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 changes to the physician fee schedule and 

other Medicare Part B payment policies to ensure that our payment systems are updated 

to reflect changes in medical practice and the relative value of services. It also addresses, 

implements or discusses certain 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 addition, 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 ambulatory surgical center payment system and the 

ambulance, clinical laboratory, and durable medical equipment prosthetics orthotics and 

supplies (DMEPOS) fee schedules; and other Part B related issues. (See the Table of 

Contents for a listing of the specific issues addressed in this 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 August 30, 2011.

ADDRESSES: In commenting, please refer to file code CMS-1524-P. Because of staff 

and resource limitations, we cannot accept comments by facsimile (FAX) transmission. 

 You may submit comments in one of four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit electronic comments on this regulation to 

http://www.regulations.gov. Follow the instructions for "submitting a comment." 

 2. By regular mail. You may mail written comments to the following address 

ONLY: 

 Centers for Medicare & Medicaid Services, 

Department of Health and Human Services, 

Attention: CMS-1524-P, 

P.O. Box 8013, 

Baltimore, MD 21244-8013. 

Please allow sufficient time for mailed comments to be received before the close 

of the comment period. 

3. By express or overnight mail. You may send written comments to the 

following address ONLY: 

 Centers for Medicare & Medicaid Services, 

 Department of Health and Human Services, 

 Attention: CMS-1524-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 deliver (by hand or courier) your 

written comments before the close of the comment period to either of the following 

addresses: 

a. For delivery in Washington, DC-- 

 Centers for Medicare & Medicaid Services, 

Department of Health and Human Services, 

Room 445-G, Hubert H. Humphrey Building, 

 200 Independence Avenue, SW., 

 Washington, DC 20201 

(Because access to the interior of the Hubert H. Humphrey Building is not readily 

available to persons without Federal government identification, commenters are 

encouraged to leave their comments in the CMS drop slots located in the main lobby of 

the building. A stamp-in clock is available for persons wishing to retain a proof of filing 

by stamping in and retaining an extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD-- 

 Centers for Medicare & Medicaid Services, 

Department of Health and Human Services, 

7500 Security Boulevard, 

Baltimore, MD 21244-1850. 
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 indicated as appropriate for hand or courier 

delivery may be delayed and received after the comment period. 

FOR FURTHER INFORMATION CONTACT: 

Ryan Howe, (410) 786–3355, for issues related to the physician fee schedule 

practice expense methodology, direct practice expense 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 related the multiple procedure payment 

reduction and pathology services. 

Sara Vitolo, (410) 786–5714, for issues related to malpractice RVUs. 

Michael Moore, (410) 786-6830, for issues related to geographic practice cost 

indices. 

Elizabeth Truong, (410) 786–6005, for issues related to the sustainable growth 

rate, or the anesthesia or physician fee schedule conversion factors. 

Bonny Dahm, (410)786-4006, for issues related to payment for covered outpatient 

drugs and biologicals. 

Claudia Lamm, (410)786-3421, for issues related to the chiropractic services 

demonstration budget neutrality issue. 

Jamie Hermansen, (410) 786-2064, or Stephanie Frilling, (410) 786-4507 for 

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

Christine Estella, (410) 786-0485, for issues related to the physician quality 

reporting system, incentives for Electronic Prescribing (eRx) and Physician Compare. 

Gift Tee, (410) 786-9316, for issues related to the Physician Resource Use 

Feedback Program and physician value modifier. 

Stephanie Frilling, (410) 786-4507 for issues related to the 3-day Payment 

Window. 

Pam West, (410) 786-2302, for issues related to the technical corrections. 

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 viewing by the public, including any personally 

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

all comments received before the close of the comment period on the regulations.gov 

Web site (www.regulations.gov) as soon as possible after they have been received: . 

Follow the search instructions on that Web site to view public comments. 

 Comments received timely will also be available for public inspection as they are 

received, generally beginning approximately 3 weeks after publication of a document, at 

the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security 

Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 

8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 

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

Table of Contents 

To assist readers in referencing sections contained in this preamble, we are 

providing a table of contents. Some of the issues discussed in this preamble affect the 

payment policies, but do not require changes to the regulations in the Code of Federal 

Regulations (CFR). Information on the regulations impact appears throughout the 

preamble and, therefore, is not discussed exclusively in section VII. of this proposed rule. 

I. Background 

 A. Development of the Relative Value System 

 1. Work RVUs 

 2. Practice Expense Relative Value Units (PE RVUs) 

 3. Resource-Based Malpractice RVUs 

 4. Refinements to the RVUs 

 5. Application of Budget Neutrality to Adjustments of RVUs 

 B. Components of the Fee Schedule Payment Amounts 

 C. Most Recent Changes to Fee Schedule 

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

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

 1. Overview 

 2. Practice Expense Methodology 

 a. Direct Practice Expense 

 b. Indirect Practice Expense per Hour Data 

 c. Allocation of PE to Services 

 (1) Direct Costs 

 (2) Indirect Costs 

 d. Facility and Nonfacility Costs 

 e. Services with Technical Components (TCs) and Professional 

 Components (PCs) 

 f. PE RVU Methodology 

 (1) Setup File 

 (2) Calculate the Direct Cost PE RVUs 

 (3) Create the Indirect Cost PE RVUs 

 (4) Calculate the Final PE RVUs 

 (5) Setup File Information 

 (6) Equipment Cost Per Minute 

 3. Changes to Direct PE Inputs 

 a. Inverted Equipment Minutes 

 b. Labor and Supply Input Duplication 

 c. AMA RUC Recommendations for Moderation Sedation Direct PE Inputs 

 d. Updates to Price and Useful Life for Existing Direct Inputs 

 4. Development of Code-Specific PE RVUs 
CMS-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 Validating the RVUs of Potentially Misvalued 

 Services under the PFS 

 a. Background 

 b. Progress in Identifying and Reviewing Potentially Misvalued Codes 

 c. Validating RVUs of Potentially Misvalued Codes 

 3. Consolidating Reviews of Potentially Misvalued Codes 

 4. 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 Expense 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 Codes 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 Policy 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 Analysis and Revisions for PE GPCIs 

 (A) General Analysis for the CY 2012 PE GPCIs 

 (B) Analysis of ACS Rental Data 

 (C) Employee Wage Analysis 
CMS-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 Billing and Payment Policies

 B. Requests for Adding Services to the List of Medicare Telehealth Services 

 C. Submitted Requests for Addition to the List of Telehealth Services for CY 2012 

 1. Smoking Cessation Services 

 2. Critical Care Services 

 3. Domiciliary or Rest Home Evaluation and Management Services 

 4. Genetic Counseling Services 

 5. Online Evaluation and Management Services 

 6. Data Collection Services 

 7. Audiology Services 

 D. The Process for Adding HCPCS Codes as Medicare Telehealth Services 

 E. Telehealth Consultations in Emergency Departments 

IV. Other Provisions of the Proposed Regulation 

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

 1. Widely Available Market Price (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 for 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 Payment for Technical Component of Certain 

 Physician Pathology Services 
CMS-1524-P 9 

 1. Background and Statutory Authority 

 2. Proposed Revisions to Payment for TC of Certain Physician Pathology 

 Services 

 E. Section 4103 of the Affordable Care Act: Medicare Coverage and Payment of 

 the Annual Wellness Visit Providing a Personalized Prevention Plan Covered 

 Under Medicare Part B. 

 1. Incorporation of a Health Risk Assessment as Part of the Annual Wellness 

 Visit 

 a. Background and Statutory Authority – Medicare Part B Coverage of an 

 Annual Wellness Visit Providing Personalized Prevention Plan Services 

 b. Implementation 

 (1) Definition of a "Health Risk Assessment" 

 (2) Proposed Changes to the Definitions 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 Reporting Mechanism 

 - Individual Eligible Professionals 

 (B) 2012 Proposed Qualification Requirements for Registries 

 (3) EHR-based Reporting 

 (A) Direct EHRs 

 (i) Proposed Requirements for the Direct 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 Requirements for EHR Direct and Data 

 Submission Vendors and Their Products for the 2013 Physician Quality 

 Reporting System 
CMS-1524-P 10 

 e Incentive Payments for the 2012 Physician Quality Reporting System 

 (1) Proposed Criteria for Satisfactory Reporting of Individual Quality Measures 

 for Individual Eligible Professionals via Claims 

 (2) Proposed 2012 Criteria for Satisfactory Reporting of Individual Quality 

 Measures for Individual Eligible Professionals via Registry 

 (3) Proposed Criteria for Satisfactory Reporting of Individual Quality Measures 

 for Individual Eligible Professionals via EHR 

 (4) Proposed Criteria for Satisfactory Reporting of Measures Groups via 

Claims – Individual Eligible Professionals 

 (5) Proposed 2012 Criteria for Satisfactory Reporting of Measures Groups via 

 Registry – Individual Eligible Professionals 

 (6) Proposed 2012 Criteria for Satisfactory Reporting on Physician Quality 

 Reporting System Measures by Group Practices Under the GPRO 

 f. 2012 Physician Quality Reporting System Measures 

 (1) Statutory Requirements for the Selection of 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, Registry, and/or EHR-based Reporting 

 (B) Proposed 2012 Physician Quality Reporting System Individual 

 Measures for Claims and Registry Reporting 

 (C) Proposed 2012 Measures Available for EHR-based Reporting 

 (4) 2012 Physician Quality Reporting System Measures Groups 

 (5) Proposed 2012 Physician Quality Reporting System Quality Measures for 

 Group Practices Selected to Participate in the GPRO (GPRO) 

 g. Maintenance of Certification Program Incentive 

 h. Feedback Reports 

 i. Informal Review 

 j. Future Payment Adjustments for the Physician Quality Reporting System 

 2. Incentives and Payment Adjustments for Electronic Prescribing (eRx) – The 

 Electronic Prescribing Incentive Program 

 a. Program Background and Statutory Authority 

 b. Eligibility 

 (1) Individual Eligible Professionals 

 (A) Definition of Eligible Professional 

 (2) Group practices 

 (A) Proposed Definition of "Group Practice" 

 (B) Proposed Process to Participate in the eRx Incentive Program – 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 Determining Successful Electronic Prescribers 

 (1) Reporting the Electronic Prescribing Quality Measure 

 (2) The Reporting Denominator for the Electronic Prescribing Measure 
CMS-1524-P 11 

 (3) The Numerator for the Electronic Prescribing Measure 

 e. Required Functionalities and Part D Electronic Prescribing Standards 

 (1) "Qualified" Electronic 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 Being a Successful Electronic for the 2012 

 and 2013 eRx Incentives – Individual Eligible Professionals 

 (3) Proposed Criteria for Being a Successful Electronic Prescriber 2012 and 2013 

 eRx Incentives – Group Practices 

 (4) No Double Payments 

 h. The 2013 and 2014 Electronic Prescribing Payment Adjustments 

 (1) 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 Prescribe due to Local, State, or Federal Law 

 or Regulation 

 (ii) Eligible Professionals Who Prescribe Fewer Than 100 Prescriptions During 

 a 6-Month, Payment Adjustment Reporting Period 

 (B) Process for Submitting Significant Hardship Exemptions – Individual 

 Eligible Professionals 

 G Physician Compare Website 

 1. Background and Statutory Authority 

 2. Proposed Plans 

 H. Medicare EHR Incentive Program for 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 Incentive 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 Phase 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 Feedback 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 Performance 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 Physicians in Rural Areas and Other Underserved 

 Communities 

 J. Bundling of Payments for Services Provided to Outpatients Who Later Are 

 Admitted as Inpatients: 3-Day Payment Window Policy and the Impact on 

 Wholly Owned or Wholly Operated Physician Practices. 

 1. Introduction 

 2. Background 

 3. Applicability of the 3-day Payment Window Policy for Services Furnished in 

 Physician Practices 

 a. Payment Methodology 

 b. Identification of Wholly Owned or Wholly Operated Physician Practices 

 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 Orders 
CMS-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 System (formerly the Physician Quality 

 Reporting Initiative (PQRI)) 

 C. Electronic Prescribing (eRx) Incentive Program 

 D. Proposed Changes to the Medicare Electronic Health Record (EHR) Incentive 

 Program for Eligible Professionals 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 Potentially Misvalued Codes on an Annual Basis 

 Under the PFS 

 E. Effect of Proposed Revisions to Malpractice RUVs 

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

 G. Effects of Proposed Changes to Medicare Telehealth Services 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 Technical Component of Certain Physician 

 Pathology Services 

 4. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a 

 Personalized Prevention Plan: Incorporation of a Health Risk Assessment as Part 

 of the Annual Wellness Visit. 

 5. Physician Payment, Efficiency, and Quality Improvements - Physician Quality 

 Reporting System 

 6. Incentives for Electronic Prescribing (eRx) - The Electronic Prescribing 

 Incentive Program 

 7. Physician Compare 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 Payment 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 the 
CMS-1524-P 14 

Internet on the CMS Web Site 

Regulations Text 

Acronyms 

 In addition, because of the many organizations and terms to which we refer by 

acronym in this 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 Freestanding Radiation Oncology Centers 

AFS Ambulance Fee Schedule 
CMS-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 Association Drug Evaluations 

AMI Acute Myocardial Infarction 

AMP Average Manufacturer Price 

AO Accreditation organization 

AOA American Osteopathic Association 

APA American Psychological Association 

APC Administrative Procedures Act 

APTA American Physical Therapy Association 

ARRA American Recovery and Reinvestment Act (Pub. L. 111-5) 

ASC Ambulatory surgical center 

ASP Average Sales Price 

ASPE Assistant Secretary of Planning and Evaluation (ASPE) 

ASRT American Society of Radiologic Technologists 

ASTRO American Society for Therapeutic Radiology and Oncology 

ATA American Telemedicine Association 

AWP Average wholesale price 

AWV Annual Wellness Visit 

BBA Balanced Budget Act of 1997 (Pub. L. 105-33) 
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 SCHIP Benefits Improvement Protection 

 Act of 2000 (Pub. L. 106-554) 

BLS Bureau of Labor and Statistics 

BMD Bone mineral density 

BMI Body mass index 

BN Budget neutrality 

BPM Benefit Policy Manual 

CABG Coronary artery bypass graft 

CAD Coronary artery disease 

CAH Critical Access Hospital 

CAHEA Committee on Allied Health Education and Accreditation 

CAP Competitive acquisition program 

CARE Continuity Assessment Record and Evaluation 

CBIC Competitive Bidding Implementation Contractor 

CBP Competitive Bidding Program 

CBSA Core-Based Statistical Area 

CDC Centers for Disease Control and Prevention 

CEM Cardiac Event Monitoring 

CF Conversion Factor 

CFC Conditions for Coverage 

CFR Code of Federal Regulations 
CMS-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 obstructive pulmonary disease 

CORF Comprehensive Outpatient Rehabilitation Facility 

COS Cost of service 

CPEP Clinical Practice Expert Panel 

CPI Consumer Price Index 

CPI-U Consumer price index for urban consumers 

CPR Cardiopulmonary resuscitation 

CPT [Physicians] Current Procedural Terminology (4th Edition, 2002, 

 copyrighted by the American Medical Association) 

CQM Clinical quality measures 

CR Cardiac rehabilitation 

CRF Chronic Renal Failure 

CRNA Certified registered nurse anesthetist 
CMS-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, prosthetics, orthotics, and supplies 

DOJ Department of Justice 

DOQ Doctors Office Quality 

DOS Date of service 

DOTPA Development of Outpatient Therapy Alternatives 

DRA Deficit Reduction Act of 2005 (Pub. L. 109-171) 

DSMT Diabetes Self-Management Training Services 

DXA CPT Dual energy X-ray absorptiometry 

E/M Evaluation and Management Medicare Services 
CMS-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 Register 
CMS-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 Professionals Advisory Committee 

HCPCS Healthcare Common Procedure Coding System 

HCRIS Healthcare Cost Report Information System 

HDL/LDL High-density lipoprotein/Low-density lipoprotein 
CMS-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 Portability and Accountability Act of 1996 

 (Pub. L. 104-191) 

HIT Health information technology 

HITECH Health Information Technology for Economic and Clinical Health 

 Act (Title IV of Division B of the Recovery Act, together with 

 Title XIII of Division A of the Recovery Act) 

HITSP Healthcare Information Technology Standards Panel 

HIV Human immunodeficiency virus 

HMO Health Maintenance Organization 

HOPD Hospital outpatient department 

HPSA Health Professional Shortage Area 

HRA Health Risk Assessment 

HRSA Health Resources Services Administration (HHS) 

HSIP HPSA Surgical Incentive Program 

HUD Department of Housing and Urban Development 

HUD Housing and Urban Development 

IACS Individuals Access to CMS Systems 
CMS-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 time 
CMS-1524-P 23 

JRCERT Joint Review Committee on Education in Radiologic Technology 

KDE Kidney Disease Education 

LCD Local coverage determination 

LOPS loss of protective sensation 

LUGPA Large Urology Group Practice Association 

M.D. Doctor of Medicine 

MA Medicare Advantage program 

MAC Medicare Administrative Contractor 

MA-PD Medicare Advantage-Prescription Drug Plans 

MAV Measure Applicability Validation 

MCMP Medicare Care Management Performance 

MCP Monthly Capitation Payment 

MDRD Modification of Diet in Renal Disease 

MedCAC Medicare Evidence Development and Coverage Advisory Committee 

 (formerly the Medicare Coverage Advisory Committee (MCAC)) 

MedPAC Medicare Payment Advisory Commission 

MEI Medicare Economic Index 

MGMA Medical Group Management Association 

MIEA-TRHCA Medicare Improvements and Extension Act of 2006 (that is, 

 Division B of the Tax Relief and Health Care Act of 2006 

 (TRHCA) (Pub. L. 109-432) 

MIPPA Medicare Improvements for Patients and Providers Act of 2008 

 (Pub. L. 110-275) 
CMS-1524-P 24 

MMA Medicare Prescription Drug, Improvement, and Modernization Act of 

2003 (Pub. L. 108-173) 

MMEA Medicare and Medicaid Extenders Act of 2010 (Pub. L. 111–309) 

MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 

(Pub. L. 110-173) 

MNT Medical Nutrition Therapy 

MOC Maintenance of certification 

MP Malpractice 

MPC Multispecialty Points of Comparison 

MPPR Multiple Procedure Payment Reduction Policy 

MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539) 

MRA Magnetic Resonance Angiography 

MRI Magnetic Resonance Imaging 

MSA Metropolitan Statistical Area 

MSP Medicare Secondary Payer 

MUE Medically Unlikely Edit 

NAICS North American Industry Classification System 

NBRC National Board for Respiratory Care 

NCCI National Correct Coding Initiative 

NCD National Coverage Determination 

NCQA National Committee for Quality Assurance 

NCQDIS National Coalition of Quality Diagnostic Imaging Services 

NCQDIS National Coalition of Quality Diagnostic Imaging Services 
CMS-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 Quality Improvement Program 

NTSB National Transportation Safety Board 

NUBC National Uniform Billing Committee 

OACT [CMS] Office of the Actuary 

OBRA Omnibus Budget Reconciliation Act 

OCR Optical Character Recognition 

ODF Open door forum 

OES Occupational Employment Statistics 

OGPE Oxygen generating portable equipment 

OIG Office of the Inspector General 

OMB Office of Management and Budget 

ONC [HHS] Office of the National Coordinator for Health IT 

OPPS Outpatient prospective payment system 
CMS-1524-P 26 

OSCAR Online Survey and Certification and Reporting 

PA Physician Assistant 

PACE Program of All-inclusive Care for the Elderly 

PACMBPRA Preservation of Access to Care for Medicare Beneficiaries and 

 Pension Relief Act of 2010 (Pub. L. 111-192) 

PAT Performance assessment tool 

PC Professional Components 

PCI Percutaneous coronary intervention 

PCIP Primary Care Incentive Payment Program 

PDP Prescription drug plan 

PE Practice Expense 

PE/HR Practice expense per hour 

PEAC Practice Expense Advisory Committee 

PECOS Provider Enrollment Chain and Ownership System 

PERC Practice Expense Review Committee 

PFS Physician Fee Schedule 

PGP [Medicare] Physician Group Practice 

PHI Protected health information 

PHP Partial hospitalization program 

PIM [Medicare] Program Integrity Manual 

PLI Professional liability insurance 

POA Present on admission 

POC Plan of care 
CMS-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 Prevention Plan Services 

PPS Prospective payment system 

PPTA Plasma Protein Therapeutics Association 

PQRI Physician Quality Reporting Initiative 

PR Pulmonary rehabilitation 

PRA Paperwork Reduction Act 

PSA Physician scarcity areas 

PT Physical therapy 

PTA Physical therapy assistant 

PTCA Percutaneous transluminal coronary angioplasty 

PVBP Physician and Other Health Professional Value-Based Purchasing 

 Workgroup 

QDCs (Physician Quality Reporting System) Quality Data Codes 

RA Radiology assistant 

RAC Medicare Recovery Audit Contractor 

RBMA Radiology Business Management Association 

RFA Regulatory Flexibility Act 

RHC Rural Health Clinic 

RHQDAPU Reporting Hospital Quality Data Annual Payment Update Program 
CMS-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 Services 
CMS-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 Pharmacopoeia-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 the Internet on the CMS Web Site 

 In the past, the Addenda referred to throughout the preamble of our annual PFS 

proposed and final rules with comment period were included in the printed Federal 

Register. However, beginning with the CY 2012 PFS proposed rule, the PFS Addenda 

will no longer appear in the Federal Register. Instead these Addenda to the annual 

proposed and final rules with comment period will be available only through the Internet. 
CMS-1524-P 30 

The PFS Addenda along with other supporting documents 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 Notices" 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 availability of the Addenda referenced in this 

proposed rule, we refer readers to section VIII. of this proposed rule. Readers who 

experience any problems accessing any of the Addenda 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 descriptions are copyright 2010 

American Medical Association. All Rights Reserved. CPT is a registered trademark of 

the American Medical Association (AMA). Applicable Federal Acquisition Regulations 

(FAR) and Defense Federal Acquisition Regulations (DFAR) apply. 

I. Background 

 Since January 1, 1992, Medicare has paid for physicians' services under section 

1848 of the Social Security Act (the Act), "Payment for Physicians' Services." The Act 

requires that payments under the physician fee schedule (PFS) are based on national 

uniform relative value units (RVUs) based on the relative resources used in furnishing a 

service. Section 1848(c) of the Act requires that national RVUs be established for 

physician work, practice expense (PE), and malpractice expense. Before the 
CMS-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, certified nurse-midwives, psychologists, or social 

workers) that are permitted to furnish and bill Medicare under the PFS for their services. 

A. Development of the Relative Value System

1. Work RVUs 

The concepts and methodology underlying the PFS were enacted as part of the 

Omnibus Budget Reconciliation Act (OBRA) of 1989 (Pub. L. 101-239), and 

OBRA 1990, (Pub. L. 101-508). The final rule, published on November 25, 1991 

(56 FR 59502), set forth the fee schedule for payment for physicians' services beginning 

January 1, 1992. Initially, only the physician work RVUs were resource-based, and the 

PE and malpractice RVUs were based on average allowable charges. 

The physician work RVUs established for the implementation of the fee schedule 

in January 1992 was developed with extensive input from the physician community. A 

research team at the Harvard School of Public Health developed the original physician 

work RVUs for most codes in a cooperative agreement with the Department of Health 

and Human Services (DHHS). In constructing the code-specific vignettes for the original 

physician work RVUs, Harvard worked with panels of experts, both inside and outside 

the Federal government, and obtained input from numerous physician specialty groups. 

Section 1848(b)(2)(B) of the Act specifies that the RVUs for anesthesia services 

are based on RVUs from a uniform relative value guide, with appropriate adjustment of 
CMS-1524-P 32 

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

services are consistent with those for other services of comparable value. We established 

a separate CF for anesthesia services, and we continue to utilize time units as a factor in 

determining payment for these services. As a result, there is a separate payment 

methodology for anesthesia services. 

 We establish physician work RVUs for new and revised codes based, in part, on 

our review of recommendations received from the American Medical Association's 

(AMA's) Specialty Society Relative Value Update Committee (RUC). 

2. Practice Expense Relative Value Units (PE RVUs) 

 Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 103-432), 

enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii) of the Act and required 

us to develop resource-based PE RVUs for each physicians service beginning in 1998. 

We were to consider general categories of expenses (such as office rent and wages of 

personnel, but excluding malpractice expenses) comprising PEs. 

 Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), 

amended section 1848(c)(2)(C)(ii) of the Act to delay implementation of the 

resource-based PE RVU system until January 1, 1999. In addition, section 4505(b) of the 

BBA provided for a 4-year transition period from charge-based PE RVUs to 

resource-based RVUs. 

We established the resource-based PE RVUs for each physician's service in a 

final rule, 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 nonphysician health professionals (for example, 

registered nurses (RNs)) nominated by physician specialty societies and other groups. 

The CPEP panels identified the direct inputs required for each physician's service in both 

the office setting and out-of-office setting. We have since refined and revised these 

inputs based on recommendations from the AMA RUC. The AMA's SMS data provided 

aggregate specialty-specific information on hours worked and PEs. 

Separate PE RVUs are established for procedures that can be performed in both a 

nonfacility setting, such as a physician's office, and a facility setting, such as a hospital 

outpatient department (HOPD). The difference between the facility and nonfacility 

RVUs reflects the fact that a facility typically receives separate payment from Medicare 

for its costs of providing the service, apart from payment under the PFS. The nonfacility 

RVUs reflect all of the direct and indirect PEs of providing a particular service. 

Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) 

(Pub. L. 106-113) directed the Secretary of Health and Human Services (the Secretary) to 

establish a process under which we accept and use, to the maximum extent practicable 

and consistent with sound data practices, data collected or developed by entities and 

organizations to supplement the data we normally collect in determining the PE 

component. On May 3, 2000, we published the interim final rule (65 FR 25664) that set 

forth the criteria for the submission of these supplemental PE survey data. The criteria 

were modified in response to comments received, and published in the Federal Register
CMS-1524-P 34 

(65 FR 65376) as part of a November 1, 2000 final rule. The PFS final rules published in 

2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended the period during 

which we would accept these supplemental data through March 1, 2005. 

In the calendar year (CY) 2007 PFS final rule with comment period 

(71 FR 69624), we revised the methodology for calculating direct PE RVUs from the topdown to the bottom-up methodology beginning in CY 2007 and provided for a 4-year 

transition for the new PE RVUs under this new methodology. This transition ended in 

CY 2010 and direct PE RVUs are calculated in CY 2012 using this methodology, unless 

otherwise noted. 

In the CY 2010 PFS final rule with comment period (74 FR 61749), we updated 

the PE/hour (PE/HR) data that are used in the calculation of PE RVUs for most 

specialties. For this update, we used the Physician Practice Information Survey (PPIS) 

conducted by the AMA. The PPIS is a multispecialty, nationally representative, PE 

survey of both physicians and nonphysician practitioners (NPPs) using a survey 

instrument and methods highly consistent with those of the SMS and the supplemental 

surveys used prior to CY 2010. We note that in CY 2010, for oncology, clinical 

laboratories, and independent diagnostic testing facilities (IDTFs), we continued to use 

the supplemental survey data to determine PE/HR values (74 FR 61752). Beginning in 

CY 2010, we provided for a 4-year transition for the new PE RVUs using the updated 

PE/HR data. In CY 2012, the third year of the transition, PE RVUs are calculated based 

on a 75/25 blend of the new PE RVUs developed using the PPIS data and the previous 

PE RVUs based on the SMS and supplemental survey data. 

3. Resource-Based Malpractice RVUs 
CMS-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 and physician-owned insurers from all the 

States, the District of Columbia, and Puerto Rico. In the CY 2010 PFS final rule with 

comment period (74 FR 61758), we implemented the Second Five-Year Review and 

update of the malpractice RVUs. In the CY 2011 PFS final rule with comment period, 

we described our approach for determining malpractice RVUs for new or revised codes 

that become effective before the next Five Year Review and update (75 FR 73208). 

Accordingly, to develop the CY 2012 malpractice RVUs for new or revised codes we 

crosswalked the new or revised code to the malpractice RVUs of a similar source code 

and adjusted for differences in work (or, if greater, the clinical labor portion of the fully 

implemented PE RVUs) between the source code and the new or revised code. 

4. Refinements to the RVUs 

Section 1848(c)(2)(B)(i) of the Act requires that we review all RVUs no less often 

than every 5 years. The First Five-Year Review of Work RVUs was published on 

November 22, 1996 (61 FR 59489) and was effective in 1997. The Second Five-Year 

Review of Work RVUs was published in the CY 2002 PFS final rule with comment 

period (66 FR 55246) and was effective in 2002. The Third Five-Year Review of Work 

RVUs was published in the CY 2007 PFS final rule with comment period (71 FR 69624) 

and was effective on January 1, 2007. The Fourth Five-Year Review of Work RVUs was 

initiated in the CY 2010 PFS final rule with comment period where we solicited 
CMS-1524-P 36 

candidate codes from the public for this review (74 FR 61941). Proposed revisions to 

work RVUs and corresponding changes to PE and malpractice RVUs affecting payment 

for physicians' services for the Fourth Five-Year Review of Work RVUs were published 

in a separate 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, effective for services furnished beginning 

January 1, 2012. 

In 1999, the AMA RUC established the Practice Expense Advisory Committee 

(PEAC) for the purpose of refining the direct PE inputs. Through March 2004, the PEAC 

provided recommendations to CMS for over 7,600 codes (all but a few hundred of the 

codes currently listed in the AMA's Current Procedural Terminology (CPT) codes). As 

part of the CY 2007 PFS final rule with comment period (71 FR 69624), we implemented 

a new bottom-up methodology for determining resource-based PE RVUs and transitioned 

the new methodology over a 4-year period. A comprehensive review of PE was 

undertaken prior to the 4-year transition period for the new PE methodology from the 

top-down to the bottom-up methodology, and this transition was completed in CY 2010. 

In CY 2010, we also incorporated the new PPIS data to update the specialty-specific 

PE/HR data used to develop PE RVUs, adopting a 4-year transition to PE RVUs 

developed using the PPIS data. 

In the CY 2005 PFS final rule with comment period (69 FR 66236), we 

implemented the First Five-Year Review of the malpractice RVUs (69 FR 66263). Minor 

modifications to the methodology were addressed in the CY 2006 PFS final rule with 

comment period (70 FR 70153). The Second Five-Year Review and update of 
CMS-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 number of potentially misvalued codes on an 

annual basis based on various identification screens. This annual review of work and PE 

RVUs for potentially misvalued codes was supplemented by section 3134 of the 

Affordable Care Act, which requires the agency to periodically identify, review and 

adjust values for potentially misvalued codes with an emphasis on the following 

categories: (1) codes and families of codes for which there has been the fastest growth; 

(2) codes or families of codes that have experienced substantial changes in practice 

expenses; (3) codes that are recently established for new technologies or services; (4) 

multiple codes that are frequently billed in conjunction with furnishing a single service; 

(5) codes with low relative values, particularly those that are often billed multiple times 

for a single treatment; (6) codes which have not been subject to review since the 

implementation of the RBRVS (the so-called 'Harvard valued codes'); and (7) other codes 

determined to be appropriate by the Secretary. 

5. Application of Budget Neutrality to Adjustments of RVUs 

 Budget neutrality typically requires that expenditures not increase or decrease as a 

result of changes or revisions to policy. However, section 1848(c)(2)(B)(ii)(II) of the Act 

requires adjustment only if the change in expenditures resulting from the annual revisions 

to the PFS exceeds a threshold amount. Specifically, adjustments in RVUs for a year 

may not cause total PFS payments to differ by more than $20 million from what they 

would have been if the adjustments were not made. In accordance with section 
CMS-1524-P 38 

1848(c)(2)(B)(ii)(II) of the Act, if revisions to the RVUs cause expenditures to change by 

more than $20 million, we make adjustments to ensure that expenditures do not increase 

or decrease by more than $20 million. 

B. Components of the Fee Schedule Payment Amounts

To calculate the payment for every physician's service, the components of the fee 

schedule (physician work, PE, and malpractice RVUs) are adjusted by a geographic 

practice cost index (GPCI). The GPCIs reflect the relative costs of physician work, PE, 

and malpractice in an area compared to the national average costs for each component. 

RVUs are converted to dollar amounts through the application of a CF, which is 

calculated by CMS' Office of the Actuary (OACT). 

The formula for calculating the Medicare fee schedule payment amount for a 

given service and fee schedule area can be expressed as: 

Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU 

Malpractice x GPCI Malpractice)] x CF. 

C. Most Recent Changes to the Fee Schedule

The CY 2011 PFS final rule with comment period (75 FR 73170) implemented 

changes to the PFS and other Medicare Part B payment policies. It also finalized many 

of the CY 2010 interim RVUs and implemented interim RVUs for new and revised codes 

for CY 2011 to ensure that our payment systems are updated to reflect changes in 

medical practice and the relative values of services. The CY 2011 PFS final rule with 

comment period also addressed other policies, as well as certain provisions of the 

Affordable Care Act and the Medicare Improvements for Patients and Providers Act of 

2008 (MIPPA). 
CMS-1524-P 39 

In the CY 2011 PFS final rule with comment period, we announced the following 

for CY 2011: the total PFS update of -10.1 percent; the initial estimate for the 

sustainable growth rate of -13.4 percent; and the CF of $25.5217. These figures were 

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

CY 2011 PFS final rule was issued. 

On December 30, 2010, we published a correction notice (76 FR 1670) to correct 

several technical and typographical errors that occurred in the CY 2011 PFS final rule 

with comment period. This correction notice announced a revised CF for CY 2011 of 

$25.4999. 

On November 30, 2010, the Physician Payment and Therapy Relief Act of 2010 

(PPATRA) (Pub. L. 111-286) was signed into law. Section 3 of Pub. L. 111–286 

modified the policy finalized in the CY 2011 PFS final rule with comment period 

(75 FR 73241), effective January 1, 2011, regarding the payment reduction applied to 

multiple therapy services provided to the same patient on the same day in the office 

setting by one provider and paid for under the PFS (hereinafter, the therapy multiple 

procedure payment reduction (MPPR)). The PPATRA provision changed the therapy 

MPPR percentage from 25 to 20 percent of the PE component of payment for the second 

and subsequent "always" therapy services furnished in the office setting on the same day 

to the same patient by one provider, and excepted the payment reductions associated with 

the therapy MPPR from budget neutrality under the PFS. 

On December 15, 2010, the Medicare and Medicaid Extenders Act of 2010 

(MMEA) (Pub. L. 111–309) was signed into law. Section 101 of Pub. L. 111–309 

provided for a 1-year zero percent update for the CY 2011 PFS. As a result of the 
CMS-1524-P 40 

MMEA, the CY 2011 PFS conversion factor 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 general categories of physician and practitioner expenses, 

such as office rent and personnel wages but excluding malpractice expenses, as 

specified in section 1848(c)(1)(B) of the Act. Section 121 of the Social Security 

Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, required 

us to develop a methodology for a resource-based system for determining PE 

RVUs for each physician's service. We develop PE RVUs by looking at the direct 

and indirect physician practice resources involved in furnishing each service. 

Direct expense categories include clinical labor, medical supplies, and medical 

equipment. Indirect expenses include administrative labor, office expense, and all 

other expenses. The sections that follow provide more detailed information about 

the methodology for translating the resources involved in furnishing each service 

into service-specific PE RVUs. In addition, we note that section 

1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in RVUs for a year may 

not cause total PFS payments to differ by more than $20 million from what they 

would have been if the adjustments were not made. Therefore, if revisions to the 

RVUs cause expenditures to change by more than $20 million, we make 

adjustments to ensure that expenditures do not increase or decrease by more than 

$20 million. We refer readers to the CY 2010 PFS final rule with comment 
CMS-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 clinical staff, equipment, and supplies) typically required to 

provide each service. The costs of the resources are calculated using the refined direct 

PE inputs assigned to each CPT code in our PE database, which are based on our review 

of recommendations received from the AMA RUC. For a detailed explanation of the 

bottom-up direct PE methodology, including examples, we refer readers to the Five-Year 

Review of Work Relative Value Units Under the PFS and Proposed Changes to the 

Practice Expense Methodology proposed notice (71 FR 37242) and the CY 2007 PFS 

final rule with comment period (71 FR 69629). 

b. Indirect Practice Expense per Hour Data 

 We use survey data on indirect practice expenses incurred per hour worked 

(PE/HR) in developing the indirect portion of the PE RVUs. Prior to CY 2010, we 

primarily used the practice expense per hour (PE/HR) by specialty that was obtained 

from the AMA's Socioeconomic Monitoring Surveys (SMS). The AMA administered a 

new survey in CY 2007 and CY 2008, the Physician Practice Expense Information 

Survey (PPIS), which was expanded (relative to the SMS) to include nonphysician 

practitioners (NPPs) paid under the PFS. 

 The PPIS is a multispecialty, nationally representative, PE survey of both 

physicians and NPPs using a consistent survey instrument and methods highly consistent 
CMS-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. Therefore, we used the PPIS data to update the 

PE/HR data for almost all of the Medicare-recognized specialties that participated in the 

survey for the CY 2010 PFS. 

 When we changed over to the PPIS data beginning in CY 2010, we did not 

change the PE RVU methodology itself or the manner in which the PE/HR data are used 

in that methodology. We only updated the PE/HR data based on the new survey. 

Furthermore, as we explained in the CY 2010 PFS final rule with comment period (74 FR 

61751), because of the magnitude of payment reductions for some specialties resulting 

from the use of the PPIS data, we finalized a 4-year transition (75 percent old/25 percent 

new for CY 2010, 50 percent old /50 percent new for CY 2011, 25 percent old 

/75 percent new for CY 2012, and 100 percent new for CY 2013) from the previous PE 

RVUs to the PE RVUs developed using the new PPIS data. 

 Section 303 of the Medicare Prescription Drug, Improvement, and Modernization 

Act of 2003 (MMA) (Pub. L. 108-173) added section 1848(c)(2)(H)(i) of the Act, which 

requires us to use the medical oncology supplemental survey data submitted in 2003 for 

oncology drug administration services. Therefore, the PE/HR for medical oncology, 

hematology, and hematology/oncology reflects the continued use of these supplemental 

survey data. 
CMS-1524-P 43 

 We do not use the PPIS data for reproductive endocrinology, sleep medicine, and 

spine surgery since these specialties are not separately recognized by Medicare, nor do 

we have a method to blend these data with Medicare-recognized specialty data. 

 Supplemental survey data on independent labs, from the College of American 

Pathologists, were implemented for payments in CY 2005. Supplemental survey data 

from the National Coalition of Quality Diagnostic Imaging Services (NCQDIS), 

representing independent diagnostic testing facilities (IDTFs), were blended with 

supplementary survey data from the American College of Radiology (ACR) and 

implemented for payments in CY 2007. Neither IDTFs nor independent labs participated 

in the PPIS. Therefore, we continue to use the PE/HR that was developed from their 

supplemental survey data. 

 Consistent with our past practice, the previous indirect PE/HR values from the 

supplemental surveys for medical oncology, independent laboratories, and IDTFs were 

updated to CY 2006 using the MEI to put them on a comparable basis with the PPIS data. 

 Previously, we have established PE/HR values for various specialties without 

SMS or supplemental survey data by crosswalking them to other similar specialties to 

estimate a proxy PE/HR. For specialties that were part of the PPIS for which we 

previously used a crosswalked PE/HR, we instead use the PPIS-based PE/HR. We 

continue previous crosswalks for specialties that did not participate in the PPIS. 

However, beginning in CY 2010 we changed the PE/HR crosswalk for portable x-ray 

suppliers from radiology to IDTF, a more appropriate crosswalk because these specialties 

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

 For registered dietician services, the proposed resource-based PE RVUs have 

been calculated in accordance with the final policy that crosswalks the specialty to the 

"All Physicians" PE/HR data, as adopted in the CY 2010 PFS final rule with comment 

period (74 FR 61752) and discussed in more detail in the CY 2011 PFS final rule with 

comment period (75 FR 73183). 

 There are four specialties whose utilization data will be newly incorporated into 

ratesetting for CY 2012. We are proposing to use proxy PE/HR values for these 

specialties by crosswalking values from other, similar specialties as follows: Speech 

Language Pathology from Physical Therapy; Hospice and Palliative Care from All 

Physicians; Geriatric Psychiatry from Psychiatry; and Intensive Cardiac Rehabilitation 

from Cardiology. Additionally, since section 1833(a)(1)(K) of the Act (as amended by 

section 3114 of the Affordable Care Act) requires that payment for services provided by a 

certified nurse midwife be paid at 100 percent of the PFS amount, this specialty will no 

longer be excluded from the ratesetting calculation. We are 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 rule with comment period (74 FR 61751), 

CY 2012 is the third year of the 4 year transition to the PE RVUs calculated using the 

PPIS data. Therefore, in general, the CY 2012 PE RVUs are a 25 percent/75 percent 

blend of the previous PE RVUs based on the SMS and supplemental survey data and the 

new PE RVUS developed using the PPIS data as described previously. 
CMS-1524-P 45 

c. Allocation of PE to Services 

To establish PE RVUs for specific services, it is necessary to establish the 

direct and indirect PE associated with each service. 

(1) Direct Costs 

 The relative relationship between the direct cost portions of the PE RVUs for 

any two services is determined by the relative relationship between the sum of the 

direct cost resources (that is, the clinical staff, equipment, and supplies) typically 

required to provide the services. The costs of these resources are calculated from 

the refined direct PE inputs in our PE database. For example, if one service has a 

direct cost sum of $400 from our PE database and another service has a direct cost 

sum of $200, the direct portion of the PE RVUs of the first service would be twice 

as much as the direct portion of the PE RVUs for the second service. 

(2) Indirect Costs 

 Section II.A.2.b. of this 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 incorporate the survey data described earlier in 

the PE/HR discussion. The general approach to developing the indirect portion of 

the PE RVUs is described as follows: 

• For a given service, we use the direct portion of the PE RVUs 

calculated as previously described and the average percentage that direct costs 

represent of total costs (based on survey data) across the specialties that perform 
CMS-1524-P 46 

the service to determine an initial indirect allocator. For example, if the direct 

portion of the PE RVUs for a given service were 2.00 and direct costs, on 

average, represented 25 percent of total costs for the specialties that performed the 

service, the initial indirect allocator would be 6.00 since 2.00 is 25 percent of 

8.00. 

• We then add the greater of the work RVUs or clinical labor portion of 

the direct portion of the PE RVUs to this initial indirect allocator. In our 

example, if this service had work RVUs of 4.00 and the clinical labor portion of 

the direct PE RVUs was 1.50, we would add 6.00 plus 4.00 (since the 4.00 work 

RVUs are greater than the 1.50 clinical labor portion) to get an indirect allocator 

of 10.00. In the absence of any further use of the survey data, the relative 

relationship between the indirect cost portions of the PE RVUs for any two 

services would be determined by the relative relationship between these indirect 

cost allocators. For example, if one service had an indirect cost allocator of 10.00 

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

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

the PE RVUs for the second service. 

• We next incorporate the specialty-specific indirect PE/HR data into the 

calculation. As a relatively extreme example for the sake of simplicity, assume in 

our previous example that, based on the survey data, the average indirect cost of 

the specialties performing the first service with an allocator of 10.00 was half of 

the average indirect cost of the specialties performing the second service with an 
CMS-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 establish two PE RVUs: facility and nonfacility. 

The methodology for calculating PE RVUs is the same for both the facility and 

nonfacility RVUs, but is applied independently to yield two separate PE RVUs. 

Because Medicare makes a separate payment to the facility for its costs of 

furnishing a service, the facility PE RVUs are generally lower than the nonfacility 

PE RVUs. 

e. Services with Technical Components (TCs) and Professional Components 

(PCs) 

Diagnostic services are generally comprised of two components: a 

professional component (PC) and a technical component (TC), each of which may 

be performed independently or by different providers, or they may be performed 

together as a "global" service. When services have PC and TC components that 

can be billed separately, the payment for the global component equals the sum of 

the payment for the TC and PC. This is a result of using a weighted average of 

the ratio of indirect to direct costs across all the specialties that furnish the global 

components, TCs, and PCs; that is, we apply the same weighted average 

indirect percentage factor to allocate indirect expenses to the global components, 

PCs, and TCs for a service. (The direct PE RVUs for the TC and PC sum to the 

global under the bottom-up methodology.) 
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 utilization for each procedure code at the 

specialty and facility/nonfacility place of service level, and the specialty-specific 

PE/HR data from the surveys. 

(2) Calculate the Direct Cost PE RVUs 

Sum the costs of each direct input. 

Step 1: Sum the direct costs of the inputs for each service. 

Apply a scaling adjustment to the direct inputs. 

Step 2: Calculate the current aggregate pool of direct PE costs. This is the 

product of the current aggregate PE (aggregate direct and indirect) RVUs, the CF, 

and the average direct PE percentage from the survey data. 

Step 3: Calculate the aggregate pool of direct costs. This is the sum of the 

product of the direct costs for each service from Step 1 and the utilization data for 

that service. 

Step 4: Using the results of Step 2 and Step 3 calculate a direct PE scaling 

adjustment so that the aggregate direct cost pool does not exceed the current 

aggregate direct cost pool and apply it to the direct costs from Step 1 for each 

service. 
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 the CF. Note that the actual value of the 

CF used in this calculation does not influence the final direct cost PE RVUs, as 

long as the same CF is used in Step 2 and Step 5. Different CFs will result in 

different direct PE scaling factors, but this has no effect on the final direct cost PE 

RVUs since changes in the CFs and changes in the associated direct scaling 

factors offset one another. 

(3) Create the Indirect Cost PE RVUs 

Create indirect allocators. 

Step 6: Based on the survey data, calculate direct and indirect 

PE percentages for each physician specialty. 

Step 7: Calculate direct and indirect PE percentages at the service level by 

taking a weighted average of the results of Step 6 for the specialties that furnish 

the service. Note that for services with TCs and PCs, the direct and 

indirect percentages for a given service do not vary by the PC, TC, and global 

components. 

Step 8: Calculate the service level allocators for the indirect PEs based on 

the percentages calculated in Step 7. The indirect PEs are allocated based on the 

three components: the direct PE RVUs, the clinical PE RVUs, and the work 

RVUs. 

For most services the indirect allocator is: indirect percentage * (direct PE 

RVUs/direct percentage) + work RVUs. 

There are two situations where this formula is modified: 
CMS-1524-P 50 

• If the service is a global service (that is, a service with global, 

professional, and technical components), then the indirect allocator is: 

indirect percentage (direct PE RVUs/direct percentage) + clinical PE 

RVUs + work RVUs. 

• If the clinical labor PE RVUs exceed the work RVUs (and the service is 

not a global service), then the indirect allocator is: indirect percentage (direct 

PE RVUs/direct percentage) + clinical PE RVUs. 

(Note: For global services, the indirect allocator is based on both the work RVUs 

and the clinical labor PE RVUs. We do this to recognize that, for the PC service, 

indirect PEs will be allocated using the work RVUs, and for the TC service, 

indirect PEs will be allocated using the direct PE RVUs and the clinical labor PE 

RVUs. This also allows the global component RVUs to equal the sum of the PC 

and TC RVUs.) 

For presentation purposes in the examples in Table 2, the formulas were 

divided into two parts for each service. 

• The first part does not vary by service and is the indirect 

percentage (direct PE RVUs/direct percentage). 

• The second part is either the work RVUs, clinical PE RVUs, or both 

depending on whether the service is a global service and whether the clinical PE 

RVUs exceed the work RVUs (as described earlier in this step). 

Apply a scaling adjustment to the indirect allocators. 
CMS-1524-P 51 

Step 9: Calculate the current aggregate pool of indirect PE RVUs by 

multiplying the current aggregate pool of PE RVUs by the average indirect 

PE percentage from the survey data. 

Step 10: Calculate an aggregate pool of indirect PE RVUs for all PFS 

services by adding the product of the indirect PE allocators for a service from 

Step 8 and the utilization data for that service. 

Step 11: Using the results of Step 9 and Step 10, calculate an indirect PE 

adjustment so that the aggregate indirect allocation does not exceed the available 

aggregate indirect PE RVUs and apply it to indirect allocators calculated in 

Step 8. 

Calculate the indirect practice cost index. 

Step 12: Using the results of Step 11, calculate aggregate pools of 

specialty-specific adjusted indirect PE allocators for all PFS services for a 

specialty by adding the product of the adjusted indirect PE allocator for each 

service and the utilization data for that service. 

Step 13: Using the specialty-specific indirect PE/HR data, calculate 

specialty-specific aggregate pools of indirect PE for all PFS services for that 

specialty by adding the product of the indirect PE/HR for the specialty, the 

physician time for the service, and the specialty's utilization for the service across 

all services performed by the specialty. 

Step 14: Using the results of Step 12 and Step 13, calculate the 

specialty-specific indirect PE scaling factors. 
CMS-1524-P 52 

Step 15: Using the results of Step 14, calculate an indirect practice cost 

index at the specialty level by dividing each specialty-specific indirect scaling 

factor by the average indirect scaling factor for the entire PFS. 

Step 16: Calculate the indirect practice cost index at the service level to 

ensure the capture of all indirect costs. Calculate a weighted average of the 

practice cost index values for the specialties that furnish the service. (Note: For 

services with TCs and PCs, we calculate the indirect practice cost index across the 

global components, PCs, and TCs. Under this method, the indirect practice cost 

index for a given service (for example, echocardiogram) does not vary by the PC, 

TC, and global component.) 

Step 17: Apply the service level indirect practice cost index calculated in 

Step 16 to the service level adjusted indirect allocators calculated in Step 11 to get 

the indirect PE RVUs. 

(4) Calculate the Final PE RVUs 

Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs 

from Step 17 and apply the final PE budget neutrality (BN) adjustment. 

The final PE BN adjustment is calculated by comparing the results of 

Step 18 to the current pool of PE RVUs. This final BN adjustment is required 

primarily because certain specialties are excluded from the PE RVU calculation 

for ratesetting purposes, but all specialties are included for purposes of calculating 

the final BN adjustment. (See "Specialties excluded from ratesetting calculation" 

later in this section.) 
CMS-1524-P 53 

(5) Setup File Information 

• Specialties excluded from ratesetting calculation: For the purposes of 

calculating the PE RVUs, we exclude certain specialties, such as certain 

nonphysician practitioners paid at a percentage of the PFS and low-volume 

specialties, from the calculation. These specialties are included for the purposes 

of calculating the BN adjustment. They are displayed in Table 1. We note that 

since specialty code 97 (physician assistant) is paid at a percentage of the PFS and 

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

to the table for CY 2012. 

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 certified prosthetist-orthotist 

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

55 Individual certified orthotist 

56 Individual certified prosthestist 

57 Individual certified prosthetist-orthotist 

58 Individuals not included in 55, 56, or 57 

59 Ambulance service supplier, e.g., private ambulance companies, funeral homes, etc. 

60 Public health or welfare agencies 

61 Voluntary health or charitable agencies 

73 Mass immunization roster biller 

74 Radiation therapy centers 

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

88 Unknown supplier/provider specialty 

89 Certified clinical nurse specialist 

95 Competitive Acquisition Program (CAP) Vendor 

96 Optician 

97 Physician assistant 

A0 Hospital 

A1 SNF 

A2 Intermediate care nursing facility 

A3 Nursing facility, other 

A4 HHA 
CMS-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 physician specialties: Crosswalk the 

utilization of certain specialties with relatively low PFS utilization to the 

associated specialties. 

• Physical therapy utilization: Crosswalk the utilization associated with 

all physical therapy services to the specialty of physical therapy. 

• Identify professional and technical services not identified under the 

usual TC and 26 modifiers: Flag the services that are PC and TC services, but do 

not use TC and 26 modifiers (for example, electrocardiograms). This flag 

associates the PC and TC with the associated global code for use in creating the 

indirect PE RVUs. For example, the professional service, CPT code 93010 

(Electrocardiogram, routine ECG with at least 12 leads; interpretation and report 

only), is associated with the global service, CPT code 93000 (Electrocardiogram, 

routine ECG with at least 12 leads; with interpretation and report). 

• Payment modifiers: Payment modifiers are accounted for in the 

creation of the file. For example, services billed with the assistant at surgery 

modifier are paid 16 percent of the PFS amount for that service; therefore, the 

utilization file is modified to only account for 16 percent of any service that 

contains the assistant at surgery modifier. 
CMS-1524-P 55 

● Work RVUs: The setup file contains the work RVUs from this final rule with 

comment period. 

(6) Equipment Cost Per Minute 

The equipment cost per minute is calculated as: 

(1/(minutes per year * usage)) * price * ((interest rate/(1-(1/((1 + interest 

rate)^ life of equipment)))) + maintenance)

Where: 

minutes per year = maximum minutes per year if usage were continuous 

(that is, usage = 1); generally 150,000 minutes. 

usage = equipment utilization assumption; 0.75 for certain expensive 

diagnostic imaging equipment (see 74 FR 61753 through 61755 and section 

II.A.3. of the CY 2011 PFS final rule with comment period) and 0.5 for others. 

price = price of the particular piece of equipment. 

interest rate = 0.11. 

life of equipment = useful life of the particular piece of equipment. 

maintenance = factor for maintenance; 0.05. 

This interest rate was proposed and finalized during rulemaking for CY 1998 PFS 

(62 FR 33164). We solicit comment regarding reliable data on current prevailing 

loan rates for small businesses. 

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 56 

TABLE 2: CALCULATION OF PE RVUS UNDER METHODOLOGY FOR SELECTED CODE

 Step Source Formula 

99213 

Office visit, 

est 

nonfacility 

33533 

CABG, 

arterial, 

single 

facility 

71020 

Chest x-ray 

nonfacility 

71020-TC 

Chest xray 

nonfacility 

71020-26 

Chest 

xray 

nonfacilit

y 

93000 

ECG, 

complete 

nonfacility 

(1) Labor cost (Lab) Step 1 DPEIdb 13.32 77.52 5.74 5.74 0.00 6.1(2) Supply cost (Sup) Step 1 DPEIdb 2.98 7.34 3.39 3.39 0.00 1.1(3) Equipment cost (Eqp.) Step 1 DPEIdb 0.19 0.65 8.17 8.17 0.00 0.1(4) Direct cost (Dir) Step 1 =(1)+(2)+(3) 16.50 85.51 17.31 17.31 0.00 7.4(5) Direct adjustment (Dir. Adj). Steps 2-4 See footnote* 0.55 0.55 0.55 0.55 0.55 0.5(6) Adjusted Labor Steps 2-4 =Lab * Dir Adj =(1)*(5) 7.26 42.27 3.13 3.13 0.00 3.3(7) Adjusted Supplies Steps 2-4 = Sup * Dir Adj =(2)*(5) 1.63 4.00 1.85 1.85 0.00 0.6(8) Adjusted Equipment Steps 2-4 = Eqp * Dir Adj =(3)*(5) 0.11 0.36 4.46 4.46 0.00 0.0(9) Adjusted direct Steps 2-4 =(6)+(7)+(8) 9.00 46.63 9.44 9.44 0.00 4.0(10) Conversion Factor (CF) Step 5 PFS 33.9764 33.9764 33.9764 33.9764 33.9764 33.976(11) Adj. labor cost converted Step 5 =(Lab * Dir Adj)/CF =(6)/(10) 0.21 1.24 0.09 0.09 0.00 0.1(12) Adj. supply cost converted Step 5 =(Sup * Dir Adj)/CF =(7)/(10) 0.05 0.12 0.05 0.05 0.00 0.0(13) Adj. equipment cost converted Step 5 =(Eqp * Dir Adj)/CF =(8)/(10) 0.00 0.01 0.13 0.13 0.00 0.0(14) Adj. direct cost converted Step 5 

=(11)+(12)+ (13) 0.26 1.37 0.28 0.28 0.00 0.1

(15) Work RVU Setup File PFS 0.97 33.75 0.22 0.00 0.22 0.1(16) Dir_pct Steps 6,7 Surveys 0.26 0.18 0.29 0.29 0.29 0.2(17) Ind_pct Steps 6,7 Surveys 0.74 0.82 0.71 0.71 0.71 0.7(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) 

(19) Ind. Alloc. (1st part). Step 8 See (18) 0.77 6.40 0.68 0.68 0.00 0.2(20) Ind. Alloc. Formulas (2nd part). Step 8 See Step 8 (15) (15) (15) (11) (15) (1(21) Ind. Alloc. (2nd part). Step 8 See (20) 0.97 33.75 0.31 0.09 0.22 0.2(22) Indirect Allocator (1st + 2nd) Step 8 =(19)+(21) 1.74 40.15 0.99 0.77 0.22 0.5(23) Indirect Adjustment (Ind. Adj.) Steps 9-11 See footnote** 0.41 0.41 0.41 0.41 0.41 0.4(24) Adjusted indirect allocator Steps 9-11 =Ind Alloc * Ind Adj 0.71 16.30 0.40 0.31 0.09 0.2(25) Ind. Practice Cost Index (IPCI) 

Steps 12-16 See Steps 12 - 16 1.12 0.82 0.90 0.90 0.90 0.9

(26) Adjusted Indirect Step 17 

= Adj.Ind Alloc * PCI =(24) * (25) 0.79 13.32 0.36 0.28 0.08 0.2
CMS-1524-P 57 

 Step Source Formula 

99213 

Office visit, 

est 

nonfacility 

33533 

CABG, 

arterial, 

single 

facility 

71020 

Chest x-ray 

nonfacility 

71020-TC 

Chest xray 

nonfacility 

71020-26 

Chest 

xray 

nonfacilit

y 

93000 

ECG, 

complete 

nonfacility 

(29) PE RVU Step 18 

=(Adj Dir + Adj Ind) * budn 

=((14)+(26)) * budn 1.05 14.68 0.64 0.56 0.08 0.3

Note: PE RVUs in Table 2, row 29, may not match the values in Addendum B due to rounding. * The direct adj = [current pe rvus * CF * avg dir pct]/[sum direct inputs] = [Step 2]/[Step 3] ** The indirect adj = [current pe rvus * avg ind pct]/[sum of ind allocators] = [Step 9]/[Step 10] 
CMS-1524-P 58 

3. Changes to Direct PE Inputs 

In this section, we discuss other specific CY 2012 proposals and changes related 

to direct PE inputs. The proposed changes 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 the minutes allocated for two particular 

equipment items have been inverted. This inversion affects three codes: 37232 

(Revascularization, endovascular, open or percutaneous, tibial/peroneal artery, unilateral, 

each additional vessel; with transluminal angioplasty (List separately in addition to code 

for primary procedure)), 37233 (Revascularization, endovascular, open or percutaneous, 

tibial/peroneal artery, unilateral, each additional vessel; with atherectomy, includes 

angioplasty within the same vessel, when performed (List separately in addition to code 

for primary procedure)), and 37234 (Revascularization, endovascular, open or 

percutaneous, tibial/peroneal artery, unilateral, each additional vessel; with transluminal 

stent placement(s), includes angioplasty within the same vessel, when performed (List 

separately in addition to code for primary procedure)). In each case, the number of 

minutes allocated to the "printer, dye sublimation (photo, color)" (ED031) should be 

appropriately allocated to the "stretcher" (EF018). The number of minutes allocated to 

the stretcher should be appropriately allocated to the printer. Therefore, the proposed 

CY 2012 database includes direct PE input corrections to the 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 SUPPLY INPUT DUPLICATION 

CPT Code Short Code Descriptor 

CMS 

Labor/Supply 

Code 

Description of Labor/Supply 

12011 Repair superficial wound(s) SA048 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 pack, 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 SB008 drape, sterile, c-arm, fluoro 

36147 Access av dial grft for eval SH026 Conray Inj (iothalamate 43%) 

Access av dial grft for eval SK093 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 

46258 Remove in/ex hem grp w/fistu SD003 anoscope 

Remove in/ex hem grp w/fistu SD003 anoscope 

Remove in/ex hem grps & fiss SD003 anoscope 

46261 Remove in/ex hem grps & fiss SD003 anoscope 

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 pack, 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 

67228 Treatment of retinal lesion SA082 pack, ophthalmology visit (w-dilation) 

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 Moderation Sedation Direct PE Inputs 

 For services described by certain codes, the direct PE database includes 

nonfacility inputs that reflect the assumption that moderation sedation is inherent in the 

procedure. These codes are listed in Table 4. The AMA RUC has recently provided 

CMS with a recommendation that standardizes the nonfacility direct PE inputs that 

account for moderate sedation as typically furnished as part of these services. 

Specifically, the RUC recommended that the direct PE inputs allocated for moderate 

sedation include the following: 

Clinical Labor Inputs: Registered Nurse (L051A) time that includes two minutes of time 

to initiate sedation, the number of minutes associated with the physician intra-service 

work time, and 15 minutes for every hour of patient recovery time for post-service patient 

monitoring. 

Supply Inputs: "Pack, conscious sedation" (SA044) that includes: an angiocatheter 

14g-24g, bandage, strip 0.75in x 3in, catheter, suction, dressing, 4in x 4.75in (Tegaderm), 

electrode, ECG (single), electrode, ground, gas, oxygen, gauze, sterile 4in x 4in, gloves, 

sterile, gown, surgical, sterile, iv infusion set, kit, iv starter, oxygen mask (1) and tubing 

(7ft), pulse oximeter sensor probe wrap, stop cock, 3-way, swab-pad, alcohol, syringe 

1ml, syringe-needle 3ml 22-26g, tape, surgical paper 1in (Micropore), tourniquet, and 

non-latex 1in x 18in. 

Equipment Inputs: "table, instrument, mobile" (EF027), "ECG, 3-channel (with SpO2, 
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 and generally agree with these inputs. 

However, we note that the equipment item "ECG, 3-channel (with SpO2, NIBP, temp, 

resp)" (EQ011) incorporates the functionality of the equipment items "pulse oxymetry 

recording software (prolonged monitoring)" (EQ212), and "blood pressure monitor, 

ambulatory, w-battery charger" (EQ269). Therefore we 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 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/. 

TABLE 4: INHERENT MODERATE 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 each 
CMS-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 fibroid 
CMS-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 removal 
CMS-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 multisource 
CMS-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 comment period (75 FR 73205), we finalized 

a process to act on public requests to update equipment and supply price and equipment 

useful life inputs through annual rulemaking beginning with the CY 2012 PFS 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 Useful Lives of Depreciable Hospital Assets,'' 

which we use as a standard reference. In each of these cases, we are proposing to accept 
CMS-1524-P 66 

the updated inputs, as requested. The CY 2012 direct PE database reflects these proposed 

changes and is available on the CMS Web site under the supporting data files for the 

CY 2012 PFS proposed rule at http://www.cms.gov/PhysicianFeeSched/. 

4. Development of Code-Specific PE RVUs 

When creating G codes, we often develop work, PE, and malpractice RVUs by 

crosswalking the RVUs from similar (reference) codes. In most of these cases, the PE 

RVUs are directly crosswalked pending the availability of utilization data. Once that data 

is available, we crosswalk the direct PE inputs and develop PE RVUs using the regular 

practice expense methodology, including allocators that are derived from utilization data. 

For CY 2012, we are using this process to develop PE RVUs for the following services: 

G0245 (Initial physician evaluation and management of a diabetic patient with diabetic 

sensory neuropathy resulting in a loss of protective sensation (LOPS) which must 

include: (1) the diagnosis of LOPS, (2) a patient history, (3) a physical examination that 

consists of at least the following elements: (a) visual inspection of the forefoot, hindfoot 

and toe web spaces, (b) evaluation of a protective sensation, (c) evaluation of foot 

structure and biomechanics, (d) evaluation of vascular status and skin integrity, and (e) 

evaluation and recommendation of footwear and (4) patient education); G0246 

(Follow-up physician evaluation and management of a diabetic patient with diabetic 

sensory neuropathy resulting in a loss of protective sensation (LOPS) to include at least 

the following: (1) a patient history, (2) a physical examination that includes: (a) visual 

inspection of the forefoot, hindfoot and toe web spaces, (b) evaluation of protective 

sensation, (c) evaluation of foot structure and biomechanics, (d) evaluation of vascular 

status and skin integrity, and (e) evaluation and recommendation of footwear, and (3) 
CMS-1524-P 67 

patient education); G0247 (Routine foot care by a physician of a diabetic patient with 

diabetic sensory neuropathy resulting in a loss of protective sensation (LOPS) to include, 

the local care of superficial wounds (for example, superficial to muscle and fascia) and at 

least the following if present: (1) local care of superficial wounds, (2) debridement of 

corns and calluses, and (3) trimming and debridement of nails); G0341 (Percutaneous 

islet cell transplant, includes portal vein catheterization and infusion); 

G0342(Laparoscopy for islet cell transplant, includes portal vein catheterization and 

infusion); G0343 (Laparotomy for islet cell transplant, includes portal vein 

catheterization and infusion); and G0365 (Vessel mapping of vessels for hemodialysis 

access (services for preoperative vessel mapping prior to creation of hemodialysis access 

using an autogenous hemodialysis conduit, including arterial inflow and venous 

outflow)). The values in Addendum B reflect the updated PE RVUs. 

In addition, there is a series of G-codes describing surgical pathology services 

with PE RVUs historically valued outside of the regular PE methodology. These codes 

are: G0416 (Surgical pathology, gross and microscopic examination for prostate needle 

saturation biopsy sampling, 1-20 specimens); G0417 (Surgical pathology, gross and 

microscopic examination for prostate needle saturation biopsy sampling, 21-40 

specimens); G0418 (Surgical pathology, gross and microscopic examination for prostate 

needle saturation biopsy sampling, 41-60 specimens); and G0419 (Surgical pathology, 

gross and microscopic examination for prostate needle saturation biopsy sampling, 

greater than 60 specimens.) The PE RVUs for these codes were established as described 

in the CY 2009 PFS final rule with comment period (73 FR 69751). In reviewing these 

values for CY 2012, we noted that because the PE RVUs established through rulemaking 
CMS-1524-P 68 

in CY 2009 were neither developed using the regular PE methodology nor directly 

crosswalked from other codes, the PE RVUs for these codes were not adjusted to account 

for the CY 2011 MEI rebasing and revising, which is discussed in the CY 2011 PFS final 

rule with comment period (75 FR 73262). While it was technically appropriate to insulate 

the PE RVUs from that adjustment in CY 2011, upon further review, we believe 

adjusting these PE RVUs would result in more accurate payment rates relative to the 

RVUs for other PFS services. Therefore, we 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 this proposed rule with comment period, in 

creating the indirect practice cost index, we calculate specialty-specific aggregate pools 

of indirect PE for all PFS services for that specialty by adding the product of the indirect 

PE/HR for the specialty, the physician time for the service, and the specialty's utilization 

for the service across all services performed by the specialty. 

During a review of the physician time data for the CY 2012 PFS rulemaking, we 

noted an anomaly regarding the physician time allotted to a series of group service codes 

that are listed in Table 5. We believe that the time associated with these codes reflects 

the typical amount of time spent by the practitioner in furnishing the group service. 

However, because the services are billed per patient receiving the service, the time for 

these codes should be divided by the typical number of patients per session. In reviewing 

the data used in the valuation of work RVUs for these services, we noted that in one 

vignette for these services, the typical group session consisted of 6 patients. Therefore 
CMS-1524-P 69 

we are proposing adjusted times for these services based on 6 patients. However, we 

seek comment on the typical number of patients 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 for 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 EDUCATION 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 components: work, practice expense (PE), and 

malpractice. Section 1848(c)(1)(A) of the Act defines the work component to include 
CMS-1524-P 70 

"the portion of the resources used in furnishing the service that reflects physician time 

and intensity in furnishing the service." Additionally, the statute provides that the work 

component shall include activities that occur before and after direct patient contact. 

Furthermore, the statute specifies that with respect to surgical procedures, the valuation 

of the work component for the code must reflect a "global" concept in which 

pre-operative and post-operative physicians' services related to the procedure are also 

included. 

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

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

relative resources incorporating physician time and intensity required in furnishing the 

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

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

the calculation of the RVUs for each of these components. Section 1848(c)(1)(B) of the 

Act defines the PE component as "the portion of the resources used in furnishing the 

service that reflects the general categories of expenses (such as office rent and wages of 

personnel, but excluding malpractice expenses) comprising practice expenses." 

Section 1848(c)(2)(C)(ii) of the Act specifies that the "Secretary shall determine a 

number of practice expense relative value units for the services for years beginning with 

1999 based on the relative practice expense resources involved in furnishing the service." 

Furthermore, section 1848(c)(2)(B) of the Act directs the Secretary to conduct a periodic 

review, not less often than every 5 years, of the RVUs established under the PFS. On 

March 23, 2010, the Affordable Care Act was enacted, further requiring the Secretary to 

periodically identify and review and identify potentially misvalued codes, and make 
CMS-1524-P 71 

appropriate adjustments to the relative values of those services identified as being 

potentially misvalued. Section 3134(a) of the Affordable Care Act added a new section 

1848(c)(2)(K) of the Act which requires the Secretary to periodically identify potentially 

misvalued services using certain criteria, and to review and make appropriate adjustments 

to the relative values for those services. Section 3134(a) of the 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 potentially misvalued codes under the 

PFS, identified using the same categorical criteria 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 identified as potentially misvalued. To respond 

to concerns expressed by MedPAC, the Congress, and other stakeholders regarding 

accurate valuation of services under the PFS, the AMA RUC created the Five-Year 

Review Identification Workgroup in 2006. In addition to providing recommendations to 

us for work RVUs and physician times, the AMA RUC's Practice Expense Subcommittee 

reviews direct PE inputs (clinical labor, medical supplies, and medical equipment) for 

individual services. 

In accordance with section 1848(c) of the Act, we determine appropriate 

adjustments to the RVUs, taking into account the recommendations provided by the 
CMS-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 section 1848(c)(2)(A)(ii) of 

the Act authorizes the use of extrapolation and other techniques to determine the RVUs 

for physicians' services for which specific data are not available, in addition to taking into 

account the results of consultations with organizations representing physicians. 

2. Identifying, Reviewing, and Validating the RVUs of Potentially Misvalued Services 

under the PFS 

a. Background 

 In its March 2006 Report to the Congress, MedPAC noted that "misvalued 

services can distort the price signals for physicians' services as well as for other health 

care services that physicians order, such as hospital services." In that same report 

MedPAC postulated that physicians' services under the PFS can become misvalued over 

time for a number of reasons: For example, MedPAC stated, "when a new service is 

added to the physician fee schedule, it may be assigned a relatively high value because of 

the time, technical skill, and psychological stress that are often required to furnish that 

service. Over time, the work required for certain services would be expected to decline 

as physicians become more familiar with the service and more efficient in furnishing it." 

That is, the amount of physician work needed to furnish an existing service may decrease 

when new technologies are incorporated. Services can also become overvalued when 

practice expenses decline. This can happen when the costs of equipment and supplies 

fall, or when equipment is used more frequently, reducing its cost per use. Likewise, 

services can become undervalued when physician work increases or practice expenses 

rise. In the ensuing years since MedPAC's 2006 report, additional groups of potentially 
CMS-1524-P 73 

misvalued services have been identified by the Congress, CMS, MedPAC, the AMA 

RUC, and other stakeholders. 

In recent years CMS and the AMA RUC have taken increasingly significant steps 

to address potentially misvalued codes. As MedPAC noted in its March 2009 Report to 

the Congress, in the intervening years since MedPAC made the initial recommendations, 

"CMS and the AMA RUC have taken several steps to improve the review process." Most 

recently, section 1848(c)(2)(K)(ii) of the Act (as added by section 3134(a) of the 

Affordable Care Act) directed the Secretary to specifically examine, as determined 

appropriate, potentially misvalued services in seven categories as follows: 

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

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

practice expenses. 

● Codes that are recently established for new technologies or services. 

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

service. 

● Codes with low relative values, particularly those that are often billed multiple 

times for a single treatment. 

● Codes which have not been subject to review since the implementation of the 

RBRVS (the so-called 'Harvard-valued codes'). 

● Other codes determined to be appropriate by the Secretary. 

Section 1848(c)(2)(K)(iii) of the Act also specifies that the Secretary may use 

existing processes to receive recommendations on the review and appropriate adjustment 

of potentially misvalued services. In addition, the Secretary may conduct surveys, other 
CMS-1524-P 74 

data collection activities, studies, or other analyses, as the Secretary determines to be 

appropriate, to facilitate the review and appropriate adjustment of potentially misvalued 

services. This section also authorizes the use of analytic contractors to identify and 

analyze potentially misvalued codes, conduct surveys or collect data, and make 

recommendations on the review and appropriate adjustment of potentially misvalued 

services. Additionally, this section provides that the Secretary may coordinate the review 

and adjustment of the RVUs with the periodic review described in section 1848(c)(2)(B) 

of the Act. Finally, section 1848(c)(2)(K)(iii)(V) of the Act specifies that the Secretary 

may make appropriate coding revisions (including using existing processes for 

consideration of coding changes) which may include consolidation of individual services 

into bundled codes for payment under the physician fee schedule. 

b. Progress in Identifying and Reviewing Potentially Misvalued Codes 

Over the last several years, CMS, in conjunction with the AMA RUC, has 

identified and reviewed numerous potentially misvalued codes in all seven of the 

categories specified in section 1848(c)(2)(K)(ii) of the Act, and we plan to continue our 

work examining potentially misvalued codes in these areas over the upcoming years, 

consistent with the new legislative requirements on this issue. In the current process, we 

request the AMA RUC to review potentially misvalued codes that we identify and make 

recommendations on revised work RVUs and/or direct PE inputs for those codes to us. 

The AMA RUC, through its own processes, also might identify and review potentially 

misvalued procedures. We then assess the recommended revised work RVUs and/or 

direct PE inputs and, in accordance with section 1848(c) of the Act, we determine if the 

recommendations constitute appropriate adjustments to the RVUs under the PFS. 
CMS-1524-P 75 

Since CY 2009, as a part of the annual potentially misvalued code review, we 

have reviewed over 700 potentially misvalued codes to refine work RVUs and direct PE 

inputs in addition to continuing the comprehensive Five-Year Review process. We have 

adopted appropriate work RVUs and direct PE inputs for these services as a result of 

these reviews. 

Our prior reviews of codes under the potentially misvalued codes initiative has 

included codes in all seven categories specified in section 1848(c)(2)(K)(ii) of the Act. 

That is, we have reviewed and assigned more appropriate values to-- 

● 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 established for new technologies or services; 

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

service; 

● Codes with low relative values, particularly those that are often billed multiple 

times for a single treatment; 

● Codes which had not been subject to review since the implementation of the 

RBRVS ('Harvard valued'); and 

● Codes potentially misvalued as determined by the Secretary. 

