Browse: Departments Dates Agencies
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Veterans Affairs Department
CFR Citation: 42 CFR Parts 409, 410, 411, 413, 414, 415, 418, 423, 424, 482, 484,
NOTICE: Part II
DOCUMENT ACTION: Final rule with comment period.
SUBJECT CATEGORY: and 485
DATES: Effective Date: The provisions of this final rule with comment period are effective January 1, 2008, except for the amendments to Sec. 409.17 and Sec. 409.23 which are effective July 1, 2008, and the amendments to Sec. 423.160 which is effective January 1, 2009.
Comment Date: Comments will be considered if we receive them at one of the addresses provided below, no later than 5 p.m. e.s.t. on December 31, 2007.
DOCUMENT SUMMARY: This final rule with comment period addresses certain provisions of the Tax Relief and Health Care Act of 2006, as well as making other proposed changes to Medicare Part B payment policy. We are making these changes to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. This final rule with comment period also discusses refinements to resourcebased practice expense (PE) relative value units (RVUs); geographic practice cost indices (GPCI) changes; malpractice RVUs; requests for additions to the list of telehealth services; several coding issues including additional codes from the 5Year Review; payment for covered outpatient drugs and biologicals; the competitive acquisition program (CAP); clinical lab fee schedule issues; payment for renal dialysis services; performance standards for independent diagnostic testing facilities; expiration of the physician scarcity area (PSA) bonus payment; conforming and clarifying changes for comprehensive outpatient rehabilitation facilities (CORFs); a process for updating the drug compendia; physician self referral issues; beneficiary signature for ambulance transport services; durable medical equipment (DME) update; the chiropractic services demonstration; a Medicare economic index (MEI) data change; technical corrections; standards and requirements related to therapy services under Medicare Parts A and B; revisions to the ambulance fee schedule; the ambulance inflation factor for CY 2008; and amending the eprescribing exemption for computergenerated facsimile transmissions. We are also finalizing the calendar year (CY) 2007 interim RVUs and are issuing interim RVUs for new and revised procedure codes for CY 2008.
As required by the statute, we are announcing that the physician fee schedule update for CY 2008 is 10.1 percent, the initial estimate for the sustainable growth rate for CY 2008 is 0.1 percent, and the conversion factor (CF) for CY 2008 is $34.0682.
SUMMARY: Health and Human Services Department, Centers for Medicare & Medicaid Services,
DOCUMENT BODY 2: [CMS1385FC]
RIN 0938AO65
Medicare Program; Revisions to Payment Policies Under the
Physician Fee Schedule, and Other Part B Payment Policies for CY 2008;
Revisions to the Payment Policies of Ambulance Services Under the
Ambulance Fee Schedule for CY 2008; and the Amendment of the E
Prescribing Exemption for Computer Generated Facsimile Transmissions
SUPPLEMENTAL INFORMATION
Submitting Comments: We welcome comments from the public on the following issues: Interim Relative Value Units (RVUs) for selected codes identified in Addendum C and the physician selfreferral designated health services (DHS) procedures listed in Addendum I. You can assist us by referencing the file code [CMS1385FC] and the specific ``issue identifier'' that precedes the section on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking. Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 18007433951.
This Federal Register document is also available from the Federal Register online database through Government Printing Office Access a service of the U.S. Government Printing Office. The Web site address is: http://www.access.gpo.gov/nara/index.html.
Information on the physician fee schedule can also be found on the CMS homepage. You can access this data by using the following directions:
1. Go to the following Web site: http://www.cms.hhs.gov/PhysicianFeeSched/ .
2. Select ``PFS Federal Regulation Notices.''
To assist readers in referencing sections contained in this
preamble, we are providing the following table of contents. Some of the
issues discussed in this preamble affect the payment policies, but do
not require changes to the regulations in the Code of Federal
Regulations. Information on the regulation's impact appears throughout the preamble and is not exclusively in section VI.
Table of Contents
I. Background
A. Development of the Relative Value System
B. Components of the Fee Schedule Payment Amounts
C. Most Recent Changes to Fee Schedule
II. Provisions of the Final Rule Related to the Physician Fee Schedule
A. Resource Based Practice Expense (PE) Relative Value Units (RVUs)
1. Current Methodology
2. PE Proposals for CY 2008
B. Geographic Practice Cost Indices (GPCIs)
1. GPCI Update
2. Payment Localities
C. Malpractice (MP) RVUs (TC/PC issue)
D. Medicare Telehealth Services
E. Specific Coding Issues Related to PFS
1. Reduction in the Technical Component (TC) Payment for Imaging Services Under the PFS to the Outpatient Department (OPD) Payment Amount
2. Application of Multiple Procedure Payment Reduction for Mohs Micrographic Surgery (CPT Codes 17311 Through 17315)
3. Payment for Intravenous Immune Globulin (IVIG) Add On Code for Preadmission Related Services
4. Reporting of Cardiac Rehabilitation Services
F. Part B Drug Payment
1. Average Sales Price (ASP) Issues
2. Competitive Acquisition Program (CAP) Issues
G. Issues Related to the Clinical Lab Fee Schedule
1. Date of Service for the Technical Component (TC) of Physician Pathology Services (Sec. 414.510)
2. New Clinical Diagnostic Laboratory Test (Sec. 414.508)
H. Revisions Related to Payment for Renal Dialysis Services Furnished by EndStage Renal Disease (ESRD) Facilities
1. Growth Update to the Drug AddOn Adjustment to the Composite Rates
2. Update to the Geographic Adjustment to the Composite Rates
I. Independent Diagnostic Testing Facility (IDTF) Issues
1. Revisions of Existing IDTF Performance Standards
2. New IDTF Standards
J. Expiration of MMA Section 413 Provisions for Physician Scarcity Area (PSA)
K. Comprehensive Outpatient Rehabilitation Facility (CORF) Issues
1. Requirements for Coverage of CORF Services Plan of Treatment (Sec. 410.105(c))
2. Included Services (Sec. 410.100)
3. Physician Services (Sec. 410.100(a))
4. Clarifications of CORF Respiratory Therapy Services
5. Social and Psychological Services
6. Nursing Care Services
7. Drugs and Biologicals
8. Supplies and DME
9. Clarifications and Payment Updates for Other CORF Services
10. Cost Based Payment (Sec. 413.1)
11. Payment for Comprehensive Outpatient Rehabilitation Facility (CORF) Services
12. Vaccines
L. Compendia for Determination of Medically Accepted Indications
for Off Label Uses of Drugs and Biologicals in an AntiCancer Chemotherapeutic Regimen (Sec. 414.930)
1. Background
2. Process for Determining Changes to the Compendia List
M. Physician Self Referral Issues
1. General
2. Changes to Reassignment and Physician Self Referral Rules Relating to Diagnostic Tests (Anti Markup Provision)
N. Beneficiary Signature for Ambulance Transport Services
O. Update to Fee Schedules for Class III DME for CYs 2007 and 2008
1. Background
2. Update to Fee Schedule
P. Discussion of Chiropractic Services Demonstration
Q. Technical Corrections
