Medicare Program; Diagnosis Codes on Physician Bills

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 405 and 424

[BPD-610-F]

RIN 0938-AE06

Medicare Program; Diagnosis Codes on Physician Bills

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule.

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SUMMARY: This final rule implements certain provisions of section

1842(p) of the Social Security Act regarding diagnosis codes on

physician bills. Under this final rule, each bill or request for

payment for a service furnished by a physician under Medicare Part B

must include appropriate diagnostic coding for the diagnosis or the

symptoms of the illness or injury for which the Medicare beneficiary

received care.

DATES: Effective date: This final rule is effective April 4, 1994.

FOR FURTHER INFORMATION CONTACT:

Pat Brooks, R.R.A. (410) 966-5318.

SUPPLEMENTARY INFORMATION:

I. Background

Medical services are furnished to Medicare beneficiaries by

providers, suppliers, physicians, and other specified practitioners.

Title XVIII of the Social Security Act (the Act) defines the term

physician. Under section 1861(r) of the Act, the term physician,

subject to limitations concerning the scope of practice by each State

and other provisions of title XVIII of the Act, means a doctor of--(1)

Medicine or osteopathy; (2) Dental surgery or dental medicine; (3)

Podiatry; (4) Optometry; or (5) Chiropractic.

Under provisions of section 1848(g)(4) of the Act, as added by

section 6102(a) of the Omnibus Budget Reconciliation Act of 1989 (Pub.

L. 100-239), effective for services furnished on or after September 1,

1990, each physician must submit a standard claim form (HCFA-1500)

directly to the Medicare carrier on behalf of the beneficiary,

regardless of whether the physician provided the services on an

assignment-related basis. (Under Medicare Part B, a physician may bill

the patient directly for the physician's services, thus requiring the

beneficiary to seek reimbursement from Medicare. Alternatively, under

section 1842(b)(3)(B) of the Act, when a physician furnishes services

on an assignment-related basis, the physician bills Medicare directly

in exchange for the physician's agreement to accept the Medicare

approved amount as payment in full. (Rules concerning assignment of

claims are found at Secs. 424.55, 424.56 and 424.70 et seq.) The HCFA-

1500, which is also used by most third-party payers, including Medicaid

and other Federal government health insurance programs, is, in effect,

an itemized bill.

Before September 1, 1990, if a physician was not paid directly by

Medicare for physician services, the physician either billed the

Medicare beneficiary directly or billed another third-party payer. The

beneficiary then sought payment from Medicare for expenses incurred in

obtaining covered physician's services by submitting a Patient's

Request for Medicare Payment (HCFA-1490 S) to the carrier. This form

directs the beneficiary to attach itemized bills from his or her

physician to the form. In limited cases, as provided under section

1842(b)(6)(B) of the Act and 42 CFR part 424 when a third party made

payment to the physician, the third party sought reimbursement from

Medicare for this payment by submitting a Request for Medicare Payment

by Organizations which Qualify to Receive Payment for Paid Bills (HCFA-

1490 U). We required the physician to fill out Part II of this form,

which was similar to an itemized bill.

Previously, each bill or request for payment for physician services

furnished to a Medicare beneficiary had to include, among other

information, a narrative description of the diagnosis or the nature of

the illness or injury for which the beneficiary received care. Although

prior to April 1, 1989 there was no requirement for diagnostic coding

(that is, a description of the diagnosis or the nature of the illness

or injury in a numeric code), many physicians routinely provided this

information. In addition, all physicians provided a narrative

description of procedures, medical services, and supplies that were

furnished to a beneficiary.

II. Legislation Requiring Diagnostic Coding

Section 202(g) of the Medicare Catastrophic Coverage Act of 1988

(Pub. L. 100-360), enacted July 1, 1988, added paragraph (p) to section

1842 of the Act. Under the provisions of section 1842(p)(1) of the Act,

each bill or request for payment for physician services under Medicare

Part B must include the appropriate diagnostic code ``as established by

the Secretary'' for each item or service for which the Medicare

beneficiary received treatment.

The conference report that accompanied Public Law 100-360 explained

clearly the purpose of the requirement for physician diagnostic coding.

After rejecting a Senate provision that would have required the use of

diagnosis codes on all prescriptions, because they felt that the

requirement would have been ``unduly burdensome,'' the conferees agreed

to require diagnostic coding for physician services under Part B. They

explained their reasons for this requirement as follows: ``This

information would be available for immediate use for utilization review

of physician services and could be used in the future to facilitate

drug utilization review by merging Part B with drug claims data.'' H.R.

Conf. Rep. No. 661, 100th Cong., 2nd Sess. 191 (1988).

Section 1842(p)(2) of the Act authorizes a denial of payment for a

bill submitted by a physician on an assignment-related basis if it does

not include the appropriate diagnostic coding.

Section 1842(p)(3) of the Act directs the Secretary to impose

penalties if a physician who is not paid on an assignment-related basis

fails to provide the appropriate diagnostic coding on the bill to the

Medicare beneficiary. That is, section 1842(p)(3)(A) of the Act

provides for a civil money penalty not to exceed $2,000 if the

physician knowingly and willfully fails to provide the appropriate

diagnostic coding. Section 1842(p)(3)(B) of the Act provides for a

sanction under 1842(j)(2)(A) of the Act if the physician ``knowingly,

willfully, and in repeated cases fails, after being notified by the

Secretary of the obligations and requirements of this subsection,'' to

furnish appropriate diagnostic coding. Section 1842(p)(3) of the Act

does not prohibit the payment of an unassigned claim solely because the

physician did not provide diagnosis codes. As explained in section I of

the preamble, effective for services furnished on or after September 1,

1990, regardless of whether they provide services on an assignment

related basis, physicians submit claim forms directly to the Medicare

carrier. The provisions of section 1848 of the Act, as added by 6102(a)

of Public Law 101-239, do not affect the penalties set forth in this

rule for failure to include diagnostic coding on physician bills. This

final rule implements the provisions of section 1842 (p)(1) and (p)(2)

of the Act.

III. Provisions of the Proposed Rule

On July 21, 1989 we published a proposed rule (54 FR 30558) to

implement the provisions of section 1842(p)(1) of the Act. We proposed

that each bill or request for payment for physician services under Part

B would have to include appropriate diagnostic coding ``as established

by the Secretary,'' relating to the nature of the illness or injury for

which the Medicare beneficiary received care.

As noted above, generally, physician services furnished directly to

a beneficiary are paid under Medicare Part B. In addition, under the

regulations set forth at subpart D of 42 CFR part 405, we make payments

to hospitals under Part A for physician services related to the

supervision and teaching of interns and residents who participate in

the care of hospital inpatients. Also, the proposed rule did not apply

to suppliers or other providers whose services are covered under Part

B.

