[Federal Register: December 31, 2002 (Volume 67, Number 251)]
[Rules and Regulations]
[Page 79965-80184]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr31de02-21]
[[Page 79965]]
-----------------------------------------------------------------------
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Parts 410, 414, and 485
Medicare Program; Revisions to Payment Policies Under the Physician Fee
Schedule for Calendar Year 2003 and Inclusion of Registered Nurses in
the Personnel Provision of the Critical Access Hospital Emergency
Services Requirement for Frontier Areas and Remote Locations; Final
Rule
[[Page 79966]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 414, and 485
[CMS-1204-FC]
RIN 0938-AL21
Medicare Program; Revisions to Payment Policies Under the
Physician Fee Schedule for Calendar Year 2003 and Inclusion of
Registered Nurses in the Personnel Provision of the Critical Access
Hospital Emergency Services Requirement for Frontier Areas and Remote
Locations
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: This final rule with comment period refines the resource-based
practice expense relative value units (RVUs) and makes other changes to
Medicare Part B payment policy. In addition, as required by statute, we
are announcing the physician fee schedule update for CY 2003.
The update to the physician fee schedule occurs as a result of a
calculation methodology specified by law. That law required the
Department to set annual updates based in part on estimates of several
factors. Although subsequent after-the-fact data indicate that actual
increases were different to some degree from earlier estimates, the law
does not permit those estimates to be revised. A subsequent law
required estimates to be revised for FY 2000 and beyond.
Although we have exhaustively examined opportunities for a
different interpretation of law that would allow us to correct the flaw
in the formula administratively, current law does not permit such an
interpretation. Accordingly, without Congressional action to address
the current legal framework, the Department is compelled to announce
herein a physician fee schedule update for CY 2003 of -4.4 percent.
Because the Department would adopt a change in the formula that
determines the physician update if the law permitted it, we have
examined how proper adjustments to past data could result in a positive
update. The Department believes that revisions of estimates used to
establish the sustainable growth rates (SGR) for fiscal years (FY) 1998
and 1999 and Medicare volume performance standards (MVPS) for 1990-1996
would, under present calculations, result in a positive update.
The Department intends to work closely with Congress to develop
legislation that could permit a positive update, and hopes that such
legislation can be passed before the negative update takes effect.
Because the Department wishes to change the update promptly in the
event that Congress provides the Department legal authority to do so,
we are requesting comments regarding how physician fee schedule rates
could and should be recalculated prospectively in the event that
Congress provides the Department with legal authority to revise
estimates used to establish the sustainable growth rates (SGR) and for
1998 and 1999 and the NVPS for 1990-1996.
The other policy changes concern: the pricing of the technical
component for positron emission tomography (PET) scans, Medicare
qualifications for clinical nurse specialists, a process to add or
delete services to the definition of telehealth, the definition for ZZZ
global periods, global period for surface radiation, and an endoscopic
base for urology codes. In addition, this rule updates the codes
subject to physician self-referral prohibitions. We are expanding the
definition of a screening fecal-occult blood test and are modifying our
regulations to expand coverage for additional colorectal cancer
screening tests through our national coverage determination process. We
also make revisions to the sustainable growth rate, the anesthesia
conversion factor, and the work values for some gastroenterologic
services.
We are making these changes to ensure that our payment systems are
updated to reflect changes in medical practice and the relative value
of services.
This final rule also clarifies the enrollment of physical and
occupational therapists as therapists in private practice and clarifies
the policy regarding services and supplies incident to a physician's
professional services. In addition, this final rule discusses physical
and occupational therapy payment caps and makes technical changes to
the definition of outpatient rehabilitation services.
In addition, we are finalizing the calendar year (CY) 2002 interim
RVUs and are issuing interim RVUs for new and revised procedure codes
for calendar year (CY) 2003.
As required by the statute, we are announcing that the physician
fee schedule update for CY 2003 is -4.4 percent, the initial estimate
of the sustainable growth rate for CY 2003 is 7.6 percent, and the
conversion factor for CY 2003 is $34.5920.
This final rule will also allow registered nurses (RNs) to provide
emergency care in certain critical access hospitals (CAHs) in frontier
areas (an area with fewer than six residents per square mile) or remote
locations (locations designated in a State's rural health plan that we
have approved.) This policy applies if the State, following
consultation with the State Boards of Medicine and Nursing, and in
accordance with State law, requests that RNs be included, along with a
doctor of medicine or osteopathy, a physician's assistant, or a nurse
practitioner with training or experience in emergency care, as
personnel authorized to provide emergency services in CAHs in frontier
areas or remote locations.
DATES: Effective date: This rule is effective on March 1, 2003.
Comment date: We will consider comments on the definition of a
screening fecal-occult blood test, the critical access hospital
emergency services requirement, the physician self-referral designated
health services identified in Table 10, the interim work RVUs for
selected procedure codes identified in Addendum C, the practice expense
direct cost inputs, and on how physician fee schedule rates could and
should be recalculated prospectively in the event that Congress
provides the Department with legal authority to revise estimates used
to establish SGRs for 1998 and 1999 and the MVPS for 1990-1996, if we
receive them at the appropriate address, as provided in the addresses
section, no later than 5 p.m. on March 3, 2003.
ADDRESSES: In commenting, please refer to file code CMS-1204-FC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission. 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-1204-FC, P.O. Box 8013, Baltimore, MD 21244-8013.
Please allow sufficient time for us to receive mailed comments on
time in the event of delivery delays.
If you prefer, you may deliver (by hand or courier) your written
comments (one original and two copies) to one of the following
addresses: Room 445-G, Hubert H. Humphrey Building, 200 Independence
Avenue, SW., Washington, DC 20201, or Room C5-14-03, 7500 Security
Boulevard, Baltimore, MD 21244-8013.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are
[[Page 79967]]
encouraged to leave their comments in the CMS drop slots located in the
main lobby of the building. A stamp-in clock is available if you wish
to retain 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 could be considered late.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Marc Hartstein, (410) 786-4539, or
Stephanie Monroe (410) 786-6864 (for issues related to resource-based
practice expense relative value units).
Jim Menas, (410) 786-4507 (for issues related to anesthesia).
Marc Hartstein, (410) 786-4539 (for issues related to the
sustainable growth rate).
Gail Addis, (410) 786-4522 (for issues related to PET scans).
Craig Dobyski, (410) 786-4584 (for issues related to telehealth).
Terri Harris, (410) 786-6830 or Pam West, (410) 786-2302 (for
issues related to physical and occupational therapy).
William Larson, (410) 786-4639 (for issues related to fecal-occult
blood test).
Regina Walker-Wren, (410) 786-9160 (for issues related to clinical
nurse specialists).
Dorothy Shannon, (410) 786-3396 (for issues related to services and
supplies incident to a physician's professional services).
Joanne Sinsheimer, (410) 786-4620 (for issues related to updates to
the list of certain services subject to the physician self-referral
prohibitions).
Mary Collins, (410) 786-3189 (for issues related to the critical
access hospital emergency services requirement).
Diane Milstead, (410) 786-1101 (for all other issues).
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: Comments
received timely will be available for public inspection as they are
recorded and processed, generally beginning approximately 4 weeks after
the publication of the 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 (410)
786-7197.
Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also be placed by
calling the order desk at (202) 512-1800 (or toll-free at 1-888-293-
6498) or by faxing to (202) 512-2250. The cost for each copy is $10. As
an alternative, you can view and photocopy the Federal Register
document at most libraries designated as Federal Depository Libraries
and at many other public and academic libraries throughout the country
that receive the Federal Register.
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. The Web site address is: http://www.access.gpo.gov/nara/index.html
.
Information on the physician fee schedule can be found on our
homepage. You can access this data by using the following directions:
1. Go to the CMS homepage (http://www.cms.hhs.gov).
2. Click on ``Medicare.''
3. Select Medicare Payment Systems.
4. Select Physician Fee Schedule.
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 XIII.
Table of Contents
I. Background
A. Legislative History
B. Published Changes to the Fee Schedule
C. Components of the Fee Schedule Payment Amounts
D. Development of the Relative Value Units
E. Delay in the Effective Date
II. Specific Provisions for Calendar Year 2003
A. Resource-Based Practice Expense Relative Value Units
B. Anesthesia Issues
C. Pricing of Technical Components (TC) for Positron Emissions
Tomography (PET) Scans
D. Enrollment of Physical and Occupational Therapists as
Therapists in Private Practice
E. Clinical Social Worker Services
F. Medicare Qualifications for Clinical Nurse Specialists
G. Process to Add or Delete Services to the Definition of
Telehealth
H. Definition for ZZZ Global Periods
I. Change in Global Period for CPT Code 77789 (Surface
Application of Radiation Source)
J. Technical Change for Sec. 410.61(d)(1)(iii) Outpatient
Rehabilitation Services
K. New HCPCS G-Codes From June 28, 2002 Proposed Rule
L. Endoscopic Base for Urology Codes
M. Physical Therapy and Occupational Therapy Caps
III. Other Issues
A. Definition of a Screening Fecal-Occult Blood Test
B. Clarification of Services and Supplies Incident To a
Physician's Professional Services: Conditions
C. Five-Year Review of Gastroenterology Codes
D. Critical Access Hospital Emergency Services Requirements
IV. Refinement of Relative Value Units for Calendar Year 2003 and
Response to Public Comments on Interim Relative Value Units for 2002
V. Update to the Codes for Physician Self-Referral Prohibition
VI. Physician Fee Schedule Update for Calendar Year 2003
VII. Allowed Expenditures for Physicians' Services and the
Sustainable Growth Rate
A. Medicare Sustainable Growth Rate
B. Physicians' Services
C. Provisions Related to the Sustainable Growth Rate
D. Preliminary Estimate of the Sustainable Growth Rate for 2003
E. Sustainable Growth Rate for 2002
F. Sustainable Growth Rate for 2001
G. Calculation of 2003, 2002, and 2001 Sustainable Growth Rates
VIII. Anesthesia and Physician Fee Schedule Conversion Factors for
CY 2003
IX. Provisions of the Final Rule
X. Waiver of Proposed Rulemaking for Definition of a Screening
Fecal-Occult Blood Test and Critical Access Hospital Emergency
Services Requirement
XI. Collection of Information Requirements
XII. Response to Comments
XIII. Regulatory Impact Analysis
Addendum A--Explanation and Use of Addendum B
Addendum B--2003 Relative Value Units and Related Information Used
in Determining Medicare Payments for 2003
Addendum C--Codes with Interim RVUs
Addendum D--2003 Geographic Practice Cost Indices by Medicare
Carrier and Locality
Addendum E--Updated List of CPT/HCPCS Codes Used to Describe Certain
Designated Health Services Under the Physician Self-Referral
Provision
Addendum F--Codes Refined by the PEAC for 2003
In addition, because of the many organizations and terms to which
we refer by acronym in this proposed rule, we are listing these
acronyms and their corresponding terms in alphabetical order below:
AMA American Medical Association
BBA Balanced Budget Act of 1997
[[Page 79968]]
BBRA Balanced Budget Refinement Act of 1999
CAH Critical Access Hospitals
CF Conversion factor
CFR Code of Federal Regulations
CMS Centers for Medicare & Medicaid Services
CNS Clinical Nurse Specialist
CPT [Physicians'] Current Procedural Terminology [4th Edition,
2002, copyrighted by the American Medical Association]
CPEP Clinical Practice Expert Panel
CRNA Certified Registered Nurse Anesthetist
E/M Evaluation and management
GPCI Geographic practice cost index
HCPCS Healthcare Common Procedure Coding System
HHA Home health agency
HHS [Department of] Health and Human Services
IDTFs Independent Diagnostic Testing Facilities
MCM Medicare Carrier Manual
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MSA Metropolitan Statistical Area
NCD National Coverage Decision
PC Professional Component
PEAC Practice Expense Advisory Committee
PET Positron Emission Tomography
PPS Prospective payment system
RUC [AMA's Specialty Society] Relative [Value] Update Committee
RVU Relative value unit
SGR Sustainable growth rate
SMS [AMA's] Socioeconomic Monitoring System
SNF Skilled Nursing Facility
TC Technical Component
I. Background
A. Legislative History
Since January 1, 1992, Medicare has paid for physicians' services
under section 1848 of the Social Security Act (the Act), ``Payment for
Physicians'' Services.'' This section provides for three major
elements--(1) A fee schedule for the payment of physicians' services;
(2) limits on the amounts that nonparticipating physicians can charge
beneficiaries; and (3) a sustainable growth rate for the rates of
increase in Medicare expenditures for physicians' services. The Act
requires that payments under the fee schedule 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, and
malpractice expense. Section 1848(c)(2)(B)(ii)(II) of the Act provides
that adjustments in RVUs may not cause total physician fee schedule
payments to differ by more than $20 million from what they would have
been had the adjustments not been made. If adjustments to RVUs cause
expenditures to change by more than $20 million, we must make
adjustments to preserve budget neutrality.
