Medicare Program; Adjustment in Payment Amounts for New Technology Intraocular Lenses

Federal RegisterSep 4, 1997

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 416

[BPD-831-P]

RIN 0938-AH15

Medicare Program; Adjustment in Payment Amounts for New

Technology Intraocular Lenses

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would establish in regulations a process

under which interested parties may request, with respect to a class of

new technology intraocular lenses (IOLs), a review of the

appropriateness of the current payment amount for IOLs furnished by

Medicare-participating ambulatory surgical centers.

The rule implements section 141(b) of the Social Security Act

Amendments of 1994, which requires us to develop and implement this

process.

DATES: Comments will be considered if we receive them at the

appropriate address, as provided below, no later than 5 p.m. on

November 3, 1997.

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: BPD-831-P, P.O. Box 26688,

Baltimore, MD 21207-0488.

If you prefer, you may deliver your written comments (1 original

and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, DC 20201, or

Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

Comments may also be submitted electronically to the following e-

mail address: [email protected] E-mail comments must include the full

name and address of the sender and must be submitted to the referenced

address to be considered. All comments must be incorporated in the e-

mail message because we may not be able to access attachments.

Electronically submitted comments will be available for public

inspection at the Independence Avenue address below.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code BPD-831-P. Comments received timely will be available for

public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in Room 309-G of

the Department's offices at 200 Independence Avenue, SW., Washington,

DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.

(phone: (202) 690-7890).

Copies: To order copies of the Federal Register containing this

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password required). Dial-in users should use communications software

and modem to call (202) 512-1661; type swais, then login as guest (no

password required).

FOR FURTHER INFORMATION CONTACT: Cathaleen Ahern, (410) 786-4515.

SUPPLEMENTARY INFORMATION:

I. Background

A. Payment for Ambulatory Surgical Center Facility Services

Section 1832(a)(2)(F)(i) of the Social Security Act (the Act)

provides that benefits under the Medicare supplementary medical

insurance program (Part B) include services furnished in connection

with surgical procedures that, under section 1833(i)(1)(A) of the Act,

are specified by us and are performed on an inpatient basis in a

hospital but that also can be performed safely on an ambulatory basis

in an ambulatory surgical center (ASC) or in a hospital outpatient

department. To participate in the Medicare program as an ASC, a

facility must meet the standards specified under section

1832(a)(2)(F)(i) of the Act and 42 CFR 416.25 (``Basic requirements'').

Our regulations at 42 CFR part 416 contain the coverage and payment

rules for services furnished by Medicare-participating ASCs.

Section 1833(i)(2)(A) of the Act authorizes us to pay ASCs a

prospectively-determined rate for facility services. ``Facility

services'' means services that are furnished in conjunction with

covered surgical procedures performed in an ASC, or in a hospital on an

outpatient basis. Section 416.61 sets forth included and excluded

facility services. ASC facility services payment rates represent our

[[Page 46699]]

estimate of a fair fee that takes into account the costs incurred by

ASCs generally in furnishing facility services in connection with

performing a surgical procedure. ASC payment rates do not include

physician fees and other medical items and services, such as laboratory

services or prosthetic devices, for which separate payment may be

authorized under other provisions of the Medicare program. However, an

intraocular lens (IOL) is included as an ASC facility service under

section 1833(i)(2)(A)(iii) of the Act.

Payment for ASC facility services is subject to the usual Medicare

Part B deductible and coinsurance requirements. Therefore,

participating ASCs are paid 80 percent of the prospectively-determined

rate adjusted for regional wage variations. The beneficiary pays a

coinsurance amount equal to 20 percent of the wage-adjusted ASC

facility fee.

Currently, the Medicare program covers approximately 2,300

procedures performed in an ASC. We assign to each procedure one of

eight standard payment rates. Collectively, the procedures assigned a

particular payment rate constitute an ASC payment group. The current

payment group rates follow:

Group 1--$312

Group 2--$419

Group 3--$479

Group 4--$591

Group 5--$674

Group 6--$785

Group 7--$935

Group 8--$923

All procedures within a payment group are paid the same rate, adjusted

for geographic wage variation. (A detailed discussion of the ASC

payment methodology and rate-setting procedures is set forth in the

final notice published in the Federal Register on February 8, 1990,

entitled ``Revision of Ambulatory Surgery Center Payment Rate

Methodology'' (55 FR 4526).)

A ninth payment group allotted exclusively to extracorporeal

shockwave lithotripsy services was established in the notice with

comment period published December 31, 1991 (56 FR 67666). The decision

in American Lithotripsy Society v. Sullivan, 785 F. Supp. 1034 (D.D.C.

1992), prohibits us from paying for these services under the ASC

benefit at this time. Extracorporeal shockwave lithotripsy payment

rates are the subject of a separate document, and a proposed notice was

published October 1, 1993 (58 FR 51355).

B. Payment for Intraocular Lenses Furnished in an Ambulatory Surgical

Center

At the inception of the ASC benefit on September 7, 1982, Medicare

paid 80 percent of the reasonable charge for IOLs supplied for

insertion concurrent with or following cataract surgery performed in an

ASC. Section 4063(b) of the Omnibus Budget and Reconciliation Act of

1987 (OBRA 1987) (Pub. L. 100-203), enacted on December 22, 1987,

amended section 1833(i)(2)(A) of the Act to mandate that we include

payment for an IOL furnished by an ASC for insertion during or

following cataract surgery as part of the ASC facility fee rather than

paying for the IOL separately, in addition to the facility fee. Payment

included in the facility fee for an IOL must be reasonable and related

to the cost of acquiring the class of IOL involved.

Thus, for services furnished beginning March 12, 1990, which was

the effective date of the final notice published in the Federal

Center Payment Rate Methodology'' (55 FR 4526), Medicare included

payment for an IOL in payment group 6 and payment group 8, the two

payment groups that include IOL insertion procedures. The Physicians'

Current Procedural Terminology (CPT) codes for groups 6 and 8 and their

descriptors follow:

Payment Group 6

CPT code 66985--Insertion of intraocular lens prosthesis (secondary

implant), not associated with concurrent cataract removal.

CPT code 66986--Exchange of intraocular lens. (This CPT code was

first listed in CPT 1992; we added it to the ASC list effective January

30, 1992.)

Payment Group 8

CPT code 66983--Intracapsular cataract extraction with insertion of

intraocular lens prosthesis (one stage procedure).

