[Federal Register: August 22, 2006 (Volume 71, Number 162)]
[Proposed Rules]
[Page 48981-49252]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22au06-20]
[[Page 48981]]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 410, et al.
Medicare Program; Revisions to Payment Policies Under the Physician
Fee Schedule for Calendar Year 2007 and Other Changes to Payment Under
Part B; Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 410, 411, 414, 415, and 424
[CMS-1321-P]
RIN 0938-AO24
Medicare Program; Revisions to Payment Policies Under the
Physician Fee Schedule for Calendar Year 2007 and Other Changes to
Payment Under Part B
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would address certain provisions of the
Deficit Reduction Act of 2005, as well as make other proposed changes
to Medicare Part B payment policy.
We are proposing these changes to ensure that our payment systems
are updated to reflect changes in medical practice and the relative
value of services. This proposed rule also discusses geographic
practice cost indices (GPCI) changes; requests for additions to the
list of telehealth services; payment for covered outpatient drugs and
biologicals; payment for renal dialysis services; policies related to
private contracts and opt-out; policies related to bone mass
measurement services, independent diagnostic testing facilities, the
physician self-referral prohibition; laboratory billing for the
technical component (TC) of physician pathology services; the clinical
laboratory fee schedule; certification of advanced practice nurses;
health information technology, and the health care information
transparency initiative.
DATES: Comment Date: Comments will be considered if we receive them at
one of the addresses provided below, no later than 5 p.m. on October
10, 2006.
ADDRESSES: In commenting, please refer to file code CMS-1321-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (fax) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period.'' (Attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word.)
2. By mail. You may mail written comments (one original and two
copies) to the following address only: Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Attention: CMS-1321-
P, P.O. Box 8015, Baltimore, MD 21244-8015.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address only: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1321-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-7197 in advance to schedule your arrival
with one of our staff members.
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue,
SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD
21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Pam West, (410) 786-2302 (for issues
related to practice expense).
Stephanie Monroe, (410) 786-6864 (for issues related to the
geographic practice cost index).
Craig Dobyski, (410) 786-4584 (for issues related to list of
telehealth services).
Roberta Epps, (410) 786-4503 (for issues related to diagnostic
imaging services).
Bill Larson, (410) 786-4639 (for issues related to coverage of bone
mass measurement and addition of ultrasound screening for abdominal
aortic aneurysm to the ``Welcome to Medicare'' benefit).
Dorothy Shannon, (410) 786-3396 (for issues related to the
outpatient therapy cap).
Catherine Jansto, (410) 786-7762 (for issues related to payment for
covered outpatient drugs and biologicals).
Henry Richter, (410) 786-4562 (for issues related to payments for
end-stage renal disease facilities).
Fred Grabau, (410) 786-0206 (for issues related to private
contracts and opt-out provision).
Lisa Ohrin, (410) 786-4565 (for issues related to physician self-
referral prohibitions).
David Walczak (410) 786-4475 (for issues related to reassignment
provisions).
August Nemec (410) 786-0612 (for issues related to independent
diagnostic testing facilities).
Anita Greenberg, (410) 786-4601 (for issues related to the clinical
laboratory fee schedule).
James Menas (410) 786-4507 (for issues related to payment for
physician pathology services).
Diane Milstead, (410) 786-3355 or Gaysha Brooks (410) 786-9649 (for
all other issues).
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
CMS-1321-P and the specific ``issue identifier'' that precedes the
section on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking.
Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public
inspection as
[[Page 48983]]
they are received, generally beginning approximately 3 weeks after
publication of a document, at the headquarters of the Centers for
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore,
Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4
p.m. To schedule an appointment to view public comments, phone 1-800-
743-3951.
Information on the physician fee schedule can be found on the CMS
homepage. You can access this data by using the following directions:
1. Go to the following Web site: http://www.cms.hhs.gov/PhysicianFeeSched/
.
2. Select ``PFS Federal Regulation Notices.''
To assist readers in referencing sections contained in this
preamble, we are providing the following table of contents. Some of the
issues discussed in this preamble affect the payment policies, but do
not require changes to the regulations in the Code of Federal
Regulations. Information on the regulation's impact appears throughout
the preamble and is not exclusively in section VI.
Table of Contents
I. Background
A. Development of the Relative Value System
1. Work RVUs
2. Practice Expense Relative Value Units (PE RVUs)
3. Resource-Based Malpractice RVUs
4. Refinements to the RVUs
5. Adjustments to RVUs Are Budget Neutral
B. Components of the Fee Schedule Payment Amounts
C. Most Recent Changes to the Fee Schedule
II. Provisions of the Proposed Rule
A. Resource-Based PE RVUs and Practice Expense Proposals for
Calendar Year 2007
B. Geographic Practice Cost Indices
C. Medicare Telehealth Services
D. Miscellaneous Coding Issues
1. Global Period for Remote Afterloading High Intensity
Brachytherapy Procedures
2. Assignment of RVUS to CPT Codes for Proton Beam Treatment
Delivery Services
E. Deficit Reduction Act (DRA) Related Proposals
1. Section 5102 of the DRA--Proposed Adjustments for Payments to
Imaging Services
2. Section 5107 of the DRA--Revisions to Payments for Therapy
Services
3. Section 5112 of the DRA--Proposed Addition of Ultrasound
Screening for Abdominal Aortic Aneurysm (AAA)
4. Section 5113 of the DRA--Proposed Non-Application of the Part
B Deductible for Colorectal Cancer Screening Tests
5. Section 5114--Proposed Addition of Diabetes Outpatient Self-
Management Training Services (DSMT) and Medical Nutrition Therapy
(MNT) for the FQHC Program
F. Proposed Payment for Covered Outpatient Drugs and Biologicals
(ASP Issues)
G. Proposed Provisions Related to Payment for Renal Dialysis
Services Furnished by End Stage Renal Disease (ESRD) Facilities
H. Private Contracts and Opt-Out Provision--Practitioner
Definition
I. Proposed Changes to Reassignment and Physician Self-Referral
Rules Relating to Diagnostic Tests
J. Supplier Access to Claims Billed on Reassignment
K. Coverage of Bone Mass Measurement Tests
L. Independent Diagnostic Testing Facility (IDTF) Issues
1. Proposed IDTF Changes in the Physician Fee Schedule Proposed
Rule
2. Proposed Performance Standards for IDTFs
3. Supervision
4. Place of Service
M. Independent Laboratory Billing for the Technical Component
(TC) of Physician Pathology Services to Hospital Patients
N. Public Consultation for Medicare Payment for New Outpatient
Clinical Diagnostic Laboratory Tests
O. Proposal To Establish Criteria for National Certifying Bodies
That Certify Advanced Practice Nurses
P. Chiropractic Services Demonstration
Q. Promoting Effective Use of Health Information Technology
R. Health Care Information Transparency Initiative
III. Collection of Information Requirements
IV. Response to Comments
V. Regulatory Impact Analysis
Regulation Text
Addendum A--Explanation and Use of Addendum B
Addendum B--2007 Relative Value Units and Related Information Used
in Determining Medicare Payments for 2007
Addendum C--Codes for Which We Received Practice Expense Review
Committee (PERC) Recommendations on Practice Expense Direct Cost
Inputs
Addendum D--2007 Geographic Practice Cost Indices (GPCIs) by
Medicare Carrier and Locality
Addendum E--2007 Geographic Adjustment Factors (GAF)
Addendum F--Proposed CPT/HCPCS Imaging Codes Defined by Section
5102(b) of the DRA
In addition, because of the many organizations and terms to
which we refer by acronym in this proposed final rule, we are
listing these acronyms and their corresponding terms in alphabetical
order below:
AADA American Academy of Dermatology Association
AAH American Association of Homecare
AAP Average acquisition price
ACC American College of Cardiology
ACG American College of Gastroenterology
ACHPN Advanced Certified Hospice and Palliative Nurse
ACOG American College of Obstetrics and Gynecology
ACR American College of Radiology
ADA American Dietetic Association
AFROC Association of Freestanding Radiation Oncology Centers
AGA American Gastroenterological Association
AHRQ Agency for Healthcare Research and Quality
AMA American Medical Association
AMP Average manufacturer price
ASA American Society of Anesthesiologists
ASGE American Society of Gastrointestinal Endoscopy
ASP Average sales price
ASTRO American Society for Therapeutic Radiation Oncology
ATA American Telemedicine Association
AUA American Urological Association
AWP Average wholesale price
BBA Balanced Budget Act of 1997
BBRA Balanced Budget Refinement Act of 1999
BES (Bureau of the Census) Business Expenditure Survey
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection
Act of 2000
BLS Bureau of Labor Statistics
BMD Bone mineral density
BMI Body mass index
BMM Bone mass measurement
BNF Budget neutrality factor
BP Best price
BSA Body surface area
CAH Critical access hospital
CAP College of American Pathologists
CBSA Core-Based Statistical Area
CCI Correct Coding Initiative
CF Conversion factor
CFR Code of Federal Regulations
CMA California Medical Association
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPO Care Plan Oversight
CPT (Physicians') Current Procedural Terminology (4th Edition, 2002,
copyrighted by the American Medical Association)
CRNA Certified Registered Nurse Anesthetist
CT Computed tomography
CTA Computed tomographic angiography
CY Calendar year
DHS Designated health services
DME Durable medical equipment
DMERC Durable Medical Equipment Regional Carrier
DRA Deficit Reduction Act
DSMT Diabetes outpatient self-management training services
DXA Dual energy x-ray absorptiometry
E&M Evaluation and management
EPO Erythopoeitin
ESRD End stage renal disease
FAX Facsimile
FI Fiscal intermediary
FR Federal Register
GAF Geographic adjustment factor
GAO General Accounting Office
GDP Gross domestic product
GPO Group purchasing organization
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GPCI Geographic practice cost index
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HSA Health Savings Account
HHA Home health agency
HHS (Department of) Health and Human Services
HIT Health information technology
HOCM High osmolar contrast media
HPSA Health Professional Shortage Area
HRSA Health Resources Services Administration (HHS)
HUD (Department of) Housing and Urban Development
IDTF Independent diagnostic testing facility
IPF Inpatient psychiatric facility
IPPS Inpatient prospective payment system
IRF Inpatient rehabilitation facility
ISO Insurance Services Office
IVIG Intravenous immune globulin
JCAAI Joint Council of Allergy, Asthma, and Immunology
JUA Joint underwriting association
LCD Local coverage determination
LTCH Long-term care hospital
LOCM Low osmolar contrast media
LOINC[supreg] Logical Observation Identifiers Names and Codes
MA Medicare Advantage
MCAC Medicare Coverage Advisory Committee
MCG Medical College of Georgia
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003
MNT Medical nutrition therapy
MRA Magnetic resonance angiography
MRI Magnetic resonance imaging
MSA Metropolitan statistical area
NCD National coverage determination
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NDC National drug code
NECMA New England County Metropolitan Area
NECTA New England City and Town Area
NP Nurse practitioner
NPP Nonphysician practitioners
NPWP Nonphysician Work Pool
OBRA Omnibus Budget Reconciliation Act
OIG Office of Inspector General
OMB Office of Management and Budget
OPD Outpatient Department
OPPS Outpatient prospective payment system
OSCAR Online Survey and Certification and Reporting
PA Physician assistant
PBM Pharmacy benefit managers
PC Professional component
PE Practice Expense
PEAC Practice Expense Advisory Committee
PERC Practice Expense Review Committee
PET Positron emission tomography
PFS Physician Fee Schedule
PLI Professional liability insurance
PPI Producer price index
PPO Preferred provider organization
PPS Prospective payment system
PRA Paperwork Reduction Act
PT Physical therapy
QCT Quantitative computerized tomography
RFA Regulatory Flexibility Act
RIA Regulatory impact analysis
RN Registered nurse
RUC (AMA's Specialty Society) Relative (Value) Update Committee
RVU Relative value unit
SXA Single energy x-ray absorptiometry
SPA Single photon absorptiometry
SGR Sustainable growth rate
SMS (AMA's) Socioeconomic Monitoring System
SNF Skilled Nursing Facility
SNM Society for Nuclear Medicine
TA Technology Assessment
TC Technical Component
UAF Update adjustment factor
UPIN Unique Physician Identification Number
WAC Wholesale acquisition cost
WAMP Widely available market price
I. Background
[If you choose to comment on issues in this section, please include
the caption ``BACKGROUND'' at the beginning of your comments.]
Since January 1, 1992, Medicare has paid for physicians' services
under section 1848 of the Social Security Act (the Act), ``Payment for
Physicians' Services.'' The Act requires that payments under the
physician fee schedule (PFS) be based on national uniform relative
value units (RVUs) based on the resources used in furnishing a service.
Section 1848(c) of the Act requires that national RVUs be established
for physician work, practice expense (PE), and malpractice expense.