B. Published Changes to the Fee Schedule
In the July 2000 proposed rule, (65 FR 44177), we listed all of the
final rules published through November 1999. In the August 2001
proposed rule (66 FR 40372) we discussed the November 2000 final rule
relating to the updates to the RVUs and revisions to payment policies
under the physician fee schedule.
In the November 2001 final rule with comment period (66 FR 55246),
we revised the policy for--resource-based practice expense RVUs;
services and supplies incident to a physician's professional service;
anesthesia base unit variations; recognition of CPT tracking codes; and
nurse practitioners, physician assistants, and clinical nurse
specialists performing screening sigmoidoscopies. We also addressed
comments received on the June 8, 2001 proposed notice (66 FR 31028) for
the 5-year review of work RVUs and finalized these work RVUs. In
addition, we acknowledged comments received in response to a discussion
of modifier-62, which is used to report the work of co-surgeons. The
November 2001 final rule also updated the list of services that are
subject to the physician self-referral prohibitions in order to reflect
CPT and Healthcare Common Procedure Coding System (HCPCS) code changes
that were effective January 1, 2002. These revisions ensure that our
payment systems are updated to reflect changes in medical practice and
the relative value of services.
The Medicare, Medicaid, and State Child Health Insurance Program
(SCHIP) Benefits Improvement and Protection Act of 2000 (Pub. L. 106-
554) (BIPA) modernized the mammography screening benefit and authorized
payment under the physician fee schedule effective January 1, 2002. It
provided for biennial screening pelvic examinations for certain
beneficiaries and expanded coverage for screening colonoscopies to all
beneficiaries effective July 1, 2001. It provided for annual glaucoma
screenings for high-risk beneficiaries and established coverage for
medical nutrition therapy services for certain beneficiaries effective
January 1, 2002. It expanded payment for telehealth services effective
October 1, 2001; required certain Indian Health Service providers to be
paid for some services under the physician fee schedule effective July
1, 2001; and revised the payment for certain physician pathology
services effective January 1, 2001. This final rule conformed our
regulations to reflect these statutory provisions.
The final rule also announced the calendar year 2002 physician fee
schedule conversion factor (CF) of $36.1992.
C. Components of the Fee Schedule Payment Amounts
Under the formula set forth in section 1848(b)(1) of the Act, the
payment amount for each service paid under the physician fee schedule
is the product of three factors--(1) A nationally uniform relative
value for the service; (2) a geographic adjustment factor (GAF) for
each physician fee schedule area; and (3) a nationally uniform
conversion factor (CF) for the service. The CF converts the relative
values into payment amounts.
For each physician fee schedule service, there are three relative
values--(1) An RVU for physician work; (2) an RVU for practice expense;
and (3) an RVU for malpractice expense. For each of these components of
the fee schedule, there is a geographic practice cost index (GPCI) for
each fee schedule area. The GPCIs reflect the relative costs of
practice expenses, malpractice insurance, and physician work in an area
compared to the national average for each component.
The general formula for calculating the Medicare fee schedule
amount for a given service in a given fee schedule area can be
expressed as:
Payment = [(RVU work x GPCI work) + (RVU practice expense x GPCI
practice expense) + (RVU malpractice x GPCI malpractice)] x CF
The CF for calendar year (CY) 2003 appears in section VIII. The
RVUs for CY 2003 are in Addendum B. The GPCIs for CY 2003 can be found
in Addendum D.
Section 1848(e) of the Act requires us to develop GAFs for all
physician fee schedule areas. The total GAF for a fee schedule area is
equal to a weighted average of the individual GPCIs for each of the
three components of the service. In accordance with the statute,
however,
[[Page 79969]]
the GAF for the physician's work reflects one-quarter of the relative
cost of physician's work compared to the national average.
D. Development of the Relative Value System
1. Work Relative Value Units
Approximately 7,500 codes represent services included in the
physician fee schedule. The 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 work RVUs for
most codes in a cooperative agreement with us. In constructing the
vignettes for the original RVUs, Harvard worked with expert panels of
physicians and obtained input from physicians from numerous
specialties.
The RVUs for radiology services were based on the American College
of Radiology (ACR) relative value scale, which we integrated into the
overall physician fee schedule. The RVUs for anesthesia services were
based on RVUs from a uniform relative value guide. We established a
separate CF for anesthesia services, and we continue to recognize time
as a factor in determining payment for these services. As a result,
there is a separate payment system for anesthesia services.
2. Practice Expense and Malpractice Expense Relative Value Units
Section 1848(c)(2)(C) of the Act required that the practice expense
and malpractice expense RVUs equal the product of the base allowed
charges and the practice expense and malpractice percentages for the
service. Base allowed charges are defined as the national average
allowed charges for the service furnished during 1991, as estimated
using the most recent data available. For most services, we used 1989
charge data aged to reflect the 1991 payment rules, since those were
the most recent data available for the 1992 fee schedule.
Section 121 of the Social Security Act Amendments of 1994 (Pub. L.
103-432), enacted on October 31, 1994, required us to develop a
methodology for a resource-based system for determining practice
expense RVUs for each physician service. As amended by the BBA, section
1848(c) required the new payment methodology to be phased in over 4
years, effective for services furnished in 1999, with resource-based
practice expense RVUs becoming fully effective in 2002. The BBA also
required us to implement resource-based malpractice RVUs for services
furnished beginning in 2000.
E. Delay in the Effective Date
On November 5, 2002 we published a notice (67 FR 67319), delaying
the publication of this final rule due to concerns about the data used
to establish the physician fees and the need to further assess the
accuracy of the data. We have concluded our review and are moving
forward with our proposals unless otherwise indicated in this preamble.
This rule is effective on March 3, 2003.
II. Specific Provisions for Calendar Year 2003
In response to the publication of the June 28, 2002 proposed rule,
(67 FR 43846), and the interim final rule, (67 FR 43555), we received
approximately 236 comments. We received comments from individual
physicians, health care workers, and professional associations and
societies. The majority of comments addressed the proposals related to
the enrollment of therapists, anesthesia services and the SGR.
The proposed rule discussed policies that affected the number of
RVUs on which payment for certain services would be based. Certain
changes implemented through this final rule are subject to the $20
million limitation on annual adjustments contained in section
1848(c)(2)(B)(ii)(II) of the Act.
After reviewing the comments and determining the policies we would
implement, we have estimated the costs and savings of these policies
and added those costs and savings to the estimated costs associated
with any other changes in RVUs for 2003. We discuss in detail the
effects of these changes in the Regulatory Impact Analysis in section
XIII.
For the convenience of the reader, the headings for the policy
issues correspond to the headings used in the June 28, 2002 proposed
rule. More detailed background information for each issue can be found
in the June 2002 interim final rule with comment period and the June
2002 proposed rule.
A. Resource-Based Practice Expense Relative Value Units
1. Resource-Based Practice Expense Legislation
Section 121 of the Social Security Act Amendments of 1994 (Pub. L.
103-432), enacted on October 31, 1994, required us to develop a
methodology for a resource-based system for determining practice
expense RVUs for each physician's service beginning in 1998. In
developing the methodology, we were to consider the staff, equipment,
and supplies used in providing medical and surgical services in various
settings. The legislation specifically required that, in implementing
the new system of practice expense RVUs, we apply the same budget-
neutrality provisions that we apply to other adjustments under the
physician fee schedule.
Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L.
105-33), enacted on August 5, 1997, amended section 1848(c)(2)(ii) of
the Act and delayed the effective date of the resource-based practice
expense RVU system until January 1, 1999. In addition, section 4505(b)
of the BBA provided for a 4-year transition period from charge-based
practice expense RVUs to resource-based RVUs. Further legislation
affecting resource-based practice expense RVUs was included in the
Medicare, Medicaid and State Child Health Insurance Program (SCHIP)
Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113),
enacted on November 29, 1999. Section 212 of the BBRA amended section
1848(c)(2)(ii) of the Act by directing us 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. These data would supplement the data we
normally collect in determining the practice expense component of the
physician fee schedule for payments in CY 2001 and CY 2002. (In the
1999 final rule (64 FR 59380), we extended, for an additional 2 years,
the period during which we would accept supplementary data.)
2. Current Methodology for Computing the Practice Expense Relative
Value Unit System
Effective with services furnished on or after January 1, 1999, we
established a new methodology for computing resource-based practice
expense RVUs that used the two significant sources of actual practice
expense data we have available--the Clinical Practice Expert Panel
(CPEP) data and the American Medical Association's (AMA) Socioeconomic
Monitoring System (SMS) data. The methodology was based on an
assumption that current aggregate specialty practice costs are a
reasonable way to establish initial estimates of relative resource
costs for physicians' services across specialties. The methodology
allocated these aggregate specialty practice costs to specific
procedures and, thus, is commonly called a ``top-down'' approach.
[[Page 79970]]
a. Major Steps
A brief discussion of the major steps involved in the determination
of the practice expense RVUs follows. (Please see the November 1, 2001
final rule (66 FR 55249) for a more detailed explanation of the top-
down methodology.)
Step 1--Determine the specialty specific practice expense per hour
of physician direct patient care. We used the AMA's SMS survey of
actual aggregate cost data by specialty to determine the practice
expenses per hour for each specialty. We calculated the practice
expenses per hour for the specialty by dividing the aggregate practice
expenses for the specialty by the total number of hours spent in
patient care activities. For the CY 2000 physician fee schedule, we
also used data from a survey submitted by the Society of Thoracic
Surgeons (STS) in calculating thoracic and cardiac surgeons' practice
expenses per hour. (Please see the November 1999 final rule (64 FR
59391) for additional information concerning acceptance of these data.)
For 2001, we used these STS data, as well as survey data submitted by
the American Society of Vascular Surgery and the Society of Vascular
Surgery. (Please see the November 2000 final rule (65 FR 65385) for
additional information on the acceptance of these data.)
Step 2--Create a specialty specific practice expense pool of
practice expense costs for treating Medicare patients. To calculate the
total number of hours spent treating Medicare patients for each
specialty, we used the physician time assigned to each procedure code
and the Medicare utilization data. We then calculated the specialty
specific practice expense pools by multiplying the specialty practice
expenses per hour by the total physician hours.
Step 3--Allocate the specialty specific practice expense pool to
the specific services performed by each specialty. For each specialty,
we divided the practice expense pool into two groups based on whether
direct or indirect costs were involved and used a different allocation
basis for each group.
(i) Direct costs--For direct costs (which include clinical labor,
medical supplies, and medical equipment), we used the procedure
specific CPEP data on the staff time, supplies, and equipment as the
allocation basis.
(ii) Indirect costs--To allocate the cost pools for indirect costs,
including administrative labor, office expenses, and all other
expenses, we used the total direct costs combined with the physician
fee schedule work RVUs. We converted the work RVUs to dollars using the
Medicare CF (expressed in 1995 dollars for consistency with the SMS
survey years).