CPT code 66984--Extracapsular cataract removal with insertion of

intraocular lens prosthesis (one stage procedure), manual or mechanical

technique (eg, irrigation and aspiration or phacoemulsification).

Initially, we set the payment amount for IOLs at $200. We did not

categorize IOLs into different classes for the reasons discussed below.

The $200 allowance applied to any IOL furnished for surgical insertion

by an ASC.

Our identification of $200 as the appropriate amount of payment for

an IOL was influenced by the Office of Inspector General's (OIG's)

finding that ASCs were able to negotiate an average IOL price of $200,

and that discounts in unknown amounts were available to other ASCs.

(See Medicare Certified Ambulatory Surgical Centers, Cataract Surgery

Costs and Related Issues, OAI-09-88-00490, published March 1988. Copies

can be obtained from the Office of Inspector General, Department of

Health and Human Services, (415) 556-0675.)

In Outpatient Ophthalmic Surgery Society, Inc. v. Shalala, No. 90-

0305 (D.D.C. January 31, 1994), the court rejected both arguments that

were mounted in a challenge to the $200 IOL payment amount. The court

deferred to our reliance on the OIG study as the basis for determining

the IOL payment amount and upheld our determination that there is no

medical justification to recognize different classes of IOLs.

Section 4151(c)(3) of the Omnibus Budget Reconciliation Act of 1990

(OBRA 1990) (Pub. L. 101-508), enacted on November 5, 1990, froze the

IOL payment amount at $200 for IOLs furnished by ASCs in conjunction

with surgery performed during the period beginning November 5, 1990 and

ending December 31, 1992. We continued paying an IOL allowance of $200

from January 1, 1993 through December 31, 1993.

Section 13533 of the Omnibus Budget Reconciliation Act of 1993

(OBRA 1993) (Pub. L. 103-66), enacted on August 10, 1993, mandated that

payment for an IOL furnished by an ASC be equal to $150 beginning

January 1, 1994 through December 31, 1998.

II. Provisions of This Proposed Rule

A. Requirement for Review of Payment for New Technology Intraocular

Lenses

On October 31, 1994, the Congress passed the Social Security Act

Amendments of 1994 (SSAA 1994) (Pub. L. 103-432). Section 141(b) of

SSAA 1994 requires us, not later than 1 year after the date of

enactment (that is, by October 31, 1995), to develop and implement a

process under which interested parties may request, with respect to a

class of new technology IOLs, a review of the appropriateness of the

payment amount provided for IOLs furnished by ASCs under section

1833(i)(2)(A)(iii) of the Act. Since January 1, 1994, the payment

amount for IOLs furnished by ASCs under section 1833(i)(2)(A)(iii) of

the Act has been $150.

Section 141(b)(1) of SSAA 1994 stipulates that an IOL may not be

treated as a new technology IOL unless it has been approved by the Food

and Drug

[[Page 46700]]

Administration (FDA). Section 141(b)(2) of SSAA 1994 requires that, in

determining whether to provide a payment adjustment, we take into

account whether use of the IOL is likely to result in reduced risk of

intraoperative or postoperative complication or trauma, accelerated

postoperative recovery, reduced induced astigmatism, improved

postoperative visual acuity, more stable postoperative vision, or any

other comparable clinical advantages.

Section 141(b)(3) of SSAA 1994 requires that we publish at least

annually a list of the requests received for review of the

appropriateness of the IOL payment amount with respect to a new

technology IOL. We must provide a 30-day comment period on the IOLs

that are the subject of the requests for review. Within 90 days of the

close of the comment period, we must publish a notice of the

determinations made with respect to the appropriateness of the IOL

payment amount for the IOLs for which a review was requested. Any

adjustment of the IOL payment amount (or payment limit) for a

particular IOL or class of IOLs that we determine is warranted would be

effective not later than 30 days following publication of the final

notice of our determination.

Implementation of section 141(b) of SSAA 1994 requires three

principal policy decisions:

Identification of a class or classes of new technology

IOLs.

Determination of whether the current IOL payment amount is

appropriate for an IOL identified as belonging to a class of new

technology IOLs.

Identification of the payment adjustment to be applied if

the current payment amount is found to be inappropriate.

In the sections that follow, we discuss the factors that led us to

the process that is the subject of this proposed rule. We welcome

comments on the options selected and rejected, and on potential

alternatives not considered.

B. Identification of a Class of New Technology Intraocular Lenses

1. Distinguishing Among Classes of Intraocular Lenses

In order to prepare the final notice entitled ``Revision of

Ambulatory Surgery Center Payment Rate Methodology'' (55 FR 4526) that

was published in the Federal Register on February 8, 1990, we sought

supporting documentation that would justify pricing IOLs according to

IOL type or ``class,'' and that would establish the basis for

distinguishing among different types of IOLs, such as placement of the

IOL within the eye, either as anterior chamber or posterior chamber

IOLs; or the style of the IOL, either single-piece or multi-piece; or

characterization of the IOL as ``advanced technology.''

On February 22, 1989, the FDA advised us in a letter that its

premarket approval review process determined whether IOLs were ``safe

and effective'' not by comparing IOLs with one another, but by

comparing them with a set of historical IOL data known collectively as

the ``grid.'' The FDA noted that no additional labeling or advertising

claims of the superiority of one IOL (or type of IOL) over another had

been approved at that time; that is, medical benefits of one IOL or

type of IOL over another had not been proven in the studies that were

submitted to the FDA. There were no across-the-board differences in the

indications and contraindications or in the warnings sections of the

package insert that would imply across-the-board medical benefits for

one IOL or type of IOL over another.

The studies that were submitted to HCFA at that time failed to

yield conclusive evidence of specific clinical conditions or

indications that required or influenced the use of one IOL over

another, nor did HCFA find justification for a differentiated price

structure based on IOL type. We therefore determined that a $200

payment amount was both reasonable and related to the costs incurred by

ASCs to acquire IOLs available at that time. As noted above, a Federal

court sustained this determination. (See Outpatient Ophthalmic Surgery

Society, Inc. v. Shalala, No. 90-0305 (D.D.C. January 31, 1994).)