1. Particular Services Excluded From Coverage (Sec. 411.15(a))
2. Medical Nutrition Therapy (Sec. 410.132(a))
3. Payment Exception: Pediatric Patient Mix (Sec. 413.184)
4. Diagnostic X ray Tests, Diagnostic Laboratory Tests, and Other Diagnostic Tests: Conditions (Sec. 410.32(a)(1))
R. Other Issues
1. Recalls and Replacement Devices
2. Therapy Standards and Requirements
3. Amendment to the Exemption for Computer Generated Facsimile Transmission from the National Council for Prescription Drug Programs (NCPDP) SCRIPT Standard for Transmitting Prescription and Certain Prescription Related Information for Part D Eligible Individuals
[[Page 66224]]
S. Division B of the Tax Relief and Health Care Act of 2006 Medicare Improvements and Extension Act of 2006 (Pub. L. 109432) (MIEATRHCA)
1. Section 101(b)Physician Quality Reporting Initiative (PQRI)
2. Section 110Reporting of Hemoglobin or Hematocrit for Part B Cancer AntiAnemia Drugs (Sec. 414.707(b))
3. Section 104Extension of Treatment of Certain Physician Pathology Services Under Medicare
4. Section 201Extension of Therapy Cap Exception Process
5. Section 101(d)Physician Assistance and Quality Initiative (PAQI) Fund
III. Revisions to the Payment Policies of Ambulance Services Under
the Fee Schedule for Ambulance Services; Ambulatory Inflation Factor Update for CY 2007
A. History of Medicare Ambulance Services
1. Statutory Coverage of Ambulance Services
2. Medicare Regulations for Ambulance Services
3. Transition to National Fee Schedule
B. Ambulance Inflation Factor (AIF) During the Transition Period
C. Ambulance Inflation Factor (AIF) for CY 2008
D. Revisions to the Publication of the Ambulance Fee Schedule (Sec. 414.620)
IV. Refinement of Relative Value Units for Calendar Year 2008 and
Response to Public Comments on Interim Relative Value Units for 2007
A. Summary of Issues Discussed Related to the Adjustment of Relative Value Units
B. Process for Establishing Work Relative Value Units for the Physician Fee Schedule
C. 5 Year Review of Work RVUs
1. Additional Codes from the 5Year Review of Work RVUs
2. Anesthesia Coding (Part of 5Year Review)
3. Budget Neutrality Adjustment
D. Work Relative Value Unit Refinements of Interim Relative Value Units (Interim 2007 Codes)
E. Establishment of Interim Work Relative Value Units for New and Revised Physician's Current Procedural Terminology (CPT) Codes and New Healthcare Common Procedure Coding System Codes (HCPCS) for 2008 (Includes Table Titled ``American Medical Association Specialty Relative Value Update Committee and Health Care Professionals Advisory Committee Recommendations and CMS's Decisions for New and Revised 2008 CPT Codes'')
F. Discussion of Codes and RUC/HCPAC Recommendations
G. Additional Coding Issues
H. Establishment of Interim PE RVUs for New and Revised
Physician's Current Procedural Terminology (CPT) Codes and New
Healthcare Common Procedure Coding System (HCPCS) Codes for 2008
V. Physician SelfReferral Prohibition: Annual Update to the List of CPT/HCPCS Codes
VI. Physician Fee Schedule Update for CY 2008
A. Physician Fee Schedule Update
B. The Percentage Change in the Medicare Economic Index (MEI)
C. The Update Adjustment Factor (UAF)
VII. Allowed Expenditures for Physicians' Services and the Sustainable Growth Rate
A. Medicare Sustainable Growth Rate
B. Physicians' Services
C. Preliminary Estimate of the SGR for 2008
D. Revised Sustainable Growth Rate for 2007
E. Final Sustainable Growth Rate for 2006
F. Calculation of 2008, 2007, and 2006 Sustainable Growth Rates
VIII. Anesthesia and Physician Fee Schedule Conversion Factors for CY 2008
A. Physician Fee Schedule Conversion Factor
B. Anesthesia Fee Schedule Conversion Factor
IX. Telehealth Originating Site Facility Fee Payment Amount Update X. Provisions of the Final Rule
XI. Waiver of Proposed Rulemaking and Delay in Effective Date XII. Collection of Information Requirements
XIII. Response to Comments
XIV. Regulatory Impact Analysis
Regulation Text
Addendum AExplanation and Use of Addendum B
Addendum B2008 Relative Value Units and Related Information Used in Determining Medicare Payments for 2007
Addendum CCodes With Interim RVUS
Addendum D2008 Geographic Adjustment Factors (GAFs)
Addendum E2008 Geographic Practice Cost Indices (GPCIs) by State and Medicare Locality
Addendum FCPT/HCPCS Imaging Codes Defined by Section 5102(b) of the DRA
Addendum GFY 2008 Wage Index for Urban Areas Based on CBSA Labor Market Areas
Addendum HFY 2008 Wage Index Based on CBSA Labor Market Areas for Rural Areas
Addendum IUpdated List of CPT/HCPCS Codes Used To Describe Certain
Designated Health Services Under the Physician SelfReferral Provision
Acronyms
In addition, because of the many organizations and terms to which
we refer by acronym in this final rule with comment period, we are
listing these acronyms and their corresponding terms in alphabetical order below:
AAA Abdominal aortic aneurysm
AAP Average acquisition price
ACOTE Accreditation Council for Occupational Therapy Education ACR American College of Radiology
AFROC Association of Freestanding Radiation Oncology Centers AHFSDI American Hospital Formulary ServiceDrug Information
AHRQ Agency for Healthcare Research and Quality (HHS)
AIF Ambulance inflation factor
AMA American Medical Association
AMADE American Medical Association Drug Evaluations
AMP Average manufacturer price
AOTA American Occupational Therapy Association
APC Ambulatory payment classification
APTA American Physical Therapy Association
ASA American Society of Anesthesiologists
ASC Ambulatory surgical center
ASP Average sales price
ASTRO American Society for Therapeutic Radiology and Oncology ATA American Telemedicine Association
AWP Average wholesale price
BBA Balanced Budget Act of 1997 (Pub. L. 10533)
BBRA [Medicare, Medicaid and State Child Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106113)
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection Act of 2000
BLS Bureau of Labor Statistics
BMD Bone mineral density
BMI Body mass index
BMM Bone mass measurement
BN Budget neutrality
BSA Body surface area
CAD Computer aided detection
CAH Critical access hospital
CAP Competitive acquisition program
CBSA CoreBased Statistical Area
CEM Cardiac event monitoring
CF Conversion factor
CFR Code of Federal Regulations
CMA California Medical Association
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CORF Comprehensive Outpatient Rehabilitation Facility
COTA Certified Occupational Therapy Assistant
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPIU Consumer price index for urban customers
CPT (Physicians') Current Procedural Terminology (4th Edition, 2002, copyrighted by the American Medical Association)
CRTD Cardiac resynchronization therapy defibrillator
CT Computed tomography
CTA Computed tomographic angiography
CY Calendar year
DEXA Dual energy xray absorptiometry
DHS Designated health services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and supplies
DO Doctor of Osteopathy
DRA Deficit Reduction Act of 2005 (Pub. L. 109432)
E/M Evaluation and management
ECI Employment cost index
EHR Electronic health record
EPC [Duke] Evidencebased Practice Centers
EPO Erythopoeitin
ESRD End stage renal disease
F&C Facts and Comparisons
FAW Furnish as written
[[Page 66225]]
FAX Facsimile
FDA Food and Drug Administration (HHS)
FMR Fair market rents
FQHC Federally qualified health center
FR Federal Register
GAF Geographic adjustment factor
GAO General Accounting Office
GII Global Insight, Inc.
