[Federal Register: November 2, 1998 (Volume 63, Number 211)]
[Rules and Regulations]
[Page 58813-58862]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02no98-16]
[[Page 58813]]
_______________________________________________________________________
Part II
Department of Health and Human Services
_______________________________________________________________________
Health Care Financing Administration
_______________________________________________________________________
42 CFR Part 405, et al.
Medicare Program; Revisions to Payment Policies and Adjustments to the
Relative Value Units Under the Physician Fee Schedule for Calendar Year
1999; Final Rule and Notice
[[Page 58814]]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Parts 405, 410, 413, 414, 415, 424, and 485
[HCFA-1006-FC]
RIN 0938-AI52
Medicare Program; Revisions to Payment Policies and Adjustments
to the Relative Value Units Under the Physician Fee Schedule for
Calendar Year 1999
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: This final rule makes several policy changes affecting
Medicare Part B payment. The changes that relate to physicians'
services include: resource-based practice expense relative value units
(RVUs), medical direction rules for anesthesia services, and payment
for abnormal Pap smears. Also, we are rebasing the Medicare Economic
Index from a 1989 base year to a 1996 base year. Under the law, we are
required to develop a resource-based system for determining practice
expense RVUs. The Balanced Budget Act of 1997 (BBA) delayed, for 1
year, implementation of the resource-based practice expense RVUs until
January 1, 1999. Also, BBA revised our payment policy for nonphysician
practitioners, for outpatient rehabilitation services, and for drugs
and biologicals not paid on a cost or prospective payment basis. In
addition, BBA permits certain physicians and practitioners to opt out
of Medicare and furnish covered services to Medicare beneficiaries
through private contracts and permits payment for professional
consultations via interactive telecommunication systems. Furthermore,
we are finalizing the 1998 interim RVUs and are issuing interim RVUs
for new and revised codes for 1999. This final rule also announces the
calendar year 1999 Medicare physician fee schedule conversion factor
under the Medicare Supplementary Medical Insurance (Part B) program as
required by section 1848(d) of the Social Security Act. The 1999
Medicare physician fee schedule conversion factor is $34.7315.
DATES: Effective date: This rule this rule is effective January 1,
1999.
Applicability date: Part 405 subpart D is applicable for private
contract affidavits signed and private contracts entered into on or
after January 1, 1999.
This rule is a major rule as defined in Title 5, United States
Code, section 804(2). Pursuant to 5 U.S.C. section 801(a)(1)(A), we are
submitting a report to the Congress on this rule on October 30, 1998.
Comment date: We will accept comments on interim RVUs for selected
procedure codes identified in Addendum C and on interim practice
expense RVUs for all codes as shown in Addendum B. Comments will be
considered if we receive them at the appropriate address, as provided
below, no later than 5 p.m. on January 4, 1999.
ADDRESSES: Mail written comments (1 original and 3 copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: HCFA-1006-FC, P.O. Box 26688,
Baltimore, MD 21207-0488.
If you prefer, you may deliver your written comments (1 original
and 3 copies) to one of the following addresses:
Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room C5-14-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code HCFA-1006-FC. Comments received timely will be available
for public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 443-G of
the Department's offices at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.
(phone: (202) 690-7890).
FOR FURTHER INFORMATION CONTACT:
Roberta Epps, (410) 786-4503 (for issues related to outpatient
rehabilitation services).
Stephen Heffler, (410) 786-1211 (for issues related to the Medicare
Economic Index).
Anita Heygster, (410) 786-4486 (for issues related to private
contracts).
Jim Menas, (410) 786-4507 (for issues related to Pap smears and medical
direction for anesthesia services).
Robert Niemann, (410) 786-4569 (for issues related to the drugs and
biologicals policy).
Regina Walker-Wren, (410) 786-9160 (for issues related to physician
assistants, nurse practitioners, clinical nurse specialists, and
certified nurse-midwives).
Craig Dobyski, (410) 786-4584 (for issues related to
teleconsultations).
Stanley Weintraub, (410) 786-4498 (for issues related to practice
expense relative value units and all other issues).
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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 not exclusively in part IX.
Table of Contents
I. Background
A. Legislative History
B. Published Changes to the Fee Schedule
II. Specific Proposals for Calendar Year 1998; Response to Comments
A. Resource-Based Practice Expense Relative Value Units
1. Resource-Based Practice Expense Legislation
2. Proposed Methodology for Computing Practice Expense Relative
Value Units
3. Other Practice Expense Policies
[[Page 58815]]
4. Refinement of Practice Expense Relative Value Units
5. Reductions in Practice Expense Relative Value Units for
Multiple Procedures
6. Transition
B. Medical Direction for Anesthesia Services
C. Separate Payment for a Physician's Interpretation of an
Abnormal Papanicolaou Smear
D. Rebasing and Revising the Medicare Economic Index
III. Implementation of the Balanced Budget Act
A. Payment for Drugs and Biologicals
B. Private Contracting with Medicare Beneficiaries
C. Payment for Outpatient Rehabilitation Services
1. BBA 1997 Provisions Affecting Payment for Outpatient
Rehabilitation Services
a. Reasonable Cost-Based Payments
b. Prospective Payment System for Outpatient Rehabilitation
Services
(1) Overview
(2) Services Furnished by Skilled Nursing Facilities
(3) Services Furnished by Home Health Agencies
(4) Services Furnished by Comprehensive Outpatient
Rehabilitation Facilities
(5) Site-of-Service Differential
(6) Mandatory Assignment
2. Uniform Procedure Codes for Outpatient Rehabilitation
Services
3. Financial Limitation
a. Overview
b. Use of Modifiers to Track the Financial Limitation
c. Treatment of Services Exceeding the Financial Limitation
4. Qualified Therapists
5. Plan of Treatment
D. Payment for Services of Certain Nonphysician Practitioners
and Services Furnished Incident to their Professional Services
E. Payment for Teleconsultations in Rural Health Professional
Shortage Areas
IV. Refinement of Relative Value Units for Calendar Year 1999 and
Responses to Public Comments on Interim Relative Value Units for
1998
A. Summary of Issues Discussed Related to the Adjustment of
Relative Value Units
B. Process for Establishing Work Relative Value Units for the
1999 Fee Schedule
V. Physician Fee Schedule Update and Conversion Factor for Calendar
Year 1999
VI. Provisions of the Final Rule
VII. Collection of Information Requirements
VIII. Regulatory Impact Analysis
A. Regulatory Flexibility Act
B. Resource-Based Practice Expense Relative Value Units
C. Medical Direction for Anesthesia Services
D. Separate Payment for a Physician's Interpretation of an
Abnormal Papanicolaou Smear
E. Rebasing and Revising the Medicare Economic Index
F. Payment for Nurse Midwives' Services
G. BBA Provisions Included in This Proposed Rule
H. Impact on Beneficiaries
Addendum A--Explanation and Use of Addenda B and C
Addendum B--Relative Value Units (RVUs) and Related Information
Addendum C--Codes with Interim RVUs
In addition, because of the many organizations and terms to which
we refer by acronym in this final rule, we are listing these acronyms
and their corresponding terms in alphabetical order below:
AANA: American Association of Nurse Anesthetists
ABC: Activity based costing
ABN: Advance Beneficiary Notice
AHE: Average hourly earnings
AMA: American Medical Association
ANCC: American Nurses Credentialing Center
ASA: American Society of Anesthesiologists
ASOPA: American Society of Orthopedic Physician Assistants
AWP: Average wholesale price
BBA: Balanced Budget Act of 1997
BLS: Bureau of Labor Statistics
CAAHEP: Commission on Accreditation of Allied Health Education
Programs
CF: Conversion factor
CFR: Code of Federal Regulations
CMSAs: Consolidated Metropolitan Statistical Areas
CORF: Comprehensive outpatient rehabilitation facility
CPEPs: Clinical Practice Expert Panels
CPI: Consumer Price Index
CPI-U: Consumer Price Index for All Urban Consumers
CPS: Current Population Survey
CPT: [Physicians'] Current Procedural Terminology
CRNA: Certified Registered Nurse Anesthetist
DME: Durable medical equipment
DMEPOS: Durable medical equipment, prosthetics, orthotics, and
supplies
DRG: Diagnosis-related group
EAC: Estimated acquisition cost
ECI: Employment Cost Index
ES-202 Data: Bureau of Labor Statistics from State unemployment
insurance agencies
ESRD: End-stage renal disease
FDA: Food and Drug Administration
FMR: Fair market rental
FQHC: Federally qualified health center
GAAP: Generally accepted accounting principles
GAF: Geographic adjustment factor
GPCI: Geographic practice cost index
HCFA: Health Care Financing Administration
HCPAC: Health Care Professionals Advisory Committee
HCPCS: HCFA Common Procedure Coding System
HHA: Home health agency
HHS: [Department of] Health and Human Services
HMO: Health maintenance organization
HPSA: Health professional shortage area
HRSA: Health Resources and Services Administration
HUD: [Department of] Housing and Urban Development
IPLs: Independent Physiologic Laboratories
MedPAC: Medicare Payment Advisory Commission
MEI: Medicare Economic Index
MGMA: Medical Group Management Association
MSA: Metropolitan Statistical Area
MSA: Medicare Supplemental Insurance
MVPS: Medicare volume performance standard
NAIC: National Association of Insurance Commissioners
NBCOPA: National Board on Certification for Orthopedic Physician
Assistants
NCCPA: National Council on Certification of Physician Assistants
NPI: National provider identifier
OBRA: Omnibus Budget Reconciliation Act
OTIP: Occupational therapist in independent practice
PC: Professional component
PHS: Public Health Service
PMSA: Primary Metropolitan Statistical Area
PPI: Producer price index
PPS: Prospective payment system
PTIP: Physical therapist in independent practice
RBRVS: Resource Based Relative Value Scale
RHC: Rural health clinic
RUC: [AMA's Specialty Society] Relative [Value] Update Committee
RN: Registered nurse
RVU: Relative value unit
SMS: Socioeconomic Monitoring System
SNF: Skilled nursing facility
TC: Technical component
TEFRA: Tax Equity and Fiscal Responsibility Act
UPIN: Uniform provider identifier number
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 contains three major elements: (1)
A fee schedule for the payment of physicians' services; (2) a
sustainable growth rate for the rates of increase in Medicare
expenditures for physicians' services; and (3) limits on the amounts
that nonparticipating physicians can charge beneficiaries. 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 because of changes resulting from a review of those 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 this tolerance is exceeded, we must make adjustments to the
conversion factors (CFs) to preserve budget neutrality.
[[Page 58816]]
B. Published Changes to the Fee Schedule
In the June 5, 1998, proposed rule (63 FR 30820), we listed all of
the final rules published through October 31, 1997 relating to the
updates to the RVUs and revisions to payment policies under the
physician fee schedule. In the June 5, 1998 proposed rule (63 FR
30818), we discussed several policy options affecting Medicare payment
for physicians' services including resource-based practice expense
RVUs, medical direction rules for anesthesia services, and payment for
abnormal Pap smears. Also, we discussed the rebasing of the Medicare
Economic Index from a 1989 base year to a 1996 base year. Further,
based on BBA, we proposed revising our payment policy for nonphysician
practitioners, for outpatient rehabilitation services, and for drugs
and biologicals not paid on a cost or prospective payment basis. In
addition, based on BBA, we discussed implementing new payment policies
for certain physicians and practitioners who opt out of Medicare and
furnish covered services to Medicare beneficiaries through private
contracts. And finally, based on BBA, we discussed teleconsultation
services.
This final rule affects the regulations set forth at 42 CFR part
405, which consists of regulations on Federal health insurance for the
aged and disabled; part 410, which consists of regulations on
supplementary medical insurance benefits; part 414, which consists of
regulations on the payment for Part B medical and other health
services; part 415, which pertains to services furnished by physicians
in providers, supervising physicians in teaching settings, and
residents in certain settings; part 424, which pertains to the
conditions for Medicare payment; and part 485, which pertains to
conditions of participation: specialized providers.
II. Specific Proposals for Calendar Year 1998; Response to Comments
In response to the publication of the June 5, 1998 proposed rule,
we received approximately 14,000 comments. We received comments from
individual physicians, health care workers, and professional
associations and societies. The majority of the comments addressed the
proposal related to the resource-based practice expense policy.
The proposed rule discussed policies that affect 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 will
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 1999. We discuss in detail the
effects of these changes in the Regulatory Impact Analysis (section
IX).
For the convenience of the reader, the headings for the policy
issues in this section correspond to the headings used in the June 5,
1998 proposed rule. More detailed background information for each issue
can be found in the June 5, 1998 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 (Public
Law 103-432), enacted on October 31, 1994, required us to develop a
methodology for determining resource-based practice expense RVUs for
each physician's service that would be effective for services furnished
in 1998. In developing the methodology, we were required 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.
On August 5, 1997, the President signed the BBA into law. Section
4505(a) of BBA delayed the effective date of the resource-based
practice expense RVU system until January 1, 1999. In addition, BBA
provided for the following revisions in the requirements to change from
a charge-based practice expense RVU system to a resource-based method.
Instead of paying for all services entirely under a resource-based
system in 1999, section 4505(b) of BBA provided for a 4-year transition
period. The practice expense RVUs for the year 1999 will be the product
of 75 percent of charge-based RVUs (1998) and 25 percent of the
resource-based RVUs. For the year 2000, the percentages will be 50
percent charge-based and 50 percent resource-based. For the year 2001,
the percentages will be 25 percent charge-based and 75 percent
resource-based. For subsequent years, the RVUs will be totally
resource-based.
Section 4505(e) of BBA provided that, for 1998, the practice
expense RVUs be adjusted for certain services in anticipation of the
implementation of resource-based practice expenses beginning in 1999.
Practice expense RVUs for office visits were increased.
For other services whose practice expense RVUs (determined for
1998) exceeded 110 percent of the work RVUs and were provided less than
75 percent of the time in an office setting, the 1998 practice expense
RVUs were reduced to a number equal to 110 percent of the work RVUs.
This limitation did not apply to services that had a proposed resource-
based practice expense RVU in the June 5, 1998 proposed rule that was
an increase from its 1997 practice expense RVU.
The total of the reductions under this provision was less than the
statutory maximum of $390 million. The procedure codes affected and the
final RVUs for 1998 were published in the October 31, 1997 final rule
(62 FR 59103).
Section 4505(d)(2) of BBA required that the Secretary transmit a
report to the Congress by March 1, 1998, including a presentation of
data to be used in developing the practice expense RVUs and an
explanation of the methodology. A report was submitted to the Congress
in early March 1998. Section 4505(d)(3) required that a proposed rule
be published by May 1, 1998, with a 90-day comment period. For the
transition to begin on January 1, 1999, a final rule must be published
by October 30, 1998.
BBA also required that we develop new resource-based practice
expense RVUs. In developing these new practice expense RVUs, section
4505(d)(1) required us to--
<bullet> Utilize, to the maximum extent practicable, generally
accepted accounting principles that recognize all staff, equipment,
supplies, and expenses, not just those that can be tied to specific
procedures, and use actual data on equipment utilization and other key
assumptions;
<bullet> Consult with organizations representing physicians
regarding the methodology and data to be used; and
<bullet> Develop a refinement process to be used during each of the
four years of the transition period.
2. Proposed Methodology for Computing Practice Expense Relative Value
Units
(See Addendum B in the June 5, 1998 proposed rule (63 FR 30888) for a
detailed technical description of the proposed methodology.)
In the June 5, 1998 proposed rule (63 FR 30827), we proposed a
methodology
[[Page 58817]]
for computing resource-based practice expense RVUs that uses 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's) Socioeconomic Monitoring System (SMS) data. This
methodology is based on an assumption that current aggregate specialty
practice costs are a reasonable way to establish initial estimates of
relative resource costs of physicians' services across specialties. It
then allocates these aggregate specialty practice costs to specific
procedures and, thus, can be seen as a ``top-down'' approach.
Practice Expense Cost Pools
We used actual practice expense data by specialty, derived from the
1995 through 1997 SMS survey data, to create six cost pools:
administrative labor, clinical labor, medical supplies, medical
equipment, office supplies, and all other expenses. There were three
steps in the creation of the cost pools.
Step 1: We used the AMA's SMS survey of actual cost data to
determine practice expenses per hour by cost category. The practice
expenses per hour for each physician respondent's practice was
calculated as the practice expenses for the practice divided by the
total number of hours spent in patient care activities by the
physicians in the practice. The practice expenses per hour for the
specialty are an average of the practice expenses per hour for the
respondent physicians in that specialty.
Step 2: We determined the total number of physician hours, by
specialty, spent treating Medicare patients. This was calculated from
physician time data for each procedure code and the Medicare claims
data. The primary sources for the physician time data were surveys
submitted to the AMA's Specialty Society Relative Value Update
Committee (RUC) and surveys done by Harvard for the initial
establishment of the work RVUs.
Step 3: We then calculated the practice expense pools by specialty
and by cost category by multiplying the practice expenses per hour for
each category by the total physician hours.
Cost Allocation Methodology
For each specialty, we separated the six practice expense pools
into two groups and used a different allocation basis for each group.
<bullet> For group one, which includes clinical labor, medical
supplies, and medical equipment, we used the CPEP data as the
allocation basis. The CPEP data for clinical labor, medical supplies,
and medical equipment were used to allocate the clinical labor, medical
supplies, and medical equipment cost pools, respectively.
<bullet> For group two, which includes administrative labor, office
expenses, and all other expenses, a combination of the group one cost
allocations and the physician fee schedule work RVUs were used to
allocate the cost pools.
<bullet> 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.
Other Methodological Issues
Professional and Technical Component Services
Using the methodology described above, the professional and
technical components of the resource-based practice expense RVUs do not
necessarily sum to the global resource-based practice expense RVUs
since specialties with different practice expenses per hour provide the
components of these services in different proportions. We made two
adjustments to the methodology, depending on the specific HCFA Common
Procedure Coding System (HCPCS) code, so that the professional and
technical component practice expense RVUs for a service sum to the
global practice expense RVUs.
Practice Expenses per Hour Adjustments and Specialty Crosswalks
Since many specialties identified in our claims data did not
correspond exactly to the specialties included in the practice expenses
tables from the SMS survey data, it was necessary to crosswalk these
specialties to the most appropriate SMS specialty category. (See Table
3 in the June 5, 1998 proposed rule (63 FR 30833) for a listing of all
proposed crosswalks.)
We also made the following adjustments to the practice expense per
hour data:
<bullet> We set the medical materials and supplies practice
expenses per hour for the specialties of ``Oncology'' and ``Allergy and
Immunology'' equal to the medical materials and supplies practice
expenses per hour for ``All Physicians,'' stating that we make separate
payment for the drugs furnished by these specialties.
<bullet> We based the administrative payroll, office, and other
practice expenses per hour for the specialties of ``Physical Therapy''
and ``Occupational Therapy'' on data used to develop the salary
equivalency guidelines for these specialties. We set the remaining
practice expense per hour categories equal to the ``All Physicians''
practice expenses per hour from the SMS survey data.
<bullet> Due to uncertainty concerning the appropriate crosswalk
and time data for the nonphysician specialty ``Audiologist,'' we
derived the resource-based practice expense RVUs for codes performed by
audiologists from the practice expenses per hour of the other
specialties that perform these codes.
<bullet> Because we believed that the use of the average practice
expenses per hour should create the appropriate practice expense pool
for radiology, we did not attempt to differentiate the practice
expenses per hour for radiologists according to who owned the
equipment.
Time Associated With the Work Relative Value Units
The time data resulting from the refinement of the work RVUs have
been, on the average, 25 percent greater than the time data obtained by
the Harvard study for the same services. We increased the Harvard time
data in order to ensure consistency between these data sources.
For services such as radiology, dialysis, and physical therapy, and
for many procedures performed by independent physiological laboratories
and the nonphysician specialties of clinical psychologist and
psychologist (independent billing), we calculated estimated total
physician times for these services based on work RVUs, maximum clinical
staff time for each service as shown in the CPEP data, or the judgment
of our clinical staff.
We calculated the time for Current Procedural Terminology (CPT)
codes 00100 through 01996 using the base and time units from the
anesthesia fee schedule and the Medicare allowed claims data.
We received the following comments on our proposed methodology to
calculate resource-based practice expense RVUs:
Top-Down Methodology
Comment: Most of the physician specialty societies commenting on
our proposed general methodology supported the use of the top-down
approach as the most reasonable methodology for developing resource-
based practice expense RVUs, and the most responsive approach to the
requirements of BBA. This was echoed by comments from several
nonphysician organizations, the Association of American Medical
Colleges, and the Medical Group Management
[[Page 58818]]
Association, as well as several hundred individual commenters.
These commenters supported the top-down method for a variety of
reasons:
<bullet> It reflects the relative values of physicians' actual
practice expenses.
<bullet> It uses the best available sources of aggregate practice
expense data.
<bullet> It recognizes specialty-specific indirect costs.
<bullet> It does not rely upon arbitrary, distorting data
adjustments such as ``linking'' and ``scaling.''
<bullet> It is conducive to refinement.
MedPAC also agreed that this approach is necessary, because of
limitations in the CPEP process and because the top-down approach
assures that all practice costs are reflected in the RVUs.
However, several organizations, mainly representing primary care
physicians and supported by comments from individual physicians,
opposed the use of a top-down methodology to develop practice expense
RVUs. They argued that the top-down approach is not resource-based but,
rather, rewards higher paid physicians who have spent more in the past,
regardless of the extent to which these expenditures contributed to
patient care. Thus, the commenters claimed that the top-down approach
perpetuates the inequities in the current charge-based practice expense
RVUs that the implementation of a resource-based practice expense
system was supposed to correct.
One commenter also claimed that the top-down approach is not
responsive to the requirements of BBA, as the methodology is not based
on generally accepted accounting principles. Further, the commenter
argued that this new proposal is not more responsive to the concerns of
the medical community in general but, rather, only benefits those
specialties whose income was projected to decline under the bottom-up
approach.
A specialty society representing clinical oncology opposed the top-
down methodology because--
<bullet> It does not actually measure appropriate input resource
costs and thus pays for inefficiencies;
<bullet> It overpays hospital-based and underpays office-based
services; and
<bullet> The RVUs for individual codes cannot be refined because of
the use of macro-specialty per hour costs.
There were several comments that expressed concern about the more
specific impacts of the methodology. A major primary care organization
pointed out that, under the 1997 proposed rule, an internist would have
had to provide only 15 midlevel established patient office visits to
obtain the practice expense reimbursement of a single coronary triple-
bypass graft, compared to 40 visits under our current proposal. One
organization opposed the use of the top-down approach because of the
estimated reduction in payments to radiology and radiation oncology.
Another commenter, representing pathologists, expressed concern that
because pathology received small gains under the bottom-up method, but
a 10 percent reduction under the top-down, there are possible flaws in
the top-down methodology.
A few of the above comments specifically recommended that we adopt
a new bottom-up approach that is responsive to the BBA, the General
Accounting Office (GAO), and the concerns of the medical community.
Another organization commented that both top-down and bottom-up
methodologies are inherently flawed, and that we should consider an
entirely new payment algorithm using type of practice. One of the major
primary care organizations concluded that the top-down methodology is
only a reasonable starting point that will need to be improved during
refinement in order to meet the original intent of improving practice-
expense payments for undervalued primary care and other office-based
services.
Response: As we stated in our proposed rule, BBA requires us to
``utilize, to the maximum extent practicable, generally accepted cost
accounting principles which recognize all staff, equipment, supplies,
and expenses, not just those which can be tied to specific
procedures****'' We still believe that the top-down methodology is more
responsive to this BBA requirement. By using aggregate specialty
practice costs as the basis for establishing the practice expense
pools, the top-down method recognizes all of a specialty's costs, not
just those linked to specific procedures.
We also believe that the other reasons outlined in the proposed
rule for preferring the top-down method are still valid. It answers
many of the criticisms and questions from the medical community and the
GAO regarding the bottom-up method's indirect practice expense
allocation method, treatment of administrative costs, and use of caps
and linking.
However, we agree that a possible weakness of the top-down approach
is that it may perpetuate historical inequities in the current charge-
based practice expense RVUs. More highly paid physicians would
presumably have more revenues that could subsequently be spent on their
practices. We believe this issue should be discussed during the
refinement process.
Comment: One major organization commented that we will need to
develop an alternative method for new and revised codes that are not
included in the SMS data because having multiple methods would lead to
questionable validity.
Response: It will not be necessary to develop an alternate
methodology for refinement of new and revised codes. Once direct inputs
are assigned to the new and revised codes, allocation to these codes
will follow the same methodology used for all other services. (See
Section II.A.4, Refinement of Practice Expense RVUs.)
Comment: Two major primary care organizations expressed concern
that we did not consult with the physician community about our
intention to abandon, rather than refine, our originally proposed
bottom-up approach, since they had assumed we would only be modifying
our original methodology. They commented that this is of greater
concern in light of BBA's requirement that we consult with physicians
regarding our methodology and of GAO's recommendation that we refine,
with no mention of replacing, the bottom-up method. One of the comments
stated, that as the GAO found the bottom-up method acceptable, their
society would like the GAO's assurance that the new method is sound.
Response: We believe we carried out the BBA requirement to consult
with physician organizations. There were extensive consultations with
physicians, including the validation panels, the cross specialty panel,
and the indirect cost symposium. During the course of each of these
meetings, physicians and others pointed out serious problems with the
bottom-up methodology. We have had two multispecialty meetings this
year to explain our proposed methodology and have also had numerous
meetings and discussions with many specialty societies. During all
these meetings we carefully listened to all points of view and to
suggestions for developing the new proposal. Following this lengthy
consultation process, we published our new proposal with a 90-day
comment period. This provided further opportunities for all interested
groups to review and comment on this proposal.
It is true that the GAO did not recommend that we totally replace
our bottom-up approach. It is our understanding that the GAO was not
asked to review alternative methods. In any case, their report did not
recommend against adopting a new methodology. Their report did point
out
[[Page 58819]]
several significant weaknesses in our original approach that we
believed were better responded to by adopting a top-down methodology.
Comment: One organization urged that we publish the practice-
expense RVUs three ways, using a top-down, a bottom-up, and a hybrid
approach that uses SMS data for indirect costs and CPEP data for direct
costs. The bottom-up and hybrid approaches should reflect the
recommendations previously received relating to scaling, linking, and
the treatment of administrative costs. This could provide a basis for
developing comments that compare the interim practice expense RVUs with
those derived from a modified bottom-up approach. The commenter stated
that we should be open to considering arguments for a change in the
interim practice expense RVUs based on a group's determination that the
values under the bottom-up approach were more accurate.
Response: We believe that we proposed the methodology for
developing resource-based practice expense RVUs that best responds to
the requirements of the Social Security Act Amendments of 1994 and BBA.
From a practical standpoint, it would be very difficult to deal with
the inconsistencies between RVUs for various services that have been
derived from totally different methodologies.
SMS Data
Comment: Almost all specialty society commenters, and many
individual commenters, raised questions concerning shortcomings in the
SMS data, though several commented that SMS is the most appropriate
data source to use in developing specialty-specific practice expense
RVUs. As we noted in the proposed rule, the AMA itself pointed out that
the survey had not been designed to support the development of practice
expense RVUs. The AMA also stated that the sample size, the response
rate, and the fact that data was collected on the physician level,
rather than the practice level, raised methodological issues. Many
commenters echoed these concerns, and many raised what they saw as
further general methodological problems:
<bullet> MedPAC expressed concern about three types of potential
errors in the SMS data: the sampling error and nonresponse error
originally identified in our proposed rule and measurement error. Some
of this measurement error could occur because the survey measures
physician-level rather than practice-level costs, as noted above. In
addition, there could be measurement error by using a self-reported
survey if no mechanism exists to verify the information provided.
MedPAC suggested that we could reduce these errors through
additional data collection, perhaps implementing a subsample of SMS
survey participants, through an analysis of nonresponse error that
compares respondents with nonrespondents, through AMA's plans to do a
practice-level survey every other year, and through considering
methods, other than actual audits, to verify survey responses.
<bullet> Several of the smaller specialties, such as maxillofacial,
pediatric, vascular and thoracic surgeons, cardiology and gynecology
subspecialties, geriatricians, and pulmonologists expressed concern
with the validity and reliability of SMS data for those specialty and
subspecialty groups not adequately represented in the SMS survey. A
commenter also stated that academic and hospital-based specialties,
such as critical care and neonatology, were not appropriately
represented. Many specialty societies requested that we consider
practice expense data obtained by under-represented specialty and
subspecialty groups.
<bullet> Several nonphysician specialties, though supporting the
use of SMS data, raised the need to modify the survey to include
nonphysicians in the future. A commenter stated that, because
nonphysicians were not represented in the SMS survey, we have been
forced to make an educated guess about which specialties they most
resemble. Another commenter pointed out that the SMS data contains no
information about osteopathic physicians.
<bullet> Several specialties, regardless of their overall sample
size, expressed concerns about the combining together of subspecialties
with differing practice costs. For example, organizations representing
cardiologists commented that it is not known how many in their sample
were providing evaluation and management services, as opposed to
performing equipment intensive procedures that have much higher costs.
Two specialty societies representing nuclear physicians, along with
several hundred individual commenters, objected to the small sample of
this subspecialty, with its high costs related to the use of
radiopharmaceuticals, being combined with radiologists into a single
practice expense pool. The comments recommended that we increase
nuclear medicine's practice expense RVUs by 20 percent.
Similarly, a vascular surgery organization objected to being
combined with cardiothoracic surgeons, who made up 75 percent of the
sample and whose practice style differs substantially from vascular
surgeons. An organization representing pediatrics expressed concern
that pediatric subspecialties were grouped together with their adult
counterparts, such as gastroenterology. The AMA commented on this point
that it plans refinements for future surveys to enhance the utility of
the data.
<bullet> Several commenters noted that the survey consisted of
physician-owned practices, despite the trend toward more physicians
working as employees, resulting in a possible bias toward solo or small
group practices. For example, one commenter stated that the majority of
emergency room physicians now work as employees or under contract.
Another commenter asserted that the majority of pediatricians list
their status as ``employed.'' The AMA commented, in this regard, that a
key refinement to the SMS survey will be the development of a practice-
level survey to complement the current process.
<bullet> One commenter questioned our assumption that physician
respondents to SMS share practice expenses equally with all other
physician owners in the practice, since there is no data to show that
this is the prevalent method.
<bullet> An organization representing nurses commented that issues
related to changes in acuity and case mix in ambulatory care are not
being addressed, particularly as they pertain to the increased
professionalization of clinical staff types. The organization argued
that there is a need to incorporate into the survey process a clearer
distinction between the types of clinical staff that are employed based
on specialty practice.
<bullet> Concerns were raised by some commenters that the SMS data
did not always include the actual costs of a given specialty. Several
organizations representing radiologists, radiation oncologists, and
cardiologists commented that the methodology employed by the SMS survey
consistently underestimated the actual costs of equipment.
Organizations representing emergency room physicians, supported by the
comment from the AMA, argued that the significant costs of both stand-
by time and uncompensated care are not reflected in the SMS data and
that these costs need to be recognized.
A gastroenterology specialty society asserted that the SMS data
grossly understated actual expenses when compared to its own study. Two
commenters stated that costs for home visits, such as travel expenses
and insurance, are not adequately represented in the data. One
organization commented that the SMS
[[Page 58820]]
data fails to adequately incorporate resources, including billing,
nursing time, and transportation costs for audiologists utilized in
settings such as skilled nursing facilities.
One commenter stated that the added costs for compliance with
federal initiatives, such as anti-fraud and abuse efforts and the new
evaluation and management documentation guidelines, are not yet
reflected in the SMS data. These costs should be recognized during the
refinement process and included in future surveys.
<bullet> On the other hand, several commenters argued that costs
were included in the SMS data that should be excluded because they are
paid for separately from the physician fee schedule. One commenter
pointed to separately reimbursable supplies and drugs, and another to
the costs of taking physician staff into the hospital, as examples of
costs included in SMS that could lead to a double payment by Medicare.
A society representing vascular surgeons commented that the technical
component of noninvasive vascular laboratory testing falls into this
``gray zone.''
<bullet> A national specialty society commented that the AMA
analysis of the ``zero'' responses by specialty by cost categories
(that is, those cost categories where respondents indicated there were
no costs) shows that a significant percentage of pathologists'
responses for direct cost categories are zero as compared to the
``zero'' response rates for all physicians. The comment requested that
the SMS pathology data be cleared of all ``zero'' responses for all
cost categories, not just for the total cost category, prior to the
calculation of mean costs. For the purpose of calculating practice
expense per hour for pathology, the society said, we should only use
data from pathologists who incur a particular cost.
<bullet> There were a number of comments concerning the SMS data on
the specialty-specific physician patient care hours, which is one of
the variables used to compute the practice expense per hour for each
specialty:
<bullet> Many specialty societies stated their concern that in the
calculation of the specialty-specific practice expense per hour,
specialties working the longest hours are disadvantaged. One commenter
pointed out that practice expense is not uniformly distributed over the
course of a given day; there are less costs when patient care takes
place after, rather than during, office hours.
Another commenter argued that our approach assumes that all of the
patient care hours in the SMS survey are reflected in our claims data.
However, the commenter stated, much time spent in patient care
activities is not billable, such as the involvement of transplant
surgeons in patient care after the initial assessments but prior to the
actual transplants.
One specialty society stated that hospital-based physicians' hours
of work are probably overstated, as they will include total time spent
in the facility and not just hours of providing patient services. One
commenter questioned both the accuracy of the SMS data on hours worked
per week, as well as our assumption that the level of practice expense
incurred increases proportionally with the hours spent in patient care.
An organization stated that physician reports of number of hours are
less reliable than the reports of costs and are prone to overstatement.
For these reasons, five specialty societies recommended using a
standardized work week, usually a 40-hour week, for all specialties.
<bullet> Many other specialty groups argued equally vehemently
against any standardization of the patient care hours. One group
commented that subjective adjustments to the SMS data, especially those
which reallocate practice expenses among specialties, should be
avoided. The comment added that suggestions that a standardized 40-hour
work week be imposed on the data should be rejected because the
proposal is driven by an arbitrary, subjective presumption that cross-
specialty practice expense variations are ``too large.''
Another group argued that, as many physicians work more than a 40-
hour week, such an adjustment would introduce additional error into the
data and distort the relationship between different specialties'
practice expenses per hour.
<bullet> Three organizations were concerned about the advantage
given to specialties that use nonphysician practitioners who are not
reimbursable. In such cases, the physician would incur practice expense
costs, but the time of practitioners would not be included in the
physician patient care hours in the denominator of the practice expense
per hour calculation.
On the other hand, another commenter stated that we should not
adjust the SMS data for midlevel practitioners, such as optometrists or
audiologists, as physician practices employing midlevel practitioners
are likely to be more complex than a physician-only operation.
<bullet> One specialty society commented that the demographics of
the SMS survey are not clear, as there are no assurances that the
sample is not biased towards one particular area of the country and
does not exclude some areas.
Response: We believe that most of the above comments identified
important areas for needed future improvement in our data collection
efforts on aggregate specialty-specific practice expense. However,
although the SMS survey was not initially intended to be used to
develop practice expense RVUs, we believe it is the best available
source of data on actual multispecialty practice costs that allows us
to recognize all staff, equipment, supplies, and expenses, not just
those that can be tied to specific procedures. Many specialties
supported this.
For example, a specialty society commented, ``As with any complex
database, the AMA SMS database is not perfect. It is, however, the best
available source of data for aggregate practice expenses.'' The Medical
Group Management Association (MGMA) stated in its comment that, ``The
SMS survey data is the most appropriate and only primary data set in
existence to determine specialty specific costs pools.''
We also need to point out that many of the weaknesses in the SMS
data could well be found in any other survey, whether undertaken by us,
some other national group, or a medical specialty society. Problems
with sample size and response rate have plagued other previous attempts
to gather reliable data on practice expenses. Problems with measurement
error may be a serious impediment for survey data that is collected
with the purpose of influencing the level of a given specialty's
practice expense pool. In fact, we believe one advantage of the current
SMS data is that they were collected before the 1997 and 1998 proposed
rules were published.
We recognize that some specialties are under-represented or not
appropriately represented in the SMS data and some are not included at
all. We also acknowledge that additional data may need to be obtained
and some adjustments made. One of our most important tasks during the
immediate refinement period will be to work with the AMA and the
medical community to consider possible ways to improve the
representativeness of the aggregate specialty-specific data so that
sampling error is decreased. As part of the refinement, we will also
need to develop strategies to eliminate as many sources of nonresponse
and measurement error as possible. (For further information on our
refinement efforts to improve the accuracy of our
[[Page 58821]]
data, see Section II.A.4, Refinement of Practice Expense RVUs.)
As indicated earlier, we believe an advantage of the SMS data we
used is that it was collected prior to the proposed rule. In fact, it
was collected prior to the original proposal in 1997 that was delayed
by BBA and that would have resulted in large redistributions among
specialties.
We are very concerned, though, about the potential biases that may
exist in any subsequent survey data collected by the SMS process or
other surveys. We especially believe there is a problem in using data
collected and submitted to us by individual specialties. We believe it
is more appropriate to use data collected at the same time by an
independent surveyor for a wide variety of specialties that both gain
and lose under the proposal.
Further, now that it is widely known how these survey data are
being used, every specialty has an incentive to ensure that their data
are as high as possible in future surveys. We agree with MedPAC that it
may not be possible for Medicare to audit these data and that it is
essential that alternatives be established by SMS and others. Perhaps
specialty data that significantly changes in a future survey should be
selectively audited by SMS through an independent auditor or other
appropriate entity before being considered for use by us. We will
consult with physician groups and others about this during the
refinement process.
Comment: One national organization suggested the use of MGMA survey
data either as a supplement or alternative to SMS in the future.
Response: We do not believe that the MGMA survey could currently be
used as an alternative to SMS. As we noted in our proposed rule, due to
selective sampling and low response rate, this survey is not
representative of the population of physicians and cannot be used to
derive code-specific RVUs. This view is based on consultations with
MGMA representatives. However, we do believe that this survey data can
be used as one way to validate the general accuracy of the SMS data. We
have analyzed the MGMA data and have concluded that, in general, it
supports the relative specialty-specific ranking of the practice
expense per hour data derived from the SMS survey.
Comment: One specialty society recommended using median, instead of
mean, values to calculate each specialty's practice expense per hour.
This comment argued that the use of medians would eliminate outliers
and is statistically more appropriate.
However, three other organizations specifically commented
supporting our decision to use mean SMS data rather than median data.
These comments asserted that, particularly with a small sample, use of
the median would obscure any major differences in practice costs within
a specialty.
Response: We will continue to calculate the practice expenses per
hour by using the mean values for each specialty, at least for the
purposes of this final rule. This is another issue that can be
revisited during the refinement period.
Comment: Organizations representing emergency room physicians, as
well as several hundred individual commenters, claimed that the SMS
data seriously under-represented the true practice costs of emergency
care. The commenters stated that the SMS data, as noted above, did not
include costs of uncompensated care, much of it mandated under the
Federal Emergency Medical Treatment and Active Labor Act (Public Law
99-272), nor stand-by expenses.
In addition, the comments argued, the SMS data failed to capture a
representative cross-section of their types of practice arrangements;
the SMS survey focused on physician owners, but the majority of
emergency room physicians work as employees or under contract.
Therefore, one commenter asserted, SMS did not include the largest
single expense for most emergency physicians: the costs associated with
employment by practice management firms, which can total between 30-40
percent of the physician's fee.
One of the specialty societies included with its comments the
results of a study it commissioned, which showed that the mean practice
expense per hour for emergency physicians was $27.33, more than double
the $13 per hour based on SMS, even without including uncompensated
care. If we are not willing at this time to substitute this survey data
for that from the SMS, the organization recommended, with support from
a comment from the AMA, that we crosswalk emergency medicine to the
practice expense per hour for ``All Physicians,'' which is $67.50.
Response: Though many specialties must deal with the issue of
uncompensated care, we do agree that it may pose a particular problem
for emergency physicians, who are obligated under law to treat any
patient regardless of the patient's ability or willingness to pay for
treatment. Therefore, the amount of patient care hours spent on
uncompensated care could be significantly higher for emergency medicine
than for any other specialty. These issues require further examination.
In the meantime, we will make an adjustment in our calculation of the
practice expense per hour for emergency medicine by using the ``All
Physicians'' practice expense per hour to calculate the administrative
labor and other expenses cost pool. We will continue to calculate the
clinical labor, supply, equipment, and office cost pools using the SMS-
derived data, as it seems unlikely that, as a hospital-based specialty,
emergency medicine's costs for these categories would approximate those
of the average physician.
Comment: Many commenters argued that the reductions published in
the June 5, 1998, NPRM for services without work RVUs were
inappropriate. The commenters represented a wide spectrum of
specialties including radiology, radiation oncology, cardiology,
independent physiological and other laboratories, psychology,
audiology, dermatology, and others. These comments focused on the fact
that AMA does not survey some of the entities that provide these
services. They argued that the CPEP data are flawed and the indirect
allocation methodology is biased.
Response: Although it is true that the AMA does not survey the
entities that provide some of these services, this does not necessarily
mean that these services are inadequately represented in the SMS data.
If these services (or in the case of technical component services, the
associated global services) are provided in the practices of physician
owners surveyed by the SMS in the same proportion as they are reflected
in our claims data, the practice expense per hour calculations and the
practice expense pools are reasonable.
If the CPEP data accurately contain the direct cost inputs for
these services, then the direct practice expense pool is being
allocated appropriately. With regard to the indirect allocation
methodology, we are modifying it to increase the weight of the direct
costs in the allocation, as discussed elsewhere.
However, the possibility exists that inaccuracies in the CPEP data
for these services are causing the substantial reductions seen in the
NPRM. Therefore, because we are not altering the CPEP at this time, as
an interim solution until the CPEP data for these services have been
validated, we have created a practice expense pool for all services
without work RVUs regardless of the specialty that provides them. We
allocated this practice expense pool to procedure codes using the
current practice expense relative value units.
[[Page 58822]]
While we are not convinced by the comments that were received to
date regarding a bias in the SMS survey data against these services, we
acknowledge those concerns and will examine this issue during the
refinement process.
Comment: The College of American Pathologists (CAP) requested that
patient care time included in the SMS data that is spent in autopsies
and supervision of technicians and paraprofessionals be excluded from
the patient care hours used to calculate the practice expense per hour
for pathology services. The commenter stated that these are Part A
services for which pathologists rarely incur any direct costs. The AMA
supported these adjustments and estimated the percentage of total
pathology patient care hours attributable to autopsy and supervision
services at 6 and 15 percent, respectively.
CAP also asked that some portion of the patient care hours category
of ``personally performing nonsurgical laboratory procedures including
reports'' be eliminated for 1999 when determining pathologists' total
patient care hours, as the SMS data includes both Part A and Part B
services. CAP stated that we should work with the CAP and the AMA to
determine the appropriate adjustment.
Response: Since pathologists have more Part A reimbursement than
any other specialty, we will decrease the number of patient care hours
by 6 percent for autopsies and 15 percent for supervision services.
However, until we have more information about the appropriate
adjustment for ``personally performing non-surgical laboratory
procedures including reports,'' the hours for those services cannot be
eliminated from our calculations. This point, as well as the general
issue of nonbillable hours, should be revisited during refinement.
Comment: Many specialty societies have commented on specific
problems with the SMS data that affect their own specialty and have
requested that we supplement or replace the SMS data with data provided
with their comments.
Response: There is not sufficient time before publication of the
final rule to begin to validate either the methodology or findings of
the submitted data. Since changes in any specialty's practice expense
per hour would have an impact on other specialties, we do not believe
it would be equitable to make any sweeping changes without the adequate
review that the refinement process can achieve. In addition, we stated
in our proposed rule that, for those larger specialties included in the
SMS survey, ``we are unlikely to make any changes in the final
rule****'' Therefore, we will continue to use the SMS-derived practice
expense per hour for these specialties, but will ensure that all of the
submitted data will be considered during the refinement process.
CPEP Data
Comment: Though one major specialty society commented that the CPEP
data, in general, is relatively sound, many comments pointed out
problems with the CPEP process and with the data derived from that
process:
<bullet> One group commented that the CPEPs did not have adequate
representation from practice managers; that there was no uniform policy
dealing with issues such as duplication of time or efficiencies that
might result from performing more than one task at a time; and that
there was inadequate time allotted for CPEPs to meet.
<bullet> Several subspecialties pointed out that they were not
included in the CPEP process and that this could have led to the
undervaluing of their services.
<bullet> Several commenters recommended that we use the CPEP data
as validated and refined by the validation panels.
<bullet> One organization commented that the CPEP data are flawed
since only 200 codes were reviewed by validation panels.
<bullet> One primary care group argued that we should not abandon
edits and modifications to raw CPEP data, as many codes are performed
by more than one specialty, and inaccuracies in the CPEP data can
affect several specialties.
<bullet> Two organizations commented that the CPEPs used what is
now obsolete salary and benefits data, at least for sonographers and
vascular technologists. One of these comments pointed out that for some
codes, a different cost was computed for the same equipment. Another
specialty society recommended that a review of prices and quantities
for supplies and equipment be included as part of the refinement
process.
<bullet> Two commenters were concerned that the CPEP data include
expenses that can be billed separately. A primary care specialty
society argued that we should edit out all direct inputs for services
to hospital patients. The comment mentioned that since these services
are paid for outside of the practice expense RVUs, failure to exclude
these inputs can distort relativity across categories of services such
as surgical services and office visits.
<bullet> One commenter clarified that the costs of therapy aides
are a part of practice expense and should be reflected in the CPEP
data, while the services of therapy assistants are included in the work
RVUs.
Response: We are aware that the raw CPEP data we have used in our
proposed methodology need further review. We also share many of the
concerns raised by those commenting on the issue. However, we believe
that the CPEP resource estimates, which were developed by practitioners
representing all the major specialties, are the best procedure level
data available at this time.
Under our top-down methodology, the CPEP inputs are used solely to
allocate each specialty's practice expense pool to the procedures
performed by that specialty. We have always believed that the relative
input estimates within families of codes for each specialty's CPEP data
were generally appropriate. In addition, the most contentious CPEP
values were the varying estimates for the administrative staff times,
and these values are not utilized in our top-down approach.
We chose not to apply the edits, caps, or linking that had
originally been proposed in our 1997 proposed rule as part of our
bottom-up methodology. These edits had met with severe criticism from
the medical community and were questioned by the GAO. We also did not
use the revised inputs from the validation panels we held in October
1997, as these panels only came to consensus on about 200 codes, and we
were not convinced that all of the revised values were correct.
However, we know that there is much needed improvement in the CPEP
data, and the identification and correction of any CPEP errors whether
in staff times, supplies, equipment, or pricing will be a major focus
of our refinement process.
Comment: One specialty society commented that we erred in not
incorporating increases in staff time recommended by validation panels.
Partly as a result, the practice expense RVUs for gastroenterologists'
out-of-office billing, scheduling, and record keeping are inadequate.
Another commenter stated that there were discrepancies in the
administrative data for skilled nursing facility services, with
subsequent visit codes being assigned only half of the billing time of
initial visits. A third commenter requested that we standardize the
administrative staff types according to the validation panels'
recommendations. Three commenters stated that we do not account for the
costs of maintaining an office full-time when the physician is
providing services out of the office.
[[Page 58823]]
Response: As stated above, under our proposed methodology, CPEP
administrative staff times have no effect on the practice expense RVUs
calculated for any code. The costs of maintaining an office while the
physician is providing services in a facility should be captured in the
SMS cost data and, thus, are a part of each specialty's practice
expense pool. As these would be indirect costs, they would be included
in the practice expense for each service by use of our allocation
methodology, which utilizes both directs costs and the physician work
RVUs.
Comment: Almost 30 specialty societies submitted specific CPT code-
level changes for the CPEP input data for clinical and administrative
labor time, supplies, and equipment for just under 3000 CPT codes. In
addition, many commenters included lists of codes with practice expense
RVUs that were considered anomalous, either within a code family, or in
relation to comparable codes. We also received comments from several
organizations with recommendations for revised crosswalks for those
codes not valued by the CPEPs, as well as recommended in-office inputs
for some codes that are now being done in the office, but were only
given practice expense RVUs for the facility setting.
Response: We had intended to make the CPEP revisions requested by a
given specialty as part of the final rule if the recommendations
appeared reasonable and if there would be no significant impact on any
other specialty. However, given the huge volume of recommended
revisions--over a third of the codes in the fee schedule would be
affected--acceptance of the recommended changes across the board would
almost certainly have a spill-over impact on many subspecialties and
between sites-of-service.
We believe it would be more responsible and fair to allow the
medical specialties to participate collectively in the needed revisions
as part of the refinement process. The deferral of the CPEP revisions
is in no way a reflection on the effort and thought that the commenters
obviously expended in arriving at their recommendations. All the code-
specific comments referred to above will be considered at the start of
the refinement period. (See Section II.A.4, Refinement of Practice
Expense RVUs)
Comment: Many organizations, representing both surgical and primary
care specialties, expressed concern that we averaged CPEP data for the
same procedures valued by more than one CPEP. Different rationales were
offered for this concern:
<bullet> Averaging could have disturbed the relative rankings of
codes within CPEPs.
<bullet> Straight averaging significantly overstated the costs of
evaluation and management services.
<bullet> Averaging CPEP costs altered practice expense
relationships within the evaluation and management family of services,
particularly with respect to emergency department evaluation and
management codes.
<bullet> The inclusion of estimates from those not performing the
procedures, including nonphysicians, could have distorted the values
for those services.
Likewise, different solutions were offered to answer the concerns:
<bullet> One specialty society recommended that we link the CPEP
data rather than relying on straight averages.
<bullet> Two organizations recommended using frequency-weighted
averages.
<bullet> Five groups recommended that the CPEP costs for redundant
codes be based on the inputs from the dominant specialty's CPEP panel.
Response: As we are making no other changes in the CPEP data for
this final rule, we will continue to use straight averaging for the
redundant CPEP codes for the purposes of this final rule. This issue
will be considered further during refinement.
Comment: Two commenters requested the inclusion in practice expense
of the procedure-related supplies which are brought into a skilled
nursing facility (SNF). One of these commenters made the same request
for home visits.
Response: Home visits are to be paid using the non-facility RVUs.
Therefore, any supplies that would be used are already included in the
payment. As for the SNF setting, this is an issue for refinement. We
would need more information about the supplies and why the SNF is not
responsible for providing them.
Comment: The American College of Surgeons sent a list of new
crosswalked codes where CPEP data had inadvertently been duplicated in
our database.
Response: We thank the commenter for pointing out this discrepancy,
and these duplications have been deleted.
Physician Time
Comment: One major specialty society recommended that efforts be
undertaken to move toward greater consistency in physician time data.
The commenter was concerned that since these data are derived from
eight different sources using different methodologies, our inflation of
the Harvard time data raises even more concern about consistency.
Three major organizations, two representing primary care and the
other a surgical specialty, recommended that we use the unadjusted
Harvard and RUC survey data. One reason given was the implication for
the work RVUs of any proposed revisions to the time data. The RUC
commented that, while the RUC physician time data may be greater than
Harvard time data for the same codes, it may be incorrect to assume
that all Harvard time data should be increased. The RUC and several
other organizations requested that we provide a description of the
methodology we used to make adjustments to the data in both the RUC and
Harvard physician time databases so they can comment on the validity of
the changes.
Response: The physician time data used for the development of the
practice expense pools are based on the Harvard resource-based RVUs
study and RUC survey data that were developed as part of the refinement
of the work RVUs. Both sets of data were based on physician surveys.
However, the RUC data, gathered in the process of refining the work
values of many CPT codes, are more current and, on average, exceeded
the original Harvard values by 25 percent. As a matter of consistency
and fairness to those services not yet refined by the RUC, we increased
the Harvard time data in proportion to the increases for related
services. A detailed description of the methodology we employed to make
all adjustments in physician time will be placed on the HCFA Homepage.
We still believe this adjustment is appropriate and we will
continue to use the adjusted values in our calculations for this final
rule. However, as the time values attributed to each procedure play an
important role in the determination of each specialty's practice
expense pool, we believe that ensuring the increased accuracy and
consistency of physician time data should be addressed as part of the
refinement of the practice expense RVUs.
Comment: Three surgical specialty societies commented that
evaluation and management times have been artificially inflated due to
rounding. A small increase in time would disproportionately inflate
high volume procedures that take little time.
Response: In our proposed rule, we expressed concern that
imprecision in the time estimates for any high volume services that
have relatively little time associated with them may potentially bias
the practice expense methodology in favor of the specialties that
perform these services. We stated at that time that this issue should
be examined as
[[Page 58824]]
part of the refinement of the resource-based practice expense RVUs.
Comment: There were several other comments regarding the accuracy
of the physician time data:
<bullet> The RUC acknowledged that some of the RUC physician time
data may not be absolutely precise.
<bullet> One specialty society, as well as the AMA, pointed out
that there are some problems with the accuracy of the physician time
data for psychotherapy services. For example, the times assigned to
psychotherapy codes that include evaluation and management services are
equal to and, in some cases, less than the psychotherapy codes that do
not include these services.
<bullet> One commenter stated that the physician time data, as
computed in the Harvard studies, are not current and are likely to be
inappropriate for use in computing practice expense RVUs.
<bullet> The American College of Surgeons commented that physician
time for pediatric surgery codes is based on erroneously low physician
time data from the original Harvard study, rather than the time data
from the special study of pediatric services performed by the same
Harvard study team for the American Pediatric Surgical Association in
1992. The latter data were used as the basis for the work RVUs assigned
to 48 pediatric surgical services.
<bullet> A surgical specialty society commented that the physician
time does not compensate its members for longer hours and cited
examples of nonbillable time, such as standby time for cardiac
catheterization and supervision of residents and interns. The society
suggested that this be considered during refinement.
<bullet> One commenter stated that travel time for home visits is
not included in either the work or practice expense RVUs. The commenter
suggested that travel time for house calls should be equal to the work
equivalent of the lowest office service times 3, for an average of 15
minutes. Further, a modifier should be used to cover instances where
travel exceeds the average.
<bullet> The American Society of Transplant Surgeons identified
physician times for several services that it believes are inaccurate
and recommended adjusted times for these services.
Response: As stated above, we will ensure that all identified
anomalies and inaccuracies in the physician time data are considered as
part of the refinement process.
Comment: The American College of Radiology commented that for our
top-down approach we had used a level three office visit (99213) as a
benchmark for estimating physician time for radiology codes. They
suggested that it would be more appropriate to use the intravenous
pyelography procedure (CPT 74400) instead of the office visit used in
our methodology.
Response: Although we agree that 99213 may be an inappropriate
benchmark since it is not often performed by radiologists, we are not
convinced that the average work per unit time of codes on the radiology
fee schedule is equivalent to CPT 74400. Instead, we are using the
weighted average work per unit time for CPT 71010 and 71020 as the
benchmark. These two services represent over approximately one-third of
the total allowed services in the radiology fee schedule, while CPT
74400 represents less than two-tenths of one percent. We will work with
the medical community to develop time estimates for radiology
procedures that will make the imputation of time from the work
estimates unnecessary.
Comments: The American Occupational Therapy Association commented
that the practice expense pool for occupational therapy codes was
understated because the time values of 15 minutes that we arbitrarily
assigned were too low. They included a list of time values we should
use for each code.
The American Hospital Association also objected to the reductions
in times for outpatient rehabilitation codes and urged the use of the
actual surveyed times for all procedure codes in the range 97001
through 97770.
Response: We believe that the time of 15 minutes we assigned to
these codes is appropriate and does not lead to an underestimation of
the practice expense pool for outpatient rehabilitation services. The
outpatient rehabilitation codes in this range are timed codes and are
billed in 15 minute increments. Also, we have been told by some
physical therapy associations that at times, some of the 15 minute
period time may be performed by therapy aides or assistants. (Note: We
plan to review this issue during a future five-year review of work
RVUs.) Finally, it is common for these timed codes to be billed in
multiple units during one therapy session. Thus, any therapist's work
prior to or after the visit is spread across more than one unit, rather
than applied to each unit.
Crosswalk Issues
Comment: The American Academy of Maxillofacial Prosthetics (AAMP)
and the American College of Prosthodontists commented that crosswalking
is not valid for maxillofacial prosthetic codes since this specialty
does not correspond to any other medical specialty included in the SMS
data and its practice expense values are much higher than other medical
specialties in the SMS survey. AAMP submitted several studies from its
own organization and from the American Dental Association, as well as
two studies published in professional journals that report the results
of polls of prosthodontic practitioners, including information on
overhead expenses. The AAMP recommended that this data be used to
calculate its practice expense per hour.
Response: We agree that maxillofacial prosthetics does not
correspond closely with any other medical specialty. It also is not a
separately-identified specialty in either the SMS survey or the
Medicare claims database.
Though the AAMP submitted survey data compiled by both its own
organization and the American Dental Association, the format,
definitions, and methodology of these surveys were not consistent with
those of the SMS survey. For example, the 1993 AAMP survey did not
survey practice expense, but rather the ``percent overhead of gross
collections for 1992.'' The American Dental Association surveys counted
dentist shareholder and employee dentist income as practice expense in
many tabulations.
Because of these methodological differences from the SMS data, we
are not able at this time to use the information in the submitted
surveys to calculate a comparable practice expense per hour for
maxillofacial prosthetics.
For this final rule we will create a practice expense pool for the
maxillofacial prosthetic codes (CPT 21076 through 21087) and crosswalk
this pool to the practice expense per hour for ``All Physicians.'' We
had imputed physician times for these services in our proposed rule.
However, we are now using the physician times utilized in calculating
the work RVUs for the same services. In addition, until the CPEP data
for these codes can be validated, we will allocate the practice expense
pool to the specific services using the current RVUs. We hope to work
with the specialty society as part of the refinement process in order
to develop a reliable method of deriving accurate practice expense RVUs
for maxillofacial prosthetics.
Comment: The American Optometric Association (AOA) disagreed with
our crosswalk of optometry to the average practice expense per hour for
``All Physicians,'' that results in a practice expense per hour of
$67.50. The commenter stated that AOA understands that the crosswalk
decision
[[Page 58825]]
was based, at least in part, on the 1997 survey conducted by AOA which
had been provided to us. This survey has been conducted regularly since
1990 and was included with the comment, along with a study commissioned
by the AOA entitled ``Results of the First National Census of
Optometrists.'' Using data from this survey and study, AOA computed an
$89.53 practice expense per hour for optometry, significantly higher
than the average for ``All Physicians.''
Response: As in the above request, the data submitted by AOA are
not easily comparable to the SMS data. For example, the AOA calculation
used medians rather than means, and retirement and fringe benefits were
not counted as median net income, but rather as practice expense. It is
therefore not possible, without further information, consultation, and
analysis, for us to calculate a practice expense per hour that would be
comparable with that of other specialties. During the refinement period
we will be working with specialties not represented in the SMS survey
to identify the data needed to enable us to determine accurate practice
expense RVUs for their services.
Comment: Although generally supporting the crosswalk to General
Internal Medicine, the American Chiropractic Association (ACA)
submitted data from the 1997 survey results of ACA's biannual survey of
the chiropractic profession. This survey shows considerably lower
direct patient care hours than SMS shows for General Internists.
Therefore, the ACA requested that we use its data to calculate the
practice expense per hour for Doctors of Chiropractic, stating that we
should accept specialty societies' data over SMS data if they were
collected in a comparable manner.
Response: The survey submitted by the commenter indicated that the
patient care hours worked by chiropractors are significantly lower than
those of general internists to whom chiropractors' practice expense per
hour is crosswalked. However, the hours of direct patient care a week
shown in the survey were defined more narrowly than in the SMS data.
For example, the 29 hours of patient care a week calculated in the
submitted survey did not include the hours spent for documentation,
administration, and billing, activities that we have considered to be
included in the direct patient care hours for other specialties. In
addition, there are insufficient details in the survey for us to
determine its comparability to the SMS data and we will maintain the
crosswalk for chiropractors for this final rule. We do intend, however,
to revisit this issue during the refinement process.
Comment: The American Podiatric Medical Association, Inc. (APMA)
objected to its crosswalk to general surgery because it believes that
there is little similarity between the two specialties based on site-
of-service and types of services provided. General surgery services are
typically performed in the facility setting, while the high volume
podiatry services are almost entirely done in the office. In addition,
the comment stated that podiatrists work fewer hours than general
surgeons.
The comment also included the results from APMA's 1996 and 1998
surveys of podiatric practice, as well copies of the surveys
themselves. According to the comment, these surveys show that the
actual practice expense per hour for podiatry is $91.50 and APMA
recommends that we use this data in place of our proposed crosswalk.
The American Academy of Orthopaedic Surgeons also disagreed with
the crosswalk for podiatry, but recommended that podiatry be
crosswalked to orthopaedic surgery in the short run, as 70 percent of
the codes billed by podiatrists are those that are shared with
orthopaedic surgery.
Response: Because of significant methodological differences between
the submitted surveys and the SMS data (for example, only gross and net
incomes are surveyed) we are not able at this time to calculate a
practice expense per hour in total, let alone for each of the different
cost pools.
However, we are persuaded that the crosswalk to general surgery is
not appropriate for the reasons cited in the comment, and we are
changing the crosswalk to ``All Physicians.'' We will be working with
all specialties not represented in the SMS data to ensure that we
obtain comparable information to calculate their practice expenses per
hour.
Comment: The Joint Council of Allergy, Asthma, and Immunology
stated that, in calculating the allergists' practice expense per hour,
we reduced the supply category practice expense per hour to that of
``All Physicians,'' because we believed that we made a separate payment
for the drugs used. However, this is not true for immunotherapy drugs
provided by allergists, as the cost of these drugs is included in the
practice expense RVUs. Therefore an adjustment needs to be made.
Response: The commenter is correct and the adjustment has been made
to the medical supplies practice expense per hour.
Comment: The American Society of Clinical Oncology commented that
since the SMS supply cost data for chemotherapy codes included the
costs of expensive chemotherapy drugs, which are paid for separately,
we used the lower supply costs for ``All Physicians'' for their supply
cost pool. The commenter argued that this fails to recognize that, in
addition to the cost of the drugs, chemotherapy administration has
extra supply costs in excess of that for ``All Physicians.'' Also,
although chemotherapy drugs are generally among the costliest drugs,
the cost of drugs was probably included in other specialties' supply
costs as well, and all specialties should be treated in the same
manner.
The Association of Community Cancer Centers, the Society of
Gynecologic Oncologists, and the American Society of Hematology also
disagreed with our adjustment for drug costs, as did the AMA, which
called our method of correcting for the double counting of drugs
inequitable and imprecise. The American Society of Hematology
recommended increasing the supply per hour costs to 125 percent of the
``All Physicians'' level.
Response: It is true that other specialties may have some drug
costs included in their SMS supply cost data, but we believe that the
total costs for chemotherapy drugs are far greater than are the drug
costs included for any other specialty. Failure to make an adjustment
for these high drug costs would lead to a gross distortion in the
supply cost pool for oncology.
We also are not convinced that the other supply costs for
oncologists would necessarily exceed that of ``All Physicians,'' and we
will continue to crosswalk oncology's supply costs to that category's
practice expense per hour. We do agree that during refinement we need
to consider development of a methodology for removing separately
billable supplies and services from the SMS data so that the Medicare
program avoids making duplicate payments. We also will work with the
oncology specialty to ensure that their practice expense per hour for
the supply category adequately reflects the actual costs of other
oncology supplies.
Comment: The American Association of Oral and Maxillofacial
Surgeons objected to the crosswalk of oral surgery and maxillofacial
surgery to the practice expense per hour of ``All Physicians.'' They
recommended a crosswalk to either otolaryngology or plastic surgery, as
most of the medical procedures billed
[[Page 58826]]
by oral and maxillofacial surgeons can be crosswalked to these two
specialties. The commenter argued that because of their significantly
higher practice expenses, oral and maxillofacial surgery should not be
in the same practice expense pool as manipulative therapists and
optometrists, as this dilutes the practice expenses for these surgical
services. In addition, the 1996 Harvard Study grouped oral and
maxillofacial surgery under otolaryngology and plastic surgery.
Response: We do not currently have sufficient data to make such a
change in our crosswalk. This is an issue that can be addressed during
the refinement period.
Comment: The American College of Cardiology and the American
Society of Echocardiography disagreed with the crosswalk of Independent
Physiologic Laboratories (IPLs) to ``All Physicians.'' The comment
recommended that IPLs' practice expense per hour be crosswalked to
cardiologists, as 60 percent of IPL billings are in the 93000 series
and for the 13 highest volume IPL codes, cardiologists account for 40
percent of claims. The Society of Vascular Technology/Society of
Diagnostic Medical Sonographers also expressed concern that our
crosswalk of IPLs did not adequately recognize their costs and
recommended that we use the figure of $176 per hour based on the
studies cited in the comment.
Response: As discussed above, we will be creating a separate
practice expense pool for all services without physician work, which
will include those technical component services done by IPLs and by
cardiologists.
Comment: The Society of Gynecologic Oncologists requested that we
consider using multiple crosswalks to determine practice expense per
hour for specialties that provide interdisciplinary care. The comment
stated that the true reflection of practice expense per hour for a
gynecologic oncologist is a hybrid of the practice expense per hour for
the specialties of obstetrics and gynecology and oncology.
Response: It is not clear whether this is desirable or what data
would be used to weight such a split between more than one specialty.
Many physicians belong to more than one specialty or subspecialty. This
is another issue that can be discussed during the refinement period.
Comment: The American Geriatrics Society disagreed with our
crosswalk of geriatrics to the General Internal Medicine practice
expense per hour. The comment stated that geriatricians typically have
higher costs than internists because of the need for more office space
and more health care professionals on staff. Since many geriatricians
are family physicians, geriatrics should be cross-walked to family
practice.
Response: We believe that geriatricians are typically more like
internists than family practitioners, so for the final rule we will not
change the crosswalk. However, we are open to receiving data that would
demonstrate that a crosswalk to family practice would be more
appropriate.
