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

Federal RegisterDec 10, 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-FC]

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:

Final rule with comment period.

SUMMARY:

This major final rule with comment period addresses changes to the physician fee schedule, clinical laboratory 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. This final rule with comment period also includes a discussion in the Supplementary Information regarding various programs. (See the Table of Contents for a listing of the specific issues addressed in the final rule with comment period.)

DATES:

Effective date:

The provisions of this final rule with comment period are effective on January 1, 2014, except for the amendments to §§ 405.350, 405.355, 405.405.2413, 405.2415, 405.2452, 410.19, 410.26, 410.37, 410.71, 410.74, 410.75, 410.76, 410.77, and 414.511, which are effective January 27, 2014, and the amendments to §§ 405.201, § 405.203, § 405.205, § 405.207, § 405.209, § 405.211, § 405.212, § 405.213, § 411.15, and 423.160, which are effective on January 1, 2015.

The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of January 1, 2014.

Applicability dates:

Additionally, the policies specified in under the following preamble sections are applicable January 27, 2014:

• Physician Compare Web site (section III.G.);

• Physician Self-Referral Prohibition: Annual Update to the List of CPT/HCPCS Codes. (section III.N.)

Comment date:

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on January 27, 2014. (See the

SUPLEMENTARY INFORMATION

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

ADDRESSES:

In commenting, please refer to file code CMS-1600-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

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

Electronically.

You may submit electronic comments on this regulation to

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-FC, P.O. Box 8013, Baltimore, MD 21244-8013.

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

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-FC, 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:

Elliott Isaac, (410) 786-4735 or

Elliott.Isaac@cms.hhs.gov

, for any physician payment issues not identified below.

Chava Sheffield, (410) 786-2298 or

Chava.Sheffield@cms.hhs.gov

, for issues related to practice expense methodology, impacts, the sustainable growth rate, or conversion factors.

Ryan Howe, (410) 786-3355 or

Ryan.Howe@cms.hhs.gov

, for issues related to direct practice expense inputs or interim final direct PE inputs.

Kathy Kersell, (410) 786-2033 or

Kathleen.Kersell@cms.hhs.gov

, for issues related to misvalued services.

Jessica Bruton, (410) 786-5991 or

Jessica.Bruton@cms.hhs.gov

, for issues related to work or malpractice RVUs.

Heidi Oumarou, (410) 786-7942 or

Heidi.Oumarou@cms.hhs.gov

, for issues related to the revision of Medicare Economic Index (MEI).

Gail Addis, (410) 786-4552 or

Gail.Addis@cms.hhs.gov

, for issues related to the refinement panel.

Craig Dobyski, (410) 786-4584 or

Craig.Dobyski@cms.hhs.gov

, for issues related to geographic practice cost indices.

Ken Marsalek, (410) 786-4502 or

Kenneth.Marsalek@cms.hhs.gov

, for issues related to telehealth services.

Simone Dennis, (410) 786-8409 or

Simone.Dennis@cms.hhs.gov

, for issues related to therapy caps.

Darlene Fleischmann, (410) 786-2357 or

Darlene.Fleischmann@cms.hhs.gov

, for issues related to “incident to” services or complex chronic care management services.

Corinne Axelrod, (410) 786-5620 or

Corrine.Axelrod@cms.hhs.gov

, for issues related to “incident to” services in Rural Health Clinics or Federally Qualified Health Centers.

Roberta Epps, (410) 786-4503 or

Roberta.Epps@cms.hhs.gov

, for issues related to chiropractors billing for evaluation and management services.

Rosemarie Hakim, (410) 786-3934 or

Rosemarie.Hakim@cms.hhs.gov

, for issues related to coverage of items and services furnished in FDA-approved investigational device exemption clinical trials.

Jamie Hermansen, (410) 786-2064 or

Jamie.Hermansen@cms.hhs.gov

or Jyme Schafer, (410) 786-4643 or

Jyme.Schafer@cms.hhs.gov

, for issues related to ultrasound screening for abdominal aortic aneurysms or colorectal cancer screening.

Anne Tayloe-Hauswald, (410) 786-4546 or

Anne-E-Tayloe.Hauswald@

cms.hhs.gov

, for issues related to ambulance fee schedule and clinical lab fee schedule.

Ronke Fabayo, (410) 786-4460 or

Ronke.Fabayo@cms.hhs.gov

or Jay Blake, (410) 786-9371 or

Jay.Blake@cms.hhs.gov

, for issues related to individual liability for payments made to providers and suppliers and handling of incorrect payments.

Rashaan Byers, (410) 786-2305 or

Rashaan.Byers@cms.hhs.gov

, for issues related to physician compare.

Christine Estella, (410) 786-0485 or

Christine.Estella@cms.hhs.gov

, for issues related to the physician quality reporting system and EHR incentive program.

Sandra Adams, (410) 786-8084 or

Sandra.Adams@cms.hhs.gov

, for issues related to Medicare Shared Savings Program.

Michael Wrobleswki, (410) 786-4465 or

Michael.Wrobleswki@cms.hhs.gov

, for issues related to value-based modifier and improvements to physician feedback.

Andrew Morgan, (410) 786-2543 or

Andrew.Morgan@cms.hhs.gov

, for issues related to e-prescribing under Medicare Part D.

Pauline Lapin, (410)786-6883 or

Pauline.Lapin@cms.hhs.gov

, for issues related to the chiropractic services demonstration budget neutrality issue.

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 Final Rule With Comment Period for PFS

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

B. Misvalued Services

C. Malpractice RVUs

D. Medicare Economic Index (MEI)

E. Establishing RVUs for CY 2014

F. Geographic Practice Cost Indices (GPCIs)

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

H. Medicare Telehealth Services for the Physician Fee Schedule

I. Therapy Caps

J. Requirements for Billing “Incident to” Services

K. Chronic Care Management (CCM) Services

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

M. Chiropractors Billing for Evaluation & Management Services

III. Other Provisions of the Proposed Regulations

A. Medicare Coverage of Items and Services in FDA-Approved Investigational Device Exemption Clinical Studies—Revisions of Medicare Coverage Requirements

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. Policies 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

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

IV. Collection of Information Requirements

V. Response to Comments

VI. Waiver of Proposed Rulemaking and Waiver of Delay of Effective Date

VII. Regulatory Impact Analysis

Regulations Text

Acronyms

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

AAA Abdominal aortic aneurysms

ACA Affordable Care Act (Pub. L. 111-148)

ACO Accountable care organization

AHE Average hourly earnings

AMA American Medical Association

AMA RUC AMA [Specialty Society] Relative (Value) Update Committee

ASC Ambulatory surgical center

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

AWV Annual wellness visit

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)

