DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 410, 414, 415, and 495 [CMS-1524-FC and CMS-1436-F] RINs 0938-AQ25 and 0938-AQ00 Medicare Program; Payment Policies under the Physician Fee Schedule, Five-Year Review of Work Relative Value Units, Clinical Laboratory Fee Schedule: Signature on Requisition, and Other Revisions to Part B for CY 2012 AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule with comment period. SUMMARY: This final rule with comment period addresses changes to the physician fee schedule and other Medicare Part B payment policies to ensure that our payment systems are updated to reflect changes in medical practice and the relative value of services. It also addresses, implements or discusses certain statutory provisions including provisions of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively known as the Affordable Care Act) and the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008. In addition, this final rule with comment period discusses payments for Part B drugs; Clinical Laboratory Fee Schedule: Signature on Requisition; Physician Quality Reporting System; the Electronic Prescribing (eRx) Incentive Program; the Physician Resource-Use Feedback Program and the value modifier; productivity adjustment for ambulatory surgical center payment system and the ambulance, clinical laboratory, and durable medical equipment prosthetics orthotics and supplies (DMEPOS) fee schedules; and other Part B related issues. CMS-1524-FC 2 DATES: Effective date: These regulations are effective on January 1, 2012. Implementation date: The 3-day payment window policy provisions specified in section V.B.3.a. of this final rule with comment period will be implemented by July 1, 2012. Comment date: To be assured consideration, comments on the items listed in the "Comment Subject Areas" section of this final rule with comment period must be received at one of the addresses provided below, no later than 5 p.m. Eastern Standard Time on [[OOFFRR——iinnsseerrtt ddaattee 6600 ddaayyss aafftteerr tthhee ddaattee ooff ffiilliinngg ffoorr ppuubblliicc iinnssppeeccttiioonn aatt OOFFRR..]] ADDRESSES: In commenting, please refer to file code CMS-1524-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. You may submit comments in one of four ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the instructions for "submitting a comment." 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1524-FC, P.O. Box 8013, Baltimore, MD 21244-8013. Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments to the following address ONLY: CMS-1524-FC 3 Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1524-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments before the close of the comment period to either of the following addresses: a. For delivery in Washington, DC-- Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201 (Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) CMS-1524-FC 4 b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-1066 in advance to schedule your arrival with one of our staff members. Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. FOR FURTHER INFORMATION CONTACT: Ryan Howe, (410) 786–3355 or Chava Sheffield, (410) 786–2298, for issues related to the physician fee schedule practice expense methodology and direct practice expense inputs. Elizabeth Truong, (410) 786–6005, or Sara Vitolo, (410) 786–5714, for issues related to potentially misvalued services and interim final work RVUs. Ken Marsalek, (410) 786–4502, for issues related the multiple procedure payment reduction and pathology services. Sara Vitolo, (410) 786–5714, for issues related to malpractice RVUs. Michael Moore, (410) 786-6830, for issues related to geographic practice cost indices. Ryan Howe, (410) 786–3355, for issues related to telehealth services. Elizabeth Truong, (410) 786–6005, for issues related to the