2. Criterion To Define a Class of New Technology Intraocular Lenses

There still is no universally accepted definition of what

constitutes a ``class of new technology intraocular lenses.'' Section

141(b) of SSAA 1994 does not define new technology IOLs other than to

specify that an IOL may not be treated as a new technology IOL unless

it has been approved by the FDA. We must therefore first define the

characteristics that distinguish a ``new technology'' IOL from other

IOLs in order to comply with section 141(b) of SSAA 1994.

Section 141(b) of SSAA 1994 requires that we take clinical outcomes

such as ``reduced risk of intraoperative or postoperative complication

or trauma'' and ``reduced induced astigmatism'' into account in

determining whether to provide a payment adjustment with respect to a

particular IOL.

Because they are identified with such specificity, we infer that

the clinical outcomes listed in the law are intended to characterize

IOLs that belong to a ``class of new technology intraocular lenses,''

the use of which not only produces the specified clinical outcomes, but

does so to a greater degree than other IOLs. We submit that the latter

consideration is crucial because of the abundant evidence that

demonstrates that IOLs have attained a level of technical

sophistication, clinical success, and patient satisfaction that exceeds

that of the more than 1 million IOLs implanted during clinical trials

conducted between 1978 and 1982. (An analysis of the 1978 through 1982

clinical trial data forms the FDA's ``grid,'' the historical control

group against which newer IOLs are measured.) To illustrate, 93 percent

and 96.8 percent of patients in more recent trials of two IOLs that

were approved in 1994 achieved visual acuity of 20/40 or better,

compared to 88 percent of patients in the historical control group. The

``best cases,'' those without any preoperative ocular pathology or

macular degeneration at any time, achieved visual acuity of 20/40 or

better in 97 percent and 99.5 percent of the patients in the two newer

trials, compared to 94 percent of the control group grid patients. The

high level of improved vision and the low rate of adverse effects

already attainable using currently available IOLs seem to leave little

room for substantive improvements in the areas listed as desirable

outcomes in SSAA 1994. At issue, then, is how to recognize IOLs that

exceed the already superior levels of performance of IOLs readily

accessible in the current market to such an extent that they warrant

being recognized as belonging to a separate and distinct class of IOLs.

Determining if use of a particular IOL results in specific clinical

outcomes, and the degree to which outcomes attainable by use of that

IOL exceed what would be expected if a different IOL were used,

requires an assessment of scientific data. We therefore considered

convening an expert panel to evaluate claims of the clinical

superiority of an IOL, or asking contractor medical directors to do so.

Part of the FDA's responsibility is granting premarket approval of

applications for new IOLs, through analysis by specialists such as

ophthalmologists; chemical, biomedical, and mechanical engineers;

microbiologists; and toxicologists. As part of the premarket approval

process, an FDA group of experts evaluates

[[Page 46701]]

claims of safety and effectiveness, and approves the claims for the

purposes of labeling and advertising. The FDA also has an advisory

panel composed of practicing ophthalmologists and other clinicians who

review clinical data and advise the FDA on the approvability of

applications. This panel reviews any new device that presents new

questions of safety and effectiveness.

Because the expertise and review process already exist within the

Department of Health and Human Services, it would be duplicative for us

to convene an expert panel for the purpose of evaluating claims of the

clinical superiority of an IOL. Therefore, we propose that the

criterion for identifying an IOL to be treated by us as a ``new

technology'' IOL under the process proposed in this rule be that all

claims of the IOL's specific clinical advantages and superiority over

existing IOLs with respect to the factors listed in section 141(b) of

SSAA 1994, for example, reduced risk of intraoperative or postoperative

complication or trauma, accelerated postoperative recovery, reduced

induced astigmatism, improved postoperative visual acuity, more stable

postoperative vision, or other comparable clinical advantages, have

been approved by the FDA for labeling and advertising purposes.

We asked the FDA if the premarket approval process would allow it

to approve these claims for labeling and advertising purposes. The FDA

responded on March 31, 1995 as follows:

Intraocular lenses are regulated by the FDA as Class III,

restricted devices that require premarket approval (PMA) prior to

marketing in the United States. FDA's authority to regulate labeling

can be found throughout the Federal Food, Drug and Cosmetic Act

(FFDCA) (i.e., Sections 201, 301, 501, 502, 507, 519, 520, 701,

704). IOL labeling is reviewed and approved by the FDA as part of

the PMA review process (Section 515(c)(1)(f) of the FFDCA). Any

extraordinary labeling claims are similarly reviewed by the FDA as

part of the PMA process. A device would be deemed to be misbranded

if `its labeling is false or misleading in any particular' (Section

502(a) of the FFDCA).

As a restricted device, an intraocular lens would also be deemed

to be misbranded if its advertising is false or misleading or lacks

information required by the FFDCA, including intended uses (Sections

502(q) and (r) of the FFDCA). * * * Both clinical and bench testing

could be used by firms to document additional claims, although

clinical data would be needed if the clinical relevance or benefit

of the ``high-tech'' feature were not well established.

In order to further define what distinguishes an IOL that would be

treated as a ``new technology'' IOL under section 141(b) of SSAA 1994,

we considered proposing as a second criterion the requirement that the

IOL be appropriately characterized as a product of ``new technology.''

We would have expected a ``new technology'' IOL to embody materials,

design, fabrication, or other features that are ``new,'' that is,

original and generally recognized as a significant innovation relative

to the materials, design, fabrication, or features of contemporary

IOLs. However, any lens, whether new or previously approved, would have

to demonstrate clinical advantages to the FDA's satisfaction in order

to comply with the SSAA 1994 requirement of achieving clinical

advantages. Thus, we hold the view that this definition of ``new'' is

not required. We welcome comments on this issue.

Once we determine that an IOL satisfies the clinical criterion

proposed above as the standard for treating an IOL as a ``new

technology lens,'' that IOL will be considered as belonging to a

``class of new technology lenses'' for the purposes of implementing the

payment review in accordance with section 141(b) of SSAA 1994 as

described below.

3. Five-Year Limit on Subsets of ``New Technology''

We propose to impose certain constraints on payment adjustments

that result from the process that is the subject of this proposed rule

to ensure that Medicare payments for IOLs furnished under section

1833(i)(2)(A)(iii) of the Act remain reasonable and related to their

acquisition cost.

We do not believe that all IOLs that could satisfy the overall

criteria of ``new technology'' proposed in this rule would necessarily

be of the same type or category. Rather, based on our assessment of the

kinds of IOLs that are currently in clinical trials, we believe ``new

technology'' IOLs could logically be grouped into smaller subsets of

``new technology,'' each of which is defined or identified by a common

salient feature or characteristic, such as fabrication from the same

material, or being multifocal in design, or designed to correct

astigmatism.

