Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models & Other Revisions to Part B for CY 2015

Federal RegisterNov 13, 2014

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 403, 405, 410, 411, 412, 413, 414, 425, 489, 495, and 498

[CMS-1612-FC]

RIN 0938-AS12

Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, Clinical Laboratory Fee Schedule, Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models & Other Revisions to Part B for CY 2015

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, 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. See the Table of Contents for a listing of the specific issues addressed in this rule.

DATES:

Effective date:

The provisions of this final rule are effective on January 1, 2015, with the exception of amendments to parts 412, 413, and 495 which are effective October 31, 2014.

Comment date:

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on December 30, 2014.

Compliance date:

The compliance date for new data collection requirements in § 403.904(c)(8) is January 1, 2016.

ADDRESSES:

In commenting, please refer to file code CMS-1612-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-1612-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-1612-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:

Donta Henson, (410) 786-1947 for any physician payment issues not identified below.

Gail Addis, (410) 786-4522, for issues related to the refinement panel.

Chava Sheffield, (410) 786-2298, for issues related to practice expense methodology, impacts, the sustainable growth rate, conscious sedation, or conversion factors.

Kathy Kersell, (410) 786-2033, for issues related to direct practice expense inputs.

Jessica Bruton, (410) 786-5991, for issues related to potentially misvalued services or work RVUs.

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

Ken Marsalek, (410) 786-4502, for issues related to telehealth services.

Pam West, (410) 786-2302, for issues related to conditions for therapists in private practice or therapy caps.

Ann Marshall, (410) 786-3059, for issues related to chronic care management.

Marianne Myers, (410) 786-5962, for issues related to ambulance extender provisions.

Amy Gruber, (410) 786-1542, for issues related to changes in geographic area designations for ambulance payment.

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

Corinne Axelrod, (410) 786-5620, for issues related to Rural Health Clinics or Federally Qualified Health Centers.

Renee Mentnech, (410) 786-6692, for issues related to access to identifiable data for the Centers for Medicare & Medicaid models.

Marie Casey, (410) 786-7861 or Karen Reinhardt, (410) 786-0189, for issues related to local coverage determination process for clinical diagnostic laboratory tests.

Frederick Grabau, (410) 786-0206, for issues related to private contracting/opt-out.

David Walczak, (410) 786-4475, for issues related to payment policy for substitute physician billing arrangements (locum tenens).

Melissa Heesters, (410) 786-0618, for issues related to reports of payments or other transfers of value to covered recipients.

Alesia Hovatter, (410) 786-6861, for issues related to physician compare.

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

Alexandra Mugge, (410) 786-4457, for issues related to EHR incentive program.

Patrice Holtz, (410) 786-5663, for issues related to comprehensive primary care initiative.

Terri Postma, (410) 786-4169, for issues related to Medicare Shared Savings Program.

Kimberly Spalding Bush, (410) 786-3232, for issues related to value-based modifier and improvements to physician feedback.

Elizabeth Holland, (410) 786-1309, Medicare EHR Incentive Program (Medicare payment adjustments and hardship exceptions).

Elisabeth Myers (CMS), (410) 786-4751, Medicare EHR Incentive Program (Medicare payment adjustments and hardship exceptions).

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

C. Health Information Technology

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

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

B. Potentially Misvalued Services Under the Physician Fee Schedule

C. Malpractice Relative Value Units (RVUs)

D. Geographic Practice Cost Indices (GPCIs)

E. Medicare Telehealth Services

F. Valuing New, Revised and Potentially Misvalued Codes

G. Establishing RVUs for CY 2015

H. Chronic Care Management (CCM)

I. Therapy Caps for CY 2015

J. Definition of Colorectal Cancer Screening Tests

K. Payment of Secondary Interpretation of Images

L. Conditions Regarding Permissible Practice Types for Therapists in Private Practice

M. Payments for Practitioners Managing Patients on Home Dialysis

N. Sustainable Growth Rate

III. Other Provisions of the Final Rule With Comment Period Regulation

A. Ambulance Extender Provisions

B. Changes in Geographic Area Delineations for Ambulance Payment

C. Clinical Laboratory Fee Schedule

D. Removal of Employment Requirements for Services Furnished “Incident to” Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) Visits

E. Access to Identifiable Data for the Center for Medicare and Medicaid Innovation Models

F. Local Coverage Determination Process for Clinical Diagnostic Laboratory Tests

G. Private Contracting/Opt-Out

H. Solicitation of Comments on the Payment Policy for Substitute Physician Billing Arrangements

I. Reports of Payments or Other Transfers of Value to Covered Recipients

J. Physician Compare Web Site

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

L. Electronic Health Record (EHR) Incentive Program

M. Medicare Shared Savings Program

N. Value-Based Payment Modifier and Physician Feedback Program

O. Establishment of the Federally Qualified Health Center Prospective Payment System (FQHC PPS)

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

Q. Interim Final Revisions to the Electronic Health Record (EHR) Incentive Program

IV. Collection of Information Requirements

V. Response to Comments

VI. Waiver of Proposed Rulemaking and Waiver of Delay in 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

ACO Accountable care organization

AMA American Medical Association

ASC Ambulatory surgical center

ATA American Telehealth Association

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

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

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

CAD Coronary artery disease

CAH Critical access hospital

CBSA Core-Based Statistical Area

CCM Chronic care management

CEHRT Certified EHR technology

CF Conversion factor

CG-CAHPS Clinician and Group Consumer Assessment of Healthcare Providers and Systems

CLFS Clinical Laboratory Fee Schedule

CNM Certified nurse-midwife

CP Clinical psychologist

CPC Comprehensive Primary Care

CPEP Clinical Practice Expert Panel

CPT [Physicians] Current Procedural Terminology (

)

CQM Clinical quality measure

CSW Clinical social worker

CT Computed tomography

CY Calendar year

DFAR Defense Federal Acquisition Regulations

DHS Designated health services

DM Diabetes mellitus

DSMT Diabetes self-management training

eCQM Electronic clinical quality measures

EHR Electronic health record

E/M Evaluation and management

EP Eligible professional

eRx Electronic prescribing

ESRD End-stage renal disease

FAR Federal Acquisition Regulations

FFS Fee-for-service

FQHC Federally qualified health center

FR Federal Register

GAF Geographic adjustment factor

GAO Government Accountability Office

GPCI Geographic practice cost index

GPO Group purchasing organization

GPRO Group practice reporting option

GTR Genetic Testing Registry

HCPCS Healthcare Common Procedure Coding System

HHS [Department of] Health and Human Services

HOPD Hospital outpatient department

HPSA Health professional shortage area

IDTF Independent diagnostic testing facility

IPPS Inpatient Prospective Payment System

IQR Inpatient Quality Reporting

ISO Insurance service office

IWPUT Intensity of work per unit of time

LCD Local coverage determination

MA Medicare Advantage

MAC Medicare Administrative Contractor

MAP Measure Applications Partnership

MAPCP Multi-payer Advanced Primary Care Practice

MAV Measure application validity [process]

MCP Monthly capitation payment

MedPAC Medicare Payment Advisory Commission

MEI Medicare Economic Index

MFP Multi-Factor Productivity

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

MMA Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Pub. L. 108-173, enacted on December 8, 2003)

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

NQS National Quality Strategy

OACT CMS's Office of the Actuary

OBRA '89 Omnibus Budget Reconciliation Act of 1989 (Pub. L. 101-239)

OBRA '90 Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508)

OES Occupational Employment Statistics

OMB Office of Management and Budget

OPPS Outpatient prospective payment system

OT Occupational therapy

PA Physician assistant

PAMA Protecting Access to Medicare Act of 2014 (Pub. L. 113-93)

PC Professional component

PCIP Primary Care Incentive Payment

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

PQRS Physician Quality Reporting System

PPIS Physician Practice Expense Information Survey

PT Physical therapy

PY Performance year

QCDR Qualified clinical data registry

QRUR Quality and Resources Use Report

RBRVS Resource-based relative value scale

RFA Regulatory Flexibility Act

RHC Rural health clinic

RIA Regulatory impact analysis

RUC American Medical Association/Specialty Society Relative (Value) Update Committee

RUCA Rural Urban Commuting Area

RVU Relative value unit

SBA Small Business Administration

SGR Sustainable growth rate

SIM State Innovation Model

SLP Speech-language pathology

SMS Socioeconomic Monitoring System

SNF Skilled nursing facility

TAP Technical Advisory Panel

TC Technical component

TIN Tax identification number

UAF Update adjustment factor

UPIN Unique Physician Identification Number

USPSTF United States Preventive Services Task Force

VBP Value-based purchasing

VM Value-Based Payment 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 2015 PFS final rule with comment period, refer to item CMS-1612-FC. Readers who experience any problems accessing any of the Addenda or other documents referenced in this rule and posted on the CMS Web site identified above should contact

donta.henson1@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. These changes are applicable to services furnished in CY 2015.

2. Summary of the Major Provisions

The Social Security Act (the 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's 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 2015 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 proposals regarding:

• Misvalued PFS Codes.

• Telehealth Services.

• Chronic Care Management Services.

• Establishing Values for New, Revised, and Misvalued Codes.

• Updating the Ambulance Fee Schedule regulations.

• Changes in Geographic Area Delineations for Ambulance Payment.

• Updating the—

++ Physician Compare Web site.

++ Physician Quality Reporting System.

++ Medicare Shared Savings Program.

++ Electronic Health Record (EHR) Incentive Program.

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

3. Summary of Costs and Benefits

The Act requires that annual adjustments to PFS RVUs may not cause annual estimated expenditures to differ by more than $20 million from what they would have been had the adjustments not been made. If adjustments to RVUs would cause expenditures to change by more than $20 million, we must make adjustments to preserve budget neutrality. These adjustments can affect the distribution of Medicare expenditures across specialties. In addition, several proposed changes would affect the specialty distribution of Medicare expenditures. When considering the combined impact of work, PE, and MP RVU changes, the projected payment impacts are small for most specialties; however, the impact would be larger for a few specialties.

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 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 (Pub. L. 101-239, enacted on December 19, 1989) (OBRA '89), and the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508, enacted on November 5, 1990) (OBRA '90). 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 (NPPs) 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 work RVUs established for the initial fee schedule, which was implemented on January 1, 1992, were developed with extensive input from the physician community. A research team at the Harvard School of Public Health developed the original work RVUs for most codes 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.

As specified in section 1848(c)(1)(A) of the Act, the work component of physicians' services means the portion of the resources used in furnishing the service that reflects physician time and intensity. We establish work RVUs for new, revised and potentially misvalued codes based on our review of information that generally includes, but is not limited to, recommendations received from the American Medical Association/Specialty Society Relative Value Update Committee (RUC), the Health Care Professionals Advisory Committee (HCPAC), the Medicare Payment Advisory Commission (MedPAC), and other public commenters; medical literature and comparative databases; as well as a comparison of the work for other codes within the Medicare PFS, and consultation with other physicians and health care professionals within CMS and the federal government. We also assess the methodology and data used to develop the recommendations submitted to us by the RUC and other public commenters, and the rationale for their recommendations.

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. The PE RVUs continue to represent the portion of these resources involved in furnishing PFS services.