BEA Bureau of Economic Analysis

CAH Critical access hospital

CBSA Core-Based Statistical Area

CCM Chronic Care Management

CED Coverage with evidence development

CEHRT Certified EHR technology

CF Conversion factor

CLFS Clinical Laboratory Fee Schedule

CMD Contractor medical director

CMHC Community mental health center

CMT Chiropractic manipulative treatment

CORF Comprehensive outpatient rehabilitation facility

CPC Comprehensive Primary Care

CPEP Clinical Practice Expert Panel

CPI-U Consumer Price Index for Urban Areas

CPS Current Population Survey

CPT [Physicians] Current Procedural Terminology (

)

CQM Clinical quality measure

CT Computed tomography

CTA Computed tomographic angiography

CY Calendar year

DFAR Defense Federal Acquisition Regulations

DHS Designated health services

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

DSMT Diabetes self-management training

ECEC Employer Costs for Employee Compensation

ECI Employment Cost Index

eCQM Electronic clinical quality measures

EHR Electronic health record

EMTALA Emergency Medical Treatment and Labor Act

eRx Electronic prescribing

ESRD End-stage renal disease

FAR Federal Acquisition Regulations

FFS Fee-for-service

FOBT Fecal occult blood test

FQHC Federally qualified health center

FR Federal Register

GAF Geographic adjustment factor

GAO Government Accountability Office

GPCI Geographic practice cost index

GPRO Group practice reporting option

HCPCS Healthcare Common Procedure Coding System

HHS [Department of] Health and Human Services

HOPD Hospital outpatient department

HPSA Health professional shortage area

IDE Investigational device exemption

IDTF Independent diagnostic testing facility

IOM Institute of Medicine

IPPE Initial Preventive Physical Examination

IPPS Inpatient Prospective Payment System

IQR Inpatient Quality Reporting

IWPUT Intensity of work per unit of time

KDE Kidney disease education

LCD Local coverage determination

LDT Laboratory-developed test

MA Medicare Advantage

MAC Medicare Administrative Contractor

MAPCP Multi-payer Advanced Primary Care Practice

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

MDC Major diagnostic category

MedPAC Medicare Payment Advisory Commission

MEI Medicare Economic Index

MFP Multi-Factor Productivity

MGMA Medical Group Management Association

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)

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)

MP Malpractice

MPPR Multiple procedure payment reduction

MRA Magnetic resonance angiography

MRI Magnetic resonance imaging

MSA Metropolitan Statistical Areas

MSPB Medicare Spending per Beneficiary

MSSP Medicare Shared Savings Program

MU Meaningful use

NCD National coverage determination

NCQDIS National Coalition of Quality Diagnostic Imaging Services

NP Nurse practitioner

NPI National Provider Identifier

NPP Nonphysician practitioner

OACT CMS's Office of the Actuary

OBRA '89 Omnibus Budget Reconciliation Act of 1989

OBRA '90 Omnibus Budget Reconciliation Act of 1990

OES Occupational Employment Statistics

OMB Office of Management and Budget

OPPS Outpatient prospective payment system

PC Professional component

PCIP Primary Care Incentive Payment

PDP Prescription Drug Plan

PE Practice expense

PE/HR Practice expense per hour

PEAC Practice Expense Advisory Committee

PECOS Provider Enrollment, Chain, and Ownership System

PFS Physician Fee Schedule

PLI Professional Liability Insurance

PMA Premarket approval

POS Place of Service

PQRS Physician Quality Reporting System

PPIS Physician Practice Expense Information Survey

QRUR Quality and Resources Use Report

RBRVS Resource-based relative value scale

RFA Regulatory Flexibility Act

RHC Rural health clinic

RIA Regulatory impact analysis

RoPR Registry of Patient Registries

RUCA Rural Urban Commuting Area

RVU Relative value unit

SBA Small Business Administration

SGR Sustainable growth rate

SMS Socioeconomic Monitoring System

SNF Skilled nursing facility

SOI Statistics of Income

TAP Technical Advisory Panel

TC Technical component

TIN Tax identification number

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

UAF Update adjustment factor

USPSTF United States Preventive Services Task Force

VBP Value-based purchasing

VBM Value-Based Modifier

Addenda Available Only Through the Internet on the CMS Web site

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

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html

. 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 final rule with comment period, refer to item CMS-1600-FC. Readers who experience any problems accessing any of the Addenda or other documents referenced in this final rule with comment period and posted on the CMS Web site identified above should contact

Elliot.Isaac@cms.hhs.gov

CPT (Current Procedural Terminology) Copyright Notice

Throughout this final rule with comment period, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2013 American Medical Association. All Rights Reserved. CPT is a registered trademark of the American Medical Association (AMA). Applicable Federal Acquisition Regulations (FAR) and Defense Federal Acquisition Regulations (DFAR) apply.

I. Executive Summary and Background

A. Executive Summary

1. Purpose

This major final rule with comment period revises payment polices under the Medicare Physician Fee Schedule (PFS) and makes other policy changes related to Medicare Part B payment. Unless otherwise noted, these changes are 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 final rule with comment period, we establish 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 final rule with comment period includes discussions and/or policy changes regarding:

• Misvalued PFS Codes.

• Telehealth Services.

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

• Requiring Compliance with State law as a Condition of Payment for Services Furnished Incident to Physicians' (and Other Practitioners') Services.

• Revising the MEI based on MEI TAP Recommendations.

• Updating the Ambulance Fee Schedule regulations.

• Adjusting the Clinical Laboratory Fee Schedule based on technological changes

• Updating the—

++ Physician Compare Web site.

++ Physician Quality Reporting System.

++ Electronic Prescribing (eRx) Incentive Program.

++ Medicare Shared Savings Program.

++ Electronic Health Record (EHR) Incentive 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

We have determined that this final rule with comment period is economically significant. For a detailed discussion of the economic impacts, see section VII. of this final rule with comment period.

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 final rule with comment period, 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 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 non-facility 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 outpatient prospective payment system (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 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.C.2. of this final rule with comment period).

e. Application of Budget Neutrality to Adjustments of RVUs

As described in section VII.C.1. of this final rule with comment period, 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.F.2 of this final rule with comment period 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. For a more detailed discussion of the calculation of the CF, the SGR, and the MEI, we refer readers to section II.G. of this final rule with comment period.

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 final RVUs and established interim final 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 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 HOPD 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.

A correction document (78 FR 48996) was issued to correct several technical and typographical errors that occurred in the CY 2013 PFS final rule with comment period.

II. Provisions of the Final Rule With Comment Period 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 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. 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.

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.

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 and those provided in response to public comment periods. 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 for CY 2013. Therefore, the CY 2013 and 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 supplemental survey data.