In this last category, we have previously proposed policies in CYs 2009, 2010, 

and 2011, and requested that the AMA RUC review codes for which there have been 

shifts in the site-of-service (that is, codes that were originally valued as being furnished 

in the inpatient setting, but that are now predominantly furnished on an outpatient basis), 
CMS-1524-P 76 

as well as codes that qualify as "23-hour stay" outpatient services (these services typically 

have lengthy hospital outpatient recovery periods). We note that a detailed discussion of 

the extensive prior reviews of potentially misvalued codes is included in the CY 2011 

PFS final rule with comment period (75 FR 73215 through 73216). 

In CY 2011, we identified additional codes under section 1848(c)(2)(K)(ii) of the 

Act that we believe are ripe for review and referred them to the AMA RUC (75 FR 73215 

through 73216). Specifically, we identified potentially misvalued codes in the category 

of "Other codes determined to be appropriate by the Secretary," referring lists of codes 

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 reference services for valuing other services, 

termed "multispecialty points of comparison" services. 

Since the publication of the CY 2011 PFS final rule with comment period, we 

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

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

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

misvalued codes for all services included in the CY 2010 PFS final rule with comment 

period that was published in the Federal Register on November 25, 2009. In addition to 

the codes submitted by the commenters, we identified a number of potentially misvalued 

codes and requested the AMA RUC to review and provide recommendations. Our 

identification of potentially misvalued codes for the Fourth Five--Year Review focused 

on two Affordable Care Act categories: site-of-service anomaly codes and ''Harvard 

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

sent the AMA RUC an initial list of 219 codes for review. Consistent with our past 
CMS-1524-P 77 

practice, we requested the AMA RUC to review codes on a "family" basis rather than in 

isolation in order to ensure that appropriate relativity in the system was retained. 

Consequently, the AMA RUC included additional codes for review, resulting in a total of 

290 codes for the Fourth Five-Year Review of Work. Of those 290 codes, 53 were 

subsequently sent to the CPT Editorial Panel to consider coding changes, 14 were not 

reviewed by the AMA RUC (and subsequently not reviewed by us) because the specialty 

society that had originally requested the review in its public comments on the CY 2010 

PFS final rule with comment period elected to withdraw the codes, 36 were not reviewed 

by the AMA RUC because their values were set as interim final in the CY 2011 PFS final 

rule with comment period, and 14 were not reviewed by us because they were 

noncovered services under Medicare. Therefore, the AMA RUC reviewed 173 of the 290 

codes initially identified for the Fourth Five-Year Review of Work, and provided the 

recommendations that were addressed in detail in the Fourth Five-Year Review of Work 

(76 FR 32410). In addition, under the Fourth Five-Year Review of Work, we reviewed 

recommendations for five additional potentially misvalued codes from the Health Care 

Professionals Advisory Committee (HCPAC), a deliberative body of nonphysician 

practitioners that also convenes during the AMA RUC meeting. The HCPAC represents 

physician assistants, chiropractors, nurses, occupational therapists, optometrists, physical 

therapists, podiatrists, psychologists, audiologists, speech pathologists, social workers, 

and registered dieticians. 

In summary, since CY 2009, CMS and the AMA RUC have addressed a number 

of potentially misvalued codes. For CY 2009, the AMA RUC recommended revised 

work values and/or PE inputs for 204 misvalued services (73 FR 69883). For CY 2010, 
CMS-1524-P 78 

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

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

discussed in the CY 2010 PFS final rule with comment period (74 FR 61778). For 

CY 2011, CMS reviewed and adopted more appropriate values for 209 codes under the 

annual review of potentially misvalued codes. For CY 2012, we recently released the 

Fourth Five-Year Review of Work, which discussed the review of 173 potentially 

misvalued codes and proposed appropriate adjustments to RVUs. In section II.B.5.of this 

proposed rule, we also provide a list of codes identified for future consideration as part of 

the potentially misvalued codes initiative, that is, in addition to the codes that are part of 

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

AMA RUC review these codes and submit recommendations to us. 

c. Validating RVUs of Potentially Misvalued Codes 

 In addition to identifying and reviewing potentially misvalued codes, section 

3134(a) of the Affordable Care Act added a new section 1848(c)(2)(L) of the Act, which 

specifies that the Secretary shall establish a formal process to validate RVUs value units 

under the PFS. The validation process may include validation of work elements (such as 

time, mental effort and professional judgment, technical skill and physical effort, and 

stress due to risk) involved with furnishing a service and may include validation of the 

pre-, post-, and intra-service components of work. The Secretary is directed to validate a 

sampling of the work RVUs of codes identified through any of the seven categories of 

potentially misvalued codes specified by section 1848(c)(2)(K)(ii) of the Act. 

Furthermore, the Secretary may conduct the validation using methods similar to those 

used to review potentially misvalued codes, including conducting surveys, other data 
CMS-1524-P 79 

collection activities, studies, or other analyses as the Secretary determines to be 

appropriate to facilitate the validation of RVUs of services. 

In the CY 2011 PFS proposed rule (75 FR 40068), we solicited public comments 

on possible approaches and methodologies that we should consider for a validation 

process. We received a number of comments regarding possible approaches and 

methodologies for a validation process. As discussed in the CY 2011 PFS final rule with 

comment period (75 FR 73217), some commenters were skeptical that there could be 

viable alternative methods to the existing AMA RUC code review process for validating 

physician time and intensity that would preserve the appropriate relativity of specific 

physician's services under the current payment system. These commenters generally 

urged us to rely solely on the AMA RUC to provide valuations for services under the 

PFS. 

While a number of commenters strongly opposed our plans to develop a formal 

validation process, many other commenters expressed support for the development and 

establishment of a system-wide validation process of the work RVUs under the PFS. As 

noted in the CY 2011 PFS final rule with comment period (75 FR 73217 through 73218), 

these commenters commended us for seeking new approaches to validation, as well as 

being open to suggestions from the public on this process. A number of commenters 

submitted technical advice and offered their time and expertise as resources for us to 

draw upon in any examination of possible approaches to developing a formal validation 

process. 

However, in response to our solicitation of comments regarding time and motion 

studies, a number of commenters opposed the approach of using time and motion studies 
CMS-1524-P 80 

to validate estimates of physician time and intensity, stating that properly conducted time 

and motion studies are extraordinarily expensive and, given the thousands of codes paid 

under the PFS, it would be unlikely that all codes could be studied. As we stated in the 

CY 2011 PFS final rule with comment period (75 FR 73218), we understand that these 

studies would require significant resources and we remain open to suggestions for other 

approaches to developing a formal validation process. We 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 previously, we intend to establish 

a more extensive validation process of RVUs in the future in accordance with the 

requirements of section 1848(c)(2)(L) of the Act. 

While we received a modest number of comments specifically addressing 

technical and methodological aspects of developing a validation system, we believe it 

would be beneficial to provide an additional opportunity for stakeholders to submit 

comments on data sources and possible methodologies for developing a system-wide 

validation system. We are particularly interested in comments regarding data sources and 

studies which may be used to validate estimates of physician time and intensity that could 

be factored into the work RVUs, especially for services with rapid growth in Medicare 

expenditures, which is one of the Affordable Care Act categories that the statute 

specifically directs us to examine. We are 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 practitioners 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 conjunction with the public 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 process 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 statutorily 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 periodic reviews of work, PE, and malpractice 

RVUs for established services every 5 years in what is commonly known as CMS' 

Five-Year Reviews of Work, PE, and Malpractice RVUs. 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 Review of PE RVUs occurred for CY 2010; 

the same year we began using the Physician Practice Information Survey (PPIS) data to 

update the PE RVUs. The last Five-Year Review of Malpractice RVUs also occurred for 

CY 2010. These Five-Year Reviews have historically included codes identified and 

nominated by the public for review, as well as those identified by CMS and the AMA 

RUC. 

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

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

annual basis using various identification screens, such as codes with high growth rates, 

codes that are frequently billed together in one encounter, and codes that are valued as 

inpatient services but that are now predominately furnished as outpatient services. These 
CMS-1524-P 82 

annual reviews have not included codes identified by the public as potentially misvalued 

since historically, the public has the opportunity to submit potentially misvalued codes 

during the Five-Year Review process. 

With the enactment of the Affordable Care Act in 2010, which endorsed our 

initiative to identify and review potentially misvalued codes and emphasized the 

importance of our ongoing work in this area to improve accuracy and appropriateness of 

payments under the PFS, we believe that continuing the annual identification and review 

of potentially misvalued codes is necessary. Given that we are engaging in extensive 

reviews of work RVUs and direct PE inputs of potentially misvalued codes on an annual 

basis, we believe that separate and "freestanding" Five-Year Reviews of Work and PE 

may have become redundant with our annual efforts. Therefore, for CY 2012 and 

forward, we propose to consolidate the formal Five-Year Review of Work and PE with 

the annual review of potentially misvalued codes. That is, we would begin meeting the 

statutory requirement to review work and PE RVUs for potentially misvalued codes at 

least once every 5 years through an annual process, rather than once every 5 years. 

Furthermore, to allow for public input and to preserve the public's ability to identify and 

nominate potentially misvalued codes for review, we are proposing a process by which 

the public could submit codes for our potential review, along with supporting 

documentation, on an annual basis. Our review of these codes would be incorporated 

into our potentially misvalued codes initiative. This proposal 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 codes 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 general, malpractice RVUs are based on malpractice insurance 

premium data on a specialty level. The last comprehensive review and update of the 

malpractice RVUs occurred for CY 2010 using data obtained from the PPIS data. Since 

it is not feasible to conduct such extensive physician surveys to obtain updated specialty 

level malpractice insurance premium data on an annual basis, we believe the 

comprehensive review of malpractice RVUs should continue to occur at 5-year intervals 

Furthermore, in identifying and reviewing potentially misvalued codes on an 

annual basis, we note that this new proposed process presents us with the opportunity to 

review simultaneously both the work RVUs and the direct PE inputs, 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 solely on its work RVUs so the 

AMA RUC would have reviewed the code and provided us with recommendations on the 

physician times and work RVUs. However, the code's direct PE inputs would not have 

necessarily been reviewed concurrently and therefore, the AMA RUC would not have 

necessarily provided us with recommendations for any changes in the direct 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 the potentially misvalued codes initiative for physician work, 

the PE component of the code could still be potentially misvalued. Going forward, we 
CMS-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 appropriate payments under the PFS. 

Finally, it is important to note that the code-specific resource based relative value 

framework under the PFS system is one in which services are ranked relative to each 

other. That is, the work RVUs assigned to a code are based on the physician time and 

intensity expended on that particular service as compared to the physician time and 

intensity of the other services paid under the PFS. This concept of relativity to other 

services also applies to the PE RVUs, particularly when it comes to reviewing and 

assigning correct direct PE inputs that are relative to other similar services. 

Consequently, we are emphasizing the need to review codes that are identified as part of 

the potentially misvalued initiative to ensure that appropriate relativity is constructed and 

maintained in several key relationships: 

● The work and PE RVUs of codes are ranked appropriately within the code 

family. That is, the RVUs of services within a family should be ranked progressively so 

that less intensive services and/or services that require less physician time and/or require 

fewer or less expensive direct PE inputs should be assigned lower work or PE RVUs 

relative to other codes within the family. For example, if a code for treatment of elbow 

fracture is under review under the potentially misvalued codes initiative, we would 

expect the work and PE RVUs for all the codes in the family also be reviewed in order to 

ensure that relativity is appropriately constructed and maintained within this family. 

Furthermore, as we noted in the CY 2010 PFS final rule with comment period 

(74 FR 61941), when we submit codes to the AMA RUC and request their review, in 
CMS-1524-P 85 

order to maintain relativity, we emphasized the importance of reviewing the base code of 

a family. The base code is the most important code to review because it is the basis for 

the valuation of other codes within the family and allows for all related codes to be 

reviewed at the same time (74 FR 61941). 

● The work and PE RVUs of codes are appropriately relative based on 

comparison of physician time and/or intensity and/or direct inputs to other services 

furnished by physicians in the same specialty. To continue the example shown 

previously, if a code for treatment of elbow fracture is under review, we would expect 

this code to be compared to other codes, such as codes for treatment of humerus fracture, 

or other codes furnished by physicians in the same specialty, in order to ensure that the 

work and PE RVUs are appropriately relative within the specialty. 

● The work and PE RVUs of codes are appropriately relative when compared to 

services across specialties. While it may be challenging to compare codes that describe 

completely unrelated services, since the entire PFS is a budget neutral system where 

payment differentials are dependent on the relative differences between services, it is 

essential that services across specialties are appropriately valued relative to each other. 

To illustrate the point, if a service furnished primarily by dermatology is analogous in 

physician time and intensity to another service furnished primarily by 

allergy/immunology, then we would expect the work RVUs for the two services to be 

similar, even though the two services may be otherwise unrelated. 

4. Proposed Public Nomination Process 

 Under the previous Five-Year Reviews, the public was provided with the 

opportunity to nominate potentially misvalued codes for review. To allow for public 
CMS-1524-P 86 

input and to preserve the public's ability to identify and nominate potentially misvalued 

codes for review under our annual potentially misvalued codes initiative, we are 

proposing a process by which on an annual basis the public could submit codes, along 

with documentation supporting the need for review. We are proposing that stakeholders 

may nominate potentially misvalued codes by submitting the code with supporting 

documentation during the 60-day public comment period following the release of the 

annual PFS final rule with comment period. We would evaluate the supporting 

documentation and decide whether the nominated code should be reviewed as potentially 

misvalued during the following year. If we were to receive an overwhelming number of 

nominated codes that qualified as potentially misvalued in any given year, we would 

prioritize the codes for review and could decide to hold our review of some of the 

potentially misvalued codes for a future year. We 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 ensure that a nominated code will be fully 

considered to qualify as a potentially misvalued code to be reviewed under our annual 

process, accompanying documentation must be provided to show evidence of the code's 

inappropriate valuation, either in terms of inappropriate physician times, work RVUs, 

and/or direct PE inputs. The AMA RUC developed certain "Guidelines for Compelling 

Evidence" for the Third Five-Year Review which we believe could be applicable for 

members of the public as they gather supporting documentation for codes they wish to 
CMS-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 medical literature or other reliable data 

that there have been changes in physician work due to one or more of the following: 

 ++ Technique. 

 ++ Knowledge and technology. 

 ++ Patient population. 

 ++ Site-of-service. 

 ++ Length of hospital stay. 

 ++ Physician time. 

● An anomalous relationship between the code being proposed for review and 

other codes. For example, if code "A" describes a service that requires more work than 

codes "B," "C," and "D," but is nevertheless valued lower. The commenter would need 

to assemble evidence on service time, technical skill, patient severity, complexity, length 

of stay and other factors for the code being considered and the codes to which it is 

compared. These reference services may be both inter- and intra-specialty. 

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

technology. 

● Analysis of other data on time and effort measures, such as operating room 

logs or national and other representative databases. 

● Evidence that incorrect assumptions were made in the previous valuation of the 

service, such as a misleading vignette, survey, or flawed crosswalk assumptions in a 

previous evaluation; 
CMS-1524-P 88 

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

determine PE RVUs are inaccurate and do not reflect current information. 

● Analyses of physician time, work RVU, or direct PE inputs using other data 

sources (for example, Department of Veteran Affairs (VA) National Surgical Quality 

Improvement Program (NSQIP), the Society for Thoracic Surgeons (STS), and the 

Physician Quality Reporting Initiative (PQRI) databases). 

● National surveys of physician time and intensity from professional and 

management societies and organizations, such as hospital associations. 

 We note that when a code is nominated, and supporting documentation is 

provided, we would expect to receive a description of the reasons for the code's 

misvaluation with the submitted materials. That is, we would require a description and 

summary of the evidence is required that shows how the service may have changed since 

the original valuation or may have been inappropriately valued due to an incorrect 

assumption. We would also appreciate specific Federal Register citations, if they exist, 

where commenters believe the nominated codes were previously valued erroneously. We 

are also proposing to consider only nominations of active codes that are covered by 

Medicare at the time of the nomination. 

 After we receive the nominated codes during the 60-day comment period 

following the release of the annual PFS final rule with comment period, we intend to 

review the supporting documentation and determine 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 codes received under 

the public nomination process during the previous year and indicate whether the codes 
CMS-1524-P 89 

would be included in our annual review of potentially misvalued codes. We would also 

indicate the codes that we would not be including in our annual 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 request 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 comments 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 nominations from the public for potentially 

misvalued codes in conjunction with rulemaking, we believe it is imperative that we 

continue the work of the review initiatives over the last several years and drive the 

agenda forward to identify, review, and adjust values for potentially misvalued codes for 

CY 2012. 

In the CY 2011 PFS proposed rule (75 FR 40068 through 40069), we identified, 

and referred to the AMA RUC, a list of potentially misvalued codes in three areas: 

● Codes on the AMA RUC's multi-specialty points of comparison (MPC) list 

(used as reference codes in the valuation of other codes), 
CMS-1524-P 90 

● Services with low work RVUs that are billed in multiples (a statutory 

category); and 

● Codes that have low work RVUs for which CMS claims data show high 

volume (that is, high utilization of these codes represents a significant dollar impact in 

the payment system). 

Our understanding is that the AMA RUC is currently working towards reviewing 

these codes at our request. We intend to provide an update and discuss any RVU 

adjustments to codes that have been identified as potentially misvalued in the CY 2012 

PFS final rule, as they move through the review process. 

Meanwhile, for CY 2012, we are continuing with the work to identify and review 

additional services under the potentially misvalued codes initiative. Stakeholders have 

noted that many of the services previously identified under the potentially misvalued 

codes initiative were concentrated in certain specialties. To develop a robust and 

representative list of codes for review under the potentially misvalued codes initiative, we 

examined the highest PFS expenditure services by specialty (based on our most recently 

available claims data and using the specialty categories listed in the PFS specialty impact 

table, see Table 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 expenditure 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/M 
CMS-1524-P 91 

services have not been reviewed since the comprehensive review of services for the Third 

Five-Year Review of Work in CY 2006. Therefore, after an examination of the highest 

PFS expenditure codes for each specialty, we have developed two code lists of potentially 

misvalued codes which we 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 intervening years, there 

has been significant interest in delivery system reform, such as patient-centered medical 

homes and making the primary care physician the focus of managing the patient's chronic 

conditions. The chronic conditions challenging the Medicare population include heart 

disease, diabetes, respiratory disease, breast cancer, allergy, Alzheimer's disease, and 

factors associated with obesity. Thus, as the focus of primary care has evolved from an 

episodic treatment-based orientation to a focus on comprehensive patient-centered care 

management in order to meet the challenges of preventing and managing chronic disease, 

we believe a more current review of E/M codes is warranted. We note that although 

physicians in primary care specialties bill a high percentage of their services using the 

E/M codes, physicians in non-primary care specialties also bill these codes for some of 

their services. 

Since we believe the focus of primary care 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 prioritize review of the E/M codes and provide us 

with recommendations on the physician times, work RVUs and direct PE inputs of at 

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

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

We would expect the AMA RUC to review the remaining E/M codes listed in Table 6 by 

July 2013 in order for us to complete the comprehensive re-evaluation of E/M services 

and include the revised valuations for these codes in the CY 2014 PFS final rule with 

comment period. 

TABLE 6: E/M CODES REFERRED 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 init 
CMS-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 subsq 
CMS-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 list of high PFS expenditure procedural 

codes representing services furnished by an array of specialties, as listed in Table 7. 

These procedural codes have not been reviewed since CY 2006 (before we began our 

potentially misvalued codes initiatives in CY 2008) and, based on the most recently 

available data, have CY 2010 allowed charges of greater than $10 million at the specialty 

level (based on the specialty categories listed in the PFS specialty impact table and 

CY 2010 Medicare claims data). A number of the codes in Table 7 would not otherwise 

be identified as potentially misvalued services using the screens we have used in recent 

years with the AMA RUC or based on one of the six specific statutory categories under 

section 1848(c)(2)(k)(ii) of the Act. However, we identified the potentially misvalued 

codes listed in Table 7 under the seventh statutory category, "other codes determined to 

be appropriate by the Secretary." We selected these codes based on the fact that they 

have not been reviewed for at least 6 years, and in many cases the last review occurred 

more than 10 years ago. They represent high Medicare expenditures under the PFS; thus, 

we believe that a review to assess changes in physician work and update direct PE inputs 

is warranted. Furthermore, since these codes have significant impact on PFS payment on 

a specialty level, a review of the relativity of the code to ensure that the work and PE 

RVUs are appropriately relative within the specialty and across specialties, as discussed 

previously, is essential. For these reasons, we have identified these codes as potentially 
CMS-1524-P 95 

misvalued and are requesting that the AMA RUC review the codes listed in Table 7 and 

provide us with recommendations on the physician times, work RVUs and direct PE 

inputs in a timely manner. That is, similar to our request for the AMA RUC to review 

E/M codes in a timely manner, we are requesting 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 PROCEDURAL 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-Ob 
CMS-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 Codes 
CMS-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, technical corrections, or by requesting that 

the AMA RUC consider the issue. 

 Since last year's rulemaking, the public has brought a series of issues to our 

attention that relate directly to direct PE inputs and physician work. We believe that 

some of these issues will serve as examples of codes that might be brought forward by 

the public as potentially misvalued in the proposed nomination process as discussed 

previously in section II.B.4. of this 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 abdomen and pelvis. Prior to 2011, these services 

would have been billed using multiple stand- alone codes for each body region. The new 

codes are: 74176 (Computed tomography, abdomen and pelvis; without contrast 

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

and 74178 (Computed tomography, abdomen and pelvis; without contrast material in one 

or both body regions, followed by with contrast material(s) and further sections in one or 

both body regions.) 

 As stated in the CY 2011 PFS final rule with comment period (75 FR 73350), we 

accepted the AMA RUC- recommended direct PE inputs for these codes, with 

refinements to the equipment minutes to assure that the time associated with the 

equipment items reflected the time during the intra-service period when a clinician is 
CMS-1524-P 98 

using the piece of equipment, plus any additional time the piece of equipment is not 

available for use for another patient due to its use during the designated procedure. We 

believe that the direct PE inputs of the new codes reflect the typical resources required to 

furnish the services in question. 

 However, stakeholders have alerted us that the resulting PE RVUs for the new 

codes reflect an anomalous rank order in comparison to the previously existing 

stand-alone codes. Specifically, the PE RVUs for the codes that describe CT scans 

without contrast for either body region are greater than the PE RVUs for 74176, which 

describes a CT scan of both body regions. We believe that the anomalous rank order of 

the PE RVUs for this series of codes may be the result of outdated direct PE inputs for 

the previously existing stand -alone codes. The physician work for those codes was last 

reviewed by the AMA RUC during the Third Five-Year Review of Work for CY 2007. 

However, the direct PE inputs for the codes have not been reviewed since 2003. 

Therefore, we are requesting that the AMA RUC review the both the direct PE inputs and 

work values of the following codes in accordance with the consolidated approach to 

reviewing potentially misvalued codes as outlined in section II.B.2.c. of this proposed 

rule: 

● 72192 Computed tomography, pelvis; without contrast material 

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

● 72194 Computed tomography, pelvis; without contrast material, followed by 

contrast material(s) and further sections 

● 74150 Computed tomography, abdomen; without contrast material 

● 74160 Computed tomography, abdomen; with contrast material(s) 
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 are atypical. Specifically, the stakeholder 

suggested that the AMA RUC relied upon an atypical clinical vignette in identifying the 

direct PE inputs for the service associated with CPT code 88305 (Level IV - Surgical 

pathology, gross and microscopic examination Abortion - spontaneous/missed, Artery, 

biopsy, Bone marrow, biopsy, Bone exostosis, Brain/meninges, other than for tumor 

resection, Breast, biopsy, not requiring microscopic evaluation of surgical margins, 

Breast, reduction mammoplasty, Bronchus, biopsy, Cell block, any source, Cervix, 

biopsy, Colon, biopsy, Duodenum, biopsy, Endocervix, 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, transbronchial biopsy, Lymph node, biopsy, Muscle, 

biopsy, Nasal mucosa, biopsy, Nasopharynx/oropharynx, biopsy, Nerve, biopsy, 

Odontogenic/dental cyst, Omentum, biopsy, Ovary with or without tube, non-neoplastic, 

Ovary, biopsy/wedge resection, Parathyroid gland, Peritoneum, biopsy, Pituitary tumor, 

Placenta, other than third trimester, Pleura/pericardium - biopsy/tissue, Polyp, 

cervical/endometrial, Polyp, colorectal, 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 than 
CMS-1524-P 100 

tumor/mass/lipoma/debridement, Spleen, Stomach, biopsy, Synovium, Testis, other than 

tumor/biopsy/castration, Thyroglossal duct/brachial cleft cyst, Tongue, biopsy, Tonsil, 

biopsy, Trachea, biopsy, Ureter, biopsy, Urethra, biopsy, Urinary bladder, biopsy, Uterus, 

with or without tubes and ovaries, for prolapse, Vagina, biopsy, Vulva/labia, biopsy). 

The stakeholder claims that in furnishing the typical service, the required material 

includes a single block of tissue and 1-3 slides. The stakeholder argues that the typical 

costs for the service amount is approximately $18, but the PE RVUs for 2011 result in a 

national payment rate of $69.65 for the technical component of the service. Because the 

direct PE inputs associated with this code have not been reviewed since 1999, we are 

asking that the AMA RUC review both the direct PE inputs and work values of this code 

as soon as possible in accordance with the consolidated approach to reviewing potentially 

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) regarding two new cytopathology codes that 

describe in situ hybridization testing of urine specimens. Prior to CY 2011, all in situ 

hybridization testing was coded and billed using CPT Codes 88365 (In situ hybridization 

(eg, FISH), each probe), 88367 (Morphometric analysis, in situ hybridization 

(quantitative or semi-quantitative) each probe; using computer-assisted technology) and 

88368 (Morphometric analysis, in situ hybridization (quantitative or semi-quantitative) 

each probe; manual). The appropriate CPT code listed would be billed one time for each 

probe used in the performance of the test, regardless of the medium of the specimen (that 

is, blood, tissue, tumor, bone marrow or urine). 
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 probes, 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 the 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 codes that are currently 

still used for any specimen except for urine. However, because the previously existing 

codes are billed per probe, the payment for a test using a different specimen type could 

vary depending upon the number of probes. For example, a practitioner furnishing a test 

involving a blood specimen and using 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 values and direct PE inputs, without 

refinement, for the two new cytopathology codes that describe in situ hybridization 

testing using urine samples. We have reviewed the direct PE recommendations made by 

the AMA RUC and, at this time, believe that these inputs are appropriate. 

However, we share LUGPA's concerns regarding the potential payment 

discrepancies between the codes that describe the same test using different specimen 
CMS-1524-P 102 

media. Therefore, we are asking the AMA RUC to review the both the direct PE inputs 

and work values of the following codes in accordance with the consolidated approach to 

reviewing potentially misvlaued codes as outlined in section II.B.2.c. of this proposed 

rule: CPT codes 88365 (In situ hybridization (eg, FISH), each probe); 88367 

(Morphometric analysis, in situ hybridization (quantitative or semi-quantitative) each 

probe; using computer-assisted technology); and 88368 (Morphometric analysis, in situ 

hybridization (quantitative or semi-quantitative) each probe; manual.) 

(2) Codes Without Direct Practice Expense Inputs in the Non-Facility Setting 

Certain stakeholders have requested that we create nonfacility PE values for a 

series of kyphoplasty services CPT codes: 

● 22523 (Percutaneous vertebral augmentation, including cavity creation 

(fracture reduction and bone biopsy included when performed) using mechanical device, 

1 vertebral body, unilateral or bilateral cannulation (eg, kyphoplasty); thoracic), 

● 22524 (Percutaneous vertebral augmentation, including cavity creation 

(fracture reduction and bone biopsy included when performed) using mechanical device, 

1 vertebral body, unilateral or bilateral cannulation (eg, kyphoplasty); lumbar). 

● 22525 (Percutaneous vertebral augmentation, including cavity creation 

(fracture reduction and bone biopsy included when performed) using mechanical device, 

1 vertebral body, unilateral or bilateral cannulation (eg, kyphoplasty); each additional 

thoracic or lumbar vertebral body (List separately in addition to code for primary 

procedure)). 

In the case of these codes, we are asking the RUC to make recommendations 

regarding the appropriateness of creating nonfacility direct PE inputs. If the RUC were 
CMS-1524-P 103 

to recommend direct PE recommendations, we would review those recommendations as 

part of the annual process. 

Ultrasound Equipment. A stakeholder has raised concern about potential 

inconsistencies with the inputs and the prices related to ultrasound equipment in the 

direct PE database. Upon reviewing inputs and prices for ultrasound equipment, we have 

noted that there are 17 different pieces of ultrasound and ultrasound-related equipment in 

the database that are associated with 110 CPT Codes. The price inputs for ultrasound 

equipment range from $1,304.33 to $466,492.00. Therefore, we are asking the AMA 

RUC to review the ultrasound equipment included in those codes as well as 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 that are used as direct PE 

inputs for a range of codes. For example, in the 2011 PFS final rule (75 FR 73204), we 

made changes to a series of codes following the RUC's review of services that include the 

radiographic fluoroscopic room (CMS Equipment Code EL014) as a direct PE input. The 

RUC review revealed the use of the item to no longer be typical for certain services in 

which it had been specified within the direct cost inputs. These recommendations have 

often prompted our proposals that have served to maintain appropriate relativity within 

the PFS, and we hope that the RUC will continue to address issues relating to equipment 

and supply inputs that affect many codes. Furthermore, we believe that in these kinds of 

cases, it may be appropriate to make changes to the related direct PE inputs for a series of 

codes without reevaluating the physician work or other direct PE inputs for the individual 

codes. In other words, while we generally believe that both the work and the direct 
CMS-1524-P 104 

practice expense inputs should be reviewed whenever the RUC makes recommendations 

regarding either component of a code's value, we recognize the value of discrete RUC 

reviews of direct PE items that serve as inputs for a series of service codes. 

(3) Codes Potentially Requiring Updates to Physician Work 

 Cholecystectomy. We received a comment regarding a potential relativity 

problem between two cholecystectomy (gall bladder removal) CPT codes. CPT code 

47600 (Cholecystectomy;) has a work RVU of 17.48, and CPT code 47605 

(Cholecystectomy; with cholangiography) has a work RVU of 15.98. Upon examination 

of the physician time and visits associated with these codes, we found that CPT code 

47600 includes 115 minutes of intra-service time and a total time of 420 minutes, 

including 3 office visits, 3 subsequent hospital care days, and 1 hospital discharge 

management day. CPT code 47605 includes 90 minutes of intra-service time and a total 

time of 387 minutes, including 2 office visits, 3 subsequent hospital care days, and 1 

hospital discharge management day. We believe that the difference in physician time and 

visits is the cause for the difference in work RVU for these codes. However, upon 

clinical review, it does not appear that these visits appropriately reflect the relativity of 

these two services, as CPT code 47600 should not have more time and visits associated 

with the service than CPT code 47605. Therefore, we are asking the AMA RUC to 

review these two cholecystectomy CPT codes, 47600 and 47605. 

 We thank the public for bringing these issues to our attention and kindly request 

that the public continue to do so. Please see section II.B.4. of this 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 Site-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 anomaly 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 valuation of the codes. Specifically, these codes 

were originally furnished in the inpatient setting, but Medicare claims data show that the 

typical case has shifted to being furnished in the outpatient setting. Since the procedures 

were typically furnished in the inpatient setting when the codes were originally valued, 

the work RVUs for these codes would have been valued to include the inpatient physician 

work furnished, as well as to reflect the intensive 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 service has shifted from the inpatient setting 

to an outpatient or physician's office setting, we do not believe the inclusion of inpatient 

hospital visits in the post-operative period is appropriate. 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 valuation of these services. Additionally, we 

believe that it is reasonable to expect that there have been changes in medical practice for 

these services, and that such changes would represent a decrease in physician time or 

intensity or both. 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 for 
CMS-1524-P 106 

CY 2009 and 11 codes for CY 2010. In the CY 2010 PFS proposed rule and final rule 

with comment period (74 FR 33556 and 74 FR 61777, respectively), we encouraged the 

AMA RUC to utilize the building block methodology when revaluing services with 

site-of-service anomalies. In the CY 2011 PFS final rule with comment period 

(75 FR 73221), we also stated that in the CYs 2009 and 2010 PFS final rules with comment 

period (73 FR 69883 and 74 FR 61776 through 61778, respectively), we indicated that 

although we would accept the AMA RUC valuations for these site-of-service anomaly 

codes on an interim basis through CY 2010, we had ongoing concerns about the 

methodology used by the AMA RUC to value these 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 PFS 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 addressed 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 addressed 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 lists in the CY 2012 PFS final rule with 
CMS-1524-P 107 

comment period. In addition, several other CPT codes have since been identified as 

having site-of-service anomalies and were addressed in the Five-Year 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 anomalies identified in CY 2009 and CY 2010, the 

rule in which each code was addressed, the AMA RUC- recommended 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 outpatient setting, we continue to believe that the 

work RVU, time, and post-service visits of the code should reflect the current 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-recommended 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 outpatient 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 site-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 for 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 jaw 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/heel Fourth Five-Year Review of Work 8.27 Disagree 7.31 

28122 Partial removal of foot bone Fourth Five-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-Year 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 Five-Year Review of Work 10.05 Disagree 9.09 

49521 Rerepair ing hernia, blocked Fourth Five-Year Review of Work 12.44 Disagree 11.48 

49587 Rpr umbil hern, block > 5 yr Fourth Five-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/renal 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 Five-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 Five-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 Codes 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 11.22 
CMS-1524-P 109 

28730 Fusion of foot bones 12.42 Disagree 10.70 

For CPT code 28725 (Arthrodesis; subtalar) 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 describing services that typically have lengthy 

hospital outpatient recovery periods. For these 23-hour stay services, the typical patient 

is commonly at the hospital for less than 24-hours, but often stays overnight at the 

hospital. Unless a treating physician has written an order to admit the patient as an 

inpatient, the patient is considered for Medicare purposes to be a hospital outpatient, not 

an inpatient, and our claims data support that the typical 23-hour stay service is billed as 

an outpatient service. 

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

that the values of the codes that fall into the 23-hour stay category should not reflect work 

that is typically associated with an inpatient service. However, as we stated in the 

CY 2011 PFS final rule with comment period (75 FR 73226 through 73227), 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 for by a physician during that 

lengthy recovery period at the hospital. While we do not believe that post-procedure 

hospital visits would be at the inpatient level since the typical case is an outpatient who 

would be ready to be discharged from the hospital in 23-hours or less, we believe it is 

generally appropriate to include the intra-service time of the inpatient hospital visit in the 
CMS-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 include a half day, rather than a full day, of a 

discharge day management service. We finalized this policy in the CY 2011 PFS final 

rule with comment period (75 FR 73226 through 73227) and encouraged the AMA RUC 

to apply this methodology in developing the recommendations it provides to us for 

valuing 23-hour stay codes, in order to ensure the consistent and appropriate valuation of 

the physician work for these services. 

For CY 2010, CPT codes 28725 and 28730 were identified as potentially 

misvalued through the site-of-service anomaly screen and were reviewed by the AMA 

RUC. For both of these services, based on reference services and specialty survey data, 

the AMA RUC recommended maintaining the current (CY 2009) work RVU, which we 

then increased slightly based on the redistribution of RVUs that resulted from the 

CY 2010 policy to no longer recognize the CPT consultation codes (74 FR 61775). The 

AMA RUC re-reviewed CPT codes 28725 and 28730 for CY 2012 and, contrary to the 

23-hour stay policy we finalized in the CY 2011 PFS final rule with comment period 

(75 FR 73226 through 73227), recommended replacing the hospital inpatient 

post-operative visit in the current work values with a subsequent observation care service, 

specifically CPT code 99224 (Level 1 subsequent observation care, per day) and 

recommended maintaining the current interim value 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 methodology for valuing these codes entails 
CMS-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 longer typically furnished in the inpatient 

setting. We do not believe it is appropriate to simply exchange the inpatient 

post-operative visits in the original value with subsequent observation care visits and 

maintain the current work RVUs. 

As the data suggests, these two site-of-service anomaly codes resemble 23-hour 

stay outpatient services, and since the AMA RUC's recommended value continues to 

include inpatient visits (or subsequent observation care codes) in the post-operative 

period, we applied the 23-hour stay policy described previously. Specifically, we 

removed the subsequent observation care service, 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 for 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 reference 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 AMA 
CMS-1524-P 112 

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 42440 used under the 

PFS was increased to 7.13 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 resubmitted its previous recommendation and 

again recommended that the current work RVU of 7.13 for CPT code 42440 be maintained. 

We disagree with the AMA RUC-recommended work RVU of 7.13 for CPT code 

42440 and believe a work RVU of 6.14 is more appropriate for this service. As stated 

previously, we believe the appropriate methodology for valuing site-of-service anomaly 

codes entails not just removing the inpatient visits, but also accounting for the removal of 

the inpatient visits in the work value of the CPT code. To appropriately revalue this CPT 

code to reflect an outpatient service we started with the original CY 2008 work RVU of 

7.05 then, in accordance with the policy discussed in section II.B. of this proposed notice, 

we removed the value of the subsequent hospital care service and one-half discharge day 

management service, and added back the subsequent hospital care intra-service time to 

the immediate post-operative care service. As a result, we are proposing 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 sphincter 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 neck 
CMS-1524-P 113 

sphincter, including placement of pump, reservoir, and cuff) was identified as potentially 

misvalued through the site-of-service anomaly screen and was reviewed by the AMA 

RUC. The AMA RUC recommended that CPT 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 claims data indicated that this service is 

predominately furnished in the outpatient setting, survey respondents 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 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. Despite 

Medicare claims data showing that this service 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 least one night in the hospital. The AMA RUC 

has requested that the specialty society conduct an additional survey to address more 

specifically whether an overnight stay is typical for CPT code 53445 and 54410. The 

AMA RUC recommended that the current work RVU of 15.39 for CPT code 53445 be 

maintained. 

We disagree with the AMA RUC-recommended work RVU of 15.39 for CPT 

code 53445 and believe a work RVU of 13.00 is more appropriate for this service. As 

stated previously in our discussion of 23-hour stay codes, as well as in the CY 2010 PFS 
CMS-1524-P 114 

final rule with comment period (74 FR 61777), even though a service may typically have 

a lengthy hospital outpatient recovery period, it should not reflect work that is typically 

associated with an inpatient service. Upon clinical review of this service and the time 

and visits associated with it, we believe that the survey 25th percentile work RVU of 

13.00 appropriately accounts for the work required to furnish this service. 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 sessions 6.54 Disagree 5.00 

 For CY 2009, CPT code 62263 (Percutaneous lysis of epidural adhesions using 

solution injection (eg, hypertonic saline, enzyme) or mechanical means (eg, catheter) 

including radiologic localization (includes contrast when administered), multiple 

adhesiolysis 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 maintaining the current 

(CY 2008) work RVU of 6.41 for this service 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 CPT consultation codes 

(74 FR 61775). Upon re-review for CY 2012, the AMA RUC reaffirmed its previous 

recommendation and recommended that the current work RVU of 6.54 for CPT code 
CMS-1524-P 115 

62263 be maintained. 

We disagree with the AMA RUC-recommended 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 just removing the inpatient visits, but also 

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

Upon clinical review, we believe that the survey median work RVU of 5.00 appropriately 

accounts for the removal of the inpatient visits as well as the increase in intra-service 

time and post-operative office visits in this service. 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 catheter 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 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 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 reflect the outpatient site-of-service, removing 

all but 1 of the post-procedure office visits to reflect the shift in global period from 

90 days to 10 days, and reducing the physician time associated with this service. In 

CY 2010, while we adopted the AMA RUC-recommended work value on an interim final 
CMS-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 increased 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 recommended that the current work RVU of 4.35 

for CPT code 62355 be maintained. 

We disagree with the AMA RUC-recommended 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 just removing the inpatient visits, but also 

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

do not believe that the reduction from the CY 2008 work RVU of 6.60 to the CY 2009 

work RVU of 4.30 adequately accounts for the removal of 3 subsequent hospital care 

visits and half a discharge management day, which together represent a work RVU of 

5.40. Also, the time required to furnish this service dropped significantly, even after 

considering the global period change. Upon clinical review, we believe that the survey 

median work RVU of 3.55 appropriately accounts for the removal of the inpatient visits 

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

CPT code 62355 for CY 2012. 

 For CY 2009, CPT code 62361 (Implantation or replacement of device for 

intrathecal or epidural drug infusion; nonprogrammable pump) 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 a work RVU of 5.60, approximately midway between the survey median 
CMS-1524-P 117 

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 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 final 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 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 

ultimately recommended that the current work RVU of 5.65 for CPT code 62361 be 

maintained. 

We disagree with the AMA RUC-recommended 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 just removing the inpatient visits, but also 

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

do not believe that the reduction from the CY 2008 work RVU of 6.59 to the CY 2009 

work RVU of 5.60 adequately accounts for the removal of 3 subsequent hospital care 

visits and half a discharge management day, which together represent a work RVU of 

5.40. Also, the time required to furnish this service dropped significantly, even after 

considering the global period change. Upon clinical review, we 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 (Implantation or replacement of device for 

intrathecal or epidural drug infusion; programmable pump, including preparation of 

pump, with or without programming) 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 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 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 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 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 ultimately recommended that the current work 

RVU of 6.10 for CPT code 62362 be maintained. 

We disagree with the AMA RUC-recommended work RVU of 6.10 for CPT code 

62362. As stated previously, we believe the appropriate methodology for valuing 

site-of-service anomaly codes entails not just removing the inpatient visits, but also 

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

do not believe that the reduction from the CY 2008 work RVU of 8.58 to the CY 2009 

work RVU of 6.05 adequately accounts for the removal of 3 subsequent hospital care 

visits and half a discharge management day, which together represent a work RVU of 
CMS-1524-P 119 

5.40. Also, the time required to furnish this service dropped significantly, even after 

considering the global period change. Upon clinical review, we believe that the survey 

median work RVU of 5.60 appropriately accounts for the removal of the inpatient visits 

and decreased time for this service. Therefore, 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 epidural infusion) 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 a work RVU of 4.60, the survey median. The AMA RUC recommended 

removing the inpatient visits to reflect the outpatient site-of-service, removing all but 1 of 

the post-procedure office visits to reflect the shift in global period from 90 days to 10 

days, and reducing the physician time associated with this service. 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 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 work RVU of 4.65 for CPT 

code 62365 be maintained. 

We disagree with the AMA RUC-recommended 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 just removing the inpatient visits, but also 
CMS-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 the CY 2008 work RVU of 6.57 to the CY 2009 

work RVU of 4.60 adequately accounts for the removal of 3 subsequent hospital care 

visits and half a discharge management day, which together represent a work RVU of 

5.40. Also, the time required to furnish this service dropped significantly, even after 

considering the global period change. 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 management 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 administered), multiple adhesiolysis 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 the survey median work RVU of 7.15, and 

removing the inpatient subsequent hospital care visits to reflect the current outpatient 
CMS-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 previous recommendation and ultimately recommended that the 

current work RVU of 7.20 for CPT code 63650 be maintained. 

We disagree with the AMA RUC-recommended 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 just removing the inpatient visits, but also 

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

Upon clinical review, we believe that the survey median work RVU of 7.15 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 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 anomaly screen and was reviewed by the AMA 

RUC. Based on reference services and 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-recommended work value on an interim final 

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

for CPT code 63685 used under the PFS was increased 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 recommended that the current work RVU of 6.05 

for CPT code 63685 be maintained. 

We disagree with the AMA RUC-recommended 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 just removing the inpatient visits, but also 

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

Upon clinical review, we believe that the 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, the typical patient is commonly at the hospital 

for less than 24 hours, but often stays overnight 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 identified as potentially misvalued through the 

site-of-service anomaly screen and was reviewed by the AMA RUC. Based on specialty 

survey data indicating that this service typically requires an overnight stay, the AMA 

RUC recommended removing the CPT code from 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 resulted 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 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 maintaining the one full day of discharge 

management service. The AMA RUC also recommended an increase in intra-service 

time and post-procedure office visits. Ultimately, 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 outpatient services, and since the AMA RUC's 

recommended value continues to include one full day of discharge management service, 

we applied the 23-hour stay policy described previously. That is, we reduced the one day 

of discharge management service to one-half day, and adjusted physician work RVUs 
CMS-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 125 

TABLE 9: PHYSICIAN TIME AND WORK VALUES FOR CY 2009 AND 2010 SITE-OF-SERVICE A

ADDRESSED IN THIS CY 2012 PFS PROPOSED RULE 

HCPCS Code Short 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 

21025 Excision of bone, lower jaw CY 2008 11.07 75 0 0 120 43 1 1 0 1 0 21025 Excision of bone, lower jaw CY 2009 9.87 60 10 15 90 30 0 0 0 0 0 21025 Excision of bone, lower jaw Current 10.03 60 10 15 90 30 0 0 0 0 0 21025 Excision of bone, lower jaw RUC Rec 10.03 60 10 15 90 30 0 0 0 0 0 21025 Excision of bone, lower jaw CMS Rec 10.03 60 10 15 90 30 0 0 0 0 0 23415 Release of shoulder ligament CY 2008 10.09 24 0 25 62 23 0.5 0 0 1 0 23415 Release of shoulder ligament CY 2009 9.07 40 15 15 60 20 0 0 0 0.5 0 23415 Release of shoulder ligament Current 9.23 40 15 15 60 20 0 0 0 0.5 0 23415 Release of shoulder ligament RUC Rec 9.23 40 15 15 60 20 0 0 0 0 0 23415 Release of shoulder ligament CMS Rec 9.23 40 15 15 60 20 0 0 0 0 0 25116 Remove wrist/forearm lesion CY 2008 7.38 21 0 15 78 21 1.5 0 0 1 0 25116 Remove wrist/forearm lesion CY 2009 7.38 40 10 15 60 20 0 0 0 0.5 0 25116 Remove wrist/forearm lesion Current 7.56 40 10 15 60 20 0 0 0 0.5 0 25116 Remove wrist/forearm lesion RUC Rec 7.56 40 10 15 60 20 0 0 0 0.5 0 25116 Remove wrist/forearm lesion CMS Rec 7.56 40 10 15 60 20 0 0 0 0.5 0 28725 Fusion of foot bones CY 2008 11.97 25 0 25 89 22 2.5 0 0 1 0 28725 Fusion of foot bones CY 2009 11.97 25 0 25 89 22 2.5 0 0 1 0 28725 Fusion of foot bones Current 12.18 45 10 15 90 20 1 0 0 1 0 28725 Fusion of foot bones RUC Rec 12.18 33 10 15 90 20 0 0 0 1 1 28725 Fusion of foot bones CMS Rec 11.22 33 10 15 90 30 0 0 0 0.5 0 28730 Fusion of foot bones CY 2008 12.21 60 0 0 120 30 1 0 0 1 0 28730 Fusion of foot bones CY 2009 12.21 60 0 0 120 30 1 0 0 1 0 28730 Fusion of foot bones Current 12.42 45 10 15 100 20 1 0 0 1 0 
CMS-1524-P 126 

HCPCS Code Short 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 

28730 Fusion of foot bones RUC Rec 12.42 33 10 15 100 20 0 0 0 1 1 28730 Fusion of foot bones CMS Rec 10.70 33 10 15 100 30 0 0 0 0.5 0 42440 Excise submaxillary gland CY 2008 7.05 22 0 25 71 19 0.5 0 0 1 0 42440 Excise submaxillary gland CY 2009 7.05 30 10 15 60 20 0 0 0 0.5 0 42440 Excise submaxillary gland Current 7.13 30 10 15 60 20 0 0 0 0.5 0 42440 Excise submaxillary gland RUC Rec 7.13 30 10 15 60 20 0 0 0 0.5 0 42440 Excise submaxillary gland CMS Rec 6.14 30 10 15 60 25 0 0 0 0.5 0 52341 Cysto w/ureter stricture tx CY 2008 6.11 47.5 0 0 60 30 1 0 0 0 0 52341 Cysto w/ureter stricture tx CY 2009 5.35 45 10 15 45 20 0 0 0 0 0 52341 Cysto w/ureter stricture tx Current 5.35 45 10 15 45 20 0 0 0 0 0 52341 Cysto w/ureter stricture tx RUC Rec 5.35 45 10 15 45 20 0 0 0 0 0 52341 Cysto w/ureter stricture tx CMS Rec 5.35 45 10 15 45 20 0 0 0 0 0 52342 Cysto w/up stricture tx CY 2008 6.61 60 0 0 65 30 1 0 0 0 0 52342 Cysto w/up stricture tx CY 2009 5.85 40 10 10 60 20 0 0 0 0 0 52342 Cysto w/up stricture tx Current 5.85 40 10 10 60 20 0 0 0 0 0 52342 Cysto w/up stricture tx RUC Rec 5.85 40 10 10 60 20 0 0 0 0 0 52342 Cysto w/up stricture tx CMS Rec 5.85 40 10 10 60 20 0 0 0 0 0 52343 Cysto w/renal stricture tx CY 2008 7.31 60 0 0 90 30 1 0 0 0 0 52343 Cysto w/renal stricture tx CY 2009 6.55 45 10 10 60 25 0 0 0 0 0 52343 Cysto w/renal stricture tx Current 6.55 45 10 10 60 25 0 0 0 0 0 52343 Cysto w/renal stricture tx RUC Rec 6.55 45 10 10 60 25 0 0 0 0 0 52343 Cysto w/renal stricture tx CMS Rec 6.55 45 10 10 60 25 0 0 0 0 0 52344 Cysto/uretero, stricture tx CY 2008 7.81 60 0 0 77.5 30 1 0 0 0 0 52344 Cysto/uretero, stricture tx CY 2009 7.05 40 10 10 45 20 0 0 0 0 0 52344 Cysto/uretero, stricture tx Current 7.05 40 10 10 45 20 0 0 0 0 0 52344 Cysto/uretero, stricture tx RUC Rec 7.05 40 10 10 45 20 0 0 0 0 0 52344 Cysto/uretero, stricture tx CMS Rec 7.05 40 10 10 45 20 0 0 0 0 0 
CMS-1524-P 127 

HCPCS Code Short 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 

52345 Cysto/uretero w/up stricture CY 2008 8.31 50 0 0 90 30 1 0 0 0 0 52345 Cysto/uretero w/up stricture CY 2009 7.55 45 10 15 45 20 0 0 0 0 0 52345 Cysto/uretero w/up stricture Current 7.55 45 10 15 45 20 0 0 0 0 0 52345 Cysto/uretero w/up stricture RUC Rec 7.55 45 10 15 45 20 0 0 0 0 0 52345 Cysto/uretero w/up stricture CMS Rec 7.55 45 10 15 45 20 0 0 0 0 0 52346 Cystouretero w/renal strict CY 2008 9.34 45 0 0 120 30 1 0 0 0 0 52346 Cystouretero w/renal strict CY 2009 8.58 40 10 10 60 20 0 0 0 0 0 52346 Cystouretero w/renal strict Current 8.58 40 10 10 60 20 0 0 0 0 0 52346 Cystouretero w/renal strict RUC Rec 8.58 40 10 10 60 20 0 0 0 0 0 52346 Cystouretero w/renal strict CMS Rec 8.58 40 10 10 60 20 0 0 0 0 0 52400 Cystouretero w/congen repr CY 2008 10.06 90 0 0 60 30 1 0 0 1 0 52400 Cystouretero w/congen repr CY 2009 8.66 72.5 10 15 40 25 0 0 0 0.5 0 52400 Cystouretero w/congen repr Current 8.69 72.5 10 15 40 25 0 0 0 0.5 0 52400 Cystouretero w/congen repr RUC Rec 8.69 72.5 10 15 40 25 0 0 0 0.5 0 52400 Cystouretero w/congen repr CMS Rec 8.69 72.5 10 15 40 25 0 0 0 0.5 0 52500 Revision of bladder neck CY 2008 9.39 40 0 0 45 35 1 0 0 1 0 52500 Revision of bladder neck CY 2009 7.99 45 10 15 45 27.5 0 0 0 0.5 0 52500 Revision of bladder neck Current 8.14 45 10 15 45 27.5 0 0 0 0.5 0 52500 Revision of bladder neck RUC Rec 8.14 45 10 15 45 27.5 0 0 0 0.5 0 52500 Revision of bladder neck CMS Rec 8.14 45 10 15 45 27.5 0 0 0 0.5 0 53445 Insert uro/ves nck sphincter CY 2008 15.21 50 0 25 126 24 3 0 0 1 0 53445 Insert uro/ves nck sphincter CY 2009 15.21 50 15 20 90 25 0 1 1 1 0 53445 Insert uro/ves nck sphincter Current 15.39 50 15 20 90 25 0 1 1 1 0 53445 Insert uro/ves nck sphincter RUC Rec 15.39 50 15 20 90 25 0 0 0 1 1 53445 Insert uro/ves nck sphincter CMS Rec 13.00 50 15 20 90 25 0 0 0 1 1 54410 Remove/replace penis prosth CY 2008 16.48 50 0 0 145 30 1 0 0 1 0 54410 Remove/replace penis prosth CY 2009 15.00 40 10 15 120 30 0 0 0 1 0 
CMS-1524-P 128 

HCPCS Code Short 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 

54410 Remove/replace penis prosth Current 15.18 40 10 15 120 30 0 0 0 1 0 54410 Remove/replace penis prosth RUC Rec 15.18 40 10 15 120 30 0 0 0 1 1 54410 Remove/replace penis prosth CMS Rec 15.18 40 10 15 120 30 0 0 0 1 0 54530 Removal of testis CY 2008 9.31 33 0 25 58 17 0.5 0 0 1 0 54530 Removal of testis CY 2009 8.35 57.5 10 15 60 30 0 0 0 0.5 0 54530 Removal of testis Current 8.46 57.5 10 15 60 30 0 0 0 0.5 0 54530 Removal of testis RUC Rec 8.46 57.5 10 15 60 30 0 0 0 0.5 0 54530 Removal of testis CMS Rec 8.46 57.5 10 15 60 30 0 0 0 0.5 0 62263 Epidural lysis mult sessions CY 2008 6.41 40 0 0 30 20 2 0 0 1 0 62263 Epidural lysis mult sessions CY 2009 6.41 33 10 5 45 20 0 0 0 0.5 0 62263 Epidural lysis mult sessions Current 6.54 33 10 5 45 20 0 0 0 0.5 0 62263 Epidural lysis mult sessions RUC Rec 6.54 33 10 5 45 20 0 0 0 0.5 0 62263 Epidural lysis mult sessions CMS Rec 5.00 33 10 5 45 40 0 0 0 0.5 0 62350 Implant spinal canal cath CY 2008 8.04 70 0 0 60 125 1 0 2 1 0 62350 Implant spinal canal cath CY 2009 6.00 33 10 5 60 20 0 0 0 0.5 0 62350 Implant spinal canal cath Current 6.05 33 10 5 60 20 0 0 0 0.5 0 62350 Implant spinal canal cath RUC Rec 6.05 33 10 5 60 20 0 0 0 0.5 0 62350 Implant spinal canal cath CMS Rec 6.05 33 10 5 60 20 0 0 0 0.5 0 62355 Remove spinal canal catheter CY 2008 6.60 60 0 0 40 130 1 0 2 1 0 62355 Remove spinal canal catheter CY 2009 4.30 33 10 5 30 20 0 0 0 0.5 0 62355 Remove spinal canal catheter Current 4.35 33 10 5 30 20 0 0 0 0.5 0 62355 Remove spinal canal catheter RUC Rec 4.35 33 10 5 30 20 0 0 0 0.5 0 62355 Remove spinal canal catheter CMS Rec 3.55 33 10 5 30 20 0 0 0 0.5 0 62360 Insert spine infusion device CY 2008 3.68 60 0 0 55 123 0 0 2 1 0 62360 Insert spine infusion device CY 2009 4.28 33 10 5 60 20 0 0 0 0.5 0 62360 Insert spine infusion device Current 4.33 33 10 5 60 20 0 0 0 0.5 0 62360 Insert spine infusion device RUC Rec 4.33 33 10 5 60 20 0 0 0 0.5 0 
CMS-1524-P 129 

HCPCS Code Short 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 

62360 Insert spine infusion device CMS Rec 4.33 33 10 5 60 20 0 0 0 0.5 0 62361 Implant spine infusion pump CY 2008 6.59 60 0 0 60 130 1 0 2 1 0 62361 Implant spine infusion pump CY 2009 5.60 33 10 5 60 20 0 0 0 0.5 0 62361 Implant spine infusion pump Current 5.65 33 10 5 60 20 0 0 0 0.5 0 62361 Implant spine infusion pump RUC Rec 5.65 33 10 5 60 20 0 0 0 0.5 0 62361 Implant spine infusion pump CMS Rec 5.00 33 10 5 60 20 0 0 0 0.5 0 62362 Implant spine infusion pump CY 2008 8.58 75 0 0 90 150 0 0 3 1 0 62362 Implant spine infusion pump CY 2009 6.05 33 10 5 60 20 0 0 0 0.5 0 62362 Implant spine infusion pump Current 6.10 33 10 5 60 20 0 0 0 0.5 0 62362 Implant spine infusion pump RUC Rec 6.10 33 10 5 60 20 0 0 0 0.5 0 62362 Implant spine infusion pump CMS Rec 5.60 33 10 5 60 20 0 0 0 0.5 0 62365 Remove spine infusion device CY 2008 6.57 60 0 0 45 125 1 0 2 1 0 62365 Remove spine infusion device CY 2009 4.60 33 10 5 45 20 0 0 0 0.5 0 62365 Remove spine infusion device Current 4.65 33 10 5 45 20 0 0 0 0.5 0 62365 Remove spine infusion device RUC Rec 4.65 33 10 5 45 20 0 0 0 0.5 0 62365 Remove spine infusion device CMS Rec 3.93 33 10 5 45 20 0 0 0 0.5 0 63650 Implant neuroelectrodes CY 2008 7.57 26 5 25 74 19 2.5 0 0 1 0 63650 Implant neuroelectrodes CY 2009 7.15 33 10 5 60 20 0 0 0 0.5 0 63650 Implant neuroelectrodes Current 7.20 33 10 5 60 20 0 0 0 0.5 0 63650 Implant neuroelectrodes RUC Rec 7.20 33 10 5 60 20 0 0 0 0.5 0 63650 Implant neuroelectrodes CMS Rec 7.15 33 10 5 60 20 0 0 0 0.5 0 63685 Insrt/redo spine n generator CY 2008 7.87 28 0 25 62 18 2.5 0 0 1 0 63685 Insrt/redo spine n generator CY 2009 6.00 33 10 5 60 20 0 0 0 0.5 0 63685 Insrt/redo spine n generator Current 6.05 33 10 5 60 20 0 0 0 0.5 0 63685 Insrt/redo spine n generator RUC Rec 6.05 33 10 5 60 20 0 0 0 0.5 0 63685 Insrt/redo spine n generator CMS Rec 5.19 33 10 5 60 20 0 0 0 0.5 0 64708 Revise arm/leg nerve CY 2008 6.22 21 0 25 76 18 0.5 0 0 1 0 
CMS-1524-P 130 

HCPCS Code Short 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 

64708 Revise arm/leg nerve CY 2009 6.22 35 10 10 60 15 0 0 0 0.5 0 64708 Revise arm/leg nerve Current 6.36 35 10 10 60 15 0 0 0 0.5 0 64708 Revise arm/leg nerve RUC Rec 6.36 35 10 10 60 15 0 0 0 0.5 0 64708 Revise arm/leg nerve CMS Rec 6.36 35 10 10 60 15 0 0 0 0.5 0 64831 Repair of digit nerve CY 2008 10.23 25 0 25 74 21 1 0 0 1 0 64831 Repair of digit nerve CY 2009 9.00 40 10 15 60 15 0 0 0 0.5 0 64831 Repair of digit nerve Current 9.16 40 10 15 60 15 0 0 0 0.5 0 64831 Repair of digit nerve RUC Rec 9.16 40 10 15 60 15 0 0 0 0.5 0 64831 Repair of digit nerve CMS Rec 9.16 40 10 15 60 15 0 0 0 0.5 0 65285 Repair of eye wound CY 2008 14.43 37 0 15 79 32 0.5 0 0 1 0 65285 Repair of eye wound CY 2009 14.43 37 0 15 79 32 0.5 0 0 1 0 65285 Repair of eye wound Current 14.71 37 0 15 79 32 0.5 0 0 1 0 65285 Repair of eye wound RUC Rec 16.00 30 10 20 90 30 0 0 0 1 0 65285 Repair of eye wound CMS Rec 15.36 30 10 20 90 30 0 0 0 0.5 0 
CMS-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 for DXA services were revised. The 

former DXA CPT codes 76075 (Dual energy X-ray absorptiometry (DXA), bone density 

study, one or more sites; axial skeleton (eg, hips, pelvis, spine)); 76076 (Dual energy 

X-ray absorptiometry (DXA), bone density study, one or more sites; appendicular 

skeleton (peripheral) (for example, radius, wrist, heel)); and 76077 (Dual energy X-ray 

absorptiometry (DXA), bone density study, one or more sites; vertebral fracture 

assessment) were deleted and replaced with new CPT codes 77080, 77081, and 77082 

that have the same respective code descriptors as the predecessor codes. Section 1848(b) 

of the Act, as amended, specifies that the revised payment applies to two of the 

predecessor codes (CPT codes 76075 and 76077) and ''any succeeding codes,'' which are, 

in this case, CPT codes 77080 and 77082. 

As mentioned previously, section 1848(b) of the Act revised the payment for CPT 

codes 77080 and 77082 during CY 2010 and CY 2011. We provided for payment in 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 adjustment for the relevant payment year). 
CMS-1524-P 132 

Because the statute specifies a payment calculation for these services for CYs 2010 and 

2011 as described previously, for those years we implemented the payment provision by 

imputing RVUs for these services that would provide the specified payment amount for 

these services when multiplied by the current year's conversion factor. 

For CY 2012, the payment rate for CPT codes 77080 and 77082 will be based 

upon resource-based, rather than imputed, RVUs, and the current year's conversion 

factor. The CY 2012 work, PE, and malpractice RVUs for these codes are shown in Table 

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 the payment rate for the two DXA CPT 

codes, section 3111(b) of the Affordable Care Act also authorizes the Secretary to enter 

into agreement with the Institute of Medicine of the National Academies to conduct a 

study on the ramifications of Medicare payment reductions for dual-energy x-ray 

absorptiometry (as described in section 1848(b)(6) of the Act) during years 2007, 2008, 

and 2009 on beneficiary access to bone mass density tests. This study has not yet been 

conducted. In the absence of this study, we request that the AMA RUC review CPT 

codes 77080 and 77082 during CY 2012. 

C. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy 
CMS-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 reduction, was extended to nuclear medicine 

diagnostic procedures (CPT codes 78306, 78320, 78802, 78803, 78806, and 78807). In 

the CY 1995 PFS final rule with comment period (59 FR 63410), we indicated that we 

would consider applying the policy to other diagnostic tests in the future. 

Consistent with recommendations of MedPAC in its March 2005 Report to the 

Congress on Medicare Payment Policy, under the CY 2006 PFS, the MPPR policy was 

extended to the technical component (TC) of certain diagnostic imaging procedures 

performed on contiguous areas of the body in a single session (70 FR 70261). The 

reduction recognizes that, for the second and subsequent imaging procedures, there are 

some efficiencies in clinical labor, supplies, and equipment time. In particular, certain 

clinical labor activities and supplies are not duplicated for subsequent procedures and, 

because equipment time and indirect costs are allocated based on clinical labor time, 

those would also be reduced accordingly. 

The imaging MPPR policy originally applied to computed tomography (CT) and 

computed tomographic angiography (CTA), magnetic resonance imaging (MRI) and 

magnetic resonance angiography (MRA), and ultrasound services within 11 families of 

codes based on imaging modality and body region. When we adopted the policy in 

CY 2007, we stated that we believed efficiencies were most likely to occur when imaging 
CMS-1524-P 134 

procedures are performed on contiguous body areas because the patient and equipment 

have already been prepared for the second and subsequent procedures, potentially 

yielding resource savings in areas such as clerical time, technical preparation, and 

supplies (70 FR 45850). The MPPR policy originally applied only to procedures 

furnished in a single session involving contiguous body areas within a family of codes, 

not across families. Additionally, while the MPPR policy applies to TC-only services 

and to the TC of global services, it does not apply to professional component (PC) 

services. 

Under the current imaging MPPR policy, full payment is made for the TC of the 

highest paid procedure, and payment is reduced by 50 percent of the TC for each 

additional procedure when an MPPR scenario applies. We originally planned to phase in 

the imaging MPPR policy over a 2-year period, with a 25 percent reduction in CY 2006 

and a 50 percent reduction in CY 2007 (70 FR 70263). However, the Deficit Reduction 

Act of 2005 (DRA) (Pub. L. 109–171) amended the statute to place a cap on the PFS 

payment amount for most imaging procedures at the amount paid under the hospital 

outpatient prospective payment system (OPPS). In view of the new OPPS payment cap 

added by the DRA, we decided in the PFS final rule with comment period for 2006 that it 

would be prudent to retain the imaging MPPR at 25 percent while we continued to 

examine the appropriate payment levels (71 FR 69659). The DRA also exempted 

reduced expenditures attributable to the imaging MPPR policy from the PFS budget 

neutrality provision. Effective July 1, 2010, section 3135(b) of the Affordable Care Act 

amended the statute to increase the MPPR on the TC of imaging services under the policy 

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

and exempted the reduced expenditures attributable to this further change from the PFS 

budget neutrality provision. 

In the July 2009 GAO report entitled, "Medicare Physician Payments: Fees 

Could Better Reflect Efficiencies Achieved when Services are Provided Together," the 

GAO recommended that we take further steps to ensure that fees for services paid under 

the PFS reflect efficiencies that occur when services are furnished by the same physician 

to the same beneficiary on the same day. The GAO recommended the following: (1) 

expanding the existing imaging MPPR policy for certain services to the PC to reflect 

efficiencies in physician work for certain imaging services; and (2) expanding the MPPR 

to reflect PE efficiencies that occur when certain nonsurgical, nonimaging services are 

furnished together. The GAO report also encouraged us to focus on service pairs that 

have the most impact on Medicare spending. 

In its March 2010 report, MedPAC noted its concerns about mispricing of 

services under the PFS. MedPAC indicated that it would explore whether expanding the 

unit of payment through packaging or bundling would improve payment accuracy and 

encourage more efficient use of services. 

In the CYs 2009 and 2010 PFS proposed rules (73 FR 38586 and 74 FR 33554, 

respectively), we stated that we planned to analyze nonsurgical services commonly 

furnished together (for example, 60 to 75 percent of the time) to assess whether an 

expansion of the MPPR policy could be warranted. MedPAC encouraged us to consider 

duplicative physician work, as well as PE, in any expansion of the MPPR policy. 

Section 1848(c)(2)(K) of the Act (as added by section 3134(a) of the Affordable Care 

Act) specifies that the Secretary shall identify potentially misvalued codes by examining 
CMS-1524-P 136 

multiple codes that are frequently billed in conjunction with furnishing a single service, 

and review and make appropriate adjustments to their relative values. As a first step in 

applying this provision, in the CY 2010 final rule with comment period, we implemented 

a limited expansion of the imaging MPPR policy to additional combinations of imaging 

services. 

 Effective January 1, 2011 the imaging MPPR applies regardless of code family; 

that is, the policy applies to multiple imaging services furnished within the same family 

of codes or across families. This policy is consistent with the standard PFS MPPR policy 

for surgical procedures that does not group procedures by body region. The current 

imaging MPPR policy applies to CT and CTA, MRI and MRA, and ultrasound 

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 services furnished on or after July 1, 2010) are 

excluded from the PFS budget neutrality adjustment. That is, the reduced payments for 

code combinations within a family of codes (contiguous body areas) are excluded from 

budget neutrality. However, this exclusion only applies to reduced expenditures 

attributable to the increase in the MPPR percentage from 25 to 50 percent, and not to 

reduced expenditures attributable to our policy change regarding additional code 

combinations across code families (non-continguous body areas) that are subject to 

budget neutrality under the PFS 
CMS-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 provisions of section 3134(a) of the Affordable 

Care Act, effective January 1, 2011, we implemented an MPPR for therapy services. The 

MPPR applies to separately payable "always therapy" services, that is, services that are 

only paid by Medicare when furnished under a therapy plan of care. Contractor-priced 

codes, bundled codes, and add-on codes are excluded because an MPPR would not be 

applicable for "always therapy" services furnished in combination with these codes. The 

complete list of codes subject to the MPPR policy for therapy services is included in 

Addendum H. 

In the CY 2011 proposed rule (75 FR 44075), we proposed to apply a 50 percent 

payment reduction to the PE component of the second and subsequent therapy services 

for multiple "always therapy" services furnished to a single patient in a single day. 

However, in response to public comments, in the CY 2011 PFS final rule with comment 

period (75 FR 73232), we adopted a 25 percent payment reduction to the PE component 

of the second and subsequent therapy services for multiple "always therapy" services 

furnished to a single patient in a single day. 

Subsequent to publication of the CY 2011 PFS final rule with comment period, 

section 3 of the Physician Payment and Therapy Relief Act of 2010 (Pub. L. 111-286) 

revised the payment reduction percentage from 25 percent to 20 percent for therapy 

services furnished in office settings. The payment reduction percentage remains at 

25 percent for services furnished in institutional settings. Section 4 of the Physician 

Payment and Therapy Relief Act of 2010 exempted the reduced expenditures attributable 
CMS-1524-P 138 

to the therapy MPPR policy from the PFS budget neutrality provision. Under our current 

policy as amended by the Physician Payment and Therapy Relief Act, for institutional 

services, full payment is made for the service or unit with the highest PE and payment for 

the PE component for the second and subsequent procedures or additional units of the 

same service is reduced by 25 percent. For non-institutional services, full payment is 

made for the service or unit with the highest PE and payment for the PE component for 

the second and subsequent procedures or additional units of the same service is reduced 

by 20 percent. 

The MPPR policy applies to multiple units of the same therapy service, as well as 

to multiple different services, when furnished to the same patient on the same day. It 

applies to services furnished by an individual or group practice or "incident to" a 

physician's service. The MPPR applies when multiple therapy services are billed on the 

same date of service for one patient by the same practitioner or facility under the same 

National Provider Identifier (NPI), regardless of whether the services are furnished in one 

therapy discipline or multiple disciplines, including, physical therapy, occupational 

therapy, or speech-language pathology. 

The MPPR policy applies in all settings where outpatient therapy services are paid 

under Part B. This includes both services paid under the PFS that are furnished in the 

office setting, as well as to institutional services paid at the PFS rates that are furnished 

by outpatient hospitals, home health agencies, comprehensive outpatient rehabilitation 

facilities (CORFs), and other entities that are paid under Medicare Part B for outpatient 

therapy services. 
CMS-1524-P 139 

2. CY 2012 Proposed Expansion of the MPPR Policy to the Professional Component of 

Advanced Imaging Services 

Over the past 3-years, as part of the potentially 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 expected efficiencies. For example, for 

CY 2011, the AMA RUC valued the work for a series of new codes that describe CT of 

the abdomen and pelvis, specifically CPT codes: 

● 74176 (Computed tomography, abdomen and pelvis; without contrast 

material). 

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

● 74178 (Computed tomography, abdomen and pelvis; without contrast material 

in one or both body regions, followed by with contrast material(s) and further sections in 

one or both body regions). 

 We accepted the 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 reductions that would typically result from a MPPR 

adjustment. For example, in support of the recommended work value of 1.74 RVUs for 

74176, the AMA RUC explained that the full value of 74150 (Computed tomography, 

abdomen; without contrast material) (Work RVU = 1.19) plus half the value of 72192 

(Computed tomography, pelvis; without contrast material) (1/2 Work RVU = 0.55) 
CMS-1524-P 140 

equals 1.74 work RVUs. The AMA RUC stated that its recommended valuation was 

appropriate even though the combined current work RVUs for of 74150 and 72192 would 

result in a total work RVU of 2.28. Furthermore, the AMA RUC validated its estimation 

of work efficiency for the combined service by comparing the code favorably with the 

work value associated with 74182 (Magnetic resonance, for example, proton imaging, 

abdomen; with contrast material(s)) (Work RVU = 1.73), which has a similar 

intra-service time, 20 minutes. Thus, we believe our current and proposed MPPR 

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

unaccounted-for efficiencies and to appropriately value comprehensive codes for a 

bundle of component services. 

We continue to believe that there may be additional imaging and other diagnostic 

services for which there are efficiencies in work when furnished together, resulting in 

potentially excessive payment for these services under current policy. 

 As noted, Medicare has a longstanding policy to reduce payment by 50 percent 

for the second and subsequent surgical procedures and nuclear medicine diagnostic 

procedures furnished to the same patient by the same physician on the same day. 

In continuing to apply the provisions of section 3134(a) of the Affordable Care Act, for 

CY 2012 we 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 Addendum F). Thus, the MPPR would apply to 

the PC and the TC of the codes. Specifically, we propose to expand the 50 percent 

payment reduction currently applied to the TC to apply also to the PC of the second and 

subsequent advanced imaging services furnished in the same session. Full payment 
CMS-1524-P 141 

would be made for the PC and TC of the highest paid procedure, and payment would be 

reduced by 50 percent for the PC and TC for each additional procedure furnished to the 

same patient in the same session. This proposal is based on the expected efficiencies in 

furnishing multiple services in the same session due to duplication of physician work - 

primarily in the pre- and post-service periods, with smaller efficiencies in the intraservice 

period. 

This proposal is consistent with the statutory requirement for the Secretary to 

identify, review, and adjust the relative values of potentially misvalued services under the 

PFS as specified by section 3134(a) of the Affordable Care Act. The proposal is also 

consistent both with our longstanding policy on surgical and nuclear medicine diagnostic 

procedures, which apply a 50 percent reduction to second and subsequent procedures. 

Furthermore, it is responsive to continued concerns about significant growth in imaging 

spending, and to MedPAC (March 2010) and GAO (July 2009) recommendations 

regarding the expansion of MPPR policies under the PFS to account for additional 

efficiencies. 

 Finally, as noted, the proposal is consistent with the RUC's recent methodology 

and rationale in valuing the work for a combined CT of the pelvis (CPT codes 72192, 

72193 and 72194), and abdomen (CPT codes 74150, 74160 and 74170) where the 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 be 
CMS-1524-P 142 

aggressively looking for efficiencies in other sets of codes during the following years and 

will consider implementing more expansive reduction policies in CY 2013 and beyond. 