Originally, the resource-based method was to be used beginning in 1998, but section 4505(a) of the Balanced Budget Act of 1997 (Pub. L. 105-33, enacted on August 5, 1997) (BBA) 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 on November 2, 1998 (63 FR 58814), effective for services furnished in CY 1999. Based on the requirement to transition to a resource-based system for PE over a 4-year period, payment rates were not fully based upon resource-based PE RVUs until CY 2002. This resource-based system was based on two significant sources of actual PE data: The Clinical Practice Expert Panel (CPEP) data and the AMA's Socioeconomic Monitoring System (SMS) data. (These data sources are described in greater detail in the CY 2012 final rule with comment period (76 FR 73033).)

Separate PE RVUs are established for services furnished in facility settings, such as a hospital outpatient department (HOPD) or an ambulatory surgical center (ASC), and in nonfacility settings, such as a physician's office. The nonfacility RVUs reflect all of the direct and indirect PEs involved in furnishing a service described by a particular HCPCS code. The difference, if any, in these PE RVUs generally results in a higher payment in the nonfacility setting because in the facility settings some costs are borne by the facility. Medicare's payment to the facility (such as the 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 (Pub. L. 106-113, enacted on November 29, 1999) (BBRA) 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 commercial and physician-owned insurers' malpractice insurance premium data from all the states, the District of Columbia, and Puerto Rico. For more information on MP RVUs, see section II.C. of this final rule with comment period.

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.

Although refinements to the direct PE inputs initially relied heavily on input from the 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. This final rule with comment period establishes a five-year review for CY 2015.

In addition to the five-year reviews, beginning for CY 2009, CMS, and the 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.

e. Application of Budget Neutrality To Adjustments of RVUs

As described in section VI.C. 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 caused expenditures for the year to change by more than $20 million, we make adjustments to ensure that expenditures did 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.D. 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. 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 2014 PFS final rule with comment period (78 FR 74230) implemented changes to the PFS and other Medicare Part B payment policies. It also finalized many of the CY 2013 interim final RVUs and established interim final RVUs for new and revised codes for CY 2014 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 section 635 of the American Taxpayer Relief Act of 2012 (Pub. L. 112-240, enacted on January 2, 2013) (ATRA), which revised the equipment utilization rate assumption for advanced imaging services furnished on or after January 1, 2014.

Also, in the CY 2014 PFS final rule with comment period, we announced the following for CY 2014: the total PFS update of −20.1 percent; the initial estimate for the SGR of −16.7 percent; and a CF of $27.2006. These figures were calculated based on the statutory provisions in effect on November 27, 2013, when the CY 2014 PFS final rule with comment period was issued.

The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67, enacted on December 26, 2013) established a 0.5 percent update to the PFS CF through March 31, 2014 and the Protecting Access to Medicare Act of 2014 (Pub. L. 113-93, enacted on April 1, 2014) (PAMA) extended this 0.5 percent update through December 31, 2014. As a result, the CF for CY 2014 that was published in the CY 2014 final rule with comment period (78 FR 74230) was revised to $35.8228 for services furnished on or after January 1, 2014 and on or before December 31, 2014. The PAMA provides for a 0.0 percent update to the PFS for services furnished on or after January 1, 2015 and on or before March 31, 2015.

The Pathway for SGR Reform Act extended through March 31, 2014 several provisions of Medicare law that would have otherwise expired on December 31, 2013. The PAMA extended these same provisions further through March 31, 2015. A list of these provisions follows.

• The 1.0 floor on the work geographic practice cost index

• The exceptions process for outpatient therapy caps

• The manual medical review process for therapy services

• The application of the therapy caps and related provisions to services furnished in HOPDs

In addition, section 220 of the PAMA included several provisions affecting the valuation process for services under the PFS. Section 220(a) of the PAMA amended section 1848(c)(2) of the Act to add a new subparagraph (M). The new subparagraph (M) provides that the Secretary may collect or obtain information from any eligible professional or any other source on the resources directly or indirectly related to furnishing services for which payment is made under the PFS, and that such information may be used in the determination of relative values for services under the PFS. Such information may include the time involved in furnishing services; the amounts, types and prices of practice expense inputs; overhead and accounting information for practices of physicians and other suppliers, and any other elements that would improve the valuation of services under the PFS. This information may be collected or obtained through surveys of physicians or other suppliers, providers of services, manufacturers, and vendors; surgical logs, billing systems, or other practice or facility records; EHRs; and any other mechanism determined appropriate by the Secretary. If we use this information, we are required to disclose the source and use of the information in rulemaking, and to make available aggregated information that does not disclose individual eligible professionals, group practices, or information obtained pursuant to a nondisclosure agreement. Beginning with fiscal year 2014, the Secretary may compensate eligible professionals for submission of data.

Section 220(c) of the PAMA amended section 1848(c)(2)(K)(ii) of the Act to expand the categories of services that the Secretary is directed to examine for the purpose of identifying potentially misvalued codes. The nine new categories are as follows:

• Codes that account for the majority of spending under the PFS.

• Codes for services that have experienced a substantial change in the hospital length of stay or procedure time.

• Codes for which there may be a change in the typical site of service since the code was last valued.

• Codes for which there is a significant difference in payment for the same service between different sites of service.

• Codes for which there may be anomalies in relative values within a family of codes.

• Codes for services where there may be efficiencies when a service is furnished at the same time as other services.

• Codes with high intra-service work per unit of time.

• Codes with high PE RVUs.

• Codes with high cost supplies.

(See section II.B. of this final rule with comment period for more information about misvalued codes.).

Section 220(i) of the PAMA also requires the Secretary to make publicly available the information we considered when establishing the multiple procedure payment reduction (MPPR) policy for the professional component of advanced imaging procedures. The policy reduces the amount paid for the professional component when two advanced imaging procedures are furnished in the same session. The policy was effective for individual physicians on January 1, 2012 and for physicians in the same group practice on January 1, 2013.

In addition, section 220 of the PAMA includes other provisions regarding valuation of services under the PFS that take effect in future years. Section 220(d) of the PAMA establishes an annual target from CY 2017 through CY 2020 for reductions in PFS expenditures resulting from adjustments to relative values of misvalued services. The target is calculated as 0.5 percent of the estimated amount of expenditures under the fee schedule for the year. If the net reduction in expenditures for the year is equal to or greater than the target for the year, the funds shall be redistributed in a budget-neutral manner within the PFS. The amount by which such reduced expenditures exceed the target for the year shall be treated as a reduction in expenditures for the subsequent year, for purposes of determining whether the target has or has not been met. The legislation includes an exemption from budget neutrality of reduced expenditures if the target is not met. Other provisions of section 220 of the PAMA include a 2-year phase-in for reductions in RVUs of at least 20 percent for potentially misvalued codes that do not involve coding changes, and certain adjustments to the fee schedule areas in California. These provisions will be addressed as we implement them in future rulemaking.

On March 5, 2014, we submitted to MedPAC an estimate of the SGR and CF applicable to Medicare payments for physicians' services for CY 2015, as required by section 1848(d)(1)(E) of the Act. The actual values used to compute physician payments for CY 2015 will be based on later data and are scheduled to be published by November 1, 2014, as part of the CY 2015 PFS final rule with comment period.

C. Health Information Technology

The Department of Health and Human Services (HHS) believes all patients, their families, and their health care providers should have consistent and timely access to patient health information in a standardized format that can be securely exchanged between the patient, providers, and others involved in the patient's care. (HHS August 2013 Statement, “Principles and Strategies for Accelerating Health Information Exchange,” see

http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf

) HHS is committed to accelerating health information exchange (HIE) through the use of safe, interoperable health information technology (health IT), including electronic health records (EHRs), across the broader care continuum through a number of initiatives: (1) Alignment of incentives and payment adjustments to encourage provider adoption and optimization of health IT and HIE services through Medicare and Medicaid payment policies; (2) adoption of common standards and certification requirements for interoperable HIT; (3) support for privacy and security of patient information across all HIE-focused initiatives; and (4) governance of health information. These initiatives are designed to encourage HIE among health care providers, including professionals and hospitals eligible for the Medicare and Medicaid EHR Incentive Programs and those who are not eligible for the EHR Incentive Programs, and are designed to improve care delivery and coordination across the entire care continuum. For example, the Transition of Care Measure #2 in Stage 2 of the Medicare and Medicaid EHR Incentive Programs requires HIE to share summary records for more than 10 percent of care transitions. In addition, to increase flexibility in the Office of the National Coordinator for Health Information Technology's (ONC) regulatory certification structure, ONC expressed in the 2014 Edition Release 2 final rule (79 FR 54472-73) an intent to propose future changes to the ONC HIT Certification Program that would permit more efficient certification of health IT for other health care settings, such as long-term and post-acute care and behavioral health settings.

We believe that health IT that incorporates usability features and has been certified to interoperable standards can effectively and efficiently help all providers improve internal care delivery practices, support management of patient care across the continuum, and support the reporting of electronically specified clinical quality measures (eCQMs).

II. Provisions of the Proposed Rule for PFS

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

1. Overview

Practice expense (PE) is the portion of the resources used in furnishing a service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages, but excluding malpractice expenses, as specified in section 1848(c)(1)(B) of the Act. As required by section 1848(c)(2)(C)(ii) of the Act, we use a resource-based system for determining PE RVUs for each physician's service. We develop PE RVUs by considering 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.

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, medical supplies, and medical equipment) 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 generally based on our review of recommendations received from the 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 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, PE RVUs from CY 2013 forward 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.

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 for work 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, medical supplies, and medical equipment) typically involved with furnishing each of the services. The costs of these resources are calculated from the refined direct PE inputs in our PE database. For example, if one service has a direct cost sum of $400 from our PE database and another service has a direct cost sum of $200, the direct portion of the PE RVUs of the first service would be twice as much as the direct portion of the PE RVUs for the second service.

(2) Indirect Costs

Section II.A.2.b. of this 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 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 other 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.)

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.

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 labor 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 labor 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.

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 work 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. The final PE BN adjustment is calculated by comparing the results of Step 18 to the current pool of PE RVUs. This final BN adjustment is required 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 prosthetist.

Individual certified prosthetist-orthotist.

Medical supply company with registered pharmacist.

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.

Optician.

Physician assistant.

Hospital.

SNF.

Intermediate care nursing facility.

Nursing facility, other.

HHA.

Pharmacy.

Medical supply company with respiratory therapist.

Department store.

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 work 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 work 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 which we use a 90 percent assumption as required by Section 1848(b)(4)(C) of the Act.

Maintenance:

This factor for maintenance was proposed and finalized during rulemaking for CY 1998 PFS (62 FR 33164). Several stakeholders have suggested that this maintenance factor assumption should be variable. We solicited comments regarding reliable data on maintenance costs that vary for particular equipment items. We received several comments about variable maintenance costs, which we will consider in future rulemaking. We note, however, that we do not believe that high-level summary data from informal surveys constitutes reliable data. Rather than assertions that a particular maintenance rate is typical, multiple invoices containing equipment prices that are accompanied by maintenance contracts would provide support for a maintenance cost other than our currently assumed 5 percent. We continue to seek reliable data about variable maintenance costs, as we consider adjustments to our methodology to accommodate variable maintenance costs.

