Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to Part B for CY 2014

Federal RegisterJul 19, 2013

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 410, 411, 414, 423, and 425

[CMS-1600-P]

RIN 0938-AR56

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, Clinical Laboratory Fee Schedule & Other Revisions to Part B for CY 2014

AGENCY:

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

ACTION:

Proposed rule.

SUMMARY:

This major proposed rule addresses changes to the physician fee schedule 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, as well as changes in the statute.

DATES:

Comment date:

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on September 6, 2013.

ADDRESSES:

In commenting, please refer to file code CMS-1600-P. 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):

Electronically.

You may submit electronic comments on this regulation to

http://www.regulations.gov

. Follow the instructions for “submitting a comment.”

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-1600-P, P.O. Box 8016, Baltimore, MD 21244-8016.

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

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-1600-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

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:

Chava Sheffield, (410) 786-2298, for issues related to practice expense methodology and impacts.

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

Joanna Baldwin, (410) 786-7205, for issues related to misvalued services.

Ken Marsalek, (410) 786-4502, for issues related to the multiple procedure payment reduction.

Heidi Oumarou, (410) 786-7942, for issues related to the revision of Medicare Economic Index (MEI).

Roberta Epps, (410) 786-4503, for issues related to chiropractors billing for evaluation and management services.

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

Simone Dennis, (410) 786-8409, for issues related to therapy caps.

Darlene Fleischmann, (410) 786-2357, for issues related to “incident to” services.

Corinne Axelrod, (410) 786-5620, for issues related to “incident to” services in Rural Health Center s or Federally Qualified Health Centers.

Anne Tayloe-Hauswald, (410) 786-4546, for issues related to ambulance fee schedule and clinical lab fee schedule.

Sandra Adams, (410) 786-2982, for issues related to Medicare shared savings program.

Rashaan Byers, (410) 786-2305, for issues related to physician compare.

Christine Estella, (410) 786-0485, for issues related to the physician quality reporting system and EHR incentive program.

Ronke Fabayo, (410) 786-4460 or Jay Blake, (410) 786-9371, for issues related to individual liability for payments made to providers and suppliers and handling of incorrect payments.

Rosemarie Hakim, (410) 786-3934, for issues related to coverage of items and services furnished in FDA-approved investigational device exemption clinical trials.

Jamie Hermansen, (410) 786-2064 or Jyme Schafer, (410) 786-4643, for issues related to ultrasound screening for abdominal aortic aneurysms.

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

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

Michael Wrobleswki, (410) 786-4465, for issues related to value-based modifier and improvements to physician feedback.

Elliot Isaac, (410) 786-4735, for malpractice RVUs and for any physician payment issue not identified above.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments:

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

http://www.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

I. Executive Summary and Background

A. Executive Summary

B. Background

II. Provisions of the Proposed Rule for PFS

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

B. Misvalued Codes

1. Valuing Services Under the PFS

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

3. CY 2014 Identification and Review of Potentially Misvalued Services

4. The Multiple Procedure Payment Reduction Policy

C. Malpractice RVUs

D. Medicare Economic Index (MEI)

E. Geographic Practice Cost Indices (GPCIs)

F. Medicare Telehealth Services for the Physician Fee Schedule

G. Therapy Caps

H. Requirements for Billing “Incident To” Services

I. Complex Chronic Care Management Services

J. Chiropractors Billing for Evaluation & Management Services

III. Other Provisions of the Proposed Regulations

A. Medicare Coverage of Items and Services in FDA Investigational Device Exemption Clinical Studies—Revision of Medicare Coverage

B. Ultrasound Screening for Abdominal Aortic Aneurysms

C. Colorectal Cancer Screening: Modification to Coverage of Screening Fecal Occult Blood Tests

D. Ambulance Fee Schedule

E. Proposals Regarding the Clinical Laboratory Fee Schedule

F. Liability for Overpayments to or on Behalf of Individuals Including Payments to Providers or Other Persons

G. Physician Compare Web Site

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

I. Electronic Health Record (EHR) Incentive Program

J. Medicare Shared Savings Program

K. Value-Based Payment Modifier and Physician Feedback Program

L. Updating Existing Standards for E-Prescribing Under Medicare Part D

M. Discussion of Budget Neutrality for the Chiropractic Services Demonstration

IV. Collection of Information Requirements

V. Response to Comments

VI. Regulatory Impact Analysis

Regulatory Text

Acronyms

In addition, because of the many organizations and terms to which we refer by acronym in this proposed rule, we are listing these acronyms and their corresponding terms in alphabetical order below:

AMA RUC American Medical Association/[Specialty Society] Relative [Value] Update Committee

ATRA American Taxpayer Relief Act (Pub. L. 112-240)

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)

CAH Critical access hospital

CF Conversion factor

CPT [Physicians] Current Procedural Terminology (

)

CY Calendar year

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

eRx Electronic prescribing

FFS Fee-for-service

Federal Register

GPCI Geographic practice cost index

HCPCS Healthcare Common Procedure Coding System

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

MedPAC Medicare Payment Advisory Commission

MEI Medicare Economic Index

MFP Multi-Factor Productivity

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

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

MP Malpractice

MPPR Multiple procedure payment reduction

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

MMSEA Medicare, Medicaid, and State Children's Health Insurance Program Extension Act (Pub. L. 110-73)

NPP Nonphysician practitioner

OBRA '89 Omnibus Budget Reconciliation Act of 1989

OBRA '90 Omnibus Budget Reconciliation Act of 1990

PC Professional component

PE Practice expense

PE/HR Practice expense per hour

PFS Physician Fee Schedule

PQRS Physician Quality Reporting System

RFA Regulatory Flexibility Act

RIA Regulatory impact analysis

RVU Relative value unit

SGR Sustainable growth rate

TAP Technical Advisory Panel

TC Technical component

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

VBP Value-based purchasing

Addenda Available Only Through the Internet on the CMS Web Site

The PFS Addenda along with other supporting documents and tables referenced in this proposed rule with comment period are available through the Internet on the CMS Web site at

http://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 2014 PFS proposed rule, refer to item CMS-1600-P. Readers who experience any problems accessing any of the Addenda or other documents referenced in this proposed rule and posted on the CMS Web site identified above should contact Elliot Isaac at (410) 786-4735.

CPT (Current Procedural Terminology) Copyright Notice

Throughout this proposed rule, 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 proposed rule would revise payment polices under the Medicare Physician Fee Schedule (PFS) and make other policy changes related to Medicare Part B payment. These changes would be applicable to services furnished in CY 2014.

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) that account for the relative resources used in furnishing a service. The Act requires that RVUs be established for three categories of resources: work, practice expense (PE); and malpractice (MP) expense; and that we establish by regulation each year payment amounts for all physicians' services, incorporating geographic adjustments to reflect the variations in the costs of furnishing services in different geographic areas. In this major proposed rule, we propose RVUs for CY 2014 for the PFS 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, as well as changes in the statute. In addition, this proposed rule includes discussions and proposals regarding:

• Misvalued PFS Codes.

• Telehealth Services.

• Applying Therapy Caps to Outpatient Therapy Services Furnished by CAHs.

• Requiring the Compliance with State law as a Condition of Payment for Services Furnished Incident to Physician and Other Practitioner Services.

• Revising the MEI based on MEI TAP Recommendations.

• Updating the Ambulance Fee Schedule regulations.

• Updating the—

++ Physician Compare Web site.

++ Physician Quality Reporting System.

++ Electronic Health Record (EHR) Incentive Program.

++ Medicare Shared Savings Program.

• Budget Neutrality for the Chiropractic Services Demonstration.

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

3. Summary of Costs and Benefits

The Act requires that annual adjustments to PFS 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. These adjustments can affect the distribution of Medicare expenditures across specialties. In addition, several proposed changes would affect the specialty distribution of Medicare expenditures. For most specialties the projected impacts are a small percentage change in Medicare payments under the PFS. For a few specialties a larger impact is projected. Diagnostic Testing Facilities, Independent Laboratory, Pathology, Radiation Oncology, and Radiation Therapy Centers are projected to have a change of 5 percent or more.

B. Background

Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Act, “Payment for Physicians' Services.” The system relies on national relative values that are established for work, PE, and MP, which are then adjusted for geographic cost variations. These values are multiplied by a conversion factor (CF) to convert the RVUs into payment rates. The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act of 1989 (OBRA '89) (Pub. L. 101-239, enacted on December 19, 1989), and the Omnibus Budget Reconciliation Act of 1990 (OBRA '90 (Pub. L. 101-508, enacted on November 5, 1990). The final rule published on November 25, 1991 (56 FR 59502) set forth the first fee schedule used for payment for physicians' services.

We note that throughout this proposed rule, unless otherwise noted, the term “practitioner” is used to describe both physicians and nonphysician practitioners who are permitted to bill Medicare under the PFS for services furnished to Medicare beneficiaries.

1. Development of the Relative Values

a. Work RVUs

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 under a cooperative agreement with the Department of Health and Human Services (HHS). In constructing the code-specific vignettes used in determining 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.

We establish 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 RVUs

Initially, only the work RVUs were resource-based, and the PE and MP RVUs were based on average allowable charges. Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 103-432, enacted on October 31, 1994), amended section 1848(c)(2)(C)(ii) of the Act and required us to develop resource-based PE RVUs for each physicians' service beginning in 1998. We were required to consider general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising PEs. Originally, this new method was to be used beginning in 1998, but section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted on August 5, 1997) delayed implementation of the resource-based PE RVU system until January 1, 1999. In addition, section 4505(b) of the BBA provided for a 4-year transition period from the charge-based PE RVUs to the resource-based PE RVUs.

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 CY 1999. Based on the requirement to transition to a resource-based system for PE over a 4-year period, payment rates were not fully based upon resource-based PE RVUs until CY 2002. This resource-based system was based on two significant sources of actual PE data: the Clinical Practice Expert Panel (CPEP) data and the AMA's Socioeconomic Monitoring System (SMS) data. (These data sources are described in greater detail in the CY 2012 final rule with comment period (76 FR 73033).)

Separate PE RVUs are established for services furnished in facility settings, such as a hospital outpatient department (HOPD) or an ambulatory surgical center (ASC), and in nonfacility settings, such as a physician's office. The nonfacility RVUs reflect all of the direct and indirect PEs involved in furnishing a service described by a particular HCPCS code. The difference, if any, in these PE RVUs generally results in a higher payment in the nonfacility setting because in the facility settings some costs are borne by the facility. Medicare's payment to the facility (such as the OPPS payment to the HOPD) would reflect costs typically incurred by the facility. Thus, payment associated with those facility resources is not made under the PFS.

Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113, enacted on November 29, 1999) directed the Secretary of Health and Human Services (the Secretary) to establish a process under which we accept and use, to the maximum extent practicable and consistent with sound data practices, data collected or developed by entities and organizations to supplement the data we normally collect in determining the PE component. On May 3, 2000, we published the interim final rule (65 FR 25664) that set forth the criteria for the submission of these supplemental PE survey data. The criteria were modified in response to comments received, and published in the

Federal Register

(65 FR 65376) as part of a November 1, 2000 final rule. The PFS final rules published in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended the period during which we would accept these supplemental data 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 for CY 2010. 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). In CY 2010, we began a 4-year

transition to the new PE RVUs using the updated PE/HR data, which was completed for CY 2013.

c. Malpractice RVUs

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

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 periodic reviews of work RVUs and PE RVUs independently. We completed Five-Year Reviews of Work RVUs that were effective for calendar years 1997, 2002, 2007, and 2012.

While refinements to the direct PE inputs initially relied heavily on input from the AMA RUC Practice Expense Advisory Committee (PEAC), the shifts to the bottom-up PE methodology in CY 2007 and to the use of the updated PE/HR data in CY 2010 have resulted in significant refinements to the PE RVUs in recent years.

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.