We invite public comment on the following MPPR policies which are under 

consideration. Any proposals would be presented in future rulemaking and subject to 

further public comment: 

● Apply the MPPR to the TC of All Imaging Services. This approach would 

apply a payment reduction to the TC of the second and subsequent imaging services 

performed in the same session. Such an approach could define imaging consistent with 

our existing definition of imaging for purposes of the statutory cap on payment at the 

OPPS rate (including x-ray, ultrasound (including echocardiography), nuclear medicine 

(including positron emission tomography), magnetic resonance imaging, computed 

tomography, and fluoroscopy, but excluding diagnostic and screening mammography). 

Add-on codes that are always furnished with another service and have been valued 

accordingly could be excluded. 

Such an approach would be based on the expected efficiencies due to duplication 

of clinical labor activities, supplies, and equipment time. This approach would apply to 

approximately 530 HCPCS codes, including the 119 codes to which the current imaging 

MPPR applies. Savings would be redistributed to other PFS services as required by the 

statutory PFS budget neutrality provision. 

● Apply the MPPR to the PC of All Imaging Services. This approach would 

apply a payment reduction to the PC of the second or subsequent imaging services 

furnished in the same encounter. Such an approach could define imaging consistent 

with our existing definition of imaging for the cap on payment at the OPPS rate. 
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 efficiencies 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 required by the statutory PFS budget neutrality 

provision. 

● Apply the MPPR to the TC of All Diagnostic Tests. This approach would 

apply a payment reduction to the TC of the second and subsequent diagnostic tests (such 

as radiology, cardiology, audiology, etc.) furnished in the same encounter. Add-on 

codes that are always furnished with another service and have been valued accordingly 

could be excluded. 

The approach would be based on the expected efficiencies due to duplication of 

clinical labor activities, supplies, and equipment time. The approach would apply to 

approximately 700 HCPCS codes, including the approximately 560 HCPCS codes 

subject to the OPPS cap. The savings would be redistributed to other PFS services as 

required by the statutory PFS budget neutrality provision. 

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, using weighted specialty-specific malpractice 
CMS-1524-P 144 

expense percentages and 1991 average allowed charges. Malpractice RVUs for new 

codes after 1991 were extrapolated from similar existing codes or as a percentage of the 

corresponding work RVU. Section 4505(f) of the BBA amended section 1848(c) of the 

Act which required us to implement resource-based malpractice RVUs for services 

furnished beginning in 2000. Therefore, initial implementation of resource-based 

malpractice RVUs occurred in 2000. 

 The statute also requires that we review, and if necessary adjust, RVUs no less 

often than every 5 years. The first review and update of resource-based malpractice 

RVUs was addressed in the CY 2005 PFS final rule with comment period (69 FR 66263). 

Minor modifications to the methodology were addressed in the CY 2006 PFS final rule 

with comment period (70 FR 70153). In the CY 2010 PFS final rule with comment 

period, we implemented the second review and update of malpractice RVUs. For a 

discussion of the second review and update of malpractice RVUs, see the CY 2010 PFS 

proposed rule (74 FR 33537) and final rule with comment period (74 FR 61758). 

 As explained in the CY 2011 PFS final rule with comment period, malpractice 

RVUs for new and revised codes effective before the next Five-Year Review (for 

example, effective CY 2011 through CY 2014, assuming that the next review of 

malpractice RVUs occurs for CY 2015) are determined either by a direct crosswalk to a 

similar source code or by a modified crosswalk to account for differences in work RVUs 

between the new/revised code and the source code (75 FR 73208). For the modified 

crosswalk approach, we adjust (or "scale") the malpractice RVU for the new/revised code 

to reflect the difference in work RVU between the source code and the new/revised work 

value (or, if greater, the clinical labor portion of the fully implemented PE RVU) for the 
CMS-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 percent over the source code RVU. This approach presumes 

the same risk factor for the new/revised code and source code but uses the work RVU for 

the new/revised code to adjust for risk-of-service. 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 current (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 occur for CY 2015. We 

anticipate soliciting public comments in the CY 2013 PFS proposed rule on matters 

relating to the CY 2015 Five-Year Review of Malpractice. 

2. Proposed Revisions to Malpractice RVUs for Certain Cardiothoracic Surgery Services 

 In addition to the scaling of malpractice RVUs to account for the proportionate 

difference between current and proposed work RVUs (proposed work RVU changes are 

discussed previously in section II.B.of this proposed rule) there are a 19 cardiothoracic 

surgery codes for which we propose to scale the malpractice RVUs to account for the 

proportionate difference between the current and proposed revised specialty risk factor. 

These codes and their short descriptors are listed 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 malpractice risk factors of all specialties that 

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

Medicare claims data on allowed services to establish the frequency of a service by 

specialty. For a number of cardiothoracic surgery CPT codes representing major open 

heart procedures performed primarily on neonates and infants, CY 2008 Medicare claims 

data showed zero allowed services. Therefore, our contractor set the number of services 

to 1, and assigned a risk factor according to the average risk factor for all services that do 

not explicitly have a separate technical or professional component (average risk 

factor = 1.95). In the CY 2010 PFS final rule with comment period, we published interim 

final malpractice RVUs for these codes calculated using the average physician risk factor, 

and finalized them in the CY 2011 PFS final rule with comment period. 

However, since publication of the CY 2010 PFS final rule with comment period, 

stakeholders have expressed concern that the average risk factor 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 codes continue to have little to no Medicare 

claims data, upon clinical review we agree that these CPT codes represent cardiac surgery 

services and that the malpractice RVUs should be calculated using the cardiac surgery 

risk factor. Accordingly, we propose to scale the malpractice RVUs for these CPT codes 

to reflect the proportionate difference between the average risk factor and the cardiac 

surgery risk factor. To scale the malpractice RVU we used the following formula: 

(cardiac surgery risk factor/average risk factor) * CY 2011 malpractice RVU = Proposed 

CY 2012 malpractice RVU. For example, CPT code 33471 (Valvotomy, pulmonary 

valve, closed heart; via pulmonary artery) has a CY 2011 malpractice RVU of 1.62 which 

was calculated using the average risk factor of 1.95. To scale this malpractice RVU to 
CMS-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 malpractice RVU to 2.56 for this service. 

Therefore, the starting value for calculating the proposed revised malpractice RVU based 

on the cardiac surgery risk factor is the Five-Year Review malpractice 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 malpractice RVUs for these cardiothoracic 

surgery codes. . 

We also propose to scale the malpractice RVU to reflect a change in risk factor 

for CPT code 32442 (Removal of lung, total pneumonectomy; with resection of segment 

of trachea followed by broncho-tracheal anastomosis (sleeve pneumonectomy)). In the 

CY 2010 review of malpractice RVUs we assigned CPT code 32442 the pulmonary 

disease risk factor (2.09) and published the interim final malpractice RVU calculated 

from this risk factor in the CY 2010 PFS final rule with comment period. This value was 

finalized in the CY 2011 PFS final rule with comment period. 

Since finalizing this value, stakeholders have suggested that a blended risk factor 

of thoracic surgery (6.49) and general surgery (5.91) would be more appropriate for this 

service. As described in the CY 2010 PFS final rule with comment period 
CMS-1524-P 148 

(74 FR 61760), we do not use a blended risk factor for services with Medicare utilization 

under 100; instead, we use the malpractice risk factor of the specialty that performs the 

given service the most (the dominant specialty). As CPT code 32442 has Medicare 

utilization well below the 100 occurrences threshold, and current Medicare claims data 

show that the dominant specialty for CPT code 32442 is thoracic surgery, we 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 disease 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 surgery 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 which 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 10.99
CMS-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 resource cost differences among localities 

compared to the national average for each of the three fee schedule components (that is, 

physician work, practice expense (PE), and malpractice). While requiring that the PE and 

malpractice GPCIs reflect the full relative cost differences, section 1848(e)(1)(A)(iii) of 

the Act requires that the physician work GPCIs reflect only one-quarter of the relative 

cost differences compared to the national average. In addition, section 1848(e)(1)(G) of 

the Act sets a permanent 1.5 work GPCI floor for services furnished in Alaska beginning 

January 1, 2009, and section 1848(e)(1)(I) of the Act sets a permanent 1.0 PE GPCI floor 

for services furnished in frontier States beginning January 1, 2011. 

Section 1848 (e)(1)(E) of the Act provides for a 1.0 floor for the work GPCIs 

which was set to expire at the end of 2009 until it was extended through 

December 31, 2010 by section 3102 (a) of the Affordable Care Act. Because the work 

GPCI floor was set to expire at the end of 2010, the GPCIs published in Addendum E of 

the CY 2011 PFS final rule with comment period did not reflect the 1.0 physician work 

floor. However, section 1848 (e)(1)(E) of the Act was amended on December 15, 2010, 
CMS-1524-P 150 

by section 103 of the Medicare and Medicaid Extenders Act (MMEA) of 2010 (P.L. 

111-309) to extend the 1.0 work GPCI floor through December 31, 2011. Appropriate 

changes to the CY 2011 GPCIs were made to reflect the 1.0 physician work floor 

required by section 103 of the MMEA. Since the work GPCI floor provided in section 

1848 (e)(1)(E) of the Act is set to expire prior to the implementation of the CY 2012 PFS, 

the CY 2012 physician work GPCIs, and summarized geographic adjustment factors 

(GAFs), presented in this 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 frontier States will be applicable in CY 2012. 

Moreover, the limited recognition of cost differences in employee compensation and 

office rent for the PE GPCIs, and the related hold harmless provision, required under 

section 1848 (e)(1)(H) of the Act was only applicable for CY 2010 and CY 2011 

(75 FR 73253) and, therefore, is no longer effective beginning in CY 2012. 

Section 1848(e)(1)(C) of the Act requires us to review and, if necessary, adjust 

the GPCIs not less often than every 3 years. This section also specifies that if more than 

1 year has elapsed since the last GPCI revision, we must phase in the adjustment over 

2 years, applying only one-half of any adjustment in the first year. 

As noted in the CY 2011 PFS final rule with comment period (75 FR 73252 

through 73262), for the sixth GPCI update, we updated the data used to compute all three 

GPCI components. Specifically, we utilized the 2006 through 2008 Bureau of Labor 

Statistics (BLS) Occupational Employment Statistics (OES) to calculate the physician 

work GPCIs (75 FR 73252). In addition, we used the 2006 through 2008 BLS OES data 

to calculate the employee compensation sub-component of practice expense 
CMS-1524-P 151 

(75 FR 73255). Consistent with previous updates, we used the 2-bedroom residential 

apartment rent data from HUD (2010) at the 50th percentile as a proxy for the relative 

cost differences in physician office rents (75 FR 73256). Lastly, we calculated the 

malpractice GPCIs using malpractice premium data from 2006 through 2007 

(75 FR 73256). 

Since more than 1 year had elapsed since the fifth GPCI update, the sixth GPCI 

update changes are being phased in over a 2-year 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 calculate the PE GPCI component. Specifically, section 

1848(e)(1)(H)(iv) of the Act (as added by section 3102(b) of the Affordable Care Act) 

requires the Secretary to "analyze current methods of establishing practice expense 

adjustments under subparagraph (A)(i) and evaluate data that fairly and reliably 

establishes distinctions in the cost of operating a medical practice in different fee 

schedule areas." Section 1848(e)(1)(H)(iv) of the Act also requires that such analysis 

shall include an evaluation of the following: 

• The feasibility of using actual data or reliable survey data developed by 

medical organizations on the costs of operating a medical practice, including office rents 

and non-physician staff wages, in different fee schedule areas. 

• The office expense portion of the practice expense geographic adjustment; 

including the extent to which types of office expenses are determined in local markets 

instead of national markets. 
CMS-1524-P 152 

• The weights assigned to each area of the categories within the practice expense 

geographic adjustment. 

In addition, the weights for different categories of practice expense in the GPCIs 

have historically matched the weights developed by the CMS Office of the Actuary 

(OACT) for use in the Medicare Economic Index (MEI), the measure of inflation used as 

part of the basis for the annual update to the physician fee schedule payment rates. In 

response to comments received on the CY 2011 Physician Fee Schedule proposed rule, 

however, we delayed moving to the new MEI weights developed by OACT for CY 2011 

pending further analysis. 

Lastly, we asked the Institute of Medicine (IOM) to evaluate the accuracy of the 

geographic adjustment factors used for Medicare physician payment. IOM will prepare 

three reports for the Congress and the Secretary of the Department of Health and Human 

Services. The first report (Phase I) was released on June 1, 2011, and includes an 

evaluation of the accuracy of geographic adjustment factors for the hospital wage index 

and the GPCIs, and the methodology and data used to calculate them. 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 recommendations in this proposed 

rule. The report can be accessed 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 proposing were developed by Acumen, LLC 

(Acumen) under contract to us. As mentioned previously, there are three GPCI 

components (physician work, PE, and malpractice), and all GPCIs are developed through 

comparison to a national average for each component. Additionally, each of the three 

GPCIs relies on its own data source(s) and methodology for calculating its value, as 

described more fully later in this section. As discussed in more detail later in this section, 

we are proposing to revise the PE GPCIs for CY 2012, as well as the cost share weights 

which correspond to all three GPCIs. 

a. Physician Work GPCIs 

The physician work GPCIs are designed to capture the relative cost of physician 

labor by Medicare PFS locality. Previously, the physician work GPCIs were developed 

using the median hourly earnings from the 2000 Census of workers in seven professional 

specialty occupation categories which we used as a proxy for physicians' wages. 

Physicians' wages are not included in the occupation categories because Medicare 

payments are a key determinant of physicians' earnings. Including physicians' wages in 

the physician work GPCIs would, in effect, have made the indices dependent upon 

Medicare payments. As required by law, the physician work GPCI reflects one-quarter 

of the relative wage differences for each locality compared to the national average. 

The physician work GPCI updates in CYs 2001, 2003, 2005, and 2008 were based 

on professional earnings data from the 2000 Census. For the sixth GPCI update in 
CMS-1524-P 154 

CY 2011, we used the 2006 through 2008 Bureau of Labor Statistics (BLS) Occupational 

Employment Statistics (OES) data as a replacement for the 2000 Census data. We are not 

proposing to revise the physician work GPCI data source for CY 2012. However, we 

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

work floor. The 1.5 work floor for Alaska is permanent and will be applicable in 

CY 2012. In addition, we are proposing to revise the physician work cost share weight 

from 52.466 to 48.266 in line with the 2011 MEI weights, which are based on 2006 data 

(referred to hereinafter as the 2006-based MEI). 

b. Practice Expense GPCIs 

(1) Affordable Care Act Analysis and Revisions for PE GPCIs 

(A) General Analysis for the CY 2012 PE GPCIs 

As previously mentioned, section 1848(e)(1)(H)(iv) of the Act (as added by 

section 3102(b) of the Affordable Care Act) requires the Secretary to "analyze current 

methods of practice expense adjustments under subparagraph (A)(i) and evaluate data 

that fairly and reliably establishes distinctions in the cost of operating a medical practice 

in different fee schedule areas." 

Moreover, section 1848 (e)(1)(H)(v) of the Act requires the Secretary to make 

appropriate adjustments to the PE GPCIs as a result of the required analysis no later than 

by January 1, 2012. We are proposing to make four 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 American Community Survey as the proxy for 
CMS-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 office expense and the stand alone "other 

professional expenses" category of the MEI and; (4) use the 2006-based MEI (most 

recent MEI weights finalized in the CY 2011 final rule with comment period) to 

determine the GPCI cost share weights. These proposals 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 services such as legal and accounting are not 

sufficiently included in the employee wage index. 

We began analyzing the current methods and data sources used in the 

establishment of the PE GPCIs during the CY 2011 rulemaking process (75 FR 40084). 

With respect to our CY 2011 analysis, we began with a review of the Government 

Accountability Office's (GAO) March 2005 Report entitled, "Medicare Physician Fees: 

Geographic Adjustment Indices Are Valid in Design, but Data and Methods Need 

Refinement" (GAO-05-119). While we have raised concerns in the past about some of 

the GAO's GPCI recommendations, we noted that with respect to the PE GPCIs, the 

GAO did not indicate any significant issues with the methods underlying the PE GPCIs. 

Rather, the report focused on some of the data sources used in the method. For example, 

the GAO stated that the wage data used for the PE GPCIs are not current. Similarly, 

commenters on previous PE GPCI updates predominantly focused on either the data 

sources used in the method or raised issues such as incentivizing the provision of care in 
CMS-1524-P 156 

different geographic areas. However, the latter issue (incentivizing the provision of care) 

is outside the scope of the statutory requirement that the PE GPCIs reflect the relative 

costs of the mix of goods and services comprising practice expenses in the different fee 

schedule areas relative to the national average. 

To further analyze the PE office expense in accordance with section 

1848(e)(1)(H)(iv) of the Act, we examined the following issues: the appropriateness of 

expanding the number of occupations included in the employee wage index; the 

appropriateness of replacing rental data from the Department of Housing and Urban 

Development (HUD) with data from the 2006-2008 American Community Survey (ACS) 

two bedroom rental data as a proxy for the office rent subcomponent of PE; and the 

appropriateness of adjusting the "all other services" and "other professional expenses" 

MEI categories for geographic variation in labor-related costs. We also examined 

available ACS occupational group data for potential use in determining geographic 

variation in the employee wage component of PE. 

An additional component of the analysis under section 1848(e)(1)(H)(iv) of the 

Act is to evaluate the weights assigned to each of the categories within the practice 

expense geographic adjustment. As discussed in the CY 2011 final rule with comment 

period (75 FR 73256), in response to concerns raised by commenters and to allow us time 

to conduct additional analysis, we did not revise the GPCI cost share weights to reflect 

the weights used in the revised and rebased 2006 MEI that we adopted beginning in 

CY 2011. In response to those commenters, whom raised many points regarding the 

appropriateness of assigning labor-related costs in the medical equipment and supplies 

and miscellaneous component which do not reflect locality cost differentials, we agreed 
CMS-1524-P 157 

to address the GPCI cost share weights again 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 Medicare Geographic Payment Summit and the 

MEI technical advisory panel during future rulemaking (75 FR 73256). The Secretary 

convened the National Summit on Health Care Quality and Value on October 4, 2010. 

This Summit was attended by a number of policy experts that engaged in detailed 

discussions regarding geographic adjustment factors and geographic variation in payment 

and the promotion of high quality care. This National Summit was useful to informing us 

on issues which we are studying further through three Institute of Medicine studies 

(including the recently released first of three reports on Geographic Adjustment Factors 

and a separate report on Geographic Variation in Health Care Spending and the 

Promotion of High Value Care). In accordance 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, which includes revisions to the GPCI, and 

through preparation of a report to the Congress that we will be submitting later this year 

in accordance with section 3137(b) of the Affordable Care Act on a plan for reforming 

the hospital wage index. In addition, the Agency is currently working through the 

various administrative requirements to formally organize the MEI technical advisory 

panel. We expect that this panel will be convened in the near future. We look forward to 

examining the recommendations of this panel once it has issued its report. 

(B) Analysis of ACS Rental Data 
CMS-1524-P 158 

In the CY 2011 final rule with comment period, we finalized our policy to use the 

2010 apartment rental data produced by HUD at the 50th percentile as the proxy for 

relative cost differences in physician office rents. However, as part of our analysis 

required by section 1848(e)(1)(H)(iv) of the Act, we have now examined the suitability of 

utilizing 3-year (2006-2008) ACS rental data to serve as a proxy for physician office 

rents We believe that the ACS rental data provide a sufficient degree of reliability and 

are an appropriate source on which to base our PE GPCI office rent proxy. We also 

believe that the ACS data provide a higher degree of accuracy than the HUD data since 

the ACS is updated annually and is not based on data collected by the 2000 Census long 

form. Moreover, it is our understanding that the Census long form, which is utilized to 

collect the necessary base year rents for the HUD Fair Market Rent (FMR) data, will no 

longer be available in future years. Therefore, we are proposing to use the available 2006 

through 2008 ACS rental data for two bedroom residential units as the proxy for 

physician office rent. We were not able to collect and analyze 5-year ACS rental data in 

time for this proposed rule. We may use 5-year ACS data in future rulemaking decisions 

and would welcome public comments regarding utilization of the 5-year 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 component. Although we investigated varying the 

weight of the office rent index for different localities, we could not find a comprehensive 

data source that provides office rent information that would allow direct measurement of 

the variation in this expense among fee schedule areas. Therefore, we are proposing to 
CMS-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 the ACS residential rent data to develop the 

practice expense GPCI value. We welcome public comments on whether there are 

potential data sources (especially publicly available sources) that would readily provide 

comprehensive office rent information that would allow us to accurately measure the 

geographic variation in this expense 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 national cost share weight data from the BLS OES 

would not only provide a more systematic approach to determining which occupations should 

be included in the non-physician employee wage category of the PE GPCI, but would also 

enable us to determine how much weight each occupation should receive within the index. 

 Due to its reliability, public availability, level of detail, and national scope, we 

propose to use BLS OES data to estimate both occupation cost shares and hourly wages for 
CMS-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 the Offices of Physicians industry (NAICS 

621100). As described in the census, the Offices of Physicians industry comprises 

establishments of health practitioners having the degree of M.D. (Doctor of Medicine) or 

D.O. (Doctor of Osteopathy) primarily engaged in the independent practice of general or 

specialized medicine (except psychiatry or psychoanalysis) or surgery. These practitioners 

operate private or group practices in their own offices (such as, centers, clinics) or in the 

facilities of others, such as hospitals or Health Maintenance Organization (HMO) medical 

centers. The OES data provide significant detail on occupational categories and offer 

national level cost share estimates for the offices of physicians industry. 

 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 in 
CMS-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 employee 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 these purchased services were labor-related and 

should be adjusted geographically, we agreed to examine this issue further in the 

CY 2011 final rule with comment period and refrained from making any changes. Based 

on our subsequent examination of this issue, we believe it would be appropriate to 

geographically adjust for the labor-related component of purchased services within the 

"All Other Services" and "Other Professional Expenses" categories using BLS wage data. 

In total, there are 63 industries, or cost categories, accounted for within the "all other 

services" and "other professional services" categories of the 2006-based MEI. As we 

established for purposes of the hospital wage index in 74 FR 43845, we define a cost 

category as labor-related if the cost category is defined as being both labor intensive and 

its costs vary with, or are influenced by the local labor market. 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 cost 
CMS-1524-P 162 

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

labor intensive and have costs that vary with, or are influenced by, the local labor market. 

The labor-related cost categories include but are not limited to building services (such as 

janitorial and landscaping), security services, and advertising services. The remaining 

weight assigned to the non labor-related industries (3.084 percentage points) represent 

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

with the local labor market. 

 In order to calculate the labor-related and non-labor- related shares, we would use 

a similar methodology that is employed in estimating the labor-related share of various 

CMS market baskets. A more detailed explanation of this methodology can be found 

under the supporting documents section of the CY 2012 PFS proposed rule web page at 

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

We believe our analysis, during 2010 and this year, of the current methods of 

establishing PE GPCIs and our evaluation of data that fairly and reliably establish 

distinctions in the cost of operating a medical practice in the different fee schedule areas 

meet the statutory requirements of section 1848(e)(1)(H)(iv) of the Act. A more detailed 

discussion of our analysis of current methods of establishing PE GPCIs and evaluation of 

data sources is included in Acumen's draft report entitled, "Proposed Revisions to the 

Sixth Update of the Geographic Practice Cost 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 section 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 the CY 2011 GPCIs for lower cost areas as 

authorized under the Affordable Care Act the Medicare and Medicaid Extenders Act 

(MMEA). 

(E) Determining the PE GPCI Cost Share Weights 

To determine the cost share weights for the CY 2012 GPCIs, we 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 physicians' services. As discussed in detail 

in that section (75 FR 73262 through 73277), the proposed expense categories in the 

MEI, along with their respective weights, were primarily derived from data collected in 

the 2006 AMA PPIS for self-employed physicians and selected self-employed 

non-medical doctor specialties. Since we have historically updated the GPCI cost share 

weights consistent with the most recent update to the MEI, and because we have 

addressed commenter concerns regarding the inclusion of the weight assigned to utilities 

with office rent and geographically adjusted for the labor intensive industries within the 

"all other services" and "other professional expenses" MEI categories, we believe it is 

appropriate to adopt the 2006-based MEI cost share weights. 

(i) Practice Expense 

 For the cost share weight for the proposed CY 2012 PE GPCIs, we would use the 

2006-based MEI weight for the PE category of 51.734 percent minus the professional 
CMS-1524-P 164 

liability insurance category weight of 4.295 percent. Therefore, 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 weight of 19.153 percent reflected in the 

2006-based MEI. 

(iii) Office Rent 

We are proposing that the weight for the office rent component be revised from 

12.209 percent to 10.223 percent. The 12.209 percent office rent GPCI weight was set 

equal to the 2000-based MEI cost weight for office expenses, which was calculated using 

the American Medical Association's (AMA) Socioeconomic Monitoring Survey (SMS). 

The 12.209 percent reflected the expenses for rent, depreciation on medical buildings, 

mortgage interest, telephone, and utilities. We are proposing to set the GPCI office rent 

equal to 10.223 percent reflecting the 2006-based MEI cost weights (75 FR 73263) for 

fixed capital (reflecting the expenses for rent, depreciation on medical buildings and 

mortgage interest) and utilities. We are no longer including telephone costs in the GPCI 

office rent cost weight because we believe these expenses do not vary by geographic 

area. 

Consistent with the revised and rebased 2006-based MEI which was adopted in 

the CY 2011 final rule with comment period (75 FR 73263), we disaggregated the 

broader office expenses component for the PE GPCI into 10 new cost categories. In this 

disaggregation, the fixed capital component is the office expense category applicable to 

the office rent component of the PE GPCI. As discussed in the section dealing with 
CMS-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 utilities component of rent for all 

ACS survey respondents, it was necessary to combine these two components to calculate 

office rent and by extension, we propose combining those two cost categories when 

assigning a weight to the office rent component. 

(iv) Purchased Services 

 As discussed in the previous paragraphs, a new purchased services index was 

created to geographically adjust the labor- related components of the "All Other Services" 

and "Other Professional Expenses" categories of the MEI office 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 only adjust for locality cost differences of 

the labor- related share of the industries comprising the "All Other Services" and "Other 

Professional Expenses" categories. We have determined that only 5.011 percentage 

points of the 8.095 percentage points would be adjusted for locality cost differences 

(5.011 adjusted purchased service + 3.084 non-adjusted purchased services= 8.095 total 

cost share weight). 

(v) Equipment, supplies, and other misc expenses 

To calculate the proposed medical equipment, supplies, and other miscellaneous 

expenses component, we removed professional liability (4.295 percentage points), 

non-physician employee compensation (19.153 percentage points), fixed capital/utilities 

(10.223 percentage points), and purchased services (8.095 percentage points) from the PE 
CMS-1524-P 166 

category weight (51.734 percent). Therefore, we are proposing a cost share weight for 

the medical equipment, supplies, and other miscellaneous expenses component of 

9.968 percent. Consistent with previous methodology, this component of the PE GPCI is 

not adjusted for geographical variation. 

(vi) Physician Work and Malpractice GPCIs 

Furthermore, we propose to use the physician 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 evaluation of the weights assigned to each of 

the categories within the PE GPCIs satisfies the statutory requirements of section 

1848(e)(1)(H)(iv) of the Act. 

 The proposed cost share weights for the CY 2012 GPCIs are displayed in Table 

12. For a detailed discussion regarding the GPCI cost share weights and how the weights 

account for local and national adjustments, see Acumen's "Proposed Revisions to the 

Sixth Update of the Geographic Practice 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 10.2231

Purchased Services N/A 8.0952 

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 purchased services contains both an adjusted 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 Care Act added a new subparagraph (I) under 

section 1848(e) (1) of the Act to establish a 1.0 PE GPCI floor for physicians' services 

furnished in frontier States effective January 1, 2011. In accordance with section 

1848(e)(1)(I) of the Act, beginning in CY 2011, we applied a 1.0 PE GPCI floor for 

physicians' services furnished in States determined to be frontier States. There are no 

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 Section 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 components: employee compensation, office rent, 

purchased services, and medical equipment, supplies and miscellaneous expenses. Our 

proposals relating to each of these components are as follows: 

• Employee Compensation: We are proposing to geographically adjust the 

employee compensation using the 2006 through 2008 BLS OES data specific to the 

offices of physicians industry along with nationwide wage data to determine the 
CMS-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 geographically 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 weight to account for the utility data 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 proposing to geographically adjust the 

labor-related component of purchased services within the "All Other Services" and 

"Other Professional Expenses "categories using BLS wage data. The methodology 

employed to estimate purchased services expenses is based on the same data used to 

estimate the employee wage index. Specifically, the proposed purchased services 

framework relies on BLS OES wage data to estimate the price of labor in industries that 

physician offices frequently rely upon for contracted services. As previously mentioned, 

the labor-related share adjustment for each industry was derived using a similar 

methodology as is employed for estimating the labor-related shares of CMS' market 

baskets. Furthermore, the weight assigned to each industry within the purchased services 

index was based on the 2006-based MEI. A more detailed discussion regarding CMS 

market baskets, as well as the corresponding definitions of a "labor- related share" and a 

"non -labor- related share" can be viewed at (74 FR 43845). The total proposed 

purchased services component accounts for 8.095 percent of total practice cost or 
CMS-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 other Miscellaneous Expenses: We continue 

to believe that items such as medical equipment and supplies have a national market and 

that input prices do not vary appreciably among geographic areas. As discussed in 

previous GPCI updates in the CY 2008 and CY 2011 PFS proposed rules, specifically the 

fifth GPCI update (72 FR 38138) and sixth GPCI update (75 FR 73256), respectively, 

some price differences may exist, but we believe these differences are more likely to be 

based on volume discounts rather than on geographic market differences. For example, 

large physicians' practices may utilize more medical equipment and supplies and 

therefore may or may not receive volume discounts on some of these items. To the 

extent that such discounting may exist, it is a function of purchasing volume and not 

geographic location. The proposed medical equipment, supplies, and miscellaneous 

expenses component was factored into the PE GPCIs with a component index of 1.000. 

The proposed medical equipment, supplies, and other miscellaneous expense component 

account for 9.968 percent of total practice cost or 21.0 percent of the PE GPCI. 

c. Malpractice GPCIs 

The malpractice GPCIs are calculated based on insurer rate filings of premium 

data for $1 million to $3 million mature "claims-made" policies (policies for claims made 

rather than services furnished during the policy term). We chose claims-made policies 

because they are the most commonly used malpractice insurance policies in the United 

States. We used claims-made policy rates rather than occurrence policies because a 
CMS-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 question; whereas an occurrence policy covers a 

physician for the policy amount in effect at the time of the event in question, even if the 

policy is expired. Based on the data we analyzed, we 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 localities 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. The District of Columbia, Maryland, Virginia 

suburbs, Puerto Rico, and the Virgin Islands are additional localities that make up the 

remainder of the total of 89 localities. The development of the current locality structure 

is described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and the 

subsequent final rule with comment period (61 FR 59494). 

As we have previously noted in the CYs 2008 and 2009 proposed rules 

(72 FR 38139 and 73 FR 38513), any changes to the locality configuration must be made 

in a budget neutral manner within a State and can lead to significant redistributions in 

payments. For many years, we have not considered making changes to localities without 

the support of a State medical association in order to demonstrate consensus for the 

change among the professionals whose payments would be affected (since such changes 

would be redistributive, with some increasing and some decreasing). However, we have 

recognized that, over time, changes in demographics or local economic conditions may 
CMS-1524-P 171 

lead us to conduct a more comprehensive examination of existing payment localities. 

For the past several years, we have been involved in discussions with physician 

groups and their representatives about recent shifts in relative demographics and 

economic conditions. We explained in the CY 2008 PFS final rule with comment period 

that we intended to conduct a thorough analysis of potential approaches to reconfiguring 

localities and would address this issue again in future rulemaking. For more information, 

we refer readers to the CY 2008 PFS proposed rule (72 FR 38139) and subsequent final 

rule with comment period (72 FR 66245). 

As a follow-up to the CY 2008 PFS final rule with comment period, we 

contracted with Acumen to conduct a preliminary study of several options for revising 

the payment localities on a nationwide basis. The contractor's interim report was posted 

on the CMS Web site on August 21, 2008, and we requested comments from the public. 

The report entitled, "Review of Alternative GPCI Payment Locality Structures," remains 

accessible from the CMS PFS Web page under the heading "Interim Study of Alternative 

Payment Localities under the PFS." The report may also be accessed directly from the 

following link: 

http://www.cms.hhs.gov/PhysicianFeeSched/10_Interim_Study.asp#TopOfPage. 

We note that the discussion of PFS payment localities and our preliminary study 

of alternative payment locality configurations in the CY 2011 PFS proposed rule was 

intended for informational purposes only. We 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 geographic 
CMS-1524-P 172 

adjustment factors in Medicare payment. It is a comprehensive empirical study of the 

geographic adjustment factors established under sections 1848(e) (GPCI) and 

1886(d)(3)(E) (hospital wage index) of the Act. These adjustments are designed to 

ensure Medicare payment fees and rates reflect differences in input costs across 

geographic areas. The factors IOM is evaluating include the-- 

● Accuracy of the adjustment factors; 

● Methodology used to determine the adjustment factors, and 

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

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

and considering the-- 

● Effect of the adjustment factors on the level and distribution of the health care 

workforce and resources, including-- 

 ++ Recruitment and retention taking into account mobility between urban and 

rural areas; 

 ++ Ability of hospitals and other facilities to maintain an adequate and skilled 

workforce; and 

++ Patient access to providers and needed medical technologies; 

● Effect of adjustment factors on population health and quality of care; and 

● Effect of the adjustment factors on the ability of providers to furnish efficient, 

high value care. 

 The 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 website 
CMS-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 calculate 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 its final report, scheduled to be released in 

the spring of 2012, the IOM will consider the role of Medicare payments in addressing 

matters such as the distribution of the health care workforce, population health, and the 

ability of providers to produce high-value, high-quality health care. 

 The recommendations specifically related to the GPCI included in IOM's 

first phase report are summarized below: 

● Recommendation 2-1: The same labor market definition should be used for both 

the hospital wage index and the physician geographic adjustment factor. Metropolitan 

statistical areas and Statewide non-metropolitan statistical areas should serve as the basis for 

defining these labor markets. 

● Recommendation 5-1: The IOM recommends constructing the geographic practice 

cost indexes with the full range of occupations employed in physicians' offices, each with a 

fixed national weight based on the hours of each occupation employed in physicians' offices 

nationwide. 

● Recommendation 5-2. 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 for 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 these recommendations in the CY 2012 proposed 

rule. As previously discussed, the IOM will be releasing a supplemental report in the 

summer of 2011 that will address additional analysis 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 stakeholders an opportunity to evaluate them. Any 

changes to the GPCIs in response to the aforementioned 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, Medicare coverage for services delivered via a 

telecommunications system was limited to services that did not require a face-to-face 

encounter under the traditional model of medical care. Examples of these services 

included interpretation of an x-ray, or electrocardiogram, or electroencephalogram 

tracing, and cardiac pacemaker analysis. 

Section 4206 of the BBA provided for coverage of, and payment for, consultation 

services delivered via a telecommunications system to Medicare beneficiaries residing in 

rural health professional shortage areas (HPSAs) as defined by the Public Health Service 

Act. Additionally, the BBA required that a Medicare practitioner (telepresenter) be with 

the patient at the time of a teleconsultation. Further, the BBA specified that payment for 

a teleconsultation had to be shared between the consulting practitioner and the referring 
CMS-1524-P 175 

practitioner and could not exceed the fee schedule payment which would have been made 

to the consultant for the service provided. The BBA prohibited payment for any 

telephone line charges or facility fees associated with the teleconsultation. We 

implemented this provision in the CY 1999 PFS final rule with comment period 

(63 FR 58814). 

Effective October 1, 2001, section 223 of the Medicare, Medicaid and SCHIP 

Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)(BIPA) added a new 

section 1834(m) to the Act which significantly expanded Medicare telehealth services. 

Section 1834(m)(4)(F)(i) of the Act defines Medicare telehealth services to include 

consultations, office visits, office psychiatry services, and any additional service 

specified by the Secretary, when delivered via a telecommunications system. We first 

implemented this provision in the CY 2002 PFS final rule with comment period 

(66 FR 55246). Section 1834(m)(4)(F)(ii) of the Act required the Secretary to establish a 

process that provides for annual updates to the list of Medicare telehealth services. We 

established this process in the CY 2003 PFS final rule with comment period 

(67 FR 79988). 

As specified in regulations at §410.78(b), we generally require that a telehealth 

service be furnished via an interactive telecommunications system. Under §410.78(a)(3), 

an interactive telecommunications system is defined as multimedia communications 

equipment that includes, at a minimum, audio and video equipment permitting two-way, 

real time interactive communication between the patient and the practitioner at the distant 

site. Telephones, facsimile machines, and electronic mail systems do not meet the 

definition of an interactive telecommunications system. An interactive 
CMS-1524-P 176 

telecommunications system is generally required as a condition of payment; however, 

section 1834(m)(1) of the Act does allow the use of asynchronous "store-and-forward" 

technology in delivering these services when the originating site is a Federal telemedicine 

demonstration program in Alaska or Hawaii. As specified in regulations at 

§410.78(a)(1), store and forward means the asynchronous transmission of medical 

information from an originating site to be reviewed at a later time by the practitioner at 

the distant site. 

Medicare telehealth services may be provided to an eligible telehealth individual 

notwithstanding the fact that the individual practitioner providing the telehealth service is 

not at the same location as the beneficiary. An eligible telehealth individual means an 

individual enrolled under Part B who receives a telehealth service furnished at an 

originating site. As specified in BIPA, originating sites are limited under section 

1834(m)(3)(C) of the Act to specified medical facilities located in specific geographic 

areas. The initial list of telehealth originating sites included the office of a practitioner, a 

critical access hospital (CAH), a rural health clinic (RHC), a federally qualified health 

center (FQHC) and a hospital (as defined in Section 1861(e)). More recently, section 149 

of the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275) 

(MIPPA) expanded the list of telehealth originating sites to include hospital-based renal 

dialysis centers, skilled nursing facilities (SNFs), and community mental health centers 

(CMHCs). In order to serve as a telehealth originating site, these sites must be located in 

an area designated as a rural health professional shortage area (HPSA), in a county that is 

not in a metropolitan statistical area (MSA), or must be an entity that participates in a 

Federal telemedicine demonstration project that has been approved by (or receives 
CMS-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 require the eligible telehealth individual to 

be presented by a practitioner at the originating site. 

2. Current Telehealth Billing and Payment Policies

As noted above, Medicare telehealth services can only be furnished to an eligible 

telehealth beneficiary in an originating site. An originating site is defined as one of the 

specified sites where an eligible telehealth individual is located at the time the service is 

being furnished via a telecommunications system. In general, originating sites must be 

located in a rural HPSA or in a county outside of an MSA. The originating sites authorized 

by the statute are as follows: 

● Offices of a physician or practitioner 

● Hospitals 

● CAHs 

● RHCs 

● FQHCs 

● Hospital-Based Or Critical Access Hospital-Based Renal Dialysis Centers 

(including Satellites) 

● SNFs 

● CMHCs

Currently approved Medicare telehealth services include the following: 

● Initial inpatient consultations 

● Follow-up inpatient consultations 

● Office or other outpatient visits 
CMS-1524-P 178 

● Individual psychotherapy 

● Pharmacologic management 

● Psychiatric diagnostic interview examination 

● End-stage renal disease (ESRD) related services 

● Individual and group medical nutrition therapy (MNT) 

● Neurobehavioral status exam 

● Individual and group health and behavior assessment and intervention (HBAI) 

● Subsequent hospital care 

● Subsequent nursing facility care 

● Individual and group kidney disease education (KDE) 

● Individual and group diabetes self-management training services (DSMT) 

In general, the practitioner at the distant site may be any of the following, 

provided that the practitioner is licensed under State law to furnish the service being 

furnished via a telecommunications system: 

● Physician; 

● Physician assistant (PA); 

● Nurse practitioner (NP); 

● Clinical nurse specialist (CNS); 

● Nurse-midwife; 

● Clinical psychologist; 

● Clinical social worker; 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 contractors that process 

claims for the service area where their distant site is located. Section 1834(m)(2)(A) of 

the Act requires that a practitioner who furnishes a telehealth service to an eligible 

telehealth individual be paid an amount equal to the amount that the practitioner would 

have been paid if the service had been furnished without the use of a telecommunications 

system. Distant site practitioners must submit the appropriate HCPCS procedure code for 

a covered professional telehealth service, appended with the –GT (Via interactive audio 

and video telecommunications system) or –GQ (Via asynchronous telecommunications 

system) modifier. By reporting the –GT or –GQ modifier with a covered telehealth 

procedure code, the distant site practitioner certifies that the beneficiary was present at a 

telehealth originating site when the telehealth service was furnished. The usual Medicare 

deductible and coinsurance policies apply to the telehealth services reported by distant 

site practitioners. 

Section 1834(m)(2)(B) of the Act provides for payment of a facility fee to the 

originating site. To be paid the originating site facility fee, the provider or supplier where 

the eligible telehealth individual is located must submit a claim with HCPCS code Q3014 

(Telehealth originating site facility fee), and the provider or supplier is paid according to 

the applicable payment methodology for that facility or location. The usual Medicare 

deductible and coinsurance policies apply to HCPCS code Q3014. By submitting 

HCPCS code Q3014, the originating site authenticates that it is located in either a rural 

HPSA or non-MSA county or is an entity that participates in a Federal telemedicine 

demonstration project that has been approved by (or receives funding from) the Secretary 
CMS-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 professional services that are commonly 

furnished remotely using telecommunications technology, but that do not require the 

patient to be present in-person with the practitioner when they are furnished, are covered 

and paid in the same way as services delivered without the use of telecommunications 

technology when the practitioner is in-person at the medical facility furnishing care to the 

patient. Such services typically involve circumstances where a practitioner is able to 

visualize some aspect of the patient's condition without the patient being present and 

without the interposition of a third person's judgment. Visualization by the practitioner 

can be possible by means of x-rays, electrocardiogram or electroencephalogram tracings, 

tissue samples, etc. For example, the interpretation by a physician of an actual 

electrocardiogram or electroencephalogram tracing that has been transmitted via 

telephone (that is, electronically, rather than by means of a verbal description) is a 

covered physician's service. These remote services are not Medicare telehealth services 

as defined under section 1834(m) of the Act. Rather, these remote services that utilize 

telecommunications technology are considered physicians' services in the same way as 

services that are furnished in-person without the use of telecommunications technology; 

they are paid under the same conditions as in-person physicians' services (with no 

requirements regarding permissible originating sites), and should be reported in the same 

way (that is, without the –GT or –GQ modifier appended). . 

B. Requests for Adding Services to the List of Medicare Telehealth Services
CMS-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 public with an ongoing opportunity to 

submit requests for adding services. We assign any request to make additions to the list 

of Medicare telehealth services to one of the following categories: 

● Category 1: Services that are similar to professional consultations, office 

visits, and office psychiatry services that are currently on the list of telehealth services. 

In reviewing these requests, we look for similarities between the requested and existing 

telehealth services for the roles of, and interactions among, the beneficiary, the physician 

(or other practitioner) at the distant site and, if necessary, the telepresenter. We also look 

for similarities in the telecommunications system used to deliver the proposed service, for 

example, the use of interactive audio and video equipment. 

● Category 2: Services that are not similar to the current list of telehealth 

services. Our review of these requests includes an assessment of whether the use of a 

telecommunications system to deliver the service produces similar diagnostic findings or 

therapeutic interventions as compared with the in-person delivery of the same service. 

Requestors should submit evidence showing that the use of a telecommunications system 

does not affect the diagnosis or treatment plan as compared to in-person delivery of the 

requested service. 

Since establishing the process to add or remove services from the list of approved 

telehealth services, we have added the following to the list of Medicare telehealth 

services: individual and group HBAI services; psychiatric diagnostic interview 

examination; ESRD services with 2 to 3 visits per month and 4 or more visits per month 
CMS-1524-P 182 

(although we require at least 1 visit a month to be furnished in-person by a physician, 

CNS, NP, or PA in order to examine the vascular access site); individual and group 

MNT; neurobehavioral status exam; initial and follow-up inpatient telehealth 

consultations for beneficiaries in hospitals and skilled nursing facilities (SNFs); 

subsequent hospital care (with the limitation of one telehealth visit every 3 days); 

subsequent nursing facility care (with the limitation of one telehealth visit every 30 days); 

individual and group KDE; and individual and group DSMT services (with a minimum of 

1 hour of in-person instruction to ensure effective injection training). 

Requests to add services to the list of Medicare telehealth services must be 

submitted and received no later than December 31 of each calendar year to be considered 

for the next rulemaking cycle. For example, requests submitted before the end of 

CY 2011 will be considered for the CY 2013 proposed rule. Each request for adding a 

service to the list of Medicare telehealth services must include any supporting 

documentation the requester wishes us to consider as we review the request. Because we 

use the annual PFS rulemaking process as a vehicle for making changes to the list of 

Medicare telehealth services, requestors should be advised that any information 

submitted is subject to public disclosure for this purpose. For more information on 

submitting a request for an addition to the list of Medicare telehealth services, including 

where to mail these requests, we refer readers to the CMS Web site at 

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 effective for CY 2012: (1) smoking cessation services; (2) critical 
CMS-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) audiology 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; intermediate, greater than 3 minutes up to 

10 minutes) and 99407 (Smoking and tobacco use cessation counseling visit; intensive, 

greater than 10 minutes) to the list of approved telehealth services for CY 2012 on a 

category 1 basis. 

Smoking Cessation services are defined as face-to-face behavior change 

interventions. We believe the interaction between a practitioner and a beneficiary 

receiving smoking cessation services is similar to the education, assessment, and 

counseling elements of individual KDE reported by HCPCS code G0420 (Face-to-face 

educational services related to the care of chronic kidney disease; individual, per session, 

per 1 hour), and individual MNT services, reported by HCPCS code G0270 (Medical 

nutrition therapy; reassessment and subsequent intervention(s) following second referral 

in the same year for change in diagnosis, medical condition or treatment regimen 

(including additional hours needed for renal disease), individual, face-to-face with the 

patient, each 15 minutes); CPT code 97802 (Medical nutrition therapy; initial assessment 

and intervention, individual, face-to-face with the patient, each 15 minutes); and CPT 

code 97803 (Medical nutrition therapy; re-assessment and intervention, individual, 
CMS-1524-P 184 

face-to-face with the patient, each 15 minutes), all services 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 tobacco cessation counseling visit for the 

asymptomatic patient; intermediate, greater than 3 minutes, up to 10 minutes) and G0437 

(Smoking and tobacco cessation counseling visit for the asymptomatic patient; intensive, 

greater than 10 minutes) to the list of telehealth services for CY 2012 since these related 

services are similar to the codes for which we received formal public requests. 

Consistent with this proposal, we are also proposing to revise our regulations at 

§410.78(b) and §414.65(a)(1) to include these smoking cessation services as Medicare 

telehealth services. 

2. Critical Care Services 

 The American Telemedicine Association and the Marshfield Clinic submitted 

requests to add critical care service CPT codes 99291 (Critical care, evaluation and 

management of the critically ill or critically injured patient; first 30-74 minutes) and 

99292 (Critical care, evaluation and management of the critically ill or critically injured 

patient; each additional 30 minutes) to the list of approved telehealth services. We 

previously received this request for the CY 2009 and CY 2010 PFS rulemaking cycles 

(73 FR 38517, 73 FR 69744-5, 74 FR 33548, and 74 FR 61764) and did not add the 

codes on a category 1 basis due to the acute nature of the typical patient. We continue to 

believe that patients requiring critical care services are more acutely ill than those 
CMS-1524-P 185 

patients typically receiving any service currently on the list of telehealth services. 

Therefore, we cannot consider critical care services on a category 1 basis. 

 In the CY 2009 PFS proposed rule (73 FR 38517), we explained that we had no 

evidence suggesting that the use of telehealth could be a reasonable surrogate for the 

in-person delivery of critical care services; therefore, we would not add the services on a 

category 2 basis. Requestors submitted new studies for CY 2012, but none demonstrated 

that comparable outcomes to a face-to-face encounter can be achieved using telehealth to 

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

to telehealth services. Some studies addressed the cost benefits and cost savings of 

telehealth services. Others focused on the positive outcomes of telehealth treatment 

when compared with no treatment at all. One submitted study addressed the equivalency 

of patient outcomes for telehealth services delivered to patients in emergency rooms, but 

the study's authors specifically restricted their population to patients whose complaints 

were not considered to be genuine emergencies. Given that limitation, it seems unlikely 

that any of these patients would have required critical care services as defined by CPT 

codes 99291 and 99292.

 We note that consultations are included on the list of Medicare telehealth 

services and may be billed by practitioners furnishing services to critically ill patients 

These services are described by the following HCPCS codes: G0425 (Initial inpatient 

telehealth consultation, typically 30 minutes communicating with the patient via 

telehealth), G0426 (Initial inpatient telehealth consultation, typically 50 minutes 

communicating with the patient via telehealth), G0427(Initial inpatient telehealth 

consultation, typically 70 minutes or more communicating with the patient via 
CMS-1524-P 186 

telehealth), G0406 (Follow-up inpatient telehealth consultation, limited, physicians 

typically spend 15 minutes communicating with the patient via telehealth), 

G0407(Follow-up inpatient telehealth consultation, intermediate, physicians typically 

spend 25 minutes communicating with the patient via telehealth), and G0408 (Follow-up 

inpatient telehealth consultation, complex, physicians typically spend 35 minutes or more 

communicating with the patient via telehealth). Critical care services, as reported by the 

applicable CPT codes and described in the introductory language in the CPT book, 

consist of direct delivery by a physician of medical care for a critically ill or injured 

patient, including high complexity decision-making to assess, manipulate, and support 

vital system functions. Critical care requires interpretation of multiple physiologic 

parameters and/or application of advanced technologies, including temporary pacing, 

ventilation management, and vascular access services. The payment rates under the PFS 

reflect this full scope of physician work. To add the critical services to the telehealth list 

would require the physician to be able to deliver this full scope of services via telehealth. 

Based on the code descriptions, we have previously believed that it is not possible to 

deliver the full range of critical care services without a physical physician presence with 

the patient. 

 We note that there are existing Category III CPT codes (temporary codes for 

emerging services that allow data collection) for remote real-time interactive video 

conferenced critical care services that, consistent with our treatment of other Category III 

CPT codes, are not nationally priced under the PFS. The fact that the CPT Editorial 

Panel created these additional Category III CPT codes suggests to us that these 
CMS-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 similar diagnostic or therapeutic 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 that our decision not to propose to add critical 

care services to the list of approved telehealth services does not preclude physicians from 

furnishing telehealth consultations to critically ill patients using the consultation codes 

that are on the list of Medicare telehealth services. 

3. Domiciliary or Rest Home Evaluation and Management Services 

The American Telemedicine Association and the Marshfield Clinic submitted 

requests to add the following domiciliary or rest home evaluation and management CPT 

codes to the telehealth list for CY 2012: 

● 99334 (Domiciliary or rest home visit for the evaluation and management of an 

established patient, which requires at least 2 of these 3 key components: a problem 

focused interval history; a problem focused examination; or straightforward medical 

decision making. Counseling and/or coordination of care with other providers or 

agencies are provided consistent with the nature of the problem(s) and the patient's and/or 

family's needs. Usually, the presenting problem(s) are self-limited or minor. Physicians 

typically spend 15 minutes with the patient and/or family or caregiver). 

● 99335 (Domiciliary or rest home visit for the evaluation and management of an 

established patient, which requires at least 2 of these 3 key components: An expanded 
CMS-1524-P 188 

problem focused interval history; An expanded problem focused examination; Medical 

decision making of low complexity. Counseling and/or coordination of care with other 

providers or agencies are provided consistent with the nature of the problem(s) and the 

patient's and/or family's needs. Usually, the presenting problem(s) are of low to moderate 

severity. Physicians typically spend 25 minutes with the patient and/or family or 

caregiver). 

● 99336 (Domiciliary or rest home visit for the evaluation and management of an 

established patient, which requires at least 2 of these 3 key components: a detailed 

interval history; a detailed examination; medical decision making of moderate 

complexity. Counseling and/or coordination of care with other providers or agencies are 

provided consistent with the nature of the problem(s) and the patient's and/or family's 

needs. Usually, the presenting problem(s) are of moderate to high severity. Physicians 

typically spend 40 minutes with the patient and/or family or caregiver). 

● 99337 (Domiciliary or rest home visit for the evaluation and management of an 

established patient, which requires at least 2 of these 3 key components: a 

comprehensive interval history; a comprehensive examination; medical decision making 

of moderate to high complexity. Counseling and/or coordination of care with other 

providers or agencies are provided consistent with the nature of the problem(s) and the 

patient's and/or family's needs. Usually, the presenting problem(s) are of moderate to 

high severity. The patient may be unstable or may have developed a significant new 

problem requiring immediate physician attention. Physicians typically spend 60 minutes 

with the patient and/or family or caregiver). 

A domiciliary or rest home is not permitted under current statute to serve as an 
CMS-1524-P 189 

originating site for Medicare telehealth services. Therefore, we are not proposing to add 

domiciliary or rest home evaluation and management 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 genetics and genetic counseling services, each 

30 minutes face-to-face with patient/family) to the telehealth list for CY 2012. We note 

that CPT guidance regarding reporting genetic counseling and education furnished by a 

physician to an individual directs physicians to evaluation and management (E/M) CPT 

codes and that services described by CPT code 96040 are provided by trained genetic 

counselors. Physicians and nonphysician practitioners who may independently bill 

Medicare for their service and who are counseling individuals would generally report 

office or other outpatient evaluation and management (E/M) CPT codes for office visits 

that involve significant counseling, including genetic counseling, and these office visit 

CPT codes are already on the list of telehealth services. CPT code 96040 would only be 

reported by genetic counselors for genetic counseling services. These practitioners 

cannot bill Medicare directly for their professional services and they are also not on the 

list of practitioners who can furnish telehealth services (specified in section 

1834(m)(4)(E) of the Act). As such, we do not believe that it would be necessary or 

appropriate to add CPT code 96040 to the list of Medicare telehealth services. Therefore, 

we are not proposing to add genetic counseling services to the list of Medicare telehealth 

services for CY 2012. 

5. Online Evaluation and Management Services 
CMS-1524-P 190 

 The American Telemedicine Association and the Marshfield Clinic submitted 

requests to add CPT code 99444 (Online evaluation and management service provided by 

a physician to an established patient, guardian, or health care provider not originating 

from a related E/M service provided within the previous 7 days, using the Internet or 

similar electronic communications network) to the list of Medicare telehealth services. 

 As we explained in the CY 2008 PFS final rule with comment period 

(72 FR 66371), we assigned a status indicator of "N" (Non-covered service) to these 

services because: (1) these services are non-face-to-face; and (2) the code descriptor 

includes language that recognizes the provision of services to parties other than the 

beneficiary and for whom Medicare does not provide coverage (for example, a guardian). 

 According to section 1834(m)(2)(A) of the Act, Medicare is required to pay for 

telehealth services at an amount equal to the amount that a practitioner would have been 

paid had such service been furnished without the use of a telecommunications system. 

As such, we do not believe it would be appropriate to make payment for services 

furnished via telehealth when those services would not otherwise be covered under 

Medicare. Because CPT code 99444 is currently noncovered, we are not proposing to 

add online evaluation and management services to the list of Medicare 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 and interpretation of 

physiologic data (eg, ECG, blood pressure, glucose monitoring) digitally stored and/or 
CMS-1524-P 191 

transmitted by the patient and/or caregiver to the physician or other qualified health care 

professional, requiring a minimum of 30 minutes of time) to the list of Medicare 

telehealth services. 

As we explained in the in CY 2002 PFS final rule with comment period 

(66 FR 55309), we assigned a status indicator of "B" (Payment always bundled into 

payment for other services not specified) to these services because the associated work is 

considered part of the pre- and post-service work of an E/M service. We note that many 

E/M codes are on the list of Medicare telehealth services. 

 According to section 1834(m)(2)(A) of the Act, Medicare is required to pay 

for telehealth services an amount equal to the amount that a practitioner would have been 

paid had such service been furnished without the use of a telecommunications system. 

Similar to the point noted 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 bundled, we are not proposing to add data 

collection services to the list of Medicare telehealth services for CY 2012. 

7. Audiology Services 

 The American Academy of Audiology submitted a request that CMS add services 

that audiologists provide for balance disorders and hearing loss to the list of Medicare 

telehealth services. The request did not include specific HCPCS codes. Nevertheless, it 

is not within our administrative authority to pay audiologists for services furnished via 
CMS-1524-P 192 

telehealth. The statute authorizes the Secretary to pay for telehealth services only when 

furnished by a physician or a practitioner as physician or practitioner are defined in 

sections 1834(m)(4)(D) and (E) of the Act. Therefore, we are not proposing to add 

services that are primarily provided by audiologists to the list of Medicare telehealth 

services for CY2012. 

D. The Process for Adding HCPCS Codes as Medicare Telehealth Services 

Along with its submission of codes for consideration as additions to the Medicare 

telehealth list for CY 2012, the American Telemedicine Association (ATA) also 

requested that CMS consider revising the annual process for adding to or deleting 

services from the list of telehealth services. The existing process, adopted in the 

CY 2003 PFS rulemaking cycle (67 FR 43862 through 43863 and 67 FR 79988 through 

79989), is described in section III.B. of this proposed rule. The following discussion 

includes a summary of recent requests by the ATA and other stakeholders for changes to 

the established process for adding services to the telehealth list, an assessment of our 

historical experience with the current process including the request review criteria, and 

our proposed refinement to the process for adding services to the telehealth list that 

would be used in our evaluation of candidate telehealth services beginning for CY 2013. 

The ATA asked CMS to consider two specific changes to the process, including: 

● broadening the factors for consideration to include shortages of health 

professionals to provide in-person services, speed of access to in-person services, and 

other barriers to care for beneficiaries; and 

● equalizing the standard for adding telehealth services with the standard for 

deleting telehealth services by adopting a standard that allows services that are safe, 
CMS-1524-P 193 

effective or medically beneficial when furnished via telehealth to be added to the list of 

Medicare telehealth services. Similarly, we have received recommendations that CMS 

place all codes payable under the PFS on the telehealth list and allow physicians and 

practitioners to make a clinical determination in each case about whether a medically 

reasonable and necessary service could be appropriately furnished to a beneficiary 

through telehealth. Under this scenario, stakeholders have argued that CMS would only 

remove services from the telehealth list under its existing policy for service removal; 

specifically, that a decision to remove a service from the list of telehealth services would 

be made using evidence-based, peer-reviewed data which indicate that a specific service 

is not safe, effective, or medically beneficial when furnished via telehealth 

(67 FR 79988). 

While we share the interests of stakeholders in reducing barriers to health care 

access faced by some beneficiaries, given that section 1834(m)(2)(F)(ii) of the Act 

requires the Secretary to establish a process that provides, on an annual basis, for the 

addition or deletion of telehealth services (and HCPCS codes), as appropriate, we do not 

believe it would be appropriate to add all services for which payment is made under the 

PFS to the telehealth list without explicit consideration as to whether the candidate 

service could be effectively furnished through telehealth. For example, addition of all 

codes to the telehealth list could result in a number of services on the list that could never 

be furnished by a physician or nonphysician practitioner who was not physically present 

with the beneficiary, such as major surgical procedures and interventional radiology 

services. Furthermore, we do not believe it would be appropriate to add services to the 

telehealth list without explicit consideration as to whether or not the nature of the service 
CMS-1524-P 194 

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

telehealth as in a face-to-face encounter. Section 1834(m)(2)(A) of the Act requires that 

the distant site physician or practitioner furnishing the telehealth service must be paid an 

amount equal to the amount the physician or practitioner would have been paid under the 

PFS has such service been furnished without the use of a telecommunications system. 

Therefore, we believe that candidate telehealth services must also be covered when 

furnished in-person; and that any service that would only be furnished through a 

telecommunications system would be a new service and, therefore, not a candidate for 

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

consider candidate additions to the telehealth list on a HCPCS code-specific basis based 

on requests from the public and our own considerations. 

We also believe it continues to be most appropriate to consider candidate services 

for the telehealth list based on the two mutually exclusive established categories into 

which all services fall - specifically, services that are similar to services currently on the 

telehealth list (category 1) and services that are not similar to current telehealth services 

(category 2). Under our existing policy, we add services to the telehealth list on a 

category 1 basis when we determine that they are similar to services on the existing 

telehealth list with respect to the roles of, and interactions among, the beneficiary, 

physician (or other practitioner) at the distant site and, if necessary, the telepresenter 

(67 FR 43862). Since CY 2003, we have added 35 services to the telehealth list on a 

category 1 basis based on public requests and our own identification of such services. 

We believe it is efficient and valuable to maintain the existing policy that allows us to 

consider requests for additions to the telehealth list on a category 1 basis and propose to 
CMS-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 public request and 

information-submission process for services that fall into this category. Therefore, we 

believe that any changes to the process for adding codes to the telehealth list should be 

considered with respect to category 2 additions, rather than category 1 additions. 

Our existing criteria for consideration of codes that would be category 2 

additions, specifically those candidate telehealth services that are not similar to any 

current telehealth services, include an assessment of whether the use of a 

telecommunications system to deliver the services produces similar diagnostic findings or 

therapeutic interventions as compared with a face-to-face in-person delivery of the same 

service (67 FR 43682). In other words, the discrete outcome of the interaction between 

the clinician and patient facilitated by a telecommunications system should correlate well 

with the discrete outcome of the clinician-patient interaction when performed face 

to-face. In the CY 2003 PFS proposed rule (67 FR 43862), we explained that requestors 

for category 2 additions to the telehealth list should submit evidence that the use of a 

telecommunications systems does not affect the diagnosis or treatment plan as compared 

to in-person delivery of the service. We indicated that if evidence shows that the 

candidate telehealth service is equivalent when furnished in person or through telehealth, 

we would add it to the list of telehealth services. We refer to this criterion in further 

discussion in this proposed rule as the "comparability standard." We stated in the 

CY 2003 PFS proposed rule (67 FR 43862) that if we determine that the use of a 

telecommunications system changes the nature or outcome of the service, for example, as 
CMS-1524-P 196 

compared with the in-person delivery of the service, we would review the telehealth 

service addition request as a request for a new service, rather than a different method of 

delivering an existing Medicare service. For coverage and payment of most services, 

Medicare requires that a new service must: (1) fall into a Medicare benefit category; (2) 

be reasonable and necessary in accordance with section 1862(a)(1)(A) of the Act; and (3) 

not be explicitly excluded from coverage. In such a case, the requestor would have the 

option of applying for a national coverage determination for the new service. 

We believe it is most appropriate to address the ATA and other stakeholder 

requests to broaden the current factors we consider when deciding whether to add 

candidate services to the telehealth list - to include factors such as the effects of barriers 

to in-person care and the safety, effectiveness, or medical benefit of the service furnished 

through telehealth, as potential refinements to our category 2 criteria. We initially 

established these category 2 criteria in the interest of ensuring that the candidate services 

were safe, effective, medically beneficial, and still accurately described by the 

corresponding codes when delivered via telehealth, while also ensuring that beneficiaries 

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

care. We believed that the demonstration of comparable clinical outcomes (diagnostic 

findings and/or therapeutic interventions) from telehealth and in-person services would 

prove to be the best indicator that all of these conditions were met. While we continue to 

believe that safety, effectiveness, and medical benefit, as well as accurate description of 

the candidate telehealth services by the CPT or HCPCS codes, are necessary conditions 

for adding codes to the list of Medicare telehealth services, our recent experience in 

reviewing public requests for telehealth list additions and our discussions with 
CMS-1524-P 197 

stakeholders regarding contemporary medical practice and potential barriers to care, have 

led us to conclude that the comparability standard for category 2 requests should be 

modified. 

In our annual evaluation of category 2 requests since we adopted the process for 

evaluating additions to the telehealth list almost 10 years ago, we have consistently 

observed that requestors have difficulty demonstrating that clinical outcomes of a service 

delivered via telehealth are comparable to the outcomes of the in-person service. The 

medical literature frequently does not include studies of the outcomes of many types of 

in-person services that allow for comparison to the outcomes demonstrated for candidate 

telehealth services. Furthermore, we know that in some cases the alternative to a 

telehealth service may be no service rather than an in-person service. The comparability 

standard may not sufficiently allow for the opportunity to add candidate services to the 

telehealth list that may be safe, effective, and medically beneficial when delivered via 

telehealth, especially to beneficiaries who experience significant barriers to in-person 

care. While we continue to believe that beneficiaries receiving services through 

telehealth are deserving of high quality health care and that in-person care may be very 

important and potentially preferable for some services when in-person care is possible, 

we are concerned that we have not added any services to the telehealth list on a 

category 2 basis as a result of our reviews. While some candidate services appear to have 

the potential for clinical benefit when furnished through telehealth, the requests have not 

met the comparability standard. 

Therefore, we are proposing to refine our category 2 review criteria for adding 

codes to the list of Medicare telehealth services beginning in CY 2013 by modifying the 
CMS-1524-P 198 

current requirement to demonstrate similar diagnostic findings or therapeutic 

interventions with respect to a candidate service delivered through telehealth compared to 

in-person delivery of the service (the comparability standard). We propose to establish a 

revised standard of demonstrated clinical benefit (the clinical benefit standard) when the 

service is furnished via telehealth. To support our review using this revised standard, we 

would ask requestors to specify in their request how the candidate telehealth service is 

still accurately described by the corresponding HCPCS or CPT code when delivered via 

telehealth as opposed to in-person. 

We are proposing that our refined criteria for category 2 additions would be as 

follows: 

● Category 2: Services that are not similar to the current list of telehealth 

services. Our review of these requests would include an assessment of whether the 

service is accurately described by the corresponding code when delivered via telehealth 

and whether the use of a telecommunications system to deliver the service produces 

demonstrated clinical benefit to the patient. Requestors should submit evidence 

indicating that the use of a telecommunications system in delivering the candidate 

telehealth service produces clinical benefit to the patient. 

The evidence submitted should include both a description of relevant clinical 

studies that demonstrate the service furnished by telehealth to a Medicare beneficiary 

improves the diagnosis or treatment of an illness or injury or improves the functioning of 

a malformed body part, including dates and findings and a list and copies of published 

peer-reviewed articles relevant to the service when furnished via telehealth. Some 

examples of clinical benefit include the following: 
CMS-1524-P 199 

● Ability to diagnose a medical condition in a patient population without access 

to clinically appropriate in-person diagnostic services. 

● Treatment option for a patient population without access to clinically 

appropriate in-person treatment options. 

● Reduced rate of complications. 

● Decreased rate of subsequent diagnostic or therapeutic interventions (for 

example, due to reduced rate of recurrence of the disease process). 

● Decreased number of future hospitalizations or physician visits. 

● More rapid beneficial resolution of the disease process treatment. 

● Decreased pain, bleeding, or other quantifiable symptom. 

● Reduced recovery time. 

We believe the adoption of this clinical benefit standard for our review of 

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

stakeholders that we broaden the factors taken into consideration to include barriers to 

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

telehealth services for beneficiaries who might otherwise have no access to certain 

diagnostic or treatment services. Furthermore, we believe the focus on demonstrated 

clinical benefit in our review of category 2 requests for addition to the telehealth lists is 

equivalent to our standard for deleting services from the telehealth list that rests upon 

evidence that a service is not safe, not effective, or not medically beneficial. Finally, we 

believe the proposed clinical benefit standard for our review of candidate telehealth 

services on a category 2 basis is fully consistent with our responsibility to ensure that 
CMS-1524-P 200 

telehealth services are safe, effective, medically beneficial, and still accurately described 

by the corresponding codes that would be used for the services when delivered in-person. 

We are soliciting public comments on this proposed refinement to our established 

process for adding codes to the telehealth list, including the information that requestors 

should furnish to facilitate our full review of requests in preparation for the 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 clarify instructions regarding appropriate 

reporting of telehealth services that, prior to our policy change regarding consultation 

codes, would have been reported as consultations furnished to patients in an emergency 

department. When we eliminated the use of all consultation codes beginning in CY 2010, 

we instructed practitioners, when furnishing a service that would have been reported as a 

consultation service, to report the E/M code that is most appropriate to the particular 

service for all office/outpatient or inpatient visits. Since section 1834(m) of the Act 

includes "professional consultations" (including the initial inpatient consultation codes 

"as subsequently modified by the Secretary") in the definition of telehealth services, we 

established several HCPCS codes to describe the telehealth delivery of initial inpatient 

consultations. For inpatient hospital and skilled nursing facility care telehealth services, 

we instructed practitioners to use the inpatient telehealth consultation G-codes listed in 
CMS-1524-P 201 

table 14 to report those telehealth services (74 FR 61763, 61774). However, we 

neglected to account for the fact that E/M emergency department visit codes 

(99281-99285) are not on the telehealth list. As such, there has not been a clear means 

for practitioners to bill a telehealth consultation furnished in an emergency department. 

In order to address this issue, we are proposing to change the code descriptors for the 

inpatient telehealth consultation G-codes to include emergency department telehealth 

consultations effective January 1, 2012. However, we are seeking public comment 

regarding other options, including creating G-codes specific to these services when 

furnished to patients in the emergency department. 

TABLE 14: INPATIENT TELEHEALTH CONSULTATION G-CODES 

HCPCS 

Code CY 2011 Long Code Descriptor 

G0425 Initial inpatient telehealth consultation, typically 30 minutes communicating 

with the patient via telehealth 

G0426 Initial inpatient telehealth consultation, typically 50 minutes communicating 

with the patient via telehealth 

G0427 Initial inpatient telehealth consultation, typically 70 minutes or more 

communicating with the patient via telehealth 

G0406 Follow-up inpatient telehealth consultation, limited, physicians typically 

spend 15 minutes communicating with the patient via telehealth 

G0407 Follow-up inpatient telehealth consultation, intermediate, physicians 

typically spend 25 minutes communicating with the patient via telehealth 

G0408 Follow-up inpatient telehealth consultation, complex, physicians typically 

spend 35 minutes or more communicating 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 biologicals described in section 1842(o)(1)(C) of 

the Act furnished on or after January 1, 2005. The ASP methodology applies to most 

drugs furnished incident to a physician's service, drugs furnished under the DME benefit, 
CMS-1524-P 202 

certain oral anti-cancer drugs, and oral immunosuppressive drugs. 

1. Widely Available Market Price (WAMP)/Average Manufacturer Price (AMP) 

Section 1847A(d)(1) of the Act states that "The Inspector General of HHS shall 

conduct studies, which may include surveys, to determine the widely available market 

prices (WAMP) of drugs and biologicals to which this section applies, as the Inspector 

General, in consultation with the Secretary, determines to be appropriate." Section 

1847A (d)(2) of the Act states, "Based upon such studies and other data for drugs and 

biologicals, the Inspector General shall compare the ASP under this section for drugs and 

biologicals with -- 

● The widely available market price (WAMP) for these drugs and biologicals, (if 

any); and 

● The average manufacturer price (AMP) (as determined under section 1927(k) 

(1) of the Act) for such drugs and biologicals." 

 Section 1847A(d)(3)(A) of the Act states that, "The Secretary may disregard the 

ASP for a drug or biological that exceeds the WAMP or the AMP for such drug or 

biological by the applicable threshold percentage (as defined in subparagraph (B))." 

Section 1847A(d)(3)(C) of the Act states that if the Inspector General (OIG) finds that the 

ASP for a drug or biological is found to have exceeded the WAMP or AMP by this 

threshold percentage, the OIG "shall inform the Secretary (at such times as the Secretary 

may specify to carry out this subparagraph) and the Secretary shall, effective as of the 

next quarter, substitute for the amount of payment otherwise determined under this 

section for such drug or biological, the lesser of -- 

● the widely available market price for the drug or biological (if any); or 
CMS-1524-P 203 

● 103 percent of the average manufacturer price as determined under section 

1927(k)(1) of the Act for the drug or biological." 

The applicable threshold percentage is specified in section 1847A(d)(3)(B)(i) of 

the Act as 5 percent for CY 2005. For CY 2006 and subsequent years, section 

1847A(d)(3)(B)(ii) of the Act establishes that the applicable threshold percentage is 

"the percentage applied under this subparagraph subject to such adjustment as the 

Secretary may specify for the WAMP or the AMP, or both." In the CY 2006 

(70 FR 70222), CY 2007 (71 FR69680), CY 2008 (72 FR 66258), CY 2009 

(73 FR 69752), and CY 2010 (74 FR 61904) PFS final rules with comment period, we 

specified an applicable threshold percentage of 5 percent for both the WAMP and AMP. 

We based this decision on the fact that data was too limited to support an adjustment to 

the current applicable threshold percentage. 

For CY 2011, we proposed to specify two separate adjustments to the applicable 

threshold percentages. When making comparisons to the WAMP, we proposed the 

applicable threshold percentage to remain at 5 percent. The applicable 

threshold percentage that we proposed for the AMP is addressed below in this section of 

the preamble. The latest WAMP comparison was published in 2008, and the OIG is 

continuing to perform studies comparing ASP to WAMP. Based on available OIG 

reports that have been published comparing WAMP to ASP, we did not have sufficient 

information at the time to determine that the 5 percent threshold percentage is 

inappropriate and should be changed. As a result, we believed that continuing the 

5 percent applicable threshold percentage for the WAMP was appropriate for CY 2011. 

Therefore, we proposed to revise §414.904(d)(3) to specify the 5 percent WAMP 
CMS-1524-P 204 

threshold for CY 2011. After soliciting and reviewing comments, we finalized our 

proposal to continue the 5 percent WAMP threshold for CY 2011 (75 FR 73469). 

For CY 2012, we again propose to specify a separate adjustment to the applicable 

threshold percentage for WAMP comparisons. When making comparisons to the 

WAMP, we propose the applicable threshold percentage to remain at 5 percent. We still 

do not have sufficient information to determine that the 5 percent threshold percentage is 

inappropriate and, as a result, we believe that continuing the 5 percent applicable 

threshold percentage for the WAMP is appropriate for CY 2012. As we noted in the 

CY 2011 PFS final rule with comment period (75 FR 73470), we understand that there 

are complicated operational issues associated with this policy. We continue to proceed 

cautiously in this area. We remain committed to providing stakeholders, including 

providers and manufacturers of drugs impacted by potential price substitutions with 

adequate notice of our intentions regarding such, including the opportunity to provide 

input with regard to the processes for substituting the WAMP for the ASP. 

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 applicable threshold percentage for CY 2005 was 

specified in statute as 5 percent. Section 1847A(d)(3) of the Act allows the Secretary to 

specify adjustments to this threshold percentage for years subsequent to 2005. For 

CY 2006 (70 FR 70222), CY 2007 (71 FR 69680), CY 2008 (72 FR 66258), CY 2009 

(73 FR 69752), and CY 2010 (74 FR 61904), the Secretary made no adjustments to the 

threshold percentage; it remained at 5 percent. 

