.) (2) Codes Without Direct Practice Expe nse Inputs in the Non-Facility Setting

Certain stakeholders have requested that we create nonfacility PE values for a series of kyphoplasty services CPT codes:

● 22523 (Percutaneous vertebral augmen tation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannul ation (eg, kyphoplasty ); thoracic),

● 22524 (Percutaneous vertebral augmen tation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannul ation (eg, kyphoplasty); lumbar).

● 22525 (Percutaneous vertebral augmen tation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannula tion (eg, kyphoplasty); each additional thoracic or lumbar vertebral body (List sepa rately in addition to code for primary procedure)). In the case of these codes, we are asking the RUC to make recommendations regarding the appropriateness of creating nonfacility direct PE inputs. If the RUC wereCMS-1524-P 103

to recommend direct PE recommendations, we would review those recommendations as part of the annual process. Ultrasound Equipment. A stakeholder has rais ed concern about potential inconsistencies with the input s and the prices related to ultrasound equipment in the direct PE database. Upon re viewing inputs and prices for ultrasound equipment, we have noted that there are 17 different pieces of ultrasound and ultrasound-related equipment in

the database that are associated with 110 CPT Codes. The price inputs for ultrasound equipment range from $1,304.33 to $466,492.00. Therefore, we are asking the AMA RUC to review the ultrasound equipment include d in those codes as well as how the way the equipment is described and priced in the direct PE database. In the past, the AMA RUC has provided us with valuable recommendations regarding particular categories of equipment and supply items th at are used as direct PE inputs for a range of codes. For example, in the 2011 PFS final rule (75 FR 73204), we made changes to a series of codes following th e RUC's review of serv ices that include the radiographic fluoroscopic room (CMS Equipmen t Code EL014) as a direct PE input. The

RUC review revealed the use of the item to no longer be typical for certain services in which it had been specified with in the direct cost inputs. These recommendations have often prompted our proposals that have served to maintain appropriate relativity within the PFS, and we hope that the RUC will continue to address issues relating to equipment and supply inputs that affect many codes. Furt hermore, we believe that in these kinds of cases, it may be appropriate to make changes to the related direct PE inputs for a series of codes without reevaluating the physician work or other direct PE input s for the individual codes. In other words, while we generally believe that both the work and the directCMS-1524-P 104

practice expense inputs should be reviewed whenever the RUC makes recommendations regarding either component of a code's valu e, we recognize the value of discrete RUC

reviews of direct PE items that serve as inputs for a series of service codes. (3) Codes Potentially Requiring Updates to Physician Work Cholecystectomy. We received a comment rega rding a potential relativity problem between two cholecystectomy (gall bl adder removal) CPT codes. CPT code 47600 (Cholecystectomy;) has a work RVU of 17.48, and CPT code 47605 (Cholecystectomy; with cholangiography) ha s a work RVU of 15.98. Upon examination of the physician time and visits associated with these codes, we found that CPT code

47600 includes 115 minutes of intra-servic e time and a total time of 420 minutes, including 3 office visits, 3 subsequent hos pital care days, and 1 hospital discharge management day. CPT code 47605 includes 90 mi nutes of intra-service time and a total time of 387 minutes, including 2 office visits, 3 subsequent hospital care days, and 1 hospital discharge management day. We believe that the difference in physician time and

visits is the cause for the difference in work RVU for these codes. However, upon clinical review, it does not appear that these visits appropriately reflect the relativity of these two services, as CPT code 47600 should no t have more time and visits associated

with the service than CPT code 47605. Th erefore, we are asking the AMA RUC to review these two cholecystectomy CPT codes, 47600 and 47605. We thank the public for bringing these i ssues to our attentio n and kindly request that the public continue to do so. Please see section II.B.4. of th is proposed notice for more information on the proposed public process for the nomination of potentially

misvalued codes.CMS-1524-P 105

6. Code-Specific Issues

a. CY 2012 Codes with S ite-of-Service Anomalies (1) Background The AMA RUC reviewed a number of site-of-service anomaly codes for CY 2012, many of which are site-of-service anom aly codes that have had interim values in place since CY 2009. These are CPT codes that have experienced a change in the typical site-of-service since the original valu ation of the codes. Specifically, these codes were originally furnished in the inpatient se tting, but Medicare claims data show that the typical case has shifted to bei ng furnished in the outpatient setting. Since the procedures were typically furnished in the inpatient se tting when the codes were originally valued,

the work RVUs for these codes would have b een valued to include the inpatient physician work furnished, as well as to reflect the in tensive follow-up care normally associated with an inpatient procedure. As we discussed in the CY 2011 final rule with comment period (75 FR 73221), when the typical case for a serv ice has shifted from the inpatient setting to an outpatient or physician's office setting, we do not believe the in clusion of inpatient hospital visits in the post-ope rative period is appropriate. 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 in the valu ation of these services. Additionally, we believe that it is reasonable to expect that th ere have been changes in medical practice for these services, and that such changes woul d represent a decrease in physician time or intensity or both. The AMA RUC reviewed 40 CPT codes that were identified as having

site-of-service anomalies and recommended revised RVUs to CMS for 29 codes forCMS-1524-P 106

CY 2009 and 11 codes for CY 2010. In the CY 2010 PFS proposed ru le and final rule with comment period (74 FR 33556 and 74 FR 61777, respectively) , we encouraged the AMA RUC to utilize the building block meth odology when revaluing services with

site-of-service anomalies. In the CY 2011 PFS final rule with comment period (75 FR 73221), we also stated that in the CYs 2009 and 20 10 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 valuat ions for these site-of-service anomaly codes on an interim basis through CY 201 0, we had ongoing concerns about the methodology used by the AMA RUC to value th ese services. We requested that the AMA RUC re-examine the site-of-service anomaly codes and adjust the work RVU, time, and post-service visits to reflect those typical of a service furnished in an outpatient or physician's office setting. Following our request in the CY 2011 PF S final rule with comment period, the AMA RUC re-reviewed these site-of-service anomaly codes and recommended work

RVUs to us. Of the 40 CPT codes on the CY 2009 and CY 2010 site-of-service anomaly

code lists in the CY 2011 PFS final rule with comment period, 1 CPT code was not re-reviewed, as it was addre ssed in the CY 2011 PFS final rule with comment period as a part of the vagal nerve stimulator family of services. Ten of the remaining 39 site-of-service anomaly codes were addre ssed in the Five-Year Review of Work, published in the Federal Register on June 6, 2011 (76 FR 32410). The remaining 29 CPT codes are addressed in this CY 2012 PFS proposed rule. We will summarize and respond to public comments, and adopt final work RVUs for all 40 CPT codes on the CY 2009 and CY 2010 site-of-service anomaly lis ts in the CY 2012 PFS final rule withCMS-1524-P 107

comment period. In addition, several other CPT codes have since been identified as having site-of-service anomalies and were a ddressed in the Five-Y ear Review of Work (76 FR 32410). We will respond to public comments and adopt final work values for

these codes in the CY 2012 PFS final rule with comment period. A complete list of the

40 CPT codes with site-of-service anoma lies identified in CY 2009 and CY 2010, the rule in which each code was addressed, th e AMA RUC- recomme nded work RVU, and the CMS proposed or interim work RVU can be found in Table 8.

When Medicare claims data show that the typical setting for a CPT code has shifted from the inpatient setting to the outpati ent setting, we continue to believe that the work RVU, time, and post-servic e visits of the code should reflect the curr ent outpatient setting. For many of the site -of-service anomaly CPT codes, we believe that the AMA RUC appropriately accounted for this site-of- service shift in its recommendations to us, and we agree with the AMA RUC-recomme nded work RVU for 19 of the 40 CY 2009 and CY 2010 site-of-service anomaly codes. However, we found that for the remainder of these site-of-service anomaly codes ( 21 of 40), the AMA RUC often recommended maintaining inpatient visits or removing inpatient visits and/or time without a corresponding decrease in work RVU. In those cases, we disagreed with the AMA RUC-recommended work RVU and adjusted the work RVU, time, and visits to reflect those typical of a service furnished in an out patient or physician's office setting. In the Fourth Five-Year Review of Work (76 FR 32410), we discussed in detail our methodology for revaluing the si te-of-service anomaly codes addressed in that proposed

notice. We continue that discussion here , and a full description of our methodology for revaluing the site-of-service anomaly codes fo r CY 2012 is included later in this section.CMS-1524-P 108

TABLE 8: CMS DECISIONS ON CODES WITH SITE-OF-SERVICE ANOMALIES

CPT Code Short Descriptor CMS Work RVU Decision Publication AMA RUC Recommended

Work RVU CMS Work RVU Decision CMS Proposed/Interim Work RVU 21025 Excision of bone, lower ja w CY 2012 PFS NPRM 10.03 Agree 10.03 23415 Release of shoulder ligament CY 2012 PFS NPRM 9.23 Agree 9.23 25116 Remove wrist/forearm lesion CY 2012 PFS NPRM 7.56 Agree 7.56 28120 Part removal of ankle/he el Fourth Five-Year Review of Work 8.27 Disagree 7.31 28122 Partial removal of foot bone Fourth Fi ve-Year Review of Work 7.72 Disagree 6.76 28725 Fusion of foot bones CY 2012 PFS NPRM 12.18 Disagree 11.22 28730 Fusion of foot bones CY 2012 PFS NPRM 12.42 Disagree 10.70 36825 Artery-vein autograft Fourth Five-Y ear Review of Work 15.13 Disagree 14.17 42415 Excise parotid gland/lesion Fourth Five -Year Review of Work 18.12 Disagree 17.16 42420 Excise parotid gland/lesion Fourth Five -Year Review of Work 21.00 Disagree 19.53 42440 Excise submaxillary gland CY 2012 PFS NPRM 7.13 Disagree 6.14 49507 Prp i/hern init block >5 yr Fourth Fi ve-Year Review of Work 10.05 Disagree 9.09 49521 Rerepair ing hernia, blocked Fourth Fi ve-Year Review of Work 12.44 Disagree 11.48 49587 Rpr umbil hern, block > 5 yr Fourth Fi ve-Year Review of Work 8.04 Disagree 7.08 52341 Cysto w/ureter stricture tx CY 2012 PFS NPRM 5.35 Agree 5.35 52342 Cysto w/up stricture tx CY 2012 PFS NPRM 5.85 Agree 5.85 52343 Cysto w/renal stricture tx CY 2012 PFS NPRM 6.55 Agree 6.55 52344 Cysto/uretero, stricture tx CY 2012 PFS NPRM 7.05 Agree 7.05 52345 Cysto/uretero w/up stricture CY 2012 PFS NPRM 7.55 Agree 7.55 52346 Cystouretero w/rena l strict CY 2012 PFS NPRM 8.58 Agree 8.58 52400 Cystouretero w/congen repr CY 2012 PFS NPRM 8.69 Agree 8.69 52500 Revision of bladder neck CY 2012 PFS NPRM 8.14 Agree 8.14 52640 Relieve bladder contracture Fourth Fi ve-Year Review of Work 4.79 Agree 4.79 53445 Insert uro/ves nck sphincter CY 2012 PFS NPRM 15.39 Disagree 13.00 54410 Remove/replace penis prosth CY 2012 PFS NPRM 15.18 Agree 15.18 54530 Removal of testis CY 2012 PFS NPRM 8.46 Agree 8.46 57287 Revise/remove sling repair Fourth Fi ve-Year Review of Work 11.15 Agree 11.15 61885 Insrt/redo neurostim 1 array CY 2011 PFS Final Rule 6.44 Disagree 6.05 62263 Epidural lysis mult sessions CY 2012 PFS NPRM 6.54 Disagree 5.00 62350 Implant spinal canal cath CY 2012 PFS NPRM 6.05 Agree 6.05 62355 Remove spinal canal catheter CY 2012 PFS NPRM 4.35 Disagree 3.55 62360 Insert spine infusion device CY 2012 PFS NPRM 4.33 Agree 4.33 62361 Implant spine infusion pump CY 2012 PFS NPRM 5.65 Disagree 5.00 62362 Implant spine infusion pump CY 2012 PFS NPRM 6.10 Disagree 5.60 62365 Remove spine infusion device CY 2012 PFS NPRM 4.65 Disagree 3.93 63650 Implant neuroelectrodes CY 2012 PFS NPRM 7.20 Disagree 7.15 63685 Insrt/redo spine n generator CY 2012 PFS NPRM 6.05 Disagree 5.19 64708 Revise arm/leg nerve CY 2012 PFS NPRM 6.36 Agree 6.36 64831 Repair of digit nerve CY 2012 PFS NPRM 9.16 Agree 9.16 65285 Repair of eye wound CY 2012 PFS NPRM 16.00 Disagree 15.36

(2) Revised Work RVUs for Code s with Site-of-Service Anomalies (A) Foot Arthrodesis

CPT Code Short Descriptor AMA RUC Recommended Work RVU CMS Work RVU Decision CMS Proposed Work RVU 28725 Fusion of foot bones 12.18 Disagree 11.22CMS-1524-P 109

28730 Fusion of foot bones 12.42 Disagree 10.70

For CPT code 28725 (Arthrodesis; subtala r) and 28730 (Arthrodesis, midtarsal or tarsometatarsal, multiple or transverse) the most recently available Medicare claims data suggests that these site-of- service anomaly codes could be "23-hour stay" outpatient

services. As we discussed in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227) and the Five-Year Review of Work (76 FR 32410), the "23-hour stay service" is a term of art de scribing services that typically have lengthy hospital outpatient recovery pe riods. For these 23-hour stay services, the typical patient is commonly at the hospital for less than 24-hours, but often stay s overnight at the hospital. Unless a treating physician has writ ten an order to admit the patient as an inpatient, the patient is consid ered for Medicare purposes to be a hospital outpatient, not an inpatient, and our claims data support that the typical 23-hour stay service is billed as an outpatient service.

As we discussed in the Five-Year Revi ew of Work (76 FR 32410), we believe

that the values of the codes that fall into th e 23-hour stay category should not reflect work that is typically associated with an inpatient service. However, as we stated in the CY 2011 PFS final rule with comment peri od (75 FR 73226 through 73227), we find it is plausible that while the patient receiving the outpatient 23-hour stay service remains a hospital outpatient, the patient would typically be cared fo r by a physician during that lengthy recovery period at the hospital. While we do not believe that post-procedure hospital visits would be at th e inpatient level since the typi cal case is an outpatient who would be ready to be discharged from the hospi tal in 23-hours or less, we believe it is generally appropriate to include the intra-serv ice time of the inpatient hospital visit in theCMS-1524-P 110

immediate post-service time of the 23-hour stay code under review. In addition, we indicated that we believe it is appropriate to in clude a half day, rather than a full day, of a discharge day management service. We fi nalized this policy in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227) and encouraged the AMA RUC to apply this methodology in developing th e recommendations it pr ovides to us for valuing 23-hour stay codes, in order to ensure the consistent and a ppropriate valuation of the physician work for these services. For CY 2010, CPT codes 28725 and 28730 were identified as potentially misvalued through the site-of-service anomal y screen and were reviewed by the AMA RUC. For both of these services, based on re ference services and specialty survey data, the AMA RUC recommended maintaining the current (CY 2009) work RVU, which we then increased slightly based on the redist ribution of RVUs that resulted from the CY 2010 policy to no longer recognize the CP T consultation codes (74 FR 61775). The

AMA RUC re-reviewed CPT codes 28725 and 28730 for CY 2012 and, contrary to the 23-hour stay policy we finalized in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227), recommended replacing the hosp ital inpatient post-operative visit in the current work values with a subsequent observation care service, specifically CPT code 99224 (Level 1 subs equent observation care, per day) and recommended maintaining the current interim value of the two CPT codes. Specifically,

for CY 2012 the AMA RUC recommended a work RVU of 12.18 for CPT code 28725

and a work RVU of 12.42 for CPT code 28730. We disagree with the AMA RUC- recommended values for CPT codes 28725 and 28730. We believe the appropriate met hodology for valuing these codes entailsCMS-1524-P 111

accounting for the removal of the inpatient visits in the work value for the site-of-service anomaly codes since these services are no l onger typically furnished in the inpatient setting. We do not believe it is appropria te to simply exchange the inpatient post-operative visits in the original value w ith subsequent observat ion care visits and

maintain the current work RVUs. As the data suggests, these two site-o f-service anomaly codes resemble 23-hour stay outpatient services, and since the AM A RUC's recommended value continues to include inpatient visits (or subsequent observation care co des) in the post-operative period, we applied the 23-hour stay policy described previously. Specifically, we removed the subsequent observation care serv ice, reduced the one day of discharge management service to one-half day, and adjusted physician work RVUs and times accordingly. As a result, for CY 2012 we are proposing a work RVU of 11.22 for CPT code 28725, and a work RVU of 10.70 fo r CPT code 28730, with aforementioned refinements to time. A complete list of CMS time refinements can be found in Table 9. (B) Submandibular Gland Excision

CPT Code Short Descriptor AMA RUC Recommended Work RVU CMS Work RVU Decision CMS Proposed Work RVU 42440 Excise submaxillary gland 7.13 Disagree 6.14

For CY 2009, CPT code 42440 (Excision of submandibular (submaxillary) gland) was identified as potentially misvalued through the site-of-service anomaly screen and was reviewed by the AMA RUC. Based on referenc e services and specialty survey data, the AMA RUC recommended maintaining the current (CY 2008) work RVU of 7.05 for this service and removing the inpatient subsequent hospital care visit blocks to reflect the current outpatient place of service. In CY 2010, while CMS adopted the AMACMS-1524-P 112

RUC-recommended work value on an interim fi nal basis and referred the service back to the AMA RUC to be reexamined, the work RVU for CPT code 42440 used under the

PFS was increased to 7.13 based on the redist ribution of RVUs that resulted from our policy to no longer recognize the CPT consultation codes (74 FR 61775). Upon re-review for CY 2012, the AM A RUC resubmitted its previous recommendation and again recommended that the current work RVU of 7.13 for CPT code 4244 0 be maintained. We disagree with the AMA RUC-reco mmended work RVU of 7.13 for CPT code

42440 and believe a work RVU of 6.14 is more a ppropriate for this service. As stated previously, we believe the appropriate me thodology for valuing site-of-service anomaly codes entails not just removing the inpatient vi sits, but also accounting for the removal of the inpatient visits in the work value of the CPT code. To appropriately revalue this CPT code to reflect an outpatient service we st arted with the original CY 2008 work RVU of 7.05 then, in accordance with the policy discusse d in section II.B. of this proposed notice, we removed the value of the subsequent hos pital care service and one-half discharge day management service, and added back the s ubsequent hospital care intra-service time to the immediate post-operative care service. As a result, we are pr oposing an alternative

work RVU of 6.14 with refinements to the time for CPT code 42440 for CY 2012. A complete list of CMS time refinements can be found in Table 9. (C) Urological Procedures

CPT Code Short Descriptor AMA RUC Recommended Work RVU CMS Work RVU Decision CMS Proposed Work RVU 53445 Insert uro/ves nck s phincter 15.39 Disagree 13.00 54410 Remove/replace penis prosth 15.18 Agree 15.18 54530 Removal of testis 8.46 Agree 8.46

For CY 2009, CPT code 53445 (Insertion of inflatable urethral/bladder neckCMS-1524-P 113

sphincter, including placement of pump, reser voir, and cuff) was identified as potentially misvalued through the site-of-service anom aly screen and was reviewed by the AMA

RUC. The AMA RUC recommended that CP T code 53445 should be removed from the site-of-service anomaly screen and that the current work RVU of 15.21 should be maintained because, although the Medicare clai ms data indicated that this service is predominately furnished in the outpatient setting, survey respo ndents indicated this service is typically furnished in the facility setting. In CY 2010, while we adopted the

AMA RUC-recommended work value on an interim final basis and referred the service back to the AMA RUC to be reexamined, the work RVU for CPT code 53445 used under

the PFS was increased to 15.39 based on the redi stribution of RVUs that resulted from our policy to no longer recognize the CPT consultation codes (74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its previ ous recommendation. Despite Medicare claims data showing that this serv ice is typically furnished in the outpatient setting, the AMA RUC believes it is appropriate for CPT code 53445 to have inpatient visits because the specialty society that most commonly furnishes these procedures asserts that the typical patient spends at le ast one night in the hos pital. The AMA RUC has requested that the specialty society c onduct an additional survey to address more specifically whether an overnight stay is typical for CPT code 53445 and 54410. The

AMA RUC recommended that th e current work RVU of 15. 39 for CPT code 53445 be

maintained. We disagree with the AMA RUC-r ecommended work RVU of 15.39 for CPT

code 53445 and believe a work RVU of 13.00 is mo re appropriate for this service. As stated previously in our di scussion of 23-hour stay codes, as well as in the CY 2010 PFSCMS-1524-P 114

final rule with comment period (74 FR 61777) , even though a service may typically have a lengthy hospital outpatient rec overy period, it should not reflect work that is typically associated with an inpatient se rvice. Upon clinical review of this service and the time and visits associated with it, we believe that the survey 25th pe rcentile work RVU of 13.00 appropriately accounts for the work required to furnish this service. Therefore, we are proposing a work RVU of 13.00 for CPT code 53445 for CY 2012. (D) Epidural Lysis

CPT Code Short Descriptor AMA RUC Recommended

Work RVU CMS Work RVU Decision CMS Proposed Work RVU 62263 Epidural lysis mult se ssions 6.54 Disagree 5.00

For CY 2009, CPT code 62263 (Percutaneous lysis of epidural adhesions using solution injection (eg, hypertonic saline, en zyme) or mechanical means (eg, catheter) including radiologic localiza tion (includes contrast when administered), multiple adhesiolysis sessions; 2 or more days,) was id entified as potentially misvalued through the site-of-service anomaly screen and was revi ewed by the AMA RUC. Based on reference services and specialty survey data, the AMA RUC recommended maintaining the current (CY 2008) work RVU of 6.41 for this servi ce and removing the inpatient subsequent hospital care visits to reflect the current outpatient place of service. In CY 2010, while we adopted the AMA RUC-recommended work value on an interim final basis and

referred the service back to the AMA RUC to be reexamined, the work RVU for CPT

code 62263 used under the PFS was increased to 6.54 based on the redistribution of RVUs that resulted from our policy to no longer recognize the CP T consultation codes (74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its previous

recommendation and reco mmended that the current work RVU of 6.54 for CPT codeCMS-1524-P 115

62263 be maintained. We disagree with the AMA RUC-reco mmended work RVU of 6.45 for CPT code 62263. As stated previously, we believe the appropriate methodology for valuing site-of-service anomaly codes entails not ju st removing the inpatient visits, but also accounting for the removal of the inpatient vis its in the work value of the CPT code. Upon clinical review, we believe that the su rvey median work RVU of 5.00 appropriately accounts for the removal of the inpatient visits as well as the incr ease in intra-service time and post-operative office visits in this se rvice. Therefore, we are proposing a work

RVU of 5.00 for CPT code 62263 for CY 2012. (E) Intrathecal Epidural Catheters and Pumps

CPT Code Short Descriptor AMA RUC Recommended

Work RVU CMS Work RVU Decision CMS Proposed Work RVU 62350 Implant spinal canal cath 6.05 Agree 6.05 62355 Remove spinal canal ca theter 4.35 Disagree 3.55 62360 Insert spine infusion device 4.33 Agree 4.33 62361 Implant spine infusion pump 5.65 Disagree 5.00 62362 Implant spine infusion pump 6.10 Disagree 5.60 62365 Remove spine infusion device 4.65 Disagree 3.93

For CY 2009, CPT code 62355 (Removal of previously implanted intrathecal or epidural catheter) was identified as potenti ally misvalued through the site-of-service anomaly screen and was reviewed by the AM A RUC. Based on refe rence services and specialty survey data, the AMA RUC reco mmended a work RVU of 4.30, approximately midway between the survey median and 75th percentile. The AMA RUC recommended removing the inpatient building blocks to refl ect the outpatient site-of-service, removing all but 1 of the post-procedure office visits to reflect the shift in global period from 90 days to 10 days, and reducing the physician time associated with this service. In CY 2010, while we adopted the AMA RUC-reco mmended work value on an interim finalCMS-1524-P 116

basis and referred the service back to the AMA RUC to be reexamined, the work RVU

for CPT code 62355 used under the PFS was incr eased to 4.35 based on the redistribution of RVUs that resulted from the CMS policy to no longer recognize the CPT consultation codes (74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its previous recommendation and ultimately reco mmended that the current work RVU of 4.35

for CPT code 62355 be maintained. We disagree with the AMA RUC-reco mmended work RVU of 4.35 for CPT code 62355. As stated previously, we believe the appropriate methodology for valuing site-of-service anomaly codes entails not ju st removing the inpatient visits, but also accounting for the removal of the inpatient visits in the work value of the CPT code. We

do not believe that the reduction from th e CY 2008 work RVU of 6.60 to the CY 2009 work RVU of 4.30 adequately accounts for th e removal of 3 subsequent hospital care visits and half a discharge management da y, which together represent a work RVU of 5.40. Also, the time required to furnish th is service dropped signi ficantly, even after considering the global period change. Upon clin ical review, we believe that the survey median work RVU of 3.55 appropriately account s for the removal of the inpatient visits

and decreased time for this service. Therefor e, we are proposing a work RVU of 3.55 for

CPT code 62355 for CY 2012. For CY 2009, CPT code 62361 (Implanta tion or replacement of device for intrathecal or epidural drug infusion; nonprogrammable pump) was identified as potentially misvalued through the site-of-se rvice anomaly screen and was reviewed by

the AMA RUC. Based on reference services and specialty survey data, the AMA RUC recommended a work RVU of 5.60, approximately midway between the survey medianCMS-1524-P 117

and 75th percentile. The AMA RUC recomm ended removing the inpatient visits to reflect the outpatient site-of-service, removi ng all but 1 of the post-procedure office visits to reflect the shift in global period from 90 days to 10 days, and reducing the physician

time associated with this service. In CY 2010, while we adopted the AMA

RUC-recommended work value on an interim fi nal basis and referred the service back to the AMA RUC to be reexamined, the work RVU for CPT code 62361 used under the

PFS was increased to 5.65 based on the redist ribution of RVUs that resulted from our policy to no longer recognize the CPT consultation codes (74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its previous recommendation and ultimately recommended that the current wo rk RVU of 5.65 for CPT code 62361 be

maintained. We disagree with the AMA RUC-reco mmended work RVU of 5.65 for CPT code 62361. As stated previously, we believe the appropriate methodology for valuing site-of-service anomaly codes entails not ju st removing the inpatient visits, but also accounting for the removal of the inpatient visits in the work value of the CPT code. We

do not believe that the reduction from th e CY 2008 work RVU of 6.59 to the CY 2009 work RVU of 5.60 adequately accounts for th e removal of 3 subsequent hospital care visits and half a discharge management da y, which together represent a work RVU of 5.40. Also, the time required to furnish th is service dropped signi ficantly, even after considering the global period change. Upon clin ical review, we believe that the survey 25th percentile work RVU of 5.00 appropriately accounts for the removal of the inpatient

visits and decreased time for this service. Therefore, we are proposing a work RVU of

5.00 for CPT code 62361 for CY 2012.CMS-1524-P 118

For CY 2009, CPT code 62362 (Implanta tion or replacement of device for intrathecal or epidural drug infusion; programmable pump, including preparation of pump, with or without programming) was iden tified as potentially misvalued through the site-of-service anomaly screen and was revi ewed by the AMA RUC. Based on reference services and specialty survey data, the AMA RUC recommended a work RVU of 6.05, approximately midway between the survey median and 75th percentile. The AMA RUC recommended removing the inpatient visits to reflect the outpatient site-of-service, removing all but 1 of the post-procedure office vi sits to reflect the shift in global period from 90 days to 10 days, and reducing the physicia n time associated with this service. In CY 2010, while CMS adopted the AMA RUC-recommended work value on an interim

final basis and referred the se rvice back to the AMA RUC to be reexamined, the work

RVU for CPT code 62362 used under the PFS was increased to 6.10 based on the

redistribution of RVUs that resulted from our policy to no longer recognize the CPT consultation codes (74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its previous recommendation and ulti mately recommended th at the current work

RVU of 6.10 for CPT code 62362 be maintained. We disagree with the AMA RUC-reco mmended work RVU of 6.10 for CPT code 62362. As stated previously, we believe the appropriate methodology for valuing site-of-service anomaly codes entails not ju st removing the inpatient visits, but also accounting for the removal of the inpatient visits in the work value of the CPT code. We

do not believe that the reduction from th e CY 2008 work RVU of 8.58 to the CY 2009 work RVU of 6.05 adequately accounts for th e removal of 3 subsequent hospital care visits and half a discharge management da y, which together represent a work RVU ofCMS-1524-P 119

5.40. Also, the time required to furnish th is service dropped signi ficantly, even after considering the global period change. Upon clin ical review, we believe that the survey median work RVU of 5.60 appropriately account s for the removal of the inpatient visits

and decreased time for this service. Therefor e, we are proposing a work RVU of 5.60 for

CPT code 62362 for CY 2012. For CY 2009, CPT code 62365 (Removal of subcutaneous reservoir or pump, previously implanted for intrathecal or epi dural infusion) was identified as potentially misvalued through the site-of-service anom aly screen and was reviewed by the AMA

RUC. Based on reference services a nd specialty survey data, the AMA RUC recommended a work RVU of 4.60, the surv ey median. The AM A RUC recommended removing the inpatient visits to reflect the outp atient site-of-service, removing all but 1 of the post-procedure office visits to reflect the shift in glob al period from 90 days to 10 days, and reducing the physician time associat ed with this service. In CY 2010, while CMS adopted the AMA RUC-recommended work value on an interim final basis and

referred the service back to the AMA RUC to be reexamined, the work RVU for CPT

code 62365 used under the PFS was increased to 4.65 based on the redistribution of RVUs that resulted from our policy to no longer recognize the CP T consultation codes (74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its previous recommendation and ultimately recommended that the current work RVU of 4.65 for CPT

code 62365 be maintained. We disagree with the AMA RUC-reco mmended work RVU of 4.65 for CPT code 62365. As stated previously, we believe the appropriate methodology for valuing site-of-service anomaly codes entails not ju st removing the inpatient visits, but alsoCMS-1524-P 120

accounting for the removal of the inpatient visits in the work value of the CPT code. We

do not believe that the reduction from th e CY 2008 work RVU of 6.57 to the CY 2009 work RVU of 4.60 adequately accounts for th e removal of 3 subsequent hospital care visits and half a discharge management da y, which together represent a work RVU of 5.40. Also, the time required to furnish th is service dropped signi ficantly, even after considering the global period chan ge. We believe that this service is similar to that of CPT code 33241 (Subcutaneous removal of single or dual chamber pacing cardioverter-defibrillator pulse generator) which has a work RVU of 3.29 but does not include a half day of discharge management service. Upon clinical review, we believe that a work RVU of 3.93, that is a work RVU of 3.29 plus a work RVU of 0.64 to account for the half day of discharge manageme nt service, appropriately accounts for the removal of the inpatient visits and decreased time for this service. Therefore, we are proposing a work RVU of 3.93 for CPT code 62365 for CY 2012. (F) Neurostimulators

CPT Code Short Descriptor AMA RUC Recommended

Work RVU CMS Work RVU Decision CMS Proposed Work RVU 63650 Implant neuroelectrodes 7.20 Disagree 7.15 63685 Insrt/redo spine n generator 6.05 Disagree 5.19

For CY 2009, CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural) or mechanical means (such as, catheter) including radiologic localization (includes contrast when administ ered), multiple adhesi olysis sessions; 2 or more days,) was identified as potentially misvalued through the site-of-service anomaly screen and was reviewed by the AMA RUC. Based on reference services and specialty survey data, the AMA RUC recommended th e survey median work RVU of 7.15, and removing the inpatient subsequent hospital care visits to reflect the current outpatientCMS-1524-P 121

place of service. In CY 2010, while we adopted the AMA RUC-recommended work

value on an interim final basis and referred the service back to the AMA RUC to be reexamined, the work RVU for CPT code 63650 used under the PFS was increased to

7.20 based on the redistribution of RVUs that resulted from the our policy to no longer recognize the CPT consultation codes (74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its prev ious recommendation and ultima tely recommended that the

current work RVU of 7.20 for CPT code 63650 be maintained. We disagree with the AMA RUC-reco mmended work RVU of 7.20 for CPT code 63650. As stated previously, we believe the appropriate methodology for valuing site-of-service anomaly codes entails not ju st removing the inpatient visits, but also accounting for the removal of the inpatient vis its in the work value of the CPT code. Upon clinical review, we believe that the su rvey median work RVU of 7.15 appropriately accounts for the removal of the inpatient vi sits, as well as th e physician time and post-operative office visit changes. Therefore, we are proposing a work RVU of 7.15 for

CPT code 63650 for CY 2012. For CY 2009, CPT code 63685 (Insertion or replacement of spinal neurostimulator pulse generator or receiver, direct or inductive coupling) was identified as potentially misvalued through the site-of-service anom aly screen and was reviewed by the AMA

RUC. Based on reference services a nd specialty survey data, the AMA RUC recommended the survey median work RVU of 6.00, and removing the inpatient subsequent hospital care visits to reflect the current outpatient place of service. In CY 2010, while we adopted the AMA RUC-reco mmended work value on an interim final

basis and referred the service back to the AMA RUC to be reexamined, the work RVUCMS-1524-P 122

for CPT code 63685 used under the PFS was incr eased to 7.05 based on the redistribution of RVUs that resulted from the our policy to no longer recognize the CPT consultation codes (74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its previous recommendation and ultimately reco mmended that the current work RVU of 6.05

for CPT code 63685 be maintained. We disagree with the AMA RUC-reco mmended work RVU of 6.05 for CPT code 63685. As stated previously, we believe the appropriate methodology for valuing site-of-service anomaly codes entails not ju st removing the inpatient visits, but also accounting for the removal of the inpatient vis its in the work value of the CPT code. Upon clinical review, we believe that th e survey 25th percentile work RVU of 5.19 appropriately accounts for the removal of the inpatient visits, as well as the physician time and post-operative office visit changes. Therefore, we are proposing a work RVU of

5.19 for CPT code 63685 for CY 2012. (G) Repair of Eye Wound

CPT Code Short Descriptor AMA RUC Recommended

Work RVU CMS Work RVU Decision CMS Proposed Work RVU 65285 Repair of eye wound 16.00 Disagree 15.36

Data suggest that CPT code 65285 (Repair of laceration; cornea and/or sclera, perforating, with reposition or resection of uveal tissue) is a "23-hour stay" outpatient service. For these 23-hour stay services, th e typical patient is co mmonly at the hospital for less than 24 hours, but often stays overnig ht at the hospital. As we discussed previously and in the Five-Year Review of Work (76 FR 32410), we believe that the

values of the codes that fall into the 23-hour stay category should not reflect work that is typically associated with an inpatient service.CMS-1524-P 123

For CY 2009, CPT code 65285 was identifie d as potentially misvalued through the site-of-service anomaly screen and was revi ewed by the AMA RUC. Based on specialty survey data indicating that this service typically require s an overnight stay, the AMA RUC recommended removing the CPT code fr om the site-of-service anomaly list and maintaining the current (CY 2008) work RVU of 14.43, as well as current physician times and visits. In CY 2010, while we adopted the AMA RUC-recommended work

value on an interim final basis and referred the service back to the AMA RUC to be reexamined, the work RVU for CPT code 65285 used under the PFS was increased to

14.71 based on the redistribution of RVUs that re sulted from the our policy to no longer recognize the CPT consultation codes (74 FR 61775).

The AMA RUC re-reviewed CPT code 65285 for CY 2012 and recommended removing the half day of subsequent hospital care service, but c ontrary to the 23-hour stay policy we finalized in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227), recommended mainta ining the one full day of discharge management service. The AMA RUC also recommended an increase in intra-service time and post-procedure office visits. U ltimately, the AMA RUC recommended a work

RVU of 16.00 for CPT code 65285 for CY 2012. We disagree with the AMA RUC recommended value for CPT code 65285. As the most recently available Medicare claims data suggest these two site-of-service anomaly codes resemble 23-hour stay outpa tient services, and since the AMA RUC's

recommended value continues to include one fu ll day of discharge management service, we applied the 23-hour stay policy described pr eviously. That is, we reduced the one day of discharge management service to one-hal f day, and adjusted physician work RVUsCMS-1524-P 124

and times accordingly. As a result, we are proposing an alternative work RVU of 15.36

with refinements to the time for CPT code 65285 for CY 2012. A complete list of CMS time refinements can be found in Table 9.CMS-1524-P 125TABLE 9: PHYSICIAN TIME AND WORK VALUES FOR CY 2009 AND 2010SITE-OF-SERVICE ANOMALY CODESADDRESSED IN THIS CY2012 PFS PROPOSED RULEHCPCSCodeShort Descriptor Source Work RVU Pre-Service Evaluation Minutes Pre-Service Positioning Minutes Pre-Service Dress, Scrub, Wait Minutes Intra-Service Minutes Same Day Post-Service Minutes Subsequent Hospital Care- 99231 Subsequent Hospital Care- 99232 Subsequent Hospital Care- 99233 Hospital Discharge Day99238 Subsequent Observation Care- 99224 Office/Outpatient Visit, Est- 99211 Office/Outpatient Visit, Est- 99212 Office/Outpatient Visit, Est- 9921321025 Excision of bone, lower jaw CY 2008 11.07 75 0 0 120 43 1 1 0 1 0 2 2 221025 Excision of bone, lower jaw CY 2009 9.87 60 10 15 90 30 0 0 0 0 0 0 2 221025 Excision of bone, lower jaw Current 10.03 60 10 15 90 30 0 0 0 0 0 0 2 221025 Excision of bone, lower jaw RUC Rec 10.03 60 10 15 90 30 0 0 0 0 0 0 2 221025 Excision of bone, lower jaw CMS Rec 10.03 60 10 15 90 30 0 0 0 0 0 0 2 223415 Release of shoulder ligament CY2008 10.09 24 0 25 62 23 0.5 0 0 1 0 0 3.5 023415 Release of shoulder ligament CY2009 9.07 40 15 15 60 20 0 0 0 0.5 0 0 2 223415 Release of shoulder ligament Current 9.23 40 15 15 60 20 0 0 0 0.5 0 0 2 223415 Release of shoulder ligament RUC Rec 9.23 40 15 15 60 20 0 0 0 0 0 0 0 023415 Release of shoulder ligament CMS Rec 9.23 40 15 15 60 20 0 0 0 0 0 0 0 025116 Remove wrist/forearm lesion CY 2008 7.38 21 0 15 78 21 1.5 0 0 1 0 0 5 025116 Remove wrist/forearm lesion CY 2009 7.38 40 10 15 60 20 0 0 0 0.5 0 0 1 325116 Remove wrist/forearm lesion Current7.56 40 10 15 60 20 0 0 0 0.5 0 0 1 325116 Remove wrist/forearm lesion RUC Rec 7.56 40 10 15 60 20 0 0 0 0.5 0 0 1 325116 Remove wrist/forearm lesion CMS Rec 7.56 40 10 15 60 20 0 0 0 0.5 0 0 1 328725 Fusion of foot bones CY 2008 11.97 25 0 25 89 22 2.5 0 0 1 0 0 4 028725 Fusion of foot bones CY 2009 11.97 25 0 25 89 22 2.5 0 0 1 0 0 4 028725 Fusion of foot bones Current 12.18 45 10 15 90 20 1 0 0 1 0 0 2 328725 Fusion of foot bones RUC Rec 12.18 33 10 15 90 20 0 0 0 1 1 0 2 328725 Fusion of foot bones CMS Rec 11.22 33 10 15 90 30 0 0 0 0.5 0 0 2 028730 Fusion of foot bones CY 2008 12.21 60 0 0 120 30 1 0 0 1 0 0 0 528730 Fusion of foot bones CY 2009 12.21 60 0 0 120 30 1 0 0 1 0 0 0 528730 Fusion of foot bones Current 12.42 45 10 15 100 20 1 0 0 1 0 0 2 3CMS-1524-P 126HCPCSCodeShort Descriptor Source Work RVU Pre-Service Evaluation Minutes Pre-Service Positioning Minutes Pre-Service Dress, Scrub, Wait Minutes Intra-Service Minutes Same Day Post-Service Minutes Subsequent Hospital Care- 99231 Subsequent Hospital Care- 99232 Subsequent Hospital Care- 99233 Hospital Discharge Day99238 Subsequent Observation Care- 99224 Office/Outpatient Visit, Est- 99211 Office/Outpatient Visit, Est- 99212 Office/Outpatient Visit, Est- 9921328730 Fusion of foot bones RUC Rec 12.42 33 10 15 100 20 0 0 0 1 1 0 2 328730 Fusion of foot bones CMS Rec 10.70 33 10 15 100 30 0 0 0 0.5 0 0 2 342440 Excise submaxillary gland CY 2008 7.05 22 0 25 71 19 0.5 0 0 1 0 0 1.5 042440 Excise submaxillary gland CY 2009 7.05 30 10 15 60 20 0 0 0 0.5 0 0 1 142440 Excise submaxillary gland Current 7.13 30 10 15 60 20 0 0 0 0.5 0 0 1 142440 Excise submaxillary gland RUC Rec 7.13 30 10 15 60 20 0 0 0 0.5 0 0 1 142440 Excise submaxillary gland CMS Rec 6.14 30 10 15 60 25 0 0 0 0.5 0 0 1 152341 Cysto w/ureter stricture tx CY 2008 6.11 47.5 0 0 60 30 1 0 0 0 0 0 0 052341 Cysto w/ureter stricture tx CY 2009 5.35 45 10 15 45 20 0 0 0 0 0 0 0 052341 Cysto w/ureter stricture tx Current 5.35 45 10 15 45 20 0 0 0 0 0 0 0 052341 Cysto w/ureter stricture tx RUC Rec 5.35 45 10 15 45 20 0 0 0 0 0 0 0 052341 Cysto w/ureter stricture tx CMS Rec 5.35 45 10 15 45 20 0 0 0 0 0 0 0 052342 Cysto w/up stricture tx CY 2008 6.61 60 0 0 65 30 1 0 0 0 0 0 0 052342 Cysto w/up stricture tx CY 2009 5.85 40 10 10 60 20 0 0 0 0 0 0 0 052342 Cysto w/up stricture tx Current 5.85 40 10 10 60 20 0 0 0 0 0 0 0 052342 Cysto w/up stricture tx RUC Rec 5.85 40 10 10 60 20 0 0 0 0 0 0 0 052342 Cysto w/up stricture tx CMS Rec 5.85 40 10 10 60 20 0 0 0 0 0 0 0 052343 Cysto w/renal stricture tx CY 2008 7.31 60 0 0 90 30 1 0 0 0 0 0 0 052343 Cysto w/renal stricture tx CY 2009 6.55 45 10 10 60 25 0 0 0 0 0 0 0 052343 Cysto w/renal stricture tx Current 6.55 45 10 10 60 25 0 0 0 0 0 0 0 052343 Cysto w/renal stricture tx RUC Rec 6.55 45 10 10 60 25 0 0 0 0 0 0 0 052343 Cysto w/renal stricture tx CMS Rec 6.55 45 10 10 60 25 0 0 0 0 0 0 0 052344 Cysto/uretero, stricture tx CY 2008 7.81 60 0 0 77.5 30 1 0 0 0 0 0 0 052344 Cysto/uretero, stricture tx CY 2009 7.05 40 10 10 45 20 0 0 0 0 0 0 0 052344 Cysto/uretero, stricture tx Current 7.05 40 10 10 45 20 0 0 0 0 0 0 0 052344 Cysto/uretero, stricture tx RUC Rec 7.05 40 10 10 45 20 0 0 0 0 0 0 0 052344 Cysto/uretero, stricture tx CMS Rec 7.05 40 10 10 45 20 0 0 0 0 0 0 0 0CMS-1524-P 127HCPCSCodeShort Descriptor Source Work RVU Pre-Service Evaluation Minutes Pre-Service Positioning Minutes Pre-Service Dress, Scrub, Wait Minutes Intra-Service Minutes Same Day Post-Service Minutes Subsequent Hospital Care- 99231 Subsequent Hospital Care- 99232 Subsequent Hospital Care- 99233 Hospital Discharge Day99238 Subsequent Observation Care- 99224 Office/Outpatient Visit, Est- 99211 Office/Outpatient Visit, Est- 99212 Office/Outpatient Visit, Est- 9921352345 Cysto/uretero w/up stricture CY 2008 8.31 50 0 0 90 30 1 0 0 0 0 0 0 052345 Cysto/uretero w/up stricture CY 2009 7.55 45 10 15 45 20 0 0 0 0 0 0 0 052345 Cysto/uretero w/up stricture Current 7.55 45 10 15 45 20 0 0 0 0 0 0 0 052345 Cysto/uretero w/up stricture RUC Rec 7.55 45 10 15 45 20 0 0 0 0 0 0 0 052345 Cysto/uretero w/up stricture CMS Rec 7.55 45 10 15 45 20 0 0 0 0 0 0 0 052346 Cystouretero w/renal strict CY 2008 9.34 45 0 0 120 30 1 0 0 0 0 0 0 052346 Cystouretero w/renal strict CY 2009 8.58 40 10 10 60 20 0 0 0 0 0 0 0 052346 Cystouretero w/renal strict Current 8.58 40 10 10 60 20 0 0 0 0 0 0 0 052346 Cystouretero w/renal strict RUC Rec 8.58 40 10 10 60 20 0 0 0 0 0 0 0 052346 Cystouretero w/renal strict CMS Rec 8.58 40 10 10 60 20 0 0 0 0 0 0 0 052400 Cystouretero w/congen repr CY 2008 10.06 90 0 0 60 30 1 0 0 1 0 0 0 152400 Cystouretero w/congen repr CY 2009 8.66 72.5 10 15 40 25 0 0 0 0.5 0 0 1 052400 Cystouretero w/congen repr Current8.69 72.5 10 15 40 25 0 0 0 0.5 0 0 1 052400 Cystouretero w/congen repr RUC Rec 8.69 72.5 10 15 40 25 0 0 0 0.5 0 0 1 052400 Cystouretero w/congen repr CMS Rec 8.69 72.5 10 15 40 25 0 0 0 0.5 0 0 1 052500 Revision of bladder neck CY 2008 9.39 40 0 0 45 35 1 0 0 1 0 0 0 352500 Revision of bladder neck CY 2009 7.99 45 10 15 45 27.5 0 0 0 0.5 0 0 0 352500 Revision of bladder neck Current8.14 45 10 15 45 27.5 0 0 0 0.5 0 0 0 352500 Revision of bladder neck RUC Rec 8.14 45 10 15 45 27.5 0 0 0 0.5 0 0 0 352500 Revision of bladder neck CMS Rec 8.14 45 10 15 45 27.5 0 0 0 0.5 0 0 0 353445 Insert uro/ves nck sphincter CY 2008 15.21 50 0 25 126 24 3 0 0 1 0 0 0 353445 Insert uro/ves nck sphincter CY 2009 15.21 50 15 20 90 25 0 1 1 1 0 0 1 353445 Insert uro/ves nck sphincter Current 15.39 50 15 20 90 25 0 1 1 1 0 0 1 353445 Insert uro/ves nck sphincter RUC Rec 15.39 50 15 20 90 25 0 0 0 1 1 0 1 353445 Insert uro/ves nck sphincter CMS Rec 13.00 50 15 20 90 25 0 0 0 1 1 0 1 354410 Remove/replace penis prosth CY 2008 16.48 50 0 0 145 30 1 0 0 1 0 0 0 254410 Remove/replace penis prosth CY 2009 15.00 40 10 15 120 30 0 0 0 1 0 0 1 3CMS-1524-P 128HCPCSCodeShort Descriptor Source Work RVU Pre-Service Evaluation Minutes Pre-Service Positioning Minutes Pre-Service Dress, Scrub, Wait Minutes Intra-Service Minutes Same Day Post-Service Minutes Subsequent Hospital Care- 99231 Subsequent Hospital Care- 99232 Subsequent Hospital Care- 99233 Hospital Discharge Day99238 Subsequent Observation Care- 99224 Office/Outpatient Visit, Est- 99211 Office/Outpatient Visit, Est- 99212 Office/Outpatient Visit, Est- 9921354410 Remove/replace penis prosth Current 15.18 40 10 15 120 30 0 0 0 1 0 0 1 354410 Remove/replace penis prosth RUC Rec 15.18 40 10 15 120 30 0 0 0 1 1 0 1 354410 Remove/replace penisprosth CMS Rec 15.18 40 10 15 120 30 0 0 0 1 0 0 1 354530 Removal of testis CY 2008 9.31 33 0 25 58 17 0.5 0 0 1 0 0 0 2.554530 Removal of testis CY 2009 8.35 57.5 10 15 60 30 0 0 0 0.5 0 0 2 154530 Removal of testis Current 8.46 57.5 10 15 60 30 0 0 0 0.5 0 0 2 154530 Removal of testis RUC Rec 8.46 57.5 10 15 60 30 0 0 0 0.5 0 0 2 154530 Removal of testis CMS Rec 8.46 57.5 10 15 60 30 0 0 0 0.5 0 0 2 162263 Epidural lysis mult sessions CY 2008 6.41 40 0 0 30 20 2 0 0 1 0 0 2 062263 Epidural lysis mult sessions CY 2009 6.41 33 10 5 45 20 0 0 0 0.5 0 0 1 262263 Epidural lysis mult sessions Current6.54 33 10 5 45 20 0 0 0 0.5 0 0 1 262263 Epidural lysis mult sessions RUC Rec 6.54 33 10 5 45 20 0 0 0 0.5 0 0 1 262263 Epidural lysis multsessions CMS Rec 5.00 33 10 5 45 40 0 0 0 0.5 0 0 1 262350 Implant spinal canal cath CY 2008 8.04 70 0 0 60 125 1 0 2 1 0 0 4 062350 Implant spinal canal cath CY 2009 6.00 33 10 5 60 20 0 0 0 0.5 0 0 0 162350 Implant spinal canal cath Current6.05 33 10 5 60 20 0 0 0 0.5 0 0 0 162350 Implant spinal canal cath RUC Rec 6.05 33 10 5 60 20 0 0 0 0.5 0 0 0 162350 Implant spinal canal cath CMS Rec 6.05 33 10 5 60 20 0 0 0 0.5 0 0 0 162355 Remove spinal canal catheter CY 2008 6.60 60 0 0 40 130 1 0 2 1 0 0 3 062355 Remove spinal canal catheter CY2009 4.30 33 10 5 30 20 0 0 0 0.5 0 0 0 162355 Remove spinal canal catheter Current 4.35 33 10 5 30 20 0 0 0 0.5 0 0 0 162355 Remove spinal canal catheter RUCRec 4.35 33 10 5 30 20 0 0 0 0.5 0 0 0 162355 Remove spinal canal catheter CMS Rec 3.55 33 10 5 30 20 0 0 0 0.5 0 0 0 162360 Insert spine infusion device CY 2008 3.68 60 0 0 55 123 0 0 2 1 0 0 4 062360 Insert spine infusion device CY 2009 4.28 33 10 5 60 20 0 0 0 0.5 0 0 0 162360 Insert spine infusion device Current 4.33 33 10 5 60 20 0 0 0 0.5 0 0 0 162360 Insert spine infusion device RUC Rec 4.33 33 10 5 60 20 0 0 0 0.5 0 0 0 1CMS-1524-P 129HCPCSCodeShort Descriptor Source Work RVU Pre-Service Evaluation Minutes Pre-Service Positioning Minutes Pre-Service Dress, Scrub, Wait Minutes Intra-Service Minutes Same Day Post-Service Minutes Subsequent Hospital Care- 99231 Subsequent Hospital Care- 99232 Subsequent Hospital Care- 99233 Hospital Discharge Day99238 Subsequent Observation Care- 99224 Office/Outpatient Visit, Est- 99211 Office/Outpatient Visit, Est- 99212 Office/Outpatient Visit, Est- 9921362360 Insert spine infusion device CMSRec 4.33 33 10 5 60 20 0 0 0 0.5 0 0 0 162361 Implant spine infusion pump CY 2008 6.59 60 0 0 60 130 1 0 2 1 0 0 4 062361 Implant spine infusion pump CY 2009 5.60 33 10 5 60 20 0 0 0 0.5 0 0 0 162361 Implant spine infusion pump Current 5.65 33 10 5 60 20 0 0 0 0.5 0 0 0 162361 Implant spine infusion pump RUC Rec 5.65 33 10 5 60 20 0 0 0 0.5 0 0 0 162361 Implant spine infusion pump CMSRec 5.00 33 10 5 60 20 0 0 0 0.5 0 0 0 162362 Implant spine infusion pump CY 2008 8.58 75 0 0 90 150 0 0 3 1 0 0 4 062362 Implant spine infusion pump CY 2009 6.05 33 10 5 60 20 0 0 0 0.5 0 0 0 162362 Implant spine infusion pump Current 6.10 33 10 5 60 20 0 0 0 0.5 0 0 0 162362 Implant spine infusion pump RUC Rec 6.10 33 10 5 60 20 0 0 0 0.5 0 0 0 162362 Implant spine infusion pump CMSRec 5.60 33 10 5 60 20 0 0 0 0.5 0 0 0 162365 Remove spine infusion device CY 2008 6.57 60 0 0 45 125 1 0 2 1 0 0 3 062365 Remove spine infusion device CY 2009 4.60 33 10 5 45 20 0 0 0 0.5 0 0 0 162365 Remove spine infusion device Current4.65 33 10 5 45 20 0 0 0 0.5 0 0 0 162365 Remove spine infusion device RUC Rec 4.65 33 10 5 45 20 0 0 0 0.5 0 0 0 162365 Remove spine infusion device CMSRec 3.93 33 10 5 45 20 0 0 0 0.5 0 0 0 163650 Implant neuroelectrodes CY 2008 7.57 26 5 25 74 19 2.5 0 0 1 0 0 0 263650 Implant neuroelectrodes CY 2009 7.15 33 10 5 60 20 0 0 0 0.5 0 0 0 163650 Implant neuroelectrodes Current7.20 33 10 5 60 20 0 0 0 0.5 0 0 0 163650 Implant neuroelectrodes RUC Rec 7.20 33 10 5 60 20 0 0 0 0.5 0 0 0 163650 Implant neuroelectrodes CMS Rec7.15 33 10 5 60 20 0 0 0 0.5 0 0 0 163685 Insrt/redo spine n generator CY 2008 7.87 28 0 25 62 18 2.5 0 0 1 0 0 0 263685 Insrt/redo spine n generator CY 2009 6.00 33 10 5 60 20 0 0 0 0.5 0 0 0 163685 Insrt/redo spine n generator Current 6.05 33 10 5 60 20 0 0 0 0.5 0 0 0 163685 Insrt/redo spine n generator RUC Rec 6.05 33 10 5 60 20 0 0 0 0.5 0 0 0 163685 Insrt/redo spine n generator CMS Rec 5.19 33 10 5 60 20 0 0 0 0.5 0 0 0 164708 Revise arm/leg nerve CY 2008 6.22 21 0 25 76 18 0.5 0 0 1 0 0 2.5 0CMS-1524-P 130HCPCSCodeShort Descriptor Source Work RVU Pre-Service Evaluation Minutes Pre-Service Positioning Minutes Pre-Service Dress, Scrub, Wait Minutes Intra-Service Minutes Same Day Post-Service Minutes Subsequent Hospital Care- 99231 Subsequent Hospital Care- 99232 Subsequent Hospital Care- 99233 Hospital Discharge Day99238 Subsequent Observation Care- 99224 Office/Outpatient Visit, Est- 99211 Office/Outpatient Visit, Est- 99212 Office/Outpatient Visit, Est- 9921364708 Revise arm/leg nerve CY 2009 6.22 35 10 10 60 15 0 0 0 0.5 0 0 3 164708 Revise arm/leg nerve Current 6.36 35 10 10 60 15 0 0 0 0.5 0 0 3 164708 Revise arm/leg nerve RUC Rec 6.36 35 10 10 60 15 0 0 0 0.5 0 0 3 164708 Revise arm/leg nerve CMS Rec6.36 35 10 10 60 15 0 0 0 0.5 0 0 3 164831 Repair of digit nerve CY 2008 10.23 25 0 25 74 21 1 0 0 1 0 0 0 2.564831 Repair of digit nerve CY 2009 9.00 40 10 15 60 15 0 0 0 0.5 0 0 2 264831 Repair of digit nerve Current 9.16 40 10 15 60 15 0 0 0 0.5 0 0 2 264831 Repair of digit nerve RUC Rec 9.16 40 10 15 60 15 0 0 0 0.5 0 0 2 264831 Repair of digit nerve CMS Rec 9.16 40 10 15 60 15 0 0 0 0.5 0 0 2 265285 Repair of eye wound CY 2008 14.43 37 0 15 79 32 0.5 0 0 1 0 0 0 5.565285 Repair of eye wound CY 2009 14.43 37 0 15 79 32 0.5 0 0 1 0 0 0 5.565285 Repair of eye wound Current 14.71 37 0 15 79 32 0.5 0 0 1 0 0 0 5.565285 Repair of eye wound RUC Rec 16.00 30 10 20 90 30 0 0 0 1 0 0 1 665285 Repair of eye wound CMS Rec 15.36 30 10 20 90 30 0 0 0 0.5 0 0 1 6CMS-1524-P 131

b. Payment for Bone Density Tests Section 1848(b)(6) of the Act (as amended by section 3111(a) of the Affordable Care Act) changed the payment calculation for dual-energy x-ray absorptiometry (DXA) services described by two specified DXA CPT codes for 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 CF, and the geographic adjustment for the relevant payment year. Effective January 1, 2007, the CPT codes fo r DXA services were revised. The former DXA CPT codes 76075 (Dual energy X-ray absorptiometry (DXA), bone density study, one or more sites; axial skeleton (e g, hips, pelvis, spine )); 76076 (Dual energy X-ray absorptiometry (DXA), bone density study, one or more sites; appendicular skeleton (peripheral) (for example, radius , wrist, heel)); and 76077 (Dual energy X-ray absorptiometry (DXA), bone density study, one or more sites; vertebral fracture assessment) were deleted and repl aced with new CPT codes 77080, 77081, and 77082 that have the same respective code descriptor s as the predecessor codes. Section 1848(b) of the Act, as amended, specifies that th e revised payment applies to two of the predecessor codes (CPT codes 76075 and 76077) and ''any succeeding codes,'' which are, in this case, CPT codes 77080 and 77082. As mentioned previously, s ection 1848(b) of the Act revised the payment for CPT codes 77080 and 77082 during CY 2010 and CY 2011. We provided for payment in CYs 2010 and 2011 under the PFS for CPT codes 77080 and 77082 at the specified rates (70 percent of the product of the CY 2006 RVUs for these DXA codes, the CY 2006 conversion factor (CF), and the geographic adju stment for the relevant payment year).CMS-1524-P 132

Because the statute specifies a payment cal culation for these services for CYs 2010 and 2011 as described previously, for those year s we implemented the payment provision by imputing RVUs for these services that woul d provide the specified payment amount for these services when multiplied by the current year's conversion factor. For CY 2012, the payment rate for CPT codes 77080 and 77082 will be based upon resource-based, rather than imputed, R VUs, and the current year's conversion factor. The CY 2012 work, PE, and malpractice RVUs for these codes are shown in Table 10, as well as in Addendum B of this proposed rule.

TABLE 10: CY 2012 RVUS FOR DXA CPT CODES 77080 AND 77082

CPT Code Modifier Physician Work RVU Fully Implemented Non-Facility

PE RVU Transitional Non-Facility

PE RVU Fully Implemented

Facility PE RVU Transitional Facility PE RVU Malpractice RVU 77080 0.20 1.26 1.44 NA NA 0.02 77080 TC 0.00 1.18 1.36 NA NA 0.01 77080 26 0.20 0.08 0.08 0.08 0.08 0.01 77082 0.17 0.63 0.65 NA NA 0.02 77082 TC 0.00 0.56 0.58 NA NA 0.01 77082 26 0.17 0.07 0.07 0.07 0.07 0.01

In addition to temporarily changing th e payment rate for the two DXA CPT codes, section 3111(b) of the Affordable Care Act also authorizes th e Secretary to enter into agreement with the Inst itute of Medicine of the National Academies to conduct a study on the ramifications of Medicare payment reductions for dual-energy x-ray absorptiometry (as described in section 1848(b)(6) of the Act) during years 2007, 2008, and 2009 on beneficiary access to bone mass dens ity tests. This study has not yet been conducted. In the absence of this study, we request that the AMA RUC review CPT codes 77080 and 77082 during CY 2012. C. Expanding the Multiple Procedure Payment Reduction (MPPR) PolicyCMS-1524-P 133

1. 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 re duction, 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 pe riod (59 FR 63410), we indicated that we would consider applying the policy to ot her diagnostic tests in the future.

Consistent with recommendations of Me dPAC in its March 2005 Report to the Congress on Medicare Payment Policy, unde r 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 subse quent procedures and, because equipment time and indirect costs ar e allocated based on clinical labor time, those would also be reduced accordingly. The imaging MPPR policy originally app lied 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 belie ved efficiencies were most likely to occur when imagingCMS-1524-P 134

procedures are performed on contiguous body areas because the patient and equipment have already been prepared for the sec ond and subsequent procedures, potentially yielding resource savings in areas such as clerical time, technical preparation, and supplies (70 FR 45850). The MPPR policy or iginally applied only to procedures furnished in a single session involving con tiguous body areas within a family of codes, not across families. Additionally, while the MPPR policy applies to TC-only services and to the TC of global services, it does not apply to professional component (PC)

services. Under the current imaging MPPR policy, fu ll payment is made for the TC of the highest paid procedure, and payment is reduced by 50 percent of the TC for each additional procedure when an MPPR scenario ap plies. We originally planned to phase in the imaging MPPR policy over a 2-year pe riod, with a 25 percen t 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) amended the statute to place a cap on the PFS payment amount for most imaging procedur es at the amount paid under the hospital outpatient prospective payment system (OPPS). In view of the new OPPS payment cap added by the DRA, we decided in the PFS fina l rule with comment period for 2006 that it would be prudent to retain the imaging M PPR at 25 percent while we continued to examine the appropriate payment levels (71 FR 69659). The DRA also exempted reduced expenditures attributable to the imaging MPPR policy from the PFS budget neutrality provision. Effective July 1, 2010, section 3135(b) of the Affordable Care Act

amended the statute to increas e the MPPR on the TC of imag ing services under the policy

established in the CY 2006 PFS final rule with comment period from 25 to 50 percent,CMS-1524-P 135

and exempted the reduced expenditures attribut able to this further change from the PFS budget neutrality provision. In the July 2009 GAO report entitled, "Medic are Physician Payments: Fees

Could Better Reflect Efficiencies Achieved when Services are Pr ovided Together," the GAO recommended that we take further steps to ensure that fees for services paid under

the PFS reflect efficiencies that occur when services are furnished by the same physician to the same beneficiary on the same da y. The GAO recommended the following: (1) expanding the existing imaging MPPR policy for certain services to the PC to reflect efficiencies in physician work for certain im aging services; and (2 ) expanding the MPPR

to reflect PE efficiencies that occur when certain nonsurgical, nonimaging services are furnished together. The GAO report also enco uraged us to focus on service pairs that have the most impact on Medicare spending. In its March 2010 report, MedPAC note d its concerns about mispricing of

services under the PFS. MedPAC indicated that it would explore whether expanding the unit of payment through packaging or bundli ng 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 planne d to analyze nonsurgical services commonly furnished together (for example, 60 to 75 pe rcent of the time) to assess whether an expansion of the MPPR policy could be warranted. MedPAC encouraged us to consider duplicative physician work, as well as PE, in any expansion of the MPPR policy. Section 1848(c)(2)(K) of the Act (as added by section 3134(a) of th e Affordable Care Act) specifies that the Secretary shall iden tify potentially misvalued codes by examiningCMS-1524-P 136

multiple codes that are frequently billed in c onjunction with furnishing a single service, and review and make appropriate adjustments to their relative values. As a first step in applying this provision, in th e CY 2010 final rule with comment period, we implemented a limited expansion of the imaging MPPR polic y to additional combinations of imaging

services. Effective January 1, 2011 the imaging M PPR applies regardless of code family; that is, the policy applies to multiple imagi ng services furnished within the same family of codes or across families. This policy is consistent with the standard PFS MPPR policy for surgical procedures that does not gr oup procedures by body region. The current imaging MPPR policy applies 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 is not limited to contiguous body areas. We note that section 1848( c)(2)(B)(v)(VI) of the Act (as added by section 3135(b) of the Affordable Care Act) specifies that reduced expenditures attributable to the increase in the imaging MPPR from 25 to 50 percent (effective for fee schedules established beginning with 2010 and for serv ices furnished on or after July 1, 2010) are excluded from the PFS budget neutrality adjustme nt. That is, the reduced payments for code combinations within a family of c odes (contiguous body areas) are excluded from budget neutrality. However, this exclus ion only applies to reduced expenditures attributable to the increase in the MPPR pe rcentage from 25 to 50 percent, and not to reduced expenditures attributable to our policy change regarding additional code combinations across code families (non-cont inguous body areas) that are subject to budget neutrality under the PFSCMS-1524-P 137

The complete list of codes subject to the CY 2011 MPPR policy for diagnostic imaging services is included in Addendum F. As a further step in applying the provisi ons of section 3134(a) of the Affordable Care Act, effective January 1, 2011, we implem ented an MPPR for therapy services. The MPPR applies to separately payable "always th erapy" services, that is, services that are only paid by Medicare when furnished under a therapy plan of care. Contractor-priced codes, bundled codes, and add-on codes are excluded because an MPPR would not be applicable for "always therapy" services furn ished in combination with these codes. The complete list of codes subject to the MPPR policy for therapy serv ices is included in

Addendum H. In the CY 2011 proposed rule (75 FR 44075), we proposed to apply a 50 percent payment reduction to the PE component of th e second and subsequent therapy services for multiple "always therapy" services furnished to a single patient in a single day. However, in response to public comments, in the CY 2011 PFS final rule with comment period (75 FR 73232), we adopted a 25 percen t payment reduction to the PE component of the second and subsequent therapy services for multiple "always therapy" services furnished to a single patient in a single day. Subsequent to publication of the CY 2011 PFS final ru le with comment period, section 3 of the Physician Payment and Therapy Relief Act of 2010 (Pub. L. 111-286) revised the payment reduction percentage from 25 percent to 20 percent for therapy services furnished in office settings. Th e payment reduction percentage remains at 25 percent for services furnished in institutional settings. Section 4 of the Physician Payment and Therapy Relief Act of 2010 exempt ed the reduced expenditures attributableCMS-1524-P 138

to the therapy MPPR policy from the PFS budge t neutrality provision. Under our current policy as amended by the Physician Payment and Therapy Relief Act, for institutional services, full payment is made for the servic e or unit with the highest PE and payment for the PE component for the second and subseque nt procedures or additional units of the same service is reduced by 25 percent. For non-institutional services, full payment is made for the service or unit with the highest PE and payment for the PE component for the second and subsequent procedures or addi tional units of the same service is reduced by 20 percent. The MPPR policy applies to multiple units of the same therapy service, as well as to multiple different services, when furnished to the same patient on the same day. It applies to services furnis hed by an individual or group practice or "incident to" a physician's service. The MPPR applies when multiple therapy services are billed on the same date of service for one patient by the sa me practitioner or faci lity under the same National Provider Identifier (NPI), regardless of whether the services are furnished in one therapy discipline or multiple discipline s, including, physical therapy, occupational therapy, or speech-language pathology. The MPPR policy applies in all settings wh ere outpatient therapy services are paid under Part B. This includes both services pa id under the PFS that are furnished in the office setting, as well as to institutional services paid at the PFS rates that are furnished by outpatient hospitals, home health agenci es, comprehensive outpatient rehabilitation facilities (CORFs), and other entities that are paid under Me dicare Part B for outpatient therapy services.CMS-1524-P 139

2. CY 2012 Proposed Expansion of the MPPR Policy to the Profe ssional Component of Advanced Imaging Services Over the past 3-years, as part of the po tentially misvalued service initiative, the

AMA RUC has examined several services that are billed together at least 90 percent of the time as part of the potentially misvalued service initiative. In several cases, the AMA

RUC recommended work values for new codes that describe the combined services, and

those recommended values reflected the e xpected efficiencies. For example, for CY 2011, the AMA RUC valued the work for a se ries of new codes that describe CT of the abdomen and pelvis, specifically CPT codes:

● 74176 (Computed tomography, abdome n and pelvis; without contrast material).

● 74177 (Computed tomography, abdomen and pelvis; with contrast material).

● 74178 (Computed tomography, abdomen and pelvis; without c ontrast material in one or both body regions, followed by with co ntrast material(s) and further sections in one or both body regions). We accepted the AMA RUC-recommended work values for these codes in the CY 2011 PFS final rule with comment period (75 FR 73229). The AMA

RUC-recommended work values reflected an expected efficiency for the typical combined service that paralleled the reductio ns that would typically result from a MPPR adjustment. For example, in support of the recommended work value of 1.74 RVUs for 74176, the AMA RUC explained that the fu ll value of 74150 (Computed tomography, abdomen; without contrast material) (Work RVU = 1.19) plus half the value of 72192 (Computed tomography, pelvis; without cont rast material) (1/2 Work RVU = 0.55)CMS-1524-P 140

equals 1.74 work RVUs. The AMA RUC stat ed that its recommended valuation was appropriate even though the combined cu rrent work RVUs for of 74150 and 72192 would

result in a total work RVU of 2.28. Furthe rmore, the AMA RUC validated its estimation of work efficiency for the combined servic e by comparing the code favorably with the work value associated with 74182 (Magnetic resonance, for example, proton imaging, abdomen; with contrast material(s)) (Work RVU = 1.73), which has a similar intra-service time, 20 minutes. Thus, we believe our current and proposed MPPR

formulations are consistent with the AMA RUC's work to review code pairs for

unaccounted-for efficiencies and to appropriate ly value comprehensive codes for a bundle of component services. We continue to believe that there may be additional imaging and other diagnostic

services for which there are efficiencies in work when furnished t ogether, resulting in potentially excessive payment for these services under current policy. As noted, Medicare has a longstanding policy to reduce payment by 50 percent for the second and subsequent surgical pr ocedures and nuclear medicine diagnostic procedures furnished to the same patient by the same physician on the same day. In continuing to apply the provi sions of section 3134(a) of the Affordable Care Act, for CY 2012 we are proposing to expand the MPPR to the PC of Advanced Imaging Services (CT, MRI, and Ultrasound), that is, the same list of codes to which the MPPR on the TC of advanced imaging already applies (see A ddendum F). Thus, the MPPR would apply to the PC and the TC of the codes. Specif ically, we propose to expand the 50 percent payment reduction currently applie d to the TC to apply also to the PC of the second and subsequent advanced imaging services furn ished in the same session. Full paymentCMS-1524-P 141

would be made for the PC and TC of the hi ghest paid procedure, and payment would be reduced by 50 percent for the PC and TC for each additional procedure furnished to the same patient in the same session. This proposal is based on the expect ed efficiencies in furnishing multiple services in the same se ssion due to duplication of physician work - primarily in the pre- and post-service periods, with smaller efficiencies in the intraservice period. This proposal is consistent with the statutory requirement for the Secretary to identify, review, and adjust the relative valu es of potentially misv alued services under the PFS as specified by section 3134(a) of the Afford able Care Act. The proposal is also consistent both with our longstanding policy on surgical and nuclear medicine diagnostic procedures, which apply a 50 percent reducti on to second and subsequent procedures. Furthermore, it is responsive to continued c oncerns about significant growth in imaging spending, and to MedPAC (March 2010) and GAO (July 2009) recommendations regarding the expansion of MPPR policie s under the PFS to account for additional

efficiencies. Finally, as noted, the proposal is c onsistent with the RUC's recent methodology and rationale in valuing the work for a co mbined CT of the pelvis (CPT codes 72192, 72193 and 72194), and abdomen (CPT codes 74150, 74160 and 74170) where the RUC assumed the work efficiency for the second service was 50 percent. Savings resulting from this proposal would be redistributed to other PFS services as required by the general statutory PFS budget neutrality provision. 3. Further Expansion of the MPPR Under Consideration for Future Years Currently, the MPPR focuses only on a select number of codes. We will beCMS-1524-P 142

aggressively looking for efficien cies in other sets of code s during the following years and will consider implementing more expansive reduction policies in CY 2013 and beyond. We invite public comment on the fo llowing MPPR policies which are under consideration. Any proposals w ould be presented in future rulemaking and subject to further public comment:

● Apply the MPPR to the TC of All Im aging Services. This approach would apply a payment reduction to the TC of the second and subsequent imaging services performed in the same session. Such an approach could define imaging consistent with our existing definition of imaging for purposes of the statutory cap on payment at the OPPS rate (including x-ray, ultrasound (incl uding echocardiography), nuclear medicine (including positron emission tomography), magnetic resonance imaging, computed tomography, and fluoroscopy, but excluding di agnostic and screening mammography). Add-on codes that are always furnished with another service and have been valued accordingly could be excluded. Such an approach would be based on the expected efficiencies due to duplication of clinical labor activities, supplies, and equipment time. This approach would apply to approximately 530 HCPCS codes, including th e 119 codes to which the current imaging MPPR applies. Savings would be redistributed to other PF S services as required by the statutory PFS budget neutrality provision.

● Apply the MPPR to the PC of All Imaging Services. This approach would apply a payment reduction to the PC of the second or subsequent imaging services

furnished in the same encounter. Such an approach could define imaging consistent with our existing definition of imaging fo r the cap on payment at the OPPS rate.CMS-1524-P 143

Add-on codes that are always furnished with another service and have been valued accordingly could be excluded. This approach would be based on effici encies due to duplication of physician work primarily in the pre- and post-service periods, with smaller efficiencies in the intraservice period. This approach would apply to approximately 530 HCPCS codes, including the 119 codes to which the current imaging MPPR applies. Savings would be

redistributed to other PFS services as re quired by the statutory PFS budget neutrality provision.

● Apply the MPPR to the TC of All Di agnostic Tests. This approach would apply a payment reduction to the TC of the s econd and subsequent diagnostic tests (such as radiology, cardiology, audi ology, etc.) furnished in th e same encounter. Add-on codes that are always furnished with another service and have been valued accordingly

could be excluded. The approach would be based on the expect ed efficiencies due to duplication of clinical labor activities, supplies, and equi pment time. The approach would apply to approximately 700 HCPCS codes, includi ng the approximately 560 HCPCS codes subject to the OPPS cap. The savings would be redistributed to other PFS services as required by the statutory PFS budget neutrality provision. D. Malpractice RVUs 1. Overview of the Methodology for Calculation of Malpractice RVUs Section 1848(c) of the Act requires that each service paid under the PFS be comprised of three components: work, PE, and malpractice. From 1992 to 1999, malpractice RVUs were charge-based, usi ng weighted specialty-specific malpracticeCMS-1524-P 144

expense percentages and 1991 av erage allowed charges. Malpractice RVUs for new codes after 1991 were extrapolated from simila r existing codes or as a percentage of the corresponding work RVU. Section 4505(f) of the BBA amended section 1848(c) of the Act which required us to implement resour ce-based malpractice RVUs for services furnished beginning in 2000. Therefore, in itial implementation of resource-based malpractice RVUs occurred in 2000. The statute also requires that we revi ew, and if necessary adjust, RVUs no less often than every 5 years. The first review and update of resour ce-based malpractice

RVUs was addressed in the CY 2005 PFS final rule with comment period (69 FR 66263). Minor modifications to the methodology were addressed in the CY 2006 PFS final rule with comment period (70 FR 70153). In the CY 2010 PFS final rule with comment period, we implemented the second review a nd 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 ru le with comment period (74 FR 61758). As explained in the CY 2011 PFS final rule with comment period, malpractice

RVUs for new and revised codes effective before the next Five-Year Review (for example, effective CY 2011 through CY 2014, assuming that the next review of malpractice RVUs occurs for CY 2015) are de termined either by a di rect crosswalk to a similar source code or by a modified crossw alk to account for differences in work RVUs

between the new/revised code and the sour ce code (75 FR 73208). For the modified crosswalk approach, we adjust(or "scale") the malpractice RVU for the new/revised code

to reflect the difference in work RVU between the source code and the new/revised work value (or, if greater, the clinical labor porti on of the fully implemented PE RVU) for theCMS-1524-P 145

new code. For example, if the proposed work RVU for a revised code is 10 percent higher than the work RVU for its source code , the malpractice RVU for the revised code would be increased by 10 percen t over the source code RVU. This approach presumes

the same risk factor for the new/revised code and source code but us es the work RVU for the new/revised code to adjust for risk-of-se rvice. For codes reviewed in this proposed

rule the source code for each code is the code itself. Therefore, we calculated the revised malpractice RVU for these codes by scaling the current malpractice RVU by the percent

difference in work RVU between the curre nt (CY 2011) work RVU and the work RVU proposed in section II.B. of this proposed rule. Typically, the assigned malpractice

RVUs for new/revised codes effective between updates remain in place until the next Five-Year Review of Malpractice, which is expected to occu r for CY 2015. We anticipate soliciting pub lic comments in the CY 2013 PFS proposed rule on matters relating to the CY 2015 Five-Year Review of Malpractice. 2. Proposed Revisions to Malp ractice RVUs for Certain Card iothoracic Surgery Services In addition to the scaling of malpract ice RVUs to account for the proportionate difference between current and proposed wo rk RVUs (proposed work RVU changes are discussed previously in section II.B.of this proposed rule) there ar e a 19 cardiothoracic surgery codes for which we propose to scal e the malpractice RVUs to account for the proportionate difference between the current a nd proposed revised specialty risk factor. These codes and their short descriptors are lis ted below in Table 11. 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 malprac tice risk factors of all specialties that

furnish the service. For the CY 2010 revi ew of malpractice RVUs, we used CY 2008CMS-1524-P 146

Medicare claims data on allowed services to establish the fre quency of a service by specialty. For a number of cardiothoracic surgery CPT codes representing major open heart procedures performed primarily on neona tes and infants, CY 2008 Medicare claims

data showed zero allowed servic es. Therefore, our contractor set the number of services to 1, and assigned a risk factor according to the average risk factor fo r all services that do not explicitly have a separate technical or professional component (average risk factor = 1.95). In the CY 2010 PFS final ru le with comment period, we published interim final malpractice RVUs for these codes calcula ted using the average physician risk factor, and finalized them in the CY 2011 PFS final rule with comment period. However, since publication of the CY 2010 PFS final rule with comment period, stakeholders have expressed c oncern that the average risk fa ctor is not appropriate for these services, and that a cardiac surgery risk factor would be more appropriate (cardiac surgery risk factor = 6.93). While these CPT c odes continue to have little to no Medicare claims data, upon clinical review we agree th at these CPT codes re present cardiac surgery services and that the malpractice RVUs s hould be calculated usi ng the cardiac surgery risk factor. Accordingly, we propose to sc ale the malpractice RVUs for these CPT codes to reflect the proportionate difference between the average risk factor and the cardiac surgery risk factor. To scale the malpr actice RVU we used the following formula: (cardiac surgery risk factor/a verage risk factor) * CY 2011 malpractice RVU = Proposed CY 2012 malpractice RVU. For exampl e, CPT code 33471 (Valvotomy, pulmonary valve, closed heart; via pulmonary artery ) has a CY 2011 malprac tice RVU of 1.62 which was calculated using the averag e risk factor of 1.95. To s cale this malpractice RVU toCMS-1524-P 147

reflect the cardiac surgery risk factor of 6.93 we used the following calculation: (6.93 RF/1.95 RF)*1.62 MP RVU = 5.76 MP RVU. CPT code 33692 (Complete repair tetralogy of Fallot without pulmonary atresia;) has a CY 2011 work RVU of 31.54 and a malpractice RVU of 2.23. However, in the Fourth Five-Year Review of Work (76 FR 32410) we have proposed an interim final work RVU of 36.15 and adjusted the malpr actice RVU to 2.56 for this service. Therefore, the starting value for calculati ng the proposed revised malpractice RVU based on the cardiac surgery risk factor is the Fi ve-Year Review malpra ctice RVU instead of the CY 2011 malpractice RVU. Similar to the example shown previously, the formula for this adjustment is as follows: (cardiac surgery risk factor/average risk factor) * Five-Year Review malpractice RVU = Proposed CY 2012 malpractice RVU. Table 11 shows the proposed CY 2012 malp ractice RVUs for th ese cardiothoracic surgery codes. . We also propose to scale the malpractice RVU to reflect a cha nge in risk factor for CPT code 32442 (Removal of lung, total pne umonectomy; with resection of segment of trachea followed by broncho-tracheal anasto mosis (sleeve pneumonectomy)). In the CY 2010 review of malpractice RVUs we assigned CPT code 32442 the pulmonary disease risk factor (2.09) and published the interim final malpractice RVU calculated

from this risk factor in the CY 2010 PFS fina l rule with comment period. This value was finalized in the CY 2011 PFS final rule with comment period. Since finalizing this value, stakeholders ha ve suggested that a blended risk factor of thoracic surgery (6.49) and ge neral surgery (5.91) would be more appropriate for this service. As described in the CY 2010 PFS final rule with comment periodCMS-1524-P 148

(74 FR 61760), we do not use a blended risk fact or for services with Medicare utilization under 100; instead, we use the malpractice risk factor of the specialty that performs the given service the most (the dominant speci alty). As CPT co de 32442 has Medicare

utilization well below the 100 occurrences th reshold, and current Medicare claims data show that the dominant specialty for CPT code 32442 is thoracic surgery, we believe that the thoracic surgery risk factor is the appropriate risk factor for this service at this time. Applying the formula described previously to adjust the malpractice RVU to reflect the thoracic surgery risk factor rather than the pulmonary dise ase risk factor results in a malpractice RVU of 13.21 for CPT code 32442. Therefore, we propose a malpractice

RVU of 13.21 for CPT code 32442 for CY 2012 . Table 11 shows the proposed CY 2012 malpractice RVUs for the cardiothoracic surger y codes described in this section. All malpractice RVUs are listed in Addendum B of this proposed rule, including those that are proposed to be revised and those for whic h there is no proposed change for CY 2012. TABLE 11: CY 2012 PROPOSED MALPRACTICE (MP) RVUS FOR SELECTED CARDIOTHORACIC SURGERY SERVICES

CPT Code Short Descriptor CY 2012 Proposed Specialty Risk Factor CY 2011 MP RVU Proposed CY 2012 MP RVU 33471 Valvotomy pulmonary valve Cardiac Surgery: 6.93 1.62 5.76 33472 Revision of pulmonary valve Cardiac Surgery: 6.93 1.63 5.80 33676 Close mult vsd w/resection Cardiac Surgery: 6.93 2.63 9.36 33677 Cl mult vsd w/rem pul band Cardiac Surgery: 6.93 2.74 9.75 33692 Repair of heart defects Cardiac Surgery: 6.93 *2.56 9.11 33762 Major vessel shunt Cardiac Surgery: 6.93 1.61 5.73 33768 Cavopulmonary shunting Cardiac Surgery: 6.93 0.56 1.99 33771 Repair great vessels defect Cardiac Surgery: 6.93 2.90 10.32 33775 Repair great vessels defect Cardiac Surgery: 6.93 2.33 8.29 33776 Repair great vessels defect Cardiac Surgery: 6.93 2.45 8.72 33777 Repair great vessels defect Cardiac Surgery: 6.93 2.42 8.61 33778 Repair great vessels defect Cardiac Surgery: 6.93 3.05 10.85 33779 Repair great vessels defect Cardiac Surgery: 6.93 3.09 10.99 33780 Repair great vessels defect Cardiac Surgery: 6.93 3.13 11.14 33781 Repair great vessels defect Cardiac Surgery: 6.93 3.09 10.99CMS-1524-P 149

CPT Code Short Descriptor CY 2012 Proposed Specialty Risk Factor CY 2011 MP RVU Proposed CY 2012 MP RVU 33786 Repair arterial trunk Cardiac Surgery: 6.93 2.98 10.60 33788 Revision of pulmonary artery Cardiac Surgery: 6.93 1.93 6.87 33822 Revise major vessel Cardiac Surgery: 6.93 1.25 4.45 32442 Sleeve pneumonectomy Thoracic Surgery: 6.49 4.25 13.21 *The malpractice RVU listed for CPT code 33692 is the Five-Year Review of Work-adjusted malpractice RVU, not the CY 2011 malpractice RVU. Please see above for additional detail.

E. 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 re source cost differences among localities compared to the national average for each of the three fee schedule components (that is, physician work, practice expense (PE), and malp ractice). While requiring that the PE and malpractice GPCIs reflect the full relative cost differences, secti on 1848(e)(1)(A )(iii) of the Act requires that the physician work GP CIs reflect only one-quarter of the relative cost differences compared to the national aver age. In addition, s ection 1848(e)(1)(G) of the Act sets a permanent 1.5 work GPCI floor for services furnished in Alaska beginning January 1, 2009, and section 1848( e)(1)(I) of the Act sets a permanent 1.0 PE GPCI floor

for services furnished in frontie r States beginning January 1, 2011. Section 1848 (e)(1)(E) of the Act provides for a 1.0 floor for the work GPCIs which was set to expire at the e nd of 2009 until it was extended through December 31, 2010 by section 3102 (a) of the Affo rdable Care Act. Because the work GPCI floor was set to expire at the end of 2010, the GPCIs publishe d in Addendum E of the CY 2011 PFS final rule with comment period did not reflect the 1.0 physician work floor. However, section 1848 (e)(1)(E) of the Act was amended on December 15, 2010,CMS-1524-P 150

by section 103 of the Medicare and Medi caid Extenders Act (MMEA) of 2010 (P.L. 111-309) to extend the 1.0 work GPCI fl oor through December 31, 2011. Appropriate changes to the CY 2011 GPCIs were made to reflect the 1.0 physician work floor required by section 103 of the MMEA. Since the work GPCI floor provided in section 1848 (e)(1)(E) of the Act is set to expire prior to the impl ementation of the CY 2012 PFS, the CY 2012 physician work GPCIs, and summ arized geographic ad justment factors (GAFs), presented in this proposed rule do not reflect the 1.0 work GPCI floor. As required by sections 1848 (e)(1)(G) and (I) of the Act, the 1.5 work GPCI floor for

Alaska and the 1.0 PE GPCI floor for frontie r States will be applicable in CY 2012. Moreover, the limited recognition of cost differences in employee compensation and office rent for the PE GPCIs, and the re lated hold harmless provision, required under section 1848 (e)(1)(H) of the Act was only applicable for CY 2010 and CY 2011 (75 FR 73253) and, therefore, is no longer effective beginning in CY 2012. Section 1848(e)(1)(C) of the Act requires us to review and, if necessary, adjust the GPCIs not less often than every 3 years. Th is section also specifies that if more than 1 year has elapsed since the last GPCI revi sion, we must phase in the adjustment over 2 years, applying only one-half of any adjustment in the first year. As noted in the CY 2011 PFS final rule with comment period (75 FR 73252 through 73262), for the sixth GPCI update, we up dated the data used to compute all three GPCI components. Specifically, we util ized the 2006 through 2008 Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) to cal culate the physician work GPCIs (75 FR 73252). In addition, we used the 2006 through 2008 BLS OES data to calculate the employee compensation sub-component of practice expenseCMS-1524-P 151

(75 FR 73255). Consistent with previous upda tes, we used the 2-bedroom residential apartment rent data from HUD (2010) at the 50 th percentile as a pr oxy for the relative cost differences in physician office rents (75 FR 73256). Lastly, we calculated the malpractice GPCIs using malpractice premium data from 2006 through 2007 (75 FR 73256). Since more than 1 year had elapsed sin ce the fifth GPCI upda te, the sixth GPCI update changes are being phased in over a 2-ye ar period as required by law. The current CY 2011 GPCIs reflect the first year of the transition. The proposed CY 2012 GPCIs reflect the full implementation. The Affordable Care Act requires that we analyze the current methodology and

data sources used to calc ulate the PE GPCI component . Specifically, section 1848(e)(1)(H)(iv) of the Act (as added by sect ion 3102(b) of the Affordable Care Act) requires the Secretary to "a nalyze current methods of es tablishing practice expense adjustments under subparagraph (A)(i) and ev aluate data that fairly and reliably

establishes distinctions in the cost of operating a medical practice in different fee schedule areas." Section 1848(e)(1 )(H)(iv) of the Act also re quires that such analysis

shall include an evalua tion of the following:

• The feasibility of usin g actual data or reliable survey data developed by medical organizations on the costs of operati ng a medical practice, in cluding office rents and non-physician staff wages, in different fee schedule areas.

• The office expense portion of the pr actice expense geographic adjustment; including the extent to which types of office expenses are determined in local markets

instead of national markets.CMS-1524-P 152

• The weights assigned to each area of th e categories within the practice expense geographic adjustment. In addition, the weights for different categ ories of practice ex pense in the GPCIs have historically matched the weights de veloped by the CMS Office of the Actuary (OACT) for use in the Medicare Economic Inde x (MEI), the measure of inflation used as part of the basis for the annual update to th e physician fee schedule payment rates. In response to comments received on the CY 2011 Physician Fee Schedule proposed rule, however, we delayed moving to the new ME I weights developed by OACT for CY 2011 pending further analysis. Lastly, we asked the Institute of Medicine (IOM) to evaluate the accuracy of the geographic adjustment factors used for Medi care physician payment. IOM will prepare three reports for the Congress and the Secretary of the Depa rtment of Health and Human Services. The first report (Phase I) wa s released on June 1, 2011, and includes an evaluation of the accuracy of geographic adju stment factors for the hospital wage index and the GPCIs, and the methodology and data us ed to calculate them. In addition, IOM is expected to release a supplemental GPCI report in the summer of 2011. The third report, expected in spring 2012, will evaluate the effects of the adjustment factors on the distribution of the health care workforce, quality of care, population health, and the ability to provide efficient, high value care. Given the timing of the release of IOM's first report and the fact that we do not yet have the second supplemental report on the GPCIs,

we are unable to address the full scope of the IOM recomm endations in this proposed rule. The report can be acces sed on the IOM's website at http://www.iom.edu/Reports/2011/Geographic- Adjustment-in-Medicare-Payment-Phase-CMS-1524-P 153

I-Improving-Accuracy.aspx

. Additionally, we have included a summary of GPCI-specific recommendations in section 4 below. 2. Proposed GPCI Revisions for CY 2012 The revised GPCI values we are prop osing were developed by Acumen, LLC (Acumen) under contract to us. As me ntioned previously, there are three GPCI components (physician work, PE, and malprac tice), and all GPCIs are developed through comparison to a national average for each comp onent. Additionally, each of the three GPCIs relies on its own data source(s) a nd methodology for calculating its value, as described more fully later in this section. As discussed in more detail later in this section, we are proposing to revise the PE GPCIs fo r CY 2012, as well as the cost share weights which correspond to all three GPCIs. a. Physician Work GPCIs The physician work GPCIs are designed to capture the relative cost of physician labor by Medicare PFS locality. Previously, the physician work GPCIs were developed using the median hourly earnings from the 2000 Census of workers in seven professional specialty occupation categories which we used as a proxy for physicians' wages. Physicians' wages are not included in th e occupation categorie s because Medicare payments are a key determinant of physicia ns' earnings. Including physicians' wages in the physician work GPCIs would, in effect , have made the indices dependent upon Medicare payments. As required by law, th e physician work GPCI reflects one-quarter of the relative wage differences for each locality compared to the national average. The physician work GPCI updates in CYs 2001, 2003, 2005, and 2008 were based on professional earnings data from the 2000 Census. For the sixth GPCI update inCMS-1524-P 154

CY 2011, we used the 2006 through 2008 Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES) data as a repl acement for the 2000 Census data. We are not proposing to revise the physician work GP CI data source for CY 2012. However, we

note that the work GPCIs will be revised to account for the expiration of the statutory

work floor. The 1.5 work floor for Alaska is permanent and will be applicable in CY 2012. In addition, we are proposing to re vise the physician work cost share weight

from 52.466 to 48.266 in line with the 2011 ME I weights, which are based on 2006 data (referred to hereinafter as the 2006-based MEI). b. Practice Expense GPCIs (1) Affordable Care Act Analys is and Revisions for PE GPCIs (A) General Analysis for the CY 2012 PE GPCIs As previously mentioned, section 1848( e)(1)(H)(iv) of the Act (as added by section 3102(b) of the Affordable Care Act) requires the Secretary to "analyze current methods of practice expense adjustments unde r subparagraph (A)(i) and evaluate data that fairly and reliably establishes distincti ons in the cost of operating a medical practice

in different fee schedule areas." Moreover, section 1848 (e)(1)(H )(v) of the Act requires the Secretary to make appropriate adjustments to the PE GPCIs as a result of the required an alysis no later than by January 1, 2012. We are proposing to make fo ur revisions to the PE data sources and cost share weights discussed herein effective January 1, 2012. Specifically, we are proposing to: (1) revise the occupations used to calculate the employee wage component of PE using BLS wage data specific to the office of physicians' industry; (2) utilize two

bedroom rental data from the 2006-2008 Amer ican Community Survey as the proxy forCMS-1524-P 155

physician office rent; (3) create a purchased service index that accounts for regional variation in labor input costs for contracted services from industries comprising the "all other services" category within the MEI o ffice expense and the stand alone "other professional expenses" category of the ME I and; (4) use the 2006-based MEI (most recent MEI weights finalized in the CY 2011 final rule with comment period) to determine the GPCI cost share weights. These proposals are based on analyses we

conducted to address commenter concerns in the CY 2011 final rule with comment period. The main comments were related to: (1) the occupational groups used to calculate the employee wage component of PE , and (2) concerns by commenters stating that regional variation in purchased serv ices such as legal and accounting are not sufficiently included in th e employee wage index. We began analyzing the current met hods and data sources used in the establishment of the PE GPCIs during the CY 2011 rulemaking process (75 FR 40084). With respect to our CY 2011 analysis, we began with a review of the Government Accountability Office's (GAO) March 2005 Re port entitled, "Medicare Physician Fees: Geographic Adjustment Indices Are Valid in Design, but Data and Methods Need Refinement" (GAO-05-119). While we have rais ed concerns in the past about some of the GAO's GPCI recommendations, we noted that with respect to the PE GPCIs, the GAO did not indicate any signifi cant issues with the methods underlying the PE GPCIs. Rather, the report focused on some of the data sources used in the method. For example, the GAO stated that the wage data used for the PE GPCIs are not current. Similarly, commenters on previous PE GPCI updates pr edominantly focused on either the data

sources used in the method or raised issues such as incentiv izing the provision of care inCMS-1524-P 156

different geographic areas. Ho wever, the latter issue (incen tivizing the provision of care) is outside the scope of the st atutory requirement that the PE GPCIs reflect the relative costs of the mix of goods and se rvices comprising practice ex penses in the different fee schedule areas relative to the national average. To further analyze the PE office e xpense in accordance with section 1848(e)(1)(H)(iv) of the Act, we examined the following issues: the appropriateness of expanding the number of occupations included in the employee wage index; the appropriateness of replacing re ntal data from the Department of Housing and Urban Development (HUD) with data from the 2006-2008 American Community Survey (ACS) two bedroom rental data as a proxy for th e office rent subcomponent of PE; and the appropriateness of adjusting the "all other se rvices" and "other pr ofessional expenses" MEI categories for geographic variation in la bor-related costs. We also examined available ACS occupational group data for potential use in determining geographic variation in the employee wage component of PE. An additional component of the analysis under section 1848(e)(1)(H)(iv) of the Act is to evaluate the weights assigned to each of the categorie s within the practice expense geographic adjustment. As discusse d in the CY 2011 final rule with comment period (75 FR 73256), in response to concerns ra ised by commenters and to allow us time to conduct additional analysis, we did not revi se the GPCI cost share weights to reflect the weights used in the revised and reba sed 2006 MEI that we adopted beginning in CY 2011. In response to those commenters, whom raised many points regarding the appropriateness of assigning labor-related co sts in the medical equipment and supplies and miscellaneous component which do not reflec t locality cost differentials, we agreedCMS-1524-P 157

to address the GPCI cost share weights ag ain in the CY 2012 PFS proposal. These issues are discussed in greater detail in the section of this rule that discusses our determination of the cost share weights.