With regard to MP RVUs, we completed Five-Year Reviews of MP that were effective in CY 2005 and 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 seven specific categories (see section II.B.2. of this proposed rule).

e. Application of Budget Neutrality to Adjustments of RVUs

As described in section VI.C.1. of this proposed rule, in accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if revisions to the RVUs would cause expenditures for the year 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. Calculation of Payments Based on RVUs

To calculate the payment for each physicians' service, the components of the fee schedule (work, PE, and MP RVUs) are adjusted by geographic practice cost indices (GPCIs) to reflect the variations in the costs of furnishing the services. The GPCIs reflect the relative costs of physician work, PE, and MP in an area compared to the national average costs for each component. (See section II.E.2 of this proposed rule for more information about GPCIs.)

RVUs are converted to dollar amounts through the application of a CF, which is calculated based on a statutory formula by CMS's Office of the Actuary (OACT). The CF for a given year is calculated using (a) the productivity-adjusted increase in the Medicare Economic Index (MEI) and (b) the Update Adjustment Factor (UAF), which is calculated by taking into account the Medicare Sustainable Growth Rate (SGR), an annual growth rate intended to control growth in aggregate Medicare expenditures for physicians' services, and the allowed and actual expenditures for physicians' services. A more detailed discussion of the calculation of the CF, the SGR, and the MEI appears in the PFS final rule with comment period for each calendar year (the most recent begins on 77 FR 69131).

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 MP × GPCI MP)] × CF

3. Separate Fee Schedule Methodology for Anesthesia Services

Section 1848(b)(2)(B) of the Act specifies that the fee schedule amounts for anesthesia services are to be based on a uniform relative value guide, with appropriate adjustment of an anesthesia conversion factor, in a manner to assure that fee schedule amounts for anesthesia services are consistent with those for other services of comparable value. Therefore, there is a separate fee schedule methodology for anesthesia services. Specifically, we establish a separate conversion factor for anesthesia services and we utilize the uniform relative value guide, or base units, as well as time units, to calculate the fee schedule amounts for anesthesia services. Since anesthesia services are not valued using RVUs, a separate methodology for locality adjustments is also necessary. This involves an adjustment to the national anesthesia CF for each payment locality.

4. Most Recent Changes to the Fee Schedule

The CY 2013 PFS final rule with comment period (77 FR 68892) implemented changes to the PFS and other Medicare Part B payment policies. It also finalized many of the CY 2012 interim RVUs and established interim RVUs for new and revised codes for CY 2013 to ensure that our payment system is updated to reflect changes in medical practice, coding changes, and the relative values of services. It also implemented certain statutory provisions including provisions of the Affordable Care Act (Pub. L. 111-148) and the Middle Class Tax Relief and Jobs Creation Act (MCTRJCA) (Pub. L. 112-96), including claims-based data reporting requirements for therapy services.

In the CY 2013 PFS final rule with comment period, we announced the following for CY 2013: The total PFS update of -26.5 percent; the initial estimate for the sustainable growth rate (SGR) of -19.7 percent; and the CY 2013 CF of $25.0008. These figures were calculated based on the statutory provisions in effect on November 1, 2012, when the CY 2013 PFS final rule with comment period was issued.

On January 2, 2013, the American Taxpayer Relief Act (ATRA) of 2012 (Pub. L. 112-240) was signed into law. Section 601(a) of the ATRA specified a zero percent update to the PFS CF for CY 2013. As a result, the CY 2013 PFS conversion factor was revised to $34.0320. In addition, the ATRA extended and added several provisions affecting Medicare services furnished in CY 2013, including:

• Section 602—extending the 1.0 floor on the work geographic practice cost index through CY 2013;

• Section 603—extending the exceptions process for outpatient therapy caps through CY 2013, extending the application of the cap and manual medical review threshold to services furnished in the hospital outpatient department (OPD) through CY 2013, and requiring the counting of a proxy amount for therapy services

furnished in a Critical Access Hospital (CAH) toward the cap and threshold during CY 2013.

In addition to the changes effective for CY 2013, section 635 of ATRA revised the equipment utilization rate assumption for advanced imaging services furnished on or after January 1, 2014.

On March 5, 2013, we submitted to the Medicare Payment Advisory Committee (MedPAC) an estimate of the SGR and CF applicable to Medicare payments for physicians' services for CY 2014, as required by section 1848(d)(1)(E) of the Act. The actual values used to compute physician payments for CY 2014 will be based on later data and are scheduled to be published by November 1, 2013 as part of the CY 2014 PFS final rule with comment period.

II. Provisions of the Proposed Rule for PFS

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

1. Overview

Practice expense (PE) is the portion of the resources used in furnishing a 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 determine the direct PE for a specific service by adding the costs of the direct resources (that is, the clinical staff, equipment, and supplies) typically involved with furnishing that 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 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). The PPIS is a multispecialty, nationally representative, PE survey of both physicians and nonphysician practitioners (NPPs) paid under the PFS using a 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 health care professional groups. We believe the PPIS is the most comprehensive source of PE survey information available. 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 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 transitioned its use over a 4-year period (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. As provided in the CY 2010 PFS final rule with comment period (74 FR 61751), the transition to the PPIS data was complete in CY 2013. Therefore, the CY 2014 PE RVUs are developed based entirely on the PPIS data, except as noted in this section.

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 survey data.

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 these specialties were updated to CY 2006 using the MEI to put them on a comparable basis with the PPIS data.

We also 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 the PPIS data with Medicare-recognized specialty data.

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 the specialty code was only available beginning in October 1, 2012. We anticipate using the PPIS data to create PE/HR for sleep medicine for CY 2015 when we will have a full year of data to make the calculations.

Previously, we 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 used 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 with respect to 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).

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 each of 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 proposed rule 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. In other words, the initial indirect allocator is calculated so that the direct costs equal the average percentage of direct costs of those specialties furnishing the service. For example, if the direct portion of the PE RVUs for a given service is 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 calculated so that it equals 75 percent of the total PE RVUs. Thus, in this example the initial indirect allocator would equal 6.00, resulting in a total PE RVUs of 8.00 (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 4.00 (since the 4.00 work RVUs are greater than the 1.50 clinical labor portion) to the initial indirect allocator of 6.00 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 incorporate the specialty-specific indirect PE/HR data into the calculation. In our example, if 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, 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 in calculating the PE RVUs for services furnished in a facility, we do not include resources that would generally not be provided by physicians when furnishing the service in a facility, the facility PE RVUs are generally lower than the nonfacility PE RVUs. Medicare makes a separate payment to the facility for its costs of furnishing a service.

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). The PC and TC 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 service 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 service, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expenses to the global service, 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 calculated 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. For CY 2014, we adjusted the direct cost pool to match the new PE share of the MEI, as discussed in section II.D. of this rule.

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 service.

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 5, 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 RVU, clinical labor PE RVU, 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. For CY 2014, we adjusted the indirect cost pool to match the new PE share of the MEI, as discussed in section II.D. of this rule.

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 service, 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 service.)

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 and the MEI revision adjustment.

The final PE BN adjustment is calculated by comparing the results of Step 18 to the current pool of PE RVUs (prior to the MEI revision adjustment and the OPPS/ASC cap redistribution). This final BN adjustment is required 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.) As discussed in section II.D. of this proposed rule, we are revising the Medicare Economic Index (MEI) for CY 2014.

Step 19:

Consistent with the proposed policy addressed in section II.A.4. of this proposed rule, apply the OPPS/ASC cap to codes subject to the cap and redistribute the RVU reduction to the PE RVUs for all other services.

(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

Ambulatory surgical center.

Nurse practitioner.

Medical supply company with certified orthotist.

Medical supply company with certified prosthetist.

Medical supply company with certified prosthetist-orthotist.

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

Individual certified orthotist.

Individual certified prosthestist.

Individual certified prosthetist-orthotist.

Individuals not included in 55, 56, or 57.

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

Public health or welfare agencies.

Voluntary health or charitable agencies.

Mass immunization roster biller.

Radiation therapy centers.

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

Unknown supplier/provider specialty.

Certified clinical nurse specialist.

Competitive Acquisition Program (CAP) Vendor.

Optician.

Physician assistant.

Hospital.

SNF.

Intermediate care nursing facility.

Nursing facility, other.

HHA.

Pharmacy.

Medical supply company with respiratory therapist.

Department store.

Supplier of oxygen and/or oxygen related equipment.

Pedorthic personnel.

Medical supply company with pedorthic personnel.

•

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 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.

Assistant at Surgery—Physician Assistant

14% (85% * 16%)

Intraoperative portion.

50 or LT and RT

Bilateral Surgery

150%

150% of physician time.

Multiple Procedure

50%

Intraoperative portion.

Reduced Services

50%

50%.

Discontinued Procedure

50%

50%.

Intraoperative Care only

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

Preoperative + Intraoperative portion.

Postoperative Care only

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

Postoperative portion.

Co-surgeons

62.5%

50%.

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). 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 BN 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 adjustments. A time adjustment of 33 percent is made only for medical direction of two to four cases since that is the only situation where time units are duplicative.

•

Work RVUs:

The setup file contains the work RVUs from this proposed 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 = variable, see discussion below.

price = price of the particular piece of equipment.

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

maintenance = factor for maintenance; 0.05.

interest rate = variable, see discussion below.

Usage:

We currently use an equipment utilization rate assumption of 50 percent for most equipment, with the exception of expensive diagnostic imaging equipment. For expensive diagnostic imaging equipment, which is equipment priced at over $1 million (for example, computed tomography (CT) and magnetic resonance imaging (MRI) scanners), we use an equipment utilization rate assumption of 75 percent. Section 1848(b)(4)(C) of the Act, as modified by section 635 of the America Taxpayer Relief Act of 2012 (Pub. L. 112-240, enacted on January 2, 2013) (ATRA), requires that for fee schedules established for CY 2014 and subsequent years, in the methodology for determining PE RVUs for expensive diagnostic imaging equipment, the Secretary shall use a 90 percent assumption. The provision also requires that the reduced expenditures attributable to this change in the utilization rate for CY 2014 and subsequent years shall not be taken into account when applying the BN limitation on annual adjustments described in section 1848(c)(2)(B)(ii)(II) of the Act. We are applying the 90 percent utilization rate assumption in CY 2014 to all of the services to which the 75 percent equipment utilization rate assumption applied in CY 2013. These services are listed in a file called “CY 2014 CPT Codes Subject to 90 Percent Usage Rate,” available on the CMS Web site under downloads for the CY 2014 PFS proposed rule at

http://www.cms.gov/physicianfeesched/downloads/

. These codes are also displayed in Table 3.

Table 3—CPT Codes Subject to 90 Percent Equipment Utilization Rate Assumption

CPT code

Short descriptor

70336

Mri, temporomandibular joint(s).

70450

Ct head/brain w/o dye.

70460

Ct head/brain w/dye.

70470

Ct head/brain w/o & w/dye.

70480

Ct orbit/ear/fossa w/o dye.

70481

Ct orbit/ear/fossa w/dye.

70482

Ct orbit/ear/fossa w/o & w/dye.

70486

Ct maxillofacial w/o dye.

70487

Ct maxillofacial w/dye.

70488

Ct maxillofacial w/o & w/dye.

70490

Ct soft tissue neck w/o dye.

70491

Ct soft tissue neck w/dye.

70492

Ct soft tissue neck w/o & w/dye.

70496

Ct angiography, head.

70498

Ct angiography, neck.

70540

Mri orbit/face/neck w/o dye.

70542

Mri orbit/face/neck w/dye.

70543

Mri orbit/face/neck w/o & w/dye.

70544

Mr angiography head w/o dye.

70545

Mr angiography head w/dye.

70546

Mr angiography head w/o & w/dye.

70547

Mr angiography neck w/o dye.

70548

Mr angiography neck w/dye.

70549

Mr angiography neck w/o & w/dye.

70551

Mri brain w/o dye.

70552

Mri brain w/dye.