Per-use Equipment Costs:

Several stakeholders have also suggested that our PE methodology should incorporate usage fees and other per-use equipment costs as direct costs. We also solicited comment on adjusting our cost formula to include equipment costs that do not vary based on the equipment time. We received a comment that addressed how to incorporate usage fees and other per-use equipment costs into our methodology, and received several comments that addressed how we should reclassify the anomalous supply inputs removed from the direct PE database. We will consider these comments in future rulemaking, including the way these anomalous supply inputs fit in to any future proposals related to per-use costs.

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

Table 3—SBA Maximum Interest Rates

Price

Useful life

Interest rate

(%)

<$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

Table 4—Calculation of PE RVUS Under Methodology for Selected Codes

Factor (CF) (2nd part)

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

5.10

(2) Supply cost (Sup)

Step 1

AMA

2.98

7.34

0.53

1.19

(3) Equipment cost (Eqp)

Step 1

AMA

0.17

0.58

6.92

0.09

(4) Direct cost (Dir)

Step 1

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

16.48

85.45

13.19

6.38

(5) Direct adjustment (Dir. Adj.)

Steps 2-4

See footnote*

0.5898

(6) Adjusted Labor

Steps 2-4

=Labor * Dir Adj

=(1)*(5)

7.86

45.72

3.39

3.01

(7) Adjusted Supplies

Steps 2-4

=Eqp * Dir Adj

=(2)*(5)

1.76

4.33

0.31

0.70

(8) Adjusted Equipment

Steps 2-4

=Sup * Dir Adj

=(3)*(5)

0.10

0.34

4.08

0.05

(9) Adjusted Direct

Steps 2-4

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

9.72

50.40

7.78

3.77

(10) Conversion Factor (CF)

Step 5

PFS

35.82

(11) Adj. labor cost converted-

Step 5

=(Lab * Dir Adj)/CF

=(6)/(10)

0.22

1.28

0.09

0.08

(12) Adj. supply cost converted

Step 5

=(Sup * Dir Adj)/CF

=(7)/(10)

0.05

0.12

0.01

0.02

(13) Adj. equipment cost converted

Step 5

=(Eqp * Dir Adj)/CF

=(8)/(10)

0.01

0.11

(14) Adj. direct cost converted

Step 5

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

0.27

1.41

0.22

0.11

(15) Work RVU

Setup File

PFS

0.97

33.75

0.22

0.17

(16) Dir_pct

Steps 6,7

Surveys

0.25

0.17

0.29

(17) Ind_pct

Steps 6,7

Surveys

0.75

0.83

0.71

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

Step 8

See Step 8

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

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

Step 8

See 18

0.82

6.67

0.53

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)

1.79

40.42

0.84

0.62

0.22

0.51

0.34

0.17

(23) Indirect Adjustment (Ind. Adj.)

Steps 9-11

See Footnote**

0.3813

(24) Adjusted Indirect Allocator

Steps 9-11

=Ind Alloc * Ind Adj

0.68

15.41

0.32

0.24

0.08

0.20

0.13

0.06

(25) Ind. Practice Cost Index (IPCI)

Steps 12-16

1.07

0.75

0.99

0.91

(26) Adjusted Indirect

Step 17

= Adj.Ind Alloc * PCI

=(24)*(25)

0.73

11.59

0.32

0.24

0.08

0.18

0.12

0.06

(27) Final PE RVU

Step 18

=(Adj Dir + Adj Ind) * Other Adj

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

1.01

13.04

0.54

0.46

0.08

0.29

0.23

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. Changes to Direct PE Inputs for Specific Services

In this section, we discuss other CY 2015 revisions related to direct PE inputs for specific services. The final direct PE inputs are included in the final rule CY 2015 direct PE input database, which is available on the CMS Web site under downloads for the CY 2015 PFS final rule with comment period at

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

a. RUC Recommendation for Monitoring Time following Moderate Sedation

We received a recommendation from the RUC regarding appropriate clinical labor minutes for post-procedure moderate sedation monitoring and post-procedure monitoring. The RUC recommended 15 minutes of RN time for one hour of monitoring following moderate sedation and 15 minutes of RN time per hour for post-procedure monitoring (unrelated to moderate sedation). For 17 procedures listed in Table 5, the recommended clinical labor minutes differed from the clinical labor minutes in the direct PE database. We proposed to accept, without refinement, the RUC recommendation to adjust these clinical labor minutes as indicated in Table 5 as “Change to Clinical Labor Time.”

Table 5—Codes With Changes to Post-Procedure Clinical Labor Monitoring Time

CPT Code

Current

monitoring

time

(min)

RUC recommended total post-procedure monitoring time

(min)

Change to clinical labor time

(min)

32553

35471

35475

−30

35476

−30

36147

37191

−30

47525

49411

50593

50200

31625

−5

31626

−10

31628

−10

31629

−10

31634

−10

31645

31646

Comment:

We received two comments supporting our proposal to accept the RUC recommendation, without refinement, to adjust the clinical labor minutes as indicated in Table 5. One commenter noted that the RUC recommendation was a more accurate reflection of the monitoring time, particularly for codes 50593 (Ablation, renal tumor(s), unilateral, percutaneous, cryotherapy) and 50200 (Renal biopsy; percutaneous, by trocar or needle), than the current time.

Response:

We appreciate commenters' support for our proposal. After consideration of comments received, we are finalizing our proposal to accept, without refinement, the RUC recommendation to adjust the clinical labor minutes as indicated in Table 5 as “Change to Clinical Labor Time.”

b. RUC Recommendation for Standard Moderate Sedation Package

We received a RUC recommendation to modify PE inputs included in the standard moderate sedation package. Specifically, the RUC indicated that several specialty societies have pointed to the need for a stretcher during procedures for which moderate sedation is inherent in the procedure. Although the RUC did not recommend that we make changes to PE inputs for codes at this time, the RUC indicated that its future recommendations would include the stretcher as a direct input for procedures including moderate sedation.

The RUC recommended three scenarios that it would use in the future to allocate the equipment time for the stretcher based on the procedure time and whether the stretcher would be available for other patients to use during a portion of the procedure. Although we appreciate the RUC's attention to the differences in the time required for the stretcher based on the time for the procedure, we believe that one of the purposes of standard PE input packages is to reduce the complexity associated with assigning appropriate PE inputs to individual procedures while, at the same time, maintaining relativity between procedures. Since we generally allocate inexpensive equipment items to the entire service period when they are likely to be unavailable for another use during the full service period, we believe it is preferable to treat the stretcher consistently across services. Therefore, we proposed to modify the standard moderate sedation input package to include a stretcher for the same length of time as the other equipment items in the moderate sedation package. The revised moderate sedation input package will be applied to relevant codes as we review them through future notice and comment rulemaking. In seeking comments on the proposal, we stated that it would be useful to hear stakeholders' views and the reasoning behind them on this issue, especially from those who think that the stretcher, as expressed through the allocation of equipment minutes, should be allocated with more granularity than the equipment costs that are allocated to other similar items.

Comment:

We received comments supporting our proposal to add the stretcher to the moderate sedation package, including support to include the stretcher for the same length of time as the other equipment items included in the moderate sedation package since it is used by the patient for the duration

of their recovery and not available to other patients during that time.

Response:

We appreciate the commenters' support for our proposal. After consideration of comments received, we are finalizing our proposal to add the stretcher to the moderate sedation package for the same length of time as the other equipment items in the moderate sedation package. We note that we will not apply this change retroactively, but will make the change to the moderate sedation package for codes being finalized for 2015, as well as interim final codes for 2015. For a detailed discussion of the specific codes impacted by this change, we refer readers to sections II.F. of this final rule with comment period.

c. RUC Recommendation for Migration From Film to Digital Practice Expense Inputs

The RUC provided a recommendation regarding the PE inputs for digital imaging services. Specifically, the RUC recommended that we remove a list of supply and equipment items associated with film technology since these items are no longer a typical resource input; these items are detailed in Table 6. The RUC also recommended that the Picture Archiving and Communication System (PACS) equipment be included for these imaging services since these items are now typically used in furnishing imaging services. We received a description of the PACS system as part of the recommendation, which included both items that appear to be direct PE items and items for which indirect PE RVUs are allocated in the PE methodology. As we have previously indicated, items which are not clinical labor, medical supplies, or medical equipment, or are not individually allocable to a particular patient for a particular procedure, are not categorized as direct costs in the PE methodology. Since we did not receive any invoices for the PACS system prior to the proposed rule, we were unable to determine the appropriate pricing to use for the inputs. We proposed to accept the RUC recommendation to remove the film supply and equipment items, and to allocate minutes for a desktop computer (ED021) as a proxy for the PACS workstation as a direct expense. Specifically, for the 31 services that already contain ED021 (computer, desktop, w-monitor), we proposed to retain the time that is currently included in the direct PE input database. For the remaining services that are valued in the nonfacility setting, we proposed to allocate the full clinical labor intraservice time to ED021, except for codes without clinical labor, in which case we proposed to allocate the intraservice work time to ED021. For services valued only in the facility setting, we proposed to allocate the post-service clinical labor time to ED021, since the film supply and/or equipment inputs were previously associated with the post-service period.

Table 6—RUC-Recommended Supply and Equipment Items Removed for Digital Imaging Services

CMS Code

Description

SK013

computer media, dvd.

SK014

computer media, floppy disk 1.44mb.

SK015

computer media, optical disk 128mb.

SK016

computer media, optical disk 2.6gb.

SK022

film, 8inx10in (ultrasound, MRI).

SK025

film, dry, radiographic, 8in x 10in.

SK028

film, fluoroscopic 14 x 17.

SK033

film, x-ray 10in x 12in.

SK034

film, x-ray 14in x 17in.

SK035

film, x-ray 14in x 36in.

SK037

film, x-ray 8in x 10in.

SK038

film, x-ray 8in x 10in (X-omat, Radiomat).

SK086

video tape, VHS.

SK089

x-ray developer solution.

SK090

x-ray digitalization separator sheet.

SK091

x-ray envelope.

SK092

x-ray fixer solution.

SK093

x-ray ID card (flashcard).

SK094

x-ray marking pencil.

SK098

film, x-ray, laser print.

SM009

cleaner, x-ray cassette-screen.

ED014

computer workstation, 3D reconstruction CT-MR.

ED016

computer workstation, MRA post processing.

ED023

film processor, PET imaging.

ED024

film processor, dry, laser.

ED025

film processor, wet.

ED027

film processor, x-omat (M6B).

ER018

densitometer, film.

ER029

film alternator (motorized film viewbox).

ER067

x-ray view box, 4 panel.