For CY 2011, we proposed, with respect to AMP substitution, to apply the 
CMS-1524-P 205 

applicable percentage subject to certain adjustments such that substitution of AMP for 

ASP will only be made when the ASP exceeds the AMP by 5 percent in two consecutive 

quarters immediately prior to the current pricing quarter, or three of the previous four 

quarters immediately prior to the current quarter. We further proposed to apply the 

applicable AMP threshold percentage only for those situations where AMP and ASP 

comparisons are based on the same set of National Drug Codes (NDCs) for a billing code 

(that is, "complete" AMP data). 

Furthermore, we proposed a price substitution policy to substitute 103 percent of 

AMP for 106 percent of ASP for both multiple and single source drugs and biologicals as 

defined respectively at section 1847(A)(c)(6)(C) and (D) of the Act. Specifically, we 

proposed that this substitution: 

• Would occur when the applicable threshold percentage has been met for two 

consecutive quarters immediately prior to the current pricing quarter, or three of the 

previous four quarters immediately prior to the current quarter. 

• Would permit for a final comparison between the OIG's volume-weighted 

103 percent of AMP for a billing code (calculated from the prior quarter's data) and the 

billing code's volume weighted 106 percent ASP (as calculated by CMS for the current 

quarter ) to avoid a situation in which the AMP-based price substitution would exceed 

that quarter's ASP; and 

• That the duration of the price substitution would last for only one quarter. 

We also sought comment on other issues related to the comparison between ASP 

and AMP, such as the following: 

• Any effect of definitional differences between AMP and ASP, particularly in 
CMS-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 comment, we did not finalize our proposed 

adjustments to the 5 percent AMP threshold or our price substitution policy because of 

legislative changes, regulatory changes, and litigation that affected this issue. 

Specifically-- 

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

District of Columbia in National Association of Chain Drug Stores et al v. Health and 

Human Services, Civil Action No. 1:07-cv-02017 (RCL) was still in effect; 

● We were continuing to expect to develop regulations to implement section 

2503 of the Affordable Care Act, which amended the definition of AMP, and section 202 

of the Federal Aviation Administration Air Transportation Modernization and Safety 

Improvement Act (Pub. L. 111-226) as enacted on August 10, 2010, which further 

amended section 1927(k) of the Act; 

● We proposed to withdraw certain provisions of the AMP final rule published 

on July 17, 2007 (75 FR 54073). 

As a result, we finalized the portion of our proposal that sets the AMP threshold at 

5 percent for CY 2011 and revised the regulation text accordingly (75 FR 73470). 

 The preliminary injunction was vacated by the United States District Court for the 

District of Columbia on December 15, 2010. Currently, we continue to expect to develop 
CMS-1524-P 207 

regulations to implement section 2503 of the Affordable Care Act and section 202 of the 

Federal Aviation Administration Air Transportation Modernization and Safety 

Improvement Act. However, these statutory amendments became effective on 

October 1, 2010 without regard to whether or not final regulations to carry out such 

amendments have been promulgated by such date. Moreover, our Medicaid final rule 

published on November 15, 2010 finalized regulations requiring manufacturers to 

calculate AMP in accordance with section 1927(k)(1) of the Act (75 FR 69591). Since 

statutory and regulatory provisions exist and are currently utilized by manufacturers for 

the calculation and submission of AMP data, we 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 percentage subject to certain adjustments. Specifically, a price 

substitution of AMP for ASP will be made only when the ASP exceeds the AMP by 

5 percent in two consecutive quarters immediately prior to the current pricing quarter, or 

three of the previous four quarters immediately prior to the current quarter. 

In general, the ASP methodology reflects average market prices for Part B drugs 

for a quarter. The ASP is based on the average sales price to all purchasers for a calendar 

quarter; the AMP, in turn, represents the average price paid by wholesalers for drugs 

distributed to retail community pharmacies and by retail community pharmacies that 

purchase drugs directly from the manufacturers. Accordingly, while the ASP payment 
CMS-1524-P 208 

amount for a billing code may exceed its AMP for that billing code for any given quarter, 

this may reflect only a temporary fluctuation in market prices that would be corrected in a 

subsequent quarter. We believe this 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 percentage over multiple quarters (OEI-03–10–00380). 

We are concerned that substitutions based on a single quarter's ASP to AMP comparison 

will not appropriately or accurately account for temporary fluctuations. We believe that 

applying this threshold percentage adjusted to reflect data from multiple quarters will 

account for continuing differences between ASP and AMP, and allow us to more 

accurately identify those drugs that consistently trigger the substitution threshold and thus 

warrant price substitution. 

 We further propose to apply the applicable AMP threshold percentage only for 

those situations where AMP and ASP comparisons are based on the same set of NDCs 

for a billing code (that is, "complete" AMP data). Prior to 2008, the OIG calculated a 

volume-weighted AMP and made ASP and AMP comparisons only for billing codes with 

such "complete" AMP data. In such comparisons, a volume-weighted AMP for a billing 

code was calculated when NDC-level AMP data was available for the same NDCs used 

by us to calculate the volume-weighted ASP. Beginning in the first quarter of 2008, the 

OIG also began to make ASP and AMP comparisons based on "partial" AMP data (that 

is, AMP data for some, but not all, NDCs in a billing code). For these comparisons, the 

volume-weighted AMP for a billing code is calculated even when only such limited AMP 
CMS-1524-P 209 

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

is based on fewer NDCs than the volume-weighted ASP calculated by CMS. Moreover, 

volume-weighted ASPs are not adjusted by the Inspector General to reflect the fewer 

number of NDCs in the volume-weighted AMP. 

Because the OIG's partial AMP data comparison did not reflect all the NDCs used 

in our volume-weighted ASP calculations, we discussed our concern about using the 

volume-weighted AMP in the CY 2011 PFS proposed rule. We believed that such AMP 

data may not adequately account for market-related drug price changes and may lead to 

the substitution of incomplete and inaccurate volume-weighted prices. Payment amount 

reductions that result from potentially inaccurate substitutions may impact physician and 

beneficiary access to drugs. Therefore, consistent with our authority as set forth in 

section 1847A(d)(1) and (3) of the Act, we proposed in the CY 2011 PFS proposed rule 

that the substitution of 103 percent of AMP for 106 percent of ASP should be limited to 

only those drugs with ASP and AMP comparisons based on the same set of NDCs. 

In response to our CY 2011 proposed rule, the OIG changed its methodology for 

"partial" AMP data comparisons beginning with its report titled "Comparison of 

First-Quarter 2010 Average Sales Prices and Average Manufacturer Prices: Impact on 

Medicare Reimbursement for Third Quarter 2010." Specifically, in addition to 

calculating a volume-weighted AMP based on "partial" data and identifying billing codes 

that exceeded the price substitution threshold, the OIG began to replace each missing 

NDC-level AMP with corresponding NDC-level ASP data. The OIG then calculated a 

volume-weighted AMP for the billing code. If the volume-weighted AMP continued to 

exceed the price substitution threshold, the report attributed this to an actual difference 
CMS-1524-P 210 

between ASPs and AMPs in the marketplace (OEI-03-10-00440). 

We appreciate that the Inspector General has acknowledged the importance of 

protecting beneficiary and physician access in its methodology change. However, section 

1847(A)(d)(2)(B) of the Act specifically indicates that the comparison be made to AMP 

as determined under section 1927(k)(1) of the Act. Moreover, we continue to be 

concerned that comparisons based on partial AMP data may not adequately account for 

market-related drug price changes and may lead to the substitution of incomplete and 

inaccurate volume-weighted prices. Therefore, for CY 2012, we propose to apply the 

applicable AMP threshold percentage only for those situations where AMP and ASP 

comparisons are based on the same set of NDCs for a billing code (that is, "complete" 

AMP data). Furthermore, we are proposing 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 General to conduct studies of 

the widely available market price for drugs and biologicals to which section 1847A of the 

Act applies. However, it does not specify the frequency of when such studies should be 

conducted. The Inspector General has conducted studies comparing AMP to ASP for 

essentially each quarter since the ASP system has been implemented. Since 2005, the 

OIG has published 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 2010 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 2009 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 2007 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 Prices: A Comparison of Average Sales 

Price to Average Manufacturer 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 Quarter 2011" (OEI–03–11–00160), the Inspector 

General found that of 365 billing codes with complete AMP data in the third quarter of 

2010, only 14 met the 5 percent threshold; that is, ASP exceeded AMP by at least 

5 percent. 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 under review. This Inspector General report 

further indicates that, "If reimbursement amounts for all 14 codes with complete AMP 

data had been based on 103 percent of the AMPs during the first quarter of 2011, we 

estimate that Medicare expenditures would have been reduced $10.3 million in that 
CMS-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, section 1847A(d)(3) of the Act provides authority for us 

to determine the applicable percentage subject to "such adjustment as the Secretary may 

specify for the widely available market price or the average manufacturer price, or both." 

We also have authority to specify the timing of any ASP substitution. Consistent with 

this authority, we are proposing a policy to substitute 103 percent of AMP for 

106 percent of ASP where the applicable percentage threshold has been satisfied for the 

two consecutive quarters immediately prior to the current pricing quarter, or for three of 

the previous four quarters immediately prior to the current pricing quarter. This policy 

would apply to single source drugs and biologicals, multiple source drugs, and biosimilar 

biological products as defined at section 1847A(c)(6)(C), (D), and (H) of the Act. 

Because of the lack of data regarding WAMP to ASP comparisons, we are 

explicitly excluding WAMP from this price 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 policy 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 manufacturer's average sales price must be 

submitted to CMS within 30 days of the close of the quarter. We then calculate an ASP 

for each billing code in accordance with the process outlined at §414.904. Then, as 

described in our CY 2005 PFS final rule (69 FR 66300), we implement these new prices 

through program instructions or otherwise at the first opportunity after we receive the 

data, which is the calendar quarter after receipt. 

Section 1847A(d)(3)(C) of the Act indicates that a price substitution would be 

implemented "effective as of the next quarter" after the OIG has informed us that the ASP 

for a drug or biological exceeds its AMP by the applicable percentage threshold. The 

OIG does not receive new ASPs for a given quarter until after we have finalized our 

calculations for the quarter. Also, the results of the OIG's pricing comparisons are not 

available until after the ASPs for a given quarter have gone into effect. Therefore, we 

anticipate that there will be a three-quarter lag for substituted prices from the quarter in 

which manufacturer sales occurred, though this will depend in great part upon the 

timeframe in which we obtain comparison data from the OIG. Table 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 billing code may have decreased since the 

OIG's comparison. Therefore, consistent with our authorities in section 1847A(d)(3) of 

the Act and our desire to provide accurate payments consistent with these provisions, we 

believe that the timing of any substitution policy should permit a final comparison 

between the OIG's volume-weighted 103 percent AMP for a billing code (calculated from 

the data from sales three quarters prior) and the billing code's volume-weighted 

106 percent ASP (as calculated by CMS for the upcoming quarter). In Table 16, for 
CMS-1524-P 216 

example, this comparison would be done between the HCPCS payment limits calculated 

for Q1-12, and the OIG's volume-weighted AMPs from their examination of Q4-11 

payment limits. This final comparison would assure the Secretary that the 106 percent 

ASP payment limit for the current pricing quarter continues to exceed 103 percent of the 

OIG's calculated AMP in order to avoid a situation in which the Secretary would 

inadvertently raise the Medicare payment limit through this price substitution policy. We 

specifically 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 particularly 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 comparison that triggered its application would 

last for one quarter. We note that in a subsequent quarter, the OIG may identify that a 

volume-weighted ASP continues to exceed the volume-weighted AMP for a billing code 

that previously triggered a price substitution. In this scenario, if the criteria for the price 

substitution policy are met, we would substitute 103 percent of the OIG's updated 

volume-weighted AMP for that billing code. 

Overall, we believe that our proposal as previously outlined to substitute 

103 percent of AMP for 106 percent of ASP provides us with a viable mechanism for 

generating savings for the Medicare program and its beneficiaries because it will allow 

Medicare to pay based on lower market prices for those drugs and biologicals that 

consistently exceed the applicable threshold percentage. Moreover, it will enable us to 

address a programmatic vulnerability identified by the OIG. 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 between AMP and ASP, particularly in light 

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

• The impact of any differences in AMP and ASP reporting by manufacturers on 

price substitution comparisons. 

• 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 otherwise specified, the term "drugs" will 

hereafter refer to both drugs and biologicals. Sections 1847A and 1927(b) of the Act 

specify quarterly ASP data reporting requirements for manufacturers. Specific ASP 

reporting requirements are set forth in section 1927(b)(3) of the Act. For the purposes of 

reporting under section 1847A of the Act, the term "manufacturer" is defined in section 

1927(k)(5) of the Act and means any entity engaged in the following: production; 

preparation, propagation, compounding, conversion or processing of prescription drug 

products; either directly or indirectly by extraction from substances of natural origin, or 

independently by means of chemical synthesis, or by a combination of extraction and 

chemical synthesis; or packaging, repackaging, labeling, relabeling, or distribution of 

prescription drug products. The term manufacturer does not include a wholesale 
CMS-1524-P 218 

distributor of drugs or a retail pharmacy licensed under State law. However, 

manufacturers that also engage in certain wholesaler activities are required to report ASP 

data for those drugs that they manufacture. Note that the definition of manufacturers for 

the purposes of ASP data reporting includes repackagers. 

Section 1927(b)(3)(A)(iii) of the Act specifies that manufacturers must report 

their average sales price and the number of units by NDC. As established by 

42 CFR part 414 subpart J, manufacturers are required to report data at the NDC level, 

which includes the following elements: (1) the manufacturer ASP; (2) the Wholesale 

Acquisition Cost (WAC) in effect on the last day of the reporting period; (3) the number 

of units sold; and (4) the NDC. The reported ASP data are used to establish the Medicare 

payment amounts. 

Section 1927(b)(3)(A)(iii)(II) of the Act specifies that the manufacturer must 

report the WAC, if it is required in order for 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 that manufacturers must report 

the ASP data to CMS using our Addendum A template. In 2005, we expanded the 

template to include WAC and additional product description details (70 FR 70221). We 

also initiated additional changes to the template in 2008 (73 FR 76032). 

In order to facilitate more accurate and consistent ASP data reporting from 

manufacturers, we are now proposing additional revisions to the Addendum A template. 

Specifically, we propose to revise existing reporting fields and add new fields to the 

Addendum A template, as follows: 

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

corresponding to the three segments of an NDC. 

● To add a new field to collect an Alternate 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 their data prior to submission. This will help 

verify that data are complete and submitted to CMS in the correct format, thereby 

minimizing time and resources spent on identifying mistakes or errors. We note that the 

use of this macro does not preclude or supersede manufacturers' responsibility to provide 

accurate and timely ASP data in accordance with the reporting obligation under section 

1927(b)(3) of the Act. We also note that manufacturers who misrepresent or fail to report 

manufacturer ASP data will remain subject to civil monetary penalties, as applicable and 

described in sections 1847A and 1927(b) of the Act and codified in regulations at 

§414.806. 

b. Reporting of ASP Units and Sales Volume for Certain Products 

 As required by 42 CFR part 414 subpart J, manufacturers report ASP price and 

volume data at the NDC level. This is appropriate for most drug and biological products 

because an NDC is usually associated with a consistent amount of product that is being 

sold. Our experience with manufacturer reporting of ASPs has revealed that a limited 

number of drug products, as defined by an NDC, might contain a variable amount of 

active ingredient. This situation is common for plasma derived clotting factors; for 

example, we are aware of one product where a vial described as nominally containing 

250 international units (IUs) of clotting factor activity might actually contain between 
CMS-1524-P 220 

220 and 400 IUs. Although the exact factor activity is specified on the label, the amount 

of IUs contained in an NDC might vary between manufacturing lots. For these types of 

products, it is possible that vials with the same NDC but different amounts of clotting 

factor activity (as measured in IUs) might be sold during the same ASP reporting period. 

For drugs paid under Medicare Part B, such variability in the amount of drug product 

within an NDC appears to apply mostly to clotting factors that are prepared from plasma 

sources; it also applies to a few other products, including a plasma protein product used 

to treat antitrypsin deficiency. 

As stated in the Section 1847A(b)(2) of the Act, for years after 2004, the 

Secretary has the authority to "establish the unit for a manufacturer to report and methods 

for counting units as the Secretary determines appropriate to implement." There are 

limited situations when ASP price and volume reporting by product NDC may affect the 

accuracy of subsequent pricing calculations done by us, for example, when an NDC is 

associated with a variable amount of drug product as described in the paragraph 

previously. We believe that in such cases it is appropriate to amend the definition of the 

ASP unit associated with the NDC that is reported to us by manufacturers for the 

purposes of calculating ASP. Under the authority in the section 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 Table 17 and is limited to items with variable 

amounts of drug product per NDC as described previously. However, we propose to 

update this list as appropriate through program instruction or otherwise because we 
CMS-1524-P 221 

believe that the ability to make changes in a subregulatory manner will provide us with 

the flexibility to quickly and appropriately react to sales and marketing practices for 

specific drug products, including the introduction of new drugs or drug products. We 

plan to amend the list as necessary and to keep updates on the CMS ASP website at: 

http://www.cms.gov/McrPartBDrugAvgSalesPrice/01_overview.asp. Our proposals 

would be effective for ASP reports received on or after January 1, 2012 and would be 

reflected in our April 1, 2012 quarterly update. 

 In conjunction with the proposals in the preceding paragraph and the expectation 

that nearly all ASP price and sales volume reporting will continue to be at the NDC level 

(that is, the reported ASP sales and volume will be associated with a non-variable amount 

that is represented by the NDC), we are also proposing a clarification to existing 

regulation text at §414.802. Current 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 situations where the amount of drug product 

represented by an NDC varies. 

TABLE 17: HCPCS CODES FOR WHICH 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:RCO 
CMS-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 completing 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 identifier (such as an internal product number) in 

the alternate ID column. 

● Manufacturers should report ASP prices and sales volumes for dermal grafting 

products in units of area by square centimeter. 
CMS-1524-P 223 

The User Guide will be available on the CMS ASP website at: 

http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/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 manufacturers that additional information about 

reporting ASP data to us is available (for examples, see the following: (69 FR 17936), 

(69 FR 66299), (70 FR 70215), (71 FR 69665), (72 FR 66256), (73 FR 69751), and 

(74 FR 61904)). Also, a link to the ASP Frequently Asked Questions (FAQs) is posted in 

the "Related Links Inside CMS" section of the ASP Overview Web page. We welcome 

comments on the ASP reporting proposals that are described in this section. 

B. Discussion of Budget Neutrality for the Chiropractic Services Demonstration

Section 651 of MMA requires the Secretary to conduct a demonstration for up to 

2-years to evaluate the feasibility and advisability of expanding coverage for chiropractic 

services under Medicare. Current Medicare coverage for chiropractic services is limited 

to manual manipulation of the spine to correct a subluxation described in section 

1861(r)(5) of the Act. The demonstration expanded Medicare coverage to include: "(A) 

care for neuromusculoskeletal conditions typical among eligible beneficiaries; and (B) 

diagnostic and other services that a chiropractor is legally authorized to perform by the 

State or jurisdiction in which such treatment is provided" 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 which the Secretary would have paid under 

the Medicare program if the demonstration projects under this section were not 

implemented." 

In the CY 2006, 2007, and 2008 PFS final rules with comment period 

(70 FR 70266, 71 FR 69707, 72 FR 66325, respectively), we included a discussion of the 

strategy that would be used to assess budget neutrality (BN) and the method for adjusting 

chiropractor fees in the event the demonstration resulted in costs higher than those that 

would occur in the absence of the demonstration. We stated BN would be assessed by 

determining the change in costs based on a pre-post comparison of total Medicare costs 

for beneficiaries in the demonstration and their counterparts in the control groups and the 

rate of change for specific diagnoses that are treated by chiropractors and physicians in 

the demonstration sites and control sites. We also stated that our analysis would not be 

limited to only review of chiropractor claims because the costs of the expanded 

chiropractor services may have an impact on other Medicare costs for other services. 

In the CY 2010 PFS final rule with comment period (74 FR 61926), we discussed 

the evaluation of this demonstration conducted by Brandeis University and the two sets 

of analyses used to evaluate budget neutrality. In the "All Neuromusculoskeletal 

Analysis," which compared the total Medicare costs of all beneficiaries who received 

services for a neuromusculoskeletal condition in the demonstration areas with those of 

beneficiaries with similar characteristics from similar geographic areas that did not 

participate in the demonstration, the total effect of the demonstration to Medicare was an 
CMS-1524-P 225 

$114 million increase in costs. In the "Chiropractic User Analysis," which compared the 

Medicare costs of beneficiaries who used expanded chiropractic services to treat a 

neuromusculoskeletal condition in the demonstration areas, with those of beneficiaries 

with similar characteristics who used chiropractic services as was currently covered by 

Medicare to treat a neuromusculoskeletal condition from similar geographic areas that 

did not participate in the demonstration, the total effect of the demonstration to Medicare 

was a $50 million increase in costs. 

As explained in the CY 2010 PFS final rule, we based the BN estimate on the 

"Chiropractic User Analysis" because of its focus on users of chiropractic services rather 

than all Medicare beneficiaries with neuromusculoskeletal conditions, including those 

who did not use chiropractic services and who may not have become users of chiropractic 

services even with expanded coverage for them (74 FR 61926 through 61927). Users of 

chiropractic services are most likely to have been affected by the expanded coverage 

provided by this demonstration. Cost increases and offsets, such as reductions in 

hospitalizations or other types of ambulatory care, are more likely to be observed in this 

group. 

As explained in the CY 2010 PFS final rule (74 FR 61927), because the costs of 

this demonstration were higher than expected and we did not anticipate a reduction to the 

PFS of greater than 2 percent per year, we finalized a policy to recoup $50 million in 

expenditures from this demonstration over a 5-year period, from CYs 2010 through 2014 

(74 FR 61927). Specifically, we are recouping $10 million for each such year through 

adjustments to the chiropractic CPT codes. Payment under the PFS for these codes will 

be reduced by approximately 2 percent. We believe that spreading this adjustment over a 
CMS-1524-P 226 

longer period of time will minimize its potential negative impact on chiropractic 

practices. 

We are continuing the implementation of the required budget neutrality 

adjustment by recouping $10 million in CY 2012. Our Office of the Actuary estimates 

chiropractic expenditures in CY 2012 to be approximately $470 million based on actual 

Medicare spending for chiropractic services for the most recent available year. To recoup 

$10 million in CY 2012, the payment amount under the PFS for the chiropractic CPT 

codes (that is, CPT codes 98940, 98941, and 98942) will be reduced by approximately 

2 percent. We are reflecting this reduction only in the payment files used by the 

Medicare contractors to process Medicare claims rather than through adjusting the 

relative value units (RVUs). Avoiding an adjustment to the RVUs would preserve the 

integrity of the PFS, particularly since many private payers also base payment on the 

RVUs. 

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 Act requires that the update factor under 

certain payment systems be annually adjusted by changes in economy-wide productivity. 

The year that the productivity adjustment is effective varies by payment system. 

Specifically, section 3401 of the Affordable Care Act requires that in CY 2011 (and in 

subsequent years) update factors under the ambulatory surgical center (ASC) payment 

system, the ambulance fee schedule (AFS), the clinical laboratory fee schedule (CLFS) 

and the DMEPOS fee schedule be adjusted by changes in economy wide productivity. 

Section 3401(a) of the Affordable Care Act amends section 1886(b)(3)(B) of the Act to 
CMS-1524-P 227 

add clause (xi)(II) which sets forth the definition of this productivity adjustment. The 

statute defines the productivity adjustment to be equal to the 10-year moving average of 

changes in annual economy-wide private nonfarm business multifactor productivity 

(MFP) (as projected by the Secretary for the 10-year period ending with the applicable 

fiscal year, year, cost reporting period, or other annual period). Historical published data 

on the measure of MFP is available on the Bureau of Labor Statistics' (BLS) 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 schedules was finalized in the CY 2011 PFS final rule with 

comment period (75 FR 73394 through 73399). As described in the CY 2011 PFS final 

rule with comment period, IGI replicates the MFP measure calculated by the BLS using a 

series of proxy variables derived from the IGI US macro-economic models. For 

CY 2012, we are proposing to revise the IGI series used to proxy the labor index used in 

the MFP forecast calculation from man-hours in private nonfarm establishments (billions 

of hours—annual rate) to hours of all persons in private nonfarm establishments, 

(2005=100.00), adjusted for labor composition effects. We are proposing this revision 

after further analysis showed that the proposed series is a more suitable proxy for the 

BLS Private nonfarm business sector labor input series since it accounts for the changes 

in skill-mix of the workforce over time (referred to above as labor composition effects). 

The BLS labor input series includes labor composition effects. We are proposing no 

additional changes to the IGI MFP forecast methodology or its application to the CPI-U 
CMS-1524-P 228 

update factors for the ASC payment system, and the Ambulance, CLFS, and DMEPOS 

fee schedules. 

D. Section 105: Extension of Payment for Technical Component of Certain Physician 

Pathology Services

1. Background and Statutory Authority 

Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits Improvement and 

Protection Act of 2000 (BIPA) (Pub. L. 106-554), as amended by section 732 of the 

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) 

(Pub. L. 108-173), section 104 of division B of the Tax Relief and Health Care Act of 

2006 (MIEA-TRHCA) (Pub. L. 109-432), section 104 of the Medicare, Medicaid, and 

SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), section 136 of the Medicare 

Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275) and 

section 3104 of the Affordable Care Act (Pub. L. 111-148), 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 who are inpatients or outpatients of a covered 

hospital through CY 2011. The technical component (TC) of physician pathology 

services refers to the preparation of the slide involving tissue or cells that a pathologist 

interprets. The professional component (PC) of physician pathology services refers to the 

pathologist's interpretation of the slide. 

When the hospital pathologist furnishes the PC service for a hospital patient, the 

PC service is separately billable by the pathologist. When an independent laboratory's 
CMS-1524-P 229 

pathologist furnishes the PC service, the PC service is usually billed with the TC service 

as a combined service. 

Historically, any independent laboratory could bill the Medicare contractor under 

the PFS for the TC of physician pathology services for hospital patients even though the 

payment for the costs of furnishing the pathology service (but not its interpretation) was 

already included in the bundled inpatient stay payment to the hospital. In the CY 2000 

PFS final rule with comment period (64 FR 59408 through 59409), we stated that this 

policy has contributed to the Medicare program paying twice for the TC service: (1) to 

the hospital, through the inpatient prospective payment rate, when the patient is an 

inpatient; and (2) to the independent laboratory that bills the Medicare contractor, instead 

of the hospital, for the TC service. While the policy also permits the independent 

laboratory to bill for the TC of physician pathology services for hospital outpatients, in 

this case, there generally would not be duplicate payment because we would expect the 

hospital to not also bill for the pathology service, which would be paid separately to the 

hospital only if the hospital were to specifically bill for it. We further indicated that we 

would implement a policy to pay only the hospital for the TC of physician pathology 

services furnished to its inpatients. 

 Therefore, in the CY 2000 PFS final rule with comment period, we revised 

§415.130(c) to state that for physician pathology services furnished on or after 

January 1, 2001 by an independent laboratory, payment is made only to the hospital for 

the TC of physician pathology services furnished to a hospital inpatient. Ordinarily, the 

provisions in the PFS final rule with comment period are implemented in the following 

year. However, the change to §415.130 was delayed 1 year (until January 1, 2001), at the 
CMS-1524-P 230 

request of the industry, to allow independent laboratories and hospitals sufficient time to 

negotiate arrangements. 

 Full implementation of §415.130 was further delayed by section 542 of BIPA and 

section 732 of the MMA, which directed us to continue payment to independent 

laboratories for the TC of physician pathology services for hospital patients for a 2 year 

period beginning on January 1, 2001 and for CYs 2005 and 2006, respectively. In the 

CY 2007 PFS final rule with comment period (71 FR 69788), we amended §415.130 to 

provide that, for services furnished after December 31, 2006, an independent laboratory 

may not bill the carrier for the TC of physician pathology services furnished to a hospital 

inpatient or outpatient. However, section 104 of the MIEA-TRHCA continued payment 

to independent laboratories for the TC of physician pathology services for hospital 

patients through CY 2007, and section 104 of the MMSEA further extended such 

payment through the first 6 months of CY 2008. 

 Section 136 of the MIPPA extended the payment through CY 2009. Section 3104 

of the Affordable Care Act amended the prior legislation to extend the payment through 

CY 2010. Subsequent to publication of the CY 2011 PFS final rule with comment 

period, section 105 of the MMEA extended the payment through CY 2011. 

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 after December 31, 2011, an independent laboratory 

may not bill the Medicare contractor for the TC of physician pathology services furnished 

to a hospital inpatient or outpatient. We would implement this provision effective for TC 

services furnished on or after January 1, 2012. 
CMS-1524-P 231 

E. Section 4103 of the Affordable Care Act: Medicare Coverage and Payment of the 

Annual Wellness Visit Providing a Personalized Prevention Plan Covered Under 

Medicare Part B.

1. Incorporation of a Health Risk Assessment as Part of the Annual Wellness Visit 

a. Background and Statutory Authority – Medicare Part B Coverage of an Annual 

Wellness Visit Providing Personalized Prevention Plan Services 

Preventive care and beneficiary wellness are important to the Medicare program 

and have become an increasing 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 referred to as the annual 

wellness visit or AWV). The AWV is described more fully in section 1861(hhh) of the 

Act, and coverage was effective for services furnished on or after January 1, 2011. 

Regulations for Medicare coverage of the AWV are established at 42 CFR 410.15. The 

AWV may be performed by a physician, nonphysician practitioner (physician assistant, 

nurse practitioner, or clinical nurse specialist), or a medical professional (including a 

health educator, a registered dietitian, or a nutrition professional, or other licensed 

practitioner) or a team of such medical professionals, working under the direct 

supervision of a physician. In summary, for CY 2011, the first AWV includes-- 

● Establishment of an individual's medical and family history; 

● Establishment of a list of current medical providers and suppliers involved in 

providing medical care to the individual; 

● Measurement of an individual's height, weight, body mass index (or waist 

circumference, if appropriate), blood pressure, and other routine measurements as 
CMS-1524-P 232 

deemed appropriate, based on the beneficiary's medical and family history; 

● Detection of any cognitive impairment that the individual may have; 

● Review of the individual's potential (risk factors) for depression; 

● Review of the individual's functional ability and level of safety; 

● Establishment of a written screening schedule for the individual such as a 

checklist for the next 5 to 10 years, as appropriate, based on recommendations of the 

United States Preventive Services Task Force, the Advisory Committee on Immunization 

Practices, and the individual's health status, screening history, and age-appropriate 

preventive services covered by Medicare; 

● Establishment of a list of risk factors for which primary, secondary or tertiary 

interventions are recommended or underway for the individual, including any mental 

health conditions or any such risk factors or conditions that have been identified through 

an initial preventive physical examination, and a list of treatment options and their 

associated risks and benefits; 

● Furnishing of personalized health advice to the individual and a referral, as 

appropriate, to health education or preventive counseling services or programs aimed at 

reducing identified risk factors and improving self management; and 

● Any other element determined appropriate through the national coverage 

determination process (NCD). 

In summary, for CY 2011, subsequent AWVs include-- 

● An update of the individual's medical and family history; 

● An update of the list of current providers and suppliers that are regularly 

involved in providing medical care to the individual; 
CMS-1524-P 233 

● Measurement of an individual's weight (or waist circumference), blood 

pressure and other routine measurements as deemed appropriate, based on the 

individual's medical and family history; 

● Detection of any cognitive impairment that the individual may have; 

● An update to the written screening schedule for the individual; 

● An update to the list of risk factors and conditions for which primary, 

secondary, or tertiary interventions are recommended or are underway for the individual; 

● Furnishing of personalized health advice to the individual and a referral, as 

appropriate, to health education or preventive counseling services; 

● Any other element determined appropriate through the NCD process. 

The AWV is specifically designed as a wellness visit that focuses on 

identification of certain risk factors, personalized health advice, and referral for 

additional preventive services and lifestyle interventions (which may or may not be 

covered by Medicare). The elements included in the AWV differ from comprehensive 

physical examination protocols with which some 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 assessment (HRA) that meets the guidelines 

established by the Secretary. In general, an HRA is an evaluation tool designed to 

provide a systematic approach to obtaining accurate information about the patient's health 

status, injury risks, modifiable risk factors, and urgent health needs. This evaluation tool 

is completed prior to, or as part of, an AWV. The information from the HRA is reflected 
CMS-1524-P 234 

in the personalized prevention plan that 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 and entities (see section 1861 (hhh)(4)(A) of 

the Act). A technology assessment from the Agency for Healthcare Research and Quality 

(AHRQ) was commissioned to describe key features of HRAs, to examine which features 

were associated with successful HRAs, and to discuss the applicability of HRAs to the 

Medicare population. A draft of the technology 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 Disease Control and Prevention (CDC), due 

to their in-depth knowledge of HRAs, and because the CDC was directed by section 

4004(f) of the Affordable Care Act to develop guidelines for a personalized prevention 

plan tool. In the November 16, 2010 Federal Register (75 FR 70009), CDC issued a 

notice to solicit feedback regarding HRA guidance development. Public comments were 

received from numerous relevant groups and entities including: the American Academy 

of Family Physicians; the American Dietetic Association; the American Geriatrics 

Society; the American College of Cardiology; Care Continuum Alliance, physician 

practices; public health agencies; healthcare research groups; and the general public. 

The CDC convened a public meeting in Atlanta, Georgia in February 2011 to 

facilitate the development of guidance for HRAs. (See the December 30, 2010 Federal 

Register (75 FR 82400) – announcement for "Development of Health Risk Assessment 

Guidance, Public Forum"). This meeting allowed broad public input from stakeholders 
CMS-1524-P 235 

and the general public into the development of guidelines for 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/downloads/healthriskassessmentsCDCfinal.pdf. 

The CDC guidance resulted from a review and 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 development process is included as part of the guidance 

document. The CDC plans to publish "A Framework for Patient-Centered Health 

Assessments, a Morbidity and Mortality Weekly Report (MMWR)." The MMWR will 

include additional information applicable for the successful implementation of the HRA, 

such as the CDC interim guidance document, as well as information related to 

implementation, feedback, and follow-up that evidence suggests is critical for improving 

health outcomes using this process. We are 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 initial CDC guidance 

document, we propose to amend 42 CFR 410.15 by: (1) adding the term "health risk 

assessment" and its definition; (2) revising the definitions of "first annual wellness visit 

providing personalized prevention plan services" and "subsequent annual wellness visit 

providing personalized prevention plan services;" and (3) incorporating the use and 
CMS-1524-P 236 

results of an HRA into the provision of personalized prevention plan services during the 

AWV. We believe that incorporation of the HRA supports a systematic approach to 

patient wellness and is integral to providing personalized prevention plan services. The 

results of the HRA will provide the foundation 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 information about the beneficiary. 

● Can be administered independently by the beneficiary or administered by a 

health professional prior to or as part of the AWV encounter. 

● Is appropriately tailored to and takes into account the communication needs of 

underserved populations, persons with limited English proficiency, and persons with 

health literacy needs, 

● Takes no more than 20 minutes to complete. 

● Addresses, at a minimum, the following topics: 

 ++ Demographic data, including but not limited to age, gender, race, and 

ethnicity. 

 ++ Self assessment of health status, frailty, and physical functioning. 

 ++ Psychosocial risks, including but not limited to depression/life satisfaction, 

stress, anger, loneliness/social isolation, pain, or fatigue. 
CMS-1524-P 237 

 ++ Behavioral risks, including but not limited to tobacco use, physical activity, 

nutrition and oral health, alcohol consumption, sexual practices, motor vehicle safety 

(seat belt use), and home safety. 

 ++ Activities of daily living (ADLs), including but not limited to dressing, 

feeding, toileting, grooming, physical ambulation (including balance/risk of falls), and 

bathing. 

 ++ Instrumental activities of daily living (IADLs), including but not limited to 

shopping, food preparation, using the telephone, housekeeping, laundry, mode of 

transportation, responsibility for own medications, and ability to handle finances. 

The CDC guidance describes an HRA as "a collection of health-related data a 

medical provider can use to evaluate the health status 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, and physical functioning; biometric assessments 

obtained by the provider; psychosocial risks; and behavioral risks. The guidance 

document suggests, based on current evidence that the following domains specific to the 

greater than or equal to a 65 year-old Medicare population be included in the HRA: 

memory, activities of daily living, and instrumental activities 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 additional aspect of the AWV...". We note that the 

definitions of both the first and subsequent annual wellness visit include 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 defined in §410.15; can be furnished in a number 

of ways, including during an encounter with a health professional or through an 

interactive telephonic or web-based program, while ensuring the privacy of the 

beneficiary; be provided in a patient's preferred language; and take no longer than 

20 minutes to complete. We believe that the health professional should consider the 

beneficiary's needs when determining whether assistance would be needed for the 

beneficiary to complete the HRA. Factors a health professional may wish to consider 

include vision, hearing, or language limitations; the communication needs of underserved 

populations; persons with limited English proficiency; and persons with health literacy 

needs. 

The completed HRA and results would be provided to the health professional as 

that term is defined in §410.15(a), as a foundation 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 practitioner in a thought process intended to 

develop a prevention plan for the patient to improve health status and delay the onset of 

disease known to be caused by the reported behavioral risks or the patient's current health 

status. The practitioner can, in a shared decision making process with the patient provide 
CMS-1524-P 239 

feedback in the form of educational messages, counseling or referrals related to changing 

high risk behaviors and health habits. This feedback can potentially improve health 

behaviors and/or alter one's risk of disease, improve chronic disease management or 

likelihood of premature death." For instance, the HRA may collect aspects of the 

beneficiary's medical and family history, such as history of tobacco use, that would 

provide a foundation for personalized health advice, 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 addressed as part of an HRA, while allowing the 

health professional the flexibility to evaluate additional topics, as appropriate, to provide 

a foundation for development of a personalized prevention plan. 

(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 services covered by Medicare that are appropriate 

for them. First and subsequent AWVs also include elements that focus on the furnishing 

of personalized health advice and referral, as appropriate, to health education, preventive 

counseling services, programs aimed at improving self-management, and 

community-based lifestyle interventions. 

We are proposing that the definitions of "first annual wellness visit providing 
CMS-1524-P 240 

personalized prevention plan services" and "subsequent annual wellness visit providing 

personalized prevention plan services" be revised to incorporate the use and results of an 

HRA. The HRA is an integral part of the provision of personalized prevention plan 

services, consistent with section 1861(hhh) of the Act. We propose to incorporate the 

HRA by revising the definitions of first 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 for identifying health behaviors and risk 

factors known to the patient (such as: smoking, physical activity, and nutritional habits) 

for which the medical provider can discuss and provide tailored feedback aimed at 

reducing risk factors as well as reducing the potential for developing the diseases to 

which they are related. 

During the AWV encounter, the HRA information is utilized by the health 

professional in a thought process intended to develop a personalized prevention plan for 

the patient to improve health status and delay the onset of disease. For instance, if the 

information provided by the HRA indicated that the beneficiary had a current or past 

history of tobacco use, the health professional may deem it appropriate to perform those 

commonly used aspects of a clinical evaluation (for instance, listening to (auscultation) 

the heart and lungs) in order to provide the appropriate personalized health advice and 

referrals for additional preventive services such as tobacco 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. Additionally, the CDC guidance document suggested 

that the information collected via the HRA would be reconciled with biometric 

assessments obtained by the provider. Consistent with section 1861(hhh)(2) of the Act, 

the definitions for first AWV and subsequent AWVs address most of the biometric 

assessments suggested in the CDC guidance 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 furnishing the AWV would review the information reported in the 

HRA, which would serve as the basis for a personalized prevention plan provided during 

the AWV encounter. The beneficiary would leave the visit with personalized health 

advice, appropriate referrals, and a written individualized screening schedule, such as a 

check list. We would not expect that the health professional would provide only general 

recommendations during the AWV encounter and then mail a personalized prevention 

plan that incorporates an HRA to the beneficiary 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 needed to address an urgent health issue. For 

example, if a beneficiary is determined to have high blood pressure, a follow- up visit for 
CMS-1524-P 242 

further review of symptoms and evaluation and management, along with determining 

whether additional interventions are necessary, 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 incorporation of the use of an 

HRA will have on health professionals and their 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 professional practices of incorporating an HRA into 

subsequent AWVs as well as the first AWV; 

● The impact of the elements included in the definitions of first and subsequent 

AWV. 

● Modification of those AWV elements for which the Secretary has authority to 

determine appropriateness. 

We are also proposing changes to the definition of the term "subsequent annual 

wellness visit providing personalized prevention plan services" to clarify that the health 

professional should furnish personalized prevention plan services and updated 

information if there have been changes since the beneficiary's last 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 (for example, lists of risk factors and 

screening schedules). Since all AWVs that follow the first AWV are considered 
CMS-1524-P 243 

subsequent AWVs, the health professional should update elements that were developed 

during the previous AWV if there have been changes. The proposed changes to the 

definition of the term "subsequent annual wellness visit providing personalized 

prevention plan services" are as follows: 

● We propose that newly redesignated paragraph (iii) state "an update of the list 

of current providers and suppliers that are regularly involved in providing medical care to 

the individual as that list was developed for the first annual wellness visit providing 

personalized prevention plan services or the previous subsequent annual wellness visit 

providing personalized prevention plan services". 

● We propose that newly redesignated paragraph (vi)(B), state "the list of risk 

factors and conditions for which primary, secondary or tertiary interventions are 

recommended or are underway for the individual as that list was developed at the first 

annual wellness visit providing personalized prevention plan services or the previous 

subsequent annual wellness visit providing personalized prevention plan services". 

2. The Addition of a Health Risk Assessment as a Required Element for the Annual 

Wellness Visit beginning in 2012. 

Section 4103 of the Affordable Care Act 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 subsection (hhh) to section 1861 of the Act to 

define "personalized prevention plan services" and to specify who may furnish these 

services. Finally, section 4103 of the Affordable Care Act amended section 1848(j)(3) of 
CMS-1524-P 244 

the Act and provided for payment of AWVs under the PFS, and specifically excluded the 

AWV from the hospital OPPS. As discussed in the CY 2011 PFS final rule with 

comment period (75 FR 73401), a single Medicare payment is made when an AWV is 

furnished by a physician, physician assistant, nurse practitioner, 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 reporting 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; includes 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 all of the required elements that 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 the information in the patient's medical 

record based on the patient's interval history since the previous AWV. 

As we stated in the CY 2011 PFS 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 visit, 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 IPPE (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 other outpatient visit). In addition, in the 

CY 2011 PFS final rule with comment period (75 FR 73410), we indicated that 

subsequent AWV's described by HCPCS code 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). Therefore, 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 established 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 comment period (75 FR 73411), we stated 

"that when the HRA is incorporated in the AWV, we will reevaluate the values for 

HCPCS codes G0438 and G0439". As discussed in the CY 2011 PFS final rule with 

comment period, the services described by CPT codes 99204 and 99214 already include 

'preventive assessment' forms. For CY 2012, we believe that the current payment 

crosswalk for HCPCS codes G0438 and G0439 continue to be most accurately equivalent 

to a level 4 E/M new or established patient visit; and therefore, we 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 Quality Improvements - Physician Quality Reporting 

System 

a. Program Background and Statutory Authority 

The Physician Quality Reporting System is a quality reporting program that provides 

incentive payments and payment adjustments to identified eligible professionals who 

satisfactorily report data on quality measures for covered professional services furnished during a 

specified reporting period. The Physician Quality Reporting System was initially implemented in 

2007 as a result of section 101 of Division B of the Tax Relief and Health Care Act of 2006. The 

Physician Quality Reporting System was extended and further enhanced as a result of the 

Medicare Improvements for Patients and Providers Act of 2009 (MIPPA), which was enacted on 

July 15, 2008, and the Affordable Care Act, which was enacted on March23, 2010. 

 Changes to the Physician Quality Reporting System as a result of these laws, as well as 

information about the Physician Quality Reporting System in 2007, 2008, 2009, 2010, and 2011 

are discussed in detail in the CY 2008 PFS proposed and final rules (72 FR 38196 through 38204 

and 72 FR 66336 through 66353, respectively), CY 2009 PFS proposed and final rules 

(73 FR 38558 through 38575 and 73 FR 69817 through 69847, respectively), CY 2010 PFS 

proposed and final rules (74 FR 33559 through 33600 and 74 FR 61788 through 61861, 

respectively), and CY 2011 PFS proposed and final rules (75 FR 73487 through 73552). Further 

detailed information, about the Physician Quality Reporting System, related laws, and help desk 

resources, is available on the CMS Web site at http://www.cms.gov/PQRS. 

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 Participation 
CMS-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 participation are described in this section. 

(1) Individual Eligible Professionals 

 As defined at 42 CFR 414.90(b) the term "eligible professional" means any of the 

following: (1) a physician; (2) a practitioner described in section 1842(b)(18)(C) of the Act; (3) a 

physical or occupational therapist or a qualified speech-language pathologist; or (4) a qualified 

audiologist. For more information on which professionals are eligible to participate in the 

Physician Quality Reporting System, we refer readers to the "List of Eligible Professionals" 

download located in the "How to Get Started section of the Physician Quality Reporting CMS 

Web site at: http://www.cms.gov/PQRS/03_How_To_Get_Started.asp#TopOfPage. 

(2) Group Practices 

(A) Background and Authority 

 As required by section 1848(m)(3)(C)(i) of the Act, we established and have had 

in place since January 1, 2010, a process under which eligible professionals in a group 

practice are treated as satisfactorily submitting data on quality measures under the 

Physician Quality Reporting System if, in lieu of reporting measures under the Physician 

Quality Reporting System, the group practice reports measures determined appropriate by 

the Secretary, for example measures that target high-cost chronic conditions and 

preventive care, in a form and manner, and at a time specified by the Secretary. Section 

1848(m)(3)(C)(ii) of the Act requires that this process provide for the use of a statistical 

sampling model to submit data on measures, for example the model used under the 

Medicare Physician Group Practice (PGP) demonstration project under section 1866A of 

the Act. We established a group practice reporting option (GPRO) for the Physician 
CMS-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 professionals, as identified by their individual 

National Provider Number (NPI), who have reassigned their Medicare billing rights to 

the TIN". We propose to change the 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 professionals (or, as identified by NPIs) who 

have reassigned their billing rights to the TIN. This proposed definition of group practice 

is different from the definition of group 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 Reporting System, our definition of "group 

practice" was limited to practices with 200 or more eligible professionals because our 

intent was to model the Physician Quality Reporting System GPRO after a quality 

reporting program that group practices may already be familiar with – the Physician 

Group Practice (PGP) demonstration. Since participation in the PGP demonstration was 

limited to large group practices, we wanted to initially limit participation in the Physician 

Quality Reporting System GPRO to similar large group practices. In 2011, we expanded 

this definition to include practices with 2-199 eligible professionals because we 

developed a second reporting option (GPRO II) specifically for smaller group practices 

that was based largely on the Physician Quality Reporting System reporting options for 

individual eligible professionals. We have since observed that many of these smaller 
CMS-1524-P 249 

group practices that self-nominated to participate in GPRO II for 2011 subsequently 

elected to opt out of participation in the GPRO II for 2011 so that members of the group 

practices can participate in the Physician Quality Reporting System individually instead. 

Out of 107 total groups that self-nominated for GPRO II, only 25 group practices 

comprised of 2-10 eligible professionals and 15 group practices comprised of 11-25 

eligible professionals are still participating in GPRO II for 2011 at this time. 

Since the GPRO II seems to be a less attractive reporting option than GPRO I, we 

are proposing in section IV.F.1.b.2 of this proposed rule to consolidate GPRO I and II 

into a single GPRO. However, since our experience with using the GPRO submission 

web interface under the Physician Quality Reporting System has been limited to larger 

practices or practices participating in demonstration projects, we hesitate to expand what 

we referred to as GPRO I to all group practices until we gain some experience with 

smaller practices on a larger scale. For example, we believe that participation under the 

Physician Quality Reporting System GPRO is a more effective method of participation 

for larger as opposed to smaller group practices. As described in section IV.F.1.e.6 of 

this proposed rule, a group practice must take extra steps to participate in the Physician 

Quality Reporting System GPRO, for example reporting on more measures overall than 

is required for individual eligible professionals. In contrast, members of a group practice 

who choose to participate in the Physician Quality Reporting System as individual 

eligible professionals could satisfactorily report by reporting as few as 3 measures. We 

believe the additional reporting burden associated with participating under the Physician 

Quality Reporting System GPRO may make the GPRO less attractive for smaller 
CMS-1524-P 250 

practices. For these reasons, we propose to change 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 professionals in group practices of less than 25 eligible professionals 

from participating in the Physician Quality Reporting System, since members of these 

group practices may still participate as individual eligible professionals. We believe that 

smaller group practices are more closely akin to individual eligible professionals with 

respect to participation under the Physician 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 practice to practice. We allow for fluctuation of the group 

practice's size throughout the reporting period. However, the group practice's size after 

the group practice's participation is approved by CMS must continue to meet the 

definition of a group practice as proposed in 42 CFR 414.90(b) for the entire reporting 

period. 

We also note that under 42 CFR 414.90(g)(1), a group practice of any size 

(including solo practitioners) or comprised of multiple TINs participating in a Medicare 

approved demonstration project of other programs would also be deemed to be 

participating in the Physician Quality Reporting System GPRO. For example, the PGP 

demonstration, as well as the Medicare Shared Savings Program (governing accountable 
CMS-1524-P 251 

care organizations (ACOs)), Pioneer ACO, and EHR demonstrations have incorporated 

or proposed to incorporate aspects of the Physician Quality Reporting System reporting 

requirements and incentives under those respective programs. 

Our intention to recognize (deem) group practices participating in such other 

programs or demonstration projects as having participated in the Physician Quality 

Reporting System was to ensure that such groups would not be barred from participating 

in the group practice reporting option under the eRx Incentive program, since we 

previously required that group practices interested in participating in the eRx Incentive 

Program also participate in the Physician Quality Reporting System GPRO. We are not 

proposing to change the eligibility for group practices, including those participating in the 

programs mentioned above, to participate in the eRx Incentive program. As discussed in 

the proposed changes to the eRx Incentive Program in section IV.F.1.e.2 later in this 

proposed rule, however, we are proposing that a group practice must self-nominate to 

participate under the eRx Incentive Program's group practice reporting option. In 

addition, we are proposing to make a technical change to 42 CFR 414.90(g)(1) to 

eliminate the reference to group practices in demonstrations that are deemed to have 

participated in the Physician Quality Reporting System. We believe 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 Reporting System or inappropriately suggest 

that duplicate Physician Quality Reporting System incentive payments are available to 

group practices under both the Physician Quality Reporting System and the other types of 

programs mentioned previously. We also propose to make a technical change to 
CMS-1524-P 252 

42 CFR 414.92(b) to more broadly address group practices in other types of programs 

that incorporate Physician Quality Reporting System reporting requirements and 

incentives, so that the regulation does not solely reference demonstrations. 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 previously, we are proposing to retain this 

requirement. However, in an effort to align 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 believe 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 providers who wish to 

participate in multiple CMS quality reporting programs 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 practice 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 practices that use multiple TINs, it would 

require us to create additional parameters related 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 integrated practice, such as but not limited to: 
CMS-1524-P 253 

● Must eligible professionals in a group practice share certain common 

characteristics in order to be eligible for participation under the Physician Quality 

Reporting System GPRO, such as geographic location or specialty? 

● Should there be a limit to how many TINs may be comprised in a single group 

practice? 

We invite public comment on parameters that 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 Physician Quality Reporting System GPRO for 2012 

and subsequent years, we propose to require group practices to complete a 

self-nomination process and to meet certain technical and other requirements described 

later in this section in greater detail. As in prior years, we are proposing to require these 

self-nomination and additional process requirements so that we may identify which group 

practices are interested in participating in the Physician Quality Reporting System as a 

GPRO as well as to ensure that group practices participating in the GPRO understand the 

process for satisfactorily reporting Physician Quality Reporting System quality measures 

under the GPRO method of reporting. 

 We 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 practice wishes to participate as a Physician 

Quality Reporting System GPRO via a web-based tool that includes the group practice's 

TIN(s) and name of the group practice, the name and email address of a single point of 

contact for handling administrative issues, as well as the name and email address of a 

single point of contact for technical support purposes. A group practice that submits an 
CMS-1524-P 254 

incomplete self-nomination statement, such as a valid email address is not provided), 

would not be considered for inclusion in the Physician Quality Reporting System GPRO. 

We would notify any group practice that submits an incomplete self-nomination 

statement. 

 If it is not operationally feasible for us to collect self-nomination statements via a 

web-based tool for 2012, we propose to require 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 includes the group practice's TIN(s) and name of 

the group practice, the name and email address of a single point of contact for handling 

administrative issues, as well as the name and email address of a single point of contact 

for technical support purposes. 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 considered 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 indicate the group practice's compliance with the 

following requirements: 

● Agree to attend and participate in all mandatory GPRO training sessions. 

● Is an established Medicare provider that has billed Medicare Part B on or after 

January 1 and prior to October 29 of the year prior to the reporting period for the 

respective year. For example, for purposes of participating in the 2012 Physician 
CMS-1524-P 255 

Quality Reporting System GPRO, the group practice must have billed Medicare Part B 

on or after January 1, 2011 and prior to October 29, 2011. 

● Agree to have the results on the performance of their Physician Quality 

Reporting System measures publicly posted on the Physician Compare Web site. 

● Obtain and/or have access to the identity management system specified by 

CMS (such as, but not limited to, the Individuals Authorized Access to CMS Computer 

Systems, or IACS) to submit Medicare clinical quality data to a CMS clinical data 

warehouse. 

● Provide CMS access (upon request for validation purposes) to review the 

Medicare beneficiary data on which Physician Quality Reporting System GPRO 

submissions are founded or provide to CMS a copy of the actual data (upon request). 

 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 years, a group practice 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 rule) must indicate its 

desire to participate in both programs in its self-nomination statement. 

 In 2012, the GPRO is interested in testing 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 must state their interest to participate in the 

group practice's self-nomination letter. 

 We further propose that group practices that wish to self-nominate must do so by 

January 31 of the calendar year in which the group practice wishes to participate in the 
CMS-1524-P 256 

Physician Quality Reporting System GPRO. For example, in order to participate in the 

GPRO for the 2012 Physician Quality Reporting System, the group practice would need 

to self-nominate by January 31, 2012. Upon receipt of the self-nomination statements, 

we would assess whether the participation requirements for the respective reporting 

period were met by each group practice using Medicare claims data from the year prior to 

the respective reporting period. We would not preclude a group practice from 

participating in the GPRO if we discover, from analysis of the Medicare claims data, that 

there are some eligible professionals (identified by NPIs) that are not established 

Medicare providers (that is, have not billed Medicare Part B on or after January 1 and 

prior to or on October 29 of the year prior to the respective reporting period) as long as 

the group has at least the minimum proposed number (that is, 25) of established Medicare 

providers required to participate in the Physician Quality Reporting System as a group 

practice. Eligible professionals, as classified by their NPIs, who do not submit Medicare 

Part B claims for PFS covered professional services during the reporting period, however, 

would not be included in our incentive payment calculations. 

 Furthermore, we propose to allow group practices who have previously 

participated in the Physician Quality Reporting System GPRO to automatically be 

qualified to participate in the GPRO in 2012 and future program years. For example, 

group practices that were selected to participate in the 2011 Physician Quality Reporting 

System GPRO I or GPRO II (provided the group practice is still comprised of at least 25 

eligible professionals) would automatically be qualified to participate in the 2012 

Physician Quality Reporting System GPRO and would not need to complete the 2012 

Physician Quality Reporting System GPRO qualification process. These practices would, 
CMS-1524-P 257 

however, need to notify CMS in writing of their desire to continue participation in the 

Physician Quality Reporting System GPRO for the respective program year. 

We recognize that, for various reasons, there potentially could be a discrepancy 

between the number of eligible professionals (that is, NPIs) submitted by the practice 

during the self-nomination process and the number of eligible professionals billing 

Medicare under the practice's TIN as people move in and out of practices. Therefore, if 

we find more NPIs in the Medicare claims than the number of NPIs submitted by the 

practice during the self-nomination process and this 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 process. 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 proposals regarding the process for physician 

group practices to participate in the Physician Quality Reporting System GPRO. 

c. Proposed Reporting Period 

 Since the implementation of the Physician Quality Reporting System in 2007, 

depending on an eligible professional's chosen reporting mechanism, we have offered up 

to two different reporting periods for satisfactorily reporting Physician Quality Reporting 

System quality measures: a 12-month reporting period (from January 1 through 

December 31of the respective program year) and a 6-month reporting period (from July 1 

through December 31of the respective program year). Section 1848(m)(5)(F) of the Act 
CMS-1524-P 258 

requires CMS to provide alternative reporting periods and criteria for measures groups 

and registry reporting. To comply with this provision, for 2012 and subsequent years, 

CMS is proposing to retain the 6-month reporting period option for 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 reporting period (that is, January 1 through 

December 31of the respective program year), consistent with section 1848(m)(6)(C)(i)(II) 

of the Act, for the satisfactory reporting of Physician Quality Reporting System quality 

measures for claims, registry, and EHR-based reporting. 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 registry). Although we are not proposing a 

6-month reporting period for claims and registry reporting (for reporting individual 

measures via registry), we note that the 12-month reporting period aligns with other CMS 

quality reporting programs. In addition, the elimination of the 6-month reporting period 

for claims and registry reporting (for reporting individual measures via registry) will 

align the reporting periods of these mechanisms with the EHR reporting mechanism. We 

further believe that the elimination of the 6-month reporting period for claims and 

registry reporting (for reporting individual measures via registry) will help to streamline 

and simplify the reporting requirements for the Physician Quality Reporting System 
CMS-1524-P 259 

without substantial burden to eligible professionals who may still satisfactorily report 

using the 12-month reporting period. 

d. Proposed Reporting Mechanisms – Individual Eligible Professionals 

 For the purpose of reporting quality measures under the Physician Quality 

Reporting System, we propose to retain the claims-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 professionals with multiple mechanisms from 

which to satisfactorily report Physician Quality Reporting System quality measures. We 

hope that offering multiple reporting mechanisms will aid in encouraging participation in 

the Physician Quality Reporting System. 

As in previous years, the individual quality measures or measures groups an 

eligible professional selects will dictate the applicable reporting mechanism(s). In 

addition, while eligible professionals can attempt to qualify for a Physician Quality 

Reporting System incentive under multiple reporting mechanisms, the eligible 

professional must satisfy the criteria for satisfactory reporting proposed for the respective 

program year, with respect to a single reporting mechanism to qualify for an incentive. 

We further propose that we would not combine data submitted via 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 Reporting 
CMS-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 participate 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 Part B claims. QDCs for the eligible 

professional's selected individual Physician Quality Reporting System quality measures 

or measures group may be submitted to CMS at any time during the reporting period for 

the respective program year. However, as required by section 1848(m)(1)(A) of the Act, 

all claims for services furnished during the reporting period, would need to be processed 

by no later than two months after the end of the reporting period, to be included in the 

program year's Physician Quality Reporting System analysis. For example, all claims for 

services furnished for the 2012 Physician Quality Reporting System would need to be 

processed by no later than two months after the end of the reporting period for the 2012 

Physician Quality Reporting System, that is, processed by February 28, 2013 for the 

reporting period that ends December 31, 2012. We invite public comment on our 

proposed requirements for eligible professionals 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 Professionals 
CMS-1524-P 261 

As stated previously, we propose to retain the registry-based reporting mechanism 

via a qualified registry (as defined in section (2)(B) of this section) for the Physician 

Quality Reporting System for 2012 and beyond. With regard to specific requirements for 

registry-based reporting for individual eligible professional 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 through a qualified registry, an eligible 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 would act as a Health Insurance Portability and 

Accountability Act of 1996 (Pub. L. 104-191) (HIPAA) Business Associate and agent of 

the eligible professional. Such agents are referred to as "data submission vendors." The 

"data submission vendors" would have the requisite legal authority to provide clinical 

quality measures results and numerator and denominator data on individual quality 

measures or measures groups on behalf of the eligible professional for the Physician 

Quality Reporting System. 

We propose that the registry, acting as a data submission vendor, would submit 

CMS-defined registry-derived measures information to our designated database for the 

Physician Quality Reporting System, using a CMS-specified record layout, which would 

be provided to the registry by CMS. Similarly, we propose that eligible professionals 
CMS-1524-P 262 

choosing to participate in the Physician Quality Reporting System through the 

registry-based reporting mechanism for the respective program year must select a 

qualified Physician Quality Reporting System registry and submit information on 

Physician Quality Reporting System individual quality measures or measures groups to 

the selected registry in the form and manner and by the deadline specified by the registry. 

We propose to post a list of qualified registries for the Physician Quality 

Reporting System for the respective program year on the Physician Quality Reporting 

System section of the CMS Web site at http://www.cms.gov/pqrs, which would include 

the registry name, contact information, the measures and/or measures group (if qualified) 

for which the registry is qualified and intends to report for the respective program year, 

and information regarding the cost of the registry to eligible professionals. However, we 

do not anticipate making this list available prior to the start of the respective program 

year. That is, we do not anticipate making the list of qualified registries for the 2012 

Physician Quality Reporting System available prior to the start of the 2012 program year. 

We 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 indicating their continued interest in being a Physician Quality 

Reporting System registry by October 31 of the year prior to the program year (that is, by 

October 31, 2011 for the 2012 program year); and (3) the registry's compliance with the 

Physician Quality Reporting System registry requirements for the respective program 
CMS-1524-P 263 

year as indicated by CMS' registry vetting process. The listing of a qualified registry will 

depend on which of the 3 proposed phases is most applicable to the registry. The manner 

in which we post the list of qualified registries is based on prior experience with 

participation in the Physician Quality Reporting System as a registry vendor. 

(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 propose to require a self-nomination process for 

registries wishing to submit Physician Quality Reporting System quality measures or 

measures groups on behalf of eligible professionals for services furnished during the 

applicable reporting periods in 2012. This qualification process allows us to ensure that 

registries are fully informed of the Physician Quality Reporting System reporting process 

and to ensure the registry is qualified, thereby improving the likelihood of accurate 

reporting. 

We note that third party intermediaries may participate in various capacities under 

the Physician Quality Reporting System. In addition, in an effort to encourage the 

electronic submission of quality measures data from eligible professionals' EHRs, we are 

proposing EHR-based reporting, as discussed later in this section. As a result, we believe 

it is important to distinguish entities that collect their data from an EHR from those 

entities that collect their data from other sources. As such, as discussed here and below, 

we propose, the following two categories of third party intermediaries that would be able 
CMS-1524-P 264 

to submit Physician Quality Reporting System measures data on behalf of eligible 

professional: 1) a registry, as defined at 42 CFR 414.90(b), which would be any data 

submission vendor submitting data from a source other than an EHR on behalf of eligible 

professionals that meets the proposed registry qualification requirements later in this 

section; and 2) EHR data submission vendors, which would be a data submission vendor 

that obtains its data from an eligible professional's EHR and that meets the 2012 EHR 

qualification requirements. However, for operational reasons, we may reserve the right 

to limit such entities to a single role such that the entity would need to decide whether it 

wants to serve as a registry or EHR data submission vendor but not both. We note that a 

registry could serve as an "EHR data submission vendor" to the extent that it obtains data 

from an eligible professional's EHR, but would need to meet the proposed 2012 EHR 

qualification requirements. To be considered a qualified registry for purposes of serving 

as a registry under the program and submitting individual quality measures on behalf of 

eligible professionals who choose the registry reporting mechanism for 2012, we 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 incentive reporting period, and if technically 

feasible, provide at least 2 feedback reports throughout the year to participating eligible 

professionals. Although it is not a requirement that registries provide interim feedback 

reports, we believe it is in the stakeholder's interest to require early registry collection of 
CMS-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 should 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 release of his or her email address. 

● Not be owned and managed by an individual locally-owned single-specialty 

group (in other words, single-specialty practices with only 1 practice location or solo 

practitioner practices would be prohibited from self-nominating to become a qualified 

Physician Quality Reporting System registry). 

● Participate in ongoing 2012 Physician Quality Reporting System mandatory 

support conference calls hosted by CMS (approximately 1 call per month), including an 

in-person registry kick-off meeting to be held at CMS headquarters in Baltimore, MD. 

Registries that miss more than one meeting 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, which is the minimum amount of measures on 

which an eligible professional is required to report, in the 2012 Physician Quality 

Reporting System (according to the posted 2012 Physician Quality Reporting System 

Measure Specifications); 

● Be able to calculate and submit measure-level reporting rates or, upon request, 

the data elements needed to calculate the reporting rates by TIN/NPI. 
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 needed to calculate the reporting rates. 

● Be able to separate out and report on Medicare Part B FFS patients. 

● Provide the name of the registry. 

● Provide the reporting period start date the registry will cover. 

● Provide the reporting period end date the registry will cover. 

● Provide the measure numbers for the Physician Quality Reporting System 

quality measures on which the registry is reporting. 

● Provide the measure title for the Physician Quality Reporting System quality 

measures on which the registry is reporting. 

● Report the number of eligible instances (reporting denominator). 

● Report the number of instances a quality service is performed (reporting 

numerator). 

● Report the number of performance exclusions, meaning the quality action was 

not performed for a valid reason as defined by the measure specification. 

● Report the number of reported instances, performance not met (eligible 

professional receives credit for reporting, not for performance), meaning the quality 

action was not performed for no valid reason as defined by the measure specification. 

● Be able to transmit this data in a CMS-approved XML format. 
CMS-1524-P 267 

● Comply with a CMS-specified secure method for data submission, such as 

submitting the registry's data in an XML file through an identity management system 

specified by CMS or another approved method, such as use of appropriate NwHIN 

(Nationwide Health Information Network) specifications, if technically feasible. 

● Submit an acceptable "validation strategy" to CMS by March 31, 2012. A 

validation strategy ascertains whether eligible professionals have submitted accurately 

and on at least the minimum number (80 percent) of their eligible patients, visits, 

procedures, or episodes for a given measure, which, as described in section (e)(2) of this 

section, is the minimum percentage of patients on which an eligible professional must 

report on any given measure. Acceptable validation strategies often include such 

provisions as the registry being able to conduct random sampling of their participant's 

data, but may also be based on other credible means of verifying the accuracy of data 

content and completeness of reporting or adherence to a required sampling method. 

● Perform the validation outlined in the strategy and send the results to CMS by 

June 30, 2013 for the 2012 reporting year's data. 

● Enter into and maintain with its participating professionals an appropriate 

Business Associate agreement that provides for the registry's receipt of patient-specific 

data from the eligible professionals, as well as the registry's disclosure of quality measure 

results and numerator and denominator data and/or patient-specific data on Medicare 

beneficiaries on behalf of eligible professionals who wish to participate in the Physician 

Quality Reporting System. 

● Obtain and keep on file signed documentation that each holder of an NPI 

whose data are submitted to the registry has authorized the registry to submit quality 
CMS-1524-P 268 

measure results and numerator and denominator data and/or patient-specific data on 

Medicare beneficiaries to CMS for the purpose of Physician Quality Reporting System 

participation. This documentation must be obtained at the time the eligible professional 

signs up with the registry to submit Physician Quality Reporting System quality measures 

data to the registry and must meet any applicable laws, regulations, and contractual 

business associate agreements. 

● Provide CMS access (upon request for health oversight purposes like 

validation) to review the Medicare beneficiary data on which 2012 Physician Quality 

Reporting System registry-based submissions are founded or provide to CMS a copy of 

the actual data (upon request). 

● Provide CMS a signed, written attestation statement via mail or e-mail which 

states that the quality measure results and any and all data including numerator and 

denominator data provided to CMS are accurate and complete. 

● Use Physician Quality Reporting System measure specifications and the CMS 

provided measure calculation algorithm, or logic, to calculate reporting rates or 

performance rates unless otherwise stated. CMS would provide registries a standard set 

of logic to calculate each measure and/or measures group they intend to report in 2012. 

● Provide a calculated result using the CMS supplied measure calculation logic 

and XML file for each measure that the data submission vendor intends to calculate. The 

registries would be required to show that they can calculate the proper measure results 

(that is, reporting and performance rates) using the CMS-supplied logic and send the 

calculated data back to CMS in the specified format. 
CMS-1524-P 269 

● Provide the individual data elements used to calculate the measures upon 

request by CMS under its health oversight authority, if aggregated data submission is still 

the selected method of data collection. Registries that are subject to validation will be 

asked to send discrete Medicare beneficiary 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 measures at a randomly selected sample of 

registries in order to validate 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 professional's measure results (that is, reporting 

and performance rates). 

 In addition to meeting all the requirements specified previously for the reporting 

of individual quality measures via registry, for registries that intend to report on 2012 

Physician Quality Reporting System measures groups, we propose that both registries 

new to the Physician Quality Reporting System and those previously qualified must: 

● Indicate the reporting period chosen for each eligible professional who chooses 

to submit data on measures groups. 

● Base reported information on measures groups only on patients to whom 

services were furnished during the 2012 reporting period. 

● Agree that the registry's data may be inspected or a copy requested by CMS 

and provided to CMS under our oversight authority. 

● Be able to report consistent with the proposed reporting criteria 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 thereafter. We anticipate that 

new registries that wish to self-nominate 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 expect 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, and wish to continue to participate in 

2012 would need to indicate their desire to continue participation for 2012 by submitting 

a self-nomination statement via a web-based tool to CMS indicating their continued 

interest in being a Physician Quality Reporting System registry for 2012 and their 

compliance with the 2012 Physician Quality Reporting System registry requirements by 

no later than October 31, 2011. Additionally, registries that were qualified but 

unsuccessful in submitting 2011 Physician Quality Reporting System data (that is, fail to 

submit 2011 Physician Quality Reporting System data per the 2011 Physician Quality 
CMS-1524-P 271 

Reporting System registry requirements) would 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 format 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 propose that the aforementioned registry 

requirements will also apply for the purpose of a registry qualifying to submit the 

electronic prescribing measure for the 2012 eRx Incentive Program. We anticipate 

finalizing the list of 2012 Physician Quality Reporting System registries by Summer 

2012. 

For eligible professionals considering this reporting mechanism, we point out that 

even though a registry is listed as "qualified," we cannot guarantee or assume 

responsibility for the registry's successful submission of the required Physician Quality 

Reporting System quality measures results or measures group results or required data 

elements submitted on behalf of a given eligible professional. We 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 found that the data registries provide are 

significantly inaccurate. We believe this is important because we have noticed many 
CMS-1524-P 272 

calculation and data submission errors in reporting 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 eligible professional's reporting and performance 

rates as well as require registries to submit patient-level data on Medicare 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 provide are significantly 

inaccurate. 

(3) EHR-based Reporting 

For 2012 and beyond, we propose that eligible professionals who choose to 

participate in the Physician Quality Reporting System via the EHR-based reporting 

mechanism have the option of submitting quality measure data obtained from their 

Physician Quality Reporting System qualified EHR to CMS either: 1) directly from his 

or her qualified EHR, in the CMS-specified manner, or 2) indirectly from a qualified 

EHR data submission vendor (on the eligible professional's behalf), in the 

CMS-specified manner. 

(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 with 
CMS-1524-P 273 

EHR-based reporting: (1) selection of a Physician Quality Reporting System qualified 

EHR product and (2) submission of Medicare clinical quality data extracted from the 

EHR directly to CMS, in the CMS-specified manner. 

 We 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 professionals who choose the EHR-based reporting mechanism 

for the 2012 Physician Quality Reporting System would be required to have a Physician 

Quality Reporting System qualified EHR product. We understand that eligible 

professionals may have purchased Certified EHR Technology for purposes of reporting 

under the Medicare and Medicaid EHR Incentive Programs. Such Certified EHR 

Technology may or may not be qualified for purposes of the 2012 Physician Quality 

Reporting System. Eligible professionals would need to ensure that their Certified EHR 

Technology is also qualified for purposes of the 2012 Physician Quality Reporting 

System to participate in the Physician Quality Reporting System via the EHR-based 

reporting mechanism for 2012. The certification process for EHR technology does not 

test the EHR product's ability to output a file that meets the Physician Quality Reporting 

System measures file specifications. We are currently exploring ways to further align 

these two programs' reporting requirements for future years so that Certified EHR 

Technology may be used to satisfy both the Medicare EHR Incentive Program and the 

Physician Quality Reporting System without any additional testing. For 2012, we 

propose to modify the current list of EHR vendors qualified under the Physician Quality 

Reporting System to indicate which of the qualified vendors' products have also received 
CMS-1524-P 274 

a certification for the purposes of the EHR Incentive Programs. We invite public 

comment on the 2012 proposed qualifications for direct EHRs. 

(ii) 2012 Proposed Qualification Requirements 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 professionals who wish to report 2012 quality 

measure data directly from their qualified 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 test/production data submission timeframe for 2012 

is expected to be December 2012 through February 2013. We are currently vetting newly 

self-nominated EHR vendor products for possible qualification for the 2012 Physician 

Quality Reporting System program year. Similar to prior years, we expect to list the 

2012 Physician Quality Reporting System qualified EHR products by January 2012. We 

will also be vetting those self-nominated EHR data submission vendors for possible 

qualification to submit 2012 Physician Quality Reporting System measures on eligible 

professionals' behalf under the EHR-based reporting mechanism. We expect to list the 

entities that are EHR data submission vendors qualified to submit 2012 Physician Quality 

Reporting System EHR measures on eligible professionals' behalf by mid-2012. 

 For direct EHR vendors wishing to qualify for participation in the 2012 Physician 

Quality Reporting System-Medicare Incentive Pilot for the Medicare EHR Incentive 

Program (discussed in section IV.H. of this proposed rule), we propose a separate, 

accelerated vetting process for EHR vendors and their products. This vetting process will 
CMS-1524-P 275 

be the same process as the vetting process for EHR vendor products for the 2012 

Physician Quality Reporting System that is currently underway. We will begin the 

vetting process for these additional EHR 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 direct vendor interested in being "qualified" to 

submit quality data extracted from an EHR to CMS on eligible professionals' behalf for 

the 2012 Physician Quality Reporting System would be required to self-nominate. We 

anticipate that the self-nomination deadline will occur no later than December 31, 2011. 