For payment purposes, after we accept an IOL as satisfying the

criterion that we have proposed for belonging to a ``class of new

technology lenses,'' we propose to assign that IOL to a subset of IOLs

with which it shares a common feature that distinguishes it from other

``new technology'' IOLs. We further propose to set the lifespan of each

subset of ``new technology'' IOLs at 5 years. That is, beginning the

sixth year following our initial recognition of a ``new technology''

subset, the new technology attribute that the IOLs in the subset have

in common would cease to be considered a characteristic of ``new

technology,'' and the Medicare payment adjustment for IOLs in that

subset would be discontinued. We would not consider for payment

adjustment any other IOLs whose primary distinguishing feature was that

attribute. For IOLs approved at the beginning of the fifth year of the

subset term, Medicare would pay any ``new technology'' adjustment for 1

year only.

We are proposing a 5-year limit because defining a ``new

technology'' characteristic as ``new'' for fewer than 5 years does not

seem fair to manufacturers whose model(s) of the new technology IOL may

receive FDA approval sometime after the original IOL that opened the

subset within the class of ``new technology'' IOLs receives its

premarket approval. But to define a ``new technology'' characteristic

as ``new'' for more than 5 years seems to impose an unnecessary and

unwarranted drain on the Medicare trust fund, given the natural course

of market forces that have repeatedly succeeded in reducing IOL costs

in a few years following introduction of a modification or innovation

in design or material.

4. Impact of Memorandum of Understanding

On September 19, 1995, we published a final rule with comment

period in the Federal Register entitled ``Medicare Program; Criteria

and Procedures for Extending Coverage to Certain Devices and Related

Services'' (60 FR 48417). That regulation discussed a memorandum of

understanding between the FDA and HCFA regarding extending Medicare

coverage to certain investigational devices. Although the criteria to

be used in the process described in the rule include determining

whether or not a ``significant modification'' has been made to a

device, that determination will not affect the process described in

this proposed rule. We will consult with the FDA should issues arise

concerning the classification of lenses.

C. Appropriateness of Payment Amount

SSAA 1994 requires us to review the appropriateness of the current

IOL payment amount with respect to a class of new technology IOLs.

Although SSAA 1994 itself does not provide explicit guidance on the

standard for judging the appropriateness of the current IOL payment

amount, section 1833(i)(2)(A)(iii) of the Act requires that the IOL

payment amount included in

[[Page 46702]]

the ASC facility fee be reasonable and related to the cost of acquiring

the class of IOL involved. Therefore, after we determine that an IOL

meets the criterion that qualifies it to be treated as a new technology

IOL under the process proposed in this rule, we must next determine if

the current IOL payment amount is reasonable and related to the cost of

acquiring that IOL.

At this time, the only method we are aware of for determining IOL

acquisition costs is to survey purchasers and audit invoices. The OIG

conducted such a survey in preparing its 1994 report entitled

Acquisition Costs of Prosthetic Intraocular Lenses, OEI-05-92-01030.

(Copies can be obtained from the Office of Inspector General,

Department of Health and Human Services, (312) 353-4124.) The OIG found

that when IOL payments were fixed at $200, ASCs could acquire and were

acquiring IOLs for an average of $126 in 1991 and $112 in 1992. This

does not take into account discounts available to the majority of

purchasers because the financial arrangements took many forms, only a

few of which were straightforward rebates or price reductions. The OIG

also discovered that the newest type of IOL available at the time of

its review (a foldable, ultraviolet-absorbing, silicone IOL) was

obtainable within relatively the same price range as other IOLs in the

study (from $75 to $475 for the foldable IOLs, compared to a range of

$30 to $450 for rigid IOLs). The OIG determined that ASCs were buying

foldable IOLs for $125 or less, at a time when the Medicare IOL payment

amount was $200.

We are developing IOL cost data as part of the 1994 Medicare

Ambulatory Surgical Center Payment Rate Survey of Facility Overhead and

Procedure Specific Costs (Form HCFA-452B). Although that information is

not yet available, we believe that the current payment amount of $150

continues to exceed the average cost to an ASC of acquiring an approved

IOL.

We may find, however, that IOLs affected by this regulation will

not have been in widespread use by ASCs at the time a review of the IOL

is requested under the provisions of section 141(b) of SSAA 1994.

Therefore, because actual acquisition cost information may be sparse,

we propose also to take into account list price; manufacturing costs;

selling costs; general and administrative overhead costs; research and

development costs; manufacturer discount and rebate packages; and any

other factors that may be relevant indicators that the current payment

amount is not appropriate for the type of new technology IOL under

review. We welcome comments on criteria that would facilitate an

objective determination of what constitutes a payment that is both

reasonable and related to acquisition cost with respect to ``new

technology'' IOLs. The criteria should include the use of readily

verifiable data, for example, studies published in peer-reviewed

journals.

D. Payment Adjustment When Current Payment Amount Is Inappropriate

The final step in the process that is the subject of this proposed

rule involves determining the amount of a payment adjustment if we find

that the current IOL payment amount is inappropriate. Among the factors

that we propose to take into account in order to determine the amount

of the adjustment to be made if the current IOL allowance is found to

be inappropriate with respect to the acquisition cost of the particular

IOL are the following:

Market projections based on anticipated clinical

indications of need for the IOL and the percent of the Medicare

population expected to present that need on an annual basis.

Additional incremental costs incurred to manufacture a new

technology IOL relative to the cost of manufacturing other IOLs, such

as the cost attributable to using a more sophisticated piece of

machinery or the cost of fabricating a new IOL material.

Additional costs incurred to conduct clinical trials that

document for FDA approval the clinical superiority of the IOL relative

to the costs incurred to conduct clinical trials for other IOLs.

Research and development costs incurred that exceed those

associated with other IOLs approved by the FDA.

Current and historical pricing, sales volume, and

revenues.

A reasonable rate of return and profit based on the

manufacturer's investment in the IOL.

We considered other options for determining the amount of an

adjustment to be made if the current payment amount was found to be

inappropriate for an IOL being reviewed under the provisions proposed

in this rule including--

Application of a single flat, across-the-board percentage

increase to the IOL payment amount for every IOL that we determined

satisfied the criteria defining a ``new technology'' IOL;

The percent of the IOL industry's investment in research

and development that ultimately leads to innovations in IOLs; and

The percentage of sales attributable to an IOL for which a

review was requested.