Supplemental survey data on independent labs from the College of American Pathologists were implemented for payments beginning 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 beginning 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.B.2.b. of this final rule with comment period describes the current data sources for specialty-specific indirect costs used in our PE calculations. We allocated the indirect costs to the code level on the basis of the direct costs specifically associated with a code and the greater of either the clinical labor costs or the physician work RVUs. We also incorporated the survey data described earlier in the PE/HR discussion. The general approach to developing the indirect portion of the PE RVUs is described as follows:

• For a given service, we use the direct portion of the PE RVUs calculated as previously described and the average percentage that direct costs represent of total costs (based on survey data) across the specialties that furnish the service to determine an initial indirect allocator. 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 separately billable PC and TC components, the payment for the global service equals the sum of the payment for the TC and PC. To achieve this we use 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 aggregate pool of direct PE costs for the current year. This is the product of the current aggregate PE (direct and indirect) RVUs, the CF, and the average direct PE percentage from the survey data used for calculating the PE/HR by specialty.

Step 3:

Calculate the aggregate pool of direct PE costs for use in ratesetting. This is the product of the aggregated direct costs for all services from Step 1 and the utilization data for that service. For CY 2014, we adjusted the aggregate pool of direct PE costs in proportion to the change in the PE share in the revised MEI, as discussed in section II.D. of this final rule with comment period.

Step 4:

Using the results of Step 2 and Step 3, calculate a direct PE scaling adjustment to ensure that the aggregate pool of direct PE costs calculated in Step 3 does not vary from the aggregate pool of direct PE costs for the current year. Apply the scaling factor to the direct costs for each service (as calculated in Step 1).

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 PE 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 PE 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 PE percentage (direct PE RVUs/direct percentage) + clinical PE RVUs.

(

Note:

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

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

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

• The second part is either the work 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 in proportion to the change in the PE share in the revised MEI, as discussed in section II.D. of this final rule with comment period.

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 adjustments corresponding with the MEI revision described in section II.D. of this final rule with comment period). 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 we note that all specialties are included for purposes of calculating the final BN adjustment. (See “Specialties excluded from ratesetting calculation” later in this section.)

(5) Setup File Information

•

Specialties excluded from ratesetting calculation:

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

Table 1—Specialties Excluded From Ratesetting Calculation

Specialty code

Specialty description

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 final rule with comment period.

(6) Equipment Cost per Minute

The equipment cost per minute is calculated as:

(1/(minutes per year * usage)) * price * ((interest rate/(1−(1/((1 + interest rate)‸ life of equipment)))) + maintenance)

Where:

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

usage = 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 CY 2013, 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 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 final rule with comment period at

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html

. 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 spine 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.

Comment:

Several commenters objected to the statutorily-mandated change in equipment utilization rate assumptions, but none provided evidence that CMS has authority to use a different equipment utilization assumption for these services.

Response:

As mandated by statute, we are finalizing our proposed change in the equipment utilization rate for these services.

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

5.10

0.00

(2) Supply cost (Sup)

Step 1

AMA

2.98

7.34

3.39

0.00

1.19

0.00

(3) Equipment cost (Eqp)

Step 1

AMA

0.17

0.58

7.24

0.00

0.09

0.00

(4) Direct cost (Dir)

Step 1

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

16.48

85.45

16.38

0.00

6.38

0.00

(5) Direct adjustment (Dir. Adj.)

Steps 2-4

See footnote *

0.5511

(6) Adjusted Labor

Steps 2-4

=Lab * Dir Adj

=(1)*(5)

7.34

42.72

3.16

0.00

2.81

0.00

(7) Adjusted Supplies

Steps 2-4

=Eqp * Dir Adj

=(2)*(5)

1.64

4.05

1.87

0.00

0.66

0.00

(8) Adjusted Equipment

Steps 2-4

=Sup * Dir Adj

=(3)*(5)

0.10

0.32

3.99

0.00

0.05

0.00

(9) Adjusted Direct

Steps 2-4

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

9.08

47.09

9.03

0.00

3.52

0.00

(10) Conversion Factor (CF)

Step 5

PFS

34.0230

(11) Adj. labor cost converted

Step 5

=(Lab * Dir Adj)/CF

=(6)/(10)

0.22

1.26

0.09

0.00

0.08

0.00

(12) Adj. supply cost converted

Step 5

=(Sup * Dir Adj)/CF

=(7)/(10)

0.05

0.12

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)

0.27

1.38

0.27

0.00

0.10

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

0.81

6.51

0.65

0.26

(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

0.25

0.08

0.17

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

Step 8

=(19)+(21)

1.78

40.26

0.96

0.74

0.22

0.51

0.34

0.17

(23) Indirect Adjustment (Ind. Adj.)

Steps 9-11

See Footnote **

0.3848

(24) Adjusted Indirect Allocator

Steps 9-11

=Ind Alloc * Ind Adj

0.68

15.49

0.37

0.29

0.08

0.20

0.13

0.07

(25) Ind. Practice Cost Index (IPCI)

Steps 12-16

1.07

0.76

0.95

0.91

(26) Adjusted Indirect

Step 17

= Adj.Ind Alloc * PCI

=(24)*(25)

0.73

11.74

0.35

0.27

0.08

0.18

0.12

0.06

(27) PE RVU

Step 18

=(Adj Dir + Adj Ind) * Other Adj

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

1.00

13.08

0.63

0.55

0.08

0.28

0.22

0.06

Note:

PE RVUs in Table 5, row 27, may not match Addendum B due to rounding.

* The direct adj = [current pe rvus * CF * avg dir pct]/[sum direct inputs] = [step2]/[step3]

** The indirect adj = [current pe rvus * avg ind pct]/[sum of ind allocators] = [step9]/[step10]

Note:

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

Note:

The Other Adjustment includes an adjustment for the equipment utilization change.

3. Adjusting RVUs To Match PE Share of the Medicare Economic Index (MEI)

For CY 2014, as explained in detail in section II.D of this final rule with comment period, we are finalizing revisions to the MEI based on the recommendations of the MEI Technical Advisory Panel (TAP). The MEI is an index that measures the price change of the inputs used to furnish physician services. This measure was authorized by statute and is developed by the CMS Office of the Actuary. We believe that the MEI is the best measure available of the relative weights of the three components in payments under the PFS—work, PE and malpractice. Accordingly, we believe that to assure that the PFS payments reflect the resources in each of these components as required by section 1848(c)(3) of the Act, the RVUs used in developing rates should reflect the same weights in each component as the MEI. We proposed to accomplish this by holding the work RVUs constant and adjusting the PE RVUs, the MP RVUs and the CF to produce the appropriate balance in RVUs among components and payments. In the proposed rule and above, we detailed the steps necessary to accomplish this result (see steps 3, 10, and 18).