GPO Group purchasing organization
GPCI Geographic practice cost index
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HIPAA Health Insurance Portability and Accountability Act of 1996 (Pub. L. 104191)
HHA Home health agency
HHS [Department of] Health and Human Services
HIT Health information technology
HMO Health maintenance organization
HPSA Health Professional Shortage Area
HRSA Health Resources Services Administration (HHS)
HUD [Department of] Housing and Urban Development
ICD Implantable cardioverterdefibrillator
ICF Intermediate care facilities
IDTF Independent diagnostic testing facility
IFC Interim final rule with comment period
IOTED International Occupational Therapy Eligibility Determination IPPE Initial preventive physical examination
IPPS Inpatient prospective payment system
IV Intravenous
IVIG Intravenous immune globulin
IWPUT Intraservice work per unit of time
JCAAI Joint Council of Allergy, Asthma, and Immunology
LPN Licensed practical nurse
MA Medicare Advantage
MAPD Medicare Advantage Prescription Drug Plans
MD Medical doctor
MedCAC Medicare Evidence Development and Coverage Advisory Committee (formerly the Medicare Coverage Advisory Committee (MCAC))
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MIEATRHCA Medicare Improvements and Extension Act of 2006 (That is,
Division B of the Tax Relief and Health Care Act of 2006 (TRHCA)
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108173)
MNT Medical nutrition therapy
MP Malpractice
MRA Magnetic resonance angiography
MRI Magnetic resonance imaging
MSA Metropolitan statistical area
MSP Medicare Secondary Payer
MSVP Multispecialty visit package
NBCOT National Board for Certification in Occupational Therapy, Inc. NCCN National Comprehensive Cancer Network
NCPDP National Council for Prescription Drug Programs
NCQDIS National Coalition of Quality Diagnostic Imaging Services NDC National drug code
NEMC New England Medical Center
NISTA National Institute of Standards and Technology Act
NLA National limitation amount
NP Nurse practitioner
NPP Nonphysician practitioners
NQF National Quality Forum
NTTAA National Technology Transfer and Advancement Act of 1995 (Pub. L. 104113)
OACT [CMS'] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
OIG Office of Inspector General
OMB Office of Management and Budget
OPD Outpatient Department
OPPS Outpatient prospective payment system
OPT Outpatient physical therapy
OSCAR Online Survey and Certification and Reporting
PA Physician assistant
PC Professional component
PCF Patient compensation fund
PDP Prescription Drug Plan
PE Practice Expense
PE/HR Practice expense per hour
PEAC Practice Expense Advisory Committee
PECOS Provider Enrollment, Chain, and Ownership System
PERC Practice Expense Review Committee
PET Positron emission tomography
PFS Physician Fee Schedule
PLI Professional liability insurance
PPI Producer price index
PPS Prospective payment system
PQRI Physician Quality Reporting Initiative
PRA Paperwork Reduction Act
PSA Physician scarcity areas
PT Physical therapy
PT/INR Prothrombin time, international normalized ratio
RFA Regulatory Flexibility Act
RHC Rural health clinic
RIA Regulatory impact analysis
RN Registered nurse
RT Respiratory therapist
RUC [AMA's Specialty Society] Relative (Value) Update Committee RVU Relative value unit
SBA Small Business Administration
SGR Sustainable growth rate
SLP Speechlanguage pathology
SLPs Speechlanguage pathologists
SMS [AMA's] Socioeconomic Monitoring System
SNF Skilled nursing facility
STS Society of Thoracic Surgeons
TA Technology Assessment
TC Technical Component
TENS Transcutaneous electric nerve stimulator
TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109432) USPDI United States PharmacopoeiaDrug Information
WAC Wholesale acquisition cost
WAMP Widely available market price
Wet AMD Exudative agerelated macular degeneration
WFOT World Federation of Occupational Therapists
I. Background
Since January 1, 1992, Medicare has paid for physicians' services
under section 1848 of the Social Security Act (the Act), ``Payment for
Physicians' Services.'' The Act requires that payments under the
physician fee schedule (PFS) be based on national uniform relative
value units (RVUs) based on the resources used in furnishing a service.
Section 1848(c) of the Act requires that national RVUs be established
for physician work, practice expense (PE), and malpractice expense.
Before the establishment of the resourcebased relative value system,
Medicare payment for physicians' services was based on reasonable charges.
A. Development of the Relative Value System
1. Work RVUs
The concepts and methodology underlying the PFS were enacted as part of the Omnibus Budget Reconciliation Act (OBRA) of 1989, Pub. L. 101239, and OBRA 1990, (Pub. L. 101508). The final rule, published November 25, 1991 (56 FR 59502), set forth the fee schedule for payment for physicians' services beginning January 1, 1992. Initially, only the physician work RVUs were resourcebased, and the PE and malpractice RVUs were based on average allowable charges.
The physician work RVUs established for the implementation of the fee schedule in January 1992 were developed with extensive input from the physician community. A research team at the Harvard School of Public Health developed the original physician work RVUs for most codes in a cooperative agreement with the Department of Health and Human Services (HHS). In constructing the codespecific vignettes for the original physician work RVUs, Harvard worked with panels of experts, both inside and outside the Federal government, and obtained input from numerous physician specialty groups.
Section 1848(b)(2)(B) of the Act specifies that the RVUs for anesthesia services are based on RVUs from a uniform relative value guide. We established a separate conversion factor (CF) for anesthesia services, and we continue to utilize time units as a factor in determining payment for these services. As a result, there is a separate formula used to calculate payment for anesthesia services.
We establish physician work RVUs for new and revised codes based on
recommendations received from the American Medical Association's (AMA) Specialty Society Relative Value Update Committee (RUC).