70553

Mri brain w/o & w/dye.

70554

Fmri brain by tech.

71250

Ct thorax w/o dye.

71260

Ct thorax w/dye.

71270

Ct thorax w/o & w/dye.

71275

Ct angiography, chest.

71550

Mri chest w/o dye.

71551

Mri chest w/dye.

71552

Mri chest w/o & w/dye.

71555

Mri angio chest w/or w/o dye.

72125

CT neck spine w/o dye.

72126

Ct neck spine w/dye.

72127

Ct neck spine w/o & w/dye.

72128

Ct chest spine w/o dye.

72129

Ct chest spine w/dye.

72130

Ct chest spine w/o & w/dye.

72131

Ct lumbar spine w/o dye.

72132

Ct lumbar spine w/dye.

72133

Ct lumbar spine w/o & w/dye.

72141

Mri neck spine w/o dye.

72142

Mri neck spine w/dye.

72146

Mri chest spine w/o dye.

72147

Mri chest spine w/dye.

72148

Mri lumbar spine w/o dye.

72149

Mri lumbar spine w/dye.

72156

Mri neck spine w/o & w/dye.

72157

Mri chest spine w/o & w/dye.

72158

Mri lumbar spine w/o & w/dye.

72159

Mr angio spone w/o&w/dye.

72191

Ct angiography, pelv w/o & w/dye.

72192

Ct pelvis w/o dye.

72193

Ct pelvis w/dye.

72194

Ct pelvis w/o & w/dye.

72195

Mri pelvis w/o dye.

72196

Mri pelvis w/dye.

72197

Mri pelvis w/o &w/dye.

72198

Mri angio pelvis w/or w/o dye.

73200

Ct upper extremity w/o dye.

73201

Ct upper extremity w/dye.

73202

Ct upper extremity w/o & w/dye.

73206

Ct angio upper extr w/o & w/dye.

73218

Mri upper extr w/o dye.

73219

Mri upper extr w/dye.

73220

Mri upper extremity w/o & w/dye.

73221

Mri joint upper extr w/o dye.

73222

Mri joint upper extr w/dye.

73223

Mri joint upper extr w/o & w/dye.

73225

Mr angio upr extr w/o&w/dye.

73700

Ct lower extremity w/o dye.

73701

Ct lower extremity w/dye.

73702

Ct lower extremity w/o & w/dye.

73706

Ct angio lower ext w/o & w/dye.

73718

Mri lower extremity w/o dye.

73719

Mri lower extremity w/dye.

73720

Mri lower ext w/& w/o dye.

73721

Mri joint of lwr extre w/o dye.

73722

Mri joint of lwr extr w/dye.

73723

Mri joint of lwr extr w/o & w/dye.

73725

Mr angio lower ext w or w/o dye.

74150

Ct abdomen w/o dye.

74160

Ct abdomen w/dye.

74170

Ct abdomen w/o & w/dye.

74174

Ct angiography, abdomen and pelvis w/o & w/dye.

74175

Ct angiography, abdom w/o & w/dye.

74176

Ct abdomen and pelvis w/o dye.

74177

Ct abdomen and pelvis w/dye.

74178

Ct abdomen and pelvis w/and w/o dye.

74181

Mri abdomen w/o dye.

74182

Mri abdomen w/dye.

74183

Mri abdomen w/o and w/dye.

74185

Mri angio, abdom w/or w/o dye.

74261

Ct colonography, w/o dye.

74262

Ct colonography, w/dye.

75557

Cardiac mri for morph.

75559

Cardiac mri w/stress img.

75561

Cardiac mri for morph w/dye.

75563

Cardiac mri w/stress img & dye.

75565

Card mri vel flw map add-on.

75571

Ct hrt w/o dye w/ca test.

75572

Ct hrt w/3d image.

75573

Ct hrt w/3d image, congen.

75574

Ct angio hrt w/3d image.

75635

Ct angio abdominal arteries.

76380

CAT scan follow up study.

77058

Mri, one breast.

77059

Mri, broth breasts.

77078

Ct bone density, axial.

77084

Magnetic image, bone marrow.

Interest Rate:

In the CY 2013 final rule with comment period (77 FR 68902), we updated the interest rates used in developing an equipment cost per minute calculation. The interest rate was based on the Small Business Administration (SBA) maximum interest rates for different categories of loan size (equipment cost) and maturity (useful life). The interest rates are listed in Table 4. See 77 FR 68902 for a thorough discussion of this issue.

Table 4—SBA Maximum Interest Rates

Price

Useful life

Interest rate

(percent)

<$25K

<7 Years

7.50

$25K to $50K

<7 Years

6.50

>$50K

<7 Years

5.50

<$25K

7+ Years

8.00

$25K to $50K

7+ Years

7.00

>$50K

7+ Years

6.00

See 77 FR 68902 for a thorough discussion of this issue.

Table 5—Calculation of PE RVUs Under Methodology for Selected Codes

Step

Source

Formula

99213 Office visit, est non-facility

33533 CABG, arterial, single facility

71020 Chest x-ray non-facility

71020-TC Chest x-ray non-facility

71020-26 Chest x-ray non-facility

93000 ECG, complete non-facility

93005 ECG, tracing non-facility

93010 ECG, report non-facility

(1) Labor cost (Lab)

Step 1

AMA

13.32

77.52

5.74

0.00

6.12

0.00

(2) Supply cost (Sup)

Step 1

AMA

2.98

0.00

3.39

0.00

1.19

0.00

(3) Equipment cost (Eqp)

Step 1

AMA

0.17

0.58

7.24

0.00

0.11

0.00

(4) Direct cost (Dir)

Step 1

=(1)+(2)+(3)

16.48

78.10

16.38

0.00

7.42

0.00

(5) Direct adjustment (Dir. Adj.)

Steps 2-4

See footnote*

0.5427

(6) Adjusted Labor

Steps 2-4

=Labor * Dir Adj

=(1)*(5)

7.23

42.07

3.11

0.00

3.32

0.00

(7) Adjusted Supplies

Steps 2-4

=Eqp * Dir Adj

=(2)*(5)

1.62

0.00

1.84

0.00

0.65

0.00

(8) Adjusted Equipment

Steps 2-4

=Sup * Dir Adj

=(3)*(5)

0.09

0.32

3.93

0.00

0.06

0.00

(9) Adjusted Direct

Steps 2-4

=(6)+(7)+(8)

8.94

42.39

8.89

0.00

4.03

0.00

(10) Conversion Factor (CF)

Step 5

PFS

34.0230

(11) Adj. labor cost converted

Step 5

=(Lab * Dir Adj)/CF

=(6)/(10)

0.21

1.24

0.09

0.00

0.10

0.00

(12) Adj. supply cost converted

Step 5

=(Sup * Dir Adj)/CF

=(7)/(10)

0.05

0.00

0.05

0.00

0.02

0.00

(13) Adj. equipment cost converted

Step 5

=(Eqp * Dir Adj)/CF

=(8)/(10)

0.00

0.01

0.12

0.00

(14) Adj. direct cost converted

Step 5

=(11)+(12)+(13)

0.26

1.25

0.26

0.00

0.12

0.00

(15) Work RVU

Setup File

PFS

0.97

33.75

0.22

0.00

0.22

0.17

0.00

0.17

(16) Dir_pct

Steps 6,7

Surveys

0.31

0.18

0.31

(17) Ind_pct

Steps 6,7

Surveys

0.69

0.82

0.69

(18) Ind. Alloc. Formula (1st part)

Step 8

See Step 8

((14)/(16)*(17)

(19) Ind. Alloc.(1st part)

Step 8

See 18

0.79

5.87

0.64

0.00

0.29

0.00

(20) Ind. Alloc. Formula (2nd part)

Step 8

See Step 8

(15)

(15+11)

(11)

(15)

(15+11)

(11)

(15)

(21) Ind. Alloc.(2nd part)

Step 8

See 20

0.97

33.75

0.31

0.09

0.22

0.27

0.10

0.17

(22) Indirect Allocator (1st + 2nd)

Step 8

=(19)+(21)

1.76

39.62

0.95

0.73

0.22

0.56

0.39

0.17

(23) Indirect Adjustment (Ind. Adj.)

Steps 9-11

See Footnote**

0.3826

(24) Adjusted Indirect Allocator

Steps 9-11

=Ind Alloc * Ind Adj

0.67

15.16

0.36

0.28

0.08

0.21

0.15

0.07

(25) Ind. Practice Cost Index (IPCI)

Steps 12-16

1.08

0.77

0.93

0.91

(26) Adjusted Indirect

Step 17

= Adj.Ind Alloc * PCI

=(24)*(25)

0.73

11.60

0.34

0.26

0.08

0.19

0.14

0.06

(27) Pre-Cap PE RVU

Step 18

=(Adj Dir + Adj Ind) * Other Adj

=((14)+(26)) * Other Adj)***

0.98

12.78

0.61

0.53

0.08

0.32

0.26

0.06

(28) OPPS/ASC Cap Adj

Step 19

PFS

1.016

(29) Final PE RVU

Step 19

PE RVU * OPPS/ASC Cap Adj

(27)*(28)

1.00

12.99

0.62

0.54

0.08

0.32

0.26

0.06

Note:

PE RVUs in Table 5, row 28, may not match Addendum B due to rounding.

* The direct adj = [current PE RVUs * CF * avg dir pct]/[sum direct inputs] = [Step 2]/[Step 3]

** The indirect adj = [current PE RVUs * avg ind pct]/[sum of ind allocators] = [Step 9]/[Step 10]

*** The other adjustment includes adjustments for the changes in the equipment utilization rate for certain services and the MEI revisions.

Note:

The use of any particular conversion factor (CF) in Table 5 to illustrate the PE calculation has no effect on the resulting RVUs.

3. Changes to Direct PE Inputs for Specific Services

In this section, we discuss other CY 2014 proposals and revisions related to direct PE inputs for specific services. The proposed revisions are included in the proposed rule CY 2014 direct PE database, which is available on the CMS Web site under the supporting data files for the CY 2014 PFS proposed rule with comment period at

www.cms.gov/PhysicianFeeSched/.

a. Anomalous Supply Inputs

In the CY 2013 PFS final rule with comment period, we established interim final direct PE inputs based on acceptance, with refinement, of recommendations submitted by the AMA RUC. Although we generally address public comments on the prior year's interim final direct PE inputs in the following year's final rule with comment period, several commenters raised an issue regarding anomalous supply items that we believe is best addressed through proposed revisions to the direct PE inputs.

For the CY 2013 interim final direct PE inputs for a series of codes that describe six levels of surgical pathology services (CPT codes 88300, 88302, 88304, 88305, 88307, 88309), we did not accept the AMA RUC recommendation to create two new direct PE supply inputs because we did not consider these items to be disposable supplies (77 FR 69074). The recommended new items were called “specimen, solvent, and formalin disposal cost,” and “courier transportation costs.” In the CY 2013 PFS final rule with comment period, we explained that neither the specimen and supply disposal nor courier costs for transporting specimens are appropriately considered disposable medical supplies. Instead, we stated these costs are incorporated into the PE RVUs for these services through the indirect PE allocation. We also noted that the current direct PE inputs for these and similar services across the PFS do not include these kinds of costs as disposable supplies.

Several commenters noted that, contrary to our assertion in the final rule with comment period, there are a few items incorporated in the direct PE input database as “supplies” that are no more disposable supplies than the new items recommended by the AMA RUC for the surgical pathology codes. These commenters identified seven supply inputs in particular that they believe are analogous to the items that we did not accept in establishing CY 2013 interim final direct PE inputs. These items and their associated HCPCS codes are listed in Table 6.

Table 6—Items Identified by Commenters

CMS supply code

Item description

Associated CPT codes

SK106

device shipping cost

93271, 93229, 93268.

SK112

Federal Express cost (average across all zones)

64650, 88363, 64653.

SK113

communication, wireless per service

93229.