sustainable growth rate, or the anesthesia or physician fee schedule conversion factors. Bonny Dahm, (410)786-4006, for issues related to payment for covered outpatient drugs and biologicals. CMS-1524-FC 5 Glenn McGuirk, (410)786-5723, for issues related to the Clinical Laboratory Fee Schedule (CLFS) signature on requisition policy. Claudia Lamm, (410)786-3421, for issues related to the chiropractic services demonstration budget neutrality issue. Jamie Hermansen, (410) 786-2064, or Stephanie Frilling, (410) 786-4507 for issues related to the annual wellness visit. Christine Estella, (410) 786-0485, for issues related to the Physician Quality Reporting System, incentives for Electronic Prescribing (eRx) and Physician Compare. Gift Tee, (410) 786-9316, for issues related to the Physician Resource Use Feedback Program and physician value modifier. Stephanie Frilling, (410) 786-4507 for issues related to the 3-day payment window. Pam West, (410) 786-2302, for issues related to the technical corrections or the therapy cap. Rebecca Cole or Erin Smith, (410) 786-4497, for issues related to physician payment not previously identified. SUPPLEMENTARY INFORMATION: Comment Subject Areas: We will consider comments on the following subject areas discussed in this final rule with comment period that are received by the date and time indicated in the DATES section of this final rule with comment period: (1) The interim final work, practice expense, and malpractice RVUs (including the physician time, direct practice expense (PE) inputs, and the equipment utilization rate assumption) for new, revised, potentially misvalued, and certain other CY 2012 HCPCS codes. CMS-1524-FC 6 These codes and their CY 2012 interim final RVUs are listed in Addendum C to this final rule with comment period. (2) The physician self-referral designated health services codes listed in Tables 83 and 84. 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 regulations.gov Web site (www.regulations.gov) as soon as possible after they have been received. Follow the search instructions on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951. Table of Contents To assist readers in referencing sections contained in this preamble, we are providing a 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 (CFR). Information on the regulations’ impact appears throughout the preamble and, therefore, is not discussed exclusively in section IX. of this final rule with comment period. I. Background A. Development of the Relative Value System 1. Work RVUs 2. Practice Expense Relative Value Units (PE RVUs) CMS-1524-FC 7 3. Resource-Based Malpractice RVUs 4. Refinements to the RVUs 5. Application of Budget Neutrality to Adjustments of RVUs B. Components of the Fee Schedule Payment Amounts C. Most Recent Changes to Fee Schedule II. Provisions of the Rule for the Physician Fee Schedule A. Resource-Based Practice Expense (PE) Relative Value Units (RVUs) 1. Overview 2. Practice Expense Methodology a. Direct Practice Expense b. Indirect Practice Expense per Hour Data c. Allocation of PE to Services (1) Direct Costs (2) Indirect Costs d. Facility and Nonfacility Costs e. Services with Technical Components (TCs) and Professional Components (PCs) f. PE RVU Methodology (1) Setup File (2) Calculate the Direct Cost PE RVUs (3) Create the Indirect Cost PE RVUs (4) Calculate the Final PE RVUs (5) Setup File Information (6) Equipment Cost Per Minute 3. Changes to Direct PE Inputs a. Inverted Equipment Minutes b. Labor and Supply Input Duplication c. AMA RUC Recommendations for Moderate Sedation Direct PE Inputs d. Updates to Price and Useful Life for Existing Direct Inputs 4. Development of Code-Specific PE RVUs 5. Physician Time for Select Services B. Potentially Misvalued Services Under the Physician Fee Schedule 1. Valuing Services Under the PFS 2. Identifying, Reviewing, and Validating the RVUs