However, we would note that geriatrics is a relatively small
specialty and the services performed by them are frequently done by
other specialties. Thus, changes in the practice expense per hour data
for geriatricians would not likely have a significant impact on the
RVUs for services they perform.
Comment: One commenter made recommendations for revisions or
additions to our proposed crosswalks for several nursing
subspecialties. Another specialty society commented that under the
physician fee schedule we have chosen to pay nonphysician practitioners
a percentage of the physician reimbursement, and crosswalking to
specialties with higher practice expense per hour rates than general
internal medicine or general surgery is not logical or reasonable.
Another organization also recommended that data from nurse
practitioners and physician assistants be excluded from the practice
expense pool calculations.
Response: We will further consider appropriate crosswalks for
nursing subspecialties during the refinement period.
Comment: The American Hospital Association and the American
Occupational Therapy Association recommended that we crosswalk all of
the practice expense pools for outpatient rehabilitation services to
the ``All Physicians'' practice expense category, rather than using the
salary equivalency guidelines for the administrative, office, and other
pool.
Response: We believe that using the ``All Physicians'' practice
expense per hour for the administrative, office, and other pool would
considerably overstate the actual practice expense for occupational
therapy. We have carefully examined outpatient therapy practice costs
for the development of the salary equivalency guidelines, and believe
that these better approximate the actual expenses for this cost pool.
We will continue to use the salary equivalency guidelines to calculate
this portion of the practice expense pool for occupational therapy for
this final rule.
Comment: The American Speech-Language Hearing Association commented
that it is not appropriate to use the practice expense per hour data
from physicians that perform audiology tests and it submitted a 1993
survey, ``Audiology Services--Scale of Relative Work,'' as part of its
comments.
Response: As we stated above, we are creating a single practice
expense pool for all services, such as audiology, that have no work
RVUs. This practice expense pool, created by using the average clinical
staff time per procedure from the CPEP data and the ``All Physicians''
practice expense per hour, raises practice expense RVUs for audiology
services relative to those previously proposed. However, during the
refinement process we will be considering all data submitted on any of
these services, including the study submitted with the above comment.
Calculation of Practice Expense Pools--Other Issues
Comment: Several organizations commented on potential problems with
the Medicare claims data, which are used as one component of the
specialty-specific practice expense pool calculation.
<bullet> Many commenters were concerned about reliance on Medicare
claims data to determine the size of each specialty's practice expense
pool. The comments claimed that to the extent that the Medicare
population is not representative of the general population, there is a
bias against specialties whose patient population does not match
Medicare's. Several organizations, representing the gamut of medical
specialties, urged us to work during the refinement period with
organizations for whom we have no, or inadequate, historical claims
utilization information and to acquire nationally representative claims
data that include Medicare, Medicaid, and private payer data.
One of these commenters recommended that, if this is not feasible,
we should conduct sensitivity analyses to explore the influence
Medicare service utilization patterns may have on private payers. The
specialty-specific utilization data are crucial for the final step of
volume-weighted averaging that brings the individual specialty scales
onto one scale, particularly when involving services performed very
frequently by specialties that see relatively few Medicare patients.
For example, the comment argued, to the extent that the cost
estimates for evaluation and management (E&M) services provided by
obstetricians and gynecologists and pediatricians differ
[[Page 58827]]
significantly from those of specialties that account for the bulk of
E&M services provided to Medicare patients, the use of an all-payer
claims database would probably yield different RVUs for E&M services.
<bullet> Several surgical specialties urged that we clean the
Medicare claims data to eliminate obvious errors, such as data showing
a sometimes significant number of nonsurgeons or physician assistants
performing complex surgeries that can only be performed by surgical
specialties. This misreporting can decrease a specialty's practice
expense pool and should either be reassigned or excluded during
refinement.
One of the commenters recommended that Medicare claims data be
reviewed for the existence of a second listed surgical specialty
identifier. In addition, physician assistants' claims should use the -
AS modifier, and calculations should use only the time that is assigned
to the intraoperative period.
<bullet> Three specialty organizations commented that many
physicians' self-designated specialties are incorrectly classified in
our claims data. For example, many cardiologists and geriatricians may
bill as internists, which may affect the respective practice expense
pools. Until these data become more accurate, one of the commenters
recommended that the specialty practice expense pools be recalculated
on an annual basis.
<bullet> An organization representing transplant surgeons commented
that, as transplant surgery is not a designated specialty in the
Medicare claims database, many transplant surgeons designate themselves
as general surgeons, who have the lowest practice expense per hour of
any surgical specialty. The comment argued that this has led to a
significant underestimation of the costs associated with transplant
surgery.
Response: We would be interested in receiving any reliable national
utilization data on the procedure code level though, to date, we are
not aware of the existence of such a data source. We plan during the
refinement period to work with the medical community in order to
pinpoint problems in the Medicare claims data, to develop strategies to
improve their accuracy, and, if possible, to find reliable supplemental
data for those specialties not appropriately represented in the
Medicare database.
Comment: One organization commented that the Medicare frequency
numbers for occupational therapy codes will be understated because BBA
requires that all outpatient therapy services be paid under the
Medicare Physician Fee Schedule beginning January 1, 1999.
Response: We disagree. We have not included estimates for
frequencies of expected services of outpatient therapy services in
computing the practice expense RVUs. BBA specified that we pay for
these services using the physician fee schedule. BBA did not
incorporate these services into the fee schedule.
Comment: Many organizations representing radiation oncology, as
well as numerous individual commenters, argued that we erroneously
combined the SMS radiation oncology survey data with that of radiology.
The commenters argued that these two specialties should be dealt with
separately, as radiation oncology utilizes different codes and has
considerably higher costs than radiology.
Response: We had combined radiation oncology and radiology together
into one practice expense pool because of the small sample of radiation
oncologists in the SMS data. However, we now agree with the commenters
that these are two different specialties with differing practice costs.
Therefore, we have separated them into two separate practice expense
cost pools in order to calculate the practice expense per hour for each
of the specialties. For radiology, excluding radiation oncology, the
total practice expense per hour is $55.90. This is comprised of $17.90
for nonphysician payroll per hour ($9.70 for clerical payroll), $12.80
for office expense, $4.50 for supply expenses, $7.70 for equipment
expense, and $12.90 for other expenses. For radiation oncology, the
total practice expense per hour is $68.30. This is comprised of $23.70
for nonphysician payroll per hour ($9.20 for clerical payroll), $11.30
for office expense, $6.20 for supplies expense, $11.00 for equipment
expense, and $16.20 for other expenses.
Allocation of Practice Expense Pools to Codes
Comment: Several organizations commented on our use of work RVUs as
part of the allocation formula for indirect practice expense costs:
<bullet> A primary care specialty group stated that we should not
allocate the indirect practice expenses using the work RVUs, since
there is no reason to believe that the costs of providing the service,
such as the cost of utilities, would vary by the intensity, where the
costs would vary by time. We should, therefore, use time rather than
work in our indirect allocation.
Another primary care organization commented that using work as one
allocator for indirect expenses inappropriately gives surgical
procedures with higher work RVUs substantially higher administrative
costs for billing activities than is given to evaluation and management
services. We should develop a standardized method to address
administrative staff costs.
<bullet> Five other organizations argued that allocating indirect
costs based on a combination of direct costs and physician work RVUs is
inappropriate and treats unfairly chemotherapy and radiation oncology
services as well as other technical component services, since they
typically are assigned no work RVUs. Various recommendations were made
by these commenters to rectify what they see as discrimination against
these technical component services:
+ Indirect costs should be based on direct costs.
+ Physician time or clinical staff time should be used instead of
work.
+ We could allocate 50 percent of the indirect costs based on
direct costs and 50 percent based on physician work or time.
+ As an alternative for chemotherapy services, work could be
imputed by using the work to time ratio for other hematology or
evaluation and management services.
One commenter recommended that we vary the indirect cost allocation
methodology in recognition of the practice patterns of particular
specialties.
<bullet> One accounting organization commented that the use of work
REUS is arbitrary and argued for the use of total dollars actually
spent to perform the procedures, not indirect splits, suggesting the
use of Activity Based Costing as a preferable methodology.
Response: In this final rule, we will use an allocation method for
the final rule that is basically similar to our proposed allocation
method. It is widely recognized by accountants and others that there is
no single best method of allocating indirect expenses to individual
services. If we used physician time as an allocator of indirect
expenses, we would be using the same values, whose accuracy have
already been questioned by some commenters, both to create the practice
expense pools and to allocate these pools to individual services. If we
used only direct costs, we would be giving full weight to CPEP values
that have not yet been refined. We agree that the use of physician work
as an allocator is not preferable in the long term. It likely provides
maximum advantage to hospital-based services in which the
[[Page 58828]]
physician incurs relatively few direct costs.
For this final rule, we are making a technical change to the
allocation method for indirect costs by using direct costs and the work
REUS scaled using the Medicare conversion factor instead of a factor
calculated using the physician time data. Because of questions raised
by commenters concerning the time data adjustments, we believe that it
is more appropriate to convert the work REUS into dollars using the
Medicare conversion factor (expressed in 1995 dollars, consistent with
the AMA SMS survey data). This will give somewhat less weight to work
while, at the same time, avoiding a major methodological change until
it has been examined further. We intend to work with the medical
community during refinement so that we ensure that our allocation
methodology is both appropriate and equitable.
Comment: Many major specialty societies, both primary care and
surgical, commented that we should not apply a different methodology
for allocating the practice expense pools to the radiology codes than
we do to all other codes. One commenter argued that multiplying the
current charge-based practice expense RVUs for radiology codes by some
percentage cannot yield a resource-based system.
Organizations representing urologists, pulmonologists,
cardiologists, and ophthalmologists commented that the uniform
reductions made in the radiology codes to maintain relative values
assumed that all radiology services are done only by radiologists, when
many of these procedures are performed by these other specialties. A
commenter stated that decisions regarding the practice expense values
for radiology codes done predominantly by other specialists should not
be made by one specialty. These organizations recommended that the
practice expense RVUs for their codes be established using the
allocation methodology used for all other services.
One specialty society, representing diagnostic vascular testing,
commented that the use of the existing radiology relatives to allocate
practice expense to the code level results in significantly larger
decreases in the technical component than in the professional component
of their services. The commenter recommended that if we continue to use
the radiology relatives, then we should reduce the professional
components of the codes more than the technical components because
practice expenses are greater for the technical component than for the
professional component.
The AMA supported the use of the radiology relative values for
actual radiology services, but recommended that this methodology should
be applied only to services that are performed predominantly by
radiologists.
The American College of Radiology endorsed the radiology relativity
of the radiology RVUs without exception, and they would oppose the
exclusion of individual radiology procedures since this is inconsistent
with the concept of radiology relative values. They argued that
maintaining the relativity of the radiology fee schedule--
<bullet> Is consistent with generally accepted accounting
principles because it is based on surveys and physician panels;
<bullet> Is widely accepted;
<bullet> Solves rank order anomalies caused by raw CPEP data;
<bullet> Simplifies the derivation of the professional component,
technical component, and global practice expense RVUs;
<bullet> Is mandated by law, as the Omnibus Budget Reconciliation
Act of 1989 stated that for radiology services ``the Secretary shall
base the relative values on the relative values developed under section
1395m(b)(1)(A)****''; and
<bullet> They also argue that we have recognized and honored the
statutory obligation to maintain the relationships in the radiology
relative value scale.
Another national organization representing diagnostic imaging
services also suggested keeping the radiology fee schedule as the
allocator for radiology, rather than the direct costs from the CPEP
data, as there would be even greater reductions on codes we allocated
using the CPEP relatives.
Response: Because the majority of specialties that perform
radiology services object to the use of the current practice expense
RVUs for radiology services, we cannot continue to use these RVUs.
However, since we are not making changes to the CPEP data for this
final rule and since the American College of Radiology has not had
sufficient opportunity to comment on the CPEP data because of our
proposed use of the current radiology RVUs, we are using the current
radiology RVUs to allocate the direct cost pools of the specialty
radiology until such time as the CPEP data for radiology services have
been validated. We will not use the current radiology RVUs for any
other specialty.
It should be noted that radiology services or components of
radiology services that lack work RVUs are handled as described in the
section on services without work RVUs. This alters the impact of using
the current radiology RVUs for the specialty radiology since we set the
global portion of a radiology service equal to the sum of the technical
and professional components.
Comment: One specialty society commented that, for one important
high volume pathology service, the proposed total professional
component practice expense RVU payment would be $11.37, approximately
$2 short of the administrative labor costs alone. The commenter wanted
more information on how our method splits administrative costs between
the professional and technical components. The commenter requested that
we provide a data set of the RVUs for administrative labor, office
expenses, and other expenses that result from our allocation method,
with a break-out of the professional and technical component RVUs for
services that have both components, so that the appropriateness of the
allocation method can be evaluated.
Response: Our methodology was described in the proposal, and we
also provided additional detailed data files that we used to develop
the proposed values. We will try to make additional data available if
the request is further specified.
Comment: The American College of Cardiology expressed concern that,
though it might be necessary to weight average the allocation to codes
according to the practice expense per hour of the different specialties
performing the service, this defeats the intent of Congress to
recognize actual costs and could also lead to negative incentives. The
commenter suggested that this is an issue that we and the specialties
should pursue.
The American Society of Echocardiography more specifically
commented that we should not include in the calculations for
cardiovascular diagnostic tests the even more unrepresentative data for
internists coding for these procedures. The society maintained that
because of the low equipment costs for internists, this blend dilutes
the RVUs allocated to these codes.
Response: The statute is very specific that Medicare is not to pay
specialty differentials. Therefore, weight averaging of the CPEP inputs
among specialties that do a service seems appropriate.
Other Issues
Comment: Many commenters, representing a broad spectrum of
specialties, expressed concern that reductions in payment for specific
services could have a negative impact on access to care. Many of these
[[Page 58829]]
commenters recommended that we monitor access and quality of care
issues that may arise as a result of the implementation of a resource-
based practice expense system.
Response: Maintaining access to high quality health care for
Medicare beneficiaries is, and will continue to be, a high priority,
and we will monitor available relevant data. However, we do not
anticipate that the implementation of resource-based practice expense
RVUs should lead to any major impediments to access to care. Any
impacts of this new system are being transitioned in over a 4-year
period, during which we will be refining both the practice expense per
hour data and the direct cost inputs. We will be working closely with
the medical community during this refinement period, and we are
confident that we will achieve a resource-based practice expense system
that will maintain our beneficiaries' access to the best possible
medical care.
Comment: One commenter was concerned about how the monthly
capitated payment for end-stage renal disease (ESRD) services was
handled under the top-down approach. The commenter argued that, though
the ``building block'' process used for the work RVUs for these
services does not translate perfectly for practice expense values, this
approach should still be utilized to calculate the practice expense
RVUs. In addition, the commenter questioned our choice of CPT 99213, a
mid-level office visit, to calculate physician time for ESRD services.
Response: We allocated the practice expense pool to ESRD services
using the CPEP inputs, as we did for almost all other services. We also
believe that the intensity of an average evaluation and management
service provides a reasonable estimate of physician time. These issues
can be further analyzed during refinement.
Comment: Two commenters noted that costs associated with the
supervision of diagnostic tests were not included in the technical
component amounts.
Response: In separate carrier manual instructions, we are revising
the level of physician supervision required for many diagnostic
services. For example, we are changing the requirements for most
ultrasound procedures from personal or direct supervision to general
supervision. We believe the required supervision for any remaining
services that are at the personal supervision level are generally
already reflected in the work RVUs. Therefore, we do not believe that
there are additional costs for physician supervision.
Comment: One commenter indicated that there will be a marked
increase in the volume of services paid under the physician fee
schedule as a result of BBA changes in payment for outpatient therapy
services. The commenter maintained that this increase should not
adversely affect future budget neutrality adjustments.
Response: Although payment for these outpatient therapy services
are based on payment amounts contained in the physician fee schedule,
these services are not included as part of the fee schedule pool for
budget neutrality calculations.
Comment: One commenter argued that the budget neutrality adjustment
is inappropriately applied because it does not recognize the savings
provided by the elimination of the facility payments for endoscopic
procedures that will move to the office setting.
Response: The statute specifies that there shall be budget
neutrality for physician fee schedule services. The budget neutrality
adjustment does not take into account payments to facilities.
Comment: Two commenters suggested that any fiscal adjustments made
to comply with BBA should be reflected in the conversion factor, or
other ratio, rather than be included in the calculation of the practice
expense RVUs, so that other payer reimbursement would not be affected.
Response: We do not completely understand these comments, but we
believe the request is consistent with our practice of making budget-
neutrality adjustments on the conversion factor.
Comment: Several commenters requested additional impact analyses
such as--
<bullet> Comparison of actual practice expense by specialty with
expected practice expense payments, both by amount and by percent, for
both our proposed practice expense payments and the current fee
schedule practice expense RVUs;
<bullet> Comparison of impacts by geographic area, including rural
and urban impacts;
<bullet> Analysis of impacts on hospital, academic, and community-
based physicians;
<bullet> Analysis of total Medicare and non-Medicare impact using
national claims case mix data; and
<bullet> An analysis that would demonstrate to other payers the
degree to which our proposed payment rates are less than actual
practice costs.
Response: We lack the data to provide some of the requested
analyses. For example, we do not have national claims case mix data and
are unaware of the existence of such data. With regard to rural and
urban impacts, in the June 5, 1998 proposed rule we discussed the
limitations of such analyses given the structure of the Medicare
payment localities. We are unsure what the commenters are specifically
requesting on the issue of actual costs since we have based the
resource-based practice expense RVUs on the best available source of
multi-specialty actual cost data: the SMS survey. Cost analyses at the
individual practice level are problematic since, for example, we do not
have physician cost reports, but we are open to concrete suggestions on
how to perform such analyses. We also note that the Medicare public use
files are an excellent source of data for commenters who wish to
perform additional analyses that they believe are possible with the
data sources available to us.
Comment: One commenter requested that we make clear to Medicare
contractors that hospital-based pathologists who incur technical
component costs for nonhospital patients can be paid for both the
technical and professional components.
Response: This is a long-standing policy, and we are not aware of
any general problems in this regard. However, we would be willing to
discuss the issue with individual carriers if the commenter provides
more specific information.
Comment: One commenter recommended that we recalibrate the
allocation of RVUs to the pools for physician work, practice expense
and malpractice, as this allocation has remained constant since the
resource-based relative value scale was implemented in 1992.
Response: We are recalibrating the allocation this year to match
the Medicare Economic Index (MEI) weights. For example, work goes from
54.2 percent of the total to 54.5 percent, the practice expense portion
goes from 41.0 percent to 42.3 percent, and the malpractice portion
goes from 4.8 percent to 3.2 percent. (See Section II.D, ``Rebasing and
Revising the Medicare Economic Index.'') In order to prevent the work
RVUs from changing as a result of this, we are altering only the
practice expense and malpractice RVUs. The changes to the practice
expense and malpractice RVUs due to this are offset by an adjustment to
the conversion factor.
Comment: One commenter recommended that we should limit the
magnitude of the changes in physician payments resulting from the shift
to resource-based payment for practice
[[Page 58830]]
expenses by imposing some reasonable limit on payment increases and
decreases for individual services. The commenter maintains that section
1848(c)(4) of the Act, which authorizes the Secretary of Health and
Human Services to, ``establish ancillary policies, as may be necessary
to implement this section,'' provides statutory authority on which to
base such a policy. The comment pointed out that we invoked this
section in 1991 with reference to the transition to resource-based
payment for physician work.
Response: We believe that Congress intended the transition period
to be the mechanism by which we would mitigate the impacts of any
changes in payment brought about by the shift to resource-based
practice expense. Therefore, we believe it would be inappropriate for
us to impose further limits on payment increases or decreases.
Comment: One commenter maintained that the proposal violates both
the Regulatory Flexibility Act and the Paperwork Reduction Act of 1980
because the adequate filings required in both of these Acts did not
accompany the proposal. Additionally, the commenter stated that we did
not cite any evidence to support its contention that a Regulatory
Impact Statement is not required.
Response: We had included a Paperwork Reduction Act (PRA) section
in HCFA-1006-P that meets the requirements of the PRA of 1980.
One commenter stated that we do not cite any evidence in either of
our proposals to support our contention that no regulatory impact
statement is required. There may be some confusion about the purpose of
an impact statement and the difference between a regulatory impact
statement and a regulatory impact analysis (RIA). A regulatory impact
statement is a brief rational on why an analysis was not conducted. An
RIA is a complete analysis based on recent available data and is more
extensive.
An RIA was conducted in the proposed rule of June 5, 1998 (63 FR
30866). Absent this analysis, we would be required to furnish an impact
statement. Therefore, there is no violation of either the RIA or
Regulatory Flexibility Act requirements.
3. Other Practice Expense Policies
Site-of-Service Payment Differential
As part of the resource-based practice expense initiative, we are
replacing the current policy that systematically reduces the practice
expense RVU by 50 percent for certain procedures performed in
facilities with a policy that would generally identify two different
levels (facility and nonfacility) of practice expense RVUs for each
procedure code depending on the site-of-service.
Some services, by the nature of their codes, are performed only in
certain settings and will have only one level of practice expense RVU
per code. Many of these are evaluation and management codes with code
descriptions specific as to the site of service. Other services, such
as most major surgical services with a 90-day global period, are
performed entirely or almost entirely in the hospital, and we are
generally providing a practice expense RVU only for the out-of-office
or facility setting.
In the majority of cases, however, we will provide both facility
and nonfacility practice expense RVUs. The higher nonfacility practice
expense RVUs are generally used to calculate payments for services
performed in a physician's office and for services furnished to a
patient in the patient's home, or facility or institution other than a
hospital, skilled nursing facility (SNF), or ambulatory surgical center
(ASC). For these services, the physician typically bears the cost of
resources, such as labor, medical supplies, and medical equipment
associated with the physician's service.
The lower facility practice expense RVUs generally are used to
calculate payments for physicians' services furnished to hospital, SNF,
and ASC patients. The costs for nonphysicians' services and other
items, including medical equipment and supplies, are typically borne by
the hospital, by the SNF, or the ASC.
We received the following comments on our site-of-service payment
differential proposal.
Comment: We received several comments concerning the
appropriateness of our site-of-service proposal:
<bullet> Several specialty groups commented that they agreed with
eliminating the site-of-service differential and replacing it with two
levels of payment.
<bullet> A national specialty society representing
gastroenterologists, as well as several hundred individual commenters,
strongly opposed the elimination of the current site-of-service
differential and replacement of it with the facility and nonfacility
resource-based practice expense RVUs. The comments argued that we
should not have established different practice expense RVUs for
facility and nonfacility settings for gastrointestinal endoscopy codes
43234 through 45385 because:
<bullet> It is unsafe to do these procedures in the office and will
thus jeopardize patient safety;
<bullet> It creates an incentive to provide care in the
inappropriate office setting; and
<bullet> It is not authorized by legislation, is against the intent
of BBA to have different payment levels for different settings, and is
likely to result in legal challenge.
The commenter recommended that we drop the office and out-of-office
differential in practice expense payment.
<bullet> One organization commented that our site-of-service
proposal will exacerbate the ability to subsidize uncompensated care
and suggested exempting teaching physicians from the new site-of-
service provision. It also suggested that HCFA should also monitor the
effects of the site-of-service policy.
<bullet> The AMA, the American Hospital Association, and three
other organizations commented that payment differentials should not
provide an incentive for physicians and patients to choose one site
over another. Some physician groups are concerned that the differential
will accelerate the shift of some services from facility to nonfacility
settings at the expense of patient safety. They asserted that claims
data on changes in place of service should be made available and this
issue should be one focus of refinement efforts.
Response: We believe that, to the extent that the differing RVUs
for in-office and out-of-office services reflect the relative
differences in practice costs for performing those services, we have
not created incentives to provide services in inappropriate settings.
We are required by both the Social Security Act Amendments of 1994 and
BBA to develop resource-based practice expense RVUs, based on
physicians' actual costs. All of our data indicate that physicians'
practice expenses are higher in the office, where the physician must
incur all the costs of staff, equipment, and supplies, than in a
facility that provides and is paid separately for these resources. As
the facility and nonfacility costs to the physician can vary by a
considerable amount, we believe that adopting a single average payment
for both sites would consistently underpay in-office procedures, and
overpay those performed in a facility and would thus be inherently
inequitable, not resource-based, and contrary to the intent of the law.
Furthermore, we are not aware of any studies showing that codes 43234
through 45385 are being unsafely performed in offices. We have complete
[[Page 58831]]
confidence that physicians will continue to exercise their best
clinical judgment as to the most appropriate setting for their
patients.
Comment: One specialty society stated its support for the proposed
change in the site-of-service payment, as long as it does not result in
nonpayment for services actually provided. For example, there are no
practice expense RVUs for emergency intubation in the nonfacility
setting, though this service may occasionally have to be performed in
the office.
Response: If a service for which there are only facility RVUs is
performed in the office, the facility rate will be paid.
Comment: The American Urological Association commented that certain
codes--50590, 52234, 52235, 52240, 52276, and 52317 were
inappropriately assigned nonfacility PERVUs, as it is not safe to
perform these services in the office.
Response: We would need more data to demonstrate that performing
these services in the office is not appropriate before we would
eliminate the nonfacility RVUs. We are willing to review such
information during the refinement process. Such information should be
submitted to HCFA, Office of Clinical Standards and Quality.
Comment: Two societies representing pulmonologists commented that
critical care is listed with facility and nonfacility practice expense
RVUs, although it is nearly always performed in an inpatient setting.
One organization representing psychiatrists noted that CPT codes
90816 through 90829 are restricted to the inpatient hospital and
partial hospital and residential care settings, and that CPT code
90870, electroconvulsive therapy, would not generally be performed in
an office setting. The commenter recommended that the final rule list
RVUs for only the facility setting.
Response: We are not deleting RVUs proposed for the nonfacility
setting in this final rule, but will be considering this issue during
refinement. We would note, however, that services performed in the
residential care setting would be paid by using the nonfacility RVUs.
Comment: One commenter pointed out that in our proposed rule we
list the services that, by nature of their codes, would only have one
level of practice expense; this list includes codes 99321 through 99333
and 99341 through 99350. However, in Addendum C, both facility and
nonfacility values are given and the facility values are higher than
the nonfacility values for most of these codes. These inconsistencies
should be corrected. Another commenter submitted a list of some codes
where the facility practice expense RVUs are higher than the in-office
values.
Response: We thank the commenters for pointing out these
discrepancies. The instances of higher facility RVUs are an artifact of
our indirect methodology and reflect the differing mix of specialties
performing a service in each setting. We will look at this more closely
during the refinement process.
Comment: One specialty society commented that the dual energy x-ray
absorptiometry codes have the same practice expense RVUs for both the
in-office and out-of-office setting. The comment recommended that the
in-office RVUs be adjusted to reflect the high costs of equipment for
the office-based physician.
Response: More specific data will be needed on the actual costs of
the equipment so that we can address any changes to the CPEP data
during the refinement process.
Comment: Three organizations representing outpatient therapy
services commented that, though outpatient rehabilitation providers
will be paid the nonfacility rate, there are higher costs for providing
rehabilitation services in an SNF or hospital than in a doctor's
office. These costs are not reflected in the CPEP data and are grossly
underestimated in the practice expense RVUs. There should be a special
higher site-of-service differential to be applied when outpatient
therapy services are furnished in provider settings.
Response: The site-of-service differential is intended to ensure
that the Medicare program avoids making duplicate payments to
practitioners and facilities for the same services. BBA specified that
outpatient therapy services, which prior to January 1, 1999 have been
paid by Medicare using a cost reimbursement system, should be paid
using the physician fee schedule effective January 1, 1999. As
discussed more fully in the June 5, 1998 proposed rule, we believe it
would be inappropriate, and inconsistent with how we pay for other
services under the fee schedule, to pay a higher rate for these
outpatient rehabilitation services when they are provided in an SNF or
hospital.
Comment: One specialty organization recommended that we confirm
that facility-based practice expenses exclude only those practice
expenses that are actually provided and paid for by the facility. We
should provide a data file summarizing which resources are deemed to be
provided by facilities, so that physician organizations can identify
any errors or anomalies in HCFA's assumptions. For example,
vitreoretinal physicians must often provide clinical staff for out-of-
office procedures, and it is essential that there is a mechanism for
the physician to be reimbursed.
Response: The differential between the facility-based and office-
based practice expenses is determined by the CPEP inputs for staff
labor time, supplies and equipment attributed to each site and the mix
of specialties providing the services in each site. We will consider
further adjustments to the CPEP inputs during the refinement period.
Comment: The American Speech-Language-Hearing Association commented
that the extra costs for patient acuity and travel should be added to
the site of service differential.
Response: This is an issue for which specific data is needed and
that should be addressed during the refinement period.
Additional Relative Value Units for Additional Office-Based Expenses
for Certain Procedure Codes
Usually office medical supplies or surgical services in the
physician's office are included in the practice expense portion of the
payment for the medical or surgical service to which they are
incidental. The November 1991 final rule (56 FR 59522) included a
policy for 44 procedure codes that allowed a practice expense RVU of
1.0 to pay for the supplies that are used incident to a physician's
service but generally are not the type of routine supplies included in
the practice expense RVUs for specific services. This list of procedure
codes was expanded in the December 1993 final rule (58 FR 63854).
Included in this list of procedures for which an additional amount may
be paid for supplies if the procedure is performed in a physician's
office are closing a tear duct (CPT code 68761) and billing for a
permanent lacrimal duct implant (HCPCS A4263), inserting an access port
(CPT code 36533) and billing for an implantable vascular access portal/
catheter (A4300), and performing cystoscopy procedures and billing for
a surgical tray (A4550).
We proposed to revise this policy under the resource-based practice
expense system. We believe the supply costs that this policy is
designed to cover were included in the supply inputs identified by the
CPEPs and the AMA's SMS survey. Thus, they were included in the
practice expense RVUs for each relevant procedure code. Therefore, we
proposed to discontinue separate payment for supply codes A4263, A4300,
A4550, and G0025.
[[Page 58832]]
Below are the comments we have received on this issue:
Comment: While two primary care organizations agreed with our
proposal to discontinue separate payment for select supply codes, three
other specialty societies opposed elimination of the current payment
for these supplies. One comment argued that incident-to supplies were
not counted in the CPEP process, and the other that this separate
payment is a preferred method of recognizing added costs to physicians.
Response: We believe that the current practice expense RVUs include
the payment for these supplies. However, we are willing to consider
evidence that the CPEP inputs do not reflect the appropriate use of
these supplies for any service during the refinement process.
Comment: The AMA, as well as four physician specialty
organizations, recommended phasing out separate payment for supplies
during the transition instead of implementing it all at once in 1999.
Response: We agree and we will be phasing out the separate payment
for these supplies over the transition period.
Anesthesia Services
Although physician anesthesia services are paid under the physician
fee schedule, these services do not have practice expense RVUs. Rather,
payment for physician anesthesia services is determined based on the
sum of allowable base and time units multiplied by a locality-specific
anesthesia CF.
Since the beginning of the physician fee schedule, overall budget
neutrality and work adjustments have been made to the anesthesia CF and
not to the base and time units. We are following the same process and
making an adjustment to the anesthesia CF to move anesthesia services
under the resource-based practice expense system. The adjustment to the
anesthesia CF is 3.0 percent (phased in other the transition period).
4. Refinement of Practice Expense Relative Value Units
Section 4505(d)(1)(C) of BBA requires the Secretary to develop a
refinement process to be used during each of the 4 years of the
transition period. In the June 5, 1998 proposed rule, we proposed
keeping the practice expense RVUs as interim RVUs until at least the
fall of 1999, and possibly beyond 1999, if we believe more time is
needed to identify and correct errors. We also solicited
recommendations for a refinement process in subsequent years.
In the June 1998 proposed rule, we did not propose a specific
process for a long-term refinement process. Rather, we set out the
parameters for an acceptable refinement process for practice expense
RVUs. Such a refinement process would enable us to do the following:
<bullet> Review and refine practice expense and hour data.
We suggested that we would be prepared in the future to refine the
practice expense and hour data of those specialties well-represented in
the SMS data if we receive compelling evidence that the SMS data are
incorrect. We invited comments on potential revisions to the SMS survey
or alternative sources of data and on the need to confirm, through
audit or other means, the survey data that would be used for long term
refinement.
<bullet> Obtain and review practice expense and hour data for
specialties or practitioners not included in the SMS survey.
We invited comments on the appropriateness of our crosswalks and
suggested that any arguments that the practice expense and hour data
should be changed would be strengthened by the submission of survey
data comparable to the SMS data.
<bullet> Address anomalies, if any, in the code-specific Harvard
and RUC physician time data.
We proposed that we would not revisit work RVU issues that have
been already addressed as part of the 5-year review.
<bullet> Address anomalies, if any, in the code-specific CPEP data
on clinical staff types and times, quantity and cost of medical
supplies, and quantity and cost of medical equipment.
We proposed that the codes identified by commenters as having
possible errors during the comment periods of the proposed rule and the
final rule will constitute the universe of codes whose code-specific
CPEP data should be reviewed, as it was not our intention to review the
inputs for all the codes on an annual basis. We also proposed that we
obtain the advice of practicing physicians on the appropriateness of
recommended changes to the CPEP inputs. We suggested two principal
options for obtaining that advice, either HCFA-convened multiple
specialty panels or the RUC or new organization like the RUC that
includes broad representation across all specialties and includes
nonphysician practitioners. The panels would need to meet no later than
the summer of 1999 to consider the comments we received on both the
proposed rule and the final rule. We invited comments on these options
and solicited any other recommendations.
<bullet> Refine, as needed, our process of developing practice
expense RVUs for codes not addressed by the CPEP process, for example,
codes that were new in 1996, 1997, and 1998.
We developed practice expense RVUs for codes that were new in 1996,
1997, and 1998 by comparing the new codes to other comparable codes for
which we had actual CPEP data and we invited comments on the
appropriateness of our crosswalks. Also, we solicited new code-specific
data on clinical staff types and times, quantity and cost of medical
supplies, and quantity and cost of medical equipment.
<bullet> Develop practice expense RVUs for codes that will be new
in 1999 and beyond.
Because of time constraints, we proposed that we develop interim
practice expense RVUs for new 1999 codes by preparing a crosswalk of
CPEP data from existing codes. Though the practice expense values for
these codes will be subject to comment, the interim values will serve
as the basis of payment during 1999.
Beyond 1999, we proposed two possible options that could be used to
develop practice expense RVUs for new codes. First, we could continue
to crosswalk new codes to existing codes and review comments we receive
with the assistance of our multiple specialty panels. Second, we could
request the RUC or a RUC-like organization to provide recommended
practice expense RVUs or recommended inputs before publication of the
proposed rule, as we do with work RVUs. We invited comments on these
options and solicited any other recommendations. Following are the
comments that we have received on our proposal for refinement of the
resource based practice expense RVUs:
Comment: The RUC submitted the following comments on the refinement
process:
<bullet> The RUC stated its interest in reviewing any comments that
we receive on the accuracy of the physician time data for specific
codes.
<bullet> The RUC commented that many members of the RUC, the RUC's
Advisory Committee and the Health Care Professionals Advisory Committee
(HCPAC) observed or participated in the entire CPEP process. The
comment stated that, based on that experience and on extensive
subsequent discussion, it became clear that the RUC, through its
experience in developing physician work relative value units, should
also seek involvement in developing
[[Page 58833]]
recommendations on practice expense relative values.
<bullet> The RUC comment contained the following proposal for
refinement of the CPEP data:
The RUC proposed the development of a new Advisory Committee, the
RUC Practice Expense Advisory Committee (PEAC) to review comments on
the code-specific CPEP data (that is, clinical staff types and times,
quantity and cost of medical supplies, and quantity and cost of medical
equipment) during the refinement period. This committee would report to
the RUC, which would make final recommendations to HCFA. The committee
composition would mirror the RUC and include additional representation
from the American Nurses Association, the American Academy of Physician
Assistants, the Medical Group Management Association, and four other
non-MD and DO organizations to encourage input from nurses and practice
managers in the process.
The committee would include one representative from the following
organizations:
<bullet> Chair (To be selected by the Chair of the RUC);
<bullet> American Medical Association;
<bullet> American Osteopathic Association;
<bullet> CPT Editorial Panel;
<bullet> Health Care Professionals Advisory Committee;
<bullet> Two rotating seats for the RUC Advisory Committee
(currently held by Rheumatology and Child Psychiatry);
<bullet> American Academy of Dermatology;
<bullet> American Academy of Family Physicians;
<bullet> American Academy of Neurology;
<bullet> American Academy of Ophthalmology;
<bullet> American Academy of Orthopaedic Surgeons;
<bullet> American Academy of Otolaryngology--Head and Neck
Surgery, Inc.;
<bullet> American Academy of Pediatrics;
<bullet> American Academy of Physician Assistants;
<bullet> American Association of Neurological Surgeons;
<bullet> American College of Cardiology;
<bullet> American College of Emergency Physicians;
<bullet> American College of Obstetricians and Gynecologists;
<bullet> American College of Physicians;
<bullet> American College of Radiology;
<bullet> American College of Surgeons;
<bullet> American Nurses Association;
<bullet> American Psychiatric Association;
<bullet> American Society of Anesthesiologists;
<bullet> American Society of Internal Medicine;
<bullet> American Society of Plastic and Reconstructive
Surgeons;
<bullet> American Urological Association;
<bullet> College of American Pathologists;
<bullet> Medical Group Management Association; and
<bullet> Society of Thoracic Surgeons.
Four seats would be added to include other organizations representing
nursing or practice managers, for example, National Federation of
Licensed Practical Nurses or American Licensed Practical Nurses
Association, American Association of Medical Assistants, Association of
Surgical Technologists, Professional Association of Health Care Office
Managers, and Healthcare Financial Management Association.
Also contributing to this refinement process would be 80 members of
the RUC Advisory Committee, representing those specialty societies with
a seat in the AMA House of Delegates who have elected to participate in
the RUC process. The RUC process will also include input from the
HCPAC, which represents audiologists, chiropractors, nurses,
occupational therapists, optometrists, physical therapists, physician
assistants, podiatrists, psychologists, social workers, and speech-
language pathologists.
The RUC has not yet implemented the PEAC, pending the initial
response(s) to the proposed rule. However, the RUC has authorized the
RUC Chair to convene the PEAC in a timely fashion and requests that we
share all comments we wish to have reviewed regarding changes to the
CPEP data with the RUC soon after the conclusion of the comment period
on the final rule. The RUC would assure that all members of the RUC
Advisory Committee and HCPAC Advisory Committee are contacted regarding
the comments and will solicit interest in bringing recommendations
forward to the PEAC on these comments. Specialty societies would
collect additional data and, where possible, form a consensus
recommendation with other interested specialty societies or HCPAC
organizations. After considering the comments and the specialty society
recommendation, the PEAC would present a report with their
recommendations to the RUC which would submit its recommendations to
us, along with its usual submission of work relative value
recommendations, at the end of May.
The RUC comment contained the following proposal for refinement of
the crosswalk for 1996, 1997, 1998, and 1999 new codes. The RUC
proposes that the PEAC, when constituted, also review any comments on
the final rule that are forwarded by us regarding the appropriateness
of crosswalks and extrapolated code-specific data for those codes that
were new in 1996, 1997, 1998, and 1999. The RUC would encourage
specialty societies and HCPAC organizations to collect data or evidence
to support new code-specific data on clinical staff types and times,
quantity and cost of medical supplies, and quantity and cost of medical
equipment for each of those new services that are frequently performed.
The RUC comment also contained the following proposal for the
development of practice expense RVUs for codes that will be new in 2000
and beyond. The RUC proposes that recommendations for practice expense
RVUs for new codes in 2000 and beyond be developed simultaneously with
the work RVU recommendations. After a new code is approved by the CPT
Editorial Panel, specialty societies would conduct a survey that would
include a section on physician work and a section on direct expense
inputs for that service. The specialty society would then present their
recommendations on both the work and practice expense RVUs, along with
all of their supporting data from the survey, to the RUC to review. The
RUC would review both RVUs and submit the recommendations to us in a
format similar to its current submission.
The RUC comment stated that the majority of the discussion on the
expense inputs would focus on the clinical staff time and, potentially,
the comparison between this time and the physician time. This time
information will not be available for new codes. If we were to utilize
two different processes for work and practice expenses for new codes,
it would be necessary to establish a process to reconcile differences
in time between the two sets of recommendations. The RUC comment
recommended that the RUC process represents the best choice for
reviewing this relationship and providing verifiable recommendations.
The comment also recommended that for new codes for services performed
by nonphysicians only, the RUC HCPAC Review Board would review both
work and practice expense RVUs and would submit their recommendations
to us directly. Throughout the updating process of practice expense,
the RUC will also seek the input of nurses, practice managers, and
others who have expertise in physician practice expense.
Comment: Almost all specialty societies and individuals commenting
on refinement, as well as MedPAC and the AMA, agreed that the RUC or a
group like the RUC should undertake the refinement of the CPEP input
data for individual procedure codes, including reviewing our crosswalks
for CPT codes new in 1996 through 1999, and recommending practice
expense values for codes that will be new in 2000 and beyond. Several
specialty societies, while supporting the role of the RUC in handling
the complex issue
[[Page 58834]]
of refining CPEP data, stated that the RUC would need to include
nonphysicians such as practice administrators and nurses in order to
accomplish this task, as staff in management roles have more expertise
than practitioners on the intricacies of practice management and the
details of practice expenses. The American Podiatric Medical
Association commented that podiatry must have full participation on an
equal basis with other physicians' specialties; membership on the HCPAC
would not be sufficient. The American Academy of Audiology has also
commented that they want an audiologist to be represented on any group
refining RVUs and the American Occupational Therapy Association
commented on the need for therapy representatives. The Society of
Vascular Technology/Society of Diagnostic Sonographers commented that
they would support the use of a RUC-like group only if there would be
appropriate representation of technical component service providers;
otherwise they would not favor the RUC handling refinement issues.
Response: As previously described, there are four key data items we
used for our methodology. Three are needed to develop practice expense
``pools'' per specialty, and the fourth is needed to allocate these
aggregate practice cost pools to individual CPT codes. The data sources
we used are as follows:
Practice Cost Pools
1. AMA SMS survey data for practice costs per hour, by specialty.
2. Harvard and RUC data for length of time to perform each service
3. Medicare claims frequency data for each procedure.
Allocation to Individual CPT Codes
4. ABT CPEP resource inputs per CPT code.
Refinement requires consideration of three broad types of
activities:
1. Review of broad strategy and general methodology issues.
Examples of these types of activities include review of the basic
methodology, formulas for allocation of indirect expenses, development
of criteria for consideration of alternative data sources, survey
sample size consideration, development of possible approaches to
validate survey data, and other similar methodology issues.
2. Refinement of specialty level practice cost per hour data.
3. Refinement of detailed code level data (CPEP data, procedure
time data).
The RUC has proposed to be involved in the refinement process by
creating a subcommittee to advise it, referred to as the Practice
Expense Advisory Committee (PEAC). It would consist of over 35 members
(RUC specialties supplemented by other groups such as MGMA, nurses,
practice managers and others). The vast majority of specialties that
commented on the refinement process indicated their support for the RUC
proposal or for a similar process.
Initial Refinement Process
We continue to believe that our proposed general methodology is
sound and responsive to the BBA requirements. We did receive a large
variety of comments about broad methodology issues, practice expense
per hour data, and detailed code level data. As described elsewhere, we
have made some adjustments to our original proposal for a select number
of situations in which we were convinced an adjustment was appropriate
at this time. We are considering other comments for possible future
refinement. The values of all codes will be considered interim for 1999
and for future years during the transition period. Rather than specify
a detailed refinement process at this time, we will continue to work
with the professional community to further develop the refinement
process. We will modify the process as necessary during the period,
based on our experiences and recommendations received.
Our plans to start the initial refinement process are as follows:
1. We plan to establish a mechanism to receive independent advice
for dealing with broad practice expense RVU technical and
methodological issues. We are considering contractor support and/or
other ways of obtaining independent advice and assessments of comments
that we have already received or will receive in the future about
important technical issues, especially those that result in major
redistributions among specialties. We welcome continuing advice and
specific recommendations from the GAO, MedPAC, and the Practicing
Physicians Advisory Council. We will also continue to actively consult
with physician and other groups about these issues. We are particularly
interested in receiving additional comments and suggestions about
methodology from organizations that have a broad range of interests and
expertise in practice expense and survey issues. All comments will be
considered, but we especially encourage organizations that represent a
broad range of physician, practitioner, and provider groups (for
example, groups that represent both ``winning'' and ``losing''
specialties) with expertise in practice costs issues to make specific
recommendations regarding the following methodology issues:
<bullet> Bias in ``Top Down'' methodology. Some commenters believe
the methodology we are using to establish initial practice expense RVUs
is flawed. They indicate that it is inappropriate to pass through costs
and that the method will perpetuate inequities among specialties
because high revenue specialties have more to spend on their practices.
One possible way of dealing with this issue is to further analyze the
differences in practice costs per hour by specialty to determine the
``reasonableness'' of these differences. Edits or other adjustments in
practice costs data could be established if appropriate.
<bullet> Validation of data. It is difficult to establish an
unbiased method for refining and validating practice costs data. Data
from the SMS survey are self-reported. There could be major incentives
in the future for respondents to expand the definition and reporting of
``costs'' for purposes of this methodology. In addition, we would
expect that individual specialties would be likely to bring undervalued
practice expense RVUs to our attention, but would not have an incentive
to report overvalued practice expense RVUs. We welcome comments on the
following:
+ What specific methods should HCFA use to validate key components
of the data used for establishing practice expense RVUs?
+ What specific approaches should be used to ensure fairness among
specialties?
+ Should we, for example, require that the specialty obtain review
by an independent auditor before we consider changes in the data?
<bullet> Criteria for using alternative survey data. The primary
source of practice costs per hour data was the AMA's SMS survey. Some
specialties have already requested that alternative, supplementary, or
more recent data be used. We welcome comments on what specific criteria
should be established for use of these alternative data?
<bullet> Allocation of indirect expenses. We allocated indirect
expenses to individual CPT codes based on physician work and direct
expenses. Some commenters suggest that indirect expenses should be
allocated by alternative methods, such as physician time and direct
expenses, or just direct expenses. We would welcome your
recommendations.
2. RUC/PEAC. We would welcome comments from the RUC/PEAC or any
other organization or individual for individual code level data--both
for
[[Page 58835]]
resource inputs and time data. The RUC and PEAC would function as an
entity independent from us, much like the current RUC operates for
purposes of providing comments on work RVUs. We also recognize the RUC/
PEAC may wish to comment on other aspects of the process, such as
methodology. We would consider such comments along with those received
from others and would likely discuss them as part of the process
described in paragraph 1 above. However, we wish to emphasize that, as
in our dealings with the current RUC, we would retain the ultimate
authority and responsibility to establish practice expense RVUs.
3. Comments on the refinement process.
We seek comments January 4, 1999 and suggestions on any aspect of
the refinement process as described above.
Comment: All but one of the organizations commenting on the issue,
as well as many individual commenters, recommended that we keep the
practice expense RVUs as interim for the 4 years of the process. One
national specialty society recommended we make the revised practice
expense RVUs interim for 1 year, only extending the period based on the
number of misvalued procedures identified and also ensuring that only
changes based on compelling evidence are made.
Response: We stated in our proposed rule that we would keep the
practice expense RVUs as interim through at least through 1999. Due to
the complexity of the issues that need to be addressed during
refinement, we now believe that a longer period could be needed to
finalize all the RVUs. Therefore, as stated above, we will be keeping
all the RVUs as interim throughout the transition period.
Comment: Many commenters recommended acceptance of information from
alternative data sources during the refinement period, including data
provided by specialty societies. One commenter suggested that we
develop a standard survey instrument for specialties to use. Another
organization commented that we should consider using MGMA's cost survey
as an alternative source of information that could be used to
supplement, validate, or otherwise expose further areas of refinement
in the SMS, or perhaps be a substitute for SMS in the future. This
comment also stated that we should remain open to challenges about
current practice expense per hour calculations from all specialties,
even from those larger specialties represented in the SMS survey, in
both the short and long term. Many commenters also recommended that we
develop a process for validating any supplemental data that we use.
Response: We believe that the refinement process that we outlined
above is responsive to these concerns. One of the major purposes of the
technical support and advice mentioned will be to help us to determine
what additional data, whether from large or small specialties, are
needed, whether submitted information is valid, and whether and how
alternative sources of data, such as the MGMA survey, can be used to
validate the assumptions used to create the practice expense pools.
Comment: One specialty society commented that we should conduct
specialty-specific surveys for all HCFA-designated specialties during
the refinement period. The comment stated that it is not reasonable for
us to put the burden of ``oversample'' costs, which exceed $100,000 on
the HCFA-designated specialties that the AMA has chosen not to include
in its annual survey sample.
Response: Decisions on what surveys are needed, what the criteria
should be for those surveys, who should conduct the surveys, and who
should fund them will be made as we address these issues during
refinement.
Comment: One organization recommended that the refinement process
distinguish between intra-specialty refinement issues that can be
resolved within a specialty, and inter-specialty refinement issues
which change the cost pool of one specialty with respect to all other
specialties.
Response: Again, we believe that our chosen refinement process
addresses this concern. The intra-specialty refinement issues will, for
the most part, revolve around adjustments to the CPEP data and will be
referred to the PEAC for their recommendations. Those issues that
affect the relative size of the practice expense pools are generally
more fundamental methodological questions for which we will seek
technical and methodological input as well as input from the medical
community.
Comment: One national organization commented that the SMS data
appears to be the best data available for the purpose of determining
practice expense RVUs and that SMS data closely mirrors the specialty's
own data. The comment recommended that refinement should focus on
identifying the proper inputs for particular codes, rather than
adjusting the current SMS data, or revamping the design of the survey,
which currently does not reflect a bias towards inflating practice
expenses for individual specialties.
Response: We agree that the SMS survey is, at present, the best
data available for determining aggregate specialty-specific practice
costs. We believe one of the purposes of refinement is to pinpoint
where appropriate adjustments need to be made in the data that we use.
We also agree, as mentioned above, that we will need to develop a
system to validate the accuracy of data collected in the future.
Comment: One commenter recommended that we ensure that cost-saving
innovations are not discouraged by the refinement process. This means
that the practice expense scale should not be refined to immediately
reflect the full impact of every cost-saving development, or
specialties will be permanently discouraged from implementing such
innovations.
Response: We are required by law to develop practice expense
relative values that are resource-based. Therefore, we do not believe
that we could develop an alternative approach that would only apply to
cost-saving innovations. We also do not believe that the use of
resource-based practice expense RVUs will have a significant effect on
cost-saving innovations; on the contrary, the use of a prospectively
determined payment system, in itself, offers an incentive for any
individual practitioner to cut costs.
Comment: Two commenters recommended that codes for entirely new
procedures and technologies have their practice expense values taken
from the all-specialty practice expense pool; two organizations
recommended that codes that apply to new technologies to replace
current procedures come from the pertinent specialty's pool.
Response: There would be no budget neutrality adjustment for new
codes that represent entirely new procedures and technologies. However,
we believe that, in the majority of cases (since we would typically
expect some type of substitution of new services for more established
services) a budget neutrality adjustment would be appropriate. In such
a case, we would spread the adjustment across all services. However,
new codes that merely replace existing services would only affect the
pertinent specialty's pool at the time when the practice expense pools
are recalculated.
Comment: A primary care specialty group recommended that we leave
undisturbed the Harvard and RUC time data during the refinement period
because of the implications for the work RVUs assigned to codes, while
a surgical specialty group recommended that we remain open to revising
the Harvard physician time data.
[[Page 58836]]
Response: The physician time data plays an important role in
determining the size of each specialty's practice expense pool and, for
this reason, it is important that this data be as accurate as possible.
Therefore, we cannot rule out the need for adjustments in the time data
during the refinement period. However, according to our chosen
refinement process, requests to adjust the physician time data would be
initially referred to the RUC. We believe that the RUC will understand
the implications that changes in physician times could have for the
work RVUs.
Comment: One commenter agreed with our proposal that we address
potential bias toward specialties which use more midlevel providers
during the refinement period.
Response: This is one of the issues on which we will be seeking
input during the refinement period.
Comment: The AMA, supported by comments from two physician
specialty groups, recommended that, to avoid confusion, we publish only
the blended set of values each year, but make a list of the resource-
based practice expense RVUs available to interested parties. Any
proposed changes in the resource-based practice expense RVUs could then
be published in the spring proposed rules. Four organizations
recommended that both sets of RVUs be published throughout the period.
Response: We are publishing both sets of RVUs in Addenda B and C.
5. Reductions in Practice Expense Relative Value Units for Multiple
Procedures
Comment: Two commenters expressed agreement with our decision not
to propose further multiple procedure reductions. Gastroenterologists
stated that multiple procedure reductions should not apply to GI
procedures done through different orifices.
Response: Although we have not made a specific proposal with
respect to multiple procedures thus far, we may do so in the future. We
continue to believe there are efficiencies when more than one service
is performed during a single encounter.
6. Transition
The Proposed Rule
The transition to resource-based practice expenses, enacted in
section 4505(b) of BBA, requires practice expense RVUs in 1999 to be
based 75 percent on the existing charge-based practice expense system
and 25 percent on the new resource-based system. In 2000, the shares
are 50 percent of the former and 50 percent the latter, and in 2001,
the shares are 25 percent and 75 percent, respectively. Beginning in
2002, practice expense RVUs are entirely resource-based.
In our October 31, 1997 final rule (62 FR 59052), we indicated that
we would use, as the first factor in the transition formula, the 1998
practice expense RVUs actually used for payment. (``The practice
expense RVUs for 1999 will be based on the product of 75 percent of the
previous year's practice expense RVUs (1998) and 25 percent of the
resource-based practice expense RVUs.'') In response to this statement,
we received a comment suggesting that we consider interpreting the law
to use 1997 practice expense RVUs as the starting point for the
transition. This interpretation would have eliminated from the
transition the 1998 changes in practice expenses enacted by section
4505 of BBA. Those commenting contended that the 1998 changes applied
only to 1998 and should not be included in the first practice expense
factor in the transition formula. Using 1997 RVUs would have resulted
in higher payments for certain specialty procedures and lower payments
for office visits during 1999, 2000, and 2001. Beginning in 2002, the
starting point for the transition does not matter because the
transition will be complete and practice expenses will be based
entirely on the new resource-based system.
When we developed the proposed rule, we specifically considered the
suggestion that we use actual 1997 practice expense RVUs as the
starting point for the transition. In the proposed rule we indicated
that we did not believe that we could use 1997 practice expense RVUs
for several reasons. First, this approach seemed to us contrary to the
statute's intent of moving toward a resource-based payment system;
also, the interpretation could potentially result in a ``yo-yoing'' of
practice expense RVUs for certain services between 1998 and future
years. We pointed out that practice expense RVUs for office medical
visits, explicitly increased by the Congress in 1998, could be reduced
in 1999 only to be increased again when the practice expenses are fully
resource-based.
We also stated that we would not use 1997 practice expense RVUs as
the starting point for the transition because this result was
inconsistent with our construction of similar reductions, enacted in
OBRA 1993, to practice expense values for 1994, 1995, and 1996. We also
indicated that we would reject the only other possibility, using 1991
practice expense RVUs; using 1991 RVUs would be unacceptable since to
do so would exclude the effects of the series of reductions to practice
expense RVUs mandated by the Congress between 1993 and 1998 and would
instead return the system to outmoded practice expense RVUs established
at the very inception of the fee schedule. We indicated that we
believed this to be a poor alternative. Basing the transition on data
for 1991, from which the original practice expenses were derived, would
require us to retrospectively impute charge data for the many new
procedure codes that had been added since the beginning of the fee
schedule. It also would have been contrary to the statutory scheme,
which is moving steadily toward a resource-based payment system. We
indicated that adoption of 1991 data for the transition starting point
would not gradually transition payments to the new resource-based
system, but instead would represent an abrupt change in direction. This
result is at odds with the purpose of a transition and inconsistent
with other transitions in Medicare. Therefore, the June 1998 rule
proposed to use the 1998 practice expense RVUs for purposes of the
transition formula in 1999, 2000, and 2001.
We received comments strongly supporting the approach we took in
the proposed rule, as well as strongly opposing our approach. These
comments centered on section 1848(c)(2)(C)(ii) of the Act. That
provision requires practice expense RVUs to be computed by multiplying
``base allowed charges'' by a practice expense percentage. BBA then
requires that this ``product'' be used as the first factor in the
transition formula. A cross-reference to section 1848(c)(2)(D) of the
Act appears to require base allowed charges to be generated from charge
data for 1991. However, we believe that a number of other factors
demonstrate the irrationality of using data for 1991 as the transition
starting point. Using data for 1991 would be a total aberration from
the course of the past 7 years of congressional directives to decrease
practice expense RVUs from which office-based and visit codes were
generally excepted and would turn the clock back without any
congressional direction to do so. We have analyzed both the statutory
language and the context in which it is found, and we have determined
that the best accommodation of the two is to use current 1998 practice
expense RVUs as the basis for the transition to the resource-based
practice expense system.
We have considered, among other things, that we are authorized by
law to make such ancillary policies as are
[[Page 58837]]
necessary to implement section 1848 of the Act; that the equation,
based on 1991 average allowed charges that the law seems to instruct us
to use as the transition starting point, ignores consistent legislative
direction since 1993, as well as our consistent implementation; that we
have not used the average allowed charge provision since the
establishment of practice expense RVUs in 1991, that it has no ready
application to the more than 2000 codes developed since 1992, and,
therefore, that using 1991 allowed charges for the transition creates a
significant administrative burden, unintended by the Congress,
particularly given the short time period for implementation; that the
language describing the transition formula and the language describing
the ``product'' upon which it is based are internally inconsistent;
that our implementation of adjustments in accordance with section
1848(c)(2)(G) of the Act is consistent with our implementation of the
OBRA 1993 3-year reductions; that the Congress is familiar with our
implementation, has amended section 1848(c) of the Act since the
implementation, and has not acted legislatively to alter our
implementation prospectively. In addition, we note that the Physician
Payment Review Commission (PPRC) studied resource-based practice
expenses for a number of years, that the Congress is familiar with
PPRC's data and analyses, and that the results of our transition are
consistent with the results PPRC predicted. In sum, we believe that our
construction of the law most appropriately resolves the tensions
inherent in the practice expense transition provisions of the BBA.
We address below the specific comments we received with respect to
transition issues.
Comment: Some commenters, mainly societies representing surgical
specialties, opposed our proposed approach and indicated that our
proposal to use the 1998 practice expense RVUs in the transition
formula is in conflict with the language and intent of BBA. These
commenters argued that section 1848(c)(2)(C)(ii)(I) and (II) of the Act
require that the practice expense charge data relied upon in 1991 to
establish the 1992 practice expense RVUs be used for the first factor
in the transition formula. They also contend that the adjustments to
the 1998 practice expense RVUs, required by BBA, were intended to
accomplish a one-time redistribution of RVUs from specialty codes to
primary care codes and that using these RVUs during the transition
would perpetuate the redistribution for three more years. These
commenters claimed that this transition would redistribute an estimated
additional $490 million from specialists to office-based codes.
These commenters assert that the charge-based factor in the
transition must be the formula in section 1848(c)(2)(C)(ii) of the Act
that established practice expense RVUs as the product of (I) the base
allowed charges for a service, and (II) the practice expense percentage
for the service. Base allowed charges are defined in section
1848(c)(2)(D) of the Act as ``with respect to a physician's service,
the national average allowed charges for the service . . . for services
furnished during 1991, as estimated by the Secretary using the most
recent data available.'' (The practice expense percentage is defined in
section 1848(c)(3)(C)(ii) of the Act.) Therefore, according to these
commenters, the reference in the transition provision that RVUs be
determined based on ``such product'' requires us to use 1991 average
charges to compute 1999 RVUs.
Response: We disagree with these commenters. We believe that the
formula in section 1848(c)(2)(C)(ii) of the Act is internally
inconsistent, that it was intended for the establishment of the
original practice expense RVUs, that it has no ready application to the
2,000 codes new or revised since 1991, and that it produces results
inconsistent with the balance of section 1848(c)(2)(C) of the Act. The
commenters' construction of the law would eviscerate the changes the
Congress made to practice expense RVUs since 1993 and would require
that we revert to the beginning of the program in the absence of
congressional direction to do so.
First, we believe that the reference to ``such product'' in section
1848(c)(2)(C)(ii) of the Act supports our view that the Congress
contemplated that the first factor in the transition formula would be
based on RVUs and not on 1991 average allowed charges. Under the
commenters' reading, the transition formula requires that in 1999 we
multiply 75 percent of a product based on average allowable charges and
25 percent of the resource-based RVUs. However, ``average allowed
charges'' are expressed as dollar figures, while the resource-based
factor is expressed in RVUs. This internal inconsistency suggests that
the Congress contemplated instead that both factors in the formula
would be expressed in RVUs and that we would use current RVUs produced
under section 1848(c)(2)(C) of the Act for the first factor in the
transition.
Moreover, although the Congress has not repealed section
1848(c)(2)(C)(ii)(I) and (II) of the Act, the provisions have not been
applied in the fee schedule computations since 1992 when the first
practice expenses were established. The language of the provisions
indicate the inappropriateness of their application here. Thus, section
1848(c)(2)(D) of the Act, incorporated by reference, provides for use
of average allowed charges ``as estimated by the Secretary using the
most recent data available.'' This language would seem to require us to
use 1998 data to recompute 1991 charges, surely an unintended result.
In addition, in 1993, the Congress required us to compute practice
expenses RVUs on a basis other than that contained in section
1848(c)(2)(C)(ii) of the Act: effective January 1, 1994, section
1848(c)(2)(E) of the Act provided for a ``[r]eduction in practice
expense relative value units for certain services.'' The Congress did
not explicitly state that the amendment applied notwithstanding the
existing language of section 1848(c)(2)(C)(ii) of the Act; instead, the
amendment operated without recourse to that provision at all. The
amendment envisioned that reductions would be made to the ``relative
value units [being] applied'' at that time, not to charges for 1991. At
the end of the period for which reductions were specified in section
1848(c)(2)(E) of the Act, practice expense RVUs did not revert to 1992
values based on 1991 charges; RVU changes produced by section
1848(c)(2)(E) of the Act were permanent and carried forward into the
next year's (1997) practice expense RVUs. These more recent and more
specific provisions added by the Congress in subsequent years obviously
control over the original provision, and the commenters' argument, if
adopted, would wipe out the effects of these intervening changes in the
law. We believe that it is far more rational and consistent with
congressional intent to harmonize the computation during the 4-year
transition period with recent legislative changes rather than reverting
back to a system from 1991 that has been unused since that time.
Section 1848(c)(2)(G) of the Act, like section 1848(c)(2)(E) of the
Act, provides specified reductions for specified services for a
particular year to lower excessively high practice expense RVUs; it
explicitly raises low RVUs attributable to office visit codes. Section
1848(c)(2)(E) of the Act also provides that ``the aggregate amount of
reductions'' to practice expense RVUs for services furnished in 1998
cannot exceed $390 million. We believe that the Congress intended that
RVU changes resulting from application of section
[[Page 58838]]
1848(c)(2)(G) of the Act be treated in the same way as we had treated
changes resulting from application of section 1848(c)(2)(E) of the Act,
that is, that the RVU changes produced by section 1848(c)(2)(G) of the
Act would be permanent and carried forward into the next year's fee
schedule.
Accepting the comments advocating use of the 1991 average allowed
charges in the transition formula would present other difficulties. We
did not establish average allowed charge RVUs for codes new or revised
since 1991. Thus, using 1991 average allowed charges in the transition
would require us to retroactively impute average allowed charges for
procedure codes that did not exist in 1991. This would be a significant
administrative burden, particularly given the obligation to have these
amendments implemented by January 1, 1999.
We believe that the Congress intended that we devote our efforts to
developing the resource-based practice expense system and refining
practice expense RVUs, rather than to creating a set of imputed charges
for new codes to be used only for the transition. BBA explicitly
requires the Secretary to develop a process to refine resource-based
practice expense RVUs during each year of the transition (see section
4505(d)(1)(C) of the Act). On the other hand, there is no mention of
our refining what 1991 national average allowed charges would have been
for more than 2,000 new codes. It is unlikely that the Congress
contemplated that we would pursue the imputation of 1991 charges in the
limited time we had to retool the resource-based practice expense
system, especially given that the imputed values would have no utility
after 2001.
Additionally, we note that section 1848(c)(4) of the Act provides
authority for us to ``establish ancillary policies (with respect to the
use of modifiers, local codes, and other matters) as may be necessary
to implement this section.'' We view this situation as one appropriate
for the application of the ancillary policies provision. We believe, as
we have noted, that the statutory language and the context in which it
appears are at odds and create an ambiguity that we must resolve based
on the design of the section as a whole and the congressional policies
underlying it, and we are using section 1848(c)(4) of the Act for that
purpose. In order to rationally implement section 1848(c) of the Act,
we will use 1998 RVUs for the first factor in the transition formula.
Comment: The surgical specialty societies argue that implementing
section 1848(c)(2)(G) of the Act in the same manner as section
1848(c)(2)(E) of the Act is prohibited because the ``adjustments in
relative value units for 1998'' are limited to $390 million and that
including the reduced practice expense RVUs in the base for the
transition makes reductions total more than $390 million.
Response: We do not agree with that statement. We believe that the
commenters are misreading the limitation on the ``aggregate''
reallocation; that limitation applies only to amounts attributable to
services furnished in 1998. The law requires us to ``increase the
practice expense relative value units for office visit procedure codes
during 1998 by a uniform percentage which [HCFA] estimates will result
in an aggregate increase in payments for such services equal to the
aggregate decrease in payments'' for the overpriced practice expenses.
The provision simply contemplates that we add the increase for each
service and assure that the total of all increases is equal to the
total of all decreases in payments for the overpriced practice
expenses. This provision does not restrict the use of the 1998 practice
expense RVUs in future years. To read the law as these commenters
suggest would be to reverse years of intentional redistribution of
practice expense RVUs mandated by the Congress.