Before the establishment of the resource-based relative value system,
Medicare payment for physicians' services was based on reasonable
charges.
A. Development of the Relative Value System
1. Work RVUs
The concepts and methodology underlying the PFS were enacted as
part of the Omnibus Budget Reconciliation Act (OBRA) of 1989, Pub. L.
101-239, and OBRA 1990, (Pub. L. 101-508). The final rule, published
November 25, 1991 (56 FR 59502), set forth the fee schedule for payment
for physicians' services beginning January 1, 1992. Initially, only the
physician work RVUs were resource-based, and the PE and malpractice
RVUs were based on average allowable charges.
The physician work RVUs established for the implementation of the
fee schedule in January 1992 were developed with extensive input from
the physician community. A research team at the Harvard School of
Public Health developed the original physician work RVUs for most codes
in a cooperative agreement with the Department of Health and Human
Services (HHS). In constructing the code-specific vignettes for the
original physician work RVUs, Harvard worked with panels of experts,
both inside and outside the Federal government, and obtained input from
numerous physician specialty groups.
Section 1848(b)(2)(A) of the Act specifies that the RVUs for
radiology services are based on relative value scale we adopted under
section 1834(b)(1)(A) of the Act, (the American College of Radiology
(ACR) relative value scale), which we integrated into the overall PFS.
Section 1848(b)(2)(B) of the Act specifies that the RVUs for anesthesia
services are based on RVUs from a uniform relative value guide. We
established a separate conversion factor (CF) for anesthesia services,
and we continue to utilize time units as a factor in determining
payment for these services. As a result, there is a separate payment
methodology for anesthesia services.
We establish physician work RVUs for new and revised codes based on
recommendations received from the American Medical Association's (AMA)
Specialty Society Relative Value Update Committee (RUC).
2. Practice Expense Relative Value Units (PE RVUs)
Section 121 of the Social Security Act Amendments of 1994 (Pub. L.
103-432), enacted on October 31, 1994, amended section
1848(c)(2)(C)(ii) of the Act and required us to develop resource-based
PE RVUs for each physician's service beginning in 1998. We were to
consider general categories of expenses (such as office rent and wages
of personnel, but excluding malpractice expenses) comprising practice
expenses.
Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L.
105-33), amended section 1848(c)(2)(C)(ii) of the Act to delay
implementation of the resource-based PE RVU system until January 1,
1999. In addition, section 4505(b) of the BBA provided for a 4-year
transition period from charge-based PE RVUs to resource-based RVUs.
We established the resource-based PE RVUs for each physician's
service in a final rule, published November 2, 1998 (63 FR 58814),
effective for services furnished in 1999. Based on the requirement to
transition to a resource-based system for PE over a 4-year period,
resource-based PE RVUs did not become fully effective until 2002.
[[Page 48985]]
This resource-based system was based on two significant sources of
actual PE data: The Clinical Practice Expert Panel (CPEP) data and the
AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were
collected from panels of physicians, practice administrators, and
nonphysicians (for example, registered nurses) nominated by physician
specialty societies and other groups. The CPEP panels identified the
direct inputs required for each physician's service in both the office
setting and out-of-office setting. The AMA's SMS data provided
aggregate specialty-specific information on hours worked and practice
expenses.
Separate PE RVUs are established for procedures that can be
performed in both a nonfacility setting, such as a physician's office,
and a facility setting, such as a hospital outpatient department. The
difference between the facility and nonfacility RVUs reflects the fact
that a facility receives separate payment from Medicare for its costs
of providing the service, apart from payment under the PFS. The
nonfacility RVUs reflect all of the direct and indirect practice
expenses of providing a particular service.
Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) directed the Secretary of Health and Human Services
(the Secretary) to establish a process under which we accept and use,
to the maximum extent practicable and consistent with sound data
practices, data collected or developed by entities and organizations to
supplement the data we normally collect in determining the PE
component. On May 3, 2000, we published the interim final rule (65 FR
25664) that set forth the criteria for the submission of these
supplemental PE survey data. The criteria were modified in response to
comments received, and published in the Federal Register (65 FR 65376)
as part of a November 1, 2000 final rule. The PFS final rules published
in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended
the period during which we would accept these supplemental data.
3. Resource-Based Malpractice RVUs
Section 4505(f) of the BBA amended section 1848(c) of the Act to
require us to implement resource-based malpractice RVUs for services
furnished on or after 2000. The resource-based malpractice RVUs were
implemented in the PFS final rule published November 2, 1999 (64 FR
59380). The malpractice RVUs were based on malpractice insurance
premium data collected from commercial and physician-owned insurers
from all the States, the District of Columbia, and Puerto Rico.
4. Refinements to the RVUs
Section 1848(c)(2)(B)(i) of the Act requires that we review all
RVUs no less often than every 5 years. The first 5-year review of the
physician work RVUs went into effect in 1997, published on November 22,
1996 (61 FR 59489). The second 5-year review went into effect in 2002,
published on November 1, 2001 (66 FR 55246). The next scheduled 5-year
review is scheduled to go into effect in 2007.
In 1999, the AMA's RUC established the Practice Expense Advisory
Committee (PEAC) for the purpose of refining the direct PE inputs.
Through March of 2004, the PEAC provided recommendations to CMS for
over 7,600 codes (all but a few hundred of the codes currently listed
in the AMA's Current Procedural Terminology (CPT) codes).
In the November 15, 2004, PFS final rule (69 FR 66236), we
implemented the first 5-year review of the malpractice RVUs (69 FR
66263).
5. Adjustments to RVUS Are Budget Neutral
Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments
in RVUs for a year may not cause total PFS payments to differ by more
than $20 million from what they would have been if the adjustments were
not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act,
if adjustments to RVUs cause expenditures to change by more than $20
million, we make adjustments to ensure that expenditures do not
increase or decrease by more than $20 million.
B. Components of the Fee Schedule Payment Amounts
To calculate the payment for every physician service, the
components of the fee schedule (physician work, PE, and malpractice
RVUs) are adjusted by a geographic practice cost index (GPCI). The
GPCIs reflect the relative costs of physician work, PEs, and
malpractice insurance in an area compared to the national average costs
for each component.
Payments are converted to dollar amounts through the application of
a CF, which is calculated by the Office of the Actuary and is updated
annually for inflation.
The general formula for calculating the Medicare fee schedule
amount for a given service and fee schedule area can be expressed as:
Payment = [(RVU work x GPCI work) + (RVU PE x GPCI PE) + (RVU
malpractice x GPCI malpractice)] x CF.
(Note: As discussed in the June 29, 2006 proposed notice for the
Five-Year Review of Work Relative Value Units Under the Physician Fee
Schedule and Proposed Changes to the Practice Expense Methodology (71
FR 37170), we have proposed to establish a separate budget neutrality
adjustor that would be applied in the calculation of the work RVUs.
Application of this budget neutrality adjustor would enable us to meet
the budget neutrality provisions of section 1848(c)(2)(B)(ii) of the
Act.)
C. Most Recent Changes to the Fee Schedule
The final rule with comment period that appeared in the Federal
Register on November 21, 2005 (70 FR 70116) addressed Medicare Part B
payment policy, including the physician fee schedule, that is
applicable for calendar year (CY) 2006; and finalized certain
provisions of the interim final rule to implement the Competitive
Acquisition Program (CAP) for Part B Drugs.
It also revised Medicare Part B payment and related policies
regarding: Physician work, practice expense and malpractice RVUs;
Medicare telehealth services; multiple diagnostic imaging procedures;
covered outpatient drugs and biologicals; supplemental payments to
Federally Qualified Health Centers (FQHCs); renal dialysis services;
coverage for glaucoma screening services; National Coverage
Determination (NCD) timeframes; and physician referrals for nuclear
medicine services and supplies to health care entities with which
physicians have financial relationships.
In addition, the rule finalized the interim RVUs for CY 2005 and
issued interim RVUs for new and revised procedure codes for CY 2006.
The rule also updated the codes subject to the physician self-referral
prohibition and discussed payment policies relating to teaching
anesthesia services, therapy caps, private contracts and opt-out, and
chiropractic and oncology demonstrations.
In accordance with section 1848(d)(1)(E)(i) of the Act, we also
announced that the PFS update for CY 2006 would be -4.4 percent; the
initial estimate for the sustainable growth rate for CY 2006 would be
1.7; and the CF for CY 2006 would be $36.1770. However, subsequent to
publication of the CY 2005 PFS final rule with comment period, section
5104 of the Deficit Reduction Act (DRA) of 2005 (Pub. L. 109-171,
February 8, 2006), was enacted which amended section 1848(d)
[[Page 48986]]
of the statute to provide for a 0 percent update effective January 1,
2006.
We also note that the Five-Year Review of Work Relative Value Units
Under the Physician Fee Schedule and Proposed Changes to the Practice
Expense Methodology proposed notice appeared in the Federal Register on
June 29, 2006 (71 FR 37170). In that notice, we proposed revisions to
work RVUs affecting payment for physicians' services. The revisions
reflect changes in medical practice, coding changes, and new data on
relative value components that affect the relative amount of physician
work required to perform each service, as required by the statute. We
also proposed revisions to our methodology for calculating PE RVUs,
including changes based on supplemental survey data for PE. This
revised methodology would be used to establish payment for services
beginning January 1, 2007.
As indicated in the June 29, 2006 proposed notice, we will respond
to the comments received on that notice as part of the final Medicare
PFS rule for CY 2007 scheduled for publication this fall. If adopted,
the RVU revisions would be fully implemented for services furnished to
Medicare beneficiaries on or after January 1, 2007. The PE revisions
would be phased-in over a four-year period; although, as we gain
experience with the new methodology, we will reexamine this policy
beginning next year and propose necessary revisions through future
rulemaking.
II. Provisions of the Proposed Rule
[If you choose to comment on issues in this section, please include
the caption ``PROVISIONS'' at the beginning of your comments.]
A. Resource-Based Practice Expense (PE) RVU Proposals for CY 2007
Major changes to the PE methodology for 2007, as well as a detailed
discussion of the current PE methodology, are discussed in the June 29,
2006 proposed notice (71 FR 37170 through 37430).
This proposed rule contains proposals for direct PE including
clinical labor, medical supplies and medical equipment.
1. RUC Recommendations for Direct PE Inputs and Other PE Input Issues
The following discussions are proposals concerning direct PE
inputs.
(a) RUC Recommendations
The AMA's Relative Value Update Committee (RUC) established a new
committee, the Practice Expense Review Committee (PERC), to assist the
RUC in recommending direct PE inputs (clinical staff, supplies, and
equipment) for new and existing CPT codes.
The PERC reviewed the PE inputs for over 2000 existing codes, some
of which were unresolved PE issues from the CY 2006 PFS final rule with
comment period, at their meetings held in September 2005, February 2006
and April 2006. (A list of these reviewed codes can be found in
Addendum C of this proposed rule.)
We have reviewed the PERC-submitted recommendations and propose to
adopt all of them. We have worked with the AMA staff to make
corrections for any typographical errors and to ensure that previously
PEAC-accepted standards are incorporated in the recommendations.
The complete PERC recommendations and the revised PE database can
be found on our Web site. (See the SUPPLEMENTARY INFORMATION section of
this proposed rule for directions on accessing our Web site.)
(b) Standard Supplies and Equipment for 90-Day Global Codes
We are proposing to revise the CPEP supply and equipment inputs for
those 90-day global procedures for which the RUC has only refined the
clinical labor inputs. We are proposing to apply the standard supply
and equipment inputs for the facility setting for 90-day global
services to these remaining unrefined 90-day global procedure codes. As
recommended by the RUC, for supplies, we propose to include one minimum
supply visit package for each post-operative visit assigned to each
code and a post-surgical incision care kit (suture, staples, or both)
where appropriate, along with additional items recommended by the RUC
for certain procedures. For equipment, we are proposing to include an
exam table and light. However, there are several issues on which we
need input before we finalize the recommended standards. For example,
for many of the 90-day codes in question, the current supply input data
contain supplies in far larger quantities than are contained in either
the visit package or incision care kit. For other codes, the current
data includes items that are not contained in the package or kit. In
other cases, the recommendations from the RUC contain additional items
in quantities that appear excessive. We plan to work with all the
concerned specialties to ensure that the finalized inputs do represent
the typical supplies needed to perform each procedure.
Because the application of the 90-day global standard supplies and
equipment would result in the deletion of some original CPEP inputs, we
are requesting that all the medical specialties examine the direct PE
inputs on our Web site and let us know whether there are additional
items from the original CPEP data that are a necessary part of the
post-operative care and if the PE inputs listed are correct. (See the
SUPPLEMENTARY INFORMATION section of this proposed rule for directions
on accessing our Web site.)