We also stated in the CY 2011 final rule with comment period that we would review the findings of the Secretary's Me dicare Geographic Payment Summit and the MEI technical advisory panel during future rulemaking (75 FR 73256). The Secretary

convened the National Summit on Health Ca re Quality and Value on October 4, 2010. This Summit was attended by a number of policy experts that engaged in detailed discussions regarding geographi c adjustment factors and geog raphic variation in payment and the promotion of high quality care. This National Summit was useful to informing us on issues which we are studying further thr ough three Institute of Medicine studies (including the recently released first of th ree reports on Geographic Adjustment Factors and a separate report on Ge ographic Variation in Hea lth Care Spending and the Promotion of High Value Care). In accordan ce with Section 3102 (b) of the Affordable Care Act, we are also continuing to consider these issues in the course of notice and comment rulemaking for the CY 2012 PFS, whic h includes revisions to the GPCI, and through preparation of a report to the Congress that we will be submitting later this year in accordance with section 3137(b) of the Affordable Care Act on a plan for reforming the hospital wage index. In addition, the Agency is currently working through the various administrative requirements to forma lly organize the MEI technical advisory panel. We expect that this panel will be convened in the ne ar future. We look forward to examining the recommendations of this panel once it has issued its report. (B) Analysis of ACS Rental DataCMS-1524-P 158

In the CY 2011 final rule with comment pe riod, we finalized our policy to use the 2010 apartment rental data produced by HUD at the 50 th percentile as the proxy for relative cost differences in physician office re nts. However, as part of our analysis required by section 1848(e)(1)(H)(iv ) of the Act, we have now examined the suitability of utilizing 3-year (2006-2008) AC S rental data to serve as a proxy for physician office

rents We believe that the ACS rental data provide a sufficient degree of reliability and are an appropriate source on which to base our PE GPCI office rent proxy. We also believe that the ACS data provide a higher de gree of accuracy than the HUD data since the ACS is updated annually and is not base d on data collected by the 2000 Census long form. Moreover, it is our understanding that the Census long form, which is utilized to collect the necessary base year rents for th e HUD Fair Market Rent (FMR) data, will no longer be available in future years. Theref ore, we are proposing to use the available 2006 through 2008 ACS rental data for two bedr oom residential units as the proxy for physician office rent. We were not able to co llect and analyze 5-year ACS rental data in time for this proposed rule. We may use 5-ye ar ACS data in future rulemaking decisions and would welcome public comments regarding utilization of the 5-y ear ACS rental data as a proxy for physician office rent. We believe the ACS data will more accurately reflect geographic variation in the office rent component. As in past GPCI updates, we propose to apply a nationally uniform weight to the office rent compone nt. Although we investigated varying the weight of the office rent inde x for different localities, we could not find a comprehensive data source that provides office rent informa tion that would allow direct measurement of the variation in this expense among fee schedu le areas. Therefore, we are proposing toCMS-1524-P 159

use the 2006-based MEI weight for fixed capital and utilities as the weight for the office rent category in the PE GPCI, and using th e ACS residential rent data to develop the practice expense GPCI value. We welcom e public comments on whether there are potential data sources (especia lly publicly available sources) that would readily provide comprehensive office rent information that would allow us to accurately measure the geographic variation in this e xpense among fee schedule areas. (C) Employee Wage Analysis Accurately evaluating the relative price that physicians pay for labor inputs requires both a mechanism for selecting the occupations to include in the employee wage index and identifying an accurate measure of the wages for each occupation. We received comments during the CY 2011 rulemaking cycle noting that the current employee wage methodology may omit key occupational categories for which cost varies significantly across regions. Commenters suggested including occupations such as accounting, legal, and information technology in the employee wage component of the PE GPCI. To address these concerns, we propose to revise the employee wage index framework within the practice expense (PE) GPCI. Under this new methodology, we would only select occupational categories relevant to a physician's practice. We would use a comprehensive set of wage data from the Bureau of Labor Statistics Occupational Employment Statistics (BLS OES) specific to the offices of physicians industry. Utilizing wage and nati onal cost share weight data from the BLS OES would not only provide a more systematic appr oach to determining which occupations should be included in the non-physician employee wage category of the PE GPCI, but would also enable us to determine how much weight each occupation should receive within the index. Due to its reliability, public availability, level of detail, and national scope, we propose to use BLS OES data to estimate both occupation cost shares and hourly wages forCMS-1524-P 160

purposes of the non-physician employee wage component of the PE GPCI. The OES panel data are collected from approximately 200,000 establishments, and provide employment and wage estimates for about 800 occupations. At the national level, OES provides estimates for over 450 industry classifications (using the 3, 4, and 5 digit North American Industry Classification System (NAICS)), including th e Offices of Physicians industry (NAICS 621100). As described in the census, the Offices of Physicians industry comprises establishments of health practitioners having the degree of M.D. (Doc tor of Medicine) or D.O. (Doctor of Osteopathy) primarily engaged in the independent practice of general or specialized medicine (except psychiatry or ps ychoanalysis) or surgery. These practitioners operate private or group practices in their own offices (such as, centers, clinics) or in the facilities of others, such as hospitals or H ealth Maintenance Organization (HMO) medical centers. The OES data provide significant detail on occupational categories and offer national level cost share estimates for the offices of physicians industry. We also evaluated available ACS occupational data as a potential data source for the non-physician employee wage PE GPCI subcomponent. Based on the occupations currently used to calculate employee wages, the BLS OES captures occupations with greater relevancy to physician office practices and is a more appropriate data source than the currently available ACS data. However, we intend to study an expanded mix of occupations utilizing 5-year ACS data as that data become available. We welcome comments on our proposal to use the BLS OES specific to the office of physicians industry. In this proposed methodology, we weight each occupation based on its share of total labor cost within the offices of physician industry. Specifically, each occupation's weight is proportional to the product of its occupation's employment share and average hourly wage. In this calculation, we use each occupation's employment level rather than hours worked, because the BLS OES does not contain industry-specific information describing the number of hours worked inCMS-1524-P 161

each occupation (see: http://www.bls.gov/oes/current/naics4_621100.htm ). This proposed methodology would account for 90 percent of the total wage share in the office of physicians industry. Additionally, this strategy produces 33 individual occupations with the highest wage shares and would account for many of the occupations commenters have stated were historically excluded from the employee wage calculation (for example, accounting, auditors, and medical transcriptionists), We also welcome public comments on the potential use of the 5-year ACS data to calculate the empl oyee wage component of the PE GPCI. (D) Purchased Services Analysis For CY 2012, we are proposing to geographically adjust the labor-related industries within the "all other services" and "other professional expenses" categories of the MEI. In response to commenters who stated that thes e purchased services were labor-related and should be adjusted geographically, we agreed to examine this issue further in the CY 2011 final rule with comment period and re frained from making any changes. Based on our subsequent examination of this issu e, we believe it would be appropriate to geographically adjust for the labor-related component of purchased services within the

"All Other Services" and "Other Professional Ex penses" categories using BLS wage data. In total, there are 63 industries, or cost ca tegories, accounted for w ithin the "all other services" and "other professional services" categories of the 2006-based MEI. As we established for purposes of the hospital wa ge index in 74 FR 43845, we define a cost category as labor-related if th e cost category is defined as being both labor intensive and its costs vary with, or are influenced by the local labor market. The total proposed purchased services component accounts for 8.095 percent of total practice cost. However, only 5.011 percentage points (of the total 8.095 percentage points assigned to purchased services) are defined as labor-related and thus adjusted for locality costCMS-1524-P 162

differences. These 5.011 percentage points repr esent cost categories that we believe are

labor intensive and have costs th at vary with, or are influenced by, the local labor market. The labor-related cost categorie s include but are not limited to building services (such as janitorial and landscaping), security services , and advertising serv ices. The remaining weight assigned to the non labor-related i ndustries (3.084 percentage points) represent

industries that do not meet the criteria of being labor intens ive or having their costs vary

with the local labor market.

In order to calculate the labor-related and non-labor- related shares, we would use a similar methodology that is employed in es timating the labor-related share of various

CMS market baskets. A more detailed e xplanation of this methodology can be found under the supporting documents section of th e CY 2012 PFS proposed rule web page at http://www.cms.gov/PhysicianFeeSched/

. We believe our analysis, dur ing 2010 and this year, of the current methods of establishing PE GPCIs and our evaluation of data that fairly and reliably establish

distinctions in the cost of operating a medical practice in th e different fee schedule areas meet the statutory requirements of section 1848 (e)(1)(H)(iv) of the Act. A more detailed discussion of our analysis of current methods of establishi ng PE GPCIs and evaluation of

data sources is included in Acumen's draft report entitled, "Propos ed Revisions to the Sixth Update of the Geographic Practice Co st Index." Acumen's draft report and associated analysis of the proposed GPCI revisions, including the PE GPCIs, will be made publicly available on the CMS website. The draft report may be accessed from the

PFS website at: http://www.cms.gov/PhysicianFeeSched/ under the "Downloads" section of the CY 2012 PFS proposed rule web page.CMS-1524-P 163

Additionally, see secti on VII.B. of this proposed rule for Table 66, which reflects the GAF impacts resulting from these proposals. As the table demonstrates, the primary driver of the CY 2012 impact is the expiration of the work GPCI floor which had produced non-budget neutral increases to th e CY 2011 GPCIs for lower cost areas as

authorized under the Affordable Care Act the Medicare and Medicaid Extenders Act (MMEA). (E) Determining the PE GPCI Cost Share Weights To determine the cost share weights for the CY 2012 GPCIs, we are proposing to use the weights established in the 2006-based MEI. The MEI was rebased and revised in the CY 2011 final rule with comment period to reflect the weighted-average annual price change for various inputs needed to provide phy sicians' services. As discussed in detail in that section (75 FR 73262 through 73277), th e 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 physic ians and selected self-employed non-medical doctor specialties. Since we have historically updated the GPCI cost share weights consistent with the most recent update to the MEI, and because we have addressed commenter concerns regarding the in clusion of the weight assigned to utilities with office rent and geographically adjusted for the labor intensive industries within the

"all other services" and "other professional expenses" MEI ca tegories, we believe it is appropriate to adopt the 2006-ba sed MEI cost share weights. (i) Practice Expense For the cost share weight for the proposed CY 2012 PE GPCIs, we would use the 2006-based MEI weight for the PE category of 51.734 percent minus the professionalCMS-1524-P 164

liability insurance category we ight of 4.295 percent. Theref ore, we propose a cost share weight for the PE GPCIs of 47.439 percent. (ii) Employee Compensation For the employee compensation portion of the PE GPCIs, we would use the non-physician employee compensation category we ight of 19.153 percent reflected in the

2006-based MEI. (iii) Office Rent We are proposing that the weight for th e office rent component be revised from 12.209 percent to 10.223 percent. The 12.209 per cent office rent GPCI weight was set equal to the 2000-based MEI cost weight for office expenses, which was calculated using the American Medical Association's (AMA) Socioeconomic Monitoring Survey (SMS). The 12.209 percent reflected the expenses fo r rent, depreciation on medical buildings, mortgage interest, telephone, a nd utilities. We are proposing to set the GPCI office rent equal to 10.223 percent refl ecting the 2006-based MEI cost weights (75 FR 73263) for fixed capital (reflecting the expenses for rent, depreciation on medical buildings and mortgage interest) and utilities. We are no longer including telephone costs in the GPCI office rent cost weight because we believe these expenses do not vary by geographic

area. Consistent with the revised and reba sed 2006-based MEI which was adopted in the CY 2011 final rule with comment pe riod (75 FR 73263), we disaggregated the broader office expenses component for the PE GPCI into 10 new cost categories. In this disaggregation, the fixed capital component is the office expense cat egory applicable to the office rent component of the PE GPCI. As discussed in the section dealing withCMS-1524-P 165

office rent, we are proposing to use 2006-2008 ACS rental data as the proxy for physician office rent. This data represents a gross rent amount and includes data on utilities expenditures. Since it is not possible to separate the utilit ies component of rent for all ACS survey respondents, it was necessary to combine these two components to calculate office rent and by extension, we propose co mbining those two cost categories when assigning a weight to th e office rent component. (iv) Purchased Services As discussed in the previous paragra phs, a new purchased services index was created to geographically adju st the labor- related component s of the "All Other Services" and "Other Professional Expens es" categories of the MEI offi ce expense. In order to calculate the purchased services index, we are proposing to merge the corresponding weights of these two categories to form a combined purchased services weight of 8.095 percent. However, we are proposing to on ly adjust for locality cost differences of

the labor- related share of the industries comprising the "All Other Services" and "Other Professional Expenses" categor ies. We have determined that only 5.011 percentage points of the 8.095 percentage points would be adjusted for locality cost differences (5.011 adjusted purchased service + 3.084 non- adjusted purchased services= 8.095 total cost share weight). (v) Equipment, supplies, and other misc expenses To calculate the proposed medical equipm ent, supplies, and other miscellaneous expenses component, we removed professi onal liability (4.295 percentage points), non-physician employee compensation (19.153 percen tage points), fixe d capital/utilities (10.223 percentage points), and purchased serv ices (8.095 percentage points) from the PECMS-1524-P 166

category weight (51.734 percent). Therefore, we are proposing a cost share weight for the medical equipment, supplies, and othe r miscellaneous expenses component of 9.968 percent. Consistent with previous met hodology, this component of the PE GPCI is not adjusted for geographical variation. (vi) Physician Work and Malpractice GPCIs Furthermore, we propose to use the phys ician compensation cost category weight of 48.266 percent as the proposed work GPCI cost share weight; and we propose to use the professional liability insurance weight of 4.295 percent for the malpractice GPCI cost share weight. We believe our analysis and ev aluation of the weights assigned to each of the categories within the PE GPCIs satisfies the statutory requirements of section 1848(e)(1)(H)(iv) of the Act. The proposed cost share weights for th e CY 2012 GPCIs are displayed in Table 12. For a detailed discussion regarding the GP CI cost share weight s and how the weights account for local and national adjustments, see Acumen's "Proposed Revisions to the Sixth Update of the Geographic Prac tice Cost Index" draft report at ( http://www.cms.gov/PhysicianFeeSched/ ) Table 12: Cost Share Weights for CY 2012 GPCI Update Expense Category Current Cost Share Weights % Proposed Cost Share Weights % Physician Work 52.466 48.266 Practice Expense 43.669 47.439 Employee Compensation 18.654 19.153 Office Rent 12.209 10.223 1 Purchased Services N/A 8.095 2 Equipment, Supplies, and Other 12.806 9.968 Malpractice Insurance 3.865 4.295 1 ACS rental data is a measurement of gross rent and includes utilities. In order to accurately capture the utility measurement present in the ACS two bedroom gross rent data, the cost share weight for utilities is combined with the fixed capital portion to form the office rent index.CMS-1524-P 167

2 The cost share weight for purchase d services contains both an adju sted and non-adjusted portion. (5.011 percentage points geographically adjusted purchased services + 3.084 percentage points non-adjusted purchased services). (F) PE GPCI Floor for Frontier States Section 10324(c) of the Affordable Ca re Act added a new subparagraph (I) under section 1848(e) (1) of the Act to establish a 1.0 PE GPCI floor for physicians' services

furnished in frontier States effective Ja nuary 1, 2011. In accordance with section 1848(e)(1)(I) of the Act, be ginning in CY 2011, we applied a 1.0 PE GPCI floor for physicians' services furnished in States dete rmined to be frontier States. There are no proposed changes to those states identified as "frontier States" for the CY 2012 proposed rule. The qualifying States are reflected in Table 13. In accordance with statute, we will apply a 1.0 GPCI floor for these states in CY 2012.

TABLE 13: Frontier States Under S ection 1848(E)(1)(I) of the Act (As added by section 10324(c) of the Affordable Care Act)

State Total Counties Frontier Counties Percent Frontier Counties (relative to counties in the State) 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 CY 2012 PE GPCI proposal The PE GPCIs include four componen ts: employee compensation, office rent, purchased services, and medical equipment, supplies and miscellaneous expenses. Our proposals relating to each of th ese components are as follows:

• Employee Compensation: We are pr oposing to geographically adjust the employee compensation using the 2006 thr ough 2008 BLS OES data specific to the offices of physicians industry along with nationwide wage data to determine theCMS-1524-P 168

employee compensation component of the PE GPCIs. The proposed employee compensation component accounts for 19.153 percent of total practice costs or 40.4 percent of the total PE GPCIs.

• Office Rents: We are proposing to ge ographically adjust office rent using the

2006-2008 ACS residential rental data for two bedroom units as a proxy for the relative cost differences in physician office rents. In addition, we are proposing to consolidate the

utilities into the office rent we ight to account for the utility da ta present in ACS gross rent data. The proposed office rent component accounts for 10.223 percent of total practice cost or 21.5 percent of the PE GPCIs.

• Purchased Services: We are prop osing to geographically adjust the labor-related component of purchased servic es within the "All Other Services" and "Other Professional Expenses "categorie s using BLS wage data. The methodology employed to estimate purchased services expens es is based on the same data used to estimate the employee wage index. Specifi cally, the proposed purchased services framework relies on BLS OES wage data to estim ate the price of labor in industries that physician offices frequently rely upon for cont racted services. As previously mentioned, the labor-related share adjustment for each industry was derived using a similar methodology as is employed for estimating the labor-related shares of CMS' market baskets. Furthermore, the weight assigned to each industry within the purchased services

index was based on the 2006-based MEI. A more detailed discussion regarding CMS market baskets, as well as the corresponding definitions of a "labor- related share" and a

"non -labor- related share" can be view ed at (74 FR 43845). The total proposed purchased services component accounts for 8.095 percent of total practice cost orCMS-1524-P 169

17.1 percent of the PE GPCI. However, the proportion of purchased services that is geographically adjusted for locality cost difference is 5.011 percentage points of the 8.095 percentage points or 10.6 percent of the PE GPCI.

• Medical Equipment, Supplies, and othe r Miscellaneous Expenses: We continue to believe that items such as medical equipm ent and supplies have a national market and that input prices do not vary appreciably among geographic areas. As discussed in previous GPCI updates in the CY 2008 and CY 2011 PFS proposed rules, specifically the fifth GPCI update (72 FR 38138) and sixt h GPCI update (75 FR 73256), respectively, some price differences may exist, but we belie ve these differences are more likely to be based on volume discounts rather than on geogr aphic market differences. For example, large physicians' practices may utilize mo re medical equipment and supplies and therefore may or may not receive volume disc ounts 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 factor ed into the PE GPCIs with a component index of 1.000. The proposed medical equipment, supplies, and other miscellaneous expense component account for 9.968 percent of total practice cost or 21.0 percent of the PE GPCI. c. Malpractice GPCIs The malpractice GPCIs are calculated ba sed 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 pol icy term). We chose claims-made policies because they are the most commonly used ma lpractice insurance policies in the United States. We used claims-made policy rates rather than occurrence policies because aCMS-1524-P 170

claims-made policy covers physicians for the policy amount in effect when the claim is made, regardless of the date of event in que stion; whereas an occurrence policy covers a physician for the policy amount in effect at th e time of the event in question, even if the policy is expired

. Based on the data we analyzed, we are proposing to revise the cost share weight for the malpractice GPCI from 3.865 percent to 4.295 percent. 3. Payment Localities The current PFS locality structure was developed and implemented in 1997. There are currently 89 total PFS localities; 34 localit ies are Statewide areas (that is, only one locality for the entire State). 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. Th e District of Columbia, Maryland, Virginia suburbs, Puerto Rico, and the Virgin Islands are additional locali ties 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 th e locality configuration must be made in a budget neutral manner within a State and can lead to si gnificant redistributions in payments. For many years, we have not cons idered making changes to localities without the support of a State medical association in order to demonstrate consensus for the change among the professionals whose payments would be affected (since such changes would be redistributive, with some increasing and some decreasing). However, we have recognized that, over time, changes in dem ographics or local economic conditions mayCMS-1524-P 171

lead us to conduct a more comprehensive ex amination of existing payment localities. For the past several years, we have been involved in discussions with physician groups and their representatives about recent shifts in relative demographics and economic conditions. We explained in the CY 2008 PFS final rule with comment period that we intended to conduct a thorough analys is of potential approach es to reconfiguring

localities and would address this issue again in future rule making. 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 prelim inary study of several options for revising the payment localities on a na tionwide 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 GP CI Payment Locality Structures," remains accessible from the CMS PFS Web page under the heading "Interim St udy 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 note that the discussion of PFS paym ent localities and our preliminary study of alternative payment local ity configurations in the CY 2011 PFS proposed rule was intended for informational purposes only. We are not making any proposals regarding the PFS locality configurations for CY 2012. 4. Report from the Institute of Medicine At our request, the Institute of Medicine is conducting a study of the geographicCMS-1524-P 172

adjustment factors in Medicare payment. It is a comprehensive empirical study of the geographic adjustment factors establis hed under sections 1848(e) (GPCI) and 1886(d)(3)(E) (hospital wage i ndex) of the Act. These adjustments are designed to ensure Medicare payment fees and rates re flect differences in input costs across geographic areas. The factors IO M is evaluating include the--

● Accuracy of the adjustment factors;

● Methodology used to determin e the adjustment factors, and

● Sources of data and the degree to which such data are representative.

Within the context of the U.S. health care marketplace, the IOM is also evaluating and considering the--

● Effect of the adjustment factors on the level and di stribution of the health care workforce and resources, including-- ++ Recruitment and retention taking into account mobility between urban and rural areas; ++ Ability of hospitals a nd other facilities to mainta in an adequate and skilled workforce; and ++ Patient access to providers a nd needed medical technologies;

● Effect of adjustment factors on popul ation health and qua lity of care; and

● Effect of the adjustment factors on the ability of provi ders to furnish efficient, high value care. The first report "Geographic Adjustment in Medicare Payment, Phase I: Improving Accuracy" is a "Phase I report" that was released June 1, 2011 and is available

on the IOM websiteCMS-1524-P 173

http://www.iom.edu/Reports/2011/Geographic- Adjustment-in-Medicare-Payment-PhaseI-Improving-Accuracy.aspx . It evaluates the accuracy of geographic adjustment factors and the methodology and data used to calcula te them. The IOM is conducting further study on GPCI payment issues, and a supplemental report is expected to be issued in the

summer of 2011 to address those issues. In it s final report, scheduled to be released in the spring of 2012, the IOM will consider the ro le of Medicare payments in addressing

matters such as the distribution of the hea lth care workforce, population health, and the ability of providers to produce high- value, high-quality health care. The recommendations specifically related to the GPCI included in IOM's first phase report are summarized below:

● Recommendation 2-1: The same labor ma rket definition should be used for both the hospital wage index and the physician ge ographic adjustment factor. Metropolitan

statistical areas and Statewide non-metropolitan statistical areas should serve as the basis for defining these labor markets.

● Recommendation 5-1: The IOM recomme nds constructing the geographic practice cost indexes with the full range of occupatio ns employed in physicians' offices, each with a fixed national weight based on the hours of each occupation employed in physicians' offices

nationwide.

● Recommendation 5-2. The committee recommends that the Centers for Medicare

and Medicaid Services and the Bureau of Labor Statistics develop an agreement allowing the

Bureau of Labor Statistics to analyze confidential data fo r the Centers for Medicare and

Medicaid Services.

● Recommendation 5-3: The committee recommends that a new source of

information be identified to obtain data on commercial office rent per square foot.CMS-1524-P 174

Because of the timeline related to the release of the PFS proposed rule, we did not have adequate time to fully evaluate th ese recommendations in the CY 2012 proposed rule. As previously discussed, the IOM w ill be releasing a supplemental report in the

summer of 2011 that will address additional an alysis related to the physician work GPCI.

We will address the IOM recommendations once we are able to assess the IOM's full recommendations and have given our stakeholde rs an opportunity to evaluate them. Any changes to the GPCIs in response to the af orementioned IOM recommendations will be proposed through the rulemaking process to allow an opportunity for public notice comment before making revisions.

III. Medicare Telehealth Services For The Physician Fee Schedule A. Billing and Payment for Telehealth Services 1. History Prior to January 1, 1999, Me dicare coverage for services delivered via a telecommunications system was limited to services that did not require a face-to-face

encounter under the traditional model of medi cal care. Examples of these services included interpretation of an x-ray, or el ectrocardiogram, or electroencephalogram tracing, and cardiac pacemaker analysis. Section 4206 of the BBA provided for cove rage of, and payment for, consultation services delivered via a telecommunications sy stem to Medicare beneficiaries residing in rural health professional shorta ge areas (HPSAs) as defined by the Public Health Service Act. Additionally, the BBA required that a Me dicare practitioner (tel epresenter) 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 referringCMS-1524-P 175

practitioner and could not exceed the fee sche dule 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 a ssociated 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 significan tly expanded Medicare te lehealth services. Section 1834(m)(4)(F)(i) of the Act defines Medicare telehealth services to include consultations, office visits, office psychiat ry services, and a ny additional service specified by the Secretary, when delivered vi a 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 te lecommunications 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 practi tioner at the distant site. Telephones, facsimile machines, a nd electronic mail systems do not meet the

definition of an interactive telecomm unications system. An interactiveCMS-1524-P 176

telecommunications system is generally re quired as a condition of payment; however, section 1834(m)(1) of the Act does allow th e use of asynchronous "store-and-forward" technology in delivering these services when the originating site is a Federal telemedicine demonstration program in Alaska or Hawa ii. 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 provi ded to an eligible telehealth individual notwithstanding the fact that the individual practitioner pr oviding the telehealth service is not at the same location as the beneficiary. An eligible telehealth individual means an

individual enrolled under Part B who receiv es a telehealth service furnished at an originating site. As specif ied in BIPA, originating s ites are limited under section 1834(m)(3)(C) of the Act to specified medical facilities located in specific geographic areas. The initial list of telehealth origina ting sites included the office of a practitioner, a critical access hospital (CAH), a rural health clinic (RHC), a federally qualified health center (FQHC) and a hospital (as defined in Section 1861(e)). More recently, section 149 of the Medicare Improvements for Patient s and Providers Act of 2008 (Pub. L. 110-275) (MIPPA) expanded the list of te lehealth originating sites to include hospital-based renal dialysis centers, skilled nursing facilities (SNFs), and community mental health centers (CMHCs). In order to serve as a telehealth or iginating site, these sites must be located in an area designated as a rural health professiona l shortage area (HPSA), in a county that is not in a metropolitan statistical area (MSA), or must be an en tity that participates in a Federal telemedicine demonstration projec t that has been approved by (or receivesCMS-1524-P 177

funding from) the Secretary of Health and Human Services as of December 31, 2000. Finally, section 1834(m) of the Act does not requ ire the eligible telehe alth individual to be presented by a practitioner at the originating site.

2. Current Telehealth Bi lling and Payment Policies As noted above, Medicare telehealth servi ces can only be furnished to an eligible telehealth beneficiary in an or iginating site. An originating site is defined as one of the specified sites where an eligible telehealth individual is locat ed at the time the service is being furnished via a telecommunications system . In general, originating sites must be

located in a rural HPSA or in a county outside of an MSA. The originating sites authorized by the statute are as follows:

● Offices of a phys ician or practitioner

● Hospitals

● CAHs

● RHCs

● FQHCs

● Hospital-Based Or Criti cal 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 visitsCMS-1524-P 178

● Individual psychotherapy

● Pharmacologic management

● Psychiatric diagnostic interview examination

● End-stage renal disease (ESRD) related services

● Individual and group medi cal nutrition therapy (MNT)

● Neurobehavioral status exam

● Individual and group h ealth and behavior assessm ent and intervention (HBAI)

● Subsequent hospital care

● Subsequent nursing facility care

● Individual and group kidney disease education (KDE)

● Individual and group diabetes self-man agement training services (DSMT) In general, the practitioner at the di stant 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; or a

● Registered dietitian or nutrition professional. Practitioners furnishing Medicare telehealth services are located at a distant site,CMS-1524-P 179

and they submit claims for telehealth services to the Medicare cont ractors that process

claims for the service area where their distan t site is located. S ection 1834(m)(2)(A) of the Act requires that a practi tioner who furnishes a telehealth service to an eligible telehealth individual be paid an amount equa l to the amount that the practitioner would have been paid if the service had been furn ished without the use of a telecommunications system. Distant site practitioners must s ubmit the appropriate HCPC S 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 cert ifies that the beneficiary was present at a telehealth originating site when the telehealth service was furnished. The usual Medicare deductible and coinsurance polic ies 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 s ite facility fee, the pr ovider or supplier where the eligible telehealth individual is located must subm it a claim with HCPCS code Q3014 (Telehealth originating site f acility fee), and the provider or supplier is paid according to the applicable payment methodology for that fa cility or location. The usual Medicare deductible and coinsurance policies appl y 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 ha s been approved by (or receive s funding from) the SecretaryCMS-1524-P 180

of Health and Human Services as of December 31, 2000 as specified in section 1834(m)(4)(C)(i)(III) of the Act. As previously described, certain prof essional services that are commonly furnished remotely using telecommunicati ons technology, but that do not require the patient to be present in-pers on with the practitioner when they are furnished, are covered and paid in the same way as services deliv ered without the use of telecommunications technology when the practitioner is in-person at the medical fac ility furnishing care to the patient. Such services typically involve ci rcumstances where a practitioner is able to visualize some aspect of the patient's c ondition without the patie nt being present and without the interpositi on of a third person's judgment. Visualization by the practitioner can be possible by means of x-rays, electrocar diogram 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, elec tronically, rather than by means of a verbal description) is a covered physician's service. These remote se rvices 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 ServicesCMS-1524-P 181

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 pub lic with an ongoing opportunity to submit requests for adding services. We assign any request to make a dditions to the list

of Medicare telehealth services to one of the following categories:

● Category 1: Services that are similar to profes sional consultations, office visits, and office psychiatry services that are currently on the list of telehealth services. In reviewing these requests, we look for si milarities between the requested and existing

telehealth services fo r the roles of, and in teractions among, the beneficiary, the physician (or other practitioner) at the dist ant 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 interactiv e audio and video equipment.

● Category 2: Services th at are not similar to the current list of telehealth services. Our review of these requests incl udes an assessment of whether the use of a telecommunications system to deliver the serv ice produces similar diagnostic findings or therapeutic interventions as compared with th e in-person delivery of the same service. Requestors should submit evidence showing that the use of a telecommunications system does not affect the diagnosis or treatment plan as compared to in-person delivery of the requested service. Since establishing the process to add or re move services from the list of approved telehealth services, we have added the follo wing to the list of Medicare telehealth services: individual and group HBAI serv ices; psychiatric diagnostic interview examination; ESRD services with 2 to 3 visits per month and 4 or more visits per monthCMS-1524-P 182

(although we require at least 1 visit a mont h to be furnished in-person by a physician, CNS, NP, or PA in order to examine the vascular access site); individual and group MNT; neurobehavioral status exam; initi al and follow-up inpatient telehealth consultations for beneficiaries in hospita ls and skilled nursing facilities (SNFs); subsequent hospital care (with the limitati on of one telehealth visit every 3 days); subsequent nursing facility care (with the lim itation of one telehealth visit every 30 days); individual and group KDE; and individual and group DSMT services (with a minimum of 1 hour of in-person instruction to en sure effective injection training). Requests to add services to the list of Medicare telehealth services must be

submitted and received no later than December 31 of each calendar year to be considered for the next rulemaking cycle. For exampl e, requests submitted before the end of CY 2011 will be considered for the CY 2013 proposed rule. Each request for adding a

service to the list of Medi care telehealth services must include any supporting documentation the requester wishes us to consid er 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 servi ces, requestors should be a dvised 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 www.cms.gov/telehealth/

. C. Submitted Requests for Addition to the List of Telehealth Services for CY 2012 We received requests in CY 2010 to add the following services as Medicare

telehealth services effectiv e for CY 2012: (1) smoking cessa tion services; (2) criticalCMS-1524-P 183

care services; (3) domiciliary or rest home evaluation and management services; (4) genetic counseling services; (5) online evaluation and management services; (6) data collection services; and (7) a udiology services. The following presents a discussion of these requests, including our proposals for additions to the CY 2012 telehealth list. 1. Smoking Cessation Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add smoking cessation services , reported by CPT codes 99406 (Smoking and tobacco use cessation counseling visit; inte rmediate, greater than 3 minutes up to 10 minutes) and 99407 (Smoking and tobacco us e cessation counseling visit; intensive, greater than 10 minutes) to the list of approved teleheal th services for CY 2012 on a category 1 basis. Smoking Cessation services are define d as face-to-face behavior change

interventions. We believe the interacti on between a pr actitioner and a beneficiary receiving smoking cessation services is si milar to the education, assessment, and counseling elements of individual KDE reported by HCPCS code G0420 (Face-to-face

educational services related to the care of chronic kidney di sease; individu al, per session, per 1 hour), and individual MNT services , reported by HCPCS code G0270 (Medical nutrition therapy; reassessment and subseque nt intervention(s) following second referral in the same year for change in diagnosi s, 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 nutriti on therapy; re-assessment and intervention, individual,CMS-1524-P 184

face-to-face with the pa tient, each 15 minutes), all serv ices that are currently on the

telehealth list. Therefore, we are proposing to add CPT codes 99406 and 99407 to the list of telehealth services for CY 2012 on a category 1 basis. Additionally, we are proposing to add HCPCS codes G0436 (Smoking and tob acco cessation counseling visit for the asymptomatic patient; intermediate, greater than 3 minutes, up to 10 minutes) and G0437 (Smoking and tobacco cessation counseling visit for the asymptomatic patient; intensive, greater than 10 minutes) to the list of telehealth services for CY 2012 since these related

services are similar to the codes for wh ich we received formal public requests. Consistent with this proposal, we are al so proposing to revise our regulations at §410.78(b) and §414.65(a)(1) to include these sm oking cessation services as Medicare

telehealth services.

2. Critical Care Services

The American Telemedicine Associati on and the Marshfield Clinic submitted requests to add critical ca re service CPT codes 99291 (Cri tical care, evaluation and management of the critically ill or critic ally injured patient; first 30-74 minutes) and 99292 (Critical care, evaluation and management of the critically ill or critically injured patient; each additional 30 mi nutes) to the list of approve d telehealth services. We previously received this request for th e CY 2009 and CY 2010 PFS rulemaking cycles (73 FR 38517, 73 FR 69744-5, 74 FR 33548, and 74 FR 61764) and did not add the codes on a category 1 basis due to the acute natu re of the typical patient. We continue to believe that patients requiring critical care services are more acutely ill than thoseCMS-1524-P 185

patients typically receiving any service curr ently on the list of telehealth services. Therefore, we cannot consider critical care services on a category 1 basis. In the CY 2009 PFS proposed rule (73 FR 38517), we explained that we had no evidence suggesting that the us e of telehealth could be a reasonable surrogate for the in-person delivery of critical care services; therefore, we w ould not add the services on a category 2 basis. Requestors submitted ne w studies for CY 2012, but none demonstrated that comparable outcomes to a face-to-face en counter can be achieved using telehealth to

deliver these services. The studies we receiv ed primarily addressed other issues relating

to telehealth services. Some studies addressed the cost be nefits and cost savings of telehealth services. Others focused on the positive outcomes of telehealth treatment when compared with no treatment at all. One submitted study addressed the equivalency of patient outcomes for telehealth services de livered to patients in emergency rooms, but the study's authors specifically restricted th eir population to patients whose complaints were not considered to be ge nuine emergencies. Given that limitation, it seems unlikely that any of these patients would have requi red critical care services as defined by CPT

codes 99291 and 99292.

We note that consultations are included on the list of Medicare telehealth services and may be billed by practitioners fu rnishing services to critically ill patients These services are described by the follo wing HCPCS codes: G0425 (Initial inpatient telehealth consultation, t ypically 30 minutes communicating with the patient via telehealth), G0426 (Initial inpatient tele health consultation, typically 50 minutes communicating with the patient via telehea lth), G0427(Initial inpatient telehealth consultation, typically 70 minutes or more communicating with the patient viaCMS-1524-P 186

telehealth), G0406 (Follow-up inpatient te lehealth consultation, limited, physicians typically spend 15 minutes communicating with the patient via telehealth), G0407(Follow-up inpatient telehealth consul tation, intermediate, physicians typically spend 25 minutes communicating with the patie nt via telehealth), and G0408 (Follow-up inpatient telehealth consulta tion, complex, physicians typically spend 35 minutes or more communicating with the patient via telehealth). Critical care services, as reported by the applicable CPT codes and described in the introductory language in the CPT book, consist of direct delivery by a physician of medical care for a critically il l or injured patient, including high complexity decision- making to assess, manipulate, and support vital system functions. Critical care requi res interpretation of multiple physiologic parameters and/or application of advan ced technologies, including temporary pacing, ventilation management, and vascular access services. The payment rates under the PFS reflect this full scope of physician work. To a dd the critical services to the telehealth list would require the physician to be able to delive r this full scope of serv ices via telehealth. Based on the code descriptions, we have prev iously believed that it is not possible to deliver the full range of critical care servic es without a physical phys ician presence with the patient. We note that there are existing Category III CPT codes (temporary codes for emerging services that allow data collecti on) for remote real-time interactive video conferenced critical care services that, consis tent with our treatment of other Category III CPT codes, are not nationally priced under th e PFS. The fact that the CPT Editorial Panel created these additional Category III CPT codes suggests to us that theseCMS-1524-P 187

video-conferenced critical care services are not the same as the in-person critical care services requested for addition to the telehealth list.

Because we did not find evidence that use of a telecommunications system to deliver critical care services produces sim ilar diagnostic or ther apeutic outcomes as compared with the face-to-face deliver of the services, we are not proposing to add critical care services (as described by CPT codes 99291 and 99292) to the list of approved telehealth services. We reiterate th at our decision not to propose to add critical care services to the list of approved telehealth services does not prec lude physicians from furnishing telehealth consultations to critic ally ill patients using the consultation codes

that are on the list of Medi care telehealth services. 3. Domiciliary or Rest Home Evaluation and Management Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add the following do miciliary or rest home ev aluation and management CPT

codes to the telehealth list for CY 2012:

● 99334 (Domiciliary or rest home visit fo r the evaluation and management of an established patient, which requires at least 2 of these 3 key components: a problem focused interval history; a problem focused examination; or straightforward medical decision making. Counseling an d/or coordination of care with other providers or agencies are provided consistent with the natu re of the problem(s) and the patient's and/or family's needs. Usually, the presenting probl em(s) are self-limited or minor. Physicians typically spend 15 minutes with the patient and/or family or caregiver).

● 99335 (Domiciliary or rest home visit fo r the evaluation and management of an established patient, which requires at least 2 of these 3 key components: An expandedCMS-1524-P 188

problem focused interval history; An expa nded problem focused examination; Medical decision making of low complexity. Counseli ng and/or coordination of care with other providers or agencies are provi ded consistent with the natu re of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of low to moderate severity. Physicians typically spend 25 minut es with the patient and/or family or caregiver).

● 99336 (Domiciliary or rest home visit fo r the evaluation and management of an established patient, which requires at least 2 of these 3 key components: a detailed interval history; a detailed examinati on; medical decision making of moderate complexity. Counseling and/or coordination of care with othe r providers or agencies are provided consistent with the na ture of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of moderate to high severity. Physicians typically spend 40 minutes with the patient and/or family or caregiver).

● 99337 (Domiciliary or rest home visit fo r the evaluation and management of an established patient, which requires at le ast 2 of these 3 key components: a comprehensive interval history; a comprehe nsive examination; medical decision making of moderate to high complexity. Counseli ng and/or coordination of care with other providers or agencies are provi ded consistent with the natu re of the problem(s) and the patient's and/or family's needs. Usually, the presenting problem(s) are of moderate to high severity. The patient may be unstable or may have developed a significant new problem requiring immediate physician attenti on. Physicians typi cally spend 60 minutes with the patient and/or family or caregiver). A domiciliary or rest home is not perm itted under current statute to serve as anCMS-1524-P 189

originating site for Medicare te lehealth services. Therefore, we are not proposing to add domiciliary or rest home evaluation and mana gement services to the list of Medicare

telehealth services for CY 2012. 4. Genetic Counseling Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add CPT code 96040 (Medical geneti cs and genetic counseling services, each 30 minutes face-to-face with pati ent/family) to the telehealth list for CY 2012. We note that CPT guidance regarding reporting geneti c counseling and educat ion furnished by a physician to an individual directs physician s to evaluation and management (E/M) CPT codes and that services described by CPT code 96040 are provided by trained genetic counselors. Physicians and nonphysician pr actitioners who may independently bill

Medicare for their service and who are couns eling individuals woul d generally report office or other outpatient evaluation and mana gement (E/M) CPT codes for office visits that involve significant couns eling, including genetic counse ling, and these office visit CPT codes are already on the list of telehe alth services. CPT code 96040 would only be reported by genetic counselors for genetic counseling services. These practitioners cannot bill Medicare directly fo r their professional services and they are also not on the list of practitioners who can furnish tele health services (specified in section 1834(m)(4)(E) of the Act). As such, we do not believe that it would be necessary or appropriate to add CPT code 96040 to the list of Medicare telehealth services. Therefore, we are not proposing to add gene tic counseling services to th e list of Medicare telehealth

services for CY 2012. 5. Online Evaluation and Management ServicesCMS-1524-P 190

The American Telemedicine Associati on and the Marshfield Clinic submitted requests to add CPT code 99444 (Online evalua tion and management service provided by a physician to an established patient, guardian, or health care provider not originating from a related E/M service pr ovided within the previous 7 days, using the Internet or similar electronic communications network) to the list of Medicare telehealth services. As we explained in the CY 2008 PF S final rule with comment period (72 FR 66371), we assigned a st atus indicator of "N" (Non- covered service) to these services because: (1) these services are non-face -to-face; and (2) the code descriptor includes language that recogni zes the provision of services to parties other than the beneficiary and for whom Medi care does not provide coverage (for example, a guardian). According to section 1834(m)(2)(A) of the Act, Medicare is required to pay for

telehealth services at an am ount equal to the amount that a practitioner would have been paid had such service been furnished without the use of a teleco mmunications system. As such, we do not believe it would be a ppropriate to make payment for services

furnished via telehealth when those serv ices would not otherwise be covered under

Medicare. Because CPT code 99444 is curr ently noncovered, we are not proposing to add online evaluation and management services to the list of Me dicare Telehealth

Services for CY 2012.

6. Data Collection Services

The American Telemedicine Association and the Marshfield Clinic submitted requests to add CPT codes 99090 (Analysis of clinical data stored in computers (eg, ECGs, blood pressures, hematologic data)) and 99091(Collection a nd interpretation of physiologic data (eg, ECG, blood pressure, gluc ose monitoring) digitally stored and/orCMS-1524-P 191

transmitted by the patient and/or caregiver to the physician or other qualified health care professional, requiring a minimum of 30 mi nutes of time) to the list of Medicare

telehealth services. As we explained in the in CY 2002 PFS final rule with comment period (66 FR 55309), we assigned a st atus indicator of "B" (Pay ment always bundled into payment for other services not sp ecified) to these services be cause the associated work is considered part of the pre- and post-service work of an E/M service. We note that many

E/M codes are on the list of Me dicare telehealth services. According to section 1834(m)(2)(A) of the Act, Medicare is required to pay for telehealth services an amount equal to th e amount that a practitioner would have been paid had such service been furnished without the use of a teleco mmunications system. Similar to the point noted above for online E/M services, we do not believe it would be appropriate to make separate payment for services furnished via telehealth when Medicare would not otherwise make separate payment for the services. Moreover, we believe the payment for these data collection services should be bundled into the payment for E/M services, many of which are already on the Medicare telehealth list. Because CPT codes 99090 and 99091 are currently bundle d, we are not proposing to add data

collection services to th e list of Medicare teleheal th services for CY 2012. 7. Audiology Services The American Academy of Audiology submitted a request that CMS add services that audiologists provide for balance disorder s and hearing loss to th e list of Medicare telehealth services. The reque st did not include specific HC PCS codes. Nevertheless, it is not within our administrative authority to pay audiologists for services furnished viaCMS-1524-P 192

telehealth. The statute authorizes the Secret ary to pay for telehealth services only when furnished by a physician or a practitioner as physician or practitioner are defined in sections 1834(m)(4)(D) and (E) of the Act. Therefore, we are not proposing to add services that are primarily provided by audiol ogists to the list of Medicare telehealth

services for CY2012. D. The Process for Adding HCPCS Code s as Medicare Telehealth Services Along with its submission of codes for cons ideration as additions to the Medicare telehealth list for CY 2012, the American Telemedicine Association (ATA) also requested that CMS consider revising th e annual process for a dding to or deleting

services from the list of te lehealth services. The existing process, adopted in the CY 2003 PFS rulemaking cycle (67 FR 43862 through 43863 and 67 FR 79988 through 79989), is described in section III.B. of th is proposed rule. The following discussion includes a summary of recent requests by the AT A and other stakeholders for changes to the established process for adding services to the telehealth list, an assessment of our historical experience with the current proce ss including the request review criteria, and our proposed refinement to the process for a dding services to the telehealth list that

would be used in our evaluation of candidate telehealth services beginning for CY 2013. The ATA asked CMS to consider two specifi c changes to the process, including:

● broadening the factors for consider ation to include shortages of health professionals to provide in-person services , speed of access to in-person services, and other barriers to care for beneficiaries; and

● equalizing the standard for adding tele health services with the standard for deleting telehealth services by adopting a standard that allo ws services that are safe,CMS-1524-P 193

effective or medically beneficial when furnishe d via telehealth to be added to the list of Medicare telehealth services. Similarly, we have received reco mmendations that CMS place all codes payable under the PFS on the telehealth list and allow physicians and practitioners to make a clinical determination in each case about whether a medically reasonable and necessary service could be appropriately furnishe d to a beneficiary through telehealth. Under this scenario, st akeholders have argued that CMS would only

remove services from the telehealth list under its existing policy for service removal; specifically, that a decision to remove a servi ce from the list of telehealth services would be made using evidence-based, peer-reviewed data which indicate that a specific service is not safe, effective, or medically be neficial when furnished via telehealth (67 FR 79988).

While we share the interests of stakeholde rs in reducing barrie rs to health care access faced by some beneficiaries, given that section 1834(m)(2)(F)(ii) of the Act requires the Secretary to esta blish a process that provides, on an annual basis, for the

addition or deletion of telehealth services (and HCPCS codes), as appropriate, we do not believe it would be appropriate to add all services for which payment is made under the

PFS to the telehealth list wit hout explicit consideration as to whether the candidate service could be effectively furnished through telehealth. For example, addition of all

codes to the telehealth list could result in a number of services on the list that could never be furnished by a physician or nonphysician pr actitioner who was not physically present with the beneficiary, such as major surgic al procedures and interventional radiology services. Furthermore, we do not believe it wo uld be appropriate to add services to the

telehealth list without explicit consider ation as to whether or not the nature of the serviceCMS-1524-P 194

described by a candidate code allows the serv ice to be furnished as effectively through

telehealth as in a face-to-f ace encounter. Section 1834(m)(2)(A ) of the Act requires that the distant site physician or practitioner furnishi ng the telehealth serv ice must be paid an amount equal to the amount the physician or practitioner would have been paid under the

PFS has such service been furnished without the use of a telecomm unications system. Therefore, we believe that can didate telehealth services must also be covered when furnished in-person; and that any servi ce that would only be furnished through a telecommunications system would be a new se rvice and, therefore, not a candidate for

addition to the telehealth list. In view of these considerations, we will continue to

consider candidate additions to the telehealth list on a HC PCS code-specific basis based on requests from the public and our own considerations.

We also believe it continues to be most a ppropriate to consider candidate services

for the telehealth list based on the two mutu ally exclusive established categories into which all services fall - specifically, services that are similar to services currently on the telehealth list (category 1) a nd services that are not similar to current telehealth services (category 2). Under our exis ting policy, we add services to the telehealth list on a category 1 basis when we determine that they are similar to services on the existing telehealth list with respect to the roles of, and interactions among, the beneficiary, physician (or other practitioner) at the distan t site and, if necessary, the telepresenter (67 FR 43862). Since CY 2003, we have added 35 services to the telehealth list on a category 1 basis based on public requests and our own identification of such services.

We believe it is efficient and valuable to ma intain the existing policy that allows us to consider requests for additions to the teleh ealth list on a category 1 basis and propose toCMS-1524-P 195

add them to the telehealth list if the existing criteria are met. This procedure expedites our ability to identify codes for the telehealth list that resemble those services already on this list, streamlining our review process and the pub lic request and information-submission process for services th at fall into this category. Therefore, we believe that any changes to the process for addi ng codes to the teleh ealth list should be considered with respect to category 2 addi tions, rather than ca tegory 1 additions. Our existing criteria for consideratio n of codes that would be category 2 additions, specifically those ca ndidate telehealth services that are not similar to any current telehealth services, include an assessment of whether the use of a telecommunications system to deliver the servic es produces similar diagnostic findings or therapeutic interventions as compared with a face-to-face in-person delivery of the same service (67 FR 43682). In other words, the di screte outcome of th e interaction between the clinician and patient fac ilitated by a telecommunications system should correlate well

with the discrete outcome of the clinicia n-patient interaction when performed face to-face. In the CY 2003 PFS proposed rule ( 67 FR 43862), we explained that requestors for category 2 additions to the telehealth li st should submit evidence that the use of a telecommunications systems does not affect the diagnosis or treatment plan as compared to in-person delivery of the service. We indicated that if evidence shows that the candidate telehealth service is equivalent wh en furnished in person or through telehealth,

we would add it to the list of telehealth serv ices. We refer to this criterion in further discussion in this proposed rule as the "com parability standard." We stated in the CY 2003 PFS proposed rule (67 FR 43862) that if we determine that the use of a telecommunications system changes the nature or outcome of the service, for example, asCMS-1524-P 196

compared with the in-person delivery of th e service, we would re view the telehealth service addition request as a request for a new service, rather than a different method of delivering an existing Medicare service. Fo r coverage and payment of most services, Medicare requires that a new se rvice must: (1) fall into a Medicare benefit category; (2) be reasonable and necessary in accordance w ith section 1862(a)(1)(A) of the Act; and (3) not be explicitly excluded from coverage. In such a case, the re questor would have the option of applying for a national coverage determination for the new service. We believe it is most appropriate to address the ATA and other stakeholder requests to broaden the current factors we consider when deciding whether to add

candidate services to the telehealth list - to include factors such as the effects of barriers to in-person care and the safety, effectiveness, or medical benefit of the service furnished through telehealth, as potentia l refinements to our category 2 criteria. We initially established these category 2 criteria in the inte rest of ensuring that the candidate services were safe, effective, medically benefici al, and still accurately described by the corresponding codes when deliver ed via telehealth, while also ensuring that beneficiaries

furnished telehealth services receive high quality care that is comparable to in-person

care. We believed that the demonstration of comparable clinical outcomes (diagnostic findings and/or therapeutic in terventions) from telehealth and in-person services would prove to be the best indicator that all of these conditions were met. While we continue to believe that safety, effectivene ss, and medical benefit, as well as accurate description of the candidate telehealth services by the CP T or HCPCS codes, are necessary conditions for adding codes to the list of Medicare tele health services, our recent experience in reviewing public requests for telehealth list additions and ou r discussions withCMS-1524-P 197

stakeholders regarding contem porary medical practice and poten tial barriers to care, have led us to conclude that the comparability standard for category 2 requests should be

modified. In our annual evaluation of category 2 re quests since we adopted the process for evaluating additions to the telehealth list al most 10 years ago, we have consistently observed that requestors have di fficulty demonstrating that clin ical outcomes of a service delivered via telehealth are comparable to th e outcomes of the in-person service. The medical literature frequently does not include studies of the outcomes of many types of in-person services that allow for comparison to the outcomes demonstrated for candidate

telehealth services. Furthe rmore, we know that in some cases the alternative to a telehealth service may be no service rather th an an in-person service. The comparability standard may not sufficiently allow for the oppor tunity to add candidate services to the telehealth list that may be safe, effective, and medically beneficial when delivered via telehealth, especially to beneficiaries who experience significant ba rriers to in-person

care. While we continue to believe that beneficiaries receivi ng services through

telehealth are deservi ng of high quality health care and that in-person care may be very important and potentially preferable for some services when in-person care is possible,

we are concerned that we have not added any services to the telehealth list on a category 2 basis as a result of our reviews. Wh ile some candidate services appear to have the potential for clinical benefit when furnis hed through telehealth, the requests have not met the comparability standard. Therefore, we are proposing to refine our category 2 review criteria for adding

codes to the list of Medicare telehealth se rvices beginning in CY 2013 by modifying theCMS-1524-P 198

current requirement to demonstrate similar diagnostic findings or therapeutic interventions with respect to a candidate service delivered th rough telehealth compared to in-person delivery of the service (the comparab ility standard). We propose to establish a

revised standard of demonstrated clinical benefit (the clinic al benefit standard) when the service is furnished via telehealth. To suppor t our review using this revised standard, we would ask requestors to specify in their requ est how the candidate telehealth service is still accurately described by the correspondi ng HCPCS or CPT code when delivered via telehealth as opposed to in-person. We are proposing that our refined criteri a for category 2 additions would be as

follows:

● Category 2: Services th at are not similar to the current list of telehealth services. Our review of these requests w ould include an assessment of whether the service is accurately descri bed by the corresponding code wh en delivered via telehealth

and whether the use of a telecommunications system to deliver the service produces demonstrated clinical benefit to the pa tient. Requestors should submit evidence indicating that the use of a telecommunications system in delivering the candidate telehealth service produces clin ical benefit to the patient.

The evidence submitted should include both a description of relevant clinical

studies that demonstrate the se rvice furnished by telehealth to a Medicare beneficiary improves the diagnosis or treatment of an illn ess or injury or improves the functioning of a malformed body part, including dates and findi ngs and a list and copies of published peer-reviewed articles relevant to the serv ice when furnished via telehealth. Some examples of clinical bene fit include the following:CMS-1524-P 199

● Ability to diagnose a medical conditi on in a patient population without access to clinically appropriate in -person diagnostic services.

● Treatment option for a patient po pulation without access to clinically appropriate in-person treatment options.

● Reduced rate of complications.

● Decreased rate of subsequent diagnos tic or therapeutic interventions (for example, due to reduced rate of re currence of the disease process).

● Decreased number of future hos pitalizations or physician visits.

● More rapid beneficial resolution of the disease process treatment.

● Decreased pain, bleeding, or other quantifiable symptom.

● Reduced recovery time. We believe the adoption of this clinical benefit standard for our review of

candidate telehealth services on a category 2 basis is res ponsive to the requests of

stakeholders that we broaden the factors take n into consideration to include barriers to

care for beneficiaries. It allows us to c onsider the demonstrated clinical benefit of

telehealth services for beneficiaries who might otherwise have no access to certain diagnostic or treatment services. Furtherm ore, we believe the focus on demonstrated

clinical benefit in our review of category 2 requests for additio n to the telehealth lists is equivalent to our standard for deleting servic es from the telehealth list that rests upon evidence that a service is not safe, not effectiv e, or not medically be neficial. Finally, we believe the proposed clinical benefit standard for our review of candidate telehealth services on a category 2 basis is fully consiste nt with our responsibil ity to ensure thatCMS-1524-P 200

telehealth services are safe, e ffective, medically beneficial, and still accurately described by the corresponding codes that would be used fo r the services when delivered in-person. We are soliciting public comments on this proposed refinement to our established process for adding codes to the telehealth lis t, including the information that requestors

should furnish to facilitate our full review of requests in prep aration for the next calendar year's rulemaking cycle. We will respond to comments on our proposal and finalize any changes to the process for addition codes to the telehealth list in the CY 2012 PFS final rule with comment period. We would use the revised category 2 review criteria to review requested additions to the telehealth list submitted during CY 2011 and under

consideration for CY 2013. E. Telehealth Consultations in Emergency Departments We have recently been asked to clar ify instructions regarding appropriate reporting of telehealth servi ces that, prior to our policy change regarding consultation codes, would have been reported as consulta tions furnished to patients in an emergency department. When we eliminated the use of all consultation code s beginning in CY 2010, we instructed practitioners, when furnishing a service that would have been reported as a consultation service, to report the E/M code th at is most appropriate to the particular service for all office/outpatient or inpatient visits. Since sect ion 1834(m) of the Act includes "professional consulta tions" (including the initial inpatient consultation codes "as subsequently modified by the Secretary") in the definition of te lehealth services, we

established several HCPCS codes to describe the telehealth delivery of initial inpatient consultations. For inpatient hospital and skille d nursing facility care telehealth services, we instructed practitioners to use the inpati ent telehealth consultation G-codes listed inCMS-1524-P 201

table 14 to report those telehealth se rvices (74 FR 61763, 61774). However, we neglected to account for the fact that E/M emergency department visit codes (99281-99285) are not on the telehealth list. As such, there has not been a clear means for practitioners to bill a telehealth consulta tion furnished in an emergency department.

In order to address this issu e, we are proposing to change the code descriptors for the inpatient telehealth consulta tion G-codes to include emergency department telehealth consultations effective January 1, 2012. However, we are seeking public comment regarding other options, incl uding creating G-codes specific to these services when furnished to patients in the em ergency department.

TABLE 14: INPATIENT TELEHEALTH CONSULTATION G-CODES

HCPCS

Code CY 2011 Long Code Descriptor

G0425 Initial inpatient telehealth consulta tion, typically 30 minutes communicating with the patient via telehealth G0426 Initial inpatient telehealth consulta tion, typically 50 minutes communicating with the patient via telehealth G0427 Initial inpatient telehealth consul tation, typically 70 minutes or more communicating with the patient via telehealth G0406 Follow-up inpatient telehealth consu ltation, limited, physicians typically spend 15 minutes communicating with the patient via telehealth G0407 Follow-up inpatient telehealth cons ultation, intermediate, physicians typically spend 25 minutes communicati ng with the patient via telehealth G0408 Follow-up inpatient telehealth consu ltation, complex, physicians typically spend 35 minutes or more communicati ng with the patient via telehealth IV. Other Provisions of the Proposed Regulation A. Part B Drug Payment: Average Sales Price (ASP) Issues Section 1847A of the Act requires use of the average sales price (ASP) payment methodology for payment for drugs and biologic als described in sec tion 1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP methodology applies to most drugs furnished incident to a physician's serv ice, drugs furnished under the DME benefit,CMS-1524-P 202

certain oral anti-cancer drugs, a nd oral immunosuppre ssive drugs. 1. Widely Available Market Price (WAM P)/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 wh ich 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 a nd other data for drugs and biologicals, the Inspector Gene ral shall compare the ASP under this section for drugs and biologicals with --

● The widely available market price (WAM P) for these drugs and biologicals, (if any); and

● The average manufacturer price (AMP ) (as determined under section 1927(k) (1) of the Act) for such drugs and biologicals." Section 1847A(d)(3)(A) of the Act states that, "The Secretary may disregard the ASP for a drug or biological that exceeds the WAMP or the AMP for such drug or biological by the applicable threshold per centage (as defined in subparagraph (B))." Section 1847A(d)(3)(C) of the Act states that if the Inspector General (OIG) finds that the ASP for a drug or biological is found to have exceeded the WAMP or AMP by this threshold percentage, the OIG "shall inform th e Secretary (at such times as the Secretary may specify to carry out this subparagraph) a nd the Secretary shall, effective as of the next quarter, substitute for the amount of payment otherwise determined under this section for such drug or biological, the lesser of --

● the widely available market price for the drug or biologic al (if any); orCMS-1524-P 203

● 103 percent of the average manufactu rer price as determined under section 1927(k)(1) of the Act for the drug or biological." The applicable threshold percentage is specified in section 1847A(d)(3)(B)(i) of the Act as 5 percent for CY 2005. For CY 2006 and subsequent years, section 1847A(d)(3)(B)(ii) of the Act establishes that the applicable threshold percentage is "the percentage applied under this subparagraph s ubject to such adjustment as the Secretary may specify for the WAMP or the AMP, or both." In the CY 2006 (70 FR 70222), CY 2007 (71 FR69680), CY 2008 (72 FR 66258), CY 2009 (73 FR 69752), and CY 2010 (74 FR 61904) PFS final rules with comment period, we specified an applicable threshold percentage of 5 percent for both the WAMP and AMP.

We based this decision on the fact that data was too limited to support an adjustment to the current applicable threshold percentage. For CY 2011, we proposed to specify two se parate adjustments to the applicable threshold percentages. When making comparisons to the WAMP, we proposed the applicable threshold percentage to re main at 5 percent. The applicable threshold percentage that we proposed for the AMP is addressed below in this section of the preamble. The latest WAMP compar ison was published in 2008, and the OIG is continuing to perform studies comparing ASP to WAMP. Based on available OIG reports that have been published comparing WAMP to ASP, we did not have sufficient

information at the time to determine that the 5 percent thresh old percentage is inappropriate and should be changed. As a result, we believed that continuing the 5 percent applicable threshold percentage for the WAMP was appr opriate for CY 2011. Therefore, we proposed to revise §414.904( d)(3) to specify th e 5 percent WAMPCMS-1524-P 204

threshold for CY 2011. After soliciting a nd reviewing comments, we finalized our proposal to continue the 5 percent WAMP threshold for CY 2011 (75 FR 73469). For CY 2012, we again propose to specify a separate adjustment to the applicable threshold percentage for WAMP comparis ons. When making comparisons to the WAMP, we propose the applicable threshold percentage to rema in at 5 percent. We still

do not have sufficient information to determine that the 5 percent threshold percentage is inappropriate and, as a result, we believe that continuing the 5 percent applicable threshold percentage for the WAMP is appr opriate for CY 2012. As we noted in the CY 2011 PFS final rule with comment peri od (75 FR 73470), we understand that there are complicated operational issues associated wi th this policy. We continue to proceed cautiously in this area. We remain co mmitted to providing stakeholders, including providers and manufacturers of drugs impacted by potential price substitutions with adequate notice of our intentions regardi ng such, including the opportunity to provide input with regard to the processes fo r substituting the WAMP for the ASP.

2. AMP Threshold and Price Substitutions As mentioned previously in section V.A.1. of this proposed rule, when making comparisons of ASP to AMP, the applicab le threshold percentage for CY 2005 was specified in statute as 5 per cent. Section 1847A(d)(3) of the Act allows the Secretary to specify adjustments to this threshold per centage for years subsequent to 2005. For CY 2006 (70 FR 70222), CY 2007 (71 FR 69680), CY 2008 (72 FR 66258), CY 2009 (73 FR 69752), and CY 2010 (74 FR 61904), the Secretary made no adjustments to the threshold percentage; it remained at 5 percent. For CY 2011, we proposed, with respect to AMP substitution, to apply theCMS-1524-P 205

applicable percentage subject to certain adju stments such that subs titution of AMP for ASP will only be made when the ASP exceeds the AMP by 5 percent in two consecutive quarters immediately prior to the current pric ing quarter, or three of the previous four quarters immediately prior to the current qu arter. We further proposed to apply the applicable AMP threshold percentage only for those situations where AMP and ASP comparisons are based on the same set of National Drug Codes (NDCs) for a billing code (that is, "complete" AMP data). Furthermore, we proposed a price substitution policy to substitute 103 percent of AMP for 106 percent of ASP for both multiple and single source drugs and biologicals as defined respectively at secti on 1847(A)(c)(6)(C) and (D ) of the Act. Specifically, we proposed that this substitution:

• Would occur when the applicable thre shold percentage has been met for two consecutive quarters immediatel y prior to the current pricin g quarter, or three of the previous four quarters immediatel y prior to the cu rrent quarter.

• Would permit for a final comparison between the OIG's volume-weighted 103 percent of AMP for a billing code (calcula ted 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 situati on in which the AMP-based pr ice substitution would exceed that quarter's ASP; and

• That the duration of the price subst itution would last for only one quarter. We also sought comment on other issues related to the comparison between ASP and AMP, such as the following:

• Any effect of definitional differences between AMP and ASP, particularly inCMS-1524-P 206

light of the definition of AMP as revised by section 2503 of the Affordable Care Act.

• The impact of any differences in AMP and ASP reporting by manufacturers on price substitution comparisons.

• Whether and/or how general differences and similarities between AMP and

manufacturer's ASP would affect comparisons between these two.

In the CY 2011 PFS final rule with comme nt, we did not finalize our proposed adjustments to the 5 percent AMP threshold or our price substitution policy because of legislative changes, regulatory changes, and litigation that affected this issue. Specifically--

● A preliminary injunction issued by th e United States District Court for the

District of Columbia in National Associati on of Chain Drug Stores et al v. Health and Human Services, Civil Action No. 1:07-cv -02017 (RCL) was still in effect;

● We were continuing to expect to de velop regulations to implement section 2503 of the Affordable Care Act, which ame nded the definition of AMP, and section 202

of the Federal Aviation Administration Air Transportation Modernization and Safety Improvement Act (Pub. L. 111-226) as en acted on August 10, 2010, which further amended section 1927(k) of the Act;

● We proposed to withdraw certain pr ovisions of the AMP final rule published on July 17, 2007 (75 FR 54073). As a result, we finalized the portion of our proposal that sets the AMP threshold at 5 percent for CY 2011 and revised the regul ation text accordingly (75 FR 73470). The preliminary injunction was vacated by the United States District Court for the District of Columbia on December 15, 2010. Curre ntly, we continue to expect to developCMS-1524-P 207

regulations to implement sect ion 2503 of the Affordable Ca re Act and section 202 of the

Federal Aviation Administration Air Tran sportation Modernization and Safety Improvement Act. However, these statutory amendments became effective on October 1, 2010 without regard to whether or not final regu lations to carry out such amendments have been promulgated by such date. Moreover, our Medicaid final rule published on November 15, 2010 finalized re gulations requiring manufacturers to

calculate AMP in accordance with section 1927(k)(1) of the Act (75 FR 69591). Since statutory and regulatory provisi ons exist and are currently utilized by manufacturers for the calculation and submission of AMP data, we are revisiting the AMP threshold and price substitution issues.

a. AMP Threshold 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. Therefore, for CY 2012, with respect to AMP substitution, we propose to apply the applicable percenta ge subject to certain adjust ments. Specifically, a price

substitution of AMP for ASP will be ma de only when the ASP exceeds the AMP by 5 percent in two consecutive qua rters immediately prior to th e current pricing quarter, or three of the previous four quarters imme diately prior to th e current quarter. In general, the ASP methodology reflects av erage market prices for Part B drugs for a quarter. The ASP is based on the average sales price to all purchasers for a calendar quarter; the AMP, in turn, represents the av erage price paid by wholesalers for drugs distributed to retail community pharmacies and by retail community pharmacies that purchase drugs directly from the manufactur ers. Accordingly, while the ASP paymentCMS-1524-P 208

amount for a billing code may exceed its AMP fo r that billing code for any given quarter, this may reflect only a temporary fluctuation in market prices that would be corrected in a subsequent quarter. We believe this fluctuation is demonstrated by how few billing codes exceed the applicable threshold percentage over multiple quarters. For example, in the Inspector General's report "Comparison of Average Sales Prices and Average

Manufacturer Prices: An Overview of 2009," only 11 of 493 examined billing codes exceeded the applicable threshold percen tage over multiple quarters (OEI-03–10–00380). We are concerned that substitutions based on a single quarter's ASP to AMP comparison will not appropriately or accurately account for temporary fluctuations. We believe that applying this threshold percentage adjusted to reflect data from multiple quarters will account for continuing differences between ASP and AMP, and allow us to more accurately identify those drugs that consistent ly trigger the substitution threshold and thus warrant price substitution. We further propose to apply the applicab le AMP threshold percentage only for those situations where AMP and ASP compar isons are based on the same set of NDCs for a billing code (that is, "complete" AMP data). Prior to 20 08, the OIG calculated a volume-weighted AMP and made ASP and AMP comparisons only for billing codes with such "complete" AMP data. In such comp arisons, a volume-weighted AMP for a billing

code was calculated when NDC-level AMP data was available for the same NDCs used by us to calculate the volume- weighted ASP. Beginning in the first quarter of 2008, the OIG also began to make ASP and AMP compar isons based on "partial" AMP data (that is, AMP data for some, but not all, NDCs in a billing code). For these comparisons, the volume-weighted AMP for a billing code is calculated even when only such limited AMPCMS-1524-P 209

data is available. That is, the volume-we ighted AMP calculated by the Inspector General

is based on fewer NDCs than the volume-wei ghted ASP calculated by CMS. Moreover, volume-weighted ASPs are not adjusted by th e Inspector General to reflect the fewer number of NDCs in the volume-weighted AMP. Because the OIG's partial AMP data compar ison did not reflect all the NDCs used in our volume-weighted ASP calculations, we discussed our concern about using the volume-weighted AMP in the CY 2011 PFS propos ed rule. We believed that such AMP data may not adequately account for market-re lated drug price changes and may lead to the substitution of incomplete and inaccurate volume-weighted prices. Payment amount reductions that result from potentially inaccura te substitutions may impact physician and beneficiary access to drugs. Th erefore, consistent with our authority as set forth in section 1847A(d)(1) and (3) of the Act, we proposed in the CY 2011 PFS proposed rule that the substitution of 103 percent of AMP for 106 percent of ASP should be limited to only those drugs with ASP and AMP compar isons based on the same set of NDCs. In response to our CY 2011 proposed ru le, the OIG changed its methodology for "partial" AMP data comparisons beginning with its report titled "Comparison of First-Quarter 2010 Average Sales Prices a nd Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarte r 2010." Specifically, in addition to calculating a volume-weighted AMP based on "par tial" data and identifying billing codes that exceeded the price substitution threshold, the OIG began to replace each missing NDC-level AMP with corresponding NDC-level ASP data. The OIG then calculated a volume-weighted AMP for the billing code. If the volume-weighted AMP continued to exceed the price substitution threshold, the repo rt attributed this to an actual differenceCMS-1524-P 210

between ASPs and AMPs in the marketplace (OEI-03-10-00440). We appreciate that the Inspector Gene ral has acknowledged the importance of protecting beneficiary and physician access in its methodology change. However, section 1847(A)(d)(2)(B) of the Act specifically indica tes that the comparison be made to AMP as determined under section 1927(k)(1) of th e Act. Moreover, we continue to be concerned that comparisons based on partia l AMP data may not adequately account for market-related drug price changes and may lead to the substitution of incomplete and inaccurate volume-weighted prices. Theref ore, for CY 2012, we propose to apply the applicable AMP threshold percentage only for those situations where AMP and ASP comparisons are based on the same set of NDC s for a billing code (that is, "complete" AMP data). Furthermore, we are propos ing to revise §414.904(d)(3) to reflect corresponding regulatory text changes, and we welcome comments on all aspects of this proposal.

b. AMP Price Substitution (1) Inspector General Studies Section 1847A(d) of the Act requires the Inspector Gene ral to conduct studies of the widely available market price for drugs and biologicals to which section 1847A of the Act applies. However, it does not specify th e frequency of when such studies should be conducted. The Inspector General has conduc ted studies comparing AMP to ASP for essentially each quarter since the ASP system has been implemented. Since 2005, the OIG has published 23 reports pertaining to the price substitution issue (see Table 15), of which 21 have identified billing codes with volume-weighted ASPs that have exceeded their volume-weighted AMPs by the applicable threshold percentage.CMS-1524-P 211

Table 15: Published OIG Reports on Price Substitutions Date Report Title 5/2011 Comparison of Third-Quarter 2010 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Quarter 2011 (OEI-03-11-00160) 4/2011 Comparison of Average Sales Prices and Average Manufacturer Prices: An overview of 2009 (OEI-03-10-00380) 2/2011 Comparison of Second-Quarter 201 0 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Fourth Quarter 2010 (OEI-03-11-00030) 11/2010 Comparison of First-Quarter 2010 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarter 2010 (OEI-03-10-00440) 7/2010 Comparison of Fourth-Quarter 2009 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Second Quarter 2010 (OEI-03-10-00350) 4/2010 Comparison of Third-Quarter 2009 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Quarter 2010 (OEI-03-10-00150) 2/2010 Comparison of Average Sales Prices and Average Manufacturer Prices: An overview of 2008 (OEI-03-09-00350) 1/2010 Comparison of Second-Quarter 200 9 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Fourth Quarter 2009 (OEI-03-09-00640) 8/2009 Comparison of First-Quarter 2009 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarter 2009 (OEI-03-09-00490) 8/2009 Comparison of Fourth-Quarter 2008 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Second Quarter 2009 (OEI-03-09-00340) 4/2009 Comparison of ThirdQuarter 2008 Average Sales Prices and Average Manufacturer Prices: Impact on Medicare Reimbursement for first Quarter 2009 (OEI-03-09-00150) 2/2009 Comparison of SecondQuarter 2008 Average Sales Prices and Average Manufacturer Prices: Impact on Medicare Reimbursement for Fourth Quarter 2008 (OEI-03-09-00050) 12/2008 Comparison of FirstQuarter 2008 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarter 2008 (OEI-03-08-00530) 12/2008 Comparison of Average Sales Prices and Average Manufacturer Prices: An Overview of 2007 (OEI-03-08-00450) 8/2008 Comparison of Fourth-Quarter 2007 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Second Quarter 2008 (OEI-03-08-00340)CMS-1524-P 212

Date Report Title 7/2008 A comparison of average sales price to widely available market prices for inhalation drugs (OEI-03-07-00190) 5/2008 Comparison of Third-Quarter 2007 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Quarter 2008 (OEI-03-08-00130) 12/2007 Comparison of Second-Quarter 200 7 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Fourth Quarter 2007 (OEI-03-08-00010) 9/2007 Comparison of First-Quarter 2007 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarter 2007 (OEI-03-07-00530) 7/2007 Comparison of Third-Quarter 2006 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Quarter 2007 (OEI-03-07-00140) 7/2006 Comparison of Fourth-Quarter 2005 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for Second Quarter 2006 (OEI-03-06-00370) 6/2006 A Comparison of Average Sales Price to Widely Available Market Prices: Fourth Quarter 2005 (OEI-03-05-00430) 4/2006 Monitoring Medicare Part B Drug Pr ices: A Comparison of Average Sales Price to Average Manufactu rer Prices (OEI-03-04-00430)

In the latest quarterly report comparing AMP to ASP, titled "Comparison of Third-Quarter 2010 Average Sales Price and Average Manufacturer Prices: Impact on Medicare Reimbursement for First Qu arter 2011" (OEI–03–11–00160), the Inspector General found that of 365 billing codes with complete AMP data in the third quarter of 2010, only 14 met the 5 percent threshold; that is, ASP exceeded AMP by at least 5 percent. 8 of these 14 billing codes also exceeded the AMP by at least 5 percent in one or more of the previous four quarters; only two drugs had ASPs that exceeded the 5 percent threshold in all four quarters unde r review. This Inspector General report further indicates that, "If reimbursement amounts for all 14 codes with complete AMP data had been based on 103 percent of th e AMPs during the first quarter of 2011, we estimate that Medicare expe nditures would have been re duced $10.3 million in thatCMS-1524-P 213

quarter alone." The savings found by the Inspector General constitute potential savings for the Medicare program and beneficiaries. (2) Proposal As discussed previously, s ection 1847A(d)(3) of the Act provides authority for us to determine the applicable percentage subjec t to "such adjustment as the Secretary may specify for the widely available market price or the average manufactur er price, or both." We also have authority to specify the timi ng of any ASP substitution. Consistent with this authority, we are proposing a polic y to substitute 103 percent of AMP for 106 percent of ASP where the a pplicable percentage threshold has been satisfied for the two consecutive quarters immediat ely prior to the current pric ing quarter, or for three of the previous four quarters imme diately prior to the current pricing quarter. This policy would apply to single source drugs and biologi cals, multiple source drugs, and biosimilar biological products as defined at section 1847A(c)(6)(C), (D), and (H) of the Act. Because of the lack of data regard ing WAMP to ASP comparisons, we are explicitly excluding WAMP from this pr ice substitution proposal, though we are proposing to maintain the WAMP threshold at 5 percent for CY 2012 in section V.A.1. of this rule. We believe that the proposed po licy reflects market-related pricing changes and focuses on those drugs that consistently exceed the applicable percentage threshold over multiple quarters. Unlike the OIG's AMP studies, the published WAMP studies do not show whether the prices for the examined groups of drugs consistently exceed the applicable percentage threshold across multiple quarters like the AMP studies. We will consider proposing a policy for the substitution of WAMP at a later date.CMS-1524-P 214

(3) Timeframe for and Duration of Price Substitutions As stated in §414.804(a)(5), a manufactur er's average sales price must be submitted to CMS within 30 days of the close of the quarter. We then calculate an ASP for each billing code in accordance with the process outlined at §414.904. Then, as described in our CY 2005 PFS final rule (69 FR 66300), we implement these new prices through program instructions or otherwise at the first opportunity after we receive the data, which is the calenda r quarter after receipt. Section 1847A(d)(3)(C) of the Act indicates that a price substitution would be implemented "effective as of the next quarter" after the OIG has informed us that the ASP for a drug or biological exceeds its AMP by th e applicable percentage threshold. The OIG does not receive new ASPs for a given quarter until after we have finalized our calculations for the quarter. Also, the result s of the OIG's pricing comparisons are not available until after the ASPs for a given quart er have gone into effect. Therefore, we anticipate that there will be a three-quarter lag for substitute d prices from the quarter in which manufacturer sales occurred, though this will depend in great part upon the timeframe in which we obtain comparison data from the OIG. Table 16 provides an example of this timeframe.CMS-1524-P 215

TABLE 16: EXAMPLE PRICE SUBSTITUTION TIMEFRAME Q2-11 Q3-11 Q4-11 Q1-12 Manufacturer sells drug. Manufacturer submits Q2-11 pricing data. CMS calculates ASP payment limits for Q4-11 and publishes Q4-11 payment limits. Q4-11 payment limits apply. Q1-12 payment limits apply, including any adjusted payment limit resulting from the price substitution. ASP Process CMS calculates ASP payment limits for Q1-12. Compares calculated payment limits to OIG substitute prices. Publishes Q1-12 prices that may include OIG substitute prices.

OIG Process OIG receives Q4-11 payment limits from CMS and compares them to Q2-11 volume-weighted AMP data. OIG notifies CMS of HCPCS for which Q4-11 ASP exceeds Q2-11 AMP by the applicable percentage threshold.

Given this lag in time, the ASP for a b illing code may have decreased since the OIG's comparison. Therefore, consistent with our authoriti es in section 1847A(d)(3) of the Act and our desire to provide accurate pa yments consistent with these provisions, we believe that the timing of any substitu tion policy should permit a final comparison between the OIG's volume-weighted 103 percent AMP for a billing code (calculated from the data from sales three quarters prior) and the billing code's volume-weighted 106 percent ASP (as calculated by CMS for th e upcoming quarter). In Table 16, forCMS-1524-P 216

example, this comparison would be done be tween the HCPCS payment limits calculated for Q1-12, and the OIG's volume-weighted AMPs from their examination of Q4-11 payment limits. This final comparison would assure the Secretary that the 106 percent ASP payment limit for the current pricing quart er continues to exceed 103 percent of the

OIG's calculated AMP in order to avoid a situation in which the Secretary would inadvertently raise the Medicare payment limit through this price substitution policy. We specifically request comments on this proposal. ASP payment limits are calculated on a quarterly basis as per section 1847A(c)(5)(A) of the Act, and we are partic ularly mindful that the ASP-based payment allowance for a billing code may change from quarter to quarter. As such, we propose that any price substitution based on the comp arison that triggered its application would last for one quarter. We note that in a s ubsequent quarter, the OIG may identify that a volume-weighted ASP continues to exceed th e volume-weighted AMP for a billing code that previously triggered a pric e substitution. In this scenario , if the criteri a for the price substitution policy are met, we would s ubstitute 103 percent of the OIG's updated volume-weighted AMP for that billing code. Overall, we believe that our proposal as previously outlined to substitute 103 percent of AMP for 106 per cent of ASP provides us w ith a viable mechanism for generating savings for the Medicare program and its beneficiaries because it will allow Medicare to pay based on lower market pr ices for those drugs and biologicals that consistently exceed the applicable threshold pe rcentage. Moreover, it will enable us to address a programmatic vulnerability identifi ed by the OIG. We welcome comments on all aspects of our proposal.CMS-1524-P 217

In the CY 2011 proposed rule, we sought comment on other issues related to the comparison between ASP and AMP, specifically:

• Any effect of definitional differences betw een AMP and ASP, particularly in light of the definition of AMP as revised by s ection 2503 of the Affordable Care Act.

• The impact of any differences in AMP and ASP reporting by manufacturers on price substitution comparisons.

• Whether and/or how general differences and similarities between AMP and

manufacturer's ASP would affect comparisons between these two. For the CY 2012 proposed rule, we again seek comment on other matters pertaining to this issue. 3. ASP Reporting Update a. ASP Reporting Template Update For purposes of this part, unless othe rwise specified, the term "drugs" will hereafter refer to both drugs and biologicals. Sections 1847A and 1927(b) of the Act specify quarterly ASP data reporting requi rements for manufacturers. Specific ASP reporting requirements are set forth in section 1927(b)(3) of the Act. For the purposes of reporting under section 1847A of the Act, the term "manufacturer" is defined in section 1927(k)(5) of the Act and mean s any entity engaged in the following: production; preparation, propagation, compounding, convers ion or processing of prescription drug products; either directly or i ndirectly by extraction from subs tances of natural origin, or independently by means of chemical synthesi s, or by a combination of extraction and chemical synthesis; or packaging, repackag ing, labeling, relabeling, or distribution of prescription drug products. The term manufacturer does not include a wholesaleCMS-1524-P 218

distributor of drugs or a retail pharmacy licensed under State law. However, manufacturers that also engage in certain w holesaler activities are required to report ASP data for those drugs that they manufacture. Note that the definition of manufacturers for the purposes of ASP data reporting includes repackagers. Section 1927(b)(3)(A)( iii) of the Act specifies that manufacturers must report their average sales price and the number of units by NDC. As established by 42 CFR part 414 subpart J, manufacturers are re quired to report data at the NDC level, which includes the following elements: (1) the manufacturer ASP; (2) the Wholesale Acquisition Cost (WAC) in effect on the last day of the reporting period; (3) the number of units sold; and (4) the NDC. The reported ASP data are used to establish the Medicare payment amounts. Section 1927(b)(3)(A)(iii)( II) of the Act specifies th at the manufacturer must report the WAC, if it is required in order fo r payment to be made under section 1847A of the Act. In the 2004 IFC that implemented the ASP reporting requirements for Medicare Part B drugs and biologicals (66 FR 17935), we specified th at manufacturers must report the ASP data to CMS using our Addendum A template. In 2005, we expanded the template to include WAC and additional pr oduct description details (70 FR 70221). We also initiated additional changes to the template in 2008 (73 FR 76032).

In order to facilitate more accurate and consistent ASP data reporting from manufacturers, we are now pr oposing additional revisions to the Addendum A template. Specifically, we propose to revi se existing reporting fields and add new fields to the Addendum A template, as follows:

● To split the current NDC column in to three separate reporting fields,CMS-1524-P 219

corresponding to the three segments of an NDC.

● To add a new field to collect an Al ternate ID for products without an NDC.

● To expand the current FDA approval number column to account for multiple entries and supplemental numbers.

We have also added a macro to the Addendum A template that will allow

manufacturers to validate the format of thei r data prior to submission. This will help verify that data are complete and submitted to CMS in the correct format, thereby minimizing time and resources spent on identifyi ng mistakes or errors. We note that the use of this macro does not preclude or supers ede manufacturers' res ponsibility to provide accurate and timely ASP data in accordance wi th the reporting ob ligation under section 1927(b)(3) of the Act. We also note that ma nufacturers who misrepresent or fail to report manufacturer ASP data will remain subject to civil monetary penalties, as applicable and described in sections 1847A and 1927(b) of the Act and codified in regulations at §414.806. b. Reporting of ASP Units and Sa les Volume for Certain Products As required by 42 CFR part 414 subpart J, manufacturers report ASP price and

volume data at the NDC level. This is a ppropriate for most drug and biological products because an NDC is usually associated with a consistent amount of product that is being sold. Our experience with manufacturer repor ting of ASPs has revealed that a limited number of drug products, as defined by an NDC, might contain a variable amount of active ingredient. This situation is comm on for plasma derived clotting factors; for example, we are aware of one product where a vial described as nominally containing 250 international units (IUs) of clotting factor activity might actually contain betweenCMS-1524-P 220

220 and 400 IUs. Although the exact factor activ ity is specified on th e label, the amount of IUs contained in an NDC might vary betw een manufacturing lots. For these types of products, it is possible that vi als with the same NDC but different amounts of clotting factor activity (as measured in IUs) might be sold during the same ASP reporting period. For drugs paid under Medicare Part B, such variability in the amount of drug product within an NDC appears to apply mostly to cl otting factors that are prepared from plasma sources; it also applies to a few other pr oducts, including a plasma protein product used to treat antitrypsin deficiency. As stated in the Section 1847A(b)(2) of the Act, for years after 2004, the Secretary has the authority to "establish the unit for a manufac turer to report and methods for counting units as the Secr etary determines appropriate to implement." There are limited situations when ASP price and vol ume reporting by product NDC may affect the accuracy of subsequent pricing calculations done by us, for example, when an NDC is

associated with a variable amount of dr ug product as described in the paragraph previously. We believe that in such cases it is appropriate to amend the definition of the

ASP unit associated with the NDC that is reported to us by ma nufacturers for the purposes of calculating ASP. Under the auth ority in the section 1847A(b)(2) of the Act, we propose that we will maintain a list of HCPCS codes for which manufacturers report ASPs for NDCs on the basis of a specified unit. The specified unit will account for situations where labeling indicates that the amount of drug product represented by an NDC varies. Our initial list appears in Tabl e 17 and is limited to items with variable amounts of drug product per NDC as describe d previously. However, we propose to update this list as appropri ate through program instructi on or otherwise because weCMS-1524-P 221

believe that the ability to make changes in a subregulatory manner wi ll provide us with the flexibility to quickly and appropriately react to sales and marketing practices for specific drug products, includi ng the introduction of new drugs or drug products. We plan to amend the list as necessary and to keep updates on th e CMS ASP website at: http://www.cms.gov/McrPartBDrug AvgSalesPrice/01_overview.asp . Our proposals would be effective for ASP reports receive d on or after January 1, 2012 and would be reflected in our April 1, 2012 quarterly update. In conjunction with the proposals in the preceding pa ragraph and the expectation that nearly all ASP price and sales volume re porting will continue to be at the NDC level (that is, the reported ASP sales and volume w ill be associated with a non-variable amount that is represented by the NDC), we are al so proposing a clarification to existing regulation text at §414.802. Curre nt regulation text states that "Unit means the product represented by the 11-digit National Drug Code." We propose to update the definition to

account for situations when an alternative unit of reporting must be used; the definition of the term unit will continue to be based on reporting of ASP data per NDC unless otherwise specified by CMS to account for s ituations where the amount of drug product represented by an NDC varies.

TABLE 17: HCPCS CODES FOR WHIC H ASP REPORTING IS DONE IN UNITS OF MEASURE OTHER THAN AN NDC 2011 Code 2011 Long Descriptor Proposed Reporting Unit

J0256 INJECTION, ALPHA 1 - PROTEINASE INHIBITOR - HUMAN, 10 MG 1MG

J1680 INJECTION, HUMAN FIBRINOGEN CONCENTRATE, 100 MG 1MG

J7184 INJECTION, VON WILLEBRAND FACTOR COMPLEX (HUMAN), WILATE, PER 100 IU VWF:RCO 1 IU VWF:RCOCMS-1524-P 222

2011 Code 2011 Long Descriptor Proposed Reporting Unit

J7185 INJECTION, FACTOR VIII (ANTIHEMOPHILIC FACTOR, RECOMBINANT) (XYNTHA), PER I.U. 1 IU

J7186 INJECTION, ANTIHEMOPHILIC FACTOR VIII/VON WILLEBRAND FACTOR COMPLEX (HUMAN), PER FACTOR VIII I.U. 1 IU

J7187 INJECTION, VON WILLEBRAND FACTOR COMPLEX (HUMATE-P), PER IU VWF:RCO 1 IU VWF:RCO

J7190 FACTOR VIII (ANTIHEMOPHILIC FACTOR, HUMAN) PER I.U. 1 IU

J7192 FACTOR VIII (ANTIHEMOPHILIC FACTOR, RECOMBINANT) PER I.U., NOT OTHERWISE SPECIFIED 1 IU

J7193 FACTOR IX (ANTIHEMOPHILIC FACTOR, PURIFIED, NON-RECOMBINANT) PER I.U. 1 IU J7194 FACTOR IX, COMPLEX, PER I.U. 1 IU

J7195 FACTOR IX (ANTIHEMOPHILIC FACTOR, RECOMBINANT) PER I.U. 1 IU J7197 ANTITHROMBIN III (HUMAN), PER I.U. 1 IU

J7198 ANTI-INHIBITOR, PER I.U. INJECTION, ANTITHROMBIN RECOMBINANT, 50 I.U. 1 IU

The instructions for reporting products with variable amounts of drug product, along with general instructions on co mpleting the revised ASP Data Form (Addendum A), will be delineated in a User Guide that will be available on the ASP website. In the user guide, we will also be revising our instructions for the reporting of dermal grafting products as follows:

● If an NDC is not associated with a dermal grafting product, manufacturers should enter the UPC or other unique identifi er (such as an internal product number) in

the alternate ID column.

● Manufacturers should repor t ASP prices and sales vo lumes for dermal grafting products in units of area by square centimeter.CMS-1524-P 223

The User Guide will be availa ble on the CMS ASP website at: http://www.cms.hhs.gov/McrPartBDr ugAvgSalesPrice/01_overview.asp

. The website

will also contain the revised ASP Data Form (Addendum A) and examples of how ASP data must be reported and formatted for submission.