Comment: Primary care groups who commented on the proposed rule
asserted that the 1998 ``down payment'' (the increased practice expense
RVUs for office visit codes created by section 1848(c)(2)(G)) of the
Act was a step in the direction of the ultimate resource-based system.
On the other hand, a surgical group believed that we were biased
because we presumed that a resource-based practice expense RVU system
would lead to a reduction in most specialty codes and a corresponding
increase in primary care codes.
Response: The trend in practice expense RVU redistributions under a
resource-based system is clear, and section 1848(c)(2)(G) of the Act is
another step in that progression, consistent with the preceding
redistributions which the Congress mandated in 1993. The direction of
payment changes for major categories of service--increases for medical
visits and reductions for surgical procedures--has been mandated by the
Congress, implemented by HCFA, and known to the public for some time.
The exception of office-based services from the 1993 practice expense
RVU reductions clearly indicated that the Congress intended a relative
redistribution toward those services. While the Congress could not
know, on a procedure-by-procedure basis, the impact of the new
resource-based system, it was cognizant of the general direction of a
resource-based system before it enacted section 121 of the Social
Security Act Amendments of 1994, mandating resource-based practice
expense RVUs.
Establishment of a resource-based system for practice expenses has
been discussed for some time. In 1992, the PPRC, a statutorily
established Commission that provided advice and recommendations to the
Congress, issued a report titled ``Practice Expenses Under the Medicare
Fee Schedule: A Resource-Based Approach'' (Number 92-1). That report
described the Commission's research on a resource-based alternative for
calculating practice expense RVUs. It showed the direction of the
projected redistributions. The report showed that RVUs for the category
of evaluation and management services (medical visits or primary care
services) would increase and the category of surgical procedures would
decrease.
In its 1993 Annual Report to the Congress, the Commission
specifically recommended that the Congress enact a resource-based
system for payment of practice expenses. The report, at page 147,
indicated:
The Commission has long questioned the appropriateness of these
charge-based practice expense and malpractice expense relative
values as part of the Medicare Fee Schedule. Since it suggested the
OBRA 89 approach as an interim measure in the Annual Report to
Congress 1989, the Commission has been working to develop methods
for calculating practice expense and malpractice expense relative
values that are more consistent with the reform goals of resource-
based payments (PPRC 1989). This work has lead to the identification
of methods for calculating these two components that the Commission
thinks are more appropriate than the OBRA 89 formulas. Both the
practice expense and malpractice expense methods have been described
in previous reports to Congress, and each is the topic of a special
research report issued by the Commission (PPRC 1992b; PPRC 1992c).
In the same report, the Commission specifically recommended:
The Congress should revise the practice expense component of the
Medicare Fee Schedule so that it will be resource-based. Practice
expense relative values should be based on data about the direct
costs incurred in delivering each service and an incentive-neutral
formula to allocate indirect costs. A transition to new practice
expense relative values should be introduced beginning in 1997. This
date will allow for completion of the current fee schedule
transition process
[[Page 58839]]
and for development and refinement of the resource-based approach.
Id. This report also showed the impact of a resource-based system for
four major categories of services. The Commission estimated that the
total payment for evaluation and management services would increase by
12 percent, that diagnostic procedures would decrease by 19 percent,
that surgical global services would decrease by 29 percent and that
technical procedures would not be changed. (These impacts reflect the
total Medicare payment; when measured relative to the practice expense
component alone, there would be greater percentage changes.) Thus, the
PPRC reports put the Congress on notice about the direction of changes
under a resource-based system.
The Congress, in section 13513 of OBRA 1993, enacted reductions in
the practice expense component payment to move toward resource-based
practice expense RVUs. (The Congress also used these reductions to
achieve savings in the Medicare program.) The Congress specifically
exempted from reduction any services that were performed at least 75
percent of the time in an office setting. Therefore, the impact of the
reductions fell on surgical procedures, and the largest impact occurred
for those procedure codes for which the practice expense RVUs most
exceeded work RVUs. The structure of section 1848(c)(2)(E) of the Act--
reduction of one-quarter of the amount of excess practice expense in
each of 3 years--was itself a transition to moderately reduce practice
expense RVUs for non-office-based codes rather than to decrease them
precipitously.
Section 121 of the Social Security Act Amendments of 1994 required
us to develop and implement resource-based practice expense RVUs
effective January 1, 1998. Section 4505 of the BBA postponed the change
to resource-based values, but included another round of reductions for
certain non-visit codes. We agree with the comment that the 1998
payment changes were simply another step in the ongoing process moving
payments in the direction of the resource-based practice expense
system.
Comment: Groups representing primary care physicians supported our
proposal, stating that using 1997 RVUs for the transition would cause
some RVUs to ``ping-pong'' between 1998 practice expense RVUs and the
transition years. Some commenters opposing the transition policy in the
proposed rule stated that the ``yo-yoing'' of practice expense values
around the transition was not inconsistent with the statutory scheme.
Response: We agree that it is inconsistent with the statutory
scheme to create sharp reversals in practice expense RVUs. A transition
in the direction of a resource-based practice expense system began in
1993, and a one-time upward spike in RVUs for surgical procedures,
which ignores the changes previously made, would be inconsistent with
congressional intent and with the very purpose of a transition.
In response to comments on our proposed rule, we have examined the
impact of the transition more precisely for a limited set of
procedures. While this example is illustrative only, it shows that
using 1991 average allowed charges in the transition formula
(disregarding the 1998 redistribution, the OBRA 1993 practice expense
payment reductions, and all budget neutrality adjustments) would result
in marked payment spikes in 1999 for procedures whose fully-implemented
resource-based practice expense RVUs are lower than their 1998 practice
expense RVUs.
The chart below illustrates the changes in practice expense RVUs
for each year from 1992 through 1998 and the estimated practice expense
RVUs for 1999, 2000, 2001, and 2002, using data for 1991 and 1998 RVUs
as alternative starting points for the transition. The chart shows the
figures for cataract removal and intraocular lens insertion (CPT code
66984); the practice expense RVUs for cataract surgery decreased under
both the OBRA 1993 and BBA reductions. Practice expense RVUs for
cataract surgery will decrease between 1998 and 2002 when the resource-
based system is fully implemented. The chart shows that there would be
smooth, moderate decreases between 1998 and 2002, as we understand the
Congress to have intended, if the 1998 practice expense RVUs are used
in the transition formula. The chart also shows that there would be
large increases in 1999 practice expense RVUs (compared to 1998 and
even compared to earlier years) if the transition practice expense RVUs
were based on 1991 average allowed charges. There would indeed be
spikes in Medicare payments unless the 1998 practice expense RVUs are
used in the transition formula, as we understand the Congress to have
intended, during 1999, 2000, and 2001.
BILLING CODE 4120-01-P
[[Page 58840]]
[GRAPHIC] [TIFF OMITTED] TR02NO98.273
BILLING CODE 4120-01-C
[[Page 58841]]
Comment: Commenters opposing the proposed policy stated that the
legislative history does not indicate that the Congress shares our
concern about sharp changes in the redistribution of practice expense
RVUs.
Response: We believe, instead, that the shape of the reductions
made by section 1848(c)(2)(G) of the Act evidences the Congress'
concern on this point. That provision explicitly exempted from
reduction any procedure if the in-office or out-of-office practice
expense RVUs would have increased under our June 1997 proposed rule.
Thus, the Congress specifically chose not to reduce RVUs for a
procedure if they were subsequently to be increased under the resource-
based system. In this way, the law reflects congressional intent to
avoid perverse shifts in practice expense RVUs during the transition.
Comment: Commenters opposed to the proposed rule also suggested
that the OBRA 1993 changes codified at section 1848(c)(2)(E) of the Act
were intended by the Congress to be temporary and apply only during
1994, 1995, and 1996.
Response: We disagree; the provisions were scored legislatively as
permanent reductions, and we note that we implemented the OBRA changes
in that way. Moreover, the Congress has acquiesced in our
implementation of section 1848(c)(2)(E) of the Act. As discussed
earlier, the OBRA 1993 reductions for practice expenses were designed
to achieve Medicare savings while moving the system in the direction it
would ultimately move under a resource-based system, greater relative
payments for office-based procedures. The Congressional Budget Office
and the Administration ``scored'' section 13513 of OBRA as having
permanent savings, from which it can be inferred that the payment
reductions were permanent. Until we received this comment in response
to the proposed rule, it had not been suggested that our implementation
of section 1848(c)(2)(E) of the Act was contrary to congressional
intent. In fact, the Congress has since amended section 1848(c) of the
Act without legislatively altering our implementation of section
1848(c)(2)(E) of the Act. We believe that the Congress' failure to take
contrary legislative action on our implementation of section
1848(c)(2)(E) of the Act indicates that we have implemented that
provision as the Congress intended.
Comment: One specialty society commented that there should be no
transition for services that are new in 1999 and beyond.
Response: The law is silent as to whether there should be a
transition for new services in 1999 and beyond. However, we agree with
the commenter and will not provide a transition for codes representing
services that are new beginning in 1999.
Comment: One specialty society suggested that we consider asking
the Congress for additional transition time due to the disruption
caused by the year 2000 computer systems overhaul.
Response: For 1999, we plan to make routine provider payment
updates and other BBA changes. These pose minimal risks to contractors'
year 2000 (Y2K) efforts and, therefore, can be done. Routine updates
between October 1, 1999 and April 1, 2000 may need to be delayed
because they would occur during a critical timeframe in late 1999 and
early 2000 when final Y2K testing and refinements must be accomplished.
We will actively consult with interested professional groups, the
Congress and other parties as we develop our plans to achieve Y2K
compliance while causing minimum disruption in fee schedule updates.
Comment: A surgical group suggested that we limit the magnitude of
the changes in physician payments by imposing some reasonable limit on
payment increases and decreases for individual services. They argue
that such an approach is advisable because of what they believe is
uncertainty about the accuracy of the resource-based RVUs.
Response: We do not believe that it is appropriate to place limits
on increases or decreases in payments as a result of the implementation
of the new system. We believe that the Congress addressed concerns
about the accuracy of new values by explicitly providing for a
transition and requiring a refinement process to be used each year of
the transition. We believe that, in so doing, the Congress indicated
its view of the appropriate contours of relief from the effects of
redistribution of practice expense RVUs.
Resolution
We have considered all of the comments on our proposal to use 1998
practice expense RVUs in the formula for the 1999, 2000, and 2001
transition to fully resource-based practice expense values. We believe
that use of 1998 practice expense RVUs is most consistent with the
statutory design for resource-based practice expense and that using
1991 average allowed charges for this purpose would be antithetical to
this scheme and to the purpose of providing a smooth transition. Thus,
we are using the current, 1998, practice expense relative values in the
transition formula for 1999 through 2001.
Revisions to the Regulations
We are revising Sec. 414.22 (Relative value units (RVUs)),
paragraph (b), (Practice expense RVUs), to state that for services
beginning January 1, 1999, the practice expense RVUs will be based on a
blend of 75 percent of practice expense RVUs used for payment in 1998
and 25 percent of the relative practice expense resources involved in
furnishing the service. For services beginning January 1, 2000, the
practice expense RVUs will be based on a blend of 50 percent of the
1998 PE RVUs and 50 percent of the relative practice expense resources
involved in furnishing the service. For services beginning January 1,
2001, the practice expense RVUs will be based on a blend of 25 percent
of the 1998 practice expense RVUs and 75 percent of the relative
practice expense resources involved in furnishing the service. For
services beginning January 1, 2002, the practice expense RVUs will be
based on 100 percent of the relative practice expense resources
involved in furnishing the service.
There will be only one level of practice expense RVUs per code for
the following categories of services: those that have only the
technical component of the practice expense RVUs; only the professional
component practice expense RVUs; certain evaluation and management
services, such as hospital or nursing facility visits that are
furnished exclusively in one setting; and major surgical services. For
other services, there will be two different levels of practice expense
RVUs per code. The lower practice expense RVUs will apply to services
furnished to hospital or ASC or SNF patients. The higher practice
expense RVUs will apply to services furnished in a physician's office
or services other than visits but performed in a patient's home and
services furnished to patients in a nursing facility or an institution
other than a hospital, ASC, or SNF.
Result of evaluation of comments: Based on our evaluation of all
comments received on our proposed resource-based practice expense
methodology, we have made the following modifications:
<bullet> Creation of a separate pool for services with work RVUs
equal to zero. We created a separate practice expense pool for services
with work RVUs equal to zero (including the technical components of
services with professional and technical components) using the top-down
methodology except we used the average clinical staff time
[[Page 58842]]
from the CPEP data (since these codes by definition do not have
physician time) and, as an interim measure, we used the current 1998
practice expense RVUs to allocate the direct cost pools (clinical
labor, medical supplies, and medical equipment). For services with
professional and technical components paid under the physician fee
schedule, the global practice expense RVUs are set equal to the sum of
the professional and technical components.
<bullet> Allocation of the indirect cost pool. In the indirect
allocation methodology, we are converting the work RVUs to dollars
using the Medicare conversion factor (expressed in 1995 dollars for
consistency with the SMS survey years).
<bullet> SMS based practice expenses per hour. For the specialty of
emergency medicine, we are using the ``All Physician'' practice expense
per hour to create practice expense cost pools for the categories
``clerical payroll'' and ``other expenses.''
For the specialty of pathology, we are removing the supervision and
autopsy hours reimbursed through Part A of the Medicare program from
the practice expense per hour calculation.
For the specialty of podiatry, we are using the ``All Physician''
practice expenses per hour to create the practice expense cost pools.
For the specialty of allergy/immunology, we are using the
``allergy/immunology'' supply practice expenses per hour to create the
supply practice expense pool.
We are splitting the ``radiology'' practice expenses per hour into
``radiation oncology'' practice expenses per hour and ``radiology other
than radiation oncology'' practice expenses per hour and using these
split practice expenses per hour to create practice expense cost pools
for these specialties.
<bullet> Corrections to code crosswalks. We had inadvertently
crosswalked some codes in settings where CPEP data existed. We have
removed these crosswalks.
<bullet> Use of the current practice expense relatives for
radiology services. For the specialty of radiology, we are using the
current practice expense relatives for radiology services, as an
interim measure, to allocate radiology's direct practice expense cost
pools. For all other specialties that perform radiology services, we
are using the CPEP relatives for radiology services in the allocation
of that specialty's direct practice expense cost pools. Note that
radiology services or components of radiology services that lack work
relative value units are handled as described above under ``Creation of
a separate pool for services with work relative value units equal to
zero.''
<bullet> Physician's time for radiology codes. For radiology codes
for which we lacked Harvard or RUC survey data, we calculated the
physician's time using the average work per unit time of CPT codes
71010 and 71020.
<bullet> Maxillofacial prosthetics. For maxillofacial prosthetics,
we are using the ``All Physician'' practice expenses per hour to create
practice expense cost pools and, as an interim measure, allocating
these pools using the current practice expense RVUs.
B. Medical Direction for Anesthesia Services
General Requirements
The conditions for payment of medical direction for anesthesia
services are included in Sec. 415.110 (Conditions for payment:
Medically directed anesthesia services). Before January 1999, the
regulations referred to these conditions as applying to services
furnished directly or concurrently. The reference to services furnished
directly is not correct. It suggests that the physician personally
performing the anesthesia services only has to provide the same kind of
services as the physician medically directing the anesthesia service.
In fact, the physician personally performing the anesthesia service
must perform the entire anesthesia service alone. This policy is
included in Sec. 414.46(c)(1)(i) (Additional rules for payment of
anesthesia services, Physician personally performs the anesthesia
procedure). Therefore, we are deleting the reference in Sec. 415.110 to
services furnished directly.
The December 1995 final rule (60 FR 63152) allows the physician's
medical direction of a certified registered nurse anesthetist (CRNA)
performing a single anesthesia service. However, this provision did not
take effect until January 1, 1998. This policy was incorporated in
Sec. 414.46(d)(iii) (Additional rules for payment of anesthesia
services, Anesthesia services medically directed by a physician). A
program memorandum explaining this policy was issued to the Medicare
carriers in January 1998.
In the June 1998 proposed rule, we proposed revising Sec. 415.110
(Conditions for payment: Medically directed anesthesia services) so
that it is consistent with Sec. 414.46(d)(iii) by stating that medical
direction can apply to the single anesthesia service furnished by a
CRNA.
The law provides that the payment allowance for the physician's
medical direction furnished on or after January 1, 1998, is 50 percent
of the fee schedule amount that would have been paid if the anesthesia
service was furnished by the physician alone.
Both the ASA and the American Association of Nurse Anesthetists
(AANA) have pointed out that our medical direction requirements are
outdated and too restrictive. The requirements are oriented to the
administration of a general anesthetic, which was the predominant mode
of practice when the regulations were originally implemented. There are
other types of anesthesia, such as regional, spinal or epidural
anesthesia, and monitored anesthesia care, that are becoming more
common and for which the Associations argue, the current requirements
are not completely appropriate. For example, in monitored anesthesia
care, there is no definable emergence as there is for general
anesthesia.
Also, the AANA has advised us that requiring the presence of the
anesthesiologist for induction for all cases may not be appropriate and
may delay the start of surgery and result in the inefficient use of
operating room time. In addition, the ASA has advised us that neither
the regulations nor the operating instructions explain the level of
documentation required by the anesthesiologist to support the payment
for the medical direction service. The ASA believes that the lack of
instructions for medical documentation and the concerns about payment
audits have reportedly prompted anesthesiologists to overly document
anesthesia records.
The ASA and the AANA reached substantial consensus on a revised
recommended set of medical direction requirements. The only area that
they had a difference of opinion was with respect to the pre-anesthetic
exam and evaluation. The ASA favored the requirement that the physician
personally perform the examination and the AANA initially favored the
requirement that the physician ensure that the examination and
evaluation be performed by a qualified individual. We chose the
proposed language as a compromise position. We reviewed their
recommendations and proposed revising our regulations in Sec. 415.110
(Conditions for payment: Anesthesia services) to reflect current
anesthesia practice arrangements. Namely, we proposed to--
<bullet> Provide that the physician either perform the pre-
anesthesia examination and evaluation or review one performed by
another qualified individual;
[[Page 58843]]
<bullet> No longer require the physician to be present during
induction and emergence on all anesthesia cases; and
<bullet> Require that the physician--
+ Monitor the course of anesthesia at intervals medically indicated
by the nature of the procedure and the patient's condition;
+ Remain physically present in the facility and immediately
available for diagnostic and therapeutic emergencies; and
+ Provide indicated post-anesthetic or ensure that it is provided
by a qualified individual.
Summary of Proposed Changes To Medical Direction Requirements
------------------------------------------------------------------------
For each patient the physician--
-------------------------------------------------------------------------
Current regulations Proposed regulations
------------------------------------------------------------------------
(i)........................ Performs a pre- Performs a pre-
anesthetic anesthetic
examination and examination and
evaluation. evaluation, or
reviews one
performed by
another qualified
individual
permitted by the
State to administer
anesthesia.
(ii)....................... Prescribes the Participates in the
anesthesia plan.. development of the
anesthesia plan and
gives final
approval of the
proposed plan.
(iii)...................... Personally Personally
participates in the participates in the
most demanding most demanding
procedures in the aspects of the
anesthesia plan anesthesia plan.
including induction
and emergence.
(iv)....................... Ensures that any Ensures that any
procedures in the aspect of the
anesthesia plan that anesthesia plan not
he or she does not performed by the
perform are anesthesiologist is
performed by a performed by a
qualified individual qualified
as defined in individual as
program operating specified in
instructions. operating
instructions.
(v)........................ Monitors the course Monitors the course
of anesthesia at of anesthesia at
frequent intervals. intervals medically
indicated by the
nature of the
procedure and the
patient's
condition.
(vi)....................... Remains physically Remains physically
present and present in the
available for facility and
immediate diagnosis immediately
and treatment of available for
emergencies. diagnostic and
therapeutic
emergencies.
(vii)...................... Provides indicated Provides indicated
post-anesthesia care. post-anesthesia
care or ensures
that it is provided
by a qualified
individual.
------------------------------------------------------------------------
Comment: Almost all commenters recommended that we drop the
proposed medical direction requirements and retain the current
requirements. They pointed out that the proposed regulations would
significantly relax the requirements for physician involvement in the
provision of anesthesia care when a qualified nonphysician anesthetist
is providing these services. They believe these changes would be to the
detriment of patients and would diminish the current standards of care.
The focus of these commenters' concerns was on the proposed
requirements that the medically directing physician--(1) Could review a
pre-anesthetic examination and evaluation performed by a qualified
individual permitted by State law to administer anesthesia; and (2)
ensure that indicated post-anesthesia care is provided by a qualified
individual.
Several commenters also pointed out that the proposed requirement
that the physician participate in the most demanding procedures in the
anesthesia plan could be construed as meaning that the medically
directing physician does not have to participate in any aspect of
anesthesia care. Commenters also objected to the proposed requirement
that the physician remain physically present in the facility and
immediately available for diagnostic and therapeutic emergencies. The
commenters pointed out that the proposed requirement is too lax and
could be interpreted to mean the medically directing physician could be
located anywhere in the facility.
Response: The medical direction requirements specify the activities
that the medically directing physician, who is usually an
anesthesiologist, must perform in order for the carrier to allow
payment for a physician's service under the physician fee schedule. The
medical direction requirements are not quality of care standards. As
one commenter pointed out, these requirements are minimum requirements.
Practicing anesthesiologists can, if they choose, furnish a level of
services beyond the minimum standards.
As we noted in the proposed rule, we had decided to propose revised
medical direction requirements because of concerns that the ASA and the
AANA presented. We had asked the ASA and AANA to work together, to the
extent practicable, to come up with a revised set of medical direction
requirements. In February 1998, we met with both groups and heard their
views and concerns. At that time, with the exception of the first
proposed requirement that the CRNA be able to furnish the preanesthesia
exam and evaluation and have the medically directing physician review
it, it was our understanding that the leadership of both groups agreed
to the uniform revised requirements.
However, because of concerns raised by their membership, the ASA
and several State anesthesiologist societies are now requesting, for
the most part, that we retain the current requirements, established in
1983.
We have decided to retain the current requirements (that is,
requirements (i) and (ii), and (iv) through (vii)) in the preceding
table and make only one technical revision in requirement (iii) at the
present time. We will study the medical direction issue further and may
propose to make a change in the future. The technical revision pertains
to the requirement that the physician participate in the most demanding
procedures in the anesthesia plan including, induction and emergence.
We published a final rule in the Federal Register on March 2, 1983 (48
FR 8928) in which the current requirements for medical direction were
included to implement section 108 of TEFRA of 1982. Since general
anesthesia was the usual mode of practice for anesthesia services, the
requirement reflected this practice. However, since 1983, other types
of anesthesia care, such as regional anesthetics and monitored
anesthesia care have become more common. One of our objectives was to
revise the current requirement so that it is consistent with current
anesthesia practices. As a result, we have decided that the medically
directing physician must be present at induction and emergence for
general anesthesia. That final requirement is as follows: The medically
directing physician participates in the most demanding
[[Page 58844]]
aspects of the anesthesia plan, including, if applicable, induction and
emergence.
Documentation Requirements
The current regulations do not specifically include medical record
documentation requirements for medical direction. The proposed
regulations state that the physician inclusively documents in the
patient's medical record that the conditions set forth in paragraph
(a)(1) of Sec. 415.110 have been satisfied, specifically documenting
personal participation in the most demanding aspects of the anesthesia
plan.
The ASA asked initially that we include the medical documentation
requirements in the regulations so that physicians, carrier staff, and
other claims/medical record auditors have a clear and uniform
understanding of the documentation requirements.
In addition, within the past 2 years, we have established medical
documentation requirements for teaching physicians, including teaching
anesthesiologists, that specify the amount of documentation needed to
support the claim for the physician's service when the attending
physician is involved in a medical/surgical case with a resident. We
sought to establish some level of reasonable documentation for the
medically directing physician considering that--(1) The teaching
anesthesiologist is paid as if he or she personally performed the
anesthesia service alone (that is, 100 percent of the fee); (2) the
medically directing anesthesiologist is paid 50 percent of the total
fee; and (3) the documentation requirements for the teaching
anesthesiologist, as found at Sec. 415.178, are that the record
demonstrates the physician's presence or participation in the
administration of the anesthesia. The operating instructions in MCM
section 15016 specifically require that the teaching physician document
in the medical records that he or she was present during the critical
(or key) portions of the procedure, including induction and emergence.
The teaching anesthesiologist's presence is not required during the
preoperative or postoperative visits with the beneficiary.
Comment: The AANA asked that we revise the medical documentation
requirements to require that the physician alone personally document
the record; the Association stated that the CRNA should not have to
document the physician's participation since the CRNA may not agree
concerning the extent of the physician's participation in the case.
Response: We believe the proposed regulation text accomplishes this
objective since it clearly says the physician must document the medical
record. However, for purposes of further clarity, we will accept the
commenter's recommendation.
Comment: The ASA asked us if their interpretation of the proposed
medical documentation requirement is correct. ASA interprets the
provision as allowing an anesthesiologist to state in the medical
record that the medical direction standards have been met, without
enumerating each such standard, and as requiring the anesthesiologist
to specify in the record those demanding aspects of the case in which
he or she personally participated.
Response: We understand the ASA's concerns about the medical
direction requirements. We do not wish to make the act of medical
documentation overly burdensome to the anesthesiologist. However, the
medical record must include an amount of documentation to enable a
medical records' auditor to conclude that the physician was
sufficiently involved to support the payment of a medical direction
fee.
The medical direction requirements specify certain functions or
services that the physician must perform and cannot delegate to the
directed qualified individual. We do not believe it is onerous to
require the medically directing physician to document that he or she
performed the pre-anesthetic exam and evaluation, provided indicated
post-anesthesia care, and was present during the most demanding
procedures, including induction and emergence where indicated. We also
expect that there would be some indication in the record that the
medically directing physician was present during some portion of the
anesthesia monitoring.
Limited Activities Permitted During Medical Direction
The preamble to the final regulations (48 FR 8928) to implement
section 108 of TEFRA of 1982 allows the medically directing physician
to respond to medical emergencies and obstetrical patients in labor and
also continue to furnish medical direction. The specific preamble
language is as follows:
``We do not expect that a physician who is directing the
administration of anesthesia to four surgical patients would be
involved routinely in furnishing any additional services to other
patients. However, addressing an emergency of short duration in the
immediate area, or administering an epidural or caudal anesthetic to
ease labor pain, or periodic rather than continuous monitoring of an
obstetrical patient, would not substantially diminish the scope of
control exercised by the physician in directing the administration of
anesthesia to surgical patients. However, the carriers will review
hospital records to ensure that such circumstances do not occur
frequently, are of short duration, and do not constitute a diminution
of the physician's involvement in the surgical procedure.''
In addition, the preamble addressed the specific question of
whether the medically directing physician could perform certain routine
tasks, such as receiving patients entering the operating suite for the
next surgery, checking on or discharging patients in the recovery room
and handling scheduling matters. The preamble included the following
response to this comment:
``We agree that a physician may appropriately receive patients
entering the operating suite for the next surgery while directing
concurrent anesthesia procedures. However, checking or discharging
patients in the recovery room and handling scheduling matters is not
compatible with our reimbursing the physician on a reasonable charge
basis (now physician fee schedule basis) for directing concurrent
anesthesia procedures. The time devoted to such activities potentially
can be extensive and would diminish the degree of involvement in the
concurrent care beyond levels acceptable for purposes of reasonable
charge reimbursement (now physician fee schedule payment).'' This
continues to be our position.
Comment: Some commenters asked whether the policy of allowing
certain other activities during medical direction would continue since
the proposed regulation did not specifically address this matter. Also,
the ASA asked whether this list of activities was exclusive or whether
other similar services of short duration could be performed without
violating the medical direction payment standards. The ASA did not
provide examples of the kinds of services they would consider ``other
limited services of short duration.''
Response: We believe this comment goes beyond our proposal. We will
continue the policy enunciated in the preamble to the final TEFRA
section 108 regulations. We will not expand or limit the current policy
until we receive and have our medical staff evaluate information from
the anesthesia societies on the specific services or the kinds of
circumstances for which they are seeking an expansion of the policy. We
invite comments on this issue.
Result of evaluation of comments: We have decided to include the
following
[[Page 58845]]
set of requirements for medical direction in Sec. 415.110 of this final
rule. For each patient, the physician--
(i) Performs a pre-anesthetic examination and evaluation;
(ii) Prescribes the anesthesia plan;
(iii) Personally participates in the most demanding aspects of the
anesthesia plan, including, if applicable, induction and emergence;
(iv) Ensures that any procedures in the anesthesia plan that he or
she does not perform are performed by a qualified individual as defined
in program operating instructions;
(v) Monitors the course of anesthesia administration at frequent
intervals;
(vi) Remains physically present and available for immediate
diagnosis and treatment of emergencies; and
(vii) Provides indicated post-anesthesia care.
Also, the physician directs no more than four anesthesia services
concurrently and does not perform any other services while he or she is
directing the single or concurrent services so that all of the
conditions for medical direction are met. The physician can attend to
medical emergencies and perform other limited services as allowed by
Medicare instructions and still be deemed to have medically directed
anesthesia procedures.
The physician alone inclusively documents in the patient's medical
record that the medical direction requirements have been met,
specifically documenting that he or she performed the pre-anesthetic
exam and evaluation, provided indicated post-anesthesia care, and was
present during the most demanding procedures, including induction and
emergence, where applicable.
C. Separate Payment for a Physician's Interpretation of an Abnormal
Papanicolaou Smear
As stated in the proposed rule (63 FR 30841), with the exception of
services to hospital inpatients, we do not allow separate payment for a
physician's interpretation of an abnormal Pap smear. Under our proposed
rule, separate payment may be allowed for a physician's interpretation
of the abnormal Pap smear furnished for any patient on or after January
1, 1999.
About 10 percent of Pap smears are abnormal and are interpreted by
a physician, usually a pathologist. If a physician interprets an
abnormal Pap smear for a patient, other than a hospital inpatient,
payment for a physician's interpretation (and the underlying test) is
made under the clinical laboratory fee schedule payment for the Pap
smear test. The physician negotiates with the laboratory for payment
for the physician's service.
The College of American Pathologists requested that we recognize
separate payment for a physician's interpretation of an abnormal Pap
smear in all settings. We believe this would establish an
understandable and uniform definition of physicians' services across
sites. Therefore, we proposed recognizing, under the physician fee
schedule, separate payment for a physician's interpretation of an
abnormal Pap smear in all settings.
The Pap smear test may be furnished by a hospital or an independent
laboratory. For hospital inpatients, the Pap smear test is paid to the
hospital on a prospective payment basis. For other than hospital
inpatients, the Pap smear test is paid under the clinical laboratory
fee schedule to the hospital laboratory or independent laboratory. For
services to hospital patients, the Pap smear interpretation usually is
furnished by the hospital pathologist who can bill for the professional
component of the service. If the independent laboratory's pathologist
furnishes the Pap smear interpretation, payment can be made to the
pathologist or the independent laboratory if it is an appropriate
reassignee.
We received 25 comments from individuals and organizations on our
proposal to recognize separate payment for a physician's interpretation
of an abnormal Pap smear. All of the commenters supported our proposal.
Comment: Several commenters stated that our policy in section 15020
of the Medicare Carriers Manual that allows separate payment for a
physician's interpretation of a Pap smear for a hospital inpatient only
as long as there is an abnormality, is too restrictive. They pointed
out that regulations implementing the Clinical Laboratory Improvement
Amendments at Sec. 493.1257(c)(1) require a pathologist to confirm all
Pap smears identified by the screening personnel as showing an
abnormality. This includes, by regulation, all smears thought to show
``reactive or reparative changes, atypical squamous or glandular cells
of undetermined significance, or to be in the premalignant (dysplasia,
cervical intraepithelial neoplasia or all squamous intraepithelial
lesions including human papilloma virus-associated changes) or
malignant category.''
Response: Our regulation will permit separate payment for a
physician's interpretation of an abnormal Pap smear in all settings as
long as--(1) The laboratory's screening personnel suspect an
abnormality; and (2) the physician reviews and interprets the smear.
We contrast these services with other services of laboratory
physicians that we considered hospital services. For example, the
services of the physician that involve the review of Pap smears as part
of the laboratory's quality control assurance procedures are considered
hospital services and payable only to the hospital. Such services
include reviewing slides that are considered normal by the
cytotechnologist but are routinely reviewed by a pathologist, because
of the risk status of the patient, as part of a random sample selected
for quality review.
Comment: Two commenters recommended that we treat a physician's
interpretation of an abnormal blood smear similar to the interpretation
of an abnormal Pap smear.
Response: This comment is outside the scope of our proposal. Our
proposal did not address abnormal blood smears. However, we will look
into this issue next year as part of our review of physician fee
schedule policies.
Comment: One commenter pointed out that the percentage of Pap
smears that are abnormal or thought to be abnormal by the
cytotechnologist and that require a physician's interpretation can vary
considerably from geographical area to area and among laboratories
within an area. The commenter wanted to point out that the fact that
some laboratory-specific percentages of Pap smears that are interpreted
to be abnormal are above 10 percent is not necessarily indicative of
unacceptable utilization levels.
Response: We appreciate the commenter's clarification. In our
proposal, we stated that ``about 10 percent of Pap smears are abnormal
and are interpreted by a physician.'' We note that the 10 percent is a
national estimate and that differences among laboratories could vary
from this amount based on the population that the laboratory serves.
Result of evaluation of comments: We are allowing separate payment
for a physician's interpretation of a Pap smear to any patient (that
is, hospital or nonhospital patient) as long as--(1) The laboratory's
screening personnel suspect an abnormality; and (2) the physician
reviews and interprets the Pap smear.
D. Rebasing and Revising the Medicare Economic Index
Background
The Medicare Economic Index (MEI) represents a weighted sum of the
annual price changes of the inputs used to produce physicians'
services. It attempts
[[Page 58846]]
to present an equitable measure for the changes in the costs of
physician time and operating expenses. The MEI now in use was rebased
and revised as stipulated in a final rule published in the Federal
Register (57 FR 55896) on November 25, 1992.
The MEI is comprised of two broad components, which are physician
net income and physician practice expenses. Physician net income is
comprised of wages, salaries, and benefits. The physician practice
expense portion is comprised of six major categories: (1) Nonphysician
employee compensation, including the wages and salaries and benefits of
nonphysician employees in physicians' offices; (2) office expenses; (3)
medical materials and supplies; (4) professional liability insurance;
(5) medical equipment; and (6) other professional expenses.
We believe that it is desirable to rebase and revise the index
periodically, in order that the expense shares and proxies will reflect
approximate current conditions. Therefore, we are rebasing the MEI to
reflect 1996 physician expenses. We chose 1996 as the base year for two
main reasons: (1) The 1996 data were the most recent available data for
most of the data sources we are using; and (2) the 1996 data were
representative of the changing distribution of physician earnings and
practice expenses over time. We have selected what we believe is the
most appropriate proxy for each expense category. We will continue to
adjust the physician and nonphysician employee compensation for
economy-wide labor productivity, to avoid accounting for both physician
practice productivity and economy-wide productivity in the physician
update framework.
We determined the number and composition of expense categories
based on the criteria used to develop the previous MEI expenditure
weights and our other input price index expenditure weights (for more
information on these criteria, see the November 25, 1992 final rule (57
FR 55900)). To determine the expenditure weights, we used currently
available, valid data sources on physician earnings and practice
expenses.
While we consulted numerous data sources, we used five sources to
determine the rebased and revised MEI expenditure weights: (1) The 1997
American Medical Association Socioeconomic Monitoring System (AMA SMS)
survey (1996 data); (2) the March 1997 Bureau of Labor Statistics (BLS)
Employment Cost Index; (3) the 1992 Bureau of the Census Asset and
Expenditure Survey (the latest available); (4) the 1996 Bureau of the
Census Current Population Survey; and (5) the Medical Economics
continuing survey published October 1997 (1996 data). No one data
source provided all of the information needed to determine expenditure
weights according to our criteria.
Rebasing and Revising the Medicare Economic Index
In the June 5, 1998 Federal Register (63 FR 30841), we published a
proposed rebased and revised MEI. In that rule, we discussed in detail
the methodology and data sources used to rebase and revise the MEI. The
final rebased and revised MEI will have a 1996 base year and use the
same data sources we proposed in the June 5, 1998 rule. Therefore, the
weights and price proxies in this final rule are the same as those we
proposed and are shown in Tables 1 and 2.
Table 1.--Revised Medicare Economic Index Expenditure Categories, Weights, and Price Proxies
----------------------------------------------------------------------------------------------------------------
Weights
Expense category -------------------------- Proposed price proxies
1989 \1\ 1996 \1\
-----------------------------------------------------------------\2\--------------------------------------------
Total......................................... 100.000 100.000 ......................................
Physician Earnings \4\........................ 54.155 54.460 ......................................
Wages and Salaries............................ 45.342 44.197 AHE-Private \3\.
Benefits \5\.................................. 8.813 10.263 ECI-Ben: Private \3\.
Physician Practice Expenses................... 45.845 45.540 ......................................
Nonphysician Employee Compensation............ 16.296 16.812 ......................................
Employee Wages and Salaries................... 13.786 12.424 ......................................
Prof/Tech Wages............................... 3.790 5.662 ECI-W/S: Private P&T \3\.
Managers Wages................................ 2.620 2.410 ECI-W/S: Private Admin \3\.
Clerical Wages................................ 5.074 3.830 ECI-W/S: Private Clerical \3\.
Services Wages................................ 2.233 0.522 ECI-W/S: Private Service \3\.
Craft Wages................................... 0.069 ........... ......................................
Employee Benefits \5\......................... 2.510 4.388 ECI-Ben: Priv. White Collar \3\.
Office Expenses............................... 10.280 11.581 CPI(U)-Housing
Medical Materials and Supplies................ 5.251 4.516 PPI Drugs/PPI Surg. Appl/CPI(U) Med
Sup.
Professional Liability Insurance.............. 4.780 3.152 HCFA-Prof. Liab. Phys. Prem. Survey.
Medical Equipment............................. 2.348 1.878 PPI-Medical Instruments and Equip.
Other Professional Expense.................... 6.890 7.601 ......................................
Automobile.................................... 1.400 1.300 CPI(U)-Private Transportation.
All Other..................................... 5.490 6.301 CPI(U)-All Items less Food and Energy
\1\.
----------------------------------------------------------------------------------------------------------------
\1\ Due to rounding, weights may not sum to 100.000 percent.
\2\ Sources: Socioeconomic Monitoring System 1997 Survey of Physicians, Center for Health Policy Research,
American Medical Association; Anne L. Finger, ``What it costs to run a practice,'' Medical Economics, October
27, 1997; U.S. Department of Labor, Bureau of Labor Statistics; and U.S. Department of Commerce, Bureau of the
Census, 1992 Asset and Expenditure Survey, and 1997 Current Population Survey.
\3\ Net of change in the 10-year moving average of output per man-hour for the nonfarm business sector.
\4\ Includes employee physician payroll.
\5\ Includes paid leave.
[[Page 58847]]
Table 2.--Percent Distribution of Nonphysician Payroll Expense by
Occupational Group: 1996
------------------------------------------------------------------------
Expenditure
BLS occupational group shares \1\
------------------------------------------------------------------------
Total...................................................... 100.000
Professional and Technical Workers......................... 45.570
Managers................................................... 19.399
Clerical Workers........................................... 30.831
Service Workers............................................ 4.199
------------------------------------------------------------------------
\1\ These weights were derived from the 1996 Current Population Survey,
U.S. Bureau of the Census.
The time series of percent changes in the current and rebased MEI
are presented and compared in Table 3.
Table 3.--Annual Percent Change in the Current and Revised Medicare
Economic Index
------------------------------------------------------------------------
Current Revised
MEI 89- MEI 96-
Years ending June 30 base base Difference
percent percent
change change
------------------------------------------------------------------------
1985.................................. 3.3 3.2 0.0
1986.................................. 3.3 3.1 -0.2
1987.................................. 3.0 2.8 -0.2
1988.................................. 3.6 3.5 -0.1
1989.................................. 3.4 3.4 0.0
1990.................................. 3.0 3.2 0.2
1991.................................. 3.2 3.3 0.1
1992.................................. 2.8 2.7 -0.1
1993.................................. 2.1 2.2 0.1
1994.................................. 2.1 2.1 0.0
1995.................................. 2.0 2.0 0.0
1996.................................. 2.0 1.8 -0.2
1997.................................. 2.2 2.2 0.0
1998.................................. 2.5 2.3 -0.2
Average:
1985-1998........................... 2.7 2.7 0.0
------------------------------------------------------------------------
The CY 1999 increase in the MEI, one of the components used to
update the physician fee schedule, is 2.3 percent.
We received numerous Comments on the rebased and revised MEI. Each
Comment, with a response, is provided below. The Comments are organized
into four major sections: index structure, expenditure weights, price
proxies, and productivity adjustment.
Index Structure
Comment: A commenter believed we should re-examine the structure of
the MEI, rather than make minor changes to an index that was developed
in 1972 when physicians were paid reasonable charges.
Response: The structure of the MEI consists of weights associated
with each of the cost categories, price proxies for each of the cost
categories, and an overall adjustment for changes in productivity. The
1996-based MEI structure is identical to the revised structure we
proposed on September 9, 1991 that was based on issues discussed at a
public conference on March 19, 1987, thoroughly reviewed by the
industry through a public Comment period, and ultimately adopted in
1992. This commenter did not offer any specific recommendations for
change, and we know of no structural change we could make to improve
the MEI. Consequently, the structure of the MEI will remain the same.
Comment: A commenter suggested that we indicate in the annual
physician fee schedule proposed rule what the forecasted MEI would be
under the different options considered and under the agency's final
recommendation. The commenter noted that forecast data generally are
provided when the agency updates the hospital market basket.
Response: The physician fee schedule is updated by a statutory-
specified formula equal to the MEI plus or minus an update adjustment
factor. The agency does not consider various options and make an update
recommendation. The MEI for a year is based on changes in prices for
prior periods. The performance adjustment is based on actual data; no
options are considered. Thus, the situation for physician updates is
not analogous to the hospital update process where changes in hospital
payments are based on forecasts of the hospital market basket increase
in the upcoming Federal fiscal year. In the case of physicians, the
changes in the physician payment levels are based on the most current
historical and performance data available.
Comment: A commenter believed that we should establish a regular
schedule for updating weights of various elements of the MEI so that
the index reflects the most recent data and information available.
Response: In the past, more frequent rebasing would have resulted
in little or no difference in the update factors. For this current
rebasing, the 1989-based MEI and the 1996-based MEI grew at the same
rate on average between 1985-1998 as shown in Table 3. We will continue
to monitor changes in the structure of physician costs as they might
affect the MEI and we will update and rebase as needed.
Comment: A commenter believed that the MEI should contain an
adjustment reflecting the fact that different inputs are used when
services are provided by a SNF.
Response: Part of the fundamental design of the Medicare fee
schedule is that payment is based on the service performed without
regard to the place where the service is performed. The MEI is
consistent with that design and provides a single national factor to
update payments under the fee schedule, regardless of the site of
service or the specialty of the health professional.
Expenditure Weights
Comment: One commenter was concerned that the proposed MEI does not
reflect adequately the much larger portion of practice expenses the
average obstetrician-gynecologist pays for professional liability
insurance as compared to other specialties. The commenter pointed out
that professional liability consists of 6.88 percent of the
obstetrician-gynecologist's practice expenses, but only 3.2 percent of
the practice expense of all physicians.
Response: The purpose of the MEI is to recognize the aggregate
``pure price'' increase of providing physicians'' services, regardless
of specialty or site of service. Therefore, all input costs across all
specialties are considered when determining the appropriate cost
weights. The resulting cost weights, along with the price proxies and
productivity adjustment, are used to calculate a national average
percent change in the inputs used to provide physicians' services. This
national average percent change is used to update the national payments
under the fee schedule. We recognize that professional liability
expenses as a portion of total expenses are above the average for some
specialties and below the average for other specialties. However,
differences in regional or specialty costs are accounted for by the
GPCI or the RVU weight, respectively.
The only change to the professional liability insurance price proxy
is that premiums are now collected for $1 million/$3 million of
coverage on a quarterly basis, as opposed to premiums for $100,000/
$300,000 of coverage on an annual basis. We continue to survey the same
professional liability insurers that we surveyed for the 1989-based
MEI.
Price Proxies
Comment: Several commenters suggested the price proxy for the
physician earnings component should be the Employment Cost Index (ECI)
for professional and technical workers, rather than the average hourly
earnings (AHEs) for total nonfarm workers, for two reasons. First, the
rationale for using a proxy of a highly heterogenous group no longer
exists under the current payment system. Thus, our concern regarding
circularity (increases in physician fees, which are tied to prevailing
charges, are linked to
[[Page 58848]]
increases in physician payments) is no longer an issue. Second,
earnings of professional workers are used as the proxy for the
physician work component in the GPCI while AHEs for total nonfarm
workers are used for physician earnings in the MEI. The commenter
believes that we should use earnings for professional workers as the
proxy in the MEI to be consistent with the GPCI.
Response: The commenters have raised issues that need to be
clarified regarding the most fair and relevant price proxy to use for
the physician work component of the MEI. The commenters are correct
that circularity does not now exist between charge levels for
individual physicians and subsequent Medicare fee levels for all
physicians in the aggregate. However, paying based on a fee schedule
does not override the need for us to continue to use fair and relevant
price proxies.
We believe that the current price proxy, AHEs in the nonfarm
business economy, is still the most appropriate proxy to use for the
physician work component. AHEs continue to best meet the criteria of
the 1972 Senate Finance Committee report shown in the June 5, 1998
Federal Register (63 FR 30844), including the criterion of ``fairness
to all concerned.'' AHEs are also the best general earnings wage
variable of which we are aware for our specific purpose. As a measure
of equitable payment increases, AHEs reflect the impact of supply,
demand, and economy-wide productivity for the average worker in
society. By using the AHEs as the price proxy for physician time, the
physician wage component captures this parity in rates of increase for
physicians and the average worker in society.
The ECI for professional and technical workers includes occupations
like engineer, architect, mathematical and computer scientist, and
other types of technicians. Excess supply or excess demand for
professional and technical workers on average can cause their wages to
move differently than wages are moving in the overall economy or for a
specific professional and technical occupation, such as a physician.
Consequently, the ECI for professional and technical workers does not
necessarily provide a good normative indicator of the percent increases
in general earnings. Therefore, the ECI for professional and technical
workers would fail to meet the criteria of fairness in the Senate
Finance Committee report.
The commenters are correct that the proxy for physician work time
in the GPCI is different than the price proxy in the MEI. This design
reflects the different purposes of the GPCI and the MEI. The GPCI
determines how total outlays are allocated among localities based on
relative input price levels for each locality, or the ``pieces of the
pie.'' Thus, the GPCI price proxy needs to validly reflect the relative
levels of the specific category being proxied. The MEI, on the other
hand, determines the aggregate increase in total outlays, or the ``size
of the pie.'' These different purposes require that different proxies
be used. Thus, the purpose of the proxy in this case is to measure the
normative change in physician earnings. Our other input price indexes
(market baskets), like the prospective payment system (PPS) hospital
market basket and the HHA market basket, also use different price
proxies than the geographic adjustment variable for similar reasons.
We are going to carefully monitor the price proxy used for
physician work time in the MEI to ensure that it continues to be the
most appropriate price proxy available for that purpose.
Comment: Several commenters suggested that the nonphysician
employee compensation component of the MEI should be adjusted using a
price proxy that reflects the increased skill mix of staff in
physicians' offices.
Response: The MEI is a Laspeyres (fixed-weight) index that measures
the normative ``pure price'' increase associated with physicians'
services. Our other input price indexes, for hospitals, home health
agencies, and skilled nursing facilities, are Laspeyres indexes as
well. Changes in skill mix are appropriately captured in the volume-
and-intensity adjustment in the fee schedule update, as they are with
similar update formulas for our other payment programs, for example,
PPS hospitals. By capturing skill mix shifts in the volume-and-
intensity adjustment, we are able to appropriately separate quantity
and ``pure price'' effects in the update framework. If we included
positive and negative skill mix shifts in the MEI, there would be
double-counting. Therefore, we will not adjust for changes in skill mix
for the nonphysician employee compensation components of the MEI.
Comment: A commenter recommended that we adjust the office expense
component using a price proxy based on inflation in commercial rents
rather than inflation as measured by the housing component of the CPI
for urban consumers.
Response: The CPI-U for housing is a comprehensive measure of
changes in the cost of housing, including rent, owners' equivalent
rent, insurance, maintenance and repair services, fuels, utilities,
telephones, furnishings, and housekeeping services. Note that the GPCI
also uses a consumer rather than a commercial rent index. The GPCI uses
an index of Fair Market Rents (FMR) published by the Department of
Housing and Urban Development for use in the Section 8 rental subsidy
program because a valid indicator of commercial rents was not
available. This measure does not meet the criterion of timeliness to be
used in an input price index as it is only available prospectively on
an annual basis. It would not represent historical data or be available
quarterly like the rest of the proxies in the MEI.
Comment: One commenter questioned why we proposed using wholesale
price changes, as measured by producer price indices (PPI), to measure
cost changes for medical supplies and equipment. The commenter believed
most physician practices are small entities that are unlikely to be
able to purchase supplies and equipment at wholesale prices.
Response: In revising and rebasing the MEI, we selected wage and
price proxies based on relevance, reliability, fairness, timeliness,
and length of time a series had been established. Relevance means that
the price proxy should represent price changes for goods or services
within the expense category. We believe that use of the PPI for medical
instruments and equipment appropriately captures price changes for the
offices of physicians. Note that movement in the PPI at any given time
is followed within a few months by approximately the same movement in
the CPI. If this were not true, retailers would soon be out of business
as their expenses rose but their revenues did not. Movement in the PPI
essentially drives movement in the CPI, albeit with a slight lag. An
increase in the wholesale level for a commodity will be followed by the
same approximate increase in the retail level. Over time, the PPI does
not move faster or slower than does the CPI. As mentioned in our June
5, 1998 proposed rule (63 FR 30846), use of the PPI for medical
instruments and equipment as the price proxy for medical equipment is
consistent with the 1989-based MEI.
Productivity Adjustment
Comment: A commenter proposed the elimination of the productivity
adjustments to both the physician and nonphysician personnel
components. The commenter believed the validity of the proposed MEI is
compromised severely by this productivity adjustment.
Response: The Medicare fee schedule is appropriately adjusted for
``pure price'' inflation using a price index that approximates a price
change in a freely functioning, competitive market. In
[[Page 58849]]
such a market, competitive forces lead to increased efficiencies
(productivity). Therefore, a competitive output price does not rise as
fast as a competitive input price, with the difference reflecting this
increased efficiency (productivity). Thus, the input prices in the MEI
need to be appropriately adjusted for productivity to approximate a
freely functioning, competitive output price change. The PPS hospital
input price index (market basket) is similarly adjusted for
productivity, but the adjustment is included as a separate component of
the PPS update framework.
The commenter believed that using economy-wide labor productivity
to make the adjustment to the MEI input prices was inappropriate
because physician productivity is lower than economy-wide productivity.
While it is true that service industry productivity tends to be lower
than economy-wide productivity, there is wide variation in productivity
among specific sectors of the service industry. For physicians, the
substantial influence they have over the volume and intensity of
services provided to their patients allows them to increase output and,
therefore, productivity.
The commenter provided information on the declining number of
patient contacts per physician as evidence of declining productivity.
To estimate productivity per physician, however, the large increase in
volume and intensity of services per contact has to be accounted for.
An approximation of the change in volume and intensity of physicians'
services is the increase in allowed charges per enrollee in excess of
the MEI increase (shown in the 1998 Annual Report of the Board of
Trustees of the Federal Supplementary Medical Insurance Trust Fund).
The increase in allowed charges per enrollee from Table II.F3. of this
report has exceeded the MEI increase by 3.1 percentage points in 1994,
5.8 percentage points in 1995, and 2.1 percentage points in 1996. These
data show that volume-and-intensity increases for physicians' services
are still high relative to economy-wide productivity, which has
historically grown around 1 percentage point annually on a 10-year
moving average basis.
Economy-wide labor productivity increases automatically result in
economy-wide wage rate increases as less worker time or other inputs
are needed to produce the same outputs. Thus, the AHEs wage variable
implicitly includes productivity increases in the overall economy. The
productivity adjustment to the MEI factors out these economy-wide
productivity increases. However, an individual physician practice still
benefits from its own productivity increases in excess of economy-wide
productivity increases. This means each individual physician practice
is allowed to reap the rewards of having high productivity. Thus, it is
both technically correct and fair to both providers and payers to
adjust the MEI input prices by economy-wide productivity increases.
Result of Evaluation of Comments
As proposed, we rebased the MEI to 1996. We used the same data
sources (for base year weights and price proxies) and methodology as
explained in the June 5, 1998 proposed rule. The percent change in the
MEI for CY 1999 is 2.3 percent.
III. Implementation of the Balanced Budget Act
In addition to the resource-based practice expense relative value
units, BBA provides for revisions to the payment policy for drugs and
biologicals, includes a provision allowing private contracting with
Medicare beneficiaries, institutes payment for outpatient
rehabilitation services based on the physician fee schedule, and
changes the policy for nonphysician practitioners and for
teleconsultations.
A. Payment for Drugs and Biologicals
Before January 1, 1998, drugs and biologicals not paid on a cost or
prospective payment basis were paid based on the lower of the estimated
acquisition cost (EAC) or the national average wholesale price (AWP) as
reflected in sources such as the Red Book, Blue Book, or Medispan. (For
purposes of this discussion, we will use the term ``drugs'' to refer to
both drugs and biologicals). Examples of drugs that are paid on this
basis are drugs furnished incident to a physician's service, drugs
furnished by pharmacies under the durable medical equipment (DME)
benefit, and drugs furnished by independent dialysis facilities that
are not included in the end-stage renal disease (ESRD) composite rate
payment.
Section 4556 of BBA established payment for drugs not paid on a
cost or prospective payment basis at the lower of the actual billed
amount or 95 percent of the AWP, effective January 1, 1998. In this
final rule, we are revising the current regulations at Sec. 405.517 to
conform to this statutory change. This regulation is removing the EAC
and provide for payment at the lower of the actual charge on the
Medicare claim or 95 percent of the AWP.
Also, we are revising the method of calculating the AWP. Our
current regulations provide that, for multiple-source drugs, the AWP
equals the median AWP of the generic forms of the drug. The AWP of the
brand name products is ignored on the presumption the brand AWP is
always higher than the generic AWPs. While this may have been true when
the policy was first promulgated, it is not always true now. Therefore,
the AWP for multiple-source drugs would equal the lower of the median
price of the generic AWPs or the lowest brand name AWP.
Comment: We received some comments on the proposed methodology for
determining the AWP in the case of multi-source drugs. Some commenters
suggested we use the average AWP instead of the median AWP. Others
objected to the use of the lowest brand AWP saying that in all cases
all AWPs, both generic and brand, should be used. One commenter stated
that the law does not distinguish brand AWP from generic AWP;
therefore, we should not make this distinction.
Response: We agree that the law does not define the term ``average
wholesale price,'' and, therefore, does not distinguish brand AWP from
generic AWP or average versus median price. However, we believe it is
within our general authority in implementing the statute to define
terms that do not have explicit statutory definitions. We believe that
when there is an array of charges, the median is an appropriate measure
of central tendency. This is consistent with many other areas of the
program in which the median is used. With respect to distinguishing
between brand and generic AWPs, as we stated in the final rule titled
``Medicare Program; Fee Schedule for Physicians'' Services (BPD-712-
F),'' published in the Federal Register on November 25, 1991 (56 FR
59502), when this policy was promulgated, the brand AWP was believed to
be always greater than the generic AWPs (56 FR 59507). Now there is
evidence from the Office of Inspector General (OIG) in its report
titled ``The Impact of High-Priced Generic Drugs on Medicare and
Medicaid'' (OEI-03-97-00510) that this is no longer true. From a series
of OIG reports spanning the past 10 years, it is clear that the AWP is
higher than the amount typically paid for drugs by physicians who bill
the program. It is also true that when a brand AWP is lower than the
median generic AWP, typically there are also other generic AWPs that
are as low as or lower than this brand AWP. We believe, therefore, that
the payment allowance resulting from this methodology will be adequate.
[[Page 58850]]
Comment: Some commenters objected to a payment allowance of less
than the AWP. One commenter alleged that not all physicians can buy
drugs at less than retail prices. Another commenter stated that only
large physician practices can obtain bulk purchase discounts. Another
commenter suggested that we monitor access to drugs. Another suggested
that we study actual acquisition costs before implementing the limit of
95 percent of AWP. Two commenters stated that physicians should not be
burdened with maintaining price controls or cost containment or
tracking the prices of drugs. Physicians should only be responsible for
choosing the best drug and not be responsible for the cost of the drug.
Furthermore, if physicians are not paid sufficiently for the drugs they
now inject, they will stop injecting drugs and refer patients to the
hospital instead. This will cost the program much more.
Response: First, the law now requires that the Medicare program
limit its payment allowance to 95 percent of the AWP. Furthermore,
there are numerous reports by the OIG over the past 10 years showing
that significant discounts from the AWP are common and are not related
to bulk purchases. In the absence of evidence to the contrary of the
OIG findings, we believe it is reasonable to set the payment limit as
we have proposed. With respect to the comment that physicians will
refer patients to hospitals for injections, we believe that for the
reasons stated and because payment for outpatient hospital services
will be changed to a prospective payment basis, this will not occur.
Comment: One commenter stated that our definition of ``brand''
should be ``the product of the innovator company.'' The commenter
objected to considering other manufacturers' products that are marketed
under a proprietary name other than the generic chemical name of the
drug as a ``brand.''
Response: Our definition of ``brand'' is any product that is
marketed under a name other than the generic chemical name of the drug.
If a manufacturer chooses to market its product under a proprietary
name rather than the generic chemical name of the drug, we believe this
is a brand. We do not limit the definition of ``brand'' to the
innovator company product or any product manufactured under a direct
license from the innovator. Furthermore, we believe that it is an
unreasonable administrative burden to require our contractors to
determine which of the thousands of AWPs they must look up, to also
determine which of those are innovator drugs or licensed by the
innovator company.
Comment: Two commenters supported our proposal stating that our
proposal was consistent with the statute.
Response: We agree with this comment.
Comment: A commenter stated that radiopharmaceuticals are drugs,
but because of their unique nature they do not have AWPs. Therefore,
the commenter recommended that we pay for radiopharmaceutical drugs at
the billed amount.
Response: We agree that radiopharmaceutical drugs do not have AWPs,
and, therefore, require a different pricing methodology. However, we do
not agree that these drugs should be paid at the amount billed to the
program. Currently, our contractors determine an allowance for these
drugs that is reasonable in light of prices paid by physicians who use
them. We will continue this policy of local pricing by our contractors.
Result of evaluation of comments: We are adopting our proposal with
further clarifications. The Medicare allowed charge for drugs and
biologicals is the lower of 95 percent of the median generic AWP or 95
percent of the lowest brand AWP. A ``brand'' product is defined as a
product that is marketed under a labeled name that is other than the
generic chemical name of the drug or biological. The allowed charge for
drugs and biologicals that do not have an AWP is determined by the
local Medicare contractor considering the prices paid by physicians and
suppliers who use them.
B. Private Contracting with Medicare Beneficiaries
Section 4507 of BBA 1997 amended section 1802 of the Act to permit
certain physicians and practitioners to opt-out of Medicare and to
provide through private contracts services that would otherwise be
covered by Medicare. This rule conforms the regulations to sections
1802(b) and 1862(a)(19) of the Act. In addition, this rule contains
ancillary policies that we believe are necessary to clarify what it
means when a physician or practitioner ``opts-out'' of Medicare, and to
otherwise effectuate the Congress'' intent in enacting section 4507 of
BBA 1997.
The private contracting provision is effective for private
contracts entered into on, or after, January 1, 1998. We implemented
private contracting through a series of operating instructions for
Medicare carriers and information that carriers were instructed to
provide to physicians and practitioners.
The Medicare claims submission and private contracting rules apply
only when a physician or practitioner furnishes Part B Medicare-covered
services to a beneficiary who is enrolled in Medicare Part B. The
private contracting rules do not apply to individuals who have only
Medicare Part A, to individuals who are age 65 or over but who do not
have Medicare, or to services that Medicare does not cover.
General Issues
State of Law Before Section 4507 of the BBA
Comment: Some commenters disagreed with our view that private
contracting is not valid except as specified in section 4507 of the
BBA. They believed that section 1848(g) of the Act does not preclude
private contacting. In addition, they believed that the claims
submission requirements apply only to ``services for which payment is
made'' under the fee schedule and, therefore, by definition, do not
apply if no claim is submitted.
Response: We continue to believe that under the Act, private
contracts between beneficiaries and physicians or practitioners are not
enforceable unless they meet the requirements of section 4507 of the
BBA. The mandatory claims submission rules of section 1848(g)(4) of the
Act specify that: ``For services furnished on or after September 1,
1990, within 1 year after the date of providing a service for which
payment is made under this part on a reasonable charge or fee schedule
basis, a physician, supplier or other person (or an employer or
facility in the cases described in section 1842(b)(6)(A))--
<bullet> (i) Shall complete and submit a claim for such service on
a standard claim form specified by the Secretary to the carrier on
behalf of a beneficiary, and
<bullet> (ii) May not impose any charge related to completing and
submitting such a form.''
Because there must be a claim to Medicare before payment can be
made, the meaning of the phrase ``. . . for which payment is made on a
reasonable charge or fee schedule basis . . . (emphasis added)'' must
be to define the universe of claims to which the mandatory claims
submission rules apply as being those services for which Medicare makes
payment on a fee schedule or reasonable charge basis once a claim is
submitted. The only exceptions the law provides to the mandatory claims
submission rules are those found in the private contracting provisions
of section 1802(b) of the Act and those implied by the phrase ``on
[[Page 58851]]
behalf of the beneficiary.'' In addition, one cannot omit the word
``basis'' and argue that the claims submission requirement applies only
to services for which ``payment is made under this part on a reasonable
charge or fee schedule.'' The word ``basis'' has meaning and was
specifically included because it defines a universe of services to
which the provision applies. The clear intention of the claims
submission provision is to apply to all services for which payment is
made under part B on a reasonable charge or fee schedule basis, but not
to include services for which payment is made under part B on a
reasonable cost basis (for example, hospital outpatient department
services).
The phrase ``. . . for which payment is made . . .'' cannot, as
commenters contend, mean that the mandatory claims submission rules
apply only if payment is actually made in an instant case. That reading
would mean the mandatory claims rules would never apply where no
payment was made because of the absence of a submitted claim, rendering
the mandatory claims provision meaningless.
Moreover, the limiting charge rules of section 1848(g)(1)(A) of the
Act establish explicit limits on the charges of a nonparticipating
physician or nonparticipating supplier or other person who does not
accept payment on an assignment-related basis for a physician's
services furnished to an individual who is enrolled in Part B. The only
exception to these limits is that found in the private contracting
provisions of section 1802(b) of the Act.
Comment: Commenters disagree that the limiting charge applies in
the absence of a claim. They believe that if the claims submission rule
can be waived by the beneficiary, then the limiting charge rule can
also be waived by the beneficiary.
Response: As noted above, there is specific language in section
1848(g) of the Act that indicates that the physician, supplier, or
other person must submit the claim ``on behalf of the beneficiary.'' In
contrast, there is no language included in the flat prohibition in
section 1848(g)(1)(A)(i) of the Act against nonparticipating
physicians, suppliers, and other persons charging more than the
limiting charge. For these reasons, we believe that we have no
discretion to waive the limiting charge, except when the criteria
established by section 4507 of the BBA are met.
Participating physicians, suppliers, and other persons who have
agreed to always take assignment on claims for Medicare covered
services, and nonparticipating physicians, suppliers, and other persons
who take assignment, have also implicitly agreed to submit claims
because one cannot take assignment on a claim unless one submits a
claim. Moreover, because taking assignment means agreeing to accept
Medicare allowed amounts as payment in full for covered services, they
have also voluntarily agreed not to collect more than deductibles and
coinsurance from all patients they see. For these reasons, signing a
participation agreement, or accepting assignment by a nonparticipating
physician, precludes private contracting outside of section 4507 of the
BBA.
Claims for services that are not reasonable and necessary according to
Medicare standards
Comment: Commenters asked that we clarify that there is no limit on
the amount physicians and practitioners may charge beneficiaries when
services furnished are denied as not reasonable and necessary, and the
physician or practitioner has provided the advance beneficiary notice
(ABN). Some commenters also asked that we clarify that when an ABN is
provided, there is no private contract. They indicated that some
physicians and practitioners are refusing to furnish non-covered
services to beneficiaries, because they believe that giving an ABN will
compel them to opt-out of Medicare.
Response: When a physician or practitioner furnishes a service that
does not meet Medicare's criteria for being reasonable and necessary,
and the physician or practitioner has furnished the beneficiary with an
ABN that advises the beneficiary that for this reason there is a
likelihood of denial of the claim by Medicare, there are no limits on
what the physician or practitioner may charge the beneficiary. An ABN
that states that the physician or practitioner believes that the
service will not be covered by Medicare is not a private contract. The
act of providing an ABN does not then require that the physician or
practitioner opt-out of Medicare so that he or she avoids being at risk
of having a penalty assessed for a limiting charge violation. Hence,
physicians and practitioners should not hesitate to furnish services to
Medicare beneficiaries when the physician or practitioner believes that
those services are in accordance with accepted standards of medical
care, even when those services do not meet Medicare's particular and
often unique coverage requirements.
