Federal Register /Vol. 63, No. 211/Monday, November 2 ... · 58864 Federal Register/Vol. 63, No. 211/Monday, November 2, 1998/Rules and Regulations modalities or therapy procedures

58863Federal Register / Vol. 63, No. 211 / Monday, November 2, 1998 / Rules and Regulations

the applicable fee schedule amount willbe the amount established forcomparable services as specified by theSecretary. Therefore, we revised ourpolicy so that the existing fee schedulesfor prosthetic and orthotic devices,durable medical equipment, andsupplies, and drugs and biologicalsapply when these services are furnishedby a CORF. We believe that these feeschedules, together with the physicianfee schedule, will encompass all CORFservices other than nursing services.The physician fee schedule amountapplicable to services furnished in anonfacility setting will apply to theservices furnished by the CORF since noseparate payment will be made forfacility costs.

To establish a fee schedule amount fornursing services delivered within aCORF, we created a new HCPCS code,G0128. We have defined this code asdirect face-to-face skilled nursingservices delivered to a CORF patient aspart of a rehabilitative plan of care. It isa timed code and can be billed for 10-minute intervals (when the initialinterval is longer than 5 minutes).G0128 is to be used for services that arenot included in the work or practiceexpense of another therapy or physicianservice. An example might be a nursewho spends 33 minutes instructing apatient in the proper procedure of ‘‘inand out’’ urethral catheterization; in thissituation, 3 units of G0128 would bebilled. We are setting the RVUs for thiscode at 0.26, based upon half the valueof the lowest level physician follow-upvisit, HCPCS code 99211, in thenonfacility setting. This results in apayment that is slightly more than theaverage wage reported by the Bureau ofLabor Statistics (BLS) for registerednurses, inflated to reflect benefits andoverhead (using the fringe benefit andexpense factor used to establish thesalary equivalency guideline).

Comment: One commenter supportedthe use of the nonfacility physician feeschedule for therapy services performedin an SNF and CORF; however,clarification was requested as towhether the facility or the nonfacilityphysician fee schedule will be used forhospital outpatient departments.

Response: The physician fee schedulepayment amount applicable tooutpatient rehabilitation servicesfurnished by hospitals is the same asthat for SNFs, CORFs, and otheroutpatient rehabilitation providers. Thatis, hospitals will be paid for theseservices under the nonfacilitycomponent of the physician feeschedule.

(5) Site-of-Service Differential

We did not propose a site-of-servicedifferential for providers of outpatientrehabilitation services as suggested bysome of the providers prior topublication of our proposed rule. Thatis, we did not propose a paymentamount greater or lesser than thatprovided by the physician fee schedulefor some of the types of providers orsites at which outpatient rehabilitationservices are furnished.

As explained in our proposed rule,the law requires that these services bepaid the amount determined ‘‘under thefee schedule established under section1848.’’ Furthermore, we believe higherpayment amounts for certain facilities,such as CORFs or rehabilitationagencies, would create paymentincentives that favor one site or settingover another. We believe the statuteestablishes a ‘‘level playing field’’ forthese services. We find no directive inthe statutory language or legislativehistory that we recognize higher coststhat some providers argue might beassociated with furnishing services in aprovider setting. To the extent thatCORFs or rehabilitation facilitiesprovide services to patients who needadditional care, CORFs or rehabilitationfacilities may bill for additional,medically necessary services. For thesereasons, we are not revising our policyto allow for a site of service adjustmentor higher payment amount for specificsettings.

Comment: One commenter believesthe work RVU should be the sameregardless of setting; however, thecommenter contends that the practiceexpense component may differ amongthe settings. The commenter states thatthe impact of any unique regulatoryrequirements among settings on the costof furnishing services should bedetermined.

Response: As stated above, we find nostatutory or legislative basis forrecognizing a distinct paymentdifferential that is site specific.Therefore, we are not revising ourpolicy to allow for a paymentdifferential among settings.

(6) Mandatory Assignment

Section 1834(k)(6) of the Act, asadded by BBA, establishes a restraint onbilling for outpatient rehabilitationtherapy services; that is, this provisionrequires that services paid under section1834(k) of the Act are subject tomandatory assignment under the sameterms applicable to practitioners undersection 1842(b)(18) of the Act.Therefore, we have revised our policy inaccordance with this provision to

require mandatory assignment forservices provided under the outpatientrehabilitation prospective paymentsystem by hospitals, SNFs, HHAs,rehabilitation agencies, public healthagencies, clinics, and CORFs. Themandatory assignment provision doesnot apply to therapy services furnishedby a physician or ‘‘incident to’’ aphysician’s service or to servicesfurnished by a physical therapist inprivate practice or an occupationaltherapist in private practice. However,when these services are not furnishedon an assignment-related basis, thelimiting charge applies.

2. Uniform Procedure Codes forOutpatient Rehabilitation Services

Section 4541(a)(2) of BBA addedsection 1834(k)(5) to the Act. This newstatutory provision requires that claimssubmitted on or after April 1, 1998 foroutpatient physical therapy services,including speech language pathologyservices and outpatient occupationaltherapy services, include a code undera uniform coding system that identifiesthe services furnished.

The uniform coding requirement isneeded to ensure proper payment underthe physician fee schedule. Hospitals,SNFs, HHAs (for individuals who arenot eligible for home health services),CORFs, and outpatient physical therapyproviders must use HCPCS codes toreport outpatient rehabilitation serviceswhen furnished to their outpatients.Hospitals and SNFs that provideoutpatient rehabilitation services totheir inpatients who are entitled tobenefits under Part A but who haveexhausted their benefits for inpatientservices during a spell of illness or totheir inpatients who are not entitled tobenefits under Part A are also requiredto report HCPCS codes.

In March, 1998, we issued ProgramMemorandum AB–98–8 whichdescribes the coding for outpatientrehabilitation services and identifiescertain HCPCS codes available forbilling by CORFs that are not generallyrehabilitation services, includingvaccinations and nursing services. Thismemorandum also specifies how thesecodes will be reported on the UB–92.We assigned the various codes torevenue centers, that is, physicaltherapy, occupational therapy, andspeech-language pathology, for purposesof applying the financial limitationdescribed below. Assigning codes torevenue centers was not intended tolimit the scope of practice or range ofprocedures that could be furnished bytherapists in a particular discipline. Werecognize that many therapy services,for example, physical therapy

58864 Federal Register / Vol. 63, No. 211 / Monday, November 2, 1998 / Rules and Regulations

modalities or therapy procedures asdescribed by HCPCS codes arecommonly delivered by both physicaland occupational therapists. Otherservices may be delivered by eitheroccupational therapists or speech-language pathologists.

Therefore, in July 1998, we issued PMA–98–24 which in effect constituted areissuance of PM A–98–8 in its entirety.PM A–98–24 was intended, in part, toclarify PM AB–98–8 regarding thereporting of HCPCS codes for outpatientrehabilitation and CORF services and toinstruct fiscal intermediaries toeliminate edits installed to matchrevenue centers to outpatientrehabilitation HCPCS codes in order tocap therapy services. HCFA did notintend for such edits to be installed andemployed. Thus, PM A–98–24instructed fiscal intermediaries toeliminate the edits for servicesfurnished on or after October 1, 1998.However, in response to industryconcerns, on August 6, 1998, we issueda memorandum to all fiscalintermediaries advising them to removeimmediately any coding edits imposedto match outpatient rehabilitationHCPCS codes to revenue codes.

Comment: We received threecomments regarding PM A–98-24 issuedJuly 1998. The commenters stated thatconfusion remains regarding theeffective date of the memorandum. Also,they urged that we instruct carriers tonot deny claims based on thepractitioners’ failure to comply withcoding requirements until there is aclarification regarding the manner inwhich the coding requirement is to beimplemented. One commenterrecommended that fiscal intermediariesbe required to adhere to revised PM A–98–24, effective immediately. Thecommenter contended that claimswrongly denied based on PM AB–98–8should be promptly paid based on theclaims originally submitted byproviders.

Response: We apologize for theconfusion. As noted above, PM A–98–24carried an effective date of October 1,1998 for fiscal intermediaries to removeany edits installed to match revenuecenter to HCPCS coding for outpatientrehabilitation services. As also statedabove, on August 6, 1998 we issued asubsequent memorandum to allintermediaries advising them to removethe edits immediately. Providers andpractitioners were encouraged toresubmit any claims that wereincorrectly denied due tomisinterpretation of our instructions forbilling outpatient rehabilitation servicesusing HCPCS codes.

Comment: We received one commentrecommending that the definition ofoutpatient rehabilitation services beexpanded to include payment for low-vision training. The commenter statedthat Medicare’s failure to cover low-vision training places beneficiaries atrisk for extreme out-of-pocketexpenditures for transportation services,home-bound visits, and psychologicalcounseling.

Response: We have not accepted thecommenter’s recommendation.Outpatient rehabilitation services areclearly defined in the statute. Low-vision training is not specificallymentioned in the statute, and we findno statutory or legislative basis forincluding low-vision training in thedefinition of outpatient rehabilitationservices. Therefore, we cannotarbitrarily expand our definition ofoutpatient rehabilitation to encompasslow-vision training.

Since the statute does not specificallyidentify low-vision training as aseparate Medicare benefit and does notprovide a basis for including it underthe outpatient rehabilitation benefit,carriers have the discretion to coverthese low-vision training services if theydetermine that they meet the statutoryrequirements applicable to coveredservices and are determined to bemedically reasonable and necessary.

Comment: A commenter recommendsthat CPT codes 92520, 94799, andpsychiatric therapeutic codes after90804 be added to the list of outpatientrehabilitation services. The commenterstated that code 94799 is currentlyrecognized by Blue Cross and BlueShield of Florida. The commenter alsostated that, in addition to code 90804,other psychiatric therapeutic codesshould be added for assessments andcommunity resource education, referraland advocacy, family conferences, andhome assessments.

Response: The commenter asked thatwe add code 92520, laryngeal functionstudies, to our list of outpatient therapycodes. Our data show that this code isalmost entirely billed byotolaryngologists. Our standard for theinclusion of diagnostic tests asoutpatient rehabilitation services is asfollows:

• If the primary purpose of adiagnostic test, at times performed bytherapists, is to assess theappropriateness or effectiveness ofoutpatient therapy services or to guideadditional treatment by a physicaltherapist, an occupational therapist orspeech-language pathologist, then thetest is considered to be outpatienttherapy or rehabilitation services; or

• If the primary purpose of thediagnostic test is to provide informationon decisions for future medical orsurgical treatment or to assess the effectof previous medical or surgicaltreatment, then the diagnostic test is notconsidered to be an outpatient therapyor rehabilitation service.

Because the purpose of code 92520 isnot clear to us and because our datashow that it is performedoverwhelmingly by otolaryngologists,we suggest that providers andpractitioners who believe it meets theabove criteria as an outpatientrehabilitation service provideinformation to their Medicarecontractors and the contractors canapprove it if it meets the coveragecriteria of being ‘‘medically necessary.’’We advised our carriers and fiscalintermediaries in PM AB–98–24 thatthey may recognize codes other thanthose identified in our instruction asoutpatient rehabilitation services to theextent that the codes represent servicesthat are determined to be medicallynecessary and within the scope ofpractice of the practitioner or therapistbilling the service.

The commenter asked that code94799, unlisted pulmonary services orprocedures, be added to the list ofoutpatient rehabilitation services.Again, we suggest that practitioners andproviders that wish to use this code todescribe an outpatient rehabilitationservice discuss with their Medicarecontractor the specific services orprocedures being provided when thiscode is used. Before this code can beused, the Medicare contractor needs todetermine whether the services are‘‘medically necessary.’’

The commenter also asked that weadd other psychotherapy codes from thefamily of codes that includes 90804 thatis on our list of outpatient rehabilitationservices. Clinical psychologists andclinical social workers who deliverservices in CORFs can bill any of thepsychotherapy codes except for the onesthat involve medical evaluation andmanagement. These services are billedunder Part B and are submitted tocarriers on the HCFA form 1500.Therefore, these codes will not be addedto our list of outpatient rehabilitationservices.

Comment: One commenterrecommended adding to our final rulethe statement contained in PM A–98–24that denotes that other codes may beconsidered to represent outpatientrehabilitation services to the extent thatthe services are determined to bemedically reasonable and necessary andcan be billed as outpatient rehabilitationservices.


Response: Although we have includedthe statement in the text in theregulation, we will consider other codesto be outpatient rehabilitation codesunder the terms we have stated.

Comment: One commenter requestedthat we clarify in the final rule thatAddendum F contains the codes forreporting outpatient rehabilitationservices.

Response: We appreciate thesuggestion. It was inaccurately reportedin the proposed rule that Addendum Econtains a listing of outpatientrehabilitation therapy codes. It shouldhave read that Addendum F containssuch a listing. We have made theappropriate correction in this rule.

3. Financial Limitationa. Overview. Outpatient rehabilitation

therapy services are subject to annualfinancial limitations or caps beginningJanuary 1, 1999. (The amount of thecurrent cap is $900.) There will be a$1,500 per-beneficiary annual limitationor cap on incurred expenses foroutpatient physical therapy servicesincluding outpatient speech-languagepathology services. A separate $1,500per-beneficiary limitation will apply onincurred expenses for outpatientoccupational therapy services. Theannual limitation does not apply toservices furnished directly or underarrangements by a hospital to anoutpatient or to an inpatient who is notin a covered Part A stay. The limitationwill apply to outpatient rehabilitationservices furnished by a separately-certified hospital-based provider, suchas a hospital-based SNF. The limitationalso applies to outpatient rehabilitationservices furnished by a physician ornonphysician practitioner, or incidentto a physician’s professional services orto a nonphysician practitioner’sprofessional services.

As stated above, there is a single$1,500 limitation for outpatient physicaltherapy services which includesoutpatient speech-language pathologyservices. As amended, section 1833(g) ofthe Act applies a single $1,500limitation to ‘‘physical therapy servicesof the type described in section1861(p).’’ Section 1861(p) definesoutpatient physical therapy services andincludes speech-language pathologyservices within that definition.

Outpatient rehabilitation services aresubject to a 20-percent coinsuranceamount. Under the outpatientprospective payment system, thebeneficiary will be responsible for 20percent of the applicable fee scheduleamounts. The $1,500 limitation is onincurred expenses. If a beneficiary hasalready satisfied the Part B deductible,

the maximum amount payable by theMedicare program is $1,200, that is, 80percent of $1,500. Beginning January 1,2002, the $1,500 annual limitations orcaps will be increased by the percentageincrease in the MEI.

In addition to outpatient physicaltherapy services and outpatientoccupational therapy services (otherthan those provided by a hospital), thelimitation applies to physical therapyservices (including speech-languagepathology services) and occupationaltherapy services ‘‘of such type whichare furnished by a physician or asincident to a physician service.’’ Asdiscussed elsewhere in this document,Medicare covers under certainconditions services performed by nursepractitioners, clinical nurse specialists,and physician assistants that would bephysicians’ services if furnished by aphysician. We are applying the financiallimitation to therapy services furnishedby these nonphysician practitionersbecause such therapy services are bydefinition the same type as arefurnished by physicians. Similarly, wehave revised our policy to apply thefinancial limitation to therapy servicesfurnished incident to thesenonphysician practitioner’s services. Wehave included in Addendum D a listingof the specific services that are subjectto the limitation when furnished by aphysician or practitioner directly orincident to his or her services. Suchoutpatient rehabilitation servicesincluded in Addendum D furnishedeither directly or incident to the servicesof a physician or practitioner are alwayssubject to the financial limitation. Otherservices such as casting, splinting, andstrapping may be used in the treatmentof conditions (for example, fractures orsprains) or as part of the postsurgicaltreatment or medical treatment when noother rehabilitation services aredelivered. If the services are deliveredby a physical or occupational therapist,speech-language pathologist, therapyassistant or therapy aide, are part of arehabilitation plan of care, or involveservices included in the aforementionedAddendum D, then the services aresubject to the cap. These outpatientrehabilitation services are delineated inAddendum E and must be identifiedwith a discipline-specific modifier.Addendum F contains a listing ofcommonly-utilized outpatientrehabilitation therapy codes. Othercodes may be considered for payment asoutpatient rehabilitation services to theextent that the services are determinedto be medically reasonable andnecessary and those that can beperformed within the scope of practice

of the therapist, physician, ornonphysician practitioner billing thecode. Payment for certain HCPCS codeswill be made on a basis other than thephysician fee schedule in hospitaloutpatient departments. Other HCPCScodes represent CORF services. Further,PM AB–98–63 dated October 1998provides additional programinstructions regarding the use of HCPCScodes for outpatient rehabilitationtherapy services.

With regard to ‘‘incident to’’ services,we note that section 4541(b) of BBAamended section 1862(a) of the Act torequire that outpatient physical therapyservices (including speech-languagepathology services) and outpatientoccupational therapy services furnished‘‘incident to’’ a physician’s professionalservices meet the standards andconditions (other than any licensingrequirement specified by the Secretary)that apply to therapy services furnishedby a therapist. This provision waseffective January 1, 1998 and wasimplemented through programinstructions.

The financial limitations apply onlyto items and services furnished bynonhospital providers and therapistsunder the outpatient physical therapy(including speech-language pathology)and the outpatient occupational therapybenefit (section 1861(s)(2)(D) of the Act)and therapy services furnished byphysicians and nonphysicianpractitioners or incident to theirservices. The limitations do not apply todiagnostic tests covered under section1861(s)(3) of the Act or to itemsfurnished or covered under the durablemedical equipment benefit.

Comment: Some commenters urged usto repeal the limitation.

Response: We have no authority torepeal the annual financial limitation asset forth in BBA. An annual perbeneficiary limit of $1,500 will apply toall outpatient physical therapy services(including speech-language pathologyservices). A separate $1,500 limit willalso apply to all occupational therapyservices. As noted above the annuallimitations do not apply to servicesfurnished directly or underarrangements by a hospital to anoutpatient or to an inpatient who is notin a covered Part A stay. This limitationapplies to expenses incurred on or afterJanuary 1, 1999.

Comment: Several commenters wantus to delay implementing the financiallimitation while others asked that, if weproceed with implementation, weclarify how we would implement it. Wereceived one comment suggesting thatwe delay the implementation of theannual limitation until we develop a


system of tracking the aggregate amountof speech-language pathology expensesincurred by a beneficiary.

Response: As previously stated,because of our efforts to become Y2Kcompliant, with the exception ofqualified therapists in independentpractice, we are not able to make theappropriate systems changes to fullyimplement the caps on a per-beneficiarybasis at this time. Instead, we will usea transitional measure, wherebyproviders and practitioners (those notcurrently subject to the caps, forexample, physicians and nonphysicianpractitioners) will be held accountablefor tracking incurred expenses for eachbeneficiary to ensure they do not billMedicare for beneficiaries that have metthe annual $1,500 limitation at theirfacility for each separate limitation. Thismeans that SNFs will be directlyresponsible for the billing of alloutpatient rehabilitation services andthe tracking of incurred expenses ofthose services when furnished to SNFresidents not in a covered Part A stayand SNF nonresidents receivingoutpatient rehabilitation services fromthe SNF.

However, the provider and thepractitioner may submit bills toMedicare for the sole purpose ofreceiving no-pay notices to billMedicaid or other insurers.

It is noted that the current annual perbeneficiary financial limitation appliedto outpatient physical therapy servicesincluding speech-language pathologyservices furnished by PTIPs is increasedfrom $900 to $1,500 effective January 1,1999 for PTPPs. In addition, the currentannual per beneficiary financiallimitation applied to outpatientoccupational therapy services isincreased from $900 to $1,500 effectiveJanuary 1, 1999 for OTPPs. As cited, forthese qualified therapists only, thefinancial limitations continue to beapplied on an annual per beneficiarybasis rather than on a per provider basis.

Comment: Many commenters believedthere should be three separate annualfinancial limitations, that is, one eachfor physical therapy, occupationaltherapy, and speech-language therapyservices. They argue that the Congressnever intended to include speech-language pathology services within thephysical therapy cap because speechtherapists have never been defined asindependent therapists and were neversubject to the current $900 cap.

Response: As stated above, section1861(p) of the Act defines the termoutpatient physical therapy services toinclude speech-language pathologyservices. The language in BBAspecifically makes provision for

physical therapy services andoccupational therapy services inapplying the annual financial limitationand does not separately mentionspeech-language pathology services. It isour position that BBA does not includea separate cap for speech-languagepathology services, and that there areonly two financial limitations (OT andPT that includes speech-languagetherapy services).

Comment: Two commenters opposethe imposition of the $1,500 capbecause it is not sufficient to cover thecost of physical therapy for manycommon diagnoses or cost of care fortypical rehabilitation cases. One of thecommenters noted that MedPAC foundin its June 1998 report to Congress thatone third of the patients receivingoutpatient rehabilitation services fromrehabilitation agencies and CORFsexceeded either the combined $1,500cap on outpatient physical therapy andspeech-language pathology or the $1,500cap on outpatient occupational therapy.

Response: The commenter is correctin stating that the MedPAC’s study of a5-percent sample of Medicare outpatientrehabilitation claims for 1996 did findthat about one-third of all patientsreceiving outpatient rehabilitationservices from rehabilitation agenciesand CORFs exceeded the $1,500 caps.However, the study noted that becausemost Medicare beneficiaries receivedthe services in hospital outpatientdepartments in 1996, the percent of allpatients impacted by the $1,500 caps isconsiderably less, that is, only 10percent of all outpatient physical andspeech therapy patients receivingservices in hospital outpatientdepartments, rehabilitation agencies andCORFs and only 2 percent of alloccupational therapy patients in thosethree settings.

We plan to carefully study this issue.As discussed elsewhere in thisdocument, BBA requires that we submita report to the Congress by January 1,2001 that recommends viable optionsfor replacing the current dollar caps thattake into account patient diagnosis andprior use of services.

Comment: One commenter stated thatthe limitation should apply only totherapy services furnished by physicaltherapists and occupational therapists,and not to therapy services furnished byphysicians. Another commentercontends that the cap applies solely totherapists and physicians furnishingoutpatient rehabilitation services undera plan of care. Neither commenterbelieves that nonphysician practitionersshould be allowed to perform therapyservices. These commenters argue thatonly physical therapists or services

provided under the supervision of aphysical therapist should be reimbursedby Medicare. The commenters maintainthat the definition of physical therapistsas referenced in § 485.705(b) and thecoverage guidelines specified in section2210.B of the MCM and 3101.8B of theMIM are not met if the services areprovided by persons other than physicaltherapists. In addition, the statute doesnot extend the cap to services furnishedby practitioners other than OTIPs andPTIPs.

Response: Section 4541 of BBAprovides for a prospective payment foroutpatient rehabilitation services. Theoperative word in the statute is‘‘services’’. Reference is made both tothe payment for outpatient therapyservices and comprehensive outpatientrehabilitation services on the basis ofthe physician fee schedule and to thefinancial limitation for all rehabilitationservices. The fee schedule is applied tooutpatient therapy or rehabilitationservices without regard to thepractitioner who furnishes the service.Physical and occupational therapyservices furnished by physicians andcertain other recognized practitionersare payable under the physician feeschedule. A nonphysician practitionerwho provides services that would bephysicians’ services if furnished by aphysician under a specific enumeratedbenefit in the statute would beconsidered as the physician treating thebeneficiary. Thus, a nonphysicianpractitioner would be considered as thephysician treating the beneficiary whenhe or she furnishes outpatient physicaltherapy and occupational therapyservices. Nonphysician practitionerswho meet this definition are physicianassistants (section 1861(s)(2)(K)(I) of theAct); and nurse practitioners andclinical nurse specialists (sections1861(s)(2)(K)(ii) and 1861(s)(2)(K)(iii) ofthe Act), operating within the scope oftheir State licenses.

B. Use of Modifiers to Track theFinancial Limitation. We haveestablished three discipline-specificmodifiers for use in tracking thefinancial limitation or cap. They arelisted below.GN Services delivered personally by a

speech-language pathologist or underan outpatient speech-languagepathology plan of care;

GO Service delivered personally by anoccupational therapist or under anoutpatient occupational therapy planof care; or

GP Service delivered personally by aphysical therapist or under anoutpatient physical therapy plan ofcare.


Reporting of these modifiers will alsoassist us in gathering data on who isproviding the services, and thefrequency and duration of the services.Many of the services, for example,physical modalities or therapeuticprocedures as described by HCPCScodes, are commonly delivered by bothphysical and occupational therapists.Other services may be delivered byeither occupational therapists or speech-language pathologists. For theseservices, we expect the claim to includea modifier that describes the type oftherapist who delivered the service; ifthe service was not delivered by atherapist, then the type of therapy planof care under which the service isdelivered would be specified. If the typeof therapy is not listed in the modifierfield, the claim would be rejected andsent to the provider for resubmission.

Comment: We received one commentthat supports our proposal to usemodifiers that will be discipline-specificto identify whether a plan of care is forphysical therapy or occupationaltherapy. However, the commenter alsofavors the addition of modifiers that willallow for the identification of physicianand nonphysician services that areprovided under a plan of care. Claimsfrom physicians and nonphysicianswith a modifier would be subject to oneof the caps, while claims without amodifier would not be subject to anycap. Another commenter stated that theproposed policy to reject a claim andsend it to the provider for resubmissionif the type of therapy is not listed in themodifier field is inappropriate andshould not be adopted. The commentercontends that there are legitimate casesin which the codes in Addendum D willbe reported but should not be appliedagainst the caps, for example, if theservices are furnished by anonphysician practitioner or aphysician but they are not providedunder a therapy plan of care. Thiscontention is also shared by anothercommenter who strongly opposed ourproposal to apply services against thecaps for occupational therapy andphysical therapy including speech-language pathology services basedstrictly on an arbitrary reporting ofcertain CPT codes. The presumptionwith this approach is that therapyservices are furnished whenever codeslisted in Addendum D are reported

Response: At this time, we havedecided to only use the discipline-specific modifiers listed in the responseabove. These modifiers will differentiatebetween either the type of therapist(physical therapist, occupationaltherapist, speech-language pathologist)personally providing the service or the

discipline plan of care (physical,occupational, and speech-languagepathology). For example, if modifier GPis used, the physical therapist mustdeliver personally the service or theservice must be delivered under aphysical therapy plan of care. Therefore,in addition to the personal provision ofthe therapy service by the physicaltherapist, a physician or nonphysicianpractitioner can also furnish thephysical therapy service. We believethat additional modifiers are not neededto delineate services provided byphysicians and nonphysicianpractitioners under a therapy plan ofcare; however, we believe that thecommenter’s statement is validregarding the possible use of codeslisted in Addendum D for other thantherapy purposes, that is, not under atherapy plan of care. We are exploringthe use of an additional modifier toindicate that the service denoted by thecode was not provided under a therapyplan of care. By the time that thefinancial limitation or cap is fullyimplemented, we expect to haveestablished the additional modifier.Until that modifier is in place, claimswithout a discipline-specific modifierwill be returned for resubmission.

Comment: A commenter stated thatthe cap will be difficult to trackadministratively and recommended thatthere be a clearer delineation of whenservices will be subject to the limit andwhat the controlling factors will be(including the type of professionaldelivering the service, whether there isa rehabilitation plan of care, and thenature of the service), a listing orexamples of services and thecircumstances under which they wouldnot be included under the cap.

Response: The commenter’s requestfor clarification is based on a fullimplementation of the financiallimitation or cap. Because of Y2Kissues, the financial limitation or capwill not be fully implemented asmandated by statute effective January 1,1999. Therefore, it is our intention tocarefully review, consider, and addressthe commenter’s concerns as we movefrom the transitional implementation ofthe cap on a per-provider basis to thefull implementation of the cap on anannual per-beneficiary basis.

Comment: One commenter stated thatthe mechanics of implementing the capshould be clarified. The commenter saidthat there are serious concerns regardingthe calculation of the cap, time ofbilling, and timing of processingpayments that would be fed into thedatabase. The commenter is concernedabout the effect of medical review, forexample, whether payment will be

reserved when a claim is filed in atimely manner, subjected to medicalreview, denied, and successfullyappealed, and the claim was originallyfiled well before the cap is met. Severalcommenters were of the opinion that itis administratively difficult for allparties (beneficiaries, providers, andcontractors) to track the cap even withthe use of the modifiers. They want usto address specific issues regardingtracking and the use of modifiers beforeimplementation of the cap, and to alsonotify beneficiaries regarding thetracking procedure. These specificissues include a clear delineation ofwhen services are subject to the limit,what the controlling factors will be(including the type of professionaldelivering the service, whether there isa rehabilitation plan of care, and thenature of the service), a listing orexamples of the services and thecircumstances under which they wouldbe excluded from the cap.

Response: These are issues that willbe addressed prior to the fullimplementation of the financiallimitation or cap. Because there is thedistinct possibility that systemsrequirements will change before suchfull implementation, it does not seemprudent at this time to detail themechanics of the future implementationof the cap. However, it is our currentthinking that these concerns will bediscussed and clarified in companionprogram instructions issued to theMedicare carriers and fiscalintermediaries.

Comment: A commenter stated thatthere should be a timely, readilyaccessible means (such as a querysystem) for beneficiaries and providersto ascertain the status of thebeneficiary’s outpatient therapybenefits.

Response: This question relates to thefull implementation of the financiallimitation or cap on an annual per-beneficiary basis. We are exploringmechanisms by which both thebeneficiary and the provider can beinformed in a timely and accuratemanner, the amounts that have beenexpended by the beneficiary foroutpatient physical therapy servicesincluding speech language pathologyservices and for outpatient occupationaltherapy services. These methods will bediscussed in any program memorandumor other program instruction that wedetermine will be the vehicle for theconveyance of the beneficiary cap statusinformation.

C. Treatment of Services Exceedingthe Financial Limitation. As required bysection 1833(g) of the Act, as amendedby section 4541 of BBA, we revised our


policy to establish two annual per-beneficiary limits of $1,500. There willbe (1) an annual per-beneficiary limit forall outpatient physical therapy servicesexcluding hospital outpatient therapyservices furnished to an outpatient or aninpatient who is not in a covered PartA stay and, (2) an annual per beneficiarylimit for all outpatient occupationaltherapy services excluding hospitaloutpatient therapy services furnished toan outpatient or an inpatient who is notin a covered Part A stay. As statedpreviously, outpatient physical therapyservices include speech-languagepathology services. A provider ofoutpatient rehabilitation services with aprovider agreement under section 1866of the Act, as well as physicians, PTIPsand OTIPs, will be allowed to collectpayment from a beneficiary for therapyservices after the $1,500 limit isreached. This is consistent with currentpolicy allowing PTIPs and OTIPs tocollect payment from a beneficiary fortherapy services in excess of the current$900 limit.

Required Congressional Report onFinancial Limitation

We note that a report to the Congressis due from the Secretary no later thanJanuary 1, 2001. This report mustinclude recommendations on theestablishment of a revised coveragepolicy of outpatient physical therapyservices, including speech-languagepathology services and outpatientoccupational therapy services. Therevised policy must be based on aclassification of individuals bydiagnosis category and prior use ofservices in both inpatient and outpatientsettings. The report should includerecommendations on how suchdurational limits by diagnostic categorycould be implemented in a budget-neutral manner.

Comment: It was recommended by acommenter for the report to theCongress that, in addition to basing arevised policy on classification bydiagnosis category and prior use ofservices, an individual’s functionalstatus should be a component of anysystem that purports to address apatient’s need for rehabilitation.

Response: As we develop the report tothe Congress, we will consider thefeasibility of the recommendation.

4. Qualified TherapistsSection 1861(p) includes services

furnished an individual by a physicaltherapist who meets licensing and otherstandards prescribed by the Secretary ifthe services meet the conditions relatingto health and safety the Secretary findsnecessary. The services must be

furnished in the therapist’s office or theindividual’s home. By regulation, wehave defined therapists meeting theconditions for coverage of servicesunder this provision as physicaltherapists in independent practice. Theconditions for coverage are set forth inpart 486, subpart D (Conditions forcoverage: Outpatient Physical TherapyServices Furnished by PhysicalTherapists in Independent Practice) andrequire that the services be provided bya therapist in independent practiceunder § 410.60. Under § 410.60, atherapist in independent practice is onewho:

• Engages in the practice of therapyon a regular basis.

• Furnishes services on his or herown responsibility without theadministrative and professional controlof an employer.

• Maintains at his or her own expenseoffice space and equipment.

• Furnishes services only in the officeor patient’s home.

• Treats individuals who are his orher own patients and collects fees orother compensation for the services.

Under § 486.151 (Conditions forcoverage: Supervision), all therapyservices must be furnished under thedirect supervision of a qualifiedtherapist in independent practice. Inother words, the therapist inindependent practice must be on thepremises whenever services areprovided to Medicare beneficiaries,including services provided by alicensed physical therapist. This long-standing requirement has beencontroversial with therapists inindependent practice. For example, atherapist in independent practicecannot have more than one office openfor services at the same time since he orshe could not be on both premises atonce.

We are revising our policy to replacethe existing ‘‘Conditions for Coverage:Outpatient Physical Therapy ServicesFurnished by Physical Therapists inIndependent Practice’’ (part 486,subpart D), which requires survey andcertification, with a simplified criteriafor physical therapists in privatepractice that would use a carrierenrollment process. The impetus for thischange comes from congressionalstatements associated with the fiscalyear 1997 appropriations process.Statements in both the House andSenate committee reports accompanyingHCFA’s fiscal year 1997 appropriationsaddressed the issue of requiring that thecertified physical or occupationaltherapist in independent practicedirectly supervise all services performedby his or her employees, even if those

employees are fully-licensed therapists.The House committee report urged thatwe modify the regulations so that thecertified therapist need not be onpremises to supervise other licensedtherapists. The Senate urged us toreview this concern and recommendregulatory or instructional changes.

We are redefining those therapistswho are qualified under section 1861(p)of the Act. That is, we woulddiscontinue the focus of the regulationon their ‘‘independent’’ status (which isnot statutory) and recognize therapistsin private practice who are employed byothers and, therefore, do not meet ourcurrent ‘‘independent’’ criteria. Thiswould be consistent with health andsafety concerns and would conform tonormal private sector practicestandards. The following newrequirements replace the current onesfor qualified therapists:

• The term ‘‘independent’’ is droppedand the benefit would be for anindividual physical therapist oroccupational therapist in privatepractice.

Private practice includes an‘‘individual’’ whose practice is in anunincorporated solo practice,unincorporated partnership, orunincorporated group practice. Privatepractice also includes an ‘‘individual’’who is practicing therapy as anemployee of one of the above or of aprofessional corporation or otherincorporated therapy practice. However,private practice does not includeindividuals when they are working asemployees of a provider. A provider asdefined in § 400.202 includes a hospital,CAH, SNF, HHA, hospice, CORF,CMHC, or an organization qualifiedunder part 485, subpart H (Conditions ofParticipation for Clinics, RehabilitationAgencies, and Public Health Agencies asProviders of Outpatient PhysicalTherapy and Speech-LanguagePathology Services), as a clinic,rehabilitation agency, or public healthagency.