We would also like to remind manufactur ers that additional information about reporting ASP data to us is available (for examples, see the following: (69 FR 17936), (69 FR 66299), (70 FR 70215), (71 FR 69665), (72 FR 66256), (73 FR 69751), and (74 FR 61904)). Also, a link to the ASP Fre quently Asked Questions (FAQs) is posted in

the "Related Links Inside CMS" section of the ASP Overview Web page. We welcome comments on the ASP reporting proposals th at are described in this section. B. Discussion of Budget Neutrality for the Chiropractic Services Demonstration Section 651 of MMA requires the Secretary to conduct a demonstration for up to 2-years to evaluate the feasibility and advisa bility of expanding coverage for chiropractic

services under Medicare. Curre nt Medicare coverage for chir opractic services is limited to manual manipulation of the spine to co rrect a subluxation described in section 1861(r)(5) of the Act. The demonstration expa nded Medicare coverage to include: "(A)

care for neuromusculoskeletal conditions t ypical among eligible beneficiaries; and (B) diagnostic and other services that a chiropract or 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,CMS-1524-P 224

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 wh ich the Secretary would have paid under the Medicare program if the demonstrati on 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, respectivel y), 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 demonstrati on resulted in costs higher than those that

would occur in the absen ce of the demonstration

. We stated BN would be assessed by determining the change in costs based on a pr e-post comparison of total Medicare costs

for beneficiaries in the demonstration and th eir 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 cl aims 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 comme nt 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 neutra lity. In the "All Neuromusculoskeletal Analysis," which compared the total Medicar e costs of all benefi ciaries who received

services for a neuromusculoskeletal condition in the demonstration areas with those of

beneficiaries with similar characteristics from similar geographi c areas that did not participate in the demonstrati on, the total effect of the demo nstration to Medicare was anCMS-1524-P 225

$114 million increase in costs. In the "Chir opractic User Analysis," which compared the

Medicare costs of beneficiaries who used expanded chiropractic services to treat a

neuromusculoskeletal condition in the demons tration areas, with those of beneficiaries with similar characteristics who used chiropr actic services as was currently covered by

Medicare to treat a neuromus culoskeletal condition from similar geographic areas that did not participate in the demonstration, the to tal 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 fo cus on users of chiropractic services rather

than all Medicare beneficiar ies with neuromusculoskelet al conditions, including those who did not use chiropractic se rvices and who may not have become users of chiropractic services even with expanded coverage fo r them (74 FR 61926 through 61927). Users of chiropractic services are most likely to ha ve been affected by the expanded coverage provided by this demonstration. Cost increa ses and offsets, such as reductions in hospitalizations or other types of ambulatory care, are more like ly to be observed in this

group. As explained in the CY 2010 PFS final ru le (74 FR 61927), because the costs of this demonstration were higher than expected and we did not anticip ate a reduction to the PFS of greater than 2 percent per year, we finalized a policy to recoup $50 million in expenditures from this dem onstration over a 5-year peri od, from CYs 2010 through 2014 (74 FR 61927). Specifically, we are recouping $10 million for each such year through adjustments to the chiropract ic CPT codes. Payment under the PFS for these codes will be reduced by approximately 2 percent. We believe that spreading this adjustment over aCMS-1524-P 226

longer period of time will minimize its potential negativ e impact on chiropractic practices. We are continuing the implementation of the required budget neutrality adjustment by recouping $10 million in CY 2012. Our Office of the Actuary estimates chiropractic expenditures in CY 2012 to be approximately $470 million based on actual Medicare spending for chiropractic services fo r the most recent available year. To recoup $10 million in CY 2012, 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 reflecti ng this reduction only in the payment files used by the Medicare contractors to pr ocess 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 ma ny private payers also base payment on the

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

Section 3401 of the Affordable Care Ac t requires that the update factor under certain payment systems be annually adjusted by changes in economy-wide productivity. The year that the productivity adjustment is effective varies by payment system. Specifically, section 3401 of the Affordable Care Act requires that in CY 2011 (and in subsequent years) update fact ors under the ambulatory su rgical center (ASC) payment system, the ambulance fee schedule (AFS), th e clinical laboratory fee schedule (CLFS)

and the DMEPOS fee schedule be adjusted by changes in economy wide productivity. Section 3401(a) of the Affordable Care Act amends section 1886(b)(3)(B) of the Act toCMS-1524-P 227

add clause (xi)(II) which sets forth the defini tion 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 reporti ng period, or other annual period). Historical published data

on the measure of MFP is available on the Bure au of Labor Statistics' (BLS) website at http://www.bls.gov/mfp.

As stated in the CY 2011 PFS final rule with comment period (75 FR 73394), the projection of MFP is currently produced by IHS Global Insight, Inc. (IGI). The methodology for calculating MFP for the ASC payment system, and the Ambulance, CLFS, and DMEPOS fee schedul es was finalized in the CY 2011 PFS final rule with comment period (75 FR 73394 through 73399). As described in the CY 2011 PFS final rule with comment period, IG I replicates the MFP measure calculated by the BLS using a series of proxy variables derived from the IGI US macro-economic models. For CY 2012, we are proposing to revise the IGI seri es used to proxy the labor index used in

the MFP forecast calculation from man-hours in private nonfarm estab lishments (billions of hours—annual rate) to hours of all pers ons in private nonfarm establishments, (2005=100.00), adjusted for labor composition e ffects. We are proposing this revision after further analysis showed that the proposed series is a more suitable proxy for the

BLS Private nonfarm business sect or labor input series since it accounts for the changes in skill-mix of the workforce over time (refe rred to above as labor composition effects). The BLS labor input series includes labor composition effects. We are proposing no additional changes to the IGI MFP forecast methodology or its application to the CPI-UCMS-1524-P 228

update factors for the ASC payment system, and the Ambulance, CLFS, and DMEPOS

fee schedules. D. Section 105: Extension of Payment fo r Technical Component of Certain Physician Pathology Services 1. Background and Statutory Authority Section 542(c) of the Medi care, 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), sectio n 104 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), section 136 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275) and section 3104 of the Affordable Care Act (P ub. L. 111-148), is amended by section 105 of the Medicare and Medicaid Extenders Act of 2010 (MMEA) (Pub. L. 111-309) to continue payment to independent laboratories for the TC of physician pathology services

for fee-for-service Medicare beneficiaries w ho are inpatients or outpatients of a covered hospital through CY 2011. Th e technical component (TC) of physician pathology services refers to the preparation of the slid e involving tissue or cel ls that a pathologist interprets. The professional co mponent (PC) of physician pathology services refers to the pathologist's interpreta tion of the slide. When the hospital pathologist furnishes the PC service for a hospital patient, the PC service is separately bill able by the pathologist. When an independent laboratory'sCMS-1524-P 229

pathologist furnishes the PC serv ice, 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 serv ices for hospital patients even though the payment for the costs of furnishing the pathol ogy service (but not it s 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 progra m paying twice for the TC service: (1) to the hospital, through the inpati ent prospective payment rate, when the patient is an inpatient; and (2) to the inde pendent laboratory that bills th e 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 pat hology services for hospital outpatients, in this case, there generally would not be dup licate payment because we would expect the hospital to not also bill for the pathology serv ice, which would be paid separately to the hospital only if the hospital were to specifically bill for it. We furt her 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 ru le with comment period, we revised §415.130(c) to state that for physician pat hology services furnished on or after January 1, 2001 by an independent laboratory, payment is made only to the hospital for the TC of physician pathology services furnishe d to a hospital inpatien t. Ordinarily, the provisions in the PFS final rule with comme nt period are implemented in the following year. However, the change to §415.130 was de layed 1 year (until January 1, 2001), at theCMS-1524-P 230

request of the industry, to allow independent laboratories and hospitals sufficient time to negotiate arrangements. Full implementation of §415.130 was furthe r delayed by section 542 of BIPA and section 732 of the MMA, which directed us to continue payment to independent laboratories for the TC of phys ician pathology services for ho spital patients for a 2 year period beginning on January 1, 2001 and for CYs 2005 and 2006, respectively. In the

CY 2007 PFS final rule with comment period (71 FR 69788), we amended §415.130 to provide that, for services furnished afte r December 31, 2006, an independent laboratory may not bill the carrier for the TC of physicia n pathology services furnished to a hospital inpatient or outpatient. Ho wever, section 104 of the MIEA-TRHCA continued payment to independent laboratories for the TC of physician pathology services for hospital patients through CY 2007, and section 104 of the MMSEA further extended such payment through the first 6 months of CY 2008. Section 136 of the MIPPA extended the payment through CY 2009. Section 3104 of the Affordable Care Act amended the pr ior legislation to ex tend the payment through CY 2010. Subsequent to pub lication of the CY 2011 PFS final rule with comment period, section 105 of the MMEA extended the payment through CY 2011. 2. Proposed Revisions to Payment for TC of Certain Physician Pathology Services Consistent with this statutory change , we are proposing to revise §415.130(d) to specify that for services furnished afte r December 31, 2011, an independent laboratory may not bill the Medicare contractor for the TC of physician pathology services furnished to a hospital inpatient or outpa tient. We would implement th is provision effective for TC services furnished on or after January 1, 2012.CMS-1524-P 231

E. Section 4103 of the Affordable Care Act: Medicare Coverage and Payment of the Annual Wellness Visit Providing a Persona lized Prevention Plan Covered Under

Medicare Part B. 1. Incorporation of a Health Risk Assessm ent as Part of the Annual Wellness Visit a. Background and Statutory Authority – Medicare Part B Coverage of an Annual Wellness Visit Providing Personalized Prevention Plan Services

Preventive care and benefi ciary wellness are important to the Medicare program and have become an increasing focus. In section 4103 of the Affordable Care Act, the Congress expanded Medicare coverage under Part B to include an annual wellness visit providing personalized prevention plan services (hereinafter referre d to as the annual wellness visit or AWV). The AWV is descri bed more fully in section 1861(hhh) of the Act, and coverage was effective for services furnished on or after January 1, 2011. Regulations for Medicare c overage of the AWV are established at 42 CFR 410.15. The AWV may be performed by a physician, nonphysic ian practitioner (phys ician assistant, nurse practitioner, or clini cal nurse specialist), or a me dical professional (including a health educator, a registered dietitian, or a nutrition pr ofessional, or other licensed practitioner) or a team of such medical professionals, working under the direct supervision of a physician. In summar y, for CY 2011, the first AWV includes--

● Establishment of an individual's medical and family history;

● Establishment of a list of current medi cal providers and suppliers involved in providing medical care to the individual;

● Measurement of an individual's height, weight, body mass index (or waist circumference, if appropriate), blood pre ssure, and other routine measurements asCMS-1524-P 232

deemed appropriate, based on the benefici ary's medical and family history;

● Detection of any cognitive impairment that the individual may have;

● Review of the individual's potenti al (risk factors) for depression;

● Review of the individual's func tional ability and level of safety;

● Establishment of a written screeni ng 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 Fo rce, the Advisory Co mmittee on Immunization Practices, and the individual's health stat us, screening history, and age-appropriate preventive services covered by Medicare;

● Establishment of a list of risk factor s for which primary, secondary or tertiary interventions are recommended or underway for the individual, including any mental health conditions or any such risk factors or conditions that have been id entified through an initial preventive physical examination, a nd a list of treatmen t options and their associated risks and benefits;

● Furnishing of personalized health advi ce to the individual and a referral, as appropriate, to health education or preventiv e counseling services or programs aimed at reducing identified risk factors a nd improving self management; and

● Any other element determined appr opriate through the national coverage determination process (NCD). In summary, for CY 2011, s ubsequent AWVs include--

● An update of the individual's medical and family history;

● An update of the list of current provi ders and suppliers that are regularly involved in providing medical care to the individual;CMS-1524-P 233

● Measurement of an individual's we ight (or waist circumference), blood pressure and other routine measurements as deemed appropriate, based on the individual's medical and family history;

● Detection of any cognitive impairment that the individual may have;

● An update to the written screen ing schedule for the individual;

● An update to the list of risk f actors and conditions for which primary, secondary, or tertiary interventions are reco mmended or are underway for the individual;

● Furnishing of personalized health advi ce to the individual and a referral, as appropriate, to health education or preventive counseling services;

● Any other element determined a ppropriate through the NCD process. The AWV is specifically designed as a wellness visit that focuses on identification of certain risk factors, pe rsonalized health advice, and referral for additional preventive services and lifestyle interventions (which may or may not be covered by Medicare). The elements includ ed in the AWV differ from comprehensive physical examination protocols with which so me providers may be familiar with since it is a visit that is specifically designed to provide personalized prevention plan services as

defined in the Act. Section 1861(hhh)(1)(A) of the Act specifies that a personalized prevention plan

for an individual includes a health risk a ssessment (HRA) that m eets the guidelines established by the Secretary. In general, an HRA is an evaluation tool designed to provide a systematic approach to obtaining a ccurate information about the patient's health status, injury risks, modifiable risk factors, and urgent health needs. This evaluation tool is completed prior to, or as pa rt of, an AWV. The information from the HRA is reflectedCMS-1524-P 234

in the personalized prevention plan th at is created for the individual. Although the AWV was effective on January 1, 2011, section 4103 of the Affordable Care Act provided the Secretary additional time to establish guidelines for HRAs after consulting with relevant groups an d entities (see secti on 1861 (hhh)(4)(A) of the Act). A technology assessment from the Ag ency for Healthcare Research and Quality (AHRQ) was commissioned to describe key feat ures of HRAs, to examine which features were associated with successful HRAs, and to discuss the applicability of HRAs to the Medicare population. A draft of the t echnology assessment dated January 19, 2011 is publically available on the CMS website at http://www.cms.gov/determinationprocess/downloads/id79ta.pdf

. We collaborated with the Centers for Di sease Control and Pr evention (CDC), due to their in-depth knowledge of HRAs, and because the CDC was directed by section 4004(f) of the Affordable Care Act to deve lop guidelines for a personalized prevention plan tool. In the November 16, 2010 Federal Register (75 FR 70009), CDC issued a

notice to solicit feedback re garding HRA guidance developmen t. Public comments were received from numerous relevant groups a nd entities including: the American Academy of Family Physicians; the American Dietet ic Association; the American Geriatrics Society; the American College of Cardio logy; Care Continuum Alliance, physician practices; public health agen cies; healthcare research gr oups; and the general public. The CDC convened a public meeting in A tlanta, Georgia in February 2011 to facilitate the development of guidance for HRAs. (See the December 30, 2010 Federal Register (75 FR 82400) – announcement for "Devel opment of Health Risk Assessment Guidance, Public Forum"). This meeting a llowed broad public input from stakeholdersCMS-1524-P 235

and the general public into th e development of guidelines fo r evidence-based HRAs. The Interim Guidance for Health Risk Assessments developed by the CDC is available on the

CMS website at http://www.cms.gov/coveragegeninfo/downl oads/healthriskassessmentsCDCfinal.pdf

. The CDC guidance resulted from a review a nd compilation of the current scientific evidence, the technology assessment, expert advice from those working in the field of HRA and wellness, and takes into account public feedback from the request for information and the public meeting. The CDC guidance includes questions and topics to be addressed as deemed appropriate for the beneficiary's age. Additional information regarding the CDC guidance de velopment process is included as part of the guidance document. The CDC plans to publish "A Framework for Patient-Centered Health Assessments, a Morbidity and Mortality Weekly Report (MMWR)." The MMWR will include additional information applicable fo r the successful implementation of the HRA, such as the CDC interim guidance documen t, as well as information related to implementation, feedback, and follow-up that ev idence suggests is critical for improving health outcomes using this process. We ar e interested in receiving feedback regarding the availability of HRAs that are available for use by the general public. b. Implementation Consistent with section 1861(hhh) of the Act and the in itial CDC guidance document, we propose to amend 42 CFR 410.15 by: (1) adding the term "health risk assessment" and its definition; (2) revising th e definitions of "first annual wellness visit providing personalized prevention plan servi ces" and "subsequent annual wellness visit providing personalized prevention plan servi ces;" and (3) incor porating the use andCMS-1524-P 236

results of an HRA into the provision of pe rsonalized prevention plan services during the

AWV. We believe that inco rporation of the HRA supports a systematic approach to patient wellness and is integr al to providing personalized pr evention plan services. The results of the HRA will provide the foundati on for and facilitate development of the personalized prevention plan. We believe that the results of the HRA will aid in developing the personalized prevention plan and, once fully implemented, will increase the efficiency of the physician' s effort during the AWV. (1) Definition of a "Health Risk Assessment" We propose to revise §410.15 by adding the term "health risk assessment" and defining such term as an evaluation tool that meets the following requirements:

● Collects self-reported info rmation about the beneficiary.

● Can be administered independently by the beneficiary or administered by a health professional prior to or as part of the AWV encounter.

● Is appropriately tailor ed to and takes into account the communication needs of underserved populations, persons with limited English proficiency, and persons with health literacy needs,

● Takes no more than 20 minutes to complete.

● Addresses, at a minimum, the following topics: ++ Demographic data, including but not limited to age, gender, race, and ethnicity.

++ Self assessment of health stat us, frailty, and physical functioning. ++ Psychosocial risks, including but not limited to depression/life satisfaction, stress, anger, loneliness/socia l isolation, pain, or fatigue.CMS-1524-P 237

++ Behavioral risks, including but not limited to tobacco use, physical activity, nutrition and oral health, al cohol consumption, sexual prac tices, motor vehicle safety (seat belt use), and home safety. ++ Activities of daily living (ADLs), including but not limited to dressing, feeding, toileting, grooming, physical ambulation (including balance/risk of falls), and bathing. ++ Instrumental activities of daily liv ing (IADLs), including but not limited to shopping, food preparation, using the te lephone, housekeeping, laundry, mode of transportation, responsibility for own medica tions, and ability to handle finances. The CDC guidance describes an HRA as "a collection of health-related data a medical provider can use to evaluate the health st atus and the health risk of an individual. An HRA will identify health behaviors and risk factors known only to the patient (such as, smoking, physical activity and nutritional habits) for which the medical provider can provide tailored feedback in an approach to reduce the risk factors" as well as the potential for diseases for which those risk factors are related. The CDC guidance further explains that the "questions/topics to be addressed in the HRA is a compilation of the current scientific evidence and are intended for Medicare beneficiaries as appropriate for their age." These include collection of demographic data; self assessment of health status, frailty, a nd physical functioning; biometric assessments obtained by the provider; psychosocial risks; and behavioral risks. The guidance document suggests, based on current evidence th at the following domains specific to the greater than or equal to a 65 year-old Medicare populati on be included in the HRA: memory, activities of daily living, and in strumental activitie s of daily living.CMS-1524-P 238

With regard to memory, the CDC guidance states "that cognition assessment is not part of the HRA itself, but rather an additi onal aspect of the AWV... ". We note that the definitions of both the first and subsequent annual wellness visit incl ude the detection of any cognitive impairment. The CDC guidance, consistent with section 1861(hhh)(4)(A) of the Act, specifies that an HRA should be made available to all Medicare beneficiaries who are eligible to receive an AWV, as de fined in §410.15; can be furnished in a number of ways, including during an encounter w ith a health professional or through an interactive telephonic or web-based progr am, while ensuring th e privacy of the beneficiary; be provided in a patient's preferred language ; and take no longer than 20 minutes to complete. We believe that th e health professional should consider the beneficiary's needs when determining whether assistance would be needed for the beneficiary to complete the HRA. Factors a health professional may wish to consider include vision, hearing, or language limitati ons; the communication needs of underserved populations; persons with limited English profic iency; and persons with health literacy

needs. The completed HRA and results would be pr ovided to the health professional as that term is defined in §410.15(a), as a f oundation for completing the elements included in the definitions of first and subsequent AWVs during the AWV encounter. The CDC guidance document explains that "during the visit, the HRA information, and other biometrics available are utilized by the pr actitioner in a thought process intended to develop a prevention plan for the patient to im prove health status and delay the onset of disease known to be caused by the reported behavi oral risks or the patient's current health status. The practitioner can, in a shared decision making pro cess with the patient provideCMS-1524-P 239

feedback in the form of edu cational messages, counseling or referrals related to changing high risk behaviors and health habits. Th is feedback can potentially improve health

behaviors and/or alter one's risk of disease, improve chronic disease management or likelihood of premature death." For instan ce, the HRA may collect aspects of the beneficiary's medical and fam ily history, such as history of tobacco use, that would provide a foundation for personalized health ad vice, and if deemed appropriate, referral for additional preventive services after completion of the AWV. We note that the standards outlined in the proposed definition of the term health risk assessment represent a minimum set of topics that need to be addr essed as part of an HRA, while allowing the health professional the flexibility to evaluate additional topics, as appropriate, to provide a foundation for development of a personalized prevention plan. (2) Proposed Changes to the Definitions of "First Annual Wellness Visit" and "Subsequent Annual Wellness Visit" In §410.15, we adopted the components of the AWV, consistent with the statutory

elements described in section 1861(hhh)(2) of the Act. The first and subsequent annual wellness visits, as defined in §410.15(a), are meant to represent a beneficiary visit focused on prevention. Among other things , the annual wellness visit encourages beneficiaries to obtain the preventive servic es covered by Medicare that are appropriate for them. First and subsequent AWVs also include elements that focus on the furnishing of personalized health advice a nd referral, as appropriate, to health education, preventive counseling services, programs aimed at improving self-management, and community-based lifestyle interventions. We are proposing that the definitions of "first annual wellness visit providingCMS-1524-P 240

personalized prevention plan services" and "subsequent annual we llness visit providing personalized prevention plan services" be revise d to incorporate the use and results of an HRA. The HRA is an integral part of th e provision of personalized prevention plan services, consistent with s ection 1861(hhh) of the Act. We propose to incorporate the HRA by revising the definitions of firs t and subsequent AWVs as follows:

● Specify that the AWV take into account the results of an HRA.

● Add the review (and administration, if needed) of an HRA as an element of both first and subsequent AWVs.

● Specify that the establishment of a written screening schedule for the individual, such as a checklist, includes and takes into account the HRA. The HRA facilitates a systematic method fo r identifying health behaviors and risk factors known to the patient (such as: smoki ng, physical activity, and nutritional habits) for which the medical provider can discuss and provide tailored feedback aimed at reducing risk factors as well as reducing th e potential for developing the diseases to which they are related. During the AWV encounter, the HRA info rmation is utilized by the health professional in a thought process intended to develop a personalized prevention plan for the patient to improve health st atus and delay the onset of di sease. For instance, if the information provided by the HRA indicated that the beneficiary had a current or past history of tobacco use, the health professi onal may deem it appropriate to perform those commonly used aspects of a clin ical evaluation (for instance, listening to (auscultation) the heart and lungs) in order to provide the appropriate personalized health advice and referrals for additional preventive services such as tobacco cessation counseling.CMS-1524-P 241

The CDC guidance document provides a list of questions/topics to be addressed in an HRA, including biometric assessments of height, weight, body mass index (BMI), systolic/diastolic blood pressure, blood lipids (HDL/LDL and total cholesterol, triglycerides), and blood glucose. Additio nally, the CDC guidance document suggested

that the information collected via the HRA would be reconc iled with biometric assessments obtained by the provider. Consis tent with section 1861( hhh)(2) of the Act, the definitions for first AWV and subseque nt AWVs address most of the biometric assessments suggested in the CDC guidan ce document. We are requesting public comment on the applicability and impact of including additional elements and biometric assessments to first and subsequent AWVs, per the Secretary's authority under section 1861(hhh)(2)(G) of the Act. We believe that the incorporation of the HRA would increase the efficiency of the health professional's effort during the AWV. For instance, during the AWV encounter, the health professional furnis hing the AWV would review the information reported in the HRA, which would serve as the basis for a personalized preventi on plan provided during the AWV encounter. The beneficiary would le ave the visit with pe rsonalized health advice, appropriate referrals, and a written individualized screening schedule, such as a check list. We would not expect that the health professional woul d provide only general recommendations during the AWV encounter and then mail a pe rsonalized prevention plan that incorporates an HRA to the bene ficiary outside of the AWV encounter. While

the AWV is a wellness visit that focuses on wellness and disease prevention, a follow-up visit to treat an identified illness may be need ed to address an urgent health issue. For example, if a beneficiary is determined to have high blood pressure, a follow- up visit forCMS-1524-P 242

further review of symptoms and evaluati on and management, along with determining

whether additional interventions are necessar y, may be performed after the completion of the AWV as a separate service. We are requesting public comment on the overall impact and burden of the AWV on health professional practices, including the impact that inco rporation of the use of an HRA will have on health professionals and th eir practices. Specifically, we are seeking public comment on the following:

● The impact of use of an HRA on health professional practices;

● The burden on health pr ofessional practices of in corporating an HRA into subsequent AWVs as well as the first AWV;

● The impact of the elements included in the definitions of first and subsequent

AWV.

● Modification of those AWV elements fo r which the Secretary has authority to determine appropriateness. We are also proposing changes to the de finition of the term "subsequent annual wellness visit providing personali zed prevention plan services" to clarify that the health professional should furnish personalized prevention plan services and updated information if there have been changes sin ce the beneficiary's last AWV, whether that was a first AWV or a subsequent AWV. In the CY 2011 PFS final rule with comment period, we stated in the definition of "subsequent annual wellness visit providing personalized prevention plan services" that certain elements should be updated based on information developed during the first AWV (f or example, lists of risk factors and screening schedules). Since all AWVs that follow the first AWV are consideredCMS-1524-P 243

subsequent AWVs, the health professional s hould update elements that were developed during the previous AWV if there have been changes. The proposed changes to the definition of the term "subsequent annua l wellness visit prov iding personalized prevention plan services" are as follows:

● We propose that newly redesignated para graph (iii) state "an update of the list of current providers and supplie rs that are regularly involve d in providing medical care to

the individual as that list was developed for the first a nnual wellness visit providing personalized prevention plan services or th e previous subsequent annual wellness visit providing personalized prevention plan services".

● We propose that newly redesignated para graph (vi)(B), state "the list of risk factors and conditions for which primary, s econdary or tertiary interventions are recommended or are underway for the individua l as that list was developed at the first annual wellness visit providing personalized pr evention plan services or the previous subsequent annual wellness visit providing pe rsonalized prevention plan services".

2. The Addition of a Health Risk Asse ssment as a Required Element for the Annual Wellness Visit beginning in 2012.

Section 4103 of the Affordable Care Ac t created a new benefit for an "annual wellness visit" (AWV) providing personalized prevention plan services (PPPS). The Affordable Care Act amended section 1861(s )(2) of the Act by adding new subparagraph (FF) to provide for coverage of the AWV beginning January 1, 2011. Section 4103 of

the Affordable Care Act also added new subs ection (hhh) to secti on 1861 of the Act to define "personalized prevention plan servic es" and to specify w ho may furnish these services. Finally, section 4103 of the Affordable Care Act amended section 1848(j)(3) ofCMS-1524-P 244

the Act and provided for payment of AWVs under the PFS, and specifically excluded the AWV from the hospital OPPS. As discu ssed in the CY 2011 PFS final rule with comment period (75 FR 73401), a single Medica re payment is made when an AWV is furnished by a physician, physic ian assistant, nurse practi tioner, or clinical nurse specialist, or a by a medical professional or team of medical professionals, under the direct supervision of a physician.

In the CY 2011 PFS final rule with comment period (75 FR 73409), we established two HCPCS G-codes for repor ting the AWV beginning in CY 2011: G0438 (Annual wellness visit; includes a personalized prevention plan of service (PPPS), first visit) and G0439 (Annual wellness visit; incl udes a personalized prevention plan of service (PPPS), subsequent visit). A beneficiary is eligible for only one first AWV (HCPCS code G0438) covered by

Medicare that must include a ll of the required elements th at we adopted in our final policy for the CY 2011 PFS final rule with comment period (75 FR 73399). All subsequent AWVs (HCPCS code G0439) include the required elements for those visits as

finalized in the CY 2011 PFS final rule with comment period (75 FR 73399). All AWVs other than the beneficiary's first AWV shall 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 th e 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 final rule with comment period (75 FR 73409),CMS-1524-P 245

we believe that the first AWV described by HCPCS code G0438 is similar to the IPPE that is currently reported with HCPCS code G0402 (Initial preventive physical examination; face-to-face visi t, services limited to new beneficiary during the first 12 months of Medicare enrollment). We note that in the CY 2010 PFS final rule with comment period discussion of payment for the IP PE (74 FR 61767), we stated 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 ot her outpatient visit). In addition, in the CY 2011 PFS final rule with comment pe riod (75 FR 73410), we indicated that subsequent AWV's described by HCPCS c ode G0439 are most similar, from the perspectives of physician work and PE, to CPT code 99214 (Level 4 established patient office or other outpatient visit). Theref ore, we valued HCPCS codes G0438 and G0439 for payment under the PFS using a crosswalk methodology for the work RVUs and direct PE inputs from the level 4 new and establishe d patient office or other outpatient visit CPT codes, respectively. a. Payment for AWV services with the inclusion of an HRA element.

In the CY 2011 PFS final rule with co mment period (75 FR 73411), we stated "that when the HRA is incorporated in th e AWV, we will reevaluate the values for

HCPCS codes G0438 and G0439". As discu ssed in the CY 2011 PFS final rule with comment period, the services described by CPT codes 99204 and 99214 already include 'preventive assessment' forms. For CY 2012, we believe that the current payment

crosswalk for HCPCS codes G0438 and G0439 con tinue to be most accurately equivalent

to a level 4 E/M new or esta blished patient visit; and ther efore, we are proposing to

continue to crosswalk HCPCS codes G0438 and G0439 to CPT codes 99204 and 99214,CMS-1524-P 246

respectively. F. Quality Reporting Initiatives 1. Physician Payment, Efficiency, and Qua lity Improvements - Physician Quality Reporting System a. Program Background and Statutory Authority The Physician Quality Reporting System is a quality reporting program that provides incentive payments and payment adjustments to identified eligible professionals who satisfactorily report data on quality measures fo r covered professional services furnished during a specified reporting period. The Physician Qua lity Reporting System was initially implemented in

2007 as a result of section 101 of Division B of the Tax Relief and Health Care Act of 2006. The Physician Quality Reporting System was exte nded and further enhanced as a result of the Medicare Improvements for Patients and Providers Act of 2009 (MIPPA), which was enacted on July 15, 2008, and the Affordable Care Ac t, which was enacted on March23, 2010. Changes to the Physician Qu ality Reporting System as a result of these laws, as well as information about the Physician Quality Repor ting System in 2007, 200 8, 2009, 2010, and 2011 are discussed in detail in the CY 2008 PFS proposed and final rules (72 FR 38196 through 38204 and 72 FR 66336 through 66353, respectively) , CY 2009 PFS proposed and final rules (73 FR 38558 through 38575 and 73 FR 69817 through 69847, respectively), CY 2010 PFS proposed and final rules (74 FR 33559 through 33600 and 74 FR 61788 through 61861, respectively), and CY 2011 PFS proposed and fina l rules (75 FR 73487 th rough 73552). Further detailed information, about the Physician Qualit y Reporting System, related laws, and help desk resources, is available on the CMS Web site at http://www.cms.gov/PQRS

. In the CY 2011 PFS final rule (75 FR 73618) , we established 42 CFR 414.90 governing the Physician Quality Reporting System. b. Methods of ParticipationCMS-1524-P 247

There are two ways an eligible professional may participate in the Physician Quality Reporting System: (1) as an individual eligible professional or (2) as part of a group practice under the Physician Quality Reporting System group practice reporting option (GPRO). The details of each proposed method of partic ipation are described in this section. (1) Individual Eligible Professionals As defined at 42 CFR 414.90(b) the term "eligible professional" means any of the following: (1) a physician; (2) a practitioner descr ibed in section 1842(b)(18)(C) of the Act; (3) a physical or occupational therapist or a qualifie d speech-language pathologist; or (4) a qualified audiologist. For more information on which pr ofessionals are eligible to participate in the Physician Quality Reporting System, we refer r eaders to the "List of Eligible Professionals"

download located in the "How to Get Started section of the Physician Quality Reporting CMS

Web site at: http://www.cms.gov/PQRS/03_How_To_Get_Started.asp#TopOfPage

. (2) Group Practices (A) Background and Authority As required by section 1848( m)(3)(C)(i) of the Act, we established and have had in place since January 1, 2010, a process under which eligible profe ssionals in a group practice are treated as satisfactorily submitting data on quality measures under the Physician Quality Reporting System if, in lie u of reporting measures under the Physician Quality Reporting System, the group practice reports measures determined appropriate by the Secretary, for example measures that target high-cost ch ronic conditions and preventive care, in a form a nd manner, and at a time specifi ed by the Secretary. Section 1848(m)(3)(C)(ii) of the Act requires that this process provide for the use of a statistical sampling model to submit data on measures, for example the model used under the Medicare Physician Group Practice (PGP) demo nstration project under section 1866A of the Act. We established a group practice reporting option (GPRO) for the PhysicianCMS-1524-P 248

Quality Reporting System under 42 CFR 414.90(g). (B) Proposed Definition of Group Practice Under 42 CFR 414.90(b), a "group practice" means "a single Tax Identification Number (TIN) with two or more eligible pr ofessionals, as identifie d by their individual National Provider Number (NPI), who have reassigned their Medica re billing rights to the TIN". We propose to change th e definition of "group practice" under 42 CFR 414.90(b). Specifically, we propose that under the Physician Quality Reporting System, a "group practice" would consist of a physician group practice, as defined by a TIN, with 25 or more individual eligible prof essionals (or, as iden tified by NPIs) who have reassigned their billing rights to the TIN. This pr oposed definition of group practice is different from the definition of gro up practice that was applicable for the 2011 Physician Quality Reporting System, which defined a group practice as two or more eligible professionals. For the 2010 Physician Quality Reporti ng System, our definition of "group practice" was limited to practices with 200 or more eligible professionals because our intent was to model the Physician Qualit y Reporting System GPRO after a quality reporting program that group practices may al ready be familiar with – the Physician Group Practice (PGP) demonstrati on. Since participation in the PGP demonstration was limited to large group practices, we wanted to initially limit participa tion in the Physician Quality Reporting System GPRO to similar large group practices. In 2011, we expanded this definition to include practices with 2-199 eligible professionals because we developed a second reporting option (GPRO II) specifically for smaller group practices that was based largely on the Physician Qu ality Reporting System reporting options for individual eligible professionals. We have since observed that many of these smallerCMS-1524-P 249

group practices that self-nominated to pa rticipate in GPRO II for 2011 subsequently elected to opt out of participation in the GPRO II for 2011 so that members of the group practices can participate in the Physician Qu ality Reporting System individually instead. Out of 107 total groups that self-nominat ed for GPRO II, only 25 group practices comprised of 2-10 eligible professional s and 15 group practices comprised of 11-25 eligible professionals are s till participating in GPRO II for 2011 at this time.

Since the GPRO II seems to be a less attr active reporting option than GPRO I, we are proposing in section IV.F .1.b.2 of this proposed rule to consolidate GPRO I and II into a single GPRO. Howeve r, since our experience with using the GPRO submission web interface under the Physician Quality Repor ting System has been limited to larger practices or practices particip ating in demonstration projects , we hesitate to expand what we referred to as GPRO I to all group pract ices until we gain some experience with smaller practices on a larger scale. For exam ple, we believe that participation under the Physician Quality Reporting System GPRO is a more effective method of participation for larger as opposed to smaller group practi ces. As described in section IV.F.1.e.6 of this proposed rule, a group pract ice must take extra steps to participate in the Physician Quality Reporting System GPRO, for exampl e reporting on more measures overall than is required for individual eligible professiona ls. In contrast, memb ers of a group practice who choose to participate in the Physicia n Quality Reporting System as individual eligible professionals could sa tisfactorily report by reporting as few as 3 measures. We believe the additional reporting burden associ ated with participa ting under the Physician Quality Reporting System GPRO may make the GPRO less attractive for smallerCMS-1524-P 250

practices. For these reasons, we propose to ch ange the definition of "group practice" at 42 CFR 414.90(b) to groups with 25 or more eligible professionals. Our proposal to change the definition of group practice would not preclude individual eligible professiona ls in group practices of less th an 25 eligible professionals from participating in the Physician Qualit y Reporting System, since members of these group practices may still participate as individua l eligible professionals. We believe that smaller group practices are more closely akin to individual eligible professionals with respect to participation under the Physic ian Quality Reporting System. We request comments on the proposed change to the definition of "group practice" under 42 CFR 414.90(b) under the Physician Quality Reporting System and also, whether we should retain the existing definition under the regulation despite our proposal to retain only the GPRO I for 2012. We recognize that a group's size can fluctuate throughout the year as professionals move from pract ice to practice. We allow for fluctuation of the group practice's size throughout the reporting period. However, the group practi ce's size after the group practice's participation is appr oved by CMS must continue to meet the definition of a group practice as proposed in 42 CFR 414.90(b) for the entire reporting period. We also note that under 42 CFR 414.90( g)(1), a group prac tice of any size (including solo practitioners) or comprised of multiple TINs participating in a Medicare approved demonstration projec t of other programs would also be deemed to be participating in the Physician Quality Repor ting System GPRO. For example, the PGP demonstration, as well as the Medicare Shar ed Savings Program (governing accountableCMS-1524-P 251

care organizations (ACOs)), Pi oneer ACO, and EHR demonstr ations have incorporated or proposed to incorporate aspects of the Physician Quality Reporting System reporting requirements and incentives under those respective programs. Our intention to recogni ze (deem) group practices participating in such other programs or demonstration projects as havi ng participated in the Physician Quality Reporting System was to ensure that such gr oups would not be barred from participating in the group practice repor ting option under the eRx Incentive program, since we previously required that group practices interested in par ticipating in the eRx Incentive Program also participate in the Physician Quality Reporting System GPRO. We are not proposing to change the eligib ility for group practices, includi ng those participating in the programs mentioned above, to participate in the eRx Incentive program. As discussed in the proposed changes to the eRx Incentive Pr ogram in section IV.F .1.e.2 later in this proposed rule, however, we are proposing th at a group practice must self-nominate to participate under the eRx Incentive Progr am's group practice reporting option. In addition, we are proposing to make a t echnical change to 42 CFR 414.90(g)(1) to eliminate the reference to group practices in demonstrations that are deemed to have participated in the Physician Quality Reporting System. We be lieve that this language is unnecessary given the regulation at 42 CFR 414.92(b). In addition, we believe that retaining the reference at 42 CFR 414.90(g)(1 ) may cause confusion with regard to participation under the Physician Quality Re porting System or inappropriately suggest that duplicate Physician Quality Reporting Sy stem incentive payments are available to group practices under both the P hysician Quality Reporting Syst em and the other types of programs mentioned previously. We also propose to make a technical change toCMS-1524-P 252

42 CFR 414.92(b) to more broadly address gr oup practices in othe r types of programs that incorporate Physician Quality Reporting System reporting requirements and incentives, so that the regulation does not so lely reference demonstrations. We seek comments on these proposed technical changes to the regulations. Since the introduction of the Physician Quality Reporting System GPRO in 2010, eligible professionals within a group practice were required to assign their billing rights to a single TIN. For 2012, as stated prev iously, we are proposing to retain this requirement. However, in an effort to ali gn the Physician Quality Reporting System with other CMS quality reporting group programs, we considered amending the definition of "group practice" to allow participation in the Physician Quality Reporting System GPRO by groups with 25 or more individual eligible professionals (or, as identified by NPIs) who practice using multiple TINs. We belie ve that changing the definition of group practice in the Physician Quality Reporting System for future program years to align with other quality reporting group programs may be beneficial to provi ders who wish to participate in multiple CMS quality reporting pr ograms that apply to group practices. Although we are not proposing to do so at this time, we invite public comment on possibly expanding the definition of group practi ce to be comprised of multiple TINs in future years of the program. We believe that to the extent we changed the definition of group practice in future years to allow for participation by group pr actices that use multiple TINs, it would require us to create additional parameters re lated to the relationship between the various TINs. As such, we also invite public comment on parameters that should be set to ensure that these multiple TINs represent a single inte grated practice, such as but not limited to:CMS-1524-P 253

● Must eligible prof essionals in a group pract ice share certain common characteristics in order to be eligible for participation under the Physician Quality Reporting System GPRO, such as ge ographic location or specialty?

● Should there be a limit to how many TI Ns may be comprised in a single group practice? We invite public comment on parameters th at may be set should we decide to amend the definition of group practice to include multiple TINs in future program years. (C) Proposed Process for Physician Group Practices to Participate as Group Practices In order to participate in the Physic ian Quality Reporting System GPRO for 2012 and subsequent years, we propose to re quire group practices to complete a self-nomination process and to meet certain technical and other re quirements described later in this section in greater detail. As in prior years, we are proposing to require these self-nomination and additional process require ments so that we may identify which group practices are interested in participating in the Physician Quality Reporting System as a GPRO as well as to ensure that group pract ices participating in the GPRO understand the process for satisfactorily repor ting Physician Quality Reporting System quality measures under the GPRO method of reporting. We propose to require that group practices interested in participating in the Physician Quality Reporting System GPRO for the first time submit a self-nomination statement for the respective year the group pr actice wishes to partic ipate as a Physician Quality Reporting System GPRO via a web-ba sed tool that includes the group practice's TIN(s) and name of the group practice, the na me and email address of a single point of contact for handling administra tive issues, as well as the name and email address of a single point of contact for t echnical support purposes. A gr oup practice that submits anCMS-1524-P 254

incomplete self-nomination statement, such as a valid email address is not provided),

would not be considered for inclusion in th e Physician Quality Reporting System GPRO. We would notify any group practice that s ubmits an incomplete self-nomination

statement. If it is not operationally f easible for us to collect self-nomination statements via a web-based tool for 2012, we propose to requ ire that group practices interested in participation in the Physician Quality Reporting System GPRO submit a self-nomination statement via a letter accompanied by an electronic file submitted in a format specified by us (such as a Microsoft Excel file) that in cludes the group practice's TIN(s) and name of the group practice, the name and email addre ss of a single point of contact for handling administrative issues, as well as the name a nd email address of a single point of contact for technical support purposes. Under this proposed submission mechanism, a group practice that submits an incomplete self- nomination statement (such as, a valid email address is not provided), would not be cons idered for inclusion in the 2012 Physician Quality Reporting System GPRO. For the Physician Quality Reporting System GPRO, we propose that the

self-nomination statement must also indi cate the group practice's compliance with the following requirements:

● Agree to attend and participate in all mandatory GPRO training sessions.

● Is an established Medicare provider that has billed Medicare Part B on or after January 1 and prior to October 29 of the ye ar prior to the repo rting period for the respective year. For example, for purposes of participating in the 2012 PhysicianCMS-1524-P 255

Quality Reporting System GPRO, the group pr actice must have billed Medicare Part B on or after January 1, 2011 and prior to October 29, 2011.

● Agree to have the results on the pe rformance of their Physician Quality Reporting System measures publicly poste d on the Physician Compare Web site.

● Obtain and/or have access to the id entity management system specified by CMS (such as, but not limited to, the Indivi duals Authorized Access to CMS Computer Systems, or IACS) to submit Medicare clinic al quality data to a CMS clinical data

warehouse.

● Provide CMS access (upon request for validation purposes) to review the Medicare beneficiary data on which P hysician Quality Reporting System GPRO submissions are founded or pr ovide to CMS a copy of the actual data (upon request). Furthermore, to ensure that accurate data is being reported, we reserve the right to validate the data submitted by GPROs. We propose that, for 2012 and future y ears, a group practi ce that wishes to participate in both the Physician Quality Reporting System and eRx GPRO (see the eRx Incentive Program's section IV.F.2.(b).(2).(B) . of this proposed ru le) must indicate its desire to participate in both programs in its self-nomination statement. In 2012, the GPRO is interested in tes ting the extraction of EHR data submitted by group practices through the GPRO web interface. We propose that those group practices wishing to participate in this test mu st state their interest to participate in the group practice's self-nomination letter. We further propose that group practices th at wish to self-nominate must do so by January 31 of the calendar year in which the group practice wishes to participate in theCMS-1524-P 256

Physician Quality Reporting System GPRO. For example, in order to participate in the GPRO for the 2012 Physician Quality Reporti ng System, the group practice would need to self-nominate by January 31, 2012. Upon r eceipt of the self-nom ination statements, we would assess whether the participati on requirements for the respective reporting period were met by each group practice using Medi care claims data from the year prior to the respective reporting period. We woul d not preclude a group practice from participating in the GPRO if we discover, from analysis of the Medicare claims data, that there are some eligible professionals (ide ntified by NPIs) that are not established Medicare providers (that is, ha ve not billed Medicare Part B on or after January 1 and prior to or on October 29 of the year prio r to the respective repor ting period) as long as the group has at least the minimum proposed nu mber (that is, 25) of established Medicare providers required to particip ate in the Physician Quality Reporting System as a group practice. Eligible professionals, as classi fied by their NPIs, who do not submit Medicare Part B claims for PFS covered professional services during the re porting period, however,

would not be included in our in centive payment calculations. Furthermore, we propose to allow gr oup practices who have previously participated in the Physician Quality Re porting System GPRO to automatically be qualified to participate in the GPRO in 2012 and future program years. For example, group practices that were sele cted to participate in the 2011 Physician Quality Reporting System GPRO I or GPRO II (provided the grou p practice is still comp rised of at least 25 eligible professionals) would automatically be qualified to pa rticipate in the 2012 Physician Quality Reporting System GPRO a nd would not need to complete the 2012 Physician Quality Reporting System GPRO qualif ication process. These practices would,CMS-1524-P 257

however, need to notify CMS in writing of thei r desire to continue participation in the Physician Quality Reporting System GPRO for the respective program year. We recognize that, for various reasons, there potentially could be a discrepancy between the number of eligible professiona ls (that is, NPIs) submitted by the practice during the self-nomination process and the number of eligible pr ofessionals billing Medicare under the practice's TIN as people move in and out of practic es. Therefore, if

we find more NPIs in the Medicare claims than the number of NPIs submitted by the practice during the self-nomination process a nd this would result in the practice being subject to different criteria for satisfactory reporting, we propose to notify the practice of this finding as part of the self-nomination pro cess. At this point, the practice would have the option of either agreeing to be subject to the different criteria for satisfactory reporting or opting out of participation in the Physician Quality Reporting System GPRO to enable the members of their practice to participate in the Physician Quality Reporting System as individual eligible professionals. We invite public comment on our proposal s regarding the process for physician group practices to participate in the P hysician Quality Reporting System GPRO. c. Proposed Reporting Period Since the implementation of the Phys ician Quality Reporting System in 2007, depending on an eligible professional's chos en reporting mechanism, we have offered up to two different reporting periods for satis factorily reporting Phys ician Quality Reporting System quality measures: a 12-month reporting period (from January 1 through December 31of the respective program year) and a 6-month reporting period (from July 1 through December 31of the respective program year). Section 1848(m)(5)(F) of the ActCMS-1524-P 258

requires CMS to provide alternative reporting periods and criteria for measures groups and registry reporting. To comply with th is provision, for 2012 and subsequent years, CMS is proposing to retain the 6-month reporting period option fo r the reporting of Physician Quality Reporting System measures groups via registry. In addition, for 2012 and subsequent years, we propose to modify 42 CFR 414.90(f)(1) to specify a 12-month re porting period (that is , January 1 through December 31of the respective program year), consistent with section 1848(m)(6)(C)(i)(II) of the Act, for the satisfactory reporting of Physician Quality Reporting System quality measures for claims, registry, and EHR-ba sed reporting. Additionally, we propose to modify 42 CFR § 414.90(g)(1) to specify a 12-month reporting period (that is, January 1through December 31of the respective program year) for the Physician Quality Reporting System GPRO. We understand that in proposing these modifications to 42 CFR 414.90, we are proposing to eliminate the 6-month reporting period for claims and registry previously available under the Physician Quality Reporting System (with the exception of reporting measures groups via re gistry). Although we are not proposing a 6-month reporting period for claims and re gistry reporting (for reporting individual measures via registry), we note that the 12- month reporting period aligns with other CMS quality reporting programs. In addition, th e elimination of the 6-month reporting period for claims and registry reporting (for repor ting individual measures via registry) will align the reporting periods of these mechanis ms with the EHR reporting mechanism. We

further believe that the elimination of the 6-month reporting period for claims and registry reporting (for reporti ng individual measures via regi stry) will help to streamline and simplify the reporting requirements fo r the Physician Quality Reporting SystemCMS-1524-P 259

without substantial burden to eligible professionals who may still satisf actorily report using the 12-month reporting period. d. Proposed Reporting Mechanisms – I ndividual Eligible Professionals For the purpose of reporting quality measures under the Physician Quality Reporting System, we propose to retain the cl aims-based, registry-based, and EHR-based reporting mechanism for 2012 and beyond. Accordingly, we propose to modify 42 CFR 414.9(f) to reflect this proposal. We are proposing to retain these reporting mechanisms in order to provide eligible pr ofessionals with multiple mechanisms from which to satisfactorily report Physician Quality Reporting System quality measures. We hope that offering multiple reporting mechanisms will aid in encouraging participation in the Physician Quality Reporting System. As in previous years, the individual quality measures or measures groups an eligible professional selects will dictate th e applicable reporting mechanism(s). In addition, while eligible professionals can at tempt to qualify for a Physician Quality Reporting System incentive under multiple reporting mechanisms, the eligible professional must satisfy the criteria for satisfactory reportin g proposed for the respective program year, with respect to a single repor ting mechanism to qualify for an incentive. We further propose that we would not comb ine data submitted vi a multiple reporting mechanisms to determine incentive eligibility. We invite public comment concerning the general, proposed reporting mechanisms for the Physician Quality Reporting System for 2012 and beyond. (1) Claims-based ReportingCMS-1524-P 260

As we noted previously, we propose to retain the claims-based reporting mechanism for the Physician Quality Reporting System for 2012 and beyond. For eligible professionals who choose to part icipate in the Physician Quality Reporting System by submitting data on individual quality measures or measures groups through the claims-based reporting mechanism, we propose that the eligible professional be required to submit the appropriate Physician Quality Reporting System quality data codes (QDCs) on the professionals' Medicare Pa rt B claims. QDCs for the eligible professional's selected individual Physicia n Quality Reporting System quality measures or measures group may be submitted to CMS at any time during the reporting period for the respective program year. However, as required by section 1848(m )(1)(A) of the Act,

all claims for services furnis hed during the reporting period, would need to be processed by no later than two months af ter the end of the reporting pe riod, to be included in the program year's Physician Quality Reporting System analysis. For example, all claims for services furnished for the 2012 Physician Qu ality Reporting System would need to be processed by no later than two months afte r the end of the repor ting period for the 2012 Physician Quality Reporting System, that is, processed by February 28, 2013 for the reporting period that ends December 31, 2012. We invite public comment on our proposed requirements for eligible professiona ls who choose the claims-based reporting mechanism for 2012 and beyond. (2) Registry-based Reporting (A) Proposed Requirements for the Registry -based Reporting Mechanism - Individual Eligible ProfessionalsCMS-1524-P 261

As stated previously, we propose to reta in the registry-based reporting mechanism via a qualified registry (as defined in secti on (2)(B) of this section) for the Physician Quality Reporting System for 2012 and beyond. W ith regard to specific requirements for registry-based reporting for i ndividual eligible professiona l reporters under the Physician Quality Reporting System, we propose that in order to report quality data on the Physician Quality Reporting System individual quality measures or measures groups for the respective program year th rough a qualified registry, an e ligible professional or group practice must enter into and maintain an appropriate legal arrangement with a qualified Physician Quality Reporting System registry. Such arrangements would provide for the registry's receipt of patient-specific data from the eligible professional and the registry's disclosure of quality measures results and numerator and denominator data on Physician Quality Reporting System quality measures or measures groups on behalf of the eligible professional to CMS. Thus, the registry woul d 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 requi site legal authority to provide clinical quality measures results and numerator a nd denominator data on individual quality measures or measures groups on behalf of the eligible professional for the Physician Quality Reporting System. We propose that the registry, acting as a data submission vendor, would submit CMS-defined registry-derived measures info rmation to our designated database for the Physician Quality Reporting System, using a CMS-specified record layout, which would be provided to the registry by CMS. Simila rly, we propose that el igible professionalsCMS-1524-P 262

choosing to participate in the Physic ian Quality Reporting System through the registry-based reporting mechanism for the respective program year must select a qualified Physician Quality Reporting Syst em registry and submit information on Physician Quality Reporting System individual quality measures or measures groups to the selected registry in the form and manner a nd by the deadline specified by the registry. We propose to post a list of qualified re gistries for the Physician Quality Reporting System for the respective program year on the Physician Quality Reporting System section of the CMS Web site at http://www.cms.gov/pqrs , which would include the registry name, contact information, the m easures and/or measur es group (if qualified) for which the registry is qualified and intends to report for the re spective program year, and information regarding the cost of the regist ry to eligible professionals. However, we do not anticipate making this list available prior to the start of the respective program year. That is, we do not anticipate making the list of qua lified registries for the 2012 Physician Quality Reporting System available pr ior to the start of the 2012 program year. We propose to post the names of the Physician Quality Reporting System qualified registries for the respective reporting period in the following 3 phases based on: (1) the registry's success in submitting Physician Quality Reporting System quality measures

results and numerator and denominator data on the quality measures in a prior Physician Quality Reporting System program year (2008, 2009, 2010, 2011, etc.); (2) the registry's

submission of a letter indicati ng their continued interest in being a Physician Quality Reporting System registry by October 31 of the year prior to the progr am year (that is, by October 31, 2011 for the 2012 program year); and (3) the registry's compliance with the Physician Quality Reporting System registry requirements for the respective programCMS-1524-P 263

year as indicated by CMS' registry vetting proc ess. The listing of a qualified registry will depend on which of the 3 proposed phases is most applicable to the registry. The manner in which we post the list of qualified regist ries is based on prior experience with participation in the Physician Quality Re porting System as a registry vendor. (B) 2012 Proposed Qualification Requirements for Registries Although we are proposing to establish the registry-based reporting mechanism as a way to report Physician Quality Reporting System quality measures for 2012 and beyond, we propose that the following proposed qualification requirements only apply for the 2012 program year. For the Physician Quality Reporting System in 2012, as in prior program years, we propos e to require a self-nomination process for registries wishing to submit Physician Quality Reporting System quality measures or measures groups on behalf of eligible prof essionals for services furnished during the applicable reporting periods in 2012. This quali fication process allows us to ensure that registries are fully informed of the Physic ian Quality Reporting System reporting process and to ensure the registry is qualifie d, thereby improving the likelihood of accurate reporting. We note that third party intermediaries ma y participate in various capacities under the Physician Quality Reporting System. In addition, in an effort to encourage the electronic submission of quality measures data from eligible professionals' EHRs, we are proposing EHR-based reporting, as di scussed later in th is section. As a result, we believe it is important to distinguish entities that collect their data fr om an EHR from those

entities that collect their data from other sour ces. As such, as disc ussed here and below, we propose, the following two categories of thir d party intermediaries that would be ableCMS-1524-P 264

to submit Physician Quality Reporting System measures data on behalf of eligible professional: 1) a registr y, as defined at 42 CFR 414.90(b) , which would be any data submission vendor submitting data from a source other than an EHR on behalf of eligible professionals that meets the proposed registry qualification require ments later in this section; and 2) EHR data submission vendors, which would be a data submission vendor

that obtains its data from an eligible professional's EH R and that meets the 2012 EHR qualification requirements. However, for ope rational reasons, we may reserve the right to limit such entities to a single role such that the entity woul d need to decide whether it wants to serve as a registry or EHR data s ubmission vendor but not both. We note that a registry could serve as an "EHR data submi ssion vendor" to the extent that it obtains data from an eligible professional's EHR, but would need to meet the proposed 2012 EHR qualification requirements. To be considered a qualified registry for purposes of serving as a registry under the program and submitti ng individual quality measures on behalf of eligible professionals who choose the regist ry reporting mechanism for 2012, we propose that both registries new to the Physician Quality Reporting System and those previously qualified must:

● Be in existence as of January 1, 2012.

● Have at least 25 participants by January 1, 2012.

● Provide at least 1 feedback report, based on the data submitted to them for the 2012 Physician Quality Reporting System incenti ve reporting period, and if technically feasible, provide at least 2 feedback reports throughout the year to participating eligible professionals. Although it is no t a requirement that registri es provide interim feedback reports, we believe it is in the stakeholder's in terest to require early registry collection ofCMS-1524-P 265

data for purposes of providing a feedback report to eligible professionals before the end of the 2012 Physician Quality Reporting System incentive reporting period to determine what steps, if any, an eligible professional shou ld take to meet the criteria for satisfactory reporting.

● For purposes of distributing feedback reports to eligible professionals, collect an eligible professional's email addresses and have documentation from the eligible professional authorizing the releas e of his or her email address.

● Not be owned and managed by an indi vidual locally-owned single-specialty group (in other words, single-specialty practic es with only 1 practi ce location or solo practitioner practices would be prohibited from self-nominating to become a qualified Physician Quality Reporting System registry).

● Participate in ongoing 2012 Physicia n Quality Reporting System mandatory support conference calls hosted by CMS (approxi mately 1 call per month), including an in-person registry kick-off meeting to be he ld at CMS headquarters in Baltimore, MD. Registries that miss more than one meeting would be precluded from submitting Physician Quality Reporting System data for the reporting year (2012).

● Be able to collect all needed data elements and transmit to CMS the data at the TIN/NPI level for at least 3 measures, wh ich is the minimum amount of measures on which an eligible professional is required to report, in the 2012 Physician Quality Reporting System (according to the poste d 2012 Physician Quality Reporting System Measure Specifications);

● Be able to calculate and submit m easure-level reporting rates or, upon request, the data elements needed to calculate the reporting rates by TIN/NPI.CMS-1524-P 266

● Be able to calculate and submit, by TIN/NPI, a performance rate (that is, the percentage of a defined population who receive a particular process of care or achieve a particular outcome based on a calculation of the measure's numerator and denominator specifications) for each measure on which the TIN/NPI reports or, upon request the Medicare beneficiary data elements n eeded 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 th e registry is reporting.

● Provide the measure title for the Phys ician Quality Reporting System quality measures on which the registry is reporting.

● Report the number of eligible in stances (reporting denominator).

● Report the number of in stances a quality service is performed (reporting numerator).

● Report the number of pe rformance exclusions, meaning the quality action was not performed for a valid reason as de fined by the measure specification.

● Report the number of reported inst ances, performance not met (eligible professional receives credit for reporting, not for performance), meaning the quality action was not performed for no valid reason as defined by the measure specification.

● Be able to transmit this data in a CMS-approved XML format.CMS-1524-P 267

● Comply with a CMS-specified secure method for data submission, such as submitting the registry's data in an XML f ile through an identity management system specified by CMS or another approved me thod, such as use of appropriate NwHIN (Nationwide Health Information Network) specifications, if technically feasible.

● Submit an acceptable "validation st rategy" to CMS by March 31, 2012. A validation strategy ascertains whether eligible professionals have submitted accurately and on at least the minimum number (80 perc ent) of their eligible patients, visits, procedures, or episodes for a given measure, wh ich, as described in section (e)(2) of this section, is the minimum percen tage of patients on which an eligible professional must report on any given measure. Acceptable validation strategies often include such provisions as the registry being able to conduct random sampling of their participant's data, but may also be based on other credible means of verifying the accuracy of data content and completeness of reporting or adherence to a required sampling method.

● Perform the validation outlined in the strategy and send the results to CMS by June 30, 2013 for the 2012 reporting year's data.

● Enter into and maintain with its pa rticipating professiona ls 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 disclosu re of quality measure

results and numerator and denominator data a nd/or patient-specific data on Medicare beneficiaries on behalf of elig ible professionals who wish to participate in the Physician Quality Reporting System.

● Obtain and keep on file signed docum entation that each holder of an NPI whose data are submitted to the registry ha s authorized the registry to submit qualityCMS-1524-P 268

measure results and numerator and denominat or data and/or patie nt-specific data on Medicare beneficiaries to CMS for the purpos e of Physician Quality Reporting System participation. This documentation must be obt ained at the time the eligible professional signs up with the registry to submit Physicia n Quality Reporting System quality measures data to the registry and must meet any a pplicable laws, regulations, and contractual business associate agreements.

● Provide CMS access (upon request for health oversight purposes like validation) to review the Medicare bene ficiary data on which 2012 Physician Quality Reporting System registry-based submissions are founded or provide to CMS a copy of the actual data (upon request).

● Provide CMS a signed, written attestat ion statement via mail or e-mail which states that the quality measure results a nd any and all data including numerator and denominator data provided to CMS are accurate and complete.

● Use Physician Quality Reporting System measure specifica tions and the CMS provided measure calculation algorithm, or logic, to calculate reporting rates or performance rates unless otherw ise stated. CMS would provide registries a standard set of logic to calculate each measure and/or m easures group they intend to report in 2012.

● Provide a calculated result using the CMS supplied measure calculation logic

and XML file for each measure that the data submission vendor intends to calculate. The registries would be required to show that they can calcula te the proper measure results (that is, reporting and performance rates) using the CMS-supplied logic and send the calculated data back to CMS in the specified format.CMS-1524-P 269

● Provide the individual data elements used to calculate the measures upon request by CMS under its health oversight author ity, if aggregated data submission is still

the selected method of data co llection. Registries that are subject to validation will be

asked to send discrete Medicare beneficiar y data elements for a measure (determined by CMS) in the required data format for us to recalculate the registries' reported results.

Validation would be conducted for several meas ures at a randomly selected sample of registries in order to validat e their data submissions.

● Provide CMS with beneficiary-level data provided to the registry by the eligible professional in the CMS-approved format, upon request by CMS. CMS intends to use the data to calculate the eligible prof essional's measure resu lts (that is, reporting and performance rates). In addition to meeting al l the requirements specified previously for the reporting of individual quality measures via registry, for registries that intend to report on 2012 Physician Quality Reporting System measures groups, we propose that both registries new to the Physician Quality Reporting Syst em and those previously qualified must:

● Indicate the reporting pe riod chosen for each eligible professional who chooses to submit data on measures groups.

● Base reported information on meas ures groups only on patients to whom

services were furnished duri ng the 2012 reporting period.

● Agree that the registry's data may be inspected or a copy requested by CMS and provided to CMS under our oversight authority.

● Be able to report consistent with th e proposed reporting crit eria requirements, as specified in section (e )(2) of this section.CMS-1524-P 270

We intend to post the final 2012 Physician Quality Reporting System registry requirements on the Physician Quality Reporting System section of the CMS Web site at http://www.cms.gov/pqrs by November 15, 2011 or shortly th ereafter. We anticipate that new registries that wish to self-nominat e for 2012 would be required to do so by January 31, 2012. We propose that registries that were "qualified" for 2011 and wish to continue to participate in 2012 will not need to be "re- qualified" for 2012, but instead would only be required to demonstrate that they can meet the new 2012 data submission requirements. For technical reasons, however, we do not expe ct to be able to complete this vetting process for the new 2012 data submission requirements until mid-2012. Therefore, for 2012, we may not be able to post the names of registries that are qualified for the 2012 Physician Quality Reporting System until we have determined the previously qualified registries that wish to be qualified for the 2012 Physician Quality Reporting System are in compliance with the new registry requirements. We propose that registries "qualified " for 2011, who are successful in submitting 2011 Physician Quality Reporting System data, a nd wish to continue to participate in

2012 would need to indicate thei r desire to continue participation for 2012 by submitting

a self-nomination statement via a web-base d tool to CMS indicating their continued interest in being a Physician Quality Re porting System registry for 2012 and their compliance with the 2012 Physician Quality Reporting System registry requirements by no later than October 31, 2011. Additiona lly, registries that were qualified but unsuccessful in submitting 2011 Physician Quality Reporting System data (that is, fail to submit 2011 Physician Quality Reporting Syst em data per the 2011 Physician QualityCMS-1524-P 271

Reporting System registry requirements) woul d need to go through a full self-nomination vetting process for 2012. We further propose that by March 31, 2012, registries that are unsuccessful at submitting registry data in the correct data fo rmat for 2011 would need to be able to meet the 2012 Physician Quality Reporting System registry requirements and go through the full vetting process again. This would include CMS receiving the registry's self-nomination by March 31, 2012. We propos e that the aforementioned registry requirements will also apply for the purpose of a registry qualifying to submit the electronic prescribing meas ure for the 2012 eRx Incentive Program. We anticipate finalizing the list of 2012 Physician Quality Reporting System registries by Summer

2012. For eligible professionals considering this reporting mechanism, we point out that even though a registry is listed as "qua lified," 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 eligib le professional. We invite public comment on our proposed 2012 requirements for the registry-based reporting mechanism for individual eligible professional reporters. Furthermore, in an effort to ensure that registries provide accurate reporting of Physician Quality Reporting System data, in program years after 2012, we seek to disallow previously-qualified registries from submitting data on Physician Quality Reporting System quality measures if it is f ound that the data registries provide are significantly inaccurate. We believe this is important because we have noticed manyCMS-1524-P 272

calculation and data submission errors in reporti ng from registries in past program years. Alternatively, for years after 2012, we may require registries to submit all the individual data elements for CMS to calculate an elig ible professional's reporting and performance rates as well as require registries to submit patient-level data on Me dicare beneficiaries rather than aggregate data. We seek public comment on disallowing previously-qualified registries to submit data on Physician Quality Reporting System quality measures in future program years if it is found that the data the registries pr ovide are significantly

inaccurate. (3) EHR-based Reporting For 2012 and beyond, we propose that elig ible professionals who choose to participate in the Physician Quality Re porting System via the EHR-based reporting mechanism have the option of submitting quality measure data obtained from their Physician Quality Reporting System qualified EH R to CMS either: 1) directly from his or her qualified EHR, in the CMS-specified manner, or 2) indire ctly from a qualified EHR data submission vendor (on the elig ible professional's behalf), in the CMS-specified manner. (A) Direct EHRs (i) Proposed Requirements for the Direct EHR-based Reporting Mechanism – Individual Eligible Professionals For 2012 and beyond, we propose to retain the EHR-based reporting mechanism via a qualified EHR (as defined in section (3 )(b) of this section) for the purpose of satisfactorily reporting Physician Quality Reporting System quality measures. We propose the following requirements for individual eligible professionals associated withCMS-1524-P 273

EHR-based reporting: (1) selection of a Physician Quality Reporting System qualified EHR product and (2) submission of Medicare cl inical quality data extracted from the EHR directly to CMS, in the CMS-specified manner. We propose that, in addition to meeting the appropriate criteria for satisfactory reporting of individual measures for the 2012 Physician Quality Reporting System EHR reporting option, eligible prof essionals who choose the EHR-based reporting mechanism for the 2012 Physician Quality Reporting System would be required to have a Physician Quality Reporting System qualified EHR product. We understand that eligible professionals may have purchased Certif ied EHR Technology for purposes of reporting

under the Medicare and Medicaid EHR In centive Programs. Such Certified EHR Technology may or may not be qualified for purposes of the 2012 Physician Quality Reporting System. Eligible professionals woul d need to ensure that their Certified EHR Technology is also qualified for purposes of the 2012 Physician Quality Reporting System to participate in the Physician Quality Reporting System via the EHR-based reporting mechanism for 2012. The certificat ion process for EHR technology does not test the EHR product's ability to output a file that meets the Physician Quality Reporting System measures file specifications. We ar e currently exploring ways to further align these two programs' reporting requirements fo r future years so that Certified EHR Technology may be used to satisfy both th e Medicare EHR Incentiv e Program and the Physician Quality Reporting System without any additional testing. For 2012, we propose to modify the current list of EHR vendors qualified under the Physician Quality Reporting System to indicate which of the qua lified vendors' products have also receivedCMS-1524-P 274

a certification for the purposes of the EHR Incentive Progr ams. We invite public comment on the 2012 proposed qualifi cations for direct EHRs. (ii) 2012 Proposed Qualification Re quirements for Direct EHR Products For direct EHR products who wish to report 2012 Physician Quality Reporting System quality measures data on behalf of eligible professionals, we propose that a test of quality data submission from eligible prof essionals who wish to report 2012 quality measure data directly from their qualifie d EHR product would be required and we anticipate that this testing would occur in late 2012, immediately followed by the submission of the eligible professional's actual 2012 Physician Quality Reporting System data in early 2013. This entire final tes t/production data submission timeframe for 2012 is expected to be December 2012 through Febr uary 2013. We are currently vetting newly self-nominated EHR vendor products for possible qualification for the 2012 Physician Quality Reporting System program year. Similar to prior years, we expect to list the 2012 Physician Quality Reporting System qua lified EHR products by January 2012. We will also be vetting those self-nominated EHR data submission vendors for possible qualification to submit 2012 Physician Quality Reporting System measures on eligible professionals' behalf under the EHR-based repo rting mechanism. We expect to list the

entities that are EHR data submission vendor s qualified to submit 2012 Physician Quality Reporting System EHR measures on eligib le professionals' behalf by mid-2012. For direct EHR vendors wishing to qualif y for participation in the 2012 Physician Quality Reporting System-Medicare Incentive Pilot for the Medicare EHR Incentive Program (discussed in section IV.H. of this proposed ru le), we propose a separate, accelerated vetting process for EHR vendors and their products. This vetting process willCMS-1524-P 275

be the same process as the vetting pr ocess for EHR vendor products for the 2012 Physician Quality Reporting System that is currently underway. We will begin the vetting process for these additional EHR da ta submission vendors in the beginning of 2012 and anticipate that the vetting pro cess be completed by Summer/Fall 2012. We further propose that any EHR direct ve ndor interested in be ing "qualified" to submit quality data extracted from an EHR to CMS on eligible professionals' behalf for the 2012 Physician Quality Reporting System woul d be required to self-nominate. We anticipate that the se lf-nomination deadline will occur no later than December 31, 2011. We expect to post instructions for self-nomination by the 4 th quarter of CY 2011 on the Physician Quality Reporting System section of CMS website. (B) EHR Data Submission Vendors (i) Proposed Requirements for the EHR Data Submission Vendor-based Reporting Mechanism – Individual Eligible Professionals For 2012 and beyond, we propose to retain the EHR-based reporting mechanism via a qualified EHR (as defined in 42 CFR 414.90(b)) for the purpose of satisfactorily reporting Physician Quality Reporting System quality measures. We propose the following requirements for individual eligible professionals associat ed with indirect EHR-based reporting: (1) selection of a Physician Quality Reporting System qualified EHR product and (2) submission of Medicare cl inical quality data extracted from the EHR to a qualified "EHR data submission ve ndor" (which may include some current registries, EHR vendors, and other entities that are able to receive and transmit clinical quality data extracted from an EHR) to CMS, in the CMS-specified manner. For eligible professionals who choose to electronically submit Medicare clinical quality dataCMS-1524-P 276

extracted from their EHR to a qualified EHR data submission vendor, the EHR data submission vendor would then submit the Phys ician Quality Reporting System measures data to CMS in a CMS-specified manner on th e eligible professional's behalf for the respective program year. For 2012, we propose that in order for an el igible professional to submit Medicare clinical quality data extracted from his or her EHR to CMS via an EHR data submission vender, the eligible professional must enter into and maintain an appropriate legal arrangement with a qualified 2012 EHR data submission vendor that is capable of receiving and transmitting Medicare clinical quality data extracted from an EHR. Such arrangements would provide for the EH R data submission vendor's receipt of beneficiary-specific data from the eligible professional and the EHR data submission vendor's disclosure of the beneficiary-specific data on behalf of the eligible professional to CMS. Thus, the EHR data submission vendor would act as a Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191) (HIPAA) Business Associate and agent of the eligible professiona l. Such agents are referred to as "EHR

data submission vendors." The "EHR data s ubmission vendors" would have the requisite legal authority to provide beneficiary-specific data on the 2012 Physician Quality Reporting System EHR measures on behalf of the eligible professional to CMS for the Physician Quality Reporting System. We also propose that eligible professi onals choosing to participate in the 2012 Physician Quality Reporting System through the EHR-based reporting mechanism via an

EHR data submission vendor for 2012 must select a qualified Physician Quality Reporting System EHR data submission ve ndor and submit information on PhysicianCMS-1524-P 277

Quality Reporting System EHR measures to the selected EHR data submission vendor in the form and manner, and by the deadline sp ecified by the EHR data submission vendor. We invite public comment on the propos ed qualification requirements on the 2012 proposed qualification requireme nts for individual eligible pr ofessionals using EHR data submission vendors to submit Physician Quality Reporting System quality measures data. (i) 2012 Proposed Qualification Requir ements for EHR Data Submission Vendors Similar to our 2012 qualification requirements for direct EHR vendors, we propose that qualified EHR data submission vendors that wish to submit 2012 quality measures data obtained from an eligible professional's qualified EHR product to CMS on the eligible professional's be half would be required to submit test data in late 2012 followed by the submission of the eligible professional's actual 2012 Physician Quality Reporting System data in early 2013. For da ta submission vendors wishing to qualify for participation in the 2012 Physician Qualit y Reporting System-Med icare Incentive Pilot

for the Medicare EHR Incentive Program (discussed in sec tion IV.H. of this proposed rule), we propose a separate, accelerated vetting process for EHR vendors and their products. This vetting process will be the same process as the vetting process for EHR vendor products for the 2012 Physician Qual ity Reporting System that is currently underway. We will begin the vetting proce ss for these additional EHR data submission vendors in the beginning of 2012 and anticipate that the vetting process be completed by

Summer/Fall 2012. We further propose that any EHR data submission vendor interested in being "qualified" to submit quality data extr acted from an EHR to CMS on eligible professionals' behalf for the 2012 Physician Qu ality Reporting System would be requiredCMS-1524-P 278

to self-nominate. We anticipate that the se lf-nomination deadline will occur no later than December 31, 2011. We expect to post in structions for self-nomination by the 4 th quarter of CY 2011 on the Physician Quality Reporting System section of CMS website. We propose the following qualification requirements for EHR data submission vendors who wish to submit 2012 Physician Quality Reporting System quality measure data:

● Not be in a beta test form.

● Be in existence as of January 1, 2012.

● Have at least 25 active users.

● Participate in ongoing Physician Quality Reporting mandatory support conference calls hosted by CMS (approximately one call per month). Failure to attend more than one call per year would result in the removal of the EHR data submission vendor from the 2012 EHR qualification process.

● Have access to the identity management system specified by CMS (such as, but not limited to, the Individuals Authorized Ac cess to CMS Computer Systems, or IACS) to submit clinical quality data extracte d to a CMS clinical data warehouse.

● Submit a test file containing dummy Me dicare clinical quality data to a CMS clinical data warehouse via an identity ma nagement system specified by CMS during a timeframe specified by CMS. In 2011, the requ irement to submit a test file could have contained real or dummy data. However, fo r privacy reasons, we have decided to only provide for the submission of test files c ontaining dummy data. We have proposed

revisions to 42 CFR 414.90 to reflect this change.CMS-1524-P 279

● Submit a file containi ng the eligible professional's 2012 Physician Quality Reporting System Medicare clinical quality da ta extracted from the EHR for the entire 12-month reporting period via the CMS-specified identify management system during the timeframe specified by us in early 2013.

● Provide at least 1 feedback report, based on the data submitted to them for the 2012 Physician Quality Reporting System incenti ve reporting period, and if technically feasible, provide at least 2 feedback reports throughout the year to participating eligible professionals.

● Be able to collect all needed data el ements and transmit to CMS the data at the beneficiary level.

● Be able to separate out and report on Medicare Part B FFS patients.

● Provide the measure numbers for th e quality measures on which the data submission vendor is reporting.

● Be able to transmit this data in a CMS-approved XML format utilizing a Clinical Document Architecture (CDA) st andard such as Quality Reporting Data Architecture (QRDA).

● Comply with a CMS-specified secure method for data submission, such as submitting the EHR data submission vendor's data in an XML file through an identity management system specified by CMS or another approved method, such as use of appropriate NwHIN (Nationwide Health In formation Network) specifications, if technically feasible.

● Enter into and maintain with its pa rticipating professiona ls an appropriate Business Associate agreement that provides fo r the data submission vendor's receipt ofCMS-1524-P 280

patient-specific data from the eligible prof essionals, as well as the data submission vendor's disclosure of patient-specific data on Medicare benefici aries on behalf of eligible professionals who wish to participate in the Physician Quality Reporting System.

● Obtain and keep on file signed docum entation that each holder of an NPI

whose data are submitted to the data submission vendor has authorized the data submission vendor to submit patient-specific data on Medicare beneficiaries to CMS for the purpose of Physician Quality Reporting System participation. This documentation must be obtained at the time the eligible pr ofessional signs up with the data submission vendor to submit Physician Quality Reporting System quality measures data to the data submission vendor and must meet any applic able laws, regulations, and contractual business associate agreements.

● Provide CMS access (upon request for health oversight purposes like validation) to review the Medicare bene ficiary data on which 2012 Physician Quality Reporting System EHR-based submissions are founded or provide to CMS a copy of the actual data (upon request).

● Provide CMS a signed, written attestat ion statement via mail or e-mail which states that the quality measure results a nd any and all data including numerator and denominator data provided to CMS are accurate and complete.

● Use Physician Quality Reporting System measure specifica tions and the CMS provided measure calculation algorithm, or logic, to calculate reporting rates or performance rates unless ot herwise stated. CMS would provide EHR data submission vendors a standard set of logic to calculat e each measure and/or measures group they intend to report in 2012.CMS-1524-P 281

● Provide a calculated result using the CMS supplied measure calculation logic

and XML file for each measure that the EHR da ta submission vendor intends to calculate. The data submission vendors would be require d to show that they can calculate the proper measure results (that is, reporting and performance rates) using the CMS-supplied logic and send the calculated data back to CMS in the specified format. For EHR data submission vendors participating in the Physician Quality Reporting System-Medicare EHR Incentive Pilo t for 2012 (discussed in section IV.H. of this proposed rule) and wish to also submit Medicare clinical quality data extracted from an EHR for the purposes of the 2012 Physicia n Quality Reporting System incentive, we propose that these EHR data submission vendor s meet the following below requirements in addition to the requirements stated above:

● Be able to collect all needed data el ements and transmit to CMS the data at the

TIN/NPI level.

● Be able to calculate and submit m easure-level reporting rates or, upon request, the data elements needed to calculate the reporting rates by TIN/NPI.

● Be able to calculate and submit, by TIN/NPI, a performance rate (that is, the percentage of a defined population who recei ve a particular process of care or achieve a particular outcome based on a calculation of the measure's numerator and denominator specifications) for each measure on which the TIN/NPI reports or, upon request the Medicare beneficiary data elements n eeded to calculate the reporting rates.

● Report the number of eligible in stances (reporting denominator).

● Report the number of in stances a quality service is performed (reporting numerator).CMS-1524-P 282

● Report the number of pe rformance exclusions, meaning the quality action was not performed for a valid reason as de fined by the measure specification.

● Report the number of reported inst ances, performance not met (eligible professional receives credit for reporting, not for performance), meaning the quality action was not performed for no valid reason as defined by the measure specification.

● Be able to transmit this data in a CMS-approved XML format.

● Submit an acceptable "validation st rategy" to CMS by March 31, 2012. A validation strategy ascertains whether eligible professionals have submitted accurately and on at least the minimum number (80 perc ent) of their eligible patients, visits, procedures, or episodes for a given measure, wh ich, as described in section (e)(2) of this section, is the minimum percen tage of patients on which an eligible professional must report on any given measure. Acceptable validation strategies often include such provisions as the EHR data submission vendor being able to conduct random sampling of their participant's data, but may also be base d on other credible m eans of verifying the accuracy of data content and completeness of reporting or adherence to a required sampling method.

● Perform the validation outlined in the strategy and send the results to CMS by June 30, 2013 for the 2012 reporting year's data.

● Enter into and maintain with its pa rticipating professiona ls an appropriate Business Associate agreement that provides fo r the data submission vendor's receipt of patient-specific data from the eligible prof essionals, as well as the data submission vendor's disclosure of quality measure resu lts and numerator and denominator data onCMS-1524-P 283

Medicare beneficiaries on behalf of eligible professionals w ho wish to participate in the Physician Quality Reporting System.

● Obtain and keep on file signed docum entation that each holder of an NPI

whose data are submitted to the data submission vendor has authorized the data submission vendor to submit quality measure re sults and numerator and denominator data on Medicare beneficiaries to CMS for the purpose of Physician Quality Reporting System participation. This documentation must be obt ained at the time the eligible professional signs up with the data submission vendor to submit Physician Quality Reporting System quality measures data to the data submissi on vendor and must meet any applicable laws, regulations, and contractual busin ess associate agreements.

● Use Physician Quality Reporting System measure specifica tions and the CMS provided measure calculation algorithm, or logic, to calculate reporting rates or performance rates unless otherwise stated.

● Provide a calculated result using the CMS supplied measure calculation logic

and XML file for each measure that the EHR da ta submission vendor intends to calculate. The data submission vendors would be require d to show that they can calculate the proper measure results (that is, reporting and performance rates) using the CMS-supplied logic and send the calculated data back to CMS in the specified format. We cannot, however, assume responsibility for the successful submission of data from eligible professionals' EHRs. In a ddition, eligible professi onals who decide to submit the Physician Quality Reporting System measures directly from his or her EHR should begin attempting submission soon after th e opening of the clinical data warehouse in order to assure the eligible professional has a reasonable period of time to work withCMS-1524-P 284

his or her EHR and/or its vendors to corre ct any problems that may complicate or preclude successful quality measures da ta submission through that EHR. We propose that for 2012, the EHR data submission vendor would submit clinical quality data on Medicare beneficiaries extracte d from eligible professionals' EHRs to our designated database for the Physician Quality Reporting System using a CMS-specified record layout, which would be provided to the EHR data submission vendor by CMS. In addition, for purposes of also reporting 2012 Physician Quality Reporting System quality measures, the EHR data submission vendor would be required to submit patient level Medicare clinical quality data extracted fr om the eligible professional's EHR using the same CMS-specified record layout that qualifi ed EHR products must be able to produce for purposes of an eligible professional directly submitting the 2012 Physician Quality Reporting System EHR measures to CMS. We invite public comment on the propos ed qualification requirements for EHR

data submission vendors. (C) Proposed Qualification Requirements fo r EHR Direct and Data Submission Vendors and Their Products for the 2013 Phys ician Quality Reporting System As in prior years, unlike the qualificati on process for regist ries, EHR vendors,

which include direct EHR vendors and EHR data submission vendors, are tested for qualification a year ahead of the program year in which the EHR vendor intends to submit Physician Quality Reporting System qua lity measures on behalf of individual eligible professionals or where its produc t(s) are available for use by eligible professionals to submit Physician Quality Repor ting System measures directly to CMS.CMS-1524-P 285

We propose EHR vendor testing for the 2013 Physician Quality Reporting System program year to qualify new EHR vendors a nd EHR data submission vendors and their EHR products for submission of Medicare bene ficiary quality data extracted from EHR products to the CMS Medicare clinical qual ity data warehouse for the 2013 Physician Quality Reporting System. Specifically, we pr opose that in order for EHR vendors to be qualified to report 2013 Physician Quality Repor ting System data to CMS, EHR vendors must meet the following requirements:

● Not be in a beta test form.

● Be in existence as of January 1, 2012.

● Have at least 25 active users.

● Participate in ongoing Physician Quality Reporting mandatory support conference calls hosted by CMS (approximately one call per month). Failure to attend more than one call per year would result in the removal of the EHR data submission vendor from the 2012 EHR qualification process.

● Indicate the reporting op tion the vendor seeks to quali fy for its users to submit

in addition to individual measures.

● Have access to the identity management system specified by CMS (such as, but not limited to, the Individuals Authorized Ac cess to CMS Computer Systems, or IACS) to submit Medicare clinical quality data extr acted to a CMS clinical data warehouse.

● Submit a test file containing dummy Me dicare clinical quality data to a CMS clinical data warehouse via an identity ma nagement system specified by CMS during a timeframe specified by CMS. In 2011, the requ irement to submit a test file could have contained real or dummy data. However, fo r privacy reasons, we have decided to onlyCMS-1524-P 286

provide for the submission of test files c ontaining dummy data. We have proposed

revisions to 42 CFR 414.90 to reflect this change.

● Submit a file containi ng the eligible professional's 2012 Physician Quality Reporting System Medicare clinical quality da ta extracted from the EHR for the entire 12-month reporting period via the CMS-specified identify management system during the timeframe specified by us in early 2013.

● Provide at least 1 feedback report, based on the data submitted to them for the 2012 Physician Quality Reporting System incenti ve reporting period, and if technically feasible, provide at least tw o feedback reports throughout the year to participating eligible professionals.

● Be able to collect all needed data el ements and transmit to CMS the data at the beneficiary level.

● Be able to separate out and report on Medicare Part B FFS patients.

● Provide the measure numbers for the quality measures on which the data submission vendor is reporting.

● Be able to transmit this data in a CMS-approved XML format utilizing a Clinical Document Architecture (CDA) st andard such as Quality Reporting Data Architecture (QRDA).

● Comply with a CMS-specified secure method for data submission, such as submitting the EHR vendor's data in an XM L file through an identity management system specified by CMS or another appr oved method, such as use of appropriate NwHIN (Nationwide Health Information Network) specifications, if technically feasible.CMS-1524-P 287

● Enter into and maintain with its pa rticipating professiona ls an appropriate Business Associate agreement that provides fo r the data submission vendor's receipt of patient-specific data from the eligible prof essionals, as well as the data submission vendor's disclosure of patient-specific data on Medicare benefici aries on behalf of eligible professionals who wish to participate in the Physician Quality Reporting System.

● Obtain and keep on file signed docum entation that each holder of an NPI

whose data are submitted to the data submission vendor has authorized the data submission vendor to submit patient-specific data on Medicare beneficiaries to CMS for the purpose of Physician Quality Reporting System participation. This documentation must be obtained at the time the eligible pr ofessional signs up with the data submission vendor to submit Physician Quality Reporting System quality measures data to the data submission vendor and must meet any applic able laws, regulations, and contractual business associate agreements.

● Provide CMS access (upon request for health oversight purposes like validation) to review the Medicare bene ficiary data on which 2012 Physician Quality Reporting System EHR-based submissions are founded or provide to CMS a copy of the actual data (upon request).

● Provide CMS a signed, written attestat ion statement via mail or e-mail which states that the quality measure results a nd any and all data including numerator and denominator data provided to CMS are accurate and complete.

● Use Physician Quality Reporting System measure specifica tions and the CMS provided measure calculation algorithm, or logic, to calculate reporting rates or performance rates unless othe rwise stated. CMS would provi de EHR vendors a standardCMS-1524-P 288

set of logic to calculate e ach measure and/or measures group they intend to report in

2012.

● Provide a calculated result using the CMS supplied measure calculation logic

and XML file for each measure that the EHR vendor intends to calculate. The data submission vendors would be required to show that they can calculate the proper measure results (that is, reporting a nd performance rates) using th e CMS-supplied logic and send the calculated data back to CMS in the specified format. This is the same self-nomination pro cess described in the "Requirements for Electronic Health Record (EHR) Vendors to Participate in the 2012 Physician Quality Reporting System EHR Program," posted on the Physician Quality Reporting System

section of the CMS Web site at http://www.cms.gov/PQRS/20_AlternativeReportingMechanisms.asp#TopOfPage . For 2013, we propose that these requirements w ould apply not only for the purpose of a vendor's EHR product being qualified so that the product's users may submit 2013 Medicare beneficiary data extracted fr om the EHR for the 2013 Physician Quality Reporting System in 2014, but also for the purpose of a vendor's EHR product being qualified to electronically subm it Medicare beneficiary data extracted from the EHR for reporting the electronic pr escribing measure for the eRx Incentive Program 2013 incentive and 2014 payment adjustment. Similarly, we propose that requirements would apply not only for the purposes of an EH R data submission vendor being qualified to submit 2013 Medicare beneficiary data from eligible professionals' EHRs for the 2013 Physician Quality Reporting System in 2014 but also for the purpose of an EHR data submission vendor being qualified to electroni cally submit Medicare beneficiary dataCMS-1524-P 289

extracted from the EHR for reporting the el ectronic prescribing measure for the eRx Incentive Program 2013 incentive and 2014 payment adjustment. We propose that if an EHR vendor misse s more than one mandatory support call or meeting, the vendor and their product a nd/or EHR data submission vendor would be disqualified for the Physician Quality Repor ting System reporting year, which is covered by the call. For the 2013 Physician Quality Reporting System, we propose that previously qualified and new vendors and/or EHR data submission vendors would need to incorporate any new EHR measures (that is, elec tronically-specified measures), as well as update their electronic measure specifications and data tr ansmission schema should either or both change, finalized for to the Physic ian Quality Reporting System for 2013 if they wish to maintain their Physician Qual ity Reporting System qualification. We further propose that any EHR vendor inte rested in having one or more of their EHR products "qualified" to submit quality data extracted from thei r EHR products to the CMS Medicare clinical quality data ware house for the 2013 Physician Quality Reporting System would be required to submit their self-nomination statement by January 31, 2012. Whereas, in prior program years, EHR vendors have submitted self-nomination statements via mail, we propose to have EHR vendors submit self-nomination statements via a web-based tool, if technica lly feasible for us to develop such a tool. We believe use

of a web-based tool to self-nominate is a more efficient method of collecting self-nomination statements. However, if us e of a web-based tool is not technically feasible, as in prior years, EHR vendors will submit self-nomination statements via email. We expect to post instructions for submitting the self-nomination statement and the 2013CMS-1524-P 290

EHR vendor requirements in the 4 th quarter of CY 2011. Specifically, for the 2013 Physician Quality Reporting System, in orde r to ensure EHR vendors' interest in participating in the 2013 Physician Quality Reporting System, we propose that only EHR

vendors that self-nominate to participate in the EHR Program testing during calendar year 2012 would be considered qualified EHR vendors for the 2013 Physician Quality Reporting System. We invite public comment on the propos ed qualification requirements for EHR vendors and their products for the 2013 Physician Quality Reporting System. e. Incentive Payments for the 2012 Physician Quality Reporting System In accordance with 42 CFR 414.90(c)(3), eligib le professionals that satisfactorily report 2012 Physician Quality Reporting System measures can qualify for an incentive equal to 0.5 percent of the total estimated part B allowed charges for all covered professional services furnished by the eligib le professional (or, in the case of a group practice participating in the GPRO, the group practice) durin g the applicable reporting period. We are proposing to modify the ince ntive payment language in 42 CFR 414.90 to provide language more cons istent with section 1848(k) of the Act. (1) Proposed Criteria for Satisfactory Repor ting of Individual Quality Measures for Individual Eligible Prof essionals via Claims Section 1848(m)(3)(A) of the Act establ ished the criteria for satisfactorily submitting data on individual quality measures as at least three measures in at least 80 percent of the cases in which the measure is applicable. For clai ms-based reporting, if fewer than three measures are applicable to the services of the professional, the professional may meet the criteria by submitti ng data on one or two measures for at leastCMS-1524-P 291

80 percent of applicable cases where the meas ures are reportable. For years after 2009, section 1848(m)(3)(D) of the Act authorizes the Secret ary, in consultation with stakeholders and experts, to revise the crit eria for satisfactorily reporting data on quality measures. Accordingly, we propose the follo wing criteria for sa tisfactory reporting via the claims-based reporting mechanism for indi vidual eligible professi onals specializing in internal medicine, family practice, ge neral practice, or cardiology:

● Report on at least one Physician Qu ality Reporting System core measure as

identified in Table 29.

● Report on at least two additional measur es that apply to the services furnished by the professional.

● Report each measure for at least 50 percent of the elig ible professional's Medicare Part B FFS patients for whom serv ices were furnished during the reporting period to which the measure applies. For all other eligible professionals, we propose the following criteria for satisfactory reporting via the claims-based reporting mechanism:

● Report on at least three measures that apply to the services furnished by the professional.