Step 4--For procedures performed by more than one specialty, the
final procedure code allocation was a weighted average of allocations
for the specialties that perform the procedure, with the weights being
the frequency with which each specialty performs the procedure on
Medicare patients.
b. Other Methodological Issues
(i) Non-Physician Work Pool--For services with physician work RVUs
equal to zero (including those services with a technical and
professional component), we created a separate practice expense pool
using the average clinical staff time from the CPEP data and the ``all
physicians'' practice expense per hour.
We then used the adjusted 1998 practice expense RVUs to allocate
this pool to each service. Also, for all radiology services that are
assigned physician work RVUs, we used the adjusted 1998 practice
expense RVUs for radiology services as an interim measure to allocate
the direct practice expense cost pool for radiology.
(ii) Crosswalks for Specialties Without Practice Expense Survey
Data--Since many specialties identified in our claims data did not
correspond exactly to the specialties included in the SMS survey data,
it was necessary to crosswalk these specialties to the most appropriate
SMS specialty.
Because we believe that most physical therapy services furnished in
physicians' offices are performed by physical therapists, we cross-
walked all utilization for therapy services in the CPT 97000 series to
the physical and occupational therapy practice expense pool.
Comment: We received several comments objecting to our policy of
cross-walking all utilization for therapy services in the CPT 97000
series to the physical and occupational therapy practice expense pool.
One commenter stated that we are currently employing an arbitrary
utilization crosswalk methodology to determine the resource-based
practice expense RVUs for physical and occupational therapy. Commenters
also indicated that this departure from the standard methodology has
not been previously published for review and comment. In addition, one
commenter challenged our assumption that most therapy services billed
by physicians are furnished by therapists and stated that it is neither
supported by explanatory text nor accompanying data. The commenter
indicates that if we did not employ this assumption to change the
resource-based practice expense methodology only for therapy services,
payments for these services would be as much as 18 percent higher.
Other commenters stated that use of the ``altered methodology'' has
resulted in inappropriate reductions in payments for physical and
occupational therapy services. One commenter expressed concern that the
adjustment affects SNFs, home health agencies, outpatient hospital
departments and CORFs in addition to therapists in private practice.
Other commenters also objected to use of a crosswalk for physical and
occupational therapy services stating that the policy is inconsistent
with the ``top-down'' methodology that bases the final RVUs for a
service on a weighted average of the practice expenses of the
specialties that bill Medicare. Another commenter indicated that there
is no evidence to suggest that practice expenses for therapy services
provided by physicians are any different from the practice expenses of
all other services they provide. This commenter indicated that
physician specialties were also disadvantaged because all therapy
services that a specialty billed were not included in calculating the
practice expense pool for that specialty, thus decreasing the dollars
that could be allocated to the services performed by that specialty.
The commenters strongly recommended that we discontinue use of the
crosswalk and employ the standard top down methodology for computing
the 2003 PERVUs for the 97000 CPT code series.
Response: We carefully reviewed comments on this issue. As
indicated in our proposed rule, we do not believe that physicians
provide most therapy services that are billed by physicians. We believe
that the practice expenses for therapy services provided in physicians'
offices by therapists are more likely to be comparable to those of
therapists than physicians. For this reason, we crosswalked utilization
for the therapy codes (CPT codes 97010 through 97750) to the physical
and occupational therapy practice cost pools. We used the physician
utilization data for the therapy evaluation codes (CPT codes 97001
through 97004) since we believe these services would be much more
likely to be performed by the billing physician. In the meantime, we
welcome further public comments on this issue. We note that physical
therapy was the only specialty for which we used their supplemental
survey data (as noted below). Use of
[[Page 79971]]
such survey data increases payments for physical therapy by 2 percent.
3. Practice Expense Provisions for Calendar Year 2003
a. Supplemental Practice Expense Surveys Criteria for Acceptance of
Supplemental Practice Expense Surveys From the June 28, 2002 Interim
Final Rule with Comment Period
On June 28, 2002 we published an interim final rule with comment
period (67 FR 43555) in the Federal Register, which made revisions to
the criteria that we apply to supplemental survey information supplied
by physician, non-physician, and supplier groups for use in determining
practice expense RVUs under the physician fee schedule. While this rule
was effective upon publication, we provided a comment period on the
revision to the criteria and are responding to the comments received in
this final rule.
The following criteria had been in effect:
[sbull] Physician groups must draw their sample from the AMA
Physician Masterfile to ensure a nationally representative sample that
includes both members and non-members of a physician specialty group.
Physician groups must arrange for the AMA to send the sample directly
to their survey contractor to ensure confidentiality of the sample;
that is, to ensure comparability in the methods and data collected,
specialties must not know the names of the specific individuals in the
sample.
[sbull] Non-physician specialties not included in the AMA's SMS
must develop a method to draw a nationally representative sample of
members and non-members. At a minimum, these groups must include former
members in their survey sample. The sample must be drawn by the non-
physician group's survey contractor, or another independent party, in a
way that ensures the confidentiality of the sample; that is, to ensure
comparability in the methods and data collected, specialties must not
know the names of the specific individuals in the sample.
[sbull] A group (or its contractors) must conduct the survey based
on the SMS survey instruments and protocols, including administration
and follow-up efforts and definitions of practice expense and hours of
direct patient care. In addition, any cover letters or other
information furnished to survey sample participants must be comparable
to the information previously supplied by the SMS contractor to its
sample participants.
[sbull] Physician groups must use a contractor that has experience
with the SMS or a survey firm with experience successfully conducting
national multi-specialty surveys of physicians using nationally
representative random samples.
[sbull] Physician groups or their contractors must submit raw
survey data to us, including all complete and incomplete survey
responses as well as any cover letters and instructions that
accompanied the survey, by August 1, 2002 for data analysis and editing
to ensure consistency. All personal identifiers in the raw data must be
eliminated.
[sbull] The physician practice expense data from surveys that we
use in our code-level practice expense calculations are the practice
expenses per physician hour in the six practice expense categories--
clinical labor, medical supplies, medical equipment, administrative
labor, office overhead, and other. Supplemental survey data must
include data for these categories.
In addition to the above survey criteria, we required a 90-percent
confidence interval with a range of plus or minus 10 percent of the
mean (that is, 1.645 times the standard error of the mean, divided by
the mean should be equal to or less than 10 percent of the mean).
Based on a review of these criteria and concern that the this
language had created confusion, in the June 2002 interim final rule we
revised this language to indicate that we will accept surveys that
achieve a sampling error of 0.15 or less at a confidence level of 90
percent. We noted that this change refines both the measurement of
precision and the level of precision we will accept and could result in
our acceptance of more surveys than the past criteria. In addition, we
stated that we would allow specialties that have submitted surveys
previously rejected under the present criteria to resubmit these
surveys to be evaluated under the revised criterion.
We also amended Sec. 414.22(b)(6) to reflect the 2-year extension
in the deadline for submitting supplemental data. Specifically, we will
accept supplemental data that meet the established criteria that we
received by August 1, 2002 to determine CY 2003 practice expense RVUs
and by August 1, 2003 to determine CY 2004 practice expense RVUs.
Comment: We received comments from several specialty organizations
on the change in the precision criteria for supplemental surveys.
Specialty organizations representing audiologists, physical therapists
and radiologists expressed support for the revised precision criterion.
The American Academy of Audiology indicated that the revised rule makes
it easier for specialty groups to submit information for our
consideration. The American College of Radiology (ACR) supported the
proposed change by suggesting that the previous requirements were not
reasonable. The ACR indicated that radiology and radiation oncology did
not conduct surveys previously because of concerns about the strictness
of the original criteria. The ACR also indicated concerns about
averaging the supplemental survey data with existing SMS survey data
and the requirement that the survey sample would have to be selected
from the AMA Masterfile. According to the ACR, the AMA Masterfile does
not adequately represent radiologists and radiation oncologists that
own and operate their own centers and equipment. The American Physical
Therapy Association (APTA) supported the new criterion and our decision
to allow previously completed surveys to be resubmitted and considered
using the new precision standard. The American Society Clinical
Oncology (ASCO) objected to the use of any precision criteria and
outlined a number of reasons why they opposed the use of this test. The
ASCO indicated that there may be wide variation in oncology practice
patterns (for example, hospital based versus non-hospital based, or
differentials in provision of chemotherapy) that could lead to wide
variation in practice expenses among surveyed practices. They suggested
that ``at least in the case of oncologists, a survey that is conducted
in accordance with the CMS rules should not be excluded from
consideration because of failure to meet the precision criteria.''
Response: If the data from physician and practitioner surveys is to
be used as the basis for physician payment, it is necessary that we
have assurance that the survey is both representative and reliable.
Applying numerical criteria for the statistical concepts of confidence
and precision give some basis for believing that the data accurately
represent practice costs for the specialty nationwide. We set the
criteria for precision and confidence after lengthy consultation with
our contractor, the Lewin Group, and agency experts on statistical
surveys. We believe the levels set are both fair and reasonable. In
addition, as indicated in the proposed rule, we are attempting to be as
flexible as possible consistent with our goal of obtaining new surveys
of practice expense that are scientifically sound and methodologically
consistent with
[[Page 79972]]
our existing estimates. We indicated that a specialty may include
different types of physician practices that exhibit different patterns
of practice expenses. We welcome stratified sampling of these different
types of practices and, would, as appropriate, apply the precision
criteria to subgroups of surveyed practices.
We considered the comment that suggests the AMA Masterfile may not
adequately represent radiologists and radiation oncologists that own
and operate their own equipment. However, since the AMA Masterfile is
the most comprehensive listing of physicians that practice in the
United States, we still believe it should be the best source of
information for selecting a representative sample of physicians. We do
acknowledge that there may be special issues related to diagnostic and
radiation oncology services. For instance, radiologists and radiation
oncologists that predominantly practice in hospitals may have
fundamentally different practice expenses than those providing services
in free-standing clinics and private offices where they likely incur
far higher costs for staff, supplies, equipment and indirect costs. In
addition, office-based radiologists and radiation oncologists may have
substantial but irregular expenses associated with medical equipment.
That is, they may purchase equipment one year and amortize the costs
over several years. It is possible that modification to the survey
instrument may be necessary to accurately identify annual equipment
costs for some specialties. Further, independent diagnostic testing
facilities also bill Medicare for diagnostic services affected by the
non-physician work pool calculations. A sample of physicians selected
from the AMA Masterfile is unlikely to include independent diagnostic
testing facilities. We believe that all of these issues can be
addressed in a supplemental survey with stratified sampling, relevant
modifications to the survey instrument and augmentation of the AMA
Masterfile with a listing of independent diagnostic testing facilities.
As we indicated in our supplemental survey interim final rule, we are
attempting to be flexible to achieve our goal of incorporating the best
possible practice expense survey information into our methodology. We
believe all of these issues should be considered carefully. We advise
any party interested in conducting a supplemental survey to consult the
Lewin Group and us before proceeding with a survey.
Comment: We also received comments from two organizations
representing emergency medicine. The Emergency Department Practice
Management Association (EDPMA) is concerned that the requirement that
supplemental surveys be based on the SMS survey instrument will
preclude us from obtaining data on uncompensated care and emergency
physician practice expenses. The EDPMA suggests that we extend the
criteria to include data regarding indirect emergency medicine practice
expense or uncompensated care cost. The American College of Emergency
Physicians (ACEP) stated that we have failed to recognize the
legitimate practice costs associated with uncompensated care pursuant
to requirements imposed by the Emergency Medical Treatment and Active
Labor Act (EMTALA) and that these costs should be recognized by us.
Despite our acknowledgement of these costs, the commenter argues that
we have not made any movement in making payment for EMTALA's
uncompensated care costs.