This proposed adjustment is consistent with our longstanding practice to make adjustments to match the RVUs for the PFS components with the MEI cost share weights for the components, including the adjustments described in the CY 1999 PFS Final Rule (63 FR 58829), CY 2004 PFS Final Rule 68 FR 63246-63247, and CY 2011 PFS Final Rule (75 FR 73275). We note that the revisions to the MEI finalized in section II.D of this final rule are made to the MEI as rebased for CY 2011, and that the RVUs we proposed for CY 2014 reflect the weights of the MEI as rebased for CY 2011 and revised for CY 2014. As such, the relationships among the work, PE, and malpractice RVUs under the PFS are aligned with those under the revised 2006-based MEI.

Comment:

Several commenters requested explanation regarding the relationship between the proposed MEI revision and the proposed RVUs. One commenter suggested that it would be better to scale the work RVUs upward instead of scaling the PE RVUs downward to achieve the weighting adjustment.

Response:

The change in the relationship among work, PE, and malpractice RVUs could be accomplished by applying adjustments directly to the work, PE, and malpractice RVUs or by holding the RVUs constant for one component, scaling the other two components and applying a budget neutrality adjustment to the conversion factor. We proposed to make the adjustment by holding work RVUs constant consistent with prior adjustments and in response to many public comments made during previous rulemaking (see, for example, 75 FR 73275) indicating a strong preference and persuasive arguments in favor of keeping the work RVUs stable over time since work RVUs generally only change based on reviews of particular services. In contrast, PE RVUs are developed annually, irrespective of changes in the direct PE inputs for particular services, so that scaling of PE RVUs is less disruptive to the public review of values that determine PFS payment rates. We took this approach for the CY 2014 adjustment because we believe the methodology and reasons for making the adjustment in this way are settled and remain valid. For these reasons, we are finalizing the proposed rebasing of the relationship among RVU components by holding the work RVUs constant, decreasing the PE RVUs and the MP RVUs, and applying a budget neutrality adjustment to the CF.

Comment:

Several commenters argued that the RVU components should not be weighted consistent with the revised MEI as it was it was entirely appropriate to include nurse practitioner and physician assistant wages in the physician practice expense calculation because physicians often employ nurse practitioners, physician assistants and other non‐physicians.

Response:

We refer commenters to section II.D. of the final rule with comment period regarding the appropriate classification of wages in the MEI. Regarding classification of labor inputs in the RVU components, the decision as to whether something should be considered a practice expense or work under the PFS does not depend on the employment status of the health care professional furnishing the service. Resource inputs are classified based on whether they relate to the “work” or “practice expense” portion of a service. The clinical labor portion of the direct PE input database includes the portion of services provided by practitioners who do not bill Medicare directly, such as registered nurses and other clinical labor. We do not include in this category the costs of nurse practitioners and others who can bill Medicare directly. Under the PFS, the work component of a service is valued based on the work involved in furnishing the typical service. The value is the same whether the service is billed by a physician or another practitioner (such as a nurse practitioner or physician assistant) who is permitted to bill Medicare directly for the service. We acknowledge that these practitioners may perform a variety of services in a physician office—some of which would be included in the work portion and others that would be included in the PE portion as clinical labor. Similarly, it is not unusual for physicians to hire other physicians to work in their practices, but we likewise do not consider those costs to be part of the clinical labor that is included as a practice expense. Since values for services under the PFS are based upon the typical case rather than the type of practitioner that performs the service in a particular situation, we continue to believe it is appropriate to include the work performed by professionals eligible to bill Medicare directly in the work component of PFS payments, even in cases when they are employed by physicians.

Additionally, we note that none of the commenters who questioned the appropriate accounting for the work of these nonphysician practitioners addressed how it would be appropriate to treat the costs for these nonphysician practitioners differently for purposes of calculating RVUs and the MEI. The labor of nonphysician practitioners who can bill independently for their services under the PFS is considered as work under the physician fee schedule since these services are also furnished by physicians and the RVUs for these PFS services do not vary based on whether furnished by a physician or nonphysician. As such, we believe that the change in the MEI to shift these costs from the PE to the work category as described in section II.D. of this final rule with comment period is entirely consistent with the PFS in this regard.

We would also note that the change in the MEI was recommended by the MEI TAP that identified a discrepancy between how the work of non-physician practitioners is captured in the RVUs, how billing works under the PFS, and how costs are accounted for in the MEI. With the change in the MEI being finalized in this final rule with comment period, we continue to believe that the MEI weights are the best reflection of the PFS component weights, and we believe it is appropriate to finalize this adjustment in the RVUs as well.

Comment:

Several commenters strongly urged the agency, in adjusting weights among the PFS components to reflect the MEI cost weight changes, to consider alternative methodologies that would mitigate the redistribution of RVUs from the PE to the work category. These commenters pointed out that the

practitioners who furnish services with a higher proportion of PE RVUs are hit hardest by these changes. These comments also suggested that CMS should consider postponing this adjustment of the RVUs until such a methodology can be vetted.

Several commenters suggested that, given the magnitude of the reductions, CMS should consider a phase-in of this change. These commenters pointed out that CMS has used a phase-in approach in the past to mitigate the effects of methodological changes to the calculation of payment rates under the MPFS, including a four-year phase-in of the transition from the top-down to the bottom-up methodology of calculating direct PE RVUs.

Response:

We appreciate that the increase in the work RVUs relative to PE RVUs will generally result in lower payments for practitioners who furnish more services with a higher proportion of PE RVUs. However, we continue to believe that the MEI cost share weights are the best reflection of the PFS component weights. The CY 2014 revisions to the MEI, following the rebasing for 2011 and consideration by the MEI TAP, reflect the best available information. As such, we believe that the relationship among the RVU components should conform to the revised cost weights adopted for the MEI.

While we understand and recognize the general preference to avoid significant year-to-year reductions in Medicare payment, including practitioners' interests in phasing in any reduction, and we acknowledge that this revision of the PFS component weights results in an increase in work RVUs relative to PE RVUs, we note that the 2011 rebasing of the MEI resulted in a change of greater magnitude that increased the PE RVUs relative to work RVUs. That change was not phased in. Based on consideration of these comments, we are finalizing as proposed the adjustment to the relationship among the work, PE, and malpractice component RVUs to reflect the MEI cost share being finalized in this final rule with comment period, with the necessary adjustment to the conversion factor and to PE and MP RVUs to maintain budget neutrality.

4. 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 final direct PE inputs are included in the final rule with comment period CY 2014 direct PE input database, which is available on the CMS Web site under under downloads for the CY 2014 PFS final rule with comment period at

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html

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 current 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 for codes that were not subject to comment in the CY 2013 final rule with comment period. Since changes were being suggested to codes not subject to comment, we believed these comments were best addressed through proposed revisions to the direct PE inputs in the proposed rule allowing the opportunity for public comment before implementation.