We expect to post instructions for self-nomination by the 4th quarter of CY 2011 on the 

Physician Quality Reporting System section of CMS 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 associated with indirect 

EHR-based reporting: (1) selection of a Physician Quality Reporting System qualified 

EHR product and (2) submission of Medicare clinical quality data extracted from the 

EHR to a qualified "EHR data submission vendor" (which may include some current 

registries, EHR vendors, and other entities that are able to receive and transmit clinical 

quality data extracted from an EHR) to CMS, in the CMS-specified manner. For eligible 

professionals who choose to electronically submit Medicare clinical quality data 
CMS-1524-P 276 

extracted from their EHR to a qualified EHR data submission vendor, the EHR data 

submission vendor would then submit the Physician Quality Reporting System measures 

data to CMS in a CMS-specified manner on the eligible professional's behalf for the 

respective program year. 

For 2012, we propose that in order for an eligible professional to submit Medicare 

clinical quality data extracted from his or her EHR to CMS via an EHR data submission 

vender, the eligible professional must enter into and maintain an appropriate legal 

arrangement with a qualified 2012 EHR data submission vendor that is capable of 

receiving and transmitting Medicare clinical quality data extracted from an EHR. Such 

arrangements would provide for the EHR data submission vendor's receipt of 

beneficiary-specific data from the eligible professional and the EHR data submission 

vendor's disclosure of the beneficiary-specific data on behalf of the eligible professional 

to CMS. Thus, the EHR data submission vendor would act as a Health Insurance 

Portability and Accountability Act of 1996 (Pub. L. 104-191) (HIPAA) Business 

Associate and agent of the eligible professional. Such agents are referred to as "EHR 

data submission vendors." The "EHR data submission vendors" would have the requisite 

legal authority to provide beneficiary-specific data on the 2012 Physician Quality 

Reporting System EHR measures on behalf of the eligible professional to CMS for the 

Physician Quality Reporting System. 

We also propose that eligible professionals choosing to participate in the 2012 

Physician Quality Reporting System through the EHR-based reporting mechanism via an 

EHR data submission vendor for 2012 must select a qualified Physician Quality 

Reporting System EHR data submission vendor and submit information on Physician 
CMS-1524-P 277 

Quality Reporting System EHR measures to the selected EHR data submission vendor in 

the form and manner, and by the deadline specified by the EHR data submission vendor. 

We invite public comment on the proposed qualification requirements on the 2012 

proposed qualification requirements for individual eligible professionals using EHR data 

submission vendors to submit Physician Quality Reporting System quality measures data. 

(i) 2012 Proposed Qualification Requirements 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 behalf 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 data submission vendors wishing to qualify for 

participation in the 2012 Physician Quality Reporting System-Medicare Incentive Pilot 

for the Medicare EHR Incentive Program (discussed in section 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 Quality Reporting System that is currently 

underway. We will begin the vetting process 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 extracted from an EHR to CMS on eligible 

professionals' behalf for the 2012 Physician Quality Reporting System would be required 
CMS-1524-P 278 

to self-nominate. We anticipate that the self-nomination deadline will occur no later than 

December 31, 2011. We expect to post instructions for self-nomination by the 4th quarter 

of CY 2011 on the Physician Quality Reporting System section of CMS 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 Access to CMS Computer Systems, or IACS) 

to submit clinical quality data extracted to a CMS clinical data warehouse. 

● Submit a test file containing dummy Medicare clinical quality data to a CMS 

clinical data warehouse via an identity management system specified by CMS during a 

timeframe specified by CMS. In 2011, the requirement to submit a test file could have 

contained real or dummy data. However, for privacy reasons, we have decided to only 

provide for the submission of test files containing dummy data. We have proposed 

revisions to 42 CFR 414.90 to reflect this change. 
CMS-1524-P 279 

● Submit a file containing the eligible professional's 2012 Physician Quality 

Reporting System Medicare clinical quality data extracted from the EHR for the entire 

12-month reporting period via the CMS-specified identify management system during the 

timeframe specified by us in early 2013. 

● Provide at least 1 feedback report, based on the data submitted to them for the 

2012 Physician Quality Reporting System incentive reporting period, and if technically 

feasible, provide at least 2 feedback reports throughout the year to participating eligible 

professionals. 

● Be able to collect all needed data elements and transmit to CMS the data at the 

beneficiary level. 

● Be able to separate out and report on Medicare Part B FFS patients. 

● Provide the measure numbers for the quality measures on which the data 

submission vendor is reporting. 

● Be able to transmit this data in a CMS-approved XML format utilizing a 

Clinical Document Architecture (CDA) standard such as Quality Reporting Data 

Architecture (QRDA). 

● Comply with a CMS-specified secure method for data submission, such as 

submitting the EHR data submission vendor's data in an XML file through an identity 

management system specified by CMS or another approved method, such as use of 

appropriate NwHIN (Nationwide Health Information Network) specifications, if 

technically feasible. 

● Enter into and maintain with its participating professionals an appropriate 

Business Associate agreement that provides for the data submission vendor's receipt of 
CMS-1524-P 280 

patient-specific data from the eligible professionals, as well as the data submission 

vendor's disclosure of patient-specific data on Medicare beneficiaries on behalf of 

eligible professionals who wish to participate in the Physician Quality Reporting System. 

● Obtain and keep on file signed documentation that each holder of an NPI 

whose data are submitted to the data submission vendor has authorized the data 

submission vendor to submit patient-specific data on Medicare beneficiaries to CMS for 

the purpose of Physician Quality Reporting System participation. This documentation 

must be obtained at the time the eligible professional signs up with the data submission 

vendor to submit Physician Quality Reporting System quality measures data to the data 

submission vendor and must meet any applicable laws, regulations, and contractual 

business associate agreements. 

● Provide CMS access (upon request for health oversight purposes like 

validation) to review the Medicare beneficiary data on which 2012 Physician Quality 

Reporting System EHR-based submissions are founded or provide to CMS a copy of the 

actual data (upon request). 

● Provide CMS a signed, written attestation statement via mail or e-mail which 

states that the quality measure results and any and all data including numerator and 

denominator data provided to CMS are accurate and complete. 

● Use Physician Quality Reporting System measure specifications and the CMS 

provided measure calculation algorithm, or logic, to calculate reporting rates or 

performance rates unless otherwise stated. CMS would provide EHR data submission 

vendors a standard set of logic to calculate 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 data submission vendor intends to calculate. 

The data submission vendors would be required to show that they can calculate the 

proper measure results (that is, reporting and performance rates) using the CMS-supplied 

logic and send the calculated data back to CMS in the specified format. 

 For EHR data submission vendors participating in the Physician Quality 

Reporting System-Medicare EHR Incentive Pilot 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 Physician Quality Reporting System incentive, we 

propose that these EHR data submission vendors meet the following below requirements 

in addition to the requirements stated above: 

● Be able to collect all needed data elements and transmit to CMS the data at the 

TIN/NPI level. 

● Be able to calculate and submit measure-level reporting rates or, upon request, 

the data elements needed to calculate the reporting rates by TIN/NPI. 

● Be able to calculate and submit, by TIN/NPI, a performance rate (that is, 

the percentage of a defined population who receive a particular process of care or achieve 

a particular outcome based on a calculation of the measure's numerator and denominator 

specifications) for each measure on which the TIN/NPI reports or, upon request the 

Medicare beneficiary data elements needed to calculate the reporting rates. 

● Report the number of eligible instances (reporting denominator). 

● Report the number of instances a quality service is performed (reporting 

numerator). 
CMS-1524-P 282 

● Report the number of performance exclusions, meaning the quality action was 

not performed for a valid reason as defined by the measure specification. 

● Report the number of reported instances, performance not met (eligible 

professional receives credit for reporting, not for performance), meaning the quality 

action was not performed for no valid reason as defined by the measure specification. 

● Be able to transmit this data in a CMS-approved XML format. 

● Submit an acceptable "validation strategy" to CMS by March 31, 2012. A 

validation strategy ascertains whether eligible professionals have submitted accurately 

and on at least the minimum number (80 percent) of their eligible patients, visits, 

procedures, or episodes for a given measure, which, as described in section (e)(2) of this 

section, is the minimum percentage of patients on which an eligible professional must 

report on any given measure. Acceptable validation strategies often include such 

provisions as the EHR data submission vendor being able to conduct random sampling of 

their participant's data, but may also be based on other credible means of verifying the 

accuracy of data content and completeness of reporting or adherence to a required 

sampling method. 

● Perform the validation outlined in the strategy and send the results to CMS by 

June 30, 2013 for the 2012 reporting year's data. 

● Enter into and maintain with its participating professionals an appropriate 

Business Associate agreement that provides for the data submission vendor's receipt of 

patient-specific data from the eligible professionals, as well as the data submission 

vendor's disclosure of quality measure results and numerator and denominator data on 
CMS-1524-P 283 

Medicare beneficiaries on behalf of eligible professionals who wish to participate in the 

Physician Quality Reporting System. 

● Obtain and keep on file signed documentation that each holder of an NPI 

whose data are submitted to the data submission vendor has authorized the data 

submission vendor to submit quality measure results and numerator and denominator data 

on Medicare beneficiaries to CMS for the purpose of Physician Quality Reporting System 

participation. This documentation must be obtained at the time the eligible professional 

signs up with the data submission vendor to submit Physician Quality Reporting System 

quality measures data to the data submission vendor and must meet any applicable laws, 

regulations, and contractual business associate agreements. 

● Use Physician Quality Reporting System measure specifications and the CMS 

provided measure calculation algorithm, or logic, to calculate reporting rates or 

performance rates unless otherwise stated. 

● Provide a calculated result using the CMS supplied measure calculation logic 

and XML file for each measure that the EHR data submission vendor intends to calculate. 

The data submission vendors would be required to show that they can calculate the 

proper measure results (that is, reporting and performance rates) using the CMS-supplied 

logic and send the calculated data back to CMS in the specified format. 

We cannot, however, assume responsibility for the successful submission of data 

from eligible professionals' EHRs. In addition, eligible professionals who decide to 

submit the Physician Quality Reporting System measures directly from his or her EHR 

should begin attempting submission soon after the opening of the clinical data warehouse 

in order to assure the eligible professional has a reasonable period of time to work with 
CMS-1524-P 284 

his or her EHR and/or its vendors to correct any problems that may complicate or 

preclude successful quality measures data submission through that EHR. 

We propose that for 2012, the EHR data submission vendor would submit clinical 

quality data on Medicare beneficiaries extracted from eligible professionals' EHRs to our 

designated database for the Physician Quality Reporting System using a CMS-specified 

record layout, which 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 from the eligible professional's EHR using the 

same CMS-specified record layout that qualified EHR products must be able to produce 

for purposes of an eligible professional directly submitting the 2012 Physician Quality 

Reporting System EHR measures to CMS. 

We invite public comment on the proposed qualification requirements for EHR 

data submission vendors. 

(C) Proposed Qualification Requirements for EHR Direct and Data Submission Vendors 

and Their Products for the 2013 Physician Quality Reporting System 

As in prior years, unlike the qualification process for registries, EHR vendors, 

which include 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 quality measures on behalf of individual 

eligible professionals or where its product(s) are available for use by eligible 

professionals to submit Physician Quality Reporting System measures directly to CMS. 
CMS-1524-P 285 

 We propose EHR vendor testing for the 2013 Physician Quality Reporting System 

program year to qualify new EHR vendors and EHR data submission vendors and their 

EHR products for submission of Medicare beneficiary quality data extracted from EHR 

products to the CMS Medicare clinical quality data warehouse for the 2013 Physician 

Quality Reporting System. Specifically, we propose that in order for EHR vendors to be 

qualified to report 2013 Physician Quality Reporting 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 option the vendor seeks to qualify for its users to submit 

in addition to individual measures. 

● Have access to the identity management system specified by CMS (such as, but 

not limited to, the Individuals Authorized Access to CMS Computer Systems, or IACS) 

to submit Medicare clinical quality data extracted to a CMS clinical data warehouse. 

● Submit a test file containing dummy Medicare clinical quality data to a CMS 

clinical data warehouse via an identity management system specified by CMS during a 

timeframe specified by CMS. In 2011, the requirement to submit a test file could have 

contained real or dummy data. However, for privacy reasons, we have decided to only 
CMS-1524-P 286 

provide for the submission of test files containing dummy data. We have proposed 

revisions to 42 CFR 414.90 to reflect this change. 

● Submit a file containing the eligible professional's 2012 Physician Quality 

Reporting System Medicare clinical quality data extracted from the EHR for the entire 

12-month reporting period via the CMS-specified identify management system during the 

timeframe specified by us in early 2013. 

● Provide at least 1 feedback report, based on the data submitted to them for the 

2012 Physician Quality Reporting System incentive reporting period, and if technically 

feasible, provide at least two feedback reports throughout the year to participating 

eligible professionals. 

● Be able to collect all needed data elements and transmit to CMS the data at the 

beneficiary level. 

● Be able to separate out and report on Medicare Part B FFS patients. 

● Provide the measure numbers for the quality measures on which the data 

submission vendor is reporting. 

● Be able to transmit this data in a CMS-approved XML format utilizing a 

Clinical Document Architecture (CDA) standard such as Quality Reporting Data 

Architecture (QRDA). 

● Comply with a CMS-specified secure method for data submission, such as 

submitting the EHR vendor's data in an XML file through an identity management 

system specified by CMS or another approved method, such as use of appropriate 

NwHIN (Nationwide Health Information Network) specifications, if technically feasible. 
CMS-1524-P 287 

● Enter into and maintain with its participating professionals an appropriate 

Business Associate agreement that provides for the data submission vendor's receipt of 

patient-specific data from the eligible professionals, as well as the data submission 

vendor's disclosure of patient-specific data on Medicare beneficiaries on behalf of 

eligible professionals who wish to participate in the Physician Quality Reporting System. 

● Obtain and keep on file signed documentation that each holder of an NPI 

whose data are submitted to the data submission vendor has authorized the data 

submission vendor to submit patient-specific data on Medicare beneficiaries to CMS for 

the purpose of Physician Quality Reporting System participation. This documentation 

must be obtained at the time the eligible professional signs up with the data submission 

vendor to submit Physician Quality Reporting System quality measures data to the data 

submission vendor and must meet any applicable laws, regulations, and contractual 

business associate agreements. 

● Provide CMS access (upon request for health oversight purposes like 

validation) to review the Medicare beneficiary data on which 2012 Physician Quality 

Reporting System EHR-based submissions are founded or provide to CMS a copy of the 

actual data (upon request). 

● Provide CMS a signed, written attestation statement via mail or e-mail which 

states that the quality measure results and any and all data including numerator and 

denominator data provided to CMS are accurate and complete. 

● Use Physician Quality Reporting System measure specifications and the CMS 

provided measure calculation algorithm, or logic, to calculate reporting rates or 

performance rates unless otherwise stated. CMS would provide EHR vendors a standard 
CMS-1524-P 288 

set of logic to calculate each measure and/or measures group they intend to report in 

2012. 

● Provide a calculated result using the CMS supplied measure calculation logic 

and XML file for each measure that the EHR vendor intends to calculate. The data 

submission vendors would be required to show that they can calculate the proper measure 

results (that is, reporting and performance rates) using the CMS-supplied logic and send 

the calculated data back to CMS in the specified format. 

 This is the same self-nomination process described in the "Requirements for 

Electronic Health Record (EHR) Vendors to Participate in the 2012 Physician Quality 

Reporting System EHR Program," posted on the Physician Quality Reporting System 

section of the CMS Web site at 

http://www.cms.gov/PQRS/20_AlternativeReportingMechanisms.asp#TopOfPage. For 

2013, we propose that these requirements would apply not only for the purpose of a 

vendor's EHR product being qualified so that the product's users may submit 2013 

Medicare beneficiary data extracted from the EHR for the 2013 Physician Quality 

Reporting System in 2014, but also for the purpose of a vendor's EHR product being 

qualified to electronically submit Medicare beneficiary data extracted from the EHR for 

reporting the electronic prescribing measure for the eRx Incentive Program 2013 

incentive and 2014 payment adjustment. Similarly, we propose that requirements would 

apply not only for the purposes of an EHR data submission vendor being qualified to 

submit 2013 Medicare beneficiary data from eligible professionals' EHRs for the 2013 

Physician Quality Reporting System in 2014 but also for the purpose of an EHR data 

submission vendor being qualified to electronically submit Medicare beneficiary data 
CMS-1524-P 289 

extracted from the EHR for reporting the electronic prescribing measure for the eRx 

Incentive Program 2013 incentive and 2014 payment adjustment. 

 We propose that if an EHR vendor misses more than one mandatory support call 

or meeting, the vendor and their product and/or EHR data submission vendor would be 

disqualified for the Physician Quality Reporting System reporting year, which is covered 

by the call. 

For the 2013 Physician Quality Reporting System, we propose that previously 

qualified and new vendors and/or EHR data submission vendors would need to 

incorporate any new EHR measures (that is, electronically-specified measures), as well as 

update their electronic measure specifications and data transmission schema should either 

or both change, finalized for to the Physician Quality Reporting System for 2013 if they 

wish to maintain their Physician Quality Reporting System qualification. 

We further propose that any EHR vendor interested in having one or more of their 

EHR products "qualified" to submit quality data extracted from their EHR products to the 

CMS Medicare clinical quality data warehouse for the 2013 Physician Quality Reporting 

System 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 technically 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 use 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 2013 
CMS-1524-P 290 

EHR vendor requirements in the 4th quarter of CY 2011. Specifically, for the 2013 

Physician Quality Reporting System, in order to ensure EHR vendors' interest in 

participating in the 2013 Physician Quality Reporting System, 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 proposed 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), eligible professionals that satisfactorily 

report 2012 Physician Quality Reporting System measures can qualify for an incentive 

equal to 0.5 percent of the total estimated part B allowed charges for all covered 

professional services furnished by the eligible professional (or, in the case of a group 

practice participating in the GPRO, the group practice) during the applicable reporting 

period. We are proposing to modify the incentive payment language in 42 CFR 414.90 to 

provide language more consistent with section 1848(k) of the Act. 

(1) Proposed Criteria for Satisfactory Reporting of Individual Quality Measures for 

Individual Eligible Professionals via Claims 

 Section 1848(m)(3)(A) of the Act established the criteria for satisfactorily 

submitting data on individual quality measures as at least three measures in at least 

80 percent of the cases in which the measure is applicable. For claims-based reporting, if 

fewer than three measures are applicable to the services of the professional, the 

professional may meet the criteria by submitting data on one or two measures for at least 
CMS-1524-P 291 

80 percent of applicable cases where the measures are reportable. For years after 2009, 

section 1848(m)(3)(D) of the Act authorizes the Secretary, in consultation with 

stakeholders and experts, to revise the criteria for satisfactorily reporting data on quality 

measures. Accordingly, we propose the following criteria for satisfactory reporting via 

the claims-based reporting mechanism for individual eligible professionals specializing in 

internal medicine, family practice, general practice, or cardiology: 

● Report on at least one Physician Quality Reporting System core measure as 

identified in Table 29. 

● Report on at least two additional measures that apply to the services furnished 

by the professional. 

● Report each measure for at least 50 percent of the eligible professional's 

Medicare Part B FFS patients for whom services were furnished during the reporting 

period to which the measure applies. 

 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 eligible professional's 

Medicare Part B FFS patients for whom services were furnished during the reporting 

period to which the measure applies. 

 We believe it would be easier for eligible 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 certain 
CMS-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 measures with measures that promote cardiovascular care. As 

such, the Physician Quality Reporting System core measures that we propose in Table 29 

are aimed at promoting the prevention of cardiovascular conditions. In an effort to 

promote the prevention of cardiovascular conditions, we are proposing that eligible 

professionals specializing in internal medicine, family practice, general practice, or 

cardiology be required to report on at least one proposed Physician Quality Reporting 

System core measure. We chose the aforementioned 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 specialties would likely report on the 

proposed Physician Quality Reporting System core measures regardless of the proposed 

requirement to report on at least one Physician Quality Reporting System core measure, 

we believe that the this requirement would not result in an increased burden to these 

specialties. In future years, we hope to develop a similar reporting requirement and core 

set of measures for other specialties. 

 We also considered including geriatricians in the proposed Physician Quality 

Reporting System core measure reporting requirement for 2012. However, we would like 

to ensure that the proposed 2012 Physician Quality Reporting System 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 invite public comment on whether other specialties should be 
CMS-1524-P 293 

included in the 2012 Physician Quality Reporting System proposed core measure 

reporting requirement. 

 As stated previously, we have proposed the requirement of the reporting of 

Physician Quality Reporting System core measures for certain specialties to introduce 

measures reporting according to specialty for eligible professionals specializing in 

internal medicine, family practice, general practice, or cardiology. However, we 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 section 1848(m)(3)(D) of 

the Act to revise the reporting criteria for satisfactory reporting, 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 eligible professional's 

Medicare Part B FFS patients for whom services were furnished during the reporting 

period to which the measure applies. 

 To the extent that an eligible professional has fewer than three Physician Quality 

Reporting System measures that apply to the eligible professional's services and the 

eligible professional is reporting via the claims-based reporting mechanism, we propose 

that the eligible professional would be able to meet the criteria for satisfactorily reporting 

data on individual quality measures by meeting the following two criteria-- 

● Report on all measures that apply to the services furnished by the professional 

(that is one to two measures); and 
CMS-1524-P 294 

● Report each measure for at least 50 percent of the eligible professional's 

Medicare Part B FFS patients for whom services were furnished during the reporting 

period to which the measure applies. 

As in prior years, we also 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 three measures through the claims-based 

reporting mechanism may be subject to the Measure Applicability Validation (MAV) 

process, which would allow us to determine whether an eligible professional should have 

reported quality data codes for additional measures. This process was applied in prior 

years, including the 2011 Physician Quality Reporting System. Under the proposed 

MAV process, when an eligible professional reports on fewer than 3 measures, we 

propose to review whether there are other closely related measures (such as those that 

share a common diagnosis or those that are representative of services typically provided 

by a particular type of eligible professional). We further propose that if an eligible 

professional who reports on fewer than 3 measures in 2012 reports on a measure that is 

part of an identified cluster of closely related measures and did not report on any other 

measure that is part of that identified cluster of closely related measures, then the eligible 

professional would not qualify as a satisfactory reporter in the 2012 Physician Quality 

Reporting System or earn an incentive payment. We propose that these criteria for 

satisfactorily reporting data on fewer than three individual quality measures would apply 

for the claims-based reporting mechanism only because, unlike registry and EHR-based 

reporting, the reporting of Physician Quality Reporting System quality measures via 

claims is not handled by an intermediary but rather directly by the eligible professional. 
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 encourage eligible professionals to perform the 

clinical quality actions specified in the measures, we propose not to count measures that 

are reported through claims that have a 0 percent performance rate. That is, if the 

recommended clinical quality action, as indicated in the numerator of the quality 

measure, is not performed on at least one patient for a particular measure or measures 

group reported by the eligible professional via claims, we will not count the measure (or 

measures group) as a measure (or measures group) reported by an eligible professional. 

This requirement is also consistent with the proposed registry and EHR-based reporting 

(see the following section (e)(3)) criteria for satisfactory reporting that are proposed in 

this section. 

The proposed 2012 criteria for satisfactory reporting of data on individual 

Physician Quality Reporting System quality measures for individual eligible 

professionals are summarized in the following 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 professional'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 professional'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
CMS-1524-P 297 

We invite public comment on the proposed criteria for satisfactory reporting of 

individual measures by individual eligible professionals via claims for the 2012 Physician 

Quality Reporting System. 

(2) Proposed 2012 Criteria for Satisfactory Reporting of Individual Quality Measures for 

Individual Eligible Professionals via Registry 

 Under our authority of section 1848(m)(3)(D) of the Act to revise the reporting 

criteria for the satisfactory reporting of measures, we propose the following criteria for 

satisfactory reporting via the registry-based reporting mechanism: (1) criteria for 

individual eligible professionals practicing in internal medicine, family practice, general 

practice, or cardiology and (2) criteria for all other eligible professionals. For the reasons 

stated previously, we are distinguishing eligible professionals in internal medicine, family 

practice, general practice, or cardiology from all other eligible professionals for the 

purposes of establishing criteria for satisfactory reporting. Therefore, for eligible 

professionals specializing in internal medicine, family practice, general practice, or 

cardiology, we propose the following criteria for satisfactory reporting: 

● Report on at least one Physician Quality Reporting System core measure as 

identified in Table 29. 

● Report on at least two additional measures that apply to the services furnished 

by the professional. 

● Report each measure for at least 80 percent of the eligible professional's 

Medicare Part B FFS patients for whom services were furnished during the reporting 

period to which the measure applies. 
CMS-1524-P 298 

 For the same reasons stated for establishing different reporting criteria for all 

other eligible professionals under the claims-based reporting mechanism, we propose the 

following criteria for satisfactory reporting via the registry-based reporting mechanism: 

● Report on at least three measures that apply to the services furnished by the 

professional. 

● Report each measure for at least 80 percent of the eligible professional's 

Medicare Part B FFS patients for whom services were furnished during the reporting 

period to which the measure applies. 

 We also considered including geriatricians in the proposed Physician Quality 

Reporting System core measure reporting requirement via the registry-based reporting 

mechanism for 2012. However, as stated previously, we would like to ensure that the 

proposed 2012 Physician Quality Reporting System 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 other specialties should be included in the 

2012 Physician Quality Reporting System proposed core measure reporting requirement. 

In addition, as in prior years, for 2012, we propose not to count measures that are 

reported through registries that have a 0 percent performance rate, calculated by dividing 

the measure's numerator by the measure's denominator. That is, if the recommended 

clinical quality action, that is the action denoted in the quality measure's numerator, is 

not performed on at least one patient for a particular measure or measures group reported 

by the eligible professional via registry, we will not count the measure (or measures 
CMS-1524-P 299 

group) as a measure (or measures group) reported 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 receiving an incentive 

payment for reporting. 

The proposed 2012 criteria for satisfactory reporting of data on individual 

Physician Quality Reporting System quality measures for individual eligible 

professionals are summarized in the following 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 PHYSICIAN QUALITY REPORTING SYSTEM 

QUALITY MEASURES VIA REGISTRY 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 professional'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
CMS-1524-P 300 

TABLE 21: PROPOSED 2012 CRITERIA FOR SATISFACTORY REPORTING 

OF DATA ON INDIVIDUAL PHYSICIAN 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 professional'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 individual eligible professionals via registry. 

(3) Proposed Criteria for Satisfactory Reporting of Individual Quality Measures for 

Individual Eligible Professionals via EHR 

 Section 1848(m)(3)(A) of the Act established the criteria for satisfactorily 

submitting data on individual quality measures as at least three measures in at least 

80 percent of the cases in which the measure is applicable. For years after 2009, section 

1848(m)(3)(D) of the Act authorizes the Secretary, in consultation with stakeholders and 

experts, to revise the criteria for satisfactorily reporting data on quality measures. 

Accordingly, we propose the following options for satisfactory reporting of individual 

quality measures by individual eligible professionals participating in the 2012 Physician 

Quality Reporting System via the EHR-based reporting mechanism: 

First, we propose that an eligible professional would meet the criteria for 

satisfactory reporting under the Physician Quality Reporting System if the eligible 
CMS-1524-P 301 

professional, using a Physician Quality Reporting System "qualified" EHR product (if the 

eligible professional is also participating in the EHR Incentive Program via the proposed 

Physician Quality Reporting System-EHR Incentive Pilot discussed in section IV.H. of 

this proposed rule, the eligible professional's EHR product must also be Certified EHR 

Technology), reports on three proposed core measures for 80 percent of the eligible 

professional's Medicare Part B FFS patients seen during the reporting period to which 

each measure applies as identified in Table 31 in this section of this proposed rule, which 

are identical to the Medicare EHR Incentive Program core measures included in Table 7 

of the Medicare and Medicaid EHR Incentive Program final rule (75 FR 44410). Insofar 

as the denominator for one or more of the core measures is 0, implying that the eligible 

professional's patient population is not addressed by these measures, we 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 Program 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 professional would be required to report on three 

additional measures of their choosing that are available for the Medicare EHR Incentive 

Program in Table 6 of the Medicare and Medicaid EHR Incentive Program final rule 

(75 FR 44398 through 44408) (as identified in Table 31 in this section of this proposed 

rule). 

With respect to reporting on the proposed measure titled "Preventive Care and 

Screening: Body Mass Index (BMI) Screening and Follow-up", listed in Table 31 of this 

proposed rule, there are two parameters in the measure denominator description: Age 65 
CMS-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 proposed measure titled "Preventive Care and 

Screening: Tobacco Use: Screening and Cessation 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 does not contain a 0 percent performance rate. 

Section 1848(m)(7) of the Act ("Integration of Physician Quality Reporting and 

EHR Reporting"), as added by section 3002(d) of the Affordable Care Act, requires us to 

move towards the integration of EHR measures with respect to the Physician Quality 

Reporting System. Section 1848(m)(7) of the Act specifies that by no later than 

January 1, 2012, the Secretary shall develop a plan to integrate reporting on quality 

measures under the Physician Quality Reporting System with reporting requirements 

under subsection (o) of section 1848 of the Act relating to the meaningful use of EHRs. 

Such integration shall consist of the following: 

(A) The selection of measures, the reporting of which would both demonstrate— 

(i) Meaningful use of an EHR for purposes of the Medicare EHR Incentive Program; 

and 

(ii) Quality of care furnished to an individual; and 

(B) Such other activities as specified by the Secretary. 
CMS-1524-P 303 

We propose the aforementioned criteria for satisfactory reporting via an EHR, 

which is identical to the criteria for achieving meaningful use for reporting clinical 

quality measures under the EHR Incentive Program as finalized in the Medicare and 

Medicaid Electronic Health Record Incentive Program final rule (75 FR 44409 through 

44411), in an effort to align the Physician Quality Reporting System with the Medicare 

EHR Incentive Program. 

 In addition to the reporting criteria proposed previously, we propose alternative 

reporting criteria for satisfactory reporting using the EHR-based reporting mechanism 

that is similar to the criteria finalized in the CY 2011 MPFS Final Rule with comment 

period (75 FR 73497 through 73500). For the reasons set forth for establishing different 

criteria for satisfactory reporting via claims and registry, we are adopting two different 

criteria for satisfactory reporting, depending on an eligible professional's specialty. For 

eligible professionals specializing in internal medicine, family practice, general practice, 

and cardiology, we propose the following criteria: 

● Report on ALL proposed Physician Quality Reporting System core measure as 

identified in Table 29. 

● Report each measure for at least 80 percent of the eligible professional's 

Medicare Part B FFS patients for whom services were furnished during the reporting 

period to which the measure applies. 

 We understand that by proposing to require eligible professionals specializing in 

internal medicine, family practice, general practice, and cardiology to report all 

Physician Quality Reporting System core measures , we would be requiring such 

professionals to report more measures than eligible professionals who do not practice 
CMS-1524-P 304 

within those specialties. We believe, however, that proposing to require these specialists 

to report of all Physician Quality Reporting System core measures would not add an 

additional burden to these eligible professionals because the reporting of measures is 

done entirely through the EHR. Furthermore, because we are proposing to require these 

specialties to report on all Physician Quality Reporting System core measures and 

recognize that some of the proposed Physician Quality Reporting System core measures 

may not be applicable to all of these eligible professionals' specialties, we propose to 

allow the reporting of these proposed Physician 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 geriatricians in the proposed Physician Quality 

Reporting System core measure reporting requirement for 2012. However, we would like 

to ensure that the proposed 2012 Physician Quality Reporting System 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 via EHR-based reporting. In addition, we invite public comment on whether 

other specialties should be included in the 2012 Physician Quality Reporting System 

proposed core measure reporting requirement. 
CMS-1524-P 305 

 For the reasons we stated previously for creating separate reporting criteria all 

other eligible professionals for claims and registry reporting, 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 eligible professional's 

Medicare Part B FFS patients for whom services 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 SATISFACTORY REPORTING OF DATA ON 

INDIVIDUAL PHYSICIAN QUALITY REPORTING SYSTEM QUALITY 

MEASURES VIA EHR FOR THE FOLLOWING 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 professional'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, 2012 
CMS-1524-P 306 

TABLE 23: 2012 CRITERIA FOR SATISFACTORY REPORTING OF DATA 

ON INDIVIDUAL PHYSICIAN QUALITY REPORTING SYSTEM QUALITY 

MEASURES VIA EHR FOR ALL OTHER 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 professional'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 Reporting 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 groups in addition to individual quality measures to qualify 

for the Physician Quality Reporting System incentive, using claims or registries. 
CMS-1524-P 307 

For the reasons we are proposing different criteria for satisfactorily reporting 

individual quality measures depending on specialty, specifically our desire to introduce 

core measures applicable to certain specialties and promote cardiovascular care, we 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 specializing in internal medicine, family 

practice, general practice, and cardiology may meet the criteria for satisfactory reporting 

of Physician Quality Reporting System measures groups via claims by reporting in the 

following manner: 

● Report at least one Physician Quality Reporting System measures group; AND 

● If the measures group does not contain at least one Physician Quality core 

measure, then one Physician Quality core measure; AND 

● For each measures group and, if applicable, Physician Quality Reporting 

System core measure reported, report on at least 30 Medicare Part B FFS patients for 

each measures group that is reported 

● Measures groups containing a measure with a 0 percent performance rate will 

not be counted. 

We also propose that eligible professionals specializing in internal medicine, 

family practice, general practice, and cardiology may meet the criteria for satisfactorily 

reporting Physician Quality Reporting System measures groups via claims by reporting in 

the following manner: 

● Report at least one Physician Quality Reporting System measures group; but 
CMS-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 applicable, Physician Quality Reporting 

System core measure reported, report on at least 50 percent of the eligible professional's 

Medicare Part B FFS patients seen during the reporting period to whom the measures 

group applies; but report no less than 15 Medicare Part B PFS patients for each measures 

group reported. 

● Measures groups containing a measure with a 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 measures groups via claims, we propose that the 

eligible professional must: 

● Report at least one Physician Quality Reporting System measures group. 

● Report on at least 30 Medicare Part B FFS patients for each measures group 

that is reported. 

● Measures groups containing a measure with 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 measures groups via claims by reporting in the 

following manner: 

● Report at least one Physician Quality Reporting System measures group. 
CMS-1524-P 309 

● For each measures group reported, report each on at least 50 percent of the 

eligible professional's Medicare Part B FFS patients seen during the reporting period to 

whom the measures group applies; but 

● Report no less than 15 Medicare Part B PFS patients for each measures group 

reported. 

● Measures groups containing a measure with a 0 percent performance rate will 

not be counted. 

 Aside from the Physician Quality Reporting System core measure reporting 

requirement for eligible professionals specializing in internal medicine, family practice, 

general practice, or cardiology, we are proposing to retain the same criteria for 

satisfactory reporting of measures groups via claims as the 2011 criteria for satisfactory 

reporting of measures groups via claims for the 12-month reporting period that was 

finalized in the 2011 MPFS Final Rule with comment period. Therefore, as in 2011, an 

eligible professional must satisfactorily report on all individual measures within the 

measures group in order to meet the criteria for satisfactory reporting via measures 

groups. We 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 satisfactory reporting. 

 As with the reporting of Physician Quality 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 
CMS-1524-P 310 

geriatric physicians before proposing to include them under the proposed requirement. 

We seek public comment as to whether geriatricians should be included as a specialty 

required to report at least 1 proposed 2012 Physician Quality Reporting System core 

measure for measures group reporting. In addition, we seek public comment on whether 

other specialties should be included in the 2012 Physician Quality Reporting System core 

measure reporting requirement for measures groups. 

For 2012, in order to ensure that the Physician Quality Reporting System 

measures on which eligible professionals report are applicable to their respective 

practices, we propose not to count measures within measures groups that are reported 

through claims or registry that have a 0 percent performance rate. That is, if the 

recommended clinical quality action is not performed on at least one patient for a 

particular measure reported by the eligible professional via claims or registry, we will not 

count the measures groups as a measures group reported by an eligible professional. 

Furthermore, this proposed requirement is consistent with the proposed reporting options 

for individual quality measures, which are discussed 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 order to meet the criteria for 

satisfactory reporting via measures groups, if an eligible professional reports a measure 

contained within a measures group with a 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 satisfactory 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 CLAIMS 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 31,2012
CMS-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 potentially qualify for the Physician Quality 

Reporting System incentive payment by satisfactorily reporting both individual measures 

and measures groups. However, only one incentive payment will be made to the eligible 

professional. 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 Reporting 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 practice, general practice, or 

cardiology, in order to meet the criteria for the satisfactory reporting of Physician Quality 
CMS-1524-P 313 

Reporting measures groups via registry, during 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 patients for each measures group 

and, if applicable, Physician Quality Reporting System core measure reported. 

● Measures groups containing a measure with a 0% performance rate will not be 

counted. 

 Alternatively, we propose that the eligible professional specializing in internal 

medicine, family practice, general practice, or cardiology may meet the criteria for the 

satisfactory reporting of Physician Quality measures groups via registry by doing the 

following during the 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 measures group applies. 

● Measures groups containing a measure with 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, during 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 measures group applies. 

● Measures groups containing a measure with 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 System measures groups via registry, we 

propose that, during the proposed 12-month reporting period, the eligible professional 

must-- 

● Report at least 1 Physician Quality Reporting System measures group; AND 

● Report each measures group for at least 30 Medicare Part B FFS patients. 

● Measures groups containing a measure with a 0% performance rate will not be 

counted.

Alternatively, we propose that an eligible professional not specializing in internal 

medicine, family practice, general practice, or cardiology may meet the criteria for the 
CMS-1524-P 315 

satisfactory reporting of Physician Quality Reporting System 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 

● For each measures group reported, report on at least 80 percent of the eligible 

professional's Medicare Part B FFS patients seen during the reporting period to whom the 

measures group applies; BUT 

● Report no less than 15 patients for each measures group reported. 

 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 propose that, during the proposed 6-month 

reporting period, the eligible professional must-- 

● Report at least 1 Physician Quality Reporting System measures group; AND 

● For each measures group reported, report on at least 80 percent of the eligible 

professional's Medicare Part B FFS patients seen during the reporting period to whom the 

measures group applies; BUT 

● Report each measures group on no less than least 8 Medicare Part B FFS 

patients for each measures group reported. 

● Measures groups containing a measure with a 0% performance rate will not be 

counted. 

 Aside from the Physician Quality Reporting System core measure reporting 

requirement for eligible professionals specializing in internal medicine, family practice, 

general practice, or cardiology, we are proposing to retain the same criteria for 

satisfactory reporting of measures groups via registry as the 2011 criteria for satisfactory 
CMS-1524-P 316 

reporting of measures groups via registry finalized in the 2011 MPFS Final Rule with 

comment period. Therefore, as in 2011, an eligible professional must satisfactorily report 

on all individual measures within the measures group in order to meet the criteria for 

satisfactory reporting via measures groups. We are retaining the same criteria because 

we eligible professionals are already familiar 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 Quality 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 include them under the proposed requirement. 

We seek public comment as to whether geriatricians should be included as a specialty 

required to report at least 1 proposed 2012 Physician Quality Reporting System core 

measure for measures group reporting. In addition, we seek public comment on whether 

other specialties should be included in the 2012 Physician Quality Reporting System core 

measure reporting requirement for measures groups. 

For 2012, in order to ensure that the Physician Quality Reporting System 

measures on which eligible professionals report are applicable to their respective 

practices, we propose not to count measures within measures groups that are reported 

through claims or registry that have a 0 percent performance rate. That is, if the 

recommended clinical quality action is not performed on at least one patient for a 
CMS-1524-P 317 

particular measure reported by the eligible professional via claims or registry, we will not 

count the measures groups as a measures group reported by an eligible professional. 

Furthermore, this proposed requirement is consistent with the proposed reporting options 

for individual quality measures, which are discussed 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 order to meet the criteria for 

satisfactory reporting via measures groups, if an eligible professional reports a measure 

contained within a measures group with a 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, 2012 
CMS-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 potentially qualify for the Physician Quality 

Reporting System incentive payment by satisfactorily reporting both individual measures 

and measures groups. However, only one incentive payment will be made to the eligible 

professional. We invite public comment on the proposed criteria for satisfactory 

reporting of measures groups for individual eligible professionals. 

(6) Proposed 2012 Criteria for Satisfactory Reporting on Physician Quality Reporting 

System Measures by Group Practices Under the GPRO 
CMS-1524-P 320 

As stated previously, instead of participating as an individual eligible 

professional, an eligible professional in a group practice may participate in the Physician 

Quality Reporting System under the Physician Quality Reporting System GPRO. 

However, an individual eligible professional who is affiliated with a group practice 

participating in the Physician Quality Reporting System GPRO that satisfactorily submits 

Physician Quality Reporting System quality measures will only be able to earn an 

incentive as part of the group practice and not as an individual eligible professional. 

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 proposed 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 propose to use the same GPRO reporting 

methods that we have used in prior years. Specifically, we propose that group practices 

participating in GPRO submit information on measures within a proposed common set of 

40 NQF-endorsed quality measures using a web 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 respect 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 the 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's 
CMS-1524-P 321 

assigned beneficiary samples and the final GPRO quality measures. We propose to 

pre-populate the web interface with the assigned beneficiaries' demographic and 

utilization information based on all of their Medicare claims data. The group practice 

would be required to populate the remaining data fields necessary for capturing quality 

measure information on each of the assigned beneficiaries. 

As specified in section IV.F.(b).(2).(B). of this proposed rule, we propose to change the 

definition of the group practices to those practices consisting 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 criteria dependent on the group's size. Although 

we are consolidating the GPRO for 2012, we still recognize the need to equalize the reporting 

burden by establishing different reporting criteria for small vs. large groups. Therefore, we 

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 practice must report on all GPRO measures 

included in the web interface (listed in Table 56 of this proposed rule). During the 

submission period, the group practice will need to access the web interface and populate 

the data fields necessary for capturing quality measure information on each of the 

assigned beneficiaries up to 218 beneficiaries (with an over-sample of 327 beneficiaries) 

for each disease module and preventive care measure. We further propose that if the pool 

of eligible assigned beneficiaries for any disease module or preventive care measure is 

less than 218, then the group practice would need to populate the remaining data files for 

100 percent of eligible assigned beneficiaries for that disease module or preventive care 
CMS-1524-P 322 

measure. For each disease module or preventive care measure, we propose that the group 

practice must report information on the assigned patients in the order in which they 

appear in the group's sample (that is, consecutively). We propose these criteria because 

they mirror the criteria for CMS' Medicare Care Management Performance (MCMP) 

demonstration. In determining the appropriate reporting criteria for group practices 

comprised of 25-99 eligible professionals, we sought to align the criteria for satisfactory 

reporting under the Physician Quality Reporting System with CMS' MCMP 

demonstration, which uses small to medium-sized group practices to analyze data aimed 

at improving the quality of care for beneficiaries with chronic conditions. We have an 

interest in aligning the reporting criteria for these two programs particularly as the 

MCMP demonstration also required its participants to report on measures similar to the 

PGP demonstration and using the same data collection vehicle. However, the statistical 

sampling methodology used in the MCMP demonstration also took into account that the 

group practices that participated in this demonstration 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 submission period, the group practice would need to 

populate the remaining data fields in the web interface necessary for capturing quality 

measure information on each of the assigned beneficiaries up to 411 beneficiaries (with 

an over-sample of 616 beneficiaries) for each disease module and preventive care 

measure. We further 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 must 
CMS-1524-P 323 

populate the remaining data fields for 100 percent of eligible assigned beneficiaries for 

that disease module or preventive care measure. For each disease module or preventive 

care measure, we propose that the group practice must report information on the assigned 

patients in the order in which they appear in the group's sample (that is, consecutively). 

Furthermore, although we are requiring that the group practices participating as 

GPROs report on a certain number of consecutive 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 beneficiary's medical records not being found or not 

being able to confirm a diagnosis. However, excessive skipping of patients may cause us 

to question the accuracy or validity of the data being reported to us by the group 

practices. Due to the variance in group patterns, measures, and disease modules, 

however, it is difficult to establish a "skip threshold" for the satisfactory reporting of 

GPRO measures. Therefore, it is our intent to examine each group practice's skip 

patterns. We may request the group to provide additional information to help explain or 

support the skips to help better inform us on what levels of skipping could potentially be 

considered excessive skipping in a future year. 

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 period for GPRO I (75 FR 73506) because 

group practices are already familiar with this reporting process. We hope that 

establishing the same process for reporting under the GPRO as proposed in prior years 

will provide a likelier chance for meeting the criteria for satisfactory reporting under the 

GPRO. In addition, we sought to align the criteria for satisfactory reporting under the 
CMS-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 practice's size throughout the reporting period, 

provided that the group size contains at least 25 eligible professionals, which is the 

proposed minimum group practice size for participation in the Physician Quality 

Reporting System GPRO. However, as we established in 2011, for purposes of 

determining which reporting criteria the group must satisfy, a group practice's size will be 

the size of the group at the time the group's participation is approved by CMS 

(75 FR 73504). For example, if a group practice is comprised of 100 eligible 

professionals at the time it self-nominates for participation as a GPRO in 2012, and the 

group practice's size then drops to 99 eligible professionals at the time the group 

practice's participation is approved by CMS, the group practice would need to meet the 

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 the proposed 2012 Physician Quality Reporting 

GPRO. We propose that group practices participating in the 2012 Physician Quality 

Reporting System GPRO, regardless of size, would 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, and chronic obstructive pulmonary disease 

(COPD). 
CMS-1524-P 325 

TABLE 28: PROPOSED 2012 CRITERIA FOR SATISFACTORY 

REPORTING FOR GROUP PRACTICES 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 requested information, on the Physician Quality 

Reporting System section of the CMS Web site at http://www.cms.gov/PQRS by 

November 15, 2011 or shortly thereafter. 

 The Physician Quality Reporting System GPRO web interface will be updated as 

needed to include the 2012 Physician Quality Reporting System GPRO measures (i.e. to 

eliminate measures that have been retired as well as add additional measures that will be 
CMS-1524-P 326 

finalized for 2012). We believe that use of the GPRO web interface allows group 

practices the opportunity to calculate their own performance rates on the quality 

measures. 

 We intend to provide the selected physician groups with access to this 

pre-populated database by no later than the 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 incorporating 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. Assigned beneficiaries would be 

limited to those Medicare Part B FFS beneficiaries with Medicare Parts A and B claims 

for whom Medicare is the primary payer. Assigned beneficiaries would not include 

Medicare Advantage enrollees. A beneficiary 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. Beneficiaries with only one office visit to the group 

practice would be eliminated from the group practice's assigned patient sample for 

purposes of the 2012 Physician Quality Reporting System GPRO. We would 

pre-populate the GPRO web interface with the assigned beneficiaries' demographic and 

utilization information based on their Medicare claims data. 
CMS-1524-P 327 

 We invite public comment on the proposed requirements for satisfactory reporting 

via the Physician Quality Reporting System GPRO reporting option. 

f. 2012 Physician Quality Reporting System Measures 

(1) Statutory Requirements for the Selection 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 under subsection 

1890(a) of the Act (currently, that is the National Quality Forum, or NQF). However, in 

the case of a specified area or medical topic determined appropriate by the Secretary for 

which a feasible and practical measure has not been endorsed by the NQF, section 

1848(k)(2)(C)(ii) of the Act authorizes the Secretary to specify a measure that is not so 

endorsed as long as due consideration is given to measures that have been endorsed or 

adopted by a consensus organization identified by the Secretary, such as the AQA 

alliance. In light of these statutory requirements, we believe that, except in the 

circumstances specified in the statute, each proposed 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 ensure that eligible professionals have the 

opportunity to provide input during the development, endorsement, or selection of 

measures applicable to services they furnish." 

The statutory requirements under section 1848(k)(2)(C) of the Act, subject to the 

exception noted previously, require only that the measures be selected from measures that 
CMS-1524-P 328 

have been endorsed by the entity with a contract with the Secretary under section 1890(a) 

(that is, the NQF) and are silent with respect to how the measures that are submitted to 

the NQF for endorsement were developed. The basic steps for developing measures 

applicable to physicians and other eligible professionals prior to submission of the 

measures for endorsement may be carried out by a variety of different organizations. We 

do not believe there needs to be any special restrictions on the type or make-up of the 

organizations carrying out this basic process of development of physician measures, such 

as restricting the initial development to physician-controlled organizations. Any such 

restriction would unduly limit the basic development of quality measures and the scope 

and utility of measures that may be considered for endorsement as voluntary consensus 

standards for purposes of the Physician Quality Reporting System. 

(2) Other Considerations for the Selection of Proposed 2012 Physician Quality Reporting 

System Measures 

In addition to reviewing the 2011 Physician 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 many of the same considerations applied to the selection of 

2009, 2010 and 2011 Physician Quality Reporting System quality measures proposed for 

inclusion in the 2012 Physician Quality Reporting 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 health disparities; healthcare-associated 

infections and other conditions; improved care coordination; improved outcomes; 

improved efficiency; improved patient and family experience of care; effective 

management of acute and chronic episodes of care; reduced unwarranted geographic 

variation in quality and efficiency; and adoption and use of interoperable HIT. 

 ++ Measures that are included in, or facilitate alignment with, other Medicare, 

Medicaid, and CHIP programs in furtherance of overarching healthcare goals. 

 ++ NQF Endorsement. 

 ++ Measures must be NQF-endorsed by August 15, 2011, in order to be 

considered for inclusion in the 2012 Physician Quality Reporting System quality measure 

set except as provided under section 1848(k)(2)(C)(ii) of the Act. 

 ++ Section 1848(k)(2)(C)(ii) of the Act provides an exception to the requirement 

that the Secretary select measures that have been endorsed by the entity with a contract 

under section 1890(a) of the Act (that is, the NQF). 

● Address Gaps in the Physician Quality Reporting System Measure Set. 

 ++ Measures that increase the scope of applicability of the Physician Quality 

Reporting System measures to services furnished to Medicare beneficiaries and expand 

opportunities for eligible professionals to participate in the Physician Quality Reporting 

System. 
CMS-1524-P 330 

● Measures of various aspects of clinical quality including outcome measures, 

where appropriate and feasible, process measures, structural measures, efficiency 

measures, and measures of patient experience of care. 

Other considerations that we applied to the selection of proposed measures for 

2012, regardless of whether the measure was a 2011 Physician Quality Reporting System 

measure or not, were-- 

● Measures that are functional, which is to say measures that can be technically 

implemented within the capacity of the CMS infrastructure for data collection, analysis, 

and calculation of reporting and performance rates. 

● Measures that address gaps in the quality of care delivered to Medicare 

beneficiaries; 

● Measures impacting chronic conditions (chronic kidney disease, diabetes 

mellitus, heart failure, hypertension and musculoskeletal); 

● Measures involving care coordination; 

● Measures applicable across care settings (such as, outpatient, nursing facilities, 

domiciliary, etc.) 

● Measures conducive to leveraging capabilities of an electronic health record 

(EHR) 

● Measures whose detailed specifications will be completed and ready for 

implementation in the 2012 Physician Quality Reporting System 

● Broadly applicable measures that could be used to create a core measure set 

required of all participating eligible professionals 
CMS-1524-P 331 

● Measures groups that reflect the services furnished to beneficiaries by a 

particular specialty. 

In the 2012 Physician Quality Reporting System, as in the 2011 Physician Quality 

Reporting System, for some measures that are useful, but where data submission is not 

feasible through all otherwise available Physician Quality Reporting System reporting 

mechanisms, we are proposing that a measure may be included for reporting solely 

through specific reporting mechanism(s) in which its submission is feasible. 

As discussed previously, section 1848(k)(2)(D) of the Act requires that the public 

have the opportunity to provide input during the selection of measures. We also are 

required by other applicable statutes to provide opportunity for public comment on 

provisions of policy or regulation that are established via notice and comment 

rulemaking. Measures that 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 process. Even when measures have been 

published in the Federal Register, but in other contexts and not specifically proposed as 

Physician Quality Reporting System measures, such publication does not provide true 

opportunity for public comment on those measures' potential inclusion in the Physician 

Quality Reporting System. Thus, such additional measures recommended for selection 

for the 2012 Physician Quality Reporting System via comments on the CY 2012 PFS 

proposed rule cannot be included in the 2012 measure set. As such, while we welcome 

all constructive comments and suggestions, and may consider such recommended 

measures for inclusion in future measure sets for the Physician Quality Reporting System 
CMS-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 again note that we do not use notice and 

comment rulemaking as a means to update or modify measure specifications. Quality 

measures that have completed the consensus process have a designated party (usually, the 

measure developer/owner) who has accepted responsibility for maintaining the measure. 

In general, it is the role of the measure owner, developer, or maintainer to make changes 

to a measure. Therefore, comments requesting changes to a specific proposed Physician 

Quality Reporting System measure's title, definition, and detailed specifications or coding 

should be directed to the measure developer identified in Tables 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 measures that are not NQF endorsed or AQA 

adopted is an exception to the requirement under section 1848(k)(2)(C)(i) of the Act that 

measures be endorsed by the NQF. We may exercise this exception authority in a 

specified area or medical topic for which a feasible and practical measure has not been 

endorsed by NQF, so long as due consideration is given to measures that have been 

endorsed by the NQF. 

 Based on the criteria previously discussed, we propose to include the individual 

measures listed in Tables 29 through 31 in the 2012 Physician Quality Reporting System 
CMS-1524-P 333 

individual quality measure set. We believe that each measure we are proposing for 

reporting under the 2012 Physician Quality Reporting System meets at least one criterion 

for the selection of Physician Quality Reporting System measures described previously. 

We are also proposing to include 24 measures groups in the 2012 Physician Quality 

Reporting System quality measure set, which 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 Reporting System Core Measures Available 

for Either Claims, Registry, and/or EHR-based Reporting; 

● Proposed 2012 Physician Quality Reporting System Individual Quality 

Measures Available for Either Claims-based Reporting and/or Registry-based Reporting; 

and 

● Proposed 2012 Physician Quality Reporting System Measures Available for 

EHR-based Reporting. 

Please note that some individual measures 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 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. If an eligible professional intends 

to report the same measures for multiple CMS programs, it is important to check the full 

measure specifications, NQF measure number (if applicable), as well as any other 

identifying measure features to determine whether the measures are the same. We invite 

comments on our proposed approach in selecting measures. 
CMS-1524-P 334 

(3) Proposed 2012 Physician Quality Reporting 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 measures that were selected for reporting in 

2011, please note that detailed measure specifications, including the measure's title, for 

the proposed 2012 individual Physician Quality Reporting System quality measures may 

have been updated or modified during the NQF endorsement process or for other reasons 

prior to 2012. The 2012 Physician Quality Reporting System quality measure 

specifications for any given individual quality measure may, therefore, be different from 

specifications for the same quality measure used in prior years. Specifications for all 

2012 individual Physician Quality Reporting System quality measures, whether or not 

included in the 2011 Physician Quality Reporting System program, must be obtained 

from the specifications document for 2012 individual Physician Quality Reporting 

System quality measures, which will be available on the Physician Quality Reporting 

System section of the CMS Web site on or before December 31, 2011. 

(A) Proposed 2012 Physician Quality Reporting System Core Measures Available for 

Claims, Registry, and/or EHR-based Reporting 

The prevention of cardiovascular conditions is a top priority for CMS. Therefore, 

in an effort to encourage eligible professionals 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 measures by all eligible professionals, as 
CMS-1524-P 335 

previously discussed in section IV.F.1.f. of this proposed rule, we are proposing that only 

certain specialties be required to report 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 Reporting 
CMS-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 measures also promotes program consistency. 

These proposed measures include 55 registry-only measures currently used in the 2011 

Physician Quality Reporting System, and 144 individual quality measures for either 

claims-based reporting or registry-based reporting (75 FR 40186 through 40190 and 

52489 through 52490). These proposed measures do not include any measures that are 

proposed to be included as part of the Back Pain measures group. For 2012, we propose 

that any 2012 Physician Quality Reporting System measures that are included in the Back 

Pain measures group would not be reportable as individual measures through 

claims-based reporting or registry-based reporting. 

In 2011, Physician Quality Reporting System measure # 197 was titled "Coronary 

Artery Disease (CAD): Drug Therapy for Lowering LDL-Cholesterol". For 2012, we are 

changing the title of measure # 197 to "Coronary Artery Disease: Lipid Control", because 

the measure owner, AMA-PCPI, has changed the title of the measure. Aside from the 

title change, measure # 197's NQF number as well as its NQF-endorsement status has not 

changed. However, as noted previously, 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 individual measures below for inclusion in the 

2012 Physician Quality Reporting System in order to provide eligible professionals with 
CMS-1524-P 337 

more Physician Quality Reporting System quality measures on which they can select 

from to report. The following 2 proposed measures are NQF-endorsed: 

● Anticoagulation for Acute Pulmonary Embolus Patients. 

● Pregnancy Test for Female Abdominal Pain Patients. 

 The remaining 24 measures 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 proposed rule. Specifically, we are 

proposing the following measures because the measures impact chronic conditions: 

● Chronic Wound Care: Use of Wound Surface Culture Technique in Patients 

with Chronic Skin Ulcers. 

● Chronic Wound Care: Use of Wet to Dry Dressings in Patients with Chronic 

Skin Ulcers. 

● Hypertension: Blood Pressure Control. 

 We are proposing the following measures because these measures involve care 

coordination: 

● Coronary Artery Disease (CAD): Symptom Management. 

 We are proposing the following measures because these measures are applicable 

across care settings: 

● Substance Use Disorders: Counseling Regarding Psychosocial and 

Pharmacologic Treatment Options for Alcohol Dependence. 

● Substance Use Disorders: Screening for Depression Among Patients with 

Substance Abuse or Dependence. 
CMS-1524-P 338 

● Cardiac Rehabilitation Patient Referral From an Outpatient Setting. 

 We are proposing the following measures because we believe the measures 

address gaps in the Physician Quality Reporting System measure set: 

● Barrett's Esophagus. 

● Ultrasound Determination of Pregnancy Location for Pregnant Patients with 

Abdominal Pain. 

● Rh Immunoglobulin (Rhogam) for Rh Negative Pregnant Women at Risk of 

Fetal Blood Exposure. 

● Surveillance after Endovascular Abdominal Aortic Aneurysm Repair (EVAR). 

● Referral for Otology Evaluation for Patients with Acute or Chronic Dizziness. 

● Image Confirmation of Successful Excision of Image–Localized Breast Lesion. 

● Improvement in Patient's Visual Function within 90-Days Following Cataract 

Surgery. 

● Patient Satisfaction within 90-Days Following Cataract Surgery. 

 We are proposing the following measures because we believe the measures 

increase the scope of applicability of the Physician Quality Reporting System measures to 

services furnished to Medicare beneficiaries and expand opportunities for eligible 

professionals to participate in the Physician Quality Reporting System: 

● Radical Prostatectomy Pathology Reporting. 

● Immunohistochemical (IHC) Evaluation of HER2 for Breast Cancer Patients . 

 We are proposing the following measures because the measures are high impact 

and support CMS and HHS priorities for improved quality and efficiency of care for 

Medicare beneficiaries. 
CMS-1524-P 339 

● Statin Therapy at Discharge after Lower Extremity Bypass (LEB). 

● Rate of Open AAA Repair without Major Complications (discharged to home 

no later than post-operative day #7). 

● Rate of EVAR without Major Complications (discharged to home no later than 

POD #2). 

● Rate of Carotid Endarterectomy for Asymptomatic Patients, without Major 

Complications (discharged to home no later than post-operative day #2). 

 We are proposing the following measures because the measures have a high 

impact on health care: 

● Preoperative Diagnosis of Breast Cancer. 

● Sentinel Lymph Node Biopsy for Invasive Breast Cancer. 

● Biopsy Follow-up. 

We believe that the addition of Physician Quality Reporting System quality 

measures will encourage eligible professionals to participate in the Physician Quality 

Reporting System, as there are more measures that may be applicable to eligible 

professionals. 

Of these measures, 13 would be reportable 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 results and numerator and denominator data on 

quality measures. If no registry self-nominates to submit measure results and numerator 
CMS-1524-P 340 

and denominator data on a particular measure 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 individual measures for either claims-based 

reporting or registry-based reporting are listed by their Physician Quality Reporting 

System Measure Number (to the extent te measure 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 the extent the measure is part of the 2011 

Physician Quality Reporting System measure set. 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 System Measure Number of "TBD." 

Table 30: Proposed 2012 Physician Quality Reporting System Individual Quality 

Measures Available for Either Claims-based Reporting and/or Registry-based 

Reporting 
CMS-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 (CAD): 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 Glaucoma (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 Prophylactic 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, 

Registry 
CMS-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: Pharmacologic 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: Assessment of Presence or 

Absence of Urinary Incontinence in Women Aged 65 

Years and Older 

0098 AMA-PCPI/NCQA Claims, 

Registry 

49 Urinary Incontinence: Characterization 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 Pulmonary Disease (COPD): 

Spirometry Evaluation 0091 AMA-PCPI Claims, 

Registry 

52 Chronic Obstructive Pulmonary Disease (COPD): 

Bronchodilator Therapy 0102 AMA-PCPI Claims, 

Registry 

53 Asthma: Pharmacologic Therapy 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, 

Registry 
CMS-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): Avoidance 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 Bisphosphonates 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/Progesterone 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-Related Bloodstream Infections 

(CRBSI): Central Venous Catheter (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, 

Registry 
CMS-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, Registry 
CMS-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 (CKD): Plan of Care – 

Elevated Hemoglobin for 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 Disease (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 Glaucoma (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, 

Registry 
CMS-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 Jiroveci 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 Access 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 Disease Prognosis 

AQA 

adopted AMA-PCPI/NCQA Claims, Registry 
CMS-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 Therapy 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, Registry 
CMS-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 Drug 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 Communication 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, Registry 
CMS-1524-P 349 

Physician 

Quality 

Reporting 

System 

Measure 

Number Measure Title 

NQF 

Measure 

Number Measure Developer 

Reporting 

Mechanism 

233 Thoracic Surgery: Recording 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 Pharmacologic 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, 

Registry 
CMS-1524-P 350 

Physician 

Quality 

Reporting 

System 

Measure 

Number Measure Title 

NQF 

Measure 

Number Measure Developer 

Reporting 

Mechanism 

TBD Image Confirmation of Successful 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 Physician Quality Reporting System data from 

EHRs for a limited subset of 2012 Physician Quality Reporting System quality measures. 

Section 1848(m)(7) of the Act ("Integration of Physician Quality Reporting and 

EHR Reporting"), as added by section 3002(d) of the Affordable Care Act, requires that 

by no later than January 1, 2012, the Secretary shall develop a plan to integrate reporting 

on quality measures under the Physician Quality Reporting System with reporting 

requirements under the EHR Incentive Program under section 1848(o) of the Act relating 

to the meaningful use of EHRs. Such integration shall consist of the following: 

(A) The selection of measures, the reporting of which would both demonstrate— 

(i) Meaningful use of an EHR for purposes of the Medicare EHR Incentive 

Program; and 

(ii) Quality of care furnished to an individual; and 

(B) Such other activities as specified by the Secretary. 

To align the Physician Quality Reporting System with the Medicare EHR 

Incentive Program, we propose to include all clinical quality measures available for 
CMS-1524-P 351 

reporting under the Medicare EHR Incentive 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 measures under the EHR-reporting option. In 2011, 

we included 14 of the 44 EHR Incentive Program measures under the 2011 Physician 

Quality Reporting System EHR reporting mechanism. In order to better align Physician 

Quality Reporting System measures with those under the EHR Incentive Program, for 

2012, we propose to have the rest of the 44 clinical quality measures in the Medicare 

EHR Incentive Program available for EHR-based reporting under the 2012 Physician 

Quality Reporting System. 

Furthermore, for 2012, we propose to retain the following 6 additional measures 

that were available for reporting under the EHR-based reporting mechanism under the 

2011 Physician Quality Reporting System: 

● Measure # 39: Screening or Therapy for Osteoporosis for Women Aged 65 

Years and Older. 

● Measure # 47: Advance Care Plan. 

● Measure # 48: Urinary Incontinence: Assessment of Presence or Absence of 

Urinary Incontinence in Women Aged 65 Years and Older. 

● Measure # 124: Health Information Technology (HIT): Adoption/Use of 

Electronic Health Records (EHR). 

● Measure # 173: Preventive Care and Screening: Unhealthy Alcohol Use – 

Screening. 

● Measure # 238: Drugs to be Avoided in the Elderly. 

We believe these measures meet the criteria listed previously for inclusion for 
CMS-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 PHYSICIAN 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 Counseling 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-PCPI 
CMS-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 Immune 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 NCQA 
CMS-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 Incontinence 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 parameters 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 two pairs does not contain a 0 percent performance rate. 

(4) 2012 Physician Quality Reporting System Measures Groups 

We propose to retain the following 14 2011 Physician Quality Reporting System 

measures groups for the 2012 Physician Quality Reporting System: (1) Diabetes 

Mellitus; (2) CKD; (3) Preventive Care; (4) CABG; (5) Rheumatoid Arthritis; (6) 

Perioperative Care; (7) Back Pain; (8) CAD; (9) Heart Failure; (10) IVD; (11) Hepatitis 

C; (12) HIV/AIDS; (13) CAP, 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 particularly because we believe the measures groups 
CMS-1524-P 355 

reflect the services furnished to beneficiaries by a particular specialty. We also believe 

that retaining these measures groups will provide 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 eligible professionals with more measures 

groups on which to report: 

● Chronic Obstructive Pulmonary Disease (COPD). 

● Inflammatory Bowel Disease. 

● Sleep Apnea. 

● Epilepsy. 

● Dementia. 

● Parkinson's. 

● Elevated Blood Pressure. 

● Radiology. 

● Cardiovascular Prevention, which contains individual measures from the 

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 Reporting System. Section 1848(k)(2)(C)(ii) 

of the Act provides an exception to the requirement that measures be endorsed by the 

NQF. We may exercise this exception authority in a specified area or medical topic for 

which a feasible and practical measure has not been endorsed by NQF, so long as due 

consideration is given to measures that have been endorsed by the NQF. For the 
CMS-1524-P 356 

measures contained within these measures groups that are not currently NQF-endorsed, 

we are proposing to exercise this authority due 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 reporting options for individual eligible professionals, thereby 

increasing participation in the Physician Quality Reporting System. 

Finally, as in previous program years, for 2012, we propose that the measures 

included in any proposed 2012 measures group be reportable either as individual 

measures or as part of a measures group, except for the Back Pain measures group, which 

would continue to be reportable only as part of a measures group and not as individual 

measures in 2012. 

As with measures group reporting in prior program years, we propose that each 

eligible professional electing to report a group of measures for 2012 must report all 

measures in the group that are applicable to each patient or encounter to which the 

measures group applies at least up to the minimum number of patients required by the 

applicable reporting criteria. 

 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 Measure Number in Tables 32 through 55. As 

stated previously, the Physician Quality Reporting System Measure Number is a unique 

identifier assigned by us to all measures in the Physician Quality Reporting System 
CMS-1524-P 357 

measure set. Once a Physician Quality Reporting System Measure Number is assigned to 

a measure, it will not be used again, even if the measure is subsequently retired from the 

Physician Quality Reporting System measure set. Measures that are not preceded by a 

number (in other words, those preceded by "TBD") in Tables 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 MELLITUS 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: Low 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 NCQA 
CMS-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 INCLUDED 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

PI 
CMS-1524-P 359 

Physician 

Quality 

Reporting 

System 

Number 

Measure Title NQF 

Measure 

Number 

Measure 

Developer

226 Preventive Care and Screening: Tobacco Use: 

Screening and Cessation Intervention 

0028 

AMA-PC

PI 

TABLE 35: PROPOSED MEASURES INCLUDED 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: Venous Thromboembolism 

(VTE) Prophylaxis (When Indicated in ALL 

Patients) 

0239 AMA-PCPI/NCQA
CMS-1524-P 361 

TABLE 38: PROPOSED MEASURES 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-PCPI
CMS-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-PCP
CMS-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 reportable 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/NCQA
CMS-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-PCPI 
CMS-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 Disease (IBD): Assessment 

of Inflammatory Bowel Disease Activity and 

Severity N/A 

AGA/AM

A-PCPI 

TBD Inflammatory Bowel Disease (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 Disease (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-PCPI 

* 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 Therapy 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 Imaging 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 CMS 
CMS-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 professional electing to report a 

group of measures for 2012 must report all measures in the group that are applicable to 

each patient or encounter to which the measures group applies at least up to the minimum 

number of patients required by the applicable reporting criteria. We 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 part of a measures group. 

 We note that the specifications for measures groups do not necessarily contain all 

the specification elements of each individual measure making up the measures group. 

This is based on the need for a common set of denominator specifications for all the 

measures making up a measures group in order to define the applicability of the measures 
CMS-1524-P 370 

group. Therefore, the specifications and instructions for 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 specifications 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, the 2012 Physician Quality Reporting System 

measure specifications for any given measures group could be different from 

specifications and submission instructions for the same measures group used for 2011. 

For example, the measure developer may change the codes contained in the measure's 

denominator. These measure specification changes do not materially impact the intended 

meaning of the measures or the strength of the measures. 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 Participate in the GPRO (GPRO) 

For 2012, we propose that group practices selected to participate in the 2012 

Physician Quality Reporting System GPRO would be required to report on 40 proposed 

measures listed in Table 55. Specifically, for the 2012 Physician Quality Reporting 
CMS-1524-P 371 

System, we propose to retain most of the measures available for reporting under the 2011 

Physician Quality Reporting System GPRO because of our continued interest in the 

reporting of those measures as well as to maintain program consistency from year to year. 

However, for 2012, we 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 via the GPRO for the 2011 Physician Quality 

Reporting System: 

● Ischemic Vascular Disease (IVD): Use of Aspirin or another Antithrombotic. 

● Measure pair: a. Tobacco Use Assessment, b. Tobacco Cessation Intervention. 

● Ischemic Vascular Disease (IVD): Complete Lipid Profile and LDL Control < 

100 

● Proportion of adults 18 years and older who have had their blood pressure measured 

within the preceding 2-years. 

 In addition to adding the Physician Quality Reporting System core measures that were 

not available for reporting under the GPRO for the 2011 Physician Quality Reporting System, we 

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 Disease (COPD): Spirometry Evaluation. 

● 30 Day Post Discharge Physician Visit. 

● Medication Reconciliation: Reconciliation After Discharge from an Inpatient Facility. 

● Diabetes: Aspirin Use. 

● Falls: Screening for Fall Risk. 

● Osteoporosis: Management Following Fracture of Hip, Spine or Distal Radius for Men 

and Women Aged 50 Years and Older. 

● Diabetes Mellitus: Tobacco Non Use. 

● Coronary Artery Disease (CAD): LDL-level < 100 mg/dl. 

● Diabetes Mellitus: Hemoglobin A1c Poor Control in Diabetes Mellitus (less 

than 8 percent). 

● Chronic Obstructive Pulmonary Disease (COPD): Smoking Cessation 

Counseling Received. 

● Monthly International Normalized Ratio (INR) for Beneficiaries on Warfarin. 

 We propose these new measures because they are NQF-endorsed measures that 

are consistent with other CMS quality reporting initiatives. We believe it is in the 

stakeholders' interest to align measures in different initiatives. As stated previously in 

section (e)(6) of this proposed rule, we propose that group practices selected to 

participate in the Physician Quality Reporting 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 PHYSICIAN QUALITY REPORTING SYSTEM 

GROUP PRACTICE REPORTING 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: Angiotensin-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 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 

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 Systolic 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 Ventricular Function (LVF) Testing CMS 

198 Heart Failure: Left Ventricular Function (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 Pulmonary Disease (COPD): 

Spirometry Evaluation 

0091 AMA-PCPI 

226 Measure pair: a. Tobacco Use Assessment, b. Tobacco 

Cessation Intervention 

0028 AMA-PCPI 

52 Chronic Obstructive Pulmonary Disease (COPD): 

Bronchodilator Therapy 

0102 AMA-PCPI 

204 Ischemic Vascular Disease (IVD): Use of Aspirin or another 

Antithrombotic 

0068 NCQA 
CMS-1524-P 374 

Physician 

Quality 

Reporting 

System 

Number 

Measure Title NQF 

Measure 

Number 

Measure 

Developer 

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 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 Therapy 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 Pulmonary Disease (COPD): Smoking 

Cessation Counseling Received 

N/A CMS 

TBD Monthly INR for Beneficiaries on Warfarin 555 CMS 

We intend to provide a separate measures specifications document and other 

supporting documents for group practices participating in the 2012 Physician Quality 

Reporting System GPRO. We anticipate that the group practice measures specifications 

document will be available by November 15, 2011 or shortly thereafter on the Physician 

Quality Reporting System section of the CMS Web site at 

http://www.cms.hhs.gov/PQRS. 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 Certification Program Incentive 
CMS-1524-P 375 

 Section 3002(c) of the Affordable Care Act amends section 1848(k)(4) of the 

Act, as amended by section 3002(c) of the Affordable Care Act, requires the Secretary to 

address a mechanism whereby an eligible professional may provide data on quality 

measures through a maintenance of certification program (Maintenance of Certification 

Program) operated by a specialty body of the American Board of Medical Specialties 

(ABMS). In addition, section 1848(m)(7) of the Act ("Additional Incentive Payment"), 

as added by section 10327(a) of the Affordable 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 Maintenance of Certification Program that meets 

the criteria for a registry under the Physician Quality Reporting System; or 

 ++ In an alternative form and manner determined appropriate by the Secretary; 

and 

 ++ More frequently than is required to qualify for or maintain board certification 

status: 

 ++ Participate in such a Maintenance of Certification Program for a year; and 

 ++ Successfully completes a qualified Maintenance of Certification Program 

practice assessment for such year. 

 Section 1848(m)(7)(C)(i) of the Act defines "Maintenance of Certification 
CMS-1524-P 376 

Program" as a continuous assessment program, such as a qualified ABMS Maintenance 

of Certification Program, or an equivalent program (as determined by the Secretary), that 

advances quality and the lifelong learning and self-assessment of board certified specialty 

physicians by focusing on the competencies of patient care, medical knowledge, 

practice-based learning, interpersonal and communications skills and professionalism. 

Such a program shall require a physician to do the following: 

● Maintain a valid, unrestricted medical license in the United States. 

● Participate in educational and self-assessment programs that require an 

assessment of what was learned. 

● Demonstrate, through a formalized, secure examination, that the physician has 

the fundamental diagnostic skills, medical knowledge, and clinical judgment to provide 

quality care in their respective specialty. 

● Successful completion of a qualified Maintenance of Certification Program 

practice assessment. 