• In implementing the statutoryrequirement that services be furnishedto an individual in the therapist’s office,or in the individual’s home, ‘‘in hisoffice’’ is defined as the location(s)where the practice is operated, in theState(s) where the therapist (andpractice, if applicable) is legallyauthorized to furnish services, duringthe hours that the therapist engages inpractice at that location.

A therapist in private practice mustmaintain a private office, if servicesalways are furnished in patients’ homes.However, if services are furnished inprivate practice office space, that spacewould have to be owned, leased, or


rented by the practice and used for theexclusive purpose of operating thepractice. For example, because of thestatutory restriction on the site ofservices, a therapist in private practicecannot furnish covered services in anSNF. Therefore, if a therapist wished tolocate his or her private office on site ata nursing facility, special care wouldneed to be taken. The private officespace could not be part of the Medicare-participating SNF’s space, and thetherapist’s services could be furnishedonly within that private office space.Neither the therapist nor any assistantsor aides who help furnish services couldbe employed by the SNF during thesame hours that they are working in theprivate practice. Another examplewhere special attention would beneeded is space that generally servesother purposes and is only used by atherapy practice during limited hours.For example, a therapist in privatepractice may furnish aquatic therapy ina community center pool on Wednesdaymornings. The practice would have torent or lease the pool for those hours,and the use of the pool during that timewould have to be restricted to thetherapist’s patients, in order torecognize the pool as part of thetherapist’s own private office duringthose hours.

In describing other services that arespecifically limited to the patient’shome, the statute uses qualifyinglanguage. For example, the durablemedical equipment definition in section1861(n) of the Act refers to a patient’shome as ‘‘including an institution usedas his home other than an institutionthat meets the requirements ofsubsection (e)(1) of this section orsection 1819(a)(1).’’ This definition ofhome is codified under our regulationsat § 410.38(b). The same definitionalways has been used in the MedicareCarriers Manual for purposes ofcovering therapists’ services in apatient’s home. We are continuing thecurrent practice and are adopting thedefinition formally in this regulation.

• Assistants and aides have to bepersonally supervised by the therapistand employed directly by the therapist,by the partnership or group to which thetherapist belongs, or by the same privatepractice that employs the therapist.Personal supervision requires that thetherapist be in the room during theperformance of the service. Levels ofsupervision are defined in § 410.32 ofour regulations.

• The therapist must be licensed orotherwise legally authorized to engagein private practice. We understand thatall States license or certify physical

therapists, so no alternative personnelqualifications need to be specified.

• Each therapist enrolls ‘‘as anindividual’’ with the carrier.

There would be no survey and nocertification by HCFA. The Medicarecarrier would verify that thequalifications proposed in§§ 410.59(c)(1) or 410.60(c)(1) of ourregulations are met. All applicants fornew enrollment would become subjectto these new rules and procedures uponthe effective date of the final rule. Fortransition purposes, we intend thatindependent therapists who are certifiedand enrolled at that time would be‘‘grandfathered’’ temporarily and wouldbecome subject to the new enrollmentrules and procedures at the time of theirnext regular periodic reenrollment.

These changes would address theconcern that current rules require eachindependent therapist to personallysupervise services performed by anyother licensed therapists that he or sheemploys. Under our proposal, eachindividual therapist in a practice couldqualify to separately enroll, andenrolled therapists would not berequired for purposes of Medicare to besupervised by their employer. Thesechanges also address the concern thatcurrent rules prohibit an independenttherapist from being employed by anyentity. Under our proposal, a variety ofemployment situations would bepermitted.

These new requirements areestablished in a revised § 410.60(c) forphysical therapists. To date, thestatutory requirements for coverage ofoutpatient occupational therapy serviceshave not been codified. We arecodifying these requirements byestablishing a new § 410.59 foroutpatient occupational therapyservices. The regulations section foroutpatient occupational therapyparallels the § 410.60 requirements foroutpatient physical therapy, as revisedin this final rule. We are also makingconforming changes in § 410.61 toinclude occupational therapy.

Therapists in private practice do notparticipate in the Medicare program inthe same way that ‘‘providers ofservices’’ do. Though they must beapproved as meeting certainrequirements, unlike ‘‘providers ofservices,’’ they do not execute a formalprovider agreement with the Secretaryas described in 42 CFR part 489(Provider Agreements and SupplierApproval). Like physicians, they dohave the option of accepting abeneficiary’s assignment of his or herclaim for Medicare Part B benefits andof becoming a Medicare-participating

supplier that agrees to acceptassignment in all cases.

Comment: One commenter stronglysupports the carrier enrollment processfor physical therapists instead of theexisting conditions of coverage.However, the commenter wantedoperational issues addressed such as aspecification that payments will bemade under the practice orcorporation’s tax ID number for servicesfurnished by physical therapists inprivate practice who are employees ofother practices or corporations. This isthe same payment system used by aphysician group practice, and thetreating therapist’s Medicare number orlicense number would be included onthe bill. In addition, the commenterurged that the same process be used forthe carrier enrollment process as for thecurrent physician enrollment. Anothercommenter supported the changes forOTPPs; however, assuming thatpayment is made to the individual, thecommenter inquired as to whethergroup numbers would be assigned sothat payment could be issued to thegroup under the tax identificationnumber of the business entity.

Response: We will use the sameenrollment and billing process as iscurrently used for individual physiciansand physician group practices. Thisprocess is delineated at section 1030.7of the Medicare Carriers Manual, HCFAPub. 14–Part 4. We note that payment isnot made on the basis of the corporateor group practice tax identificationnumber. This number is just one of thedata elements that can be related to theMedicare individual and/or groupbilling number.

Comment: A commenterrecommended that direct supervision ofassistants and aides be required insteadof personal supervision. The commenterprovided that direct supervision wouldbe consistent with state laws, thesupervision requirements fornonphysician personnel performingservices in a physician’s office, and withthe supervision requirements for aidesand assistants of PTIPs.

Another commenter agreed thatpersonal supervision over therapy aidesby a qualified occupational therapist orqualified occupational therapy assistantis appropriate. However, the commenterstrongly disagreed with the proposal torequire personal supervision overoccupational therapy assistants andinstead urged the adoption of a policyfor practicing occupational therapistswhereby occupational therapy assistantscan perform covered services under thegeneral supervision (that is, initialdirection and periodic inspection) of aqualified occupational therapist. In


addition, the commenter thought thepolicy should state that either aqualified occupational therapist or aqualified occupational therapy assistantmust provide personal supervisionwhen therapy aides are used to furnishservices.

A commenter stated that qualifiedoccupational therapists who are not PartB suppliers, but who are employed bya therapist who is enrolled as a Part Bsupplier, should not be subject to thepersonal supervision requirement. Inaddition, it was suggested that theproposed language at § 410.59(c)(2)regarding supervision of occupationaltherapy services should be revised asfollows:

‘‘Occupational therapy services areperformed by, or under the generalsupervision of, the occupationaltherapist in private practice. Servicesprovided by therapy aides must beperformed under the personalsupervision of an occupational therapistor occupational therapy assistant. Allservices not performed personally bythe therapist in private practice must beperformed by employees of the practice,under the applicable level ofsupervision by the therapist, andincluded in the fee for the therapist’sservices.’’

Response: Statements contained inthe House and Senate committee reportsaccompanying the 1997 appropriationsrecommended modifications in oursupervision requirements for qualifiedtherapists. As stated, the Housecommittee report urged a regulatorychange in the requirement that certifiedtherapists be on the premises tosupervise other licensed therapists. Wewere also urged by the Senate to reviewthis concern and recommend regulatoryor instructional changes. We haveaddressed the concern expressed in theHouse and Senate 1997 appropriationscommittee reports and will allowcertified therapists to be off thepremises when other licensed therapistsare present. However, we do not believethat we have the authority to modify thesupervision requirements for therapy(physical, occupational or speech-language pathology) assistants andaides. Therefore, we are maintaining ourcurrent requirement that therapyassistants and aides have to bepersonally supervised by the therapistand employed directly by the therapist,by the partnership or group to which thetherapist belongs. In accordance withthe aforementioned policy, there is nochange in the proposed language foundat § 410.59(c)(2).

Comment: We received one commenton our proposed qualifications foroccupational therapists. One

organization recommends that werequire evidence of successfulcompletion of a national certificationexamination recognized by theregulatory authority in the State ofpractice. Reasons given for the additionof this requirement are that practicevaries by jurisdiction and unsuccessfulexam candidates often move from Stateto State obtaining temporary licenses inspite of repeatedly failing qualifyingexams. The commenter adds that theparticular test they recommend isrequired in every jurisdiction.

Response: We believe that thisrecommendation has merit. However,we believe that it requires further studyand discussion to assess its impactbefore we can consider it for adoption.Therefore, we believe it would be moreappropriate to consider thisrecommendation as a proposal for asubsequent publication rather to acceptit for adoption in this final rule.

Comment: One commenter supportsour proposed set of changes addressingindependent practicing occupationaltherapist services, but adds that asMedicare moves to embrace marketbased competition, the focus should beon the outcomes delivered rather thanthe input credentialing. There should bea commitment to move beyondburdensome input criteria that add costsand restrict competition. Thecommenter suggests that, as part of thatinitiative, we establish a meaningfultime horizon for moving to outcomes-based performance measures.

Response: This is a welcomedrecommendation. In recent years, whenrevising our conditions of participationfor various entities, we haveemphasized outcomes-based measures.However, this is an area that requiresfurther study in order to apply thisconcept to our conditions foroccupational therapists practice.

Comment: One commenter stated thatverification should be provided in thefinal rule that section 1861(p) of the Actrequires a physician to have servicesfurnished by a licensed physicaltherapist or under the supervision ofsuch a therapist when billing forphysical therapist services incident tothe physician’s professional services.

Response: Section 1861(p) of the Actdoes not set forth the requirements asspecified by the commenter. Aspreviously stated, section 4541(b) of theBBA 1997 amended section 1862(a) ofthe Act to require that outpatientphysical therapy services (includingspeech-language pathology services) andoccupational therapy services furnished‘‘incident to’’ a physician’s professionalservices meet the standards andconditions (other than any licensing

requirement specified by the Secretary)that apply to therapy services furnishedby a therapist. In May 1998, we issuedTransmittal No. 1606 of the MedicareCarriers Manual, Part 3—Claims Processwhich implemented this provision thatwas effective January 1, 1998. Section2218(A) of the Medicare CarriersManual requires that physical therapyservices provided by a physician or byan incident-to employee of thephysician in the physician’s office orthe beneficiary’s home must beprovided by, or under the directsupervision of, a physician (a doctor ofmedicine or osteopathy) who is legallyauthorized to practice physical therapyservices by the State in which he or sheperforms such function or action.

5. Plan of TreatmentWe are proposing to revise

§§ 410.61(e), 424.24(c)(4)(i), and485.711(b), which concern the plan oftreatment review requirements foroutpatient rehabilitation therapyservices. Section 1861(p) of the Actdefines these therapy services, in part,as services furnished to an individualwho is under the care of a physician andfor whom a plan, prescribing the type,amount, and duration of therapyservices that are to be furnished, hasbeen established by a physician or aqualified therapist and is periodicallyreviewed by a physician.

Currently, providers that furnishoutpatient rehabilitation therapyservices are required to have a physicianreview the plan of treatment andrecertify the need for care at least every30 days. We proposed revising ourpolicy to allow the physician to reviewand recertify the required plan oftreatment within the first 62 days and atleast every 31 days after the first reviewand recertification. The currentrequirement for the review of a plan oftreatment for patients of physicaltherapists in independent practice issimilar in that the physician mustreview the plan at least every 30 days.We proposed changing this reviewrequirement and requiring that thephysician review and recertify the planof treatment within the first 62 days andat least every 31 days thereafter.

We recommended these changesbecause it was our understanding thatan initial 2-month (62 day) review isconsistent with the usual therapy courseof treatment. It is also consistent withour current therapy requirements in thehome health setting. These changeswere intended to reduce the burden onproviders, patients, and physicians byeliminating the current requirement foran initial review within the first 30days. After the first 62 days, we believed


that patients receiving outpatientrehabilitation services are likely to showsignificant progress that warrantssubsequent reviews every 31 days.Changes in the patient’s level offunction and need for continued therapycan be expected to occur morefrequently after the first 2 months oftherapy. We believe this subsequentreview schedule will help controlpotential over-utilization that results inexcessive therapy to some Medicarepatients.

Under our proposed policy, thetherapists would be required toimmediately notify the physician of anychanges in the patient’s condition, andphysicians retain the ability to reviewthe care at closer intervals if necessary.

Comment: We received commentsfrom six outpatient rehabilitationassociations supporting our proposaland two comments from orthopedicsurgical associations strongly opposingit. The opposing orthopedic associationsinformed us that 62 days is not theusual course of treatment. They arguedthat every patient’s need for therapy isunique depending on the condition.While 62 days may be appropriate forsome back injuries, they contend itwould be inappropriate for a hand, foot,or shoulder injury. Therapy isappropriate as long as the patientcontinues to make progress and shouldbe discontinued when the patient’scondition has plateaued and no furtherprogress is being made. They stated thiscan best be determined by the referringphysician periodically evaluating thepatient’s progress and recovery. Theybelieve the current 30-day requirementis appropriate and should bemaintained.

Response: After careful review of thecomments received and study of theissue by our medical staff, we areretaining our current 30-dayrequirement and rescind our proposal.As indicated above, our intent, in part,was to establish consistency with theinitial review period for HHA therapyservices. However, subsequent to ourproposal we further learned that HHApatients may not receive the same levelof intensity of therapy services aspatients receiving them under theoutpatient rehabilitation benefit. Ourmedical staff believes that patients inthe latter group are seen more often bytheir therapists than are HHA patients.Therefore, the rate of progressionbetween the two patient groups may bedifferent and warrant a 30-day rather 62-day initial plan of treatment review forbeneficiaries receiving outpatientrehabilitation services.

Comment: We received severalcomments to allow nonphysician

practioners such as nurse practitioners,physician assistants, and clinical nursespecialist to certify the therapy plan ofcare.

Response: Because we allownonphysician practioners, that is, nursepractitioners, clinical nurse specialists,and physician assistants to prescribemedicine, we have also decided thatnonphysician practioners who haveknowledge of the therapy case maycertify therapy plans of treatment.

Result of the evaluation of comments:We are adopting our proposal to pay alloutpatient rehabilitation services andCORF services under the physician feeschedule. We are delaying fullimplementation of the financiallimitations on outpatient rehabilitationservices furnished by nonhospitalentities due to our Y2K efforts until afterJanuary 1, 2000. We are not adopting asite-of-service differential for outpatientrehabilitation providers asrecommended by commenters.Regarding proposed qualifications fortherapists, we are adopting them asproposed and are not accepting therecommendation that we requireoccupational therapists to provideevidence of successful completion of anational certification examination. Weanticipate that this issue will be furtherstudied and discussed in a subsequentrule. We are withdrawing our proposalto extend from 30 days to 60 days thetime required for physicianrecertification of the plan of treatment.

D. Payment for Services of CertainNonphysician Practitioners and ServicesFurnished Incident to Their ProfessionalServices

Nonphysician practitioners’ serviceshave been covered by Medicare sincethe inception of the program; originallythe law did not provide for separatepayments for these services. Coverageand payment of nonphysicians’ serviceswas primarily within the context ofsection 1861(s)(2)(A) of the Act asimplemented by section 2050 of theMedicare Carriers Manual, for thepayment of services incident to aphysician’s professional services. Inrecent years, the Congress has expandedMedicare coverage of nonphysicianpractitioners’ services in certain settingsto improve beneficiary access to medicalservices. Separate Part B coverage isspecifically authorized for certainnonphysician practitioners’ services andfor services and supplies furnished asincident to those services.

For purposes of this rule as it appliesto nonphysician practitioners, we definenonphysician practitioners as nursepractitioners, clinical nurse specialists,certified nurse-midwives, and physician

assistants. With respect to services andsupplies furnished as incident to anonphysician practitioner’s services, weare requiring that, to be covered byMedicare, the services must meet thelongstanding requirements in section2050 of the Medicare Carriers Manualapplicable to services furnished asincident to the professional services ofa physician. Therefore, we specify, innew §§ 410.74(b), 410.75(d), 410.76(d),and 410.77(c) that Medicare Part Bcovers services and supplies (includingdrugs and biologicals that cannot beself-administered) furnished as incidentto the nonphysician’s services only ifthese services and supplies would becovered if furnished by a physician orfurnished as incident to a physician’sprofessional services. In addition,§§ 410.74(b), 410.75(d), 410.76(d), and410.77(c) specify the variousrequirements for these incidentalservices and supplies.

Coverage and Payment for NursePractitioners’ Services Subsequent toBBA

Effective for services furnished on orafter January 1, 1998, section 4511 ofBBA authorizes nurse practitioners tobill the program directly for servicesfurnished in any setting, regardless ofwhether the settings are located in ruralor urban areas, but only if the facility orother providers of services do not chargeor are not paid any amounts withrespect to the furnishing of nursepractitioners’ services. Accordingly, anew § 410.75 of this rule specifies thequalifications for nurse practitioners,lists the requirements for theprofessional services of a nursepractitioner and the requirements forservices furnished incident to theprofessional services of a nursepractitioner. This new section alsospecifies the process that applies to theprovision of nurse practitioners’services.

New §§ 405.520(a), (b), and (c) of thisrule provide the general rule andrequirements for nurse practitioners. Anew paragraph (16) is added to§ 410.150(b) to authorize payment fornurse practitioners’ services whenfurnished in collaboration with aphysician in all settings located in bothrural and urban areas. A new paragraph(c) is added to § 414.56 of this rule toset forth the payment amount for nursepractitioner services.

All of the independent nursepractitioners and clinical nursespecialists commenting on the proposedrule and all of the major organizationsrepresenting these nonphysicianpractitioners vigorously opposed theproposed Federal guidelines for


collaboration; those provisions wouldapply only in States with nocollaboration requirement.

Comment: The commenters thatobjected to the proposed guidelines forcollaboration requested that we adopt apolicy that strictly defers to State laws,rules, and regulations regardingcollaboration. The commenters insistedthat the absence of State guidelines forcollaboration does not necessitate theintrusion of Federal guidelines. In fact,they claimed that where State laws orguidelines do not include a requirementfor collaboration, or fail to providespecific detailed requirements for acollaborative relationship, it is not amatter of accident or simple omission,but of conscious State policy regardingprofessional scope of practice. In thesecases, they believe that there should beno collaboration requirement.

Additionally, these commentersstated that they believe that there is abetter understanding at the State level ofthe practice situations encountered andthe evolving advancements in healthcare issues. Therefore, many States havedetermined that this relationship is bestdefined by the professionals themselves,rather than through detailed statutorylegislation.

The commenters claimed that they arenot aware of any substantial problems ininterpreting or implementing thecollaboration requirement in the 71⁄2years that carriers have been applyingthe collaboration requirement withoutthe benefit of Federal rule. According toone commenter, currently at least 26States have no statutory or regulatoryrequirement for collaboration as acondition that nurses must satisfy inorder to practice, and in the 16 Statesthat have physician collaboration orsupervision practice requirements, noneare as restrictive as the guidelines thatwe proposed.

One of the commenters that opposedthe proposed collaboration guidelinesstated that if more detailed provisionssuch as these are imposed on nursepractitioners and clinical nursespecialists, there will be a cost attachedto be borne by the practitioner orconsumers through cost shifting.Another commenter expanded upon thiscomment by posing the concern abouthow collaboration might affect Statesthat authorize nurses to practiceindependently. The commenter statedthat imposition of the collaborationrequirement in ‘‘independent practiceStates’’ could create a new area forpotentially fraudulent or abusivepractices. For example, a physician mayrefuse to provide collaboration in agiven area or may refuse to enter into acollaboration agreement unless the

nurse pays a fee to the physician. Thispractice may violate the anti-kickbackstatute.

One commenter stated that ourproposal restricted nurses to acollaboration arrangement with onephysician, and that the State’s nursepractice act does not restrict nurses toa collaborative practice arrangementwith one physician. The requirement ofcollaboration with one physician raisesthe cost to patients, restricts access, andrequires unnecessary, additionalservices. Additionally, this samecommenter raised concerns about thephrase in the collaboration guidelinesthat states ‘‘or as provided by othermechanisms defined by Federalregulations,’’ because she believes thatthis is the first time this wording hasappeared in the definition ofcollaboration and it appears to giveunlimited authority for regulation ofpractice.

One of the professional organizationsrepresenting nurse practitionersmaintained that the proposedcollaboration guidelines wouldparticularly harm Medicarebeneficiaries located in rural areas,where nurse practitioners may be thesole source of health care within thecommunity. If a nurse practitioner is notable to receive payment for care due tothe inability to locate a physician in thatgeographic area who is able to performthe functions of a collaboratingphysician, these areas may not be servedat all.

Response: Section 6114 of OBRA 1989established the nurse practitionerbenefit as a separate benefit under theMedicare Part B program and alsorequired that nurse practitionerscollaborate with a physician in order fortheir services to be covered underMedicare. Therefore, nurse practitionershave always been required by Medicarelaw to collaborate with a physician. Thecollaboration requirement is a specificand distinct requirement, separate fromthe requirement that these nonphysicianpractitioners must practice within thescope of the law of the State where theservices are performed.

The 1989 Omnibus BudgetReconciliation Act, adding section1861(aa)(6) of the Act, defined the term,‘‘collaboration’’ as a process in which anurse practitioner works with aphysician to deliver health care serviceswithin the scope of the practitioner’sprofessional expertise, with medicaldirection and appropriate supervision asprovided for in jointly developedguidelines or other mechanisms asprovided by the law of the State inwhich the services are performed. TheBBA of 1997 increased payment

amounts to nurse practitioners andexpanded the settings where they canreceive payments, but the BBA did notchange the collaboration requirement. Inthe absence of State law regarding thecollaborative relationship that nursepractitioners must share with aphysician when furnishing theirservices to Medicare beneficiaries, wemust implement the collaborationrequirement as required by law.

However, we did not intend tointroduce new burdensomerequirements to address situationswhere there is no State requirement forcollaboration. Therefore we areremoving the proposed definition ofcollaboration that applies to thesesituations and will require that, in theabsence of State law or regulationsgoverning collaboration relationships,we will require nurse practitioners andclinical nurse specialists to documenttheir scope of practice and indicate therelationships that they have withphysicians to deal with issues outsidetheir scope of practice. The proposedrule was not intended to require that anurse practitioner must furnish servicesin collaboration with only onephysician. We fully expect that thesenonphysician practitioners may havecollaborative relationships withnumerous physicians and will continueto do so in the future. We did not intendto introduce any new costs to thepractices of nurse practitioners andclinical nurse specialists.

Comment: Five major associationsand professional organizationsrepresenting physicians, medicaldirectors, and hospitals commented infavor of the proposed collaborationguidelines and suggested alternativecriteria that they believed the Medicareprogram should use to determinecoverage and payment for the services ofnurse practitioners and clinical nursespecialists.

Two of these organizationscommented that ‘‘appropriateness’’ isthe key criterion that Medicarecontractors should use in determiningwhether services of these nonphysicianpractitioners should be covered underthe ‘‘reasonable and necessary’’provisions of section 1862(a)(1)(A) ofthe Act. These commenters suggestedthat we consider services to beappropriate if they are furnished byqualified personnel; further, thecommenters believed that, in the case ofpsychiatry services, these nonphysicianpractitioners are not qualified asphysicians are to perform a psychiatricdiagnostic interview examination (CPTcodes 90801 and 90802), nor are theyqualified to furnish services representedby any of the psychotherapy CPT codes


that include medical evaluation andmanagement. Therefore, thesecommenters asserted, all of thepertinent sections of the regulations textshould be revised to read that thenonphysician practitioners are notperforming services otherwiseprecluded from coverage because of oneof the statutory coverage exclusionslisted under section 1862(a)(1)(A) of theAct.

Response: In order for any service tobe covered under Medicare, it must bedetermined to be reasonable andnecessary, and therefore, appropriate.Accordingly, we do not believe that it isnecessary to revise the regulations textto specify that services furnished bythese nonphysician practitioners can becovered only when they are nototherwise excluded from coverageunder section 1861(a)(1)(A) of the Act.It is already stated in the proposed ruleat sections 410.74(a)(2)(iii), 410.75(c)(3),and 410.76(c)(3) that services performedby any of these nonphysicianpractitioners are not covered if they areotherwise excluded from coveragebecause of a statutory exclusion.Additionally, it is our understandingthat some nurse practitioners andclinical nurse specialists specialize inmental health. Therefore, if State lawauthorizes these nonphysicianpractitioners to perform mental healthservices and evaluation andmanagement services that wouldotherwise be furnished by a physicianor incident to a physician’s services,psychiatric nurse practitioners andclinical nurse specialists could bill forpsychiatric diagnostic interviews andany of the psychotherapy CPT codesthat include medical evaluation andmanagement.

Comment: One associationrepresenting hospitals urged us toclarify in the final rule all of the settingsin which separate payment to nursepractitioners and clinical nursespecialists will not be made. Also, thecommenter suggested clarificationregarding whether Medicare willcontinue to pay hospitals for the facilitycomponent of hospital outpatientdepartment services when separatepayment is made to these nonphysicianpractitioners for their professionalservices furnished in hospital outpatientdepartments.

Response: Payment is made to nursepractitioners and clinical nursespecialists for their professional servicesfurnished in all settings, with theexception of RHCs and FQHCs. (Theprofessional services of all practitionersare bundled in these two settings, andMedicare payment is made to thefacility for such services under an all-

inclusive composite rate.) However,when these nonphysician practitionersfurnish services in hospital outpatientdepartments, Medicare will continue tomake payment to the hospital outpatientdepartment for the facility component ofhospital outpatient department services.

Comment: Two other organizationscommented that we should require thatthe employer of a nurse practitioner ora clinical nurse specialist bill for his orher professional services. Thecommenter stated that technically, somenurses can practice without directsupervision, but not independently ofthe supervising physician since thephysician must review all recordswithin 2 weeks. The commenterbelieves that safe and high qualitymedical care requires that diagnosis,evaluation, treatment, and managementdecisions be made by physicians whodirectly supervise nonphysicianpractitioners on-site. The commenterargues that, if payment is made directlyto the nurses, the physician has no wayof verifying what is billed when anemployer relationship does not exist.Also, because collaboration does notrequire that the physician be presentwhile services are furnished, and it doesnot require a physician to make anindependent evaluation of each patient,there is no assurance that safe, highquality services are being performed.

Response: The law no longer requiresthat the employers of nurse practitionersand clinical nurse specialists bill fortheir services, as it does for physicianassistants. The law does maintain therequirement, however, that thesenonphysician practitioners must furnishtheir services in collaboration with aphysician. Nurse practitioners andclinical nurse specialists have beeneducated and specially trained tofurnish primary care and certain otherservices that have traditionally beenfurnished by physicians. As long as theservices that nonphysician practitionersfurnish are medically reasonable andnecessary, meet Medicare requirements,and fall within the scope of services thatthey are licensed to perform, theMedicare program covers the services.

Comment: Numerous nursepractitioners and clinical nursespecialists commented that §§ 410.75(d)and 410.76(d) that pertain to servicesand supplies furnished incident to theprofessional services of a nursepractitioner or clinical nurse specialistshould be clarified to state that thesenonphysician practitioners need not bepresent in the same room where theservices are being provided, but may bepresent and available in the office suite.

Additionally, these same commentersrequested the elimination of the list of

examples of professional servicesperformed by nurse practitioners andclinical nurse specialists at§ § 410.75(e)(3) and 410.76(e)(3),asserting that the list is too limited,confusing, and ultimately unnecessary.

Response: We agree that it may bemore appropriate to include the list ofexamples of services in manualinstructions to provide guidance tocontractors to use in processing claims.Therefore, we are removing the listing ofexamples of services that can beprovided by physician assistants atsection 410.74(d)(3), nurse practitionersat section 410.75(e)(3), and clinicalnurse specialists at section 410.76(e)(3).

Comment: One commenter suggesteda language change to the requirementthat ‘‘incident to’’ services be of a typethat are commonly furnished in aphysician’s office, to also include areference to the offices of other healthprofessionals.

Response: The ‘‘incident to’’requirements for nonphysicianpractitioners are the same requirementsthat apply to physicians and that havebeen in place since the inception of theMedicare program. The various‘‘incident to’’ requirements are currentlyinterpreted at section 2050 of theMedicare Carriers Manual. We will notamend any of the ‘‘incident to’’requirements at this time.

Comment: A few nurses’ associationscommented that the proposedqualifications for nurse practitionersand clinical nurse specialists should beamended to clarify that theseindividuals must be licensed or certifiedby a professional association or anaccrediting body that has, at aminimum, eligibility requirements thatmeet certain standards. One commenterstated that the accrediting body could beone that is recognized by us. Thesecommenters explained that mostorganizations that certify nurses are notprofessional associations themselves;rather they are separately incorporatedaccrediting bodies. For example, theAmerican Nurses Association does notcertify nurse practitioners or clinicalnurse specialists, but the AmericanNurses Credentialing Center (ANCC)does by utilizing standards developedby the nurse profession.

Response: Currently, thequalifications for nurse practitioners atsection 2158 of the Medicare CarriersManual require that such an individualbe certified as a primary care nursepractitioner by the American Nurses’Association or by the National Board ofPediatric Nurse Practitioners andAssociates. (Section 2160 of theMedicare Carriers Manual does notcontain a specific certification criteria


for clinical nurse specialists.) Thus, themanual recognizes the ANCC as anappropriate certifying body for nursepractitioners.

Comment: One comment made wasdirected specifically toward thequalifications for nurse practitioners at§ 410.75(b) of the proposed rule. Oneacademy representing nursepractitioners stated that the intent of thelaw is to pay nurse practitioners whoare licensed in their States to practice assuch. Therefore, the qualifications fornurse practitioners should be that theindividual be a registered nurse who isauthorized to practice as a nursepractitioner in accordance with Statelaw. This academy believes that theinclusion of additional requirementswill exclude some fully qualified nursepractitioners who are certified bynational certifying bodies that recognizegrandfathering laws in the States and byStates that currently use programaccreditation or certification rather thannational certification in their licensingprocesses for nurse practitioners.

Response: We agree with thecommenter that the intent of the law isto pay nurse practitioners who arelicensed in their States to practice assuch. However, we believe that Statelicensure should not be the onlyqualification criterion that would enablenurse practitioners to bill the Medicareprogram directly for their professionalservices. Therefore, we will revise thequalification requirements to ensurethat for Medicare purposes, appropriateindividuals can bill the program forservices furnished to Medicarebeneficiaries.

Comment: One college representingnurse practitioners raised concernsabout the types of services for whichnurse practitioners can bill the Medicareprogram. The college stated that itwishes to ensure that we intend topermit a nurse practitioner to bill withina group practice setting for the servicesof all other licensed health careprofessionals and technicians in thatpractice. The commenter stated that,although the proposed rule does notindicate a problem with this billingarrangement, it would appreciate aspecific statement from us about thearrangement.

Response: A nurse practitioner withina group practice setting would bepermitted to bill the Medicare programfor the services of all other licensedhealth care professionals andtechnicians within the practice,provided the services of others in thepractice are furnished incident to thenurse practitioner’s professionalservices and all the ‘‘incident to’’requirements are met.

Comment: The college also stated thatit is concerned that the proposed ruledoes not list nurse practitioners asdesignated providers of outpatientphysical therapy and outpatient speech-pathology services. The college asks thatthe language of §§ 410.60 and 410.62 beamended to include nurse practitionersas nonphysician practitioners who areauthorized to bill for these types ofservices.

Response: Nurse practitioners,clinical nurse specialists, and physicianassistants may order physical therapy,occupational therapy, and speech-language pathology services in the casewhere the services are medicallyreasonable and necessary and the Statein which they are practicing authorizesthem to do so. Also, these nonphysicianpractitioners may also certify andrecertify the plan of treatment forphysical therapy, occupational therapy,and speech-language pathology servicesproviding they are authorized by Statelaw to perform such services.Accordingly, § 410.60 and 410.62regarding physical therapy,occupational therapy, and speech-language pathology will be revised toinclude these nonphysicianpractitioners as designated providers ofsuch services.

Result of evaluation of comments: Wehave determined that for purposes ofMedicare Part B payment, a nursepractitioner must—

• Possess a master’s degree innursing;

• Be a registered professional nursewho is authorized by the State in whichthe services are furnished, to practice asa nurse practitioner in accordance withState law; and

• Be certified as a nurse practitionerby the ANCC or other recognizednational certifying bodies that haveestablished standards for nursepractitioners as stated above.

We have removed the alternateproposed definition of collaboration in§§ 410.75(c)(2)(iv) and 410.76(c)(2)(iv)of the proposed rule. For purposes ofMedicare coverage, the collaborationrequirement will state that nursepractitioners and clinical nursespecialists must meet the standards fora collaborative process, as establishedby the State in which they arepracticing. In the absence of State lawgoverning collaborative relationships,collaboration is a process in which thesenonphysician practitioners have arelationship with one or morephysicians to deliver health careservices. Such collaboration is to beevidenced by nurse practitioners orclinical nurse specialists documentingtheir scope of practice and indicating

the relationships that they have withphysicians to deal with issues outsidetheir scope of practice. Nursepractitioners and clinical nursespecialists must document thiscollaborative process with physicians.The collaborating physician does notneed to be present with the nursepractitioner or clinical nurse specialistwhen the services are furnished or tomake an independent evaluation of eachpatient who is seen by the nursepractitioner or clinical nurse specialist.

Also, we are deleting the proposedlisting of examples of services that canbe provided by physician assistants,nurse practitioners and clinical nursespecialists.

Coverage and Payment for ClinicalNurse Specialists’ Services Subsequentto BBA

Effective for services furnished on orafter January 1, 1998, section 4511 ofBBA authorizes clinical nursespecialists to bill the program directlyfor services furnished in any setting,regardless of whether the settings arelocated in rural or urban areas, but onlyif the facility or other providers ofservices do not charge or are not paidany amounts with respect to thefurnishing of nurse practitioners’services. A new § 410.76(e) of this rulesets forth this provision.

The new § 410.76(b) sets forth newqualifications for clinical nursespecialists. Section 410.76(c) describesthe conditions of coverage for clinicalnurse specialists’ services, defines thecollaboration process, and paragraph (d)lists the requirements for servicesfurnished incident to the professionalservices of a clinical nurse specialist.

New § § 405.520(a), (b), and (c) of thisrule provide the general rule,requirements, and civil monetarypenalties for clinical nurse specialists. Anew paragraph (c) is added to § 414.56of this rule to set forth the paymentamounts for clinical nurse specialists’services.

