T h i s d o c u m e n t i s s c h e d u l e d t o b e p u b l i s h e d i n t h e F e d e r a l R e g i s t e r o n 0 5 / 1 1 / 2 0 1 2 a n d a v a i l a b l e o n l i n e a t h t t p : / / f e d e r a l r e g i s t e r . g o v / a / 2 0 1 2 - 1 1 4 2 1 , a n d o n F D s y s . g o vCMS-2370-P 2

funding is due. In addition, this proposed rule would update the interim regional maximum fees that providers may charge for the administ ration of pediatric vaccines to federally vaccine-eligible children under the Pediatri c Immunization Distribution Program, more commonly known as the Vaccines for Children (VFC) program.

DATES : To be assured consideration, comment s must be received at one of the addresses provided below, no later than 5 p.m. on [OFR--insert date 30 days after date of publication in the Federal Register]

. ADDRESSES: In commenting, please refer to file code CMS-2370-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 "Submit a comment" instructions. 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-2370-P, P.O. Box 8016, Baltimore, MD 21244-8016.

Please allow sufficient time for mailed co mments to be received before the close of the comment period.CMS-2370-P 3

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-2370-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier . If you prefer, yo u 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 Hube rt H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available fo r persons wishing to re tain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)CMS-2370-P 4

b. For delivery in Baltimore, MD--

Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 in advance to schedule your arrival with one of our

staff members.

Comments mailed to the addresses indicat ed as appropriate for hand or courier delivery may be delayed and rece ived after the comment period. Submission of comments on paperwork requirements . You may submit comments on this document's paperwork requirements by fo llowing the instructions at the end of the "Collection of Information Requireme nts" section in this document. For information on viewing public co mments, see the beginning of the

"SUPPLEMENTARY INFORMATION" section.

FOR FURTHER INFORMATION CONTACT: Mary Cieslicki, (410) 786-4576, or Linda Tavener, (410) 786-3838, for issues related to payments for primary care physicians. Mary Beth Hance, 410-786-4299, for issues related to charges for the administration of pediatric vaccines.

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

identifiable or confidential business informa tion that is included in a comment. We postCMS-2370-P 5

all comments received before the close of the comment period on the following Web site as soon as possible after th ey have been received: http://www.regulations.gov . Follow

the search instructions on that Web site to view public comments. Comments received timely will also be avai lable for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Cent ers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointm ent to view public comments, phone 1-800-743-

3951. I. Executive Summary and Background A. Executive Summary 1. Purpose This proposed rule implements new requirements in sections 1902(a)(13), 1902(jj), 1905(dd) and 1932(f) of the Social Security Act requiring payment by State Medicaid agencies of at l east the Medicare rates in eff ect in CYs 2013 and 2014 or, if higher, the rate using the CY 2009 conversi on factor (CF) for primary care services furnished by a physician with a specialty designation of family medicine, general internal medicine, or pediatric medicine. Also, th is proposed rule implements the statutory payment provisions uniformly across all States, defines, for purposes of enhanced Federal match, eligible primary care physicians, identif ies eligible primary care services, and specifies how the increased payment should be calculated. Finally, this proposed rule provides general guidelines for implementi ng the increased payment for primary care services delivered by managed care plans. This proposed rule also proposes upda tes to vaccine rates that have notCMS-2370-P 6

been updated since the VFC program was established in 1994. We propose to update these rates due to inflation and we are proposing to use the Medicare Economic Index (MEI). 2. Summary of the Major Provisions a. Payments to Physicians for Primary Care Services This proposed rule would implement Medicaid payment for primary care services furnished by certain physicians in calendar years (CYs) 2013 and 2014 at

rates not less than the Medicare rates in effect in those CYs or, if greater, the payment rates that would be applicable in those CYs using the CY 2009 conversion factor (CF). It would also provide for a 100 percent Federal matching rate for any increase in payment above the amounts that would be due for these services under the provisions of the State pl an as of July 1, 2009. This proposed rule is necessary to promote access to primary care services in the Medicaid program before and during the expansion of coverage that begins in 2014. These proposals implement the

Affordable Care Act. b. Vaccine Administration under the Vaccines for Children (VFC) Program This proposed rule proposes to update the interim regional maximum fees that providers may charge for the administ ration of pediatric vaccines to federally vaccine-eligible children under the Pediat ric Immunization Distribution Program, more commonly known as the Vaccines for Children (VFC) program. We are proposing to use the MEI which is a price index that is used by CMS to update Medicare physician payments. We believe th e MEI is the best tool to update these rates because: (1) it reflects input price in flation faced by physicians inclusive of the time period when the national average was established in 1994, and (2) we believeCMS-2370-P 7

that input prices associated with this specific type of physician-provided service are consistent with overall input prices. Th e MEI was most recently updated at the end

of 2011. 3. Summary of the Costs and BenefitsCMS-2370-P 8

Provision Description Total Costs Total Benefits Payments to Physicians for Primary Care Services The overall economic impact of this proposed rule is an estimated $5.52 billion in CY 2013 and $5.66 billion in CY 2014. In CY 2013, the Federal cost is approximately $5.74 billion with $225 million in State savings. In CY 2014, the Federal cost is approximately $5.96 billion with $300 million in State savings. Of this amount, the aggregate economic impact, as a result of this proposed rule requiring States to reimburse specified physicians for vaccine administration at the lesser of the Medicare rate or the VFC regional maximum during CYs 2013 and 2014, is estimated at an additional $970 million in Federal costs. The Federal costs for funding that increase, in State payments during CYs 2013 and 2014, are estimated at $490 million and $480 million, respectively. The overall benefit of this rule is the expected increase in provider participation by primary care physicians resulting in better access to primary and preventive health services by Medicaid beneficiaries.CMS-2370-P 9

Provision Description Total Costs Total Benefits Increase in Vaccine for Children Program Maximum Ceiling This rule raises the maximum rate that States could pay providers for the administration of vaccines under the VFC program in subsequent years after CY 2014. States are not anticipated to raise their VFC ceilings in 2013 and 2014 because of the implementation of the primary care payment increase. The overall benefit of this provision is that it gives States the ability to increase their VFC vaccine administration rates.

C. Background 1. Payments to Physicians for Primary Care Services: Statutory and Regulatory

Framework a. Improving Primary Care

On March 23, 2010, the Patient Protection and Affordable Care Act (Pub. L. 111-148) was enacted and on March 30, 2010, the Health Care and Education Reconciliation Act of 2010 (HCERA) (Pub. L. 111-152) was enacted; together they are known as the Affordable Care Act. This proposed rule would implement the new requirements in sections 1902(a)(13), 1902(jj ), 1932(f), and 1905(dd) of the Act, as amended by the Affordable Care Act. Secti on 1902(a)(13) of the Act requires payment by State Medicaid agencies of at least the Medica re rates in effect in calendar years (CYs) 2013 and 2014 or, if higher, the rate that would be applicable using the CY 2009 Medicare conversion factor (CF), for primar y care services furnished by a physician with a specialty designation of family medicine, general internal medicine, or pediatric

medicine.CMS-2370-P 10

Primary care for any population is critical to ensuring continuity of care, as well as to providing necessary preventive care, which improves overall health and can reduce health care costs. The availability of primar y care is particularly important for Medicaid enrollees to establish a regular source of car e and to provide care to a population that is more prone to chronic health conditions th at can be appropriately managed by primary care physicians. Primary care physicians provide se rvices that are consid ered to be a core part of the Medicaid benefit package. Additionally, these physicians can perform the vital function of coordinating care, including specialty care. As we move towards CY 2014 and the expa nsion of Medicaid e ligibility, it is

critical that a sufficient nu mber of primary care physicians participate in the program. Section 1902(a)(13) of the Act will encourag e primary care physicians to participate in Medicaid by increasing payment rates. b. Medicaid Payment to Providers Section 1902(a)(30)(A) of the Act requires that Medica id payments be consistent with efficiency, economy, and quality of care and be sufficient to enlist enough providers

so that care and services are av ailable under the plan at least to the exte nt that such care and services are available to the general popu lation in the geographic area. In meeting these requirements, States have broad disc retion in establishing and updating Medicaid service payment rates to primary care provide rs. For instance, many States reimburse based on the cost of providing the service, a review of the amount paid by commercial payers in the private market, or as a percen tage of rates paid under the Medicare program for equivalent services. States may update ra tes based on specific tr ending factors such as the MEI or a Medicaid speci fic trend factor that incor porates a State-determined inflation adjustment rate. Increasingly, St ates are providing medi cal assistance throughCMS-2370-P 11

managed care plans under contracts with mana ged care organizations (MCOs) and other organized delivery systems, such as prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs). The contr act between the State and the managed care plan requires the plan to pr ovide access to and make payments to primary care physicians using the funds the State pays to the managed care plan. Indeed, according to the Medicaid and CHIP Payment and Access Commission (MACPAC), 49 million Medicaid beneficiaries receive care through some form of Medicaid managed care. Section 1902(a)(13)(C) of the Act requires that States pay a minimum payment amount for certain primary care services deli vered by designated primary care physicians. Primary care services are defined in new s ection 1902(jj) of the Act and include certain specified procedure codes for evaluation a nd management (E&M) services and certain vaccine administration codes. Under this pr ovision, States must reimburse at least as much as the Medicare physician fee sche dule (MPFS) rate in CYs 2013 and 2014 or, if greater, the payment rate that would a pply using the CY 2009 Medicare CF. The requirement for payment at the Medicare rate extends to primary car e services paid on a fee-for-service (FFS) basis, as well as to those paid by Medicaid managed care plans. This proposed regulation would specify whic h services and physicians qualify for the increased payment amount in CYs 2013 and 2014, and the method for calculating that payment. Section 1905(dd) of the Act provides for a higher FMAP for the required increase in physician payment. For FFS expenditures, the FMAP rate will be 100 percent of the difference between the Medicaid State plan ra te in effect on July 1, 2009, and the amount required to be paid under section 1902(a)(13)(C) of the Act. That means that States will be fully reimbursed for these increased payments by the Federal government.CMS-2370-P 12

One goal of this proposed rule is to defi ne the payment provisions further so that States may uniformly identify the rate differential. Specifically, we propose a payment methodology that would take into account poten tial changes in Medicare rates between CYs 2013 and 2014 and CY 2009 that is indepe ndent of the legislatively required payment reductions caused by Medicare’s su stainable growth rate mechanism. Furthermore, this proposed rule would addre ss Medicare’s use of different fee schedules

that take into account the site of service (for example, phys ician’s office, or outpatient department of a hospital) and geogr aphical location of the provider.

The Affordable Care Act amended section 1932 (f) of the Act to clarify that States must incorporate the requirement for increased payment to primary care providers into contracts with managed care organizations. We propose general guidel ines for States to follow when identifying the amounts by which MCOs must increase existing payments to primary care providers, and any additional capitation costs to the State attributable to such required increases in existing payments. We are also proposing to extend this same treatment to PIHPs and PAHPs through regulations at part 438, to the extent that primary care provider payments are made by these entities. We seek comments on how best to impl ement through regulation the requirement that managed care plans (wheth er capitated, partially capita ted or on a FFS basis) pay primary care providers at the Medicare rate for primary care services, consistent with those paid on a FFS basis. Additionally, we seek comments from States and others on the best way to adequately identify the increase in managed care capitation payments made by the State that is attributable to the in creased provider payment, for the purpose of claiming 100 percent FFP. We are particularly interested in ensuring that primary care physicians receive the benefit of the increase d payment. Section 1932(f) of the Act, asCMS-2370-P 13

amended by the Affordable Care Act, requi res that the managed care contracts pay providers at the applicable Medicare rate levels. We pr opose to review managed care contracts to ensure that this requirement is imposed on managed care plans by the State. We also propose to require managed care plan s to report to the State the payments made to physicians under this provisi on to justify any adjustments to the capitation rates paid by the State under the contract. In proposing th is approach, we are mindful of balancing the need for adequate documentation of th e payment with the administrative burden it places on States and managed care plans. We are requesting comment on these provisions and additional suggestions on how to ensure that managed care plans provide the necessary data to the State, as well as how to ensure and mon itor that managed care plans appropriately pass on to physicians the portion of the increased capitation rate that is attributable to the primary care rate increase. This proposed rule also addr esses identification of the rate differential eligible for 100 percent Federal matching funds for vaccine administration, as set forth in section 1905(dd) of the Act. In 2011, the vaccine ad ministration billing codes were changed so it is not possible to track the Me dicaid State plan rate in CY 2009 directly to the rates applicable in CYs 2013 and 2014. We are requesting comment on our proposal for imputing the CY 2009 rate. c. Medicare Payment to Primary Care Providers Medicare provides health insurance covera ge to people who are aged 65 and over, or who meet other special criteria, under t itle XVIII of the Act. For institutional care, such as hospital and nursing home care, Medi care makes payments to providers using prospective payment systems. Payment for physicians’ services under Medicare is based on the MPFS. The MPFS assigns relative value units (RVUs) for each procedure, as wellCMS-2370-P 14

as practice cost indices (GPCIs) for geographi c variations in payments, and a global CF,

which converts RVUs into dollars. Individua l fee schedule amounts for the MPFS are the product of the geographic adjustment, RVUs, a nd CF. Site of service (for example, physician office or outpatient hospi tal) is reflected as an ad justment to the RVUs. We generally issue the MPFS final rule for th e subsequent calendar year on or before

November 1 st each year. The MPFS final rule includes the RVUs and CF for the upcoming calendar year, which permits the calculation of rates. Updates may occur throughout the year, but normally occur quarterly.