We note that the RUC exempted certain procedures from its recommendation because (a) the dominant specialty indicated that digital technology is not yet typical or (b) the procedure only contained a single input associated with film technology, and it was determined that the sharing of images, but not actual imaging, may be involved in the service. However, we do not believe that the most appropriate approach in establishing relative values for services that involve imaging is to exempt services from the transition from film to digital PE inputs based on information reported by individual specialties. Although we understand that the migration from film technology to digital technology may progress at different paces for particular specialties, we do not have information to suggest that the migration is not occurring for all procedures that require the storage of images. Just as it was appropriate to use film inputs as a proxy for some services for which digital inputs were typical pending these changes in the direct PE input database, we believe it is appropriate to use digital inputs as a proxy for the services that may still use film, pending their migration to digital technology. In addition, since the RUC conducted its collection of information from the specialties over several years, we believe the migration process from film to digital inputs has likely continued over the time period during which the information was gathered, and that the digital PE inputs will reflect typical use of technology for most if not all of these services before the change to digital inputs would take effect beginning January 1, 2015.

We noted that we believed that, for the sake of relativity, we should remove the equipment and supply inputs noted below from all procedures in the direct PE database, including those listed in Table 7. We sought comment on whether the computer workstation, which we proposed to use as a proxy for the PACS workstation, is the appropriate input for the services listed in Table 7, or whether an alternative input is a more appropriate reflection of direct PE costs.

Table 7—Codes Containing Film Inputs But Excluded From the RUC Recommendation

HCPCS

Short descriptor

21077

Prepare face/oral prosthesis.

28293

Correction of bunion.

61580

Craniofacial approach skull.

61581

Craniofacial approach skull.

61582

Craniofacial approach skull.

61583

Craniofacial approach skull.

61584

Orbitocranial approach/skull.

61585

Orbitocranial approach/skull.

61586

Resect nasopharynx skull.

64517

N block inj hypogas plxs.

64681

Injection treatment of nerve.

70310

X-ray exam of teeth.

77326

Brachytx isodose calc simp.

77327

Brachytx isodose calc interm.

77328

Brachytx isodose plan compl.

91010

Esophagus motility study.

91020

Gastric motility studies.

91034

Gastroesophageal reflux test.

91035

G-esoph reflx tst w/electrod.

91037

Esoph imped function test.

91038

Esoph imped funct test > 1hr.

91040

Esoph balloon distension tst.

91120

Rectal sensation test.

91122

Anal pressure record.

91132

Electrogastrography.

91133

Electrogastrography w/test.

92521

Evaluation of speech fluency.

92523

Speech sound lang comprehend.

92524

Behavioral qualit analys voice.

92601

Cochlear implt f/up exam <7.

92603

Cochlear implt f/up exam 7/>.

92611

Motion fluoroscopy/swallow.

92612

Endoscopy swallow tst (fees).

92614

Laryngoscopic sensory test.

92616

Fees w/laryngeal sense test.

95800

Slp stdy unattended.

95801

Slp stdy unatnd w/anal.

95803

Actigraphy testing.

95805

Multiple sleep latency test.

95806

Sleep study unatt&resp efft.

95807

Sleep study attended.

95808

Polysom any age 1-3> param.

95810

Polysom 6/> yrs 4/> param.

95811

Polysom 6/>yrs cpap 4/> parm.

95812

Eeg 41-60 minutes.

95813

Eeg over 1 hour.

95829

Surgery electrocorticogram.

95950

Ambulatory eeg monitoring.

95953

Eeg monitoring/computer.

95954

Eeg monitoring/giving drugs.

95955

Eeg during surgery.

95956

Eeg monitor technol attended.

95957

Eeg digital analysis.

96904

Whole body photography.

G0270

Mnt subs tx for change dx.

G0271

Group mnt 2 or more 30 mins.

Finally, we noted that the RUC recommendation also indicated that, given the labor-intensive nature of reviewing all clinical labor tasks associated with film technology, these times would be addressed as these codes are reviewed. We agreed with the RUC that reviewing and adjusting the times for each code would be difficult and labor-intensive since the direct PE input database does not allow for a comprehensive adjustment of the clinical labor time based on changes in particular clinical labor tasks. To make broad adjustments such as this across codes, the PE database would need to contain the time associated with individual clinical labor tasks rather than reflecting only the sum of times for the pre-service period, service period, and post-service period, as it does now. We recognized this situation presents a challenge in implementing RUC recommendations such as this one, and makes it difficult to understand the basis of both the RUC's recommended clinical labor times and our refinements of those recommendations. Therefore, we stated that we were considering revising the direct PE input database to include task-level clinical labor time information for every code in the database. As an example, we referred readers to the supporting data files for the direct PE inputs, which include public use files that display clinical labor times as allocated to each individual clinical labor task for a sample of procedures. We displayed this information as we attempt to increase the transparency of the direct PE database. We stated that we hoped that this modification would enable us to more accurately allocate equipment minutes to clinical labor tasks in a more consistent and efficient manner. Given the number of procedures and the volume of information involved, we sought comments on the feasibility of this approach. We note that we did not propose to make any changes to PE inputs for CY 2015 based on this modification to the design of the direct PE input database.

As discussed in section II.G. of this final rule with comment period, some of the RUC recommendations for 2015 included film items as practice expense inputs. For existing codes, the database from the proposed rule already included the PACS workstation proxy. However, for new services, as with the current items in the database, we have replaced the film items with the PACS workstation proxy. The codes affected by this change are listed in Table 8.

Table 8—Codes Affected by Removal of Film Inputs

HCPCS

Short descriptor

22510

Perq cervicothoracic inject.

22511

Perq lumbosacral injection.

22513

Perq vertebral augmentation.

22514

Perq vertebral augmentation.

62302

Myelography lumbar injection.

62303

Myelography lumbar injection.

62304

Myelography lumbar injection.

62305

Myelography lumbar injection.

71275

Ct angiography chest.

72191

Ct angiograph pelv w/o&w/dye.

72240

Myelography neck spine.

72255

Myelography thoracic spine.

72265

Myelography l-s spine.

72270

Myelogphy 2/> spine regions.

74174

Ct angio abd&pelv w/o&w/dye.

74175

Ct angio abdom w/o & w/dye.

74230

Cine/vid x-ray throat/esoph.

76942

Echo guide for biopsy.

93312

Echo transesophageal.

93314

Echo transesophageal.

93320

Doppler echo exam heart.

93321

Doppler echo exam heart.

93325

Doppler color flow add-on.

93880

Extracranial bilat study.

93882

Extracranial uni/ltd study.

93886

Intracranial complete study.

93888

Intracranial limited study.

93895

Carotid intima atheroma eval.

93925

Lower extremity study.

93926

Lower extremity study.

93930

Upper extremity study.

93931

Upper extremity study.

93970

Extremity study.

93971

Extremity study.

93975

Vascular study.

93976

Vascular study.

93978

Vascular study.

93979

Vascular study.

Comment:

We received many comments on our proposal to remove the equipment and supply inputs associated with film technology from the direct PE database. In general, commenters supported our proposal to remove the film inputs from the direct PE database. Some commenters supported our use of the desktop computer as a proxy for the PACS workstation, but other commenters opposed using this item as a proxy. Commenters opposed to using the desktop computer as the proxy item stated that the PACS workstation was significantly more expensive and included greater functionality than a desktop computer. Some commenters opposed our proposal to maintain the current equipment time allocated to the computer desktop for the 31 services that already included this equipment item, suggesting that it was incorrect to eliminate the film inputs without proportionately increasing the proxy time for ED021. Some commenters requested a delay in implementation until stakeholders provide invoices or otherwise work with CMS to identify prices for the PACS items. Some commenters suggested CMS should develop a means to allocate digital technology costs to individual services, even if it is difficult to do so. Another commenter explained that it is difficult for stakeholders to obtain invoices that display prices for individual items, such as the PACS workstation, since the price of the particular items is often bundled with other related equipment and services. Many commenters urged CMS to work with stakeholders to obtain invoices, while other commenters requested that CMS accept the RUC recommendation regarding the PACS workstation.

Response:

We appreciate commenters' support for our proposal to incorporate the transition from film to digital imaging technology into the direct PE input database. With regard to the pricing of the PACS workstation, as with all inputs, we would prefer to use actual paid invoices to establish the input price. However, in the absence of invoices demonstrating the actual cost, we believe that use of a proxy to price the appropriate inputs, in this case the PACS workstation, is preferable to

continuing to use inputs that we know are no longer typical. We made the proposal to use the computer, desktop, w-monitor (ED021), priced at $2,501, as a proxy based on our assessment of similar resource costs between the item and the PACS workstation. Although some commenters stated that the item was not an appropriate proxy, these commenters did not provide any evidence to indicate that the resource costs are not similar or to suggest a more appropriate proxy. Nor were any paid invoices submitted. Absent such information, we continue to believe that using the proxy item is the best approach to incorporate the direct PE cost of the digital imaging technology.

With regard to the 31 services that already included the desktop computer as an equipment input, we will include the desktop computer as a proxy for the PACS workstation using the same methodology as for the services that did not previously contain the desktop computer. To clearly differentiate the desktop computer proxy from the desktop computer currently included in these services, and to facilitate accurate replacement of this input when we do receive pricing information, we will create a new equipment item called “desktop computer (proxy for PACS workstation),” which will be allocated to each procedure using the methodology described above.

Comment:

Some commenters opposed our removal of the film inputs from services that were not included in the RUC recommendation, but did not provide a rationale for their opposition.

Response:

For the reasons we explained in making the proposal and reiterate above, we continue to believe that it is appropriate to remove these items from the direct PE database.

Comment:

Some commenters provided specific suggestions regarding the use of digital inputs should CMS decide to move forward with the proposal. Commenters requested that for portable x-ray services, CMS include a flat plate receptor/image capture plate to capture the image, specialized software to process the image, and multiple high definition monitors used by the interpreting radiologist. Commenters provided an invoice for the image capture plate at a price of $25,600 indicating that this item replaces the film as the media to record the image.

Response:

We appreciate that commenters provided us with an invoice for the image capture plate. However, services furnished by portable x-ray providers are reported using the same procedure codes as services provided using fixed machines. Since the typical x-ray service is furnished using fixed equipment, we are not including the image capture plate that is associated with portable equipment as an input for the imaging procedure codes. We also do not believe that high definition monitors used by the interpreting radiologist are appropriately included in the technical component of imaging procedures; rather, these are indirect costs associated with the professional component of the service. Therefore, we are not including the high definition monitors as an input for these services. Finally, to determine whether the software is appropriately categorized as a direct PE input, we need more information about the functionality of the software, and whether it is used in furnishing the typical x-ray service (including services furnished using fixed machinery). Until we have information that supports the inclusion of this item as a direct cost, we will not include the software for x-ray services.

Comment:

Commenters were supportive of the increased transparency with regard to the direct PE inputs, but several commenters suggested that there may be more feasible approaches to break out the individual clinical labor tasks associated with each portion of the service (pre-service period, service period, and post-service period). The RUC suggested that we post all PE worksheets and supporting materials in code-order on our Web site. Other commenters did not suggest a specific alternative approach to providing detail for the individual clinical labor tasks.