 As defined in section 1848(m)(7)(C)(ii) of the Act, a "qualified Maintenance of 

Certification Program practice assessment" means an assessment of a physician's practice 

that--- 

● Includes an initial assessment of an eligible professional's practice that is 

designed to demonstrate the physician's use of evidence-based medicine; 

● Includes a survey of patient experience with care; and 

● Requires a physician to implement a quality improvement intervention to 

address a practice weakness identified in the initial assessment and then to remeasure to 

assess performance after such intervention. 
CMS-1524-P 377 

 To qualify for the additional incentive payment, section 1848(m)(7)(B)(iii) of the 

Act also requires the Maintenance of Certification Program to submit to CMS, on behalf 

of the eligible professional, information: 

● In a form and manner specified by the Secretary, that the eligible professional 

more frequently than is required to qualify for or maintain board certification status, 

participates in the Maintenance of Certification Program for a year and successfully 

completes a qualified Maintenance of Certification Program practice assessment for such 

year; 

● Upon request by the Secretary, information on the survey of patient experience 

with care; and 

● As the Secretary may require, on the methods, measures, and data used under 

the Maintenance of Certification Program and the qualified Maintenance of Certification 

Program practice assessment. 

 In order to qualify for the additional 0.5 percent incentive payment in 2011, 

eligible professionals were required to participate more frequently in each of the 

following four parts of the Maintenance of Certification Program: 

● Maintain a valid unrestricted license in the United States. For 2011, physicians 

simply needed to maintain a valid unrestricted license in the United States to meet the 

requirement for "more frequent" participation with respect to this part (75 FR 73541 

through 73546). 

● Participate in educational and self-assessment programs that require an 

assessment of what was learned. 
CMS-1524-P 378 

● Demonstrate, through a formalized secure examination, that the physician has 

the fundamental diagnostic skills, medical knowledge, and clinical judgment to provide 

quality care in their respective specialty. 

● Successfully complete a qualified maintenance of certification program 

practice assessment. 

We 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 four parts of the Maintenance of Certification Program is too 

narrow. We have further considered the language under section 1848(m)(7)(B)(ii)(I) of 

the Act and we believe it can be interpreted more broadly. In particular, we note that the 

requirement that a professional "more frequently than is required to qualify for or 

maintain board certification status participates in such a Maintenance of Certification 

Program" could refer to the program as a whole, such that any element performed more 

frequently than is required satisfies the general requirement. The nature of the various 

components of a maintenance of certification program also suggest that it is not necessary 

that each of the four elements of the program be performed more frequently. We 

previously stated we believe that the "more frequently" requirement does not apply to the 

first part, which states that a physician maintain a valid unrestricted license, as there is no 

way a physician may maintain a valid unrestricted license "more frequently." As such, 

we believe that the more frequently requirement could be satisfied based on any of the 

other elements of the program (that is, educational and self-assessment program; secure 

examination; or practice assessment). Specifically, we believe that if a professional more 
CMS-1524-P 379 

frequently than is required satisfies one or more of those parts of a program, the more 

frequently requirement would be met. Accordingly, we propose that in order to earn an 

additional 0.5 percent incentive for 2012 through 2014, an eligible professional must 

participate more frequently than is required in at least one of the following 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 "more frequently," we believe that this would 

be tied to the specific requirements of Board certification for the professional. Given that 

different specialties have different certification requirements (physician examination 

requirements to maintain Board certification varies widely depending on specialty), we 

do not believe it is appropriate to impose a uniform requirement for all professionals and 

therefore, we believe that the board could determine for a particular program element the 

more frequent requirement for the professional. However, we believe that a minimum 

threshold would need to be met such that the professional would have to do something 

more frequently or more than what is ordinarily required for a particular part of the 

program, as well as "more frequent" participation in the practice assessment component. 

 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 Physician Quality Reporting System reporting, 

for the applicable program year (that is, to qualify for the additional 0.5 percent incentive 

payment for 2012, meet the 2012 requirements for satisfactory reporting), based on the 
CMS-1524-P 380 

12-month reporting period (January 1 through December 31 of the respective program 

year). 

● For purposes of satisfactory reporting under the Physician Quality Reporting 

System, we propose that the eligible professional may participate as an individual eligible 

professional using either individual Physician Quality Reporting System measures or 

measures groups and submitting the Physician Quality Reporting System data via claims, 

a registry, or an EHR or participate under the GPRO option. As an alternative to this 

reporting option, we propose that eligible professionals may satisfactorily report under 

the Physician Quality Reporting System based on submission of Physician Quality 

Reporting System data by a Maintenance of Certification Program, provided that the 

Maintenance of Certification Program has qualified as a Physician Quality Reporting 

System registry for 2012. As indicated previously, an eligible professional would not 

necessarily have to qualify for the Physician Quality Reporting System through a 

Maintenance of Certification Program serving as a registry. Rather, we propose that an 

eligible professional may qualify for the additional incentive, without regard to the 

method by which the eligible professional has met the basic requirement of satisfactory 

reporting under the Physician Quality Reporting System. 

● In addition to meeting the proposed requirements for satisfactory reporting for 

the Physician Quality Reporting System for a program year, the eligible professional 

must have data with respect to the eligible professional's participation in a Maintenance 

of Certification Program submitted on his or her behalf by a qualified medical specialty 

board or other entity sponsoring a Maintenance of Certification Program. For each 

eligible professional that wishes to qualify for the Maintenance of Certification Program 
CMS-1524-P 381 

Incentive, the qualified medical specialty board or other entity sponsoring a Maintenance 

of Certification Program must submit data to CMS with respect to the following: 

● An eligible professional must, more frequently than is required to qualify for or 

maintain board certification, participate in a Maintenance of Certification Program for a 

year and successfully complete a qualified Maintenance of Certification Program practice 

assessment for such year. With regard to the "more frequently" requirement as it applies 

to the elements of a Maintenance of Certification Program itself (other than completing a 

qualified Maintenance of Certification Program practice assessment), we propose to 

require that the Maintenance of Certification Program certify that the eligible 

professional has "more frequently" than is required to qualify for or maintain board 

certification "participated in a Maintenance of Certification Program for a year". We do 

not propose to specify with respect to participation how a physician must meet the more 

frequently requirement, but rather that the Maintenance of Certification Program 

determine what a physician must do to more frequently participate in a Maintenance of 

Certification Program and so certify that the eligible professional has met this 

requirement. While we do not believe that the "more frequently" requirement is 

applicable to the licensure requirement, given that one cannot be licensed "more 

frequently" than is required, we propose to leave it up to the Maintenance 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 while 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 delineated in section 1848(m)(7)(B)(ii) of the Act as being required 

more often than is necessary to qualify for or maintain board certification, we believe we 

need to be more specific regarding our interpretation of the phrase "more frequently." 

Additionally, we are aware that some specialty boards have varying Maintenance of 

Certification Program requirements for physicians to maintain board certification, based 

on the date of original certification. Some, we believe, may not be required to participate 

in a Maintenance of Certification Program at all in order to maintain board certification. 

Accordingly, we recognize that "more often" may vary among physicians certified by the 

same specialty board. We interpret the statutory provisions as requiring participation in 

and successful completion of at least one Maintenance of Certification Program practice 

assessment per year. Therefore, we propose, as a basic requirement, participation in and 

successful completion in at least one Maintenance of Certification Program practice 

assessment for each year the physician participates in the Maintenance of Certification 

Program Incentive, regardless of whether or how often the physician is required to 

participate in a Maintenance of Certification Program to maintain board certification. 

 We are also aware that ABMS boards are at various stages in implementing the 

practice assessment modules, and some may not have such assessment modules in place. 

However, inasmuch as we interpret the statute to require a Maintenance of Certification 

Program practice assessment at least once per program year as part of the Maintenance of 

Certification Program, eligible professionals who do not have available, through their 

boards or otherwise, a Maintenance of Certification Program practice assessment are not 

eligible for the 0.5 percent incentive. 
CMS-1524-P 383 

We believe that the experience of care survey provides particularly valuable 

information and proposed that a qualified Maintenance of Certification Program practice 

assessment must include a survey of patient experience with care. The Secretary may 

request information on the survey of patient experience with care, under section 

1848(m)(7)(B)(iii) of the Act. In view of the importance of this information, and the lack 

of readily available alternative sources, we propose to require that Maintenance of 

Certification Programs submit information about the patient experience with care 

survey(s) used by physicians to fulfill the Maintenance of Certification Program practice 

assessment. We are not, at this time, requesting the results of the survey for the eligible 

professionals for whom information is being submitted by the Maintenance of 

Certification Program. We may, however, request such information for appropriate 

validation purposes and may propose to request such data for future years of the 

Maintenance of Certification Program Incentive. 

 Some Maintenance of Certification Programs underwent a self-nomination 

process in 2011 to enable their members to be eligible for this Physician Quality 

Reporting System Maintenance of Certification Program Incentive for 2011 Physician 

Quality Reporting System. We propose that a Maintenance of Certification Program that 

was approved after undergoing the self-nomination process in 2011 must submit a self 

nomination statement for each year the Maintenance of Certification Program intends to 

participate in the Physician Quality Reporting System Maintenance of Certification 

Program. In the self-nomination statement, we 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 statement be submitted to CMS via a web-based 
CMS-1524-P 384 

tool. 

 For Maintenance of Certification Programs new for 2012, we propose that 

Maintenance of Certification Programs wishing to enable their diplomates to be eligible 

for an additional Physician Quality Reporting System incentive payment for the 2012 

Physician Quality Reporting System will need to go through a self-nomination process by 

January 31, 2012. We proposed the board would need to include all of the following 

information in their self-nomination statement to us: 

• Provide detailed information regarding the Maintenance of Certification 

Program with reference to the statutory requirements for such program. 

• Indicate the organization sponsoring the Maintenance of Certification Program, 

and whether the Maintenance of Certification Program is sponsored by an ABMS board. 

If not an ABMS board, indicate whether and how the program is substantially equivalent 

to the ABMS Maintenance of Certification Program process. 

• Indicate that the program is in existence as of January 1, 2012. 

• Indicate that the program has at least 1 active participant. 

• The frequency of a cycle of Maintenance of Certification Program for the 

specific Maintenance of Certification Program of the sponsoring organization; including 

what constitutes "more frequently" for the Maintenance of Certification Program itself 

and for the practice assessment for the specific Maintenance of Certification Program of 

the sponsoring organization. 

● Confirmation from the board that the practice assessment will occur and be 

completed in the year the physician is participating in the Maintenance of Certification 

Program Incentive 
CMS-1524-P 385 

• What was, is, or will be the first year of availability of the Maintenance of 

Certification Program practice assessment for completion by an eligible professional. 

• What data is collected under the patient experience of care survey and how this 

information would be provided to CMS. 

• How the Maintenance of Certification Program monitors that an eligible 

professional has implemented a quality improvement process for their practice. 

• Describe the methods, and data used under the Maintenance of Certification 

Program, and provide a list of all measures used in the Maintenance of Certification 

Program for 2011 and to be used for 2012, including the title and descriptions of each 

measure, the owner of the measure, whether the measure is NQF endorsed, and a link to a 

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 Certification 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 frequently than is required to 

qualify for or maintain board certification status, including the year that the physician met 

the board certification requirements for the Maintenance of Certification Program, and 

the year the eligible professional participated in a Maintenance of Certification Program 

"more frequently" than is required to maintain or qualify for board certification. 

• Information certifying that the eligible professional has completed the 

Maintenance of Certification Program practice assessment at least one time each year the 

eligible professional participates in the Maintenance of Certification Program Incentive. 

We propose that specialty boards that also desire to send Physician Quality 

Reporting System information to us on behalf of eligible professionals should be able to 

meet the proposed requirements for registry data submission and should follow the 

directions for self-nomination to become a qualified registry. Boards may also 

participate as registries for Physician Quality Reporting System data provided that they 

meet the registry requirements. As an alternative to requiring boards to either operate a 

qualified Physician Quality Reporting System registry or to self-nominate to submit 

Maintenance of Certification Program data to 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 eligible professionals to CMS. 

To the extent an eligible professional participates in multiple Maintenance of 

Certification Programs and meets the requirements under section 1848(m)(7) of the Act 

(Additional Incentive Payment) under multiple programs, we note that the eligible 
CMS-1524-P 387 

professional can qualify for only one additional 0.5 percent incentive per year. We invite 

public comment on our proposals for the Physician Quality Maintenance of Certification 

Program Incentive for 2012 through 2014. 

h. Feedback Reports 

 Section 1848(m)(5)(H) of the Act requires the Secretary to provide timely 

feedback to eligible professionals on the performance of the eligible professional with 

respect to satisfactorily submitting data on quality measures. Since the inception of the 

program in 2007, the Physician Quality Reporting System has provided eligible 

professionals who have reported Physician Quality Reporting System data on quality 

measures feedback reports at the TIN/NPI level detailing participation in the Physician 

Quality Reporting System, including reporting rate and performance rate information. 

For 2008, we improved the format and content of feedback reports based on stakeholder 

input. We also developed an alternate report distribution method whereby each eligible 

professional can directly request and receive a feedback report. In accordance with 

Section 1848(m)(5)(H) of the Act, we will continue to provide feedback reports to 

individuals and group practices that attempt to report on at least one Physician Quality 

Reporting System quality measure. We propose 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 reports to eligible professionals in 2012 

(75 FR 73549). Therefore, we propose to provide interim feedback reports for eligible 

professionals reporting individual measures and measures groups through the 
CMS-1524-P 388 

claims-based reporting mechanism for 2012 and beyond. These reports would be a 

simplified version of annual feedback reports that 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 respective program year (that is summer 2012 for the 

2012 program year). We believe interim feedback reports would be particularly valuable 

to eligible professionals reporting measures groups, because it would let an eligible 

professional know how many more cases he or she needs to report to satisfy the criteria 

for satisfactory reporting for claims-based reporting of measures groups. We invite 

public comment on our proposal to continue to provide annual feedback reports as well as 

our intention to provide interim feedback reports. 

i. Informal Review 

 Under 42 CFR 414.90(i), eligible professionals or group practices may seek an 

informal review of the determination that the eligible professional or group practice did 

not satisfactorily submit data on quality measures under the Physician Quality Reporting 

System. 

 To maintain program consistency until we have further experience with the 

informal review process that we implemented for the 2011 Physician Quality Reporting 

System, we 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 the informal process on our current inquiry 

process whereby an eligible professional can contact the Quality Net Help Desk (via 
CMS-1524-P 389 

phone or e-mail) for general Physician Quality Reporting System and eRx Incentive 

Program information, information on Physician Quality Reporting System feedback 

report availability and access, and/or information on Physician Quality Reporting System 

Portal password issues. For purposes of the informal process required under section 

1848(m)(5)(E) of the Act, we propose the following inquiry process: 

• An eligible professional electing to utilize the informal process must request an 

informal review within 90 days of the release of his or her feedback report, irrespective of 

when an eligible professional actually accesses his/her feedback report. 

• An eligible professional may request an informal review through use of a 

web-based tool, if technically feasible. We believe use of the web-based tool will 

provide a more efficient way to record informal review requests, as web-based tool will 

guide the eligible professional through the creation of an informal review requests. For 

example, the web-based tool will prompt an eligible professional of any necessary 

information s/he must provide. If not technically feasible, we propose 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 summarize the concern(s) of the eligible professional and the 

reason(s) for requesting an informal review. 

• We further propose that CMS will provide the eligible professional with a 

response to his or her request for an informal review within 90 days of receiving the 

original request. In 2011, we proposed to provide the eligible professional with a 

response to his or her request for an informal review within 60 days of receiving the 

original request. However, we anticipate that the volume of informal review requests 
CMS-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 greater 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 original request for an informal review. 

• As this process is informal and the statute does not require a formal appeals 

process, we will not include a hearing or evidence submission process, although the 

eligible professional may submit information to assist in the review. 

• Based on our informal review, we will provide a written response. Where we 

find that the eligible professional did satisfactorily report, we propose to provide the 

applicable incentive payment. 

• Given that this is an informal review process and given the limitations on 

review under section 1848(m)(5)(E) of the Act, decisions based on the informal review 

will be final, and there will be no further review or appeal. 

 We 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 eligible 
CMS-1524-P 391 

professional does not satisfactorily submit data on quality measures for covered 

professional services for the quality reporting period for the year, the fee schedule 

amount for services furnished by such professionals during the year shall be equal to the 

applicable percent of the fee schedule amount that would otherwise apply to such 

services. The applicable percent is-- 

● 98.5 percent for 2015; and 

● 98.0 percent for 2016 and each subsequent year. 

 Section 1848(8)(A)(i) of the Act provides that, for purposes of the payment 

adjustment, the "quality reporting period" with the respect to a year, is a period specified 

by the Secretary. In order to maintain consistency and program continuity, similar to the 

12-month reporting period we are proposing for 2012, we are also proposing a 12-month 

reporting period for the 2015 payment adjustment. Specifically, we propose that the 

reporting period for purposes of the 2015 payment 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 still providing us with enough time to collect 

and analyze the data submitted by eligible professionals for the 2015 payment adjustment 

without having to make retroactive payment adjustments in 2015. If we determine that 

an eligible professional or group practice has not satisfactorily reported data on quality 

measures for the January 1, 2013 through December 31, 2013 reporting period for 

purposes of the 2015 payment adjustment, then the eligible professional or group practice 

would be subject to the 1.5 percent adjustment in their fee schedule amount in 2015. We 
CMS-1524-P 392 

invite public comment on the proposed reporting period for purposes of the 2015 

Physician Quality Reporting System payment adjustment. 

 We intend to address the remaining requirements for satisfactory reporting for 

purposes of the 2015 payment adjustment in future rulemaking. We welcome 

suggestions for what the criteria for satisfactory 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 through an intermediary, including an electronic 

prescribing network. To encourage the use of electronic prescribing among eligible 

professionals, section 132 of the Medicare Improvements for Patients and Providers Act of 2008 

(MIPPA) amended section 1848(m) of the Act to establish the eRx Incentive Program. The eRx 

Incentive Program provides a combination of incentive payments and payment adjustments 

through 2014 to eligible professionals who are successful electronic prescribers. No eRx 

incentive payments or payment adjustments are authorized beyond 2014. 

 From 2009 through 2013, the Secretary is authorized to provide eligible professionals 

who are successful electronic prescribers an incentive payment equal to a percentage of the 

eligible professional's total estimated Medicare Part B PFS allowed charges (based on claims 

submitted not later than 2 months after the end of the reporting period) for all covered 

professional services furnished by the eligible professional during the respective reporting period. 

However, section 1848(m)(2)(D) of the Act, as added by section 4101(f)(2)(B) of Title IV of 
CMS-1524-P 393 

Division B of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5) (ARRA), 

which also authorized the Medicare EHR Incentive Program, specifies that the eRx incentive does 

not apply to an eligible professional, if, for the EHR reporting period, the eligible professional 

earns an incentive payment under the Medicare EHR Incentive Program beginning in 2011. 

The applicable electronic prescribing percent for incentive payments under the eRx 

Incentive Program are as follows: 

● 2.0 percent for 2009. 

● 2.0 percent for 2010 

● 1.0 percent for 2011. 

● 1.0 percent for 2012. 

● 0.5 percent for 2013. 

In addition, for years 2012 through 2014, under section 1848(a)(5)(A) of the Act, a PFS 

payment adjustment applies to eligible professionals who are not successful electronic prescribers 

at an increasing rate through 2014. Specifically, if the eligible professional is not a successful 

electronic prescriber for the respective reporting period for the year, the PFS amount for covered 

professional services during the year shall be a percentage less than the PFS amount that would 

otherwise apply. The applicable electronic prescribing percent for payment adjustments under 

the eRx Incentive Program are as follows: 

● 1.0 percent in 2012. 

● 1.5 percent in 2013. 

● 2.0 percent in 2014. 

We believe the purpose of the eRx Incentive Program for 2012 and beyond is to 

continue to encourage significant expansion of the use of electronic prescribing by 

authorizing a combination of financial incentives and payment adjustments. We are 
CMS-1524-P 394 

proposing to modify the incentive and payment adjustment language in 42 CFR 414.92 to 

provide language more consistent with section 1848(k) of the Act. 

We believe that the criteria used to determine who is a successful electronic 

prescriber for purposes of the eRx incentive are not required to be identical to the criteria 

used to determine the applicability of the eRx payment adjustment. In general, we 

believe that an incentive should be broadly available to encourage the widest possible 

adoption of electronic prescribing, even for low volume prescribers. On the other hand, 

we believe that a payment adjustment should be applied primarily to assure that those 

who have a large volume of prescribing do so electronically, without penalizing those for 

whom the adoption and use of an electronic prescribing system may be impractical given 

the low volume of prescribing. We also believe that eligible professionals who have met 

the requirements for receiving an incentive payment under the eRx Incentive Program for 

a particular year have sufficiently demonstrated their adoption and use of electronic 

prescribing technology and thus should not be subject to the payment adjustment in a 

future year. 

Individual eligible professionals do not have to participate in the Physician 

Quality Reporting System in order to participate in the eRx Incentive Program (and vice 

versa). The provisions of the eRx Incentive Program are codified at 42 CFR 414.92. 

In prior years, we have proposed and finalized the details of the eRx Incentive 

Program for each program year through an annual rulemaking process. Through this 

annual rulemaking process, we have previously established the criteria for avoiding the 

2012 eRx payment adjustment in the 2011 PFS Final Rule with comment period 

(75 FR 73562 through 73565) as well as issued a proposed rule entitled "Proposed 
CMS-1524-P 395 

Changes to the Electronic Prescribing (eRx) Incentive Program" (76 FR 31547), in which 

we proposed additional changes to the 2012 payment adjustment, as well as the electronic 

prescribing quality measure for certain reporting periods in 2011. We also established 

requirements for the 2013 eRx payment adjustment in the 2011 PFS Final Rule with 

comment period (75 FR 7356). 

In this rule, we are setting forth our comprehensive proposals for the 2012 and 

2013 incentive payments, additional requirements 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 eligible professionals with more time to 

familiarize themselves with the details of the eRx Incentive Program. We hope this will 

lead to increased, successful participation in the eRx Incentive Program. Details 

regarding our proposals for the eRx Incentive 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, are 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 professional; or (2) as part of a 

group practice reporting option (GPRO) for the eRx Incentive Program (eRx GPRO). 

Eligible professionals eligible to participate 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 Professionals 
CMS-1524-P 396 

page of the eRx Incentive Program section of the CMS Web site at: 

http://www.cms.gov/ERxIncentive/05_Eligible%20Professionals.asp#TopOfPage. 

(1) Individual Eligible Professionals 

(A) Definition of Eligible Professional 

As in the 2011 eRx Incentive Program, we propose that, for individual eligible 

professionals participating in the eRx Incentive Program for purposes of the 2012 and 

2013 incentive payments and 2013 and 2014 payment adjustments, the determination of 

whether an eligible professional is a successful electronic prescriber will be made at the 

individual professional level, based on the National Provider Identifier (NPI) number. 

Inasmuch as some individuals (identified by NPIs) may be associated with more than one 

practice or Tax Identification Number (TIN), for the 2012 and 2013 incentive payments 

and 2013 and 2014 payment adjustments, we propose that the determination of whether 

an eligible professional is a successful electronic prescriber will continue to be made for 

each unique TIN/NPI combination. Then, as in previous years, incentive payments 

would be made to the applicable holder of the TIN. We propose continuing to use the 

TIN/NPI combination as the unit of analysis to maintain program continuity, as 

individual eligible professionals are already familiar with this level of analysis and 

payment. We invite public comment on our proposal to continue analyzing data using 

the TIN/NPI combination while providing payment to the applicable holder of the TIN. 

 As in prior program years, we propose that individual eligible professionals who 

wish to participate in the eRx Incentive Program for purposes of the 2012 and 2013 

incentive payments and 2013 and 2014 payment adjustments may simply start 

participating. Individual eligible professionals are not required to register or notify CMS 
CMS-1524-P 397 

they intend to participate; rather, they may simply 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 services for a reporting period (or, for purposes 

of the payment adjustment under section 1848(a)(5) of the Act, for a reporting period for 

a year) if, in lieu of reporting the electronic prescribing measure, the group practice 

reports measures determined appropriate by the Secretary, such as measures that target 

high-cost chronic conditions and preventive care, in a form and manner, and at a time 

specified by the Secretary. Specifically, we first established the eRx 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 for incentive payment and payment adjustment 

purposes based on separately analyzing whether 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 electronic prescriber in accordance with 

section 1848(m)(3)(C) of the Act for those group practices that wish to participate in the 

eRx GPRO. 

(A) Proposed Definition of "Group Practice" 

Section 1848(m)(3)(C)(i) of the Act authorizes the Secretary to define "group 
CMS-1524-P 398 

practice," which CMS defined by referencing our regulation at §414.92(b). For the 2011 

eRx Incentive Program, a group practice is-- 

(1) Defined at §414.90(b), that is participating in the Physician Quality Reporting 

System; or 

(2)(a) In a Medicare approved demonstration project that is deemed to be 

participating in the Physician Quality Reporting System group practice reporting option; 

and 

(b) Has indicated its desire to participate in the electronic prescribing group 

practice option. 

However, for purposes of determining whether 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 practice" 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 definition at 42 CFR 414.90(b) by defining a group 

practice as a single TIN with at least 25 or more eligible professionals, as identified by 

their individual NPI, who have reassigned their Medicare billing rights to the TIN. Given 
CMS-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) are finalized, it would 

apply to the definition for group practice under the eRx Incentive Program. 

Although this proposal would eliminate group practices comprised of 2 to 24 

eligible professionals for the purpose of the eRx Incentive Program , we believe this 

proposal to change the definition of "group practice" 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 Reporting System, 68 of these group practices 

qualified to participate in the eRx Incentive Program under GPRO II. However, during 

the opt-out period which ended on May 12, 2011, 6 of these 68 group practices dropped 

out of GPRO II participation, leaving only 62 group practices to participate in GPRO II 

for 2010. Due to the low participation of only 62 groups, we believe participation in the 

eRx Incentive GPRO should be limited to only those group practices with 25 or more 

eligible professionals. Indeed, we believe participating under GPRO II may be more 

burdensome for very small group practices than participating as eligible professionals. 

For example, with respect to the payment adjustment, additional limitations may apply to 

eligible professionals as individuals that are not applied to group practices, which 

presents an additional burden to the group practice. 

(B) Proposed Process to Participate in the eRx Incentive Program – eRx GPRO 

 We propose that if a group practice wishes to participate in the eRx Incentive 

Program under the eRx GPRO, the group practice must self-nominate to do so. To 

self-nominate, we propose that the group practice follow the requirements for 
CMS-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 calendar year the group wishes to participate 

in the eRx GPRO. If a group practice self-nominates to participate in the eRx GPRO for 

a calendar year, then we propose to consider that the group practice is participating in the 

eRx GPRO for purposes of both the incentive payment (with respect to any incentive 

payment reporting period that occurs during the calendar year) and the payment 

adjustment (with respect to any payment adjustment reporting period that occurs during 

any calendar year). For example, the 2013 payment adjustment reporting period occurs 

during calendar year 2012 (January 1, 2012 through June 30, 2012). Therefore, any 

group practice participating in the eRx GPRO during calendar year 2012 would be 

considered to be participating in the eRx GPRO for both the 2012 incentive and 2013 

payment adjustment. Please note that a group practice that is deemed to be participating 

in the Physician Quality Reporting System, such as an ACO participating under the 

Medicare Shared Savings Program, will not be deemed participating as a group practice 

in the eRx Incentive Program. Therefore, the group practice must self-nominate to 

participate in the eRx Incentive Program under the eRx GPRO. Instructions for 

submitting the self-nomination statement are the same as the instructions for submitting a 

self-nomination statement for the Physician Quality Reporting System. Each year, we 

expect to notify a group practice of the selection decision with respect to participation in 

the eRx GPRO during the first quarter of the year. We invite public comment on the 

requirements for eligible professionals 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 the Secretary to revise the 

reporting period if the Secretary determines such revision is appropriate, produces valid 

results on measures reported, and are consistent with the goals 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 "reporting period" under the eRx 

Incentive Program for years after 2008 to be the entire year. We also have authority 

under section 1848(m)(6)(C)(ii) of the Act to revise the reporting period. 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 under Section 1848(m)(6)(C)(ii) of the Act, 

in the 2011 PFS Final Rule with comment period, we finalized two different reporting 

periods: a 6-month reporting period (between January 1, 2011 and June 30, 2011) for 

purposes of the 2012 payment adjustment for both individual eligible professionals and 

group practices participating in the eRx GPRO (75 FR 73562 through 73563) and a 

12-month reporting period (between January 1, 2011 and December 31, 2011) for 

purposes of the 2013 payment adjustment for individual eligible professionals and group 

practices participating in the eRx GPRO (75 FR 73565). 
CMS-1524-P 402 

In addition to the 12-month reporting period finalized in the 2011 PFS Final Rule 

with comment period, we propose an additional 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 eligible 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 period (between January 1, 2013 and June 30, 

2013) that would apply to both individual eligible professionals and group practices with 

regard to the 2014 payment adjustment.. (Please 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 eligible professionals with two 

opportunities to become successful electronic prescribers. We invite public comment on 

the proposed reporting periods for the 2013 and 2014 payment adjustments. 

d. Proposed Criterion for Determining 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. The 
CMS-1524-P 403 

Secretary is authorized to use one of two possible criteria for determining whether an 

eligible professional is a successful electronic prescriber. One criterion, under section 

1848(m)(3)(B)(ii) of the Act, is based on the eligible professional's reporting, in at least 

50 percent of the reportable cases, on any electronic prescribing measures that have been 

established under the Physician Quality Reporting System, and are applicable to services 

furnished by the eligible professional for the reporting period. However, for years after 

2009, section 1848(m)(3)(D) of the Act permits the Secretary in consultation with 

stakeholders and experts to revise the criteria for submitting data on electronic 

prescribing measures under section 1848(m)(3)(B)(ii) of the Act. 

The second criterion, under section 1848(m)(3)(B)(iii) of the Act, is based on the 

electronic submission by the eligible professional of a sufficient number (as determined 

by the Secretary) of prescriptions under Part D during the reporting period. If the 

Secretary decides to use this standard, then, in accordance with section 1848(m)(3)(B)(iv) 

of the Act, the Secretary is authorized to use Part D drug claims data to assess whether a 

sufficient number of prescriptions have been submitted by eligible professionals. 

However, under section 1848(m)(3)(B)(i) of the Act, if the standard based on a sufficient 

number (as determined by the Secretary) of electronic Part D prescriptions is applied for 

a particular reporting period, then the standard specified in law, based on the reporting on 

electronic prescribing measures would no longer apply. 

We considered use of the second criterion for determining successful prescribing 

under the eRx Incentive Program. While we recognize the benefits of using Part D data 

as the standard for determining successful electronic prescribers, we believe use of Part D 

prescriptions for analysis may be premature. For example, as the use of Part D data is 
CMS-1524-P 404 

fairly new, there is uncertainty as to the 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. Furthermore, use of Part D data would require a 

complete overhaul of the current requirements for the eRx Incentive Program. For 

instance, if we choose to shift to the use of Part D data, the program would have to adopt 

a new form of measurement, a new form of analysis other than use of an eligible 

professionals' TIN/NPI (as no TIN is populated under Part D data), and new criteria for 

eligible professionals and eRx GPROs to become successful electronic prescribers. 

Therefore, we are not proposing to use the second criterion. 

For the reasons stated previously, we propose to continue to require eligible 

professionals to report on the electronic prescribing measure used in 2011 to determine 

whether an eligible professional 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 "successful electronic 

prescriber" determination under the program. 

(1) Reporting the Electronic Prescribing Quality Measure 

The proposed electronic prescribing quality measure, similar to the Physician 

Quality Reporting System measures, has two basic elements, which include: (1) a 

reporting denominator that defines the patient population on which the eligible 

professional's performance is being measured; and (2) a reporting numerator, which 
CMS-1524-P 405 

identifies whether or not a clinical quality 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 electronic prescribing measure, 

which was initially introduced under the Physician Quality Reporting System, shall be a 

measure selected by the Secretary that has been endorsed by the entity with a contract 

with the Secretary under section 1890(a) of the Act. Currently, that entity is the National 

Quality Forum (NQF). The electronic prescribing measure we propose to retain, NQF 

Measure #0486: Adoption of Medication e-Prescribing, is currently endorsed by the 

NQF. 

(2) The Denominator for the Electronic Prescribing Measure 

The denominator for the electronic prescribing quality measure consists of 

specific billing codes for covered professional services. 

As initially required under section 1848(k)(2)(A)(ii) of the Act, and further 

established through rulemaking and under section 1848(m)(2)(B) of the Act, we may 

modify the codes making up the denominator of the electronic prescribing measure. As 

such, we expanded the scope of the denominator codes for 2010 to covered professional 

services outside the professional office and outpatient setting, such as professional 

services furnished in skilled nursing facilities or the home care setting. For 2011, we 

finalized the following CPT and HCPCS codes in the denominator of the electronic 

prescribing measure: 90801, 90802, 90804, 90805, 90806, 90807, 90808, 90809, 90862, 

92002, 92004, 92012, 92014, 96150, 96151, 96152, 99201, 99202, 99203, 99204, 99205, 
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 reporting periods during CYs 2012 and 2013, we 

propose to retain these CPT and HCPCS codes in the denominator of the electronic 

prescribing measure because we believe that these codes represent the types of services 

for which prescriptions are likely to be generated. Therefore, if we were to measure an 

eligible professional's performance on the electronic prescribing measure, we would want 

to do so only for patients who saw the professional for such services. 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 electronic 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 numerator consists of a single 

code, G8553, which indicates that at least 1 prescription created 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 participating in the eRx GPRO can report the code 
CMS-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 and comment rulemaking prior to posting the 

final measure specifications for that year. We invite public comment on the proposed 

numerator for the electronic prescribing measure for CYs 2012 through 2013. 

e. Required Functionalities and Part D Electronic Prescribing Standards 

 

 As previously stated, to report the electronic 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 payment 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 prescribing system, which we further propose to define as either a 

system with functionalities identified in the electronic prescribing measure specifications, 

or Certified EHR Technology as defined at 42 CFR 495.4 and 45 CFR 170.102. This 
CMS-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 eligible professionals who are 

interested in participating in the eRx Incentive Program but currently do not have an 

electronic prescribing system or Certified EHR Technology. The electronic prescribing 

measure does not require the use of any particular system or transmission network; only 

that the system be a "qualified" system. 

If the professional does not have general access to an electronic prescribing 

system or Certified EHR Technology in the practice setting, the eligible professional 

would not be able to report the electronic prescribing measure. In addition to not being 

eligible for an incentive payment, an eligible professional who does not report the 

electronic prescribing measure for 2012 or 2013 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 electronic prescribing quality measure. 

(1) "Qualified" Electronic Prescribing System 

We propose to retain what constitutes a "qualified" electronic prescribing system 

as a system based upon certain required functionalities that the system can perform. We 

propose to retain the same functionalities that were required in 2010 and 2011. 

Therefore, for 2012 through 2014, we propose that a "qualified" electronic prescribing 

system is one that can do the following: 

● Generate a complete active medication list incorporating 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 possible undesirable or unsafe situations including potentially 

inappropriate dose or route of administration of a drug, drug-drug interactions, allergy 

concerns, or warnings and cautions). This functionality must be enabled. 

● Provide information related to lower cost, therapeutically appropriate 

alternatives (if any). The ability of an electronic prescribing system to receive tiered 

formulary information, if available, would again suffice for this requirement for reporting 

the electronic prescribing measure during the reporting periods occurring in CYs 2012 

and 2013 until this function is more widely available in the marketplace. 

● Provide information on formulary or tiered formulary medications, patient 

eligibility, and authorization requirements received electronically from the patient's drug 

plan (if available). 

 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 prescribing 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 and 45 CFR 170.102 because we believe the 

technological requirements for eRx in the EHR Incentive Program are similar to the 

technological requirements for the eRx Incentive 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 technologies for purposes of meeting the 
CMS-1524-P 410 

requirements for each program. This proposal 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 eligible professional is a successful electronic prescriber, "the 

Secretary shall ensure that eligible professionals utilize electronic prescribing systems in 

compliance with standards established for such systems pursuant to the Part D Electronic 

Prescribing Program under section 1860D-4(e) of the Act". The Part D standards for 

electronic prescribing systems establish which electronic standards Part D sponsors, 

providers, and dispensers must use when they electronically transmit prescriptions and 

certain prescription related information for Part D covered drugs that are prescribed for 

Part D eligible individuals. 

To be a qualified electronic prescribing system under the eRx Incentive Program, 

electronic systems must convey the information listed previously using the standards 

currently in effect for the Part D electronic prescribing program. Additional Part D 

electronic prescribing standards 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 electronic prescribing standards, and those that 

had previously been adopted, can be found on the CMS Web site at 

http://www.cms.gov/eprescribing. 

To ensure that eligible professionals utilize electronic prescribing systems that 

meet these requirements, the electronic prescribing measure requires that those 
CMS-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 standards consistent with current, CMS Part D 

electronic prescribing standards. The Part D electronic prescribing standards relevant to 

the four functionalities described previously are as follows: 

● Generate medication list – Use the National Council for Prescription Drug 

Programs (NCPDP) Prescriber/Pharmacist Interface SCRIPT Standard, Implementation 

Guide, Version 8 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 alternatives – Use the NCPDP Formulary 

and Benefits Standard, Implementation Guide, Version 1, Release 0 (Version 1.0), 

October 2005 (hereinafter "NCPDP Formulary and Benefits 1.0"). 

● Provide information on formulary or tiered formulary medications, patient 

eligibility, and authorization requirements received electronically from the patient's drug 

plan use: 

 ++ NCPDP Formulary and Benefits 1.0 for communicating formulary and 

benefits information between prescribers and plans. 

 ++ Accredited Standards Committee (ASC) X12N 270/271-Health Care 

Eligibility Benefit Inquiry and Response, Version 4010 , May 2000, Washington 
CMS-1524-P 412 

Publishing Company, 004010X092 and Addenda to Health Care Eligibility Benefit 

Inquiry and Response, Version 4010A1, October 2002, Washington Publishing 

Company, 004010X092A1 for communicating eligibility information between the plan 

and prescribers. 

 ++ NCPDP Telecommunication Standard Specification, Version 5, Release 1 

(Version 5.1), September 1999, and equivalent NCPDP Batch Standard Batch 

Implementation Guide, Version 1, Release 1 (Version 1.1), January 2000 for 

communicating eligibility information between the plan and dispensers. 

However, there are Part D electronic prescribing standards that are in effect for 

functionalities that are not commonly utilized at this time. One example is Rx Fill 

Notification, which is discussed in the Part D electronic prescribing final rule 

(73 FR 18926). For purposes of the eRx Incentive Program for CYs 2012 through 2014, 

we again are not requiring that an electronic prescribing system contain all functionalities 

for which there are available Part D electronic prescribing standards since many of these 

functionalities are not commonly available. For those required functionalities previously 

described, we propose that a "qualified" system must use the adopted Part D electronic 

prescribing standards listed previously for electronic messaging only. 

There are other aspects of the functionalities for a "qualified" system that are not 

dependent on electronic messaging and are part of the software of the electronic 

prescribing system, for which Part D standards for electronic prescribing do not pertain 

and are not required for purposes of the eRx Incentive Program. For example, the 

requirements in the second functionality that require the system to allow professionals to 
CMS-1524-P 413 

select medications, print prescriptions, and conduct alerts are functions included in the 

particular software, for which Part D standards for electronic messaging do not apply. 

 As stated previously, we are proposing to expand the definition of what 

constitutes a "qualified" electronic 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-related information in accordance with certain 

standards, some of which have been adopted for purposes of electronic 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 formulary or a preferred drug list, although the 

certification criteria do not specify any standards for the performance of those functions. 

We believe that it is acceptable that not all of the Part D eRx standards are required for 

Certified EHR Technology in light of our desire to better align the requirements of the 

eRx and the Medicare EHR Incentive Program and potentially reduce unnecessary 

investment in multiple technologies for purposes of meeting the requirements for each 

program. Furthermore, to the extent that an eligible professional uses Certified EHR 

Technology to electronically prescribe under Part D, he or she would still be required to 

comply with the 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 the criteria for being a successful electronic 
CMS-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 the 2012 payment adjustment 

(75 FR 73563). 

For reporting periods that occur during CY 2012 and 2013, to provide eligible 

professionals and groups practices with multiple mechanisms to report on the electronic 

prescribing measure for purposes of reporting the electronic prescribing measure for the 

2012 and 2013 incentive payments and 2013 and 2014 payment adjustments, we propose 

the following three reporting mechanisms – claims, 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. Therefore, we are proposing that an eligible 

professional or eRx GPRO would need to meet the relevant reporting criteria for the 

incentive or payment adjustment using a single reporting mechanism. 

For reporting periods that occur during CYs 2012 and 2013, we also 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 report 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 reporting 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 the 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 has been used since the implementation of the 

eRx Incentive Program in 2009 for all remaining incentive and payment adjustment 

years. We are not proposing any prerequisites, such as registration, to begin reporting on 

the electronic prescribing measure via claims. Retaining the claims-based mechanism 

allows eligible professionals and group practices to begin to report 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 eRx system) as eligible 

professionals already report PFS charges via claims. 

If an eligible professional or group practice chooses the claims-based reporting 

mechanism, we propose that the eligible professional or group practice must directly 

submit data on the electronic prescribing measure. 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 reporting period, we propose that all claims 

for services must be processed by us no later than two months after the respective 

reporting period, for the claim to be included in our data analysis. (For example, for an 

eligible professional using the 12-month, 2014 payment adjustment reporting period, all 

claims for services between January 1, 2012 and December 31, 2012 must be processed 
CMS-1524-P 416 

no later than February 28, 2013 to be included in our data analysis.) For eligible 

professionals and group practices using the proposed claims-based reporting mechanism 

for purposes of reporting the electronic prescribing measure during a 6-month payment 

adjustment reporting period, we propose that all claims for services must be processed by 

us by no later than one month after the respective reporting period, for the claim to be 

included in our data analysis (for example, for an eligible professional using the 6-month, 

2013 payment adjustment reporting period, all claims for services between 

January 1, 2012 and June 30, 2012 must be processed no later than July 31, 2012, for the 

claims to be included in our data analysis.) We believe that these proposed reporting 

periods will allow sufficient time for eligible professionals to report the electronic 

prescribing measure, allow us to collect and analyze the data submitted by eligible 

professionals, and avoid retroactive adjustments of payments. We invite public comment 

on our proposal to retain claims-based reporting as a reporting mechanism for the eRx 

Incentive Program. 

(2) Registry-Based Reporting 

In addition, for purposes of reporting for 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 registry-based reporting 

mechanism introduced under the 2010 eRx Incentive Program. Retaining the 

registry-based reporting option provides eligible professionals and group practices with 

another alternative to reporting. In addition, unlike claims-based reporting, although 
CMS-1524-P 417 

there may be a cost associated with submitting data to a registry, reporting of the 

electronic prescribing measure to CMS is done entirely by the registry. 

We note that there may be a cost associated with submitting data to a registry. As 

in prior program years, we propose that only registries qualified to submit quality 

measure results and numerator and denominator data on quality measures on behalf of 

eligible professionals for the Physician Quality Reporting System for the applicable 

calendar year would be qualified to submit measure results and numerator and 

denominator data on the electronic prescribing measure on behalf of eligible 

professionals for the eRx Incentive Program. 

Some registries that self-nominate to become a qualified registry for the Physician 

Quality Reporting System may not choose to self-nominate to become a qualified registry 

for purposes for the eRx Incentive Program. Registries need to indicate their desire to 

qualify to submit measure results and numerator and denominator data on the electronic 

prescribing measure for reporting periods that occur during CYs 2012 and 2013 at the 

time that they submit their self-nomination letter for the 2012 and 2013 Physician Quality 

Reporting System respectively. The self-nomination process and requirements for 

registries for the Physician Quality Reporting System, which also will apply to the 

registries for the eRx Incentive Program, are discussed in the Physician Quality 

Reporting System section IV.F.1.(d).(2). of this proposed rule. We would post a final list 

of qualified registries for the eRx Incentive Program for CYs 2012 and 2013 on the eRx 

Incentive Program section of the CMS Web site at http://www.cms.gov/ERXIncentive

when we post the final list of qualified registries for the Physician Quality Reporting 
CMS-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 reporting period for purposes of the 2012 and 

2013 incentive and 6 and 12-month reporting periods for purposes of the 2013 and 2014 

payment adjustments (as described in the section previously), we further 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 respective 6-month payment adjustment reporting 

period (between July 1, 2012 and August 19, 2012, for purposes of the 2013 eRx 

payment adjustment, and between July 1, 2013 and August 19, 2013, for purposes of the 

2014 eRx payment adjustment); AND 

● Following the end of the 12-month reporting period for the 2012 and 2013 

incentives and 2014 payment adjustment. 

We 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 eligible professionals and 

group practices who choose to participate in the Physician Quality Reporting System via 

EHR as well as eligible professionals who participate in the Medicaid or Medicare EHR 
CMS-1524-P 419 

Incentive Program to use the same reporting mechanism for reporting 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 described 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 prescribing measure for 

the 2012 and 2013 incentives and 2013 and 2014 payment adjustments. The 

self-nomination process and requirements for direct EHR products and EHR data 

submission vendors for the Physician Quality Reporting System as discussed previously 

in section IV.F.1.d.(3). of this proposed rule 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 Program. 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 professional potentially 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 that is approved) for the eRx Incentive 
CMS-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 periods with respect to the 2013 and 2014 

payment adjustments (described in section (c)(2) previously), we further propose that 

eligible professionals using 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 reporting 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 respective 6-month payment adjustment reporting 

period (between July 1, 2012 and August 19, 2012, for purposes of the 2013 eRx 

payment adjustment, and between July 1, 2013 and August 19, 2013, for purposes of the 

2014 eRx payment adjustment); AND 

● Following the end of the 12-month reporting period for the 2012 and 2013 

incentives and 2014 payment adjustment. 

We invite public comment on our proposals 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 incentive payment (subject to paragraph 

(c)(3) of this section), an individual eligible professional, as identified by a 

unique TIN/NPI combination, must meet the criteria for being a

successful electronic prescriber under section 1848(m)(3)(B) of the Act 

and as specified by CMS during the reporting period specified in 

paragraph (d)(1) of this section and using one of the reporting mechanisms 

specified in paragraph (d)(2) of this section. Although an eligible 

professional may attempt to qualify for the electronic prescribing incentive 

payment using more than one reporting mechanism (as specified in 

paragraph (d)(2) of this section), the eligible professional will receive only 

one electronic prescribing incentive payment per TIN/NPI combination for 

a program year. 

 We believe this change provides more clarity to the provision. 

(1) Applicability of 2012 and 2013 eRx Incentives for Eligible Professionals and eRx 

GPROs 

Section 1848(m)(2)(B) of the Act imposes a limitation on the eRx incentive 

payment. The Secretary is authorized to choose 1 of 2 possible criteria for determining 

whether or not the limitation applies to a successful electronic prescriber: 

● Whether Medicare Part B allowed charges for covered professional services to 

which the electronic prescribing quality measure applies are less than 10 percent of the 

total Medicare Part B PFS allowed charges for all covered professional services furnished 

by the eligible professional during the reporting period; OR 

● The second criterion, under section 1848(m)(3)(B)(iii) of the Act, is based on 

whether the eligible professional submits (both electronically and non-electronically) a 

sufficient number (as determined by the Secretary) of prescriptions under Part D (which 

can, again, be assessed using Part D drug claims data). If the Secretary decides to use 

this criterion, the criterion based on the reporting on electronic prescribing measures 

would no longer apply. 
CMS-1524-P 422 

Based on our proposal to make the determination of whether an eligible 

professional or group practice is a "successful electronic prescriber" based on submission 

of the electronic prescribing measure (the first criterion), we propose to apply the 

criterion under section 1848(m)(2)(B)(i) of the Act for the limitation for both the 2012 

and 2013 incentives. Specifically, a successful electronic 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 professional or group practice 

during the reporting period. 

For purposes of the 2012 and 2013 incentives, this analysis would be performed 

during the first quarters of 2013 and 2014 respectively by dividing the eligible 

professional's or group practice's (for those group practices participation in the eRx 

GPRO for that year) total 2012 and 2013 respective Medicare Part B PFS allowed 

charges for all such covered professional services submitted for the measure's 

denominator codes by the eligible professional's or group practices' total Medicare Part B 

PFS allowed charges for all covered professional services. If the result is 10 percent or 

more, then the statutory limitation would not apply and a successful electronic prescriber 

would qualify to earn the electronic prescribing incentive payment. If the result is less 

than 10 percent, then the statutory limitation would apply and the eligible professional or 

group practice would not earn an electronic prescribing incentive payment even if he or 

she meets the reporting criteria for being a successful electronic prescriber. Although an 

individual eligible professional or group practice may decide to conduct his or her own 
CMS-1524-P 423 

assessment of how likely this statutory limitation is expected to apply to him or her 

before deciding whether or not to report the electronic prescribing measure, an individual 

eligible professional or group practice may report the electronic prescribing measure 

without regard to the statutory limitation for the incentive payment. We invite public 

comment on our proposed use of the 10 percent 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 1848(m)(3)(D) of the Act authorizes the 

Secretary to revise the criteria for submitting data on the electronic prescribing measure 

under section 1848(m)(3)(B)(ii) of the Act, which requires the measure to be reported in 

at least 50 percent of the cases in which the measure is reportable. For 2010 and 2011, 

we revised that criterion, such that an eligible professional is a successful electronic 

prescriber by reporting the electronic prescribing quality measure for a minimum of 25 

unique visits per year of applicable 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 based on a count of the 

number of times (minimum threshold of 25) an eligible professional reports that at least 

one prescription created during the denominator-eligible encounter is generated using a 

qualified electronic prescribing system, which would include Certified EHR Technology 

(that is, reports the G8553 code when the eligible professional bills for one of the services 

included in the measure's denominator). We believe this criterion adequately addresses 
CMS-1524-P 424 

the goal of the eRx Incentive Program, specifically to promote the use of electronic 

prescribing systems. We invite public comment on the proposed criteria for successful 

electronic prescriber with regard to reporting the electronic 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 "successful electronic 

prescriber." 

For a group practice to be a successful electronic 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 for a minimum of 75 to2,500 unique visits per 

year of applicable cases in the electronic prescribing measure's denominator. 

Specifically, 2011 eRx GPRO comprised of 26 to 50 eligible professionals are required to 

report the electronic prescribing measure for at least 475 unique visits. 2011 group 

practices comprised of 51 to 100 eligible professionals are required to report the 

electronic prescribing measure for at least 925 unique visits, and 2011 group practices 

comprised of 101 to 199 eligible professionals are required to report the electronic 

prescribing measure for at least 1,875 unique visits. 

Because we seek to simplify the reporting 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 practice using the eRx GPRO to be a successful 
CMS-1524-P 425 

prescriber, a group practice using the eRx GPRO must report the electronic prescribing 

measure's numerator for at least 625 unique visits (for group practices comprised of 

25-99 eligible professionals) or 2,500 unique visits (for group practices comprised of 100 

or more eligible professionals). To obtain these reporting criteria, we multiplied the 

smallest group practice size for each respective threshold (that is, 25 for the first 

threshold and 100 for the second threshold) by the number of unique visits (25) an 

individual eligible professional must report on the electronic prescribing measure in order 

to qualify for an incentive payment. Although this may be a higher reporting threshold 

for group practices using the eRx GPRO comprised of 25-50 eligible professionals and 

group practices using the eRx GPRO comprised of 101-199 eligible professionals than in 

2011, we believe it is still quite feasible for these group practices to meet the respective 

reporting threshold as this would be the reporting threshold should the members of the 

group practice choose to participate in the eRx Incentive Program as individual eligible 

professionals. 

We invite public comment on the proposed criteria for determining successful 

electronic prescribers for eRx GPROs reporting for purposes of earning the 2012 and 

2013 incentives. 

(4) No Double Payments 

We are prohibited from making double payments under section 

1848(m)(3)(C)(iii) of the Act, which requires that payments to a group practice shall be 

in lieu of the payments that would otherwise be made under the eRx Incentive Program to 

eligible professionals in the group practice for being a successful electronic prescriber. 

Accordingly, consistent with 2010 and 2011, we propose to make incentive payments to 
CMS-1524-P 426 

group practices based on the determination that the eRx GPRO, as a whole, is a 

successful electronic prescriber for the respective program year. An individual eligible 

professional who is affiliated with a group practice participating in the eRx GPRO 

reporting option that meets the requirements of being a successful electronic prescriber 

under a group practice would not be eligible to earn a separate eRx incentive payment on 

the basis of the individual eligible professional meeting the criteria for successful 

electronic reporter at the individual level. We 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 technical 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 reporting period for the year, the PFS amount for 

covered professional services furnished by such professionals during the year shall be 

less than the PFS amount that would otherwise apply by – 

● 1.0 percent for 2012; 

● 1.5 percent for 2013; and 

● 2.0 percent for 2014. 

 We propose to modify 42 CFR 414.92 to provide further explanation of the 

requirements for individual eligible professionals and group practices for the 2013 and 

2014 payment adjustment, 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 should be broadly available to encourage 

the widest possible adoption of electronic prescribing, even for low volume prescribers, 

we believe that a payment adjustment should be applied primarily to assure that those 

who have a large volume of prescribing do so electronically, without penalizing those for 

whom the adoption and use of an electronic prescribing system may be impractical given 

the low volume of prescribing. We propose that the 2013 and 2014 payment adjustments 

would not apply if: 

● An eligible professional is not an MD, DO, podiatrist, nurse practitioner, or 

physician assistant as of June 30, 2012, for purposes of the 2013 payment adjustment and 

June 30, 2013, for purposes of the 2014 payment adjustment. Since these eligible 

professionals do not generally prescribe, we have excluded these eligible professionals 

from the eRx Incentive Program. 

 For purposes of determining whether an eligible professional is an MD, DO, 

podiatrist, nurse practitioner, or physician assistant we would use National Plan and 

Provider Enumeration System (NPPES) data. It is an eligible professional's 

responsibility to ensure that his or her primary taxonomy code in NPPES is accurate. 

However, in 2011, we also established a G-code, (G8644) that eligible professionals can 

use to report to us that they do not have prescribing privileges. We 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 with dates of services during the 6-month 
CMS-1524-P 428 

reporting period (January 1, 2012 and June 30, 2012). For purposes of the 2014 payment 

adjustment, we propose that eligible professionals who report this G-code must do so on 

a claim with dates of services during the 6-month reporting period (January 1, 2013 and 

June 30, 2013) so that we are able to distinguish whether a professional is reporting this 

G-code for the 2013 payment adjustment or the 2014 payment adjustment. 

● The eligible professional's Medicare Part B allowed charges for covered 

professional services to which the electronic prescribing quality measure applies are less 

than 10 percent of the total Medicare Part B PFS allowed charges for all covered 

professional services furnished by the eligible professional during the respective payment 

adjustment reporting period. This is a required limitation under section 1848(m)(2)(B) of 

the Act. This calculation will be performed by dividing the eligible professional's total 

2011 Medicare Part B PFS allowed charges for all such covered professional services 

submitted for the measure's denominator codes by the eligible professional's total 

Medicare Part B PFS allowed charges for all covered professional services (as assessed at 

the TIN/NPI level). If the result is 10 percent or more, then the statutory limitation will 

not apply. If the result is less than 10 percent, then the statutory limitation will apply. 

For the 12-month incentive and payment adjustment reporting periods, this calculation is 

expected to take place in the first quarter of the year following the reporting period (for 

example, in the first quarter of 2013 for the 12-month reporting period for the 2012 

incentive). For the 6-month payment adjustment reporting period, this calculation is 

expected to take place within the calendar year for 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 purposes of the 2014 payment adjustment. If 

an eligible professional has less than 100 denominator-eligible 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 covered 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 successful electronic prescriber. However, 

section 1848(m)(3)(D) of the Act authorizes the Secretary to revise the criteria for 

submitting data on the electronic prescribing quality measure. In the 2011 PFS Final 

Rule with comment period, we established the same reporting criteria for being a 

successful electronic prescriber for purposes of the 2011 incentive and the 2013 payment 

adjustment, based on a 12-month reporting period in 2011 (75 FR 73565). In order to 
CMS-1524-P 430 

create another opportunity for an eligible professional to become a successful electronic 

prescriber for purposes of the 2013 payment adjustment, we propose the following 

criteria, based on the proposed 6-month reporting period, for being a successful electronic 

prescriber: An eligible professional will be deemed a successful electronic prescriber if 

he/she reports the electronic prescribing measure's numerator, that is, at least 1 

prescription for Medicare Part B PFS patients created during an encounter was generated 

and transmitted electronically using a qualified electronic prescribing system at least 10 

times during the 6-month payment adjustment reporting period (that is, January 1, 2012 

through June 30, 2012). Unlike the reporting criteria for the incentive payments where 

the numerator must be reported in connection with a denominator-eligible visit, for 

purposes of the 2013 and 2014 payment adjustments, we propose an eligible professional 

would be able to report the measure's numerator for any Medicare Part B PFS service 

provided during the reporting period, regardless of whether the code for such service 

appears in the denominator, because we recognize that eligible professionals may 

generate prescriptions during encounters that are not necessarily included in the 

measure's denominator. 

 For purposes of avoiding the 2014 payment adjustment, we also seek to provide 

more than one opportunity for eligible professionals to avoid the 2014 payment 

adjustment by becoming a successful electronic prescriber. Therefore, consistent with 

the finalized and proposed criteria for successful electronic prescribing for purposes of 

the 2013 payment adjustment, we propose that an eligible professional the following 

criteria for an eligible professional to be a successful electronic prescriber for purposes of 

the 2014 payment adjustment: (1) An eligible professional meets the criteria for the 2013 
CMS-1524-P 431 

incentive, that is, reports that at least one prescription for Medicare Part B PFS patients 

created during an encounter was generated and transmitted electronically using a 

qualified electronic prescribing system at least 25 times during the 12-month payment 

adjustment reporting period (that is, January 1, 2012 through December 31, 2012) or (2) 

An eligible professional reports the electronic prescribing measure's numerator (that is, 

that at least 1 prescription for 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 PRESCRIBER 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 reporting 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 electronic 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 the 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 for becoming a successful electronic prescriber for 

the 2013 and 2014 payment adjustments for individual eligible professionals. 

(3) Proposed Requirements for the 2013 and 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 electronic 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 practice 
CMS-1524-P 433 

reports the electronic prescribing measure's numerator (that is, that at least 1 prescription 

for Medicare Part B PFS patients created during an encounter was generated and 

transmitted electronically using a qualified electronic prescribing system) at least 625 

times (for group practices comprised of 25 to 99 eligible professionals) or 2,500 times 

(for group practices comprised of 100+ eligible professionals). 

Similarly, for the 2014 payment adjustment, we 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 criteria for being a successful electronic 

prescriber for purposes of the 2012 incentive payment. In other words, the group practice 

would need to report the electronic prescribing measure's numerator for at least 625 (for 

group practices comprised of 25 to 99 eligible professionals) or 2,500 (for group practices 

comprised of 100 or more eligible professionals) times for encounters associated with at 

least 1 of the denominator codes that 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 reporting period (January 1, 2013 through June 

30, 2013), a group practice reports the electronic prescribing measure's numerator (that is, 

that at least 1 prescription for Medicare Part B PFS patients created during an encounter 

was generated and transmitted electronically using a qualified electronic prescribing 

system at least 625 times (for group practices with 25 to 99 eligible professionals) or 

2,500 times (for group practices with 100+ eligible professionals)). 

In addition, in accordance with the limitation under section 1848(m)(2)(B)(i) of 

the Act, the 2013 or 2014 payment adjustment would not apply to a group practice in 
CMS-1524-P 434 

which less than 10 percent of the group practice's estimated total allowed charges for the 

respective 6-month or 12-month payment adjustment reporting period are comprised of 

services which appear in the denominator of the 2012 or 2013 electronic prescribing 

measure. To be consistent with how this limitation is applied to group practices for 

purposes of the incentive, we propose to determine whether this limitation applies to a 

group practice for the payment adjustment at the TIN level. Tables 59 and 60 reflect the 

proposed criteria for being a successful electronic prescriber for a group practice for 

purposes of the 2013 and 2014 payment adjustments, respectively. 

TABLE 59. PROPOSED CRITERIA FOR BEING A SUCCESSFUL 

ELECTRONIC PRESCRIBER 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 times 

 
CMS-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 provides that the Secretary may, on a 

case-by-case basis, exempt an eligible professional from the application of the payment 

adjustment, if the Secretary determines, subject to annual renewal, that compliance with 

the requirement for being a successful electronic prescriber would result in a significant 

hardship. 

(A) 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 eligible professional or 

eRx GPRO can request consideration for a significant hardship exemption for the 2012 

eRx payment adjustment: 

• The eligible professional or eRx GPRO practices in a rural area with limited 

high speed internet access. 

• The eligible professional or eRx GPRO practices in an area with limited 

available pharmacies for electronic prescribing. 

 For the 2013 and 2014 payment adjustments, 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. Alternatively, 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 the 
CMS-1524-P 436 

2013 and 2014 payment adjustment by reporting the appropriate G-code at least once on 

claims for services rendered during the respective 2013 and 2014 6-month reporting 

periods. 

 Since publication of the CY 2011 PFS Final 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 privileges but do not prescribe under their NPI, 

eligible professionals who prescribe a high volume of narcotics, and eligible 

professionals who electronically prescribe but typically do not do so for any of the 

services included in the electronic prescribing measure's denominator), while others 

strongly suggested we consider increasing the number of specific hardship exemption 

categories. We believe that many of the circumstances raised by stakeholders may pose a 

significant hardship and limit eligible professionals and group practices in their ability to 

meet the requirements for being successful electronic prescribers either because of the 

nature of their practice or because of the limitations of the electronic prescribing measure 

itself, and as a result, such professionals might be unfairly penalized. Therefore, in 2011, 

in the proposed rule entitled "Proposed Changes to the Electronic Prescribing (eRx) 

Incentive" (76 FR 31547), we proposed to expand the categories under the significant 

hardship exemption for the 2012 payment adjustment. Because we believe the reasons 

for proposing the expanded categories under the significant hardship exemption for the 

2012 payment adjustment also apply to the 2013 and 2014 payment adjustments, we 
CMS-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 prescribe fewer than 100 prescriptions during a 

6-month, payment adjustment reporting period 

(i) Inability to Electronically Prescribe due to Local, State, or Federal Law or Regulation 

We 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 prescribing (for example, eligible professionals 

who prescribe a large volume of narcotics, which may not be electronically prescribed in 

some states, or eligible professionals who practice in a State that prohibits or limits the 

transmission of electronic prescriptions via a third party network such as Surescripts), the 

eligible professional or group practice would be able to request consideration for an 

exemption from application of the 2013 and/or 2014 payment adjustments, which would 

be reviewed on a case-by-case basis. We believe eligible professionals in this situation 

face a significant hardship with regard to the requirements for being successful electronic 

prescribers because while they may meet the 10 percent threshold for applicability of the 

payment adjustment, or the 100 denominator-eligible cases limit in a 6-month payment 

adjustment reporting period, they may not have sufficient opportunities to meet the 

requirements for being a successful electronic prescriber because Federal, State, or local 

law or regulation may limit the number of opportunities that an eligible professional or 

group practice has to electronically 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 professional who has prescribing privileges but 

prescribes fewer than 100 prescriptions during a 6-month, payment adjustment reporting 

period (for example, a nurse practitioner who may not write prescriptions under his or 

her own NPI, a physician who decides to let his Drug Enforcement Administration 

registration expire during the reporting period without renewing it, or an eligible 

professional who prescribed fewer than 100 prescriptions between January 1, 2012 and 

June 30, 2012 regardless of whether the prescriptions were electronically prescribed or 

not), yet still meets the 10 percent threshold for applicability of the payment adjustment, 

would be able to request consideration for a significant hardship exemption from 

application of the 2013 and/or 2014 payment adjustment, which would be reviewed on a 

case-by-case basis. We believe that it is a significant hardship for eligible professionals 

who have prescribing privileges, but infrequently prescribe, to become successful 

electronic prescribers because the nature of their practice may limit the number of 

opportunities an eligible professional or group practice to prescribe, much less 

electronically prescribe. 

 We invite public comments on our proposal to modify 42 CFR 414.92 to include 

our proposed significant hardship exemption categories for the 2013 and 2014 payment 

adjustments. 

As we realize that the 4 significant hardship exemptions we have proposed above 

may not capture every circumstance that could constitute a significant hardship, we invite 
CMS-1524-P 439 

public comment on other suggestions for significant hardship exemption categories that 

we may want to consider. 

(B) Process for Submitting Significant Hardship Exemptions – Individual Eligible 

Professionals and Group Practices 

To request a significant hardship exemption for any of the categories proposed 

and previously described, we are proposing that an eligible professional provide to us by 

the end of the 2013 and/or 2014 payment adjustment reporting periods (that is June 30, 

2012 for the 2013 payment adjustment and June 30, 2013 for the 2014 payment 

adjustment), the following: 

● The name of the practice and other Identifying information (for example: TIN, 

NPI, mailing address, and e-mail address of all affected eligible professionals. 

● The proposed significant hardship exemption category(ies) that apply. 

● A justification statement describing how compliance with the requirement for 

being a successful electronic prescriber for the respective 2013 and/or 2014 payment 

adjustment during the reporting period would result in a significant hardship to the 

eligible professional. 

● An attestation of the accuracy of the information provided. 

The justification statement should be specific to the category under which the 

eligible professional or group practice is submitting its request and must explain how the 

exemption applies to the professional. For example, if the eligible professional is 

requesting a significant hardship exemption due to Federal, State, or local law or 

regulation, he or she must cite the applicable law and how the law restricts the eligible 

professional's ability to electronically prescribe. CMS will review the information 
CMS-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 practice must, upon request, provide 

additional supporting documentation if there is insufficient information (such as, but not 

limited to, a TIN or NPI that we cannot match to the Medicare claims, a certification 

number for the Certified EHR Technology that does not appear on the list of Certified 

EHR Technology, or an incomplete justification for the significant hardship exemption 

request) to justify the request or make the determination of whether a significant hardship 

exists. 

 We also are proposing that eligible professionals or group practices would be able 

to submit significant hardship exemption requests 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 practices 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 eligible 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 reporting 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 and made a decision, we would notify the 

eligible professional or group practice of our decision and all such decisions would be 
CMS-1524-P 441 

final. Eligible professionals or group practices would not have the opportunity to request 

reconsiderations of their requests for significant hardship exemption. We invite public 

comment on the proposed process for individual eligible professionals and group 

practices for submitting these requests for significant hardship exemptions to us 

(including comments on the type of information we are proposing eligible 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 enrolled in the Medicare program under section 

1866(j) of the Act as well information on other eligible professionals who participate in 

the Physician Quality Reporting System under section 1848 of the Act (42 U.S.C. 

1395w–4). Public reporting of performance results on standardized quality measures 

currently exists on http://www.medicare.gov for the following: 

● Hospitals (Hospital Compare). 

● Dialysis facilities (Dialysis Facility Compare). 

● Nursing homes (Nursing Home Compare). 

● Home health facilities (Home Health Compare). 

 As an initial step towards providing information on the quality of care for services 

furnished by physicians and other professionals to Medicare beneficiaries, we have 

enhanced the existing Physician and Other Health Care Professionals directory at 
CMS-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 Physician Compare Internet website on 

December 30, 2010. This initial phase included the posting of the names of eligible 

professionals that satisfactorily submitted quality data for the 2009 Physician Quality 

Reporting System. 

2. Proposed Plans 

 Section 10331 (a)(2) of the Affordable Care Act also requires that, no later than 

January 1, 2013, and with respect to reporting periods that begin no earlier than 

January 1, 2012, we implement a plan for making information on physician performance 

publicly available through the Physician Compare 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 for public reporting: 

● Measures collected under the Physician Quality Reporting System. 

● An assessment of patient health outcomes and functional status of patients. 

● An assessment of the continuity and coordination of care and care transitions, 

including episodes of care and risk-adjusted resource use. 

● An assessment of efficiency. 

● An assessment of patient experience and patient, caregiver, and family 

engagement. 

● An assessment of the safety, effectiveness, and timeliness of care. 

● Other information as determined appropriate by the Secretary. 

As required under section 10331(b) of the Affordable Care Act, in developing and 
CMS-1524-P 443 

implementing the plan, we must include, to the extent practicable, the following: 

● Processes to ensure that data made public are statistically valid, reliable, and 

accurate, including risk adjustment mechanisms used by the Secretary. 

● Processes for physicians and eligible professionals whose information is being 

publically reported to have a reasonable opportunity, as determined by the Secretary, to 

review their results before posting to Physician Compare. 

● Processes to ensure the data published on Physician Compare provides a robust 

and accurate portrayal of a physician's performance. 

● Data that reflects the care provided to all patients seen by physicians, under 

both the Medicare program and, to the extent applicable, other payers, to the extent such 

information would provide a more accurate portrayal of physician performance. 

● Processes to ensure appropriate attribution of care when multiple and other 

providers are involved in the care of the patient. 

● Processes to ensure timely statistical performance feedback is provided to 

physicians concerning the data published on Physician Compare. 

● Implementation of computer and data infrastructure and systems used to 

support valid, reliable, and accurate reporting activities. 

 Section 10331 (d) of the Affordable Care Act requires us to consider input from 

multi-stakeholder groups in selecting quality measures for Physician Compare. In 

developing the plan for making information on physician performance publicly available 

through the Physician Compare website, section 10331 (e) of the Affordable Care Act 

requires the Secretary, as the Secretary deems appropriate, to consider the plan to 

transition to value-based purchasing for physicians and other practitioners that was 
CMS-1524-P 444 

developed under section 131(d) of the Medicare Improvements for Patients and Providers 

Act of 2008. 

 We are required, under section 10331 (f) of the Affordable Care Act, to submit a 

report to the Congress by January 1, 2015 on the Physician Compare website developed, 

and include information on the efforts and plans to collect and publish data on physician 

quality and efficiency and on patient experience of care in support of value-based 

purchasing and consumer choice. Section 10331(g) of the Affordable Care Act provides 

that any time before that date, we may continue to expand the information made available 

on Physician Compare. 

 We believe section 10331 of the Affordable Care Act supports our overarching 

goals to foster transparency and public reporting by providing consumers with quality of 

care information to make informed decisions about their health care, while encouraging 

clinicians to improve on the quality of care they provide to their patients. In accordance 

with Section 10331 of the Affordable Care Act, we intend to utilize the Physician 

Compare 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 "measure performance" information on Physician 

Compare. By "measure performance," we mean the percent of times that a particular 

clinical quality action was reported as being performed, or a particular outcome was 

attained, for the applicable persons to whom a measure applies as described in the 

denominator for the measure. 

The Physician Quality Reporting System is a readily available source of measures 
CMS-1524-P 445 

performance data. First implemented in 2007, the program grew to include 194 different 

measures in 2011. The measures used in the Physician Quality Reporting System cover a 

wide range of health conditions and topics and include measures applicable to most 

physician specialties and other clinicians. Work is underway to ensure consistency of 

quality measures reported under the Physician Quality Reporting System and the EHR 

Incentive Program. 

 The first phase of the plan to make information on physicians and other eligible 

professionals who participate in the Physician Quality Reporting System publically 

available was completed through the launch of the Physician Compare website and the 

posting of the names of those eligible professionals who satisfactorily participated in the 

Physician Quality Reporting System. 

 During the second phase of the plan, 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 release to incorporate updates and improvements 

to the website. Updates will include the addition of the names of eligible professionals 

who are successful electronic prescribers, as required by section 1848(m)(5)(G) of the 

Social Security Act (the Act), as well as the names of those eligible professionals who 

participate in the EHR Incentive Program, as required by section 1848(o)(3)(D) of the 

Act. Additional enhancements planned include the addition of links to specialty board 

websites that can provide more information on an eligible professional's board 

certification status and improved website functionality and layout. 

 Moving towards the reporting of physician performance information, we propose 
CMS-1524-P 446 

to take an initial step by making public the performance rates of the quality measures that 

group practices submit under the 2012 Physician Quality Reporting System group 

practice reporting option (GPRO)) described in section IV.F.b.2. of this proposed rule. 

We also propose to publicly report the performance rates of the quality measures that the 

group practices participating in the Physician Group Practice demonstration report on the 

Physician Compare Web site as early as 2013 for performance information collected in 

CY 2012. Subject to the discussion later in this section, we would make public the 

measure performance for each of the measures included in the 2012 Physician Quality 

Reporting System GPRO. Since the quality measures in GPRO are reported for the 

group as a whole, the information on measure performance would also apply to the group 

as a whole, rather than to individual physicians within a group. 

Public reporting of the group practices' measure performance results at the group 

practice level would begin public reporting at the earliest time specified by the statute. 

We believe the design of the GPRO (see section IV.F.b.2. of this proposed rule) 

facilitates making public groups' performance results. All groups participating in the 

GPRO would be reporting on the same set of clinical quality measures, which allows for 

comparison of the results across groups. 

To eliminate the risk of calculating performance rates based on a small 

denominator, we propose to set a minimum patient sample size threshold. A minimum 

threshold of 25 patients will have to be met in order for the group practice's measure 

performance rate to be reported on the Physician Compare website. 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 reported. In determining the minimum patient 
CMS-1524-P 447 

sample size, we took into consideration the minimum patient sample size used by other 

Compare websites that publically report measure performance data. We wanted to ensure 

that we used a number large enough to accurately reflect measure performance, but not so 

large that it will limit the number of groups for which measure performance could be 

reported. In taking into consideration the minimum patient sample size used by other 

Compare websites that publically report measure performance data, we also considered a 

minimum patient sample size of 10 patients, 20 patients and 30 patients. As we are 

proposing to report measure performance at a group level and a majority of the other 

Compare websites use minimum sample sizes 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 Physician Quality Reporting System GPRO would 

agree in advance to have their reporting performance results publicly reported as part of 

their self-nomination to participate in the 2012 Physician Quality Reporting System 

GPRO. Finally, we propose to modify the GPRO data collection tool for 2012 to 

calculate the numerator, denominator, and measure performance rate for each measure 

from the data that the group practices use to populate the tool and provide each group 

practice this information at the time of 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 10331(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 measure performance of individual physicians or 

eligible professionals associated with the group. However, we propose to identify the 
CMS-1524-P 448 

individual eligible professionals who were associated with the group during the reporting 

period. We will identify the eligible professionals associated 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 the collection of additional types of measures and public reporting 

of individual physicians' quality measure performance results. Implementation of 

subsequent phases of the plan will need to be developed and addressed in future notice 

and comment rulemaking, as needed. We invite comments regarding our proposal to: (1) 

to publicly report group practices' measure performance results in 2013 based on group 

practices' 2012 Physician Quality Reporting System performance results under GPRO; 

and (2) utilize a minimum patient sample size of 25 for reporting and displaying measure 

performance on the Physician Compare website. 

