PART 414—PAYMENT for PART B 414.65 Payment for Telehealth Services

SUBCHAPTER B—MEDICARE PROGRAM (CONTINUED)

PART 414—PAYMENT FOR PART B 414.65 Payment for telehealth services. 414.66 Incentive payments for physician MEDICAL AND OTHER HEALTH scarcity areas. SERVICES 414.67 Incentive payments for services furnished in Health Professional Shortage Subpart A—General Provisions Areas. 414.68 Imaging accreditation. Sec. 414.80 Incentive payment for primary care 414.1 Basis and scope. services. 414.2 Definitions. 414.90 Physician Quality Reporting System. 414.4 Fee schedule areas. 414.92 Electronic Prescribing Incentive Pro- Subpart B—Physicians and Other gram. Practitioners Subpart C—Fee Schedules for Parenteral 414.20 Formula for computing fee schedule and Enteral Nutrition (PEN) Nutrients, amounts. Equipment and Supplies 414.21 Medicare payment basis. 414.22 Relative value units (RVUs). 414.100 Purpose. 414.24 Review, revision, and addition of 414.102 General payment rules. RVUs for physician services. 414.104 PEN Items and Services. 414.26 Determining the GAF. 414.28 Conversion factors. Subpart D—Payment for Durable Medical 414.30 Conversion factor update. Equipment and Prosthetic and Orthotic 414.32 Determining payments for certain Devices physicians’ services furnished in facility settings. 414.200 Purpose. 414.34 Payment for services and supplies in- 414.202 Definitions. cident to a physician’s service. 414.210 General payment rules. 414.36 Payment for drugs incident to a phy- 414.220 Inexpensive or routinely purchased sician’s service. items. 414.39 Special rules for payment of care plan 414.222 Items requiring frequent and sub- oversight. stantial servicing. 414.40 Coding and ancillary policies. 414.224 Customized items. 414.42 Adjustment for first 4 years of prac- 414.226 Oxygen and oxygen equipment. tice. 414.228 Prosthetic and orthotic devices. 414.44 Transition rules. 414.46 Additional rules for payment of anes- 414.229 Other durable medical equipment— thesia services. capped rental items. 414.48 Limits on actual charges of non- 414.230 Determining a period of continuous participating suppliers. use. 414.50 Physician or other supplier billing for 414.232 Special payment rules for trans- diagnostic tests performed or interpreted cutaneous electrical nerve stimulators by a physician who does not share a prac- (TENS). tice with the billing physician or other supplier. Subpart E—Determination of Reasonable 414.52 Payment for physician assistants’ Charges Under the ESRD Program services. 414.54 Payment for certified nurse-mid- 414.300 Scope of subpart. wives’ services. 414.310 Determination of reasonable charges 414.56 Payment for nurse practitioners’ and for physician services furnished to renal clinical nurse specialists’ services. dialysis patients. 414.58 Payment of charges for physician 414.313 Initial method of payment. services to patients in providers. 414.314 Monthly capitation payment meth- 414.60 Payment for the services of CRNAs. od. 414.61 Payment for anesthesia services fur- 414.316 Payment for physician services to nished by a teaching CRNA. patients in training for self-dialysis and 414.62 Fee schedule for clinical psychologist home dialysis. services. 414.320 Determination of reasonable charges 414.63 Payment for outpatient diabetes self- for physician renal transplantation serv- management training. ices. 414.64 Payment for medical nutrition ther- 414.330 Payment for home dialysis equip- apy. ment, supplies, and support services.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00015 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Pt. 414 42 CFR Ch. IV (10–1–12 Edition)

414.335 Payment for EPO furnished to a Subpart I—Payment for Drugs and home dialysis patient for use in the Biologicals home. 414.701 Purpose. Subpart F—Competitive Bidding for Certain 414.704 Definitions. Durable Medical Equipment, Pros- 414.707 Basis of payment. thetics, Orthotics, and Supplies (DMEPOS) Subpart J—Submission of Manufacturer’s Average Sales Price Data 414.400 Purpose and basis. 414.402 Definitions. 414.800 Purpose. 414.404 Scope and applicability. 414.802 Definitions. 414.406 Implementation of programs. 414.804 Basis of payment. 414.408 Payment rules. 414.806 Penalties associated with the failure 414.410 Phased-in implementation of com- to submit timely and accurate ASP data. petitive bidding programs. 414.411 Special rule in case of competitions Subpart K—Payment for Drugs and for diabetic testing strips conducted on Biologicals Under Part B or after January 1, 2011. 414.412 Submission of bids under a competi- 414.900 Basis and scope. tive bidding program. 414.902 Definitions. 414.414 Conditions for awarding contracts. 414.904 Average sales price as the basis for 414.416 Determination of competitive bid- payment. ding payment amounts. 414.906 Competitive acquisition program as 414.418 Opportunity for networks. the basis for payment. 414.420 Physician or treating practitioner 414.908 Competitive acquisition program. authorization and consideration of clin- 414.910 Bidding process. ical efficiency and value of items. 414.912 Conflicts of interest. 414.422 Terms of contracts. 414.914 Terms of contract. 414.423 Appeals process for termination of 414.916 Dispute resolution for vendors and competitive bidding contract beneficiaries. 414.424 Administrative or judicial review. 414.917 Dispute resolution and process for 414.425 Claims for damages. suspension or termination of approved 414.426 Adjustments to competitively bid CAP contract and termination of physi- payment amounts to reflect changes in cian participation under exigent cir- the HCPCS. cumstances. 414.918 Assignment. Subpart G—Payment for New Clinical 414.920 Judicial review. Diagnostic Laboratory Tests 414.930 Compendia for determination of medically-accepted indications for off- 414.500 Basis and scope. label uses of drugs and biologicals in an 414.502 Definitions. anti-cancer chemotherapeutic regimen. 414.504 [Reserved] 414.506 Procedures for public consultation Subpart L—Supplying and Dispensing Fees for payment for a new clinical diagnostic laboratory test. 414.1000 Purpose. 414.508 Payment for a new clinical diag- 414.1001 Basis of Payment. nostic laboratory test. 414.509 Reconsideration of basis for and Subpart M—Payment for Comprehensive amount of payment for a new clinical di- Outpatient Rehabilitation Facility agnostic laboratory test. (CORF) Services 414.510 Laboratory date of service for clinical laboratory and pathology specimens. 414.1100 Basis and scope. 414.1105 Payment for Comprehensive Out- Subpart H—Fee Schedule for Ambulance patient Rehabilitation Facility (CORF) Services services. 414.601 Purpose. AUTHORITY: Secs. 1102, 1871, and 1881(b)(l) of 414.605 Definitions. the Social Security Act (42 U.S.C. 1302, 414.610 Basis of payment. 1395hh, and 1395rr(b)(l)). 414.615 Transition to the ambulance fee SOURCE: 55 FR 23441, June 8, 1990, unless schedule. otherwise noted. 414.617 Transition from regional to national ambulance fee schedule. EDITORIAL NOTE: Nomenclature changes to 414.620 Publication of the ambulance fee part 414 appear at 60 FR 50442, Sept. 29, 1995, schedule. and 60 FR 53877, Oct. 18, 1995. 414.625 Limitation on review. 6

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00016 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.4

Subpart A—General Provisions Physician services means the following services to the extent that they are § 414.1 Basis and scope. covered by Medicare: This part implements the following (1) Professional services of doctors of provisions of the Act: medicine and osteopathy (including os- teopathic practitioners), doctors of op- 1802—Rules for private contracts by Medi- tometry, doctors of podiatry, doctors care beneficiaries. of dental surgery and dental medicine, 1833—Rules for payment for most Part B services. and chiropractors. 1834(a) and (h)—Amounts and frequency of (2) Supplies and services covered payments for durable medical equipment and ‘‘incident to’’ physician services (ex- for prosthetic devices and orthotics and pros- cluding drugs as specified in § 414.36). thetics. (3) Outpatient physical and occupa- 1834(l)—Establishment of a fee schedule for ambulance services. tional therapy services if furnished by 1834(m)—Rules for Medicare reimburse- a person or an entity that is not a ment for telehealth services. Medicare provider of services as de- 1842(o)—Rules for payment of certain drugs fined in § 400.202 of this chapter. and biologicals. (4) Diagnostic x-ray tests and other 1847(a) and (b)—Competitive bidding for diagnostic tests (excluding diagnostic certain durable medical equipment, pros- laboratory tests paid under the fee thetics, orthotics, and supplies (DMEPOS). 1848—Fee schedule for physician services. schedule established under section 1881(b)—Rules for payment for services to 1833(h) of the Act). ESRD beneficiaries. (5) X-ray, radium, and radioactive 1887—Payment of charges for physician isotope therapy, including materials services to patients in providers. and services of technicians. [67 FR 9132, Feb. 27, 2002, as amended at 69 (6) Antigens, as described in section FR 1116, Jan. 7, 2004; 71 FR 48409, Aug. 18, 1861(s)(2)(G) of the Act. 2006] (7) Bone mass measurement. RVU stands for relative value unit. § 414.2 Definitions. (8) Screening mammography serv- As used in this part, unless the con- ices. text indicates otherwise— AA stands for anesthesiologist assist- [56 FR 59624, Nov. 25, 1991, as amended at 57 ant. FR 42492, Sept. 15, 1992; 58 FR 63686, Dec. 2, AHPB stands for adjusted historical 1993; 59 FR 63463, Dec. 8, 1994; 60 FR 63177, payment basis. Dec. 8, 1995; 63 FR 34328, June 24, 1998; 66 FR 55322, Nov. 1, 2001; 75 FR 73616, Nov. 29, 2010] CF stands for conversion factor. CRNA stands for certified registered § 414.4 Fee schedule areas. nurse anesthetist. CY stands for calendar year. (a) General. CMS establishes physi- FY stands for fiscal year. cian fee schedule areas that generally GAF stands for geographic adjust- conform to the geographic localities in ment factor. existence before January 1, 1992. GPCI stands for geographic practice (b) Changes. CMS announces proposed cost index. changes to fee schedule areas in the HCPCS stands for CMS Common Pro- FEDERAL REGISTER and provides an op- cedure Coding System. portunity for public comment. After Health Professional Shortage Area considering public comments, CMS (HPSA) means an area designated publishes the final changes in the FED- under section 332(a)(1)(A) of the Public ERAL REGISTER. Health Service Act as identified by the [59 FR 63463, Dec. 8, 1994] Secretary prior to the beginning of such year. Major surgical procedure means a sur- Subpart B—Physicians and Other gical procedure for which a 10-day or Practitioners 90-day global period is used for payment under the physician fee schedule SOURCE: 56 FR 59624, Nov. 25, 1991; 57 FR and section 1848(b) of the Act. 42492, Sept. 15, 1992, unless otherwise noted.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00017 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.20 42 CFR Ch. IV (10–1–12 Edition)

§ 414.20 Formula for computing fee (2) The average practice expense per- schedule amounts. centage for a service or class of serv- (a) Participating supplier. The fee ices is computed as follows: schedule amount for a participating (i) Multiply the average practice ex- supplier for a physician service as de- pense percentage for each specialty by fined in § 414.2 is computed as the prod- the proportion of a particular service uct of the following amounts: or class of service performed by that (1) The RVUs for the service. specialty. (ii) Add the products for all special- (2) The GAF for the fee schedule area. ties. (3) The CF. (3) For services furnished beginning (b) The fee Nonparticipating supplier. calendar year (CY) 1994, for which 1994 schedule amount for a nonparticipating practice expense RVUs exceed 1994 supplier for a physician service as de- work RVUs and that are performed in fined in § 414.2 is 95 percent of the fee office settings less than 75 percent of schedule amount as calculated in para- the time, the 1994, 1995, and 1996 prac- graph (a) of this section. tice expense RVUs are reduced by 25 [62 FR 59101, Oct. 31, 1997] percent of the amount by which they exceed the number of 1994 work RVUs. § 414.21 Medicare payment basis. Practice expense RVUs are not reduced Medicare payment is based on the to less than 128 percent of 1994 work lesser of the actual charge or the appli- RVUs. cable fee schedule amount. (4) For services furnished beginning January 1, 1998, practice expense RVUs [62 FR 59101, Oct. 31, 1997] for certain services are reduced to 110 percent of the work RVUs for those § 414.22 Relative value units (RVUs). services. The following two categories CMS establishes RVUs for physi- of services are excluded from this limi- cians’ work, practice expense, and mal- tation: practice insurance. (i) The service is provided more than (a) Physician work RVUs—(1) General 75 percent of the time in an office set- rule. Physician work RVUs are estab- ting; or lished using a relative value scale in (ii) The service is one described in which the value of physician work for a section 1848(c)(2)(G)(v) of the Act, codi- particular service is rated relative to fied at 42 U.S.C. 1395w–4(c)(2)(G). Sec- the value of work for other physician tion 1848(c)(2)(G)(v) of the Act refers to services. the 1998 proposed resource-based prac- (2) Special RVUs for anesthesia and ra- tice expense RVUs (as specified in the diology services)—(i) Anesthesia services. June 18, 1997 physician fee schedule The rules for determining RVUs for an- proposed rule (62 FR 33158)) for the spe- esthesia services are set forth in cific site, either in-office or out-of-of- § 414.46. fice, increased from its 1997 practice (ii) Radiology services. CMS bases the expense RVUs.) RVUs for all radiology services on the (5) For services furnished beginning relative value scale developed under January 1, 1999, the practice expense section 1834(b)(1)(A) of the Act, with RVUs are based on 75 percent of the appropriate modifications to ensure practice expense RVUs applicable to that the RVUs established for radi- services furnished in 1998 and 25 per- ology services that are similar or recent of the relative practice expense lated to other physician services are resources involved in furnishing the consistent with the RVUs established service. For services furnished in 2000, for those similar or related services. the practice expense RVUs are based on (b) Practice expense RVUs. (1) Practice 50 percent of the practice expense expense RVUs are computed for each RVUs applicable to services furnished service or class of service by applying in 1998 and 50 percent of the relative average historical practice cost per- practice expense resources involved in centages to the estimated average al- furnishing the service. For services fur- lowed charge during the 1991 base pe- nished in 2001, the practice expense riod. RVUs are based on 25 percent of the

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00018 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.24

practice expense RVUs applicable to and related materials submitted to services furnished in 1998 and 75 per- CMS by March 1, 2004 to determine CY cent of the relative practice expense 2005 practice expense RVUs and by resources involved in furnishing the March 1, 2005 to determine CY 2006 service. For services furnished in 2002 practice expense RVUs. and subsequent years, the practice ex- (c) Malpractice insurance RVUs. (1) pense RVUs are based entirely on rel- Malpractice insurance RVUs are com- ative practice expense resources. puted for each service or class of serv- (i) Usually there are two levels of ices by applying average malpractice practice expense RVUs that correspond insurance historical practice cost per- to each code. centages to the estimated average al- (A) Facility practice expense RVUs. lowed charge during the 1991 base pe- The facility practice expense RVUs riod. apply to services furnished to patients (2) The average historical mal- in places of service including, but not practice insurance percentage for a limited to, a hospital, a skilled nursing service or class of services is computed facility, a community mental health as follows: center, a hospice, or an ambulatory (i) Multiply the average malpractice surgical center, or in a wholly owned insurance percentage for each specialty or wholly operated entity providing by the proportion of a particular serv- preadmission services under ice or class of services performed by § 412.2(c)(5). that specialty. (B) Nonfacility practice expense RVUs. (ii) Add all the products for all the The nonfacility practice expense RVUs specialties. apply to services furnished to patients (3) For services furnished in the year in places of service including, but not 2000 and subsequent years, the mal- limited to, a physician’s office, the pa- practice RVUs are based on the rel- tient’s home, a nursing facility, or a ative malpractice insurance resources. comprehensive outpatient rehabilita- [56 FR 59624, Nov. 25, 1991, as amended at 57 tion facility (CORF). FR 42493, Sept. 15, 1992; 58 FR 63687, Dec. 2, (C) Outpatient therapy and CORF serv- 1993; 62 FR 59102, Oct. 31, 1997; 63 FR 58910, ices. Outpatient therapy services (in- Nov. 2, 1998; 64 FR 59441, Nov. 2, 1999; 65 FR cluding physical therapy, occupational 25668, May 3, 2000; 65 FR 65440, Nov. 1, 2000; 67 43558, June 28, 2002; 68 FR 63261, Nov. 7, 2003; therapy, and speech-language pathol- 72 FR 66932, Nov. 27, 2007; 73 FR 69935, Nov. 19, ogy services) and CORF services billed 2008; 76 FR 73471, Nov. 28, 2011] under the physician fee schedule are paid using the nonfacility practice ex- § 414.24 Review, revision, and addition pense RVUs. of RVUs for physician services. (ii) Only one practice expense RVU (a) Interim values for new and revised per code can be applied for each of the HCPCS level 1 and level 2 codes. (1) CMS following services: services that have establishes interim RVUs for new serv- only technical component practice ex- ices and for codes for which definitions pense RVUs or only professional com- have changed. ponent practice expense RVUs; evalua- (2) CMS publishes a notice in the tion and management services, such as FEDERAL REGISTER to announce in- hospital or nursing facility visits, that terim RVUs and seek public comment are furnished exclusively in one set- on them. The RVUs are effective pro- ting; and major surgical services. spectively for services furnished begin- (6)(i) CMS establishes criteria for ning on the effective date specified in supplemental surveys regarding spe- the notice. cialty practice expenses submitted to (3) After considering public com- CMS that may be used in determining ments, CMS revises, if necessary, the practice expense RVUs. interim RVUs and announces those re- (ii) Any CMS-designated specialty visions in a final notice published in group may submit a supplemental sur- the FEDERAL REGISTER. Any revisions vey. in the RVUs are effective prospectively (iii) CMS will consider for use in de- for services furnished beginning on the termining practice expense RVUs for effective date specified in the final no- the physician fee schedule survey data tice.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00019 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.26 42 CFR Ch. IV (10–1–12 Edition)

(b) Revision of RVUs for established (c) Adjusting the practice expense index HCPCS level 1 and level 2 codes. (1) CMS to account for the Frontier State floor— publishes a proposed notice in the FED- (1) General criteria. Effective on or after ERAL REGISTER to announce changes in January 1, 2011, CMS will adjust the RVUs for established codes and pro- practice expense index for physicians’ vides an opportunity for public com- services furnished in qualifying States ment no less often than every 5 years. to recognize the practice expense index (2) After considering public com- floor established for Frontier States. A ments, CMS publishes a final notice in qualifying State must meet the fol- the FEDERAL REGISTER to announce re- lowing criteria: visions to RVUs. (i) At least 50 percent of counties lo- (3) The RVU revisions are effective cated within the State have a popu- prospectively for services furnished be- lation density less than 6 persons per ginning on the effective date specified square mile. in the final notice. (ii) The State does not receive a non- (c) Values for local codes (HCPCS Level labor related share adjustment deter- 3). (1) Carriers establish relative values for local codes for services not included mined by the Secretary to take into in HCPCS levels 1 or 2. account the unique circumstances of (2) Carriers must obtain prior ap- hospitals located in Alaska and Hawaii. proval from CMS to establish local (2) Amount of adjustment. The practice codes for services that meet the defini- expense value applied for physicians’ tion of ‘‘physician services’’ in § 414.2. services furnished in a qualifying State will be not less than 1.00. [56 FR 59624, Nov. 25, 1991, as amended at 57 (3) Process for determining adjustment. FR 42492, Sept. 15, 1992] (i) CMS will use the most recent popu- § 414.26 Determining the GAF. lation estimate data published by the U.S. Census Bureau to determine coun- CMS establishes a GAF for each serv- ty definitions and population density. ice in each fee schedule area. This analysis will be periodically re- (a) Geographic indices. CMS uses the vised, such as for updates to the decen- following indices to establish the GAF: (1) An index that reflects one-fourth nial census data. of the difference between the relative (ii) CMS will publish annually a list- value of physicians’ work effort in each ing of qualifying Frontier States re- of the different fee schedule areas as ceiving a practice expense index floor determined under § 414.22(a) and the na- attributable to this provision. tional average of that work effort. (d) Computation of GAF. The GAF for (2) An index that reflects the relative each fee schedule area is the sum of the costs of the mix of goods and services physicians’ work adjustment factor, comprising practice expenses (other the practice expense adjustment fac- than malpractice expenses) in each of tor, and the malpractice cost adjust- the different fee schedule areas as de- ment factor, as defined in this section: termined under § 414.22(b) compared to (1) The geographic physicians’ work the national average of those costs. adjustment factor for a service is the (3) An index that reflects the relative product of the proportion of the total costs of malpractice expenses in each relative value for the service that re- of the different fee schedule areas as flects the RVUs for the work compo- determined under § 414.22(c) compared nent and the geographic physicians’ to the national average of those costs. work index value established under (b) Class-specific practice cost indices. paragraph (a)(1) of this section. If the application of a single index to (2) The geographic practice expense different classes of services would be adjustment factor for a service is the substantially inequitable because of product of the proportion of the total differences in the mix of goods and relative value for the service that re- services comprising practice expenses flects the RVUs for the practice ex- for the different classes of services, pense component, multiplied by the ge- more than one index may be estab- ographic practice cost index (GPCI) lished under paragraph (a)(2) of this value established under paragraph section. (a)(2) of this section.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00020 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.32

(3) The geographic malpractice ad- (b) Downward adjustment. The down- justment factor for a service is the ward adjustment may not exceed the product of the proportion of the total following: relative value for the service that re- (1) For CYs 1992 and 1993, 2 percent- flects the RVUs for the malpractice age points. component, multiplied by the GPCI (2) For CY 1994, 2.5 percentage points. value established under paragraph (3) For CYs 1995 and thereafter, 5 per- (a)(3) of this section. centage points. [56 FR 59624, Nov. 25, 1991, as amended at 57 [55 FR 23441, June 8, 1990, as amended at 60 FR 42492, Sept. 15, 1992; 75 FR 73616, Nov. 29, FR 63177, Dec. 8, 1995; 61 FR 42385, Aug. 15, 2010] 1996]

§ 414.28 Conversion factors. § 414.32 Determining payments for cer- CMS establishes CFs in accordance tain physicians’ services furnished with section 1848(d) of the Act. in facility settings. (a) Base-year CFs. CMS established (a) Definition. As used in this section, the CF for 1992 so that had section 1848 facility settings include the following fa- of the Act applied during 1991, it would cilities: have resulted in the same aggregate (1) Hospital outpatient departments, amount of payments for physician including clinics and emergency rooms. services as the estimated aggregate (2) Hospital inpatient departments. amount of these payments in 1991, ad- (3) Comprehensive outpatient reha- justed by the update for 1992 computed bilitation facilities. as specified in § 414.30. (4) Comprehensive inpatient rehabili- (b) Subsequent CFs. For calendar tation facilities. years 1993 through 1995, the CF for each year is equal to the CF for the previous (5) Inpatient psychiatric facilities. year, adjusted in accordance with (6) Skilled nursing facilities. § 414.30. Beginning January 1, 1996, the (b) General rule. If physicians’ serv- CF for each calendar year may be fur- ices of the type routinely furnished in ther adjusted so that adjustments to physicians’ offices are furnished in fa- the fee schedule in accordance with cility settings before January 1, 1999, section 1848(c)(2)(B)(ii) of the Act do the physician fee schedule amount for not cause total expenditures under the those services is determined by reduc- fee schedule to differ by more than $20 ing the practice expense RVUs for the million from the amount that would services by 50 percent. For services fur- have been spent if these adjustments nished on or after January 1, 1999, the had not been made. practice expense RVUs are determined [56 FR 59624, Nov. 25, 1991, as amended at 57 in accordance with § 414.22(b)(5). FR 42492, Sept. 15, 1992; 60 FR 53877, Oct. 18, (c) Services covered by the reduction. 1995; 60 FR 63177, Dec. 8, 1995] CMS establishes a list of services routinely furnished in physicians’ offices § 414.30 Conversion factor update. nationally. Services furnished at least Unless Congress acts in accordance 50 percent of the time in physicians’ of- with section 1848(d)(3) of the Act— fices are subject to this reduction. (a) General rule. The CF update for a (d) Services excluded from the reduc- CY equals the Medicare Economic tion. The reduction established under Index increased or decreased by the this section does not apply to the fol- number of percentage points by which lowing: the percentage increase in expendi- (1) Rural health clinic services. tures for physician services (or for a (2) Surgical services not on the am- particular category of physician serv- bulatory surgical center covered list of ices, such as surgical services) in the procedures published under § 416.65(c) of second preceding FY over the third pre- this chapter when furnished in an am- ceding FY exceeds the performance bulatory surgical center. standard rate of increase established for the second preceding FY.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00021 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.34 42 CFR Ch. IV (10–1–12 Edition)

(3) Anesthesiology services and diag- paid as if the physician had personally nostic and therapeutic radiology serv- furnished the service. ices. [56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. [58 FR 63687, Dec. 2, 1993, as amended at 60 15, 1992, as amended at 63 FR 58911, Nov. 2, FR 63177, Dec. 8, 1995; 62 FR 59102, Oct. 31, 1998] 1997; 63 FR 58911, Nov. 2, 1998; 64 FR 25457, May 12, 1999] § 414.36 Payment for drugs incident to a physician’s service. § 414.34 Payment for services and sup- Payment for drugs incident to a phy- plies incident to a physician’s serv- sician’s service is made in accordance ice. with § 405.517 of this chapter. (a) Medical supplies. (1) Except as otherwise specified in this paragraph, of- § 414.39 Special rules for payment of fice medical supplies are considered to care plan oversight. be part of a physician’s practice ex- (a) General. Except as specified in pense, and payment for them is in- paragraphs (b) and (c) of this section, cluded in the practice expense portion payment for care plan oversight is in- of the payment to the physician for the cluded in the payment for visits and medical or surgical service to which other services under the physician fee they are incidental. schedule. For purposes of this section a (2) If physician services of the type nonphysician practitioner (NPP) is a routinely furnished in provider settings nurse practitioner, clinical nurse spe- are furnished in a physician’s office, cialist or physician assistant. separate payment may be made for cer- (b) Exception. Separate payment is tain supplies furnished incident to that made under the following conditions physician service if the following re- for physician care plan oversight serv- quirements are met: ices furnished to beneficiaries who re- (i) It is a procedure that can safely be ceive HHA and hospice services that furnished in the office setting in appro- are covered by Medicare: priate circumstances. (1) The care plan oversight services (ii) It requires specialized supplies require recurrent physician supervision that are not routinely available in phy- of therapy involving 30 or more min- sicians’ offices and that are generally utes of the physician’s time per month. disposable. (2) Payment is made to only one phy- (iii) It is furnished before January 1, sician per patient for services furnished 1999. during a calendar month period. The (3) For the purpose of paragraph physician must have furnished a serv- (a)(2) of this section, provider settings ice requiring a face-to-face encounter include only the following settings: with the patient at least once during (i) Hospital inpatient and outpatient the 6-month period before the month departments. for which care plan oversight payment (ii) Ambulatory surgical centers. is first billed. The physician may not (4) For the purpose of paragraph have a significant ownership interest (a)(2) of this section, ‘‘routinely fur- in, or financial or contractual relation- nished in provider settings’’ means fur- ship with, the HHA in accordance with nished in inpatient or outpatient hos- § 424.22(d) of this chapter. The physi- pital settings or ambulatory surgical cian may not be the medical director centers more than 50 percent of the or employee of the hospice and may time. not furnish services under an arrange- (5) CMS establishes a list of services ment with the hospice. for which a separate supply payment (3) If a physician furnishes care plan may be made under this section. oversight services during a post- (6) The fee schedule amount for sup- operative period, payment for care plan plies billed separately is not subject to oversight services is made if the serv- a GPCI adjustment. ices are documented in the patient’s (b) Services of nonphysicians that are medical record as unrelated to the sur- incident to a physician’s service. Services gery. of nonphysicians that are covered as (c) Special rules for payment of care incident to a physician’s service are plan oversight provided by nonphysician

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00022 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.42

practitioners for beneficiaries who receive ices, such as an EEG, which typically HHA services covered by Medicare. (1) An comprise a technical component (the NPP can furnish physician care plan taking of the test) and a professional oversight (but may not certify a pa- component (the interpretation)). tient as needing home health services) (3) Payment modifiers (for example, only if the physician who signs the assistant-at-surgery, multiple surgery, plan of care provides regular ongoing bilateral surgery, split surgical global care under the same plan of care as services, team surgery, and unusual does the NPP billing for care plan over- services). sight and either— (i) The physician and NPP are part of § 414.42 Adjustment for first 4 years of the same group practice; or practice. (ii) If the NPP is a nurse practitioner (a) General rule. For services fur- or clinical nurse specialist, the physi- nished during CYs 1992 and 1993, except cian signing the plan of care also has a as specified in paragraph (b) of this sec- collaborative agreement with the NPP; tion, the fee schedule payment amount or or prevailing charge must be phased in (iii) If the NPP is a physician assist- as specified in paragraph (d) of this sec- ant, the physician signing the plan of tion for physicians, physical therapists care is also the physician who provides (PTs), occupational therapists (OTs), general supervision of physician assist- and all other health care practitioners ant services for the practice. who are in their first through fourth (2) Payment may be made for care years of practice. plan oversight services furnished by an (b) Exception. The reduction required NPP when: in paragraph (d) of this section does (i) The NPP providing the care plan not apply to primary care services or oversight has seen and examined the to services furnished in a rural area as patient; defined in section 1886(d)(2)(D) of the (ii) The NPP providing care plan Act that is designated under section oversight is not functioning as a con- 332(a)(1)(A) of the Public Health Serv- sultant whose participation is limited ice Act as a Health Professional Short- to a single medical condition rather age Area. than multi-disciplinary coordination of (c) Definition of years of practice. (1) care; and The ‘‘first year of practice‘‘ is the first (iii) The NPP providing care plan full CY during the first 6 months of oversight integrates his or her care which the physician, PT, OT, or other with that of the physician who signed health care practitioner furnishes pro- the plan of care. fessional services for which payment [59 FR 63463, Dec. 8, 1994; 60 FR 49, Jan. 3, may be made under Medicare Part B, 1995; 60 FR 36733, July 18, 1995 as amended at plus any portion of the prior CY if that 69 FR 66423, Nov. 15, 2004; 70 FR 16722, Apr. 1, prior year does not meet the first 6 2005] months test. § 414.40 Coding and ancillary policies. (2) The ‘‘second, third, and fourth years of practice‘‘ are the first, second, (a) General rule. CMS establishes uni- and third CYs following the first year form national definitions of services, of practice, respectively. codes to represent services, and pay- (d) Amounts of adjustment. The fee ment modifiers to the codes. schedule payment for the service of a (b) Specific types of policies. CMS es- new physician, PT, OT, or other health tablishes uniform national ancillary care practitioner is limited to the fol- policies necessary to implement the fee lowing percentages for each of the indi- schedule for physician services. These cated years: include, but are not limited to, the fol- (1) First year—80 percent lowing policies: (2) Second year—85 percent (1) Global surgery policy (for exam- (3) Third year—90 percent ple, post- and pre-operative periods and services, and intra-operative services). (4) Fourth year—95 percent (2) Professional and technical compo- [57 FR 42493, Sept. 15, 1992, as amended at 58 nents (for example, payment for serv- FR 63687, Dec. 2, 1993]

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00023 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.44 42 CFR Ch. IV (10–1–12 Edition)

§ 414.44 Transition rules. schedule amount is substituted for the (a) Adjusted historical payment basis— fee schedule amount. (1) All services other than radiology and (c) Adjustment of 1992 payments for ra- nuclear medicine services. For all physi- diology services. For radiology services cian services other than radiology serv- furnished during CY 1992 the following ices, furnished in a fee schedule area, rules apply: the adjusted historical payment basis (1) If the AHPB determined under (AHPB) is the estimated weighted aver- paragraph (a) of this section is from 85 age prevailing charge applied in the fee percent to 109 percent of the fee sched- schedule area for the service in CY ule amount for the area for services 1991, as determined by CMS without re- furnished in 1992, payment is at the fee gard to physician specialty and as ad- schedule amount. justed to reflect payments for services (2) If the AHPB determined under below the prevailing charge, adjusted paragraph (a) of this section is less by the update established for CY 1992. than 85 percent of the fee schedule (2) Radiology services. For radiology amount for the area for services fur- services, the AHPB is the amount paid nished in 1992, an amount equal to the for the service in the fee schedule area AHPB plus 15 percent of the fee sched- in CY 1991 under the fee schedule estab- ule amount is substituted for the fee lished under section 1834(b), adjusted schedule amount. by the update established for CY 1992. (3) If the AHPB determined under (3) Nuclear medicine services. For nu- paragraph (a) of this section is greater clear medicine services, the AHPB is than 109 percent of the fee schedule the amount paid for the service in the amount for the area for services fur- fee schedule area in CY 1991 under the nished in 1992, an amount equal to the fee schedule established under section AHPB minus 9 percent of the fee sched- 6105(b) of Public Law 101–239 and sec- ule amount is substituted for the fee tion 4102(g) of Public Law 101–508, ad- schedule amount. justed by the update established for CY 1992. (d) Computation of payments for CY (4) Transition adjustment. CMS adjusts 1993. For physician services subject to the AHPB for all services by 5.5 percent the transition rules in CY 1992 and fur- to produce budget-neutral payments nished during CY 1993, the fee schedule for 1992. is equal to 75 percent of the amount (b) Adjustment of 1992 payments for that would have been paid in the fee physician services other than radiology schedule area under the 1992 transition services. For physician services fur- rules, adjusted by the amount of the nished during CY 1992 the following 1993 update, plus 25 percent of the 1993 rules apply: fee schedule amount. (1) If the AHPB determined under (e) Computation of payments for CY paragraph (a) of this section is from 85 1994. For physician services subject to percent to 115 percent of the fee sched- the transition rules in CY 1993, and fur- ule amount for the area for services nished during CY 1994, the fee schedule furnished in 1992, payment is at the fee is equal to 67 percent of the amount schedule amount. that would have been paid in the fee (2) If the AHPB determined under schedule area under the 1993 transition paragraph (a) of this section is less rules, adjusted by the amount of the than 85 percent of the fee schedule 1994 update, plus 33 percent of the 1994 amount for the area for services fur- fee schedule amount. nished in 1992, an amount equal to the (f) Computation of payments for CY AHPB plus 15 percent of the fee sched- 1995. For physician services subject to ule amount is substituted for the fee the transition rules in CY 1994 and fur- schedule amount. nished during CY 1995, the fee schedule (3) If the AHPB determined under is equal to 50 percent of the amount paragraph (a) of this section is greater that would have been paid in the fee than 115 percent of the fee schedule schedule area under the 1994 transition amount for the area for services fur- rules, adjusted by the amount of the nished in 1992, an amount equal to the 1995 update, plus 50 percent of the 1995 AHPB minus 15 percent of the fee fee schedule amount.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00024 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.46

§ 414.46 Additional rules for payment services) reports the same anesthesia of anesthesia services. time as the medically-directed CRNA. (a) Definitions. For purposes of this (2) CMS furnishes the carrier with section, the following definitions the base units for each anesthesia pro- apply: cedure code. The base units are derived (1) Base unit means the value for each from the 1988 American Society of An- anesthesia code that reflects all activi- esthesiologists’ Relative Value Guide ties other than anesthesia time. These except that the number of base units activities include usual preoperative recognized for anesthesia services fur- and postoperative visits, the adminis- nished during cataract or iridectomy tration of fluids and blood incident to surgery is four units. anesthesia care, and monitoring serv- (3) Modifier units are not allowed. ices. Modifier units include additional units (2) Anesthesia practitioner, for the pur- charged by a physician or a CRNA for pose of anesthesia time, means a physician who performs the anesthesia serv- patient health status, risk, age, or un- ice alone, a CRNA who is not medically usual circumstances. directed who performs the anesthesia (c) Physician personally performs the service alone, or a medically directed anesthesia procedure. (1) CMS considers CRNA. an anesthesia service to be personally (3) Anesthesia time means the time performed under any of the following during which an anesthesia practi- circumstances: tioner is present with the patient. It (i) The physician performs the entire starts when the anesthesia practitioner anesthesia service alone. begins to prepare the patient for anes- (ii) The physician establishes an at- thesia services and ends when the anes- tending physician relationship in one thesia practitioner is no longer fur- or two concurrent cases involving an nishing anesthesia services to the bene- intern or resident and the service was ficiary, that is, when the beneficiary furnished before January 1, 1994. may be placed safely under post- (iii) The physician establishes an at- operative care. Anesthesia time is a tending physician relationship in one continuous time period from the start case involving an intern or resident of anesthesia to the end of an anesthesia service. In counting anesthesia and the service was furnished on or time, the anesthesia practitioner can after January 1, 1994 but prior to Janu- add blocks of anesthesia time around ary 1, 1996. For services on or after Jan- an interruption in anesthesia time as uary 1, 1996, the physician must be the long as the anesthesia practitioner is teaching physician as defined in furnishing continuous anesthesia care §§ 415.170 through 415.184 of this chap- within the time periods around the ter. interruption. (iv) The physician and the CRNA or (b) Determinations of payment AA are involved in a single case and amount—Basic rule. For anesthesia the services of each are found to be services performed, medically directed, medically necessary. or medically supervised by a physician, (v) The physician is continuously in- CMS pays the lesser of the actual volved in a single case involving a stu- charge or the anesthesia fee schedule dent nurse anesthetist. amount. (vi) The physician is continuously in- (1) The carrier bases the fee schedule volved in a single case involving a amount for an anesthesia service on CRNA or AA and the service was fur- the product of the sum of allowable nished prior to January 1, 1998. base and time units and an anesthesia- specific CF. The carrier calculates the (2) CMS determines the fee schedule time units from the anesthesia time re- amount for an anesthesia service per- ported by the anesthesia practitioner sonally performed by a physician on for the anesthesia procedure. The phy- the basis of an anesthesia-specific fee sician who fulfills the conditions for schedule CF and unreduced base units medical direction in § 415.110 (Condi- and anesthesia time units. One anes- tions for payment: Anesthesiology thesia time unit is equivalent to 15