2. Vaccine Administration Under the Vaccines for Children (VFC) Program The Omnibus Budget Reconciliation Act of 1993 (OBRA 1993), (Pub. L. 103-66), created the Vaccines for Children (VFC) Program), which became effective October 1, 1994. Section 13631 of OBRA 1993 added section 1902(a)(62) to the Act to require that States provide for a program for the purchase and distribution of pediatric vaccines to program-registered providers for the immunization of vaccine-eligible

children in accordance with section 1928 of the Act. S ection 1928 of the Act requires each State to establish a VFC Program (w hich may be administered by the State Department of Health) under which certain sp ecified groups of children are entitled to receive qualified pediatric immunizations without charge for the cost of the vaccine. Under the VFC Program, a provider, in administering a qualified pediatric vaccine to a federally vaccine-eligible child, may not impose a charge for the cost of the vaccine. Section 1928(c)(2)(C)(ii) of the Ac t allows a provider to impose a fee for the administration of a qualified pediatric vaccine as long as the fee, in the case of a federally vaccine-eligible child, does not exceed the cost s of such administration (as determined by the Secretary based on actual regional cost s for such administration). However, aCMS-2370-P 15

provider may not deny administration of a qualified pediatric vaccine to a vaccineeligible child due to the inability of the child's parents or legal guardian to pay the

administration fee. II. Provisions of the Proposed Regulation A. Payments to Physicians for Primary Care Services 1. Primary Care Services Furnished by P hysicians with Specified Specialty and Subspecialty (§447.400) a. Specified Specialties and Subspecialties Section 1902(a)(13)(C ) of the Act specifies that physicians with a specialty designation of family medicine , general internal medicine, and pediatric medicine qualify as primary care providers for purposes of increased payment. This proposed rule provides that services provided by subspecialists related to the primary care specialists designated in the statute woul d also qualify for higher paym ent. These subspecialists would be recognized in accord ance with the American Bo ard of Medical Specialties designations. For example, a pediatric cardi ologist would qualify for payment if he or she rendered one of the specified primary car e services by virtue of that physician’s subspecialty within the qualifying specialty of internal medicine. Additionally, this proposed rule would specify a method for States to use in identifying practitioners who may receive the increased payment. The inclusion of subspecialists is based on three factors. We first considered that many primary care subspecialists render the prim ary care services specified in this rule. Stakeholders, including physicians, States , and independent policy makers strongly emphasized this point in their engagement with CMS on this proposed rule. Many stressed the importance of subspecialists, pa rticularly pediatric s ubspecialists, in theCMS-2370-P 16

provision of primary care and str ongly recommended that they be eligible for the higher payment. Additionally, we see no justification for including only subspecialists in one specialty designation and, therefor e, we are proposing that al l subspecialists within the three specialty designations be eligible for increased payment for primary care services. Finally, we believe the statute provides the latitude to include related subspecialists within these speci alty designations. Therefore, we are proposing that all s ubspecialists recognized by the American Board of Medical Specialties within the thre e specialty designations be eligible for increased payment for primary care services. Th at is, we propose that all subspecialists within the specialty designations of family medicine, general internal medicine, and pediatric medicine as recognized by the Am erican Board of Medical Specialties be eligible for increased payment. In this rule, we propose to specify how States would identify the specialists and subspecialists elig ible for increased payment. Identification of eligible physicians is critical to ensure th at only specified physic ians receive increased payment. Under our proposal, States would be requi red to establish a system to require physicians to identify to the Medicaid agency their specialty or subs pecialty before an increased payment is made. For program integr ity purposes, the State will be required to confirm the self-attestation of the physician be fore paying claims from that provider at the higher Medicare rate. We propose that this be done either by verifying that the physician is Board certified in an eligible specialty or subspe cialty or through a review of physician’s practice characteristics. Specifically, for a physician who attests that he or she is an eligible primary care specialist or subspecialist but who is not Board certified (including those who are Board-CMS-2370-P 17

eligible, but not cer tified), a review of the physician’s billing history must be performed by the Medicaid agency. We are proposing that at least 60 percent of the codes billed by the physician for all of CY 2012 must be fo r the E&M codes and v accine administration codes specified in this regul ation. For a new physician w ho enrolls during either CY

2013 or CY 2014 and who attests that he or she is within one of the eligible specialties or subspecialties and who is not Board certified, we propose that following the end of the CY in which enrollment occurs, the State w ould review the physicia n’s billing history to confirm that 60 percent of c odes billed during the CY of enrollment were for primary care services eligible for payment under sec tions 1902(a)(13)(C) and 1902(jj) of the Act. To summarize, we would not limit specifi ed providers to physicians who are

Board certified. States woul d be required to verify the el igibility of non-Board certified physicians through a review of the phys ician’s practice characteristics. We developed this proposal for the use of a supporting history of codes billed to qualify physicians for increased payment after reviewing the statutory requirements for the Medicare Incentive Payments for Primary Care Services payments authorized by section 5501(a) of the Affordable Care Act, which amended section 1833 of the Act. That provision specifically requires th at primary care services acc ount for at least 60 percent of the allowed charges billed by a practitioner for services to be eligible for increased payment. We propose that the same standard be applied to the Medicaid payments under section 1902(a)(13)(C) of the Act although we propose that verification would be based on the number of codes billed for the specified primary care services, rather than charges. The use of billing codes rather than allowe d charges helps to assure that physicians providing a certain volume of primary care serv ices are uniformly recognized for higher payment across States, regardless of variations in service charges.CMS-2370-P 18

We are seeking comment on whether 60 percent or some other percentage threshold would be more appropriate to determine whether a non Board certified physician qualifies for increased payment. In developing the overall require ments for verification of physician self-attestation, we considered that th ere are no pre-existing Federal Medicaid requirements concerning provide r designation of a specialty or subspecialty. Because State practices vary on recognizing specialty or subspecialty desi gnations for different purposes, reliance solely on self-attestation woul d result in a lack of uniformity in the application of minimum payment levels. Se lf-attestation alone w ould not provide an objective and auditable standard to document that a provider is one of the types of primary care physicians designate d in statute. For this reason, we believe imposing the requirement for either Board certificati on in a nationally-recognized specialty or subspecialty or a supporting history of code s billed using the Medicare standard is

merited. When making a payment, the State would have the choice of initially reimbursing a newly enrolled physician at the Medicare rate or the Medicaid State plan rate used for services provided by physicians who do not qualify for the increased payment. If the State chooses to reimburse a physician initially at the higher Medicare rate and later finds through the review of codes bill ed that the physician did not qualify, increased payments to which the provider was not entitled under the State plan would be considered as overpayments. Conversely, the State could choose to reimburse the newly enrolled physician at the Medicaid State plan rate applicable to se rvices provided by physicians who do not qualify for increased payment, and then make supplemental payments promptly upon determining qualificat ion for the increased payments.CMS-2370-P 19

We are soliciting comments on whether the proposed timeframes, or something else, for establishing a supporti ng history of codes billed fo r a physician who is not Board certified is appropriate. We are attempti ng to minimize any implementation burden while also ensuring that proper audit controls are in place to prevent in appropriate application of this provision. b. Furnished by a Specified Physician Section 1902(a)(13)(c)of the Act requires increased payment for “primary care services furnished in CYs 2013 and 2014 by a physician with a primary specialty designation of family medicine, general internal medicine, or pediatric medicine.” This regulation would specify that the increased payment applies only for services under the “physicians’ services” benefit at section 1905(a)(5)(A) of the Act and in regulations at §440.50. Increased payment would not be availabl e for services provided by a physician delivering services under any other benefit unde r section 1905(a) of th e Act such as, but not limited to, the FQHC or RHC benefits be cause, in those instances, payment is made on a facility basis and is not specific to the physician’s serv ices. Section 1902(a)(13)(c) of the Act requires payment “for primary car e services... furnished by a physician with a primary specialty designation of family medici ne, general internal medicine, or pediatric medicine at a rate no less than 100 percent of the payment rate that applies to such services and physicians under Part B of Title XVIII.” Therefore, we believe that the statute limits payment to physicians who, if Medicare providers, would be reimbursed using the MPFS. The MPFS is not used to reimburse physicians in settings such as FQHCs or RHCs; therefore, we believe physic ians delivering primar y care services at FQHCs and RHCs are not eligible for increas ed payments under section 1902(a)(13) ofCMS-2370-P 20

the Act. Furthermore, we note that the Medicaid statute alre ady provides a payment methodology for FQHCs and RHCs that is designed to reimburse those providers at cost. In specifying that payment is made for qualified primary care services under the physicians’ services benefit at §440.50, the in creased payment for primary care services would be required for services furnished “ by or under the personal supervision” of a physician who is one of the primary care special ty or subspecialty types designated in the regulation. In Medicaid, many primary care physician services are actually furnished under the personal supervision of a physic ian by nonphysician practitioners, such as nurse practitioners and physician assistan ts. Such services are billed under the supervising physician’s program enrollment numb er and are treated in both Medicare and Medicaid as services of the supervising physic ian. Consistent with that treatment, we propose that primary care services would be pa id at the higher rates if properly billed under the provider number of a physician who is enrolled as one of the specified primary care specialists or subspecialists, regard less of whether furnished by the physician directly, or under the physician ’s personal supervision. This would align with Medicaid’s longstanding practi ce in providing physician services, as well as Medicare’s Part B FFS payment methodology for professional servic es. Additionally, this policy would recognize the important role that nonphysician practi tioners working under the supervision of physicians have in the delivery of primary care services. c. Eligible Primary Care Services (§447.400(b)) We propose that Healthcare Common Pr ocedure Coding System (HCPCS) E&M codes 99201 through 99499 and vaccine administration codes 90460, 90461, 90471, 90472, 90473 and 90474 or their successors would be eligible for higher payment andCMS-2370-P 21

FFP. These codes are specified by the statut e and include those primary care E&M codes not reimbursed by Medicare. We believe that non-Medicare covered pr imary care services should be included because these services represen t a core component of servic es commonly delivered in the Medicaid program. We reviewed Medica id payment data from 2007, 2008, and 2009 for these services as a percentage of primary car e expenditures, and found that they represent 6 percent of primary care payments (as disti nguished from service volume). We believe this percentage warrants the inclusion of these non-Medicare reimbursed codes to achieve the purpose of encouraging primary care pr oviders to serve th e Medicaid population.