[[Page 66226]]
2. Practice Expense Relative Value Units (PE RVUs)
Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 10332), enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii) of the Act and required us to develop resourcebased PE RVUs for each physician's service beginning in 1998. We were to consider general categories of expenses (such as office rent and wages of personnel, but excluding malpractice expenses) comprising PEs.
Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105 33), amended section 1848(c)(2)(C)(ii) of the Act to delay implementation of the resource based PE RVU system until January 1, 1999. In addition, section 4505(b) of the BBA provided for a 4year transition period from charge based PE RVUs to resourcebased RVUs.
We established the resource based PE RVUs for each physician's service in a final rule, published November 2, 1998 (63 FR 58814), effective for services furnished in 1999. Based on the requirement to transition to a resource based system for PE over a 4year period, resourcebased PE RVUs did not become fully effective until 2002.
This resourcebased system was based on two significant sources of actual PE data: The Clinical Practice Expert Panel (CPEP) data and the AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were collected from panels of physicians, practice administrators, and nonphysicians (for example, registered nurses (RNs)) nominated by physician specialty societies and other groups. The CPEP panels identified the direct inputs required for each physician's service in both the office setting and outofoffice setting. We have since refined and revised these inputs based on recommendations from the RUC. The AMA's SMS data provided aggregate specialtyspecific information on hours worked and PEs.
Separate PE RVUs are established for procedures that can be performed in both a nonfacility setting, such as a physician's office, and a facility setting, such as a hospital outpatient department. The difference between the facility and nonfacility RVUs reflects the fact that a facility typically receives separate payment from Medicare for its costs of providing the service, apart from payment under the PFS. The nonfacility RVUs reflect all of the direct and indirect PEs of providing a particular service.
Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106113) directed the Secretary of Health and Human Services (the Secretary) to establish a process under which we accept and use, to the maximum extent practicable and consistent with sound data practices, data collected or developed by entities and organizations to supplement the data we normally collect in determining the PE component. On May 3, 2000, we published the interim final rule (65 FR 25664) that set forth the criteria for the submission of these supplemental PE survey data. The criteria were modified in response to comments received, and published in the Federal Register (65 FR 65376) as part of a November 1, 2000 final rule. The PFS final rules published in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended the period during which we would accept these supplemental data through March 1, 2005.
In the CY 2007 PFS final rule with comment period (71 FR 69624), we revised the methodology for calculating PE RVUs beginning in CY 2007 and provided for a 4year transition for the new PE RVUs under this new methodology. We will continue to reexamine this policy and proposed necessary revisions through future rulemaking.
3. ResourceBased Malpractice (MP) RVUs
Section 4505(f) of the BBA amended section 1848(c) of the Act to require us to implement resourcebased malpractice (MP) RVUs for services furnished on or after 2000. The resourcebased MP RVUs were implemented in the PFS final rule published November 2, 1999 (64 FR 59380). The MP RVUs were based on malpractice insurance premium data collected from commercial and physicianowned insurers from all the States, the District of Columbia, and Puerto Rico.
4. Refinements to the RVUs
Section 1848(c)(2)(B)(i) of the Act requires that we review RVUs no less often than every 5 years. The first 5Year Review of the physician work RVUs was effective in 1997, published on November 22, 1996 (61 FR 59489). The second 5Year Review went into effect in 2002, published in the CY 2002 PFS final rule (66 FR 55246). The third 5Year Review of physician work RVUs went into effect on January 1, 2007 and was published in the CY 2007 PFS final rule with comment period (71 FR 69624) (although we note that certain additional proposals relating to the third 5Year Review are addressed in the CY 2008 PFS proposed rule and in this final rule with comment period).
In 1999, the AMA's RUC established the Practice Expense Advisory Committee (PEAC) for the purpose of refining the direct PE inputs. Through March 2004, the PEAC provided recommendations to CMS for over 7,600 codes (all but a few hundred of the codes currently listed in the AMA's Current Procedural Terminology (CPT) codes). As part of the CY 2007 PFS final rule with comment period (71 FR 69624), we implemented a new methodology for determining resourcebased PE RVUs and are transitioning this over a 4year period.
In the CY 2005 PFS final rule with comment period (69 FR 66236), we implemented the first 5Year Review of the malpractice RVUs (69 FR 66263).
5. Adjustments to RVUs are Budget Neutral
Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments in RVUs for a year may not cause total PFS payments to differ by more than $20 million from what they would have been if the adjustments were not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act, if adjustments to RVUs cause expenditures to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million.
As explained in the CY 2007 PFS final rule with comment period (71 FR 69624), due to the increase in work RVUs resulting from the third 5 Year Review of physician work RVUs, we are applying a separate budget neutrality (BN) adjustor to the work RVUs for services furnished during 2007. This approach is consistent with the method we use to make BN adjustments to the PE RVUs to reflect the changes in these PE RVUs. B. Components of the Fee Schedule Payment Amounts
To calculate the payment for every physician service, the components of the fee schedule (physician work, PE, and MP RVUs) are adjusted by a geographic practice cost index (GPCI). The GPCIs reflect the relative costs of physician work, PE, and malpractice insurance in an area compared to the national average costs for each component.
Payments are converted to dollar amounts through the application of a CF, which is calculated by the Office of the Actuary (OACT) and is updated annually for inflation.
The formula for calculating the Medicare fee schedule amount for a given service and fee schedule area can be expressed as:
[[Page 66227]]
Payment = [(RVU work x budget neutrality adjuster x work GPCI) + (RVU PE x PE GPCI) + (MP RVU x MP GPCI)] x CF.
C. Most Recent Changes to the Fee Schedule
The CY 2007 PFS final rule with comment period (71 FR 69624) addressed certain provisions of the Deficit Reduction Act of 2005 (Pub. L. 109432) (DRA) and made other changes to Medicare Part B payment policy to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. This final rule with comment period also discussed GPCI changes; requests for additions to the list of telehealth services; payment for covered outpatient drugs and biologicals; payment for renal dialysis services; policies related to private contracts and optout; policies related to bone mass measurement (BMM) services, independent diagnostic testing facilities (IDTFs), the physician selfreferral prohibition; laboratory billing for the technical component (TC) of physician pathology services; the clinical laboratory fee schedule; certification of advanced practice nurses; health information technology, the health care information transparency initiative; updated the list of certain services subject to the physician selfreferral prohibitions, finalized ASP reporting requirements, and codified Medicare's longstanding policy that payment of bad debts associated with services paid under a fee schedule/chargebased system is not allowable.
We also finalized the CY 2006 interim RVUs and issued interim RVUs for new and revised procedure codes for CY 2007.
In addition, the CY 2007 PFS final rule with comment period included revisions to payment policies under the fee schedule for ambulance services and announced the ambulance inflation factor (AIF) update for CY 2007.