Beneficiaries in Medicare risk HMOs and Medicare+Choice organizations
Comment: Some commenters wanted us to reaffirm that a physician or
practitioner may charge without regard to the limiting charge, when he
or she furnishes a service to a beneficiary who is enrolled in a
Medicare risk plan and the plan will not pay for that service. In
addition, we were requested to address what happens in situations in
which the beneficiary appeals the denial of the service and the
Medicare risk plan subsequently agrees to pay the claim. Commenters
asked that we define what is meant by ``covered services,'' for
purposes of physicians and practitioners being able to charge Medicare
risk plan or Medicare+Choice (M+C) organization enrollees more than the
Medicare fee schedule, without having the physician or practitioner
opt-out of Medicare for services not covered by the plan or the M+C
organization.
Response: When a Medicare beneficiary enrolls in a Medicare risk
plan (either currently under section 1876 of the Act or after January
1, 1999, under the M+C program), that beneficiary has Medicare coverage
only to the extent that the services are covered under the risk plan
according to the plan's rules for coverage. A risk plan may deny
payment for a service if the beneficiary has not abided by the rules
for coverage of care under the risk plan. (Examples of non-adherence to
the plan's rules could be a beneficiary acquiring care without the
required plan prior authorization, or acquiring care from a non-network
physician if coverage is limited to network physicians.) In that
situation there is no plan coverage of that service and the beneficiary
is fully liable for the payment of the service, even when payment would
have been made under original Medicare if the beneficiary were not in
the risk plan. In these types of situations, the physician or
practitioner may charge the beneficiary without regard to the limiting
charge for the service furnished, and no claim need be submitted for
the non-covered service. A private contract is not needed and the
physician or practitioner need not opt-out of Medicare.
We would caution, however, that if the beneficiary seeks plan
payment and the plan pays for the service, either initially or on
appeal, then the physician or practitioner is entitled to receive no
more than the amount he or she would have received under original
Medicare. An adjustment would then have to be made to ensure that the
beneficiary received a refund for any amount in excess of the Medicare
allowed amount (if the physician participates in original Medicare) or
the Medicare limiting charge (if the physician does not participate in
original Medicare).
[[Page 58852]]
Application to Medicaid
Comment: A commenter wanted us to revise the final rule to specify
that a physician or practitioner who opts-out of Medicare may not bill
Medicaid for services he or she furnishes to individuals who are
enrolled in both Medicare and Medicaid.
Response: There is nothing in section 4507 of the BBA that
prohibits either dually eligible Medicare and Medicaid beneficiaries,
or Medicare providers, from entering into a private contract, or that
prohibits these providers from billing Medicaid for Medicaid covered
services.
Excluded physicians and practitioners who opt-out
A physician or practitioner may be excluded from Medicare by the
Office of Inspector General (OIG) for violations of the law according
to sections 1128, 1156, and 1892 of the Act. An excluded physician or
practitioner may not furnish, order, prescribe, or certify the need for
Medicare-covered items and services (except as permitted in 42 CFR
1001.1901) for the term of the exclusion. A physician or practitioner
must request and be granted reinstatement by the OIG before billing
Medicare.
Comment: A commenter asked that we not permit excluded physicians
and practitioners to opt-out. She believes that we need to clarify the
relationship between opting-out and being excluded. She believes that
if we permit excluded physicians and practitioners to opt-out, all the
rules that apply to excluded physicians and practitioners can and
should apply to physicians and practitioners who have opted-out. For
example, excluded physicians cannot order covered services. Commenters
also wanted us to agree that a private contract entered into by an
excluded physician or practitioner would be recognized by us and the
Office of the Inspector General as a notice to the beneficiary that the
physician or practitioner is excluded, because the private contract
must say whether the physician or practitioner is excluded.
Response: Section 1802(b)(2)(B) of the Act says, ``[s]uch contract
shall also clearly indicate whether the physician or practitioner is
excluded from participation under the Medicare program under section
1128.'' We have interpreted this to mean that, although excluded
physicians can enter into private contracts, they must not only
indicate their excluded status through the contract, but also still
abide by the terms of their sanction under section 1128 of the Act.
Practically speaking, this means that excluded physicians or
practitioners may file affidavits and enter into private contracts, but
that all the provisions of section 1128 of the Act and regulatory
requirements pertaining to section 1128 of the Act, such as per-
encounter issuances of ABNs, must still apply. Further, although
section 1802(b)(2)(B) of the Act specifically mentions exclusions under
section 1128 of the Act, the Secretary also has authority to exclude
physicians and practitioners under sections 1156 and 1892 of the Act
for the reasons specified therein. We believe it was Congress's intent
to require clear notice of any exclusion, regardless of the specific
statutory basis for it, in the contract with the beneficiary.
Therefore, we have added language to Secs. 405.415 and 405.425 to
require a physician or practitioner provide clear notice of any
exclusion, be it under section 1128, 1156, or 1892 or any other
provision of the Act. We have also added language to Sec. 405.440 to
make clear that excluded physicians and practitioners are bound by the
standards in 42 CFR Sec. 1001.1901 for obtaining Medicare payment for
emergency or urgent care services.
Grandfathering of physicians and practitioners who already opted-out
Comment: Commenters requested affirmation that the physicians and
practitioners who have already opted-out will not have to file either
revised affidavits or revised private contracts to meet the new
standards contained in these regulations.
Response: We agree. These regulations are effective for private
contracts entered into on or after January 1, 1999, and for affidavits
submitted to carriers on or after January 1, 1999.
The provisions of section 4507 of the BBA were effective for
private contracts entered into on or after January 1, 1998. We have
therefore implemented the provisions of section 4507 of the BBA through
operational instructions. Specifically, we issued Medicare program
memoranda to implement the law in November 1997, January 1998, April
1998, July 1998. Medicare carriers have provided the information in
these documents to all physicians and practitioners as they were
released throughout the year. If physicians and practitioners submit
affidavits in accordance with these program memoranda before January 1,
1999, they have opted-out of Medicare for the 2-year opt-out period,
and need not submit revised affidavits to comply with the regulations.
Similarly, when they have entered into private contracts with Medicare
beneficiaries before January 1, 1999, they need not revise the private
contracts or have beneficiaries sign second private contracts.
Comment: Commenters requested that physicians and practitioners who
have opted-out before the regulations take effect, be provided with an
opportunity to terminate their opt-out within 90 days of the date the
new rules are effective, under the terms of early termination of opt-
out.
Response: We agree. We have provided a special one time 90-day
early termination opportunity for physicians and practitioners who
opted-out during 1998, and who are willing to terminate their opt-out
by complying with the requirements of Secs. 405.445(b) (3) and (4) and
405.445(c).
Charitable care
Comment: Commenters indicated that physicians and practitioners
should be permitted to opt-out of Medicare to do charitable care. They
believed that because currently physicians and practitioners must
collect deductible and coinsurance, they can be found to have made an
illegal remuneration if they do not. They believed that the deductible
and coinsurance are a financial burden for beneficiaries who do not
have Medicaid. In addition, they believed that physicians and
practitioners should be able to privately contract on a patient-by-
patient basis, when they choose to offer free services to Medicare
patients in need of those services.
Response: A physician or practitioner need not opt-out of Medicare
to furnish services for which they do not charge, nor need they opt-out
when either the deductible or coinsurance or both are waived because of
indigence. Under current law, regulations, and instructions, nothing
prevents a physician or practitioner from not charging a beneficiary
for medical services. Moreover, longstanding Medicare policy permits
physicians and practitioners to waive Medicare deductibles and
coinsurance, when the physician's or practitioner's analysis of the
beneficiary's financial information leads him or her to believe that
collecting either the deductible or coinsurance or both would impose a
hardship on the beneficiary. This policy has long been stated in
Medicare Carrier Manual section 5220, and was stated as a permitted
exception to the prohibition on the waiver of the deductible and
coinsurance in section 231(h) of Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-191).
However, the commenter is correct that the provision of free
services can become problematic in some cases, as
[[Page 58853]]
for example, when a charge is not made as an inducement for the
beneficiary to return for covered services, or as an inducement for the
beneficiary to provide referrals. The commenter is also correct that
indigence is the only explicitly permitted basis for waiver of either
the deductible or coinsurance or both.
Definitions (Sec. 405.400)
Beneficiary
Comment: Commenters wanted the definition of ``beneficiary''
clarified to indicate that it applies only to individuals who are
enrolled in original Medicare and does not apply to individuals who are
enrolled in Medicare risk plans, or, after January 1, 1999, the M+C
organizations.
Response: We have not made this change. The commenters are under
the mistaken impression that a physician or practitioner may opt-out of
original Medicare, but continue to be paid by an M+C organization for
Medicare-covered services furnished to a beneficiary who is enrolled in
an M+C organization. Instead, under the law and as specified in these
regulations at Sec. 405.220, a physician or practitioner who opts-out
of Medicare may not provide services for which payment is made by
Medicare, including where payment is made to the physician or
practitioner by an M+C organization for services to a Medicare
beneficiary enrolled in such an organization.
Emergency care services
Comment: Some commenters raised the question of whether we would
use the ``prudent layperson'' definition of emergency medical condition
of Sec. 422.2, instead of the provider agreement definition of the term
at Sec. 489.24. The commenter believed that the ``prudent lay person''
definition is preferable.
Response: We agree. In order to give both beneficiaries and
physicians and practitioners the greatest protection and flexibility in
medical decision-making, we have decided to adopt the more inclusive
``prudent layperson'' standard of Sec. 422.2, which was recently
published as part of the M+C regulations at 63 FR 34968.
Legal representative
Comment: Some commenters objected to permitting a beneficiary's
``legal representative'' signing a private contract, because the law
makes no provision for this action. They believed the regulations
should permit no one but the beneficiary to sign a private contract.
Response: We permit a beneficiary's legal representative to sign a
private contract so that beneficiaries who have legal representatives
will not be treated differently than beneficiaries who do not have
legal representatives. We can foresee a situation in which the legal
representative of a beneficiary believes that signing a private
contract that allows the physician or practitioner to furnish care
would be in the beneficiary's best interest, and, we believe that, if
legal representatives have the right to do so under applicable State
law, they should not be precluded from doing so by Medicare
regulations.
Comment: Some commenters stated that the proposed definition of
``legal representative'' is too restrictive. These commenters believed
that we should define a ``legal representative'' to be any person
permitted by State law to make health care decisions on behalf of the
beneficiary. They believed that we defer to State law under the M+C
rules, and that there is no reason to make a different rule for private
contracting.
Some commenters requested that the definition of ``legal
representative'' be expanded to include any person who would be willing
to pay the beneficiary's bill, as, for example, family members. Some
commenters stated that we should not define ``legal representative'' or
use the term. Rather we should state that the private contract must be
recognized under State law as a legally binding contract on the
beneficiary, thereby letting the State determine when someone other
than the beneficiary may sign it.
Some commenters indicated that the definition is not clear and
should be revised. They wanted the revision to reflect differences in
State law, or differences in the scope of the court order that
appointed the beneficiary's legal guardian, by defining ``legal
representative'' as ``the beneficiary's court-appointed surrogate
(guardian, conservator or other State law terminology) who has
authority to enter into a contract for health care services. Some
commenters indicated that the regulation should be revised to clarify
that the ``legal representative'' accepts responsibility for making
payment from the beneficiary's financial resources or from the
beneficiary's estate, but is not responsible for making payments using
the legal representative's personal funds. In addition, commenters
wanted the regulation to clarify that the legal representative is not
personally liable for the beneficiary's bills.
Commenters also indicated that the party who can make health
decisions may not be the same party who can make financial decisions.
These commenters believed that private contracting involves both health
and financial decisions, and, thus, that both parties should have to
consult and agree before any one party enters into a private contract
on behalf of a beneficiary.
Response: We believe that the question of who should be allowed to
enter into a private contract should be determined in accordance with
State law. Therefore, we have changed the definition of legal
representative as specified in Sec. 405.400 to be: ``one or more
individuals who, as determined by applicable State law, has the legal
authority to enter into the contract with the physician or practitioner
on behalf of the beneficiary.''
Comment: One commenter requested that the regulation require that
the court order or power of attorney document establishing a ``legal
representative'' be attached to the contract.
Response: We leave this matter to the States to regulate in accord
with their applicable contract and agency laws.
Physician
Comment: Some commenters wanted optometrists to be able to opt-out.
Response: Section 1802(b)(5)(B) of the Act defines a physician
according to the definition given in section 1861(r)(1) of the Act,
which defines a physician as a doctor of medicine or osteopathy. For
the purposes of opting-out and private contracting, the Congress did
not define the term physician to mean the many other types of health
care professionals as listed in section 1861(r)(2) through (5) of the
Act. Optometrists are included in the definition only at section
1861(r)(4) of the Act.
General Rules (Sec. 405.405)
Two-year opt-out period
Comment: Many commenters objected to the requirements that when a
physician or practitioner opts-out of Medicare, he or she must agree to
sign private contracts with all Medicare beneficiaries, for all
services furnished to Medicare beneficiaries for 2 years (other than
emergency and urgent care services). These commenters believed that the
2-year requirement transforms private contracting from a vehicle for
maximizing patient choice and access to services, into a barrier to the
acquisition of services by the patient from the physician or
practitioner of the patient's choice.
Response: The statute specifies that, in order to privately
contract, the physician or practitioner must file an affidavit with
Medicare. In the affidavit he or she must agree to enter into private
contracts with Medicare beneficiaries (except in the case of those
[[Page 58854]]
who require emergency or urgent services) for 2 years.
Effect of opt-out that occurs during a continuum of care
Comment: Commenters asked that we clarify the effect of private
contracting when the beneficiary is in a continuum of care that
overlaps the opt-out period. For example, what will happen when a
beneficiary is in the midst of a course of chemotherapy and the
physician chooses to opt-out?
Response: When a Medicare beneficiary is in a continuum of care
such as a course of chemotherapy and the physician chooses to opt-out
of Medicare, the beneficiary may either privately contract with the
physician, or the beneficiary may acquire the remainder of the care
from a physician who has not opted-out of Medicare. If a physician or
practitioner has opted-out of Medicare by filing an affidavit with the
carrier, then he or she must enter into a private contract with every
beneficiary to whom he or she furnishes care, except in situations
where the beneficiary requires emergency or urgent care.
Conditions for Properly Opting-Out of Medicare (Sec. 405.410)
Advance notice of opt-out
Comment: A commenter requested that we require that physicians and
practitioners give 60 days advance notice of their intention to opt-
out. For nonparticipating physicians, this would be 60 days prior to
filing the affidavit. For participating physicians, this would be 60
days before the calendar quarter in which their opt-out becomes
effective. The notice would be given to beneficiaries treated by the
physician or practitioner within 3 years, and to new beneficiaries with
pending appointments.
The commenter knew of cases where beneficiaries traveled long
distances for medical services without having been informed that the
physician or practitioner had opted-out. Then, after arriving for the
appointment, the beneficiaries had to leave without receiving the
needed medical services, because they could not afford to enter into a
private contract. According to the commenter, the beneficiaries in
these cases suffered anxiety, distress, expense, and a delay in
receiving the needed medical services. Those negative consequences
could have been avoided if the beneficiaries had been advised, at the
time the appointment was made or earlier, that the physicians had
opted-out of Medicare. The commenter believed that the absence of
advance notice leaves beneficiaries subject to duress in the
physician's or practitioner's office.
Response: We have not imposed an advance notice requirement for
physicians and practitioners who opt-out. We do not believe that kind
of requirement is warranted. Moreover, the 60-day advance notice the
commenter requested may cause physicians and practitioners to refuse to
provide services during those 60 days, possibly resulting in the delay
of needed medical services.
However, we hope that organizations will encourage member
physicians and practitioners who have opted-out to notify the Medicare
beneficiaries to whom they provide care as soon as possible after they
file the affidavit. We also hope that these physicians or practitioners
require that their office staff advise beneficiaries, at the time the
beneficiary makes an appointment, that the physician or practitioner
has opted-out of Medicare. Advance notice would spare beneficiaries the
inconvenience, anxiety, duress, and delay in receiving needed medical
services that might otherwise occur if they cannot enter into the
private contract.
There are also significant administrative and good will advantages
to the physician or practitioner of these notices. Advance notices will
prevent the beneficiary from being surprised and possibly upset or
angry in the office. Moreover, they will minimize the ill will that may
occur if the beneficiary is asked to enter into a private contract at
the time of the appointment as a condition of seeing the physician or
practitioner, without being given advance notice. In addition, an
advance notice will minimize the chance that beneficiaries will leave
without having received the needed services, and result in an avoidable
loss of income and time for the physician or practitioner.
We also hope that beneficiary organizations will encourage
beneficiaries when they make an appointment to seek out information on
whether they will need to sign a private contract before seeing a
physician or practitioner. Then, the beneficiary could make a
thoughtful and careful decision, in an environment less stressful than
the physician's or practitioner's office.
Although we hope that the physician and practitioner communities
will cooperate to provide an appropriate advance notice, we are
concerned about the scenarios presented by the commenter and will
continue to consider whether further guidance is needed.
Notice of change in participation status
Comment: A commenter indicated that there should be a mechanism for
beneficiaries who have not signed private contracts, to be notified
when they receive either emergency or urgent care services from an opt-
out physician or practitioner who participated in Medicare before
opting-out (and cannot sign a private contract at that time), that the
physician or practitioner is now a nonparticipating physician or
practitioner. That notification would benefit the beneficiary because
the beneficiary's financial liability for those services will rise as a
result of the change in the Medicare status of the physician or
practitioner.
Response: We believe that this recommendation is an impractical
burden to impose on physicians and practitioners, and is of little
value to the beneficiary who needs emergency or urgent care services.
When a beneficiary needs emergency or urgent care services, he or she
probably does not have the alternative to seek care from a
participating physician.
Signage
Comment: A commenter asked that we require that physicians and
practitioners who opt-out to post a sign in a conspicuous space in his
or her office in 5-inch type, stating that the physician or
practitioner has opted-out of Medicare. Then beneficiaries will know
when they enter the office that they will be required to sign a private
contract to acquire non-emergency or urgent care services.
Response: We have not adopted this suggestion. As noted earlier we
hope the physician and practitioner communities will cooperate to
provide an appropriate advance notice to beneficiaries. We believe that
a sign such as the commenter recommends would provide little or no
value to the beneficiary who has already come to the physician or
practitioner's office, and is about to be asked to enter into a private
contract.
Relationship of opt-out physicians and practitioners to beneficiaries
who do not enter into private contracts
Comment: A commenter asked that Secs. 405.410 and 410.420 be
revised to include an affirmative prohibition that physicians or
practitioners cannot furnish an item or service to any beneficiary who
has not privately contracted. The commenter believed that it should
also be a condition to properly opt-out and maintain opt-out so that,
if the physician or practitioner does not privately contract, the
penalties of Sec. 405.435(b) would be invoked.
[[Page 58855]]
Response: We have revised Sec. 405.435 to specify that when a
physician or practitioner who has opted-out fails to enter into a
private contract (except in emergency or urgent care situations), he or
she has failed to maintain opt-out. Therefore, where an opt-out
physician or practitioner fails to enter into a private contract
(except in emergency or urgent care situations), he or she will be
subject to the penalties in that section for failure to maintain opt-
out. We believe that this change addresses the commenter's concerns,
and that changes to Secs. 405.410 and 405.420 are not useful.
Timing of opt-out by participating physicians
Comment: Some commenters believed that participating physicians
should be allowed to opt-out at any time after they provide sufficient
advance notice. These commenters did not believe that participating
physicians should have to await the beginning of a calendar quarter to
be able to opt-out. Other commenters believed that physicians should
only be permitted to opt-out during the standard participating
physician enrollment period. They argued that permitting participating
physicians to opt-out on a quarterly basis, and permitting
nonparticipating physicians to opt-out at any time, leaves
beneficiaries with too little time to find another physician or
practitioner if theirs chooses to opt-out.
Response: We have decided to make no changes to the conditions
regarding the timing of the opt-out period, either to permit opt-out by
participating physicians at will, or to permit opt-out only during the
participation enrollment period. Medicare carriers must make systems
changes to permit participating physicians to opt-out, and, thereby,
become nonparticipating physicians in the middle of the year, in such a
way that they do not reduce Medicare payments for services furnished
during the part of the year that they had a participation agreement in
effect.
Medicare has a longstanding policy of making systems changes no
less often than on a quarterly basis. The quarterly opt-out for
participating physicians is designed to accommodate that schedule,
while simultaneously permitting participating physicians to opt-out
without having to await the annual participation enrollment or
disenrollment period. The law does not link the opt-out election to the
annual participation period and, therefore, we do not preclude
participating physicians from opting-out only during that period.
Whether a carrier should send a return receipt to a physician or
practitioner that submitted an affidavit
Comment: A commenter wanted carriers to be required to send a
return receipt verifying the accuracy and acceptance of the affidavit.
The commenter believed that procedure will eliminate problems with lost
mail or an incorrect affidavit, and reduce the incidence of physicians
and practitioners not properly opting-out and later finding themselves
in trouble for having failed to properly opt-out.
Response: Our experience with those physicians and practitioners
who have opted-out, indicates that there have been no notable problems
with lost mail or incorrect affidavits. Hence, we do not believe that
there is sufficient justification at this time for requiring the
carrier (and the Medicare program) to incur the costs associated with
sending return receipts to the physician or practitioner.
Impact of changes in carrier jurisdiction
Comment: A commenter asked that we address how carrier terminations
and replacements will affect the opt-out status of physicians and
practitioners. Specifically, the commenter wanted to know if the
physician or practitioner needs to again file the affidavit with the
carrier that is taking over the jurisdiction.
Response: Physicians and practitioners who have filed affidavits
opting-out of Medicare will not need to refile when a carrier is
replaced by a new carrier. The information will be transferred from the
existing contractor to the new contractor, as part of the systems and
records transition process.
Requirement to submit affidavits to all carriers
Comment: Commenters objected to the requirement that the physician
or practitioner must submit affidavits to all carriers to which he or
she has submitted claims in the past 2 years. They believed that this
is a burdensome requirement that will become more so as there are more
M+C organizations. Commenters also believed that this requirement is
particularly burdensome for physicians and practitioners in States that
have a lot of ``snowbirds.'' They asked whether the physician or
practitioner must submit an affidavit to each carrier to which they
would send claims. A commenter requested that there should either be a
standard form that contains all addresses, or the affidavit should be
submitted to us for distribution to all carriers.
Response: We do not believe that this requirement is burdensome.
The submission of an affidavit is done no more than once every 2 years,
and requires simply mailing it to the addresses to which the physician
or practitioner ordinarily sends claims. Physicians and practitioners
already know to whom they have sent claims within the past 2 years, and
this is the reason we proposed this standard.
We want to reinforce the importance of mailing the affidavits to
the appropriate carriers. We have received many affidavits that were
sent to the Secretary, rather than being sent to the physician's or
practitioner's carrier. The result of the misrouting of the affidavits
has been significant delays in the processing of these misdirected
affidavits by carriers. Physicians and practitioners were instructed
where to send the affidavit in the November 1997 ``Dear Doctor''
letter. That letter was sent to all physicians and practitioners who
had submitted claims to Medicare within the previous year.
Moreover, the comments reflect several misunderstandings. First,
the number of M+C organizations has no relationship to the number of
affidavits to be filed, because an M+C organization is not a Medicare
carrier. M+C organizations will acquire information on physicians and
practitioners who have opted-out through mutually agreed upon
arrangements with carriers.
Also, when a physician furnishes care to a Medicare beneficiary who
lives much of the time in another State, the physician files the
Medicare claim with the carrier that has jurisdiction over the claims
for the services furnished in the physician's or practitioner's
Medicare locality. For example, when a physician in Jacksonville treats
a Medicare beneficiary who resides most of the time in Detroit, the
physician files the claim with the carrier who processes claims for
services furnished in Jacksonville, not with the carrier who processes
claims for services furnished in Detroit. Hence, the physician would
file the affidavit with the carrier for Jacksonville, not with the
carrier for Detroit.
We recognize that this process could be more streamlined.
Therefore, we are considering ways to simplify it for physicians,
practitioners, carriers, and M+C organizations, and would welcome
suggestions on this subject.
Comment: A commenter asked for specific guidance in the case of
physicians and practitioners who have not filed claims with Medicare in
the past 2 years.
Response: The physician or practitioner should file the affidavit
with the carrier that has jurisdiction over claims for the services
furnished in
[[Page 58856]]
the Medicare localities in which the physician furnishes services.
Requirements of Private Contracts (Sec. 405.415)
Need for a model contract
Comment: Some commenters wanted us to develop a model contract.
They believed that it would help physicians and practitioners by
ensuring that they maintain their opt-out status. They believed that a
model contract would increase the probability that beneficiaries will
understand the effects of the private contract.
Response: We agree. We plan to create boilerplate language that may
be included with any other contractual document the physician or
practitioner and beneficiary create. We plan to create boilerplate
language as part of the development of manual instructions, after
consultation with the physician, practitioner, and beneficiary
communities.
Wording of the private contract
Comment: Commenters requested that we require that the wording of
the private contract be plain and simple, and not reference law,
regulations, or government instructions. They believed such references
cause beneficiaries to cease reading documents.
Response: We agree that the wording of private contracts should be
plain and simple. At the same time, a private contract is a binding
legal document. Its purpose is to waive a beneficiary's right to have
his or her government-sponsored insurance coverage pay for certain
health services. It is unlikely that a sensible and intelligent
contract on this issue could be developed without a reference to law or
regulation. Therefore, we are not prohibiting inclusion of references
to law and regulations because such references may be necessary.
However, contracts could have references to law or regulations and
still be in plain and simple language.
Comment: Commenters requested that we require that the private
contract specify that the beneficiary does not forego Medicare coverage
for the services furnished by other physicians or practitioners who
have not opted-out. In addition, commenters requested that the private
contract specify that the beneficiary is not compelled to enter into
private contracts that apply to other Medicare-covered services.
Response: We believed that these concerns were addressed in
Sec. 405.415(g) of the proposed rule. However, because of this comment,
we have revised Sec. 405.415(g), adding that the beneficiary must be
advised that he or she is not compelled to enter into private contracts
that apply to other Medicare-covered services furnished by other
physicians or practitioners who have not opted-out. In addition, this
and other terms a private contract should contain may be incorporated
in boilerplate language that we plan to create after consulting with
the physician, practitioner, and beneficiary communities. That
boilerplate language could then be included as part of the private
contract document.
Comment: Commenters requested that we require that the private
contract contain wording that specifies that the private contract
applies to all services by the opt-out physician or practitioner,
including emergency and urgent care services, and that, therefore,
Medicare will not pay for any services furnished by the opt-out
physician or practitioner. Commenters indicated that this wording is
needed, because many private contracts specify that the beneficiary
will have to pay for certain services, wrongly implying that other
services not identified in the contract will be paid by Medicare. If
the beneficiary is misled by this wording, it increases the likelihood
that he or she will sign the private contract without understanding the
effect.
Response: We have revised Sec. 405.415(c) to clarify that the
private contract must state that the beneficiary understands that by
signing the private contract, the beneficiary or his or her legal
representative accepts full responsibility for payment of the
physicians's or practitioner's charge for all services furnished by the
physician or practitioner. We will consider the exact language to be
used in the private contract as part of the development of the
boilerplate private contract language.
Beneficiary's copy of the private contract
Comment: Commenters asked how far in advance must the physician or
practitioner give the beneficiary a copy of the private contract as
required by Sec. 405.415(l).
Response: Under Sec. 405.415(l), we proposed that the beneficiary
receive a copy of the contract before receiving any services under the
contract, but we did not require that this occur a specific duration of
time before services are furnished under the contract. We only proposed
that the beneficiary be in possession of the private contract, or a
copy of the private contract, by the time services under the private
contract are furnished. This is consistent with the policy we have in
place under the interim operating instructions issued to carriers in
November 1997, January 1998, April 1998, and July 1998.
Duration of retention of the private contract
Comment: Commenters requested that we require the opt-out physician
and practitioner to retain the private contract for the duration of the
longest statute of limitations in the relevant state jurisdiction, so
it would be available to use in potential claims against the physician
or practitioner. They believed that this would assist in settling
disputes about whether a private contract was required.
Response: We proposed that the private contract be retained for the
duration of the opt-out term to which it applies. However, we are aware
that, for example, a particular physician's or practitioner's opt-out
term may run from January 1, 1999 to December 31, 2001. In this
example, a beneficiary could enter into a contract with that
practitioner or physician in November 2001, and a dispute over the
existence or validity of the contract could arise in January 2002. If
the physician or practitioner disposed of the contract on December 31,
2001, the physician or practitioner would not have the contractual
evidence in the subsequent dispute. However, because retention of the
private contract would be to the practitioner's or physician's benefit,
we believe that the contract would become part of the patient's
permanent record. In addition, although the physician or practitioner
might have disposed of his or her copy of the contract, the beneficiary
should still have the copy of the contract the beneficiary was given
when the beneficiary entered into the contract.
Private contract type size
Comment: Commenters indicated that they support the absence of
specified requirements regarding size of the print in the private
contract, but that the regulations should stipulate that the physician
or practitioner and the beneficiary should reach mutual agreement on
all aspects of the private contract.
Response: Implicit in the fact that both parties enter into a
private contract is the notion that both parties have read, fully
understand, and agree to the terms and provisions of the private
contract.
Requirements of the Opt-Out Affidavis (Sec. 405.420) Reassignment
Implications
Comment: Commenters wanted the proposed regulations to be revised
to explicitly authorize continued reassignment of Medicare benefits for
[[Page 58857]]
services furnished by opt-out physicians and practitioners to community
mental health centers (CMHCs). They believed that opt-out physicians
and practitioners should be able to opt-out of Medicare for purposes of
their private practices, but be able to remain in Medicare when they
furnish services in other settings like CMHCs. That would allow the
physician and practitioner to continue to furnish services to low
income persons for which the CMHC could bill Medicare.
Response: We disagree. Under the law, when a physician or
practitioner opts-out of Medicare, he or she signs an affidavit that
promises that he or she will privately contract for all Medicare-
covered services he or she furnishes to Medicare beneficiaries. Hence,
the opt-out decision applies to all services furnished by the physician
or practitioner, including those for which a CMHC bills and is paid by
Medicare under a reassignment of benefits to the CMHC, a billing agent
arrangement, or through an employment relationship. Except as discussed
below, no payment may be made to the physician or practitioner or to
the CMHC for the services of a physician or practitioner who has opted-
out of Medicare.
The only exception occurs when a clinical social worker (CSW) who
is recognized by Medicare as a practitioner provides services as part
of a partial hospitalization program for which Medicare is paying the
CMHC. In this case, the CMHC (and not the CSW) is the provider of a
partial hospitalization service (not a CSW service) and the fact that
the CSW opted-out of Medicare does not preclude payment for the partial
hospitalization service.
Identifying Information
Comment: Commenters objected to the quantity of information that we
proposed requiring in the affidavits. They believed that we have gone
beyond what the law requires for the specific identifying information
that must be provided. They requested that the proposed regulations be
revised to require only a name, address, phone number, and one
identifying number such as either the national provider identifier, the
uniform provider identification number, or the tax identification
number.
Response: We are sympathetic to these commenters concerns, but we
believe that we have requested the minimum practical quantity of
information be provided in the affidavit that we, and carriers, need to
properly and uniquely identify opt-out physicians and practitioners.
Given the possibility that a large number of physicians or
practitioners could opt-out of Medicare, the potential for having
confusion among physician or practitioners with the same name or
business address is significant. This is especially true when the
additional factors such as the prevalence of the use of billing agents
and reassignments are considered.
We need sufficient information to ensure that no entity is billing
on behalf of an opt-out physician or practitioner. We also need
sufficient information to identify persons who have never been involved
in the Medicare program. In addition, and most importantly from the
physician's or practitioner's standpoint, we need what some physicians
and practitioners may believe to be duplicate information to ensure
that we have correctly identified the opt-out physician or practitioner
and have not incorrectly assumed that a physician or practitioner has
opted-out.
Failure to Properly Opt-Out (Sec. 405.430)
Difference Between Failing to Properly Opt-Out and Failing to Maintain
Opt-Out
Comment: Commenters asked that we clarify the difference between
failing to properly opt-out (Sec. 405.430) and failing to maintain opt-
out (Sec. 405.435).
Response: Failure to properly opt-out means failure to meet the
criteria that change a physician's or practitioner's status, from a
physician or practitioner who is bound by the Medicare claims filing
rules and limits on charges (that is, participating or
nonparticipating), to a physician or practitioner who is no longer
bound by Medicare claims filing and limits on charges and must
privately contract with Medicare beneficiaries (that is, an opt-out
physician or practitioner). The effects of failing to properly opt-out
as specified in Sec. 405.435(b) are the same conditions that existed
before the private contract provisions of section 4507 of the BBA were
effective. These conditions continue to exist for all physicians and
practitioners who do not properly opt-out by meeting all of the
requirements of these rules. A physician or practitioner who has never
filed an affidavit is bound by the rules in Sec. 405.430(b) because he
or she has not properly opted-out.
Failing to maintain opt-out means failure to continue to comply
with the requirements of properly opting-out, but only after having
properly opted-out. A physician or practitioner who has opted-out by
meeting the requirements of Sec. 405.410, but who fails to continue to
meet one of the requirements specified in Sec. 405.435(a), has failed
to maintain opt-out and is subject to the effects of Sec. 405.435(b).
Beneficiary rights when a physician or practitioner does not properly
opt-out
Comment: Commenters asked that we specify the beneficiary's rights
when the physician or practitioner fails to properly opt-out.
Specifically, are beneficiaries entitled to refunds for services
furnished under private contracts? If the answer is yes, are the
refunds based on Medicare rules, and does the pre-opt-out or post opt-
out status (participating versus nonparticipating) control the payment?
Response: Beneficiary rights when a physician or practitioner fails
to properly opt-out are specified in Sec. 405.430(b). However, we
realize that the proposed rule failed to indicate that a participating
physician in Part B of Medicare who has not properly opted-out may not
charge more than the deductible and coinsurance that applies to the
service furnished because, in the absence of the physician properly
opting-out of Medicare, the participation agreement to accept
assignment on all claims continues to apply. We have made the relevant
change to this section.
Repeated attempts to opt-out
Comment: Commenters asked us to clarify what happens when the
physician or practitioner fails to properly opt-out. Does a
participating physician have to wait until the next calendar quarter to
properly opt-out? Commenters wanted the regulations to specify that all
attempts to properly opt-out must meet the same criteria as if no opt-
out attempt had occurred.
Response: A physician or practitioner who fails to properly opt-out
continues to be bound by the Medicare claims filing and charge limit
rules identified in Sec. 405.430(b). However, he or she may make an
unlimited number of attempts to properly opt-out at any time. We
believe that the regulations are clear that the criteria for properly
opting-out as specified in Sec. 405.410 must be met for the physician
or practitioner to opt-out.
Failure to Maintain Opt-Out (Sec. 405.435)
Inclusion of failure to enter into a private contract as a failure to
maintain opt-out
Comment: Some commenters requested that the regulations specify
that the failure of a physician or practitioner who has properly opted-
out to privately contract with a beneficiary to furnish services, that
are not emergency or urgent care services, is a failure to maintain
opt-out. In those
[[Page 58858]]
cases, the commenters wanted the penalties for failure to maintain opt-
out to apply.
Response: We agree and have revised Sec. 405.435(a). Failure to
enter into a private contract with a beneficiary who requires services
that are neither emergency nor urgent care services is now a condition
that results in the physician or practitioner failing to maintain opt-
out as specified in Sec. 405.435(a)(5). Commenters have provided
information about situations in which physicians and practitioners who
opted-out of Medicare failed to enter into private contracts with
beneficiaries who did not need emergency or urgent care services. Those
beneficiaries subsequently learned that they would be wholly liable for
the physician's or practitioner's charges because they had opted-out of
Medicare. We believe that failing to privately contract after promising
to do so in the affidavit clearly violates the intent of the law. That
intent, we believe, is to ensure that beneficiaries have entered into
private contracts before they assume liability for payment of furnished
services without regard to charge limits.
Medicare payment when the beneficiary has not entered into a private
contract
Comment: Some commenters requested that we require that when the
opt-out physician or practitioner fails to enter into a private
contract before furnishing services that are not emergency or urgent
care services, the beneficiary be reimbursed by Medicare. In addition,
the physician or practitioner would have to refund to the beneficiary
any amount in excess of the limiting charge. Commenters indicated that
this would parallel longstanding policy in which Medicare pays the
first claim submitted by an excluded physician or practitioner.
Response: We have revised Sec. 405.435 to add failure to enter into
a private contract as a failure to maintain opt-out. Under these
provisions, the physician or practitioner would be required to refund
amounts in excess of the charge limits under the limited terms
described in Sec. 405.435(b). Under those terms, where a carrier
notifies a physician or practitioner that he or she appears to have
failed to maintain opt-out, the physician or practitioner would have 45
days to respond to the carrier with the good faith efforts that he or
she has taken to resolve the problem. In cases in which the physician
or practitioner did not sign private contracts, those good faith
efforts would have to include refunds to those beneficiaries of amounts
in excess of the charge limits (that is, the limiting charge for
physicians, and deductible and coinsurance for practitioners). Where a
carrier notified a physician or practitioner that there was an apparent
failure to maintain opt-out and he or she did not respond within 45
days with an explanation of how the problem was or would be solved, the
charge limits would apply after the 45th day, resulting in refund of
excess amounts if any are collected for the remainder of the opt-out
period. Where the physician or practitioner responded to the carrier
notice and resolved the problem, no refunds would be required and the
opt-out would continue unaffected.
In addition, we have added Sec. 405.435(c), which specifies that
payment may be made to beneficiaries in a similar manner as payment
made to beneficiaries who receive services from physicians and
practitioners who are excluded from Medicare by the Office of the
Inspector General (OIG).
Under a longstanding exclusion provision at 42 CFR 1001.1901(c),
payment may be made to a beneficiary who has not been notified of the
physician's exclusion, for the first claim submitted by the enrollee.
Payment to the beneficiary may also be made for services received by
the beneficiary no more than 15 days after the date of the carrier's
notice to the beneficiary that the physician has been excluded from
Medicare. Therefore, in Sec. 405.435(c), we have included similar
provisions with respect to physicians and practitioners who have opted-
out of Medicare, but failed to enter into private contracts before
furnishing services that are not emergency or urgent care services.
We agree with the commenters that it is not fair to deny
beneficiaries reimbursement for otherwise allowable services when they
had no reason to believe that Medicare would not pay for the furnished
services. We should point out, however, that as a practical matter,
payment to the beneficiary will probably be made after denial of the
beneficiary's claim and as part of the appeal process. In other words,
the beneficiary's claim initially would be denied on the basis that the
physician or practitioner opted-out. Should the beneficiary then appeal
on the basis that he or she did not enter into a contract with the
physician or practitioner, and should the physician or practitioner
fail to produce documentation that there was a contract, the
beneficiary's appeal would be allowed and the claim would be paid.
Comment: Commenters objected to any recovery of payment from the
physician or practitioner when the physician or practitioner failed to
maintain opt-out, because he or she failed to enter into a private
contract with the beneficiary before furnishing services that were not
emergency or urgent care services.
Response: As discussed above, we have revised Sec. 405.435 to
define failure of an opt-out physician or practitioner to enter into a
private contract as being a failure to maintain opt-out. When a carrier
notifies an opt-out physician or practitioner that he or she appears to
have failed to maintain opt-out by not entering into a private
contract, he or she may continue to opt-out if he or she makes good
faith efforts at fixing the problem that led to the failure to maintain
opt-out and notifies the carrier of these efforts within 45 days of the
carrier notice. When a physician or practitioner appears to have failed
to maintain opt-out by not entering into a private contract with a
Medicare beneficiary (except in emergency or urgent care cases), these
good faith efforts should include refunding amounts collected in excess
of applicable charge limits (that is, limiting charge for physicians
and deductible and coinsurance for practitioners) to beneficiaries.
Where the physician or practitioner makes good faith efforts to correct
the problem he or she would not be subject to the consequences of
failing to maintain opt-out. However, if he or she does not make good
faith efforts to fix the problem that resulted in violating the opt-
out, the consequences of Sec. 405.435(b) would apply.
Treatment of incidental failure to maintain opt-out
Comment: Some commenters indicated that the first time the carrier
becomes aware that a physician or practitioner failed to enter into a
private contract before furnishing services that were not emergency or
urgent care services, there should be a presumption that there was an
isolated error. They believed in those cases that no adverse
consequences should occur to the physician or practitioner. Some
commenters stated that there should be a process for dealing with
physicians and practitioners who demonstrate a pattern of failing to
enter into private contracts with beneficiaries, before furnishing
services that are not emergency or urgent care services.
Response: We agree that, as written, an isolated error causes the
physician or practitioner to fail to maintain opt-out. We also
recognize that isolated errors will occur and should not result in the
consequences provided in Sec. 405.435(b). We accommodated this concern
in our operating instructions to carriers. Consequently, we have
revised the
[[Page 58859]]
regulation at Sec. 405.435(b). We have limited the effects of failing
to maintain opt-out when the physician or practitioner has failed to
maintain opt-out in accordance with the provisions of Sec. 405.435(a),
by failing to make a good faith effort to advise carriers regarding how
they will correct violations of opt-out within 45 days of the date a
carrier brings those violations to their attention. This change
comports with the current operating procedures in place when a
physician or practitioner submits a claim for Medicare payment in
violation of the affidavit, in which he or she promised not to submit
claims.
Payment to physicians and practitioners when they fail to maintain opt-
out
Comment: Commenters indicated that it is unclear whether the
physician or practitioner would be paid anything for the services they
furnished if they fail to maintain opt-out. Commenters objected to what
they view as provisions that prevent them from collecting more than the
deductible and coinsurance if the physician or practitioner fails to
maintain opt-out.
Response: Physicians and practitioners who have opted-out and who
fail to maintain opt-out are not precluded from collecting payment from
the beneficiary. But if they failed to privately contract with a
beneficiary (other than in an emergency or urgent care case), they may
have to refund amounts in excess of the applicable charge limits to
those beneficiaries with whom they failed to privately contract in
order to preserve their opt-out status.
Specifically, under Sec. 404.435(b) when a physician or
practitioner fails to maintain opt-out, he or she is given 45 days
after a notice from the carrier to respond with a description of the
good faith efforts that he or she has made to correct the problem that
led to the failure to maintain opt-out. If the failure to maintain opt-
out was caused by the physician's or practitioner's failure to
privately contract with a beneficiary (other than one in need of
emergency or urgent care), then the good faith efforts would include
refunding to that beneficiary amounts collected in excess of the
applicable charge limits (that is, the limiting charge in the case of
physicians, and the deductible and coinsurance in the case of
practitioners). If the physician or practitioner does not respond with
a description of the good faith efforts taken to resolve the problem
that led to the failure to maintain opt-out, then the provisions of
Sec. 405.435(b) apply after the 45th day after the carrier notice and
the physician or practitioner become again required to submit claims
and are bound by the applicable charge limits (that is, the limiting
charge in the case of physicians, and the deductible and coinsurance in
the case of practitioners) for the rest of the opt-out period.
Medicare inspection of private contracts
Comment: Commenters stated that a very high threshold should be met
before we are allowed to inspect private contracts. Commenters wanted
the regulations to specify that we would be allowed to inspect private
contracts only if the request is reasonable and does not interfere with
the delivery of services. Commenters wanted the regulations to require
that we obtain beneficiary consent before asking to see the private
contract. Otherwise, they believed it is a violation of privacy. Some
commenters indicated that when it is alleged that a physician or
practitioner opted-out but did not enter into private contracts before
furnishing services that are not emergency or urgent care services,
settlement of the case should be on a case-by-case basis by the appeal
process.
Response: We anticipate that we will request to see private
contracts rarely, and only in cases where a beneficiary alleges that he
or she did not enter into a private contract before the service was
furnished. We anticipate we will have the consent of the beneficiary,
or his or her legal representative, to acquire a copy of the private
contract from the physician or practitioner who alleges that one was
entered into, and that the contract will be requested as part of the
processing of an appeal of a denial of a claim for services.
Application of effects of failure to maintain opt-out
Comment: Commenters objected to considering the provisions of
Secs. 405.435(a)(2), (3), and (4) to be a failure to maintain opt-out
resulting in the adverse effects of Sec. 405.435(b). Commenters
believed that the statute provides for the adverse effects in
Sec. 405.435(b) only if the physician or practitioner who has opted-out
submits a claim for Medicare payment. In addition, they believed that
we have exceeded what the law permits by providing adverse consequences
in these other cases:
<bullet> The physician or practitioner fails to use private
contracts that meet the requirements of Sec. 405.435(a)(2).
<bullet> The physician or practitioner fails to comply with the
emergency and urgent care rules as specified in Sec. 405.435(a)(3).
<bullet> The physician or practitioner fails to keep a copy of a
private contract or fails to permit us to review contracts on request
as specified in Sec. 405.435(a)(4).
In these cases, commenters believed that nothing supports applying
the penalties of Sec. 405.435(b) for failing to maintain opt-out, and
they objected that we do not apply the knowing and willful test in
these cases.
Response: We believe that under general rulemaking authority, we
have the authority to impose the requirements we believe are necessary
to implement the law in a manner that conforms with the intended
effect. We believe that it would be inconsistent with the intent of the
law if we could not ensure that--(1) private contracts adequately
protect beneficiaries who enter into them; (2) emergency and urgent
care services are provided without the patient being asked to enter
into a private contract; and (3) a private contract is available for
review when an appeal is based on the allegation that a contract was
not entered into.
Comment: Commenters wanted the regulations to specify that when the
physician or practitioner who has opted-out fails to maintain opt-out,
the physician or practitioner must refund amounts collected in excess
of the limiting charge for services he or she furnished before the
failure to maintain opt-out occurred.
Response: We have not made this change. When a physician or
practitioner has properly opted-out, he or she is not limited in what
he or she can collect from the beneficiary for services furnished
during the period in which he or she has properly opted-out.
As discussed previously, to avoid the consequences of failing to
maintain opt-out, the physician or practitioner must respond within 45
days after the carrier notice with good faith efforts to resolve the
problem (including refunding to the beneficiary amounts in excess of
the charge limits where the physician or practitioner failed to enter
into a private contract with a beneficiary who did not need emergency
or urgent care). However, if the physician or practitioner does not
respond within 45 days with good faith efforts to maintain opt-out, he
or she becomes bound by the consequences of failing to maintain opt-out
(including applicable charge limits), but only for services furnished
in the remainder of the opt-out period--not for services furnished
while he or she was in compliance with the opt-out.
[[Page 58860]]
Emergency and Urgent Care Services (Sec. 405.440)
Disagreements about emergency or urgent care services
Comment: Commenters asked what will happen if the physician or
practitioner furnishes services that they believe are emergency or
urgent care services, but the carrier disagrees. Will the physician or
practitioner be subjected to any penalties for failure to privately
contract? Commenters believed that this is particularly problematic in
instances of furnishing urgent care services, when the carrier or M+C
organization believes those services could wait more than 12 hours, but
the physician or practitioner disagrees. There should be some
protection for the physician or practitioner who believes that the
proper categorization of the needed furnished services was urgent care,
even if the physician or practitioner loses on appeal.
Response: We believe that changing the definition of emergency
care, from the ``anti-dumping'' definition specified at Sec. 489.24 to
the ``prudent layperson'' standard specified at Sec. 422.2, will offer
more protection to physicians and practitioners who are presented with
a beneficiary who believes he or she is in need of emergency or urgent
care services. Therefore, we have revised the text of emergency care
services to mean ``services furnished to an individual for treatment of
an `emergency medical condition' as that term is defined in Sec. 422.2
of this chapter.''
Comment: Commenters asked what oversight processes we will use to
ensure that physicians and practitioners that opt-out do not abuse
their ability to see patients without private contracts. The commenters
were concerned that beneficiaries may be left unprotected if Medicare
disagrees with the physician's or practitioner's view that the services
were emergency medical care or urgent care services. They were also
concerned that beneficiaries who believe that they need emergency
medical care or urgent care services may be coerced by physicians or
practitioners to enter into private contracts. The reason for that
coercion would be to protect the physician or practitioner from
potential conflict with the carrier, if the physician or practitioner
does not believe that the patient needs emergency medical care or
urgent care services.
Response: Section 1802(b)(2)(A)(iii) of the Act is clear that a
physician or practitioner cannot enter into a private contract with a
beneficiary if the private contract is entered into when the
beneficiary is facing an emergency or urgent health care situation. We
also extend this analysis to mean that, in case of a beneficiary
emergency, the beneficiary's legal representative cannot enter into a
private contract on the beneficiary's behalf. Because we are adopting
the prudent layperson standard the test would be whether the
beneficiary is a prudent layperson, and whether a prudent layperson
would have thought he or she was facing an emergency or urgent health
care situation under the particular circumstances involved.
Renewal and Early Termination of Opt-Out (Sec. 405.445)
Early termination of opt-out
Comment: Commenters asked that we clarify whether a physician or
practitioner who opted-out but then completed an early termination of
opt-out, may reapply for a subsequent opt-out period. They also asked
that we also identify what notice he or she must give to the
beneficiary.
Response: A physician or practitioner who opted-out of Medicare and
completed an early termination of opt-out may reapply for a subsequent
opt-out period under the same terms, including the same beneficiary
notice terms, that would apply if he or she had not opted-out and then
terminated opt-out.
We would note, however, that a physician or practitioner can
terminate opt-out early only once. Therefore, if a physician or
practitioner opts-out, then executes an early termination of opt-out,
and then submits a second affidavit opting-out again, he or she will
not be permitted early termination of that or any subsequent opt-out.
We expect that a single early termination of opt-out will be sufficient
to meet the needs of a physician or practitioner who has opted-out and
decides that it was a mistake. Moreover, permitting more than one early
termination of opt-out would be very difficult for carriers' systems to
accommodate and would impose a costly systems burden to them (and to
Medicare).
Comment: Commenters asked what participation status applies to a
physician or practitioner who completes early termination of opt-out.
In addition, they asked what payment status (participating versus
nonparticipating) applies to service charges for services furnished
during the aborted opt-out period.
Response: When a physician or practitioner terminates opt-out
early, he or she resumes the participation status that existed before
he or she opted-out. That participation status would apply to the
service furnished during the shortened opt-out period.
Medicare+Choice Organizations (Sec. 405.450)
Acquisition of information on opt-out physicians and practitioners by
Medicare+Choice organizations
In Sec. 405.455, we indicate that M+C organizations may not pay for
services of physicians or practitioners who opt-out of Medicare under
these rules. We also specify that M+C organizations must acquire the
information needed to implement this requirement from Medicare carriers
that have jurisdiction over the claims in the areas the M+C
organization serves.
We recognize that this approach for acquiring this information may
not be optimal and we want to streamline it. We welcome suggestions on
the specific information M+C organizations need to implement these
rules and the most efficient means by which they could receive it.
C. Payment for Outpatient Rehabilitation Services
The term outpatient rehabilitation therapy encompasses outpatient
physical therapy (including speech-language pathology) and outpatient
occupational therapy.
1. BBA 1997 Provisions Affecting Payment for Outpatient Rehabilitation
Services
a. Reasonable Cost-Based Payments. Section 4541(a) of BBA 1997
added new section 1834(k) to the Act. Section 1834(k)(2) establishes a
10-percent reduction in the reasonable cost of therapy services
furnished during 1998. The 10-percent reduction does not apply to
outpatient therapy services furnished by hospitals. In accordance with
this provision, we have revised our policy to make payment for
outpatient rehabilitation services furnished during 1998 based upon the
lesser of the charges imposed or the reasonable cost determined for
such services, reduced by 10 percent. The 10-percent reduction does not
apply to outpatient physical therapy or occupational therapy services
furnished by a hospital to an outpatient or to a hospital inpatient
entitled to benefits under Part A but who has exhausted benefits or is
otherwise not in a covered Part A stay.
As stated in our proposed rule, the salary equivalency guidelines
will remain in effect until all BBA provisions regarding a prospective
payment system for outpatient rehabilitation services are implemented.
The prospective payment system, which is effective for services
[[Page 58861]]
furnished on or after January 1, 1999, removes the need for salary
equivalency guidelines because providers will no longer be paid on a
reasonable cost basis for their therapy services. The salary
equivalency guidelines were a tool used to determine the reasonable
cost of therapy services provided by practitioners other than
physicians.
Comment: We received several comments stating that the 10-percent
payment reduction may cause certain small providers to cease operations
or cease providing services to Medicare beneficiaries. The commenters
also stated that the Congress did not adequately consider the impact of
the 10-percent reduction on small providers and that the Congress was
misled.
Response: The 10-percent payment reduction is required by BBA.
b. Prospective Payment System for Outpatient Rehabilitation
Services.
(1) Overview
Section 4541 of BBA adds a new section 1834(k) to the Act that
provides for a prospective payment system for outpatient rehabilitation
services and all services provided by CORFs. The prospective payment
system is effective for services furnished on or after January 1, 1999.
Section 1834(k)(1)(B) of the Act provides for payment for those
services to be made at 80 percent of the lesser of (1) the actual
charge for the services, or (2) the applicable fee schedule. Section
1834(k)(2) defines the applicable fee schedule amount as the amount
determined under the physician fee schedule, or, if there is no such
fee schedule established for those services, the amount determined
under the fee schedule established for comparable services as specified
by the Secretary.
The physician fee schedule is currently applied to certain
outpatient rehabilitation therapy services. It is now the basis of
payment for outpatient rehabilitation services furnished by physical
therapists in independent practice (PTIPs) and occupational therapists
in independent practice (OTIPs), physicians, and certain nonphysician
practitioners or incident to the services of these physicians or
nonphysician practitioners. The physician fee schedule has been the
method of payment for outpatient rehabilitation therapy services
provided by such entities for several years. As discussed in our
proposed rule, fee schedule payment will now apply when outpatient
physical therapy, occupational therapy, and speech-language pathology
services are furnished by rehabilitation agencies, public health
agencies, clinics, SNFs, home health agencies for beneficiaries who are
not eligible for home health benefits because they are not homebound or
to homebound beneficiaries who are not entitled to home health
benefits, hospitals (when such services are provided to an outpatient
or to a hospital inpatient who is entitled to benefits under Part A but
who has exhausted benefits, or is not entitled), and CORFs. The fee
schedule also applies to outpatient rehabilitation services furnished
under an arrangement with any of the cited entities that are to be paid
on the basis of the physician fee schedule. The fee schedule will not
apply to outpatient rehabilitation services furnished by critical
access hospitals. Under section 1833 of the Act as amended by section
4541 of BBA, these services will be paid on a reasonable cost basis.
Comment: We received one comment in support of delaying the
implementation of a prospective payment system for outpatient
rehabilitation services until April 2000 because implementation of the
hospital outpatient prospective payment system is being delayed. The
commenter stated that a delay would provide sufficient time for HCFA to
develop a site-of-service differential and, at the same time, would
allow for implementation of all revisions to hospital outpatient
billing. It was also noted that hospitals are faced with Year 2000
(Y2K) problems as well and that the piecemeal implementation of
outpatient regulations adds to the already daunting Y2K task.
Response: We disagree that development of a site-of-service
differential for outpatient rehabilitation services is a rational basis
for seeking to delay implementation of a prospective payment system for
outpatient rehabilitation services because as we noted in our proposed
rule, we find no legislative basis for making such a payment
differential. On the other hand, we are sensitive to the commenter's
concerns about the Y2K system compliancy challenges confronting
hospitals and their need to effectively and efficiently renovate their
systems. We face similar challenges and have therefore, to delay
implementation of certain BBA provisions such as the hospital
outpatient PPS to which the commenter refers. However, we will not be
delaying implementation of the outpatient rehabilitation PPS.
Implementation of hospital outpatient PPS must be delayed by the year
2000 system renovations because it requires massive system changes.
Major contractor systems will be affected and the consequence of these
required changes to the basic systems will be to change the entire way
fiscal intermediaries process and pay hospital outpatient and community
mental health claims (These latter claims will be paid under the
hospital outpatient PPS).
By contrast, implementation of the fee schedule provision for
outpatient rehabilitation services does not require that we develop an
entirely new system or even undertake extensive reprogramming of the
existing system in order to accommodate the new entities such as CORFs
and rehabilitation agencies that will bill under this system.
Basically, we can implement the fee schedule provision because it
involves extending billing under an existing system (the physician fee
schedule) to additional practitioners and services.
However, extension of the two $1,500 outpatient financial
limitations or caps on a per-beneficiary basis as proposed in our June
5, 1998 rule requires considerable new programming that we are not able
to undertake concurrent with our Y2K efforts. Therefore, we are
delaying full implementation of the caps, effective January 1, 1999. We
will implement them as discussed in our proposal as soon as possible
after January 1, 2000.
Effective January 1, 1999, we will begin employing a transitional
approach to implementing the caps on a provider/practitioner specific
basis. This approach, will require each provider/practitioner not
subject to the current limitations to cap their Medicare billings at
$1,500 per beneficiary. We describe this partial implementation measure
elsewhere in this rule under the section on financial limitations.
(2) Services Furnished by Skilled Nursing Facilities
Section 4432(a) of BBA added a new subsection(e) to section 1888 of
the Act to establish a prospective payment systems for SNFs. Under the
statute, effective for cost reporting periods beginning on or after
July 1, 1998, Medicare pays for covered Part A SNF stays on the basis
of prospectively determined payment rates that encompass all costs of
``covered SNF services'' furnished to an SNF resident. The statute
defines covered SNF services to include (1) post-hospital extended care
services paid for under Part A, and, (2) certain services that may be
paid under Part B and that are furnished to SNF residents receiving
covered post-hospital extended care services. Section 1888(e)(2)
provides for exclusion of specific services from the definition of
covered SNF services, but the statute explicitly states that the
exclusions do not encompass ``any
[[Page 58862]]
physical, occupational or speech-language therapy services regardless
of whether or not the services are furnished by, or under the
supervision of, a physician or other health care professional.'' Thus,
if an SNF resident is in a covered Part A stay, therapy services
furnished to the SNF resident are encompassed in the PPS payment and
Medicare does not make a separate Part B payment.
Under the new payment system for SNF inpatient services, and
consistent with current policy (which applied before enactment of BBA),
services furnished to SNF residents that are not covered under Part A
may nevertheless be covered under Part B. Section 4432(b) of BBA
amended section 1842(b)(6) of the Act to require that payment for most
services furnished to an individual who is a resident of an SNF,
including outpatient rehabilitation services, be made to the facility
(without regard to whether the service was furnished by the facility,
by others under arrangement with the facility, or under any other
arrangement). When the services are not being furnished directly, the
facility then pays the provider of therapy services. The consolidated
billing provision was scheduled to be effective for services furnished
on or after July 1, 1998. However, due to systems modification delays
in implementing SNF consolidated billing, instructions in Program
Memorandum (PM) AB-98-18 dated July 1998, as they apply to services and
supplies furnished to residents in a Part A stay in an SNF not yet on
the PPS and to the Part B stay (Part A benefits exhausted, posthospital
or level of care requirements not met), are delayed until further
notice. We announced this decision in a subsequent Program Memoranda,
that is, PM AB-98-35 dated July 1998.
Section 4432(b)(3) of BBA added a new paragraph (9) to section
1888(e) of the Act to provide that, with respect to a service covered
under Part B that is furnished to an SNF resident, the amount of
payment for the service is the amount provided under the fee schedule
for such item or service. This provision must be read in conjunction
with the provisions of section 4541 of BBA. Section 4541 added a new
section 1833(a)(8) to specify that the amounts payable for outpatient
rehabilitation services furnished by an SNF will be the amounts
determined under section 1834(k) of the Act. Section 1834(k) of the Act
provides that payment in 1998 is to be based on the lesser of the
charges imposed for these services or the adjusted reasonable costs
and, in 1999 and thereafter, 80 percent of the lesser of the actual
charge for the service or the physician fee schedule. Thus, as
discussed in our proposed rule, we have revised our policy so that Part
B services furnished to a SNF inpatient (Part A benefits exhausted,
posthospital or level of care requirements not met) remain payable on a
reasonable cost basis until January 1, 1999. Effective January 1, 1999,
the services will be paid in accordance with the physician fee
schedule.
The physician fee schedule amount applicable to services furnished
in a nonfacility setting will apply to the Part B services to
inpatients (Part A benefits exhausted, posthospital or level; of care
requirement not met) and other outpatient rehabilitation services
furnished by the SNF. The nonfacility amount applies because the
consolidated billing provision requires that the SNF be directly paid
for the entire therapy service (including facility costs) based on the
physician fee schedule. This is in contrast to the amount applicable to
physician services, excluding outpatient rehabilitation services,
billed for SNF residents. In this case, the physician payment is not
intended to cover the facility costs associated with the service and
the fee schedule amount applicable to services furnished in a facility
applies. Through PM AB-98-63 dated October 1998, we advised our fiscal
intermediaries to require SNFs to bill Medicare directly for all
outpatient therapy services provided to their SNF residents in a
noncovered Part A stay and to the their nonresidents covered under Part
B.
(3) Services Furnished by Home Health Agencies
Section 1833(a)(8)(A) applies the physician fee schedule to
outpatient rehabilitation services furnished by an HHA to an individual
who is not homebound. Most outpatient rehabilitation services furnished
by an HHA under section 1861(s)(2)(D) of the Act is to individuals who
are not homebound. The likelihood is great that most individuals who
are homebound and are receiving physical therapy, speech-language
pathology, or occupational therapy are entitled to home health
benefits. However, there may be some individuals who are homebound and
have not required a qualifying service for home health benefits but who
need occupational therapy services. If provided by an HHA, these
services could be provided under section 1861(s)(2)(D) of the Act.
Although section 4541 of BBA did not expressly address these services,
the statute allows them to be remain payable on a reasonable cost basis
under section 1861(v)(1) of the Act. All other services furnished by
the HHA will be paid under a prospective payment system.
(Implementation of an HHA prospective payment system that was scheduled
to take effect October 1, 1999 has been delayed due to our Y2K
compliancy efforts.) Section 1861(v)(1) provides that the reasonable
cost of any service is the cost actually incurred, excluding any costs
unnecessary to the efficient delivery of needed health services.
Section 1861(v)(1) also allows, use in determining reasonable cost,
to provide for the use of estimates of cost for particular items and
services. In enacting section 4541 of BBA, the Congress determined that
payment in the amounts dictated by the physician fee schedule
represents the appropriate level of payment for outpatient
rehabilitation services provided by HHAs to certain non-homebound
beneficiaries who do not qualify for the HHA benefit. (Of course,
pursuant to section 4541, this payment level applies to all suppliers
of rehabilitation services enumerated in the provision.) The Congress
has, thus, evinced its view that payment at the fee schedule level
adequately compensates HHAs for their expenses for this group of
services. We believe that the Congress' determination in this case
forms a basis for us to find that this level of payment represents an
acceptable estimate of the expenses of providing rehabilitation
services to other, homebound beneficiaries receiving services from
HHAs, but also not eligible for the HHA benefit. Thus, we are applying
the fee schedule payment level as our estimate of the reasonable costs
of these services for these beneficiaries receiving outpatient
rehabilitation services and not eligible for HHA benefits. Therefore,
Sec. 413.125 is modified to provide that effective for services
furnished on or after January 1, 1999, the reasonable cost of
outpatient rehabilitation services furnished by an HHA to homebound
patients who are not entitled to home health benefits may not exceed
the amounts payable under the fee schedule.
(4) Services Furnished by Comprehensive Outpatient Rehabilitation
Facilities
Section 4541(a)(1) of the BBA adds a new section 1832(a)(2)(D)(9)
to the Act to provide that all services furnished by a CORF, not just
outpatient rehabilitation services, will be paid the applicable fee
schedule amount. In cases in which there is no physician fee schedule
amount for the services, section 1834(k) of the Act specifies that
[[Continued on page 58863]]
[[Continued from page 58862]]
[[Page 58863]]
the applicable fee schedule amount will be the amount established for
comparable services as specified by the Secretary. Therefore, we
revised our policy so that the existing fee schedules for prosthetic
and orthotic devices, durable medical equipment, and supplies, and
drugs and biologicals apply when these services are furnished by a
CORF. We believe that these fee schedules, together with the physician
fee schedule, will encompass all CORF services other than nursing
services. The physician fee schedule amount applicable to services
furnished in a nonfacility setting will apply to the services furnished
by the CORF since no separate payment will be made for facility costs.
To establish a fee schedule amount for nursing services delivered
within a CORF, we created a new HCPCS code, G0128. We have defined this
code as direct face-to-face skilled nursing services delivered to a
CORF patient as part of a rehabilitative plan of care. It is a timed
code and can be billed for 10-minute intervals (when the initial
interval is longer than 5 minutes). G0128 is to be used for services
that are not included in the work or practice expense of another
therapy or physician service. An example might be a nurse who spends 33
minutes instructing a patient in the proper procedure of ``in and out''
urethral catheterization; in this situation, 3 units of G0128 would be
billed. We are setting the RVUs for this code at 0.26, based upon half
the value of the lowest level physician follow-up visit, HCPCS code
99211, in the nonfacility setting. This results in a payment that is
slightly more than the average wage reported by the Bureau of Labor
Statistics (BLS) for registered nurses, inflated to reflect benefits
and overhead (using the fringe benefit and expense factor used to
establish the salary equivalency guideline).
Comment: One commenter supported the use of the nonfacility
physician fee schedule for therapy services performed in an SNF and
CORF; however, clarification was requested as to whether the facility
or the nonfacility physician fee schedule will be used for hospital
outpatient departments.
Response: The physician fee schedule payment amount applicable to
outpatient rehabilitation services furnished by hospitals is the same
as that for SNFs, CORFs, and other outpatient rehabilitation providers.
That is, hospitals will be paid for these services under the
nonfacility component of the physician fee schedule.
(5) Site-of-Service Differential
We did not propose a site-of-service differential for providers of
outpatient rehabilitation services as suggested by some of the
providers prior to publication of our proposed rule. That is, we did
not propose a payment amount greater or lesser than that provided by
the physician fee schedule for some of the types of providers or sites
at which outpatient rehabilitation services are furnished.