Where there are differences in codes reimbursed by Medicaid and Medicare we attribute this mostly to the fact that children represent a population not typically served by the Medicare program. As a result, the scope of primary care services is not equivalent between the two programs. We belie ve that the statute provides the latitude to include codes for which the Medicare pr ogram sets and publishes RVUs, even if Medicare payment is not actua lly made for the service. Specifically, we are proposing to include as primary care services the following

E&M codes that are not reimbursed by Medicare:

● New Patient/Initial Comprehensive Preventive Medicine--codes 99381 through 99387;

● Established Patient/Periodic Compre hensive Preventive Medicine--codes 99391 through 99397;

● Counseling Risk Factor Reduction a nd Behavior Change Intervention--codes 99401 through 99404, 99408, 99409, 99411, 99412, 99420 and 99429;

● E&M/Non Face-to-Face physician Service--codes 99441 through 99444.CMS-2370-P 22

2. Amount of Required Minimum Payments (§447.405) Section 1902(a)(13)(C ) of the Act requires payment not less than the amount that applies under the MPFS in CYs 2013 and 2014 or, if greater, the payment rate that would be applicable if the 2009 CF we re used to calculate the MPFS. a. Use of Fee Schedule Amount Applicable to the Geographic Location of Service We are proposing that States be required to use the MPFS rate applicable to the site of service and geographic lo cation of the service at issue. The Medicare Part B rates vary by geographic location and site of service. For ex ample, rates are higher for services provided in an office setting as opposed to the outpatient hospital setting. We propose that States would be required to use the MPFS payment amounts applicable to the site of service and geogra phic location because we believe these are integral to the MPFS payment system. Individual fee sche dule amounts for the MPFS are the product of the geographic adjustment, RVUs, and CF that converts adjusted RVUs into dollar

amounts. Site of service is reflected as an adjustment to the RVUs used to set the rate. We are proposing that States be requi red to use the MPFS as published by CMS. Medicare primary care incentive payments made pursuant to section 5501 of the Affordable Care Act, which amended section 1833 of the Act, would not be included. Section 5501(a) provides for incentive payments for a subset of the codes covered by this regulation. The payments are not made as increases in fee schedule amounts and are not

reflected in the MPFS. b. Payment for Services Unique to Medicaid For services reimbursed by Medicaid but not Medicare, we propose that payment would be made under a fee schedule developed by CMS and issued prior to the beginning of CYs 2013 and 2014. We propose that ra tes for non-Medicare reimbursed servicesCMS-2370-P 23

would be established using the Medicare CF in effect in CYs 2013 and 2014 (or the CY 2009 CF, if higher) and the RVUs recommende d by the American Medical Association’s (AMA) Specialty Society Relative Value Update Committee (RUC) and published by CMS for CYs 2013 and 2014. We are specifically seeking comments from States and others on the most appropriate way to set payment rates for services not reimbursed by

Medicare. c. Updates to Medicare Part B Fee Schedule We recognize the potential for multiple updates to the MPFS in CYs 2013 and 2014. Those rates are published by CMS on or before November 1 st of the preceding calendar year, but are subject to periodic ad justments or updates th roughout the calendar year. In addition, the Medicare Part B ra tes vary by geographic location and site of

service. We propose to permit States the option of complying with the requirements of section 1902(a)(13)(C) of the Act by eith er adopting annual rates or by using a methodology to update rates to reflect changes made by Medicare during the year. That is, States could adopt the MPFS in effect at the beginning of CYs 2013 and 2014 (or, if the CY 2009 CF is higher, the CY 2013 or CY 2014 RVUs multiplied by the CY 2009 MPFS CF), and apply those rates throughout the applicable calendar year without adjustments or updates. Using this met hodology, mid-year updates made to the MPFS during the respective calendar year would not be reflecte d in Medicaid payments. Alternatively, a State could el ect to adjust Medicaid payments to reflect mid-year updates made to the MPFS, but the State’s methodology would have to specify the timing for such adjustments.CMS-2370-P 24

In consulting with State Medicaid agencies and other stakeholders, we were urged not to require multiple rate adjustments based on fluctuations in the MPFS, but to identify the MPFS for each year as of a single point in time. That annual fee schedule would

serve as the basis of the rate s paid by Medicaid during each of the 2 years that section 1902(a)(13)(C) of the Act is in effect. Ba sed on the feedback, we propose giving States the choice to apply or not apply mid-year updates. 3. State Plan Requirements (§447.410) Under the proposed rule, States would be required to submit a State plan amendment (SPA) to reflect the fee schedule rate increases for eligible primary care physicians under section 1902(a)(13)(A) of th e Act. The purpose of this proposed requirement is to assure that when Stat es make the increased reimbursement to physicians, they have State plan authority to do so and they have notified physicians of the change in reimbursement as required by Federal regulations. 4. Availability of Federal Fina ncial Participati on (FFP) (§447.415) Section 1905(dd) of the Act allows States to receive 100 percent FFP for expenditures equal to the difference between the Medicaid State plan rate for primary care services in effect on July 1, 2009, and th e Medicare rates in effect in CYs 2013 and 2014 or, if greater, the payment rate that would be applicable using the CY 2009

Medicare CF. To claim the enhanced Fede ral match, States must make payments to specified physicians at the appropriate MPFS rate and must develop a method of identifying both the rate differential and elig ible physicians for services reimbursed on an FFS for service basis and through managed care pl ans. States must be able to document the difference between the July 1, 2009 Medica id rate and the applicable Medicare rate for specified providers that is claimable at the 100 percent matching rate. ThisCMS-2370-P 25

requirement applies also to services provide d to individuals eligib le for both Medicaid

and Medicare. This means that increased FFP will be available also for higher Medicaid payments for Medicare cost sharing for individuals who are eligible for both programs. a. FFP in Payments for Individuals E ligible for Both Medicare and Medicaid When a service is provided to an indivi dual who is eligible for Medicare and Medicaid, Medicare reimburses the physician 80 percent of it s fee schedule rate while Medicaid pays the remaining cost. Currently, States have two options for such payments consistent with section 1902(n) of the Act. A State may pay the provider the full amount necessary to result in aggregate payment to the provider equal to the MPFS rate (the full Medicare cost sharing amount), or only th e amount (if any) to result in aggregate payment equal to the State’s Medicaid rate. For example, under the second option, if the Medicare allowed amount is $100 and the Me dicaid rate is $75, th en Medicare pays $80 and there is no additional amount paid by Medi caid. Historically, most States have chosen to pay providers only up to the lower Medicaid rate. In CYs 2013 and 2014, the Medicaid rate for primary care services by the specified physicians will equal the Medicare rate. As a result, these physicians should receive payment up to the full Medicare rate for primary care services and 100 percent

FFP will be available for the full amount of the Medicare cost sharing amount that exceeds the amount that would have been payabl e under the State plan in effect on July 1,

2009. b. Identifying the July 1, 2009 Payment Rate For the purpose of identifying the differential between the Medicaid rate and the Medicare rate, we propose to define the Me dicaid “rate” under the approved Medicaid State plan as the final rate paid to a provider inclusive of all supplemental or increasedCMS-2370-P 26

payments paid to that provider. For exam ple, many States currently pay physicians

affiliated with academic medical centers the Me dicaid State plan rate plus a supplemental amount that together equal the average amount paid by commercial third party payers. Therefore, in calculating the rate differentia l, these States would determine the CY 2009 rate inclusive of any supplemental payment. c. Federal Funding for Increased Pa yments for Vaccine Administration There are a number of factors affecting th e identification of the cost of vaccine administration eligible for 100 percent FFP. They include the following issues:

● The structure of the billing codes fo r vaccine administration changed in 2011

such that four of the codes used in 2009 were replaced by two codes.

● Some States did not use the designate d billing codes in effect in 2009.

• Prior to CY 2011, billing codes for vaccine administration did not permit payment for additional vaccine/toxoid components.

● Vaccines for Children (VFC) program requirements do not permit payment for each vaccine/toxoid component administered and limit provider charges to the regional VFC ceiling amount.

Prior to CY 2011 vaccine administration billing codes did not permit additional vaccine administration payments for vacci nes with more than one vaccine/toxoid component. All providers, including those participating in the VFC program, received one payment per vaccine regardless of the num ber of vaccine/toxoid components. In this rule, we clarify that qualifying physicians , excluding those participating in the VFC program, must receive additional payments during CYs 2013 and 2014 for vaccines with multiple vaccine/toxoid components admini stered to Medicaid beneficiaries.CMS-2370-P 27

The vaccine administration billing codes recognized for reimbursement under the statute are: 90465, 90466, 90567, 90568, 90471, 90472, 90473 and 90474 or their successor codes. In 2011, the coding struct ure for vaccine administration changed such that four pediatric billing codes specif ied in section 1902(jj) of the Act (90465, 90466, 90767, and 90468) were replaced by just two billing codes (90460 and 90461). Moreover, the four deleted codes represente d vaccine administrati ons by various routes (for example, intranasal vs. injectable) to children under age 8. However, new code 90460 represents the initial vacci ne/toxoid administered throu gh all routes to children under 18 while code 90461 represents additiona l vaccines/toxoids administered. As a result, States will not be able to identify th e rate differential by comparing payments for

the codes used in CY 2009 to those in use in CYs 2013 and 2014.

Immunization Codes Before and After 2011

Prior to 2011 Effective 2011 90465, 90466, 90467, 90468 90460, 90461

90471 90471

90472 90472

90473 90473

90474 90474 We propose that the State impute the CY 2009 rate for code 90460 based on the average payment amount for the deleted codes we ighted by service volume. That is, each

of the four CY 2009 rates for vaccine ad ministration would be multiplied by their respective percentages of service volume and then added to determine one payment amount as demonstrated in the following example:

● 90465 = $10 x 0.50 service volume = $5.00CMS-2370-P 28

• 90466 = $10 x 0.10 service volume = $1.00

● 90467 = $8 x 0.30 service volume = $2.40

• 90468 = $8 x 0.10 service volume = 0.80

● Total cost equals $9.20 for the new, single code, 90460. Code 90461 represents payment for the administration of additional vaccine/toxoid components in a vaccine. Code 90461 is an add-on code that cannot be

used without code 90460. Because there were only single payments for vaccines prior to 2011, we believe the rate for code 90461 should be $0. We believe that this is an equitable method of setting the 2009 Me dicaid base for code 90460, but welcome comments. For VFC providers, if the rate pa id in July 2009 was lower than the regular Medicaid State plan administration fee fo r non-VFC providers, then the rate for VFC providers should be used as the 2009 base for code 90460. The majority of vaccines administered to Medicaid-eligible children under the age of 18 are administered as part of the Vaccines for Children (VFC) program. Sec tion 1928(c)(2)(ii) of the Act provides that administration fees for vaccines provided under the VFC program cannot exceed the cost of administration as determined by the Secret ary for that program. An additional concern for VFC vaccines is that, under the terms of the VFC program, providers can still only bill a flat fee per vaccine given by injection or by intranasal or oral routes, regardless of the number of vaccines/toxoid components, a nd must use only code 90460. In order to permit providers participating in the VFC progr am to benefit from the provisions of the Affordable Care Act, this rule proposes th at States be required to reimburse VFC providers at the lesser of the 2013 and 2014 Medicare rates or the maximum regional VFC amount in those years. States should qualify for 100% FFP for these increased reimbursements. This policy is consistent w ith Medicare which limits provider paymentCMS-2370-P 29

to the lesser of the fee schedule amount or provider charges, since VFC provider charges are limited to the regional maximum administ ration fee. Since the VFC statute prohibits payment for additional vaccines/toxoids, VF C providers would only receive payment for administration fees billed using code 90460. We invite comment on whether these proposed provisions give sufficient effect to the legislative intent to increase provider payments to Medicare levels, or whether we should instead adopt policies that we

describe below as alternatives consid ered in developing this proposed rule. In proposing a method to determine the CY 2009 rate for code 90460, our goal is to identify a uniform methodol ogy that is not administrativ ely burdensome. We are seeking comments on this proposal and encour age States and other stakeholders to provide additional options for iden tifying the rate differential. An additional issue related to the changes made by the Affordable Care Act for vaccine administration is that, in CY 2009, some States did not reimburse providers using the designated vaccine administration billing co des. Rather, some States paid providers on the basis of non standard billing codes de veloped for the purpose of identifying the type of vaccine being administered. In instances where both the vaccine and administration fee were billed using the vacc ine code, States will be required to identify the CY 2009 payment for vaccine administrati on separate from the vaccine itself.