Response: As we indicated in the November 2, 1998 final rule (63 FR
58821), we made an adjustment in the practice expense per hour for
emergency medicine because of our concern that emergency medicine
physicians could spend a significantly higher proportion of time than
other physicians providing uncompensated care to patients. We are
currently using a practice expense per hour of $33.00 for emergency
medicine. If we had not made the adjustment for uncompensated care, the
practice expense per hour for emergency medicine would be $14.90. Our
adjustment assumes that 55 percent ($14.9/(1-0.55)=$33.00) of emergency
physicians' time spent treating patients is uncompensated. This has the
effect of raising the practice expense per hour to reflect only the
physician's time spent in revenue-generating activities. If emergency
physicians believe that they spend more than 55 percent of their time
treating patients for which they are not compensated, we would welcome
specific data on this subject from a supplemental survey.
Comment: The American College of Cardiology (ACC) and the AMA, who
wrote in support of the ACC, indicated they are aware that we would
like data on practice expenses that shows the six categories of
practice expenses used in the practice expense methodology. However,
the ACC indicated that the AMA no longer collects data in this
disaggregated fashion and suggested that this data limitation can be
overcome by simply apportioning practice expense reported in the most
recent survey to the separate pools based on historical distribution
patterns.
Response: We will continue to require disaggregated data from
supplemental surveys because apportionment based on historical
distribution patterns might not reflect actual or current cost
patterns. Further, to accept this data would be inconsistent with our
clearly stated rule. In both the original interim final rule published
on May 3, 2000 (65 FR 25666) and in the interim final rule published on
June 28, 2002 (67 FR 43556), we indicated that ``* * * code-level
practice expense calculations are the practice expense per physician
hour in the six practice expense categories-clinical labor, medical
supplies, medical equipment, administrative labor, office overhead and
other. Supplemental survey data must include data for these
categories.''
Result of Evaluation of Comments
We are retaining the change to the precision and confidence levels
for supplemental surveys to reflect a confidence level of 90 percent
and a precision level of 0.15, as stated in our interim final rule.
(ii) Submission of Supplemental Surveys--We received surveys from
the American Physical Therapy Association (APTA), the American Society
of Clinical Oncology (ASCO), the American College of Cardiology (ACC),
and the American Academy of Pediatrics (AAP). The National Association
of Portable X-Ray Providers (NAPXP) also provided us with cost data for
their industry. Our contractor, the Lewin Group, has evaluated the data
submitted by each organization and recommends that we use the survey
information from APTA. We reviewed and agree with their analysis;
therefore, we are using the APTA survey to determine practice expense
RVUs for CY 2003 and subsequent years. The data supplied to the Lewin
Group reflects a 1999 cost year. As indicated in our June 2002 interim
final rule (67 FR 43556), we are deflating the figures by the MEI to
reflect a 1995 cost year. The revised practice expense per hour figures
that we are using for physical therapy (specialty code 65) and
occupational therapy (specialty code 67) are as follows:
[[Page 79973]]
Table 1
----------------------------------------------------------------------------------------------------------------
Admin. Office
Clinical staff staff expense Supplies Equipment Other Total
----------------------------------------------------------------------------------------------------------------
10.4.............................................. 6.5 13.4 2.4 2.2 7.7 42.5
----------------------------------------------------------------------------------------------------------------
The Lewin Group raised significant concerns about the data received
from ASCO. Specifically, the Lewin Group is concerned about
extraordinarily high expenses associated with clinical and clerical
staff and a more than 300 percent increase in ``other'' practice
expenses compared to the SMS value for oncology. As a result, the Lewin
Group carefully examined the underlying data. They report that
compensation (including salaries and fringe benefits) would average out
to $71,014 for clinical staff and $87,253 for clerical staff. They
believe it is unlikely that the average annual salary for clerical
staff would be higher than for clinical staff. Further, the Lewin Group
indicates that the average clerical compensation from the ASCO survey
is approximately 400 percent higher than the figure reported by the
Bureau of Labor Statistics for ``Office Clerks, General.'' While the
Lewin Group indicates that the high payroll expense for clinical staff
may be explained, in part, by recent changes in labor markets, we
remain concerned that the compensation reported in the survey is far
higher than independent information on oncology nursing salaries
provided to us by the Oncology Nursing Society. The Lewin Group also
indicated that ``other professional expenses'' increased more than 349
percent from the SMS to the supplemental survey and the contribution of
this category to total practice expenses increased from 9.4 percent to
22.3 percent. They believe that such a large increase in practice
expense per hour needs further examination. The Lewin Group believes
that we should confer with ASCO and request a rationale for the high
values found in the survey results or validate the data in some other
fashion. Therefore, at this time, we are not using the supplemental
survey received from ASCO. However, we would like to further examine
the data with the Lewin Group and discuss the survey results with ASCO
and will consider using the data in the future if our concerns are
addressed.
In the June 2002 proposed rule (67 FR 43850), we discussed an
adjustment made to the medical supplies practice expense per hour for
oncology. We made this adjustment because of a concern that the
inordinately high practice expense per hour includes expenses
associated with separately billable drugs. We expressed an interest in
reconsidering the adjustment consistent with a recommendation made by
the GAO in their October 2001 report. If we resolve concerns about the
oncology survey data, the adjustment for medical supplies will no
longer be necessary since the supplemental survey collects information
on medical supplies practice expenses net of separately billable drugs.
The Lewin Group indicated that the surveys from the ACC and the AAP
do not meet requirements established in regulations for supplemental
surveys. As a result, we will not be incorporating data from the ACC or
the AAP into the practice expense methodology. We will be making the
Lewin Group's full recommendations available on our website. The
National Association of Portable X-ray Providers (NAPXP) did not
provide us with data as part of the supplemental survey process.
However, they requested that we use their data to develop practice
expense RVUs for the physician fee schedule services they provide.
Since we were provided with survey information, we asked the Lewin
Group to evaluate the data using the same standards of review applied
to other specialty survey data. The Lewin Group evaluated whether the
cost information supplied by NAPXP meets our criteria for acceptance of
supplemental surveys. The Lewin Group found that (1) More information
is required to determine if the data are broadly representative of the
portable x-ray industry and (2) the data as presented are not
adequately detailed to support a practice expense per hour based on the
current practice expense methodology.
Comment: Health Trac, a supplier of portable x-rays and other
imaging services, commented that the practice costs associated with
set-up of portable x-ray equipment are not included in the SMS and
there are sufficient differences among geographic regions in the
performance of this procedure that warrant reclassifying this service
as carrier-priced.
Response: At this time, we are not making portable x-ray set-up
(Q0092) a carrier-priced service. However, we will continue to work
with the suppliers of portable x-ray services to find the best ways of
developing payment rates for these services.
b. CPEP Data
(i) 2001 PEAC/RUC Recommendations on CPEP inputs
In the November 2001 final rule (66 FR 55256), we responded to the
PEAC/RUC recommendations for the refinement to all or part of the CPEP
inputs for over 1,100 codes. These included refinements of large
numbers of orthopedic, dermatology, pathology, physical medicine, and
ophthalmology services. In addition, these recommendations confirmed
that there were no inputs for over 150 ZZZ-global procedures that are
performed only in a facility and no supply or equipment inputs for
almost 700 facility-only services with an XXX or 0-day global period.
We accepted almost all of the recommendations with only minor
revisions. We received the following comments on our responses and
modifications to the RUC recommendations on the CPEP inputs.
Comment: Specialty societies representing radiology and orthopedic
surgery both expressed appreciation about our willingness to work with
the RUC and PEAC on practice expense refinement, as well as for our
implementation of the refinements already submitted by the PEAC. Both
societies agreed with our establishment of revised practice expense
values as ``interim'' until the refinement process is complete.
Response: We are also pleased with the progress of the refinement
of the CPEP inputs and thank the PEAC, RUC and all the involved
specialty societies for the hard work and dedicated commitment that has
led to a successful refinement process.
Comment: A specialty society representing surgeons expressed
support for our decisions on CPEP revisions in general and commended
our staff for our efforts to develop appropriate and acceptable inputs
for a large number of codes. The commenter also agreed with the use of
the refined evaluation and management (E/M) inputs to refine post-
surgical visits, but recommended that the process should allow for
exceptions.
Response: We understand that the PEAC has developed a standard
[[Page 79974]]
approach to estimating the clinical staff time involved in post-
surgical visits in which the times associated with the assigned E/M
visits are applied to the post-surgical clinical staff times. It is
also our understanding that, as with all the standards and packages
that the PEAC has developed, a specialty would be free to argue that
something other than the standard should be applied to a given service.
Comment: One commenter representing family physicians noted that we
had accepted most of the practice expense recommendations submitted by
the PEAC/RUC and commended us for our willingness to accept these
recommendations. The commenter also suggested that the PEAC
recommendations for the fine needle aspiration CPT codes 88170 and
88171, which were deleted CPT codes for 2002, should be applied to CPT
codes 10021 and 10022 that replace these deleted codes.
Response: We agree with this suggestion. When CPT codes 10021 and
10022 were originally valued by the RUC, the practice expense inputs
were crosswalked from the then unrefined inputs for CPT codes 88170 and
88171. Now that these inputs have been refined, it is appropriate for
us to crosswalk the inputs for CPT codes 10021 and 10022 from this
updated CPEP data.
Comment: A commenter representing dermatologists was pleased with
our acceptance of PEAC revisions for the phototherapy codes. However,
the commenter expressed concern about the decrease in the practice
expense RVUs for the code for the application of an Unna boot, CPT code
29580, and for the cryotherapy code, CPT code 17340 and requested that
we explain the decrease. A specialty society representing podiatrists
agreed with decision to retain the Unna boot in the list of supplies
for CPT code 29580.
Response: Both CPT codes 29580 and 17340 were refined by the PEAC
in October 2001 and were included in the PEAC/RUC recommendations for
2002. We accepted these recommendations without change, except that we
retained an Unna boot in the supply list for CPT code 29580. The
recommendations contained lower direct cost inputs than the original
CPEP panel data, which explains the decrease in payment for these
services.
Comment: A specialty society representing urologists requested an
explanation of why the bougie a boule was deleted from the equipment
list for the cystourethroscopy code, CPT code 52281 and requested that
it be added as a supply.
Response: Since the inception of resource-based practice expense,
the supply list has been used for disposable items and we have only
included as equipment those items that are more than $500. The bougie a
boule is not a disposable item, and at a cost of $105 it does not meet
the definition of equipment. These definitions have applied across the
spectrum of physician fee schedule services and, therefore, we do not
believe that any specialty has been disadvantaged. If we did include a
$100 item in our equipment list with a five-year expected life, it
would add only $0.0004 per minute of use to the input costs of any
associated procedure and, thus, would have no effect on the practice
expense RVUs for that service.
Comment: Two organizations representing physical and occupational
therapists argued strongly that the revisions we made to the PEAC
recommendations on the practice expense inputs for the physical
medicine and rehabilitation (PM&R) codes were inappropriate. The
physical therapy comment commended the specialty societies
participating in the PEAC, as well as AMA and our staff, for their time
and assistance as the clinical inputs for the therapy codes were
developed. However, the commenter also expressed concern that we did
not accept the PEAC's recommendations in their entirety despite the
fact that we state in the rule that the PEAC refinement process is
working. The comment from the occupational therapists shared this
concern and both commenters urged us to revisit our decision and accept
the PEAC recommendations for the CPT codes in the 97000 series without
revisions.
Specifically, both commenters objected to the deletion of the PEAC
approved clinical staff time for obtaining vital signs and
measurements, patient education and phone calls. One commenter
contended that our decision is contrary to the standardized times that
we have allowed for physicians' clinical staff and to the survey data
presented which demonstrated that clinical staff do perform these
services in therapy practices. The other commenter argued that, because
we have allowed such clinical staff time for other specialties, our
revisions disrupt the resource-based relative value scale on which the
physician fee schedule is based. Further, the occupational therapy
comment states that the addition of 7 minutes only in the evaluation
and reevaluation codes for aide services is insufficient to counteract
the deletion of the physical therapy assistant time, and that this has
created anomalies in the practice expense RVUs within the PM&R family
of services.