2. Payment for Splint and Cast Supplies
In the PFS final rules published November 1999 (64 FR 59380) and
November 2000 (65 FR 65376), we removed splint and cast supplies from
the PE database for the CPT codes for fracture management and cast/
strapping application procedures. Because splint and cast supplies
could be separately billed using Healthcare Common Procedure Coding
System (HCPCS) codes (Q4001-Q4051) that were established for payment of
these supplies under section 1861(s)(5) of the Act, we did not want to
make duplicate payment under the PFS for these items.
In the CY 2006 PFS proposed rule (70 FR 70116), we proposed to
reinstate payment for all splints and cast supplies through the PE
component of the PFS because we believed we may have unintentionally
prohibited remuneration for these supplies when they are not used for
reduction of a fracture or dislocation (covered under section
1861(s)(5) of the Act), but rather are provided (and covered) as
``incident to'' a physician service under section 1861(s)(2)(A) of the
Act. This proposal was not finalized; however, in our final rule we
asked the medical specialties and the PERC to determine the typical
supplies for splints and casts necessary for each of the fracture
management codes and the cast/strapping application codes because we
wanted to make certain that the supply inputs were correct before we
proceeded with rulemaking for the CY 2007 PFS. At its February 2006
meeting, the PERC reviewed and approved the supply inputs submitted by
the AAOS for each CPT code for fracture management and cast/strapping
application and these were forwarded to us as PERC recommendations.
During this interim period we also reassessed the options for payment
of materials for splints and casts.
We believe that the majority of the splint and cast supplies that
are currently paid through the Q-codes are furnished in relationship to
cast/strapping procedures for the management of fractures and
dislocations. However, we did not intend for the medically necessary
[[Page 48987]]
splint and cast supplies used for other reasons (for example, serial
casting, wound care, or protection) not to be paid. Because it may be
difficult for the contractors to identify the purpose for the cast/
strapping application procedure on a claim form, we believe that
contractors may have been paying for the splint and cast supply Q-codes
when the service is performed for other purposes than treatment of
fractures and dislocations.
Since these splint and cast supplies can be covered under both
sections 1861(s)(5) and 1861(s)(2)(A) of the Act, we are proposing to
include payment for both statutory benefits using the separate HCPCS Q-
codes. This would allow for payment for these medically necessary
supplies whether based on sections 1861(s)(5) or 1861(s)(2)(A) of the
Act, while ensuring that no duplicate payments are made. Physicians
would continue to bill the HCPCS Q-codes, in addition to the cast/
strapping application procedure codes, to be paid for these materials.
The following supplies would continue to be paid separately using
the HCPCS Q-codes and would not be included in the PE database upon
adoption of this proposal:
Fiberglass roll.
Cast padding.
Cast shoe.
Stockingnet/stockinette.
Plaster bandage.
Denver splint.
Dome paste bandage.
Cast sole.
Elastoplast roll.
Fiberglass splint.
Ace wrap.
Kerlix.
Webril.
Malleable arch bars and elastics.
The splint and cast supplies would not be included in the PEs for
the following CPT codes:
24500 through 24685
25500 through 25695
26600 through 26785
27500 through 27566
27750 through 27848
28400 through 28675
29000 through 29750.
We are requesting input, specifically from medical specialties and
contractors on this proposal.
3. Medical Nutrition Therapy Services
In 2000, the Health Care Professional Advisory Committee (HCPAC)
recommended that we assign work RVUs to three new medical nutrition
therapy (MNT) CPT codes--97802 Medical nutrition therapy; initial
assessment and intervention, individual, face-to-face with the patient,
each 15 minutes at 0.45 RVUs, 97803 Medical nutrition therapy; re-
assessment and intervention, individual, face-to-face with the patient,
each 15 minutes at 0.37 RVUs, and 97804 Medical nutrition therapy;
group (two or more individuals), each 30 minutes at 0.25 RVUs. However,
during rulemaking for the CY 2001 PFS final rule, we indicated that MNT
was not covered because there was yet no statutory benefit category
that would allow medical nutritionists to bill these services. We also
did not accept the HCPAC recommendations for work RVUs for these MNT
services because the codes were designed for use only by nonphysicians.
The following year, section 105(c) of the Medicare, Medicaid, and SCHIP
Benefits Improvement Protection Act of 2000 (BIPA) provided for the
coverage of MNT services when furnished by registered dietitians or
nutritional professionals at 85 percent of the amount that a physician
would be paid for the same services. As a result, we established values
for these MNT services for the 2002 PFS. In keeping with our earlier
decision, we did not assign the HCPAC-recommended work values. However,
the associated work value for each code was utilized in the conversion
of work to clinical labor time for MNTs as part of the PE component. At
that time we received several comments, including one from the American
Dietetic Association (ADA), urging us to adopt the work values
recommended by the HCPAC.
More recently, the ADA has requested us to reconsider our decision
not to accept the HCPAC recommended work RVUs. The ADA contends that
the payment rate established by section 105(c) of BIPA, 85 percent of
the PFS amount that would be paid for the same service if furnished by
a physician, is based on the premise that work values are inherent to
these MNT services. The ADA believes that without work RVUs, the
payment for these services does not reflect 85 percent of what a
physician would be paid for performing the same service. Because these
MNT codes were created specifically for MNT professionals, the ADA
compared the work associated with their services to physician E/M
services of CPT 99203 and 99213, which have respective work RVUs of
1.34 and 0.67.
After reviewing the issues and relevant arguments raised by the
ADA, we are persuaded that it would be appropriate to include work RVUs
for the MNT services. Consequently, we are proposing to establish work
RVUs for each code at the level previously recommended by the HCPAC, as
follows:
CPT 97802 = 0.45 RVUs.
CPT 97803 = 0.37 RVUs.
CPT 97804 = 0.25.
Because we propose to add the work RVUs to these services, the MNT
clinical labor time in the direct input database would be removed with
the adoption of this proposal. Additionally, two HCPCS codes, G0270 MNT
subs tx for change dx and G0271 Group MNT 2 or more 30 mins were
created to track MNT services following the second referral in the same
year. These HCPCS codes correspond to CPT codes 97803 and 97804,
respectively. Therefore, we would also propose to add the same work
RVUs to these HCPCS codes and to delete the clinical labor inputs from
the PE database upon adoption of this policy. We encourage specialty
societies and other professional groups to comment on this proposal.
4. Surgical Pathology Codes
We heard from the College of American Pathologists (CAP) regarding
the equipment times assigned to CPT codes 88304 and 88305 in the basic
surgical pathology family of codes. While all six codes in this family
have been refined by the PEAC, this refinement occurred at 4 separate
PEAC meetings. CPT codes 88304 and 88305 were refined at the first PEAC
meeting in April 1999 before time standards were established for the
equipment at subsequent PEAC meetings when the other four CPT codes
88300, 88302, 88307, and 88309 were reviewed. Using our proposed
bottom-up PE methodology to value these codes, the lack of the
equipment time standards for CPT codes 88304 and 88305 create a rank-
order anomaly in this family. Consequently, CAP, after reviewing and
applying current standards for the equipment times, submitted suggested
revised equipment times to us. We are proposing to accept these times
and the proposed times will be reflected in the PE database on our Web
site (See the SUPPLEMENTARY INFORMATION section of this proposed notice
for directions on accessing our Web site.)
5. Other PE Issues
In the CY 2006 PFS final rule with comment period (70 FR 70116), we
explained that we were not implementing the PERC or other proposed PE
changes for CY 2006 due to issues with the PE methodology. In this
proposed rule, we are proposing that the PERC and other PE changes
originally proposed for CY 2006 would be implemented and effective with
the CY 2007 PFS. The following
[[Page 48988]]
subsections, (a) through (j), summarize the PE proposals from the CY
2006 PFS final rule with comment period that we are including in this
proposed rule. Additionally, we are including several other items which
concern inputs for PE that are discussed below in subsections (k)
through (n).
(a) PE Recommendations on CPEP Inputs for CY 2006
We are proposing to use a clinical labor time of 167 minutes for
the service period for CPT code 36522, Extracorporeal Photopheresis;
maintain the nonfacility setting PE RVUs for CPT code 78350, single
photon bone densitometry; and remove the PE inputs for the nonfacility
setting for CPT codes 76975, GI endoscopic ultrasound, and 15852,
Dressing change not for burn. (70 FR 70136 through 70137)
(b) Supply Items for CPT Code 95015 (Which Is Used for Intradermal
Allergy Tests With Drugs, Biologicals, or Venoms)
We are proposing to implement the allergy and immunology
specialty's recommendation to change the test substance in CPT code
95015 to venom, at $10.70 (from single antigen, at $5.18) and the
quantity to 0.3 ml (from 0.1 ml). (See 70 FR 70138.)
(c) Flow Cytometry Services
Based on information from the society representing independent
laboratories, we are proposing to implement the following direct PE
inputs:
Clinical Labor--We are proposing to change the staff type
in the service (intra) period in both CPT codes 88184 and 88185 to
cytotechnologist, at $0.45 per minute (currently lab technician, at
$0.33 per minute).
Supplies--We are proposing to change the antibody cost for
both CPT codes 88184 and 88185 to $8.50 (from $3.544).
Equipment--We are proposing to add the following equipment
to CPT code 88184:
+ Computer.
+ Printer.
+ Slide strainer.
+ Biohazard hood.
+ Wash assistant.
+ FAC loader.
+ We are proposing to add a computer and printer to the equipment
for CPT code 88185 (70 FR 70138).
(d) Low Osmolar Contrast Media (LOCM) and High Osmolar Contrast Media
(HOCM)
Because separate payment is available for both types of contrast
media, we are proposing to delete LOCM and HOCM from the PE database
with the CY 2007 PFS rule. (See 70 FR 70138).
(e) Imaging Rooms
We are proposing to implement the updates for the contents and
prices of 5 ``rooms'' used in imaging procedures including--
Basic radiology room;
Radiographic-fluoroscopic room;
Mammography room;
Computed tomography (CT) room; and
Magnetic resonance imaging (MRI) room (See 70 FR 70139).
(f) Equipment Pricing for Select Services and Procedures
We are proposing to accept the following equipment pricing
information provided by various specialty societies for select services
and procedures as discussed in the CY 2006 PFS final rule with comment
period. (See 70 FR 70139):
Equipment pricing for certain radiology services received
from the ACR as presented in Table 15 of the CY 2006 PFS proposed rule.
Equipment pricing on the ultrasound color doppler
transducers and vaginal probe received from the American College of
Obstetrics and Gynecology (ACOG).
For CPT 36522, extracorporeal photopheresis, equipment
pricing information specific to this procedure.
Pricing of EMG botox machine used in CPT code 92265 as
presented by the American Academy of Ophthalmology.
(g) Supply Item for In Situ Hybridization Codes (CPT Codes 88365,
88367, and 88368)
We are proposing to implement the Society for Clinical
Pathologists' request to change the probe quantity for CPT code 88367
In situ hybridization, auto to 1.5, equal to that of the other two
codes in the family.
(h) Supply Item for Percutaneous Vertebroplasty Procedures (CPT codes
22520 and 22525)
Based on documentation provided by the Society for Interventional
Radiology, we are proposing to implement a new price of $696.00 for the
vertebroplasty kit, to replace a temporary price of $660.50 that was a
placeholder price from the CY 2006 PFS final rule with comment period.
(See 70 FR 70139.)
(i) Clinical Labor for G-Codes Related to Home Health and Hospice
Physician Supervision, Certification and Recertification
We are proposing to apply the refinements made to the PE inputs to
CPT codes 99375 and 99378 for home health and hospice supervision to 4
G-codes that are related to home health and hospice physician
supervision, certification and recertification, G0179, GO180, GO181,
and GO182. These G-codes are incorrectly valued for clinical labor.
These G-codes are cross-walked from CPT codes 99375 and 99378, which
underwent PEAC refinement in January 2003 for the CY 2004 PFS. However,
at that time we inadvertently did not apply the new refinements to
these specific G-codes. (See 70 FR 70139 through 70140.)
(j) Programmers for Implantable Neurostimulators and Intrathecal Drug
Infusion Pumps
Although we had initially proposed, in the CY 2006 PFS proposed
rule, to remove two programmers from the PE database (EQ208 for
medication pump from two codes (CPT 62367 and 62368) and EQ209 for the
neurostimulator from 8 codes (CPT 95970-97979)), based on comments
received as discussed in the CY 2006 PFS final rule with comment period
(see 70 FR 70140), we determined that we will retain these programmers
in the database. In addition, we added ``with printer'' to the
description of EQ208 based on comments received. We are proposing to
implement these decisions for CY 2007.
(k) Cardiac Monitoring Services
We are requesting more specific PE information related to remote
cardiac monitoring services because these services do not fit the
direct PE model used for typical physician services. These services are
overwhelmingly performed by specialized independent diagnostic testing
facilities (IDTFs) that are paid under the PFS, but due to the
characteristics of cardiac monitoring services, frequently maintain
more extensive operating hours than the typical physician office.