SK107

fee, usage, cycletron/accelerator, gammaknife, Lincac SRS System

77423, 77422.

SK110

fee, image analysis

96102, 96101, 99174.

SK111

fee, licensing, computer, psychology

96102, 96101, 96103, 96120.

SD140

bag system, 1000ml (for angiography waste fluids)

93451, 93452, 93453, 93454, 93455, 93456, 93457, 93458, 93459, 93460, 93461.

We reviewed each of these items for consistency with the general principles of the PE methodology regarding the consistent categorization of all costs. Within the PE methodology, all costs other than clinical labor, disposable supplies, and medical equipment are considered indirect costs. For six of the items contained in Table 6, we agree with the commenters that the items should not be considered disposable supplies. We believe that these items are more appropriately categorized as indirect PE costs, which are reflected in the allocation of indirect PE RVUs rather than direct PE. Therefore, we are proposing to remove the following six items from the direct PE input database for CY 2014: “device shipping cost” (SK106); “Federal Express cost (average across all zones)” (SK112); “communication, wireless per service” (SK113); “fee, usage, cycletron/accelerator, gammaknife, Lincac SRS System” (SK107); “fee, image analysis” (SK110); and “fee, licensing, computer, psychology” (SK111). The CY 2014 proposed direct PE input database and Addendum B of this proposed rule reflect these proposed revisions.

In the case of the supply item called “bag system, 1000ml (for angiography waste fluids)” (SD140), we do not agree with the commenters that this item is analogous to the specimen disposal costs recommended for the surgical pathology codes. This supply input represents only the costs of the disposable material items associated with the removal of waste fluids that typically result from a particular procedure. In contrast, the item recommended by the AMA RUC for surgical pathology consisted of an amortized portion of a specimen disposal contract that includes costs for resources such as labor and transportation. Furthermore, we do not believe that the specimen disposal contract is attributable to individual procedures within the established PE methodology. We believe that a disposable supply is one that is attributable, in its entirety, to an individual patient for a particular service. An amortized portion of a specimen disposal contract does not meet these criteria. Accordingly, as stated in the CY 2013 final rule with comment period, we did not accept the AMA RUC recommendation to create a new supply item related to specimen disposal costs. We believe that many physician offices and other nonfacility settings where Medicare beneficiaries receive services incur costs related to waste management or other service contracts, but none of these costs are currently incorporated into the PE methodology as disposable supplies. Instead, these costs are appropriately categorized as indirect costs and are reflected in the PE RVUs through the allocation of indirect PE. We are clarifying that we believe that supply costs related to specimen disposal attributable to individual services may be appropriately categorized as disposable supplies, but that specimen disposal costs related to an allocated portion of service contracts that cannot be attributed to individual services should not be incorporated into the direct PE input database as disposable supplies.

Moreover, because do not agree with commenters that the “bag system, 1000ml (for angiography waste fluids)” (SD140) is analogous to a specimen disposal contract for the reasons state above, we continue to believe that SD140 is a direct expense. Accordingly, we are not removing SD140 from the direct PE input database. Additionally, we anticipate responding to these and other aspects of the comments regarding the direct PE inputs for the surgical pathology services in the CY 2014 PFS final rule with comment period.

b. Direct PE Input Refinements based on Routine Data Review

In reviewing the direct PE input database, we have identified several discrepancies that we believe should be addressed for CY 2014. In the following paragraphs, we identify the nature of these discrepancies, the affected codes, and the refinements displayed in the CY 2014 proposed direct PE input database. As part of our internal review of information in the direct PE input database, we identified supply items that appeared without quantities for CPT code 51710 (Change of cystostomy tube; complicated). Upon reviewing these items we believe that the codes should include the items at the quantities listed in Table 7.

Table 7—Supply Items and Quantities for CPT Code 51710

Supply code

Description of supply item

quantity

SA069

tray, suturing

1.0

SB007

drape, sterile barrier 16in x 29in

1.0

SC029

needle, 18-27g

1.0

SC051

syringe 10-12ml

1.0

SD024

catheter, Foley

1.0

SD088

Guidewire

1.0

SF036

suture, nylon, 3-0 to 6-0, c

1.0

SG055

gauze, sterile 4in x 4in

1.0

SG079

tape, surgical paper 1in (Micropore)

6.0

SH075

water, sterile inj

3.0

SJ032

lubricating jelly (K-Y) (5gm uou)

1.0

SJ041

povidone soln (Betadine)

20.0

Upon reviewing the direct PE inputs for CPT code 51710 and the related code 51705 (Change of cystostomy tube; simple), we also noted that the direct PE input database includes an anomalous 0.5 minutes of clinical labor time in the post-service period. We believe that this small portion of clinical labor time is the result of a rounding error in our data and should be removed from the direct PE input database.

During our review of the data, we noted an invalid supply code (SM037) that appears in the direct PE input database for CPT codes 88312 and 88313. Upon review of the code, we believe that the supply item called “wipes, lens cleaning (per wipe) (Kimwipe)” (SM027) should be included in the code instead of the invalid code. The CY 2014 proposed direct PE input database reflects these proposed revisions.

Additionally, we conducted a routine review of the codes valued in the nonfacility setting for which moderate sedation is inherent in the procedure. Consistent with the standard moderate sedation package finalized in the CY 2012 PFS final rule with comment period (76 FR 73043), we have made minor adjustments to the nurse time and equipment time of 18 of these codes. These codes appear in Table 8, and the CY 2014 proposed direct PE input database reflects the proposed refined inputs for moderation sedation.

Table 8—Codes With Minor Adjustments to Moderate Sedation Inputs

CPT code

Descriptor

31629

Bronchoscopy/needle bx each.

31645

Bronchoscopy clear airways.

31646

Bronchoscopy reclear airway.

32405

Percut bx lung/mediastinum.

32550

Insert pleural cath.

35471

Repair arterial blockage.

37183

Remove hepatic shunt (tips).

37210

Embolization uterine fibroid.

43453

Dilate esophagus.

43458

Dilate esophagus.

44394

Colonoscopy w/snare.

45340

Sig w/balloon dilation.

47000

Needle biopsy of liver.

47525

Change bile duct catheter.

49411

Ins mark abd/pel for rt perq.

50385

Change stent via transureth.

50386

Remove stent via transureth.

57155

Insert uteri tandem/ovoids.

93312

Echo transesophageal.

93314

Echo transesophageal.

G0341

Percutaneous islet celltrans.

c. Adjustments to Pre-Service Clinical Labor Minutes

We recently received a recommendation from the AMA RUC regarding appropriate pre-service clinical labor minutes in the facility setting for codes with 000 day global periods. In general, the AMA RUC has recommended that codes with 000 day global period include a maximum of 30 minutes of clinical labor time in the pre-service period in the facility setting. The AMA RUC identified 48 codes that currently include more clinical labor time than this recommended maximum and provided us with recommended pre-service clinical labor minutes in the facility setting of 30 minutes or fewer for these 48 codes. We reviewed the AMA RUC's recommendation and agree that the recommended reductions would be appropriate to maintain relativity with other 000 day global codes. Therefore, we propose to amend the pre-service clinical labor minutes for the codes listed in Table 9, consistent with the AMA RUC recommendation. The proposed CY 2014 direct PE input database reflects this proposal.

Table 9—000-Day Global Codes with Proposed Changes to Pre-Service CL Time

CPT code

Short descriptor

Existing CL pre-service

facility minutes

Proposed CL pre-service

facility minutes

(AMA RUC

recommendation)

20900

Removal of bone for graft

20902

Removal of bone for graft

33224

Insert pacing lead & connect

33226

Reposition l ventric lead

36800

Insertion of cannula

36861

Cannula declotting

37202

Transcatheter therapy infuse

50953

Endoscopy of ureter

50955

Ureter endoscopy & biopsy

51726

Complex cystometrogram

51785

Anal/urinary muscle study

52250

Cystoscopy and radiotracer

52276

Cystoscopy and treatment

52277

Cystoscopy and treatment

52282

Cystoscopy implant stent

52290

Cystoscopy and treatment

52300

Cystoscopy and treatment

52301

Cystoscopy and treatment

52334

Create passage to kidney

52341

Cysto w/ureter stricture tx

52342

Cysto w/up stricture tx

52343

Cysto w/renal stricture tx

52344

Cysto/uretero stricture tx

52345

Cysto/uretero w/up stricture

52346

Cystouretero w/renal strict

52351

Cystouretero & or pyeloscope

52352

Cystouretero w/stone remove

52353

Cystouretero w/lithotripsy

52354

Cystouretero w/biopsy

52355

Cystouretero w/excise tumor

54100

Biopsy of penis

61000

Remove cranial cavity fluid

61001

Remove cranial cavity fluid

61020

Remove brain cavity fluid

61026

Injection into brain canal

61050

Remove brain canal fluid

61055

Injection into brain canal

61070

Brain canal shunt procedure

62268

Drain spinal cord cyst

67346

Biopsy eye muscle

68100

Biopsy of eyelid lining

93530

Rt heart cath congenital

93531

R & l heart cath congenital

93532

R & l heart cath congenital

93533

R & l heart cath congenital

93580

Transcath closure of asd

93581

Transcath closure of vsd

d. Price Adjustment for Laser Diode

It has come to our attention that the price associated with the equipment item called “laser, diode, for patient positioning (Probe)” (ER040) in the direct PE input database is $7,678 instead of $18,160 as listed in the CY 2013 PFS final rule with comment period (77 FR 68922). The CY 2014 proposed direct PE input database reflects the updated price for the equipment item.

e. Direct PE Inputs for Stereotactic Radiosurgery (SRS) Services (CPT Codes 77372 and 77373)

Since 2001, Medicare has used HCPCS G-codes, in addition to the CPT codes, for stereotactic radiosurgery (SRS) to distinguish robotic and non-robotic methods of delivery. Based on our review of the current SRS technology, it is our understanding that most services currently furnished with linac-based SRS technology, including services currently billed using the non-robotic codes, incorporate some type of robotic feature. Therefore, we believe that it is no longer necessary to continue to distinguish robotic versus non-robotic linac-based SRS through the HCPCS G-codes. For purposes of the hospital outpatient prospective payment system (OPPS), CMS is proposing to replace the existing four SRS HCPCS G-codes G0173 (Linear accelerator based stereotactic radiosurgery, complete course of therapy in one session), G0251 (Linear accelerator based stereotactic radiosurgery, delivery including collimator changes and custom plugging, fractionated treatment, all lesions, per session, maximum five sessions per course of treatment), G0339 (Image-guided robotic linear accelerator-based stereotactic radiosurgery, complete course of therapy in one session or first session of fractionated treatment), and G0340 (Image-guided robotic linear accelerator-based stereotactic radiosurgery, delivery including collimator changes and custom plugging, fractionated treatment, all lesions, per session, second through fifth sessions, maximum five sessions per course of treatment), with the SRS CPT codes 77372 (Radiation treatment delivery, stereotactic radiosurgery (SRS), complete course of treatment of cranial lesion(s) consisting of 1 session; linear accelerator based) and 77373 (Stereotactic body radiation therapy, treatment delivery, per fraction to 1 or more lesions, including image guidance, entire course not to exceed 5 fractions) that do not distinguish between robotic and non-robotic methods of delivery. We refer readers to section II.C.3 of the CY 2014 OPPS proposed rule for more discussion of that proposal. We also refer readers to the CY 2007 OPPS final rule (71 FR 68023 through 68026) for a

detailed discussion of the history of the SRS codes.