of Potentially Misvalued Services under the PFS a. Background b. Progress in Identifying and Reviewing Potentially Misvalued Codes c. Validating RVUs of Potentially Misvalued Codes 3. Consolidating Reviews of Potentially Misvalued Codes 4. Public Nomination Process 5. CY 2012 Identification and Review of Potentially Misvalued Services a. Code Lists b. Specific Codes (1) Codes Potentially Requiring Updates to Direct PE Inputs (2) Codes Without Direct Practice Expense Inputs in the Non-Facility Setting (3) Codes Potentially Requiring Updates to Physician Work 6. Expanding the Multiple Procedure Payment Reduction (MPPR) Policy CMS-1524-FC 8 a. Background b. CY 2012 Expansion of the MPPR Policy to the Professional Component of Advance Imaging Services c. Further Expansion of MPPR Policies Under Consideration for Future Years d. Procedures Subject to the OPPS Cap C. Overview of the Methodology for Calculation of Malpractice RVUs D. Geographic Practice Cost Indices (GPCIs) 1. Background 2. GPCI Revisions for CY 2012 a. Physician Work GPCIs b. Practice Expense GPCIs (1) Affordable Care Act Analysis and Revisions for PE GPCIs (A) General Analysis for the CY 2012 PE GPCIs (B) Analysis of ACS Rental Data (C) Employee Wage Analysis (D) Purchased Services Analysis (E) Determining the PE GPCI Cost Share Weights (i) Practice Expense (ii) Employee Compensation (iii) Office Rent (iv) Purchased Services (v) Equipment, Supplies, and Other Miscellaneous Expenses (vi) Physician Work and Malpractice GPCIs (F) PE GPCI Floor for Frontier States (2) Summary of CY 2012 PE proposal c. Malpractice GPCIs d. Public Comments and CMS responses regarding the CY 2012 proposed revisions to the 6th GPCI Update e. Summary of CY 2012 Final GPCIs 3. Payment Localities 4. Report from the Institute of Medicine E. Medicare Telehealth Services For The Physician Fee Schedule 1. Billing and Payment for Telehealth Services a. History b. Current Telehealth Billing and Payment Policies 2. Requests for Adding Services to the List of Medicare Telehealth Services 3. Submitted Requests for Addition to the List of Telehealth Services for CY 2012 a. Smoking Cessation Services b. Critical Care Services c. Domiciliary or Rest Home Evaluation and Management Services d. Genetic Counseling Services e. Online Evaluation and Management Services f. Data Collection Services g. Audiology Services 4. The Process for Adding HCPCS Codes as Medicare Telehealth Services 5. Telehealth Consultations in Emergency Departments CMS-1524-FC 9 6. Telehealth Originating Site Facility Fee Payment Amount Update III. Addressing Interim Final Relative Value Units from CY 2011 and Establishing Interim Relative Value Units for CY 2012 A. Methodology B. Finalizing CY 2011 Interim and Proposed Values for CY 2012 1. Finalizing CY 2011 Interim and Proposed Work Values for CY 2012 a. Refinement Panel (1) Refinement Panel Process (2) Proposed and Interim Final Work RVUs Referred to the Refinement Panels in CY 2011 b. Code-Specific Issues (1) Integumentary System: Skin, Subcutaneous, and Accessory Structures (CPT Codes 10140-11047) and Active Wound Care Management (CPT Codes 97597 and 97598) (2) Integumentary System: Nails (CPT Codes 11732-11765) (3) Integumentary System: Repair (Closure) (CPT Codes 11900-11901, 12001-12018, 12031-13057, 13100-13101, 15120-15121, 15260, 15732, 15832)) (4) Integumentary System: Destruction (CPT Codes 17250-17286) (5) Integumentary System: Breast (CPT Codes 19302-19357) (6) Musculoskeletal: Spine (Vertebral Column) (CPT Codes 22315-22851) (7) Musculoskeletal: Forearm and Wrist (CPT Codes 25116-25605) (8) Musculoskeletal: Femur (Thigh Region) and Knee Joint (CPT Codes 27385-27530) (9) Musculoskeletal: Leg (Tibia and Fibula) and Ankle Joint (CPT Codes 27792) (10) Musculoskeletal: Foot and Toes (CPT Codes 28002-28825) (11) Musculoskeletal: Application of Casts and Strapping (CPT Codes 