5. Primary Care Service Payments Made by Managed Care Plans, and Enhanced Federal Match (§438.6 and §438.804) As amended by the Affordable Care Act, section 1932(f) of the Act requires that the managed care plans pay physicians at the a pplicable Medicare rates. We propose to implement the managed care requirements thr ough a State-by-State review of managed care contracts and applicable procedures. We will review managed care contracts toCMS-2370-P 30

ensure that they-- • Provide for payment at the minimu m Medicare primary care payment levels; • Require that eligible physicians receive direct benefit of the payment increase for each of the primary care servic es specified in this rule. This requirement must be met regardless of whether a physician is salaried, or receives a fee for service or capitated payment. We emphasize that increased paym ent must correspond directly to the volume and payment amounts associated with the primar y care services specified in this rule; • Require that all information needed to adequately document expenditures eligible for 100 percent FFP is reported by MCOs, PIHPs, and PAHPs to the States which, in turn, will report these data to CMS; and • Specify that States must receiv e from MCOs, PIHPs and PHAPs data on primary care services which qualify for pa yment under this rule. The managed care reporting requirements would ensure that St ates have data on increased provider payments necessary to justify any adjustment s to the capitation rates paid by the State

under the contract. Additionally, we will review each State’ s proposed methodology for identifying the discrete amount paid for each of the elig ible primary care services that qualifies for 100 percent FFP. Both the managed care contracts and the State’s methodology for identifying payment amounts made for each primary care services must be submitted to CMS for review prior to the start of CY 2013. We acknowledge the diversity of payment arrangements between managed care plans and primary care physicians, and we will not require that managed care plans modify the terms of their payments to eligible primary care physicians beyond the increase in payments for primary care services required by the statute.CMS-2370-P 31

In proposing this approach, we are mindful of balancing the need for adequate documentation of the payment with the admi nistrative burden it places on States and managed care plans. We are requesting comment on these provisions and additional suggestions on how to ensure that managed ca re plans provide the necessary data to the State, as well as how to ensure and mon itor that managed care pl ans appropriately pass on to physicians the portion of th e increased capitation rate th at is attributable to the primary care rate increase. States have expressed concern about their ability to align capitated payment made as of July 1, 2009 to payment made for se rvices provided in CYs 2013 and 2014 for the purpose of claiming increased FFP. We recognize the particular chal lenges inherent in identifying the payment differential eligible for 100 percent FFP for primary care services provided by managed care plans be cause such payments are not necessarily

linked to individual services a nd physicians. We believe that the most reasonable way to apply this provision for managed car e rates is to do the following: Step I: Identify the proportion of total capitation linked to primary care. Step II: Identify the fee schedule amount inco rporated into the actuarial model for primary care services represented by the proportion of payment for primary care services. Here, we assume the visit rate equals $25. Step III: Determine the annualized cost built in to the actuarial model for primary care. Here we assume 8 visits annually. $25 per visit rate X 8 visits annually = $200 Step IV: Determine the per visit cost discounted for volume. $200/12 = $16.67 In this example, $16.67 equals the imputed amount of the payment made on a fee for services basis for an individual primary car e service. The State would compare this amount to the Medicare rate paid in CYs 2013 and 2014 to determine the paymentCMS-2370-P 32

differential eligible for 1 00 percent Federal matching funds. In proposing this methodology, we realize there may be multiple ways to achieve implementation and specifically request comments on th is portion of the proposed rule. To be clear, we are proposing that States would be required to submit the methodology they intend to use to identif y the increment of the capitation payment attributable to increased provi der rates to CMS for approval prior to the beginning of CY 2013. Further, we propose that, absent a pproval of its methodology from CMS, States

would not be able to claim the enhanced Federal match for capitation payments to managed care plans. This proposal was developed with input from States. During a January 27, 2011 all-State call sp ecific to the impact of th e amended section 1932(f) of the Act on managed care, States reported that the amount and type of data managed care plans report to them varies greatly both across an d within States. States expressed the need to be able to identify the rate di fferential for the purpose of claiming 100 percent FFP and to do so in a manner that is reasonable and documented. We are seeking additional comments on how States might best meet these requirements.

B . Vaccine Administration Under the Vaccines for Children (VFC) Program

1. General Statement At this time, we are proposing to add 42 CFR part 441 subpart K to codify the requirements of the Vaccines for Children Pr ogram. The general requirements of the VFC program will be found at §441.510, and st ate that federally-purchased vaccines under the VFC Program are made available to children who are 18 years of age or younger and who are any of the following:

● Eligible for Medicaid

.CMS-2370-P 33

● Not insured.

● Not insured for the vaccine and who are administered pediatric vaccines by a federally-qualified health center (FQHC ) or rural health clinic (RHC).

● An Indian, as defined in section 4 of the Indian Health Care Improvement Act. Under the VFC program, vaccines must be administered by program-registered providers. Section 1928(c) of the Act defines a program-registered provider as any health care provider that --

● Is licensed or authorized to administ er pediatric vaccines under the law of the

State in which the administration occurs withou t regard to whether or not the provider is a Medicaid-participating provider.

● Submits to the State an executed provider agreement in the form and manner specified by the Secretary.

● Has not been found, by the Secretary or the State to have violated the provider agreement or other applicable requirements established by the Secretary or the State. Section 1928 of the Act requires each St ate to establish a VFC Program (which may be administered by the Stat e Department of Health) and include this program in the State plan (§441.505) under which certain spec ified groups of child ren are entitled to receive qualified pediatric immunizations without charge for the cost of the vaccine. In the October 3, 1994 Federal Register , we published a notice with comment period entitled, “Charges for Vaccine Admi nistration Under the Vaccines for Children (VFC) Program” (59 FR 50235) (hereinafter referred to as th e “October 1994 VFC notice”) that set forth, by State, the in terim regional maximum charges for the VFC program. These charges represented the ma ximum amount that a provider in a State could charge for the administration of qualif ied pediatric vaccines to federally vaccine-CMS-2370-P 34

eligible children under the VF C Program. This proposed rule would announce updates to

those fees for use on an interim basis. This is the first proposed update of the interim regional maximum administration fees since 199 4. We received comments in response to

the October 1994 VFC notice and we have review ed them. We expect to address those comments in a separate document. We w ill respond to public comments provided in response to this proposed rule. We are inte rested in receiving comments on this proposed rule and suggestions for potential updates that could be made to the administration fees to ensure that the VFC regional maximum rates ar e increased to reflect a more current cost

of vaccine administration. As discussed in the October 1994 VFC notice, the interim maximum administration fees apply to al l VFC program-registered providers that administer pediatric vaccines to federally vaccine-eligible children. The fees do not apply to children receiving free vaccines under State purchase programs or any other arrangement. In accordance with section 1928(c)(2)(C )(ii)of the Act, we are proposing §441.500 to state that physicians participating in the VFC program can charge federally vaccine-eligible children who are not enrolled in Medicaid the maximum administration fee (if that fee reflects the provider's cost of administration) regardless of whether the State has established a lower administration fee under the Medicaid program. Families of children who are enrolled in the VFC program because they are either uninsured or do

not have insurance that covers vaccines would be impacted by this proposed regulation.

Providers can bill the families of those childr en at the State’s regional maximum rate for the administration of a vaccine. Therefore, if the proposed updated rates were to become effective, those families could be billed at th e published rate for that State. However, section 1928(c)(2)(B)(i ii) of the Social Security Act sa ys that “[t]he provider will notCMS-2370-P 35

deny administration of a qualified pediatric vaccine to a vaccin e-eligible child due to the inability of the child’s parent to pay an admi nistration fee.” A recent survey of providers participating in VFC shows that approximate ly 37 percent of thos e providers actually charge the State’s maximum ad ministration fee to families of children who are uninsured

or who do not have insuran ce that covers vaccines. The remaining 61 percent of providers surveyed either write off the char ge or charge a lesser amount. We solicit comments specifically on the impact of the in creased fees on uninsured and underinsured VFC-eligible children. However, as discu ssed in the October 1994 VFC notice, and as proposed in new §441.515(e), there would be no Federal Medicaid matching funds

available for administration since these childr en are not eligible fo r Medicaid. Although the cost of the vaccines for the VFC program is funded under Title XIX of the Act,

Medicaid will not pay for the administration of vaccines provided to children under the VFC program who are not Medicaid-eligib le. A provider may only bill Medicaid for the

administration of a vaccine if the child is eligible under Medicaid. 2. Methodology Used to Establ ish Administration Charges In 1994, to obtain national average rates for the administration of vaccines, we

contracted with the American Academy of Pediatrics ( AAP) to purchase data on the normal fee charged by its members for administering the vaccines covered by this program. This was because there was no reliab le data available on physicians’ actual cost that would provide a valid base for setting th ese maximum charges on a nationwide scale. The final national average administration ch arge we obtained from the AAP was $15.09. The national average was then adjusted for re gional variations, using indices established

for the MPFS.CMS-2370-P 36

Before the publication of this propose d rule, we attempted to determine the availability of Medicaid cost data; however, just as in 1994, there is no data readily available on physician’s actual costs that w ould provide a valid basis for recalculating these maximum fees. Therefore, in § 441.515, we are proposing to update the maximum

administration fees based on the data and formula established in the October 1994 VFC notice. We continue to believe, given the nature of the program and the requirements applicable to participating provi ders, that charge da ta, adjusted for regional variations, is a reasonable proxy for calcula ting these maximum fees. To adjust the administration charge of $15.09 for inflation, we are propos ing to use the Medicare Economic Index (MEI), which is a price index that is used by CMS to update Medicare physician payments. We are proposing to use the MEI b ecause: (1) it reflect s input price inflation faced by physicians inclusive of the tim e period when the national average was established in 1994, and (2) we believe that input prices associated with this specific type of physician-provided service are consistent with overall inpu t prices. The MEI was most recently updated at the end of 2011 (76 FR 73275 through 73276, November 28, 2011). Therefore, we have calculated the propos ed update based on the MEI up through and including CY 2012. Using that index, we ha ve determined that the updated national average administration charge would be $21.80. As in the October 1994 VFC notice, we would adjust the national average for regional variations, using indices establishe d for the MPFS. The national average was weighted by the geographic ad justment factors (GAF), whic h reflects a weighted sum of the three geographic practice cost indexe s (GPCIs) (work, practice expense, and malpractice insurance) for a gi ven Medicare PFS locality.CMS-2370-P 37

The GAF is a proxy for differences in th e cost of operating a medical practice among various geographic areas, and is used as a comparison among Medicare PFS localities (73 FR 69726, 69740 November 19, 2008) . Consistent with the methodology in the October 1994 VFC notice, when there was more than one GAF per State, we would select the highest GAF within the State and use that GAF to adjust the average national vaccination administration charge for the enti re State to assure that administration charges would fall within our established maximum rates. The MPFS localities (and correspondi ng GAFs) are grouped by State and

sub-State areas. As discussed in the Oc tober 1994 VFC notice, we developed the regional maximum charges for each “State” b ecause the geographic area of a State is clearly identifiable by boundary lines recogni zed nationwide, as opposed to a sub-State area. In this proposed rule, we see no reason to change that interpretation. We are also proposing to revise the nati onal average for each State to reflect the fully implemented sixth comprehensive update to the MPFS GPCIs and updated GAFs. For more information on the methodology used for the most recent GPCI update, we

refer readers to the CY 2012 MPFS final rule with comment period (76 FR 73026 through 73474 ) . Consistent with that rule, the co st share weights for determining the GAF equation are 48.266 percent for phys ician work, 47.439 percent for practice expense, and 4.295 percent fo r malpractice insurance. We derived the proposed interim amounts specified in the chart under section II of this proposed rule as the maximum a llowable charges for the administration of qualified pediatric vaccines for each State on the basis of the formula: National charge data x updated GAFs = maximum VFC fee. (See Table 1.)CMS-2370-P 38

TABLE 1: Example of the Applic ation of the Formula for Ohio Average national administration charge = $21.80 Work expense = 0.998; practice expense = 0.927 Malpractice expense = 1.24 Using Medicare weights to weigh components of-- Work expense = 48.266 percent Practice expense = 47.439 percent Malpractice expe nse = 4.295 percent Calculation: Work expense......... 0.998 x 48.266 percent = 0.482 Practice expense..... 0.927 x 47.439 percent = 0.439 Malpractice expense.. 1.24 x 4.295 percent = 0.053 Total expense = 0.975 Ohio’s updated maximum fee for administration of the vaccine is: $21.80 x 0.975 = $21.25.

