Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency


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As we previously stated in the CY final rule with comment period 80 FR , we do not believe the annual maintenance factor for all equipment is precisely 5 percent, and we concur that the current rate likely understates the true cost of maintaining some equipment. We also believe it likely overstates the maintenance costs for other equipment. When we solicited comments regarding sources of data containing equipment maintenance rates, commenters were unable to identify an auditable, robust data source that could be used by CMS on a wide scale. We do not believe that voluntary submissions regarding the maintenance costs of individual equipment items would be an appropriate methodology for determining costs.

As a result, in the absence of publicly available datasets regarding equipment maintenance costs or another systematic data collection methodology for determining maintenance factor, we do not believe that we have sufficient information at present to propose a variable maintenance factor for equipment cost per minute pricing. We continue to investigate potential avenues for determining equipment maintenance costs across a broad range of equipment items. Interest Rate: In the CY PFS final rule with comment period 77 FR , we updated the interest rates used in developing an equipment cost per minute calculation see 77 FR for a thorough discussion of this issue.

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The interest rate was based on the Small Business Administration SBA maximum interest rates for different categories of loan size equipment cost and maturity useful life. We are not proposing any changes to these interest rates for CY The interest rates are listed in Table 4. This section focuses on specific PE inputs. As we noted in the CY PFS final rule with comment period 79 FR , we continue to make improvements to the direct PE input database to provide the number of clinical labor minutes assigned for each task for every code in the database instead of only including the number of clinical labor minutes for the preservice, service, and postservice periods for each code.

In addition to increasing the transparency of the information used to set PE RVUs, this level of detail would allow us to compare clinical labor times for activities associated with services across the PFS, which we believe is important to maintaining the relativity of the direct PE inputs. This information would facilitate the identification of the usual numbers of minutes for clinical labor tasks and the identification of exceptions to the usual values.

It would also allow for greater transparency and consistency in the assignment of Start Printed Page equipment minutes based on clinical labor times.

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Finally, we believe that the detailed information can be useful in maintaining standard times for particular clinical labor tasks that can be applied consistently to many codes as they are valued over several years, similar in principle to the use of physician preservice time packages. We believe that setting and maintaining such standards would provide greater consistency among codes that share the same clinical labor tasks and could improve relativity of values among codes.

For example, as medical practice and technologies change over time, changes in the standards could be updated simultaneously for all codes with the applicable clinical labor tasks, instead of waiting for individual codes to be reviewed. In the CY PFS final rule with comment period 80 FR , we solicited comments on the appropriate standard minutes for the clinical labor tasks associated with services that use digital technology.

Exam completed in RIS system to generate billing process and to populate images into Radiologist work queue. We finalized a proposal to establish 2 minutes as the standard for the simple case, 3 minutes as the standard for the intermediate case, 4 minutes as the standard for the complex case, and 5 minutes as the standard for the highly complex case. These values were based upon a review of the existing minutes assigned for this clinical labor activity; we determined that 2 minutes is the duration for most services and a small number of codes with more complex forms of digital imaging have higher values.

The format of the PE worksheet has varied over time and among the medical specialties developing the recommendations. These variations have made it difficult for both the RUC's development and our review of code values for individual codes. Beginning with its recommendations for CY , the RUC has mandated the use of a new PE worksheet for purposes of their recommendation development process that standardizes the clinical labor tasks and assigns them a clinical labor activity code.

We believe the RUC's use of the new PE worksheet in developing and submitting recommendations will help us to simplify and standardize the hundreds of different clinical labor tasks currently listed in our direct PE database. As we did for CY , to facilitate rulemaking for CY , we are continuing to display two versions of the Labor Task Detail public use file: One version with the old listing of clinical labor tasks, and one with the same tasks cross-walked to the new listing of clinical labor activity codes.

We note that there is no effect on the total clinical labor direct costs in these situations, since the same 3 minutes of clinical labor time is still being used in the calculation of PE RVUs.


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During our routine reviews of direct PE input recommendations, we have regularly found unexplained inconsistencies involving the use of scopes and the video systems associated with them. Some of the scopes include video systems bundled into the equipment item, some of them include scope accessories as part of their price, and some of them are standalone scopes with no other equipment included.

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It is not always clear which equipment items related to scopes fall into which of these categories. We have also frequently found anomalies in the equipment recommendations, with equipment items that consist of a scope and video system bundle recommended, along with a separate scope video system. Based on our review, the variations do not appear to be consistent with the different code descriptions. To promote appropriate relativity among the services and facilitate the transparency of our review process, during the review of the recommended direct PE inputs for the CY PFS proposed rule, we developed a structure that separates the scope, the associated video system, and any scope accessories that might be typical as distinct equipment items for each code.