We proposed that a physician would be required to furnish diagnosis

codes instead of the narrative description that was previously

required. We proposed to deny payment for a bill or request for payment

for physician services furnished on an assignment-related basis if the

bill or request for payment does not contain the appropriate diagnostic

coding. This would not be true for a claim for physician services not

furnished on an assignment-related basis. In other words, if the

beneficiary seeks Medicare reimbursement for payment for physician

services, we proposed not to deny payment solely because the claim does

not contain diagnosis codes. If enough information were provided to

enable a carrier to process the claim, it would be processed without

the diagnosis codes. As explained in section II of the preamble,

section 1842(p)(3)(B) of the Act provides for a sanction under section

1842(j)(2)(A) of the Act if the physician ``knowingly, willfully, and

in repeated cases fails, after being notified by the Secretary of the

obligations and requirements of this subsection,'' to furnish

appropriate diagnostic coding.

We proposed to use the International Classification of Diseases,

Ninth Revision, Clinical Modification (ICD-9-CM) as the most

appropriate diagnostic coding system.

The ICD is a classification system developed by the World Health

Organization (WHO) for recording morbidity and mortality information

for statistical purposes, for indexing hospital records by diseases,

and for storing and retrieving data. Effective with the Twentieth World

Assembly of WHO, nomenclature regulations were adopted on May 22, 1967.

Article 21(b)(2) of these regulations specifies that ``members

compiling mortality and morbidity statistics shall do so in accordance

with the current revision of the International Statistical

Classification of Diseases, Injuries and Causes of Death as adapted

from time to time by the World Health Assembly. This Classification may

be cited as the `International Classification of Diseases'.'' The

United States is signatory to the WHO's agreements, which include the

above nomenclature regulations binding the United States to the use of

the ICD system for official government health statistical purposes. The

nomenclature regulations became effective on January 1, 1968.

The clinical modification of the ninth revision to ICD (that is,

ICD-9-CM) is a coding system for reporting diagnostic information and

procedures performed on patients in hospitals or other types of health

care delivery systems.

ICD-9-CM was developed under the guidance of the National Center

for Health Statistics (NCHS) to adapt the ninth revision of the ICD

classification system to the needs of hospitals in the United States.

The modifications were intended to provide a mechanism to present a

clinical picture of the patient. Thus, ICD-9-CM codes are more precise

than those included in ICD-9 since greater detail is needed to describe

the clinical picture of a patient than for statistical groupings and

trend analysis.

Effective January 1979, after nearly two years of development by

numerous national experts on clinical technical matters, the ICD-9-CM

became the single classification system intended for use by hospitals

in the United States. This system replaced several earlier related but

somewhat dissimilar classification systems. Once the ICD-9-CM

classification system was in place, several errors and omissions were

noted. Consequently, in September 1980 a second edition of ICD-9-CM was

published. The preface to the second edition noted that the continuous

maintenance of ICD-9-CM is the responsibility of the Federal

government. The preface also stated that no future modifications to

ICD-9-CM would be made by the Federal government without considering

the opinions of representatives of major users of the classification

system.

In September 1985, the ICD-9-CM Coordination and Maintenance

Committee (the Committee) was formed. This is a Federal

interdepartmental committee that maintains and updates the ICD-9-CM.

This includes approving new coding changes, developing errata, addenda,

and other modifications to the ICD-9-CM to reflect newly developed

procedures and technologies and newly identified diseases. The

Committee is also responsible for promoting the use of Federal and non-

Federal educational programs and other communication techniques with a

view toward standardizing coding applications and upgrading the quality

of the classification system.

The Committee is co-chaired by NCHS and HCFA. NCHS has primary

responsibility for the ICD-9-CM diagnosis codes included in Volume 1--

Diseases: Tabular List, and Volume 2--Diseases: Alphabetic Index. HCFA

has primary responsibility for the ICD-9-CM procedure codes included in

Volume 3--Procedures: Tabular List and Alphabetic Index.

The Committee encourages participation in the development of

diagnosis and procedure codes by health-related organizations,

organizations in the coding field, and other members of the public.

During each Federal fiscal year (FY), the Committee holds three public

meetings during which coding changes are discussed. Taking into account

the public comments made at each meeting and the public correspondence

received after each meeting, the Committee formulates recommendations,

which must be approved by the co-chair agency heads, the Administrator

of HCFA and the Director of NCHS, before adoption for general use.

Coding changes approved by the Committee and agency heads are published

annually in the Federal Register.

Only official volumes and addenda of ICD-9-CM are to be considered

in the assignment of diagnosis codes for Medicare patients. HCFA is not

responsible for mistakes made by businesses in the replication of these

official volumes and addenda, which are then sold to the public.

Official addenda have become effective on May 1, 1986, and subsequently

on October 1 of each year from 1986 through the present. Another

addendum, containing the Human Immunodeficiency Virus (HIV) Infection

Codes, became effective for Medicare patients discharged on or after

July 1, 1988.

Before publication of the proposed rule on July 21, 1989, the GPO

exhausted its supply of previously published addenda and announced that

it had no plans to reprint more copies. However, the private sector

continues to publish changes to the ICD-9-CM coding system annually by

October 1st. The GPO also announced that it would no longer provide

addenda except to subscription purchasers of the third edition. ICD-9-

CM, third edition, was published in March 1989; automatic addenda

updates expired in 1991. The third edition incorporates all addenda

that were previously published. We stated in the July 21, 1989 proposed

rule that if a physician had not yet obtained ICD-9-CM, second edition,

and had not updated the set with the addenda, he or she should obtain

the recently updated Volumes 1 and 2 (that include all the addenda) (54

FR 30560). The American Health Information Management Association

(AHIMA), previously known as the American Medical Records Association

(AMRA), the national professional association of medical records

practitioners, and the American Hospital Association (AHA) have

indicated that they intend to reprint these future addenda and make

them available for sale.

The price for Volumes 1 and 2 of ICD-9-CM, fourth edition, is

$65.00 for delivery within the United States and $81.25 for delivery

outside of the United States. A purchaser must furnish an address other

than a post office box because the volumes will be delivered only to a

place of business or a residence. When ordering, the purchaser should

enclose a check, money order, or Visa or Mastercard account name,

number, and expiration date. Checks should be made out to the

Superintendent of Documents.

Updated volumes 1 and 2 may be purchased by writing to the

following address: ICD-9-CM, Fourth Edition, Volumes 1 and 2, P.O. Box

371954, Pittsburgh, PA 15250-7954. (Telephone orders may be placed

through the GPO order desk at (202) 783-3238.)

Section 424.32 sets forth the basic requirements for all claims.