Comment: Numerous nursesassociations commented specificallyabout the qualifications for clinicalnurse specialists at § 410.76(b) of theproposed rule. They suggested that thequalifications for clinical nursespecialists be amended to require that aclinical nurse specialist be anindividual who is a registered nursecurrently licensed to practice as in theState in which he or she practices andhave a master’s degree in a definedclinical area of nursing from anaccredited educational institution. Thecommenters emphasized that there is noneed to provide for an exception asincluded in the proposed qualifications


for clinical nurse specialists, becausethe nursing profession has long heldconsensus that clinical nurse specialistsbe required to have a master’s degree.Additionally, they believed that thedefinition of a clinical nurse specialistunder the BBA makes it clear that aclinical nurse specialist must hold amaster’s degree. Furthermore, theystated that the proposed exceptionrequirement contains erroneousinformation about the educational focusof clinical nurse specialist programs thatmay be preparatory both for primarycare and specialty care.

Response: Prior to the BBA, section2160 of the Medicare Carriers Manualrequired that a clinical nurse specialisthad to satisfy the applicablerequirements for a clinical nursespecialist in the State in which theservices are performed. In the absence ofState requirements, Medicarecontractors had the discretion todetermine whether an individual’squalifications warranted Medicarepayment for clinical nurse specialistservices. However, the BBA, whichestablished qualifications for clinicalnurse specialists, defines a clinicalnurse specialist as an individual who isa registered nurse and is licensed topractice nursing in the State in whichthe services are performed and holds amaster’s degree in a defined clinicalarea of nursing from an accreditededucational institution. Therefore, wewill implement the BBA qualificationsfor clinical nurse specialists without anexception for clinical nurse specialistswho do not possess a master’s degree.

Comment: One independentlypracticing clinical nurse specialistargued that access to psychiatric clinicalnurse specialists, in particular, is beingdenied even though they are the onlymental health providers, other thanpsychiatrists, whose education,experience, and legal scope of practiceinclude the management of co-morbidmedical and psychiatric illness.Psychiatric clinical nurse specialistsalso provide services that includepatient and family education to managesymptoms of illness and medications,evaluation and management of sideeffects, identification of adversereactions, and evaluation ofeffectiveness of medications andpsychotherapy. The commenterexplained that all clinical nursespecialists in psychiatric nursing holdmaster’s or doctoral degrees; havecompleted 2-years post-graduate,supervised, clinical experience; havepassed a national board certificationexam; and are required to obtain 75hours of continuing education creditevery 5 years. The commenter

concluded that psychiatric clinicalnurse specialists are the only group ofmental health providers whose practiceis being restricted.

Response: Psychotherapy services arelisted in the AMA’s CPT coding book as‘‘physician services’’. Nursepractitioners and clinical nursespecialists are authorized by theMedicare program to bill for servicesthat would otherwise be furnished by aphysician or incident to a physician’sservices. Accordingly, it is appropriatefor the Medicare program to pay thesenonphysician practitioners who havethe specific training mentioned forpsychotherapy services that aredetermined to be medically reasonableand necessary.

Result of evaluation of comments: Wehave determined that for purposes ofMedicare Part B payment, a clinicalnurse specialist must—

• Be a registered nurse who iscurrently licensed to practice in theState where he or she practices and beauthorized to perform the services of aclinical nurse specialist in accordancewith State law;

• Have a master’s degree in a definedclinical area of nursing from anaccredited educational institution; and

• Be certified as a clinical nursespecialist by the American NursesCredentialing Center.

Coverage and Payment for CertifiedNurse-Midwives’ Services

Section 13554 of OBRA 1993 (Pub. L.103–66) amended section 1861(gg)(2) ofthe Act to revise the definition ofcertified nurse-midwife. The revisioneliminated a limitation on coverage andincluded, as covered services, thoseservices furnished by certified nurse-midwives outside the maternity cycle.This change was made effective forservices furnished on or after January 1,1994.

A new § 410.77 of this rule lists thequalifications for certified nurse-midwives and provides the conditionsfor coverage of certified nurse-midwives’ services. Paragraph (d) of§ 410.77 lists the coverage requirementsfor the professional services of certifiednurse-midwives, while paragraph (c)lists the requirements for servicesfurnished incident to the professionalservices of a certified nurse-midwife.

The comments that we received froma major college representing certifiednurse-midwives mainly addressed theproposed qualifications for theseindividuals.

Comment: The commenter urged thatthe qualifications for certified nurse-midwives be revised to read that theindividual must—

(1) Be legally authorized to practice asa certified nurse-midwife under Statelaw or regulations;

(2) Have successfully completed aprogram of study and clinicalexperience accredited by an accreditingbody approved by the U.S. Departmentof Education; and

(3) Be currently certified as a nurse-midwife by the American College ofNurse-Midwives or by the AmericanCollege of Nurse-Midwives CertificationCouncil.

The college believed that theserevised qualifications at § 410.77(a)would eliminate the possibility ofindividuals being able to practice ascertified nurse-midwives in theMedicare program without having totake and pass appropriate certificationexaminations that are explicitly linkedto a demonstrated mastery of the ‘‘corecompetencies’’ for basic nurse-midwifepractice. These revised qualificationswould, the commenter stated, alsoassure greater uniformity of quality andcompetency among certified nurse-midwives who wish to be paid byMedicare for services that they provideto Medicare patients.

Response: Section 1861(gg)(2) of theAct states that the term, ‘‘certifiednurse-midwife’’ means a registerednurse who has successfully completed aprogram of study and clinicalexperience meeting guidelinesprescribed by the Secretary, or has beencertified by an organization recognizedby the Secretary. Accordingly, we areimplementing qualifications for certifiednurse-midwives that implement thesestatutory requirements.

Comment: The other comment thatthe college representing certified nurse-midwives made was directed toward thecriteria for determining payment tocertified nurse-midwives for theirprofessional services. The college statedthat § 410.77(d)(1) should clarify that,while supervision of nonphysician staffby a nurse-midwife does not constitutea professional service, the serviceprovided by the nonphysician may bepaid to the certified nurse-midwife if itmeets the requirements of a serviceincident to his or her service.

Additionally, the college suggestedthat § 410.77(d)(3) be revised to statethat Medicare will pay a certified nurse-midwife for all services that he or sheis legally authorized under State law orregulations to furnish as a certifiednurse-midwife in the State, if thoseservices are also covered services underthe Medicare program. The collegesuggested this change because itmaintains that certified nurse-midwivesare qualified to perform ‘‘other services’’that might not be interpreted to include


newborn care or certain primary careservices, or primary care casemanagement in a managed care context,and certain States license them toperform these ‘‘other services.’’

Response: The requirementspertaining to services furnished incidentto the professional services of a certifiednurse-midwife are listed separately at§ 410.77(c) of the proposed rule. We donot want to confuse the requirements forthe professional services of certifiednurse-midwives with the requirementsthat pertain to services furnishedincident to the professional services ofcertified nurse midwives.

Section 1861(gg)(1) defines the term,‘‘certified nurse-midwife services’’ asservices furnished by a certified nurse-midwife and services and suppliesfurnished as an incident to the nurse-midwife’s service which the certifiednurse-midwife is legally authorized toperform under State law as wouldotherwise be covered if furnished by aphysician or as an incident to aphysicians’ service. Therefore, we agreewith the statement made by thecommenter that coverage of theprofessional services of certified nurse-midwives are not restricted to newborncare, certain primary care services, orprimary care case management servicesif State law authorizes them to furnish‘‘other services.’’

Result of Evaluation of Comments: Wehave determined that for purposes ofMedicare Part B payment, a nurse-midwife must—

• Be a registered nurse who is legallyauthorized to practice as a nurse-midwife in the State where services areperformed;

• Have successfully completed aprogram of study and clinicalexperience for nurse-midwives that isaccredited by an accrediting bodyapproved by the U.S. Department ofEducation; and

• Be certified as a nurse-midwife bythe American College of Nurse-Midwives or the American College ofNurse-Midwives Certification Council.The Secretary reserves the right todetermine that these accrediting bodies’standards are no longer sufficient forqualifying nurse midwives for MedicarePart B payment.

Also, a nurse-midwife may provideservices that he or she is legallyauthorized to perform under State lawas a nurse-midwife, if the serviceswould otherwise be covered by theMedicare program when furnished by aphysician or incident to a physicians’professional services.

Coverage and Payment for PhysicianAssistants’ Services Subsequent to BBA

Effective for services furnished on orafter January 1, 1998, the majority of theconditions for coverage of physicianassistants’ services as indicated by new§§ 410.74(a) and (b) remain unchangedwith the exception of the condition forcoverage of physician assistants’services furnished in certain areas andsettings. Section 4512 of BBA removesthe restrictions on the sites in whichphysician assistants may furnish theirprofessional services, regardless ofwhether the settings are located in ruralor urban areas. Physician assistants areauthorized to furnish their professionalservices as independent nonphysicianpractitioners to practically all providersof services and suppliers of services,provided the facility or other provider ofservices do not charge or is not paid anyamounts with respect to the furnishingof physician assistants’ professionalservices. Accordingly, separate paymentmay be made for physician assistants’services in all settings, except in RHCsand FQHCs; physician assistant servicesare included as RHC and FQHC servicesfor which Medicare payment is madebased on an all-inclusive payment ratethat the program makes to thesefacilities.

In new § 410.74(c), we proposed toamend the qualifications for physicianassistants to recognize certification ofphysician assistants by the NationalBoard of Certification of OrthopedicPhysician Assistants. Thesequalifications would also haverecognized academic programs forphysician assistants that are accreditedby either the Commission onAccreditation of Allied HealthEducation Programs or the AmericanSociety of Orthopedic PhysicianAssistants.

Additionally, effective January 1,1998, physician assistants have theoption of furnishing services under adifferent employment arrangement witha physician. They can furnish servicesas employees of a physician under a W–2 form employment arrangement or theycan furnish services as an independentcontractor to a physician and receive a1099 form. Under either arrangement,the employer of the physician assistantmust bill the program for physicianassistants’ services as required under§ 410.150(b)(15). Moreover, when anindividual furnishes services ‘‘incidentto’’ the professional services of aphysician assistant, these ancillaryservices must meet the requirementsunder § 410.74(a)(2)(vi)(B).

The Medicare payment amount for aphysician assistant’s professional

services as of January 1, 1998, as statedin new paragraph (d) of § 414.52,remains at 80 percent of the lesser ofeither the actual charge or 85 percent ofthe physician fee schedule amount forprofessional services. Also, new§ 405.520 provides the general rule,requirements, and civil monetarypenalties for physician assistants whofurnish services under the Medicareprogram.

We received a total of 140 commentson the proposed physician assistantqualifications. Half of all of thecommenters strongly opposed theinclusion of orthopedic physicianassistants (OPAs) under thequalifications for physician assistants.The others commenting on the inclusionof OPAs applauded and supported theirinclusion and suggested a few minorchanges to the qualifications overall.

Comment: The commenters whostrongly opposed the proposedphysician assistant qualificationsincluded professional organizations,individual physician assistants, Statelevel professional societies andacademies, congressionalrepresentatives, educationalinstitutions, hospitals, and a board ofmedical examiners. The commentersstated overwhelmingly that theproposed qualifications for physicianassistants inappropriately includedorthopedic physician assistants and thatorthopedic physician assistants are notphysician assistants even if theacronyms (PA and OPA) appear to besimilar. The majority of commenterswho opposed the inclusion of OPAsnoted that they would not object,however, if the Congress implemented aMedicare benefit that recognizesorthopedic physician assistants asseparate independent nonphysicianpractitioners, and, in that case, thereshould be a payment differential in theamounts of payment made to physicianassistants and orthopedic physicianassistants that would reflect a higherpayment to PAs because they have agreater career investment, patient careresponsibility, and higher malpracticeinsurance costs than OPAs.

The commenters stated that PAs andOPAs do not receive the same educationand training, accreditation, certification,or State licensure, and their continuingmedical education requirements are notsimilar. These commenters stated thatthe curricula for the physician assistanteducational programs reveal that theseprograms emphasized primary careinvolving diagnosis and treatment offive major clinical disciplines(medicine, surgery, pediatrics,psychiatry, and obstetrics), as well aspharmacology. The training period for


PAs lasts anywhere from 24 to 28months. The orthopedic educationalprograms train technical assistants toassist orthopedic surgeons, with anemphasis on orthopedic disease andinjury, management of equipment andsupplies, operating room techniques,cast application and removal, officeprocedures, and orientation toprosthetics and orthotics. The trainingperiod for OPAs lasted for no more than24 months.

The commenters asserted that theCommission on Accreditation of AlliedHealth Education Programs (CAAHEP)must accredit all physician assistanteducational programs. CAAHEP is anational independent accreditingagency that is recognized by the U.S.Department of Education and sponsoredby medical, allied health, andeducational organizations. However,there are currently no existing OPAprograms to be accredited. The AMAaccredited eight orthopedic physicianassistant educational programs from1969 to 1974. Accreditation ceased in1974 when the American Academy ofOrthopedic Surgeons withdrewsponsorship of the accreditationprocess.

The commenters stated that PAs arerequired to take and pass a nationalexamination after graduation from aphysician assistant educational programthat is certified by the National Councilon Certification of Physician Assistants(NCCPA). The NCCPA nationalcertification examination is open only tothose individuals who have graduatedfrom accredited physician assistanteducational programs. The NCCPA,which provides the certified nationalexamination, is an independentorganization whose governing board hasrepresentatives from the AmericanMedical Association, American HospitalAssociation, American Academy ofFamily Physicians, American Academyof Pediatrics, American College ofPhysicians, American College ofSurgeons, National Medical Association,Association of American MedicalSchools, Federation of State MedicalBoards, U.S. Department of Defense,Association of Physician AssistantPrograms, and the American Academyof Physician Assistants. The NCCPAalso includes three public members.

OPAs who have had on-the-jobtraining or other mid-levelparaprofessionals who challenge theexam and have had on-the-job trainingmay take the examination for OPAs thatis certified by the National Board onCertification for Orthopedic PhysicianAssistants (NBCOPA). The NBCOPAcertification examination is an openexamination and is currently reached

through the Professional TestingCorporation, a for-profit business thatadministers tests for variousorganizations. The NBCOPA iscomprised of six members of theAmerican Society of OrthopedicPhysician Assistants (ASOPA), theorthopedic physician assistantprofessional society, and an unspecifiednumber of advisory members who arepresumably non-voting physicians andeducators. There is no organizedmedical group that sponsors or overseesthe national certification examinationfor OPAs other than ASOPA.

The commenters emphasized that allStates except Mississippi license andregulate PAs. Forty-three States, theDistrict of Columbia, and Guam haveenacted laws to authorize PAs toprescribe medicine. Thirty-three Statesauthorize PAs to write prescriptions forcontrolled medications. Conversely,only Tennessee specifically licensesOPAs. Tennessee’s licensure of OPAs is,however, separate from its licensure ofPAs. California and New York have lawsreferencing OPAs, but the laws refer toOPAs as distinct from PAs. Californiarefers to OPAs who successfullycompleted training as OPAs from anapproved California orthopedicphysician assistant educational programin any year between 1971 to 1974 toperform only those orthopedic medicaltasks that a physician and surgeon maydelegate. New York defines thequalifications for PAs in terms broadenough to include OPAs. The New YorkState regulations do not limit theacceptable examination to the NCCPAcertification examination. Therefore, theNBCOPA certification examinationcould be considered to adequatelyassess entry level skills for thephysician assistant profession. None ofthe other States, however, recognizeOPAs, and none of the Statesspecifically grant OPAs prescribingprivileges.

Additionally, the commentersexplained that PAs are required to log100-hours of continuing medicaleducation over a 2-year cycle and totake a recertification exam every 6 yearsto maintain certification as PAs. On theother hand, OPAs are required tocomplete 120 hours of continuingmedical education every 4-years orretake the initial NBCOPA certificationexamination to maintain certification asOPAs.

The professional organizationsrepresenting PAs and numerousindependent PAs and congressionalrepresentatives argued that the proposedchanges to the PA qualifications runcounter to our twin goals of controllingcosts to the Medicare program and

maintaining the quality of servicesfurnished to Medicare beneficiaries.There are approximately 49,000 surgicaltechnologists and 3,000 registered nursefirst assistants and an uncountednumber of unlicensed medical schoolgraduates (for example, from othercountries). These individuals couldpotentially qualify as PAs under theproposed qualifications by getting therequisite orthopedic work experienceand passing the orthopedic physicianassistant examination that is certified byNBCOPA. Thus, the number ofindividuals who could qualify forpayment under the PA benefitultimately is substantial.

Additionally, these commentersargued that the proposal to includeOPAs as PAs runs counter tocongressional intent because the BBA,which amends coverage payment forPAs, does not include any mention ofOPAs. They state that the debate on theBBA provisions for physician assistants,nurse practitioners, and clinical nursespecialists did not include anydiscussion of orthopedic physicianassistants or any other types ofphysician extenders, nor did theCongressional Budget Office considerorthopedic physician assistants or othertypes of specialty physician extenderswhen projecting the costs of physicianassistant services under the BBA.Furthermore, these commenters statedthat the primary sponsors of the 1977Rural Health Clinic Services Actacknowledged the educationalpreparation of PAs to provide a widerange of primary care services toMedicare beneficiaries living in areasexperiencing a shortage of primary carephysicians. While orthopedictechnicians may provide valuable,specialized services in assistingorthopedic surgeons, they do not havean educational background in primarycare. Consequently, they are notqualified to provide the wide range ofprimary care services that the Congressanticipated when it recognized the needto cover and pay for the services of PAsunder Medicare.

Finally, the commenters urged us torequire that, in order for an individualto qualify as a PA under Medicare, heor she must (1) possess State approvalto practice as a PA, and (2) demonstrateeither graduation from a physicianassistant educational programaccredited by CAAHEP or certificationby NCCPA.

The commenters who supported theinclusion of OPAs under the physicianassistant benefit were represented by anational society and academy,orthopedic surgeons, independentorthopedic physician assistants,


hospitals, universities, andorganizations that provide orthopedicsurgical services. The national societyrepresenting OPAs declared that ourclarification of the PA qualificationsdoes not relate to payment becauseorthopedic surgeons are already paid formany services provided by OPAsincident to their professional services.Rather, it believes that the clarificationis about recognition of OPAs.

The national academy representingorthopedic surgeons, numerousindependent orthopedic surgeons, andOPAs stated that OPAs are speciallytrained to assist orthopedic surgeons insurgical procedures and other servicesinvolving the total care of patients withorthopedic conditions of the anatomyand pathophysiology of themusculoskeletal organ system.Commenters state that OPAs receiveextensive training that includesrotations in general medicine andsurgery, history and physicalassessment, and pharmacology.Additionally, they say, OPAs are trainedto obtain medical histories, performphysical examinations, assist thephysician in developing andimplementing patient managementplans, perform common laboratory,radiologic, and other routine diagnosticprocedures, and provide injections,immunizations, suturing and woundcare, among other services. Otherservices that these groups have statedthat OPAs may perform include theapplication, fabrication and removal ofcasts, splints, braces and orthopedichardware, emergent care of traumapatients, pre- and post-operative care,and serving as first and secondassistants to orthopedic surgeons for allprocedures. A few commenters notedthat the only orthopedic experience thatthe primary care physician assistantshave is received during a 6-weekrotation within the 4-year primary careeducational program.

Many orthopedic surgeons and othersstated that the specialty training thatOPAs receive has enabled them tobecome extremely valuable to theirpractices freeing up orthopedic surgeonsto perform other tasks. Also, somecommenters stated that they have foundPAs and OPAs to be equally competentand in some cases, OPAs have provento be more competent than PAs.Therefore, OPAs are very quicklybecoming an integral part of theirpatient care teams. A professionalorganization commented that theinclusion of OPAs under the PA benefitshould not result in exorbitant costs tothe Medicare program because there areonly approximately 1,000 OPAs whocould meet the proposed PA

qualifications. Also, when Tennesseeestablished State licensure for OPAs, theState Comptroller’s office found thatthere was an increase in State revenuesfrom fees collected and a slight, but notsignificant, increase in Stateexpenditures for administering theprogram.

The national society representingOPAs suggested specific language beadded to the proposed PA qualificationsto require formal education programs forOPAs.

Response: After reviewing moreclosely information about thedistinctions between PAs and OPAs,and after reviewing the comments thatwe received on the proposal to includeOPAs as PAs, we have determined thatit would not be appropriate to treatOPAs in the same way as PAs. There aresubstantial differences in education andtraining, certification examinations,accreditation of educational programs,and State licensure and regulation ofPAs and OPAs. Additionally, we believethat the 1977 Rural Health ClinicServices Act, which first recognized andpaid for the services of PAs under PartB of the Medicare program, would havespecifically recognized OPAs as withinits scope if it intended to do so. We alsobelieve that a significant number ofindividuals, exceeding theapproximately 1,000 currentlypracticing OPAs, could qualify as PAsunder the proposed rule because thenational certification examination forOPAs is currently open to other mid-level nonphysician practitioners whochallenge the examination and have hadon-the-job training.

Comment: We did not specificallysolicit public comment in the proposedrule on the BBA provision thatauthorized PAs to provide servicesunder an arrangement as independentcontractors, in addition to performingservices as an employee of entities orindividuals such as a physician,medical group, professional corporation,hospital, skilled nursing facility, ornursing facility. However, we discussed,in the background section of theproposed rule, that effective January 1,1998, PAs have the option of furnishingservices under an independentcontractor arrangement. Under eitherarrangement, we explained that theemployer of the PA must bill theprogram for services furnished by thePA. As a result of this discussion, onecommenter stated that, generally, PAshave been under the direction of aphysician, and they have not beenviewed as independent contractors.Therefore, the commenter emphasizedthat clarification is needed about PAs

performing in an independentcontractor employment relationship.

Response: Regardless of whether a PAperforms services under an employmentrelationship or under an independentcontractor relationship, the Medicarestatute requires that he or she furnishservices under the general supervisionof a physician, and the employer of thePA must always bill for the servicesfurnished.

However, just as we adopt the InternalRevenue Service’s definition of anemployer/employee employmentrelationship, we also adopt the InternalRevenue Service’s definition of anindependent contractor relationship.

Some of the distinctions between anemployer/employee and an independentcontractor relationship are that, underan independent contractor relationship,the employer does not generally have towithhold or pay any taxes on paymentsto independent contractors and theemployer has virtually no behavioral orfinancial control over the independentcontractor. That is, under anindependent contractor relationship, theindependent contractor worksautonomously without any instructionsfrom his or her employer about when,where, and how to work. The contractoris engaged to perform services for aspecific project or period of time, forwhich he or she is paid at thecompletion of the project. Independentcontractors can make a profit or loss.The services that the independentcontractor performs may not be a keyaspect of the employer’s regularbusiness and, therefore, an independentcontractor may have a significantinvestment in the facilities he or sheuses in performing services for theemployer. Additionally, the employer ofan independent contractor may notprovide employee-type benefits such asinsurance, a pension plan, vacation pay,or sick pay.

Result of evaluation of comments: Wehave determined that for purposes ofMedicare Part B payment, a physicianassistant is an individual who—

• Has graduated from a physicianassistant educational program that isaccredited by the National Commissionon Accreditation of Allied HealthEducation Programs;

• Has passed the nationalcertification examination that iscertified by the National Commission onCertification of Physician Assistants;and

• Is licensed by the State to practiceas a physician assistant.


E. Payment for Teleconsultations inRural Health Professional ShortageAreas

In section 4206 of BBA, the Congressrequired that, not later than January 1,1999, Medicare Part B pay forprofessional consultations by aphysician via interactivetelecommunications systems(teleconsultations).

Under section 4206(a) of BBA,payment may be made under Part B,provided the teleconsultation service isfurnished to a beneficiary who residesin a county in a rural area designated asa Health Professional Shortage Area(HPSA). This payment isnotwithstanding that the individualphysician or practitioner providing theprofessional consultation is not at thesame location as the physician orpractitioner furnishing the service tothat beneficiary. (For the purposes ofconvenience, in this section the term‘‘practitioner’’ is used to meanphysicians and practitioners asspecified.)

Section 4206(b) of BBA also requiredthat the Secretary establish amethodology for determining theamount of payments made for ateleconsultation within the followingparameters:

• The payment is to be sharedbetween the referring practitioner andthe consulting practitioner.

• The amount of the payment is notto exceed the current fee scheduleamount that would be paid to theconsulting practitioner.

• The payment is not to include anyreimbursement for any telephone linecharges or any facility fees, and abeneficiary may not be billed for thesecharges or fees.

• The payment is to be subject to thecoinsurance and deductiblerequirements under section 1833 (a)(1)and (b) of the Act.

• The payment differential of section1848(a)(3) of the Act is to be applied toservices furnished by nonparticipatingphysicians.

• The provisions of sections 1848(g)and 1842(b)(18) of the Act are to apply.

• Further, payment for theconsultation service is to be increasedannually by the update factor forphysicians’ services determined undersection 1848(d) of the Act.

In addition, the statute directs that, inestablishing the methodology fordetermining the amount of payment, theSecretary take into account the findingsof the report required by section 192 ofthe Health Insurance Portability andAccountability Act of 1996 (Public Law104–191), the findings of the report

required by section 4206(c) of BBA, andany other findings related to clinicalefficacy and cost-effectiveness oftelemedicine applications.

Provisions of HCFA–1906–P

On June 22, 1998, we published aproposed rule titled ‘‘Payment forTeleconsultations in Rural HealthProfessional Shortage Areas’’ (HCFA–1906–P) (63 FR 33882) that wouldimplement the provisions of section4206 of the BBA addressing Medicarereimbursement for telehealth services.

Regulatory Provisions

In proposed § 410.75(a)(1), werequired that as a condition forMedicare Part B payment for ateleconsultation, the referring and theconsulting practitioner be any of thefollowing:

• A physician as described in existing§ 410.20.

• A physician assistant as defined inexisting § 491.2.

• A nurse practitioner as defined inexisting § 491.2.

• A clinical nurse specialist asdescribed in existing § 424.11(e)(6).

• A certified registered nurseanesthetist or anesthesiologist’sassistant as defined in existing § 410.69.

• A certified nurse-midwife asdefined in existing § 405.2401.

• A clinical social worker as definedin section 1861(hh)(1) of the Act.

• A clinical psychologist as describedin existing § 417.416(d)(2).

We required, in proposed§ 410.75(a)(2), that teleconsultationservices be furnished to a beneficiaryresiding in a rural area as defined insection 1886(d)(2)(D) of the Act that isdesignated as an HPSA under section332(a)(1)(A) of the Public Health ServiceAct. For purposes of this requirement,the beneficiary is deemed to be residingin such an area if the teleconsultationpresentation takes place in such an area.

In proposed §§ 410.75(a)(3) through410.75(a)(5) we specified further thatteleconsultations must meet thefollowing requirements in order to becovered by Medicare Part B:

• The medical examination of thebeneficiary must be under the control ofthe consultant practitioner.

• The consultation must involve theparticipation of the referringpractitioner, as appropriate to themedical needs of the patient, and asneeded to provide information to and atthe direction of the consultant.

• The consultation results must be ina written report that is furnished to thereferring practitioner.

We defined ‘‘interactivetelecommunications systems’’ in

paragraph (b) of proposed § 410.75, asmultimedia communications equipmentthat includes, at a minimum, audio-video equipment permitting two-way,real-time consultation among thepatient, consulting practitioner, andreferring practitioner as appropriate tothe medical needs of the patient and asneeded to provide information to and atthe direction of the consultingpractitioner. Telephones, facsimilemachines, and electronic mail systemsdo not meet the definition of interactivetelecommunications systems.

Payment ProvisionsProposed regulatory provisions: We

proposed adding § 414.62 (Payment forconsultations via interactivetelecommunication systems) to ourregulations.

We specified, in paragraph (a) ofproposed § 414.62, that Medicare totalpayments for a teleconsultation may notexceed the current fee schedule amountfor the service when furnished by theconsulting practitioner. We furtherspecified that the payment (1) may notinclude any reimbursement for anytelephone line charges or any facilityfees, and (2) is subject to thecoinsurance and deductiblerequirements of section 1833(a)(1) and(b) of the Act. We also specified inparagraph (b) that the paymentdifferential of section 1848(a)(3) of theAct applies to services furnished bynonparticipating physicians.

In paragraph (c) of proposed § 414.62,we provided that payment tononphysician practitioners is made onlyon an assignment-related basis.Paragraph (d) provided that only theconsultant practitioner may bill for theconsultation, and paragraph (e) requiredthe consultant practitioner to providethe referring practitioner 25 percent ofany payments, including any applicabledeductible or coinsurance amounts, heor she received for the consultation.

Paragraph (f) specified that apractitioner may be subject to thesanctions provided for in 42 CFRchapter V, parts 1001, 1002, and 1103 ifhe or she (1) knowingly and willfullybills or collects for services in violationof the limitations of proposed § 414.62on a repeated basis, or (2) fails to timelycorrect excess charges by reducing theactual charge billed for the service to anamount that does not exceed thelimiting charge or fails to timely refundexcess collections.

Analysis of and Response to PublicComments to HCFA–1906–P EligibilityProvisions

Comment: Most commentersapplauded HCFA’s decision to include


both partial and full county geographicHPSAs when determining eligibility.However, a few commenters believedwe should not limit eligibility to ruralHPSAs. One commenter stated that theproposed eligibility criteriadiscriminated against elderly personsliving in other remote areas. Anothercommenter suggested that travel time ordistance to the specialist, not theavailability of primary care physiciansin the community, are the mostimportant criteria for elderly patients inneed of specialty consultation.

Response: BBA limits eligibility forteleconsultation to rural areas as definedby section 1886(d)(2)(D) of the Actdesignated as an HPSA as defined bysection 332(A)(1)(a) of the Public HealthService Act. This section of the PublicHealth Service Act defines an HPSA asan area that the Secretary determineshas a shortage of health professionalsand is not reasonably accessible to anadequately serviced area.

We believe that, it is likely that in anarea where sources of primary care area considerable distance and travel timeaway, the same would be true forspecialty care. In any event, we do nothave the authority to expand eligibilityfor teleconsultation beyond what isspecified by BBA.

Comment: One commenter questionedwhether psychiatric, dental, and facilityHPSAs are eligible for teleconsultation.

Response: As discussed above, HPSAeligibility is limited to eligibility undersection 332(a)(1)(A) of the Public HealthService Act. This section of the lawreferences geographic HPSAs only.

Coverage Provisions

Comment: Many commentersrequested that we include payment forthe use of store-and-forward technologywithin the scope of coverage of thisprovision. Commenters believed that,for many specialties, store-and-forwardtechnology provided the sameinformation that would be provided ina live consultation.

For instance, several commentersrecommended that we broaden thedefinition of a consultation to allowstored full-motion video exams or otherrepresentations to substitute for thepresence of the patient. Othercommenters recommended payment forstore-and-forward applications such asdermatology photos and orthopedicdigital x-rays.

Other justifications for coverage ofstore-and-forward technology includedlack of infrastructure and schedulingdifficulties. A few commentersmentioned congressional interest inproviding coverage and payment for the

use of store-and-forward technology inproviding a consultation.

Response: We believe that ateleconsultation is a different method ofdelivering a consultation service. Tothat end, we view a teleconsultation asan interactive patient encounter thatmust meet the criteria for a givenconsultation service included in theAmerican Medical Association’s (AMA)Current Procedure Terminology.

In the proposed rule, we specifiedthat the minimum technology necessaryto deliver a consultation must includeinteractive audio and video equipmentpermitting two-way real-timecommunication between thebeneficiary, consulting practitioner, andreferring practitioner as appropriate. ForMedicare payment to occur, the patientmust be present, and thetelecommunications technology mustallow the consulting practitioner toconduct a medical examination of thepatient.

The telecommunicationsrequirements do not mandate fullmotion video. If the telecommunicationstechnology permits two-way interactiveaudio and video communicationallowing the consulting practitioner toconduct a medical exam, Medicarewould make payment for ateleconsultation.

These requirements would notprohibit the use of higher end store-and-forward technology in which less thanfull motion video is sufficient toperform an interactive examination atthe control of the consultingpractitioner. When performed in real-time, with the patient present, store-and-forward may allow the consultantphysician to control the examination byrequesting additional, real-time picturesof the patient that are transmittedimmediately to the online consultant.

Traditional store-and-forwardtechnology in which an examination,diagnostic test, or procedure is filmedand later transmitted can be used inconjunction with the interactive (viaaudio-video technology) examination tofacilitate the consultant’s decisionmaking. However, for Medicarepayment to occur, the patient must bepresent in real-time.

We do not propose to make separatepayment provisions for the review ofmedical records via telecommunicationsin this final rule. BBA gives paymentauthority for consultation viatelecommunications with a physician orpractitioner described in section1842(b)(18)(C) of the Act, furnishing aservice for which payment may be madeunder Medicare. Medicare currentlydoes not make separate payment for the

review and interpretation of medicalrecords.

Separate payment for traditionalstore-and-forward applications may beappropriate for many forms ofdiagnostic testing including radiology,electrocardiogram, andelectroencephalogram interpretations, aswell as imaging studies such asmagnetic resonance imaging andultrasound. Medicare currently allowscoverage and payment for medicalservices delivered viatelecommunications systems that do notrequire a face-to-face ‘‘hands on’’encounter. Section 2020(A) of theMedicare Carriers Manual addresses thisissue and lists radiology,electrocardiogram, andelectroencephalogram interpretations asexamples of such services.

Review of dermatology photos wouldnot be considered a consultation. Webelieve that this would be a new servicefor which payment could not currentlybe made under Medicare. BBA limitsthe scope of coverage to professionalconsultations for which payment maybe made under Medicare.

Comment: Many commenters believedthat we should be more stringentregarding practitioners who can beconsultants. For instance, a number ofcommenters believed that a certifiedregistered nurse anesthetist,anesthesiologist assistant, clinicalpsychologist, or clinical social workershould not be eligible to be a consultingpractitioner because Medicare does notmake payment for consultationsprovided by these practitioners.Additionally, commenters stated thatconsultation is beyond the scope ofpractice for these practitioners.

Response: In the proposed rule forteleconsultation we specified that allpractitioners described in section1842(b)(18)(C) of the Act qualify to be aconsulting and a referring practitioner.These practitioners include: aphysician, physician assistant, nursepractitioner, clinical nurse specialist,certified registered nurse anesthetist,anesthesiologist assistant, certifiednurse midwife, clinical psychologist,and clinical social worker.

After further review of this proposal,we have determined that allowingclinical psychologists, clinical socialworkers, certified nurse anesthetists,and anesthesiologist assistants toprovide a teleconsultation isinconsistent with the Medicare benefit.

We believe that a professionalconsultation delivered viatelecommunications is a method ofdelivering a consultation service, ratherthan a new service. For instance, BBAsection 4206(a) states that ‘‘payment


shall be made for professionalconsultations via telecommunicationssystems with a physician or practitionerdescribed in section 1842(b)(18)(C) ofthe Act furnishing a service for whichpayment may be made * * * ’’Moreover, section 4206(b) of BBA states‘‘the amount of such payment shall notbe greater than the current fee scheduleof the consulting physician orpractitioner.’’