H. Medicare EHR Incentive Program for Eligible 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 amended 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 successfully adopt, implement, upgrade, or 
CMS-1524-P 449 

demonstrate meaningful use of certified electronic 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 and 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 year and subsequent payment years, they 

will be required to electronically submit CQM results as calculated by certified EHR 

technology. Additionally, we stated that the primary method for 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 accept 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 certified EHR technology will be required to 

calculate the clinical quality measure results and transmit under the Physician Quality 

Reporting Initiative (PQRI) Registry XML specification (75 FR 44435). Since the 
CMS-1524-P 450 

publication of the final rule, we have determined that it is not feasible to receive 

electronically the information necessary for clinical quality measure reporting based 

solely on the use of PQRI 2009 Registry XML Specification content exchange standards 

as is required for certified EHR technology. This is because the specification is tailored 

to the elements required for 2009 PQRI Registry submission, rather than constituting a 

more generic standard. As a result, we propose to modify the requirement that clinical 

quality measure reporting must be done electronically. Specifically, we propose that for 

the 2012 payment year, EPs may continue to report clinical quality measure results as 

calculated by certified EHR technology by attestation, 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 voluntary and would enable EPs to satisfy the 

Medicare EHR Incentive Program requirements 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 for 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 information. 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 case of Medicaid EPs, the States) in 
CMS-1524-P 451 

the form and manner specified by CMS (or in the case of Medicaid EPs, 

the States)." 

2. The Proposed Physician Quality Reporting 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 the CQM reporting requirements of the EHR 

Incentive Program for payment year 2012 by participating in a pilot, which we refer to as 

the Physician Quality Reporting System-Medicare EHR Incentive Pilot. Sections 

1848(o)(2)(B)(ii) of the Act provides authority for the Secretary to accept information on 

CQMs electronically on a pilot basis. We propose that EPs may participate in the pilot 

on a voluntary basis, and that those EPs who choose not to participate may instead 

continue to attest to the results of the CQMs as calculated by certified EHR technology, 

consistent with the CQM reporting method for the 2011 payment year. However, we 

encourage participation in the pilot based on our desire to adequately pilot electronic 

submission of CQMs and to move to a system of reporting where EPs can satisfy the 

CQM reporting requirements for both the Physician Quality Reporting System and the 

EHR Incentive Program. To participate 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 platforms of the Physician Quality Reporting 

System. As described later in this section, one option would be based on the 

infrastructure used for the Physician Quality Reporting System EHR data submission 

vendor reporting mechanism. The second option would be based on the infrastructure 

used for the Physician Quality Reporting System EHR reporting mechanism. EPs who 

seek to participate in the Physician Quality Reporting System-Medicare EHR Incentive 
CMS-1524-P 452 

Pilot must also participate in the Physician 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 the reporting requirements of the Medicare 

EHR Incentive Program, as required by section 1848(m)(7) of the Act ("Integration of 

Physician Quality Reporting and EHR Reporting"), we 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 insofar as the denominator for one or more of 

the core measures is zero, and three additional measures from the measures included in 

Table 6, as is otherwise required by the final rule to successfully demonstrate meaningful 

use (75 FR 44409 through 44411). EPs that elect to participate in this Physician Quality 

Reporting System-Medicare EHR Incentive Pilot 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 the reporting of CQMs is only one of the 15 core meaningful use 

objectives for EPs for the Medicare EHR Incentive Program, an EP who elects to 

participate in the proposed Physician Quality Reporting System-Medicare EHR Incentive 

Pilot would still be required to meet and attest to the remaining 14 core objectives and 

required menu set objectives using the attestation module on the CMS website for the 
CMS-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 Quality Reporting System-Medicare EHR 

Incentive Pilot, we propose EPs would be required to electronically report the CQMs by 

choosing one of the options described later in this section. By submitting the required 

information through the pilot, an EP could meet the core objective for reporting CQMs 

for the Medicare EHR Incentive Program for the 2012 payment year. After attesting to 

all other meaningful use objectives, the EP's attestation file would be placed in a holding 

status, with respect to the CQM objective only, until the EP reports the CQMs via one of 

the 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 respect to the CQM objective until the CQMs are 

received at the end of the submission period for measures for the Physician Quality 

Reporting System (we expect this would be 2 months after the close of the reporting 

period, which is the CY 2012, and no later than February 29, 2013). As explained later in 

this section, any EP participating in this pilot would be required to report CQMs based on 

a full calendar year, regardless of the EP's year of participation in the Medicare EHR 

Incentive Program. 

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 attestation module on the CMS website and complete 

attestation for the CQMs assuming it is within the reporting timeframes established under 
CMS-1524-P 454 

the EHR Incentive Program. We note that EPs who are in their first year 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 Reporting System-EHR Incentive Pilot will allow 

for the receipt of EHR Incentive Program and Physician Quality Reporting System 

incentives, provided an EP meets the provisions described later in this section. 

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, EPs participating in the Physician Quality 

Reporting System may choose to report the Physician Quality Reporting System 

measures to CMS via a Physician Quality Reporting System qualified EHR data 

submission vendor. For purposes of the Physician Quality Reporting System, a Physician 

Quality Reporting System qualified EHR data submission vendor 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 that an EP participating in the Physician 

Quality Reporting System-Medicare EHR Incentive Pilot would submit CQM data from 

his or her certified EHR technology to a Physician Quality Reporting System qualified 

EHR data submission vendor. We expect to post a list of the 2012 Physician Quality 

Reporting System EHR data submission vendors that are qualified to submit data from an 

EP's certified EHR technology to CMS on the EP's behalf on the Physician Quality 

Reporting System section of the CMS 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 previously, in order for an EP to submit CQMs 

electronically through the Physician Quality Reporting System – Medicare EHR 

Incentive Pilot EHR data submission vendor-based reporting option, we propose that 

such EPs must submit information on the same CQMs as required by the July 28, 2010 

final rule, which must be based on data contained 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 required by the pilot even though 

such data would differ from what is required 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 participation). We invite 

comment on the proposed EHR data submission 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, EPs participating in the Physician Quality 

Reporting System via the EHR reporting mechanism 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 propose that an EP participating in the 

Physician Quality Reporting System-Medicare EHR Incentive Pilot would submit CQM 

data directly from his or her certified EHR technology to CMS via a secure portal using 

the infrastructure of the Physician Quality Reporting System EHR reporting mechanism. 

We propose that in order to participate in the Physician Quality Reporting 

System-Medicare EHR Incentive Pilot under this option, the EP's certified EHR 

technology must also be a 2012 Physician Quality Reporting System qualified EHR. We 

expect to post a list of the 2012 Physician Quality Reporting System qualified EHRs on 

the Physician Quality Reporting System section of the CMS website prior to 

January 1, 2012. Due to this proposed Physician Quality Reporting System-Medicare 

EHR Incentive Pilot, we are proposing to have 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 vendors, if applicable, and their products in the summer of 

2012. 

 As discussed previously, in order for an EP to submit CQMs electronically 

through the Physician Quality Reporting System – 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 final rule, which must be based on data 

contained in the EP's certified EHR technology. That is, 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 insofar as the denominator for one or 

more of the core measures is zero, and three additional measures from the measures 

included in Table 6, as is otherwise required by the final rule to successfully demonstrate 
CMS-1524-P 457 

meaningful use. If the EP cannot report three additional measures without zero 

denominators, the EP must report on all applicable 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 option, the data would be different from 

what is required by the July 28, 2010 final rule in that it would be: (1) limited to 

Medicare patients rather than all patients; (2) patient-level data from which we may 

calculate CQM results using a uniform calculation process, rather than aggregate results 

calculated by the EP's certified EHR technology; and (3) based on a CQM reporting 

period of 1 calendar year regardless of the EP's year of participation in the Medicare EHR 

Incentive Program (resulting in a later determination of whether the EP has successfully 

demonstrated meaningful use, for those EPs in their first year of program 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 Physician Quality Reporting System section of this 

proposed rule, we propose if an EP successfully submits all required CQM data from 

certified EHR technology, which also must be a Physician Quality Reporting System 

qualified EHR product, directly to CMS, then the EP would also meet the criteria for 

satisfactory reporting under the 2012 Physician Quality Reporting System, which would 

also qualify the EP under the 2012 Physician Quality Reporting System. 

 The Medicare EHR Incentive Program measures, including the core and alternate 

core measures, and the 38 additional measures, 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 for 
CMS-1524-P 458 

this pilot is not a functionality of certified EHR technology. Rather, for purposes of the 

pilot, the certified EHR technology must conform to the qualifications for an EHR under 

the Physician Quality Reporting System. 

3. Method for EPs to Indicate Election to Participate in the Physician Quality Reporting 

System-Medicare EHR Incentive Pilot for Payment Year 2012 

 EPs electing to participate in the Physician Quality Reporting System-Medicare 

EHR Incentive Pilot would be able to indicate 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 Feedback 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 meaningful information concerning resource use 

and quality regarding their Medicare fee-for-service patients. We view value-based 

purchasing ("VBP") as an important step toward revamping not only how care and 

services are paid for, but also moving increasingly toward rewarding better value, 
CMS-1524-P 459 

outcomes and innovations instead of volume. The approach used this year and that we 

anticipate using in future years for the Physician 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 under the physician fee schedule starting in 

2015. 

In 2011, we will begin to include the quality measures that are reported in the 

Physician Quality Reporting System in the Physician Feedback reports. Aligning 

quality measures reduces potential program inconsistencies, ensures we do not measure 

the same clinical process or outcome using different data sources or methodologies, and 

does not place new reporting burdens on physicians. 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 peers on the same quality measures. 

Under section 1848(p)(4)(B) of the Act, we are required to begin implementing 

the value modifier through the rulemaking process during 2013, so that it is ready for 

application to specific physicians and groups of physicians under the physician fee 

schedule in 2015. We expect the value modifier to evolve after its initial application in 

2015. We anticipate that information we have obtained from the Physician Feedback 

reports, our efforts to learn from and build upon the best transparent practices and 

methodologies developed in the private sector, and our continued and sustained dialogue 

with the physician and patient communities will yield significant improvements to the 

development of the value modifier. We plan to move forward with 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 Providers Act and amended by section 3003(a) 

of the Affordable Care Act, we established and implemented by January 1, 2009, the 

Physician Resource Use Measurement & Reporting 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 beneficiaries. Section 1848(n) of the Act also 

authorized us to include information on the quality of care furnished to Medicare 

beneficiaries by a physician or group of physicians. We have completed two phases of 

Physician Feedback reports and, by the end of 2011, we intend to implement Phase III 

of the Physician Feedback Program, by providing reports on both resource use and 

quality measures that cover a larger number 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 geographic 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 with practicing physicians. 

 In Phase II of the Physician Feedback Program, we expanded on Phase I by 

providing reports that included 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 Medicare Physician Quality 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 information to allow peer group 

comparisons. These measures were calculated using administrative claims data and did 

not require physicians to submit additional quality data. The measures captured several 

chronic conditions that are prevalent in the Medicare population and could be applied to 

all eligible physicians, although 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 beneficiaries with the following five common chronic 

diseases: (1) diabetes; (2) congestive heart failure; (3) coronary artery disease; (4) 

chronic obstructive pulmonary disease; and (5) prostate cancer. This information was 

not limited to the cost of treating the disease itself, but also included total Parts A and B 

per capita cost information, as well as service category breakdowns, for the care 

received by the subset of attributed beneficiaries with that disease. Phase II reports did 

not include episode-specific cost information (as we had included in the Phase I 

reports), because we found that the two commercially available proprietary groupers, 

which were not built for use with Medicare claims 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/GEM 
CMS-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 specialist or surgeon in 

the group billed for Evaluation and Management (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-minimum3

" 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 beneficiary to a group 

practice was based on the group practice that provided the plurality of E/M services and 

a minimum threshold of 30 percent of E/M costs. For both individuals and groups, we 

required at least 30 beneficiaries to be assigned to either the individual or the group 

practice.5 Seventy percent of eligible beneficiaries were attributed to an individual 

physician or group practice. These beneficiaries 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 beneficiary'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 same 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_QRUR_Detailed_Methodology.pdf. 4

 Costs refer to allowed charges for Part A and B services. 

5

 We chose 30 beneficiaries because this threshold is commonly used for attribution purposes. 
CMS-1524-P 463 

Our data analysis showed that the single-provider plurality-minimum rule 

generally assigned Medicare beneficiaries correctly to primary care physicians including 

internists, geriatricians, family practitioners, and general practitioners. However, this 

rule did not work well to attribute beneficiaries with multiple conditions that see a 

variety of physicians, because a single physician was unlikely to have both provided the 

plurality of E/M visits and to have also 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 measures are all clinical process measures, 

measure specifications provided detailed inclusion/exclusion criteria, and it is generally 

accepted that these measures need not be risk adjusted. 

The individual-level reports in both phases of the program 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 being compared. For the 

per capita cost measures, the physician was shown his or her position in a distribution 

that specifically identified the 10th, 50th, and 90th percentiles of performance. 

3. Future Considerations for Phase III Physician Feedback Program 

 

6

 For more information about hierarchal condition categories model, see 

https://www.cms.gov/MedicareAdvtgSpecRateStats/downloads/Evaluation_Risk_Adj_Model_2011.pdf. 
CMS-1524-P 464 

a. Phase III Physician Feedback 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 reports. 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 reports 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 proposing 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 inform 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, because they could be compared on the 
CMS-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 anticipate scheduling outreach and feedback sessions 

following dissemination of these reports to garner physician reaction to the information 

contained in the reports and elicit 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 Medicare providers paid 

under the PFS who treated patients attributed to a participating medical practice group. 

This information will allow each group to compare its per capita Medicare costs to the 

per capita Medicare costs attributed to all 35 medical practice groups that participated in 

the 2010 GPRO-1 cohort. In addition, the report will show each medical group its 

average per capita costs for various types of fee-for-service patient services. The reports 

will also display group-specific data on per capita costs and hospital 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 manner 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, bacterial pneumonia, dehydration, chronic obstructive pulmonary 

disease (COPD), urinary tract infection, and congestive heart failure. The information 

presented will also allow each group to compare its performance to the performance of 
CMS-1524-P 466 

all of the 35 medical practice groups that participated in the 2010 GPRO-1 cohort. 

(2) Reports to Individual Physicians 

Late in 2011, we also intend to disseminate 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 these 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 States who satisfactorily reported data on 

quality measures under the Physician Quality Reporting System will receive a report 

that includes their performance on these quality measures. In addition, individual 

reports will display clinical quality measures that are derived from Medicare claims for 

all physicians in these four States. We used 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 quality measures. Our medical officers and 

internal experts thoroughly reviewed over 70 claims-based National Quality 

Forum-endorsed measures and ultimately recommended 28 claims-based clinical 

measures to include in the 2011 individual physician reports. These measures include 

the 12 HEDIS measures that CMS included in the 2010 reports. Use of these 28 
CMS-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 clinical 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 

Claims
CMS-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 

Claims
CMS-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 

Claims
CMS-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 prostate 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 nephropathy 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 

Claims
CMS-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 

Claims
CMS-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 therapeutic 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 

Claims
CMS-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 and 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 had 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 

Claims
CMS-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 Test

Percentage 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 reported unless the measure is not NQF-endorsed, in which case the 

measure steward is reported. 

The individual reports will not contain the 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 measures 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 capita costs of his/her peers' 

patients, the reports will compare total per capita costs for patients with the following 

chronic conditions: heart failure, chronic pulmonary obstructive disease (COPD), 

diabetes, and coronary artery disease. 

b. Refinement of the Physician Feedback Program in 2011: Individual 

Physicians/Medical Group Practices/Specialties 

As stated in the CY 2011 PFS proposed rule, deciding which physician(s) is/are 

responsible for the care of which beneficiaries is an important 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 within their control. We recognize that 

attribution rules have the potential to alter incentives regarding how physicians 
CMS-1524-P 475 

coordinate and deliver care to beneficiaries and seek to encourage better care 

coordination and accountability for patient outcomes. In addition, determining how to 

make relevant comparisons of physicians to a standard or to their peers is also an 

important policy aspect of the Physician Feedback Program. In light of these issues, we 

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 attribution methods that would allow more 

Medicare beneficiaries to be matched to physicians 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 Physician 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 example, may better apply to physicians who 

commonly furnish surgical procedures or interventions, especially those that are high 

volume and/or high cost. We anticipate combining this effort with work to identify 

quality measures appropriate to the practices of these specialists. We recognize that 

characteristics of physicians and the scope of their medical practices vary far more than 

those of other provider types such as hospitals, home health agencies, and nursing 

homes and, thus, we want to ensure we develop sound attribution rules that recognize 

these variations and are appropriate for physicians. 

We also are planning to investigate stratifying physicians by specialty and by the 

conditions they treat, which would allow both cost and clinical measures to reflect 

procedures and services that best portray physician practice patterns. 

Second, we intend to examine whether to provide reports to groups of physicians 
CMS-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 few of some types of 

patients to allow for accurate reporting of cost measures or certain quality measures. 

We seek comment on these and any other issues to ensure that the future 

Physician Feedback reports provide meaningful and actionable information. 

c. Beyond 2011: Future Scale Up and Dissemination 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 current inventory of quality measures, both claims-based and 

those used in the 2010 GPRO-1 quality measures, best covers primary care practitioners 

including family physicians, general practitioners, internists, geriatricians, and related 

medical non-procedural specialists. As the scope of measures, including outcomes, in 

the Physician Quality Reporting System increases and as more physicians report 

measures, we expect to be able to provide meaningful and actionable quality 

information to an increasing number of physicians. This increased participation will 

increase the breadth of Medicare physicians for whom Physician Feedback reports can 

be created. 

Second, section 1848(n)(9)(A) of the Act, as added by section 3003 of the 

Affordable Care Act, requires the development, by not later than January 1, 2012, of a 

Medicare-specific episode grouper so that physicians can be compared on episode-based 
CMS-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 episode grouper is being developed to determine 

episode-based costs for a subset of selected high cost, high volume conditions for 

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. 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 monitor developments regarding the National 

Quality Forum's project regarding resource use measures. Learning from this project is 

likely to help refine the next steps related to the scale up of the Physician Feedback 

reports. 

Lastly, we will pursue how best to incorporate the production and dissemination 

of the feedback reports into the IT infrastructure of the agency. For example, in this 

year's reports we plan to use the Medicare Administrative Contractor 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 physicians to obtain and review their reports. It 

is critical for us to plan for the very significant, and ongoing, data and dissemination 
CMS-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 added by Section 3007 of the Affordable Care 

Act, requires the Secretary to "establish a payment modifier that provides for differential 

payment to a physician or a group of physicians" under the physician fee schedule 

"based upon the quality of care furnished compared to cost ... during a performance 

period." The provision requires that "such payment modifier be separate from the 

geographic adjustment factors" established for the physician fee schedule. We believe 

that this provision requires the Secretary to establish a differential payment under the 

physician fee schedule to reflect "value," for example, the quality of care compared to 

cost, and that the value modifier is independent from the geographic adjustments applied 

under the fee schedule. 

Section 1848(p)(4)(C) of the Act requires that the value modifier be 

implemented in a budget-neutral manner. Budget neutrality means that payments will 

increase for some physicians but decrease for others, but the aggregate amount of 

Medicare spending in any given year for physicians' services will not change as a result 
CMS-1524-P 479 

of application of the value modifier. Over time, we expect that implementation of the 

value modifier will lead to more efficient use of services. 

 Section 1848(p)(4)(A) and (B) of the Act establish the time frame for 

implementation of the value modifier. Section 1848(p)(4)(B)(iii) of the Act requires the 

Secretary to apply the value modifier beginning January 1, 2015 to specific physicians 

and groups of physicians the Secretary determines appropriate. This section also 

requires the Secretary to apply the value modifier with respect to all physicians and 

groups of physicians beginning not later than January 1, 2017. 

 Section 1848(p)(4) of the Act 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 related to the establishment of the value 

modifier: (a) the quality of care and cost measures established by the Secretary for 

purposes of the modifier; (b) the dates for implementation of the value modifier; and (c) 

the initial performance period for application of value modifier in 2015. 

Section 1848(p)(4)(B) of the Act requires the Secretary to begin implementing 

the value modifier through the physician fee schedule rulemaking process during 2013; 

this rulemaking would apply to value modifier payment adjustments for 2015. Section 

1848(p)(4)(B) of the Act further requires the Secretary, to the extent practicable during 

the initial performance period, 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 and 
CMS-1524-P 480 

services are paid for under the physician fee schedule. Currently, payments under the 

physician fee schedule are generally based on the relative resources involved with 

furnishing each service, and adjusted for differences in resource inputs among 

geographic areas. Thus, all physicians in a geographic area are paid the same amount 

for individual services regardless of the quality of care or outcomes of services they 

furnish. 

Although the fee schedule payments are or will soon be adjusted depending upon 

whether eligible professionals are satisfactory reporters of PQRS quality measures, 

successful electronic prescribers and meaningful users of electronic health records 

(EHRs),7

 these adjustments do not currently take into account performance on these 

quality measures. In addition, the fee schedule does not take into account the overall 

cost of services furnished or ordered by physicians for individual Medicare 

beneficiaries. These limitations mean that the physician fee schedule does not contain 

incentives for physicians to focus on: (1) the relative cost or value of each service they 

furnish or order; (2) the cumulative cost of their own services and the services that their 

beneficiaries receive from other providers; or (3) the quality 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 purchasing 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 3002(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: Reforming the Delivery System, Chapter 1 (June 2008), 

available at: http://www.medpac.gov/documents/Jun08_EntireReport.pdf. 
CMS-1524-P 481 

Affordable Care Act requires us to develop a plan to implement value-based purchasing 

programs for skilled nursing facilities, home health agencies, and ambulatory surgical 

centers. We view the physician value modifier as the companion value-based payment 

mechanism for physicians. 

In implementing value-based purchasing initiatives generally, we seek to meet 

the following goals: 

● Improving quality 

 ++ Value-based payment systems and public reporting should rely on a mix of 

standards, processes, outcomes, and patient experience measures, including measures of 

care transitions and changes in patient functional status. Across all programs, we seek 

to move as quickly as possible to the use of outcome and patient experience measures. 

To the extent practicable and appropriate, we believe these outcome and patient 

experience measures should be adjusted for risk or other appropriate patient population 

or provider characteristics. 

 ++ To the extent possible, and recognizing differences in payment system 

readiness and statutory requirements and authorities, measures should be aligned across 

Medicare and Medicaid's public reporting and payment systems. We seek to evolve a 

focused core set of measures appropriate to each specific provider category that reflects 

the level of care and the most important areas of service and measures for that provider. 

 ++ The collection of information should minimize the burden on providers to 

the extent possible. As part of that effort, we will continuously seek to align our 

measures with the adoption of meaningful use standards for health information 

technology (HIT), so the collection of performance information is part of care delivery. 
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 the cost of care, and be rewarded for 

reducing unnecessary expenditures and be responsible for excess expenditures. 

 ++ In reducing excess expenditures, providers should continually improve the 

quality of care they deliver. 

 ++ To the extent possible, and recognizing differences in payers' value based 

purchasing initiatives, providers should apply cost-reducing and quality-improving 

redesigned care processes to their entire patient population. 

Our experience with providing physicians confidential feedback reports, which 

include various measures of cost and quality, is helping us to design and develop the 

value modifier. In addition, we seek to build upon best practices that have evolved in 

the private sector to provide meaningful and actionable information to physicians. For 

example, we recognize the importance of transparent methodologies and of procedural 

safeguards necessary to provide physicians with an opportunity to review the value 

modifier such as the one we will develop.9

 

We intend to move both deliberately and carefully because we recognize the 

complexities of calculating a reliable and valid measure of value that compares 

physicians against their peers and uses the measure 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_care/pdfs/Excellus%20Settlement.pdf. 
CMS-1524-P 483 

this rulemaking as one part of an ongoing and extensive dialogue with health care 

stakeholders on how best to ensure development of a fair, meaningful, and actionable 

value modifier on which to differentiate payments to physicians. 

a. Measures of Quality of Care and Costs 

(1) Quality of Care Measures 

Section 1848(p)(2) of the Act 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 Act requires that the Secretary establish 

appropriate measures of the quality of care furnished by a physician or a group of 

physicians to Medicare beneficiaries such as measures that reflect health outcomes. The 

statute requires the measures to be risk adjusted as determined appropriate by the 

Secretary. Section 1848(p)(2)(B)(ii) of the Act requires the Secretary to seek 

endorsement of the quality of care measures by the entity with a contract under section 

1890(a) of the Act, which is the National Quality Forum. 

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 ensuring that this set of core 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 picture of the quality of care 

furnished by a physician. At our September 24, 2010, Listening Session on the 

Physician Feedback Program and Implementation of the Value-Based Payment Modifier 

for Fee-for-Service Medicare, the stakeholder community suggested the need for 

additional quality measures that focus on care coordination/care transitions, patient 
CMS-1524-P 484 

experience, and outcomes such as functional health status.10 We agree with these 

suggestions and believe that these measures could provide a richer picture of the quality 

of care furnished by physicians to Medicare beneficiaries. 

We view the requirement for the Secretary to establish, by January 1, 2012, the 

quality measures for the value modifier to be the first step in identifying a robust core 

set of measures of the quality of care furnished by physicians for use in the value 

modifier. We envision incorporating additional quality measures 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, alternate core, and 38 additional measures in 

the Electronic Health Record Incentive Program measures for 2012. Table 62 lists these 

measures. We recognize that there are measures 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/Downloads/092410_Listening_Session_Feedback_Progr

am_Transcript.pdf.
CMS-1524-P 485 

TABLE 62. PROPOSED QUALITY 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 Prescribed 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 X 
CMS-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 

 X 
CMS-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 X 
CMS-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 

 X 
CMS-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 modifier. 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 Record 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 the Act directs us to 

coordinate the value modifier quality measures 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 coordinate the value modifier with the Physician 

Feedback Program, the Physician Quality Reporting System, and the EHR incentive 

program. We seek comment on the proposed measures and on our interest 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 picture 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 specifically seek comment from specialists about measures 

that are not included in the list of proposed measures. 
CMS-1524-P 490 

We also seek comment on the types of measures identified below as well as the 

28 administrative claims measures (described above with respect to the 2011 Physician 

Feedback reports) and whether we should include them in the value modifier. We 

especially urge the physician community and private payers that have been engaged in 

pay-for-performance programs to identify other quality measures that they have used 

and to describe their experience with these measures. We seek comment on how the 

measures discussed below align with current private sector quality measurement 

initiatives. To the extent that such measures are not currently developed, we would use 

the established agency procedures 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 includes outcome measures. For 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, chronic 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 hospital 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 considering use of these measures for physicians 

and physician groups. Our goal is to focus on outcomes of care for which it would be 
CMS-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 including these outcome measures in the value 

modifier. 

We also specifically seek suggestions about other outcome measures 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 the Affordable Care Act, also requires 

the Secretary to develop and periodically update provider-level outcome 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 physicians. In addition, we are particularly 

interested in comments on potential measures 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 transitions help ensure that a beneficiary is on a 

path to improvement and could avoid readmission. We believe that several aspects of 

the care transition could be developed into quality of care measures for purposes of the 

value modifier. For example, we could potentially consider developing a measure that 

would assess whether an appointment was set up or whether the hospitalized beneficiary 
CMS-1524-P 492 

saw a physician during a specified post-discharge period. This measure 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 measure that would involve a hospital physician checking to 

see if the hospital has notified the beneficiary's primary physician of an unscheduled 

admission (if the hospital and community physician were not the same). 

Another aspect of care coordination could involve services that are ordered by 

one physician but furnished by another physician. Under this scenario, the treating 

physician may send a report back to the ordering physician. However, this is not always 

the case. The lack of coordination 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 and whether the furnishing physician has 

confirmation that the report was actually received. 

We seek input about these and other potential aspects of care coordination / 

transitions for which measures could be developed and/or used for purposes of the value 

modifier. To the extent commenters are aware 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 furnished for purposes of the value modifier. 

(iii) Patient Safety, Patient Experience and Functional Status: 

 We believe that it is important to develop measures of patient safety, patient 
CMS-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 Act requires that cost measures used in the value 

modifier be evaluated, to the extent practicable, based on a composite of appropriate 

measures of costs established by the Secretary. This composite would eliminate the 

effect of geographic adjustments in payment rates and account for risk factors and other 

factors determined appropriate by the Secretary. 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 chronic conditions: chronic obstructive pulmonary 

disease; heart failure; coronary artery disease; and diabetes. These per capita cost 

measures are price standardized and risk adjusted to ensure geographic 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_QRUR_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 measures for beneficiaries with these four 

chronic conditions (chronic obstructive pulmonary disease; heart 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 determining 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 related items and services 

into an episode of care for a beneficiary. Section 1848(n)(9)(A) of the Act requires us to 

develop an episode grouper so that physicians can be compared on episode-based costs of 

care. In order to comply with this statutory requirement, we have awarded separate 

contracts to four different project teams. We have tasked each project team to design a 

"prototype" of the episode grouper by determining 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 Severity Diagnosis Related Groups (MS-DRG) 

classification system. Specifically, we could use allowed Parts A and B charges per 
CMS-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 discharge. We are currently 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 comment on the resource and cost measures 

used in private sector initiatives and how they are used to profile physicians compared 

to the quality of care provided. 

b. Assessing Physician Performance 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 related to the implementation of the value 

modifier including steps for both measurement of performance and application of 

payment adjustments. While we are not making 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 these measures. In addition, we are examining 

how to attribute beneficiaries to physicians to develop meaningful and actionable 

physician profiles for use in the value modifier. Some of the issues involved with 

examining attribution rules were discussed earlier in the discussion of Physician 
CMS-1524-P 496 

Feedback reports and include issues of sample size. We are also developing appropriate 

peer groups or benchmarks in order to compare physicians on the value modifier. 

As previously mentioned, prior to application of the value modifier to all 

physicians and physician groups in 2017, section 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 appropriate. For example, we could apply 

the value modifier to physicians who are outliers (as identified individually, by practice 

group, or by geographic region) compared to national or regional areas in terms of high 

cost and low quality. Alternatively, we could apply the modifier to physicians who treat 

the conditions that are most prevalent and/or most costly, among Medicare beneficiaries. 

As stated previously, we seek comment on these issues and other issues related 

to implementation of the value modifier. Our plan is to begin implementing the value 

modifier through the rulemaking process during 2013 as required by section 

1848(p)(4)(B)(i) of the Act. We 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 furnished 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 methodology we propose to calculate the value 
CMS-1524-P 497 

modifier may be further refined, if necessary, during the 2014 rulemaking 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 the 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 physicians 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 processed until 2014. As such, we will need 

adequate lead time to collect performance data, assess performance, and construct and 

compute the value modifier during 2014 so that it can be applied to specific physicians 

starting January 1, 2015, as required by statute. As we have done in other payment 

systems, we plan to use claims that are paid within a specified time period, such as, 

90-days after 2013, for assessment of performance and application of the value modifier 

for 2015. We will propose the specific cut-off period as part of the more detailed 

methodology for computation and application of the value modifier in future 

rulemakings. We seek comment on this proposed performance period. 

e. Other Issues 

 We also seek comment on a number of issues 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 comment on two specific issues. 
CMS-1524-P 498 

(1) Systems-Based Care 

Section 1848(p)(5) of the Act requires the Secretary, as appropriate, to apply the 

value-based modifier in a manner that promotes systems-based care. We seek comment 

on how we might determine the scope of systems-based care and how best to promote it 

in applying the value modifier. For example, systems-based care might include an 

integrated group practice participation in the 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 collection of physicians that 

treat patients in common to encourage better coordination of care. Additionally, we 

could promote systems-based care by developing 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 care through the application 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 take into account the special circumstances 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 circumstances should be taken into account for 

purposes of applying the value modifier. In addition, we seek comment on the 

organizational structures and practices that rural physicians and other underserved 
CMS-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 Policy and the Impact on Wholly Owned or 

Wholly Operated Physician Practices

1. Introduction 

On June 25, 2010, the Preservation of Access to Care for Medicare Beneficiaries 

and Pension Relief Act of 2010 (PACMBPRA) (Pub. L. 111-192) was enacted. 

Section 102 of this Act entitled, "Clarification of 3-Day Payment Window," clarified 

when certain services furnished to Medicare beneficiaries in the 3-days (or, in the case of 

a hospital that is not a subsection (d) hospital, during the 1-day) preceding an inpatient 

admission should be considered "operating costs of inpatient hospital services" and 

therefore included in the hospital's payment under the Hospital Inpatient Prospective 

Payment System (IPPS). This policy is generally known as the "3-day payment 

window." Under the 3-day payment window, a hospital (or an entity that is wholly 

owned or wholly operated by the hospital) must include on the claim for a Medicare 

beneficiary's inpatient stay, the technical portion of any outpatient diagnostic services and 

admission-related nondiagnostic services provided during the payment window. The new 

law makes the policy pertaining to admission-related nondiagnostic services more 

consistent with common hospital billing practices. Section 102 of the PACMBPRA is 

effective for services furnished on or after June 25, 2010. 

2. Background 

We discussed changes to the 3-day payment window in the interim final rule with 
CMS-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 diagnostic services furnished to a 

Medicare beneficiary by a hospital (or an entity wholly owned or wholly operated by the 

hospital), on the date of a beneficiary's admission or during the 3-days (1-day for a 

non-subsection (d) hospital) immediately preceding the date of a beneficiary's inpatient 

hospital admission, continue to be included on the Part A bill for the beneficiary's 

inpatient stay at the hospital. In accordance with section 102(a)(1) of the PACMBPRA, 

for outpatient services furnished on or after June 25, 2010, all nondiagnostic services, 

other than ambulance and maintenance renal dialysis services, provided by the hospital 

(or an entity wholly owned or wholly operated by the hospital) on the date of a 

beneficiary's inpatient admission and during the 3 calendar days (1 calendar day for a 

nonsubsection (d) hospital) immediately preceding the date of admission are deemed 

related to the admission and, therefore, must be billed with the inpatient stay, unless the 

hospital attests that certain nondiagnostic services are unrelated to the hospital claim (that 

is, the preadmission nondiagnostic services are clinically distinct or independent from the 

reason for the beneficiary's inpatient admission). In such cases, the unrelated outpatient 

hospital nondiagnostic services are covered by Medicare Part B, and the hospital may 

separately bill for those services. 

 Prior to the enactment of section 102 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 Manual 
CMS-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 inpatient admission. On November 5, 1990, section 

4003(a) of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508) amended 

the statutory definition of "operating cost of inpatient hospital services" to include the 

costs of certain services furnished prior to admission. Section 4003(a) also required that 

these preadmission services be included on the Medicare Part A bill for the subsequent 

inpatient stay. With this amendment, section 1886(a)(4) of the Act defines the operating 

costs of inpatient hospital services to include diagnostic services (including clinical 

diagnostic laboratory tests) or other services related to the admission (as defined by the 

Secretary) furnished by the hospital (or by an entity that is wholly owned or wholly 

operated by the hospital) to the patient during the 3-days prior to the date of the patient's 

admission to the hospital. 

 Section 1886(a)(4) of the Act was further amended by section 110 of the Social 

Security Amendments of 1994 (Pub. L. 103-432) enacted on October 31, 1994. This 

provision revised the payment window for hospitals that are excluded from the IPPS to 

include only those services furnished by the hospital or an entity wholly owned or wholly 

operated by the hospital during the 1-day (instead of the previous 3-days) prior to the 

patient's hospital inpatient admission. The hospital and hospital units excluded from the 

IPPS and affected by this policy are psychiatric hospitals and units, inpatient 

rehabilitation hospitals and units, long-term care hospitals, children's hospitals, and 

cancer hospitals. In the FY 1996 IPPS final rule (60 FR 45840), we noted that the term 

"day" refers to the entire calendar-day immediately preceding the date of admission and 

not the 24-hour time period that immediately precedes the hour of admission. 
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 chronic maintenance of renal dialysis services 

are excluded from the 3-day payment window. This final rule also clarified that the 

payment window applies to outpatient services that are otherwise billable under Part B 

and does not apply to nonhospital services that are generally covered under Part A (such 

as home health, skilled nursing facility, and hospice). In addition the rule clarified the 

terms "wholly owned or operated" and "admission-related" for nondiagnostic services. 

The 1998 final rule (63 FR 6866) defined an entity as wholly owned or wholly 

operated if a hospital has direct ownership or control over another entity's operations. 

Specifically, 42 CFR 412.2(c)(5)(i) states, "An entity is wholly owned by the hospital if 

the hospital is the sole owner of the entity. An entity is wholly operated by a hospital if 

the hospital has exclusive responsibility for conducting and overseeing the entity's routine 

operations, regardless of whether the hospital also has policymaking authority over the 

entity." The 1998 final rule also stated "that we have defined services as being related to 

the admission only when there is an exact match between the ICD-9-CM diagnosis code 

assigned for both the preadmission services and the inpatient stay." The rule also stated 

"A hospital-owned or hospital-operated physician clinic or practice is subject to the 

payment window provision." Therefore, related preadmission nondiagnostic services 

provided by a wholly owned or wholly operated physician clinic or practice are also 

included in the 3-day (or 1-day) payment window policy, and services were considered 

related when there was an exact match between ICD-9 CM diagnosis codes for the 

outpatient encounter and the inpatient admission. 
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 inpatient admission. Because of the exact match 

policy, very few services furnished in a physician's office or clinic that is wholly owned 

or operated by the hospital would be subject to the policy. Because the policy applied 

only in such narrow circumstances, until the recent statutory change, we have not 

provided further guidance to wholly owned or wholly operated physician offices on how 

nondiagnostic services are to be included on hospital bills when the 3-day payment 

window applied. However, the statutory change to the payment window policy made by 

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 preadmission diagnostic and related nondiagnostic 

services furnished to a patient at wholly owned or wholly operated physician practices 

after June 25, 2010. We do not know how many physician offices will meet this 

definition of wholly owned or wholly operated. Our expectation is that most 

hospital-owned entities providing outpatient services would be considered part of the 

hospital, likely as an outpatient department, and not separate physician clinics or 

practices. However, we believe there may be at least some hospital-owned clinics that 
CMS-1524-P 504 

meet the definition of a wholly owned or wholly operated physician practice. When a 

physician furnishes a service in a hospital, including an outpatient department of a 

hospital, Medicare pays the physician under the physician fee schedule, generally at a 

facility-based payment rate that is lower than the "nonfacility" payment rate in order to 

avoid duplication of payment for supplies, equipment, and staff that are paid directly to 

the hospital by Medicare. 

3. Applicability of the 3-day Payment Window Policy for Services Furnished in 

Physician Practices 

In circumstances where the 3-day payment window applies to nondiagnostic 

services related to an inpatient admission furnished in a wholly owned or wholly operated 

physician practice, we 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 later in this section, the services that are subject 

to the 3-day payment window would be billed to Medicare similar to services that are 

furnished in a hospital, including 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 services furnished and to any nondiagnostic 

services that are clinically related to the reason for the patient's inpatient admission 

regardless of whether the reported inpatient and outpatient ICD-9-CM diagnosis codes 

are the same. 

a. Payment Methodology 
CMS-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) for CPT/HCPCS codes with a Technical 

Component (TC)/PC split that are provided in the 3-day (or, in the case of non-IPPS 

hospitals, 1-day) payment window in a hospital's wholly owned or wholly operated 

physician practice. We propose to pay the facility rate for codes without a TC/PC split to 

avoid duplicate payment for the technical resources required to provide 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, malpractice, and the facility 

practice expense, which is a payment to support services provided by the physician office 

when a physician treats patients at another facility, such as updating medical records. We 

propose to modify our regulation at §414.22(b)(5)(i), which defines the sites of service 

that result in a facility practice expense RVU for payment, to add an entity that is wholly 

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 would establish a new HCPCS modifier through 

sub-regulatory guidance. We would require that this modifier be appended to the 

physician preadmission diagnostic and admission-related nondiagnostic services, reported 

with HCPCS codes, which are subject to the 3-day payment window policy. Each wholly 

owned or wholly operated physician's practice would need to manage its billing processes 

to ensure that it billed for its physician services appropriately when a related inpatient 

admission has occurred. The hospital would be responsible for notifying the practice of 

related inpatient admissions for a patient who received services in a wholly owned or 
CMS-1524-P 506 

wholly operated physician practice 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 receive payment at the facility rate for related nondiagnostic 

services and receive payment for only the professional component for diagnostic services 

effective for services furnished on or after January 1, 2012. 

We realize that the time frames associated with the global surgical package for 

many surgical services could overlap with the 3-day (or 1-day) payment window policy. 

Global surgical payment rules apply to major and minor surgeries, and endoscopies. 

Section 40.1 of the Claims Processing Manual (100-04 chapter 12 

Physician/Nonphysician Practitioners) defines the global surgical package. Procedures 

can have a global surgical period of 0, 10, or 90-days. Generally, the global period for 

major surgeries is 1-day prior to the surgical procedure and 90-days immediately 

following the procedure. For minor surgeries, the global period is the-day of the 

procedure and 10-days immediately following the procedure. 

Medicare payment for the global surgical package is based on the typical case for 

a procedure, and includes preoperative visits, intra-operative services, and complications 

following surgery, postoperative visits, postsurgical pain management, supplies, and 

miscellaneous other services such as dressing changes and removal of sutures or staples. 

Medicare makes a single payment to the treating physician (or group practice) for the 

surgical procedure and any of the pre- and postoperative services typically associated 

with the surgical procedure provided within the global surgical period (10 or 90-days). 

The same section of the Claims Processing Manual (100-04 chapter 12 
CMS-1524-P 507 

Physician/Nonphysician Practitioners) also discusses the services that are not included in 

payment for the global surgical period. In general, these services are unrelated to the 

surgery, are diagnostic or are part of the decision to pursue surgery, or are related to the 

surgery but are so significant they warrant an additional payment. Some examples of 

services not included in payment for the global surgical period include the initial 

evaluation of the problem by the surgeon to determine the need for major surgery; 

services of another physician; visits unrelated to the diagnosis for the surgical procedure 

unless the visits occur due to surgical complications; treatment that is not part of the 

normal recovery from surgery; diagnostic tests; distinct surgical procedures that are not 

re-operations; treatment for postoperative complications that require a return trip to the 

operating room; critical care unrelated to the surgery where a seriously injured or burned 

patient is critically ill and requires the constant attention of the physician; and 

immunosuppressive therapy for organ transplants. 

The time frames for application of the 3-day payment window and the global 

surgical package could overlap. In some cases, the application of the 3-day payment 

window is straightforward. For example, a patient could have minor surgery in a wholly 

owned or wholly operated physician's office and, due to complications, need to be 

admitted within 3-days to an acute care hospital paid under the IPPS for follow-up 

surgery. Under the 3-day payment window policy, the practice expense portion of the 

initial surgery and any pre- and 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 the inpatient admission. The wholly owned or 

wholly operated physician practice would bill for the surgery performed for the inpatient 
CMS-1524-P 508 

as well as for the initial surgical procedure performed in the physician practice that 

started the global period. The wholly owned or wholly operated physician practice would 

apply the HCPCS modifier that CMS would 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, any preadmission diagnostic tests conducted by the 

wholly owned or wholly operated physician practice in the 3-day payment window would 

be included on the physician practice's claim with the anticipated HCPCS modifier, and 

Medicare would pay the wholly owned or wholly operated physician practice only the 

professional portion of the service. 

However, the situation could arise where a global surgical period overlaps with 

the 3-day payment window, but the actual surgical procedure with the global surgical 

package occurred before the 3-day payment window. In this case, several post-operative 

services, such as follow-up visits, would occur during the global period, but the surgeon 

would not bill separately for those services. We 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 practices furnish preadmission diagnostic and 

nondiagnostic services that are clinically related to an inpatient admission when the date 

of the actual surgical procedure falls within the 3-day payment window policy. However, 

when the actual surgical procedure for a service that has a global surgical package is 

furnished on a date that falls outside the 3-day payment window, the 3-day window 

policy would not apply. We do not believe it would be appropriate to require the wholly 

owned or wholly operated physician practice to unbundle the post operative services 
CMS-1524-P 509 

associated with the global surgical procedure so that the practice expense portion of those 

services could be paid under the PFS at the facility rate and the costs included on the 

hospital's inpatient claim. However, any service that a wholly owned or wholly operated 

physician practice would bill separately from the global surgical package, such as a 

separate initial evaluation of a problem by the surgeon to determine the need for surgery 

or separate diagnostic tests, would continue to be subject to the 3-day payment window 

policy. 

b. Identification of Wholly Owned or Wholly Operated Physician Practices 

The 1998 final rule (63 FR 6864) defined wholly owned or wholly operated as a 

hospital's direct ownership or control over another entity's operations. In that rule, we 

added the regulation at 42 CFR 412.2(c)(5)(i) which states, "An entity is wholly owned 

by the hospital if the hospital is the sole owner of the entity. An entity is wholly operated 

by a hospital if the hospital has exclusive responsibility for conducting and overseeing 

the entity's routine operations, regardless of whether the hospital also has policymaking 

authority over the entity." Physician practices self-designate whether they are owned or 

operated by a hospital during the Medicare enrollment process. Currently, a physician 

practice enrolls in Medicare with CMS form "855B." This enrollment form reports 

pertinent practice information such as ownership, organizational structure, and 

operational duties. Likewise, hospitals enroll in Medicare using CMS form "855A" also 

reporting pertinent hospital information such as ownership, organizational structure and 

operational duties. Medicare Administrative Contractors update files of physician 

practices that are owned and operated by hospitals, and the files of hospitals that own 

those physician practices, in their claims processing systems and use that data to confirm 
CMS-1524-P 510 

an ownership relationship for identified physician practices. We will investigate the 

feasibility of establishing national system edits within the Common Working File to fully 

identify whether a physician practice is wholly owned or wholly operated by a hospital 

and to associate such practice with its affiliated hospital. 

K. Hospital Discharge Care Coordination

 We are committed to achieving better care for individuals, better health for 

populations, and reduced expenditure growth. Reforms such as Accountable Care 

Organizations and Medical Homes 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 Patients, (in April 2011), a national patient safety initiative 

that includes the Community Based Care Transitions 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 for 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 financial burden on the health care system. 

Successful efforts to improve hospital discharge care coordination and care transitions 

could improve the quality of care while simultaneously 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 transition 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 two hospital discharge codes, 

hospital discharge day management services CPT codes 99238 (Hospital discharge day 

management; 30 minutes or less) and 99239 (Hospital discharge day management; more 

than 30 minutes). Both of these codes include care coordination activities. The specific 

physician activities for care coordination associated with the hospital 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 discharge follow-up professional services and 

testing. 

● Discussing aftercare treatment with the beneficiary, family, and other 

healthcare professionals. 

● Informing the primary care or referring physician of discharge plans. 

● Provide necessary care coordination, telephonic or electronic communication 

assistance, and other necessary management related to this hospitalization. 

● Revise treatment plan(s) and communicate 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 other outpatient visit) that a beneficiary's primary physician 

would use to bill for the first visit after discharge. The physician activities for care 

coordination associated with these E/M services as shown in Table 63 include providing 

necessary care coordination, telephonic or electronic communication assistance, and 
CMS-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 values 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 considered for these CPT codes, including 

hospital discharge care coordination activities.
CMS-1524-P 513 

TABLE 63: AMA RUC CLINICAL VIGNETTE 

CPT 

Code Long Descriptor Vignette Pre Service Intra Service 

99238 

Hospital discharge day management; 30 minutes or less 

Discharge visit for a 55-year-old male admitted with a community-acquired pneumonia is seen in preparation for discharge from the hospital. He is euvolemic, afebrile, asymptomatic, and his oxygen saturations are normal. 

• Review data not available on the unit (such as diagnostic and imaging studies). •Communicate with other professionals and with patient or patient's family. 

• Review medical records and data available on the unit. • Obtain an interval history. • Perform a physical exam. • Consider relevant data, options, and risks and formulate/revise diagnosis and treatment plan(s) including making the decision for discharge. • Discuss aftercare treatment with the patient, family and other healthcare professionals. • Provide care coordination for the transition including instructions for aftercare to caregivers. • Order/arrange for post discharge follow-up professional services and testing. • Reconcile medications with attention to pre-admission therapy, inpatient therapy and 

outpatient formulary and write prescriptions. • Complete discharge and aftercare forms. • Inform the primary care or referring physician of discharge plans. • Complete medical record documentation. 

• Complete d• Handle (witreatment failmedications t• Provide netelephonic or assistance, arelated to this 

• Receive anresults or corany results p• Revise treawith patient a
CMS-1524-P 514 

CPT 

Code Long Descriptor Vignette Pre Service Intra Service 

99239 

Hospital discharge day management; more than 30 minutes 

Discharge visit for a 75-year-old female who required a below-the knee amputation for an infected non-healing ulcer on her right foot is seen in preparation for discharge from the hospital. She has Type 2 diabetes mellitus, ischemic cardiomyopathy, atherosclerotic peripheral vascular disease, hypertension, chronic renal insufficiency, and dementia. She is no longer delirious, her blood sugars are well controlled, and she is at her baseline weight. She is being discharged back to the nursing home. 

• Review data not available on the unit (such as diagnostic and imaging studies).• Communicate with other professionals and with patient or patient's family 

• Review medical records and data available on the unit. • Obtain an interval history. • Perform a physical exam. • Consider relevant data, options, and risks and formulate/revise diagnosis and treatment plan(s) including making the decision for discharge. • Discuss aftercare treatment with the patient, family and other healthcare professionals. • Provide care coordination for the transition including instructions for aftercare to caregivers. • Order/arrange for post discharge follow-up professional services and testing. • Reconcile medications with attention to pre-admission therapy, inpatient therapy and 

outpatient formulary and write prescriptions. • Complete discharge and aftercare forms. • Inform the primary care or referring physician of discharge plans. • Complete medical record documentation. 

• Complete d• Handle (witreatment failmedications t• Provide netelephonic or assistance, arelated to this • Receive anresults or corany results p• Revise treawith patient a

99203 Office/outpatient visit, new 

Initial office visit for a 63-year old female with hypertension presents for a pre-employment physical after moving to the area. Her blood pressure has been adequately controlled with her current medication on home blood pressure monitoring. 

• Review the medical history form completed by the patient and vital signs obtained by clinical staff • Communicate with other health professionals 

• Obtain a detailed history. • Perform a detailed examination. • Consider relevant data, options, and risks and formulate a diagnosis and develop a treatment plan (low complexity medical decision making). • Discuss diagnosis and treatment options with the patient. • Address the preventive health care needs of the patient. • Reconcile medication(s). • Write prescription(s). • Order and arrange diagnostic testing or referral as necessary. 

• Complete t• Handle (witreatment failmedications t• Provide netelephonic or assistance, arelated to this • Receive anresults or cor• Revise treawith patient, 
CMS-1524-P 515 

CPT 

Code Long Descriptor Vignette Pre Service Intra Service 

99213 Office/outpatient visit, est 

Office visit, established patient, a 55 year old male with a history of hypertension and hyperlipidemia who presents for follow up. 

• Review the medical history form completed by the patient and vital signs obtained by clinical staff. 

• Obtain an expended problem focused history (including response to treatment at last visit and reviewing interval correspondence or medical records received).* • Perform an expended problem focused examination.* • Consider relevant data, options, and risks and formulate a diagnosis and develop a treatment plan (low complexity medical decision making).* • Discuss diagnosis and treatment options with the patient. • Address the preventive health care needs of the patient. • Reconcile medication(s). • Write prescription(s). • Order and arrange diagnostic testing or referral as necessary. 

• Complete t• Handle (witreatment failmedications t• Provide netelephonic or assistance, arelated to this • Receive anresults or cor• Revise treawith patient, * Two of thes
CMS-1524-P 516 

In order to ensure that these hospital discharge care coordination services are 

appropriately valued, we are seeking comment on the specific physician activities and the 

associated resources involved in physician provision of effective care coordination 

surrounding a hospital discharge. For the treating physician(s) overseeing the care of the 

beneficiary in the hospital, specific care coordination activities (for example, transfer of 

the beneficiary to a community physician) 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" information to the receiving 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 results and drugs and treatments, as well as 

pending tests and how and when to obtain results 

 ++ Drugs prescribed, including planned changes 

 ++ Other treatments and tests prescribed, including planned changes 

 ++ Allergies 

 ++ Receiving physician contact information and specification of physician 

coverage for problems before any initial appointment. For hospitalized beneficiaries, this 

could include a planned initial post-discharge appointment within 7 business days with a 

physician, NP, or PA (if authorized by State law). 

 ++ Overview of the caregiver situation. 
CMS-1524-P 517 

 ++ Summary of beneficiary/family goals of care, with time frames and any 

restrictions. 

 ++ Family caregiver and surrogate decision-maker identification, and assessment 

of needs (for the caregiver), as appropriate. 

 ++ Responding to inquiries from the receiving 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 physician(s) in the community overseeing the 

beneficiary's care post hospital discharge, specific care coordination activities could 

include: 

● Assuming responsibility for the beneficiary's care without a gap. 

● Notifying the patient that the receiving 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 physician(s) involved in the beneficiary's care during the 

hospital stay (as appropriate). 

● Setting up an appointment for a face-to-face visit with the beneficiary, as 

appropriate. 

 We welcome comment on key physician activities associated with effective care 

coordination between the treating physician in the hospital and the beneficiary's primary 

physician in the community upon hospital discharge. We request public comment on the 
CMS-1524-P 518 

extent to which the clinical vignette for the hospital discharge and office visit codes 

appropriately incorporate hospital discharge care coordination activities. We also seek 

comment about whether the relative values assigned to these services under the physician 

fee schedule appropriately reflect the resources involved in performing activities that are 

essential to hospital discharge care coordination, and on ways to ensure appropriate 

recognition of the resources involved in these services, specifically, the physician time 

and complexity of physician work as well as the associated practice expenses. We also 

seek comments on the current coding structure for these services and on any other 

suggested changes to improve care coordination, particularly for the beneficiary's 

transition from the hospital to the community, to better reflect the resources required. We 

note that the Assistant Secretary of Planning and Evaluation (ASPE) in the Department of 

Health and Human Services hosted a technical 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 activities. We will consider the panel's 

discussion and any available analyses as we broadly consider physician payment for 

hospital discharge care coordination activities. 

In addition to specific comments on the resources required for effective care 

coordination activities, we also broadly invite comment on other means to emphasize 

physician care coordination, such as educational 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 between 
CMS-1524-P 519 

beneficiary and physician rather than those created solely by the physician and dictated as 

"doctor's orders" to the beneficiary. Shared care plans are jointly developed between 

beneficiary and physician where the physician sets and documents self-management 

goals collaboratively with beneficiaries. These jointly developed care plans can be 

particularly important to improving overall beneficiary 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, producing motivated and engaged beneficiaries. 

In addition, they provide health care professionals a communication 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/HIVDiseaseGeneral/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 changes 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 requirements 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 technical correction to the heading of the condition of 
CMS-1524-P 520 

coverage at §410.62(b) for outpatient speech-language pathology services. The heading 

was inadvertently changed in the course of rulemaking for CY 2009 when a new 

paragraph was added at §410.62(c) to recognize speech-language pathologists in private 

practice. The section heading at §410.62(b) currently reads "Special provisions for 

services furnished by speech-language pathologists 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 services furnished to certain inpatients of a 

hospital or a CAH or SNF." 

2. Outpatient Diabetes Self-Management Training 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 clarify the purpose of the reference to an 

approved entity: 

 ++ "[B]y CMS to furnish and receive Medicare payment for the training". 

 ++ "Upon being approved". 

 ++ "CMS refers to this entity as an "approved entity"". 

● 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, physician, or entity accredited by an 

approved organization, but that 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 technical correction to §410.141(b)(1) entitled 

"training orders": 

● Removing the cross-reference "§410.32(a)" and adding the cross-reference 

"§410.32(a)(2)". 

● Removing the term "it" and adding the phrase "the training" 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 ordered by the physician (or qualified nonphysician practitioner) 

(as defined in §410.32(a)(2)) treating the beneficiary's diabetes. 

3. Practice Expense Relative Value Units (RVUs) 

 We are proposing the following technical corrections to the regulation at 

§414.22(b): 

● In paragraphs (b)(5)(i)(A) and (B)-- 

 ++ Include additional examples of the settings in which the facility or nonfacility 

practice expense (PE) RVUs are applied, respectively; and 

 ++ Clarify that the lists of settings are not exhaustive; and amend these lists to 

include additional place of service examples. 

● In paragraph (b)(5)(i)(A) we would add "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 consistent with (b)(5)(i)(A) and to include the 

"comprehensive outpatient rehabilitation facility (CORF)" as a place of service example; 

and 

 ++ Clarify this provision by removing the text regarding the use of the 

nonfacility PE RVUs for services in "...a facility or institution other than the hospital, 

skilled nursing facility, community mental health center, or ASC" because this phrase 

does not accurately reflect the places of service where the nonfacility PE RVUs are 

applied. 

● In paragraph (b)(5)(i)(C)-- 

 ++ 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 add "(including physical therapy, 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 facility, a community mental health center, a hospice, or an 

ambulatory surgical center. 

(B) Nonfacility practice expense RVUs. The nonfacility practice expense RVUs 

apply to services furnished to patients in places of service including, but not limited to, a 
CMS-1524-P 523 

physician's office, the patient's home, a nursing facility, or a comprehensive outpatient 

rehabilitation facility (CORF). 

(C) Outpatient therapy and CORF services. Outpatient therapy services 

(including physical therapy, occupational therapy, and speech-language pathology 

services) and CORF services billed under the physician fee schedule are paid using the 

nonfacility practice expense RVUs. 

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 collection and its usefulness in carrying out the 

proper functions of our agency. 

● The accuracy of our estimate of the information collection burden. 

● The quality, utility, and clarity of the information to be collected. 

● Recommendations to minimize the information collection burden on the 

affected public, including automated collection techniques. 

The proposed rule imposes collection of information requirements as outlined in 

the regulation text and specified in various section of this proposed rule. However, this 

proposed rule also makes reference to several associated information collections that are 

not discussed in the regulation text contained in this document. The following is a 
CMS-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 (ASP) 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 manufacturers are required to submit ASP 

data to us on a quarterly basis. The ASP reporting requirements are set forth in section 

1927(b) of the Act. 

In order to facilitate more accurate and consistent ASP data reporting from 

manufacturers, we are proposing the following: 

● To revise existing reporting fields and add new fields to the Addendum A 

template. 

● To add a macro to the Addendum A template that will allow manufacturers to 

validate the format of their data prior to submission. 

● To maintain a list of HCPCS codes for which manufacturer's report ASPs for 

NDCs on the basis of a specified unit. 

● A clarification to existing regulation text at §414.802. Current 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. 

 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 requirement is the time and effort required by 

manufacturers of Medicare Part B drugs and biologicals to calculate, record, and submit 

the required data to CMS. The Addendum A template is currently approved under OMB 

control number 0938-0921. For the first year, we estimate that collection of the 

additional data elements will take approximately 2 additional hours for each submission 

of data, or 12 hours per response, at a cost of $252 per response. Based on the current 

number of respondents, we estimate that this requirement will affect approximately 180 

manufacturers. Since manufacturers will respond 4 times per year, we estimate that, on 

an annual basis, the annual number of responses will be 720 (180 manufacturers 

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 response 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 discusses the background of the Physician 

Quality Reporting System, provides information about the proposed measures and 

reporting mechanisms that would be available to eligible professionals and group 

practices who choose to participate in the 2012 Physician Quality Reporting System, and 

the proposed criteria for satisfactory reporting in 2012. 

With respect to satisfactory submission of data on quality measures by eligible 

professionals, eligible professionals include physicians, other practitioners as described in 

section 1842(b)(18)(c) of the Act, physical and occupational therapists, qualified 
CMS-1524-P 526 

speech-language pathologists, and qualified audiologists. Eligible professionals may 

choose whether to participate and, to the extent they satisfactorily submit data on quality 

measures for covered professional services, they can qualify to receive an incentive 

payment. To qualify to receive an incentive payment for 2012, we propose that the 

eligible professional (or group practice) would need to meet 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 participate in the Physician Quality Reporting 

System in CY 2012. Information from the "Physician Quality Reporting System 2009 

Reporting Experience Report, "which is available on the Physician Quality Reporting 

System section of the CMS Web site at http://www.cms.hhs.gov/pqrs, indicates that 

eligible professionals from nearly 120,000 unique TIN/NPI combinations attempted to 

submit Physician Quality Reporting System quality measures data for the 2009 Physician 

Quality Reporting System. Therefore, for purposes of conducting a burden analysis for 

the 2012 Physician Quality Reporting System, we will assume that all eligible 

professionals who attempted to participate in the 2009 Physician Quality Reporting 

System will also attempt to participate in the 2012 Physician Quality Reporting System. 

Furthermore, we believe that the burden for eligible professionals who are participating 

in the Physician Quality Reporting System for the first time in 2012 would be 

considerably higher than the burden 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 begin participating in the Physician Quality 
CMS-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 year and there are no changes to the measure's 

specifications from a prior year, such preparatory steps would not need to be repeated in 

subsequent years. 

For individual eligible professionals, the burden associated with the requirements 

of this reporting initiative would be the time and effort associated with eligible 

professionals identifying applicable Physician Quality Reporting System quality 

measures for which they can report the necessary information, collecting the necessary 

information, and reporting the information needed to report the eligible professional's or 

group practice's measures. We believe it is difficult to definitively quantify the burden 

because eligible professionals may have different processes for integrating the data 

collection for the Physician Quality Reporting System measures into their practice's work 

flows. Moreover, we expect that the time needed for an eligible professional to review 

the quality measures and other information, select measures applicable to his or her 

patients and the services he or she furnishes to them, and incorporate the use of quality 

data codes into the office work flows 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 registry-based reporting of individual measures, 

they would generally be required to report on at least three measures to earn a Physician 

Quality Reporting System incentive. Therefore, we will assume that each eligible 

professional who attempts to submit Physician Quality Reporting System quality 

measures data via claims or registry reporting is attempting to earn a Physician Quality 
CMS-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 significant increases in participation each year 

since the program's inception, we anticipate even greater participation in the 2012 

Physician Quality Reporting System than in previous years, including participation by 

eligible professionals who are participating in the Physician Quality Reporting System 

for the first time in 2012. As discussed previously, eligible professionals who are 

participating in the Physician Quality Reporting System for the first time in 2012 need to 

take preparatory steps to begin 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, review the various reporting options, select the 

most appropriate reporting option, identify the applicable measures or measures groups 

for which they can report the necessary information, review the measure specifications 

for the selected measures or measures groups, and incorporate reporting of the selected 

measures or measures groups into the office work flows. This estimate is based on our 

assumption that an eligible professional 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 measures or up to 1 selected measures group 

and to develop a mechanism for incorporating reporting of the selected measures or 

measures group into the office work flows. 
CMS-1524-P 529 

Information from the Physician Voluntary Reporting Program (PVRP), which was 

a predecessor to the Physician Quality Reporting System, indicated 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 percent. Thus, we estimate the cost for an 

eligible professional associated with preparing to report Physician Quality Reporting 

System quality measures would be approximately $300 per eligible professional 

($60 per hour x 5 hours). 

We continue to expect the ongoing costs associated with Physician Quality 

Reporting System participation to decline based on an eligible professional's familiarity 

with and understanding of the Physician Quality Reporting System, experience with 

participating in the Physician Quality Reporting System, and increased efforts by CMS 

and stakeholders to disseminate useful educational resources and best practices. We also 

continue to expect the ongoing costs associated with Physician Quality Reporting System 

participation to decline as we align the participation requirements in the Physician 

Quality Reporting System with the reporting requirements in the Medicare and Medicaid 

Electronic Health Record (EHR) Incentive Program such that an eligible professional 

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 vary depending on the reporting mechanism 

selected by the eligible professional. For the proposed claims-based reporting option, 

eligible professionals would need to gather the required information, select the 

appropriate quality data codes (QDCs), and include the appropriate QDCs on the claims 
CMS-1524-P 530 

they submit for payment. The Physician Quality Reporting System would collect QDCs 

as additional (optional) line items on the existing HIPAA transaction 837-P and/or CMS 

Form 1500 (OCN: 0938-0999). We do not anticipate any new forms and or any 

modifications to the existing transaction or form. We also do not anticipate changes to 

the 837-P or CMS Form 1500 for CY 2012. 

Based on our experience with the PVRP, we continue to estimate that the time 

needed to perform all the steps necessary to report each measure (that is, reporting the 

relevant quality data code(s) for a measure) on claims would ranges from 15 seconds 

(0.25 minutes) to over 12 minutes for complicated cases and/or measures, with the 

median time being 1.75 minutes. At an average labor cost of $60 per hour per practice, 

the cost associated with this burden would 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 reporting instances for each of the Physician 

Quality Reporting System measures was 9. Since we proposed to reduce the required 

reporting rate by over one-third to 50 percent, then for purposes of this burden analysis 

we will assume that an eligible professional will need to report each selected measure for 

6 reporting instances. The actual number of cases on which an eligible professional 

would be required to report quality measures data would vary, however, with the eligible 

professional's patient population and the types of measures on which the eligible 
CMS-1524-P 531 

professional chooses to report (each measure's specifications includes a required 

reporting frequency). 

Based on the assumptions discussed previously, we estimate the total annual 

reporting burden per individual eligible professional associated with claims-based 

reporting would range from 4.5 minutes (0.25 minutes per measure X 3 measures X 6 

cases per measure) to 180 minutes (12 minutes per measure X 3 measures X 6 cases per 

measure), with the burden to the median practice being 31.5 minutes (1.75 minutes per 

measure X 3 measures X 6 cases). We estimate the total annual reporting cost per 

eligible professional associated with claims-based reporting 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 median 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 professionals opting for registry-based 

reporting would more than likely already be reporting data to the registry for other 

purposes and the registry would merely be re-packaging the data for use in the Physician 

Quality Reporting System. Little, if any, additional data would need to be reported to the 

registry solely for purposes of participation in the 2012 Physician Quality Reporting 

System. However, eligible professionals would need to authorize or instruct the registry 

to submit quality measures results and numerator and denominator data on quality 

measures to CMS on their behalf. We estimate that the time and effort associated with 

this would be approximately 5 minutes per eligible professional. 
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 involve 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 and 2 hours calculating 

numerators, denominators, and measure results for each measure the registry wishes to 

report using a CMS-provided measure flow. However, the time it takes to produce 

calculated numerators, denominators, and measure results using the CMS-provided 

measure flows could vary depending on the registry's experience and the number and 

type of measures for which the registry wishes to submit on behalf of eligible 

professionals. Additionally, part of the proposed self-nomination process involves the 

completion of an XML submission by the registry, which we estimate to take 

approximately 5 hours, but may vary depending on the registry's experience. We 

estimate that the registry staff involved in the registry self-nomination process would 

have an average labor cost of $50 per hour. Therefore, assuming the total burden hours 

per registry associated with the registry self-nomination process is 10 hours, we estimate 

that the total cost to a registry associated with the registry self-nomination process would 

be approximately $500 ($50 per hour x 10 hours per registry). 
CMS-1524-P 533 

The burden associated with the proposed registry-based reporting requirements of 

the Physician Quality Reporting System would be the time and effort associated with the 

registry calculating quality measures results from the data submitted to the registry by its 

participants and submitting the quality measures results and numerator and denominator 

data on quality measures to CMS on behalf of their participants. We expect that the time 

needed for a registry to review the quality measures and other information, calculate the 

measures results, and submit the measures results and numerator and denominator data 

on the quality measures on their participants' behalf is would vary along with the number 

of eligible professionals reporting data to the registry and the number of applicable 

measures. However, we believe that registries already perform many of these activities 

for their participants. Therefore, there may not necessarily be a burden on a particular 

registry associated with calculating the measure results and submitting the measures 

results and numerator and denominator data on the quality measures to CMS on behalf of 

their participants. Whether there is any additional burden to the registry as a result of the 

registry's participation in the Physician Quality Reporting System would depend on the 

number of measures that the registry intends 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 proposed for the CY 2012 Physician Quality 

Reporting System, the individual eligible professional 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 professionals' 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 less 
CMS-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 2012 data file in 2013, we believe that this 

would take an eligible professional no more than 2 hours, depending on the number of 

patients on which the eligible professional is submitting. We believe that once the EHR 

is programmed by the vendor to allow data submission to CMS, the burden to the eligible 

professional associated with submission of data on Physician Quality Reporting System 

quality measures should be minimal as all of the information required to report the 

measure should already reside in the eligible professional's EHR. We did not introduce 

the EHR-based reporting mechanism into the Physician Quality Reporting System until 

2010. We are still in the process of analyzing 2010 data. As such, we believe it is 

difficult to predict how many eligible professionals may choose to participate in the 2012 

Physician Quality Reporting System via the EHR-based reporting mechanism. 

We are proposing that an EHR vendor interested in having their product(s) be 

used by eligible professionals to to submit 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 professionals 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 definitively quantify the burden associated with the 

proposed EHR self-nomination process as there is variation regarding the technical 
CMS-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 vendor 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 capabilities 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 capabilities 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 reporting data on the 

proposed quality measures for group practices to be treated as satisfactorily submitting 

quality measures data under the 2012 Physician Quality Reporting System discussed in 

section IV.F.1. of this proposed rule, group practices interested in participating in the 

2012 Physician Quality Reporting System through the proposed group practice reporting 

option (GPRO) would need to complete a proposed self-nomination process similar to the 
CMS-1524-P 536 

proposed self-nomination process required of registries and EHR vendors. Therefore, 

assuming it takes 2 hours for a group practice to decide whether to participate as a group 

or individually, approximately 2 hours per group practice to draft the letter of intent for 

self-nomination, gather the requested information, and provide this requested 

information, and an additional 2 hours undergoing the vetting process with CMS 

officials, we estimate a total of 6 hours associated with the proposed self-nomination 

process. Assuming that the group practice staff involved in the group practice proposed 

self-nomination process have the same average practice labor cost as the average practice 

labor cost estimates we used for individual eligible professionals of $60 per hour, we 

estimate that the total cost to a group practice associated with the group practice 

self-nomination process would be approximately $360 ($60 per hour x 6 hours per group 

practice). 

The burden associated with the proposed group practice reporting requirements of 

the 2012 Physician Quality Reporting System is the time and effort associated with the 

group practice submitting the proposed quality measures data. For practices participating 

under the proposed GPRO process, this would be the time associated with the physician 

group completing the data collection tool. The information collection components of this 

data collection tool have been reviewed by OMB and are currently approved under OMB 

control number 0938-0941, with an expiration date of December 31, 2011, for use in the 

Physician Group Practice, Medicare Care Management Performance (MCMP), and EHR 

demonstrations. Based on burden estimates for the PGP demonstration, which uses the 

same data submission methods, we estimate the burden associated with a physician group 

completing the data collection tool would be approximately 79 hours per physician 
CMS-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 associated 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 qualify 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 frequently than is required to qualify for or 

maintain board certification status participate in a qualified Maintenance of Certification 

Program for 2012 and successfully complete a qualified Maintenance of Certification 

Program practice assessment for 2012. We believe that a majority of the eligible 

professionals who would attempt to qualify for this additional 0.5 percent incentive 

payment would be those who are already enrolled and participating in a Maintenance of 

Certification Board. The amount of time that it would take for the eligible professional to 

participate in the Maintenance of Certification Program more frequently than is required 

to qualify for or maintain board certification status would vary based on what each 

individual board determines constitutes "more frequently." 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 informal poll of a few ABMS member boards 

indicates that the time an individual eligible professional spends to complete the practice 

assessment component of the Maintenance of Certification ranges from 8 to 12 hours. 

We are seeking comments on this burden 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 were eligible to participate in the eRx 

Incentive Program. Approximately 90,000 (or about 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 payment, we expect that the number of 

eligible professionals participating in the eRx Incentive Program to be approximately 

90,000, based on participation rates from 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 mechanisms for purposes of reporting the electronic 

prescribing measure for the 2013 and 2014 payment 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 purposes of conducting a burden analysis for 

the 2012 through 2014 eRx Incentive Program, we will assume that approximately 

90,000 professionals eligible to participate in the 2009 eRx Incentive Program will 

participate. This is based on participation rates from the 2009 eRx Incentive Program, 

which is the highest participation level for 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, we 
CMS-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 whether to participate and, to the extent 

they meet-- (1) certain proposed thresholds with respect to the 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 this proposed rule, they would 

qualify to receive an incentive payment for 2012 and 2013 and/or avoid being subject to 

the 2013 and 2014 payment adjustment. 

In section IV.F.2.b.(2). of this proposed 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 electronic 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 association 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 successful electronic prescriber for the 2014 

payment adjustment. For the 2013 and 2014 payment adjustment, we propose that each 

eligible professional would need to report the electronic prescribing measure's numerator 

at least 10 instances during the reporting period. 
CMS-1524-P 540 

We expect the ongoing costs associated with participation in the eRx Incentive 

Program to decline based on an eligible professional's understanding of the eRx Incentive 

Program, experience with participating in the eRx Incentive Program, and increased 

efforts by CMS and stakeholders to disseminate useful educational resources and best 

practices. 

Similar to the Physician Quality Reporting System, one factor in the burden to 

individual eligible professionals is the time and effort associated with individual eligible 

professionals reviewing the electronic prescribing measure to determine whether it is 

applicable to them, reviewing and selecting one of the available 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 the measure into their office work flows. 

Since the eRx Incentive Program consists of only 1 measure to report, we estimate 

2 hours as the amount of time that would be needed for individual eligible professionals 

to prepare for participation in the eRx Incentive Program. At an average cost of 

approximately $60 per hour per practice, we estimate the total preparation 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 prescribing measure. For eligible professionals 

who choose to do so via claims, we estimate that the burden associated with the 

requirements of this incentive program would be the time and effort associated with 

gathering the required information and identifying when it is appropriate to include the 
CMS-1524-P 541 

measure's quality data code (QDC) on the claims they submit for payment. For 

claims-based reporting, the measure's QDC would be collected as additional (optional) 

line items on the existing HIPAA transaction 837-P and/or CMS Form 1500. We do not 

anticipate any new forms and or modifications to the existing transaction or form. We 

also do not anticipate changes to the 837-P or CMS Form 1500 for CY 2012. 

Based on the information from the PVRP for the amount of time it takes a median 

practice to report one measure one time on claims (1.75 minutes) and our proposed 

requirement that eligible professionals report the measure 25 times for purposes of the 

incentive payment, we estimate the burden associated with claims-based data submission 

to would be 43.75 minutes (1.75 minutes per case 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, where we propose that an eligible 

professional is required to report the measure only 10 times, we estimate the burden 

associated with claims-based submission would be 17.5 minutes (1.75 minutes per case X 

1 measure X 10 cases per measure). This equates 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 Incentive Program for 2010 and eligible professionals are not 

required to indicate to us how they plan to report the electronic prescribing measure each 

year, it is difficult to accurately estimate how many eligible professionals would opt to 

participate in the eRx Incentive Program through the proposed registry-based reporting 
CMS-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 participation in the 2012, 2013, and 2014 eRx Incentive 

Program since the only information that the registry would need to report to us is the 

number of times the eligible professional electronically prescribed. However, eligible 

professionals would need to authorize or instruct the registry to submit quality measures 

results and numerator and denominator data on the electronic prescribing measure to 

CMS on their behalf. We estimate that the time and effort associated with this would be 

approximately 5 minutes for each eligible professional that wishes to authorize or instruct 

the registry to submit quality measures results and numerator and denominator data on 

the electronic prescribing measure to CMS on their behalf. 

