# Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2018; Medicare Shared Savings Program Requirements; and Medicare Diabetes Prevention Program > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2017-23953 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** November 15, 2017 - **Citation:** 82 FR 52976 ## Text DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 405, 410, 414, 424, and 425 [CMS-1676-F] RIN 0938-AT02 Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2018; Medicare Shared Savings Program Requirements; and Medicare Diabetes Prevention Program AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: This major final rule addresses changes to the Medicare physician fee schedule (PFS) and other Medicare Part B payment policies such as changes to the Medicare Shared Savings Program, 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 includes policies necessary to begin offering the expanded Medicare Diabetes Prevention Program model. DATES: These regulations are effective on January 1, 2018. FOR FURTHER INFORMATION CONTACT: Jessica Bruton, (410) 786-5991, for any physician payment issues not identified below. Lindsey Baldwin, (410) 786-1694, and Emily Yoder, (410) 786-1804, for issues related to telehealth services and primary care. Roberta Epps, (410) 786-4503, for issues related to PAMA section 218(a) policy and transition from traditional X-ray imaging to digital radiography. Isadora Gil, (410) 786-4532, for issues related to the valuation of cardiovascular services, bone marrow services, surgical respiratory services, dermatological procedures, and payment rates for nonexcepted items and services furnished by nonexcepted off-campus provider-based departments of a hospital. Donta Henson, (410) 786-1947, for issues related to ophthalmology services. Jamie Hermansen, (410) 786-2064, for issues related to the valuation of anesthesia services. Tourette Jackson, (410) 786-4735, for issues related to the valuation of musculoskeletal services, allergy and clinical immunology services, endocrinology services, genital surgical services, nervous system services, INR monitoring services, injections and infusions, and chemotherapy services. Ann Marshall, (410) 786-3059, for issues related to primary care, chronic care management (CCM), and evaluation and management (E/M) services. Geri Mondowney, (410) 786-1172, for issues related to malpractice RVUs. Patrick Sartini, (410) 786-9252, for issues related to the valuation of imaging services and malpractice RVUs. Michael Soracoe, (410) 786-6312, for issues related to the practice expense methodology, impacts, conversion factor, and valuation of pathology and surgical procedures. Pamela West, (410) 786-2302, for issues related to therapy services. Corinne Axelrod, (410) 786-5620, for issues related to rural health clinics or federally qualified health centers. Felicia Eggleston, (410) 786-9287, for issues related to DME infusion drugs. Rasheeda Johnson, (410) 786-3434, for issues related to initial data collection and reporting periods for the clinical laboratory fee schedule. Edmund Kasaitis, (410) 786-0477, for issues related to biosimilars. JoAnna Baldwin, (410) 786-7205, or Sarah Fulton, (410) 786-2749, for issues related to appropriate use criteria for advanced diagnostic imaging services. Crystal Kellam, (410) 786-7970, for issues related to physician quality reporting system. Alesia Hovatter, (410) 786-6861, for issues related to Physician Compare. Alexandra Mugge, (410) 786-4457, for issues related to the EHR incentive program. Kari Vandegrift, (410) 786-4008, or ACO@cms.hhs.gov , for issues related to the Medicare Shared Savings Program. Kimberly Spalding Bush, (410) 786-3232, or Fiona Larbi, (410) 786-7224, for issues related to Value-based Payment Modifier and Physician Feedback Program. Wilfred Agbenyikey, (410) 786-4399, for issues related to MACRA patient relationship categories and codes. Carlye Burd, (410) 786-1972, or Albert Wesley, (410) 786-4204, for issues related to the Medicare Diabetes Prevention Program expanded model. SUPPLEMENTARY INFORMATION: Table of Contents I. Executive Summary II. Provisions of the Proposed Rule and Analysis of and Responses to Public Comments A. Background B. Determination of Practice Expense (PE) Relative Value Units (RVUs) C. Determination of Malpractice Relative Value Units (RVUs) D. Medicare Telehealth Services E. Potentially Misvalued Services Under the PFS F. Payment Incentive for the Transition from Traditional X-Ray Imaging to Digital Radiography and Other Imaging Services G. Establishment of Payment Rates Under the Medicare PFS for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital H. Valuation of Specific Codes I. Evaluation & Management (E/M) Guidelines and Care Management Services J. Therapy Caps III. Other Provisions of the Proposed Rule A. New Care Coordination Services and Payment for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) B. Part B Drug Payment: Infusion Drugs Furnished Through an Item of Durable Medical Equipment (DME) C. Solicitation of Public Comments on Initial Data Collection and Reporting Periods for Clinical Laboratory Fee Schedule D. Payment for Biosimilar Biological Products Under Section 1847A of the Act E. Appropriate Use Criteria for Advanced Diagnostic Imaging Services F. Physician Quality Reporting System Criteria for Satisfactory Reporting for Individual EPs and Group Practices for the 2018 PQRS Payment Adjustment G. Clinical Quality Measurement for Eligible Professionals Participating in the Electronic Health Record (EHR) Incentive Program for 2016 H. Medicare Shared Savings Program I. Value-Based Payment Modifier and Physician Feedback Program J. MACRA Patient Relationship Categories and Codes K. Changes to the Medicare Diabetes Prevention Program (MDPP) Expanded Model L. Physician Self-Referral Law: Annual Update to the List of CPT/HCPCS Codes IV. Collection of Information Requirements V. 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, we are listing these acronyms and their corresponding terms in alphabetical order below: A1c Hemoglobin A1c AAA Abdominal aortic aneurysms ABLE Achieving a Better Life Experience Act of 2014 (Pub. L. 113-295) ACI Advancing Care Information ACO Accountable care organization AMA American Medical Association APM Alternative Payment Model ASC Ambulatory surgical center ATA American Telehealth Association ATRA American Taxpayer Relief Act (Pub. L. 112-240) AUC Appropriate Use Criteria AWV Annual wellness visit BBA Balanced Budget Act of 1997 (Pub. L. 105-33) BBRA [Medicare, Medicaid and State Child Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113) BHI Behavioral health integration BLS Bureau of Labor Statistics CAD Coronary artery disease CAH Critical access hospital CBSA Core-Based Statistical Area CCM Chronic care management CDSM Clinical Decision Support Mechanism CEHRT Certified EHR technology CF Conversion factor CG-CAHPS Clinician and Group Consumer Assessment of Healthcare Providers and Systems CLFS Clinical Laboratory Fee Schedule CoA Certificate of Accreditation CoC Certificate of Compliance CoCM Collaborative care model CoR Certificate of Registration CNM Certified nurse-midwife CP Clinical psychologist CPC Comprehensive Primary Care CPEP Clinical Practice Expert Panel CPT [Physicians] Current Procedural Terminology ( CPT codes, descriptions and other data only are copyright 2015 American Medical Association. All rights reserved. ) CQM Clinical quality measure CSW Clinical social worker CT Computed tomography CW Certificate of Waiver 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 ED Emergency Department EHR Electronic health record E/M Evaluation and management EMT Emergency Medical Technician EP Eligible professional eRx Electronic prescribing ESRD End-stage renal disease FAR Federal Acquisition Regulations FDA Food and Drug Administration FFS Fee-for-service FQHC Federally qualified health center FR Federal Register FSHCAA Federally Supported Health Centers Assistance Act 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 IPPE Initial preventive physical exam IPPS Inpatient Prospective Payment System IQR Inpatient Quality Reporting ISO Insurance service office IT Information technology IWPUT Intensity of work per unit of time LCD Local coverage determination MA Medicare Advantage MAC Medicare Administrative Contractor MACRA Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10) 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) MIPS Merit-based Incentive Payment System 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 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) PAMPA Patient Access and Medicare Protection Act (Pub. L. 114-115) 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 PLE Provider-led Entity PLI Professional Liability Insurance PMA Premarket approval PMH-NP Psychiatric mental health nurse practitioner PPM Provider-Performed Microscopy PQRS Physician Quality Reporting System PPIS Physician Practice Expense Information Survey PPS Prospective Payment System PT Physical therapy PT Proficiency Testing PT/INR Prothrombin Time/International Normalized Ratio PY Performance year QA Quality Assessment QC Quality Control 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 Scale 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 TCM Transitional Care Management 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 are available 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 2018 PFS Final Rule, refer to item CMS-1676-F. Readers with questions related to accessing any of the Addenda or other supporting documents referenced in this final rule and posted on the CMS Web site identified above should contact Jessica Bruton at (410) 786-5991. CPT (Current Procedural Terminology) Copyright Notice Throughout this final rule, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2016 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 A. Purpose This final rule makes payment and policy changes under the Medicare Physician Fee Schedule (PFS) and implements required statutory changes under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10), Achieving a Better Life Experience Act of 2014 (ABLE) (Pub. L. 113-295), Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-93), and the Consolidated Appropriations Act of 2016 (Pub. L. 114-113). This final rule also makes changes to payment policy and other related policies for Medicare Part B, Part D, and Medicare Advantage. 