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00025 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.46 42 CFR Ch. IV (10–1–12 Edition)

minutes of anesthesia time, and frac- (iii) CY 1996—55 percent of the pay- tions of a 15-minute period are recog- ment allowance for personally per- nized as fractions of an anesthesia time formed services. unit. (iv) CY 1997—52.5 percent of the pay- (d) Anesthesia services medically di- ment allowance for personally per- rected by a physician. (1) CMS considers formed services. an anesthesia service to be medically (v) CY 1998 and thereafter—50 percent directed by a physician if: of the payment allowance for person- (i) The physician performs the activi- ally performed services. ties described in § 415.110 of this chap- (e) Special payment rule for teaching ter. anesthesiologist involved in a single resi- (ii) The physician directs qualified dent case or two concurrent cases. For individuals involved in two, three, or physicians’ services furnished on or four concurrent cases. after January 1, 2010, if the teaching anesthesiologist is involved in the (iii) Medical direction can occur for a training of physician residents in a sin- single case furnished on or after Janu- gle anesthesia case or two concurrent ary 1, 1998 if the physician performs the anesthesia cases, the fee schedule activities described in § 415.110 of this amount must be 100 percent of the fee chapter and medically directs a single schedule amount otherwise applicable CRNA or AA. if the anesthesia services were person- (2) The rules for medical direction ally performed by the teaching anes- differ for certain time periods depend- thesiologist and the teaching anesthe- ing on the nature of the qualified indi- siologist fulfilled the criteria in vidual who is directed by the physi- § 415.178 of this chapter. This special cian. payment rule also applies if the teach- (i) If more than two procedures are ing anesthesiologist is involved in one directed on or after January 1, 1994, the resident case that is concurrent to an- qualified individuals could be AAs, other case paid under the medical di- CRNAs, interns, or residents. The med- rection payment rules. ical direction rules apply to student (f) Physician medically supervises anes- nurse anesthetists only if the physician thesia services. If the physician medi- directs two concurrent cases, each of cally supervises more than four concur- which involves a student nurse anes- rent anesthesia services, CMS bases the thetist or the physician directs one fee schedule amount on an anesthesia- case involving a student nurse anes- specific CF and three base units. This thetist and the other involving a represents payment for the physician’s CRNA, AA, intern, or resident. involvement in the pre-surgical anes- (ii) For services furnished on or after thesia services. January 1, 2010, the medical direction (g) Payment for medical or surgical rules do not apply to a single anes- services furnished by a physician while thesia resident case that is concurrent furnishing anesthesia services. (1) CMS to another case which is paid under the allows separate payment under the fee medical direction payment rules as schedule for certain reasonable and specified in paragraph (e) of this sec- medically necessary medical or sur- tion. gical services furnished by a physician (3) Payment for medical direction is while furnishing anesthesia services to based on a specific percentage of the the patient. CMS makes payment for payment allowance recognized for the these services in accordance with the anesthesia service personally per- general physician fee schedule rules in formed by a physician alone. The fol- § 414.20. These services are described in lowing percentages apply for the years program operating instructions. specified: (2) CMS makes no separate payment (i) CY 1994—60 percent of the pay- for other medical or surgical services, ment allowance for personally per- such as the pre-anesthetic examination formed procedures. of the patient, pre- or post-operative (ii) CY 1995—57.5 percent of the pay- visits, or usual monitoring functions, ment allowance for personally per- that are ordinarily included in the an- formed services. esthesia service.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00026 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.50

(h) Physician involved in multiple anes- agnostic test that was ordered by the thesia services. If the physician is in- physician or other supplier (or ordered volved in multiple anesthesia services by a party related to such physician or for the same patient during the same other supplier through common owner- operative session, the carrier makes ship or control as described in § 413.17 payment according to the base unit as- of this chapter) and the diagnostic test sociated with the anesthesia service is performed by a physician who does having the highest base unit value and not share a practice with the billing anesthesia time that encompasses the physician or other supplier, the pay- multiple services. The carrier makes ment to the billing physician or other payment for add-on anesthesia codes supplier (less the applicable according to program operating in- deductibles and coinsurance paid by structions. the beneficiary or on behalf of the ben- [56 FR 59624, Nov. 25, 1991, as amended at 57 eficiary) for the TC or PC of the diag- FR 42492, Sept. 15, 1992; 58 FR 63687, Dec. 2, nostic test may not exceed the lowest 1993; 60 FR 63177, Dec. 8, 1995; 64 FR 59441, of the following amounts: Nov. 2, 1999; 67 FR 80041, Dec. 31, 2002; 68 FR (i) The performing supplier’s net 63261, Nov. 7, 2003; 74 FR 62006, Nov. 25, 2009] charge to the billing physician or other supplier. For purposes of this para- § 414.48 Limits on actual charges of graph (a)(1) only, with respect to the nonparticipating suppliers. TC, the performing supplier is the phy- (a) General rule. A supplier, as defined sician who supervised the TC, and with in § 400.202 of this chapter, who is non- respect to the PC, the performing sup- participating and does not accept as- plier is the physician who performed signment may charge a beneficiary an the PC. amount up to the limiting charge de- (ii) The billing physician or other scribed in paragraph (b) of this section. supplier’s actual charge. (b) Specific limits. For items or serv- (iii) The fee schedule amount for the ices paid under the physician fee sched- test that would be allowed if the per- ule, the limiting charge is 115 percent forming supplier billed directly. of the fee schedule amount for nonparticipating suppliers. For items or (2) The following requirements are services CMS excludes from payment applicable for purposes of paragraph under the physician fee schedule (in ac- (a)(1) of this section: cordance with section 1848 (j)(3) of the (i) The net charge must be deter- Act), the limiting charge is 115 percent mined without regard to any charge of 95 percent of the payment basis ap- that is intended to reflect the cost of plicable to participating suppliers as equipment or space leased to the per- calculated in § 414.20(b). forming supplier by or through the billing physician or other supplier. [58 FR 63687, Dec. 2, 1993, as amended at 62 (ii) A performing physician shares a FR 59102, Oct. 31, 1997] practice with the billing physician or § 414.50 Physician or other supplier other supplier if he or she furnishes billing for diagnostic tests per- substantially all (which, for purposes formed or interpreted by a physi- of this section, means ‘‘at least 75 per- cian who does not share a practice cent’’) of his or her professional serv- with the billing physician or other ices through such billing physician or supplier. other supplier. The ‘‘substantially all’’ (a) General rules. (1) For services cov- requirement will be satisfied if, at the ered under section 1861(s)(3) of the Act time the billing physician or other sup- and paid for under part 414 of this chap- plier submits a claim for a service fur- ter (other than clinical diagnostic lab- nished by the performing physician, oratory tests paid under section the billing physician or other supplier 1833(a)(2)(D) of the Act, which are sub- has a reasonable belief that: ject to the special billing rules set (A) For the 12 months prior to and in- forth in section 1833(h)(5)(A) of the cluding the month in which the service Act), if a physician or other supplier was performed, the performing physi- bills for the technical component (TC) cian furnished substantially all of his or professional component (PC) of a di- or her professional services through

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00027 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.52 42 CFR Ch. IV (10–1–12 Edition)

the billing physician or other supplier; ment may not bill the beneficiary more or than the payment amount described in (B) The performing physician will paragraph (a) of this section. furnish substantially all of his or her [72 FR 66400, Nov. 27, 2007, as amended at 73 professional services through the bill- FR 2432, Jan. 15, 2008; 73 FR 69935, Nov. 19, ing physician or other supplier for the 2008] next 12 months (including the month in which the service is performed). § 414.52 Payment for physician assist- (iii) A physician will be deemed to ants’ services. share a practice with the billing physi- Allowed amounts for the services of a cian or other supplier with respect to physician assistant furnished begin- the performance of the TC or PC of a ning January 1, 1992 and ending Decem- diagnostic test if the physician is an ber 31, 1997, may not exceed the limits owner, employee or independent con- specified in paragraphs (a) through (c) tractor of the billing physician or of this section. Allowed amounts for other supplier and the TC or PC is per- the services of a physician assistant formed in the office of the billing phy- furnished beginning January 1, 1998, sician or other supplier. The ‘‘office of may not exceed the limits specified in the billing physician or other supplier’’ paragraph (d) of this section. is any medical office space, regardless (a) For assistant-at-surgery services, of number of locations, in which the or- 65 percent of the amount that would be dering physician or other ordering sup- allowed under the physician fee sched- plier regularly furnishes patient care, ule if the assistant-at-surgery service and includes space where the billing was furnished by a physician. physician or other supplier furnishes (b) For services (other than assist- diagnostic testing, if the space is lo- ant-at-surgery services) furnished in a cated in the same building (as defined hospital, 75 percent of the physician fee in § 411.351) in which the ordering phy- schedule amount for the service. sician or other ordering supplier regularly furnishes patient care. With re- (c) For all other services, 85 percent spect to a billing physician or other of the physician fee schedule amount supplier that is a physician organiza- for the service. tion (as defined in § 411.351 of this chap- (d) For services (other than assist- ter), the ‘‘office of the billing physician ant-at-surgery services) furnished be- or other supplier’’ is space in which the ginning January 1, 1998, 85 percent of ordering physician provides substan- the physician fee schedule amount for tially the full range of patient care the service. For assistant-at-surgery services that the ordering physician services, 85 percent of the physician fee provides generally. The performance of schedule amount that would be allowed the TC includes both the conducting of under the physician fee schedule if the the TC as well as the supervision of the assistant-at-surgery service were fur- TC. nished by a physician. (b) Restriction on payment. (1) The [56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. billing physician or other supplier 15, 1992, as amended at 63 FR 58911, Nov. 2, must identify the performing supplier 1998] and indicate the performing supplier’s net charge for the test. If the billing § 414.54 Payment for certified nurse- physician or other supplier fails to pro- midwives’ services. vide this information, CMS makes no (a) For services furnished after De- payment to the billing physician or cember 31, 1991, allowed amounts under other supplier and the billing physician the fee schedule established under sec- or other supplier may not bill the bene- tion 1833(a)(1)(K) of the Act for the pay- ficiary. ment of certified nurse-midwife serv- (2) Physicians and other suppliers ices may not exceed 65 percent of the that accept Medicare assignment may physician fee schedule amount for the bill beneficiaries for only the applica- service. ble deductibles and coinsurance. (b) For certified nurse-midwife serv- (3) Physicians and other suppliers ices furnished on or after January 1, that do not accept Medicare assign- 2011, allowed amounts may not exceed

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00028 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.60

100 percent of the physician fee sched- in accordance with §§ 414.1 through ule amount that would be paid to a 414.48. physician for the services. (b) Teaching hospitals. Services fur- [75 FR 73616, Nov. 29, 2010] nished by physicians in teaching hospitals may be made on a reasonable § 414.56 Payment for nurse practi- cost basis set forth in § 415.162 of this tioners’ and clinical nurse special- chapter if the hospital exercises the ists’ services. election described in § 415.160 of this (a) Rural areas. For services furnished chapter. beginning January 1, 1992 and ending December 31, 1997, allowed amounts for [56 FR 59624, Nov. 25, 1991, as amended at 57 the services of a nurse practitioner or a FR 42492, Sept. 15, 1992; 60 FR 63189, Dec. 8, clinical nurse specialist in a rural area 1995] (as described in section 1861(s)(2)(K)(iii) of the Act) may not exceed the fol- § 414.60 Payment for the services of CRNAs. lowing limits: (1) For services furnished in a hos- (a) Basis for payment. The allowance pital (including assistant-at-surgery for the anesthesia service furnished by services), 75 percent of the physician a CRNA, medically directed or not fee schedule amount for the service. medically directed, is based on allow- (2) For all other services, 85 percent able base and time units as defined in of the physician fee schedule amount § 414.46(a). Beginning with CY 1994— for the service. (1) The allowance for an anesthesia (b) Non-rural areas. For services fur- service furnished by a medically di- nished beginning January 1, 1992 and rected CRNA is based on a fixed per- ending December 31, 1997, allowed centage of the allowance recognized for amounts for the services of a nurse the anesthesia service personally per- practitioner or a clinical nurse specialist in a nursing facility may not ex- formed by the physician alone, as spec- ceed 85 percent of the physician fee ified in § 414.46(d)(3); and schedule amount for the service. (2) The CF for an anesthesia service (c) Beginning January 1, 1998. For furnished by a CRNA not directed by a services (other than assistant-at-sur- physician may not exceed the CF for a gery services) furnished beginning Jan- service personally performed by a phy- uary 1, 1998, allowed amounts for the sician. services of a nurse practitioner or clin- (b) To whom payment may be made. ical nurse specialist may not exceed 85 Payment for an anesthesia service fur- percent of the physician fee schedule nished by a CRNA may be made to the amount for the service. For assistant- CRNA or to any individual or entity at-surgery services, allowed amounts (such as a hospital, critical access hos- for the services of a nurse practitioner pital, physician, group practice, or am- or clinical nurse specialist may not ex- bulatory surgical center) with which ceed 85 percent of the physician fee the CRNA has an employment or con- schedule amount that would be allowed tract relationship that provides for under the physician fee schedule if the assistant-at-surgery service were fur- payment to be made to the individual nished by a physician. or entity. (c) Condition for payment. Payment [63 FR 58911, Nov. 2, 1998] for the services of a CRNA may be § 414.58 Payment of charges for physi- made only on an assignment related cian services to patients in pro- basis, and any assignment accepted by viders. a CRNA is binding on any other person (a) Payment under the physician fee presenting a claim or request for pay- schedule. In addition to the special con- ment for the service. ditions for payment in §§ 415.100 [60 FR 63178, Dec. 8, 1995, as amended at 62 through 415.130, and § 415.190 of this FR 46037, Aug. 29, 1997; 64 FR 59441, Nov. 2, chapter, CMS establishes payment for 1999] physician services to patients in providers under the physician fee schedule

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00029 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.61 42 CFR Ch. IV (10–1–12 Edition)

§ 414.61 Payment for anesthesia serv- proved by CMS to furnish outpatient ices furnished by a teaching CRNA. diabetes self-management training in (a) Basis for payment. Beginning Jan- accordance with part 410, subpart H of uary 1, 2010, anesthesia services fur- this chapter. nished by a teaching CRNA may be (c) Limitation on payment. Payment paid under one of the following condi- may be made for training sessions actions: tually attended by the beneficiary and (1) The teaching CRNA, who is not documented on attendance sheets. under medical direction of a physician, (d) Payments made to those not paid is present with the student nurse anes- under the physician fee schedule. Pay- thetist for the pre and post anesthesia ments may be made to other entities services included in the anesthesia base not routinely paid under the physician units payment and is continuously fee schedule, such as hospital out- present during anesthesia time in a patient departments, ESRD facilities, single case with a student nurse anes- and DME suppliers. The payment thetist. equals the amounts paid under the phy- (2) The teaching CRNA, who is not sician fee schedule. under the medical direction of a physi- (e) Other conditions for fee-for-serv- cian, is involved with two concurrent ice payment. The beneficiary must anesthesia cases with student nurse an- meet the following conditions: esthetists. The teaching CRNA must be (1) Has not previously received initial present with the student nurse anes- training for which Medicare payment thetist for the pre and post anesthesia was made under this benefit. services included in the anesthesia base (2) Is not receiving services as an in- unit. For the anesthesia time of the patient in a hospital, SNF, hospice, or two concurrent cases, the teaching nursing home. CRNA can only be involved with those (3) Is not receiving services as an out- two concurrent cases and may not per- patient in an RHC or FQHC. form services for other patients. (b) Level of payment. The allowance [65 FR 83153, Dec. 29, 2000] for the service of the teaching CRNA, furnished under paragraph (a) of this § 414.64 Payment for medical nutrition section, is determined in the same way therapy. as for a physician who personally per- (a) Payment under the physician fee forms the anesthesia service alone as schedule. Medicare payment for med- specified in § 414.46(c) of this subpart. ical nutrition therapy is made under [74 FR 62006, Nov. 25, 2009] the physician fee schedule in accordance with subpart B of this part. Pay- § 414.62 Fee schedule for clinical psy- ment to non-physician professionals, as chologist services. specified in paragraph (b) of this sec- The fee schedule for clinical psychol- tion, is the lesser of the actual charges ogist services is set at 100 percent of or 80 percent of 85 percent of the physi- the amount determined for cor- cian fee schedule amount. responding services under the physi- (b) To whom payment may be made. cian fee schedule. Payment may be made to a registered [62 FR 59102, Oct. 31, 1997] dietician or nutrition professional qualified to furnish medical nutrition § 414.63 Payment for outpatient diabe- therapy in accordance with part 410, tes self-management training. subpart G of this chapter. (a) Payment under the physician fee (c) Effective date of payment. Medicare schedule. Except as provided in para- pays suppliers of medical nutrition graph (d) of this section, payment for therapy on or after the effective date of outpatient diabetes self-management enrollment of the supplier at the car- training is made under the physician rier. fee schedule in accordance with §§ 414.1 (d) Limitation on payment. Payment is through 414.48. made only for documented nutritional (b) To whom payment may be made. therapy sessions actually attended by Payment may be made to an entity ap- the beneficiary.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00030 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.65

(e) Other conditions for fee-for-service (ii) Follow-up inpatient telehealth con- payment. Payment is made only if the sultations. The Medicare payment beneficiary: amount for follow-up inpatient tele- (1) Is not an inpatient of a hospital, health consultations furnished via an SNF, nursing home, or hospice. interactive telecommunications sys- (2) Is not receiving services in an tem is equal to the current fee schedule RHC, FQHC or ESRD dialysis facility. amount applicable to subsequent hos- [66 FR 55332, Nov. 1, 2001] pital care provided by a physician or practitioner. § 414.65 Payment for telehealth serv- (2) Only the physician or practitioner ices. at the distant site may bill and receive (a) Professional service. Medicare pay- payment for the professional service ment for the professional service via an via an interactive telecommunications interactive telecommunications sys- system. tem is made according to the following (3) Payments made to the physician limitations: or practitioner at the distant site, in- (1) The Medicare payment amount for cluding deductible and coinsurance, for office or other outpatient visits, subse- the professional service may not be quent hospital care services (with the shared with the referring practitioner limitation of one telehealth subsequent or telepresenter. hospital care service every 3 days), sub- (b) Originating site facility fee. For sequent nursing facility care services telehealth services furnished on or (not including the Federally-mandated after October 1, 2001: periodic visits under § 483.40(c) and with (1) For services furnished on or after the limitation of one telehealth nurs- October 1, 2001 through December 31, ing facility care service every 30 days), 2002, the payment amount to the origi- professional consultations, psychiatric nating site is the lesser of the actual diagnostic interview examination, charge or the originating site facility neurobehavioral status exam, indi- fee of $20. For services furnished on or vidual psychotherapy, pharmacologic after January 1 of each subsequent management, end-stage renal disease- year, the facility fee for the origi- related services included in the month- nating site will be updated by the ly capitation payment (except for one Medicare Economic Index (MEI) as de- ‘‘hands on’’ visit per month to examine fined in section 1842(i)(3) of the Act. the access site), individual and group (2) Only the originating site may bill medical nutrition therapy services, infor the originating site facility fee and dividual and group kidney disease edu- only on an assignment-related basis. cation services, individual and group The distant site physician or practi- diabetes self-management training tioner may not bill for or receive pay- (DSMT) services (except for 1 hour of ment for facility fees associated with in-person DSMT services to be fur- the professional service furnished via nished in the year following the initial an interactive telecommunications DSMT service to ensure effective injec- system. tion training), and individual and (c) Deductible and coinsurance apply. group health and behavior assessment The payment for the professional serv- and intervention, and smoking ces- ice and originating site facility fee is sation services furnished via an inter- subject to the coinsurance and deduct- active telecommunications system is ible requirements of sections 1833(a)(1) equal to the current fee schedule and (b) of the Act. amount applicable for the service of (d) Assignment required for physicians, the physician or practitioner. practitioners, and originating sites. Pay- (i) Initial inpatient telehealth consulta- ment to physicians, practitioners, and tions. The Medicare payment amount originating sites is made only on an as- for initial inpatient telehealth con- signment-related basis. sultations furnished via an interactive (e) Sanctions. A distant site practi- telecommunications system is equal to tioner or originating site facility may the current fee schedule amount appli- be subject to the applicable sanctions cable to initial hospital care provided provided for in chapter IV, part 402 and by a physician or practitioner. chapter V, parts 1001, 1002, and 1003 of

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00031 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.66 42 CFR Ch. IV (10–1–12 Edition)

this title if he or she does any of the ices furnished on or after January 1, following: 2005 and before January 1, 2008. (1) Knowingly and willfully bills or [69 FR 66424, Nov. 15, 2004] collects for services in violation of the limitation of this section. § 414.67 Incentive payments for serv- (2) Fails to timely correct excess ices furnished in Health Profes- charges by reducing the actual charge sional Shortage Areas. billed for the service in an amount that (a) Health Professional Shortage Area does not exceed the limiting charge for (HPSA) physician bonus program. A the service or fails to timely refund ex- HPSA physician incentive payment cess collections. will be made subject to the following: (3) Fails to submit a claim on a (1) HPSA bonuses are payable for standard form for services provided for services furnished by physicians as de- which payment is made on a fee sched- fined in section 1861(r) of the Act in areas designated as of December 31 of ule basis. the prior year as geographic primary (4) Imposes a charge for completing medical care HPSAs as defined in sec- and submitting the standard claims tion 332(a)(1)(A) of the Public Health form. Service Act. [66 FR 55332, Nov. 1, 2001, as amended at 67 (2) HPSA bonuses are payable for FR 80041, Dec. 31, 2003; 69 FR 66424, Nov. 15, services furnished by psychiatrists in 2004; 70 FR 70332, Nov. 21, 2005; 72 FR 66401, areas designated as of December 31 of Nov. 27, 2007; 73 FR 69936, Nov. 19, 2008; 74 FR the prior year as geographic mental 62006, Nov. 25, 2009; 75 FR 73617, Nov. 29, 2010; health HPSAs if the services are not al- 76 FR 73471, Nov. 28, 2011] ready eligible for the bonus based on being in a geographic primary care § 414.66 Incentive payments for physi- HPSA. cian scarcity areas. (3) Physicians eligible for the HPSA (a) Definition. As used in this section, physician bonus are entitled to a 10 the following definitions apply. percent incentive payment above the Physician scarcity area is defined as amount paid for their professional an area with a shortage of primary services under the physician fee sched- care physicians or specialty physicians ule. to the Medicare population in that (4) Physicians furnishing services in area. areas that are designated as geographic Primary care physician is defined as a HPSAs prior to the beginning of the general practitioner, family practice year but not included on the published practitioner, general internist, obste- list of zip codes for which automated trician or gynecologist. HPSA bonus payments are made must (b) Physicians’ services furnished to use the AQ modifier to receive the a beneficiary in a Physician Scarcity HPSA physician bonus payment. (b) HPSA surgical incentive payment Area (PSA) for primary or specialist program. A HPSA surgical incentive care are eligible for a 5 percent incen- payment will be made subject to the tive payment. following: (c) Primary care physicians fur- (1) A major surgical procedure as de- nishing services in primary care PSAs fined in § 414.2 of this part is furnished are entitled to an additional 5 percent by a general surgeon on or after Janu- incentive payment above the amount ary 1, 2011 and before January 1, 2016 in paid under the physician fee schedule an area recognized for the HPSA physi- for their professional services fur- cian bonus program under paragraph nished on or after January 1, 2005 and (a)(1) of this section. before January 1, 2008. (2) Payment will be made on a quar- (d) Physicians, as defined in section terly basis in an amount equal to 10 1861(r)(1) of the Act, furnishing services percent of the Part B payment amount in specialist care PSAs are entitled to for major surgical procedures furnished an additional 5 percent payment above as described in paragraph (b)(1) of this the amount paid under the physician section, in addition to the amount the fee schedule for their professional serv- physician would otherwise be paid.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00032 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.68

(3) Physicians furnishing services in (c) Application and reapplication proce- areas that are designated as geographic dures for accreditation organizations. An HPSAs eligible for the HPSA physician independent accreditation organization bonus program under paragraph (a)(1) applying for approval or reapproval of of this section prior to the beginning of authority to survey suppliers for pur- the year but not included on the pub- poses of accrediting suppliers fur- lished list of zip codes for which auto- nishing the TC of advanced diagnostic mated HPSA surgical incentive pay- imaging services is required to furnish ments are made should report HCPCS CMS with all of the following: modifier -AQ to receive the HPSA sur- (1) A detailed description of how the gical incentive payment. organization’s accreditation criteria (4) The payment described in para- satisfy the statutory standards author- graph (b)(2) of this section is made to ized by section 1834(e)(3) of the Act, the surgeon or, where the surgeon has specifically— reassigned his or her benefits to a crit- (i) Qualifications of medical per- ical access hospital (CAH) paid under sonnel who are not physicians and who the optional method, to the CAH based furnish the TC of advanced diagnostic on an institutional claim. imaging services; (ii) Qualifications and responsibil- [75 FR 73617, Nov. 29, 2010] ities of medical directors and super- § 414.68 Imaging accreditation. vising physicians (who may be the same person), such as their training in (a) Scope and purpose. Section 1834(e) advanced diagnostic imaging services of the Act requires the Secretary to in a residency program, expertise ob- designate and approve independent ac- tained through experience, or con- creditation organizations for purposes tinuing medical education courses; of accrediting suppliers furnishing the (iii) Procedures to ensure the reli- technical component (TC) of advanced ability, clarity, and accuracy of the diagnostic imaging services and estab- technical quality of diagnostic images lish procedures to ensure that the cri- produced by the supplier, including a teria used by an accreditation organi- thorough evaluation of equipment per- zation is specific to each imaging mo- formance and safety; dality. Suppliers of the TC of advanced (iv) Procedures to ensure the safety diagnostic imaging services for which of persons who furnish the TC of ad- payment is made under the fee sched- vanced diagnostic imaging services and ule established in section 1848(b) of the individuals to whom such services are Act must become accredited by an ac- furnished; creditation organization designated by (v) Procedures to assist the bene- the Secretary beginning January 1, ficiary in obtaining the beneficiary’s 2012. imaging records on request; and (b) Definitions. As used in this sec- (vi) Procedures to notify the accredi- tion, the following definitions are ap- tation organization of any changes to plicable: the modalities subsequent to the orga- Accredited supplier means a supplier nization’s accreditation decision. that has been accredited by a CMS-des- (2) An agreement to conform accredi- ignated accreditation organization as tation requirements to any changes in specified in this part. Medicare statutory requirements au- Advanced diagnostic imaging service thorized by section 1834(e) of the Act. means any of the following diagnostic The accreditation organization must services: maintain or adopt standards that are (i) Magnetic resonance imaging. equal to, or more stringent than, those (ii) Computed tomography. of Medicare. (iii) Nuclear medicine. (3) Information that demonstrates (iv) Positron emission tomography. the accreditation organization’s knowl- CMS-approved accreditation organiza- edge and experience in the advanced di- tion means an accreditation organiza- agnostic imaging arena. tion designated by CMS to perform the (4) The organization’s proposed fees accreditation functions specified in for accreditation for each modality in section 1834(e) of the Act. which the organization intends to offer

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00033 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.68 42 CFR Ch. IV (10–1–12 Edition)

accreditation, including any plans for (xi) The policies and procedures re- reducing the burden and cost of accred- garding an individual’s participation in itation to small and rural suppliers. the survey or accreditation decision (5) Any specific documentation re- process of any organization with which quirements and attestations requested the individual is professionally or fi- by CMS as a condition of designation nancially affiliated. under this part. (xii) The policies and procedures used (6) A detailed description of the orga- when an organization has a dispute re- nization’s survey process, including the garding survey findings or an adverse following: decision. (i) Type and frequency of the surveys (7) Detailed information about the performed. size and composition of survey teams (ii) The ability of the organization to for each category of advanced medical conduct timely reviews of accredita- imaging service supplier accredited. tion applications, to include the orga- (8) A description of the organization’s nizations national capacity. data management and analysis system (iii) Description of the organization’s for its surveys and accreditation deci- audit procedures, including random sions, including the kinds of reports, site visits, site audits, or other strate- tables, and other displays generated by gies for ensuring suppliers maintain that system. compliance for the duration of accredi- (9) The organization’s procedures for tation. responding to and for the investigation (iv) Procedures for performing unan- nounced site surveys. of complaints against accredited facili- (v) Copies of the organization’s sur- ties, including policies and procedures vey forms. regarding coordination of these activi- (vi) A description of the accredita- ties with appropriate licensing bodies tion survey review process and the ac- and CMS. creditation status decision-making (10) The organization’s policies and process, including the process for ad- procedures for the withholding or re- dressing deficiencies identified with moval of accreditation status for facili- the accreditation requirements, and ties that fail to meet the accreditation the procedures used to monitor the cor- organization’s standards or require- rection of deficiencies found during an ments, and other actions taken by the accreditation survey. organization in response to noncompli- (vii) Procedures for coordinating sur- ance with its standards and require- veys with another accrediting organi- ments. These policies and procedures zation if the organization does not ac- must include notifying CMS of Medi- credit all products the supplier pro- care facilities that fail to meet the re- vides. quirements of the accrediting organiza- (viii) Detailed information about the tion. individuals who perform evaluations (11) A list of all currently accredited for the accreditation organization, in- suppliers, the type and category of ac- cluding all of the following informa- creditation currently held by each sup- tion: plier, and the expiration date of each (A) The number of professional and supplier’s current accreditation. technical staff that are available for (12) A written presentation that dem- surveys. onstrates the organization’s ability to (B) The education, employment, and furnish CMS with electronic data in experience requirements surveyors ASCII comparable code. must meet. (13) A resource analysis that dem- (C) The content and length of the ori- onstrates that the organization’s staff- entation program. ing, funding, and other resources are (ix) The frequency and types of in- adequate to perform the required sur- service training provided to survey per- veys and related activities. sonnel. (14) A statement acknowledging that, (x) The evaluation systems used to as a condition for approval of designa- monitor the performance of individual tion, the organization agrees to carry surveyors and survey teams. out the following activities:

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00034 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.68

(i) Prioritize surveys for those sup- fices to verify representations made by pliers needing to be accredited by Jan- the organization in its application, in- uary 1, 2012. cluding, but not limited to, reviewing (ii) Notify CMS, in writing, of any documents and interviewing the orga- Medicare supplier that had its accredi- nization’s staff. tation revoked, withdrawn, revised, or (f) Formal notice from CMS. The ac- any other remedial or adverse action creditation organization will receive a taken against it by the accreditation formal notice from CMS stating wheth- organization within 30 calendar days of er the request for designation has been any such action taken. approved or denied. If approval was de- (iii) Notify all accredited suppliers nied the notice includes the basis for within 10 calendar days of the organi- denial and reconsideration and re- zation’s removal from the list of des- application procedures. ignated accreditation organizations. (g) Ongoing responsibilities of a CMS- (iv) Notify CMS, in writing, at least approved accreditation organization. An 30 calendar days in advance of the ef- accreditation organization approved by fective date of any significant proposed CMS must carry out the following ac- changes in its accreditation require- tivities on an ongoing basis: ments. (1) Provide CMS with all of the fol- (v) Permit its surveyors to serve as lowing in written format (either elec- witnesses if CMS takes an adverse ac- tronic or hard copy): tion based on accreditation findings. (i) Copies of all accreditation sur- (vi) Notify CMS, in writing (elec- veys, together with any survey-related tronically or hard copy), within 2 busi- information that CMS may require (in- ness days of a deficiency identified in cluding corrective action plans and any accreditation supplier from any summaries of findings with respect to source where the deficiency poses an unmet CMS requirements). immediate jeopardy to the supplier’s (ii) Notice of all accreditation deci- beneficiaries or a hazard to the general sions. public. (iii) Notice of all complaints related (vii) Provide, on an annual basis, to suppliers. summary data specified by CMS that (iv) Information about all accredited relates to the past year’s accredita- suppliers against which the accredita- tions and trends. tion organization has taken remedial (viii) Attest that the organization or adverse action, including revoca- will not perform any accreditation sur- tion, withdrawal, or revision of the veys of Medicare-participating sup- supplier’s accreditation. pliers with which it has a financial re- (v) Notice of any proposed changes in lationship in which it has an interest. its accreditation standards or require- (ix) Conform accreditation requirements or survey process. If the organi- ments to changes in Medicare require- zation implements the changes before ments. or without CMS’ approval, CMS may (x) If CMS withdraws an accredita- withdraw its approval of the accreditation organization’s approved status, tion organization. work collaboratively with CMS to di- (2) Within 30 calendar days after a rect suppliers to the remaining accred- change in CMS requirements, the ac- itation organizations within a reason- creditation organization must submit able period of time. an acknowledgment of receipt of CMS’ (d) Determination of whether additional notification to CMS. information is needed. If CMS deter- (3) The accreditation organization mines that additional information is must permit its surveyors to serve as necessary to make a determination for witnesses if CMS takes an adverse ac- approval or denial of the accreditation tion based on accreditation findings. organization’s application for designa- (4) Within 2 business days of identi- tion, the organization must be notified fying a deficiency of an accredited sup- and afforded an opportunity to provide plier that poses immediate jeopardy to the additional information. a beneficiary or to the general public, (e) Visits to the organization’s office. the accreditation organization must CMS may visit the organization’s of- provide CMS with written notice of the

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00035 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.68 42 CFR Ch. IV (10–1–12 Edition)

deficiency and any adverse action im- findings by CMS on standards that con- plemented by the accreditation organi- stitute immediate jeopardy to patient zation. health and safety if unmet; or, (5) Within 10 calendar days after (C) Irrespective of the rate of dis- CMS’ notice to a CMS-approved accred- parity, widespread or systemic prob- itation organization that CMS intends lems in an organization’s accreditation to withdraw approval of the accredita- process such that accreditation by that tion organization, the accreditation or- accreditation organization no longer ganization must provide written notice provides CMS with adequate assurance of the withdrawal to all of the organi- that suppliers meet or exceed the Medi- zation’s accredited suppliers. care requirements; then CMS will give (6) The organization must provide, on the organization written notice of its an annual basis, summary data speci- intent to withdraw approval as specified by CMS that relate to the past fied in paragraph (h)(3) of this section. year’s accreditation activities and (ii) CMS may also provide the organi- trends. zation written notice of its intent to (h) Continuing Federal oversight of ap- withdraw approval if an equivalency proved accreditation organizations. This review, onsite observation, or CMS’ paragraph establishes specific criteria daily experience with the accreditation and procedures for continuing over- organization suggests that the accredi- sight and for withdrawing approval of a tation organization is not meeting the CMS-approved accreditation organiza- requirements of this section. tion. (3) Withdrawal of approval. CMS may (1) Validation audits. (i) CMS or its withdraw its approval of an accredita- contractor may conduct an audit of an tion organization at any time if CMS accredited supplier to validate the sur- determines that— vey accreditation process of approved (i) Accreditation by the organization accreditation organizations for the TC no longer adequately assures that the of advanced diagnostic imaging serv- suppliers furnishing the technical com- ices. ponent of advanced diagnostic imaging (ii) The audits must be conducted on service are meeting the established in- a representative sample of suppliers dustry standards for each modality and who have been accredited by a par- that failure to meet those require- ticular accrediting organization or in ments could jeopardize the health or response to allegations of supplier non- safety of Medicare beneficiaries and compliance with the standards. could constitute a significant hazard to (A) When conducted on a representa- the public health; or tive sample basis, the audit is com- (ii) The accreditation organization prehensive and addresses all of the has failed to meet its obligations with standards, or may focus on a specific respect to application or reapplication standard in issue. procedures. (B) When conducted in response to an (i) Reconsideration. An accreditation allegation, CMS audits any standards organization dissatisfied with a deter- that CMS determines are related to the mination that its accreditation re- allegations. quirements do not provide or do not (2) Notice of intent to withdraw ap- continue to provide reasonable assur- proval. (i) If, during the audit specified ance that the suppliers accredited by in paragraph (h)(1) of this section, CMS the accreditation organization meet identifies any accreditation programs the applicable quality standards is en- for which validation audit results indi- titled to a reconsideration. CMS recon- cate— siders any determination to deny, re- (A) A 10 percent or greater rate of move, or not renew the approval of des- disparity between findings by the ac- ignation to accreditation organizations creditation organization and findings if the accreditation organization files a by CMS on standards that do not con- written request for reconsideration by stitute immediate jeopardy to patient its authorized officials or through its health and safety if unmet; or legal representative. (B) Any disparity between findings (1) Filing requirements. (i) The request by the accreditation organization and must be filed within 30 calendar days of