In accordance with section 1848(d)(1)(E)(i) of the Act, we also
announced that the PFS update for CY 2007 is 5.0 percent, the initial
estimate for the sustainable growth rate (SGR) for CY 2007 is 1.8
percent and the CF for CY 2007 is $35.9848. However, subsequent to
publication of the CY 2007 PFS final rule with comment period, section
101(a) of Division B, Title I of the Tax Relief and Health Care Act of
2006 (Pub. L. 109432) (MIEATRHCA), which was enacted on December 20,
2006, amended section 1848(d) of the Act. [Division B of the Tax Relief
and Health Care Act of 2006 is entitled Medicare and Other Health
Provisions and its short title is the Medicare Improvements and
Extension Act of 2006. Therefore, the law is hereinafter referred to as
``MIEATRHCA''.] As a result of this statutory change, the CF of $37.8975 was maintained for CY 2007.
II. Provisions of the Final Rule Related to the Physician Fee Schedule
In response to the CY 2008 PFS proposed rule (72 FR 38122), we received approximately 27,000 comments. We received comments from individual physicians, health care workers, professional associations and societies, and beneficiaries. The majority of the comments addressed the proposals related to anesthesia coding and the 5Year Review, the physician selfreferral provisions and the technical correction to Sec. 410.32(a)(1) concerning an exception to the requirement that diagnostic services (including xrays) must be ordered by the treating physician. To the extent that comments were outside the scope of the proposed rule, they are not addressed in this final rule with comment period.
RVU changes implemented through this final rule with comment are
subject to the $20 million limitation on annual adjustments contained
in section 1848(c)(2)(B)(ii)(II) of the Act. After reviewing the
comments and determining the policies we would implement, we have
estimated the costs and savings of these policies and discuss in detail
the effects of these changes in the Regulatory Impact Analysis in
section XIV. For the convenience of the reader, the headings for the
policy issues correspond to the headings used in the CY 2008 PFS
proposed rule (72 FR 38122). More detailed background information for each issue can be found in the CY 2008 PFS proposed rule.
A. Resource Based Practice Expense (PE) Relative Value Units (RVUs)
Practice expense (PE) is the portion of the resources used in furnishing the service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages but excluding malpractice expenses, as specified in section 1848(c)(1)(B) of the Act.
Section 121 of the Social Security Amendments of 1994 (Pub. L. 103 432), enacted on October 31, 1994, required CMS to develop a methodology for a resourcebased system for determining PE RVUs for each physician's service. Until that time, PE RVUs were based on historical allowed charges. This legislation required that the revised PE methodology must consider the staff, equipment, and supplies used in the provision of various medical and surgical services in various settings beginning in 1998. The Secretary has interpreted this to mean that Medicare payments for each service would be based on the relative PE resources typically involved with furnishing the service.
The initial implementation of resourcebased PE RVUs was delayed from January 1, 1998, until January 1, 1999, by section 4505(a) of the BBA. In addition, section 4505(b) of the BBA required that the new payment methodology be phased in over 4 years, effective for services furnished in CY 1999, and fully effective in CY 2002. The first step toward implementation of the statute was to adjust the PE values for certain services for CY 1998. Section 4505(d) of the BBA required that, in developing the resourcebased PE RVUs, the Secretary must:
In CY 1999, we began the 4year transition to resourcebased PE RVUs utilizing a ``topdown'' methodology whereby we allocated aggregate specialtyspecific practice costs to individual procedures. The specialtyspecific PEs were derived from the American Medical Association's (AMA's) Socioeconomic Monitoring Survey (SMS). In addition, under section 212 of the BBRA, we established a process extending through March 2005 to supplement the SMS data with data submitted by a specialty. The aggregate PEs for a given specialty were then allocated to the services furnished by that specialty on the basis of the direct input data (that is, the staff time, equipment, and supplies) and work RVUs assigned to each CPT code.
For CY 2007, we implemented a new methodology for calculating PE
RVUs. Under this new methodology, we use the same data sources for
calculating PE, but instead of using the ``topdown'' approach to
calculate the direct PE RVUs, under which the aggregate direct and
indirect costs for each specialty are allocated to each individual service, we now utilize a ``bottomup'' approach to
[[Page 66228]]
calculate the direct costs. Under the ``bottomup'' approach, we
determine the direct PE by adding the costs of the resources (that is,
the clinical staff, equipment, and supplies) typically required to
furnish each service. The costs of the resources are calculated using
the refined direct PE inputs assigned to each CPT code in our PE
database, which are based on our review of recommendations received
from the AMA's Relative Value Update Committee (RUC). For a more
detailed explanation of the PE methodology see the FiveYear Review of
Work RVUs Under the PFS and Proposed Changes to the PE Methodology
proposed notice (71 FR 37242) and the CY 2007 PFS final rule with comment period (71 FR 69629).
1. Current Methodology
a. Data Sources for Calculating Practice Expense
The AMA's SMS survey data and supplemental survey data from the specialties of cardiothoracic surgery, vascular surgery, physical and occupational therapy, independent laboratories, allergy/immunology, cardiology, dermatology, gastroenterology, radiology, independent diagnostic testing facilities (IDTFs), radiation oncology, and urology are used to develop the PE per hour (PE/HR) for each specialty. For those specialties for which we do not have PE/HR, the appropriate PE/HR is obtained from a crosswalk to a similar specialty.
The AMA developed the SMS survey in 1981 and discontinued it in
1999. Beginning in 2002, we incorporated the 1999 SMS survey data into
our calculation of the PE RVUs, using a 5year average of SMS survey
data. (See the Revisions to Payment Policies and FiveYear Review of
and Adjustments to the Relative Value Units Under the Physician Fee
Schedule for CY 2002 final rule (66 FR 55246, November 1, 2002)
(hereinafter referred to as CY 2002 PFS final rule).) The SMS PE survey
data are adjusted to a common year, 2005. The SMS data provide the following six categories of PE costs:
In accordance with section 212 of the BBRA, we established a process to supplement the SMS data for a specialty with data collected by entities and organizations other than the AMA (that is, the specialty itself). (See the Criteria for Submitting Supplemental Practice Expense Survey Data interim final rule with comment period, (65 FR 25664, May 3, 2000).) Originally, the deadline to submit supplementary survey data was through August 1, 2001. In the CY 2002 PFS final rule (66 FR 55246), the deadline was extended through August 1, 2003. To ensure maximum opportunity for specialties to submit supplementary survey data, we extended the deadline to submit surveys until March 1, 2005 in the Revisions to Payment Policies Under the Physician Fee Schedule for CY 2004 final rule, (November 7, 2003; 68 FR 63196) (hereinafter referred to as CY 2004 PFS final rule).
The direct cost data for individual services were originally developed by the Clinical Practice Expert Panels (CPEP). The CPEP data include the supplies, equipment, and staff times specific to each procedure. The CPEPs consisted of panels of physicians, practice administrators, and nonphysicians (for example, RNs) who were nominated by physician specialty societies and other groups. There were 15 CPEPs consisting of 180 members from more than 61 specialties and subspecialties. Approximately 50 percent of the panelists were physicians.