As explained in our proposed rule, the law requires that these
services be paid the amount determined ``under the fee schedule
established under section 1848.'' Furthermore, we believe higher
payment amounts for certain facilities, such as CORFs or rehabilitation
agencies, would create payment incentives that favor one site or
setting over another. We believe the statute establishes a ``level
playing field'' for these services. We find no directive in the
statutory language or legislative history that we recognize higher
costs that some providers argue might be associated with furnishing
services in a provider setting. To the extent that CORFs or
rehabilitation facilities provide services to patients who need
additional care, CORFs or rehabilitation facilities may bill for
additional, medically necessary services. For these reasons, we are not
revising our policy to allow for a site of service adjustment or higher
payment amount for specific settings.
Comment: One commenter believes the work RVU should be the same
regardless of setting; however, the commenter contends that the
practice expense component may differ among the settings. The commenter
states that the impact of any unique regulatory requirements among
settings on the cost of furnishing services should be determined.
Response: As stated above, we find no statutory or legislative
basis for recognizing a distinct payment differential that is site
specific. Therefore, we are not revising our policy to allow for a
payment differential among settings.
(6) Mandatory Assignment
Section 1834(k)(6) of the Act, as added by BBA, establishes a
restraint on billing for outpatient rehabilitation therapy services;
that is, this provision requires that services paid under section
1834(k) of the Act are subject to mandatory assignment under the same
terms applicable to practitioners under section 1842(b)(18) of the Act.
Therefore, we have revised our policy in accordance with this provision
to require mandatory assignment for services provided under the
outpatient rehabilitation prospective payment system by hospitals,
SNFs, HHAs, rehabilitation agencies, public health agencies, clinics,
and CORFs. The mandatory assignment provision does not apply to therapy
services furnished by a physician or ``incident to'' a physician's
service or to services furnished by a physical therapist in private
practice or an occupational therapist in private practice. However,
when these services are not furnished on an assignment-related basis,
the limiting charge applies.
2. Uniform Procedure Codes for Outpatient Rehabilitation Services
Section 4541(a)(2) of BBA added section 1834(k)(5) to the Act. This
new statutory provision requires that claims submitted on or after
April 1, 1998 for outpatient physical therapy services, including
speech language pathology services and outpatient occupational therapy
services, include a code under a uniform coding system that identifies
the services furnished.
The uniform coding requirement is needed to ensure proper payment
under the physician fee schedule. Hospitals, SNFs, HHAs (for
individuals who are not eligible for home health services), CORFs, and
outpatient physical therapy providers must use HCPCS codes to report
outpatient rehabilitation services when furnished to their outpatients.
Hospitals and SNFs that provide outpatient rehabilitation services to
their inpatients who are entitled to benefits under Part A but who have
exhausted their benefits for inpatient services during a spell of
illness or to their inpatients who are not entitled to benefits under
Part A are also required to report HCPCS codes.
In March, 1998, we issued Program Memorandum AB-98-8 which
describes the coding for outpatient rehabilitation services and
identifies certain HCPCS codes available for billing by CORFs that are
not generally rehabilitation services, including vaccinations and
nursing services. This memorandum also specifies how these codes will
be reported on the UB-92. We assigned the various codes to revenue
centers, that is, physical therapy, occupational therapy, and speech-
language pathology, for purposes of applying the financial limitation
described below. Assigning codes to revenue centers was not intended to
limit the scope of practice or range of procedures that could be
furnished by therapists in a particular discipline. We recognize that
many therapy services, for example, physical therapy
[[Page 58864]]
modalities or therapy procedures as described by HCPCS codes are
commonly delivered by both physical and occupational therapists. Other
services may be delivered by either occupational therapists or speech-
language pathologists.
Therefore, in July 1998, we issued PM A-98-24 which in effect
constituted a reissuance of PM A-98-8 in its entirety. PM A-98-24 was
intended, in part, to clarify PM AB-98-8 regarding the reporting of
HCPCS codes for outpatient rehabilitation and CORF services and to
instruct fiscal intermediaries to eliminate edits installed to match
revenue centers to outpatient rehabilitation HCPCS codes in order to
cap therapy services. HCFA did not intend for such edits to be
installed and employed. Thus, PM A-98-24 instructed fiscal
intermediaries to eliminate the edits for services furnished on or
after October 1, 1998. However, in response to industry concerns, on
August 6, 1998, we issued a memorandum to all fiscal intermediaries
advising them to remove immediately any coding edits imposed to match
outpatient rehabilitation HCPCS codes to revenue codes.
Comment: We received three comments regarding PM A-98-24 issued
July 1998. The commenters stated that confusion remains regarding the
effective date of the memorandum. Also, they urged that we instruct
carriers to not deny claims based on the practitioners' failure to
comply with coding requirements until there is a clarification
regarding the manner in which the coding requirement is to be
implemented. One commenter recommended that fiscal intermediaries be
required to adhere to revised PM A-98-24, effective immediately. The
commenter contended that claims wrongly denied based on PM AB-98-8
should be promptly paid based on the claims originally submitted by
providers.
Response: We apologize for the confusion. As noted above, PM A-98-
24 carried an effective date of October 1, 1998 for fiscal
intermediaries to remove any edits installed to match revenue center to
HCPCS coding for outpatient rehabilitation services. As also stated
above, on August 6, 1998 we issued a subsequent memorandum to all
intermediaries advising them to remove the edits immediately. Providers
and practitioners were encouraged to resubmit any claims that were
incorrectly denied due to misinterpretation of our instructions for
billing outpatient rehabilitation services using HCPCS codes.
Comment: We received one comment recommending that the definition
of outpatient rehabilitation services be expanded to include payment
for low-vision training. The commenter stated that Medicare's failure
to cover low-vision training places beneficiaries at risk for extreme
out-of-pocket expenditures for transportation services, home-bound
visits, and psychological counseling.
Response: We have not accepted the commenter's recommendation.
Outpatient rehabilitation services are clearly defined in the statute.
Low-vision training is not specifically mentioned in the statute, and
we find no statutory or legislative basis for including low-vision
training in the definition of outpatient rehabilitation services.
Therefore, we cannot arbitrarily expand our definition of outpatient
rehabilitation to encompass low-vision training.
Since the statute does not specifically identify low-vision
training as a separate Medicare benefit and does not provide a basis
for including it under the outpatient rehabilitation benefit, carriers
have the discretion to cover these low-vision training services if they
determine that they meet the statutory requirements applicable to
covered services and are determined to be medically reasonable and
necessary.
Comment: A commenter recommends that CPT codes 92520, 94799, and
psychiatric therapeutic codes after 90804 be added to the list of
outpatient rehabilitation services. The commenter stated that code
94799 is currently recognized by Blue Cross and Blue Shield of Florida.
The commenter also stated that, in addition to code 90804, other
psychiatric therapeutic codes should be added for assessments and
community resource education, referral and advocacy, family
conferences, and home assessments.
Response: The commenter asked that we add code 92520, laryngeal
function studies, to our list of outpatient therapy codes. Our data
show that this code is almost entirely billed by otolaryngologists. Our
standard for the inclusion of diagnostic tests as outpatient
rehabilitation services is as follows:
<bullet> If the primary purpose of a diagnostic test, at times
performed by therapists, is to assess the appropriateness or
effectiveness of outpatient therapy services or to guide additional
treatment by a physical therapist, an occupational therapist or speech-
language pathologist, then the test is considered to be outpatient
therapy or rehabilitation services; or
<bullet> If the primary purpose of the diagnostic test is to
provide information on decisions for future medical or surgical
treatment or to assess the effect of previous medical or surgical
treatment, then the diagnostic test is not considered to be an
outpatient therapy or rehabilitation service.
Because the purpose of code 92520 is not clear to us and because
our data show that it is performed overwhelmingly by otolaryngologists,
we suggest that providers and practitioners who believe it meets the
above criteria as an outpatient rehabilitation service provide
information to their Medicare contractors and the contractors can
approve it if it meets the coverage criteria of being ``medically
necessary.'' We advised our carriers and fiscal intermediaries in PM
AB-98-24 that they may recognize codes other than those identified in
our instruction as outpatient rehabilitation services to the extent
that the codes represent services that are determined to be medically
necessary and within the scope of practice of the practitioner or
therapist billing the service.
The commenter asked that code 94799, unlisted pulmonary services or
procedures, be added to the list of outpatient rehabilitation services.
Again, we suggest that practitioners and providers that wish to use
this code to describe an outpatient rehabilitation service discuss with
their Medicare contractor the specific services or procedures being
provided when this code is used. Before this code can be used, the
Medicare contractor needs to determine whether the services are
``medically necessary.''
The commenter also asked that we add other psychotherapy codes from
the family of codes that includes 90804 that is on our list of
outpatient rehabilitation services. Clinical psychologists and clinical
social workers who deliver services in CORFs can bill any of the
psychotherapy codes except for the ones that involve medical evaluation
and management. These services are billed under Part B and are
submitted to carriers on the HCFA form 1500. Therefore, these codes
will not be added to our list of outpatient rehabilitation services.
Comment: One commenter recommended adding to our final rule the
statement contained in PM A-98-24 that denotes that other codes may be
considered to represent outpatient rehabilitation services to the
extent that the services are determined to be medically reasonable and
necessary and can be billed as outpatient rehabilitation services.
[[Page 58865]]
Response: Although we have included the statement in the text in
the regulation, we will consider other codes to be outpatient
rehabilitation codes under the terms we have stated.
Comment: One commenter requested that we clarify in the final rule
that Addendum F contains the codes for reporting outpatient
rehabilitation services.
Response: We appreciate the suggestion. It was inaccurately
reported in the proposed rule that Addendum E contains a listing of
outpatient rehabilitation therapy codes. It should have read that
Addendum F contains such a listing. We have made the appropriate
correction in this rule.
3. Financial Limitation
a. Overview. Outpatient rehabilitation therapy services are subject
to annual financial limitations or caps beginning January 1, 1999. (The
amount of the current cap is $900.) There will be a $1,500 per-
beneficiary annual limitation or cap on incurred expenses for
outpatient physical therapy services including outpatient speech-
language pathology services. A separate $1,500 per-beneficiary
limitation will apply on incurred expenses for outpatient occupational
therapy services. The annual limitation does not apply to services
furnished directly or under arrangements by a hospital to an outpatient
or to an inpatient who is not in a covered Part A stay. The limitation
will apply to outpatient rehabilitation services furnished by a
separately-certified hospital-based provider, such as a hospital-based
SNF. The limitation also applies to outpatient rehabilitation services
furnished by a physician or nonphysician practitioner, or incident to a
physician's professional services or to a nonphysician practitioner's
professional services.
As stated above, there is a single $1,500 limitation for outpatient
physical therapy services which includes outpatient speech-language
pathology services. As amended, section 1833(g) of the Act applies a
single $1,500 limitation to ``physical therapy services of the type
described in section 1861(p).'' Section 1861(p) defines outpatient
physical therapy services and includes speech-language pathology
services within that definition.
Outpatient rehabilitation services are subject to a 20-percent
coinsurance amount. Under the outpatient prospective payment system,
the beneficiary will be responsible for 20 percent of the applicable
fee schedule amounts. The $1,500 limitation is on incurred expenses. If
a beneficiary has already satisfied the Part B deductible, the maximum
amount payable by the Medicare program is $1,200, that is, 80 percent
of $1,500. Beginning January 1, 2002, the $1,500 annual limitations or
caps will be increased by the percentage increase in the MEI.
In addition to outpatient physical therapy services and outpatient
occupational therapy services (other than those provided by a
hospital), the limitation applies to physical therapy services
(including speech-language pathology services) and occupational therapy
services ``of such type which are furnished by a physician or as
incident to a physician service.'' As discussed elsewhere in this
document, Medicare covers under certain conditions services performed
by nurse practitioners, clinical nurse specialists, and physician
assistants that would be physicians' services if furnished by a
physician. We are applying the financial limitation to therapy services
furnished by these nonphysician practitioners because such therapy
services are by definition the same type as are furnished by
physicians. Similarly, we have revised our policy to apply the
financial limitation to therapy services furnished incident to these
nonphysician practitioner's services. We have included in Addendum D a
listing of the specific services that are subject to the limitation
when furnished by a physician or practitioner directly or incident to
his or her services. Such outpatient rehabilitation services included
in Addendum D furnished either directly or incident to the services of
a physician or practitioner are always subject to the financial
limitation. Other services such as casting, splinting, and strapping
may be used in the treatment of conditions (for example, fractures or
sprains) or as part of the postsurgical treatment or medical treatment
when no other rehabilitation services are delivered. If the services
are delivered by a physical or occupational therapist, speech-language
pathologist, therapy assistant or therapy aide, are part of a
rehabilitation plan of care, or involve services included in the
aforementioned Addendum D, then the services are subject to the cap.
These outpatient rehabilitation services are delineated in Addendum E
and must be identified with a discipline-specific modifier. Addendum F
contains a listing of commonly-utilized outpatient rehabilitation
therapy codes. Other codes may be considered for payment as outpatient
rehabilitation services to the extent that the services are determined
to be medically reasonable and necessary and those that can be
performed within the scope of practice of the therapist, physician, or
nonphysician practitioner billing the code. Payment for certain HCPCS
codes will be made on a basis other than the physician fee schedule in
hospital outpatient departments. Other HCPCS codes represent CORF
services. Further, PM AB-98-63 dated October 1998 provides additional
program instructions regarding the use of HCPCS codes for outpatient
rehabilitation therapy services.
With regard to ``incident to'' services, we note that section
4541(b) of BBA amended section 1862(a) of the Act to require that
outpatient physical therapy services (including speech-language
pathology services) and outpatient occupational therapy services
furnished ``incident to'' a physician's professional services meet the
standards and conditions (other than any licensing requirement
specified by the Secretary) that apply to therapy services furnished by
a therapist. This provision was effective January 1, 1998 and was
implemented through program instructions.
The financial limitations apply only to items and services
furnished by nonhospital providers and therapists under the outpatient
physical therapy (including speech-language pathology) and the
outpatient occupational therapy benefit (section 1861(s)(2)(D) of the
Act) and therapy services furnished by physicians and nonphysician
practitioners or incident to their services. The limitations do not
apply to diagnostic tests covered under section 1861(s)(3) of the Act
or to items furnished or covered under the durable medical equipment
benefit.
Comment: Some commenters urged us to repeal the limitation.
Response: We have no authority to repeal the annual financial
limitation as set forth in BBA. An annual per beneficiary limit of
$1,500 will apply to all outpatient physical therapy services
(including speech-language pathology services). A separate $1,500 limit
will also apply to all occupational therapy services. As noted above
the annual limitations do not apply to services furnished directly or
under arrangements by a hospital to an outpatient or to an inpatient
who is not in a covered Part A stay. This limitation applies to
expenses incurred on or after January 1, 1999.
Comment: Several commenters want us to delay implementing the
financial limitation while others asked that, if we proceed with
implementation, we clarify how we would implement it. We received one
comment suggesting that we delay the implementation of the annual
limitation until we develop a
[[Page 58866]]
system of tracking the aggregate amount of speech-language pathology
expenses incurred by a beneficiary.
Response: As previously stated, because of our efforts to become
Y2K compliant, with the exception of qualified therapists in
independent practice, we are not able to make the appropriate systems
changes to fully implement the caps on a per-beneficiary basis at this
time. Instead, we will use a transitional measure, whereby providers
and practitioners (those not currently subject to the caps, for
example, physicians and nonphysician practitioners) will be held
accountable for tracking incurred expenses for each beneficiary to
ensure they do not bill Medicare for beneficiaries that have met the
annual $1,500 limitation at their facility for each separate
limitation. This means that SNFs will be directly responsible for the
billing of all outpatient rehabilitation services and the tracking of
incurred expenses of those services when furnished to SNF residents not
in a covered Part A stay and SNF nonresidents receiving outpatient
rehabilitation services from the SNF.
However, the provider and the practitioner may submit bills to
Medicare for the sole purpose of receiving no-pay notices to bill
Medicaid or other insurers.
It is noted that the current annual per beneficiary financial
limitation applied to outpatient physical therapy services including
speech-language pathology services furnished by PTIPs is increased from
$900 to $1,500 effective January 1, 1999 for PTPPs. In addition, the
current annual per beneficiary financial limitation applied to
outpatient occupational therapy services is increased from $900 to
$1,500 effective January 1, 1999 for OTPPs. As cited, for these
qualified therapists only, the financial limitations continue to be
applied on an annual per beneficiary basis rather than on a per
provider basis.
Comment: Many commenters believed there should be three separate
annual financial limitations, that is, one each for physical therapy,
occupational therapy, and speech-language therapy services. They argue
that the Congress never intended to include speech-language pathology
services within the physical therapy cap because speech therapists have
never been defined as independent therapists and were never subject to
the current $900 cap.
Response: As stated above, section 1861(p) of the Act defines the
term outpatient physical therapy services to include speech-language
pathology services. The language in BBA specifically makes provision
for physical therapy services and occupational therapy services in
applying the annual financial limitation and does not separately
mention speech-language pathology services. It is our position that BBA
does not include a separate cap for speech-language pathology services,
and that there are only two financial limitations (OT and PT that
includes speech-language therapy services).
Comment: Two commenters oppose the imposition of the $1,500 cap
because it is not sufficient to cover the cost of physical therapy for
many common diagnoses or cost of care for typical rehabilitation cases.
One of the commenters noted that MedPAC found in its June 1998 report
to Congress that one third of the patients receiving outpatient
rehabilitation services from rehabilitation agencies and CORFs exceeded
either the combined $1,500 cap on outpatient physical therapy and
speech-language pathology or the $1,500 cap on outpatient occupational
therapy.
Response: The commenter is correct in stating that the MedPAC's
study of a 5-percent sample of Medicare outpatient rehabilitation
claims for 1996 did find that about one-third of all patients receiving
outpatient rehabilitation services from rehabilitation agencies and
CORFs exceeded the $1,500 caps. However, the study noted that because
most Medicare beneficiaries received the services in hospital
outpatient departments in 1996, the percent of all patients impacted by
the $1,500 caps is considerably less, that is, only 10 percent of all
outpatient physical and speech therapy patients receiving services in
hospital outpatient departments, rehabilitation agencies and CORFs and
only 2 percent of all occupational therapy patients in those three
settings.
We plan to carefully study this issue. As discussed elsewhere in
this document, BBA requires that we submit a report to the Congress by
January 1, 2001 that recommends viable options for replacing the
current dollar caps that take into account patient diagnosis and prior
use of services.
Comment: One commenter stated that the limitation should apply only
to therapy services furnished by physical therapists and occupational
therapists, and not to therapy services furnished by physicians.
Another commenter contends that the cap applies solely to therapists
and physicians furnishing outpatient rehabilitation services under a
plan of care. Neither commenter believes that nonphysician
practitioners should be allowed to perform therapy services. These
commenters argue that only physical therapists or services provided
under the supervision of a physical therapist should be reimbursed by
Medicare. The commenters maintain that the definition of physical
therapists as referenced in Sec. 485.705(b) and the coverage guidelines
specified in section 2210.B of the MCM and 3101.8B of the MIM are not
met if the services are provided by persons other than physical
therapists. In addition, the statute does not extend the cap to
services furnished by practitioners other than OTIPs and PTIPs.
Response: Section 4541 of BBA provides for a prospective payment
for outpatient rehabilitation services. The operative word in the
statute is ``services''. Reference is made both to the payment for
outpatient therapy services and comprehensive outpatient rehabilitation
services on the basis of the physician fee schedule and to the
financial limitation for all rehabilitation services. The fee schedule
is applied to outpatient therapy or rehabilitation services without
regard to the practitioner who furnishes the service. Physical and
occupational therapy services furnished by physicians and certain other
recognized practitioners are payable under the physician fee schedule.
A nonphysician practitioner who provides services that would be
physicians' services if furnished by a physician under a specific
enumerated benefit in the statute would be considered as the physician
treating the beneficiary. Thus, a nonphysician practitioner would be
considered as the physician treating the beneficiary when he or she
furnishes outpatient physical therapy and occupational therapy
services. Nonphysician practitioners who meet this definition are
physician assistants (section 1861(s)(2)(K)(I) of the Act); and nurse
practitioners and clinical nurse specialists (sections
1861(s)(2)(K)(ii) and 1861(s)(2)(K)(iii) of the Act), operating within
the scope of their State licenses.
B. Use of Modifiers to Track the Financial Limitation. We have
established three discipline-specific modifiers for use in tracking the
financial limitation or cap. They are listed below.
GN Services delivered personally by a speech-language pathologist or
under an outpatient speech-language pathology plan of care;
GO Service delivered personally by an occupational therapist or under
an outpatient occupational therapy plan of care; or
GP Service delivered personally by a physical therapist or under an
outpatient physical therapy plan of care.
[[Page 58867]]
Reporting of these modifiers will also assist us in gathering data
on who is providing the services, and the frequency and duration of the
services. Many of the services, for example, physical modalities or
therapeutic procedures as described by HCPCS codes, are commonly
delivered by both physical and occupational therapists. Other services
may be delivered by either occupational therapists or speech-language
pathologists. For these services, we expect the claim to include a
modifier that describes the type of therapist who delivered the
service; if the service was not delivered by a therapist, then the type
of therapy plan of care under which the service is delivered would be
specified. If the type of therapy is not listed in the modifier field,
the claim would be rejected and sent to the provider for resubmission.
Comment: We received one comment that supports our proposal to use
modifiers that will be discipline-specific to identify whether a plan
of care is for physical therapy or occupational therapy. However, the
commenter also favors the addition of modifiers that will allow for the
identification of physician and nonphysician services that are provided
under a plan of care. Claims from physicians and nonphysicians with a
modifier would be subject to one of the caps, while claims without a
modifier would not be subject to any cap. Another commenter stated that
the proposed policy to reject a claim and send it to the provider for
resubmission if the type of therapy is not listed in the modifier field
is inappropriate and should not be adopted. The commenter contends that
there are legitimate cases in which the codes in Addendum D will be
reported but should not be applied against the caps, for example, if
the services are furnished by a nonphysician practitioner or a
physician but they are not provided under a therapy plan of care. This
contention is also shared by another commenter who strongly opposed our
proposal to apply services against the caps for occupational therapy
and physical therapy including speech-language pathology services based
strictly on an arbitrary reporting of certain CPT codes. The
presumption with this approach is that therapy services are furnished
whenever codes listed in Addendum D are reported
Response: At this time, we have decided to only use the discipline-
specific modifiers listed in the response above. These modifiers will
differentiate between either the type of therapist (physical therapist,
occupational therapist, speech-language pathologist) personally
providing the service or the discipline plan of care (physical,
occupational, and speech-language pathology). For example, if modifier
GP is used, the physical therapist must deliver personally the service
or the service must be delivered under a physical therapy plan of care.
Therefore, in addition to the personal provision of the therapy service
by the physical therapist, a physician or nonphysician practitioner can
also furnish the physical therapy service. We believe that additional
modifiers are not needed to delineate services provided by physicians
and nonphysician practitioners under a therapy plan of care; however,
we believe that the commenter's statement is valid regarding the
possible use of codes listed in Addendum D for other than therapy
purposes, that is, not under a therapy plan of care. We are exploring
the use of an additional modifier to indicate that the service denoted
by the code was not provided under a therapy plan of care. By the time
that the financial limitation or cap is fully implemented, we expect to
have established the additional modifier. Until that modifier is in
place, claims without a discipline-specific modifier will be returned
for resubmission.
Comment: A commenter stated that the cap will be difficult to track
administratively and recommended that there be a clearer delineation of
when services will be subject to the limit and what the controlling
factors will be (including the type of professional delivering the
service, whether there is a rehabilitation plan of care, and the nature
of the service), a listing or examples of services and the
circumstances under which they would not be included under the cap.
Response: The commenter's request for clarification is based on a
full implementation of the financial limitation or cap. Because of Y2K
issues, the financial limitation or cap will not be fully implemented
as mandated by statute effective January 1, 1999. Therefore, it is our
intention to carefully review, consider, and address the commenter's
concerns as we move from the transitional implementation of the cap on
a per-provider basis to the full implementation of the cap on an annual
per-beneficiary basis.
Comment: One commenter stated that the mechanics of implementing
the cap should be clarified. The commenter said that there are serious
concerns regarding the calculation of the cap, time of billing, and
timing of processing payments that would be fed into the database. The
commenter is concerned about the effect of medical review, for example,
whether payment will be reserved when a claim is filed in a timely
manner, subjected to medical review, denied, and successfully appealed,
and the claim was originally filed well before the cap is met. Several
commenters were of the opinion that it is administratively difficult
for all parties (beneficiaries, providers, and contractors) to track
the cap even with the use of the modifiers. They want us to address
specific issues regarding tracking and the use of modifiers before
implementation of the cap, and to also notify beneficiaries regarding
the tracking procedure. These specific issues include a clear
delineation of when services are subject to the limit, what the
controlling factors will be (including the type of professional
delivering the service, whether there is a rehabilitation plan of care,
and the nature of the service), a listing or examples of the services
and the circumstances under which they would be excluded from the cap.
Response: These are issues that will be addressed prior to the full
implementation of the financial limitation or cap. Because there is the
distinct possibility that systems requirements will change before such
full implementation, it does not seem prudent at this time to detail
the mechanics of the future implementation of the cap. However, it is
our current thinking that these concerns will be discussed and
clarified in companion program instructions issued to the Medicare
carriers and fiscal intermediaries.
Comment: A commenter stated that there should be a timely, readily
accessible means (such as a query system) for beneficiaries and
providers to ascertain the status of the beneficiary's outpatient
therapy benefits.
Response: This question relates to the full implementation of the
financial limitation or cap on an annual per-beneficiary basis. We are
exploring mechanisms by which both the beneficiary and the provider can
be informed in a timely and accurate manner, the amounts that have been
expended by the beneficiary for outpatient physical therapy services
including speech language pathology services and for outpatient
occupational therapy services. These methods will be discussed in any
program memorandum or other program instruction that we determine will
be the vehicle for the conveyance of the beneficiary cap status
information.
C. Treatment of Services Exceeding the Financial Limitation. As
required by section 1833(g) of the Act, as amended by section 4541 of
BBA, we revised our
[[Page 58868]]
policy to establish two annual per-beneficiary limits of $1,500. There
will be (1) an annual per-beneficiary limit for all outpatient physical
therapy services excluding hospital outpatient therapy services
furnished to an outpatient or an inpatient who is not in a covered Part
A stay and, (2) an annual per beneficiary limit for all outpatient
occupational therapy services excluding hospital outpatient therapy
services furnished to an outpatient or an inpatient who is not in a
covered Part A stay. As stated previously, outpatient physical therapy
services include speech-language pathology services. A provider of
outpatient rehabilitation services with a provider agreement under
section 1866 of the Act, as well as physicians, PTIPs and OTIPs, will
be allowed to collect payment from a beneficiary for therapy services
after the $1,500 limit is reached. This is consistent with current
policy allowing PTIPs and OTIPs to collect payment from a beneficiary
for therapy services in excess of the current $900 limit.
Required Congressional Report on Financial Limitation
We note that a report to the Congress is due from the Secretary no
later than January 1, 2001. This report must include recommendations on
the establishment of a revised coverage policy of outpatient physical
therapy services, including speech-language pathology services and
outpatient occupational therapy services. The revised policy must be
based on a classification of individuals by diagnosis category and
prior use of services in both inpatient and outpatient settings. The
report should include recommendations on how such durational limits by
diagnostic category could be implemented in a budget-neutral manner.
Comment: It was recommended by a commenter for the report to the
Congress that, in addition to basing a revised policy on classification
by diagnosis category and prior use of services, an individual's
functional status should be a component of any system that purports to
address a patient's need for rehabilitation.
Response: As we develop the report to the Congress, we will
consider the feasibility of the recommendation.
4. Qualified Therapists
Section 1861(p) includes services furnished an individual by a
physical therapist who meets licensing and other standards prescribed
by the Secretary if the services meet the conditions relating to health
and safety the Secretary finds necessary. The services must be
furnished in the therapist's office or the individual's home. By
regulation, we have defined therapists meeting the conditions for
coverage of services under this provision as physical therapists in
independent practice. The conditions for coverage are set forth in part
486, subpart D (Conditions for coverage: Outpatient Physical Therapy
Services Furnished by Physical Therapists in Independent Practice) and
require that the services be provided by a therapist in independent
practice under Sec. 410.60. Under Sec. 410.60, a therapist in
independent practice is one who:
<bullet> Engages in the practice of therapy on a regular basis.
<bullet> Furnishes services on his or her own responsibility
without the administrative and professional control of an employer.
<bullet> Maintains at his or her own expense office space and
equipment.
<bullet> Furnishes services only in the office or patient's home.
<bullet> Treats individuals who are his or her own patients and
collects fees or other compensation for the services.
Under Sec. 486.151 (Conditions for coverage: Supervision), all
therapy services must be furnished under the direct supervision of a
qualified therapist in independent practice. In other words, the
therapist in independent practice must be on the premises whenever
services are provided to Medicare beneficiaries, including services
provided by a licensed physical therapist. This long-standing
requirement has been controversial with therapists in independent
practice. For example, a therapist in independent practice cannot have
more than one office open for services at the same time since he or she
could not be on both premises at once.
We are revising our policy to replace the existing ``Conditions for
Coverage: Outpatient Physical Therapy Services Furnished by Physical
Therapists in Independent Practice'' (part 486, subpart D), which
requires survey and certification, with a simplified criteria for
physical therapists in private practice that would use a carrier
enrollment process. The impetus for this change comes from
congressional statements associated with the fiscal year 1997
appropriations process. Statements in both the House and Senate
committee reports accompanying HCFA's fiscal year 1997 appropriations
addressed the issue of requiring that the certified physical or
occupational therapist in independent practice directly supervise all
services performed by his or her employees, even if those employees are
fully-licensed therapists. The House committee report urged that we
modify the regulations so that the certified therapist need not be on
premises to supervise other licensed therapists. The Senate urged us to
review this concern and recommend regulatory or instructional changes.
We are redefining those therapists who are qualified under section
1861(p) of the Act. That is, we would discontinue the focus of the
regulation on their ``independent'' status (which is not statutory) and
recognize therapists in private practice who are employed by others
and, therefore, do not meet our current ``independent'' criteria. This
would be consistent with health and safety concerns and would conform
to normal private sector practice standards. The following new
requirements replace the current ones for qualified therapists:
<bullet> The term ``independent'' is dropped and the benefit would
be for an individual physical therapist or occupational therapist in
private practice.
Private practice includes an ``individual'' whose practice is in an
unincorporated solo practice, unincorporated partnership, or
unincorporated group practice. Private practice also includes an
``individual'' who is practicing therapy as an employee of one of the
above or of a professional corporation or other incorporated therapy
practice. However, private practice does not include individuals when
they are working as employees of a provider. A provider as defined in
Sec. 400.202 includes a hospital, CAH, SNF, HHA, hospice, CORF, CMHC,
or an organization qualified under part 485, subpart H (Conditions of
Participation for Clinics, Rehabilitation Agencies, and Public Health
Agencies as Providers of Outpatient Physical Therapy and Speech-
Language Pathology Services), as a clinic, rehabilitation agency, or
public health agency.
<bullet> In implementing the statutory requirement that services be
furnished to an individual in the therapist's office, or in the
individual's home, ``in his office'' is defined as the location(s)
where the practice is operated, in the State(s) where the therapist
(and practice, if applicable) is legally authorized to furnish
services, during the hours that the therapist engages in practice at
that location.
A therapist in private practice must maintain a private office, if
services always are furnished in patients' homes. However, if services
are furnished in private practice office space, that space would have
to be owned, leased, or
[[Page 58869]]
rented by the practice and used for the exclusive purpose of operating
the practice. For example, because of the statutory restriction on the
site of services, a therapist in private practice cannot furnish
covered services in an SNF. Therefore, if a therapist wished to locate
his or her private office on site at a nursing facility, special care
would need to be taken. The private office space could not be part of
the Medicare-participating SNF's space, and the therapist's services
could be furnished only within that private office space. Neither the
therapist nor any assistants or aides who help furnish services could
be employed by the SNF during the same hours that they are working in
the private practice. Another example where special attention would be
needed is space that generally serves other purposes and is only used
by a therapy practice during limited hours. For example, a therapist in
private practice may furnish aquatic therapy in a community center pool
on Wednesday mornings. The practice would have to rent or lease the
pool for those hours, and the use of the pool during that time would
have to be restricted to the therapist's patients, in order to
recognize the pool as part of the therapist's own private office during
those hours.
In describing other services that are specifically limited to the
patient's home, the statute uses qualifying language. For example, the
durable medical equipment definition in section 1861(n) of the Act
refers to a patient's home as ``including an institution used as his
home other than an institution that meets the requirements of
subsection (e)(1) of this section or section 1819(a)(1).'' This
definition of home is codified under our regulations at Sec. 410.38(b).
The same definition always has been used in the Medicare Carriers
Manual for purposes of covering therapists' services in a patient's
home. We are continuing the current practice and are adopting the
definition formally in this regulation.
<bullet> Assistants and aides have to be personally supervised by
the therapist and employed directly by the therapist, by the
partnership or group to which the therapist belongs, or by the same
private practice that employs the therapist. Personal supervision
requires that the therapist be in the room during the performance of
the service. Levels of supervision are defined in Sec. 410.32 of our
regulations.
<bullet> The therapist must be licensed or otherwise legally
authorized to engage in private practice. We understand that all States
license or certify physical therapists, so no alternative personnel
qualifications need to be specified.
<bullet> Each therapist enrolls ``as an individual'' with the
carrier.
There would be no survey and no certification by HCFA. The Medicare
carrier would verify that the qualifications proposed in
Secs. 410.59(c)(1) or 410.60(c)(1) of our regulations are met. All
applicants for new enrollment would become subject to these new rules
and procedures upon the effective date of the final rule. For
transition purposes, we intend that independent therapists who are
certified and enrolled at that time would be ``grandfathered''
temporarily and would become subject to the new enrollment rules and
procedures at the time of their next regular periodic reenrollment.
These changes would address the concern that current rules require
each independent therapist to personally supervise services performed
by any other licensed therapists that he or she employs. Under our
proposal, each individual therapist in a practice could qualify to
separately enroll, and enrolled therapists would not be required for
purposes of Medicare to be supervised by their employer. These changes
also address the concern that current rules prohibit an independent
therapist from being employed by any entity. Under our proposal, a
variety of employment situations would be permitted.
These new requirements are established in a revised Sec. 410.60(c)
for physical therapists. To date, the statutory requirements for
coverage of outpatient occupational therapy services have not been
codified. We are codifying these requirements by establishing a new
Sec. 410.59 for outpatient occupational therapy services. The
regulations section for outpatient occupational therapy parallels the
Sec. 410.60 requirements for outpatient physical therapy, as revised in
this final rule. We are also making conforming changes in Sec. 410.61
to include occupational therapy.
Therapists in private practice do not participate in the Medicare
program in the same way that ``providers of services'' do. Though they
must be approved as meeting certain requirements, unlike ``providers of
services,'' they do not execute a formal provider agreement with the
Secretary as described in 42 CFR part 489 (Provider Agreements and
Supplier Approval). Like physicians, they do have the option of
accepting a beneficiary's assignment of his or her claim for Medicare
Part B benefits and of becoming a Medicare-participating supplier that
agrees to accept assignment in all cases.
Comment: One commenter strongly supports the carrier enrollment
process for physical therapists instead of the existing conditions of
coverage. However, the commenter wanted operational issues addressed
such as a specification that payments will be made under the practice
or corporation's tax ID number for services furnished by physical
therapists in private practice who are employees of other practices or
corporations. This is the same payment system used by a physician group
practice, and the treating therapist's Medicare number or license
number would be included on the bill. In addition, the commenter urged
that the same process be used for the carrier enrollment process as for
the current physician enrollment. Another commenter supported the
changes for OTPPs; however, assuming that payment is made to the
individual, the commenter inquired as to whether group numbers would be
assigned so that payment could be issued to the group under the tax
identification number of the business entity.
Response: We will use the same enrollment and billing process as is
currently used for individual physicians and physician group practices.
This process is delineated at section 1030.7 of the Medicare Carriers
Manual, HCFA Pub. 14-Part 4. We note that payment is not made on the
basis of the corporate or group practice tax identification number.
This number is just one of the data elements that can be related to the
Medicare individual and/or group billing number.
Comment: A commenter recommended that direct supervision of
assistants and aides be required instead of personal supervision. The
commenter provided that direct supervision would be consistent with
state laws, the supervision requirements for nonphysician personnel
performing services in a physician's office, and with the supervision
requirements for aides and assistants of PTIPs.
Another commenter agreed that personal supervision over therapy
aides by a qualified occupational therapist or qualified occupational
therapy assistant is appropriate. However, the commenter strongly
disagreed with the proposal to require personal supervision over
occupational therapy assistants and instead urged the adoption of a
policy for practicing occupational therapists whereby occupational
therapy assistants can perform covered services under the general
supervision (that is, initial direction and periodic inspection) of a
qualified occupational therapist. In
[[Page 58870]]
addition, the commenter thought the policy should state that either a
qualified occupational therapist or a qualified occupational therapy
assistant must provide personal supervision when therapy aides are used
to furnish services.
A commenter stated that qualified occupational therapists who are
not Part B suppliers, but who are employed by a therapist who is
enrolled as a Part B supplier, should not be subject to the personal
supervision requirement. In addition, it was suggested that the
proposed language at Sec. 410.59(c)(2) regarding supervision of
occupational therapy services should be revised as follows:
``Occupational therapy services are performed by, or under the
general supervision of, the occupational therapist in private practice.
Services provided by therapy aides must be performed under the personal
supervision of an occupational therapist or occupational therapy
assistant. All services not performed personally by the therapist in
private practice must be performed by employees of the practice, under
the applicable level of supervision by the therapist, and included in
the fee for the therapist's services.''
Response: Statements contained in the House and Senate committee
reports accompanying the 1997 appropriations recommended modifications
in our supervision requirements for qualified therapists. As stated,
the House committee report urged a regulatory change in the requirement
that certified therapists be on the premises to supervise other
licensed therapists. We were also urged by the Senate to review this
concern and recommend regulatory or instructional changes. We have
addressed the concern expressed in the House and Senate 1997
appropriations committee reports and will allow certified therapists to
be off the premises when other licensed therapists are present.
However, we do not believe that we have the authority to modify the
supervision requirements for therapy (physical, occupational or speech-
language pathology) assistants and aides. Therefore, we are maintaining
our current requirement that therapy assistants and aides have to be
personally supervised by the therapist and employed directly by the
therapist, by the partnership or group to which the therapist belongs.
In accordance with the aforementioned policy, there is no change in the
proposed language found at Sec. 410.59(c)(2).
Comment: We received one comment on our proposed qualifications for
occupational therapists. One organization recommends that we require
evidence of successful completion of a national certification
examination recognized by the regulatory authority in the State of
practice. Reasons given for the addition of this requirement are that
practice varies by jurisdiction and unsuccessful exam candidates often
move from State to State obtaining temporary licenses in spite of
repeatedly failing qualifying exams. The commenter adds that the
particular test they recommend is required in every jurisdiction.
Response: We believe that this recommendation has merit. However,
we believe that it requires further study and discussion to assess its
impact before we can consider it for adoption. Therefore, we believe it
would be more appropriate to consider this recommendation as a proposal
for a subsequent publication rather to accept it for adoption in this
final rule.
Comment: One commenter supports our proposed set of changes
addressing independent practicing occupational therapist services, but
adds that as Medicare moves to embrace market based competition, the
focus should be on the outcomes delivered rather than the input
credentialing. There should be a commitment to move beyond burdensome
input criteria that add costs and restrict competition. The commenter
suggests that, as part of that initiative, we establish a meaningful
time horizon for moving to outcomes-based performance measures.
Response: This is a welcomed recommendation. In recent years, when
revising our conditions of participation for various entities, we have
emphasized outcomes-based measures. However, this is an area that
requires further study in order to apply this concept to our conditions
for occupational therapists practice.
Comment: One commenter stated that verification should be provided
in the final rule that section 1861(p) of the Act requires a physician
to have services furnished by a licensed physical therapist or under
the supervision of such a therapist when billing for physical therapist
services incident to the physician's professional services.
Response: Section 1861(p) of the Act does not set forth the
requirements as specified by the commenter. As previously stated,
section 4541(b) of the BBA 1997 amended section 1862(a) of the Act to
require that outpatient physical therapy services (including speech-
language pathology services) and occupational therapy services
furnished ``incident to'' a physician's professional services meet the
standards and conditions (other than any licensing requirement
specified by the Secretary) that apply to therapy services furnished by
a therapist. In May 1998, we issued Transmittal No. 1606 of the
Medicare Carriers Manual, Part 3--Claims Process which implemented this
provision that was effective January 1, 1998. Section 2218(A) of the
Medicare Carriers Manual requires that physical therapy services
provided by a physician or by an incident-to employee of the physician
in the physician's office or the beneficiary's home must be provided
by, or under the direct supervision of, a physician (a doctor of
medicine or osteopathy) who is legally authorized to practice physical
therapy services by the State in which he or she performs such function
or action.
5. Plan of Treatment
We are proposing to revise Secs. 410.61(e), 424.24(c)(4)(i), and
485.711(b), which concern the plan of treatment review requirements for
outpatient rehabilitation therapy services. Section 1861(p) of the Act
defines these therapy services, in part, as services furnished to an
individual who is under the care of a physician and for whom a plan,
prescribing the type, amount, and duration of therapy services that are
to be furnished, has been established by a physician or a qualified
therapist and is periodically reviewed by a physician.
Currently, providers that furnish outpatient rehabilitation therapy
services are required to have a physician review the plan of treatment
and recertify the need for care at least every 30 days. We proposed
revising our policy to allow the physician to review and recertify the
required plan of treatment within the first 62 days and at least every
31 days after the first review and recertification. The current
requirement for the review of a plan of treatment for patients of
physical therapists in independent practice is similar in that the
physician must review the plan at least every 30 days. We proposed
changing this review requirement and requiring that the physician
review and recertify the plan of treatment within the first 62 days and
at least every 31 days thereafter.
We recommended these changes because it was our understanding that
an initial 2-month (62 day) review is consistent with the usual therapy
course of treatment. It is also consistent with our current therapy
requirements in the home health setting. These changes were intended to
reduce the burden on providers, patients, and physicians by eliminating
the current requirement for an initial review within the first 30 days.
After the first 62 days, we believed
[[Page 58871]]
that patients receiving outpatient rehabilitation services are likely
to show significant progress that warrants subsequent reviews every 31
days. Changes in the patient's level of function and need for continued
therapy can be expected to occur more frequently after the first 2
months of therapy. We believe this subsequent review schedule will help
control potential over-utilization that results in excessive therapy to
some Medicare patients.
Under our proposed policy, the therapists would be required to
immediately notify the physician of any changes in the patient's
condition, and physicians retain the ability to review the care at
closer intervals if necessary.
Comment: We received comments from six outpatient rehabilitation
associations supporting our proposal and two comments from orthopedic
surgical associations strongly opposing it. The opposing orthopedic
associations informed us that 62 days is not the usual course of
treatment. They argued that every patient's need for therapy is unique
depending on the condition. While 62 days may be appropriate for some
back injuries, they contend it would be inappropriate for a hand, foot,
or shoulder injury. Therapy is appropriate as long as the patient
continues to make progress and should be discontinued when the
patient's condition has plateaued and no further progress is being
made. They stated this can best be determined by the referring
physician periodically evaluating the patient's progress and recovery.
They believe the current 30-day requirement is appropriate and should
be maintained.
Response: After careful review of the comments received and study
of the issue by our medical staff, we are retaining our current 30-day
requirement and rescind our proposal. As indicated above, our intent,
in part, was to establish consistency with the initial review period
for HHA therapy services. However, subsequent to our proposal we
further learned that HHA patients may not receive the same level of
intensity of therapy services as patients receiving them under the
outpatient rehabilitation benefit. Our medical staff believes that
patients in the latter group are seen more often by their therapists
than are HHA patients. Therefore, the rate of progression between the
two patient groups may be different and warrant a 30-day rather 62-day
initial plan of treatment review for beneficiaries receiving outpatient
rehabilitation services.
Comment: We received several comments to allow nonphysician
practioners such as nurse practitioners, physician assistants, and
clinical nurse specialist to certify the therapy plan of care.
Response: Because we allow nonphysician practioners, that is, nurse
practitioners, clinical nurse specialists, and physician assistants to
prescribe medicine, we have also decided that nonphysician practioners
who have knowledge of the therapy case may certify therapy plans of
treatment.
Result of the evaluation of comments: We are adopting our proposal
to pay all outpatient rehabilitation services and CORF services under
the physician fee schedule. We are delaying full implementation of the
financial limitations on outpatient rehabilitation services furnished
by nonhospital entities due to our Y2K efforts until after January 1,
2000. We are not adopting a site-of-service differential for outpatient
rehabilitation providers as recommended by commenters. Regarding
proposed qualifications for therapists, we are adopting them as
proposed and are not accepting the recommendation that we require
occupational therapists to provide evidence of successful completion of
a national certification examination. We anticipate that this issue
will be further studied and discussed in a subsequent rule. We are
withdrawing our proposal to extend from 30 days to 60 days the time
required for physician recertification of the plan of treatment.
D. Payment for Services of Certain Nonphysician Practitioners and
Services Furnished Incident to Their Professional Services
Nonphysician practitioners' services have been covered by Medicare
since the inception of the program; originally the law did not provide
for separate payments for these services. Coverage and payment of
nonphysicians' services was primarily within the context of section
1861(s)(2)(A) of the Act as implemented by section 2050 of the Medicare
Carriers Manual, for the payment of services incident to a physician's
professional services. In recent years, the Congress has expanded
Medicare coverage of nonphysician practitioners' services in certain
settings to improve beneficiary access to medical services. Separate
Part B coverage is specifically authorized for certain nonphysician
practitioners' services and for services and supplies furnished as
incident to those services.
For purposes of this rule as it applies to nonphysician
practitioners, we define nonphysician practitioners as nurse
practitioners, clinical nurse specialists, certified nurse-midwives,
and physician assistants. With respect to services and supplies
furnished as incident to a nonphysician practitioner's services, we are
requiring that, to be covered by Medicare, the services must meet the
longstanding requirements in section 2050 of the Medicare Carriers
Manual applicable to services furnished as incident to the professional
services of a physician. Therefore, we specify, in new Secs. 410.74(b),
410.75(d), 410.76(d), and 410.77(c) that Medicare Part B covers
services and supplies (including drugs and biologicals that cannot be
self-administered) furnished as incident to the nonphysician's services
only if these services and supplies would be covered if furnished by a
physician or furnished as incident to a physician's professional
services. In addition, Secs. 410.74(b), 410.75(d), 410.76(d), and
410.77(c) specify the various requirements for these incidental
services and supplies.
Coverage and Payment for Nurse Practitioners' Services Subsequent to
BBA
Effective for services furnished on or after January 1, 1998,
section 4511 of BBA authorizes nurse practitioners to bill the program
directly for services furnished in any setting, regardless of whether
the settings are located in rural or urban areas, but only if the
facility or other providers of services do not charge or are not paid
any amounts with respect to the furnishing of nurse practitioners'
services. Accordingly, a new Sec. 410.75 of this rule specifies the
qualifications for nurse practitioners, lists the requirements for the
professional services of a nurse practitioner and the requirements for
services furnished incident to the professional services of a nurse
practitioner. This new section also specifies the process that applies
to the provision of nurse practitioners' services.
New Secs. 405.520(a), (b), and (c) of this rule provide the general
rule and requirements for nurse practitioners. A new paragraph (16) is
added to Sec. 410.150(b) to authorize payment for nurse practitioners'
services when furnished in collaboration with a physician in all
settings located in both rural and urban areas. A new paragraph (c) is
added to Sec. 414.56 of this rule to set forth the payment amount for
nurse practitioner services.
All of the independent nurse practitioners and clinical nurse
specialists commenting on the proposed rule and all of the major
organizations representing these nonphysician practitioners vigorously
opposed the proposed Federal guidelines for
[[Page 58872]]
collaboration; those provisions would apply only in States with no
collaboration requirement.
Comment: The commenters that objected to the proposed guidelines
for collaboration requested that we adopt a policy that strictly defers
to State laws, rules, and regulations regarding collaboration. The
commenters insisted that the absence of State guidelines for
collaboration does not necessitate the intrusion of Federal guidelines.
In fact, they claimed that where State laws or guidelines do not
include a requirement for collaboration, or fail to provide specific
detailed requirements for a collaborative relationship, it is not a
matter of accident or simple omission, but of conscious State policy
regarding professional scope of practice. In these cases, they believe
that there should be no collaboration requirement.
Additionally, these commenters stated that they believe that there
is a better understanding at the State level of the practice situations
encountered and the evolving advancements in health care issues.
Therefore, many States have determined that this relationship is best
defined by the professionals themselves, rather than through detailed
statutory legislation.
The commenters claimed that they are not aware of any substantial
problems in interpreting or implementing the collaboration requirement
in the 7\1/2\ years that carriers have been applying the collaboration
requirement without the benefit of Federal rule. According to one
commenter, currently at least 26 States have no statutory or regulatory
requirement for collaboration as a condition that nurses must satisfy
in order to practice, and in the 16 States that have physician
collaboration or supervision practice requirements, none are as
restrictive as the guidelines that we proposed.
One of the commenters that opposed the proposed collaboration
guidelines stated that if more detailed provisions such as these are
imposed on nurse practitioners and clinical nurse specialists, there
will be a cost attached to be borne by the practitioner or consumers
through cost shifting. Another commenter expanded upon this comment by
posing the concern about how collaboration might affect States that
authorize nurses to practice independently. The commenter stated that
imposition of the collaboration requirement in ``independent practice
States'' could create a new area for potentially fraudulent or abusive
practices. For example, a physician may refuse to provide collaboration
in a given area or may refuse to enter into a collaboration agreement
unless the nurse pays a fee to the physician. This practice may violate
the anti-kickback statute.
One commenter stated that our proposal restricted nurses to a
collaboration arrangement with one physician, and that the State's
nurse practice act does not restrict nurses to a collaborative practice
arrangement with one physician. The requirement of collaboration with
one physician raises the cost to patients, restricts access, and
requires unnecessary, additional services. Additionally, this same
commenter raised concerns about the phrase in the collaboration
guidelines that states ``or as provided by other mechanisms defined by
Federal regulations,'' because she believes that this is the first time
this wording has appeared in the definition of collaboration and it
appears to give unlimited authority for regulation of practice.
One of the professional organizations representing nurse
practitioners maintained that the proposed collaboration guidelines
would particularly harm Medicare beneficiaries located in rural areas,
where nurse practitioners may be the sole source of health care within
the community. If a nurse practitioner is not able to receive payment
for care due to the inability to locate a physician in that geographic
area who is able to perform the functions of a collaborating physician,
these areas may not be served at all.
Response: Section 6114 of OBRA 1989 established the nurse
practitioner benefit as a separate benefit under the Medicare Part B
program and also required that nurse practitioners collaborate with a
physician in order for their services to be covered under Medicare.
Therefore, nurse practitioners have always been required by Medicare
law to collaborate with a physician. The collaboration requirement is a
specific and distinct requirement, separate from the requirement that
these nonphysician practitioners must practice within the scope of the
law of the State where the services are performed.
The 1989 Omnibus Budget Reconciliation Act, adding section
1861(aa)(6) of the Act, defined the term, ``collaboration'' as a
process in which a nurse practitioner works with a physician to deliver
health care services within the scope of the practitioner's
professional expertise, with medical direction and appropriate
supervision as provided for in jointly developed guidelines or other
mechanisms as provided by the law of the State in which the services
are performed. The BBA of 1997 increased payment amounts to nurse
practitioners and expanded the settings where they can receive
payments, but the BBA did not change the collaboration requirement. In
the absence of State law regarding the collaborative relationship that
nurse practitioners must share with a physician when furnishing their
services to Medicare beneficiaries, we must implement the collaboration
requirement as required by law.
However, we did not intend to introduce new burdensome requirements
to address situations where there is no State requirement for
collaboration. Therefore we are removing the proposed definition of
collaboration that applies to these situations and will require that,
in the absence of State law or regulations governing collaboration
relationships, we will require nurse practitioners and clinical nurse
specialists to document their scope of practice and indicate the
relationships that they have with physicians to deal with issues
outside their scope of practice. The proposed rule was not intended to
require that a nurse practitioner must furnish services in
collaboration with only one physician. We fully expect that these
nonphysician practitioners may have collaborative relationships with
numerous physicians and will continue to do so in the future. We did
not intend to introduce any new costs to the practices of nurse
practitioners and clinical nurse specialists.
Comment: Five major associations and professional organizations
representing physicians, medical directors, and hospitals commented in
favor of the proposed collaboration guidelines and suggested
alternative criteria that they believed the Medicare program should use
to determine coverage and payment for the services of nurse
practitioners and clinical nurse specialists.
Two of these organizations commented that ``appropriateness'' is
the key criterion that Medicare contractors should use in determining
whether services of these nonphysician practitioners should be covered
under the ``reasonable and necessary'' provisions of section
1862(a)(1)(A) of the Act. These commenters suggested that we consider
services to be appropriate if they are furnished by qualified
personnel; further, the commenters believed that, in the case of
psychiatry services, these nonphysician practitioners are not qualified
as physicians are to perform a psychiatric diagnostic interview
examination (CPT codes 90801 and 90802), nor are they qualified to
furnish services represented by any of the psychotherapy CPT codes
[[Page 58873]]
that include medical evaluation and management. Therefore, these
commenters asserted, all of the pertinent sections of the regulations
text should be revised to read that the nonphysician practitioners are
not performing services otherwise precluded from coverage because of
one of the statutory coverage exclusions listed under section
1862(a)(1)(A) of the Act.
Response: In order for any service to be covered under Medicare, it
must be determined to be reasonable and necessary, and therefore,
appropriate. Accordingly, we do not believe that it is necessary to
revise the regulations text to specify that services furnished by these
nonphysician practitioners can be covered only when they are not
otherwise excluded from coverage under section 1861(a)(1)(A) of the
Act. It is already stated in the proposed rule at sections
410.74(a)(2)(iii), 410.75(c)(3), and 410.76(c)(3) that services
performed by any of these nonphysician practitioners are not covered if
they are otherwise excluded from coverage because of a statutory
exclusion. Additionally, it is our understanding that some nurse
practitioners and clinical nurse specialists specialize in mental
health. Therefore, if State law authorizes these nonphysician
practitioners to perform mental health services and evaluation and
management services that would otherwise be furnished by a physician or
incident to a physician's services, psychiatric nurse practitioners and
clinical nurse specialists could bill for psychiatric diagnostic
interviews and any of the psychotherapy CPT codes that include medical
evaluation and management.
Comment: One association representing hospitals urged us to clarify
in the final rule all of the settings in which separate payment to
nurse practitioners and clinical nurse specialists will not be made.
Also, the commenter suggested clarification regarding whether Medicare
will continue to pay hospitals for the facility component of hospital
outpatient department services when separate payment is made to these
nonphysician practitioners for their professional services furnished in
hospital outpatient departments.
Response: Payment is made to nurse practitioners and clinical nurse
specialists for their professional services furnished in all settings,
with the exception of RHCs and FQHCs. (The professional services of all
practitioners are bundled in these two settings, and Medicare payment
is made to the facility for such services under an all-inclusive
composite rate.) However, when these nonphysician practitioners furnish
services in hospital outpatient departments, Medicare will continue to
make payment to the hospital outpatient department for the facility
component of hospital outpatient department services.
Comment: Two other organizations commented that we should require
that the employer of a nurse practitioner or a clinical nurse
specialist bill for his or her professional services. The commenter
stated that technically, some nurses can practice without direct
supervision, but not independently of the supervising physician since
the physician must review all records within 2 weeks. The commenter
believes that safe and high quality medical care requires that
diagnosis, evaluation, treatment, and management decisions be made by
physicians who directly supervise nonphysician practitioners on-site.
The commenter argues that, if payment is made directly to the nurses,
the physician has no way of verifying what is billed when an employer
relationship does not exist. Also, because collaboration does not
require that the physician be present while services are furnished, and
it does not require a physician to make an independent evaluation of
each patient, there is no assurance that safe, high quality services
are being performed.
Response: The law no longer requires that the employers of nurse
practitioners and clinical nurse specialists bill for their services,
as it does for physician assistants. The law does maintain the
requirement, however, that these nonphysician practitioners must
furnish their services in collaboration with a physician. Nurse
practitioners and clinical nurse specialists have been educated and
specially trained to furnish primary care and certain other services
that have traditionally been furnished by physicians. As long as the
services that nonphysician practitioners furnish are medically
reasonable and necessary, meet Medicare requirements, and fall within
the scope of services that they are licensed to perform, the Medicare
program covers the services.
Comment: Numerous nurse practitioners and clinical nurse
specialists commented that Secs. 410.75(d) and 410.76(d) that pertain
to services and supplies furnished incident to the professional
services of a nurse practitioner or clinical nurse specialist should be
clarified to state that these nonphysician practitioners need not be
present in the same room where the services are being provided, but may
be present and available in the office suite.
Additionally, these same commenters requested the elimination of
the list of examples of professional services performed by nurse
practitioners and clinical nurse specialists at Sec. Sec. 410.75(e)(3)
and 410.76(e)(3), asserting that the list is too limited, confusing,
and ultimately unnecessary.
Response: We agree that it may be more appropriate to include the
list of examples of services in manual instructions to provide guidance
to contractors to use in processing claims. Therefore, we are removing
the listing of examples of services that can be provided by physician
assistants at section 410.74(d)(3), nurse practitioners at section
410.75(e)(3), and clinical nurse specialists at section 410.76(e)(3).
Comment: One commenter suggested a language change to the
requirement that ``incident to'' services be of a type that are
commonly furnished in a physician's office, to also include a reference
to the offices of other health professionals.
Response: The ``incident to'' requirements for nonphysician
practitioners are the same requirements that apply to physicians and
that have been in place since the inception of the Medicare program.
The various ``incident to'' requirements are currently interpreted at
section 2050 of the Medicare Carriers Manual. We will not amend any of
the ``incident to'' requirements at this time.
Comment: A few nurses' associations commented that the proposed
qualifications for nurse practitioners and clinical nurse specialists
should be amended to clarify that these individuals must be licensed or
certified by a professional association or an accrediting body that
has, at a minimum, eligibility requirements that meet certain
standards. One commenter stated that the accrediting body could be one
that is recognized by us. These commenters explained that most
organizations that certify nurses are not professional associations
themselves; rather they are separately incorporated accrediting bodies.
For example, the American Nurses Association does not certify nurse
practitioners or clinical nurse specialists, but the American Nurses
Credentialing Center (ANCC) does by utilizing standards developed by
the nurse profession.
Response: Currently, the qualifications for nurse practitioners at
section 2158 of the Medicare Carriers Manual require that such an
individual be certified as a primary care nurse practitioner by the
American Nurses' Association or by the National Board of Pediatric
Nurse Practitioners and Associates. (Section 2160 of the Medicare
Carriers Manual does not contain a specific certification criteria
[[Page 58874]]
for clinical nurse specialists.) Thus, the manual recognizes the ANCC
as an appropriate certifying body for nurse practitioners.
Comment: One comment made was directed specifically toward the
qualifications for nurse practitioners at Sec. 410.75(b) of the
proposed rule. One academy representing nurse practitioners stated that
the intent of the law is to pay nurse practitioners who are licensed in
their States to practice as such. Therefore, the qualifications for
nurse practitioners should be that the individual be a registered nurse
who is authorized to practice as a nurse practitioner in accordance
with State law. This academy believes that the inclusion of additional
requirements will exclude some fully qualified nurse practitioners who
are certified by national certifying bodies that recognize
grandfathering laws in the States and by States that currently use
program accreditation or certification rather than national
certification in their licensing processes for nurse practitioners.
Response: We agree with the commenter that the intent of the law is
to pay nurse practitioners who are licensed in their States to practice
as such. However, we believe that State licensure should not be the
only qualification criterion that would enable nurse practitioners to
bill the Medicare program directly for their professional services.
Therefore, we will revise the qualification requirements to ensure that
for Medicare purposes, appropriate individuals can bill the program for
services furnished to Medicare beneficiaries.
Comment: One college representing nurse practitioners raised
concerns about the types of services for which nurse practitioners can
bill the Medicare program. The college stated that it wishes to ensure
that we intend to permit a nurse practitioner to bill within a group
practice setting for the services of all other licensed health care
professionals and technicians in that practice. The commenter stated
that, although the proposed rule does not indicate a problem with this
billing arrangement, it would appreciate a specific statement from us
about the arrangement.
Response: A nurse practitioner within a group practice setting
would be permitted to bill the Medicare program for the services of all
other licensed health care professionals and technicians within the
practice, provided the services of others in the practice are furnished
incident to the nurse practitioner's professional services and all the
``incident to'' requirements are met.
Comment: The college also stated that it is concerned that the
proposed rule does not list nurse practitioners as designated providers
of outpatient physical therapy and outpatient speech-pathology
services. The college asks that the language of Secs. 410.60 and 410.62
be amended to include nurse practitioners as nonphysician practitioners
who are authorized to bill for these types of services.
Response: Nurse practitioners, clinical nurse specialists, and
physician assistants may order physical therapy, occupational therapy,
and speech-language pathology services in the case where the services
are medically reasonable and necessary and the State in which they are
practicing authorizes them to do so. Also, these nonphysician
practitioners may also certify and recertify the plan of treatment for
physical therapy, occupational therapy, and speech-language pathology
services providing they are authorized by State law to perform such
services. Accordingly, Sec. 410.60 and 410.62 regarding physical
therapy, occupational therapy, and speech-language pathology will be
revised to include these nonphysician practitioners as designated
providers of such services.
Result of evaluation of comments: We have determined that for
purposes of Medicare Part B payment, a nurse practitioner must--
<bullet> Possess a master's degree in nursing;
<bullet> Be a registered professional nurse who is authorized by
the State in which the services are furnished, to practice as a nurse
practitioner in accordance with State law; and
<bullet> Be certified as a nurse practitioner by the ANCC or other
recognized national certifying bodies that have established standards
for nurse practitioners as stated above.
We have removed the alternate proposed definition of collaboration
in Secs. 410.75(c)(2)(iv) and 410.76(c)(2)(iv) of the proposed rule.
For purposes of Medicare coverage, the collaboration requirement will
state that nurse practitioners and clinical nurse specialists must meet
the standards for a collaborative process, as established by the State
in which they are practicing. In the absence of State law governing
collaborative relationships, collaboration is a process in which these
nonphysician practitioners have a relationship with one or more
physicians to deliver health care services. Such collaboration is to be
evidenced by nurse practitioners or clinical nurse specialists
documenting their scope of practice and indicating the relationships
that they have with physicians to deal with issues outside their scope
of practice. Nurse practitioners and clinical nurse specialists must
document this collaborative process with physicians. The collaborating
physician does not need to be present with the nurse practitioner or
clinical nurse specialist when the services are furnished or to make an
independent evaluation of each patient who is seen by the nurse
practitioner or clinical nurse specialist.
Also, we are deleting the proposed listing of examples of services
that can be provided by physician assistants, nurse practitioners and
clinical nurse specialists.
Coverage and Payment for Clinical Nurse Specialists' Services
Subsequent to BBA
Effective for services furnished on or after January 1, 1998,
section 4511 of BBA authorizes clinical nurse specialists to bill the
program directly for services furnished in any setting, regardless of
whether the settings are located in rural or urban areas, but only if
the facility or other providers of services do not charge or are not
paid any amounts with respect to the furnishing of nurse practitioners'
services. A new Sec. 410.76(e) of this rule sets forth this provision.
The new Sec. 410.76(b) sets forth new qualifications for clinical
nurse specialists. Section 410.76(c) describes the conditions of
coverage for clinical nurse specialists' services, defines the
collaboration process, and paragraph (d) lists the requirements for
services furnished incident to the professional services of a clinical
nurse specialist.
New Sec. Sec. 405.520(a), (b), and (c) of this rule provide the
general rule, requirements, and civil monetary penalties for clinical
nurse specialists. A new paragraph (c) is added to Sec. 414.56 of this
rule to set forth the payment amounts for clinical nurse specialists'
services.
Comment: Numerous nurses associations commented specifically about
the qualifications for clinical nurse specialists at Sec. 410.76(b) of
the proposed rule. They suggested that the qualifications for clinical
nurse specialists be amended to require that a clinical nurse
specialist be an individual who is a registered nurse currently
licensed to practice as in the State in which he or she practices and
have a master's degree in a defined clinical area of nursing from an
accredited educational institution. The commenters emphasized that
there is no need to provide for an exception as included in the
proposed qualifications
[[Page 58875]]
for clinical nurse specialists, because the nursing profession has long
held consensus that clinical nurse specialists be required to have a
master's degree. Additionally, they believed that the definition of a
clinical nurse specialist under the BBA makes it clear that a clinical
nurse specialist must hold a master's degree. Furthermore, they stated
that the proposed exception requirement contains erroneous information
about the educational focus of clinical nurse specialist programs that
may be preparatory both for primary care and specialty care.
Response: Prior to the BBA, section 2160 of the Medicare Carriers
Manual required that a clinical nurse specialist had to satisfy the
applicable requirements for a clinical nurse specialist in the State in
which the services are performed. In the absence of State requirements,
Medicare contractors had the discretion to determine whether an
individual's qualifications warranted Medicare payment for clinical
nurse specialist services. However, the BBA, which established
qualifications for clinical nurse specialists, defines a clinical nurse
specialist as an individual who is a registered nurse and is licensed
to practice nursing in the State in which the services are performed
and holds a master's degree in a defined clinical area of nursing from
an accredited educational institution. Therefore, we will implement the
BBA qualifications for clinical nurse specialists without an exception
for clinical nurse specialists who do not possess a master's degree.