1. Summary of the Major Provisions Section 1848 of 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 statute 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 paid under the PFS, incorporating geographic adjustments to reflect the variations in the costs of furnishing services in different geographic areas. In this major final rule, we establish RVUs for CY 2018 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 includes discussions and finalized policies regarding: • Potentially Misvalued Codes. • Telehealth Services. • Establishing Values for New, Revised, and Misvalued Codes. • Establishing Payment Rates under the PFS for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Provider-Based Departments of a Hospital. • Evaluation & Management (E/M) Guidelines and Care Management Services. • Care Coordination Services and Payment for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs). • Part B Drug Payment: Infusion Drugs Furnished Through an Item of Durable Medical Equipment (DME). • Solicitation of Public Comments on Initial Data Collection and Reporting Periods for Clinical Laboratory Fee Schedule. • Payment for Biosimilar Biological Products under Section 1847A of the Act. • Appropriate Use Criteria for Advanced Diagnostic Imaging Services. • PQRS Criteria for Satisfactory Reporting for Individual EPs and Group Practices for the 2018 PQRS Payment Adjustment. • Clinical Quality Measurement for Eligible Professionals Participating in the Electronic Health Record (EHR) Incentive Program for 2016. • Medicare Shared Savings Program. • Value-Based Payment Modifier and the Physician Feedback Program. • MACRA Patient Relationship Categories and Codes. • Changes to the Medicare Diabetes Prevention Program (MDPP) Expanded Model. • Physician Self Referral Law: Annual Update to the List of CPT/HCPCS Codes. • Therapy Caps. 2. Summary of Costs and Benefits The statute 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. We have determined that this major final rule is economically significant. For a detailed discussion of the economic impacts, see section V. of this final rule. II. Provisions of the Final Rule, and Analysis of and Responses to Public Comments for PFS A. Background Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Act, “Payment for Physicians' Services.” The PFS 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 major final rule, 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 Scale 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. In the CY 2011 PFS final rule with comment period (75 FR 73328 through 73329), we discussed a variety of methodologies and approaches used to develop work RVUs, including survey data, building blocks, crosswalk to key reference or similar codes, and magnitude estimation. More information on these issues is available in that rule. 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. 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 5-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. In addition to the 5-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, that require 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 V.C. of this final rule, in accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if revisions to the RVUs cause expenditures for the year to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million. 2. Calculation of Payments Based on RVUs To calculate the payment for each 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 work, PE, and MP in an area compared to the national average costs for each component. RVUs are converted to dollar amounts through the application of a CF, which is calculated based on a statutory formula by CMS's Office of the Actuary (OACT). The formula for calculating the Medicare PFS 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 CF, in a manner to ensure 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 CF 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. B. Determination of 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 physicians' 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 5 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 PE/HR by specialty that was obtained from the AMA's 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 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 Medicare Economic Index (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 use crosswalks for specialties that did not participate in the PPIS. These crosswalks have been generally established through notice and comment rulemaking and are available in the file called “CY 2018 PFS Final Rule PE/HR” on the CMS Web site under downloads for the CY 2018 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html . Comment: Several commenters recommended that it was time to consider a new nationwide all specialty PE/HR survey, given the amount of time that has passed since the last survey was conducted. The commenters stated that the practice of medicine has significantly and substantially evolved in the past decade and that many specialties have had extensive changes in physician employment models during that time. The commenters stated that continued use of the outdated PPIS survey leads to an inappropriate and inaccurate distortion of the PE RVUs for current practice. Response: We have previously identified several concerns regarding the underlying data used in determining PE RVUs in the CY 2014 PFS final rule (78 FR 74246 through 74247). Even when we first incorporated the survey data into the PE methodology beginning in CY 1999 (63 FR 58814), many commenters 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. However, we currently lack another source of comprehensive data regarding PE costs, and as a result, we continue to believe that the PPIS survey data is the best data currently available. We continue to seek the best broad-based, auditable, routinely-updated source of information regarding PE costs. 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 We allocate 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 work RVUs. We also incorporate the survey data described earlier in the PE/HR discussion (see section II.B.2.b of this final rule). 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. That is, 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, represent 25 percent of total costs for the specialties that furnish 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 RVU 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 a work RVU of 4.00 and the clinical labor portion of the direct PE RVU 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 incorporated 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. (3) Facility and Nonfacility Costs For procedures that can be furnished in a physician's office, as well as in a facility setting, where Medicare makes a separate payment to the facility for its costs in furnishing a service, 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. 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. For this reason, the facility PE RVUs are generally lower than the nonfacility PE RVUs. Comment: One commenter requested that CMS develop nonfacility PE RVUs for CPT code 31255 (Nasal/sinus endoscopy, surgical; with ethmoidectomy, total (anterior and posterior)), stating that this would be consistent with the migration of many sinus surgery procedures to the office setting. The commenter indicated that the availability of new technology has transformed these services to become minimally invasive, and as a result, they can be safely and effectively performed in the office setting for many patients. Response: We appreciate the information provided by the commenter. However, we note that CPT code 31255 was reviewed by the RUC for the current CY 2018 rule cycle, and the RUC did not recommend any direct PE inputs for this code in the nonfacility setting. We welcome an ongoing dialogue with stakeholders regarding the direct PE inputs for this code, which we will take under consideration for future rulemaking. We also note that pricing in a particular setting does not constitute a coverage determination. (4) Services With Technical Components and Professional Components 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.) (5) 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). We also direct interested readers to the file called “Calculation of PE RVUs under Methodology for Selected Codes” which is available on our Web site under downloads for the CY 2018 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html . This file contains a table that illustrates the calculation of PE RVUs as described in this final rule for individual codes. (a) 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. (b) 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. Step 2: Calculate the aggregate pool of direct PE costs for the current year. We set the aggregate pool of PE costs equal to the product of the ratio of the current aggregate PE RVUs to current aggregate work RVUs and the proposed aggregate work RVUs. Step 3: Calculate the aggregate pool of direct PE costs for use in ratesetting. This is the product of the aggregate 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, use the CF to 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 adjustment to the direct costs for each service (as calculated in Step 1). Step 5: Convert the results of Step 4 to a 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 4 and Step 5. Different CFs would result in different direct PE scaling adjustments, but this has no effect on the final direct cost PE RVUs since changes in the CFs and changes in the associated direct scaling adjustments offset one another. (c) 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. We generally use an average of the 3 most recent years of available Medicare claims data to determine the specialty mix assigned to each code. Prior to implementing that policy, we used the most recent year of available claims data to determine the specialty mix assigned to each code. Under either of these approaches, codes with low Medicare service volume require special attention since billing or enrollment irregularities for a given year can result in significant changes in specialty mix assignment. Prior to adopting the 3-year average of data, for low-volume services (fewer than 100 Medicare allowed services), we assigned the values associated with the specialty that most frequently reported the service in the most recent claims data (dominant specialty). For some time, stakeholders, including the RUC, have requested that we use a recommended “expected” specialty for all low volume services instead of the information contained in the claims data. Currently, in the development of PE RVUs we use “expected specialty” overrides for only several dozen services based on several code-specific policies we established in prior rulemaking. As we stated in the CY 2016 final rule with comment period (80 FR 70894), we hoped that the 3-year average would mitigate the need to use dominant or expected specialty instead of the specialty identified using claims data. Because we incorporated CY 2015 claims data for use in the CY 2017 proposed rates, we believe that the finalized PE RVUs associated with the CY 2017 PFS final rule provided a first opportunity to determine whether service-level overrides of claims data are necessary. Although we believe that the use of the 3-year average of claims data to determine specialty mix has led to an improvement in the