(The term ``claim'' is used when referring to the regulatory language

instead of the term ``bill or request for payment''.) In

Sec. 424.32(a), all claims (including those filed directly with

Medicare by physicians, beneficiaries or other persons or entities for

physician services furnished to Medicare beneficiaries) must be filed

in accordance with HCFA instructions. Section 424.34 provides

additional requirements for claims filed with Medicare by

beneficiaries. Under Sec. 424.34(b)(4), the itemized bill must include

a listing of services in sufficient detail to permit determination of

reasonable charges. We proposed to make the following changes to the

regulations text:

Revise Sec. 424.32(a) to state specifically that a claim

for physician services must include appropriate diagnostic coding using

ICD-9-CM.

Revise Sec. 424.34(b)(4) to state specifically that an

itemized bill furnished by a physician to a beneficiary for physician

services must include appropriate diagnostic coding using ICD-9-CM.

Add to Sec. 424.3 the definition of ICD-9-CM, which means

the International Classification of Diseases, Ninth Revision, Clinical

Modification.

Coding and reporting requirements and instructions for diagnostic

coding were developed in order to take into account circumstances

unique to care furnished by physicians. These coding and reporting

requirements and instructions for completing bills and requests for

payment were developed before publication of the proposed rule and were

distributed to the carriers on March 3, 1989. The carriers then mailed

this information, in the form of a Medicare Bulletin, to the physicians

whom they service. During preparation of these procedures and

instructions, we consulted with the American Medical Association (AMA)

and provided the AMA an opportunity to comment on the material.

In the proposed rule, we proposed a limited grace period during

which payments would not be denied and sanctions would not be imposed

for failure to use diagnosis codes. We provided for a 6-month grace

period until October 1, 1989 to allow physicians and their office staff

to obtain training and purchase books. On August 8, 1989, we notified

carriers of the extension of the grace period through a memorandum from

the HCFA Bureau of Program Operations. For the convenience of the

reader, we published the coding and reporting requirements as an

appendix to the proposed rule.

AHIMA offered nationwide training classes and training materials

for physician office staff for ICD-9-CM diagnostic coding, as did the

AMA.

Suggestions concerning modification of the ICD-9-CM codes, or

additions to the existing codes, may be submitted in writing to the

following address: National Center for Health Statistics, 6525 Belcrest

Road,room 9-58, Hyattsville, MD 20782.

In this final rule, we are adopting the requirements as stated in

the proposed rule without modification.

IV. Discussion of Public Comments

In response to the proposed rule, we received 35 timely items of

correspondence. Comments were received from physicians, professional

health-related organizations, universities and colleges, medical

facilities, state governments, laboratories, durable medical equipment

suppliers and pharmaceutical companies.

Although the majority of commenters were not opposed to the

diagnostic coding requirement in general, they were concerned with

certain aspects of the proposed rule.

A. Coding Issues

Comment: One commenter inquired about the possibility of an

indefinite delay of the ICD-9-CM diagnostic coding requirement. Another

commenter asserted that the diagnostic coding requirement should not be

implemented until final regulations are published, which should allow

for a training period of 60 days before any adverse actions.

Response: The original implementation date of April 1, 1989 was

extended by a 60-day grace period to allow physicians and their office

staffs to purchase coding books and to obtain coding training. This

grace period was further extended until October 1, 1989, at which time

we required all physicians to use ICD-9-CM codes on bills or requests

for payment. On August 8, 1989, we notified carriers of the extension

through a memorandum from the HCFA Bureau of Program Operations. In

total, we allowed a 6-month grace period. We believe we provided a

reasonable time period for physicians and their staffs to prepare for

the new coding requirements.

Comment: The American Psychiatric Association disagreed with HCFA

that the ICD-9-CM is the only classification system acceptable for

Medicare claims. They urged HCFA to allow the use of the Diagnostic and

Statistical Manual of Mental Disorders, Third Edition, Revised (DSM-

III-R) coding system for mental disorders. The American Medical

Association also supports the DSM-III-R coding system for use by

psychiatrists.

Response: DSM-III-R was designed to be compatible with ICD-9-CM,

but the two systems are not identical. Systems such as DSM-III-R

address only certain types of diagnoses, and cannot be used universally

by all types of practitioners to code all types of diagnoses on claims

submitted to Medicare. In fact, ICD-9-CM provides for greater

specificity in coding mental disorders that DSM-III-R. Within the

``mental disorders'' range (codes 290-319) there are an additional 218

specific codes available in ICD 9-CM that are not in DSM-III-R. Thus,

we continue to believe that the ICD-9-CM system is the only

comprehensive diagnostic coding system that is suitable for Medicare

claims.

Comment: The College of American Pathologists stated that the ICD-

9-CM coding system is limited in its description of disease states. The

commenter asserted that the Systematized Nomenclature of Medicine

(SNOMED), which it publishes, is more specific.

Response: The SNOMED is an excellent coding system. However, as

stated above, the Department of Health and Human Services is signatory

to the WHO's nomenclature regulations binding the United States to use

of the ICD for official government purposes. Even though ICD-9-CM has

recognized limitations, it can be updated as the need arises via the

ICD-9-CM Coordination and Maintenance Committee.

Comment: One laboratory recommended that the burden of furnishing

the proper diagnosis codes be placed on the physician ordering a test

rather than the supplier of the service. The commenter expressed a

concern that the laboratory performing the test should not be held

responsible for performing a test that Medicare later determines to be

not medically necessary.

Response: The proposed rule and this final rule address the

requirement for diagnostic coding of only physicians' bills. This new

coding requirement does not apply to bills from laboratories (except

for physician laboratory services--see Sec. 405.556).

Comment: One commenter suggested that referring physicians provide

a reason for the biopsy or referral. It requested that this practice be

encouraged and emphasized through carrier communication with the

physicians.

Response: We have always encouraged that the referring physician

communicate the reason for the referral or specimen so the proper

medical interpretation is made or test is performed. We will continue

to encourage carrier to convey this message to the physician community.

Comment: Three commenters were concerned that providing for only

four diagnostic codes on the form HCFA-1500 is insufficient in many

cases to adequately describe a patient's condition.

Response: Since the implementation of the diagnostic coding

requirement, we have received few complaints concerning the form HCFA-

1500. Thus, we believe that four diagnosis codes are sufficient in most

instances. We note that this regulation is not intended to change the

structure of the form HCFA-1500. Moreover, our contractors' claims

processing systems, as currently constructed, would not be able to

accommodate more than four diagnosis codes on a single claim.

The use of codes instead of a narrative description should enhance

the physician's ability to describe the patient's condition with

greater precision. If there are cases where the use of four codes is

not sufficient, we suspect that they would arise when more than one

procedure has been performed (for example, psychological counseling

provided to a trauma patient). In such cases, the physician could

submit one claim for the procedure that relates to four or fewer

diagnoses, and submit another claim for the other procedures with their

attendant diagnoses.

Comment: The American Ambulance Association requested that the

final rule specify that the coding requirements do not apply to

ambulance services.

Response: This final rule provides only that each bill or request

for payment for physician services must include diagnostic coding.

These provisions do not apply to ambulance services.