We rejected these options, however, primarily because they are

inconsistent with the overall statutory mandate that payment be

reasonable and related to the cost of acquiring an IOL.

E. Implementation of the Payment Adjustment

1. Two-Year Limit on Payment Adjustment

A related issue pertains to the appropriate length of time the

adjusted payment amount would be allowed by Medicare for a particular

``new technology'' IOL. We propose to allow a single IOL the benefit of

any payment adjustment determined to be appropriate for a period of 2

years following the review process proposed in this rule. At the

conclusion of the 2-year payment adjustment period, Medicare payment

for the IOL would then revert to the payment rate for IOLs furnished by

an ASC that is in effect at that time.

Supporting a 2-year payment limit is the OIG's 1994 report

(Acquisition Costs of Prosthetic Intraocular Lenses, OEI-05-92-01030),

which found a decrease in IOL prices generally over a 2-year period

ranging from 11 to 14 percent in various settings. We assume this

decrease is attributable to technology diffusion and the associated

development of similar lenses by competing firms. We believe a

desirable new technology IOL with demonstrated clinical superiority

would be subject to equivalent conditions, and thus experience a

similar drop in acquisition cost over a 2-year period.

2. Operational Payment Principles

The payment adjustments we publish in the Federal Register would be

implemented prospectively, effective 30 days from the date of their

publication. This implementation date of a payment adjustment is

required under section 141(b) of SSAA 1994.

We propose to apply the same payment adjustment amount established

for the first IOL or IOLs approved within a new technology subset to

all IOLs that we subsequently accept as satisfying the criteria for

``new technology'' that are assigned to the same subset. If a new

technology IOL were to qualify under more than one subset of

technology, and the subsets had different payment rates, the IOL would

be paid for at the higher (or highest) applicable rate.

We expect that more than one manufacturer would be working to

develop IOLs that rely on the same or similar technology that defines

``new technology'' under the provisions of this

[[Page 46703]]

rule. If we were to make a payment adjustment under the provisions

proposed in this rule, the payment adjustment amount would be based on

information regarding IOL production, acquisition costs, and IOL

benefits that is submitted by the manufacturer or manufacturers that

first request review for a particular type of new technology IOLs.

Manufacturers would have 3 years during which to submit requests for

review of equivalent IOLs approved by the FDA that were in a ``new

technology'' subset already approved by us and still benefit from the

full 2-year payment adjustment term. Requests for review of an IOL

submitted during the third year of a technology's designation as

``new'' would only have the benefit of a payment adjustment for 1 year.

If an interested party wants an IOL to be considered for a payment

adjustment under section 141(b) of SSAA 1994, that interested party

must request a review in accordance with the process proposed in this

rule, which request would be approved and published in a final rule and

codified in the Code of Federal Regulations. In accordance with section

141(b) of SSAA 1994, we would adhere to a yearly cycle of receiving

requests for review, publishing those requests, reviewing comments on

the requests, reviewing the requests, and publishing our

determinations. We would not make determinations or provide for payment

adjustments outside this schedule, although interested parties may

submit requests for review as soon as FDA grants its approval. We would

compile these requests for publication in the next applicable Federal

We propose to assign codes to be used to bill for IOLs that qualify

for the payment adjustment. The list of these IOLs, with the

appropriate billing code, would be published annually in the Federal

codes would constitute fraud.

We invite comments on the suitability of these proposals and

solicit suggestions for alternative approaches for determining how to

identify IOLs as ``new technology''; for evaluating the appropriateness

of the current IOL allowance; for calculating the amount of an

adjustment to be made in the event the current IOL payment amount is

found to be inappropriate with respect to a particular IOL; and for

defining the period of time during which the payment adjustment would

be in effect. We believe that any adjustment amount should be modest,

since the high quality, readily accessible IOLs currently on the market

leave only marginal room for improvement. We do not believe that an

upward adjustment is warranted unless the new technology IOLs, as a

group, cost more to produce, are appreciably superior clinically, and

successfully fulfill a need unmet before that time in an innovative

manner.

F. Review and Adjustment Process

In this section, we describe the process that we propose to

implement annually in order to determine the appropriateness of IOL

pricing as required under section 141(b) of SSAA 1994.

1. Federal Register Notice Inaugurates Annual Cycle

The process, which is designed to be repeated annually on a 365-day

cycle, would be initiated by publication of a Federal Register notice

that would serve a threefold purpose.

a. Deadline for submission of a request for review. The publication

date of the Federal Register notice announcing the deadline by which

any interested parties would have to submit requests in order for us to

review the appropriateness of the Medicare payment allowance under

section 1833(i)(2)(A)(iii) of the Act with respect to a particular IOL

would be established as ``Day 1'' of the 365-day annual review cycle.

The ``Day 1'' Federal Register notice would include the deadline for

submission of requests to review (the date of publication of the

Federal Register notice plus 125 days); the requirements to be

satisfied in order for an IOL to be treated as a ``new technology'' IOL

under section 141(b) of SSAA 1994; the specific information that must

accompany a request for review as well as the format in which that

information is to be submitted; the address to which the request is to

be sent; the factors that we would take into account in determining

whether the current IOL payment amount is appropriate; the factors that

we would take into account in determining the payment adjustment to be

made; and any other information that we believe is relevant and

necessary.

b. List of intraocular lenses for payment adjustment. The Federal

addition to announcing the deadline for submission of requests to

review for the forthcoming year, would list those IOLs, identified as

new technology IOLs, for which we had found a payment adjustment to be

appropriate during the prior year's review. The ``Day 1'' notice would

also include information on the amount of any payment adjustment

determined for a particular IOL; the subset of ``new technology'' under

which each IOL would be classified; the beginning date of the period

when the payment adjustment would be effective (``Day 1,'' the date of

publication of the Federal Register notice, plus 30 days); the code(s)

to be used to bill for the IOL; the expiration date of the period

during which the payment adjustment would be allowed (2 years from the

date of publication of the Federal Register notice); and, the

expiration date of the IOL's ``new technology'' designation (5 years

from the date of publication of the Federal Register notice). Because

ASC rates are prospectively set, we would make payment adjustments

prospectively.

c. Summary of previous year's determinations. The ``Day 1'' Federal

still applied as the result of reviews in earlier years; the type of

``new technology'' under which each IOL had been classified whether or

not it qualified for a payment adjustment; the amount of the payment

adjustment allowed for each type of IOL; the code(s) to be used to

bill; and the dates when the ``new technology'' designation of the IOL

and the applicable payment adjustment would expire.