Response: We deleted the times assigned to the physical therapy
assistant for taking vital signs, and for phone calls and patient
education because we were concerned that there could be an overlap
between the work of the physical therapist, which is reflected in the
work RVUs, and the work of the assistant, which is considered as
practice expense. However, the commenters are correct that we have
allowed such tasks to be considered as practice expense for other
services, even though there could also be some potential overlap
between practitioner and clinical staff work. We still believe that
this can be more problematic with therapy services because of the broad
range of clinical activities that the physical therapy assistant can
share with the therapist, but also believe that this issue might be
better addressed as a general issue across all specialties. Therefore,
we are revising the clinical staff times for all codes in the CPT 97000
series to reflect the 2001 PEAC recommendations for these services.
Comment: The specialty society representing physical therapy
commented that the relatively high practice expense of 0.45 RVUs for
CPT code 97530, therapeutic activities, cause a rank order anomaly with
other codes in the CPT 97000 series. For example, therapeutic exercise
(CPT code 97110) only has a PE value of 0.25. The commenter speculated
that this might be due to inclusion of the environmental module in the
equipment list for this code.
Response: On analyzing the differences in CPEP inputs between these
two codes, it became apparent that the major contributor to the
possible anomalous practice expense values lies not with the equipment
for CPT code 97530, but with the supplies. For the timed codes that are
billed in 15-minute increments, the PEAC recommendations generally
assumed that two 15-minute sessions would be performed during one
visit. Therefore, for all of these codes, including CPT code 97110, the
PEAC recommendations divided the supplies by half because they would
not have to be replaced for the second 15-minute session. However,
inadvertently, the recommendation for the therapeutic activities code,
CPT code 97530, did not make this adjustment, and the full cost of the
relatively expensive woodworking kit was assigned to the code. In
addition, it seems unlikely that a supply like a $13 woodworking kit
would necessarily be discarded after one visit. Therefore, we are
[[Page 79975]]
apportioning the cost of this kit over four sessions, and are assigning
one-fourth of a kit to CPT code 97530.
Comment: The comment from the physical therapy specialty society
raised the concern that there may be an inadvertent error in the
printing of the values of physical therapy and occupational therapy
evaluation and reevaluation CPT codes in the final rule. First, the
values for the occupational therapy codes are significantly higher than
values for the physical therapy codes, which did not change from the
2001 values, despite the refinement of these codes. Second, the
practice expense RVUs for the occupational therapy evaluation and re-
evaluation codes are the same, which appears inappropriate.
Response: The practice expense RVUs for the occupational therapy
evaluation and re-evaluation codes are higher than those for physical
therapy because the PEAC recommendations, which were based on the
specialty societies' presentation and which we later accepted, assigned
higher cost supplies and equipment to the occupational therapy codes
than to the physical therapy evaluation and re-evaluation services. In
addition, although the occupational therapy evaluation code had higher
cost equipment than the re-evaluation code, the opposite was true for
supplies. We would certainly consider information that might point to
specific problems in any inputs assigned to these codes, but, at this
point, have no basis for making any changes in the direct cost inputs.
Comment: A medical electronics manufacturer commented that the
practice expense RVUs assigned to short wave diathermy treatment (CPT
code 97024) may not take into account all of the resources required to
provide the service, because the cost of the equipment alone is not
covered by the practice expense reimbursement. The commenter suggested
that the cost of the diathermy machine has increased greatly since
1995, when the equipment was last priced, and stated that the current
price is between $18,000 and $30,000. The commenter urged us to
reevaluate and increase the 2002 fee schedule reimbursement to ensure
that diathermy continues to be available for beneficiaries.
Response: We accepted the PEAC recommendations for the direct cost
inputs for CPT code 97024, except for the deletion of one minute of
physical therapy assistant time. The PEAC recommendation was based on a
presentation that was made by the physical therapy specialty society.
The current CPEP inputs consist of 2 minutes for a physical therapy
aide and 3 minutes of physical therapy assistant time and 15 minutes of
a low mat table and diathermy machine. There were no supplies assigned
because the supplies are included in the procedures that are typically
delivered with this modality. We have seen no evidence that would
indicate that any of these inputs are incorrect. Therefore, we will
make no revisions to the inputs at this time. However, we have two
diathermy machines in our CPEP input database. We currently have
assigned the machine priced at $2850 to the diathermy code, but will
substitute the higher priced machine, which we have priced at $3120,
until we have more definitive information regarding the typical cost of
the equipment. We have a contractor who is currently updating the
prices of all the supplies and equipment listed in the CPEP database,
and will soon be proposing updated prices for all the CPEP inputs,
including the diathermy equipment.
(ii) PEAC/RUC Recommendations on CPEP Inputs for 2003
We have received recommendations from the PEAC on the refinement to
the CPEP direct practice expense inputs for over 1200 codes. (A list of
these codes can be found in Addendum F.) These include refinements to
codes from almost every major specialty. In addition, the PEAC has
continued to standardize inputs to streamline the refinement process.
Previously, the PEAC created standardized inputs for 90-day global
services as well as supply packages for evaluation and management,
neurosurgery, gynecology services, ophthalmology and postoperative
services. The PEAC has also established standard times for certain
clinical staff tasks, such as greeting and gowning the patient, the
taking of vital signs and post-service phone calls. These current
recommendations include standardized times for office-based clinical
staff for services provided during a patient's hospitalization and for
discharge day management services, as well as pre-service clinical
staff time data for 323 neurosurgery procedures. At an early PEAC
meeting a list was drawn up of the codes most in need of refining. Of
the 122 codes on this list, only seven have not yet been refined, which
is one important measure of the success of the PEAC's efforts.
As stated above, we are very pleased with the progress that the
PEAC has made so far and appreciate greatly the contributions that have
been made to our refinement effort by the PEAC members, as well as by
the staff from the AMA and the specialty societies. We have reviewed
the submitted PEAC recommendations and are also pleased that, because
of the expertise gained by the PEAC in evaluating the practice expense
inputs, we are able to accept all of the recommendations without any
revision. The complete PEAC recommendations and the revised CPEP
database can be found on our Web site. (See the SUPPLEMENTARY
INFORMATION section of this rule for directions on accessing our Web
site.)
(iii) Other Comments on the Refinement of the CPEP Inputs
Comment: We received comments from specialty societies representing
vascular surgery, radiation oncology, rheumatology, physical therapy
and internal medicine agreeing with the update we made to the clinical
staff categories and to the revised salary data. Several of these
commenters also thanked us for our analysis and use of the additional
data that was supplied by the specialty societies.
Response: We appreciate the positive response to our repricing of
clinical staff salaries.
Comment: The specialty society representing radiology expressed
appreciation for the establishment of new clinical wage rates for CT
technologist, MRI technologist, medical physicist, and dosimetrist.
However, the comment expressed disagreement with our decision to merge
the x-ray technician and radiation technologist staff types under the
title of ``radiologic technologist,'' because the education and scope
of practice for these staff types are different and merging them will
reduce the radiation technologists wage rate. The specialty society
also opposed the decision to blend the staff types of RN and
sonographers because they are trained to provide different services and
are not interchangeable.
Response: The original CPEP data listed both ``x-ray technician''
and ``radiation technologist'' and seemingly made no distinction
between these two staff types because the same wage rate was assigned
to both. We used the Bureau of Labor Statistics' salary data to
determine the wage rate for the ``radiologic technologist.'' Therefore,
we do not believe that the salary assigned has been reduced in any way.
If some of the radiology procedures typically use staff that are paid
at a lower rate than the radiologic technologist, this information
should be provided by the specialty society when the practice expense
inputs for the services are refined. Regarding the second concern, we
did not make a decision to blend the staff types, ``RN'' and
``diagnostic
[[Page 79976]]
medical sonographer.'' This blend currently exists in the original CPEP
data and has also been contained in several PEAC recommendations. Both
staff types are priced separately and we were merely listing what the
pricing would be when such a blend was applied to any service.
Comment: Three specialty societies, representing surgeons, thoracic
surgeons and ophthalmologists, commented on the issue of our previous
exclusion from the CPEP data of all claimed time associated with staff
brought to the hospital by the physician. The commenters from the
surgical and the thoracic surgery specialty societies claimed that a
recent report by the Office of the Inspector General (OIG) confirms
that over 70 percent of cardiac surgeons bring staff to the hospital,
but that only 19 percent are being reimbursed by the hospital. The
commenters further argued that this is an inequitable arrangement that
requires corrective action by us. The commenter from the ophthalmology
society claimed that ophthalmologists bring their staff to the facility
setting 50 percent of the time and some cost for this should be built
into their practice expense.
Response: In the November 2, 1999 final rule (64 FR 59399), we
adopted a policy to exclude all clinical staff time in the facility
setting from the input data used to develop practice expense RVUs.
Among other arguments, we indicated that Medicare should not pay twice
for the same service. That is, Medicare's payment to the hospital
includes payment for clinical staff and we should not also compensate a
physician for using their own staff in the hospital. In addition, we
argued that we also pay for physician-extender staff used in the
facility setting, such as physician assistants and nurse practitioners,
through the physician work RVUs, and we pay physician assistants
directly when performing as an assistant-at-surgery. In response to
this argument, thoracic surgeons contended that hospitals are no longer
providing the staff to furnish adequate care. While we did not change
our policy, we asked the Office of Inspector General (OIG) to conduct
an independent assessment of staffing arrangements between hospitals
and thoracic surgeons (see November 1, 2000 final rule 65 FR 65395). In
April, 2002 (OEI-09-01-00130, page ii), OIG concluded:
Medicare pays for non-physician staff even though surgeons do not
receive additional payment for some of the staff they bring to the
hospital. Instead, services of these staff are paid to either
physicians through the work relative value units, to the mid-level
practitioners directly, or to the hospital through Part A or the
Ambulatory Payment Classification system for outpatient services.
Recognizing this, some hospitals and cardiothoracic surgeons have
entered into arrangements whereby hospitals provide some compensation
to surgeons who bring their own staff.
We believe the OIG report clearly supports our position to exclude
the costs of clinical staff brought to the hospital from the practice
expense calculations. While it may be common for thoracic surgeons to
bring staff to hospitals, the OIG report makes clear that Medicare pays
for these costs either directly to physicians or the hospital. Since
the OIG report supports our position, we are not making any revisions
to our policy to exclude practice expense inputs associated with
bringing clinical staff to hospitals.
Comment: One commenter representing an independent diagnostic
testing facility commented that a review of the practice expense inputs
for the 24-hour cardiac monitoring HCPCS codes G0005, G0006 and G0007
and the corresponding CPT codes 93270, 93271, and 93272 revealed the
CPEP input lists contain items that are not needed to perform these
services. The commenter suggested the following deletions: G0005 and
CPT code 93270 (for the hookup of the equipment)--delete the ECG
electrodes, laser paper, king of hearts-20, computer, life receiving
center; G0006 and CPT code 93721 (for the monitoring and transmission
of data)-delete the razor, gloves, alcohol swab, and tape and exam
table; G0007 (interpretation and report)-delete all the supplies (G0007
currently has no equipment and CPT code 93272 currently has no
equipment or supplies assigned.
Response: We agree that the changes to the practice expense inputs
suggested above divide the inputs more appropriately between the two TC
codes and the PC code for this cardiac monitoring service. However, as
discussed in section IV, we are deleting the referenced G-codes for CY
2003 and these services will be reported using the CPT codes. On an
interim basis, until these codes are refined, we will make the
recommended revisions to the CPEP data for the CPT codes for these
services. It should be noted, however, that the TC codes are currently
in the non-physician work pool and that the CPEP data is not currently
used to calculate their practice expense RVUs. In addition, we do not
assign direct cost inputs to PC codes. Therefore, these changes will
not at this time have any effect on the payment for these codes.
Comment: A specialty society representing radiology commented that
the review cycle for pricing ``high tech'' equipment and supplies may
need to be reviewed more frequently than every 5 years and suggested a
3-year cycle.
