Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, DME Face-to-Face Encounters, Elimination of the Requirement for Termination of Non-Random Prepayment Complex Medical Review and Other Revisions to Part B for CY 2013

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 414, 415, 421, 423, 425, 486, and 495

[CMS-1590-FC]

RIN 0938-AR11

Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, DME Face-to-Face Encounters, Elimination of the Requirement for Termination of Non-Random Prepayment Complex Medical Review and Other Revisions to Part B for CY 2013

AGENCY:

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

ACTION:

Final rule with comment period.

SUMMARY:

This major final rule with comment period addresses changes to the physician fee schedule, payments for Part B drugs, and other Medicare Part B payment policies to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. It also implements provisions of the Affordable Care Act by establishing a face-to-face encounter as a condition of payment for certain durable medical equipment (DME) items. In addition, it implements statutory changes regarding the termination of non-random prepayment review. This final rule with comment period also includes a discussion in the Supplementary Information regarding various programs . (See the Table of Contents for a listing of the specific issues addressed in this final rule with comment period.)

DATES:

Effective date:

The provisions of this final rule with comment period are effective on January 1, 2013 with the exception of provisions in § 410.38 which are effective on July 1, 2013. The incorporation by reference of certain publications listed in the rule was approved by the Director of the Federal Register on May 16, 2012.

Comment date:

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on December 31, 2012. (See the

SUPPLEMENTARY INFORMATION

section of this final rule with comment period for a list of the provisions open for comment.)

ADDRESSES:

In commenting, please refer to file code CMS-1590-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (please choose only one of the ways listed):

1.

Electronically.

You may submit electronic comments on this regulation to

www.regulations.gov

. Follow the instructions for “submitting a comment.”

2.

By regular mail.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1590-FC, P.O. Box 8013, Baltimore, MD 21244-8013.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3.

By express or overnight mail.

You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1590-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

4.

By hand or courier.

If you prefer, you may deliver (by hand or courier) your written comments before the close of the comment period to either of the following addresses:

a. For delivery in Washington, DC—Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201.

(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. For delivery in Baltimore, MD—Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members.

Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

FOR FURTHER INFORMATION CONTACT:

Elliott Isaac, (410) 786-4735, for any physician payment issue not identified below.

Ryan Howe, (410) 786-3355, for issues related to practice expense methodology and direct practice expense inputs, telehealth services, and issues related to primary care and care coordination.

Sara Vitolo, (410) 786-5714, for issues related to potentially misvalued services, malpractice RVUs, molecular pathology, and payment for new preventive service HCPCS G-codes, and the sustainable growth rate.

Carol Schwartz, (410) 786- 0576, for issues related to colonoscopy and preventive services.

Ken Marsalek, (410) 786-4502, for issues related to the multiple procedure payment reduction and payment for the technical component of pathology services.

Craig Dobyski, (410) 786-4584, for issues related to geographic practice cost indices.

Pam West, (410) 786-2302, for issues related to therapy services.

Chava Sheffield, (410) 786-2298, for issues related to certified registered nurse anesthetists scope of benefit.

Roberta Epps, (410) 786-4503, for issues related to portable x-ray.

Anne Tayloe-Hauswald, (410) 786-4546, for issues related to ambulance fee schedule and Part B drug payment.

Amanda Burd, (410) 786-2074, for issues related to the DME provisions.

Debbie Skinner, (410) 786-7480, for issues related to non-random prepayment complex medical review.

Latesha Walker, (410) 786-1101, for issues related to ambulance coverage—physician certification statement.

Alexandra Mugge, (410) 786-4457, for issues related to physician compare.

Christine Estella, (410) 786-0485, for issues related to the physician quality reporting system, incentives for e-prescribing, and Medicare shared savings program.

Pauline Lapin, (410) 786-6883, for issues related to the chiropractic services demonstration budget neutrality issue.

Gift Tee, (410) 786-9316, for issues related to the physician feedback reporting program and value-based payment modifier.

Jamie Hermansen, (410) 786-2064, for issues related to Medicare coverage for hepatitis B vaccine.

Andrew Morgan, (410) 786-2543, for issues related to e-prescribing under Medicare Part D.

SUPPLEMENTARY INFORMATION:

Provisions open for comment:

We will consider comments that are submitted as indicated above in the “Dates” and “Addresses” sections on the following subject areas discussed in this final rule with comment period:

• Interim final work, practice expense, and malpractice RVUs (including physician time, direct practice expense (PE) inputs, and the equipment utilization rate assumption) for new, revised, potentially misvalued, and certain other CY 2013 HCPCS codes as indicated in the sections that follow and listed in Addendum C to this final rule with comment period; and

• The appropriate direct PE inputs for establishing nonfacility PE RVUs for CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural).

Inspection of Public Comments:

All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received:

www.regulations.gov

. Follow the search instructions on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1 (800) 743-3951.

Table of Contents

To assist readers in referencing sections contained in this preamble, we are providing a 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 (CFR). Information on the regulations impact appears throughout the preamble and, therefore, is not discussed exclusively in section VIII. of this final rule with comment period.

I. Executive Summary and Background

II. Provisions of the Final Rule With Comment Period

A. Resource-Based Practice Expense (PE) Relative Value Units (RVUs)

B. Potentially Misvalued Codes Under the Physician Fee Schedule

C. Malpractice RVUs

D. Geographic Practice Cost Indices (GPCIs)

E. Medicare Telehealth Services for the Physician Fee Schedule

F. Extension of Payment for Technical Component of Certain Physician Pathology Services

G. Therapy Services

H. Primary Care and Care Coordination

I. Payment for Molecular Pathology Services

J. Payment for New Preventive Services HCPCS G Codes

K. Certified Registered Nurse Anesthetists Scope of Benefit

L. Ordering of Portable X-Ray Services

M. Addressing Interim Final Relative Value Units (RVUs) From CY 2012 and Establish Interim Final Rule RVU's for CY 2013

N. Allowed Expenditures for Physicians' Services and the Sustainable Growth Rate

III. Other Provisions of the Final Rule With Comment Period

A. Ambulance Fee Schedule

B. Part B Drug Payment: Average Sales Price (ASP) Issues

C. Durable Medical Equipment (DME) Face-to-Face Encounters and Written Orders Prior to Delivery

D. Elimination of the Requirement for Termination of Non-Random Prepayment Complex Medical Review

E. Ambulance Coverage-Physician Certification Statement

F. Physician Compare Web Site

G. Physician Payment, Efficiency, and Quality Improvements—Physician Quality Reporting System

H1. Electronic Prescribing (eRx) Incentive Program

H2. The PQRS-Medicare EHR Incentive Pilot

I. Medicare Shared Savings Program

J. Discussion of Budget Neutrality for the Chiropractic Services Demonstration

K. Physician Value-Based Payment Modifier and the Physician Feedback Reporting Program

L. Medicare Coverage of Hepatitis B Vaccine

M. Updating Existing Standards for E-Prescribing Under Medicare Part D and Lifting the LTC Exemption

IV. Additional Provisions

A. Waiver of Deductible for Surgical Services Furnished on the Same Date as a Planned Screening Colorectal Cancer Test and Colorectal Cancer Screening Test Definition—Technical Correction

B. Physician Self-Referral Prohibition: Annual Update to the List of CPT/HCPCS Codes

V. Collection of Information Requirements

VI. Waiver of Proposed Rulemaking

VII. Response to Comments

VIII. Regulatory Impact Analysis

Acronyms

Because of the many organizations and terms to which we refer by acronym in this final rule with comment period, we are listing these acronyms and their corresponding terms in alphabetical order below:

AHRQ [HHS] Agency for Healthcare Research and Quality

AMA American Medical Association

AMA RUC AMA [/Specialty Society] Relative [Value] Update Committee

ARRA American Recovery and Reinvestment Act (Pub. L. 111-5)

BBA Balanced Budget Act of 1997 (Pub. L. 105-33)

BBRA [Medicare, Medicaid and State Child Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)

BIPA [Medicare, Medicaid, and SCHIP] Benefits Improvement Protection Act of 2000 (Pub. L. 106-554)

BLS Bureau of Labor Statistics

BN Budget neutrality

CAH Critical access hospital

CBSA Core-Based Statistical Area

CF Conversion factor

CfC Conditions for Coverage

CFR Code of Federal Regulations

CNS Clinical nurse specialist

CoPs Conditions of Participation

CORF Comprehensive Outpatient Rehabilitation Facility

CPI Consumer Price Index

CPT [Physicians] Current Procedural Terminology

(CPT codes, descriptions and other data only are copyright 2012 American Medical Association. All rights reserved.)

CRNA Certified registered nurse anesthetist

CY Calendar year

DHS Designated health services

DME Durable medical equipment

DMEPOS Durable medical equipment, prosthetics, orthotics, and supplies

DOTPA Development of Outpatient Therapy Payment Alternatives

DRA Deficit Reduction Act of 2005 (Pub. L. 109-171)

E/M Evaluation and management

EHR Electronic health record

eRx Electronic prescribing

FFS Fee-for-service

FR

Federal Register

GAF Geographic adjustment factor

GAO [U.S.] Government Accountability Office

GPRO Group Practice Reporting Option

GPCI Geographic practice cost index

HAC Hospital-acquired conditions

HCPCS Healthcare Common Procedure Coding System

HHA Home health agency

HIPAA Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104-191)

HIT Health information technology

HITECH Health Information Technology for Economic and Clinical Health Act (Title IV of Division B of the Recovery Act, together with Title XIII of Division A of the Recovery Act)

HPSA Health Professional Shortage Area

ICD International Classification of Diseases

IMRT Intensity Modulated Radiation Therapy

IOM Internet-only Manual

IPCI Indirect practice cost index

IPPS Inpatient prospective payment system

IWPUT Intra-service work per unit of time

MAC Medicare Administrative Contractor

MCTRJCA Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96)

MEDCAC Medicare Evidence Development and Coverage Advisory Committee

(formerly the Medicare Coverage Advisory Committee)

MedPAC Medicare Payment Advisory Commission

MEI Medicare Economic Index

MIEA-TRHCA Medicare Improvements and Extension Act of 2006 (that is, Division B of the Tax Relief and Health Care Act of 2006 (TRHCA) (Pub. L. 109-432)

MIPPA Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275)

MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173)

MMEA Medicare and Medicaid Extenders Act of 2010 (Pub. L. 111-309)

MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173)

MPPR Multiple procedure payment reduction

MQSA Mammography Quality Standards Act of 1992 (Pub. L. 102-539)

NP Nurse practitioner

NPP Nonphysician practitioner

OACT [CMS] Office of the Actuary

OBRA Omnibus Budget Reconciliation Act (Pub. L. 101-239)

OIG [HHS] Office of Inspector General

PA Physician assistant

PC Professional component

PE Practice expense

PE/HR Practice expense per hour

PERC Practice Expense Review Committee

PFS Physician Fee Schedule

PGP [Medicare] Physician Group Practice

PLI Professional liability insurance

PPS Prospective payment system

PQRS Physician Quality Reporting System

PRA Paperwork Reduction Act

PPTRA Physician Payment and Therapy Relief Act of 2010 (Pub. L. 111-286)

PVBP Physician and Other Health Professional Value-Based Purchasing Workgroup

RAC [Medicare] Recovery Audit Contractor

RFA Regulatory Flexibility Act

RIA Regulatory impact analysis

RVU Relative value unit

SBRT Stereotactic body radiation therapy

SGR Sustainable growth rate

TC Technical component

TIN Tax identification number

TPTCCA Temporary Payroll Tax Cut Continuation Act of 2011 (Pub. L. 112-78)

TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432)

VBP Value-based purchasing

Addenda Available Only Through the Internet on the CMS Web Site

In the past, the Addenda referred to throughout the preamble of our annual PFS proposed and final rules with comment period were included in the printed

Federal Register

. However, effective with the CY 2012 PFS final rule with comment period, the PFS Addenda no longer appear in the

Federal Register

. Instead these Addenda to the annual proposed and final rules with comment period will be available only through the Internet. The PFS Addenda along with other supporting documents and tables referenced in this final rule with comment period are available through the Internet on the CMS Web site at

www.cms.gov/PhysicianFeeSched/

. Click on the link on the left side of the screen titled, “PFS Federal Regulations Notices” for a chronological list of PFS

Federal Register

and other related documents. For the CY 2013 PFS final rule with comment period, refer to item CMS-1590-FC. Readers who experience any problems accessing any of the Addenda or other documents referenced in this final rule with comment period and posted on the CMS Web site identified above should contact Elliott Isaac at (410) 786-4735.

CPT (Current Procedural Terminology) Copyright Notice

Throughout this final rule with comment period, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2012 American Medical Association. All Rights Reserved. CPT is a registered trademark of the American Medical Association (AMA). Applicable Federal Acquisition Regulations (FAR) and Defense Federal Acquisition Regulations (DFAR) apply.

I. Executive Summary and Background

A. Executive Summary

1. Purpose

This major final rule with comment period revises payment policies under the Medicare Physician Fee Schedule (PFS) and makes other policy changes related to Medicare Part B payment. These changes are applicable to services furnished in CY 2013. It also implements provisions of the Affordable Care Act by establishing a face-to-face encounter as a condition of payment for certain durable medical equipment (DME) items. In addition, it implements statutory changes regarding the termination of non-random prepayment review.

2. Summary of the Major Provisions

The Social Security Act (Act) requires us to establish payments under the PFS based on national uniform relative value units (RVUs) and the relative resources used in furnishing a service. The Act requires that national RVUs be established for physician work, practice expense (PE), and malpractice expense. In this major final rule with comment period, we establish payment rates for CY 2013 for the PFS, payments for Part B drugs, and other Medicare Part B payment policies to ensure that our payment systems are updated to reflect changes in medical practice and in the relative value of services. It also implements provisions of the Affordable Care Act by establishing a face-to-face encounter as a condition of payment for certain durable medical equipment (DME) items, and by removing certain regulations regarding the termination of non-random prepayment review. It also establishes new claims-based data reporting requirements for therapy services to implement a provision in the Middle Class Tax Relief and Jobs Creation Act (MCTRCA). In addition, this rule:

• Identifies Potentially Misvalued Codes to be Evaluated.

• Establishes Additional Multiple Procedure Payment Reductions (MPPR).

• Expands Medicare Telehealth Services.

• Implements Regulatory Changes Regarding Payment for Technical Component of Certain Physician Pathology Services to Conform to Statute.

• Requires the Inclusion of Specific Information on Claims for Therapy Services.

• Establishes New Transitional Care Management Services.

• Clarifies Services Included in the Certified Registered Nurse Anesthetists Scope of Benefit.

• Modifies Ordering Requirements for Portable X-ray Services.

• Updates the Ambulance Fee Schedule.

• Sets Part B Drug Payment Rates for 2013.

• Addresses Ambulance Coverage—Physician Certification Statement.

• Updates policies regarding the—

++ Physician Compare Web site.

++ Physician Quality Reporting System.

++ Electronic Prescribing (eRx) Incentive Program.

++ Electronic Health Record (EHR) Incentive Program.

++ Medicare Shared Savings Program.

• Discusses Budget Neutrality for the Chiropractic Demonstration.

• Addresses Implementation of the Physician Value-Based Payment Modifier and the Physician Feedback Reporting Program.