2. Publication of Requests for Review

We would provide that we must receive requests for review no later

than 125 days from the date of publication of the ``Day 1'' Federal

of any requests for review that we received timely. The list, including

the manufacturer's name and the model number of the IOL to be reviewed,

would be published in a Federal Register notice with comment period.

This second notice would be published no later than 245 days from the

publication date of the first Federal Register notice that initiated

the annual review cycle by inviting requests for review. The public

would have 30 days to comment on the IOLs included in the list of those

for which a payment review had been requested.

3. Our Review and Publication of Determinations

We would review any comments that were submitted regarding the list

of IOLs published in the Federal Register along with the information

submitted with the request to review to decide whether an adjustment of

the current IOL payment amount was appropriate with respect to each IOL

on the list. Because of the rigid time frame for this process, the

applicant must submit sufficient information in a timely manner to

allow for review. At our

[[Page 46704]]

discretion, we may request additional information. If an initial

submission is incomplete, however, we would make a determination based

on the information submitted.

As described in an earlier section, we propose to take the

following factors into account in determining whether to provide a

payment adjustment:

The IOL meets the definition of a ``new technology IOL''

in Sec. 416.180 (``Definitions'').

The extent to which the current IOL payment amount is

reasonable and reflects the acquisition cost of the IOL under review.

No later than 90 days after the close of the public comment period,

we would publish in the Federal Register a notice announcing our

determinations with respect to the requests for review that had been

published 120 days previously announcing the amount of any new payment

adjustments; announcing the deadline for submission of the upcoming

year's requests for review 125 days from that time; and summarizing

payment adjustments made previously that were still in effect. With

publication of this notice, the annual cycle would be repeated with a

new ``Day 1'' date.

The following table summarizes the key events in the annual review

cycle that is the subject of this proposed rule:

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

Event Timeframe

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

Publication of a Federal Register notice Date of publication of

inviting requests for review, announcing our this notice constitutes

determinations of adjustments to be made to ``Day 1'' of the annual

``new technology'' IOL payment amounts, and review cycle.

summarizing adjustments from prior years

that are still in effect.

Effective date for any payment adjustments ``Day 1'' date plus 30

that we determine are appropriate as days.

published in the Federal Register on ``Day

1.''.

Deadline for receipt of the IOL review ``Day 1'' date plus 125

requests for our consideration. days.

Publication in the Federal Register of the ``Day 1'' date plus 245

list of requests for review. days.

End of 30-day public comment period regarding ``Day 1'' date plus 275

the list of requests for review. days.

Publication of a Federal Register notice ``Day 1'' date plus 365

inviting requests for review, announcing our days; cycle starts over

determinations of adjustments to be made to with new ``Day 1.''

``new technology'' IOL payment amounts, and

summarizing adjustments from prior years

that are still in effect.

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

To summarize the process that we propose in this rule, in order for

us to treat an IOL as a new technology IOL under the provisions of SSAA

1994, the IOL must have obtained FDA approval to include in labeling

and advertising claims of superior clinical advantages over other IOLs.

If we find that the IOL for which a review is requested meets this

criterion and if we determine that the current payment amount for IOLs

furnished by ASCs is inappropriate with respect to the IOL, that is,

the current IOL payment amount is not reasonable and is not related to

the cost of acquiring the IOL, we would adjust the payment amount for

the IOL. In determining the amount of adjustment, we propose to take

into account development and manufacturing costs and sales projections

as elements of cost with respect to the IOL under review, both alone

and relative to other IOLs.

G. Requirements for Content of a Request To Review

We propose to require interested parties seeking a review of the

IOL allowance under section 141(b) of the SSAA 1994 to submit certain

information that we regard as critical if we are to make a fair and

objective determination that the payment amount for an IOL paid under

section 1833(i)(2)(A)(iii) of the Act is or is not appropriate.

Interested parties requesting a review of the IOL payment amount with

respect to a particular IOL would be required to submit the following:

identification of the individual IOL under consideration as a ``new

technology'' IOL for which a payment review is requested, including the

name of the manufacturer, model number, trade name, and the date the

FDA granted premarket approval for the IOL; a copy of the FDA's summary

of safety and effectiveness; a copy of the labeling claims of specific

clinical advantages approved by the FDA; reports of modifications made

after FDA approval; development and manufacturing costs of the ``new

technology'' IOL relative to the costs of manufacturing other approved

IOLs; the costs of conducting clinical trials for the IOL in question

relative to the costs of conducting clinical trials for other approved

IOLs; indications and contraindications for use; epidemiological data

indicating demand for the IOL; sales price, sales history, and

revenues, and prices and projected revenues during the period of the

payment adjustment; names of purchasers; and other information we

consider appropriate for making a determination. We cannot be all-

inclusive in this list since we may need information that we cannot

foresee at this time. We may modify our requests for information as

changes in technology dictate. We may request supplemental information

from individual interested parties during the review process. The

interested party would be responsible for demonstrating to our

satisfaction that a payment adjustment for the IOL under review is

warranted, especially given the widespread availability of high quality

IOLs at a cost equal to or less than the current Medicare IOL

allowance. The burden of proof would be on the interested party to show

that the current IOL payment amount is inappropriate for the new

technology IOL for which a review is requested.

Interested parties should be aware that 45 CFR 5.65(c) provides

that a submitter of information may designate all or part of the

information as being exempt from mandatory disclosure under Exemption 4

of the Freedom of Information Act.

III. Collection of Information Requirements

This document does not impose information collection and

recordkeeping requirements. Consequently, it need not be reviewed by

the Office of Management and Budget under the authority of the

Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

IV. Response to Comments

Because of the large number of items of correspondence we normally

receive on Federal Register documents published for comment, we are not

able to acknowledge or respond to them individually. We will consider

all comments we receive by the date and time specified in the DATES

section of this preamble, and, if we proceed with a subsequent

document, we will respond to the comments in the preamble to that

document.