Specifically, we are looking for data to indicate the typical number
and type of transmissions or other encounters per day between the
beneficiary and the IDTF for each of the remote monitoring services. We
would also like to know the number and type of clinical staff, as well
as the corresponding time, that are necessary to ensure appropriate
services are available for each patient. Additionally, we are
interested in identifying any other direct PE inputs for typical
supplies and equipment relating to these services, and any data that
would reflect indirect PEs, such as overhead and non-clinical payroll
expenses. We believe that the following codes represent atypical PE
scenarios
[[Page 48989]]
and would like to receive PE information regarding these services:
Cardiac event monitoring (CPT codes 93271, 93012 and
93270).
Pacemaker monitoring (CPT codes 93733 and 93736).
Holter monitoring (CPT codes 93232, 93226, 93231 and
93225).
INR monitoring (HCPCS codes G0248 and G0249).
(l) Clarification With Respect to Non-Facility PE RVUs
In the CY 2006 PFS final rule with comment (70 FR 70335) we
provided a clarification in Addendum A concerning use of ``NA'' in the
PE RVU columns for Addendum B. Commenters requested that further
clarification be made concerning the payment amount for procedures
performed in the non-facility setting if there is an ``NA'' in the non-
facility PE RVU column. Our policy is that if the Medicare carrier pays
for the service in the non-facility setting, the service will be paid
at the facility PE RVU rate. In this proposed rule, we are proposing
revisions to Addendum A to include this clarification.
(m) Supply for CPT Code 50384, Removal (via Snare/Capture) of
Internally Dwelling Ureteral Stent Via Percutaneous Approach, Including
Radiological Supervision and Interpretation
Upon review of the RUC-recommended direct PE inputs for CPT 50384,
a new procedure for CPT 2006, we identified the inappropriate inclusion
of a ureteral stent that we are proposing to delete for CY 2007. We
believe that the addition of the ureteral stent, valued by the
specialty at $162, to CPT code 50384, which is the procedure for the
removal of a stent, was an inadvertent error by the specialty during
the April 2005 RUC meeting.
(n) Supply and Equipment Items Needing Specialty Input
We have identified certain supply and equipment items for which we
were unable to verify the pricing information (see Table 1: Supply
Items Needing Specialty Input for Pricing and Table 2: Equipment Items
Needing Specialty Input for Pricing). During the CY 2006 rulemaking
process, we listed both supply and equipment items for which pricing
documentation was needed from the medical specialty societies and, for
many of these items, we received sufficient documentation in the form
of catalog listings, vendor Web sites, invoices, and manufacturer
quotes. We have accepted the documented prices for many of these items
and these prices are reflected in the PE RVUs in Addendum B of this
proposed rule. The items listed below in Tables 1 and 2 represent the
outstanding items from CY 2006 and new items added from the current RUC
recommendations. We are requesting that commenters provide pricing
information on items in these tables along with acceptable
documentation, as noted in the footnote to each table, to support
recommended prices. For supplies or equipment that have previously
appeared on this list, and for which we received no or inadequate
documentation, we are proposing to delete these items unless we receive
adequate information to support current pricing by the conclusion of
the comment period for this proposed rule.
BILLING CODE 4120-01-P
[[Page 48990]]
[GRAPHIC] [TIFF OMITTED] TP22AU06.000
[[Page 48991]]
[GRAPHIC] [TIFF OMITTED] TP22AU06.001
[[Page 48992]]
[GRAPHIC] [TIFF OMITTED] TP22AU06.002
BILLING CODE 4120-01-C
[[Page 48993]]
B. Geographic Practice Cost Indices (GPCI)
[If you choose to comment on issues in this section, please include
the caption ``GPCI'' at the beginning of your comments.]
Section 1848(e)(1)(A) of the Act requires us to develop separate
GPCIs to measure resource cost differences among localities compared to
the national average for each of the three fee schedule components.
While requiring that the PE and malpractice GPCIs reflect the full
relative cost differences, section 1848(e)(1)(A)(iii) of the Act
requires that the physician work GPCIs reflect only one-quarter of the
relative cost differences compared to the national average.
Section 1848(e)(1)(C) of the Act requires us, in consultation with
appropriate physician representatives, to review the GPCIs at least
every 3 years and allows us to make adjustments based on our review.
This section of the Act also requires us to phase-in the adjustment
over 2 years, implementing only one-half of any adjustment in the first
year if more than 1 year has elapsed since the last GPCI revision. The
GPCIs were first implemented in 1992. The first review and revision was
implemented in 1995 and the last GPCI revision was implemented in 2005.
The next update is scheduled to be implemented in January 2008.
We do not anticipate proposing significant changes to the GPCIs in
response to changes in the source data. There have been no new Census
data to affect the work GPCI, the PE GPCI will reflect any changes in
the Department of Housing and Urban Development (HUD) rental data, and
the malpractice GPCI (based on malpractice RVUs) will reflect the
national claims-based premium data for 2004 and 2005. Details of the
methodology, data sources, and adjustments to the GPCIs will be made
available for public comment in the CY 2008 PFS proposed rule.
In addition, section 412 of the MMA amended section 1848(e)(1) of
the Act to establish a floor of 1.0 for the work GPCI for any locality
where the GPCI would otherwise fall below 1.0 for purposes of payment
for services furnished on or after January 1, 2004 and before January
1, 2007. Beginning on January 1, 2007, the 1.00 floor will be removed
and the work GPCI will revert to the fully implemented value. The
values for the work GPCI and subsequent changes to the Geographic
Adjustment Factor (GAF) published in this proposed rule reflect the
removal of the 1.0 floor. For many payment localities this change had
no impact on the GAF; however, the GAFs for a number of payment
localities were reduced due to this change. The impact of this change
on the GAFs for those payment localities is shown below in Table 3.
The proposed GPCIs for 2007 are shown in Addendum D and the
proposed GAFs for 2007 are shown in Addendum E. The GPCIs shown in
Addendum D are fully implemented and reflect 2007 budget neutrality
scaling coefficients provided by the Office of the Actuary.
Table 3.--Payment Localities With Negative Percent Change in GAF 1
Between 2006 and 2007 Due to Removal of the 1.000 Work Floor
------------------------------------------------------------------------
Percent
Locality name 2006 GAF 2007 GAF change
------------------------------------------------------------------------
Fort Worth, TX......................... 0.998 0.996 -0.17
Rest of Michigan....................... 0.986 0.984 -0.20
Rest of New York....................... 0.952 0.950 -0.21
Rest of Maryland....................... 0.982 0.978 -0.36
Metropolitan St. Louis, MO............. 0.978 0.974 -0.41
Rest of Pennsylvania................... 0.950 0.946 -0.44
Ohio................................... 0.970 0.966 -0.44
Austin, TX............................. 1.020 1.015 -0.47
New Hampshire.......................... 1.010 1.005 -0.50
Minnesota.............................. 0.980 0.975 -0.53
Galveston, TX.......................... 0.991 0.986 -0.54
Metropolitan Kansas City, MO........... 0.987 0.981 -0.56
Fort Lauderdale, FL.................... 1.022 1.016 -0.59
Arizona................................ 0.999 0.993 -0.65
Wisconsin.............................. 0.956 0.950 -0.65
Colorado............................... 0.998 0.991 -0.67
East St. Louis, IL..................... 1.003 0.996 -0.68
New Orleans, LA........................ 0.984 0.977 -0.73
Rest of Washington..................... 0.984 0.976 -0.77
Indiana................................ 0.937 0.930 -0.79
Beaumont, TX........................... 0.951 0.942 -0.96
Alabama................................ 0.923 0.914 -0.99
Virginia............................... 0.958 0.948 -1.06
Southern Maine......................... 0.992 0.981 -1.09
Rest of Georgia........................ 0.943 0.932 -1.14
Tennessee.............................. 0.933 0.921 -1.27
Utah................................... 0.960 0.948 -1.30
South Carolina......................... 0.930 0.917 -1.41
Rest of Illinois....................... 0.952 0.938 -1.43
Rest of Florida........................ 0.982 0.968 -1.45
West Virginia.......................... 0.942 0.928 -1.47
North Carolina......................... 0.951 0.936 -1.55
New Mexico............................. 0.947 0.932 -1.57
Kansas*................................ 0.934 0.919 -1.60
Rest of Louisiana...................... 0.936 0.919 -1.78
Kentucky............................... 0.932 0.915 -1.80
Kansas*................................ 0.936 0.919 -1.81
Rest of Oregon......................... 0.946 0.929 -1.81
[[Page 48994]]
Vermont................................ 0.968 0.950 -1.82
Virgin Islands......................... 1.007 0.989 -1.83
Rest of Texas.......................... 0.947 0.929 -1.87
Idaho.................................. 0.922 0.904 -1.91
Iowa................................... 0.927 0.909 -1.97
Rest of Maine.......................... 0.936 0.916 -2.14
Oklahoma............................... 0.913 0.893 -2.14
Mississippi............................ 0.919 0.898 -2.31
Arkansas............................... 0.905 0.884 -2.34
Puerto Rico............................ 0.905 0.883 -2.44
Nebraska............................... 0.925 0.902 -2.44
Wyoming................................ 0.934 0.910 -2.55
Montana................................ 0.928 0.902 -2.83
Rest of Missouri *..................... 0.910 0.883 -2.97
North Dakota........................... 0.924 0.895 -3.16
South Dakota........................... 0.922 0.891 -3.35
------------------------------------------------------------------------
\1\ Calculation for the GAF: (.52466*work gpci) + (.03865*mp gpci) +
(.52466*pe gpci).
In the CY 2005 PFS proposed rule, published August 15, 2004, we
discussed the issue of changes to the GPCI payment localities (69 FR
47504). In that proposed rule, we noted that we look for the support of
a State medical society as the impetus for changes to existing payment
localities. Because the GPCIs for each locality are calculated using
the average of the county-specific data from all of the counties in the
locality, removing high cost counties from a locality will result in
lower GPCIs for the remaining counties. Therefore, because of this
redistributive impact, we have refrained, in the past, from making
changes to payment localities unless the State medical association
provides evidence that any proposed change has statewide support.
We would be interested in receiving suggestions on alternative ways
that we could administratively reconfigure payment localities that
could be developed and proposed in future rulemaking. In addition,
MEDPAC and the GAO have both expressed interest in studying the
physician payment localities. CMS intends to work with both groups to
study our current methodology and develop alternative options.
C. Medicare Telehealth Services
[If you choose to comment on issues in this section, please include
the caption ``TELEHEALTH'' at the beginning of your comments.]
1. Requests for Adding Services to the List of Medicare Telehealth
Services
Section 1834(m)(4)(F) of the Act defines telehealth services as
professional consultations, office visits, and office psychiatry
services (identified as of July 1, 2000 by CPT codes 99241 through
99275, 99201 through 99215, 90804 through 90809, and 90862) and any
additional service specified by the Secretary. In addition, the statute
requires us to establish a process for adding services to or deleting
services from the list of telehealth services on an annual basis.
In the December 31, 2002 Federal Register (67 FR 79988), we
established a process for adding services to or deleting services from
the list of Medicare telehealth services. This process provides the
public an ongoing opportunity to submit requests for adding services.
We assign any request to make additions to the list of Medicare
telehealth services to one of the following categories:
Category #1: Services that are similar to office and other
outpatient visits, consultation, and office psychiatry services. In
reviewing these requests, we look for similarities between the proposed
and existing telehealth services for the roles of, and interactions
among, the beneficiary, the physician (or other practitioner) at the
distant site and, if necessary, the telepresenter. We also look for
similarities in the telecommunications system used to deliver the
proposed service, for example, the use of interactive audio and video
equipment.
Category #2: Services that are not similar to the current
list of telehealth services. Our review of these requests includes an
assessment of whether the use of a telecommunications system to deliver
the service produces similar diagnostic findings or therapeutic
interventions as compared with the face[pi]to[pi]face ``hands on''
delivery of the same service. Requestors should submit evidence showing
that the use of a telecommunications system does not affect the
diagnosis or treatment plan as compared to a face[pi]to[pi]face
delivery of the requested service.
Since establishing the process, we have added the following to the
list of Medicare telehealth services: psychiatric diagnostic interview
examination; ESRD services with two to three visits per month and four
or more visits per month (although we require at least one visit a
month by a physician, CNS, NP, or PA to examine the vascular access
site); and individual medical nutritional therapy.
Requests to add services to the list of Medicare telehealth
services must be submitted and received no later than December 31 of
each CY to be considered for the next proposed rule. For example,
requests submitted before the end of CY 2005 are considered for the CY
2007 proposed rule. For more information on submitting a request for an
addition to the list of Medicare telehealth services, visit our Web
site at http://www.cms.hhs.gov/telehealth.