Under existing Medicare policy,clinical psychologists, clinical socialworkers, certified registered nurseanesthetists, and anesthesiologistassistants cannot bill, nor receivepayment, for consultation servicesunder Medicare. Therefore, theseparticular practitioners are prohibitedfrom billing for a teleconsultationbecause, under the Medicare program,no payment would be made for aconsultation service provided by thesepractitioners.

In addition, we have reviewed ourproposed policy which allowed certifiedregistered nurse anesthetists andanesthesiologist assistants to referMedicare beneficiaries forteleconsultation. After review, we havedecided to omit these practitioners aseligible to refer patients forteleconsultation. Section 1861(bb) of theSocial Security Act defines servicesprovided by these practitioners asanesthesia services and related care.Currently, our view is that the nature ofthese services is such that certifiedregistered nurse anesthetists andanesthesiologist assistants would notrequest a consultation as defined by thePhysicians’ Current ProcedureTerminology. Thus, we are excludingcertified registered nurse anesthetistsand anesthesiologist assistants from thelist of referring practitioners. We invitespecific comments regarding this issue.

To implement this policy change, weare omitting clinical psychologists,clinical social workers, certified nurseanesthetists, and anesthesiologistassistants from being consultingpractitioners as follows at redesignated§ 410.78(a)(1):

(1) The consulting practitioner is any of thefollowing:

(i) A physician as described in § 410.20.(ii) A physician assistant as defined in

§ 410.74.(iii) A nurse practitioner as defined in

§ 410.75.(iv) A clinical nurse specialist as defined

in § 410.76.(v) A nurse-midwife as defined in § 410.77.

Additionally, a new section is addedto omit certified nurse anesthetists andanesthesiologist assistants as referringpractitioners as follows at redesignated§ 410.78(a)(2):

(2) The referring practitioner is any of thefollowing:

(i) A physician as described in § 410.20.(ii) A physician assistant as defined in

§ 410.74.(iii) A nurse practitioner as defined in

§ 410.75.(iv) A clinical nurse specialist as defined

in § 410.76.(v) A nurse-midwife as defined in § 410.77.(vi) A clinical psychologist as described at

§ 410.71.(vii) A clinical social worker as described

in section 410.73.

Comment: We received a number ofcomments regarding the referringpractitioner participation requirements.Several commenters believed thatrequiring the participation of thereferring practitioner as a condition ofpayment is unreasonable. They believedthis responsibility can usually bedelegated to a midlevel practitioner or,in some cases, no presentingpractitioner. Commenters made the casethat the referring practitioner does nottravel to the consultant’s office for atraditional consultation and thereforeshould not be required to participate ina teleconsultation.

Response: We have reviewed ourproposed policy requiring theparticipation of the actual referringpractitioner as appropriate to themedical needs of the patient. Afterreview we have decided to amend thispolicy to allow all practitioners listed asreferring practitioners in this rule to beeligible to present a Medicarebeneficiary for teleconsultation.However, if the practitioner is not theactual referring practitioner, he or shemust be an employee of the referringpractitioner.

Hence, if a primary care physiciandetermines that a specialty consultationis necessary, he or she could delegatethe presentation of the beneficiary to aneligible referring practitioner (i.e., nursepractitioner, physician assistant, nursemidwife, clinical nurse specialist,clinical psychologist, or clinical socialworker) who is an employee.

We clarify, that for circumstanceswhere the condition of the patient maynot medically require the participationof a presenting practitioner, we wouldnot require the participation of apresenting practitioner as a condition ofpayment for the teleconsultation.

When no practitioner is present withthe patient, the consultant will continueto share 25 percent of total paymentswith the referring practitioner. Asdiscussed in the payment provisionsection of this document, the 25-percentallocation is intended to reflect theaverage amount of new work performedby the referring practitioner over manyteleconsultations. However, because of

the potential for fraud or abusivepractices in these situations where thereferring practitioner is not present withthe patient, HCFA in consultation withthe Office of the Inspector General willmonitor these services in our review ofthe Medicare teleconsultation benefit.

To execute this policy in this finalrule, proposed § 410.75(a)(5),redesignated as § 410.78(a)(5), specifiesthat as a condition of payment, theteleconsultation involves theparticipation of the referringpractitioner or a practitioner describedin section 1842(b)(18)(C) of the Act(other than a certified registered nurseanesthetist or anesthesiologist assistant)who is an employee of the referringpractitioner, as appropriate to themedical needs of the beneficiary and toprovide information to and at thedirection of the consulting practitioner.

Comment: Several commentersrequested clarification regarding theavailability of the referring practitionerwhile the teleconsultation takes place.

Response: A practitioner who iseligible to be a referring practitioner, asdescribed in redesignated § 410.78(a)(2)(formerly § 410.75(a)(2)), is required tobe present in the office suite or hospitalwing and available to participate in theteleconsultation as necessary. We do notmandate that a practitioner be present inthe room while the teleconsultation istaking place.

As discussed earlier in this document,a presenting practitioner’s participationis required as appropriate to the medicalneeds of the beneficiary and to provideinformation at the direction of theconsulting practitioner. However, if themedical needs of the beneficiary requirethe participation of a presenting medicalprofessional, that professional must be apractitioner described in redesignated§ 410.78(a)(2).

Comment: A few commentersrequested clarification regardingwhether the referring practitioner maybill for other services on the same daythat the teleconsultation takes place. Asuggestion was made that a referringpractitioner should be permitted to billfor a primary care visit on the same dayas a teleconsultation if the primary carevisit is the basis of the consultation orfor a medical problem unrelated to theconsultation.

Response: On the day theteleconsultation occurs, the referringpractitioner may bill for the office,outpatient, or inpatient visit thatpreceded the need for a consultation.Additionally, the referring practitionercould bill for other services as orderedby the consultant, or for servicesunrelated to the medical problem forwhich a consultation was requested.


However, the referring practitioner isprohibited from billing for a second visitfor his or her role in presenting thepatient at the time of teleconsultation.The consulting practitioner isresponsible for billing Medicare for theconsultation service.

Comment: Many commenterssuggested an expansion in the scope ofcoverage beyond consultation servicesincluding speech pathology,occupational therapy, diabetic selfmanagement, psychotherapy, office andother outpatient visits for new andestablished patients, nursing facilityservices, and patient education anddiagnostic interviews. Additionally, thenature of the comments indicated abelief that consultation can only berequested for a limited number ofconditions or specialties and that aconsultation service can only beprovided once per patient.

Response: Section 4206(a) of BBAlimits the scope of coverage toprofessional consultation for whichpayment is currently made underMedicare. We believe that aconsultation is a specific service thatmeets the criteria specified for aconsultation service in the AMA 1998Current Procedure Terminology. BBAdoes not give authority to cover servicesbeyond consultation under thisprovision.

We clarify that a consultation can berequested by a physician or practitionerfor many medical specialties including,but not limited to: cardiology,pulmonary, neurology, dermatology,gastrology, and psychiatry.Additionally, the scope of coverage forteleconsultation is not limited to theinitial request for consultation from thereferring practitioner. If an additionalrequest for consultation regarding thesame or new problem is received fromthe attending practitioner anddocumented in the medical records,another teleconsultation may be billed.

Comment: Two commenters requestedclarification of whether a physicianassistant is eligible to be a consultantunder this provision.

Response: A physician assistant, asdefined in existing § 410.74, is eligibleto bill for a teleconsultation.

Comment: A number of commentersbelieved that, in many cases, aregistered nurse, or other medicalprofessional, is qualified to present thepatient to the consultant. Onecommenter believed that patient carehas never suffered when a medicalprofessional not recognized as aMedicare practitioner is used to presentthe patient and only a small percentageof cases actually require a physician,nurse practitioner, or physician

assistant to be present for theteleconsultation.

Response: Section 4206(a) of BBAspecifies that the individual physicianor practitioner providing theprofessional consultation does not haveto be at the same location as thephysician or practitioner furnishing theservice to the beneficiary. We believethis language is limiting and requiresthat a practitioner, as recognized undersection 1842(b)(18)(C) of the Act, mustbe present with the patient during theteleconsultation. Since the same phrasedescribes the medical professional atboth ends of the teleconsultation, webelieve that it would be difficult tointerpret the phrase to have onemeaning for purposes of identifying theconsultant and a different meaning forpurposes of identifying who may bephysically with the patient. Therefore,registered nurses, and other medicalprofessionals not recognized aspractitioners under section1842(b)(18)(C) cannot act as presentersduring teleconsultations.

Comment: A few commentersbelieved that the range of medicalprofessionals eligible to provide ateleconsultation should be expandedbeyond what is allowed by BBA.Suggestions included physicaltherapists, respiratory therapists, andoccupational therapists. Commentersstated that outpatient rehabilitationfollowing a stroke or other disorder isless expensive and better thanprolonged inpatient care. Othercommenters suggested that nursespecialists and registered nurses beallowed to provide a consultationservice. Commenters stated that nursesprovide education to patients withoutthe presence of a physician or otherpractitioner.

Response: BBA limits the medicalprofessionals who may be consultants tophysicians or practitioners described insection 1842(b)(18)(C) of the Act. Thesepractitioners include a clinical nursespecialist as described in § 410.76;however, nurses who are not recognizedas practitioners under section1842(b)(18)(C) of the Act are not eligibleto provide a teleconsultation. Thissection of the law does not includephysical therapists, respiratorytherapists, and occupational therapists.We have no authority to expand thestatutory definition.

Comment: One commenter stated thata certain State law requires the referringpractitioner to have the ultimateauthority over the care of the patient.The commenter believed that thisrequirement conflicts with our proposedrule which specifies that the

examination be at the control of theconsulting practitioner.

Response: We clarify that thelanguage at proposed § 410.75(a)(4),redesignated in this final rule as§ 410.78(a)(4), ‘‘The medicalexamination of the beneficiary is underthe control of the consultantpractitioner,’’ does not mean that thereferring practitioner relinquishes theoverall responsibility for a beneficiary’scare. The intent of this requirement is toclarify that the consulting practitioner isconducting a real-time examinationwith the patient present, rather thanreviewing a prior examination,diagnostic test, or procedure prepared inadvance by the referring practitioner.

Payment and Billing Provisions

Comment: One commenter believedthat the discussion of general Medicarepayment policy is unclear. Thecommenter specifically questioned theapplicability of coinsurance.

Response: Generally, under Medicarepart B, Medicare pays 80 percent of thelower of the actual charge or appropriatefee schedule amount, presuming thebeneficiary has met his or her Medicarepart B deductible. Under the Medicareprogram and for purposes of thisprovision, the maximum Medicarepayment for a teleconsultation providedby a participating physician would bebased on 80 percent of the physician feeschedule, presuming that the deductiblehad been met. For all other eligibleconsulting practitioners, the maximumMedicare payment amount would be 80percent of 85 percent of the physicianfee schedule. The beneficiary would beresponsible for 20 percent of theappropriate payment amount.

An example of this formula using$100 as the Medicare physician feeschedule amount is provided below.

Payment for a teleconsultation whena participating physician is theconsultant:

• Medicare Physician Fee Schedule:$100.

• Max. Medicare Payment Amount(80% of $100): $80.

• Coinsurance (20% of $100): $20.• Total Payment Amount: $100.Payment for a teleconsultation when

an eligible non-physician practitioner isthe consultant:

• Medicare Physician Fee Schedule:$100.

• Practitioners Respective Percentageof the Physicians Fee Schedule andResulting Non-Physician Fee ScheduleAmount (85% of $100): $85.

• Max. Medicare Payment Amount(80% of $85): $68.

• Coinsurance (20% of $85): $17.• Total Payment Amount: $85.


Comment: One commenter questionedwhether Medigap, Medicaid, and othersupplemental insurance will pay the 20-percent coinsurance forteleconsultations.

Response: Medicare SupplementalInsurance (MSI) will pay the 20-percentcoinsurance for coveredteleconsultations. MSI coverageincluding Medigap, Medicaid, oremployer plans have been standardizedacross the country. All MSI plansprovide what are known as ‘‘basicbenefits,’’ which are defined to includeMedicare Part B coinsurance for coveredservices (20 percent of the Medicare-approved amount). Teleconsultation is aconsultation service delivered viatelecommunications systems and iscovered under Medicare in rural HPSAseffective January 1, 1999.

Comment: We received a number ofcomments regarding the proposedpayment allocation in which theconsultant would receive 75 percentand the referring practitioner wouldreceive 25 percent of the consultingpractitioners fee schedule. Severalrecommendations were made to vary thedistribution of payment based on thework performed by each practitioner. Afew commenters suggested that if it isnot medically necessary for a presentingpractitioner to participate in theteleconsultation, the consultant shouldreceive 100 percent of the payment.Other commenters suggested that thepayment allocation be determined bythe practitioners involved.

Response: We recognize that the levelof involvement of the presentingpractitioner will vary from case to case,and our model for payment allocationreflects this belief. In determining thepayment allocation, we developed amodel simulating the combinedintensity level for both the referring andconsulting practitioners by usingrelative value units (RVUs) applicable toconsultation services and primary carevisits (primary care visits were used asproxy for the role of a presentingpractitioner during a teleconsultation).

The model reflects that someconsultations will require morepreparation and medical expertise fromthe presenting practitioner. Forinstance, in the first scenario we usedthe full primary care RVUs. In thesecond scenario we reduced the workcomponent by 50 percent to reflect thatsome consultations will require lessnew work from the presentingpractitioner.

The consultation service and primarycare visit RVUs were calculated as apercentage of the combined total andresulted in a 75-percent payment to theconsulting practitioner and 25-percent

payment to the referring practitioner.This percentage allocation is intendedto reflect the average level of new workperformed by each practitioner over thecourse of various teleconsultations. Itwould not be practical for us to developvarying fee amounts for the referringpractitioner’s role in presenting thepatient given our lack of programexperience with teleconsultation.However, we are not eliminating thepossibility of making changes to theallocation methodology if programexperience demonstrates that amodification is warranted.

We considered making a singlepayment to the consulting practitionerwithout specifying the amount to beshared with the referring practitioner,however we wished to avoid raisingissues of prohibitions against ‘‘feesplitting.’’ For more information on thepayment allocation see page 33886 ofthe June 22, 1998 proposed rule.

Comment: A few commentersbelieved that the regulation shouldspecify the consequences in the eventthat a consultant fails to share paymentin a timely fashion. A suggestion wasmade to amend the regulation to requirethe consultant to share payment within30 days of receipt from the Medicarecarrier. The commenter also requestedthat, in the event of untimely sharing ofpayment, the referring practitioner havethe right to contact the consultant’sMedicare carrier directly for therequired percent of payment.

Response: We are not mandating orimposing time limits or dictating howsharing of payments should occur. Webelieve the specific details of how thepayment should be shared, includingthe appropriate time frame, should beup to the practitioners involved. Webelieve that specifying a time frame inwhich sharing must occur, wouldimpose an unnecessary burden on theconsulting practitioner.

Comment: One commenter stated thatthe proposed rule is unclear regardingwhen the consulting practitioner shouldshare 25 percent of the total paymentwith the referring practitioner.Specifically, the commenter providedtwo examples of how payment couldpossibly be shared. The first exampleinvolved sharing Medicare andcoinsurance payments separately (uponthe receipt by the consultant), while thesecond example involved sharing 25percent of the total fee schedule amountbefore coinsurance was received by theconsulting practitioner. The commenterbelieved that the amount of paymentallocation changes depending on whensharing occurs.

Response: The consulting practitioneris responsible for billing Medicare for

the consultation service and sharing 25percent of total payments received withthe referring practitioner. Whether theconsulting practitioner shares paymentsas he or she receives them, waits untilall payments are received, or shares theMedicare and coinsurance payments up-front, the total payment amountallocated to each practitioner remainsthe same. We are not imposing furtherguidelines on the sharing arrangementbetween the two practitioners.

Comment: Several commentersquestioned whether our proposedpayment methodology of making asingle payment to the consultant andrequiring him or her to share paymentviolates section 1877 of the Act. Thissection provides penalties for certainprohibited referrals. A few commentersquestioned the applicability of Statelaws that prohibit fee splitting.

Response: The payment provisions forteleconsultation specify that theconsulting practitioner must submit theclaim for the consultation service andmust share 25 percent of total paymentwith the referring practitioner. Giventhat we require the sharing of paymentsand predetermine by law the paymentamount allocated to the referringpractitioner, we believe that ourregulation does not constitute aprohibited compensation arrangementbetween the consulting and referringpractitioners. We do not regard theconsulting practitioner as actuallymaking a payment to the referringpractitioner, but rather acting as a‘‘conduit’’ to pass a portion of theMedicare payment on. Therefore, webelieve that physicians andpractitioners, under our payment policy,are not in violation of the Act. For morediscussion regarding the bundledpayment approach see page 33887 of theJune 22, 1998 proposed rule.

Comment: A few commentersquestioned how this payment sharingarrangement is treated for tax purposesand whether requiring the consultant toshare payment is in conflict with the taxlaws.

Response: HCFA does not give taxadvice. However, we believe that whatthe commenter presents as a taxproblem is merely a matter ofbookkeeping. We note that the lawrequires the sharing of payment, and theregulation requires the consultant togive 25 percent of the payment receivedto the referring practitioner. We do notbelieve that the consultant would everaccount for the portion of the Medicarepayment for which he serves as a‘‘conduit’’ as income of his or her own.Each practitioner should consult his orher own tax adviser for specific


information about his own bookkeepingpractices.

Comment: Many commenters believedthat it will be an administrative burdenfor the consultant to share paymentswith the referring practitioner. Wereceived suggestions for two alternativebilling proposals. The first alternativeproposal maintained the single billapproach, but required us to issueseparate checks to the consulting andreferring practitioner from the sameclaim form. The second alternativeproposal required the submission ofseparate claims from the consulting andreferring practitioner with HCFA issuingseparate checks.

Response: We understand thecommenters’ concern regarding theadditional administrative requirementsplaced on the consulting practitioner.As a result of public comment, weexamined the possibility of issuing twoseparate checks from the same claimform. Under this approach, we wouldpay the consultant 75 percent of theappropriate fee schedule amount andthe referring practitioner would be paid25 percent based upon the claimsubmitted by the consultant. However,this option could not be implemented tomeet the January 1, 1999, effective dateof this provision as mandated by section4206 of BBA. For instance, the Medicareclaims processing system is currentlydesigned to accept only one ‘‘pay to’’personal identification number (PIN)per claim on the electronic claim recordand the HCFA–1500 paper claim fieldsthat are used as the source forgenerating a check to a practitioner.

Currently there is only one scenario inwhich two checks can be issued fromone claim form. That situation occurswhen a beneficiary overpays his or herdeductible and/or coinsurance on anassigned claim. In this case, one checkis issued to the provider and a secondcheck is issued to the beneficiaryreflecting the amount the beneficiaryoverpaid. It is possible to issue twochecks in this one instance becausethere is only one personal identificationnumber.

Additionally, the Medicare claimsprocessing system is designed toaccommodate only one providersignature per claim. As such, if theconsulting practitioner bills on behalf ofthe referring practitioner, we would nothave a valid claim from the referringpractitioner upon which to basepayment and issue a check.

Another administrative difficultyconcerns the possibility that theconsulting and referring practitionersmay be located in different carrierjurisdictions. This would make itdifficult for one carrier to make separate

payments to both practitioners. Thisoption may be more feasible oncenational practitioner identificationnumbers are implemented as mandatedby the Health Insurance Portability andAccountability Act of 1996.

When developing the proposed rulewe considered requiring eachpractitioner to submit a separate claim.This alternative was rejected due to theadministrative difficulties in linkingclaims to assure that the paymentceiling as allowed by section 4206 ofBBA is not exceeded. Total paymentcould exceed what the consultant wouldhave otherwise received if thepresenting practitioner were to submit aclaim for a consultation at a higherintensity level than the consultant. Thetask of linking claims becomesincreasingly difficult if two carriers areinvolved because the practitioners’locations fall within separate carrierjurisdictions. The systems modificationsnecessary to accommodate separateclaims could not have beenimplemented by the January 1, 1999,effective date as mandated by BBA.

Although the final rule requires theconsulting practitioner to submit aclaim for the teleconsultation and sharepayment with the referring practitioner,we are not foreclosing the possibility ofmaking changes to this policy in thefuture.

Comment: One commenter hadconcerns regarding language in theproposed rule that stated that theteleconsultation transfers the patient tothe consulting practitioner. Thecommenter believed that we shouldclarify that this statement was madeonly for administrative requirements ofthe physician fee schedule and that wedid not intend it as a comment on thescope of medical practice.

Response: Our determination of theconsultant’s location as the site ofservice is for Medicare paymentpurposes only. Given that BBA allowspayment up to the consultant’s currentfee schedule, we believe that it isappropriate to use the GeographicPractice Cost Index (GPCI) relevant tothe location of the consultingpractitioner, rather than the GPCIapplicable to the referring practitioner.We did not intend to make a commentregarding the scope of medical practice.

Coding ProvisionsComment: The majority of

commenters were strongly in favor ofusing a modifier to identify aconsultation delivered viatelecommunications systems. A fewcommenters suggested new codes toidentify a teleconsultation. Onecommenter stated that modifiers are not

always handled correctly by theMedicare carriers and that separatecodes would offer the most reliable wayof identifying services subject to theirown payment rules.

Response: Using a modifier to identifya consultation delivered viatelecommunications conforms with ourview that a teleconsultation is a methodof delivering a consultation service,rather than a new service. Weconsidered developing a separate codingstructure for teleconsultation, however,we rejected this option because webelieve that new codes would beadministratively cumbersome for themedical community and the Medicareprogram. We believe it will be easier forpractitioners to use a single modifierrather than an entirely new set of codes.

Issues Not Addressed in the ProposedRule

Comment: One commenter askedwhether we plan to evaluate the impactof this rule on beneficiaries, providers,other payers, or Medicare. Thecommenter further stated that data hasbeen limited from the currentteleconsultation demonstration project.

Response: We believe that it would bebeneficial to evaluate the impact ofexpanding eligibility forteleconsultation beyond the existingdemonstration sites. We plan to evaluateprogram data resulting from thisprovision, such as utilization patterns,service intensity, and the type ofpractitioners providing ateleconsultation.

Comment: A few commenterssuggested we provide clarificationregarding both intra- and inter-statescope of practice and licensure issues.One commenter expressed concern thatthe proposed rule may unintentionallyinvolve us in State-based scope ofpractice and recommended that weclarify that midlevel practitioners areprohibited from operating outside thelicensed health professionals scope ofpractice in their State.

Response: BBA specifies that anonphysician practitioner may refer abeneficiary for consultation. We clarifythat midlevel practitioners would needto meet the governing requirements ofthe State in which they are licensed.Therefore, if the law of the State inwhich they are licensed would prohibita midlevel practitioner (for example, anurse practitioner or a physicianassistant) from referring a patient forconsultation, the practitioner could notrefer a patient for teleconsultation.Likewise, if the law of the State inwhich the teleconsultation occursprohibits a nonphysician fromproviding a consultation service, the


practitioner could not provide ateleconsultation under Medicare.Moreover, if State law precludes an out-of-State practitioner from delivering ateleconsultation, Medicare would notpay for that consultation.

Comment: One commenter believedthat this rule would disadvantagespecialists located in a rural HPSA bydrawing patients to specialists outsideof the local area. The commenter statedthat managed care organizations maypossibly be able to negotiate a betterprice from consultants outside thecommunity and believed we shoulddevelop safeguards to prohibit suchpossibilities.

Response: We believe this comment isbeyond the scope of this provision asauthorized by BBA. BBA provides forpayment of teleconsultation when therequirements of this benefit are met.However, HCFA is not authorized by thelaw to direct physicians and othermedical practitioners to a specificconsultant.

Comment: A few commenterssuggested that we consider guidelinesregarding beneficiary consent andsafeguards for confidentiality.

Response: We agree that thebeneficiary should be thoroughlyinformed regarding the nature of ateleconsultation and that confidentialityof medical records is of great concern.However, we assume that practitionersare already cognizant of theirresponsibility to obtain patients’informed consent and to protectpatients’ medical records. Therefore, weare not establishing guidelines regardingbeneficiary consent or confidentiality atthis time. We invite specific commentsregarding this issue.

We recognize that this rule is a firststep in refining face-to-face ‘‘hands on’’requirements for a medical serviceunder Medicare to reflect a telemedicineservice. We are not eliminating thepossibility of the development ofmodifications to Medicare telemedicinecoverage and payment policies as thelaw permits and as more programexperience in this area is obtained.

To that end, we intend to exploreseveral issues, including: (1) The use ofstore and forward technologies as amethod for delivering medical services;(2) the use of registered nurses and othermedical professionals not recognized asa practitioner under the teleconsultationprovision to present the patient to theconsulting practitioner; and (3) theappropriateness of current consultationcodes for reporting consultationsdelivered via communications systems.

In a year we will sendrecommendations to Congress regarding

these issues along with any necessarylegislative changes.

Clarifications and Modifications

Teleconsultation in Rural Health Clinics

As a result of further analysis andevaluation, we have decided to clarifypayment policy for teleconsultationsprovided in a Rural Health Clinic (RHC).

We believe that Congress did notintend to include teleconsultation, asprovided for by BBA, as part of the RHCbenefit. Section 4206(a) of BBA specifiesthat Medicare payment shall be madefor a professional consultation deliveredvia telecommunications with aphysician as defined in section 1861(r)of the Social Security Act or practitioneras defined by section 1842(b)(18)(C) ofthe Act. Services furnished by an RHCare treated as ‘‘RHC services’’ and losetheir identity as physicians’ services orservices of other practitioners.

Moreover, section 4206(b) of BBAinstructs us to create a system ofpayment for teleconsultation thatrequires that payment be sharedbetween the referring and consultingprofessionals, precludes payment forany sort of capital or facility fees, andapplies the mandatory claimssubmission and limiting chargeprovisions of section 1848(g) of theSocial Security Act. The method ofpayment for teleconsultation servicesunder this benefit is not congruent withthe method of payment for servicesunder the RHC benefit. Under the RHCbenefit, payment is made on the basis ofan all-inclusive rate per visit (see 42CFR 405.2462). These provisions areanother indication that we should notinclude teleconsultation servicesfurnished by physicians in RHCs asRHC services for which we makepayment to the RHC.

While, some argument could be madethat Congress simply did not intend forteleconsultation services ever to be paidfor under section 4206 if they arefurnished within the confines of anRHC, this would be an unusualconclusion since section 4206specifically provides payment forconsultation services in rural areassimilar to those areas serviced by RHCsthat may lack sufficient specialists toprovide necessary beneficiary care.

Since Congress did not address howwe should treat the services ofphysicians and other practitionersproviding teleconsultation in RHCs, weare interpreting the law to permitpractitioners in RHCs to bill forteleconsultation as do otherpractitioners. The law and thelegislative history indicate that theintent of the teleconsultation benefit

was to expand services to beneficiariesin rural areas. The same intent informsthe RHC benefit, so we believe it wouldbe anomalous to read theteleconsultation benefit as beingunavailable to rural beneficiaries whoreceive a teleconsultation in an RHC.

Section 402 of the RHC manual(HCFA Pub. 27) describes ‘‘servicesfurnished by RHCs . . . which are notRHC/FQHC services.’’ These servicesinclude durable medical equipment,ambulance services, diagnostic tests(‘‘unless an interpretation of the test isprovided by the RHC/FQHCphysician’’), prosthetic devices, braces,and artificial limbs. Thus, servicescreated by other benefit provisions andnot explicitly enumerated as part of theRHC benefit have been paid not underthe RHC benefit (even if furnished in anRHC), but rather under the appropriateauthority in section 1833 of the Act. Webelieve that it is consistent with thispolicy to pay for teleconsultations underthe authority of section 4206 of BBA,not as an RHC service.

Therefore, consulting practitionersproviding a teleconsultation in an RHCsetting will be paid according to thepayment methodology specified in thisfinal rule. A teleconsultation would notgenerate an RHC visit and would not bepaid for under the all-inclusive ratemethodology. For instance, theconsulting practitioner providing ateleconsultation in an RHC would billthe applicable Medicare carrier usinghis or her own identification numberrather than the identification number ofthe RHC. Payment would be based onthe consultant’s fee schedule amountand he or she would be required toshare 25 percent of total payments withthe referring practitioner.

When a practitioner in an RHC refersa Medicare beneficiary for ateleconsultation, he or she will receive25 percent of the approved Medicareconsultation fee schedule. An RHC visitwould not be billed by either thereferring or consulting practitioner forthe teleconsultation. However, thereferring practitioner could bill for theinitial visit which prompted the needfor a consultation as an RHC visit.

Note: These requirements would also applyto Federally Qualified Health Centers locatedin a rural HPSA.

Result of Evaluation of Comments• Eligibility for Teleconsultation—

Medicare beneficiaries residing in ruralHPSAs are eligible to receiveteleconsultation services. This final rulestipulates the use of the site ofpresentation (patient location) as aproxy for beneficiary residence.However, if a beneficiary can


demonstrate that he or she resides in arural HPSA, Medicare would makepayment regardless of the site ofconsultation. Eligibility forteleconsultation includes both full andpartial county HPSAs designated bysection 332(a)(1)(A) of the Public HealthService Act.

• Scope of Coverage—Coveredservices include initial, follow-up, orconfirming consultations in hospitals,outpatient facilities, or medical officesdelivered via interactive audio andvideo telecommunications systems (CPTcodes 99241–99245, 99251–99255,99261–99263, and 99271–99275).

• Practitioners eligible to beconsulting and referring practitioners—Clinical psychologists, clinical socialworkers, certified registered nurseanesthetists, and anesthesiologistassistants do not provide forconsultation services payable underMedicare and therefore cannot providea teleconsultation under this provision.Additionally, certified nurseanesthetists and anesthesiologistassistants are not eligible to be referringpractitioners for a teleconsultation.Practitioners who may provideteleconsultations include the following:physicians, physician assistants, nursepractitioners, clinical nurse specialists,and nurse-midwives. Practitioners whomay refer patients for teleconsultationinclude the following: physicians,physician assistants, nurse practitioners,clinical nurse specialists, nurse-midwives, clinical psychologists, andclinical social workers.

• Conditions of Payment—Thepatient must be present at the time ofconsultation, the medical examinationof the patient must be under the controlof the consulting practitioner, and theconsultation must take place via aninteractive audio and videotelecommunications system. Interactivetelecommunications systems must bemulti-media communications that, at aminimum, include audio and videoequipment permitting real-timeconsultation among the patient,consulting practitioner, and referringpractitioner (as appropriate).Telephones, facsimile machines, andelectronic mail systems do not meet therequirements of interactivetelecommunications systems.

• We amended the proposed rule toallow another practitioner who can be areferring practitioner under thisprovision to present the patient to theconsultant provided that he or she is anemployee of the actual referringpractitioner.

• Registered nurses and other medicalprofessionals not included within thedefinition of a practitioner in section1842(b)(18)(C) of the Act are notpermitted to act as presenters duringteleconsultations.

• Medicare Payment Policy—A singlepayment will be made to the consultingpractitioner. The amount will be equalthe consultant’s current fee schedulepayment for a face-to-face patientconsultation. The statute requires thatthe fee be shared by the referring andconsulting practitioners. This final ruleimplements this requirement byproviding that the consultingpractitioner receive 75 percent, and thereferring practitioner 25 percent, of theconsulting practitioner’s Medicare fee.The patient continues to be responsiblefor the 20 percent Medicarecoinsurance.

• Billing for Teleconsultation—Theconsulting practitioner will submit oneclaim for the consultation service andwill provide the referring practitionerwith 25 percent of any payment,including any deductible or coinsurancereceived for the consultation. A codingmodifier will be used to identify theclaim as a teleconsultation. Thereferring practitioner cannot submit aMedicare claim for the teleconsultation.

IV. Refinement of Relative Value Unitsfor Calendar Year 1999 and Responsesto Public Comments on Interim RelativeValue Units for 1998

A. Summary of Issues Discussed Relatedto the Adjustment of Relative ValueUnits

Section IV.B. of this final ruledescribes the methodology used toreview the comments received on theRVUs for physician work and theprocess used to establish RVUs for newand revised CPT codes. Changes tocodes on the physician fee schedulereflected in Addendum B are effectivefor services furnished beginning January1, 1999.

B. Process for Establishing WorkRelative Value Units for the 1999Physician Fee Schedule

Our October 31, 1997 final rule on the1998 physician fee schedule (62 FR59048) announced the final RVUs forMedicare payment for existingprocedure codes under the physician feeschedule and interim RVUs for new andrevised codes. The RVUs contained inthe rule apply to physicians’ servicesfurnished beginning January 1, 1998.We announced that we considered theRVUs for the interim codes to be subjectto public comment under the annual

refinement process. In this section, wesummarize the refinements to theinterim work RVUs that have occurredsince publication of the October 1998final rule and our establishment of thework RVUs for new and revised codesfor the 1999 physician fee schedule.

Work Relative Value Unit Refinementsof Interim and Related Relative ValueUnits (Includes Table 4—Work RelativeValue Unit Refinements of 1998 Interimand Related Relative Value Units)

Although the RVUs in the October1997 final rule were used to calculate1998 payment amounts, we consideredthe RVUs for the new or revised codesto be interim. We accepted commentsfor a period of 60 days. We receivedcomments from approximately 8specialty societies on approximately 34CPT codes with interim RVUs. Onlycomments received on codes listed inAddendum C of the October 1997 finalrule were considered this year.

Due to the content of the commentsreceived, we did not convene multi-specialty refinement panels (see theNovember 22, 1996 final rule on thephysician fee schedule (61 FR 59536)for a detailed explanation of therefinement of CPT codes with interimRVUs). Instead, determinations weremade by HCFA medical officers inconjunction with our carrier medicaldirectors.

Table 4—Work Relative Value UnitRefinements of 1998 Interim andRelated Relative Value Units

Table 4 lists the interim and relatedcodes reviewed during the 1998refinement process described in thissection. This table includes thefollowing information:

• CPT Code. This is the CPT code fora service.

• Description. This is an abbreviatedversion of the narrative description ofthe code.

• 1998 Work RVU. The work RVUsthat appeared in the October 1997 ruleare shown for each reviewed code.

• Requested Work RVU. This columnidentifies the work RVUs requested bycommenters.

• 1999 Work RVU. This columncontains the final RVUs for physicianwork.

The new values emerged fromanalysis of the specialty society’swritten comments on the 1998 interimvalued CPT codes.