● Report each measure for at least 50 percent of the elig ible professional's Medicare Part B FFS patients for whom serv ices were furnished during the reporting period to which the measure applies. We believe it would be easier for elig ible professionals to find applicable measures on which to report if measures were grouped according its applicability to medical specialties. We then seek to move towards having specialties report on certainCMS-1524-P 292

measures that are relevant to the respective specialty. We have recognized the promotion of the prevention of cardiovascular conditions as a top priority and therefore propose to start to group individual meas ures with measures that promote cardiovascular care. As such, the Physician Quality Reporting System co re measures that we propose in Table 29 are aimed at promoting the prevention of car diovascular conditions. In an effort to promote the prevention of cardiovascular c onditions, we are propos ing that eligible professionals specializing in internal medicine, family pr actice, general practice, or cardiology be required to repor t on at least one proposed Physician Quality Reporting System core measure. We chose the afor ementioned specialties because we believe the Physician Quality Reporting System core measures are most relevant to those specialties. Since we believe that eligible professionals in those specialti es would likely report on the proposed Physician Quality Reporting System core measures regardless of the proposed requirement to report on at least one Physic ian Quality Reporting System core measure,

we believe that the this re quirement would not result in an increased burden to these specialties. In future years, we hope to de velop a similar reporti ng requirement and core set of measures for other specialties. We also considered including geriatri cians in the proposed Physician Quality Reporting System core measure reporting requi rement for 2012. However, we would like to ensure that the proposed 2012 Physician Quality Reporting System core measures would be sufficiently applicable to geriatri c physicians before making such a proposal. We seek public comment as to whether geriat ricians should be included as a specialty required to report at least one proposed 2012 Physician Quality Reporting System core measure. In addition, we invite public comm ent on whether other specialties should beCMS-1524-P 293

included in the 2012 Physician Quality Re porting System proposed core measure reporting requirement. As stated previously, we have propos ed the requirement of the reporting of Physician Quality Reporting System core meas ures for certain specialties to introduce measures reporting according to specialty fo r eligible professionals specializing in internal medicine, family practice, general pr actice, or cardiology. However, we are not proposing this core measure requirement for all other specialties. Therefore, for all other specialties, we are proposing to retain similar reporting criteria as finalized for the in the 2011 MPFS final rule. Specifically, under our authority under secti on 1848(m)(3)(D) of the Act to revise the reporting criteria for satisfactory reporting, for all other eligible professionals, we propose the following crit eria for satisfactory reporting via the claims-based reporting mechanism:

● Report on at least three measures that apply to the services furnished by the professional. Report each measure for at leas t 50 percent of the eligible professional's Medicare Part B FFS patients for whom serv ices were furnished during the reporting period to which the measure applies. To the extent that an eligible professional has fewer than three Physician Quality Reporting System measures that apply to th e eligible professional's services and the eligible professional is repor ting via the claims-based repo rting mechanism, we propose that the eligible professional w ould be able to meet the crite ria for satisfactorily reporting data on individual quality measures by meeting the following two criteria--

● Report on all measures that apply to the services furnished by the professional (that is one to two measures); andCMS-1524-P 294

● Report each measure for at least 50 percent of the elig ible professional's Medicare Part B FFS patients for whom serv ices were furnished during the reporting period to which the measure applies. As in prior years, we also propose that, for 2012, an eligible professional may also report on fewer than three measures, if less than three apply. However, an eligible professional who reports on fewer than th ree measures through the claims-based reporting mechanism may be subject to th e Measure Applicability Validation (MAV) process, which would allow us to determine wh ether an eligible professional should have reported quality data codes for additional measures. This process was applied in prior years, including the 2011 Physician Qual ity Reporting System. Under the proposed MAV process, when an eligible professional reports on fewer than 3 measures, we propose to review whether ther e are other closely related m easures (such as those that share a common diagnosis or those that are re presentative of services typically provided by a particular type of eligible professional) . We further propose that if an eligible professional who reports on fewer than 3 meas ures in 2012 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 satisfact ory reporter in the 2012 Physician Quality Reporting System or earn an incentive paymen t. We propose that these criteria for satisfactorily reporting data on fewer than th ree individual quality measures would apply for the claims-based reporting mechanism onl y because, unlike registry and EHR-based reporting, the reporting of Physician Quality Reporting System quality measures via claims is not handled by an intermediary but rath er directly by the elig ible professional.CMS-1524-P 295

For 2012, in order to encourage reporting on measures that are applicable to the eligible professional's practice as well as en courage eligible professionals to perform the clinical quality actions specifi ed in the measures, we propose not to count measures that are reported through claims that have a 0 pe rcent performance rate. That is, if the recommended clinical quality action, as i ndicated in the numerator of the quality measure, is not performed on at least one pa tient for a particular measure or measures group reported by the eligible professional via claims, we will not count the measure (or measures group) as a measure (or measures gr oup) reported by an elig ible professional. This requirement is also consistent with the proposed registry and EHR-based reporting (see the following section (e)(3 )) criteria for satisfactory repo rting that are proposed in

this section. The proposed 2012 criteria for satisfacto ry reporting of data on individual Physician Quality Reporting System quali ty measures for individual eligible professionals are summarized in the fo llowing Tables 18 and 2, and are arranged by reporting mechanism and reporting period.CMS-1524-P 296

TABLE 18: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING OF DATA ON INDIVIDUAL PHYSICIAN QUALITY REPORTING SYSTEM QUALITY MEASURES VIA CLAIMS FOR THE FOLLOWING SPECIALTIES: INTERNAL MEDICINE FAMILY PRACTICE, GENERAL PRACTICE, AND CARDIOLOGY Reporting Mechanism Reporting Criteria Reporting Period Claims-based reporting ● Report at least three Physician Quality Reporting System measures, which consist of one Physician Quality Reporting System core measure + 2 additional measures of the eligible professional's choosing; OR

● If less than three measures apply to the eligible professional, 1- 2 measures, of which at least 1 measure must consist of a Physician Quality Reporting System core measure; AND

● Report each measure for at least 50% of the eligible professi onal's Medicare Part B FFS patients seen during the reporting period to which the measure applies.

● Measures with a 0% performance rate will not be counted January 1, 2012 – December 31, 2012

TABLE 19: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING OF DATA ON INDIVIDUAL PHYSICIAN QUALITY REPORTING SYSTEM QUALITY MEASURES VIA CLAIMS FOR ALL OTHER ELIGIBLE PROFESSIONALS NOT IDENTIFIED IN TABLE 18 Reporting Mechanism Reporting Criteria Reporting Period Claims-based reporting ● Report at least three Physician Quality Reporting System measures; OR

● If less than three measures apply to the eligible professional, 1-2 measures; AND

● Report each measure for at least 50% of the eligible professi onal's Medicare Part B FFS patients seen during the reporting period to which the measure applies.

● Measures with a 0% performance rate will not be counted January 1, 2012 – December 31, 2012CMS-1524-P 297

We invite public comment on the proposed criteria for satisfactory reporting of individual measures by indivi dual eligible professionals via claims for the 2012 Physician Quality Reporting System. (2) Proposed 2012 Criteria for Satisfactory Repo rting of Individual Quality Measures for Individual Eligible Prof essionals via Registry Under our authority of section 1848(m)(3)(D ) of the Act to re vise the reporting criteria for the satisfactory reporting of meas ures, we propose the following criteria for satisfactory reporting via the registry-based reporting mechanism: (1) criteria for individual eligible professiona ls practicing in internal medi cine, family practice, general practice, or cardiology and (2) criteria for all other eligible professi onals. For the reasons stated previously, we are disti nguishing eligible professionals in internal medicine, family practice, general practice, or cardiology from all other eligible professionals for the purposes of establishing criteria for satisfa ctory reporting. Therefore, for eligible professionals specializing in internal medicine, family pr actice, general practice, or cardiology, we propose the following criter ia for satisfactory reporting:

● Report on at least one Physician Qu ality Reporting System core measure as

identified in Table 29.

● Report on at least two additional measur es that apply to the services furnished by the professional.

● Report each measure for at least 80 percent of the elig ible professional's Medicare Part B FFS patients for whom serv ices were furnished during the reporting period to which the measure applies.CMS-1524-P 298

For the same reasons stated for estab lishing different reporting criteria for all other eligible professionals under the claims-based reporting mechanism, we propose the following criteria for satisfactory reporting vi a the registry-based reporting mechanism:

● Report on at least three measures that apply to the services furnished by the professional.

● Report each measure for at least 80 percent of the elig ible professional's Medicare Part B FFS patients for whom serv ices were furnished during the reporting period to which the measure applies. We also considered including geriatri cians in the proposed Physician Quality Reporting System core measure reporting requi rement via the registry-based reporting mechanism for 2012. However, as stated prev iously, we would like to ensure that the proposed 2012 Physician Quality Reporting Syst em core measures would be sufficiently applicable to geriatric physicians before making such a proposal. We seek public comment as to whether geriatricians should be included as a specialty required to report at least one proposed 2012 Physician Quality Reporting System core measure. In addition, we seek public comment on whether ot her specialties should be included in the 2012 Physician Quality Reporting System propos ed core measure reporting requirement. In addition, as in prior year s, for 2012, we propose not to count measures that are reported through registries that have a 0 percent performan ce rate, calculated by dividing the measure's numerator by the measure's deno minator. That is, if the recommended clinical quality action, that is the action denoted in the quality measure's numerator, is not performed on at least one patient for a pa rticular measure or measures group reported by the eligible professional via registry, we will not count the measure (or measuresCMS-1524-P 299

group) as a measure (or measures group) re ported by an eligible professional. We propose to disregard measures (or measures groups) that are reported through a registry that have a 0 percent performance rate in the 2012 Physician Quality Reporting System, because we are assuming that the measure was not applicable to the eligible professional and was likely reported from EHR-derived data (or from data mining) and was unintentionally submitted from the registry to us. We also seek to avoid the possibility of intentional submission of spurious data solely for the purpose of re ceiving an incentive payment for reporting. The proposed 2012 criteria for satisfacto ry reporting of data on individual Physician Quality Reporting System quali ty measures for individual eligible professionals are summarized in the fo llowing Tables 20 and 21, and are arranged by reporting mechanism and reporting period.

TABLE 20: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING

OF DATA ON INDIVIDUAL PHYSICIA N QUALITY REPORTING SYSTEM QUALITY MEASURES VIA RE GISTRY FOR THE FOLLOWING SPECIALTIES: INTERNAL MEDICINE FAMILY PRACTICE, GENERAL PRACTICE, AND CARDIOLOGY Reporting Mechanism Reporting Criteria Reporting Period Registry-based reporting ● Report at least three Physician Quality Reporting System measures, which consist of 1 Physician Quality Reporting System core measure + 2 additional measures of the eligible professional's choosing AND

● Report each measure for at least 80% of the eligible professi onal's Medicare Part B FFS patients seen during the reporting period to which the measure applies.

● Measures with a 0% performance rate will not be counted January 1,2012 – December 31, 2012CMS-1524-P 300

TABLE 21: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING

OF DATA ON INDIVIDUAL PHYSICIA N QUALITY REPORTING SYSTEM QUALITY MEASURES VIA REGISTRY FOR ALL OTHER ELIGIBLE PROFESSIONALS NOT IDENTIFIED IN TABLE 20 Reporting Mechanism Reporting Criteria Reporting Period Registry-based reporting ● Report at least three Physician Quality Reporting System measures AND

● Report each measure for at least 80% of the eligible professi onal's Medicare Part B FFS patients seen during the reporting period to which the measure applies.

● Measures with a 0% performance rate will not be counted January 1,2012 – December 31, 2012

We invite public comment on the proposed criteria for satisfactory reporting of individual quality measures for individua l eligible professi onals via registry. (3) Proposed Criteria for Satisfactory Repor ting of Individual Quality Measures for Individual Eligible Pr ofessionals via EHR Section 1848(m)(3)(A) of the Act establ ished the criteria for satisfactorily submitting data on individual quality measures as at least three measures in at least 80 percent of the cases in which the measure is applicable. For years after 2009, section 1848(m)(3)(D) of the Act authorizes the Secret ary, in consultation with stakeholders and experts, to revise the criteria for satisfact orily reporting data on quality measures. Accordingly, we propose the following options for satisfactory repor ting of individual quality measures by individual eligible professionals partic ipating in the 2012 Physician Quality Reporting System via the EHR-based reporting mechanism: First, we propose that an eligible pr ofessional would meet the criteria for satisfactory reporting under the Physician Qu ality Reporting System if the eligibleCMS-1524-P 301

professional, using a Physician Quality Repor ting System "qualified" EHR product (if the eligible professional is also participating in the EHR Incentive Program via the proposed Physician Quality Reporting System-EHR Incenti ve Pilot discussed in section IV.H. of this proposed rule, the eligib le professional's EHR product mu st also be Certified EHR Technology), reports on three proposed core meas ures for 80 percen t of the eligible professional's Medicare Part B FFS patients seen during th e reporting period to which each measure applies as identified in Table 31 in this section of this proposed rule, which

are identical to the Medicare EHR Incentive Pr ogram core measures included in Table 7

of the Medicare and Medicaid EHR Incentive Program final rule (75 FR 44410). Insofar

as the denominator for one or more of the co re measures is 0, implying that the eligible professional's patient populat ion is not addressed by these measures, we propose that eligible professionals would be required to report up to three proposed alternate core

measures as identified in Table 31 in this section of this proposed rule and which are identical to the Medicare EHR Incentive Progr am alternate core measures included in

Table 7 of the Medicare and Medicaid EHR Incentive Program final rule (75 FR 44410). In addition, we propose that the eligible prof essional would be required to report on three additional measures of their choosing that ar e available for the Medicare EHR Incentive Program in Table 6 of the Medicare and Medicaid EHR Incentive Program final rule (75 FR 44398 through 44408) (as identified in Ta ble 31 in this section of this proposed rule). With respect to reporting on the proposed measure titled "Pre ventive Care and Screening: Body Mass Index (BMI) Screening a nd Follow-up", listed in Table 31 of this proposed rule, there are two parameters in the measure denominator description: Age 65CMS-1524-P 302

and older BMI and Age 18-64 BMI. For the purpose of reporting this measure under the Physician Quality Reporting System, we propose to count the reporting of this measure if at least one of the two parameters does not contain a 0 percent performance rate. In addition, with respect to reporting on the pr oposed measure titled "Preventive Care and Screening: Tobacco Use: Screening and Cessa tion Intervention", also listed in Table 31 of this proposed rule, the measure is divided into two pairs: a. Tobacco Use Assessment

and b. Tobacco Cessation Intervention. For the purpose of reporting this measure under the Physician Quality Reporting System, we propose to count the reporting of this measure if at least one of the two pairs doe s not contain a 0 percent performance rate. Section 1848(m)(7) of the Act ("Integrat ion of Physician Quality Reporting and EHR Reporting"), as added by section 3002(d) of the Affordable Care Act, requires us to move towards the integration of EHR measures with respect to the Physician Quality Reporting System. Section 1848(m)(7) of th e 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 Repor ting System with reporting requirements under subsection (o) of section 1848 of the Act relating to the meaningful use of EHRs. Such integration shall consist of the following: (A) The selection of measures, the re porting of which would both demonstrate— (i) Meaningful use of an EHR for purpos es of the Medicare EHR Incentive Program;

and (ii) Quality of care furnishe d to an individual; and (B) Such other activities as specified by the Secretary

.CMS-1524-P 303

We propose the aforementioned criteria for satisfactory reporting via an EHR,

which is identical to the criteria for achi eving meaningful use for reporting clinical quality measures under the EHR Incentive Pr ogram as finalized in the Medicare and

Medicaid Electronic Health Record Incentiv e Program final rule (75 FR 44409 through 44411), in an effort to align the Physician Quality Reporting System with the Medicare EHR Incentive Program. In addition to the reporting criteria proposed previously, we propose alternative reporting criteria for satisfactory reporti ng using the EHR-base d reporting mechanism

that is similar to the crite ria finalized in the CY 2011 MPFS Final Rule with comment period (75 FR 73497 through 73500). For the reasons set forth for establishing different criteria for satisfactory repor ting via claims and registry, we are adopting two different criteria for satisfactory repor ting, depending on an eligible pr ofessional's specialty. For eligible professionals specializing in internal medicine, family practice, general practice, and cardiology, we propose the following criteria:

● Report on ALL proposed Physician Qua lity Reporting System core measure as

identified in Table 29.

● Report each measure for at least 80 percent of the elig ible professional's Medicare Part B FFS patients for whom serv ices were furnished during the reporting period to which the measure applies. We understand that by proposing to require eligible profession als specializing in internal medicine, family practice, genera l practice, and cardiology to report all Physician Quality Reporting System core measures , we would be requiring such professionals to report more measures than eligible profession als who do not practiceCMS-1524-P 304

within those specialties. We believe, however , that proposing to requ ire these specialists to report of all Physician Quality Reporting System core measures would not add an additional burden to these eligible professi onals because the reporting of measures is done entirely through the EHR. Furthermore, because we are proposing to require these specialties to report on all Physician Qua lity Reporting System core measures and recognize that some of the proposed Physicia n Quality Reporting System core measures may not be applicable to all of these elig ible professionals' specialties, we propose to allow the reporting of these proposed Physicia n Quality Reporting System core measures with a 0 percent performance rate. That is, the reporting of a Physician Quality Reporting System core measure that is not applicable to the eligible professional's practice in this instance will not preclude an eligible professional from meeting the criteria for satisfactory reporting. We also considered including geriatri cians in the proposed Physician Quality Reporting System core measure reporting requi rement for 2012. However, we would like to ensure that the proposed 2012 Physician Quality Reporting System core measures would be sufficiently applicable to geriatri c physicians before making such a proposal. We seek public comment as to whether geriat ricians should be included as a specialty required to report at least one proposed 2012 Physician Quality Reporting System core measure via EHR-based reporting. In additi on, we invite public comment on whether other specialties should be included inthe 2012 Physician Quality Reporting System proposed core measure reporting requirement.CMS-1524-P 305

For the reasons we stated previously fo r creating separate reporting criteria all other eligible professionals for claims and registry repor ting, we propose the following criteria for satisfactory reporting using the EHR-based reporting mechanism:

● Report on at least three Physician Quality Reporting System EHR measures of the eligible professional's choosing; and

● Report each measure for at least 80 percent of the elig ible professional's Medicare Part B FFS patients for whom serv ices were furnished during the reporting period to which the measure applies. The proposed methods for satisfactory reporting via EHR for the 2012 Physician Quality Reporting System are described in the following Tables 22 and 23.

TABLE 22: 2012 CRITERIA FOR SATISF ACTORY REPORTING OF DATA ON INDIVIDUAL PHYSICIAN QUALITY REPORTING SYSTEM QUALITY MEASURES VIA EHR FOR THE FO LLOWING SPECIALTIES: INTERNAL MEDICINE, FAMILY PRACTICE, GENERAL PRACTICE, AND CARDIOLOGY Reporting Mechanism Reporting Criteria Reporting Period

EHR – Aligning with the Medicare EHR Incentive Program ● Reports on ALL three Medicare EHR Incentive Program core measures (as identified in Table 31 of this proposed rule)

● If the denominator for one or more of the Medicare EHR Incentive Program core measures is 0, report on up to three Medicare EHR Incentive Program alternate core measures (as identified in Table 31 of this proposed rule); AND

● Report on three (of the 38 additional measures available for the Medicare EHR Incentive Program. January 1, 2012 – December 31, 2012

EHR ● Report on ALL Physician Quality Reporting System core measures AND

● Report each measure for at least 80% of the eligible professiona l's Medicare Part B FFS patients seen during the reporting period to which the measure applies.

● Measures with a 0% performance rate will not be counted, unless the measure is a Physician Quality Reporting System core measure January 1, 2012 – December 31, 2012CMS-1524-P 306

TABLE 23: 2012 CRITERIA FOR SATI SFACTORY REPORTING OF DATA ON INDIVIDUAL PHYSICIAN QUALIT Y REPORTING SYSTEM QUALITY MEASURES VIA EHR FOR ALL OTHE R ELIGIBLE PROFESSIONALS NOT IDENTIFIED IN TABLE 22 Reporting Mechanism Reporting Criteria Reporting Period

EHR – Aligning with the Medicare EHR Incentive Program ● Reports on ALL three Medicare EHR Incentive Program core measures (as identified in Table 31 of this proposed rule)

● If the denominator for one or more of the Medicare EHR Incentive Program core measures is 0, report on up to three Medicare EHR Incentive Program alternate core measures (as identified in Table 31 of this proposed rule); AND

● Report on three (of the 38) additional measures available for the Medicare EHR Incentive Program. January 1, 2012 – December 31, 2012

EHR ● Report at least three Physician Quality Reporting System measures AND

● Report each measure for at least 80% of the eligible professiona l's Medicare Part B FFS patients seen during the reporting period to which the measure applies.

● Measures with a 0% performance rate will not be counted January 1, 2012 – December 31, 2012

We invite public comment on the proposed criteria for satisfactory reporting of individual quality measures by individual eligible professionals via an EHR-based reporting mechanism in the 2012 Physician Quality Reporting System. (4) Proposed Criteria for Satisfactory Re porting of Measures Groups via Claims – Individual Eligible Professionals At §414.90(b) "measures group" is defined as "a subset of four or more Physician Quality Reporting System measures that have a particular clinical condition or focus in common." For 2012 and beyond, we propose that individual eligible professionals have the option to report measures gr oups in addition to individual quality measures to qualify for the Physician Quality Reporting System in centive, using claims or registries.CMS-1524-P 307

For the reasons we are proposing differen t criteria for satisfactorily reporting individual quality measures depending on sp ecialty, specifically our desire to introduce core measures applicable to certain specialti es and promote cardiovascular care, we are proposing two different criteria for satisfactorily reporting measures groups. We propose the following criteria for satisfactory reporting of 2012 Physician Quality Reporting System measures groups: We propose that eligible professionals sp ecializing in internal medicine, family practice, general practice, a nd cardiology may meet the criter ia for satisfactory reporting of Physician Quality Reporting System meas ures groups via claims by reporting in the following manner:

● Report at least one Physician Quality Reporting System measures group; AND

● If the measures group does not contain at least one Physician Quality core measure, then one Physician Quality core measure; AND

● For each measures group and, if a pplicable, Physician Quality Reporting System core measure reported, report on at least 30 Medicare Part B FFS patients for each measures group that is reported

● Measures groups containing a measure w ith a 0 percent performance rate will

not be counted. We also propose that eligible professi onals specializing in internal medicine, family practice, general practice, and cardiol ogy may meet the criteria for satisfactorily reporting Physician Quality Reporting System measures groups via claims by reporting in the following manner:

● Report at least one Physician Quality Reporting System m easures group; butCMS-1524-P 308

● If the measures group does not contain at least one Physician Quality Reporting System core measure, then one Physician Quality core measure.

● For each measures group and, if a pplicable, Physician Quality Reporting System core measure reported, report on at leas t 50 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; but report no le ss than 15 Medicare Part B PFS patients for each measures group reported.

● Measures groups containing a measure w ith a 0 percent performance rate will

not be counted. For all other eligible professionals, in order to meet the criteria for satisfactory reporting of Physician Quality Reporting measur es groups via claims, we propose that the eligible professional must:

● Report at least one Physician Qual ity Reporting System measures group.

● Report on at least 30 Medicare Part B FFS patient s for each measures group that is reported.

● Measures groups containing a measure w ith a 0 percent performance rate will

not be counted. Alternatively, eligible professionals not specializing in internal medicine, family practice, general practice, and cardiology may meet the criteria for satisfactorily reporting Physician Quality Reporting System measur es groups via claims by reporting in the following manner:

● Report at least one Physician Qual ity Reporting System measures group.CMS-1524-P 309

● For each measures group reported, repor t each on at least 50 percent of the eligible professional's Medica re Part B FFS patients seen du ring the reporting period to

whom the measures group applies; but

● Report no less than 15 Medicare Part B PFS patients for each measures group reported.

● Measures groups containing a measure w ith a 0 percent performance rate will

not be counted. Aside from the Physician Quality Reporting System core measure reporting requirement for eligible profe ssionals specializing in internal medicine, family practice, general practice, or cardiology, we are pr oposing to retain the same criteria for satisfactory reporting of measures groups via claims as the 2011 criteria for satisfactory reporting of measures groups via claims fo r the 12-month reporting period that was

finalized in the 2011 MPFS Final Rule with comment period. Therefore, as in 2011, an eligible professional must satisfactorily repor t on all individual measures within the measures group in order to meet the criter ia for satisfactory reporting via measures groups. We are retaining the same criteria because eligible professionals are already familiar with these reporting criteria, which we believe will in turn lead to a greater chance that eligible professionals meet the criteria for sa tisfactory reporting. As with the reporting of Physician Qual ity Reporting System individual measures, we also considered including geriatricians as one of specialties we proposed previously with regard to the proposed Physician Quality Reporting System core measure reporting requirement for measures groups. However, we would like to ensure that the proposed 2012 Physician Quality Reporting System core measures are sufficiently applicable toCMS-1524-P 310

geriatric physicians before proposing to in clude them under the proposed requirement. We seek public comment as to whether geriat ricians should be included as a specialty required to report at least 1 proposed 2012 Physician Qual ity Reporting System core measure for measures group reporting. In addition, we seek public comment on whether other specialties should be included in th e 2012 Physician Quality Reporting System core measure reporting requirement for measures groups. For 2012, in order to ensure that th e Physician Quality Reporting System measures on which eligible professionals re port are applicable to their respective practices, we propose not to count measures within measures groups that are reported through claims or registry that have a 0 pe rcent performance rate. That is, if the recommended clinical quality action is not performed on at least one patient for a particular measure reported by th e eligible professional via clai ms or registry, we will not count the measures groups as a measures group reported by an eligible professional. Furthermore, this proposed requirement is c onsistent with the proposed reporting options for individual quality measures, which are di scussed previously. Since we are proposing to retain the requirement that an eligible professional must satisfactorily report on all

individual measures contained within a measures group in orde r to meet the criteria for satisfactory reporting via measures groups, if an eligible professional reports a measure contained within a measures group with a 0 percent performance rate, the eligible professional will fail to meet the criteria for the satisfactory reporting of measures groups. The 2012 proposed criteria for satisfact ory reporting of measures groups via claims for individual eligible professionals are described in the following Tables 24 and

25.CMS-1524-P 311

TABLE 24: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING ON MEASURES GROUPS VIA CL AIMS FOR THE FOLLOWING SPECIALTIES:INTERNAL MEDICINE, FAMILY PRACTICE, GENERAL PRACTICE, AND CARDIOLOGY Reporting Mechanism Reporting Criteria Reporting Period Claims ● Report at least 1 Physician Quality Reporting System measures group; AND

● If the measures group does not contain at least 1 Physician Quality core measure, then report 1 Physician Quality core measure; AND

● Report each measures group and, if applicable, Physician Quality Reporting System core measure for at least 30 Medicare Part B FFS patients.

● Measures groups containing a measure with a 0% performance rate will not be counted. January 1, 2012– December 31, 2012

Claims ● Report at least 1 Physician Quality Reporting System measures group; AND

● If the measures group does not contain at least 1 Physician Quality core measure, then report 1 Physician Quality core measure; AND

● Report each measures group and, if applicable, Physician Quality Reporting System core measure 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; BUT

● Report each measures group on no less than 15 Medicare Part B FFS patients seen during the reporting period to which the measures group applies.

● Measures groups containing a measure with a 0% performance rate will not be counted. January 1, 2012 – December 31,2012CMS-1524-P 312

TABLE 25: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING ON MEASURES GROUPS VIA CLAIMS FOR ALL OTHER ELIGIBLE PROFESSIONALS NOT IDENTIFIED IN TABLE 24 Reporting Mechanism Reporting Criteria Reporting Period Claims ● Report at least 1 Physician Quality Reporting System measures group; AND

● Report each measures group for at least 30 Medicare Part B FFS patients.

● Measures groups containing a measure with a 0% performance rate will not be counted. January 1, 2012– December 31, 2012

Claims ● Report at least 1 Physician Quality Reporting System measures group; ● 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; BUT

● Report each measures group on no less than 15 Medicare Part B FFS patients seen during the reporting period to which the measures group applies.

● Measures groups containing a measure with a 0% performance rate will not be counted. January 1, 2012 – December 31,2012

An eligible professional could also pote ntially qualify for the Physician Quality Reporting System incentive payment by satisfa ctorily reporting both individual measures and measures groups. However, only one incentive payment will be made to the eligible professional. We invite public comment on the proposed 2012 criteria for satisfactory reporting of measures groups via claims for individual eligible professionals. (5) Proposed 2012 Criteria for Satisfactory Repo rting of Measures Groups via Registry – Individual Eligible Professionals As with the reporting of measures groups via claims, we are proposing different criteria for the satisfactory reporting of Physician Quality Reporting System measures groups via registry depending on the eligible professional's specialty. For eligible professionals specializing in internal medicine, family pr actice, general practice, or cardiology, in order to meet the criteria for th e satisfactory reporting of Physician QualityCMS-1524-P 313

Reporting measures groups via registry, dur ing the proposed 12-month reporting period, we propose that the eligible professional must--

● Report at least 1 Physician Quality Reporting System measures group; AND

● If the measures group does not contain at least 1 Physician Quality core measure, then 1 Physician Quality core measure; AND

● Report on at least 30 Medicare Part B FFS patient s for each measures group and, if applicable, Physician Quality Reporting System core measure reported.

● Measures groups containing a measure w ith a 0% performance rate will not be

counted. Alternatively, we propose that the eligib le professional specia lizing in internal medicine, family practice, general practice, or cardiology may meet the criteria for the satisfactory reporting of Physician Quality measures groups via registry by doing the following during the proposed 12-month reporting period:

● Report at least one Physician Quality Reporting System measures group; AND

● If the measures group does not contain at least 1 Physician Quality core measure, then 1 Physician Quality core measure; AND

● Report each measures group and, if applicable, Physician Quality Reporting System core measure for at least 80 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT

● Report each measures group on no less than 15 Medicare Part B FFS patients seen during the reporting period to which the measur es group applies.

● Measures groups containing a measure w ith a 0% performance rate will not be

counted.CMS-1524-P 314

In order to meet the criteria for the satisfactory reporting of Physician Quality Reporting measures groups via registry, dur ing the proposed 6-month reporting period, we propose that the eligible professional must--

● Report at least one Physician Quality Reporting System measures group; AND

● If the measures group does not contain at least 1 Physician Quality core measure, then 1 Physician Quality core measure; AND

● Report each measures group and, if applicable, Physician Quality Reporting System core measure for at least 80 percent of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT

● Report each measures group on no less than 8 Medicare Part B FFS patients seen during the reporting period to which the measur es group applies.

● Measures groups containing a measure w ith a 0% performance rate will not be

counted. For all other eligible professionals, in order to meet the criteria for the satisfactory reporting of Physician Quality Reporting Sy stem measures groups via registry, we propose that, during the proposed 12-month re porting period, the el igible professional

must--

● Report at least 1 Physician Quality Reporting System measures group; AND

● Report each measures group for at least 30 Medicare Part B FFS patients.

● Measures groups containing a measure w ith a 0% performance rate will not be

counted. Alternatively, we propose that an eligible professional not specia lizing in internal medicine, family practice, general practice, or cardiology may meet the criteria for theCMS-1524-P 315

satisfactory reporting of Physician Qualit y Reporting System measures groups via registry by doing the following during th e proposed 12-month reporting period:

● Report at least one Physician Quality Reporting System measures group; AND

● For each measures group reported, report on at least 80 percen t of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT

● Report no less than 15 patients for each measures group reported. For all other eligible professionals, in order to meet the criteria for the satisfactory reporting of Physician Quality Reporting System measures groups via registry during the proposed 6-month reporting period, we pr opose that, during the proposed 6-month reporting period, the eligib le professional must--

● Report at least 1 Physician Quality Reporting System measures group; AND

● For each measures group reported, report on at least 80 percen t of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT

● Report each measures group on no less than least 8 Medicare Part B FFS patients for each measures group reported.

● Measures groups containing a measure w ith a 0% performance rate will not be

counted. Aside from the Physician Quality Reporting System core measure reporting requirement for eligible profe ssionals specializing in internal medicine, family practice, general practice, or cardiology, we are pr oposing to retain the same criteria for satisfactory reporting of measures groups via re gistry as the 2011 crit eria for satisfactoryCMS-1524-P 316

reporting of measures groups via registry fi nalized in the 2011 MPFS Final Rule with comment period. Therefore, as in 2011, an elig ible professional must satisfactorily report

on all individual measures within the measures group in order to meet the criteria for satisfactory reporting via measures groups. We are retaining the same criteria because we eligible professionals are already fam iliar with this reporting criteria, which we

believe will in turn lead to a greater chance that eligible professionals meet the criteria for satisfactory reporting. As with the reporting of Physician Qual ity Reporting System individual measures, we also considered including geriatricians as one of specialties we proposed previously with regard to the proposed Physician Quality Reporting System core measure reporting requirement for measures groups. However, we would like to ensure that the proposed 2012 Physician Quality Reporting System core measures are sufficiently applicable to geriatric physicians before proposing to in clude them under the proposed requirement. We seek public comment as to whether geriat ricians should be included as a specialty required to report at least 1 proposed 2012 Physician Qual ity Reporting System core measure for measures group reporting. In addition, we seek public comment on whether other specialties should be included in th e 2012 Physician Quality Reporting System core measure reporting requirement for measures groups. For 2012, in order to ensure that th e Physician Quality Reporting System measures on which eligible professionals re port are applicable to their respective practices, we propose not to count measures within measures groups that are reported through claims or registry that have a 0 pe rcent performance rate. That is, if the recommended clinical quality action is not performed on at least one patient for aCMS-1524-P 317

particular measure reported by th e eligible professional via clai ms or registry, we will not count the measures groups as a measures group reported by an eligible professional. Furthermore, this proposed requirement is c onsistent with the proposed reporting options for individual quality measures, which are di scussed previously. Since we are proposing to retain the requirement that an eligible professional must satisfactorily report on all

individual measures contained within a measures group in orde r to meet the criteria for satisfactory reporting via measures groups, if an eligible professional reports a measure contained within a measures group with a 0 percent performance rate, the eligible professional will fail to meet the criteria for the satisfactory reporting of measures groups. The proposed 2012 criteria for satisfactory reporting of data on measures groups are summarized in the following Tables 26 through 27 and are arranged by reporting mechanism and reporting period.CMS-1524-P 318

TABLE 26: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING ON MEASURES GROUPS VIA REGISTRY FOR THE FOLLOWING SPECIALTIES: INTERNAL MEDICINE, FAMILY PRACTICE, GENERAL PRACTICE AND CARDIOLOGY Reporting Mechanism Reporting Criteria Reporting Period Registry ● Report at least 1 Physician Quality Reporting System measures group; AND

● If the measures group does not contain at least 1 Physician Quality core measure, then 1 Physician Quality core measure; AND

● Report each measures group and, if applicable, Physician Quality Reporting System core measure for at least 30 Medicare Part B FFS patients.

● Measures groups containing a measure with a 0% performance rate will not be counted. January 1, 2012 – December 31, 2012

Registry ● Report at least 1 Physician Quality Reporting System measures group;

● If the measures group does not contain at least 1 Physician Quality core measure, then 1 Physician Quality core measure; AND

● Report each measures group and, if applicable, Physician Quality Reporting System core measure for at least 80 % of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT

● Report each measures group on no less than 15 Medicare Part B FFS patients seen during the reporting period to which the measures group applies.

● Measures groups containing a measure with a 0% performance rate will not be counted. January 1, 2012 – December 31, 2012

Registry ● Report at least 1 Physician Quality Reporting System measures group;

● If the measures group does not contain at least 1 Physician Quality core measure, then 1 Physician Quality core measure; AND

● Report each measures group and, if applicable, Physician Quality Reporting System core measure for at least 80 % of the eligible professional's Medicare Part B FFS patients seen during the reporting period to whom the measures group applies; BUT

● Report each measures group on at least 8 Medicare Part B FFS patients seen during the reporting period to which the measures group applies.

● Measures groups containing a measure with a 0% performance rate will not be counted. July1, 2012 – December 31, 2012CMS-1524-P 319

TABLE 27: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING ON MEASURES GROUPS VIA REGISTRY FOR ALL OTHER ELIGIBLE PROFESSIONALS NOT IDENTIFIED IN TABLE 26 Reporting Mechanism Reporting Criteria Reporting Period Registry ● Report at least 1 Physician Quality Reporting System measures group; AND

● Report each measures group for at least 30 Medicare Part B FFS patients.

● Measures groups containing a measure with a 0% performance rate will not be counted. January 1, 2012 – December 31, 2012

Registry ● Report at least 1 Physician Quality Reporting System measures group; AND

● 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; BUT

● Report each measures group on at least 15 Medicare Part B FFS patients seen during the reporting period to which the measures group applies.

● Measures groups containing a measure with a 0% performance rate will not be counted. January 1, 2012 – December 31, 2012

Registry ● Report at least 1 Physician Quality Reporting System measures group; AND

● 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; BUT

● Report each measures group on no less than 8 Medicare Part B FFS patients seen during the reporting period to which the measures group applies.

● Measures groups containing a measure with a 0% performance rate will not be counted. July 1, 2012 – December 31, 2012

An eligible professional could also pote ntially qualify for the Physician Quality Reporting System incentive payment by satisfa ctorily reporting both individual measures and measures groups. However, only one incentive payment will be made to the eligible professional. We invite public comment on the proposed criteria for satisfactory reporting of measures groups for indi vidual eligible professionals. (6) Proposed 2012 Criteria for Satisfactory Reporting on Physician Quality Reporting System Measures by Group Practices Under the GPROCMS-1524-P 320

As stated previously, instead of par ticipating as an individual eligible professional, an eligible professional in a group practice may participate in the Physician Quality Reporting System under the Phys ician Quality Reporting System GPRO. However, an individual eligible professi onal who is affiliated with a group practice participating in the Physician Quality Reporting System GPRO that satisfactorily submits Physician Quality Reporting System quality measures will only be able to earn an incentive as part of the group practice and not as an individual eligible professional. As stated previously, we propose that group practices interested in participating in

GPRO must self-nominate. As stated in the "Proposed Reporting Period" in section IV.F.2.c. of this propose d rule, for group practices selected to participate in the Physician Quality Reporting System GPRO for 2012, we propose a 12-month reporting period beginning January 1, 2012. For 2012, we pr opose to use the same GPRO reporting methods that we have used in prior years. Specifically, we propos e that group practices participating in GPRO submit information on measures within a proposed common set of 40 NQF-endorsed quality measures using a we b interface based on the GPRO Tool used in the 2011 Physician Quality Reporting System GPRO. As part of the data submission process for 2012 GPRO, we propose that during 2012, each group practice would be required to report quality measures with re spect to services furnished during the 2012 reporting period (that is, January 1, 2012, through December 31, 2012) on an assigned sample of Medicare beneficiaries. Once th e beneficiary assignment has been made for each group practice, which we anticipate will be done during the fourth quarter of 2012, we propose to provide each group practice selected to participate in the Physician Quality Reporting System GPRO with access to a web interface that would include the group'sCMS-1524-P 321

assigned beneficiary samples and the fina l GPRO quality measures. We propose to pre-populate the web interface with the a ssigned beneficiaries' demographic and

utilization information based on all of their Medicare claims data. The group practice would be required to populate the remaining data fields necessary for capturing quality measure information on each of the assigned beneficiaries. As specified in section IV.F.(b).(2).(B). of th is proposed rule, we propose to change the definition of the group practices to those practices c onsisting of 25 or more eligible professionals. In 2011, to distinguish the criteria in GPRO I and II for satisfactory reporting between small vs. large groups, we established different reporting crite ria dependent on the group's size. Although we are consolidating the GPRO for 2012, we still recognize the need to equalize the reporting burden by establishing different reporting criteria for small vs. large groups. Therefore, we propose to establish the following two criteria for the satisfactory reporting of Physician Quality Reporting System quality measures under the 2012 GPRO, based on the size of the group practice:

● For group practices comprised of 25-99 eligible professionals participating in the GPRO, we propose that the group practi ce must report on all GPRO measures included in the web interface (listed in Tabl e 56 of this proposed rule). During the submission period, the group pr actice will need to access the web interface and populate the data fields necessary for capturing qua lity measure information on each of the assigned beneficiaries up to 218 beneficiaries (with an over-sample of 327 beneficiaries) for each disease module and preventive care meas ure. We further propose that if the pool of eligible assigned beneficiaries for any di sease module or preventive care measure is less than 218, then the group pr actice would need to populate th e remaining data files for 100 percent of eligible assigned beneficiaries for that diseas e module or preventive careCMS-1524-P 322

measure. For each disease module or preventive care measure, we propose that the group practice must report information on the assi gned patients in the order in which they appear in the group's sample (that is, consecu tively). We propose these criteria because they mirror the criteria for CMS' Medicare Care Management Performance (MCMP) demonstration. In determining the appropri ate reporting criteria for group practices comprised of 25-99 eligible professionals, we sought to align the cr iteria for satisfactory reporting under the Physician Quality Reporting System with CMS' MCMP demonstration, which uses small to medium-s ized group practices to analyze data aimed at improving the quality of care for beneficiar ies with chronic conditions. We have an interest in aligning the reporting criteria for these tw o programs particularly as the MCMP demonstration also require d its participants to report on measures similar to the PGP demonstration and using the same data co llection vehicle. However, the statistical sampling methodology used in the MCMP demons tration also took into account that the group practices that participated in this de monstration were significantly smaller than those that participate in the PGP demonstration. .

● For group practices comprised of 100 or more eligible professionals, we propose that the group practices must report on all Physician Quality Reporting System GPRO quality measures. During the submissi on period, the group practice would need to populate the remaining data fields in the web interface necessary for capturing quality measure information on each of the assigned be neficiaries up to 411 beneficiaries (with an over-sample of 616 beneficiaries) for each disease module and preventive care measure. We further propose that if the pool of eligible assigned beneficiaries for any disease module or preventive care measure is less than 411, then the group practice mustCMS-1524-P 323

populate the remaining data fields for 100 per cent of eligible assigned beneficiaries for that disease module or preventive care meas ure. For each disease module or preventive care measure, we propose that the group practic e must report information on the assigned patients in the order in which they appear in the group's sample (that is, consecutively). Furthermore, although we are requiring that the group practices participating as GPROs report on a certain number of consecu tive patients, such as either 218 or 411 beneficiaries depending on the group's size, we propose to allow the "skipping" of patients for valid reasons, such as a benefi ciary's medical records not being found or not being able to confirm a diagnosis. However, excessive skipping of patients may cause us to question the accuracy or validity of the data being reported to us by the group practices. Due to the variance in group patterns, measures, and disease modules, however, it is difficult to esta blish a "skip threshold" for the satisfactory reporting of GPRO measures. Therefore, it is our intent to examine each group practice's skip patterns. We may request the group to provide additional information to help explain or support the skips to help better inform us on wh at levels of skipping could potentially be considered excessive skipping in a future year. In determining the appropriate reporting criteria for group practices comprised of 100 or more eligible professionals, we sought to use the same criteria as we finalized in the 2011 MPFS Final Rule with comment pe riod for GPRO I (75 FR 73506) because group practices are already fa miliar with this reporting process. We hope that establishing the same process for reporting under the GPRO as proposed in prior years will provide a likelier chance for meeting the cr iteria for satisfactory reporting under the GPRO. In addition, we sought to align the criteria for satisfactor y reporting under theCMS-1524-P 324

Physician Quality Reporting System with CMS' Physician Group Practice (PGP) demonstration, which collects data from large group practices in an effort to coordinate the overall care delivered to Medicare patients. As we discussed previously with our proposed definition of group practice, we allow for fluctuation of the group prac tice's size throughout the reporting period, provided that the group size cont ains at least 25 eligible professionals, which is the proposed minimum group practice size for pa rticipation in the Physician Quality Reporting System GPRO. However, as we established in 2011, for purposes of determining which reporting criteria the group must satisfy, a group practice's size will be the size of the group at the time the gr oup's participation is approved by CMS (75 FR 73504). For example, if a group practice is comprised of 100 eligible professionals at the time it self-nominates for participation as a GPRO in 2012, and the group practice's size then drops to 99 elig ible professionals at the time the group practice's participation is approved by CMS, the group practice would need to meet the proposed reporting criteria for a group size of 99. Table 28 summarizes the proposed criteria for the satisfactory reporting of data on quality measures by group practice under th e proposed 2012 Physician Quality Reporting GPRO. We propose that group practices participating in the 2012 Physician Quality Reporting System GPRO, regardless of size, w ould be required to report on all of the proposed measures listed in Table 56 of this proposed rule. These quality measures are grouped into preventive care measures and five disease modules: heart failure, diabetes, coronary artery disease, hypertension, a nd chronic obstructive pulmonary disease (COPD).CMS-1524-P 325

TABLE 28: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING FOR GROUP PRACTIC ES PARTICIPATING IN THE PHYSICIAN QUALITY REPORTING SYSTEM GROUP PRACTICE REPORTING OPTION (GPRO) Group Practice Size Reporting Mechanism Reporting Criteria Reporting Period 25-99 Eligible Professionals A submission web interface provided by CMS ● Report on all measures included in the web interface; and

● Populate data fields for the first 218 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample (with an over-sample of 327) for each disease module or preventive care measure. If the pool of eligible assigned beneficiaries is less than 218, then report on 100% of assigned beneficiaries. January 1, 2012 – December 31, 2012

100+ Eligible Professionals A submission web interface provided by CMS ● Report on all measures included in the web interface; and

● Populate data fields for the first 411 consecutively ranked and assigned beneficiaries in the order in which they appear in the group's sample (with an over-sample of 616) 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. January 1, 2012 – December 31, 2012

We intend to post the final 2012 Physician Quality Reporting System GPRO participation requirements for group practices , including instructions for submitting the self-nomination statement and other request ed information, on the Physician Quality Reporting System section of the CMS We b site at http://www.cms.gov/PQRS by November 15, 2011 or shortly thereafter. The Physician Quality Reporting System GPRO web interface will be updated as needed to include the 2012 Physician Quality Reporting System GPRO measures (i.e. to

eliminate measures that have b een retired as well as add add itional measures that will beCMS-1524-P 326

finalized for 2012). We believe that us e of the GPRO web interface allows group practices the opportunity to calculate their own perfor mance rates on the quality

measures. We intend to provide the selected p hysician groups with access to this pre-populated database by no later than th e first quarter of 2013. For purposes of pre-populating this GPRO web interface, we propose to assign beneficiaries to each group practice using a patient assignment methodology modeled after the patient assignment methodology used in the PGP & MCMP demonstrations. Based on our desire to model the Physician Quality Reporting System GPRO after the PGP & MCMP demonstrations, we will also consider inco rporating any methodologies used in the PGP demonstration prior to January 1, 2012 to the 2012 Physician Quality Reporting System. We propose using Medicare Part B claims data for dates of service on or after January 1, 2011 and submitted and processed by approximately October 31, 2011 to assign Medicare beneficiaries to each group practice. Assign ed beneficiaries would be

limited to those Medicare Part B FFS benefici aries with Medicare Parts A and B claims for whom Medicare is the primary payer. Assigned beneficiaries would not include Medicare Advantage enrollees. A benefici ary would be assigned to the group practice that provides the plurality of a beneficiary's office or other outpatient office evaluation and management allowed charges. Beneficiar ies with only one office visit to the group practice would be eliminated from the gr oup practice's assigned patient sample for purposes of the 2012 Physician Quality Reporting System GPRO. We would pre-populate the GPRO web inte rface with the assigned bene ficiaries' demographic and

utilization information based on th eir Medicare claims data.CMS-1524-P 327

We invite public comment on the proposed requirements for satisfactory reporting via the Physician Quality Reporti ng System GPRO reporting option. f. 2012 Physician Quality Reporting System Measures (1) Statutory Requirements for the Sel ection of Proposed 2012 Physician Quality Reporting System Measures Under section 1848(k)(2)(C )(i) of the Act, the Physician Quality Reporting System quality measures shall be such measures selected by the Secretary from measures that have been endorsed by the entity with a contract with the Secretary un der subsection 1890(a) of the Act (currently, that is the Natio nal 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 aut horizes the Secretary to specif y a measure that is not so endorsed as long as due consider ation is given to measures that have been endorsed or adopted by a consensus organization iden tified by the Secretary, such as the AQA alliance. In light of thes e statutory requirements, we believe that, except in the circumstances specified in the statute, each proposed 2012 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 2012 Physician Quality Reporting System quality measure, "the Secretary shall ensu re that eligible pr ofessionals have the opportunity to provide input during the development, endor sement, 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 th e measures be selected from measures thatCMS-1524-P 328

have been endorsed by the entity with a cont ract with the Secret ary under section 1890(a) (that is, the NQF) and are silent with respec t to how the measures that are submitted to the NQF for endorsement were developed. The basic steps for developing measures applicable to physicians and other eligible professionals prior to submission of the measures for endorsement may be carried out by a variety of different organizations. We do not believe there needs to be any special restrictions on the type or make-up of the organizations carrying out this basic process of development of physician measures, such as restricting the initi al development to physician-contro lled organizations. Any such restriction would unduly limit the basic devel opment of quality measures and the scope and utility of measures that may be considered for endorsement as voluntary consensus standards for purposes of the Physician Quality Reporting System. (2) Other Considerations for the Selecti on of Proposed 2012 Physician Quality Reporting System Measures In addition to reviewing the 2011 Physic ian Quality Reporting System measures for purposes of developing the proposed 2012 Physician Quality Reporting System measures, we reviewed and considered measure suggestions for the 2012 Physician Quality Reporting System. With respect to the selection of new measures, we applied the following considerations, which include ma ny of the same considerations applied to the selection of 2009, 2010 and 2011 Physician Quality Reporting Sy stem quality measures proposed for inclusion in the 2012 Physician Quality Reportin g System quality measure set previously

described:

● High Impact on Healthcare.CMS-1524-P 329

++ 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 h ealth disparities; healthcare-associated infections and other conditions; improved care coordination; improved outcomes; improved efficiency; improved patient and family experience of care; effective management of acute and chronic episodes of care; reduced unwarranted geographic variation in quality and efficiency; and a doption and use of interoperable HIT.

++ Measures that are incl uded in, or facilitate alig nment with, other Medicare, Medicaid, and CHIP programs in furthe rance of overarching healthcare goals. ++ NQF Endorsement. ++ Measures must be NQF-endorsed by August 15, 2011, in order to be considered for inclusion in the 2012 Physicia n Quality Reporting System quality measure set except as provided under sec tion 1848(k)(2)(C)(ii) of the Act. ++ Section 1848(k)(2)(C)(ii) of the Act provides an ex ception to the requirement that the Secretary select measures that have been endorsed by the entity with a contract under section 1890(a) of the Ac t (that is, the NQF).

● Address Gaps in the Physician Qu ality Reporting System Measure Set. ++ Measures that increase the scope of applicability of the Physician Quality Reporting System measures to services furn ished to Medicare beneficiaries and expand opportunities for eligible profe ssionals to particip ate in the Physician Quality Reporting System.CMS-1524-P 330

● Measures of various aspects of clin ical quality includi ng outcome measures, where appropriate and feasible, process m easures, structural measures, efficiency measures, and measures of pa tient experience of care. Other considerations that we applied to the selection of proposed measures for 2012, regardless of whether the measure was a 2011 Physician Quality Reporting System

measure or not, were--

● Measures that are functional, which is to say measures that can be technically implemented within the capacity of the CMS infrastructure for data collection, analysis, and calculation of reporting and performance rates.

● Measures that address gaps in th e quality of care delivered to Medicare beneficiaries;

● Measures impacting chr onic conditions (chronic kidney disease, diabetes mellitus, heart failure, hypertension and musculoskeletal);

● Measures involving care coordination;

● Measures applicable across care setti ngs (such as, outpatient , nursing facilities, domiciliary, etc.)

● Measures conducive to le veraging capabilities of an electronic health record (EHR)

● Measures whose detailed specifica tions will be completed and ready for implementation in the 2012 Physician Quality Reporting System

● Broadly applicable measur es that could be used to create a core measure set required of all participati ng eligible professionalsCMS-1524-P 331

● Measures groups that reflect the se rvices furnished to beneficiaries by a particular specialty. In the 2012 Physician Quality Reporting System, as in the 2011 Physician Quality Reporting System, for some measures that ar e useful, but where data submission is not feasible through all otherwise available P hysician Quality Reporting System reporting mechanisms, we are proposing that a meas ure may be included for reporting solely through specific reporting m echanism(s) in which its submission is feasible. As discussed previously, s ection 1848(k)(2)(D) of the Act requires that the public have the opportunity to provi de 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 are not included in the proposed rule for inclusion in the 2012 Physician Quality Reporting System that are recommended to us via comments on the proposed rule have not been placed before the public to comment on the selection of those measures within the rulemaking pro cess. Even when measures have been published in the Federal Register, but in othe r contexts and not specifically proposed as Physician Quality Reporting System measures , such publication does not provide true opportunity for public comment on those measur es' potential inclusion in the Physician Quality Reporting System. Thus, such additional measures recommended for selection for the 2012 Physician Quality Reporting System via comments on the CY 2012 PFS proposed rule cannot be included in the 2012 me asure set. As such, while we welcome all constructive comments and suggesti ons, and may consider such recommended measures for inclusion in future measure sets for the Physician Quality Reporting SystemCMS-1524-P 332

and other programs to which such measures may be relevant, we are not able to consider such additional measures for inclusion in the final 2012 Physician Quality Reporting System measure set. In addition, as in prior years, we ag ain 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 designate d party (usually, the measure developer/owner) who has accepted resp onsibility for maintaining the measure. In general, it is the role of the measure owne r, developer, or maintainer to make changes to a measure. Therefore, comments requesti ng changes to a specific proposed Physician Quality Reporting System measure's title, de finition, and detailed specifications or coding should be directed to the measure developer identified in Tables 29 through 55. Contact information for the 2011 Physician Quality Reporting System measure developers is listed in the "2011 Physician Quality Reporting System Quality Measures List," which is

available on the CMS Web site at http://www.cms.gov/PQRS/15_MeasuresCodes.asp#TopOfPage

. However, we stress that inclusion of m easures that are not NQF endorsed or AQA adopted is an exception to the requirement unde r 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. Based on the criteria previously discu ssed, we propose to include the individual measures listed in Tables 29 through 31 in the 2012 Physician Quality Reporting SystemCMS-1524-P 333

individual quality measure set. We believe that each measure we are proposing for reporting under the 2012 Physician Quality Repor ting System meets at least one criterion for the selection of Physician Quality Reporti ng System measures described previously. We are also proposing to include 24 meas ures groups in the 2012 Physician Quality Reporting System quality measure set, whic h are listed in Tables 29 through 31. The

individual measures selected for the 2012 Physician Quality Reporting System can be categorized as follows--

● Proposed 2012 Physician Quality Reporti ng System Core Measures Available for Either Claims, Registry, and/or EHR-based Reporting;

● Proposed 2012 Physician Quality Re porting System Individual Quality

Measures Available for Either Claims-based Reporting and/or Regi stry-based Reporting;

and

● Proposed 2012 Physician Quality Repor ting System Measures Available for EHR-based Reporting.

Please note that some individual measur es we are proposing in Tables 29 through 31 for reporting for the 2012 Physician Quality Reporting System may be available for reporting in other CMS programs, such as the Medicare and Medi caid EHR Incentive Program as well as the Medicare Shared Savi ngs Program. We note that measure titles, in some instances, may vary from program to program. If an eligib le professional intends to report the same measures for multiple CMS programs, it is important to check the full measure specifications, NQF measure number (if applicable), as well as any other identifying measure features to determine whet her the measures are the same. We invite comments on our proposed approach in selecting measures.CMS-1524-P 334

(3) Proposed 2012 Physician Quality Re porting System Individual Measures This section focuses on the proposed 2012 Physician Quality Reporting System

Individual Measures available for reporting via claims and/or registry. For the proposed 2012 Physician Quality Reporting System measur es that were selected for reporting in 2011, please note that detailed measure specif ications, including the measure's title, for the proposed 2012 individual Physician Qualit y Reporting System quality measures may have been updated or modified during the NQF endorsement process or for other reasons prior to 2012. The 2012 Physician Qual ity Reporting System quality measure specifications for any given individual quality measure may, therefore, be different from specifications for the same quality measure used in prior years. Specifications for all 2012 individual Physician Quality Reporting System quality measures, whether or not included in the 2011 Physician Quality Repor ting System program, must be obtained from the specifications document for 2012 individual Physician Quality Reporting System quality measures, which will be av ailable on the Physician Quality Reporting System section of the CMS Web site on or before December 31, 2011. (A) Proposed 2012 Physician Quality Reporti ng System Core Measures Available for Claims, Registry, and/ or EHR-based Reporting The prevention of cardiovascular conditions is a top priority for CMS. Therefore, in an effort to encourage eligible professiona ls to monitor their performance with respect to the prevention of cardiovascular conditions , we propose to adopt a Physician Quality Reporting System set of core measures for CY 2012, which are specified later in this section in Table 29, which focuses on the prevention of cardiovascular conditions. While we encourage reporting of these meas ures by all eligible professionals, asCMS-1524-P 335

previously discussed in secti on IV.F.1.f. of this proposed rule , we are proposing that only certain specialties be required to repo rt on the proposed 2012 Physician Quality Reporting System core measures. TABLE 29: PROPOSED 2012 PHYSICIAN QUALITY REPORTING SYSTEM CORE MEASURES AVAILABLE FOR EITHER CLAIMS, REGISTRY, AND/OR EHR-BASED REPORTING Physician Quality Reporting System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism

204 Ischemic Vascular Disease (IVD): Use of Aspirin or another Antithrombotic 0068 NCQA Claims, Registry, EHR 236 Controlling High Blood Pressure 0018 NCQA Claims, Registry, EHR 2 Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus 0064 NCQA Claims, Registry, EHR 226 Measure pair: a. Tobacco Use Assessment, b. Tobacco Cessation Intervention 0028 AMA-PCPI Claims, Registry, EHR TBD Ischemic Vascular Disease (IVD): Complete Lipid Profile and LDL Control < 100 0075 NCQA Claims, Registry, EHR TBD Proportion of adults 18 years and older who have had their BP measured within the preceding 2 years N/A CMS Claims, Registry, EHR TBD Preventative Care: Cholesterol-LDL test performed N/A CMS EHR

We invite public comment on the proposed 2012 Physician Quality Reporting System core measures. (B) Proposed 2012 Physician Quality Reporting System Individual Measures for Claims and Registry ReportingCMS-1524-P 336

For 2012, we propose to retain all measures currently used in the 2011 Physician Quality Reporting System. We believe these 2011 Physician Quality Reporting System measures meet the statutory considerations as well as other factors we used in determining which measures to include for reporting under the 2012 Physician Quality Reporting System. The retention of these meas ures also promotes program consistency. These proposed measures include 55 registry-o nly measures currently used in the 2011 Physician Quality Reporting System, and 144 individual quality measures for either claims-based reporting or registry-bas ed reporting (75 FR 40186 through 40190 and 52489 through 52490). These proposed measures do not include any measures that are proposed to be included as part of the Back Pain measures group. For 2012, we propose that any 2012 Physician Quality Reporting Syst em measures that are included in the Back Pain measures group would not be repor table as individual measures through claims-based reporting or re gistry-based reporting. In 2011, Physician Quality Reporting System measure # 197 was titled "Coronary Artery Disease (CAD): Drug Therapy for Lo wering LDL-Cholesterol". For 2012, we are changing the title of measure # 197 to "Coronary Artery Disease: Lipid Control", because the measure owner, AMA-PCPI, has changed the title of the measure. Aside from the title change, measure # 197's NQF number as well as its NQF-endorsement status has not changed. However, as noted previously, please check the measure specifications for measure # 197, as the specifications on how to report on measure # 197 for the 2012 Physician Quality Reporting System may change from 2011. In addition, we propose the 26 new individua l measures below for inclusion in the 2012 Physician Quality Reporting System in orde r to provide eligible professionals withCMS-1524-P 337

more Physician Quality Reporting System qua lity measures on which they can select from to report. The following 2 proposed measures are NQF-endorsed:

● Anticoagulation for Acute Pulmonary Embolus Patients.

● Pregnancy Test for Female Abdominal Pain Patients. The remaining 24 measures are either pending NQF endorsement or would have to be adopted under the exception to NQF endorsement provided under section 1848(k)(2)(C)(ii) of the Act. In selecting these measures , we took into account other

considerations listed in section IV.F.1.(f).(2). of this pr oposed rule. Specifically, we are proposing the following measures because th e measures impact chronic conditions:

● Chronic Wound Care: Use of Wound Su rface Culture Technique in Patients

with Chronic Skin Ulcers.

● Chronic Wound Care: Use of Wet to Dr y Dressings in Patients with Chronic

Skin Ulcers.

● Hypertension: Blood Pressure Control. We are proposing the following measures because these measures involve care

coordination:

● Coronary Artery Disease (C AD): Symptom Management. We are proposing the following measures because these measures are applicable across care settings:

● Substance Use Disorders: Couns eling Regarding Psychosocial and Pharmacologic Treatment Opti ons for Alcohol Dependence.

● Substance Use Disorders: Screeni ng for Depression Among Patients with Substance Abuse or Dependence.CMS-1524-P 338

● Cardiac Rehabilitation Patient Refe rral From an Outpatient Setting. We are proposing the following measur es because we believe the measures address gaps in the Physician Qual ity Reporting System measure set:

● Barrett's Esophagus.

● Ultrasound Determination of Pregnanc y Location for Pregnant Patients with

Abdominal Pain.

● Rh Immunoglobulin (Rhogam) for Rh Ne gative Pregnant Women at Risk of Fetal Blood Exposure.

● Surveillance after Endovasc ular Abdominal Aortic An eurysm Repair (EVAR).

● Referral for Otology Evaluation for Pati ents with Acute or Chronic Dizziness.

● Image Confirmation of Successful Exci sion of Image–Localized Breast Lesion.

● Improvement in Patient's Visual F unction within 90-Days Following Cataract Surgery.

● Patient Satisfaction within 90-Da ys Following Cataract Surgery. We are proposing the following measur es because we believe the measures increase the scope of applicability of the Physician Quality Reporting System measures to

services furnished to Medicare benefici aries and expand opportunities for eligible professionals to partic ipate in the Physician Quality Reporting System:

● Radical Prostatect omy Pathology Reporting.

● Immunohistochemical (IHC) Evaluation of HER2 for Breast Cancer Patients . We are proposing the following measures because the measures are high impact and support CMS and HHS priorities for impr oved quality and efficiency of care for

Medicare beneficiaries.CMS-1524-P 339

● Statin Therapy at Discharge af ter Lower Extremity Bypass (LEB).

● Rate of Open AAA Repair without Ma jor Complications (discharged to home no later than post-operative day #7).

● Rate of EVAR without Major Complicat ions (discharged to home no later than POD #2).

● Rate of Carotid Endarterectomy fo r Asymptomatic Patients, without Major Complications (discharged to home no later than post-operative day #2). We are proposing the following measur es because the measures have a high impact on health care:

● Preoperative Diagnos is of Breast Cancer.

● Sentinel Lymph Node Biops y for Invasive Breast Cancer.

● Biopsy Follow-up. We believe that the addition of Phys ician Quality Reporting System quality measures will encourage eligible professionals to participate in the Physician Quality Reporting System, as there are more measures that may be applicable to eligible professionals. Of these measures, 13 would be reportab le via registry-only. The remaining 13

measures would be available for claims and registry reporting. Although we are proposing to designate certain measures as registry-only measures, we cannot guarantee that there will be a registry qualified to submit each registry-only measure for 2012. We rely on registries to self-nominate and identify the measures for which they would like to be qualified to submit quality measures resu lts and numerator and denominator data on quality measures. If no registry self-nomin ates to submit measure results and numeratorCMS-1524-P 340

and denominator data on a particular meas ure for 2012, then an eligible professional would not be able to report that particular measure.

Table 30 identifies the list of measures we propose to include for claims and/or registry-based reporting in the 2012 Physician Quality Reporting System. The proposed 2012 Physician Quality Reporting System indivi dual measures for either claims-based reporting or registry-based reporting are listed by thei r Physician Quality Reporting System Measure Number (to the extent te m easure is part of the 2011 Physician Quality Reporting System measure set) and Title in Table 30, 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 30 can be found in the "2011 Physician Quality Reporting System Quality Measures List," which is available on the Measures and Codes page of the Physician Quality Reporting System section of the CMS Web site at http://www.cms.hhs.gov/PQRS to th e extent the measure is part of the 2011 Physician Quality Reporting System measure se t. New measures that we are proposing to add to the Physician Quality Reporting System measure set for 2012 are designated with a Physician Quality Reporting Syst em Measure Number of "TBD."

Table 30: Proposed 2012 Physician Qualit y Reporting System Individual Quality

Measures Available for Either Claims-bas ed Reporting and/or Registry-based ReportingCMS-1524-P 341

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism 1 Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus 0059 NCQA Claims, Registry 2 Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus 0064 NCQA Claims, Registry 3 Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus 0061 NCQA Claims, Registry

5 Heart Failure: Angiotensin- Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0081 AMA-PCPI Registry

6 Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CAD 0067 AMA-PCPI Claims, Registry 7 Coronary Artery Disease (C AD): Beta-Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI) 0070 AMA-PCPI Registry

8 Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0083 AMA-PCPI Registry

9 Major Depressive Disorder (MDD): Antidepressant Medication During Acute Phase for Patients with MDD 0105 NCQA Claims, Registry

10 Stroke and Stroke Rehabilitation: Computed Tomography (CT) or Magnetic Resonance Imaging (MRI) Reports 00246 AMA-PCPI/NCQA Claims, Registry

12 Primary Open Angle Glauco ma (POAG): Optic Nerve Evaluation 0086 AMA-PCPI Claims, Registry 14 Age-Related Macular Degeneration (AMD): Dilated Macular Examination 0087 AMA-PCPI/NCQA Claims, Registry 18 Diabetic Retinopathy 0088 AMA-PCPI Claims, Registry 19 Diabetic Retinopathy: Communication with the Physician Managing On-going Diabetes Care 0089 AMA-PCPI Claims, Registry 20 Perioperative Care: Timing of Antibiotic Prophylaxis – Ordering Physician 0270 AMA-PCPI/NCQA Claims, Registry 21 Perioperative Care: Selection of Proph ylactic Antibiotic 0268 AMA-PCPI/NCQA Claims, Registry 22 Perioperative Care: Discontinuation of Prophylactic Antibiotics (Non-Cardiac Procedures) 0271 AMA-PCPI/NCQA Claims, Registry 23 Perioperative Care: Venous Thromboembolism (VTE) Prophylaxis (When Indicated in ALL Patients) 0239 AMA-PCPI/NCQA Claims, Registry

24 Osteoporosis: Communication with the Physician Managing On-going Care Post-Fracture of Hip, Spine or Distal Radius for Men and Women Aged 50 Years and Older 0045 AMA-PCPI/NCQA Claims, Registry

28 Aspirin at Arrival for Acute Myocardial Infarction (AMI) 0092 AMA-PCPI/NCQA Claims, Registry 30 Perioperative Care: Timely Administration of Prophylactic Parenteral Antibiotics 0270 AMA-PCPI/NCQA Claims, Registry

31 Stroke and Stroke Rehabilitation: Deep Vein Thrombosis Prophylaxis (DVT) for Ischemic Stroke or Intracranial Hemorrhage 0240 AMA-PCPI/NCQA Claims, RegistryCMS-1524-P 342

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism 32 Stroke and Stroke Rehabilitation: Discharged on Antiplatelet Therapy 0325 AMA-PCPI/NCQA Claims, Registry 33 Stroke and Stroke Rehabilitation: Anticoagulant Therapy Prescribed for Atrial Fibrillation at Discharge 0241 AMA-PCPI/NCQA Registry

35 Stroke and Stroke Rehabilitation: Screening for Dysphagia 0243 AMA-PCPI/NCQA Claims, Registry 36 Stroke and Stroke Rehabilitation: Consideration of Rehabilitation Services 0244 AMA-PCPI/NCQA Claims, Registry

39 Screening or Therapy for Osteoporosis for Women Aged 65 Years and Older 0046 AMA-PCPI/NCQA Claims, Registry

40 Osteoporosis: Management Following Fracture of Hip, Spine or Distal Radius for Men and Women Aged 50 Years and Older 0045 AMA-PCPI/NCQA Claims, Registry

41 Osteoporosis: Pharmacol ogic Therapy for Men and Women Aged 50 Years and Older 0049 AMA-PCPI/NCQA Claims, Registry

43 Coronary Artery Bypass Graft (CABG): Use of Internal Mammary Artery (IMA) in Patients with Isolated CABG Surgery 0516 STS Claims, Registry

44 Coronary Artery Bypass Graft (CABG): Preoperative Beta-Blocker in Patients with Isolated CABG Surgery 0235 STS Claims, Registry 45 Perioperative Care: Discontinuation of Prophylactic Antibiotics (Cardiac Procedures) 0637 AMA-PCPI/NCQA Claims, Registry 46 Medication Reconciliation: Reconciliation After Discharge from an Inpatient Facility 0097 AMA-PCPI/NCQA Claims, Registry 47 Advance Care Plan 0326 AMA-PCPI/NCQA Claims, Registry

48 Urinary Incontinence: Asse ssment of Presence or Absence of Urinary Incontinence in Women Aged 65 Years and Older 0098 AMA-PCPI/NCQA Claims, Registry

49 Urinary Incontinence: Char acterization of Urinary Incontinence in Women Aged 65 Years and Older 0099 AMA-PCPI/NCQA Claims, Registry 50 Urinary Incontinence: Plan of Care for Urinary Incontinence in Women Aged 65 Years and Older 0100 AMA-PCPI/NCQA Claims, Registry 51 Chronic Obstructive Pulm onary Disease (COPD): Spirometry Evaluation 0091 AMA-PCPI Claims, Registry 52 Chronic Obstructive Pulm onary Disease (COPD): Bronchodilator Therapy 0102 AMA-PCPI Claims, Registry 53 Asthma: Pharmacologic Th erapy 0047 AMA-PCPI Claims, Registry, 54 12-Lead Electrocardiogram (ECG) Performed for Non-Traumatic Chest Pain 0090 AMA-PCPI/NCQA Claims, Registry 55 12-Lead Electrocardiogram (ECG) Performed for Syncope 0093 AMA-PCPI/NCQA Claims, Registry 56 Community-Acquired Pneumonia (CAP): Vital Signs 0232 AMA-PCPI/NCQA Claims, Registry 57 Community-Acquired Pneumonia (CAP): Assessment of Oxygen Saturation 0094 AMA-PCPI/NCQA Claims, RegistryCMS-1524-P 343

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism 58 Community-Acquired Pneumonia (CAP): Assessment of Mental Status 0234 AMA-PCPI/NCQA Claims, Registry 59 Community-Acquired Pneumonia (CAP): Empiric Antibiotic 0096 AMA-PCPI/NCQA Claims, Registry 64 Asthma: Asthma Assessment 0001 AMA-PCPI Claims, Registry 65 Treatment for Children with Upper Respiratory Infection (URI): Avoidan ce of Inappropriate Use 0069 NCQA Claims, Registry 66 Appropriate Testing for Children with Pharyngitis 0002 NCQA Claims, Registry

67 Myelodysplastic Syndrome (MDS) and Acute Leukemias: Baseline Cytogenetic Testing Performed on Bone Marrow 0377 AMA-PCPI/ASH Claims, Registry

68 Myelodysplastic Syndrome (MDS): Documentation of Iron Stores in Patients Receiving Erythropoietin Therapy 0378 AMA-PCPI/ASH Claims, Registry 69 Multiple Myeloma: Treatment with Bi sphosphonates 0380 AMA-PCPI/ASH Claims, Registry 70 Chronic Lymphocytic Leukemia (CLL): Baseline Flow Cytometry 0379 AMA-PCPI/ASH Claims, Registry

71 Breast Cancer: Hormonal Therapy for Stage IC-IIIC Estrogen Receptor/Proge sterone Receptor (ER/PR) Positive Breast Cancer 0387 AMA-PCPI/ ASCO/NCCN Claims, Registry

72 Colon Cancer: Chemotherapy for Stage III Colon Cancer Patients 0385 AMA-PCPI/ ASCO/NCCN Claims, Registry

76 Prevention of Catheter-Relat ed Bloodstream Infections (CRBSI): Central Venous Ca theter (CVC) Insertion Protocol 0464 AMA-PCPI Claims, Registry

79 End Stage Renal Disease (ESRD): Influenza Immunization in Patients with ESRD 0227 AMA-PCPI Claims, Registry 81 End Stage Renal Disease (ESRD): Plan of Care for Inadequate Hemodialysis in ESRD Patients 0323 AMA-PCPI Registry

82 End Stage Renal Disease (ESRD): Plan of Care for Inadequate Peritoneal Dialysis 0321 AMA-PCPI Registry

83 Hepatitis C: Testing for Chronic Hepatitis C – Confirmation of Hepatitis C Viremia 0393 AMA-PCPI Registry

84 Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating Treatment 0395 AMA-PCPI Claims, Registry, 85 Hepatitis C: HCV Genotype Testing Prior to Treatment 0396 AMA-PCPI Claims, Registry 86 Hepatitis C: Antiviral Treatment Prescribed 0397 AMA-PCPI Claims, Registry 87 Hepatitis C: HCV Ribonucleic Acid (RNA) Testing at Week 12 of Treatment 0398 AMA-PCPI Claims, Registry 89 Hepatitis C: Counseling Regarding Risk of Alcohol Consumption 0401 AMA-PCPI Claims, Registry 90 Hepatitis C: Counseling Regarding Use of Contraception Prior to Antiviral Therapy 0394 AMA-PCPI Claims, RegistryCMS-1524-P 344

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism 91 Acute Otitis Externa (AOE): Topical Therapy 0653 AMA-PCPI Claims, Registry 92 Acute Otitis Externa (AOE): Pain Assessment N/A AMA-PCPI Claims, Registry 93 Acute Otitis Externa (AOE): Systemic Antimicrobial Therapy – Avoidance of Inappropriate Use 0654 AMA-PCPI Claims, Registry

94 Otitis Media with Effusion (OME): Diagnostic Evaluation – Assessment of Tympanic Membrane Mobility N/A AMA-PCPI Claims, Registry

99 Breast Cancer Resection Pathology Reporting: pT Category (Primary Tumor) and pN Category (Regional Lymph Nodes) with Histologic Grade 0391 AMA-PCPI/CAP Claims, Registry

100 Colorectal Cancer Resection Pathology Reporting: pT Category (Primary Tumor) and pN Category (Regional Lymph Nodes) with Histologic Grade 0392 AMA-PCPI/CAP Claims, Registry

102 Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low-Risk Prostate Cancer Patients 0389 AMA-PCPI Claims, Registry 104 Prostate Cancer: Adjuvant Hormonal Therapy for High-Risk Prostate Cancer Patients 0390 AMA-PCPI Claims, Registry 105 Prostate Cancer: Three-Dimensional (3D) Radiotherapy 0388 AMA-PCPI Claims, Registry 106 Major Depressive Disorder (MDD): Diagnostic Evaluation 0103 AMA-PCPI Claims, Registry 107 Major Depressive Disorder (MDD): Suicide Risk Assessment 0104 AMA-PCPI Claims, Registry 108 Rheumatoid Arthritis (RA): Disease Modifying Anti-Rheumatic Drug (DMARD) Therapy 0054 NCQA Claims, Registry 109 Osteoarthritis (OA): Function and Pain Assessment 0050 AMA-PCPI Claims, Registry 110 Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old 0041 AMA-PCPI Claims, Registry 111 Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older 0043 NCQA Claims, Registry 112 Preventive Care and Screening: Screening Mammography 0031 NCQA Claims, Registry

113 Preventive Care and Screening: Colorectal Cancer Screening 0034 NCQA Claims, Registry

116 Antibiotic Treatment for Adults with Acute Bronchitis: Avoidance of Inappropriate Use 0058 NCQA Claims, Registry 117 Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient 0055 NCQA Claims, Registry

118 Coronary Artery Disease (CAD): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left Ventricular Systolic Dysfunction (LVSD) 0066 AMA-PCPI Registry

119 Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic Patients 0062 NCQA Claims, RegistryCMS-1524-P 345

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism

121 Chronic Kidney Disease (CKD): Laboratory Testing (Calcium, Phosphorus, Intact Parathyroid Hormone (iPTH) and Lipid Profile) N/A AMA-PCPI Claims, Registry

122 Chronic Kidney Disease (CKD): Blood Pressure Management AQA adopted AMA-PCPI Claims, Registry

123 Chronic Kidney Disease (C KD): Plan of Care – Elevated Hemoglobin fo r Patients Receiving Erythropoiesis-Stimulating Agents (ESA) AQA adopted AMA-PCPI Claims, Registry

124 Health Information Technology (HIT): Adoption/Use of Electronic Health Records (EHR) 0488 CMS/QIP Claims, Registry 126 Diabetes Mellitus: Diabetic Foot and Ankle Care, Peripheral Neuropathy

– Neurological Evaluation 0417 APMA Claims, Registry 127 Diabetes Mellitus: Diabetic Foot and Ankle Care, Ulcer Prevention

– Evaluation of Footwear 0416 APMA Claims, Registry

128 Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-Up 0421 CMS/QIP Claims, Registry

130 Documentation of Current Medications in the Medical Record 0419 CMS/QIP Claims, Registry 131 Pain Assessment Prior to Initiation of Patient Therapy and Follow-Up 0420 CMS/QIP Claims, Registry 134 Screening for Clinical Depression and Follow-Up Plan 0418 CMS/QIP Claims, Registry 135 Chronic Kidney Diseas e (CKD): Influenza Immunization AQA adopted AMA-PCPI Claims, Registry 137 Melanoma: Continuity of Care – Recall System 0650 AMA-PCPI/NCQA Registry 138 Melanoma: Coordination of Care 0561 AMA-PCPI/NCQA Registry 140 Age-Related Macular Degeneration (AMD): Counseling on Antioxidant Supplement 0566 AMA-PCPI/NCQA Claims, Registry

141 Primary Open-Angle Glauco ma (POAG): Reduction of Intraocular Pressure (IOP) by 15% OR Documentation of a Plan of Care 0563 AMA-PCPI/NCQA Claims, Registry

142 Osteoarthritis (OA): Assessment for Use of Anti-Inflammatory or Analgesic Over-the-Counter (OTC) Medications 0051 AMA-PCPI Claims, Registry

143 Oncology: Medical and Radiation – Pain Intensity Quantified 0384 AMA-PCPI Registry

144 Oncology: Medical and Radiation – Plan of Care for Pain 0383 AMA-PCPI Registry

145 Radiology: Exposure Time Reported for Procedures Using Fluoroscopy 0510 AMA-PCPI/NCQA Claims, Registry 146 Radiology: Inappropriate Use of "Probably Benign" Assessment Category in Mammography Screening 0508 AMA-PCPI/NCQA Claims, Registry 147 Nuclear Medicine: Correlation with Existing Imaging Studies for All Patients Undergoing Bone Scintigraphy 0511 AMA-PCPI Claims, Registry 153 Chronic Kidney Disease (CKD): Referral for Arteriovenous (AV) Fistula AQA adopted AMA-PCPI Claims, Registry 154 Falls: Risk Assessment AQA adopted AMA-PCPI/NCQA Claims, RegistryCMS-1524-P 346

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism 155 Falls: Plan of Care AQA adopted AMA-PCPI/NCQA Claims, Registry 156 Oncology: Radiation Dose Limits to Normal Tissues 0382 AMA-PCPI Claims, Registry 157 Thoracic Surgery: Recording of Clinical Stage for Lung Cancer and Esophageal Cancer Resection 0455 STS Claims, Registry 158 Carotid Endarterectomy: Use of Patch During Conventional Carotid Endarterectomy 0466 SVS Claims, Registry 159 HIV/AIDS: CD4+ Cell Count or CD4+ Percentage 0404 AMA-PCPI/NCQA Registry 160 HIV/AIDS: Pneumocystis Ji roveci Pneumonia (PCP) Prophylaxis 0405 AMA-PCPI/NCQA Registry

161 HIV/AIDS: Adolescent and Adult Patients with HIV/AIDS Who Are Prescribed Potent Antiretroviral Therapy 0406 AMA-PCPI/NCQA Registry

162 HIV/AIDS: HIV RNA Control After Six Months of Potent Antiretroviral Therapy 0407 AMA-PCPI/NCQA Registry 163 Diabetes Mellitus: Foot Exam 0056 NCQA Claims, Registry 164 Coronary Artery Bypass Graft (CABG): Prolonged Intubation (Ventilation) 0129 STS Registry

165 Coronary Artery Bypass Graft (CABG): Deep Sternal Wound Infection Rate 0130 STS Registry

166 Coronary Artery Bypass Graft (CABG): Stroke/Cerebrovascular Accident (CVA) 0131 STS Registry

167 Coronary Artery Bypass Graft (CABG): Postoperative Renal Insufficiency 0114 STS Registry

168 Coronary Artery Bypass Graft (CABG): Surgical Re-exploration 0115 STS Registry

169 Coronary Artery Bypass Graft (CABG): Antiplatelet Medications at Discharge 0237 STS Registry

170 Coronary Artery Bypass Graft (CABG): Beta-Blockers Administered at Discharge 0238 STS Registry

171 Coronary Artery Bypass Graft (CABG): Lipid Management and Counseling 0118 STS Registry

172 Hemodialysis Vascular A ccess Decision-Making by Surgeon to Maximize Placement of Autogenous Arterial Venous (AV) Fistula 0259 SVS Claims, Registry

173 Preventive Care and Screening: Unhealthy Alcohol Use – Screening AQA adopted AMA-PCPI Claims, Registry 175 Pediatric End Stage Renal Disease (ESRD): Influenza Immunization AQA adopted AMA-PCPI Claims, Registry 176 Rheumatoid Arthritis (RA): Tuberculosis Screening AQA adopted AMA-PCPI/NCQA Claims, Registry 177 Rheumatoid Arthritis (RA): Periodic Assessment of Disease Activity AQA adopted AMA-PCPI/NCQA Claims, Registry 178 Rheumatoid Arthritis (RA): Functional Status Assessment AQA adopted AMA-PCPI/NCQA Claims, Registry 179 Rheumatoid Arthritis (RA): Assessment and Classification of Di sease Prognosis AQA adopted AMA-PCPI/NCQA Claims, RegistryCMS-1524-P 347

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism 180 Rheumatoid Arthritis (RA): Glucocorticoid Management AQA adopted AMA-PCPI/NCQA Claims, Registry 181 Elder Maltreatment Screen and Follow-Up Plan AQA adopted CMS/QIP Claims, Registry 182 Functional Outcome Assessment in Chiropractic Care AQA adopted CMS/QIP Claims, Registry 183 Hepatitis C: Hepatitis A Vaccination in Patients with HCV 0399 AMA-PCPI Claims, Registry 184 Hepatitis C: Hepatitis B Vaccination in Patients with HCV 0400 AMA-PCPI Claims, Registry

185 Endoscopy & Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps – Avoidance of Inappropriate Use 0659 AMA-PCPI/NCQA Claims, Registry

186 Wound Care: Use of Compression System in Patients with Venous Ulcers AQA adopted AMA-PCPI/NCQA Claims, Registry 187 Stroke and Stroke Rehabilitation: Thrombolytic Therapy 0437 AHA/ASA/TJC Registry 188 Referral for Otologic Evaluation for Patients with Congenital or Traumatic Deformity of the Ear N/A AQC Claims, Registry

189 Referral for Otologic Evaluation for Patients with History of Active Drainage From the Ear Within the Previous 90 Days N/A AQC Claims, Registry

190 Referral for Otologic Evaluation for Patients with a History of Sudden or Rapidly Progressive Hearing Loss N/A AQC Claims, Registry 191 Cataracts: 20/40 or Better Visual Acuity Within 90 Days Following Cataract Surgery 0565 AMA-PCPI/NCQA Registry

192 Cataracts: Complications within 30 Days Following Cataract Surgery Requiring Additional Surgical Procedures 0564 AMA-PCPI/NCQA Registry

193 Perioperative Temperature Management 0454 AMA-PCPI Claims, Registry 194 Oncology: Cancer Stage Documented 0386 AMA-PCPI/ASCO Claims, Registry 195 Radiology: Stenosis Measurement in Carotid Imaging Studies 0507 AMA-PCPI/NCQA Claims, Registry 196 Coronary Artery Disease (CAD): Symptom and Activity Assessment 0065 AMA-PCPI Registry 197 Coronary Artery Disease (CAD): Lipid Control 0074 AMA-PCPI Registry 198 Heart Failure: Left Ventricular Function (LVF) Assessment 0079 AMA-PCPI Registry 199 Heart Failure: Patient Education 0082 AMA-PCPI Registry 200 Heart Failure: Warfarin Therap y for Patients with Atrial Fibrillation 0084 AMA-PCPI Registry

201 Ischemic Vascular Disease (IVD): Blood Pressure Management Control 0073 NCQA Claims, Registry 202 Ischemic Vascular Disease (IVD): Complete Lipid Profile 0075 NCQA Claims, Registry 203 Ischemic Vascular Disease (IVD): Low Density Lipoprotein (LDL–C) Control 0075 NCQA Claims, RegistryCMS-1524-P 348

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism 204 Ischemic Vascular Disease (IVD): Use of Aspirin or Another Antithrombotic 0068 NCQA Claims, Registry 205 HIV/AIDS: Sexually Transmitted Disease Screening for Chlamydia and Gonorrhea 0409 AMA-PCPI/NCQA Registry 206 HIV/AIDS: Screening for High Risk Sexual Behaviors 0413 AMA-PCPI/NCQA Registry 207 HIV/AIDS: Screening for Injection Dr ug Use 0415 AMA-PCPI/NCQA Registry 208 HIV/AIDS: Sexually Transmitted Disease Screening for Syphilis 0410 AMA-PCPI/NCQA Registry

209 Functional Communication Measure - Spoken Language Comprehension 0445 ASHA Registry 210 Functional Communication Measure - Attention 0449 ASHA Registry 211 Functional Communication Measure - Memory 0448 ASHA Registry 212 Functional Communicati on Measure - Motor Speech 0447 ASHA Registry 213 Functional Communication Measure - Reading 0446 ASHA Registry 214 Functional Communication Measure - Spoken Language Expression 0444 ASHA Registry 215 Functional Communication Measure - Writing 0442 ASHA Registry 216 Functional Communication Measure - Swallowing 0443 ASHA Registry 217 Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Knee Impairments 0422 FOTO Registry

218 Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Hip Impairments 0423 FOTO Registry

219 Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Lower Leg, Foot or Ankle Impairments 0424 FOTO Registry

220 Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Lumbar Spine Impairments 0425 FOTO Registry

221 Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Shoulder Impairments 0426 FOTO Registry

222 Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Elbow, Wrist or Hand Impairments 0427 FOTO Registry

223 Functional Deficit: Change in Risk-Adjusted Functional Status for Patients with Neck, Cranium, Mandible, Thoracic Spine, Ribs, or Other General Orthopedic Impairments 0428 FOTO Registry

224 Melanoma: Overutilization of Imaging Studies in Stage 0-IA Melanoma 0562 AMA-PCPI Registry 225 Radiology: Reminder System for Mammograms 0509 AMA-PCPI Claims, Registry 226 Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention 0028 AMA-PCPI Claims, Registry 228 Heart Failure (HF): Left Ventricular Function (LVF) Testing 0079 CMS Registry

231 Asthma: Tobacco Use: Screening - Ambulatory Care Setting N/A AMA-PCPI Claims, Registry 232 Asthma: Tobacco Use: Intervention - Ambulatory Care Setting N/A AMA-PCPI Claims, RegistryCMS-1524-P 349

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism 233 Thoracic Surgery: Recordin g of Performance Status Prior to Lung or Esophageal Cancer Resection 0457 STS Registry

234 Thoracic Surgery: Pulmonary Function Tests Before Major Anatomic Lung Resection (Pneumonectomy, Lobectomy, or Formal Segmentectomy) 0458 STS Registry

235 Hypertension (HTN): Plan of Care 0017 AMA-PCPI Claims, Registry TBD Chronic Wound Care: Use of Wound Surface Culture Technique in Patients with Chronic Skin Ulcers N/A ASPS-PCPI-NCQA Claims, Registry TBD Chronic Wound Care: Use of Wet to Dry Dressings in Patients with Chronic Skin Ulcers N/A ASPS-PCPI-NCQA Claims, Registry

TBD Substance Use Disorders: Counseling Regarding Psychosocial and Pharmacolo gic Treatment Options for Alcohol Dependence AQA adopted ASPS-PCPI-NCQA Claims, Registry

TBD Substance Use Disorders: Screening for Depression Among Patients with Substance Abuse or Dependence AQA adopted ASPS-PCPI-NCQA Claims, Registry TBD Coronary Artery Disease (CAD): Symptom Management N/A ASPS-PCPI-NCQA Registry

TBD Cardiac Rehabilitation Patient Referral From an Outpatient Setting N/A ACCF-AHA Registry TBD Hypertension: Blood Pressure Control N/A ACC-AHA-PCPI Registry TBD Barrett's Esophagus N/A CAP Claims, Registry TBD Radical Prostatectomy Pathology Reporting N/A CAP Claims, Registry

TBD Immunohistochemical (IHC) Evaluation of HER2 for Breast Cancer Patients N/A College of American Pathologists Claims, Registry TBD Anticoagulation for Acute Pulmonary Embolus Patients 0503 ACEP Claims, Registry TBD Pregnancy Test for Female Abdominal Pain Patients 0502 ACEP Claims, Registry TBD Ultrasound Determination of Pregnancy Location for Pregnant Patients with Abdominal Pain N/A ACEP Claims, Registry TBD Rh Immunoglobulin (Rhogam) for Rh Negative Pregnant Women at Risk of Fetal Blood Exposure N/A ACEP Registry

TBD Surveillance after Endovascular Abdominal Aortic Aneurysm Repair (EVAR N/A SVS Registry

TBD Statin Therapy at Discharge after Lower Extremity Bypass (LEB) N/A SVS Registry

TBD Rate of Open AAA Repair without Major Complications (discharged to home no later than post-operative day #7) N/A SVS Registry

TBD Rate of EVAR without Major Complications (discharged to home no later than POD #2) N/A SVS Registry

TBD Rate of Carotid Endarterectomy for Asymptomatic Patients, without Major Complications (discharged to home no later than post-operative day #2) N/A SVS Registry

TBD Referral for Otology Evaluation for Patients with Acute or Chronic Dizziness N/A AQC Claims, RegistryCMS-1524-P 350

Physician

Quality Reporting

System Measure Number Measure Title NQF Measure Number Measure Developer Reporting Mechanism TBD Image Confirmation of Succes sful Excision of Image– Localized Breast Lesion N/A ASBS Claims, Registry TBD Preoperative Diagnosis of Breast Cancer N/A ASBS Claims, Registry TBD Sentinel Lymph Node Biopsy for Invasive Breast Cancer N/A ASBS Registry TBD Biopsy Follow-up N/A AAD Registry TBD Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery N/A AAO Registry

TBD Patient Satisfaction within 90 Days Following Cataract Surgery N/A AAO Registry

(C) Proposed 2012 Measures Available for EHR-based Reporting For 2012, we propose to again accept Physic ian Quality Reporting System data from EHRs for a limited subset of 2012 Physician Quality Reporting System quality measures. Section 1848(m)(7) of the Act ("Integrat ion of Physician Quality Reporting and EHR Reporting"), as added by section 3002(d) of the Affordable Care Act, requires that by no later than January 1, 2012, the Secretary sh all develop a plan to integrate reporting on quality measures under the Physician Quality Reporting System with reporting requirements under the EHR Incentive Program under section 1848(o) of the Act relating to the meaningful use of EHRs. Such in tegration shall consist of the following: (A) The selection of measures, the re porting of which would both demonstrate— (i) Meaningful use of an EHR for purposes of the Medicare EHR Incentive Program; and (ii) Quality of care furnis hed to an individual; and (B) Such other activities as specified by the Secretary

. To align the Physician Quality Repor ting System with the Medicare EHR Incentive Program, we propose to include all clinical quality meas ures available forCMS-1524-P 351

reporting under the Medicare EHR Incentiv e Program (75 FR 44398 through 44408) in the EHR-based reporting option in the 2012 Physician Quality Reporting System for purposes of reporting data on quality measur es under the EHR-reporting option. In 2011,

we included 14 of the 44 EHR Incentive Pr ogram measures under the 2011 Physician Quality Reporting System EHR reporting mechanism. In order to better align Physician Quality Reporting System measures with those under the EHR Incentive Program, for 2012, we propose to have the rest of the 44 cl inical quality measures in the Medicare EHR Incentive Program available for EHR- based reporting under the 2012 Physician Quality Reporting System. Furthermore, for 2012, we propose to retain the following 6 additional measures that were available for reporting under th e EHR-based reporting mechanism under the 2011 Physician Quality Reporting System:

● Measure # 39: Screening or Thera py for Osteoporosis for Women Aged 65

Years and Older.

● Measure # 47: Advance Care Plan.

● Measure # 48: Urinary Incontinence: Assessment of Presence or Absence of Urinary Incontinence in Wome n Aged 65 Years and Older.

● Measure # 124: Health Informati on Technology (HIT): Adoption/Use of Electronic Health Records (EHR).

● Measure # 173: Preventive Care and Screening: Unhealthy Alcohol Use – Screening.

● Measure # 238: Drugs to be Avoided in the Elderly. We believe these measures meet the criteria listed previously for inclusion forCMS-1524-P 352

reporting under the Physician Quality Reporting System.

Table 31 identifies the list of measures we propose to include for EHR-based reporting under the 2012 Physician Quality Reporting System.