Comment: One commenter interpreted the proposed rule to imply that

physicians must now submit claims for services that they would not have

normally billed under the previous guidelines. The commenter requested

that HCFA clarify this point in the final rule.

Response: Although the ICD-9-CM coding system permits

classification of many services for which specific codes could be used,

the mere presence of an ICD-9-CM code does not, of itself, mean that a

bill or request for payment must include the code for that service. If

a physician generally would not have submitted a bill or request for

payment for a particular service prior to the physician diagnostic

coding requirement, the physician may not be required to submit a bill

for that service under the new rules. For instance, HCFA did not mean

to imply, under an example in the guidelines published in the proposed

rule (54 FR 30564), that a bill should be submitted for a service for

X.3, attention to surgical dressings and sutures, if this service is

included in the surgeon's global charge. However, if this service is

performed by another physician, unrelated to the surgeon, it might be

appropriate for the second surgeon to use this code to describe the

reason for the encounter.

Comment: One commenter suggested that HCFA clarify in the final

rule whether the new regulations supersede or supplement individual

carrier coding policies since there are conflicts between the new and

old coding practices.

Response: The requirements in this final rule supersede any

individual carrier coding policies. Those carrier coding policies have

been changed to comply with the requirements of this final rule.

Comment: Both the AMA and the American Society of Internal Medicine

stated that supplying codes for signs and symptoms without also

supplying codes indicating diagnoses that the physician has ruled out

will not accurately describe the patient's conditions and explain the

reasons for the care provided. Another commenter recommended that we

allow the use of ``suspected'' and ``rule out'' codes.

Response: The coding guidelines state that each visit must be coded

to describe the specific reason that the patient sought care or

treatment. The guidelines also state: ``Do not code diagnosis

documented as ``suspected,'' ``rule out,'' ``probable,'' or

``questionable'' as if they are established. Rather, code the condition

to the highest degree of certainty for that encounter/visit to reflect

symptoms, signs, abnormal test results, or other reasons for the

visit.'' To require coding of ``probable,'' ``suspected,''

``questionable,'' or ``rule out'' conditions as if the conditions

existed would lead to significant overcounting of conditions. This

inaccurate recording would distort data and would artificially distort

disease statistics. Therefore, physicians should report diagnosis codes

for symptoms and signs but should exclude codes for diagnoses that the

physician either suspects or rules out.

Comment: Several commenters asked how they should code for

situations in which a patient presents disabling symptoms but no

diagnosis exists for the patient. They recommended that the diagnosis

codes include codes for symptoms.

Response: Diagnosis codes should reflect the diagnosis, condition,

problem, or other reason for the encounter or visit shown in the

medical record to be chiefly responsible for the services provided.

However, the carrier will also accept codes for symptoms when no other

more definite code can be given to describe the reason for the visit of

the patient. This is explained further in guideline number four of the

Appendix--Claims Review and Adjudication Procedures, published with the

proposed rule (54 FR 30564, July 21, 1989).

Comment: Two commenters suggested that correlating the ICD-9-CM

diagnosis codes and the CPT-4 procedures codes is a redundant effort

since a procedure may be performed as the result of several conditions.

They urged that the requirement be deleted.

Response: Correlating the narrative diagnosis and the CPT-4

procedure code is a requirement of the Medicare carrier, and has been a

standard requirement for years. It has only been modified by the new

physician diagnostic coding requirements. Physicians must now correlate

the ICD-9-CM code, instead of the narrative, to the CPT-4 code.

Comment: One commenter stated that suppliers cannot be required to

include diagnostic coding on Part B bills even though they often

provide the diagnostic codes identified by the physician on bills for

equipment and supplies.

Response: We have never required suppliers to include diagnostic

coding on their Part B bills. Section 1842(p)(1) of the Act requires

physicians, as defined in section 1861(r) of the Act, and subject to

limitations concerning the scope of practice by each State and other

provisions of title XVIII of the Act, to furnish diagnostic coding.

That is, only doctors of medicine or osteopathy, dental surgery or

dental medicine, podiatry, optometry, or chiropractic must furnish

diagnostic coding. Durable medical equipment suppliers are not included

in this requirement.

Comment: One commenter inquired why his or her carrier included

messages in the explanation of the Medicare benefit worksheet regarding

both diagnostic coding requirements (ICD-9-CM) and procedural coding

requirements (CPT-4) since the proposed rule (54 FR 30559, July 21,

1989) stated that there is no current requirement for diagnostic

coding.

Response: The statement on page 54 FR 30559 referred to the policy

before implementation of section 1842(p)(1) of the Act that requires

physician diagnostic coding instead of the written narrative that was

previously required. We are now conforming the regulations to the

previously issued administrative instructions.

The CPT-4 coding (part of the HCFA Common Procedural Coding System)

describes physician services and supplies, not diagnoses. If either

fields 23 or 24c on the form HCFA-1500 are blank, the carrier will

communicate with the physician via the explanation of the Medicare

benefit worksheet requesting completion of this information.

Comment: A commenter asserted that as an incentive all bills or

requests for payment without ICD-9-CM codes should be rejected and that

properly coded bills and requests for payment should be expedited.

Response: The Act specifically provides for denial of payment for a

bill submitted by a physician on an assignment-related basis if it does

not include the appropriate diagnostic code. For a claim for an item or

service not submitted on an assignment-related basis, the Act

authorizes the Secretary to impose a civil money penalty, not to exceed

$2,000, against a physician seeking payment who knowingly and willfully

fails to promptly provide the appropriate diagnostic coding on the bill

to the Medicare beneficiary upon the request of the Secretary or a

carrier. If the physician knowingly, willfully, and in repeated cases

fails, after being notified by the Secretary of the statutorily

prescribed obligations, to include the requisite diagnostic codes, the

physician may also be subject to administrative sanctions. However, the

payment of an unassigned claim may not be prohibited solely because the

physician has not furnished the diagnosis codes.

We considered, but rejected, the idea of expediting properly coded

bills and requests for payment since we do not handle properly coded

bills for Part A services in a special manner. Properly coding bills is

a standard requirement to receive payment for services. However,

payment would occur more quickly for properly coded bills because there

would be no need for resubmission because of errors in coding.

Comment: A clinical laboratory stated that bills and requests for

payment with diagnostic coding can be processed electronically at a

much lower cost to Medicare than we projected in the proposed rule.

Response: The cost projections in the proposed rule for

electronically processed claims are the expected costs for physicians

to comply with the requirement for diagnostic coding on all bills and

requests for payment rather than the costs of the carriers in

processing the bills and requests for payment.

Comment: One association asked the implied meaning of the statement

``* * * (diagnostic coding) could be used for prepayment screens'' (54

FR 30559, July 21, 1989). The commenter asked where the ICD-9-CM and

CPT-4 information is being collected and what future plans are being

implemented for the use of the information. The association was

informed by its carrier that the carrier does not believe the ICD-9-CM

and CPT-4 codes will eventually be used for a prospective payment

system for physicians.