The maximum updated administration fee w ould be effective w ith the publication of a final notice or regulation. We re quest comments on the methodology used to calculate this administration fee update a nd will consider revisions to the regional maximum fees in response to public comme nts. The proposed updated maximum fees

are set forth in Table 2. TABLE 2: Regional Maximum Administration Fee by State

State Current Regional Maximum Fee Updated Regional Maximum Fee Alabama $14.26 $19.79 Alaska $17.54 $27.44 Arizona $15.43 $21.33 Arkansas $13.30 $19.54 California $17.55 $26.03 Colorado $14.74 $21.68 Connecticut $16.56 $23.41 Delaware $16.55 $22.07 District of Columbia $15.13 $24.48 Florida $16.06 $24.01 Georgia $14.81 $21.93 Guam $23.11 Hawaii $15.71 $23.11 Idaho $14.34 $20.13 Illinois $16.79 $23.87 Indiana $14.47 $20.32 Iowa $14.58 $19.68 Kansas $14.80 $20.26 Kentucky $14.17 $19.93 Louisiana $15.22 $21.30CMS-2370-P 39

State Current Regional Maximum Fee Updated Regional Maximum Fee Maine $14.37 $21.58 Maryland $15.49 $23.28 Massachusetts $15.78 $23.29 Michigan $16.75 $23.03 Minnesota $14.69 $21.22 Mississippi $13.92 $19.79 Missouri $15.07 $21.53 Montana $14.13 $21.32 Nebraska $13.58 $19.82 Nevada $16.13 $22.57 New Hampshire $14.51 $22.02 New Jersey $16.34 $24.23 New Mexico $14.28 $20.80 New York $17.85 $25.10 North Carolina $13.71 $20.45 North Dakota $13.90 $20.99 Ohio $14.67 $21.25 Oklahoma $13.89 $19.58 Oregon $15.19 $21.96 Pennsylvania $15.76 $23.14 Puerto Rico $12.24 $16.80 Rhode Island $14.93 $22.69 South Carolina $13.62 $20.16 South Dakota $13.56 $20.73 Tennessee $13.70 $20.00 Texas $14.85 $22.06 Utah $14.52 $20.72 Vermont $13.86 $21.22 Virginia $14.71 $21.24 Virgin Islands $15.09 $21.81 Washington $15.60 $23.44 West Virginia $14.49 $19.85 Wisconsin $15.02 $20.83 Wyoming $14.31 $21.72

As noted in the October 1994 VFC notice, th ese fees are intended as guidance for Universal Purchase States (that is, where th e vaccines are purchased by the State for all children in the State). These States may use the maximum charges listed or develop their

own maximum fees. In addition, as stated in the October 1994 VFC notice, State Medicaid agencies would not be obligated to set the Medicaid payment for vaccine administration at the

level of the maximum fees set forth in this proposed rule. Therefor e, if these proposed maximum fees were to go into effect, the amount that a State pays a provider under theCMS-2370-P 40

Medicaid program would not increase unless a State were to submit a SPA to CMS that

increases the rate. In accordance with sec tions 1902(a)(30) and 1928(c)(2)(C)(ii) of the Act, States have the flexibility to set their payment rates at a lower level than the State’s regional maximum fee. State Medicaid agencies typically take a vari ety of factors into consideration when setting payment rates, including the need to assure adequate participation by providers. III. 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. To fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

● The need for the information collecti on and its usefulness in carrying out the proper functions of our agency.

● The accuracy of our estimate of the information collection burden.

● The quality, utility, and clarity of the information to be collected.

● Recommendations to minimize the information collection burden on the affected public, including auto mated collection techniques. To derive average costs, we used data fr om the U.S. Bureau of Labor Statistics for all salary estimates. The salary estimates incl ude the cost of fringe benefits, calculated at approximately 35 percent of salary, which is based on the June 2011 Employer Costs for Employee Compensation report by the Bureau.CMS-2370-P 41

We are soliciting public comment on each of the section 3506(c)(2)(A)-required issues for the following informati on collection requirements (ICRs): A. ICR's Regarding Contract Requirements (§438.6) In §438.6(c)(3)(v) and (c)(5)(vi), States w ould be required to implement managed care contracts for payment to a MCO, PIPH or PAHP to comply with the requirements at

section 1202 of the HCERA. There is a one -time burden to the State for amending such contracts for the following provisions: (1) To assure that the level of payment is consistent with part 447, subpart G; (2) to a ssure that the specifie d physicians (whether directly or through a capitated arrangement) receive an amount at least equal to the amount set for and required under part 447; a nd (3) to assure that the State receive documentation regarding those payments. The burden associated with the requir ements under §438.6(c)(3)(v) and (c)(5) (vi)

is the time and effort it would take each of the 35 State Medicaid programs with managed care plan payments and the District of Co lumbia (36 total respondents) to amend an average of three managed care contracts. We estimate it will take three hours to complete this task per contract at an estimated co st of $441.63 per respondent ($49.07/hr x 3 hr x 3 contracts) or $15,898.68 total ($441.63 per res pondent x 36 respondents). In deriving this figure, we used a labor rate of $49.07/hr for a State’s management, professional and

related staff to amend each contract. B. ICR's Regarding Provider Agreements (§441.505(b)) This requirement is exempt from OMB re view and approval since we expect to

receive fewer than 10 submissi ons (annually) from providers, if any. The requirement that providers must have provider agreements in place in order to pa rticipate in the VFC program has been in effect since the program was implemented in 1994. The provision inCMS-2370-P 42

this regulation is merely codifying the requi rement and no further action is necessary in regard to providers who are currently participating in the VFC program. C. ICR's Regarding State Plan Amendments for the Vaccines for Children Program (§§441.510 and 441.515(d)) This requirement is exempt from the OMB review process as we expect to receive fewer than 10 submissions from States. The requirement that a State submit a State plan was a requirement when the VFC program wa s first established in 1994, and all States

submitted State Plans at that time. A Stat e now only submits a State plan amendment related to the VFC program when it makes a cha nge to the State’s administration fee. In 2011, only two States submitted State plans that made changes to the State’s administration fee under the VFC program. Even with the publication of the updated fee schedule, we do not anticipate that many St ates will make changes to their State’s

administration fee. D. ICR's Regarding Eligible Services (§447.400(a)) In §447.400(a), States would be required to ensure that physicians identify their specialty to the Medicaid agency before an increased payment is made. Initial identification may be made by self-attestation, but for pr ogram integrity purposes the State will be required to verify the physicia n’s claimed specialty st atus by reviewing the

Board certification status of the physician, or reviewi ng the physician’s practice characteristics, before paying for services at the Medicare rate. The burden associated with the requir ements under §447.400(a) is the time and

effort it would take each of th e 50 Medicaid Programs and the District of Columbia (51 total respondents) to esta blish that a physician is qua lified, either through Board certification or a supporting history of codes billed, to receive payment under sectionCMS-2370-P 43

1202 of the HCERA. We estimate that it will take 0.5 hours to determine whether a physician may receive payment under section 1202 of the HCERA. We used data from the Medicaid Statistical Information System (M SIS) to identify the number of physicians claiming for the E&M codes specified in this regulation during the fourth quarter of FY 2008 and FY 2009 (the most recent data availabl e). Based on that data, there is an average of 2,245 physicians per State who cu rrently bill, but whose eligibility for increased payment will need to be verified by the Medicaid agency. We increased this number by 10 percent to account for particip ation by new physicians for a total of 2,470 physicians. We used the following hourly labor rates a nd estimated the time to complete each

task: 0.5 hours for a State’s Medicaid offi ce and support staff working in the medical billing area to retrieve and assess claims for an individua l physician; or 0.5 hours for

administrative staff to review the Board ce rtification status of a physician. Costs associated with these staff are reported at a cost of $14.12 for each half-hour derived from $28.24/hr each and 2,470 physicians for an estimated cost of $14.12 per response or $34,876.40 (total). E. ICR's Regarding State Plan Requirements (§447.410) In §447.410, States would be required to s ubmit a SPA to reflect the fee schedule rate increases for eligible primary care physicians under section 1902(a)(1 3)(C) of the Act. The purpose of this proposed requirement is to assure that when States make the increased reimbursement to providers, they have State Plan authority to do so and they have notified providers of the change in reimbursement as required by Federal regulations.CMS-2370-P 44

The burden associated with the one-t ime requirement under §447.410 is the time

and effort it would take each of the 50 State Medicaid Programs and the District of Columbia (51 total respondents) to modify the Medicaid St ate plan to reflect payment consistent with the requirements in section 1902(a)(13)(C) of the Act. This will require the preparation and submission of a SPA. We estimate that it will take State staff working 4 hours to complete all of the tasks associat ed with the preparation of an SPA. The estimated cost is $107.13 ($35.71/hr x 3 h r) per State or $5,463.63 total ($107.13 * 51) for tasks completed by non-management staff working on SPA preparation. We estimate

that this task will also re quire 1 hour for State-employed legal staff at $49.07/hr or $49.07 (per response) for a total of $2,502.57 ($49.07 x 51). The combined total for cost associated with SPA preparation, including non-legal and legal staff employed by the State, is $7,966.20 ($5,463.63 + $2,502.57). F. ICR's Regarding Additional Requirements (Methodology to Identify Rate Differential) for FFP for Managed Care Payments (§438.804(a)(2) and (3)) In §438.804(a)(3), States would be re quired to submit the methodology they intend to use to identify the rate differenti al for managed care payments to CMS for approval 6 months prior to th e beginning of CY 2013. Further, we propose that, absent approval from CMS, States would not be able to claim the enhanced Federal match for managed care payments. The burden associated with the requir ements under §438.804(a)(2) and (3) is the

time and effort it would take each of the 35 State Medicaid Program s with managed care plan payments and the District of Columb ia (36 total respondents) to develop a methodology for the identification of payment made for primary care services through managed care contracts eligible for 100 percent Federal matc hing funds. This task willCMS-2370-P 45

involve a one-time effort on th e part of financial, legal a nd information technology staff. We estimate that it will take 14 hours per re spondent at a cost of $637.42 to develop the identification methodology at a total cost of $22,947.12 (36 x $637.42). In deriving these figures, we used the following hourly labor rate s and estimated the time to complete this task: $49.07/hr and 2 hours for legal staff to review the methodology for compliance with the statute ($98.14); $48.09/hr and 8 hour s for managerial staff to assess the feasibility of implementing the met hodology ($384.72); and $38.64/hr and 4 hours for information technology/public administration staff to assess the feasibility of the methodology ($154.56). TABLE 3: Proposed Annual Record keeping and Reporting Requirements

Regulation Section(s) Responden ts Response s Burden per Response

(hours) Total Annual Burden (hours) Labor Cost of Reporting ($) Total Cost ($) §438.6(c)(3)(v) and (c)(5)(vi) 36 108 3 324 $15,898.68 $15,898.68 §447.400(a) 51 2,470 .50 1,235 $34,876.40 $34,876.40 §447.410 51 51 4 204 $7,966.20 $7,966.20 §438.804(a)(2) and (3) 36 36 14 504 $22,947.12 $22,947.12

Total -- -- -- 2,267 $81,688.40 $81,688.40 Note 1 : All of the proposed collections are new. Therefore, OMB control numbers have not been assigned and the control number column has been omitted from the table. Note 2 : There are no capital or maintena nce costs incurred by any of the proposed collections. Therefore, the capitol cost column has be en omitted from the table.

We have submitted a copy of this proposed rule to OMB for its review of the rule’s information collection and recordkeep ing requirements. These requirements are not effective until they have been approved by the OMB. To obtain copies of the supporting stat ement and any related forms for the proposed paperwork collections referenced above, access our Web site at http://www.cms.hhs.gov/Paperwork@cms.hhs.gov , or call the Reports Clearance Office

at 410–786–1326.CMS-2370-P 46

We invite public comments on th ese potential information collection requirements. If you comment on these in formation collection and recordkeeping requirements, please do either of the following: 1. Submit your comments electronica lly 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 Budge t, Attention: CMS Desk Officer, (CMS–2370– P) Fax: (202) 395–6974; or E- mail: OIRA_submission@omb.eop.gov

. IV. 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, a nd, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document. V. Regulatory Impact Statement

A. Introduction We have examined the impacts of this proposed rule as required by Executive Order 12866 (September 30, 1993, Regulatory Pl anning and Review), Executive Order 13563 on Improving Regulation and Regulator y Review (January 18, 2011), the Regulatory Flexibility Act (September 19, 1980; Pub. L. 96-354) (RFA), 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)).CMS-2370-P 47

Executive Orders 12866 and 13563 direct agenci es to assess all costs and benefits of available regulatory alterna tives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (inc luding potential economi c, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both co sts and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated an "economically" significant rule, under s ection 3(f)(1) of Executive Order 12866. Accordingly, we have prepared a Regulatory Im pact Analysis (RIA) that, to the best of our ability, presents the costs and benefits of the rulemaking. We solicit comment on the RIA analysis provided. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Offi ce of Management and Budget. Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before i ssuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2012, that threshol d is approximately $139 million. This rule does not contain mandates that will impose spending costs on State governments in the aggregate of $139 million. The cost for increasi ng payment for primary care services in CYs 2013 and 2014 will be borne by the Federal government, which will provide 100 percent matching funds equal to the difference between th e Medicaid State plan rate in effect July 1, 2009 and the Medicare rate implemented in CY 2013 and 2014, or the rate using the CY 2009 CF, if higher. Section 1202 of the HCERA requires higher payment to physicians for primary care serv ices but does not impose increased costs on States. For the provisions associated with the charges for vaccine administration underCMS-2370-P 48

the VFC program, the proposals will have no cons equential effect on State, local, or tribal governments or on the private sector. Executive Order 13132 establishes certain requ irements that an agency must meet when it promulgates a proposed rule (and subseq uent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. As indicated, th is proposed rule will not have a substantial effect on State and local governments.