TABLE 31: PROPOSED 2012 PHYSIC IAN QUALITY REPORTING SYSTEM MEASURES AVAILABLE FOR EHR-BASED REPORTING Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

MEASURES THAT ARE ALSO EHR INCENTIVE PROGRAM CORE MEASURES 128 Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-up* 0421 CMS/QIP 237 Hypertension (HTN): Blood Pressure Measurement 0013 AMA-PCPI 226 Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention** 0028 AMA-PCPI

MEASURES THAT ARE ALSO EHR INCENTIVE PROGRAM ALTERNATE CORE MEASURES 110 Preventative Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old 0041 AMA-PCPI 239 Weight Assessment and C ounseling for Children and Adolescents 0024 NCQA TBD Childhood Immunization Status 0038 NCQA MEASURES THAT ARE ALSO EHR INCENTIVE PROGRAM MEASURES 1 Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus 0059 NCQA 2 Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus 0064 NCQA 3 Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus 0061 NCQA 5 Heart Failure: Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0081 AMA-PCPI

6 Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CAD 0067 AMA-PCPI 7 Coronary Artery Disease (CAD): Beta-Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI) 0070 AMA-PCPI

8 Heart Failure (HF): Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0083 AMA-PCPI 9 Anti-depressant medication management: (a) Effective Acute Phase Treatment, (b) Effective Continuation Phase Treatment 0105 NCQA

12 Primary Open Angle Glaucoma (POAG): Optic Nerve Evaluation 0086 AMA-PCPI 18 Diabetic Retinopathy: Documentation of Presence or 0088 AMA-PCPICMS-1524-P 353

Absence of Macular Edema and Level of Severity of Retinopathy 19 Diabetic Retinopathy: Communication with the Physician Managing Ongoing Diabetes Care 0089 AMA-PCPI 53 Asthma Pharmacologic 0047 AMA-PCPI 64 Asthma Assessment 0001 AMA-PCPI 66 Appropriate Testing for Children with Pharyngitis 0002 NCQA 71 Oncology Breast Cancer: Hormonal Therapy for Stage IC-IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast Cancer 0387 AMA-PCPI

72 Oncology Colon Cancer: Chemotherapy for Stage III Colon Cancer Patients 0385 AMA-PCPI

102 Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low Risk Prostate Cancer Patients 0389 AMA-PCPI

111 Preventive Care and Screening: Screening Mammography 0043 NCQA

112 Preventive Care and Screening: Colorectal Cancer Screening 0031 NCQA 113 Colorectal Cancer Screening 0034 NCQA 114 & 115 Smoking and Tobacco Use Cessation, Medical Assistance: a. Advising Smokers to Quit, b. Discussing Smoking and Tobacco Use Cessation Medications, c. Discussing Smoking and Tobacco Use Cessation Strategies 0027 NCQA

117 Diabetes: Eye Exam 0055 AMA-PCPI 119 Diabetes: Urine Screening 0062 NCQA 163 Diabetes: Foot Exam 0056 NCQA 197 Coronary Artery Disease (CAD): Lipid Control 0074 AMA-PCPI 200 Heart Failure: Warfarin Therapy Patients with Atrial Fibrillation 0084 AMA-PCPI 201 Ischemic Vascular Disease (IVD): Blood Pressure Management 0073 NCQA 204 Ischemic Vascular Disease (IVD): Use of Aspirin or Another Antithrombotic 0068 NCQA TBD Initiation and Engagement of Alcohol and Other Drug Dependence Treatment: (a) Initiation, (b) Engagement 0004 NCQA

TBD Prenatal Care: Screening for Human Immunodeficiency Virus (HIV) 0012 AMA-PCPI

TBD Prenatal Care: Anti-D I mmune Globulin 0014 AMA-PCPI 236 Controlling High Blood Pressure 0018 NCQA TBD Cervical Cancer Screening 0032 NCQA TBD Chlamydia Screening for Women 0033 NCQA 240 Use of Appropriate Medications for Asthma 0036 NCQACMS-1524-P 354

TBD Low Back Pain: Use of Imaging Studies 0052 NCQA 202 & 203 Ischemic Vascular Disease (IVD): Complete Lipid Panel and LDL Control 0075 NCQA TBD Diabetes: Hemoglobin A 1 c Control (<8.0%) 0575 NCQA OTHER PHYSICIAN QUALITY REPORTING SYSTEM EHR MEASURES 39 Screening or Therapy for Osteoporosis for Women Aged 65 Years and Older 0046 AMA-PCPI/NCQA 47 Advance Care Plan 0326 AMA-PCPI/NCQA 48 Urinary Incontinence: Assessment of Presence or Absence of Urinary Incont inence in Women Aged 65 Years and Older 0098 AMA-PCPI/NCQA

124 Health Information Technology (HIT): Adoption/Use of Electronic Health Records (EHR) 0488 CMS/QIP 173 Preventive Care and Screening: Unhealthy Alcohol Use – Screening AQA Adopted AMA-PCPI 238 Drugs to be Avoided in the Elderly 0022 NCQA * For the purpose of reporting this measure under the Physician Quality Reporting System, the reporting of this measure will count if at least one of the two pa rameters does not contain a 0 percent performance rate. ** For the purpose of reporting this measure under the Physician Quality Reporting System, the reporting of this measure will count if at least one of the tw o pairs does not contain a 0 percent performance rate. (4) 2012 Physician Quality Repor ting System Measures Groups We propose to retain the following 14 2011 Physician Quality Reporting System measures groups for the 2012 Physician Qu ality 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; (13) CA P, and (14) Asthma. For 2012, we propose that the CABG, CAD, Heart Failure, and HIV/AIDS measures groups would continue to be reportable through the registry-based reporting mechanism only, while the remaining Diabetes Mellitus, CKD, Preventive Care, Rheumatoid Arthritis, Perioperative Care, Back Pain, IVD, Hepatitis C, CAP, and Asthma measures groups would continue to be reportable through either claims-based reporting or registry-based reporting for the 2012 Physician Quality Reporting System. We are retaining these measures groups for the 2012 Physician Quality Reporting System particular ly because we believe the measures groupsCMS-1524-P 355

reflect the services furnished to beneficiarie s by a particular specia lty. We also believe that retaining these measures groups will pr ovide consistency from program year to

program year. In addition to the 14 measures groups previously, we propose the following 10 new measures groups for 2012 to provide elig ible professionals with more measures groups on which to report:

● Chronic Obstructive Pulmonary Disease (COPD).

● Inflammatory Bowel Disease.

● Sleep Apnea.

● Epilepsy.

● Dementia.

● Parkinson's.

● Elevated Blood Pressure.

● Radiology.

● Cardiovascular Prevention, which c ontains individual measures from the proposed Physician Quality Reporting System core measure set previously discussed.

● Cataracts. These are the measures groups that were presented to us for inclusion for reporting under the 2012 Physician Quality Re porting System. Sec tion 1848(k)(2)(C)(ii) of the Act provides an excepti on to the requirement that m easures be endorsed by the NQF. We may exercise this exception authorit y in a specified area or medical topic for which a feasible and practical measure ha s not been endorsed by NQF, so long as due consideration is give n to measures that have been endorsed by the NQF. For theCMS-1524-P 356

measures contained within these measures groups that are not currently NQF-endorsed, we are proposing to exercise this authority du e to our interest in all of the proposed 10 measures group's topics. We believe that each of the proposed additional measures groups address gaps in the Physician Quality Reporting System measures groups and will also allow for greater reporti ng options for individual eligib le professionals, thereby increasing participation in the P hysician Quality Reporting System. Finally, as in previous program years, for 2012, we propose that the measures included in any proposed 2012 measures gr oup be reportable either as individual measures or as part of a measures group, ex cept for the Back Pain measures group, which would continue to be reportable only as part of a measures group and not as individual

measures in 2012. As with measures group reporting in prio r program years, we propose that each eligible professional electi ng to report a group of measur es for 2012 must report all measures in the group that are applicable to each patient or encounter to which the measures group applies at le ast up to the minimum number of patients required by the applicable reporting criteria. The measures proposed for inclusion in each of the 2012 measures groups are identified in Tables 32 through 55 of this proposed rule. Some measures proposed for inclusion in the 2012 measures groups are also 2011 individual Physician Quality Reporting System measures. The title of each such measure is preceded with its Physician Quality Reporting System Measur e Number in Tables 32 through 55. As stated previously, the Physician Quality Re porting System Measure Number is a unique identifier assigned by us to all measures in the Physician Quality Reporting SystemCMS-1524-P 357

measure set. Once a Physician Quality Repor ting 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 se t. Measures that are not preceded by a number (in other words, those preceded by "TBD") in Tables 32 through 55 were never part of a Physician Quality Reporting System measure set prior to 2012. A number will be assigned to such measures for 2012.

TABLE 32: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 DIABETES ME LLITUS MEASURES GROUP Physician Quality Reporting System Number Measure Title NQF Measure Number Measure Developer

1 Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus 0059 NCQA

2 Diabetes Mellitus: Lo w Density Lipoprotein (LDL-C) Control in Diabetes Mellitus 0064 NCQA

3 Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus 0061 NCQA 117 Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient 0055 NCQA 119 Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic Patients 0062 NCQA

163 Diabetes Mellitus: Foot Exam 0056 NCQACMS-1524-P 358

TABLE 33: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 CKD MEASURES GROUP Physician Quality Reporting System Number Measure Title NQF Measure Number Measure Developer

121 Chronic Kidney Disease (CKD): Laboratory Testing (Calcium, Phosphorus, Intact Parathyroid Hormone (iPTH) and Lipid Profile) Not applicabl e AMA-PC PI

122 Chronic Kidney Disease (CKD): Blood Pressure Management AQA adopted AMA-PC PI 123 Chronic Kidney Disease (CKD): Plan of Care – Elevated Hemoglobin for Patients Receiving Erythropoiesis-Stimulating Agents (ESA) AQA adopted AMA-PC PI 153 Chronic Kidney Disease (CKD): Referral for Arteriovenous (AV) Fistula AQA adopted AMA-PC PI

TABLE 34: PROPOSED MEASURES IN CLUDED IN THE PROPOSED 2012 PREVENTATIVE CARE MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

39 Screening or Therapy for Osteoporosis for Women Aged 65 Years and Older 0046 AMA-PC PI/NCQA 48 Urinary Incontinence: Assessment of Presence or Absence of Urinary Incontinence in Women Aged 65 Years and Older 0098 AMA-PC PI/NCQA 110 Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old 0041 AMA-PC PI 111 Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older 0043 NCQA 112 Preventive Care and Screening: Screening Mammography 0031 NCQA

113 Preventive Care and Screening: Colorectal Cancer Screening 0034 NCQA 128 Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-Up 0421 CMS/QIP 173 Preventive Care and Screening: Unhealthy Alcohol Use – Screening AQA adopted AMA-PC PICMS-1524-P 359

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

226 Preventive Care and Screening: Tobacco Use: Screening and Cessa tion Intervention 0028 AMA-PC PI

TABLE 35: PROPOSED MEASURES IN CLUDED IN THE PROPOSED 2012 CABG MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

43 Coronary Artery Bypass Graft (CABG): Use of Internal Mammary Artery (IMA) in Patients with Isolated CABG Surgery 0516 STS

44 Coronary Artery Bypass Graft (CABG): Preoperative Beta-Blocker in Patients with Isolated CABG Surgery 0235 STS

164 Coronary Artery Bypass Graft (CABG): Prolonged Intubation (Ventilation) 0129 STS 165 Coronary Artery Bypass Graft (CABG): Deep Sternal Wound Infection Rate 0130 STS 166 Coronary Artery Bypass Graft (CABG): Stroke/Cerebrovascular Accident (CVA) 0131 STS 167 Coronary Artery Bypass Graft (CABG): Postoperative Renal Insufficiency 0114 STS 168 Coronary Artery Bypass Graft (CABG): Surgical Re-exploration 0115 STS 169 Coronary Artery Bypass Graft (CABG): Antiplatelet Medications at Discharge 0237 STS 170 Coronary Artery Bypass Graft (CABG): Beta-Blockers Administered at Discharge 0238 STS 171 Coronary Artery Bypass Graft (CABG): Lipid Management and Counseling 0118 STS

* This measures group is reportable through registry-based reporting only.CMS-1524-P 360

TABLE 36: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 RHEUMATOID ARTHRITIS MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

108 Rheumatoid Arthritis (RA): Disease Modifying Anti-Rheumatic Drug (DMARD) Therapy 0054 NCQA 176 Rheumatoid Arthritis (RA): Tuberculosis Screening AQA adopted AMA-PCP I/NCQA 177 Rheumatoid Arthritis (RA): Periodic Assessment of Disease Activity AQA adopted AMA-PCP I/NCQA 178 Rheumatoid Arthritis (RA): Functional Status Assessment AQA adopted AMA-PCP I/NCQA 179 Rheumatoid Arthritis (RA): Assessment and Classification of Disease Prognosis AQA adopted AMA-PCP I/NCQA 180 Rheumatoid Arthritis (RA): Glucocorticoid Management AQA adopted AMA-PCP I/NCQA

TABLE 37: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 PERIOPERATIVE CARE MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

20 Perioperative Care: Timing of Antibiotic Prophylaxis – Ordering Physician 0270 AMA-PCPI/NCQA 21 Perioperative Care: Selection of Prophylactic Antibiotic – First OR Second Generation Cephalosporin 0268 AMA-PCPI/NCQA

22 Perioperative Care: Discontinuation of Prophylactic Antibiotics (Non-Cardiac Procedures) 0271 AMA-PCPI/NCQA

23 Perioperative Care: Ve nous Thromboembolism (VTE) Prophylaxis (When Indicated in ALL Patients) 0239 AMA-PCPI/NCQACMS-1524-P 361

TABLE 38: PROPOSED MEAS URES INCLUDED IN THE 2012 PROPOSED BACK PAIN MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

148 Back Pain: Initial Visit 0322 NCQA 149 Back Pain: Physical Exam 0319 NCQA 150 Back Pain: Advice for Normal Activities 0315 NCQA 151 Back Pain: Advice Against Bed Rest 0313 NCQA

TABLE 39: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 CAD MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

6 Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CAD 0067 AMA-PCPI 196 Coronary Artery Disease (CAD): Symptom and Activity Assessment 0065 AMA-PCPI 197 Coronary Artery Disease (CAD): Lipid Control 0074 AMA-PCPI 226 Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention 0028 AMA-PCPI

* This measures group is reportable through registry-based reporting only.

TABLE 40: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 HEART FAILURE MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

5 Heart Failure: Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0081 AMA-PCPI

8 Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0083 AMA-PCPI 198 Heart Failure: Left Ventricular Function (LVF) Assessment 0079 AMA-PCPI

199 Heart Failure: Patient Education 0082 AMA-PCPI 226 Preventive Care and Screening: Tobacco Use: 0028 AMA-PCPICMS-1524-P 362

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

Screening and Cessation Intervention * This measures group is reportable through registry-based reporting only.

TABLE 41: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 IVD MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

201 Ischemic Vascular Disease (IVD): Blood Pressure Management Control 0073 NCQA 202 Ischemic Vascular Disease (IVD): Complete Lipid Profile 0075 NCQA 203 Ischemic Vascular Disease (IVD): Low Density Lipoprotein (LDL-C) Control 0075 NCQA 204 Ischemic Vascular Disease (IVD): Use of Aspirin or Another Antithrombotic 0068 NCQA 226 Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention 0028 AMA-PCPI

TABLE42: PROPOSED MEASURES INCLUDED IN THE

PROPOSED 2012 HEPATITIS C MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

84 Hepatitis C: Ribonucleic Acid (RNA) Testing Before Initiating Treatment 0395 AMA-PCP I 85 Hepatitis C: HCV Genotype Testing Prior to Treatment 0396 AMA-PCP I 86 Hepatitis C: Antiviral Treatment Prescribed 0397 AMA-PCP I 87 Hepatitis C: HCV Ribonucleic Acid (RNA) Testing at Week 12 of Treatment 0398 AMA-PCP I 89 Hepatitis C: Counseling Regarding Risk of Alcohol Consumption 0401 AMA-PCP I 90 Hepatitis C: Counseling Regarding Use of Contraception Prior to Antiviral Therapy 0394 AMA-PCP I 183 Hepatitis C: Hepatitis A Vaccination in Patients 0399 AMA-PCPCMS-1524-P 363

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

with HCV I 184 Hepatitis C: Hepatitis B Vaccination in Patients with HCV 0400 AMA-PCP I

TABLE 43: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 HIV/AIDS MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

159 HIV/AIDS: CD4+ Cell Count or CD4+ Percentage 0404 AMA-PCP I/NCQA 160 HIV/AIDS: Pneumocystis Jiroveci Pneumonia (PCP) Prophylaxis 0405 AMA-PCP I/NCQA 161 HIV/AIDS: Adolescent and Adult Patients with HIV/AIDS Who Are Prescribed Potent Antiretroviral Therapy 0406 AMA-PCP I/NCQA

162 HIV/AIDS: HIV RNA Control After Six Months of Potent Antiretroviral Therapy 0407 AMA-PCP I/NCQA 205 HIV/AIDS: Sexually Transmitted Disease Screening for Chlamydia and Gonorrhea 0409 AMA-PCP I/NCQA 206 HIV/AIDS: Screening for High Risk Sexual Behaviors 0413 AMA-PCP I/NCQA 207 HIV/AIDS: Screening for Injection Drug Use 0415 AMA-PCP I/NCQA 208 HIV/AIDS: Sexually Transmitted Disease Screening for Syphilis 0410 AMA-PCP I/NCQA * This measures group is selected to be repor table through registry-based reporting only.

TABLE 44: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 CAP MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

56 Community-Acquired Pneumonia (CAP): Vital Signs 0232 AMA-PCPI/NCQA 57 Community-Acquired Pneumonia (CAP): Assessment of Oxygen Saturation 0094 AMA-PCPI/NCQA 58 Community-Acquired Pneumonia (CAP): 0234 AMA-PCPI/NCQACMS-1524-P 364

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

Assessment of Mental Status 59 Community-Acquired Pneumonia (CAP): Empiric Antibiotic 0096 AMA-PCPI/NCQA

TABLE 45: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 ASTHMA MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

53 Asthma: Pharmacologic Therapy 0047 AMA-PCPI 64 Asthma: Asthma Assessment 0001 AMA-PCPI 231 Asthma: Tobacco Use: Screening – Ambulatory Setting N/A AMA-PCPI 232 Asthma: Tobacco Use: Intervention – Ambulatory Screening N/A AMA-PCPI

TABLE 46: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 COPD MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

110 Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old 0041 AMA-PCPI

111 Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older 0043 AMA-PCPI 51 Chronic Obstructive Pulmonary Disease (COPD): Spirometry Evaluation 0091 AMA-PCPI 52 Chronic Obstructive Pulmonary Disease (COPD): Bronchodilator Therapy 0102 AMA-PCPI 226 Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention 0028 AMA-PCPICMS-1524-P 365

TABLE 47: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 IBD MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

TBD Inflammatory Bowel Dis ease (IBD): Assessment of Inflammatory Bowel Disease Activity and Severity N/A AGA/AM A-PCPI TBD Inflammatory Bowel Di sease (IBD): Preventive Care: Steroid Sparing Therapy N/A AGA/AM A-PCPI TBD Inflammatory Bowel Disease (IBD): Preventive Care: Steroid Related Iatrogenic Injury – Bone Loss Assessment N/A AGA/AM A-PCPI TBD Inflammatory Bowel Disease (IBD): Preventive Care: Influenza Immunization N/A AGA/AM A-PCPI TBD Inflammatory Bowel Disease (IBD): Preventive Care: Pneumococcal Immunization N/A AGA/AM A-PCPI TBD Inflammatory Bowel Di sease (IBD): Screening for Latent TB Before Initiating Anti-TNF Therapy N/A AGA/AM A-PCPI TBD Inflammatory Bowel Disease (IBD): Hepatitis B Assessment Before Initiating Anti-TNF Therapy N/A AGA/AM A-PCPI 226 Preventative Care and Screening: Tobacco Use; Screening and Cessation Intervention 0028 AMA-PCP I * This measures group is reportable thought registry-based reporting only.

TABLE 48: PROPOSED MEASURES INCLUDED IN THE

PROPOSED 2012 SLEEP APNEA MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measur e Numbe r Measure Developer

TBD Assessment of Sleep Symptoms N/A AMA/PCPI/AASM TBD Severity Assessment at Initial Diagnosis N/A AMA/PCPI/AASM TBD Positive Airway Pressure Ther apy Prescribed N/A AMA/PCPI/AASM TBD Assessment of Adherence to Positive Airway Pressure Therapy N/A AMA/PCPI/AASM * This measures group is reportable thought registry-based reporting only.CMS-1524-P 366

TABLE 49: PROPOSED MEASURES IN THE PROPOSED 2012 EPILEPSY MEASURES GROUP Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

TBD Seizure Type(s) and Current Seizure Frequency(ies) N/A AAN/AMA-PCPI TBD Documentation of Etiology of Epilepsy or Epilepsy Syndrome N/A AAN/AMA-PCPI TBD Querying and Counseling about Anti-Epileptic Drug (AED) Side-Effects N/A AAN/AMA-PCPI TBD Counseling about Epilepsy Specific Safety Issues N/A AAN/AMA-PCPI TBD Counseling for Women of Childbearing Potential with Epilepsy N/A AAN/AMA-PCPI

TABLE 50: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 DEMENTIA MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

TBD Dementia: Staging of Dementia

N/A AAN/AGS/ AMDA/APA/ AMA-PCPI TBD Dementia: Cognitive Assessment

N/A AAN/AGS/AMD A/APA/ AMA-PCPI TBD Dementia: Functional Status Assessment

N/A AAN/AGS/ AMDA/APA/ AMA-PCPI TBD Dementia: Neuropsychiatric Symptom Assessment

N/A AAN/AGS/ AMDA/APA/ AMA-PCPI TBD Dementia: Management of Neuropsychiatric Symptoms

N/A AAN/AGS/ AMDA/APA/ AMA-PCPI TBD Dementia: Screening for Depressive Symptoms

N/A AAN/AGS/ AMDA/APA/ AMA-PCPI TBD Dementia: Counseling Regarding Safety Concerns

N/A AAN/AGS/ AMDA/APA/ AMA-PCPI TBD Dementia: Counseling Regarding Risks of Driving

N/A AAN/AGS/ AMDA/APA/ AMA-PCPI TBD Dementia: Caregiver Education and Support N/A AAN/AGS/ AMDA/APA/CMS-1524-P 367

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

AMA-PCPI * This measures group is reportable thought registry-based reporting only.

TABLE 51: PROPOSED MEASURES INCLUDED IN THE

PROPOSED 2012 PARKINSON'S MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

TBD Annual Parkinson's Disease Diagnosis Review N/A AAN TBD Psychiatric Disorders or Disturbances Assessment N/A AAN TBD Cognitive Impairment or Dysfunction Assessment N/A AAN TBD Querying about Sleep Disturbances N/A AAN TBD Parkinson's Disease Rehabilitative Therapy Options N/A AAN TBD Parkinson's Disease Related Safety Issues Counseling N/A AAN TBD Parkinson's Disease Medical and Surgical Treatment Options Reviewed N/A AAN * This measures group is reportable thought registry-based reporting only.

TABLE 52: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 ELEVATED BLOOD PREASSURE MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

TBD Aspirin or Other Anti-Platelet or Anti-Coagulant Therapy N/A ABIM TBD Complete Lipid Profile N/A ABIM TBD Urine Protein Test N/A ABIM TBD Annual Serum Creatinine Test N/A ABIM TBD Diabetes Documentation or Screen Test N/A ABIM TBD Counseling for Diet and Physical Activity N/A ABIM TBD Blood Pressure Control N/A ABIM TBD LDL Control N/A ABIM TBD Overall Hypertension Care Satisfaction N/A ABIM TBD Patient Self-care Support N/A ABIM * This measures group is reportable thought registry-based reporting only.CMS-1524-P 368

TABLE 53: PROPOSED MEASURES INCLUDED IN THE

PROPOSED 2012 RADIOLOGY MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

TBD Reporting to a Radiation Dose Index Registry N/A TBD Cumulative Count of Potential High Dose Radiation Imaging Studies: CT Scans and Cardiac Nuclear Medicine Scans N/A ABMS/AB R/ACR/PCP I TBD Utilization of a Standardized Nomenclature for CT Imaging Description N/A ABR TBD Appropriateness: Follow-up CT Imaging for Incidental Pulmonary Nodules According to Recommended Guidelines N/A ABR TBD Overuse: Abdomen, Pelvis or Combined Abdomen/Pelvies CT Studies N/A ABR TBD Equipment Evaluatoin for Pediatric CT Imaging Protocols N/A ABR TBD Utilization of Pediatric CT Imaging Protocols N/A ABR TBD Search for Prior Imagi ng Studies through a Secure, Authorized Media-Free Shared Archive N/A ABR TBD Images Available for Patient Follow-up and Comparison Purposes N/A ABR TBD Exposure Time Reported for Procedures Using Fluoroscopy N/A PCPI/ACR/ NCQA * This measures group is reportable thought registry-based reporting only.

TABLE 54: PROPOSED MEASURES INCLUDED IN THE PROPOSED 2012 CARDIOVASCULAR PREVENTION MEASURES GROUP Physician

Quality Reporting

System Measure Title NQF Measure Number Measure Developer

204 Ischemic Vascular Disease (IVD): Use of Aspirin or another Antithrombotic 0068 NCQA 236 Controlling High Blood Pressure 0018 NCQA 2 Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus 0064 NCQA 226 Measure pair: a. Tobacco Use Assessment, b. Tobacco Cessation Intervention 0028 AMA-PCPI TBD Ischemic Vascular Disease (IVD): Complete Lipid Profile and LDL Control < 100 0075 NCQA TBD Proportion of adults 18 years and older who have had their BP measured within the preceding 2 years N/A CMSCMS-1524-P 369

TABLE 55: PROPOSED MEASURES INCLUDED IN THE

PROPOSED 2012 CATARACTS MEASURES GROUP* Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

TBD Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery N/A AAO TBD Cataracts: Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery N/A AAO 191 Cataracts: 20/40 or Better Visual Acuity within 90 Days Following Cataract Surgery 0565 AMA-PCPI/NCQA 192 Cataracts: Complications within 30 Days Following Cataract Surgery Requiring Additional Surgical Procedures 0564 AMA-PCPI/NCQA * This measures group is reportable thought registry-based reporting only. As with measures group reporting in the 2008, 2009, 2010, and 2011 Physician Quality Reporting System, we propose that each eligible professiona l electing to report a group of measures for 2012 must report all measures in the group that are applicable to each patient or encounter to which the measur es group applies at least up to the minimum number of patients required by the applicable reporting criter ia. We proposed that the measures proposed for the 2012 Back Pain Measures Group would continue to be reportable only as part of a measures group and not as individual measures for the 2012 Physician Quality Reporting System. Measures selected for inclusion in all other 2012 Physician Quality Reporting System measures groups would be reportable either as individual measures or as pa rt of a measures group. We note that the specifications for meas ures groups do not ne cessarily contain all the specification elements of each indivi dual 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 measuresCMS-1524-P 370

group. Therefore, the specifi cations and instructions fo r measures groups would be provided separately from the specifications and instructions for the individual 2012 Physician Quality Reporting System measures. We will post the detailed specifications and specific instructions for reporting measures groups on the Physician Quality Reporting System section of the CMS Web site at http://www .cms.hhs.gov/PQRS by no later than December 31, 2011. Additionally, the detailed measure speci fications and instructions for submitting data on those 2012 measures groups that were also included as 2011 Physician Quality Reporting System measures groups may be updated or modified by the measure developer prior to 2012. Therefore, th e 2012 Physician Quality Reporting System measure specifications for any given m easures group could be different from specifications and submission instructions for the same measures group used for 2011. For example, the measure developer may cha nge the codes containe d in the measure's denominator. These measure specification cha nges do not materially impact the intended meaning of the measures or the strength of the measures. We invite public comment on our proposed retention of all 2011 Physician Quality Reporting System measures groups, as well as our newly proposed measures groups for the 2012 Physician Quality Reporting System. (5) Proposed 2012 Physician Quality Reporting System Quality Measures for Group

Practices Selected to Partic ipate in the GPRO (GPRO) For 2012, we propose that group practices se lected to participate in the 2012 Physician Quality Reporting System GPRO w ould be required to report on 40 proposed measures listed in Table 55. Specifica lly, for the 2012 Physician Quality ReportingCMS-1524-P 371

System, we propose to retain most of the m easures available for reporting under the 2011 Physician Quality Reporting System GPRO b ecause of our continued interest in the reporting of those measures as well as to main tain program consistency from year to year. However, for 2012, we propose to retire the following measures that were required under the 2010 and 2011 GPRO (that is, GPRO I for 2011):

● Diabetes Mellitus: Hemoglobin A1c Testing.

● Diabetes Mellitus: Lipid Profile

● Hypertension (HTN): Blood Pressure Measurement. Furthermore, we propose to add the following Physician Quality core measures that were not available for reporting vi a the GPRO for the 2011 Physician Quality Reporting System:

● Ischemic Vascular Disease (IVD): Use of Aspirin or another Antithrombotic.

● Measure pair: a. Tobacco Use Asse ssment, b. Tobacco Cessation Intervention.

● Ischemic Vascular Disease (IVD): Co mplete Lipid Profile and LDL Control <

100

● Proportion of adults 18 years and olde r who have had their blood pressure measured within the preceding 2-years. In addition to adding the Physician Quality Reporting System core measures that were not available for reporting under the GPRO for th e 2011 Physician Quality Reporting System, we propose to add the following measures for reporting under the 2012 Physician Quality Reporting System GPRO:

● Chronic Obstructive Pulmonary Disease (COPD): Bronchodilator Therapy.

● Adult Weight Screening and Follow-up.

● Ischemic Vascular Disease (IVD): Blood Pressure Management Control.CMS-1524-P 372

● Chronic Obstructive Pulmonary Di sease (COPD): Spirometry Evaluation.

● 30 Day Post Discharge Physician Visit.

● Medication Reconciliation: Reconciliation Af ter Discharge from an Inpatient Facility.

● Diabetes: Aspirin Use.

● Falls: Screening for Fall Risk.

● Osteoporosis: Management Following Fracture of Hip, Spine or Distal Radius for Men and Women Aged 50 Years and Older.

● Diabetes Mellitus: Tobacco Non Use.

● Coronary Artery Disease (CAD): LDL-level < 100 mg/dl.

● Diabetes Mellitus: Hemoglobin A1c P oor Control in Diabetes Mellitus (less than 8 percent).

● Chronic Obstructive Pulmonary Disease (COPD): Smoking Cessation Counseling Received.

● Monthly International Normalized Ra tio (INR) for Beneficiaries on Warfarin. We propose these new measures becaus e they are NQF-endorsed measures that are consistent with other CMS quality reporti ng initiatives. We believe it is in the stakeholders' interest to align measures in di fferent initiatives. As stated previously in section (e)(6) of this pro posed rule, we propose that group practices selected to participate in the Physician Quality Reporti ng System GPRO would be required to report

on all measures listed in Table 56.CMS-1524-P 373

TABLE 56: PROPOSED MEASURES FOR PHYSICIAN GROUPS PARTICIPATING IN THE 2012 PHYSIC IAN QUALITY REPORTING SYSTEM GROUP PRACTICE REPORT ING OPTION (GPRO)

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

1 Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus(>9%) 0059 NCQA 2 Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus 0064 NCQA 3 Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus 0061 NCQA 5 Heart Failure: Angiotensi n-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0081 AMA-PCPI

6 Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescribed for Patients with CAD 0067 AMA-PCPI 7 Coronary Artery Disease (CAD ): Beta-Blocker Therapy for CAD Patients with Prior Myocardial Infarction (MI) 0070 AMA-PCPI 8 Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0083 AMA-PCPI 110 Preventive Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old 0041 AMA-PCPI

111 Preventive Care and Screen ing: Pneumonia Vaccination for Patients 65 Years and Older 0043 NCQA 112 Preventive Care and Screening: Screening Mammography 0031 NCQA 113 Preventive Care and Screening: Colo rectal Cancer Screening 0034 NCQA 117 Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient 0055 NCQA 118 Coronary Artery Disease (CAD): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left Ventricular Systo lic Dysfunction (LVSD) 0066 AMA-PCPI

119 Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic Patients 0062 NCQA 163 Diabetes Mellitus: Foot Exam 0056 NCQA 228 Heart Failure: Left Ventricu lar Function (LVF) Testing CMS 198 Heart Failure: Left Ventricular Fu nction (LVF) Assessment 0079 AMA-PCPI 227 Heart Failure: Weight Measurement 0085 AMA-PCPI 199 Heart Failure: Patient Education 0082 AMA-PCPI 236 Hypertension (HTN): Blood Pressure Control 0018 NCQA 235 Hypertension (HTN): Plan of Care 0017 AMA-PCPI 201 Ischemic Vascular Disease (IVD): Blood Pressure Management Control 0073 NCQA 51 Chronic Obstructive Pulm onary Disease (COPD): Spirometry Evaluation 0091 AMA-PCPI

226 Measure pair: a. Tobacco Use Assessment, b. Tobacco Cessation Intervention 0028 AMA-PCPI

52 Chronic Obstructive Pulm onary Disease (COPD): Bronchodilator Therapy 0102 AMA-PCPI

204 Ischemic Vascular Disease (IVD ): Use of Aspirin or another Antithrombotic 0068 NCQACMS-1524-P 374

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer

TBD Ischemic Vascular Disease (I VD): Complete Lipid Profile and LDL Control < 100 0075 NCQA

TBD Proportion of adults 18 years and older who have had their BP measured within the preceding 2 years N/A CMS

TBD 30 Day Post Discharge Physician Visit N/A CFMC 46 Medication Reconciliation: Reconciliation After Discharge from an Inpatient Facility 0097 AMA-PCPI/NC QA 197 Coronary Artery Disease (CAD): Lipid Control 0074 AMA-PCPI

200 Heart Failure: Warfarin Ther apy for Patients with Atrial Fibrillation 0084 AMA-PCPI TBD Diabetes: Aspirin Use 0076 MN Community Measurement TBD Falls: Screening for Fall Risk 0101 NCQA 40 Osteoporosis: Management Following Fracture of Hip, Spine or Distal Radius for Men and Women Aged 50 Years and Older 0045 AMA-PCPI/NC QA

128 Adult Weigh Screening and Follow-up 421 CMS/QIP TBD Diabetes Mellitus: Tobacco Non-Use 0729 MN Community Management TBD Coronary Artery Disease (CAD): LDL-level < 100 mg/dl N/A CMS TBD Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus (<8%) 575 NCQA

TBD Chronic Obstructive Pulmonar y Disease (COPD): Smoking Cessation Counseling Received N/A CMS

TBD Monthly INR for Beneficiaries on Warfarin 555 CMS

We intend to provide a separate measur es specifications document and other supporting documents for group practices par ticipating in the 2012 Physician Quality Reporting System GPRO. We anticipate that the group practice measures specifications document will be available by November 15, 2011 or shortly thereafter on the Physician Quality Reporting System section of the CMS Web site at http://www.cms.hhs.gov/PQRS . We invite public comment on the proposed 2012 Physician Quality Reporting System measures for group practices selected to participate in the 2012 Physician Quality Reporting System GPRO. g. Maintenance of Certif ication Program IncentiveCMS-1524-P 375

Section 3002(c) of the Affordable Ca re Act amends section 1848(k)(4) of the Act, as amended by section 3002(c) of the Affo rdable Care Act, requires the Secretary to address a mechanism whereby an eligible professional may provide data on quality measures through a maintenance of certificat ion program (Maintenance of Certification Program) operated by a specialty body of th e 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 Affordab le Care Act , 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 governing the "Additional Incentive Payment," in order to qualify for the additional incentive payment, an eligible professional must--

● Satisfactorily submit data on quality measures under the Physician Quality Reporting System for a year and have such data submitted— ++ On their behalf through a Maintena nce of Certification Program that meets the criteria for a registry under the Ph ysician 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 CertificationCMS-1524-P 376

Program" as a continuous assessment program, such as a qualified ABMS Maintenance of Certification Program, or an equivalent pr ogram (as determined by the Secretary), that advances quality and the lifelong learning and self-assessment of board certified specialty physicians by focusing on the competencies of patient care, medical knowledge, practice-based learning, interpersonal and communications skills and professionalism. Such a program shall require a physician to do the following:

● Maintain a valid, unrestricted me dical license in the United States.

● Participate in educational and se lf-assessment programs that require an

assessment of what was learned.

● Demonstrate, through a formalized, secu re examination, that the physician has the fundamental diagnostic skills, medical knowledge, and clinical judgment to provide quality care in their respective specialty.

● Successful completion of a qualified Maintenance of Certification Program practice assessment. As defined in section 1848(m)(7)(C)(ii) of the Act, a "qualified Maintenance of Certification Program practice assessment" m eans an assessment of a physician's practice

that---

● Includes an initial asse ssment of an eligible professional's practice that is designed to demonstrate the physician' s use of evidence-based medicine;

● Includes a survey of patie nt experience with care; and

● Requires a physician to implement a quality improvement intervention to address a practice weakness identified in the in itial assessment and then to remeasure to assess performance after such intervention.CMS-1524-P 377

To qualify for the additional incentive pa yment, section 1848( m)(7)(B)(iii) of the Act also requires the Maintenance of Certification Program to submit to CMS, on behalf of the eligible professional, information:

● In a form and manner specified by the Secretary, that the el igible professional more frequently than is required to qualify for or maintain board certification status, participates in the Maintenance of Certifi cation Program for a year and successfully completes a qualified Maintenance of Certifi cation Program practice assessment for such

year;

● Upon request by the Secret ary, information on the survey of patient experience with care; and

● As the Secretary may require, on the methods, measures, and data used under the Maintenance of Certification Program and the qualified Maintenance of Certification Program practice assessment. In order to qualify for the additi onal 0.5 percent incentive payment in 2011, eligible professionals were required to pa rticipate more frequently in each of the following four parts of the Maintena nce of Certification Program:

● Maintain a valid unrestri cted license in the United States. For 2011, physicians simply needed to maintain a valid unrestrict ed license in the United States to meet the requirement for "more frequent" participati on with respect to th is part (75 FR 73541 through 73546).

● Participate in educational and se lf-assessment programs that require an

assessment of what was learned.CMS-1524-P 378

● Demonstrate, through a formalized secu re examination, that the physician has the fundamental diagnostic skills, medical knowledge, and clinical judgment to provide quality care in their respective specialty.

● Successfully complete a qualified maintenance of certification program practice assessment. We have received requests from the American Board of Medical Specialties, as well as various specialty organizations , to revise the criteria for satisfying the Maintenance of Certification Program additional incentive, because these entities believe that more frequent participation in all f our parts of the Maintenance of Certification Program is too

narrow. We have further considered th e language under section 1848(m)(7)(B)(ii)(I) of the Act and we believe it can be interpreted mo re broadly. In particular, we note that the requirement that a professional "more frequen tly than is required to qualify for or maintain board certification status participat es in such a Maintena nce of Certification Program" could refer to the program as a whol e, such that any element performed more frequently than is required satisfies the ge neral requirement. The nature of the various components of a maintenance of certification prog ram also suggest that it is not necessary that each of the four elements of the pr ogram be performed more frequently. We previously stated we believe that the "more frequently" requirement does not apply to the first part, which states that a physician maintain a valid unrestricted license, as there is no way a physician may maintain a valid unrestric ted license "more frequently." As such, we believe that the more frequently require ment could be satisfied based on any of the other elements of the program (that is, e ducational and self-assessment program; secure examination; or practice assessment). Specifica lly, we believe that if a professional moreCMS-1524-P 379

frequently than is required satisfies one or more of those parts of a program, the more frequently requirement would be met. Accord ingly, we propose that in order to earn an additional 0.5 percent incen tive for 2012 through 2014, an eligible professional must participate more frequently than is required in at least one of the fo llowing four parts of the Maintenance of Certification Program, as well as "more frequent" participation in the practice assessment component. With respect to how to assess whether a professional completes one of the elements of a program "m ore frequently," we be lieve that this would be tied to the specific requireme nts of Board certification for the professional. Given that different specialties have different certif ication requirements ( physician examination requirements to maintain Board certification varies widely dependi ng on specialty), we do not believe it is appropriate to impose a uni form requirement for all professionals and therefore, we believe that the board could de termine for a particular program element the more frequent requirement for the professiona l. However, we believe that a minimum

threshold would need to be met such that the professional would have to do something more frequently or more than what is ordi narily required for a particular part of the program, as well as "more frequent" participa tion in the practice assessment component. Accordingly, we propose for 2012, 2013, and 2014 the following for each year:

● An eligible professional wishing to be eligible for the additional Physician Quality Reporting System incentive payment of 0.5 percent would be required to meet the proposed requirements for satisfactory P hysician Quality Reporting System reporting, for the applicable program year (that is, to qualify for the additiona l 0.5 percent incentive payment for 2012, meet the 2012 requirements for satisfactory reporting), based on theCMS-1524-P 380

12-month reporting period (January 1 thr ough December 31 of the respective program year).

● For purposes of satisfactory repor ting under the Physician Quality Reporting System, we propose that the elig ible professional may participat e as an indivi dual eligible professional using either individual Physic ian 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 th e GPRO option. As an alternative to this reporting option, we propose that eligible pr ofessionals 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 Certificati on Program has qualified as a Physician Quality Reporting System registry for 2012. As indicated prev iously, an eligible pr ofessional would not necessarily have to qualify for the P hysician Quality Reporting System through a

Maintenance of Certification Pr ogram serving as a registry. Rather, we propose that an eligible professional may qualify for the addi tional 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 a program year, the eligible professional must have data with respect to the eligible professional's participation in a Maintenance of Certification Program submitted on his or her behalf by a qualified medical specialty board or other entity sponsoring a Maintenance of Certification Program. For each eligible professional that wishes to qualify for the Maintenance of Certification ProgramCMS-1524-P 381

Incentive, the qualified medical specialty board or other entity spons oring a Maintenance of Certification Program must submit data to CMS with respect to the following:

● An eligible professional must, more fre quently than is require d to qualify for or maintain board certification, pa rticipate in a Maintenance of Certification Program for a year and successfully comple te a qualified Maintenance of Certification Program practice assessment for such year. With regard to th e "more frequently" requirement as it applies to the elements of a Maintenance of Certification Program itself (other than completing a qualified Maintenance of Certification Pr ogram practice assessment), we propose to require that the Maintenance of Certification Program certify that the eligible professional has "more frequently" than is re quired to qualify for or maintain board certification "participated in a Maintenance of Certification Program for a year". We do not propose to specify with re spect to participation how a physician must meet the more frequently requirement, but rather that the Maintenan ce of Certification Program determine what a physician must do to more fr equently participate in a Maintenance of Certification Program and so certify that the eligible professional has met this requirement. While we do not believe that the "more frequently" requirement is applicable to the licensure requirement, given that one cannot be licensed "more frequently" than is required, we propose to l eave it up to the Maintena nce of Certification Program to determine which element(s) of a Maintenance of Certification Program must be completed more frequently. We believe that making this change will reduce burden on physicians and will increase participation wh ile being consistent with the requirement to "more frequently" participate in a Maintenance of Certification Program.CMS-1524-P 382

● With respect to the Maintenance of Certification Program practice assessment, which is specifically delineat ed in section 1848(m)(7)(B)(ii) of the Act as being required more often than is necessary to qualify for or maintain board certifi cation, we believe we need to be more specific regarding our inte rpretation of the phrase "more frequently." Additionally, we are aware that some specia lty boards have varying Maintenance of Certification Program requirements for physicia ns to maintain board certification, based on the date of original certifi cation. Some, we believe, may not be required to participate in a Maintenance of Certification Program at all in order to maintain board certification. Accordingly, we recognize that "more often" may vary among physicians certified by the same specialty board. We interpret the stat utory provisions as requi ring participation in and successful completion of at least one Ma intenance of Certification Program practice assessment per year. Therefore, we propose, as a basic requirement, participation in and successful completion in at least one Main tenance of Certifica tion Program practice assessment for each year the physician particip ates in the Maintenance of Certification Program Incentive, regardless of whether or how often the physic ian is required to participate in a Maintenance of Certification Program to maintain board certification.

We are also aware that ABMS boards ar e at various stages in implementing the practice assessment modules, a nd some may not have such as sessment modules in place. However, inasmuch as we interpret the statut e to require a Maintenance of Certification Program practice assessment at least once per pr ogram year as part of the Maintenance of Certification Program, eligible professionals who do not have avai lable, through their boards or otherwise, a Maintenance of Cer tification Program practice assessment are not eligible for the 0.5 percent incentive.CMS-1524-P 383

We believe that the experience of care survey provides particularly valuable information and proposed that a qualified Ma intenance of Certific ation Program practice assessment must include a survey of patient experience with care. The Secretary may request information on the survey of patie nt 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 propose to require that Maintenance of Certification Programs submit information about the patient experience with care survey(s) used by physicians to fulfill the Ma intenance of Certifica tion Program practice assessment. We are not, at this time, requesti ng the results of the survey for the eligible professionals for whom information is being submitted by the Maintenance of Certification Program. We may, however, request such information for appropriate validation purposes and may propose to requ est such data for future years of the

Maintenance of Certifica tion Program Incentive.

Some Maintenance of Certification Programs underwent a self-nomination process in 2011 to enable their members to be eligible for this Physician Quality Reporting System Maintenance of Certificat ion Program Incentive for 2011 Physician Quality Reporting System. We propose that a Maintenance of Certification Program that was approved after undergoing the self-nomin ation process in 2011 must submit a self nomination statement for each year the Mainte nance of Certification Program intends to participate in the Physician Quality Repor ting System Maintenance of Certification Program. In the self-nomination statement, we propose that the previously approved program must provide us with updates to its program in its self-nomination statement. We propose that this self-nomination stat ement be submitted to CMS via a web-basedCMS-1524-P 384

tool.

For Maintenance of Certification Programs new for 2012, we propose that

Maintenance of Certification Pr ograms wishing to enable thei r diplomates to be eligible for an additional Physician Quality Reporting System incentive payment for the 2012 Physician Quality Reporting System will need to go through a self-nomination process by January 31, 2012. We proposed the board woul d need to include all of the following

information in their self-nomination statement to us:

• Provide detailed information regard ing the Maintenance of Certification Program with reference to the statut ory requirements for such program.

• Indicate the organization sponsoring th e Maintenance of Ce rtification Program,

and whether the Maintenance of Certificati on Program is sponsored by an ABMS board. If not an ABMS board, indicate whether and how the program is substantially equivalent

to the ABMS Maintenance of Ce rtification Program process.

• Indicate that the program is in existence as of January 1, 2012.

• Indicate that the program has at least 1 active participant.

• The frequency of a cycle of Mainte nance of Certification Program for the specific Maintenance of Certification Program of the sponsoring or ganization; including what constitutes "more frequently" for the Maintenance of Certification Program itself and for the practice assessment for the specifi c Maintenance of Certification Program of the sponsoring organization.

● Confirmation from the board that th e practice assessment will occur and be completed in the year the physician is partic ipating in the Maintena nce of Certification Program IncentiveCMS-1524-P 385

• What was, is, or will be the first ye ar of availability of the Maintenance of Certification Program practice assessment for completion by an eligib le 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 im provement 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 2011 and to be used for 2012, incl uding the title and descriptions of each measure, the owner of the measure, whether the measure is NQF endorsed, and a link to a website containing the detailed specifications of the measures, or an electronic file containing the detailed specifications of the measures. We propose that sponsoring organizations who desire to participate as a

Maintenance of Certificati on Program would 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 us.

• Information from the patient experience of care survey.CMS-1524-P 386

• Information certifying that the eligible professional has participated in a

Maintenance of Certification Program for a year, more fre quently than is required to qualify for or maintain board certification stat us, including the year that the physician met the board certification require ments for the Maintenance of Certification Program, and the year the eligible professional participated in a Maintenance of Certification Program "more frequently" than is re quired to maintain or qualif y for board certification.

• Information certifying that the eligible professional has completed the Maintenance of Certification Program practic e assessment at least one time each year the eligible professional participates in the Maintenance of Certification Program Incentive. We propose that specialty boards that al so desire to send Physician Quality Reporting System information to us on behalf of eligible professionals should be able to meet the proposed requirements for regist ry 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 altern ative to requiring boards to either operate a qualified Physician Quality Reporting System registry or to self-nominate to submit

Maintenance of Certification Pr ogram data to us on behalf of their members, we propose

to continue to allow the various boards to submit the Maintenance of Certification Program data to the ABMS and having ABMS submit the information on behalf of the various boards and their member elig ible professionals to CMS. To the extent an eligible professional participates in multiple Maintenance of Certification Programs and meets the requi rements under section 1848(m)(7) of the Act (Additional Incentive Payment) under multiple programs, we note that the eligibleCMS-1524-P 387

professional can qualify for only one additional 0.5 percent incentive pe r year. We invite public comment on our proposals for the Physic ian Quality Maintenance of Certification Program Incentive for 2012 through 2014. h. Feedback Reports Section 1848(m)(5)(H) of the Act requi res the Secretary to provide timely feedback to eligible professi onals on the performance of th e eligible professional with respect to satisfactorily submitting data on quality measures. Since the inception of the program in 2007, the Physician Quality Re porting System has provided eligible professionals who have reported Physician Quality Reporting System data on quality measures feedback reports at the TIN/NPI le vel 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 re port distribution method whereby each eligible professional can directly reque st and receive a feedback report. In accordance with Section 1848(m)(5)(H) of the Act, we will c ontinue to provide feedback reports to individuals and group practices that attempt to report on at least one Physician Quality Reporting System quality measure. We propos e to provide feedback reports for 2012 and beyond on or about the time of issuance of the incentive payments, consistent with our current practice. We believe it will be beneficial for eligible professionals to also receive interim feedback reports. In the 2011 MPFS Final Rule with comment period, we stated that we intended to provide interim feedback re ports to eligible professionals in 2012 (75 FR 73549). Therefore, we propose to prov ide interim feedback reports for eligible professionals reporting indi vidual measures and meas ures groups through theCMS-1524-P 388

claims-based reporting mechanism for 2012 and beyond. These reports would be a simplified version of annual feedback reports th at we currently provide for such eligible professionals and would be based on claims for dates of service occurring on or after January 1 and processed by March 31 of the respective program year (that is, January 1, 2012 and processed by March 31, 2012 for the 2012 program year). We expect that we would be able to make these interim feedback reports available to eligible professionals in the summer of the respectiv e program year (that is summer 2012 for the 2012 program year). We believe interim feedb ack 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 re port to satisfy the criteria for satisfactory reporting for claims-based re porting of measures groups. We invite public comment on our proposal to continue to provide annual feedback reports as well as our intention to provide in terim feedback reports.

i. Informal Review Under 42 CFR 414.90(i), eligible professi onals or group practices may seek an

informal review of the determination that th e eligible professional or group practice did not satisfactorily submit data on quality m easures under the Physician Quality Reporting System. To maintain program consistency until we have further experience with the informal review process that we implem ented for the 2011 Physician Quality Reporting System, we propose to largely retain the same informal review process that was finalized

in the 2011 MPFS final rule with comment period (75 FR 73549 through 73551) for 2012 and beyond. Specifically, we propose to base th e informal process on our current inquiry process whereby an eligible professional can contact the Quality Net Help Desk (viaCMS-1524-P 389

phone or e-mail) for general Physician Qu ality Reporting System and eRx Incentive Program information, information on Physician Quality Reporting System feedback report availability and access, and/or info rmation on Physician Quality Reporting System Portal password issues. For purposes of th e informal process required under section 1848(m)(5)(E) of the Act, we propose the following inquiry process:

• An eligible professional electing to u tilize the informal process must request an informal review within 90 days of the release of his or her feedback report, irrespective of when an eligible professional actua lly accesses his/her feedback report.

• An eligible professional may request an informal review through use of a web-based tool, if technically feasible. We believe use of the web-based tool will provide a more efficient way to record informal review requests, as web-based tool will guide the eligible professional through the creation of an info rmal review requests. For example, the web-based tool will prompt an eligible professional of any necessary information s/he must provide. If not techni cally feasible, we propos e that an eligible professional may request the informal review by notifying the Quality Net Help Desk via

email at qnetsupport@sdps.org . The email requesting the initiation of the informal review process should summari ze the concern(s) of the elig ible professional and the reason(s) for requesting an informal review.

• We further propose that CMS will pr ovide the eligible professional with a response to his or her request for an informal review within 90 days of receiving the original request. In 2011, we proposed to provide the eligible professional with a response to his or her request for an inform al review within 60 days of receiving the original request. However, we anticipate that the volume of informal review requestsCMS-1524-P 390

will grow as participation in the Physician Quality Reporting System grows, particularly as we move towards the implementation of the 2015 payment adjustment. Furthermore,

we believe that the time it takes for CMS to calculate data on Physician Quality Reporting System quality measures will be gr eater than in 2011, since we are proposing

additional individual measures and measures groups. For these reasons, we are proposing to amend 42 CFR 414.90(i)(2) to indicate that CMS will provide a written response within 90 days of the receipt of the or iginal request for an informal review.

• As this process is informal and the statute does not require a formal appeals process, we will not include a hearing or evidence submission process, although the eligible professional may submit inform ation to assist in the review.

• Based on our informal review, we will provide a written response. Where we find that the eligible profe ssional did satisfactorily report, we propose to provide the applicable incentive payment.

• Given that this is an informal re view process and given the limitations on review under section 1848(m)(5)(E) of the Act, decisions based on the informal review will be final, and there will be no further review or appeal. We invite public comment on our proposal for the Physician Quality Reporting System informal review process. j. Future Payment Adjustments for the Physician Quality Reporting System Beginning in 2015, a payment adjustment will apply under the Physician Quality Reporting System. Specifically, under section 1848(a)(8) of the Act, as added by section 3002(b) of the Affordable Care Act , with respect to covered professional services furnished by an eligible professional during 2015 or any subsequent year, if the eligibleCMS-1524-P 391

professional does not satisfactorily submit data on quality measures for covered professional services for the quality repor ting period for the year, the fee schedule amount for services furnished by such professi onals during the year sh all be equal to the applicable percent of the fee schedule am ount that would otherwise apply to such services. The applicable percent is--

● 98.5 percent for 2015; and

● 98.0 percent for 2016 and each subsequent year. Section 1848(8)(A)(i) of the Act prov ides that, for purposes of the payment adjustment, the "quality reporting period" with the respect to a year, is a period specified by the Secretary. In order to maintain consistency and program continuity, similar to the 12-month reporting period we are proposing for 2012, we are also proposing a 12-month reporting period for the 2015 payment adjustme nt. Specifically, we propose that the reporting period for purposes of the 2015 paym ent adjustment to be the 2013 calendar year, that is, January 1, 2013 through December 31, 2013. We believe that this proposed reporting period will allow a full calendar year for eligible professionals to meet the criteria for satisfactory reporting for purposes of the 2015 payment adjustment (that will be proposed in future rulemaking) while st ill providing us with enough time to collect and analyze the data submitted by eligible pr ofessionals for the 2015 payment adjustment without having to make retroactive payment adjustments in 2015. If we determine that an eligible professional or group practice ha s not satisfactorily reported data on quality measures for the January 1, 2013 through December 31, 2013 reporting period for purposes of the 2015 payment adjustment, then the eligible professional or group practice would be subject to the 1.5 percent adjustme nt in their fee schedule amount in 2015. WeCMS-1524-P 392

invite public comment on the proposed re porting period for purposes of the 2015 Physician Quality Reporting System payment adjustment. We intend to address the remaining re quirements for satisfactory reporting for purposes of the 2015 payment adjustment in future rulemaking. We welcome suggestions for what the criteria for sa tisfactory reporting for purposes of the 2015 payment adjustment we might consider in the future with regard to the proposed reporting period described previously. 2. Incentives And Payment Adjustments for Electronic Prescribing (eRx) – The Electronic Prescribing Incentive Program a. Program Background and Statutory Authority Electronic prescribing is the transmission using electronic media, of prescription or prescription-related information between the prescriber, dispenser, pharmacy benefit manager (PBM), or health plan, either directly or th rough an intermediary, including an electronic prescribing network. To encourage the use of electronic prescribing among eligible professionals, section 132 of the Medicare Improve ments for Patients and Providers Act of 2008 (MIPPA) amended section 1848(m) of the Act to establish the eRx Incentive Program. The eRx Incentive Program provides a combination of incentive payments and payment adjustments through 2014 to eligible pr ofessionals who are successful electronic prescribers. No eRx incentive payments or payment adjust ments are authorized beyond 2014. From 2009 through 2013, the Secretary is aut horized to provide eligible professionals who are successful electronic prescribers an incen tive payment equal to a percentage of the eligible professional's total estimated Medicar e 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 pr ofessional during the respective reporting period. However, section 1848(m)(2)(D) of the Act, as added by section 4101(f)(2)(B) of Title IV ofCMS-1524-P 393

Division B of the American Recovery and Reinv estment Act of 2009 (Pub. L. 111-5) (ARRA),

which also authorized the Medicare EHR Incentiv e Program, specifies that the eRx incentive does not apply to an eligible professional, if, for the EHR reporting period, the eligible professional earns an incentive payment under the Medicare EHR Incentive Program beginning in 2011. The applicable electronic prescribing per cent for incentive payments under the eRx Incentive Program are as follows:

● 2.0 percent for 2009.

● 2.0 percent for 2010

● 1.0 percent for 2011.

● 1.0 percent for 2012.

● 0.5 percent for 2013. In addition, for years 2012 through 2014, un der section 1848(a)(5)(A) of the Act, a PFS payment adjustment applies to eligible professi onals who are not successful electronic prescribers at an increasing rate through 2014. Specifically , if the eligible professional is not a successful electronic prescriber for the respective reporting period for the year, the PFS amount for covered professional services during the year shall be a percentage less than the PFS amount that would otherwise apply. The applicable electronic prescribing percent for payment adjustments under the eRx Incentive Program are as follows:

● 1.0 percent in 2012.

● 1.5 percent in 2013.

● 2.0 percent in 2014. We believe the purpose of the eRx In centive Program for 2012 and beyond is to continue to encourage significant expansion of the use of electronic prescribing by authorizing a combination of financial ince ntives and payment adjustments. We areCMS-1524-P 394

proposing to modify the incentive and paymen t adjustment language in 42 CFR 414.92 to provide language more cons istent with section 1848(k) of the Act.

We believe that the criteria used to determine who is a su ccessful electronic prescriber for purposes of the eRx incentive are not required to be identical to the criteria used to determine the applicability of the eRx payment adjustment. In general, we believe that an incentive should be broadly available to encourage the widest possible adoption of electronic prescrib ing, even for low volume prescribers. On the other hand, we believe that a payment adjustment should be applied primarily to assure that those who have a large volume of prescribing do so electronically, without penalizing those for whom the adoption and use of an electronic prescribing system may be impractical given the low volume of prescribing. We also believ e that eligible profe ssionals who have met the requirements for receivi ng an incentive payment under th e eRx Incentive Program for a particular year have suffi ciently demonstrated their a doption and use of electronic prescribing technology and thus should not be subject to the payment adjustment in a future year. Individual eligible professionals do not have to participate in the Physician Quality Reporting System in order to participate in the eRx Incentive Program (and vice versa). The provisions of the eRx Incentive Program are codified at 42 CFR 414.92. In prior years, we have proposed and fi nalized the details of the eRx Incentive Program for each program year through an annual rulemaking process. Through this annual rulemaking process, we have previously established the crit eria for avoiding the 2012 eRx payment adjustment in the 2011 PFS Final Rule with comment period (75 FR 73562 through 73565) as well as issu ed a proposed rule entitled "ProposedCMS-1524-P 395

Changes to the Electronic Prescribing (eRx) Incentive Program" (76 FR 31547), in which we proposed additional changes to the 2012 paym ent adjustment, as well as the electronic prescribing quality measure fo r certain reporting periods in 2011. We also established requirements for the 2013 eRx payment adju stment in the 2011 PFS Final Rule with comment period (75 FR 7356). In this rule, we are setting forth our comprehensive proposals for the 2012 and 2013 incentive payments, additional requireme nts for the 2013 payment adjustment, and 2014 payment adjustment. We believe that proposing criteria for the eRx Incentive Program for 2012 and beyond will provide eligib le professionals with more time to

familiarize themselves with the details of the eRx Incentive Program. We hope this will lead to increased, successful participa tion in the eRx Incentive Program. Details regarding our proposals for the eRx In centive Program for 2012 and 2013 incentive payments, additional requirements for the 2013 payment adjustment, and the 2014 payment adjustment, including our rationale for such proposals, ar e described in the following section. b. Eligibility For the 2012 and 2013 incentive payments and 2013 and 2014 payment adjustments, we propose the following two ways eligible professionals may participate in the eRx Incentive Program: (1) as an individual eligible prof essional; or (2) as part of a group practice reporting option (GPRO) for the eRx Incentive Program (eRx GPRO). Eligible professionals eligible to participat e in the eRx Incentive Program are defined at 42 CFR 414.92(b). For more information on which professionals are eligible to participate in the eRx Incentive Program, we refer readers to the Eligible ProfessionalsCMS-1524-P 396

page of the eRx Incentive Program section of the CMS Web site at: http://www.cms.gov/ERxIncentive/05_Elig ible%20Professionals.asp#TopOfPage

. (1) Individual Eligible Professionals (A) Definition of Eligible Professional As in the 2011 eRx Incentive Program, we propose that, for individual eligible professionals participating in the eRx In centive Program for purposes of the 2012 and 2013 incentive payments and 2013 and 2014 payment adjustments, the determination of whether an eligible professiona l is a successful electronic pres criber will be made at the individual professional level, based on the National Provider Identifier (NPI) number. Inasmuch as some individuals (identified by NP Is) may be associated with more than one practice or Tax Identification Number (TIN), for the 2012 and 2013 incentive payments and 2013 and 2014 payment adjustments, we propose that the determination of whether an eligible professional is a successful electron ic prescriber will continue to be made for each unique TIN/NPI combination. Then, as in previous years, incentive payments would be made to the applicab le holder of the TIN. We propose continuing to use the TIN/NPI combination as the unit of analys is to maintain program continuity, as individual eligible professionals are alrea dy familiar with this level of analysis and payment. We invite public comment on our proposal to continue analyzing data using the TIN/NPI combination while providing paymen t to the applicable holder of the TIN. As in prior program years, we propose th at individual eligible professionals who wish to participate in the eRx Incentiv e Program for purposes of the 2012 and 2013 incentive payments and 2013 and 2014 paym ent adjustments may simply start participating. Individual elig ible professionals are not requir ed to register or notify CMSCMS-1524-P 397

they intend to participate; rather, they may si mply begin to report the eRx measure. We invite public comment on the proposed process for individual eligible professionals to participate in the eRx Incentive Program. (2) Group practices As required under section 1848(m)(3)(C) of the Act, we established a process under which eligible professionals in a group practice (as defined by the Secretary) would be treated as meeting the requirements for submitting data on electronic prescribing quality measures for covered professional serv ices 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 prescrib ing measure, the group practice reports measures determined appropriate by th e Secretary, such as measures that target high-cost chronic conditions and preventive care, in a form and manner, and at a time specified by the Secretary. Specifically, we first established the eRx GPRO in 2010,

which was further modified in the 2011 PFS Final Rule (75 FR 73502). The eRx GPRO

was further modified in 2011. In addition to determining whether an eligible professional is a successful electronic prescriber fo r incentive payment and payment adjustment purposes based on separately analyzing whethe r the individual eligible professionals are successful electronic prescribers, we propose to also make the determination that the group practice, as a whole, is a successful el ectronic prescriber in accordance with section 1848(m)(3)(C) of the Act for those group practices that wish to partic ipate in the

eRx GPRO. (A) Proposed Definition of "Group Practice" Section 1848(m)(3)(C)(i) of the Act authorizes the S ecretary to define "groupCMS-1524-P 398

practice," which CMS defined by referenci ng our regulation at §414.92(b). For the 2011 eRx Incentive Program, a group practice is-- (1) Defined at §414.90(b), that is particip ating in the Physician Quality Reporting System; or (2)(a) In a Medicare appr oved demonstration project that is deemed to be participating in the Physician Quality Repor ting System group practice reporting option;

and (b) Has indicated its desire to partic ipate in the electronic prescribing group practice option. However, for purposes of determining whether an eRx GPRO is a successful electronic prescriber for CYs 2012 through 2014, we propose to modify the definition of the "group practice" at 42 CFR 414.92(b) to be consistent with with modifications being proposed to the definition of "group pr actice" at 42 CFR 414.90(b) for the 2012 Physician Quality Reporting System. Specifically, we propose to modify the language that references Medicare demonstrations to more broadly recognize other similar Medicare programs that group practices may be participating in so that such practices may be eligible to participate in the eRx Incentive Program. In addition, we are making clear that all group practices must indicate their desire to participate in the eRx group practice option. Also, as we noted above, we are proposing to modify the definition of group practice under the Physician Quality Reporting System defin ition at 42 CFR 414.90(b) by defining a group practice as a single TIN with at least 25 or more eligible professionals, as identified by their individual NPI, who have reassigned thei r Medicare billing right s to the TIN. GivenCMS-1524-P 399

that the definition of "group practice" at 42 CFR 414.92(b) follows the Physician Quality Reporting System definition, if the proposed changes to 414.90(b) ar e finalized, it would apply to the definition for group prac tice under the eRx Incentive Program. Although this proposal would eliminate group practices comprised of 2 to 24 eligible professionals for the purpose of th e eRx Incentive Program , we believe this proposal to change the definition of "group pr actice" would not be a significant burden to these small group practices as they may still participate as individual eligible professionals. For 2010, out of 107 group practices that self-nominated to participate in GPRO II for the Physician Quality Repor ting System, 68 of these group practices qualified to participate in the eRx Incentive Program under GPRO II. However, during the opt-out period which ended on May 12, 2011, 6 of these 68 group practices dropped out of GPRO II participation, leaving only 62 group practices to participate in GPRO II for 2010. Due to the low participation of onl y 62 groups, we believe participation in the

eRx Incentive GPRO should be limited to onl y those group practices with 25 or more eligible professionals. Indeed, we believe participating under GP RO II may be more burdensome for very small group practices than participating as elig ible professionals. For example, with respect to the payment ad justment, additional limitations may apply to eligible professionals as i ndividuals that are not applie d to group practices, which presents an additional burd en to the group practice. (B) Proposed Process to Participate in the eRx Incentive Pr ogram – eRx GPRO We propose that if a group practice wish es to participate in the eRx Incentive Program under the eRx GPRO, the group prac tice must self-nominate to do so. To self-nominate, we propose that the gr oup practice follow the requirements forCMS-1524-P 400

self-nomination under the Physician Quality Reporting System as well as specifically indicate its intent to participate in the eRx Incentive Program as a group practice. A group practice must self-nominate for each cale ndar year the group wishes to participate in the eRx GPRO. If a group pr actice self-nominates to par ticipate in the eRx GPRO for a calendar year, then we propose to consider that the group pract ice is participating in the eRx GPRO for purposes of both the incentive payment (with respect to any incentive payment reporting period that occurs dur ing the calendar year) and the payment adjustment (with respect to any payment ad justment reporting peri od that occurs during any calendar year). For example, the 2013 payment adjustment re porting period occurs during calendar year 2012 (January 1, 2012 through June 30, 2012). Therefore, any group practice participating in the eRx GPRO during cale ndar year 2012 would be considered to be participating in the eRx GPRO for both the 2012 incentive and 2013 payment adjustment. Please note that a group pr actice that is deemed to be participating in the Physician Quality Reporting System, such as an ACO participating under the Medicare Shared Savings Program, will not be deemed participating as a group practice in the eRx Incentive Program. Therefore, the group practice must self-nominate to participate in the eRx In centive Program under the eRx GPRO. Instructions for submitting the self-nomination statement are th e same as the instructions for submitting a self-nomination statement for the Physician Quality Reporting System. Each year, we expect to notify a group practice of the selection decision with respect to participation in the eRx GPRO during the first quarter of th e year. We invite public comment on the requirements for eligible profe ssionals to participate as an eRx GPRO for purposes of the eRx Incentive Program.CMS-1524-P 401

c. Proposed Reporting Periods Section 1848(m)(6)(C)(ii) of the Act also authorizes th e Secretary to revise the reporting period if the Secretary determines such revision is appropriate, produces valid results on measures reported, a nd are consistent with the goa ls of maximizing scientific validity and reducing administrative burden. (1) Proposed Reporting Periods for the 2012 and 2013 eRx Incentives Section 1848(m)(6)(C)(i)(II) of the Act defines "repor ting period" under the eRx Incentive Program for years afte r 2008 to be the entire year . We also have authority under section 1848(m)(6)(C)(ii) of the Act to revise the reporting period. We propose, however, entire calendar year reporting periods for the reporting period for purposes of the 2012 and 2013 incentive payment (January 1, 2012 through December 31, 2012 for the 2012 incentive and January 1, 2013 through December 31, 2013 for the 2013 incentive, respectively). Accordingly, we propose to modify 42 CFR 414.92(d)(1). (2) Proposed Reporting Periods for the 2013 and 2014 eRx Payment Adjustments As we indicated, using our authority unde r Section 1848(m)(6)(C)( ii) of the Act, in the 2011 PFS Final Rule with comment peri od, we finalized two different reporting periods: a 6-month reporting period (between January 1, 2011 and June 30, 2011) for purposes of the 2012 payment adjustment for bo th individual eligible professionals and group practices participati ng in the eRx GPRO (75 FR 73562 through 73563) and a 12-month reporting period (between January 1, 2011 and December 31, 2011) for purposes of the 2013 payment adjustment for individual eligible pr ofessionals and group practices participating in th e eRx GPRO (75 FR 73565).CMS-1524-P 402

In addition to the 12-month reporting peri od finalized in the 2011 PFS Final Rule with comment period, we propose an additiona l 6-month reporting period for purposes of the 2013 payment adjustment. As stated in the CY 2011 PFS final rule with comment period (75 FR 73565), we indicated that we might consider in future rulemaking additional reporting periods for purposes of the 2013 payment adjustment to maximize the opportunities for eligible professionals to become successful electronic prescribers. As such, we propose for both individual el igible professionals and group practices participating in the eRx GPRO a 6-month reporting period (between January 1, 2012 and June 30, 2012) for purposes of the 2013 payment adjustment. For similar reasons, we propose a 12-month reporting period (between January 1, 2012 and December 31,2 012) that would apply to individual eligible professionals and a 6-month reporting peri od (between January 1, 2013 and June 30, 2013) that would apply to both individual eligib le professionals and group practices with regard to the 2014 payment adjustment.. (P lease note that we are not proposing the 12-month reporting period for group practices for purposes of the 2014 payment adjustment because it is the same proposed reporting period for the 2013 incentive.) Providing two different reporting periods will provide eligib le professionals with two opportunities to become successful electronic pr escribers. We invite public comment on the proposed reporting periods for th e 2013 and 2014 payment adjustments. d. Proposed Criterion for Determini ng Successful Electronic Prescribers Section 1848(m)(3)(B) of the Act governs the requirements for "successful electronic prescriber," for purposes of the incentive payment under section 1848(m)(2) of the Act and the payment adjustment under section 1848(a)(5) of the Act. TheCMS-1524-P 403

Secretary is authorized to use one of two possible criteria for determining whether an eligible professional is a su ccessful electronic prescriber. One criterion, under section 1848(m)(3)(B)(ii) of the Act, is based on the el igible professional's reporting, in at least 50 percent of the reportable cases , on any electronic prescribi ng measures that have been established under the Physician Quality Reporting System, and ar e applicable to services furnished by the eligible prof essional for the reporting period. However, for years after 2009, section 1848(m)(3)(D) of th e Act permits the Secretar y in consultation with stakeholders and experts to revise the criteria for submitting data on electronic prescribing measures under secti on 1848(m)(3)(B)(ii) of the Act. The second criterion, under se ction 1848(m)(3)(B)(i ii) of the Act, is based on the electronic submission by the elig ible professional of a sufficient number (as determined by the Secretary) of prescrip tions under Part D during the reporting period. If the Secretary decides to use this standard, then, in accordance with section 1848(m)(3)(B)(iv) of the Act, the Secretary is authorized to us e 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 Ac t, if the standard based on a sufficient number (as determined by the Secretary) of el ectronic Part D prescriptions is applied for a particular reporting period, then the standard specified in law, ba sed on the reporting on electronic prescribing measur es would no longer apply.

We considered use of the second criteri on for determining successful prescribing under the eRx Incentive Program. While we re cognize the benefits of using Part D data as the standard for determining successful elec tronic prescribers, we believe use of Part D prescriptions for analysis may be premature. For example, as the use of Part D data isCMS-1524-P 404

fairly new, there is uncertainty as to th e accuracies of reporting electronic prescribing activities. For example, if an electronic prescription is converted to a facsimile when reaching the pharmacy, under reporting of Part D data, the transmission is still reported as a pure, electronic prescribing event. Furthe rmore, use of Part D data would require a complete overhaul of the current requiremen ts for the eRx Incentive Program. For instance, if we choose to shift to the use of Part D data, th e program would have to adopt a new form of measurement, a new form of analysis other than use of an eligible professionals' TIN/NPI (as no TIN is populated under Part D data), and new criteria for eligible professionals and eR x GPROs to become successful electronic prescribers. Therefore, we are not proposing to use the seco nd criterion. For the reasons stated previously, we pr opose to continue to require eligible professionals to report on th e electronic prescrib ing measure used in 2011 to determine whether an eligible professiona l is a successful electronic prescriber for the remainder of the eRx Incentive Program. Please note, however, we also are proposing in section IV.F.2.(d).(1). of this proposed rule to modify the electronic quality measure's specifications and to use modified reporting criteria based on the authority provided under section 1848(m)(3)(D) of the Act. We invite public comment on the continued use of reporting the electronic prescribing quality measure for purposes of the "s uccessful electronic prescriber" determination under the program. (1) Reporting the Electronic Prescribing Quality Measure The proposed electronic pres cribing quality measure, similar to the Physician Quality Reporting System measures, has two basic elements, which include: (1) a reporting denominator that defines the pa tient population on which the eligible professional's performance is being measur ed; and (2) a reporting numerator, whichCMS-1524-P 405

identifies whether or not a clinical qualit y action was performed. Our proposals specified later in this section apply to the following eRx Incentive Program years: the 2012 eRx incentive payment; the 2013 eRx incentive payment; the 2013 eRx payment adjustment; and the 2014 eRx payment adjustment. Under section 1848(k)(2)(C)(i ) of the Act, the electr onic prescribing measure, which was initially introduced under the Phys ician Quality Reporting System, shall be a measure selected by the Secret ary that has been endorsed by the entity with a contract with the Secretary under section 1890(a) of the Ac t. Currently, that entity is the National Quality Forum (NQF). The electronic pres cribing measure we propose to retain, NQF Measure #0486: Adoption of Medication e-Pr escribing, is currently endorsed by the NQF. (2) The Denominator for the Electronic Prescribing Measure The denominator for the electronic pres cribing quality measure consists of specific billing codes for covered professional services. As initially required under section 1848(k)(2 )(A)(ii) of the Act, and further established through rulemaking and under se ction 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 denominat or codes for 2010 to covered professional services outside the professional office and outpatient setting, such as professional

services furnished in skille d nursing facilities or the home care setting. For 2011, we finalized the following CPT and HCPCS code s in the denominator of the electronic prescribing measure: 90801, 90802, 90804, 90805, 90806, 90807, 90808, 90809, 90862, 92002, 92004, 92012, 92014, 96150, 96151, 96152, 99201, 99202, 99203, 99204, 99205,CMS-1524-P 406

99211, 99212, 99213, 99214, 99215, 99304, 99305, 99306, 99307, 99308, 99309, 99310, 99315, 99316, 99324, 99325, 99326, 99327, 99328, 99334, 99335, 99336, 99337, 99341, 99342, 99343, 99344, 99345, 99347, 99348, 99349, 99350, G0101, G0108, and G0109 (75 FR 73555). For purposes of repor ting periods during CYs 2012 and 2013, we propose to retain these CPT and HCPCS code s in the denominator of the electronic prescribing measure because we believe that these codes represent the types of services for which prescriptions are likely to be genera ted. Therefore, if we were to measure an eligible professional's performance on the el ectronic prescribing meas ure, we would want to do so only for patients who saw the profession al for such services. For purposes of the 2012 and 2013 incentives and 2013 and 2014 payment adjustment, we propose to retain

the denominator codes contained in the 2011 el ectronic prescribing measure. Whereas in prior years we only permitted eligible professionals to report the electronic prescribing

measure's numerator in connection with a service in the measure's denominator, as discussed in section IV.F.2.i. of this proposed rule, we are proposing to depart from this requirement for purposes of the 2013 and 2014 payment adjustments. (3) The Reporting Numerator for the Electronic Prescribing Measure Currently, the electronic prescribing measure's numerat or consists of a single code, G8553, which indicates that at least 1 prescription creat ed during the encounter was generated and transmitted electronically using a qualified electronic prescribing system. For purposes of reporting the measure for the 2012 and 2013 incentives or the 2013 and 2014 payment adjustment, as in prior years, we propose that an eligible professional or group practice participati ng in the eRx GPRO can report the codeCMS-1524-P 407

associated with the measure's numerator whenever a prescription is generated and transmitted electronically. We propose to post the final electronic prescribing measure specifications on the "eRx Measure" page of the eRx Incentive Program section of the CMS Web site at http://www.cms.gov/ERXIncentive by no later than --

● December 31, 2011 for the reporting periods that occur during calendar year

2012.

● December 31, 2012 for the reporting periods that occur during calendar year

2013. In the event that additional changes are needed to the measure specifications for years after 2012, we would do so via notice a nd comment rulemaking prior to posting the final measure specifications for that year. We invite public comment on the proposed numerator for the electronic prescr ibing measure for CYs 2012 through 2013. e. Required Functionalities and Part D Electronic Prescribing Standards

As previously stated, to report the electr onic prescribing measure, we propose that the eligible professional or group practice must report the measure's numerator G-code. When reporting this G-code for incentive pa yment or payment adjustment purposes, we propose, for purposes of the 2012 and 2013 incentive and 2013 and 2014 payment adjustment that the eligible professional or eRx GPRO must have and regularly use a "qualified" electronic prescribi ng system, which we further propose to define as either a system with functionalities identified in th e electronic prescribing measure specifications,

or Certified EHR Technology as define d at 42 CFR 495.4 and 45 CFR 170.102. ThisCMS-1524-P 408

proposal is consistent with our June 1, 2011 proposed rule for the 2011 eRx Incentive Program (76 FR 31549).

We are aware that there are significant numbers of elig ible professionals who are interested in participating in the eRx Incen tive Program but currently do not have an electronic prescribing system or Certified EHR Technol ogy. The electron ic prescribing measure does not require the use of any partic ular system or transmission network; only that the system be a "qualified" system. If the professional does not have gene ral access to an electronic prescribing system or Certified EHR Technology in the pr actice setting, the el igible professional would not be able to report the electronic pr escribing measure. In addition to not being eligible for an incentive payment, an e ligible professional who does not report the electronic prescribing meas ure for 2012 or 2013 would be subject to the 2013 or 2014 eRx payment adjustment, unless an exception applied. We invite public comment on the proposed technological requirements of the el ectronic prescribing qua lity measure. (1) "Qualified" Electron ic Prescribing System We propose to retain what constitutes a " qualified" electronic prescribing system as a system based upon certain required functiona lities that the system can perform. We propose to retain the same functionali ties that were required in 2010 and 2011. Therefore, for 2012 through 2014, we propose that a "qualified" elect ronic prescribing system is one that can do the following:

● Generate a complete active medicati on list incorporati ng electronic data received from applicable pharmacies and PBMs, if available.CMS-1524-P 409

● Enable eligible professionals to select medications, print prescriptions, electronically transmit prescriptions, as well as provide notifications (that is, signals to warn the prescriber of possi ble undesirable or unsafe situations in cluding potentially inappropriate dose or route of administrati on of a drug, drug-drug interactions, allergy concerns, or warnings and cautions). Th is functionality must be enabled.

● Provide information related to lo wer cost, therapeutically appropriate alternatives (if any). The ability of an el ectronic prescribing syst em to receive tiered formulary information, if available, would ag ain suffice for this requirement for reporting the electronic prescrib ing measure during the reporting periods occurring in CYs 2012

and 2013 until this function is more wide ly available in the marketplace.

● Provide information on formulary or tiered formulary medications, patient eligibility, and authorization requirements received electronically from the patient's drug plan (if available). We invite public comment on the proposed definition of a "qualified electronic prescribing system," for systems that have these four functionalities. Furthermore, we are proposing to expand the definition of a "qualified electronic prescribing system" in the electronic pres cribing measure that would be used for reporting periods that occur during CY 2012 and 2013 to include Certified EHR Technology as defined at 42 CFR 495.4 a nd 45 CFR 170.102 because we believe the technological requirements for eRx in th e EHR Incentive Program are similar to the technological requirements for the eRx Incenti ve Program. We also desire to align the requirements of the eRx and the Medicare EHR Incentive Program in order to potentially reduce unnecessary investment in multiple t echnologies for purposes of meeting theCMS-1524-P 410

requirements for each program. This propos al is consistent with our June 1, 2011 proposed rule for the 2011 eRx incentive and the 2013 eRx payment adjustment (76 FR 31549). (2) Part D Electronic Prescribing Standards Section 1848(m)(3)(B)(v) of the Act specifies that to the extent practicable, in determining whether an eligib le professional is a successful electronic prescriber, "the Secretary shall ensure that el igible professionals utilize el ectronic prescribing systems in compliance with standards established for such systems pursuant to the Part D Electronic Prescribing Program under sec tion 1860D-4(e) of the Act". The Part D standards for electronic prescribing systems establish which electronic standards Part D sponsors, providers, and dispensers must use when th ey electronically transmit prescriptions and certain prescription related information for Pa rt D covered drugs that are prescribed for Part D eligible individuals. To be a qualified electronic prescribi ng system under the eRx Incentive Program, electronic systems must convey the informati on listed previously using the standards currently in effect for the Part D electron ic prescribing program. Additional Part D electronic prescribing standa rds were implemented April 1, 2009. On July 1, 2010, we published an Interim Final Rule providing additional updates to Part D electronic prescribing standards. These latest Part D el ectronic 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 pr ofessionals utilize electroni c prescribing systems that meet these requirements, the electronic prescribing measure requires that thoseCMS-1524-P 411

functionalities required for a " qualified" electronic prescribing system utilize the adopted Part D electronic prescribing standards. We propose to modify the Part D electronic prescribing standards required for a "qualified" electronic prescribing system under the eRx Incentive Program to have these standa rds consistent with current, CMS Part D electronic prescribing standards. The Part D electronic prescribing st andards relevant to

the four functionalities describe d previously are as follows:

● Generate medication list – Use th e National Council for Prescription Drug Programs (NCPDP) Prescriber/Pharmacist In terface SCRIPT Standard, Implementation Guide, Version 8 or 10.6, Release 1, October 2005 (hereinafter "NCPDP SCRIPT 8.1 or 10.6") Medication History Standard. Use of NCPDP SCRIPT 10.6 is a new option for use in the eRx Incentive Program.

● Transmit prescriptions electronically – Use the NCPDP SCRIPT 8.1or 10.6 for the transactions listed at §423.160(b)(2).

● Provide information on lower cost al ternatives – Use the NCPDP Formulary and Benefits Standard, Implementation Gu ide, Version 1, Release 0 (Version 1.0), October 2005 (hereinafter "NCPDP Formulary and Benefits 1.0").

● Provide information on formulary or tiered formulary medications, patient eligibility, and authorization requirements received electronically from the patient's drug plan use: ++ NCPDP Formulary and Benefits 1.0 for communicating formulary and benefits information between prescribers and plans.

++ Accredited Standards Committ ee (ASC) X12N 270/271-Health Care Eligibility Benefit Inqu iry and Response, Version 4010 , May 2000, WashingtonCMS-1524-P 412

Publishing Company, 004010X092 and Addenda to Health Care Eligibility Benefit Inquiry and Response, Version 4010A 1, October 2002, Washington Publishing Company, 004010X092A1 for communi cating eligibility inform ation between the plan and prescribers.

++ NCPDP Telecommunication Standa rd Specification, Version 5, Release 1 (Version 5.1), September 1999, and equiva lent NCPDP Batch Standard Batch Implementation Guide, Version 1, Rel ease 1 (Version 1.1), January 2000 for communicating eligibility information between the plan and dispensers. However, there are Part D el ectronic 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 Pa rt D electronic prescribing final rule (73 FR 18926). For purposes of the eRx Incentive Program for CYs 2012 through 2014, we again are not requiring that an electronic prescribing sy stem contain all functionalities

for which there are available Part D electroni c prescribing standards since many of these

functionalities are not commonly available. For those re quired functionalities previously described, we propose that a "qualified" syst em must use the adopted Part D electronic prescribing standards listed previ ously for electronic messaging only. There are other aspects of th e functionalities for a "quali fied" system that are not dependent on electronic messaging and are pa rt of the software of the electronic prescribing system, for which Part D standards for electroni c prescribing do not pertain and are not required for purposes of the eR x Incentive Program. For example, the requirements in the second functionality that re quire the system to allow professionals toCMS-1524-P 413

select medications, print prescriptions, and conduct alerts are func tions included in the particular software, for whic h Part D standards for electr onic messaging do not apply. As stated previously, we are proposi ng to expand the definition of what constitutes a "qualified" elec tronic prescribing system under the electronic prescribing system to also recognize as "qualified " Certified EHR Technology. Among other requirements, Certified EHR Technology must be able to electronically generate and transmit prescriptions and prescription-relate d information in accordance with certain standards, some of which have been adopted for purposes of electr onic prescribing under

Part D. Similar to the four functionalities previously noted with regard to a qualified eRx system, Certified EHR Technology also must be able to check for drug-drug interactions and check whether drugs are in a formular y or a preferred dr ug list, although the certification criteria do not spec ify any standards for the perf ormance of those functions. We believe that it is acceptable that not al l of the Part D eRx standards are required for Certified EHR Technology in light of our desire to better align the requirements of the eRx and the Medicare EHR Incentive Progr am and potentially reduce unnecessary investment in multiple technologies for purpos es of meeting the requirements for each program. Furthermore, to the extent that an eligible professiona l uses Certified EHR Technology to electronically pres cribe under Part D, he or sh e would still be required to comply with the Part D standards to do so. f. Proposed Reporting Mechanisms for the 2012 and 2013 Reporting Periods For purposes of the 2011 incentive payment and 2013 payment adjustment, an eligible professional (and eRx GPRO, for purposes of the 2011 incentive) may report on the electronic prescribing measure to meet th e criteria for being a successful electronicCMS-1524-P 414

prescriber via three reporting mechanisms – claims, qualified registry, and qualified EHR product. However, for purposes of the 2012 payment adjustment, due to operational limitations, only the claims-based reporting mechanism is available for purposes of reporting on the electronic prescribing measure for th e 2012 payment adjustment (75 FR 73563). For reporting periods that occur during CY 2012 and 2013, to provide eligible professionals and groups practices with multip le mechanisms to report on the electronic prescribing measure for purposes of reporting the electronic prescribing measure for the 2012 and 2013 incentive payments and 2013 and 2014 payment adjustments, we propose the following three reporting mechanisms – cl aims, qualified registry, and qualified EHR. However, as in the past, we would not combine data on the electronic prescribing measure submitted via multiple reporting mechanisms. Combining data received via multiple reporting mechanisms would add significant complexity to our analytics and potentially delay incentive payments. Theref ore, we are proposi ng that an eligible professional or eRx GPRO would need to m eet the relevant reporting criteria for the incentive or payment adjustment using a single reporting mechanism. For reporting periods that occur during CYs 2012 and 2013, we also propose that a group practice that wishes to participate in the eRx Incentive Program as an eRx GPRO for a particular calendar year will have to indicate which reporting mechanism the group practice intends to use to repor t the electronic prescribing measure. That is, the group practice will need to indicate at the time it self-nominates which reporting mechanism (claims, qualified registry, or qualified EHR) the group practice intends to use for purposes of participating in the eRx GPRO.CMS-1524-P 415

The proposed requirements for each repor ting mechanism with respect to the 2012 and 2013 incentives and 2013 and 2014 payment adjustments are described below. (1) Claims-Based Reporting First, for purposes of reporting th e electronic measure for the 2012 and 2013 incentives as well as the 2013 and 2014 payment adjustments, we propose to again retain the claims-based reporting mechanism that ha s been used since the implementation of the eRx Incentive Program in 2009 for all remain ing incentive and payment adjustment years. We are not proposing any prerequisite s, such as registration, to begin reporting on the electronic prescribing measure via claims . Retaining the claims-based mechanism allows eligible professionals and group pract ices to begin to re port on the electronic prescribing measure without the added cost of submitting data to a registry or purchasing an EHR system (if the eligible professional is using a standalone eR x system) as eligible professionals already report PFS charges via claims. If an eligible professiona l or group practice chooses th e claims-based reporting mechanism, we propose that the eligible pr ofessional or group practice must directly submit data on the electronic prescribing measur e. For eligible professionals and group practices participating in the eRx GPRO using the proposed claims-based reporting mechanism for purposes of reporting the electronic prescribing measure during a 12-month incentive or payment adjustment re porting period, we propose that all claims for services must be processed by us no la ter than two months after the respective reporting period, for the claim to be included in our data analysis. (For example, for an eligible professional using the 12-month, 2014 payment adjustment reporting period, all claims for services between January 1, 2012 and December 31, 2012 must be processedCMS-1524-P 416

no later than February 28, 2013 to be include d in our data analysis.) For eligible professionals and group practices using the proposed claims-based reporting mechanism for purposes of reporting the electronic pres cribing measure during a 6-month payment adjustment reporting period, we propose that al l claims for services must be processed by us by no later than one month after the resp ective reporting period, for the claim to be included in our data analysis (for example, for an eligible professional using the 6-month, 2013 payment adjustment reporting period, all claims for services between January 1, 2012 and June 30, 2012 must be pr ocessed no later than July 31, 2012, for the

claims to be included in our data analysis.) We believe that these proposed reporting periods will allow sufficient time for eligib le professionals to report the electronic prescribing measure, allow us to collect and analyze the data submitted by eligible professionals, and avoid retroactive adjustment s of payments. We invite public comment on our proposal to retain claims-based re porting as a reporting mechanism for the eRx Incentive Program. (2) Registry-Based Reporting In addition, for purposes of reporting fo r the 2012 and 2013 incentives as well as the 2013 and 2014 payment adjustments, to provide an opportunity for individual eligible professionals and group practices who choose to participate in the Physician Quality Reporting System via registry to use the same reporting mechanism for reporting the electronic prescribing measure, we propose to continue the regi stry-based reporting

mechanism introduced under the 2010 eR x Incentive Program. Retaining the registry-based reporting option provides eligible professiona ls and group practices with another alternative to reporting. In a ddition, unlike claims-based reporting, althoughCMS-1524-P 417

there may be a cost associated with subm itting data to a registry, reporting of the electronic prescribing m easure to CMS is done en tirely by the registry. We note that there may be a cost associat ed with submitting data to a registry. As in prior program years, we propose that only registries qualifie d to submit quality measure results and numerator and denominator data on quality measures on behalf of eligible professionals for the Physician Quality Reporting System for the applicable calendar year would be qualified to su bmit measure results and numerator and

denominator data on the el ectronic prescribing measur e on behalf of eligible professionals for the eRx Incentive Program. Some registries that self-nominate to beco me a qualified registry for the Physician Quality Reporting System may not choose to se lf-nominate to become a qualified registry for purposes for the eRx Incentive Program. Regi stries need to indicate their desire to qualify to submit measure results and numera tor and denominator da ta on the electronic prescribing measure for reporting periods that occur during CYs 2012 and 2013 at the time that they submit their self-nomination letter for the 2012 and 2013 Physician Quality Reporting System respectively. The self- nomination process and requirements for registries for the Physician Quality Reporting System, which also will apply to the registries for the eRx Incentive Program, are discussed in the Physician Quality Reporting System section IV.F.1.(d).(2). of this proposed rule. We would post a final list of qualified registries for the eRx Ince ntive Program for CYs 2012 and 2013 on the eRx Incentive Program section of the CMS Web site at http://www.cms.gov/ERXIncentive when we post the final list of qualified regi stries for the Physician Quality ReportingCMS-1524-P 418

System for 2012 and 2013 respectively on the Physician Quality Reporting System

section of the CMS Web site. Since we are proposing a 12-month reporti ng period for purposes of the 2012 and 2013 incentive and 6 and 12-month reporting periods for purposes of the 2013 and 2014 payment adjustments (as described in the se ction previously), we further propose that qualified registries would need to submit the electronic prescribing measure for the eRx Incentive Program to us in two separate transmissions, based on the proposed reporting periods for the 2012 and 2013 incentive payments and 2013 and 2014 payment adjustments. Specifically, we propose that qualified registries would need to submit 2012 and 2013 data on the electronic prescribing measure in two separate submissions:

● Following the end of the respectiv e 6-month payment adjustment reporting period (between July 1, 2012 and Augus t 19, 2012, for purposes of the 2013 eRx payment adjustment, and between July 1, 2013 and August 19, 2013, for purposes of the 2014 eRx payment adjustment); AND

● Following the end of the 12-m onth reporting period for the 2012 and 2013 incentives and 2014 payment adjustment. We invite public comment on our proposals regarding registry-based reporting for the 2012, 2013, and 2014 eRx Incentive Program. (3) EHR-Based Reporting For purposes of reporting for the 2013 incentive as well as the 2013 and 2014 payment adjustments, in order to provide an opportunity for eligib le professionals and group practices who choose to participate in the Physician Quality Reporting System via EHR as well as eligible professionals who pa rticipate in the Medicaid or Medicare EHRCMS-1524-P 419

Incentive Program to use the same reporti ng mechanism for repor ting the electronic prescribing measure, we propose to retain the EHR-based reporting mechanism to encourage the use of EHR technology as well as provide eligible professionals and group practices with a third reporting option. Similar to registry-based reporting, we propose that direct EHR technology as well as EHR data submission vendors (as desc ribed in our proposals to the Physician Quality Reporting System) "qualified" to submit extracted Medicare clinical quality data to us for the Physician Quality Reporting System would be able to be used by an eligible professional or group practice to submit data on the electronic pres cribing measure for

the 2012 and 2013 incentives and 2013 a nd 2014 payment adjustments. The self-nomination process and requirements for direct EHR products and EHR data submission vendors for the Physician Quality Re porting System as discussed previously in section IV.F.1.d.(3). of this proposed ru le in our 2012 proposals for the Physician Quality Reporting System, would continue to apply to the EHR products and EHR data submission vendors for the eRx Incentive Prog ram. We hope this third reporting option for eligible professionals and group practices will encourage the use of EHR technology. We propose that direct EHR products and EHR data submission vendors be required to indicate their desire to have one or more of their EHR products approved for the purpose of an eligible pr ofessional potentiall y being able to submit data on the electronic prescribing measure for the eRx Incentive Program for reporting periods that occur in CYs 2012 and 2013 at the time they self-nominate for the respective 2012 and 2013 Physician Quality Reporting System. A list of approved EHR technology, their vendors (including the technology's version th at is approved) for the eRx IncentiveCMS-1524-P 420

Program would 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 approved EHR technology for the Physician Quality Reporting System on the Physician Quality Reporting System

section of the CMS Web site. Since we are proposing two reporting pe riods with respect to the 2013 and 2014 payment adjustments (described in section (c )(2) previously), we further propose that eligible professionals usi ng their approved EHR systems would need to submit the electronic prescribing measure for the eRx Incentive Program to us in two separate transmissions, based on the proposed repor ting periods for the 2012 and 2013 incentive payments and 2013 and 2014 payment adjustments. Specifically, we propose that eligible professionals would need to submit 2012 and 2013 data on the electronic prescribing measure in two separate submissions:

● Following the end of the respectiv e 6-month payment adjustment reporting period (between July 1, 2012 and Augus t 19, 2012, for purposes of the 2013 eRx payment adjustment, and between July 1, 2013 and August 19, 2013, for purposes of the 2014 eRx payment adjustment); AND

● Following the end of the 12-m onth reporting period for the 2012 and 2013 incentives and 2014 payment adjustment. We invite public comment on our proposal s with regard to EHR-based reporting. g. The 2012 and 2013 eRx Incentives 42 CFR 414.92(d) states the requirements for individual eligible professionals to qualify to receive an incentive payment. We are proposing to modify 42 CFR 414.92(d) to add "being a," so that the provision reads:CMS-1524-P 421

In order to be considered a successful electronic prescriber and qualify to earn an electronic prescribing incen tive payment (subject to paragraph (c)(3) of this section), an individual eligible professional, as identified by a unique TIN/NPI combination, must meet the criteria for being a successful electronic prescriber under section 1848(m)(3)(B) of the Act and as specified by CMS during the reporting period specified in paragraph (d)(1) of this section and us ing one of the reporting mechanisms specified in paragraph (d)(2) of th is section. Although an eligible professional may attempt to qualify for the electronic prescribing incentive payment using more than one reporting mechanism (as specified in paragraph (d)(2) of this section), the eligible professional will receive only one electronic prescribing incentive payment per TIN/NPI combination for a program year. We believe this change provide s more clarity to the provision. (1) Applicability of 2012 and 2013 eRx Incentiv es for Eligible Professionals and eRx

GPROs Section 1848(m)(2)(B) of the Act impos es a limitation on the eRx incentive payment. The Secretary is authorized to choose 1 of 2 possible cr iteria for determining whether or not the limitation applies to a successful electronic prescriber:

● Whether Medicare Part B allowed char ges 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 fo r all covered professional services furnished by the eligible professional during the reporting period; OR

● The second criterion, unde r section 1848(m)(3)(B)(iii) of the Act, is based on whether the eligible professi onal submits (both electronica lly and non-electronically) a sufficient number (as determined by the Secret ary) of prescriptions under Part D (which can, again, be assessed using Pa rt D drug claims data). If the Secretary decides to use this criterion, the criterion based on the reporting on electronic pr escribing measures would no longer apply.CMS-1524-P 422

Based on our proposal to make the dete rmination of whether an eligible professional or group practice is a "successful electronic pr escriber" based on submission of the electronic prescribing measure (the first criterion), we propose to apply the criterion under section 1848( m)(2)(B)(i) of the Act for th e limitation for both the 2012 and 2013 incentives. Specifically, a successful el ectronic prescriber is eligible for the 2012 and/or 2013 incentive only if the Medicare Part B allowed charges for covered professional services to which the electronic prescribing quality measure applies comprise at least 10 percent of the total Medicare Part B PFS allowed charges for all covered professional services furnished by the eligible professi onal or group practice during the reporting period. For purposes of the 2012 and 2013 incentives, this analysis would be performed during the first quarters of 2013 and 2014 re spectively by dividing the eligible professional's or group practice's (for those group practices participation in the eRx GPRO for that year) total 2012 and 2013 resp ective Medicare Part B PFS allowed charges for all such covered professional services submitted for the measure's denominator codes by the eligible professional' s or group practices' total Medicare Part B PFS allowed charges for all covered professional services. If the re sult is 10 percent or more, then the statutory limitation would not ap ply and a successful electronic prescriber would qualify to earn the electronic prescribing incentive payment. If the result is less than 10 percent, then the statutory limitation would apply and the elig ible professional or group practice would not earn an electronic prescribing incen tive payment even if he or she meets the reporting criteria for being a su ccessful electronic pr escriber. Although an individual eligible professional or group pr actice may decide to conduct his or her ownCMS-1524-P 423

assessment of how likely this statutory limitati on is expected to apply to him or her before deciding whether or not to report the electronic prescribing measure, an individual eligible professional or gr oup practice may report the elect ronic prescribing measure without regard to the statutory limitation fo r the incentive payment. We invite public comment on our proposed use of the 10 percen t limitation with respect to the 2012 and 2013 incentive payments. (2) Proposed Reporting Criteria for Being a Successful Electronic for the 2012 and 2013 eRx Incentives – Individual Eligible Professionals As discussed previously, section 184 8(m)(3)(D) of the Act authorizes the Secretary to revise the criteria for submitti ng data on the electronic prescribing measure under section 1848(m)(3)(B)(ii) of the Act, which requires the measure to be reported in at least 50 percent of the cases in which the measure is reportable. For 2010 and 2011, we revised that criterion, such that an eligible professional is a successful electronic prescriber by reporting the electronic pres cribing quality measure for a minimum of 25 unique visits per year of applicab le cases in the denominator.