Response: Billing information is compiled by each carrier and then

electronically transmitted to HCFA's Bureau of Data Management and

Strategy in Baltimore, Maryland. This Bureau is largely responsible for

performing HCFA's mathematical and statistical programming and for

managing HCFA's statistical data bases to support program decisions by

various HCFA components. Current and possible applications for the ICD-

9-CM and CPT-4 coding information include answering research queries

from private sources, development of quality assurance monitoring

mechanisms, assessment of the impact of proposals that affect health

care financing programs, or special research and evaluation studies.

The Bureau uses diagnostic coding information to design and develop

periodic statistical tabulations to assess the characteristics of

beneficiaries and the utilization and cost of program benefits. The

CPT-4 codes also are now used for payment purposes under the fee

schedule for physician services.

Comment: One commenter was concerned about the increased costs for

manpower and the reformatting of her billing system associated with

implementation of the diagnostic coding requirement.

Response: We cannot predict the increased costs or manpower that an

individual office would incur as a result of the diagnostic coding

requirement. However, in the impact analysis to this final rule, we

discuss our estimate of the aggregate costs associated with coding

training and ICD-9-CM coding books. Also, as discussed in the impact

analysis, we now estimate that about 90 percent of physicians included

diagnostic coding on bills before it was required by section 1842(p) of

the Act. These physicians may not have experienced as significant an

increase in costs as physicians who did not code before the requirement

was established.

Comment: One commenter stated that since general practitioners care

for the whole patient, it is sometimes difficult to find an applicable

diagnosis even after looking through 2,000 pages of codes. The

physician recommended that we allow three digit codes to be used for

procedures for which physicians routinely charge less than $200.

Response: We are aware that general practitioners are responsible

for coding a wide range of diagnoses. To determine the correct code,

Volume 2, Index, must be consulted first. After the correct code has

been determined, Volume 1 is then referenced to determine if there are

other coding conventions that apply, such as ``Includes'' or

``Excludes'' notes.

We cannot accept the recommendation to allow the use of three digit

codes in any circumstance where an applicable four or five digit code

exists. Codes must be used to their highest level of specificity; this

may include some three digit codes. If diagnoses are coded to the

highest level, using the same data base for all bills and requests for

payment will permit meaningful trend analysis and data comparisons.

Comment: Several commenters stated that the estimate of 1 minute to

code a bill or request for payment is too short. The estimate does not

consider the time a physician spends with office staff to select the

correct diagnosis code.

Response: The estimate of 1 minute to code a bill or request for

payment was made by AHIMA based on their professional coding experience

and expertise. We believe that this is a realistic figure for several

reasons. First, there are many physicians who are specialists, and who

will use only a small portion of the coding manuals during their normal

course of business. We anticipate that these physicians and their

office staffs will quickly identify those parts of the coding books

that apply to their practice. Additionally, many offices have developed

reference lists pertaining to the codes frequently used in their

particular practices. Once this list has been developed, very little

physician involvement is required for the coding process.

The amount of time necessary for the physician to work with his or

her clerical staff in the selection of the correct diagnosis code(s)

was not factored into the estimate of 1 minute. That estimate reflected

the use of the code book or reference list and the documentation

process, whether manual or key entry. We anticipate that the diagnosis

code(s) will become as familiar to the office staffs as the recording

of the narrative diagnostic language, and that completion of the

billing form will proceed as smoothly as it did prior to the

implementation of this diagnostic coding requirement.

B. Patient Information and Confidentiality

Comment: The American Psychiatric Association (APA) stated that

there may be instances when the diagnosis information provided to the

patient (particularly in non-assigned claims) could have an adverse

impact on the patient and course of treatment. The APA suggests that

HCFA have an exceptions process that allows the physician to determine

whether diagnosis information should be directly provided to the

patient.

Response: We agree, and note that there is already an established

procedure for such situations. The physician should file the form HCFA-

1500 on behalf of the beneficiary as required by section 1848(g)(4) of

the Act. The form should include the appropriate diagnostic codes and

should be forwarded to the Medicare carrier. If a physician determines

that diagnostic information should not be released directly to a

patient, the physician may furnish bills to the patient without

diagnostic information. In addition to psychiatric diagnoses,

physicians also may choose to use this procedure for terminal illnesses

or other conditions of a sensitive nature.

Comment: The APA expressed a concern that HCFA should have a

mechanism in place to assure that diagnostic information is kept

confidential and not released to third parties except when permitted by

law. It recommended that the regulations be amended to include privacy

protection.

Response: We share the APA's concerns about the confidentiality of

patient information. To assure that the beneficiary is protected, when

we release medical data, the data do not include any patient-specific

identifiers. Patient-specific medical data in the custody of HCFA and

its intermediaries and carriers are fully protected by the Privacy Act

(5 U.S.C. 552a).

C. Utilization Review

Comment: A pharmaceutical company is concerned that utilization

review of physician services and future drug utilization review may be

less effective because of the limitation of four diagnostic codes on

the bill or request for payment.

Response: Utilization review of physician services will be enhanced

by the diagnostic coding requirement since the information can be

categorized by code and made available for immediate use. At this time,

we have no plans to implement a drug utilization review program using

the diagnostic coding information on the form HCFA-1500. We will

consider the effect of the four diagnostic code limitations if we

propose a drug utilization review program.

Comment: One commenter questioned the possibility of the physician

diagnostic coding requirement eventually becoming a tool to standardize

physician practice patterns nationwide without physician input.

Response: The information obtained from the ICD-9-CM codes will be

used for compiling statistical information. Any new requirements or

procedures would not be implemented without physician input and, if

appropriate, a notice of proposed rulemaking.

Comment: One commenter asserted that the ICD-9-CM coding system is

a bulky, unreliable system for gathering data.

Response: The ICD-9-CM coding system was developed under the

guidance of the National Center for Health Statistics for greater

specificity in reporting illnesses and injuries in the United States.

The ICD-9-CM coding system is the best system available for recording

the diagnoses of Medicare beneficiaries. The system is not considered

unreliable by most users; however, errors do occur as a result of

physicians' incorrect application of the codes.

To help make the coding system meet the needs of all users, we

welcome input from interested physicians, organizations and the public

through the ICD-9-CM Coordination and Maintenance Committee meetings.

Comment: One commenter asked for the name of an agency that can

give advice and answer questions concerning coding issues.

Response: The AHA is the official clearinghouse for questions

concerning the ICD-9-CM system. They accept written questions and will

provide a written reply. The AMA is also providing ICD-9-CM coding

advice to its members through their CPT Clearing House Hotline (312)

464-4737. In addition, each carrier has designated a contact person to

answer the concerns raised by the physicians they service. We encourage

close communication between a physician and the carrier to avoid coding

problems.