2. Submitted Requests for Addition to the List of Telehealth Services
We received the following requests for additional approved services
in CY 2005: (1) Nursing facility care; (2) speech language pathology;
(3) audiology; and (4) physical therapy services. The following is a
discussion of the requests submitted in CY 2005.
Nursing Facility Care
The American Telemedicine Association (ATA) and an individual
practitioner submitted a request to add the following services: Initial
nursing facility care (as represented by HCPCS
[[Page 48995]]
codes 99304 through 99306); subsequent nursing facility care (HCPCS
codes 99307 through 99310); nursing facility discharge services (HCPCS
codes 99315 and 99316); and other nursing facility services as
described by HCPCS code 99318. The requestors explained that the
primary purpose of using telehealth in the Skilled Nursing Facility
(SNF) setting is to provide urgent consultation when the patient has a
sudden change in his or her condition, and to provide increased
availability to primary and specialty care on days when the physician
is not present in the SNF or when traveling is a hardship. The
requestors believe that the current list of Medicare telehealth
services is not appropriate because the list does not include codes
that are specifically intended for nursing facility residents.
CMS Review
Nursing Facility Care
Section 1834(m)(C)(ii) of the Act defines a telehealth originating
site as a physician's or practitioner's office; or a hospital, critical
access hospital (CAH), rural health clinic, or FQHC. SNFs are not
defined in the statute as originating sites.
However, section 418 of the MMA required the Health Resources
Services Administration (HRSA), a component of HHS, in consultation
with CMS, to conduct an evaluation of demonstration projects under
which SNFs, as defined in section 1819(a) of the Act, are treated as
originating sites for Medicare telehealth services. The MMA also
required the Secretary to submit a report to the Congress that includes
recommendations on ``mechanisms to ensure that permitting a SNF to
serve as an originating site for the use of telehealth services or any
other service delivered via a telecommunications system does not serve
as a substitute for in-person visits furnished by a physician, or for
in-person visits furnished by a physician assistant (PA), nurse
practitioner (NP), or clinical nurse specialist (CNS), as is otherwise
required by the Secretary'' and provides the authority to include SNFs
as a Medicare telehealth originating site, if the Secretary concludes
in the report that it is advisable to do so and that mechanisms could
be established to ensure that the use of a telecommunications system
does not serve as a substitute for the required in-person physician or
practitioner SNF visits. This report is currently under review in DHHS.
Given that SNFs are not defined in the statute as a telehealth
originating site and the report to the Congress, as discussed above, is
currently being reviewed within DHHS, we cannot consider approving
nursing facility care for telehealth at this time. We will review and
consider the recommendations of the report to the Congress once it is
issued. If it is determined that SNFs should be added as an originating
site, this change will be considered in future rulemaking.
Speech Language Pathology, Audiology and Physical Therapy
The ATA and an individual practitioner submitted a request to add
various speech therapy, audiology and physical therapy services to the
list of Medicare telehealth services. The requestors also asked us to
add physical therapists, speech language pathologists and audiologists
to the list of approved telehealth practitioners.
CMS Review
Physical therapists, speech language pathologists and audiologists
are not permitted under current law to provide and receive payment for
Medicare telehealth services at the distant site. The statute permits
only a physician, as defined by section 1861(r) of the Act or a
practitioner as described in section 1842(b)(18)(C) of the Act (CNS,
NP, PA, nurse midwife, clinical psychologist, clinical social worker,
registered dietitian or other nutrition professional), to furnish
Medicare telehealth services. Since speech language pathologists,
audiologists and physical therapists are not permitted under current
law to provide and receive payment for Medicare telehealth services at
the distant site, we cannot fully consider the request to add speech
therapy, audiology services and physical therapy to the list of
Medicare telehealth services. We are exploring this issue as part of a
report to the Congress (required by section 223(d) of BIPA) on
additional sites and settings, geographic areas, and types of non-
physician practitioners that could be reimbursed for the provision of
telehealth services.
D. Miscellaneous Coding Issues
[If you choose to comment on issues in this section, please include
the caption ``Miscellaneous Coding Issues'' at the beginning of your
comments.]
The following sections address specific coding issues related to
payment for services under the PFS.
1. Global Period for Remote Afterloading High Intensity Brachytherapy
Procedures
CPT Code 77783, Remote afterloading high intensity brachytherapy;
9-12 source positions or catheters, resides in a family of codes with
varying numbers of source positions. All of the codes in the family,
CPT codes 77781-77784 are currently designated as 90-day global
services. CPT codes 77781-77784 are used to treat many clinical
conditions, but primarily patients with prostate cancer, breast cancer
and sarcoma. Patients with any of these conditions usually receive
several treatments (2-10) over a two to ten day period of time. Due to
the increasing variability in treatment regimens, it is difficult to
assign RVUs for a ``typical'' patient based on a global period of 90
days.
Therefore, we are proposing that this family of codes (CPT codes
77781, 77782, 77783 and 77784) be assigned a global period of ``XXX'',
which will permit separate payment each time the services are provided
and allow payment to be based on the actual service(s) provided. We
will request that the RUC revalue the work RVUs and the PE inputs for
these services if a change in the global period is finalized. However
we are proposing, on an interim basis, to revise the work RVUs and PE
inputs to reflect the removal of the postoperative visit, CPT code
99212, that is currently assigned to these services. The proposed
interim work RVUs for these services would be as follows:
77781 = 1.21
77782 = 2.04
77783 = 3.27
77784 = 5.15
We are also proposing to delete the registered nurse (RN) time in
the post-service period as well as the patient gowns for the post-
service visit. We would also note that, to the extent that these
services are performed as staged procedures, providers may make use of
applicable modifiers.
2. Assignment of RVUs to CPT Codes for Proton Beam Treatment Delivery
Services
We have received a request to assign PE inputs for the non-facility
setting to Proton Beam treatment delivery services represented by CPT
codes 77520 through 77525.
These services are currently carrier-priced; therefore, payment in
the facility or non-facility setting is established by each carrier. To
the extent that physicians and suppliers wish to have national RVUs
assigned for these services, there is an established process utilizing
the AMA-RUC to recommend work RVUs, as well as the direct PE inputs
used to compute the PE RVUs, to CMS. We would strongly encourage the
physicians and suppliers to use this established process, and would
also be
[[Page 48996]]
interested in receiving comments on this issue.
E. Deficit Reduction Act (DRA) Related Proposals
[If you choose to comment on issues in this section, please include
the caption ``DRA PROPOSALS'' at the beginning of your comments.]
The DRA of 2005 (Pub. L. 109-171), was enacted February 8, 2006 and
included provisions that affect the Medicare program. The following
section addresses the specific DRA provisions that are being addressed
in this proposed rule.
1. Section 5102--Proposed Adjustments for Payments to Imaging Services
Section 5102 of the DRA includes two provisions that affect payment
of imaging services under the Medicare physician fee schedule. The
first provision addresses payment for certain multiple imaging
procedures for CY 2007 and application of budget neutrality while the
second provision addresses limiting the payment amount under PFS to the
outpatient department (OPD) payment amount for the technical component
(TC) of certain imaging services.
(a) Payment for Multiple Imaging Procedures for 2007
In general, Medicare prices diagnostic imaging procedures in the
following three ways:
The professional component (PC) represents the physician's
interpretation (PC-only services are billed with the 26 modifier).
The TC represents PE and includes clinical staff,
supplies, and equipment (TC-only services are billed with the TC
modifier).
The global service represents both PC and TC.
As discussed in the CY 2006 PFS final rule with comment period (70
FR 70261), in the CY 2006 PFS proposed rule (70 FR 45764 through
46064), we had proposed to reduce payment for the TC of selected
diagnostic imaging procedures belonging to one of eleven imaging
families when the procedures are performed on contiguous body areas by
50 percent for CY 2006. However, in the final rule with comment period,
we stated that we would phase-in the 50 percent reduction over two
years, beginning with a 25 percent reduction in 2006. We also sought
additional data and comments on the appropriateness of 50 percent as
the final level of reduction. The reduction applies to the TC and the
technical portion of the global service, but does not apply to the PC
of the service. Currently, we make full payment for the highest priced
procedure and reduce payment for each additional procedure by 25
percent, when more than one procedure from the same imaging family is
performed during the same session on the same day.
As described in the CY 2006 PFS final rule with comment period, at
the time, the statute required us to make changes such as this in a
budget neutral manner, meaning that the estimated savings generated by
the application of the multiple imaging procedure payment reduction
were used to increase payment for other physician fee schedule
services. We increased the CY 2006 PE RVUs by 0.3 percent to offset the
estimated savings generated by the multiple imaging payment reduction
policy.
Subsequent to the publication of the CY 2006 PFS final rule with
comment period, section 5102(a) of the DRA (Multiple Procedure Payment
Reduction for Imaging Exempted From Budget Neutrality), required that
``effective for fee schedules established beginning with 2007, reduced
expenditures attributable to the multiple procedure payment reduction
for imaging under the final rule published by the Secretary in the
Federal Register on November 21, 2005 (42 CFR 405, et al.) insofar as
it relates to the physician fee schedules for 2006 and 2007'' are
exempted from the budget neutrality provision. As a result, we are
proposing to remove the 0.3 percent increase to the CY 2006 PE RVUs
from the CY 2007 PE RVUs in accordance with the statute.
In addition, in response to our request for data on the
appropriateness of the 50 percent reduction in the CY 2006 PFS final
rule with comment period (70 FR 70261), the ACR provided information
for 25 code combinations supporting a reduction of between 21 and 44
percent. Given the expected interaction between the multiple procedure
imaging policy and the further imaging payment reductions mandated by
section 5102(b) of the DRA described below, along with the new
information we have received from the ACR on the multiple imaging
procedure policy as it applies to common combinations of imaging
services, we believe it would be prudent to maintain the multiple
imaging payment reduction at its current 25 percent level while we
continue to examine the appropriate payment levels. Therefore, we are
proposing to continue the multiple imaging payment reduction for 2007
at the 25 percent level. We would proceed through future rulemaking in
the event we determine that revisions to the policy are warranted.
(b) Reduction in TC for Imaging Services Under the PFS to OPD Payment
Amount
Section 5102(b)(1) of the DRA amended section 1848 of the Act and
requires that, with respect to imaging services, if--
``(i) The technical component (including the technical component
portion of a global fee) of the service established for a year under
the fee schedule * * *, without application of the geographic
adjustment factor * * *, exceeds,
(ii) The Medicare OPD fee schedule amount established under the
prospective payment system for hospital outpatient department services
* * * for such service for such year, determined without regard to
geographic adjustment * * *, the Secretary shall substitute the amount
described in clause (ii), adjusted by the geographic adjustment factor
[under the PFS] * * *, for the fee schedule amount for such technical
component for such year.''
As required by the statute, for imaging services (described below)
furnished on or after January 1, 2007, we will cap the PFS payment
amount for the year (prior to geographic adjustment) by the CY 2007
outpatient prospective payment system (OPPS) payment amount (prior to
geographic adjustment). We will then apply the PFS geographic
adjustment to the capped payment amount.
Section 5102(b)(2) of the DRA exempts the estimated savings from
this provision from the PFS budget neutrality requirement. Section
5102(b)(1) of the DRA defines imaging services as ``* * * imaging and
computer-assisted imaging services, including X-ray, ultrasound
(including echocardiography), nuclear medicine (including positron
emission tomography), magnetic resonance imaging, computed tomography,
and fluoroscopy, but excluding diagnostic and screening mammography.''
In order to apply section 5102(b) of the DRA, we needed to
determine the CPT and alpha-numeric HCPCS codes that fall within the
scope of ``imaging services'' defined by the DRA provision. In general,
we believe that imaging services provide visual information regarding
areas of the body that are not normally visible, thereby assisting in
the diagnosis or treatment of illness or injury. We began by
considering the CPT 7XXXX series codes for radiology services and then
adding in other CPT codes and alpha-numeric HCPCS codes that describe
imaging services. We then excluded nuclear medicine services that were
either non-imaging diagnostic or treatment services. We also excluded
all
[[Page 48997]]
codes for unlisted procedures, since we would not know in advance of
any specific clinical scenario whether or not the unlisted procedure
was an imaging service. We excluded all mammography services,
consistent with the statute. We excluded radiation oncology services
that were not imaging or computer-assisted imaging services. We also
excluded all HCPCS codes for imaging services that are not separately
paid under the OPPS since there would be no corresponding OPPS payment
to serve as a TC cap. We excluded any service where the CPT code
describes a procedure for which fluoroscopy, ultrasound, or another
imaging modality is either included in the code whether or not it is
used or is employed peripherally in the performance of the main
procedure, for example, 31622 for bronchoscopy with or without
fluoroscopic guidance and 43242 for upper gastrointestinal endoscopy
with transendoscopic ultrasound-guided intramural or transmural fine
needle aspiration/biopsy(s). In these cases, we are unable to clearly
distinguish imaging from non-imaging services because, for example, a
specific procedure may or may not utilize an imaging modality, or the
use of an imaging technology cannot be segregated from the performance
of the main procedure. Note that we included carrier priced services
since these services are within the statutory definition of imaging
services and are also within the statutory definition of PFS services
(that is, carrier-priced TCs of PET scans).