Two of the four current SRS G-codes are paid in the nonfacility setting through the PFS. These two codes, G0339 and G0340, describe robotic SRS treatment delivery and are contractor-priced. CPT codes 77372 and 77373, which describe SRS treatment delivery without regard to the method of delivery, are currently paid in the nonfacility setting based on resource-based RVUs developed through the standard PE methodology. If the CY 2014 OPPS proposal is implemented, it would appear that there would no longer be a need for G-codes to describe robotic SRS treatment and delivery. Prior to eliminating the contractor-priced G-codes and using the existing CPT code for PFS payment of services previously reported using G-codes, we believe that it would be appropriate to ensure that the direct PE inputs used to develop PE RVUs for CPT codes 77372 and 77373 accurately reflect the typical resources used in furnishing the services that would be reported in the non-facility setting in the absence of the robotic G-codes. Therefore, for CY 2014, we are not proposing to replace the contractor-priced G-codes for PFS payment. We are seeking comment from the public and stakeholders, including the AMA RUC, regarding whether or not the direct PE inputs for CPT codes 77372 and 77373 would continue to accurately estimate the resources used in furnishing typical SRS delivery were there no coding distinction between robotic and non-robotic methods of delivery.

3. Using OPPS and ASC Rates in Developing PE RVUs

As we explain in section II.A.2.d of this proposed rule, we typically establish two PE RVUs for procedures that can be furnished in either a nonfacility setting, like a physician's office, or facility setting, like a hospital. The nonfacility RVUs reflect all of the direct and indirect practice expenses of providing a particular service when the entire service is furnished in a nonfacility setting. The facility RVUs are designed to reflect the direct and indirect practice expenses typically associated with furnishing a particular service in a setting, such as a hospital or ASC where those facilities incur a portion or all of the costs. Thus, the difference between the facility and nonfacility RVUs is because Medicare makes a separate payment to the facility for its costs of furnishing a service when a service is furnished in a facility.

When services are furnished in the facility setting, such as a hospital outpatient department (OPD) or an ambulatory surgical center (ASC), the total Medicare payment (made to the facility and the professional combined) typically exceeds the Medicare payment made for the same service when furnished in the physician office or other nonfacility setting. We believe that this payment difference generally reflects the greater costs that facilities incur than those incurred by practitioners furnishing services in offices and other non-facility settings. For example, hospitals incur higher overhead costs because they maintain the capability to furnish services 24 hours a day and 7 days per week, furnish services to higher acuity patients than those who receive services in physician offices, and have additional legal obligations such as complying with the Emergency Medical Treatment and Active Labor Act (EMTALA). Additionally, hospitals and ASCs must meet Medicare conditions of participation and conditions for coverage, respectively.

However, we have found that for some services, the total Medicare payment when the service is furnished in the physician office setting exceeds the total Medicare payment when the service is furnished in an OPD or an ASC. When this occurs, we believe it is not the result of appropriate payment differentials between the services furnished in different settings. Rather, we believe it is due to anomalies in the data we use under the PFS and in the application of our resource-based PE methodology to the particular services.

The PFS PE RVUs rely heavily on the voluntary submission of information by individuals furnishing the service and who are paid at least in part based on the data provided. Currently, we have little means to validate whether the information is accurate or reflects typical resource costs. Furthermore, in the case of certain direct costs, like the price of high-cost disposable supplies and expensive capital equipment, even voluntary information has been very difficult to obtain. In some cases the PE RVUs are based upon single price quotes or one paid invoice. We have addressed these issues extensively in previous rulemaking (75 FR 73252) and again in section II.A.3.e of this proposed rule. Such incomplete, small sample, potentially biased or inaccurate resource input costs may distort the resources used to develop nonfacility PE RVUs used in calculating PFS payment rates for individual services.

In addition to the accuracy issues with some of the physician PE resource inputs, the data used in the PFS PE methodology can often be outdated. As we have previously noted (77 FR 68921) there is no practical means for CMS or stakeholders to engage in a complete simultaneous review of the input resource costs for all HCPCS codes paid under the PFS on an annual or even regular basis. Thus, the information used to estimate PE resource costs for PFS services is not routinely updated. Instead, we strive to maintain relativity by reviewing the work RVUs, physician time, and direct PE inputs for a code at the same time and reviewing all codes within families where appropriate. Nonetheless, outdated resource input costs may distort RVUs used to develop nonfacility PFS payment rates for individual services. In the case of new medical devices for which high growth in volume of a service as it diffuses into clinical practice may lead to a decrease in the cost of expensive items, outdated price inputs can result in significant overestimation of resource costs.

Such inaccurate resource input costs may distort the nonfacility PE RVUs used to calculate PFS payment rates for individual services. As we have previously noted, OPPS payment rates are based on auditable hospital data and are updated annually. Given the differences in the validity of the data used to calculate payments under the PFS and OPPS, we believe that the nonfacility PFS payment rates for procedures that exceed those for the same procedure when in a facility result from inadequate or inaccurate direct PE inputs, especially in price or time assumptions, as compared to the more accurate OPPS data. On these bases, we are proposing a change in the PE methodology beginning in CY 2014 and subsequent years. To improve the accuracy of PFS nonfacility payment rates for each calendar year, we are proposing to use the current year OPPS or ASC rates as a point of comparison in establishing PE RVUs for services under the PFS. In setting PFS rates, we would compare the PFS payment rate for a service furnished in an office setting to the total Medicare payment to practitioners and facilities for the same service when furnished in a hospital outpatient setting. For services on the ASC list, we would make the same comparison except we would use the ASC rate as the point of comparison instead of the OPPS rate.

We are proposing to limit the nonfacility PE RVUs for individual codes so that the total nonfacility PFS payment amount would not exceed the total combined amount Medicare would pay for the same code in the facility setting. That is, if the nonfacility PE RVUs for a code would result in a higher payment than the corresponding

OPPS or ASC payment rate and PFS facility PE RVUs (when applicable) for the same code, we would reduce the nonfacility PE RVU rate so that the total nonfacility payment does not exceed the total Medicare payment made for the service in the facility setting. To maintain the greatest consistency and transparency possible, we are proposing to use the current year PFS conversion factor, as reflected in Figure B1. Similarly, we are proposing to use current year OPPS or ASC rates in the comparison.

EP19JY13.000

For services with no work RVUs, we are proposing to compare the total nonfacility PFS payment to the OPPS payment rates directly since no PFS payment is made for these services when furnished in the facility setting.

We are proposing to exempt the following services from this policy:

Services Without Separate OPPS Payment rates:

We are proposing to exclude services without separately payable OPPS rates from this methodical change since there would be no OPPS rate to which we could compare the PFS nonfacility PE RVUs. We note that there would also be no ASC rate for these services since ASCs are only approved to furnish a subset of OPPS services.

Codes Subject to the DRA Imaging Cap:

We are proposing to exclude services capped at the OPPS payment rate by the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171) from this policy. The DRA provision limits PFS payment for most imaging procedures to the amount paid under the OPPS system. This policy applies to the technical component of imaging services, including X-ray, ultrasound, nuclear medicine, MRI, CT, and fluoroscopy services. Screening and diagnostic mammograms are exempt. Since payment for these procedures is capped by statute we are excluding them from this policy.

Codes with Low Volume in the OPPS or ASC:

We are proposing to exclude any service for which 5% percent or less of the total number of services are furnished in the OPPS setting relative to the total number of PFS/OPPS allowed services.

Codes with ASC Rates Based on PFS Payment Rates:

To avoid issues of circularity, we are proposing to exclude ASC services subject to the “office-based” procedure payment policies for which payment rates are based on the PFS nonfacility PE RVUs. We direct interested readers to the CY 2013 OPPS final rule (77 FR 68444) for additional information regarding this payment policy.

Codes Paid in the Facility at Nonfacility PFS Rates:

To avoid issues of circularity, we are also proposing to exclude services that are paid in the facility setting at nonfacility payment rates. This would include certain professional-only services where the resource costs for practitioners are assumed to be similar in both settings.

Codes with PE RVUs Developed Outside the PE Methodology:

We are also proposing to exclude services with PE RVUs established outside the PE Methodology through notice and comment rulemaking.

Addendum B of this proposed rule with comment period displays the PE RVUs that would result from implementation of this proposed change in the PE methodology.

In discussing resource input issues, some stakeholders have previously suggested that the direct costs (for example, clinical labor, disposable supplies and medical equipment) involved in furnishing a service are similar in both the nonfacility and facility settings. Others have suggested that facilities, like hospitals, have greater purchasing power for medical equipment and disposable supplies so that the direct costs for a facility to furnish a service can be lower than costs for a physician practice furnishing the same service. This proposed policy does not assume that the direct costs to furnish a service in the nonfacility setting are always lower than in the facility setting. Medicare payment methodologies, including both OPPS and the PFS PE methodology, incorporate both direct and indirect costs (administrative labor, office expenses, and all other expenses). This proposed policy is premised on the idea that there are significantly greater indirect resource costs that are carried by facilities even in the event that the direct costs involved in furnishing a service in the office and facility settings are comparable.

We believe this proposal provides a reliable means for Medicare to set upper payment limits for office-based procedures based on relatively more

reliable cost information available for the same procedures when furnished in a facility setting where the cost structure would be expected to be somewhat, if not significantly, higher than the office setting. We believe that the current basis for estimating the resource costs involved in furnishing a PFS service is significantly encumbered by our current inability to obtain accurate information regarding supply and equipment prices, as well as procedure time assumptions. We believe that this policy will mitigate the negative impact of these difficulties on both the appropriate relativity of PFS services and overall Medicare spending. A wide range of stakeholders and public commenters have pointed to the nonfacility setting as the most cost-effective location for services. Given the significantly higher cost structure of facilities (as discussed above) we believe that this presumption is accurate. In its March 2012 report to Congress, MedPAC recommended that Medicare should seek to pay similar amounts for similar services across payment settings, taking into account differences in the definitions of services and patient severity. (MedPAC March 2012 Report to Congress, page 46) We believe that the proposed change to our PFS PE methodology will more appropriately reflect resource costs in the nonfacility setting.

b. Ultrasound Equipment Recommendations

In the CY 2012 PFS proposed rule (76 FR 42796), we asked the AMA RUC to review the ultrasound equipment described in the direct PE input database. We specifically asked for review of the ultrasound equipment items described in the direct PE input database and whether the ultrasound equipment listed for specific procedure codes is clinically necessary.

In response, the AMA RUC recommended creating several new equipment inputs in addition to the revision of current equipment inputs for ultrasound services. The AMA RUC also forwarded pricing information for new and existing equipment items from certain medical specialty societies that represent the practitioners who furnish these services. In the following paragraphs, we summarize the AMA RUC recommendations, address our review of the provided information, and describe proposed changes to the direct PE inputs used in developing PE RVUs for these services.

(1) Equipment Rooms

The AMA RUC made a series of recommendations regarding the ultrasound equipment items included in direct PE input equipment packages called “rooms.” Specifically, the AMA RUC recommended adding several new equipment items to the equipment packages called “room, ultrasound, general” (EL015) and “room, ultrasound, vascular” (EL016). The AMA RUC also recommended creating a similar direct PE input equipment package called “room, ultrasound, cardiovascular.” In considering these recommendations, we identified a series of new concerns regarding the makeup of these equipment packages and because there are several different ways to handle these concerns, we are seeking public comment from additional stakeholders prior to proposing to implement any of these recommended changes through future rulemaking.

We note that the existing “rooms” for ultrasound technology include a greater number of individual items than the “rooms” for other kinds of procedures. For example, the equipment package for the “room, basic radiology” (EL012) contains only two items: An x-ray machine and a camera. Ordinarily under the PFS, direct PE input packages for “rooms” include only equipment items that are typically used in furnishing every service in that room. When equipment items beyond those included in a “room” are typically used in furnishing a particular procedure, the additional equipment items for that procedure are separately reflected in the direct PE input database in addition to the “room” rather than being included in the room. When handled in this way, the room includes only those inputs that are common to all services furnished in that room type, and thus the direct PE inputs are appropriate for the typical case of each particular service. When additional equipment items are involved in furnishing a particular service, they are included as an individual PE input only for that particular service.