Comment: Several commenters expressed concern that requiring coding

to the fifth digit is burdensome and will require a more skilled person

to properly code the diagnoses. One commenter stated that prior to the

new physician diagnostic coding requirement, coding by physicians was

generally limited to three digits.

Response: We did not anticipate a significant burden upon

physicians as a result of coding to the fifth digit level when the

proposed rule was published, and have not had complaints from the

physician community since that time. We continue to believe that most

physicians or their office staff create reference lists of diagnoses

encountered most often. Since 1979, the ICD-9-CM coding system has been

in use and has contained five digit codes. Thus, we do not agree that

coding by physicians previously was limited to three digits.

Comment: One commenter asserted that it would be advantageous if

the format requirements for submitting bills or requests for payment

are published with the proposed rule.

Response: The Medicare Carriers Manual explains how to fill out

bills and requests for payment. Basically, the only format requirement

for the diagnostic coding is to put each appropriate code in the space

that is provided for those codes under the heading ``Nature of Illness

or Injury.''

The form HCFA-1500 and accompanying sections of the Carriers Manual

are already subject to public comment, pursuant to the Paperwork

Reduction Act of 1980. In accordance with that Act, OMB reviews the

form HCFA-1500 and its instructions at least once every 3 years. The

Department publishes a notice in the Federal Register that informs the

public of OMB's review and solicits comments for OMB's consideration in

the course of its review.

Comment: The AMA stated that pathologists have expressed a concern

that failure to list a second diagnosis after V72.6, Laboratory

examination, may lead to medical necessity review problems. The AMA

requested that we inform the carriers that V72.6 code meets the

Medicare coding requirements.

Response: We agree that in many instances one code (V72.6) will

explain the reason for the patient's encounter. Carriers should

identify a way of determining the proper coverage policy issue through

the use of a screen. We recommend that all laboratory claims begin with

the code V72.6, Laboratory examination. However, by supplying a second

code to describe the reason for the referral, the bill or request for

payment can clearly be identified as referrals to evaluate symptoms,

signs, or diagnoses, instead of being part of a routine physical

examination that is not covered by Medicare.

Comment: One commenter inquired about how the ``V'' codes should be

sequenced for diagnostic services on the bill or request for payment.

Response: Ancillary diagnostic services, which are coded beginning

with a ``V,'' are provided in laboratories and radiology offices if the

patient's main reason for the visit is to get an x-ray, (V72.5,

Radiological examination, not elsewhere classified), or to have a test

conducted (V72.6, Laboratory examination.) The condition for which the

patient sought treatment will be reflected in the additional diagnoses.

In coding ancillary diagnostic services, it may be helpful to question

the reason for the encounter. The reason for the encounter is that the

patient visited the laboratory or radiology office to have either an

analysis performed or an x-ray taken.

D. Training

Comment: One commenter stated that HCFA's estimate that 70 percent

of physicians and office staff will need ICD-9-CM coding training is a

gross underestimate.

Response: We do not believe that our estimate of 70 percent of

physicians and office staff in need of coding training was too low. In

fact, we believe that most physicians and office staff did not require

coding training. Immediately after implementation of the diagnostic

coding requirement, medical review at the intermediary level did not

reveal significant coding problems. Since that time, the majority of

physician bills using ICD-9-CM coding have passed intermediary edits

for accuracy. In addition, many physicians did not need training since

they submitted ICD-9-CM codes prior to April 1989 due to the

requirements of third party payers for non-Medicare patients. We

believe that the lack of coding problems indicates that, if anything,

we may have overestimated the proportion of physicians and office staff

that needed training.

Comment: One commenter suggested that HCFA require the Medicare

carriers to provide ICD-9-CM training and technical assistance to

physicians and providers.

Response: The Medicare carriers were required by HCFA to provide

initial ICD-9-CM coding training prior to the April 1, 1989

implementation date. A National Carriers Training program was held in

February 1989 in preparation for the training done in each State by

each carrier. The National Carriers Training was conducted by AHIMA,

with input on the program from the AMA. Subsequently, each carrier was

responsible for conducting its own training program on a state-by-state

basis. In many cases, carriers worked with the State medical societies

in conducting the training. Diagnostic coding training for physicians

and physician office staffs has been ongoing since the implementation

of this requirement, especially through courses and sessions sponsored

by the private sector. For further information concerning coding

training, physicians can contact their State medical society, the AMA,

AHIMA, their State component of the medical record or medical health

information association, or their carrier.

E. Sanctions Process and Civil Money Penalties

Comment: One commenter indicated that the sanction provisions for

noncompliance with the coding requirements are illogical since coding

bills or requesting payment with ICD-9-CM codes is essentially a

clerical function. The civil monetary penalties and sanction actions by

the Office of Inspector General are perceived as excessive since

clerical errors of omission and inaccurately coded diagnoses will be

inevitable. Another commenter recommended that the sanctions process

should not apply to the ICD-9-CM coding requirement.

Response: Coding is a task routinely delegated by physicians to

billing clerks or staff. However, this delegation does not relieve the

physician of the responsibility to submit bills or requests for payment

that meet the requirements of the law.

Comment: One medical association questioned whether the carrier

considers the remarks on the explanation of the Medicare benefit (EOMB)

form an advisement of a violation (for not including diagnostic coding

on a bill or request for payment) that will be referred to the OIG for

investigation and possible sanctions. The commenter asked why the

carrier includes a remark in the EOMB stating that they will process

this claim but will not process future claims. The association suggests

that the message on the EOMB should contain a more complete and

accurate statement.

Response: Messages that appear on the EOMB have been revised and

are more clear and explanatory. It is not our intent to put the

beneficiary at risk by not paying a bill or request for payment lacking

an ICD-9-CM code. For claims submitted by physicians who do not accept

assignment, the carrier will process the bill or request for payment as

usual, substituting a ``dummy'' code for the ICD-9-CM coding.

The carrier will collect physician-specific information about the

quantity of the dummy codes generated per physician. When a threshold

of ten bills or requests for payment is reached, the carrier is

instructed to contact the physician in order to explain the necessity

of providing diagnostic coding and to help with training. If the

physician subsequently knowingly, willfully, and in repeated cases

fails to supply the requested codes, the Office of the Inspector

General may invoke a civil money penalty.

F. Availability of the ICD-9-CM

Comment: Two commenters expressed concern that the Government

Printing Office (GPO) does not stock a sufficient supply of the ICD-9-

CM coding books, which results in a 4-to-8 week delay in receiving the

books.

Response: ICD-9-CM books are in stock at the special address

mentioned elsewhere in this preamble. We are aware of the potential

demand and have an adequate supply. All orders are sent by priority

mail.

V. Impact Analysis

Unless the Secretary certifies that a final rule will not have a

significant economic impact on a substantial number of small entities,

we generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612) . For purposes of the RFA, all physicians are considered

to be small entities.