Our proposed list of codes that identify imaging services defined
by the DRA OPPS cap provision can be found in Addendum F to this
proposed rule. Note that this is the list of imaging services for which
we propose to make the comparison between the PFS TC payment amount and
the OPPS payment amount used to establish OPD payment. Payment for an
individual service on this list would only be capped if the PFS TC
payment amount exceeds the OPPS payment amount.
To the extent changes are made to codes for services already on the
list, we propose to update the list through program instructions to our
contractors. To the extent that the same imaging service is coded
differently under the PFS and the OPPS, we propose to crosswalk the
code under the PFS to the appropriate code under the OPPS that could be
reported for the same service provided in the hospital outpatient
setting. Our proposed list of crosswalks is below:
------------------------------------------------------------------------
MFS code Descriptor OPPS code Desc
------------------------------------------------------------------------
74185........ Mri angio, abdom w or C8900....... MRA w/cont, abd.
w/o dye.
76093........ Magnetic image, C8905....... MRI w/o fol w/cont,
breast. brst, un.
76094........ Magnetic image, both C8908....... MRI w/o fol w/cont,
breasts. breast.
71555........ Mri angio chest w or C8909....... MRA w/cont, chest.
w/o dye.
73725........ Mr ang lwr ext w or w/ C8912....... MRA w/cont, lwr ext.
o dye.
72198........ Mr angio pelvis w/o & C8918....... MRA w/cont, pelvis.
w/dye.
------------------------------------------------------------------------
(c) Interaction of the Multiple Imaging Payment Reduction and the OPPS
Cap
For CY 2007 imaging services potentially subject to both the
multiple imaging reduction and the OPPS cap, we propose to first apply
the multiple imaging payment reduction and then apply the OPPS cap to
the reduced amount as illustrated in the following example.
----------------------------------------------------------------------------------------------------------------
25%
Pre-OPPS Multiple OPPS cap Final MPFS
HCPCS cap MPFS imaging rate payment
rate reduction
----------------------------------------------------------------------------------------------------------------
7XXX1....................................................... $341.89 $256.42 $316.55 $256.42
7XXX2....................................................... 552.86 414.65 391.83 391.83
----------------------------------------------------------------------------------------------------------------
We considered first applying the OPPS cap and then applying the
multiple procedure reduction. However, as indicated in the CY 2006 OPPS
final rule, we received public comments suggesting that the OPPS
payment rates may implicitly include at least some multiple imaging
discount. While we continue to examine this issue, we believe the most
appropriate policy is to apply the multiple imaging payment reduction
prior to the application of the OPPS cap.
2. Section 5107--Revisions to Payments for Therapy Services
Section 1833(g) of the Act applies an annual per beneficiary
combined cap beginning January 1, 1999, on outpatient physical therapy
and speech-language pathology services and a similar separate cap on
outpatient occupational therapy services. These caps apply to expenses
incurred for the respective therapy services under Medicare Part B,
with the exception of outpatient hospital services. The caps were in
effect from January 1, through December 31, 1999, from September 1,
2003 through December 7, 2003, and beginning January 1, 2006. In 2000
through 2002, and from December 8, 2003 through December 31, 2005, the
Congress placed moratoria on implementation of the caps. Section
1833(g)(2) of the Act provides that, for 1999 through 2001, the caps
were $1500, and for years after 2001, the caps are equal to the
preceding year's cap increased by the percentage increase in the
Medicare Economic Index (MEI) (except that if an increase for a year is
not a multiple of $10, it is rounded to the nearest multiple of $10).
We implemented the separate statutory limits of $1740 for
outpatient physical therapy and speech-language pathology services and
$1740 for occupational therapy on January 1, 2006. The DRA of 2005 was
enacted on February 8, 2006. Section 5107(a) of the DRA required the
Secretary to develop an exceptions process for the therapy caps
effective January 1, 2006. The exceptions process applies only to
expenses incurred in 2006. Details of the exceptions process were
published in a manual change on February 13, 2006 (CR4364). The change
request
[[Page 48998]]
consists of three transmittals with current numbers of--
Transmittal 855, CR 4364, Pub. L. 100-04;
Transmittal 47, CR 4365, Pub. L. 100-02; and
Transmittal 140, CR 4364, Pub. L. 100-08.
The transmittals are available on our Web site at http://www.cms.hhs.gov/Transmittals/
.
In accordance with the statute, the therapy caps will remain in
effect, but without the exceptions process, with respect to expenses
incurred beginning on January 1, 2007. The dollar amount of the therapy
caps in 2007 will be the 2006 rate ($1740) increased by the percentage
increase in the MEI. As noted above, under current law, the exceptions
process will not apply to therapy services incurred after December 31,
2006, but the therapy caps will remain inapplicable to therapy services
provided in the outpatient hospital setting as provided in section
1833(g) of the Act.
Section 5107(b) of the DRA requires the Secretary to implement, by
July 1, 2006, edits for clinically illogical combinations of procedure
codes and other edits in order to limit inappropriate payment for
therapy services. In January 2006, we implemented Correct Coding
Initiative (CCI) edits for the therapy providers that bill to the
fiscal intermediaries, thus, addressing the section 5107 of the DRA
requirement with respect to edits for clinically illogical combinations
of procedure codes. Adoption of these code edits ensures that these
providers of outpatient Part B therapy services, including SNFs,
comprehensive outpatient rehabilitation facilities, certain outpatient
physical therapy and speech-language therapy providers (rehabilitation
agencies) and home health agencies (HHAs) (where beneficiary is not
under a Part A plan of care) meet the same CCI edit requirements as
those that have been in place for physicians, private practice
therapists, and OPPS hospitals. We are considering the implementation
of other edits in the future to further address concerns about
inappropriate payment for therapy services.
3. Section 5112-Proposed Addition of Ultrasound Screening for Abdominal
Aortic Aneurysm (AAA)
Section 5112 of the DRA of 2005 amended section 1861 of the Act to
provide for coverage under Part B of ultrasound screening for AAAs,
effective for services furnished on or after January 1, 2007, subject
to certain eligibility and other limitations. This screening test will
be available even if the qualifying patient does not present signs or
symptoms of disease or illness.
To conform the regulations to the statutory requirements of section
5112 of the DRA, we are proposing to include an exception in Sec.
411.15(a)(1) to permit coverage for ultrasound screening for AAAs that
meet the conditions for coverage that we are proposing to specify under
new Sec. 410.19(b) (Conditions for coverage of an ultrasound screening
for abdominal aortic aneurysms). We are also adding a new Sec.
411.15(k)(12).
As provided in the DRA, this new coverage allows payment for a one-
time only screening examination. We are proposing to add new Sec.
410.19(b) to provide for the coverage of the screening examinations for
AAAs as specified in section 5112 of the DRA. We are also proposing to
add new Sec. 410.19(c) (Limitation on coverage of ultrasound screening
for abdominal aortic aneurysms.) to provide the limitation on coverage
for an individual who is not an eligible beneficiary as defined in
proposed new Sec. 410.19(a).
We are proposing definitions set forth in new Sec. 410.19(a) of
this proposed rule that would be included to implement the statutory
provisions and to help the reader in understanding the provisions of
this regulation. The proposed definitions include the following terms:
Eligible beneficiary.
Ultrasound screening for abdominal aortic aneurysms.
Specifically, section 5112(a)(1) of the DRA amended section 1861 of
the Act to provide that coverage of ultrasound screening for AAAs will
be available for an individual--(i) who receives a referral for such an
ultrasound screening as a result of an initial preventive physical
examination (as defined in section 1861(ww)(1) of the Act); (ii) who
has not been previously furnished such an ultrasound screening under
this title; and (iii) who has a family history of AAA or manifests risk
factors included in a beneficiary category recommended for screening by
the United States Preventive Services Task Force regarding AAAs.
Section 5112(a)(2) of the DRA also adds a definition of the term
``ultrasound screening for an Abdominal Aortic Aneurysm'' to mean,
``(1) a procedure using sound waves (or other procedures using
alternative technologies, of commensurate accuracy and cost, that the
Secretary may specify) provided for the early detection of abdominal
aortic aneurysm; and (2) includes a physician's interpretation of the
results of the procedure.''
In developing the proposed rule based on this provision, we
reviewed the 2005 United States Preventive Services Task Force (USPSTF)
recommendations and related material on ultrasound screening for AAAs.
This includes--
A recommendation for a one-time ultrasound screening for
men aged 65 to 75 who have smoked at least 100 cigarettes in their
lifetime;
No recommendation for or against ultrasound screening for
AAAs for men who have not smoked at least 100 cigarettes in their
lifetime; and
A recommendation against routine screening for AAAs in
women.
Based on the statutory language and the USPSTF recommendations
outlined above, we are proposing to define the term ``eligible
beneficiary'' for coverage of ultrasound screening examinations for AAA
to mean an individual who--
Has received a referral for an ultrasound screening as a
result of an initial preventive physical examination (as defined in
section 1861(ww)(1) of the Act);
Has not been previously furnished such a covered
ultrasound screening examination under the Medicare program; and
Is included in at least one of the following risk
categories:
+ Has a family history of an AAA; or
+ Is a man age 65 to 75 years who smoked at least 100 cigarettes in
his lifetime; or
+ Is an individual who manifests other risk factors that are
described in a benefit category recommended by the USPSTF regarding an
AAA that has been determined by the Secretary through the NCD process.
To facilitate our consideration of possible expansions of coverage
in the future for identifying (1) other risk factors in a benefit
category recommended for screening for the early detection of AAAs by
the USPSTF, and (2) alternative screening technologies to ultrasound
screening for AAAs of commensurate accuracy and cost, we are proposing
to add language to our regulations that would allow us to make
determinations through the NCD process. The NCD process would allow the
Secretary to expand coverage more quickly following an assessment of
those subjects than is possible under the standard rulemaking process.
We intend to use the NCD process, which includes an opportunity for
public comments, for evaluating the medical and scientific issues
relating to the coverage of alternative screening technologies and the
identification of other risk factors for AAAs recommended by the USPSTF
that may be brought to our attention in the future. Use of an NCD to
establish
[[Page 48999]]
a change in the scope of benefits is authorized by section 1871(a)(2)
of the Act. An aggrieved party can challenge an NCD under the
procedures established by section 1869(f) of the Act. These proposed
coverage provisions would be set forth in proposed new Sec. 410.19
(a)(1)(i) and Sec. 410.19(a)(2)(iii)(C).
Section 5112(b) of DRA also amended section 1861(ww)(2) of the Act
(the initial preventive physical examination benefit) by adding the new
ultrasound screening benefit to the list of preventive services for
which physicians and other qualified nonphysician practitioners must
provide ``education, counseling and referral'' to new beneficiaries who
take advantage of the initial preventive physical examination benefit
within the first 6 months after the effective date of their first Part
B coverage period. Therefore, we are also proposing to amend Sec.
410.16(a)(7) of the regulations so that it reflects the additional
responsibilities that physicians and qualified nonphysician
practitioners will have under the initial preventive physical
examination benefit with respect to the new ultrasound screening
benefit.
Beginning January 1, 2007, we are proposing to pay for ultrasound
screening for AAAs through the use of a new HCPCS code GXXX1,
Ultrasound, B-scan and/or real time with image documentation; for
abdominal aortic aneurysm (AAA) screening. We are proposing that
payment for this service be made at the same level as CPT code 76775
Ultrasound, retroperitoneal (e.g., renal, aorta, nodes), B-scan and/or
real time with image documentation; limited. CPT code 76775 is used to
bill for the service when it is provided as a diagnostic test, and we
believe the service associated with the proposed HCPCS code reflects
equivalent resources and work intensity to those contained in CPT code
76775.
In addition, since the DRA provides that the Medicare Part B
deductible will not apply with respect to ultrasound screening for
abdominal aortic aneurysm (as defined in section 1861(bbb) of the Act),
we are proposing to revise Sec. 410.160 to include an exception from
the Medicare Part B deductible for the ultrasound screening for
abdominal aortic aneurysm as described in proposed Sec. 410.19.
(Conditions for coverage of an ultrasound screening for abdominal
aortic aneurysms.)