Response: We plan to propose current pricing for all the supplies
and equipment in our CPEP database in next year's proposed rule. We
have made no final decision on how often this pricing update should be
done and will consult with the medical community on how best to ensure
that we have appropriate pricing for all of our direct cost inputs.
(iv) Proposed Changes from June 28, 2002 Proposed Rule
(A) Ophthalmology Services--Rank Order Anomalies
Based on a request from the American Academy of Ophthalmology we
proposed revisions to the CPEP data for five ophthalmology services:
For CPT code 67820, Revise eyelashes, we proposed to remove ophthane
from the supply list. For CPT code 67825, Revise eyelashes, we proposed
to remove the bipolar handpiece from the supply list. For CPT code
65220, Removal foreign body from eye, we proposed using the supply list
and clinical staff time assigned to CPT code 65222. The exam lane is
the only equipment assigned. For CPT codes 92081 and 92083, Visual
field examination(s), we proposed to assign the same supplies and
equipment as CPT code 92082 and to assign 35 minutes of clinical staff
time to 92081 and 70 minutes to 92083.
Comment and Response: Commenters were supportive of the proposed
revision to the CPEP inputs for the ophthalmology codes and we are
finalizing the revisions as proposed.
(B) Practice Expense Inputs for Thermotherapy Procedures
There are three CPT codes for transurethral destruction of prostate
tissue: CPT 53850, by microwave therapy, CPT 53852, by radiofrequency
thermotherapy, and CPT 53853, by water-induced thermotherapy (WIT).
Based on concerns expressed by a manufacturer of WIT equipment that
practice expense inputs were underestimated for CPT code 53853 relative
to the other two codes, we made a comparison and agreed that the WIT
procedure had not been assigned many of the basic supply and equipment
inputs that were included in the CPEP inputs for the other two
procedures. Therefore, we proposed to add, on an interim basis, the
following inputs: Power table, ultrasound unit, mayo stand, endoscopy
stretcher, light source,
[[Page 79977]]
chux, sani-wipe, patient education book, sterile towel, sterile gloves,
specimen cup, alcohol swab, gauze, tape, lidocaine, betadine, 10 cc
syringe, 30 cc syringe, sterile water, leg bag.
We also proposed to change on an interim basis the staff type for
CPT code 53853 from the RN/LPN/MTA blend to RN in order to make the
staff type consistent among these three similar procedures. In
addition, we corrected, for all three procedures, the minutes assigned
to each piece of equipment to reflect the intra- and post-clinical
staff times only, rather than the total clinical staff times.
We have also requested that these three procedures be reexamined by
the PEAC at the same time in order to ensure that there is a consistent
approach to the assignment of direct cost inputs.
Based on questions we received regarding the large disparity in
prices used for the three different thermotherapy machines and
indications that the prices have decreased dramatically since these
were initially priced in 1999, we proposed to set the price for
thermotherapy equipment at $60,000 for CPT code 53850 and $30,000 for
CPT code 53852. We also requested any additional available price
documentation that would assist us in ensuring assigned prices
accurately reflect actual costs.
Comment: Commenters were generally supportive of the proposed
revisions and in agreement that the PEAC should review the CPEP inputs
for these procedures. A specialty society representing urology agreed
that the best way to handle the CPEP inputs for these services is to
have the PEAC review the direct cost inputs for all the heat therapy
procedures concurrently and the comment from the RUC stated that it
plans to review these codes in time for inclusion in the physician fee
schedule for 2004. However, a few commenters also suggested that the
review be extended to other codes for treatment for benign prostatic
hypertrophy, such as the code for transurethral resection of the
prostate, CPT code 52612, and for laser coagulation of the prostate,
CPT code 52647.
Response: We agree that it would be advantageous to have the PEAC
review the CPEP inputs for all codes pertaining to the treatment of
benign prostatic hypertrophy at the same time. This would help ensure
that the same standards are applied to developing the direct cost
inputs for these codes so that the resulting practice expense RVUs
appropriately reflect the relative costs of each service. We will
request that the PEAC include for review all the codes suggested by the
commenters.
Comment: One commenter, representing a manufacturer, also indicated
that, as part of any review, it is imperative that cost data for all
medical devices that fall within the CPT code should be evaluated. The
commenter suggested that we work with the specialty groups to obtain
pricing information rather than using invoices for pricing. The comment
from the specialty society argued that we should maintain all the
proposed input changes unless we receive compelling data from
urologists or manufacturers that varies from the proposed inputs.
Another commenter stated that, while there has been a reduction in the
price of the thermotherapy control unit over the past few years, the
proposed price of $60,000 for thermotherapy equipment for CPT code
53850 was not representative. The commenter included an invoice that
indicated that the current price is closer to $80,000, after the
application of discounts.
Response: We will finalize the revisions to the CPEP inputs as
proposed with the exception of the price for the thermotherapy
equipment that we will increase to $80,000 on an interim basis. As part
of the practice expense refinement process we have awarded a contract
to update the pricing for both the supplies and equipment represented
in the CPEP inputs and we anticipate that the proposed pricing
revisions to the inputs will be included in next year's proposed rule.
Pricing of the thermotherapy equipment will be included in these
proposed changes and we will be seeking input from the specialty
society to help us in this endeavor.
(C) Revision to Inputs for Iontophoresis
It had been brought to our attention that the electrodes assigned
to the supply list for CPT code 97033, Iontophoresis, were not the type
required for this procedure. We proposed to substitute two electrodes
with a medication vesicle as the appropriate supply for iontophoresis.
(D) Correction to Price for Sterile Water
We proposed to change the price for 1000 ml of sterile water from
$40.00 to $3.00.
Comments and Responses: No comments were received on our proposals
to substitute two electrodes with a medication vesicle as the
appropriate supply for iontophoresis or to correct the price of sterile
water. Therefore, we are finalizing these as proposed.
b. Non-Physician Work Pool For Practice Expense
Comment: We received a comment objecting to use of the phrase
``zero work pool.'' The comment acknowledges that our preamble refers
to ``zero physician work pool'' but stated that the vernacular used by
the agency, Congressional staff and other stakeholders is ``zero work
pool.'' While acknowledging that we do not intend to connote a zero
value for oncology nurses' contributions, oncology nurses, social
workers, radiology technicians and others take offense to the use of
``zero work pool'' because it suggests that the work done by oncology
nurses and other clinical staff is without value. The comment suggested
four appropriate alternative titles: Non-physician clinical staff time,
Non-physician work components, Non-physician work pool or Non-physician
health professional pool.
Response: We did not intend to devalue the contribution of clinical
staff involved in providing physician fee schedule services. In fact,
we created the special methodology to value services that are provided
by clinical staff without a physician because of our concern that these
services could be valued inappropriately low under the top down
methodology. Nevertheless, it is clear that there are objections to the
nomenclature we have used. We appreciate the suggestions for
alternative nomenclature and will refer to the special methodology as
the ``Non-physician work pool.''
(i) Discussion of Alternatives to the Non-Physician Work Pool
In our June 2002 proposed rule (67 FR 43850) we summarized
alternatives to the non-physician work pool that have been included in
reports prepared by our contractor, the Lewin Group. Included in the
alternatives were: elimination of the non-physician work pool;
development of specialty specific non-physician work pools; making the
TC equal to the global less the PC RVUs; and, development of proxy
physician work RVUs for physician fee schedule services provided by
clinical staff without physicians. While we included a discussion of
each alternative and their feasibility, we did not propose eliminating
or replacing the non-physician work pool. We indicated that specialties
whose services are affected by the non-physician work pool may conduct
supplemental practice expense surveys if they believe there are
shortcomings in the practice expense per hour information that we use
as part of the basic methodology. We referenced
[[Page 79978]]
the interim final rule also published June 28, 2002 in the Federal
Register. The interim final rule modified the criteria for acceptance
of supplemental data. (See section II.A.3.(a) of this rule for a
summary of the interim final rule, the public comments, and our
responses.) We also noted that while the non-physician work pool is of
benefit to many of the services that were originally included, we have
allowed specialties to request that their services be removed.
As part of our analysis of alternatives to the non-physician work
pool, we proposed a change in the computation of practice expense RVUs
for some PC and TC services. Since it is far more common to receive a
global bill than a TC only bill, we believe that using the global to
value the TC service will result in a payment that is more typical of
the relative actual practice expense associated with the service.
Therefore, we proposed to make the TC value equal the difference
between the global and the PC for procedure codes that are not included
in the non-physician work pool. That is, we used the practice expense
value produced by the methodology for the global and subtracted the PC
to derive the TC practice expense RVU. As a result of concerns that we
had about the impact of this change on services that are affected by
the non-physician work pool calculations, we proposed continuing to
make the global value equal to the sum of the professional and the TC
values for non-physician work pool services.
Comment: One commenter, representing oncologists, argued that the
``normal top-down methodology discriminates against [non-physician work
pool] services * * * by assuming, without any basis, that indirect
costs are lower than comparable services that do involve physician
work.'' The commenter stated that both the GAO and Lewin reports
provide support for the conclusion that the indirect cost allocation is
biased against non-physician work services. According to the commenter,
our assertion that ``the indirect cost allocation must be correct
because not all of the services without a physician work component are
disadvantaged by its use is not a sound basis for maintaining the
current methodology.'' The commenter argues that estimates of practice
expense per hour and physician time may be overstated for some non-
physician work services resulting in an advantage outside of the non-
physician work pool. Furthermore, the comment argues that an increase
in payment resulting from services being ``withdrawn from the [non-
physician work pool] does not demonstrate that the normal top-down
methodology results in an appropriate payment amount for services that
do not have physician work components.'' The commenter also objected to
our rejection of the Lewin Group's idea to develop specialty-specific
non-physician work pools on the basis that a single methodology must
apply to all services. According to the commenter, our refusal would
only be appropriate if the methodology was not biased against non-
physician work pool services. Another comment suggested that we
allocated indirect costs by deeming direct costs as 33.2 percent of
total costs. Indirect costs would then be added to direct costs to
determine a total practice expense RVU.
Response: We do not believe the practice expense methodology is
biased against non-physician work services. The methodology allocates
indirect costs based on physician work and direct costs. While the
comment suggests the use of physician work in the indirect cost
allocation is biased against services that do not have physician work,
it ignores that direct costs are also used. Most services that do not
have physician work have significant direct expenses. Thus, any bias
against non-physician work services in the indirect cost allocation is
offset by the use of direct costs. Similarly, the use of physician work
in the indirect cost allocation will offset any bias against services
predominantly performed in facilities where the physician will have
few, if any, direct costs associated with the services. For example,
surgical services furnished in a hospital have few direct expenses,
thus the allocation of indirect expenses according to both work and
direct expenses helps offset any bias against surgical services.
We also disagree with the comment that suggests ``deeming'' direct
costs to be 33.2 percent of total costs for purposes of developing
practice expense RVUs. The proportion of costs attributable to direct
and indirect costs will be different for each service. Such a proposal
would be inherently unfair to services that have few direct costs (and
impossible to use for services that have no direct costs) and would
create a significant bias in favor of services that have high direct
expenses.
We further examined the assertion in the comment and in the Lewin
Group and GAO reports that the indirect cost allocation is a possible
explanation for the adverse payment impact that would occur under the
top-down methodology for some non-physician work pool services. It is
important to distinguish between the different types of services that
are affected by the non-physician work pool calculations. Professional/
TC services are the largest category of services included in the non-
physician work pool. While many professional/TC services were not
adversely affected by the adoption of the top-down methodology, the
ones remaining in the pool are the services that would be most
adversely affected by its elimination. Some ``Incident to'' services
are also included in the non-physician work pool. Elimination of the
non-physician work pool may cause payments for these services to go up
or down depending on the specialty that provides them.
Based on 2000 utilization data, the specialties with the largest
amount of Medicare allowed charges affected by the non-physician work
pool calculations are: radiology ($2.8 billion), cardiology ($2.1
billion), internal medicine ($568 million), radiation oncology ($465
million), multi-specialty clinics ($313 million), independent
diagnostic testing facilities ($309 million) and oncology ($226
million). Radiology receives 87 percent of its Medicare revenues from
services that are affected by the non-physician work pool calculations.