Response:

We appreciate the RUC's suggestion regarding the posting of the PE worksheets, but we do not believe that this would enable us to accomplish a comprehensive cross-code analysis and refinement to clinical labor times within the direct PE input database to increase consistency for identical clinical labor tasks between codes. Since we did not receive other suggestions from commenters on an approach to break out the individual clinical labor tasks associated with each service period to enable us to conduct the necessary analysis, we will pursue the approach described in the proposed rule. We will consider the comments submitted and continue to work with interested stakeholders regarding the best approaches to displaying the supporting files. We note that public use files continue to be available in the same format as in previous years, but that additional public use files now display the clinical labor tasks for each service period, providing greater transparency and enabling comparisons across codes. We note that we have refined the file structure based on comments, and we continue to seek input on whether there are additional or alternative ways to display this information to enhance its clarity, and note that there are challenges inherent in the display of this information in a two-dimensional format. We refer readers to the public use files available on the CMS Web site under downloads for the CY 2015 PFS final rule with comment period at

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

d. Inputs for Digital Mammography Services

Mammography services are currently reported and paid using both CPT codes and G-codes. To meet the requirements of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), we established G-codes for use beginning in CY 2002 to pay for mammography services using new digital technologies (G0202 screening mammography digital; G0204 diagnostic mammography digital; G0206 diagnostic mammography digital). We continued to use the CPT codes for mammography services furnished using film technology (77055 (Mammography; unilateral); 77056 (Mammography; bilateral); 77057 (Screening mammography, bilateral (2-view film study of each breast)). As we discussed previously in this section, the RUC has recommended that all imaging codes, including mammography, be valued using digital rather than film inputs because the use of film is no longer typical. A review of Medicare claims data shows that the mammography CPT codes are billed extremely infrequently, and that the G-codes are billed for the vast majority of mammography claims, confirming the RUC's conclusion that the typical service uses digital technology. As such, we stated that we do not believe there is a reason to continue the separate CPT codes and G-codes for mammography services since both sets of codes would have the same values when priced based upon the typical digital technology. Accordingly, we proposed to delete the mammography G-codes beginning for CY 2015 and to pay all mammography using the CPT codes.

We indicated that, although we believed that the CPT codes should now be used to report all mammography services, we had concerns about whether the current values for the CPT codes accurately reflect the resource inputs associated with furnishing the services. Because the CPT codes have not been recently reviewed and

significant technological changes have occurred since the current values were established, we did not believe it would be appropriate to retain the current values for the CPT codes. Therefore, we proposed to value the CPT codes using the RVUs previously established for the G-codes. We believed these values would be most appropriate since they were established to reflect the use of digital technology, which is now typical.

As discussed in section II.B of this final rule with comment period, we proposed these CPT codes as potentially misvalued and requested that the RUC and other interested stakeholders review these services in terms of appropriate work RVUs, work time assumptions, and direct PE inputs. However, as discussed in section II.B. of this final rule with comment period, we will continue to maintain separate payment rates for film and digital mammography while we consider revaluation of all mammography services. For CY 2015, we will therefore maintain both the G-codes and CPT codes; we will continue using the 2014 RVUs from each of the following codes to price them for 2015: G0202, G0204, G0206, 77055, 77056, and 77057. 2015. We also note that we will continue to pay for film mammography services at the 2014 rates until we revalue the mammography services.

We refer readers to section II.B. of this final rule with comment period, where we address comments received on this proposal.

e. Radiation Treatment Vault

In previous rulemaking (77 FR 68922, 78 FR 74346), we indicated that we included the radiation treatment vault as a direct PE input for several recently reviewed radiation treatment codes for the sake of consistency with its previous inclusion as a direct PE input for some other radiation treatment services, but that we intended to review the radiation treatment vault input and address whether or not it should be included in the direct PE input database for all services in future rulemaking. Specifically, we questioned whether it was consistent with the principles underlying the PE methodology to include the radiation treatment vault as a direct cost given that it appears to be more similar to building infrastructure costs than to medical equipment costs. In response to this discussion, we received comments and invoices from stakeholders who indicated that the vault should be classified as a direct cost. However, upon review of the information received, we believed that the specific structural components required to house the linear accelerator are similar in concept to components required to house other medical equipment such as expensive imaging equipment. In general, the electrical, plumbing, and other building specifications are often unique to the intended functionality of a given building, including costs that are attributable to the specific medical equipment housed in the building, but those building characteristics do not represent direct medical equipment costs in our established PE methodology. Therefore, we believed that the special building requirements indicated for the radiation treatment vault to house a linear accelerator do not represent a direct cost in our PE methodology, and that the vault construction is instead accounted for in the indirect PE methodology, just as the building and infrastructure costs are treated for other PFS services including those with specialized infrastructure costs to accommodate specific equipment. Therefore, we proposed to remove the radiation treatment vault as a direct PE input from the radiation treatment procedures listed in Table 9, because we believed that the vault is not, itself, medical equipment; and therefore, it is accounted for in the indirect PE methodology.

Table 9—HCPCS Codes Affected by Proposed Removal of Radiation Treatment Vault

HCPCS

Short descriptor

77373

Sbrt delivery.

77402

Radiation treatment delivery.

77403

Radiation treatment delivery.

77404

Radiation treatment delivery.

77406

Radiation treatment delivery.

77407

Radiation treatment delivery.

77408

Radiation treatment delivery.

77409

Radiation treatment delivery.

77411

Radiation treatment delivery.

77412

Radiation treatment delivery.

77413

Radiation treatment delivery.

77414

Radiation treatment delivery.

77416

Radiation treatment delivery.

77418

Radiation tx delivery imrt.

Comment:

We received many comments regarding our proposal to remove the radiation treatment vault as a direct cost from the radiation treatment delivery codes. Although one commenter supported the proposal, most commenters opposed the proposal. In general, commenters reiterated their rationale for inclusion of the vault as a direct practice expense input, asserting that the vault is necessary for the functioning of the equipment, serves a unique medical need, cannot be separated from the treatment delivered by the linear accelerator, and cannot be repurposed for another use. Commenters also stated that the Internal Revenue Code treats the vault as medical equipment that is separately depreciable from the building itself. For the most part, commenters objected to the removal of the vault given the context of declining Medicare payment for radiation oncology services over the past few years, or in conjunction with the revised radiation treatment code set. Specifically, several commenters suggested that stakeholders cannot provide meaningful comment about the impact of the vault proposal in the context of other pending changes. Some commenters requested a phase-in of any decrease in payment so that providers of radiation therapy services have an opportunity to adjust their practice costs. Several commenters also suggested that the change in payment could exacerbate problems in access to oncology services for Medicare patients.

Response:

We appreciate commenters' concerns regarding the proposal to remove the vault as a direct practice expense input. We understand the essential nature of the vault in the provision of radiation therapy services and its uniqueness to a particular piece of medical equipment but are not convinced that either of these factors leads to the conclusion that the vault should be considered medical equipment for purposes of the PE methodology under the PFS. We appreciate the information commenters provided regarding the IRS treatment of the vault under tax laws, but the purposes and goals of the tax code and the PFS PE methodology are different, and, as such, attempts to draw parallels between the two are not necessarily instructive or relevant. We are not finalizing our proposal at this time, but intend to further study the issues raised by the vault and how it relates to our PE methodology.

Comment:

A commenter noted that removing the vault as a direct cost also reduces the amount of indirect PE allocated for these procedures, and that this proposal does not shift the vault from direct PE to indirect PE, but rather drops the cost of the vault entirely. Another commenter stated that since the pool of indirect PE RVUs associated with radiation oncology services is fixed, the issue in question is how the indirect costs involved in furnishing treatment services compare to the indirect costs in providing other radiation oncology services.

Response:

We understand the concerns of commenters regarding the importance of ensuring that the costs related to the vault are included in the

PE methodology. We want to point out, however, that within the established PE methodology, the allocation of indirect PE to individual codes has significant impact on the PE RVUs that determine Medicare payment for individual services. In other words, we believe it is important for stakeholders to recognize that practice expense costs not included in the direct PE input database contribute to the development of PE RVUs through the data used to allocate indirect PE RVUs. We also want to point out that the pool of indirect PE RVUs is not fixed at the specialty level. Rather, the pool of indirect costs under the entire PFS is maintained from year to year, as delineated in step 11 of the PE methodology above. Therefore, changes in the allocation of indirect PE for particular PFS services based on changes in either direct PE inputs, work RVUs, work time, or utilization data, impacts the amount of indirect PE allocated to all other PFS services, not just those furnished by specialties that furnish that service.

After continued review of the issues pertaining to the vault in the context of the comments, we believe that these issues require further study. Therefore, at this time, we will continue to include the vault as a direct PE input for the services listed in Table 9.

f. Clinical Labor Input Errors

Subsequent to the publication of the CY 2014 PFS final rule with comment period, it came to our attention that, due to a clerical error, the clinical labor type for CPT code 77293 (Respiratory Motion Management Simulation (list separately in addition to code for primary procedure)) was entered as L052A (Audiologist) instead of L152A (Medical Physicist), which has a higher cost per minute. We proposed a correction to the clinical labor type for this service.

Comment:

Commenters appreciated our proposal to correct this error.

Response:

We appreciate commenters' support for our proposal, and are finalizing the assignment of clinical labor type L152A to code 77293 as proposed. The CY 2015 Direct Practice Expense Input database reflects this correction.

In conducting a routine data review of the database, we also discovered that, due to a clerical error, the RN time allocated to CPT codes 33620 (Apply r&l pulm art bands), 33621 (Transthor cath for stent), and 33622 (Redo compl cardiac anomaly) was entered in the nonfacility setting, rather than in the facility setting where the code is valued. When a service is not valued in a particular setting, any inputs included in that setting are not included in the calculation of the PE RVUs for that service. Therefore, we proposed to move the RN time allocated to these procedures to the facility setting. The PE RVUs listed in Addendum B reflect these technical corrections.

We did not receive any comments on this proposal; therefore, we are finalizing our proposal to move the RN time allocated to these procedures to the facility setting. The CY 2015 Direct Practice Expense Input database reflects this correction.

g. Work Time

Subsequent to the publication of the CY PFS 2014 final rule with comment period, several inconsistencies in the work time file came to our attention. First, for some services, the total work time, which is used in our PE methodology, did not equal the sum of the component parts (pre-service, intra-service, post-service, and times associated with global period visits). The times in the CY 2015 work time file reflect our corrected values for total work time. Second, for a subset of services, the values in the pre-positioning time, pre-evaluation time, and pre-scrub-dress-wait time, were inadvertently transposed. We note that this error had no impact on calculation of the total times, but has been corrected in the CY 2015 work time file. Third, minor discrepancies for a series of interim final codes were identified between the work time file and the way we addressed these codes in the preamble text. Therefore, we have made adjustments to the work time file to reflect the decisions indicated in the preamble text. The work time file is available on the CMS Web site under the supporting data files for the CY 2015 PFS final rule with comment period at

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

. Note that for comparison purposes, the CY 2014 work time file is located at

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices-Items/CMS-1600-FC.html

Comment:

A commenter supported our proposal to correct the work times associated with the procedures affected by this proposal.

Response:

We appreciate the commenter's support for our proposal. After consideration of the comment received, we are finalizing our proposal to adjust the work time file as proposed. The work time file is available on the CMS Web site under the supporting data files for the CY 2015 PFS final rule with comment period at

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

h. Updates to Price for Existing Direct Inputs.