29125-29916) (12) Respiratory: Lungs and Pleura (CPT Codes 32405-32854) (13) Cardiovascular: Heart and Pericardium (CPT Codes 33030-37766) (14) Digestive: Salivary Glands and Ducts (CPT Codes 42415-42440) (15) Digestive: Esophagus (CPT Codes 43262-43415) (16) Digestive: Rectum (CPT Codes 45331) (17) Digestive: Biliary Tract (CPT Codes 47480-47564) (18) Digestive: Abdomen, Peritoneum, and Omentum (CPT Codes 49082-49655) (19) Urinary System: Bladder (CPT Codes 51705-53860) (20) Female Genital System: Vagina (CPT Codes 57155-57288) (21) Maternity Care and Delivery (CPT Codes 59400-59622) (22) Endocrine System: Thyroid Glad (CPT Codes 60220-60240) (23) Endocrine System: Parathyroid, Thymus, Adrenal Glands, Pancreas, and Cartoid Body (CPT Codes 60500) (24) Nervous System: Skull, Meninges, Brain and Extracranial Peripheral Nerves and Autonomic Nervous System (CPT Codes 61781-61885, 64405-64831) (25) Nervous system: Spine and Spinal Cord (CPT Codes 62263-63685) (26) Eye and Ocular Adnexa: Eyeball (CPT Codes 65285) (27) Eye and Ocular Adnexa: Posterior Segment (CPT Codes 67028) (28) Diagnostic Radiology: Chest, Spine, and Pelvis (CPT Codes 71250, 72114-72131) (29) Diagnostic Radiology: Upper Extremities (CPT Codes 73080-73700) (30) Diagnostic Ultrasound: Extremities (CPT Codes 76881-76882) (31) Radiation Oncology: Radiation Treatment Management (CPT Codes 77427-77469) CMS-1524-FC 10 (32) Nuclear Medicine: Diagnostic (CPT Codes 78226-78598) (33) Pathology and Laboratory: Urinalysis (CPT Codes 88120-88177) (34) Immunization Administration for Vaccines/Toxoids (CPT Codes 90460-90461) (35) Gastroenterology (CPT Codes 91010-91117) (36) Opthalmology: Special Opthalmological Services (CPT Codes 92081-92285) (37) Special Otorhinolaryngologic Services (CPT Codes 92504-92511) (38) Special Otorhinolaryngologic Services: Evaluative and Therapeutic Services (CPT Codes 92605-92618) (39) Cardiovascular: Therapeutic Services and Procedures (CPT Codes 92950) (40) Neurology and Neuromuscular Procedures: Sleep Testing (CPT Codes 95800-95811) (41) Osteopathic Manipulative Treatment (CPT Codes 98925-98929) (42) Evaluation and Management: Initial Observation Care (CPT Codes 99218-99220) (43) Evaluation and Management: Subsequent Observation Care (CPT Codes 99224- 99226) (44) Evaluation and Management: Subsequent Hospital Care (CPT Codes 99234-99236) 2. Finalizing CY 2011 Interim Direct PE RVUs for CY 2012 a. Background and Methodology b. Common Refinements (1) General Equipment Time (2) Supply and Equipment Items Missing Invoices c. Code-specific direct PE inputs (1) CT Abdomen and Pelvis (2) Endovascular Revascularization (3) Nasal/Sinus Endoscopy (4) Insertion of Intraperitoneal Catheter (5) In Situ Hybridization Testing (6) External Mobile Cardivascular Telemetry 3. Finalizing CY 2011 Interim Final and CY 2012 Proposed Malpractice RVUs a. Finalizing CY 2011 Interim Final Malpractice RVUs b. Finalizing CY 2012 Proposed Malpractice RVUs, Including Malpractice RVUs for Certain Cardiothoracic Surgery Services 4. Payment for Bone Density Tests 5. Other New, Revised, or Potentially Misvalued Codes with CY 2011 Interim Final RVUs or CY 2012 Proposed RVUs Not Specifically Discussed in the CY 2012 Final Rule with Comment Period C. Establishing Interim Final RVUs for CY 2012 1. Establishing Interim Final Work RVUs for CY 2012 a. Code-Specific Issues (1) Integumentary System: Skin, Subcutaneous, and Accessory Structures (CPT Codes 10060-10061, 11056) (2) Integumentary System: Nails (CPT Codes 11719-11721, and G0127) (3) Integumentary System: Repair (Closure) (CPT Codes 15271-15278, 16020, 16025) (4) Musculoskeletal: Hand and fingers (CPT Codes 26341) (5) Musculoskeletal: Application of Casts and Strapping (CPT Codes 29125-29881) (6) Musculoskeletal: Endoscopy/Arthroscopy (CPT codes 29826, 29880, 29881) (7) Respiratory: Lungs and Pleura (CPT Codes 32096-32674)