B. Statement of Need This proposed rule implements secti on 1202 of the HCERA requiring payment by State Medicaid agencies of at least the Me dicare rates in effect in CYs 2013 and 2014 or, if higher, the rate using the CY 2009 CF for primary care services furnished by a physician with a specialty designation of family medicine, general internal medicine, or pediatric medicine. Also, this proposed rule implements the statutory payment provisions uniformly across all States, defines, for pur poses of enhanced Federal match, eligible primary care physicians, identifies eligible primary care services, and specifies how the increased payment should be calculated. Fina lly, this proposed rule provides general guidelines for implementing the increased paym ent for primary care services delivered by managed care plans. C. Overall Impact The aggregate economic impact of this pr oposed rule is an estimated $5.52 billion in CY 2013 and $5.66 billion in CY 2014. In CY 2013, the Federal cost is approximately $5.74 billion with $225 million in State savings. In CY 2014, the Federal cost is approximately $5.96 billion with $300 million in State savings. The State savings are derived from the projected increases in reim bursement rates expected to occur prior toCMS-2370-P 49

passage of this legislation between year s 2009 and 2013 through 2014, which will now be paid for by the Federal government. Absent th e legislation, the projec ted increases in the

reimbursement rates would be split between the Federal gov ernment and States. This aggregate economic impact estimate includes the requirement that States reimburse specified physicians for vaccine administrati on at the lesser of the Medicare rate or the VFC regional maximum during CYs 2013 and 2014, which is estimated at $970 million

in Federal costs. The Federal costs for f unding that increase, in State payments during CYs 2013 and 2014, are estimated at $490 million and $480 million, respectively. Overall, the estimated economic impact s are a result of th is proposed rule providing States the ability to increase pa yment for primary care services without incurring additional costs. We anticipat e higher payment will result in greater participation by primary care physicians, in cluding primary care subspecialists, in Medicaid thereby helping to promote overall ac cess to care. At this time it is not known whether States will be willing or have the ab ility to sustain this level of payment to providers beyond CY 2014. For managed care plan s, this proposed rule would require documentation of the primary care services that are provided in order for States to claim 100 percent FFP. Currently, many States do no t receive complete data on individual services provided by managed care plans. We believe, as result of this proposed rule, there will be improved documentation and repor ting of primary care services provided by managed care plans. This, in turn, may serve to inform future manage d care rate setting. D. Detailed Economic Analysis 1. Anticipated Effects on Medicaid Recipients We anticipate this proposed ru le will have a positive eff ect on Medicaid recipients by increasing the availability of services through financial incentives to primary careCMS-2370-P 50

physicians. The exact number of beneficiarie s that will benefit is not known, however,

we believe it will be substantial because this rule directly affects payment for a type of service which is a key component of the Me dicaid program. Additionally, we believe primary care physicians will be encouraged to accept more Medicaid beneficiaries into their practices as a result of increased payment. We believe that this regulation will positively affect the availability of vaccination services as well. Currently, only 5 States reimburse the regional maximum for vaccine administration set by the VFC program. This proposed rule would require States to reimburse specified physicians for vaccine ad ministration at the lesser of the Medicare rate or the VFC regional maximum during CYs 2013 and 2014. Finally, this rule will positively affect patie nts who are dually eligible for benefits under the Medicare and Medicaid programs by increasing payment to physicians who serve this population. Specifically, Medicaid will pay higher amounts to providers. We anticipate that increased payment will promote greater access to primary care services for dually eligible beneficiaries. 2. Anticipated Effects on Other Providers We anticipate this proposed rule would increase physician participation in Medicaid as most States reimburse physicia ns at well below the Medicare rates. Recently, as States have experienced budgetary constraints, they have sought to address this by reducing payments to providers, incl uding physicians. This proposed rule would ensure that in CYs 2013 and 2014, physicians re ceive the higher Medicare rate for the specified primary care services. In addition, this proposed rule would im pact States and providers who provide immunizations under the Medicaid program becau se it will require that such providers beCMS-2370-P 51

reimbursed at the lesser of the 2013 or 2014 Medicare rate or the Regional Maximum

VFC Administration Fee in CYs 2013 and 2014. This rule also raises the maximum rate that States could pay providers for the ad ministration of vaccines under the VFC program in subsequent years. The proposed upda ted Regional Maximum Administration Fees included in this proposed rule are the ma ximum amounts that a State could choose to reimburse a provider for the administration of a vaccine under the VFC program after the provisions of the primary care payment increas e expire at the end of CY 2014. States have the flexibility to set th e rate that they will reimburse providers, and can therefore

choose to set it at the State’ s regional maximum fee or at any other amount below the regional maximum amount. It is not expected that all States will choose to implement the

increase. The impact of this proposed rule on the Federal Government is therefore

connected to States decisions as to whether to increase the amount that they pay providers

for the administration of vaccines after CY 2014. That is, if no States choose to increase the administration fee for providers, there would be no additional costs incurred by the

Federal Government. The same is true for States. There would be no impact of this proposed rule on a

State unless the State chooses to increase the amount that it reimburses providers for the administration of vaccines under the VFC program. Children enrolled in the VFC program who are Medicaid eligible would not incur any additional costs as a result of this proposed rule as there are no out-of-pocket expenses related to the VFC progr am for Medicaid eligible children.

Families of children who are enrolled in the VFC program because they are either

uninsured or do not have insurance that c overs vaccines would be impacted by thisCMS-2370-P 52

proposed regulation. The Affordable Care Act does not make any changes to the VFC program and therefore uninsured and underi nsured individuals receiving vaccines through the VFC program will continue to pay a single administration fee for any vaccine provided. The provider will also receive a single administration fee for any vaccine provided, regardless of the number of vaccine/toxoid components, and will not receive

the Medicare administration rate for those services. Providers can bill the families of those children at the State’s regional maximu m rate for the administration of a vaccine. As a result, if the proposed updated rates were to become effective, those families could be billed at the published rate for that State. However, section 1928(c)(2)(B)(iii) of the Social Security Act says that “[t]he provi der will not deny admini stration of a qualified pediatric vaccine to a vaccine-eligible child du e to the inability of the child’s parent to pay an administration fee.” Therefore, providers could benefit from the proposed regulat ion as they could charge and receive the State’s regional maximu m rate for their patients who are enrolled in the VFC program because they are either uninsured or do not have insurance that covers immunizations. A provi der would not receive an incr eased administration fee for Medicaid-eligible child ren unless a State chose to incr ease the amount that it pays providers under the Medicaid program. 3. Anticipated Effects on the Medicaid Program Expenditures Table 4 provides estimates of the an ticipated Medicaid program expenditures associated with increasing payment for primary care services. CMS’ Office of the Actuary (OACT) developed estimates for the im pact of this section of the Affordable Care Act, which were initi ally published in April 2010, (https://www.cms.gov/ActuarialStudies/dow nloads/PPACA_2010-04-22.pdf). Initially,CMS-2370-P 53

projections of Medicaid spending on prim ary care physician services by FFS Medicaid and Medicaid managed care plans were creat ed. For this, OACT developed assumptions of (1) what share of Medicaid physician sp ending was for primary care and (2) what share of managed care spending was for physic ian services, relying on several studies on physician service utilization and expenditure s. OACT then projected spending for 2013 and 2014 based on the projections of Medicaid physician spending in the President’s Fiscal Year 2010 Budget Mid-Session Review . To determine the impact of using Medicare physician payment rates for Medica id payments, OACT compared the ratio of Medicaid rates to Medicare rates, based on a study of Medicare and Medicaid physician payment rates across all States. Finally, OACT projected growth in Medicaid physician payments and the rates prescribed by sect ion 1202 of the HCERA, based on Medicare payment rates; these estimates were revised to incorporate the actual CY 2011 CF, (75 FR 73169). OACT assumed that physician servi ces covered by Medicaid would increase over 2013 and 2014 as a result of higher paym ents and expected increases in physician participation in Medicaid. Additionally, these changes were estimated to result in a slight decrease to projected State spending as futu re projected Medicaid payment rate increases would be covered by increased Federal matching funds in 2013 and 2014. The studies and data sources used for developing these es timates included: S. Zuckerman, “Trends in Medicaid Physician Fees, 2003-2008,” Health Affairs , 28 April 2009; the American Medical Association; the Medical Group Mana gement Association; and the Bureau of

Labor Statistics.

TABLE 4: Federal and State Medicaid Im pacts for Payment Increases to Primary Care Providers during Calendar Years 2013 through 2014 (Millions of 2012 dollars)

CY 2013 CY 2014 Federal Share* $5,740 $5,960 State Share –$225 -$300CMS-2370-P 54

Total $5,515 $5,660 (* Federal cost estimates refl ect the additional $490 million and $480 million in CYs 2013 and 2014, respectively, as a result of States reimbursing specified physicians for vaccine administration at the lesser of the Medicare rate or the VFC regional maximum.) The Medicare payment rates used in th is estimate were the actual 2009 MPFS and the current statute projections of the CYs 2013 and 2014 MPFS. In addition, it should be noted that these estimates are based on the current statute which includes a significant projected reduc tion to payment rates in the CY 2013 MPFS under the Sustainable Growth Rate (SGR) form ula. Every year since 2003, the Congress has passed legislation overriding projected cuts that otherwise would have resulted from the SGR formula. Furthermore, it is possible that the Congress may enact legislation that averts the currently projected reduction in MPFS rates for 2013 which would affect the CYs 2013, and 2014 rates that are being used to estimate the payment impacts in this rule. Consequently, if the Congress enacts legislation resulting in increased payment rates to replace the payment rate reduction called for under the SGR formula in CYs 2013, and 2014, and in turn the CYs 2013 or 2014 ra tes exceed the rates calculated using the CY 2009 CF, then this would result in higher costs for the CYs 2013 and 2014 Medicaid physician payments presented in this rule. Additionally, other changes to the CF in these years may also affect the costs of this section. Therefor e, currently it is not possible to accurately estimate the impact of these potential future changes, since definitive action, if any, by the Congr ess regarding the MPFS CF is unknown. 4. Anticipated Effects on States The Federal government would provide 100 percent matching funds for the difference between the Medicaid State plan ra te in effect July 1, 2009 and the Medicare

rate in CYs 2013 and 2014 or the rate usi ng the CY 2009 Medicare CF, if higher.CMS-2370-P 55

Therefore, we believe this proposed rule woul d result in a positive effect on States, since it reduces their expenditures for primary care services. State savings are estimated at $225 million and $300 million in CYs 2013 and 2014, respectively. However, for Medicaid State plan rates belo w the 2009 level, States would be required to reimburse the non-Federal share of that portion, so as to re turn to the 2009 level of payment. We are unable to accurately quantify th e impact of this effect on States, since there is not a precise relationship between any of the Medicaid State plan rates and the Medicare rates.

5. Anticipated Effects on Small Entities The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substant ial number of small entit ies. For purposes of the RFA, small entities include small bus inesses, nonprofit organization, and small governmental jurisdictions. The great majority of hospitals and most other health care providers and suppliers are small entities, e ither by being nonprofit organizations or by meeting the SBA definition of a small busin ess and having revenues of less than $7.0 million to $34.5 million in any 1 year. (For details, see the Small Business

Administration’s Table of Size Standards at http://www.sba.gov/sites/default/ files/Size_Standards_Table.pdf .) For purposes of the RFA, approximately 95 percent of physicians are considered to be small entities. Individuals and States are not included in the definition of a small entity. We anticipate that this re gulation would primarily impact individual physicians and State Medicaid agencies. This proposed rule requires States to increase payment for primary care services without incurring additi onal State cost. As previously noted, we anticipate that this higher payment would impact physicians by encouraging greaterCMS-2370-P 56

participation by primary care physicians, in cluding primary care subspecialists, in Medicaid, thereby helping to promote overall ac cess to care. Therefore, the Secretary has determined that this proposed rule would not have a significant impact on a substantial

number of small entities. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the opera tions of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of th e Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. This rule would not have a signifi cant impact on small rural hospitals because it only affects physicians. We are not preparing an analysis for secti on 1102(b) of the Act because the Secretary has determined that none of the provisions in this proposed rule would have a significant impact on the operatio ns of a substantial number of small rural hospitals.