Based on our proposal to consider only registries qualified to submit Physician 

Quality Reporting System quality measures results and numerator and denominator data 

on quality measures to CMS on their participants' behalf for the 2012 and 2013 Physician 

Quality Reporting System reporting periods to be qualified to submit results and 

numerator and denominator data on the electronic prescribing measure for the respective 

eRx Incentive Program reporting periods that occur in 2012 and 2013, there would be no 

need for a registry to undergo a separate self-nomination process for the eRx Incentive 

Program and therefore, no additional burden associated with the registry self-nomination 

process. 
CMS-1524-P 543 

There would also be a burden to the registry associated with the registry 

calculating results for the electronic prescribing measure from the data submitted to the 

registry by its participants and submitting the quality measures results and numerator and 

denominator data on the electronic prescribing quality measure to CMS on behalf of their 

participants. We expect that the time needed for a registry to review the electronic 

prescribing measure's specifications, calculate the measure's results, and submit the 

measure's results and numerator and denominator data on their participants' behalf would 

vary along with the number of eligible professionals reporting data to the registry. 

However, we believe that registries already perform many of these activities for their 

participants. Since the eRx Incentive Program consists of only one measure, we believe 

that the burden associated with the registry reporting the measure's results and numerator 

and denominator to CMS on behalf of their participants would be minimal. 

For the proposed EHR-based reporting mechanism, the eligible professional 

would need to either extract the necessary clinical data from his or her EHR and submit 

the necessary data to the CMS-designated clinical data warehouse or have an EHR data 

submission vendor extract the necessary clinical data from his or her EHR and submit the 

necessary data to CMS on the professional's behalf. Because this manner of reporting 

quality data to CMS was first added to the eRx Incentive Program in 2010 and eligible 

professionals are not currently required to (and we are not proposing to require that they) 

indicate to us how they intend to report the electronic prescribing measure, it is difficult 

to estimate how many eligible professionals would opt to participate in the eRx Incentive 

Program through the proposed EHR-based reporting mechanism for reporting periods 

that occur in CYs 2012 and 2013. We believe that once an eligible professional's EHR is 
CMS-1524-P 544 

programmed by the vendor to allow data submission to CMS, the burden to the eligible 

professional associated with submission of data on the electronic prescribing measure 

should be minimal. The eligible professional who chooses to submit the electronic 

prescribing measure data directly to CMS from his or her EHR would have to have 

access to a CMS-specified identity management system, such as IACS, though. We 

believe it takes less than 1 hour to obtain access 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 for the eRx Incentive Program. 

There would also be a burden to the EHR vendor associated with the EHR vendor 

programming its EHR product(s) to extract the clinical data that the eligible professional 

and/or vendor would need to submit to CMS for purposes of reporting the proposed 

electronic prescribing measure. The time needed for an EHR vendor to review the 

measure's specifications and program its product to submit data on the measure to the 

CMS-designated clinical data warehouse would be dependent on the EHR vendor's 

familiarity with the electronic prescribing measure, the vendor's system capabilities, as 

well as the vendor's programming capabilities. Since we are proposing that only EHR 

products qualified for 2012 and 2013Physician Quality Reporting System reporting 

periods would qualify for the respective eRx Incentive Program reporting periods that 
CMS-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 measure to the CMS-designated clinical data 

warehouse would be minimal. 

Finally, with respect to the proposed criteria for group practices to be treated as 

successful electronic prescribers for the 2012 and 2013 incentive, as well as with regard 

to the 2013 and 2014 payment adjustments, as discussed in section IV.F.2. of this 

proposed rule, respectively, group practices would have the same options as individual 

eligible professionals in terms of the form and manner for reporting the electronic 

prescribing measure (that is, group practices would have the option of reporting the 

measure through claims, a qualified registry, or a qualified EHR product). There are only 

2 differences between the proposed requirements for an individual eligible professional 

and a group practice: (1) the fact that a group 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 burden associated with the proposed group 

practice self-nomination process since we propose to limit the group practices to those 

selected to participate in the Physician 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 self-nominates for the Physician Quality 

Reporting System GPRO and indicate how it intends to report the electronic prescribing 

measure. 
CMS-1524-P 546 

In terms of the burden to group practices comprised of 25 to 99 eligible 

professionals associated with submission of the electronic prescribing measure, we 

believe that this would be similar to the burden to individual eligible professionals for 

submitting the electronic prescribing measure. In fact, overall, there could be less burden 

associated with a practice participating as a group rather than as individual eligible 

professionals because the total number of proposed reporting instances required by the 

group could be less than the total number of proposed reporting instances that would be 

required if each member of the group separately reported the electronic prescribing 

measure. Thus, we believe that the burden to a group practice associated with reporting 

the electronic prescribing measure could range from almost no burden (for groups who 

choose to do so through a qualified EHR or registry) to 18.22 hours (1.75 minutes per 

measure x 1 measure x 625 cases per measure) for a group practice that chooses to report 

the electronic prescribing measures through the proposed claims submission process. 

Consequently, the total estimated cost per group practice to report 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 burden to individual eligible professionals for 

submitting the electronic prescribing measure. In fact, overall, there could be less burden 

associated with a practice participating as a group rather than as individual eligible 

professionals because the total number of proposed reporting instances required by the 

group could be less than the total number of proposed reporting instances that would be 
CMS-1524-P 547 

required if each member of the group separately reported the electronic prescribing 

measure. Thus, we believe that the burden to a group practice associated with reporting 

the electronic prescribing measure could range from almost no burden (for groups who 

choose to do so through a qualified EHR or registry) to 72.92 hours (1.75 minutes per 

measure x 1 measure x 2500 cases per measure) for a group practice that chooses to 

report the electronic prescribing measures through the proposed claims submission 

process. Consequently, the total estimated cost per group practice 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 through the proposed registry-based reporting 

mechanism of the electronic prescribing measure would more than likely already be 

reporting data to the registry. Little, if any, additional data would need to be reported to 

the registry for purposes of participation in the eRx Incentive Program for CYs 2012 

through 2014 beyond authorizing or instructing the registry to submit quality measures 

results and numerator and denominator data on the electronic prescribing measure to 

CMS on their behalf. We estimate that the time and effort associated with this proposed 

registry option would be approximately 5 minutes for each group practice that wishes to 

authorize or instruct the registry to submit quality measures results and numerator and 

denominator data on the electronic prescribing measure to CMS on their behalf. 

For group practices that choose to participate in the eRx Incentive Program for 

CYs 2012 through 2014 via the proposed EHR-based reporting of the electronic 

prescribing mechanism, once the EHR is programmed by the vendor to allow data 
CMS-1524-P 548 

submission to CMS, the burden to the group practice associated with submission of data 

on the electronic prescribing measure 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 section IV.H. of this proposed rule) is a 

voluntary program whereby eligible professionals (EPs) may earn an incentive payment 

for demonstrating meaningful use of certified EHR technology, which includes among 

other requirements, the submission of clinical quality measures (CQMs). The "Electronic 

Health Record Incentive Program" final rule (75 FR 44314 through 75 FR 44588) 

describes the CQMs and the CQM reporting mechanisms that will be available to EPs 

who choose to participate in the EHR Incentive Program (75 FR 44380) and established 

the criteria for achieving meaningful use in Stage 1, which includes CY 2012. In the 

final rule, for CY 2012, we estimated that approximately 385,954 Medicare EPs will be 

eligible to receive an incentive under the EHR Incentive Program (75 FR 44518). 

Section 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 the reporting of CQMs for purposes of 

demonstrating meaningful use through participation in the Physician Quality Reporting 

System-Medicare EHR Incentive Pilot. Eligible professionals may participate in the Pilot 

by submitting CQMs via (1) a Physician Quality Reporting System "qualified" EHR data 
CMS-1524-P 549 

submission vendor or (2) an EHR-based reporting option using the EP's certified EHR 

technology, which must also be a Physician Quality Reporting System "qualified" EHR. 

 Because 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 Incentive Program opened in January 2011. At this 

time, we do not have sufficient data available on participation in the EHR Incentive 

Program by EPs to revise the final rule's estimate of how many EPs will opt to participate 

in the EHR Incentive Program for payment year 2012. 

We believe the burden associated with actually reporting CQMs will vary 

depending on the reporting mechanism selected by the EP. Attestation to the objectives 

and measures is the only method available for EPs to demonstrate that they have met the 

meaningful use criteria in 2011. Attestation was first available on April 18, 2011 and we 

do not yet have sufficient data on the 2011 participation in the EHR Incentive Program. 

Therefore, it is difficult to estimate the level of participation in the 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 attestation will largely be those who are not 

participating in both the EHR Incentive Program and Physician Quality Reporting 

System. This is because EPs participating in the Physician Quality Reporting System 

would be more likely to participate 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 technology, specify the technology, and satisfied all 

Stage 1 meaningful use core criteria for payment year 2012 (75 FR 44518). We estimate 
CMS-1524-P 550 

that it will further take an additional 0.5 hours to select and attest to the clinical quality 

measures, in the format and manner specified by CMS (75 FR 44517). 

 For reporting via a qualified EHR data submission vendor, there would be no 

additional time burden for eligible professionals 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 EHR 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 aside from the burden associated with being a 

Physician Qualified Reporting System qualified EHR data submission vendor for such 

vendors to submit CQMs on behalf of EPs. 

For EPs who choose to participate in the pilot via direct data submission to CMS 

from the EP's certified 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 the 
CMS-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 such, we believe there will be no additional 

burden on EPs to have access to a CMS-specified identity management system if the EP 

is already participating in the Physician Quality Reporting System. With respect to 

submitting the actual 2012 data file in 2013, we believe that this 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 Physician Quality Reporting System, the additional 

burden to the EP associated with electronic submission of the CQMs should be minimal. 

Since this is a new, proposed reporting mechanism for the EHR Incentive Program 2012 

payment year, it is difficult to predict the level of participation in EHR-based reporting. 

However, we believe that the number of EPs who choose to participate in the EHR-based 

reporting pilot will be the same as the number of eligible professionals who choose the 

EHR-based reporting mechanism for the Physician Quality Reporting System. This is 

primarily because in addition to being certified EHR technology, the technology used 

under this reporting option would need to be "qualified" according to the Physician 

Quality Reporting System qualification process. 

 The burden associated with the EHR vendor programming its EHR product(s) to 

extract the clinical data that the EP or vendor needs to submit to CMS for purposes of 

reporting CQMs will be dependent on the EHR vendor's familiarity with the EHR 

Incentive Program, the vendor's system capabilities, as well as the vendor's programming 

capabilities. As we already propose to require "qualified" EHRs vendors to perform 

these functions under the Physician Quality Reporting System, the burden for submitting 
CMS-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 total burden hours to be 40 hours at a rate of 

$50 per hour for a total burden estimate of $2,000 ($50 per hour x 40 hours per vendor). 

However, given the variability in the capabilities of the vendors, those vendors with 

minimal experience would have a burden of approximately 200 hours at $50 per hour, for 

a total estimate of $10,000 per vendor ($50 per hour x 200 hours per EHR vendor). 

 We invite comments on this burden analysis, including the underlying 

assumptions used in developing our burden estimates. 

To obtain copies of the supporting statement and any related forms for the 

proposed paperwork collections referenced above, access CMS' Web site at 

http://www.cms.gov/PaperworkReductionActof1995/PRAL/list.asp#TopOfPage or email 

your request, including your address, phone number, OMB number, and CMS document 

identifier, to Paperwork@cms.hhs.gov, or call the Reports Clearance Office at 

(410) 786-1326. 

If you comment on these information collection and recordkeeping requirements, 

please do either of the following: 

 1. Submit your comments electronically as specified in the ADDRESSES section 

of this 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; or 
CMS-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 acknowledge or respond to them individually. 

We will consider all comments we receive by the date and time specified in the "DATES" 

section of this preamble, and, when we proceed with a subsequent document, we will 

respond to the comments in the preamble to that document.

VII. Regulatory Impact Analysis 

A. Statement of Need

 This proposed rule is necessary in order to make payment and policy changes 

under the Medicare PFS and to make required statutory changes under the Affordable 

Care Act and MIPPA and other statutory changes. This proposed rule is also necessary to 

make changes to the Part B drug payment policy 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 (September 30, 1993), Executive Order 13563 on 

Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory 

Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the 

Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 

22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999) and the 

Congressional Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of 

available regulatory alternatives and, if regulation is necessary, to select regulatory 
CMS-1524-P 554 

approaches that maximize net benefits (including potential economic, environmental, 

public health and safety effects, distributive impacts, and equity). Executive Order 13563 

emphasizes the importance of quantifying both costs and benefits, of reducing costs, of 

harmonizing rules, and of promoting flexibility. This rule has been designated an 

"economically" significant rule, under section 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, that to the best of our ability presents the 

costs and benefits of the proposed 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 significant impact on a substantial number of small entities. For 

purposes of the RFA, small entities include small businesses, nonprofit organizations, and 

small governmental jurisdictions. Most hospitals and most other providers and suppliers 

are small entities, either by nonprofit status or by having revenues of $7.0 million to 

$34.5 million in any 1 year (for details see the SBA's Web site at 

http://www.sba.gov/content/table-small-business-size-standards (refer to the 620000 

series)). Individuals and States are not included in the definition of a small entity. 

The RFA requires that we analyze regulatory options for small businesses and other 

entities. A Regulatory Flexibility Act analysis must include a justification concerning 

the reason action is being taken, the kinds and number of small entities the rule affects, 

and an explanation of any meaningful options that achieve the objectives with less 

significant adverse economic impact on the small entities. 

For purposes of the RFA, physicians, NPPs, and suppliers including IDTFs are 
CMS-1524-P 555 

considered small businesses if they generate revenues of $10 million or less based on 

SBA size standards. Approximately 95 percent of physicians are considered to be small 

entities. There are over 1 million physicians, other practitioners, and medical suppliers 

that receive Medicare payment under the PFS. 

 Because we acknowledge that many of the affected entities are small entities, the 

analysis provided here and throughout the preamble of this proposed rule constitutes our 

Initial Regulatory Flexibility Act (IRFA) analysis 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 operations of a substantial number 

of small rural hospitals. This analysis must conform to the provisions of section 603 of 

the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as 

a hospital that is located outside of a Metropolitan Statistical Area 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 determined, 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 benefits before issuing any rule whose mandates 

require spending in any 1 year of $100 million in 1995 dollars, updated annually for 

inflation. In 2011, that threshold is approximately $136 million. This regulation does not 

impose any costs on State or local governments, the requirements of Executive Order 
CMS-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, meets 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 presents 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 regulations, payments, or payment policies to 

ensure that our payment systems reflect changes in medical practice and the relative 

value of services. We provide information for each of the policy changes in the relevant 

sections of this proposed rule. We are unaware of any relevant Federal rules that 

duplicate, overlap, or conflict with this proposed rule. The relevant sections of this 

proposed rule contain a description of significant alternatives if applicable. 

C. RVU Impacts 

1. Resource-Based Work, PE, and Malpractice RVUs 

Section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or decreases in 

RVUs may not cause the amount of expenditures for the year to differ by more than 

$20 million from what expenditures would have been in the absence of these changes. If 

this threshold is exceeded, we make adjustments to preserve budget neutrality. 

Our estimates of changes in Medicare revenues for PFS services compare 

payment rates for CY 2011 with proposed payment rates for CY 2012 using CY 2010 

Medicare utilization for all years. To the extent that there are year-to-year changes in the 

volume and mix of services provided by physicians, the actual impact on total Medicare 

revenues will be different than those shown in Table 64. The payment impacts reflect 
CMS-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 receive substantial Medicare revenues for 

services that are not paid under the PFS. For instance, independent laboratories receive 

approximately 85 percent of their Medicare revenues from clinical laboratory services 

that are not paid under the PFS. 

Table 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 versus allowed or "target" expenditures, and 

applies a sustainable growth rate (SGR) calculation intended to control growth in 

aggregate Medicare expenditures for physicians' services. This update methodology is 

typically referred to as the "SGR" methodology, although the SGR is only one 

component of the formula. Medicare physician fee schedule payments for services are 

not withheld if the percentage increase in actual expenditures exceeds the SGR. Rather, 

the PFS update, as specified in section 1848(d)(4) of the Act, is adjusted to eventually 

bring actual expenditures back in line with targets. If actual expenditures exceed allowed 

expenditures, the update is reduced. If actual expenditures are less than allowed 

expenditures, the update is increased. We currently estimate that the statutory formula 

used to determine the physician update will result in a CY 2012 conversion factor of 

$23.9635 which represents a PFS update of -29.5 percent. By law, we are required to 
CMS-1524-P 558 

make these reductions in accordance with section 1848(d) and (f) of the Act, and these 

reductions can only be averted by an Act of the Congress. While the Congress has 

provided temporary relief from these reductions for every year since 2003, a long-term 

solution is critical. We are committed to working with the Congress to permanently 

reform the SGR methodology for Medicare physician fee schedule updates. 

The following is an explanation of the information represented in Table 64: 

● Column A (Specialty): The Medicare specialty code as reflected in our 

physician/supplier enrollment files. 

● Column B (Allowed Charges): The aggregate estimated PFS allowed charges 

for the specialty based on CY 2010 utilization and CY 2011 rates. That is, allowed 

charges are the PFS amounts for covered services and include coinsurance and 

deductibles (which are the financial responsibility of the beneficiary). These amounts 

have been summed across all services furnished by physicians, practitioners, and 

suppliers within a specialty to arrive at the total allowed charges for the specialty. 

● Column C (Impact of Work and Malpractice (MP) RVU Changes): This 

column shows the estimated CY 2012 impact on total allowed charges of the changes in 

the work and malpractice RVUs, including the impact of changes due to potentially 

misvalued codes. These impacts are primarily due to the multiple procedure payment 

reduction (MPPR) for the professional component of advanced imaging services. 

● Column D (Impact of PE RVU Changes - Full): This column shows the 

estimated CY 2012 impact on total allowed charges of the changes in the PE RVUs if 

there were no remaining transition to the full use of the PPIS data. 

● Column E (Impact of PE RVU Changes - Tran): This column shows the 
CMS-1524-P 559 

estimated CY 2012 impact on total allowed charges of the changes in the PE RVUs under 

the third year of the 4-year transition to the full use of the PPIS data. This column also 

includes the impact of the MPPR policy and, and the impact of changes due to potentially 

misvalued codes. 

● Column F (Combined Impact - Full): This column shows the estimated 

CY 2012 combined impact on total allowed charges of all the changes in the previous 

columns if there were no remaining transition to the new PE RVUs using the PPIS data. 

● Column G (Combined Impact - Tran): This column shows the estimated 

CY 2012 combined impact on total allowed charges of all the changes in the previous 

columns under the third year of the 4-year transition to the new PE RVUs using the PPIS 

data.

TABLE 64: CY 2012 PFS PROPOSED RULE TOTAL ALLOWED 

CHARGE ESTIMATED IMPACT FOR 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 impacts 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 are 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 proportions in the revised and rebased MEI for 

CY 2011. That is, the rebased MEI had a greater proportion attributable to malpractice 

and PE and, correspondingly, a lesser proportion attributable to work. Specialties that 

have a high proportion of total RVUs attributable to work, such as emergency medicine, 

experienced a decrease in aggregate payments as a result of this rescaling, while 

specialties that have a high proportion attributable to PE, such as diagnostic testing 

facilities, experienced an increase in aggregate payments. (For further details on the MEI 

rebasing, see the discussion beginning on 75 FR 73262 in the CY 2011 PFS final rule.) 

Table 64 also includes the impacts resulting from our proposal to expand the 

current 50 percent MPPR policy to the professional 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. Finally, 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, including group therapy services, as discussed previously in 

section II.A. of this proposed rule. 

b. Combined Impact 

 Column F of Table 64 displays the estimated 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 therapy centers. Again, these impacts are estimated prior to the 

application of the negative CY 2012 Conversion Factor (CF) update applicable under the 

current statute. 

Table 65 shows the estimated impact on total payments for selected high-volume 

procedures of all of the changes discussed previously. We have included CY 2012 

payment rates with and without the effect of the CY 2012 negative PFS CF update for 

comparison purposes. We selected these procedures because they are the most 

commonly furnished by a broad spectrum of physician specialties. There are separate 

columns that show the change in the facility rates and the nonfacility rates. For an 

explanation of facility and nonfacility PE, we refer readers to Addendum A of this 

proposed rule. 
CMS-1524-P 563 

TABLE 65: IMPACT OF PROPOSED RULE AND ESTIMATED PHYSICIAN UPDATE ON CY 2012 

SELECTED PROCEDURES 

Facility 

CPT/ 

HCPCS1 MOD Short Descriptor CY 20112 CY 20123 (pre-update) 

% 

Change 

(preupdate) CY 20124 

% Change 

(postupdate) CY 20112 CY 20123 (pre-update

11721 Debride nail 6 or more $25.82 $25.17 -3% $17.73 -31% $41.79 $41.17000 Destruct premalg lesion $55.38 $55.44 0% $39.06 -29% $79.50 $79.27130 Total hip arthroplasty $1,440.26 $1,437.28 0% $1,012.70 -30% NA N27244 Treat thigh fracture $1,224.51 $1,223.69 0% $862.21 -30% NA N27447 Total knee arthroplasty $1,539.47 $1,535.22 0% $1,081.71 -30% NA N33533 Cabg arterial single $1,984.22 $1,942.33 -2% $1,368.56 -31% NA N35301 Rechanneling of artery $1,128.70 $1,108.74 -2% $781.21 -31% NA N43239 Upper gi endoscopy biopsy $174.64 $173.45 -1% $122.21 -30% $345.20 $346.66821 After cataract laser surgery $296.95 $303.71 NA $213.99 -28% $314.62 $321.66984 Cataract surg w/iol 1 stage $742.38 $753.67 2% $531.03 -28% NA N67210 Treatment of retinal lesion $647.59 $657.08 1% $462.97 -29% $669.00 $678.71010 Chest x-ray NA NA NA NA NA $23.78 $23.71010 26 Chest x-ray $8.83 $8.84 0% $6.23 -29% $8.83 $8.77056 Mammogram both breasts NA NA NA NA NA $110.76 $110.77056 26 Mammogram both breasts $43.49 $42.17 -3% $29.71 -32% $43.49 $42.77057 Mammogram screening NA NA NA NA NA $81.20 $79.77057 26 Mammogram screening $35.00 $34.01 -3% $23.96 -32% $35.00 $34.77427 Radiation tx management x5 $180.41 $174.81 -3% $123.17 -32% $180.41 $174.88305 26 Tissue exam by pathologist $36.35 $35.71 -2% $25.16 -31% $36.35 $35.90801 Psy dx interview $123.33 $119.38 -3% $84.11 -32% $153.91 $151.90862 Medication management $44.85 $44.21 -1% $31.15 -31% $57.76 $58.90935 Hemodialysis one evaluation $74.75 $72.44 -3% $51.04 -32% NA N92012 Eye exam established pat $50.62 $51.36 1% $36.18 -29% $79.84 $81.92014 Eye exam & treatment $77.13 $77.88 1% $54.88 -29% $115.86 $118.92980 Insert intracoronary stent $873.19 $834.95 -4% $588.30 -33% NA N93000 Electrocardiogram complete NA NA NA NA NA $19.71 $18.93010 Electrocardiogram report $8.83 $8.50 -4% $5.99 -32% $8.83 $8.93015 Cardiovascular stress test NA NA NA NA NA $92.42 $87.93307 26 Tte w/o doppler complete $47.57 $45.91 -3% $32.35 -32% $47.57 $45.93458 26 L hrt artery/ventricle angio $320.06 $315.96 -1% $222.62 -30% $320.06 $315.98941 Chiropractic manipulation $30.92 $30.61 -1% $21.57 -30% $35.34 $35.99203 Office/outpatient visit new $74.75 $74.48 0% $52.48 -30% $102.95 $104.99213 Office/outpatient visit est $49.27 $49.66 1% $34.99 -29% $68.97 $69.99214 Office/outpatient visit est $75.77 $75.84 0% $53.44 -29% $102.27 $103.99222 Initial hospital care $132.17 $132.64 0% $93.46 -29% NA N
CMS-1524-P 564 

Facility 

CPT/ 

HCPCS1 MOD Short Descriptor CY 20112 CY 20123 (pre-update) 

% 

Change 

(preupdate) CY 20124 

% Change 

(postupdate) CY 20112 CY 20123 (pre-update

99223 Initial hospital care $194.01 $194.88 0% $137.31 -29% NA N99231 Subsequent hospital care $38.39 $38.09 -1% $26.84 -30% NA N99232 Subsequent hospital care $69.31 $69.38 0% $48.89 -29% NA N99233 Subsequent hospital care $99.55 $99.65 0% $70.21 -29% NA N99236 Observ/hosp same date $214.05 $184.34 -14% $129.88 -39% NA N99239 Hospital discharge day $101.25 $102.37 1% $72.13 -29% NA N99283 Emergency dept visit $61.16 $59.86 -2% $42.18 -31% NA N99284 Emergency dept visit $115.52 $114.27 -1% $80.52 -30% NA N99291 Critical care first hour $217.11 $216.65 0% $152.65 -30% $264.34 $265.99292 Critical care addl 30 min $109.06 $108.83 0% $76.68 -30% $118.92 $118.99348 Home visit est patient NA NA NA NA NA $82.22 $81.99350 Home visit est patient NA NA NA NA NA $169.54 $170.

G0008 Immunization admin NA NA NA NA NA $23.10 $23.

1 CPT codes and descriptions are copyright 2010 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply. 2 Payments based on the 2011 conversion factor of 33.9764 3 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 Potentially Misvalued Codes on an Annual Basis 

Under the PFS

 This year's proposal of a process to consolidate the Five-Year Reviews of Work 

and PE RVUs with the annual review of potentially 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 previously, 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 Revisions 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 codes. 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 Geographic Practice Cost Indices (GPCIs) 

As discussed in section II.E. of this proposed 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 the 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 for 
CMS-1524-P 566 

determining the relative cost differences in the office rent component of the PE GPCIs. 

In addition, we utilized 2006 through 2008 Bureau of Labor and Statistics (BLS) 

Occupational Employment Statistics (OES) 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 share of the industries occupying the "All Other 

Services" and "Other Professional Expenses" 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 the PE category of 51.734 percent minus the 

professional liability insurance category weight 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 categories were combined 

to achieve a total office rent weight of 10.223 percent. As discussed in the previous 

paragraph, a new purchased services index was created to geographically adjust the 

labor-related components of the "All Other Services" and "Other Professional Expenses" 

categories of the MEI. 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. However, since our proposed purchased 

services methodology only accounts for the labor related share of the industries 

comprising the "All Other Services" 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 a 
CMS-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 proposed work GPCI cost share weight and the 

professional liability insurance weight of 4.295 percent was used for the malpractice 

GPCI cost share weight. A more detailed discussion on the proposed CY 2012 GPCI cost 

share weights can be found in section II.E. of this proposed rule. 

Additionally, section 1848(e)(1)(E) of the Act (as amended by section 103 of the 

Medicare and Medicaid Extenders Act of 2010) extended the 1.000 work GPCI floor 

through December 31, 2011. Therefore, the CY 2012 GPCIs reflect the sunset of the 

1.000 work GPCI floor. Section 1848(e)(1)(G) of the Act (as amended by section 134(b) 

of the MIPPA) established a permanent 1.500 work GPCI floor in Alaska, beginning 

January 1, 2009 and, therefore, the 1.500 work GPCI floor in Alaska will remain in place 

for CY 2012. Moreover, section 1848(e)(1)(I) of the Act (as added by section 10324(c) 

of the Affordable Care Act) established a permanent1.000 PE GPCI floor for services 

furnished in frontier States effective January 1, 2011. 

Addendum D to this proposed rule shows 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 national GPCI cost share weights. While we 

do not actually use the GAFs in computing the PFS payment for a specific service, they 

are useful in comparing the estimated overall costs and payments for different localities. 

The cumulative effects of all of the GPCI revisions, including the updated underlying 

GPCI data, updated cost share weights, and provisions of the Affordable Care Act, are 
CMS-1524-P 568 

reflected in the CY 2012 GPCI values that are 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 current law CY 2011 Geographic Adjustment 

Factors (GAFs) to the proposed CY 2012 GAFs. 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 work, practice expense, and malpractice. The 

table first shows the impact under current law and regulation, 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 neutral increases to the 

CY 2011 GPCIs for lower expense areas authorized 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 directly resulting from our 

proposed changes to the PE GPCI are isolated, the impacts are negligible (Column F). 

The following is an explanation of the information represented in Table 66: 

● Column (A): Medicare Locality - The PFS geographic locality. 

● Column (B): CY 2011 GAF - The current CY 2011 Geographic Adjustment 

Factor for the locality, which includes the non-budget neutral increases to the CY 2011 

GPCIs for lower expense areas authorized by the Affordable Care Act and the Medicare 

and Medicaid Extenders Act. These figures also reflect the first year of the 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 increases to the CY 2011 GPCIs for lower expense 

areas authorized by the Affordable Care Act and the MMEA. These numbers also reflect 

the end of the transition to the latest GPCIs that began in 2011. 

● Column (D): CY 2012 GAF (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 the GPCI practice expense weights to the 

2006-based MEI cost share weights. The Geographic Adjustment Factors in this column 

are for 2012 and do not reflect any temporary increases to work and practice expense 

required by the Affordable Care Act. 

● Column (E): percent Change CY 2011 to CY 2012 (current) - Impact of the 

expiration of the non-budget neutral increases to the CY 2011 GPCIs for lower 

expense areas authorized by the Affordable Care Act and the MMEA and the end of 

the transition to the latest GPCIs that began in 2011. 

● Column (F): percent Change CY 2012 (No NPRM) to CY 2012 (NPRM) - 

Impact of the four regulatory changes described previously. 

● Column (G): percent Change Combined Impact CY 2011 to CY 2012 - 

Combined impact of all changes from CY 2011 to CY 2012. 
CMS-1524-P 570 

TABLE 66: CY 2012 GEOGRAPHIC ADJUSTMENT FACTORS (GAFS) 

CHANGES UNDER CURRENT 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 utilization of similar services already on the 

telehealth list, we estimate no significant budgetary impact from the proposed additions. 

In addition, the proposed revision to the telehealth criteria would be effective for CY 

2013 PFS telehealth services, with no impact in CY 2012. 

H. Effects of the Impacts of Other Provisions of the Proposed Rule

1. Part B Drug Payment: ASP Issues 

Application of our proposals for "ASP Reporting Template Update" and 

"Reporting of ASP Units and Sales Volume for Certain Products," as discussed in section 

IV.A. of this proposed rule involve revisions to the existing ASP reporting template 

which will facilitate the accuracy and efficiency of data transfer from manufacturers. 

Any impacts are dependent on the status and quality of quarterly manufacturer data 

submissions, so we cannot quantify associated savings. 
CMS-1524-P 573 

Finally, as discussed in section IV.A. of this proposed rule, we are proposing to 

provide for appropriate price substitutions that account for market-related pricing changes 

and would allow Medicare to pay based off lower market prices for those drugs and 

biologicals that consistently exceed the applicable threshold percentage. Based on 

estimates published in various OIG reports (see section 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 rule, we are continuing the 

recoupment of the $50 million in expenditures from this demonstration in order to satisfy 

the budget neutrality requirement in section 651(f)(1)(b) of the MMA. We initiated this 

recoupment in CY 2010 and this will be the third year. As discussed in the CY 2010 PFS 

final rule with comment period, we finalized a policy to recoup $10 million each year 

through adjustments to the PFS for all chiropractors in CYs 2010 through 2014. To 

implement this required budget neutrality adjustment, we are recouping $10 million in 

CY 2012 by reducing the payment amount under the PFS for the chiropractic CPT codes 

(that is, CPT codes 98940, 98941, and 98942) by approximately 2 percent. 

3. Extension of Payment for Technical Component of Certain Physician Pathology 

Services 

 As discussed in section IV.D. of this 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 for 
CMS-1524-P 574 

the TC of physician pathology services furnished to a hospital inpatient or outpatient. 

The savings associated with implementing this provision are estimated to be 

approximately 80 million dollars for CY 2012. 

4. Section 4103: Medicare Coverage of Annual Wellness Visit Providing a Personalized 

Prevention Plan: Incorporation of a Health Risk Assessment as Part of the Annual 

Wellness Visit. 

As discussed in section IV.E. of this proposed rule, section 1861(s)(2)(FF) of the 

Act, as described more fully in section 1861(hhh), of the Act (as added by section 4103 

of the Affordable Care Act) provides Medicare coverage for an annual wellness visit. 

Regulations for Medicare coverage of the AWV are established at 42 CFR 410.15. The 

annual wellness visit is covered with no coinsurance or deductible when furnished by a 

Medicare participating provider (a health professional as that term is defined in 

42 CFR 410.15). The annual wellness visit entails the creation of a personalized 

prevention plan for an individual and includes elements, such as updating medical and 

family history, identifying providers that regularly provide medical care to the individual, 

measurement of height, weight, and body mass index, identification of risk factors, the 

provision of personalized health advice, and development of a screening schedule (such 

as a checklist), and referrals as appropriate for additional preventive services. Section 

1861(hhh)(1)(A) of the Act specifies that a personalized prevention plan for an individual 

includes a health risk assessment (HRA) that meets the guidelines established by the 

Secretary and takes into account the results of a HRA. We are proposing to incorporate 

the use and results of an HRA as part of the provision of personalized prevention plan 

services during the AWV. The estimated impact of incorporating the HRA as part of the 
CMS-1524-P 575 

AWV is unknown for CY 2012. We are specifically seeking public comment on the 

following: 

● The impact of use of the HRA on health professional practices. 

● The burden on health professional practices of incorporating an HRA into 

subsequent AWVs, as well as the first AWV. 

● The impact of the elements included in the definitions of first and subsequent 

AWVs. 

● Modification of those AWV elements for which the Secretary has authority to 

determine appropriateness. 

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 professionals who wish to participate in the 2012 

Physician Quality Reporting System. Although there may be some cost incurred by CMS 

for maintaining the Physician Quality Reporting System measures and their associated 

code sets, and for expanding an existing clinical data warehouse to accommodate the 

proposed registry-based reporting ,EHR-based reporting, and group practice reporting 

options for the 2012 Physician Quality Reporting System, we do not anticipate a 

significant cost impact on the Medicare program. 

Participation in the CY 2012 Physician Quality Reporting System by individual 

eligible professionals and group practices is voluntary and individual eligible 

professionals and group practices may have different processes for integrating the 

collection of the Physician Quality Reporting System measures into their practice's work 
CMS-1524-P 576 

flows. Given this variability and the multiple reporting options that we provide, it is 

difficult to definitively estimate the impact of the Physician Quality Reporting System on 

providers. Furthermore, we believe that costs for eligible professionals who are 

participating in the Physician Quality Reporting System for the first time in 2012 would 

be considerably higher than the cost for eligible professionals who participated in the 

Physician Quality Reporting System in prior years. Some preparatory steps are needed to 

begin participating in the Physician Quality Reporting System. To the extent that we are 

not proposing to retire the measures that an eligible professional has reported in a prior 

year and there are no changes to the measure's specifications from a prior year, such 

preparatory steps would not need to be repeated in subsequent years. In addition, for 

many eligible professionals, the cost of participating in the Physician Quality Reporting 

System is offset by the incentive payment received. 

With respect to the potential incentive payments that would be made to 

satisfactory reporters under the 2012 Physician Quality Reporting System, we estimate 

this amount for individual eligible professionals would be approximately $60 million. 

This estimate is derived from looking at our 2009 incentive payment of approximately 

$235 million and then accounting for the fact that the 2009 incentive payment was 

2.0 percent of an eligible professional's total estimated Medicare Part B PFS allowed 

charges for all such covered professional services furnished by the eligible professional 

during the 2009 reporting period. For 2012, the incentive payment is 0.5 percent of an 

eligible professional's total estimated Medicare Part B PFS allowed charges for all 

covered professional services furnished by an eligible professional during the 2012 

reporting period. Although we expect that the lower incentive payment percentage for 
CMS-1524-P 577 

2012 would reduce the total outlay by approximately one-fourth, we also expect more 

eligible professionals to participate in the 2012 Physician Quality Reporting System 

because 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 additional 0.5 percent incentive authorized under 

section 1848(m)(7) of the Act ("Additional Incentive Payment"). 

One factor that influences the cost to individual eligible professionals is the time 

and effort associated it would take individual eligible 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 Reporting System, experience with Physician 

Quality Reporting System participation, and 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 Program (PVRP), which was a predecessor to 

the Physician Quality Reporting System and was the first step for the reporting of 

physician quality of care through certain quality metrics, indicated an average labor cost 

per practice of approximately $50 per hour 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 increase of approximately 3 percent. Therefore, 

assuming that it takes an individual eligible professional approximately 5 hours to 
CMS-1524-P 578 

review the Physician Quality Reporting System quality measures, review the various 

reporting options, select the most appropriate reporting option, identify the applicable 

measures for which they can report the necessary information, and incorporate reporting 

of the selected measures into their office work flows, we estimate that the cost to eligible 

professionals associated with preparing to report Physician Quality Reporting System 

quality measures 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-based 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 ranges from 15 seconds (0.25 minutes) to 

12 minutes for complicated cases or measures. In previous years, when we required 

reporting on 80 percent of eligible cases for claims-based reporting, we found that on 

average, the median number of reporting instances for each of the Physician Quality 

Reporting System measures was 9. Since we 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 majority of eligible professionals participate in 

the Physician Quality Reporting System by reporting individual measures via claims or 

registry and that an eligible professional reports on an average of 6 reporting instances 
CMS-1524-P 579 

per measure, we estimate that the cost to an individual eligible professional 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 measures x $60 per hour) to $216.00 (12 minutes per 

reporting instance x 6 reporting instances per measure x 3 measures x $60 per hour). If 

an eligible professional satisfactorily 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 majority of registries charging fees ranging from $500 to$1,000. 

However, our impact analysis is limited to the incremental costs associated with 

Physician Quality Reporting System reporting, which we believe are minimal. We 

believe that many eligible professionals who would select the proposed registry-based 

reporting option would already be utilizing the registry for other purposes and would not 

need to report additional data to the registry specifically for Physician Quality Reporting 

System. The registries also often provide the eligible professional services above and 

beyond what is required for Physician Quality Reporting System. 

For the proposed EHR-based reporting option, an individual eligible 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 solely 
CMS-1524-P 580 

for the purpose of participating in Physician Quality Reporting System, cost estimates for 

EHR adoption by eligible professionals from the EHR Incentive Program final rule 

(75 FR 44549) show that an individual eligible professional who chooses to do so would 

have to spend anywhere from $25,000 to $54,000 to purchase and implement an EHR 

and up to $18,000 annually for ongoing maintenance. 

 Although we believe that the majority of eligible professionals attempting to 

qualify for the additional 0.5 percent incentive payment authorized by section 1848(m)(7) 

of the Act would be those who are already required by their Boards to participate in a 

Maintenance of Certification Program, individual eligible professionals who wish to 

qualify for the additional 0.5 percent incentive payment and are not currently 

participating in a Maintenance of Certification Program would also have to incur a cost 

for participating in a Maintenance of Certification Program. The manner in which fees 

are charged for participating in a Maintenance of Certification Program vary by specialty. 

Some Boards charge a single fee for participation in the full cycle of Maintenance of 

Certification Program. Such fees appear to range anywhere from over $1,100 to nearly 

$1,800 per cycle. Some Boards have annual fees that are paid by their diplomates. On 

average, ABMS diplomates pay approximately $200.00 per year for participating in 

Maintenance of Certification Program. Some Boards have an additional fee for the 

Maintenance of Certification Program Part III secure examination, but most Boards do 

not have additional charges for participation in the Part IV practice/quality improvement 

activities. 

With respect to the proposed requirements for group practices to be treated as 

satisfactorily submitting quality measures data for the CY 2012 Physician Quality 
CMS-1524-P 581 

Reporting System discussed in section IV.F.1 of this proposed rule, group practices 

interested in participating in the CY 2012 Physician Quality Reporting System through 

the proposed group practice reporting option (GPRO) 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 completely offset if the group practice earns the 

incentive payment since the group practice would be eligible for an incentive payment 

equal to 0.5 percent of the entire group's total estimated Medicare Part B PFS allowed 

charges for covered professional services furnished by the group practice during the 

reporting period. 

One factor in the cost to group practices 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 individual eligible professionals, 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 practice to decide whether to participate as a 

group or have members of the practice participate individually and 4 hours for the 

self-nomination process, we estimate the total cost to a group practice associated with the 

group practice self-nomination process would 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 factor in the cost to the group would be the 

time and effort associated with the group practice completing and submitting the 

proposed data collection tool. Based on the Physician Group Practice (PGP) 
CMS-1524-P 582 

demonstration's estimate that it takes approximately 79 hours for a group practice to 

complete the data collection tool, which uses the same data submission methods as those 

we have proposed, we estimate the cost associated with a physician group completing the 

data collection tool would be approximately $4,740 ($60 per hour x 79 hours per group 

practice). 

In addition to costs incurred by individual eligible professionals and group 

practices, registries and EHR vendors may also incur some costs related to the proposals 

for the 2012 Physician Quality Reporting System. Registries interested in becoming 

"qualified" to submit on behalf of individual eligible professionals would also have to 

incur a cost associated with the vetting process, and with calculating quality measures 

results from the data submitted to the registry by its participants, and submitting the 

quality measures results, as well as and numerator and denominator data on quality 

measures, to CMS on behalf of their participants. We estimate the registry 

self-nomination process will cost approximately $500 per registry ($50 per hour x 

10 hours per registry). This cost estimate includes the cost of submitting the 

self-nomination letter to CMS and completing 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 professionals whose average hourly rates range from $36 to $84 

per hour depending on experience, with an average rate of nearly $50 per hour for a 

mid-level programmer. We do not believe that there are any additional costs for 

registries associated with a registry calculating quality measures results from the data 

submitted to the registry by its participants and submitting the quality measures results 

and numerator and denominator data on quality measures to CMS on behalf of their 
CMS-1524-P 583 

participants under the proposed program for 2012. We believe that the majority of 

registries already perform these functions for their participants. 

An EHR vendor interested in having its product(s) be used by individual eligible 

professionals to submit the proposed Physician Quality Reporting System measures to 

CMS for 2012 would have to complete the proposed vetting process during 2012 and 

program its EHR product(s) to extract the clinical data that the eligible 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 specifications 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 cost associated with completing the proposed 

self-nomination process, including the proposed vetting process 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 vendors is based on the assumption that vendor 

staff include IT professionals whose average hourly rates range from $36 to $84 per hour 

depending on experience, with an average rate of nearly $50 per hour for a mid-level 

programmer. We believe that the cost associated with the time and effort needed for an 

EHR vendor to review the proposed quality measures and other information and program 

the EHR product to enable individual eligible professionals to submit Physician Quality 

Reporting System proposed quality measures data to the CMS-designated clinical 

warehouse would be dependent on the EHR vendor's familiarity with the Physician 

Quality Reporting System, the vendor's system's capabilities, as well as the vendor's 
CMS-1524-P 584 

programming capabilities. Some vendors already 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 variability in the capabilities of the vendors, 

we believe an estimate for those vendors with minimal experience would be 

approximately $10,000 per vendor ($50 per hour 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 rule describes the proposed Electronic 

Prescribing (eRx) Incentive Programs for CYs 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 would be the cost incurred for maintaining 

the electronic prescribing measure and its associated code set, and for maintaining the 

existing clinical data warehouse to accommodate the proposed registry-based reporting 

and EHR-based reporting options for the electronic prescribing measure. However, we 

do not believe that the proposed program for CYs 2012 through 2014 has a significant 

administrative cost impact on the Medicare program since much of this infrastructure has 

already been established for the eRx Incentive Program. 

Individual eligible professionals and group practices may have different processes 

for integrating data collection on the electronic prescribing measure into their practices' 

work workflows. Given this variability and the multiple reporting options that we are 

proposing, it is difficult to accurately estimate the impact of the eRx Incentive Program 

for CYs 2012 through 2014 on providers. Furthermore, we believe that costs for eligible 

professionals who would participate in the eRx Incentive Program for the first time 

would be considerably higher than the cost for eligible professionals who participated in 

the eRx Incentive Program in prior years as there are preparatory steps that an eligible 

professional would need to take to begin participating in the program. In addition, for 

many eligible professionals (especially those who participated in the eRx Incentive 

Program in prior years), we believe the cost of participating in the eRx Incentive Program 

in 2012 or 2013 would be offset by the incentive 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 Program for CYs 2012 through 2014 could be higher 
CMS-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, based 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 eligible professionals with a mean incentive 

amount of approximately $3,000. Based on the aforementioned figures from the 2009 

eRx Incentive Program, we estimate that the total incentive payments for individual 

eligible professionals for the 2012 eRx incentive 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 payment adjustment, we anticipate that 

despite a decrease in the incentive payment amount from 2 percent in 2009 to 1 percent 

of total estimated Medicare Part B allowed charges for covered professional services in 

2012 and 0.5 percent in 2013, more eligible professionals (and groups) will choose to 

participate in the eRx Incentive Program due to the 2013 and 2014 payment adjustments 

of 1.5 percent and 2.0 percent respectively on eligible professionals' totally estimated 

Medicare Part B allowed charges for not demonstrating that they are successful electronic 

prescribers. In order to become a successful electronic prescriber for purposes of the 

2013 and 2014 payment adjustments, we are proposing to provide more opportunities to 

report on the electronic prescribing measure by concentrating only on the numerator of 
CMS-1524-P 587 

the measure. Furthermore, we are proposing 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 participation for purposes of the 2013 and 2014 

payment adjustments, we believe that at least some of these anticipated increases would 

be offset by the additional significant hardship exemptions we have proposed for the 

2013 and 2014 payment adjustments. As such, we expect that the participation level for 

the eRx Incentive Program will be approximately 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 results for the implementation of the eRx 

payment adjustment as the reporting period for the 2012 payment adjustment (the first of 

3 such payment adjustments), we will base our estimates for the distribution of payment 

adjustment amounts on the incentives earned in the 2009 eRx Incentive Program. For the 

2013 payment adjustment, taking into account that 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 distributed 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 total 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 professional who wishes to participate in the eRx 

Incentive Program must have a qualified electronic prescribing system in order to 

participate. Therefore, a one-time potential cost to some individual eligible professionals 
CMS-1524-P 588 

would be the cost of purchasing and using an electronic prescribing system, which varies 

by the commercial software package selected, the level at which the professional 

currently employs information technology in his or her practice and the training needed. 

One study indicated that a midrange complete electronic medical record with electronic 

prescribing functionality costs $2,500 per license with an annual fee of $90 per license 

for quarterly updates of the drug database after setup costs while standalone prescribing, 

messaging, and problem list system may cost $1,200 per physician per year after setup 

costs. Hardware costs and setup fees substantially add to the final cost of any software 

package. (Corley, S.T. (2003). "Electronic prescribing: a review of costs and benefits." 

Topics in Health Information Management 24(1):29-38.). These are the estimates that we 

intend to use for our impact analysis. 

 Similar to the Physician Quality Reporting System, one factor in the cost to 

individual eligible professionals is the time and effort associated with individual eligible 

professionals reviewing the electronic prescribing measure to determine whether it is 

applicable to them, reviewing the available reporting options and selecting one, gathering 

the required information, and incorporating reporting of the measure into their office 

work flows. Since the eRx Incentive Program consists of only 1 quality measure, we 

estimate 2 hours as the amount of time needed for individual eligible professionals to 

prepare for participation in the eRx Incentive Program. Information obtained from the 

PVRP, which was a predecessor to the Physician Quality Reporting System and was the 

first step for the reporting of physician quality of care through certain quality metrics, 

indicated an average labor cost per practice of approximately $50 per hour. To account 

for salary increases over time, we will use an average practice labor cost of $60 per hour 
CMS-1524-P 589 

for our estimates, based on an assumption of an average annual increase of approximately 

3 percent. At an average cost of approximately $60 per hour, we estimate the total 

preparation costs to individual eligible professionals 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 electronic 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 cost associated with reporting the appropriate QDC on the 

claims an individual eligible professional submits for payment. Based on the information 

from the PVRP described previously for the amount of time it takes a median practice to 

report one measure one time (1.75 minutes) and the requirement to report 25 electronic 

prescribing events during 2012, we estimate the annual estimated cost per individual 

eligible professional to report the electronic prescribing measure via claims-submission 

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 successful electronic prescribers who earn an 

incentive, these costs would be negated by the incentive payment received given that the 

median incentive for eligible professionals who qualified for a 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 eligible professionals opting for registry-based 

reporting are more than likely already reporting data to the registry. Little if any, 

additional data would need to be reported to the registry for purposes of participation in 
CMS-1524-P 590 

the eRx Incentive Program for CYs 2012 through 2014. Individual eligible professionals 

using registries for Physician Quality Reporting System would likely experience 

minimal, if any, increased costs charged by the registry to report this 1 additional 

measure. 

 For EHR-based reporting, we propose that the eligible professional must extract 

the necessary clinical data from his or her EHR, and submit the necessary data to the 

CMS-designated clinical data warehouse. Once the EHR is programmed by the vendor to 

allow data submission to CMS, the cost to the individual eligible professional associated 

with the time and effort to submit data on the electronic prescribing measure should be 

minimal. 

With respect to the 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 electronic prescribing measure (that is, group practices have 

the option of reporting the measure through claims, a qualified registry, or a qualified 

EHR product). There are only 2 differences between the proposed requirements for an 

individual eligible professional and a group practice: (1) the fact that a group practice 

would have to self-nominate; and (2) the number of times a group practice would be 

required to report the electronic prescribing measure. Overall, there could be less cost 

associated with a practice participating in the eRx Incentive Program as a group rather 

than the individual members of the group separately participating. We do not believe that 

there are any additional costs associated with the group practice self-nomination process 
CMS-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 participate in the eRx GPRO at the time they 

self-nominate for the Physician Quality Reporting System GPRO. 

The costs for a group practice reporting to an EHR or registry should be similar to 

the costs associated with registry and EHR reporting for an individual eligible 

professional, as the process is the same with the exception that more electronic 

prescribing events must be reported by the group. For similar reasons, the costs for a 

group practice reporting via claims should also be similar to the costs associated with 

claims-based reporting for an individual eligible professional. Therefore, we estimate 

that the costs for group practices who are selected to participate in the eRx Incentive 

Program for CYs 2012 through 2014 as a group would range from $3,349.61 

(1.75 minutes per case x 1 measure x 625 cases 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 eligible professionals participating as an eRx GPRO. 

We believe that the costs to individual eligible professionals and group practices 

associated with avoiding the 2013 and 2014 payment adjustment would be similar to the 

costs of an eligible professional 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 electronic prescribing measure in one instance for purposes of the 

payment adjustment is identical to the cost of reporting the electronic prescribing 

measure for one instance on claims for purposes of the incentive payment. The only 
CMS-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 professionals, however, would 

be required to report the electronic prescribing measure for only 10 electronic prescribing 

events for purposes of the 2013 and 2014 payment adjustments as opposed to 25 

electronic prescribing events for purposes of the 2012 and 2013 incentives. 

 Based on our decision to consider only registries qualified to submit quality 

measures results and numerator and denominator data on quality measures to CMS on 

their participant's behalf for the 2012, 2013, and 2014 Physician Quality Reporting 

System to be qualified to submit results and numerator and denominator data on the 

electronic prescribing measure for eRx Incentive Program for CYs 2012, 2013, and 2014 

respectively, we do not estimate any cost to the registry associated with becoming a 

registry qualified to submit the electronic prescribing measure for CYs 2012 through 

2014. 

 The cost for the registry would be the time and effort associated with the registry 

calculating results for the electronic prescribing measure from the data submitted to the 

registry by its participants and submitting the quality measures results and numerator and 

denominator data on the eRx quality measure to CMS on behalf of their participants. We 

believe such costs would be minimal as registries would already be required to perform 

these activities for Physician Quality Reporting System. 

 Likewise, based on our decision to consider only EHR products qualified for the 

Physician Quality Reporting System for CYs 2012, 2013, and 2014 to be qualified to 
CMS-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 associated with the proposed EHR-based reporting 

requirements of this reporting initiative is the time and effort associated with the EHR 

vendor programming its EHR product(s) to extract the clinical data that the individual 

eligible professional needs to submit to CMS for reporting the electronic prescribing 

measure. Since we determined that only EHR products qualified for the Physician 

Quality Reporting System would be qualified for the eRx Incentive Program, and the eRx 

Incentive Program consists of only one measure, we believe that any burden associated 

with the EHR vendor to program its product(s) to enable individual eligible professionals 

to submit data on the electronic prescribing measure to the CMS-designated clinical data 

warehouse would be minimal. 

7. Physician Compare Website 

 Section IV.G.2. of this proposed rule discusses 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 Site 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 Physician Quality Reporting System. The second 

phase of the plan, which would occur during CYs 2011 through 2012, would include the 

posting of the names of eligible professionals who are successful electronic prescribers 
CMS-1524-P 594 

under the 2009 eRx Incentive Program, as well as eligible professionals (EPs) who 

participate in the EHR Incentive Program. 

 We are proposing to include performance information with respect to the 2012 

Physician Quality Reporting System GPRO measures. As reporting of physician 

performance rates on the Physician Compare Web Site will be performed directly by us 

using the data that we collect under the 2012 Physician Quality Reporting System GPRO, 

we do not anticipate any notable impact on eligible professionals with respect to the 

posting of information on the Physician Compare Web Site. 

8. Medicare EHR Incentive Program 

 Section 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 the reporting of CQMs for purposes of 

demonstrating meaningful use through participation in the Physician Quality Reporting 

System-Medicare EHR Incentive Pilot via-- (1) a Physician Quality Reporting System 

"qualified" EHR data submission vendor or (2) using an EP's certified EHR technology, 

which also must be a Physician Quality Reporting System "qualified" EHR. 

We believe the impact associated with actually reporting CQMs would vary depending 

on how the EP chooses to do so. We believe that the number of EPs who choose to 

participate via attestation would largely be those who are not participating in both the 

EHR Incentive Program and Physician Quality Reporting System as this is the method of 

reporting most favorable to EPs not participating in the Physician Quality Reporting 

System. EPs participating in the Physician Quality Reporting System would be more 

likely to participate in the proposed pilot. Therefore, based on the previously mentioned 
CMS-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 Feedback Program in section IV.I. of this 

proposed rule would not impact CY 2012 physician payments under the Physician Fee 

Schedule. However, we expect 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 increased participation in the Physician 

Quality Reporting System in CY 2012. We anticipate that as we approach 

implementation of the value modifier, physicians will increasingly participate in the 

Physician Quality Reporting System to determine and understand how the value modifier 

could affect their payments. 

10. Bundling of Payments for Services Provided to Outpatients Who Later Are Admitted 

as Inpatients: 3-Day Payment Window Policy and the Impact on Wholly Owned or 

Wholly Operated Physician Offices 

 Medicare traditionally collects ownership information obtained in the 855 A and 

855 B enrollment forms completed upon a facility or a practitioner's Medicare 

enrollment. The 855 forms are self-selecting enrollment forms that may be updated as 

necessary. 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 physician offices and clinics that might be wholly 
CMS-1524-P 596 

owned or operated by a hospital. While we believe that most hospital owned entities 

providing physician services will be considered part of the hospital and operating as 

hospital outpatient departments; there will be at least some hospital owned physician 

offices and clinics that will meet the definition of "wholly-owned or wholly-operated" 

and will be subject to the 3-day payment window policy. We are unable to accurately 

estimate and verify the number of wholly owned or wholly operated physician offices or 

clinics enrolled in Medicare and furnishing health services to Medicare beneficiaries that 

will be subject to the 3-day payment window policy under the PFS because the 855 forms 

do not explicitly capture information on sole ownership or operation. We 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 the majority of services provided by 

wholly-owned or wholly-operated physician offices. 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 application of the 3-day payment window, the program 

savings would be redistributed across all other services paid under the PFS in accordance 

with due to the PFS budget neutrality provisions. 

I. Alternatives Considered

 This proposed rule contains a range of policies, including some provisions related 

to specific statutory provisions. The preceding preamble provides descriptions of the 
CMS-1524-P 597 

statutory provisions that are addressed, identifies those policies when discretion has been 

exercised, presents rationale for our policies and, where relevant, alternatives that were 

considered. 

J. Impact on Beneficiaries 

There are a number of changes in this proposed 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 beneficiary liability in some cases. Most 

changes in aggregate beneficiary liability due to a particular provision would be a 

function of the coinsurance (20 percent if applicable for the particular provision after the 

beneficiary has met the deductible). To illustrate this point, as shown in Table 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 this amount, or $20.59. Based on this proposed 

rule, including the negative update, the CY 2012 national payment amount in the 

nonfacility setting for CPT code 99203, as shown in Table 65, is $73.57, which means 

that, in CY 2012, the beneficiary coinsurance for this service would be $14.71. Most 

policies discussed in this proposed rule that impact payment rates, such as the expansion 

of the MPPR to the professional component of imaging procedures, would similarly 

impact beneficiaries' coinsurance. 

K. Accounting Statement
CMS-1524-P 598 

As required by OMB Circular A-4 (available at 

http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 69, we have prepared 

an accounting statement showing the estimated expenditures 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 Transfers Estimated decrease in expenditures of $20.2 billion for 

the PFS update. 

From Whom To Whom? Federal Government 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 Flexibility Act Analysis. The previous analysis, 

together with the remainder of this preamble, provides a Regulatory Impact Analysis. 

VIII. Addenda Referenced in this Proposed 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 are 
CMS-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 screen titled, "PFS Federal Regulations Notices" 

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. 

Addendum A – Explanation and Use of Addendum B

Addendum B – Proposed Relative Value Units and Relations Information Used in 

Determining Medicare Payments for CY 2012 

Addendum C – [Reserved] 

Addendum D – Proposed CY 2012 Geographic Adjustment Factors (GAFs) 

Addendum E – Proposed CY 2012 Geographic Practice Cost Indices (GPCIs) by States 

and Medicare Locality 

Addendum F – Proposed CY 2012 Diagnostic Imaging Services Subject to the Multiple 

Procedure Payment Reduction 

Addendum G – CPT/HCPCS Imaging Codes Defined by Section 5102(b) of the DRA 

Addendum H – CY 2011 "Always Therapy" Services Subject to the Multiple Procedure 

Payment Reduction 

List of Subjects 

42 CFR Part 410 

Health facilities, Health professions, Kidney diseases, Laboratories, Medicare, 

Reporting and recordkeeping requirements, Rural areas, X-rays. 
CMS-1524-P 600 

42 CFR Part 414 

Administrative practice and procedure, Health facilities, Health professions, 

Kidney diseases, Medicare, Reporting and recordkeeping. 

42 CFR Part 415 

Health facilities, Health professions, Medicare, Reporting and recordkeeping 

requirements. 

42 CFR Part 495 

Administrative practice and procedure, Electronic health records, Health facilities, 

Health professions, Health maintenance organizations (HMO), Medicaid, Medicare, 

Penalties, Privacy, Reporting and recordkeeping requirements. 
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 chapter IV as set forth below: 

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS 

Subpart B – Medical and Other Health Services 

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

Authority: Secs. 1102, 1834, 1871, and 1893 of the Social Security Act (42 

U.S.C. 1302, 1395m, 1395hh, and 1395ddd). 

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 redesignated paragraph (viii)(A). 

B. Adding the definition of "Health risk assessment". 

C. In the definition of "subsequent annual wellness visit providing personalized 

prevention plan services". 

1. Revising the introductory text. 

2. Redesignating paragraphs (i) through (vii) as paragraphs (ii) through (viii). 

3. Adding a new paragraph (i). 

4. Revising newly redesigned paragraphs (iii) and (vi)(B). 

The revisions and additions read as follows: 
CMS-1524-P 602 

§ 410.15 Annual wellness visits providing Personalized Prevention Plan Services: 

Conditions for and limitations on coverage. 

 (a) * * * 

First annual wellness visit providing personalized prevention plan services means 

the following services furnished to an eligible beneficiary by a health professional, taking 

into account the results of a health risk assessment, as those terms are defined in this 

section: 

(i) Review (and administration if needed) of a health risk assessment (as defined 

in this paragraph). 

* * * * * 

(viii) * * * 

(A) A written screening schedule for the individual such as a checklist for the 

next 5 to 10 years, as appropriate, based on recommendations of the United States 

Preventive Services Task Force and the Advisory Committee on Immunization Practices, 

and the individual's health risk assessment (as that term is defined in this section), health 

status, screening history, and age-appropriate preventive services covered by Medicare. 

* * * * * 

Health risk assessment means, for the purposes of this section, an evaluation tool that 

meets the following criteria: 

(i) Collects self-reported information about the beneficiary. 

(ii) Can be administered independently by the beneficiary or administered by a 

health professional prior to or as part of the AWV encounter. 

(iii) Is appropriately tailored to and takes into account the communication needs 
CMS-1524-P 603 

of underserved populations, persons with limited English proficiency, and persons with 

health literacy needs. 

(iv) Takes no more than 20 minutes to complete. 

(v) Addresses, at a minimum, the following topics: 

(A) Demographic data, including but not limited to age, gender, race, and 

ethnicity. 

(B) Self assessment of health status, frailty, and physical functioning. 

(C) Psychosocial risks, including but not limited to, depression/life satisfaction, 

stress, anger, loneliness/social isolation, pain, or fatigue. 

(D) Behavioral risks, including but not limited to, tobacco use, physical activity, 

nutrition and oral health, alcohol consumption, sexual practices, motor vehicle safety 

(seat belt use), and home safety. 

(E) Activities of daily living (ADLs), including but not limited to, dressing, 

feeding, toileting, grooming, physical ambulation (including balance/risk of falls), and 

bathing. 

(F) Instrumental activities of daily living (IADLs), including but not limited to, 

shopping, food preparation, using the telephone, housekeeping, laundry, mode of 

transportation, responsibility for own medications, and ability to handle finances. 

* * * * * 

Subsequent annual wellness visit providing personalized prevention plan services

means the following services furnished to an eligible beneficiary by a health professional, 

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 providers and suppliers that are regularly 

involved in providing medical care to the individual as that list was developed for the 

first annual wellness visit providing personalized prevention plan services or the previous 

subsequent annual wellness visit providing personalized prevention plan services. 

* * * * * 

(vi) * * * 

(B) The list of risk factors and conditions for which primary, secondary or 

tertiary interventions are recommended or are underway for the individual as that list was 

developed at the first annual wellness visit providing personalized prevention plan 

services or the previous subsequent annual wellness visit providing personalized 

prevention plan services. 

* * * * * 

 3. Amend §410.62 paragraph (b) by revising the paragraph heading to read as 

follows: 

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

***** 

 (b) Condition for coverage of outpatient speech-language pathology services furnished to 

certain inpatients of a hospital or a CAH or SNF.*** 

***** 
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 and behavior assessment and intervention 

services furnished by an interactive telecommunications system if the following 

conditions are met:" and adding in its place the phrase "individual and group health and 

behavior assessment and intervention services, and smoking cessation services furnished 

by an interactive telecommunications system if the following conditions are met:". 

 5. Amend §410.140 by revising the definition 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 the 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 414 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) through (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 facility, 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 nursing facility, or a comprehensive outpatient 

rehabilitation facility (CORF). 

 (C) Outpatient therapy and CORF services. Outpatient therapy services 

(including physical therapy, occupational therapy, and speech-language pathology 

services) and CORF services billed under the physician fee schedule are paid using the 

nonfacility practice expense RVUs. 
CMS-1524-P 607 

* * * * * 

§ 414.65 [Amended] 

 9. In § 414.65 paragraph (a) is amended by removing the phrase "and individual 

and group health and behavior assessment and intervention furnished via an interactive 

telecommunications system is equal to the current fee schedule amount applicable for the 

service of the physician or practitioner." and adding in its place the phrase "individual 

and group health and behavior assessment and intervention, and smoking cessation 

services furnished via an interactive telecommunications system is equal to the current 

fee schedule amount applicable for the service of the physician or practitioner." 

10. Amend §414.90 as follows: 

 A. In paragraph (b), adding the definition 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 paragraph (f)(2) introductory text. 

I. In newly redesignated paragraph (f)(2)(ii), removing the phrase "behalf; or" 

and adding in its place the phrase "behalf." 

J. In newly redesignated paragraph (f)(2)(iii), removing the phrase "containing 
CMS-1524-P 608 

real or dummy" and adding in its place 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 health 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 professionals (or, as identified by NPIs) who have reassigned 

their billing rights to the TIN. 

* * * * * 

(f) * * * 

(1) Reporting periods. For purposes of this paragraph, the reporting period is— 

(i) The 12-month period from January 1 through December 31 of such program 

year. 

(ii) 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 through December 31 of such program year. 

(B) For 2012 and subsequent program years, the 6-month reporting period from 

July 1 through December 31 of such program year is available for registry-based 
CMS-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 this paragraph must be in lieu of the 

payments that would otherwise be made under the Physician Quality Reporting System to 

eligible professionals in the group practice for meeting the criteria for satisfactory 

reporting for individual eligible professionals. 

 (i) If an eligible professional, as identified by an individual NPI, has reassigned 

his or her Medicare billing rights to a TIN selected to participate in the Physician Quality 

Reporting System group practice reporting option for a program year, then for that 

program year the eligible professional must participate in the Physician Quality 

Reporting System via the group practice reporting option. For any program year in 

which the TIN is selected to participate in the Physician Quality Reporting System group 

practice reporting option, the eligible professional cannot individually qualify for a 

Physician Quality Reporting System incentive payment by meeting the requirements 
CMS-1524-P 610 

specified in paragraph (f) of this section. 

 (ii) If, for the program year, the eligible professional participates in the Physician 

Quality Reporting System under a TIN that is not selected to participate in the Physician 

Quality Reporting System group practice reporting option for that program year, then the 

eligible professional may individually qualify for a Physician Quality Reporting System 

incentive by meeting the requirements specified in paragraph (f) of this section under that 

TIN. 

***** 

(i) * * * 

(1) To request an informal review, an eligible professional (or in the case of 

reporting under paragraph (g) of this section, group practices) must submit a request to 

CMS within 90 days of the release of the feedback reports. The request must be 

submitted in writing and summarize the concern(s) and reasons for requesting an 

informal review and may also include information to assist in the review. 

 (2) CMS will provide a written response within 90 days of the receipt of the 

original request. 

* * * * * 

11. Section 414.92 is amended as follows: 

 A. In paragraph (b), adding the definition of "Certified electronic health record 

technology". 

B. In paragraph (b), revising paragraphs (ii) and (iii) of the definition of "Group 

practice". 

C. Revising paragraph (c)(1). 
CMS-1524-P 611 

D. In paragraph (c)(2), revise the paragraph heading. 

E. Revising paragraph (c)(2)(ii). 

. 

F. Adding paragraph (c)(2)(iii). 

G. In paragraph (d)(1), removing the phrase "For purposes of this paragraph in 

2011," is removed and adding in its place the phrase "For purposes of this paragraph,". 

H. In paragraph (d)(2), removing the phrase "For program year 2011," and 

adding in its place the phrase "For the 2012 and 2013 incentive payments," 

I. Redesignating paragraph (f) as (g). 

J. Adding a new paragraph (f). 

§ 414.92 Electronic Prescribing Incentive Program 

* * * * * 

 (b) * * * 

 Certified electronic health record technology means an electronic health record 

vendor's product and version as described in 45 CFR 170.102. 

Group practice * * * 

(ii) In a Medicare-approved demonstration project or other Medicare program, 

under which Physician Quality Reporting System requirements and incentives have been 

incorporated; and 

(iii) Has indicated its desire 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 furnished during a reporting period by an eligible 

professional, if the eligible professional is a successful electronic prescriber for such 

reporting period, in addition to the amount otherwise paid under section 1848 of the Act, 

there also must be paid to the eligible professional (or to an employer or facility in the 

cases described in section 1842(b)(6)(A) of the Act) or, in the case of a group practice 

under paragraph (e) of this section, to the group practice, from the Federal Supplementary 

Medical Insurance Trust Fund established under section 1841 of the Act an amount equal 

to the applicable electronic prescribing percent (as specified in paragraph (c)(1)(ii) of this 

section) of the total estimated allowed part B charges for all such covered professional 

services furnished by the eligible professional (or, in the case of a group practice under 

paragraph (e) of this section, by the group practice) during the applicable reporting 

period. 

(2) Payment adjustment.*** (ii) Significant hardship exception. CMS may, on a caseby-case basis, exempt an eligible professional (or in the case of a group practice under 

paragraph (e) of this section, a group practice) from the application of the payment 

adjustment under paragraph (c)(2) of this section if, CMS determines, subject to annual 

renewal, that compliance with the requirement for being a successful electronic prescriber 

would result in a significant hardship. Eligible professionals (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 in a rural area without 
CMS-1524-P 613 

high speed internet access. 

 (B) The eligible professional or group practice is located in an area without 

sufficient available pharmacies for electronic prescribing. 

 (C) The eligible professional or group practice is unable 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 generating 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 paragraph (b) of this section, a group practice) is exempt 

from the application of the payment adjustment under paragraph (c)(2) of this section if 

one of the following applies: 

 (A) The eligible professional is not an MD, DO, podiatrist, nurse practitioner, or 

physician assistant. 

 (B) The eligible professional does not have at least 100 cases containing an 

encounter code that falls within the denominator of the electronic prescribing measure for 

dates of service during the 6-month reporting period specified in paragraph (f)(1) of this 

section. 

* * * * * 

(f) Requirements for individual eligible professionals and group practices for the 

payment adjustment. In order to be considered a successful electronic prescriber for the 

electronic prescribing payment adjustment, an individual eligible professional (or, in the 

case of a group practice under paragraph (b) of this section, a group practice), as 
CMS-1524-P 614 

identified by a unique TIN/NPI combination, must meet the criteria for being a successful 

electronic prescriber specified by CMS, in the form and manner specified in paragraph 

(f)(2) of this section, and during the reporting period specified in paragraph (f)(1) of this 

section. 

 (1) Reporting periods. (i) For purposes of this paragraph, the reporting period 

for the 2013 payment adjustment is either of the following: 

 (A) The 12-month period from January 1, 2011 through December 31, 2011. 

 (B) The 6-month period from January 1, 2012 through June 30, 2012. 

 (ii) For purposes of this paragraph, 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 practice under paragraph (e) of this section, a 

group practice) who wishes to participate in the Electronic Prescribing Incentive Program 

must report information on the electronic prescribing measure identified by CMS to one 

of the following: 

 (i) CMS, by no later than 2 months after the end of the applicable 12-month 

reporting period or by no later than 1 month after the end of the applicable 6-month 

reporting period, on the eligible professional's Medicare Part B claims for covered 

professional services furnished by the eligible professional during the reporting period 

specified in paragraph (f)(1) of this section. 

 (ii) A qualified registry (as defined in paragraph (b) of this section) in the form 
CMS-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 furnished by the eligible professional during the 

reporting period specified in paragraph (f)(1) of this section to CMS on the eligible 

professional's behalf. 

 (iii) CMS by extracting clinical data using a secure data submission method, as 

required by CMS, from a qualified electronic health record product (as defined in 

paragraph (b) of this section) by the deadline specified by CMS for covered professional 

services furnished by the eligible professional during the reporting period specified in 

paragraph (f)(1) of this section. Prior to actual data submission for a given program year 

and by a date specified by CMS, the eligible professional must submit a test file 

containing dummy clinical quality data extracted from the qualified electronic health 

record product selected by the eligible professional using a secure data submission 

method, as required by CMS. 

* * * * * 

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 the 11-digit National Drug Code, unless 

otherwise specified by CMS to account for situations where labeling indicates that the 

amount of drug product represented by an NDC varies. * * * 
CMS-1524-P 616 

* * * * * 

13. Section 414.904 is amended by revising paragraph (d)(3) to reads as follows: 

§ 414.904 Average sales price as the basis for payment. 

* * * * * 

(d) * * * 

(3) Widely available market price and average manufacturer price. If the 

Inspector General finds that the average sales price exceeds the widely available market 

price or the average manufacturer price by the applicable threshold percentage specified 

in paragraph (d)(3)(iii) or (d)(3)(iv) of this section, the Inspector General is responsible 

for informing the Secretary (at such times as specified by the Secretary) and the payment 

amount for the drug or biological will be substituted subject to the following adjustments: 

(i) The payment amount substitution will be applied at the next ASP payment 

amount calculation period after the Inspector General informs the Secretary (at such 

times specified by the Secretary) about billing 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 average manufacturer price for a billing code 

will be applied at such times when-- 

(A) The threshold for making price substitutions, as defined in paragraph 

(d)(3)(iii) of this section is met; and 

(B) 103 percent of the AMP is less than the 106 percent of the ASP for the 

quarter in which the substitution would be applied. 

(iii) The applicable percentage threshold for AMP comparisons for CYs 2005 
CMS-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 consecutive quarters, or three of the last 4 quarters immediately 

preceding the quarter to which the price substitution would be applied; and 

(B) The average manufacturer price for the billing code is calculated using the 

same set of NDCs used for the average sales price for the billing code. 

(iv) The applicable percentage threshold for WAMP comparisons for CYs 2005 

through 2012 is 5 percent. 

* * * * * 

PART 415--SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS, 

SUPERVISING PHYSICIANS IN TEACHING SETTINGS, AND RESIDENTS IN 

CERTAIN SETTINGS 

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

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

1395hh). 

Subpart C--Part B Carrier Payments for Physician 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 PROGRAM 
CMS-1524-P 618 

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

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

1395hh). 

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 States) 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 EPs, 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 Reporting System may also participate in the 

Physician Quality Reporting System-Medicare EHR Incentive Pilot through one of the 

following methods: 

(A) Submission of data extracted from the EP's certified EHR technology 

through a Physician Quality Reporting System qualified EHR data submission vendor; or 

(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 Assistance Program No. 93.773, Medicare--Hospital 

Insurance; and Program No. 93.774, Medicare--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-P 
CMS-1524-P 621 

[FR Doc. 2011-16972 Filed 07/01/2011 at 4:15 pm; Publication Date: 

07/19/2011]