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00036 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.80

the receipt of CMS notice of an adverse (vi) The written report of the hearing determination or non-renewal. officer includes separate numbered (ii) The request for reconsideration findings of fact and the legal conclu- must specify the findings or issues with sions of the hearing officer. which the accreditation organization (vii) The hearing officer’s decision is disagrees and the reasons for the dis- final. agreement. [74 FR 62006, Nov. 25, 2009] (iii) A requestor may withdraw its request for reconsideration at any time § 414.80 Incentive payment for pri- before the issuance of a reconsideration mary care services. determination. (a) Definitions. As defined in this sec- (2) CMS response to a filing request. In tion— response to a request for reconsider- Eligible primary care practitioner ation, CMS provides the accreditation means one of the following: organization with— (i) A physician (as defined in section (i) The opportunity for an informal 1861(r)(1) of the Act) who meets all of hearing to be conducted by a hearing the following criteria: officer appointed by the Administrator (A) Enrolled in Medicare with a pri- of CMS and provide the accreditation mary specialty designation of 08-family organization the opportunity to practice, 11-internal medicine, 37-pedi- present, in writing and in person, evi- atrics, or 38-geriatrics. dence or documentation to refute the (B) At least 60 percent of the physi- determination to deny approval, or to cian’s allowed charges under the physi- withdraw or not renew designation; cian fee schedule (excluding hospital and inpatient care and emergency depart- (ii) Written notice of the time and ment visits) during a reference period place of the informal hearing at least specified by the Secretary are for pri- 10 business days before the scheduled mary care services. date. (ii) A nurse practitioner, clinical (3) Hearing requirements and rules. (i) nurse specialist, or physician assistant The informal reconsideration hearing (as defined in section 1861(aa)(5) of the is open to all of the following: Act) who meets all of the following cri- (A) CMS. teria: (B) The organization requesting the (A) Enrolled in Medicare with a pri- reconsideration including— mary specialty designation of 50-nurse (1) Authorized representatives; practitioner, 89-certified clinical nurse, (2) Technical advisors (individuals or 97-physician assistant. with knowledge of the facts of the case (B) At least 60 percent of the practi- or presenting interpretation of the tioner’s allowed charges under the phy- facts); and sician fee schedule (excluding hospital (3) Legal counsel. inpatient care and emergency depart- (ii) The hearing is conducted by the ment visits) during a reference period hearing officer who receives testimony specified by the Secretary are for pri- and documents related to the proposed mary care services. action. Primary care services means— (iii) Testimony and other evidence (i) New and established patient office may be accepted by the hearing officer or other outpatient evaluation and even though such evidence may be in- management (E/M) visits; admissible under the Federal Rules of (ii) Initial, subsequent, discharge, Civil Procedure. and other nursing facility E/M services; (iv) The hearing officer does not have (iii) New and established patient the authority to compel by subpoena domiciliary, rest home (for example, the production of witnesses, papers, or boarding home), or custodial care E/M other evidence. services; (v) Within 45 calendar days of the (iv) Domiciliary, rest home (for ex- close of the hearing, the hearing officer ample, assisted living facility), or presents the findings and recommenda- home care plan oversight services; and tions to the accreditation organization (v) New and established patient home that requested the reconsideration. E/M visits.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00037 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.90 42 CFR Ch. IV (10–1–12 Edition)

(b) Payment. (1) For primary care Maintenance of Certification Program services furnished by an eligible pri- means a continuous assessment pro- mary care practitioner on or after Jan- gram, such as qualified American uary 1, 2011 and before January 1, 2016, Board of Medical Specialties Mainte- payment is made on a quarterly basis nance of Certification Program or an in an amount equal to 10 percent of the equivalent program (as determined by payment amount for the primary care the Secretary), that advances quality services under Part B, in addition to and the lifelong learning and self-as- the amount the primary care practi- sessment of board certified specialty tioner would otherwise be paid for the physicians by focusing on the com- primary care services under Part B. petencies of patient care, medical (2) The payment described in para- knowledge, practice-based learning, graph (b)(1) of this section is made to interpersonal and communication the eligible primary care practitioner skills, and professionalism. Such a pro- or, where the physician has reassigned gram must include the following: his or her benefits to a critical access (i) The program requires the physi- hospital (CAH) paid under the optional cian to maintain a valid unrestricted method, to the CAH based on an insti- license in the United States. tutional claim. (ii) The program requires a physician to participate in educational and self- [75 FR 73617, Nov. 29, 2010] assessment programs that require an § 414.90 Physician Quality Reporting assessment of what was learned. System. (iii) The program requires a physician to demonstrate, through a formal- (a) Basis and scope. This section im- ized secure examination, that the phy- plements the following provisions of sician has the fundamental diagnostic the Act: skills, medical knowledge, and clinical (1) 1848(a)—Payment Based on Fee judgment to provide quality care in Schedule. their respective specialty. (2) 1848(k)—Quality Reporting Sys- (iv) The program requires successful tem. completion of a qualified maintenance (3) 1848(m)—Incentive Payments for of certification program practice as- Quality Reporting. sessment. (b) Definitions. As used in this sec- Maintenance of Certification Program tion, unless otherwise indicated— Practice Assessment means an assess- Covered professional services means ment of a physician’s practice that— services for which payment is made (i) Includes an initial assessment of under, or is based on, the Medicare an eligible professional’s practice that physician fee schedule as provided is designed to demonstrate the physi- under section 1848(k)(3) of the Act and cian’s use of evidence-based medicine; which are furnished by an eligible pro- (ii) Includes a survey of patient expe- fessional. rience with care; and Eligible professional means any of the (iii) Requires a physician to imple- following: ment a quality improvement interven- (i) A physician. tion to address a practice weakness (ii) A practitioner described in sec- identified in the initial assessment tion 1842(b)(18)(C) of the Act. under paragraph (h) of this section and (iii) A physical or occupational ther- then to remeasure to assess perform- apist or a qualified speech-language pa- ance improvement after such interven- thologist. tion. (iv) A qualified audiologist (as de- Measures group means a subset of four fined in section 1861(ll)(3)(B) of the or more Physician Quality Reporting Act). System measures that have a par- Group practice means a physician ticular clinical condition or focus in group practice, as defined by a TIN, common. The denominator definition with 25 or more individual eligible pro- and coding of the measures group iden- fessionals (or, as identified by NPIs) tifies the condition or focus that is who have reassigned their billing shared across the measures within a rights to the TIN. particular measures group.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00038 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.90

Physician Quality Reporting System (1) There are any quality measures means the physician reporting system that have been established under the under section 1848(k) of the Act for the Physician Quality Reporting System reporting by eligible professionals of that are applicable to any such services data on quality measures and the in- furnished by such professional (or in centive payment associated with this the case of a group practice under para- physician reporting system. graph (g) of this section, such group Performance rate means the percent- practice) for such reporting period; and age of a defined population who re- (2) The eligible professional (or in the ceives a particular process of care or case of a group practice under para- achieve a particular outcome for a par- graph (g) of this section, the group ticular quality measure. practice) satisfactorily submits (as de- Reporting rate means the percentage termined under paragraph (f) of this of patients that the eligible profes- section for eligible professionals and sional indicated a quality action was or paragraph (g) of this section for group was not performed divided by the total practices) to the Secretary data on number of patients in the denominator such quality measures in accordance of the measure. with the Physician Quality Reporting Qualified registry means a medical System for such reporting period, in registry or a maintenance of certifi- addition to the amount otherwise paid cation program operated by a specialty under section 1848 of the Act, there body of the American Board of Medical also must be paid to the eligible profes- Specialties that, with respect to a par- sional (or to an employer or facility in ticular program year, has self-nomi- the cases described in section nated and successfully completed a 1842(b)(6)(A) of the Act or, in the case vetting process (as specified by CMS) of a group practice) under paragraph to demonstrate its compliance with the (g) of this section, to the group prac- Physician Quality Reporting System tice, from the Federal Supplementary qualification requirements specified by Medical Insurance Trust Fund estab- CMS for that program year. The reg- lished under section 1841 of the Act an istry may act as a data submission amount equal to the applicable quality vendor, which has the requisite legal percent (as specified in paragraph (c)(3) authority to provide Physician Quality of this section) of the eligible profes- Reporting System data (as specified by sional’s (or, in the case of a group prac- CMS) on behalf of an eligible profes- tice under paragraph (g) of this section, sional to CMS. the group practice’s) total estimated Qualified electronic health record prod- allowed charges for all covered profes- uct means an electronic health record sional services furnished by the eligible vendor’s product and version that, with professional (or, in the case of a group respect to a particular program year, practice under paragraph (g) of this has self-nominated and successfully section, by the group practice) during completed a vetting process (as speci- the reporting period. fied by CMS) to demonstrate the product’s compliance with the Physician (3) Applicable quality percent. The ap- Quality Reporting System qualifica- plicable quality percent is as follows: tion requirements specified by CMS for (i) For 2011, 1.0 percent; and a program year. The requirements and (ii) For 2012, 2013, and 2014, 0.5 per- process for an electronic health record cent; product to be qualified for the purpose (4) For purposes of this paragraph— of the Physician Quality Reporting (i) The eligible professional’s (or, in System is separate from the standards, the case of a group practice under para- implementation specifications, and graph (g) of this section, the group certification criteria established for practice’s) total estimated allowed the EHR Incentive Program specified charges for covered professional serv- in part 495. ices furnished during a reporting period (c) Incentive payments. With respect are determined based on claims proc- to covered professional services fur- essed in the National Claims History nished during a reporting period by an (NCH) no later than 2 months after the eligible professional, if — end of the applicable reporting period;

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00039 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.90 42 CFR Ch. IV (10–1–12 Edition)

(ii) In the case of an eligible profes- (A) In a form and manner specified by sional who furnishes covered profes- the Secretary, that the eligible professional services in more than one prac- sional has successfully met the require- tice, incentive payments are separately ments of paragraph (d)(2)(ii) of this sec- determined for each practice based on tion, which may be in the form of a claims submitted for the eligible pro- structural measure); fessional for each practice; (B) If requested by the Secretary, on (iii) Incentive payments earned by an the survey of patient experience with eligible professional (or in the case of a care (as described in paragraph (b) of group practice under paragraph (g) of this section); and this section, by a group practice) for a (C) As the Secretary may require, on particular program year will be paid as the methods, measures, and data used a single consolidated payment to the under the Maintenance of Certification TIN holder of record. Program and the qualified Mainte- (d) Additional incentive payment. (1) nance of Certification Program prac- Through 2014, if an eligible professional tice assessment. meets the requirements described in (e) Use of consensus-based quality paragraph (d)(2) of this section, the ap- measures. For each program year, CMS plicable percent for such year, as de- will publish the final list of measures scribed in paragraphs (c)(3)(i) and (ii) of and the final detailed measure speci- this section, must be increased by 0.5 fications for all quality measures se- percentage points. lected for inclusion in the Physician (2) In order to qualify for the addi- Quality Reporting System quality tional incentive payment described in measure set for a given program year paragraph (d)(1) of this section, an eli- on a CMS Web site by no later than De- gible professional must meet the fol- cember 31 of the prior year. lowing requirements: (1) General rule. Subject to paragraph (i) The eligible professional must— (e)(2) of this section, for purposes of re- (A) Satisfactorily submit data on porting data on quality measures for quality measures for purposes of this covered professional services furnished section for a year; and during a year, subject to paragraph (f) (B) Have such data submitted on of this section, the quality measures their behalf through a Maintenance of specified under this paragraph must be Certification program (as defined in such measures selected by the Sec- paragraph (b) of this section) that retary from measures that have been meets: endorsed by the entity with a contract (1) The criteria for a registry (as with the Secretary under section specified by CMS); or 1890(a) of the Act. (2) An alternative form and manner (2) Exception. In the case of a speci- determined appropriate by the Sec- fied area or medical topic determined retary. appropriate by the Secretary for which (ii) The eligible professional, more a feasible and practical measure has frequently than is required to qualify not been endorsed by the entity with a for or maintain board certification sta- contract under section 1890(a) of the tus— Act, the Secretary may specify a meas- (A) Participates in a maintenance of ure that is not so endorsed as long as certification program (as defined in due consideration is given to measures paragraph (b) of this section) for a that have been endorsed or adopted by year; and a consensus organization identified by (B) Successfully completes a quali- the Secretary, such as the AQA alli- fied maintenance of certification pro- ance. gram practice assessment (as defined (3) Opportunity to provide input on in paragraph (b) of this section) for measures. For each quality measure such year. adopted by the Secretary under this (iii) A Maintenance of Certification paragraph, the Secretary ensures that Program submits to the Secretary, on eligible professionals have the oppor- behalf of the eligible professional, in- tunity to provide input during the de- formation— velopment, endorsement, or selection

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00040 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.90

of quality measures applicable to serv- Quality Reporting System must report ices they furnish. information on the individual Physi- (f) Requirements for individual eligible cian Quality Reporting System quality professionals to qualify to receive an in- measures or Physician Quality Report- centive payment. In order to qualify to ing System measures groups identified earn a Physician Quality Reporting by CMS in one of the following man- System incentive payment for a par- ners: ticular program year, an individual eli- (i) Reporting the individual Physi- gible professional, as identified by a cian Quality Reporting System quality unique TIN/NPI combination, must measures or Physician Quality Report- meet the criteria for satisfactory re- ing System measures groups to CMS, porting specified by CMS for such year by no later than 2 months after the end by reporting on either individual Phy- of the applicable reporting period, on sician Quality Reporting System qual- the eligible professional’s Medicare ity measures or Physician Quality Re- Part B claims for covered professional porting System measures groups iden- services furnished during the applica- tified by CMS during a reporting period ble reporting period. specified in paragraph (f)(1) of this sec- (ii) Reporting the individual Physi- tion and using one of the reporting cian Quality Reporting System quality mechanisms specified in paragraph measures or Physician Quality Report- (f)(2) of this section. Although an eligi- ing System measures groups to a quali- ble professional may attempt to qual- fied registry (as specified in paragraph ify for the Physician Quality Reporting (b) of this section) in the form and System incentive payment by report- manner and by the deadline specified ing on both individual Physician Qual- by the qualified registry selected by ity Reporting System quality measures the eligible professional. The selected and measures groups, using more than registry will submit information, as re- one reporting mechanism (as specified quired by CMS, for covered profes- in paragraph (f)(2) of this section), or sional services furnished by the eligible reporting for more than one reporting professional during the applicable re- period, he or she will receive only one porting period to CMS on the eligible Physician Quality Reporting System incentive payment per TIN/NPI com- professional’s behalf. bination for a program year. (iii) Reporting the individual Physi- (1) Reporting periods. For purposes of cian Quality Reporting System quality this paragraph, the reporting period measures to CMS by extracting clinical is— data using a secure data submission (i) The 12-month period from January method, as required by CMS, from a 1 through December 31 of such program qualified EHR product (as defined in year. paragraph (b) of this section) by the (ii) A 6-month period from July 1 deadline specified by CMS for covered through December 31 of such program professional services furnished by the year. eligible professional during the appli- (A) For 2011, such 6-month reporting cable reporting period. Prior to actual period is not available for EHR-based data submission for a given program reporting of individual Physician Qual- year and by a date specified by CMS, ity Reporting System quality meas- the eligible professional must submit a ures. test file containing dummy clinical (B) For 2012 and subsequent program quality data extracted from the quali- years, such 6-month reporting period fied EHR product selected by the eligi- from July 1 through December 31 of ble professional using a secure data such program year is only available for submission method, as required by registry-based reporting of Physician CMS. Quality Reporting System measures (g) Requirements for group practices to groups by eligible professionals. qualify to receive an incentive payment. A (2) Reporting mechanisms. For pro- group practice (as defined in paragraph gram year 2011 and subsequent program (b) of this section) will be treated as years, an eligible professional who satisfactorily submitting data on qual- wishes to participate in the Physician ity measures under Physician Quality

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00041 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.90 42 CFR Ch. IV (10–1–12 Edition)

Reporting System for covered profes- ually qualify for a Physician Quality sional services for a reporting period, Reporting System incentive by meet- if, in lieu of reporting Physician Qual- ing the requirements specified in para- ity Reporting System measures, the graph (f) of this section under that group practice— TIN. (1) Meets the participation require- (h) Limitations on review. Except as ments specified by CMS for the Physi- specified in paragraph (i) of this sec- cian Quality Reporting System group tion, there is no administrative or judi- practice reporting option; cial review under section 1869 or 1879 of (2) Is selected by CMS to participate the Act, or otherwise of— in the Physician Quality Reporting (1) The determination of measures System group practice reporting option; applicable to services furnished by eli- (3) Reports measures in the form and gible professionals under the Physician manner specified by CMS; Quality Reporting System; (4) For purposes of paragraph (g), the (2) The determination of the payment reporting period is the 12-month period limitation; and from January 1 through December 31 of (3) The determination of any Physi- such program year; cian Quality Reporting System incen- (5) Meets other requirements for sat- tive payment and the Physician Qual- isfactory reporting specified by CMS; ity Reporting System payment adjust- and ment. (6) Payments to a group practice (i) Informal review. Eligible profes- under this paragraph must be in lieu of sionals (or in the case of reporting the payments that would otherwise be under paragraph (g) of this section, made under the Physician Quality Re- group practices) may seek an informal porting System to eligible profes- review of the determination that an el- sionals in the group practice for meet- igible professional (or in the case of re- ing the criteria for satisfactory report- porting under paragraph (g) of this sec- ing for individual eligible profes- tion, group practices) did not satisfac- sionals. torily submit data on quality measures (i) If an eligible professional, as iden- under the Physician Quality Reporting tified by an individual NPI, has reassigned his or her Medicare billing System. rights to a TIN selected to participate (1) To request an informal review, an in the Physician Quality Reporting eligible professional (or in the case of System group practice reporting option reporting under paragraph (g) of this for a program year, then for that pro- section, group practices) must submit a gram year the eligible professional request to CMS within 90 days of the must participate in the Physician release of the feedback reports. The re- Quality Reporting System via the quest must be submitted in writing and group practice reporting option. For summarize the concern(s) and reasons any program year in which the TIN is for requesting an informal review and selected to participate in the Physician may also include information to assist Quality Reporting System group prac- in the review. tice reporting option, the eligible pro- (2) CMS will provide a written re- fessional cannot individually qualify sponse within 90 days of the receipt of for a Physician Quality Reporting Sys- the original request. tem incentive payment by meeting the (i) All decisions based on the infor- requirements specified in paragraph (f) mal review will be final. of this section. (ii) There will be no further review or (ii) If, for the program year, the eligible professional participates in the appeal. Physician Quality Reporting System (j) Public reporting of an eligible profes- under a TIN that is not selected to par- sional’s or group practice’s Physician ticipate in the Physician Quality Re- Quality Reporting System data. For each porting System group practice reporting option for that program year, then the eligible professional may individ-

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00042 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.92

program year, CMS will post on a pub- and incentives have been incorporated; lic Web site, in an easily understand- and able format, a list of the names of eli- (ii) Has indicated its desire to par- gible professionals (or in the case of re- ticipate in the electronic prescribing porting under paragraph (g) of this sec- group practice option. tion, group practices) who satisfac- Qualified electronic health record prod- torily submitted Physician Quality Re- uct means an electronic health record porting System quality measures. product and version that, with respect to a particular program year, is des- [75 FR 73617, Nov. 29, 2010, as amended at 76 FR 73471, Nov. 28, 2011] ignated by CMS as a qualified electronic health record product for the § 414.92 Electronic Prescribing Incen- purpose of the Physician Quality Re- tive Program. porting System (as described in § 414.90) and the product’s vendor has indicated (a) Basis and scope. This section im- a desire to have the product qualified plements the following provisions of for purposes of the product’s users to the Act: submit information related to the elec- (1) Section 1848(a)—Payment Based tronic prescribing measure. on Fee Schedule. Qualified registry means a medical (2) Section 1848(m)—Incentive Pay- registry or a Maintenance of Certifi- ments for Quality Reporting. cation Program operated by a specialty (b) Definitions. As used in this sec- body of the American Board of Medical tion, unless otherwise indicated— Specialties that, with respect to a par- Certified electronic health record tech- ticular program year, is designated by nology means an electronic health CMS as a qualified registry for the pur- record vendor’s product and version as pose of the Physician Quality Report- described in 45 CFR 170.102. ing System (as described in § 414.90) and Covered professional services means that has indicated its desire to be services for which payment is made qualified to submit the electronic pre- under, or is based on, the Medicare scribing measure on behalf of eligible physician fee schedule which are fur- professionals for the purposes of the nished by an eligible professional. Electronic Prescribing Incentive Pro- Electronic Prescribing Incentive Pro- gram. gram means the incentive payment pro- (c) Incentive payments and payment gram established under section 1848(m) adjustments. (1) Incentive payments. Sub- of the Act for the adoption and use of ject to paragraph (c)(3) of this section, electronic prescribing technology by with respect to covered professional eligible professionals. services furnished during a reporting Eligible professional means any of the period by an eligible professional, if following healthcare professionals who the eligible professional is a successful have prescribing authority: electronic prescriber for such reporting (i) A physician. period, in addition to the amount oth- (ii) A practitioner described in sec- erwise paid under section 1848 of the tion 1842(b)(18)(C) of the Act. Act, there also must be paid to the eli- (iii) A physical or occupational ther- gible professional (or to an employer or apist or a qualified speech-language pa- facility in the cases described in sec- thologist. tion 1842(b)(6)(A) of the Act) or, in the (iv) A qualified audiologist (as de- case of a group practice under para- fined in section 1861(ll)(3)(B) of the graph (e) of this section, to the group Act). practice, from the Federal Supple- Group practice means a group practice mentary Medical Insurance Trust Fund that is— established under section 1841 of the (i)(A) Defined at § 414.90(b), that is Act an amount equal to the applicable participating in the Physician Quality electronic prescribing percent (as spec- Reporting System; or ified in paragraph (c)(1)(ii) of this sec- (B) In a Medicare-approved dem- tion) of the eligible professional’s (or, onstration project or other Medicare in the case of a group practice under program, under which Physician Qual- paragraph (e) of this section, the group ity Reporting System requirements practice’s) total estimated allowed

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00043 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.92 42 CFR Ch. IV (10–1–12 Edition)

charges for all covered professional the eligible professional (or in the case services furnished by the eligible proof a group practice under paragraph (e) fessional (or, in the case of a group of this section, the group practice) is practice under paragraph (e) of this not a successful electronic prescriber section, by the group practice) during (as specified by CMS for purposes of the the applicable reporting period. payment adjustment) for an applicable (i) For purposes of paragraph (c)(1) of reporting period (as specified by CMS) this section, the fee schedule amount for such serv- (A) The eligible professional’s (or, in ices furnished by such professional (or the case of a group practice under para- group practice) during the program graph (e) of this section, the group year (including the fee schedule practice’s) total estimated allowed amount for purposes of determining a charges for covered professional serv- payment based on such amount) is ices furnished during a reporting period equal to the applicable percent (as are determined based on claims proc- specified in paragraph (c)(2)(i) of this essed in the National Claims History section) of the fee schedule amount (NCH) no later than 2 months after the that would otherwise apply to such end of the applicable reporting period; services under section 1848 of the Act. (B) In the case of an eligible profes- (i) Applicable percent. The applicable sional who furnishes covered profes- percent is as follows: sional services in more than one prac- (A) For 2012, 99 percent; tice, incentive payments are separately (B) For 2013, 98.5 percent; and determined for each practice based on (C) For 2014, 98 percent. claims submitted for the eligible pro- (ii) Significant hardship exception. fessional for each practice; CMS may, on a case-by-case basis, ex- (C) Incentive payments earned by an empt an eligible professional (or in the eligible professional (or in the case of a case of a group practice under para- group practice under paragraph (e) of graph (e) of this section, a group prac- this section, by a group practice) for a tice) from the application of the pay- particular program year will be paid as ment adjustment under paragraph a single consolidated payment to the (c)(2) of this section if, CMS deter- TIN holder of record. mines, subject to annual renewal, that (ii) Applicable electronic prescribing compliance with the requirement for percent. The applicable electronic pre- being a successful electronic prescriber scribing percent is as follows: would result in a significant hardship. (A) For the 2011 and 2012 program Eligible professionals (or, in the case of years, 1.0 percent. a group practice under paragraph (e) of (B) For the 2013 program year, 0.5 this section, a group practice) may re- percent. quest consideration for a significant (iii) Limitation with respect to elec- hardship exemption from a eRx pay- tronic health record (EHR) incentive payment adjustment if one of the fol- ments. The provisions of this paragraph lowing circumstances apply: do not apply to an eligible professional (or, in the case of a group practice (A) From the 2012 payment adjust- under paragraph (e) of this section, a ments by meeting one of the following: group practice) if, for the electronic (1) The practice is located in a rural health record reporting period the eli- area without high speed internet ac- gible professional (or group practice) cess. receives an incentive payment under (2) The practice is located in an area section 1848(o)(1)(A) of the Act with re- without sufficient available phar- spect to a certified electronic health macies for electronic prescribing. record technology (as defined in sec- (3) Registration to participate in the tion 1848(o)(4) of the Act) that has the Medicare or Medicaid EHR Incentive capability of electronic prescribing. Program and adoption of Certified EHR (2) Payment adjustment. Subject to Technology. paragraphs (c)(1)(ii) and (c)(3) of this (4) Inability to electronically pre- section, with respect to covered profes- scribe due to local, State or Federal sional services furnished by an eligible law or regulation. professional during 2012, 2013, or 2014, if (5) Limited prescribing activity.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00044 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.92

(6) Insufficient opportunities to re- eligible professional (or the group prac- port the eRx measure due to limita- tice, as applicable). tions of the measure’s denominator. (d) Requirements for individual eligible (B) From the 2013 and 2014 payment professionals to qualify to receive an in- adjustments by meeting one of the fol- centive payment. In order to be consid- lowing: ered a successful electronic prescriber (1) The eligible professional or group and qualify to earn an electronic pre- practice is located in a rural area with- scribing incentive payment (subject to out high speed internet access. paragraph (c)(3) of this section), an in- (2) The eligible professional or group dividual eligible professional, as identi- practice is located in an area without fied by a unique TIN/NPI combination, sufficient available pharmacies for must meet the criteria for being a suc- electronic prescribing. cessful electronic prescriber under sec- (3) The eligible professional or group tion 1848(m)(3)(B) of the Act and as practice is unable to electronically pre- specified by CMS during the reporting scribe due to local, State, or Federal period specified in paragraph (d)(1) of law or regulation. this section and using one of the re- (4) The eligible professional or group porting mechanisms specified in para- practice has limited prescribing activ- graph (d)(2) of this section. Although ity, as defined by an eligible profes- an eligible professional may attempt to sional generating fewer than 100 pre- qualify for the electronic prescribing scriptions during a 6-month reporting incentive payment using more than period. one reporting mechanism (as specified (iii) Other limitations to the payment in paragraph (d)(2) of this section), the adjustment. An eligible professional (or eligible professional will receive only in the case of a group practice under one electronic prescribing incentive paragraph (b) of this section, a group payment per TIN/NPI combination for practice) is exempt from the applica- a program year. tion of the payment adjustment under (1) Reporting period. For purposes of paragraph (c)(2) of this section if one of this paragraph, the reporting period the following applies: with respect to a program year is the (A) The eligible professional is not an entire calendar year. MD, DO, podiatrist, nurse practitioner, (2) Reporting mechanisms. An eligible or physician assistant. professional who wishes to participate (B) The eligible professional does not in the Electronic Prescribing Incentive have at least 100 cases containing an Program must report information on encounter code that falls within the de- the electronic prescribing measure nominator of the electronic prescribing identified by CMS to— measure for dates of service during the (i) CMS, by no later than 2 months 6-month reporting period specified in after the end of the applicable report- paragraph (f)(1) of this section. ing period, on the eligible profes- (3) Limitation with respect to electronic sional’s Medicare Part B claims for prescribing quality measures. The provi- covered professional services furnished sions of paragraphs (c)(1) and (c)(2) of by the eligible professional during the this section do not apply to an eligible reporting period specified in paragraph professional (or, in the case of a group (d)(1) of this section; practice under paragraph (e) of this (ii) A qualified registry (as defined in section, a group practice) if for the re- paragraph (b) of this section) in the porting period the allowed charges form and manner and by the deadline under section 1848 of the Act for all specified by the qualified registry se- covered professional services furnished lected by the eligible professional. The by the eligible professional (or group, selected qualified registry will submit as applicable) for the codes to which information, as required by CMS, for the electronic prescribing measure ap- covered professional services furnished plies are less than 10 percent of the by the eligible professional during the total of the allowed charges under sec- reporting period specified in paragraph tion 1848 of the Act for all such covered (d)(1) of this section to CMS on the eli- professional services furnished by the gible professional’s behalf; or

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00045 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.92 42 CFR Ch. IV (10–1–12 Edition)

(iii) CMS by extracting clinical data Electronic Prescribing Incentive Pro- using a secure data submission method, gram under a TIN that is not selected as required by CMS, from a qualified to participate in the Electronic Pre- electronic health record product (as describing Incentive Program group prac- fined in paragraph (b) of this section) tice reporting option for that program by the deadline specified by CMS for year, then the eligible professional covered professional services furnished may individually qualify for an elec- by the eligible professional during the tronic prescribing incentive by meet- reporting period specified in paragraph ing the requirements specified in para- (d)(1) of this section. Prior to actual graph (d) of this section under that data submission for a given program TIN. year and by a date specified by CMS, (f) Requirements for individual eligible the eligible professional must submit a professionals and group practices for the test file containing real or dummy payment adjustment. In order to be con- clinical quality data extracted from sidered a successful electronic pre- the qualified electronic health record scriber for the electronic prescribing product selected by the eligible profes- payment adjustment, an individual eli- sional using a secure data submission gible professional (or, in the case of a method, as required by CMS. group practice under paragraph (b) of (e) Requirements for group practices to this section, a group practice), as iden- qualify to receive an incentive payment. tified by a unique TIN/NPI combina- (1) A group practice (as defined in para- tion, must meet the criteria for being a graph (b) of this section) will be treat- successful electronic prescriber speci- ed as a successful electronic prescriber fied by CMS, in the form and manner for covered professional services for a specified in paragraph (f)(2) of this sec- reporting period if the group practice tion, and during the reporting period meets the criteria for successful elec- specified in paragraph (f)(1) of this sec- tronic prescriber specified by CMS in tion. the form and manner and at the time (1) Reporting periods. (i) For purposes specified by CMS. of this paragraph (f), the reporting pe- (2) No double payments. Payments to a riod for the 2013 payment adjustment is group practice under this paragraph either of the following: must be in lieu of the payments that (A) The 12-month period from Janu- would otherwise be made under the ary 1, 2011 through December 31, 2011. Electronic Prescribing Incentive Pro- (B) The 6-month period from January gram to eligible professionals in the 1, 2012 through June 30, 2012. group practice for being a successful (ii) For purposes of this paragraph (f), electronic prescriber. the reporting period for the 2014 pay- (i) If an eligible professional, as iden- ment adjustment is either of the fol- tified by an individual NPI, has reas- lowing: signed his or her Medicare billing (A) The 12-month period from Janu- rights to a TIN selected to participate ary 1, 2012 through December 31, 2012. in the electronic prescribing group (B) The 6-month period from January practice reporting option for a program 1, 2013 through June 30, 2013. year, then for that program year the (2) Reporting mechanisms. An eligible eligible professional must participate professional (or, in the case of a group in the Electronic Prescribing Incentive practice under paragraph (e) of this Program via the group practice report- section, a group practice) who wishes ing option. For any program year in to participate in the Electronic Pre- which the TIN is selected to partici- scribing Incentive Program must re- pate in the Electronic Prescribing In- port information on the electronic pre- centive Program group practice report- scribing measure identified by CMS to ing option, the eligible professional one of the following: cannot individually qualify for an elec- (i) For the 6- and 12-month reporting tronic prescribing incentive payment periods under paragraph (f)(1) of this by meeting the requirements specified section, CMS, by no later than 2 in paragraph (d) of this section. months after the end of the applicable (ii) If, for the program year, the eligi- 12-month reporting period or by no ble professional participates in the later than 1 month after the end of the

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00046 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.104

applicable 6-month reporting period, on Subpart C—Fee Schedules for Par- the eligible professional’s Medicare enteral and Enteral Nutrition Part B claims for covered professional (PEN) Nutrients, Equipment services furnished by the eligible pro- and Supplies fessional during the reporting period specified in paragraph (f)(1) of this section. SOURCE: 66 FR 45176, Aug. 28, 2001, unless otherwise noted. (ii) For the 12-month reporting period under paragraph (f)(1) of this section, a § 414.100 Purpose. qualified registry (as defined in paragraph (b) of this section) in the form This subpart implements fee sched- and manner and by the deadline speci- ules for PEN items and services as au- fied by the qualified registry selected thorized by section 1842(s) of the Act. by the eligible professional. The se- § 414.102 General payment rules. lected qualified registry submits information, as required by CMS, for cov- (a) General rule. For items and serv- ered professional services furnished by ices furnished on or after January 1, the eligible professional during the re- 2002, Medicare pays for the items and porting period specified in paragraph services as described in paragraph (b) (f)(1) of this section to CMS on the eli- of this section on the basis of 80 per- gible professional’s behalf. cent of the lesser of— (iii) For the 12-month reporting pe- (1) The actual charge for the item or riod under paragraph (f)(1) of this sec- service; or tion, CMS by extracting clinical data (2) The fee schedule amount for the using a secure data submission method, item or service, as determined in ac- as required by CMS, from a qualified cordance with § 414.104. electronic health record product (as de- (b) Payment classification. (1) CMS or fined in paragraph (b) of this section) the carrier determines fee schedules for by the deadline specified by CMS for Parenteral and enteral nutrition (PEN) covered professional services furnished nutrients, equipment, and supplies, as by the eligible professional during the specified in § 414.104. reporting period specified in paragraph (2) CMS designates the specific items (f)(1) of this section. Prior to actual and services in each category through data submission for a given program program instructions. year and by a date specified by CMS, (c) Updating the fee schedule amounts. the eligible professional must submit a For each year subsequent to 2002, the test file containing dummy clinical fee schedule amounts of the preceding quality data extracted from the quali- year are updated by the percentage increase in the CPI-U for the 12-month fied electronic health record product period ending with June of the pre- selected by the eligible professional ceding year. using a secure data submission method, as required by CMS. § 414.104 PEN Items and Services. (g) Public reporting of an eligible professional’s or group practice’s Electronic (a) Payment rules. Payment for PEN items and services is made in a lump Prescribing Incentive Program data. For sum for nutrients and supplies that are each program year, CMS will post on a purchased and on a monthly basis for public Web site, in an easily under- equipment that is rented. standable format, a list of the names of (b) Fee schedule amount. The fee eligible professionals (or in the case of schedule amount for payment for an reporting under paragraph (e) of this item or service furnished in 2002 is the section, group practices) who are suc- lesser of— cessful electronic prescribers. (i) The reasonable charge from 1995; [75 FR 73620, Nov. 29, 2010, as amended at 76 or FR 54968, Sept. 6, 2011; 76 FR 73472, Nov. 28, (ii) The reasonable charge that would 2011] have been used in determining payment for 2002.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00047 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.200 42 CFR Ch. IV (10–1–12 Edition)

Subpart D—Payment for Durable cause of a change in the beneficiary’s Medical Equipment and Pros- physical condition. thetic and Orthotic Devices The following are neither prosthetic nor orthotic devices— § 414.200 Purpose. (1) Parenteral and enteral nutrients, This subpart implements sections supplies, and equipment; 1834 (a) and (h) of the Act by specifying (2) Intraocular lenses; how payments are made for the pur- (3) Medical supplies such as cath- chase or rental of new and used durable eters, catheter supplies, ostomy bags, medical equipment and prosthetic and and supplies related to ostomy care orthotic devices for Medicare bene- that are furnished by an HHA as part of ficiaries. home health services under § 409.40(e) of this chapter; [57 FR 57689, Dec. 7, 1992] (4) Dental prostheses. § 414.202 Definitions. Region means those carrier service areas administered by CMS regional of- For purposes of this subpart, the fol- fices. lowing definitions apply: Complex rehabilitative power-driven [57 FR 57689, Dec. 7, 1992, as amended at 75 wheelchair means a power-driven wheel- FR 73622, Nov. 29, 2010; 76 FR 70314, Nov. 10, chair that is classified as— 2011] (1) Group 2 power wheelchair with § 414.210 General payment rules. power options that can accommodate rehabilitative features (for example, (a) General rule. For items furnished tilt in space); or on or after January 1, 1989, except as (2) Group 3 power wheelchair. provided in paragraphs (c) and (d) of Covered item update means the per- this section, Medicare pays for durable centage increase in the consumer price medical equipment, prosthetics and index for all urban consumers (U.S. orthotics, including a separate pay- city average) (CPI-U) for the 12-month ment for maintenance and servicing of period ending with June of the previous the items as described in paragraph (e) year. of this section, on the basis of 80 per- Durable medical equipment means cent of the lesser of— equipment, furnished by a supplier or a (1) The actual charge for the item; home health agency that meets the fol- (2) The fee schedule amount for the lowing conditions: item, as determined in accordance with (1) Can withstand repeated use. the provisions of §§ 414.220 through (2) Effective with respect to items 414.232. classified as DME after January 1, 2012, (b) Payment classification. (1) The car- has an expected life of at least 3 years. rier determines fee schedules for the (3) Is primarily and customarily used following classes of equipment and de- to serve a medical purpose. vices: (4) Generally is not useful to an indi- (i) Inexpensive or routinely pur- vidual in the absence of an illness or chased items, as specified in § 414.220. injury. (ii) Items requiring frequent and sub- (5) Is appropriate for use in the home. stantial servicing, as specified in Prosthetic and orthotic devices means— § 414.222. (1) Devices that replace all or part of (iii) Certain customized items, as an internal body organ, including specified in § 414.224. ostomy bags and supplies directly re- (iv) Oxygen and oxygen equipment, lated to ostomy care, and replacement as specified in § 414.226. of such devices and supplies; (v) Prosthetic and orthotic devices, (2) One pair of conventional eye- as specified in § 414.228. glasses or contact lenses furnished sub- (vi) Other durable medical equipment sequent to each cataract surgery with (capped rental items), as specified in insertion of an intraocular lens; and § 414.229. (3) Leg, arm, back, and neck braces, (vii) Transcutaneous electrical nerve and artificial legs, arms, and eyes, in- stimulators (TENS), as specified in cluding replacements if required be- § 414.232.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00048 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.210