For the 2012 and 2013 incentives , to maintain program consistency form year to year, we propose to make the determination of whether an eligible professional is a successful electronic prescriber for purposes of the incentive base d on a count of the number of times (minimum threshold of 25) an eligible professional reports that at least one prescription created during the denominator-eligible enc ounter is generated using a qualified electronic prescrib ing system, which would include Certified EHR Technology (that is, reports the G8553 code when the eligib le professional bills for one of the services included in the measure's denominator). We believe this criterion adequately addressesCMS-1524-P 424

the goal of the eRx Incentive Program, speci fically to promote the use of electronic prescribing systems. We invite public co mment on the proposed criteria for successful electronic prescriber with re gard to reporting the electroni c prescribing quality measure by individual eligible professionals for purposes of qualifying for the 2012 and 2013 eRx incentive payments. (3) Proposed Criteria for Being a Successful Electronic Prescriber 2012 and 2013 eRx Incentives – Group Practices Under section 1848(m)(3)(B) of the Act, in order to qualify for the incentive payment, an eligible professional or group practice must be a "s uccessful electronic prescriber." For a group practice to be a successful elec tronic prescriber for purposes of the 2011 incentive payment, depending on the group's size, a group practice was required to report the electronic prescribing measure fo r a minimum of 75 to2,500 unique visits per year of applicable cases in the electro nic prescribing measure's denominator. Specifically, 2011 eRx GPRO comprised of 26 to 50 eligible professiona ls are required to report the electronic prescribing measure fo r at least 475 unique visits. 2011 group practices comprised of 51 to 100 eligible professionals ar e required to report the electronic prescribing measur e for at least 925 unique vi sits, and 2011 group practices comprised of 101 to 199 eligible professiona ls are required to report the electronic prescribing measure for at least 1,875 unique visits. Because we seek to simplify the reporti ng criteria for group practices using the eRx GPRO, we propose that, for the 2012 and 2013 incentive payments and 2013 and 2014 payment adjustments, for a group practi ce using the eRx GPRO to be a successfulCMS-1524-P 425

prescriber, a group practice usi ng the eRx GPRO must report the electronic prescribing measure's numerator for at least 625 unique visits (for group pract ices comprised of 25-99 eligible professionals) or 2,500 unique vi sits (for group pract ices comprised of 100 or more eligible professionals). To obta in these reporting criteria, we multiplied the smallest group practice size for each respec tive threshold (that is, 25 for the first threshold and 100 for the second threshold) by the number of unique visits (25) an individual eligible professional must report on the electronic prescrib ing measure in order to qualify for an incentive payment. A lthough this may be a higher reporting threshold for group practices using the eRx GPRO comprised of 25-50 eligible professionals and group practices using the eRx GP RO comprised of 101-199 eligib le professionals than in 2011, we believe it is still quite feasible for these group practices to meet the respective reporting threshold as this would be the re porting threshold should the members of the group practice choose to particip ate in the eRx Incentive Prog ram as individual eligible professionals. We invite public comment on the proposed criteria for determining successful electronic prescribers for eRx GPROs re porting for purposes of earning the 2012 and

2013 incentives. (4) No Double Payments We are prohibited from maki ng double payments under section 1848(m)(3)(C)(iii) of the Act, which requires th at payments to a group practice shall be in lieu of the payments that would otherwis e be made under the eRx Incentive Program to eligible professionals in the group practice for being a successf ul electronic prescriber. Accordingly, consistent with 2010 and 2011, we propose to make incentive payments toCMS-1524-P 426

group practices based on the determination that the eRx GPRO, as a whole, is a successful electronic prescriber for the respec tive program year. An individual eligible professional who is affiliated with a gr oup practice participati ng in the eRx GPRO reporting option that meets the re quirements of being a succe ssful electronic prescriber under a group practice would not be eligible to earn a separate eRx incentive payment on the basis of the individual eligible profe ssional meeting the criteria for successful electronic reporter at the indi vidual level. We invite public comment on the proposed

determination of the 2012 and 2013 incentive payment amount for group practices that are successful electronic prescribers. Furthermore, we propose to make a tec hnical change 42 CFR 414.92(g)(5)(ii) to modify "another" to "a" to clarify the provision. h. The 2013 and 2014 Electronic Prescribing Payment Adjustments As previously stated, for 2012, 2013, and 2014, if the eligible professional is not a successful electronic prescriber for the repor ting period for the year, the PFS amount for covered professional services furnished by su ch professionals duri ng the year shall be

less than the PFS amount that w ould otherwise apply by –

● 1.0 percent for 2012;

● 1.5 percent for 2013; and

● 2.0 percent for 2014. We propose to modify 42 CFR 414.92 to provide further explanation of the requirements for individual eligible prof essionals and group practices for the 2013 and 2014 payment adjustment, which we will propose below.CMS-1524-P 427

(1) Proposed Limitations to the 2013 and 2014 eRx Payment Adjustments – Individual Eligible Professionals

Whereas we believe that an incentive s hould be broadly available to encourage the widest possible adoption of electronic prescribing, even for low volume prescribers, we believe that a payment adjustment should be applied primarily to assure that those who have a large volume of prescribing do so electronically, without penalizing those for whom the adoption and use of an electronic prescribing system may be impractical given the low volume of prescribing. We propose that the 2013 and 2014 payment adjustments would not apply if:

● An eligible professional is not an MD, DO, podiatrist, nur se practitioner, or physician assistant as of June 30, 2012, for pur poses of the 2013 payment adjustment and June 30, 2013, for purposes of the 2014 paymen t adjustment. Since these eligible professionals do not generally prescribe, we have excluded these el igible professionals from the eRx Incentive Program. For purposes of determining whether an eligible professional is an MD, DO, podiatrist, nurse practitioner, or physician assistant we would use National Plan and Provider Enumeration System (NPPES) data . It is an elig ible professional's responsibility to ensure that his or her pr imary taxonomy code in NPPES is accurate. However, in 2011, we also established a G-c ode, (G8644) that eligible professionals can use to report to us that they do not have pr escribing privileges. We propose to retain the reporting of this G-code for purposes of the 2013 and 2014 payment adjustments. For purposes of the 2013 payment adjustment, we propose that eligible professionals who report this G-code must do so on a claim w ith dates of services during the 6-monthCMS-1524-P 428

reporting period (January 1, 2012 and June 30, 2012). For purposes of the 2014 payment adjustment, we propose that eligible professi onals who report this G-code must do so on a claim with dates of services during th e 6-month reporting period (January 1, 2013 and June 30, 2013) so that we are able to disti nguish whether a professi onal is reporting this G-code for the 2013 payment adjustment or the 2014 payment adjustment.

● The eligible professional's Medicare Part B allowed charges for covered professional services to which the electronic prescribing quality measure applies are less than 10 percent of the total Medicare Pa rt B PFS allowed charges for all covered professional services furnished by the eligib le professional during the respective payment adjustment reporting period. This is a re quired limitation under section 1848(m)(2)(B) of the Act. This calculation will be performed by dividing the eligible professional's total 2011 Medicare Part B PFS allowed charges for all such covered professional services submitted for the measure's denominator codes by the eligible professional's total Medicare Part B PFS allowed charges for all co vered professional services (as assessed at the TIN/NPI level). If the result is 10 pe rcent or more, then the statutory limitation will not apply. If the result is less than 10 percent, then the statutory limitation will apply. For the 12-month incentive and payment adjustme nt reporting periods, this calculation is expected to take place in the first quarter of the year following th e reporting period (for example, in the first quarter of 2013 for the 12-month reporting period for the 2012 incentive). For the 6-month payment adju stment reporting period, this calculation is expected to take place with in the calendar year for that 6-month reporting period (for example. within 2012 for the 6-month reporting period for the 2013 payment adjustment).CMS-1524-P 429

● 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 during: the 6-month, 2013 payment adjustment reporting period (January 1, 2012 through June 30, 2012) for purposes of the 2013 payment adjustment or the 6-month, 2014 payment adjustment reporting period (January 1, 2013 through June 30, 2013) for purpos es of the 2014 payment adjustment. If an eligible professional has less than 100 denominator-eligi ble instances in a 6-month period, this would be an indicator to us that the professional likely has a small Medicare patient population. We invite public comment on the proposed limitations of the 2013 and 2014 payment adjustments. (2) Proposed Requirements for the 2013 and 2014 eRx Payment Adjustments – Individual Eligible Professionals As we explained previously, section 1848(a)(5) of the Act requires a payment adjustment be applied with respect to c overed professional services furnished by an eligible professional in 2013 and 2014, 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 su ccessful electronic prescriber. However, section 1848(m)(3)(D) of the Ac t authorizes the Secretary to revise the criteria for submitting data on the electronic prescribing quality measure. In the 2011 PFS Final Rule with comment period, we establishe d the same reporting criteria for being a successful electronic prescriber for purpos es of the 2011 incentive and the 2013 payment adjustment, based on a 12-month reporting pe riod in 2011 (75 FR 73565). In order toCMS-1524-P 430

create another opportunity for an eligible pr ofessional to become a successful electronic prescriber for purposes of the 2013 payment adjustment, we propose the following criteria, based on the proposed 6-month repor ting period, for being a successful electronic prescriber: An eligible professional will be d eemed a successful electronic prescriber if he/she reports the electronic prescribing measure's numer ator, that is, at least 1 prescription for Medicare Part B PFS patients created during an encounter was generated and transmitted electronically using a qualified electronic prescribing system at least 10 times during the 6-month payment adjustment reporting period (that is, January 1, 2012 through June 30, 2012). Unlike the reporting cr iteria for the incentive payments where the numerator must be reported in connecti on with a denominator-eligible visit, for purposes of the 2013 and 2014 payment adjustments, we propose an eligible professional would be able to report the measure's nu merator for any Medicare Part B PFS service provided during the reporting pe riod, regardless of whether the code for such service appears in the denominator, because we r ecognize that eligible professionals may generate prescriptions during encounters that are not necessarily included in the

measure's denominator. For purposes of avoiding the 2014 payment adjustment, we also seek to provide more than one opportunity for eligible professionals to a void the 2014 payment adjustment by becoming a successful electronic prescriber. Therefore, consistent with the finalized and proposed criteria for succe ssful electronic prescribing for purposes of the 2013 payment adjustment, we propose that an eligible prof essional the following criteria for an eligible professional to be a successful electronic pres criber for purposes of the 2014 payment adjustment: (1 ) An eligible professional meets the criteria for the 2013CMS-1524-P 431

incentive, that is, reports th at at least one prescription for Medicare Part B PFS patients created during an encounter was generated and transmitted electronically using a qualified electronic prescribi ng system at least 25 times during the 12-month payment adjustment reporting period (that is, Janua ry 1, 2012 through December 31, 2012) or (2) An eligible professional repor ts the electronic prescribing measure's numerator (that is, that at least 1 prescription for Medicare Part B PFS patients created during an encounter was generated and transmitted electronically using a qualified electronic prescribing system) at least 10 times during the 6-month payment adjustment reporting period (that is, January 1, 2013 through June 30, 2013). As with the 2012 and 2013 incentive payments, we propose 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. Tables 57 and 58 reflect the proposed criteria for being a successful electronic prescriber for an individual eligible professional for purposes of the 2013 and 2014 payment adjustment respectively.

TABLE 57. PROPOSED CRITERIA FOR BEING A SUCCESSFUL ELECTRONIC PRESCRIBE R FOR THE 2013 ERX PAYMENT ADJUSTMENT FOR THE PROPOSED 6-MONTH REPORTING PERIOD – INDIVIDUAL ELIGIBLE PROFESSIONALS* Reporting Period Criteria 6-month (Jan 1, 2012-Jun 30, 2012) Report the electronic prescribing measure's numerator code at least 10 times * In the CY 2011 PFS final rule with comment period, we finalized a repor ting criterion based on a 12-month reporting period (January 1, 2011 through December 31, 2011) for being a successful electronic prescriber for the 2013 payment adjustment. That is, the eligible professional becomes a successful electronic prescriber for the 2013 payment adjustment if, between January 1, 2011 and December 31, 2011 s/he reports on the 2011 elec tronic prescribing measure at least 25 times.CMS-1524-P 432

TABLE 58. PROPOSED CRITERIA FOR BEING A SUCCESSFUL ELECTRONIC PRESCRIBER FOR THE 2014 ERX PAYMENT ADJUSTMENT – INDIVIDUAL ELIGIBLE PROFESSIONALS Reporting Period Criteria 12-month (Jan 1, 2012-Dec 31, 2012) Report the electronic prescribing measure's numerator code at least 25 times for encounters associated with at least 1 of the denominator codes (the same criteria as the 2013 eRx incentive) 6-month (Jan 1, 2013-Jun 30, 2013) Report the electronic prescribing measure's numerator code at least 10 times

We proposed the previous criteria for being a successful electronic prescriber for purposes of the 2013 and 2014 payment adjustments because they are consistent with the criteria for being a successful electronic prescriber for purposes of th e 2012 and 2013 payment adjustment that were

finalized in the CY 2011 PFS final rule with comment period (75 FR 73562 through 73565). We invite public comment on the proposed criteria fo r becoming a successful electronic prescriber for the 2013 and 2014 payment adjustments for individual eligible professionals. (3) Proposed Requirements for the 2013 a nd 2014 eRx Payment Adjustments – 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 electroni c prescriber for purposes of the payment adjustment. For purposes of the 2013 and 2014 payment adjustments, we propose that if a group practice chooses to participate in the eRx GPRO during CYs 2012 and 2013, respectively, then the group practice would be evaluated for applicability of the 2013 and 2014 payment adjustment as a group practice. We propose an eRx GPRO will be deemed a successful electronic prescriber for purposes of the 2013 payment adjustment if, during the 6-month, 2013 payment adjustment reporting period (January 1, 2012 through June 30, 2012), a group practiceCMS-1524-P 433

reports the electronic prescribi ng measure's numerator (that is, that at least 1 prescription for Medicare Part B PFS patients created during an encounter was generated and transmitted electronically using a qualified el ectronic prescribing system) at least 625 times (for group practices comprised of 25 to 99 eligible professionals) or 2,500 times (for group practices comprised of 100+ eligible professionals). Similarly, for the 2014 payment adjustment, we propose the following: A group practice would be a successful electronic prescriber for purposes of the 2014 payment adjustment if the group practice meets the 2012 cr iteria for being a su ccessful electronic prescriber for purposes of the 2012 incentive pa yment. In other words, the group practice would need to report the elec tronic prescribing measure's num erator for at least 625 (for group practices comprised of 25 to 99 eligible professionals) or 2,500 (for group practices comprised of 100 or more eligib le professionals) times for en counters associated with at

least 1 of the denominator codes th at occur between January 1, 2012 and December 31, 2012. In addition, we propose that a group practice would also be a successful electronic prescriber for purposes of the 2014 payment adjustment if, during the 6-month, 2014 payment adjustment repor ting period (January 1, 2013 through June 30, 2013), a group practice reports th e electronic prescribing m easure's numerator (that is, that at least 1 prescription for Medicare Part B PFS patients created during an encounter was generated and transmitted electronically using a qualified electronic prescribing system at least 625 times (for group practices with 25 to 99 eligible professionals) or 2,500 times (for group practices with 100+ eligible professionals)). In addition, in accordance with the li mitation under section 1848(m)(2)(B)(i) of the Act, the 2013 or 2014 payment adjustment would not apply to a group practice inCMS-1524-P 434

which less than 10 percent of the group practi ce's estimated total allowed charges for the respective 6-month or 12-month payment adjustment reporting period are comprised of services which appear in the denominator of the 2012 or 2013 el ectronic prescribing

measure. To be consistent with how this limitation is applied to group practices for purposes of the incentive, we propose to dete rmine whether this limitation applies to a group practice for the payment adjustment at th e TIN level. Tables 59 and 60 reflect the proposed criteria for being a successful el ectronic prescriber for a group practice for purposes of the 2013 and 2014 payment adjustments, respectively.

TABLE 59. PROPOSED CRITERIA FOR BEING A SUCCESSFUL ELECTRONIC PRESCRIBE R FOR THE 2013 ERX PAYMENT ADJUSTMENT FOR THE PROPOSED 6-MONTH REPORTING PERIOD – GROUP PRACTICES eRx GPRO Size Reporting Period Criteria 25-99 Eligible Professionals 6-month (Jan 1, 2012-Jun 30, 2012) Report the electronic prescribing measure's numerator code at least 625 times 100+ Eligible Professionals 6-month (Jan 1, 2012-Jun 30, 2012) Report the electronic prescribing measure's numerator code at least 2,500 times

TABLE 60. PROPOSED CRITERIA FOR BEING A SUCCESSFUL ELECTRONIC PRESCRIBER FOR THE 2014 ERX PAYMENT ADJUSTMENT – GROUP PRACTICES USING THE ERX GPROS eRx GPRO Size Reporting Period Criteria 25-99 Eligible Professionals 12-month (Jan 1, 2012-Dec 31, 2012) Report the electronic prescribing measure's numerator for at least 625 times for encounters associated with at least 1 of the denominator codes (the same criteria as the 2012 eRx incentive) 100+ Eligible Professionals 12-month (Jan 1, 2012-Dec 31, 2012) Report the electronic prescribing measure's numerator for at least 2,500 times for encounters associated with at least 1 of the denominator codes (the same criteria as the 2012 incentive) 25-99 Eligible Professionals 6-month (Jan 1, 2013-Jun 30, 2013) Report the electronic prescribing measure's numerator code at least 625 times 100+ Eligible Professionals 6-month (Jan 1, 2013-Jun 30, 2013) Report the electronic prescribing measure's numerator code at least 2,500 timesCMS-1524-P 435

We invite public comment on the proposed requirements for 2013 and 2014 electronic prescribing payment adjustment for eRx GPROs. (4) Significant Hardship Exemptions Section 1848(a)(5)(B) of the Act pr ovides that the Secretary may, on a case-by-case basis, exempt an eligible profe ssional from the application of the payment adjustment, if the Secretary determines, subj ect to annual renewal, that compliance with the requirement for being a successful electroni c prescriber would re sult in a significant hardship. (A) Proposed Significant Hardship Exemptions In the CY 2011 PFS Final Rule with comment period (75 FR 73564 through 75 FR 73565), we finalized two circumstances under which an eligib le professional or eRx GPRO can request consid eration for a significant hard ship exemption for the 2012 eRx payment adjustment:

• The eligible professional or eRx GP RO practices in a rural area with limited high speed internet access.

• The eligible professional or eRx GP RO practices in an area with limited available pharmacies for electronic prescribing. For the 2013 and 2014 payment adjustment s, we propose to retain these two significant hardship exemption categories. We propose that eligible professionals and eRx GPROs wishing to request applicability of these significant hardship exemption categories may do so via a web-based tool. Al ternatively, since we created a G-code for each of the previous categories, we propose that eligible professionals and eRx GPROs may use the G-codes to request consideration for a significant hardship exemption for theCMS-1524-P 436

2013 and 2014 payment adjustment by reporting the appropriate G-code at least once on claims for services rendered during th e respective 2013 and 2014 6-month reporting periods. Since publication of the CY 2011 PFS Fina l Rule with comment period, we have received numerous requests to expand the categories under the significant hardship exemption for the payment adjustment. Some stakeholders have recommended specific circumstances of significant hardship for our consideration (for example, eligible professionals who have prescribing privileg es but do not prescribe under their NPI, eligible professionals who prescribe a high volume of narcotics, and eligible professionals who electronically prescribe but typically do not do so for any of the

services included in the elec tronic prescribing measure's denominator), while others strongly suggested we consider increasing th e number of specific hardship exemption categories. We believe that many of the ci rcumstances raised by stakeholders may pose a significant hardship and limit eligible profession als and group practices in their ability to meet the requirements for being successful el ectronic prescribers either because of the nature of their practice or because of the lim itations of the electronic prescribing measure itself, and as a result, such professionals mi ght be unfairly penalized. Therefore, in 2011, in the proposed rule entitled "Proposed Ch anges to the Electronic Prescribing (eRx) Incentive" (76 FR 31547), we proposed to e xpand the categories under the significant hardship exemption for the 2012 payment adjustment. Because we believe the reasons for proposing the expanded categories under th e significant hardship exemption for the 2012 payment adjustment also apply to the 2013 and 2014 payment adjustments, weCMS-1524-P 437

propose to retain the following significant hardship exemptions for the 2013 and 2014 payment adjustments:

● Inability to electronically prescribe due to local, state, or federal law or regulation

● Eligible professionals who prescrib e fewer than 100 prescriptions during a 6-month, payment adjustment reporting period (i) Inability to Electronically Prescribe due to Local, State, or Federal Law or Regulation We are proposing that, to the extent that local, State, or Federal law or regulation limits or prevents an eligible professional or group practice that otherwise has general prescribing authority from electronically prescr ibing (for example, e ligible professionals who prescribe a large volume of narcotics, wh ich may not be electron ically prescribed in some states, or eligible prof essionals who practice in a Stat e that prohibits or limits the transmission of electronic prescriptions via a third party network such as Surescripts), the eligible professional or group practice would be able to re quest consideration for an exemption from application of the 2013 and/ or 2014 payment adjustments, which would be reviewed on a case-by-case basis. We belie ve eligible professionals in this situation face a significant hardship with regard to the requirements for being successful electronic prescribers because while they may meet the 10 percent threshold for applicability of the payment adjustment, or the 100 denominator-e ligible cases limit in a 6-month payment adjustment reporting period, they may not ha ve sufficient opportunities to meet the requirements for being a successful electronic pr escriber because Federal, State, or local law or regulation may limit the number of oppor tunities that an elig ible professional or group practice has to elec tronically prescribe.CMS-1524-P 438

(ii) Eligible professionals who prescribe fewer than 100 prescriptions during a 6-month, payment adjustment reporting period We are proposing that an eligible prof essional who has prescribing privileges but prescribes fewer than 100 prescriptions dur ing a 6-month, payment adjustment reporting period (for example, a nurse practitioner who may not write pres criptions under his or her own NPI, a physician who decides to let his Drug Enforcement Administration registration expire during th e reporting period without re newing it, or an eligible professional who prescribed fewer than 100 prescriptions between January 1, 2012 and June 30, 2012 regardless of whether the prescrip tions were electronically prescribed or not), yet still meets the 10 percent threshol d for applicability of the payment adjustment, would be able to request consideration fo r a significant hardship exemption from application of the 2013 and/or 2014 payment ad justment, which would be reviewed on a case-by-case basis. We believe that it is a si gnificant hardship for eligible professionals who have prescribing privileges, but infre quently prescribe, to become successful electronic prescribers because the nature of their practice may limit the number of opportunities an eligible professional or group practice to prescribe, much less electronically prescribe. We invite public comments on our pr oposal to modify 42 CFR 414.92 to include our proposed significant hardship exemp tion categories for the 2013 and 2014 payment adjustments. As we realize that the 4 significant hard ship exemptions we have proposed above may not capture every circumstance that could constitute a significant hardship, we inviteCMS-1524-P 439

public comment on other suggestions for signi ficant hardship exemption categories that we may want to consider. (B) Process for Submitting Significant Hard ship Exemptions – Individual Eligible Professionals and Group Practices To request a significant hardship exemp tion for any of the categories proposed and previously described, we are proposing that an eligible professi onal provide to us by the end of the 2013 and/or 2014 payment adjust ment reporting periods (that is June 30, 2012 for the 2013 payment adjustment and June 30, 2013 for the 2014 payment adjustment), the following:

● The name of the practice and other Iden tifying information (for example: TIN, NPI, mailing address, and e-mail address of all affected eligible professionals.

● The proposed significant hardship ex emption category(ies) that apply.

● A justification statement describing how compliance with the requirement for being a successful electronic prescriber fo r the respective 2013 and/or 2014 payment adjustment during the reporting period would result in a significant hardship to the eligible professional.

● An attestation of the accuracy of the information provided. The justification statement should be specific to the category under which the eligible professional or group practice is s ubmitting its request and must explain how the exemption applies to the professional. For example, if the eligible professional is requesting a significant hardship exemption due to Federal, State, or local law or regulation, he or she must cite the applicable law and how th e law restricts the eligible professional's ability to electronically pres cribe. CMS will review the informationCMS-1524-P 440

submitted by each eligible professional on a case-by-case basis. In addition, we are proposing that an eligible professional or group practi ce must, upon request, provide additional supporting documentation if there is insufficient information (such as, but not limited to, a TIN or NPI that we cannot match to the Medicare claims, a certification number for the Certified EHR Technology that does not appear on the list of Certified EHR Technology, or an incomplete justifica tion for the significant hardship exemption request) to justify the request or make the de termination of whether a significant hardship

exists. We also are proposing that eligible professionals or gr oup practices would be able to submit significant hardship exemption reque sts using the web-based tool or interface (that we also proposed to use in the 2011 "Proposed Changes to the Electronic Prescribing (eRx) Incentive Program" proposed rule). Under the web-based tool, we propose that eligible professionals and group prac tices be able to log-in, request a specific significant hardship exemption, and provide the reasons why a significant hardship exemption should apply. We propose that e ligible professionals would be required to submit their requests for a significant hardship exemption via the web-based tool during the relevant 6-month payment adjustment repor ting period. For example, if an eligible professional is requesting a significant hardship exemption from the 2013 payment adjustment, then the request must be submitted between January 1, 2012 and June 30, 2012. We also are proposing that once we have completed our review of the eligible professional's or group practice's request a nd made a decision, we would notify the eligible professional or group practice of our decision and a ll such decisions would beCMS-1524-P 441

final. Eligible professionals or group pract ices would not have th e opportunity to request

reconsiderations of their re quests for significant hardship exemption. We invite public comment on the proposed process for indi vidual eligible prof essionals and group practices for submitting these requests for significant hardship exemptions to us (including comments on the type of informati on we are proposing el igible professionals must submit, the proposed options for how the information could be submitted, and the proposed timeframes for submission). G Physician Compare Website 1. Background and Statutory Authority Section 10331 (a)(1) of the Affordable Care Act (42 U.S.C. 1395w-5 note) requires that we, by no later than January 1, 2011, develop a Physician Compare Internet website with information on physicians enroll ed in the Medicare program under section 1866(j) of the Act as well information on othe r eligible professionals who participate in the Physician Quality Reporting System under section 1848 of the Act (42 U.S.C. 1395w–4). Public reporting of performance re sults on standardized quality measures currently exists on http://www.medicare.gov for the following:

● Hospitals (Hospital Compare).

● Dialysis facilities (D ialysis Facility Compare).

● Nursing homes (Nur sing Home Compare).

● Home health facilities (Home Health Compare). As an initial step towards providing info rmation on the quality of care for services furnished by physicians and other professiona ls to Medicare bene ficiaries, we have enhanced the existing Physician and Other Health Care Professi onals directory atCMS-1524-P 442

http://www.medicare.gov to develop a similar Compare website specific to physicians and other professionals. In accordance with section 10331 of the Affordable Care Act, we launched the first phase of the P hysician Compare Internet website on December 30, 2010. This initial phase include d the posting of the names of eligible professionals that satisfactorily submitted quality data for the 2009 Physician Quality Reporting System. 2. Proposed Plans Section 10331 (a)(2) of the Affordable Care Act also requires that, no later than January 1, 2013, and with respect to repor ting periods that be gin no earlier than January 1, 2012, we implement a plan for making information on physician performance publicly available through the Physician Compare Website. To the extent that scientifically sound measures are developed and are available, we are required to include, to the extent practicable, the following types of measures fo r public reporting:

● Measures collected under the Physician Quality Reporting System.

● An assessment of patient health outc omes and functional status of patients.

● An assessment of the continu ity and coordination of care and ca re transitions, including episodes of care and risk-adjusted resource use.

● An assessment of efficiency.

● An assessment of patient experien ce and patient, caregiver, and family engagement.

● An assessment of the safety, eff ectiveness, and timeliness of care.

● Other information as determined appropriate by the Secretary. As required under section 10331(b) of the Af fordable Care Act, in developing andCMS-1524-P 443

implementing the plan, we must include, to the extent practicable, the following:

● Processes to ensure that data made pub lic are statistically valid, reliable, and accurate, including risk adjustment mechanisms used by the Secretary.

● Processes for physicians a nd eligible professionals whose information is being publically reported to have a reasonable opportunity, as dete rmined by the Secretary, to

review their results before posting to Physician Compare.

● Processes to ensure the data publishe d on Physician Compare provides a robust and accurate portrayal of a physician's performance.

● Data that reflects the care provided to all patients seen by physicians, under both the Medicare program and, to the extent ap plicable, other payers, to the extent such information would provide a more accurate portrayal of physician performance.

● Processes to ensure appropriate attr ibution of care when multiple and other providers are involved in th e care of the patient.

● Processes to ensure timely statistical performance feedback is provided to physicians concerning the data published on Physician Compare.

● Implementation of computer and data infrastructure and systems used to support valid, reliable, and accu rate reporting activities. Section 10331 (d) of the Affordable Care Act requires us to consider input from multi-stakeholder groups in selecting quality measures for Physician Compare. In developing the plan for making informati on on physician performance publicly available through the Physician Compare website, sect ion 10331 (e) of the Affordable Care Act requires the Secretary, as the Secretary deem s appropriate, to consider the plan to transition to value-based purchasing for phys icians and other practitioners that wasCMS-1524-P 444

developed under section 131(d) of the Medicare Improvement s for Patients and Providers

Act of 2008. We are required, under sec tion 10331 (f) of the Affordab le Care Act, to submit a report to the Congress by January 1, 2015 on the Physician Compare website developed, and include information on the efforts and pl ans to collect and publish data on physician quality and efficiency and on patient expe rience of care in support of value-based purchasing and consumer choice. Section 10331 (g) of the Affordable Care Act provides that any time before that date, we may conti nue to expand the information made available on Physician Compare.

We believe section 10331 of the Afford able Care Act supports our overarching goals to foster transparency and public repor ting by providing consumers with quality of

care information to make informed decisions about their health care, while encouraging clinicians to improve on the quality of care th ey provide to their patients. In accordance

with Section 10331 of the Affordable Care Act, we intend to u tilize the Physician Compare website to publicly report physician performance results. For purposes of implementing a plan to publicly report physician performance, we plan to use data reported under the existing Physician Quality Reporting System as an initial step for making public physician "meas ure performance" information on Physician Compare. By "measure performance," we mean the percent of times that a particular clinical quality action was re ported as being performed, or a particular outcome was attained, for the applicable persons to wh om a measure applies as described in the

denominator for the measure. The Physician Quality Reporting System is a readily available source of measuresCMS-1524-P 445

performance data. First implemented in 2007, the program grew to include 194 different

measures in 2011. The measures used in th e Physician Quality Reporting System cover a wide range of health conditi ons and topics and include m easures applicable to most physician specialties and other clinicians. Work is underway to ensure consistency of quality measures reported under the Physic ian Quality Reporting System and the EHR Incentive Program. The first phase of the plan to make in formation on physicians and other eligible professionals who participate in the Phys ician Quality Reporting System publically available was completed through the launch of the Physician Compare website and the posting of the names of those el igible professionals who satisf actorily participated in the Physician Quality Reporting System. During the second phase of the pla n, occurring in 2011 through 2012, we will continue to work towards the development and improvement of the website. Our plans for Physician Compare website development during this second phase include monthly

data refreshes and a semiannual website rel ease to incorporate updates and improvements to the website. Updates will include the addi tion of the names of eligible professionals who are successful electronic prescribers, as required by secti on 1848(m)(5)(G) of the Social Security Act (the Act), as well as th e names of those eligible professionals who participate in the EHR Incentive Program, as required by section 1848(o)(3)(D) of the Act. Additional enhancements planned includ e the addition of links to specialty board websites that can provide more informa tion on an eligible professional's board

certification status and improved website functionality and layout. Moving towards the reporting of physician performance information, we proposeCMS-1524-P 446

to take an initial step by making public the pe rformance rates of the quality measures that group practices submit under the 2012 Physician Quality Reporting System group practice reporting optio n (GPRO)) described in section IV.F.b.2. of this proposed rule. We also propose to publicly report the performa nce rates of the quality measures that the group practices participating in the Physician Group Practice demonstration report on the Physician Compare Web site as early as 2013 for performance information collected in CY 2012. Subject to the discus sion later in this section, we would make public the measure performance for each of the measur es included in the 2012 Physician Quality Reporting System GPRO. Since the quality measures in GPRO are reported for the group as a whole, the information on measure performance would also apply to the group as a whole, rather than to indivi dual physicians within a group. Public reporting of the group practices' m easure performance results at the group practice level would begin public reporting at the earliest time specified by the statute. We believe the design of the GPRO (see section IV.F.b.2. of this proposed rule) facilitates making public groups' performance re sults. All groups pa rticipating in the GPRO would be reporting on the same set of clinical quality measures, which allows for comparison of the results across groups. To eliminate the risk of calculating performance rates based on a small denominator, we propose to set a minimum pa tient sample size threshold. A minimum threshold of 25 patients will have to be me t in order for the group practice's measure performance rate to be reporte d on the Physician Compare webs ite. If the threshold of 25 patients is not met for a particular measure, the group's performance rate for that measure would be suppressed and not publically reporte d. In determining the minimum patientCMS-1524-P 447

sample size, we took into consideration the minimum patient sample size used by other Compare websites that publically report measur e performance data. We wanted to ensure that we used a number large enough to accurately reflect measure performance, but not so large that it will limit the number of groups for which measure performance could be reported. In taking into cons ideration the minimum patient sample size used by other Compare websites that publically report meas ure performance data, we also considered a minimum patient sample size of 10 patients, 20 patients and 30 patients. As we are proposing to report measure performance at a group level and a majority of the other Compare websites use minimum sample si zes of between 20 and 30 patients, we concluded that a minimum patient sample size of 25 would meet our criteria.

As discussed in section IV.F.b.2 of this proposed rule, we propose that group practices participating in the 2012 Physic ian Quality Reporting System GPRO would agree in advance to have their reporting performance results p ublicly reported as part of their self-nomination to participate in the 2012 Physician Quality Reporting System GPRO. Finally, we propose to modify th e GPRO data collection tool for 2012 to calculate the numerator, denominator, and m easure performance rate for each measure from the data that the group practices use to populate the tool and provide each group practice this information at the time of tool submission. This feature would allow the group practice the opportunity to review their measure performance results before they are made public in accordance with section 1033 1(b) of the Affordable Care Act. For groups reporting using GPRO information that is made public in 2013, we do not propose to post information with respect to the meas ure performance of individual physicians or eligible professionals associ ated with the group. However, we propose to identify theCMS-1524-P 448

individual eligible professiona ls who were associated with the group during the reporting period. We will identify the el igible professionals associat ed with the group by posting a list of the eligible professionals on the Physician Compare website. We believe a staged approach to public reporting of physician information allows for the use of information currently available while we develop the infrastructure necessary to support th e collection of additional types of measures and public reporting of individual physicians' quality measure pe rformance results. Implementation of subsequent phases of the plan will need to be developed and addre ssed in future notice and comment rulemaking, as needed. We inv ite comments regarding our proposal to: (1) to publicly report group practices' measure pe rformance results in 2013 based on group practices' 2012 Physician Quality Reporting System performance results under GPRO; and (2) utilize a minimum patient sample size of 25 for reporting and displaying measure performance on the Physician Compare website. H. Medicare EHR Incentive Program for E ligible Professionals for the 2012 Payment

Year 1. Background On July 28, 2010, we published in the Federal Register (75 FR 44314) a final

rule entitled "Medicare and Medicaid Programs; Electronic Health Record Incentive Program" to implement the provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L. 111-5) that am ended sections 1848, 1853, and 1886 of the Social Security Act (the Act) to provide incentive payments to eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) participating in the Medicare and Medicaid programs that succ essfully adopt, implement, upgrade, orCMS-1524-P 449

demonstrate meaningful use of certified elec tronic health record (EHR) technology. In that final rule, we specified the initial criteria EPs, eligible hospitals, and CAHs must meet in order to qualify for an incentive payment, including the initial clinical quality measures (CQMs) for which these providers would be required to submit information to the Secretary in the form a nd manner specified by CMS. In the July 28, 2010 final rule (75 FR 44430), we stated that for the Medicare EHR Incentive Program, for the 2011 payment year, EPs, eligible hospitals, and CAHs will be required to submit CQM results as calculated by certified EHR technology through attestation, and for the 2012 payment y ear and subsequent payment years, they will be required to electronically submit CQ M results as calculated by certified EHR technology. Additionally, we stat ed that the primary method fo r these providers to report required CQM information electronically will be to submit data by an upload process through a CMS-designated portal. In the final rule , we also stated that we anticipated that we would have completed the necessary steps to have the capacity to receive information on CQMs electronically for the 2012 payment year. However, we also stated that if the Secretary does not have the capacity to accep t the information on CQMs electronically in 2012, consistent with sections 1848(o)(2)(B)(ii) and 1886(n)(3)(B)( ii) of the Act, then we will continue to rely on attestation for reporting CQMs as a requirement for demonstrating meaningful use of certified EHR technology for the 2012 payment year (75 FR 44380).

We also stated in the final rule that ce rtified EHR technology will be required to calculate the clinical quality measure resu lts and transmit under the Physician Quality Reporting Initiative (P QRI) Registry XML specification (75 FR 44435). Since theCMS-1524-P 450

publication of the final rule, we have determ ined that it is not feasible to receive electronically the information necessary fo r clinical quality measure reporting based solely on the use of PQRI 2009 Registry XM L Specification content exchange standards as is required for certified EHR technology. Th is is because the spec ification is tailored to the elements required for 2009 PQRI Regi stry submission, rather than constituting a more generic standard. As a result, we propose to modify th e requirement that clinical quality measure reportin g must be done electronically. Specifically, we propose that for the 2012 payment year, EPs may continue to re port clinical quality measure results as calculated by certified EHR technology by a ttestation, as for the 2011 payment year. In addition to attestation, we propose to establish a pilot mechanism through which EPs participating in the Medicare EHR Incentive Program may report CQM information electronically using certified EHR technology for the 2012 payment year. Participation in the pilot would be volunt ary and would enable EPs to satisfy the Medicare EHR Incentive Program require ments for reporting CQMs for the 2012 payment year. EPs who choose not to participate in the pilot would be able to continue to use an attestation methodology for reporting CQMs for payment year 2012. We propose to modify 42 CFR 495.8(a)(2) by adding a new paragraph to allow for the reporting of CQMs fo r the Medicare EHR Incentive Program via the Physician Quality Reporting System-Medicare EHR Incentive Pilot. Furthermore we are proposing to revise 42 CFR 495.8(a)(2)(ii) by deleting the word "electronically" and adding the

words "form and" such that it reads as follows: Reporting of clinical quality in formation. For 42 CFR 495.6(d)(10), 'Report ambulatory clinical quality measures to CMS or, in the case of Medicaid EPs, the States,' report the ambulatory clinical quality measures selected by CMS to CMS (or in the cas e of Medicaid EPs, the States) inCMS-1524-P 451

the form and manner specified by CMS (or in the case of Medicaid EPs, the States)." 2. The Proposed Physician Quality Repor ting System-Medicare EHR Incentive Pilot We propose to modify 42 CFR 495.8(a)(2) to indicate that EPs participating in the Medicare EHR Incentive Program can meet th e CQM reporting requirements of the EHR Incentive Program for payment year 2012 by partic ipating in a pilot, wh ich we refer to as the Physician Quality Reporting System-Medicare EHR Incentive Pilot. Sections 1848(o)(2)(B)(ii) of the Act pr ovides authority for the Secretary to accept information on CQMs electronically on a pilot basis. We propose that EP s may participat e in the pilot on a voluntary basis, and that those EPs who choose not to participate may instead

continue to attest to the re sults of the CQMs as calculate d by certified EHR technology, consistent with the CQM reporting method for the 2011 payment year. However, we encourage participation in the pilot based on our desire to adequa tely pilot electronic submission of CQMs and to move to a syst em of reporting where EPs can satisfy the CQM reporting requirements for both the P hysician Quality Reporting System and the EHR Incentive Program. To participat e in the Physician Quality Reporting System-Medicare EHR Incentive Pilot, we propose that EPs would be required to electronically report the CQMs using certified EHR technology via one of two options that are based on the existing reporting pl atforms of the Physician Quality Reporting System. As described later in this section, one option would be based on the infrastructure used for the Physician Quality Reporting System EHR data submission vendor reporting mechanism. The second op tion would be based on the infrastructure used for the Physician Quality Reporting Sy stem EHR reporting mechanism. EPs who seek to participate in the Physician Quality Reporting System-Medicare EHR IncentiveCMS-1524-P 452

Pilot must also participate in the Physicia n Quality Reporting System itself, because the pilot will rely on the infrastructure used for Physician Quality Reporting System. To move towards the integration of reporting on quality measures under the Physician Quality Reporting System with th e reporting requirement s of the Medicare EHR Incentive Program, as required by secti on 1848(m)(7) of the Act ("Integration of Physician Quality Reporting and EHR Reporting"), we propose that participation in the Physician Quality Reporting System-Medicare EHR Incentive Pilot would require EPs to submit information on the same CQMs that were adopted for EPs for the Medicare EHR Incentive Program and included in Tables 6 and 7 of the July 28, 2010 final rule (75 FR 44398 through 44410). We propose that EPs participating in this pilot must

submit information on the three core measures included in Table 7, up to three of the

alternate core measures included in Table 7 in sofar as the denominator for one or more of the core measures is zero, and three additional measures from the measures included in Table 6, as is otherwise required by the final rule to successfully demonstrate meaningful use (75 FR 44409 through 44411). EPs that elect to participate in this Physician Quality Reporting System-Medicare EHR Incentive P ilot will still be required to report information on the CQMs as required under the Stage 1 criteria established for the Medicare EHR Incentive Program regardless of which option they select as described

later in this section. As th e reporting of CQMs is only one of the 15 core meaningful use objectives for EPs for the Medicare EHR In centive Program, an EP who elects to participate in the proposed Physician Qua lity Reporting System-Medicare EHR Incentive Pilot would still be required to meet and atte st to the remaining 14 core objectives and required menu set objectives using the atte station module on the CMS website for theCMS-1524-P 453

program. Consequently, participation in this pilot only applies to the method of reporting for meeting the meaningful use CQM objective in the EHR Incentive Program (42 CFR 495.6(d)(10)). To participate in the Physician Qu ality Reporting System-Medicare EHR Incentive Pilot, we propose EPs would be re quired to electronical ly report the CQMs by choosing one of the options described later in this section. By submitting the required information through the pilot, an EP could m eet the core objective for reporting CQMs

for the Medicare EHR Incentive Program for the 2012 payment y ear. After attesting to all other meaningful use objectives, the EP's attestation file would be placed in a holding status, with respect to the CQM objective on ly, until the EP reports the CQMs via one of the proposed Physician Quality Reporting System-Medicare EHR Incentive Pilot options. Thus, the EP would not know if he/she successfully met the requirements for the Medicare EHR Incentive Program with resp ect to the CQM objective until the CQMs are received at the end of the submission period for measures for the Physician Quality Reporting System (we expect this would be 2 months after the close of the reporting period, which is the CY 2012, and no later than February 29, 2013). As explained later in this section, any EP participating in this p ilot would be required to report CQMs based on a full calendar year, regardless of the EP's y ear of participation in the Medicare EHR Incentive Program.

If the EP who selects one of the pilot options subsequently determines completion of the pilot is unfeasible, then we propose it is permissible for the EP to go back into the Medicare EHR Incentive Program attestati on module on the CMS website and complete attestation for the CQMs assuming it is within the reporting timeframes established underCMS-1524-P 454

the EHR Incentive Program. We note that EPs w ho are in their first ye ar of participation in the EHR Incentive Program and choose to participate in the Physician Quality Reporting System-Medicare EHR Incentive Pilot only will have their EHR incentive payments delayed until the data submitted under the Pilot has been analyzed. However, participation in this Physician Quality Re porting System-EHR Incentive Pilot will allow for the receipt of EHR Incentive Program and Physician Quality Reporting System incentives, provided an EP meets the provi sions described late r in this section. a. EHR Data Submission Vendor-based Reporting Option As discussed further in the Physician Quality Reporting System section IV.F.1(d).(3).(b). of this proposed rule, EP s participating in the Physician Quality Reporting System may choose to report the Physician Quality Reporting System measures to CMS via a Physician Quality Reporting System qualified EHR data submission vendor. For purposes of the Phys ician Quality Reporting System, a Physician Quality Reporting System qualified EHR da ta submission vendor would receive data from an EP's EHR and subsequently reformat and transmit the data on behalf of the EP to CMS. Under this reporting option, we propose th at an EP participat ing in the Physician Quality Reporting System-Medicare EHR Incentive Pilot would submit CQM data from his or her certified EHR technology to a P hysician Quality Reporting System qualified EHR data submission vendor. We expect to post a list of the 2012 Physician Quality Reporting System EHR data subm ission vendors that are qualifie d to submit data from an EP's certified EHR technology to CMS on the EP's behalf on the Physician Quality Reporting System section of the CMS website ( http://www.cms.gov/pqrs ) by summer

2012.CMS-1524-P 455

Under this option, the Physician Quality Reporting System qualified EHR data

submission vendor would obtain data elements for the calculation of CQMs from the EP's certified EHR technology and then submit the calculated results to CMS on the EP's behalf via a secure portal. As discussed pr eviously, in order for an EP to submit CQMs electronically through the Physician Qua lity Reporting System – Medicare EHR

Incentive Pilot EHR data submission vendo r-based reporting option, we propose that

such EPs must submit information on the same CQMs as require d by the July 28, 2010 final rule, which must be based on data cont ained in the EP's certified EHR technology. However, it would be sufficient for an EP participating in this EHR data submission vendor-based reporting option to submit CQM data as require d by the pilot even though such data would differ from what is requi red by the July 28, 2010 final rule in the following two respects: (1) the data would be limited to Medicare patients rather than all patients, and (2) the data would be based on a CQM reporting period of 1-calendar year regardless of which year of participation in the Medicare EHR Incentive Program the EP is in (resulting in a later determination of whether the EP has successfully demonstrated meaningful use, for those EPs in their first year of program partic ipation). We invite comment on the proposed EHR data submi ssion vendor-based reporting option under the Physician Quality Reporting System-Medicare EHR Incentive Pilot. b. EHR-based Reporting Option As discussed further in the Physician Quality Reporting System section IV.F.1.(d).(3).(a). of this proposed rule, EP s participating in the Physician Quality Reporting System via the EHR reporting mechan ism can choose to report the Physician Quality Reporting System measures to CMS directly from the EP's EHR. Therefore,CMS-1524-P 456

under this EHR-based reporting option, we pr opose that an EP participating in the Physician Quality Reporting System-Medic are EHR Incentive Pilot would submit CQM data directly from his or her certified EHR technology to CMS via a secure portal using the infrastructure of the Physician Qualit y Reporting System EHR reporting mechanism. We propose that in order to particip ate in the Physician Quality Reporting System-Medicare EHR Incentive Pilot unde r this option, the EP's certified EHR technology must also be a 2012 Physician Qual ity Reporting System qualified EHR. We expect to post a list of the 2012 Physicia n Quality Reporting System qualified EHRs on the Physician Quality Reporting System section of the CMS website prior to January 1, 2012. Due to this proposed Physician Quality Reporting System-Medicare EHR Incentive Pilot, we are proposing to ha ve an additional vetting process for EHR vendors wishing to participate in the Pilot. We expect to post an additional list of these additional 2012 qualified EHR vend ors, if applicable, and thei r products in the summer of

2012. As discussed previously, in order fo r an EP to submit CQMs electronically through the Physician Quality Reporting Sy stem – Medicare EHR Incentive Pilot EHR-based reporting option, we propose that such EPs must submit information on the same CQMs as required by the July 28, 2010 fi nal rule, which must be based on data contained in the EP's certified EHR technology. That is, EPs particip ating in this pilot must submit information on the three core measures included in Table 7, up to three of

the alternate core measures included in Tabl e 7 insofar as the denominator for one or more of the core measures is zero, and three additional measures from the measures included in Table 6, as is otherwise required by the final rule to successfully demonstrateCMS-1524-P 457

meaningful use. If the EP cannot report three additional measures without zero denominators, the EP must report on all app licable measures (that is, 1 or 2 measures) and attest that all remaining measures have zero denominators. However, as with the EHR data submission vendor-based reporting opt ion, the data would be different from what is required by the July 28, 2010 final ru le in that it would be: (1) limited to Medicare patients rather than all patients; (2) patient-level data from which we may calculate CQM results using a uniform calculati on process, rather than aggregate results calculated by the EP's certified EHR t echnology; and (3) based on a CQM reporting period of 1 calendar year regardless of the EP's year of participation in the Medicare EHR Incentive Program (resulting in a later determination of wh ether the EP has successfully demonstrated meaningful use, for those EPs in their first year of pr ogram participation). We invite comment on the proposed EHR- based reporting option under the Physician Quality Reporting System-Medicare EHR Incentive Pilot. In addition, as discussed in the Physicia n Quality Reporting System section of this proposed rule, we propose if an EP successf ully submits all required CQM data from certified EHR technology, which also must be a Physician Quality Reporting System qualified EHR product, directly to CMS, then the EP would also meet the criteria for satisfactory reporting under the 2012 Physic ian Quality Reporting System, which would also qualify the EP under the 2012 Phys ician Quality Reporting System. The Medicare EHR Incentive Program meas ures, including the core and alternate core measures, and the 38 additional measur es, are specified in the Physician Quality Reporting System's Table 31 of this proposed rule . It should be noted that while the EP is required to use certified EHR technology, the electronic submission format used forCMS-1524-P 458

this pilot is not a functionali ty of certified EHR technology. Rather, for purposes of the pilot, the certified EHR technology must conf orm to the qualifications for an EHR under the Physician Quality Reporting System.

3. Method for EPs to Indicate Election to Pa rticipate in the Physician Quality Reporting System-Medicare EHR Incentive Pilot for Payment Year 2012 EPs electing to participate in the Ph ysician Quality Reporting System-Medicare

EHR Incentive Pilot would be able to indica te their intent to fulfill the CQM objective by participating in the Physician Quality Reporting System-Medicare EHR Incentive Pilot under the EHR Incentive Program attestation module. The EHR Incentive Program

attestation module is available on the CMS Web site at https://www.cms.gov/EHRIncentivePrograms/32_Attestation.asp#TopOfPage

. I. Improvements to the Physician Feedback Program and Establishment of the Value-Based Payment Modifier (Effect of Sections 3003 and 3007 of the Affordable Care Act on the Program)

1. Overview The requirements of the Physician Feedb ack Program, in section 1848(n) of the the Act, as amended by section 3003(a) of the Affordable Care Act, and the value-based payment modifier ("value modifier"), under section 1848(p) of the Act, as added by section 3007 of the Affordable Care Act, mutually reinforce our goal to provide physicians with fair, actionable and meani ngful information concerning resource use and quality regarding their Me dicare fee-for-service patien ts. We view value-based purchasing ("VBP") as an important step toward revamping not only how care and services are paid for, but also moving in creasingly toward rewarding better value,CMS-1524-P 459

outcomes and innovations instead of volume. Th e approach used this year and that we anticipate using in future years for the Phys ician Feedback reports will serve as the testing basis to develop and implement the value modifier, which will be applied to certain physicians and physician groups unde r the physician fee sc hedule starting in

2015. In 2011, we will begin to include the quali ty measures that are reported in the Physician Quality Reporting System in th e Physician Feedback reports. Aligning quality measures reduces potential program in consistencies, ensures we do not measure the same clinical process or outcome using different data sources or methodologies, and does not place new reporting bu rdens on physicians. For physicians who participate in the Physician Quality Reporting System, it also identifies clear and consistent opportunities for improvement, because the Feedback reports will show how their performance compares to their peer s on the same quality measures. Under section 1848(p)(4)(B) of the Act, we are required to begin implementing the value modifier through th e rulemaking process during 201 3, so that it is ready for application to specific physicians and gr oups of physicians under the physician fee schedule in 2015. We expect the value modifier to evolve after its in itial application in 2015. We anticipate that information we ha ve obtained from the Physician Feedback reports, our efforts to learn from and bu ild upon the best transparent practices and methodologies developed in the private sector , and our continued a nd sustained dialogue with the physician and patient communities will yield significant improvements to the development of the value modifier. We plan to move forward w ith substantial input from physicians and experts as we continue to develop and implement these programs.CMS-1524-P 460

2. Background As required under section 1848 (n) of the Act, as added by section 131(c) of the Medicare Improvements for Patients and Pr oviders Act and amended by section 3003(a) of the Affordable Care Act, we estab lished and implemented by January 1, 2009, the Physician Resource Use Measurement & Repor ting Program (now referred to as the Physician Feedback Program) (74 FR 61844). The purpose of the Physician Feedback Program is to provide confidential reports to physicians that measure the resources involved in furnishing care to Medicare bene ficiaries. Section 1848(n) of the Act also

authorized us to include information on th e quality of care furnished to Medicare beneficiaries by a physician or group of physic ians. We have completed two phases of Physician Feedback reports and, by the end of 2011, we intend to implement Phase III of the Physician Feedback Program, by pr oviding reports on both resource use and quality measures that cover a larger numb er and increased breadth of physicians and groups of physicians.

Phase I was discussed in the CY 2010 PFS proposed and final rules (74 FR 33589 and 74 FR 61844, respectively). In Phase I, we sent to several hundred individual practicing physicians in 12 geogr aphic areas reports that contained per capita and episode-based cost information based on 2007 claims. 1 In creating these reports, we assessed patient attribution models and risk adjustment methodologies. We also tested various report designs wi th practicing physicians. In Phase II of the Physician Feedback Program, we expanded on Phase I by providing reports that include d quality measures for both individual and groups of

1 The 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.CMS-1524-P 461

physicians in the same 12 geographic areas using the same 2007 claims data. (Phase II was discussed in the CY 2011 PFS proposed and final rules 75 FR 40113 and 75 FR 73377, respectively). The quality measures used were the claims-based measures developed by us in the Generating Me dicare Physician Qu ality Performance Measurement Results (GEM) project (74 FR 61846). 2 This initial core set of 12 quality measures was a first step to provide sufficient quality info rmation to allow peer group comparisons. These measures were calculated using administrative claims data and did not require physicians to submit additional qua lity data. The measures captured several chronic conditions that are prevalent in th e Medicare population and could be applied to all eligible physicians, alt hough the measures were most applicable to primary care physicians. Phase II reports contained total per capita cost information, as well as total per capita cost information for those beneficiar ies with the following five common chronic diseases: (1) diabetes; (2) congestive heart failure; (3) co ronary artery disease; (4) chronic obstructive pulmonary disease; and (5 ) prostate cancer. This information was not limited to the cost of treating the disease itself, but also include d total Parts A and B per capita cost information, as well as se rvice category breakdowns, for the care received by the subset of attri buted beneficiaries with that disease. Phase II reports did not include episode-specific cost informa tion (as we had included in the Phase I reports), because we found that the two co mmercially available proprietary groupers,

which were not built for use with Medicare cl aims data, did not work well to create episodes for the significant number of Medicare beneficiaries with multiple chronic conditions (75 FR 73378).

2 http://www.cms.gov/GEMCMS-1524-P 462

We provided Phase II reports to 36 group practices and approximately 1,650 individual physicians who were members of these practices in the 12 geographic areas identified in Phase I. A group was defined as a single provider entity, identified by its tax identification number (TIN), which served at least 5,000 Medicare beneficiaries and in which at least one primary care physician and at least one medical speci alist or surgeon in the group billed for Evaluation and Manageme nt (E/M) Medicare services. The use of group reports allowed for more robust comparisons on a fuller set of quality measures, because the groups were more likely to have sufficient number of cases to calculate each

measure. We used a "single-provider plurality-minimum 3 " method to attribute beneficiaries to the 36 group practices and the individual physicians. This method was based on the highest number of E/M services furnished by an individual physician and a minimum threshold of 20 percent of E/M costs. 4 Attribution of a be neficiary to a group practice was based on the group pr actice that provided the plur ality of E/M services and a minimum threshold of 30 percent of E/M co sts. For both individuals and groups, we required at least 30 beneficiaries to be a ssigned to either the individual or the group practice. 5 Seventy percent of eligible benefici aries were attributed to an individual physician or group practice. These beneficiar ies accounted for 53 percent of total Parts A and B costs but covered only 30 percent of individual physicians.

3 Under a "single-provider plurality -minimum" attribution method, a beneficiary is attributed to the one physician who furnished the plurality of the beneficiar y's E/M services during the year so long as that physician billed at least 20 percent of the beneficiary' s E/M allowed charges for the year. If a beneficiary did not receive the plurality of services from the sa me physician that met the 20 percent minimum, the beneficiary was not assigned to a physician. For a more detailed discussion of methodology issues, see the Detailed Methodology Specification, available at https://www.cms.gov/PhysicianFeedbackProgram/ Downloads/2010_Q RUR_Detailed_Methodology.pdf. 4 Costs refer to allowed charges for Part A and B services. 5 We chose 30 beneficiaries because this thresh old is commonly used for attribution purposes.CMS-1524-P 463

Our data analysis showed that the si ngle-provider plurality-minimum rule generally assigned Medicare beneficiaries corre ctly to primary care physicians including internists, geriatricians, family practitioners , and general practitione rs. However, this

rule did not work well to attribute benefi ciaries with multiple conditions that see a variety of physicians, because a single physic ian was unlikely to ha ve both provided the plurality of E/M visits and to have al so accounted for 20 percent of E/M costs. As in Phase I, we price standardized the cost data to adjust for geographic differences. We also employed the same method of risk adjustment for per capita costs as we use in the Medicare Advantage (MA) program; that is, the hierarchal condition category (HCC) model for the cost data. 6 We did not risk-adjust the quality data included in Phase II, because the GEM meas ures are all clinical process measures, measure specifications provided detailed inclus ion/exclusion criteria , and it is generally accepted that these measures need not be risk adjusted. The individual-level report s in both phases of the pr ogram contained 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. Peer group comparisons were made for both measures of cost and quality. We imposed a minimum peer group size of 30 physicians in Phase II for each of the cost and quality measures to ensure the group comparisons were credible to the physicians bei ng compared. For the per capita cost measures, the physician was shown his or her positi on in a distribution that specifically identified the 10 th , 50 th , and 90 th percentiles of performance.

3. Future Considerations for Phas e III Physician Feedback Program

6 For more information about hierar chal condition categories model, see https://www.cms.gov/MedicareAdvtgSpecRateStats /downloads/Evaluation_ Risk_Adj_Model_2011.pdf

.CMS-1524-P 464

a. Phase III Physician F eedback Reports (Fall 2011) Based on the experience gained so far and our plan to provide reports to a greater number and percentage of physicians, we intend to increase production and dissemination of Physician Feedback repor ts. In 2011, we are examining several approaches to developing and disseminating reports based on our 2010 experience. We believe that many of the issues we address in these reports will assist us as we begin to implement the value modifier in 2013. We anticipate using quality measures reported in the Physician Quality Reporting System in the Physician Feedback re ports this year. We further believe that use of these measures will begin to reduce potential program inconsistencies, ensure we do not measure the same clinical process or outcome using different data sources or methodologies, and not place new reporting burdens on physicians. In addition, elsewhere in this proposed rule, we are propos ing to align the quality measures in the Physician Quality Reporting System with the Electronic Health Records incentive program quality measures. We seek comment on using the performance data in the Physician Quality Reporting System in the Physician Feedback program and on other issues discussed below that could help info rm future phases of the Physician Feedback

program. (1) Physician Group Reports We intend to create physician feedback reports for the 35 large medical group practices (each with 200 or more physicians) that chose to participate in the Physician Quality Reporting System Group Practice Reporting Option (GPRO-1) in 2010. We specifically chose these medical groups, b ecause they could be compared on theCMS-1524-P 465

common set of 26 quality measures included in the GPRO-1 reporting tool. The reports will be emailed to each group. We anticipat e scheduling outreach and feedback sessions following dissemination of these reports to ga rner physician reaction to the information contained in the reports and el icit physician input on ways to increase their utility in future years. The resource use portion of these reports will present summary information based on 2010 Medicare Parts A and B paid claims for all Medica re providers paid under the PFS who treated patients attributed to a participating me dical practice group. This information will allow each group to comp are its per capita Medicare costs to the per capita Medicare costs attributed to all 35 medical practice groups th at participated in the 2010 GPRO-1 cohort. In addition, the report will show each medical group its average per capita costs for vari ous types of fee-for-service patient services. The reports will also display group-specific data on pe r capita costs and hos pital utilization of patients who have chronic conditions such as diabetes, heart failure, COPD, and coronary artery disease. Data in these reports will be risk adjusted and price

standardized in a similar ma nner to the Phase II reports. The quality portion of these reports will present the group's performance on each of the 26 quality measures included in the Physician Quality Reporting System 2010 GPRO-1 reporting option. It will also show the average rate of preventable hospital admissions (for which a lower rate is better) for six ambulatory care-sensitive conditions: diabetes, bacter ial pneumonia, dehydration, ch ronic obstructive pulmonary disease (COPD), urinary tract infection, and congestive heart failure. The information presented will also allow each group to comp are its performance to the performance ofCMS-1524-P 466

all of the 35 medical practice groups that pa rticipated in the 2 010 GPRO-1 cohort. (2) Reports to Individual Physicians Late in 2011, we also intend to dissem inate Physician Feedback reports to physicians paid under the PFS within four states: Iowa, Kansas, Missouri, and

Nebraska. We choose these four states because the Medicare Administrative Contractor (MAC) serving these states can assist us in emailing these reports to a substantial number of physicians because of its robust electronic communications infrastructure. There are approximately 56,000 physicians in th ese four states. We realize, however, that we will not produce reports for all of these physicians, because some portion of the total will not have sufficient numbers of fee-for-service Medicare patients to qualify for a report based on the attribution rules we use. As discussed later in this section, we are examining which attribution rules to apply to these individual reports. Individual physicians in these four St ates who satisfactor ily reported data on quality measures under the Physician Quality Reporting System will receive a report that includes their performance on these qua lity measures. In addition, individual reports will display clinical quality measures that are derived from Medicare claims for all physicians in these four States. We us ed an internal multi-step process among our medical officers (who represent a variety of medical specialties) and other internal experts to identify these claims-based qua lity measures. Our medical officers and internal experts thoroughly reviewed over 70 claims-based National Quality

Forum-endorsed measures and ultimatel y recommended 28 claims-based clinical measures to include in the 2011 individual phys ician reports. These measures include

the 12 HEDIS measures that CMS include d in the 2010 reports. Use of these 28CMS-1524-P 467

measures in the 2011 reports will allow us to have a sufficient number of cases to make peer group comparisons, which we believe are a critical component of the Physician Feedback program. The claims-based c linical measures for the 2011 individual physician feedback reports are displayed in Table 61 and additional information on

these measures is available at: http://www.cms.gov/physicianfeedbackprogram/

. TABLE 61: CLAIMS-BASED MEASURES FOR THE 2011 INDIVIDUAL PHYSICIAN FEEDBACK REPORTS

Measure Number Measure Title and Description NQF Measure Number or

Measure Steward* Source of Data

1 Acute Myocardial Infarction (AMI): Persistence of Beta-Blocker Treatment After a Heart Attack Percentage of patients age 18 years and older during the measurement year who were hospitalized and discharged alive with a diagnosis of acute myocardial infarction (AMI) and who received persistent beta-blocker treatment for six months after discharge 0071 Administrative Claims

2 Use of Spirometry Testing in the Assessment and Diagnosis of COPD) Percentage of patients at least 40 years old who have a new diagnosis or newly active chronic obstructive pulmonary disease (COPD) who received appropriate spirometry testing to confirm the diagnosis 0577 Administrative Claims

3 Antidepressant Medication Management: (a) Effective Acute Phase Treatment Percentage of patients who were diagnosed with a new episode of depression and treated with antidepressant medication and who remained on an antidepressant drug during the entire 84-day Acute Treatment Phase (b) Effective Continuation Phase Treatment Percentage of patients who were diagnosed with a new episode of depression and treated with antidepressant medication and who remained on an antidepressant drug for at least 180 days 0105 Administrative ClaimsCMS-1524-P 468

Measure Number Measure Title and Description NQF Measure Number or

Measure Steward* Source of Data

4 Follow-Up After Hospitalization for Mental Illness Percentage of discharges for patients who were hospitalized for treatment of selected mental health disorders and who had an outpatient visit, an intensive outpatient encounter, or partial hospitalization with a mental health practitioner Two rates are reported: Rate 1: Percentage of patients who received follow-up within 30 days of discharge Rate 2: Percentage of patients who received follow-up within 7 days of discharge 0576 Administrative Claims

5 Osteoporosis management in women who had a fracture Percentage of women 67 years and older who suffered a fracture and who had either a bone mineral density (BMD) test or prescription for a drug to treat or prevent osteoporosis in the six months after the date of fracture 0053 Administrative Claims

6 Use of High-Risk Medications in the Elderly: (a) Patients Who Receive At Least One Drug To Be Avoided Percentage of patients ages 65 years and older who received at least one high-risk medication in the measurement year (b) Patients Who Receive At Least Two Different Drugs To Be Avoided Percentage of patients 65 years of age and older who received at least two different high-risk medications in the measurement year 0022 Administrative ClaimsCMS-1524-P 469

Measure Number Measure Title and Description NQF Measure Number or

Measure Steward* Source of Data

7 Potentially Harmful Drug-Disease Interactions in the Elderly Percentage of Medicare patients 65 years of age and older who have evidence of an underlying disease, condition or health concern and who were dispensed an ambulatory prescription for a contraindicated medication, concurrent with or after the diagnosis Report each of the three rates separately and as a total rate: Rate 1: A history of falls and a prescription for tricyclic antidepressants, antipsychotics or sleep agents Rate 2: Dementia and a prescription for tricyclic antidepressants or anticholinergic agents

Rate 3: Chronic renal failure (CRF) and prescription for nonaspirin NSAIDs or Cox-2 Selective NSAIDs Total rate: The sum of the three numerators divided by the sum of the three denominators National Committee for Quality Assurance

(NCQA) Administrative Claims

8 International Normalized Ration (INR) for Beneficiaries Taking Warfarin and Interacting Anti-Infective Medications Percentage of episodes with an INR test performed 3 to 7 days after a newly-started interacting anti-infective medication for Part D beneficiaries receiving warfarin 0556 Administrative Claims

9 Appropriate Follow-Up for Patients with HIV Percentage of patients diagnosed with HIV who received a CD4 count and an HIV RNA level laboratory test in the 6 months following diagnosis 0568 Administrative ClaimsCMS-1524-P 470

Measure Number Measure Title and Description NQF Measure Number or

Measure Steward* Source of Data

10 Ischemic Vascular Disease (IVD): Complete Lipid Profile Percentage of patients 18 years of age and older who were discharged alive for acute myocardial infarction (AMI), coronary artery bypass graft (CABG) or percutaneous coronary interventions (PCI) from January 1–November 1 of the year prior to the measurement year, or who had a diagnosis of ischemic vascular disease (IVD) during the measurement year and the year prior to measurement year, who had a complete lipid profile during the measurement year 0075 Administrative Claims

11 Breast Cancer – Cancer Surveillance Percentage of female patients 18 and older with breast cancer who had breast cancer surveillance in the past 12 months 0623 Administrative Claims

12 Prostate Cancer – Cancer Surveillance Percentage of males with pr ostate cancer that have had their PSA monitored in the past 12 months 0625 Administrative Claims

13 Diabetes: Eye Exam Percentage of adult patients with diabetes aged 18-75 years who received a dilated eye exam by an ophthalmologist or optometrist during the measurement year, or had a negative retinal exam (no evidence of retinopathy) by an eye care professional in the year prior to the measurement year 0055 Administrative Claims

14 Diabetes: Hemoglobin A1c Testing Percentage of adult patients with diabetes aged 18-75 years receiving one or more A1c test(s) per year 0057 Administrative Claims

15 Diabetes: Medical Attention for Nephropathy Percentage of adult diabetes patients aged 18-75 years with at least one test nephropathy screening test during the measurement year or who had evidence existing nephropathy (diagnosis of ne phropathy or documentation of microalbuminuria or albuminuria) 0062 Administrative Claims

16 Diabetes: LDL-C Screening Percentage of adult patients with diabetes aged 18-75 who had an LDL-C test performed during the measurement year NCQA Administrative ClaimsCMS-1524-P 471

Measure Number Measure Title and Description NQF Measure Number or

Measure Steward* Source of Data

17 Pharmacotherapy Management of COPD Exacerbation Percentage of chronic obstructive pulmonary disease (COPD) exacerbations for patients 40 years of age and older who had an acute inpatient discharge or ED encounter between January 1–November 30 of the measurement year and were dispensed appropriate medications Two rates are reported: Rate 1: Dispensed a systemic corticosteroid within 14 days of the event Rate 2: Dispensed a bronchodilator within 30 days of the event Note: The eligible population for this measure is based on acute inpatient discharges and emergency department (ED) visits, not on patients; it is possible for the denominator to include multiple events for the same individual 0549 Administrative Claims

18 Arthritis: Disease Modifying Antirheumatic Drug (DMARD) Therapy in Rheumatoid Arthritis Percentage of patients 18 years and older, diagnosed with rheumatoid arthritis who have had at least one ambulatory prescription dispensed for a DMARD 0054 Administrative Claims

19 Coronary Artery Disease and Medication Possession Ratio for Statin Therapy Medication Possession Ratio (MPR) for statin therapy for individuals over 18 years of age with coronary artery disease Rate 1: Percentage of patients who are prescribed statin therapy in the measurement year Rate 2: Average Medication Possession Ratio (MPR) of patients in the measurement year (MPR= the days supply of medication divided by the number of days in the measurement period) Rate 3: The percentage of patients with MPR ≥ 0.80 in the measurement year 0543 Administrative ClaimsCMS-1524-P 472

Measure Number Measure Title and Description NQF Measure Number or

Measure Steward* Source of Data

20 Therapeutic Monitoring: Annual Monitoring for Patients on Persistent Medications Percentage of patients 18 years of age and older who received at least 180 treatment days of ambulatory medication therapy for a select therapeutic agent during the measurement year and at least one therapeutic monitoring event for the th erapeutic agent in the measurement year Report each of the four rates separately and as a total rate: Rate 1: Annual monitoring for patients on angiotensin converting enzyme (ACE) inhibitors or angiotensin receptor blockers (ARB) Rate 2: Annual monitoring for patients on digoxin Rate 3: Annual monitoring for patients on diuretics Rate 4: Annual monitoring for patients on anticonvulsants Total Rate: The sum of the four numerators divided by the sum of the four denominators 0021 Administrative Claims

21 Deep Vein Thrombosis Anticoagulation At Least 3 Months Percentage of patients diagnosed with a lower extremity DVT more than 3 months prior to the end of the measurement year (who do not have contraindications to warfarin therapy and who do not have an IVC filter in the 90 days after the onset of PE) who had at least 3 months of anticoagulation after the event or patients showing compliance with anticoagulation therapy as indicated by a Home PT Monitoring device or multiple instances of prothrombin time testing over the 3-month period 0581 Administrative ClaimsCMS-1524-P 473

Measure Number Measure Title and Description NQF Measure Number or

Measure Steward* Source of Data

22 Pulmonary Embolism Anticoagulation At Least 3 Months Percentage of patients diagnosed with a PE more than 3 months prior to the end of the measurement year (who do not have contraindications to warfarin therapy and who do not have an IVC filter in the 90 days after the onset of PE) who had at least 3 months of anticoagulation after the event or patients showing compliance with anticoagulation therapy as indicated by a Home PT Monitoring device or multiple instances of prothrombin time testing over the 3-month period 0593 Administrative Claims

23 Monthly INR Monitoring for Beneficiaries on Warfarin Average percentage of 40-day intervals in which Part D beneficiaries with claims for warfarin do not receive an INR test during the measurement period 0555 Administrative Claims

24 Steroid Use – Osteoporosis Screening Percentage of patients, 18 a nd older, who have been on chronic steroids for at least 180 days in the past 9 months and who had a bone density evaluation or osteoporosis treatment 0614 Administrative Claims

25 Appropriate Work-Up Prior To Endometrial Ablation Procedure Percentage of women who ha d an endometrial ablation procedure during the measurement year who received endometrial sampling or hysteroscopy with biopsy during the previous year 0567 Administrative Claims

26 Breast Cancer Screening Percentage of eligible women 40-69 who receive a mammogram in during the measurement year or in the year prior to the measurement year 0031 Administrative Claims

27 Hepatitis C: Viral Load Test Percentage of patients 18 years or older with Hepatitis C (HCV) who began HCV antiviral therapy during the measurement year and had HCV Viral Load testing prior to initiation of antiviral therapy 0584 Administrative ClaimsCMS-1524-P 474

Measure Number Measure Title and Description NQF Measure Number or

Measure Steward* Source of Data

28 Dyslipidemia New Medication 12 -Week Lipid TestPercentage of patients age 18 or older starting lipidlowering medication during the measurement year who had a lipid panel checked within 3 months after starting drug therapy 0583 Administrative Claims

* The NQF measure number is repor ted unless the measure is not NQF-endorsed, in which case the measure steward is reported. The individual reports will not contain th e average rate of preventable hospital admissions for the six ambulatory care-sensitive conditions identified above because these measures are not specified at the individual physician level at this time. We again plan to display resource use m easures that reflect average per capita cost for a given physician's Medicare patients. In addition to comparing average per capita costs of one physician's patients to the average per cap ita costs of his/her peers' patients, the reports will compare total per capita costs for patients with the following chronic conditions: heart failure, chroni c pulmonary obstructive disease (COPD), diabetes, and coronary artery disease. b. Refinement of the Physician F eedback Program in 2011: Individual Physicians/Medical Group Practices/Specialties As stated in the CY 2011 PFS proposed ru le, deciding which physician(s) is/are responsible for the care of wh ich beneficiaries is an impor tant aspect of measurement (75 FR 40115). When attributing beneficiary cost information to physicians, we must

balance between costs for delivered services that are within the physician's control and

costs for delivered services that are not w ithin their control. We recognize that

attribution rules have the potential to alter incentiv es regarding how physiciansCMS-1524-P 475

coordinate and deliver care to benefici aries and seek to encourage better care coordination and accountability for patient out comes. In addition, determining how to make relevant comparisons of physicians to a standard or to thei r peers is also an important policy aspect of the Physician Feedba ck Program. In light of these issues, we are engaging in the efforts described below to help inform how to develop and produce this and future year's reports. First, we are examining alternative attr ibution methods that would allow more Medicare beneficiaries to be matched to phys icians for purposes of assessing the quality

of care furnished and the associated resources . We plan to explore broader attribution models than we used in last year's Physic ian Feedback reports, in which beneficiaries were attributed to physicians/groups based on E/M services and a minimum cost threshold. Cost of service rules, for ex ample, may better appl y to physicians who commonly furnish surgical pro cedures or interventions, espe cially those that are high volume and/or high cost. We anticipate comb ining this effort with work to identify quality measures appropriate to the practices of these spec ialists. We recognize that characteristics of physicians and the scope of their medical practices vary far more than those of other provider types such as hos pitals, home health agencies, and nursing homes and, thus, we want to ensure we de velop sound attribution rules that recognize

these variations and are a ppropriate for physicians. We also are planning to investigate stra tifying physicians by specialty and by the conditions they treat, which would allow bot h cost and clinical measures to reflect procedures and services that best portr ay physician practice patterns. Second, we intend to examine whether to provide reports to groups of physiciansCMS-1524-P 476

who submit Medicare claims under a single tax identification number (TIN) to see if we can provide feedback reports that cover more physicians . TIN-level reporting may prove useful in situations where individual physicians have too fe w of some types of patients to allow for accurate reporting of co st measures or certain quality measures. We seek comment on these and any other issues to ensure that the future Physician Feedback reports provide m eaningful and actionable information. c. Beyond 2011: Future Scale Up and Disse mination for Increased Physician Feedback Reporting In CY 2012, we expect to expand dissemination of reports to cover 100,000 physicians nationally. In 2012, we expect to be able to evaluate whether leveraging the quality measures in the Physician Quality Reporting System will help achieve this goal. We recognize that our curre nt inventory of quality meas ures, both claims-based and those used in the 2010 GPRO-1 quality measur es, best covers primary care practitioners including family physicians, general practitione rs, internists, geriat ricians, and related medical non-procedural specialists. As the scope of measures, including outcomes, in the Physician Quality Reporting System in creases and as more physicians report measures, we expect to be able to pr ovide meaningful and actionable quality information to an increasing number of physic ians. This increased participation will

increase the breadth of Medi care physicians for whom P hysician Feedback reports can

be created. Second, section 1848(n)(9)(A) of the Ac t, as added by section 3003 of the Affordable Care Act, requires the developm ent, by not later than January 1, 2012, of a Medicare-specific episode groupe r so that physicians can be compared on episode-basedCMS-1524-P 477

costs of care. The episode grouper will require further testing and refinement in order to see how well it integrates with other parameters, such as attribution and benchmarking, before it can be fully operational. The epis ode grouper is being developed to determine episode-based costs for a subset of sele cted high cost, high volume conditions for Medicare beneficiaries, incl uding six of the following nine conditions: hip fracture/hip replacement; pneumonia; heart attack; coronary artery disease; asthma; COPD; stroke; diabetes; and heart failure. Aspects of the episode grouper could be applied, on a limited basis, in Physician Feedback reports in 2012 or 2013, depending upon the testing and validation of the methodology. Section 1848(n)(9)(A)(iv) of the Act requires that the Secretary seek endorsement of the grouper by an entity with a contract under section 1890(a) of the Act. Plans to secure this endorsement are under development. We plan to make details of the Medicare grouper publicly available as required by section 1848(n)(9 )(A)(iii)) of the Act. In addition, we will continue to monito r developments regarding the National Quality Forum's project regarding resource use measures. Learning from this project is likely to help refine the next steps relate d to the scale up of th e Physician Feedback reports. Lastly, we will pursue how best to inco rporate the production and dissemination of the feedback reports into th e IT infrastructure of the ag ency. For example, in this year's reports we plan to use the Medicare Administrative Contract or to distribute the individual physician reports by email. It is our intent in future years to use other mechanisms, such as a secure portal, for physic ians to obtain and revi ew their reports. It is critical for us to plan for the very significant, and ongoing, data and disseminationCMS-1524-P 478

infrastructure that must be built for us to provide feedback reports to all physicians paid

under the PFS. As the science of quality measurement improves, attribution methodologies mature, participation rates in our reporting programs increase, and our IT infrastructure evolves, we will determine how best to incorporate these advances into a better physician feedback program. Furthermore, it is our intent to engage in continued dialogue with the physician community about ways to improve these reports and their

dissemination. 4. The Value-Based Payment Modifier: Section 3007 of the Affordable Care Act Section 1848(p) of the Act, as adde d by Section 3007 of the Affordable Care Act, requires the Secretary to "establish a pa yment modifier that provides for differential payment to a physician or a group of phys icians" under the phys ician fee schedule "based upon the quality of care furnished compared to cost ... during a performance period." The provision require s that "such payment modifi er be separate from the geographic adjustment factors" established for th e physician fee schedule. We believe that this provision requires the Secretary to establish a differe ntial payment under the physician fee schedule to reflect "value," for example, the quality of care compared to cost, and that the value modifier is indepe ndent from the geographic adjustments applied

under the fee schedule. Section 1848(p)(4)(C) of the Act requ ires that the value modifier be implemented in a budget-neutral manner. B udget neutrality means that payments will increase for some physicians but decrease for others, but the aggregate amount of Medicare spending in any given year for physic ians' services will not change as a resultCMS-1524-P 479

of application of the value m odifier. Over time, we expect that implementation of the

value modifier will lead to mo re efficient use of services. Section 1848(p)(4)(A) a nd (B) of the Act establish the time frame for implementation of the value modifier. Secti on 1848(p)(4)(B)(iii ) of the Act requires the Secretary to apply the value modifier begi nning January 1, 2015 to specific physicians and groups of physicians the Secretary dete rmines appropriate. This section also requires the Secretary to appl y the value modifier with respect to all physicians and groups of physicians beginning not later than January 1, 2017. Section 1848(p)(4) of the Ac t requires the Secretary to take a series of steps, beginning not later than January 1, 2012, and leading up to implementation of the value modifier on January 1, 2015. Section 1848(p)(4 )(A) of the Act requires us to publish, not later than January 1, 2012, three items re lated to the establishment of the value modifier: (a) the quality of care and cost measures established by the Secretary for purposes of the modifier; (b) the dates for im plementation of the value modifier; and (c) the initial performance pe riod for application of va lue modifier in 2015. Section 1848(p)(4)(B) of the Act requires the Secretary to begin implementing the value modifier through the physician f ee schedule rulemaking process during 2013; this rulemaking would apply to value modifier payment adjustments for 2015. Section 1848(p)(4)(B) of the Act furthe r requires the Secretary, to the extent practicable during the initial performance peri od, to provide information to physicians and physician groups about the quality of care furnished by the physician or group of physicians to Medicare beneficiaries compared to cost. The value modifier is an important component in revamping how care andCMS-1524-P 480

services are paid for under the physician f ee schedule. Currently, payments under the physician fee schedule are generally based on the relative resour ces involved with furnishing each service, and adjusted for differences in resource inputs among geographic areas. Thus, all physicians in a geographic area are paid the same amount for individual services regardless of the qua lity of care or outcomes of services they

furnish. Although the fee schedule payments are or will soon be adjusted depending upon whether eligible professionals are satisf actory reporters of PQRS quality measures, successful electronic prescribers and meani ngful users of electr onic health records (EHRs), 7 these adjustments do not currently ta ke into account pe rformance on these quality measures. In addition, the fee sche dule does not take into account the overall

cost of services furnished or ordere d by physicians for individual Medicare

beneficiaries. These limitations mean that the physician fee sc hedule does not contain incentives for physicians to focus on: (1) the relative cost or value of each service they furnish or order; (2) the cumula tive cost of their own services and the services that their

beneficiaries receive from ot her providers; or (3) the qua lity and outcomes of all the

care furnished to beneficiaries. 8 We note that Medicare is beginning to implement value-based payment adjustments for other types of services. For example, recently, we published a final rule to implement the hospital value-based purchas ing program that will affect hospitals beginning with FY 2013 discharges (76 FR 26490). In addition, section 3006 of the

7 See, for example, section 1848(a)(8) of the Act, as added by section 30 02(b) of the Affordable Care Act; section 1848(a)(7)(A) of the Act, as added by section Sec 4101 (b) of the HITECH Act. 8 Source: MedPAC, Report to the Congress: Reform ing the Delivery System, Chapter 1 (June 2008), available at: http://www.medpac.gov/documents/Jun08_EntireReport.pdf

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Affordable Care Act requires us to devel op a plan to implement value-based purchasing programs for skilled nursing facilities, home health agencies, and ambulatory surgical centers. We view the physician value modi fier as the companion value-based payment mechanism for physicians. In implementing value-based purchasing in itiatives generally, we seek to meet the following goals:

● Improving quality ++ Value-based payment systems and pub lic reporting should rely on a mix of standards, processes, outcomes, and patient experience measures, including measures of care transitions and changes in patient functional status. Across all programs, we seek to move as quickly as possibl e to the use of outcome and patient experience measures. To the extent practicable and appropriate , we believe these outcome and patient experience measures should be adjusted for risk or other appropr iate patient population or provider characteristics. ++ To the extent possible, and reco gnizing differences in payment system readiness and statutory require ments and authorities, measur es should be aligned across Medicare and Medicaid's public reporting and payment systems. We seek to evolve a focused core set of measures appropriate to each specific provider category that reflects the level of care and the most important areas of service and measures for that provider. ++ The collection of information should minimize the burden on providers to the extent possible. As part of that e ffort, we will continuously seek to align our measures with the adoption of meaningful use standard s for health information technology (HIT), so the collection of performa nce information is part of care delivery.CMS-1524-P 482

++ To the extent practicable, measures used by us should be nationally endorsed by a multi-stakeholder organization. Measures should be aligned with best practices among other payers and the needs of the end users of the measures.

● Lowering per-capita growth in expenditures.

++ Providers should be accountable for th e cost of care, and be rewarded for reducing unnecessary expend itures and be responsible for excess expenditures. ++ In reducing excess e xpenditures, providers shoul d continually improve the quality of care they deliver. ++ To the extent possible, and recogn izing differences in payers' value based purchasing initiatives, provi ders should apply cost-re ducing and quality-improving redesigned care processes to th eir entire patient population. Our experience with providing physicians confidential feedback reports, which include various measures of cost and qualit y, is helping us to design and develop the value modifier. In addition, we seek to build upon best practices th at have evolved in the private sector to provid e meaningful and actionable information to physicians. For example, we recognize the importance of tr ansparent methodologies and of procedural safeguards necessary to provi de physicians with an opportu nity to review the value modifier such as the one we will develop. 9 We intend to move both deliberately a nd carefully because we recognize the complexities of calculating a reliable and valid measure of value that compares physicians against their peers and uses the m easure to differentiate payment. We view

9 See for example Ambulatory Quality Alliance, Performance Measurement Workgroup materials, available at: http://www.ambulatoryqualityalliance.org/performancewg.htm ; New York Attorney General Settlement with Excellus, available at: http://www.ag.ny.gov/bureaus/health_c are/pdfs/Excellus%20Settlement.pdf

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this rulemaking as one part of an ongoing and extensive dialogue with health care

stakeholders on how best to ensure devel opment of a fair, meaningful, and actionable

value modifier on which to different iate payments to physicians. a. Measures of Quality of Care and Costs (1) Quality of Care Measures Section 1848(p)(2) of the Ac t requires that the quality of care be evaluated, to the extent practicable, based on a composite of measures of the quality of care furnished. Section 1848(p)(2)(B) of the Ac t requires that the Secretary establish appropriate measures of the quality of care furnished by a physician or a group of physicians to Medicare benefici aries such as measures that reflect health outcomes. The statute requires the measures to be risk adjusted as determined appropriate by the Secretary. Section 1848(p)(2)( B)(ii) of the Act require s the Secretary to seek endorsement of the quality of care measures by the entity with a c ontract under section 1890(a) of the Act, which is the National Quality Forum. In establishing the quality of care measures for the value modifier, our interest is

to move toward a core set of measures so that we can assess and benchmark physician performance. We are interested in ensuri ng that this set of co re measures includes outcome measures, especially for care provided by specialists. We also want to start a discussion of potential measures that could provide a richer pi cture of the quality of care furnished by a physician. At our Se ptember 24, 2010, Listening Session on the Physician Feedback Program and Implementa tion of the Value-Based Payment Modifier for Fee-for-Service Medicare, the stake holder community suggested the need for additional quality measures that focus on care coordination/care transitions, patientCMS-1524-P 484

experience, and outcomes such as functional health status. 10 We agree with these suggestions and believe that these measures co uld provide a richer pi cture of the quality of care furnished by physicians to Medicare beneficiaries. We view the requirement for the Secret ary to establish, by January 1, 2012, the quality measures for the value modifier to be the first step in id entifying a robust core set of measures of the quality of care fu rnished by physicians for use in the value

modifier. We envision incor porating additional quality measur es into the value modifier

over time. (A) Proposed Quality of Care Measures for the Value-Modifier. For purposes of section 1848(p)(4)(A)(i ) of the Act, we propose to use performance on: (1) the measures in the core set of the Physician Quality Reporting System for 2012; (2) all measures in the GPRO of the Physician Quality Reporting System for 2012; and (3) the core measures, al ternate core, and 38 additional measures in

the Electronic Health Record Incentive Pr ogram measures for 2012. Table 62 lists these measures. We recognize that there are m easures common to these two programs because they are derived from the proposed 2012 Physician Quality Reporting System and may be available for reporting in other CMS programs, such as the Medicare and Medicaid EHR Incentive Program as well as the Medicare Shared Savings Program. We note that measure titles, in some instances, may vary from program to program. Once these measures are finalized, we will identify the measures more fully to eliminate any duplication.