E. Alternatives Considered This section provides an overview of the issues addressed in the proposed rule and the regulatory alternatives considere d. In identifying the issues and developing alternatives, we consulted with States and ot her interested stakeholders such as primary care specialists and policy makers. We solic it comment on the assumptions and analyses presented in the Alternatives Considered section. 1. Eligible Providers The statute specifies that increased payment may be made for primary care services furnished by a physician with a primary specialty designation of family medicine, general internal medicine or pediat ric medicine. Because States have varyingCMS-2370-P 57

methods of identifying a physician’s specialty this poses a challe nge to the uniform implementation of the increased payment. Currently, there are no Federal requirements surrounding how States must enroll Medicaid pr oviders. In this rule, we propose to use Board certification and a suppor ting history of codes billed in the absence of Board

certification as a means of id entifying eligible primary care physicians but seek comment on the time period from which claimed codes would be drawn. We considered permitting physicians to qualify for payment based solely on self attestation in the absence of Board

certification but were concerne d that without an objective m easure, such as a supporting history of codes billed, certain physicians co uld be unfairly advantag ed or disadvantaged in receiving the increased payment. We also believe that an objective measure is more supportive of program integrity. This proposed rule clarifies that subspecialists related to the specialty designations identified in the statute would be eligib le for payment. We considered extending eligibility for increased payment to only thos e physicians with a primary care specialty designation of family medicine, general internal medicine or pediatric medicine and not to subspecialists within thos e categories. However, through our engagement with the provider community we learned that pediatri c subspecialists rou tinely deliver primary care services. Therefore, we propose to make all subspecialists within the primary care specialties designated in the statute eligible for the enhanced payment. Due to the limited data available, including the lack of discrete data on physic ian specialty or subspecialty, we are unable to accurately estimate th e impacts representing the exclusion of subspecialties relative to this proposed regula tion. The analysis is further complicated by the observation that some types of subspeci alists may provide a significant amount of primary care services, while other types of subs pecialists may provide very little primaryCMS-2370-P 58

care services, thereby limiting any sound assu mptions presented including the entailed impact modeling. 2. Payment Made Under the Physicia n Benefit as a Physician Service This rule clarifies physician services to mean any service delivered under the physicians’ services benefit at 1905(a)(5)(A) of the Act. First, we considered whether the statute limited increased payment to se rvices provided only by physicians. In the Medicaid program, a significant proportion of primary care services are actually rendered by advance practice nurses, and ot her types of independently practicing nonphysicians. We recognize the importance of these non-physician practitioners in the provision of primary care servic es in many States. However, section 1902(a)(13)(c) of the Act limits eligibility for higher payment to services provided by physicians. Next we

considered whether the statute limited increas ed payment to services provided directly by physicians. Medicaid regulations at 42 CFR 440.50 define “physician services” as services provided by or under the personal su pervision of a physician. Therefore, we concluded that, in light of th e important role of these prac titioners in delivering primary care to Medicaid beneficiaries and the regul atory definition of a “physician service,” those services delivered under the personal supervision of a specified primary care physician could qualify for the increased paym ent. This means that specified primary care services rendered by non physicians such as advanced practice nurses and other mid-level professionals qualify for payment wh en billed under the Medicaid enrollment number of any designated primary care specialist or subspecialist. Due to the limited data available, we are unable to accurately estimate the impacts representing the inclusion of serv ices provided by practitioners under the supervision of a physician. A ll such services are billed under the supervising physician’sCMS-2370-P 59

billing number and are reported as physicia n services to CMS making it impossible to determine the impact of this proposal. We also considered whether services pr ovided by physicians in settings such as FQHCs, RHCs, or clinics woul d be eligible for increased payment. In Medicaid “physician services” is a distinct benefit from other benefits such as the FQHC, RHC or

clinic benefits. We believe that the st atute limits payment to physicians who, if Medicare providers, would be reimbursed us ing the MPFS. The MPFS is not used to reimburse physicians in settings such as FQHCs and RHCs and we believe that enhanced payment should not be extended to physicians under ot her Medicaid benefit categories. Furthermore, the Medicaid stat ute already requires that FQHCs and RHCs

be reimbursed at cost.

We estimate that the inclusion of services provided by physicians in settings such as FQHCs, RHCs, or clinics for increased pa yment would result in an aggregate Federal cost of approximately $820 million for CY s 2013 and 2014. The limitations of this impact estimate to more accurately reflect clinic participation include, 1) determining whether the services provided in the various clinic types are in fact performed by a qualifying physician, and 2) determining the di rect link between Medicaid clinic payment rates, as they vary substantially across code s and states, and Medicaid physician rates. 3. Eligible E&M Services The statute requires enhanced payment fo r E&M services/codes. The proposed rule specifies the E&M Codes eligible for the increased payment. They include all primary care E&M codes, including some codes not recognized for payment by Medicare. Because the statute requires paymen t at the Medicare rate, we considered not extending the requirement for increased payment to codes not reimbursed by Medicare.CMS-2370-P 60

However, many of those codes represent serv ices provided to child ren. While Medicare covers relatively few children, payments for services provided to children constitute a larger proportion of Medicaid expenditures. We therefore include these additional codes because they represent core primary care serv ices that are important to the Medicaid

program. We estimate that approximately 6 to 7 percent of all expenditures on services eligible for the increased payment rates ar e for services not co vered by Medicare. Furthermore, we believe that a corresponding am ount of the Federal co sts associated with this proposed regulation would be related to these services, reflecting an impact range of $670 million to $780 million over the two CYs 2013 and 2014. The eligible codes are listed in the regulatory text. We propose to set rates for codes not covered by Medicare based on a cal culation of the CF and RVUs that are published by CMS. We establish RVUs ba sed on recommendations from the AMA RUC and clinical review by Medicare. We consid ered setting rates fo r these codes by looking at rates paid by Medica re for comparable services. Ho wever, each code is designed to represent a distinct service and we could not find codes that we were comfortable substituting on a one for one basis for purposes of rate setting. We seek comment on the proposed rate setting methodology for codes not reimbursed by Medicare. 4. Eligible Vaccine Administration Services The statute specifies payment at the CY 2013 and 2014 Medicare rate for certain vaccine administration billing codes or thei r successor codes. A State may receive 100 percent FMAP for the difference between the Medicaid rate as of July 1, 2009 and

the Medicare rates in CYs 2013 and 2014 or the ra te using the CY 2009 CF, if higher. In 2011, the coding structure for vaccine administration changed such that two codesCMS-2370-P 61

replaced four of the specif ied codes. Moreover, the f our deleted codes represented vaccine administrations by various routes (e.g., intranasal vs. injectable) to children under 8. However, new code 90460 represents the in itial vaccine/toxoid ad ministered through

all routes to children under 18 while c ode 90461 represents payment for additional

vaccines/toxoids administered. This rule proposes a method for imputing a vaccine

administration rate in 2009for code 90460. The proposed 2009 would equal the average payment amount weighted by volume of the four codes used in 2009. The 2009 value for code 90461 would be $0, since there was no payment for additional vaccines/toxoids prior to 2011. We seek comment from Stat es and other stakeholders on this proposed methodology. In 2009, approximately 20 States used a bundled rate to reimburse vaccines and vaccine administration, complicati ng the identification of the rate differential. This rule clarifies that, for any bundled ra te payments such as this, St ates must correctly identify the rate differential for the included prim ary care service only (in this case, vaccine administration). We added this provision in the interest of promoting program payment integrity but defer to the States to develop a methodology. In this rule, we propose that provider s administering vaccines under the VFC program be reimbursed the lesser of the Medi care rates in 2013 or 2014 or the Regional Maximum Administration Fee per vaccine, with no payment for additional vaccine/toxoid components. We considered proposing that St ates be required to pay VFC physicians for

vaccine administration associated with the VFC program the amounts required by sections 1902(a)(13)(c ) and 1932(f) of the Act, notwithstanding limitations on provider billing for vaccine administration under the VFC program. Free vaccine is made available through the VFC program to “program registered providers” who have enteredCMS-2370-P 62

into a VFC provider agreement. Under secti on 1928(c)(2)(C)(ii) of the Act, one of the requirements of that agreement is that progr am registered providers limit administration

fees to an amount that “does not exceed the costs of such administration (as determined by the Secretary based on actual regiona l costs for such administration).” This rule would not have changed th e statutory requirement in section 1928(c)(2)(C) of the Act that a qualified physic ian administering a vaccine obtained from the VFC program is limited under the VFC provi der agreement to charging an amount for vaccine administration that is no more than the VFC maximum allowable charge. However, we considered proposing that States comply with the requi rements of sections 1902(a)(13)(c) and 1932(f) of the Act and pa y the designated Medicare amount despite the fact that this amount might have been higher than the amount that was billed by the provider. To meet this requirement we cons idered proposing that States re-price vaccine administration billing codes, re sulting in payment equal to th e applicable Medicare-based

rate. We considered this alternative to fully reflect the requirement in section 1202 of the HCERA that Medicaid payment for primar y care services be not less than the MPFS payment rate. While Medicare provider pa yment is limited to the lesser of provider charges or the fee schedule amount, we cons idered that allowing provider payment to exceed provider charges in this instance c ould be allowable in order to achieve the objectives of sections 1902(a)(13)(c) and 1932( f) of the Act. We also considered proposing that VFC providers account for the payment in excess of the billed amount as a Medicaid receipt for vaccine administration and that they ensure that it was not considered as an increase in the billed amount, or as a credit toward either the beneficiary account or toward payment for other services.CMS-2370-P 63

The primary benefit of this alternativ e is higher reimbursement for vaccine administration fees associated with the VFC program. Although the VFC ceilings have not been modified since 1994, the majority of States have paid for vaccine administrations at rates well below the ceilings . For example, California’s maximum rate was $17.55, but the State paid $9.00. Approxima tely five States reimbursed vaccine administration fees within close prox imity to the ceiling. Medicare’s 2011 reimbursement rate for the first vaccine was $23.10 and for subsequent vaccines was $11.55. Therefore, we believe that requiring VFC administrations be reimbursed at the Medicare rate will help to ensure adequate compensation for VFC providers. However, we were concerned about the potential Federal budget impact of this proposal, with initial estimates indicating a potential cost im pact of approximately $970 million over CYs 2013 and 2014, and the administrativ e burden it would place on States to reprice claims

for these services. We also considered whether the requi rements of the VFC statute preclude application of sections 1902(a)(13)(c) and 1932(f) of the Act to vaccine administration under the VFC program. However, this would mean that participating providers would be limited to the State-specific VFC rates in the Medicaid State pl an as well as to payment per vaccine administered. Another alternative was to require pa yment at the DHHS VFC regional maximum fee schedule amount but to also require reimbursement for each vaccine/toxoid administered. This would comply with VFC requirements that providers charge no more than the regional maximum amount, but woul d permit providers to benefit from the coding change that requires paymen t per vaccine/toxoid administered.CMS-2370-P 64

We recognize the complexity of the issu es surrounding the interplay of the VFC statutory requirements and the requirements of the Affordable Care Act and specifically request comment on these proposals. 5. Method of Payment Section 1902(a)(13)(C) of the Act requires payment in CYs 2013 and 2014 of the current Medicare rate, unless th e rate set using the CY 2009 CF was higher. Historically, Medicare has issued multiple updates to its MPFS within a single year. Based on input from States, and to assure the feasibility of implementation, we propose to permit States the option to either adopt the MPFS in effect at the beginning of CYs 2013 and 2014 or the rate using the CY 2009 CF, if higher or a methodology to update rates to reflect changes made my Medicar e during the year. If the State chooses to reflect changes made by Medicare, the met hodology for those updates must be specified. States would be required to use the MPFS applicable to the place of service and geographic location. We considered requiri ng States to make changes throughout the year, as Medicare changed its MPFS. Howeve r, our proposal to permit States to use a single version of the MPFS reflects extensiv e comment received from States concerned about balancing the need for administrative ease with meeting the re quirements to make this payment. We also propose that payment not be ma de inclusive of Medicare’s incentive payment as authorized under se ction 5501(a) of the Affordable Care Act. We considered defining the Medicare “rate” as being inclusive of the incentive payments. However, the Medicare incentive payments are supplements made to specific providers based on total Medicare allowed charges and do not represen t increases to the M PFS rates for specific CPT codes. Moreover, even if the same providers qualified for both the MedicareCMS-2370-P 65

incentive payment and this Medicaid payment, it would be administratively difficult for State Medicaid agencies to determine the Medicare “rate” for purposes of the increased Medicaid payment since St ates do not have access to Medicare payment data. For the purpose of identifying the differential between the Medicaid rate and the Medicare rate, this proposed rule would de fine the Medicaid “rate” under the approved Medicaid State plan as the final rate paid to a provider inclusive of all supplemental or enhanced payments made to that provider

. For example, many States reimburse physicians affiliated with academic medical cen ters the Medicaid State plan rate plus a supplemental amount that together equal th e average amount paid by commercial third party payers. Therefore, in calculating the ra te differential, these States would determine

the CY 2009 Medicaid rate in clusive of this type of supplemental payment. We considered not defining “rate” but, recognizing the wide variety of ways in which States characterize their payments, we chose to make this clarification to promote uniform and fair implementation of this payment.