(2) CMS designates the items in each first month of that period for 30 min- class of equipment or device through utes of labor for routine maintenance its program instructions. and servicing of the equipment in the (c) Exception for certain HHAs. Public beneficiary’s home (including an insti- HHAs and HHAs that furnish services tution used as the beneficiary’s home). or items free-of-charge or at nominal (iii) The supplier must visit the bene- prices to a significant number of low- ficiary’s home (including an institution income patients, as defined in § 413.13(a) used as the beneficiary’s home) to in- of this chapter, are paid on the basis of spect the equipment during the first 80 percent of the fee schedule amount month of the 6-month period. determined in accordance with the pro- (3) Exception to maintenance and serv- vision of §§ 414.220 through 414.230. icing payments. For items purchased on (d) Prohibition on special limits. For or after June 1, 1989, no payment is items furnished on or after January 1, made under the provisions of paragraph 1989 and before January 1, 1991, neither (e)(1) of this section for the mainte- CMS nor a carrier may establish a spe- nance and servicing of: cial reasonable charge for items cov- (i) Items requiring frequent and sub- ered under this subpart on the basis of stantial servicing, as defined in inherent reasonableness as described in § 414.222(a); § 405.502(g) of this chapter. (ii) Capped rental items, as defined in (e) Maintenance and servicing—(1) § 414.229(a), that are not beneficiary- General rule. Except as provided in owned in accordance with § 414.229(d), paragraph (e)(3) of this section, the carrier pays the reasonable and necessary § 414.229(f)(2), or § 414.229(h); and charges for maintenance and servicing (iii) Capped rental items, as defined of beneficiary-owned equipment. Rea- in § 414.229(a), that are not beneficiary- sonable and necessary charges are owned in § 414.229(d), § 414.229(f)(2), or those made for parts and labor not oth- § 414.229(h); and erwise covered under a manufacturer’s (iv) Oxygen equipment, as described or supplier’s warranty. Payment is in § 414.226. made for replacement parts in a lump (4) Supplier replacement of beneficiary- sum based on the carrier’s consider- owned equipment based on accumulated ation of the item. The carrier estab- repair costs. A supplier that transfers lishes a reasonable fee for labor associ- title to a capped rental item to a bene- ated with repairing, maintaining, and ficiary in accordance with § 414.229(f)(2) servicing the item. Payment is not is responsible for furnishing replace- made for maintenance and servicing of ment equipment at no cost to the bene- a rented item other than the mainte- ficiary or to the Medicare program if nance and servicing fee for oxygen the carrier determines that the item equipment described in paragraph (e)(2) furnished by the supplier will not last of this section or for other durable for the entire reasonable useful life- medical equipment as described in time established for the equipment in § 414.229(e). accordance with § 414.210(f)(1). In mak- (2) Maintenance and servicing payment ing this determination, the carrier may for certain oxygen equipment furnished consider whether the accumulated after the 36-month rental period from Jan- costs of repair exceed 60 percent of the uary 1, 2009 through June 30, 2010. The cost to replace the item. carrier makes a maintenance and serv- (5) Maintenance and servicing payment icing payment for oxygen equipment for certain oxygen equipment furnished other than liquid and gaseous equip- after the 36-month rental period and on or ment (stationary and portable) as fol- after July 1, 2010. For oxygen equipment lows: other than liquid and gaseous equip- (i) For the first 6-month period fol- ment (stationary and portable), the lowing the date on which the 36-month carrier makes payment as follows: rental period ends in accordance with (i) For the first 6-month period fol- § 414.226(a)(1) of this subpart, no pay- lowing the date on which the 36-month ments are made. rental period ends in accordance with (ii) For each succeeding 6-month pe- § 414.226(a)(1) of this subpart, no pay- riod, payment may be made during the ments are made.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00049 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.220 42 CFR Ch. IV (10–1–12 Edition)

(ii) For each succeeding 6-month pe- § 414.220 Inexpensive or routinely pur- riod, payment may be made during the chased items. first month of that period for routine (a) Definitions. (1) Inexpensive equip- maintenance and servicing of the ment means equipment the average pur- equipment in the beneficiary’s home chase price of which did not exceed $150 (including an institution used as the during the period July 1986 through beneficiary’s home). June 1987. (iii) Payment for maintenance and (2) Routinely purchased equipment servicing is made based on a reasonable means equipment that was acquired by fee not to exceed 10 percent of the pur- purchase on a national basis at least 75 chase price for a stationary oxygen percent of the time during the period concentrator. This payment includes July 1986 through June 1987. payment for maintenance and servicing (3) Accessories. Effective January 1, of all oxygen equipment other than liq- 1994, accessories used in conjunction uid or gaseous equipment (stationary with a nebulizer, aspirator, or venti- or portable). lator excluded from § 414.222 meet the definitions of ‘‘inexpensive equipment’’ (iv) The supplier must visit the bene- and ‘‘routinely purchased equipment’’ ficiary’s home (including an institution in paragraphs (a)(1) and (a)(2) of this used as the beneficiary’s home) to in- section, respectively. spect the equipment during the first (b) Payment rules. (1) Subject to the month of the 6-month period. limitation in paragraph (b)(3) of this (f) Payment for replacement of equip- section, payment for inexpensive and ment. If an item of DME or a prosthetic routinely purchased items is made on a or orthotic device paid for under this rental basis or in a lump sum amount subpart has been in continuous use by for purchase of the item based on the the patient for the equipment’s reason- applicable fee schedule amount. able useful lifetime or if the carrier de- (2) Effective January 1, 1994, payment termines that the item is lost, stolen, for ostomy supplies, tracheostomy sup- or irreparably damaged, the patient plies, urologicals, and surgical may elect to obtain a new piece of dressings not furnished as incident to a equipment. physician’s professional service or fur- (1) The reasonable useful lifetime of nished by an HHA is made using the DME or prosthetic and orthotic devices methodology for the inexpensive and is determined through program in- routinely purchased class. structions. In the absence of program (3) The total amount of payments instructions, carriers may determine made for an item may not exceed the the reasonable useful lifetime of equip- fee schedule amount recognized for the ment but in no case can it be less than purchase of that item. 5 years. Computation is based on when (c) Fee schedule amount for 1989 and the equipment is delivered to the bene- 1990. The fee schedule amount for pay- ficiary, not the age of the equipment. ment of purchase or rental of inexpen- (2) If the beneficiary elects to obtain sive or routinely purchased items fur- replacement oxygen equipment, pay- nished in 1989 and 1990 is the local payment is made in accordance with ment amount determined as follows: § 414.226(a). (1) The carrier determines the average reasonable charge for inexpensive (3) If the beneficiary elects to obtain or routinely purchased items that were a replacement capped rental item, pay- furnished during the period July 1, 1986 ment is made in accordance with through June 30, 1987 based on the § 414.229(a)(2) or (a)(3). mean of the carrier’s allowed charges (4) For all other beneficiary-owned for the item. A separate determination items, if the beneficiary elects to ob- of an average reasonable charge is tain replacement equipment, payment made for rental equipment, new pur- is made on a purchase basis. chased equipment, and used purchased [57 FR 57689, Dec. 7, 1992, as amended at 71 equipment. FR 65932, Nov. 9, 2006; 73 FR 69936, Nov. 19, (2) The carrier adjusts the amount 2008; 73 FR 80304, Dec. 31, 2008; 74 FR 62009, determined under paragraph (c)(1) of Nov. 25, 2009] this section by the change in the level

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00050 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.222

of the CPI-U for the 6-month period (3) For 1993, the national limited pay- ending December 1987. ment amount is equal to one of the fol- (d) Updating the local payment lowing: amounts for years after 1990. For each (i) 100 percent of the local payment year subsequent to 1990, the local pay- amount if the local payment amount is ment amounts of the preceding year neither greater than the weighted aver- are increased or decreased by the cov- age nor less than 85 percent of the ered item update. For 1991 and 1992, the weighted average of all local payment covered item update is reduced by 1 amounts. percentage point. (ii) 100 percent of the weighted aver- (e) Calculating the fee schedule age of all local payment amounts if the amounts for years after 1990. For years local payment amount exceeds the after 1990, the fee schedule amounts are weighted average of all local payment equal to the national limited payment amounts. amount. (iii) 85 percent of the weighted aver- (f) Calculating the national limited pay- age of all local payment amounts if the ment amount. The national limited pay- local payment amount is less than 85 ment amount is computed as follows: percent of the weighted average of all (1) The 1991 national limited payment local payment amounts. amount is equal to: (4) For 1994 and subsequent years, the (i) 100 percent of the local payment amount if the local payment amount is national limited payment amount is neither greater than the weighted aver- equal to one of the following: age nor less than 85 percent of the (i) If the local payment amount is weighted average of all local payment not in excess of the median, nor less amounts; than 85 percent of the median, of all (ii) The sum of 67 percent of the local local payment amounts—100 percent of payment amount plus 33 percent of the the local payment amount. weighted average of all local payment (ii) If the local payment amount ex- amounts if the local payment amount ceeds the median—100 percent of the exceeds the weighted average of all median of all local payment amounts. local payment amounts; or (iii) If the local payment amount is (iii) The sum of 67 percent of the less than 85 percent of the median—85 local payment amount plus 33 percent percent of the median of all local pay- of 85 percent of the weighted average of ment amounts. all local payment amounts if the local (g) Payment for surgical dressings. For payment amount is less than 85 percent surgical dressings furnished after De- of the weighted average of all local cember 31, 1993, the national limited payment amounts. payment amount is computed based on (2) The 1992 national limited payment local payment amounts using average amount is equal to: reasonable charges for the 12-month pe- (i) 100 percent of the local payment riod ending December 31, 1992, in- amount if the local payment amount is creased by the covered item updates for neither greater than the weighted aver- 1993 and 1994. age nor less than 85 percent of the weighted average of all local payment [57 FR 57689, Dec. 7, 1992, as amended at 60 amounts; FR 35497, July 10, 1995] (ii) The sum of 33 percent of the local § 414.222 Items requiring frequent and payment amount plus 67 percent of the substantial servicing. weighted average of all local payment amounts if the local payment amount (a) Definition. Items requiring fre- exceeds the weighted average; or quent and substantial servicing in (iii) The sum of 33 percent of the order to avoid risk to the beneficiary’s local payment amount plus 67 percent health are the following: of 85 percent of the weighted average of (1) Ventilators (except those that are all local payment amounts if the local either continuous airway pressure de- payment amount is less than 85 percent vices or respiratory assist devices with of the weighted average. bi-level pressure capability with or

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00051 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.224 42 CFR Ch. IV (10–1–12 Edition)

without a backup rate, previously re- purchase option must be offered to the ferred to as ‘‘intermittent assist de- beneficiary in May 1994, the tenth vices with continuous airway pressure month of continuous rental. devices’’). [57 FR 57690, Dec. 7, 1992, as amended at 60 (2) Continuous and intermittent posi- FR 35497, July 10, 1995; 71 FR 4525, Jan. 27, tive pressure breathing machines. 2006] (3) Continuous passive motion machines. § 414.224 Customized items. (4) Other items specified in CMS pro- (a) Criteria for a customized item. To be gram instructions. considered a customized item for pay- (5) Other items identified by the car- ment purposes under paragraph (b) of rier. this section, a covered item (including (b) Payment rule. Rental payments for a wheelchair) must be uniquely con- items requiring frequent and substan- structed or substantially modified for a tial servicing are made on a monthly specific beneficiary according to the basis, and continue until medical ne- description and orders of a physician cessity ends. and be so different from another item (c) Fee schedule amount for 1989 and used for the same purpose that the two 1990. The fee schedule amount for items items cannot be grouped together for requiring frequent and substantial pricing purposes. servicing is the local payment amount (b) Payment rule. Payment is made on determined as follows: a lump sum basis for the purchase of a (1) The carrier determines the aver- customized item based on the carrier’s age reasonable charge for rental of individual consideration and judgment items requiring frequent and substan- of a reasonable payment amount for tial servicing that were furnished dur- each customized item. The carrier’s in- ing the period July 1, 1986 through dividual consideration takes into ac- June 30, 1987 based on the mean of the count written documentation on the carrier’s allowed charges for the item. costs of the item including at least the (2) The carrier adjusts the amounts cost of labor and materials used in cus- determined under paragraph (c)(1) of tomizing an item. this section by the change in the level [56 FR 65998, Dec. 20, 1991, as amended at 58 of the CPI-U for the 6-month period FR 34919, June 30, 1993] ending December 1987. (d) Updating the fee schedule amounts § 414.226 Oxygen and oxygen equip- for years after 1990. For years after 1990, ment. the fee schedules are determined using (a) Payment rules—(1) Oxygen equip- the methodology contained in para- ment. Payment for rental of oxygen graphs (d), (e), and (f) of § 414.220. equipment is made based on a monthly (e) Transition to other payment classes. fee schedule amount during the period For purposes of calculating the 15- of medical need, but for no longer than month rental period, beginning Janu- a period of continuous use of 36 ary 1, 1994, if an item has been paid for months. A period of continuous use is under the frequent and substantial determined under the provisions in servicing class and is subsequently paid § 414.230. for under another payment class, the (2) Oxygen contents. Payment for pur- rental period begins with the first chase of oxygen contents is made based month of continuous rental, even if on a monthly fee schedule amount that period began before January 1, until medical necessity ends. 1994. For example, if the rental period (b) Monthly fee schedule amount for began on July 1, 1993, the carrier must items furnished prior to 2007. (1) Monthly use this date as beginning the first fee schedule amounts are separately month of rental. Likewise, for purposes calculated for the following items: of calculating the 10-month purchase (i) Stationary oxygen equipment and option, the rental period begins with oxygen contents (stationary and port- the first month of continuous rental able oxygen contents). without regard to when that period (ii) Portable oxygen equipment only. started. For example, if the rental pe- (iii) Stationary and portable oxygen riod began in August 1993, the 10-month contents only.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00052 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.226

(iv) Portable oxygen contents only. (iv) Stationary oxygen contents only. (2) For 1989 and 1990, the monthly fee (v) Portable oxygen contents only. schedule amounts are the local pay- (2) The national limited monthly ment amounts determined as follows: payment rate for items described in (i) The carrier determines the base paragraph (c)(1)(i) of this section is local average monthly payment rate equal to the weighted average fee equal to the total reasonable charges schedule amount established under for the item for the 12-month period paragraph (b)(5) of this section reduced ending December 1986 divided by the by $1.44. total number of months for all bene- (3) The national limited monthly ficiaries receiving the item for the payment rate for items described in same period. In determining the local paragraph (c)(1)(ii) of this section is average monthly payment rate, the fol- equal to the weighted average of the lowing limitations apply: fee schedule amounts established under (A) Purchase charges for oxygen sys- paragraph (b)(5) of this section. tems are not included as items classi- (4) The national limited monthly fied under paragraph (b)(1)(i) of this payment rate for items described in section. paragraph (c)(1)(iii) of this section is (B) Purchase charges for portable equal to the national limited monthly equipment are not included as items payment rate established under para- classified under paragraph (b)(1)(ii) of graph (c)(5) of this section, multiplied this section. by 24, and divided by 36. (ii) The carrier determines the local (5) The national limited monthly monthly payment amount equal to 0.95 payment rate for items described in times the base local average monthly paragraphs (c)(1)(iv) and (c)(1)(v) of this payment amount adjusted by the section is equal to 50 percent of the change in the CPI-U for the six-month weighted average fee schedule amounts period ending December 1987. established under paragraph (b)(3) of (3) For 1991 through 2006, the fee this section for items described in schedule amounts for items described paragraph (b)(1)(iii) of this section. in paragraphs (b)(1)(iii) and (iv) of this (6) Beginning in 2008, CMS makes an section are determined using the meth- annual adjustment to the national lim- odology contained in § 414.220(d), (e), ited monthly payment rates for each and (f). class of items described in paragraph (4) For 1991 through 2006, the fee (c)(1) of this section to ensure that schedule amounts for items described such payment rates do not result in ex- in paragraphs (b)(1)(i) and (ii) of this penditures for any year that are more section are determined using the meth- or less than the expenditures that odology contained in § 414.220(d), (e), would have been made if such classes and (f). had not been established. (5) For 2005 and 2006, the fee schedule (d) Application of monthly fee schedule amounts determined under paragraph amounts. (1) The fee schedule amount (b)(4) of this section are reduced using for items described in paragraph the methodology described in section (c)(1)(i) of this section is paid when the 1834(a)(21)(A) of the Act. beneficiary rents stationary oxygen (c) Monthly fee schedule amount for equipment. items furnished for years after 2006. (1) (2) Subject to the limitation set forth For 2007, national limited monthly in paragraph (e)(2) of this section, the payment rates are calculated and paid fee schedule amount for items de- as the monthly fee schedule amounts scribed in paragraphs (c)(1)(ii) and for the following classes of items: (c)(1)(iii) of this section is paid when (i) Stationary oxygen equipment (in- the beneficiary rents portable oxygen cluding stationary concentrators) and equipment. oxygen contents (stationary and port- (3) The fee schedule amount for items able). described in paragraph (c)(1)(iv) of this (ii) Portable equipment only (gaseous section is paid when the beneficiary— or liquid tanks). (i) Owns stationary oxygen equip- (iii) Oxygen generating portable ment that requires delivery of gaseous equipment only. or liquid oxygen contents; or

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00053 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.226 42 CFR Ch. IV (10–1–12 Edition)

(ii) Rents stationary oxygen equip- (ii) If the prescribed flow rate is dif- ment that requires delivery of gaseous ferent for the patient at rest than for or liquid oxygen contents after the pe- the patient at exercise, the flow rate riod of continuous use of 36 months de- for the patient at rest is used. scribed in paragraph (a)(1) of this sec- (iii) If the prescribed flow rate is dif- tion. ferent for nighttime use and daytime (4) The fee schedule amount for items use, the average of the two flow rates described in paragraph (c)(1)(v) of this is used. section is paid when the beneficiary— (f) Furnishing oxygen and oxygen (i) Owns portable oxygen equipment equipment after the 36-month rental cap. described in (c)(1)(ii) of this section; (1) The supplier that furnishes oxygen (ii) Rents portable oxygen equipment equipment for the 36th continuous described in paragraph (c)(1)(ii) of this month during which payment is made section during the period of continuous under this section must— use of 36 months described in para- (i) Continue to furnish the equipment graph (a)(1) of this section and does not during any period of medical need for rent stationary oxygen equipment; or the remainder of the reasonable useful (iii) Rents portable oxygen equip- lifetime established for the equipment ment described in paragraph (c)(1)(ii) of in accordance with § 414.210(f)(1); or this section after the period of contin- (ii) Arrange for furnishing the oxygen uous use of 36 months described in equipment with another supplier if the paragraph (a)(1) of this section. beneficiary relocates to an area that is (e) Volume adjustments. (1) The fee outside the normal service area of the schedule amount for an item described supplier that initially furnished the in paragraph (c)(1)(i) of this section is equipment. adjusted as follows: (2) The supplier that furnishes liquid (i) If the attending physician pre- or gaseous oxygen equipment (sta- scribes an oxygen flow rate exceeding tionary or portable) for the 36th con- four liters per minute, the fee schedule tinuous month during which payment amount is increased by 50 percent, sub- is made under this section must— ject to the limit in paragraph (e)(2) of (i) Continue to furnish the oxygen this section. contents necessary for the effective use (ii) If the attending physician pre- of the liquid or gaseous equipment dur- scribes an oxygen flow rate of less than ing any period of medical need for the one liter per minute, the fee schedule remainder of the reasonable useful life- amount is decreased by 50 percent. time established for the equipment in (2) If portable oxygen equipment is accordance with § 414.210(f)(1); or used and the prescribed oxygen flow (ii) Arrange for furnishing the oxygen rate exceeds four liters per minute, the contents with another supplier if the total fee schedule amount recognized beneficiary relocates to an area that is for payment is limited to the higher outside the normal service area of the of— supplier that initially furnished the (i) The sum of the monthly fee sched- equipment. ule amount for the items described in (g) Additional supplier requirements for paragraphs (c)(1)(i) and (c)(1)(ii) or rentals that begin on or after January 1, (c)(1)(iii) of this section; or 2007. (1) The supplier that furnishes ox- (ii) The adjusted fee schedule amount ygen equipment for the first month described in paragraph (e)(1)(i) of this during which payment is made under section. this section must continue to furnish (3) In establishing the volume adjust- the equipment for the entire 36-month ment for those beneficiaries whose phy- period of continuous use, unless med- sicians prescribe varying flow rates, ical necessity ends or— the following rules apply: (i) The item becomes subject to a (i) If the prescribed flow rate is dif- competitive acquisition program im- ferent for stationary oxygen equipment plemented in accordance with section than for portable oxygen equipment, 1847(a) of the Act; the flow rate for the stationary equip- (ii) The beneficiary relocates to an ment is used. area that is outside the normal service

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00054 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.228

area of the supplier that initially fur- orthotic devices is determined as fol- nished the equipment; lows: (iii) The beneficiary elects to obtain (1) The carrier determines a base oxygen equipment from a different sup- local purchase price equal to the aver- plier prior to the expiration of the 36- age reasonable charge for items pur- month rental period; or chased during the period July 1, 1986 (iv) CMS or the carrier determines through June 30, 1987 based on the that an exception should apply in an mean of the carrier’s allowed charges individual case based on the cir- for the item. cumstances. (2) The carrier determines a local (2) Oxygen equipment furnished purchase price equal to the following: under this section may not be replaced (i) For 1989 and 1990, the base local by the supplier prior to the expiration purchase price is adjusted by the of the reasonable useful lifetime estab- change in the level of the CPI-U for the lished for the equipment in accordance 6-month period ending December 1987. with § 414.210(f)(1) unless: (ii) For 1991 through 1993, the local (i) The supplier replaces an item with purchase price for the preceding year is the same, or equivalent, make and adjusted by the applicable percentage model of equipment because the item increase for the year. The applicable initially furnished was lost, stolen, ir- percentage increase is equal to 0 per- reparably damaged, is being repaired, cent for 1991. For 1992 and 1993, the ap- or no longer functions; plicable percentage increase is equal to (ii) A physician orders different the percentage increase in the CPI-U equipment for the beneficiary. If the for the 12-month period ending with order is based on medical necessity, June of the previous year. then the order must indicate why the (iii) For 1994 and 1995, the applicable equipment initially furnished is no percentage increase is 0 percent. longer medically necessary and the (iv) For all subsequent years the ap- supplier must retain this order in the plicable percentage increase is equal to beneficiary’s medical record; the percentage increase in the CPI-U (iii) The beneficiary chooses to ob- for the 12-month period ending with tain a newer technology item or up- June of the previous year. graded item and signs an advanced ben- (3) CMS determines the regional pur- eficiary notice (ABN); or chase price equal to the following: (iv) CMS or the carrier determines (i) For 1992, the average (weighted by that a change in equipment is war- the relative volume of all claims ranted. among carriers) of the local purchase (3) Before furnishing oxygen equip- prices for the carriers in the region. ment, the supplier must disclose to the (ii) For 1993 and subsequent years, beneficiary its intentions regarding the regional purchase price for the pre- whether it will accept assignment of ceding year adjusted by the applicable all monthly rental claims for the dura- percentage increase for the year. tion of the rental period. A supplier’s (4) CMS determines a purchase price intentions could be expressed in the equal to the following: form of a written agreement between (i) For 1989, 1990 and 1991, 100 percent the supplier and the beneficiary. of the local purchase price. [57 FR 57690, Dec. 7, 1992, as amended at 71 (ii) For 1992, 75 percent of the local FR 65933, Nov. 9, 2006; 73 FR 69936, Nov. 19, purchase price plus 25 percent of the re- 2008] gional purchase price. (iii) For 1993, 50 percent of the local § 414.228 Prosthetic and orthotic de- purchase price plus 50 percent of the re- vices. gional purchase price. (a) Payment rule. Payment is made on (iv) For 1994 and subsequent years, a lump-sum basis for prosthetic and 100 percent of the regional purchase orthotic devices subject to this sub- price. part. (5) For 1992 and subsequent years, (b) Fee schedule amounts. The fee CMS determines a national average schedule amount for prosthetic and purchase price equal to the unweighted

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00055 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.229 42 CFR Ch. IV (10–1–12 Edition)

average of the purchase prices deter- rules set forth in paragraph (f) of this mined under paragraph (b)(4) of this section. section for all carriers. (5) For power-driven wheelchairs (6) CMS determines the fee schedule classified as complex rehabilitative amount equal to 100 percent of the pur- power-driven wheelchairs, furnished on chase price determined under para- or after January 1, 2011, payment is graph (b)(4) of this section, subject to made in accordance with the rules set the following limitations: forth in paragraphs (f) or (h) of this (i) For 1992, the amount cannot be section. greater than 125 percent nor less than (b) Fee schedule amounts for rental. (1) 85 percent of the national average pur- For 1989 and 1990, the monthly fee chase price determined under para- schedule amount for rental of other graph (b)(5) of this section. covered durable medical equipment (ii) For 1993 and subsequent years, equals 10 percent of the purchase price the amount cannot be greater than 120 recognized as determined under para- percent of the national average nor less graph (c) of this section subject to the than 90 percent of the national average following limitation: For 1989 and 1990, purchase price determined under para- the fee schedule amount cannot be graph (b)(5) of this section. greater than 115 percent nor less than (c) Payment for therapeutic shoes. The 85 percent of the prevailing charge, as payment rules specified in paragraphs determined under § 405.504 of this chap- (a) and (b) of this section are applicable ter, established for rental of the item to custom molded and extra depth in January 1987, as adjusted by the shoes, modifications, and inserts change in the level of the CPI-U for the (therapeutic shoes) furnished after De- 6-month period ending December 1987. cember 31, 2004. (2) For 1991 and subsequent years, the monthly fee schedule amount for rent- [57 FR 57691, Dec. 7, 1992, as amended at 60 al of other covered durable medical FR 35498, July 10, 1995; 73 FR 69937, Nov. 19, equipment equals 10 percent of the pur- 2008] chase price recognized as determined under paragraph (c) of this section for § 414.229 Other durable medical equipment—capped rental items. each of the first 3 months and 7.5 percent of the purchase price for each of (a) General payment rule. Payment is the remaining months. made for other durable medical equip- (3) For power-driven wheelchairs fur- ment that is not subject to the pay- nished on or after January 1, 2011, the ment provisions set forth in § 414.220 monthly fee schedule amount for rent- through § 414.228 as follows: al equipment equals 15 percent of the (1) For items furnished prior to Janu- purchase price recognized as deter- ary 1, 2006, payment is made on a rent- mined under paragraph (c) of this sec- al or purchase option basis in accord- tion for each of the first 3 months and ance with the rules set forth in para- 6 percent of the purchase price for each graphs (b) through (e) of this section. of the remaining months. (2) For items other than power-driven (c) Determination of purchase price. wheelchairs furnished on or after Janu- The purchase price of other covered du- ary 1, 2006, payment is made in accord- rable medical equipment is determined ance with the rules set forth in para- as follows: graph (f) of this section. (1) For 1989 and 1990. (i) The carrier (3) For power-driven wheelchairs fur- determines a base local purchase price nished on or after January 1, 2006 amount equal to the average of the through December 31, 2010, payment is purchase prices submitted on an as- made in accordance with the rules set signment-related basis of new items forth in paragraphs (f) or (h) of this supplied during the 6-month period section. ending December 1986. (4) For power-driven wheelchairs that (ii) The purchase price is equal to the are not classified as complex rehabili- base local purchase price adjusted by tative power-driven wheelchairs, fur- the change in the level of the CPI-U for nished on or after January 1, 2011, pay- the 6-month period ending December ment is made in accordance with the 1987.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00056 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.229

(2) For 1991. (i) The local payment (ii) If the beneficiary accepts the pur- amount is the purchase price for the chase option, payment continues on a preceding year adjusted by the covered rental basis not to exceed a period of item update for 1991 and decreased by continuous use of longer than 13 the percentage by which the average of months. On the first day after 13 con- the reasonable charges for claims paid tinuous rental months during which for all other items described in § 414.229, payment is made, the supplier must is lower than the average of the pur- transfer title to the equipment to the chase prices submitted for such items beneficiary. during the final 9 months of 1988. (e) Payment for maintenance and serv- (ii) The purchase price for 1991 is the icing. (1) The carrier establishes a rea- national limited payment amount as sonable fee for maintenance and serv- determined using the methodology icing for each rented item of other du- contained in § 414.220(f). rable medical equipment. The fee may (3) For years after 1991. The purchase not exceed 10 percent of the purchase price is determined using the method- price recognized as determined under ology contained in paragraphs (d) paragraph (c) of this section. through (f) of § 414.220. (2) Payment of the fee for mainte- (d) Purchase option. Suppliers must nance and servicing of other durable offer a purchase option to beneficiaries medical equipment that is rented is during the 10th continuous rental made only for equipment that con- month and, for power-driven wheel- tinues to be used after 15 months of chairs, the purchase option must also rental payments have been made and is be made available at the time the limited to the following: equipment is initially furnished. (i) For the first 6-month period, no (1) Suppliers must offer beneficiaries payments are to be made. the option of purchasing power-driven (ii) For each succeeding 6-month pe- wheelchairs at the time the supplier riod, payment may be made during the first furnishes the item. On or after first month of that period. January 1, 2011, this option is available (3) Payment for maintenance and only for complex rehabilitative power- servicing DME purchased in accord- driven wheelchairs. Payment must be ance with paragraphs (d)(1) and on a lump-sum fee schedule purchase (d)(2)(ii) of this section, is made on the basis if the beneficiary chooses the pur- basis of reasonable and necessary chase option. The purchase fee is the charges. amount established in paragraph (c) of (f) Rules for capped rental items fur- this section. nished beginning on or after January 1, (2) Suppliers must offer beneficiaries 2006. (1) For items furnished on or after the option of converting capped rental January 1, 2006, payment is made based items (including power-driven wheel- on a monthly rental fee schedule chairs not purchased when initially amount during the period of medical furnished) to purchased equipment dur- need, but for no longer than a period of ing their 10th continuous rental continuous use of 13 months. A period month. Beneficiaries have one month of continuous use is determined under from the date the supplier makes the the provisions in § 414.230. offer to accept the purchase option. (2) The supplier must transfer title to (i) If the beneficiary does not accept the item to the beneficiary on the first the purchase option, payment con- day that begins after the 13th contin- tinues on a rental basis not to exceed a uous month in which payments are period of continuous use of longer than made under paragraph (f)(1) of this sec- 15 months. After 15 months of rental tion. payments have been paid, the supplier (3) Payment for maintenance and must continue to provide the item servicing of beneficiary-owned equip- without charge, other than a charge for ment is made in accordance with maintenance and servicing fees, until § 414.210(e). medical necessity ends or Medicare (g) Additional supplier requirements for coverage ceases. A period of continuous capped rental items that are furnished be- use is determined under the provisions ginning on or after January 1, 2007. (1) in § 414.230. The supplier that furnishes an item for

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00057 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.230 42 CFR Ch. IV (10–1–12 Edition)

the first month during which payment (4) No later than two months before is made using the methodology de- the date on which the supplier must scribed in paragraph (f)(1) of this sec- transfer title to a capped rental item tion must continue to furnish the to the beneficiary, the supplier must equipment until medical necessity disclose to the beneficiary whether it ends, or the 13-month period of contin- can maintain and service the item uous use ends, whichever is earlier, un- after the beneficiary acquires title to less— it. CMS or its carriers may make ex- (i) The item becomes subject to a ceptions to this requirement on a case- competitive acquisition program im- by-case basis. plemented in accordance with section (h) Purchase of power-driven wheel- 1847(a) of the Act; chairs furnished on or after January 1, (ii) The beneficiary relocates to an 2006. (1) Suppliers must offer bene- area that is outside the normal service ficiaries the option to purchase power- area of the supplier that initially fur- driven wheelchairs at the time the nished the equipment; equipment is initially furnished. (iii) The beneficiary elects to obtain (2) Payment is made on a lump-sum the equipment from a different supplier purchase basis if the beneficiary choos- prior to the expiration of the 13-month es this option. rental period; or (3) On or after January 1, 2011, this (iv) CMS or the carrier determines option is available only for complex re- that an exception should apply in an habilitative power-driven wheelchairs. individual case based on the circumstances. [57 FR 57691, Dec. 7, 1992, as amended at 60 (2) A capped rental item furnished FR 35498, July 10, 1995; 71 FR 65934, Nov. 9, under this section may not be replaced 2006; 75 FR 73622, Nov. 29, 2010] by the supplier prior to the expiration § 414.230 Determining a period of con- of the 13-month rental period unless: tinuous use. (i) The supplier replaces an item with the same, or equivalent, make and (a) Scope. This section sets forth the model of equipment because the item rules that apply in determining a pe- initially furnished was lost, stolen, ir- riod of continuous use for rental of du- reparably damaged, is being repaired, rable medical equipment. or no longer functions; (b) Continuous use. (1) A period of (ii) A physician orders different continuous use begins with the first equipment for the beneficiary. If the month of medical need and lasts until need for different equipment is based a beneficiary’s medical need for a par- on medical necessity, then the order ticular item of durable medical equip- must indicate why the equipment ini- ment ends. tially furnished is no longer medically (2) In the case of a beneficiary receiv- necessary and the supplier must retain ing oxygen equipment on December 31, this order in the beneficiary’s medical 2005, the period of continuous use for record; the equipment begins on January 1, (iii) The beneficiary chooses to ob- 2006. tain a newer technology item or up- (c) Temporary interruption. (1) A pe- graded item and signs an advanced ben- riod of continuous use allows for tem- eficiary notice (ABN); or porary interruptions in the use of (iv) CMS or the carrier determines equipment. that a change in equipment is war- (2) An interruption of not longer than ranted. 60 consecutive days plus the days re- (3) Before furnishing a capped rental maining in the rental month in which item, the supplier must disclose to the use ceases is temporary, regardless of beneficiary its intentions regarding the reason for the interruption. whether it will accept assignment of (3) Unless there is a break in medical all monthly rental claims for the dura- necessity that lasts lnnger than 60 con- tion of the rental period. A supplier’s secutive days plus the days remaining intentions could be expressed in the in the rental month in which use form of a written agreement between ceases, medical necessity is presumed the supplier and the beneficiary. to continue.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00058 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.310

(d) Criteria for a new rental period. If determined using the methodology for an interruption in the use of equipment purchase of inexpensive or routinely continues for more than 60 consecutive purchased items as described in days plus the days remaining in the § 414.220. The payment amount for rental month in which use ceases, a TENS computed under § 414.220(c)(2) is new rental period begins if the supplier reduced according to the following for- submits all of the following informa- mula: tion— (1) Effective April 1, 1990—the origi- (1) A new prescription. nal payment amount is reduced by 15 (2) New medical necessity docu- percent. mentation. (2) Effective January 1, 1991—the re- (3) A statement describing the reason duced payment amount in paragraph for the interruption and demonstrating (a)(1) is reduced by 15 percent. that medical necessity in the prior epi- (3) Effective January 1, 1994—the re- sode ended. duced payment amount in paragraph (e) Beneficiary moves. A permanent or (a)(1) is reduced by 45 percent. temporary move made by a beneficiary (b) Exception. In order to permit an does not constitute an interruption in attending physician time to determine the period of continuous use. whether the purchase of the TENS is (f) New equipment. (1) If a beneficiary medically appropriate for a particular changes equipment or requires addi- patient, two months of rental pay- tional equipment based on a physi- ments may be made in addition to the cian’s prescription, and the new or ad- purchase price. The rental payments ditional equipment is found to be nec- are equal to 10 percent of the purchase essary, a new period of continuous use price. begins for the new or additional equipment. A new period of continuous use [57 FR 57692, Dec. 7, 1992, as amended at 60 does not begin for base equipment that FR 35498, July 10, 1995] is modified by an addition. (2) A new period of continuous use Subpart E—Determination of Rea- does not begin when a beneficiary sonable Charges Under the changes from one stationary oxygen ESRD Program equipment modality to another or from one portable oxygen equipment modal- § 414.300 Scope of subpart. ity to another. This subpart sets forth criteria and (g) New supplier. If a beneficiary procedures for payment of the fol- changes suppliers, a new period of con- lowing services furnished to ESRD pa- tinuous use does not begin. tients: (h) Oxygen equipment furnished after the 36-month rental period. A new period (a) Physician services related to of continuous use does not begin under renal dialysis. any circumstance in the case of oxygen (b) Physician services related to equipment furnished after the 36- renal transplantation. month rental period in accordance with (c) Home dialysis equipment, sup- § 414.226(f) until the end of the reason- plies, and support services. able useful lifetime established for (d) Epoetin (EPO) furnished by a sup- such equipment in accordance with plier of home dialysis equipment and § 414.210(f). supplies to a home dialysis patient for use in the home. [56 FR 50823, Oct. 9, 1991, as amended at 57 FR 57111, Dec. 3, 1992; 71 FR 65935, Nov. 9, 2006; 73 [55 FR 23441, June 8, 1990, as amended at 56 FR 69937, Nov. 19, 2008] FR 43710, Sept. 4, 1991; 59 FR 1285, Jan. 10, 1994] § 414.232 Special payment rules for transcutaneous electrical nerve § 414.310 Determination of reasonable stimulators (TENS). charges for physician services fur- (a) General payment rule. Except as nished to renal dialysis patients. provided in paragraph (b) of this sec- (a) Principle. Physician services fur- tion, payment for TENS is made on a nished to renal dialysis patients are purchase basis with the purchase price subject to payment if the services are