Comment: One independently practicing clinical nurse specialist
argued that access to psychiatric clinical nurse specialists, in
particular, is being denied even though they are the only mental health
providers, other than psychiatrists, whose education, experience, and
legal scope of practice include the management of co-morbid medical and
psychiatric illness. Psychiatric clinical nurse specialists also
provide services that include patient and family education to manage
symptoms of illness and medications, evaluation and management of side
effects, identification of adverse reactions, and evaluation of
effectiveness of medications and psychotherapy. The commenter explained
that all clinical nurse specialists in psychiatric nursing hold
master's or doctoral degrees; have completed 2-years post-graduate,
supervised, clinical experience; have passed a national board
certification exam; and are required to obtain 75 hours of continuing
education credit every 5 years. The commenter concluded that
psychiatric clinical nurse specialists are the only group of mental
health providers whose practice is being restricted.
Response: Psychotherapy services are listed in the AMA's CPT coding
book as ``physician services''. Nurse practitioners and clinical nurse
specialists are authorized by the Medicare program to bill for services
that would otherwise be furnished by a physician or incident to a
physician's services. Accordingly, it is appropriate for the Medicare
program to pay these nonphysician practitioners who have the specific
training mentioned for psychotherapy services that are determined to be
medically reasonable and necessary.
Result of evaluation of comments: We have determined that for
purposes of Medicare Part B payment, a clinical nurse specialist must--
<bullet> Be a registered nurse who is currently licensed to
practice in the State where he or she practices and be authorized to
perform the services of a clinical nurse specialist in accordance with
State law;
<bullet> Have a master's degree in a defined clinical area of
nursing from an accredited educational institution; and
<bullet> Be certified as a clinical nurse specialist by the
American Nurses Credentialing Center.
Coverage and Payment for Certified Nurse-Midwives' Services
Section 13554 of OBRA 1993 (Pub. L. 103-66) amended section
1861(gg)(2) of the Act to revise the definition of certified nurse-
midwife. The revision eliminated a limitation on coverage and included,
as covered services, those services furnished by certified nurse-
midwives outside the maternity cycle. This change was made effective
for services furnished on or after January 1, 1994.
A new Sec. 410.77 of this rule lists the qualifications for
certified nurse-midwives and provides the conditions for coverage of
certified nurse-midwives' services. Paragraph (d) of Sec. 410.77 lists
the coverage requirements for the professional services of certified
nurse-midwives, while paragraph (c) lists the requirements for services
furnished incident to the professional services of a certified nurse-
midwife.
The comments that we received from a major college representing
certified nurse-midwives mainly addressed the proposed qualifications
for these individuals.
Comment: The commenter urged that the qualifications for certified
nurse-midwives be revised to read that the individual must--
(1) Be legally authorized to practice as a certified nurse-midwife
under State law or regulations;
(2) Have successfully completed a program of study and clinical
experience accredited by an accrediting body approved by the U.S.
Department of Education; and
(3) Be currently certified as a nurse-midwife by the American
College of Nurse-Midwives or by the American College of Nurse-Midwives
Certification Council.
The college believed that these revised qualifications at
Sec. 410.77(a) would eliminate the possibility of individuals being
able to practice as certified nurse-midwives in the Medicare program
without having to take and pass appropriate certification examinations
that are explicitly linked to a demonstrated mastery of the ``core
competencies'' for basic nurse-midwife practice. These revised
qualifications would, the commenter stated, also assure greater
uniformity of quality and competency among certified nurse-midwives who
wish to be paid by Medicare for services that they provide to Medicare
patients.
Response: Section 1861(gg)(2) of the Act states that the term,
``certified nurse-midwife'' means a registered nurse who has
successfully completed a program of study and clinical experience
meeting guidelines prescribed by the Secretary, or has been certified
by an organization recognized by the Secretary. Accordingly, we are
implementing qualifications for certified nurse-midwives that implement
these statutory requirements.
Comment: The other comment that the college representing certified
nurse-midwives made was directed toward the criteria for determining
payment to certified nurse-midwives for their professional services.
The college stated that Sec. 410.77(d)(1) should clarify that, while
supervision of nonphysician staff by a nurse-midwife does not
constitute a professional service, the service provided by the
nonphysician may be paid to the certified nurse-midwife if it meets the
requirements of a service incident to his or her service.
Additionally, the college suggested that Sec. 410.77(d)(3) be
revised to state that Medicare will pay a certified nurse-midwife for
all services that he or she is legally authorized under State law or
regulations to furnish as a certified nurse-midwife in the State, if
those services are also covered services under the Medicare program.
The college suggested this change because it maintains that certified
nurse-midwives are qualified to perform ``other services'' that might
not be interpreted to include
[[Page 58876]]
newborn care or certain primary care services, or primary care case
management in a managed care context, and certain States license them
to perform these ``other services.''
Response: The requirements pertaining to services furnished
incident to the professional services of a certified nurse-midwife are
listed separately at Sec. 410.77(c) of the proposed rule. We do not
want to confuse the requirements for the professional services of
certified nurse-midwives with the requirements that pertain to services
furnished incident to the professional services of certified nurse
midwives.
Section 1861(gg)(1) defines the term, ``certified nurse-midwife
services'' as services furnished by a certified nurse-midwife and
services and supplies furnished as an incident to the nurse-midwife's
service which the certified nurse-midwife is legally authorized to
perform under State law as would otherwise be covered if furnished by a
physician or as an incident to a physicians' service. Therefore, we
agree with the statement made by the commenter that coverage of the
professional services of certified nurse-midwives are not restricted to
newborn care, certain primary care services, or primary care case
management services if State law authorizes them to furnish ``other
services.''
Result of Evaluation of Comments: We have determined that for
purposes of Medicare Part B payment, a nurse-midwife must--
<bullet> Be a registered nurse who is legally authorized to
practice as a nurse-midwife in the State where services are performed;
<bullet> Have successfully completed a program of study and
clinical experience for nurse-midwives that is accredited by an
accrediting body approved by the U.S. Department of Education; and
<bullet> Be certified as a nurse-midwife by the American College of
Nurse-Midwives or the American College of Nurse-Midwives Certification
Council. The Secretary reserves the right to determine that these
accrediting bodies' standards are no longer sufficient for qualifying
nurse midwives for Medicare Part B payment.
Also, a nurse-midwife may provide services that he or she is
legally authorized to perform under State law as a nurse-midwife, if
the services would otherwise be covered by the Medicare program when
furnished by a physician or incident to a physicians' professional
services.
Coverage and Payment for Physician Assistants' Services Subsequent to
BBA
Effective for services furnished on or after January 1, 1998, the
majority of the conditions for coverage of physician assistants'
services as indicated by new Secs. 410.74(a) and (b) remain unchanged
with the exception of the condition for coverage of physician
assistants' services furnished in certain areas and settings. Section
4512 of BBA removes the restrictions on the sites in which physician
assistants may furnish their professional services, regardless of
whether the settings are located in rural or urban areas. Physician
assistants are authorized to furnish their professional services as
independent nonphysician practitioners to practically all providers of
services and suppliers of services, provided the facility or other
provider of services do not charge or is not paid any amounts with
respect to the furnishing of physician assistants' professional
services. Accordingly, separate payment may be made for physician
assistants' services in all settings, except in RHCs and FQHCs;
physician assistant services are included as RHC and FQHC services for
which Medicare payment is made based on an all-inclusive payment rate
that the program makes to these facilities.
In new Sec. 410.74(c), we proposed to amend the qualifications for
physician assistants to recognize certification of physician assistants
by the National Board of Certification of Orthopedic Physician
Assistants. These qualifications would also have recognized academic
programs for physician assistants that are accredited by either the
Commission on Accreditation of Allied Health Education Programs or the
American Society of Orthopedic Physician Assistants.
Additionally, effective January 1, 1998, physician assistants have
the option of furnishing services under a different employment
arrangement with a physician. They can furnish services as employees of
a physician under a W-2 form employment arrangement or they can furnish
services as an independent contractor to a physician and receive a 1099
form. Under either arrangement, the employer of the physician assistant
must bill the program for physician assistants' services as required
under Sec. 410.150(b)(15). Moreover, when an individual furnishes
services ``incident to'' the professional services of a physician
assistant, these ancillary services must meet the requirements under
Sec. 410.74(a)(2)(vi)(B).
The Medicare payment amount for a physician assistant's
professional services as of January 1, 1998, as stated in new paragraph
(d) of Sec. 414.52, remains at 80 percent of the lesser of either the
actual charge or 85 percent of the physician fee schedule amount for
professional services. Also, new Sec. 405.520 provides the general
rule, requirements, and civil monetary penalties for physician
assistants who furnish services under the Medicare program.
We received a total of 140 comments on the proposed physician
assistant qualifications. Half of all of the commenters strongly
opposed the inclusion of orthopedic physician assistants (OPAs) under
the qualifications for physician assistants. The others commenting on
the inclusion of OPAs applauded and supported their inclusion and
suggested a few minor changes to the qualifications overall.
Comment: The commenters who strongly opposed the proposed physician
assistant qualifications included professional organizations,
individual physician assistants, State level professional societies and
academies, congressional representatives, educational institutions,
hospitals, and a board of medical examiners. The commenters stated
overwhelmingly that the proposed qualifications for physician
assistants inappropriately included orthopedic physician assistants and
that orthopedic physician assistants are not physician assistants even
if the acronyms (PA and OPA) appear to be similar. The majority of
commenters who opposed the inclusion of OPAs noted that they would not
object, however, if the Congress implemented a Medicare benefit that
recognizes orthopedic physician assistants as separate independent
nonphysician practitioners, and, in that case, there should be a
payment differential in the amounts of payment made to physician
assistants and orthopedic physician assistants that would reflect a
higher payment to PAs because they have a greater career investment,
patient care responsibility, and higher malpractice insurance costs
than OPAs.
The commenters stated that PAs and OPAs do not receive the same
education and training, accreditation, certification, or State
licensure, and their continuing medical education requirements are not
similar. These commenters stated that the curricula for the physician
assistant educational programs reveal that these programs emphasized
primary care involving diagnosis and treatment of five major clinical
disciplines (medicine, surgery, pediatrics, psychiatry, and
obstetrics), as well as pharmacology. The training period for
[[Page 58877]]
PAs lasts anywhere from 24 to 28 months. The orthopedic educational
programs train technical assistants to assist orthopedic surgeons, with
an emphasis on orthopedic disease and injury, management of equipment
and supplies, operating room techniques, cast application and removal,
office procedures, and orientation to prosthetics and orthotics. The
training period for OPAs lasted for no more than 24 months.
The commenters asserted that the Commission on Accreditation of
Allied Health Education Programs (CAAHEP) must accredit all physician
assistant educational programs. CAAHEP is a national independent
accrediting agency that is recognized by the U.S. Department of
Education and sponsored by medical, allied health, and educational
organizations. However, there are currently no existing OPA programs to
be accredited. The AMA accredited eight orthopedic physician assistant
educational programs from 1969 to 1974. Accreditation ceased in 1974
when the American Academy of Orthopedic Surgeons withdrew sponsorship
of the accreditation process.
The commenters stated that PAs are required to take and pass a
national examination after graduation from a physician assistant
educational program that is certified by the National Council on
Certification of Physician Assistants (NCCPA). The NCCPA national
certification examination is open only to those individuals who have
graduated from accredited physician assistant educational programs. The
NCCPA, which provides the certified national examination, is an
independent organization whose governing board has representatives from
the American Medical Association, American Hospital Association,
American Academy of Family Physicians, American Academy of Pediatrics,
American College of Physicians, American College of Surgeons, National
Medical Association, Association of American Medical Schools,
Federation of State Medical Boards, U.S. Department of Defense,
Association of Physician Assistant Programs, and the American Academy
of Physician Assistants. The NCCPA also includes three public members.
OPAs who have had on-the-job training or other mid-level
paraprofessionals who challenge the exam and have had on-the-job
training may take the examination for OPAs that is certified by the
National Board on Certification for Orthopedic Physician Assistants
(NBCOPA). The NBCOPA certification examination is an open examination
and is currently reached through the Professional Testing Corporation,
a for-profit business that administers tests for various organizations.
The NBCOPA is comprised of six members of the American Society of
Orthopedic Physician Assistants (ASOPA), the orthopedic physician
assistant professional society, and an unspecified number of advisory
members who are presumably non-voting physicians and educators. There
is no organized medical group that sponsors or oversees the national
certification examination for OPAs other than ASOPA.
The commenters emphasized that all States except Mississippi
license and regulate PAs. Forty-three States, the District of Columbia,
and Guam have enacted laws to authorize PAs to prescribe medicine.
Thirty-three States authorize PAs to write prescriptions for controlled
medications. Conversely, only Tennessee specifically licenses OPAs.
Tennessee's licensure of OPAs is, however, separate from its licensure
of PAs. California and New York have laws referencing OPAs, but the
laws refer to OPAs as distinct from PAs. California refers to OPAs who
successfully completed training as OPAs from an approved California
orthopedic physician assistant educational program in any year between
1971 to 1974 to perform only those orthopedic medical tasks that a
physician and surgeon may delegate. New York defines the qualifications
for PAs in terms broad enough to include OPAs. The New York State
regulations do not limit the acceptable examination to the NCCPA
certification examination. Therefore, the NBCOPA certification
examination could be considered to adequately assess entry level skills
for the physician assistant profession. None of the other States,
however, recognize OPAs, and none of the States specifically grant OPAs
prescribing privileges.
Additionally, the commenters explained that PAs are required to log
100-hours of continuing medical education over a 2-year cycle and to
take a recertification exam every 6 years to maintain certification as
PAs. On the other hand, OPAs are required to complete 120 hours of
continuing medical education every 4-years or retake the initial NBCOPA
certification examination to maintain certification as OPAs.
The professional organizations representing PAs and numerous
independent PAs and congressional representatives argued that the
proposed changes to the PA qualifications run counter to our twin goals
of controlling costs to the Medicare program and maintaining the
quality of services furnished to Medicare beneficiaries. There are
approximately 49,000 surgical technologists and 3,000 registered nurse
first assistants and an uncounted number of unlicensed medical school
graduates (for example, from other countries). These individuals could
potentially qualify as PAs under the proposed qualifications by getting
the requisite orthopedic work experience and passing the orthopedic
physician assistant examination that is certified by NBCOPA. Thus, the
number of individuals who could qualify for payment under the PA
benefit ultimately is substantial.
Additionally, these commenters argued that the proposal to include
OPAs as PAs runs counter to congressional intent because the BBA, which
amends coverage payment for PAs, does not include any mention of OPAs.
They state that the debate on the BBA provisions for physician
assistants, nurse practitioners, and clinical nurse specialists did not
include any discussion of orthopedic physician assistants or any other
types of physician extenders, nor did the Congressional Budget Office
consider orthopedic physician assistants or other types of specialty
physician extenders when projecting the costs of physician assistant
services under the BBA. Furthermore, these commenters stated that the
primary sponsors of the 1977 Rural Health Clinic Services Act
acknowledged the educational preparation of PAs to provide a wide range
of primary care services to Medicare beneficiaries living in areas
experiencing a shortage of primary care physicians. While orthopedic
technicians may provide valuable, specialized services in assisting
orthopedic surgeons, they do not have an educational background in
primary care. Consequently, they are not qualified to provide the wide
range of primary care services that the Congress anticipated when it
recognized the need to cover and pay for the services of PAs under
Medicare.
Finally, the commenters urged us to require that, in order for an
individual to qualify as a PA under Medicare, he or she must (1)
possess State approval to practice as a PA, and (2) demonstrate either
graduation from a physician assistant educational program accredited by
CAAHEP or certification by NCCPA.
The commenters who supported the inclusion of OPAs under the
physician assistant benefit were represented by a national society and
academy, orthopedic surgeons, independent orthopedic physician
assistants,
[[Page 58878]]
hospitals, universities, and organizations that provide orthopedic
surgical services. The national society representing OPAs declared that
our clarification of the PA qualifications does not relate to payment
because orthopedic surgeons are already paid for many services provided
by OPAs incident to their professional services. Rather, it believes
that the clarification is about recognition of OPAs.
The national academy representing orthopedic surgeons, numerous
independent orthopedic surgeons, and OPAs stated that OPAs are
specially trained to assist orthopedic surgeons in surgical procedures
and other services involving the total care of patients with orthopedic
conditions of the anatomy and pathophysiology of the musculoskeletal
organ system. Commenters state that OPAs receive extensive training
that includes rotations in general medicine and surgery, history and
physical assessment, and pharmacology. Additionally, they say, OPAs are
trained to obtain medical histories, perform physical examinations,
assist the physician in developing and implementing patient management
plans, perform common laboratory, radiologic, and other routine
diagnostic procedures, and provide injections, immunizations, suturing
and wound care, among other services. Other services that these groups
have stated that OPAs may perform include the application, fabrication
and removal of casts, splints, braces and orthopedic hardware, emergent
care of trauma patients, pre- and post-operative care, and serving as
first and second assistants to orthopedic surgeons for all procedures.
A few commenters noted that the only orthopedic experience that the
primary care physician assistants have is received during a 6-week
rotation within the 4-year primary care educational program.
Many orthopedic surgeons and others stated that the specialty
training that OPAs receive has enabled them to become extremely
valuable to their practices freeing up orthopedic surgeons to perform
other tasks. Also, some commenters stated that they have found PAs and
OPAs to be equally competent and in some cases, OPAs have proven to be
more competent than PAs. Therefore, OPAs are very quickly becoming an
integral part of their patient care teams. A professional organization
commented that the inclusion of OPAs under the PA benefit should not
result in exorbitant costs to the Medicare program because there are
only approximately 1,000 OPAs who could meet the proposed PA
qualifications. Also, when Tennessee established State licensure for
OPAs, the State Comptroller's office found that there was an increase
in State revenues from fees collected and a slight, but not
significant, increase in State expenditures for administering the
program.
The national society representing OPAs suggested specific language
be added to the proposed PA qualifications to require formal education
programs for OPAs.
Response: After reviewing more closely information about the
distinctions between PAs and OPAs, and after reviewing the comments
that we received on the proposal to include OPAs as PAs, we have
determined that it would not be appropriate to treat OPAs in the same
way as PAs. There are substantial differences in education and
training, certification examinations, accreditation of educational
programs, and State licensure and regulation of PAs and OPAs.
Additionally, we believe that the 1977 Rural Health Clinic Services
Act, which first recognized and paid for the services of PAs under Part
B of the Medicare program, would have specifically recognized OPAs as
within its scope if it intended to do so. We also believe that a
significant number of individuals, exceeding the approximately 1,000
currently practicing OPAs, could qualify as PAs under the proposed rule
because the national certification examination for OPAs is currently
open to other mid-level nonphysician practitioners who challenge the
examination and have had on-the-job training.
Comment: We did not specifically solicit public comment in the
proposed rule on the BBA provision that authorized PAs to provide
services under an arrangement as independent contractors, in addition
to performing services as an employee of entities or individuals such
as a physician, medical group, professional corporation, hospital,
skilled nursing facility, or nursing facility. However, we discussed,
in the background section of the proposed rule, that effective January
1, 1998, PAs have the option of furnishing services under an
independent contractor arrangement. Under either arrangement, we
explained that the employer of the PA must bill the program for
services furnished by the PA. As a result of this discussion, one
commenter stated that, generally, PAs have been under the direction of
a physician, and they have not been viewed as independent contractors.
Therefore, the commenter emphasized that clarification is needed about
PAs performing in an independent contractor employment relationship.
Response: Regardless of whether a PA performs services under an
employment relationship or under an independent contractor
relationship, the Medicare statute requires that he or she furnish
services under the general supervision of a physician, and the employer
of the PA must always bill for the services furnished.
However, just as we adopt the Internal Revenue Service's definition
of an employer/employee employment relationship, we also adopt the
Internal Revenue Service's definition of an independent contractor
relationship.
Some of the distinctions between an employer/employee and an
independent contractor relationship are that, under an independent
contractor relationship, the employer does not generally have to
withhold or pay any taxes on payments to independent contractors and
the employer has virtually no behavioral or financial control over the
independent contractor. That is, under an independent contractor
relationship, the independent contractor works autonomously without any
instructions from his or her employer about when, where, and how to
work. The contractor is engaged to perform services for a specific
project or period of time, for which he or she is paid at the
completion of the project. Independent contractors can make a profit or
loss. The services that the independent contractor performs may not be
a key aspect of the employer's regular business and, therefore, an
independent contractor may have a significant investment in the
facilities he or she uses in performing services for the employer.
Additionally, the employer of an independent contractor may not provide
employee-type benefits such as insurance, a pension plan, vacation pay,
or sick pay.
Result of evaluation of comments: We have determined that for
purposes of Medicare Part B payment, a physician assistant is an
individual who--
<bullet> Has graduated from a physician assistant educational
program that is accredited by the National Commission on Accreditation
of Allied Health Education Programs;
<bullet> Has passed the national certification examination that is
certified by the National Commission on Certification of Physician
Assistants; and
<bullet> Is licensed by the State to practice as a physician
assistant.
[[Page 58879]]
E. Payment for Teleconsultations in Rural Health Professional Shortage
Areas
In section 4206 of BBA, the Congress required that, not later than
January 1, 1999, Medicare Part B pay for professional consultations by
a physician via interactive telecommunications systems
(teleconsultations).
Under section 4206(a) of BBA, payment may be made under Part B,
provided the teleconsultation service is furnished to a beneficiary who
resides in a county in a rural area designated as a Health Professional
Shortage Area (HPSA). This payment is notwithstanding that the
individual physician or practitioner providing the professional
consultation is not at the same location as the physician or
practitioner furnishing the service to that beneficiary. (For the
purposes of convenience, in this section the term ``practitioner'' is
used to mean physicians and practitioners as specified.)
Section 4206(b) of BBA also required that the Secretary establish a
methodology for determining the amount of payments made for a
teleconsultation within the following parameters:
<bullet> The payment is to be shared between the referring
practitioner and the consulting practitioner.
<bullet> The amount of the payment is not to exceed the current fee
schedule amount that would be paid to the consulting practitioner.
<bullet> The payment is not to include any reimbursement for any
telephone line charges or any facility fees, and a beneficiary may not
be billed for these charges or fees.
<bullet> The payment is to be subject to the coinsurance and
deductible requirements under section 1833 (a)(1) and (b) of the Act.
<bullet> The payment differential of section 1848(a)(3) of the Act
is to be applied to services furnished by nonparticipating physicians.
<bullet> The provisions of sections 1848(g) and 1842(b)(18) of the
Act are to apply.
<bullet> Further, payment for the consultation service is to be
increased annually by the update factor for physicians' services
determined under section 1848(d) of the Act.
In addition, the statute directs that, in establishing the
methodology for determining the amount of payment, the Secretary take
into account the findings of the report required by section 192 of the
Health Insurance Portability and Accountability Act of 1996 (Public Law
104-191), the findings of the report required by section 4206(c) of
BBA, and any other findings related to clinical efficacy and cost-
effectiveness of telemedicine applications.
Provisions of HCFA-1906-P
On June 22, 1998, we published a proposed rule titled ``Payment for
Teleconsultations in Rural Health Professional Shortage Areas'' (HCFA-
1906-P) (63 FR 33882) that would implement the provisions of section
4206 of the BBA addressing Medicare reimbursement for telehealth
services.
Regulatory Provisions
In proposed Sec. 410.75(a)(1), we required that as a condition for
Medicare Part B payment for a teleconsultation, the referring and the
consulting practitioner be any of the following:
<bullet> A physician as described in existing Sec. 410.20.
<bullet> A physician assistant as defined in existing Sec. 491.2.
<bullet> A nurse practitioner as defined in existing Sec. 491.2.
<bullet> A clinical nurse specialist as described in existing
Sec. 424.11(e)(6).
<bullet> A certified registered nurse anesthetist or
anesthesiologist's assistant as defined in existing Sec. 410.69.
<bullet> A certified nurse-midwife as defined in existing
Sec. 405.2401.
<bullet> A clinical social worker as defined in section 1861(hh)(1)
of the Act.
<bullet> A clinical psychologist as described in existing
Sec. 417.416(d)(2).
We required, in proposed Sec. 410.75(a)(2), that teleconsultation
services be furnished to a beneficiary residing in a rural area as
defined in section 1886(d)(2)(D) of the Act that is designated as an
HPSA under section 332(a)(1)(A) of the Public Health Service Act. For
purposes of this requirement, the beneficiary is deemed to be residing
in such an area if the teleconsultation presentation takes place in
such an area.
In proposed Secs. 410.75(a)(3) through 410.75(a)(5) we specified
further that teleconsultations must meet the following requirements in
order to be covered by Medicare Part B:
<bullet> The medical examination of the beneficiary must be under
the control of the consultant practitioner.
<bullet> The consultation must involve the participation of the
referring practitioner, as appropriate to the medical needs of the
patient, and as needed to provide information to and at the direction
of the consultant.
<bullet> The consultation results must be in a written report that
is furnished to the referring practitioner.
We defined ``interactive telecommunications systems'' in paragraph
(b) of proposed Sec. 410.75, as multimedia communications equipment
that includes, at a minimum, audio-video equipment permitting two-way,
real-time consultation among the patient, consulting practitioner, and
referring practitioner as appropriate to the medical needs of the
patient and as needed to provide information to and at the direction of
the consulting practitioner. Telephones, facsimile machines, and
electronic mail systems do not meet the definition of interactive
telecommunications systems.
Payment Provisions
Proposed regulatory provisions: We proposed adding Sec. 414.62
(Payment for consultations via interactive telecommunication systems)
to our regulations.
We specified, in paragraph (a) of proposed Sec. 414.62, that
Medicare total payments for a teleconsultation may not exceed the
current fee schedule amount for the service when furnished by the
consulting practitioner. We further specified that the payment (1) may
not include any reimbursement for any telephone line charges or any
facility fees, and (2) is subject to the coinsurance and deductible
requirements of section 1833(a)(1) and (b) of the Act. We also
specified in paragraph (b) that the payment differential of section
1848(a)(3) of the Act applies to services furnished by nonparticipating
physicians.
In paragraph (c) of proposed Sec. 414.62, we provided that payment
to nonphysician practitioners is made only on an assignment-related
basis. Paragraph (d) provided that only the consultant practitioner may
bill for the consultation, and paragraph (e) required the consultant
practitioner to provide the referring practitioner 25 percent of any
payments, including any applicable deductible or coinsurance amounts,
he or she received for the consultation.
Paragraph (f) specified that a practitioner may be subject to the
sanctions provided for in 42 CFR chapter V, parts 1001, 1002, and 1103
if he or she (1) knowingly and willfully bills or collects for services
in violation of the limitations of proposed Sec. 414.62 on a repeated
basis, or (2) fails to timely correct excess charges by reducing the
actual charge billed for the service to an amount that does not exceed
the limiting charge or fails to timely refund excess collections.
Analysis of and Response to Public Comments to HCFA-1906-P Eligibility
Provisions
Comment: Most commenters applauded HCFA's decision to include
[[Page 58880]]
both partial and full county geographic HPSAs when determining
eligibility. However, a few commenters believed we should not limit
eligibility to rural HPSAs. One commenter stated that the proposed
eligibility criteria discriminated against elderly persons living in
other remote areas. Another commenter suggested that travel time or
distance to the specialist, not the availability of primary care
physicians in the community, are the most important criteria for
elderly patients in need of specialty consultation.
Response: BBA limits eligibility for teleconsultation to rural
areas as defined by section 1886(d)(2)(D) of the Act designated as an
HPSA as defined by section 332(A)(1)(a) of the Public Health Service
Act. This section of the Public Health Service Act defines an HPSA as
an area that the Secretary determines has a shortage of health
professionals and is not reasonably accessible to an adequately
serviced area.
We believe that, it is likely that in an area where sources of
primary care are a considerable distance and travel time away, the same
would be true for specialty care. In any event, we do not have the
authority to expand eligibility for teleconsultation beyond what is
specified by BBA.
Comment: One commenter questioned whether psychiatric, dental, and
facility HPSAs are eligible for teleconsultation.
Response: As discussed above, HPSA eligibility is limited to
eligibility under section 332(a)(1)(A) of the Public Health Service
Act. This section of the law references geographic HPSAs only.
Coverage Provisions
Comment: Many commenters requested that we include payment for the
use of store-and-forward technology within the scope of coverage of
this provision. Commenters believed that, for many specialties, store-
and-forward technology provided the same information that would be
provided in a live consultation.
For instance, several commenters recommended that we broaden the
definition of a consultation to allow stored full-motion video exams or
other representations to substitute for the presence of the patient.
Other commenters recommended payment for store-and-forward applications
such as dermatology photos and orthopedic digital x-rays.
Other justifications for coverage of store-and-forward technology
included lack of infrastructure and scheduling difficulties. A few
commenters mentioned congressional interest in providing coverage and
payment for the use of store-and-forward technology in providing a
consultation.
Response: We believe that a teleconsultation is a different method
of delivering a consultation service. To that end, we view a
teleconsultation as an interactive patient encounter that must meet the
criteria for a given consultation service included in the American
Medical Association's (AMA) Current Procedure Terminology.
In the proposed rule, we specified that the minimum technology
necessary to deliver a consultation must include interactive audio and
video equipment permitting two-way real-time communication between the
beneficiary, consulting practitioner, and referring practitioner as
appropriate. For Medicare payment to occur, the patient must be
present, and the telecommunications technology must allow the
consulting practitioner to conduct a medical examination of the
patient.
The telecommunications requirements do not mandate full motion
video. If the telecommunications technology permits two-way interactive
audio and video communication allowing the consulting practitioner to
conduct a medical exam, Medicare would make payment for a
teleconsultation.
These requirements would not prohibit the use of higher end store-
and-forward technology in which less than full motion video is
sufficient to perform an interactive examination at the control of the
consulting practitioner. When performed in real-time, with the patient
present, store-and-forward may allow the consultant physician to
control the examination by requesting additional, real-time pictures of
the patient that are transmitted immediately to the online consultant.
Traditional store-and-forward technology in which an examination,
diagnostic test, or procedure is filmed and later transmitted can be
used in conjunction with the interactive (via audio-video technology)
examination to facilitate the consultant's decision making. However,
for Medicare payment to occur, the patient must be present in real-
time.
We do not propose to make separate payment provisions for the
review of medical records via telecommunications in this final rule.
BBA gives payment authority for consultation via telecommunications
with a physician or practitioner described in section 1842(b)(18)(C) of
the Act, furnishing a service for which payment may be made under
Medicare. Medicare currently does not make separate payment for the
review and interpretation of medical records.
Separate payment for traditional store-and-forward applications may
be appropriate for many forms of diagnostic testing including
radiology, electrocardiogram, and electroencephalogram interpretations,
as well as imaging studies such as magnetic resonance imaging and
ultrasound. Medicare currently allows coverage and payment for medical
services delivered via telecommunications systems that do not require a
face-to-face ``hands on'' encounter. Section 2020(A) of the Medicare
Carriers Manual addresses this issue and lists radiology,
electrocardiogram, and electroencephalogram interpretations as examples
of such services.
Review of dermatology photos would not be considered a
consultation. We believe that this would be a new service for which
payment could not currently be made under Medicare. BBA limits the
scope of coverage to professional consultations for which payment may
be made under Medicare.
Comment: Many commenters believed that we should be more stringent
regarding practitioners who can be consultants. For instance, a number
of commenters believed that a certified registered nurse anesthetist,
anesthesiologist assistant, clinical psychologist, or clinical social
worker should not be eligible to be a consulting practitioner because
Medicare does not make payment for consultations provided by these
practitioners. Additionally, commenters stated that consultation is
beyond the scope of practice for these practitioners.
Response: In the proposed rule for teleconsultation we specified
that all practitioners described in section 1842(b)(18)(C) of the Act
qualify to be a consulting and a referring practitioner. These
practitioners include: a physician, physician assistant, nurse
practitioner, clinical nurse specialist, certified registered nurse
anesthetist, anesthesiologist assistant, certified nurse midwife,
clinical psychologist, and clinical social worker.
After further review of this proposal, we have determined that
allowing clinical psychologists, clinical social workers, certified
nurse anesthetists, and anesthesiologist assistants to provide a
teleconsultation is inconsistent with the Medicare benefit.
We believe that a professional consultation delivered via
telecommunications is a method of delivering a consultation service,
rather than a new service. For instance, BBA section 4206(a) states
that ``payment
[[Page 58881]]
shall be made for professional consultations via telecommunications
systems with a physician or practitioner described in section
1842(b)(18)(C) of the Act furnishing a service for which payment may be
made * * * '' Moreover, section 4206(b) of BBA states ``the amount of
such payment shall not be greater than the current fee schedule of the
consulting physician or practitioner.''
Under existing Medicare policy, clinical psychologists, clinical
social workers, certified registered nurse anesthetists, and
anesthesiologist assistants cannot bill, nor receive payment, for
consultation services under Medicare. Therefore, these particular
practitioners are prohibited from billing for a teleconsultation
because, under the Medicare program, no payment would be made for a
consultation service provided by these practitioners.
In addition, we have reviewed our proposed policy which allowed
certified registered nurse anesthetists and anesthesiologist assistants
to refer Medicare beneficiaries for teleconsultation. After review, we
have decided to omit these practitioners as eligible to refer patients
for teleconsultation. Section 1861(bb) of the Social Security Act
defines services provided by these practitioners as anesthesia services
and related care. Currently, our view is that the nature of these
services is such that certified registered nurse anesthetists and
anesthesiologist assistants would not request a consultation as defined
by the Physicians' Current Procedure Terminology. Thus, we are
excluding certified registered nurse anesthetists and anesthesiologist
assistants from the list of referring practitioners. We invite specific
comments regarding this issue.
To implement this policy change, we are omitting clinical
psychologists, clinical social workers, certified nurse anesthetists,
and anesthesiologist assistants from being consulting practitioners as
follows at redesignated Sec. 410.78(a)(1):
(1) The consulting practitioner is any of the following:
(i) A physician as described in Sec. 410.20.
(ii) A physician assistant as defined in Sec. 410.74.
(iii) A nurse practitioner as defined in Sec. 410.75.
(iv) A clinical nurse specialist as defined in Sec. 410.76.
(v) A nurse-midwife as defined in Sec. 410.77.
Additionally, a new section is added to omit certified nurse
anesthetists and anesthesiologist assistants as referring practitioners
as follows at redesignated Sec. 410.78(a)(2):
(2) The referring practitioner is any of the following:
(i) A physician as described in Sec. 410.20.
(ii) A physician assistant as defined in Sec. 410.74.
(iii) A nurse practitioner as defined in Sec. 410.75.
(iv) A clinical nurse specialist as defined in Sec. 410.76.
(v) A nurse-midwife as defined in Sec. 410.77.
(vi) A clinical psychologist as described at Sec. 410.71.
(vii) A clinical social worker as described in section 410.73.
Comment: We received a number of comments regarding the referring
practitioner participation requirements. Several commenters believed
that requiring the participation of the referring practitioner as a
condition of payment is unreasonable. They believed this responsibility
can usually be delegated to a midlevel practitioner or, in some cases,
no presenting practitioner. Commenters made the case that the referring
practitioner does not travel to the consultant's office for a
traditional consultation and therefore should not be required to
participate in a teleconsultation.
Response: We have reviewed our proposed policy requiring the
participation of the actual referring practitioner as appropriate to
the medical needs of the patient. After review we have decided to amend
this policy to allow all practitioners listed as referring
practitioners in this rule to be eligible to present a Medicare
beneficiary for teleconsultation. However, if the practitioner is not
the actual referring practitioner, he or she must be an employee of the
referring practitioner.
Hence, if a primary care physician determines that a specialty
consultation is necessary, he or she could delegate the presentation of
the beneficiary to an eligible referring practitioner (i.e., nurse
practitioner, physician assistant, nurse midwife, clinical nurse
specialist, clinical psychologist, or clinical social worker) who is an
employee.
We clarify, that for circumstances where the condition of the
patient may not medically require the participation of a presenting
practitioner, we would not require the participation of a presenting
practitioner as a condition of payment for the teleconsultation.
When no practitioner is present with the patient, the consultant
will continue to share 25 percent of total payments with the referring
practitioner. As discussed in the payment provision section of this
document, the 25-percent allocation is intended to reflect the average
amount of new work performed by the referring practitioner over many
teleconsultations. However, because of the potential for fraud or
abusive practices in these situations where the referring practitioner
is not present with the patient, HCFA in consultation with the Office
of the Inspector General will monitor these services in our review of
the Medicare teleconsultation benefit.
To execute this policy in this final rule, proposed
Sec. 410.75(a)(5), redesignated as Sec. 410.78(a)(5), specifies that as
a condition of payment, the teleconsultation involves the participation
of the referring practitioner or a practitioner described in section
1842(b)(18)(C) of the Act (other than a certified registered nurse
anesthetist or anesthesiologist assistant) who is an employee of the
referring practitioner, as appropriate to the medical needs of the
beneficiary and to provide information to and at the direction of the
consulting practitioner.
Comment: Several commenters requested clarification regarding the
availability of the referring practitioner while the teleconsultation
takes place.
Response: A practitioner who is eligible to be a referring
practitioner, as described in redesignated Sec. 410.78(a)(2) (formerly
Sec. 410.75(a)(2)), is required to be present in the office suite or
hospital wing and available to participate in the teleconsultation as
necessary. We do not mandate that a practitioner be present in the room
while the teleconsultation is taking place.
As discussed earlier in this document, a presenting practitioner's
participation is required as appropriate to the medical needs of the
beneficiary and to provide information at the direction of the
consulting practitioner. However, if the medical needs of the
beneficiary require the participation of a presenting medical
professional, that professional must be a practitioner described in
redesignated Sec. 410.78(a)(2).
Comment: A few commenters requested clarification regarding whether
the referring practitioner may bill for other services on the same day
that the teleconsultation takes place. A suggestion was made that a
referring practitioner should be permitted to bill for a primary care
visit on the same day as a teleconsultation if the primary care visit
is the basis of the consultation or for a medical problem unrelated to
the consultation.
Response: On the day the teleconsultation occurs, the referring
practitioner may bill for the office, outpatient, or inpatient visit
that preceded the need for a consultation. Additionally, the referring
practitioner could bill for other services as ordered by the
consultant, or for services unrelated to the medical problem for which
a consultation was requested.
[[Page 58882]]
However, the referring practitioner is prohibited from billing for a
second visit for his or her role in presenting the patient at the time
of teleconsultation. The consulting practitioner is responsible for
billing Medicare for the consultation service.
Comment: Many commenters suggested an expansion in the scope of
coverage beyond consultation services including speech pathology,
occupational therapy, diabetic self management, psychotherapy, office
and other outpatient visits for new and established patients, nursing
facility services, and patient education and diagnostic interviews.
Additionally, the nature of the comments indicated a belief that
consultation can only be requested for a limited number of conditions
or specialties and that a consultation service can only be provided
once per patient.
Response: Section 4206(a) of BBA limits the scope of coverage to
professional consultation for which payment is currently made under
Medicare. We believe that a consultation is a specific service that
meets the criteria specified for a consultation service in the AMA 1998
Current Procedure Terminology. BBA does not give authority to cover
services beyond consultation under this provision.
We clarify that a consultation can be requested by a physician or
practitioner for many medical specialties including, but not limited
to: cardiology, pulmonary, neurology, dermatology, gastrology, and
psychiatry. Additionally, the scope of coverage for teleconsultation is
not limited to the initial request for consultation from the referring
practitioner. If an additional request for consultation regarding the
same or new problem is received from the attending practitioner and
documented in the medical records, another teleconsultation may be
billed.
Comment: Two commenters requested clarification of whether a
physician assistant is eligible to be a consultant under this
provision.
Response: A physician assistant, as defined in existing
Sec. 410.74, is eligible to bill for a teleconsultation.
Comment: A number of commenters believed that, in many cases, a
registered nurse, or other medical professional, is qualified to
present the patient to the consultant. One commenter believed that
patient care has never suffered when a medical professional not
recognized as a Medicare practitioner is used to present the patient
and only a small percentage of cases actually require a physician,
nurse practitioner, or physician assistant to be present for the
teleconsultation.
Response: Section 4206(a) of BBA specifies that the individual
physician or practitioner providing the professional consultation does
not have to be at the same location as the physician or practitioner
furnishing the service to the beneficiary. We believe this language is
limiting and requires that a practitioner, as recognized under section
1842(b)(18)(C) of the Act, must be present with the patient during the
teleconsultation. Since the same phrase describes the medical
professional at both ends of the teleconsultation, we believe that it
would be difficult to interpret the phrase to have one meaning for
purposes of identifying the consultant and a different meaning for
purposes of identifying who may be physically with the patient.
Therefore, registered nurses, and other medical professionals not
recognized as practitioners under section 1842(b)(18)(C) cannot act as
presenters during teleconsultations.
Comment: A few commenters believed that the range of medical
professionals eligible to provide a teleconsultation should be expanded
beyond what is allowed by BBA. Suggestions included physical
therapists, respiratory therapists, and occupational therapists.
Commenters stated that outpatient rehabilitation following a stroke or
other disorder is less expensive and better than prolonged inpatient
care. Other commenters suggested that nurse specialists and registered
nurses be allowed to provide a consultation service. Commenters stated
that nurses provide education to patients without the presence of a
physician or other practitioner.
Response: BBA limits the medical professionals who may be
consultants to physicians or practitioners described in section
1842(b)(18)(C) of the Act. These practitioners include a clinical nurse
specialist as described in Sec. 410.76; however, nurses who are not
recognized as practitioners under section 1842(b)(18)(C) of the Act are
not eligible to provide a teleconsultation. This section of the law
does not include physical therapists, respiratory therapists, and
occupational therapists. We have no authority to expand the statutory
definition.
Comment: One commenter stated that a certain State law requires the
referring practitioner to have the ultimate authority over the care of
the patient. The commenter believed that this requirement conflicts
with our proposed rule which specifies that the examination be at the
control of the consulting practitioner.
Response: We clarify that the language at proposed
Sec. 410.75(a)(4), redesignated in this final rule as
Sec. 410.78(a)(4), ``The medical examination of the beneficiary is
under the control of the consultant practitioner,'' does not mean that
the referring practitioner relinquishes the overall responsibility for
a beneficiary's care. The intent of this requirement is to clarify that
the consulting practitioner is conducting a real-time examination with
the patient present, rather than reviewing a prior examination,
diagnostic test, or procedure prepared in advance by the referring
practitioner.
Payment and Billing Provisions
Comment: One commenter believed that the discussion of general
Medicare payment policy is unclear. The commenter specifically
questioned the applicability of coinsurance.
Response: Generally, under Medicare part B, Medicare pays 80
percent of the lower of the actual charge or appropriate fee schedule
amount, presuming the beneficiary has met his or her Medicare part B
deductible. Under the Medicare program and for purposes of this
provision, the maximum Medicare payment for a teleconsultation provided
by a participating physician would be based on 80 percent of the
physician fee schedule, presuming that the deductible had been met. For
all other eligible consulting practitioners, the maximum Medicare
payment amount would be 80 percent of 85 percent of the physician fee
schedule. The beneficiary would be responsible for 20 percent of the
appropriate payment amount.
An example of this formula using $100 as the Medicare physician fee
schedule amount is provided below.
Payment for a teleconsultation when a participating physician is
the consultant:
<bullet> Medicare Physician Fee Schedule: $100.
<bullet> Max. Medicare Payment Amount (80% of $100): $80.
<bullet> Coinsurance (20% of $100): $20.
<bullet> Total Payment Amount: $100.
Payment for a teleconsultation when an eligible non-physician
practitioner is the consultant:
<bullet> Medicare Physician Fee Schedule: $100.
<bullet> Practitioners Respective Percentage of the Physicians Fee
Schedule and Resulting Non-Physician Fee Schedule Amount (85% of $100):
$85.
<bullet> Max. Medicare Payment Amount (80% of $85): $68.
<bullet> Coinsurance (20% of $85): $17.
<bullet> Total Payment Amount: $85.
[[Page 58883]]
Comment: One commenter questioned whether Medigap, Medicaid, and
other supplemental insurance will pay the 20-percent coinsurance for
teleconsultations.
Response: Medicare Supplemental Insurance (MSI) will pay the 20-
percent coinsurance for covered teleconsultations. MSI coverage
including Medigap, Medicaid, or employer plans have been standardized
across the country. All MSI plans provide what are known as ``basic
benefits,'' which are defined to include Medicare Part B coinsurance
for covered services (20 percent of the Medicare-approved amount).
Teleconsultation is a consultation service delivered via
telecommunications systems and is covered under Medicare in rural HPSAs
effective January 1, 1999.
Comment: We received a number of comments regarding the proposed
payment allocation in which the consultant would receive 75 percent and
the referring practitioner would receive 25 percent of the consulting
practitioners fee schedule. Several recommendations were made to vary
the distribution of payment based on the work performed by each
practitioner. A few commenters suggested that if it is not medically
necessary for a presenting practitioner to participate in the
teleconsultation, the consultant should receive 100 percent of the
payment. Other commenters suggested that the payment allocation be
determined by the practitioners involved.
Response: We recognize that the level of involvement of the
presenting practitioner will vary from case to case, and our model for
payment allocation reflects this belief. In determining the payment
allocation, we developed a model simulating the combined intensity
level for both the referring and consulting practitioners by using
relative value units (RVUs) applicable to consultation services and
primary care visits (primary care visits were used as proxy for the
role of a presenting practitioner during a teleconsultation).
The model reflects that some consultations will require more
preparation and medical expertise from the presenting practitioner. For
instance, in the first scenario we used the full primary care RVUs. In
the second scenario we reduced the work component by 50 percent to
reflect that some consultations will require less new work from the
presenting practitioner.
The consultation service and primary care visit RVUs were
calculated as a percentage of the combined total and resulted in a 75-
percent payment to the consulting practitioner and 25-percent payment
to the referring practitioner. This percentage allocation is intended
to reflect the average level of new work performed by each practitioner
over the course of various teleconsultations. It would not be practical
for us to develop varying fee amounts for the referring practitioner's
role in presenting the patient given our lack of program experience
with teleconsultation. However, we are not eliminating the possibility
of making changes to the allocation methodology if program experience
demonstrates that a modification is warranted.
We considered making a single payment to the consulting
practitioner without specifying the amount to be shared with the
referring practitioner, however we wished to avoid raising issues of
prohibitions against ``fee splitting.'' For more information on the
payment allocation see page 33886 of the June 22, 1998 proposed rule.
Comment: A few commenters believed that the regulation should
specify the consequences in the event that a consultant fails to share
payment in a timely fashion. A suggestion was made to amend the
regulation to require the consultant to share payment within 30 days of
receipt from the Medicare carrier. The commenter also requested that,
in the event of untimely sharing of payment, the referring practitioner
have the right to contact the consultant's Medicare carrier directly
for the required percent of payment.
Response: We are not mandating or imposing time limits or dictating
how sharing of payments should occur. We believe the specific details
of how the payment should be shared, including the appropriate time
frame, should be up to the practitioners involved. We believe that
specifying a time frame in which sharing must occur, would impose an
unnecessary burden on the consulting practitioner.
Comment: One commenter stated that the proposed rule is unclear
regarding when the consulting practitioner should share 25 percent of
the total payment with the referring practitioner. Specifically, the
commenter provided two examples of how payment could possibly be
shared. The first example involved sharing Medicare and coinsurance
payments separately (upon the receipt by the consultant), while the
second example involved sharing 25 percent of the total fee schedule
amount before coinsurance was received by the consulting practitioner.
The commenter believed that the amount of payment allocation changes
depending on when sharing occurs.
Response: The consulting practitioner is responsible for billing
Medicare for the consultation service and sharing 25 percent of total
payments received with the referring practitioner. Whether the
consulting practitioner shares payments as he or she receives them,
waits until all payments are received, or shares the Medicare and
coinsurance payments up-front, the total payment amount allocated to
each practitioner remains the same. We are not imposing further
guidelines on the sharing arrangement between the two practitioners.
Comment: Several commenters questioned whether our proposed payment
methodology of making a single payment to the consultant and requiring
him or her to share payment violates section 1877 of the Act. This
section provides penalties for certain prohibited referrals. A few
commenters questioned the applicability of State laws that prohibit fee
splitting.
Response: The payment provisions for teleconsultation specify that
the consulting practitioner must submit the claim for the consultation
service and must share 25 percent of total payment with the referring
practitioner. Given that we require the sharing of payments and
predetermine by law the payment amount allocated to the referring
practitioner, we believe that our regulation does not constitute a
prohibited compensation arrangement between the consulting and
referring practitioners. We do not regard the consulting practitioner
as actually making a payment to the referring practitioner, but rather
acting as a ``conduit'' to pass a portion of the Medicare payment on.
Therefore, we believe that physicians and practitioners, under our
payment policy, are not in violation of the Act. For more discussion
regarding the bundled payment approach see page 33887 of the June 22,
1998 proposed rule.
Comment: A few commenters questioned how this payment sharing
arrangement is treated for tax purposes and whether requiring the
consultant to share payment is in conflict with the tax laws.
Response: HCFA does not give tax advice. However, we believe that
what the commenter presents as a tax problem is merely a matter of
bookkeeping. We note that the law requires the sharing of payment, and
the regulation requires the consultant to give 25 percent of the
payment received to the referring practitioner. We do not believe that
the consultant would ever account for the portion of the Medicare
payment for which he serves as a ``conduit'' as income of his or her
own. Each practitioner should consult his or her own tax adviser for
specific
[[Page 58884]]
information about his own bookkeeping practices.
Comment: Many commenters believed that it will be an administrative
burden for the consultant to share payments with the referring
practitioner. We received suggestions for two alternative billing
proposals. The first alternative proposal maintained the single bill
approach, but required us to issue separate checks to the consulting
and referring practitioner from the same claim form. The second
alternative proposal required the submission of separate claims from
the consulting and referring practitioner with HCFA issuing separate
checks.
Response: We understand the commenters' concern regarding the
additional administrative requirements placed on the consulting
practitioner. As a result of public comment, we examined the
possibility of issuing two separate checks from the same claim form.
Under this approach, we would pay the consultant 75 percent of the
appropriate fee schedule amount and the referring practitioner would be
paid 25 percent based upon the claim submitted by the consultant.
However, this option could not be implemented to meet the January 1,
1999, effective date of this provision as mandated by section 4206 of
BBA. For instance, the Medicare claims processing system is currently
designed to accept only one ``pay to'' personal identification number
(PIN) per claim on the electronic claim record and the HCFA-1500 paper
claim fields that are used as the source for generating a check to a
practitioner.
Currently there is only one scenario in which two checks can be
issued from one claim form. That situation occurs when a beneficiary
overpays his or her deductible and/or coinsurance on an assigned claim.
In this case, one check is issued to the provider and a second check is
issued to the beneficiary reflecting the amount the beneficiary
overpaid. It is possible to issue two checks in this one instance
because there is only one personal identification number.
Additionally, the Medicare claims processing system is designed to
accommodate only one provider signature per claim. As such, if the
consulting practitioner bills on behalf of the referring practitioner,
we would not have a valid claim from the referring practitioner upon
which to base payment and issue a check.
Another administrative difficulty concerns the possibility that the
consulting and referring practitioners may be located in different
carrier jurisdictions. This would make it difficult for one carrier to
make separate payments to both practitioners. This option may be more
feasible once national practitioner identification numbers are
implemented as mandated by the Health Insurance Portability and
Accountability Act of 1996.
When developing the proposed rule we considered requiring each
practitioner to submit a separate claim. This alternative was rejected
due to the administrative difficulties in linking claims to assure that
the payment ceiling as allowed by section 4206 of BBA is not exceeded.
Total payment could exceed what the consultant would have otherwise
received if the presenting practitioner were to submit a claim for a
consultation at a higher intensity level than the consultant. The task
of linking claims becomes increasingly difficult if two carriers are
involved because the practitioners' locations fall within separate
carrier jurisdictions. The systems modifications necessary to
accommodate separate claims could not have been implemented by the
January 1, 1999, effective date as mandated by BBA.
Although the final rule requires the consulting practitioner to
submit a claim for the teleconsultation and share payment with the
referring practitioner, we are not foreclosing the possibility of
making changes to this policy in the future.
Comment: One commenter had concerns regarding language in the
proposed rule that stated that the teleconsultation transfers the
patient to the consulting practitioner. The commenter believed that we
should clarify that this statement was made only for administrative
requirements of the physician fee schedule and that we did not intend
it as a comment on the scope of medical practice.
Response: Our determination of the consultant's location as the
site of service is for Medicare payment purposes only. Given that BBA
allows payment up to the consultant's current fee schedule, we believe
that it is appropriate to use the Geographic Practice Cost Index (GPCI)
relevant to the location of the consulting practitioner, rather than
the GPCI applicable to the referring practitioner. We did not intend to
make a comment regarding the scope of medical practice.
Coding Provisions
Comment: The majority of commenters were strongly in favor of using
a modifier to identify a consultation delivered via telecommunications
systems. A few commenters suggested new codes to identify a
teleconsultation. One commenter stated that modifiers are not always
handled correctly by the Medicare carriers and that separate codes
would offer the most reliable way of identifying services subject to
their own payment rules.
Response: Using a modifier to identify a consultation delivered via
telecommunications conforms with our view that a teleconsultation is a
method of delivering a consultation service, rather than a new service.
We considered developing a separate coding structure for
teleconsultation, however, we rejected this option because we believe
that new codes would be administratively cumbersome for the medical
community and the Medicare program. We believe it will be easier for
practitioners to use a single modifier rather than an entirely new set
of codes.
Issues Not Addressed in the Proposed Rule
Comment: One commenter asked whether we plan to evaluate the impact
of this rule on beneficiaries, providers, other payers, or Medicare.
The commenter further stated that data has been limited from the
current teleconsultation demonstration project.
Response: We believe that it would be beneficial to evaluate the
impact of expanding eligibility for teleconsultation beyond the
existing demonstration sites. We plan to evaluate program data
resulting from this provision, such as utilization patterns, service
intensity, and the type of practitioners providing a teleconsultation.
Comment: A few commenters suggested we provide clarification
regarding both intra- and inter-state scope of practice and licensure
issues. One commenter expressed concern that the proposed rule may
unintentionally involve us in State-based scope of practice and
recommended that we clarify that midlevel practitioners are prohibited
from operating outside the licensed health professionals scope of
practice in their State.
Response: BBA specifies that a nonphysician practitioner may refer
a beneficiary for consultation. We clarify that midlevel practitioners
would need to meet the governing requirements of the State in which
they are licensed. Therefore, if the law of the State in which they are
licensed would prohibit a midlevel practitioner (for example, a nurse
practitioner or a physician assistant) from referring a patient for
consultation, the practitioner could not refer a patient for
teleconsultation. Likewise, if the law of the State in which the
teleconsultation occurs prohibits a nonphysician from providing a
consultation service, the
[[Page 58885]]
practitioner could not provide a teleconsultation under Medicare.
Moreover, if State law precludes an out-of-State practitioner from
delivering a teleconsultation, Medicare would not pay for that
consultation.
Comment: One commenter believed that this rule would disadvantage
specialists located in a rural HPSA by drawing patients to specialists
outside of the local area. The commenter stated that managed care
organizations may possibly be able to negotiate a better price from
consultants outside the community and believed we should develop
safeguards to prohibit such possibilities.
Response: We believe this comment is beyond the scope of this
provision as authorized by BBA. BBA provides for payment of
teleconsultation when the requirements of this benefit are met.
However, HCFA is not authorized by the law to direct physicians and
other medical practitioners to a specific consultant.
Comment: A few commenters suggested that we consider guidelines
regarding beneficiary consent and safeguards for confidentiality.
Response: We agree that the beneficiary should be thoroughly
informed regarding the nature of a teleconsultation and that
confidentiality of medical records is of great concern. However, we
assume that practitioners are already cognizant of their responsibility
to obtain patients' informed consent and to protect patients' medical
records. Therefore, we are not establishing guidelines regarding
beneficiary consent or confidentiality at this time. We invite specific
comments regarding this issue.
We recognize that this rule is a first step in refining face-to-
face ``hands on'' requirements for a medical service under Medicare to
reflect a telemedicine service. We are not eliminating the possibility
of the development of modifications to Medicare telemedicine coverage
and payment policies as the law permits and as more program experience
in this area is obtained.
To that end, we intend to explore several issues, including: (1)
The use of store and forward technologies as a method for delivering
medical services; (2) the use of registered nurses and other medical
professionals not recognized as a practitioner under the
teleconsultation provision to present the patient to the consulting
practitioner; and (3) the appropriateness of current consultation codes
for reporting consultations delivered via communications systems.
In a year we will send recommendations to Congress regarding these
issues along with any necessary legislative changes.
Clarifications and Modifications
Teleconsultation in Rural Health Clinics
As a result of further analysis and evaluation, we have decided to
clarify payment policy for teleconsultations provided in a Rural Health
Clinic (RHC).
We believe that Congress did not intend to include
teleconsultation, as provided for by BBA, as part of the RHC benefit.
Section 4206(a) of BBA specifies that Medicare payment shall be made
for a professional consultation delivered via telecommunications with a
physician as defined in section 1861(r) of the Social Security Act or
practitioner as defined by section 1842(b)(18)(C) of the Act. Services
furnished by an RHC are treated as ``RHC services'' and lose their
identity as physicians' services or services of other practitioners.
Moreover, section 4206(b) of BBA instructs us to create a system of
payment for teleconsultation that requires that payment be shared
between the referring and consulting professionals, precludes payment
for any sort of capital or facility fees, and applies the mandatory
claims submission and limiting charge provisions of section 1848(g) of
the Social Security Act. The method of payment for teleconsultation
services under this benefit is not congruent with the method of payment
for services under the RHC benefit. Under the RHC benefit, payment is
made on the basis of an all-inclusive rate per visit (see 42 CFR
405.2462). These provisions are another indication that we should not
include teleconsultation services furnished by physicians in RHCs as
RHC services for which we make payment to the RHC.
While, some argument could be made that Congress simply did not
intend for teleconsultation services ever to be paid for under section
4206 if they are furnished within the confines of an RHC, this would be
an unusual conclusion since section 4206 specifically provides payment
for consultation services in rural areas similar to those areas
serviced by RHCs that may lack sufficient specialists to provide
necessary beneficiary care.
Since Congress did not address how we should treat the services of
physicians and other practitioners providing teleconsultation in RHCs,
we are interpreting the law to permit practitioners in RHCs to bill for
teleconsultation as do other practitioners. The law and the legislative
history indicate that the intent of the teleconsultation benefit was to
expand services to beneficiaries in rural areas. The same intent
informs the RHC benefit, so we believe it would be anomalous to read
the teleconsultation benefit as being unavailable to rural
beneficiaries who receive a teleconsultation in an RHC.
Section 402 of the RHC manual (HCFA Pub. 27) describes ``services
furnished by RHCs . . . which are not RHC/FQHC services.'' These
services include durable medical equipment, ambulance services,
diagnostic tests (``unless an interpretation of the test is provided by
the RHC/FQHC physician''), prosthetic devices, braces, and artificial
limbs. Thus, services created by other benefit provisions and not
explicitly enumerated as part of the RHC benefit have been paid not
under the RHC benefit (even if furnished in an RHC), but rather under
the appropriate authority in section 1833 of the Act. We believe that
it is consistent with this policy to pay for teleconsultations under
the authority of section 4206 of BBA, not as an RHC service.
Therefore, consulting practitioners providing a teleconsultation in
an RHC setting will be paid according to the payment methodology
specified in this final rule. A teleconsultation would not generate an
RHC visit and would not be paid for under the all-inclusive rate
methodology. For instance, the consulting practitioner providing a
teleconsultation in an RHC would bill the applicable Medicare carrier
using his or her own identification number rather than the
identification number of the RHC. Payment would be based on the
consultant's fee schedule amount and he or she would be required to
share 25 percent of total payments with the referring practitioner.
When a practitioner in an RHC refers a Medicare beneficiary for a
teleconsultation, he or she will receive 25 percent of the approved
Medicare consultation fee schedule. An RHC visit would not be billed by
either the referring or consulting practitioner for the
teleconsultation. However, the referring practitioner could bill for
the initial visit which prompted the need for a consultation as an RHC
visit.
Note: These requirements would also apply to Federally Qualified
Health Centers located in a rural HPSA.
Result of Evaluation of Comments
<bullet> Eligibility for Teleconsultation--Medicare beneficiaries
residing in rural HPSAs are eligible to receive teleconsultation
services. This final rule stipulates the use of the site of
presentation (patient location) as a proxy for beneficiary residence.
However, if a beneficiary can
[[Page 58886]]
demonstrate that he or she resides in a rural HPSA, Medicare would make
payment regardless of the site of consultation. Eligibility for
teleconsultation includes both full and partial county HPSAs designated
by section 332(a)(1)(A) of the Public Health Service Act.
<bullet> Scope of Coverage--Covered services include initial,
follow-up, or confirming consultations in hospitals, outpatient
facilities, or medical offices delivered via interactive audio and
video telecommunications systems (CPT codes 99241-99245, 99251-99255,
99261-99263, and 99271-99275).
<bullet> Practitioners eligible to be consulting and referring
practitioners--Clinical psychologists, clinical social workers,
certified registered nurse anesthetists, and anesthesiologist
assistants do not provide for consultation services payable under
Medicare and therefore cannot provide a teleconsultation under this
provision. Additionally, certified nurse anesthetists and
anesthesiologist assistants are not eligible to be referring
practitioners for a teleconsultation. Practitioners who may provide
teleconsultations include the following: physicians, physician
assistants, nurse practitioners, clinical nurse specialists, and nurse-
midwives. Practitioners who may refer patients for teleconsultation
include the following: physicians, physician assistants, nurse
practitioners, clinical nurse specialists, nurse-midwives, clinical
psychologists, and clinical social workers.
<bullet> Conditions of Payment--The patient must be present at the
time of consultation, the medical examination of the patient must be
under the control of the consulting practitioner, and the consultation
must take place via an interactive audio and video telecommunications
system. Interactive telecommunications systems must be multi-media
communications that, at a minimum, include audio and video equipment
permitting real-time consultation among the patient, consulting
practitioner, and referring practitioner (as appropriate). Telephones,
facsimile machines, and electronic mail systems do not meet the
requirements of interactive telecommunications systems.
<bullet> We amended the proposed rule to allow another practitioner
who can be a referring practitioner under this provision to present the
patient to the consultant provided that he or she is an employee of the
actual referring practitioner.
<bullet> Registered nurses and other medical professionals not
included within the definition of a practitioner in section
1842(b)(18)(C) of the Act are not permitted to act as presenters during
teleconsultations.
<bullet> Medicare Payment Policy--A single payment will be made to
the consulting practitioner. The amount will be equal the consultant's
current fee schedule payment for a face-to-face patient consultation.
The statute requires that the fee be shared by the referring and
consulting practitioners. This final rule implements this requirement
by providing that the consulting practitioner receive 75 percent, and
the referring practitioner 25 percent, of the consulting practitioner's
Medicare fee. The patient continues to be responsible for the 20
percent Medicare coinsurance.
<bullet> Billing for Teleconsultation--The consulting practitioner
will submit one claim for the consultation service and will provide the
referring practitioner with 25 percent of any payment, including any
deductible or coinsurance received for the consultation. A coding
modifier will be used to identify the claim as a teleconsultation. The
referring practitioner cannot submit a Medicare claim for the
teleconsultation.
IV. Refinement of Relative Value Units for Calendar Year 1999 and
Responses to Public Comments on Interim Relative Value Units for
1998
A. Summary of Issues Discussed Related to the Adjustment of Relative
Value Units
Section IV.B. of this final rule describes the methodology used to
review the comments received on the RVUs for physician work and the
process used to establish RVUs for new and revised CPT codes. Changes
to codes on the physician fee schedule reflected in Addendum B are
effective for services furnished beginning January 1, 1999.
B. Process for Establishing Work Relative Value Units for the 1999
Physician Fee Schedule
Our October 31, 1997 final rule on the 1998 physician fee schedule
(62 FR 59048) announced the final RVUs for Medicare payment for
existing procedure codes under the physician fee schedule and interim
RVUs for new and revised codes. The RVUs contained in the rule apply to
physicians' services furnished beginning January 1, 1998. We announced
that we considered the RVUs for the interim codes to be subject to
public comment under the annual refinement process. In this section, we
summarize the refinements to the interim work RVUs that have occurred
since publication of the October 1998 final rule and our establishment
of the work RVUs for new and revised codes for the 1999 physician fee
schedule.
Work Relative Value Unit Refinements of Interim and Related Relative
Value Units (Includes Table 4--Work Relative Value Unit Refinements of
1998 Interim and Related Relative Value Units)
Although the RVUs in the October 1997 final rule were used to
calculate 1998 payment amounts, we considered the RVUs for the new or
revised codes to be interim. We accepted comments for a period of 60
days. We received comments from approximately 8 specialty societies on
approximately 34 CPT codes with interim RVUs. Only comments received on
codes listed in Addendum C of the October 1997 final rule were
considered this year.
Due to the content of the comments received, we did not convene
multi-specialty refinement panels (see the November 22, 1996 final rule
on the physician fee schedule (61 FR 59536) for a detailed explanation
of the refinement of CPT codes with interim RVUs). Instead,
determinations were made by HCFA medical officers in conjunction with
our carrier medical directors.
Table 4--Work Relative Value Unit Refinements of 1998 Interim and
Related Relative Value Units
Table 4 lists the interim and related codes reviewed during the
1998 refinement process described in this section. This table includes
the following information:
<bullet> CPT Code. This is the CPT code for a service.
<bullet> Description. This is an abbreviated version of the
narrative description of the code.
<bullet> 1998 Work RVU. The work RVUs that appeared in the October
1997 rule are shown for each reviewed code.
<bullet> Requested Work RVU. This column identifies the work RVUs
requested by commenters.
<bullet> 1999 Work RVU. This column contains the final RVUs for
physician work.
The new values emerged from analysis of the specialty society's
written comments on the 1998 interim valued CPT codes.