stability of PE and MP RVUs from year to year, after reviewing the RVUs for low volume services, we continue to see possible distortions and wide variability from year to year in PE and MP RVUs for low volume services. Several stakeholders have suggested that CMS implement service-level overrides based on the expected specialty in order to determine the specialty mix for these low volume procedures. The RUC previously supplied us with a list of nearly 2,000 lower volume codes and their suggested specialty overrides. After reviewing the finalized PE RVUs for the CY 2017 PFS final rule, we agree that the use of service-level overrides for low volume services would help mitigate annual fluctuations and provide greater stability in the valuation of these services. While the use of the 3-year average of claims data to determine specialty mix has helped to mitigate some of the year to year variability for low volume services, it has not fully mitigated what appear to be anomalies for many of these lower volume codes. Therefore, we proposed to use the most recent year of claims data to determine which codes are low volume for the coming year (those that have fewer than 100 allowed services in the Medicare claims data). For codes that fall into this category, instead of assigning specialty mix based on the specialties of the practitioners reporting the services in the claims data, we proposed to instead use the expected specialty that we identify on a list. For CY 2018, we proposed to use a list that was developed based on our medical review of the list most recently recommended by the RUC, in addition to our own proposed expected specialty for certain other low-volume codes for which we have historically used expected specialty assignments. We would display this list as part of the annual set of data files we make available as part of notice and comment rulemaking. We proposed to consider recommendations from the RUC and other stakeholders on changes to this list on an annual basis. We also proposed to apply these service-level overrides for both PE and MP, rather than one or the other category. We believe that this would simplify the implementation of service-level overrides for PE and MP, and would also address stakeholder concerns about the year-to-year variability for low volume services. We solicited public comment on the proposal to use service-level overrides to determine the specialty mix for low volume procedures, as well as on the proposed list of expected specialty overrides itself, which is largely based on the recommendations submitted by the RUC last year. The proposed list of expected specialty assignments for individual low volume services is available on our Web site under downloads for the CY 2018 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service- Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html . Services for which the specialty is automatically assigned based on previously finalized policies under our established methodology (for example, “always therapy” services) would be unaffected by this proposal. The following is a summary of the public comments received on our proposal to use service-level overrides to determine the specialty mix for low volume procedures and our responses: Comment: Many commenters supported the use of the expected specialty assignments and urged CMS to finalize the proposal. Commenters stated that the proposal was consistent with a longstanding RUC recommendation and the use of the expected specialty assignments would help mitigate some of the year to year variability for low volume services. Commenters supported the creation of a list of these service-level overrides and its maintenance on an annual basis, with several commenters stating that the RUC should review updated claims data each year to determine if any new codes fall below 100 claims and submit an expected specialty recommendation for these additional codes. Response: We appreciate the comments in support of the proposal. As we stated in the proposed rule, we will consider recommendations from the RUC and other stakeholders on changes to the list of expected specialty assignments on an annual basis. Comment: Several commenters made specific recommendations about the proposed list of expected specialty assignments for individual low volume services. One commenter recommended that the following CPT codes should be added to the list of expected specialty assignments: Cardiology: 33477; Cardiac surgery: 33238, 33514, 33548, 33951, 33953, 33955, 33957, 33958, 33959, 33962, 33963, 33964, 33965, 33969, 33973, 33985, 33987, 33988, 33989, 33991, 35271; General Surgery: 35251, 43325; Thoracic Surgery: 32672, 33025, 33215, 43135. The same commenter recommended the following changes to the indicated codes on the low volume override list: • CPT codes 33363 and 33364: The commenter recommended changing the override specialty from cardiology to cardiac surgery. • CPT codes 33516, 33976 and 35812: The commenter recommended changing the override specialty from thoracic surgery to cardiac surgery. • CPT codes 35311 and 35526: The commenter recommended changing the override specialty from vascular surgery to cardiac surgery. • CPT codes 38382, 43108, 43118, 43123, 43360, 43405 and 43425: The commenter recommended changing the override specialty from general surgery to thoracic surgery. In addition, a different commenter recommended changing the proposed expected specialty for CPT code 43754 from gastroenterology to emergency medicine. Response: We appreciate the submission of specific recommendations to the proposed list of expected specialty assignments. These recommendations from the commenter included newer information about the typical practice of these CPT codes than what we possessed when initially proposing the low volume services list, which was based, in part, upon a review that took place in CY 2016. After reviewing the recommendations provided by the commenters, and in light of the additional information supplied by the commenter about these codes, we are finalizing the addition of these updated recommendations to the list. Comment: Several commenters expressed concern regarding the treatment of existing codes with no Medicare volume (as distinct from low volume) reported for any given year. Under the methodology used in the proposed rule, these codes with no utilization data received the average risk factor for all physician specialties rather than the expected specialty assignments on the list of service-level overrides. The commenters recommended that the proposed list of expected specialty overrides be utilized for both low volume and no volume codes. Response: We agree with the commenters that the RVUs for services with no Medicare volume should be calculated in a manner that is consistent with services with low Medicare volume because our proposal was for fewer than 100 allowed services, and no-volume services would fit within that standard. Therefore, we are finalizing the recommendation from the commenters to use the proposed list of expected specialty overrides for both low volume and no volume codes. Comment: A commenter agreed with the CMS proposal that there would no longer be a need to apply service-level MP RVU crosswalks for new or revised codes in order to assign a specialty-mix risk factor. The commenter stated that CMS would be able to derive the specialty mix assumption in the first year for a new or revised code from the specialty mix used for purposes of ratesetting. The commenter indicated their support for this change to calculating MP RVUs for new or revised codes. Response: We are finalizing our proposal to remove service-level MP RVU crosswalks for new or revised codes, and we will instead derive the specialty mix assumption for the first year for a new or revised code from the specialty mix used for purposes of ratesetting. Comment: One commenter supported the CMS proposal and requested the use of the phrase “Family Medicine” for the list of expected specialty assignments rather than the phrase “Family Practice”, which the commenter stated was a more outdated term. Response: Regarding the requested update to the name assigned to a specialty, we would direct the commenter to the standard process for updating specialty designations. This change would have to be made to the Medicare enrollment specialty and lies outside the scope of the proposal. After consideration of comments received, we are finalizing our proposal to use service-level overrides to determine the specialty mix for low volume procedures, with the modifications as discussed in this section. Based on comments, we are also finalizing the use of service-level overrides to determine the specialty mix for no volume procedures. In addition, we are finalizing the proposed list of expected specialty overrides with modifications. We are finalizing the addition of certain CPT codes to the list and updated specialty assignments for certain CPT codes. 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 labor 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 would be allocated using the work RVUs, and for the TC service, indirect PEs would 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 the download file called “Calculation of PE RVUs under Methodology for Selected Codes”, 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 result of step 8 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. (d) Calculate the Final PE RVUs Step 18: Add the direct PE RVUs from Step 5 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 sum of steps 5 and 17 to the proposed aggregate work RVUs scaled by the ratio of current aggregate PE and work RVUs. This adjustment ensures that all PE RVUs in the PFS account for the fact that certain specialties are excluded from the calculation of PE RVUs but included in maintaining overall PFS budget neutrality. (See “Specialties excluded from ratesetting calculation” later in this final rule.) Step 19: Apply the phase-in of significant RVU reductions and its associated adjustment. Section 1848(c)(7) of the Act specifies that for services that are not new or revised codes, if the total RVUs for a service for a year would otherwise be decreased by an estimated 20 percent or more as compared to the total RVUs for the previous year, the applicable adjustments in work, PE, and MP RVUs shall be phased in over a 2-year period. In implementing the phase-in, we consider a 19 percent reduction as the maximum 1-year reduction for any service not described by a new or revised code. This approach limits the year one reduction for the service to the maximum allowed amount (that is, 19 percent), and then phases in the remainder of the reduction. To comply with section 1848(c)(7) of the Act, we adjust the PE RVUs to ensure that the total RVUs for all services that are not new or revised codes decrease by no more than 19 percent, and then apply a relativity adjustment to ensure that the total pool of aggregate PE RVUs remains