4. Section 5113--Proposed Non-Application of the Part B Deductible for
Colorectal Cancer Screening Tests
Current Medicare policy requires that, with limited exceptions,
incurred expenses for covered part B services are subject to, and count
toward meeting the Part B annual deductible. Section 5113 of the DRA
amended section 1833(b) of the Act to provide for an exception to the
application of the Part B deductible with respect to colorectal cancer
screening tests. Beginning January 1, 2007, colorectal cancer screening
services, as described in section 1861(pp)(1) of the Act, are no longer
subject to the Part B deductible. The conditions for and limitations on
coverage for colorectal cancer screening tests under Medicare part B
are described in Sec. 410.37.
To conform our regulations to this statutory change, we are
proposing to revise Sec. 410.160 to include an exception from the Part
B annual deductible for the colorectal cancer screening services
described in Sec. 410.37.
5. Section 5114--Proposed Addition of Diabetes Outpatient Self-
Management Training Services (DSMT) and Medical Nutrition Therapy (MNT)
for the FQHC Program
Section 5114 of the DRA amended section 1861(aa)(3) of the Act to
add DSMT and MNT services to the list of Medicare covered and
reimbursed services under the Medicare FQHC benefit, effective for
services provided on or after January 1, 2006. Although this statutory
change has already been implemented in administrative instructions, we
are proposing to conform the regulations to the new statutory
requirement.
FQHCs certified as DSMT and MNT providers have been allowed to
bundle the cost of those services into their FQHC payment rates. But
before the enactment of the DRA, the provision of these services would
not generate a separate FQHC visit payment. Effective for services
furnished on or after January 1, 2006, FQHCs that are certified
providers of DSMT and MNT services can receive per visit payments for
covered services furnished by registered dietitians or nutrition
professionals. In other words, if all relevant program requirements are
met, these services are included under the Medicare FQHC benefit as
billable visits.
In order to conform the regulations, we are proposing to amend
Sec. 405.2446(b) to expand the scope of FQHC services to include
certified providers of DSMT and MNT services by adding a new paragraph
(10). We are also proposing to revise Sec. 405.2463 by--
Revising paragraph (a) to expand the definition of an FQHC
visit to include certified providers of DSMT and MNT services under new
sub-paragraph (a)(1)(ii)(B). We would also revise the definition of an
RHC visit in new subparagraph (a)(1)(i) to include a face-to-face
encounter between a patient and a clinical psychologist or clinical
social worker to conform to statutory language at section
1861(aa)(1)(B) of the Act. We are also proposing to redesignate and
revise paragraphs (b) and (c) as new paragraphs (a)(2) and (a)(3),
respectively.
We are proposing to incorporate paragraph (a)(2) into
(a)(1), and to redesignate and revise current paragraph (a)(3) as new
paragraph (b). We would also clarify that it is generally permissible
for both FQHCs and Rural Health Clinics to furnish, when necessary,
most types of medical and other health visits on the same day to the
same patient. We are also proposing to amend this paragraph to permit a
separate additional FQHC visit for DSMT and MNT services (which may
occur on the same date of service when the beneficiary receives care
from their FQHC physician or non-physician practitioner) when
reasonable and necessary, consistent with the Congressional mandate
under section 5114 of the DRA to provide coverage and adequate access
to these services in the FQHC setting.
We are proposing to redesignate and revise current
paragraph (a)(4) as new paragraph (c).
F. Proposed Payment for Covered Outpatient Drugs and Biologicals (ASP
Issues)
[If you choose to comment on issues in this section, please include
the caption ``ASP Issues'' at the beginning of your comments.]
Medicare Part B covers a limited number of prescription drugs and
biologicals. For the purposes of this proposed rule, the term ``drugs''
will hereafter refer to both drugs and biologicals. Medicare Part B
covered drugs not paid on a cost or prospective payment basis generally
fall into the following three categories:
Drugs furnished incident to a physician's service.
DME drugs.
Drugs specifically covered by statute (certain
immunosuppressive drugs, for example).
Beginning in CY 2005, the vast majority of Medicare Part B drugs
not paid on a cost or prospective payment basis are paid under the ASP
[[Page 49000]]
methodology. The ASP methodology is based on data submitted to us
quarterly by manufacturers. In addition to the payment for the drug,
Medicare currently pays a furnishing fee for blood clotting factors, a
dispensing fee for inhalation drugs, and a supplying fee to pharmacies
for certain Part B drugs.
In January 2006, the drug coverage available to Medicare
beneficiaries expanded with the implementation of Medicare Part D. The
Medicare Part D program does not change Medicare Part B drug coverage.
This section of the preamble discusses proposed changes and issues
related to the determination of the payment amounts for covered Part B
drugs and furnishing blood clotting factor. This section also discusses
proposed changes to how manufacturers calculate and report ASP data to
us.
1. ASP Issues
Section 303(c) of the MMA amended Title XVIII of the Act by adding
new section 1847A. This new section revised the payment methodology for
the vast majority of drugs and biologicals not paid on a cost or
prospective payment basis furnished on or after January 1, 2005. The
ASP reporting requirements are set forth in section 1927(b) of the Act.
Manufacturers must submit ASP data for each 11-digit National Drug Code
(NDC) to us quarterly. The manufacturers' submissions are due to us not
later than 30 days after the last day of each calendar quarter. The
methodology for developing Medicare drug payment allowances based on
the manufacturers' submitted ASP data is specified in the regulations
in part 414, subpart K. We update the Part B drug payment amounts
quarterly based on the data we receive.
In this section of the preamble, we discuss our intent to issue a
final rule to implement the provisions in the MMA related to the
calculation and submission of manufacturers' ASP data, and seek further
comments on specific issues related to price concessions and certain
fees.
On April 6, 2004, we published the Manufacturer's Submission of
Average Sales Price Data for Medicare Part B Drugs and Biologicals
(ASP) interim final rule with comment period (IFC) (69 FR 17935) to
implement the ASP calculation and reporting requirements. Manufacturers
were required to submit their initial quarterly ASP data to us shortly
thereafter, beginning April 30, 2004. We received comments from drug
manufacturers, pharmacies, physicians, national associations of the
pharmaceutical industry, national associations of physicians, and
consultants. These comments addressed a variety of aspects of
calculating and reporting ASPs. On September 16, 2004, we published the
Manufacturer's Submission of Average Sales Price Data for Medicare Part
B Drugs and Biologicals (ASP) final rule (69 FR 55763) addressing only
the comments pertaining to the methodology for estimating lagged price
concessions. We have also addressed ASP calculation and reporting
requirements in other proposed and final rules and information
collection notices, including rulemaking to implement the Competitive
Acquisition Program for Part B Drugs and Biologicals (CAP). (See 70 FR
39069, 70 FR 45842, 70 FR 70215, and 70 FR 70477.) In addition, we
posted official agency guidance, including responses to frequently
asked questions, on our Web site to implement the ASP provisions in
accordance with section 1847A(c)(5)(C) of the Act.
We intend to publish a final rule addressing comments on the April
6, 2004 IFC in the near future. We may publish the final rule as part
of this rulemaking, or we may publish a separate final rule, in either
case after the close of the comment period for this proposed rule.
Because the comments received during the comment period in response to
the April 6, 2004 IFC were made during the initial months of
manufacturers' experience with calculating and reporting ASPs and prior
to publication of payment amounts based on the ASP methodology, we
believe there is good reason to provide the public with the opportunity
for additional comments based on what is now more than a year and a
half of experience with the ASP reporting requirements. Therefore, we
seek comments on the ASP reporting provisions in the April 6, 2004 IFC.
In particular, we seek comments on the issues discussed in the sections
below.
We note that we received many comments in response to the April 6,
2004 interim final rule on the use and potential impacts of the ASP
payment methodology. As noted above, we are reopening the comment
period on the issue of ASP reporting. Thus, comments about the use or
appropriateness of the ASP payment methodology are outside the scope of
this rulemaking and the ASP reporting rule (CMS-1380-IFC). Therefore,
comments about the appropriateness and use of 106 percent of ASP as the
basis for the Medicare Part B drug payment rates will be outside the
scope of the comments considered for the final ASP reporting rule we
are preparing to publish.
a. Fees Not Considered Price Concessions
Section 1847A(c)(5)(A) of the Act states that the ASP is to be
calculated by the manufacturer on a quarterly basis. As a part of that
calculation, manufacturers are to take into account price concessions
such as--
Volume discounts;
Prompt pay discounts;
Cash discounts;
Free goods that are contingent on any purchase
requirement;
Chargebacks; and
Rebates (other than rebates under the Medicaid drug rebate
programs).
If the data on these price concessions are lagged, then the
manufacturer is required to estimate costs attributable to these price
concessions using the required ratio methodology as specified in 42 CFR
part 414, subpart J, Sec. 414.804(a)(3).
Among the comments from drug manufacturers and national
associations representing wholesalers and distributors, we received
requests for clarification and detailed guidance on the treatment of
administrative fees, service fees and fees paid to pharmacy benefit
managers (PBMs) in the ASP calculation. We posted guidance on our Web
site (http://questions.cms.hhs.gov/cgi-bin/ cmshhs.cfg/php/enduser/
std--adp.php?p --faqid=3323&p-- created=1095344721& p--sid=Ghuscgci&p--
accessibility=0& p--lva=&p-- sp=cF9zcmNoPTEmcF9zb3J
0X2J5PSZwX2dyaWRzb3J0 PSZwX3Jvd19jbnQ9M zEmcF9wcm9kcz04LD U2LDYwNCZwX2N
hdHM9JnBfc HY9My42MDQ mcF9jdj0mcF9zZWFyY 2hfdHlwZT1hb nN3ZXJzLnNl
YXJjaF9ubCZw X3BhZ2U9MQ**& p--li=& p--topview=1) to clarify that in the
absence of specific guidance in the Social Security Act or Federal
regulations, the manufacturer may make reasonable assumptions in its
calculations of ASP, consistent with the general requirements and
intent of the Social Security Act, Federal regulations, and its
customary business practices. These assumptions should be submitted
along with the ASP data. In December 2004, we posted further guidance
on our website addressing service fees and administrative fees paid to
buyers (http://questions.cms.hhs.gov/ cgi-bin/cmshhs.cfg/php/enduser/
std--adp.php?p-- faqid=3318&p-- created=1095343992& p--sid=a2qUcgci
&p--accessibility=0&p --lva=&p --sp=cF9zcmNoPTEmc F9zb3J0X2J5PSZ
wX2dyaWRzb3J0PSZ wX3Jvd19jbnQ9Mz EmcF9wcm9kcz04LDU2LDY wNCZwX2NhdHM9
[[Page 49001]]
JnBfcHY9 My42MDQmcF9jdj0 mcF9zZWFyY2hfdH lwZT1hbnN3ZXJzLnNlYXJ
jaF9ubCZwX3BhZ2U9MQ **&p--li=&p --topview=1 and http://questions.cms.hhs.gov/
cgi-bin/cmshhs.cfg/php/ enduser/std--adp.
php?p--faqid=4136&p --created=1109786814 &p--sid=bxw-cgci &p--
accessibility=0 &p--lva=& p--sp=cF9zcmNoPTE mcF9zb3J0X2J5PSZwX2
dyaWRzb3J0PSZwX3Jvd19jbn Q9MzEmcF9wcm9kcz04LDU2LDY
wNCZwX2NhdHM9JnBfcHY9 My42MDQmcF9jdj0mcF9zZWFyY2hfd
HlwZT1hbnN3ZXJzLnNlYXJjaF9 ubCZwX3BhZ2U9MQ**&p --li=&p--topview=1).
On July 6, 2005, we restated our guidance on service fees in the
preamble of the Competitive Acquisition of Outpatient Drugs and
Biologicals Under Part B (CAP) interim final rule with comment (70 FR
39069). Subsequently, we have received requests for clarification on
how fees paid to entities such as group purchasing organizations (GPOs)
or PBMs must be treated for purposes of the ASP calculation.
We propose to further clarify in the final ASP reporting rule that,
beginning with the ASP reporting for sales during the first calendar
quarter of 2007, bona fide service fees that are paid by a manufacturer
to an entity, whether or not the entity takes title to the drug, are
not considered price concessions under Sec. 414.804(a)(2) insofar as,
and to the extent that, they satisfy the definition of a bona fide
service fee that we are proposing at Sec. 414.802. In Sec. 414.802,
we propose to define bona fide service fees as fees paid by a
manufacturer to an entity that represent fair market value for a bona
fide, itemized service actually performed on behalf of the manufacturer
that the manufacturer would otherwise perform (or contract for) in the
absence of the service arrangement, and that are not passed on, in
whole or in part, to a client or customer of an entity, whether or not
the entity takes title to the drug. Our current guidance, which
provides that bona fide service fees means expenses that would have
generally been paid for by the manufacturer at the same rate had these
services been performed by other entities, would continue unless we
provide an alternative approach as discussed below. Further, we propose
to clarify in the final ASP reporting rule that fees, including service
fees, administrative fees and other fees, paid to GPOs or PBMs are not
considered price concessions under Sec. 414.804(a)(2) insofar as, and
to the extent that, they satisfy the definition of a bona fide service
fee that we have proposed at Sec. 414.802.