In the CY 2011 PFS final rule with comment period (75 FR 73205), we finalized a process to act on public requests to update equipment and supply price and equipment useful life inputs through annual rulemaking beginning with the CY 2012 PFS proposed rule. During 2013, we received a request to update the price of SD216 (catheter, balloon, esophageal or rectal (graded distention test)) from $217 to $237.50. We also received a request to update the price of SL196 (kit, HER-2/neu DNA Probe) from $105 to $144.50. We received invoices that documented updated pricing for each of these supply items. We proposed to increase the price associated with these supply items.

We continue to believe it is important to maintain a periodic and transparent process to update the price of items to reflect typical market prices in our ratesetting methodology, and we continue to study the best way to improve our current process. We remind stakeholders that we have difficulty obtaining accurate pricing information. The goal of the current transparent process is to offer the opportunity for the community to both request supply price updates by providing us copies of paid invoices, and to object to proposed changes in price inputs for particular items by providing additional information about prices available to the practitioner community. We remind stakeholders that PFS payment rates are developed within a budget neutral, relative value system, and any increases in price inputs for particular supply items result in corresponding decreases to the relative values of all other direct PE inputs.

We also received a RUC recommendation to update the prices associated with two supply items. Specifically, the RUC recommended that we increase the price of SA042 (pack, cleaning and disinfecting, endoscope) from $15.52 to $17.06 to reflect the addition of supply item SJ009 (basin, irrigation) to the pack, and increase the price of SA019 (kit, IV starter) from $1.37 to $1.60 to reflect the addition of supply item SA044 (underpad 2 ft. x 3 ft. (Chux)) to the kit. We proposed to update the prices for both of these items based on these recommendations.

Comment:

We received several comments regarding our concern about obtaining accurate pricing information for equipment and supply items included in the direct PE database. The RUC indicated that it would continue to work with specialty societies to obtain

paid invoices. A commenter suggested that a sample of paid invoices be obtained from practices and submitted with the PE materials to the RUC, or directly to CMS. Another commenter expressed concern regarding CMS's assertion that invoices are difficult to obtain, given that the RUC process collects lists of resources required to furnish services in the physician office using a standardized process that is typically accompanied by invoices. Another commenter stated that CMS used only the lowest-cost invoice for a particular equipment item since the other invoices included “soft costs,” and that CMS should establish an approach that would allow invoices to be used even if they contain “soft costs.”

Response:

We appreciate the RUC's assistance in obtaining paid invoices from the specialty societies. These invoices are helpful in pricing inputs. We disagree that we use the lowest-cost invoice because it had the lowest cost; rather, we often use the lowest-cost invoice because we do not have a method to use invoices that include costs that are not included as part of the equipment costs, so called “soft costs,” within the PE methodology. We do not believe it would serve accuracy or relativity to include as part of the pricing inputs “soft costs” that increase the price of particular supply or equipment items. We would welcome further input on potential approaches for “backing out” these costs.

Comment:

One commenter disagreed with CMS's position that the RUC PE Subcommittee's review results in biased or inaccurate resource input costs because the prices are largely maintained in the direct PE input database by CMS.

Response:

Although we did not raise this point in the CY 2015 PFS proposed rule, we refer readers to our discussion in previous rulemaking (for example, the CY 2011 PFS final rule with comment period at 75 FR 73250 and the CY 2014 PFS final rule with comment period at 78 FR 74246) regarding issues associated with obtaining appropriate prices for medical equipment and supply items included in the direct PE database. We note that the RUC provides recommendations regarding the use of particular items in furnishing a service, but does not provide CMS with recommendations regarding the prices of direct PE item. Without assigning a price, the input cannot be factored in to our PE RVU methodology. Our price information is almost exclusively anecdotal, and generally updated only through voluntary submission of a small number of invoices from the same practitioners that furnish and are paid for the services that use the particular inputs. Therefore, we continue to believe there is potential for bias in the information we receive.

Comment:

In its comment, the RUC suggested that an annual CMS review of paid invoices for high-cost supplies would be appropriate. A commenter referenced comments made on the CY 2014 PFS final rule with comment period, and expressed agreement with those commenters that the provision of pricing information is sensitive because of issues involving proprietary pricing information and price negotiations for individual practitioners. This commenter also agreed with CMS that such information would be less sensitive if it confirmed inputs contained in the direct PE database. However, the commenter noted that requiring paid invoices from this point forward only partially addresses the concern since many existing inputs are not based on paid invoices; specifically, societies working on inputs for new, revised, or potentially misvalued services are disadvantaged in comparison to many existing inputs due to fee schedule relativity. The commenter suggested that CMS may need to undertake a comprehensive review of all direct PE inputs and obtain paid invoices to systematically address its concerns.

Response:

We share commenters' concerns that codes that are being reviewed may be disadvantaged relative to codes that contain input prices that may not be based on paid invoices; and note that we rely on the public process to ensure continued relativity within the direct PE inputs. We encourage interested stakeholders to review updates to prices, as well as prices for new items, to ensure that they appear reasonable and current, and to provide us with updated pricing information, particularly regarding high cost supplies that have a greater impact on relativity. We refer readers to section II.F. of this final rule with comment period, in which we detail price updates, as well as establish new prices, for inputs included in new, revised, and potentially misvalued codes.

Comment:

We received some comments in support of our proposal to update the price for SL196 (kit, HER-2/neu DNA Probe).

Response:

We appreciate the commenters' support for our proposal to update the price for SL196. After publication of our proposal, we obtained new information suggesting that further study of the price of this item is necessary before proceeding to update the input price. Therefore, we are not finalizing our proposal to update the price for SL196, and will consider this matter in future rulemaking.

Comment:

We did not receive any comments regarding our proposal to update the price for of SD216 (catheter, balloon, esophageal or rectal (graded distention test)).

Response:

We are finalizing the price updates for SD216.

Comment:

We received comments in support of the price update to SA019 (kit, IV starter) and SA042 (pack, cleaning and disinfecting, endoscope).

Response:

We appreciate the commenters' support for our proposal to update the price for SA019 and SA042. After consideration of comments received, we are finalizing the price updates for SA019 and SA042.

i. New Standard Supply Package for Contrast Imaging

The RUC recommended creating a new direct PE input standard supply package “Imaging w/contrast, standard package” for contrast enhanced imaging, with a price of $6.82. This price reflects the combined prices of the medical supplies included in the package; these items are listed in Table 10. We proposed to accept this recommendation, but sought comment on whether all of the items included in the package are used in the typical case. The CY 2015 direct PE database reflects this change and is available on the CMS Web site under the supporting data files for the CY 2015 PFS proposed rule at

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

Table 10—Standard Contrast Imaging Supply Package

Medical supply description

SCMS

supply

code

Unit

Quantity

Price

Kit, IV starter

SA019

Kit

$1.60

Gloves, non-sterile

SB022

Pair

0.084

Angiocatheter 14g-24g

SC001

Item

1.505

Heparin lock

SC012

Item

0.917

IV tubing (extension)

SC019

Foot

1.590

Needle, 18-27g

SC029

Item

0.089

Syringe 20ml

SC053

Item

0.558

Sodium chloride 0.9% inj. bacteriostatic (30ml uou)

SH068

Item

0.700

Swab-pad, alcohol

SJ053

Item

0.013

Total

7.06

* The price for SC019 (IV tubing, (extension)) is $0.53 per foot.

Comment:

Commenters supported our proposal to create the standard supply package for contrast imaging. Some commenters expressed concern that the proposed supply package did not include the full range of supplies typically used when performing contrast imaging. One commenter stated that, for echocardiography labs that utilize contrast-enhanced ultrasound, additional items are typically part of the contrast imaging supply package, including 2x2 gauze pads, a stopcock, and tape. Another commenter suggested that a power injector should also be included in the standard contrast imaging supply package. Commenters also noted that CMS provided limited information regarding how the prices were assigned to the supply items, and pointed to discrepancies between the direct PE database files and the prices quoted in the table.

Response:

We appreciate commenters' support for our proposal. We note that the RUC recommendation for the standard contrast imaging supply package also noted that the inputs for CTA and MRA studies would include the standard contrast imaging supply pack in addition to a stop cock (SC050) and additional tubing. While we acknowledge a commenter's suggestion that additional items may be used when echocardiography labs conduct contrast-enhanced ultrasound studies, we do not have information to suggest that these items are used for other imaging studies, such as CT and MRI contrast-enhanced studies. We would welcome more information on whether these items should be included in the newly created standard contrast imaging kit, as well as whether the power injector is used whenever the other inputs in the standard contrast imaging supply package are used, or whether they are used only in certain instances. We note that the reason for the discrepancy in the price for the IV starter kit is that we proposed to update the price at the same time that we proposed to create a new contrast imaging kit. Since we are finalizing the price update for SA019 (kit, IV starter), we are also finalizing a revised price for the new standard contrast imaging package of $7.06. Finally, we disagree with the commenter's suggestion that CMS provided limited information about the pricing for the items included in the kit, as these items are existing inputs in the direct PE database, and the codes associated with these items were listed in the table in the proposed rule. After consideration of comments received, we are finalizing our proposal to create a standard contrast imaging supply pack, with a revised price of $7.06.

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

In the CY 2014 PFS final rule with comment period (78 FR 74245), we summarized comments received about whether CPT codes 77372 and 77373 would accurately reflect the resources used in furnishing the typical SRS delivery if there were no coding distinction between robotic and non-robotic delivery methods. Until now, SRS services furnished using robotic methods were billed using contractor-priced G-codes 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). We indicated that we would consider deleting these codes in future rulemaking.

Most commenters responded that the CPT codes accurately described both services, and the RUC stated that the direct PE inputs for the CPT codes accurately accounted for the resource costs of the described services. One commenter objected to the deletion of the G-codes but did not include any information to suggest that the CPT codes did not describe the services or that the direct PE inputs for the CPT codes were inaccurate. Based on a review of the comments received, we had no indication that the direct PE inputs included in the CPT codes would not reflect the typical resource inputs involved in furnishing an SRS service. Therefore, in the CY 2014 proposed rule we proposed to recognize only the CPT codes for SRS services, and to delete the G-codes used to report robotic delivery of SRS.

Comment:

We received several comments regarding our proposal to delete the SRS G-codes. Some commenters supported our proposal, but most opposed our proposal on the grounds that the direct PE inputs included in the CPT codes do not reflect the typical resource inputs used in furnishing robotic SRS services. Some commenters urged CMS to delay this policy change and continue to contractor price the G-codes until a more appropriate solution can be found.

Response:

After consideration of the comments regarding the appropriate inputs to use in pricing the SRS services, we have concluded that at this time, we lack sufficient information to make a determination about the appropriateness of deleting the G-codes and paying for all SRS/SBRT services using the CPT codes. Therefore, we will not delete the G-codes for 2015, but will instead work with stakeholders to identify an alternate approach and reconsider this issue in future rulemaking.

k. Inclusion of Capnograph for Pediatric Polysomnography Services

We proposed to include equipment item EQ358, Sleep capnograph, polysomnography (pediatric), for CPT codes 95782 (Polysomnography; younger than 6 years, sleep staging with

4 or more additional parameters of sleep, attended by a technologist) and 95783 (Polysomnography; younger than 6 years, sleep staging with 4 or more additional parameters of sleep, with initiation of continuous positive airway pressure therapy or bi-level ventilation, attended by a technologist). Based upon our understanding that capnography is a required element of sleep studies for patients younger than 6 years, we proposed to allocate this equipment item to 95782 for 602 minutes, and 95783 for 647 minutes. Based on the invoice we received for this equipment item, we proposed to price EQ358 at $4,534.23.