relative to the pool of work and MP RVUs. For a more detailed description of the methodology for the phase-in of significant RVU changes, we refer readers to the CY 2016 PFS final rule with comment period (80 FR 70927 through 70931). Comment: One commenter stated that CMS should take a phased in approach to avoid any beneficiary access issues presented by the significant payment decreases caused by PE decreases for imaging services. These decreases could affect the viability of many practices providing these critical services as the new payment rates might create economic hardships for continuation of these services. The commenter stated that CMS should implement the RUC-recommended practice expenses over a phased in period to reduce the financial impact of the PE changes, particularly for codes with a proposed decrease of more than 10 percent. Response: We agree with the commenter that there is a need to ensure access to patient care and mitigate the potential for economic hardship on the part of providers facing decreases in the valuation of services. We note in response to the commenter that section 1848(c)(7) of the Act already stipulates 19 percent as the maximum 1-year reduction for any service not described by a new or revised code. This phase-in methodology has been in use for PFS ratesetting since CY 2016. (e) Setup File Information • Specialties excluded from ratesetting calculation: For the purposes of calculating the PE RVUs, we exclude certain specialties, such as certain NPPs paid at a percentage of the PFS and low-volume specialties, from the calculation. These specialties are included for the purposes of calculating the BN adjustment. They are displayed in Table 1. Table 1—Specialties Excluded From Ratesetting Calculation Specialty code Specialty description 49 Ambulatory surgical center. 50 Nurse practitioner. 51 Medical supply company with certified orthotist. 52 Medical supply company with certified prosthetist. 53 Medical supply company with certified prosthetist-orthotist. 54 Medical supply company not included in 51, 52, or 53. 55 Individual certified orthotist. 56 Individual certified prosthetist. 57 Individual certified prosthetist-orthotist. 58 Medical supply company with registered pharmacist. 59 Ambulance service supplier, e.g., private ambulance companies, funeral homes, etc. 60 Public health or welfare agencies. 61 Voluntary health or charitable agencies. 73 Mass immunization roster biller. 74 Radiation therapy centers. 87 All other suppliers ( e.g., drug and department stores). 88 Unknown supplier/provider specialty. 89 Certified clinical nurse specialist. 96 Optician. 97 Physician assistant. A0 Hospital. A1 SNF. A2 Intermediate care nursing facility. A3 Nursing facility, other. A4 HHA. A5 Pharmacy. A6 Medical supply company with respiratory therapist. A7 Department store. B2 Pedorthic personnel. B3 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. AS Assistant at Surgery—Physician Assistant 14% (85% * 16%) Intraoperative portion. 50 or LT and RT Bilateral Surgery 150% 150% of work time. 51 Multiple Procedure 50% Intraoperative portion. 52 Reduced Services 50% 50%. 53 Discontinued Procedure 50% 50%. 54 Intraoperative Care only Preoperative + Intraoperative Percentages on the payment files used by Medicare contractors to process Medicare claims Preoperative + Intraoperative portion. 55 Postoperative Care only Postoperative Percentage on the payment files used by Medicare contractors to process Medicare claims Postoperative portion. 62 Co-surgeons 62.5% 50%. 66 Team Surgeons 33% 33%. We also make adjustments to volume and time that correspond to other payment rules, including special multiple procedure endoscopy rules and multiple procedure payment reductions (MPPRs). 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 we use the average allowed charge when simulating RVUs; therefore, the RVUs as calculated already reflect the payments as adjusted by modifiers, and no volume adjustments are necessary. However, a time adjustment of 33 percent is made only for medical direction of two to four cases since that is the only situation where a single practitioner is involved with multiple beneficiaries concurrently, so that counting each service without regard to the overlap with other services would overstate the amount of time spent by the practitioner furnishing these services. • Work RVUs: The setup file contains the work RVUs from this final rule. (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 in this final rule. 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 in this final rule. 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. Stakeholders have often suggested that particular equipment items are used less frequently than 50 percent of the time in the typical setting and that CMS should reduce the equipment utilization rate based on these recommendations. We appreciate and share stakeholders' interest in using the most accurate assumption regarding the equipment utilization rate for particular equipment items. However, we believe that absent robust, objective, auditable data regarding the use of particular items, the 50 percent assumption is the most appropriate within the relative value system. We welcome the submission of data that illustrates an alternative rate. Comment: One commenter stated that most ophthalmology diagnostic equipment is in use far less than 50 percent of the time. The commenter indicated that they had developed a survey instrument that asked ophthalmic technicians to provide time usage estimates for the 16 most-utilized pieces of diagnostic testing equipment. The commenter stated that their preliminary survey results produced a utilization rate of 22 percent, much lower than the 50 percent assumption currently used by CMS. The commenter suggested that CMS should work with the RUC to do a robust survey to help determine a more valid utilization rate, including the possibility of specialty-specific equipment utilization rates. Response: We are always looking for more accurate information to improve our PE methodology. We appreciate and share stakeholders' interest in using the most accurate assumption regarding the equipment utilization rate for particular equipment items, and we will review any information that the RUC's PE Subcommittee or other stakeholders are willing to submit through the public comment process. We concur with the commenter that a wide-ranging survey or similar study designed to address the subject of equipment utilization rates would be an appropriate tool to investigate this subject in further detail. At the moment, we believe that absent robust, objective, auditable data regarding the use of particular items, the 50 percent assumption is the most appropriate within the relative value system. We welcome the further submission of data that illustrates an alternative rate. Maintenance: This factor for maintenance was finalized in the CY 1998 PFS final rule with comment period (62 FR 33164). Comment: Several commenters addressed the issue of equipment maintenance costs. One commenter stated that the current maintenance percentage of 5 percent across all types of medical equipment does not adequately address the maintenance costs of imaging equipment in general and particularly not for advanced imaging modalities like CT and MRI. This commenter stated that a CT scanner would have an estimated annual maintenance cost of 7.2 percent. Another commenter supported our willingness to investigate potential avenues for determining variable equipment maintenance costs across a broad range of equipment items. The commenter stated that the standard equipment rate assumption fails to appreciate the significant costs associated with the maintenance of highly technical and particularly complex equipment items, and indicated that that CMS should not persist in an inaccurate approach while it collects additional data. Response: We appreciate the additional information regarding equipment maintenance rates from the commenters. As we previously stated in the CY 2016 final rule with comment period (80 FR 70897), we agree with the commenters that we do not believe the annual maintenance factor for all equipment is precisely 5 percent, and we concur that the current rate likely understates the true cost of maintaining some equipment. We also believe it likely overstates the maintenance costs for other equipment. When we solicited comments regarding sources of data containing equipment maintenance rates, commenters were unable to identify an auditable, robust data source that could be used by CMS on a wide scale. We do not believe that voluntary submissions regarding the maintenance costs of individual equipment items would be an appropriate methodology for determining costs. As a result, in the absence of publicly available datasets regarding equipment maintenance costs or another systematic data collection methodology for determining maintenance factor, we do not believe that we have sufficient information at present to adopt a variable maintenance factor for equipment cost per minute pricing. We continue to investigate potential avenues for determining equipment maintenance costs across a broad range of equipment items. Interest Rate: In the CY 2013 PFS final rule with comment period (77 FR 68902), we updated the interest rates used in developing an equipment cost per minute calculation (see 77 FR 68902 for a thorough discussion of this issue). 