[[Page 58887]]
Table 4.--Work Relative Value Unit Refinements of 1998 Interim and Related Relative Value Units
----------------------------------------------------------------------------------------------------------------
1998 work Requested 1999 work
CPT MOD Description RVU work RVU RVU
----------------------------------------------------------------------------------------------------------------
11055.. ......................... Paring or cutting of nails........... 0.27 0.43 0.27
11056.. ......................... Paring or cutting of nails........... 0.39 0.61 0.39
11057.. ......................... Paring or cutting of nails........... 0.50 0.79 0.50
11719.. ......................... Paring or cutting of nails........... 0.11 0.17 0.11
17003.. ......................... Destruction of lesions............... 0.15 0.18 0.15
17004.. ......................... Destruction of lesions............... 2.79 3.05 2.79
90804.. ......................... Psytx, office (20-30)................ 1.11 1.30 1.21
90805.. ......................... Psytx, office (20-30) w/e&m.......... 1.47 1.47 1.37
90806.. ......................... Psytx, office (45-50)................ 1.73 1.99 1.86
90807.. ......................... Psytx, office (45-50) w/e&m.......... 2.00 2.16 2.02
90808.. ......................... Psytx, office (75-80)................ 2.76 2.99 2.79
90809.. ......................... Psytx, office (75-80) w/e&m.......... 3.15 3.16 2.95
90810.. ......................... Intac psytx, office (20-30).......... 1.19 1.42 1.32
90811.. ......................... Intac psytx, off 20-30 w/e&m......... 1.58 1.59 1.48
90812.. ......................... Intac psytx, office (45-50).......... 1.86 2.11 1.97
90813.. ......................... Intac psytx, off 45-50 w/e&m......... 2.15 2.28 2.13
90814.. ......................... Intac psytx, office (75-80).......... 2.97 3.11 2.90
90815.. ......................... Intac psytx, off 75-80 w/e&m......... 3.39 3.28 3.06
90816.. ......................... Psytx, hosp (20-30).................. 1.24 1.34 1.25
90817.. ......................... Psytx, hosp (20-30) w/e&m............ 1.65 1.51 1.41
90818.. ......................... Psytx, hosp (45-50).................. 1.94 2.03 1.89
90819.. ......................... Psytx, hosp (45-50) w/e&m............ 2.24 2.20 2.05
90821.. ......................... Psytx, hosp (75-80).................. 3.09 3.03 2.83
90822.. ......................... Psytx, hosp (75-80) w/e&m............ 3.53 3.20 2.99
90823.. ......................... Intac psytx, hosp (20-30)............ 1.33 1.46 1.36
90824.. ......................... Intac psytx, hsp 20-30 w/e&m......... 1.77 1.63 1.52
90826.. ......................... Intac psytx, hosp (45-50)............ 2.08 2.15 2.01
90827.. ......................... Intac psytx, hsp 45-50 w/e&m......... 2.41 2.32 2.16
90828.. ......................... Intac psytx, hosp (75-80)............ 3.32 3.15 2.94
90829.. ......................... Intac psytx, hsp 75-80 w/e&m......... 3.80 3.32 3.10
99343.. ......................... Home care visits..................... 2.27 No Rec 2.27
99345.. ......................... Home care visits..................... 3.79 No Rec 3.79
99348.. ......................... Home care visits..................... 1.26 No Rec 1.26
99350.. ......................... Home care visits..................... 3.03 No Rec 3.03
----------------------------------------------------------------------------------------------------------------
* All CPT and descriptors copyright 1998 American Medical Association.
Paring or cutting of nails (CPT codes 11055 through 11057 and 11719)
Comment: A commenter disagreed with our decision to decrease the
RUC-recommended RVUs for this family of codes. (``RUC'' refers to the
American Medical Association's Specialty Society Relative Value Scale
Update Committee.) They believed our budget-neutral approach decreased
the recommended RUC work RVUs by too large a factor. (See the section
on the establishment of interim work Value Units for a brief discussion
of the budget-neutral approach.)
Response: We disagree with the commenter's view that the RUC
recommendations were decreased by too large a factor. CPT codes 11055
through 11057 can be performed in conjunction with CPT code 11719. The
methodology that was used accounts for these combinations. Therefore,
the 1998 interim work RVUs will be made final for this series of CPT
codes. The final work RVUs, effective January 1, 1999, will be as
follows: CPT code 11055 (0.27), CPT code 11056 (0.39), CPT code 11057
(0.50), and CPT code 11719 (0.11).
Destruction of lesions (CPT codes 17003 and 17004)
Comment: A commenter disagreed with our decision to accept the RUC
recommendations for CPT codes 17003 and 17004. The commenter believed
that the work RVUs associated with these codes were decreased by the
RUC without any rationale.
Response: We disagree with the commenter's belief that we should
not have accepted the RUC recommendation for CPT codes 17003 and 17004.
The RUC determined the work RVUs for these two codes by crosswalking
the utilization of existing procedure codes (which were to be deleted
for CPT 1998) into these two new CPT codes for the same services.
Compliance with our guidelines for budget neutrality resulted in the
reduction of the society's recommended work RVUs by the RUC. Therefore,
the 1998 interim RVUs for CPT codes 17003 and 17004 will be made final.
The final work RVUs, effective January 1, 1999, will be as follows: CPT
code 17003 (0.15) and CPT code 17004 (2.79).
Psychotherapy (CPT codes 90804 through 90829)
Comment: In May of 1997, the RUC recommended that HCFA-assigned
RVUs for the 24 HCPCS psychotherapy codes be crosswalked to the 1998
CPT codes. The RUC also recommended that the work RVUs remain interim
until such time as a survey is conducted by each of the professions
that furnish the services.
Response: We received recommendations that were based upon the
cooperative efforts of the American Academy of Child and Adolescent
Psychiatry, The American Nurses Association, the American Psychiatric
Association, the American Psychological Association, and the National
Association of Social Workers. The RUC accepted these recommendations.
The cooperative effort by the referenced specialties used frequency
estimations to maintain budget neutrality within the family of new CPT
codes. Based upon actual 1997
[[Page 58888]]
frequencies, the recommended work RVUs are not budget-neutral. We will
retain the relative relationships that were recommended but will attain
budget neutrality by applying a uniform 6.7 percent reduction across
all of the codes. The final 1999 work RVUs will be as follows:
Table 5.--Psychotherapy (CPT Codes 90804 through 90829)
------------------------------------------------------------------------
CPT 1999 work
code Descriptor RVUs
------------------------------------------------------------------------
90804.. Psytx, office (20-30)............................. 1.21
90805.. Psytx, office (20-30) w/e&m....................... 1.37
90806.. Psytx, office (45-50)............................. 1.86
90807.. Psytx, office (45-50) w/e&m....................... 2.02
90808.. Psytx, office (75-80)............................. 2.79
90809.. Psytx, office (75-80) w/e&m....................... 2.95
90810.. Intac psytx, office (20-30)....................... 1.32
90811.. Intac psytx, off 20-30 w/e&m...................... 1.48
90812.. Intac psytx, office (45-50)....................... 1.97
90813.. Intac psytx, off 45-50 w/e&m...................... 2.13
90814.. Intac psytx, office (75-80)....................... 2.90
90815.. Intac psytx, off 75-80 w/e&m...................... 3.06
90816.. Psytx, hosp (20-30)............................... 1.25
90817.. Psytx, hosp (20-30) w/e&m......................... 1.41
90818.. Psytx, hosp (45-50)............................... 1.89
90819.. Psytx, hosp (45-50) w/e&m......................... 2.05
90821.. Psytx, hosp (75-80)............................... 2.83
90822.. Psytx, hosp (75-80) w/e&m......................... 2.99
90823.. Intac psytx, hosp (20-30)......................... 1.36
90824.. Intac psytx, hsp 20-30 w/e&m...................... 1.52
90826.. Intac psytx, hosp (45-50)......................... 2.01
90827.. Intac psytx, hsp 45-50 w/e&m...................... 2.16
90828.. Intac psytx, hosp (75-80)......................... 2.94
90829.. Intac psytx, hsp 75-80 w/e&m...................... 3.10
------------------------------------------------------------------------
Home care visits (CPT codes 99341 through 99350)
Comment: A commenter suggested that, when we increased the RUC's
work RVU recommendations by a uniform 10 percent intensity factor, we
used incorrect base intra-service time. The commenter believed the RUC
survey of intra-service time was more accurate than the typical time
agreed to by CPT.
Response: We maintain that the correct intra-service times were
used and thus will finalize these interim valued codes for home visits.
Effective January 1, 1999, the final work RVUs for the home care visit
codes will be as follows: CPT code 99341 (1.01), CPT code 99342 (1.52),
CPT code 99343 (2.27), CPT code 99344 (3.03), CPT code 99345 (3.79),
CPT code 99347 (0.76), CPT code 99348 (1.26), CPT code 99349 (2.02),
and CPT code 99350 (3.03).
Establishment of Interim Work Relative Value Units for New and Revised
Physicians' Current Procedural Terminology Codes and New HCFA Common
Procedure Coding System Codes for 1999 Methodology (Includes Table 6--
American Medical Association Specialty Society Relative Value Update
Committee and Health Care Professionals Advisory Committee
Recommendations and HCFA's Decisions for New and Revised 1999 CPT
Codes)
One aspect of establishing work RVUs for 1999 was related to the
assignment of interim work RVUs for all new and revised CPT codes. As
described in our November 25, 1992 notice on the 1993 fee schedule (57
FR 55938) and in section III.B. of our November 26, 1996 final rule (61
FR 59505 through 59506), we established a process, based on
recommendations received from the AMA's RUC, for establishing interim
RVUs for new and revised codes.
We received work RVU recommendations for approximately 70 new and
revised codes from the RUC. Physician panels consisting of carrier
medical directors and our staff reviewed the RUC recommendations by
comparing them to our reference set or to other comparable services on
the physician fee schedule for which work RVUs had been established
previously, or to both of these criteria. The panels also considered
the relationships among the new and revised codes for which we received
RUC recommendations. We agreed with the majority of those relationships
reflected in the RUC values. In some cases, when we agreed with the RUC
relationships, we revised the work RVUs recommended by the RUC to
achieve work neutrality within families of codes. That is, the work
RVUs have been adjusted so that the sum of the new or revised work RVUs
(weighted by projected frequency of use) for a family of codes will be
the same as the sum of the current work RVUs (weighted by their current
frequency of use). For approximately 93 percent of the RUC
recommendations, proposed work RVUs were accepted or increased, and,
for approximately 7 percent, work RVUs were decreased.
We received only one recommendation from the Health Care
Professionals Advisory Committee (HCPAC) for a new code for which the
RUC did not provide a recommendation. This HCPAC recommendation was
accepted.
There were also 10 CPT codes for which we did not receive a RUC
recommendation. After review of these codes by HCFA medical officers,
we established interim work RVUs for 8 of these codes and identified
the remaining 2 CPT codes as carrier-priced for 1999.
Table 6 is a listing of those codes that will be new or revised in
1999 as well as their associated work RVUs. This table includes the
following information:
<bullet> A ``#'' identifies a new code for 1999.
<bullet> CPT code. This is the CPT code for a service.
<bullet> Modifier. A ``26'' in this column indicates that the work
RVUs are for the professional component of the code.
<bullet> Description. This is an abbreviated version of the
narrative description of the code.
<bullet> RUC recommendations. This column identifies the work RVUs
recommended by the RUC.
<bullet> HCPAC recommendations. This column identifies work RVUs
recommended by the HCPAC.
<bullet> HCFA decision. This column indicates whether we agreed
with the RUC recommendation (``agree''); we established work RVUs that
are higher than the RUC recommendation (``increase''); or we
established work RVUs that were less than the RUC recommendation
(``decrease''). Codes for which we did not accept the RUC
recommendation are discussed in greater detail following Table 6 below.
An ``(a)'' indicates that no RUC recommendation was provided. A
discussion follows the table.
<bullet> HCFA work RVUs. This column contains the RVUs for
physician work based on our reviews of the RUC recommendations. The
RVUs shown for global surgical services have not been adjusted to
account for the 1998 increases for work RVUs in evaluation and
management services.
1999 work RVUs. This column contains the 1999 RVUs for physician
work. The RVUs shown for global surgical services have been adjusted to
account for the 1998 increases for work RVUs in evaluation and
management.
This table includes only those codes that were reviewed by the full
RUC or for which we received a recommendation from the HCPAC.
[[Page 58889]]
Table 6.--American Medical Association Specialty Society Relative Value Update Committee and Health Care
Professionals Advisory Committee Recommendations and HCFA's Decisions for New and Revised 1999 CPT Codes
----------------------------------------------------------------------------------------------------------------
RUC HCPAC NCFA Work 1998 Work
CPT * code MOD Description recommendation recommendation HCFA decision RVU RVU
----------------------------------------------------------------------------------------------------------------
15000...... ......... Skin graft 4.00 .............. Agree.......... 4.00 4.00
procedure.
15001#..... ......... Skin graft 1.00 .............. Agree.......... 1.00 1.00
procedure.
15100...... ......... Skin split graft 9.05 .............. Agree.......... 9.05 9.05
procedure.
15101...... ......... Skin split graft 1.72 .............. Agree.......... 1.72 1.72
procedure.
15120...... ......... Skin split graft 9.83 .............. Agree.......... 9.83 9.83
procedure.
15121...... ......... Skin split graft 2.67 .............. Agree.......... 2.67 2.67
procedure.
15350...... ......... Skin homograft 4.00 .............. Agree.......... 4.00 4.00
procedure.
15351#..... ......... Skin homograft 1.00 .............. Agree.......... 1.00 1.00
procedure.
15400...... ......... Skin heterograft 4.00 .............. Agree.......... 4.00 4.00
procedure.
15401#..... ......... Skin heterograft 1.00 .............. Agree.......... 1.00 1.00
procedure.
19364...... ......... Breast 41.00 .............. Agree.......... 41.00 41.00
reconstruction.
27347#..... ......... Excision tendon 5.78 .............. Agree.......... 5.78 5.78
sheath.
28289#..... ......... Hallux rigidus 7.04 .............. Agree.......... 7.04 7.04
correction.
31622...... ......... Bronchoscopic .............. .............. (a)............ 2.67 2.67
procedures.
31623#..... ......... Bronchoscopic .............. .............. (a)............ 3.07 3.07
procedures.
31624#..... ......... Bronchoscopic .............. .............. (a)............ 3.11 3.11
procedures.
31643#..... ......... Bronchoscopy for 3.50 .............. Agree.......... 3.50 3.50
brachytherapy.
32001#..... ......... Bronchoscopic .............. .............. (a)............ 5.71 5.71
procedures.
33975...... ......... Ventricular 21.60 .............. Agree.......... 21.60 21.60
assist devices.
33976...... ......... Ventricular 29.10 .............. Agree.......... 29.10 29.10
assist devices.
35500#..... ......... Bypass grafts.... .............. .............. (a)............ carrier carrier
35681...... ......... Bypass grafts.... 3.93 .............. Decrease....... 1.60 1.60
35682#..... ......... Bypass grafts.... 7.20 .............. Agree.......... 4.80 4.80
35683#..... ......... Bypass grafts.... 8.50 .............. Agree.......... 6.10 6.10
35875...... ......... Thrombectomy of 10.13 .............. Agree.......... 10.13 10.13
grafts.
35876...... ......... Thrombectomy of 17.00 .............. Agree.......... 17.00 17.00
grafts.
36823#..... ......... Arteriovenous carrier .............. Agree.......... carrier carrier
Chemo.
36831#..... ......... Thrombectomy of 8.00 .............. Agree.......... 8.00 8.00
grafts.
36832...... ......... Thrombectomy of 10.50 .............. Agree.......... 10.50 10.50
grafts.
36833#..... ......... Thrombectomy of 11.95 .............. Agree.......... 11.95 11.95
grafts.
36860...... ......... Thrombectomy of 2.01 .............. Agree.......... 2.01 2.01
grafts.
38792#..... ......... Sentinel node .............. .............. (a)............ carrier carrier
biopsy.
45126#..... ......... Pelvic 38.39 .............. Agree.......... 38.39 38.39
exenteration.
56321#..... ......... Laparoscopic carrier .............. Agree.......... carrier carrier
adrenalectomy.
57106#..... ......... Radical 6.36 .............. Agree.......... 6.36 6.36
vaginectomy.
57107#..... ......... Radical 23.00 .............. Agree.......... 23.00 23.00
vaginectomy.
57109#..... ......... Radical 27.00 .............. Agree.......... 27.00 27.00
vaginectomy.
57110...... ......... Radical 14.29 .............. Agree.......... 14.29 14.29
vaginectomy.
57111#..... ......... Radical 27.00 .............. Agree.......... 27.00 27.00
vaginectomy.
57112#..... ......... Radical 29.00 .............. Agree.......... 29.00 29.00
vaginectomy.
67208...... ......... Destruction of 6.70 .............. Agree.......... 6.70 6.70
choroid lesion.
67210...... ......... Destruction of 8.82 .............. Agree.......... 8.82 8.82
choroid lesion.
67220#..... ......... Destruction of 13.13 .............. Agree.......... 13.13 13.13
choroid lesion.
67320...... ......... Strabimus surgery 4.33 .............. Agree.......... 4.33 4.33
67331...... ......... Strabimus surgery 4.06 .............. Agree.......... 4.06 4.06
67332...... ......... Strabimus surgery 4.49 .............. Agree.......... 4.49 4.49
67334...... ......... Strabimus surgery 3.98 .............. Agree.......... 3.98 3.98
67335...... ......... Strabimus surgery 2.49 .............. Agree.......... 2.49 2.49
67340...... ......... Strabimus surgery 4.93 .............. Agree.......... 4.93 4.93
69990#..... ......... Microsurgery..... .............. .............. (a)............ 3.46 3.46
73560...... 26....... Radiological 0.17 .............. Agree.......... 0.17 0.17
examination,
knee.
73562...... 26....... Radiological 0.18 .............. Agree.......... 0.18 0.18
examination,
knee.
73564...... 26....... Radiological 0.22 .............. Agree.......... 0.22 0.22
examination,
knee.
76006#..... ......... Stress views..... 0.41 .............. Agree.......... 0.41 0.41
76977#..... 26....... Bone density..... .............. .............. (a)............ 0.22 0.22
78020#..... ......... Thyroid carcinoma 0.67 .............. Decrease....... 0.60 0.60
metastases.
78205...... 26....... Liver imaging.... 0.71 .............. Agree.......... 0.71 0.71
78206#..... 26....... Liver imaging.... 0.96 .............. Agree.......... 0.96 0.96
78472...... 26....... Cardiac blood 0.98 .............. Agree.......... 0.98 0.98
pool imaging.
78494#..... 26....... Cardiac blood 1.19 .............. Agree.......... 1.19 1.19
pool imaging.
78496#..... 26....... Cardiac blood 0.50 .............. Agree.......... 0.50 0.50
pool imaging.
78588#..... 26....... Pulmonary 1.09 .............. Agree.......... 1.09 1.09
perfusion
imaging.
88291#..... 26....... Cytogenetic 0.52 .............. Agree.......... 0.52 0.52
studies.
92135#..... 26....... Confocal Scanning 0.35 .............. Agree.......... 0.35 0.35
93571#..... 26....... IV distal blood 2.99 .............. Decrease....... 1.80 1.80
velocity measure.
93572#..... 26....... IV distal blood 1.70 .............. Decrease....... 1.44 1.44
velocity measure.
94014#..... 26....... Pulmonary 0.52 .............. Agree.......... 0.52 0.52
function.
[[Page 58890]]
94016#..... ......... Pulmonary 0.52 .............. Agree.......... 0.52 0.52
function.
94060...... 26....... Pulmonary 0.31 .............. Agree.......... 0.31 0.31
function.
94620...... 26....... Pulmonary .............. .............. (a)............ 0.88 0.88
function.
94621#..... 26....... Pulmonary .............. .............. (a)............ 0.88 0.88
function.
95920...... 26....... Neurotransmitter 2.11 .............. Agree.......... 2.11 2.11
analysis.
95970#..... ......... Neurotransmitter 0.45 .............. Agree.......... 0.45 0.45
analysis.
95971#..... ......... Neurotransmitter 0.78 .............. Agree.......... 0.78 0.78
analysis.
95972#..... ......... Neurotransmitter 1.50 .............. Agree.......... 1.50 1.50
analysis.
95973#..... ......... Neurotransmitter 0.92 .............. Agree.......... 0.92 0.92
analysis.
95974#..... ......... Neurotransmitter 3.00 .............. Agree.......... 3.00 3.00
analysis.
95975#..... ......... Neurotransmitter 1.70 .............. Agree.......... 1.70 1.70
analysis.
97140#..... ......... Manual therapy 0.45 .............. Decrease....... 0.43 0.43
techniques.
99298#..... ......... Neonatal care.... 2.75 .............. Agree.......... 2.75 2.75
----------------------------------------------------------------------------------------------------------------
<SUP>a No RUC recommendation provided.
# New Codes.
* All numeric HCPCS CPT Copyright 1997 American Medical Association.
Discussion of Codes for Which the RUC Recommendations Were Not Accepted
The following is a summary of our rationale for not accepting
particular recommendations. It is arranged by type of service in CPT
code order. This summary refers only to work RVUs. Furthermore, the
RVUs in the following discussion have not been adjusted by the budget-
neutrality adjustment factor.
Bypass grafts (CPT code 35681).
We received RUC recommendations for three of the four add-on codes
(codes that may be billed only in conjunction with selected primary
procedure codes) related to composite bypass grafts. We rejected the
RUC recommendation of 3.93 work RVUs for CPT code 35681 (Bypass graft,
composite, prosthetic and vein). These work RVUs were suggested during
the 5-year review of work RVUs at a time when this family of composite
codes had not been established. The recommendation was based on the
assumption that the work could be estimated at 12 percent of an
independent procedure, CPT code 35102. We believe that a more
appropriate evaluation is based on the work involved in anastomosing
the vein and prosthetic grafts, which we estimate at 1.60 work RVUs.
Effective January 1, 1999, CPT code 35681 will be valued at 1.60 work
RVUs.
Thyroid carcinoma metastases uptake (CPT code 78020)
We received a RUC recommendation of 0.67 for CPT code 78020. The
survey data indicated that CPT code 78020 was previously reported with
unlisted CPT code 78099. The survey estimated that CPT code 78020 will
be billed approximately 15 percent of the time CPT code 78018 is
billed. CPT code 78099 was only billed 61 times in 1997, while the
projected utilization of CPT code 78020 for 1999 is approximately 575
claims annually. To retain budget neutrality within this family of
codes, the total work RVUs that will be paid in 1999 were scaled to
what would have been paid in 1999 if CPT code 78020 had not been
established. This results in work RVUs of 0.60 for CPT code 78020 and
0.86 for CPT code 78018.
Intravascular distal blood flow velocity measurements (CPT code 93571
and 93572)
The RUC recommended work RVUs of 2.99 and 1.70, respectively, for
CPT codes 93571 and 93572. The RUC recommendation was constructed based
upon a building block approach. Our analysis of this approach raised
concerns about the inclusion of certain items in the building block for
each respective code. We chose to value these procedures based upon
analogous CPT codes 92978 (IV ultrasound) and 92979 (IV ultrasound,
each additional vessel) for which the RUC time estimates were
identical. For this reason, we assigned 1.80 work RVUs to CPT code
93571 and 1.44 work RVUs to CPT code 93572.
Physical medicine and rehabilitation (CPT code 97140) CPT code 97140
(RUC-recommended work RVU=0.45 replaces CPT codes 97122, 97250, 97260,
97261, and 97265.)
To retain budget neutrality within this family of codes, the total
work RVUs that will be paid in 1999 were scaled to the total work RVUs
that would have been paid if CPT code 97140 had not been established.
This results in work RVUs of 0.43 for CPT code 97140.
V. Physician Fee Schedule Update and Conversion Factor for Calendar
Year 1999
The 1999 physician fee schedule conversion factor is $34.7315.
In accordance with section 1848(d)(1)(D) of the Act, as amended by
section 4504 of the BBA 1997, the separate conversion factor for
anesthesia services for a year shall be equal to 46 percent of the
single conversion factor for other physicians' services, except as
adjusted for changes in work, practice expense, or malpractice relative
value units. This calculation yields a 1999 anesthesia conversion
factor of $17.24.
The specific calculations to determine the conversion factor for
physicians' services for calendar year 1999 are explained below.
Detail on Calculation of the Calendar Year 1999 Physician Fee Schedule
Update and the 1999 Conversion Factor
Physician Fee Schedule Update and Conversion Factor
The conversion factor is affected by section 1848(c)(2)(B)(ii)(II)
of the Act, which requires that changes to the relative value units of
the Medicare physician fee schedule not cause expenditures to increase
or decrease by more than $20 million from the amount of expenditures
that would have been made if such adjustments had not been made. We
implement this requirement through a uniform budget-neutrality
adjustment to the conversion factor.
[[Page 58891]]
The conversion factor is also affected by the elimination of the
separate 0.917 budget-neutrality adjustment to the work relative value
units. This adjustment and its elimination are described in the October
31, 1997 final rule.
The conversion factor is further affected by adjustments made to
the practice expense and malpractice relative value units to ensure
that the percentages of fee schedule allowed charges for work, practice
expense, and malpractice premiums equal the new percentages that those
categories represent in the revised Medicare Economic Index (MEI)
weights.
Taking all of these factors into account, as well as the percent
change in the MEI and Sustainable Growth Rate (SGR) adjustments
described below, the 1999 conversion factor is calculated as follows:
1998 Conversion Factor: 36.6873
1999 Update: 2.3%
Other 1999 Factors: -7.45944%
1999 Conversion Factor: 34.7315
The 2.3 percent 1999 update is calculated as follows:
MEI: 2.3%
SGR adjustment: 0.0%
1999 Update: 2.3%
The -7.45944 percent adjustment for other factors is calculated as
follows:
Elimination of the separate work adjuster: -8.30%
Adjustment to match MEI weights: 1.20%
Volume and Intensity adjustment: -0.28%
Other 1999 factors: -7.45944%
Note that the elimination of the separate work adjuster and the
adjustment to match the MEI weights does not affect aggregate Medicare
payments because offsetting changes have been made to the practice
expense and malpractice relative value units. As described earlier, the
volume-and-intensity adjustment does not affect aggregate payments
because our actuaries assume an offsetting increase in the volume and
intensity of services provided in 1999.
The MEI and the SGR adjustments are described below.
The Percentage Change in the Medicare Economic Index
The MEI measures the weighted-average annual price change for
various inputs needed to produce physicians' services. The MEI is a
fixed-weight input price index, with an adjustment for the change in
economy-wide labor productivity. This index, which has 1996 base
weights, is comprised of two broad categories: (1) physician's own
time, and (2) physician's practice expense.
The physician's own time component represents the net income
portion of business receipts and primarily reflects the input of the
physician's own time into the production of physicians' services in
physicians' offices. This category consists of two subcomponents: wages
and salaries and fringe benefits. These components are adjusted by the
10-year moving average annual percent change in output per man-hour for
the nonfarm business sector to eliminate double counting for
productivity growth in physicians' offices and the general economy.
The physician's practice expense category represents the rate of
price growth in nonphysician inputs to the production of services in
physicians' offices. This category consists of wages and salaries and
fringe benefits for nonphysician staff and other nonlabor inputs. Like
physician's own time, the nonphysician staff categories are adjusted
for productivity using the 10-year moving average annual percent change
in output per man-hour for the nonfarm business sector. The physician's
practice expense component also includes the following categories of
nonlabor inputs: office expense, medical materials and supplies,
professional liability insurance, medical equipment, professional car,
and other expense. The table below presents a listing of the MEI cost
categories with associated weights and percent changes for price
proxies for the 1999 update. The calendar year 1999 MEI is 2.3 percent.
Increase in the Medicare Economic Index Update for Calendar Year 1999
\1\
------------------------------------------------------------------------
CY 1999
1996 percent
weights \2\ changes
------------------------------------------------------------------------
Medicare Economic Index Total................. 100.0 2.3
1. Physician's Own Time \3\ \4\........... 54.5 2.6
a. Wages and Salaries: Average hourly
earnings private nonfarm, net of
productivity......................... 44.2 2.9
b. Fringe Benefits: Employment Cost
Index, benefits, private nonfarm, net
of productivity...................... 10.3 1.2
2. Physician's Practice Expense \3\....... 45.5 2.1
a. Nonphysician Employee Compensation. 16.8 2.4
1. Wages and Salaries: Employment
Cost Index, wages and salaries,
weighted by occupation, net of
productivity..................... 12.4 2.7
2. Fringe Benefits: Employment
Cost Index, fringe benefits,
white collar, net of productivity 4.4 1.5
b. Office Expense: Consumer Price
Index for Urban Consumers (CPI-U),
housing.............................. 11.6 2.3
c. Medical Materials and Supplies:
Producer Price Index (PPI), ethical
drugs/PPI, surgical appliances and
supplies/CPI-U, medical equipment and
supplies (equally weighted).......... 4.5 4.3
d. Professional Liability Insurance:
HCFA professional liability insurance
survey \5\........................... 3.2 -0.8
e. Medical Equipment: PPI, medical
instruments and equipment............ 1.9 -1.1
f. Other Professional Expense......... 7.6 1.7
1. Professional Car: CPI-U,
private transportation........... 1.3 -1.1
2. Other: CPI-U, all items less
food and energy.................. 6.3 2.2
Addendum:
Productivity: 10-year moving average of
output per man-hour, nonfarm business
sector................................... n/a 1.1
Physician's Own Time, not productivity
adjusted................................. 54.5 3.7
Wages and salaries, not
productivity adjusted............ 44.2 4.0
Fringe benefits, not productivity
adjusted......................... 10.3 2.3
Nonphysician Employee Compensation, not
productivity adjusted.................... 16.8 3.5
Wages and salaries, not
productivity adjusted............ 12.4 3.8
Fringe benefits, not productivity
adjusted......................... 4.4 2.6
------------------------------------------------------------------------
\1\ The rates of change are for the 12-month period ending June 30,
1998, which is the period used for computing the calendar year 1999
update. The price proxy values are based upon the latest available
Bureau of Labor Statistics data as of September 15, 1998.
[[Page 58892]]
\2\ The weights shown for the MEI components are the 1996 base-year
weights, which may not sum to subtotals or totals because of rounding.
The MEI is a fixed-weight, Laspeyres-type input price index whose
category weights indicate the distribution of expenditures among the
inputs to physicians' services for calendar year 1996. To determine
the MEI level for a given year, the price proxy level for each
component is multiplied by its 1996 weight. The sum of these products
(weights multiplied by the price index levels) over all cost
categories yields the composite MEI level for a given year. The annual
percent change in the MEI levels is an estimate of price change over
time for a fixed market basket of inputs to physicians' services.
\3\ The Physician's Own Time and Nonphysician Employee Compensation
category price measures include an adjustment for productivity. The
price measure for each category is divided by the 10-year moving
average of output per man-hour in the nonfarm business sector. For
example, the wages and salaries component of Physician's Own Time is
calculated by dividing the rate of growth in average hourly earnings
by the 10-year moving average rate of growth of output per man-hour
for the nonfarm business sector. Dividing one plus the decimal form of
the percent change in the average hourly earnings (1+.040=1.040 by one
plus the decimal form of the percent change in the 10-year moving
average of labor productivity (1+.011=1.011) equals one plus the
change in average hourly earnings net of the change in output per man
hour (1.040/1.011=1.029). All Physician's Own Time and Nonphysician
Employee Compensation categories are adjusted in this way. Due to a
higher level of precision the computer calculated quotient may differ
from the quotient calculated from rounded individual percent changes.
\4\ The average hourly earnings proxy, the Employment Cost Index
proxies, as well as the CPI-U, housing and CPI-U, private
transportation are published in the Current Labor Statistics Section
of the Bureau of Labor Statistics' Monthly Labor Review. The remaining
CPIs and PPIs in the revised index can be obtained from the Bureau of
Labor Statistics' CPI Detailed Report or Producer Price Indexes.
\5\ Derived from a HCFA survey of several major insurers (the latest
available historical percent change data are for calendar year 1997).
This is consistent with prior computations of the professional
liability insurance component of the MEI.
n/a Productivity is factored into the MEI compensation categories as an
adjustment to the price variables; therefore, no explicit weight
exists for productivity in the MEI.
Medicare Performance Relative to the SGR
Medicare Sustainable Growth Rate
Section 1848(f) of the Act, as amended by section 4503 of the BBA
1997, replaces the volume performance standard with a sustainable
growth (SGR) standard. It specifies the formula for establishing yearly
SGR targets for physicians' services under Medicare. The use of SGR
targets is intended to control the actual growth in Medicare
expenditures for physicians' services.
The SGR targets are not limits on expenditures. Payments for
services are not withheld if the SGR target is exceeded. Rather, the
appropriate fee schedule update, as specified in section 1848(d)(3)(A)
of the Act, is adjusted to reflect the success or failure in meeting
the SGR target.
As provided in section 4502 of the BBA 1997, the update to the
conversion factor is established to match spending under the SGR. The
law refers to this update as the update adjustment factor. The amended
section 1848(d)(3)of the Act now states that:
the `update adjustment factor' for a year is equal (as estimated
by the Secretary) to--
(i) the difference between (I) the sum of the allowed expenditures
for physicians' services (as determined under subparagraph (C)) for
the period beginning April 1, 1997, and ending on March 31 of the
year involved, and (II) the amount of the actual expenditures for
physicians' services furnished during the period beginning April 1,
1997, and ending on March 31 of the preceding year; divided by--
(ii) the actual expenditures for physicians' services for the
12-month period ending on March 31 of the preceding year, increased
by the sustainable growth rate under subsection (f) for the fiscal
year which begins during such 12-month period.
The result is a 0.0 percent adjustment for 1999. The allowed
expenditures for physicians' services are calculated based upon the
1998 and 1999 SGR derivations as detailed in the October 31, 1997 final
rule and the Notice announcing the Sustainable Growth Rate found in
this edition of the Federal Register, respectively.
VI. Provisions of the Final Rule
The provisions of this final rule restate the provisions of the
June 5, 1998, proposed rule except as noted elsewhere in this preamble.
Following is a highlight of the changes made:
For our proposal relating to the medical direction of anesthesia
services (Sec. 415.110), we have decided to retain the current
requirements (that is, requirements (i) and (ii), and (iv) through
(vii)) and make only one technical revision in requirement (iii). The
technical revision pertains to the requirement that the physician
participate in the most demanding procedures in the anesthesia plan,
including induction and emergence.
For our proposal relating to nonphysician practitioners, following
is a highlight of the changes to the proposed rule:
<bullet> Proposed Secs. 410.75(c) and 410.76(c) are revised to
remove the alternate proposed definition of collaboration. For purposes
of Medicare coverage, the collaboration requirement will state that
these nonphysician practitioners must meet the standards for a
collaborative relationship, as established by the State in which they
are practicing. In the absence of State law or regulations governing
collaborative relationships, these nonphysician practitioners must
document their scope of practice and indicate the relationships that
they have with physicians to deal with issues outside their expertise.
<bullet> In proposed Secs. 410.74(d) and 410.75(e) we deleted the
proposed listing of examples of services that can be provided by
physician assistants, nurse practitioners and clinical nurse
specialists.
<bullet> Proposed Sec. 410.76(b) is revised to implement the
qualifications for clinical nurse specialist as established by the BBA
without the proposed exception for those clinical nurse specialist that
do not possess a master's degree.
<bullet> Proposed Sec. 410.77(a) is revised to state that a nurse-
midwife must--
+ Be a registered nurse who is currently licensed to practice as a
nurse-midwife in the State where services are performed;
+ Have successfully completed an accredited program of study and
clinical experience for nurse-midwives as specified by the State; or
+ Be certified as a nurse-midwife by the American College of Nurse-
Midwives or the American College of Nurse-Midwives Certification
Council.
<bullet> Proposed Sec. 410.74(c) is revised to state that a
physician assistant is an individual who--
+ Has graduated from a physician assistant educational program that
is accredited by the National Commission on Accreditation on Allied
Health Education Programs;
+ Has passed the national certification examination that is
certified by the National Commission on Certification of Physician
Assistants; and
+ Is licensed by the State to practice as a physician assistant.
This final rule also restates the provisions of teleconsultations
in rural health professional shortage areas proposed rule published on
June 22, 1998, at 63 FR 33890, that provided for payment for
consultations via telecommunications systems in rural HPSAs, with
changes. The changes listed below have been discussed elsewhere in this
preamble. Following is a highlight of the changes to the proposed rule:
<bullet> Proposed Sec. 410.75(a)(1) is revised to omit clinical
psychologists, clinical social workers, certified nurse
[[Page 58893]]
anesthetists, and anesthesiologist assistants from the list of
practitioners who may be consulting practitioners and the section is
redesignated as Sec. 410.78(a)(1).
<bullet> The definition of referring practitioners at proposed
Sec. 410.75(a)(2) is revised to omit certified registered nurse
anesthetists and anesthesiologist assistants, and is redesignated as
Sec. 410.78(a)(2).
<bullet> Proposed Sec. 410.75(a)(5) is redesignated as
Sec. 410.78(a)(5) and specifies that as a condition of payment, the
teleconsultation involves the participation of the referring
practitioner or a practitioner described in section 1842(b)(18)(C) of
the Act (other than a certified registered nurse anesthetist or
anesthesiologist assistant) who is an employee of the referring
practitioner, as appropriate to the medical needs of the beneficiary
and to provide information to and at the direction of the consulting
practitioner.
<bullet> The definition at proposed Sec. 410.75(b) is revised to
reflect the above changes and is redesignated as Sec. 410.78(b).
<bullet> For clarification purposes, we are referencing different
definition citations for non-physician practitioners than those
provided in the proposed rule. The definitions of physician assistants,
nurse practitioners, clinical nurse specialists, nurse-midwives,
clinical social workers, and clinical psychologists have been
reassigned to Sec. 410.74(a)(2), Sec. 410.75(b), Sec. 410.76(b),
Sec. 410.77(a), Sec. 410.73(a), and Sec. 410.71(d), respectively.
VII. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), agencies are
required to provide a 60-day notice in the Federal Register and solicit
public comment before a collection of information requirement is
submitted to the Office of Management and Budget (OMB) for review and
approval. In order to fairly evaluate whether an information collection
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires
that we solicit comment on the following issues:
Whether the information collection is necessary and useful to carry
out the proper functions of the agency;
The accuracy of the agency's estimate of the information collection
burden;
The quality, utility, and clarity of the information to be
collected; and
Recommendations to minimize the information collection burden on
the affected public, including automated collection techniques.
Based on a public comment, this rule modifies a regulatory
requirement creating an additional information collection requirement
(ICR) which was not reflected in the proposed rule that was published
on June 5, 1998, at 63 FR 30818. (The PRA package associated with the
proposed rule is: OMB No. 0938-0730, HCFA-R-0234, with an expiration
date of August 31, 2001.) Therefore, to ensure that all of the
requirements in this rule can be implemented concurrently, we are
requesting emergency OMB review of the additional ICR referenced in
this final rule. In compliance with section 3506(c)(2)(A) of the PRA of
1995, we are submitting to OMB the following requirement for emergency
review. We are requesting an emergency review because the collection of
this information is needed before the expiration of the normal time
limits specified by OMB's regulations at 5 CFR 1320. This ensures
compliance with the Balanced Budget Act of 1997 (BBA) which requires us
to revise our payment policy for nonphysician practitioners, for
outpatient rehabilitation services, and for drugs and biologicals not
paid on a cost or prospective payment basis.
We cannot reasonably comply with normal clearance procedures in
order to implement the renewal and early termination of the opt-out
requirement described below. Physicians and practitioners must notify
carriers of their intent to terminate opt-out in accordance with the
BBA.
We are requesting OMB review and approval of this collection within
11 working days from the date of publication of this regulation, with a
180-day approval period. Written comments and recommendations will be
accepted from the public if received by the individuals designated
below within 10 working days from the date of publication of this
regulation.
During this 180-day period, we will publish a separate Federal
Register notice announcing the initiation of an extensive 60-day agency
review and public comment period on this requirement. We will submit
the requirement for OMB review and an extension of this emergency
approval.
Therefore, we are soliciting public comment on this issue for the
information collection requirement discussed below.
Sec. 405.445 Renewal and early termination of opt-out
Section 405.445(d) states that a physician or practitioner who has
completed opt-out on or before January 1, 1999 may terminate opt-out
during the 90 days following January 1, 1999 if he or she notifies all
carriers to whom he or she would otherwise submit claims of the intent
to terminate opt-out and complies with paragraphs (b)(3) and (4) of
this section. Paragraph (c) of this section applies in those cases.
The burden associated with this requirement is time and effort for
the physician or practitioner to notify all carriers to whom he or she
would otherwise submit claims of the intent to terminate opt-out. There
is a one-time opportunity for physicians and practitioners who opted-
out in 1998 to re-enter the program. Afterwards, physicians and
practitioners may re-enter the program annually. It is estimated that
it will take 30 physicians or practitioners 15 minutes each to notify
their carriers for a total of 8 hours. We estimate the average
annualized three year burden estimate to be 11 hours. (Year 1--1998 and
1999 16 hours, Year 2--2000 8 hours, Year 3--2001 8 hours for a total
of 32 hours/3 years = 11 hours per year)
We have submitted a copy of this final rule with comment to OMB for
its review of the ICR described above. This requirement is not
effective until they have been approved by OMB.
If you comment on any of this information collection and record
keeping requirement, please mail copies directly to the following:
Health Care Financing Administration, Office of Information Services,
Security and Standards Group, Division of HCFA Enterprise Standards,
Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-1850,
Attn.: Louis Blank, HCFA-1006-FC.
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn.: Allison Herron Eydt, HCFA Desk Officer.
VIII. Regulatory Impact Analysis
We have examined the impacts of this final rule as required by
Executive Order 12866, the Unfunded Mandates Act of 1995, and the
Regulatory Flexibility Act (RFA) (Public Law 96-354). Executive Order
12866 directs agencies to assess all costs and benefits of available
regulatory alternatives and, when regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). A regulatory impact analysis (RIA) must be
prepared for major rules with economically significant effects ($100
million or more annually).
[[Page 58894]]
This final rule is expected to have varying effects on the
distribution of Medicare physicians' payments and services. With few
exceptions, we expect that the impact will be limited.
The Unfunded Mandates Reform Act of 1995 also requires (in section
202) that agencies prepare an assessment of anticipated costs and
benefits before proposing any rule that may result in an annual
expenditure by State, local, or tribal governments, in the aggregate,
or by the private sector, of $100 million. This final rule will have no
consequential effect on State, local, or tribal governments. We believe
the private sector cost of this rule falls below these thresholds as
well.
A. Regulatory Flexibility Act
Consistent with the provisions of the Regulatory Flexibility Act,
we analyze options for regulatory relief for small businesses and other
small entities. We prepare a Regulatory Flexibility Analysis (RFA)
unless we certify that a rule would not have a significant economic
impact on a substantial number of small entities. The RFA is to include
a justification of why action is being taken, the kinds and number of
small entities the final rule would affect, and an explanation of any
considered meaningful options that achieve the objectives and would
lessen any significant adverse economic impact on the small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 604 of the Regulatory Flexibility Act. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 50 beds.
For purposes of the RFA, all physicians are considered to be small
entities. There are about 700,000 physicians and other practitioners
who receive Medicare payment under the physician fee schedule. Thus, we
have prepared the following analysis, which, together with the rest of
this preamble, meets all three assessment requirements. It explains the
rationale for and purposes of the rule, details the costs and benefits
of the rule, analyzes alternatives, and presents the measures we
propose to minimize the burden on small entities.
B. Resource-Based Practice Expense Relative Value Units
Our methodology for implementing resource-based practice expense
RVUs for each physician's service considers the staff, equipment, and
supplies used in the provision of various medical and surgical services
in various settings, including those that cannot be attributed to
specific procedures. We are required to begin the transition to the new
practice expense RVUs on January 1, 1999.
By law, the conversion to a resource-based determination for the
payment of physicians' practice expenses must be budget neutral. In
other words, the total Medicare expenditures for calendar year 1999
must be the same as the amount that would have been paid under the
prior method of paying practice expenses.
As we indicated in the proposed rule, each year since the fee
schedule has been implemented, our actuaries have determined any
adjustments needed to meet this requirement. A key component of the
actuarial determination of budget neutrality involves estimating any
impact of changes in the volume and intensity of physicians' services
provided to Medicare beneficiaries as a result of the proposed changes.
We indicated in the proposed rule that, in estimating the impacts
of proposed changes under the physician fee schedule on the volume and
intensity of services, the actuaries have historically used a model
that assumes that 50 percent of the change in net revenue for a
practice would be recouped. This does not mean that payments are
reduced by 50 percent. In fact, payments have typically been reduced
only a few percent or less. The actuaries also assume that there is no
offsetting reduction in volume and intensity for physicians whose
Medicare revenue increases.
As we indicated in the proposed rule, our actuaries have reviewed
the literature and conducted data analysis of the volume-and-intensity
response. In the proposed rule, we indicated that for the purpose of
establishing budget neutrality for the physicians' practice expense
determination, the actuaries will use a model that assumes a 30 percent
volume-and-intensity response to price reductions but no reduction in
volume and intensity in response to a price increase. There were some
inadvertent delays in making our actuary's analysis of the volume-and-
intensity response available on our homepage (www.hcfa.gov), but it is
now available there.
Comment: Most commenters were pleased that the volume-and-intensity
response was lowered, but opposed use of any volume-and-intensity
offset. Many groups recommended that to the extent that any adjustments
are necessary, they could be made within the framework of the SGR
system. Some groups stated that their specialty or particular services
should be exempt from the application of a volume-and-intensity
adjustment.
Response: Our actuaries have reviewed the issue but believe that
their review of the literature and their own analysis presents a
convincing case as to the need for them to utilize a model that
incorporates a volume-and-intensity response to price reductions. We
cannot apply a volume-and-intensity adjustment that exempts certain
procedures because the response could occur for other procedures
furnished by a physician. Similarly, we cannot exempt certain
specialties from application of the adjustment because physicians of
all specialties have some discretion as to the nature and extent of
services furnished. We do not believe that we can use the SGR mechanism
alone, without the adjustment for volume and intensity for 1999,
because any SGR adjustment would be in the future and the actuaries
would not determine us to be in compliance with the statutory budget-
neutrality requirement for 1999. To the extent that the volume-and-
intensity response does not occur, the SGR system enacted as part of
the BBA 1997 will return the volume-and-intensity adjustment in the
form of higher future updates to the Medicare physician fee schedule
conversion factor.
Using the revised actuarial model, achieving budget neutrality for
the practice expense per hour method would require lowering physicians'
payments in calendar year 1999 by 0.28 percent (1.12 percent cumulative
from 1999 to 2002). The 0.28 percent volume-and-intensity adjustment
results in a reduction in the 1999 physician fee schedule CF of $0.10.
Table 7, ``Impact on Total Allowed Charges by Specialty of the
Resource-Based Practice Expense Relative Value Units under the Practice
Expense per Hour'' shows the change in Medicare physician fees
resulting from the practice expense per hour methodology discussed
earlier in this final rule. In order to isolate the change in fees
resulting from the resource-based methodology, this analysis assumes
the same mix of services is furnished under the new and old practice
expense payment systems and does not include the effects of the annual
updates to the Medicare physician fee schedule conversion factor. The
impact of the changes on the total revenue (Medicare and non-Medicare)
for a given specialty is less than the impact displayed in
[[Page 58895]]
Table 7 since physicians furnish services to both Medicare and non-
Medicare patients.
For example, Table 7 shows that when the resource-based system is
fully phased-in, general surgery will experience a 7 percent decrease
in Medicare revenues relative to the current practice expense system
and family practice will experience a 7 percent increase.
The magnitude of the Medicare impact depends generally on the mix
of services the specialty provides and the sites where the services are
performed. In general, those specialties that furnish more office-based
services are expected to experience larger increases in Medicare
payments than specialties that provide fewer office-based services.
Table 7 also includes the impact of the volume-and-intensity
adjustments to the conversion factor discussed above, but does not
include the impact of the volume response on revenues.
Table 7.--Impact on Total Allowed Charges by Specialty of the Resource-
Based Practice Expense Relative Value Units under the Practice Expense
per Hour Method (percent change)
------------------------------------------------------------------------
Allowed
charges Impact Cumulative
Specialty (in per 4-year
billions) year impact
------------------------------------------------------------------------
M.D./D.O. Physicians:
Anesthesiology.......................... 1.6 0 0
Cardiac Surgery......................... 0.3 -3 -12
Cardiology.............................. 3.8 -2 -9
Clinics................................. 1.6 -1 -3
Dermatology............................. 1.0 5 20
Emergency Medicine...................... 0.9 -3 -10
Family Practice......................... 2.7 2 7
Gastro- enterology...................... 1.2 -4 -15
General Practice........................ 1.0 1 4
General Surgery......................... 2.0 -2 -7
Hematology/Oncology..................... 0.5 2 6
Internal Medicine....................... 6.0 0 2
Nephrology.............................. 0.9 -2 -7
Neurology............................... 0.7 0 -1
Neurosurgery............................ 0.3 -3 -11
Obstetrics/Gynecology................... 0.4 1 4
Ophthalmology........................... 3.3 1 4
Orthopedic Surgery...................... 2.0 0 -1
Other Physician *....................... 1.1 0 1
Otolaryngology.......................... 0.5 2 9
Pathology............................... 0.5 -3 -13
Plastic Surgery......................... 0.2 1 2
Psychiatry.............................. 1.1 0 1
Pulmonary............................... 1.0 -1 -4
Radiation Oncology...................... 0.6 -2 -6
Radiology............................... 2.9 -3 -10
Rheumatology............................ 0.2 4 16
Thoracic Surgery........................ 0.6 -3 -12
Urology................................. 1.1 1 5
Vascular Surgery........................ 0.3 -3 -11
Others:
Chiropractic............................ 0.4 -2 -8
Nonphysician Practitioner............... 0.8 0 2
Optometry............................... 0.3 6 27
Podiatry................................ 0.9 2 9
Suppliers............................... 0.5 -2 -6
------------------------------------------------------------------------
* Other physician includes allergy/immunology, oral surgery, physical
medicine and rehabilitation, pediatrics, critical care, and
hematology.
Table 8 below compares the impact of the resource-based practice
expense methodology described in this final rule with the impacts
published in the June 5, 1998 proposed rule. Differences reflect the
net effect of the changes described earlier in the section ``Results of
the Evaluation of Comments.'' In general, the changes with the greatest
impact were the creation of a separate pool for services with work
relative value units equal to zero and the use of the Medicare
conversion factor in the indirect cost pool allocation.
Table 8.--Comparison of the Impact on Total Allowed Charges by Specialty
of the Resource-Based Practice Expense Relative Value Units under the
Practice Expense per Hour Methodology with the Impacts from the June 5,
1998 Proposed Rule
------------------------------------------------------------------------
Proposed
rule Current
Specialty cumulative cumulative
4-year 4-year
impact impact
------------------------------------------------------------------------
M.D./D.O. Physicians:
Anesthesiology................................ 2 0
Cardiac Surgery............................... -14 -12
Cardiology.................................... -13 -9
Clinics....................................... -3 -3
Dermatology................................... 27 20
Emergency Medicine............................ -13 -10
Family Practice............................... 6 7
Gastroenterology.............................. -14 -15
General Practice.............................. 3 4
General Surgery............................... -6 -7
Hematology/Oncology........................... 2 6
Internal Medicine............................. 1 2
Nephrology.................................... -5 -7
Neurology..................................... 0 -1
Neurosurgery.................................. -10 -11
Obstetrics/Gynecology......................... 5 4
Ophthalmology................................. 11 4
Orthopedic Surgery............................ -1 -1
Other Physician*.............................. 0 1
Otolaryngology................................ 6 9
Pathology..................................... -10 -13
Plastic Surgery............................... 5 2
Psychiatry.................................... 4 1
Pulmonary..................................... -3 -4
Radiation Oncology............................ -13 -6
Radiology..................................... -13 -10
Rheumatology.................................. 15 16
Thoracic Surgery.............................. -13 -12
Urology....................................... 7 5
Vascular Surgery.............................. -12 -11
Others:
Chiropractic.................................. -2 -8
Nonphysician Practitioner..................... -1 2
Optometry..................................... 36 27
Podiatry...................................... 5 9
Suppliers..................................... -18 -6
------------------------------------------------------------------------
* Other physician includes allergy/immunology, oral surgery, physical
medicine and rehabilitation, pediatrics, critical care, and
hematology.
For certain high volume procedures, Table 9, ``Total Payment for
Selected Procedures,'' shows the percentage change between the current
1998 payments (calculated using the 1998 relative value units, 1998
site-of-service policy, and the 1998 conversion factor) and the fully
phased-in resource-based practice expense payments (calculated using
the full resource-based practice expense relative value units, the 1999
work and malpractice relative value units, and the 1999 Medicare
conversion factor).
BILLING CODE 4120-01-P
[[Page 58896]]
[GRAPHIC] [TIFF OMITTED] TR02NO98.274
[[Page 58897]]
[GRAPHIC] [TIFF OMITTED] TR02NO98.275
BILLING CODE 4120-01-C
[[Page 58898]]
Table 10 below displays the impact of the practice expense per hour
methodology by Medicare payment locality, including the volume-and-
intensity increase and corresponding conversion factor adjustment
discussed earlier. This analysis does not include the effects of the
annual updates to the Medicare physician fee schedule conversion
factor.
Table 10.--Impact of Practice Expense per Hour Methodology on Total
Allowed Charges by Medicare Locality (percent change)
------------------------------------------------------------------------
Cumulative
Locality State Impact four year
per year impact
------------------------------------------------------------------------
All........................... Alaska........... 0.1 0.5
All........................... Alabama.......... -0.2 -0.8
All........................... Arkansas......... -0.2 -0.9
All........................... Arizona.......... 0.2 1.0
Anaheim/Santa Ana............. California....... 0.6 2.5
Los Angeles................... California....... 0.5 2.1
Marin/Napa/Solano............. California....... 0.6 2.4
Oakland/Berkley............... California....... 0.3 1.1
Rest of California............ California....... 0.3 1.4
San Francisco................. California....... 0.6 2.3
San Mateo..................... California....... 0.4 1.5
Santa Clara................... California....... 0.2 0.8
Ventura....................... California....... 0.4 1.5
All........................... Colorado......... 0.1 0.4
All........................... Connecticut...... 0.1 0.6
All........................... District of 0.1 0.3
Columbia.
All........................... Delaware......... 0.0 0.1
Ft Lauderdale................. Florida.......... 0.6 2.6
Miami......................... Florida.......... 0.1 0.5
Rest of Florida............... Florida.......... 0.1 0.5
Atlanta....................... Georgia.......... -0.1 -0.3
Rest of Georgia............... Georgia.......... -0.1 0.5
All........................... Hawaii........... 0.6 2.4
All........................... Iowa............. -0.2 -0.8
All........................... Idaho............ 0.0 0.1
Chicago....................... Illinois......... -0.2 -1.0
East St Louis................. Illinois......... -0.1 -0.5
Rest of Illinois.............. Illinois......... -0.2 -0.7
Suburban Chicago.............. Illinois......... -0.1 -0.4
All........................... Indiana.......... -0.4 -1.5
All........................... Kansas........... -0.2 -0.8
All........................... Kentucky......... -0.3 -1.1
New Orleans................... Louisiana........ -0.3 -1.2
Rest of Louisiana............. Louisiana........ -0.3 -1.3
Boston........................ Massachusetts.... -0.3 -1.1
Rest of Massachusetts......... Massachusetts.... 0.1 0.6
Balto/Surr Ctys............... Maryland......... -0.3 -1.2
Rest of Maryland.............. Maryland......... -0.2 -0.6
Rest of Maine................. Maine............ -0.1 -0.4
Southern Maine................ Maine............ -0.1 -0.2
Detroit....................... Michigan......... -0.2 -0.8
Rest of Michigan.............. Michigan......... -0.2 -0.9
All........................... Minnesota........ -0.1 -0.4
Metro Kansas City............. Missouri......... -0.7 -2.7
Rest of Missouri.............. Missouri......... -0.2 -0.8
Rest of Missouri.............. Missouri......... 0.1 0.2
St Louis...................... Missouri......... -0.4 -1.6
All........................... Mississippi...... -0.5 -1.8
All........................... Montana.......... 0.1 0.3
All........................... North Carolina... -0.1 -0.3
All........................... North Dakota..... -0.3 -1.1
All........................... Nebraska......... -0.2 -0.8
All........................... New Hampshire.... 0.0 -0.2
Northern New Jersey........... New Jersey....... 0.0 0.0
Rest of New Jersey............ New Jersey....... 0.1 0.5
All........................... New Mexico....... 0.2 0.8
All........................... Nevada........... 0.0 -0.1
Manhattan..................... New York......... 0.4 1.5
NYC Suburbs/LI................ New York......... 0.3 1.3
NYC Suburbs/Poughk............ New York......... 0.3 1.2
Queens........................ New York......... 0.7 2.8
Rest of New York.............. New York......... -0.1 -0.2
All........................... Ohio............. -0.3 -1.2
All........................... Oklahoma......... -0.2 -0.7
[[Page 58899]]
Portland...................... Oregon........... 0.1 0.2
Rest of Oregon................ Oregon........... 0.4 1.5
Philadelphia.................. Pennsylvania..... -0.1 -0.4
Rest of Pennsylvania.......... Pennsylvania..... -0.1 -0.3
All........................... Puerto Rico...... 1.0 3.9
All........................... Rhode Island..... 0.2 0.6
All........................... South Carolina... 0.0 -0.2
All........................... South Dakota..... -0.4 -1.5
All........................... Tennessee........ -0.3 -1.3
Austin........................ Texas............ -0.3 -1.0
Beaumont...................... Texas............ -0.6 -2.5
Brazoria...................... Texas............ 0.4 1.7
Dallas........................ Texas............ -0.2 -0.8
Fort Worth.................... Texas............ 0.0 0.0
Galveston..................... Texas............ -0.4 -1.5
Houston....................... Texas............ -0.4 -1.8
Rest of Texas................. Texas............ -0.1 -0.4
All........................... Utah............. 0.0 0.2
All........................... Virginia......... 0.0 -0.1
All........................... Virgin Islands... 0.6 2.5
All........................... Vermont.......... 0.2 0.9
Rest of Washington............ Washington....... 0.3 1.2
Seattle (King Co)............. Washington....... 0.0 0.0
All........................... Wisconsin........ -0.2 -1.0
All........................... West Virginia.... -0.2 -0.8
All........................... Wyoming.......... 0.3 1.0
------------------------------------------------------------------------
C. Medical Direction for Anesthesia Services
For our proposal relating to the medical direction of anesthesia
services (Sec. 415.110), we have decided to retain the current
requirements (that is, requirements (i) and (ii), and (iv)) and make
only one technical revision in requirement (iii). The technical
revision pertains to the requirement that the physician participate in
the most demanding procedures in the anesthesia plan, including,
induction and emergence.
D. Separate Payment for a Physician's Interpretation of an Abnormal
Papanicolaou Smear
We are allowing separate payment for a physician's interpretation
of a Pap smear to any patient (that is, hospital or nonhospital
patient) as long as--(1) The laboratory's screening personnel suspect
an abnormality; and (2) the physician reviews and interprets the pap
smear. Currently, separate payment to a physician is limited to a Pap
smear interpretation that is abnormal and is furnished to a hospital
inpatient. We estimate that there would be a $10 million increase in
payments under the physician fee schedule for this change in payment
for Pap smear interpretations for FY 1999.
E. Rebasing and Revising the Medicare Economic Index
There is negligible impact on Medicare expenditures as a result of
this change.
F. Payment for Nurse Midwives' Services
The provision for nurse midwives' services will place into
regulations text a provision of OBRA 1993 that eliminates the
limitation on coverage of services furnished outside the maternity
cycle by nurse midwives. This provision has been implemented previously
through program instructions; therefore, this change in the regulations
text will have no impact.
G. BBA Provisions Included in This Final Rule
The following five provisions of BBA 1997 are implemented in this
final rule. This final rule conforms the regulations text to BBA 1997
provisions. Table 11 below provides the cost and savings estimates (in
millions of dollars) for the Medicare program for these provisions for
the fiscal years shown:
Table 11.--Cost and Savings Estimates for BBA 1997 Provisions
[In millions]
------------------------------------------------------------------------
Provision
section Subject 1999 2000 2001 2002 2003
------------------------------------------------------------------------
4206..... Teleconsultation
s.............. 20 40 55 70 90
4511..... Nurse
practitioners
and Clinical
Nurse
Specialists.... 290 330 370 440 490
4512..... Physician
Assistants..... 60 60 70 90 100
4541..... Outpatient
Rehabilitation. -130 -190 -200 -230 -250
4556..... Drugs........... -60 -70 -70 -80 -80
------------------------------------------------------------------------
[[Page 58900]]
Payment for Services of Certain Nonphysician Practitioners and
Services Furnished Incident to Their Professional Services
Sections 4511 and 4512 of BBA 1997 provide for the expanded
coverage of nurse practitioner, clinical nurse specialist, and
physician assistant services. This provision is self-implementing. This
final rule changes the regulations text to conform to the BBA 1997
provisions. We are clarifying the following two existing issues
unrelated to the BBA 1997 provisions for nonphysician practitioners:
<bullet> Definition of physician collaboration for nurse
practitioners.
<bullet> The impact of the BBA 1997 provisions is shown in Table 11
(a combination of sections 4511 and 4512 of BBA 1997). The proposals
being made final in this rule will have negligible budgetary impact.
Payment for Outpatient Rehabilitation Services
Sections 4541(a)(2) and 4541(a)(3) of BBA 1997 change the payment
of outpatient rehabilitation services from cost-based to a payment
system based on the physician fee schedule. The regulatory changes are
to conform our regulations to the provisions of the BBA 1997.
In addition to the changes directed by the statute, the following
changes are being made in this rule to furnish information for
identification of the outpatient rehabilitation services and for
administrative purposes:
<bullet> Specifying HCPCS as the coding system for rehabilitation
services since it is used by the fee schedule in section 1848 of the
Act.
<bullet> Providing for discipline-specific modifiers to be used in
coding services.
<bullet> Providing for a code for nursing services performed in
CORFs.
These administrative changes will have a negligible impact.
Section 4541(c) of BBA 1997 applies an annual per beneficiary limit
of $1,500 to all outpatient physical therapy services (including
speech-language pathology services) except for services furnished by a
hospital outpatient department. A separate $1,500 limit also applies to
all outpatient occupational therapy services except for services
furnished by hospital outpatient departments. Therapy services
furnished incident to a physician's professional services are also
subject to these limits. The changes in this rule conform the
regulations to the BBA 1997 provisions. The delay in full
implementation, however, is discussed below.
There are several different types of providers that will be
affected by this BBA 1997 provision. The largest providers are SNFs,
outpatient rehabilitation facilities, and hospital outpatient
departments. There are about 15,000 SNFs, 2,500 outpatient
rehabilitation facilities, and about 5,600 outpatient hospital
facilities. We determined that the services that would be affected by
these changes account for about 15 percent of Medicare Part B payments
to facilities.
We estimate that these providers as well as other providers and
practitioners of outpatient therapy services will experience a
reduction in revenue both because of the movement from cost
reimbursement to fee schedule payments and because of the $1,500
limits. The impact of the provisions on individual providers, however,
cannot be estimated for a variety of reasons. First, since
reimbursement has historically been based on cost for most providers,
we do not have coded information on individual services per beneficiary
at individual providers. Second, with respect to the impact of the
$1,500 limit, the extent to which a provider will receive a payment
from another source to substitute for Medicare's payment is unknown.
For example, if a beneficiary reaches the $1,500 limit, Medicare will
no longer pay, but payment may be received from another source, such as
a Medigap insurer, a retiree health plan, or the beneficiary.
The $1,500 limits will reduce the amount of therapy services paid
for by Medicare. The patients most affected are likely to be those with
diagnoses such as stroke, certain fractures, and amputation, where the
number of therapy visits needed by a patient may exceed those that can
be reimbursed by Medicare under the statutory limits. Services not paid
for by Medicare, however, may be paid for by other payers.
As explained in the preamble, the $1,500 limits will not be fully
implemented until sometime in 2000 due to the necessity to devote
resources to Y2K compliance activities. Until that time, the limits
will be implemented partially on a per-provider basis whereby each
provider will be held accountable for tracking expenses for each
beneficiary and not billing Medicare for beneficiaries that have met
the limit at their facility. Implementing the provision in this fashion
should lessen the impact on both beneficiaries and providers until full
implementation occurs.
Impact on Small Rural Hospitals
We realize that the provision to move from cost reimbursement to a
fee schedule may have an impact on small rural hospitals; however, we
have been unable to assess this impact because we do not have the data
to make this analysis. Also, data that would identify the extent to
which these services are currently being furnished in small rural
hospitals to serve as the baseline for comparing the impact of the
legislative changes are not available. In addition, we do not maintain
data that identify services furnished under the physician fee schedule
in areas where rural hospitals are located. Although there are
localities designated for payment purposes, there is very little
correlation between the payment localities (most of which are state-
wide) and areas where small rural hospitals are located.
Payment for Drugs and Biologicals
The impact of this BBA 1997 provision is shown in Table 5. This
final rule modifies the current regulatory language regarding drug
payment to conform to the BBA 1997 changes. Revising the regulation on
multi-source drugs to include the brand name version of the drug is not
related to the BBA 1997 drug provision but will have a slight program
savings.
Private Contracting with Medicare Beneficiaries
We anticipate that there would be a negligible impact on Medicare
trust fund payments as a result of the regulation that implements the
law. The program impact of the provision when it was assessed in the
legislative process was negligible. The impact on beneficiaries,
physicians, and practitioners is impossible to assess in any
quantitative way.
Specifically, beneficiaries who have had difficulty in finding
physicians or practitioners to furnish services because the physicians
or practitioners were dissatisfied with the Medicare payment rates may
find it easier to acquire care. On the other hand, beneficiaries who
cannot afford to privately contract with physicians or practitioners
who opt out of Medicare may have more limited access to care as they
try to seek care from reduced numbers of physicians and practitioners
who will accept Medicare payment rules.