Comment:

We received two comments in support of our proposal to include the capnograph in CPT codes 95782 and 95783.

Response:

We appreciate commenters' support for our proposal. After consideration of comments received, we are finalizing our proposal to include the capnograph in CPT codes 95782 and 95783.

4. Using OPPS and ASC Rates in Developing PE RVUs

Accurate and reliable pricing information for both individual items and indirect PEs is critical to establish accurate PE RVUs for PFS services. As we have addressed in previous rulemaking, we have serious concerns regarding the accuracy of some of the information we use in developing PE RVUs. In particular, as discussed in the CY 2014 PFS final rule with comment period, we have several longstanding concerns regarding the accuracy of direct PE inputs, including both items and procedure time assumptions, and prices of individual supplies and equipment (78 FR 74248-74250). In addition to the concerns regarding the inputs used in valuing particular procedures, we also noted that the allocation of indirect PE is based on information collected several years ago (as described above) and will likely need to be updated in the coming years.

To mitigate the impact of some of these potentially problematic data used in developing values for individual services, in rulemaking for the CY 2014 PFS, 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. In developing the proposal, we sought a reliable means for Medicare to set upper payment limits for office-based procedures and believed OPPS and ASC payment rates would provide an appropriate comparison because these rates are based on relatively more reliable cost information in settings with cost structures that generally would be expected to be higher than in the office setting.

We received many comments regarding our proposal, the vast majority of which urged us to withdraw the proposal. Some commenters questioned the validity of our assumption that facilities' costs for providing all services are necessarily higher than the costs of physician offices or other nonfacility settings. Other commenters expressed serious concerns with the asymmetrical comparisons between PFS payment amounts and OPPS/ASC payment amounts. Finally, many commenters suggested revisions to technical aspects of our proposed policy.

In considering all the comments, however, we were persuaded that the comparison of OPPS (or ASC) payment amounts to PFS payment amounts for particular procedures is not the most appropriate or effective approach to ensuring that PFS payment rates are based on accurate cost assumptions. Commenters noted several flaws with the approach. First, unlike PFS payments, OPPS and ASC payments for individual services are grouped into rates that reflect the costs of a range of services. Second, 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. For these and other reasons raised by commenters, we did not propose a similar policy for the CY 2015 PFS. If we consider using OPPS or ASC payment rates in developing PFS PE RVUs in future rulemaking, we would consider all of the comments received regarding the technical application of the previous proposal.

After thorough consideration of the comments regarding the CY 2014 proposal, we continue to believe that there are various possibilities for leveraging the use of available hospital cost data in the PE RVU methodology to ensure that the relative costs for PFS services are developed using data that is auditable and comprehensively and regularly updated. Although some commenters questioned the premise that the hospital cost data are more accurate than the information used to establish PE RVUs, we continue to believe that the routinely updated, auditable resource cost information submitted contemporaneously by a wide array of providers across the country is a valid reflection of “relative” resources and could be useful to supplement the resource cost information developed under our current methodology based upon a typical case that are developed with information from a small number of representative practitioners for a small percentage of codes in any particular year.

Section 220(a)(1) of the PAMA added a new subparagraph (M) under section 1848(c)(2) of the Act that gives us authority to collect information on resources used to furnish services from eligible professionals (including physicians, non-physician practitioners, PTs, OTs, SLPs and qualified audiologists), and other sources. It also authorizes us to pay eligible professionals for submitting solicited information. We will be exploring ways of collecting better and updated resource data from physician practices, including those that are provider-based, and other non-facility entities paid through the PFS. We believe such efforts will be challenging given the wide variety of practices, and that any effort will likely impose some burden on eligible professionals paid through the PFS regardless of the scope and manner of data collection. Currently, through one of the validation contracts discussed in section II.B. of this final rule with comment period, we have been gathering time data directly from physician practices. Through this project, we have learned much about the challenges for both CMS and the eligible professionals of collecting data directly from practices. Our own experience has shown that is difficult to obtain invoices for supply and equipment items that we can use in pricing direct PE inputs.

Many specialty societies also have noted the challenges in obtaining recent invoices for medical supplies and equipment (78 FR 74249). Further, PE calculations rely heavily on information from the Physician Practice Expense Information Survey (PPIS) survey, which, as discussed earlier, was conducted in 2007 and 2008. When we implemented the results of the survey, many in the community expressed serious concerns over the accuracy of this or other PE surveys as a way of gathering data on PE inputs from the diversity of providers paid under the PFS.

In addition to data collection, section 1848(c)(2)(M) of the Act as added by section 220(a) of the PAMA provides authority to develop and use alternative approaches to establish PE relative values, including the use of data from other suppliers and providers of services. We are exploring the best approaches for exercising this authority, including with respect to use of hospital outpatient cost data. We understand that

many stakeholders will have concerns regarding the possibility of using hospital outpatient cost data in developing PE RVUs under the PFS, and we want to be sure we are aware of these prior to considering or developing any future proposal relying on those data.

Therefore, in the CY 2015 PFS proposed rule (79 FR 40333), we sought comment on the possible uses of the Medicare hospital outpatient cost data (not the APC payment amount) in potential revisions of the PFS PE methodology. This could be as a means to validate or, perhaps, in setting the relative resource cost assumptions within the PFS PE methodology. We noted that the resulting PFS payment amounts would not necessarily conform to OPPS payment amounts since OPPS payments are grouped into APCs, while PFS payments would continue to be valued individually and would remain subject to the relativity inherent in establishing PE RVUs, budget neutrality adjustments, and PFS updates. We expressed particular interest in comments that compare such possibilities to other broad-based, auditable, mechanisms for data collection, including any we might consider under the authority provided under section 220(a) of the PAMA. We urged commenters to consider a wide range of options for gathering and using the data, including using the data to validate or set resource assumptions for only a subset of PFS services, or as a base amount to be adjusted by code or specialty-level recommended adjustments, or other potential uses. We appreciate the many thoughtful comments that we received on whether and how to use the OPPS cost data in establishing PE relative values. We will consider these as we continue to think about mechanisms to improve the accuracy of PE values.

In addition to soliciting comments as noted above, in the CY 2015 proposed rule we stated that we continue to seek a better understanding regarding the growing trend toward hospital acquisition of physicians' offices and how the subsequent treatment of those locations as off-campus provider-based outpatient departments affects payments under PFS and beneficiary cost-sharing. MedPAC continues to question the appropriateness of increased Medicare payment and beneficiary cost-sharing when physicians' offices become hospital outpatient departments, and to recommend that Medicare pay selected hospital outpatient services at PFS rates (MedPAC March 2012 and June 2013

Report to Congress

). We noted that we also remain concerned about the validity of the resource data as more physician practices become provider-based. Our survey data reflects the PE costs for particular PFS specialties, including a proportion of practices that may have become provider-based since the survey was conducted. Additionally, as the proportion of provider-based offices varies among physician specialties, so do the relative accuracy of the PE survey data. Our current PE methodology primarily distinguishes between the resources involved in furnishing services in two sites of service: The non-facility setting and the facility setting. In principle, when services are furnished in the non-facility setting, the costs associated with furnishing services include all direct and indirect PEs associated with the work and the PE of the service. In contrast, when services are furnished in the facility setting, some costs that would be PEs in the office setting are incurred by the facility. Medicare makes a separate payment to the facility to account for some portion of these costs, and we adjust PEs accordingly under the PFS. As more physician practices become hospital-based, it is difficult to know which PE costs typically are actually incurred by the physician, which are incurred by the hospital, and whether our bifurcated site-of service differential adequately accounts for the typical resource costs given these relationships. We also have discussed this issue as it relates to accurate valuation of visits within the postoperative period of 10- and 90-day global codes in section II.B.4 of this final rule with comment period.

To understand how this trend is affecting Medicare, including the accuracy of payments made through the PFS, we need to develop data to assess the extent to which this shift toward hospital-based physician practices is occurring. To that end, during CY 2014 rulemaking we sought comment regarding the best method for collecting information that would allow us to analyze the frequency, type, and payment for services furnished in off-campus provider-based hospital departments (78 FR 74427). We received many thoughtful comments. However, the commenters did not present a consensus opinion regarding the options we presented in last year's rule. Based on our analysis of the comments, we stated that we believed the most efficient and equitable means of gathering this important information across two different payment systems would be to create a HCPCS modifier to be reported with every code for physicians' and hospital services furnished in an off-campus provider-based department of a hospital.

We proposed that the modifier would be reported on both the CMS-1500 claim form for physicians' services and the UB-04 (CMS form 1450) for hospital outpatient claims. (We note that the requirements for a determination that a facility or an organization has provider-based status are specified in § 413.65, and we define a hospital campus to be the physical area immediately adjacent to the provider's main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by the CMS regional office.)

Therefore, we proposed to collect this information on the type and frequency of services furnished in off-campus provider-based departments in accordance with our authority under section 1848(c)(2)(M) of the Act (as added by section 220(a) of the PAMA) beginning January 1, 2015. The collection of this information would allow us to begin to assess the accuracy of the PE data, including both the service-level direct PE inputs and the specialty-level indirect PE information that we currently use to value PFS services. Furthermore, this information would be critical in order to develop proposed improvements to our PE data or methodology that would appropriately account for the different resource costs among traditional office, facility, and off-campus provider-based settings. We also sought additional comment on whether a code modifier is the best mechanism for collecting this service-level information.

Comment:

Many commenters agreed on the need to collect information on the frequency, type, and payment of services furnished in off-campus provider-based departments of hospitals, however, several commenters expressed concern that the HCPCS modifier would create additional administrative burden for providers. Many of these commenters stated that the new modifier would require significant changes to hospitals' billing systems, including a separate charge master for outpatient off-campus PBDs and training for staff on how to use the new modifier. Several commenters thought that education and training would be required for physician offices to attach a modifier to services furnished in an off-campus provider-based department. These same commenters suggested that a new place of service (POS) code would be more appropriate for physician billing. Several commenters suggested that CMS

should re-propose a detailed data collection methodology, test it with providers, make adjustments, and allow additional time for implementation.

Response:

While we understand commenters' concerns about the additional administrative burden of reporting a new HCPCS modifier, we have weighed the burden of reporting the modifier for each service against the benefit of having data that will allow us to obtain and assess accurate information on the type and frequency of outpatient hospital services furnished in off-campus provider-based departments, and we do not believe that the modifier is excessively burdensome for providers to report. When billing for hospital services, providers must know where services are furnished in order to accurately complete value code 78 of an outpatient claim or item 32 for service location on the practitioner claim. However, as discussed later in this section, we agree that a POS code on the professional claim allows for the same type of data collection as a modifier and would be less burdensome than the modifier for practitioners. We discuss the timeframe for implementation later in this section.