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). We did not propose any changes to these interest rates for CY 2018. The interest rates are listed in Table 3. Table 3—SBA Maximum Interest Rates Price Useful life (years) Interest rate (%) <$25K <7 7.50 $25K to $50K <7 6.50 >$50K <7 5.50 <$25K 7+ 8.00 $25K to $50K 7+ 7.00 >$50K 7+ 6.00 3. Changes to Direct PE Inputs for Specific Services This section focuses on specific PE inputs. The direct PE inputs are included in the CY 2018 direct PE input database, which is available on the CMS Web site under downloads for the CY 2018 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html . (a) PE Inputs for Digital Imaging Services In the CY 2017 PFS final rule (81 FR 80179 through 80184), we finalized our proposal to add a professional PACS workstation (ED053) used for interpretation of digital images to a series of CPT codes and to address costs related to the use of film that had previously been incorporated as direct PE inputs for these services. We finalized the following criteria for the inclusion of a professional PACS workstation: • We did not add the professional PACS workstation to any code that currently lacks a technical PACS workstation (ED050) or lacks a work RVU. We continue to believe that procedures that do not include a technical workstation, or do not have physician work, would not require a professional workstation. • We did not add the professional PACS workstation to add-on codes. Because the base codes include equipment minutes for the professional PACS workstation, we continue to believe it would be duplicative to add additional equipment time for the professional PACS workstation in the add-on code. • We also did not add the professional PACS workstation to image guidance codes where the dominant provider is not a radiologist according to the most recent year of claims data, because we believe a single technical PACS workstation would be more typical in those cases. • We agreed with commenters that because the clinical utility of the PACS workstation is not necessarily limited to diagnostic services, there may be therapeutic codes where it would be reasonable to assume its use to be typical. Based on information provided by commenters and our own medical review, we stated that we believe that the use of the professional PACS workstation is typical for many of the specific codes that were identified. We added the workstation to many of the therapeutic codes requested by commenters, specifically CPT codes listed outside the 70000 series, where we agreed that use of the professional PACS workstation was typical. • For CPT codes in the 80000 and 90000 series, we expressed our concerns about whether it is appropriate to include the technical PACS workstation in many of these services. PACS workstations were created for imaging purposes, but many of these services that include a technical PACS workstation do not appear to make use of imaging. Although we did not remove the technical PACS workstation from these codes at that time, we did not believe that a professional PACS workstation should be added to these procedures. Prior to the publication of this CY 2018 PFS proposed rule, a stakeholder expressed concern about our decision not to include the professional PACS workstation in a series of vascular ultrasound codes that use technical PACS workstations. The stakeholder indicated that the vascular ultrasound codes in question do make use of a professional PACS workstation, and that the dominant specialty provider requirement (that is, that the code's dominant specialty provider be diagnostic radiology) would exclude codes for which the professional PACS workstation is typical based on a mistaken assumption. The stakeholder stated that to furnish vascular ultrasound services following the transition from film to digital imaging, both a technical and a professional PACS workstation are required, regardless of whether the practitioner furnishing the service is a radiologist, cardiologist, neurologist, or vascular surgeon. We appreciate the submission of this additional information regarding the use of the professional PACS workstation in vascular ultrasound codes. Therefore, we solicited comments regarding whether or not the use of the professional PACS workstation would be typical in the following list of CPT and HCPCS codes. The codes brought to our attention by the stakeholder are CPT codes 93880, 93882, 93886, 93888, 93890, 93892, 93893, 93922, 93923, 93924, 93925, 93926, 93930, 93931, 93965, 93970, 93971, 93975, 93976, 93978, 93979, 93980, 93981, 93990, and 76706, and HCPCS code G0365. We considered information submitted in comments to determine whether the professional PACS workstation should be included as a direct PE input for these codes. The following is a summary of the public comments received regarding whether or not the use of the professional PACS workstation would be typical in the previous list of CPT and HCPCS codes and our responses: Comment: Several commenters stated that the finalized policy in CY 2017 that did not add the professional PACS workstation to image guidance codes where the dominant practitioner is not a radiologist was an arbitrary decision. The commenters stated that CMS did not provide any rationale for this policy, and that for many services, both a technical and a professional PACS workstation would be typically used regardless of whether the practitioner performing the service is a radiologist or in another specialty. These commenters urged CMS to add a professional PACS workstation in services where its use would be typical without concern for whether diagnostic radiology is the dominant provider. Response: We agree with the commenters that equipment allocated to each code should be determined based on the resources typically required to furnish the service. In general, we believe that examining Medicare claims data for dominant specialty is a useful and data-driven approach to making educated assumptions regarding typical resources involved in furnishing particular procedures. However, in this case, we are persuaded by commenters who stated that other specialties, outside of diagnostic radiology, utilize the professional PACS workstation. After reviewing the information supplied by the commenters, we agree the use of both a technical and a professional PACS workstation may be typical in some services where diagnostic radiology is not the dominant provider. We welcome feedback from stakeholders in identifying additional services where the use of a professional PACS workstation would be typical. Comment: One commenter disagreed with the exclusion of add-on codes from the list of codes that included a professional PACS workstation. The commenter stated that the add-on codes require additional time to perform and therefore more time with the technical PACS workstation for the technician, as well as additional time for the review and interpretation performed by the physician using the professional PACS workstation. Response: We disagree with the commenter. We continue to believe it would be duplicative to add additional equipment time for the professional PACS workstation in the add-on code, as the base codes already include equipment time for the practitioner's use following the service. Comment: Many commenters stated that the use of a professional PACS workstation would be typical in the 26 CPT codes detailed previously. Commenters stated that in the wake of the transition from film to digital imaging, use of both a technical and a professional PACS workstations has become typical for many diagnostic imaging services, including vascular ultrasound and digital pathology services. One commenter indicated that the use of the professional PACS workstation served a vital part in coordination of care for their treatment of vascular access issues related to ESRD patients. Another commenter stated that HCPCS code G0365 may have been mistakenly included on this list, as it already includes a professional PACS workstation added in CY 2017, while CPT code 93965 should not be considered for the professional PACS workstation as the code was previously deleted. Response: We agree with the commenters that the use of the professional PACS workstation would be typical in 21 of the 26 codes listed in the proposed rule. As mentioned by one commenter, CPT code 93965 has been deleted while code G0365 already includes a professional PACS workstation. We disagree with adding a professional PACS workstation to CPT codes 93922, 93923, and 93924 because these codes do not include a technical PACS workstation and we continue to believe that procedures that do not include a technical workstation would not require a professional workstation. We will assign equipment time for the professional PACS workstation in the nonfacility setting according to the equipment time formula finalized in CY 2017. For diagnostic codes, we are assigning equipment minutes equal to half the preservice physician work time plus the full intraservice physician work time, consistent with the previously finalized policy. For the relatively smaller group of diagnostic codes with no service period time breakdown, we are assigning equipment time equal to half of the total physician work time, consistent with the previously finalized policy. The equipment time to be added is shown in Table 4. Table 4—Additional Codes With Professional PACS Workstation HCPCS Procedure type ED053 minutes 93880 Diagnostic 18 93882 Diagnostic 13 93886 Diagnostic 20 93888 Diagnostic 13 93890 Diagnostic 20 93892 Diagnostic 25 93893 Diagnostic 25 93925 Diagnostic 18 93926 Diagnostic 13 93930 Diagnostic 18 93931 Diagnostic 13 93970 Diagnostic 17 93971 Diagnostic 12 93975 Diagnostic 23 93976 Diagnostic 18 93978 Diagnostic 18 93979 Diagnostic 13 93980 Diagnostic 21 93981 Diagnostic 10 93990 Diagnostic 14 76706 Diagnostic 13 Comment: One commenter stated that the costs associated with storing digital images should be included as a direct PE. The commenter noted that CMS treated film as a supply item for purposes of direct cost determination and cited an MRI study in the 2010 direct PE database with 12 pieces of 14 x 17 film at a price of $1.17 each or $14.04. The commenter stated that this film was not replaced and that digital imaging studies need to be recorded and then archived. The commenter suggested that storage costs for digital images should be added as a maintenance percentage for digital imaging services. Response: We disagree with the commenter that the costs associated with storing digital images are excluded from digital imaging services, as these costs are incorporated into the indirect PE methodology that cover administrative costs and office rent. We do not pay separately for the storage of digital images as these expenses are not allocable to individual services, just as we do not explicitly incorporate the storage costs of electronic health records (EHRs) as direct PE inputs for the range of practitioners that use EHRs. We understand and agree that we previously treated film itself as direct PE input. However, the film was allocable to an individual patient. We believe that the better analog for the storage of images under the previous assumptions would be the office cabinets and office space in which the film was stored. These items were clearly considered to be indirect PE expenses and, therefore, such costs are included in the specialty-specific data that is used to allocate indirect PE RVUs. We previously replaced the direct PE components of imaging services during the film-to-digital transition that took place in CY 2015 (79 FR 67561). Comment: One commenter recommended that CMS revisit its definition of room time for imaging procedures. Under the current policy, room time for imaging studies is defined as the time it takes to acquire the images plus any additional time that the piece of equipment is not available for use for another patient due to its use during the designated procedure. The commenter stated that this definition was inconsistent with how imaging centers actually function, as most patient-related activities take place in the imaging room with the involvement of multiple technologists. The commenter suggested that CMS should return to the previous definition, in which equipment time for highly technical equipment was based on total technologist time. Response: We disagree with the commenter regarding the current standard equipment time formula for highly technical equipment. As we wrote in the