• Establishes Medicare Coverage of Hepatitis B Vaccine.

• Updates Existing Standards for e-prescribing under Medicare Part D and Lifting the LTC Exemption.

3. Summary of Costs and Benefits

The statute requires that we establish by regulation each year payment amounts for all physicians' service. These payment amounts are required to be adjusted to reflect the variations in

the costs of providing services in different geographic areas. The statute also requires that annual adjustments to the RVUs not cause annual estimated expenditures to differ by more than $20 million from what they would have been had the adjustments not been made. If adjustments to RVUs would cause expenditures to change by more than $20 million, we must make adjustments to preserve budget neutrality.

Several changes affect the specialty distribution of Medicare expenditures. This final rule with comment period reflects the Administration's priority to improve payment for primary care services. As described in Section II.N, in the absence of Congressional action, an overall reduction of 26.5 percent will be imposed in the conversion factor used to calculate payment for physicians' services on or after January 1, 2013 due to the Sustainable Growth Rate (SGR). To isolate the impact of changes that we are proposing in this final rule with comment period, we analyze and discuss the policies' impact with a constant conversion factor. In the absence of a change in the conversion factor, payments to primary care specialties will increase and payments to select other specialties will decrease due to several changes in how we calculate payments for CY 2013.

The largest payment increase for primary care specialties overall will result from a new payment for managing a beneficiary's care when the beneficiary is discharged from an inpatient hospital, a SNF, an outpatient hospital observation, partial hospitalization services, or a community mental health center. Payments to primary care specialties also will increase due to redistributions from changes in payments for services furnished by other specialties. Because of the budget-neutral nature of this system, decreases in payments for one service result in increases in payments in others.

Payments to primary care specialties are also impacted by the completion of the 4-year transition to new PE RVUs using the new Physician Practice Information Survey (PPIS) data that was adopted in the CY 2010 PFS final rule with comment period. The projected impacts of using the new PPIS data are generally consistent with the impacts discussed in the CY 2012 final rule with comment period (76 FR 72452).

Several types of providers are projected to see decreases in Medicare PFS payments, mainly as a result of the potentially misvalued codes initiative. We have received numerous new codes with new values and revised codes with new values for CY 2013 as a result of our ongoing misvalued codes initiative, an effort to improve payment accuracy. Many of the new and revised codes that we valued on an interim basis for CY 2013 originated with the potentially misvalued codes initiative. Reductions for pathology, neurology, and independent laboratories are a result of the misvalued code initiative. In the case of independent laboratories, we note that independent laboratories receive the majority of the Medicare revenue from the Clinical Lab Fee Schedule, which is unaffected by the misvalued code initiative. Radiation therapy centers will see an overall decrease of 9 percent primarily as a result of the PPIS transition discussed above and a change in the interest rate assumption used to calculate PE. Radiation oncology sees a 7 percent decrease for the same reasons as radiation therapy centers.

B. Background

We note that throughout this final rule with comment period, unless otherwise noted, the term “practitioner” is used to describe both physicians and nonphysician practitioners (such as physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, psychologists, or clinical social workers) who are permitted to bill Medicare under the PFS for their services. Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Act, “Payment for Physicians' Services.” The Act requires that CMS make payments under the PFS using national uniform relative value units (RVUs) based on the relative resources used in furnishing a service. Section 1848(c) of the Act requires that national RVUs be established for physician work, PE, and malpractice expense. Before the establishment of the resource-based relative value system, Medicare payment for physicians' services was based on reasonable charges.

1. Development of the Relative Value System

a. Work RVUs

The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act (OBRA) of 1989 (Pub. L. 101-239), and OBRA 1990, (Pub. L. 101-508). The final rule published on November 25, 1991 (56 FR 59502) set forth the fee schedule for payment for physicians' services beginning January 1, 1992.

The physician work RVUs established for the implementation of the fee schedule in January 1992 were developed with extensive input from the physician community. A research team at the Harvard School of Public Health developed the original physician work RVUs for most codes in a cooperative agreement with the Department of Health and Human Services (HHS). In constructing the code-specific vignettes for the original physician work RVUs, Harvard worked with panels of experts, both inside and outside the federal government, and obtained input from numerous physician specialty groups.

Section 1848(b)(2)(B) of the Act specifies that the RVUs for anesthesia services are based on RVUs from a uniform relative value guide, with appropriate adjustment of the conversion factor (CF), in a manner to assure that fee schedule amounts for anesthesia services are consistent with those for other services of comparable value. We established a separate CF for anesthesia services, and we continue to utilize time units as a factor in determining payment for these services. As a result, there is a separate payment methodology for anesthesia services.

We establish physician work RVUs for new and revised codes based, in part, on our review of recommendations received from the American Medical Association/Specialty Society Relative Value Update Committee (AMA RUC).

b. Practice Expense Relative Value Units (PE RVUs)

Initially, only the physician work RVUs were resource-based, and the PE and malpractice RVUs were based on average allowable charges. Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 103-432), and Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) amended section 1848(c)(2)(C)(ii) of the Act and required us to develop resource-based PE RVUs for each physicians' service. We were to consider general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising PEs.

We established the resource-based PE RVUs for each physicians' service in a final rule, published November 2, 1998 (63 FR 58814), effective for services furnished in 1999. Separate PE RVUs are established for procedures that can be furnished in both a nonfacility setting, such as a physician's office, and a facility setting, such as a hospital outpatient department (HOPD). The difference between the facility and nonfacility RVUs reflects the fact that a facility typically receives separate payment from Medicare for its costs of furnishing the service, apart from payment under the PFS. The nonfacility

RVUs reflect all of the direct and indirect PEs of furnishing a particular service. Based on the BBA requirement to transition to a resource-based system for PE over a 4-year period, resource-based PE RVUs did not become fully effective until 2002.

This resource-based system was based on two significant sources of actual PE data. Panels of physicians, practice administrators, and nonphysician health professionals (for example, registered nurses (RNs)), who were nominated by physician specialty societies and other groups identified the direct inputs required for each physicians' service. (We have since refined and revised these inputs based on recommendations from the AMA RUC.) Aggregate specialty-specific information on hours worked and PEs was obtained from the AMA's Socioeconomic Monitoring System (SMS).

Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) directed us to establish a process under which we accept and use, to the maximum extent practicable and consistent with sound data practices, data collected or developed by entities and organizations to supplement the data we normally collect in determining the PE component. On May 3, 2000, we published the interim final rule (65 FR 25664) that set forth the criteria for the submission of these supplemental PE survey data. The criteria were modified in response to comments received, and published in the

Federal Register

(65 FR 65376) as part of a November 1, 2000 final rule. The PFS final rules published in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended the period during which we would accept these supplemental data through March 1, 2005.

In the CY 2007 PFS final rule with comment period (71 FR 69624), we revised the methodology for calculating direct PE RVUs from the top-down to the bottom-up methodology beginning in CY 2007. We adopted a 4-year transition to the new PE RVUs. This transition was completed in CY 2010. Direct PE RVUs were calculated for CY 2013 using this methodology, unless otherwise noted.

In the CY 2010 PFS final rule with comment period, we updated the practice expense per hour (PE/HR) data that are used in the calculation of PE RVUs for most specialties (74 FR 61749). For this update, we used the Physician Practice Information Survey (PPIS) conducted by the AMA. The PPIS is a multispecialty, nationally representative, PE survey of both physicians and nonphysician practitioners (NPPs) using a survey instrument and methods highly consistent with those used prior to CY 2010. We note that in CY 2010, for oncology, clinical laboratories, and independent diagnostic testing facilities (IDTFs), we continued to use the supplemental survey data to determine PE/HR values (74 FR 61752). Beginning in CY 2010, we provided for a 4-year transition for the new PE RVUs using the updated PE/HR data. In CY 2013, the final year of the transition, PE RVUs are calculated based on the new data.

c. Resource-Based Malpractice RVUs

Section 4505(f) of the BBA amended section 1848(c) of the Act to require that we implement resource-based malpractice RVUs for services furnished on or after CY 2000. The resource-based malpractice RVUs were implemented in the PFS final rule with comment period published November 2, 1999 (64 FR 59380). The malpractice RVUs were based on malpractice insurance premium data collected from commercial and physician-owned insurers.

d. Refinements to the RVUs

Section 1848(c)(2)(B)(i) of the Act requires that we review all RVUs no less often than every 5 years. Prior to CY 2013, we conducted separate periodic reviews of work RVUs and PE RVUs. The First Five-Year Review of Work RVUs was published on November 22, 1996 (61 FR 59489) and was effective in 1997. The Second Five-Year Review of Work RVUs was published in the CY 2002 PFS final rule with comment period (66 FR 55246) and was effective in 2002. The Third Five-Year Review of Work RVUs was published in the CY 2007 PFS final rule with comment period (71 FR 69624) and was effective on January 1, 2007. The Fourth Five-Year Review of Work RVUs was published in the CY 2012 PFS final rule with comment period (76 FR 73026).

Initially refinements to the direct PE inputs relied on input from the AMA RUC-established the Practice Expense Advisory Committee (PEAC). Through March 2004, the PEAC provided recommendations to CMS for more than 7,600 codes (all but a few hundred of the codes included in the AMAs Current Procedural Terminology (CPT) codes). As part of the CY 2007 PFS final rule with comment period (71 FR 69624), we implemented a new bottom-up methodology for determining resource-based PE RVUs and transitioned the new methodology over a 4-year period. A comprehensive review of PE was undertaken prior to the 4-year transition period for the new PE methodology from the top-down to the bottom-up methodology, and this transition was completed in CY 2010. In CY 2010, we also incorporated the new PPIS data to update the specialty-specific PE/HR data used to develop PE RVUs, adopting a 4-year transition to PE RVUs developed using the PPIS data.

In the CY 2012 PFS final rule with comment period (76 FR 73057), we finalized a proposal to consolidate reviews of work and PE RVUs under section 1848(c)(2)(B) of the Act and reviews of potentially misvalued codes under section 1848(c)(2)(K) of the Act into one annual process.

In the CY 2005 PFS final rule with comment period (69 FR 66236), we implemented the first Five-Year Review of the malpractice RVUs (69 FR 66263). Minor modifications to the methodology were addressed in the CY 2006 PFS final rule with comment period (70 FR 70153). The second Five-Year Review and update of resource-based malpractice RVUs was published in the CY 2010 PFS final rule with comment period (74 FR 61758) and was effective in CY 2010.

In addition to the Five-Year Reviews, beginning for CY 2009, CMS and the AMA RUC have identified and reviewed a number of potentially misvalued codes on an annual basis based on various identification screens. This annual review of work and PE RVUs for potentially misvalued codes was supplemented by the amendments to Section 1848 of the Act, as enacted by section 3134 of the Affordable Care Act, which requires the agency to periodically identify, review and adjust values for potentially misvalued codes with an emphasis on the following categories: (1) Codes and families of codes for which there has been the fastest growth; (2) codes or families of codes that have experienced substantial changes in PEs; (3) codes that are recently established for new technologies or services; (4) multiple codes that are frequently billed in conjunction with furnishing a single service; (5) codes with low relative values, particularly those that are often billed multiple times for a single treatment; (6) codes which have not been subject to review since the implementation of the fee schedule (the so-called `Harvard valued codes'); and (7) other codes determined to be appropriate by the Secretary.

e. Application of Budget Neutrality to Adjustments of RVUs

Budget neutrality (BN) typically requires that expenditures not increase or decrease as a result of changes or revisions to policy. However, section 1848(c)(2)(B)(ii)(II) of the Act requires

adjustment only if the change in expenditures resulting from the annual revisions to the PFS exceeds a threshold amount. Specifically, adjustments in RVUs for a year may not cause total PFS payments to differ by more than $20 million from what they would have been if the adjustments were not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if revisions to the RVUs would cause expenditures to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million.

2. Components of the Fee Schedule Payment Amounts

To calculate the payment for each physicians' service, the components of the fee schedule (work, PE, and malpractice RVUs) are adjusted by geographic practice cost indices (GPCIs). The GPCIs reflect the relative costs of physician work, PE, and malpractice in an area compared to the national average costs for each component.

RVUs are converted to dollar amounts through the application of a CF, which is calculated by CMS' Office of the Actuary (OACT).

The formula for calculating the Medicare fee schedule payment amount for a given service and fee schedule area can be expressed as:

Payment = [(RVU work × GPCI work) + (RVU PE × GPCI PE) + (RVU malpractice × GPCI malpractice)] × CF.

3. Most Recent Changes to the Fee Schedule

The CY 2012 PFS final rule with comment period (76 FR 73026) implemented changes to the PFS and other Medicare Part B payment policies. It also finalized many of the CY 2011 interim RVUs and implemented interim RVUs for new and revised codes for CY 2012 to ensure that our payment systems are updated to reflect changes in medical practice and the relative values of services. In the CY 2012 PFS final rule with comment period, we announced the following for CY 2012: the total PFS update of −27.4 percent; the initial estimate for the sustainable growth rate (SGR) of −16.9 percent; and the conversion factor (CF) of $24.6712. These figures were calculated based on the statutory provisions in effect on November 1, 2011, when the CY 2012 PFS final rule with comment period was issued.

A correction notice was issued (77 FR 227) to correct several technical and typographical errors that occurred in the CY 2012 PFS final rule with comment period.

On December 23, 2011, the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA) (Pub. L. 112-78) was signed into law. Section 301 of the TPTCCA specified a zero percent update to the PFS from January 1, 2012 through February 29, 2012. As a result, the CY 2012 PFS conversion factor was revised to $34.0376 for claims with dates of service on or after January 1, 2012 through February 29, 2012. In addition, the TPTCCA extended several provisions affecting Medicare services furnished on or after January 1, 2012 through February 29, 2012, including:

• Section 303—the 1.0 floor on the physician work geographic practice cost index;

• Section 304—the exceptions process for outpatient therapy caps;

• Section 305—the payment to independent laboratories for the technical component (TC) of physician pathology services furnished to certain hospital patients, and

• Section 307—the 5 percent increase in payments for mental health services.

On February 22, 2012, the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96) (MCTRJCA) was signed into law. Section 3003 of the MCTRJCA extended the zero percent PFS update to the remainder of CY 2012. As a result of the MCTRJCA, the CY 2012 PFS CF was maintained as $34.0376 for claims with dates of service on or after March 1, 2012 through December 31, 2012. In addition:

• Section 3004 of MCTRJCA extended the 1.0 floor on the physician work geographic practice cost index through December 31, 2012;

• Section 3006 continued payment to independent laboratories for the TC of physician pathology services furnished to certain hospital patients through June 30, 2012; and

• Section 3005 extended the exceptions process for outpatient therapy caps through CY 2012 and made several other changes related to therapy claims and caps.