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) and thus they did not meet the criteria for direct PE inputs. These 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 CY 2013 final rule with comment period, there are 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

Affected 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 angiographywaste 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 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 agreed with the commenters that the items should not be considered disposable supplies. We believed that these items are more appropriately categorized as indirect PE costs, which are reflected in the allocation of indirect PE RVUs rather than through direct PE inputs. Therefore, we proposed 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).

In the case of the supply item called “bag system, 1000ml (for angiography waste fluids)” (SD140), we did 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 did 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, which are reflected in the PE RVUs through the allocation of indirect PE. We clarified 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 cannot be attributed to individual services and should not be incorporated into the direct PE input database as disposable supplies.

Moreover, because we 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 continued to believe that SD140 is a direct expense. Accordingly, we did not propose to remove SD140 from the direct PE input database.

Comment:

One commenter objected to CMS's proposal to remove the “device shipping cost” (SK106) and “communication, wireless per service” (SK113) from the direct PE input database as they are more analogous to the angiography waste fluid bag system than the other items since both items represent costs associated with a specific procedure rather than an amortization of costs associated with a service contract.

Response:

We agree with the commenter that both of these items may represent costs associated with a specific procedure. However, as we articulated in making the proposal to remove these items, we do not believe these items are disposable supplies and we believe all costs other than clinical labor, disposable supplies, and medical equipment should be considered indirect costs in order to maintain consistency and relativity within the PE methodology. We believe that there are a variety of costs allocable to individual services that are appropriately considered part of indirect cost categories for purposes of the PE methodology. Were all these included as direct PE inputs for services across the PFS, regardless of whether or not the items were reasonably described as clinical labor, disposable supplies, or medical equipment, then the relationship between direct and indirect costs would be significantly skewed. This skewing could be compounded since the amount of indirect PE allocated to particular codes is partly determined by the amount of direct costs associated with the codes. Therefore, the inaccurate inclusion of indirect costs as direct costs would not only result in duplicative accounting for the items (as both indirect and direct PE costs) but also an additional allocation of indirect PE based on the item's inclusion as a direct cost. Therefore, we are finalizing removal of these items from the direct PE input database as proposed.

Comment:

Several commenters suggested that CMS should change its understanding of direct and indirect practice expense items. One commenter suggested that all variable costs proportional to the number of services furnished per day be considered direct. Another commenter suggested that the only costs that can be considered indirect costs are those that are required by all services, those that do not vary from one service type to the next; and those that are not based on service volume. Therefore CMS should allow all other recommended direct PE inputs to be allowed as direct PE inputs.

Response:

We note that there is a longstanding PE methodology, established through notice and comment rulemaking that includes principles for determining whether an expense is direct or indirect. Under the established PE methodology, whether or not a particular cost is variable has little bearing on the appropriate classification of a particular item as a direct or indirect cost. Although we have previously pointed out that the current methodology does not accommodate costs that cannot be allocated to particular services as direct costs, this does not mean that all costs that can be allocated to particular services are necessarily direct costs. Instead, a significant number of costs considered to be indirect for purposes of the PE methodology are variable costs proportional to the kind and number of services furnished each day. For example, administrative and clerical resource costs associated with medical billing are likely to be incurred with each service furnished. Presumably, practitioners incur greater resource cost associated with administrative and clerical labor and supplies based on the volume of services furnished. Similarly, some kinds of services may require more administrative resources than others. Some complex services, for example, may require advance or follow-up administrative work that is not required for less complex services. General office expenses may also vary depending on the number and kind of services furnished. For example, practices that furnish a greater number of services to a greater number of patients generally require larger waiting rooms and additional waiting room furniture. Other services such as those that are furnished without having the patient present may not require patient waiting rooms at all. We note that some services require a different amount of electricity than others and some require more space than others. We believe that the PE methodology accounts for these costs in the allocation of indirect PE RVUs included in the payment rate for each service furnished to Medicare beneficiaries. We do not believe it would appropriate in the current methodology to include all such variable costs as direct PE inputs. Therefore, we do not agree with commenters' assertions regarding the appropriateness of these items as direct costs. Instead, we continue to believe that these costs represent indirect costs that are incorporated in the PE RVUs for these services through the allocation of

indirect PE RVUs. We also direct readers to section II.E.2.b. of this final rule for a discussion of comments received regarding the CY 2013 interim final direct PE inputs for surgical pathology services.

After consideration of these comments, we are finalizing our proposal to remove the specified anomalous supply items from the direct PE input database. The CY 2014 direct PE input database and the PE RVUs displayed in Addendum B of this final rule with comment period reflect the finalization of this proposal.

b. Direct PE Input Refinements Based on Routine Data Review

In reviewing the direct PE input database, we identified several discrepancies that we proposed to address for CY 2014. In the following paragraphs, we identify the nature of these discrepancies, the affected codes, and the adjustments proposed in the CY 2014 proposed rule 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 believed that the code 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.

Comment:

One commenter supported the inclusion of the supply items for CPT code 51710. We received no comments regarding the change in clinical labor time for codes 51710 and 51705.

Response:

Based on these comments and for the reasons stated, we are finalizing the removal of these items in the CY 2014 final 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 for these codes instead of the invalid supply code. We did not receive any comments regarding this proposed revision. Therefore, we are finalizing this revision as proposed for CY 2014.

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 for 18 of these codes. These codes appear in Table 8.

Comment:

One commenter agreed with this proposal to standardize moderate sedation inputs for codes valued in the nonfacility setting. We received no comments on the correction on the invalid supply item.

Response:

After considering this comment, we are finalizing the minor adjustments to the moderate sedation inputs as proposed. The CY 2014 direct PE database reflects these adjustments.

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

As we noted in the CY 2014 PFS proposed rule, we had 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 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 proposed to amend the pre-service clinical labor minutes for the codes listed in Table 9, consistent with the AMA RUC recommendation.

Comment:

One commenter supported this proposal based on the AMA RUC's recommendation.

Response:

After considering the supporting comment, we are finalizing these changes as proposed. The CY 2014 direct PE input database reflects these changes.

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

CPT code

Short descriptor

Existing CL Pre-

Service facility

minutes

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

As we noted in the CY 2013 PFS proposed rule, 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). We proposed to revise the direct PE input database to reflect the corrected price.

Comment:

Several commenters expressed support for this proposal.

Response:

We appreciate the commenters' support and have revised the CY 2014 final direct PE input database as proposed.

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), we proposed 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. We noted in the proposed rule that if the CY 2014 OPPS proposal were finalized, it would appear that there would no longer be a need for G-codes to describe robotic SRS treatment and delivery. We did not propose to replace the contractor-priced G-codes for PFS payment but did seek 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.