CY 2011 final rule with comment period (75 FR 73350), certain highly technical pieces of equipment and equipment rooms are less likely to be used by a clinician over the full course of a procedure and are typically available for other patients during time that may still be in the intraservice portion of the service. When we identify these services, we adjust those equipment times accordingly. For example, CPT code 74178 (Computed tomography, abdomen and pelvis; without contrast material in more than one body region) includes 3 minutes of intra-service clinical labor time associated with obtaining the patient's consent for the procedure. Since we believe that it would be atypical for this activity to occur within the CT room, we believe these 3 minutes should not be attributed to the CT room. We agree with the commenter that the standard formula used to determine equipment time for highly technical equipment may not be typical for all services, which is why we evaluate equipment time on a case-by-case basis as services are reviewed. We appreciate the information submitted by the commenter, and we will take these comments under consideration as we evaluate codes on an individual basis. After consideration of comments received, we are finalizing the addition of a professional PACS workstation to the codes listed in Table 4 with the equipment time detailed. (2) Standardization of Clinical Labor Tasks As we noted in the CY 2015 PFS final rule with comment period (79 FR 67640-67641), we continue to make improvements to the direct PE input database to provide the number of clinical labor minutes assigned for each task for every code in the database instead of only including the number of clinical labor minutes for the preservice, service, and postservice periods for each code. In addition to increasing the transparency of the information used to set PE RVUs, this improvement would allow us to compare clinical labor times for activities associated with services across the PFS, which we believe is important to maintaining the relativity of the direct PE inputs. This information would facilitate the identification of the usual numbers of minutes for clinical labor tasks and the identification of exceptions to the usual values. It would also allow for greater transparency and consistency in the assignment of equipment minutes based on clinical labor times. Finally, we believe that the information can be useful in maintaining standard times for particular clinical labor tasks that can be applied consistently to many codes as they are valued over several years, similar in principle to the use of physician preservice time packages. We believe such standards would provide greater consistency among codes that share the same clinical labor tasks and could improve relativity of values among codes. For example, as medical practice and technologies change over time, changes in the standards could be updated simultaneously for all codes with the applicable clinical labor tasks, instead of waiting for individual codes to be reviewed. The following is a summary of the public comments received regarding the standardization of clinical labor tasks and our responses: Comment: One commenter supported the efforts of the AMA RUC to standardize clinical labor activities in the new PE worksheet and urged CMS to accept these standards. Response: We appreciate the efforts to establish greater organizational consistency through the RUC's use of the new PE worksheet and new clinical labor activity codes in developing and making recommendations to CMS. Comment: Several commenters stated that, while they supported the revisions to the direct PE database providing the number of clinical labor minutes assigned for each clinical labor activity for each code, they had concerns regarding the over-standardization of clinical labor activities. These commenters indicated that each service requires different clinical labor resources and creating standard times is not possible for all clinical labor activities. Commenters stated that the RUC's PE Subcommittee is the entity best suited to make service-level determinations for clinical labor, and that blanket changes to standardize clinical labor activities outside of RUC review would lead to misvaluation of codes. Response: We agree with the commenters that there are often important differences between services and that no two services are necessarily identical. We also acknowledge that there is a balance between establishing standards for clinical labor activities and the need for individual review of each code. We concur with the commenters that some services require greater or less time than the clinical labor standards, and we have frequently finalized clinical labor times outside the standard values. The standard times for clinical labor activities are a starting point for our clinical review of individual services, not necessarily an ending point. As we have written in past rulemaking, we believe that the establishment of standard times helps to facilitate greater transparency of information and maintain consistency in review patterns over time. Our goal is to maintain relativity among services, and we believe that the creation of clinical labor standards helps to facilitate that goal. Comment: One commenter stated that the proposed standardized clinical labor times for CT and MRI codes required additional time due to a need to assess patients for any special needs, review screening sheets with patients, and obtain a clinical history from the patient. Response: When reviewing clinical labor times for individual codes, we typically work closely with the recommendations provided by the RUC, which did not include additional clinical labor time for these specific activities in these services. While we appreciate the additional information from the commenter, we do not agree that it would serve overall PFS relativity to include additional clinical labor time for these services based on this rationale. In the following paragraphs, we address a series of issues related to clinical labor tasks, particularly relevant to services currently being reviewed under the misvalued code initiative. a. Preservice Clinical Labor for 0-Day and 10-Day Global Services Several years ago, the RUC's PE Subcommittee reviewed the preservice clinical labor times for CPT codes with 0-day and 10-day global periods. The RUC concluded that these codes are assumed to have no preservice clinical staff time (standard time of 0 minutes) unless the specialty can provide evidence that the preservice time is appropriate. In other words, for minor procedures, it is assumed that there is no clinical staff time typically spent preparing for the specific procedure prior to the patient's arrival. However, we note that for CY 2018, 41 of the 53 reviewed codes with 0-day or 10-day global periods include preservice clinical labor of some kind, suggesting that it is typical for clinical staff to prepare for the procedure prior to the patient's arrival. As we review misvalued codes, we believe that the general adherence to values that we have established as standards supports relativity within the PFS. Because 77 percent of the reviewed codes for the current calendar year deviate from the “standard,” we sought comment on the value and appropriate application of the standard in our review of RUC recommendations in future rulemaking. In reviewing the inputs included in the direct PE inputs database, we found that for the 1,142 total 0-day global codes, 741 of them had preservice clinical labor of some kind (65 percent). We also noticed a general correlation between preservice clinical labor time and the recent review. We sought comment specifically on whether the standard preservice clinical labor time of 0 minutes should be consistently applied for 0-day and 10-day global codes in future rulemaking. The following is a summary of the public comments received regarding whether the standard preservice clinical labor time of 0 minutes should be consistently applied for 0-day and 10-day global codes in future rulemaking and our responses: Comment: Many commenters opposed eliminating clinical staff preservice time from all 0-day and 10-day global procedures in future rulemaking. Several commenters stated that although it is accurate to assume that no clinical staff time is necessary for minor procedures, it is no longer true that all 0-day and 10-day globals can be classified as minor procedures, as increasingly complex services are now performed using this global period. For example, there are several cardiothoracic surgery procedures that in the past would have been valued as 90-day global services but instead were implemented as 0-day global procedures to allow additional flexibility in the delivery of patient care. One commenter stated that the “trend” identified in the proposed rule occurred only because of the significant number of 0-day endoscopy and interventional codes that have recently been reviewed. Other commenters stated that the standard preservice clinical labor time of 0 minutes is only applicable if specialties cannot provide evidence of the need for preservice clinical labor, and that the rise in preservice clinical labor time indicated the growing recognition that the use of clinical staff is typical for these services. Many commenters stated that the RUC's PE Subcommittee should review the evidence on a case-by-case basis to determine if individual services justify preservice clinical labor time. Commenters urged CMS to work with the RUC to identify circumstances where deviations from the standard clinical labor times would be appropriate and develop clear definitions and criteria that support compelling reasons for clinical staff time that deviates from the standard for 0-day and 10-day global procedures. A few commenters, including the RUC, acknowledged that the high number of preservice clinical labor exceptions raised the question of the utility of the standard given this high number of exemptions. Response: We appreciate the responses from the commenters. We note that several commenters also acknowledged the problematic nature of having so many exceptions to the established standard for preservice clinical labor. We appreciate in particular the additional information regarding the increasing use of the 0-day and 10-day global periods for procedures that are not minor in nature. In light of this information, we agree with the commenters who suggested that there is a need to identify circumstances where deviations from the standard clinical labor times would be appropriate and develop clear definitions and criteria for these situations. If an increasingly large number of major procedures are performed using the 0-day and 10-day global periods, we believe that there will be a need for the establishment of new guidelines for the typical allotment of preservice clinical labor. We agree with the commenters that preservice clinical labor must be determined on an