II. Provisions of the Final Rule for the Physician Fee Schedule

A. Resource-Based Practice Expense (PE) Relative Value Units (RVUs)

1. Overview

Practice expense (PE) is the portion of the resources used in furnishing the service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages but excluding malpractice expenses, as specified in section 1848(c)(1)(B) of the Act. Section 121 of the Social Security Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii) of the Act to require us to develop a methodology for a resource-based system for determining PE RVUs for each physician's service. We develop PE RVUs by looking at the direct and indirect physician practice resources involved in furnishing each service. Direct expense categories include clinical labor, medical supplies, and medical equipment. Indirect expenses include administrative labor, office expense, and all other expenses. The sections that follow provide more detailed information about the methodology for translating the resources involved in furnishing each service into service-specific PE RVUs. In addition, we note that section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in RVUs for a year may not cause total PFS payments to differ by more than $20 million from what they would have otherwise been if the adjustments were not made. Therefore, if revisions to the RVUs cause expenditures to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million. We refer readers to the CY 2010 PFS final rule with comment period (74 FR 61743 through 61748) for a more detailed explanation of the PE methodology.

2. Practice Expense Methodology

a. Direct Practice Expense

We use a “bottom-up” approach to determine the direct PE by adding the costs of the resources (that is, the clinical staff, equipment, and supplies) typically involved with furnishing each service. The costs of the resources are calculated using the refined direct PE inputs assigned to each CPT code in our PE database, which are based on our review of recommendations received from the AMA RUC. For a detailed explanation of the bottom-up direct PE methodology, including examples, we refer readers to the Five-Year Review of Work Relative Value Units Under the PFS and Proposed Changes to the Practice Expense Methodology proposed notice (71 FR 37242) and the CY 2007 PFS final rule with comment period (71 FR 69629).

b. Indirect Practice Expense per Hour Data

We use survey data on indirect PEs incurred per hour worked in developing the indirect portion of the PE RVUs. Prior to CY 2010, we primarily used the practice expense per hour (PE/HR) by specialty that was obtained from the

AMA's Socioeconomic Monitoring Surveys (SMS). The AMA administered a new survey in CY 2007 and CY 2008, the Physician Practice Expense Information Survey (PPIS), which was expanded (relative to the SMS) to include nonphysician practitioners (NPPs) paid under the PFS.

The PPIS is a multispecialty, nationally representative, PE survey of both physicians and NPPs using a consistent survey instrument and methods highly consistent with those used for the SMS and the supplemental surveys. The PPIS gathered information from 3,656 respondents across 51 physician specialty and healthcare professional groups. We believe the PPIS is the most comprehensive source of PE survey information available to date. Therefore, we used the PPIS data to update the PE/HR data for the CY 2010 PFS for almost all of the Medicare-recognized specialties that participated in the survey.

When we began using the PPIS data beginning in CY 2010, we did not change the PE RVU methodology itself or the manner in which the PE/HR data are used in that methodology. We only updated the PE/HR data based on the new survey. Furthermore, as we explained in the CY 2010 PFS final rule with comment period (74 FR 61751), because of the magnitude of payment reductions for some specialties resulting from the use of the PPIS data, we finalized a 4-year transition (75 percent old/25 percent new for CY 2010, 50 percent old/50 percent new for CY 2011, 25 percent old/75 percent new for CY 2012, and 100 percent new for CY 2013) from the previous PE RVUs to the PE RVUs developed using the new PPIS data.

Section 1848(c)(2)(H)(i) of the Act requires us to use the medical oncology supplemental survey data submitted in 2003 for oncology drug administration services. Therefore, the PE/HR for medical oncology, hematology, and hematology/oncology reflects the continued use of these supplemental survey data.

We do not use the PPIS data for reproductive endocrinology and spine surgery since these specialties currently are not separately recognized by Medicare, nor do we have a method to blend these data with Medicare-recognized specialty data. Similarly, we do not use the PPIS data for sleep medicine since there is not a full year of Medicare utilization data for that specialty given when the specialty code was created.

Supplemental survey data on independent labs, from the College of American Pathologists, were implemented for payments in CY 2005. Supplemental survey data from the National Coalition of Quality Diagnostic Imaging Services (NCQDIS), representing independent diagnostic testing facilities (IDTFs), were blended with supplementary survey data from the American College of Radiology (ACR) and implemented for payments in CY 2007. Neither IDTFs nor independent labs participated in the PPIS. Therefore, we continue to use the PE/HR that was developed from their supplemental survey data.

Consistent with our past practice, the previous indirect PE/HR values from the supplemental surveys for medical oncology, independent laboratories, and IDTFs were updated to CY 2006 using the MEI to put them on a comparable basis with the PPIS data.

Previously, we have established PE/HR values for various specialties without SMS or supplemental survey data by crosswalking them to other similar specialties to estimate a proxy PE/HR. For specialties that were part of the PPIS for which we previously used a crosswalked PE/HR, we instead use the PPIS-based PE/HR. We continue previous crosswalks for specialties that did not participate in the PPIS. However, beginning in CY 2010 we changed the PE/HR crosswalk for portable x-ray suppliers from radiology to IDTF, a more appropriate crosswalk because these specialties are more similar to each other for physician time.

For registered dietician services, the resource-based PE RVUs have been calculated in accordance with the final policy that crosswalks the specialty to the “All Physicians” PE/HR data, as adopted in the CY 2010 PFS final rule with comment period (74 FR 61752) and discussed in more detail in the CY 2011 PFS final rule with comment period (75 FR 73183).

There were five specialties whose utilization data were newly incorporated into ratesetting for CY 2012. In accordance with the final policies adopted in the CY 2012 final rule with comment period (76 FR 73036), we use proxy PE/HR values for these specialties by crosswalking values from other, similar specialties as follows: Speech Language Pathology from Physical Therapy; Hospice and Palliative Care from All Physicians; Geriatric Psychiatry from Psychiatry; Intensive Cardiac Rehabilitation from Cardiology, and Certified Nurse Midwife from Obstetrics/gynecology.

For CY 2013, there are two specialties whose utilization data will be newly incorporated into ratesetting. We proposed to use proxy PE/HR values for these specialties by crosswalking values from other specialties that furnish similar services as follows: Cardiac Electrophysiology from Cardiology; and Sports Medicine from Family Practice. These proposed changes are reflected in the “PE HR” file available on the CMS Web site under the supporting data files for the CY 2013 PFS final rule with comment period at

www.cms.gov/PhysicianFeeSched/

.

We did not receive any comments regarding our proposal to use these proxy PE/HR values for these specialties, and we continue to believe that the values crosswalked from other specialties that furnish similar services are appropriate. Therefore, we are finalizing our CY 2013 proposals to update the PE/HR data as reflected in the “PE HR” file available on the CMS Web site under the supporting data files for the CY 2013 PFS final rule with comment period at

http://www.cms.gov/PhysicianFeeSched/

.

As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), CY 2013 is the final year of the 4-year transition to the PE RVUs calculated using the PPIS data. Therefore, the CY 2013 PE RVUs are developed based entirely on the PPIS data, except as noted in this section.

c. Allocation of PE to Services

To establish PE RVUs for specific services, it is necessary to establish the direct and indirect PE associated with each service.

(1) Direct Costs

The relative relationship between the direct cost portions of the PE RVUs for any two services is determined by the relative relationship between the sum of the direct cost resources (that is, the clinical staff, equipment, and supplies) typically involved with furnishing the services. The costs of these resources are calculated from the refined direct PE inputs in our PE database. For example, if one service has a direct cost sum of $400 from our PE database and another service has a direct cost sum of $200, the direct portion of the PE RVUs of the first service would be twice as much as the direct portion of the PE RVUs for the second service.

(2) Indirect Costs

Section II.A.2.b. of this final rule with comment period describes the current data sources for specialty-specific indirect costs used in our PE calculations. We allocated the indirect costs to the code level on the basis of the direct costs specifically associated with a code and the greater of either the clinical labor costs or the physician work RVUs. We also incorporated the

survey data described earlier in the PE/HR discussion. The general approach to developing the indirect portion of the PE RVUs is described as follows:

• For a given service, we use the direct portion of the PE RVUs calculated as previously described and the average percentage that direct costs represent of total costs (based on survey data) across the specialties that furnish the service to determine an initial indirect allocator. For example, if the direct portion of the PE RVUs for a given service was 2.00 and direct costs, on average, represented 25 percent of total costs for the specialties that furnished the service, the initial indirect allocator would be 6.00 since 2.00 is 25 percent of 8.00 and 6.00 is 75 percent of 8.00.

• Next, we add the greater of the work RVUs or clinical labor portion of the direct portion of the PE RVUs to this initial indirect allocator. In our example, if this service had work RVUs of 4.00 and the clinical labor portion of the direct PE RVUs was 1.50, we would add 6.00 plus 4.00 (since the 4.00 work RVUs are greater than the 1.50 clinical labor portion) to get an indirect allocator of 10.00. In the absence of any further use of the survey data, the relative relationship between the indirect cost portions of the PE RVUs for any two services would be determined by the relative relationship between these indirect cost allocators. For example, if one service had an indirect cost allocator of 10.00 and another service had an indirect cost allocator of 5.00, the indirect portion of the PE RVUs of the first service would be twice as great as the indirect portion of the PE RVUs for the second service.

• Next, we next incorporate the specialty-specific indirect PE/HR data into the calculation. As a relatively extreme example for the sake of simplicity, assume in our previous example that, based on the survey data, the average indirect cost of the specialties furnishing the first service with an allocator of 10.00 was half of the average indirect cost of the specialties furnishing the second service with an indirect allocator of 5.00. In this case, the indirect portion of the PE RVUs of the first service would be equal to that of the second service.

d. Facility and Nonfacility Costs

For procedures that can be furnished in a physician's office, as well as in a hospital or facility setting, we establish two PE RVUs: facility and nonfacility. The methodology for calculating PE RVUs is the same for both the facility and nonfacility RVUs, but is applied independently to yield two separate PE RVUs. Because Medicare makes a separate payment to the facility for its costs of furnishing a service, the facility PE RVUs are generally lower than the nonfacility PE RVUs.

e. Services With Technical Components (TCs) and Professional Components (PCs)

Diagnostic services are generally comprised of two components: a professional component (PC) and a technical component (TC), each of which may be furnished independently or by different providers, or they may be furnished together as a “global” service. When services have PC and TC components that can be billed separately, the payment for the global component equals the sum of the payment for the TC and PC. This is a result of using a weighted average of the ratio of indirect to direct costs across all the specialties that furnish the global components, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expenses to the global components, PCs, and TCs for a service. (The direct PE RVUs for the TC and PC sum to the global under the bottom-up methodology.)

f. PE RVU Methodology

For a more detailed description of the PE RVU methodology, we refer readers to the CY 2010 PFS final rule with comment period (74 FR 61745 through 61746).

(1) Setup File

First, we create a setup file for the PE methodology. The setup file contains the direct cost inputs, the utilization for each procedure code at the specialty and facility/nonfacility place of service level, and the specialty-specific PE/HR data from the surveys.

(2) Calculate the Direct Cost PE RVUs

Sum the costs of each direct input.

Step 1:

Sum the direct costs of the inputs for each service. Apply a scaling adjustment to the direct inputs.

Step 2:

Calculate the current aggregate pool of direct PE costs. This is the product of the current aggregate PE (aggregate direct and indirect) RVUs, the CF, and the average direct PE percentage from the survey data.

Step 3:

Calculate the aggregate pool of direct costs. This is the sum of the product of the direct costs for each service from Step 1 and the utilization data for that service.

Step 4:

Using the results of Step 2 and Step 3 calculate a direct PE scaling adjustment so that the aggregate direct cost pool does not exceed the current aggregate direct cost pool and apply it to the direct costs from Step 1 for each service.

Step 5:

Convert the results of Step 4 to an RVU scale for each service. To do this, divide the results of Step 4 by the CF. Note that the actual value of the CF used in this calculation does not influence the final direct cost PE RVUs, as long as the same CF is used in Step 2 and Step 5. Different CFs will result in different direct PE scaling factors, but this has no effect on the final direct cost PE RVUs since changes in the CFs and changes in the associated direct scaling factors offset one another.

(3) Create the Indirect Cost PE RVUs

Create indirect allocators.

Step 6:

Based on the survey data, calculate direct and indirect PE percentages for each physician specialty.

Step 7:

Calculate direct and indirect PE percentages at the service level by taking a weighted average of the results of Step 6 for the specialties that furnish the service. Note that for services with TCs and PCs, the direct and indirect percentages for a given service do not vary by the PC, TC, and global components.

Step 8:

Calculate the service level allocators for the indirect PEs based on the percentages calculated in Step 7. The indirect PEs are allocated based on the three components: the direct PE RVUs, the clinical PE RVUs, and the work RVUs. For most services the indirect allocator is: indirect percentage * (direct PE RVUs/direct percentage) + work RVUs.

There are two situations where this formula is modified:

• If the service is a global service (that is, a service with global, professional, and technical components), then the indirect allocator is: indirect percentage (direct PE RVUs/direct percentage) + clinical PE RVUs + work RVUs.

• If the clinical labor PE RVUs exceed the work RVUs (and the service is not a global service), then the indirect allocator is: indirect percentage (direct PE RVUs/direct percentage) + clinical PE RVUs.

(

Note:

For global services, the indirect allocator is based on both the work RVUs and the clinical labor PE RVUs. We do this to recognize that, for the PC service, indirect PEs will be allocated using the work RVUs, and for the TC service, indirect PEs will be allocated using the direct PE RVUs and the clinical labor PE RVUs. This also allows the global component RVUs to equal the sum of the PC and TC RVUs.)

For presentation purposes in the examples in Table 1, the formulas were divided into two parts for each service.

• The first part does not vary by service and is the indirect percentage (direct PE RVUs/direct percentage).

• The second part is either the work RVUs, clinical PE RVUs, or both depending on whether the service is a global service and whether the clinical PE RVUs exceed the work RVUs (as described earlier in this step).

Apply a scaling adjustment to the indirect allocators.

Step 9:

Calculate the current aggregate pool of indirect PE RVUs by multiplying the current aggregate pool of PE RVUs by the average indirect PE percentage from the survey data.

Step 10:

Calculate an aggregate pool of indirect PE RVUs for all PFS services by adding the product of the indirect PE allocators for a service from Step 8 and the utilization data for that service.

Step 11:

Using the results of Step 9 and Step 10, calculate an indirect PE adjustment so that the aggregate indirect allocation does not exceed the available aggregate indirect PE RVUs and apply it to indirect allocators calculated in Step 8.

Calculate the indirect practice cost index.

Step 12:

Using the results of Step 11, calculate aggregate pools of specialty-specific adjusted indirect PE allocators for all PFS services for a specialty by adding the product of the adjusted indirect PE allocator for each service and the utilization data for that service.

Step 13:

Using the specialty-specific indirect PE/HR data, calculate specialty-specific aggregate pools of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service across all services furnished by the specialty.

Step 14:

Using the results of Step 12 and Step 13, calculate the specialty-specific indirect PE scaling factors.

Step 15:

Using the results of Step 14, calculate an indirect practice cost index at the specialty level by dividing each specialty-specific indirect scaling factor by the average indirect scaling factor for the entire PFS.

Step 16:

Calculate the indirect practice cost index at the service level to ensure the capture of all indirect costs. Calculate a weighted average of the practice cost index values for the specialties that furnish the service. (Note: For services with TCs and PCs, we calculate the indirect practice cost index across the global components, PCs, and TCs. Under this method, the indirect practice cost index for a given service (for example, echocardiogram) does not vary by the PC, TC, and global component.)

Step 17:

Apply the service level indirect practice cost index calculated in Step 16 to the service level adjusted indirect allocators calculated in Step 11 to get the indirect PE RVUs.