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00059 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.310 42 CFR Ch. IV (10–1–12 Edition)

otherwise covered by the Medicare pro- sional service that entails substantial gram and if they are considered reason- direct involvement and the physical able and medically necessary in ac- presence of the physician in the deliv- cordance with section 1862(a)(1)(A) of ery of services directly to the patient. the Act. Routine professional services include (b) Scope and applicability—(1) Scope. all physicians’ services furnished dur- This section pertains to physician serv- ing a dialysis session and all services ices furnished to the following pa- listed in paragraph (d) of this section tients: that meet the following requirements: (i) Outpatient maintenance dialysis (1) They are personally furnished by patients who dialyze— a physician to an individual patient. (A) In an independent or hospital- (2) They contribute directly to the di- based ESRD facility, or agnosis or treatment of an individual (B) At home. patient. (ii) Hospital inpatients for which the (3) They ordinarily must be per- physician elects to continue payment formed by a physician. under the monthly capitation payment Supervision of staff, in contrast to (MCP) method described in § 414.314. medical direction, is an administrative (2) Applicability. These provisions service that does not necessarily re- apply to routine professional services quire the physician to be present at the of physicians. They do not apply to ad- dialysis session. It is a general activity ministrative services performed by primarily concerned with monitoring physicians, which are paid for as part performance of and giving guidance to of a prospective payment for dialysis other health care personnel (such as services made to the facility under nurses and dialysis technicians) who § 413.170 of this chapter. deliver services to patients. (c) Definitions. For purposes of this (d) Types of routine professional serv- section, the following definitions ices. Routine professional services in- apply: clude at least all of the following serv- Administrative services are physician ices when medically appropriate: services that are differentiated from (1) Visits to the patient during dialy- routine professional services and other sis, and review of laboratory test re- physician services because they are su- sults, nurses’ notes and any other med- pervision, as described in the definition ical documentation, as a basis for— of ‘‘supervision of staff’’ of this section, (i) Adjustment of the patient’s medi- or are not related directly to the care cation or diet, or the dialysis proce- of an individual patient, but are sup- dure; portive of the facility as a whole and of (ii) Prescription of medical supplies; benefit to patients in general. Exam- and ples of administrative services include (iii) Evaluation of the patient’s psy- supervision of staff, staff training, par- chosocial status and the appropriate- ticipation in staff conferences and in ness of the treatment modality. the management of the facility, and (2) Medical direction of staff in deliv- advising staff on the procurement of ering services to a patient during a di- supplies. alysis session. Dialysis session is the period of time (3) Pre-dialysis and post-dialysis ex- that begins when the patient arrives at aminations, or examinations that the facility and ends when the patient could have been furnished on a pre-di- departs from the facility. In the case of alysis or post-dialysis basis. home dialysis, the period begins when (4) Insertion of catheters for patients the patient prepares for dialysis and who are on peritoneal dialysis and do generally ends when the patient is dis- not have indwelling catheters. connected from the machine. In this (e) Payment for routine professional context, a dialysis facility includes services. Beginning August 7, 1990, rou- only those parts of the building used as tine professional services furnished by a facility. It does not include any areas physicians may be paid under either used as a physician’s office. the ‘‘initial method’’ of payment de- Medical direction, in contrast to su- scribed in § 414.313, (if all of the physi- pervision of staff, is a routine profes- cians at the facility elect the initial

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00060 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.314

method) or under the ‘‘physician MCP fective date of a termination of the method’’ described in § 414.314. Physi- election described in paragraph (d) of cian services furnished after July 31, this section. 1983 and before August 6, 1990, are pay- (d) Termination of the initial method. able only under the MCP method de- (1) Physicians may terminate the ini- scribed in § 414.314. tial method of payment by written notice to the carrier(s) that serves each § 414.313 Initial method of payment. physician and to the intermediary that (a) Basic rule. Under this method, the serves the facility. intermediary pays the facility for rou- (2) If the notice terminating the ini- tine professional services furnished by tial method is received by the car- physicians. Payment is in the form of rier(s) and intermediary— an add-on to the facility’s composite (i) On or before November 1, the ef- rate payment, which is described in fective date of the termination is Janu- part 413, subpart H of this subchapter. ary 1 of the year following the calendar (b) Services for which payment is not year in which the termination notice is included in the add-on payment. (1) Phy- received by the carrier(s) and inter- sician administrative services are con- mediary; or sidered to be facility services and are (ii) After November 1, the effective paid for as part of the facility’s com- date of the termination is January 1 of posite rate. the second year after the calendar year (2) The carrier pays the physician or in which the notice is received by the the beneficiary (as appropriate) under carrier(s) and intermediary. the reasonable charge criteria set forth (e) Determination of payment amount. in subpart E of part 405 of this chapter The factors used in determining the for the following services: add-on amount are related to program (i) Physician services that must be experience. They are re-evaluated peri- furnished at a time other than during odically and may be adjusted, as deter- the dialysis session (excluding pre-di- mined necessary by CMS, to maintain alysis and post-dialysis examinations the payment at a level commensurate and examinations that could have been with the prevailing charges of other furnished on a pre-dialysis or post-di- physicians for comparable services. alysis basis), such as monthly and (f) Publication of payment amount. Re- semi-annual examinations to review visions to the add-on amounts are pub- health status and treatment. lished in the FEDERAL REGISTER in ac- (ii) Physician surgical services other cordance with the Department’s estab- than insertion of catheters for patients lished rulemaking procedures. who are on peritoneal dialysis and do [55 FR 23441, June 8, 1990, as amended at 62 not have indwelling catheters. FR 43674, Aug. 15, 1997] (iii) Physician services furnished to hospital inpatients who were not ad- § 414.314 Monthly capitation payment mitted solely to receive maintenance method. dialysis. (a) Basic rules. (1) Under the monthly (iv) Administration of hepatitis B capitation payment (MCP) method, the vaccine. carrier pays an MCP amount for each (c) Physician election of the initial patient, to cover all professional serv- method. (1) Each physician in a facility ices furnished by the physician, except must submit to the appropriate carrier those listed in paragraph (b) of this and intermediary that serve the facil- section. ity a statement of election of the ini- (2) The carrier pays the MCP amount, tial method of payment for all the subject to the deductible and coinsur- ESRD facility patients that he or she ance provisions, either to the physician attends. if the physician accepts assignment or (2) The initial method of payment ap- to the beneficiary if the physician does plies to dialysis services furnished be- not accept assignment. ginning with the second calendar (3) The MCP method recognizes the month after the month in which all need of maintenance dialysis patients physicians in the facility elect the ini- for physician services furnished peri- tial method and continues until the ef- odically over relatively long periods of

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00061 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.316 42 CFR Ch. IV (10–1–12 Edition)

time, and the capitation amounts are patient’s renal condition and that addi- consistent with physicians’ charging tional visits are required. patterns in their localities. (ii) The carrier’s medical staff, acting (4) Payment of the capitation on the basis of the documentation and amount for any particular month is appropriate medical consultation ob- contingent upon the physician fur- tained by the carrier, determines nishing to the patient all physician whether additional payment for the ad- services required by the patient during ditional services is warranted. the month, except those listed in para- (3) The MCP is reduced in proportion graph (b) of this section. to the number of days the patient is— (5) Payment for physician adminis- (i) Hospitalized and the physician trative services (§ 414.310) is made to elects to bill separately for services the dialysis facility as part of the fa- furnished during hospitalization; or cility’s composite rate (part 413, sub- (ii) Not attended by the physician or part H of this subchapter) and not to his or her substitute for any reason, in- the physician under the MCP. cluding when the physician is not (b) Services not included in the MCP. available to furnish patient care or (1) Services that are not included in when the patient is not available to re- the MCP and which may be paid in ac- ceive care. cordance with the reasonable charge (c) Determination of payment amount. rules set forth in subpart E of part 405 The amount of payment for the MCP is of this chapter are limited to the fol- determined under the Medicare physi- lowing: cian fee schedule described in this part (i) Administration of hepatitis B vac- 414. cine. (ii) Covered physician services fur- [55 FR 23441, June 8, 1990, as amended at 59 nished by another physician when the FR 63463, Dec. 8, 1994; 62 FR 43674, Aug. 15, patient is not available to receive, or 1997] the attending physician is not available to furnish, the outpatient services § 414.316 Payment for physician services to patients in training for self- as usual (see paragraph (b)(3) of this dialysis and home dialysis. section). (iii) Covered physician services fur- (a) For each patient, the carrier pays nished to hospital inpatients, including a flat amount that covers all physician services related to inpatient dialysis, services required to create the capacity by a physician who elects not to con- for self-dialysis and home dialysis. tinue to receive the MCP during the pe- (b) CMS determines the amount on riod of inpatient stay. the basis of program experience and re- (iv) Surgical services, including views it periodically. declotting of shunts, other than the in- (c) The payment is made at the end sertion of catheters for patients on of the training course, is subject to the maintenance peritoneal dialysis who deductible and coinsurance provisions, do not have indwelling catheters. and is in addition to any amounts pay- (v) Needed physician services that able under the initial or MCP methods are— set forth in §§ 414.313 and 414.314, respec- (A) Furnished by the physician fur- tively. nishing renal care or by another physi- (d) If the training is not completed, cian; the payment amount is proportionate (B) Not related to the treatment of to the time spent in training. the patient’s renal condition; and (C) Not furnished during a dialysis § 414.320 Determination of reasonable session or an office visit required be- charges for physician renal trans- cause of the patient’s renal condition. plantation services. (2) For the services described in para- (a) Comprehensive payment for services graph (b)(1)(v) of this section, the fol- furnished during a 60-day period. (1) The lowing rules apply: comprehensive payment is subject to (i) The physician must provide docu- the deductible and coinsurance provi- mentation to show that the services sions and is for all surgeon services fur- are not related to the treatment of the nished during a period of 60 days in

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00062 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.330

connection with a renal transplan- § 414.330 Payment for home dialysis tation, including the usual pre- equipment, supplies, and support operative and postoperative care, and services. for immunosuppressant therapy if su- (a) Equipment and supplies—(1) Basic pervised by the transplant surgeon. rule. Except as provided in paragraph (2) Additional sums, in amounts es- (a)(2) of this section, Medicare pays for tablished on the basis of program expe- home dialysis equipment and supplies rience, may be included in the com- only under the prospective payment prehensive payment for other surgery rates established at § 413.210. performed concurrently with the trans- (2) Exception for equipment and sup- plant operation. plies furnished prior to January 1, 2011. If (3) The amount of the comprehensive the conditions in subparagraphs (a)(2) payment may not exceed the lower of (i) through (iv) of this section are met, the following: Medicare pays for home analysis equip- (i) The actual charges made for the ment and supplies on a reasonable services. charge basis in accordance with sub- (ii) Overall national payment levels part E (Criteria for Determination of Reasonable Charges; Reimbursement established under the ESRD program for Services of Hospital Interns, Resi- and adjusted to give effect to vari- dents, and Supervising Physicians) of ations in physician’s charges through- part 405, but the amount of payment out the nation. (These adjusted may not exceed the limit for equip- amounts are the maximum allowances ment and supplies in paragraph (c)(2) of in a carrier’s service area for renal this section. transplantation surgery and related (i) The patient elects to obtain home services by surgeons.) dialysis equipment and supplies from a (4) Maximum allowances computed supplier that is not a Medicare ap- under these instructions are revised at proved dialysis facility. the beginning of each calendar year to (ii) The patient certifies to CMS that the extent permitted by the lesser of he or she has only one supplier for all the following: home dialysis equipment and supplies. (i) Changes in the economic index as This certification is made on CMS described in § 405.504(a)(3)(i) of this Form 382 (the ‘‘ESRD Beneficiary Se- chapter. lection’’ form). (ii) Percentage changes in the (iii) In writing, the supplier— weighted average of the carrier’s pre- (A) Agrees to receive Medicare pay- vailing charges (before adjustment by ment for home dialysis supplies and the economic index) for— equipment only on an assignment-re- (A) A unilateral nephrectomy; or lated basis; and (B) Another medical or surgical serv- (B) Certifies to CMS that it has a ice designated by CMS for this purpose. written agreement with one Medicare (b) Other payments. Payments for cov- approved dialysis facility or, if the ben- ered medical services furnished to the eficiary is also entitled to military or transplant beneficiary by other spe- veteran’s benefits, one military or Vet- erans Administration hospital, for each cialists, as well as for services by the patient. (See part 494 of this chapter transplant surgeon after the 60-day pe- for the requirements for a Medicare ap- riod covered by the comprehensive pay- proved dialysis facility.) Under the ment, are made under the reasonable agreement, the facility or military or charge criteria set forth in § 405.502 (a) VA hospital agrees to the following: through (d) of this chapter. The pay- (1) To furnish all home dialysis sup- ments for physicians’ services in con- port services for each patient in ac- nection with renal transplantations are cordance with part 494 (Conditions for changed on the basis of program expe- Coverage for End-Stage Renal Disease rience and the expected advances in the Facilities) of this chapter. (§ 410.52 sets medical art for this operation. forth the scope and conditions of Medi- care Part B coverage of home dialysis services, supplies, and equipment.)

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00063 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.330 42 CFR Ch. IV (10–1–12 Edition)

(2) To furnish institutional dialysis furnished to the patient in accordance services and supplies. (§ 410.50 sets forth with § 494.100(c)(2) of this chapter. the scope and conditions for Medicare (b) Support services—(1) Basic rule. Ex- Part B coverage of institutional dialy- cept as provided in paragraph (b)(2) of sis services and supplies.) this section, Medicare pays for support (3) To furnish dialysis-related emer- services only under the prospective gency services. payment rates established in § 413.210 of (4) To arrange for a Medicare ap- this chapter. proved laboratory to perform dialysis- (2) Exception for home support services related laboratory tests that are cov- furnished prior to January 1, 2011. If the ered under the composite rate estab- patient elects to obtain home dialysis lished at § 413.170 and to arrange for the equipment and supplies from a supplier laboratory to seek payment from the that is not an approved ESRD facility, facility. The facility then includes Medicare pays for support services, these laboratory services in its claim other than support services furnished for payment for home dialysis support by military or VA hospitals referred to services. in paragraph (a)(2)(iii)(B) of this sec- (5) To arrange for a Medicare ap- tion, under paragraphs (b)(2) (i) and (ii) proved laboratory to perform dialysis- of this section but in no case may the related laboratory tests that are not amount of payment exceed the limit covered under the composite rate es- for support services in paragraph (c)(1) tablished at § 413.170 and for which the of this section: laboratory files a Medicare claim di- (i) For support services furnished by rectly. a hospital-based ESRD facility, Medi- (6) To furnish all other necessary di- care pays on a reasonable cost basis in alysis services and supplies (that is, accordance with part 413 of this chap- those which are not home dialysis ter. equipment and supplies). (ii) For support services furnished by (7) To satisfy all documentation, rec- an independent ESRD facility, Medi- ordkeeping and reporting requirements care pays on the basis of reasonable in part 494 (Conditions for Coverage for charges that are related to costs and End-Stage Renal Disease Facilities) of allowances that are reasonable when this chapter. This includes maintaining the services are furnished in an effec- a complete medical record of ESRD re- tive and economical manner. lated items and services furnished by (c) Payment limits for support serv- other parties. The facility must report, ices, equipment and supplies, and noti- on the forms required by CMS or the fication of changes to the payment ESRD network, all data for each pa- limits apply prior to January 1, 2011 as tient in accordance with subpart U. follows: (iv) The facility with which the (1) Support services. The amount of agreement is made must be located payment for home dialysis support within a reasonable distance from the services is limited to the national aver- patient’s home (that is, located so that age Medicare-allowed charge per pa- the facility can actually furnish the tient per month for home dialysis sup- needed services in a practical and time- port services, as determined by CMS, ly manner, taking into account vari- plus the median cost per treatment for ables like the terrain, whether the pa- all dialysis facilities for laboratory tient’s home is located in an urban or tests included under the composite rural area, the availability of transpor- rate, as determined by CMS, multiplied tation, and the usual distances trav- by the national average number of eled by patients in the area to obtain treatments per month. health care services). (2) Equipment and supplies. Payment (C) Agrees to report to the ESRD fa- for home dialysis equipment and sup- cility providing support services, at plies is limited to an amount equal to least every 45 days, all data (meaning the result obtained by subtracting the information showing what supplies and support services payment limit in para- services were provided to the patient graph (c)(1) of this section from the and when each was provided) for each amount (or, in the case of continuous patient regarding services and items cycling peritoneal dialysis, 130 percent)

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00064 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.402

of the national median payment as de- § 414.402 Definitions. termined by CMS that would have been For purposes of this subpart, the fol- made under the prospective payment lowing definitions apply: rates established in § 413.170 of this Affected party means a contract sup- chapter for hospital-based facilities. plier that has been notified that their (3) Notification of changes to the pay- DMEPOS CBP contract will be termi- ment limits. Updated data are incor- nated for a breach of contract. porated into the payment limits when Bid means an offer to furnish an item the prospective payment rates estab- for a particular price and time period lished at § 413.170 of this chapter are up- that includes, where appropriate, any dated, and changes are announced by services that are directly related to the notice in the FEDERAL REGISTER with- furnishing of the item. out a public comment period. Revisions Breach of contract means any devi- of the methodology for determining the ation from contract requirements, including a failure to comply with a gov- limits are published in the FEDERAL ernmental agency or licensing organi- REGISTER in accordance with the De- zation requirements, constitutes a partment’s established rulemaking breach of contract. procedures. Competitive bidding area (CBA) means [57 FR 54187, Nov. 17, 1992, as amended at 73 an area established by the Secretary FR 20474, Apr. 15, 2008; 75 FR 49202, Aug. 12, under this subpart. 2010] Competitive bidding program means a program established under this subpart § 414.335 Payment for EPO furnished within a designated CBA. to a home dialysis patient for use in Composite bid means the sum of a sup- the home. plier’s weighted bids for all items with- (a) Prior to January 1, 2011, payment in a product category for purposes of for EPO used at home by a home dialy- allowing a comparison across bidding sis patient is made only to either a suppliers. Medicare approved ESRD facility or a Contract supplier means an entity supplier of home dialysis equipment that is awarded a contract by CMS to and supplies. Effective January 1, 2011, furnish items under a competitive bidding program. payment for EPO used at home by a Corrective action plan (CAP) means a home dialysis patient is made only to a contract supplier’s written document Medicare-approved ESRD facility in with supporting information that de- accordance with the per treatment scribes the actions the contract sup- payment as defined in § 413.230. plier will take within a specified time- (b) After January 1, 2011, a home and frame to remedy a breach of contract. self training amount is added to the Covered document means a financial, per treatment base rate for adult and tax, or other document required to be pediatric patients as defined in § 413.230 submitted by a bidder as part of an original bid submission under a com- [75 FR 49202, Aug. 12, 2010] petitive acquisition program in order to meet the required financial stand- Subpart F—Competitive Bidding ards. for Certain Durable Medical Covered document review date means Equipment, Prosthetics, the later of— Orthotics, and Supplies (1) The date that is 30 days before the (DMEPOS) final date for the closing of the bid window; or § 414.400 Purpose and basis. (2) The date that is 30 days after the opening of the bid window. This subpart implements competitive DMEPOS stands for durable medical bidding programs for certain DMEPOS equipment, prosthetics, orthotics, and items as required by sections 1847(a) supplies. and (b) of the Act. Grandfathered item means all rented items within a product category for [72 FR 18084, Apr. 10, 2007] which payment was made prior to the

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00065 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.402 42 CFR Ch. IV (10–1–12 Edition)

implementation of a competitive bid- (iii) Oxygen and oxygen equipment, ding program to a grandfathered sup- as specified in § 414.226(c)(1). plier that chooses to continue to fur- (iv) Other DME (capped rental nish the items in accordance with items), as specified in § 414.229. § 414.408(j) of this subpart and that fall (2) Supplies necessary for the effec- within the following payment cat- tive use of DME other than inhalation egories for competitive bidding: drugs. (1) An inexpensive or routinely pur- (3) Enteral nutrients, equipment, and chased item described in § 414.220 of this supplies. part. (4) Off-the-shelf orthotics, which are (2) An item requiring frequent and orthotics described in section 1861(s)(9) substantial servicing, as described in of the Act that require minimal self- § 414.222 of this part. adjustment for appropriate use and do (3) Oxygen and oxygen equipment de- not require expertise in trimming, scribed in § 414.226 of this part. bending, molding, assembling or cus- (4) Other DME described in § 414.229 of tomizing to fit a beneficiary. this part. Item weight is a number assigned to an item based on its beneficiary utili- Grandfathered supplier means a non- zation rate using national data when contract supplier that chooses to con- compared to other items in the same tinue to furnish grandfathered items to product category. a beneficiary in a CBA. Mail order contract supplier is a con- means an indi- Hearing officer (HO) tract supplier that furnishes items vidual, who was not involved with the through the mail to beneficiaries who CBIC recommendation to terminate a maintain a permanent residence in a DMEPOS Competitive Bidding Pro- competitive bidding area. gram contract, who is designated by Mail order item means any item (for CMS to review and make an unbiased example, diabetic testing supplies) and independent recommendation when shipped or delivered to the bene- there is an appeal of CMS’s initial de- ficiary’s home, regardless of the meth- termination to terminate a DMEPOS od of delivery. Competitive Bidding Program con- Metropolitan Statistical Area (MSA) tract. has the same meaning as that given by Hospital has the same meaning as in the Office of Management and Budget. section 1861(e) of the Act. Minimal self-adjustment means an ad- Item means a product included in a justment that the beneficiary, care- competitive bidding program that is taker for the beneficiary, or supplier of identified by a HCPCS code, which may the device can perform and does not re- be specified for competitive bidding quire the services of a certified (for example, a product when it is fur- orthotist (that is, an individual cer- nished through mail order), or a com- tified by either the American Board for bination of codes and/or modifiers, and Certification in Orthotics and Pros- includes the services directly related thetics, Inc., or the Board for to the furnishing of that product to the Orthotist/Prosthetist Certification) or beneficiary. Items that may be in- an individual who has specialized train- cluded in a competitive bidding pro- ing. gram are: National mail order DMEPOS competi- (1) Durable medical equipment (DME) tive bidding program means a program other than class III devices under the whereby contracts are awarded to sup- Federal Food, Drug and Cosmetic Act, pliers for the furnishing of mail order as defined in § 414.202 of this part and items across the nation. group 3 complex rehabilitative wheel- Nationwide competitive bidding area chairs and further classified into the means a CBA that includes the United following categories: States, its Territories, and the District (i) Inexpensive or routinely pur- of Columbia. chased items, as specified in § 414.220(a). Nationwide mail order contract supplier (ii) Items requiring frequent and sub- means a mail order contract supplier stantial servicing, as specified in that furnishes items in a nationwide § 414.222(a). competitive bidding area.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00066 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.404

Network means a group of small sup- § 414.404 Scope and applicability. pliers that form a legal entity to pro- (a) Applicability. Except as specified vide competitively bid items through- in paragraph (b) of this section, this out the entire CBA. subpart applies to all suppliers that Noncontract supplier means a supplier furnish the items defined in § 414.402 to that is not awarded a contract by CMS beneficiaries, including providers, phy- to furnish items included in a competi- sicians, treating practitioners, physical tive bidding program. therapists, and occupational therapists Non-mail order item means any item that furnish such items under Medicare (for example, diabetic testing supplies) Part B. that a beneficiary or caregiver picks up in person at a local pharmacy or sup- (b) Exceptions. (1) Physicians, treat- plier storefront. ing practitioners, and hospitals may Parties to the hearing means the furnish certain types of competitively DMEPOS contract supplier and CMS. bid durable medical equipment without submitting a bid and being awarded a Physician has the same meaning as in section 1861(r) of the Act. contract under this subpart, provided that all of the following conditions are Pivotal bid means the lowest com- satisfied: posite bid based on bids submitted by suppliers for a product category that (i) The items furnished are limited to includes a sufficient number of sup- crutches, canes, walkers, folding man- pliers to meet beneficiary demand for ual wheelchairs, blood glucose mon- the items in that product category. itors, and infusion pumps that are Product category means a grouping of DME, and off-the-shelf (OTS) orthotics. related items that are used to treat a (ii) The items are furnished by the similar medical condition. physician or treating practitioner to Regional competitive bidding area his or her own patients as part of his or means a CBA that consists of a region her professional service or by a hos- of the United States, its Territories, pital to its own patients during an ad- and the District of Columbia. mission or on the date of discharge. Regional mail order contract supplier (iii) The items are billed under a bill- means a mail order contract supplier ing number assigned to the hospital, that furnishes items in a regional com- physician, the treating practitioner (if petitive bidding area. possible), or a group practice to which Single payment amount means the al- the physician or treating practitioner lowed payment for an item furnished has reassigned the right to receive under a competitive bidding program. Medicare payment. Small supplier means, a supplier that (2) A physical therapist in private generates gross revenue of $3.5 million practice (as defined in § 410.60(c) of this or less in annual receipts including chapter) or an occupational therapist Medicare and non-Medicare revenue. in private practice (as defined in Supplier means an entity with a valid § 410.59(c) of this chapter) may furnish Medicare supplier number, including competitively bid off-the-shelf an entity that furnishes an item orthotics without submitting a bid and through the mail. being awarded a contract under this Treating practitioner means a physi- subpart, provided that the items are cian assistant, nurse practitioner, or furnished only to the therapist’s own clinical nurse specialist, as those terms patients as part of the physical or oc- are defined in section 1861(aa)(5) of the cupational therapy service. Act. (3) Payment for items furnished in Weighted bid means the item weight accordance with paragraphs (b)(1) and multiplied by the bid price submitted (b)(2) of this section will be paid in ac- for that item. cordance with § 414.408(a). [72 FR 18084, Apr. 10, 2007, as amended at 74 [72 FR 18084, Apr. 10, 2007, as amended at 74 FR 2880, Jan. 16, 2009; 74 FR 62009, Nov. 25, FR 2880, Jan. 16, 2009; 75 FR 73623, Nov. 29, 2009; 75 FR 73622, Nov. 29, 2010; 76 FR 70314, 2010; 76 FR 70314, Nov. 10, 2011] Nov. 10, 2011]

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00067 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.406 42 CFR Ch. IV (10–1–12 Edition)

§ 414.406 Implementation of programs. under this subpart is made on an assignment-related basis. (a) Implementation contractor. CMS (d) Applicability of advanced bene- designates one or more implementa- ficiary notice. Implementation of a pro- tion contractors for the purpose of im- gram in accordance with this subpart plementing this subpart. does not preclude the use of an ad- (b) Competitive bidding areas. CMS des- vanced beneficiary notice. ignates through program instructions (e) Requirement to obtain competitively or by other means, such as the request bid items from a contract supplier. (1) for bids, each CBA in which a competi- General rule. Except as provided in tive bidding program may be imple- paragraph (e)(2) of this section, all mented under this subpart. items that are included in a competi- (c) Revisions to competitive bidding tive bidding program must be furnished areas. CMS may revise the CBAs des- by a contract supplier for that pro- ignated under paragraph (b) of this sec- gram. tion. (2) Exceptions. (i) A grandfathered (d) Competitively bid items. CMS des- supplier may furnish a grandfathered ignates the items that are included in item to a beneficiary in accordance a competitive bidding program through with paragraph (j) of this section. program instructions or by other (ii) Medicare may make a secondary means payment for an item furnished by a (e) Claims processing. The Durable noncontract supplier that the bene- Medical Equipment Medicare Adminis- ficiary is required to use under his or trative Contractor designated to proc- her primary insurance policy. The pro- ess DMEPOS claims for a particular ge- visions of this paragraph do not super- ographic region also processes claims sede Medicare secondary payer statu- for items furnished under a competi- tory and regulatory provisions, includ- tive bidding program in the same geo- ing the Medicare secondary payment graphic region. rules located in §§ 411.32 and 411.33 of [71 FR 48409, Aug. 18, 2006, as amended at 72 this subchapter, and payment will be FR 18085, Apr. 10, 2007] calculated in accordance with those rules. § 414.408 Payment rules. (iii) If a beneficiary is outside of the (a) Payment basis. (1) The payment CBA in which he or she maintains a basis for an item furnished under a permanent residence, he or she may ob- competitive bidding program is 80 per- tain an item from a— cent of the single payment amount cal- (A) Contract supplier, if the bene- culated for the item under § 414.416 for ficiary obtains the item in another the CBA in which the beneficiary main- CBA and the item is included in the tains a permanent residence. competitive bidding program for that (2) If an item that is included in a CBA; or competitive bidding program is fur- (B) Supplier with a valid Medicare nished to a beneficiary who does not billing number, if the beneficiary ob- maintain a permanent residence in a tains the item in an area that is not a CBA, the payment basis for the item is CBA, or if the beneficiary obtains the 80 percent of the lesser of the actual item in another CBA but the item is charge for the item, or the applicable not included in the competitive bidding fee schedule amount for the item, as program for that CBA. determined under subpart C or subpart (iv) A physician, treating practi- D. tioner, physical therapist in private (b) No changes to the single payment practice, occupational therapist in pri- amount. The single payment amount vate practice, or hospital may furnish calculated for each item under each an item in accordance with § 414.404(b) competitive bidding program is paid of this subpart. for the duration of the competitive bid- (3) Unless paragraph (e)(2) of this sec- ding program and will not be adjusted tion applies: by any update factor. (i) Medicare will not make payment (c) Payment on an assignment-related for an item furnished in violation of basis. Payment for an item furnished paragraph (e)(1) of this section, and

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00068 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.408

(ii) A beneficiary has no financial li- al of power wheelchairs equals 15 per- ability to a noncontract supplier that cent of the single payment amounts furnishes an item included in the com- calculated for new durable medical petitive bidding program for a CBA in equipment under paragraph (f)(1) of violation of paragraph (e)(1) of this sec- this section for each of the first 3 tion, unless the beneficiary has signed months, and 6 percent of the single an advanced beneficiary notice. payment amounts calculated for these (4) CMS separately designates the items for each of the remaining months Medicare billing number of all noncon- 4 through 13. tract suppliers to monitor compliance (3) Additional payment to certain con- with paragraphs (e)(1) and (e)(2) of this tract suppliers for capped rental DME. (i) section. Except as specified in paragraph (f) Purchased equipment. (1) The single (h)(3)(ii) of this section, Medicare payment amounts for new purchased makes 13 monthly payments to a con- durable medical equipment, including tract supplier that furnishes capped power wheelchairs that are purchased rental durable medical equipment to a when the equipment is initially fur- beneficiary who would otherwise be en- nished and enteral nutrition equipment titled to obtain the item from a grand- are calculated based on the bids sub- fathered supplier under paragraph (j) of mitted and accepted for these items. this section. Payment is made using For contracts entered into beginning the methodology described in para- on or after January 1, 2011, payment on graph (h)(1) of this section. The con- a lump sum purchase basis is only tract supplier must transfer title to available for power wheelchairs classi- the item to the beneficiary on the first fied as complex rehabilitative power day that begins after the 13th contin- wheelchairs. uous month in which payments are (2) Payment for used purchased dura- made in accordance with this parable medical equipment and enteral nu- graph. trition equipment is made in an (ii) Medicare does not make payment amount equal to 75 percent of the sin- to a contract supplier under paragraph gle payment amounts calculated for (h)(3)(i) of this section if the contract new purchased equipment under paragraph (f)(1) of this section. supplier furnishes capped rental dura- (g) Purchased supplies and orthotics. ble medical equipment to a beneficiary The single payment amounts for the who previously rented the equipment following purchased items are cal- from another contract supplier. culated based on the bids submitted (4) Maintenance and servicing of rented and accepted for the following items: DME. Separate maintenance and serv- (1) Supplies used in conjunction with icing payments are not made for any durable medical equipment. rented durable medical equipment. (2) Enteral nutrients. (5) Payment for rented enteral nutrition (3) Enteral nutrition supplies. equipment. Payment for rented enteral (4) OTS orthotics. nutrition equipment is made in an (h) Rented equipment—(1) Capped rent- amount equal to 10 percent of the sin- al DME. Subject to the provisions of gle payment amounts calculated for paragraph (h)(2) of this section, pay- new enteral nutrition equipment under ment for capped rental durable medical paragraph (f)(1) of this section for each equipment is made in an amount equal of the first 3 months, and 7.5 percent of to 10 percent of the single payment the single payment amount calculated amounts calculated for new durable for these items under paragraph (f)(1) medical equipment under paragraph of this section for each of the remain- (f)(1) of this section for each of the first ing months 4 through 15. The contract 3 months, and 7.5 percent of the single supplier to which payment is made in payment amounts calculated for these month 15 for furnishing enteral nutri- items for each of the remaining months tion equipment on a rental basis must 4 through 13. continue to furnish, maintain and serv- (2) For contracts entered into begin- ice the equipment until a determina- ning on or after January 1, 2011, the tion is made by the beneficiary’s physi- monthly fee schedule amount for rent- cian or treating practitioner that the

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00069 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.408 42 CFR Ch. IV (10–1–12 Edition)

equipment is no longer medically nec- (A) If Medicare made 26 or less essary. monthly payments to the former sup- (6) Maintenance and servicing of rented plier, Medicare makes a monthly pay- enteral nutrition equipment. Payment for ment to the contract supplier for up to the maintenance and servicing of the number of months equal to the dif- rented enteral nutrition equipment be- ference between 36 and the number of ginning 6 months after 15 months of months for which payment was made rental payments is made in an amount to the former supplier. equal to 5 percent of the single pay- (B) If Medicare made 27 or more ment amounts calculated for these monthly payments to the former sup- items under paragraph (f)(1) of this sec- plier, Medicare makes 10 monthly pay- tion. ments to the contract supplier. (7) Payment for inexpensive or routinely (ii) Payment is made using the meth- purchased durable medical equipment. odology described in paragraph (i)(1) of Payment for inexpensive or routinely this section. On the first day after the purchased durable medical equipment month in which the final rental pay- furnished on a rental basis is made in ment is made under paragraph (i)(2)(i) an amount equal to 10 percent of the of this section, the contract supplier single payment amount calculated for must transfer title of the oxygen equip- new purchased equipment. ment to the beneficiary. (iii) Medicare does not make pay- (8) Payment amounts for rented DME ment to a contract supplier under para- requiring frequent and substantial serv- graph (i)(2) of this section if the con- icing—(i) General rule. Except as pro- tract supplier furnishes oxygen equip- vided in paragraph (h)(7)(ii) of this sec- ment to a beneficiary who previously tion, the single payment amounts for rented the equipment from another rented durable medical equipment re- contract supplier. quiring frequent and substantial serv- (j) Special rules for certain rented dura- icing are calculated based on the rental ble medical equipment and oxygen and ox- bids submitted and accepted for the ygen equipment—(1) Supplier election. (i) furnishing of these items on a monthly A supplier that is furnishing durable basis. medical equipment or is furnishing ox- (ii) Exception. The single payment ygen or oxygen equipment on a rental amounts for continuous passive motion basis to a beneficiary prior to the im- exercise devices are calculated based plementation of a competitive bidding on the bids submitted and accepted for program in the CBA where the bene- the furnishing of these items on a daily ficiary maintains a permanent resi- basis. dence may elect to continue furnishing (i) Monthly payment amounts for oxy- the item as a grandfathered supplier. gen and oxygen equipment—(1) Basic (ii) A supplier that elects to be a payment amount. Subject to the provi- grandfathered supplier must continue sions of paragraph (i)(2) of this section, to furnish the grandfathered items to the single payment amounts for oxygen all beneficiaries who elect to continue and oxygen equipment are calculated receiving the grandfathered items from based on the bids submitted and ac- that supplier for the remainder of the cepted for the furnishing on a monthly rental period for that item. basis of each of the five classes of oxy- (2) Payment for grandfathered items gen and oxygen equipment described in furnished during the first competitive bid- § 414.226(c)(1). ding program implemented in a CBA. (2) Additional payment to certain con- Payment for grandfathered items fur- tract suppliers. (i) Except as specified in nished during the first competitive bid- paragraph (i)(2)(iii) of this section, ding program implemented in a CBA is Medicare makes monthly payments to made as follows: a contract supplier that furnishes oxy- (i) For inexpensive and routinely pur- gen equipment to a beneficiary who chased items described in § 414.220(a), would otherwise be entitled to obtain payment is made in the amount deter- the item from a grandfathered supplier mined under § 414.220(b). under paragraph (j) of this section as (ii) For other durable medical equip- follows: ment or capped rental items described

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00070 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.408

in § 414.229, payment is made in the (2) Identify the grandfathered items amount determined under § 414.229(b). that the supplier is willing to continue (iii) For items requiring frequent and to rent to the beneficiary. substantial servicing described in (3) Be in writing (for example, by let- § 414.222, payment is made in accord- ter or postcard) and the supplier must ance with paragraph (a)(1) of this sec- maintain proof of delivery. tion. (4) State that the supplier is willing (iv) For oxygen and oxygen equip- to continue to furnish certain rented ment described in § 414.226(c)(1), pay- Durable Medical Equipment (DME), ox- ment is made in accordance with para- ygen and oxygen equipment, and sup- graph (a)(1) of this section. plies that the supplier is currently fur- (3) Payment for grandfathered items nishing to the beneficiary (that is, be- furnished during all subsequent competi- fore the start of the competitive bid- tive bidding programs in a CBA. Begin- ding program) and is willing to con- ning with the second competitive bid- tinue to provide these items to the bending program implemented in a CBA, eficiary for the remaining rental payment is made for grandfathered months. items in accordance with paragraph (5) State that the beneficiary has the (a)(1) of this section. choice to continue to receive a grandfathered item(s) from the grand- (4) Choice of suppliers. (i) Bene- fathered supplier or may elect to re- ficiaries who are renting an item that ceive the item(s) from a contract sup- meets the definition of a grandfathered plier after the end of the last month for item in § 414.402 of this subpart may which a rental payment is made to the elect to obtain the item from a grand- noncontract supplier. fathered supplier. (6) Provide the supplier’s telephone (ii) A beneficiary who is otherwise number and instruct the beneficiary to entitled to obtain a grandfathered item call the supplier with any questions from a grandfathered supplier under and to notify the supplier of his or her paragraph (j) of this section may elect decision to use or not use the supplier to obtain the same item from a con- as a grandfathered supplier. tract supplier at any time after a com- (7) State that the beneficiary can ob- petitive bidding program is imple- tain information about the competitive mented. bidding program by calling 1–800– (iii) If a beneficiary elects to obtain MEDICARE or on the Internet at http:// the same item from a contract sup- www.Medicare.gov. plier, payment is made for the item ac- (B) Record of beneficiary’s choice. The cordance with paragraph (a)(1) of this supplier should obtain an election from section. the beneficiary regarding whether to (5) Notification of beneficiaries and use or not use the supplier as a grand- CMS by suppliers that choose to become fathered supplier. The supplier must grandfathered suppliers. (i) Notification maintain a record of its attempts to of beneficiaries by suppliers. (A) Require- communicate with the beneficiary to ments of notification. A noncontract obtain the beneficiary’s election re- supplier that elects to become a grand- garding grandfathering. When the sup- fathered supplier must provide a 30-day plier obtains such an election, the sup- written notification to each Medicare plier must maintain a record of the beneficiary that resides in a competi- beneficiary decision including the date tive bidding area and is currently rent- the choice was made, and how the ben- ing a competitively bid item from that eficiary communicated his or her supplier. The 30-day notification to the choice to the supplier. beneficiary must meet the following (C) Notification. If the beneficiary requirements: chooses not to continue to receive a (1) Be sent by the supplier to the ben- grandfathered item(s) from their cur- eficiary at least 30 business days before rent supplier, the supplier must pro- the start date of the implementation of vide the beneficiary with 2 more no- the competitive bidding program for tices in addition to the 30-day notice the CBA in which the beneficiary re- prior to the supplier picking up its sides. equipment.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00071 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.408 42 CFR Ch. IV (10–1–12 Edition)