V. Regulatory Impact Statement

We generally prepare a regulatory flexibility analysis that is

consistent with the Regulatory Flexibility Act

[[Page 46705]]

(RFA) (5. U.S.C. 601 through 612) unless the Secretary certifies that a

proposed rule would not have a significant economic impact on a

substantial number of small entities. For purposes of the RFA, we

consider all manufacturers of IOLs, ASCs, hospital outpatient

departments, and physicians who perform IOL insertion surgery to be

small entities. Individuals and States are not included in the

definition of a small entity. We are not preparing a regulatory

flexibility analysis because we have determined, and the Secretary

certifies, that this proposed regulation would not have a significant

economic impact on a substantial number of small entities.

Also, section 1102(b) of the Act requires the Secretary to prepare

a regulatory impact analysis if a proposed rule would have a

significant impact on the operations of a substantial number of small

rural hospitals. This analysis must conform to the provisions of

section 603 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 hospital impact statement because we have determined,

and the Secretary certifies, that this proposed regulation would not

have a significant impact on the operations of a substantial number of

small rural hospitals.

Although this proposed rule is not an ``economically significant''

rule under Executive Order 12866, we present below a voluntary analysis

of the effects of this proposed rule because many beneficiaries who

undergo IOL insertion surgery following a cataract extraction could be

affected.

We believe that the fiscal impact of this rule would be negligible.

We do not expect that making this payment adjustment would have an

impact on the availability or prices of other IOLs. We do not expect

that it would affect competition, employment, or investment. The ocular

implant industry is mature, with a successful product readily available

to purchasers. Our data suggest that we pay, under the Medicare

program, more than the acquisition cost for most of the IOLs used

today. New technology IOLs would achieve improvements in only small

segments of the industry, since the majority of IOLs function superbly.

The IOLs under development that we are aware of would substitute for

spectacles in some cases, and in others would allow the patient to wear

a single vision prescription rather than bifocals. The desirability of

this feature to the Medicare population is not known.

There would be no significant program savings, even if the use of

these IOLs reduced expenditures for spectacles or eliminated the need

for follow-up treatment. The complexities of claims processing for an

additional payment on top of a bundled, fixed payment would be

considerable. Manual claims processing or a significant reconfiguration

of claims processing software would be required. The payment method for

ASC-type procedures performed in hospital outpatient departments

requires that we use a blend of 42 percent of the hospital's costs or

charges and 58 percent of the ASC rate as a basis for payment. The

addition of an adjustment to two of the ASC rates would complicate

hospital payment. The review process to determine which IOLs qualify

for a payment adjustment would be costly in terms of staff hours and

Federal Register publication costs. We would have to develop new codes

to identify specific IOLs, which creates the possibility of

``upcoding,'' or using those codes for IOLs not eligible for the

adjustment. We would also have to undertake an extensive educational

effort, to explain the use of the new codes to the provider community

and to our contractors. This would involve manual issuances and program

memoranda. These direct and indirect costs more than outweigh the

marginal benefit available to a few manufacturers.

In accordance with the provisions of Executive Order 12866, this

regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 416

Health facilities, Kidney diseases, Medicare, Reporting and

recordkeeping requirements.

For the reasons set forth in the preamble, 42 CFR part 416 would be

amended as follows:

PART 416--AMBULATORY SURGICAL SERVICES

1. The authority citation for part 416 continues to read as

follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42

U.S.C. 1302 and 1395hh).

2. A new subpart F, consisting of Secs. 416.180, 416.185, 416.190,

416.195, and 416.200, is added to read as follows:

Subpart F--Adjustment in Payment Amounts for New Technology Intraocular

Lenses

Secs.

416.180 Definitions.

416.185 Payment review process.

416.190 Who may request a review.

416.195 Content of a request to review.

416.200 Application of the payment adjustment.

Subpart F--Adjustment in Payment Amounts for New Technology

Intraocular Lenses

Sec. 416.180 Definitions.

As used in this subpart, the following definitions apply:

Class of new technology intraocular lenses (IOLs) means all of the

IOLs, collectively, that HCFA determines to have met the definition of

``new technology IOL'' under the provisions of this subpart.

Interested party means any individual, partnership, corporation,

association, society, scientific or academic establishment,

professional or trade organization, or any other legal entity.

New technology IOL means an IOL that HCFA determines to have met

the following criterion: The FDA has approved for use in labeling and

advertising the IOL's claims of specific clinical advantages and

superiority over existing IOLs with regard to reduced risk of

intraoperative or postoperative complication or trauma, accelerated

postoperative recovery, reduced induced astigmatism, improved

postoperative visual acuity, more stable postoperative vision, or other

comparable clinical advantages.

New technology subset means a group of IOLs that HCFA determines to

meet the criterion for being treated as new technology IOLs and that

share a common feature or features that distinguish them from other

IOLs. For example, all new technology IOLs that are made of a

particular bioengineered material could comprise one subset, while all

that rely on a particular optical innovation could comprise another.

Sec. 416.185 Payment review process.

(a) HCFA publishes a Federal Register notice announcing the

deadline and requirements for submitting a request for HCFA to review

payment for an IOL.

(b) HCFA receives requests for review of payment for an IOL.

identifies the IOL manufacturer's name, the model number of the IOL to

be reviewed, the interested party or parties that submit requests, and

a summary of the interested party's grounds for requesting review of

the appropriateness of the IOL payment amount.

(d) HCFA publishes the list of requests in a Federal Register

notice with comment period, giving the public 30 days to comment on the

IOLs for which review was requested.

[[Page 46706]]

(e) HCFA reviews the information submitted with the request to

review, any timely comments that are submitted regarding the list of

IOLs published in the Federal Register, and any other timely

information that HCFA deems relevant to decide whether to provide a

payment adjustment. Factors that HCFA takes into account in determining

whether the IOL payment amount provided under section

1833(i)(A)(2)(iii) of the Act is appropriate with respect to an IOL for

which a review was requested include, but are not limited to, the

following:

(1) Whether the IOL meets the definition of a ``new-technology

IOL'' in Sec. 416.180.

(2) What it costs ASCs to acquire IOLs in the new technology subset

to which the IOL under review belongs.

(3) Whether the current IOL payment allowance is reasonable with

regard to the IOL under review.

(f) If HCFA determines that the current IOL payment allowance is

not appropriate for the IOL under review, HCFA establishes a payment

adjustment that takes into account the following factors:

(1) IOL manufacturing costs.