(4) Calculate the Final PE RVUs

Step 18:

Add the direct PE RVUs from Step 6 to the indirect PE RVUs from Step 17 and apply the final PE budget neutrality (BN) adjustment.

The final PE BN adjustment is calculated by comparing the results of Step 18 to the current pool of PE RVUs. This final BN adjustment is required in order to redistribute RVUs from step 18 to all PE RVUs in the PFS and because certain specialties are excluded from the PE RVU calculation for ratesetting purposes, but all specialties are included for purposes of calculating the final BN adjustment. (See “Specialties excluded from ratesetting calculation” later in this section.)

(5) Setup File Information

•

Specialties excluded from ratesetting calculation:

For the purposes of calculating the PE RVUs, we exclude certain specialties, such as certain nonphysician practitioners paid at a percentage of the PFS and low-volume specialties, from the calculation. These specialties are included for the purposes of calculating the BN adjustment. They are displayed in Table 1.

Table 1—Specialties Excluded From Ratesetting Calculation

Specialty code

Specialty description

49

Ambulatory surgical center.

50

Nurse practitioner.

51

Medical supply company with certified orthotist.

52

Medical supply company with certified prosthetist.

53

Medical supply company with certified prosthetist-orthotist.

54

Medical supply company not included in 51, 52, or 53.

55

Individual certified orthotist.

56

Individual certified prosthestist.

57

Individual certified prosthetist-orthotist.

58

Individuals not included in 55, 56, or 57.

59

Ambulance service supplier, e.g., private ambulance companies, funeral homes, etc.

60

Public health or welfare agencies.

61

Voluntary health or charitable agencies.

73

Mass immunization roster biller.

74

Radiation therapy centers.

87

All other suppliers (e.g., drug and department stores).

88

Unknown supplier/provider specialty.

89

Certified clinical nurse specialist.

95

Competitive Acquisition Program (CAP) Vendor.

96

Optician.

97

Physician assistant.

A0

Hospital.

A1

SNF.

A2

Intermediate care nursing facility.

A3

Nursing facility, other.

A4

HHA.

A5

Pharmacy.

A6

Medical supply company with respiratory therapist.

A7

Department store.

1

Supplier of oxygen and/or oxygen related equipment.

2

Pedorthic personnel.

3

Medical supply company with pedorthic personnel.

In the CY 2013 PFS proposed rule, we proposed to calculate the specialty mix for low volume services (fewer than 100 billed services in the previous year) using the same methodology we used for non-low volume services. We currently use the survey data from the dominant specialty for these low volume services. We proposed to calculate a specialty mix for these services rather than use the dominant specialty in order to smooth year-to-year fluctuations in PE RVUs due to changes in the dominant specialty. However, the PE RVUs for the affected HCPCS codes were inadvertently displayed in Addendum B for the CY 2013 PFS proposed rule using our previously established methodology of using the dominant specialty for these services. While we received comments on our proposal, including some suggesting alternative methods for handling low volume services, we do not believe that it would be appropriate to make changes to the current methodology since the correct impact of the proposed calculation was not reflected in the displayed PE RVUs. We appreciate the commenters' perspective on the proposal, and will take those comments into account as we consider the best methodology for calculating the specialty mix for low volume services in future rulemaking.

•

Crosswalk certain low volume physician specialties:

Crosswalk the utilization of certain specialties with relatively low PFS utilization to the associated specialties.

•

Physical therapy utilization:

Crosswalk the utilization associated with all physical therapy services to the specialty of physical therapy.

•

Identify professional and technical services not identified under the usual TC and 26 modifiers:

Flag the services that are PC and TC services, but do not use TC and 26 modifiers (for example, electrocardiograms). This flag associates the PC and TC with the associated global code for use in creating the indirect PE RVUs. For example, the professional service, CPT code 93010 (Electrocardiogram, routine ECG with at least 12 leads; interpretation and report only), is associated with the global service, CPT code 93000 (Electrocardiogram, routine ECG with at least 12 leads; with interpretation and report).

•

Payment modifiers:

Payment modifiers are accounted for in the creation of the file consistent with current payment policy as implemented in claims processing. For example, services billed with the assistant at surgery modifier are paid 16 percent of the PFS amount for that service; therefore, the utilization file is modified to only account for 16 percent of any service that contains the assistant at surgery modifier. Similarly, for those services to which volume adjustments are made to account for the payment modifiers, time adjustments are applied as well. For time adjustments to surgical services, the intraoperative portion in the physician time file is used; where it is not present, the intraoperative percentage from the payment files used by Medicare contractors to process Medicare claims is used instead. Where neither is available, we use the payment adjustment ratio to adjust the time accordingly. Table 2 details the manner in which the modifiers are applied.

Table 2—Application of Payment Modifiers to Utilization Files

Modifier

Description

Volume adjustment

Time adjustment

80, 81, 82

Assistant at Surgery

16%

Intraoperative portion.

AS

Assistant at Surgery—Physician Assistant

14% (85% * 16%)

Intraoperative portion.

50 or LT and RT

Bilateral Surgery

150%

150% of physician time.

51

Multiple Procedure

50%

Intraoperative portion.

52

Reduced Services

50%

50%.

53

Discontinued Procedure

50%

50%.

54

Intraoperative Care only

Preoperative + Intraoperative Percentages on the payment files used by Medicare contractors to process Medicare claims

Preoperative + Intraoperative portion.

55

Postoperative Care only

Postoperative Percentage on the payment files used by Medicare contractors to process Medicare claims

Postoperative portion.

62

Co-surgeons

62.5%

50%.

66

Team Surgeons

33%

33%.

We also make adjustments to volume and time that correspond to other payment rules, including special multiple procedure endoscopy rules and multiple procedure payment reductions (MPPR) including the final ophthalmology and cardiovascular diagnostic services MPPR discussed in section II.B.4. of this final rule with comment period. We note that section 1848(c)(2)(B)(v) of the Act exempts certain reduced payments for multiple imaging procedures and multiple therapy services from the budget-neutrality calculation under section 1848(c)(2)(B)(ii)(II) of the Act. These MPPRs are not included in the development of the RVUs.

For anesthesia services, we do not apply adjustments to volume since the average allowed charge is used when simulating RVUs and therefore includes all discounts. A time adjustment of 33 percent is made only for medical direction of two to four cases since that it is the only occasion where time units are duplicative.

Comment:

One commenter expressed concern regarding the accuracy of the 33 percent time adjustment made for these services.

Response:

We note that we did not make any proposals regarding the 33 percent time adjustment for medical direction in the CY 2013 PFS proposed rule. As such, we do not believe it would be appropriate to modify that

figure in this final rule. However, we would welcome any independently verifiable data that could inform the accuracy of our assumption regarding duplicative time units. The 33 percent time adjustment effectively assumes medical direction of three cases. We would consider any such data for future rulemaking.

•

Work RVUs:

The setup file contains the work RVUs from this final rule with comment period.

(6) Equipment Cost per Minute

The equipment cost per minute is calculated as:

(1/(minutes per year * usage)) * price * ((interest rate/(1 − (1/((1 + interest rate)

^

life of equipment)))) + maintenance)

Where:

minutes per year = maximum minutes per year if usage were continuous (that is, usage = 1); generally 150,000 minutes.

usage = 0.5 is the standard equipment utilization assumption; 0.75 for certain expensive diagnostic imaging equipment (see 74 FR 61753 through 61755 and section II.A.3. of the CY 2011 PFS final rule with comment period).

price = price of the particular piece of equipment.

interest rate = sliding scale (see proposal below)

life of equipment = useful life of the particular piece of equipment.

maintenance = factor for maintenance; 0.05.

The interest rate we have previously used was proposed and finalized during rulemaking for CY 1998 PFS (62 FR 33164). In the CY 2012 proposed rule (76 FR 42783), we solicited comment regarding reliable data on current prevailing loan rates for small businesses. In response to that request, the AMA RUC recommended that rather than applying the same interest rate across all equipment, CMS should consider a “sliding scale” approach which varies the interest rate based on the equipment cost, useful life, and SBA (Small Business Administration) maximum interest rates for different categories of loan size and maturity. The maximum interest rates for SBA loans are as follows:

• Fixed rate loans of $50,000 or more must not exceed Prime plus 2.25 percent if the maturity is less than 7 years, and Prime plus 2.75 percent if the maturity is 7 years or more.

• For loans between $25,000 and $50,000, maximum rates must not exceed Prime plus 3.25 percent if the maturity is less than 7 years, and Prime plus 3.75 percent if the maturity is 7 years or more.

• For loans of $25,000 or less, the maximum interest rate must not exceed Prime plus 4.25 percent if the maturity is less than 7 years, and Prime plus 4.75 percent, if the maturity is 7 years or more.

The current Prime rate is 3.25 percent.

Based on that recommendation, for CY 2013, we proposed to use a “sliding scale” approach based on the current SBA maximum interest rates for different categories of loan size (price of the equipment) and maturity (useful life of the equipment). Additionally, we proposed to update this assumption through annual PFS rulemaking to account for fluctuations in the Prime rate and/or changes to the SBA's formula to determine maximum allowed interest rates.

Comment:

Both MedPAC and the AMA RUC supported the proposal. MedPAC stated:

We support CMS's proposal to use more accurate interest rate information because this will improve the accuracy of practice expense payment rates and redistribute dollars from overvalued codes to undervalued codes.

The AMA RUC commented:

The RUC appreciates that CMS intends to adopt the RUC recommendation of implementing a “sliding scale” for the interest rate utilized in computing equipment costs.

Other commenters, also supported the proposal. However, while physician organizations that represent specialties that provide medical equipment intensive services and medical equipment manufacturers generally acknowledged that the interest rate used in the calculation had not been updated in over 12 years, they did not support the specific proposed update approach. These commenters assertions included: The proposal is “overly complicated” to administer since the interest rates vary by loan size and maturity, and interest rates can fluctuate; the SBA loan program is designed to encourage loans to small businesses so the SBA rates are below market rates unrelated to the cost of capital for physician practices; the proposed methodology may be inconsistent with the statute since it does not reflect relative resources; CMS should factor in the opportunity cost for practices that pay cash for the equipment (a weighted average cost of capital (WACC) approach) using WACC measures available in the private sector; CMS should transition this policy given the investments in equipment that have already been made; CMS should use a multiyear average of the Prime rate rather than the most recent Prime rate in the calculation; and, CMS should only update the interest rate every few years to help ensure more stable practice expenses.

Response:

We agree with MedPAC, the AMA RUC, and the commenters who supported our proposed approach for the interest rate calculation. Our proposed approach recognizes that the goal of the practice expense methodology is to calculate, as accurately as possible given the available data sources, the relative resources required to furnish services that are paid under the physician fee schedule. To continue to use an 11 percent interest rate assumption in the calculation of the equipment portion of the practice expense RVUs when this rate does not reflect a market rate would unnecessarily distort this relativity. We are unaware of, nor did commenters suggest, a readily available and transparent data source that specifically provides nationally representative data on the typical interest rates charged to physicians when obtaining financing for medical equipment. We believe that the use of the SBA maximum loan rates leads to a more reasonable estimate of relative resource used across the fee schedule and, consistent with the MedPAC comment, that the continued use of an 11 percent interest rate would inappropriately skew physician fee schedule relativity towards equipment intensive services.

Additionally, we disagree that the maximum SBA loan rates are not sufficient as an assumption for the rate at which a typical physician practice would obtain financing, nor did the commenters offer nationally representative data indicating that this is the case.

We agree with commenters that, in an ideal world, the interest rate assumption used in the equipment calculation would explicitly factor in the opportunity costs for practices that pay cash for the equipment (a WACC approach) and not just the cost of financing. However, as with the interest rates typically charged to physicians for medical equipment financing, we are unaware of any nationally representative data source that would provide the opportunity cost for physician practices deciding on purchasing medical equipment. Some commenters suggested we use proprietary WACC measures designed for industry and company stock valuations. We do not believe it would be appropriate to use proprietary measures in this calculation, nor do we believe that measures developed to value the stock prices of individual medical equipment companies or the medical device industry are necessarily applicable to the opportunity costs of

typical medical practices. Also, we do not agree that the opportunity cost of a physician practice purchase of medical equipment, if known or estimable, would exceed the SBA maximum loan rates.

We also do not believe that our proposal is overly complicated to administer. The Prime rate is readily available, as are the SBA loan maximums. As such, we believe our proposal is a very transparent approach. We stated that we would update the rate through our annual PFS rulemaking process. In response to comments on this aspect of our proposal, we are clarifying that we generally intend to update the interest rate calculation through future rulemaking when we broadly update one or more of the other direct practice expense inputs, such as pricing or labor wage rates, to maintain relatively between the practice expense components. Given that we do not anticipate updating the interest rate assumption every year, we do not believe it is necessary to use a rolling average in the calculation. Periodic updates using the most recent Prime rate will balance commenters' desire for stability in the PE RVUs with the need to maintain appropriate relativity under the PFS. We also do not believe a transition is appropriate in this situation. We believe it is important to update the interest rate assumptions to appropriately adjust the relativity of equipment in relation to other PE inputs and the relation of equipment intensive services to other services on the PFS.

In summary, we are finalizing without modification our proposal to use a “sliding scale” approach based on the current SBA maximum interest rates for different categories of loan size (price of the equipment) and maturity (useful life of the equipment). We will update the interest rate assumption through PFS rulemaking to account for fluctuations in the Prime rate and/or changes to the SBA's formula to determine maximum allowed interest rates. We are clarifying that we generally intend to update the interest rate calculation through future rulemaking only in years when we broadly update one or more of the other direct practice expense inputs. Accordingly, we anticipate updating the interest rate calculation less frequently than annually.

The effects of this policy on direct equipment inputs are reflected in the CY 2013 direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS final rule with comment period at

http://www.cms.gov/PhysicianFeeSched/

. Additionally, we note that the PE RVUs included in Addendum B reflect this policy.

BILLING CODE 4120-01-P

ER16NO12.000

ER16NO12.001

ER16NO12.002

BILLING CODE 4120-01-C

3. Changes to Direct PE Inputs for Specific Services

In this section, we discuss other specific CY 2013 proposals and changes related to direct PE inputs for specific services. The changes we proposed and are finalizing are included in the final rule CY 2012 direct PE database, which is available on the CMS Web site under the supporting data files for the CY 2012 PFS final rule with comment period at

www.cms.gov/PhysicianFeeSched/

. We note that we address comments on the interim direct PE inputs established in the CY 2012 PFS final rule with comment period in section II.M. of this final rule with comment period.

a. Equipment Minutes for Interrogation Device Evaluation Services

It has come to our attention that the pacemaker follow-up system (EQ138) associated with two interrogation device management service codes does not have minutes allocated in the direct PE input database. Based on our analysis of these services, we believed that 10 minutes should be allocated to the equipment for each of the following CPT codes: 93294 (Interrogation device evaluation(s) (remote), up to 90 days; single, dual, or multiple lead pacemaker system with interim physician analysis, review(s) and report(s)), and 93295 (Interrogation device evaluation(s) (remote), up to 90 days; single, dual, or multiple lead implantable cardioverter-defibrillator system with interim physician analysis, review(s) and report(s)). Therefore, the direct PE input database was modified to allocate 10 minutes to the pacemaker follow-up system for CPT codes 93294 and 93295.