The CPEPs identified specific inputs involved in each physician's service provided in an office or facility setting. The inputs identified were the quantity and type of nonphysician labor, medical supplies, and medical equipment.
In 1999, the AMA's RUC established the Practice Expense Advisory Committee (PEAC). From 1999 to March 2004, the PEAC, a multispecialty committee, reviewed the original CPEP inputs and provided us with recommendations for refining these direct PE inputs for existing CPT codes. Through its last meeting in March 2004, the PEAC provided recommendations for over 7,600 codes which we have reviewed and accepted. As a result, the current PE inputs differ markedly from those originally recommended by the CPEPs. The PEAC has now been replaced by the Practice Expense Review Committee (PERC), which acts to assist the RUC in recommending PE inputs.
b. Allocation of PE to Services
The aggregate level specialtyspecific PEs are derived from the
AMA's SMS survey and supplementary survey data. To establish PE RVUs
for specific services, it is necessary to establish the direct and indirect PE associated with each service.
(i) Direct costs. The direct costs are determined by adding the
costs of the resources (that is, the clinical staff, equipment, and
supplies) typically required to provide the service. The costs of these
resources are calculated from the refined direct PE inputs in our PE
database. These direct inputs are then scaled to the current aggregate
pool of direct PE RVUs. The aggregate pool of direct PE RVUs can be
derived using the following formula: (PE RVUs * physician CF) *
(average direct percentage from SMS/(Supplemental PE/HR data)).
(ii) Indirect costs. The SMS and supplementary survey data are the
source for the specialtyspecific aggregate indirect costs used in our
PE calculations. We then allocate the indirect costs to the code level
on the basis of the direct costs specifically associated with a code
and the maximum of either the clinical labor costs or the physician
work RVUs. For calculation of the 2008 PE RVUs, we are using the 2006
procedurespecific utilization data crosswalked to 2007 services. To arrive at the indirect PE costs:
allocation would be (0.75/0.25) = 3.0. The indirect percentage factor is then applied to the service level adjusted indirect PE allocators.
c. Facility/Nonfacility Costs
Procedures that can be furnished in a physician's office, as well
as in a hospital or facility setting, have two PE RVUs: facility and
nonfacility. The nonfacility setting includes physicians' offices,
patients' homes, freestanding imaging centers, and independent
pathology labs. Facility settings include hospitals, ambulatory
surgical centers (ASCs), and skilled nursing facilities (SNFs). The
methodology for calculating PE RVUs is the same for both, facility and
nonfacility RVUs, but is applied independently to yield two separate PE
RVUs. Because the PEs for services provided in a facility setting are
generally included in the payment to the facility (rather than the
payment to the physician under the PFS), the PE RVUs are generally lower for services provided in the facility setting.
d. Services With Technical Components (TCs) and Professional Components (PCs)
Diagnostic services are generally comprised of two components; a professional component (PC) and a technical component (TC), which may be furnished independently or by different providers. When services have TC, PC, and global components that can be billed separately, the payment for the global component equals the sum of the payment for the TC and PCs. This is a result of using a weighted average of the ratio of indirect to direct costs across all the specialties that furnish the global components, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expenses to the global components, PC, and TCs for a service. (The direct PE RVUs for the TC and PCs sum to the global under the bottomup methodology.) e. Transition Period
As discussed in the CY 2007 PFS final rule with comment period (71 FR 69674), we are implementing the change in the methodology for calculating PE RVUs over a 4year period. During this transition period, the PE RVUs will be calculated on the basis of a blend of RVUs calculated using our methodology described previously in this section (weighted by 25 percent during CY 2007, 50 percent during CY 2008, 75 percent during CY 2009, and 100 percent thereinafter), and the CY 2006 PE RVUs for each existing code. PE RVUs for codes that are new during this period will be calculated using only the current PE methodology, and will be paid at the fully transitioned rate.
f. PE RVU Methodology
The following is a description of the PE RVU methodology. (i) Setup File
First, we create a setup file for the PE methodology. The setup
file contains the direct cost inputs, the utilization for each
procedure code at the specialty and facility/nonfacility place of
service level, and the specialtyspecific survey PE per physician hour data.
(ii) Calculate the Direct Cost PE RVUs
Sum the Costs of Each Direct Input
Step 1: Sum the direct costs of the inputs for each service. The direct costs consist of the costs of the direct inputs for clinical labor, medical supplies, and medical equipment. The clinical labor cost is the sum of the cost of all the staff types associated with the service; it is the product of the time for each staff type and the wage rate for that staff type. The medical supplies cost is the sum of the supplies associated with the service; it is the product of the quantity of each supply and the cost of the supply. The medical equipment cost is the sum of the cost of the equipment associated with the service; it is the product of the number of minutes each piece of equipment is used in the service and the equipment cost per minute. The equipment cost per minute is calculated as described at the end of this section. Apply a BN Adjustment to the Direct Inputs
Step 2: Calculate the current aggregate pool of direct PE costs. To do this, multiply the current aggregate pool of total direct and indirect PE costs (that is, the current aggregate PE RVUs multiplied by the CF) by the average direct PE percentage from the SMS and supplementary specialty survey data.
Step 3: Calculate the aggregate pool of direct costs. To do this, for all PFS services, sum the product of the direct costs for each service from Step 1 and the utilization data for that service.
Step 4: Using the results of Step 2 and Step 3 calculate a direct PE BN adjustment so that the proposed aggregate direct cost pool does not exceed the current aggregate direct cost pool and apply it to the direct costs from Step 1 for each service.
Step 5: Convert the results of Step 4 to an RVU scale for each
service. To do this, divide the results of Step 4 by the Medicare PFS CF.
(iii) Create the Indirect PE RVUs
Create Indirect Allocators
Step 6: Based on the SMS and supplementary specialty survey data, calculate direct and indirect PE percentages for each physician specialty.
Step 7: Calculate direct and indirect PE percentages at the service level by taking a weighted average of the results of Step 6 for the specialties that furnish the service. Note that for services with a TC and PCs we are calculating the direct and indirect percentages across the global components, PCs and TCs. That is, the direct and indirect percentages for a given service (for example, echocardiogram) do not vary by the PC, TC and global component.
Step 8: Calculate the service level allocators for the indirect PEs
based on the percentages calculated in Step 7. The indirect PEs are allocated based on the three components: the direct PE
[[Page 66230]]
RVU, the clinical PE RVU and the work RVU.
For most services the indirect allocator is: indirect percentage * (direct PE RVU/direct percentage) + work RVU.