TABLE 4.—WORK RELATIVE VALUE UNIT REFINEMENTS OF 1998 INTERIM AND RELATED RELATIVE VALUE UNITS

CPT MOD Description 1998 workRVU

Requestedwork RVU

1999 workRVU

11055 .......... Paring or cutting of nails ........................................................................................... 0.27 0.43 0.2711056 .......... Paring or cutting of nails ........................................................................................... 0.39 0.61 0.3911057 .......... Paring or cutting of nails ........................................................................................... 0.50 0.79 0.5011719 .......... Paring or cutting of nails ........................................................................................... 0.11 0.17 0.1117003 .......... Destruction of lesions ................................................................................................ 0.15 0.18 0.1517004 .......... Destruction of lesions ................................................................................................ 2.79 3.05 2.7990804 .......... Psytx, office (20–30) ................................................................................................. 1.11 1.30 1.2190805 .......... Psytx, office (20–30) w/e&m ..................................................................................... 1.47 1.47 1.3790806 .......... Psytx, office (45–50) ................................................................................................. 1.73 1.99 1.8690807 .......... Psytx, office (45–50) w/e&m ..................................................................................... 2.00 2.16 2.0290808 .......... Psytx, office (75–80) ................................................................................................. 2.76 2.99 2.7990809 .......... Psytx, office (75–80) w/e&m ..................................................................................... 3.15 3.16 2.9590810 .......... Intac psytx, office (20–30) ......................................................................................... 1.19 1.42 1.3290811 .......... Intac psytx, off 20–30 w/e&m .................................................................................... 1.58 1.59 1.4890812 .......... Intac psytx, office (45–50) ......................................................................................... 1.86 2.11 1.9790813 .......... Intac psytx, off 45–50 w/e&m .................................................................................... 2.15 2.28 2.1390814 .......... Intac psytx, office (75–80) ......................................................................................... 2.97 3.11 2.9090815 .......... Intac psytx, off 75–80 w/e&m .................................................................................... 3.39 3.28 3.0690816 .......... Psytx, hosp (20–30) .................................................................................................. 1.24 1.34 1.2590817 .......... Psytx, hosp (20–30) w/e&m ...................................................................................... 1.65 1.51 1.4190818 .......... Psytx, hosp (45–50) .................................................................................................. 1.94 2.03 1.8990819 .......... Psytx, hosp (45–50) w/e&m ...................................................................................... 2.24 2.20 2.0590821 .......... Psytx, hosp (75–80) .................................................................................................. 3.09 3.03 2.8390822 .......... Psytx, hosp (75–80) w/e&m ...................................................................................... 3.53 3.20 2.9990823 .......... Intac psytx, hosp (20–30) .......................................................................................... 1.33 1.46 1.3690824 .......... Intac psytx, hsp 20–30 w/e&m .................................................................................. 1.77 1.63 1.5290826 .......... Intac psytx, hosp (45–50) .......................................................................................... 2.08 2.15 2.0190827 .......... Intac psytx, hsp 45–50 w/e&m .................................................................................. 2.41 2.32 2.1690828 .......... Intac psytx, hosp (75–80) .......................................................................................... 3.32 3.15 2.9490829 .......... Intac psytx, hsp 75–80 w/e&m .................................................................................. 3.80 3.32 3.1099343 .......... Home care visits ........................................................................................................ 2.27 No Rec 2.2799345 .......... Home care visits ........................................................................................................ 3.79 No Rec 3.7999348 .......... Home care visits ........................................................................................................ 1.26 No Rec 1.2699350 .......... Home care visits ........................................................................................................ 3.03 No Rec 3.03

* All CPT and descriptors copyright 1998 American Medical Association.

Paring or cutting of nails (CPT codes11055 through 11057 and 11719)

Comment: A commenter disagreedwith our decision to decrease the RUC-recommended RVUs for this family ofcodes. (‘‘RUC’’ refers to the AmericanMedical Association’s Specialty SocietyRelative Value Scale UpdateCommittee.) They believed our budget-neutral approach decreased therecommended RUC work RVUs by toolarge a factor. (See the section on theestablishment of interim work ValueUnits for a brief discussion of thebudget-neutral approach.)

Response: We disagree with thecommenter’s view that the RUCrecommendations were decreased by toolarge a factor. CPT codes 11055 through11057 can be performed in conjunctionwith CPT code 11719. The methodologythat was used accounts for thesecombinations. Therefore, the 1998interim work RVUs will be made finalfor this series of CPT codes. The finalwork RVUs, effective January 1, 1999,will be as follows: CPT code 11055(0.27), CPT code 11056 (0.39), CPT code

11057 (0.50), and CPT code 11719(0.11).

Destruction of lesions (CPT codes 17003and 17004)

Comment: A commenter disagreedwith our decision to accept the RUCrecommendations for CPT codes 17003and 17004. The commenter believedthat the work RVUs associated withthese codes were decreased by the RUCwithout any rationale.

Response: We disagree with thecommenter’s belief that we should nothave accepted the RUC recommendationfor CPT codes 17003 and 17004. TheRUC determined the work RVUs forthese two codes by crosswalking theutilization of existing procedure codes(which were to be deleted for CPT 1998)into these two new CPT codes for thesame services. Compliance with ourguidelines for budget neutrality resultedin the reduction of the society’srecommended work RVUs by the RUC.Therefore, the 1998 interim RVUs forCPT codes 17003 and 17004 will bemade final. The final work RVUs,effective January 1, 1999, will be as

follows: CPT code 17003 (0.15) and CPTcode 17004 (2.79).

Psychotherapy (CPT codes 90804through 90829)

Comment: In May of 1997, the RUCrecommended that HCFA-assignedRVUs for the 24 HCPCS psychotherapycodes be crosswalked to the 1998 CPTcodes. The RUC also recommended thatthe work RVUs remain interim untilsuch time as a survey is conducted byeach of the professions that furnish theservices.

Response: We receivedrecommendations that were based uponthe cooperative efforts of the AmericanAcademy of Child and AdolescentPsychiatry, The American NursesAssociation, the American PsychiatricAssociation, the AmericanPsychological Association, and theNational Association of Social Workers.The RUC accepted theserecommendations.

The cooperative effort by thereferenced specialties used frequencyestimations to maintain budgetneutrality within the family of new CPTcodes. Based upon actual 1997


frequencies, the recommended workRVUs are not budget-neutral. We willretain the relative relationships thatwere recommended but will attainbudget neutrality by applying a uniform6.7 percent reduction across all of thecodes. The final 1999 work RVUs willbe as follows:

TABLE 5.—PSYCHOTHERAPY (CPTCODES 90804 THROUGH 90829)

CPTcode Descriptor 1999 work

RVUs

90804 Psytx, office (20–30) 1.2190805 Psytx, office (20–30)

w/e&m ................... 1.3790806 Psytx, office (45–50) 1.8690807 Psytx, office (45–50)

w/e&m ................... 2.0290808 Psytx, office (75–80) 2.7990809 Psytx, office (75–80)

w/e&m ................... 2.9590810 Intac psytx, office

(20–30) .................. 1.3290811 Intac psytx, off 20–30


(45–50) .................. 1.9790813 Intac psytx, off 45–50


(75–80) .................. 2.9090815 Intac psytx, off 75–80

w/e&m ................... 3.0690816 Psytx, hosp (20–30) 1.2590817 Psytx, hosp (20–30)



w/e&m ................... 2.9990823 Intac psytx, hosp

(20–30) .................. 1.3690824 Intac psytx, hsp 20–

30 w/e&m .............. 1.5290826 Intac psytx, hosp

(45–50) .................. 2.0190827 Intac psytx, hsp 45–

50 w/e&m .............. 2.1690828 Intac psytx, hosp

(75–80) .................. 2.9490829 Intac psytx, hsp 75–

80 w/e&m .............. 3.10

Home care visits (CPT codes 99341through 99350)

Comment: A commenter suggestedthat, when we increased the RUC’s workRVU recommendations by a uniform 10percent intensity factor, we usedincorrect base intra-service time. Thecommenter believed the RUC survey ofintra-service time was more accuratethan the typical time agreed to by CPT.

Response: We maintain that thecorrect intra-service times were usedand thus will finalize these interimvalued codes for home visits. EffectiveJanuary 1, 1999, the final work RVUs for

the home care visit codes will be asfollows: CPT code 99341 (1.01), CPTcode 99342 (1.52), CPT code 99343(2.27), CPT code 99344 (3.03), CPT code99345 (3.79), CPT code 99347 (0.76),CPT code 99348 (1.26), CPT code 99349(2.02), and CPT code 99350 (3.03).

Establishment of Interim Work RelativeValue Units for New and RevisedPhysicians’ Current ProceduralTerminology Codes and New HCFACommon Procedure Coding SystemCodes for 1999 Methodology (IncludesTable 6—American Medical AssociationSpecialty Society Relative Value UpdateCommittee and Health CareProfessionals Advisory CommitteeRecommendations and HCFA’sDecisions for New and Revised 1999CPT Codes)

One aspect of establishing work RVUsfor 1999 was related to the assignmentof interim work RVUs for all new andrevised CPT codes. As described in ourNovember 25, 1992 notice on the 1993fee schedule (57 FR 55938) and insection III.B. of our November 26, 1996final rule (61 FR 59505 through 59506),we established a process, based onrecommendations received from theAMA’s RUC, for establishing interimRVUs for new and revised codes.

We received work RVUrecommendations for approximately 70new and revised codes from the RUC.Physician panels consisting of carriermedical directors and our staff reviewedthe RUC recommendations bycomparing them to our reference set orto other comparable services on thephysician fee schedule for which workRVUs had been established previously,or to both of these criteria. The panelsalso considered the relationships amongthe new and revised codes for which wereceived RUC recommendations. Weagreed with the majority of thoserelationships reflected in the RUCvalues. In some cases, when we agreedwith the RUC relationships, we revisedthe work RVUs recommended by theRUC to achieve work neutrality withinfamilies of codes. That is, the workRVUs have been adjusted so that thesum of the new or revised work RVUs(weighted by projected frequency of use)for a family of codes will be the sameas the sum of the current work RVUs(weighted by their current frequency ofuse). For approximately 93 percent ofthe RUC recommendations, proposedwork RVUs were accepted or increased,and, for approximately 7 percent, workRVUs were decreased.

We received only onerecommendation from the Health CareProfessionals Advisory Committee(HCPAC) for a new code for which the

RUC did not provide a recommendation.This HCPAC recommendation wasaccepted.

There were also 10 CPT codes forwhich we did not receive a RUCrecommendation. After review of thesecodes by HCFA medical officers, weestablished interim work RVUs for 8 ofthese codes and identified theremaining 2 CPT codes as carrier-pricedfor 1999.

Table 6 is a listing of those codes thatwill be new or revised in 1999 as wellas their associated work RVUs. Thistable includes the followinginformation:

• A ‘‘#’’ identifies a new code for1999.

• CPT code. This is the CPT code fora service.

• Modifier. A ‘‘26’’ in this columnindicates that the work RVUs are for theprofessional component of the code.

• Description. This is an abbreviatedversion of the narrative description ofthe code.

• RUC recommendations. Thiscolumn identifies the work RVUsrecommended by the RUC.

• HCPAC recommendations. Thiscolumn identifies work RVUsrecommended by the HCPAC.

• HCFA decision. This columnindicates whether we agreed with theRUC recommendation (‘‘agree’’); weestablished work RVUs that are higherthan the RUC recommendation(‘‘increase’’); or we established workRVUs that were less than the RUCrecommendation (‘‘decrease’’). Codes forwhich we did not accept the RUCrecommendation are discussed ingreater detail following Table 6 below.An ‘‘(a)’’ indicates that no RUCrecommendation was provided. Adiscussion follows the table.

• HCFA work RVUs. This columncontains the RVUs for physician workbased on our reviews of the RUCrecommendations. The RVUs shown forglobal surgical services have not beenadjusted to account for the 1998increases for work RVUs in evaluationand management services.

1999 work RVUs. This columncontains the 1999 RVUs for physicianwork. The RVUs shown for globalsurgical services have been adjusted toaccount for the 1998 increases for workRVUs in evaluation and management.

This table includes only those codesthat were reviewed by the full RUC orfor which we received arecommendation from the HCPAC.


TABLE 6.—AMERICAN MEDICAL ASSOCIATION SPECIALTY SOCIETY RELATIVE VALUE UPDATE COMMITTEE AND HEALTHCARE PROFESSIONALS ADVISORY COMMITTEE RECOMMENDATIONS AND HCFA’S DECISIONS FOR NEW AND REVISED1999 CPT CODES

CPT *code MOD Description RUC rec-

ommendation

HCPACrec-

ommenda-tion

HCFA decisionNCFAWorkRVU

1998WorkRVU

15000 .... .......... Skin graft procedure ..................................... 4.00 .................. Agree ......................... 4.00 4.0015001# .. .......... Skin graft procedure ..................................... 1.00 .................. Agree ......................... 1.00 1.0015100 .... .......... Skin split graft procedure .............................. 9.05 .................. Agree ......................... 9.05 9.0515101 .... .......... Skin split graft procedure .............................. 1.72 .................. Agree ......................... 1.72 1.7215120 .... .......... Skin split graft procedure .............................. 9.83 .................. Agree ......................... 9.83 9.8315121 .... .......... Skin split graft procedure .............................. 2.67 .................. Agree ......................... 2.67 2.6715350 .... .......... Skin homograft procedure ............................ 4.00 .................. Agree ......................... 4.00 4.0015351# .. .......... Skin homograft procedure ............................ 1.00 .................. Agree ......................... 1.00 1.0015400 .... .......... Skin heterograft procedure ........................... 4.00 .................. Agree ......................... 4.00 4.0015401# .. .......... Skin heterograft procedure ........................... 1.00 .................. Agree ......................... 1.00 1.0019364 .... .......... Breast reconstruction .................................... 41.00 .................. Agree ......................... 41.00 41.0027347# .. .......... Excision tendon sheath ................................. 5.78 .................. Agree ......................... 5.78 5.7828289# .. .......... Hallux rigidus correction ................................ 7.04 .................. Agree ......................... 7.04 7.0431622 .... .......... Bronchoscopic procedures ........................... ........................ .................. (a) .............................. 2.67 2.6731623# .. .......... Bronchoscopic procedures ........................... ........................ .................. (a) .............................. 3.07 3.0731624# .. .......... Bronchoscopic procedures ........................... ........................ .................. (a) .............................. 3.11 3.1131643# .. .......... Bronchoscopy for brachytherapy .................. 3.50 .................. Agree ......................... 3.50 3.5032001# .. .......... Bronchoscopic procedures ........................... ........................ .................. (a) .............................. 5.71 5.7133975 .... .......... Ventricular assist devices ............................. 21.60 .................. Agree ......................... 21.60 21.6033976 .... .......... Ventricular assist devices ............................. 29.10 .................. Agree ......................... 29.10 29.1035500# .. .......... Bypass grafts ................................................ ........................ .................. (a) .............................. carrier carrier35681 .... .......... Bypass grafts ................................................ 3.93 .................. Decrease ................... 1.60 1.6035682# .. .......... Bypass grafts ................................................ 7.20 .................. Agree ......................... 4.80 4.8035683# .. .......... Bypass grafts ................................................ 8.50 .................. Agree ......................... 6.10 6.1035875 .... .......... Thrombectomy of grafts ................................ 10.13 .................. Agree ......................... 10.13 10.1335876 .... .......... Thrombectomy of grafts ................................ 17.00 .................. Agree ......................... 17.00 17.0036823# .. .......... Arteriovenous Chemo ................................... carrier .................. Agree ......................... carrier carrier36831# .. .......... Thrombectomy of grafts ................................ 8.00 .................. Agree ......................... 8.00 8.0036832 .... .......... Thrombectomy of grafts ................................ 10.50 .................. Agree ......................... 10.50 10.5036833# .. .......... Thrombectomy of grafts ................................ 11.95 .................. Agree ......................... 11.95 11.9536860 .... .......... Thrombectomy of grafts ................................ 2.01 .................. Agree ......................... 2.01 2.0138792# .. .......... Sentinel node biopsy .................................... ........................ .................. (a) .............................. carrier carrier45126# .. .......... Pelvic exenteration ........................................ 38.39 .................. Agree ......................... 38.39 38.3956321# .. .......... Laparoscopic adrenalectomy ........................ carrier .................. Agree ......................... carrier carrier57106# .. .......... Radical vaginectomy ..................................... 6.36 .................. Agree ......................... 6.36 6.3657107# .. .......... Radical vaginectomy ..................................... 23.00 .................. Agree ......................... 23.00 23.0057109# .. .......... Radical vaginectomy ..................................... 27.00 .................. Agree ......................... 27.00 27.0057110 .... .......... Radical vaginectomy ..................................... 14.29 .................. Agree ......................... 14.29 14.2957111# .. .......... Radical vaginectomy ..................................... 27.00 .................. Agree ......................... 27.00 27.0057112# .. .......... Radical vaginectomy ..................................... 29.00 .................. Agree ......................... 29.00 29.0067208 .... .......... Destruction of choroid lesion ........................ 6.70 .................. Agree ......................... 6.70 6.7067210 .... .......... Destruction of choroid lesion ........................ 8.82 .................. Agree ......................... 8.82 8.8267220# .. .......... Destruction of choroid lesion ........................ 13.13 .................. Agree ......................... 13.13 13.1367320 .... .......... Strabimus surgery ......................................... 4.33 .................. Agree ......................... 4.33 4.3367331 .... .......... Strabimus surgery ......................................... 4.06 .................. Agree ......................... 4.06 4.0667332 .... .......... Strabimus surgery ......................................... 4.49 .................. Agree ......................... 4.49 4.4967334 .... .......... Strabimus surgery ......................................... 3.98 .................. Agree ......................... 3.98 3.9867335 .... .......... Strabimus surgery ......................................... 2.49 .................. Agree ......................... 2.49 2.4967340 .... .......... Strabimus surgery ......................................... 4.93 .................. Agree ......................... 4.93 4.9369990# .. .......... Microsurgery ................................................. ........................ .................. (a) .............................. 3.46 3.4673560 .... 26 ..... Radiological examination, knee .................... 0.17 .................. Agree ......................... 0.17 0.1773562 .... 26 ..... Radiological examination, knee .................... 0.18 .................. Agree ......................... 0.18 0.1873564 .... 26 ..... Radiological examination, knee .................... 0.22 .................. Agree ......................... 0.22 0.2276006# .. .......... Stress views .................................................. 0.41 .................. Agree ......................... 0.41 0.4176977# .. 26 ..... Bone density ................................................. ........................ .................. (a) .............................. 0.22 0.2278020# .. .......... Thyroid carcinoma metastases ..................... 0.67 .................. Decrease ................... 0.60 0.6078205 .... 26 ..... Liver imaging ................................................. 0.71 .................. Agree ......................... 0.71 0.7178206# .. 26 ..... Liver imaging ................................................. 0.96 .................. Agree ......................... 0.96 0.9678472 .... 26 ..... Cardiac blood pool imaging .......................... 0.98 .................. Agree ......................... 0.98 0.9878494# .. 26 ..... Cardiac blood pool imaging .......................... 1.19 .................. Agree ......................... 1.19 1.1978496# .. 26 ..... Cardiac blood pool imaging .......................... 0.50 .................. Agree ......................... 0.50 0.5078588# .. 26 ..... Pulmonary perfusion imaging ....................... 1.09 .................. Agree ......................... 1.09 1.0988291# .. 26 ..... Cytogenetic studies ....................................... 0.52 .................. Agree ......................... 0.52 0.5292135# .. 26 ..... Confocal Scanning ........................................ 0.35 .................. Agree ......................... 0.35 0.3593571# .. 26 ..... IV distal blood velocity measure ................... 2.99 .................. Decrease ................... 1.80 1.8093572# .. 26 ..... IV distal blood velocity measure ................... 1.70 .................. Decrease ................... 1.44 1.4494014# .. 26 ..... Pulmonary function ....................................... 0.52 .................. Agree ......................... 0.52 0.52


TABLE 6.—AMERICAN MEDICAL ASSOCIATION SPECIALTY SOCIETY RELATIVE VALUE UPDATE COMMITTEE AND HEALTHCARE PROFESSIONALS ADVISORY COMMITTEE RECOMMENDATIONS AND HCFA’S DECISIONS FOR NEW AND REVISED1999 CPT CODES—Continued

CPT *code MOD Description RUC rec-

ommendation

HCPACrec-

ommenda-tion

HCFA decisionNCFAWorkRVU

1998WorkRVU

94016# .. .......... Pulmonary function ....................................... 0.52 .................. Agree ......................... 0.52 0.5294060 .... 26 ..... Pulmonary function ....................................... 0.31 .................. Agree ......................... 0.31 0.3194620 .... 26 ..... Pulmonary function ....................................... ........................ .................. (a) .............................. 0.88 0.8894621# .. 26 ..... Pulmonary function ....................................... ........................ .................. (a) .............................. 0.88 0.8895920 .... 26 ..... Neurotransmitter analysis ............................. 2.11 .................. Agree ......................... 2.11 2.1195970# .. .......... Neurotransmitter analysis ............................. 0.45 .................. Agree ......................... 0.45 0.4595971# .. .......... Neurotransmitter analysis ............................. 0.78 .................. Agree ......................... 0.78 0.7895972# .. .......... Neurotransmitter analysis ............................. 1.50 .................. Agree ......................... 1.50 1.5095973# .. .......... Neurotransmitter analysis ............................. 0.92 .................. Agree ......................... 0.92 0.9295974# .. .......... Neurotransmitter analysis ............................. 3.00 .................. Agree ......................... 3.00 3.0095975# .. .......... Neurotransmitter analysis ............................. 1.70 .................. Agree ......................... 1.70 1.7097140# .. .......... Manual therapy techniques ........................... 0.45 .................. Decrease ................... 0.43 0.4399298# .. .......... Neonatal care ................................................ 2.75 .................. Agree ......................... 2.75 2.75

a No RUC recommendation provided.# New Codes.* All numeric HCPCS CPT Copyright 1997 American Medical Association.

Discussion of Codes for Which the RUCRecommendations Were Not Accepted

The following is a summary of ourrationale for not accepting particularrecommendations. It is arranged by typeof service in CPT code order. Thissummary refers only to work RVUs.Furthermore, the RVUs in the followingdiscussion have not been adjusted bythe budget-neutrality adjustment factor.

Bypass grafts (CPT code 35681).

We received RUC recommendationsfor three of the four add-on codes (codesthat may be billed only in conjunctionwith selected primary procedure codes)related to composite bypass grafts. Werejected the RUC recommendation of3.93 work RVUs for CPT code 35681(Bypass graft, composite, prosthetic andvein). These work RVUs were suggestedduring the 5-year review of work RVUsat a time when this family of compositecodes had not been established. Therecommendation was based on theassumption that the work could beestimated at 12 percent of anindependent procedure, CPT code35102. We believe that a moreappropriate evaluation is based on thework involved in anastomosing the veinand prosthetic grafts, which we estimateat 1.60 work RVUs. Effective January 1,1999, CPT code 35681 will be valued at1.60 work RVUs.

Thyroid carcinoma metastases uptake(CPT code 78020)

We received a RUC recommendationof 0.67 for CPT code 78020. The surveydata indicated that CPT code 78020 waspreviously reported with unlisted CPTcode 78099. The survey estimated that

CPT code 78020 will be billedapproximately 15 percent of the timeCPT code 78018 is billed. CPT code78099 was only billed 61 times in 1997,while the projected utilization of CPTcode 78020 for 1999 is approximately575 claims annually. To retain budgetneutrality within this family of codes,the total work RVUs that will be paid in1999 were scaled to what would havebeen paid in 1999 if CPT code 78020had not been established. This results inwork RVUs of 0.60 for CPT code 78020and 0.86 for CPT code 78018.

Intravascular distal blood flow velocitymeasurements (CPT code 93571 and93572)

The RUC recommended work RVUs of2.99 and 1.70, respectively, for CPTcodes 93571 and 93572. The RUCrecommendation was constructed basedupon a building block approach. Ouranalysis of this approach raisedconcerns about the inclusion of certainitems in the building block for eachrespective code. We chose to value theseprocedures based upon analogous CPTcodes 92978 (IV ultrasound) and 92979(IV ultrasound, each additional vessel)for which the RUC time estimates wereidentical. For this reason, we assigned1.80 work RVUs to CPT code 93571 and1.44 work RVUs to CPT code 93572.

Physical medicine and rehabilitation(CPT code 97140) CPT code 97140(RUC-recommended work RVU=0.45replaces CPT codes 97122, 97250,97260, 97261, and 97265.)

To retain budget neutrality within thisfamily of codes, the total work RVUsthat will be paid in 1999 were scaled tothe total work RVUs that would have

been paid if CPT code 97140 had notbeen established. This results in workRVUs of 0.43 for CPT code 97140.

V. Physician Fee Schedule Update andConversion Factor for Calendar Year1999

The 1999 physician fee scheduleconversion factor is $34.7315.

In accordance with section1848(d)(1)(D) of the Act, as amended bysection 4504 of the BBA 1997, theseparate conversion factor for anesthesiaservices for a year shall be equal to 46percent of the single conversion factorfor other physicians’ services, except asadjusted for changes in work, practiceexpense, or malpractice relative valueunits. This calculation yields a 1999anesthesia conversion factor of $17.24.

The specific calculations to determinethe conversion factor for physicians’services for calendar year 1999 areexplained below.

Detail on Calculation of the CalendarYear 1999 Physician Fee ScheduleUpdate and the 1999 Conversion Factor

Physician Fee Schedule Update andConversion Factor

The conversion factor is affected bysection 1848(c)(2)(B)(ii)(II) of the Act,which requires that changes to therelative value units of the Medicarephysician fee schedule not causeexpenditures to increase or decrease bymore than $20 million from the amountof expenditures that would have beenmade if such adjustments had not beenmade. We implement this requirementthrough a uniform budget-neutralityadjustment to the conversion factor.


The conversion factor is also affectedby the elimination of the separate 0.917budget-neutrality adjustment to thework relative value units. Thisadjustment and its elimination aredescribed in the October 31, 1997 finalrule.

The conversion factor is furtheraffected by adjustments made to thepractice expense and malpracticerelative value units to ensure that thepercentages of fee schedule allowedcharges for work, practice expense, andmalpractice premiums equal the newpercentages that those categoriesrepresent in the revised MedicareEconomic Index (MEI) weights.

Taking all of these factors intoaccount, as well as the percent changein the MEI and Sustainable Growth Rate(SGR) adjustments described below, the1999 conversion factor is calculated asfollows:1998 Conversion Factor: 36.68731999 Update: 2.3%Other 1999 Factors: ¥7.45944%1999 Conversion Factor: 34.7315

The 2.3 percent 1999 update iscalculated as follows:MEI: 2.3%SGR adjustment: 0.0%1999 Update: 2.3%

The ¥7.45944 percent adjustment forother factors is calculated as follows:Elimination of the separate work

adjuster: ¥8.30%

Adjustment to match MEI weights:1.20%

Volume and Intensity adjustment:¥0.28%

Other 1999 factors: ¥7.45944%Note that the elimination of the

separate work adjuster and theadjustment to match the MEI weightsdoes not affect aggregate Medicarepayments because offsetting changeshave been made to the practice expenseand malpractice relative value units. Asdescribed earlier, the volume-and-intensity adjustment does not affectaggregate payments because ouractuaries assume an offsetting increasein the volume and intensity of servicesprovided in 1999.

The MEI and the SGR adjustments aredescribed below.

The Percentage Change in the MedicareEconomic Index

The MEI measures the weighted-average annual price change for variousinputs needed to produce physicians’services. The MEI is a fixed-weightinput price index, with an adjustmentfor the change in economy-wide laborproductivity. This index, which has1996 base weights, is comprised of twobroad categories: (1) physician’s owntime, and (2) physician’s practiceexpense.

The physician’s own time componentrepresents the net income portion ofbusiness receipts and primarily reflects

the input of the physician’s own timeinto the production of physicians’services in physicians’ offices. Thiscategory consists of twosubcomponents: wages and salaries andfringe benefits. These components areadjusted by the 10-year moving averageannual percent change in output perman-hour for the nonfarm businesssector to eliminate double counting forproductivity growth in physicians’offices and the general economy.

The physician’s practice expensecategory represents the rate of pricegrowth in nonphysician inputs to theproduction of services in physicians’offices. This category consists of wagesand salaries and fringe benefits fornonphysician staff and other nonlaborinputs. Like physician’s own time, thenonphysician staff categories areadjusted for productivity using the 10-year moving average annual percentchange in output per man-hour for thenonfarm business sector. Thephysician’s practice expense componentalso includes the following categories ofnonlabor inputs: office expense, medicalmaterials and supplies, professionalliability insurance, medical equipment,professional car, and other expense. Thetable below presents a listing of the MEIcost categories with associated weightsand percent changes for price proxiesfor the 1999 update. The calendar year1999 MEI is 2.3 percent.

INCREASE IN THE MEDICARE ECONOMIC INDEX UPDATE FOR CALENDAR YEAR 1999 1

1996weights 2

CY 1999percentchanges

Medicare Economic Index Total ...................................................................................................................................... 100.0 2.31. Physician’s Own Time 3 4 ...................................................................................................................................... 54.5 2.6

a. Wages and Salaries: Average hourly earnings private nonfarm, net of productivity ................................... 44.2 2.9b. Fringe Benefits: Employment Cost Index, benefits, private nonfarm, net of productivity ............................. 10.3 1.2

2. Physician’s Practice Expense 3 ............................................................................................................................ 45.5 2.1a. Nonphysician Employee Compensation ........................................................................................................ 16.8 2.4

1. Wages and Salaries: Employment Cost Index, wages and salaries, weighted by occupation, net ofproductivity .............................................................................................................................................. 12.4 2.7

2. Fringe Benefits: Employment Cost Index, fringe benefits, white collar, net of productivity .................. 4.4 1.5b. Office Expense: Consumer Price Index for Urban Consumers (CPI–U), housing ....................................... 11.6 2.3c. Medical Materials and Supplies: Producer Price Index (PPI), ethical drugs/PPI, surgical appliances and

supplies/CPI–U, medical equipment and supplies (equally weighted) .......................................................... 4.5 4.3d. Professional Liability Insurance: HCFA professional liability insurance survey 5 ......................................... 3.2 ¥0.8e. Medical Equipment: PPI, medical instruments and equipment .................................................................... 1.9 ¥1.1f. Other Professional Expense ........................................................................................................................... 7.6 1.7

1. Professional Car: CPI–U, private transportation .................................................................................... 1.3 ¥1.12. Other: CPI-U, all items less food and energy ........................................................................................ 6.3 2.2

Addendum:Productivity: 10-year moving average of output per man-hour, nonfarm business sector ...................................... n/a 1.1Physician’s Own Time, not productivity adjusted ..................................................................................................... 54.5 3.7

Wages and salaries, not productivity adjusted .......................................................................................... 44.2 4.0Fringe benefits, not productivity adjusted .................................................................................................. 10.3 2.3

Nonphysician Employee Compensation, not productivity adjusted .......................................................................... 16.8 3.5Wages and salaries, not productivity adjusted .......................................................................................... 12.4 3.8Fringe benefits, not productivity adjusted .................................................................................................. 4.4 2.6

1 The rates of change are for the 12-month period ending June 30, 1998, which is the period used for computing the calendar year 1999 up-date. The price proxy values are based upon the latest available Bureau of Labor Statistics data as of September 15, 1998.


2 The weights shown for the MEI components are the 1996 base-year weights, which may not sum to subtotals or totals because of rounding.The MEI is a fixed-weight, Laspeyres-type input price index whose category weights indicate the distribution of expenditures among the inputs tophysicians’ services for calendar year 1996. To determine the MEI level for a given year, the price proxy level for each component is multipliedby its 1996 weight. The sum of these products (weights multiplied by the price index levels) over all cost categories yields the composite MEIlevel for a given year. The annual percent change in the MEI levels is an estimate of price change over time for a fixed market basket of inputsto physicians’ services.

3 The Physician’s Own Time and Nonphysician Employee Compensation category price measures include an adjustment for productivity. Theprice measure for each category is divided by the 10-year moving average of output per man-hour in the nonfarm business sector. For example,the wages and salaries component of Physician’s Own Time is calculated by dividing the rate of growth in average hourly earnings by the 10-year moving average rate of growth of output per man-hour for the nonfarm business sector. Dividing one plus the decimal form of the percentchange in the average hourly earnings (1+.040=1.040 by one plus the decimal form of the percent change in the 10-year moving average oflabor productivity (1+.011=1.011) equals one plus the change in average hourly earnings net of the change in output per man hour (1.040/1.011=1.029). All Physician’s Own Time and Nonphysician Employee Compensation categories are adjusted in this way. Due to a higher level ofprecision the computer calculated quotient may differ from the quotient calculated from rounded individual percent changes.

4 The average hourly earnings proxy, the Employment Cost Index proxies, as well as the CPI–U, housing and CPI–U, private transportation arepublished in the Current Labor Statistics Section of the Bureau of Labor Statistics’ Monthly Labor Review. The remaining CPIs and PPIs in therevised index can be obtained from the Bureau of Labor Statistics’ CPI Detailed Report or Producer Price Indexes.

5 Derived from a HCFA survey of several major insurers (the latest available historical percent change data are for calendar year 1997). This isconsistent with prior computations of the professional liability insurance component of the MEI.

n/a Productivity is factored into the MEI compensation categories as an adjustment to the price variables; therefore, no explicit weight exists forproductivity in the MEI.

Medicare Performance Relative to theSGR

Medicare Sustainable Growth RateSection 1848(f) of the Act, as

amended by section 4503 of the BBA1997, replaces the volume performancestandard with a sustainable growth(SGR) standard. It specifies the formulafor establishing yearly SGR targets forphysicians’ services under Medicare.The use of SGR targets is intended tocontrol the actual growth in Medicareexpenditures for physicians’ services.

The SGR targets are not limits onexpenditures. Payments for services arenot withheld if the SGR target isexceeded. Rather, the appropriate feeschedule update, as specified in section1848(d)(3)(A) of the Act, is adjusted toreflect the success or failure in meetingthe SGR target.

As provided in section 4502 of theBBA 1997, the update to the conversionfactor is established to match spendingunder the SGR. The law refers to thisupdate as the update adjustment factor.The amended section 1848(d)(3)of theAct now states that:

the ‘update adjustment factor’ for a year isequal (as estimated by the Secretary) to—(i) the difference between (I) the sum of theallowed expenditures for physicians’ services(as determined under subparagraph (C)) forthe period beginning April 1, 1997, andending on March 31 of the year involved, and(II) the amount of the actual expenditures forphysicians’ services furnished during theperiod beginning April 1, 1997, and endingon March 31 of the preceding year; dividedby—

(ii) the actual expenditures for physicians’services for the 12-month period ending onMarch 31 of the preceding year, increased bythe sustainable growth rate under subsection(f) for the fiscal year which begins duringsuch 12-month period.

The result is a 0.0 percent adjustmentfor 1999. The allowed expenditures forphysicians’ services are calculatedbased upon the 1998 and 1999 SGR

derivations as detailed in the October31, 1997 final rule and the Noticeannouncing the Sustainable GrowthRate found in this edition of the FederalRegister, respectively.