Comment:

One commenter expressed support for this modification.

Response:

We appreciate the support for the modification and will maintain the allocated equipment minutes in the final direct PE input database.

b. Clinical Labor for Pulmonary Rehabilitation Services (HCPCS Code G0424)

It has come to our attention that the direct PE input database includes 15 minutes of clinical labor time in the nonfacility setting allocated for a CORF social worker/psychologist (L045C) associated with HCPCS code G0424 (Pulmonary rehabilitation, including exercise (includes monitoring), one hour, per session, up to two sessions per day). Based on our analysis of this service, we believed that these 15 minutes should be added to the 15 minutes currently allocated to the Respiratory Therapist (L042B) associated with this service. Therefore, we proposed to modify the direct PE input database to allocate 15 additional minutes to the Respiratory Therapist (L042B) (for a total of 30 minutes) and to delete the CORF social worker/psychologist (L045C) associated with HCPCS code G0424.

Comment:

One commenter supported the modification as accurate and fair. Another commenter suggested that the appropriate clinical staff time for the code should be 60 minutes since the code describes an hour long session. Furthermore, the same commenter expressed opposition to reassigning the 15 minutes to the Respiratory Therapist because the rate per minute of the Respiratory Therapist is lower than the rate per minute of the CORF social worker/psychologist and the change, however modest, may potentially reduce the PE RVUs for the service.

Response:

We appreciate the support for the modification and understand the commenter's concerns. We recognize that for many services with code descriptors that include procedure time assumptions, the number of clinical labor minutes allocated during the service period corresponds to the time as described by the code. However, as we explained in the CY 2011 PFS final rule with comment period (75 FR 73299), because pulmonary rehabilitation services reported under HCPCS code G0424 can be furnished either individually or in groups, we believe that 30 minutes of respiratory therapist time would be more appropriate for valuing the typical pulmonary rehabilitation service. We also recognize that reclassifying the direct PE input labor category from CORF social worker/psychologist to Respiratory Therapist for 15 minutes will reduce the direct labor costs used in calculating PE RVUs for the service. However, we continue to believe that the Respiratory Therapist is the most appropriate labor category to include as a direct PE input for this service.

After consideration of the comments we received, we are finalizing the modification of the direct PE labor inputs for this service to allocate 15 additional minutes to the Respiratory Therapist (L042B) (for a total of 30 minutes) and to delete the CORF social worker/psychologist (L045C) associated with HCPCS code G0424.

c. Transcranial Magnetic Stimulation Services

For CY 2011, the CPT Editorial Panel converted Category III CPT codes 0160T and 0161T to Category I status (CPT codes 90867 (Therapeutic repetitive transcranial magnetic stimulation (TMS) treatment; initial, including cortical mapping, motor threshold determination, delivery and management), and 90868 (Therapeutic repetitive transcranial magnetic stimulation (TMS) treatment; subsequent delivery and management, per session)), which were contractor priced on the PFS. For CY 2012, the CPT Editorial Panel modified CPT codes 90867 and 90868, and created CPT code 90869 ((Therapeutic repetitive transcranial magnetic stimulation (TMS) treatment; subsequent motor threshold re-determination with delivery and management.) In the CY 2012 PFS final rule with comment period, we established interim final values based on refinement of RUC-recommended work RVUs, direct PE inputs, and malpractice risk factor crosswalks for these services (76 FR 73201).

Subsequent to the development of interim final PE RVUs, it came to our attention that the application of our usual PE methodology resulted in anomalous PE values for these services. As we explain in section II.A.2.c.2 of this final rule with comment period, for a given service, we use the direct costs associated with a service (clinical staff, equipment, and supplies) and the average percentage that direct costs represent of total costs (based on survey data) across the specialties that furnish the service to determine an initial indirect allocator.

For services almost exclusively furnished by one specialty, the average percentage of indirect costs relative to direct costs would ordinarily be used to determine the initial indirect allocator. For specialties that typically incur significant direct costs relative to indirect costs, the initial indirect allocator for their services is generally lower than for the specialties that typically incur lower direct costs relative to indirect costs. Relative to direct costs, the methodology generally allocates a greater proportion of indirect PE to services furnished by psychiatrists, for example, than to services furnished by specialties that typically incur significant direct costs, such as radiation oncologists. In the case of TMS, however, the direct costs incurred by psychiatrists reporting the codes far exceed the direct costs typical to any other service predominantly furnished by psychiatrists. This drastic difference in the direct costs of TMS relative to most other services furnished by psychiatrists, results in anomalous PE values since code-level indirect PE allocation relies on typical resource costs for the specialties that furnish the service. In other words, the amount of indirect PE allocated to TMS services is

based on the proportion of indirect expense to direct expense that is typical of other psychiatric services, and is not on par with other services that require similar investments in capital equipment and high-cost, disposable supplies.

Historically, we have contractor-priced (meaning our claims processing contractors develop payment rates) for services with resource costs that cannot be appropriately valued within the generally applicable PE methodology used to price services across the PFS. Because there is no mechanism to develop appropriate payment rates for these services within our current methodology, we proposed to contractor price these codes for CY 2013.

Comment:

One commenter objected to the proposal to contractor price these codes for CY 2013 and suggested that CMS should establish PE RVUs using the generally applicable PE methodology and must endeavor in ensuing rulemaking to revise the methodology to refine any values the agency views as “anomalous.” The commenter also questioned CMS's assumption that the direct costs for psychiatrists who furnish these services “far exceed” the direct costs for psychiatrists who do not furnish these services. The commenter stated that CMS made this assessment without any empirical support and that CMS needs to conduct a survey or obtain other data from psychiatrists before drawing any conclusions regarding the appropriateness of Medicare payment rates on this basis.

Response:

We understand the commenter's objections, but as we explained in the proposal, we do not believe that there is a mechanism within the current methodology that allows us to develop appropriate payment rates for these services. We agree with the commenter that it may be appropriate to consider potential changes to the practice expense methodology to accommodate changing circumstances of medical practice. We do not agree with the commenter, however, that we have no means to pay appropriately for services when we recognize areas where the practice expense methodology is inadequate and that we must establish national RVUs based on that methodology, even when it does not accommodate the unique circumstances of particular services. Instead, we believe that in outlier cases, contractor pricing allows Medicare to pay more appropriately for particular services furnished to beneficiaries.

In our proposal, we pointed out that the direct costs incurred by psychiatrists reporting the codes far exceed the direct costs typical to any other service predominantly furnished by psychiatrists. The commenter objected to this assertion and claimed it was made without any empirical support. We made that assertion based on comparing the direct practice expense input costs for transcranial magnetic stimulation services and the current direct practice expense input costs in the direct PE database for services predominantly furnished by the specialty based on Medicare claims data. In our examination of 20 frequently billed psychiatry services (where greater than half of the Medicare allowed services were reported by psychiatrists), the total direct costs (clinical labor, disposable medical supplies, or medical equipment) in the direct PE input database summed to under $10 for all but 3 of these 20 services. Examples of these services include CPT codes 90807 (Individual psychotherapy, insight oriented, behavior modifying and/or supportive, in an office or outpatient facility, approximately 45 to 50 minutes face-to-face with the patient; with medical evaluation and management services), 90862 (Pharmacologic management, including prescription, use, and review of medication with no more than minimal medical psychotherapy), and 90845 (Psychoanalysis). For the three where the direct PE input costs summed to greater than $10, HCPCS code M0064 (Brief office visit for the sole purpose of monitoring or changing drug prescriptions used in the treatment of mental psychoneurotic and personality disorders), and CPT codes 90865 (Narcosynthesis for psychiatric diagnostic and therapeutic purposes (eg, sodium amobarbital (Amytal) interview)), and 90870 (Electroconvulsive therapy (includes necessary monitoring)), the service with the highest direct cost sum was $32.24. In contrast, the transcranial magnetic stimulation services treatment delivery (CPT code 90867) included direct PE inputs that summed to direct costs of $145.19. The disparity between the TMS direct costs and the direct costs in other frequent psychiatry codes was the basis for our assertion that the direct costs for this service far exceeded the direct costs typical to any other service predominantly furnished by psychiatrists. Thus, we continue to believe our decision to contractor price these codes is the proper one.

Comment:

Another commenter requested that CMS use the existing methodology to price the codes or contractor price the codes. This commenter also urged CMS to consider alternate sources of data for resource costs as they become available, or to make appropriate future refinements to the practice expense methodology.

Response:

We appreciate the commenter's support for our proposal as a suitable means of pricing the services. We will consider appropriate means to develop national prices for these services in the context of potential changes to the practice expense methodology and the availability of new data sources.

After consideration of these public comments, we are finalizing our proposal to contractor price CPT codes 90867, 90868, and 90869 for CY 2013.

d. Spinal Cord Stimulation Trial Procedures in the Nonfacility Setting

Stakeholders have recently brought to our attention that CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural) is frequently furnished in the physician office setting but is not priced in that setting. We note that the valuation of a service under the PFS in particular settings does not address whether those services are medically reasonable and necessary in the case of individual patients, including being furnished in a setting appropriate to the patient's medical needs and condition. However, because these services are being furnished in the nonfacility setting, we believed that CPT code 63650 should be reviewed to establish appropriate nonfacility inputs. We proposed to review CPT code 63650 and requested recommendations from the AMA RUC and other public commenters on the appropriate physician work RVUs (as measured by time and intensity), and facility and nonfacility direct PE inputs for this service. We understand that disposable leads comprise a significant resource cost for this service and are currently separately reportable to Medicare for payment purposes when the service is furnished in the physician office setting. Disposable medical supplies are not considered prosthetic devices paid under the Durable Medical Equipment, Prosthetic/Orthotic, and Supplies (DMEPOS) fee schedule and generally are incorporated as nonfacility direct PE inputs to PE RVUs. We sought comment on establishing nonfacililty PE RVUs for CPT code 63650.

Comment:

Several commenters expressed concerns regarding the possibility of establishing nonfacility PE RVUs for this service based on the assumption that the nonfacility PFS payment rate would be lower than the rate paid by the Medicare hospital outpatient prospective payment system

(OPPS). These commenters stated that the supply, personnel, and administration costs are higher in the non-facility setting than in the facility setting and that current Medicare payment for L8680 under the DMEPOS fee schedule offsets the difference in costs between the facility and nonfacility setting. Many of these commenters also stated that it is more cost effective for the Medicare program for these services to be furnished in the nonfacility setting. These commenters also stated that it is more convenient for patients to receive this service in the nonfacility setting, so that Medicare should not implement nonfacility payment rates because doing so might discourage practitioners from furnishing the service in the nonfacility setting.

Response:

We understand the commenters' interest in ensuring that Medicare beneficiaries retain access to the service in the nonfacility setting. We do not agree with the commenters' underlying assumption that developing accurate payment rates for the service in the nonfacility setting will necessarily deter practitioners from furnishing the service to Medicare beneficiaries outside the facility setting. Additionally, we do not know how to reconcile the contradictory contentions of many individual commenters that the costs of furnishing the services in the nonfacility setting are greater so that payment rates should be higher, but furnishing services there would still be more cost effective for Medicare.

Comment:

One commenter supported the proposal to create nonfacility RVUs for this service since it would reduce overutilization of the service and lower the likelihood of fraud.

Response:

We appreciate the support for the proposal, and we generally agree that developing accurate payment rates encourages appropriate utilization.

Comment:

One commenter stated that CMS should continue to provide payment for HCPCS code L8680 until non-facility PE inputs for CPT code 63650 including the leads have been developed.

Response:

We appreciate the commenter's concerns. We would continue a mechanism to provide payment for the disposable leads used in furnishing the service while we develop non-facility PE inputs. We also agree that once a practice expense payment reflects these disposable leads, that a separate payment mechanism would no longer be necessary.

Comment:

The AMA RUC agreed that the direct practice expense inputs for the service should be reviewed to establish appropriate inputs in both the facility and nonfacility setting.

After consideration of the comments we received regarding our proposal to establish nonfacility PE RVUs for CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural), we continue to believe that it would be appropriate to do so since these services are being furnished in the nonfacility setting. The AMA RUC expects to review the direct PE inputs for this service during CY 2013. We anticipate receiving recommendations from the AMA RUC for the CY 2014 PFS, and we request comments from other stakeholders regarding the appropriate direct PE inputs for this service

B. Potentially Misvalued Codes Under the Physician Fee Schedule

1. Valuing Services Under the PFS

To value services under the PFS, section 1848(c) of the Act requires the Secretary to determine relative values for physicians' services based on three components: work; practice expense (PE); and malpractice. Section 1848(c)(1)(A) of the Act defines the work component to include “the portion of the resources used in furnishing the service that reflects physician time and intensity in furnishing the service.” In addition, section 1848(c)(2)(C)(i) of the Act specifies that “the Secretary shall determine a number of work relative value units (RVUs) for the service based on the relative resources incorporating physician time and intensity required in furnishing the service.”

As discussed in detail in sections II.B.1.b. and II.B.1.c. of this final rule with comment period, the statute also defines the PE and malpractice components and provides specific guidance in the calculation of the RVUs for each of these components. Section 1848(c)(1)(B) of the Act defines the PE component as “the portion of the resources used in furnishing the service that reflects the general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising practice expenses.” Section 1848(c)(1)(C) of the Act defines the malpractice component as “the portion of the resources used in furnishing the service that reflects malpractice expenses in furnishing the service.” Clause (ii) and clause (iii) of section 1848 (c)(2)(C) of the Act specify that PE and malpractice expense RVUs shall be determined based on the relative PE/malpractice expense resources involved in furnishing the service.

Section 1848(c)(2)(B) of the Act directs the Secretary to conduct a periodic review, not less often than every 5 years, of the RVUs established under the PFS. On March 23, 2010, the Affordable Care Act was enacted, further requiring the Secretary to periodically identify and review potentially misvalued codes and make appropriate adjustments to the relative values of those services identified as being potentially misvalued. Section 1848(c)(2)(K) to the Act requires the Secretary to periodically identify potentially misvalued services using certain criteria and to review and make appropriate adjustments to the relative values for those services. Section 1848(c)(2)(L) of the Act requires the Secretary to develop a process to validate the RVUs of certain potentially misvalued codes under the PFS, identified using the same criteria used to identify potentially misvalued codes, and to make appropriate adjustments.

As discussed in section I.B.1.a. of this final rule with comment period, each year we develop and propose appropriate adjustments to the RVUs, taking into account the recommendations provided by the American Medical Association Specialty Society Relative Value Scale Update Committee (AMA RUC), the Medicare Payment Advisory Commission (MedPAC), and others. For many years, the AMA RUC has provided us with recommendations on the appropriate relative values for new, revised, and potentially misvalued PFS services. We review these recommendations on a code-by-code basis and consider these recommendations in conjunction with the recommendations of other public commenters, and with analyses of data sources, such as claims data, to inform the decision-making process as authorized by the law. We may also consider analyses of physician time, work RVUs, or direct PE inputs using other data sources, such as Department of Veteran Affairs (VA) National Surgical Quality Improvement Program (NSQIP), the Society for Thoracic Surgeons (STS), and the Physician Quality Reporting Initiative (PQRI) databases. In addition to considering the most recently available data, we also assess the results of physician surveys and specialty recommendations submitted to us by the AMA RUC. We conduct a clinical review to assess the appropriate RVUs in the context of contemporary medical practice. We note that section 1848(c)(2)(A)(ii) of the Act authorizes the use of extrapolation and other techniques to determine the RVUs for physicians' services for which specific data are not available, in addition to taking into account the

results of consultations with organizations representing physicians. In accordance with section 1848(c) of the Act, we determine appropriate adjustments to the RVUs, explain the basis of these adjustments, and respond to public comments in the PFS proposed and final rules.