There are two situations where this formula is modified:
(Note that for global services the indirect allocator is based on both the work RVU and the clinical labor PE RVU. We do this to recognize that, for the professional service, indirect PEs will be allocated using the work RVUs, and for the TC service, indirect PEs will be allocated using the direct PE RVU and the clinical labor PE RVU. This also allows the global component RVUs to equal the sum of the PC and TC RVUs.)
For presentation purposes in the examples in Table 1, the formulas were divided into two parts for each service. The first part does not vary by service and is the indirect percentage * (direct PE RVU/direct percentage). The second part is either the work RVU, clinical PE RVU, or both depending on whether the service is a global service and whether the clinical PE RVU exceeds the work RVU (as described earlier in this step.)
Apply a BN Adjustment to the Indirect Allocators
Step 9: Calculate the current aggregate pool of indirect PE RVUs by multiplying the current aggregate pool of PE RVUs by the average indirect PE percentage from the physician specialty survey data. This is similar to the Step 2 calculation for the direct PE RVUs.
Step 10: Calculate an aggregate pool of proposed indirect PE RVUs for all PFS services by adding the product of the indirect PE allocators for a service from Step 8 and the utilization data for that service. This is similar to the Step 3 calculation for the direct PE RVUs.
Step 11: Using the results of Step 9 and Step 10, calculate an indirect PE adjustment so that the aggregate indirect allocation does not exceed the available aggregate indirect PE RVUs and apply it to indirect allocators calculated in Step 8. This is similar to the Step 4 calculation for the direct PE RVUs.
Calculate the Indirect Practice Cost Index
Step 12: Using the results of Step 11, calculate aggregate pools of specialtyspecific adjusted indirect PE allocators for all PFS services for a specialty by adding the product of the adjusted indirect PE allocator for each service and the utilization data for that service.
Step 13: Using the specialtyspecific indirect PE/HR data, calculate specialtyspecific aggregate pools of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service.
Step 14: Using the results of Step 12 and Step 13, calculate the specialtyspecific indirect PE scaling factors as under the current methodology.
Step 15: Using the results of Step 14, calculate an indirect practice cost index at the specialty level by dividing each specialty specific indirect scaling factor by the average indirect scaling factor for the entire PFS.
Step 16: Calculate the indirect practice cost index at the service level to ensure the capture of all indirect costs. Calculate a weighted average of the practice cost index values for the specialties that furnish the service. Note: For services with TC and PCs, we calculate the indirect practice cost index across the global components, PCs and TCs. Under this method, the indirect practice cost index for a given service (for example, echocardiogram) does not vary by the PC, TC and global components.
Step 17: Apply the service level indirect practice cost index calculated in Step 16 to the service level adjusted indirect allocators calculated in Step 11 to get the indirect PE RVU.
(iv) Calculate the Final PE RVUs
Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs from Step 17.
Step 19: Calculate and apply the final PE BN adjustment by
comparing the results of Step 18 to the current pool of PE RVUs. This
final BN adjustment is required primarily because certain specialties
are excluded from the PE RVU calculation for ratesetting purposes, but
all specialties are included for purposes of calculating the final BN
adjustment. (See ``Specialties excluded from ratesetting calculation'' below in this section.)
(v) Setup File Information
(vi) Equipment Cost Per Minute =
The equipment cost per minute is calculated as:
(1/(minutes per year * usage)) * price * ((interest rate/(1(1/((1 + interest rate) * life of equipment)))) + maintenance)
Where:
minutes per year = maximum minutes per year if usage were continuous (that is, usage = 1); 150,000 minutes.
usage = equipment utilization assumption; 0.5.
price = price of the particular piece of equipment.
interest rate = 0.11.
life of equipment = useful life of the particular piece of equipment. maintenance = factor for maintenance; 0.05.
[[Page 66231]]
Table 1.Calculation of PE RVUs Under Methodology for Selected Codes
99213 33533 71020 71020TC 7102026 93000 93005 93010
CABG,
Step Source Formula Office arterial, Chest xray Chest xray Chest xray ECG, ECG, ECG, report
visit, est single nonfacility nonfacility nonfacility complete tracing nonfacility
nonfacility facility nonfacility nonfacility
(1) Labor cost (Lab)........... Step 1............ AMA.............. ................. $13.32 $77.52 $5.74 $5.74 $ $6.12 $6.12 $
(2) Supply cost (Sup).......... Step 1............ AMA.............. ................. $2.98 $7.34 $3.39 $3.39 $ $1.19 $1.19 $
(3) Equipment cost (Eqp)....... Step 1............ AMA.............. ................. $0.19 $0.65 $8.17 $8.17 $ $0.12 $0.12 $
(4) Direct cost (Dir).......... Step 1............ ................. =(1)+(2)+(3)..... $16.50 $85.51 $17.31 $17.31 $ $7.43 $7.60 $
(5) Direct adjustment (Dir Adj) Steps 24......... See footnote \1\. ................. 0.592 0.592 0.592 0.592 0.592 0.592 0.592 0.592
(6) Adjusted labor............. Steps 24......... =Lab * Dir Adj... =(1) * (5)....... $7.89 $45.89 $3.40 $3.40 $ $3.62 $3.62 $
(7) Adjusted supplies.......... Steps 24......... =Sup * Dir Adj... =(2) * (5)....... $1.77 $4.35 $2.01 $2.01 $ $0.71 $0.71 $
(8) Adjusted equipment......... Steps 24......... =Eqp *Dir Adj.... =(3) * (5)....... $0.12 $0.39 $4.84 $4.84 $ $0.07 $0.07 $
(9) Adjusted direct............ Steps 24......... ................. =(6)+(7)+(8)..... $9.77 $50.62 $10.25 $10.25 $ $4.40 $4.40 $
(10) Conversion Factor (CF).... Step 5............ MFS.............. ................. $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682
(11) Adj. labor cost converted. Step 5............ =(Lab * Dir Adj)/ =(6)/(10)........ 0.23 1.35 0.10 0.10 ........... 0.11 0.11 ........... CF.
(12) Adj. supply cost converted Step 5............ =(Sup * Dir Adj)/ =(7)/(10)........ 0.05 0.13 0.06 0.06 ........... 0.02 0.02 ........... CF.
(13) Adj. equip cost converted. Step 5............ =(Eqp * Dir Adj)/ =(8)/(10)........ 0.00 0.01 0.14 0.14 ........... 0.00 0.00 ........... CF.
(14) Adj. direct cost converted Step 5............ ................. =(11)+(12)+(13).. 0.29 1.49 0.30 0.30 ........... 0.13 0.13 ...........