(2) The IOL manufacturer's selling costs and general and

administrative overhead costs.

(3) Research and development costs attributable to the IOL.

(4) Manufacturer discount and rebate packages.

(5) Other information that HCFA considers appropriate in

determining a payment adjustment.

(g) Within 90 days of the end of the comment period following the

Federal Register notice identified in paragraph (d) of this section

that lists IOLs for which a review was requested, HCFA publishes its

determinations with regard to payment adjustments in the Federal

deadline and requirements for submitting requests for the next annual

cycle of reviews.

(h) Payment adjustments are effective beginning 30 days after the

publication of HCFA's determinations in the Federal Register.

Sec. 416.190 Who may request a review.

Any party who is able to furnish the information required in

Sec. 416.195 may request that HCFA review the appropriateness of the

payment amount provided under section 1833(i)(2)(A)(iii) of the Act

with respect to an IOL that meets the definition of a new technology

IOL in Sec. 416.180.

Sec. 416.195 Content of a request to review.

The interested party requesting a review of the IOL payment amount

must timely furnish convincing evidence that the payment amount

provided under section 1833(i)(2)(A)(iii) of the Act is not appropriate

for a new technology IOL and that a payment adjustment is reasonable

and warranted.

(a) Requirements for a request to review the appropriateness of the

IOL payment amount for a new technology IOL. In order for HCFA to

consider a request to review the IOL payment amount with regard to a

particular IOL, the request must meet all of the following

requirements:

(1) Identification of an IOL. The interested party must provide the

following information:

(i) The name of the manufacturer, the model number, and the trade

name of the IOL.

(ii) A copy of the FDA's summary of the IOL's safety and

effectiveness.

(iii) A copy of the labeling claims of specific clinical advantages

approved by the FDA for the IOL.

(iv) A copy of the IOL's original FDA approval notification.

(v) Reports of modifications made subsequent to original FDA

approval.

(vi) Indications and contraindications for use of the IOL.

(vii) Epidemiological data indicating demand for the IOL.

(viii) Other information that HCFA finds necessary for

identification of the IOL.

(2) IOL costs. To enable HCFA to review the appropriateness of the

payment amount provided under section 1833(i)(2)(A)(iii) of the Act

with regard to the IOL, the following documented evidence of the cost

of the IOL and the manufacturer's investment in the IOL is required:

(i) The manufacturer's current list price for the IOL and a history

of the IOL's pricing since FDA approval was obtained.

(ii) Manufacturing costs of the IOL relative to the costs of

manufacturing other approved IOLs.

(iii) Research and development costs incurred to create the IOL,

using research and development costs of other FDA-approved IOLs for

purposes of comparison.

(iv) Costs incurred to conduct clinical trials for the purpose of

demonstrating for FDA approval the clinical superiority of the IOL

relative to the costs incurred to conduct clinical trials for other

approved IOLs.

(v) Sales and revenue history of the IOL, and sales and revenues

projected for the IOL if a payment adjustment were approved by HCFA.

(vi) Names of purchasers of the IOL.

(vii) Other information HCFA finds necessary for making a

determination.

(b) Confidential information. To the extent that information

received from an IOL manufacturer can reasonably be characterized as a

trade secret or as privileged or confidential commercial or financial

information, Exemption 4 of the Freedom of Information Act (5 U.S.C.

552(b)(4)) and, with respect to trade secrets, the Trade Secrets Act

(18 U.S.C. 1905), allow HCFA to maintain the confidentiality of the

information and to protect it from disclosure not otherwise authorized

or required by Federal law.

Sec. 416.200 Application of the payment adjustment.

(a) New technology subset. (1) HCFA designates a predominant

characteristic of a new technology IOL that both sets it apart from

other IOLs and links it with other similar IOLs with the same

characteristic to establish within the ``class of new technology IOLs''

a specific subset of new technology.

(2) Each subset is recognized for purposes of this subpart as

belonging to the class of new technology IOLs for a period of 5 years,

effective beginning the date that the first IOL that defines the subset

is identified.

(3) During the fifth year following the date that the first IOL is

designated as belonging to the subset, requests to review IOLs that

would be considered part of the subset that expires at the end of the

year are not considered.

(4) Beginning on the sixth anniversary date of the effective date

of the recognition of a subset, payment adjustments applicable to IOLs

in that subset cease for all IOLs in that subset and payment reverts to

the payment rate in effect at that time for IOLs under section

1833(i)(2)(A)(iii) of the Act.

(b) Duration of payment adjustment. (1) Any single model of IOL for

which HCFA determines that a payment adjustment is appropriate receives

the payment adjustment for a period of 2 years.

(2) On the second anniversary date of implementation of a payment

adjustment approved for the IOL under the provisions of this subpart,

payment for the IOL reverts to the IOL payment rate in effect at that

time under section 1833(i)(2)(A)(iii) of the Act.

subset of new technology IOLs and for which HCFA determines a payment

adjustment is appropriate receive the same payment adjustment.

(d) Basis for payment. (1) In order for HCFA to consider an IOL for

a payment

[[Page 46707]]

adjustment under this subpart, an interested party must submit timely a

request for review prepared in accordance with the requirements in

Sec. 416.195, and the IOL must be included in the list of requests for

review that is published annually in the Federal Register in accordance

with the process described in Sec. 416.185.

(2) In order for HCFA to make an IOL payment adjustment under this

subpart, the IOL for which the adjustment is approved must be

identified in the list of determinations HCFA publishes in the Federal

(i) HCFA assigns a unique billing code to each IOL for which it

determines a payment adjustment is appropriate.

(ii) Using the billing code assigned to an IOL for which HCFA

determines a payment adjustment is appropriate under this subpart in

order to bill for a different IOL constitutes fraud.

(Sections 1832(a)(2)(F)(i) and 1833(i)(2)(a) of the Social Security

Act (42 U.S.C. 1395k(a)(2)(F)(i) and 1395l(i)(2)(a)))

(Catalog of Federal Domestic Assistance Program No. 93.774,

Medicare--Supplementary Medical Insurance Program)

Dated: January 17, 1997.

Bruce C. Vladeck,

Administrator, Health Care

Financing Administration.

Dated: March 10, 1997.

Donna E. Shalala,

Secretary.

[FR Doc. 97-23380 Filed 9-3-97; 8:45 am]

BILLING CODE 4120-01-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.