(1) 10-day notification: Ten business (3) When a beneficiary chooses to days prior to picking up the item, the switch to a new contract supplier, the supplier should have direct contact (for current noncontract supplier and the example, a phone call) with the bene- new contract supplier must make ar- ficiary or the beneficiary’s caregiver rangements that are suitable to the and receive acknowledgement that the beneficiary. beneficiary understands their equip- (4) The contract supplier may not ment will be picked up. This should submit a claim with a date of delivery occur on the first anniversary date for the new equipment that is prior to after the start of the CBP or on an- the first anniversary date that occurs other date agreed to by the beneficiary after the beginning of the CBP, and the or the beneficiary’s caregiver. The contract supplier may not begin billing beneficiary’s anniversary date occurs until the first anniversary date that every month and is the date of the occurs after the beginning of the CBP. month on which the item was first de- (5) The noncontract supplier must livered to the beneficiary by the cur- submit a claim to be paid up to the rent supplier. When a date other than first anniversary date that occurs after the anniversary date is chosen by the the beginning of the CBP. Therefore, beneficiary or the beneficiary’s care- they should not pick up the equipment giver, the noncontract supplier will still receive payment up to the anni- before that date unless an alternative versary date after the start of the CBP, arrangement has been made with the and the new contract supplier may not beneficiary and the new contract sup- bill for any period of time before the plier. anniversary date. (ii) Notification to CMS by suppliers. A (2) 2-day notification: Two business noncontract supplier that elects to be- days prior to picking up the item the come a grandfathered supplier must supplier should contact the beneficiary provide a written notification to CMS or the beneficiary’s caregiver by phone of this decision. This notification must to notify the beneficiary of the date meet the following requirements: the supplier will pick up the item. This (A) State that the supplier agrees to date should not be before the bene- continue to furnish certain rented ficiary’s first anniversary date that oc- DME, oxygen and oxygen equipment curs after the start of the competitive that it is currently furnishing to bene- bidding program unless an alternative ficiaries (that is, before the start of the arrangement has been made with the competitive bidding program) in a CBA beneficiary and the new contract sup- and will continue to provide these plier. items to these beneficiaries for the re- (D) Pickup procedures. (1) The pickup maining months of the rental period. of the noncontract supplier’s equip- (B) Include the following informa- ment and the delivery of the new con- tion: tract supplier’s equipment should (1) Name and address of the supplier. occur on the same date, that is, the (2) The 6-digit NSC number of the first rental anniversary date of the supplier. equipment that occurs after the start (3) Product category(s) by CBA for of the competitive bidding program un- which the supplier is willing to be a less an alternative arrangement has grandfathered supplier. been made with the beneficiary and the new contract supplier. (C) State that the supplier agrees to (2) Under no circumstance should a meet all the terms and conditions per- supplier pick up a rented item prior to taining to grandfathered suppliers. the supplier’s receiving acknowledge- (D) Be provided by the supplier to ment from the beneficiary that the CMS in writing at least 30 business beneficiary is aware of the date on days before the start date of the imple- which the supplier is picking up the mentation of the Medicare DMEPOS item and the beneficiary has made ar- Competitive Bidding Program. rangements to have the item replaced (6) Suppliers that choose not to become on that date by a contract supplier. grandfathered suppliers. (i) Requirement

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00072 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.408

for non-grandfathered supplier. A non- rangements to have the item replaced contract supplier that elects not to be- on that date by a contract supplier. come a grandfathered supplier is re- (C) When a beneficiary chooses to quired to pick up the item it is cur- switch to a new contract supplier, the rently renting to the beneficiary from current noncontract supplier and the the beneficiary’s home after proper no- new contract supplier must make ar- tification. rangements that are agreeable to the (ii) Notification. Proper notification beneficiary. includes a 30-day, a 10-day, and a 2-day (D) The contract supplier cannot sub- notice of the supplier’s decision not to mit a claim with a date of delivery for become a grandfathered supplier to its the new equipment that is prior to the Medicare beneficiaries who are cur- first anniversary date that occurs after rently renting certain DME competi- the beginning of the CBP. tively bid item(s) and who reside in a (7) Payment for accessories and supplies CBA. for grandfathered items. Accessories and (iii) Requirements of notification. supplies that are used in conjunction These notifications must meet all of with and are necessary for the effective the requirements listed in paragraph use of a grandfathered item may be fur- (j)(5)(i) of this section for the 30-day, 10-day and 2-day notices that must be nished by the same grandfathered sup- sent by suppliers who decide to be plier that furnishes the grandfathered grandfathered suppliers, with the fol- item. Payment is made in accordance lowing exceptions for the 30-day notice. with paragraph (a)(1) of this section. (A) State that, for those items for (k) Payment for maintenance, servicing which the supplier has decided not to and replacement of beneficiary-owned be a grandfathered supplier, the sup- items. (1) Payment is made for the plier will only continue to rent these maintenance and servicing of bene- competitively bid item(s) to its beneficiary-owned items, provided the ficiaries up to the first anniversary maintenance and servicing is per- date that occurs after the start of the formed by a contract supplier or a non- Medicare DMEPOS Competitive Bid- contract supplier having a valid Medi- ding Program. care billing number, as follows: (B) State that the beneficiary must (i) Payment for labor is made in ac- select a contract supplier for Medicare cordance with § 414.210(e)(1) of subpart to continue to pay for these items. D. (C) Refer the beneficiary to the con- (ii) Payment for parts that are not tract supplier locator tool on and to 1– items (as defined in § 414.402) is made in 800–MEDICARE to obtain information accordance with § 414.210(e)(1) of sub- about the availability of contract sup- part D. pliers for the beneficiary’s area. (iii) Payment for parts that are items (iv) Pickup procedures. (A) The pick- (as defined in § 414.402) is made in ac- up of the noncontract supplier’s equip- cordance with paragraph (a)(1) of this ment and the delivery of the new con- section. tract supplier’s equipment should (2) Additional payments are made in occur on the same date, that is, the accordance with § 414.210(e)(2), (e)(3) first rental anniversary date of the and (e)(5) of this part for the mainte- equipment that occurs after the start nance and servicing of oxygen equip- of the competitive bidding program un- ment if performed by a contract sup- less an alternative arrangement has plier or a noncontract supplier having been made with the beneficiary and the new contract supplier. a valid Medicare billing number. (B) Under no circumstance should a (3) Beneficiaries must obtain a re- supplier pick up a rented item prior to placement of a beneficiary-owned item, the supplier’s receiving acknowledge- other than parts needed for the repair ment from the beneficiary that the of beneficiary-owned equipment from a beneficiary is aware of the date on contract supplier. Payment is made for which the supplier is picking up the item and the beneficiary has made ar-

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00073 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.410 42 CFR Ch. IV (10–1–12 Edition)

the replacement item in accordance (3) The total number of DMEPOS with paragraph (a)(1) of this section. suppliers per fee-for-service beneficiary who received DMEPOS items in an [72 FR 18085, Apr. 10, 2007, as amended at 74 FR 2880, Jan. 16, 2009; 74 FR 62009, Nov. 25, MSA. 2009; 75 FR 73623, Nov. 29, 2010; 76 FR 70315, (4) An MSA’s geographic location. Nov. 10, 2011] (c) Exclusions from a CBA. CMS may exclude from a CBA a rural area (as de- § 414.410 Phased-in implementation of fined in § 412.64(b)(1)(ii)(C) of this sub- competitive bidding programs. chapter), or an area with low popu- (a) Phase-in of competitive bidding pro- lation density based on one or more of grams. CMS phases in competitive bid- the following factors— ding programs so that competition (1) Low utilization of DMEPOS items under the programs occurs— by Medicare beneficiaries receiving fee- (1) In CY 2009, in Cincinnati—Middle- for-service benefits relative to similar town (Ohio, Kentucky and Indiana), geographic areas; Cleveland—Elyria—Mentor (Ohio), (2) Low number of DMEPOS suppliers Charlotte—Gastonia—Concord (North relative to similar geographic areas; or Carolina and South Carolina), Dallas— (3) Low number of Medicare fee-for- Fort Worth—Arlington (Texas), Kansas service beneficiaries relative to similar City (Missouri and Kansas), Miami— geographic areas. Fort Lauderdale—Miami Beach (Flor- (d) Selection of additional CBAs after ida), Orlando (Florida), Pittsburgh CY 2009. (1) Beginning after CY 2009, (Pennsylvania), and Riverside—San CMS designates through program in- Bernardino—Ontario (California). structions or by other means addi- (2) In CY 2011, in an additional 91 tional CBAs based on CMS’ determina- MSAs (the additional 70 MSAs selected tion that the implementation of a com- by CMS as of June 1, 2008, and the next petitive bidding program in a par- 21 largest MSAs by total population ticular area would be likely to result in based on 2009 population estimates, and significant savings to the Medicare not already phased in as of June 1, program. 2008). CMS may subdivide any of the 91 (2) Beginning after CY 2009, CMS may MSAs with a population of greater designate through program instruc- than 8,000,000 into separate CBAs, tions or by other means a nationwide thereby resulting in more than 91 CBA or one or more regional CBAs for CBAs. purposes of implementing competitive (3) After CY 2011, additional CBAs bidding programs for items that are (or, in the case of national mail order furnished through the mail by nation- for items and services, after CY 2010). wide or regional mail order contract (4) For competitions (other than for suppliers. national mail order items and services) [72 FR 18085, Apr. 10, 2007, as amended at 74 after CY 2011 and prior to CY 2015, the FR 2880, Jan. 16, 2009; 75 FR 73623, Nov. 29, following areas are excluded: 2010; 76 FR 70315, Nov. 10, 2011] (i) Rural areas. (ii) MSAs not selected under para- § 414.411 Special rule in case of com- graphs (a)(1) or (a)(2) of this section petitions for diabetic testing strips with a population of less than 250,000. conducted on or after January 1, (iii) An area with low population den- 2011. sity within an MSA not selected under (a) National mail order competitions. A paragraphs (a)(1) or (a)(2) of this sec- supplier must demonstrate that their tion. bid submitted as part of a national (b) Selection of MSAs for CY 2007 and mail order competition for diabetic CY 2009. CMS selects the MSAs for pur- testing strips covers the furnishing of a poses of designating CBAs in CY 2007 sufficient number of different types of and CY 2009 by considering the fol- diabetic testing strip products that, in lowing variables: the aggregate, and taking into account (1) The total population of an MSA. volume for the different products, in- (2) The Medicare allowed charges for cludes at least 50 percent of all the dif- DMEPOS items per fee-for-service ben- ferent types of products on the market. eficiary in an MSA. A type of diabetic testing strip means

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00074 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.414

a specific brand and model of testing supplier that is located in the CBA for strips. which the bid is being submitted must (b) Other competitions. CMS may be included in the bid. The bid must apply this special rule to non-mail also include any commonly-owned or order or local competitions for diabetic controlled supplier that is located out- testing strips. side of the CBA but would furnish the [75 FR 73623, Nov. 29, 2010] product category to the beneficiaries who maintain a permanent residence in § 414.412 Submission of bids under a the CBA. competitive bidding program. (f) Mail order suppliers. (1) Suppliers (a) Requirement to submit a bid. Except that furnish items through the mail as provided under § 414.404(b), in order must submit a bid to furnish these for a supplier to receive payment for items in a CBA in which a mail order items furnished to beneficiaries under competitive bidding program that in- a competitive bidding program, the cludes the items is implemented. supplier must submit a bid to furnish (2) Suppliers that submit one or more those items and be awarded a contract bids under paragraph (f)(1) of this sec- under this subpart. tion may submit the same bid amount (b) Grouping of items into product cat- for each item under each competitive egories. (1) Bids are submitted for items bidding program for which it submits a grouped into product categories. bid. (2) The bids submitted for each item (g) Applicability of the mail order com- in a product category cannot exceed petitive bidding program. Suppliers that the payment amount that would other- do not furnish items through the mail wise apply to the item under Subpart C are not required to participate in a na- or Subpart D of this part. tionwide or regional mail order com- (c) Furnishing of items. A bid must in- petitive bidding program that includes clude all costs related to furnishing an the same items. Suppliers may con- item, including all services directly re- tinue to furnish these items in— lated to the furnishing of the item. (1) A CBA, if the supplier is awarded (d) Separate bids. For each product a contract under this subpart; or category that a supplier is seeking to (2) An area not designated as a CBA. furnish under a competitive bidding program, the supplier must submit a [72 FR 18085, Apr. 10, 2007] separate bid for each item in that prod- § 414.414 Conditions for awarding con- uct category. tracts. (e) Commonly-owned or controlled suppliers. (1) For purposes of this para- (a) General rule. The rules set forth in graph— this section govern the evaluation and (i) An ownership interest is the pos- selection of suppliers for contract session of equity in the capital, stock award purposes under a competitive or profits of another supplier; bidding program. (ii) A controlling interest exists if (b) Basic supplier eligibility. (1) Each one or more of owners of a supplier is supplier must meet the enrollment an officer, director or partner in an- standards specified in § 424.57(c) of this other supplier; and chapter. (iii) Two or more suppliers are com- (2) Each supplier must disclose infor- monly-owned if one or more of them mation about any prior or current has an ownership interest totaling at legal actions, sanctions, revocations least 5 percent in the other(s). from the Medicare program, program- (2) A supplier must disclose in its bid related convictions as defined in sec- each supplier in which it has an owner- tion 1128(a)(1) through (a)(4) of the Act, ship or controlling interest and each exclusions or debarments imposed supplier which has an ownership or against it, or against any members of controlling interest in it. the board of directors, chief corporate (3) Commonly-owned or controlled officers, high-level employees, affili- suppliers must submit a single bid to ated companies, or subcontractors, by furnish a product category in a CBA. any Federal, State, or local agency. Each commonly-owned or controlled The supplier must certify in its bid

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00075 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.414 42 CFR Ch. IV (10–1–12 Edition)

that this information is completed and plicable missing covered documents accurate. identified in the notice are submitted (3) Each supplier must have all State to CMS not later than 10 business days and local licenses required to perform after the date of such notice. the services identified in the request (e) Evaluation of bids. CMS evaluates for bids. bids submitted for items within a prod- (4) Each supplier must submit a bona uct category by— fide bid that complies with all the (1) Calculating the expected bene- terms and conditions contained in the ficiary demand in the CBA for the request for bids. items in the product category; (5) Each network must meet the re- (2) Calculating the total supplier ca- quirements specified in § 414.418. pacity that would be sufficient to meet (c) Quality standards and accredita- the expected beneficiary demand in the tion. Each supplier furnishing items CBA for the items in the product cat- and services directly or as a subcon- egory; tractor must meet applicable quality (3) Establishing a composite bid for standards developed by CMS in accord- each supplier and network that sub- ance with section 1834(a)(20) of the Act mitted a bid for the product category. and be accredited by a CMS-approved (4) Arraying the composite bids from organization that meets the require- the lowest composite bid price to the ments of § 424.58 of this subchapter, un- highest composite bid price; less a grace period is specified by CMS. (5) Calculating the pivotal bid for the (d) Financial standards. (1) General product category; rule. Each supplier must submit along with its bid the applicable covered doc- (6) Selecting all suppliers and net- uments (as defined in § 414.402) specified works whose composite bids are less in the request for bids. than or equal to the pivotal bid for (2) Process for reviewing covered docu- that product category, and that meet ments. (i) Submission of covered docu- the requirements in paragraphs (b) ments for CMS review. To receive notifi- through (d) of this section. cation of whether there are missing (f) Expected savings. A contract is not covered documents, the supplier must awarded under this subpart unless CMS submit its applicable covered docu- determines that the amounts to be paid ments by the later of the following cov- to contract suppliers for an item under ered document review dates: a competitive bidding program are ex- (A) The date that is 30 days before pected to be less than the amounts the final date for the closing of the bid that would otherwise be paid for the window; or same item under subpart C or subpart (B) The date that is 30 days after the D. opening of the bid window. (g) Special rules for small suppliers—(1) (ii) CMS feedback to a supplier with Target for small supplier participation. missing covered documents. (A) For CMS ensures that small suppliers have Round 1 bids. CMS has up to 45 days the opportunity to participate in a after the covered document review date competitive bidding program by taking to review the covered documents and the following steps: to notify suppliers of any missing docu- (i) Setting a target number for small ments. supplier participation by multiplying (B) For subsequent Round bids. CMS 30 percent by the number of suppliers has 90 days after the covered document that meet the requirements in para- review date to notify suppliers of any graphs (b) through (d) of this section missing covered documents. and whose composite bids are equal to (iii) Submission of missing covered doc- or lower than the pivotal bid cal- uments. Suppliers notified by CMS of culated for the product category; missing covered documents have 10 (ii) Identifying the number of quali- business days after the date of such no- fied small suppliers whose composite tice to submit the missing documents. bids are at or below the pivotal bid for CMS does not reject the supplier’s bid the product category; on the basis that the covered docu- (iii) Selecting additional small sup- ments are late or missing if all the ap- pliers whose composite bids are above

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00076 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.418

the pivotal bid for the product cat- dated information demonstrating that egory in ascending order based on the the supplier meets the requirements proximity of each small supplier’s com- under paragraphs (b) through (d) of this posite bid to the pivotal bid, until the section. number calculated in paragraph [72 FR 18085, Apr. 10, 2007, as amended at 74 (g)(1)(i) of this section is reached or FR 2880, Jan. 16, 2009; 76 FR 70315, Nov. 10, there are no more composite bids sub- 2011] mitted by small suppliers for the product category. § 414.416 Determination of competitive (2) The bids by small suppliers that bidding payment amounts. are selected under paragraph (g)(1)(iii) (a) General rule. CMS establishes a of this section are not used to calculate single payment amount for each item the single payment amounts for any furnished under a competitive bidding items under § 414.416 of this subpart. program. (h) Sufficient number of suppliers. (1) (b) Methodology for setting payment Except as provided in paragraph (h)(3) amount. (1) The single payment amount of this section. CMS will award at least for an item furnished under a competi- five contracts, if there are five sup- tive bidding program is equal to the pliers satisfying the requirements in median of the bids submitted for that paragraphs (b) through (f) of this sec- item by suppliers whose composite bids tion; or for the product category that includes (2) CMS will award at least two con- the item are equal to or below the piv- tracts, if there are less than five sup- otal bid for that product category. If pliers meeting these requirements and there is an even number of bids, the the suppliers satisfying these require- single payment amount for the item is ments have sufficient capacity to sat- equal to the average of the two middle isfy beneficiary demand for the product bids. category calculated under paragraph (2) The single payment amount for an (e)(1) of this section. item must be less than or equal to the (3) The provisions of paragraph (h)(1) amount that would otherwise be paid of this section do not apply to regional for the same item under subpart C or or nationwide mail order CBAs under subpart D. § 414.410(d)(2) of this subpart. (i) Selection of new suppliers after bid- [72 FR 18085, Apr. 10, 2007] ding. (1) Subsequent to the awarding of contracts under this subpart, CMS may § 414.418 Opportunity for networks. award additional contracts if it deter- (a) A network may be comprised of at mines that additional contract sup- least 2 but not more than 20 small suppliers are needed to meet beneficiary pliers. demand for items under a competitive (b) The following rules apply to net- bidding program. CMS selects addi- works that seek contracts under this tional contract suppliers by— subpart: (i) Referring to the arrayed list of (1) Each network must form a single suppliers that submitted bids for the legal entity that acts as the bidder and product category included in the com- submits the bid. Any agreement en- petitive bidding program for which tered into for purposes of forming a beneficiary demand is not being met; network must be submitted to CMS. and The network must identify itself as a (ii) Beginning with the supplier network and identify all of its mem- whose composite bid is the first com- bers. posite bid above the pivotal bid for (2) Each member of the network must that product category, determining if satisfy the requirements in § 414.414(b) that supplier is willing to become a through (d). contract supplier under the same terms (3) A small supplier may join one or and conditions that apply to other con- more networks but cannot submit an tract suppliers in the CBA. individual bid to furnish the same (2) Before CMS awards additional product category in the same CBA as contracts under paragraph (i)(1) of this any network in which it is a member. section, a supplier must submit up- A small supplier may not be a member

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00077 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.420 42 CFR Ch. IV (10–1–12 Edition)

of more than one network if those net- (b) Furnishing of a prescribed par- works submit bids to furnish the same ticular brand item or mode of delivery. If product category in the same CBA. a physician or treating practitioner (4) The network cannot be anti- prescribes a particular brand of an competitive, and this section does not item or mode of delivery, the contract supersede any Federal law or regula- supplier must— tion that regulates anticompetitive be- (1) Furnish the particular brand or havior. mode of delivery as prescribed by the (5) A bid submitted by a network physician or treating practitioner; must include a statement from each (2) Consult with the physician or network member certifying that the treating practitioner to find an appro- network member joined the network priate alternative brand of item or because it is unable independently to mode of delivery for the beneficiary furnish all of the items in the product and obtain a revised written prescrip- category for which the network is sub- tion from the physician or treating mitting a bid to beneficiaries through- practitioner; or (3) Assist the beneficiary in locating out the entire geographic area of the a contract supplier that can furnish CBA. the particular brand of item or mode of (6) At the time that a network sub- delivery prescribed by the physician or mits a bid, the network’s total market treating practitioner. share for each product category that is (c) Payment for a particular brand of the subject of the network’s bid cannot item or mode of delivery. Medicare does exceed 20 percent of the Medicare de- not make an additional payment to a mand for that product category in the contract supplier that furnishes a par- CBA. ticular brand or mode of delivery for an (c) If the network is awarded a con- item, as directed by a prescription tract, each supplier must submit its written by the beneficiary’s physician own claims and will receive payment or treating practitioner. directly from Medicare for the items (d) Prohibition on billing for an item that it furnishes under the competitive different from the particular brand of item bidding program. or mode of delivery prescribed. A con- [72 FR 18085, Apr. 10, 2007] tract supplier is prohibited from submitting a claim to Medicare if it fur- § 414.420 Physician or treating practi- nishes an item different from that tioner authorization and consider- specified in the written prescription re- ation of clinical efficiency and ceived from the beneficiary’s physician value of items. or treating practitioner. Payment will (a) Prescription for a particular brand not be made to a contract supplier that item or mode of delivery. (1) A physician submits a claim prohibited by this or treating practitioner may prescribe, paragraph. in writing, a particular brand of an [72 FR 18085, Apr. 10, 2007] item for which payment is made under a competitive bidding program, or a § 414.422 Terms of contracts. particular mode of delivery for an (a) Basic rule. CMS specifies the item, if he or she determines that the terms and conditions of the contracts particular brand or mode of delivery entered into with contract suppliers would avoid an adverse medical out- under this subpart. A contract supplier come for the beneficiary. must comply with all terms of its con- (2) When a physician or treating tract, including any option exercised practitioner prescribes a particular by CMS, for the full duration of the brand or mode of delivery of an item contract period. under paragraph (a)(1) of this section, (b) Recompeting competitive bidding the physician or treating practitioner contracts. CMS recompetes competitive must document the reason in the bene- bidding contracts at least once every 3 ficiary’s medical record why the par- years. ticular brand or mode of delivery is (c) Nondiscrimination. The items fur- medically necessary to avoid an ad- nished by a contract supplier under verse medical outcome. this subpart must be the same items

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00078 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.422

that the contract supplier makes avail- (2) A skilled nursing facility defined able to other customers. under section 1819(a) of the Act or a (d) Change of ownership. (1) A con- nursing facility defined under section tract supplier must notify CMS if it is 1919(a) of the Act that has elected to negotiating a change in ownership 60 furnish items only to its own residents days before the anticipated date of the and that is also a contract supplier change. may furnish items under a competitive (2) CMS may award a contract to an bidding program to its own patients to entity that merges with, or acquires, a whom it would otherwise furnish Part contract supplier if— B services. (i) The successor entity meets all re- (3) Contract suppliers for diabetic quirements applicable to contract sup- testing supplies must furnish the brand pliers for the applicable competitive of diabetic testing supplies that work bidding program; with the home blood glucose monitor (ii) The successor entity submits to selected by the beneficiary. The con- CMS the documentation described tract supplier is prohibited from influ- under § 414.414(b) through (d) if that encing or incentivizing the beneficiary documentation has not previously been by persuading, pressuring, or advising submitted by the successor entity or them to switch from their current the contract supplier that is being ac- brand or for new beneficiaries from quired, or is no longer current. This their preferred brand of glucose mon- documentation must be submitted itor and testing supplies. The contract within 30 days prior to the anticipated supplier may not furnish information effective date of the change of owner- about alternative brands to the bene- ship. A successor entity is not required ficiary unless the beneficiary requests to duplicate previously submitted in- such information. formation if the previously submitted (f) Disclosure of subcontracting ar- information is still current; rangements. (1) Initial disclosure. Not (iii) The successor entity is acquiring later than 10 days after the date a sup- the assets of the existing contract supplier enters into a contract under this plier, it submits to CMS, at least 30 section the supplier must disclose in- days before the anticipated effective formation on both of the following: date of the change of ownership, a signed novation agreement acceptable (i) Each subcontracting arrangement to CMS stating that it will assume all that the supplier has in furnishing obligations under the contract; or items and services under the contract. (iv) A new entity will be formed as a (ii) Whether each subcontractor result of the merger or acquisition, the meets the requirement of section existing contract supplier submits to 1834(a)(20)(F)(i) of the Act if applicable CMS, at least 30 days before the antici- to such subcontractor. pated effective date of the change of (2) Subsequent disclosure. Not later ownership, its final draft of a novation than 10 days after the date a supplier agreement as described in paragraph enters into a subcontracting arrange- (d)(2)(iii) of this section for CMS re- ment subsequent to contract award view. The successor entity must sub- with CMS, the supplier must disclose mit to CMS, within 30 days after the ef- information on both of the following: fective date of the change of (i) The subcontracting arrangement ownernship and executed novation that the supplier has in furnishing agreement acceptable to CMS. items and services under the contract. (e) Furnishing of items. Except as oth- (ii) Whether the subcontractor meets erwise prohibited under section 1877 of the requirement of section the Act, or any other applicable law or 1834(a)(20)(F)(i) of the Act, if applicable regulation: to such subcontractor. (1) A contract supplier must agree to (g) Breach of contract. (1) Any devi- furnish items under its contract to any ation from contract requirements, in- beneficiary who maintains a perma- cluding a failure to comply with gov- nent residence in, or who visits, the ernmental agency or licensing organi- CBA and who requests those items zation requirements, constitutes a from that contract supplier. breach of contract.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00079 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.423 42 CFR Ch. IV (10–1–12 Edition)

(2) In the event a contract supplier (v) Penalties that will accompany the breaches its contract, CMS may take termination, such as not being eligible one or more of the following actions: to bid in future rounds of competitive (i) Require the contract supplier to bidding. submit a corrective action plan; (vi) The effective date of termination (ii) Suspend the contract supplier’s is 45 days from the date of the notifica- contract; tion letter unless a timely hearing re- (iii) Terminate the contract; quest has been filed or a corrective ac- (iv) Preclude the contract supplier tion plan (CAP) has been submitted from participating in the competitive within 30 days of the date on the notifi- bidding program; cation letter. (v) Revoke the supplier number of (c) Corrective action plan (CAP)—(1) the contract supplier; or Option for corrective action plan (CAP). (vi) Avail itself of other remedies al- (i) CMS has the option to allow a lowed by law. DMEPOS supplier to provide a written corrective action plan (CAP) to remedy [72 FR 18085, Apr. 10, 2007, as amended at 74 the deficiencies identified in the no- FR 2881, Jan. 16, 2009; 75 FR 73623, Nov. 29, tice, when CMS determines that the 2010; 76 FR 70315, Nov. 10, 2011] delay in the termination date caused by allowing a CAP will not cause harm § 414.423 Appeals Process for Termi- nation of Competitive Bidding Con- to beneficiaries, for example, we would tract. not allow a CAP if the supplier has been excluded from any Federal pro- This section implements an appeals gram, debarred by a Federal agency, or process for suppliers that CMS has de- convicted of a healthcare-related termined are in breach of their Medi- crime. care DMEPOS Competitive Bidding (ii) If a supplier chooses not to sub- Program contracts and where CMS has mit a CAP or if CMS determines that a taken action to terminate the sup- supplier’s CAP is insufficient, the supplier’s contract. Except as specified in plier may request a hearing on the ter- this regulation termination decisions mination. made under this section are final and (2) Submission of a CAP. (i) A correc- binding. tive action plan must be submitted (a) Terminations for breach of contract. within 30 days from the date on the no- CMS may terminate a supplier’s tification letter. If the supplier decides DMEPOS Competitive Bidding Pro- not to submit a corrective action plan gram contract when it determines that the supplier may within 30 days of the the supplier has violated any of the date on the termination letter request terms of its contract. a hearing by a CBIC hearing officer. (b) Notice of termination—(1) CMS noti- (ii) Suppliers will only have the op- fication. If CMS determines a supplier portunity to submit a CAP when they to be in breach of its contract either in are first notified that they have been part or in whole, it will notify the determined to be in breach of contract. Medicare DMEPOS supplier of the ter- If the CAP is not acceptable or prop- mination by certified mail. erly implemented, suppliers will re- (2) Content of the notice. The CMS no- ceive a subsequent termination notice. tice will include the following: (d) The purpose of the corrective action (i) The reasons for the termination. plan. (1) For the supplier to eliminate (ii) The right to request a hearing by all of the deficiencies that were identi- a CBIC Hearing Officer, and depending fied in the notice to terminate its con- on the nature of the breach, the sup- tract to avoid contract termination. plier may also be allowed to submit a (2) To identify the timeframes by CAP in lieu of requesting a hearing by which the supplier will implement each a CBIC Hearing Officer, as specified in of the components of the CAP. paragraph (c)(1)(i) of this section. (e) Review of the CAP. (1) The CBIC (iii) The address to which the written will review the CAP. Suppliers may request for a hearing must be mailed. only revise their CAP one-time during (iv) The address to which the CAP the review process based on the defi- must be mailed, if applicable. ciencies identified by the CBIC. The

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00080 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.423

CBIC will submit a recommendation to (2) The hearing may be held in person CMS concerning whether the CAP in- or by telephone at the supplier’s re- cludes the steps necessary to remedy quest. the contract deficiencies as identified (3) The scheduling notice to the par- in the notice of termination. ties must indicate the time and place (2) If CMS accepts the CAP, including for the hearing and must be sent to the supplier’s designated timeframe for its supplier 30 days before the date of the completion; the supplier must provide hearing. a follow-up report within 5 days after (4) The HO may, on his or her own the supplier has fully implemented the motion, or at the request of a party, CAP that verifies that all of the defi- change the time and place for the hear- ciencies identified in the CAP have ing, but must give the parties to the been corrected in accordance with the hearing 30 days notice of the change. timeframes accepted by CMS. (5) The HO’s scheduling notice must (3) If the supplier does not implement provide the parties to the hearing and an acceptable CAP the supplier will re- the CBIC the following information: ceive a subsequent notice that their (i) Description of the hearing proce- contract will be terminated within 45 dure. days of the date on that notice. (ii) The general and specific issues to (f) Right to request a hearing by the be resolved. CBIC hearing officer (HO). (1) A supplier (iii) The supplier has the burden to who has received a notice that CMS prove it is not in violation of the con- considers the supplier in breach of contract. tract or that the supplier’s CAP is not (iv) The opportunity for parties to acceptable has the right to request a the hearing to submit additional evi- hearing before an HO who was not in- dence to support their positions, if requested by the HO. volved with the original determination. (v) All evidence submitted, both from the supplier and CMS, in preparation (2) A supplier who wishes to appeal for the hearing with all affected parties the termination notice must submit a within 15 days prior to the scheduled written request to the CBIC. The re- date of the hearing. quest for a hearing must be received by (h) Burden of proof. (1) The burden of the CBIC within 30 days from the date proof is on the Competitive Bidding of the notice to terminate. Program contract supplier to dem- (3) A request for hearing must be in onstrate to the HO with convincing writing and submitted by an author- evidence that it has not breached its ized official of the supplier. contract or that termination is not ap- (4) The appeals process for the Medi- propriate. care DMEPOS Competitive Bidding (2) The supplier’s supporting evidence Program is not to be used in place of must be submitted with its request for other existing appeals processes that a hearing. apply to other parts of the Medicare. (3) If the Medicare DMEPOS supplier (5) If the supplier is given the oppor- fails to submit this evidence at the tunity to submit a CAP and a CAP is time of its submission, the Medicare not submitted and the supplier fails to DMEPOS supplier is precluded from in- timely request a hearing, this will re- troducing new evidence later during sult in the termination of the sup- the hearing process, unless permitted plier’s DMEPOS Competitive Bidding by the hearing officer. Program contract effective 45 days (4) CMS also has the opportunity to from the date on the notice to termi- submit evidence to the HO within 10 nate received by the supplier. days of receiving a notice announcing (g) The CBIC Hearing Officer schedules the hearing. and conducts the hearing. (1) Within 30 (5) The HO will share all evidence days from the receipt of the supplier’s submitted by the supplier and/or CMS, timely request for a hearing the hear- with all parties to the hearing and the ing officer will contact the parties to CBIC within 15 days prior to the sched- schedule the hearing. uled date of the hearing.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00081 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.423 42 CFR Ch. IV (10–1–12 Edition)

(i) Role of the Hearing Officer. The HO not allow the supplier to submit new will conduct a thorough and inde- information. pendent review of the evidence includ- (2) After reviewing the HO rec- ing the information and documentation ommendation, CMS’ decision will be submitted for the hearing and other in- made within 30 days from the date of formation that the HO considers perti- receipt of the HO’s recommendation. nent for the hearing. The role of the (3) A CMS decision to terminate will HO includes, at a minimum, the fol- indicate the effective date of the termi- lowing: nation. (1) Conducts the hearing and decides (4) This decision is final and binding. the order in which the evidence and the (l) Effect of contract termination. A arguments of the parties are presented; contract supplier whose contract has (2) Determines the rules on admissi- been terminated— bility of the evidence; (1) All locations included in the con- (3) Examines the witnesses, in addi- tract can no longer furnish competitive tion to the examinations conducted by bid items to beneficiaries within a CBA CMS and the contract supplier; and the supplier cannot be reimbursed (4) The CBIC may assist CMS in the by Medicare for these items after the appeals process including being present effective date of the termination. at the hearing, testifying as a witness, (2) Must notify all beneficiaries who or performing other, related ministe- are receiving rented competitive bid rial duties. items or competitive bid items re- (5) Determines the rules for request- ceived on a recurring basis, of the ter- ing documents and other evidence from mination of their contract. other parties; (i) The notice to the beneficiary from (6) Ensures a complete record of the the supplier whose contract was termi- hearing is made available to all parties nated must be provided within 15 days to the hearing; of receipt of the final notice of termi- (7) Prepares a file of the record of the nation. hearing which includes all evidence submitted as well as any relevant docu- (ii) The notification to the bene- ments identified by the HO and consid- ficiaries must inform the beneficiaries ered as part of the hearing; and that they are going to have to select a (8) Complies with all applicable pro- new contract supplier to furnish these visions of 42 USC Title 18 and related items in order for Medicare to pay provisions of the Act, the applicable these items. regulations issued by the Secretary, (m) Effective date of the contract termi- and manual instructions issued by nation. (1) A supplier’s DMEPOS CBP CMS. contract is terminated effective on the (j) Hearing Officer recommendation. (1) termination date specified in the no- The HO will issue a written rec- tice to the supplier, unless the supplier ommendation to CMS within 30 days of timely requests a hearing with the HO the close of the hearing unless an ex- or the supplier has submitted a CAP tension has been granted by CMS be- under paragraph (c) of this section. cause the HO has demonstrated that an (2) If a supplier requests an HO re- extension is needed due to the com- view of the CMS decision to terminate plexity of the matter or heavy work- its contract, and CMS based upon the load. HO’s recommendation terminates the (2) The recommendation will explain supplier’s contract, the effective date the basis and the rationale for the HO’s of the termination will be the date recommendation. specified in the post-hearing notice to (3) The hearing officer must include the supplier indicating CMS’s final de- the record of the hearing, along with termination to terminate the contract. all evidence and documents produced (3) For violations of the terms of the during the hearing along with its rec- supplier’s DMEPOS CBP contract that ommendation. may harm beneficiaries, such as a sup- (k) CMS’ final determination. (1) CMS’ plier providing an inferior product that review of the HO recommendation will causes harm to the beneficiary, no