The figures are 47 percent for cardiology, 9 percent for internal
medicine, 65 percent for radiation oncology, 17 percent for multi-
specialty clinics, 86 percent for independent diagnostic testing
facilities and 26 percent for oncology. There are other smaller
specialties that also receive a significant proportion of their
revenues from services in the non-physician work pool (portable x-ray
suppliers, 100 percent, interventional radiology, 63 percent, allergy/
immunology 35 percent). The specialties that receive the highest
proportion of their revenues from professional/TC services remaining in
the non-physician work pool would be most adversely affected by its
elimination (independent diagnostic testing facilities, portable x-ray
suppliers, radiology, radiation oncology and interventional radiology).
Cardiology also receives substantial Medicare revenues from
professional/TC services remaining in the non-physician work pool but
would be less adversely affected by its elimination. Allergy/immunology
receives substantial revenues from ``incident to'' services in the non-
physician work pool and would experience a more modest decline in
payment under the top-down methodology. Payments to oncology for
``incident to'' services would increase if the non-physician work pool
were eliminated.
Radiology, radiation oncology and certain other diagnostic services
with professional and technical components
[[Page 79979]]
are likely to be the services most adversely affected by elimination of
the non-physician work pool. We do not believe the allocation of either
direct or indirect costs explains the effect of the top-down
methodology on these services. We examined this issue further by
modifying the indirect cost allocation using an idea suggested by the
Lewin Group that would retain work and direct expenses to allocate
indirect costs but create proxy physician work values for services that
do not have physician work (the Lewin Group, pages 22-23). As indicated
earlier, we proposed to modify the practice expense methodology to
calculate the TC practice expense RVU as the difference between the
global and the PC RVU for services unaffected by the non-physician work
pool. To analyze the Lewin idea, we followed this same approach for all
services. However, we further modified the methodology to use proxy
work RVUs for the TC (or non-physician work portion) of the global
service for the allocation of indirect costs. (We did this for TC
services as well, but it makes no difference whether a proxy physician
work RVU is used for the indirect cost allocation since the RVU
produced by the practice expense methodology for the TC is not used).
By developing a proxy work RVU for the global, in effect, we imputed
physician work RVUs for the technical portion of the global service and
added it to the existing work RVUs for the physician interpretation. If
such an approach were adopted, the indirect cost allocation would favor
the global service at the expense of professional component. That is,
the practice expense RVUs would increase for the global and decrease
for the PC but the overall impact for the specialty would be about the
same. Modifying the indirect cost allocation in this way would not
offset large decreases in payment for radiology, radiation oncology and
other specialties most adversely affected by elimination of the non-
physician work pool. In fact, such a methodological change would not
even raise payments to these specialties.
As we indicated in the June 2002 proposed rule, we believe a
relatively low practice expense per hour, and not the indirect cost
allocation, explains the adverse impact on diagnostic services that
would occur from eliminating the non-physician work pool. We encourage
radiology, radiology oncology and other diagnostic service providers
affected by the non-physician work pool to undertake a survey of the
practice expenses. Since practice expense methodology uses a weighted
average of the practice expenses of the specialties that bill Medicare,
we believe there are significant advantages to the survey being
undertaken with collaboration among the different providers of
diagnostic services. As indicated earlier, we advise any party
interested in conducting a supplemental survey to consult the Lewin
Group and us before proceeding.
Comment: Most comments we received supported making the TC practice
expense RVUs equal to the difference between the global and PC practice
expense RVUs. We received a number of comments from pathologists and
organizations representing independent laboratories, pathologists,
dermatologists, and others expressing concern about the effect of the
proposal on payment for pathology services. Some of the commenters
indicated that we did not provide an explanation of the necessity for
the change or indicate why a simple arithmetic change should result in
such a large difference in the proposed fee for TC services. Several of
these commenters stated that practice expenses for physician pathology
services are increasing, not decreasing. According to some of these
commenters, it is inequitable to apply the methodology to certain
specialties or groups of services that would experience significant
reductions while sparing other specialties or services that would
experience reductions under the same change. There were also comments
indicating that the reduction in payment for pathology services was
related to the mix of specialties that bill for global services;
specifically, there is concern that independent laboratories bill for a
higher proportion of global than TC services. The commenters noted that
we do not have a practice expense per hour for independent laboratories
and use a crosswalk practice expense per hour from ``all physicians.''
While this comment acknowledges our need to use a crosswalk when we do
not have a practice expense per hour, the comment indicated that there
is no reason to conclude that independent laboratories that provide
pathology services have practice expenses per hour similar to the all
physician average. The comments expressing concern about the impact of
the proposal on pathology services requested a one-year moratorium on
its implementation to allow for a survey of independent laboratory
practice expenses under the supplemental survey process. There were a
number of comments indicating that organizations representing
pathologists would undertake a survey of practice expenses for
independent laboratories that could be used to develop 2004 physician
fee schedule rates.
Response: We agree with the comments that suggest a one-year
moratorium on implementation of the proposed change for pathology
services paid under the physician fee schedule. Based on a consultation
with the College of American Pathologists, we will continue to
determine the global practice expense RVUs as the sum of the
professional plus TC for all of the global codes in the CPT 80000
series that are paid using the physician fee schedule, as well as the
following HCPCS and CPT codes:
Table 2
------------------------------------------------------------------------
CPT/HCPCS Description
------------------------------------------------------------------------
G0141.................................. Screening c/v, autosys, interp
P3001.................................. Screening c/v, interp
10021.................................. FNA w/o image
10022.................................. FNA w/image
36430.................................. Blood transfusion service
36440.................................. Blood transfusion service
36450.................................. Blood transfusion service
36455.................................. Exchange transfusion service
36460.................................. Transfusion service, fetal
36520.................................. Plasma and/or cell exchange
38220.................................. Bone marrow aspiration
38221.................................. Bone marrow biopsy
38230.................................. Bone marrow collection
38231.................................. Stem cell collection
------------------------------------------------------------------------
CPT codes and descriptions only are copyright 2002 American Medical
Association.
As we indicate in the background part of this preamble, the
practice expense methodology essentially takes a weighted average of
different specialty practice expenses to determine a practice expense
RVU. The methodology will independently produce a value for the global,
professional and technical components. For instance, CPT code 88305
(Tissue exam by pathologist) is a commonly provided pathology service.
The methodology produces a value of 1.60 for the global, 0.34 for the
PC and 1.39 for the technical component. The sum of the professional
and TC RVUs (0.34 + 1.39 = 1.73) is not equal to the global RVU (1.60).
The values are not equal because the mix of specialties that provide
the global and the TC are different and each specialty has a different
practice expense per hour. The specialties that bill CPT code 88305 to
Medicare for the global service most frequently have the following
practice expense per hour:
[[Page 79980]]
Table 3
------------------------------------------------------------------------
Practice expense Percent of total
Specialty per hour volume
------------------------------------------------------------------------
Independent Lab................... $69.00 56
Pathology......................... 66.30 29
Dermatology....................... 119.40 13
------------------------------------------------------------------------
The specialties that bill Medicare most frequently for the TC are:
Table 4
------------------------------------------------------------------------
Practice expense Percent of total
Specialty per hour volume
------------------------------------------------------------------------
Independent Lab................... $69.00 47
Dermatology....................... 119.40 33
Pathology......................... 66.30 16
------------------------------------------------------------------------
As shown in the tables above, dermatology has a very high practice
expense per hour relative to independent laboratories and pathology.
However, dermatologists bill Medicare for a smaller portion of the
global services. As a result, dermatology contributes less weight to
the global value than the TC value. Our practice has been to make the
global RVUs equal the sum of the PC and TC values. If the methodology
results in PC and TC values that do not sum to the global value, we
must change either the global or TC value. To date, we have used the PC
(0.34) and the TC value (1.39) to determine the global value (1.74).
However, in the proposed rule, we used the global value (1.60) minus
the PC (0.34) to obtain the TC (1.26). Using the TC to value the global
component for this code (88305) produces a higher RVU for both the
technical and the global components than using the global component to
value the TC.
As we have previously indicated, it is far more common for Medicare
to receive a global than technical-component-only bill. For this
reason, we believe it is valid to rely on the global to produce a value
for the technical rather than use the technical to value the global.
Nevertheless, since independent laboratories predominantly bill the
global for pathology services and we are using a crosswalk for the
practice expense per hour, we believe it makes sense to allow for a
one-year moratorium on implementation of this provision for pathology
services to allow for use of a supplemental survey that provides us
with specific data on practice expenses for independent laboratories.
Final Decision: We are not adopting the proposed change for
pathology services paid using the physician fee schedule at this time.
For all professional/TC services not included in the non-physician work
pool, excluding pathology services, we will make the TC value equal the
difference between the global and the professional component. We will
continue with the current practice for pathology services and non-
physician work pool services and sum the professional and TC values to
determine the global.
(ii) Other Proposals for Changes to the Non-Physician Work Pool
(A). Change to Staff Time Used To Create the Pool
In the November 2, 1998 final rule (63 FR 58841), we indicated that
average clinical staff time was used in the creation of the non-
physician work pool. Since the cost pools are created using physician
time and, by definition, services provided by clinical staff have no
physician time, we need staff time to create the non-physician cost
pool. If our database indicates that multiple staff types are typically
involved in the service, we have used an average of the different
clinical staff times. We proposed to create the non-physician cost pool
using the highest staff time in place of average staff time.
Comment: We received many comments that supported using the highest
staff time to create the non-physician work pool. Some comments
suggested that we should consider using ``total'' staff time especially
if we will use the clinical staff times being provided by the Practice
Expense Advisory Committee (PEAC). The comment indicates that the PEAC
has been particularly careful to avoid duplications of time. If the
PEAC has limited or eliminates concurrent staff time, the comment
suggests that ``total'' rather ``maximum'' staff time should be use to
determine the non-physician work pool. A number of comments expressed
concern about PEAC refinements of clinical staff times associated with
codes included in the non-physician work pool. These comments requested
that we not incorporate any PEAC revised clinical staff times for non-
physician work services until there has been an opportunity for public
notice and comment. There were two comments objecting to this proposal.
One comment indicated that the maximum staff time is not the
``typical'' time associated with provision of the service and urged us
not to implement the proposal. We received another comment that noted
that physician times used to establish practice expense cost pools for
physician work services use average or median times from RUC or Harvard
surveys. The comment indicates that the proposal to use maximum staff
time represents a step away from the stated goal of developing a
consistent method for all services. According to this commenter, the
proposal will penalize specialties that do not perform a large volume
of services in the non-physician work pool.
Response: We disagree with the comment that suggests we are not
using a time that is typical of the service and the one that implies
our staff time proposal is inconsistent with how we determine physician
time. For a physician's service, we develop time based on surveys.
While the comment is correct that we generally use average or median
time estimates from surveys to determine the typical time, the time
reflects the service of a single physician.
[[Page 79981]]
For non-physician work pool services, we are also using estimated
average staff times to represent the typical service. However, multiple
clinical staff are frequently involved in performing non-physician work
pool services. The staff may be working concurrently, consecutively or
overlapping time. Given the special circumstances associated with non-
physician work pool services that do not apply to physicians' services,
it was necessary for us to select among multiple time estimates to
develop the pool. We are currently using an average of the estimated
staff times but proposed to use the maximum. Once we address issues
related to the non-physician work pool, this will no longer be an issue
since we will use a single methodology for all physician fee schedule
services and staff time will not be used to create cost pools.
In response to the comment that refined clinical staff times not be
used at this time for non-physician work pool services, we agree that
there are special circumstances that apply to these services. Because
the clinical staff times are used to create the pool and can result in
RVU changes across all services, even those where no refinements have
been made, we are not using the revised clinical staff time to create
the non-physician work pool at this time. However, as indicated above,
this will no longer be an issue once we address other issues related to
the non-physician work pool.