Under this approach, we proposed standalone Start Printed Page prices for each scope, and separate prices for the video systems and accessories that are used with scopes. Beginning in the CY proposed rule 81 FR through , we proposed standardizing refinements to the way scopes have been defined in the direct PE input database.

We believe that there are four general types of scopes: Non-video scopes; flexible scopes; semi-rigid scopes, and rigid scopes. Flexible scopes, semi-rigid scopes, and rigid scopes would typically be paired with one of the scope video systems, while the non-video scopes would not. The flexible scopes can be further divided into diagnostic or non-channeled and therapeutic or channeled scopes. We proposed to identify for each anatomical application: 1 A rigid scope; 2 a semi-rigid scope; 3 a non-video flexible scope; 4 a non-channeled flexible video scope; and 5 a channeled flexible video scope.

We proposed to classify the existing scopes in our direct PE database under this classification system, to improve the transparency of our review process and improve appropriate relativity among the services. We planned to propose input prices for these equipment items through future rulemaking. We proposed these changes only for the reviewed codes for CY that made use of scopes, along with updated prices for the equipment items related to scopes utilized by these services. But, we did not propose to apply these policies to codes with inputs reviewed prior to CY We also solicited comment on this separate pricing structure for scopes, scope video systems, and scope accessories, which we could consider proposing to apply to other codes in future rulemaking.

We did not finalize price increases for a series of other scopes and scope accessories, as the invoices submitted for these components indicated that they are different forms of equipment with different product IDs and different prices. We did not receive any data to indicate that the equipment on the newly submitted invoices was more typical in its use than the equipment that we were currently using for pricing. However, we believed there was some miscommunication on this point, as the RUC's PE Subcommittee workgroup that was created to address scope systems stated that no further action was required following the finalization of our proposal.

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Therefore, we made further proposals in CY 82 FR through to continue clarifying scope equipment inputs, and sought comments regarding the new set of scope proposals. We considered creating a single scope equipment code for each of the five categories detailed in this rule: 1 A rigid scope; 2 a semi-rigid scope; 3 a non-video flexible scope; 4 a non-channeled flexible video scope; and 5 a channeled flexible video scope.

Under the current classification system, there are many different scopes in each category depending on the medical specialty furnishing the service and the part of the body affected. We stated our belief that the variation between these scopes was not significant enough to warrant maintaining these distinctions, and we believed that creating and pricing a single scope equipment code for each category would help provide additional clarity. We sought public comment on the merits of this potential scope organization, as well as any pricing information regarding these five new scope categories.

After considering the comments on the CY proposed rule, we did not finalize our proposal to create and price a single scope equipment code for each of the five categories previously identified. Instead, we supported the recommendation from the commenters to create scope equipment codes on a per-specialty basis for six categories of scopes as applicable, including the addition of a new sixth category of multi-channeled flexible video scopes.

Our goal is to create an administratively simple scheme that will be easier to maintain and help to reduce administrative burden. We look forward to receiving detailed recommendations from expert stakeholders regarding the scope equipment items that would be typically required for each scope category, as well as the proper pricing for each scope. We proposed in the CY PFS proposed rule 81 FR through to define the scope video system as including: 1 A monitor; 2 a processor; 3 a form of digital capture; 4 a cart; and 5 a printer.

Geographic Adjustment in Medicare Payment Phase I Improving Accuracy

We believe that these equipment components represent the typical case for a scope video system. We obtained current pricing invoices for the endoscopy video system as part of our investigation of these issues involving scopes, which we proposed to use for this re-pricing. In the CY PFS final rule 82 FR through , we outlined, but did not finalize, a proposal to add an LED light source into the cost of the scope video system ES , which would remove the need for a separate light source in these procedures.

We did not finalize this updated pricing to the scope video system in CY , and indicated our intention to address these changes in CY to incorporate feedback from expert stakeholders. We understand that there may be other accessories associated with the use of scopes. We finalized a proposal in the CY PFS final rule 81 FR to separately price any scope accessories outside the use of the scope video system, and individually evaluate their inclusion or exclusion as direct PE inputs for particular codes as usual under our current policy based on whether they are typically used in furnishing the services described by the particular codes.

We understand that the RUC has convened a Scope Equipment Reorganization Workgroup that will be incorporating feedback from expert stakeholders with the intention of making recommendations to us on scope organization and scope pricing. Since the workgroup was not convened in time to submit recommendations for the CY PFS rulemaking cycle, we are proposing to delay proposals for any further changes to scope equipment until CY so that we can incorporate the feedback from the aforementioned workgroup.

They also indicated that the same catheter could be used to treat multiple sinuses rather than being a disposable one-time use supply.