individual basis based on the resources typically required to furnish the service. However, the need for individual review of services does not preclude the development of standards which, as we stated above, helps to facilitate greater transparency of information and maintain consistency in review patterns over time. After consideration of comments received, we do not believe that the standard preservice clinical labor time of 0 minutes should be consistently applied for 0-day and 10-day global codes in future rulemaking. We look forward to working with stakeholders and seeing their recommendations for preservice clinical labor that maintain relativity among the different kind of procedures classified as 0-day and 10-day globals. b. Obtain Vital Signs Clinical Labor The direct PE inputs for each CPT code paid under the PFS include minutes assigned to a series of standard clinical labor tasks assumed to be typical for the service in question. The minutes assigned to each of these tasks for each CPT code have been developed over several decades, and what was previously considered to be a standard value in the review of the codes has changed over time. Because each year we perform a detailed review of all of the inputs for only several hundred of the over 7,000 CPT codes paid under the PFS, valuation for individual services can be influenced by shifts in review standards over time rather than purely based on changes in practice. For example, we traditionally assigned a clinical labor time of 3 minutes for the “Obtain vital signs” clinical labor activity, based on the amount of time typically required to check a patient's vitals. Over time, that number of minutes has increased as codes are reviewed. For example, many of the reviewed codes for the current CY 2018 rulemaking cycle have a recommended clinical labor time of 5 minutes for “Obtain vital signs,” based on the understanding that these services are measuring two additional vital signs: the patient's height and weight. We do not have any reason to believe that measuring a patient's height and weight is only typical for services described by recently reviewed codes. Instead, we believe that the review standards have changed, perhaps in conjunction with changes in medical practice, and that the change in the minutes assigned for the “Obtain vital signs” task for newer-reviewed services is detrimental to relativity among PFS services. Therefore, to preserve relativity among the PFS codes, we proposed to assign 5 minutes of clinical labor time for all codes that include the “Obtain vital signs” task, regardless of the date of last review. We proposed to assign this 5 minutes of clinical labor time for all codes that include at least 1 minute previously assigned to this task. We also proposed to update the equipment times of the codes with this clinical labor task accordingly to match the changes in clinical labor time. For codes that were not recently reviewed and for which we lacked a breakdown of how the equipment time was derived from the clinical labor tasks, we could not determine if the equipment time included time assigned for the “Obtain vital signs” task. In these cases, we proposed to adjust the equipment time of any equipment item that matched the clinical labor time of the full service period to match the change in the “Obtain vital signs” clinical labor time. The list of all codes affected by these proposed vital signs changes to direct PE inputs is available on the CMS Web site under downloads for the CY 2018 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html . The following is a summary of the public comments received on the list of all codes affected by these proposed vital signs changes to direct PE inputs proposals and our responses: Comment: Many commenters supported the CMS proposal. Commenters agreed that these differences in the minutes assigned to the “Obtain vital signs” clinical labor task appeared to be attributed to variances in review standards over time rather than reflecting actual variations in practice. One commenter stated that medical practice typically requires measurement of height and weight when vital signs are measured, while another commenter stated that the new standard time would be an administrative simplification for stakeholders and help streamline reviews. These commenters urged CMS to finalize the proposal to help preserve relativity between PFS codes. Response: We appreciate the support from the commenters for the proposal. Comment: Other commenters disagreed with the proposal to establish 5 minutes as the new clinical labor standard for the “Obtain vital signs” task. These commenters stated that the RUC PE Subcommittee's standard for vital signs clinical labor, based on the number of vital signs being taken, remained accurate and was the best way to make sure that individual codes are allocated the correct amount of time. These commenters were opposed to changing the clinical labor time of a large number of codes at once, and stressed the need for individual review of each service. Commenters urged CMS not to finalize this proposal and suggested the issue should be referred to the RUC and its Practice Expense Advisory Committee for further review and input. Response: We generally agree with commenters that the determinations for individual clinical labor activities are typically made at the code level, such as those recommended by the RUC's PE subcommittee. Therefore, we are not finalizing our proposal to use 5 minutes as the universal input for this clinical labor task. However, since even the comments opposing the proposal did not suggest that the clinical labor associated with taking vital signs has changed over time, only the review standards associated with them, we will assign 5 minutes as the input for all codes that include the “Obtain vital signs” task for CY 2018, as proposed. For future rulemaking we will consider code-level recommendations that will help distinguish services that may require fewer or greater than 5 minutes for this activity. We believe that finalizing 5 minutes for the codes as proposed will serve to mitigate the detrimental impact of review standards shifting over time while preserving the principle that the number of minutes involved in obtaining vital signs may vary for different services. Comment: One commenter asked if CMS would accept vital sign data from fitness wearable devices such as an Apple watch, Garmin, or Fitbit. Response: Our proposal concerns the number of minutes assumed to be involved in obtaining vital signs for purposes of PFS ratesetting and is not intended to establish requirements regarding how vital signs are obtained. After consideration of comments received, we are not finalizing our proposal to establish 5 minutes as the new standard for the “Obtain vital signs” clinical labor task. However, since we continue to believe that the review standards associated with the clinical labor time for obtaining vital signs have changed over time, we will assign 5 minutes as the input for all codes that include the “Obtain vital signs” task for CY 2018, as proposed. c. Establishment of Clinical Labor Activity Codes Historically, the RUC has submitted a “PE worksheet” that details the recommended direct PE inputs for our use in developing PE RVUs. The format of the PE worksheet has varied over time and among the medical specialties developing the recommendations. These variations have made it difficult for both the RUC's development and our review of code values for individual codes. Beginning for the CY 2019 PFS rulemaking cycle, we understand that the RUC intends to mandate the use of a new PE worksheet for purposes of their recommendation development process that standardizes the clinical labor tasks and assigns them a clinical labor activity code. We believe the RUC's use of the new PE worksheet in developing and submitting recommendations to us would, in turn, help us to simplify and standardize the hundreds of different clinical labor tasks currently listed in our direct PE database. To help facilitate this transition to the new clinical labor activity codes, we developed a crosswalk to link the old clinical labor tasks to the new clinical labor activity codes. Our crosswalk is for informational purposes only, and would not change either the direct PE input values or the PE RVUs for codes. Instead, we hope that the crosswalk would help us to translate the sprawling, existing data set into a condensed version that would significantly improve the standardization of clinical labor recommendations and improve the ability of commenters to identify concerns with our proposed valuation. For CY 2018 rulemaking, we are displaying two versions of the Labor Task Detail public use file: One version with the old listing of clinical labor tasks, and one with the same tasks as described by the new listing of clinical labor activity codes. These lists are available on the CMS Web site under downloads for the CY 2018 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html . (3) Equipment Recommendations for Scope Systems During our routine reviews of direct PE input recommendations, we have regularly found unexplained inconsistencies involving the use of scopes and the video systems associated with them. Some of the scopes include video systems bundled into the equipment item, some of them include scope accessories as part of their price, and some of them are standalone scopes with no other equipment included. It is not always clear which equipment items related to scopes fall into which of these categories. We have also frequently found anomalies in the equipment recommendations, with equipment items that consist of a scope and video system bundle recommended, along with a separate scope video system. Based on our review, the variations do not appear to be consistent with the different code descriptions. To promote appropriate relativity among the services and facilitate the transparency of our review process, during review of recommended direct PE inputs for the CY 2017 PFS proposed rule, we developed a structure that separates the scope and the associated video system as distinct equipment items for each code. Under this approach, we proposed standalone prices for each scope, and separate prices for the video systems that are used with scopes. We proposed to define the scope video system as including: (1) A monitor; (2) a processor; (3) a form of digital capture; (4) a cart; and (5) a printer. We believe that these equipment components represent the typical case for a scope video system. Our model for this system was the “video system, endoscopy (processor, digital capture, monitor, printer, cart)” equipment item (ES031), which we proposed to re-price as part of this separate pricing approach. We obtained current pricing invoices for the endoscopy video system as part of our investigation of these issues involving scopes, which we proposed to use for this re-pricing. We understand that there