(15) Wrk RVU * Wrk Scaler...... Setup File........ MFS.............. 0.8806........... 0.81 29.62 0.19 0.00 0.19 0.15 0.00 0.15
(16) Dirpct.................. Steps 6, 7........ Surveys.......... ................. 33.8% 32.6% 40.7% 40.7% 40.7% 37.7% 37.7% 37.7%
(17) Indpct.................. Steps 6, 7........ Surveys.......... ................. 66.2% 67.4% 59.3% 59.3% 59.3% 62.3% 62.3% 62.3%
(18) Ind. Alloc. formula (1st Step 8............ See Step 8....... ................. ((14)/(16)) ((14)/ ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16))
part). * (17) (16)) * * (17) * (17) * (17) * (17) * (17) * (17)
(17)
(19) Ind. Alloc. (1st part).... Step 8............ ................. See (18)......... 0.56 3.07 0.44 0.44 ........... 0.21 0.21 ...........
(20) Ind. Alloc. formulas (2nd Step 8............ See Step 8....... ................. (15) (15) (15)+(11) (11) (15) (15)+(11) (11) (15) part).
(21) Ind. Alloc. (2nd part).... Step 8............ ................. See (20)......... 0.81 29.62 0.29 0.10 0.19 0.26 0.11 0.15
(22) Indirect Allocator Step 8............ ................. =(19)+(21)....... 1.37 32.70 0.73 0.54 0.19 0.47 0.32 0.15 (1st+2nd).
(23) Indirect Adjustment (Ind Steps 911........ See footnote \2\. ................. 0.362 0.362 0.362 0.362 0.362 0.362 0.362 0.362 Adj).
(24) Adjusted Indirect Steps 911........ =Ind Alloc * Ind ................. 0.50 11.84 0.26 0.19 0.07 0.17 0.12 0.05 Allocator. Adj.
(25) Ind. Practice Cost Index Steps 1216....... See Steps 1216.. ................. 0.968 0.942 1.054 1.054 1.054 1.280 1.280 1.280 (PCI).
(26) Adjusted Indirect......... Step 17........... = Adj. Ind Alloc =(24) * (25)..... 0.48 11.15 0.28 0.21 0.07 0.22 0.15 0.07
* PCI.
(27) PE RVU.................... Steps 1819....... =(Adj Dir+Adj =((14)+(26)) * 0.77 12.64 0.58 0.51 0.07 0.35 0.28 0.07
Ind) * budn. budn.
\1\ The direct adj = [current pe rvus * CF * avg dir pct] / [sum direct inputs] = [Step 2] / [Step 3].
\2\ The indirect adj = [current pe rvus * avg ind pct] / [sum of ind allocators] = [Step 9] / [Step 10. [[Page 66232]]
Comments Related to PE Methodology
Comment: Several commenters recommend that the unadjusted work RVUs be used in the allocation of the indirect PE RVUs.
Response: The decision to use the budget neutralized work RVUs in the calculation of indirect PEs appropriately maintains the current relationships between the work, PE, and professional liability payments. We also believe it is important to apply the revised, budget neutralized work RVUs consistently within the PFS framework. It would not be consistent to apply one set of work RVUs for work payments, but a different set for purposes of calculating indirect PEs. Therefore, we will base the calculation of both the work payments and the indirect PE payments on the adjusted work RVUs, and maintain the current overall relationships between work, PE, and professional liability. The PE RVUs in Addendum B and throughout the rest of this rule reflect this policy.
Comment: Several commenters commended CMS on the bottom up approach to calculating resource based PE RVUs. Commenters expressed gratitude for the transparency and straight forward nature of the revised methodology.
Response: We appreciate the support for the revised bottom up practice methodology and agree that the bottom up methodology is a more straight forward methodology then its predecessor.
Comment: Some commenters contend that the approach of basing PE calculations on the weighted average of all specialties furnishing a service is flawed and should be replaced with an approach that bases the specialty weighted factors upon specialties that represent 95 percent of the total utilization of each respective service.
Response: This issue was fully addressed in the comment and response section of the CY 2007 PFS final rule with comment period (71 FR 69641), and we did not make any further proposals relating to this policy in the CY 2008 PFS proposed rule. Thus, these comments are outside the scope of the CY 2008 PFS proposed rule.
Comment: One commenter stated that the use of direct PEs in the allocation
FOR FURTHER INFORMATION CONTACT Pam West, (410) 786-2302 for issues related to practice expense and comprehensive outpatient rehabilitation facilities.
Rick Ensor, (410) 7865617 for issues related to practice expense methodology.
Stephanie Monroe, (410) 7866864 for issues related to the geographic practice cost index and malpractice RVUs.
Craig Dobyski, (410) 7864584 for issues related to list of telehealth services.
Ken Marsalek, (410) 7864502 for issues related to the DRA imaging cap.
Catherine Jansto, (410) 7867762 for issues related to payment for covered outpatient drugs and biologicals.
Edmund Kasaitis (410) 7860477 for issues related to the Competitive Acquisition Program (CAP) for part B drugs.
Anita Greenberg (410) 7864601 for issues related to the clinical laboratory fee schedule.
Henry Richter, (410) 7864562 for issues related to payments for endstage renal disease facilities.
August Nemec (410) 7860612 for issues related to independent diagnostic testing facilities.
Kate Tillman (410) 7869252 or Brijit Burton (410) 7867364 for issues related to the drug compendia.
[[Page 66223]]
David Walczak (410) 7864475 for issues related to reassignment and physician selfreferral rules for diagnostic tests and beneficiary signature for ambulance transport.
Lisa Ohrin (410) 7864565 or Joanne Sinsheimer (410) 7864620 for issues related to physician selfreferral rules.
Bob Kuhl (410) 7864597 for issues related to the DME update.
Rachel Nelson (410) 7861175 for issues related to the physician quality reporting system for CY 2008.
Maria Ciccanti (410) 7863107 for issues related to the reporting of anemia quality indicators.
James Menas (410) 7864507 for issues related to payment for physician pathology services.
Dorothy Shannon, (410) 7863396 for issues related to the outpatient therapy caps.
Drew Morgan, (410) 7862543 for issues related to the EPrescribing Exemption for Computer Generated Facsimile Transmissions.
Roechel Kujawa (410) 7869111 or Anne Tayloe (410) 7864546 for issues related to the ambulance fee schedule.
Diane Milstead, (410) 7863355 or Gaysha Brooks (410) 7869649 for all other issues.
Common CFR Searches
14 CFR Part 39 40 CFR Part 52 14 CFR Part 71 33 CFR Part 165 50 CFR Part 679 26 CFR Part 1 40 CFR Part 180 47 CFR Part 73 50 CFR Part 17 33 CFR Part 117 44 CFR Part 67 50 CFR Part 648 14 CFR Part 97 33 CFR Part 100 40 CFR Part 63 26 CFR Part 301 50 CFR Part 622 39 CFR Part 111 40 CFR Part 300 44 CFR Part 65 50 CFR Part 660 40 CFR Part 271 40 CFR Parts 52 and 81 47 CFR Part 64 50 CFR Part 665 49 CFR Part 571 44 CFR Part 64 21 CFR Part 522 14 CFR Part 23 47 CFR Part 76