The statutory requirement that physicians use diagnostic coding has

been in effect since April, 1989, and we believe that the vast majority

of physicians were already using ICD-9-CM coding even before that time.

Thus, the economic impact of this final rule on the physician community

should be minimal.

In the proposed rule, we prepared a voluntary impact analysis and

voluntary regulatory flexibility analysis because of our inability to

quantify with any degree of precision the estimated costs of these

provisions and the large number of physicians who were affected by the

provisions of section 1842(p) of the Act. These provisions require that

each bill or request for payment for a service furnished by a physician

include appropriate diagnostic coding related to the illness or injury

for which the Medicare beneficiary received treatment. Under section

1842(p) of the Act, a physician who is to be paid on an assignment-

related basis will not be paid if he or she fails to include

appropriate diagnostic coding on the bill. In this final rule we have

revised the impact analysis based on public comment.

With one exception, any effects of this final rule will be a direct

result of the legislative provisions in section 1842(p) of the Act. The

exception is a result of the discretion that section 1842(p)(1) of the

Act provides the Secretary in the choice of which system to use to code

diagnoses. We chose to use ICD-9-CM because it is the only

comprehensive coding system that includes all possible diagnoses for

Medicare beneficiaries. For that reason, it is already widely used by

physicians. Furthermore, we are already using ICD-9-CM in the Medicare

program for classifying DRGs for payment under the inpatient hospital

prospective payment system. Therefore, we believe that it is the

easiest coding system for physician use.

Before April 1, 1989, physicians were not required to provide ICD-

9-CM or any other type of diagnostic codes on their Medicare bills or

requests for payment. Therefore, we believe that physicians who were

not coding before the provisions of section 1842(p) of the Act were

affected through increased paperwork, the cost of training themselves

and their staff, and the probable need to purchase Volumes 1 and 2 of

the ICD-9-CM, fourth edition.

As of December 31, 1986, there were 569,160 physicians practicing

in the United States (Physician Characteristics and Distribution in the

U.S., 1986. Department of Data Release Services, Division of Survey and

Data Resources, American Medical Association, 1987). In the proposed

rule, we estimated that at least 30 percent of physicians used ICD-9-CM

codes before the requirements of section 1842(p) were established,

presumably because of requirements of other third party payers that

ICD-9-CM diagnosis or procedure codes be used on their claims. Thus, we

estimated that up to 70 percent of practicing physicians did not report

codes before the requirement was established (that is, approximately

398,000 physicians).

In this final rule, we have revised our estimate of the number of

physicians who reported ICD-9-CM codes before the requirements of

section 1842(p) of the Act were established. As stated in section III

of this preamble, we provided for a 6-month grace period following the

statutory implementation date of April 1, 1989, during which no claims

would be denied for lack of coding. The grace period ended on October

1, 1989. It has been our experience that, when grace periods are

established, providers usually do not comply with the required

provisions until the end of the grace period, presumably because of

lack of training or need for a preparation period. In this case,

however, approximately 90 percent of the claims were coded using ICD-9-

CM during the first month of the grace period, and the compliance rate

remained at approximately 90 percent for the duration of the grace

period. Moreover, intermediary review of these claims revealed no

significant coding problems. Since the number of physicians that

complied with the coding requirement remained stable throughout the

grace period, we believe that the number of physicians who reported

codes during the grace period is indicative of the number of physicians

who were reporting codes before the requirement was established.

Therefore, we now estimate that approximately 90 percent of physicians

reported ICD-9-CM codes before April, 1989 (that is, approximately,

512,000 physicians). The discussion below reflects this revised

estimate.

If all the physicians who did not report ICD-9-CM codes before

April 1989 needed new coding books, ICD-9-CM Volumes 1 and 2 at a cost

of $65.00 per set, the total cost would have been approximately

$3,700,000. In practice, however, we believe that not all of these

physicians needed to purchase new coding books. For example, some

physicians belonged to group practices, some worked for hospitals and

do not have their own patients, and some already owned coding books.

For purposes of this impact analysis, however, we assume that all

physicians who did not code before April, 1989 purchased new coding

books.

In the proposed rule, in calculating costs of training and coding

for physicians who did not code before April 1989, we estimated the

average wages of a physician's office staff person at $4.50 an hour. In

response to the July 21, 1989 proposed rule, we received several

comments stating that we had underestimated the average hourly wages

for a physician's office staff member. We agree that our estimate of

$4.50 per hour was too low. In this final rule, we are revising our

estimate of the hourly rate based on comments received on the proposed

rule and our examination of the hourly wages of physicians' office

staff in the monthly publication ``Employment and Earnings'' (U.S.

Department of Labor Bureau of Labor Statistics, ``Employment and

Earnings'' Vol. 37, No. 4, April 1990, p. 131 (Washington, DC)). Our

revised estimate of the typical wage for a staff person at the time the

requirement was established is $9.65 per hour.

Based on claims data, we believe there were approximately 320.1

million physician claims processed for the period from April 1, 1989 to

March 31, 1990. We estimated that the clerical cost of coding each

claim was $0.16 for a total of $51,216,000 for the first year that the

requirement was in effect. We arrived at the $0.16 figure by assuming

an hourly rate of the typical physician's office staff person to be

$9.65 per hour, as explained above. We believe that it takes 1 minute

to code a claim, therefore $9.65 divided by 60 minutes results in a

$0.16 cost per claim. However, we believe that 90 percent of the claims

were being coded prior to April 1, 1989. Thus, 10 percent of the cost

of coding claims (approximately $5,120,000) can be attributed to the

provision of section 1842(p) of the Act.

We anticipated that each physician that did not report ICD-9-CM

codes before April 1, 1989 would either send one or more persons for

training, or may have determined that formal training was not needed.

Some of those physicians may not have sent any staff since they are in

a group practice, (in which case, one staff member may represent

several physicians), or because they work for hospitals (in which case

they would not submit Part B claims.)

Below, in two examples, we are providing the extremes of estimated

training costs using the same methodology as set forth in the impact

analysis of the proposed rule. In the first example, we assume that all

physicians who did not code prior to April 1989 sent, on average, one

of their office staff to attend a half-day session sponsored by a

national firm. We anticipated that the cost of such a training session

could have been as high as $100.00. Thus, for this estimate, we are

assuming a cost of $100.00. Furthermore, we assume the physicians paid

an hourly rate of $9.65 per hour to their employees while they attended

the coding session. Given these assumptions, we estimated training

costs as follows:

(All estimates are rounded to the nearest $10,000.)