Comment:

Several commenters, including the AMA RUC, responded to our request for information regarding whether 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. Most commenters, including the AMA RUC, stated that the most recently recommended direct PE inputs for these services would accurately estimate the resources. One commenter suggested this was not the case and that CMS should maintain the G-codes for purposes of PFS payment.

Response:

We appreciate stakeholders' responsiveness to our request for information. We will consider the information submitted in public comments as we consider future rulemaking for these codes.

2. Using OPPS and ASC Rates in Developing PE RVUs

We typically establish two separate PE RVUs for services that can be furnished in either a nonfacility setting, like a physician's office, or a facility setting, like a hospital. The nonfacility PE RVUs reflect all of the direct and indirect practice expenses involved in furnishing a particular service when the entire service is furnished in a nonfacility setting. The facility PE RVUs reflect the direct and indirect practice expenses 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 and receive a separate Medicare payment for the service.

When services are furnished in the facility setting, such as a HOPD or an ASC, the total combined Medicare payment (made to the facility and the professional) 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 nonfacility 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, generally furnish services to higher acuity patients than those who receive services in physicians' offices, and have additional legal obligations such as complying with the Emergency Medical Treatment and Labor Act (EMTALA). Additionally, hospitals must meet conditions of participation and ASCs must meet conditions for coverage in order to participate in Medicare.

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 HOPD 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 (for example, 75 FR 73252). 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 at the same time the work RVUs, physician time, and direct PE inputs for a code, and reviewing all codes within families of codes 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 a high growth in the 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 furnished 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 proposed a change in the PE methodology beginning in CY 2014. To improve the accuracy of PFS nonfacility payment rates for each calendar year, we proposed 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 proposed to compare the PFS payment rate for a service furnished in an office setting to the total combined Medicare payment to practitioners and facilities for the same service when furnished in a hospital outpatient setting. For services on the ASC list, we proposed to make the same comparison except we would use the ASC rate as the point of comparison instead of the OPPS rate.

We proposed to limit the nonfacility PE RVUs for individual codes so that the total nonfacility PFS payment amount would not exceed the total combined amount that 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 combined 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 proposed to use the current year PFS conversion factor. Similarly, we proposed to use current year OPPS or ASC rates in the comparison. For services with no work RVUs, we proposed 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 proposed to exempt the following services from this policy:

•

Services Without Separate OPPS Payment Rates:

We proposed 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 proposed to exclude from this policy services capped at the OPPS payment rate in accordance with the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171). 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 proposed to exclude them from this policy.

•

Codes with Low Volume in the OPPS or ASC:

We proposed 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 proposed to exclude ASC services that are subject to the “office-based” procedure payment policies for which payment rates are based on the PFS nonfacility PE RVUs. We directed 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 also proposed 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 also proposed to exclude services with PE RVUs established through notice and comment rulemaking outside the PE Methodology.

Addendum B of the proposed rule displayed the PE RVUs that would result from implementation of the 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. Our proposed policy did 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). Our proposed policy was 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 stated our belief that our 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 our proposed policy would 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 would more appropriately reflect resource costs in the nonfacility setting.

Comment:

One commenter representing primary care physicians supported the proposal and indicated a belief that the proposed policy would help to correct misvaluation between primary care services and the services affected by the policy. Another commenter supported the policy as an interim step until an expedited review of the services could be conducted. Other commenters, while not

supporting the proposal due to the financial impact on certain services, stated that hospitals and ASCs do typically incur higher overhead costs in delivering services than physician offices.

The overwhelmingly majority of commenters objected to the proposed policy. Several commenters believed the services impacted by the policy were potentially misvalued, but still opposed our policy. Many commenters questioned whether facilities' costs for providing all services are necessarily higher than the costs of physicians or other practitioners. Commenters stated that the resources required to furnish services in nonfacility physician settings cannot be accurately measured using the OPPS methodology and that our proposal would result in rank order anomalies. Commenters indicated that it was inappropriate to base PFS payment on OPPS payment since a single APC contains multiple services that can involve a wide a range of costs that are averaged under the OPPS methodology. Many commenters also stated that since OPPS payment rates rely on the accuracy of APC payments, developed through hospitals accurately allocating their costs and charges to particular departments/APCs. These commenters stated that hospitals may have little incentive to accurately allocate their costs and charges to particular departments/APCs since they typically provide a broad range of services and therefore have the ability to make up for losses on one service with profits on another. The argument is that this ability makes the precise pricing of individual services less important in the OPPS system than it is in the physician setting. Also, the argument is that if physicians are going to be paid based upon the OPPS system it should be for all services so that like the hospitals they benefit from those overpaid in the hospital. Many commenters also questioned CMS' authority to use payment rates from other Medicare payment methodologies to cap PFS rates since they asserted the policy violated the statutory requirement that the PFS PE relative values be based on the resources used in furnishing the service. Some commenters also cited the financial impact of our proposed policy on the PFS rates as a further reason that the policy was inappropriate.

For all of these reasons, these commenters recommended that we not adopt the proposed policy. Many of these commenters also suggested modifications to the policy if CMS did decide to move forward. Commenters suggested that since the ASC rates reflect the OPPS relative weights to determine payment rates under the ASC payment system, and are not based on cost information collected from ASCs, the ASC rates should not be used in the proposed policy.

Commenters also stated a strong preference to use prospective year OPPS rates instead of current year OPPS rates as the point of comparison to prospective year PFS rates. The CY 2014 OPPS proposed rule proposed significant packaging that raised payment for many APCs, and therefore, raised the associated PFS cap rate.

Some commenters stated that they believed that CMS does not have authority to use any conversion factor in the policy other than the one calculated under existing law for CY 2014.

Commenters stated that the low-volume threshold (a minimum of 5 percent in the hospital outpatient setting) was proposed with insufficient rationale and recommended either a 50 percent threshold or an absolute volume threshold. Commenters also argued that there should be an ASC low-volume threshold for using ASC rates.

Commenters urged CMS to establish a means for stakeholders to demonstrate the validity of office costs relative to OPPS payments prior to implementing a cap for any particular code. Commenters also suggested that the AMA RUC should examine each code prior to the implementation of the policy for that code.

Commenters suggested excluding codes recently revalued, such as certain surgical pathology codes, from the cap as their resource inputs and costs are more accurate than those less recently revalued.

Commenters suggested that CMS should make the cap more transparent by identifying all affected codes and displaying the data used in establishing the capped values.

Several commenters suggested using the individual OPPS HCPCS code costs that are used to calculate the APC payment, rather than the APC payment rate itself, as a way of avoiding the problems caused by the averaging that goes on in calculating the APC rates. These commenters argued that individual code costs are a more appropriate comparison than APC payment rates.