VI. Provisions of the Final RuleThe provisions of this final rule

restate the provisions of the June 5,1998, proposed rule except as notedelsewhere in this preamble. Following isa highlight of the changes made:

For our proposal relating to themedical direction of anesthesia services(§ 415.110), we have decided to retainthe current requirements (that is,requirements (i) and (ii), and (iv)through (vii)) and make only onetechnical revision in requirement (iii).The technical revision pertains to therequirement that the physicianparticipate in the most demandingprocedures in the anesthesia plan,including induction and emergence.

For our proposal relating tononphysician practitioners, following isa highlight of the changes to theproposed rule:

• Proposed §§ 410.75(c) and 410.76(c)are revised to remove the alternateproposed definition of collaboration.For purposes of Medicare coverage, thecollaboration requirement will state thatthese nonphysician practitioners mustmeet the standards for a collaborativerelationship, as established by the Statein which they are practicing. In theabsence of State law or regulationsgoverning collaborative relationships,these nonphysician practitioners mustdocument their scope of practice andindicate the relationships that they havewith physicians to deal with issuesoutside their expertise.

• In proposed §§ 410.74(d) and410.75(e) we deleted the proposedlisting of examples of services that canbe provided by physician assistants,nurse practitioners and clinical nursespecialists.

• Proposed § 410.76(b) is revised toimplement the qualifications for clinicalnurse specialist as established by theBBA without the proposed exception forthose clinical nurse specialist that donot possess a master’s degree.

• Proposed § 410.77(a) is revised tostate that a nurse-midwife must—

+ Be a registered nurse who iscurrently licensed to practice as a nurse-midwife in the State where services areperformed;

+ Have successfully completed anaccredited program of study and clinicalexperience for nurse-midwives asspecified by the State; or

+ Be certified as a nurse-midwife bythe American College of Nurse-Midwives or the American College ofNurse-Midwives Certification Council.

• Proposed § 410.74(c) is revised tostate that a physician assistant is anindividual who—

+ Has graduated from a physicianassistant educational program that isaccredited by the National Commissionon Accreditation on Allied HealthEducation Programs;

+ Has passed the nationalcertification examination that iscertified by the National Commission onCertification of Physician Assistants;and

+ Is licensed by the State to practiceas a physician assistant.

This final rule also restates theprovisions of teleconsultations in ruralhealth professional shortage areasproposed rule published on June 22,1998, at 63 FR 33890, that provided forpayment for consultations viatelecommunications systems in ruralHPSAs, with changes. The changeslisted below have been discussedelsewhere in this preamble. Following isa highlight of the changes to theproposed rule:

• Proposed § 410.75(a)(1) is revised toomit clinical psychologists, clinicalsocial workers, certified nurse


anesthetists, and anesthesiologistassistants from the list of practitionerswho may be consulting practitionersand the section is redesignated as§ 410.78(a)(1).

• The definition of referringpractitioners at proposed § 410.75(a)(2)is revised to omit certified registerednurse anesthetists and anesthesiologistassistants, and is redesignated as§ 410.78(a)(2).

• Proposed § 410.75(a)(5) isredesignated as § 410.78(a)(5) andspecifies that as a condition of payment,the teleconsultation involves theparticipation of the referringpractitioner or a practitioner describedin section 1842(b)(18)(C) of the Act(other than a certified registered nurseanesthetist or anesthesiologist assistant)who is an employee of the referringpractitioner, as appropriate to themedical needs of the beneficiary and toprovide information to and at thedirection of the consulting practitioner.

• The definition at proposed§ 410.75(b) is revised to reflect the abovechanges and is redesignated as§ 410.78(b).

• For clarification purposes, we arereferencing different definition citationsfor non-physician practitioners thanthose provided in the proposed rule.The definitions of physician assistants,nurse practitioners, clinical nursespecialists, nurse-midwives, clinicalsocial workers, and clinicalpsychologists have been reassigned to§ 410.74(a)(2), § 410.75(b), § 410.76(b),§ 410.77(a), § 410.73(a), and § 410.71(d),respectively.

VII. Collection of InformationRequirements

Under the Paperwork Reduction Actof 1995 (PRA), agencies are required toprovide a 60-day notice in the FederalRegister and solicit public commentbefore a collection of informationrequirement is submitted to the Office ofManagement and Budget (OMB) forreview and approval. In order to fairlyevaluate whether an informationcollection should be approved by OMB,section 3506(c)(2)(A) of the PRArequires that we solicit comment on thefollowing issues:

Whether the information collection isnecessary and useful to carry out theproper functions of the agency;

The accuracy of the agency’s estimateof the information collection burden;

The quality, utility, and clarity of theinformation to be collected; and

Recommendations to minimize theinformation collection burden on theaffected public, including automatedcollection techniques.

Based on a public comment, this rulemodifies a regulatory requirementcreating an additional informationcollection requirement (ICR) which wasnot reflected in the proposed rule thatwas published on June 5, 1998, at 63 FR30818. (The PRA package associatedwith the proposed rule is: OMB No.0938–0730, HCFA–R–0234, with anexpiration date of August 31, 2001.)Therefore, to ensure that all of therequirements in this rule can beimplemented concurrently, we arerequesting emergency OMB review ofthe additional ICR referenced in thisfinal rule. In compliance with section3506(c)(2)(A) of the PRA of 1995, we aresubmitting to OMB the followingrequirement for emergency review. Weare requesting an emergency reviewbecause the collection of thisinformation is needed before theexpiration of the normal time limitsspecified by OMB’s regulations at 5 CFR1320. This ensures compliance with theBalanced Budget Act of 1997 (BBA)which requires us to revise our paymentpolicy for nonphysician practitioners,for outpatient rehabilitation services,and for drugs and biologicals not paidon a cost or prospective payment basis.

We cannot reasonably comply withnormal clearance procedures in order toimplement the renewal and earlytermination of the opt-out requirementdescribed below. Physicians andpractitioners must notify carriers oftheir intent to terminate opt-out inaccordance with the BBA.

We are requesting OMB review andapproval of this collection within 11working days from the date ofpublication of this regulation, with a180-day approval period. Writtencomments and recommendations will beaccepted from the public if received bythe individuals designated below within10 working days from the date ofpublication of this regulation.

During this 180-day period, we willpublish a separate Federal Registernotice announcing the initiation of anextensive 60-day agency review andpublic comment period on thisrequirement. We will submit therequirement for OMB review and anextension of this emergency approval.

Therefore, we are soliciting publiccomment on this issue for theinformation collection requirementdiscussed below.

§ 405.445 Renewal and earlytermination of opt-out

Section 405.445(d) states that aphysician or practitioner who hascompleted opt-out on or before January1, 1999 may terminate opt-out duringthe 90 days following January 1, 1999 if

he or she notifies all carriers to whomhe or she would otherwise submitclaims of the intent to terminate opt-outand complies with paragraphs (b)(3) and(4) of this section. Paragraph (c) of thissection applies in those cases.

The burden associated with thisrequirement is time and effort for thephysician or practitioner to notify allcarriers to whom he or she wouldotherwise submit claims of the intent toterminate opt-out. There is a one-timeopportunity for physicians andpractitioners who opted-out in 1998 tore-enter the program. Afterwards,physicians and practitioners may re-enter the program annually. It isestimated that it will take 30 physiciansor practitioners 15 minutes each tonotify their carriers for a total of 8hours. We estimate the averageannualized three year burden estimateto be 11 hours. (Year 1—1998 and 199916 hours, Year 2—2000 8 hours, Year3—2001 8 hours for a total of 32 hours/3 years = 11 hours per year)

We have submitted a copy of this finalrule with comment to OMB for itsreview of the ICR described above. Thisrequirement is not effective until theyhave been approved by OMB.

If you comment on any of thisinformation collection and recordkeeping requirement, please mail copiesdirectly to the following:Health Care Financing Administration,

Office of Information Services,Security and Standards Group,Division of HCFA EnterpriseStandards, Room N2–14–26, 7500Security Boulevard, Baltimore, MD21244–1850, Attn.: Louis Blank,HCFA–1006–FC.

Office of Information and RegulatoryAffairs, Office of Management andBudget, Room 10235, New ExecutiveOffice Building, Washington, DC20503, Attn.: Allison Herron Eydt,HCFA Desk Officer.

VIII. Regulatory Impact AnalysisWe have examined the impacts of this

final rule as required by ExecutiveOrder 12866, the Unfunded MandatesAct of 1995, and the RegulatoryFlexibility Act (RFA) (Public Law 96–354). Executive Order 12866 directsagencies to assess all costs and benefitsof available regulatory alternatives and,when regulation is necessary, to selectregulatory approaches that maximizenet benefits (including potentialeconomic, environmental, public healthand safety effects, distributive impacts,and equity). A regulatory impactanalysis (RIA) must be prepared formajor rules with economicallysignificant effects ($100 million or moreannually).


This final rule is expected to havevarying effects on the distribution ofMedicare physicians’ payments andservices. With few exceptions, weexpect that the impact will be limited.

The Unfunded Mandates Reform Actof 1995 also requires (in section 202)that agencies prepare an assessment ofanticipated costs and benefits beforeproposing any rule that may result in anannual expenditure by State, local, ortribal governments, in the aggregate, orby the private sector, of $100 million.This final rule will have noconsequential effect on State, local, ortribal governments. We believe theprivate sector cost of this rule fallsbelow these thresholds as well.

A. Regulatory Flexibility ActConsistent with the provisions of the

Regulatory Flexibility Act, we analyzeoptions for regulatory relief for smallbusinesses and other small entities. Weprepare a Regulatory FlexibilityAnalysis (RFA) unless we certify that arule would not have a significanteconomic impact on a substantialnumber of small entities. The RFA is toinclude a justification of why action isbeing taken, the kinds and number ofsmall entities the final rule would affect,and an explanation of any consideredmeaningful options that achieve theobjectives and would lessen anysignificant adverse economic impact onthe small entities.

In addition, section 1102(b) of the Actrequires us to prepare an RIA if a rulemay have a significant impact on theoperations of a substantial number ofsmall rural hospitals. This analysis mustconform to the provisions of section 604of the Regulatory Flexibility Act. Forpurposes of section 1102(b) of the Act,we define a small rural hospital as ahospital that is located outside of aMetropolitan Statistical Area and hasfewer than 50 beds.

For purposes of the RFA, allphysicians are considered to be smallentities. There are about 700,000physicians and other practitioners whoreceive Medicare payment under thephysician fee schedule. Thus, we haveprepared the following analysis, which,together with the rest of this preamble,meets all three assessmentrequirements. It explains the rationalefor and purposes of the rule, details thecosts and benefits of the rule, analyzesalternatives, and presents the measureswe propose to minimize the burden onsmall entities.

B. Resource-Based Practice ExpenseRelative Value Units

Our methodology for implementingresource-based practice expense RVUs

for each physician’s service considersthe staff, equipment, and supplies usedin the provision of various medical andsurgical services in various settings,including those that cannot beattributed to specific procedures. We arerequired to begin the transition to thenew practice expense RVUs on January1, 1999.

By law, the conversion to a resource-based determination for the payment ofphysicians’ practice expenses must bebudget neutral. In other words, the totalMedicare expenditures for calendar year1999 must be the same as the amountthat would have been paid under theprior method of paying practiceexpenses.

As we indicated in the proposed rule,each year since the fee schedule hasbeen implemented, our actuaries havedetermined any adjustments needed tomeet this requirement. A keycomponent of the actuarialdetermination of budget neutralityinvolves estimating any impact ofchanges in the volume and intensity ofphysicians’ services provided toMedicare beneficiaries as a result of theproposed changes.

We indicated in the proposed rulethat, in estimating the impacts ofproposed changes under the physicianfee schedule on the volume andintensity of services, the actuaries havehistorically used a model that assumesthat 50 percent of the change in netrevenue for a practice would berecouped. This does not mean thatpayments are reduced by 50 percent. Infact, payments have typically beenreduced only a few percent or less. Theactuaries also assume that there is nooffsetting reduction in volume andintensity for physicians whose Medicarerevenue increases.

As we indicated in the proposed rule,our actuaries have reviewed theliterature and conducted data analysisof the volume-and-intensity response. Inthe proposed rule, we indicated that forthe purpose of establishing budgetneutrality for the physicians’ practiceexpense determination, the actuarieswill use a model that assumes a 30percent volume-and-intensity responseto price reductions but no reduction involume and intensity in response to aprice increase. There were someinadvertent delays in making ouractuary’s analysis of the volume-and-intensity response available on ourhomepage (www.hcfa.gov), but it is nowavailable there.

Comment: Most commenters werepleased that the volume-and-intensityresponse was lowered, but opposed useof any volume-and-intensity offset.Many groups recommended that to the

extent that any adjustments arenecessary, they could be made withinthe framework of the SGR system. Somegroups stated that their specialty orparticular services should be exemptfrom the application of a volume-and-intensity adjustment.

Response: Our actuaries havereviewed the issue but believe that theirreview of the literature and their ownanalysis presents a convincing case as tothe need for them to utilize a model thatincorporates a volume-and-intensityresponse to price reductions. We cannotapply a volume-and-intensityadjustment that exempts certainprocedures because the response couldoccur for other procedures furnished bya physician. Similarly, we cannotexempt certain specialties fromapplication of the adjustment becausephysicians of all specialties have somediscretion as to the nature and extent ofservices furnished. We do not believethat we can use the SGR mechanismalone, without the adjustment forvolume and intensity for 1999, becauseany SGR adjustment would be in thefuture and the actuaries would notdetermine us to be in compliance withthe statutory budget-neutralityrequirement for 1999. To the extent thatthe volume-and-intensity response doesnot occur, the SGR system enacted aspart of the BBA 1997 will return thevolume-and-intensity adjustment in theform of higher future updates to theMedicare physician fee scheduleconversion factor.

Using the revised actuarial model,achieving budget neutrality for thepractice expense per hour methodwould require lowering physicians’payments in calendar year 1999 by 0.28percent (1.12 percent cumulative from1999 to 2002). The 0.28 percent volume-and-intensity adjustment results in areduction in the 1999 physician feeschedule CF of $0.10.

Table 7, ‘‘Impact on Total AllowedCharges by Specialty of the Resource-Based Practice Expense Relative ValueUnits under the Practice Expense perHour’’ shows the change in Medicarephysician fees resulting from thepractice expense per hour methodologydiscussed earlier in this final rule. Inorder to isolate the change in feesresulting from the resource-basedmethodology, this analysis assumes thesame mix of services is furnished underthe new and old practice expensepayment systems and does not includethe effects of the annual updates to theMedicare physician fee scheduleconversion factor. The impact of thechanges on the total revenue (Medicareand non-Medicare) for a given specialtyis less than the impact displayed in


Table 7 since physicians furnishservices to both Medicare and non-Medicare patients.

For example, Table 7 shows thatwhen the resource-based system is fullyphased-in, general surgery willexperience a 7 percent decrease inMedicare revenues relative to thecurrent practice expense system andfamily practice will experience a 7percent increase.

The magnitude of the Medicareimpact depends generally on the mix ofservices the specialty provides and thesites where the services are performed.In general, those specialties that furnishmore office-based services are expectedto experience larger increases inMedicare payments than specialties thatprovide fewer office-based services.Table 7 also includes the impact of thevolume-and-intensity adjustments to theconversion factor discussed above, butdoes not include the impact of thevolume response on revenues.

TABLE 7.—IMPACT ON TOTAL AL-LOWED CHARGES BY SPECIALTY OFTHE RESOURCE-BASED PRACTICEEXPENSE RELATIVE VALUE UNITSUNDER THE PRACTICE EXPENSE PERHOUR METHOD (PERCENT CHANGE)

Specialty

Allowedcharges(in bil-lions)

Impactperyear

Cumu-lative4-yearimpact

M.D./D.O. Physi-cians:

Anesthesiology 1.6 0 0Cardiac Surgery 0.3 ¥3 ¥12Cardiology ........ 3.8 ¥2 ¥9Clinics ............... 1.6 ¥1 ¥3Dermatology ..... 1.0 5 20Emergency

Medicine ........ 0.9 ¥3 ¥10Family Practice 2.7 2 7Gastro-

enterology ..... 1.2 ¥4 ¥15General Practice 1.0 1 4General Surgery 2.0 ¥2 ¥7Hematology/On-

cology ............ 0.5 2 6Internal

Medicine ........ 6.0 0 2Nephrology ....... 0.9 ¥2 ¥7Neurology ......... 0.7 0 ¥1Neurosurgery .... 0.3 ¥3 ¥11Obstetrics/Gyne-

cology ............ 0.4 1 4Ophthalmology 3.3 1 4Orthopedic

Surgery ......... 2.0 0 ¥1Other

Physician * ..... 1.1 0 1Otolaryngology 0.5 2 9Pathology .......... 0.5 ¥3 ¥13Plastic Surgery 0.2 1 2Psychiatry ......... 1.1 0 1Pulmonary ........ 1.0 ¥1 ¥4

TABLE 7.—IMPACT ON TOTAL AL-LOWED CHARGES BY SPECIALTY OFTHE RESOURCE-BASED PRACTICEEXPENSE RELATIVE VALUE UNITSUNDER THE PRACTICE EXPENSE PERHOUR METHOD (PERCENTCHANGE)—Continued

Specialty

Allowedcharges(in bil-lions)

Impactperyear

Cumu-lative4-yearimpact

Radiation Oncol-ogy ................ 0.6 ¥2 ¥6

Radiology .......... 2.9 ¥3 ¥10Rheumatology .. 0.2 4 16Thoracic Sur-

gery ............... 0.6 ¥3 ¥12Urology ............. 1.1 1 5Vascular Sur-

gery ............... 0.3 ¥3 ¥11Others:Chiropractic ...... 0.4 ¥2 ¥8Nonphysician

Practitioner .... 0.8 0 2Optometry ......... 0.3 6 27Podiatry ............ 0.9 2 9Suppliers ........... 0.5 ¥2 ¥6

* Other physician includes allergy/immunol-ogy, oral surgery, physical medicine and reha-bilitation, pediatrics, critical care, and hema-tology.

Table 8 below compares the impact ofthe resource-based practice expensemethodology described in this final rulewith the impacts published in the June5, 1998 proposed rule. Differencesreflect the net effect of the changesdescribed earlier in the section ‘‘Resultsof the Evaluation of Comments.’’ Ingeneral, the changes with the greatestimpact were the creation of a separatepool for services with work relativevalue units equal to zero and the use ofthe Medicare conversion factor in theindirect cost pool allocation.

TABLE 8.—COMPARISON OF THE IM-PACT ON TOTAL ALLOWED CHARGESBY SPECIALTY OF THE RESOURCE-BASED PRACTICE EXPENSE REL-ATIVE VALUE UNITS UNDER THEPRACTICE EXPENSE PER HOURMETHODOLOGY WITH THE IMPACTSFROM THE JUNE 5, 1998 PROPOSEDRULE

Specialty

Proposedrule cu-mulative4-yearimpact

Currentcumu-

lative 4-year im-

pact

M.D./D.O. Physicians:Anesthesiology ...... 2 0Cardiac Surgery .... ¥14 ¥12Cardiology ............. ¥13 ¥9Clinics .................... ¥3 ¥3Dermatology .......... 27 20

TABLE 8.—COMPARISON OF THE IM-PACT ON TOTAL ALLOWED CHARGESBY SPECIALTY OF THE RESOURCE-BASED PRACTICE EXPENSE REL-ATIVE VALUE UNITS UNDER THEPRACTICE EXPENSE PER HOURMETHODOLOGY WITH THE IMPACTSFROM THE JUNE 5, 1998 PROPOSEDRULE—Continued

Specialty

Proposedrule cu-mulative4-yearimpact

Currentcumu-

lative 4-year im-

pact

Emergency Medi-cine .................... ¥13 ¥10

Family Practice ...... 6 7Gastroenterology ... ¥14 ¥15General Practice .... 3 4General Surgery .... ¥6 ¥7Hematology/Oncol-

ogy ..................... 2 6Internal Medicine ... 1 2Nephrology ............ ¥5 ¥7Neurology .............. 0 ¥1Neurosurgery ......... ¥10 ¥11Obstetrics/Gyne-

cology ................. 5 4Ophthalmology ...... 11 4Orthopedic Surgery ¥1 ¥1Other Physician* .... 0 1Otolaryngology ...... 6 9Pathology ............... ¥10 ¥13Plastic Surgery ...... 5 2Psychiatry .............. 4 1Pulmonary ............. ¥3 ¥4Radiation Oncology ¥13 ¥6Radiology ............... ¥13 ¥10Rheumatology ....... 15 16Thoracic Surgery ... ¥13 ¥12Urology .................. 7 5Vascular Surgery ... ¥12 ¥11

Others:Chiropractic ........... ¥2 ¥8Nonphysician Prac-

titioner ................ ¥1 2Optometry .............. 36 27Podiatry ................. 5 9Suppliers ................ ¥18 ¥6

* Other physician includes allergy/immunol-ogy, oral surgery, physical medicine and reha-bilitation, pediatrics, critical care, and hema-tology.

For certain high volume procedures,Table 9, ‘‘Total Payment for SelectedProcedures,’’ shows the percentagechange between the current 1998payments (calculated using the 1998relative value units, 1998 site-of-servicepolicy, and the 1998 conversion factor)and the fully phased-in resource-basedpractice expense payments (calculatedusing the full resource-based practiceexpense relative value units, the 1999work and malpractice relative valueunits, and the 1999 Medicareconversion factor).BILLING CODE 4120–01–P



BILLING CODE 4120–01–C


Table 10 below displays the impact ofthe practice expense per hourmethodology by Medicare paymentlocality, including the volume-and-

intensity increase and correspondingconversion factor adjustment discussedearlier. This analysis does not includethe effects of the annual updates to the

Medicare physician fee scheduleconversion factor.

TABLE 10.—IMPACT OF PRACTICE EXPENSE PER HOUR METHODOLOGY ON TOTAL ALLOWED CHARGES BY MEDICARELOCALITY (PERCENT CHANGE)

Locality State Impactper year

Cumulativefour yearimpact

All ........................................................................................ Alaska .................................................................................. 0.1 0.5All ........................................................................................ Alabama .............................................................................. ¥0.2 ¥0.8All ........................................................................................ Arkansas ............................................................................. ¥0.2 ¥0.9All ........................................................................................ Arizona ................................................................................ 0.2 1.0Anaheim/Santa Ana ............................................................ California ............................................................................. 0.6 2.5Los Angeles ........................................................................ California ............................................................................. 0.5 2.1Marin/Napa/Solano .............................................................. California ............................................................................. 0.6 2.4Oakland/Berkley .................................................................. California ............................................................................. 0.3 1.1Rest of California ................................................................ California ............................................................................. 0.3 1.4San Francisco ..................................................................... California ............................................................................. 0.6 2.3San Mateo ........................................................................... California ............................................................................. 0.4 1.5Santa Clara ......................................................................... California ............................................................................. 0.2 0.8Ventura ................................................................................ California ............................................................................. 0.4 1.5All ........................................................................................ Colorado .............................................................................. 0.1 0.4All ........................................................................................ Connecticut ......................................................................... 0.1 0.6All ........................................................................................ District of Columbia ............................................................. 0.1 0.3All ........................................................................................ Delaware ............................................................................. 0.0 0.1Ft Lauderdale ...................................................................... Florida ................................................................................. 0.6 2.6Miami ................................................................................... Florida ................................................................................. 0.1 0.5Rest of Florida ..................................................................... Florida ................................................................................. 0.1 0.5Atlanta ................................................................................. Georgia ................................................................................ ¥0.1 ¥0.3Rest of Georgia ................................................................... Georgia ................................................................................ ¥0.1 0.5All ........................................................................................ Hawaii .................................................................................. 0.6 2.4All ........................................................................................ Iowa ..................................................................................... ¥0.2 ¥0.8All ........................................................................................ Idaho ................................................................................... 0.0 0.1Chicago ............................................................................... Illinois .................................................................................. ¥0.2 ¥1.0East St Louis ....................................................................... Illinois .................................................................................. ¥0.1 ¥0.5Rest of Illinois ...................................................................... Illinois .................................................................................. ¥0.2 ¥0.7Suburban Chicago .............................................................. Illinois .................................................................................. ¥0.1 ¥0.4All ........................................................................................ Indiana ................................................................................. ¥0.4 ¥1.5All ........................................................................................ Kansas ................................................................................ ¥0.2 ¥0.8All ........................................................................................ Kentucky .............................................................................. ¥0.3 ¥1.1New Orleans ....................................................................... Louisiana ............................................................................. ¥0.3 ¥1.2Rest of Louisiana ................................................................ Louisiana ............................................................................. ¥0.3 ¥1.3Boston ................................................................................. Massachusetts .................................................................... ¥0.3 ¥1.1Rest of Massachusetts ........................................................ Massachusetts .................................................................... 0.1 0.6Balto/Surr Ctys .................................................................... Maryland .............................................................................. ¥0.3 ¥1.2Rest of Maryland ................................................................. Maryland .............................................................................. ¥0.2 ¥0.6Rest of Maine ...................................................................... Maine ................................................................................... ¥0.1 ¥0.4Southern Maine ................................................................... Maine ................................................................................... ¥0.1 ¥0.2Detroit .................................................................................. Michigan .............................................................................. ¥0.2 ¥0.8Rest of Michigan ................................................................. Michigan .............................................................................. ¥0.2 ¥0.9All ........................................................................................ Minnesota ............................................................................ ¥0.1 ¥0.4Metro Kansas City ............................................................... Missouri ............................................................................... ¥0.7 ¥2.7Rest of Missouri .................................................................. Missouri ............................................................................... ¥0.2 ¥0.8Rest of Missouri .................................................................. Missouri ............................................................................... 0.1 0.2St Louis ............................................................................... Missouri ............................................................................... ¥0.4 ¥1.6All ........................................................................................ Mississippi ........................................................................... ¥0.5 ¥1.8All ........................................................................................ Montana .............................................................................. 0.1 0.3All ........................................................................................ North Carolina ..................................................................... ¥0.1 ¥0.3All ........................................................................................ North Dakota ....................................................................... ¥0.3 ¥1.1All ........................................................................................ Nebraska ............................................................................. ¥0.2 ¥0.8All ........................................................................................ New Hampshire ................................................................... 0.0 ¥0.2Northern New Jersey .......................................................... New Jersey ......................................................................... 0.0 0.0Rest of New Jersey ............................................................. New Jersey ......................................................................... 0.1 0.5All ........................................................................................ New Mexico ......................................................................... 0.2 0.8All ........................................................................................ Nevada ................................................................................ 0.0 ¥0.1Manhattan ........................................................................... New York ............................................................................. 0.4 1.5NYC Suburbs/LI .................................................................. New York ............................................................................. 0.3 1.3NYC Suburbs/Poughk. ........................................................ New York ............................................................................. 0.3 1.2Queens ................................................................................ New York ............................................................................. 0.7 2.8Rest of New York ................................................................ New York ............................................................................. ¥0.1 ¥0.2All ........................................................................................ Ohio ..................................................................................... ¥0.3 ¥1.2All ........................................................................................ Oklahoma ............................................................................ ¥0.2 ¥0.7


TABLE 10.—IMPACT OF PRACTICE EXPENSE PER HOUR METHODOLOGY ON TOTAL ALLOWED CHARGES BY MEDICARELOCALITY (PERCENT CHANGE)—Continued

Locality State Impactper year

Cumulativefour yearimpact

Portland ............................................................................... Oregon ................................................................................ 0.1 0.2Rest of Oregon .................................................................... Oregon ................................................................................ 0.4 1.5Philadelphia ......................................................................... Pennsylvania ....................................................................... ¥0.1 ¥0.4Rest of Pennsylvania .......................................................... Pennsylvania ....................................................................... ¥0.1 ¥0.3All ........................................................................................ Puerto Rico ......................................................................... 1.0 3.9All ........................................................................................ Rhode Island ....................................................................... 0.2 0.6All ........................................................................................ South Carolina .................................................................... 0.0 ¥0.2All ........................................................................................ South Dakota ...................................................................... ¥0.4 ¥1.5All ........................................................................................ Tennessee ........................................................................... ¥0.3 ¥1.3Austin .................................................................................. Texas ................................................................................... ¥0.3 ¥1.0Beaumont ............................................................................ Texas ................................................................................... ¥0.6 ¥2.5Brazoria ............................................................................... Texas ................................................................................... 0.4 1.7Dallas .................................................................................. Texas ................................................................................... ¥0.2 ¥0.8Fort Worth ........................................................................... Texas ................................................................................... 0.0 0.0Galveston ............................................................................ Texas ................................................................................... ¥0.4 ¥1.5Houston ............................................................................... Texas ................................................................................... ¥0.4 ¥1.8Rest of Texas ...................................................................... Texas ................................................................................... ¥0.1 ¥0.4All ........................................................................................ Utah ..................................................................................... 0.0 0.2All ........................................................................................ Virginia ................................................................................ 0.0 ¥0.1All ........................................................................................ Virgin Islands ....................................................................... 0.6 2.5All ........................................................................................ Vermont ............................................................................... 0.2 0.9Rest of Washington ............................................................. Washington ......................................................................... 0.3 1.2Seattle (King Co) ................................................................. Washington ......................................................................... 0.0 0.0All ........................................................................................ Wisconsin ............................................................................ ¥0.2 ¥1.0All ........................................................................................ West Virginia ....................................................................... ¥0.2 ¥0.8All ........................................................................................ Wyoming ............................................................................. 0.3 1.0

C. Medical Direction for AnesthesiaServices

For our proposal relating to themedical direction of anesthesia services(§ 415.110), we have decided to retainthe current requirements (that is,requirements (i) and (ii), and (iv)) andmake only one technical revision inrequirement (iii). The technical revisionpertains to the requirement that thephysician participate in the mostdemanding procedures in the anesthesiaplan, including, induction andemergence.

D. Separate Payment for a Physician’sInterpretation of an AbnormalPapanicolaou Smear

We are allowing separate payment fora physician’s interpretation of a Papsmear to any patient (that is, hospital ornonhospital patient) as long as—(1) The

laboratory’s screening personnel suspectan abnormality; and (2) the physicianreviews and interprets the pap smear.Currently, separate payment to aphysician is limited to a Pap smearinterpretation that is abnormal and isfurnished to a hospital inpatient. Weestimate that there would be a $10million increase in payments under thephysician fee schedule for this changein payment for Pap smearinterpretations for FY 1999.

E. Rebasing and Revising the MedicareEconomic Index

There is negligible impact onMedicare expenditures as a result of thischange.

F. Payment for Nurse Midwives’ Services

The provision for nurse midwives’services will place into regulations text

a provision of OBRA 1993 thateliminates the limitation on coverage ofservices furnished outside the maternitycycle by nurse midwives. This provisionhas been implemented previouslythrough program instructions; therefore,this change in the regulations text willhave no impact.

G. BBA Provisions Included in ThisFinal Rule

The following five provisions of BBA1997 are implemented in this final rule.This final rule conforms the regulationstext to BBA 1997 provisions. Table 11below provides the cost and savingsestimates (in millions of dollars) for theMedicare program for these provisionsfor the fiscal years shown:

TABLE 11.—COST AND SAVINGS ESTIMATES FOR BBA 1997 PROVISIONS

[In millions]

Provisionsection Subject 1999 2000 2001 2002 2003

4206 Teleconsultations .......................................................................................................... 20 40 55 70 904511 Nurse practitioners and Clinical Nurse Specialists ....................................................... 290 330 370 440 4904512 Physician Assistants ..................................................................................................... 60 60 70 90 1004541 Outpatient Rehabilitation ............................................................................................... ¥130 ¥190 ¥200 ¥230 ¥2504556 Drugs ............................................................................................................................. ¥60 ¥70 ¥70 ¥80 ¥80


Payment for Services of CertainNonphysician Practitioners andServices Furnished Incident to TheirProfessional Services

Sections 4511 and 4512 of BBA 1997provide for the expanded coverage ofnurse practitioner, clinical nursespecialist, and physician assistantservices. This provision is self-implementing. This final rule changesthe regulations text to conform to theBBA 1997 provisions. We are clarifyingthe following two existing issuesunrelated to the BBA 1997 provisionsfor nonphysician practitioners:

• Definition of physiciancollaboration for nurse practitioners.

• The impact of the BBA 1997provisions is shown in Table 11 (acombination of sections 4511 and 4512of BBA 1997). The proposals beingmade final in this rule will havenegligible budgetary impact.

Payment for Outpatient RehabilitationServices

Sections 4541(a)(2) and 4541(a)(3) ofBBA 1997 change the payment ofoutpatient rehabilitation services fromcost-based to a payment system basedon the physician fee schedule. Theregulatory changes are to conform ourregulations to the provisions of the BBA1997.

In addition to the changes directed bythe statute, the following changes arebeing made in this rule to furnishinformation for identification of theoutpatient rehabilitation services andfor administrative purposes:

• Specifying HCPCS as the codingsystem for rehabilitation services sinceit is used by the fee schedule in section1848 of the Act.

• Providing for discipline-specificmodifiers to be used in coding services.

• Providing for a code for nursingservices performed in CORFs.

These administrative changes willhave a negligible impact.

Section 4541(c) of BBA 1997 appliesan annual per beneficiary limit of$1,500 to all outpatient physical therapyservices (including speech-languagepathology services) except for servicesfurnished by a hospital outpatientdepartment. A separate $1,500 limit alsoapplies to all outpatient occupationaltherapy services except for servicesfurnished by hospital outpatientdepartments. Therapy servicesfurnished incident to a physician’sprofessional services are also subject tothese limits. The changes in this ruleconform the regulations to the BBA1997 provisions. The delay in fullimplementation, however, is discussedbelow.

There are several different types ofproviders that will be affected by thisBBA 1997 provision. The largestproviders are SNFs, outpatientrehabilitation facilities, and hospitaloutpatient departments. There are about15,000 SNFs, 2,500 outpatientrehabilitation facilities, and about 5,600outpatient hospital facilities. Wedetermined that the services that wouldbe affected by these changes account forabout 15 percent of Medicare Part Bpayments to facilities.

We estimate that these providers aswell as other providers and practitionersof outpatient therapy services willexperience a reduction in revenue bothbecause of the movement from costreimbursement to fee schedulepayments and because of the $1,500limits. The impact of the provisions onindividual providers, however, cannotbe estimated for a variety of reasons.First, since reimbursement hashistorically been based on cost for mostproviders, we do not have codedinformation on individual services perbeneficiary at individual providers.Second, with respect to the impact ofthe $1,500 limit, the extent to which aprovider will receive a payment fromanother source to substitute forMedicare’s payment is unknown. Forexample, if a beneficiary reaches the$1,500 limit, Medicare will no longerpay, but payment may be received fromanother source, such as a Medigapinsurer, a retiree health plan, or thebeneficiary.

The $1,500 limits will reduce theamount of therapy services paid for byMedicare. The patients most affected arelikely to be those with diagnoses suchas stroke, certain fractures, andamputation, where the number oftherapy visits needed by a patient mayexceed those that can be reimbursed byMedicare under the statutory limits.Services not paid for by Medicare,however, may be paid for by otherpayers.