10 Listening Session Regarding: Physician Feedback Program and Implementation of the Value-Based Payment Modifier for Fee-for-Service Medicare (Sept. 24, 2010) (see, for example, comments of Pacific Business Group on Health, Consumer Purchaser Disclosure Project), transcript available at: https://www.cms.gov/PhysicianFeedbackProgram/Do wnloads/092410_Listening _Session_Feedback_Progr am_Transcript.pdf

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TABLE 62. PROPOSED QUAL ITY MEASURES FOR THE VALUE MODIFIER

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer EHR Incentive Program PQRS GPRO PQRS Core

110 Preventative Care and Screening: Influenza Immunization for Patients ≥ 50 Years Old 0041 AMA-PCPI X X

111 Preventive Care and Screening: Pneumonia Vaccination for Patients 65 Years and Older 0043 NCQA X X

112 Preventive Care and Screening: Screening Mammography 0031 NCQA X X

113 Preventive Care and Screening: Colorectal Cancer Screening 0034 NCQA X X

128 Preventive Care and Screening: Body Mass Index (BMI) Screening and Follow-up 0421 CMS-QIP X

TBD Preventive Care: Cholesterol-LDL test performed N/A CMS X TBD Falls: Screening for Falls Risk 101 NCQA X TBD Cervical Cancer Screening 0032 NCQA X

226 Preventive Care and Screening: Tobacco Use: Screening and Cessation Intervention 0028 AMA-PCPI X X X

235 Hypertension (HTN): Plan of Care 0017 AMA-PCPI X

236 Controlling High Blood Pressure 0018 NCQA X X X

237 Hypertension (HTN): Blood Pressure Measurement 0013 AMA-PCPI X X

TBD Proportion of adults 18 years and older who have had their BP measured within the preceding 2 years N/A CMS X X

6 Coronary Artery Disease (CAD): Oral Antiplatelet Therapy Prescrib ed for Patients with CAD 0067 AMA-PCPI X X

7 Coronary Artery Disease (CAD): Beta-Blocker Therapy

for CAD Patients with Prior Myocardial Infarction (MI) 0070 AMA-PCPI X XCMS-1524-P 486

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer EHR Incentive Program PQRS GPRO PQRS Core

118 Coronary Artery Disease(CAD): AngiotensinConverting Enzyme (ACE)

Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left

Ventricular Systolic Dysfunction (LVSD) 0066 AMA-PCPI X

TBD Coronary Artery Disease (CAD): LDL <100mg/dl NA CMS X

197 Coronary Artery Disease (CAD): Lipid Control 0074 AMA-PCPI X X

201 Ischemic Vascular Disease (IVD): Blood Pressure Management Control 0073 NCQA X X

204 Ischemic Vascular Disease (IVD): Use of Aspirin or another Antithrombotic 0068 NCQA X X X

TBD Ischemic Vascular Disease (IVD): Complete Lipid Profile and LDL Control < 100 mg/dl 0075 NCQA x X X

5 Heart Failure: AngiotensinConverting Enzyme (ACE)

Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0081 AMA-PCPI X X

8 Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) 0083 AMA-PCPI X X

228 Heart Failure: Left Ventricular Function (LVF) Testing N/A CMS X

198 Heart Failure: Left Ventricular Function (LVF) Assessment 0079 AMA-PCPI X

227 Heart Failure: Weight Measurement 0085 AMA-PCPI X

199 Heart Failure: Patient Education 0082 AMA-PCPI X

200 Heart Failure: Warfarin Therapy for Patients with Atrial Fibrillation 0084 AMA-PCPI X X

TBD Monthly INR for Beneficiaries on Warfarin 555 CMS X 1 Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus 0059 AMA-PCPI X X

TBD Diabetes: Aspirin Use 0729 MN Community Measurement XCMS-1524-P 487

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer EHR Incentive Program PQRS GPRO PQRS Core

3 Diabetes Mellitus: High Blood Pressure Control in Diabetes Mellitus 0061 NCQA X X

TBD Diabetes: Hemoglobin A 1 c Control (<8.0%) 575 NCQA X X

2 Diabetes Mellitus: Low Density Lipoprotein (LDL-C) Control in Diabetes Mellitus 0064 NCQA X X X

117 Diabetes Mellitus: Dilated Eye Exam in Diabetic Patient 0055 NCQA X X

18 Diabetic Retinopathy: Documentation of Presence or

Absence of Macular Edema

and Level of Severity of Retinopathy 0088 AMA-PCPI X

TBD Diabetic Retinopathy: Communication with the Physician Managing Ongoing Diabetes Care 0089 AMA-PCPI X

119 Diabetes Mellitus: Urine Screening for Microalbumin or Medical Attention for Nephropathy in Diabetic Patients 0062 NCQA X X

163 Diabetes Mellitus: Foot Exam 0056 NCQA X X

TBD Diabetes Mellitus: Tobacco Non-Use 0729 MN Community Measurement X

239 Weight Assessment and Counseling for Children and Adolescents 0024 NCQA X

240 Childhood Immunization Status 0038 NCQA X

TBD Appropriate Testing for Children with Pharyngitis 0002 NCQA X

TBD Prenatal Care: Screening for Human Immunodeficiency Virus (HIV) 0012 AMA-PCPI X

TBD Prenatal Care: Anti-D Immune Globulin 0014 AMA-PCPI X

53 Asthma Pharmacologic Therapy 0047 AMA-PCPI X 64 Asthma Assessment 0001 AMA-PCPI X TBD Use of Appropriate Medications for Asthma 0036 NCQA X

51 Chronic Obstructive Pulmonary Disease (COPD): Spirometry Evaluation 0091 NCQA XCMS-1524-P 488

Physician

Quality Reporting

System Number Measure Title NQF Measure Number Measure Developer EHR Incentive Program PQRS GPRO PQRS Core

52 Chronic Obstructive Pulmonary Disease (COPD):

Bronchodilator Therapy 0102 AMA-PCPI X

TBD Chronic Obstructive Pulmonary Disease (COPD): Smoking Cessation Counseling Received N/A CMS X

71 Oncology Breast Cancer: Hormonal Therapy for Stage IC-IIIC Estrogen Receptor/Progesterone Receptor (ER/PR) Positive Breast Cancer 0387 AMA-PCPI X

72 Oncology Colon Cancer: Chemotherapy for Stage III Colon Cancer Patients 0385 AMA-PCPI X

102 Prostate Cancer: Avoidance of Overuse of Bone Scan for Staging Low Risk Prostate Cancer Patients 0389 AMA-PCPI X

9 Anti-depressant Medication Management: (a) Effective Acute Phase Treatment, (b) Effective Continuation Phase Treatment 0105 NCQA X

TBD Initiation and Engagement of Alcohol and Other Drug Dependence Treatment: (a) Initiation, (b) Engagement 0004 NCQA X

40 Osteoporosis: Management Following Fracture of Hip, Spine or Distal Radius for Men

and Women Aged 50 Years and Older 0045 NCQA X

TBD Low Back Pain: Use of Imaging Studies 0052 NCQA X

TBD Chlamydia Screening for Women 0033 NCQA X

12 Primary Open Angle Glaucoma (POAG): Optic Nerve Evaluation 0086 AMA-PCPI X

46 Medication Reconciliation: Reconciliation After Discharge from an Inpatient Facility 0097 AMA-PCPI X

TBD 30 Day Post Discharge Physician Visit N/A Colorado Foundation for Medical Care XCMS-1524-P 489

We seek comment on whether to include additional measures from the Physician Quality Reporting System (which are described elsewhere in this proposed rule) in the measures that we propose for the value modi fier. We also seek comment on whether there are any measures included here that should be excluded from the value modifier, and on the appropriate number of measures for inclusion.

To the extent that the 2013 measures adopted for the Physician Quality Reporting System and Electronic Health Reco rd Incentive Program are different than those used in 2012, we would consider, through rulemaking next year, revising the value modifier quality measures applicable to 2013 to be consistent with the revisions made to the measures for those programs. Indeed, Section 1848(p)(9) of th e Act directs us to coordinate the value modifier quality measur es with the Physician Feedback Program, and, as the Secretary determines appropriate, other similar provisions of Title XVIII of the Social Security Act. We plan to coor dinate the value modifier with the Physician Feedback Program, the Physician Qualit y Reporting System, and the EHR incentive program. We seek comment on the proposed m easures and on our inte rest to establish a

core measure set for the value modifier. (B) Potential Quality of Care Measures for Additional Dimensions of Care in the Value

Modifier As described previously, one of our goals is to start a discussion about potential measures that could provide a richer pict ure of the quality of care furnished by a physician. For example, we are very interested in quality measures that assess the care provided by specialists. We sp ecifically seek comment from specialists about measures

that are not included in the lis t of proposed measures.CMS-1524-P 490

We also seek comment on the types of m easures identified below as well as the 28 administrative claims measures (described above with respect to the 2011 Physician Feedback reports) and whether we should in clude them in the value modifier. We especially urge the physician community and pr ivate payers that ha ve been engaged in pay-for-performance programs to identify other quality measures that they have used and to describe their experience with thes e measures. We seek comment on how the measures discussed below align with curre nt private sector quality measurement

initiatives. To the extent that such meas ures are not currently developed, we would use the established agency procedur es to develop such measures. (i) Outcome Measures We are very interested in moving toward a core quality of care measure set for

the value modifier that in cludes outcome measures. Fo r example, the Physician Feedback reports already display the rate of potentially preventable hospital admissions for six ambulatory care sensitive conditions at the practice group level: diabetes, bacterial pneumonia, dehydration, chroni c obstructive pulmonary disease (COPD), urinary tract infection, and congestive heart failure. These measures have been developed by the Agency for Healthcare Research and Quality and specifications for

these measures can be found at http://www.qualityindicators.ahrq.gov/modules/PQI_TechSpec.aspx

. We also are developing an all-cause hosp ital readmission measure for potential use in the Shared Savings Program, and section 1886(q)(8) of the Act requires us to develop an all-patient hospital readmission measure. We are consid ering use of these measures for physicians and physician groups. Our goal is to focus on outcomes of care for which it would beCMS-1524-P 491

appropriate to assess physician performance. We seek comments about these potential measures for physicians. Although we are not proposing these measures at this time, we are soliciting comment and will consider incl uding these outcome measures in the value

modifier. We also specifically seek suggestions about other outcome m easures that would be appropriate measures of the quality of care furnished for purposes of the value modifier. For example, section 931 of the Public Health Service Act, as added by section 3013(a) and amended by section 10303 of th e Affordable Care Act, also requires the Secretary to develop and periodically update provider-level out come measures for physicians, among other types of providers. We also could consider development of measures that examine emergency room use for ambulatory care sensitive conditions.

We are interested in outcome measures that can be calculated from existing Medicare claims data and do not require reporting by phys icians. In addition, we are particularly interested in comments on potential meas ures of complications that would be appropriate to include in the value modifier. (ii) Care Coordination/Transition Measures We believe that care transitions such as transition of a beneficiary from an inpatient setting to the community or to a post-acute setting are important aspects of quality of care furnished. Successful transiti ons help ensure that a beneficiary is on a path to improvement and could avoid readmissi on. We believe that several aspects of

the care transition could be de veloped into quality of care measures for purposes of the value modifier. For example, we could pot entially consider deve loping a measure that would assess whether an appointment was se t up or whether the hos pitalized beneficiaryCMS-1524-P 492

saw a physician during a specified post-dischar ge period. This meas ure could apply to both the hospital physician and the community physician. In addition, beneficiaries often have unscheduled admissions (such as , via an emergency room) of which their primary physician is not made aware. We are considering including a care

transition/care coordination m easure that would involve a hospital physician checking to see if the hospital ha s notified the beneficiary's prim ary physician of an unscheduled admission (if the hospital and community physician were not the same). Another aspect of care coor dination could involve serv ices that ar e ordered by one physician but furnished by another physic ian. Under this s cenario, the treating physician may send a report back to the orderi ng physician. However, this is not always

the case. The lack of coor dination between two physicians involved in the beneficiary's care could be a missed opportunity to provide optimal, seamless care for the beneficiary. A care coordination measure could potentially assess the extent to which the report is sent back to the ordering physician an d whether the furnishing physician has confirmation that the report was actually received. We seek input about these and other pot ential aspects of care coordination /

transitions for which measures could be deve loped and/or used for purposes of the value

modifier. To the extent commenters are awar e of potential measures that address care coordination/transitions that we could use, we welcome such suggestions. We would propose the specific measures through notice and comment rulemaking before including them as measures of the quality of care fu rnished for purposes of the value modifier. (iii) Patient Safety, Patient E xperience and Functional Status: We believe that it is important to de velop measures of patient safety, patientCMS-1524-P 493

experience and functional status for purposes of the value modifier. A potential patient safety measure might involve use of a surgical checklist. We seek comment about such a measure and other potential patient safety measures that could be developed and/or used for purposes of the value modifier. To the extent commenters are aware of potential measures of patient safety, patient experience, or functional status that we could use, we welcome such suggestions. We would propose the specific measures through notice and comment rulemaking before including them as measures of the quality of care furnished for purposes of the value modifier. (2) Cost Measures Section 1848(p)(3) of the Ac t requires that cost measures used in the value modifier be evaluated, to the extent pract icable, based on a com posite of appropriate measures of costs established by the Secret ary. This composite would eliminate the effect of geographic adjustments in payment rates and account for risk factors and other factors determined appropriate by the Secretar y. In our Physician Feedback reports, we currently use a total per capita cost measure and per capita cost measures for the overall

costs for beneficiaries with four chroni c conditions: chronic obstructive pulmonary disease; heart failure; coronary artery dis ease; and diabetes. These per capita cost measures are price standardized and risk ad justed to ensure ge ographic and clinical comparability, as required by section 1848(p)(3 ) of the Act. These measures are

described in more detail in the Detailed Methodology Specification document accompanying the 2010 Physician Feedback reports. 11 (A) Proposed Cost Measures for the Value Modifier

11 The Detailed Methodology Specifications are available at: https://www.cms.gov/PhysicianFeedbackProgram/ Downloads/2010_Q RUR_Detailed_Methodology.pdf.CMS-1524-P 494

For purposes of section 1848(p)(4)(A)(i) of the Act, we propose to use total per capita cost measures and per capita cost m easures for beneficiaries with these four chronic conditions (chronic obstr uctive pulmonary disease; hear t failure; coronary artery disease; and diabetes) in the value modifier. These cost measures would be compared to the quality of care furnished for use in de termining the value modifier. We seek comment on this proposal. (B) Potential Cost Measures for Future Use in the Value Modifier During 2012 we will test and plan how to use an "episode grouper." The purpose of the episode grouper is to combine separate , but clinically relate d items and services into an episode of care for a beneficiary. S ection 1848(n)(9)(A) of th e Act requires us to develop an episode grouper so that physicians can be compared on ep isode-based costs of care. In order to comply with this stat utory requirement, we ha ve awarded separate contracts to four different pr oject teams. We have tasked each project team to design a "prototype" of the episode grouper by dete rmining episode-based costs for selected high-cost, high-volume conditions that occur among Medicare beneficiaries, including six of the following nine conditions: hip fracture/hip replacement; pneumonia; heart attack; coronary artery disease; asthma; COPD ; stroke; diabetes; and heart failure. By January 1, 2012, we will select one project team 's prototype. The selected team will then be tasked to develop episode groupers for a more comprehensive set of conditions over a four-year period. As a transition to implementing the episode grouper, we could use cost measures based on the inpatient hospital Medicare Seve rity Diagnosis Related Groups (MS-DRG) classification system. Specifically, we c ould use allowed Parts A and B charges perCMS-1524-P 495

beneficiary for all services furnished on the day of admission and furnished through a specific number of days after the day of di scharge. We are curre ntly assessing how to attribute episode costs to physicians. We seek comment on whether we should pursue the MS-DRG approach in the near term while we develop episode-based cost measures for a significant number of high-cost and high-volume conditions in the Medicare

program. In addition, we specifically seek commen t on the resource and cost measures used in private sector initiatives and how th ey are used to profile physicians compared to the quality of care provided. b. Assessing Physician Performanc e and Applying the Value Modifier Apart from the measures that would be used for purposes of applying the value modifier, there are a number of issues re lated to the implementation of the value modifier including steps for both measurem ent of performance and application of payment adjustments. While we are not ma king proposals on these issues at this time, we have briefly described them below and welcome public comments to be considered as we develop proposals on the value modifier for future rulemaking. Pursuant to statutory requirements, we are examining how to create composites of measures of quality of care and of cost from the measures we have proposed so that we can compare quality relative to cost. We are also examining how to make appropriate risk and other adjustments to th ese measures. In addition, we are examining how to attribute beneficiaries to physicia ns to develop meaningful and actionable physician profiles for use in the value modifi er. Some of the issues involved with examining attribution rules were discusse d earlier in the discussion of PhysicianCMS-1524-P 496

Feedback reports and include i ssues of sample size. We are also developing appropriate peer groups or benchmarks in order to co mpare physicians on the value modifier. As previously mentioned, prior to app lication of the value modifier to all physicians and physician groups in 2017, sect ion 1848(p)(4)(B)(iii) of the Act allows the Secretary in 2015 and 2016 to apply the value modifier to specific physicians and physician groups the Secretary determines a ppropriate. For example, we could apply the value modifier to physicians who are out liers (as identified individually, by practice group, or by geographic region) co mpared to national or region al areas in terms of high cost and low quality. Alternatively, we coul d apply the modifier to physicians who treat the conditions that are most pr evalent and/or most costly, am ong Medicare beneficiaries. As stated previously, we seek comment on these issues and other issues related to implementation of the value modifier. Ou r plan is to begin implementing the value modifier through the rulemaking proce ss during 2013 as required by section 1848(p)(4)(B)(i) of the Act. We seek input from stakeholders as we work on these

issues. c. Dates for Implementation of the Value Modifier Section 1848(p)(4)(B)( iii) of the Act requires that the Secretary apply the value

modifier for items and services furnishe d beginning on January 1, 2015, with respect to specific physicians and groups of physicians, and not later than January 1, 2017, with respect to all physicians and groups of physicians. As required by section 1848(p)(4)(B)(i) of the Act, we will begin implementation of the value modifier through the rulemaking process during 2013 for the physician fee schedule effective for CY 2014. We anticipate that the methodol ogy we propose to calculate the valueCMS-1524-P 497

modifier may be further refined, if nece ssary, during the 2014 ru lemaking process for the physician fee schedule that will take effect in 2015.

d. Initial Performance Period Section 1848(p)(4)(B)(ii)(I) of the Act requires the Secretary to specify an initial performance period for the application of th e value modifier with respect to 2015. We propose that the initial performance period be the full calendar year 2013, that is, January 1, 2013 through December 31, 2013. The value modifier that is applied to items and services furnished by specific phys icians and groups of physicians under the 2015 physician fee schedule would be based on performance during 2013. We propose this performance period because some claims for 2013 (which could be used in cost or quality measures) may not be fully proce ssed until 2014. As such, we will need adequate lead time to collect performance data, assess performance, and construct and compute the value modifier during 2014 so that it can be applied to specific physicians starting January 1, 2015, as requi red by statute. As we ha ve done in other payment systems, we plan to use claims that are paid within a specified time period, such as, 90-days after 2013, for assessment of performanc e and application of the value modifier for 2015. We will propose the specific cut-o ff period as part of the more detailed methodology for computation and applicati on of the value modifier in future rulemakings. We seek comment on this proposed performance period.

e. Other Issues

We also seek comment on a number of i ssues related to the development of the value modifier, which we will address in future rulemaking. Although we are not proposing particular policies at this time, we seek co mment on two specific issues.CMS-1524-P 498

(1) Systems-Based Care Section 1848(p)(5) of the Ac t requires the Secretary, as appropriate, to apply the value-based modifier in a manner that promot es systems-based care. We seek comment on how we might determine the scope of syst ems-based care and how best to promote it in applying the value modifier. For exam ple, systems-based care might include an integrated group practice participation in th e Shared Savings Program, a medical home, or an Innovation Center program that promotes systems-based care. We also could implement an attribution method that attributes patients to a collecti on of physicians that treat patients in common to encourage bett er coordination of car e. Additionally, we could promote systems-based care by deve loping a common set of quality measures on which all providers would be evaluated. We seek comment on these and other ways in which we could promote systems-based car e through the applicat ion of the value

modifier. (2) Special Circumstances for Physicians in Rural Areas and Other Underserved

Communities Section 1848(p)(6) of the Act requires the Secretary in applying the value modifier, as appropriate, to ta ke into account the special ci rcumstances of physicians or groups of physicians in rural areas and other underserved communities. We seek comment on how we should identify physicians or groups of physicians in rural areas and other underserved communities, the specific special circumstances they face, and once identified, how these special circumst ances should be taken into account for purposes of applying the value modifier. In addition, we seek comment on the organizational structures and practices th at rural physicians and other underservedCMS-1524-P 499

communities use and how we could apply a value modifier in these areas to accommodate their special circumstances. J. Bundling of Payments for Services Provided to Outpatients Who Later Are Admitted as Inpatients: 3-Day Payment Window Polic y and the Impact on Wholly Owned or Wholly Operated Physician Practices

1. Introduction On June 25, 2010, the Preservation of Acce ss to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PACMB PRA) (Pub. L. 111-192) was enacted. Section 102 of this Act entitled, "Clarifica tion of 3-Day Payment Window," clarified

when certain services furnished to Medicare bene ficiaries in the 3-days (or, in the case of a hospital that is not a subsect ion (d) hospital, during the 1- day) preceding an inpatient admission should be considered "operating co sts of inpatient hos pital services" and therefore included in the hospital's paymen t under the Hospital Inpatient Prospective Payment System (IPPS). This policy is generally known as the "3-day payment window." Under the 3-day payment window, a hospital (or an entity that is wholly owned or wholly operated by the hospital) must include on the claim for a Medicare beneficiary's inpatient stay, the technical porti on of any outpatient dia gnostic services and admission-related nondiagnostic services prov ided during the payment window. The new law makes the policy pertaining to admi ssion-related nondiagnostic services more consistent with common hospital billing pract ices. Section 102 of the PACMBPRA is effective for services furnished on or after June 25, 2010. 2. Background We discussed changes to the 3-day payment window in the interim final rule withCMS-1524-P 500

comment period that was issued as part of last year's IPPS final rule ( 75 FR 50346). The law makes no changes to the billing of "diagnostic services" furnished during the 3-day payment window, which are included in the "operating costs of inpatient hospital services" pursuant to section 1886(a)(4) of the Act. All diag nostic services furnished to a Medicare beneficiary by a hospital (or an ent ity wholly owned or wholly operated by the hospital), on the date of a beneficiary's admission or during the 3-days (1-day for a non-subsection (d) hospital) immediately preced ing the date of a beneficiary's inpatient hospital admission, continue to be included on the Part A bill for the beneficiary's inpatient stay at the hospita l. In accordance with sect ion 102(a)(1) of the PACMBPRA, for outpatient services furnished on or af ter June 25, 2010, all nondiagnostic services,

other than ambulance and mainte nance renal dialysis servic es, provided by the hospital (or an entity wholly owned or wholly operated by the hospital) on the date of a beneficiary's inpatient admission and during the 3 calendar days (1 calendar day for a nonsubsection (d) hospital) immediately pre ceding the date of admission are deemed related to the admission and, therefore, must be billed with the inpatient stay, unless the hospital attests that certain nondi agnostic services are unrelated to the hospital claim (that is, the preadmission nondiagnostic services are clin ically distinct or independent from the reason for the beneficiary's inpatient admission) . In such cases, the unrelated outpatient hospital nondiagnostic services are covered by Medicare Part B, and the hospital may separately bill for those services.

Prior to the enactment of section 10 2 of the PACMBPRA clarifying the 3-Day Payment Window, the term "related to the admission" was defined in section 40.3, Chapter 3, Inpatient Hospital Billing, of the Medicare Claims Processing ManualCMS-1524-P 501

(Pub. 100-04) to mean an exact match between the principal ICD-9 CM diagnosis codes for the outpatient encounter and the inpatie nt admission. On November 5, 1990, section 4003(a) of the Omnibus Budget Reconcilia tion Act of 1990 (Pub. L. 101-508) amended the statutory definition of "ope rating cost of inpatient hosp ital services" to include the costs of certain services furnished prior to admission. Section 4003(a) also required that these preadmission services be included on the Medicare Part A bill for the subsequent inpatient stay. With this amendment, sect ion 1886(a)(4) of the Ac t defines the operating costs of inpatient hospital services to incl ude diagnostic services (including clinical diagnostic laboratory tests) or other services related to the admission (as defined by the Secretary) furnished by the hospital (or by an entity that is wholly owned or wholly operated by the hospital) to the patient during the 3-days prior to the date of the patient's admission to the hospital. Section 1886(a)(4) of the Act was further amended by section 110 of the Social Security Amendments of 1994 (Pub. L. 103-432) enacted on October 31, 1994. This provision revised the payment window for hospitals that ar e excluded from the IPPS to include only those services fu rnished by the hospital or an entity wholly owned or wholly operated by the hospital during the 1-day (inst ead of the previous 3-days) prior to the patient's hospital inpatient admission. The hos pital and hospital units excluded from the IPPS and affected by this policy are psyc hiatric hospitals and units, inpatient rehabilitation hospitals and units, long-t erm care hospitals, children's hospitals, and cancer hospitals. In the FY 1996 IPPS final rule (60 FR 45840), we noted that the term "day" refers to the entire calendar-day immediately preceding the date of admission and not the 24-hour time period that immedi ately precedes the hour of admission.CMS-1524-P 502

On February 11, 1998, we published a final rule (63 FR 6864), that responded to public comments received on a prior interim final rule on this policy. In that final rule,

we confirmed that ambulance services and chr onic maintenance of renal dialysis services are excluded from the 3-day payment window. This final rule also clarified that the payment window applies to outpa tient services that are othe rwise billable under Part B and does not apply to nonhospita l services that are generally covered under Part A (such as home health, skilled nursing facility, and hospice). In addition the rule clarified the terms "wholly owned or operated" and "admissi on-related" for nondiagnostic services. The 1998 final rule (63 FR 6866) defined an entity as wholly owned or wholly operated if a hospital has direct ownership or control over another entity's operations. Specifically, 42 CFR 412.2(c)(5)(i) states, "A n entity is wholly owned by the hospital if the hospital is the sole owner of the entity. An entity is wholly operated by a hospital if the hospital has exclusive res ponsibility for conducting and ov erseeing the entity's routine operations, regardless of whether the hospita l also has policymaking authority over the entity." The 1998 final rule also stated "that we ha ve defined services as being related to the admission only when there is an exact match between the ICD-9-CM diagnosis code assigned for both the preadmission services and th e inpatient stay." The rule also stated "A hospital-owned or hospital- operated physician clinic or practice is subject to the payment window provision." Therefore, re lated preadmission nondiagnostic services provided by a wholly owned or wholly operate d physician clinic or practice are also included in the 3-day (or 1-day) payment wi ndow policy, and services were considered related when there was an exact match between ICD-9 CM diagnosis codes for the outpatient encounter and the inpatient admission.CMS-1524-P 503

Prior to the June 25, 2010 enactment of section 102(a)(1) of PACMBPRA (Pub. L. 111–192), the payment window policy for preadmission nondiagnostic services was rarely applied in the wholly-owned or operated physician's office or clinic because, as noted, the policy required an exact match between the principal ICD–9 CM diagnosis codes for the outpatient services and the inpa tient admission. Because of the exact match policy, very few services furnis hed in a physician's office or cl inic that is wholly owned or operated by the hospital woul d be subject to the policy. Because the policy applied only in such narrow circumstances, until the recent statutory change, we have not provided further guidance to wholly owned or wholly operated physician offices on how nondiagnostic services are to be included on hospital bills when the 3-day payment window applied. However, the statutory ch ange to the payment window policy made by Public Law 111–192 significantly broadened the definition of nondiagnostic services that are subject to the payment window to include any nondiagnostic service that is clinically

related to the reason for a patient's inpatient admission, regardless of whether the inpatient and outpatient diagnoses are the same. The FY 2012 IPPS proposed rule (76 FR 25960) further discusses application of the 3-day payment window for both preadmi ssion diagnostic and related nondiagnostic services furnished to a patient at wholly owned or wholly operat ed physician practices after June 25, 2010. We do not know how many physician offices will meet this definition of wholly owned or wholly ope rated. Our expecta tion is that most hospital-owned entities providing outpatient se rvices would be considered part of the hospital, likely as an outpatient depart ment, and not separate physician clinics or practices. However, we believe there may be at least some hospital-owned clinics thatCMS-1524-P 504

meet the definition of a wholly owned or w holly operated physician practice. When a physician furnishes a service in a hospital, including an outpatient department of a hospital, Medicare pays the physician under th e physician fee schedule, generally at a facility-based payment rate th at is lower than the "nonfacil ity" payment rate in order to avoid duplication of payment for supplies, equipm ent, and staff that are paid directly to the hospital by Medicare. 3. Applicability of the 3-day Payment Window Policy for Services Furnished in Physician Practices In circumstances where the 3-day pa yment window applies to nondiagnostic services related to an inpatient admission furn ished in a wholly owned or wholly operated physician practice, we propose that Medicare would make payment under the physician fee schedule for the physicians' services that are subject to the 3-day payment window at the facility rate. As explained more fully late r in this section, the se rvices that are subject to the 3-day payment window would be billed to Medicare similar to services that are furnished in a hospital, includi ng an outpatient department of a hospital. On or after January 1, 2012, we propose that when a physician furnishes services to a beneficiary in a hospital's wholly owned or wholly operated physician practice and the beneficiary is admitted as an inpatient within 3 days (or, in the case of non-IPPS hospitals, 1 day), the payment window will apply to all diagnostic se rvices furnished and to any nondiagnostic services that are clinically related to th e reason for the patient's inpatient admission regardless of whether the re ported inpatient and outpatien t ICD-9-CM diagnosis codes

are the same. a. Payment MethodologyCMS-1524-P 505

Specifically, we would establish a new Medicare HCPCS modifier that will signal claims processing systems to provide payment at the facility rate. We propose to pay only the Professional Component (PC) fo r CPT/HCPCS codes with a Technical Component (TC)/PC split that are provided in the 3-day (or, in the case of non-IPPS hospitals, 1-day) payment window in a hospital's wholly owned or wholly operated physician practice. We propose to pay the faci lity rate for codes without a TC/PC split to avoid duplicate payment for the technical reso urces required to provi de the services as those costs will be included on the hospital' s inpatient claim for the related inpatient admission. The facility rate includes physician work, malp ractice, and the facility practice expense, which is a payment to s upport services provided by the physician office when a physician treats patients at another faci lity, such as updating medical records. We propose to modify our regulat ion at §414.22(b)(5)(i), which de fines the sites of service that result in a facility pract ice expense RVU for payment, to add an entity that is wholly owned or wholly operated by a hospital, as defined in §412.2(c)(5)(ii) when that entity furnishes preadmission services. If this proposal is finalized, we woul d establish a new HCPCS modifier through sub-regulatory guidanc e. We would require that this modifier be appended to the physician preadmission diagnostic and admission -related nondiagnostic services, reported with HCPCS codes, which are subject to th e 3-day payment window policy. Each wholly owned or wholly operated physician's practice w ould need to manage its billing processes to ensure that it billed for its physician serv ices appropriately whena related inpatient admission has occurred. The hospital would be responsible for notifying the practice of related inpatient admissions for a patient who received services in a wholly owned orCMS-1524-P 506

wholly operated physician practi ce within the 3-day (or when appropriate1-day) payment window prior to the inpatient stay. We would make the new modifier effective for claims

with dates of service on or after January 1, 2012, and wholly owned or wholly operated physician practices would receiv e payment at the facility ra te for related nondiagnostic services and receive payment for only the pr ofessional component for diagnostic services effective for services furnished on or after January 1, 2012.

We realize that the time frames associat ed with the global surgical package for many surgical services could overlap with the 3-day (or 1-day) payment window policy. Global surgical payment rules apply to majo r and minor surgeries, and endoscopies.

Section 40.1 of the Claims Pr ocessing Manual (100-04 chapter 12 Physician/Nonphysician Practitioners) defines the global surgical package. Procedures can have a global surgical period of 0, 10, or 90-days. Generally, the global period for major surgeries is 1-day prior to the su rgical procedure and 90-days immediately following the procedure. For minor surger ies, the global period is the-day of the procedure and 10-days immediatel y following the procedure. Medicare payment for the global surgical package is based on the typical case for a procedure, and includes preoperative visits , intra-operative servic es, and complications following surgery, postoperative visits, posts urgical pain management, supplies, and

miscellaneous other services su ch as dressing changes and rem oval of sutures or staples. Medicare makes a single payment to the treating physician (or group practice) for the surgical procedure and any of the pre- and postoperative services typically associated with the surgical procedure provided within the global surgical peri od (10 or 90-days).

The same section of the Claims Processing Manual (100-04 chapter 12CMS-1524-P 507

Physician/Nonphysician Practitioners) also discus ses the services that are not included in payment for the global surgical period. In general, these se rvices are unrelated to the surgery, are diagnostic or are pa rt of the decision to pursue su rgery, or are related to the surgery but are so significant they warrant an additional payment. Some examples of services not included in payment for the gl obal surgical period include the initial evaluation of the problem by the surgeon to determine the need for major surgery; services of another physician; visits unrelated to the diagno sis for the surgical procedure

unless the visits occur due to surgical complications; treatment that is not part of the normal recovery from surgery; di agnostic tests; distinct surgical procedures that are not re-operations; treatment for postoperative compli cations that require a return trip to the operating room; critical care unrelated to the surgery where a seriously injured or burned patient is critically ill an d requires the constant atte ntion of the physician; and immunosuppressive therapy for organ transplants. The time frames for application of th e 3-day payment window and the global surgical package could overlap. In some cases, the application of the 3-day payment window is straightforward. For example, a pa tient could have minor surgery in a wholly owned or wholly operated physician's office and, due to complications, need to be admitted within 3-days to an acute care hospital paid under the IPPS for follow-up surgery. Under the 3-day payment window policy, the practice e xpense portion of the initial surgery and any pre- and postoperative visits associated with the surgery (both those subject to the global surgery rules and separate diagnostic procedures) should be included on the hospital's Part A claim for th e inpatient admission. The wholly owned or wholly operated physician practice would bill fo r the surgery performed for the inpatientCMS-1524-P 508

as well as for the initial su rgical procedure performed in the physician practice that started the global period. Th e wholly owned or wholly ope rated physician practice would apply the HCPCS modifier that CMS woul d pursue to implement the 3-day payment

window to each of these services HCPCS code. Medicare would pay the physician practice for the initial surgical procedure and the related procedure following inpatient admission at the facility rate. Finally, a ny preadmission diagnostic tests conducted by the wholly owned or wholly operated physician practice in the 3-day payment window would be included on the physician practice's claim with the anticipated HCPCS modifier, and Medicare would pay the wholly owned or wholly operated physic ian practice only the professional portion of the service. However, the situation could arise wher e a global surgical period overlaps with the 3-day payment window, but th e actual surgical procedure with the global surgical package occurred before the 3-day payment win dow. In this case, several post-operative services, such as follow-up visits, would o ccur during the global period, but the surgeon would not bill separately for those services . We propose that services with a global surgical package would be subject to the 3-day payment window policy when wholly owned or wholly operated physician pract ices furnish preadmission diagnostic and nondiagnostic services that are clinically relate d to an inpatient admission when the date of the actual surgical procedure falls within the 3-day payment window policy. However, when the actual surgical procedure for a serv ice that has a global surgical package is

furnished on a date that falls outside the 3-day paym ent window, the 3-day window policy would not apply. We do not believe it w ould be appropriate to require the wholly owned or wholly operated physician practi ce to unbundle the post operative servicesCMS-1524-P 509

associated with the global surgical procedure so that the practice e xpense portion of those services could be paid under the PFS at th e facility rate and the costs included on the hospital's inpatient claim. However, any serv ice that a wholly owned or wholly operated physician practice would bill separately from the global surgical package, such as a separate initial evaluation of a problem by the surgeon to determine the need for surgery or separate diagnostic tests, would continue to be subject to th e 3-day payment window policy. b. Identification of Wholly Owned or Wholly Operated Physician Practices The 1998 final rule (63 FR 6864) defined w holly owned or wholly operated as a hospital's direct ownership or control over another entity's ope rations. In that rule, we added the regulation at 42 CFR 412.2(c)(5)(i) which states, "An en tity is wholly owned by the hospital if the hospital is the sole owner of the entity. An entity is wholly operated by a hospital if the hospital has exclusive responsibility for co nducting and overseeing the entity's routine operations , regardless of whether the hos pital also has policymaking authority over the entity." Physician practices self-designa te whether they are owned or operated by a hospital during th e Medicare enrollment proce ss. Currently, a physician practice enrolls in Medicare with CMS form "855B." This enrollment form reports pertinent practice information such as ow nership, organizational structure, and operational duties. Likewise, hospitals enro ll in Medicare using CMS form "855A" also reporting pertinent hospital information such as ownership, organiza tional structure and operational duties. Medicare Administrativ e Contractors update files of physician practices that are owned and operated by hospitals, and the f iles of hospitals that own those physician practices, in their claims pro cessing systems and use that data to confirmCMS-1524-P 510

an ownership relationship for identified phys ician practices. We will investigate the feasibility of establishing national system ed its within the Common Working File to fully identify whether a physician practice is who lly owned or wholly operated by a hospital and to associate such practice with its affiliated hospital. K. Hospital Discharge Care Coordination We are committed to achieving better care for individuals, better health for populations, and reduced expenditure growt h. Reforms such as Accountable Care Organizations and Medical Homes work to achieve these goals. We are also committed to reforms to the fee-for-service payment system to achieve these goals. We recently launched the Partnership for Patie nts, (in April 2011), a nation al patient safety initiative that includes the Community Based Care Tr ansitions Program, which provides funding to community-based organizations to coordinate a continuum of post-acute care in order to test models for improving care transitions fo r high risk Medicare beneficiaries. Care coordination involving the transition of a beneficiary from care furnished by a treating physician during a hospital stay to the beneficiary's primary physician in the community could avoid adverse events such as readmissions or subsequent illnesses, improve beneficiary outcomes, and avoid a fi nancial burden on the health care system. Successful efforts to improve hospital discha rge care coordination and care transitions could improve the quality of care while si multaneously decreasing costs. We are interested in broad public comment on how to further improve physician care coordination within the statutory structure for physician payment and quality reporting, particularly for a beneficiary's transi tion from the hospital to the community. Care coordination is a component of many evaluation and management (E/M)CMS-1524-P 511

services. Under the physician fee schedule, there are tw o hospital discharge codes, hospital discharge day management services CPT codes 99238 (Hos pital discharge day management; 30 minutes or less) and 99239 (Hospital discharge day management; more than 30 minutes). Both of these codes include care coordination activ ities. The specific physician activities for care coordination a ssociated with the hos pital discharge day management codes as shown in Table 63 include the following:

● Providing care coordination for the transition including instructions for aftercare to caregivers.

● Ordering and arranging for post discha rge follow-up professional services and testing.

● Discussing aftercare treatment w ith the beneficiary, family, and other healthcare professionals.

● Informing the primary care or refe rring physician of discharge plans.

● Provide necessary care coordination, telephonic or electronic communication assistance, and other necessary manageme nt related to this hospitalization.

● Revise treatment plan(s) and communicat e with beneficiary and/or caregiver,

as necessary. Providing necessary care coordination also is a component of the office visit CPT codes 99203 (Level 3 new patient office or other outpatient visit) and 99213 (Level 3 established patient office or ot her outpatient visit) that a beneficiary's primary physician

would use to bill for the firs t visit after discharge. Th e physician activities for care

coordination associated with these E/M servi ces as shown in Table 63 include providing necessary care coordination, telephonic or electronic communicat ion assistance, andCMS-1524-P 512

other necessary management related to this office visit. The clinical vignettes that are used to value the resources included in these codes are shown in Table 63. We have provided the full clinical vignettes used by the American Medical Association/Specialty Society Relative Value Update Committee (AMA RUC) to develop recommended RVU va lues for the resources included in the discharge day management and E/M codes. These vignettes detail all the specific physician activities that the AMA RUC cons idered for these CPT codes, including hospital discharge care coordination activities.CMS-1524-P 513TABLE 63: AMA RUC CLINICAL VIGNETTECPTCodeLong DescriptorVignettePre ServiceIntra ServicePost Service99238Hospital dischargeday management;30 minutes or lessDischarge visit for a55-year-old male admittedwith a community-acquiredpneumonia is seen inpreparation for dischargefrom the hospital. He iseuvolemic, afebrile,asymptomatic, and hisoxygen saturations arenormal.•Review datanot available onthe unit (such asdiagnostic andimaging studies).•Communicatewith otherprofessionalsand with patientor patient'sfamily.•Review medical records and data availableon the unit.•Obtain an interval history.•Perform a physical exam.•Consider relevant data, options, and risksand formulate/revise diagnosis and treatmentplan(s) including making the decision fordischarge.•Discuss aftercare treatment with the patient,family and other healthcare professionals.•Provide care coordination for the transitionincluding instructions for aftercare tocaregivers.•Order/arrange for post discharge follow-upprofessional services and testing.•Reconcile medications with attention topre-admission therapy,inpatient therapy andoutpatient formulary and write prescriptions.•Complete dischargeand aftercare forms.•Inform the primarycare or referringphysician of discharge plans.•Complete medical record documentation.•Complete discharge records.•Handle (with the help of clinical staff) anytreatment failures or adverse reactions tomedications that may occur after discharge.•Provide necessary care coordination,telephonic or electronic communicationassistance, and other necessarymanagementrelated to thishospitalization.•Receive and respond to any interval testingresults or correspondence, including obtainingany results pending at discharge.•Revise treatment plan(s) and communicatewith patient and/or caregiver, as necessary.CMS-1524-P 514CPTCodeLong DescriptorVignettePre ServiceIntra ServicePost Service99239Hospital dischargeday management;more than 30minutesDischarge visit for a75-year-old female whorequired a below-the kneeamputation for an infectednon-healing ulcer on herright foot is seen inpreparation for dischargefrom the hospital. She hasType 2 diabetes mellitus,ischemic cardiomyopathy,atherosclerotic peripheralvascular disease,hypertension, chronic renalinsufficiency, anddementia. She is no longerdelirious, her blood sugarsare well controlled, and sheis at her baseline weight.She is being dischargedback to the nursing home.•Review datanot available onthe unit (such asdiagnostic andimaging studies).•Communicatewith otherprofessionalsand with patientor patient's family•Review medical records and data availableon the unit.•Obtain an interval history.•Perform a physical exam.•Consider relevant data, options, and risksand formulate/revise diagnosis and treatmentplan(s) including making the decision fordischarge.•Discuss aftercare treatment with the patient,family and other healthcare professionals.•Provide care coordination for the transitionincluding instructions for aftercare tocaregivers.• Order/arrange for post discharge follow-upprofessional services and testing.• Reconcile medications with attention topre-admission therapy,inpatient therapy andoutpatient formulary and write prescriptions.• Complete discharge and aftercare forms.• Inform the primary care or referringphysician of discharge plans.• Complete medical record documentation.•Complete discharge records.•Handle (with the help of clinical staff) anytreatment failures or adverse reactions tomedications that may occur after discharge.•Provide necessary care coordination,telephonic or electronic communicationassistance, and other necessary managementrelated to thishospitalization.•Receive and respond to any interval testingresults or correspondence, including obtainingany results pending at discharge.•Revise treatment plan(s) and communicatewith patient and/or caregiver, as necessary.99203Office/outpatientvisit, newInitial office visit for a63-year old female withhypertension presents for apre-employment physicalafter moving to the area.Her blood pressure hasbeen adequately controlledwith her current medicationon home blood pressuremonitoring.• Review themedical historyform completedby the patientand vital signsobtained byclinical staff• Communicatewith other healthprofessionals• Obtain a detailed history.• Perform a detailed examination.• Consider relevant data, options, and risksand formulate a diagnosis and develop atreatment plan (low complexity medicaldecision making).• Discuss diagnosis and treatment optionswith the patient.• Address the preventive health care needs ofthe patient.• Reconcile medication(s).• Write prescription(s).• Order and arrange diagnostic testing orreferral as necessary.• Complete the medical record documentation.• Handle (with the help of clinical staff) anytreatment failures or adverse reactions tomedications that may occur after the visit.• Provide necessary care coordination,telephonic or electronic communicationassistance, and other necessary managementrelated to thisoffice visit.• Receive and respond to any interval testingresults or correspondence.• Revise treatment plan(s) and communicatewith patient, as necessary.CMS-1524-P 515CPTCodeLong DescriptorVignettePre ServiceIntra ServicePost Service99213Office/outpatientvisit, estOffice visit, establishedpatient, a 55 year old malewith a history ofhypertension andhyperlipidemia whopresents for follow up.• Review themedical historyform completedby the patientand vital signsobtained byclinical staff.• Obtain an expended problem focusedhistory (including response to treatment at lastvisit and reviewing interval correspondence ormedical records received).*• Perform an expended problem focusedexamination.*• Consider relevant data, options, and risksand formulate a diagnosis and develop atreatment plan (low complexity medicaldecision making).*• Discuss diagnosis and treatment optionswith the patient.• Address the preventive health care needs ofthe patient.• Reconcile medication(s).• Write prescription(s).• Order and arrange diagnostic testing orreferral as necessary.• Complete the medical record documentation.• Handle (with the help of clinical staff) anytreatment failures or adverse reactions tomedications that may occur after the visit.• Provide necessary care coordination,telephonic or electronic communicationassistance, and other necessary managementrelated to thisoffice visit.• Receive and respond to any interval testingresults or correspondence.• Revise treatment plan(s) and communicatewith patient, as necessary.* Two of these three components requiredCMS-1524-P 516

In order to ensure that these hospital discharge care coordination services are appropriately valued, we are seeking comment on the specific physic ian activities and the associated resources involved in physician provision of effective care coordination surrounding a hospital discharge. For the trea ting physician(s) overseeing the care of the beneficiary in the hospital, specific care coor dination activities (for example, transfer of the beneficiary to a community physic ian) could include the following:

● Transitioning responsibility for the beneficiary's care to a receiving physician without a "gap" (that is, a seamless transition). This could include identifying the receiving physician by name and providing that physician's contact information to the beneficiary and/or family representative.

● Facilitating the transfer of "core" in formation to the rece iving physician and/or beneficiary/family (if requested ), via fax, secure email, hard copy, or other mechanism.

The core set of information could include (unless not applicable): ++ Important lab and diagnostic test resu lts and drugs and treatments, as well as pending tests and how and when to obtain results ++ Drugs prescribed, in cluding planned changes ++ Other treatments and tests pres cribed, including planned changes ++ Allergies ++ Receiving physician contact inform ation and specification of physician coverage for problems before any initial appoint ment. For hospitalized beneficiaries, this could include a planned initial post-discharge appointment w ithin 7 business days with a physician, NP, or PA (if au thorized by State law).

++ Overview of the caregiver situation.CMS-1524-P 517

++ Summary of beneficiary/family goa ls of care, with time frames and any

restrictions. ++ Family caregiver and surrogate d ecision-maker identific ation, and assessment of needs (for the caregi ver), as appropriate. ++ Responding to inquiries from the rece iving physician or other provider (such as, LTCH, IRF, SNF) about the beneficiary's hospital stay and care plan in a timely and collaborative way. For the beneficiary's primary physicia n(s) in the community overseeing the beneficiary's care post hospital discharge, specific care coordina tion activities could

include:

● Assuming responsibility for the beneficiary's care without a gap.

● Notifying the patient that the receiv ing physician will be responsible for the beneficiary's care, and checking on the beneficiary's condition in the first few days after

the transition.

● Obtaining and reviewing the core information provided by the sending physician.

● Contacting the physicia n(s) involved in the bene ficiary's care during the hospital stay (a s appropriate).

● Setting up an appointment for a f ace-to-face visit with the beneficiary, as appropriate. We welcome comment on key physician activ ities associated with effective care coordination between the treating physician in the hospital and the beneficiary's primary physician in the community upon hospital disc harge. We request public comment on theCMS-1524-P 518

extent to which the clinical vignette for the hospital discharge and office visit codes appropriately incorporate hospital discharge care coordination activit ies. We also seek

comment about whether the relative values as signed to these servic es under the physician fee schedule appropriately refl ect the resources involved in performing activities that are essential to hospital discharg e care coordination, and on wa ys to ensure appropriate recognition of the resources i nvolved in these services, sp ecifically, the physician time and complexity of physician work as well as the associated practice expenses. We also seek comments on the current coding struct ure for these services and on any other suggested changes to improve care coordi nation, particularly for the beneficiary's transition from the hospital to the community, to better reflect the re sources required. We note that the Assistant Secretary of Planning and Evaluation (ASPE) in the Department of

Health and Human Services hosted a tec hnical expert panel in May 2011 identifying areas of additional research into equitable payment for services among specialties, with particular attention to valuing the resources required for primary care including generally identifying and valuing care coordination ac tivities. We will consider the panel's discussion and any available analyses as we broadly consider physician payment for hospital discharge care c oordination activities. In addition to specific comments on the resources required for effective care coordination activities, we also broadly i nvite comment on other means to emphasize physician care coordination, such as educationa l efforts or the development of additional care coordination performance measures for the Physician Quality Reporting System and the Physician Fee Schedule Value Modifier. A new trend in care transition planning is the use of shared care plans betweenCMS-1524-P 519

beneficiary and physician rather than those cr eated solely by the physician and dictated as "doctor's orders" to the beneficiary. Shared care plans are join tly developed between beneficiary and physician where the physicia n sets and documents self-management goals collaboratively with beneficiaries. These jointly developed care plans can be particularly important to improving overall be neficiary outcomes for beneficiaries with chronic illnesses, such as diabetes or HIV/AIDS, by developing a sense of personal responsibility for health outcomes. These plans give the patients a tool to learn about and practice principles of self-management, produc ing motivated and enga ged beneficiaries. In addition, they provide health care prof essionals a communicati on tool to provide timely information that supports planned care and beneficiary self-management. (For

more information see http://www.innovations.ahrq.gov/content.aspx?id=2191 or http://www.ihi.org/IHI/Topics/HIVAIDS/H IVDiseaseGeneral/Tools/My+Shared+Care+P

lan.htm .) We will carefully weigh all comments received as we consider changes to the Medicare physician fee schedule to appropriately reflect the relative value of effective post discharge care coordination or other means to focus attention in this area. We note that we are not proposing any ch anges at this time. If we believe it would be appropriate to make certain changes, they would be proposed through future notice and comment rulemaking and would be subject to the budget neutrality requir ements of section 1848(c)(2)(B)(ii)(II) of the Act.

L. Technical Corrections 1. Outpatient Speech-Language Pathology Services: Conditions and Exclusions We are proposing a tech nical correction to the he ading of the condition ofCMS-1524-P 520

coverage at §410.62(b) for outpatient speech-l anguage pathology services. The heading was inadvertently changed in the course of rulemaking for CY 2009 when a new paragraph was added at §410.62(c) to recogni ze speech-language pathologists in private practice. The section headi ng at §410.62(b) currently read s "Special provisions for services furnished by speech-language pathol ogists in private practice." We are proposing to reinstate the correct heading at §410.62(b) to read "Condition for coverage of outpatient speech-language pathology servic es furnished to certain inpatients of a hospital or a CAH or SNF." 2. Outpatient Diabetes Self-Management Trai ning and Diabetes Outcome Measurements a. Proposed Changes to the Definition of Deemed Entity We are proposing the following technical corrections to the definition of "deemed entity" in §410.140:

● Removing the following phrases to clar ify the purpose of the reference to an approved entity: ++ "[B]y CMS to furnish and receiv e Medicare payment for the training". ++ "Upon being approved".

++ "CMS refers to this en tity as an "approved entity"".

● Removing an incorrect reference to §410.141(e) and replacing it with §410.145(b). The proposed revisions would read as follows: Deemed entity means an individual, physicia n, or entity accredited by an approved organization, but th at has not yet been approved by CMS under §410.145(b) to furnish training.CMS-1524-P 521

b. Proposed Changes to the Condition of Coverage Regarding Training Orders We are proposing the following tech nical correction to §410.141(b)(1) entitled "training orders":

● Removing the cross-reference "§4 10.32(a)" and adding the cross-reference "§410.32(a)(2)".

● Removing the term "it" and adding the phrase "the trai ning" in its place. The proposed revisions would read as follows: Training orders . Following an evaluation of the beneficiary's need for the training, the training is orde red by the physician (or quali fied nonphysician practitioner) (as defined in §410.32(a)(2)) treati ng the beneficiary's diabetes. 3. Practice Expense Relative Value Units (RVUs) We are proposing the following techni cal corrections to the regulation at §414.22(b):

● In paragraphs (b)(5)(i)(A) and (B)-- ++ Include additional examples of the set tings in which the facility or nonfacility practice expense (PE) RVUs are applied, respectively; and ++ Clarify that the lists of settings ar e not exhaustive; and amend these lists to include additional place of service examples.

● In paragraph (b)(5)(i)(A) we would a dd "hospice" to the list of places of service after "community mental health center.

● In paragraph (b)(5)(i)(B) --CMS-1524-P 522

++ Revise the language to be more cons istent with (b)(5)(i)(A) and to include the "comprehensive outpatient rehabilitation facil ity (CORF)" as a place of service example;

and ++ Clarify this provision by removi ng the text regarding the use of the nonfacility PE RVUs for services in "...a facility or institution other than the hospital, skilled nursing facility, community mental heal th center, or ASC" because this phrase does not accurately reflect the places of se rvice where the nonfacility PE RVUs are applied.

● In paragraph (b)(5)(i)(C)-- ++ Revise the paragraph introduction by adding "and CORF" after "outpatient therapy" and before "services" and, to more accurately define the term "outpatient therapy services," to ad d "(including physical thera py, occupational therapy and speech-language pathology services )" after "therapy services" and before "CORF services

billed under...". The proposed revisions to §414.22(b)(5)(i) (A), (B), and (C) would read as

follows: (A) Facility practice expense RVUs . The facility practice expense RVUs apply to services furnished to patients in places of service including, but not limited to, a hospital, a skilled nursing fac ility, a community mental health center, a hospice, or an ambulatory surgical center. (B) Nonfacility practice expense RVUs . The nonfacility practice expense RVUs apply to services furnished to patients in places of service including, but not limited to, aCMS-1524-P 523

physician's office, the patient's home, a nursi ng facility, or a comprehensive outpatient rehabilitation facility (CORF). (C) Outpatient therapy and CORF services . Outpatient therapy services (including physical therapy, occupationa l therapy, and speech-language pathology services) and CORF services billed under the physician fee schedule are paid using the nonfacility practice expense RVUs. V. Collection of Information Requirements Under the Paperwork Reduction Act of 1995, we are required to provide 60-day

notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2 )(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

● The need for the information collecti on 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 auto mated collection techniques. The proposed rule imposes collection of in formation requirements as outlined in the regulation text and specified in various se ction of this proposed rule. However, this proposed rule also makes refere nce to several associ ated information collections that are not discussed in the regulati on text contained in this document. The following is aCMS-1524-P 524

discussion of these information collections, some of which have already received OMB approval. A. Part B Drug Payment The discussion of average sales price (A SP) issues in section IV.A.1 of this proposed rule with comment period pertains to payment for Medicare Part B drugs and biologicals under the ASP methodology. Drug manu facturers are required to submit ASP data to us on a quarterly basis. The ASP reporting requirements are set forth in section 1927(b) of the Act.

In order to facilitate more accurate and consistent ASP data reporting from manufacturers, we are proposing the following:

● To revise existing repo rting fields and add new fields to the Addendum A template.

● To add a macro to the Addendum A temp late that will allow manufacturers to

validate the format of their data prior to submission.

● To maintain a list of HCPCS codes for which manufacturer's report ASPs for NDCs on the basis of a specified unit.

● A clarification to exis ting regulation text at §414.802. Current regulation text states that "Unit means the product represente d by the 11 digit National Drug Code." We propose to update the definition to account fo r situations when an alternative unit of reporting must be used. Additionally, we will also be revising our instructions for the reporting of dermal grafting products in a user guide available on the ASP website at: http://www.cms.gov/McrPartBDrugAvgSalesPrice/

.CMS-1524-P 525

The burden associated with this require ment is the time and effort required by manufacturers of Medicare Part B drugs and biologicals to calculate, record, and submit the required data to CMS. The Addendum A template is currently approved under OMB control number 0938-0921. For the first year , we estimate that collection of the additional data elements will take approxima tely 2 additional hours for each submission of data, or 12 hours per respons e, at a cost of $252 per response. Based on the current number of respondents, we estimate that this requirement will affect approximately 180 manufacturers. Since manufacturers will respond 4 times per year, we estimate that, on an annual basis, the annual number of responses will be 720 (180 manufacturers multiplied by 4 responses) and the total annual hours burden will be 34,560 hours (720 annual responses multiplied by 48 annual hours per response). We estimate the annual cost burden to be $181,440 (cost per re sponse multiplied by the annual number of responses). Once manufacturers adjust to the changes associated with electronic reporting after the first year, we anticipate that the burden estimate will decrease. B. The Physician Quality Reporting System Section IV.F.1. of this proposed rule di scusses the background of the Physician Quality Reporting System, provides inform ation about the proposed measures and reporting mechanisms that would be availa ble to eligible professionals and group practices who choose to participate in th e 2012 Physician Quality Reporting System, and the proposed criteria for sa tisfactory reporting in 2012. With respect to satisfactory submission of data on quality measures by eligible professionals, eligible professi onals include physicians, other pr actitioners as described in section 1842(b)(18)(c) of the Act, physical and occ upational therapists, qualifiedCMS-1524-P 526

speech-language pathologists, and qualified audiologists. Eligible professionals may choose whether to participate and, to the exte nt they satisfactorily submit data on quality measures for covered professional services, they can qualify to receive an incentive payment. To qualify to receive an incen tive payment for 2012, we propose that the eligible professional (or group practice) would need to m eet one of the criteria for satisfactory reporting described in section IV.F.1.e. or IV.F.1.f . of this proposed rule (or section IV.F.1.g. for group practices). Because this is a voluntary program, it is difficult to accurately estimate how many eligible professionals would opt to pa rticipate in the Physician Quality Reporting System in CY 2012. Information from th e "Physician Quality Reporting System 2009 Reporting Experience Report, "which is av ailable on the Physician Quality Reporting System section of the CMS Web site at http://www.cms.hhs.gov/ pqrs, indicates that eligible professionals from nearly 120,000 unique TIN/NPI combinations attempted to submit Physician Quality Reporting System qua lity measures data for the 2009 Physician Quality Reporting System. Therefore, for purposes of conducting a burden analysis for the 2012 Physician Quality Reporting System , we will assume that all eligible professionals who attempted to particip ate in the 2009 Physician Quality Reporting System will also attempt to participate in the 2012 Physician Quality Reporting System. Furthermore, we believe that the burden for eligible professionals who are participating in the Physician Quality Reporting Syst em for the first time in 2012 would be considerably higher than the bur den for eligible professionals who have participated in the Physician Quality Reporting System in prior years. As described later in this section, some preparatory steps are needed to begi n participating in the Physician QualityCMS-1524-P 527

Reporting System. To the extent that we are not proposing to retire the measures that an eligible professional has reported in a prior ye ar and there are no changes to the measure's specifications from a prior year, such preparat ory steps would not need to be repeated in subsequent years. For individual eligible pr ofessionals, the burden associ ated with the requirements of this reporting initiative would be the time and effort associated with eligible professionals identifying applicable P hysician 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 eligib le professional's or group practice's measures. We believe it is difficult to defi nitively quantify the burden because eligible professionals may have di fferent processes for integrating the data collection for the Physician Quality Reporting System measures into their practice's work flows. Moreover, we expect that the time n eeded for an eligible professional to review the quality measures and other information, se lect measures applicable to his or her patients and the services he or she furnishe s to them, and incorporate the use of quality

data codes into the office work flows would vary along with the number of measures that are potentially applicable to a given professional's practice. Since a majority of eligible professionals participate via claims or regi stry-based reporting of individual measures, they would generally be require d to report on at least three m easures to earn a Physician Quality Reporting System incentive. Therefore, we will assume that each eligible professional who attempts to submit Phys ician Quality Reporting System quality measures data via claims or registry repor ting is attempting to earn a Physician QualityCMS-1524-P 528

Reporting System incentive payment and reports on an average of three measures for this burden analysis. Due to the fact that we have seen signif icant increases in participation each year since the program's inception, we anticipat e even greater participation in the 2012 Physician Quality Reporting System than in previous years, including participation by eligible professionals who are participati ng in the Physician Quality Reporting System for the first time in 2012. As discussed pr eviously, eligible pr ofessionals who are participating in the Physician Quality Reporti ng System for the first time in 2012 need to take preparatory steps to begi n participating in the program. Since this burden analysis focuses on those new to the Physician Quality Reporting System, we will assign 5 hours as the amount of time needed for eligible professionals to review the 2012 Physician Quality Reporting System Measures List, revi ew the various reporting options, select the most appropriate reporting op tion, identify the app licable measures or measures groups for which they can report the necessary in formation, 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 would need up to 2 hours to review the 2012 Physician Quality Reporting System Measures List, review the reporting options, and select a reporting option and measures on which to report and 3 hours to review the measure specifications for up to 3 selected m easures or up to 1 selected measures group and to develop a mechanism fo r incorporating reporting of the selected measures or measures group into the office work flows.CMS-1524-P 529

Information from the Physician Voluntary Reporting Program (PVRP), which was a predecessor to the Physicia n Quality Reporting System, indi cated an average labor cost of $50 per hour for 2006. To account for salary increases over time, we will use an average practice labor cost of $60 per hour in our estimates based on an assumption of an average annual increase of approximately 3 perc ent. Thus, we estimate the cost for an eligible professional associated with prep aring to report Physic ian Quality Reporting System quality measures would be approximately $300 per eligible professional ($60 per hour x 5 hours). We continue to expect the ongoing cost s 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 Re porting System, and increased efforts by CMS

and stakeholders to disseminate useful educa tional resources and best practices. We also continue to expect the ongoing costs associat ed with Physician Quality Reporting System participation to decline as we align the participation requirements in the Physician Quality Reporting System with the reporting requirements in the Medicare and Medicaid Electronic Health Record (EHR) Incentive Pr ogram such that an eligible professional would only need to submit data to CMS one time for multiple purposes.

We believe the burden associated with actually reporting the Physician Quality Reporting System quality measures would va ry depending on the reporting mechanism selected by the eligible professional. For the proposed claims-bas ed reporting option, eligible professionals would need to ga ther the required information, select the appropriate quality data code s (QDCs), and include the appropriate QDCs on the claimsCMS-1524-P 530

they submit for payment. The Physician Quality Reporting System would collect QDCs as additional (optional) line items on the existing HIPAA transact ion 837-P and/or CMS Form 1500 (OCN: 0938-0999). We do not anticipate any new forms and or any modifications to the existing transaction or fo rm. We also do not anticipate changes to

the 837-P or CMS Form 1500 for CY 2012. Based on our experience with the PVRP, we continue to estimate that the time needed to perform all the steps necessary to report each measure (that is, reporting the relevant quality data code(s) for a measure) on claims would ranges from 15 seconds (0.25 minutes) to over 12 minutes for compli cated cases and/or measures, with the median time being 1.75 minutes. At an averag e labor cost of $60 per hour per practice,

the cost associated with this burden woul d range from $0.25 in labor to about $12.00 in labor time for more complicated cases and/or measures, with the cost for the median practice being $1.75.

The total estimated annual burden for this requirement would also vary along with the volume of claims on which quality data is reported. In previous years, when we required reporting on 80 percent of eligible cases for claims-based reporting, we found that on average, the median number of re porting 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 would vary, however, with the eligible professional's patient population and the t ypes of measures on which the eligibleCMS-1524-P 531

professional chooses to report (each meas ure's specifications includes a required reporting frequency). Based on the assumptions discussed prev iously, we estimate the total annual reporting burden per individual eligible professional associated with claims-based reporting would range from 4.5 minutes (0.25 minutes per measure X 3 measures X 6 cases per measure) to 180 mi nutes (12 minutes per measure X 3 measures X 6 cases per measure), with the burden to the median practice being 31.5 minutes (1.75 minutes per measure X 3 measures X 6 cases). We estimate the total annual reporting cost per eligible professional associ ated with claims-based re porting would range from $4.50 ($0.25 per measure X 3 measures X 6 cases per measure) to $216.00 ($12.00 per measure X 3 measures X 6 cases per measure), with the cost to the medi an practice being $31.50 per eligible professional ($1.75 per measure X 3 measures X 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 profe ssionals 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, additi onal data would need to be reported to the registry solely for purposes of particip ation in the 2012 Physician Quality Reporting System. However, eligible professionals would need to authorize or instruct the registry to submit quality measures results and nu merator 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 mi nutes per eligible professional.CMS-1524-P 532

We are proposing that registries interested in submitting quality measures results and numerator and denominator data on quality measures to CMS on their participants' behalf in 2012 would need to complete a self-nomination process in order to be considered "qualified" to submit on behalf of eligible professionals unless the registry was qualified to submit on behalf of eligible professionals for prior program years and did so successfully. We estimate that the proposed self-nomination process for qualifying additional registries to submit on behalf of eligible professionals for the 2012 Physician Quality Reporting System would invol ve approximately 1 hour per registry to

draft the letter of intent for self-nomination. We estimate that each self-nominated entity would also spend 2 hours for the interview with CMS officials a nd 2 hours calculating numerators, denominators, and measure results for each measure the registry wishes to report using a CMS-provided measure flow. However, the time it takes to produce calculated numerators, denominators, and measure results using the CMS-provided measure flows could vary depending on the registry's experience and the number and type of measures for which the registry wishes to submit on behalf of eligible professionals. Additionally, part of the pr oposed self-nomination process involves the completion of an XML submission by the re gistry, which we estimate to take approximately 5 hours, but may vary depending on the registry's experience. We estimate that the registry staff involved in the registry self-nomination process would have an average labor cost of $50 per hour. Therefore, assuming the total burden hours per registry associated with the registry se lf-nomination process is 10 hours, we estimate that the total cost to a registry associated with the registry self-nomination process would be approximately $500 ($50 per hour x 10 hours per registry).CMS-1524-P 533

The burden associated with the proposed re gistry-based reporti ng requirements of the Physician Quality Reporting System would be the time and effort associated with the registry calculating quality measures results fr om the data submitted to the registry by its participants and submitting the quality measur es results and numerator and denominator data on quality measures to CMS on behalf of th eir participants. We expect that the time needed for a registry to review the quality measures and other info rmation, calculate the measures results, and submit the measures re sults and numerator and denominator data on the quality measures on their participants' behalf is would vary along with the number of eligible professionals repor ting data to the registry a nd the number of applicable measures. However, we believe that regist ries already perform ma ny of these activities for their participants. Therefore, there may not necessarily be a burden on a particular registry associated with calculating the measure results and submitting the measures

results and numerator and denominator data on the quality measures to CMS on behalf of their participants. Whether there is any additi onal burden to the regist ry as a result of the registry's participation in the Physician Quality Reporting System would depend on the number of measures that the registry in tends to report to CMS and how similar the registry's measures are to CMS' proposed Physician Quality Reporting System measures. For EHR-based reporting we have propos ed for the CY 2012 Physician Quality Reporting System, the individual eligible pr ofessional could either submit the quality measures data directly to CMS from their EHR or utilize an EHR data submission vendor to submit the data to CMS on the eligible pr ofessionals' behalf. To submit data to CMS must directly from their EHR, the eligible professional would have to have access to a CMS-specified identity management system, such as IACS, which we believe takes lessCMS-1524-P 534

than 1 hour to obtain. Once an eligible professional has an account for this CMS-specified identity management system , he or she would need to extract the necessary clinical data from his or her EHR, and submit the necessary data to the CMS-designated clinical data warehouse. With respect to our proposed 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 20 12 data file in 2013, we believe that this would take an eligible professional no mo re 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 subm ission to CMS, the burden to the eligible professional associated with submission of data on Physician Quality Reporting System quality measures should be minimal as all of the information required to report the measure should already reside in the eligible professional's EHR. We did not introduce the EHR-based reporting mechanism into the Physician Quality Reporting System until 2010. We are still in the process of analyzi ng 2010 data. As such, we believe it is difficult to predict how many eligible profe ssionals may choose to participate in the 2012 Physician Quality Reporting System via the EHR-based reporting mechanism. We are proposing that an EHR vendor in terested in having their product(s) be used by eligible professionals to to su bmit the proposed Physician Quality Reporting System quality measures data to CMS or interested in submitting data obtained from an EHR to CMS on behalf of eligible profe ssionals would be required to complete a self-nomination process in order for the vendor and/or its product(s) to be considered "qualified" for 2012. It is difficult to defin itively quantify the burden associated with the proposed EHR self-nomination process as th ere is variation regarding the technicalCMS-1524-P 535

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 would be similar to the time required for registries to self-nominate, which is approximately 10 hours at $50 per hour for a total of $500 per EHR vendor ($50 per hour x 10 hours per EHR vendor).

The burden associated with the EHR ve ndor programming its EHR product(s) to extract the clinical data that the eligible professional would need to submit to CMS for purposes of reporting 2012 Physician Quality Reporting System quality measures would 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 capabil ities and for such vendors, we estimate that the total burden hours would be 40 hours at a rate of $50 per hour for a total burden estimate of $2,000 ($50 per hour x 40 hours per vendor). However, given the variability in the capab ilities of the vendors, we believe 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 x 200 hours per EHR vendor). With respect to the proposed criteria for satisfactorily re porting data on the proposed quality measures for group practices to be treated as satisfactorily submitting quality measures data under the 2012 Physic ian Quality Reporting System discussed in section IV.F.1. of this proposed rule, group prac tices interested in participating in the 2012 Physician Quality Reporting System th rough the proposed group practice reporting option (GPRO) would need to complete a propos ed self-nomination process similar to theCMS-1524-P 536

proposed self-nomination proce ss required of registries a nd EHR vendors. Therefore, assuming it takes 2 hours for a group practice to decide whether to pa rticipate as a group or individually, approximately 2 hours per group practice to draft the le tter of intent for self-nomination, gather the requested in formation, and provide this requested information, and an additional 2 hours undergoing the vetting process with CMS officials, we estimate a total of 6 hours a ssociated with the proposed self-nomination process. Assuming that the group practice staff involved in the group practice proposed self-nomination process have the same averag e practice labor cost as the average practice

labor cost estimates we used for individua l eligible profession als of $60 per hour, we estimate that the total cost to a group pr actice associated with the group practice self-nomination process would be approxima tely $360 ($60 per hour x 6 hours per group practice). The burden associated with the proposed group practice reporti ng requirements of the 2012 Physician Quality Reporting System is the time and effort associated with the group practice submitting the proposed quality meas ures data. For practices participating under the proposed GPRO process, this would be the time associated with the physician group completing the data collection tool. Th e information collecti on 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 th e burden associated with a physician group completing the data collection tool woul d be approximately 79 hours per physicianCMS-1524-P 537

group. Based on an average labor cost of $60 per physician group, we estimate the cost of data submission per physician group associ ated with participating in the proposed 2012 Physician Quality Reporting System GPRO would be $4,740 ($60 per hour x 79 hours per group practice). Eligible professionals who wish to qualif y for the additional 0. 5 percent incentive payment authorized under section 1848(m)(7) of the Act ("Additional Incentive Payments") for 2012 would need to more freque ntly than is required to qualify for or maintain board certification status participate in a qualified Maintenance of Certification Program for 2012 and successfully complete a qualified Maintenance of Certification Program practice assessment for 2012. We be lieve that a majority of the eligible professionals who would attempt to qualif y for this additional 0.5 percent incentive payment would be those who are already enroll ed 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 Certificati on Program more frequen tly than is required to qualify for or maintain board certifica tion status would vary based on what each

individual board determines constitutes "more frequently." We expect that the amount of time needed to complete a qualified Maintenance of Certification Program practice assessment would be spread out over time since a quality improvement component is often required. Information from an info rmal 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 are seeking comments on this burd en analysis, including the underlying assumptions used in developing our burden estimates.CMS-1524-P 538

C. Electronic Prescribing (eRx) Incentive Program The eRx Incentive Program is a voluntary reporting program. In 2009, approximately 670,000 eligible professionals we re eligible to participate in the eRx Incentive Program. Approximately 90,000 (or ab out 14 percent) of eligible professionals participated in the eRx Incentive Program in 2009. For purposes of participation in the eRx Incentive Program to earn an incentive pa yment, we expect that the number of eligible professionals participating in th e eRx Incentive Program to be approximately 90,000, based on participation rates fr om the 2009 eRx Incentive Program. Due to the implementation of the 2013 and 2014 payment adjustments as well as the proposals to expand the reporting mechanis ms for purposes of reporting the electronic prescribing measure for the 2013 and 2014 paymen t adjustments, we expect that there will be an increase in eligible professionals who participate in the eRx Incentive Program for CYs 2012 through 2014. Therefore, for pur poses of conducting a bu rden analysis for the 2012 through 2014 eRx Incentive Program, we will assume that approximately 90,000 professionals eligible to particip ate in the 2009 eRx Incentive Program will participate. This is based on participa tion rates from the 2009 eRx Incentive Program, which is the highest participation level fo r the eRx Incentive Program we have yet recorded. As such, we can estimate that more than 90,000 unique TIN/NPI combinations will participate in the 2012, 2013, and 2014 eRx Incentive Program for purposes of the 2013 and 2014 payment adjustment (see the " 2009 Reporting Experience," which is available on the Physician Quality Reporting System section of the CMS Web site at http://www.cms.hhs.gov/pqrs ). Although this estimate only accounts for approximately 13 percent of all professionals eligible to participate in the eRx Incentive Program, weCMS-1524-P 539

believe that participation may be offset by the limitations and significant hardship exemptions we have proposed for the 2013 and 2014 payment adjustment. Section IV.F.2. of this proposed rule discusses the background of the eRx Incentive Program. For the proposed programs for 2012 through 2014, eligible professionals and group practices may choose wh ether to participate and, to the extent they meet-- (1) certain proposed thresholds with respect to th e volume of covered professional services furnished; and (2) the proposed criteria for being a successful electronic prescriber described in section IV.F.2.b.(2). of th is proposed rule, they would qualify to receive an incentive payment fo r 2012 and 2013 and/or avoid being subject to the 2013 and 2014 payment adjustment. In section IV.F.2.b.(2). of this propose d rule, we propose the requirements for eligible professionals and group practices can qualify for being a successful electronic prescriber in order to earn a 2012 and/or 2013 incentive payment. For the 2012 and 2013 incentives, as discussed in section IV.F.2. of this proposed rule, each eligible professional would need to report the elec tronic prescribing measure's numerator indicating that a least one prescription generated during an encounter was electronically submitted at least 25 instances during the reporting period in associ ation with a denominator-eligible visit. In section IV.F.2.b.(2). of this proposed rule, we propose additional requirements for eligible professionals and group practices can meet for the 2013 payment adjustment, as well as propose requirements for being a succ essful electronic pr escriber for the 2014 payment adjustment. For the 2013 and 2014 payment adjustment, we propose that each eligible professional would need to report the electronic pr escribing measure's numerator

at least 10 instances duri ng the reporting period.CMS-1524-P 540

We expect the ongoing costs associated w ith participation in the eRx Incentive Program to decline based on an eligible pr ofessional's understanding of the eRx Incentive Program, experience with participating in the eRx Incentive Program, and increased efforts by CMS and stakeholders to disseminate useful educ ational 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 associ ated with individual eligible professionals reviewing the electronic prescr ibing measure to determine whether it is applicable to them, reviewing and selec ting one of the available proposed reporting options (for purposes of the 2012 and 2013 incentives and the 2013 and 2014 payment adjustments, this measure would be reportable through claims-based reporting, registry-based reporting, or through EHRs) and selecting one, gathering the required information, and incorporating reporting of th e measure into their office work flows. Since the eRx Incentive Program consists of only 1 measure to report, we estimate

2 hours as the amount of time that would be n eeded for individual eligible professionals to prepare for participation in the eRx In centive Program. At an average cost of approximately $60 per hour per practice, we estimate the total pr eparation costs to individual eligible professionals would be approximately $120 (2 hours X $60 per hour).

Another factor that we believe influences the burden to eligible professionals is how they choose to report the electronic pres cribing measure. For eligible professionals who choose to do so via claims, we estimat e that the burden associated with the requirements of this incentive program would be the time and effort associated with gathering the required information and identify ing when it is appropriate to include theCMS-1524-P 541

measure's quality data code (QDC) on the claims they submit for payment. For claims-based reporting, the measure's QDC woul d be collected as additional (optional) line items on the existing HIPAA transaction 837-P and/or CMS Form 1500. We do not anticipate any new forms and or modifications to the existing transaction or form. We also do not anticipate cha nges to the 837-P or CMS Form 1500 for CY 2012.

Based on the information from the PVRP fo r the amount of time it takes a median practice to report one measure one time on claims (1.75 minutes) and our proposed requirement that eligible professionals re port the measure 25 times for purposes of the incentive payment, we estimate the burden a ssociated with claims-based data submission to would be 43.75 minutes (1.75 minutes per cas e X 1 measure X 25 cases per measure). This equates to a cost of approximately $43.75 (1.75 minutes per case X 1 measure X 25 cases per measure X $60 per hour) per individual eligible professional. For purposes of the 2013 and 2014 eRx payment adjustment, wh ere we propose that an eligible professional is required to report the m easure only 10 times, we estimate the burden

associated with claims-based submission w ould be 17.5 minutes (1.75 minutes per case X 1 measure X 10 cases per measure). This e quates to a cost of approximately $17.50 (1.75 minutes per case X 1 measure X 10 cases per measure X $60 per hour) per individual eligible professional. Because registry-based reporting of the electronic prescribing measure to CMS

was added to the eRx Incentiv e Program for 2010 and eligib le professionals are not required to indicate to us how they plan to report the electronic pr escribing measure each year, it is difficult to accurately estimate how many eligible profe ssionals would opt to participate in the eRx Incen tive Program through the proposed registry-based reportingCMS-1524-P 542

mechanism in CYs 2012 through 2014. We do not anticipate, however, any additional burden for eligible professionals to report data to a registry as eligible professionals opting for registry-based reporting 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 participat ion in the 2012, 2013, and 2014 eRx Incentive Program since the only information that the re gistry would need to report to us is the number of times the eligible professional el ectronically prescribed. However, eligible professionals would need to authorize or inst ruct 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 tim e and effort associated with this would be approximately 5 minutes for each eligible profe ssional that wishes to authorize or instruct the registry to submit quality measures resu lts and numerator and denominator data on the electronic prescribing measur e to CMS on their behalf. Based on our proposal to consider only registries qualified to submit Physician Quality Reporting System quality measures re sults and numerator and denominator data on quality measures to CMS on their partic ipants' behalf for the 2012 and 2013 Physician Quality Reporting System reporting periods to be qualified to submit results and

numerator and denominator data on the electronic prescribin g measure for the respective eRx Incentive Program reporting periods that occur in 2012 and 2013, there would be no need for a registry to undergo a separate self-nomination proce ss for the eRx Incentive Program and therefore, no addi tional burden associated with the registry self-nomination

process.CMS-1524-P 543

There would also be a burden to the re gistry associated with the registry calculating results for the electronic prescrib ing measure from the data submitted to the registry by its participants and submitting the quality measures results and numerator and

denominator data on the electr onic prescribing quality measur e to CMS on behalf of their participants. We expect that the time need ed for a registry to review the electronic prescribing measure's specifications, calcula te the measure's results, and submit the

measure's results and numerator and denominator data on their participants' behalf would vary along with the number of eligible professionals repor ting data to the registry. However, we believe that registries alrea dy perform many of thes e 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 m easure's results and numerator

and denominator to CMS on behalf of thei r participants would be minimal. For the proposed EHR-based reporting m echanism, the eligible professional would need to either extract the necessary cl inical data from his or her EHR and submit the necessary data to the CMS-designated clin ical data warehouse or have an EHR data submission vendor extract the necessary clinical data from his or her EHR and submit the necessary data to CMS on the professional' s behalf. Because this manner of reporting quality data to CMS was first added to th e eRx Incentive Program in 2010 and eligible professionals are not currently required to (a nd we are not proposing to require that they) indicate to us how they intend to report th e electronic prescribing measure, it is difficult to estimate how many eligible professionals w ould opt to participate in the eRx Incentive Program through the proposed EHR-based re porting mechanism for reporting periods

that occur in CYs 2012 and 2013. We believe that once an eligible professional's EHR isCMS-1524-P 544

programmed by the vendor to allow data subm ission to CMS, the burden to the eligible professional associated with submission of data on the electronic prescribing measure should be minimal. The eligible profe ssional who chooses to submit the electronic prescribing measure data directly to CMS from his or her EHR would have to have access to a CMS-specified identity manage ment system, such as IACS, though. We

believe it takes less than 1 hour to obtain a ccess to the identity management system. Since we are proposing that only EHR products and data submission vendors qualified for 2012 and 2013 Physician Quality Reporting System reporting periods could

be used to submit data on the electronic prescribing measure for the respective eRx Incentive Program reporting periods that occur in CYs 2012 and 2013, there would be no need for EHR vendors and/or their products to undergo a separate self-nomination process for the eRx Incentive Program and therefore, no additional burden associated with the self-nomination process fo r the eRx Incentive Program.

There would also be a burden to the EH R vendor associated with the EHR vendor programming its EHR product(s) to extract the c linical data that the eligible professional

and/or vendor would need to submit to CMS for purposes of reporting the proposed electronic prescribing measur e. The time needed for an EHR vendor to review the measure's specifications and program its produ ct to submit data on the measure to the CMS-designated clinical da ta warehouse would be dependent on the EHR vendor's familiarity with the electronic prescribing meas ure, the vendor's system capabilities, as well as the vendor's programming capabilities . Since we are proposing that only EHR products qualified for 2012 and 2013Physicia n Quality Reporting System reporting periods would qualify for the respective eR x Incentive Program re porting periods thatCMS-1524-P 545

occur in CY 2012 or 2013, and the eRx Incentive Program consists of only one measure, we believe that any burden associated with the EHR vendor to program its product(s) to submit data on the electronic prescribing meas ure to the CMS-designated clinical data

warehouse would be minimal. Finally, with respect to the proposed criter ia for group practices to be treated as successful electronic prescribers for the 2012 a nd 2013 incentive, as well as with regard to the 2013 and 2014 payment adjustments, as discussed in sec tion IV.F.2. of this proposed rule, respectively, group practices w ould have the same options as individual eligible professionals in terms of the fo rm and manner for reporting the electronic prescribing measure (that is, group practices would have the op tion of reporting the measure through claims, a qualified registry, or a qualified EHR product). There are only 2 differences between the proposed requirement s for an individual eligible professional and a group practice: (1) the fact that a gr oup practice would have to self-nominate; and (2) a difference in the number of times that a group practice would be required to report the electronic prescribing measure. We do not anticipate any additional burde n associated with the proposed group practice self-nomination process since we pr opose to limit the group practices to those selected to participate in the Physicia n Quality Reporting System GPRO. We are proposing that the practice only would need to indicate its desire to participate in the proposed eRx GPRO at the same time it se lf-nominates for the Physician Quality Reporting System GPRO and indicate how it inte nds to report the el ectronic prescribing

measure.CMS-1524-P 546

In terms of the burden to group practi ces comprised of 25 to 99 eligible professionals associated with submission of the electronic prescribing measure, we

believe that this would be similar to the bur den to individual elig ible 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 proposed reporting instances required by the group could be less than the to tal number of proposed reporting instances that would be required if each member of the group sepa rately reported the el ectronic prescribing measure. Thus, we believe that the burden to a group practice asso ciated with reporting the electronic prescrib ing measure could range from almost no burden (for groups who choose to do so through a qualified EHR or registry) to 18.22 hours (1.75 minutes per measure x 1 measure x 625 cases per measure) for a group practice that chooses to report the electronic prescrib ing measures through the proposed claims submission process. Consequently, the total estimated cost pe r group practice to re port the electronic prescribing measure could be as high as $1,093 ($1.75 per measure x 1 measure x 625 cases per measure). In terms of the burden to group practices comprised of 100 or more eligible professionals associated with submission of the electronic prescribing measure, we

believe that this would be similar to the bur den to individual elig ible 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 proposed reporting instances required by the group could be less than the to tal number of proposed reporting instances that would beCMS-1524-P 547

required if each member of the group sepa rately reported the el ectronic prescribing measure. Thus, we believe that the burden to a group practice asso ciated with reporting the electronic prescrib ing measure could range from almost no burden (for groups who choose to do so through a qualified EHR or registry) to 72.92 hours (1.75 minutes per measure x 1 measure x 2500 cases per measur e) for a group practice that chooses to report the electronic prescribing measures through the proposed claims submission process. Consequently, the to tal estimated cost per group prac tice to report the electronic prescribing measure could be as high as $4,375 ($1.75 per measure x 1 measure x 2500 cases per measure). As with individual eligible professionals, we believe that group practices that choose to participate in the eRx GPRO th rough the proposed registry-based reporting mechanism of the electronic pr escribing 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 participati on in the eRx Incentive Program for CYs 2012 through 2014 beyond authorizing or instructing the registry to submit quality measures

results and numerator and denominator data on the electronic prescribing measure to

CMS on their behalf. We estimate that the tim e and effort associated with this proposed registry option would be approximately 5 mi nutes for each group practice that wishes to authorize or instruct the registry to subm it quality measures results and numerator and

denominator data on the elec tronic prescribing measure to CMS on their behalf. For group practices that choose to partic ipate in the eRx Incentive Program for CYs 2012 through 2014 via the proposed EHR- based reporting of the electronic prescribing mechanism, once the EHR is programmed by the vendor to allow dataCMS-1524-P 548

submission to CMS, the burden to the group pr actice associated with submission of data on the electronic prescribing m easure should be minimal.

We invite comments on this burden analysis, including the underlying assumptions used in developing our burden estimates.

D. Medicare Electronic Health Record (EHR) Incentive Program for Eligible Professionals for the 2012 Payment Year The EHR Incentive Program (discussed in se ction IV.H. of this proposed rule) is a voluntary program whereby eligible professiona ls (EPs) may earn an incentive payment for demonstrating meaningful use of cer tified EHR technology, which includes among other requirements, the submission of clinical quality measures (CQMs). The "Electronic

Health Record Incentive Program" final rule (75 FR 44314 through 75 FR 44588) describes the CQMs and the CQM reporting mech anisms that will be available to EPs who choose to participate in the EHR Incen tive Program (75 FR 44380) and established the criteria for achieving m eaningful use in Stage 1, which includes CY 2012. In the final rule, for CY 2012, we estimated that approximately 385,954 Medi care EPs will be eligible to receive an in centive under the EHR Incen tive Program (75 FR 44518). Section IV.H.2. of this proposed rule proposes changes to the EHR Incentive Program for EPs for the 2012 payment year. Aside from continuing the attestation method of reporting CQMs, we propose to allow th e reporting of CQMs for purposes of demonstrating meaningful use through participation in th e Physician Quality Reporting System-Medicare EHR Incentive Pilot. Eligible professionals may participate in the Pilot by submitting CQMs via (1) a Physician Qualit y Reporting System "qualified" EHR dataCMS-1524-P 549

submission vendor or (2) an EHR-based repor ting option using the EP's certified EHR technology, which must also be a Physician Quality Reporting System "qualified" EHR. Because this is a voluntary program, EPs may choose whether to participate in the EHR Incentive Program and attest that they have met the meaningful use objectives and measures. Registration for the EHR Incentiv e Program opened in January 2011. At this time, we do not have sufficient data availa ble on participation in the EHR Incentive Program by EPs to revise the final rule's estim ate of how many EPs will opt to participate in the EHR Incentive Program for payment year 2012. We believe the burden associated with actually reporting CQMs will vary depending on the reporting mechanism selected by the EP. Attestation to the objectives and measures is the only method available for EPs to demonstrate that they have met the meaningful use criteria in 2011. Attestati on was first available on April 18, 2011 and we do not yet have sufficient data on the 2011 pa rticipation in the EHR Incentive Program. Therefore, it is difficult to estimate the level of participation in the proposed Pilot versus the number of EPs that would prefer to attest to the CQMs. However, we believe that the number of EPs who choose to participate via at testation will largely be those who are not participating in both the EHR Incentive Program and Physician Quality Reporting System. This is because EPs participati ng in the Physician Quality Reporting System would be more likely to pa rticipate in the Pilot. As we estimated in the EHR Incentive Program final rule, we estimate that it

would take 8 hours and 52 minutes for an EP to attest that during the EHR reporting period, the EP used certified EHR technol ogy, specify the technology, and satisfied all Stage 1 meaningful use core cr iteria for payment year 2012 (75 FR 44518). We estimateCMS-1524-P 550

that it will further take an a dditional 0.5 hours to select and at test to the clinical quality measures, in the format and manner specified by CMS (75 FR 44517). For reporting via a qualified EHR data submission vendor, there would be no additional time burden for eligible professiona ls to report CQM data to a "qualified" EHR data submission vendor as EPs opting for this option would more than likely already be reporting data to the EHR data submission vendor for other purposes, such as the Physician Quality Reporting System, and the EHR data submission vendor would merely be re-packaging the data for use in the EH R Incentive Program. Furthermore, EPs more than likely would not need to authorize or instruct the EHR data submission vendor to submit CQM data to CMS on their behalf because this likely will have already been done as a requirement for reporting via an EHR data submission vendor under the Physician Quality Reporting System. Qualified EHR data submission vendors interested in submitting CQM data to CMS on their participants' behalf will not need to complete a self-nomination process in order to be considered "qualified" to submit on behalf of EPs as this process would have already been performed for the Physician Quality Reporting System. Therefore, we

believe that there is no additional burden as ide from the burden associated with being a Physician Qualified Reporting System qualif ied EHR data submission vendor for such vendors to submit CQMs on behalf of EPs. For EPs who choose to participate in the pilot via direct data submission to CMS from the EP's certified her technology, an EP must have access to a CMS-specified identity management system, such as IACS, to participate in the Physician Quality Reporting System or eRx Incentive Program. We believe that EPs that choose theCMS-1524-P 551

EHR-based reporting pilot to report CQMs will do so only if they are participating in the Physician Quality Reporting System. As suc h, we believe there will be no additional burden on EPs to have access to a CMS-specified identity management system if the EP is already participating in the Physician Quality Reporting System. With respect to submitting the actual 2012 data file in 2013, we believe that this would take an EP no more than 2 hours, depending on the number of patients on which the EP is submitting. We believe that once the EHR is programmed by the vendor to allow data submission to CMS and the EP participates in the Physic ian Quality Reporting System, the additional

burden to the EP associated with electronic submission of the CQMs should be minimal. Since this is a new, proposed reporting m echanism for the EHR Incentive Program 2012 payment year, it is difficult to predict the level of participation in EHR-based reporting. However, we believe that the number of EPs who choose to participate in the EHR-based reporting pilot will be the same as the numbe r of eligible professionals who choose the EHR-based reporting mechanism for the Physician Quality Reporting System. This is primarily because in additi on to being certified EHR t echnology, the technology used under this reporting option would need to be "qualified" according to the Physician Quality Reporting System qualification process.

The burden associated with the EHR ve ndor programming its EHR product(s) to

extract the clinical data that the EP or vendor needs to submit to CMS for purposes of reporting CQMs will be dependent on the EHR vendor's familiarity with the EHR Incentive Program, the vendor's system capab ilities, as well as the vendor's programming capabilities. As we already propose to re quire "qualified" EHRs vendors to perform these functions under the Physician Quality Reporting System, the burden for submittingCMS-1524-P 552

CQMs under the EHR Incentive Program will be similar to the EHR vendor reporting burden under the Physician Quality Reporting System. For vendors who already have these necessary capabilities, we estimate the to tal burden hours to be 40 hours at a rate of $50 per hour for a total burden estimate of $2,000 ($50 per hour x 40 hours per vendor). However, given the variability in the capab ilities 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 pe r vendor ($50 per hour x 200 hours per EHR vendor).