In comments on the April 6, 2004 IFC, groups representing
wholesalers, distributors and specialty pharmacies provided some
insight into the types of activities that are performed in the
distribution of drugs. These commenters suggested that costs for
handling, storage, inventory reporting, shipping, receiving, patient
education, disease management and data should be borne by manufacturers
and be excluded from the ASP calculation as bona fide services.
However, these commenters did not provide detailed information about
whether and how one would determine the extent to which these
activities are bona fide services actually performed on behalf of the
manufacturer or otherwise.
Because the scope of appropriate services may vary across
categories of drugs, we are considering providing guidance on the types
of services that may qualify as bona fide services for purposes of the
ASP calculation. We are also considering providing further guidance on
or revising the approach or methodology manufacturers must use to
determine the fair market value of bona fide services performed on
their behalf and whether the service fee paid was passed on in whole or
in part. In either case, we may implement our policy through rulemaking
or through program instruction or other guidance (consistent with our
authority under section 1847A(c)(5)(C) of the Act).
We seek comments on the specific types of services entities perform
on behalf of manufacturers that a manufacturer would otherwise perform
(or contract for) and the necessity of those services in the efficient
distribution of drugs. We also seek comments on activities that should
not be considered bona fide services performed on behalf of
manufacturers. To better understand which services may be considered
bona fide services performed on behalf of the manufacturer that the
manufacturer would otherwise perform (or contract for), we seek to
understand the bona fide services that may be appropriate for all or
specific types of products, as well as the specific services that may
be applicable to unique products or circumstances. We also seek to
understand the costs and relative costs of services performed on behalf
of manufacturers.
To exclude a bona fide service fee from the ASP calculation, a
manufacturer must determine whether the fee paid to an entity
represents fair market value for a bona fide service actually performed
on behalf of the manufacturer that the manufacturer would otherwise
perform (or contract for), and that the fee is not passed on, in whole
or in part, to a client or customer of the entity. Our current guidance
provides that bona fide service fees means expenses that would have
generally been paid for by the manufacturer at the same rate had these
services been performed by other entities. We seek comments on
appropriate additional guidance or alternative methods for determining
fair market value for purposes of identifying bona fide service fees
that are excluded from the calculation of ASP, as well as comments on
whether, and the extent to which, fees tied to performance of a
service, fixed fee, revenue generated by product sales, or other basis
may represent fair market prices for purposes of identifying bona fide
service fees that are excluded from the calculation of ASP. In
addition, we seek comments on the appropriate methods for determining
whether a fee is passed on in whole or in part. We also seek comments
on how Medicare's guidance on the treatment of service fees for ASP
calculation purposes may differ with the treatment of service fees for
financial accounting or other purposes, and any implications that this
may have for manufacturers.
b. Estimation Methodology for Lagged Exempted Sales
Section 1847A(c)(2) of the Act requires manufacturers to exclude
from the calculation of ASP those sales that are exempt from the
Medicaid best price (BP) calculation (for example, Federal sales, sales
to State pharmacy assistance programs, sales to a prescription drug
plan for use under Medicare Part D). In the comments on the April 6,
2004 IFC, commenters requested more guidance on the method
manufacturers should use to exclude exempted sales that are known on a
lagged basis. Manufacturers identify exempted sales based on direct
sales and through chargeback and rebate data that may not be
sufficiently available at the time the ASP is calculated. In the
absence of specific guidance on how to account for lagged exempted
sales (that is, exempted sales identified through chargeback or rebate
processes), manufacturers have relied upon assumptions in accordance
with their customary business practices to develop their approach for
excluding these sales from the ASP calculation. In our work with
manufacturers that submit ASP data, we understand that some
manufacturers have used a ratio methodology for estimating exempted
sales known on a lagged basis which is similar to the ratio methodology
manufacturers must use to estimate
[[Page 49002]]
price concessions known on a lagged basis.
To establish a uniform approach, in Sec. 414.804(a)(4), we propose
to require, in the final ASP reporting rule, that all manufacturers use
a 12-month (or less, if applicable) rolling average ratio methodology
to estimate exempted sales known on a lagged basis (through chargebacks
or rebates) in order to more accurately exclude these sales from the
ASP calculation. Specifically, for exempted sales known on a lagged
basis, the manufacturer sums the lagged exempted sales for the most
recent 12-month period available (or the number of months the NDC has
been sold for NDCs with less than 12 months of sales, except for
redesignated NDCs as described in section d below). The manufacturer
then calculates a percentage using this summed amount as the numerator
and the sales (the number of units after non-lagged exempted sales have
been subtracted from total sales) for the same period (12 months or
less, if applicable) as the denominator. The result is a rolling
average percentage estimate for lagged exempted sales that is applied
to the sales (the number of units after non-lagged exempted sales have
been subtracted from total sales) for the quarter being reported. The
product that results from multiplying the rolling average percentage
estimate of lagged exempted sales and sales (the number of units after
non-lagged exempted sales have been subtracted from total sales)
determines the number of lagged exempted sales (in units) to be
excluded from the denominator of the ASP calculation. Manufacturers
must make a corresponding adjustment to the numerator of the ASP
calculation to ensure that the total in dollars for the reporting
quarter does not include revenue related to lagged exempted sales
excluded from the denominator using the proposed estimation
methodology. Further, manufacturers must remove the dollar value of
lagged exempted sales from their estimates of lagged price concessions
by subtracting the dollar value of estimated lagged exempted sales from
the denominator as specified in Sec. 414.804(a)(3)(i).
Our proposed methodology for excluding lagged exempted sales is
similar to the methodology manufacturers are required to use to
estimate price concessions known on a lagged basis, and was recommended
by manufacturers. We believe requiring similar methods to estimate both
lagged exempted sales and lagged price concessions is reasonable and
reduces potential errors in the manufacturers' ASP calculations, while
ensuring that exempted sales are appropriately removed from the ASP
calculation. In addition, using an estimation methodology to remove
lagged exempted sales reduces the likelihood of quarter to quarter
variations in the ASP.
We seek comments on the proposed methodology for excluding exempted
sales known on a lagged basis from the ASP calculation and estimate of
lagged price concessions. We also solicit suggestions on appropriate
alternative methodologies that may be less complex.
c. Nominal Sales
Section 1847A(c)(2)(B) of the Act requires manufacturers to exclude
from the ASP calculation sales that are merely nominal in amount, as
applied for purposes of section 1927(c)(1)(C)(ii)(III) of the Act,
except as the Secretary may otherwise provide. Effective January 1,
2007, the DRA (Pub. L. 109-171) modifies section 1927(c)(1)(C)(ii)(III)
of the Act. Limitations on nominal sales have been added in new section
1927(c)(1)(D) of the Act. The DRA also modified the average
manufacturer price (AMP) calculation and frequency of AMP reporting.
Therefore, we are proposing to clarify the method manufacturers must
follow, beginning in 2007, to identify nominal sales for ASP reporting
purposes and to exclude nominal sales from the calculation of the ASP.
We also are seeking comments on whether we should establish an
alternative definition of nominal sales for ASP purposes.
In the preamble to the ASP reporting interim final rule, we stated
sales to an entity that are nominal in amount are defined in the
Medicaid drug rebate agreement (see sample agreement at http://www.cms.hhs.gov/MedicaidDrugRebateProgram/downloads/rebateagreement.pdf
). That is, for ASP purposes, a nominal sale is a
sale at a price less than 10 percent of the AMP in the same quarter for
which the AMP is computed. Effective January 1, 2007, the DRA revises
the AMP calculation (to omit customary prompt pay discounts extended to
wholesalers), added a monthly AMP reporting requirement, and
established limitations on nominal sales (only sales to certain
entities may qualify as nominal sales). Section 1927(c)(1)(D) of the
Act limits the nominal sales exclusion to nominal sales made to the
following entities:
340B covered entities as described in section 340B(a)(4)
of the Public Health Services Act (PHS Act).
Intermediate care facilities for the mentally retarded
(ICFs/MR).
State-owned or operated nursing facilities.
Any other facility or entity that the Secretary determines
is a safety net provider to which sales of such drugs at a nominal
price would be appropriate based on the factors described in section
1927(c)(1)(D)(ii) of the Act.
Because section 1847A(c)(2)(B) of the Act requires manufacturers to
exclude from the ASP calculation sales that are merely nominal in
amount, as applied for purposes of section 1927(c)(1)(C)(ii)(III) of
the Act, except as the Secretary may otherwise provide, the DRA changes
will have implications for ASP reporting beginning January 1, 2007
(unless we provide an alternative policy for determining nominal sales
as permitted under section 1847A(c)(2)(B) of the Act). One implication
is that the limitations set forth in section 1927(c)(1)(D) of the Act
will continue the exclusion of nominal sales to certain entities while
requiring that sales to entities not identified under section
1927(c)(1)(D) of the Act are included in the ASP calculation, even if
such sales are at very low prices. Another implication is the AMP
calculation will exclude customary prompt pay discounts extended to
wholesalers, yet prompt pay discounts will continue to be a type of
price concession that manufacturers must include in their ASP
calculations. The change in treatment of customary prompt pay discounts
extended to wholesalers in the AMP calculation may result in a higher
number of sales that are at less than 10 percent of the AMP than in
past ASP reporting periods (notwithstanding the new limitation on what
is considered a nominal sale under section 1927(c)(1)(D) of the Act).
Still another implication is that the frequency of AMP reporting will
include monthly reporting; thus, for ASP purposes, there is further
need to clarify how nominal sales are to be identified in 2007.
Separate Medicaid rulemaking will address the DRA provisions related to
AMP reporting.
We believe the DRA modifications to section 1927 of the Act noted
above will have minimal effect on reported ASPs. We would expect that
the exclusion of customary prompt pay discounts extended to wholesalers
from AMP would lead to a modest increase in AMP, and as a result a
modest increase in the number of sales that would qualify as nominal
under the current ASP reporting regulations. At the same time, we
anticipate that the limitation on nominal sales in section
1927(c)(1)(D) of the Act will result in a modest reduction in the
number of sales that qualify as nominal sales for
[[Page 49003]]
purposes of ASP reporting because we believe that the entities outlined
in section 1927(c)(1)(D) of the Act generally represent the types of
entities to which manufacturers may offer sales at a nominal amount.
Consequently, we would expect these two countervailing changes would
have a minimal overall impact on nominal sales that would be excluded
from the ASP calculation. For 2007 and beyond, we propose to revise
Sec. 414.804(a)(4) to clarify that manufacturers must continue to use
the Medicaid threshold (less than 10 percent of AMP) to determine
nominal sales that are excluded (subject to the limitations in section
1927(c)(1)(D) of the Act) from the ASP calculation. Further, we propose
that, in identifying nominal sales, manufacturers must use the AMP for
the calendar quarter that is the same calendar quarter for the ASP
reporting period. For these reasons, we are proposing to continue the
current methodology for identifying and excluding nominal sales (that
is, sales that are exempt from the Medicaid best price calculation
under section 1927(c)(1)(C)(ii)(III) of the Act) from the
manufacturer's calculation of the ASP. We believe this approach helps
maintain continuity in the ASP calculation and minimizes manufacturers'
reporting burden, as Medicare continues to follow the Medicaid approach
for identifying nominal sales and manufacturers can use a single method
for identifying nominal sales for both ASP and AMP purposes.
We seek comments on our proposal to continue use of the AMP as the
basis for identifying nominal sales excluded from the ASP calculation
and on whether an alternative threshold for identifying nominal sales
for ASP calculation purposes is necessary or desirable to ensure the
accuracy of the ASP payment methodology. Specifically, we seek comments
on whether sales at less than 10 percent of the ASP (instead of the
AMP) should be used to identify nominal sales for ASP purposes (with
the new requirement in section 1927(c)(1)(D) of the Act allowing only
sales to certain entities to be considered nominal sales still being
applicable). We also seek comments on our belief that the new
limitations on nominal sales and change to the AMP calculation will
have minimal impact on reported ASPs.
Subsequent to the April 6, 2004 IFC, we received requests for
clarification on a technical aspect related to the identification of
nominal sales. Specifically, some manufacturers have asked whether
nominal sales are identified by performing a series of calculations
once or whether the manufacturer repeats the series of calculations
until no remaining ASP eligible sales are below the nominal threshold.
Consistent with current Medicaid reporting, for 2005 and 2006,
manufacturers must identify nominal sales by performing the following
steps once:
The manufacturer calculates the AMP for the reporting
quarter to identify the dollar amount that represents 10 percent of the
AMP for that reporting period.
The manufacturer then identifies sales below this am