Response:

As we stated in the proposed rule, when services are furnished in the facility setting, such as an HOPD or 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 continue to believe that this payment difference generally reflects the greater costs that facilities incur compared to those incurred by practitioners furnishing services in offices and other non-facility settings. We also continue to believe that if the total Medicare payment when a service is furnished in the physician office setting exceeds the total Medicare payment when a service is furnished in an HOPD or an ASC, this is generally not the result of appropriate payment differentials between the services furnished in different settings. Rather, we continue to believe that it is primarily 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.

We greatly appreciate all of the comments that we received on our proposal. Given the many thoughtful and detailed technical comments that we received, we are not finalizing our proposed policy in this final rule with comment period. We will consider more fully all the comments received, including those suggesting technical improvements to our proposed methodology. After further consideration of the comments, we expect to develop a revised proposal for using OPPS and ASC rates in developing PE RVUs which we will propose through future notice and comment rulemaking.

At this time, we do not believe that our standard process for evaluating potentially misvalued codes, including the use of the AMA RUC is an effective means of addressing these codes. As we stated in the proposed rule, we do not believe that the direct practice expense information we currently use to value these codes is accurate or reflects typical resource costs. We have addressed these issues extensively in previous rulemaking (for example, 75 FR 73252) and again in section II.B.4. of this final rule with comment period. We believe the current review process for direct PE inputs only accommodates incomplete, small sample, and potentially biased or inaccurate resource input costs that may distort the resources used to develop nonfacility PE RVUs used in calculating PFS payment rates for individual services.

3. 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 a series of changes we proposed to the direct PE inputs used in developing PE RVUs for these services for CY 2014.

(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. In the CY 2014 PFS proposed rule we sought public comment from stakeholders prior to proposing to implement any of these recommended changes through future rulemaking.

We noted 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. In the proposed rule, we stated that 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 proposing to incorporate the AMA RUC's recommendation to add more equipment items to these ultrasound equipment “room” packages, we stated our intention to 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 sought 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 stated that we thought that it would be appropriate to consider these comments in future rulemaking instead of proposing to alter the existing “rooms” just for ultrasound equipment items for CY 2014. Specifically we sought 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 stated that we believed 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 stated that we believed 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.

Comment:

Several commenters, including the AMA RUC, suggested that equipment room packages should include all items that are typically in the room and cannot be used for another patient, in order to furnish all typical services performed in that room. In its comment letter, the AMA RUC urged CMS to adopt its previous recommendations and pointed out that CMS has previously stated that equipment time is comprised of any time that clinical labor is using the piece of equipment, plus any additional time the piece of equipment is not available for use with another patient due to its use during the procedure in question. Therefore, any time a piece of equipment is not available for use with another patient, the equipment should be allocated minutes. The AMA RUC also pointed out, as an example, that the equipment item called “otoscope-ophthalmoscope (wall unit)” (EQ189) is a standard equipment input for all E/M codes even though it may not be typically used for each E/M service. Therefore, items included in the room but not necessarily typically used in furnishing particular services should be included as equipment minutes for all codes that typically use the room.

Response:

We appreciate the responses of the AMA RUC and others regarding our questions regarding equipment packages. We remain concerned about the appropriate estimate of resources regarding equipment items, especially those in room packages. We note that in our previous statements regarding allocation of equipment minutes, we have articulated that equipment minutes should be allocated to particular items when those items are unavailable for use with another patient “due to its use during the procedure in question.” Based on the recommended equipment room packages, we are concerned that this definition may not apply consistently in the direct PE input database. While we understand the example of the “otoscope-ophthalmoscope (wall unit)” (EQ189) for E/M services, we believe that there may be other medical equipment items in a typical evaluation room in addition to the otoscope-ophthalmoscope (wall unit) and an exam table.

These comments reinforce our belief that, for the sake of relativity and accuracy, changes to particular equipment room packages should be made in the context of a broader examination of all equipment packages, as well as assumed equipment utilization rates for these packages.

In addition to the concerns regarding the contents of the ultrasound “room” packages, we also expressed 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 the AMA RUC recommendation described in the proposal, 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

In the proposed rule, we noted that we were 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 sought comment on the appropriate price to use as the typical for portable ultrasound units.

Comment:

We received several comments regarding the appropriate means to price the direct PE inputs. The AMA RUC and several specialty expressed concern that it is difficult for medical specialty societies to obtain paid invoices for equipment and supplies, especially for large equipment items that are bought infrequently.

Several medical specialty societies suggested that their members are often uncomfortable sending invoices for expensive items since the prices are often proprietary and even though identifying information is redacted, the invoices are sometimes distributed to all AMA RUC meeting participants and available to the public once submitted to CMS. The specialty society suggested that certain stakeholders in the marketplace are often able to identify the individual practice submitting the invoice through this process and that such public revelation of the propriety pricing information may have major implications for the provider in future price negotiations and service lines in local markets for any practitioner volunteering such information.

The AMA RUC expressed a shared concern with CMS about pricing information submitted as supporting documentation for the ultrasound room packages and stated that it will work with medical specialty societies to provide paid invoices as soon as possible. The AMA RUC also noted that it will work with the specialties to ensure that paid invoices, rather than quotes, are submitted to CMS. Several commenters objected to CMS' suggestion that a newspaper article might more accurately reflect typical resource costs than an invoice.

Response:

We appreciate the response of the AMA RUC to these concerns. We also appreciate that in many cases the staff of medical specialty societies may have difficulty obtaining paid invoices. However, we believe the difficulty in obtaining invoices due to market sensitivity does not negate or lessen the critical importance of using accurate pricing information in establishing direct PE inputs. We believe it is likely that the pricing information would be less market sensitive if the information served to confirm the assumptions we already display in the direct PE input database. We appreciate the concerns shared by the AMA RUC's and we continue to seek the best means to identify typical resource costs associated with disposable supplies and medical equipment. While we believe that a copy of a paid invoice is the minimal amount of necessary information for pricing a disposable supply or medical equipment input, we reiterate our concerns that, even when proffered, a sole paid invoice is not necessarily the optimal source for identifying typical resource costs. We agree with commenters that information a manufacturer provides the news media is not necessarily accurate. However, when such information stands in stark contrast to single invoices, we believe it is imperative to attempt to reconcile that information to identify the best available information regarding the typical cost. We will continue to consider the perspectives offered by these commenters in developing future proposals regarding the pricing of individual items and equipment packages.

(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). As we noted in the proposed rule, 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 proposed 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. We did not receive any additional information regarding the price for this equipment item. Therefore the CY 2014 direct PE input database reflects the price as proposed.

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 created this equipment item to use as an input in the direct PE input database. The price associated with the “endoscopic ultrasound processor” is $59,925, which reflects the price documented on the copy of the paid invoice submitted with the recommendation. We did not receive any additional information regarding the price for this equipment item. Therefore the CY 2014 direct PE input database reflects the price as proposed.