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00082 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.425

delays of the effective date of the ter- (c) Information that must be included in mination will be allowed. a claim. (1) Supplier’s name, name of authorized official, U.S. Post Office [75 FR 73623, Nov. 29, 2010] mailing address, phone number, email § 414.424 Administrative or judicial re- address and bidding number, and Na- view. tional Supplier Clearinghouse Number; (2) A copy of the signed contract en- (a) There is no administrative or judicial review under this subpart of the tered into with CMS for the Round 1 following: DMEPOS Competitive Bidding Pro- gram; (1) Establishment of payment amounts. (3) A detailed explanation of the (2) Awarding of contracts. damages incurred by this supplier as a direct result of the termination of the (3) Designation of CBAs. Round 1 competitive bid contract by (4) Phase-in of the competitive bid- MIPPA. The explanation must include ding programs. all of the following: (5) Selection of items for competitive bidding. (i) Documentation of the supplier’s damages through receipts. (6) Bidding structure and number of contract suppliers selected for a com- (ii) Records that substantiate the petitive bidding program. supplier’s damages and demonstrate (b) A denied claim is not appealable that the damages are directly related if the denial is based on a determina- to performance of the Round 1 contract tion by CMS that a competitively bid and are consistent with information item was furnished in a CBA in a man- the supplier provided as part of their ner not authorized by this subpart. bid. (4) The supplier must explain how it [72 FR 18085, Apr. 10, 2007] would be damaged if not reimbursed. (5) The claim must document steps § 414.425 Claims for damages. the supplier took to mitigate any dam- (a) Eligibility for filing a claim for damages they may have incurred due to the ages as a result of the termination of sup- contract termination, including a de- plier contracts by the Medicare Improve- tailed explanation of the steps of all at- ments for Patients and Providers Act of tempts to use for other purposes, re- 2008 (MIPPA). (1) Any aggrieved sup- turn or dispose of equipment or other plier, including a member of a network assets purchased or rented for the use that was awarded a contract for the in the Round 1 DMEPOS CBP contract Round 1 Durable Medical Prosthetics, performance. Orthotics, and Supplies Competitive (d) Items that will not be considered in Bidding Program (DMEPOS CBP) that a claim. The following items will not be believes it has been damaged by the considered in a claim: termination of its competitive bid con- (1) The cost of submitting a bid. tract, may file a claim under this sec- (2) Any fees or costs incurred for con- tion. sulting or marketing. (2) A subcontractor of a contract supplier is not eligible to submit a claim (3) Costs associated with accredita- under this section. tion or licensure. (b) Timeframe for filing a claim. (1) A (4) Costs incurred before March 20, completed claim, including all docu- 2008. mentation, must be filed within 90 days (5) Costs incurred for contract per- of January 1, 2010 (the effective date of formance after July 14, 2008 except for these damages provisions), unless that costs incurred to mitigate damages. day is a Federal holiday or Sunday in (6) Any profits a supplier may have which case it will fall to the next busi- expected from the contract. ness day. (7) Costs that would have occurred (2) The date of filing is the actual without a contract having been award- date of receipt by the CBIC of a com- ed. pleted claim that includes all the infor- (8) Costs for items such as inventory, mation required by this rule. delivery vehicles, office space and

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00083 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.425 42 CFR Ch. IV (10–1–12 Edition)

equipment, personnel, which the sup- (B) The reasonable amount will con- plier did not purchase specifically to sider both costs incurred and the con- perform the contract. tractor’s attempts and action to limit (9) Costs that the supplier has re- the damages; couped by any means, and may include (v) The recommendation will be sent use of personnel, material, suppliers, or to the Determining Authority for a equipment in the supplier’s business final determination. operations. (2) CMS’ role as the Determining Au- (e) Filing a claim. (1) A claim, with all thority. (i) The Determining Authority supporting documentation, must be shall review the recommendation of filed with the CMS Competitive Bid- the CBIC. ding Implementation Contractor (ii) The Determining Authority may (CBIC). seek further information from the (2) Claims must include a statement claimant or the CBIC in making a con- from a supplier’s authorized official currence or non-concurrence deter- certifying the accuracy of the informa- mination. tion provided on the claim and all sup- (iii) The Determining Authority may porting documentation. set a deadline for receipt of additional (3) The CBIC does not accept elec- information. A claimant’s failure to re- tronic submissions of claims for dam- spond timely may result in a denial of ages. the claim. (f) Review of claim. (1) Role of the (iv) If the Determining Authority CBIC. (i) The CBIC will review the concurs with the CBIC recommenda- claim to ensure it is submitted timely, tion, the Determining Authority shall complete, and by an eligible claimant. submit a final signed decision to the When the CBIC identifies that a claim CBIC and direct the CBIC to notify the is incomplete or not filed timely, it claimant of the decision and the rea- will make a recommendation to the sons for the final decision. Determining Authority not to process (v) If the Determining Authority the claim further. Incomplete or un- non-concurs with the CBIC rec- timely claims may be dismissed by the ommendation, the Determining Au- Determining Authority without fur- thority may return the claim for further processing. ther processing or the Determining Au- (ii) For complete, timely claims, the thority may: CBIC will review the claim on its mer- (A) Write a determination granting its to determine if damages are war- (in whole or in part) a claim for dam- ranted and may seek further informa- ages or denying a claim in its entirety; tion from the claimant when making its recommendation to the Deter- (B) Direct the CBIC to write said de- mining Authority. The CBIC may set a termination for the Determining deadline for receipt of additional infor- Authority’s signature; or mation. A claimant’s failure to respond (C) Return the claim to the CBIC timely may result in a denial of the with further instructions. claim. (vi) The Determining Authority’s de- (iii) The CBIC will make a rec- termination is final and not subject to ommendation to the Determining Au- administrative or judicial review. thority for each claim filed and include (g) Timeframe for determinations. (1) an explanation that supports its rec- Every effort will be made to make a de- ommendation. termination within 120 days of initial (iv) The recommendation must be ei- receipt of the claim for damages by the ther to award damages for a particular CBIC or the receipt of additional infor- amount (which may not be the same mation that was requested by the amount requested by the claimant) or CBIC, whichever is later. that no damages should be awarded. (2) In the case of more complex cases, (A) If the CBIC recommends that or in the event of a large workload, a damages are warranted, the CBIC will decision will be issued as soon as prac- calculate a recommended reasonable ticable. amount of damages based on the claim (h) Notification to claimant of damage submitted. determination. The CBIC must mail the

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00084 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.506

Determining Authority’s determina- Subpart G—Payment for New tion to the claimant by certified mail Clinical Diagnostic Laboratory return receipt requested, at the address Tests provided in the claim.

[74 FR 62011, Nov. 25, 2009] SOURCE: 71 FR 69786, Dec. 1, 2006, unless otherwise noted. § 414.426 Adjustments to competitively bid payment amounts to reflect § 414.500 Basis and scope. changes in the HCPCS. This subpart implements provisions If a HCPCS code for a competitively of 1833(h)(8) of the Act—procedures for bid item is revised after the contract determining the basis for, and amount period for a competitive bidding proof, payment for a new clinical diag- gram begins, CMS adjusts the single nostic laboratory test with respect to payment amount for that item as fol- which a new or substantially revised lows: Healthcare Common Procedure Coding (a) If a single HCPCS code for an System code is assigned on or after item is divided into two or more January 1, 2005. HCPCS codes for the components of that item, the sum of single payment § 414.502 Definitions. amounts for the new HCPCS codes For purposes of this subpart— equals the single payment amount for New test means any clinical diag- the original item. Contract suppliers nostic laboratory test for which a new must furnish the components of the or substantially revised Healthcare item and submit claims using the new Common Procedure Coding System HCPCS codes. Code is assigned on or after January 1, (b) If a single HCPCS code is divided 2005. into two or more separate HCPCS Substantially Revised Healthcare Com- codes, the single payment amount for mon Procedure Coding System Code each of the new separate HCPCS codes means a code for which there has been is equal to the single payment amount a substantive change to the definition applied to the single HCPCS code. Con- of the test or procedure to which the tract suppliers must furnish the items code applies (such as a new analyte or a new methodology for measuring an and submit claims using the new sepa- existing analyte specific test). rate HCPCS codes. (c) If the HCPCS codes for compo- [71 FR 69786, Dec. 1, 2006, as amended at 72 nents of an item are merged into a sin- FR 66401, Nov. 27, 2007] gle HCPCS code for the item, the single payment amount for the new HCPCS § 414.504 [Reserved] code is equal to the total of the sepa- § 414.506 Procedures for public con- rate single payment amounts for the sultation for payment for a new components. Contract suppliers must clinical diagnostic laboratory test. furnish the item and submit claims For a new test, CMS determines the using the new HCPCS code. basis for and amount of payment after (d) If multiple HCPCS codes for simi- performance of the following: lar items are merged into a single (a) CMS makes available to the pub- HCPCS code, the items to which the lic (through CMS’s Internet Web site) a new HCPCS codes apply may be fur- list that includes codes for which es- nished by any supplier that has a valid tablishment of a payment amount is Medicare billing number. Payment for being considered for the next calendar these items will be made in accordance year. with Subpart C or Subpart D. (b) CMS publishes a FEDERAL REG- [72 FR 18085, Apr. 10, 2007] ISTER notice of a meeting to receive public comments and recommendations (and data on which recommendations are based) on the appropriate basis, as specified in § 414.508, for establishing

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00085 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.508 42 CFR Ch. IV (10–1–12 Edition)

payment amounts for the list of codes (b) Gapfilling. Gapfilling is used when made available to the public. no comparable existing test is avail- (c) Not fewer than 30 days after publi- able. cation of the notice in the FEDERAL (1) In the first year, carrier-specific REGISTER, CMS convenes a meeting amounts are established for the new that includes representatives of CMS test code using the following sources of officials involved in determining pay- information to determine gapfill ment amounts, to receive public com- amounts, if available: ments and recommendations (and data (i) Charges for the test and routine on which the recommendations are discounts to charges; based). (ii) Resources required to perform the (d) Considering the comments and test; recommendations (and accompanying (iii) Payment amounts determined by data) received at the public meeting, other payers; and CMS develops and makes available to (iv) Charges, payment amounts, and the public (through an Internet Web resources required for other tests that site and other appropriate mecha- may be comparable or otherwise rel- nisms) a list of— evant. (1) Proposed determinations with re- (2) In the second year, the test code spect to the appropriate basis for es- is paid at the national limitation tablishing a payment amount for each amount, which is the median of the code, with an explanation of the rea- carrier-specific amounts. sons for each determination, the data (3) For a new test for which a new or on which the determinations are based, substantially revised HCPCS code was and a request for public written com- assigned on or before December 31, 2007, ments within a specified time period on after the first year of gapfilling, CMS the proposed determination; and determines whether the carrier-specific (2) Final determinations of the pay- amounts will pay for the test appro- ment amounts for tests, with the ra- priately. If CMS determines that the tionale for each determination, the carrier-specific amounts will not pay data on which the determinations are for the test appropriately, CMS may based, and responses to comments and crosswalk the test. suggestions from the public. [71 FR 69786, Dec. 1, 2006, as amended at 72 FR 66401, Nov. 27, 2007] [71 FR 69786, Dec. 1, 2006, as amended at 72 FR 66401, Nov. 27, 2007] § 414.509 Reconsideration of basis for and amount of payment for a new § 414.508 Payment for a new clinical clinical diagnostic laboratory test. diagnostic laboratory test. For a new test for which a new or For a new clinical diagnostic labora- substantially revised HCPCS code was tory test that is assigned a new or sub- assigned on or after January 1, 2008, stantially revised code on or after Jan- the following reconsideration proce- uary 1, 2005, CMS determines the pay- dures apply: ment amount based on either of the (a) Reconsideration of basis for pay- following: ment. (1) CMS will receive reconsider- (a) Crosswalking. Crosswalking is used ation requests in written format for 60 if it is determined that a new test is days after making a determination of comparable to an existing test, mul- the basis for payment under tiple existing test codes, or a portion of § 414.506(d)(2) regarding whether CMS an existing test code. should reconsider the basis for pay- (1) CMS assigns to the new test code, ment and why a different basis for pay- the local fee schedule amounts and na- ment would be more appropriate. If a tional limitation amount of the exist- requestor recommends that the basis ing test. for payment should be changed from (2) Payment for the new test code is gapfilling to crosswalking, the re- made at the lesser of the local fee questor may also recommend the code schedule amount or the national limi- or codes to which to crosswalk the new tation amount. test.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00086 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.509

(2)(i) A requestor that submitted a (iii) Considering comments received, request under paragraph (a)(1) of this CMS may reconsider its determination section may also present its reconsid- of the amount of payment. As the re- eration request at the public meeting sult of such a reconsideration, CMS convened under § 414.506(c), provided may change the code or codes to which that the requestor requests an oppor- the new test is crosswalked. tunity to present at the public meeting (iv) If CMS changes the basis for pay- as part of its written submission under ment from gapfilling to crosswalking paragraph (a)(1) of this section. as a result of a reconsideration, the (ii) If the requestor presents its re- crosswalked amount of payment is not consideration request at the public subject to reconsideration. meeting convened under § 414.506(c), (2) Gapfilling. (i) By April 30 of the members of the public may comment year after CMS makes a determination on the reconsideration request verbally under § 414.506(d)(2) or § 414.509(a)(3) at the public meeting and may submit that the basis for payment for a new written comments after the public test will be gapfilling, CMS posts in- meeting (within the timeframe for pub- terim carrier-specific amounts on the lic comments established by CMS). CMS Web site. (3) Considering reconsideration re- (ii) For 60 days after CMS posts in- quests and other comments received, terim carrier-specific amounts on the CMS may reconsider its determination CMS Web site, CMS will receive public of the basis for payment. As the result comments in written format regarding of such a reconsideration, CMS may the interim carrier-specific amounts. change the basis for payment from (iii) After considering the public crosswalking to gapfilling or from comments, CMS will post final carrier- gapfilling to crosswalking. specific amounts on the CMS Web site. (4) If the basis for payment is revised (iv) For 30 days after CMS posts final as the result of a reconsideration, the carrier-specific amounts on the CMS new basis for payment is final and is Web site, CMS will receive reconsider- not subject to further reconsideration. ation requests in written format re- (b) Reconsideration of amount of pay- garding whether CMS should recon- ment—(1) Crosswalking. (i) For 60 days sider the final payment amounts and after making a determination under the appropriate national limitation § 414.506(d)(2) of the code or codes to amount for the new test. which a new test will be crosswalked, (v) Considering reconsideration re- CMS receives reconsideration requests quests received, CMS may reconsider in written format regarding whether its determination of the amount of CMS should reconsider its determina- payment. As the result of a reconsider- tion and the recommended code or ation, CMS may revise the national codes to which to crosswalk the new limitation amount for the new test. test. (3) For both gapfilled and (ii)(A) A requestor that submitted a crosswalked new tests, if CMS revises request under paragraph (b)(1)(i) of this the amount of payment as the result of section may also present its reconsid- a reconsideration, the new amount of eration request at the public meeting payment is final and is not subject to convened under § 414.506(c), provided further reconsideration. that the requestor requests an oppor- (c) Effective date. If CMS changes a tunity to present at the public meeting determination as the result of a recon- as part of its written submission under sideration, the new determination re- paragraph (b)(1)(i) of this section. garding the basis for or amount of pay- (B) If a requestor presents its recon- ment is effective January 1 of the year sideration request at the public meet- following reconsideration. Claims for ing convened under § 414.506(c), mem- services with dates of service prior to bers of the public may comment on the the effective date will not be reopened reconsideration request verbally at the or otherwise reprocessed. public meeting and may submit writ- (d) Jurisdiction for reconsideration deci- ten comments after the public meeting sions. Jurisdiction for reconsidering a (within the timeframe for public com- determination rests exclusively with ments established by CMS). the Secretary. A decision whether to

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00087 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.510 42 CFR Ch. IV (10–1–12 Edition)

reconsider a determination is com- (i) The decision regarding the specific mitted to the discretion of the Sec- chemotherapeutic agents to test is retary. A decision not to reconsider an made at least 14 days after discharge; initial determination is not subject to (ii) The specimen was collected while administrative or judicial review. the patient was undergoing a hospital surgical procedure; [72 FR 66401, Nov. 27, 2007, as amended at 73 FR 2432, Jan. 15, 2008] (iii) It would be medically inappropriate to have collected the sample § 414.510 Laboratory date of service other than during the hospital proce- for clinical laboratory and pathol- dure for which the patient was admit- ogy specimens. ted; The date of service for either a clin- (iv) The results of the test do not ical laboratory test or the technical guide treatment provided during the component of physician pathology hospital stay; and, service is as follows: (v) The test was reasonable and medi- (a) Except as provided under para- cally necessary for the treatment of an graph (b) of this section, the date of illness. service of the test must be the date the (4) For purposes of this section, specimen was collected. ‘‘chemotherapy sensitivity test’’ means a test identified by the Secretary as a (b)(1) If a specimen was collected test that requires a fresh tissue sample over a period that spans 2 calendar to test the sensitivity of tumor cells to days, then the date of service must be various chemotherapeutic agents. The the date the collection ended. Secretary identifies such tests through (2) In the case of a test performed on program instructions. a stored specimen, if a specimen was stored for— [71 FR 69786, Dec. 1, 2006, as amended at 72 (i) Less than or equal to 30 calendar FR 66402, Nov. 27, 2007] days from the date it was collected, the date of service of the test must be the Subpart H—Fee Schedule for date the test was performed only if— Ambulance Services (A) The test is ordered by the patient’s physician at least 14 days fol- SOURCE: 67 FR 9132, Feb. 27, 2002, unless lowing the date of the patient’s dis- otherwise noted. charge from the hospital; (B) The specimen was collected while § 414.601 Purpose. the patient was undergoing a hospital This subpart implements section surgical procedure; 1834(l) of the Act by establishing a fee (C) It would be medically inappro- schedule for the payment of ambulance priate to have collected the sample services. Section 1834(l) of the Act re- other than during the hospital proce- quires that, except for services fur- dure for which the patient was admit- nished by certain critical access hos- ted; pitals (see § 413.70(b)(5) of this chapter), (D) The results of the test do not payment for all ambulance services, guide treatment provided during the otherwise previously payable on a rea- hospital stay; and sonable charge basis or retrospective (E) The test was reasonable and reasonable cost basis, be made under a medically necessary for the treatment fee schedule. of an illness. (ii) More than 30 calendar days before § 414.605 Definitions. testing, the specimen is considered to As used in this subpart, the following have been archived and the date of definitions apply to both land and service of the test must be the date the water (hereafter collectively referred specimen was obtained from storage. to as ‘‘ground’’) ambulance services (3) In the case of a chemotherapy sen- and to air ambulance services unless sitivity test performed on live tissue, otherwise specified: the date of service of the test must be Advanced life support (ALS) assessment the date the test was performed only is an assessment performed by an ALS if— crew as part of an emergency response

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00088 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.605

that was necessary because the pa- to administer additional interventions tient’s reported condition at the time and medications. of dispatch was such that only an ALS Basic life support (BLS) means trans- crew was qualified to perform the as- portation by ground ambulance vehicle sessment. An ALS assessment does not and medically necessary supplies and necessarily result in a determination services, plus the provision of BLS am- that the patient requires an ALS level bulance services. The ambulance must of service. be staffed by an individual who is Advanced life support (ALS) interven- qualified in accordance with State and tion means a procedure that is, in ac- local laws as an emergency medical cordance with State and local laws, re- technician-basic (EMT-Basic). These quired to be furnished by ALS per- laws may vary from State to State. sonnel. For example, only in some States is an Advanced life support, level 1 (ALS1) EMT-Basic permitted to operate lim- means transportation by ground ambu- ited equipment on board the vehicle, lance vehicle, medically necessary sup- assist more qualified personnel in per- plies and services and either an ALS forming assessments and interventions, assessment by ALS personnel or the and establish a peripheral intravenous provision of at least one ALS interven- (IV) line. tion. Conversion factor (CF) is the dollar Advanced life support, level 2 (ALS2) amount established by CMS that is means either transportation by ground multiplied by relative value units to ambulance vehicle, medically nec- produce ground ambulance service base essary supplies and services, and the rates. administration of at least three medi- Emergency response means responding cations by intravenous push/bolus or immediately at the BLS or ALS1 level by continuous infusion, excluding crys- of service to a 911 call or the equivalent talloid, hypotonic, isotonic, and in areas without a 911 call system. An hypertonic solutions (Dextrose, Normal immediate response is one in which the Saline, Ringer’s Lactate); or transportation, medically necessary supplies ambulance entity begins as quickly as and services, and the provision of at possible to take the steps necessary to least one of the following ALS proce- respond to the call. dures: Fixed wing air ambulance (FW) means (1) Manual defibrillation/ transportation by a fixed wing aircraft cardioversion. that is certified as a fixed wing air am- (2) Endotracheal intubation. bulance and such services and supplies (3) Central venous line. as may be medically necessary. (4) Cardiac pacing. Geographic adjustment factor (GAF) (5) Chest decompression. means the practice expense (PE) por- (6) Surgical airway. tion of the geographic practice cost (7) Intraosseous line. index (GPCI) from the physician fee Advanced life support (ALS) personnel schedule as applied to a percentage of means an individual trained to the the base rate. For ground ambulance level of the emergency medical techni- services, the PE portion of the GPCI is cian-intermediate (EMT-Intermediate) applied to 70 percent of the base rate or paramedic. The EMT-Intermediate for each level of service. For air ambu- is defined as an individual who is quali- lance services, the PE portion of the fied, in accordance with State and GPCI is applied to 50 percent of the ap- local laws, as an EMT-Basic and who is plicable base rate. also qualified in accordance with State Loaded mileage means the number of and local laws to perform essential ad- miles the Medicare beneficiary is vanced techniques and to administer a transported in the ambulance vehicle. limited number of medications. The Paramedic ALS intercept (PI) means EMT-Paramedic is defined as pos- EMT-Paramedic services furnished by sessing the qualifications of the EMT- an entity that does not furnish the Intermediate and also, in accordance ground ambulance transport, provided with State and local laws, as having the services meet the requirements enhanced skills that include being able specified in § 410.40(c) of this chapter.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00089 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.610 42 CFR Ch. IV (10–1–12 Edition)

Point of pick-up means the location of all ambulance services are paid under the beneficiary at the time he or she is the fee schedule specified in this sub- placed on board the ambulance. part (regardless of the vehicle fur- Relative value units (RVUs) means a nishing the service). value assigned to a ground ambulance (b) Mandatory assignment. Effective service. with implementation of the ambulance Rotary wing air ambulance (RW) fee schedule described in § 414.601 (that means transportation by a helicopter is, for services furnished on or after that is certified as an ambulance and April 1, 2002), all payments made for such services and supplies as may be ambulance services are made only on medically necessary. an assignment-related basis. Ambu- Rural adjustment factor (RAF) means lance suppliers must accept the Medi- an adjustment applied to the base pay- care allowed charge as payment in full ment rate when the point of pick-up is and may not bill or collect from the located in a rural area. beneficiary any amount other than the Rural area means an area located out- unmet Part B deductible and Part B side an urban area, or a rural census coinsurance amounts. Violations of tract within a Metropolitan Statistical this requirement may subject the pro- Area as determined under the most re- vider or supplier to sanctions, as pro- cent version of the Goldsmith modi- vided by law (part 402 of this chapter). fication as determined by the Office of (c) Formula for computation of payment Rural Health Policy of the Health Re- amounts. The fee schedule payment sources and Services Administration. amount for ambulance services is com- Specialty care transport (SCT) means puted according to the following provi- interfacility transportation of a criti- sions: cally injured or ill beneficiary by a (1) Ground ambulance service levels. ground ambulance vehicle, including The CF is multiplied by the applicable medically necessary supplies and serv- RVUs for each level of service to ices, at a level of service beyond the produce a service-level base rate. scope of the EMT-Paramedic. SCT is (i) For services furnished during the necessary when a beneficiary’s condi- period July 1, 2004 through December tion requires ongoing care that must 31, 2006, ambulance services originating be furnished by one or more health pro- in— fessionals in an appropriate specialty (A) Urban areas (both base rate and area, for example, nursing, emergency mileage) are paid based on a rate that medicine, respiratory care, cardio- is 1 percent higher than otherwise is vascular care, or a paramedic with ad- applicable under this section; and ditional training. (B) Rural areas (both base rate and Urban area means a Metropolitan mileage) are paid based on a rate that Statistical Area, as defined by the Ex- is 2 percent higher than otherwise is ecutive Office of Management and applicable under this section. Budget. (ii) For services furnished during the [67 FR 9132, Feb. 27, 2002, as amended at 68 period July 1, 2008 through December FR 67693, Dec. 5, 2003; 71 FR 69787, Dec. 1, 31, 2011, ambulance services originating 2006] in— (iii) The service-level base rate is § 414.610 Basis of payment. then adjusted by the GAF. Compare (a) Method of payment. Medicare pay- this amount to the actual charge. The ment for ambulance services is based lesser of the actual charge or the GAF on the lesser of the actual charge or adjusted base rate amount is added to the applicable fee schedule amount. the lesser of the actual mileage The fee schedule payment for ambu- charges or the payment rate per mile, lance services equals a base rate for the multiplied by the number of miles that level of service plus payment for mile- the beneficiary was transported. When age and applicable adjustment factors. applicable, the appropriate RAF is ap- Except for services furnished by cer- plied to the ground mileage rate to de- tain critical access hospitals or enti- termine the appropriate payment ties owned and operated by them, as rates. The RVU scale for the ambu- described in § 413.70(b) of this chapter, lance fee schedule is as follows:

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00090 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.610

Relative (ii) For services furnished during the Service level value units (RVUs) period July 1, 2004 through December 31, 2011, the payment amount for the BLS ...... 1.00 ground ambulance base rate is in- BLS-Emergency ...... 1.60 ALS1 ...... 1.20 creased by 22.6 percent where the point ALS1-Emergency ...... 1.90 of pickup is in a rural area determined ALS2 ...... 2.75 to be in the lowest 25 percent of rural SCT ...... 3.25 PI ...... 1.75 population arrayed by population density. The amount of this increase is (2) Air ambulance service levels. The based on CMS’s estimate of the ratio of base payment rate for the applicable the average cost per trip for the rural type of air ambulance service is ad- areas in the lowest quartile of popu- justed by the GAF and, when applica- lation compared to the average cost ble, by the appropriate RAF to deter- per trip for the rural areas in the high- mine the amount of payment. Air am- est quartile of population. In making bulance services have no CF or RVUs. this estimate, CMS may use data pro- This amount is compared to the actual vided by the GAO. charge. The lesser of the charge or the (6) Multiple patients. The allowable adjusted GAF rate amount is added to amount per beneficiary for a single am- the payment rate per mile, multiplied bulance transport when more than one by the number of miles that the bene- patient is transported simultaneously ficiary was transported. When applica- is based on the total number of pa- ble, the appropriate RAF is also ap- tients (both Medicare and non-Medi- plied to the air mileage rate. care) on board. If two patients are (3) Loaded mileage. Payment is based transported simultaneously, then the on loaded miles. Payment for air mile- payment allowance for the beneficiary age is based on loaded miles flown as (or for each of them if both patients expressed in statute miles. There are are beneficiaries) is equal to 75 percent three mileage payment rates: a rate for of the service payment allowance ap- FW services, a rate for RW services, plicable for the level of care furnished and a rate for all levels of ground to the beneficiary, plus 50 percent of transportation. (4) Geographic adjustment factor (GAF). the applicable mileage payment allow- For ground ambulance services, the PE ance. If three or more patients are portion of the GPCI from the physician transported simultaneously, the pay- fee schedule is applied to 70 percent of ment allowance for the beneficiary (or the base rate for ground ambulance each of them) is equal to 60 percent of services. For air ambulance services, the service payment allowance applica- the PE portion of the physician fee ble for the level of care furnished to schedule GPCI is applied to 50 percent the beneficiary, plus the applicable of the base rate for air ambulance serv- mileage payment allowance divided by ices. the number of patients on board. (5) Rural adjustment factor (RAF). (i) (7) Payment rate for mileage greater For ground ambulance services where than 50 miles. For services furnished the point of pickup is in a rural area, during the period July 1, 2004 through the mileage rate is increased by 50 per- December 31, 2008, each loaded ambu- cent for each of the first 17 miles and, lance mile greater than 50 (that is, for services furnished before January 1, miles 51 and greater) for ambulance 2004, by 25 percent for miles 18 through transports originating in either urban 50. The standard mileage rate applies areas or in rural areas are paid based to every mile over 50 miles and, for on a rate that is 25 percent higher than services furnished after December 31, otherwise is applicable under this sec- 2003, to every mile over 17 miles. For tion. air ambulance services where the point (d) Payment. Payment, in accordance of pickup is in a rural area, the total with this subpart, represents payment payment is increased by 50 percent; in full (subject to applicable Medicare that is, the rural adjustment factor ap- Part B deductible and coinsurance re- plies to the sum of the base rate and quirements as described in subpart G of the mileage rate. part 409 of this chapter or in subpart I

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00091 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.615 42 CFR Ch. IV (10–1–12 Edition)

of part 410 of this chapter) for all serv- sition period is made based on a com- ices, supplies, and other costs for an bination of the fee schedule payment ambulance service furnished to a Medi- for ambulance services and the amount care beneficiary. No direct payment the program would have paid absent will be made under this subpart if bill- the fee schedule for ambulance serv- ing for the ambulance service is re- ices, as follows: quired to be consolidated with billing (a) 2002 Payment. For services fur- for another benefit for which payment nished in 2002, the payment for the may be made under this chapter. service component, the mileage compo- (e) Point of pick-up. The zip code of nent and, if applicable, the supply com- the point of pick-up must be reported ponent is based on 80 percent of the on each claim for ambulance services reasonable charge for independent sup- so that the correct GAF and RAF may be applied, as appropriate. pliers or on 80 percent of reasonable (f) Updates. The CF, the air ambu- cost for providers, plus 20 percent of lance base rates, and the mileage rates the ambulance fee schedule amount for are updated annually by an inflation the service and mileage components. factor established by law. The inflation The reasonable charge or reasonable factor is based on the consumer price cost portion of payment in CY 2002 is index for all urban consumers (CPI–U) equal to the supplier’s reasonable (U.S. city average) for the 12-month pe- charge allowance or provider’s reason- riod ending with June of the previous able cost allowance for CY 2001, multi- year and, for 2011 and each subsequent plied by the statutory inflation factor year, is reduced by the productivity ad- for ambulance services. justment described in section (b) 2003 Payment. For services fur- 1886(b)(3)(B)(xi)(II) of the Act. nished in CY 2003, payment is based on (g) Adjustments. The Secretary mon- 60 percent of the reasonable charge or itors payment and billing data on an reasonable cost, as applicable, plus 40 ongoing basis and adjusts the CF and percent of the ambulance fee schedule air ambulance rates as appropriate to amount. The reasonable charge and reflect actual practices under the fee reasonable cost portion in CY 2003 is schedule. These rates are not adjusted equal to the supplier’s reasonable solely because of changes in the total charge or provider’s reasonable cost for number of ambulance transports. CY 2002, multiplied by the statutory in- (h) Treatment of certain areas for pay- flation factor for ambulance services. ment for air ambulance services. Any area that was designated as a rural area for (c) 2004 Payment. For services fur- purposes of making payments under nished in CY 2004, payment is based on the ambulance fee schedule for air am- 40 percent of the reasonable charge or bulance services furnished on Decem- reasonable cost, as applicable, plus 60 ber 31, 2006, must be treated as a rural percent of the ambulance fee schedule area for purposes of making payments amount. The reasonable charge and under the ambulance fee schedule for reasonable cost portion in CY 2004 is air ambulance services furnished dur- equal to the supplier’s reasonable ing the period July 1, 2008, through De- charge or provider’s reasonable cost for cember 31, 2011. CY 2003, multiplied by the statutory in- [67 FR 9132, Feb. 27, 2002, as amended at 68 flation factor for ambulance services. FR 67693, Dec. 5, 2003; 69 FR 40292, July 1, (d) 2005 Payment. For services fur- 2004; 71 FR 69787, Dec. 1, 2006; 73 FR 69937, nished in CY 2005, payment is based on Nov. 19, 2008; 74 FR 62012, Nov. 25, 2009; 75 FR 20 percent of the reasonable charge or 73625, Nov. 29, 2010; 76 FR 70315, Nov. 10, 2011] reasonable cost, as applicable, plus 80 percent of the ambulance fee schedule § 414.615 Transition to the ambulance fee schedule. amount. The reasonable charge and reasonable cost portion in CY 2005 is The fee schedule for ambulance serv- equal to the supplier’s reasonable ices will be phased in over 5 years be- charge or provider’s reasonable cost for ginning April 1, 2002. Subject to the first sentence in § 414.610(a), payment CY 2004, multiplied by the statutory infor services furnished during the tran- flation factor for ambulance services.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00092 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.625

(e) 2006 and Beyond Payment. For § 414.617 Transition from regional to services furnished in CY 2006 and there- national ambulance fee schedule. after, the payment is based solely on For services furnished during the pe- the ambulance fee schedule amount. riod July 1, 2004 through December 31, (f) Updates. The portion of the transi- 2009, the amount for the ground ambu- tion payment that is based on the ex- lance base rate is subject to a floor isting payment methodology (that is, amount determined by establishing the non-fee-schedule portion) is up- nine fee schedules based on each of the dated annually for inflation by a factor nine census divisions using the same equal to the percentage increase in the methodology as used to establish the CPI-U (U.S. city average) for the 12- national fee schedule. If the regional month period ending with June of the fee schedule methodology for a given previous year. The CY 2002 inflation census division results in an amount update factor used to update the 2001 that is less than or equal to the na- payment amounts is applied to the tional ground base rate, then it is not annualized (average) payment amounts used, and the national FS amount ap- for CY 2001. For the period January 1, plies. If the regional fee schedule meth- 2001 through June 30, 2001, the inflation odology for a given census division re- update factor is 2.7 percent. For the pe- sults in an amount that is greater than riod July 1, 2001 through December 31, the national ground base rate, then the 2001, the inflation update factor is 4.7 FS portion of the base rate for that percent. The average for the year is 3.7 census division is equal to a blend of percent. Thus, the annualized (average) the national rate and the regional rate CY 2001 payment amounts used to de- in accordance with the following sched- rive the CY 2002 payment amounts are ule: equivalent to the CY 2001 payment amounts that would have been deter- Time period Regional National mined had the inflation update factor percent percent for the entire CY 2001 been 3.7 percent. 7/1/04–12/31/04 ...... 80 20 Both portions of the transition pay- CY 2005 ...... 60 40 ment (that is, the portion that is based CY 2006 ...... 40 60 on reasonable charge or reasonable CY 2007–CY 2009 ...... 20 80 cost and the portion that is based on CY 2010 and thereafter ...... 0 100 the ambulance fee schedule) are updated annually for inflation by the in- [69 FR 40292, July 1, 2004] flation factor described in § 414.610(f). (g) Exception. There will be no blend- § 414.620 Publication of the ambulance ed payment allowance as described in fee schedule. paragraphs (a), (b), (c), and (d) of this (a) Changes in payment rates result- section for ground mileage in those ing from incorporation of the annual States where the Medicare carrier paid inflation factor and the productivity separately for all out-of-county ground adjustment as described in § 414.610(f) ambulance mileage, but did not, before will be announced by CMS by instruc- the implementation of the Medicare tion and on the CMS Web site. ambulance fee schedule, make a sepa- (b) CMS will follow applicable rule- rate payment for any ground ambu- making procedures in publishing revi- lance mileage within the county in sions to the fee schedule for ambulance which the beneficiary was transported. services that result from any factors Payment for ground ambulance mile- other than those described in age in that State will be made based on § 414.610(f). the full ambulance fee schedule amount for ground mileage. This ex- [75 FR 73626, Nov. 29, 2010] ception applies only to carrier-proc- essed claims and only in those States § 414.625 Limitation on review. in which the carrier paid separately for There will be no administrative or ju- out-of-county ambulance mileage, but dicial review under section 1869 of the did not make separate payment for any Act or otherwise of the amounts estab- in-county mileage throughout the en- lished under the fee schedule for ambu- tire State. lance services, including the following:

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00093 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.701 42 CFR Ch. IV (10–1–12 Edition)

(a) Establishing mechanisms to con- 2003, subject to the exceptions as speci- trol increases in expenditures for am- fied in paragraphs (a)(2) through (a)(8) bulance services. of this section. (b) Establishing definitions for ambu- (2) The payment limits for the fol- lance services that link payments to lowing drugs are calculated using 95 the type of services provided. percent of the average wholesale price: (c) Considering appropriate regional (i) Blood clotting factors. and operational differences. (ii) A drug or biological furnished (d) Considering adjustments to pay- during 2004 that was not available for ment rates to account for inflation and Medicare payment as of April 1, 2003. other relevant factors. (iii) Pneumococcal and influenza vac- (e) Phasing in the application of the cines as well as hepatitis B vaccine payment rates under the fee schedule that is furnished to individuals at high in an efficient and fair manner. or intermediate risk of contracting hepatitis B (as determined by the Sec- Subpart I—Payment for Drugs and retary). (iv) A drug or biological furnished Biologicals during 2004 in connection with the furnishing of renal dialysis services if sep- SOURCE: 69 FR 1116, Jan. 7, 2004, unless oth- arately billed by renal dialysis facili- erwise noted. ties. (3) The payment limits for infusion § 414.701 Purpose. drugs furnished through a covered item This subpart implements section of durable medical equipment are cal- 1842(o) of the Social Security Act by culated using 95 percent of the average specifying the methodology for deter- wholesale price in effect on October 1, mining the payment allowance limit 2003. for drugs and biologicals covered under (4) The payments limits for drugs Part B of Title XVIII of the Act (here- contained in the following table are after in this subpart referred to as the calculated based on the percentages of ‘‘program’’) that are not paid on a cost the average wholesale price determined or prospective payment system basis. as of April 1, 2003 that are specified in Examples of drugs that are subject to the table. the rules contained in this subpart are: drugs furnished incident to a physi- Percentage cian’s service; durable medical equip- used to cal- Drug culate 2004 ment (DME) drugs; separately billable payment drugs at independent dialysis facilities limit not under the ESRD composite rate; statutorily covered drugs, for example, EPOETIN ALFA ...... 87 influenza, pneumococcal and hepatitis LEUPROLIDE ACETATE ...... 81 vaccines, antigens, hemophilia blood GOSERELIN ACETATE ...... 80 RITUXIMAB ...... 81 clotting factor, immunosuppressive PACLITAXEL ...... 81 drugs and certain oral anti-cancer DOCETAXEL ...... 80 drugs. CARBOPLATIN ...... 81 IRINOTECAN ...... 80 § 414.704 Definitions. GEMCITABINE HCL ...... 80 As used in this subpart, the following PAMIDRONATE DISODIUM ...... 85 DOLASETRON MESYLATE ...... 80 definition applies. Drug refers to both FILGRASTIM ...... 81 drugs and biologicals. HYLAN G-F 20 ...... 82 MYCOPHENOLATE MOFETIL ...... 86 § 414.707 Basis of payment. GRANISETRON HCL ...... 80 (a) Method of payment. (1) Payment ONDANSETRON ...... 87 for a drug in calendar year 2004 is based VINORELBINE TARTATE ...... 81 on the lesser of— SARGRAMOSTIM ...... 80 TOPOTECAN ...... 84 (i) The actual charge on the claim for IPRATROPIUM BROMIDE ...... 80 program benefits; or ALBUTEROL SULFATE ...... 80 (ii) 85 percent of the average whole- IMMUNE GLOBULIN ...... 80 sale price determined as of April 1, LEUCOVORIN CALCIUM ...... 80