2. Identifying, Reviewing, and Validating the RVUs of Potentially Misvalued Services on the PFS

a. Background

In its March 2006 Report to the Congress, MedPAC noted that “misvalued services can distort the price signals for physicians' services as well as for other health care services that physicians order, such as hospital services.” In that same report MedPAC postulated that physicians' services under the PFS can become misvalued over time for a number of reasons: For example, MedPAC stated, “when a new service is added to the PFS, it may be assigned a relatively high value because of the time, technical skill, and psychological stress that are often required to furnish that service. Over time, the work required for certain services would be expected to decline as physicians become more familiar with the service and more efficient in furnishing it.” That is, the amount of physician work needed to furnish an existing service may decrease as physicians build experience furnishing that service. Services can also become overvalued when PEs decline. This can happen when the costs of equipment and supplies fall, or when equipment is used more frequently than is estimated in the PE methodology, reducing its cost per use. Likewise, services can become undervalued when physician work increases or PEs rise. In the ensuing years since MedPAC's 2006 report, additional groups of potentially misvalued services have been identified by the Congress, CMS, MedPAC, the AMA RUC, and other stakeholders.

In recent years, CMS and the AMA RUC have taken increasingly significant steps to address potentially misvalued codes. As MedPAC noted in its March 2009 Report to Congress, in the intervening years since MedPAC made the initial recommendations, “CMS and the AMA RUC have taken several steps to improve the review process.” Most recently, section 1848(c)(2)(K)(ii) of the Act directed the Secretary to specifically examine, as determined appropriate, potentially misvalued services in seven categories as follows:

• Codes and families of codes for which there has been the fastest growth;

• Codes and families of codes that have experienced substantial changes in PEs;

• Codes that are recently established for new technologies or services;

• Multiple codes that are frequently billed in conjunction with furnishing a single service;

• Codes with low relative values, particularly those that are often billed multiple times for a single treatment;

• Codes which have not been subject to review since the implementation of the PFS (the so-called `Harvard-valued codes'); and

• Other codes determined to be appropriate by the Secretary.

Section 1848(c)(2)(K)(iii) of the Act also specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. In addition, the Secretary may conduct surveys, other data collection activities, studies, or other analyses, as the Secretary determines to be appropriate, to facilitate the review and appropriate adjustment of potentially misvalued services. This section also authorizes the use of analytic contractors to identify and analyze potentially misvalued codes, conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of potentially misvalued services. Additionally, this section provides that the Secretary may coordinate the review and adjustment of any RVU with the periodic review described in section 1848(c)(2)(B) of the Act. Finally, section 1848(c)(2)(K)(iii)(V) of the Act specifies that the Secretary may make appropriate coding revisions (including using existing processes for consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the PFS.

In addition to these requirements, section 3003(b)(1) of the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA) (Pub. L. 112-96), requires that the Secretary conduct a study that examines options for bundled or episode-based payment to cover physicians' services currently paid under the PFS under section 1848 of the Act for one or more prevalent chronic conditions or episodes of care for one or more major procedures. In conducting the study, the Secretary shall consult with medical professional societies and other relevant stakeholders. Additionally, the study shall include an examination of related private payer payment initiatives. This section also requires that not later than January 1, 2013, the Secretary submit to certain committees of the Congress a report on the study. The report shall include recommendations on suitable alternative payment options for services paid under the PFS and on associated implementation requirements.

Bundling is one method for aligning incentives for hospitals, post-acute care providers, physicians, and other practitioners to partner closely across all specialties and settings that a patient may encounter to improve the patient's experience of care. The typical goals of developing an effective bundled payment system are to improve quality, reduce costs, and promote efficiency. Current work on bundling services paid under the PFS to date has been limited to targeting specific codes and sets of codes and repackaging those codes into “bundles.” As detailed above, through the potentially misvalued codes initiative we are currently identifying for review codes that are frequently billed together and codes with low relative values billed in multiples. Many of the codes identified through these screens have been referred to the CPT Editorial Panel for the development of a comprehensive or bundled code, and several bundled codes have already been created and valued. However, we believe that we now need to move beyond this “repackaging” of codes and examine the potential of a larger bundled payment within the PFS. In response to section 3003(b)(1) of the MCTRJCA, we have consulted with medical professional societies, private payers, healthcare system administrators, and other stakeholders; met with other CMS staff involved in other bundling initiatives; and performed an extensive literature review. Additionally, we have had representatives of specialty groups such as radiation oncologists volunteer to work with us to create a bundled payment for their services. If we were to engage in a bundling project for radiation therapy, we would want to do more than provide a single episode payment for the normal course of radiation therapy that aggregates the sum of the individual treatments. Radiation therapy has many common side effects that can vary based on the type of cancer the patient has and how it is being treated. Common side effects associated with radiation therapy include fatigue, skin problems, eating problems, blood count changes, emotional issues such as depression, etc* * * If we were to engage in a bundling project that includes radiation therapy, we would be interested in exploring whether it could also include treating and managing the side effects

that result from radiation therapy in addition to the radiation therapy itself. Such an episode-based payment would allow Medicare to pay for the full course of the typical radiation therapy as well as the many medical services the patient may be receiving to treat side effects.

We will continue to examine options for bundled or episode-based payments and will include our recommendations and implementation options in our report to the Congress. Following completion of this report, we will look forward with interest to the view of stakeholders that are interested in testing some of these concepts within the PFS.

b. Progress in Identifying and Reviewing Potentially Misvalued Codes

In accordance with our statutory mandate, we have identified and reviewed numerous potentially misvalued codes in all seven of the categories specified in section 1848(c)(2)(K)(ii) of the Act, and we plan to continue our work examining potentially misvalued codes in these areas over the upcoming years. In the current process, we identify potentially misvalued codes for review, and request recommendations from the AMA RUC and other public commenters on revised work RVUs and direct PE inputs for those codes. The AMA RUC, through its own processes, identifies potentially misvalued codes for review, and through our public nomination process for potentially misvalued codes established in the CY 2012 PFS final rule, other individuals and stakeholder groups submit nominations for review of potentially misvalued codes as well.

Since CY 2009, as a part of the annual potentially misvalued code review and Five-Year Review processes, we have reviewed over 1,000 potentially misvalued codes to refine work RVUs and direct PE inputs. We have adopted appropriate work RVUs and direct PE inputs for these services as a result of these reviews.

Our prior reviews of codes under the potentially misvalued codes initiative have included codes in all seven categories specified in section 1848(c)(2)(K)(ii) of the Act, listed above. A more detailed discussion of the extensive prior reviews of potentially misvalued codes is included in the CY 2012 PFS final rule with comment period (76 FR 73052 through 73055).

In the CY 2012 final rule with comment period, under the potentially misvalued codes category of “Other codes determined to be appropriate by the Secretary,” we finalized our proposal to review a list of the highest PFS expenditure services, by specialty, that had not been recently reviewed (76 FR 73059 through 73068). In the CY 2012 final rule with comment period we also finalized policy to consolidate the periodic reviews of physician work and PE at the same time (76 FR 73055 through 73958), and established a process for the annual public nomination of potentially misvalued services to replace the Five-Year review process (76 FR 73058 through 73059). Below we discuss the CY 2013 PFS proposals that support our continuing efforts to appropriately identify, review, and adjust values for potentially misvalued codes.

c. Validating RVUs of Potentially Misvalued Codes

In addition to identifying and reviewing potentially misvalued codes, section 1848(c)(2)(L) of the Act specifies that the Secretary shall establish a formal process to validate RVUs under the PFS. The validation process may include validation of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, and stress due to risk) involved with furnishing a service and may also include validation of the pre-, post-, and intra-service time components of work. The Secretary is directed, as part of the validation, to validate a sampling of the work RVUs of codes identified through any of the seven categories of potentially misvalued codes specified by section 1848(c)(2)(K)(ii) of the Act. Furthermore, the Secretary may conduct the validation using methods similar to those used to review potentially misvalued codes, including conducting surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the validation of RVUs of services.

In the CY 2011 PFS proposed rule (75 FR 40068) and CY 2012 PFS proposed rule (76 FR 42790), we solicited public comments on possible approaches, methodologies, and data sources that we should consider for a validation process. A summary of the comments along with our responses are included in the CY 2011 PFS final rule with comment period (75 FR 73217) and the CY 2012 PFS final rule with comment period (77 FR 73054 through 73055). In September 2012 we entered into two contracts to assist us in validating RVUs of potentially misvalued codes; the implementation details for these contracts are currently under development. Contractors will explore models for the validation of physician work under the PFS, both for new and existing services. We plan to discuss these models further in future rulemaking.

d. Improving the Valuation of the Global Surgical Package

(1) Background

We applied the concept of payment for a global surgical package under the PFS at its inception on January 1, 1992 (56 FR 59502). For each global surgical procedure, we establish a single payment, which includes payment for a package of all related services typically furnished by the surgeon furnishing the procedure during the global period. Each global surgery is paid on the PFS as a single global surgical package. Each global surgical package payment rate is based on the work necessary for the typical surgery and related pre- and post-operative work. The global period may include 0, 10, or 90 days of post-operative care, depending on the procedure. For major procedures, those with a 90-day global period, the global surgical package payment also includes services typically furnished the day prior to the day of surgery.

Some global surgical packages have been valued by adding the RVU of the surgical procedure and all pre- and post-operative evaluation and management (E/M) services included in the global period. Others have been valued using magnitude estimation, in which case the overall RVU for the surgical package was determined without factoring in the specific RVUs associated with the E/M services in the global period. The number and level of E/M services identified with a global surgery payment are based on the typical case. Even though a surgical package may have been developed with several E/M services included, a physician is not required to furnish each pre- or post-operative visit to bill for the global surgical package.

Similar to other bundled services on the PFS, when a global surgery code is billed, the bundled pre- and post-operative care is not separately payable; surgeons or other physicians billing a surgical procedure, cannot separately bill for the E/M services that are included in the global surgical package.

(2) Measuring Post-Operative Work

The use of different methodologies for valuing global surgical packages since 1992 has created payment rates that reflect a wide range of E/M services within the post-operative period. This is especially true among those with 90-day global periods. More recently reviewed codes tend to have fewer E/M services in the global period, and the work RVUs of those E/M services are often

accounted for in the value for the global surgical package. The values of global surgical packages reviewed less recently frequently do not appear to include the full work RVUs of each E/M service in the global surgical package, and the numbers of E/M services included in the post-operative period can be inconsistent within a family of procedures.

In 2005, the HHS Office of Inspector General (OIG) examined whether global surgical packages are appropriately valued. In its report on eye and ocular surgeries, “National Review of Evaluation and Management Services Included in Eye and Ocular Adnexa Global Surgery Fees for Calendar Year 2005” (A-05-07-00077), the OIG reviewed a sample of 300 eye and ocular surgeries, and counted the actual number of face-to-face services in the surgeons' medical records to establish whether the surgeon furnished post-operative E/M services. The OIG findings show that surgeons typically furnished fewer E/M services in the post-operative period than were identified with the global surgical package payment for each procedure. A smaller percentage of surgeons furnished more E/M services than were identified with the global surgical package payment. The OIG could only review the number of face-to-face services and was not able to review the level of the E/M services that the surgeons furnished due to a lack of documentation in surgeons' medical records. The OIG concluded that the RVUs for the global surgical package are too high because they include the work of E/M services that are not typically furnished within the global period for the reviewed procedures.

Following the 2005 report, the OIG continued to investigate E/M services furnished during the global surgical period. In May 2012, the OIG published a report titled “Musculoskeletal Global Surgery Fees Often Did Not Reflect the Number of Evaluation and Management Services Provided” (A-05-09-00053). For this investigation, the OIG sampled 300 musculoskeletal global surgeries and again found that, for the majority of sampled surgeries, physicians furnished fewer E/M services than were identified as part of the global period for that service. Once again, a smaller percentage of surgeons furnished more E/M services than were identified with the global surgical package payment. The OIG concluded that the RVUs for the global surgical package are too high because they include the work of E/M services that are not typically furnished within the global period for the reviewed procedures.

In both reports, the OIG recommended that we adjust the number of E/M services identified with the global surgical payments to reflect the number of E/M services that are actually being furnished. Under the PFS, we do not ask surgeons to detail the component bundled services on their claim when billing for the global surgical package as we do providers furnishing bundled services under other Medicare payment systems. Since it is not necessary for a surgeon to identify the level or CPT code of the E/M services actually furnished during the global period, there is very limited documentation on the frequency or level of post-operative services. Without sufficient documentation, a review of the medical record cannot accurately determine the number or level of E/M services furnished in the post-operative period. This is an area of concern, and is discussed in more detail later in this section.

As noted above, section 1848(c)(2)(K) of the Act, which codified and expanded the potentially misvalued codes initiative that CMS had begun, requires that the Secretary identify and review potentially misvalued services with an emphasis on several categories, and recognizes the Secretary's discretion to identify additional potentially misvalued codes. Several of the categories of potentially misvalued codes support better valuation of global surgical package codes. We have made efforts to prioritize the review of RVUs for services on the PFS that have not been reviewed recently or for services where there is a potential for misuse. One of the priority categories for review of potentially misvalued codes is services that have not been subject to review since the implementation of the PFS (the so-called “Harvard-valued codes”). In the CY 2009 PFS proposed rule, we requested that the AMA RUC engage in an ongoing effort to review the remaining Harvard-valued codes, focusing first on the high-volume codes (73 FR 38589). For the Fourth Five-Year Review (76 FR 32410), we requested that the AMA RUC review services that have not been reviewed since the original implementation of the PFS with utilization greater than 30,000 (Harvard-valued—Utilization > 30,000). In the CY 2013 PFS proposed rule, we proposed to review Harvard-valued services with annual allowed charges that totaled at least $10,000,000 (Harvard-valued—Allowed charges ≥$10,000,000), and requested recommendations from the AMA RUC and other public commenters on appropriate values for these services (77 FR 44741).

Of the more than 1,000 identified potentially misvalued codes, just over 650 are surgical services with a global period of 0, 10, or 90 days. We have completed our review of 450 of these potentially misvalued surgical codes. As we stated in the CY 2013 PFS proposed rule, these efforts are important, but we believe the usual review process does not go far enough to assess whether the valuation of global surgical packages reflects the number and level of post-operative services that are typically furnished. To support our statutory obligation to identify and review potentially misvalued services and to respond to the OIG's concern that global surgical package payments are misvalued, we believe that we should gather more information on the E/M services that are typically furnished with surgical procedures. Information regarding the typical work involved in surgical procedures with a global period is necessary to evaluate whether certain surgical procedures are appropriately valued. While the AMA RUC reviews and recommends RVUs for services on the PFS, we complete our own assessment of those recommendations, and may adopt different RVUs. However, for procedures with a global period, the lack of detail in claims data and documentation restrict our ability to review and assess the appropriateness of their RVUs.