may be other accessories associated with the use of scopes; we proposed to separately price any scope accessories, and individually evaluate their inclusion or exclusion as direct PE inputs for particular codes as usual under our current policy based on whether they are typically used in furnishing the services described by the particular codes. We also proposed standardizing refinements to the way scopes have been defined in the direct PE input database. We believe that there are four general types of scopes: Non-video scopes; flexible scopes; semi-rigid scopes, and rigid scopes. Flexible scopes, semi-rigid scopes, and rigid scopes would typically be paired with one of the scope video systems, while the non-video scopes would not. The flexible scopes can be further divided into diagnostic (or non-channeled) and therapeutic (or channeled) scopes. We proposed to identify for each anatomical application: (1) A rigid scope; (2) a semi-rigid scope; (3) a non-video flexible scope; (4) a non-channeled flexible video scope; and (5) a channeled flexible video scope. We proposed to classify the existing scopes in our direct PE database under this classification system, to improve the transparency of our review process and improve appropriate relativity among the services. We planned to propose input prices for these equipment items through future rulemaking. We proposed these changes only for the reviewed codes for CY 2017 that made use of scopes, along with updated prices for the equipment items related to scopes utilized by these services. But, we did not propose to apply these policies to codes with inputs reviewed prior to CY 2017. We also solicited comment on this separate pricing structure for scopes, scope video systems, and scope accessories, which we could consider proposing to apply to other codes in future rulemaking. In response to comments, we finalized the addition of a digital capture device to the endoscopy video system (ES031) in the CY 2017 PFS final rule. We finalized our proposal to price the system at $33,391, based on component prices of $9,000 for the processor, $18,346 for the digital capture device, $2,000 for the monitor, $2,295 for the printer, and $1,750 for the cart. We also finalized a price of $16,843.87 for the stroboscopy system scope accessory (ES065). We did not finalize price increases for a series of other scopes and scope accessories, as the invoices submitted for these components indicated that they are different forms of equipment with different product IDs and different prices. We did not receive any data to indicate that the equipment on the newly submitted invoices was more typical in its use than the equipment that we were currently using for pricing. We did not make further changes to existing scope equipment in CY 2017 in order to allow the RUC's PE Subcommittee the opportunity to provide feedback. However, we believed there was some miscommunication on this point, as the RUC's PE Subcommittee workgroup that was created to address scope systems stated that no further action was required following the finalization of our proposal. Therefore, we made further proposals to continue clarifying scope equipment inputs, and sought comments regarding the new set of scope proposals. We welcomed feedback from all stakeholders, including practitioners with direct experience in the use of scope equipment. We sought comment on several potential categories of scope system PE inputs. We are considering creating a single scope equipment code for each of the five categories detailed in this rule: (1) A rigid scope; (2) a semi-rigid scope; (3) a non-video flexible scope; (4) a non-channeled flexible video scope; and (5) a channeled flexible video scope. Under the current classification system, there are many different scopes in each category depending on the medical specialty furnishing the service and the part of the body affected. We believe that the variation between these scopes is not significant enough to warrant maintaining these distinctions, and we believe that creating and pricing a single scope equipment code for each category would help provide additional clarity. We sought public comment on the merits of this potential scope organization, as well as any pricing information regarding these five new scope categories. For CY 2018, we proposed two minor changes to PE inputs related to scopes. We proposed to add an LED light source into the cost of the scope video system (ES031), which would remove the need for a separate light source in these procedures. If this proposal were to be finalized, we would remove the equipment time for the separate light source from CPT codes that include the scope video system. We also proposed an increase to the price of the scope video system of $1,000.00 to cover the expense of miscellaneous small equipment associated with the system that falls below the threshold of individual equipment pricing as scope accessories (such as cables, microphones, foot pedals, etc.) We sought comments on the inclusion of the LED light in the scope video system, and the appropriate pricing of the system with the inclusion of these additional equipment items. We anticipate adopting detailed changes to scope systems at the code level through rulemaking for CY 2019, because we believe that additional feedback from expert stakeholders will improve the details of the proposed changes. We did not propose any additional pricing changes to scope equipment for CY 2018 due to the proposed reorganization into a single type of scope equipment for each of the five scope categories. However, we would consider updating prices for these equipment items through the public request process for price updates, or based on information submitted as part of RUC recommendations. The following is a summary of the public comments received on the continued organization of scope equipment and our responses: Comment: Many commenters disagreed with the CMS proposal to create and price a single scope equipment code for each category. Commenters stated that there were significant differences in the scopes used by different specialties, and the proposal to establish a single scope for each category would not sufficiently capture variations across specialties in terms of typical scopes and typical costs. As an example, one commenter stated that the price difference between scopes could be as large as $10,000. Many commenters suggested that CMS should create packages on a per-specialty basis for these five categories of scopes, as applicable. Response: In light of the information supplied by commenters regarding the significant differences in price and usage across specialties, we will not finalize our proposal to create and price a single scope equipment code for each of the five categories previously identified. Comment: Commenters supported the CMS proposal to add an LED light source and miscellaneous costs into the price of the scope video system (ES031). Commenters indicated that the addition of the light and $1,000.00 for small various small items like foot pedals and microphones would more accurately describe the resource costs of the scope video system. Response: We appreciate the comments supporting the proposal. However, we are not finalizing the proposal to add an LED light source and an increase of $1,000 for miscellaneous small equipment to the price of scope video systems for CY 2018. We intend to update the price of the scope video system with these changes for CY 2019 as part of the scope reorganization project. Comment: Many commenters agreed with the proposal to delay implementation of these proposed changes until CY 2019 and encouraged CMS to request that the RUC review this issue and provide guidance on the correct pricing. Response: We agree that the anticipated delay on implementation until CY 2019 will allow additional time for stakeholders to provide recommendations on the proper organization and pricing of scope equipment. Comment: One commenter disagreed with the five categories of scope equipment that CMS identified and finalized in CY 2017. This commenter stated that these five categories did not represent all scope equipment categories and recommended adding a sixth category, a multi-channeled flexible video scope. Response: We will take the recommendation from the commenter into consideration. We look forward to receiving additional feedback from stakeholders regarding whether adding a sixth category for multi-channeled flexible video scopes would be appropriate as part of the project to organize scope equipment. Comment: Several commenters stated that some of the scope equipment currently in use was inaccurately priced, and appeared to reflect older technology that has become outdated. One commenter submitted an extensive list of invoices related to the pricing of scope equipment. Response: We appreciate the submission of additional information related to scope pricing from the commenters. We stated in the proposed rule that we anticipated adopting detailed changes to scope systems at the code level for CY 2019 in order to incorporate additional feedback from expert stakeholders. Since we did not propose any additional pricing changes to scope equipment for CY 2018 due to this proposed reorganization, we believe that it would be more appropriate to delay any price updates until the following year rather than make changes for CY 2018 and, again, shortly thereafter. The general reorganization of scopes taking place in CY 2019 will include updates to scope pricing. After consideration of comments received, we will not finalize our proposal to create and price a single scope equipment code for each of the five categories previously identified. Instead, we are supportive of the recommendation from the commenters to create scope equipment codes on a per-specialty basis for these five, or potentially six, categories of scopes as applicable. Our goal is to create an administratively simple scheme that will be easier to maintain and helps to reduce administrative burden. We look forward to receiving detailed recommendations from expert stakeholders regarding the number of these scope equipment items that would be typically required for each scope category as well as the proper pricing for each scope. We are not finalizing our proposal to add an LED light source and an increase to the price of the scope video system of $1,000.00 to cover the expense of miscellaneous small equipment associated. We intend to address these changes for CY 2019 in order to incorporate the aforementioned feedback from expert stakeholders. (4) Clarivein Kit for Mechanochemical Vein Ablation In the CY 2017 PFS final rule, we finalized work RVUs and direct PE inputs for two new codes related to mechanochemical vein ablation, CPT codes 36473 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, mechanochemical; first vein treated) and 3647 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2017-23953. Public record. Not legal advice.