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The stakeholders stated that marketing firms and sales representatives are advertising these CPT codes as a method for generating additional profits due to the payment for the procedures exceeding the resources typically needed to furnish the services, and requested that CMS investigate the use of the SA supply in these codes. We appreciate the information supplied by the stakeholders regarding the use of the balloon sinus surgery kit.

When CPT codes were initially reviewed during the CY and CY PFS rulemaking cycles 75 FR , and 76 FR through , respectively , we expressed our reservations about the pricing and the typical quantity of this supply item used in furnishing these services. The RUC recommended for the CY rulemaking cycle that CMS remove the balloon sinus surgery kit from each of these codes and implement separately billable alpha-numeric HCPCS codes to allow practitioners to be paid the cost of the disposable kits per patient encounter instead of per CPT code.

We stated at the time, and we continue to believe, that this option presents a series of potential problems that we have addressed previously in the context of the broader challenges regarding our ability to price high cost disposable supply items. We stated at the time that since the balloon sinus surgery kits can be used when furnishing more than one service to the same beneficiary on the same day, we believed that it would be appropriate to include 0.

In light of the additional information supplied by the stakeholders, we are soliciting comments on two aspects of the use of the balloon sinus surgery kit SA supply. First, we are soliciting comments on whether the 0. We are concerned that the same kit can be used when furnishing more than one service to the same beneficiary on the same day, and that even the 0. Second, we are soliciting comments on the pricing of the balloon sinus surgery kit, given that we have received letters stating that the price has decreased since the initial pricing in the CY final rule.

See Table 5 for the current component pricing of the balloon sinus surgery kit. We are interested in any information regarding possible changes in the pricing for this kit or its individual components since the initial pricing we adopted in CY Subsequent to the publication of the CY PFS final rule, stakeholders alerted us to several clerical inconsistencies in the direct PE database. For CY , we are proposing to address the following inconsistencies:. In general, we are proposing to align the number of minimum multi-specialty visit packs with the number of post-operative office visits included in these codes.

We are not proposing any supply pack quantity refinements for CPT codes , , or since they are being deleted for CY We are also not proposing any supply pack quantity refinements for CPT codes , , , , , , , or HCPCS code G since these codes were reviewed by the RUC this year and their previous direct PE inputs will be superseded by the new direct PE inputs we establish through this rulemaking process for CY We propose to revise the direct PE inputs to reflect the ones previously finalized through rulemaking for CPT code We are also proposing to refine the equipment time for the table, mat, hi-lo, 6 x 8 platform EF for CPT code to reflect the change in the clinical labor time.

After reviewing the direct PE inputs for this code, we agree with the stakeholder and we are proposing to add the endoscope disinfector ES to CPT code , and to add 22 minutes of equipment time for that item to match the equipment time of the other non-scope items included in this code. In the CY PFS final rule with comment period 75 FR , we finalized a process to act on public requests to update equipment and supply price and equipment useful life inputs through annual rulemaking, beginning with the CY PFS proposed rule.

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For CY , we are proposing the following price updates for existing direct PE inputs. We are proposing to update the price of four supplies and one equipment item in response to the public submission of invoices. As these pricing updates were each part of the formal review for a code family, we are proposing that the new pricing take effect for CY for these items instead of being phased in over 4 years. For the details of these proposed price updates, please refer to section II. Section a of the Protecting Access to Medicare Act of PAMA provides that the Secretary may collect or obtain information from any eligible professional or any other source on the resources directly or indirectly related to furnishing services for which payment is made under the PFS, and that such information may be used in the determination of relative values for services under the PFS.

Such information may include the time involved in furnishing services; the amounts, types and prices of PE inputs; overhead and accounting information for practices of physicians and other suppliers, and any other elements that would improve the valuation of services under the PFS. These supply and equipment prices were last systematically developed in StrategyGen has submitted a report with updated pricing recommendations for approximately supplies and equipment items currently used as direct PE inputs.

The StrategyGen team of researchers, attorneys, physicians, and health policy experts conducted a market research study of the supply and equipment items currently used in the PFS direct PE input database. Resources and methodologies included field surveys, aggregate databases, vendor resources, market scans, market analysis, physician substantiation, and statistical analysis to estimate and validate current prices for medical equipment and medical supplies.

The primary and secondary resources StrategyGen used to gather price data and other information were:. StrategyGen developed the preliminary Recommended Price RP methodology based on the following rules in hierarchical order considering both data representativeness and reliability:. If the market share, as well as the sample size, for the top three commercial products were available, the weighted average price weighted by percent market share was the reported RP. Commercial price, as a weighted average of market share, represents a more robust estimate for each piece of equipment and a more precise reference for the RP.

Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency
Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency
Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency
Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency
Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency
Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency Geographic Adjustment in Medicare Payment: Phase II:Implications for Access, Quality, and Efficiency

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