In the CY 2013 proposed rule, we requested comments on methods of obtaining accurate and current data on E/M services furnished as part of a global surgical package. We stated that we were especially interested in and invited comments on a claims-based data collection approach that would include reporting E/M services furnished as part of a global surgical package, as well as other valid, reliable, generalizable, and robust data to help us identify the number and level of E/M services typically furnished in the global surgical period for specific procedures.

The following is summary of the comments we received regarding the methods of obtaining accurate and current data on E/M services furnished as part of a global surgical package proposal.

Comment:

Several commenters stated that the global payment methodology has restricted CMS' ability to audit the accuracy of the current value of services as well as the accuracy of the AMA RUC recommendations for services with a global period. Many commenters offered recommendations on how CMS could validate the current global surgical packages or obtain accurate and current data on E/M services furnished as a part

of the global surgical package. Some commenters recommended that CMS establish auditable documentation requirements for inpatient and outpatient post-operative visits, and many believed that these auditable post-operative visit notes should follow E/M documentation guidelines. Other commenters suggested that CMS adjust all surgical services to a 0-day global period, require surgeons to bill post-operative E/M services separately for payment purposes, and subject those billings to the same coding and documentation standards and audits to which other practitioners are already subject. Several commenters noted that CMS could validate the global surgical packages with the hospital Diagnosis-Related Group (DRG) length of stay data, and that CMS could explore the use of surgical specialties' registries to collect data on services furnished within the global period. Commenters also suggested that CMS could draw upon the OIG's approach and review the medical record for a statistically valid sample of claims and then extrapolate those results to clinically similar families of codes. One commenter suggested that CMS could establish G-codes through which a large sample of surgeons might report the number and intensity of post-operative visits.

In response to our request for comments on methods of obtaining accurate and current data on E/M services furnished as part of a global surgical package, some commenters stated that they believe post-operative work is appropriately surveyed, vetted and valued by the AMA RUC during its ongoing reviews of surgical procedures, and therefore, claims-based reporting is unnecessary in order to verify that the number of visits assigned to global surgical procedures is accurate. Some commenters stated that if CMS has concerns with a specific code, or group of codes, regarding the number of E/M visits valued within the physician work RVU, CMS should work with the AMA RUC to review these services. One commenter noted that there are 4,258 CPT codes on the PFS with a global period, but that only 271 of these CPT codes are billed more than 10,000 times annually, and most of the 271 CPT codes have been reviewed by CMS and the AMA RUC since 2005.

Response:

We thank the commenters for their recommendations on this important issue. We will carefully weigh all comments received as we consider how best to measure the number and level of visits that occur during the global period.

In addition to the broader comments on measuring post-operative work, we also received a comment from the AMA RUC noting that the hospital and discharge management services included in the global period for many surgical procedures may have been inadvertently removed from the time file in 2007. With its comment letter, the AMA RUC sent us a revised time file with updated post-operative visits for the services that may be incorrectly displayed with zero visits. We are reviewing this file, and if appropriate, we intend to propose modifications to the physician time file in the CY 2014 PFS proposed rule. We note that should time have been removed from the physician time file inadvertently, it would not have affected the physician work RVUs or direct practice expense inputs for these services. It would have a small impact on the indirect allocation of practice expense at the specialty level, which we will review when we explore this potential time file change.

3. CY 2013 Identification and Review of Potentially Misvalued Services

a. Public Nomination of Potentially Misvalued Codes

In the CY 2012 PFS final rule, we finalized a public nomination process for potentially misvalued codes (76 FR 73058). Under the previous Five-Year Reviews for PE and work, we invited the public to nominate potentially misvalued codes for review. To allow for public input and to preserve the public's ability to identify and nominate potentially misvalued codes for review under our annual potentially misvalued codes initiative, we established a process by which the public can submit codes, along with documentation supporting the need for review, on an annual basis. Stakeholders may nominate potentially misvalued codes for review by submitting the code with supporting documentation during the 60-day public comment period following the release of the annual PFS final rule with comment period. Supporting documentation for codes nominated for the annual review of potentially misvalued codes may include the following:

• Documentation in the peer reviewed medical literature or other reliable data that there have been changes in physician work due to one or more of the following: technique; knowledge and technology; patient population; site-of-service; length of hospital stay; and physician time.

• Evidence of an anomalous relationship between the code being proposed for review and other codes.

• Evidence that technology has changed physician work, that is, diffusion of technology.

• Analysis of other data on time and effort measures, such as operating room logs or national and other representative databases.

• Evidence that incorrect assumptions were made in the previous valuation of the service, such as a misleading vignette, survey, or flawed crosswalk assumptions in a previous evaluation.

• Prices for certain high cost supplies or other direct PE inputs that are used to determine PE RVUs are inaccurate and do not reflect current information.

• Analyses of physician time, work RVU, or direct PE inputs using other data sources (for example, Department of Veteran Affairs (VA) National Surgical Quality Improvement Program (NSQIP), the Society for Thoracic Surgeons (STS), and the Physician Quality Reporting System (PQRS) databases).

• National surveys of physician time and intensity from professional and management societies and organizations, such as hospital associations.

Under this newly established process, after we receive the nominated codes during the 60-day comment period following the release of the annual PFS final rule with comment period, we evaluate the supporting documentation and assess whether the submitted codes appear to be potentially misvalued codes appropriate for review under the annual process. In the following year's PFS proposed rule, we publish the list of nominated codes, and propose -which nominated codes will be reviewed as potentially misvalued. We encourage the public to submit nominations for potentially misvalued codes in the 60-day comment period following the publication of this CY 2013 PFS final rule with comment period.

Table 4—CPT Codes Nominated as Potentially Misvalued for CY 2013 Rulemaking

CPT Code

Short descriptor

CMS Action

33282

Implant pat-active ht record

Establish nonfacility inputs, and review the work, facility and nonfacility inputs together. Not considered a potentially misvalued code.

33284

Remove pat-active ht record

Establish nonfacility inputs, and review the work, facility and nonfacility inputs together. Not considered a potentially misvalued code.

36819

Av fuse uppr arm basilic

Review as a potentially misvalued code.

36825

Artery-vein autograft

Review as a potentially misvalued code.

53445

Insert uro/ves nck sphincter

Interim Final in CY 2012, Final for CY 2013. Comments addressed in section II.M.2.a. of this CY 2013 PFS final rule with comment period.

77336

Radiation physics consult

Review as a potentially misvalued code.

94762

Measure blood oxygen level

Adopt direct PE revisions discussed below on an interim final basis for CY 2013.

28820

Amputation of toe

Last reviewed for CY 2012. No further review required at this time.

28825

Partial amputation of toe

Last reviewed for CY 2012. No further review required at this time.

35188

Repair blood vessel lesion

Last reviewed for CY 2012. No further review required at this time.

35612

Artery bypass graft

Last reviewed for CY 2012. No further review required at this time.

35800

Explore neck vessels

Last reviewed for CY 2012. No further review required at this time.

35840

Explore abdominal vessels

Last reviewed for CY 2012. No further review required at this time.

35860

Explore limb vessels

Last reviewed for CY 2012. No further review required at this time.

43283

Lap esoph lengthening

Last reviewed for CY 2012. No further review required at this time.

43327

Esoph fundoplasty lap

Last reviewed for CY 2012. No further review required at this time.

43328

Esoph fundoplasty thor

Last reviewed for CY 2012. No further review required at this time.

43332

Transab esoph hiat hern rpr

Last reviewed for CY 2012. No further review required at this time.

43333

Transab esoph hiat hern rpr

Last reviewed for CY 2012. No further review required at this time.

43334

Transthor diaphrag hern rpr

Last reviewed for CY 2012. No further review required at this time.

43335

Transthor diaphrag hern rpr

Last reviewed for CY 2012. No further review required at this time.

43336

Thorabd diaphr hern repair

Last reviewed for CY 2012. No further review required at this time.

43337

Thorabd diaphr hern repair

Last reviewed for CY 2012. No further review required at this time.

43338

Esoph lengthening

Last reviewed for CY 2012. No further review required at this time.

47563

Laparo cholecystectomy/graph

Last reviewed for CY 2012. No further review required at this time.

49507

Prp i/hern init block >5 yr

Last reviewed for CY 2012. No further review required at this time.

49521

Rerepair ing hernia blocked

Last reviewed for CY 2012. No further review required at this time.

49587

Rpr umbil hern block > 5 yr

Last reviewed for CY 2012. No further review required at this time.

49652

Lap vent/abd hernia repair

Last reviewed for CY 2012. No further review required at this time.

49653

Lap vent/abd hern proc comp

Last reviewed for CY 2012. No further review required at this time.

49654

Lap inc hernia repair

Last reviewed for CY 2012. No further review required at this time.

49655

Lap inc hern repair comp

Last reviewed for CY 2012. No further review required at this time.

60220

Partial removal of thyroid

Last reviewed for CY 2012. No further review required at this time.

60240

Removal of thyroid

Last reviewed for CY 2012. No further review required at this time.

60500

Explore parathyroid glands

Last reviewed for CY 2012. No further review required at this time.

95800

Slp stdy unattended

Last reviewed for CY 2012. No further review required at this time.

In the 60 days following the release of the CY 2012 PFS final rule with comment period, we received nominations and supporting documentation for review of the codes listed above in Table 4. A total of 36 CPT codes were nominated. The majority of the nominated codes were codes for which we finalized RVUs in the CY 2012 PFS final rule. That is, the RVUs were interim in CY 2011 and finalized for CY 2012, or proposed in either the Fourth Five-Year Review of Work or the CY 2012 PFS proposed rule and finalized for CY 2012. In the CY 2013 proposed rule, we noted that under this annual public nomination process it would be highly unlikely that we would determine that a nominated code is appropriate for review under the potentially misvalued codes initiative if it had been reviewed in the years immediately preceding its nomination since we believe that the best information on the level of physician work and PE inputs already would have been available through that recent review. We stated that, nonetheless, we would evaluate the supporting documentation for each nominated code to ascertain whether the submitted information demonstrated that the code is potentially misvalued.

CPT codes 33282 (Implantation of patient-activated cardiac event recorder) and 33284 (Removal of an implantable, patient-activated cardiac event recorder) were nominated for review as potentially misvalued codes. The requestor stated that CPT codes 33282 and 33284 are misvalued in the nonfacility setting because these CPT codes currently are only priced in the facility setting even though physicians furnish these services in the office setting. The requestor asked that we establish appropriate payment for the services when furnished in a physician's office. Specifically, the requestor asked that CMS establish nonfacility PE RVUs for these services. In the CY 2013 proposed rule, we stated that we do not consider the lack of pricing in a particular setting as an indicator of a potentially misvalued code. However, given that these services are now furnished in the nonfacility setting, we believe that CPT codes 33282 and 33284 should be reviewed to establish appropriate nonfacility inputs. We noted, as did the requestor, that the valuation of a service under the PFS in a particular setting does not address whether those services and the setting in which they are furnished are medically reasonable and necessary for a patient's medical needs and condition. We proposed to review CPT codes 33282 and 33284 and requested recommendations from the AMA RUC and other public commenters on the appropriate physician work RVUs (as measured by time and intensity), and facility and nonfacility direct PE inputs for these services.

Like CPT codes 33282 and 33284, stakeholders requested that we establish appropriate payment for CPT code 63650 (Percutaneous implantation of neurostimulator electrode array, epidural) when furnished in an office

setting. In the CY 2013 proposed rule, we noted that this request was not submitted as a potentially misvalued code nomination. However, given that these services are now furnished in the nonfacility setting, we stated that we believed CPT code 63650 should be reviewed to establish appropriate nonfacility inputs. Please see section III.A.3 (Changes to Direct Inputs for Specific Services) for a discussion of spinal code stimulation trial procedures in the nonfacility setting.

The following is a summary of the comments we received in response to our proposal to review the physician work, facility, and nonfacility direct PE inputs for CPT codes 33282 and 33284.

Comment:

Several commenters did not support our proposal to review CPT codes 33282 and 33284. Commenters stated that the very low utilization in the nonfacility setting does not justify a review of the codes for nonfacility PE inputs. One commenter noted that physicians are not interested in furnishing these services in the nonfacility setting due to concerns for patient safety. Commenters recommended that we not consider establishing nonfacility PE RVUs for these CPT codes until additional studies indicate a clinical need to furnish these services in the nonfacility setting. Additionally, commenters stated that they do not believe it is necessary to review physician work and PE in the facility setting, as that was not the concern that the stakeholder brought forward. The AMA RUC stated that it continues to support the current work RVUs and facility PE inputs for these services.

Another commenter recommended that CMS finalize the proposal to revalue CPT codes 33282 and 33284 in order to establish nonfacility PE RVUs. The commenter stated that the lack of nonfacility PE RVUs prevents physicians from furnishing these services in the office for select patients for whom this setting of care is safe and appropriate. This commenter recommended that CMS maintain the existing work RVUs, and focus the revaluation on the nonfacility PE inputs. The commenter requested that CMS remain flexible in its approach to nominated codes and allow for more expeditious review of codes by not requiring full provider surveys.

Response:

After reviewing the comments received, we are finalizing our proposal to review the physician work, and facility and nonfacility direct PE inputs for CPT codes 33282 and 33284. We acknowledge that we received very few Medicare claims for these services in the nonfacility setting in CY 2011; nonetheless, we believe it is appropriate to consider the relative resources involved in furnishing this service in the nonfacility setting. We reiterate that the valuation of a service under the PFS in a particular setting does not address whether those services and the setting in which they are furnished are medically reasonable and necessary for a patient's medical needs and condition.

We acknowledge that commenters support the current work and facility RVUs, however, it is our policy generally to review the physician work, facility, and nonfacility direct PE inputs for each service together to ensure consistency in the inputs used to value the service. Based on information provided by the requestor and the 2011 nonfacility utilization for this code, we believe it is appropriate to review this service for nonfacility PE inputs. As explained above, we intend to review the work and facility inputs as well. Additionally, we note that the physician work and facility PE inputs for these two services have not been reviewed in over a decade, so we believe it is reasonable to assess whether the inputs on which the current payment rates are based accurately reflect the resources involved in furnishing these services today. Accordingly, we are finalizing our proposal to review the physician work, and facility and nonfacility direct practice expense inputs for CPT codes 33282 and 33284, and request comments on the appropriate physician work, and facility and nonfacility direct practice expense inputs for these services.

Traditionally, we have received recommendations from the AMA RUC on the appropriate physician work, PE, and malpractice inputs for services CMS plans to review and revalue. However, we understand that the AMA RUC may not issue recommendations for all codes under review by CMS. In addition to requesting recommendations from the AMA RUC on services we intend to review, we request and encourage recommendations on these services from other public commenters as well. We acknowledge the requestor's comment that CMS remain flexible in its approach to nominated codes and not require full practitioner surveys for CPT codes 33282 and 33284. We understand that practitioner surveys regarding work, malpractice, and PE are not always available, practical, or reliable. We encourage commenters to submit the best data available on the appropriate valuation and inputs for the services under review, including the information listed above under supporting documentation for the nomination of potentially misvalued codes.