Half-day (4 hours) at $9.65 per hour=$38.60; $38.60 x

57,000 employees.......................................... $2,200,000

Session cost $100.00 x 57,000 employees.................... 5,700,000

------------

Total training costs................................... $7,900,000

In the second example, we assume that physicians who did not code

before the requirement was established in April 1989 sent, on average,

one of their office staff to coding sessions sponsored by carriers or

insurance companies at no cost. Assuming that the office employee was

paid $9.65 an hour, we estimated the total training costs as follows:

Half-day (4 hours) at $9.65 per hour=$38.60; $38.60 x

57,000 employees.......................................... $2,200,000

Session costs.............................................. 0

------------

Total training costs................................... $2,200,000

Below, we show the total estimated first year costs for the two

examples.

For the first example, the total estimated first year

costs consisted of:

Coding costs............................................... $5,120,000

Training................................................... 7,300,000

Books...................................................... 3,700,000

------------

Total.................................................. $16,720,000

For the second example, the total estimated first year

costs consisted of:

Coding costs............................................... $5,120,000

Training................................................... 2,200,000

Books...................................................... 3,700,000

------------

Total.................................................. $11,020,000

Therefore, we estimate that first year training costs were between

$11 million and $16 million. The cost of updated books will be an

ongoing expense. Training costs will be recurring to the extent that

staff turnover will occur. Coding costs will be ongoing. However, we

believe that coding time and costs will probably be reduced with

experience.

Section 1102(b) of the Act requires the Secretary to prepare a

regulatory impact analysis if a final rule will have a significant

impact on the operations of a substantial number of small rural

hospitals. Such an analysis must conform to the provisions of section

604 of the RFA. For purposes of section 1102(b) of the Act, we define a

small rural hospital as a hospital that is located outside of a

Metropolitan Statistical Area and has fewer than 50 beds.

We are not preparing a rural impact statement since we have

determined, and the Secretary certifies, that this final rule will not

have an impact on a significant number of small rural hospitals.

This final rule was reviewed by the Office of Management and

Budget.

V. Paperwork Reduction Act

Regulations at Sec. 424.32(a) and Sec. 424.34(b) contain

information collection and recordkeeping requirements that are subject

to review by the Office of Management and Budget under the Paperwork

Reduction Act of 1980 (44 U.S.C. 3501 through 3511). These regulations

and the information collection and record keeping requirements apply to

the requirement that a physician provide appropriate diagnostic coding

on each bill or request for payment for a physician service furnished

under Medicare Part B. Public reporting burden for this collection of

information is estimated to average one minute per submitted Part B

claim. This includes time spent reviewing instructions, searching

existing data sources, gathering and maintaining needed data, and

completing and reviewing the collection of information. The information

and record keeping requirements associated with this final rule have

been approved by the Office of Management and Budget in accordance with

the Paperwork Reduction Act of 1980 (approval number 0938-0008).

List of Subjects

42 CFR Part 405

Administrative practice and procedure, Health facilities, Health

professions, Kidney diseases, Medicare, Reporting and recordkeeping

requirements, Rural areas, X-rays.

42 CFR Part 424

Assignment of benefits, Physician certification, Claims for

payment, Emergency services, Plan of treatment.

I. 42 CFR part 405, subpart E is amended as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

Subpart E--Criteria for Determination of Reasonable Charges;

Payment for Services of Hospital Interns, Residents, and

Supervising Physicians

A. The authority citation for Subpart E continues to read as

follows:

Authority: Secs. 1102, 1814(b), 1832, 1833(a), 1834 (a) and (b),

1842 (b) and (h), 1848, 1861(b), (v), and (aa) 1862(a)(14), 1866(a),

1871, 1881, 1886, 1887, and 1889 of the Social Security Act as

amended (42 U.S.C. 1302, 1395f(b), 1395k, 1395l(a), 1395m (a) and

(b), 1395u (b) and (h), 1395 w-4, 1395x(b), (v), and (aa),

1395y(a)(14), 1395cc(a), 1395hh, 1395rr, 1395ww, 1395xx, and

1395zz).

B. In Sec. 405.512 paragraph (c) introductory text is republished

and paragraph (c)(8) is revised to read as follows:

Sec. 405.512 Carriers' procedural terminology and coding systems.

* * * * *

(c) Guidelines. The following considerations and guidelines are

taken into account in evaluating a carrier's proposal to change its

system of procedural terminology and coding:

* * * * *

(8) Compatibility of the proposed system with the carriers methods

for determining payment under the fee schedule for physicians' services

for services which are identified by a single element of terminology

but which may vary in content.

* * * * *

II. 42 CFR part 424 is amended as set forth below:

PART 424--CONDITIONS FOR MEDICARE PAYMENT

A. The authority citation for part 424 is revised to read as

follows:

Authority: Secs. 216(j), 1102, 1814, 1815(c), 1835, 1842 (b) and

(p), 1861, 1866(d), 1870 (e) and (f), 1871, and 1872 of the Social

Security Act (42 U.S.C. 416(j), 1302, 1395f, 1395g(c), 1395n, 1395u

(b) and (p), 1395x, 1395cc(d), 1395gg (e) and (f), 1395hh, and

1395ii)

Subpart A--General Provisions

B. In Sec. 424.3, the introductory text is republished and a

definition for ``ICD-9-CM'' is added in alphabetical order to read as

follows:

Sec. 424.3 Definitions.

As used in this part, unless the context indicates otherwise--

ICD-9-CM means International Classification of Diseases, Ninth

Revision, Clinical Modification.

* * * * *

Subpart C--Claims for Payment

C. In Sec. 424.32, paragraph (a) is revised to read as follows:

Sec. 424.32 Basic Requirements for all claims.

(a) A claim must meet the following requirements:

(1) A claim must be filed with the appropriate intermediary or

carrier on a form prescribed by HCFA in accordance with HCFA

instructions.

(2) A claim for physician services must include appropriate

diagnostic coding using ICD-9-CM.

(3) A claim must be signed by the beneficiary or the beneficiary's

representative (in accordance with Sec. 424.36(b)).

(4) A claim must be filed within the time limits specified in

Sec. 424.44.

* * * * *

D. In Sec. 424.34, the introductory text of paragraph (b) is

republished and paragraph (b)(4) is revised to read as follows:

Sec. 424.34 Additional requirements: Beneficiary's claim for direct

payment.

* * * * *

(b) Itemized bill from the hospital or supplier. The itemized bill

for the services, which may be receipted or unpaid, must include all

the following information:

* * * * *

(4) A listing of the services in sufficient detail to permit

determination of payment under the fee schedule for physicians'

services; for itemized bills from physicians, appropriate diagnostic

coding using ICD-9-CM must be used. (For example, a bill for ambulance

service must specify the pick-up and delivery points.)

* * * * *

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance; and Program No. 93.774, Medicare--

Supplementary Medical Insurance Program)

Dated: November 22, 1993

Bruce C. Vladeck,

Administrator, Health Care Financing Administration.

Dated: January 24, 1994.

Donna E. Shalala,

Secretary.

[FR Doc. 94-4900 Filed 3-3-94; 8:45 am]

BILLING CODE 4120-01-P