We invite comments on this burde n analysis, including the underlying assumptions used in developing our burden estimates. To obtain copies of the supporting stat ement and any related forms for the proposed paperwork collections referen ced above, access CMS' Web site at http://www.cms.gov/PaperworkReduc tionActof1995/PRAL/list.asp#TopOfPage or email your request, including your address, phone number, OMB number, and CMS document identifier, to Paperwork@cms.hhs.gov, or call the Reports Clearance Office at (410) 786-1326. If you comment on these information colle ction and recordkeeping requirements, please do either of the following: 1. Submit your comments electronically as specified in the ADDRESSES section of this proposed rule; or 2. Submit your comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: CMS Desk Officer, [CMS-1524-P] Fax: (202) 395-5806; orCMS-1524-P 553

Email: OIRA_submission@omb.eop.gov VI. Response to Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowle dge or respond to them individually. We will consider all comments we receive by th e date and time specified in the "DATES" section of this preamble, and, when we pr oceed with a subsequent document, we will respond to the comments in the preamble to that document. VII. Regulatory Impact Analysis

A. Statement of Need This proposed rule is necessary in or der to make payment and policy changes under the Medicare PFS and to make require d statutory changes under the Affordable Care Act and MIPPA and other statutory changes. This proposed rule is also necessary to make changes to the Part B drug payment po licy and other Part B related policies. B. Overall Impact We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (Sep tember 30, 1993), Executive Order 13563 on Improving Regulation and Re gulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternativ es and, if regulation is necessary, to select regulatoryCMS-1524-P 554

approaches that maximize net benefits (inc luding potential economi c, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both co sts and benefits, of reducing costs, of harmonizing rules, and of promoting flexibil ity. This rule has been designated an "economically" significant rule, under s ection 3(f)(1) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget. We have prepared a Regulatory Impact Analysis, th at to the best of our ability presents the costs and benefits of the pr oposed rule. We solicit comment on the Regulatory Impact Analysis provided. The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a signi ficant impact on a substantial nu mber of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospita ls and most other providers and suppliers are small entities, either by nonprofit status or by havi ng revenues of $7.0 million to $34.5 million in any 1 year (f or details see the SBA's Web site at http://www.sba.gov/content/table- small-business-size-standards (refer to the 620000 series)). Individuals and Stat es are not included in the defi nition of a small entity. The RFA requires that we analyze regulator y options for small businesses and other entities. A Regulatory Flexib ility Act analysis must include a justification concerning the reason action is being taken, the kinds and number of sma ll entities the rule affects, and an explanation of any meaningful opti ons that achieve the objectives with less significant adverse economic imp act on the small entities. For purposes of the RFA, physicians, N PPs, and suppliers including IDTFs areCMS-1524-P 555

considered small businesses if they gene rate revenues of $10 million or less based on SBA size standards. Approximately 95 percent of physicians are considered to be small entities. There are over 1 million physicians , other practitioners, and medical suppliers

that receive Medicare payment under the PFS. Because we acknowledge that many of the affected entities are small entities, the analysis provided here and throughout the pr eamble of this proposed rule constitutes our Initial Regulatory Flexibility Act (IRFA) an alysis for the remaining provisions. This

includes alternatives considered for the various proposed policies in this rule. We solicit public comment on the IRFA analysis provided. 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 opera tions of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of th e Act, we define a small rural hospital as a hospital that is located out side of a Metropolitan Statis tical Area for Medicare payment regulations and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determine d, and the Secretary certifies, that this proposed rule would not have a significant impact on the operations of a substantial number of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benef its before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2011, that threshold is approxi mately $136 million. This regulation does not impose any costs on State or local governme nts, the requirements of Executive OrderCMS-1524-P 556

13132 are not applicable. We have prepared the following analysis , which together with the information provided in the rest of this preamble, meet s all assessment requirements. The analysis explains the rationale for and purposes of this proposed rule; details the costs and benefits of the rule; analyzes alternatives; and pres ents the measures we would use to minimize

the burden on small entities. As indicated elsewhere in this proposed rule, we are implementing a variety of changes to our re gulations, payments, or payment policies to ensure that our payment systems reflect changes in medical practice and the relative value of services. We provide information fo r each of the policy changes in the relevant sections of this proposed rule. We are una ware of any relevant Federal rules that duplicate, overlap, or conflict with this propos ed rule. The relevant sections of this proposed rule contain a description of si gnificant alternatives if applicable. C. RVU Impacts 1. Resource-Based Work, PE , and Malpractice RVUs Section 1848(c)(2)(B)(ii)(II) of the Act re quires 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 b een in the absence of these changes. If this threshold is exceeded, we make adjustments to pr eserve budget neutrality. Our estimates of changes in Medicar e revenues for PFS services compare payment rates for CY 2011 with proposed payment rates for CY 2012 using CY 2010 Medicare utilization for all years. To the exte nt that there are year-t o-year changes in the volume and mix of services provided by physicia ns, the actual impact on total Medicare

revenues will be different th an those shown in Table 64. The payment impacts reflectCMS-1524-P 557

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 r eceive substantial Medicare revenues for services that are not paid under the PFS. Fo r instance, independent laboratories receive approximately 85 percent of th eir Medicare revenues from c linical laboratory services that are not paid under the PFS. Table 64 shows only the payment impact on PFS services. We note that these impacts do not include the effect of the January 2012 conversion factor changes under current law. The annual update to the PFS conversion factor is calculated based on a statutory formula that measures actual vers us allowed or "target" expenditures, and applies a sustainable growth rate (SGR) calculation intended to control growth in aggregate Medicare expenditures for physicia ns' services. This update methodology is typically referred to as the "SGR" methodology, although the SGR is only one component of the formula. Medicare physicia n fee schedule paymen ts for services are not withheld if the percentage increase in actual expenditures exceeds the SGR. Rather, the PFS update, as specified in section 1848(d)(4) of the Act, is adjusted to eventually bring actual expenditures back in line with targets. If act ual expenditures exceed allowed expenditures, the update is reduced. If actual expenditures ar e less than allowed expenditures, the update is increased. We cu rrently estimate that the statutory formula used to determine the physician update will result in a CY 2012 conversion factor of $23.9635 which represents a PFS update of -29.5 pe rcent. By law, we are required toCMS-1524-P 558

make these reductions in accordance with sec tion 1848(d) and (f) of the Act, and these reductions can only be averted by an Act of the Congress. While the Congress has provided temporary reli ef from these reductions for ev ery year since 2003, a long-term solution is critical. We are committed to working with the Congress to permanently reform the SGR methodology for Medi care physician fee schedule updates. The following is an explanation of the in formation represented in Table 64:

● Column A (Specialty) : The Medicare specialty code as reflected in our physician/supplier enro llment files.

● Column B (Allowed Charges) : The aggregate estimated PFS allowed charges for the specialty based on CY 2010 utilization and CY 2011 rates. That is, allowed charges are the PFS amounts for covered services and include coinsurance and deductibles (which are the fina ncial responsibility of the beneficiary). These amounts

have been summed across all services furnished by physicians, practitioners, and suppliers within a specialty to arrive at th e total allowed charges for the specialty.

● Column C (Impact of Work and Malpractice (MP) RVU Changes) : This column shows the estimated CY 2012 impact on total allowed charges of the changes in the work and malpractice RVUs, including th e impact of changes due to potentially misvalued codes. These impacts are primarily due to the multiple procedure payment reduction (MPPR) for the professional com ponent of advanced imaging services.

● Column D (Impact of PE RVU Changes - Full) : This column shows the estimated CY 2012 impact on total allowed char ges of the changes in the PE RVUs if there were no remaining transition to the full use of the PPIS data.

● Column E (Impact of PE RVU Changes - Tran) : This column shows theCMS-1524-P 559

estimated CY 2012 impact on total allowed char ges of the changes in the PE RVUs under the third year of the 4-year tr ansition to the full use of the PPIS data. This column also includes the impact of the MPPR policy and, a nd the impact of cha nges due to potentially

misvalued codes.

● Column F (Combined Impact - Full) : This column shows the estimated CY 2012 combined impact on total allowed char ges of all the change s in the previous columns if there were no remaining transiti on to the new PE RVUs using the PPIS data.

● Column G (Combined Impact - Tran) : This column shows the estimated CY 2012 combined impact on total allowed char ges of all the change s in the previous columns under the third year of the 4-year transition to the new PE RVUs using the PPIS

data.

TABLE 64: CY 2012 PFS PROPOSED RULE TOTAL ALLOWED CHARGE ESTIMATED IMPACT FO R RVU AND MPPR CHANGES*

Impact of PE RVU Changes Combined Impact Specialty Allowed Charges (mil) Impact of Work and MP RVU Changes Full Tran Full Tran (A) (B) (C) (D) (E) (F) (G) TOTAL $83,014 0% 0% 0% 0% 0% ALLERGY/IMMUNOLOGY $194 0% 1% 1% 1% 1% ANESTHESIOLOGY $1,847 0% 4% 2% 4% 2% CARDIAC SURGERY $384 0% -2% -1% -2% -1% CARDIOLOGY $6,778 0% -3% -1% -3% -1% COLON AND RECTAL SURGERY $146 0% 2% 1% 2% 1% CRITICAL CARE $252 0% 1% 0% 1% 0% DERMATOLOGY $2,931 0% 0% 0% 0% 0% EMERGENCY MEDICINE $2,658 0% -1% -1% -1% -1% ENDOCRINOLOGY $415 0% 1% 0% 1% 0% FAMILY PRACTICE $5,640 0% 2% 1% 2% 1% GASTROENTEROLOGY $1,837 0% 1% 0% 0% 0% GENERAL PRACTICE $656 0% 2% 1% 2% 1% GENERAL SURGERY $2,277 0% 1% 0% 1% 0% GERIATRICS $200 0% 2% 1% 2% 1% HAND SURGERY $121 0% 3% 1% 2% 1% HEMATOLOGY/ONCOLOGY $1,912 0% -1% 0% -2% 0%CMS-1524-P 560

Impact of PE RVU Changes Combined Impact Specialty Allowed Charges (mil) Impact of Work and MP RVU Changes Full Tran Full Tran (A) (B) (C) (D) (E) (F) (G) INFECTIOUS DISEASE $597 0% 1% 1% 1% 0% INTERNAL MEDICINE $10,737 0% 1% 1% 1% 1% INTERVENTIONAL PAIN MGMT $448 0% 3% 2% 2% 1% INTERVENTIONAL RADIOLOGY $211 -1% -3% -1% -4% -2% MULTISPECIALTY CLINIC/OTHER $84 1% 1% 1% 2% 1% NEPHROLOGY $2,011 0% 0% 0% 0% 0% NEUROLOGY $1,520 0% 4% 2% 4% 2% NEUROSURGERY $669 0% 1% 0% 1% 0% NUCLEAR MEDICINE $53 0% -4% -2% -5% -3% OBSTETRICS/GYNECOLOGY $678 0% 0% 0% 0% 0% OPHTHALMOLOGY $5,316 0% 3% 2% 3% 2% ORTHOPEDIC SURGERY $3,572 0% 2% 1% 2% 1% OTOLARNGOLOGY $1,001 0% 2% 1% 1% 1% PATHOLOGY $1,122 0% -2% -1% -2% -1% PEDIATRICS $68 0% 1% 1% 1% 1% PHYSICAL MEDICINE $928 0% 3% 2% 3% 2% PLASTIC SURGERY $339 0% 2% 1% 1% 0% PSYCHIATRY $1,134 0% 0% 0% 0% 0% PULMONARY DISEASE $1,758 0% 1% 0% 1% 0% RADIATION ONCOLOGY $1,968 0% -8% -4% -8% -4% RADIOLOGY $4,722 -1% -5% -2% -6% -4% RHEUMATOLOGY $530 0% 0% 0% 0% 0% THORACIC SURGERY $371 0% -2% -1% -1% -1% UROLOGY $1,919 0% -3% -2% -3% -2% VASCULAR SURGERY $749 0% -2% -1% -2% -1% AUDIOLOGIST $56 0% -6% -3% -6% -3% CHIROPRACTOR $743 0% 2% 1% 2% 1% CLINICAL PSYCHOLOGIST $559 0% -5% -3% -5% -3% CLINICAL SOCIAL WORKER $386 0% -6% -3% -6% -3% DIAGNOSTIC TESTING FACILITY $833 0% -8% -2% -8% -3% INDEPENDENT LABORATORY $1,047 0% -3% -1% -3% -1% NURSE ANES / ANES ASST $769 0% 5% 2% 5% 2% NURSE PRACTITIONER $1,376 0% 2% 1% 2% 1% OPTOMETRY $980 0% 4% 2% 4% 2% ORAL/MAXILLOFACIAL SURGERY $43 0% 2% 1% 2% 1% PHYSICAL/OCCUPATIONAL THERAPY $2,324 0% 5% 3% 5% 3% PHYSICIAN ASSISTANT $1,055 0% 1% 0% 1% 0% PODIATRY $1,902 0% 3% 2% 3% 2% PORTABLE X-RAY $97 0% 4% 3% 4% 3% RADIATION THERAPY CENTERS $73 0% -9% -5% -9% -5% OTHER $17 0% 5% 4% 5% 4% * Table 64 shows only the payment impact on PFS services. We note that these impact s do not include the effects of the January 2012 conversion factor change under current law.CMS-1524-P 561

2. CY 2012 PFS Impact Discussion a. Changes in RVUs The most widespread specialty impacts of the RVU changes are generally related to several factors. First, as discussed in section II.A.2. of this proposed rule, we are currently implementing the third year of the 4-year transition to new PE RVUs using the PPIS data that were adopted in the CY 2010 PFS final rule with comment period. The impacts of the third year of the transition ar e generally consistent with the impacts that would be expected based on the impacts displayed in the CY 2011 final rule with comment period. The second general factor contributing to the CY 2012 impacts shown in Table 64 is a secondary effect of the CY 2011 rescaling of the RVUs so that, in the aggregate, they match the work, PE, and malpractice proporti ons in the revised and rebased MEI for CY 2011. That is, the rebased MEI had a grea ter proportion attributab le to malpractice and PE and, correspondingly, a lesser proportion attributable to work. Specialties that have a high proportion of total RVUs attributable to work, such as emergency medicine, experienced a decrease in aggregate payments as a result of this rescaling, while specialties that have a high proportion attributable to PE , such as diagnostic testing facilities, experienced an increase in aggreg ate payments. (For further details on the MEI rebasing, see the discussion be ginning on 75 FR 73262 in the CY 2011 PFS final rule.) Table 64 also includes the impacts resu lting from our proposal to expand the current 50 percent MPPR policy to the prof essional component of advanced imaging services. We estimate that this policy would redistribute approximately $100 million through a small increase in the conversion factor and a small adjustment to all PE RVUs.CMS-1524-P 562

We estimate that this change would primarily reduce payments to the specialties of radiology and interventional radiology. Finall y, Table 64 also reflects the impacts of our proposed adjustments to improve the accuracy of the time associated with the work RVUs for certain services, in cluding group therapy services, as discussed previously in section II.A. of this proposed rule. b. Combined Impact Column F of Table 64 displays the es timated CY 2012 combined impact on total allowed charges by specialty of all the proposed RVU and MPPR changes. These impacts range from an increase of 5 percent for nurse anesthetists to a decrease of 9 percent for radiation thera py centers. Again, these impacts are estimated prior to the application of the negative CY 2012 Conversion Factor (CF) update applicable under the

current statute. Table 65 shows the estimated impact on to tal payments for selected high-volume procedures of all of the ch anges discussed previously. We have included CY 2012 payment rates with and wit hout the effect of the CY 2012 negative PFS CF update for comparison purposes. We selected these procedures because they are the most commonly furnished by a broad spectrum of phys ician 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 read ers to Addendum A of this proposed rule.CMS-1524-P 563TABLE 65: IMPACT OF PROPOSED RULE AND ESTIMATED PHYSICIAN UPDATE ON CY 2012 PAYMENT FORSELECTED PROCEDURESFacility NonfacilityCPT/HCPCS1MOD Short DescriptorCY 20112CY 20123(pre-update)%Change(preupdate) CY 20124% Change(postupdate)CY20112CY 20123(pre-update)%Change(preupdate) CY 20124%Change(postupdate)11721 Debride nail 6 or more $25.82 $25.17 -3% $17.73 -31% $41.79 $41.83 0% $29.48 -29%17000 Destruct premalg lesion $55.38 $55.44 0% $39.06 -29% $79.50 $79.92 1% $56.31 -29%27130 Total hip arthroplasty $1,440.26 $1,437.28 0% $1,012.70 -30% NA NA NA NA NA27244 Treat thigh fracture $1,224.51 $1,223.69 0% $862.21 -30% NA NA NA NA NA27447 Total knee arthroplasty $1,539.47 $1,535.22 0% $1,081.71 -30% NA NA NA NA NA33533 Cabg arterial single $1,984.22 $1,942.33-2% $1,368.56 -31% NA NA NA NA NA35301 Rechanneling of artery $1,128.70 $1,108.74 -2% $781.21 -31% NA NA NA NA NA43239 Upper gi endoscopy biopsy $174.64 $173.45 -1% $122.21 -30% $345.20 $346.22 0% $243.95 -29%66821 After cataract laser surgery $296.95 $303.71 NA $213.99 -28% $314.62 $321.74 2% $226.69 -28%66984 Cataract surg w/iol 1 stage $742.38 $753.67 2% $531.03 -28% NA NA NA NA NA67210 Treatment of retinal lesion $647.59 $657.08 1% $462.97 -29% $669.00 $678.85 1% $478.31 -29%71010 Chest x-ray NA NA NA NA NA $23.78 $23.47 -1% $16.53 -30%71010 26 Chest x-ray $8.83 $8.84 0% $6.23 -29% $8.83 $8.84 0% $6.23 -29%77056 Mammogram both breasts NA NA NA NA NA $110.76 $110.19 -1% $77.64 -30%77056 26 Mammogram both breasts $43.49 $42.17 -3% $29.71 -32% $43.49 $42.17 -3% $29.71 -32%77057 Mammogram screening NA NA NA NA NA $81.20 $79.92 -2% $56.31 -31%77057 26 Mammogram screening $35.00 $34.01 -3% $23.96 -32% $35.00 $34.01 -3% $23.96 -32%77427 Radiation tx management x5 $180.41 $174.81 -3% $123.17 -32% $180.41 $174.81 -3% $123.17 -32%88305 26 Tissue exam by pathologist $36.35 $35.71 -2% $25.16 -31% $36.35 $35.71 -2% $25.16 -31%90801 Psy dx interview $123.33 $119.38 -3% $84.11 -32% $153.91 $151.35 -2% $106.64 -31%90862 Medication management $44.85 $44.21 -1% $31.15 -31% $57.76 $58.16 1% $40.98 -29%90935 Hemodialysis one evaluation $74.75 $72.44 -3% $51.04 -32% NA NA NA NA NA92012 Eye exam established pat $50.62 $51.36 1% $36.18 -29% $79.84 $81.62 2% $57.51 -28%92014 Eye exam & treatment $77.13 $77.88 1% $54.88 -29% $115.86 $118.36 2% $83.39 -28%92980 Insert intracoronary stent $873.19 $834.95 -4% $588.30 -33% NA NA NA NA NA93000 Electrocardiogram complete NANA NA NA NA $19.71 $18.71 -5% $13.18 -33%93010 Electrocardiogram report $8.83 $8.50 -4% $5.99 -32% $8.83 $8.50 -4% $5.99 -32%93015 Cardiovascular stress test NA NA NA NA NA $92.42 $87.41 -5% $61.59 -33%93307 26 Tte w/o doppler complete $47.57 $45.91 -3% $32.35 -32% $47.57 $45.91 -3% $32.35 -32%93458 26 L hrt artery/ventricle angio $320.06 $315.96 -1% $222.62 -30% $320.06 $315.96 -1% $222.62 -30%98941 Chiropractic manipulation $30.92 $30.61 -1% $21.57 -30% $35.34 $35.71 1% $25.16 -29%99203 Office/outpatient visit new $74.75 $74.48 0% $52.48 -30% $102.95 $104.41 1% $73.57 -29%99213 Office/outpatient visit est $49.27 $49.66 1% $34.99 -29% $68.97 $69.72 1% $49.13 -29%99214 Office/outpatient visit est $75.77 $75.84 0% $53.44 -29% $102.27 $103.05 1% $72.61 -29%99222 Initial hospital care $132.17 $132.64 0% $93.46 -29% NA NA NA NA NACMS-1524-P 564Facility NonfacilityCPT/HCPCS1MOD Short DescriptorCY 20112CY 20123(pre-update)%Change(preupdate) CY 20124% Change(postupdate)CY20112CY 20123(pre-update)%Change(preupdate) CY 20124%Change(postupdate)99223 Initial hospital care $194.01 $194.88 0% $137.31 -29% NA NA NA NA NA99231 Subsequent hospital care $38.39 $38.09 -1% $26.84 -30% NA NA NA NA NA99232 Subsequent hospital care $69.31 $69.38 0% $48.89 -29% NA NA NA NA NA99233 Subsequent hospital care $99.55 $99.65 0% $70.21 -29% NA NA NA NA NA99236 Observ/hosp same date $214.05 $184.34 -14% $129.88 -39% NA NA NA NA NA99239 Hospital discharge day $101.25 $102.37 1% $72.13 -29% NA NA NA NA NA99283 Emergency dept visit $61.16 $59.86 -2% $42.18 -31% NA NA NA NA NA99284 Emergency dept visit $115.52 $114.27 -1% $80.52 -30% NA NA NA NA NA99291 Critical care first hour $217.11 $216.65 0% $152.65 -30% $264.34 $265.28 0% $186.92 -29%99292 Critical care addl 30 min $109.06 $108.83 0% $76.68 -30% $118.92 $118.70 0% $83.63 -30%99348 Home visit est patient NA NANA NA NA $82.22 $81.62 -1% $57.51 -30%99350 Home visit est patient NA NANA NA NA $169.54 $170.39 1% $120.06 -29%G0008 Immunization admin NA NA NA NA NA $23.10 $23.81 3% $16.77 -27%1 CPT codes and descriptions are copyright2010 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.2 Payments based on the 2011 conversion factor of 33.97643 Payments based on the 2011 conversion factor of 33.9764, adjusted to 34.0103 to include the budget neutrality adjustment.4 Payments based on the 2012 conversion factor of 23.9635, which includes the budget neutrality adjustment.CMS-1524-P 565

D. Effects of Proposal to Review Pote ntially Misvalued Codes on an Annual Basis

Under the PFS This year's proposal of a process to c onsolidate the Five-Year Reviews of Work and PE RVUs with the annual review of poten tially misvalued codes, as discussed in section II.B.3. of this proposed rule with comment period, is not anticipated to have a budgetary impact in CY 2012. As noted previo usly, to the extent that for CY 2012 we have proposed revised RVUs for codes identified under the potentially misvalued codes initiative, Table 64 includes the estimated CY 2012 impact on total allowed charges of the changes in the RVUs for these codes. E. Effect of Proposed Re visions to Malpractice RUVs

As discussed in section II.D.2. of this proposed rule, we proposed to revise malpractice RVUs for a limited number of code s. The utilization of many of these services is 0, while the others have a very low utilization. Therefore, we estimate no significant budgetary impact from the proposed changes to the MP RVUs due to the very

low utilization of these services. F. Effect of Proposed Changes to Ge ographic Practice Cost Indices (GPCIs) As discussed in section II.E. of this pr oposed rule, we are required to update the GPCI values at least every 3 years and phase in the adjustment over 2 years (if there has not been an adjustment in the past year). For CY 2012, we are proposing to revise the PE GPCIs for each Medicare locality, as well as th e cost share weights for all three GPCI components. Moreover, the proposed revised PE GPCI values are a result of our analysis of the PE methodology as required by section 1848(e)(1)(H)(iv) of the Act. The new GPCIs rely upon the 2006--2008 American Community Survey (ACS) data forCMS-1524-P 566

determining the relative cost differences in the office rent component of the PE GPCIs. In addition, we utilized 2006 through 2008 Bu reau of Labor and Statistics (BLS) Occupational Employment Statistics (O ES) data to determine the employee compensation component with data specific to the offices of physicians industry. Finally, we proposed to create a purchased services index that will be used to geographically adjust for differences in the labor-related sh are of the industries occupying the "All Other Services" and "Other Professional Expe nses" 2006-based MEI categories. To determine the cost share weights for the proposed CY 2012 PE GPCIs, we used the 2006-based MEI weight for th e PE category of 51.734 percent minus the professional liability insurance category wei ght of 4.295 percent. Therefore, we propose a cost share weight for the PE GPCIs of 47.439 percent. For the employee compensation portion of the PE GPCIs, we used the non-physician employee compensation category weight of 19.153 percent. The fixed capital and utilities MEI categ ories were combined to achieve a total office rent weight of 10.223 percent. As discussed in the previous paragraph, a new purchased se rvices index was created to geographically adjust the labor-related components of the "All Other Se rvices" and "Other Professional Expenses" categories of the MEI. In order to calc ulate the purchased se rvices index, we are proposing to merge the corre sponding weights of these two categories to form a combined purchased services weight of 8.095. However, since our proposed purchased services methodology only accounts for the labor related share of the industries comprising the "All Other Servic es" and "Other Professional Expenses" categories, only 5.011 percentage points of the 8.095 percentage points accounting for the purchased services cost share weight is adjusted for locality cost differences. We are proposing aCMS-1524-P 567

cost share weight for the medical equipment, supplies, and other miscellaneous expenses component of 9.968 percent. Furthermore, the physician compensation cost category and its weight of 48.266 percent reflects the propos ed work GPCI cost share weight and the professional liability insurance weight of 4.295 percent was used for the malpractice GPCI cost share weight. A more detailed discussion on the proposed CY 2012 GPCI cost share weights can be found in sec tion II.E. of this proposed rule. Additionally, section 1848(e )(1)(E) of the Act (as ame nded by section 103 of the

Medicare and Medicaid Extenders Act of 2010) extended the 1.000 work GPCI floor through December 31, 2011. Therefore, the CY 2012 GPCIs reflect the sunset of the 1.000 work GPCI floor. Section 1848(e)(1)(G) of the Act (as amended by section 134(b) of the MIPPA) established a permanent 1.500 work GPCI floor in Alaska, beginning January 1, 2009 and, therefore, the 1.500 work GP CI floor in Alaska will remain in place for CY 2012. Moreover, sect ion 1848(e)(1)(I) of the Act (as added by section 10324(c) of the Affordable Care Act) established a permanent1.000 PE GPCI floor for services

furnished in frontier States effective January 1, 2011. Addendum D to this proposed rule show s the estimated effects of the revised GPCIs on locality GAFs for CY 2012. The GAFs reflect the use of revised GPCI data and the updated cost share weights. The GAFs are a weighted composite of each area's work, PE, and malpractice GPCIs using the natio nal GPCI cost share weights. While we do not actually use the GAFs in computing th e PFS payment for a specific service, they are useful in comparing the estimated overall costs and payments for different localities.

The cumulative effects of all of the GPCI revisions, includi ng the updated underlying GPCI data, updated cost share weights, and pr ovisions of the Affordable Care Act, areCMS-1524-P 568

reflected in the CY 2012 GPCI values that ar e displayed in Addendum E in this proposed

rule. The following Table 66 illustrates the impact by physician fee schedule geographic locality of moving from the cu rrent law CY 2011 Geographic Adjustment Factors (GAFs) to the proposed CY 2012 GAF s. The GAFs summarize the combined impact of the three separate GPCIs into a single number to more easily compare the impact of policy changes among localities. More specifically, the GAF for a locality is the weighted average of the individual wor k, practice expense, and malpractice. The table first shows the impact unde r current law and re gulation, and then with the additional impact of our recommendations. As shown in the table, the primary driver of the CY 2012 impact is the current law expiration of the non-budget neutra l increases to the CY 2011 GPCIs for lower expense areas author ized by the Affordable Care Act and the Medicare and Medicaid Extenders Act. The table is sorted by total impact from largest reductions to largest increases. When the overall impacts direc tly resulting from our proposed changes to the PE GPCI are isolate d, the impacts are neg ligible (Column F). The following is an explanation of the info rmation represented in Table 66:

● Column (A) : Medicare Locality - Th e PFS geographic locality.

● Column (B ) : CY 2011 GAF - The current CY 2011 Geographic Adjustment Factor for the locality, which includes the non-budget neutral increases to the CY 2011 GPCIs for lower expense areas authorized by the Affordable Care Act and the Medicare and Medicaid Extenders Act. These figures al so reflect the first year of the two year

transition to the latest GPCIs that began in 2011.CMS-1524-P 569

● Column (C) : CY 2012 GAF (Current Law/Reg) - The CY 2012 Geographic Adjustment Factor for the locality under current law and regulations, which includes the expiration of the non-budget neutral increase s to the CY 2011 GPCIs for lower expense areas authorized by the Affordable Care Act and the MMEA. These numbers also reflect

the end of the transition to the la test GPCIs that began in 2011.

● Column (D) : CY 2012 GAF (Proposed NPRM): - The CY 2012 Geographic Adjustment Factor for the locality under the recommended NPRM proposals. The two largest drivers are the proposed use of residential rent data from the Census Bureau's ACS data instead of the Department of Housing and Urban Development's HUD FMR data, and the proposed benchmarking of th e GPCI practice expense weights to the 2006-based MEI cost share weights. The Geogr aphic Adjustment Factors in this column are for 2012 and do not reflect any temporar y increases to work and practice expense required by the Affordable Care Act.

● Column (E) : percent Change CY 2011 to CY 2012 (current) - Impact of the expiration of the non-budget neutral incr eases to the CY 2011 GPCIs for lower expense areas authorized by the Affordable Care Act and the MMEA and the end of

the transition to the latest GPCIs that began in 2011.

● Column (F) : percent Change CY 2012 (N o NPRM) to CY 2012 (NPRM) - Impact of the four regulatory ch anges described previously.

● Column (G) : percent Change Combined Impact CY 2011 to CY 2012 - Combined impact of all changes from CY 2011 to CY 2012.CMS-1524-P 570

TABLE 66: CY 2012 GEOGRAPHIC ADJ USTMENT FACTORS (GAFS) CHANGES UNDER CURR ENT LAW AND THE PROPOSED RULE

(A) (B) (C) (D) (E) (F) (G) Medicare Locality CY 2011 GAF CY 2012 GAF (Current law/reg) CY 2012 GAF (Proposed) % Change CY 2011 to CY 2012 (current) Col (C)/ Col (B) % Change CY 2012 (Curr) to CY 2012 (Proposed Rule) Col (D)/ Col (C) % Change Combined

Impact CY 2011

to CY 2012 Col (D)/ Col (B) PUERTO RICO 0.903 0.786 0.769 -13% -2% -15% WEST VIRGINIA 0.972 0.910 0.909 -6% 0% -6% OKLAHOMA 0.955 0.904 0.897 -5% -1% -6% MISSISSIPPI 0.961 0.910 0.907 -5% 0% -6% REST OF MISSOURI 0.961 0.903 0.908 -6% 1% -6% ARKANSAS 0.945 0.893 0.895 -6% 0% -5% REST OF LOUISIANA 0.965 0.914 0.914 -5% 0% -5% IOWA 0.950 0.898 0.902 -5% 0% -5% BEAUMONT, TX 0.978 0.925 0.932 -5% 1% -5% KENTUCKY 0.959 0.917 0.914 -4% 0% -5% ALABAMA 0.949 0.905 0.907 -5% 0% -4% TENNESSEE 0.959 0.918 0.918 -4% 0% -4% NEBRASKA 0.947 0.905 0.909 -4% 0% -4% REST OF MAINE 0.961 0.922 0.923 -4% 0% -4% IDAHO 0.959 0.926 0.923 -3% 0% -4% KANSAS 0.964 0.923 0.928 -4% 1% -4% SOUTH CAROLINA 0.959 0.925 0.924 -4% 0% -4% INDIANA 0.966 0.928 0.932 -4% 0% -4% REST OF TEXAS 0.973 0.934 0.939 -4% 1% -3% REST OF GEORGIA 0.970 0.936 0.937 -4% 0% -3% METROPOLITAN BOSTON 1.106 1.079 1.069 -2% -1% -3% NORTH CAROLINA 0.970 0.934 0.938 -4% 0% -3% UTAH 0.982 0.946 0.950 -4% 0% -3% MANHATTAN, NY 1.153 1.142 1.119 -1% -2% -3% REST OF PENNSYLVANIA 0.986 0.957 0.957 -3% 0% -3% NEW ORLEANS, LA 1.005 0.980 0.977 -2% 0% -3% SOUTH DAKOTA** 0.978 0.952 0.951 -3% 0% -3% LOS ANGELES, CA 1.106 1.099 1.076 -1% -2% -3% REST OF ILLINOIS 0.985 0.950 0.959 -4% 1% -3% NEW MEXICO 0.979 0.949 0.955 -3% 1% -2% REST OF MICHIGAN 0.985 0.962 0.962 -2% 0% -2% ALASKA* 1.289 1.289 1.260 0% -2% -2% VENTURA, CA 1.113 1.105 1.090 -1% -1% -2% REST OF NEW YORK 0.965 0.948 0.946 -2% 0% -2% OHIO 0.992 0.970 0.974 -2% 0% -2% METROPOLITAN KANSAS CITY, MO 0.996 0.975 0.978 -2% 0% -2% MONTANA** 0.996 0.976 0.978 -2% 0% -2% CONNECTICUT 1.094 1.086 1.075 -1% -1% -2% NORTH DAKOTA** 0.979 0.964 0.963 -2% 0% -2% ANAHEIM/SANTA ANA, CA 1.129 1.129 1.111 0% -2% -2% REST OF FLORIDA 1.014 0.996 0.999 -2% 0% -1%CMS-1524-P 571

(A) (B) (C) (D) (E) (F) (G) Medicare Locality CY 2011 GAF CY 2012 GAF (Current law/reg) CY 2012 GAF (Proposed) % Change CY 2011 to CY 2012 (current) Col (C)/ Col (B) % Change CY 2012 (Curr) to CY 2012 (Proposed Rule) Col (D)/ Col (C) % Change Combined

Impact CY 2011

to CY 2012 Col (D)/ Col (B) NYC SUBURBS/LONG I., NY 1.161 1.159 1.144 0% -1% -1% SAN MATEO, CA 1.199 1.194 1.183 0% -1% -1% EAST ST. LOUIS, IL 1.016 0.997 1.003 -2% 1% -1% REST OF MASSACHUSETTS 1.040 1.039 1.028 0% -1% -1% REST OF OREGON 0.968 0.950 0.958 -2% 1% -1% HAWAII 1.074 1.091 1.063 2% -3% -1% ARIZONA 0.989 0.977 0.979 -1% 0% -1% SAN FRANCISCO, CA 1.198 1.194 1.186 0% -1% -1% WISCONSIN 0.965 0.949 0.956 -2% 1% -1% METROPOLITAN ST. LOUIS, MO 0.988 0.971 0.979 -2% 1% -1% FORT WORTH, TX 0.991 0.981 0.982 -1% 0% -1% VERMONT 0.982 0.980 0.974 0% -1% -1% NORTHERN NJ 1.120 1.105 1.112 -1% 1% -1% AUSTIN, TX 0.992 0.979 0.985 -1% 1% -1% MIAMI, FL 1.108 1.100 1.101 -1% 0% -1% SOUTHERN MAINE 0.997 0.993 0.991 0% 0% -1% WYOMING** 1.002 0.994 0.996 -1% 0% -1% HOUSTON, TX 1.008 0.992 1.002 -2% 1% -1% METROPOLITAN PHILADELPHIA, PA 1.068 1.062 1.062 -1% 0% -1% VIRGINIA 0.978 0.971 0.974 -1% 0% 0% DETROIT, MI 1.060 1.047 1.056 -1% 1% 0% OAKLAND/BERKELEY, CA 1.133 1.136 1.130 0% -1% 0% REST OF NEW JERSEY 1.074 1.066 1.072 -1% 1% 0% BRAZORIA, TX 0.996 0.977 0.995 -2% 2% 0% DC + MD/VA SUBURBS 1.124 1.125 1.123 0% 0% 0% RHODE ISLAND 1.042 1.039 1.042 0% 0% 0% MARIN/NAPA/SOLANO, CA 1.119 1.127 1.120 1% -1% 0% DELAWARE 1.012 1.010 1.013 0% 0% 0% DALLAS, TX 1.004 0.997 1.005 -1% 1% 0% VIRGIN ISLANDS 0.998 0.997 1.000 0% 0% 0% FORT LAUDERDALE, FL 1.061 1.062 1.064 0% 0% 0% POUGHKPSIE/N NYC SUBURBS, NY 1.037 1.039 1.040 0% 0% 0% ATLANTA, GA 1.002 0.997 1.005 0% 1% 0% QUEENS, NY 1.140 1.150 1.144 1% -1% 0% CHICAGO, IL 1.081 1.076 1.085 0% 1% 0% NEW HAMPSHIRE 1.007 1.012 1.011 0% 0% 0% GALVESTON, TX 0.997 0.995 1.002 0% 1% 1% COLORADO 0.989 0.990 0.994 0% 0% 1% MINNESOTA 0.969 0.968 0.974 0% 1% 1% REST OF CALIFORNIA 1.025 1.038 1.033 1% 0% 1% REST OF WASHINGTON 0.987 0.985 0.997 0% 1% 1% NEVADA** 1.024 1.031 1.037 1% 1% 1% SUBURBAN CHICAGO, IL 1.061 1.059 1.077 0% 2% 2% BALTIMORE/SURR. CNTYS, MD 1.052 1.070 1.069 2% 0% 2% REST OF MARYLAND 1.004 1.024 1.021 2% 0% 2%CMS-1524-P 572

(A) (B) (C) (D) (E) (F) (G) Medicare Locality CY 2011 GAF CY 2012 GAF (Current law/reg) CY 2012 GAF (Proposed) % Change CY 2011 to CY 2012 (current) Col (C)/ Col (B) % Change CY 2012 (Curr) to CY 2012 (Proposed Rule) Col (D)/ Col (C) % Change Combined

Impact CY 2011

to CY 2012 Col (D)/ Col (B) PORTLAND, OR 0.991 0.995 1.009 0% 1% 2% SANTA CLARA, CA 1.156 1.164 1.179 1% 1% 2% SEATTLE (KING CNTY), WA 1.045 1.056 1.077 1% 2% 3% *GAF reflects a 1.5 work GPCI floor in Alaska established by the MIPPA. ** GAFs reflect a 1.0 PE GPCI floor for frontier States as required by the Affordable Care Act.

G. Effects of Proposed Changes to Medicare Telehealth Services Under the Physician

Fee Schedule

As discussed in section III.D. of this proposed rule, we are proposing to add

several new codes to the list of telehealth services and revise the criteria for adding

services to the list of telehealth services. While we expect these changes to increase access to care in rural areas, based on recent ut ilization of similar se rvices already on the telehealth list, we estimate no significant budgetary impact from the proposed additions. In addition, the proposed revision to the telehe alth criteria would be effective for CY 2013 PFS telehealth services, wi th no impact in CY 2012. H. Effects of the Impacts of Ot her Provisions of the Proposed Rule 1. Part B Drug Payment: ASP Issues Application of our proposals for "A SP Reporting Template Update" and "Reporting of ASP Units and Sale s Volume for Certain Products ," as discussed in section IV.A. of this proposed rule involve revisions to the ex isting ASP reporting template which will facilitate the accuracy and efficien cy of data transfer from manufacturers. Any impacts are dependent on the status a nd quality of quarterly manufacturer data submissions, so we cannot quantify associated savings.CMS-1524-P 573

Finally, as discussed in sec tion IV.A. of this proposed rule, we are proposing to provide for appropriate price su bstitutions that account for market-related pricing changes and would allow Medicare to pay based off lower market prices for those drugs and biologicals that consistently exceed the applicable thre shold percentage. Based on estimates published in various OIG reports (see section IV.A. for a list of citations), we believe that this proposal will generate minor savings for the Medicare program and its beneficiaries since any substituted prices would be for amounts less than the calculated 106 percent of the ASP. 2. Chiropractic Services Demonstration

As discussed in section IV.B. of this proposed ru le, we are continuing the recoupment of the $50 million in expenditures fr om 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 th ird 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 ch iropractors in CYs 2010 through 2014. To implement this required budget neutrality adjustment, we are recouping $10 million in CY 2012 by reducing the payment amount unde r the PFS for the chiropractic CPT codes (that is, CPT codes 98940, 98941, and 98942) by approximately 2 percent. 3. Extension of Payment for Technical Component of Certain Physician Pathology

Services

As discussed in section IV.D. of th is proposed rule, we are proposing to implement the provision that specifies that for services furnished after December 31, 2011, an independent laboratory may not bill the Medicare contractor forCMS-1524-P 574

the TC of physician pathology services furnishe d to a hospital inpati ent or outpatient. The savings associated with implementi ng this provision are estimated to be approximately 80 million dollars for CY 2012. 4. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a Personalized Prevention Plan: Incorporati on of a Health Risk Assessm ent as Part of the Annual

Wellness Visit. As discussed in section IV.E. of this pr oposed rule, section 1 861(s)(2)(FF) of the Act, as described more fully in section 1861(hhh), of the Act (as added by section 4103 of the Affordable Care Act) provides Medica re coverage for an a nnual wellness visit. Regulations for Medicare c overage of the AWV are established at 42 CFR 410.15. The

annual wellness visit is covered with no coinsu rance or deductible when furnished by a Medicare participating provide r (a health professional as that term is defined in 42 CFR 410.15). The annual wellness visit entails the creation of a personalized prevention plan for an individual and incl udes elements, such as updating medical and family history, identifying provide rs that regularly provide medi cal care to the individual, measurement of height, weight , and body mass index, identificat ion of risk factors, the provision of personalized health advice, and development of a screening schedule (such as a checklist), and referrals as appropriate for additional preventive services. Section 1861(hhh)(1)(A) of the Act specifies that a personalized preven tion plan for an individual

includes a health risk asse ssment (HRA) that meets the guidelines established by the Secretary and takes into account the results of a HRA. We are proposing to incorporate the use and results of an HRA as part of the provision of personalized prevention plan services during the AWV. The estimated impact of incorporating the HRA as part of theCMS-1524-P 575

AWV is unknown for CY 2012. We are specif ically seeking public comment on the following:

● The impact of use of the HRA on health professional practices.

● The burden on health pr ofessional practices of in corporating an HRA into subsequent AWVs, as well as the first AWV.

● The impact of the elements included in the definitions of first and subsequent

AWVs.

● Modification of those AWV elements fo r which the Secretary has authority to determine appropriateness. 5. Physician Payment, Efficiency, and Quality Improvements - Physician Quality Reporting System

As discussed in section IV.F.1 of this proposed rule, we are proposing several different reporting options for eligible profe ssionals who wish to pa rticipate in the 2012 Physician Quality Reporting System. Although there may be some cost incurred by CMS for maintaining the Physician Quality Reporti ng System measures and their associated code sets, and for expanding an existing clin ical data warehouse to accommodate the proposed registry-based reporting ,EHR-bas ed reporting, and group practice reporting options for the 2012 Physician Quality Re porting System, we do not anticipate a significant cost impact on the Medicare program. Participation in the CY 2012 Physician Quality Reporting System by individual eligible professionals and group practices is voluntar y and individua l eligible professionals and group practices may have different processes for integrating the collection of the Physician Quality Reporting Sy stem measures into their practice's workCMS-1524-P 576

flows. Given this variability and the multip le reporting options that we provide, it is difficult to definitively estimate the impact of the Physician Quality Reporting System on providers. Furthermore, we believe that costs for elig ible professionals who are participating in the Physician Quality Repor ting System for the first time in 2012 would be considerably higher than the cost for elig ible professionals who participated in the Physician Quality Reporting System in prior year s. Some preparatory steps are needed to begin participating in the Physician Quality Re porting System. To the extent that we are not proposing to retire the measures that an e ligible professional ha s reported in a prior year and there are no changes to the measur e's specifications from a prior year, such preparatory steps would not need to be repeated in subseque nt years. In addition, for many eligible professionals, th e cost of participating in the Physician Quality Reporting System is offset by the incentive payment received. With respect to the potential incentive payments that would be made to satisfactory reporters under the 2012 Physic ian Quality Reporting System, we estimate this amount for individual eligible profe ssionals would be approximately $60 million. This estimate is derived from looking at our 2009 incentive payment of approximately $235 million and then accounting for the f act that the 2009 incentive payment was 2.0 percent of an eligible pr ofessional's total estimated Medicare Part B PFS allowed charges for all such covered professional serv ices furnished by the eligible professional during the 2009 reporting period. For 2012, th e incentive payment is 0.5 percent of an eligible professional's tota l estimated Medicare Part B PFS allowed charges for all covered professional services furnished by an eligible professional during the 2012 reporting period. Although we expect that the lower incentive paym ent percentage forCMS-1524-P 577

2012 would reduce the total outlay by approxima tely one-fourth, we also expect more eligible professionals to participate in the 2012 Physician Quality Reporting System because there we are proposing more methods of data submission, additional alternative reporting methods, and because CMS seeks to align the Physician Quality Reporting System with the EHR Incentive Program. We also believe that some eligible professionals would qualify for the additio nal 0.5 percent incentive authorized under section 1848(m)(7) of the Act ("Additional Incentive Payment").

One factor that influences the cost to i ndividual eligible prof essionals is the time

and effort associated it woul d take individual elig ible professionals to identifyapplicable proposed Physician Quality Reporting System quality measures and reviewing and selecting a reporting option. This burden would vary with each individual eligible professional by the number of applicable measures, the eligible professional's understanding of the Physician Quality Re porting System, experi ence with Physician Quality Reporting System participation, a nd the proposed method(s) selected by the eligible professional for reporting of the proposed measures, and incorporating the reporting of the proposed measures into the office work flows. Information obtained from the Physician Voluntary Reporting Pr ogram (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, indi cated an average labor cost per practice of approximately $50 per hour in 2006. To account for salary increases over time, we will use an average practice labor cost of $60 per hour for our estimates, based on an assumption of an average annual increas e of approximately 3 percent. Therefore, assuming that it takes an individual elig ible professional appr oximately 5 hours toCMS-1524-P 578

review the Physician Quality Reporting Syst em 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 $300 per individual eligible professional ($60 per hour x 5 hours).

Another factor that influences the cost to individual eligible professionals is how they choose to report the Physician Quality Reporting System measures (that is, whether they select the claims-based, registry-bas ed or EHR-based reporting mechanism we are proposing). For the proposed claims--based reporting mechanism, estimates from the PVRP indicate the time needed to perform all the steps necessary to report quality data codes (QDCs) for 1 measure on a claim ra nges 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 fo r claims-based reporting, we found that on average, the median number of reporting in stances for each of the Physician Quality Reporting System measures was 9. Since we are proposing to reduce 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 would need to report each selected measure for 6 reporting instances, or 6 cases. Assuming that an eligible professional, on average, would report 3 measures since a majori ty of eligible professionals participate in the Physician Quality Reporting System by repor ting individual measures via claims or registry and that an eligible professional reports on an average of 6 reporting instancesCMS-1524-P 579

per measure, we estimate that the cost to an individual eligible pr ofessional associated with the proposed claims--based reporting option of Physician Quality Reporting System measures would range from approximately $4.50 (0.25 minutes per reporting instance x 6 reporting instances per measure x 3 measur es x $60 per hour) to $216.00 (12 minutes per reporting instance x 6 reporting in stances per measure x 3 measures x $60 per hour). If an eligible professional satis factorily reports, these costs would more than likely be negated by the incentive earned. For the 2009 Physician Quality Reporting System, which had a 2.0 percent incentive, the mean incentive amount was close to $2,000 for an individual eligible professional. For the proposed registry-- based reporting option, individual eligible professionals would generally incur a cost to submit data to registries. We estimate that fees for using a qualified registry would range from no charge, or a nominal charge, for an individual eligible professional to use a registry to several thousand dollars, with a majo rity of registries chargi ng fees ranging from $500 to$1,000. However, our impact analysis is limited to the incremental costs associated with Physician Quality Reporting System reporti ng, which we believe are minimal. We believe that many eligible professionals w ho would select the pr oposed registry-based reporting option would already be utilizing th e registry for other purposes and would not need to report additional data to the regist ry specifically for Physician Quality Reporting System. The registries also often provide the eligible professiona l services above and beyond what is required for Physician Quality Reporting System. For the proposed EHR-based reporting opti on, an individual e ligible professional generally would incur a cost associated with purchasing an EHR product. Although we do not believe that the majority of eligible professionals would purchase an EHR solelyCMS-1524-P 580

for the purpose of participating in Physicia n 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 eligib le 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 re quired by their Boards to participate in a

Maintenance of Certification Program, individual eligible professionals who wish to qualify for the additional 0.5 percent incen tive payment and are not currently participating in a Maintenance of Certificati on Program would also have to incur a cost for participating in a Maintenance of Certif ication Program. The manner in which fees are charged for participating in a Maintenance of Certificatio n Program vary by specialty. Some Boards charge a single fee for particip ation 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 proposed requirement s for group practices to be treated as satisfactorily submitting quality measures data for the CY 2012 Physician QualityCMS-1524-P 581

Reporting System discussed in section IV.F .1 of this proposed rule, group practices interested in partic ipating in the CY 2012 Physician Quality Reporting System through the proposed group practice reporting option (GPR O) may also incur a cost. However, for groups that satisfactorily report for the proposed 2012 Physician Quality Reporting System, we believe these costs would be comp letely offset if the group practice earns the incentive payment since the gr oup practice would be eligible for an incentive payment equal to 0.5 percent of the en tire group's total estimated Medicare Part B PFS allowed charges for covered professional services furnished by the group practice during the reporting period. One factor in the cost to group practices would be the costs associated with the proposed self-nomination process. Similar to our estimates for staff involved with the proposed claims-based reporting option for i ndividual eligible prof essionals, we also estimate that the group practice staff involved in the proposed group practice self-nomination process has would have an an average labor cost of $60 per hour. Therefore, assuming 2 hours for a group practic e to decide whether to participate as a group or have members of the practice part icipate individually and 4 hours for the self-nomination process, we es timate the total cost to a group practice associated with the group practice self-nomination process woul d be approximately $360 ($60 per hour x 6 hours per group practice). For groups participating under the proposed GPRO process that are comprised of 25 or more eligible professionals, another f actor 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. Base d on the Physician Group Practice (PGP)CMS-1524-P 582

demonstration's estimate that it takes appr oximately 79 hours for a group practice to complete the data collection tool, which uses the same data submission methods as those we have proposed, we estimate the cost asso ciated with a physician group completing the data collection tool would be approxima tely $4,740 ($60 per hour x 79 hours per group practice). In addition to costs incurred by indivi dual eligible profe ssionals and group practices, registries and EHR vendors may also incur some costs related to the proposals for the 2012 Physician Quality Reporting System . Registries inte rested in becoming "qualified" to submit on behalf of individual eligible professionals would also have to incur a cost associated with the vetting pr ocess, and with calculating quality measures results from the data submitted to the registry by its participants, and submitting the quality measures results, as well as and numerator and denominator data on quality measures, to CMS on behalf of their pa rticipants. We estimate the registry self-nomination process will cost approximately $500 per registry ($50 per hour x 10 hours per registry). This cost estimate includes the cost of submitting the self-nomination letter to CMS and completi ng the proposed CMS vetting process. Our estimate of $50 per hour average labor cost for registries is based on the assumption that registry staff include IT pr ofessionals whose average hourly rates range from $36 to $84 per hour depending on experience, with an av erage rate of nearly $50 per hour for a mid-level programmer. We do not believe that there are any additional costs for registries associated with a registry calcula ting 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 quali ty measures to CMS on behalf of theirCMS-1524-P 583

participants under the proposed program for 2012. We believe that the majority of registries already perform these f unctions for their participants. An EHR vendor interested in having its pr oduct(s) be used by individual eligible professionals to submit the proposed Physic ian Quality Reporting System measures to CMS for 2012 would have to complete th e proposed vetting process during 2012 and program its EHR product(s) to extract the clinical data that the e ligible professional would need to submit to CMS for purposes of reporting the proposed 2012 quality measures in 2013 as well. We proposed that previously qualified vendors would need to only update their electronic measure specifica tions and data transmission schema during 2012 to incorporate any new EHR measures we proposed to maintain their qualification for the 2012 Physician Quality Reporting System. Therefore, for EHR vendors that were not previously qualified, we estimate the co st associated with completing the proposed self-nomination process, incl uding the proposed vetting proc ess with CMS officials, is estimated would be $500 ($50 per hour x 10 hours per EHR vendor). Our estimate of a $50 per hour average labor cost for EHR vendor s is based on the assumption that vendor staff include IT professionals whose averag e hourly rates range fr om $36 to $84 per hour depending on experience, with an average ra te of nearly $50 per hour for a mid-level programmer. We believe that the cost associ ated with the time and effort needed for an EHR vendor to review the proposed quality m easures and other information and program the EHR product to enable indi vidual eligible professionals to submit Physician Quality Reporting System proposed quality measures data to the CMS- designated clinical warehouse would be dependent on the EHR ve ndor's familiarity with the Physician Quality Reporting System, the vendor's system 's capabilities, as well as the vendor'sCMS-1524-P 584

programming capabilities. Some vendors alr eady have the necessary capabilities and for such vendors, we estimate the total cost would be approximately $2,000 ($50 per hour x 40 hours per vendor). However, given the vari ability in the capabi lities of the vendors,

we believe an estimate for those ven dors with minimal experience would be approximately $10,000 per vendor ($50 per hour x 200 hours per EHR vendor).

TABLE 67: ESTIMATED COSTS TO PROFESSIONALS: PHYSICIAN QUALITY REPORTING

Estimated Hours Estimated Instances Number of Measures Hourly Rate Total Cost Individual Eligble Professional (EP): Preparation 5.0 1 N/A $60 $300 Individual EP: Claims Reporting 0.2 6 3 $60 $216 Individual EP: Registry Reporting N/A 1 N/A N/A $500 to $1,000 Individual EP: EHR Reporting N/A 1 N/A N/A $25,000 - $54,000 initial start-up $18,000 annually for

subsequent years Group Practice: Self-Nomination 6.0 1 N/A $60 $360 Group Practice: Reporting 79 1 N/A $60 $4,740

TABLE 68: ESTIMATED COSTS TO VENDORS: PHYSICIAN QUALITY REPORTING Estimated Hours Hourly Rate Total Cost Registry: Self-Nomination 10 $50 $500 EHR: Self-Nomination 10 $50 $500 EHR: Programming 40-200 $50 $2,000 - $10,000

6. Incentives for Electronic Prescribing (eRx) - The Electronic Prescribing Incentive Program Section IV.F.2. of this proposed ru le describes the proposed Electronic Prescribing (eRx) Incentive Programs for CY s 2012 through 2014. To be considered a successful electronic prescriber in CYs 2012 through 2014, an individual eligible professional would need to meet the proposed requirements described in section IV.F.2.CMS-1524-P 585

of this proposed rule. We estimate that the cost impact of the proposed eRx Incentive Programs for CYs 2012 through 2014 on the Medicare program woul d be the cost incu rred for maintaining the electronic prescribing measure and its asso ciated code set, and for maintaining the existing clinical data warehouse to accomm odate the proposed registry-based reporting and EHR-based reporting options for the electro nic prescribing measure. However, we do not believe that the proposed program for CYs 2012 through 2014 has a significant administrative cost impact on th e Medicare program since much of this infrastructure has already been established for the eRx Incentive Program. Individual eligible profes sionals and group practices ma y have different processes for integrating data collection on the electronic prescribing m easure into their practices' work workflows. Given this variability and the multiple reporting options that we are proposing, it is difficult to accurately estimate the impact of the eRx Incentive Program for CYs 2012 through 2014 on providers. Furtherm ore, we believe that costs for eligible professionals who would participate in th e eRx Incentive Program for the first time would be considerably higher than the cost fo r eligible professionals who participated in the eRx Incentive Program in prior years as th ere are preparatory steps that an eligible professional would need to take to begin pa rticipating in the progr am. In addition, for many eligible professionals (especially thos e who participated in the eRx Incentive Program in prior years), we believe the cost of participating in th e eRx Incentive Program in 2012 or 2013 would be offset by the incentiv e payment received. As a result of the payment adjustment that begins in 2012 and continues until 2014, the cost of not participating in the eRx Incentive Progra m for CYs 2012 through 2014 could be higherCMS-1524-P 586

than the cost of participating in the form of reduced Medicare payments as a result of the payment adjustment. For the 2009 eRx Incentive Program, base d on an incentive of 2.0 percent of eligible professionals' total estimated Medicare Part B allowed charges, approximately $148 million in total incentives were paid to e ligible professionals w ith a mean incentive amount of approximately $3,000. Based on th e aforementioned figures from the 2009 eRx Incentive Program, we estimate that the total incentive payments for individual eligible professionals for the 2012 eRx incen tive would be approximately $74 million, taking into account that the incentive payment for 2012 would be 1.0 percent. Assuming no changes in the participation rates, we estimate that the total incentive payments for the 2013 eRx incentive would be approximately $37 million, taking into account that the incentive payment for 2013 would be 0.5 percent. From 2009, 89,752 eligible professionals participated in the eRx Incentive Program. For purposes of the 2013 and 2014 pa yment adjustment, we anticipate that despite a decrease in the incentive payment am ount from 2 percent in 2009 to 1 percent

of total estimated Medicare Part B allowed ch arges for covered professional services in 2012 and 0.5 percent in 2013, more eligible professionals (and groups) will choose to participate in the eRx Incen tive Program due to the 2013 and 2014 payment adjustments of 1.5 percent and 2.0 percent respectively on eligible professionals' totally estimated Medicare Part B allowed charges for not demons trating that they are successful electronic prescribers. In order to become a successf ul electronic prescriber for purposes of the 2013 and 2014 payment adjustments, we are pr oposing to provide more opportunities to report on the electronic prescribing measure by concentrating only on the numerator ofCMS-1524-P 587

the measure. Furthermore, we are proposi ng to expand the reporting mechanisms for the 2013 and 2014 payment adjustments to include registry and EHR-based reporting. Although we expect an increase in part icipation for purposes of the 2013 and 2014 payment adjustments, we believe that at leas t some of these anticipated increases would be offset by the additional significant hardsh ip exemptions we have proposed for the 2013 and 2014 payment adjustments. As such, we expect that the pa rticipation level for the eRx Incentive Program will be approxima tely 90,000 eligible professionals, based on the level of participation in 2009 (which was the highest participation level for the eRx Incentive Program recorded as of yet). Since we do not have participation re sults for the implementation of the eRx payment adjustment as the reporting period fo r the 2012 payment adjustment (the first of 3 such payment adjustments), we will base our estimates for the di stribution of payment adjustment amounts on the incentives earned in the 2009 eRx Incentive Program. For the 2013 payment adjustment, taking into account th at the payment adjustment would be 1.5 percent, we believe that the total payment adjustment amount would be $111 million.

This is based off of the incentive amount di stributed for the 2009 eRx Incentive Program. For the 2014 payment adjustment, taking into account that the payment adjustment would be 2.0 percent, we believe that the tota l payment adjustment amount would be $148

million. This is also based off of the incentive amount distributed for the 2009 eRx Incentive Program. We propose that any eligible professiona l who wishes to participate in the eRx Incentive Program must have a qualified elec tronic prescribing sy stem in order to participate. Therefore, a one-time potential co st to some individual eligible professionalsCMS-1524-P 588

would be the cost of purchasing and using an electronic prescribing system, which varies by the commercial software package select ed, the level at which the professional currently employs information technology in hi s or her practice and the training needed. One study indicated that a midrange complete electronic medical record with electronic prescribing functionality cost s $2,500 per license with an an nual fee of $90 per license for quarterly updates of the drug database afte r setup costs while st andalone prescribing, messaging, and problem list system may cost $1,200 per physician pe r year after setup costs. Hardware costs and setup fees substan tially add to the final cost of any software package. (Corley, S.T. (2003). "Electronic pres cribing: 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 associ ated with individual eligible professionals reviewing the electronic prescr ibing measure to determine whether it is applicable to them, reviewing the available reporting options and se lecting one, gathering the required information, and incorporating reporting of the meas ure 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 Incentiv e 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 thr ough certain quality metrics, indicated an average labor co st per practice of approximate ly $50 per hour. To account for salary increases over time, we will use an average practice labor cost of $60 per hourCMS-1524-P 589

for our estimates, based on an assumption of an average annual increase of approximately 3 percent. At an average cost of appr oximately $60 per hour, we estimate the total preparation costs to indivi dual eligible professional s to be approximately $120 ($60 per hour x 2 hours).

Another factor that influences the cost to individual eligible professionals is how they choose to report the electr onic prescribing measure (that is, whether they select the claims-based, registry-based or EHR-based reporting mechanism). For claims-based reporting, there would be a co st associated with reporti ng the appropriate QDC on the claims an individual eligible professional submits for payment. Based on the information from the PVRP described previously for the am ount of time it takes a median practice to report one measure one time (1.75 minutes) and the requireme nt to report 25 electronic prescribing events during 2012, we estimate th e annual estimated cost per individual eligible professional to report the electron ic prescribing measur e via claims-submission would be $43.75 (1.75 minutes per case x1 measure x 25 cases per measure x $60 per hour). We believe that for most su ccessful electronic prescribers who earn an incentive, these costs would be negated by th e incentive payment received given that the median incentive for eligible professionals who qualified for a 2010 eRx incentive was around $1,600. For eligible professionals who select the proposed registry-based reporting mechanism, we do not anticipate any additional cost for individual eligible professionals to report data to a registry, as individual el igible professionals op ting for registry-based reporting are more than likely already reporti ng data to the registry. Little if any, additional data would need to be reported to the registry for purposes of participation inCMS-1524-P 590

the eRx Incentive Program for CYs 2012 thr ough 2014. Individual elig ible professionals using registries for Physician Quality Reporting System would likely experience minimal, if any, increased costs charged by the registry to repor t this 1 additional

measure. For EHR-based reporting, we propose that the eligible professional must extract the necessary clinical data from his or he r EHR, and submit the necessary data to the CMS-designated clinical data warehouse. Once the EHR is programmed by the vendor to allow data submission to CMS, the cost to th e individual eligible professional associated

with the time and effort to submit data on th e electronic prescrib ing measure should be

minimal. With respect to the proposed process for group practices to be treated as successful electronic prescribers for the 2012 and 2013 incentive and 2013 and 2014 payment adjustment discussed in section IV .F.2. of this proposed rule, group practices have the same proposed options as individual eligible professionals in terms of the form and manner for reporting the el ectronic prescribing measure (that is, group practices have the option of reporting the measure through clai ms, a qualified regist ry, or a qualified EHR product). There are only 2 differences between the proposed requirements for an individual eligible professi onal and a group practice: (1) the fact that a group practice would have to self-nominate; and (2) th e number of times a group practice would be required to report the electronic prescribing measure. Overa ll, 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 separate ly participating. We do not believe that there are any additional costs associated with the group prac tice self-nomination processCMS-1524-P 591

since we are limiting the group practices to those selected to participate in the 2012, 2013, and/or 2014 respective Physician Quality Reporting System GPRO. The practices only will need to indicate their desire to pa rticipate in the eRx GPRO at the time they self-nominate for the Physician Qu ality Reporting System GPRO. The costs for a group practice reporting to an EHR or registry should be similar to the costs associated with registry and EHR reporting for an individual eligible professional, as the process is the same with the exception that more electronic prescribing events must be reported by the gr oup. For similar reasons, the costs for a group practice reporting via clai ms should also be similar to the costs associated with claims-based reporting for an individual elig ible professional. Th erefore, we estimate that the costs for group practi ces who are selected to par ticipate in the eRx Incentive Program for CYs 2012 through 2014 as a group would range from $3,349.61 (1.75 minutes per case x 1 measure x 625 cas es per measure x $60 per hour) for groups comprised of 25-99 eligible professionals participating as an eRx GPRO to $4,375.00 (1.75 minutes per case x 2500 cases per measure x $60 per hour) for the groups comprised of 100 or more elig ible professionals particip ating as an eRx GPRO.

We believe that the costs to individual eligible professionals and group practices associated with avoiding the 2013 and 2014 paym ent adjustment would be similar to the costs of an eligible profe ssional or group practice reporting the electronic prescribing measure for purposes of the 2012 and 2013 incentive. Specifically, we believe that the cost of reporting the electroni c prescribing measure in one instance for purposes of the payment adjustment is identical to the cost of reporting the electronic prescribing measure for one instance on claims for purposes of the incentive payment. The onlyCMS-1524-P 592

difference would be in the total costs for an individual eligible professional. Group practices would be required to report the electronic prescribing measure for the same number of electronic prescribing events for both the 2012 and 2013 incentives and the 2013 and 2014 payment adjustments. Individual eligible professiona ls, however, would be required to report the elec tronic prescribing measure for only 10 electronic prescribing events for purposes of the 2013 and 2014 payment adjustments as opposed to 25 electronic prescribing events for purpo ses of the 2012 and 2013 incentives. Based on our decision to consider only registries qualified to submit quality measures results and numerator and denominator data on quality measures to CMS on their participant's behalf for the 2012, 2013, and 2014 Physician Quality Reporting System to be qualified to submit results and numerator and denominator data on the electronic prescribing measure for eR x Incentive Program for CYs 2012, 2013, and 2014 respectively, we do not estimate any cost to the registry associated with becoming a registry qualified to submit the electroni c prescribing measure for CYs 2012 through

2014. The cost for the registry would be the tim e and effort associated with the registry calculating results for the electronic prescrib ing 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 would be minimal as regi stries would already be required to perform these activities for Physician Quality Reporting System. Likewise, based on our decision to consid er only EHR products qualified for the Physician Quality Reporting System for CYs 2012, 2013, and 2014 to be qualified toCMS-1524-P 593

submit results and numerator and denominator data on the electronic prescribing measure for the eRx Incentive Program for CYs 2012, 2013, and 2014, there would be no need for EHR vendors to undergo a separate self-nomination process for the eRx Incentive Program. Therefore, there would be no additional cost associated with the self-nomination process.

The cost to the EHR vendor associat ed with the proposed EHR-based reporting requirements of this reporting initiative is the time and effort associated with the EHR vendor programming its EHR product(s) to extr act the clinical data that the individual eligible professional needs to submit to CM S for reporting the elec tronic prescribing measure. Since we determined that only EHR products qualified for the Physician Quality Reporting System would be qualified for the eRx Incentive Program, and the eRx Incentive Program consists of only one measur e, we believe that any burden associated with the EHR vendor to program its product(s) to enable individual eligible professionals

to submit data on the electronic prescribing measure to the CMS-designated clinical data

warehouse would be minimal. 7. Physician Compare Website Section IV.G.2. of this proposed rule di scusses the background of the Physician Compare Website. As described in section IV.G.2. of this proposed rule, we propose to develop aspects of the Physician Compare Web S ite in stages. In the first stage, which was completed in 2011, we posted the names of those eligible professionals who satisfactorily participated in the 2009 Phys ician Quality Reporting System. The second phase of the plan, which would occur dur ing CYs 2011 through 2012, would include the posting of the names of eligible professionals who are succes sful electronic prescribersCMS-1524-P 594

under the 2009 eRx Incentive Program, as we ll as eligible professionals (EPs) who participate in the EHR Incentive Program. We are proposing to include performa nce information with respect to the 2012 Physician Quality Reporting System GPRO measures. As reporting of physician performance rates on the Physician Compare We b Site will be performed directly by us using the data that we collect under the 2012 Physician Quality Reporting System GPRO, we do not anticipate any notable impact on eligible professi onals with respect to the posting of information on the P hysician Compare Web Site. 8. Medicare EHR Incentive Program Section IV.H.2. of this proposed rule proposes changes to the EHR Incentive Program for EPs for the 2012 payment year. Aside from continuing the attestation method of reporting CQMs, we propose to a llow the reporting of CQMs for purposes of demonstrating meaningful use through participation in th e Physician Quality Reporting System-Medicare EHR Incentive Pilot via-- (1) a Physician Quality Reporting System "qualified" EHR data submission vendor or (2 ) using an EP's certified EHR technology, which also must be a Physician Qual ity Reporting System "qualified" EHR. We believe the impact associated with actually reporting CQMs would vary depending

on how the EP chooses to do so. We belie ve that the number of EPs who choose to participate via attestation would largely be those who are not part icipating in both the EHR Incentive Program and Physician Quality Reporting System as this is the method of reporting most favorable to EPs not partic ipating in the Physician Quality Reporting System. EPs participating in the Physicia n Quality Reporting System would be more likely to participate in the pr oposed pilot. Therefore, base d on the previously mentionedCMS-1524-P 595

assumptions, we do not believe there would be any additional impact on EPs specific to the EP's participation in the proposed pilot. All the steps necessary to participate in the proposed pilot would need to be performed to participate in the Physician Quality Reporting System. 9. Physician Feedback Program/Value Modifier Payment The proposed changes to the Physician Fee dback Program in section IV.I. of this proposed rule would not impact CY 2012 physician payments under the Physician Fee Schedule. However, we exp ect that our proposals to use the Physician Quality Reporting System quality measures in the Physician Feedback reports and in the value modifier to be implemented in CY 2015 may result in in creased participation in the Physician Quality Reporting System in CY 2012. We anticipate that as we approach implementation of the value modifier, physic ians will increasingly participate in the Physician Quality Reporting System to determine and understand how the value modifier could affect their payments. 10. Bundling of Payments for Services Provi ded to Outpatients Who Later Are Admitted as Inpatients: 3-Day Payment Window Polic y and the Impact on Wholly Owned or Wholly Operated Physician Offices Medicare traditionally collects ownershi p information obtained in the 855 A and 855 B enrollment forms completed upon a f acility or a practitioner's Medicare

enrollment. The 855 forms are self-selecti ng enrollment forms that may be updated as necessary. Although the enrollment forms do not specifically require information on whether a physician office is wholly owned or wholly operated by a hospital, we will use this information to aid us in identifying physic ian offices and clinics that might be whollyCMS-1524-P 596

owned or operated by a hospital. While we believe that most hos pital owned entities providing physician services will be consider ed part of the hospital and operating as hospital outpatient departments; there will be at least some hospital owned physician

offices and clinics that will meet the defin ition of "wholly-owned or wholly-operated" and will be subject to the 3-day payment wi ndow policy. We are unable to accurately estimate and verify the number of wholly ow ned or wholly operated physician offices or clinics enrolled in Medicare and furnishing hea lth services to Medica re beneficiaries that will be subject to the 3-day payment window policy under the PFS because the 855 forms do not explicitly capture information on sole ownership or operation. We note that the application of the 3-day window policy is limited to only those outpatient services provided within the payment window to patients that are admitted to a hospital. The 3-day window policy would not apply to th e majority of services provided by wholly-owned or wholly-operated physician o ffices. Furthermore, application of the 3- day window policy would be limited to only the practice expense component of the payment rate, and the professional component will be unchanged by the payment policy. For the CY 2012 PFS proposed rule, we are unable to estimate the impact of this proposed policy change. However, we note that if we were able to estimate a savings in Part B payments as a result of the applica tion of the 3-day payment window, the program savings would be redistributed across all othe r services paid under the PFS in accordance with due to the PFS budget neut rality provisions.

I. Alternatives Considered This proposed rule contains a range of policies, including some provisions related to specific statutory provisions. The pr eceding preamble provides descriptions of theCMS-1524-P 597

statutory provisions that are addressed, identi fies those policies when discretion has been exercised, presents rationale for our policies and, where relevant, alternatives that were

considered. J. Impact on Beneficiaries There are a number of changes in this pr oposed rule that would have an effect on beneficiaries. In general, we believe that many of the proposed changes, including the refinements of the Physician Quality Reporting System with its focus on measuring, submitting, and analyzing quality data will have a positive impact and improve the quality and value of care provided to Medicare beneficiaries. The regulatory provisions may affect benefi ciary liability in some cases. Most changes in aggregate benefici ary liability due to a part icular provision would be a function of the coinsurance (20 percent if appl icable for the particular provision after the beneficiary has met the deductible). To illust rate this point, as shown in Table 65, the CY 2011 national payment amount in the nonfacility setting for CPT code 99203 (Office/outpatient visit, new) is $102.95, which means that in CY 2011 a beneficiary would be responsible for 20 percent of th is amount, or $20.59. Based on this proposed rule, including the negative update, th e CY 2012 national payment amount in the nonfacility setting for CPT code 99203, as s hown in Table 65, is $73.57, which means that, in CY 2012, the beneficiary coinsuran ce for this service would be $14.71. Most policies discussed in th is proposed rule that impact paym ent rates, such as the expansion of the MPPR to the professional component of imaging procedures, would similarly impact beneficiaries' coinsurance. K. Accounting StatementCMS-1524-P 598

As required by OMB Circul ar A-4 (available at http://www.whitehouse.gov/om b/circulars/a004/a-4.pdf ), in Table 69, we have prepared an accounting statement showi ng the estimated expenditure s associated with this proposed rule. This estimate includes the estimated CY 2012 incurred benefit impact

associated with the estimated CY 2012 PFS conversion factor update based on the FY 2012 President's Budget baseline.

TABLE 69: ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED TRANSFERS

CATEGORY TRANSFERS CY 2012 Annualized Monetized Tran sfers Estimated decrease in expenditures of $20.2 billion for the PFS update. From Whom To Whom? Federal Governme nt to physicians, other practitioners and providers and suppliers who receive payment under Medicare.

L. Conclusion The analysis in the previous sections, together with the remainder of this preamble, provides an Initial Regulatory Flexib ility Act Analysis. The previous analysis, together with the remainder of this preambl e, provides a Regulatory Impact Analysis. VIII. Addenda Referenced in this Propos ed Rule and Available Only Through the

Internet on the CMS Web Site

This section lists the Addenda referred to throughout the preamble of this proposed rule. Beginning with the CY 2012 PFS proposed rule, the PFS Addenda A, B, C, D, E, F, G, and H will no longer appear in the Federal Register . Instead, these Addenda, along with other supplemental documents, will be available through the

Internet. Readers who experience any problems accessing any of the Addenda that areCMS-1524-P 599

posted on the CMS Web sites identified above should contact Erin Smith at (410)

786-4497. The following PFS Addenda for CY 2012 PFS proposed rule are available through the Internet on the CMS Web site at http://www.cms.gov/PhysicianFeeSched/

. Click on the link on the left side of the sc reen titled, "PFS Federa l Regulations Notices" for a chronological list of PFS Federal Register and other related documents. For the CY 2012 PFS proposed rule, re fer to item CMS-1524-P. Addendum A – Explanation and Use of Addendum B Addendum B – Proposed Relative Value Unit s and Relations Information Used in Determining Medicare Payments for CY 2012 Addendum C – [Reserved] Addendum D – Proposed CY 2012 Geogra phic Adjustment Factors (GAFs) Addendum E – Proposed CY 2012 Geographic Practice Cost I ndices (GPCIs) by States and Medicare Locality Addendum F – Proposed CY 2012 Di agnostic 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 List of Subjects

42 CFR Part 410 Health facilities, Health professions, Kidney diseases, Laboratories, Medicare, Reporting and recordkeeping requ irements, Rural areas, X-rays.CMS-1524-P 600

42 CFR Part 414 Administrative practice and procedure, Health facilitie s, Health professions, Kidney diseases, Medicare, Reporting and recordkeeping.

42 CFR Part 415 Health facilities, Health professions , Medicare, Reporting and recordkeeping requirements.

42 CFR Part 495 Administrative practice and pr ocedure, Electronic health r ecords, Health facilities, Health professions, Health maintenance organizations (H MO), Medicaid, Medicare, Penalties, Privacy, Reporting a nd recordkeeping requirements.CMS-1524-P 601

For the reasons set forth in the preamble of this proposed rule, the Centers for

Medicare & Medicaid Services proposes to amend 42 CFR chap ter IV as set forth below: PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS Subpart B – Medical and Ot her Health Services 1. The authority citation for part 41 0 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). 2. Amend §410.15(a) as follows: A. Amending the definition of "first annual wellness visit providing personalized prevention plan services" by-- 1. Revising the introductory text. 2. Redesignating paragraphs (i) through (ix) as paragraphs (ii) through (x). 3. Adding a new paragraph (i). 4. Revising newly redesigna ted paragraph (viii)(A). B. Adding the definition of "Health risk assessment". C. In the definition of "subsequent a nnual wellness visit providing personalized prevention plan services". 1. Revising the introductory text. 2. Redesignating paragraphs (i) through (vii) as paragr aphs (ii) through (viii). 3. Adding a new paragraph (i). 4. Revising newly redesigned pa ragraphs (iii) and (vi)(B).

The revisions and additions read as follows:CMS-1524-P 602

§ 410.15 Annual wellness visits providing Pers onalized Prevention Plan Services: Conditions for and limitations on coverage. (a) * * * First annual wellness visit providing personalized prevention plan services means the following services furnished to an eligib le beneficiary by a health professional, taking

into account the results of a health risk a ssessment, as those terms are defined in this

section: (i) Review (and administration if needed) of a health risk assessment (as defined in this paragraph).

* * * * * (viii) * * * (A) A written screening schedule for the individual such as a checklist for the next 5 to 10 years, as ap propriate, based on recommendations of the United States

Preventive Services Task Force and the Advisory Committee on I mmunization Practices, and the individual's health risk assessment (as th at term is defined in this section), health status, screening history, a nd age-appropriate preventive services covered by Medicare.

* * * * *

Health risk assessment means, for the purposes of this section, an eval uation tool that meets the following criteria: (i) Collects self-re ported information about the beneficiary. (ii) Can be administered independently by the beneficiary or administered by a health professional prior to or as part of the AWV encounter. (iii) Is appropriately tailored to and takes into account th e communication needsCMS-1524-P 603

of underserved populations, persons with limite d English proficiency, and persons with health literacy needs. (iv) Takes no more than 20 minutes to complete. (v) Addresses, at a minimum, the following topics: (A) Demographic data, including but not limited to age, gender, race, and ethnicity. (B) Self assessment of health status , frailty, and physical functioning. (C) Psychosocial risks, including but not limited to, depression/life satisfaction, stress, anger, loneliness/socia l isolation, pain, or fatigue. (D) Behavioral risks, including but not limited to, tobacco use, physical activity, nutrition and oral health, al cohol consumption, sexual prac tices, motor vehicle safety (seat belt use), and home safety. (E) Activities of daily living (ADLs) , including but not limited to, dressing, feeding, toileting, grooming, physical ambulation (including balance/risk of falls), and bathing. (F) Instrumental activities of daily liv ing (IADLs), including but not limited to, shopping, food preparation, using the te lephone, housekeeping, laundry, mode of transportation, responsibility for own medi cations, and ability to handle finances.

* * * * * Subsequent annual wellness visit providi ng personalized preven tion plan services means the following services furnished to an el igible beneficiary by a health professional, taking into account the results of a health risk assessment, as those terms are defined in

this section:CMS-1524-P 604

(i) Review (and administration, if needed) of a health risk assessment (as defined in this section).

* * * * * (iii) An update of the list of current pr oviders and suppliers that are regularly involved in providing medical car e to the individual as that list was developed for the first annual wellness visit provid ing personalized prevention plan services or the previous subsequent annual wellness visit providing personalized preventi on plan services.

* * * * * (vi) * * * (B) The list of risk factors and c onditions for which primary, secondary or tertiary interventions are reco mmended or are underway for th e individual as that list was developed at the first annual wellness vi sit providing personalized prevention plan services or the previous subsequent annual wellness visit providing personalized prevention plan services.

* * * * * 3. Amend §410.62 paragraph (b) by revisi ng the paragraph heading to read as

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

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

*****CMS-1524-P 605

§ 410.78 [Amended] 4. In § 410.78 the introductory text of paragraph (b) is amended by removing the phrase "and individual and group health a nd behavior assessment and intervention services furnished by an interactive telecommunications system if the following conditions are met:" and adding in its place th e phrase "individual and group health and

behavior assessment and intervention servic es, and smoking cessation services furnished by an interactive tel ecommunications system if the following conditions are met:". 5. Amend §410.140 by revising the defin ition of "Deemed entity" to read as

follows: § 410.140 Definitions.

* * * * * Deemed entity means an individual, physician, or entity accredited by an approved organization, but that has not yet been approved by CMS under §410.145(b) to furnish training. §410.141 [Amended] 6. Amend §410.141 paragraph (b)(1) as follows: A. Removing the term "it" and adding the phrase "the training" in its place. B. Removing the cross-reference "§ 410.32(a)" and adding th e cross-reference "§410.32(a)(2)".

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

SERVICES Subpart B--Physicians and Other Practitioners 7. The authority citation for part 41 4 continues to read as follows:CMS-1524-P 606

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

8. Amend §414.22 by revising paragraphs (b)(5)(i)(A) throug h (b)(5)(i)(C) to

read as follows: §414.22 Relative value units (RVUs).

* * * * * (b) * * * (5) * * * (i) * * * (A) Facility practice expense RVUs . The facility practice expense RVUs apply to services furnished to patients in places of service including, but not limited to, a hospital, a skilled nursing fac ility, a community mental health center, a hospice, or an ambulatory surgical center, or in a wholly owned or wholly operated physician practice providing preadmission services under §412.2(c)(5). (B) Nonfacility practice expense RVUs . The nonfacility practice expense RVUs apply to services furnished to patients in places of service including, but not limited to, a physician's office, the patient's home, a nursi ng facility, or a comprehensive outpatient rehabilitation facility (CORF). (C) Outpatient therapy and CORF services . Outpatient therapy services (including physical therapy, occupationa l therapy, and speech-language pathology services) and CORF services billed under the physician fee schedule are paid using the nonfacility practice expense RVUs.CMS-1524-P 607

* * * * * § 414.65 [Amended] 9. In § 414.65 paragraph (a) is amende d by removing the phrase "and individual and group health and behavior assessment a nd intervention furnished via an interactive telecommunications system is equal to the cu rrent fee schedule amount applicable for the service of the physicia n or practitioner." and adding in its place the phrase "individual and group health and behavior assessme nt and intervention, and smoking cessation services furnished via an interactive telecommunications system is equal to the current fee schedule amount applicable for the se rvice of the physicia n or practitioner." 10. Amend §414.90 as follows: A. In paragraph (b), adding the definiti on of "Certified electronic health record technology". B. In paragraph (b), revising the definitions of "Group practice".

C. Removing paragraph (c)(2). D. Redesignating paragraph (c)(3) as (c)(2). E. Revising paragraph (f)(1). F. Removing paragraph (f)(2). G. Redesignating paragraph (f)(3) as (f)(2). H. Revising newly redesignated pa ragraph (f)(2) in troductory text. I. In newly redesignated paragraph (f )(2)(ii), removing the ph rase "behalf; or" and adding in its place the phrase "behalf." J. In newly redesignated paragraph (f)(2)(iii), removing the phrase "containingCMS-1524-P 608

real or dummy" and adding in its pl ace the phrase "containing dummy". K. Revising paragraphs (g)(1), (g)(5) , (i)(1) and (i)(2) introductory text.

The revisions and additions and read as follows: § 414.90 Physician Quality Reporting System

* * * * * (b) * * *

Certified electronic he alth record technology means an electronic health record vendor's product and version as described in 45 CFR 170.102. Group practice means a physician group practice, as defined by a TIN, with 25 or more individual eligible prof essionals (or, as identified by NPIs) who have reassigned their billing rights to the TIN.

* * * * * (f) * * * (1) Reporting periods

. For purposes of this para graph, the reporting period is— (i) The 12-month period from January 1 through December 31 of such program

year. (ii) Exceptions . (A) Program year 2011 . The reporting period for the program year 2011 is one of the following: (1 ) The 12-month period from January 1 through December 31 of such program

year; or (2 ) The 6-month period from July 1 thr ough December 31 of such program year. (B) For 2012 and subsequent program y ears, the 6-month reporting period from July 1 through December 31 of such program year is available for registry-basedCMS-1524-P 609

reporting of Physician Quality Reporting System measures groups by eligible professionals. (2) Reporting mechanisms . For program year 2011 and subsequent program years, an eligible professional who wishes to participate in the Physician Quality Reporting System must report information on the individual Physician Quality Reporting System quality measures or Physician Quality Reporting System measures groups identified by CMS in one of the following manners: (g) * * * (1) Meets the participation requirements specified by CMS for the Physician Quality Reporting System group practice reporting option;

* * * * * (5) Payments to a group practice under th is 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 e ligible professionals. (i) If an eligible professional, as id entified by an individual NPI, has reassigned his or her Medicare billing right s to a TIN selected to participate in the Physician Quality Reporting System group practice reporting op tion for a program year, then for that program year the eligible professional must participat e in the Physician Quality Reporting System via the group practice repor ting 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 canno t individually qualify for a Physician Quality Reporting System incenti ve payment by meeting the requirementsCMS-1524-P 610

specified in paragraph (f) of this section. (ii) If, for the program year, the eligible professional participat es in the Physician Quality Reporting System under a TIN that is no t selected to particip ate 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 th is section under that

TIN.

***** (i) * * * (1) To request an informal review, an eligible professional (or in the case of reporting under paragraph (g) of this section, group practices ) must submit a request to CMS within 90 days of the release of the feedback reports. The request must be submitted in writing and summarize the concern(s) and reasons for requesting an informal review and may also include information to assist in the review. (2) CMS will provide a written response within 90 days of the receipt of the original request.

* * * * *

11. Section 414.92 is amended as follows: A. In paragraph (b), adding the definiti on of "Certified electronic health record technology". B. In paragraph (b), revising paragraphs (ii) and (iii) of th e definition of "Group practice". C. Revising paragraph (c)(1).CMS-1524-P 611

D. In paragraph (c)(2), re vise the paragraph heading. E. Revising paragraph (c)(2)(ii).

. F. Adding paragraph (c)(2)(iii). G. In paragraph (d)(1), removing the phr ase "For purposes of this paragraph in 2011," is removed and adding in its place the phra se "For purposes of this paragraph,". H. In paragraph (d)(2), removing th e phrase "For program year 2011," and adding in its place the phrase "For the 2012 and 2013 incentive payments," I. Redesignating pa ragraph (f) as (g). J. Adding a new paragraph (f). § 414.92 Electronic Prescribing Incentive Program

* * * * * (b) * * *

Certified electronic health record technology means an elect ronic health record vendor's product and version as described in 45 CFR 170.102. Group practice * * * (ii) In a Medicare-approved demonstrat ion project or other Medicare program, under which Physician Quality Reporting System requirements and incentives have been incorporated; and (iii) Has indicated its desi re to participate in the electronic prescribing group practice reporting option.

* * * * * (c) * * *CMS-1524-P 612

(1) Incentive payments . Subject to paragraph (c)(3) of this section, with respect to covered professional services furnishe d 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 unde r section 1848 of the Act, there also must be paid to th e 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 se ction, to the group practice, fr om the Federal Supplementary

Medical Insurance Trust Fund established unde r section 1841 of the Act an amount equal to the applicable electronic prescribing percent (as specified in paragr aph (c)(1)(ii) of this section) of the total estimated allowed part B charges for all such covered professional services furnished by the elig ible professional (or, in th e case of a group practice under paragraph (e) of this section, by the group practice) during the applicable reporting period. (2) Payment adjustment.*** (ii) Significant hardship exception . CMS may, on a caseby-case basis, exempt an eligible professi onal (or in the case of a group practice under paragraph (e) of this secti on, a group practice) from the application of the payment adjustment under paragraph (c)(2) of this se ction if, CMS determines, subject to annual renewal, that compliance with the requirement for being a successful electronic prescriber would result in a significant ha rdship. Eligible pr ofessionals (or, in the case of a group practice under paragraph (e) of this section, a group practice) may request consideration for a significant hardship exemption from the 2013 and 2014 payment adjustments if one of the following circumstances apply: (A) The eligible professional or group practice is located ina rural area withoutCMS-1524-P 613

high speed internet access. (B) The eligible professional or gro up practice is located in an area without sufficient available pharmacies for electronic prescribing. (C) The eligible professional or gr oup practice is unabl e to electronically prescribe due to local, State, or Federal law or regulation. (D) The eligible professional or group practice has limited prescribing activity, as defined by an eligible professional generati ng fewer than 100 prescriptions during a 6- month reporting period. (iii) Exemptions to the payment adjustment. An eligible professional (or in the case of a group practice under pa ragraph (b) of this section, a group practice) is exempt from the application of the payment adjustme nt under paragraph (c)(2) of this section if one of the following applies: (A) The eligible professional is not an MD, DO, podiatrist, nurse practitioner, or physician assistant. (B) The eligible professional does not have at least 100 cases containing an

encounter code that falls within the denominat or of the electronic prescribing measure for dates of service during the 6-month reporting pe riod specified in paragraph (f)(1) of this

section.

* * * * * (f) Requirements for indivi dual eligible professionals and group practices for the payment adjustment . In order to be considered a su ccessful electronic prescriber for the electronic prescribing payment adjustment, an individual eligible prof essional (or, in the case of a group practice under paragraph (b ) of this section, a group practice), asCMS-1524-P 614

identified by a unique TIN/NPI combination, mu st meet the criteria for being a successful electronic prescriber specifie d by CMS, in the form and manner specified in paragraph (f)(2) of this section, and during the reporting period specified in para graph (f)(1) of this

section. (1) Reporting periods . (i) For purposes of this paragraph, the reporting period for the 2013 payment adjustment is either of the following: (A) The 12-month period from January 1, 2011 through December 31, 2011. (B) The 6-month period from January 1, 2012 through June 30, 2012. (ii) For purposes of this paragra ph, the reporting period for the 2014 payment adjustment is either of the following: (A) The 12-month period from January 1, 2012 through December 31, 2012. (B) The 6-month period from January 1, 2013 through June 30, 2013. (2) Reporting mechanisms . For program years 2012 through 2014, an eligible professional (or, in the case of a group pr actice under paragraph (e ) of this section, a group practice) who wishes to participate in the Electronic Prescrib ing Incentive Program must report information on the electronic pres cribing measure identified by CMS to one of the following: (i) CMS, by no later than 2 months af ter the end of the applicable 12-month reporting period or by no later than 1 month after the end of the applicable 6-month reporting period, on the eligible professional's Medicare Pa rt B claims for covered professional services furnished by the eligib le professional during the reporting period specified in paragraph (f)(1) of this section. (ii) A qualified registry (as defined in pa ragraph (b) of this section) in the formCMS-1524-P 615

and manner and by the deadline specified by the qualified registry selected by the eligible professional. The selected qualified registry submits information, as required by CMS, for covered professional services furnishe d by the eligible pr ofessional during the reporting period specified in pa ragraph (f)(1) of this sec tion to CMS on the eligible professional's behalf. (iii) CMS by extracting clinical data using a secure data submission method, as required by CMS, from a qualified electroni c health record product (as defined in paragraph (b) of this secti on) by the deadline sp ecified by CMS for covered professional services furnished by the elig ible professional during the re porting period specified in paragraph (f)(1) of this secti on. Prior to actual data submission for a given program year and by a date specified by CMS, the eligible professional must submit a test file containing dummy clinical quality data extr acted from the qualified electronic health record product selected by the eligible pr ofessional using a secure data submission method, as required by CMS.

* * * * * Subpart J – Submission of Manufacturer's Average Sales Price Data 12. Section 414.802 is amended by revising the first sentence of the definition of

"unit" to reads as follows: § 414.802 Definitions.

*****

Unit means the product represented by th e 11-digit National Drug Code, unless otherwise specified by CMS to account for situ ations where labeling indicates that the amount of drug product represented by an NDC varies. * * *CMS-1524-P 616

* * * * * 13. Section 414.904 is amended by revising pa ragraph (d)(3) to reads as follows: § 414.904 Average sales price as the basis for payment.

* * * * * (d) * * * (3) Widely available market pr ice and average manufacturer price

. If the Inspector General finds that the average sale s price exceeds the widely available market price or the average manufacturer price by the applicable threshold percentage specified in paragraph (d)(3)(iii) or (d)(3)(iv) of this section, the Inspector General is responsible for informing the Secretary (at such times as specified by th e Secretary) and the payment amount for the drug or biological will be subst ituted subject to the following adjustments: (i) The payment amount substitution will be applied at the next ASP payment amount calculation period after the Inspector General informs the Secretary (at such times specified by the Secretary) about bil ling codes for which the ASP has exceeded the AMP by the applicable threshold percentage, and will remain in effect for one quarter after publication. (ii) Payment at 103 percent of the aver age manufacturer price for a billing code will be applied at such times when-- (A) The threshold for making price substitutions, as defined in paragraph (d)(3)(iii) of this section is met; and (B) 103 percent of the AMP is less than the 106 percent of the ASP for the quarter in which the substitution would be applied. (iii) The applicable percentage thre shold for AMP comparisons for CYs 2005CMS-1524-P 617

through 2011 is 5 percent. For CY 2012, the applicable percentage threshold for ASP comparisons is reached when-- (A) The ASP for the billing code has exceeded the AMP for the billing code by 5 percent or more in two cons ecutive quarters, or three of the last 4 quarters immediately preceding the quarter to which the pri ce substitution would be applied; and (B) The average manufacture r price for the billing code is calculated using the same set of NDCs used for the averag e sales price for the billing code. (iv) The applicable pe rcentage threshold for WAMP comparisons for CYs 2005 through 2012 is 5 percent.

* * * * *

PART 415--SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS,

SUPERVISING PHYSICIANS IN TEACH ING SETTINGS, AND RESIDENTS IN

CERTAIN SETTINGS 14. The authority citation for part 415 continues to read as follows: Authority: Secs. 1102 and 1871 of the Social Se curity Act (42 U.S.C. 1302 and 1395hh). Subpart C--Part B Carrier Payments for Phys ician Services to Beneficiaries in

Providers § 415.130 [Amended] 15. In § 415.130, paragraphs (d)(1) and (d)(2) are amended by removing the date "December 31, 2010" and adding the date "December 31, 2011" in its place.

PART 495—STANDARDS FOR THE ELECTRONIC HEALTH RECORD

TECHNOLOGY INCENTIVE PROGRAMCMS-1524-P 618

16. The authority for part 495 co ntinues to read as follows: Authority: Secs. 1102 and 1871 of the Social Security Act (42 U.S.C. 1302 and 1395hh). 17. Amend §495.8 as follows: A. In pargraph (a)(2)(ii), removing the phrase "selected by CMS electronically to CMS (or in the case of Medicaid EPs, the St ates) in the manner specified by CMS (or in the case of Medicaid EPs, the States)." and adding in its place the phrase "selected by CMS to CMS (or in the case of Medicaid EP s, the States) in the form and manner specified by CMS (or in the case of Medicaid EPs, the States)." B. Adding a new paragraph (a)(2)(v) to read as follows: § 495.8 Demonstration of meaningful use criteria. (a) * * * (2) * * * (v) Exception for Medicare EPs for PY 2012—Participation in the Physician Quality Reporting System-Medicare EHR Incentive Pilot . In order to satisfy the clinical quality measure reporting objective in §495.6( d)(10), aside from attestation, an EP participating in the Physician Quality Repor ting System may also participate in the Physician Quality Reporting System-Medicare EHR Incentive Pilot through one of the following methods: (A) Submission of data extracted fr om the EP's certified EHR technology through a Physician Quality Reporting System qualified EHR data submission vendor; or (B) Submission of data extracted from the EP's certified EHR technology, which must also be through a Physician Quality Reporting System qualified EHR.CMS-1524-P 619

* * * * *CMS-1524-P (Catalog of Federal Domestic Assistan ce Program No. 93.773, Medicare--Hospital Insurance; and Program No. 93.774, Medica re--Supplementary Medical Insurance Program)

Dated: June 16, 2011

__________________________________ Donald M. Berwick,

Administrator , Centers for Medicare & Medicaid Services

.

Approved: June 24, 2011

__________________________________ Kathleen Sebelius, Secretary , Department of Health and Human Services

.

BILLING CODE 4120-01-PCMS-1524-P 621

[FR Doc. 2011-16972 Filed 07/01/2011 at 4:15 pm; Publication Date: 07/19/2011]