In contrast, the equipment items currently included in the “room, ultrasound, general” are: the ultrasound system, five different transducers, two probe starter kits, two printers, a table, and various other items. We do not believe that it is likely that all of these items would be typically used in furnishing each service. For example, we do not believe that the typical ultrasound study would require the use of five different ultrasound transducers. However, the costs of all of these items are incorporated into the resource inputs for every service for which the ultrasound room is a direct PE input, regardless of whether each of those items is typically used in furnishing the particular service. This increases the resource cost for every service that uses the room regardless of whether or not each of the individual items is typically used in furnishing a particular procedure.

Instead of incorporating the AMA RUC's recommendation to add more equipment items to these ultrasound equipment “room” packages, we believe that we should continue to consider the appropriateness of the full number of items in the ultrasound “rooms” in the context of maintaining appropriate relativity with other services across the PFS. We seek comment from stakeholders, including the AMA RUC, on the items included in the ultrasound rooms, especially as compared to the items included in other equipment “rooms.” We believe that it would be appropriate to consider these comments in future rulemaking. Specifically we seek comment on whether equipment packages called “rooms” should include all of the items that might be included in an actual room, just the items typically used for every service in such a room, or all of the items typically used in typical services furnished in the room. We believe that it would be most appropriate to propose changes to the “room, ultrasound, general” (EL015) and “room, ultrasound, vascular” (EL016) in the context of considering comments on this broader issue. We also believe that consideration of the broader issue will help determine whether it would be appropriate to create a “room, ultrasound, cardiovascular,” and if so, what items would be included in this equipment package.

In addition to the concerns regarding the contents of the ultrasound “room” packages, we are also concerned about the pricing information submitted through the AMA RUC to support its recommendation to add equipment to the ultrasound room packages. The highest-price item used in pricing the existing equipment input called “room, ultrasound, general” (EL015), is a “GE Logic 9 ultrasound system,” currently priced at $220,000. As part of a current AMA RUC recommendation, a medical specialty society recommended increasing the price of that item to $314,500. However, that recommendation did not include documentation to support the pricing level, such as a copy of a paid invoice for the equipment. Furthermore, the recommended price conflicts with certain publicly available information. For example, the

Milwaukee Sentinel-Journal

reported in a February 9, 2013 article that the price for GE ultrasound equipment ranges from “$7,900 for a hand-held ultrasound to $200,000 for its

most advanced model.” The same article points to an item called the “Logiq E9” as the ultrasound machine most used by radiologists and priced from $150,000 to $200,000.

http://www.jsonline.com/business/ge-sees-strong-future-with-its-ultrasound-business-uj8mn79-190533061.html

At this time, are unsure how to best reconcile the information disclosed by the manufacturer to the press and the prices submitted by the medical specialty society for use in updating the direct PE input prices. We believe discrepancies, such as these, exemplify the potential problem with updating prices for particular items based solely on price quotes or information other than copies of paid invoices. However, copies of paid invoices must also be evaluated carefully. The information presented in the article regarding the price for hand-held ultrasound devices raises questions about the adequacy of paid invoices, too, in determining appropriate input costs. The direct PE input described in the database as “ultrasound unit, portable” (EQ250) is currently priced at $29,999 based on a submitted invoice, while the article cites that GE sells a portable unit for as low as $7,900. We are seeking comment on the appropriate price to use as the typical cost for portable ultrasound units.

Additionally, we are not proposing to revise the equipment items, or to change the prices of items, included in these rooms. Instead, pending our receipt and consideration of additional information, the proposed direct PE input database continues to include the current prices for the “room, ultrasound, general” (EL015), “room, ultrasound, vascular” (EL016), and “ultrasound unit, portable” (EQ250).

(2) New Equipment Inputs and Price Updates

Ultrasound Unit, portable, breast procedures.

The AMA RUC recommended that a new direct PE input, “ultrasound unit, portable, breast procedures,” be created for breast procedures that are performed in a surgeon's office and where ultrasound imaging is included in the code descriptor. These services are described by CPT codes 19105 (Ablation, cryosurgical, of fibroadenoma, including ultrasound guidance, each fibroadenoma), 19296 (Placement of radiotherapy afterloading expandable catheter (single or multichannel) into the breast for interstitial radioelement application following partial mastectomy, includes imaging guidance; on date separate from partial mastectomy), and 19298 (Placement of radiotherapy afterloading brachytherapy catheters (multiple tube and button type) into the breast for interstitial radioelement application following (at the time of or subsequent to) partial mastectomy, includes imaging guidance). We are creating this input. The pricing information submitted for this item is a paid invoice and two price quotes. As we have previously stated, we believe that copies of paid invoices are more likely to reflect actual resource costs associated with equipment and supply items than quotes or other information. Therefore, we are proposing a price of $33,930, which reflects the price displayed on the submitted copy of the paid invoice. We are not using the quotes as we do not believe that quotes provide reliable information about the prices that are actually paid for medical equipment.

Endoscopic Ultrasound Processor.

The AMA RUC recommended creating a new direct PE input called “endoscopic ultrasound processor,” for use in furnishing the service described by CPT code 31620 (Endobronchial ultrasound (EBUS) during bronchoscopic diagnostic or therapeutic intervention(s) (List separately in addition to code for primary procedure[s])). We are creating this equipment item to use as an input in the proposed direct PE input database. The price associated with the “endoscopic ultrasound processor” will be $59,925, which reflects the price documented on the copy of the paid invoice submitted with the recommendation.

Bronchofibervideoscope.

The AMA RUC recommended creating a new direct PE input called “Bronchofibervideoscope,” for use in furnishing the service described by CPT code 31620 (Endobronchial ultrasound (EBUS) during bronchoscopic diagnostic or therapeutic intervention(s) (List separately in addition to code for primary procedure[s])). We are creating this new equipment item to use as an input in the proposed direct PE input database. However, this item has no price associated with it in the proposed direct PE input database because we did not receive any information that would allow us to price the item accurately. Consequently, we seek copies of paid invoices for this equipment item so that we can price the item accurately in the future.

Endoscope, ultrasound probe, drive (ES015).

The AMA RUC forwarded pricing information to us regarding the existing input called “endoscope, ultrasound probe, drive” (ES015). This information included a copy of a paid invoice. Based on this information, we are proposing to change the price associated with ES015 to $13,256.25, which reflects the price documented on the submitted copy of the paid invoice.

(3) Ultrasound Equipment Input Recommendations for Particular Services

The AMA RUC made recommendations regarding the typical ultrasound items used in furnishing particular services. In general, the AMA RUC recommended that the existing equipment items accurately described the typical equipment used in furnishing particular services. However, for some CPT codes the AMA RUC recommended changing the associated equipment inputs that appear in the direct PE input database. Based on our review of these recommendations, we have generally agreed with the AMA RUC regarding these recommended changes, and these changes are reflected in the proposed direct PE input database. Table 10 displays the codes with proposed changes to ultrasound equipment. However, for certain codes we do not agree with the recommendations of the AMA RUC. The following paragraphs address the changes we are proposing that differ from the recommendations of the AMA RUC.

For a series of cardiovascular services that include ultrasound technology, the AMA RUC recommended removing certain equipment items and replacing those items with a new item called “room, ultrasound, cardiovascular.” As we described in the preceding paragraphs, we are not proposing to create the “room, ultrasound, cardiovascular” and therefore will not propose to add this “room” an input for these services. However, we note that the newly recommended equipment package incorporates many of the same kinds of items as the currently existing “room, ultrasound, vascular” (EL016). We agree with the AMA RUC's suggestion that the existing equipment inputs for the relevant services listed in Table 10 do not reflect typical resource costs of furnishing the services. We believe that, pending our further consideration of the ultrasound “room” equipment packages, it would be appropriate to use the existing “room, ultrasound, vascular” (EL016) as a proxy for resource costs for these services. Therefore, the proposed direct PE input database reflects this proposed change.

In the case of CPT code 76942 (Ultrasonic guidance for needle placement (eg, biopsy, aspiration, injection, localization device), imaging supervision and interpretation), we agree with the AMA RUC's

recommendation to replace the current equipment input of the “room, ultrasound, general” (EL015) with “ultrasound unit, portable” (EQ250). We note that this service is typically reported with other codes that describe the needle placement procedures and that the recommended change in equipment from a room to a portable device reflects a change in the typical kinds of procedures reported with this image guidance service. Given this change, we believe that it is appropriate to reconsider the procedure time assumption currently used in establishing the direct PE inputs for this code is 45 minutes, which we believe is inaccurate. We reviewed the services reported with CPT code 76942 to identify the most common procedures furnished with this image guidance. The code most frequently reported with CPT code 76942 is CPT 20610 (Arthrocentesis, aspiration and/or injection; major joint or bursa (eg, shoulder, hip, knee joint, subacromial bursa). The assumed procedure time for this service is five minutes. The vast majority of other procedures frequently reported with CPT code 76942 range in procedure time assumptions from 5 to 20 minutes. Therefore, in addition to proposing the recommended change in equipment inputs associated with the code, we are also proposing to change the procedure time assumption used in establishing direct PE inputs for the service from 45 to 10 minutes, based on our analysis of thirty needle placement procedures most frequently reported with CPT code 76942. We note that this will reduce the clinical labor and equipment minutes associated with the code from 58 to 23 minutes. This change is reflected in the proposed direct PE input database. We also note that this code has been proposed as a potentially misvalued code in section II.B.3.b.1.

Table 10—Codes With Proposed Changes to Ultrasound Equipment for CY 2014

CPT code

Descriptor

CY 2013 CMS Equipment code

CY 2013

Equipment description

Proposed CY 2014 Equipment CMS code

Proposed CY 2014 Equipment description

19105

Cryosurg ablate fa each

EQ250

ultrasound unit, portable

NEW

ultrasound unit, portable, breast procedures.

19296

Place po breast cath for rad

EL015

room, ultrasound, general

NEW

ultrasound unit, portable, breast procedures.

19298

Place breast rad tube/caths

EL015

room, ultrasound, general

NEW

ultrasound unit, portable, breast procedures.

31620

Endobronchial us add-on

n/a

NEW

Bronchofibervideoscope.

n/a

NEW

Endoscopic ultrasound processor.

52649

Prostate laser enucleation

EQ255

ultrasound, noninvasive bladder scanner w-cart

EQ250

ultrasound unit, portable.

76376

3d render w/o postprocess

EL015

room, ultrasound, general

Remove input.

76775

Us exam abdo back wall lim

EL015

room, ultrasound, general

EQ250

ultrasound unit, portable.

76820

Umbilical artery echo

EQ249

ultrasound color doppler, transducers and vaginal probe

EL015

room, ultrasound, general.

76857

Us exam pelvic limited

EL015

room, ultrasound, general

EQ250

ultrasound unit, portable.

76870

Us exam scrotum

EL015

room, ultrasound, general

EQ250

ultrasound unit, portable.

76872

Us transrectal

EL015

room, ultrasound, general

EQ250

ultrasound unit, portable.

76942

Echo guide for biopsy

EL015

room, ultrasound, general

EQ250

ultrasound unit, portable.

93303

Echo guide for biopsy

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EL016

room, ultrasound, vascular.

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

93304

Echo transthoracic

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EL016

room, ultrasound, vascular.

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

93306

Tte w/doppler complete

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EL016

room, ultrasound, vascular.

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

93307

Tte w/o doppler complete

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EL016

room, ultrasound, vascular.

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

93308

Tte f-up or lmtd

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EL016

room, ultrasound, vascular.

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

93312

Echo transesophageal

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EL016

room, ultrasound, vascular.

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EQ256

ultrasound, transducer (TEE Omniplane II)

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

93314

Echo transesophageal

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

EL016

room, ultrasound, vascular.

EQ256

ultrasound, transducer (TEE Omniplane II)

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

93320

Doppler echo exam heart

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EL016

room, ultrasound, vascular.

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

93321

Doppler echo exam heart

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EL016

room, ultrasound, vascular.