Physicians and practitioners who opt out of Medicare may see
increased incomes as a result of their ability to charge without regard
to the Medicare limiting charge. However, to the extent that
beneficiaries cease to seek treatment from them because they have
[[Page 58901]]
opted out of Medicare, their incomes may decline. Moreover,
organizations to which physicians and practitioners had reassigned
Medicare benefits may cease their contracts with them if they opt out
since the organizations could no longer be paid by Medicare for the
physician's or practitioner's service. Managed care plans that have a
contract with Medicare may cease their contractual arrangement with
physicians and practitioners who opt out of Medicare since the plan
cannot pay for any of their services to Medicare beneficiaries and,
hence, their services no longer offer access to care under the plan.
Similarly, insurance plans other than Medicare can choose to not pay
for the services provided to any of their enrollees by physicians and
practitioners who opt out of Medicare, causing the physicians and
practitioners who opt out further loss of income.
Teleconsultations
We estimate that the cost of providing consultation services in
accordance with section 4206 of BBA 1997 will be approximately $20
million in FY 1999 and approximately $90 million by FY 2003. Note that
the FY 1999 estimate reflects only a partial year estimate, given the
January 1, 1999 effective date for teleconsultation coverage. We
estimate that teleconsultation will cost approximately $275 million for
the first 5 years of coverage, as indicated below:
Medicare costs
[In millions]
------------------------------------------------------------------------
FY 1999 FY 2000 FY 2001 FY 2002 FY 2003
------------------------------------------------------------------------
$20.......... $40 $55 $70 $90
------------------------------------------------------------------------
This rule would provide for payment exclusively for professional
consultation with a physician and certain other practitioners via
interactive telecommunication systems. Section 4206 of BBA 1997 does
not provide for payment for telephone line fees or any facility fees
associated with teleconsultation that may be incurred by hospitals
included in the telemedicine network.
Further, this rule does not mandate that entities provide
consultation services via telecommunications. Thus, this final rule
does not require entities to purchase telemedicine equipment or to
acquire the telecommunications infrastructure necessary to deliver
consultation services via telecommunication systems. Therefore, this
rule does not impose costs associated with starting and operating a
telemedicine network.
The benefit changes in this final rule resulting from payment for
teleconsultation services do not result in additional Medicare
expenditures of $100 million or more for any single FY through FY 2003.
We have determined, and we certify, that teleconsultation provisions do
not have a significant economic impact on a substantial number of small
entities or a significant impact on the operations of a substantial
number of small rural hospitals.
H. Impact on Beneficiaries
Although changes in physicians' payments when the physician fee
schedule was implemented in 1992 were large, we detected no problems
with beneficiary access to care. Because there is a 4-year transition
to the resource-based practice expense system, we anticipate a minimal
impact on beneficiaries.
The benefit changes in this final rule resulting from payment for
teleconsultation services do not result in additional Medicare
expenditures of $100 million or more for any single FY through FY 2003.
We have determined, and we certify, that teleconsultation provisions do
not have a significant economic impact on a substantial number of small
entities or a significant impact on the operations of a substantial
number of small rural hospitals.
Statutory effects that are being implemented by this regulation
result in specialty impacts exceeding $100 million per year. Therefore,
this rule is an economically significant rule under Executive Order
12866, and a major rule under Title 5, United States Code, section
804(2).
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 405
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, Reporting and recordkeeping
requirements, Rural areas, X-rays.
42 CFR Part 410
Health facilities, Health professions, Kidney diseases,
Laboratories, Medicare, Rural areas, X-rays.
42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
42 CFR Part 414
Administrative practice and procedure, Health facilities, Health
professions, Kidney diseases, Medicare, Reporting and recordkeeping
requirements, Rural areas, X-rays.
42 CFR Part 415
Health facilities, Health professions, Medicare and Reporting and
recordkeeping requirements.
42 CFR Part 424
Emergency medical services, Health facilities, Health professions,
Medicare.
42 CFR Part 485
Grant programs-health, Health facilities, Medicaid, Medicare,
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, 42 CFR chapter IV is
amended as follows:
PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED
A. Part 405 is amended as set forth below:
1. A new subpart D, consisting of Secs. 405.400, 405.405, 405.410,
405.415, 405.420, 405.425, 405.430, 405.435, 405.440, 405.445, 405.450,
and 405.455 is added to read as follows:
Subpart D--Private Contracts
Secs.
405.400 Definitions.
405.405 General rules.
405.410 Conditions for properly opting-out of Medicare.
405.415 Requirements of the private contract.
405.420 Requirements of the opt-out affidavit.
405.425 Effects of opting-out of Medicare.
405.430 Failure to properly opt-out.
405.435 Failure to maintain opt-out.
405.440 Emergency and urgent care services.
[[Page 58902]]
405.445 Renewal and early termination of opt-out.
405.450 Appeals.
405.455 Application to Medicare+Choice contracts.
Authority: Secs. 1102, 1802, and 1871 of the Social Security Act
(42 U.S.C. 1302, 1395a, and 1395hh).
Subpart D--Private Contracts
Sec. 405.400 Definitions.
For purposes of this subpart, the following definitions apply:
Beneficiary means an individual who is enrolled in Part B of
Medicare.
Emergency care services means services furnished to an individual
for treatment of an ``emergency medical condition'' as that term is
defined in Sec. 422.2 of this chapter.
Legal representative means one or more individuals who, as
determined by applicable State law, has the legal authority to enter
into the contract with the physician or practitioner on behalf of the
beneficiary.
Opt-out means the status of meeting the conditions specified in
Sec. 405.410.
Opt-out period means the 2-year period beginning on the effective
date of the affidavit as specified by Sec. 405.410(c)(1) or
Sec. 405.410(c)(2), as applicable.
Participating physician means a ``physician'' as defined in this
section who has signed an agreement to participate in Part B of
Medicare.
Physician means a doctor of medicine or a doctor of osteopathy who
is currently licensed as that type of doctor in each State in which he
or she furnishes services to patients.
Practitioner means a physician assistant, nurse practitioner,
clinical nurse specialist, certified registered nurse anesthetist,
certified nurse midwife, clinical psychologist, or clinical social
worker, who is currently legally authorized to practice in that
capacity by each State in which he or she furnishes services to
patients or clients.
Private contract means a document that meets the criteria specified
in Sec. 405.415.
Properly opt-out means to complete, without defect, the
requirements for opt-out as specified in Sec. 405.410.
Properly terminate opt-out means to complete, without defect, the
requirements for terminating opt-out as specified in Sec. 405.445.
Urgent care services means services furnished to an individual who
requires services to be furnished within 12 hours in order to avoid the
likely onset of an emergency medical condition.
Sec. 405.405 General rules.
(a) A physician or practitioner may enter into one or more private
contracts with Medicare beneficiaries for the purpose of furnishing
items or services that would otherwise be covered by Medicare, provided
the conditions of this subpart are met.
(b) A physician or practitioner who enters into at least one
private contract with a Medicare beneficiary under the conditions of
this subpart, and who submits one or more affidavits in accordance with
this subpart, opts-out of Medicare for a 2-year period unless the opt-
out is terminated early according to Sec. 405.445. The physician's or
practitioner's opt-out may be renewed for subsequent 2-year periods.
(c) Both the private contracts described in paragraph (a) of this
section and the physician's or practitioner's opt-out described in
paragraph (b) of this section are null and void if the physician or
practitioner fails to properly opt-out in accordance with the
conditions of this subpart.
(d) Both the private contracts described in paragraph (a) of this
section and the physician's or practitioner's opt-out described in
paragraph (b) of this section are null and void for the remainder of
the opt-out period if the physician or practitioner fails to remain in
compliance with the conditions of this subpart during the opt-out
period.
(e) Services furnished under private contracts meeting the
requirements of this subpart are not covered services under Medicare,
and no Medicare payment will be made for such services either directly
or indirectly, except as permitted in accordance with Sec. 405.435(c).
Sec. 405.410 Conditions for properly opting-out of Medicare.
The following conditions must be met for a physician or
practitioner to properly opt-out of Medicare:
(a) Each private contract between a physician or a practitioner and
a Medicare beneficiary that is entered into prior to the submission of
the affidavit described in paragraph (b) of this section must meet the
specifications of Sec. 405.415.
(b) The physician or practitioner must submit an affidavit that
meets the specifications of Sec. 405.420 to each Medicare carrier with
which he or she would file claims absent completion of opt-out.
(c) A nonparticipating physician or a practitioner may opt-out of
Medicare at any time in accordance with the following:
(1) The 2-year opt-out period begins the date the affidavit meeting
the requirements of Sec. 405.420 is signed, provided the affidavit is
filed within 10 days after he or she signs his or her first private
contract with a Medicare beneficiary.
(2) If the physician or practitioner does not timely file any
required affidavit, the 2-year opt-out period begins when the last such
affidavit is filed. Any private contract entered into before the last
required affidavit is filed becomes effective upon the filing of the
last required affidavit and the furnishing of any items or services to
a Medicare beneficiary under such contract before the last required
affidavit is filed is subject to standard Medicare rules.
(d) A participating physician may properly opt-out of Medicare at
the beginning of any calendar quarter, provided that the affidavit
described in Sec. 405.420 is submitted to the participating physician's
Medicare carriers at least 30 days before the beginning of the selected
calendar quarter. A private contract entered into before the beginning
of the selected calendar quarter becomes effective at the beginning of
the selected calendar quarter and the furnishing of any items or
services to a Medicare beneficiary under such contract before the
beginning of the selected calendar quarter is subject to standard
Medicare rules.
Sec. 405.415 Requirements of the private contract.
A private contract under this subpart must:
(a) Be in writing and in print sufficiently large to ensure that
the beneficiary is able to read the contract.
(b) Clearly state whether the physician or practitioner is excluded
from Medicare under sections 1128, 1156, or 1892 or any other section
of the Social Security Act.
(c) State that the beneficiary or his or her legal representative
accepts full responsibility for payment of the physician's or
practitioner's charge for all services furnished by the physician or
practitioner.
(d) State that the beneficiary or his or her legal representative
understands that Medicare limits do not apply to what the physician or
practitioner may charge for items or services furnished by the
physician or practitioner.
(e) State that the beneficiary or his or her legal representative
agrees not to submit a claim to Medicare or to ask the physician or
practitioner to submit a claim to Medicare.
(f) State that the beneficiary or his or her legal representative
understands
[[Page 58903]]
that Medicare payment will not be made for any items or services
furnished by the physician or practitioner that would have otherwise
been covered by Medicare if there was no private contract and a proper
Medicare claim had been submitted.
(g) State that the beneficiary or his or her legal representative
enters into this contract with the knowledge that he or she has the
right to obtain Medicare-covered items and services from physicians and
practitioners who have not opted-out of Medicare, and that the
beneficiary is not compelled to enter into private contracts that apply
to other Medicare-covered services furnished by other physicians or
practitioners who have not opted-out.
(h) State the expected or known effective date and expected or
known expiration date of the opt-out period.
(i) State that the beneficiary or his or her legal representative
understands that Medigap plans do not, and that other supplemental
plans may elect not to, make payments for items and services not paid
for by Medicare.
(j) Be signed by the beneficiary or his or her legal representative
and by the physician or practitioner.
(k) Not be entered into by the beneficiary or by the beneficiary's
legal representative during a time when the beneficiary requires
emergency care services or urgent care services. (However, a physician
or practitioner may furnish emergency or urgent care services to a
Medicare beneficiary in accordance with Sec. 405.440.)
(l) Be provided (a photocopy is permissible) to the beneficiary or
to his or her legal representative before items or services are
furnished to the beneficiary under the terms of the contract.
(m) Be retained (original signatures of both parties required) by
the physician or practitioner for the duration of the opt-out period.
(n) Be made available to HCFA upon request.
(o) Be entered into for each opt-out period.
Sec. 405.420 Requirements of the opt-out affidavit.
An affidavit under this subpart must:
(a) Be in writing and be signed by the physician or practitioner.
(b) Contain the physician's or practitioner's full name, address,
telephone number, national provider identifier (NPI) or billing number,
if one has been assigned, uniform provider identification number (UPIN)
if one has been assigned, or, if neither an NPI nor a UPIN has been
assigned, the physician's or practitioner's tax identification number
(TIN).
(c) State that, except for emergency or urgent care services (as
specified in Sec. 405.440), during the opt-out period the physician or
practitioner will provide services to Medicare beneficiaries only
through private contracts that meet the criteria of paragraph
Sec. 405.415 for services that, but for their provision under a private
contract, would have been Medicare-covered services.
(d) State that the physician or practitioner will not submit a
claim to Medicare for any service furnished to a Medicare beneficiary
during the opt-out period, nor will the physician or practitioner
permit any entity acting on his or her behalf to submit a claim to
Medicare for services furnished to a Medicare beneficiary, except as
specified in Sec. 405.440.
(e) State that, during the opt-out period, the physician or
practitioner understands that he or she may receive no direct or
indirect Medicare payment for services that he or she furnishes to
Medicare beneficiaries with whom he or she has privately contracted,
whether as an individual, an employee of an organization, a partner in
a partnership, under a reassignment of benefits, or as payment for a
service furnished to a Medicare beneficiary under a Medicare+Choice
plan.
(f) State that a physician or practitioner who opts-out of Medicare
acknowledges that, during the opt-out period, his or her services are
not covered under Medicare and that no Medicare payment may be made to
any entity for his or her services, directly or on a capitated basis.
(g) State a promise by the physician or practitioner to the effect
that, during the opt-out period, the physician or practitioner agrees
to be bound by the terms of both the affidavit and the private
contracts that he or she has entered into.
(h) Acknowledge that the physician or practitioner recognizes that
the terms of the affidavit apply to all Medicare-covered items and
services furnished to Medicare beneficiaries by the physician or
practitioner during the opt-out period (except for emergency or urgent
care services furnished to the beneficiaries with whom he or she has
not previously privately contracted) without regard to any payment
arrangements the physician or practitioner may make.
(i) With respect to a physician who has signed a Part B
participation agreement, acknowledge that such agreement terminates on
the effective date of the affidavit.
(j) Acknowledge that the physician or practitioner understands that
a beneficiary who has not entered into a private contract and who
requires emergency or urgent care services may not be asked to enter
into a private contract with respect to receiving such services and
that the rules of Sec. 405.440 apply if the physician furnishes such
services.
Sec. 405.425 Effects of opting-out of Medicare.
If a physician or practitioner opts-out of Medicare in accordance
with this subpart for the 2-year period for which the opt-out is
effective, the following results obtain:
(a) Except as provided in Sec. 405.440, no payment may be made
directly by Medicare or by any Medicare+Choice plan to the physician or
practitioner or to any entity to which the physician or practitioner
reassigns his right to receive payment for services.
(b) The physician or practitioner may not furnish any item or
service that would otherwise be covered by Medicare (except for
emergency or urgent care services) to any Medicare beneficiary except
through a private contract that meets the requirements of this subpart.
(c) The physician or practitioner is not subject to the requirement
to submit a claim for items or services furnished to a Medicare
beneficiary, as specified in Sec. 424.5(a)(6) of this chapter, except
as provided in Sec. 405.440.
(d) The physician or practitioner is prohibited from submitting a
claim to Medicare for items or services furnished to a Medicare
beneficiary except as provided in Sec. 405.440.
(e) In the case of a physician, he or she is not subject to the
limiting charge provisions of Sec. 414.48 of this chapter, except for
services provided under Sec. 405.440.
(f) The physician or practitioner is not subject to the
prohibition-on-reassignment provisions of Sec. 414.80 of this chapter,
except for services provided under Sec. 405.440.
(g) In the case of a practitioner, he or she is not prohibited from
billing or collecting amounts from beneficiaries (as provided in 42
U.S.C. 1395u(b)(18)(B)).
(h) The death of a beneficiary who has entered into a private
contract (or whose legal representative has done so) does not invoke
Sec. 424.62 or Sec. 424.64 of this chapter with respect to the
physician or practitioner with whom the beneficiary (or legal
representative) has privately contracted.
(i) The physician or practitioner who has not been excluded under
sections 1128, 1156, or 1892 of the Social Security Act may order,
certify the need for, or refer a beneficiary for Medicare-covered items
and services, provided
[[Page 58904]]
the physician or practitioner is not paid, directly or indirectly, for
such services (except as provided in Sec. 405.440).
(j) The physician or practitioner who is excluded under sections
1128, 1156, or 1892 of the Social Security Act may not order,
prescribe, or certify the need for Medicare-covered items and services
except as provided in Sec. 1001.1901 of this title, and must otherwise
comply with the terms of the exclusion in accordance with
Sec. 1001.1901 effective with the date of the exclusion.
Sec. 405.430 Failure to properly opt-out.
(a) A physician or practitioner fails to properly opt-out if--
(1) Any private contract between the physician or practitioner and
a Medicare beneficiary, that was entered into before the affidavit
described in Sec. 405.420 was filed, does not meet the specifications
of Sec. 405.415; or
(2) He or she fails to submit the affidavit(s) in accordance with
Sec. 405.420.
(b) If a physician or practitioner fails to properly opt-out in
accordance with paragraph (a) of this section, the following results
obtain:
(1) The physician's or practitioner's attempt to opt-out of
Medicare is nullified, and all of the private contracts between the
physician or practitioner and Medicare beneficiaries for the two-year
period covered by the attempted opt-out are deemed null and void.
(2) The physician or practitioner must submit claims to Medicare
for all Medicare-covered items and services furnished to Medicare
beneficiaries, including the items and services furnished under the
nullified contracts. A nonparticipating physician is subject to the
limiting charge provisions of Sec. 414.48 of this chapter. A
participating physician is subject to the limitations on charges of the
participation agreement he or she signed.
(3) The practitioner may not reassign any claim except as provided
in Sec. 424.80 of this chapter.
(4) The practitioner may neither bill nor collect an amount from
the beneficiary except for applicable deductible and coinsurance
amounts.
(5) The physician or practitioner may make another attempt to
properly opt-out at any time.
Sec. 405.435 Failure to maintain opt-out.
(a) A physician or practitioner fails to maintain opt-out under
this subpart if, during the opt-out period--
(1) He or she knowingly and willfully--
(i) Submits a claim for Medicare payment (except as provided in
Sec. 405.440); or
(ii) Receives Medicare payment directly or indirectly for Medicare-
covered services furnished to a Medicare beneficiary (except as
provided in Sec. 405.440).
(2) He or she fails to enter into private contracts with Medicare
beneficiaries for the purpose of furnishing items and services that
would otherwise be covered by Medicare, or enters into contracts that
fail to meet the specifications of Sec. 405.415; or
(3) He or she fails to comply with the provisions of Sec. 405.440
regarding billing for emergency care services or urgent care services;
or
(4) He or she fails to retain a copy of each private contract that
he or she has entered into for the duration of the opt-out period for
which the contracts are applicable or fails to permit HCFA to inspect
them upon request.
(b) If a physician or practitioner fails to maintain opt-out in
accordance with paragraph (a) of this section, and fails to
demonstrate, within 45 days of a notice from the carrier of a violation
of paragraph (a) of this section, that he or she has taken good faith
efforts to maintain opt-out (including by refunding amounts in excess
of the charge limits to beneficiaries with whom he or she did not sign
a private contract), the following results obtain, effective 46 days
after the date of the notice, but only for the remainder of the opt-out
period:
(1) All of the private contracts between the physician or
practitioner and Medicare beneficiaries are deemed null and void.
(2) The physician's or practitioner's opt-out of Medicare is
nullified.
(3) The physician or practitioner must submit claims to Medicare
for all Medicare-covered items and services furnished to Medicare
beneficiaries.
(4) The physician or practitioner or beneficiary will not receive
Medicare payment on Medicare claims for the remainder of the opt-out
period, except as provided in paragraph (c) of this section.
(5) The physician is subject to the limiting charge provisions of
Sec. 414.48 of this chapter.
(6) The practitioner may not reassign any claim except as provided
in Sec. 424.80 of this chapter.
(7) The practitioner may neither bill nor collect any amount from
the beneficiary except for applicable deductible and coinsurance
amounts.
(8) The physician or practitioner may not attempt to once more meet
the criteria for properly opting-out until the 2-year opt-out period
expires.
(c) Medicare payment may be made for the claims submitted by a
beneficiary for the services of an opt-out physician or practitioner
when the physician or practitioner did not privately contract with the
beneficiary for services that were not emergency care services or
urgent care services and that were furnished no later than 15 days
after the date of a notice by the carrier that the physician or
practitioner has opted-out of Medicare.
Sec. 405.440 Emergency and urgent care services.
(a) A physician or practitioner who has opted-out of Medicare under
this subpart need not enter into a private contract to furnish
emergency care services or urgent care services to a Medicare
beneficiary. Accordingly, a physician or practitioner will not be
determined to have failed to maintain opt-out if he or she furnishes
emergency care services or urgent care services to a Medicare
beneficiary with whom the physician or practitioner has not previously
entered into a private contract, provided the physician or practitioner
complies with the billing requirements specified in paragraph (b) of
this section.
(b) When a physician or practitioner who has not been excluded
under sections 1128, 1156, or 1892 of the Social Security Act furnishes
emergency care services or urgent care services to a Medicare
beneficiary with whom the physician or practitioner has not previously
entered into a private contract, he or she:
(1) Must submit a claim to Medicare in accordance with both 42 CFR
part 424 and Medicare instructions (including but not limited to
complying with proper coding of emergency or urgent care services
furnished by physicians and practitioners who have opted-out of
Medicare).
(2) May collect no more than--
(i) The Medicare limiting charge, in the case of a physician; or
(ii) The deductible and coinsurance, in the case of a practitioner.
(c) Emergency care services or urgent care services furnished to a
Medicare beneficiary with whom the physician or practitioner has
previously entered into a private contract (that is, entered into
before the onset of the emergency medical condition or urgent medical
condition), are furnished under the terms of the private contract.
(d) Medicare may make payment for emergency care services or urgent
care services furnished by a physician or practitioner who has properly
opted-out when the services are furnished and the claim for services is
made in accordance with this section. A physician or practitioner who
has been excluded
[[Page 58905]]
must comply with the regulations at Sec. 1001.1901 (Scope and effect of
exclusion) of this title when he or she furnishes emergency services to
beneficiaries and may not bill and be paid for urgent care services.
Sec. 405.445 Renewal and early termination of opt-out.
(a) A physician or practitioner may renew opt-out by filing an
affidavit with each carrier with which he or she would file claims
absent completion of opt-out, provided the affidavits are filed within
30 days after the current opt-out period expires.
(b) To properly terminate opt-out a physician or practitioner must:
(1) Not have previously opted out of Medicare.
(2) Notify all Medicare carriers, with which he or she filed an
affidavit, of the termination of the opt-out no later than 90 days
after the effective date of the opt-out period.
(3) Refund to each beneficiary with whom he or she has privately
contracted all payment collected in excess of:
(i) The Medicare limiting charge (in the case of physicians); or
(ii) The deductible and coinsurance (in the case of practitioners).
(4) Notify all beneficiaries with whom the physician or
practitioner entered into private contracts of the physician's or
practitioner's decision to terminate opt-out and of the beneficiaries'
right to have claims filed on their behalf with Medicare for the
services furnished during the period between the effective date of the
opt-out and the effective date of the termination of the opt-out
period.
(c) When the physician or practitioner properly terminates opt-out
in accordance with paragraph (b), he or she will be reinstated in
Medicare as if there had been no opt-out, and the provision of
Sec. 405.425 shall not apply unless the physician or practitioner
subsequently properly opts out.
(d) A physician or practitioner who has completed opt-out on or
before January 1, 1999 may terminate opt-out during the 90 days
following January 1, 1999 if he or she notifies all carriers to whom he
or she would otherwise submit claims of the intent to terminate opt-out
and complies with paragraphs (b)(3) and (4) of this section. Paragraph
(c) of this section applies in these cases.
Sec. 405.450 Appeals.
(a) A determination by HCFA that a physician or practitioner has
failed to properly opt-out, failed to maintain opt-out, failed to
timely renew opt-out, failed to privately contract, or failed to
properly terminate opt-out is an initial determination for purposes of
Sec. 405.803.
(b) A determination by HCFA that no payment can be made to a
beneficiary for the services of a physician who has opted-out is an
initial determination for purposes of Sec. 405.803.
Sec. 405.455 Application to Medicare+Choice contracts.
An organization that has a contract with HCFA to provide one or
more Medicare+Choice (M+C) plans to beneficiaries (part 422 of this
chapter):
(a) Must acquire and maintain information from Medicare carriers on
physicians and practitioners who have opted-out of Medicare.
(b) Must make no payment directly or indirectly for Medicare
covered services furnished to a Medicare beneficiary by a physician or
practitioner who has opted-out of Medicare.
(c) May make payment to a physician or practitioner who furnishes
emergency or urgent care services to a beneficiary who has not
previously entered into a private contract with the physician or
practitioner in accordance with Sec. 405.440.
Subpart E--Criteria for Determining Reasonable Charges
2. The authority citation for part 405, subpart E, continues to
read as follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
3. Section 405.517 is revised to read as follows:
Sec. 405.517 Payment for drugs and biologicals that are not paid on a
cost or prospective payment basis.
(a) Applicability. Payment for a drug or biological that is not
paid on a cost or prospective payment basis is determined by the
standard methodology described in paragraph (b) of this section.
Examples of when this procedure applies include a drug or biological
furnished incident to a physician's service, a drug or biological
furnished by an independent dialysis facility that is not included in
the ESRD composite rate set forth in Sec. 413.170(c) of this chapter,
and a drug or biological furnished as part of the durable medical
equipment benefit.
(b) Methodology. Payment for a drug or biological described in
paragraph (a) of this section is based on the lower of the actual
charge on the Medicare claim for benefits or 95 percent of the national
average wholesale price of the drug or biological.
(c) Multiple-source drugs. For multiple-source drugs and
biologicals, for purposes of this regulation, the average wholesale
price is defined as the lesser of the median average wholesale price
for all sources of the generic forms of the drug or biological or the
lowest average wholesale price of the brand name forms of the drug or
biological.
4. A new Sec. 405.520 is added to read as follows:
Sec. 405.520 Payment for a physician assistants, nurse practitioners,
and clinical nurse specialists' services and services furnished
incident to their professional services.
(a) General rule. A physician assistants, nurse practitioners, and
clinical nurse specialists' services, and services and supplies
furnished incident to their professional services, are paid in
accordance with the physician fee schedule. The payment for a physician
assistants' services may not exceed the limits at Sec. 414.52 of this
chapter. The payment for a nurse practitioners' and clinical nurse
specialists' services may not exceed the limits at Sec. 414.56 of this
chapter.
(b) Requirements. Medicare payment is made only if all claims for
payment are made on an assignment-related basis in accordance with
Sec. 424.55 of this chapter, that sets forth, respectively, the
conditions for coverage of physician assistants' services, nurse
practitioners' services and clinical nurse specialists' services, and
services and supplies furnished incident to their professional
services.
(c) Civil money penalties. Any person or entity who knowingly and
willingly bills a Medicare beneficiary amounts in excess of the
appropriate coinsurance and deductible is subject to a civil money
penalty not to exceed $2,000 for each bill or request for payment.
PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS
B. Part 410 is amended as set forth below:
1. The authority citation for part 410 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Sec. 410.1 [Amended]
2. Section 410.1, paragraph (a) is amended by adding the following
sentence at the end: ``Section 4206 of the Balanced Budget Act of 1997
sets forth the conditions for payment for professional consultations
that take place by means of telecommunications systems.''
[[Page 58906]]
Sec. 410.32 [Amended]
3. In Sec. 410.32(a)(3), the last word, ``section,'' is removed and
the word ``paragraph'' is added in its place.
4. A new section 410.59 is added to read as follows:
Sec. 410.59 Outpatient occupational therapy services: Conditions.
(a) Basic rule. Medicare Part B pays for outpatient occupational
therapy services if they meet the following conditions:
(1) They are furnished to a beneficiary while he or she is under
the care of a physician who is a doctor of medicine, osteopathy, or
podiatric medicine.
(2) They are furnished under a written plan of treatment that meets
the requirements of Sec. 410.61.
(3) They are furnished--
(i) By a provider as defined in Sec. 489.2 of this chapter, or by
others under arrangements with, and under the supervision of, a
provider; or
(ii) By or under the personal supervision of an occupational
therapist in private practice as described in paragraph (c) of this
section.
(b) Outpatient occupational therapy services furnished to certain
inpatients of a hospital or a CAH or SNF. Medicare Part B pays for
outpatient occupational therapy services furnished to an inpatient of a
hospital, CAH, or SNF who requires them but who has exhausted or is
otherwise ineligible for benefit days under Medicare Part A.
(c) Special provisions for services furnished by occupational
therapists in private practice.
(1) Basic qualifications. In order to qualify under Medicare as a
supplier of outpatient occupational therapy services, each individual
occupational therapist in private practice must meet the following
requirements:
(i) Be legally authorized (if applicable, licensed, certified, or
registered) to engage in the private practice of occupational therapy
by the State in which he or she practices, and practice only within the
scope of his or her license, certification, or registration.
(ii) Engage in the private practice of occupational therapy on a
regular basis as an individual, in one of the following practice types:
(A) An unincorporated solo practice.
(B) A partnership or unincorporated group practice.
(C) An unincorporated solo practice, partnership, or group
practice, a professional corporation or other incorporated occupational
therapy practice. Private practice does not include any individual
during the time he or she is working as an employee of a provider.
(iii) Bill Medicare only for services furnished in his or her
private practice office space, or in the patient's home. A therapist's
private practice office space refers to the location(s) where the
practice is operated, in the State(s) where the therapist (and
practice, if applicable) is legally authorized to furnish services,
during the hours that the therapist engages in practice at that
location. When services are furnished in private practice office space,
that space must be owned, leased, or rented by the practice and used
for the exclusive purpose of operating the practice. A patient's home
does not include any institution that is a hospital, an CAH, or a SNF.
(iv) Treat individuals who are patients of the practice and for
whom the practice collects fees for the services furnished.
(2) Supervision of occupational therapy services. Occupational
therapy services are performed by, or under the personal supervision
of, the occupational therapist in private practice. All services not
performed personally by the therapist must be performed by employees of
the practice, personally supervised by the therapist, and included in
the fee for the therapist's services.
(d) Excluded services. No service is included as an outpatient
occupational therapy service if it would not be included as an
inpatient hospital service if furnished to a hospital or CAH inpatient.
(e) Annual limitation on incurred expenses. (1) Amount of
limitation. (i) In 1999, 2000, and 2001, no more than $1,500 of
allowable charges incurred in a calendar year for outpatient
occupational therapy services are recognized incurred expenses.
(ii) In 2002 and thereafter, the limitation is determined by
increasing the limitation in effect in the previous calendar year by
the increase in the Medicare Economic Index for the current year.
(2) For purposes of applying the limitation, outpatient
occupational therapy includes:
(i) Except as provided in paragraph (e)(3) of this section,
outpatient occupational therapy services furnished under this section;
(ii) Outpatient occupational therapy services furnished by a
comprehensive outpatient rehabilitation facility;
(iii) Outpatient occupational therapy services furnished by a
physician or incident to a physician's service;
(iv) Outpatient occupational therapy services furnished by a nurse
practitioner, clinical nurse specialist, or physician assistant or
incident to their services.
(3) For purposes of applying the limitation, outpatient
occupational therapy services excludes services furnished by a hospital
directly or under arrangements.
5. Section 410.60 is revised to read as follows:
Sec. 410.60 Outpatient physical therapy services: Conditions.
(a) Basic rule. Medicare Part B pays for outpatient physical
therapy services if they meet the following conditions:
(1) They are furnished to a beneficiary while he or she is under
the care of a physician who is a doctor of medicine, osteopathy, or
podiatric medicine.
(2) They are furnished under a written plan of treatment that meets
the requirements of Sec. 410.61.
(3) They are furnished--
(i) By a provider as defined in Sec. 489.2 of this chapter, or by
others under arrangements with, and under the supervision of, a
provider; or
(ii) By or under the personal supervision of a physical therapist
in private practice as described in paragraph (c) of this section.
(b) Outpatient physical therapy services furnished to certain
inpatients of a hospital or a CAH or SNF. Medicare Part B pays for
outpatient physical therapy services furnished to an inpatient of a
hospital, CAH, or SNF who requires them but who has exhausted or is
otherwise +ineligible for benefit days under Medicare Part A.
(c) Special provisions for services furnished by physical
therapists in private practice. (1) Basic qualifications. In order to
qualify under Medicare as a supplier of outpatient physical therapy
services, each individual physical therapist in private practice must
meet the following requirements:
(i) Be legally authorized (if applicable, licensed, certified, or
registered) to engage in the private practice of physical therapy by
the State in which he or she practices, and practice only within the
scope of his or her license, certification, or registration.
(ii) Engage in the private practice of physical therapy on a
regular basis as an individual, in one of the following practice types:
(A) An unincorporated solo practice.
(B) An unincorporated partnership or unincorporated group practice.
(C) An unincorporated solo practice, partnership, or group
practice, or a professional corporation or other incorporated physical
therapy practice. Private practice does not include any individual
during the time he or she is working as an employee of a provider.
[[Page 58907]]
(iii) Bill Medicare only for services furnished in his or her
private practice office space, or in the patient's home. A therapist's
private practice office space refers to the location(s) where the
practice is operated, in the State(s) where the therapist (and
practice, if applicable) is legally authorized to furnish services,
during the hours that the therapist engages in practice at that
location. When services are furnished in private practice office space,
that space must be owned, leased, or rented by the practice and used
for the exclusive purpose of operating the practice. A patient's home
does not include any institution that is a hospital, a CAH, or a SNF.
(iv) Treat individuals who are patients of the practice and for
whom the practice collects fees for the services furnished.
(2) Supervision of physical therapy services. Physical therapy
services are performed by, or under the personal supervision of, the
physical therapist in private practice. All services not performed
personally by the therapist must be performed by employees of the
practice, personally supervised by the therapist, and included in the
fee for the therapist's services.
(d) Excluded services. No service is included as an outpatient
physical therapy service if it would not be included as an inpatient
hospital service if furnished to a hospital or CAH inpatient.
(e) Annual limitation on incurred expenses. (1) Amount of
limitation. (i) In 1999, 2000, and 2001, no more than $1,500 of
allowable charges incurred in a calendar year for outpatient physical
therapy services are recognized incurred expenses.
(ii) In 2002 and thereafter, the limitation shall be determined by
increasing the limitation in effect in the previous calendar year by
the increase in the Medicare Economic Index for the current year.
(2) For purposes of applying the limitation, outpatient physical
therapy includes:
(i) Except as provided in paragraph (e)(3) of this section,
outpatient physical therapy services furnished under this section;
(ii) Except as provided in paragraph (e)(3) of this section
outpatient speech-language pathology services furnished under
Sec. 410.62;
(iii) Outpatient physical therapy and speech-language pathology
services furnished by a comprehensive outpatient rehabilitation
facility;
(iv) Outpatient physical therapy and speech-language pathology
services furnished by a physician or incident to a physician's service;
(v) Outpatient physical therapy and speech-language pathology
services furnished by a nurse practitioner, clinical nurse specialist,
or physician assistant or incident to their services.
(3) For purposes of applying the limitation, outpatient physical
therapy excludes services furnished by a hospital or CAH directly or
under arrangements.
6. In Sec. 410.61, the section heading and paragraphs (a) through
(d) are revised to read as follows:
Sec. 410.61 Plan of treatment requirements for outpatient
rehabilitation services.
(a) Basic requirement. Outpatient rehabilitation services
(including services furnished by a qualified physical or occupational
therapist in private practice), must be furnished under a written plan
of treatment that meets the requirements of paragraphs (b) through (e)
of this section.
(b) Establishment of the plan. The plan is established before
treatment is begun by one of the following:
(1) A physician.
(2) A physical therapist who furnishes the physical therapy
services.
(3) A speech-language pathologist who furnishes the speech-language
pathology services.
(4) An occupational therapist who furnishes the occupational
therapy services.
(5) A nurse practitioner, a clinical nurse specialist, or a
physician assistant.
(c) Content of the plan. The plan prescribes the type, amount,
frequency, and duration of the physical therapy, occupational therapy,
or speech-language pathology services to be furnished to the
individual, and indicates the diagnosis and anticipated goals.
(d) Changes in the plan. Any changes in the plan--
(1) Are made in writing and signed by one of the following:
(i) The physician.
(ii) The physical therapist who furnishes the physical therapy
services.
(iii) The occupational therapist who furnishes the physical therapy
services.
(iv) The speech-language pathologist who furnishes the speech-
language pathology services.
(v) A registered professional nurse or a staff physician, in
accordance with oral orders from the physician, physical therapist,
occupational therapist, or speech-language pathologist who furnishes
the services.
(vi) A nurse practitioner, a clinical nurse specialist, or a
physician assistant.
(2) The changes are incorporated in the plan immediately.
* * * * *
7. In Sec. 410.62, the section heading and paragraph (a)(3) are
revised and a new paragraph (d) is added to read as follows:
Sec. 410.62 Outpatient speech-language pathology services: Conditions
and exclusions.
(a) * * *
(3) They are furnished by a provider as defined in Sec. 489.2 of
this chapter or by others under arrangements with, or under the
supervision of, a provider.
* * * * *
(d) Limitation. After 1998, outpatient speech-language pathology
services are subject to the limitation in Sec. 410.60(e).
8. New Secs. 410.74, 410.75, 410.76, 410.77, and 410.78 are added
to subpart B to read as follows:
Subpart B--Medical and Other Health Services
Sec. 410.74 Physician assistants' services.
(a) Basic rule. Medicare Part B covers physician assistants'
services only if the following conditions are met:
(1) The services would be covered as physicians' services if
furnished by a physician (a doctor of medicine or osteopathy, as set
forth in section 1861(r)(1) of the Act).
(2) The physician assistant--
(i) Meets the qualifications set forth in paragraph (c) of this
section;
(ii) Is legally authorized to perform the services in the State in
which they are performed;
(iii) Performs services that are not otherwise precluded from
coverage because of a statutory exclusion;
(iv) Performs the services under the general supervision of a
physician (The supervising physician need not be physically present
when the physician assistant is performing the services unless required
by State law; however, the supervising physician must be immediately
available to the physician assistant for consultation.);
(v) Furnishes services that are billed by the employer of a
physician assistant; and
(vi) Performs the services--
(A) In all settings in either rural and urban areas; or
(B) As an assistant at surgery.
(b) Services and supplies furnished incident to a physician
assistant's services. Medicare covers services and supplies (including
drugs and biologicals that cannot be self-administered) that are
furnished incident to the physician assistant's services described in
paragraph (a) of
[[Page 58908]]
this section. These services and supplies are covered only if they--
(1) Would be covered if furnished by a physician or as incident to
the professional services of a physician;
(2) Are the type that are commonly furnished in a physician's
office and are either furnished without charge or are included in the
bill for the physician assistants' services;
(3) Are, although incidental, an integral part of the professional
service performed by the physician;
(4) Are performed under the direct supervision of the physician
assistant (that is, the physician assistant is physically present and
immediately available); and
(5) Are performed by the employee of a physician assistant or an
entity that employs both the physician assistant and the person
providing the services.
(c) Qualifications. For Medicare Part B coverage of his or her
services, a physician assistant must meet all of the following
conditions:
(1) Have graduated from a physician assistant educational program
that is accredited by the National Commission on Accreditation of
Allied Health Education Programs;
(2) Have passed the national certification examination of the
National Commission on Certification of Physician Assistants; and
(3) Be licensed by the State to practice as a physician assistant.
(d) Professional services. Physician assistants can be paid for
professional services only if the services have been professionally
performed by them and no facility or other provider charges for the
service or is paid any amount for the furnishing of those professional
services.
(1) Supervision of other nonphysician staff by a physician
assistant does not constitute personal performance of a professional
service by the physician assistant.
(2) The services are provided on an assignment-related basis, and
the physician assistant may not charge a beneficiary for a service not
payable under this provision. If a beneficiary has made payment for a
service, the physician assistant must make the appropriate refund to
the beneficiary.
Sec. 410.75 Nurse practitioners' services.
(a) Definition. As used in this section, the term ``physician''
means a doctor of medicine or osteopathy, as set forth in section
1861(r)(1) of the Act.
(b) Qualifications. For Medicare Part B coverage of his or her
services, a nurse practitioner must--
(1) Possess a master's degree in nursing;
(2) Be a registered professional nurse who is authorized by the
State in which the services are furnished, to practice as a nurse
practitioner in accordance with State law; and,
(3) Be certified as a nurse practitioner by the American Nurses
Credentialing Center or other recognized national certifying bodies
that have established standards for nurse practitioners as defined in
paragraphs (b)(1) and (2) of this section.
(c) Services. Medicare Part B covers nurse practitioners' services
in all settings in both rural and urban areas, only if the services
would be covered if furnished by a physician and the nurse
practitioner--
(1) Is legally authorized to perform them in the State in which
they are performed;
(2) Is not performing services that are otherwise excluded from
coverage because of one of the statutory exclusions; and
(3) Performs them while working in collaboration with a physician.
(i) Collaboration is a process in which a nurse practitioner works
with one or more physicians to deliver health care services within the
scope of the practitioner's expertise, with medical direction and
appropriate supervision as provided for in jointly developed guidelines
or other mechanisms as provided by the law of the State in which the
services are performed.
(ii) In the absence of State law governing collaboration,
collaboration is a process in which a nurse practitioner has a
relationship with one or more physicians to deliver health care
services. Such collaboration is to be evidenced by nurse practitioners
documenting the nurse practitioners' scope of practice and indicating
the relationships that they have with physicians to deal with issues
outside their scope of practice. Nurse practitioners must document this
collaborative process with physicians.
(iii) The collaborating physician does not need to be present with
the nurse practitioner when the services are furnished or to make an
independent evaluation of each patient who is seen by the nurse
practitioner.
(d) Services and supplies incident to a nurse practitioners'
services. Medicare Part B covers services and supplies (including drugs
and biologicals that cannot be self-administered) incident to a nurse
practitioner's services that meet the requirements in paragraph (c) of
this section. These services and supplies are covered only if they--
(1) Would be covered if furnished by a physician or as incident to
the professional services of a physician;
(2) Are of the type that are commonly furnished in a physician's
office and are either furnished without charge or are included in the
bill for the nurse practitioner's services;
(3) Although incidental, are an integral part of the professional
service performed by the nurse practitioner; and
(4) Are performed under the direct supervision of the nurse
practitioner (that is, the nurse practitioner must be physically
present and immediately available).
(e) Professional services. Nurse practitioners can be paid for
professional services only when the services have been personally
performed by them and no facility or other provider charges, or is
paid, any amount for the furnishing of the professional services.
(1) Supervision of other nonphysician staff by a nurse practitioner
does not constitute personal performance of a professional service by a
nurse practitioner.
(2) The services are provided on an assignment-related basis, and a
nurse practitioner may not charge a beneficiary for a service not
payable under this provision. If a beneficiary has made payment for a
service, the nurse practitioner must make the appropriate refund to the
beneficiary.
Sec. 410.76 Clinical nurse specialists' services.
(a) Definition. As used in this section, the term ``physician''
means a doctor of medicine or osteopathy, as set forth in section
1861(r)(1) of the Act.
(b) Qualifications. For Medicare Part B coverage of his or her
services, a clinical nurse specialist must--
(1) Be a registered nurse who is currently licensed to practice in
the State where he or she practices and be authorized to perform the
services of a clinical nurse specialist in accordance with State law;
(2) Have a master's degree in a defined clinical area of nursing
from an accredited educational institution; and
(3) Be certified as a clinical nurse specialist by the American
Nurses Credentialing Center.
(c) Services. Medicare Part B covers clinical nurse specialists'
services in all settings in both rural and urban areas only if the
services would be covered if furnished by a physician and the clinical
nurse specialist--
(1) Is legally authorized to perform them in the State in which
they are performed;
(2) Is not performing services that are otherwise excluded from
coverage by one of the statutory exclusions; and
(3) Performs them while working in collaboration with a physician.
[[Page 58909]]
(i) Collaboration is a process in which a clinical nurse specialist
works with one or more physicians to deliver health care services
within the scope of the practitioner's expertise, with medical
direction and appropriate supervision as provided for in jointly
developed guidelines or other mechanisms as provided by the law of the
State in which the services are performed.
(ii) In the absence of State law governing collaboration,
collaboration is a process in which a clinical nurse specialist has a
relationship with one or more physicians to deliver health care
services. Such collaboration is to be evidenced by clinical nurse
specialists documenting the clinical nurse specialists' scope of
practice and indicating the relationships that they have with
physicians to deal with issues outside their scope of practice.
Clinical nurse specialists must document this collaborative process
with physicians.
(iii) The collaborating physician does not need to be present with
the clinical nurse specialist when the services are furnished, or to
make an independent evaluation of each patient who is seen by the
clinical nurse specialist.
(d) Services and supplies furnished incident to clinical nurse
specialists' services. Medicare Part B covers services and supplies
(including drugs and biologicals that cannot be self-administered)
incident to a clinical nurse specialist's services that meet the
requirements in paragraph (c) of this section. These services and
supplies are covered only if they--
(1) Would be covered if furnished by a physician or as incident to
the professional services of a physician;
(2) Are of the type that are commonly furnished in a physician's
office and are either furnished without charge or are included in the
bill for the clinical nurse specialist's services;
(3) Although incidental, are an integral part of the professional
service performed by the clinical nurse specialist; and
(4) Are performed under the direct supervision of the clinical
nurse specialist (that is, the clinical nurse specialist must be
physically present and immediately available).
(e) Professional services. Clinical nurse specialists can be paid
for professional services only when the services have been personally
performed by them and no facility or other provider charges, or is
paid, any amount for the furnishing of the professional services.
(1) Supervision of other nonphysician staff by clinical nurse
specialists does not constitute personal performance of a professional
service by clinical nurse specialists.
(2) The services are provided on an assignment-related basis, and a
clinical nurse specialist may not charge a beneficiary for a service
not payable under this provision. If a beneficiary has made payment for
a service, the clinical nurse specialist must make the appropriate
refund to the beneficiary.
Sec. 410.77 Certified nurse-midwives' services: Qualifications and
conditions.
(a) Qualifications. For Medicare coverage of his or her services, a
certified nurse-midwife must:
(1) Be a registered nurse who is legally authorized to practice as
a nurse-midwife in the State where services are performed;
(2) Have successfully completed a program of study and clinical
experience for nurse-midwives that is accredited by an accrediting body
approved by the U.S. Department of Education; and
(3) Be certified as a nurse-midwife by the American College of
Nurse-Midwives or the American College of Nurse-Midwives Certification
Council.
(b) Services. A certified nurse-midwife's services are services
furnished by a certified nurse-midwife and services and supplies
furnished as an incident to the certified nurse-midwife's services
that--
(1) Are within the scope of practice authorized by the law of the
State in which they are furnished and would otherwise be covered if
furnished by a physician or as an incident to a physician's service;
and
(2) Unless required by State law, are provided without regard to
whether the certified nurse-midwife is under the supervision of, or
associated with, a physician or other health care provider.
(c) Incident to services: Basic rule. Medicare covers services and
supplies furnished incident to the services of a certified nurse-
midwife, including drugs and biologicals that cannot be self-
administered, if the services and supplies meet the following
conditions:
(1) They would be covered if furnished by a physician or as
incident to the professional services of a physician.
(2) They are of the type that are commonly furnished in a
physician's office and are either furnished without charge or are
included in the bill for the certified nurse-midwife's services.
(3) Although incidental, they are an integral part of the
professional service performed by the certified nurse-midwife.
(4) They are furnished under the direct supervision of a certified
nurse-midwife (that is, the midwife is physically present and
immediately available).
(d) Professional services. A nurse-midwife can be paid for
professional services only when the services have been performed
personally by the nurse-midwife.
(1) Supervision of other nonphysician staff by a nurse-midwife does
not constitute personal performance of a professional service by the
nurse-midwife.
(2) The service is provided on an assignment-related basis, and a
nurse-midwife may not charge a beneficiary for a service not payable
under this provision. If the beneficiary has made payment for a
service, the nurse-midwife must make the appropriate refund to the
beneficiary.
(3) A nurse-midwife may provide services that he or she is legally
authorized to perform under State law as a nurse-midwife, if the
services would otherwise be covered by the Medicare program when
furnished by a physician or incident to a physicians' professional
services.
Sec. 410.78 Consultations via telecommunications systems.
(a) General rule. Medicare Part B pays for professional
consultations furnished by means of interactive telecommunications
systems if the following conditions are met:
(1) The consulting practitioner is any of the following:
(i) A physician as described in Sec. 410.20.
(ii) A physician assistant as defined in Sec. 410.74.
(iii) A nurse practitioner as defined in Sec. 410.75.
(iv) A clinical nurse specialist as described in Sec. 410.76.
(v) A nurse-midwife as defined in Sec. 410.77.
(2) The referring practitioner is any of the following:
(i) A physician as described in Sec. 410.20.
(ii) A physician assistant as defined in Sec. 410.74.
(iii) A nurse practitioner as defined in Sec. 410.75.
(iv) A clinical nurse specialist as described in Sec. 410.76.
(v) A nurse-midwife as defined in Sec. 410.77.
(vi) A clinical psychologist as described at Sec. 410.71.
(vii) A clinical social worker as defined in Sec. 410.73.
(3) The services are furnished to a beneficiary residing in a rural
area as defined in section 1886(d)(2)(D) of the Act, and the area is
designated as a
[[Page 58910]]
health professional shortage area (HPSA) under section 332(a)(1)(A) of
the Public Health Service Act (42 U.S.C. 254e(a)(1)(A)). For purposes
of this requirement, the beneficiary is deemed to be residing in such
an area if the teleconsultation presentation takes place in such an
area.
(4) The medical examination of the beneficiary is under the control
of the consulting practitioner.
(5) As a condition of payment, the teleconsultation involves the
participation of the referring practitioner, or a practitioner
described in section 1842(b)(18)(C) of the Act (other than a certified
registered nurse anesthetist or anesthesiologist assistant) who is an
employee of the referring practitioner, as appropriate to the medical
needs of the patient and as needed to provide information to and at the
direction of the consultant.
(6) The consultation results in a written report that is furnished
to the referring practitioner.
(b) Definition. For purposes of this section, interactive
telecommunications systems means multimedia communications equipment
that includes, at a minimum, audio and video equipment permitting real-
time consultation among the patient, consultant, and referring
practitioner, or a practitioner described in section 1842(b)(18)(C) of
the Act (other than a certified registered nurse anesthetist or
anesthesiologist assistant) who is an employee of the referring
practitioner, as appropriate to the medical needs of the patient and as
needed to provide information to and at the direction of the consulting
practitioner. Telephones, facsimile machines, and electronic mail
systems do not meet the definition of interactive telecommunications
systems.
9. In Sec. 410.150, the introductory text to paragraph (b) is
republished, and new paragraphs (b)(15) and (b)(16) are added to read
as follows:
Sec. 410.150 To whom payment is made.
* * * * *
(b) Specific rules. Subject to the conditions set forth in
paragraph (a) of this section, Medicare Part B pays as follows:
* * * * *
(15) To the qualified employer of a physician assistant for
professional services furnished by the physician assistant and for
services and supplies furnished incident to his or her services.
Payment is made to the employer of a physician assistant regardless of
whether the physician assistant furnishes services under a W-2,
employer-employee employment relationship, or whether the physician
assistant is an independent contractor who receives a 1099 reflecting
the relationship. Both types of relationships must conform to the
appropriate guidelines provided by the Internal Revenue Service. A
qualified employer is not a group of physician assistants that
incorporate to bill for their services. Payment is made only if no
facility or other provider charges or is paid any amount for services
furnished by a physician assistant.
(16) To a nurse practitioner or clinical nurse specialist for
professional services furnished by a nurse practitioner or clinical
nurse specialist in all settings in both rural and nonrural areas and
for services and supplies furnished incident to those services. Payment
is made only if no facility or other provider charges, or is paid, any
amount for the furnishing of the professional services of the nurse
practitioner or clinical nurse specialist.
* * * * *
10. In Sec. 410.152, the headings to paragraphs (a) and (a)(1) are
republished, and paragraph (a)(1)(v) is revised to read as follows:
Sec. 410.152 Amount of payment.
(a) General provisions--(1) Exclusion from incurred expenses.* * *
(v) In the case of expenses incurred for outpatient physical
therapy services including speech-language pathology services, the
expenses excluded are from the incurred expenses under Sec. 410.60(e).
In the case of expenses incurred for outpatient occupational therapy
including speech-language pathology services, the expenses excluded are
from the incurred expenses under Sec. 410.59(e).
* * * * *
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES
C. Part 413 is amended as set forth below.
1. The authority citation for part 413 continues to read as
follows:
Authority: Secs. 1102, 1861(v)(1)(A), and 1871 of the Social
Security Act (42 U.S.C. 1302, 1395x(v)(1)(A), and 1395hh).
2. Section 413.125 is amended by designating the existing text as
paragraph (a) and adding paragraph (b) to read as follows:
Sec. 413.125 Payment for home health agency services.
* * * * *
(b) The reasonable cost of outpatient rehabilitation services
furnished by a home health agency to homebound patients who are not
entitled to home health benefits may not exceed the amounts payable
under the physician fee schedule for comparable services effective
January 1, 1999.
PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES
D. Part 414 is amended as set forth below:
1. The authority citation for part 414 continues to read as
follows:
Authority: Secs. 1102, 1871, and 1881(b)(1) of the Social
Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(1)).
2. In Sec. 414.1, the introductory text is republished, and the
following statutory authorities are added in numerical order to read as
follows:
Sec. 414.1 Basis and scope.
This part implements the indicated provisions of the following
sections of the Act:
1802--Rules for private contracts by Medicare beneficiaries.
1820--Rules for Medicare reimbursement for telehealth services.
* * * * *
3. Sections 414.20 through 414.62 are redesignated as Subpart B,
and a new heading is added to read ``Subpart B--Physicians and Other
Practitioners''.
4. In Sec. 414.22, the introductory text to the section is revised
and the heading to paragraph (b) is republished, and new paragraph
(b)(5) is added to read as follows:
Sec. 414.22 Relative value units (RVUs).
HCFA establishes RVUs for physicians' work, practice expense, and
malpractice insurance.
* * * * *
(b) Practice expense RVUs. * * *
(5) For services furnished beginning January 1, 1999, the practice
expense RVUs are based on 75 percent of the practice expense RVUs
applicable to services furnished in 1998 and 25 percent of the relative
practice expense resources involved in furnishing the service. For
services furnished in 2000, the practice expense RVUs are based on 50
percent of the practice expense RVUs applicable to services furnished
in 1998 and 50 percent of the relative practice expense resources
involved in furnishing the service. For services furnished in 2001, the
practice expense RVUs are based on 25 percent of the practice expense
RVUs applicable to services furnished in 1998 and 75 percent of the
relative practice expense
[[Page 58911]]
resources involved in furnishing the service. For services furnished in
2002 and subsequent years, the practice expense RVUs are based entirely
on relative practice expense resources.
(i) Usually one of two levels of practice expense RVUs per code can
be applied to each service. The lower practice expense RVUs apply to
services furnished to hospital, skilled nursing facility, or ambulatory
surgical center patients. The higher practice expense RVUs apply to
services performed in a physician's office; services, other than
evaluation and management services, furnished to patients in a nursing
facility, in a facility or institution other than a hospital, skilled
nursing facility, or ambulatory surgical center, or in the home; and
other services furnished to facility patients for which the facility
payment does not include physicians' practice costs.
(ii) Only one practice expense RVU per code can be applied for each
of the following services: services that have only technical component
practice expense RVUs or only professional component practice expense
RVUs; evaluation and management services, such as hospital or nursing
facility visits, that are furnished exclusively in one setting; and
major surgical services.
* * * * *
5. In Sec. 414.32, the heading and paragraph (b) are revised to
read as follows:
Sec. 414.32 Determining payments for certain physicians' services
furnished in facility settings.
* * * * *
(b) General rule. If physicians' services of the type routinely
furnished in physicians' offices are furnished in facility settings
before January 1, 1999, the physician fee schedule amount for those
services is determined by reducing the practice expense RVUs for the
services by 50 percent. For services furnished on or after January 1,
1999, the practice expense RVUs are determined in accordance with
Sec. 414.22(b)(5).
* * * * *
6. In Sec. 414.34, the section heading is revised, and a new
paragraph (a)(2)(iii) is added to read as follows:
Sec. 414.34 Payment for services and supplies incident to a
physician's service.
(a) Medical supplies. * * *
(2) * * *
(iii) It is furnished before January 1, 1999.
* * * * *
7. In Sec. 414.52, the section heading and introductory text are
revised, and a new paragraph (d) is added to read as follows:
Sec. 414.52 Payment for physician assistants' services.
Allowed amounts for the services of a physician assistant furnished
beginning January 1, 1992 and ending December 31, 1997, may not exceed
the limits specified in paragraphs (a) through (c) of this section.
Allowed amounts for the services of a physician assistant furnished
beginning January 1, 1998, may not exceed the limits specified in
paragraph (d) of this section.
* * * * *
(d) For services (other than assistant-at-surgery services)
furnished beginning January 1, 1998, 85 percent of the physician fee
schedule amount for the service. For assistant-at-surgery services, 85
percent of the physician fee schedule amount that would be allowed
under the physician fee schedule if the assistant-at-surgery service
were furnished by a physician.
8. Section 414.56 is revised to read as follows:
Sec. 414.56 Payment for nurse practitioners' and clinical nurse
specialists' services.
(a) Rural areas. For services furnished beginning January 1, 1992
and ending December 31, 1997, allowed amounts for the services of a
nurse practitioner or a clinical nurse specialist in a rural area (as
described in section 1861(s)(2)(K)(iii) of the Act) may not exceed the
following limits:
(1) For services furnished in a hospital (including assistant-at-
surgery services), 75 percent of the physician fee schedule amount for
the service.
(2) For all other services, 85 percent of the physician fee
schedule amount for the service.
(b) Non-rural areas. For services furnished beginning January 1,
1992 and ending December 31, 1997, allowed amounts for the services of
a nurse practitioner or a clinical nurse specialist in a nursing
facility may not exceed 85 percent of the physician fee schedule amount
for the service.
(c) Beginning January 1, 1998. For services (other than assistant-
at-surgery services) furnished beginning January 1, 1998, allowed
amounts for the services of a nurse practitioner or clinical nurse
specialist may not exceed 85 percent of the physician fee schedule
amount for the service. For assistant-at-surgery services, allowed
amounts for the services of a nurse practitioner or clinical nurse
specialist may not exceed 85 percent of the physician fee schedule
amount that would be allowed under the physician fee schedule if the
assistant-at-surgery service were furnished by a physician.
9. Section 414.65 is added to subpart B, to read as follows:
Sec. 414.65 Payment for consultations via interactive
telecommunications systems.
(a) Limitations on payment. Medicare payment for a professional
consultation conducted via interactive telecommunications systems is
subject to the following limitations:
(1) The payment may not exceed the current fee schedule amount
applicable to the consulting practitioner for the health care service
provided.
(2) The payment may not include reimbursement for any telephone
line charges or any facility fees.
(3) The payment is subject to the coinsurance and deductible
requirements of sections 1833(a)(1) and (b) of the Act.
(4) The payment differential of section 1848(a)(3) of the Act
applies to services furnished by nonparticipating physicians.
(b) Prohibited billing. The beneficiary may not be billed for any
telephone line charges or any facility fees.
(c) Assignment required for nonphysician practitioners. Payment to
nonphysician practitioners is made only on an assignment-related basis.
(d) Who may bill for the consultation. Only the consultant
practitioner may bill for the consultation.
(e) Sharing of payment. The consultant practitioner must provide to
the referring practitioner 25 percent of any payments he or she
receives for the consultation, including any applicable deductible or
coinsurance amounts.
(f) Sanctions. A practitioner may be subject to the applicable
sanctions provided for in chapter V, parts 1001, 1002, and 1003 of this
title if he or she--
(1) Knowingly and willfully bills or collects for services in
violation of the limitations of this section on a repeated basis; or
(2) Fails to timely correct excess charges by reducing the actual
charge billed for the service to an amount that does not exceed the
limiting charge for the service or fails to timely refund excess
collections.
PART 415--SERVICES FURNISHED BY PHYSICIANS IN PROVIDERS,
SUPERVISING PHYSICIANS IN TEACHING SETTINGS, AND RESIDENTS IN
CERTAIN SETTINGS
E. Part 415 is amended as set forth below:
1. The authority citation for part 415 continues to read as
follows:
[[Page 58912]]
Authority: Secs. 1102 and 1871 of the Social Security Act (41
U.S.C. 1302 and 1395hh).
2. Section 415.110 is revised to read as follows:
Sec. 415.110 Conditions for payment: Medically directed anesthesia
services.
(a) General payment rule. Medicare pays for the physician's medical
direction of anesthesia services for one service or two through four
concurrent anesthesia services furnished after December 31, 1998, only
if each of the services meets the condition in Sec. 415.102(a) and the
following additional conditions:
(1) For each patient, the physician--
(i) Performs a pre-anesthetic examination and evaluation;
(ii) Prescribes the anesthesia plan;
(iii) Personally participates in the most demanding aspects of the
anesthesia plan including, if applicable, induction and emergence;
(iv) Ensures that any procedures in the anesthesia plan that he or
she does not perform are performed by a qualified individual as defined
in operating instructions;
(v) Monitors the course of anesthesia administration at frequent
intervals;
(vi) Remains physically present and available for immediate
diagnosis and treatment of emergencies; and
(vii) Provides indicated post-anesthesia care.
(2) The physician directs no more than four anesthesia services
concurrently and does not perform any other services while he or she is
directing the single or concurrent services so that one or more of the
conditions in paragraph (a)(1) of this section are not violated.
(3) If the physician personally performs the anesthesia service,
the payment rules in Sec. 414.46(c) of this chapter apply (Physician
personally performs the anesthesia procedure).
(b) Medical documentation. The physician alone inclusively
documents in the patient's medical record that the conditions set forth
in paragraph (a)(1) of this section have been satisfied, specifically
documenting that he or she performed the pre-anesthetic exam and
evaluation, provided the indicated post-anesthesia care, and was
present during the most demanding procedures, including induction and
emergence where applicable.
PART 424--CONDITIONS FOR MEDICARE PAYMENT
F. Part 424 is amended as set forth below:
1. The authority citation for part 424 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (41
U.S.C. 1302 and 1395hh).
2. In Sec. 424.24, paragraphs (c) introductory text, (c)(1)(ii),
(c)(1)(iii), (c)(3)(i), (c)(3)(ii), (c)(4), (f)(2), and (f)(3) are
revised to read as follows:
Sec. 424.24 Requirements for medical and other health services
furnished by providers under Medicare Part B.
* * * * *
(c) Outpatient physical therapy and speech-language pathology
services--(1) Content of certification. * * *
(ii) The services were furnished while the individual was under the
care of a physician, nurse practitioner, clinical nurse specialist, or
physician assistant.
(iii) The services were furnished under a plan of treatment that
meets the requirements of Sec. 410.61 of this chapter.
* * * * *
(3) Signature. * * *
(i) If the plan of treatment is established by a physician, nurse
practitioner, clinical nurse specialist, or physician assistant, the
certification must be signed by that physician or nonphysician
practitioner.
(ii) If the plan of treatment is established by a physical
therapist or speech-language pathologist, the certification must be
signed by a physician or by a nurse practitioner, clinical nurse
specialist, or physician assistant who has knowledge of the case.
(4) Recertification--(i) Timing. Recertification statements are
required at least every 30 days and must be signed by the physician,
nurse practitioner, clinical nurse specialist, or physician assistant
who reviews the plan of treatment.
(ii) Content. The recertification statement must indicate the
continuing need for physical therapy or speech-language pathology
services and an estimate of how much longer the services will be
needed.
(iii) Signature. Recertifications must be signed by the physician,
nurse practitioner, clinical nurse specialist, or physician assistant
who reviews the plan of treatment.
* * * * *
(f) * * *
(2) Signature. The certificate must be signed by a physician, nurse
practioner, clinical nurse specialist, or physician assistant who has
knowledge of the case.
(3) Timing. The physician, nurse practioner, clinical nurse
specialist, or physician assistant may provide certification at the
time the services are furnished or, if services are provided on a
continuing basis, either at the beginning or at the end of a series of
visits.
* * * * *
PART 485--CONDITIONS OF PARTICIPATION: SPECIALIZED PROVIDERS
G. Part 485 is amended as set forth below:
1. The authority citation for part 485 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (41
U.S.C. 1302 and 1395hh).
2. Section 485.705 is revised to read as follows:
Sec. 485.705 Personnel qualifications.
(a) General qualification requirements. Except as specified in
paragraphs (b) and (c) of this section, all personnel who are involved
in the furnishing of outpatient physical therapy, occupational therapy,
and speech-language pathology services directly by or under
arrangements with an organization must be legally authorized (licensed
or, if applicable, certified or registered) to practice by the State in
which they perform the functions or actions, and must act only within
the scope of their State license or State certification or
registration.
(b) Exception for Federally defined qualifications. The following
Federally defined qualifications must be met:
(1) For a physician, the qualifications and conditions as defined
in section 1861(r) of the Act and the requirements in part 484 of this
chapter.
(2) For a speech-language pathologist, the qualifications specified
in section 1861(11)(1) of the Act and the requirements in part 484 of
this chapter.
(c) Exceptions when no State Licensing laws or State certification
or registration requirements exist. If no State licensing laws or State
certification or registration requirements exist for the profession,
the following requirements must be met--
(1) An administrator is a person who has a bachelor's degree and:
(i) Has experience or specialized training in the administration of
health institutions or agencies; or
(ii) Is qualified and has experience in one of the professional
health disciplines.
(2) An occupational therapist must meet the requirements in part
484 of this chapter.
(3) An occupational therapy assistant must meet the requirements in
part 484 of this chapter.
(4) A physical therapist must meet the requirements in part 484 of
this chapter.
[[Continued on page 58913]]