Comment:

Some commenters who were concerned about the administrative burden of the new HCPCS modifier suggested several alternative methods for CMS to collect data on services furnished in off-campus provider-based departments. Several of these commenters recommended that CMS consider establishing of a new POS code for professional claims, or for both professional and hospital claims, because they believed this approach would be less administratively burdensome than attaching a modifier to each service reported on the claim that was furnished in an off-campus provider-based department. Some commenters preferred identifying services furnished in provider-based departments on the Medicare cost report (CMS-2552-10). Some commenters suggested using provider numbers and addresses to identify off-campus PBDs, or changing the provider enrollment process to be able to track this data. Yet other commenters suggested creating a new bill type to track off-campus PBD services.

Commenters generally recommended that CMS choose the least administratively burdensome approach that would ensure accurate data collection, but did not necessarily agree on what approach would optimally achieve that result. Some commenters believed that a HCPCS modifier would more clearly identify specific services furnished at off-campus PBDs, and would provide better information about the type and level of care furnished. Some commenters believed that a HCPCS modifier would be the least administratively burdensome approach because hospitals and physicians already report a number of claims-based modifiers. However, other commenters stated that additional modifiers would increase administrative burden because this approach would increase the modifiers that would need to be considered when billing.

Response:

With respect to creating a new POS code to obtain data on services furnished in off-campus PBDs of a hospital, we note that POS codes are only reported on professional claims and are not included on institutional claims. Therefore, a POS code could not be easily implemented for hospital claims. However, POS codes are already required to be reported on every professional claim, and POS 22 is currently used when physicians' services are furnished in an outpatient hospital department. (More information on existing POS codes is available on the CMS Web site at

http://www.cms.gov/Medicare/Coding/place-of-service-codes/Place_of_Service_Code_Set.html

Though we considered proposing a new POS code for professional claims to collect data on services furnished in the off-campus hospital setting, we note that previous GAO and OIG reports (October 2004 A-05-04-0025, January 2005 A-06-04-00046, July 2010 A-01-09-00503, September 2011 A-01-10-00516) have noted frequent inaccuracies in the reporting of POS codes. Additionally, at the time the proposed rule was developed, we had concerns that using a POS code to report this information might not give us the reliable data we are looking to collect, especially if such data were to be cross-walked with hospital claims for the same service, since the hospital claim would have a modifier, not a POS code. However, we have been persuaded by public comments suggesting that use of a POS code on professional claims would be less administratively burdensome than use of a modifier, and would be more familiar to those involved in practitioner billing. Specifically, since a POS code is already required on every professional claim, we believe that creating a new POS code to distinguish outpatient hospital services that are furnished on the hospital campus versus in an off-campus provider-based department would require less staff training and education than would the use of a modifier on the professional claim. Additionally, professional claims only have space for four modifiers; while a very small percentage of professional claims have four modifiers, required use of an additional modifier for every professional claim could lead to more occurrences where there would not be space for all applicable payment modifiers for a specific service. Unlike institutional claims, we note that a new professional claim is required whenever the place of service changes. That is, even if the same practitioner treats the same patient on the same day in the office and the hospital, the services furnished in the office setting must be submitted on one claim with POS 11 (Office), while those furnished in the outpatient hospital department would be submitted on a separate claim with POS 22 (Outpatient Hospital). Likewise, if a new POS code were to be created for off-campus outpatient provider-based hospital department, a separate claim for services furnished in that setting would be required relative to a claim for outpatient services furnished on the hospital's main campus by the same practitioner to the same patient on the same day. Based on public comments and after further consultation with Medicare billing experts, we believe that use of the POS code on professional claims would be no less accurate than use of a modifier on professional claims in identifying services furnished in off-campus PBDs. In addition, we believe that the POS code would be less administratively burdensome for practitioners billing using the professional claim since a POS code is already required for every professional claim.

With respect to adding new fields to existing claim forms or creating a new bill type, we do not believe that this data collection warrants these measures. We believe that those changes would create greater administrative burden than the proposed HCPCS modifier and POS codes, especially since providers are already accustomed to using modifiers and POS codes. Revisions to the claim form to add new fields or an additional bill type would create significant administrative burden to revise claims processing systems and educate providers that is not necessary given the availability of a modifier and POS codes. Though providers may not be familiar with this new modifier or any new POS code; since these types of codes already exist generally for hospital and professional claims, providers and suppliers should already have an understanding of these types of codes and how to apply them. Finally, we do not believe that expansions to the claim form or use of a new bill type

would provide us with detailed information on exactly which services were furnished in an off-campus PBD versus those furnished on the main campus when those services are furnished on the same day.

We also do not believe that we could accurately determine which services are furnished at off-campus provider-base departments (PBDs) using currently available NPI and facility address data. Hospitals are required to report the nine-digit ZIP code indicating where a service was furnished for purposes of paying properly for physician and anesthesia services paid off the PFS when that ZIP code differs from the master address for the hospital on file in CMS claims systems in value code 78 (pub 100-04, transmittal 1681, February 13, 2009). However, the billing ZIP code for the hospital main campus could be broad enough to incorporate on and off-campus provider-based departments. Further, a ZIP code reported in value code 78 does not allow CMS to distinguish between services furnished in different locations on the same date. Therefore, we do not believe that a comparison of the ZIP code captured in value code 78 and the main campus ZIP code is sufficiently precise.

Finally, while we considered the suggestion that CMS use currently reported Medicare hospital cost report (CMS-2552-10) data to identify services furnished at off-campus PBDs, we note that though aggregate data on services furnished in different settings must be reported through the appropriate cost center, we would not be able to obtain the service-specific level of detail that we would be able to obtain from claims data.

We will take under consideration the suggestion that CMS create a way for hospitals to report their acquisition of physician offices as off-campus PBDs through the enrollment process, although this information, as currently reported, would not allow us to know exactly which services are furnished in off-campus provider based departments and which services are furnished on the hospital's main campus when a hospital provides both on the same day.

Comment:

Commenters noted that the proposed modifier would not allow CMS to know the precise location of the off-campus provider-based department for billed services or when services are furnished at different off-campus provider-based locations in the same day.

Response:

We agree that neither the proposed modifier nor a POS code provides details on the specific provider-based location for each furnished service. However, we believe that collecting information on the type and frequency of services furnished at all off-campus locations will assist CMS in better understanding the distribution of services between on and off-campus locations.

Comment:

MedPAC believed there may be some value in collecting data on services furnished in off-campus provider-based departments to validate the accuracy of site-of-service reporting when the physician's office is off-campus but bills as an outpatient department. MedPAC indicated that any data collection effort should not prevent the development of policies to align payment rates across settings. MedPAC encouraged CMS to seek legislative authority to set equal payment rates across settings for evaluation and management office visits and other select services.

Response:

We thank MedPAC for its support of our data collection efforts to learn more about the frequency and types of services that are being furnished in off-campus PBDs.

Comment:

Many commenters suggested that providers would not be able to accurately apply the new modifier by the January 1, 2015 implementation timeline and recommended a one-year delay before providers would be required to apply the modifier to services furnished at off-campus PBDs. Some commenters requested only a six-month delay in implementation. Commenters indicated that significant revisions to internal billing processes would require additional time to implement.

Response:

Though we believe that the January 1st effective date that applies to most policies adopted in the final rules with comment period for both the PFS and the OPPS would provide sufficient lead time, we understand commenters' concerns with the proposed timeline for implementation given that the new reporting requirements may require changes to billing systems as well as education and training for staff. With respect to the POS code for professional claims, we will request two new POS codes to replace POS code 22 (Hospital Outpatient) through the POS Workgroup and expect that it will take some time for these new codes to be established. Once the revised POS codes are ready and integrated into CMS claims systems, practitioners would be required to use them, as applicable. More information on the availability of the new POS codes will be forthcoming in subregulatory guidance, but we do not expect the new codes to be available prior to July 1, 2015. There will be no voluntary reporting period of the POS codes for applicable professional claims because each professional claim requires a POS code in order to be accepted by Medicare. However, we do not view this to be problematic because we intend to give prior notice on the POS coding changes and, as many public commenters noted, because practitioners are already accustomed to using a POS on every claim they submit.

We also are finalizing our proposal to create a HCPCs modifier for hospital services furnished in an off-campus PBD setting; but we are adopting a voluntary reporting period for the new HCPCS modifier for one year. That is, reporting the new HCPCS modifier for services furnished at an off-campus PBD will not be mandatory until January 1, 2016, in order to allow providers time to make systems changes, test these changes, and train staff on use of the new modifier before reporting is required. We welcome early reporting of the modifier and believe a full year of preparation should provide hospitals with sufficient time to modify their systems for accurate reporting.

Comment:

Many commenters expressed concern that this data collection would eventually lead to equalizing payment for similar services furnished in the non-facility setting and the off-campus PBD setting. Several commenters noted that the trend of hospitals acquiring physician practices is due to efforts to better integrate care delivery, and suggested that CMS weigh the benefits of care integration when deciding payment changes. Some commenters suggested that CMS should use the data to equalize payment for similar services between these two settings. These commenters suggest that there is little difference in costs and care between the two settings that would warrant the difference in payment. Several of these commenters highlighted beneficiary cost sharing as one reason for site-neutral payment, noting that the total payment amount for hospital outpatient services is generally higher than the total payment amount for those same services when furnished in a physician's office.

Response:

We appreciate the comments received. At this time, we are only finalizing a data collection in this final rule with comment period. We did not propose, and therefore, are not finalizing any adjustment to payments furnished in the off-campus PBD setting.

Comment:

Several commenters noted that the CMS proposal would not provide additional information on how a physician practice billed prior to becoming an off-campus PBD, which would be important for analyzing the impact of this trend.

Response:

We agree that, in analyzing the impact of this trend, it is important to understand physician billing patterns that were in place prior to becoming an off-campus PBD, and we will continue to evaluate ways to analyze claims data to gather this information. We believe that collecting data using the additional modifier and POS code as finalized in this rule will be an important tool in furthering this analysis.

Comment:

Some commenters suggested that the term “off-campus” needs to be better defined. Commenters asked how billing would occur for hospitals with multiple campuses since the CMS definition of campus references main buildings and does not include remote locations. One commenter also asked whether the modifier is intended to cover services furnished in free-standing emergency departments.

Response:

For purposes of the modifier and the POS codes we are finalizing in this final rule with comment period, we define a “campus” using the definition at § 413.65(a)(2) to be the physical area immediately adjacent to the provider's main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by the CMS regional office, to be part of the provider's campus. We agree with commenters that our intent is to capture data on outpatient services furnished off of the hospital's main campus and off of any of the hospital's other campuses. The term “remote location of a hospital” is defined in our regulations at section 413.65(a)(2). Under the regulation, a “remote location” includes a hospital campus other than the main hospital campus. Specifically, a remote location is “a facility or an organization that is either created by, or acquired by, a hospital that is a main provider for the purposes of furnishing inpatient hospital services under the name, ownership, and financial and administrative control of the main provider . . . .” Therefore, we agree with the commenters that the new HCPCS modifier and the POS code for off-campus PBDs should not be reported for services furnished in remote locations of a hospital. The term “remote location” does not include “satellite” locations of a hospital. However, since a satellite facility is one that provides inpatient services in a building also used by another hospital, or in one or more entire buildings located on the same c

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