As explained in the preamble, the$1,500 limits will not be fullyimplemented until sometime in 2000due to the necessity to devote resourcesto Y2K compliance activities. Until thattime, the limits will be implementedpartially on a per-provider basiswhereby each provider will be heldaccountable for tracking expenses foreach beneficiary and not billingMedicare for beneficiaries that have metthe limit at their facility. Implementingthe provision in this fashion shouldlessen the impact on both beneficiariesand providers until full implementationoccurs.

Impact on Small Rural Hospitals

We realize that the provision to movefrom cost reimbursement to a feeschedule may have an impact on smallrural hospitals; however, we have beenunable to assess this impact because wedo not have the data to make thisanalysis. Also, data that would identifythe extent to which these services arecurrently being furnished in small ruralhospitals to serve as the baseline forcomparing the impact of the legislativechanges are not available. In addition,we do not maintain data that identifyservices furnished under the physicianfee schedule in areas where ruralhospitals are located. Although there arelocalities designated for paymentpurposes, there is very little correlationbetween the payment localities (most ofwhich are state-wide) and areas wheresmall rural hospitals are located.

Payment for Drugs and Biologicals

The impact of this BBA 1997provision is shown in Table 5. This finalrule modifies the current regulatorylanguage regarding drug payment toconform to the BBA 1997 changes.Revising the regulation on multi-sourcedrugs to include the brand name versionof the drug is not related to the BBA1997 drug provision but will have aslight program savings.

Private Contracting with MedicareBeneficiaries

We anticipate that there would be anegligible impact on Medicare trustfund payments as a result of theregulation that implements the law. Theprogram impact of the provision whenit was assessed in the legislative processwas negligible. The impact onbeneficiaries, physicians, andpractitioners is impossible to assess inany quantitative way.

Specifically, beneficiaries who havehad difficulty in finding physicians orpractitioners to furnish services becausethe physicians or practitioners weredissatisfied with the Medicare paymentrates may find it easier to acquire care.On the other hand, beneficiaries whocannot afford to privately contract withphysicians or practitioners who opt outof Medicare may have more limitedaccess to care as they try to seek carefrom reduced numbers of physiciansand practitioners who will acceptMedicare payment rules.

Physicians and practitioners who optout of Medicare may see increasedincomes as a result of their ability tocharge without regard to the Medicarelimiting charge. However, to the extentthat beneficiaries cease to seektreatment from them because they have


opted out of Medicare, their incomesmay decline. Moreover, organizations towhich physicians and practitioners hadreassigned Medicare benefits may ceasetheir contracts with them if they opt outsince the organizations could no longerbe paid by Medicare for the physician’sor practitioner’s service. Managed careplans that have a contract withMedicare may cease their contractualarrangement with physicians andpractitioners who opt out of Medicaresince the plan cannot pay for any of

their services to Medicare beneficiariesand, hence, their services no longer offeraccess to care under the plan. Similarly,insurance plans other than Medicarecan choose to not pay for the servicesprovided to any of their enrollees byphysicians and practitioners who optout of Medicare, causing the physiciansand practitioners who opt out furtherloss of income.

Teleconsultations

We estimate that the cost of providingconsultation services in accordancewith section 4206 of BBA 1997 will beapproximately $20 million in FY 1999and approximately $90 million by FY2003. Note that the FY 1999 estimatereflects only a partial year estimate,given the January 1, 1999 effective datefor teleconsultation coverage. Weestimate that teleconsultation will costapproximately $275 million for the first5 years of coverage, as indicated below:

MEDICARE COSTS

[In millions]

FY 1999 FY 2000 FY 2001 FY 2002 FY 2003

$20 $40 $55 $70 $90

This rule would provide for paymentexclusively for professional consultationwith a physician and certain otherpractitioners via interactivetelecommunication systems. Section4206 of BBA 1997 does not provide forpayment for telephone line fees or anyfacility fees associated withteleconsultation that may be incurred byhospitals included in the telemedicinenetwork.

Further, this rule does not mandatethat entities provide consultationservices via telecommunications. Thus,this final rule does not require entitiesto purchase telemedicine equipment orto acquire the telecommunicationsinfrastructure necessary to deliverconsultation services viatelecommunication systems. Therefore,this rule does not impose costsassociated with starting and operating atelemedicine network.

The benefit changes in this final ruleresulting from payment forteleconsultation services do not result inadditional Medicare expenditures of$100 million or more for any single FYthrough FY 2003. We have determined,and we certify, that teleconsultationprovisions do not have a significanteconomic impact on a substantialnumber of small entities or a significantimpact on the operations of a substantialnumber of small rural hospitals.

H. Impact on Beneficiaries

Although changes in physicians’payments when the physician feeschedule was implemented in 1992were large, we detected no problemswith beneficiary access to care. Becausethere is a 4-year transition to theresource-based practice expense system,we anticipate a minimal impact onbeneficiaries.

The benefit changes in this final ruleresulting from payment forteleconsultation services do not result inadditional Medicare expenditures of$100 million or more for any single FYthrough FY 2003. We have determined,and we certify, that teleconsultationprovisions do not have a significanteconomic impact on a substantialnumber of small entities or a significantimpact on the operations of a substantialnumber of small rural hospitals.

Statutory effects that are beingimplemented by this regulation result inspecialty impacts exceeding $100million per year. Therefore, this rule isan economically significant rule underExecutive Order 12866, and a major ruleunder Title 5, United States Code,section 804(2).

In accordance with the provisions ofExecutive Order 12866, this regulationwas reviewed by the Office ofManagement and Budget.

List of Subjects

42 CFR Part 405

Administrative practice andprocedure, Health facilities, Healthprofessions, Kidney diseases, Medicare,Reporting and recordkeepingrequirements, Rural areas, X-rays.

42 CFR Part 410

Health facilities, Health professions,Kidney diseases, Laboratories,Medicare, Rural areas, X-rays.

42 CFR Part 413

Health facilities, Kidney diseases,Medicare, Puerto Rico, Reporting andrecordkeeping requirements.

42 CFR Part 414

Administrative practice andprocedure, Health facilities, Health

professions, Kidney diseases, Medicare,Reporting and recordkeepingrequirements, Rural areas, X-rays.

42 CFR Part 415Health facilities, Health professions,

Medicare and Reporting andrecordkeeping requirements.

42 CFR Part 424Emergency medical services, Health

facilities, Health professions, Medicare.

42 CFR Part 485Grant programs-health, Health

facilities, Medicaid, Medicare,Reporting and recordkeepingrequirements.

For the reasons set forth in thepreamble, 42 CFR chapter IV isamended as follows:

PART 405—FEDERAL HEALTHINSURANCE FOR THE AGED ANDDISABLED

A. Part 405 is amended as set forthbelow:

1. A new subpart D, consisting of§§ 405.400, 405.405, 405.410, 405.415,405.420, 405.425, 405.430, 405.435,405.440, 405.445, 405.450, and 405.455is added to read as follows:

Subpart D—Private Contracts

Secs.405.400 Definitions.405.405 General rules.405.410 Conditions for properly opting-out

of Medicare.405.415 Requirements of the private

contract.405.420 Requirements of the opt-out

affidavit.405.425 Effects of opting-out of Medicare.405.430 Failure to properly opt-out.405.435 Failure to maintain opt-out.405.440 Emergency and urgent care

services.


405.445 Renewal and early termination ofopt-out.

405.450 Appeals.405.455 Application to Medicare+Choice

contracts.Authority: Secs. 1102, 1802, and 1871 of

the Social Security Act (42 U.S.C. 1302,1395a, and 1395hh).

Subpart D—Private Contracts

§ 405.400 Definitions.

For purposes of this subpart, thefollowing definitions apply:

Beneficiary means an individual whois enrolled in Part B of Medicare.

Emergency care services meansservices furnished to an individual fortreatment of an ‘‘emergency medicalcondition’’ as that term is defined in§ 422.2 of this chapter.

Legal representative means one ormore individuals who, as determined byapplicable State law, has the legalauthority to enter into the contract withthe physician or practitioner on behalfof the beneficiary.

Opt-out means the status of meetingthe conditions specified in § 405.410.

Opt-out period means the 2-yearperiod beginning on the effective date ofthe affidavit as specified by§ 405.410(c)(1) or § 405.410(c)(2), asapplicable.

Participating physician means a‘‘physician’’ as defined in this sectionwho has signed an agreement toparticipate in Part B of Medicare.

Physician means a doctor of medicineor a doctor of osteopathy who iscurrently licensed as that type of doctorin each State in which he or shefurnishes services to patients.

Practitioner means a physicianassistant, nurse practitioner, clinicalnurse specialist, certified registerednurse anesthetist, certified nursemidwife, clinical psychologist, orclinical social worker, who is currentlylegally authorized to practice in thatcapacity by each State in which he orshe furnishes services to patients orclients.

Private contract means a documentthat meets the criteria specified in§ 405.415.

Properly opt-out means to complete,without defect, the requirements for opt-out as specified in § 405.410.

Properly terminate opt-out means tocomplete, without defect, therequirements for terminating opt-out asspecified in § 405.445.

Urgent care services means servicesfurnished to an individual who requiresservices to be furnished within 12 hoursin order to avoid the likely onset of anemergency medical condition.

§ 405.405 General rules.

(a) A physician or practitioner mayenter into one or more private contractswith Medicare beneficiaries for thepurpose of furnishing items or servicesthat would otherwise be covered byMedicare, provided the conditions ofthis subpart are met.

(b) A physician or practitioner whoenters into at least one private contractwith a Medicare beneficiary under theconditions of this subpart, and whosubmits one or more affidavits inaccordance with this subpart, opts-outof Medicare for a 2-year period unlessthe opt-out is terminated earlyaccording to § 405.445. The physician’sor practitioner’s opt-out may berenewed for subsequent 2-year periods.

(c) Both the private contractsdescribed in paragraph (a) of thissection and the physician’s orpractitioner’s opt-out described inparagraph (b) of this section are null andvoid if the physician or practitioner failsto properly opt-out in accordance withthe conditions of this subpart.

(d) Both the private contractsdescribed in paragraph (a) of thissection and the physician’s orpractitioner’s opt-out described inparagraph (b) of this section are null andvoid for the remainder of the opt-outperiod if the physician or practitionerfails to remain in compliance with theconditions of this subpart during theopt-out period.

(e) Services furnished under privatecontracts meeting the requirements ofthis subpart are not covered servicesunder Medicare, and no Medicarepayment will be made for such serviceseither directly or indirectly, except aspermitted in accordance with§ 405.435(c).

§ 405.410 Conditions for properly opting-out of Medicare.

The following conditions must be metfor a physician or practitioner toproperly opt-out of Medicare:

(a) Each private contract between aphysician or a practitioner and aMedicare beneficiary that is entered intoprior to the submission of the affidavitdescribed in paragraph (b) of thissection must meet the specifications of§ 405.415.

(b) The physician or practitioner mustsubmit an affidavit that meets thespecifications of § 405.420 to eachMedicare carrier with which he or shewould file claims absent completion ofopt-out.

(c) A nonparticipating physician or apractitioner may opt-out of Medicare atany time in accordance with thefollowing:

(1) The 2-year opt-out period beginsthe date the affidavit meeting therequirements of § 405.420 is signed,provided the affidavit is filed within 10days after he or she signs his or her firstprivate contract with a Medicarebeneficiary.

(2) If the physician or practitionerdoes not timely file any requiredaffidavit, the 2-year opt-out periodbegins when the last such affidavit isfiled. Any private contract entered intobefore the last required affidavit is filedbecomes effective upon the filing of thelast required affidavit and the furnishingof any items or services to a Medicarebeneficiary under such contract beforethe last required affidavit is filed issubject to standard Medicare rules.

(d) A participating physician mayproperly opt-out of Medicare at thebeginning of any calendar quarter,provided that the affidavit described in§ 405.420 is submitted to theparticipating physician’s Medicarecarriers at least 30 days before thebeginning of the selected calendarquarter. A private contract entered intobefore the beginning of the selectedcalendar quarter becomes effective atthe beginning of the selected calendarquarter and the furnishing of any itemsor services to a Medicare beneficiaryunder such contract before thebeginning of the selected calendarquarter is subject to standard Medicarerules.

§ 405.415 Requirements of the privatecontract.

A private contract under this subpartmust:

(a) Be in writing and in printsufficiently large to ensure that thebeneficiary is able to read the contract.

(b) Clearly state whether thephysician or practitioner is excludedfrom Medicare under sections 1128,1156, or 1892 or any other section of theSocial Security Act.

(c) State that the beneficiary or his orher legal representative accepts fullresponsibility for payment of thephysician’s or practitioner’s charge forall services furnished by the physicianor practitioner.

(d) State that the beneficiary or his orher legal representative understandsthat Medicare limits do not apply towhat the physician or practitioner maycharge for items or services furnished bythe physician or practitioner.

(e) State that the beneficiary or his orher legal representative agrees not tosubmit a claim to Medicare or to ask thephysician or practitioner to submit aclaim to Medicare.

(f) State that the beneficiary or his orher legal representative understands


that Medicare payment will not be madefor any items or services furnished bythe physician or practitioner that wouldhave otherwise been covered byMedicare if there was no privatecontract and a proper Medicare claimhad been submitted.

(g) State that the beneficiary or his orher legal representative enters into thiscontract with the knowledge that he orshe has the right to obtain Medicare-covered items and services fromphysicians and practitioners who havenot opted-out of Medicare, and that thebeneficiary is not compelled to enterinto private contracts that apply to otherMedicare-covered services furnished byother physicians or practitioners whohave not opted-out.

(h) State the expected or knowneffective date and expected or knownexpiration date of the opt-out period.

(i) State that the beneficiary or his orher legal representative understandsthat Medigap plans do not, and thatother supplemental plans may elect notto, make payments for items andservices not paid for by Medicare.

(j) Be signed by the beneficiary or hisor her legal representative and by thephysician or practitioner.

(k) Not be entered into by thebeneficiary or by the beneficiary’s legalrepresentative during a time when thebeneficiary requires emergency careservices or urgent care services.(However, a physician or practitionermay furnish emergency or urgent careservices to a Medicare beneficiary inaccordance with § 405.440.)

(l) Be provided (a photocopy ispermissible) to the beneficiary or to hisor her legal representative before itemsor services are furnished to thebeneficiary under the terms of thecontract.

(m) Be retained (original signatures ofboth parties required) by the physicianor practitioner for the duration of theopt-out period.

(n) Be made available to HCFA uponrequest.

(o) Be entered into for each opt-outperiod.

§ 405.420 Requirements of the opt-outaffidavit.

An affidavit under this subpart must:(a) Be in writing and be signed by the

physician or practitioner.(b) Contain the physician’s or

practitioner’s full name, address,telephone number, national provideridentifier (NPI) or billing number, if onehas been assigned, uniform provideridentification number (UPIN) if one hasbeen assigned, or, if neither an NPI nora UPIN has been assigned, thephysician’s or practitioner’s taxidentification number (TIN).

(c) State that, except for emergency orurgent care services (as specified in§ 405.440), during the opt-out period thephysician or practitioner will provideservices to Medicare beneficiaries onlythrough private contracts that meet thecriteria of paragraph § 405.415 forservices that, but for their provisionunder a private contract, would havebeen Medicare-covered services.

(d) State that the physician orpractitioner will not submit a claim toMedicare for any service furnished to aMedicare beneficiary during the opt-outperiod, nor will the physician orpractitioner permit any entity acting onhis or her behalf to submit a claim toMedicare for services furnished to aMedicare beneficiary, except asspecified in § 405.440.

(e) State that, during the opt-outperiod, the physician or practitionerunderstands that he or she may receiveno direct or indirect Medicare paymentfor services that he or she furnishes toMedicare beneficiaries with whom he orshe has privately contracted, whether asan individual, an employee of anorganization, a partner in a partnership,under a reassignment of benefits, or aspayment for a service furnished to aMedicare beneficiary under aMedicare+Choice plan.

(f) State that a physician orpractitioner who opts-out of Medicareacknowledges that, during the opt-outperiod, his or her services are notcovered under Medicare and that noMedicare payment may be made to anyentity for his or her services, directly oron a capitated basis.

(g) State a promise by the physicianor practitioner to the effect that, duringthe opt-out period, the physician orpractitioner agrees to be bound by theterms of both the affidavit and theprivate contracts that he or she hasentered into.

(h) Acknowledge that the physician orpractitioner recognizes that the terms ofthe affidavit apply to all Medicare-covered items and services furnished toMedicare beneficiaries by the physicianor practitioner during the opt-out period(except for emergency or urgent careservices furnished to the beneficiarieswith whom he or she has not previouslyprivately contracted) without regard toany payment arrangements thephysician or practitioner may make.

(i) With respect to a physician whohas signed a Part B participationagreement, acknowledge that suchagreement terminates on the effectivedate of the affidavit.

(j) Acknowledge that the physician orpractitioner understands that abeneficiary who has not entered into aprivate contract and who requires

emergency or urgent care services maynot be asked to enter into a privatecontract with respect to receiving suchservices and that the rules of § 405.440apply if the physician furnishes suchservices.

§ 405.425 Effects of opting-out ofMedicare.

If a physician or practitioner opts-outof Medicare in accordance with thissubpart for the 2-year period for whichthe opt-out is effective, the followingresults obtain:

(a) Except as provided in § 405.440,no payment may be made directly byMedicare or by any Medicare+Choiceplan to the physician or practitioner orto any entity to which the physician orpractitioner reassigns his right to receivepayment for services.

(b) The physician or practitioner maynot furnish any item or service thatwould otherwise be covered byMedicare (except for emergency orurgent care services) to any Medicarebeneficiary except through a privatecontract that meets the requirements ofthis subpart.

(c) The physician or practitioner isnot subject to the requirement to submita claim for items or services furnishedto a Medicare beneficiary, as specifiedin § 424.5(a)(6) of this chapter, except asprovided in § 405.440.

(d) The physician or practitioner isprohibited from submitting a claim toMedicare for items or services furnishedto a Medicare beneficiary except asprovided in § 405.440.

(e) In the case of a physician, he orshe is not subject to the limiting chargeprovisions of § 414.48 of this chapter,except for services provided under§ 405.440.

(f) The physician or practitioner is notsubject to the prohibition-on-reassignment provisions of § 414.80 ofthis chapter, except for servicesprovided under § 405.440.

(g) In the case of a practitioner, he orshe is not prohibited from billing orcollecting amounts from beneficiaries(as provided in 42 U.S.C.1395u(b)(18)(B)).

(h) The death of a beneficiary who hasentered into a private contract (or whoselegal representative has done so) doesnot invoke § 424.62 or § 424.64 of thischapter with respect to the physician orpractitioner with whom the beneficiary(or legal representative) has privatelycontracted.

(i) The physician or practitioner whohas not been excluded under sections1128, 1156, or 1892 of the SocialSecurity Act may order, certify the needfor, or refer a beneficiary for Medicare-covered items and services, provided


the physician or practitioner is not paid,directly or indirectly, for such services(except as provided in § 405.440).

(j) The physician or practitioner whois excluded under sections 1128, 1156,or 1892 of the Social Security Act maynot order, prescribe, or certify the needfor Medicare-covered items and servicesexcept as provided in § 1001.1901 ofthis title, and must otherwise complywith the terms of the exclusion inaccordance with § 1001.1901 effectivewith the date of the exclusion.

§ 405.430 Failure to properly opt-out.(a) A physician or practitioner fails to

properly opt-out if—(1) Any private contract between the

physician or practitioner and aMedicare beneficiary, that was enteredinto before the affidavit described in§ 405.420 was filed, does not meet thespecifications of § 405.415; or

(2) He or she fails to submit theaffidavit(s) in accordance with§ 405.420.

(b) If a physician or practitioner failsto properly opt-out in accordance withparagraph (a) of this section, thefollowing results obtain:

(1) The physician’s or practitioner’sattempt to opt-out of Medicare isnullified, and all of the private contractsbetween the physician or practitionerand Medicare beneficiaries for the two-year period covered by the attemptedopt-out are deemed null and void.

(2) The physician or practitioner mustsubmit claims to Medicare for allMedicare-covered items and servicesfurnished to Medicare beneficiaries,including the items and servicesfurnished under the nullified contracts.A nonparticipating physician is subjectto the limiting charge provisions of§ 414.48 of this chapter. A participatingphysician is subject to the limitations oncharges of the participation agreementhe or she signed.

(3) The practitioner may not reassignany claim except as provided in§ 424.80 of this chapter.

(4) The practitioner may neither billnor collect an amount from thebeneficiary except for applicabledeductible and coinsurance amounts.

(5) The physician or practitioner maymake another attempt to properly opt-out at any time.

§ 405.435 Failure to maintain opt-out.(a) A physician or practitioner fails to

maintain opt-out under this subpart if,during the opt-out period—

(1) He or she knowingly andwillfully—

(i) Submits a claim for Medicarepayment (except as provided in§ 405.440); or

(ii) Receives Medicare paymentdirectly or indirectly for Medicare-covered services furnished to aMedicare beneficiary (except asprovided in § 405.440).

(2) He or she fails to enter into privatecontracts with Medicare beneficiariesfor the purpose of furnishing items andservices that would otherwise becovered by Medicare, or enters intocontracts that fail to meet thespecifications of § 405.415; or

(3) He or she fails to comply with theprovisions of § 405.440 regarding billingfor emergency care services or urgentcare services; or

(4) He or she fails to retain a copy ofeach private contract that he or she hasentered into for the duration of the opt-out period for which the contracts areapplicable or fails to permit HCFA toinspect them upon request.

(b) If a physician or practitioner failsto maintain opt-out in accordance withparagraph (a) of this section, and fails todemonstrate, within 45 days of a noticefrom the carrier of a violation ofparagraph (a) of this section, that he orshe has taken good faith efforts tomaintain opt-out (including byrefunding amounts in excess of thecharge limits to beneficiaries withwhom he or she did not sign a privatecontract), the following results obtain,effective 46 days after the date of thenotice, but only for the remainder of theopt-out period:

(1) All of the private contractsbetween the physician or practitionerand Medicare beneficiaries are deemednull and void.

(2) The physician’s or practitioner’sopt-out of Medicare is nullified.

(3) The physician or practitioner mustsubmit claims to Medicare for allMedicare-covered items and servicesfurnished to Medicare beneficiaries.

(4) The physician or practitioner orbeneficiary will not receive Medicarepayment on Medicare claims for theremainder of the opt-out period, exceptas provided in paragraph (c) of thissection.

(5) The physician is subject to thelimiting charge provisions of § 414.48 ofthis chapter.

(6) The practitioner may not reassignany claim except as provided in§ 424.80 of this chapter.

(7) The practitioner may neither billnor collect any amount from thebeneficiary except for applicabledeductible and coinsurance amounts.

(8) The physician or practitioner maynot attempt to once more meet thecriteria for properly opting-out until the2-year opt-out period expires.

(c) Medicare payment may be madefor the claims submitted by a

beneficiary for the services of an opt-outphysician or practitioner when thephysician or practitioner did notprivately contract with the beneficiaryfor services that were not emergencycare services or urgent care services andthat were furnished no later than 15days after the date of a notice by thecarrier that the physician or practitionerhas opted-out of Medicare.

§ 405.440 Emergency and urgent careservices.

(a) A physician or practitioner whohas opted-out of Medicare under thissubpart need not enter into a privatecontract to furnish emergency careservices or urgent care services to aMedicare beneficiary. Accordingly, aphysician or practitioner will not bedetermined to have failed to maintainopt-out if he or she furnishes emergencycare services or urgent care services toa Medicare beneficiary with whom thephysician or practitioner has notpreviously entered into a privatecontract, provided the physician orpractitioner complies with the billingrequirements specified in paragraph (b)of this section.

(b) When a physician or practitionerwho has not been excluded undersections 1128, 1156, or 1892 of theSocial Security Act furnishes emergencycare services or urgent care services toa Medicare beneficiary with whom thephysician or practitioner has notpreviously entered into a privatecontract, he or she:

(1) Must submit a claim to Medicarein accordance with both 42 CFR part424 and Medicare instructions(including but not limited to complyingwith proper coding of emergency orurgent care services furnished byphysicians and practitioners who haveopted-out of Medicare).

(2) May collect no more than—(i) The Medicare limiting charge, in

the case of a physician; or(ii) The deductible and coinsurance,

in the case of a practitioner.(c) Emergency care services or urgent

care services furnished to a Medicarebeneficiary with whom the physician orpractitioner has previously entered intoa private contract (that is, entered intobefore the onset of the emergencymedical condition or urgent medicalcondition), are furnished under theterms of the private contract.

(d) Medicare may make payment foremergency care services or urgent careservices furnished by a physician orpractitioner who has properly opted-outwhen the services are furnished and theclaim for services is made in accordancewith this section. A physician orpractitioner who has been excluded


must comply with the regulations at§ 1001.1901 (Scope and effect ofexclusion) of this title when he or shefurnishes emergency services tobeneficiaries and may not bill and bepaid for urgent care services.

§ 405.445 Renewal and early termination ofopt-out.

(a) A physician or practitioner mayrenew opt-out by filing an affidavit witheach carrier with which he or she wouldfile claims absent completion of opt-out,provided the affidavits are filed within30 days after the current opt-out periodexpires.

(b) To properly terminate opt-out aphysician or practitioner must:

(1) Not have previously opted out ofMedicare.

(2) Notify all Medicare carriers, withwhich he or she filed an affidavit, of thetermination of the opt-out no later than90 days after the effective date of theopt-out period.

(3) Refund to each beneficiary withwhom he or she has privately contractedall payment collected in excess of:

(i) The Medicare limiting charge (inthe case of physicians); or

(ii) The deductible and coinsurance(in the case of practitioners).

(4) Notify all beneficiaries with whomthe physician or practitioner enteredinto private contracts of the physician’sor practitioner’s decision to terminateopt-out and of the beneficiaries’ right tohave claims filed on their behalf withMedicare for the services furnishedduring the period between the effectivedate of the opt-out and the effective dateof the termination of the opt-out period.

(c) When the physician or practitionerproperly terminates opt-out inaccordance with paragraph (b), he or shewill be reinstated in Medicare as if therehad been no opt-out, and the provisionof § 405.425 shall not apply unless thephysician or practitioner subsequentlyproperly opts out.

(d) A physician or practitioner whohas completed opt-out on or beforeJanuary 1, 1999 may terminate opt-outduring the 90 days following January 1,1999 if he or she notifies all carriers towhom he or she would otherwisesubmit claims of the intent to terminateopt-out and complies with paragraphs(b)(3) and (4) of this section. Paragraph(c) of this section applies in these cases.

§ 405.450 Appeals.(a) A determination by HCFA that a

physician or practitioner has failed toproperly opt-out, failed to maintain opt-out, failed to timely renew opt-out,failed to privately contract, or failed toproperly terminate opt-out is an initialdetermination for purposes of § 405.803.

(b) A determination by HCFA that nopayment can be made to a beneficiaryfor the services of a physician who hasopted-out is an initial determination forpurposes of § 405.803.

§ 405.455 Application to Medicare+Choicecontracts.

An organization that has a contractwith HCFA to provide one or moreMedicare+Choice (M+C) plans tobeneficiaries (part 422 of this chapter):

(a) Must acquire and maintaininformation from Medicare carriers onphysicians and practitioners who haveopted-out of Medicare.

(b) Must make no payment directly orindirectly for Medicare covered servicesfurnished to a Medicare beneficiary bya physician or practitioner who hasopted-out of Medicare.

(c) May make payment to a physicianor practitioner who furnishes emergencyor urgent care services to a beneficiarywho has not previously entered into aprivate contract with the physician orpractitioner in accordance with§ 405.440.

Subpart E—Criteria for DeterminingReasonable Charges

2. The authority citation for part 405,subpart E, continues to read as follows:

Authority: Secs. 1102 and 1871 of theSocial Security Act (42 U.S.C. 1302 and1395hh).

3. Section 405.517 is revised to readas follows:

§ 405.517 Payment for drugs andbiologicals that are not paid on a cost orprospective payment basis.

(a) Applicability. Payment for a drugor biological that is not paid on a costor prospective payment basis isdetermined by the standardmethodology described in paragraph (b)of this section. Examples of when thisprocedure applies include a drug orbiological furnished incident to aphysician’s service, a drug or biologicalfurnished by an independent dialysisfacility that is not included in the ESRDcomposite rate set forth in § 413.170(c)of this chapter, and a drug or biologicalfurnished as part of the durable medicalequipment benefit.

(b) Methodology. Payment for a drugor biological described in paragraph (a)of this section is based on the lower ofthe actual charge on the Medicare claimfor benefits or 95 percent of the nationalaverage wholesale price of the drug orbiological.

(c) Multiple-source drugs. Formultiple-source drugs and biologicals,for purposes of this regulation, theaverage wholesale price is defined as

the lesser of the median averagewholesale price for all sources of thegeneric forms of the drug or biologicalor the lowest average wholesale price ofthe brand name forms of the drug orbiological.

4. A new § 405.520 is added to readas follows:

§ 405.520 Payment for a physicianassistants, nurse practitioners, and clinicalnurse specialists’ services and servicesfurnished incident to their professionalservices.

(a) General rule. A physicianassistants, nurse practitioners, andclinical nurse specialists’ services, andservices and supplies furnished incidentto their professional services, are paid inaccordance with the physician feeschedule. The payment for a physicianassistants’ services may not exceed thelimits at § 414.52 of this chapter. Thepayment for a nurse practitioners’ andclinical nurse specialists’ services maynot exceed the limits at § 414.56 of thischapter.

(b) Requirements. Medicare paymentis made only if all claims for paymentare made on an assignment-related basisin accordance with § 424.55 of thischapter, that sets forth, respectively, theconditions for coverage of physicianassistants’ services, nurse practitioners’services and clinical nurse specialists’services, and services and suppliesfurnished incident to their professionalservices.

(c) Civil money penalties. Any personor entity who knowingly and willinglybills a Medicare beneficiary amounts inexcess of the appropriate coinsuranceand deductible is subject to a civilmoney penalty not to exceed $2,000 foreach bill or request for payment.

PART 410—SUPPLEMENTARYMEDICAL INSURANCE (SMI)BENEFITS

B. Part 410 is amended as set forthbelow:

1. The authority citation for part 410continues to read as follows:


§ 410.1 [Amended]

2. Section 410.1, paragraph (a) isamended by adding the followingsentence at the end: ‘‘Section 4206 ofthe Balanced Budget Act of 1997 setsforth the conditions for payment forprofessional consultations that takeplace by means of telecommunicationssystems.’’


§ 410.32 [Amended]3. In § 410.32(a)(3), the last word,

‘‘section,’’ is removed and the word‘‘paragraph’’ is added in its place.

4. A new section 410.59 is added toread as follows:

§ 410.59 Outpatient occupational therapyservices: Conditions.

(a) Basic rule. Medicare Part B paysfor outpatient occupational therapyservices if they meet the followingconditions:

(1) They are furnished to a beneficiarywhile he or she is under the care of aphysician who is a doctor of medicine,osteopathy, or podiatric medicine.

(2) They are furnished under a writtenplan of treatment that meets therequirements of § 410.61.

(3) They are furnished—(i) By a provider as defined in § 489.2

of this chapter, or by others underarrangements with, and under thesupervision of, a provider; or

(ii) By or under the personalsupervision of an occupational therapistin private practice as described inparagraph (c) of this section.

(b) Outpatient occupational therapyservices furnished to certain inpatientsof a hospital or a CAH or SNF. MedicarePart B pays for outpatient occupationaltherapy services furnished to aninpatient of a hospital, CAH, or SNFwho requires them but who hasexhausted or is otherwise ineligible forbenefit days under Medicare Part A.

(c) Special provisions for servicesfurnished by occupational therapists inprivate practice.

(1) Basic qualifications. In order toqualify under Medicare as a supplier ofoutpatient occupational therapyservices, each individual occupationaltherapist in private practice must meetthe following requirements:

(i) Be legally authorized (if applicable,licensed, certified, or registered) toengage in the private practice ofoccupational therapy by the State inwhich he or she practices, and practiceonly within the scope of his or herlicense, certification, or registration.

(ii) Engage in the private practice ofoccupational therapy on a regular basisas an individual, in one of the followingpractice types:

(A) An unincorporated solo practice.(B) A partnership or unincorporated

group practice.(C) An unincorporated solo practice,

partnership, or group practice, aprofessional corporation or otherincorporated occupational therapypractice. Private practice does notinclude any individual during the timehe or she is working as an employee ofa provider.

(iii) Bill Medicare only for servicesfurnished in his or her private practiceoffice space, or in the patient’s home. Atherapist’s private practice office spacerefers to the location(s) where thepractice is operated, in the State(s)where the therapist (and practice, ifapplicable) is legally authorized tofurnish services, during the hours thatthe therapist engages in practice at thatlocation. When services are furnished inprivate practice office space, that spacemust be owned, leased, or rented by thepractice and used for the exclusivepurpose of operating the practice. Apatient’s home does not include anyinstitution that is a hospital, an CAH, ora SNF.

(iv) Treat individuals who are patientsof the practice and for whom thepractice collects fees for the servicesfurnished.

(2) Supervision of occupationaltherapy services. Occupational therapyservices are performed by, or under thepersonal supervision of, theoccupational therapist in privatepractice. All services not performedpersonally by the therapist must beperformed by employees of the practice,personally supervised by the therapist,and included in the fee for thetherapist’s services.

(d) Excluded services. No service isincluded as an outpatient occupationaltherapy service if it would not beincluded as an inpatient hospital serviceif furnished to a hospital or CAHinpatient.

(e) Annual limitation on incurredexpenses. (1) Amount of limitation. (i)In 1999, 2000, and 2001, no more than$1,500 of allowable charges incurred ina calendar year for outpatientoccupational therapy services arerecognized incurred expenses.

(ii) In 2002 and thereafter, thelimitation is determined by increasingthe limitation in effect in the previouscalendar year by the increase in theMedicare Economic Index for thecurrent year.

(2) For purposes of applying thelimitation, outpatient occupationaltherapy includes:

(i) Except as provided in paragraph(e)(3) of this section, outpatientoccupational therapy services furnishedunder this section;

(ii) Outpatient occupational therapyservices furnished by a comprehensiveoutpatient rehabilitation facility;

(iii) Outpatient occupational therapyservices furnished by a physician orincident to a physician’s service;

(iv) Outpatient occupational therapyservices furnished by a nursepractitioner, clinical nurse specialist, or

physician assistant or incident to theirservices.

(3) For purposes of applying thelimitation, outpatient occupationaltherapy services excludes servicesfurnished by a hospital directly or underarrangements.

5. Section 410.60 is revised to read asfollows:

§ 410.60 Outpatient physical therapyservices: Conditions.

(a) Basic rule. Medicare Part B paysfor outpatient physical therapy servicesif they meet the following conditions:

(1) They are furnished to a beneficiarywhile he or she is under the care of aphysician who is a doctor of medicine,osteopathy, or podiatric medicine.

(2) They are furnished under a writtenplan of treatment that meets therequirements of § 410.61.