In the CY 2013 proposed rule, we stated that we did not consider CPT codes 36819 (Arteriovenous anastomosis, open; by upper arm basilic vein transposition) and 36825 (Creation of arteriovenous fistula by other than direct arteriovenous anastomosis (separate procedure); autogenous graft) to be potentially misvalued because these codes were last reviewed and valued for CY 2012 and the supporting documentation did not provide sufficient evidence to demonstrate that the codes should be reviewed as potentially misvalued for CY 2013 or CY 2014. The following is a summary of the comments we received in response to our proposal not to review CPT codes 36819 and 36825 as potentially misvalued codes.

Comment:

One commenter reiterated its belief that CPT codes 36819 and 36825 are potentially misvalued because the work RVUs finalized by CMS in CY 2012 place these services out of rank order with services that involve similar resources. To support this position, the commenter provided a list showing these services relative to all services with a similar global period, intra-service time, and work RVU. The commenter also restated the rationale previously submitted to CMS when it nominated these services as potentially misvalued. The commenter requested that CMS reconsider the work RVUs of these two services.

Response:

After reviewing the comments received and conducting a clinical review of CPT codes 36819 and 36825 alongside similar services, we agree with the commenter that these services may be out of rank order and are potentially misvalued. Therefore, we are modifying our proposal to not review CPT codes 36819 and 36825 as potentially misvalued codes. We will review CPT codes 36819 and 36825 along with their code families, which include CPT codes 36818 through 36821 and CPT codes 36825 through 36830, as potentially misvalued. We thank commenters for the additional supporting documentation provided, and request additional comments on the appropriate physician work and direct PE inputs for these services.

CPT code 53445 (Insertion of inflatable urethral/bladder neck sphincter, including placement of pump, reservoir, and cuff) was nominated for review as a potentially misvalued code. CPT code 53445 was identified through the site-of-service anomaly potentially misvalued code screen for CY 2008. We completed our review and established RVUs for this

code on an interim basis for CY 2012 subject to public comment. In the CY 2013 proposed rule, we stated that we would consider the supporting documentation submitted under the potentially misvalued code nomination process for CPT code 53445 as comments on the CY 2012 interim final value, and would address the comments in the CY 2013 PFS final rule with comment period when we address the final value of the CPT code. A summary of the comments received on CPT code 53445 and our response to those comments is included in section II.M.2 of this final rule with comment period.

CPT code 77336 (Continuing medical physics consultation, including assessment of treatment parameters, quality assurance of dose delivery, and review of patient treatment documentation in support of the radiation oncologist, reported per week of therapy) was nominated for review as a potentially misvalued code. The requestor stated that CPT code 77336 is misvalued because changes in the technique for furnishing continuing medical physics consultations have resulted in changes to the knowledge required, time, and effort expended, and complexity of technology associated with the tasks performed by the physicist and other staff. Additionally the requestor stated that the direct PE inputs no longer accurately reflect the resources used to deliver this service and may be undervalued. CPT code 77336 was last reviewed for CY 2003. In the CY 2013 proposed rule, we stated that after evaluating the detailed supporting information that the commenter provided, we believed there may have been changes in technology and other PE inputs since we last reviewed the service, and that further review is warranted. As such, we proposed to review CPT code 77336 as potentially misvalued and requested recommendations from the AMA RUC and other public commenters on the direct PE inputs for this service and for the other services within this family of CPT codes.

The following is a summary of the comments we received in response to our proposal to review CPT code 77336 as potentially misvalued.

Comment:

Commenters supported the CMS proposal to review CPT code 77336 and urged CMS to finalize it. The AMA RUC stated that it would review this service and provide recommendations to CMS on its valuation. Several commenters reiterated their rationale for why they believe CPT code 77336 is potentially misvalued and provided supporting documentation. Additionally, commenters indicated that the American Society for Physicists in Medicine (AAPM) would submit information on practice expense inputs and other data to support the revaluation of this CPT code, and expressed appreciation that CMS is willing to consider data and input from professional medical societies that do not participate in the AMA RUC process.

Response:

After reviewing the comments received, we continue to believe that changes in technology may have altered the direct practice expense inputs associated with CPT code 77336 and are finalizing our proposal to review this service as potentially misvalued. We thank commenters for the supporting documentation provided, and request additional comments on the appropriate direct PE inputs for this service, as well as any other services that may be within this family of CPT codes.

CPT code 94762 (Noninvasive ear or pulse oximetry for oxygen saturation; by continuous overnight monitoring (separate procedure)) was nominated for review as a potentially misvalued code. Requestors stated that CPT code 94762 is misvalued because the time currently allocated to the various direct PE inputs does not accurately reflect current practice. Requestors also stated that independent diagnostic testing facilities are not appropriately accounted for in the current indirect PE methodology. In the CY 2013 proposed rule, we stated that, in response to these stakeholder concerns, we reviewed the PE inputs for CPT code 94762, which was last reviewed for CY 2010. We believed that CPT code 94762 is misvalued, and we proposed changes to the PE inputs for CY 2013. We stated that, following clinical review, we believed that the current time allocated to clinical labor and supplies appropriately reflects current practice. However, we believed that 480 minutes (8 hours) of equipment time for the pulse oximetry recording slot and pulse oximeter with printer are more appropriate for this overnight monitoring procedure code. As such, we proposed this refinement to the direct PE inputs for CPT code 94762 for CY 2013. These proposed adjustments were reflected in the CY 2013 proposed direct PE input database, available on the CMS Web site under the downloads for the CY 2013 PFS final rule with comment period at

http://www.cms.gov/PhysicianFeeSched/

.

The following is a summary of the comments received regarding the proposed direct PE adjustments to CPT code 94762.

Comment:

Many commenters agreed with CMS' proposal to refine the equipment minutes for this service to 480 minutes. One commenter suggested that CMS should increase the proposed allocation of minutes to account for the time that the equipment is unavailable for use because the patient has yet to return it to the office.

Response:

We appreciate the support for the proposal. We believe that the appropriate allocation of minutes for the equipment is the sum of the times within the intra-service period when a clinician is using the piece of equipment, plus any additional time the piece of equipment is not available for use for another patient due to its use during the designated procedure. However, we also note that the equipment cost per minute calculation incorporates a utilization rate assumption that appropriately accounts for the time the equipment cannot be used because it is being transported to and from the office or between patients. Therefore, we are not revising our proposed adjustment to the equipment time.

Comment:

Several commenters supported the proposed allocation of minutes to the equipment and also submitted invoices and other evidence for updating the direct PE inputs for the service. The AMA RUC and others submitted information to update the pulse oximeter and the recording software used in the service. The information submitted by the AMA RUC reflects a pulse oximeter priced at $1,418 and recording software priced at $990. Other commenters submitted various disposable supplies that might be used to furnish the service, including varying types of batteries, oximeter cables, and wristbands that might be used when furnishing this service.

Response:

We appreciate the updated information furnished to us by stakeholders and other commenters. While we generally urge stakeholders to submit such price update requests through the process for updating supply and equipment prices we established for CY 2011, because we made a proposal specifically related to the equipment minutes allocated for this procedure, we believe it would be appropriate to consider the supplies and equipment price inputs associated with the service in conjunction with the proposal to change the equipment minutes. Based on the invoice information we received from commenters, we will update the price of the `pulse oximetry recording software (prolonged monitoring)' (EQ212) and include a new equipment item “Pulse Oximeter 920 M Plus” priced at $1,418 as equipment inputs for

the code. In reviewing the requested supply items to include, we believe that it would be appropriate to include 6 AA batteries (SK095) as a disposable supply for the service as well as incorporate a new item, a disposable oximeter cable, priced at $11.08.

Based on these comments and our clinical review, we are adopting these direct PE inputs, including our adjusted allocation of equipment minutes, on an interim basis for CY 2013. These values are reflected in the CY 2013 PFS direct PE input database available under downloads for the CY 2013 PFS final rule with comment period on the CMS Web site at:

http://www.cms.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage

. We also note that the PE RVUs included in Addenda B and C reflect these interim direct PE inputs.

In the CY 2013 proposed rule, we stated that we did not consider the nominated codes that were last reviewed and valued for CY 2012 to be potentially misvalued because the supporting documentation did not provide sufficient evidence to demonstrate that the codes should be reviewed as potentially misvalued for CY 2013 or CY 2014. The supporting documentation for these services generally mirrored the public comments previously submitted, to which CMS has already responded. Below is a summary of the comments we received in response to our proposal to not review the CPT codes listed above in Table 4 not discussed above.

Comment:

We received a few limited comments on the nominated codes not previously discussed above, however, like the code nominations, the comments and supporting documentation for these services mirrored the public comments previously submitted, to which CMS has already responded.

Response:

Having received no new information on the CPT codes listed in Table 4 not previously discussed, we are finalizing our proposal not to review those services as potentially misvalued.

b. Potentially Misvalued Code Lists

As mentioned above, in the last several annual PFS proposed rules we have identified lists of potentially misvalued codes for review. We believe it is imperative that we continue to identify new lists of potentially misvalued codes for review to appropriately identify, review, and adjust values for potentially misvalued codes for CY 2013.

(1) Review of Harvard-Valued Services With Medicare Allowed Charges of $10,000,000 or More

For many years, we have been reviewing `Harvard-valued' CPT codes through the potentially misvalued code initiative. The RVUs for Harvard-valued CPT codes have not been reviewed since they were originally valued in the early 1990s at the beginning of the PFS. While the principles underlying the relative value scale have not changed, over time the methodologies we use for valuing services on the PFS have changed, potentially disrupting the relativity between the remaining Harvard-valued codes and other codes on the PFS. At this time, nearly all CPT codes that were Harvard-valued and had Medicare utilization of over 30,000 allowed services per year have been reviewed. In the CY 2013 PFS proposed rule, we proposed to review Harvard-valued services with annual Medicare allowed charges of $10 million or greater. The CPT codes meeting these criteria have relatively low Medicare utilization (as we have reviewed the services with utilization over 30,000), but account for significant Medicare spending annually and have never been reviewed. In the CY 2013 proposed rule, we noted that several of the CPT codes meeting these criteria have already been identified as potentially misvalued through other screens and were scheduled for review for CY 2013. We also recognized that other codes meeting these criteria had been referred by the AMA RUC to the CPT Editorial Panel. We stated that, in these cases, we were not proposing re-review of these already identified services, but for the sake of completeness, we included those codes as a part of this category of potentially misvalued services. In our proposal, we recognized that the relatively low Medicare utilization for these services may make gathering information on the appropriate physician work and direct PE inputs difficult. We requested recommendations from the AMA RUC and other public commenters, and stated that we appreciate efforts expended to provide RVU and input recommendations to CMS for these lower volume services. Because survey sample sizes could be small for these lower volume services, we encouraged the use of valid and reliable alternative data sources and methodologies when developing recommended values. In sum, we proposed to review Harvard-valued CPT codes with annual allowed charges of $10 million or more as a part of the potentially misvalued codes initiative. In the CY 2013 proposed rule, we stated that the following codes met the criteria for this screen and proposed to review these CPT codes as potentially misvalued services.

Table 5—Proposed Harvard-Valued CPT Codes With Annual Allowed Charges ≥$10,000,000

CPT Code

Short descriptor

13152 *

Repair of wound or lesion.

27446

Revision of knee joint.

29823

Shoulder arthroscopy/surgery.

36215 **

Place catheter in artery.

36245 **

Ins cath abd/l-ext art 1st.

43264 **

Endo cholangiopancreatograph.

50360

Transplantation of kidney.

52353 *

Cystouretero w/lithotripsy.

64450 *

N block other peripheral.

64590

Insrt/redo pn/gastr stimul.

66180

Implant eye shunt.

67036

Removal of inner eye fluid.

67917

Repair eyelid defect.

92286 **

Internal eye photography.

92982 *

Coronary artery dilation.

95860 *

Muscle test one limb.

* Scheduled for CY 2012 AMA RUC Review.

** Referred by the AMA RUC to the CPT Editorial Panel.

The following is summary of the comments we received in response to our proposal to review Harvard-valued CPT codes with annual allowed charges of $10 million or more as a part of the potentially misvalued codes initiative.

Comment:

Comments on this proposal were specific to the CPT codes we proposed to review under this potentially misvalued code screen. A few commenters noted that CPT code 64590 (Insertion or replacement of peripheral or gastric neurostimulator pulse generator or receiver, direct or inductive coupling) does not have annual allowed charges that meet the threshold of $10 million and stated that the code should be removed from the list. These commenters requested that CMS reexamine this list to ensure all codes meet the specified criteria. Other commenters pointed out that certain codes on the list are already scheduled for review by the medical specialty societies and the AMA RUC, and that some codes are scheduled for deletion by the CPT Editorial Panel. The AMA RUC stated that it would discuss the list of codes that meet the criteria for this screen and would determine the next steps in the AMA RUC's review of these services.

Response:

After reviewing the comments received, and reexamining the Medicare claims data, we agree with commenters that CPT code 64590 does not have annual Medicare allowed charges of $10 million or greater, nor do CPT codes 29823 (Arthroscopy,

shoulder, surgical; debridement, extensive) and 95860 (Needle electromyography; 1 extremity with or without related paraspinal areas). In compiling the list, we inadvertently included allowed charges incurred in the ambulatory surgical center setting. We thank commenters for bringing this to our attention. Therefore, we have removed these three services from the proposed list of CPT codes that are Harvard-value with annual allowed charges of $10 million or greater.

In the CY 2013 proposed rule, we noted that several codes that met the criteria for this potentially misvalued code screen were currently under review for CY 2013 and others were scheduled for review by the CPT Editorial Panel. CPT codes 13152 (Repair, complex, eyelids, nose, ears and/or lips; 2.6 cm to 7.5 cm), 52353 (Cystourethroscopy, with ureteroscopy and/or pyeloscopy; with lithotripsy (ureteral catheterization is included)), 64450 (Injection, anesthetic agent; other peripheral nerve or branch), 92286 (Special anterior segment photography with interpretation and report; with specular endothelial microscopy and cell count), and 95860 (Needle electromyography; 1 extremity with or without related paraspinal areas) were reviewed for CY 2013. A discussion of the interim final values for those services is in section III.M.3. of this final rule with comment period. CPT code 92982 (Percutaneous transluminal coronary balloon angioplasty; single vessel) has been deleted by the CPT Editorial Panel for CY 2013. We have updated the list of CPT codes meeting this potentially misvalued code screen to show the review status of the codes, and to remove the three CPT codes mentioned above that do not meet the parameters of the screen. We are finalizing the list of Harvard-valued CPT codes with annual allowed charges of $10 million or more in Table 6, and for CY 2014, we will review the services not already reviewed. We request public comments on the appropriate work RVUs and direct practice expense inputs for these services.

Table 6—Harvard-Valued CPT Codes With Annual Allowed Charges ≥$10,000,000

CPT code

Short descriptor

Review status

13152

Repair of wound or lesion

Interim Final for CY 2013.

27446

Revision of knee joint

Review for CY 2014.

36215

Place catheter in artery

Review for CY 2014.

36245

Ins cath abd/l-ext art 1st

Review for CY 2014.

43264

Endo cholangiopan

This text is long and has been trimmed here. Open the source document for the complete record.