(B). Removal of Non-Invasive Vascular Diagnostic Study Codes From the
Non-Physician Work Pool
We proposed to remove the non-invasive vascular diagnostic study
codes (CPT codes 93875-93990) from the non-physician work pool based on
a request from the American Association for Vascular Surgery (AAVS) and
the Society for Vascular Surgery (SVS).
Comment: We received support from vascular surgeons and others for
removing the non-invasive vascular diagnostic studies from the non-
physician work pool. These comments requested that AAVS/SVS should be
able to modify the request if CMS does not finalize its proposal to
calculate the TC practice expense RVU as the difference between the
global and professional components. We also received a number of
comments requesting that we remove other codes from the non-physician
work pool. The Society of Vascular Technology and Society of Diagnostic
Medical Sonography) requested that we remove 26 ultrasound codes in the
CPT code range 76506 through 76977. The American Society of
Neuroimaging also requested that some of these codes be removed. The
American Urological Association (AUA) also requested that we remove CPT
codes 76857, 76872, 76942 and 96400 from the non-physician work pool.
While there were no objections to removing the non-invasive vascular
diagnostic study codes, we received many comments that suggested
limiting the financial impact that removing codes from the non-
physician work pool have on the remaining codes. In particular, many of
these commenters expressed concern about the impact of removing
chemotherapy administration codes from the non-physician work pool.
Some comments provided suggestions for modifications to the non-
physician work pool (for example, using a different practice expense
per hour) that could be used if adverse impacts result from codes being
removed. One commenter suggested that we maintain the existing RVUs and
provide a downward adjustment to the CF to ensure no increase in
aggregate payment results from removing chemotherapy administration
services from the non-physician work pool.
Response: At this time, we have not received any requests to remove
chemotherapy administration from the non-physician work pool.
Nevertheless, if there are sound suggestions that could be adopted
consistent with changes in the composition of the non-physician work
pool that will improve the practice expense methodology, we may
consider adopting them in the future. Of course, as stated elsewhere,
our goal is to eliminate the non-physician work pool and apply a single
methodology to all physician fee schedule services so further
adjustments will be unnecessary. We expect this to be a top priority in
CY 2003 for determining CY 2004 physician fee schedule rates.
We have reviewed the comments to remove specific services from the
non-physician work pool. While our general policy has been that
``families'' of procedure codes should be removed from the non-
physician work pool (see the July 22, 1999 proposed rule (64 FR
39620)), we will allow individual codes to be removed if the requesting
specialty predominantly performs the requested code and other
specialties predominantly perform the other codes in the family. We
have reviewed 2001 utilization for the codes requested by the AUA.
Since urologists predominantly perform the requested codes and other
codes in the family are predominantly performed by other specialties,
we are removing the following codes from the non-physician work pool:
CPT codes 76857, 76872, 76942 and 96400. We are not removing other
codes requested in the comments because they are predominantly
performed by radiology, neurology or obstetrics-gynecology and the
specialty societies representing these physicians have not requested
that the codes be removed from the non-physician work pool.
Comment: The American College of Rheumatology (ACR) acknowledged
that the current average wholesale price (AWP) methodology provides for
a ``healthy margin overall'' in the provision of these services
[infusion agents and infusion therapy] through ``cross-subsidization.''
However, they indicated that payments for infusion therapy services are
``woefully insufficient.'' The comments from ACR and many
rheumatologists expressed concern about reductions in payment for
infusion agents in combination with maintaining the current payment
amounts for infusion therapy (CPT codes 90780 and 90781). The comments
indicated that a reduction in payment for infusion agents without an
increase in the payment for infusion therapy services will likely
result in Medicare beneficiaries being unable to receive infusion
services in physicians' offices. One commenter from a society
representing gastroenterologists indicated that we should consider
increasing the payment for non-chemotherapy infusion services. Other
comments suggested that we should use the rulemaking process to
establish HCPCS G codes to increase payment for non-chemotherapy drug
administration to a more appropriate level.
Response: We currently determine the practice expense RVUs for CPT
codes 90780 and 90781 using the non-physician work pool methodology.
One commenter suggested establishing a G code for non-chemotherapy
infusion services. While this option would allow infusion therapy to be
valued outside of the non-physician work pool, we want to avoid
establishment of G codes for services that are already described by
existing CPT codes. Another option for addressing these comments would
be to remove infusion therapy from the non-physician work pool and
allow for resource-based pricing under the top-down methodology.
However, oncologists predominantly perform these services and have not
requested removing the codes from the non-physician work pool. We are
reluctant to remove infusion therapy services from the non-physician
work pool without a request from the specialty that predominates the
data. As we previously noted, oncologists provided
[[Page 79982]]
us with a supplemental practice expense survey. At this time, we are
not incorporating the survey into the practice expense methodology
because of concerns raised by our contractor, the Lewin Group, about
the validity of some of the data. However, we hope to work with the
Lewin Group and ASCO to either get an explanation of the survey results
or use alternative data to validate the results. As we work to resolve
issues related to the ASCO survey, we will consider removing the
infusion therapy codes from the non-physician work pool.
In the interim, we note that Medicare pays for drugs based on 95
percent of AWP. This system has been widely criticized for paying
physicians for drugs at far higher rates than prices paid to obtain
them. Oncologists receive more than 70 percent of their Medicare
revenues from drugs. While we would prefer a statutory change to
address Medicare's drug pricing methodology, we are contemplating
administrative actions that may be taken under current law to address
this issue. As we consider options for changing Medicare's drug payment
methodology, we will continue examining the ASCO survey to determine
whether the data can be used to calculate the practice expense per hour
for oncology.
(C). Removal of Immunization CPT Codes 90471 and 90472 From the Non-
Physician Work Pool
We proposed to remove immunization administration services from the
non-physician work pool. We indicated this change would nearly double
payment for CPT code 90471 and slightly reduce payment for CPT code
90472. Procedure CPT code 90471 is used for immunization administration
of one vaccine and CPT code 90472 is used for the administration of
each additional vaccine. Since CPT code 90472 must be billed in
conjunction with CPT code 90471, the total payment for these procedures
would increase when billed together.
We also explained that we have not assigned immunization
administration physician work RVUs because this service does not
typically involve a physician. The nurse that administers the vaccine
typically provides the necessary counseling to the patient and this
time is accounted for in the practice expense RVU.
In addition, we noted that not all services represented by CPT
codes 90471 and 90472 are covered by Medicare. For example, medically
necessary administrations of tetanus toxoid (such as following a severe
injury) would be covered whereas preventive administration of this
vaccine would not be covered. We also indicated we would consider
whether coding changes might be appropriate to reflect the differences
in counseling of the patient and/or family for childhood immunizations.
Comment: Commenters supported our proposal to remove CPT codes
90471 and 90472 from the non-physician work pool. However, commenters
indicated elderly patients are at higher risk to acquire pathogens and
viruses and are in greater need of vaccinations. Medicare must
recognize that as part of their practice of medicine, physicians take
the time and responsibility to explain to their patients the benefits
of vaccination and the potential side effects. Physicians question the
patient about previous reactions to the vaccine and provide information
material. These comments indicated that we should assign work RVUs of
0.17 for the administration of vaccines as recommended by the RUC.
Response: The RUC has recommended that we both establish a work RVU
for CPT code 90471 and include 13 minutes of clinical staff time to
value the practice expense RVU. Further, our understanding from the RUC
is that these immunization services are also provided in conjunction
with a separately billable visit. We believe the clinical staff time
for these services is intended to account for patient counseling and
some of the activities described in the comment. Other activities
attributed to the physicians are likely being provided as part of a
separately billable office visit. For these reasons, we continue to
believe that these codes should not be assigned physician work RVUs.
Comment: Several commenters expressed concern that we did not
propose any change in the payment rate for the administration of
influenza (G0008), pneumonia (G0009), and hepatitis B (G0010) vaccines.
The commenters are concerned that we continue to link payment for the
administration of Medicare covered vaccines to a therapeutic injection
CPT code (90782) that pays at half of the proposed rate for CPT code
90471. Other commenters recommended that Medicare use the CPT codes
90471 and 90472 in place of the Medicare-only alphanumeric codes
(G0008, G0009, G0010). These comments indicated that if we are to
retain the G codes, we should publish RVUs for them that match CPT code
90471.
Response: We considered the comment to eliminate use of the G codes
and allow use of the CPT codes for the administration of Medicare
covered vaccines. However, we have decided that we will maintain these
G codes at this time. It is important that we be able to closely
monitor patient access to these important preventive services. However,
since CPT has established similar codes for immunization administration
that can be covered by Medicare, we will consider this issue further in
2003.
With respect to payment, we agree with the commenters. Rather than
link payment for procedures codes G0008, G0009, and G0010 to a service
paid under the physician fee schedule, we will develop practice expense
RVUs for these codes. Using the top-down methodology to develop
practice expense RVUs will nearly double payment for these codes and
make Medicare's payment for vaccine administration using the G codes
more consistent with the rates paid for the CPT codes. Since the
statute does not include the administration of pneumonia, influenza,
and hepatitis B vaccines within the definition of physicians' services
in section 1848(j) of the Act, the increased payment for these services
will not result in reductions to the practice expense RVUs associated
with physician fee schedule services. That is, there is no budget-
neutrality adjustment to be made for revisions in payments for the
administration of pneumonia, influenza, and hepatitis B vaccines.
Comment: One commenter indicated that Medicare does not pay for the
administration of influenza and pneumonia vaccines provided on the same
day as another physician's service.
Response: The commenter is incorrect. Medicare will pay separately
for the administration of these vaccines and other physicians' services
on the same day.
(D) Utilization Data
Medicare utilization is an important data source used in
determining the practice expense RVUs. Our current policy has been to
use the latest utilization data to develop each successive year's fully
implemented practice expense RVUs during each year of the transition.
While substituting the latest year's utilization data into the practice
expense methodology generally made little difference on total Medicare
payments per specialty, there has been a larger impact on services
affected by the non-physician work pool. Based on suggestions made by
specialty organizations, we proposed to use the CYs 1997 through 2000
utilization data to develop the CY 2003 practice expense RVUs and not
to update further the utilization data in this year's final rule
[[Page 79983]]
to incorporate the CY 2001 utilization data. Further, we proposed to
continue using the CYs 1997 through 2000 utilization data in the
practice expense methodology until we undertake the 5-year review of
practice expense RVUs.
Comment: We received comments both supporting and opposing use of
multi-year utilization data in the practice expense methodology. The
comments that ``applauded CMS's efforts to ensure the stability'' of
the practice expense RVUs largely came from organizations affected by
the non-physician work pool methodology. We also received support from
specialties that are largely unaffected by the proposal because of its
potential to provide more year-to-year stability in the practice
expense RVUs. Other commenters indicated that use of new utilization
data with a different ``mix'' of services produces unpredictable
changes in RVUs even though resource costs have not changed. There were
comments that indicated use of multi-year utilization data will restore
the unanticipated and extraordinary reductions experienced by
diagnostic imaging centers in CY 2002. These commenters urged that we
adopt our proposal in the final rule. One comment stated that
``utilization data adjustments should not change annually until the
[non-physician work pool] is eliminated and/or CMS undertakes the 5-
year review of practice expense RVUs.''
One commenter stated that it is unclear whether the multi-year
utilization will be used to develop practice expense RVUs for all
services or only those in the non-physician work pool. Another
commenter stated it is difficult to assess the impact of the proposal
and urged the agency ``not to make such a change, at least until it has
conducted extensive impact comparisons'' that can be evaluated by
physicians and other stakeholders. Other commenters suggested that we
should not update the practice expense methodology with new utilization
data without giving an opportunity for public notice and comment. A
number of commenters argued that application of a 10-percent payment
reduction in CY 1998 and the per beneficiary per facility payment cap
of $1500 cap in CY 1999 (in settings other than outpatient hospital
departments) make utilization data unreliable for therapy services
during the