(3) They are furnished—(i) By a provider as defined in § 489.2

of this chapter, or by others underarrangements with, and under thesupervision of, a provider; or

(ii) By or under the personalsupervision of a physical therapist inprivate practice as described inparagraph (c) of this section.

(b) Outpatient physical therapyservices furnished to certain inpatientsof a hospital or a CAH or SNF. MedicarePart B pays for outpatient physicaltherapy services furnished to aninpatient of a hospital, CAH, or SNFwho requires them but who hasexhausted or is otherwise +ineligible forbenefit days under Medicare Part A.

(c) Special provisions for servicesfurnished by physical therapists inprivate practice. (1) Basic qualifications.In order to qualify under Medicare as asupplier of outpatient physical therapyservices, each individual physicaltherapist in private practice must meetthe following requirements:

(i) Be legally authorized (if applicable,licensed, certified, or registered) toengage in the private practice ofphysical therapy by the State in whichhe or she practices, and practice onlywithin the scope of his or her license,certification, or registration.

(ii) Engage in the private practice ofphysical therapy on a regular basis as anindividual, in one of the followingpractice types:

(A) An unincorporated solo practice.(B) An unincorporated partnership or

unincorporated group practice.(C) An unincorporated solo practice,

partnership, or group practice, or aprofessional corporation or otherincorporated physical therapy practice.Private practice does not include anyindividual during the time he or she isworking as an employee of a provider.


(iii) Bill Medicare only for servicesfurnished in his or her private practiceoffice space, or in the patient’s home. Atherapist’s private practice office spacerefers to the location(s) where thepractice is operated, in the State(s)where the therapist (and practice, ifapplicable) is legally authorized tofurnish services, during the hours thatthe therapist engages in practice at thatlocation. When services are furnished inprivate practice office space, that spacemust be owned, leased, or rented by thepractice and used for the exclusivepurpose of operating the practice. Apatient’s home does not include anyinstitution that is a hospital, a CAH, ora SNF.

(iv) Treat individuals who are patientsof the practice and for whom thepractice collects fees for the servicesfurnished.

(2) Supervision of physical therapyservices. Physical therapy services areperformed by, or under the personalsupervision of, the physical therapist inprivate practice. All services notperformed personally by the therapistmust be performed by employees of thepractice, personally supervised by thetherapist, and included in the fee for thetherapist’s services.

(d) Excluded services. No service isincluded as an outpatient physicaltherapy service if it would not beincluded as an inpatient hospital serviceif furnished to a hospital or CAHinpatient.

(e) Annual limitation on incurredexpenses. (1) Amount of limitation. (i)In 1999, 2000, and 2001, no more than$1,500 of allowable charges incurred ina calendar year for outpatient physicaltherapy services are recognized incurredexpenses.

(ii) In 2002 and thereafter, thelimitation shall be determined byincreasing the limitation in effect in theprevious calendar year by the increasein the Medicare Economic Index for thecurrent year.

(2) For purposes of applying thelimitation, outpatient physical therapyincludes:

(i) Except as provided in paragraph(e)(3) of this section, outpatient physicaltherapy services furnished under thissection;

(ii) Except as provided in paragraph(e)(3) of this section outpatient speech-language pathology services furnishedunder § 410.62;

(iii) Outpatient physical therapy andspeech-language pathology servicesfurnished by a comprehensiveoutpatient rehabilitation facility;

(iv) Outpatient physical therapy andspeech-language pathology services

furnished by a physician or incident toa physician’s service;

(v) Outpatient physical therapy andspeech-language pathology servicesfurnished by a nurse practitioner,clinical nurse specialist, or physicianassistant or incident to their services.

(3) For purposes of applying thelimitation, outpatient physical therapyexcludes services furnished by ahospital or CAH directly or underarrangements.

6. In § 410.61, the section heading andparagraphs (a) through (d) are revised toread as follows:

§ 410.61 Plan of treatment requirementsfor outpatient rehabilitation services.

(a) Basic requirement. Outpatientrehabilitation services (includingservices furnished by a qualifiedphysical or occupational therapist inprivate practice), must be furnishedunder a written plan of treatment thatmeets the requirements of paragraphs(b) through (e) of this section.

(b) Establishment of the plan. Theplan is established before treatment isbegun by one of the following:

(1) A physician.(2) A physical therapist who furnishes

the physical therapy services.(3) A speech-language pathologist

who furnishes the speech-languagepathology services.

(4) An occupational therapist whofurnishes the occupational therapyservices.

(5) A nurse practitioner, a clinicalnurse specialist, or a physicianassistant.

(c) Content of the plan. The planprescribes the type, amount, frequency,and duration of the physical therapy,occupational therapy, or speech-language pathology services to befurnished to the individual, andindicates the diagnosis and anticipatedgoals.

(d) Changes in the plan. Any changesin the plan—

(1) Are made in writing and signed byone of the following:

(i) The physician.(ii) The physical therapist who

furnishes the physical therapy services.(iii) The occupational therapist who

furnishes the physical therapy services.(iv) The speech-language pathologist

who furnishes the speech-languagepathology services.

(v) A registered professional nurse ora staff physician, in accordance withoral orders from the physician, physicaltherapist, occupational therapist, orspeech-language pathologist whofurnishes the services.

(vi) A nurse practitioner, a clinicalnurse specialist, or a physicianassistant.

(2) The changes are incorporated inthe plan immediately.* * * * *

7. In § 410.62, the section heading andparagraph (a)(3) are revised and a newparagraph (d) is added to read asfollows:

§ 410.62 Outpatient speech-languagepathology services: Conditions andexclusions.

(a) * * *(3) They are furnished by a provider

as defined in § 489.2 of this chapter orby others under arrangements with, orunder the supervision of, a provider.* * * * *

(d) Limitation. After 1998, outpatientspeech-language pathology services aresubject to the limitation in § 410.60(e).

8. New §§ 410.74, 410.75, 410.76,410.77, and 410.78 are added to subpartB to read as follows:

Subpart B—Medical and Other HealthServices

§ 410.74 Physician assistants’ services.(a) Basic rule. Medicare Part B covers

physician assistants’ services only if thefollowing conditions are met:

(1) The services would be covered asphysicians’ services if furnished by aphysician (a doctor of medicine orosteopathy, as set forth in section1861(r)(1) of the Act).

(2) The physician assistant—(i) Meets the qualifications set forth in

paragraph (c) of this section;(ii) Is legally authorized to perform

the services in the State in which theyare performed;

(iii) Performs services that are nototherwise precluded from coveragebecause of a statutory exclusion;

(iv) Performs the services under thegeneral supervision of a physician (Thesupervising physician need not bephysically present when the physicianassistant is performing the servicesunless required by State law; however,the supervising physician must beimmediately available to the physicianassistant for consultation.);

(v) Furnishes services that are billedby the employer of a physician assistant;and

(vi) Performs the services—(A) In all settings in either rural and

urban areas; or(B) As an assistant at surgery.(b) Services and supplies furnished

incident to a physician assistant’sservices. Medicare covers services andsupplies (including drugs andbiologicals that cannot be self-administered) that are furnishedincident to the physician assistant’sservices described in paragraph (a) of


this section. These services and suppliesare covered only if they—

(1) Would be covered if furnished bya physician or as incident to theprofessional services of a physician;

(2) Are the type that are commonlyfurnished in a physician’s office and areeither furnished without charge or areincluded in the bill for the physicianassistants’ services;

(3) Are, although incidental, anintegral part of the professional serviceperformed by the physician;

(4) Are performed under the directsupervision of the physician assistant(that is, the physician assistant isphysically present and immediatelyavailable); and

(5) Are performed by the employee ofa physician assistant or an entity thatemploys both the physician assistantand the person providing the services.

(c) Qualifications. For Medicare PartB coverage of his or her services, aphysician assistant must meet all of thefollowing conditions:

(1) Have graduated from a physicianassistant educational program that isaccredited by the National Commissionon Accreditation of Allied HealthEducation Programs;

(2) Have passed the nationalcertification examination of the NationalCommission on Certification ofPhysician Assistants; and

(3) Be licensed by the State to practiceas a physician assistant.

(d) Professional services. Physicianassistants can be paid for professionalservices only if the services have beenprofessionally performed by them andno facility or other provider charges forthe service or is paid any amount for thefurnishing of those professionalservices.

(1) Supervision of other nonphysicianstaff by a physician assistant does notconstitute personal performance of aprofessional service by the physicianassistant.

(2) The services are provided on anassignment-related basis, and thephysician assistant may not charge abeneficiary for a service not payableunder this provision. If a beneficiary hasmade payment for a service, thephysician assistant must make theappropriate refund to the beneficiary.

§ 410.75 Nurse practitioners’ services.(a) Definition. As used in this section,

the term ‘‘physician’’ means a doctor ofmedicine or osteopathy, as set forth insection 1861(r)(1) of the Act.

(b) Qualifications. For Medicare PartB coverage of his or her services, a nursepractitioner must—

(1) Possess a master’s degree innursing;

(2) Be a registered professional nursewho is authorized by the State in whichthe services are furnished, to practice asa nurse practitioner in accordance withState law; and,

(3) Be certified as a nurse practitionerby the American Nurses CredentialingCenter or other recognized nationalcertifying bodies that have establishedstandards for nurse practitioners asdefined in paragraphs (b)(1) and (2) ofthis section.

(c) Services. Medicare Part B coversnurse practitioners’ services in allsettings in both rural and urban areas,only if the services would be covered iffurnished by a physician and the nursepractitioner—

(1) Is legally authorized to performthem in the State in which they areperformed;

(2) Is not performing services that areotherwise excluded from coveragebecause of one of the statutoryexclusions; and

(3) Performs them while working incollaboration with a physician.

(i) Collaboration is a process in whicha nurse practitioner works with one ormore physicians to deliver health careservices within the scope of thepractitioner’s expertise, with medicaldirection and appropriate supervision asprovided for in jointly developedguidelines or other mechanisms asprovided by the law of the State inwhich the services are performed.

(ii) In the absence of State lawgoverning collaboration, collaboration isa process in which a nurse practitionerhas a relationship with one or morephysicians to deliver health careservices. Such collaboration is to beevidenced by nurse practitionersdocumenting the nurse practitioners’scope of practice and indicating therelationships that they have withphysicians to deal with issues outsidetheir scope of practice. Nursepractitioners must document thiscollaborative process with physicians.

(iii) The collaborating physician doesnot need to be present with the nursepractitioner when the services arefurnished or to make an independentevaluation of each patient who is seenby the nurse practitioner.

(d) Services and supplies incident toa nurse practitioners’ services. MedicarePart B covers services and supplies(including drugs and biologicals thatcannot be self-administered) incident toa nurse practitioner’s services that meetthe requirements in paragraph (c) of thissection. These services and supplies arecovered only if they—


(2) Are of the type that are commonlyfurnished in a physician’s office and areeither furnished without charge or areincluded in the bill for the nursepractitioner’s services;

(3) Although incidental, are anintegral part of the professional serviceperformed by the nurse practitioner; and

(4) Are performed under the directsupervision of the nurse practitioner(that is, the nurse practitioner must bephysically present and immediatelyavailable).

(e) Professional services. Nursepractitioners can be paid forprofessional services only when theservices have been personallyperformed by them and no facility orother provider charges, or is paid, anyamount for the furnishing of theprofessional services.

(1) Supervision of other nonphysicianstaff by a nurse practitioner does notconstitute personal performance of aprofessional service by a nursepractitioner.

(2) The services are provided on anassignment-related basis, and a nursepractitioner may not charge abeneficiary for a service not payableunder this provision. If a beneficiary hasmade payment for a service, the nursepractitioner must make the appropriaterefund to the beneficiary.

§ 410.76 Clinical nurse specialists’services.

(a) Definition. As used in this section,the term ‘‘physician’’ means a doctor ofmedicine or osteopathy, as set forth insection 1861(r)(1) of the Act.

(b) Qualifications. For Medicare PartB coverage of his or her services, aclinical nurse specialist must—

(1) Be a registered nurse who iscurrently licensed to practice in theState where he or she practices and beauthorized to perform the services of aclinical nurse specialist in accordancewith State law;

(2) Have a master’s degree in adefined clinical area of nursing from anaccredited educational institution; and

(3) Be certified as a clinical nursespecialist by the American NursesCredentialing Center.

(c) Services. Medicare Part B coversclinical nurse specialists’ services in allsettings in both rural and urban areasonly if the services would be covered iffurnished by a physician and theclinical nurse specialist—

(1) Is legally authorized to performthem in the State in which they areperformed;

(2) Is not performing services that areotherwise excluded from coverage byone of the statutory exclusions; and

(3) Performs them while working incollaboration with a physician.


(i) Collaboration is a process in whicha clinical nurse specialist works withone or more physicians to deliver healthcare services within the scope of thepractitioner’s expertise, with medicaldirection and appropriate supervision asprovided for in jointly developedguidelines or other mechanisms asprovided by the law of the State inwhich the services are performed.

(ii) In the absence of State lawgoverning collaboration, collaboration isa process in which a clinical nursespecialist has a relationship with one ormore physicians to deliver health careservices. Such collaboration is to beevidenced by clinical nurse specialistsdocumenting the clinical nursespecialists’ scope of practice andindicating the relationships that theyhave with physicians to deal with issuesoutside their scope of practice. Clinicalnurse specialists must document thiscollaborative process with physicians.

(iii) The collaborating physician doesnot need to be present with the clinicalnurse specialist when the services arefurnished, or to make an independentevaluation of each patient who is seenby the clinical nurse specialist.

(d) Services and supplies furnishedincident to clinical nurse specialists’services. Medicare Part B covers servicesand supplies (including drugs andbiologicals that cannot be self-administered) incident to a clinicalnurse specialist’s services that meet therequirements in paragraph (c) of thissection. These services and supplies arecovered only if they—


(2) Are of the type that are commonlyfurnished in a physician’s office and areeither furnished without charge or areincluded in the bill for the clinicalnurse specialist’s services;

(3) Although incidental, are anintegral part of the professional serviceperformed by the clinical nursespecialist; and

(4) Are performed under the directsupervision of the clinical nursespecialist (that is, the clinical nursespecialist must be physically presentand immediately available).

(e) Professional services. Clinicalnurse specialists can be paid forprofessional services only when theservices have been personallyperformed by them and no facility orother provider charges, or is paid, anyamount for the furnishing of theprofessional services.

(1) Supervision of other nonphysicianstaff by clinical nurse specialists doesnot constitute personal performance of a

professional service by clinical nursespecialists.

(2) The services are provided on anassignment-related basis, and a clinicalnurse specialist may not charge abeneficiary for a service not payableunder this provision. If a beneficiary hasmade payment for a service, the clinicalnurse specialist must make theappropriate refund to the beneficiary.

§ 410.77 Certified nurse-midwives’services: Qualifications and conditions.

(a) Qualifications. For Medicarecoverage of his or her services, acertified nurse-midwife must:

(1) Be a registered nurse who islegally authorized to practice as a nurse-midwife in the State where services areperformed;

(2) Have successfully completed aprogram of study and clinicalexperience for nurse-midwives that isaccredited by an accrediting bodyapproved by the U.S. Department ofEducation; and

(3) Be certified as a nurse-midwife bythe American College of Nurse-Midwives or the American College ofNurse-Midwives Certification Council.

(b) Services. A certified nurse-midwife’s services are servicesfurnished by a certified nurse-midwifeand services and supplies furnished asan incident to the certified nurse-midwife’s services that—

(1) Are within the scope of practiceauthorized by the law of the State inwhich they are furnished and wouldotherwise be covered if furnished by aphysician or as an incident to aphysician’s service; and

(2) Unless required by State law, areprovided without regard to whether thecertified nurse-midwife is under thesupervision of, or associated with, aphysician or other health care provider.

(c) Incident to services: Basic rule.Medicare covers services and suppliesfurnished incident to the services of acertified nurse-midwife, including drugsand biologicals that cannot be self-administered, if the services andsupplies meet the following conditions:

(1) They would be covered iffurnished by a physician or as incidentto the professional services of aphysician.

(2) They are of the type that arecommonly furnished in a physician’soffice and are either furnished withoutcharge or are included in the bill for thecertified nurse-midwife’s services.

(3) Although incidental, they are anintegral part of the professional serviceperformed by the certified nurse-midwife.

(4) They are furnished under thedirect supervision of a certified nurse-

midwife (that is, the midwife isphysically present and immediatelyavailable).

(d) Professional services. A nurse-midwife can be paid for professionalservices only when the services havebeen performed personally by the nurse-midwife.

(1) Supervision of other nonphysicianstaff by a nurse-midwife does notconstitute personal performance of aprofessional service by the nurse-midwife.

(2) The service is provided on anassignment-related basis, and a nurse-midwife may not charge a beneficiaryfor a service not payable under thisprovision. If the beneficiary has madepayment for a service, the nurse-midwife must make the appropriaterefund to the beneficiary.

(3) A nurse-midwife may provideservices that he or she is legallyauthorized to perform under State lawas a nurse-midwife, if the serviceswould otherwise be covered by theMedicare program when furnished by aphysician or incident to a physicians’professional services.

§ 410.78 Consultations viatelecommunications systems.

(a) General rule. Medicare Part B paysfor professional consultations furnishedby means of interactivetelecommunications systems if thefollowing conditions are met:

(1) The consulting practitioner is anyof the following:

(i) A physician as described in§ 410.20.

(ii) A physician assistant as defined in§ 410.74.

(iii) A nurse practitioner as defined in§ 410.75.

(iv) A clinical nurse specialist asdescribed in § 410.76.

(v) A nurse-midwife as defined in§ 410.77.

(2) The referring practitioner is any ofthe following:

(i) A physician as described in§ 410.20.

(ii) A physician assistant as defined in§ 410.74.

(iii) A nurse practitioner as defined in§ 410.75.

(iv) A clinical nurse specialist asdescribed in § 410.76.

(v) A nurse-midwife as defined in§ 410.77.

(vi) A clinical psychologist asdescribed at § 410.71.

(vii) A clinical social worker asdefined in § 410.73.

(3) The services are furnished to abeneficiary residing in a rural area asdefined in section 1886(d)(2)(D) of theAct, and the area is designated as a


health professional shortage area(HPSA) under section 332(a)(1)(A) of thePublic Health Service Act (42 U.S.C.254e(a)(1)(A)). For purposes of thisrequirement, the beneficiary is deemedto be residing in such an area if theteleconsultation presentation takesplace in such an area.

(4) The medical examination of thebeneficiary is under the control of theconsulting practitioner.

(5) As a condition of payment, theteleconsultation involves theparticipation of the referringpractitioner, or a practitioner describedin section 1842(b)(18)(C) of the Act(other than a certified registered nurseanesthetist or anesthesiologist assistant)who is an employee of the referringpractitioner, as appropriate to themedical needs of the patient and asneeded to provide information to and atthe direction of the consultant.

(6) The consultation results in awritten report that is furnished to thereferring practitioner.

(b) Definition. For purposes of thissection, interactive telecommunicationssystems means multimediacommunications equipment thatincludes, at a minimum, audio andvideo equipment permitting real-timeconsultation among the patient,consultant, and referring practitioner, ora practitioner described in section1842(b)(18)(C) of the Act (other than acertified registered nurse anesthetist oranesthesiologist assistant) who is anemployee of the referring practitioner,as appropriate to the medical needs ofthe patient and as needed to provideinformation to and at the direction ofthe consulting practitioner. Telephones,facsimile machines, and electronic mailsystems do not meet the definition ofinteractive telecommunications systems.

9. In § 410.150, the introductory textto paragraph (b) is republished, and newparagraphs (b)(15) and (b)(16) are addedto read as follows:

§ 410.150 To whom payment is made.* * * * *

(b) Specific rules. Subject to theconditions set forth in paragraph (a) ofthis section, Medicare Part B pays asfollows:* * * * *

(15) To the qualified employer of aphysician assistant for professionalservices furnished by the physicianassistant and for services and suppliesfurnished incident to his or her services.Payment is made to the employer of aphysician assistant regardless ofwhether the physician assistantfurnishes services under a W–2,employer-employee employmentrelationship, or whether the physician

assistant is an independent contractorwho receives a 1099 reflecting therelationship. Both types of relationshipsmust conform to the appropriateguidelines provided by the InternalRevenue Service. A qualified employeris not a group of physician assistantsthat incorporate to bill for their services.Payment is made only if no facility orother provider charges or is paid anyamount for services furnished by aphysician assistant.

(16) To a nurse practitioner or clinicalnurse specialist for professional servicesfurnished by a nurse practitioner orclinical nurse specialist in all settings inboth rural and nonrural areas and forservices and supplies furnished incidentto those services. Payment is made onlyif no facility or other provider charges,or is paid, any amount for the furnishingof the professional services of the nursepractitioner or clinical nurse specialist.* * * * *

10. In § 410.152, the headings toparagraphs (a) and (a)(1) arerepublished, and paragraph (a)(1)(v) isrevised to read as follows:

§ 410.152 Amount of payment.(a) General provisions—(1) Exclusion

from incurred expenses.* * *(v) In the case of expenses incurred

for outpatient physical therapy servicesincluding speech-language pathologyservices, the expenses excluded arefrom the incurred expenses under§ 410.60(e). In the case of expensesincurred for outpatient occupationaltherapy including speech-languagepathology services, the expensesexcluded are from the incurredexpenses under § 410.59(e).* * * * *

PART 413—PRINCIPLES OFREASONABLE COSTREIMBURSEMENT; PAYMENT FOREND-STAGE RENAL DISEASESERVICES; OPTIONALPROSPECTIVELY DETERMINEDPAYMENT RATES FOR SKILLEDNURSING FACILITIES

C. Part 413 is amended as set forthbelow.


Authority: Secs. 1102, 1861(v)(1)(A), and1871 of the Social Security Act (42 U.S.C.1302, 1395x(v)(1)(A), and 1395hh).

2. Section 413.125 is amended bydesignating the existing text asparagraph (a) and adding paragraph (b)to read as follows:

§ 413.125 Payment for home health agencyservices.

* * * * *

(b) The reasonable cost of outpatientrehabilitation services furnished by ahome health agency to homeboundpatients who are not entitled to homehealth benefits may not exceed theamounts payable under the physicianfee schedule for comparable serviceseffective January 1, 1999.

PART 414—PAYMENT FOR PART BMEDICAL AND OTHER HEALTHSERVICES

D. Part 414 is amended as set forthbelow:


Authority: Secs. 1102, 1871, and 1881(b)(1)of the Social Security Act (42 U.S.C. 1302,1395hh, and 1395rr(b)(1)).

2. In § 414.1, the introductory text isrepublished, and the following statutoryauthorities are added in numerical orderto read as follows:

§ 414.1 Basis and scope.This part implements the indicated

provisions of the following sections ofthe Act:

1802—Rules for private contracts byMedicare beneficiaries.

1820—Rules for Medicare reimbursementfor telehealth services.

* * * * *3. Sections 414.20 through 414.62 are

redesignated as Subpart B, and a newheading is added to read ‘‘Subpart B—Physicians and Other Practitioners’’.

4. In § 414.22, the introductory text tothe section is revised and the heading toparagraph (b) is republished, and newparagraph (b)(5) is added to read asfollows:

§ 414.22 Relative value units (RVUs).HCFA establishes RVUs for

physicians’ work, practice expense, andmalpractice insurance.* * * * *

(b) Practice expense RVUs. * * *(5) For services furnished beginning

January 1, 1999, the practice expenseRVUs are based on 75 percent of thepractice expense RVUs applicable toservices furnished in 1998 and 25percent of the relative practice expenseresources involved in furnishing theservice. For services furnished in 2000,the practice expense RVUs are based on50 percent of the practice expense RVUsapplicable to services furnished in 1998and 50 percent of the relative practiceexpense resources involved infurnishing the service. For servicesfurnished in 2001, the practice expenseRVUs are based on 25 percent of thepractice expense RVUs applicable toservices furnished in 1998 and 75percent of the relative practice expense


resources involved in furnishing theservice. For services furnished in 2002and subsequent years, the practiceexpense RVUs are based entirely onrelative practice expense resources.

(i) Usually one of two levels ofpractice expense RVUs per code can beapplied to each service. The lowerpractice expense RVUs apply to servicesfurnished to hospital, skilled nursingfacility, or ambulatory surgical centerpatients. The higher practice expenseRVUs apply to services performed in aphysician’s office; services, other thanevaluation and management services,furnished to patients in a nursingfacility, in a facility or institution otherthan a hospital, skilled nursing facility,or ambulatory surgical center, or in thehome; and other services furnished tofacility patients for which the facilitypayment does not include physicians’practice costs.

(ii) Only one practice expense RVUper code can be applied for each of thefollowing services: services that haveonly technical component practiceexpense RVUs or only professionalcomponent practice expense RVUs;evaluation and management services,such as hospital or nursing facilityvisits, that are furnished exclusively inone setting; and major surgical services.* * * * *

5. In § 414.32, the heading andparagraph (b) are revised to read asfollows:

§ 414.32 Determining payments for certainphysicians’ services furnished in facilitysettings.

* * * * *(b) General rule. If physicians’

services of the type routinely furnishedin physicians’ offices are furnished infacility settings before January 1, 1999,the physician fee schedule amount forthose services is determined byreducing the practice expense RVUs forthe services by 50 percent. For servicesfurnished on or after January 1, 1999,the practice expense RVUs aredetermined in accordance with§ 414.22(b)(5).* * * * *

6. In § 414.34, the section heading isrevised, and a new paragraph (a)(2)(iii)is added to read as follows:

§ 414.34 Payment for services andsupplies incident to a physician’s service.

(a) Medical supplies. * * *(2) * * *(iii) It is furnished before January 1,

1999.* * * * *

7. In § 414.52, the section heading andintroductory text are revised, and a new

paragraph (d) is added to read asfollows:

§ 414.52 Payment for physician assistants’services.

Allowed amounts for the services of aphysician assistant furnished beginningJanuary 1, 1992 and ending December31, 1997, may not exceed the limitsspecified in paragraphs (a) through (c) ofthis section. Allowed amounts for theservices of a physician assistantfurnished beginning January 1, 1998,may not exceed the limits specified inparagraph (d) of this section.* * * * *

(d) For services (other than assistant-at-surgery services) furnished beginningJanuary 1, 1998, 85 percent of thephysician fee schedule amount for theservice. For assistant-at-surgery services,85 percent of the physician fee scheduleamount that would be allowed underthe physician fee schedule if theassistant-at-surgery service werefurnished by a physician.

8. Section 414.56 is revised to read asfollows:

§ 414.56 Payment for nurse practitioners’and clinical nurse specialists’ services.

(a) Rural areas. For services furnishedbeginning January 1, 1992 and endingDecember 31, 1997, allowed amountsfor the services of a nurse practitioneror a clinical nurse specialist in a ruralarea (as described in section1861(s)(2)(K)(iii) of the Act) may notexceed the following limits:

(1) For services furnished in ahospital (including assistant-at-surgeryservices), 75 percent of the physician feeschedule amount for the service.

(2) For all other services, 85 percentof the physician fee schedule amountfor the service.

(b) Non-rural areas. For servicesfurnished beginning January 1, 1992 andending December 31, 1997, allowedamounts for the services of a nursepractitioner or a clinical nurse specialistin a nursing facility may not exceed 85percent of the physician fee scheduleamount for the service.

(c) Beginning January 1, 1998. Forservices (other than assistant-at-surgeryservices) furnished beginning January 1,1998, allowed amounts for the servicesof a nurse practitioner or clinical nursespecialist may not exceed 85 percent ofthe physician fee schedule amount forthe service. For assistant-at-surgeryservices, allowed amounts for theservices of a nurse practitioner orclinical nurse specialist may not exceed85 percent of the physician fee scheduleamount that would be allowed underthe physician fee schedule if the

assistant-at-surgery service werefurnished by a physician.

9. Section 414.65 is added to subpartB, to read as follows:

§ 414.65 Payment for consultations viainteractive telecommunications systems.

(a) Limitations on payment. Medicarepayment for a professional consultationconducted via interactivetelecommunications systems is subjectto the following limitations:

(1) The payment may not exceed thecurrent fee schedule amount applicableto the consulting practitioner for thehealth care service provided.

(2) The payment may not includereimbursement for any telephone linecharges or any facility fees.

(3) The payment is subject to thecoinsurance and deductiblerequirements of sections 1833(a)(1) and(b) of the Act.

(4) The payment differential of section1848(a)(3) of the Act applies to servicesfurnished by nonparticipatingphysicians.

(b) Prohibited billing. The beneficiarymay not be billed for any telephone linecharges or any facility fees.

(c) Assignment required fornonphysician practitioners. Payment tononphysician practitioners is made onlyon an assignment-related basis.

(d) Who may bill for the consultation.Only the consultant practitioner maybill for the consultation.

(e) Sharing of payment. Theconsultant practitioner must provide tothe referring practitioner 25 percent ofany payments he or she receives for theconsultation, including any applicabledeductible or coinsurance amounts.

(f) Sanctions. A practitioner may besubject to the applicable sanctionsprovided for in chapter V, parts 1001,1002, and 1003 of this title if he or she—

(1) Knowingly and willfully bills orcollects for services in violation of thelimitations of this section on a repeatedbasis; or

(2) Fails to timely correct excesscharges by reducing the actual chargebilled for the service to an amount thatdoes not exceed the limiting charge forthe service or fails to timely refundexcess collections.

PART 415—SERVICES FURNISHED BYPHYSICIANS IN PROVIDERS,SUPERVISING PHYSICIANS INTEACHING SETTINGS, ANDRESIDENTS IN CERTAIN SETTINGS

E. Part 415 is amended as set forthbelow:





§ 415.110 Conditions for payment:Medically directed anesthesia services.

(a) General payment rule. Medicarepays for the physician’s medicaldirection of anesthesia services for oneservice or two through four concurrentanesthesia services furnished afterDecember 31, 1998, only if each of theservices meets the condition in§ 415.102(a) and the followingadditional conditions:

(1) For each patient, the physician—(i) Performs a pre-anesthetic

examination and evaluation;(ii) Prescribes the anesthesia plan;(iii) Personally participates in the

most demanding aspects of theanesthesia plan including, if applicable,induction and emergence;

(iv) Ensures that any procedures inthe anesthesia plan that he or she doesnot perform are performed by aqualified individual as defined inoperating instructions;

(v) Monitors the course of anesthesiaadministration at frequent intervals;

(vi) Remains physically present andavailable for immediate diagnosis andtreatment of emergencies; and

(vii) Provides indicated post-anesthesia care.

(2) The physician directs no morethan four anesthesia servicesconcurrently and does not perform anyother services while he or she isdirecting the single or concurrentservices so that one or more of theconditions in paragraph (a)(1) of thissection are not violated.

(3) If the physician personallyperforms the anesthesia service, thepayment rules in § 414.46(c) of thischapter apply (Physician personallyperforms the anesthesia procedure).

(b) Medical documentation. Thephysician alone inclusively documentsin the patient’s medical record that theconditions set forth in paragraph (a)(1)of this section have been satisfied,specifically documenting that he or sheperformed the pre-anesthetic exam andevaluation, provided the indicated post-anesthesia care, and was present duringthe most demanding procedures,including induction and emergencewhere applicable.

PART 424—CONDITIONS FORMEDICARE PAYMENT

F. Part 424 is amended as set forthbelow:



2. In § 424.24, paragraphs (c)introductory text, (c)(1)(ii), (c)(1)(iii),(c)(3)(i), (c)(3)(ii), (c)(4), (f)(2), and (f)(3)are revised to read as follows:

§ 424.24 Requirements for medical andother health services furnished byproviders under Medicare Part B.

* * * * *(c) Outpatient physical therapy and

speech-language pathology services—(1)Content of certification. * * *

(ii) The services were furnished whilethe individual was under the care of aphysician, nurse practitioner, clinicalnurse specialist, or physician assistant.

(iii) The services were furnishedunder a plan of treatment that meets therequirements of § 410.61 of this chapter.* * * * *

(3) Signature. * * *(i) If the plan of treatment is

established by a physician, nursepractitioner, clinical nurse specialist, orphysician assistant, the certificationmust be signed by that physician ornonphysician practitioner.

(ii) If the plan of treatment isestablished by a physical therapist orspeech-language pathologist, thecertification must be signed by aphysician or by a nurse practitioner,clinical nurse specialist, or physicianassistant who has knowledge of thecase.

(4) Recertification—(i) Timing.Recertification statements are requiredat least every 30 days and must besigned by the physician, nursepractitioner, clinical nurse specialist, orphysician assistant who reviews theplan of treatment.

(ii) Content. The recertificationstatement must indicate the continuingneed for physical therapy or speech-language pathology services and anestimate of how much longer theservices will be needed.

(iii) Signature. Recertifications mustbe signed by the physician, nursepractitioner, clinical nurse specialist, orphysician assistant who reviews theplan of treatment.* * * * *

(f) * * *(2) Signature. The certificate must be

signed by a physician, nurse practioner,clinical nurse specialist, or physicianassistant who has knowledge of thecase.

(3) Timing. The physician, nursepractioner, clinical nurse specialist, orphysician assistant may providecertification at the time the services arefurnished or, if services are provided ona continuing basis, either at the

beginning or at the end of a series ofvisits.* * * * *

PART 485—CONDITIONS OFPARTICIPATION: SPECIALIZEDPROVIDERS

G. Part 485 is amended as set forthbelow:




§ 485.705 Personnel qualifications.

(a) General qualificationrequirements. Except as specified inparagraphs (b) and (c) of this section, allpersonnel who are involved in thefurnishing of outpatient physicaltherapy, occupational therapy, andspeech-language pathology servicesdirectly by or under arrangements withan organization must be legallyauthorized (licensed or, if applicable,certified or registered) to practice by theState in which they perform thefunctions or actions, and must act onlywithin the scope of their State license orState certification or registration.

(b) Exception for Federally definedqualifications. The following Federallydefined qualifications must be met:

(1) For a physician, the qualificationsand conditions as defined in section1861(r) of the Act and the requirementsin part 484 of this chapter.

(2) For a speech-language pathologist,the qualifications specified in section1861(11)(1) of the Act and therequirements in part 484 of this chapter.

(c) Exceptions when no StateLicensing laws or State certification orregistration requirements exist. If noState licensing laws or Statecertification or registration requirementsexist for the profession, the followingrequirements must be met—

(1) An administrator is a person whohas a bachelor’s degree and:

(i) Has experience or specializedtraining in the administration of healthinstitutions or agencies; or

(ii) Is qualified and has experience inone of the professional healthdisciplines.

(2) An occupational therapist mustmeet the requirements in part 484 ofthis chapter.

(3) An occupational therapy assistantmust meet the requirements in part 484of this chapter.

(4) A physical therapist must meet therequirements in part 484 of this chapter.

Documents

Federal Register /Vol. 63, No. 211/Monday, November 2 ... · 58864 Federal Register/Vol. 63, No. 211/Monday, November 2, 1998/Rules and Regulations modalities or therapy procedures