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[Federal Register Volume 73, Number 2 (Thursday, January 3, 2008)]
[Rules and Regulations]
[Pages 404-406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-6280]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 414

[CMS-1385-F2]
RIN 0938-AO65

Medicare Program; Revisions to Payment Policies Under the 
Physician Fee Schedule, and Other Part B Payment Policies for CY 2008; 
Delay of the Date of Applicability of the Revised Anti-Markup 
Provisions for Certain Services Furnished in Certain Locations (Sec.  
414.50)

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

ACTION: Final rule.

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SUMMARY: This final rule delays until January 1, 2009 the applicability 
of the anti-markup provisions in Sec.  414.50, as revised at 72 FR 
66222, except with respect to the technical component of a purchased 
diagnostic test and with respect to any anatomic pathology diagnostic 
testing services furnished in space that: Is utilized by a physician 
group practice as a ``centralized building'' (as defined at Sec.  
411.351 of this chapter) for purposes of complying with the physician 
self-referral rules; and does not qualify as a ``same building'' under 
Sec.  411.355(b)(2)(i) of this chapter.

DATES: The provisions of this final rule are effective January 1, 2008. 
However,

[[Page 405]]

the date of applicability of the provisions of Sec.  414.50, as revised 
at 72 FR 66222, with respect to certain services furnished in certain 
locations, as described herein, are delayed until January 1, 2009.

FOR FURTHER INFORMATION CONTACT: Donald Romano, (410) 786-1401.

SUPPLEMENTARY INFORMATION:

I. Background

    The final rule with comment period, entitled ``Medicare Program; 
Revisions to Payment Policies Under the Physician Fee Schedule, and 
Other Part B Payment Policies for CY 2008; Revisions to the Payment 
Policies of Ambulance Services Under the Ambulance Fee Schedule for CY 
2008; and the Amendment of the E-Prescribing Exemption for Computer 
Generated Facsimile Transmissions,'' that appeared in the November 27, 
2007 Federal Register (72 FR 66222), amended the anti-markup provisions 
for certain diagnostic tests in Sec.  414.50.

II. Provisions of the Final Regulations

    As amended, the anti-markup provisions in Sec.  414.50 will apply 
to the technical and professional components of diagnostic tests 
covered under section 1861(s)(3) of the Social Security Act (the Act) 
and paid for under part 414 (other than clinical diagnostic laboratory 
tests paid under section 1833(a)(2)(D) of the Act, which are subject to 
the special billing rules set forth in section 1833(h)(5)(A) of the 
Act). If a physician or other supplier bills for the technical 
component or professional component of a diagnostic test that was 
ordered by the physician or other supplier (or ordered by a party 
related to such physician or other supplier through common ownership or 
control) and the diagnostic test is either purchased from an outside 
supplier or performed at a site other than the office of the billing 
physician or other supplier, the payment to the billing physician or 
other supplier (less the applicable deductibles and coinsurance paid by 
the beneficiary or on behalf of the beneficiary) for the technical 
component or professional component of the diagnostic test may not 
exceed the lowest of the following amounts:
     The performing supplier's net charge to the billing 
physician or other supplier.
     The billing physician or other supplier's actual charge.
     The fee schedule amount for the test that would be allowed 
if the performing supplier billed directly.
    In revised Sec.  414.50(a)(2)(iii), we define the ``office of the 
billing physician or other supplier'' as medical office space where the 
physician or other supplier regularly furnishes patient care. With 
respect to a billing physician or other supplier that is a physician 
organization (as defined at Sec.  411.351 of this chapter), the 
``office of the billing physician or other supplier'' is space in which 
the physician organization provides substantially the full range of 
patient care services that the physician organization provides 
generally.
    Subsequent to the publication of the final rule with comment 
period, we received informal comments from various stakeholders who 
allege that the application of the rule is unclear with respect to 
whether certain types of space arrangements meet the definition of the 
``office of the billing physician or other supplier.'' Further, some of 
these stakeholders assert that patient access may be significantly 
disrupted due to the alleged inability of physician groups to render 
services in a cost-effective manner if medical office space that 
satisfies the ``same building'' test in Sec.  411.355(b)(2)(i) of this 
chapter for purposes of the physician self-referral rules in Part 411, 
Subpart J of this chapter and other medical office space in which 
patients are seen and that complies with the physician self-referral 
rules are subject to the anti-markup provisions in revised Sec.  
414.50. That is, physician groups allege that, in situations in which 
they are subject to the anti-markup provisions and are limited to 
billing Medicare for the amount of the net charge imposed by the 
performing supplier, because they will not be able to realize a profit 
and will not be able to recoup their overhead costs, they will not be 
able to continue to provide diagnostic testing services to the same 
extent that they are currently providing such services.
    We are concerned that the definition of ``office of the billing 
physician or other supplier'' may not be entirely clear and could have 
unintended consequences. Accordingly, in order for us to study the 
issues further, we are delaying until January 1, 2009, the 
applicability of the revised anti-markup provisions in Sec.  414.50, 
except for anatomic pathology diagnostic testing services furnished in 
space that: (1) Is utilized by a physician group practice as a 
``centralized building'' (as defined at Sec.  411.351 of this chapter) 
for purposes of complying with the physician self-referral rules; and 
(2) does not qualify as a ``same building'' under Sec.  
411.355(b)(2)(i) of this chapter. During the next 12 months, we plan to 
issue clarifying guidance as to what constitutes the ``office of the 
billing physician or other supplier'' or propose additional rulemaking, 
or both. Because anatomic pathology diagnostic testing arrangements 
precipitated our proposal for revision of the anti-markup provisions 
and remain our core concern, we are not delaying the date of 
applicability with respect to anatomic pathology diagnostic testing 
services furnished in space that: (1) Is utilized by a physician group 
practice as a ``centralized building'' (as defined at Sec.  411.351 of 
this chapter) for purposes of complying with the physician self-
referral rules; and (2) does not qualify as a ``same building'' under 
Sec.  411.355(b)(2)(i) of this chapter. In addition, we are not 
delaying the applicability of the revised anti-markup rule with respect 
to the technical component of any purchased diagnostic test. The anti-
markup prohibition with respect to the technical component of purchased 
diagnostic tests is longstanding and was incorporated into the expanded 
and revised provision of Sec.  414.50. Accordingly, it will remain 
applicable to the technical component of any purchased diagnostic test.

III. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking and invite 
public comment on the proposed rule. The notice and comment rulemaking 
procedure is not required, however, if the rule is interpretive or 
procedural in nature, and it may be waived if there is good cause that 
it is impracticable, unnecessary, or contrary to the public interest 
and we incorporate in the rule a statement of such a finding and the 
reasons supporting that finding. Likewise, we ordinarily provide for a 
delayed effective date of a final rule, but we are not required to do 
so if the rule is procedural or interpretive. Where a delayed effective 
date is required, this requirement may be waived for good cause. We set 
forth below our finding of good cause for the waiver of notice and 
comment rulemaking and the waiver of a delayed effective date.
    Our implementation of this action without opportunity for public 
comment and without a delayed effective date is based on the good cause 
exceptions in 5 U.S.C. 553(b)(3)(B) and (d), respectively. We find that 
seeking public comment on this action is impracticable and contrary to 
the public interest. We are implementing this delay of effective date 
as a result of our review of the informal comments on the final rule 
with comment period from various stakeholders. As discussed above, we 
understand from those comments that patient access for common 
diagnostic tests may be significantly disrupted

[[Page 406]]

unless we delay the effective date of revised Sec.  414.50 with respect 
to anatomic pathology diagnostic testing services furnished in space 
that: (1) Is utilized by a physician group practice as a ``centralized 
building'' (as defined at Sec.  411.351 of this chapter) for purposes 
of complying with the physician self-referral rules; and (2) does not 
qualify as a ``same building'' under Sec.  411.355(b)(2)(i) of this 
chapter. Likewise, if we do not make this final rule effective upon 
publication, patient care may be significantly disrupted during the 
interim period between the issuance of the rule and a delayed effective 
date.

IV. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 35).

V. Regulatory Impact Statement

    We do not believe that this delay in the date of applicability will 
result in any significant economic impact on any small entity. Until 
January 1, 2009, the majority of billing suppliers affected by the 
revised Sec.  414.50 do not have to comply with the revised 
requirements in Sec.  414.50.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: December 18, 2007.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: December 27, 2007.
Michael O. Leavitt,
Secretary.
[FR Doc. 07-6280 Filed 12-28-07; 1:17 pm]
BILLING CODE 4120-01-P
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