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

93325

Doppler color flow add-on

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EL016

room, ultrasound, vascular.

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

93350

Stress tte only

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

EL016

room, ultrasound, vascular.

EQ253

ultrasound, echocardiography digital acquisition (Novo Microsonics, TomTec)

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

93351

Stress tte complete

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

EL016

room, ultrasound, vascular.

93980

Penile vascular study

EL015

room, ultrasound, general

EQ249

ultrasound color doppler, transducers and vaginal probe.

93981

Penile vascular study

EL015

room, ultrasound, general

EQ249

ultrasound color doppler, transducers and vaginal probe.

4. Collecting Data on Services Furnished in Off-Campus Hospital Provider-Based Departments

In recent years, the research literature and popular press have documented the increased trend toward hospital acquisition of physician practices, integration of those practices as a department of the hospital, and the resultant increase in the furnishing of physicians' services in a hospital outpatient setting (for example, see Ostrom, Carol M. “Why you might pay twice for one visit to a doctor,”

Seattle Times.

November 3, 2012, and O'Malley, Ann, Amelia M. Bond, and Robert Berenson.

Rising hospital employment of physicians: better quality, higher costs?

Issue Brief No. 136, Center for Studying Health System Change. August 2011). When a Medicare

beneficiary receives outpatient services in a hospital, Medicare generally pays more in total than when the beneficiary receives those same services in a freestanding clinic or physician office. As more physician practices become hospital-based, news articles have highlighted beneficiary liability for the additional coinsurance for the “facility fee,” which is the payment in addition to the physician payment when services are furnished in a hospital. MedPAC has questioned the appropriateness of increased Medicare payment and beneficiary cost-sharing when physician offices become hospital outpatient departments, and has recommended that Medicare pay selected hospital outpatient services at physician fee schedule rates (MedPAC March 2012

Report to Congress

The total l payment (including both Medicare program payment and beneficiary cost-sharing) generally is higher when outpatient services are furnished in the hospital outpatient setting rather than a physician office. Both the PFS and the hospital outpatient prospective payment system (OPPS) establish payment based on the relative resources involved in furnishing a service. As described in section II.B.1.b. of this proposed rule, the relative values for services furnished in the physician office setting under the PFS reflect not only payment for the practitioner's work, but also the direct expenses (clinical labor, medical equipment, and medical supplies) and the indirect expenses (administrative labor, office expense, and all other expenses) typically involved in furnishing the service. Under section 1833(t) of the Act, Medicare provides separate payment through the OPPS to hospitals for certain items and services furnished to registered hospital outpatients that are based on the relativity of the resource costs (labor and capital) involved in furnishing those hospital services. In general, we expect hospitals to have higher overall resource requirements than physician offices because hospitals are required to meet conditions of participation, to maintain standby capacity for emergency situations, and to be available to address a wide variety of complex medical needs in a community. When services are furnished in the hospital setting, such as in off-campus provider based departments, Medicare pays the physician under the PFS at a typically lower facility payment rate but then also pays the hospital under the OPPS for the facility resources required to furnish the service. The beneficiary pays coinsurance for both the physician PFS payment and the hospital OPPS payment. The term “facility fee” refers to this additional hospital outpatient payment.

Upon acquisition of a physician practice, hospitals frequently treat the practice locations as off-campus provider-based departments of the hospital and bill Medicare for services furnished at those locations under the OPPS (for further information on the provider-based regulations at § 413.65, see

http://www.gpo.gov/fdsys/pkg/CFR-2010-title42-vol2/pdf/CFR-2010-title42-vol2-sec413-65.pdf

). Since October 1, 2002, we have not required hospitals to seek from CMS a determination of provider-based status for a facility that is located off campus. We also do not have a formal process for gathering information on the frequency, type, and payment for services furnished in off-campus provider-based departments of the hospital.

To better understand the growing trend toward hospital acquisition of physician offices and subsequent treatment of those locations as off-campus provider-based outpatient departments, we are considering collecting information that would allow us to analyze the frequency, type, and payment for services furnished in off-campus provider-based hospital departments. We have considered several potential methods. Claims-based approaches could include (1) creating a new place of service code for off-campus departments of a provider under 42 CFR 413.65(g)(2) as part of item 24B of the CMS-1500 claim form, comparable to current place of service codes such as “22 Outpatient” and “23 Emergency Room-Hospital” when physician services are furnished in an off-campus provider-based department, or (2) creating a HCPCS modifier that could be reported with every code for services furnished in an off-campus provider-based department of a hospital on the CMS-1500 claim form for physician services and the UB-04 (CMS form 1450) for hospital outpatient claims. In addition, we also have considered asking hospitals to break out the costs and charges for their provider-based departments as outpatient service cost centers on the Medicare hospital cost report, form 2552-10. We note that some hospitals already break out these costs voluntarily or because of cost reporting requirements for the 340B Drug Discount program but this practice is not consistent or standardized. We welcome public comment on the best means for collecting information on the frequency, type, and payment for services furnished in off-campus provider-based departments of hospitals.

B. Misvalued Codes

1. Valuing 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; 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.” 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.” (See section I.A.2. for more detail on the PE component.) 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.” Sections 1848 (c)(2)(C)(ii) and (iii) 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. Section 3134(a) of the Affordable Care Act added a new section 1848(c)(2)(K) to the Act, which 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 3134(a) of the Affordable Care Act also added a new section 1848(c)(2)(L) to the Act which, 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 II.A.1. of this proposed rule, 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 analyses of other data, 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) National Database, 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

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. MedPAC stated, “when a new service is added to the physician fee schedule, 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.” We believe 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 identify and 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 (as added by section 3134(a) of the Affordable Care Act) directed the Secretary to specifically examine, as determined appropriate, potentially misvalued services in the following seven categories:

• 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 RBRVS (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) that may include consolidation of individual services into bundled codes for payment under the physician fee schedule.

b. Progress in Identifying and Reviewing Potentially Misvalued Codes

To fulfill 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, also identifies potentially misvalued codes for review. Through our public nomination process for potentially misvalued codes established in the CY 2012 PFS final rule with comment period, 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 process, we have reviewed more than 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. 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 PFS proposed rule, we proposed to identify and review potentially misvalued codes in the category of “Other codes determined to be appropriate by the Secretary,” referring to 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 finalized our policy to consolidate the review 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.

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, low intensity 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 annual utilization greater than 30,000 (Harvard-valued—Utilization > 30,000). In the CY 2013 final rule with comment period, we identify for review the potentially misvalued codes for Harvard-valued services with annual allowed charges that total at least $10,000,000 (Harvard-valued—Allowed charges ≥$10,000,000).

In addition to the Harvard-valued codes, in the same rule we finalized for review a list of potentially misvalued codes that have stand-alone PE (codes with physician work and no listed physician time and codes with no physician work and have listed physician time).

c. Validating RVUs of Potentially Misvalued Codes

In addition to identifying and reviewing potentially misvalued codes, section 3134(a) of the Affordable Care Act added section 1848(c)(2)(L) of the Act, which 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 include validation of the pre-, post-, and intra-service 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 (73054 through 73055).

We have entered into two contracts with outside entities to develop validation models for RVUs. During a 2-year project, the RAND Corporation will use available data to build a validation model to predict work RVUs and the individual components of work RVUs, time and intensity. The model design will be informed by the statistical methodologies and approach used to develop the initial work RVUs and to identify potentially misvalued procedures under current CMS and AMA RUC processes. RAND will use a representative set of CMS-provided codes to test the model. RAND will consult with a technical expert panel on model design issues and the test results.

The second contract is with the Urban Institute. Given the central role of time in establishing work RVUs and the concerns that have been raised about the current time values, a key focus of the project is collecting data from several practices for services selected by the contractor. The data will be used to develop time estimates. Urban Institute will use a variety of approaches to develop objective time estimates, depending on the type of service, which will be a very resource-intensive part of the project. Objective time estimates will be compared to the current time values used in the fee schedule. The project team will then convene groups of physicians from a range of specialties to review the new time data and their potential implications for work and the ratio of work to time.

3. CY 2014 Identification and Review of Potentially Misvalued Services

a. Public Nomination of Potentially Misvalued Codes

In the CY 2012 PFS final rule with comment period, we finalized a process for the public to nominate potentially misvalued codes (76 FR 73058). The public and 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.

• 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) National Database, 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.

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 nominated 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 indicate whether we are proposing each nominated code as a potentially misvalued code.

We did not receive publicly nominated potentially misvalued codes for inclusion in this proposed rule. We look forward to receiving new code nominations for inclusion in the CY 2015 proposed rule to continue with our efforts to identify potentially misvalued codes.

b. Potentially Misvalued Codes

(1) Contractor Medical Director Identified Potentially Misvalued Codes

After publishing the CY final rule with comment period, we began considering additional ways to broaden participation in the process of identifying potentially misvalued codes. We solicited the input of Medicare contractor medical directors (CMDs) in developing a list of potentially misvalued codes. CMDs offer a unique perspective on the Medicare program. Medicare Administrative Contractors administer the Medicare program in their assigned geographic area and each has at least one CMD that serves as its director. As a group, CMDs represent a variety of medical specialties, which makes them a diverse group of physicians capable of providing opinions across the vast scope of services covered under the PFS. In addition to being physicians, they are on the front line of administering the Medicare program; and their offices often serve as the first point of contact for any provider with questions regarding coverage, coding and claims processing. CMDs spend a significant amount of time communicating directly with providers and the health care industry discussing more than just the broad aspects of the Medicare program but also engaging in and facilitating specific discussions around individual services. Through their development of evidence-based local coverage determinations (LCDs), CMDs also have experience developing policy based on research. In consultation with our CMDs, we have identified the following list of codes that we are proposing as potentially misvalued. We include a brief discussion of the reasons for proposing these codes as potentially misvalued.

Table 11—Codes Identified in Consultation With CMDs as Potentially Misvalued

CPT code

Short descriptor

17311

Mohs 1 stage h/n/hf/g.

17313

Mohs 1 stage t/a/l.

21800

Treatment of rib fracture.

22035

Closed tx spine process fx.

27193

Treat pelvic ring fracture.

33960

External circulation assist.

33961

External circulation assist, each subsequent day.

47560

Laparoscopy w/cholangio.

47562

Laparoscopic cholecystectomy.

47563

Laparo cholecystectomy/graph.

55845

Extensive prostate surgery.

55866

Laparo radical prostatectomy.

64566

Neuroeltrd stim post tibial.

76942

Echo guide for biopsy.

CPT codes 17311 (Mohs micrographic technique, including removal of all gross tumor, surgical excision of tissue specimens, mapping, color coding of specimens, microscopic examination of specimens by the surgeon, and histopathologic preparation, head, neck, hands, feet genitalia, or any location with surgery directly involving muscle, cartilage, bone, tendon, major nerves, or vessels; first stage, up to 5 tissue blocks) and 17313 (Mohs micrographic technique, including removal of all gross tumor, surgical excision of tissue specimens, mapping, color coding of specimens, microscopic examination of specimens by the surgeon, and histpathologic preparation including routine stains(s) of the trunk, arms, or legs; first stage, up to 5 tissue blocks) are proposed as potentially misvalued codes because based on CMD comments, we believe that the code may be overvalued.

CPT codes 21800 (Closed treatment of rib fracture, uncomplicated, each), 22305 (Closed treatment of vertebral process fracture(s)) and 27193 (Closed treatment of pelvic ring fracture, dislocation, diastasis or subluxation, without manipulation) is proposed for review. We are considering the appropriateness of having a 90-day global surgical package for a procedure that is performed in settings other than the inpatient setting 33 percent of the time. We believe it is unlikely that it is appropriate for a procedure performed outside of the inpatient hospital setting at this frequency to have such a long global period. CPT codes 33960 (Prolonged extracorporeal circulation for cardiopulmonary insufficiency; initial day) and 33961 (Each subsequent day) are being proposed for review because CMDs were concerned about their current valuation of physician work. The CMD comment states that the service was originally valued when it was used primarily in premature neonates; but the service is now being furnished to adults with severe influenza, pneumonia and respiratory distress syndrome. We are concerned that, while the code currently includes 523 minutes of total physician time with 133 minutes of intraservice time, physicians are not typically furnishing the service over that entire time interval; rather, hospital-employed pump technicians are furnishing much of the work.