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 created this new equipment item to use as an input in the direct PE input database. However, this item had 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 sought copies of paid invoices for this equipment item in the CY 2014 proposed rule so that we could price the item accurately in the future.

Comment:

One commenter reported that the current sales price for the bronchofibervideoscope ranges from $30,000-$50,000. The commenter provided an invoice for the equipment that reflected a price of $35,200.

Response:

Based on the submission of the invoice information, we have updated the direct PE input database to reflect a price of $35,200 for the Bronchofibervideoscope (ER093).

Endoscope, ultrasound probe, drive (ES015).

The AMA RUC forwarded pricing information to us regarding the existing input called “endoscope, ultrasound probe, drive” (ES015), including a copy of a paid invoice. Based on this information, we proposed to change the price associated with ES015 to $13,256.25, which reflects the price documented on the submitted copy of the paid invoice. We did not receive any additional information regarding the price for this equipment item. Therefore, we the CY 2014 direct PE input database reflects the price as proposed.

(2) 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 generally agreed with the AMA RUC regarding these recommended changes, and the recommended changes are reflected in the direct PE input database. Table 10 displays the codes with changes to ultrasound equipment. However, for certain codes we did not agree with the recommendations of the AMA RUC. The following paragraphs address the changes we proposed 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 did not propose to create the “room, ultrasound, cardiovascular” and therefore did not propose to add this “room” as an input for these services. However, we noted that the newly recommended equipment package incorporates many of the same kinds of items as the currently existing “room, ultrasound, vascular” (EL016). We agreed 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 believed 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.

Comment:

Several commenters urged CMS to accept the AMA RUC's recommendations. Most of these commenters suggested that if CMS were not to accept the AMA RUC's recommendation to create the new “cardiovascular ultrasound room” for CY 2014, then the inputs for the existing “room, ultrasound, vascular” (EL016) should be used. A few commenters representing some of the practitioners who furnish some of these services objected to the change in equipment inputs based on their assertion that the members of their specialty societies typically use more resource intensive equipment than reflected in the AMA RUC recommendations. One of these commenters suggested that the CPT codes for fetal echocardiography (CPT codes 76825, 76826, 78627, and 78628) previously included the same equipment items as the other echocardiography codes with equipment updates. This commenter suggested that the equipment for these codes should be updated to correspond with the equipment for other, similar services.

Response:

As we noted in the proposed rule, we believe that the issue of equipment room packages should be addressed in future rulemaking. Based on these comments, we are finalizing the use of the existing “room, ultrasound, vascular” (EL016) as a proxy for resource costs for these services pending future consideration of equipment room packages. We note that the AMA RUC based its recommendation on information obtained from the medical specialty societies that represent the specialty of the practitioners who furnish the majority of allowed services for each of these codes using recent Medicare claims data. We examined the comments we received objecting to the finalization of the AMA RUC-recommended equipment recommendations and, in each case, confirmed that the commenters did not represent the practitioners who typically furnish each service according to the Medicare claims data. In the case of the fetal echocardiography codes, we agree with the commenter's suggestion that the equipment for these codes should correspond with the equipment for the similar services, especially since the AMA RUC recommended replacing these items for all other codes in the direct PE inputs database. Based on that review, we remain confident that our proposal is appropriate and we are finalizing the changes in the ultrasound equipment items as proposed, with the exception of updating the equipment items for fetal echocardiography to be consistent with other echocardiography services. These changes are displayed in Table 10 and incorporated in the CY 2014 direct PE input database.

In the case of CPT code 76942 (Ultrasonic guidance for needle placement (for example, biopsy, aspiration, injection, localization device), imaging supervision and interpretation), we agreed 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, which is 45 minutes. 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 (for example, shoulder, hip, knee joint, subacromial bursa). The assumed procedure time for this service is five minutes. The procedure time assumptions for the vast majority of other procedures frequently reported with CPT code 76942 range from 5 to 20 minutes. Therefore, in addition to proposing the recommended change in equipment inputs associated with the code, we proposed 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 30 needle placement procedures most frequently reported with CPT code 76942. We noted that this reduced the clinical labor and equipment minutes associated with the code from 58 to 23 minutes.

Comment:

Several commenters noted that the AMA RUC is planning to conduct surveys and review the assumptions regarding the code and that CMS will be in a better position to make more accurate determinations if it waits for that data from the AMA RUC. One commenter stated that CMS should not make a change in the direct PE input database based on information in the Medicare claims data without input from the medical specialty societies whose members furnish and report the ultrasound guidance as described with CPT code 76942 and that a recommendation from the AMA RUC may provide better data than the information contained on Medicare claims.

Response:

We appreciate the partnership of the AMA RUC in the misvalued code initiative, but as a general principle, we do not believe that we should refrain from making appropriate changes to code values solely because the AMA RUC is planning to review a service in the future. In some cases, we believe that we should examine claims information and other sources of data and make proposals regarding the appropriate inputs used to develop the amount Medicare pays for PFS services. We believe that notice and comment rulemaking itself provides a means for the public, including medical specialty societies and the AMA RUC, to respond substantively to proposed changes in resource inputs for particular services. Furthermore, in cases like this one, we do not believe that the information reflected in the Medicare claims data is subjective or open to differing interpretations.

Comment:

Several commenters, including the AMA RUC, pointed out that CPT code 76942 includes supervision and interpretation, which represents both time and work that is separate from the surgical code and that the additional time included in the direct PE inputs may reflect time in addition to the base procedure.

Response:

We appreciate the response of the AMA RUC and others in pointing out concerns with our assumptions. We note that the proposed clinical labor service period of 23 minutes includes the 10 minutes of intra-service time in addition to 2 minutes for preparing the room, equipment, and supplies, 3 minutes for preparing and positioning the patient, 3 minutes for cleaning the room, and 5 minutes for processing images, completing data sheet, and presenting images and data to the interpreting physician. We did not receive information from any commenters suggesting that the time allocated for these tasks was inadequate. Therefore, we are finalizing our adjustment to the clinical labor minutes associated with this code, as proposed.

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

CPT code

Descriptor

CY 2013 CMS equipment code

CY 2013 equipment description

CY 2014 equipment CMS code

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.

76825

Echo exam of fetal heart

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

EL016

room, ultrasound, vascular.

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

76826

Echo exam of fetal heart

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

EL016

room, ultrasound, vascular.

EQ252

ultrasound, echocardiography analyzer software (ProSolv)

76827

Echo exam of fetal heart

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

EL016

room, ultrasound, vascular.

76828

Echo exam of fetal heart

EQ254

ultrasound, echocardiography w-4 transducers (Sequoia C256)

EL016

room, ultrasound, vascular.

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.

B. Misvalued Services

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.B.1.b. for more detail on the development of 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 RVUs shall be determined based

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