6. VFC Administration Fee Increase We considered a number of options when determining to update the average national administration charge portion of the formula us ed to calculate the VFC administration fee. These options included using the Medicare Economic Index (MEI), Consumer Price Index (CPI) or the Gross Domestic Product De flator. We have determined the best option is to utilize the MEI, which is a price index used by CMS to update Medicare physician payments. The MEI reflects input price in flation experienced by physicians inclusive of the time period when the national average was established in 1994. Therefore, we believe that input prices associated with this specific type of physician-provided service are consis tent with overall input prices.CMS-2370-P 66

The overall economic impact, as a result of this proposed ru le announcing updates to the regional maximum charges for the VF C program for use on an interim basis, is estimated at $75 million per year. The Federa l cost of this total is approximately $45 million per year. These estimates assume that every State would increase its

reimbursement rate to the new VFC maximum fee. F. Accounting Statement and Table As required by OMB’s Circul ar A-4 (available at http://www.whitehouse.gov/om b//circulars_a004_a-4/ ), in Table 5 we have prepared an accounting statement illustrating the classification of the Fe deral and State expenditures associated with this proposed rule.CMS-2370-P 67

TABLE 5: Accounting Statement: Cla ssification of Estimated Expenditures for Payment Increases to Primary Care Providers during Calendar Years 2013 through 2014 (Millions of 2012 Dollars)

Category Transfers Annualized Monetized Transfers Discount Rate Period Covered

7% 3% Primary Estimate $5,846 $5,848 CYs 2013- 2014 From/To Federal Government to Medicaid Providers. Category Transfers Annualized Monetized Transfers Discount Rate Period Covered

7% 3% Primary Estimate -$261 -$262 CYs 2013- 2014 From/To State Governments to Medicaid Providers.CMS-2370-P 68

List of Subjects

42 CFR Part 438 Grant programs-health, Medicaid, Repor ting and recordkeeping requirements.

42 CFR Part 441 Aged, Family planning, Grant programs-h ealth, Infants and children, Medicaid, Penalties, Reporting and recordkeeping requirements.

42 CFR Part 447 Accounting, Administrative practice a nd procedure, Drugs, Grant programshealth, Health facilities, Health profe ssions, Medicaid, Reporting and recordkeeping requirements, Rural areas.CMS-2370-P 69 For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services proposes to amend 42 CFR chapter IV as set forth below:

PART 438 — MANAGED CARE 1. The authority citation for part 43 8 continues to read as follows: Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302). 2. Section 438.6 is amended by adding new paragraphs (c)(3)(v) and (c)(5)(vi) to

read as follows: §438.6 Contract requirements.

* * * * * (c) * * * (3) * * * (v) For rates covering CYs 2013 and 2014, complying with minimum payment for physician services under paragraph (c)(5)(vi) of this section, and part 447, subpart G, of this chapter.

* * * * * (5) * * * (vi) For CYs 2013 and 2014, and payments to an MCO, PIHP or PAHP for primary care services furnished to enrollees unde r part 447, subpart G, of this chapter, the contract must require that the MCO, PIHPor PAHP meet the following requirements: (A) Make payments to those specified physicians (whether directly or through a capitated arrangement) at least equal to th e amounts set forth and required under part 447, subpart G, of this chapter. (B) Provide sufficient documentation to the State, as determined by the State, regarding the amount provider pa yments increase as a result of meeting the requirement of paragraph (c)(5)(vi )(A) of this section.CMS-2370-P 70 * * * * *

3. Section 438.804 is adde d to read as follows: §438.804 Primary care provider payment increases. (a) For MCO, PIHP or PAHP contract s that cover calendar years 2013 and 2014,

FFP is available at an enhanced rate of 100 percent for the portion of the expenditures for capitation payments made under those cont racts to comply w ith the contractual requirement under §438.6(c)(5)(vi) only if the following requirements are met: (1) The State makes a reasonable estima te of the increased amounts paid for specified primary care services provided by eligible primary care physicians resulting from the contractual requirement under §438.6( c)(5)(vi), based on in formation received from the managed care provider for services furnished as of July 1, 2009. (2) The State develops a methodology for identifying the differential in payment between the provider payments that would ha ve been made by the managed care provider on July 1, 2009 and the amount needed to comp ly with the contract ual requirement under §438.6(c)(5)(vi). (3) The State must submit the methodology in paragraph (a)(2) of this section to CMS for approval before the beginning of CY 2013. (b) [Reserved] PART 441--SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO

SPECIFIC SERVICES 4. The authority citation of part 441 is revised to read as follows: Authority : Secs. 1102, 1902, and 1928 of the Social Security Act (42 U.S.C. 1302). 5. Subpart K is added to read as follows: Subpart K--Vaccines for Children ProgramCMS-2370-P 71 Sec. 441.500 Basis and purpose. 441.505 General requirements. 441.510 State plan requirements. 441.515 Administration fee requirements. Subpart K--Vaccines for Children Program §441.500 Basis and purpose. This subpart implements sections 1902( a)(62) and 1928 of the Act by requiring States to provide for a program for the purchas e and distribution of pe diatric vaccines to program-registered providers for the imm unization of vaccine-eligible children. §441.505 General requirements. (a) Federally-purchased vaccines under the VFC Program are made available to children who are 18 years of age or younge r and who are any of the following: (1) Eligible for Medicaid. (2) Not insured. (3) Not insured with respect to the vacci ne and who are administered pediatric vaccines by a federally qualified health center (FQHC) or rural health clinic. (4) An Indian, as defined in section 4 of the Indian Health Care Improvement Act.(b) Under the VFC program, vaccines must be administered by programregistered providers. Section 1928(c) of the Act defines a pr ogram-registered provider as any health care provider that meets the following requirements: (1) Is licensed or authorized to administ er pediatric vaccines under the law of the

State in which the administration occurs withou t regard to whether or not the provider is a Medicaid-participating provider.CMS-2370-P 72 (2) Submits to the State an executed pr ovider agreement in the form and manner specified by the Secretary. (3) Has not been found, by the Secretary or the State to have violated the provider agreement or other applicable requirements established by the Secretary or the State. §441.510 State plan requirements. A State plan must provide that the Medi caid agency meets the requirements of this subpart. §441.515 Administration fee requirements. (a) Under the VFC Program, a provider who administers a qualified pediatric vaccine to a federally vaccine-eligible child, may not impose a charge for the cost of the

vaccine. (1) A provider can impose a fee for the administration of a qualified pediatric vaccine as long as the fee does not exceed the costs of the administration (as determined by the Secretary based on actual regional costs for the administration). (2) A provider may not deny administration of a qualified pediat ric vaccine to a vaccine-eligible child due to th e inability of the child's pare nts or legal guardian to pay

the administration fee. (b) The Secretary must publish each Stat e’s regional maximum charge for the VFC program, which represents the maximum amount that a provider in a State could charge for the administration of qualified pe diatric vaccines to federally vaccine-eligible children under the VFC program. (c) An interim formula has been established for the calculation of a State’s regional maximum administration fee. That fo rmula is as follows: National charge data x updated geographic adjustment fact ors (GAFs) = maximum VFC fee. (d) The Medicaid Agency must submit a Stat e plan amendment that identifies theCMS-2370-P 73 amount that the State will pay providers fo r the administration of a qualified pediatric vaccine to a Medicaid-eligibl e child under the VFC program. The amount identified by the State cannot exceed the State’s regi onal maximum administration fee. (e) Physicians participati ng in the VFC program can charge federally vaccineeligible children who are not enrolled in Medicaid the maximum administration fee (if that fee reflects the provider’s cost of admi nistration) regardless of whether the State has

established a lower administ ration fee under the Medicaid program. However, there would be no Federal Medicaid matching funds available for the administration since these children are not eligible for Medicaid.

PART 447 – PAYMENTS FOR SERVICES 6. The authority citation for part 44 7 continues to read as follows: Authority: Section 1102 of the Social Security Act (42 U.S.C. 1302). 7. Subpart G is added to read as follows: Subpart G – Payments for Primary Care Services Furnished by Physicians

Sec. 447.400 Primary care services furnished by phys icians with a sp ecified specialty or subspecialty. 447.405 Amount of required minimum payments. 447.410 State plan requirements. 447.415 Availability of Federal fi nancial participation (FFP). Subpart G – Payments for Primary Care Services Furnished by Physicians §447.400 Primary care services furnished by physicians with a specified specialty or subspecialty. (a) States pay for services furnished by a physician as defined in §440.50 of this chapter, or under the personal supervision of a physician who self-attests to a specialtyCMS-2370-P 74 designation of family medicine , general internal medicine or pediatric medicine or a subspecialty recognized by the American Board of Medical Specialties and is verified by the Medicaid agency as meeting one of the following requirements: (1) Is Board certified with such a specialty or subspecialty. (2) Has furnished evaluation and management services and vaccine

administration services under codes described in paragraph (b) of this section that equal at least 60 percent of the Medi caid codes billed during the most recently completed CY. (3) For physicians who do not have 12 mont hs of paid Medicaid claims history,

data on codes billed must be reviewed from the date of enrollment through the end of the

enrollment CY. (b) Primary care services designated in the Healthcare Common Procedure Coding System (HCPCS) are as follows: (1) Evaluation and Management (E&M) codes 99201 through 99499. (2) Current Procedural Terminology (C PT) vaccine administration codes 90460, 90461, 90471, 90472, 90473 and 90474, or their successor codes. §447.405 Amount of required minimum payments. (a) For CYs 2013 and 2014, a State must pa y for physician services described in §447.400 based on the lesser of: (1) The Medicare Part B fee sc hedule rate that is applicable to the site of service and geographic location of the se rvice of, if there is no applicable rate the rate specified

in a fee schedule established and announced by CM S (that is, the product of multiplying the Medicare CF in effect at the beginning of CYs 2013 or 2014 (or the CY 2009 CF, if higher) and the CY 2013 and 2014 relative value units (RVUs). (2) The provider’s actual billed charge for the service.CMS-2370-P 75 (b) For vaccines provided under the Vaccines for Children Program in CYs 2013 and 2014, a State must pay the lesser of: (1) The Regional Maximum Administration Fee; or, (2) The Medicare fee schedule rate in CY 2013 or 2014 (or, if higher, the rate using the 2009 conversion factor an d the 2013 and 2014 RVUs) for code 90460. §447.410 State plan requirements. The State must amend its plan to reflect the increase in fee schedule payments in CYs 2013 and 2014 unless, for each of the billin g codes eligible for payment, the State currently reimburses at least as much as the higher of the CY 2013 and CY 2014

Medicare rate or the rate th at would be derived using the CY 2009 conversion factor and

the CY 2013 and 2014 Medicare re lative value units (RVUs). §447.415 Availability of Federal financial participation (FFP) (a) For primary care services furnis hed by physicians specified in §447.400, FFP will be available at the rate of 100 percent for the amount by which the payment required to comply with §447.405 exceeds the Medicaid payment that would have been made under the approved State plan in effect on July 1, 2009. (b) For purposes of calculating the paymen t that would have been made under the approved State plan in effect on July 1, 2009, the State must consider all supplemental and increased payments made for the individu ally billed codes, in cluding any incentive payments and other supplemental payment in effect at that time. (c) For vaccine administration, the Stat e must impute the payment that would have been made under the approved Medicaid State plan in effect on July 1, 2009 by calculating the average payment for codes 90465, 90466, 90467 and 90468 weighted by

volume.CMS-2370-P 76 (d) For any payment made under a bundl ed rate methodology, including bundled

rates for vaccines and vaccine administrati on, the amount directly attributable to the applicable primary care service must be isolated for purposes of determining the availability of the 100 percent FFP rate.CMS-2370-P Authority: (Catalog of Federal Domestic A ssistance Program No. 93.778, Medical Assistance Program)

Dated: April 17, 2012.

_______________________________ Marilyn Tavenner, Acting Administrator , Centers for Medicare & Medicaid Services

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Approved: April 18, 2012.

__________________________________ Kathleen Sebelius, Secretary , Department of Health and Human Services

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BILLING CODE 4120-01-PCMS-2370-P

[FR Doc. 2012-11421 Filed 05/09/2012 at 11:15 am; Publication Date: 05/11/2012]