CPT codes 47560 (Laparoscopy, surgical; with guided transhepatic cholangiography, without biopsy), 47562 (Cholecystectomy) and 47563 (Cholecystectomy with cholangiography) we are proposing these codes as potentially misvalued because the more extensive code has lower work RVUs than the less extensive codes.

CPT codes 55845 (Prostatectomy, retropubic radical with or without nerve sparing with bilateral pelvic lymphadenectomy, including external iliac, hypogastric, and obturator nodes) and 55866 (Laparoscopy, surgical prostatectomy, retropubic radial, including nerve sparing, includes robotic assistance when performed) we are proposing as potentially misvalued because the RVUs for the laparoscopic procedure are higher than for the open procedure and, in general, a laparascopic procedure would not require greater resources than the open procedure.

We are proposing CPT 64566 (Posterior tibial neurostimulation, percutaneous needle electrode, single treatment, includes programming) as a potentially misvalued code because we think that the procedure typically is furnished by support staff with supervision as opposed to being furnished by the physician. We are concerned that the current valuation is based on the procedure being furnished by a physician.

We are proposing CPT code 76942 (Ultrasonic guidance for needle placement (for example, biopsy, aspiration, injection, localization device), imaging supervision and interpretation) as a potentially misvalued code because of the high frequency with which it is billed with CPT code 20610 (Arthrocentesis aspiration and/or injection; major joint or bursa (for example, shoulder, hip, knee joint, subacromial bursa) in the CMD's geographic region. The CMD noted that some providers within the contractor's geographic area bill CPT code 76942 with every injection or aspiration of the knee. One CMD suggests that the payment for CPT code 76942 and CPT code 20610 should be combined to reduce the incentive for providers to always provide and bill separately for ultrasound guidance. We note that we are making a proposal regarding the direct PE inputs for CPT code 76942. Our claims data show that the procedure time assumption for CPT code 76942 is longer than the typical procedure with which the code is billed (for example, CPT code 20610). The proposed changes relating to CPT code 76942 are addressed in detail in section II.A.4.b.3. of this proposed rule. We believe that the discrepancy in procedure times and the resulting potentially inaccurate payment raises a fundamental concern regarding the incentive to furnish ultrasound guidance. However, we believe this

concern spans more than just an individual code for ultrasound guidance. Accordingly, we have proposed additional ultrasound guidance codes as potentially misvalued in Table 12. We are seeking public comment on including these codes as potentially misvalued codes. We are also seeking public comment on any similar codes that should be included on this list.

Table 12—CPT Codes for Ultrasound Guidance

CPT code

Short descriptor

76930

Echo guide cardiocentesis.

76932

Echo guide for heart biopsy.

76936

Echo guide for artery repair.

76940

US guide tissue ablation.

76948

Echo guide ova aspiration.

76950

Echo guidance radiotherapy.

76965

Echo guidance radiotherapy.

(2) Improving the Valuation of the Global Surgical Package, Measuring Post-Operative Work

In the CY 2013 proposed rule, we sought comments on methods of obtaining accurate and current data on E/M services furnished as part of a global surgical package. Commenters provided a variety of suggestions including setting the all surgical services to a 0-day global period, requiring all E/M services to be separately billed, validating the global surgical packages with the hospital Diagnosis-Related Group length of stay data, and setting documentation standards for post-operative E/M services that could be audited. In addition to receiving the broader comments on measuring post-operative work, we also received a comment from the AMA RUC noting that the hospital and discharge day 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 time file with updated post-operative visits for the services that arguably we incorrectly displayed with zero visits in the CMS time file. We said in the CY 2013 final rule with comment period that we would review this file and, if appropriate, propose modifications to the physician time file in the CY 2014 PFS proposed rule. We noted in the CY 2013 final rule with comment period that if time had been removed from the physician time file inadvertently, it would not have affected the physician work RVUs or direct PE inputs for these services. It would have a small impact on the indirect allocation of PE at the specialty level, which we would review when we explore this potential time file change.

After extensive review, we believe that the data were deleted from the time file due to an inadvertent error as noted by the AMA RUC. Thus, we are proposing to replace the missing post-operative hospital E/M visit information and time for the 117 codes that were identified by the AMA-RUC and displayed in Table 13. We believe this proposal would populate the physician time file with data that, absent the inadvertent error, would have been present in the time file.

Table 13—Proposed Physician Time Changes for CY 2014 Potentially Misvalued Codes

CPT code

Short descriptor

AMA RUC-recommended visits

99231

99232

99238

99291

CY 2013

physician time

AMA RUC-

recommended physician time

19368

Breast reconstruction

712

770

19369

Breast reconstruction

657

690

20100

Explore wound neck

218

266

20816

Replantation digit complete

671

697

20822

Replantation digit complete

587

590

20824

Replantation thumb complete

646

690

20827

Replantation thumb complete

610

625

20838

Replantation foot complete

887

986

20955

Fibula bone graft microvasc

867

957

20969

Bone/skin graft microvasc

1,018

1,048

20970

Bone/skin graft iliac crest

958

988

20973

Bone/skin graft great toe

1,018

988

21139

Reduction of forehead

400

466

21151

Reconstruct midface lefort

567

686

21154

Reconstruct midface lefort

664

853

21155

Reconstruct midface lefort

754

939

21175

Reconstruct orbit/forehead

549

767

21182

Reconstruct cranial bone

619

856

21188

Reconstruction of midface

512

572

22100

Remove part of neck vertebra

397

372

22101

Remove part thorax vertebra

392

387

22110

Remove part of neck vertebra

437

479

22112

Remove part thorax vertebra

507

530

22114

Remove part lumbar vertebra

517

530

22210

Revision of neck spine

585

609

22212

Revision of thorax spine

610

640

22214

Revision of lumbar spine

585

624

22220

Revision of neck spine

565

585

22222

Revision of thorax spine

630

651

22224

Revision of lumbar spine

620

666

22315

Treat spine fracture

257

252

22325

Treat spine fracture

504

528

22326

Treat neck spine fracture

452

480

22327

Treat thorax spine fracture

505

604

22548

Neck spine fusion

532

673

22556

Thorax spine fusion

525

557

22558

Lumbar spine fusion

502

525

22590

Spine & skull spinal fusion

532

501

22595

Neck spinal fusion

492

521

22600

Neck spine fusion

437

490

22610

Thorax spine fusion

468

549

22630

Lumbar spine fusion

501

487

22800

Fusion of spine

517

571

22802

Fusion of spine

552

538

22804

Fusion of spine

630

595

22808

Fusion of spine

553

530

22810

Fusion of spine

613

595

22812

Fusion of spine

666

700

31582

Revision of larynx

489

654

32650

Thoracoscopy w/pleurodesis

322

290

32656

Thoracoscopy w/pleurectomy

419

377

32658

Thoracoscopy w/sac fb remove

362

330

32659

Thoracoscopy w/sac drainage

414

357

32661

Thoracoscopy w/pericard exc

342

300

32664

Thoracoscopy w/th nrv exc

362

330

32820

Reconstruct injured chest

631

854

33236

Remove electrode/thoracotomy

258

346

33237

Remove electrode/thoracotomy

378

456

33238

Remove electrode/thoracotomy

379

472

33243

Remove eltrd/thoracotomy

504

537

33321

Repair major vessel

751

754

33332

Insert major vessel graft

601

604

33401

Valvuloplasty open

830

661

33403

Valvuloplasty w/cp bypass

890

638

33417

Repair of aortic valve

740

750

33472

Revision of pulmonary valve

665

780

33502

Coronary artery correction

710

688

33503

Coronary artery graft

890

838

33504

Coronary artery graft

740

789

33600

Closure of valve

800

628

33602

Closure of valve

770

628

33606

Anastomosis/artery-aorta

860

728

33608

Repair anomaly w/conduit

800

668

33690

Reinforce pulmonary artery

620

636

33702

Repair of heart defects

663

751

33722

Repair of heart defect

770

608

33732

Repair heart-vein defect

710

578

33735

Revision of heart chamber

740

770

33736

Revision of heart chamber

710

548

33750

Major vessel shunt

680

722

33764

Major vessel shunt & graft

710

750

33767

Major vessel shunt

800

608

33774

Repair great vessels defect

845

998

33788

Revision of pulmonary artery

770

736

33802

Repair vessel defect

558

556

33803

Repair vessel defect

618

586

33820

Revise major vessel

430

414

33824

Revise major vessel

588

615

33840

Remove aorta constriction

588

639

33845

Remove aorta constriction

710

726

33851

Remove aorta constriction

603

700

33852

Repair septal defect

663

719

33853

Repair septal defect

800

668

33917

Repair pulmonary artery

740

608

33920

Repair pulmonary atresia

800

658

33922

Transect pulmonary artery

618

546

33974

Remove intra-aortic balloon

406

314

34502

Reconstruct vena cava

793

741

35091

Repair defect of artery

597

790

35694

Arterial transposition

468

456

35901

Excision graft neck

484

482

35903

Excision graft extremity

408

416

47135

Transplantation of liver

1,501

1,345

47136

Transplantation of liver

1,301

1,329

49422

Remove tunneled ip cath

154

182

49429

Removal of shunt

249

317

50320

Remove kidney living donor

480

524

50845

Appendico-vesicostomy

685

613

56632

Extensive vulva surgery

835

683

60520

Removal of thymus gland

406

474

60521

Removal of thymus gland

457

445

60522

Removal of thymus gland

525

533

61557

Incise skull/sutures

529

510

63700

Repair of spinal herniation

399

401

63702

Repair of spinal herniation

469

463

63704

Repair of spinal herniation

534

609

63706

Repair of spinal herniation

602

679

(3) Codes With Higher Total Medicare Payments in Office Than in Hospital or ASC

We are proposing to address nearly 200 codes that we believe have misvalued resource inputs. These are codes for which the total PFS payment when furnished in an office or other nonfacility setting would exceed the total Medicare payment (the combined payment to the facility and the professional) when the service is furnished in a facility, either a hospital outpatient department or an ASC.

For services furnished in a facility setting we would generally expect the combined payment to the facility and the practitioner to exceed the PFS payment made to the professional when the service is furnished in the nonfacility setting. This payment differential is expected because it reflects the greater costs we would expect to be incurred by facilities relative to physicians furnishing services in offices and other non-facility settings. These greater costs are due to higher overhead resulting from differences in regulatory requirements and for facilities, such as hospitals, maintaining the capacity to furnish services 24 hours per day and 7 days per week. However, when we analyzed such payments, we identified nearly 300 codes that would result in greater Medicare payment in the nonfacility setting than in the facility setting. We believe these anomalous site-of-service payment differentials are the result of inaccurate resource input data used to establish rates under the PFS.

In this proposed rule, we are proposing to address these misvalued codes. Specifically, we are proposing to refine the PE methodology to limit the nonfacility PE RVUs for individual codes so that the total nonfacility PFS payment amount would not exceed the total combined payment under the PFS and the OPPS (or the ASC payment system) when the service is furnished in the facility setting. We believe this is an efficient way to address these significant anomalies within the PE methodology and more appropriately value these services. We discuss this proposal in more detail in section II.A.4.b.3.

4. The Multiple Procedure Payment Reduction Policy

Medicare has long employed multiple procedure payment reduction (MPPR) policies to adjust payment to more appropriately reflect reduced resources involved with furnishing services that are frequently furnished together. Under these policies, we reduce payment for the second and subsequent services within the same MPPR category furnished in the same session or same day. These payment reductions reflect efficiencies that typically occur

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