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00094 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.802

Percentage most recent hemoglobin or hematocrit used to cal- level; Drug culate 2004 (2) Each request for payment for use payment limit of erythropoiesis stimulating agents must report the beneficiary’s most re- DOXORUBICIN HCL ...... 80 cent hemoglobin or hematocrit level. DEXAMETHOSONE SODIUM PHOS- PHATE ...... 86 [69 FR 1116, Jan. 7, 2004, as amended at 72 FR HEPARIN SODIUM LOCK-FLUSH ..... 80 66402, Nov. 27, 2007] CROMOLYN SODIUM ...... 80 ACETYLCYSTEINE ...... 80 Subpart J—Submission of Manu- facturer’s Average Sales Price (5) The payment limits for Data imiglucerase and alglucerase are calculated using 94 percent of the average wholesale price determined as of April SOURCE: 69 FR 17938, Apr. 6, 2004, unless 1, 2003. otherwise noted. (6) Exception. The payment limit for § 414.800 Purpose. a drug otherwise subject to paragraph (a)(1)(ii) or paragraph (a)(4) of this sec- This subpart implements section tion may be calculated using the per- 1847A of the Act by specifying the re- centage of the average wholesale price quirements for submission of a manu- as the Secretary deems appropriate facturer’s average sales price data for based on data and information sub- certain drugs and biologicals covered mitted by the drug manufacturer. under Part B of Title XVIII of the Act (i) The manufacturer must submit that are paid under sections data after October 15, 2003 and before 1842(o)(1)(D), 1847A, and January 1, 2004. 1881(b)(13)(A)(ii) of the Act. (ii) The percentage only applies for drugs furnished on or after April 1, § 414.802 Definitions. 2004. As used in this subpart, unless the (7) In the case of blood and blood context indicates otherwise— products (other than blood clotting fac- Bona fide service fees means fees paid tors), the payment limits shall be de- by a manufacturer to an entity, that termined in the same manner as such represent fair market value for a bona payment limit was determined on Oc- fide, itemized service actually per- tober 1, 2003. formed on behalf of the manufacturer (b) Mandatory assignment. Effective that the manufacturer would otherwise with services furnished on or after Feb- perform (or contract for) in the absence ruary 1, 2001, payment for any drug of the service arrangement, and that covered under Part B of Medicare may are not passed on in whole or in part to be made on an assignment-related basis a client or customer of an entity, only. All billers must accept the pro- whether or not the entity takes title to gram allowed charge as payment in full the drug. and may not bill nor collect from the Drug means both drugs and beneficiary any amount other than the biologicals. unmet Part B deductible and Part B Manufacturer means any entity that coinsurance amounts, if applicable. is engaged in the following (This term Violations of this requirement may does not include a wholesale dis- subject the supplier to sanctions, as tributor of drugs or a retail pharmacy provided by the statute (See § 402 of licensed under State law): this chapter). (1) Production, preparation, propaga- (c) Mandatory reporting of anemia tion, compounding, conversion or proc- quality indicators. The following provi- essing of prescription drug products, ei- sions are effective January 1, 2008: ther directly or indirectly by extrac- (1) Each request for payment for tion from substances of natural origin, anti-anemia drugs furnished to treat or independently by means of chemical anemia resulting from the treatment of synthesis, or by a combination of ex- cancer must report the beneficiary’s traction and chemical synthesis.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00095 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.804 42 CFR Ch. IV (10–1–12 Edition)

(2) The packaging, repackaging, la- lagged basis, the manufacturer must beling, relabeling, or distribution of estimate this amount in accordance prescription drug products. with the methodology described in this Unit means the product represented paragraph. by the 11-digit National Drug Code, un- (i)(A) For each National Drug Code less otherwise specified by CMS to ac- with at least 12 months of sales (in- count for situations where labeling including products for which the manu- dicates that the amount of drug prod- facturer has redesignated the National uct represented by a National Drug Drug Code for the specific product and Code varies. The method of counting package size and has 12 months of sales units excludes units of CAP drugs (as across the prior and current National defined in § 414.902 of this part) sold to Drug Codes), after adjusting for ex- an approved CAP vendor (as defined in empted sales, the manufacturer cal- § 414.902 of this part) for use under the culates a percentage equal to the sum CAP (as defined in § 414.902 of this of the price concessions for the most part). recent 12-month period available asso- [70 FR 69 FR 17938, Apr. 6, 2004, as amended ciated with sales subject to the average at 71 FR 48143, Aug. 18, 2006; 71 FR 69787, Dec. sales price reporting requirement di- 1, 2006; 74 FR 62012, Nov. 25, 2009; 76 FR 73473, vided by the total in dollars for the Nov. 28, 2011] sales subject to the average sales price reporting requirement for the same 12- § 414.804 Basis of payment. month period. (a) Calculation of manufacturer’s aver- (B) For each National Drug Code age sales price. (1) The manufacturer’s with less than 12 months of sales, the average sales price for a quarter for a calculation described in paragraph drug represented by a particular 11- (i)(A) of this section is performed for digit National Drug Code must be cal- the time period equaling the total culated as the manufacturer’s sales to number of months of sales. all purchasers in the United States for (ii) The manufacturer multiplies the that particular 11-digit National Drug applicable percentage described in Code (after excluding sales as specified paragraph (a)(3)(i)(A) or (a)(3)(i)(B) of in paragraph (a)(4) of this section and this section by the total in dollars for then deducting price concessions as the sales subject to the average sales specified in paragraphs (a)(2) and (a)(3) price reporting requirement (after ad- of this section) divided by the total justing for exempted sales) for the number of units sold by the manufac- quarter being submitted. (The manu- turer in that quarter (after excluding facturer must carry a sufficient num- units associated with sales as specified ber of decimal places in the calculation in paragraph (a)(4) of this section). of the price concessions percentage in (2) Price concessions. (i) In calculating order to round accurately the net total the manufacturer’s average sales price, sales amount for the quarter to the a manufacturer must deduct price con- nearest whole dollar.) The result of cessions. Price concessions include the this multiplication is then subtracted following types of transactions and from the total in dollars for the sales items: subject to the average sales price re- (A) Volume discounts. porting requirement (after adjusting (B) Prompt pay discounts. for exempted sales) for the quarter (C) Cash discounts. being submitted. (D) Free goods that are contingent on (iii) The manufacturer uses the result any purchase requirement. of the calculation described in para- (E) Chargebacks and rebates (other graph (a)(3)(ii) of this section as the than rebates under the Medicaid pro- numerator and the number of units gram). sold in the quarter (after adjusting for (ii) For the purposes of paragraph exempted sales) as the denominator to (a)(2)(i), bona fide services fees are not calculate the manufacturer’s average considered price concessions. sales price for the National Drug Code (3) To the extent that data on price for the quarter being submitted. concessions, as described in paragraph (iv) Example. After adjusting for ex- (a)(2) of this section, are available on a empted sales, the total lagged price

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00096 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.900

concessions (discounts, rebates, etc.) amount of product in a vial or other over the most recent 12-month period container as conspicuously reflected on available associated with sales for Na- the FDA approved label as defined by tional Drug Code 12345–6789–01 subject section 201(k) of the Food, Drug, and to the ASP reporting requirement Cosmetic Act. equal $200,000, and the total in dollars (7) Each report must be certified by for the sales subject to the average one of the following: sales price reporting requirement for (i) The manufacturer’s Chief Execu- the same period equals $600,000. The tive Officer (CEO). lagged price concessions percentage for (ii) The manufacturer’s Chief Finan- this period equals 200,000/600,000 = cial Officer (CFO). 0.33333. The total in dollars for the (iii) An individual who has delegated sales subject to the average sales price authority to sign for, and who reports reporting requirement for the quarter directly to, the manufacturer’s CEO or being reported, equals $50,000 for 10,000 CFO. units sold. The manufacturer’s average (b) [Reserved] sales price calculation for this Na- tional Drug Code for this quarter is: [69 FR 17938, Apr. 6, 2004, as amended at 69 $50,000¥(0.33333 × $50,000) = $33,334 (net FR 55764, Sept. 16, 2004; 70 FR 70332, Nov. 21, 2005; 71 FR 69787, Dec. 1, 2006; 72 FR 18914, total sales amount); $33,334/10,000 = Apr. 16, 2007; 75 FR 73626, Nov. 29, 2010] $3.33 (average sales price). (4) Exempted sales. (i) In calculating § 414.806 Penalties associated with the the manufacturer’s average sales price, failure to submit timely and accu- a manufacturer must exclude sales rate ASP data. that are exempt from inclusion in the Section 1847A(d)(4) specifies the pen- determination of the best price under alties associated with misrepresenta- section 1927(c)(1)(C)(i) of the Act and tions associated with ASP data. If the sales that are merely nominal in Secretary determines that a manufac- amount as applied for purposes of sec- turer has made a misrepresentation in tion 1927(c)(1)(C)(ii)(III) of the Act, as the reporting of ASP data, a civil limited by section 1927(c)(1)(D) of the money penalty in an amount of up to Act. $10,000 may be applied for each price (ii) In determining nominal sales ex- misrepresentation and for each day in empted under section which the price misrepresentation was 1927(c)(1)(C)(ii)(III) of the Act, the man- applied. Section 1927(b)(3)(C) of the ufacturer calculates the average manu- Act, as amended by section 303(i)(4) of facturer price as defined in section the MMA, specifies the penalties asso- 1927(k) of the Act and then identifies ciated with a manufacturer’s failure to sales that are eligible to be considered submit timely information or the sub- a nominal sale under section mission of false information. 1927(c)(1)(D) of the Act and are at less than 10 percent of the average manufacturer price. To identify nominal Subpart K—Payment for Drugs sales, the manufacturer must use the and Biologicals Under Part B average manufacturer price for the calendar quarter that is the same cal- SOURCE: 69 FR 66424, Nov. 15, 2004, unless endar quarter as the average sales otherwise noted. price reporting period. (5) The manufacturer’s average sales § 414.900 Basis and scope. price must be calculated by the manu- (a) This subpart implements sections facturer every calendar quarter and 1842(o), 1847A, and 1847B of the Act and submitted to CMS within 30 days of the outlines two payment methodologies close of the quarter. The first quarter applicable to drugs and biologicals cov- submission must be submitted by April ered under Medicare Part B that are 30, 2004. Subsequent reports are due not not paid on a cost or prospective pay- later than 30 days after the last day of ment system basis. each calendar quarter. (b) Examples of drugs that are sub- (6) The manufacturer’s average sales ject to the requirements specified in price must be calculated based on the this subpart are:

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00097 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.902 42 CFR Ch. IV (10–1–12 Edition)

(1) Drugs furnished incident to a phy- Emergency delivery means delivery of sician’s service; durable medical equip- a CAP drug within one business day in ment (DME) drugs. appropriate shipping and packaging, in (2) Separately billable drugs at inde- all areas of the United States and its pendent dialysis facilities not under territories, with the exception of the the ESRD composite rate. Pacific Territories. In the Pacific Ter- (3) Statutorily covered drugs, for ex- ritories, emergency delivery means de- ample— livery of a CAP drug within 5 business (i) Influenza. days in appropriate shipping and pack- (ii) Pneumococcal and Hepatitis B aging. In each case, this timeframe vaccines. shall be reduced if product stability re- (iii) Antigens. quires it, meaning that the manufac- (iv) Hemophilia blood clotting factor. turer’s labeling instructions, drug com- (v) Immunosuppressive drugs. pendia, or specialized drug stability (vi) Certain oral anti-cancer drugs. references indicate that a shorter de- [69 FR 66424, Nov. 15, 2004, as amended at 70 livery timeframe is necessary to avoid FR 39093, July 6, 2005] adversely affecting the product’s integrity, safety, or efficacy. § 414.902 Definitions. Emergency situation means, for the As used in this subpart, unless the purposes of the CAP, an unforeseen oc- context indicates otherwise— currence or situation determined by Approved CAP vendor means an entity the participating CAP physician, in his that has been awarded a contract by or her clinical judgment, to require CMS to participate in the competitive prompt action or attention for pur- acquisition program under 1847B of the poses of permitting the participating Act. CAP physician to use a drug from his Bid means an offer to furnish a CAP or her own stock, if the other require- drug within a category of CAP drugs in ments of § 414.906(e) are met. a competitive acquisition area for a Local carrier means an entity as- particular price and time period. signed by CMS to process and pay Biosimilar biological product means a claims for administration of drugs and biological product approved under an biologicals under the CAP. abbreviated application for a license of Manufacturer’s average sales price a biological product that relies in part means the price calculated and re- on data or information in an applica- ported by a manufacturer under part tion for another biological product li- 414, subpart J of this chapter. censed under section 351 of the Public Multiple source drug means a drug de- Health Service Act (PHSA) as defined scribed by section 1847A(c)(6)(C) of the at section 1847A(c)(6)(H) of the Act. Act. CAP drug means a physician-adminis- Pacific Territories means, for purposes tered drug or biological furnished on or of the CAP, American Samoa, Guam, after January 1, 2006 described in sec- or the Northern Mariana Islands. tion 1842(o)(1)(C) of the Act and sup- Participating CAP physician means a plied by an approved CAP vendor under physician electing to participate in the the CAP as provided in this subpart. CAP, as described in this subpart. The Competitive acquisition area means a participating CAP physician must com- geographic area established by the Sec- plete and sign the participating CAP retary for purposes of implementing physician election agreement. Physi- the CAP required by section 1847B of cians who do not participate in Medi- the Act. care but who elect to participate in the Competitive acquisition program (CAP) CAP must agree to accept assignment means a program as defined under sec- for CAP drug administration claims. tion 1847B of the Act. Participating CAP physician election Designated carrier means an entity as- agreement means the agreement that signed by CMS to process and pay the physician signs to notify CMS of claims for drugs and biologicals under the physician’s election to participate the CAP. in the CAP and to agree to the terms Drug means both drugs and and conditions of CAP participation as biologicals. set forth in this subpart.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00098 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.904

Prescription order means a written section or subject to the exceptions de- order submitted by the participating scribed in paragraph (e) of this section. CAP physician to the approved CAP (3) For purposes of this paragraph— vendor that meets the requirements of (i) CMS calculates an average sales this subpart. price payment limit based on the Reference biological product means the amount of product included in a vial or biological product licensed under such other container as reflected on the section 351 of the PHSA that is referred FDA-approved label. to in the application of the biosimilar (ii) Additional product contained in biological product as defined at section the vial or other container does not 1847A(c)(6)(I) of the Act. represent a cost to providers and is not Routine delivery means delivery of a incorporated into the ASP payment drug within 2 business days in appro- limit. priate shipping and packaging in all (iii) No payment is made for amounts areas of the United States and its terri- of product in excess of that reflected on tories, with the exception of the Pa- the FDA-approved label. cific Territories. In the Pacific Terri- (b) Multiple source drugs—(1) Average tories, routine delivery of drug means sales prices. The average sales price for delivery of a CAP drug within 7 busi- all drug products included within the ness days in appropriate shipping and same multiple source drug billing and packaging. In each case, this time- payment code is the volume-weighted frame will be reduced if product sta- average of the manufacturers’ average bility requires it, meaning that the sales prices for those drug products. manufacturer’s labeling instructions, (2) Calculation of the average sales drug compendia, or specialized drug price. (i) For dates of service before stability references indicate that a April 1, 2008, the average sales price is shorter delivery timeframe is nec- determined by— essary to avoid adversely affecting the (A) Computing the sum of the prod- product’s integrity, safety, or efficacy. ucts (for each National Drug Code as- Single source drug means a drug designed to the drug products) of the scribed by section 1847A(c)(6)(D) of the manufacturer’s average sales price and Act. the total number of units sold; and Timely delivery means delivery of a (B) Dividing that sum by the sum of CAP drug within the defined routine the total number of units sold for all and emergency delivery timeframes. NDCs assigned to the drug products. Compliance with timely delivery (ii) For dates of service on or after standards is also a factor for evalua- April 1, 2008, the average sales price is tion of potential and approved CAP determined by— vendors. (A) Computing the sum of the prod- Unit is defined as in part 414, subpart ucts (for each National Drug Code as- J of this chapter. signed to such drug products) of the Wholesale acquisition cost (WAC) manufacturer’s average sales price, de- means the price described by section termined by the Secretary without di- 1847A(c)(6)(B) of the Act. viding such price by the total number [69 FR 66424, Nov. 15, 2004, as amended at 70 of billing units for the National Drug FR 39093, July 6, 2005; 75 FR 73626, Nov. 29, Code for the billing and payment code 2010] and the total number of units sold; and (B) Dividing the sum determined § 414.904 Average sales price as the under clause (A) by the sum of the basis for payment. products (for each National Drug Code (a) Method of payment. Payment for a assigned to such drug products) of the drug furnished on or after January 1, total number of units sold and the 2005 is based on the lesser of— total number of billing units for the (1) The actual charge on the claim for National Drug Code for the billing and program benefits; or payment code. (2) 106 percent of the average sales (iii) For purposes of this subsection price, subject to the applicable limita- and subsection (c), the term billing tions specified in paragraph (d) of this unit means the identifiable quantity

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00099 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.904 42 CFR Ch. IV (10–1–12 Edition)

associated with a billing and payment section 623(c) of the Medicare Prescrip- code, as established by CMS. tion Drug, Improvement, and Mod- (c) Single source drugs—(1) Average ernization Act of 2003 inflated by the sales price. The average sales price is percentage increase in the Producer the volume-weighted average of the Price Index. manufacturers’ average sales prices for (ii) Except as provided in paragraph all National Drug Codes assigned to the (a) of this section, the payment for drug or biological product. drugs and biologicals, furnished to an (2) Calculation of the average sales end-stage renal disease patient that is price. (i) For dates of service before separately billed by an end-stage renal April 1, 2008, the average sales price is disease facility, is based on 106 percent determined by— of the average sales price. (A) Computing the sum of the prod- (iii) Effective for drugs and ucts (for each National Drug Code as- biologicals furnished in CY 2006 and signed to the drug product) of the man- subsequent calendar years, the pay- ufacturer’s average sales price and the ment for such drugs and biologicals total number of units sold; and furnished in connection with renal di- (B) Dividing that sum by the sum of alysis services and separately billed by the total number of units sold for all freestanding and hospital-based renal NDCs assigned to the drug product. dialysis facilities not paid on a cost (ii) For dates of service on or after basis is the amount determined under April 1, 2008, the average sales price is section 1847A of the Act. determined by— (3) Widely available market price and (A) Computing the sum of the prod- average manufacturer price. If the In- ucts (for each National Drug Code as- spector General finds that the average signed to such drug products) of the sales price exceeds the widely available manufacturer’s average sales price, de- market price or the average manufac- termined by the Secretary without di- turer price by the applicable threshold viding such price by the total number percentage specified in paragraph of billing units for the National Drug (d)(3)(iii) or (iv) of this section, the In- Code for the billing and payment code spector General is responsible for in- and the total number of units sold; and forming the Secretary (at such times (B) Dividing the sum determined as specified by the Secretary) and the under clause (A) by the sum of the payment amount for the drug or bio- products (for each National Drug Code logical will be substituted subject to assigned to such drug products) of the the following adjustments: total number of units sold and the (i) The payment amount substitution total number of billing units for the will be applied at the next average National Drug Code for the billing and sales price payment amount calcula- payment code. tion period after the Inspector General (d) Limitations on the average sales informs the Secretary (at such times price—(1) Wholesale acquisition cost for a specified by the Secretary) about bill- single source drug. The payment limit ing codes for which the average sales for a single source drug product is the price has exceeded the average manu- lesser of 106 percent of the average facturer price by the applicable thresh- sales price for the product or 106 per- old percentage, and will remain in ef- cent of the wholesale acquisition cost fect for 1 quarter after publication. for the product. (ii) Payment at 103 percent of the av- (2) Payment limit for a drug furnished erage manufacturer price for a billing to an end-stage renal disease patient. (i) code will be applied at such times Effective for drugs and biologicals fur- when— nished in 2005, the payment for such (A) The threshold for making price drugs and biologicals, including eryth- substitutions, as defined in paragraph ropoietin, furnished to an end-stage (d)(3)(iii) of this section is met; and renal disease patient that is separately (B) 103 percent of the average manu- billed by an end-stage renal disease fa- facturer price is less than the 106 per- cility and not paid on a cost basis is ac- cent of the average sales price for the quisition cost as determined by the In- quarter in which the substitution spector General report as required by would be applied.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00100 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.904

(iii) The applicable percentage Medicare Part B drug payment meth- threshold for average manufacturer odology in effect on November 1, 2003. price comparisons for CYs 2005 through (5) Treatment of certain drugs. Begin- 2011 is 5 percent. For CY 2012, the appli- ning with April 1, 2008, the payment cable percentage threshold for average amount for— sales price comparisons is reached (i) Each single source drug or biologi- when— cal described in section 1842(o)(1)(G) (A) The average sales price for the that is treated as a multiple source billing code has exceeded the average drug because of the application of sec- manufacturer price for the billing code tion 1847A(c)(6)(C)(ii) is the lower of— by 5 percent or more in 2 consecutive (A) The payment amount that would quarters, or 3 of the previous 4 quarters be determined for such drug or biologi- immediately preceding the quarter to cal applying section 1847A(c)(6)(C)(ii); which the price substitution would be or applied; and (B) The payment amount that would (B) The average manufacturer price have been determined for such drug or for the billing code is calculated using biological if section 1847A(c)(6)(C)(ii) the same set of National Drug Codes were not applied. used for the average sales price for the (ii) A multiple source drug described billing code. in section 1842(o)(1)(G) (excluding a (iv) The applicable percentage drug or biological that is treated as a threshold for widely available market multiple source drug because of the ap- price comparisons for CYs 2005 through plication of section 1847A(c)(6)(C)(ii)) is 2012 is 5 percent. the lower of— (e) Exceptions to the average sales (A) The payment amount that would price—(1) Vaccines. The payment limits be determined for such drug or biologi- for hepatitis B vaccine furnished to in- cal taking into account the application dividuals at high or intermediate risk of section 1847A(c)(6)(C)(ii); or of contracting hepatitis B (as deter- (B) The payment amount that would mined by the Secretary), pneumococcal have been determined for such drug or vaccine, and influenza vaccine and are biological if section 1847A(c)(6)(C)(ii) calculated using 95 percent of the aver- were not applied. age wholesale price. (f) Except as otherwise specified (see (2) Infusion drugs furnished through a paragraph (e)(2) of this section) for in- covered item of durable medical equip- fusion drugs, the payment limits are ment. The payment limit for an infu- updated quarterly. sion drug furnished through a covered (g) The payment limit is computed item of durable medical equipment is without regard to any special pack- calculated using 95 percent of the aver- aging, labeling, or identifiers on the age wholesale price in effect on Octo- dosage form or product or package. ber 1, 2003 and is not updated in 2006. (h) The payment amount is subject to (3) Blood and blood products. In the applicable deductible and coinsurance. case of blood and blood products (other (i) If manufacturer ASP data is not than blood clotting factors), the pay- available prior to the publication dead- ment limits are determined in the line for quarterly payment limits and same manner as the payment limits the unavailability of manufacturer were determined on October 1, 2003. ASP data significantly changes the (4) Payment limit in a case where the quarterly payment limit for the billing average sales price during the first quar- code when compared to the prior quarter of sales is unavailable. In the case of ter’s billing code payment limit, the a drug during an initial period (not to payment limit is calculated by car- exceed a full calendar quarter) in rying over the most recent available which data on the prices for sales of manufacturer ASP price from a pre- the drug are not sufficiently available vious quarter for an NDC in the billing from the manufacturer to compute an code, adjusted by the weighted average average sales price for the drug, the of the change in the manufacturer payment limit is based on the whole- ASPs for the NDCs that were reported sale acquisition cost or the applicable for both the most recently available

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00101 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.906 42 CFR Ch. IV (10–1–12 Edition)

previous quarter and the current quar- (5) The approved CAP vendor bills ter. Medicare only for the amount of the (j) Biosimilar biological products. Effec- drug administered to the patient, and tive July 1, 2010, the payment amount the beneficiary’s coinsurance will be for a biosimilar biological drug product calculated from the quantity of drug (as defined in § 414.902 of this subpart) that is administered. is the sum of the average sales price of (b) Exceptions to competitive acquisi- all NDCs assigned to the biosimilar bition. Specific CAP drugs, including a ological product as determined under category of these drugs, may be ex- section 1847A(b)(6) of the Act and 6 per- cluded from the CAP if the application cent of the amount determined under of competitive bidding to these drugs— section 1847A(b)(4) of the Act for the (1) Is not likely to result in signifi- reference drug product (as defined in cant savings; or § 414.902 of this subpart). (2) Is likely to have an adverse im- [69 FR 66424, Nov. 15, 2004, as amended at 70 pact on access to those drugs. FR 70332, Nov. 21, 2005; 71 FR 69788, Dec. 1, (c) Computation of payment amount. 2006; 72 FR 66402, Nov. 27, 2007; 73 FR 69937, Except as specified in paragraph (c)(2) Nov. 19, 2008; 73 FR 80304, Dec. 31, 2008; 74 FR of this section, payment for CAP drugs 62012, Nov. 25, 2009; 75 FR 73626, Nov. 29, 2010; is based on bids submitted as a result 76 FR 73473, Nov. 28, 2011] of the bidding process as described in § 414.906 Competitive acquisition pro- § 414.910 of this subpart. gram as the basis for payment. (1) Single payment amount. (i) A single (a) Program payment. Beginning in payment amount for each CAP drug in 2006, as an alternative to payment the competitive acquisition area is de- under § 414.904, payment for a CAP drug termined on the basis of the bids sub- may be made through the CAP if the mitted and accepted and updated from following occurs: the bidding period to the beginning of (1) The CAP drug is supplied under the payment year. the CAP by an approved CAP vendor as (ii) The single payment amount is specified in § 414.908(b). then updated quarterly based on the (2) The claim for the prescribed drug approved CAP vendor’s reasonable net is submitted by the approved CAP ven- acquisition costs for that category as dor that supplied the drug, and pay- determined by CMS, and limited by the ment is made only to that vendor. weighted payment amount established (3) The approved CAP vendor collects under section 1847A of the Act across applicable deductible and coinsurance all drugs for which a composite bid is with respect to the drug furnished required in the category. under the CAP only after the drug is (iii) The payment amount for each administered to the beneficiary. other drug for which the approved CAP (4) The approved CAP vendor delivers vendor submits a bid in accordance CAP drugs directly to the participating with § 414.910 of this subpart and each CAP physician in unopened vials or other drug that is approved by CMS for other original containers as supplied the approved CAP vendor to furnish by the manufacturer or from a dis- under the CAP is also updated quar- tributor that has acquired the products terly based on the approved CAP ven- directly from the manufacturer and in- dor’s reasonable net acquisition costs cludes language with the shipping ma- for each HCPCS code and limited by terial stating that the drug was ac- the payment amount established under quired in a manner consistent with all section 1847A of the Act. statutory requirements. If the ap- (2) Updates to payment amount. (i) The proved CAP vendor opts to split ship- first update is effective on the first day ments, the participating CAP physi- of claims processing for the first quar- cian must be notified in writing which ter of an approved CAP vendor’s con- can be included with the initial ship- tract. The first quarterly contract up- ment, and each incremental shipment date is based on the reasonable net ac- must arrive at least 2 business days be- quisition cost (RNAC) data reported to fore the anticipated date of adminis- CMS or its designee for any purchases tration. of drug before the beginning of CAP

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00102 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.906

claims processing for the contract pe- HCPCS code not included in the com- riod and reported to CMS no later than posite bid list; Each HCPCS code added 30 days before the beginning of CAP to the drug list during the contract pe- claims processing. riod; and each drug that has not yet (ii) For subsequent quarters, each ap- been assigned a HCPCS code, but for proved CAP vendor must report to CMS which a HCPCS code will be estab- or its designee RNAC data for a quarter lished. of CAP drug purchases within 30 days (A) The most recent previous pay- of the close of that quarter. ment amount for each drug must be up- (iii) For all quarters, only RNAC data dated by calculating the percent from approved CAP vendors that are change in reasonable net acquisition supplying CAP drugs under their CAP costs for each approved CAP vendor, contract at the time updates are being then calculating the median of all par- calculated must be used to calculate ticipating approved CAP vendors’ ad- updated CAP payment amounts. justed CAP payment amounts. (iv) CMS excludes such RNAC data (B) The median percent change cal- submitted by an approved CAP vendor culated for each drug, subject to the if, during the time calculations are limit described in paragraph (c)(1) of being done, CMS knows that the ap- this section, must be applied to the proved CAP vendor will not be under payment amount for each drug. contract for the applicable quarterly (3) Alternative payment amount. The update. alternative payment amount estab- (v) The payment amount weights lished under section 1847A of the Act must be calculated based on the more may be used to establish payment for a recent of the following: CAP drug if— (A) Contract bidding weights. (i) The drug is properly assigned to a (B) CAP claims data. category established under the CAP; (vi) The payment limit must be de- and termined using the most recent pay- (ii) It is a drug for which a HCPCS ment limits available to CMS under code must be established. section 1847A of the Act. (d) Adjustments. There is an estab- (vii) The following payment amount lished process for adjustments to pay- update calculation must be applied for ments to account for drugs that were the group of all drugs for which a com- billed, but which were not adminis- posite bid is required. tered. (A) The most recent previous composite payment amount for the group (e) Resupply of participating CAP phy- is updated by— sician drug inventory. A participating (1) Calculating the percent change in CAP physician may acquire drugs reasonable net acquisition costs for under the CAP to resupply his or her each approved CAP vendor; private inventory if all of the following (2) Calculating the median of all par- requirements are met: ticipating approved CAP vendors’ ad- (1) The drugs were required imme- justed CAP payment amounts; and diately. (3) Limiting the payment as de- (2) The participating CAP physician scribed in paragraph (c)(1) of this sec- could not have anticipated the need for tion. the drugs. (B) The median percent change, sub- (3) The approved CAP vendor could ject to the limit described in paragraph not have delivered the drugs in a time- (c)(1) of this section, must be the up- ly manner. For purposes of this sec- date percentage for that quarter. tion, timely manner means delivery (C) The single update percentage within the emergency delivery time- must be applied to the payment frame, as defined in § 414.902. amount for each drug in the group of (4) The participating CAP physician drugs for which a composite bid is re- administered the drugs in an emer- quired in the category. gency situation, as defined in § 414.902. (viii) The following payment amount (f) Substitution or addition of drugs on update calculation must be applied for an approved CAP vendor’s CAP drug each of the following items: Each list—(1) Short-term substitution of a CAP

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00103 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.906 42 CFR Ch. IV (10–1–12 Edition)

drug. On an occasional basis (for a pe- the addition of the HCPCS code(s) as riod of time less than 2 weeks), an ap- applicable; and proved CAP vendor may agree to fur- (iii) Address the impact of the substi- nish a substitute NDC within a HCPCS tution of the NDC(s) or the addition of code on the approved CAP vendor’s the NDC(s) or HCPCS code(s), or both CAP drug list if the approved CAP ven- on— dor— (A) Patient and drug safety; (i) Is willing to accept the payment (B) Drug waste; and amount that was established for the (C) The potential for cost savings. HCPCS code under this section; and (iv) In the case of additions requested (ii) Obtains the participating CAP under paragraph (f)(2)(v) of this sec- physician’s prior approval. tion, address and document the need (2) Long-term substitution or addition for such an expansion based on demand of a CAP drug. An approved CAP vendor may submit a request, as specified in for the product(s). paragraph (f)(3) of this section, for ap- (4) Approval of a request(s). CMS or its proval to substitute an NDC supplied designee notifies the approved CAP by the approved CAP vendor for an- vendor of its decision. other NDC within the same HCPCS (i) Except as specified in paragraph code or to add an NDC to the approved (f)(4)(ii) of this section, an approved re- CAP vendor’s drug list, if at least one quest is effective at the beginning of of the following criteria is met: the next calendar quarter. (i) Proposed substitution of an NDC (ii) Approved substitutions for re- for a period of 2 weeks or longer. quest based on a drug shortage or other (ii) Proposed addition of one or more exigent circumstance may become ef- NDCs within a HCPCS code included in fective immediately provided that— the CAP drug category specified by (A) CMS approves the immediate sub- CMS or on the approved CAP vendor’s stitution; and approved CAP drug list. (B) The approved CAP vendor’s noti- (iii) Proposed addition of— fies its CAP participating physicians of (A) One or more newly issued HCPCS the substitution immediately following codes; or CMS approval. (B) One of the following single indi- (5) Payment for an approved drug cation orphan drug J codes or their up- change(s). The payment for— dates: J0205, J0256, J9300, J1785, J2355, (i) Substituted or added CAP drugs J3240, J7513, J9010, J9015, J9017, J9160, that are within a HCPCS code for J9216. which payment is computed under (iv) Beginning January 1, 2007, the paragraph (c)(1) of this section is the proposed addition of a drug(s) that has single payment for that HCPCS code, not yet been assigned a HCPCS code, as determined and updated in accord- but for which a HCPCS code must be ance with paragraph (c)(1) of this sec- established. tion; or (v) On or after January 1, 2010, the (ii) Added CAP drugs that are not proposed addition of drugs with similar within a HCPCS code for which pay- therapeutic uses to drugs already sup- ment is computed under paragraph plied under the CAP by the approved (c)(1) of this section is specified under CAP vendor(s). paragraph (c)(2) of this section. (3) Requesting the addition or substitution of CAP drug. An approved CAP (g) Deletion of drugs on an approved vendor that meets the one of the cri- CAP vendor’s CAP drug list. Deletion of teria specified in paragraph (f)(2) must drugs on an approved CAP vendor’s submit a written request to CMS or its CAP drug list due to unavailability re- designee. The request must— quires a written request and approval (i) Specify the NDC(s) and the respec- as described in paragraphs (f)(3)(i) tive HCPCS code that is to be added or through (iii) and (f)(4) of this section. substituted. [70 FR 39094, July 6, 2005, as amended at 70 (ii) Address the rationale for the sub- FR 70333, Nov. 21, 2005; 71 FR 9460, Feb. 24, stitution or addition of the NDC(s) or 2006; 74 FR 62012, Nov. 25, 2009]

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00104 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.908

§ 414.908 Competitive acquisition pro- CAP physician was not previously gram. aware, CAP participation imposes a (a) Participating CAP physician selec- burden on the physician’s practice. The tion of an approved CAP vendor. (1) CMS written request must document the provides the participating CAP physi- burden. The designated carrier will cian with a process for the selection of process the participating CAP physi- an approved CAP vendor on an annual cian’s request and CMS will approve or basis, with exceptions as specified in deny the request under the dispute res- § 414.908(a)(2). Participating CAP physi- olution process as specified under cians will also receive information § 414.917 of this subpart. about the CAP in the enrollment proc- (3) The physician participating in the ess for Medicare participation set forth CAP— in section 1842(h) of the Act. (i) Elects to use an approved CAP (2) A participating CAP physician vendor for the drug category and area may select an approved CAP vendor as set forth in § 414.908(b); outside the annual selection process or (ii) Completes and signs the CAP opt out of the CAP for the remainder of election agreement; the annual selection period when— (iii) Submits a written prescription (i) The selected approved CAP vendor order to the approved CAP vendor with ceases participation in the CAP; complete patient information for pa- (ii) The physician leaves a group tients new to the approved CAP vendor practice participating in CAP; or when information changes. Abbre- (iii) The participating CAP physician viated information may be sent on all relocates to another competitive acqui- subsequent orders for a patient for sition area; or which the approved CAP vendor has (iv) The approved CAP vendor refuses previously received complete informa- to ship to the participating CAP physi- tion and that has no changes to the cian because the conditions of original information. Prescription or- § 414.914(i) have been met (if this sub- ders may be initiated by telephone, paragraph (a)(2)(iv) applies, the physi- with a follow-up written order provided cian can withdraw from the CAP cat- within 8 hours for routine deliveries egory for the remainder of the year im- and immediately for emergency deliv- mediately upon notice to CMS and the eries; approved CAP vendor); or (iv) Does not receive payment for the (v) Other exigent circumstances de- CAP drug; fined by CMS are present, including— (v) Except where applicable State (A) If, up to and including 60 days pharmacy law prohibits it, provides the after the effective date of the physi- following information to the approved cian’s CAP election agreement, the CAP vendor to facilitate collection of participating CAP physician submits a applicable deductible and coinsurance written request to the designated car- as described in § 414.906(a)(3): rier to terminate the CAP election (A) Date of order. agreement because CAP participation (B) Beneficiary name, address, and imposes a burden on the physician’s phone number. practice. The written request must (C) Physician identifying informa- document the burden. The designated tion: carrier will process the participating CAP physician’s request and CMS will Name, practice location/shipping ad- approve or deny the request under the dress, group practice information (if dispute resolution process as specified applicable), PIN, and UPIN. under § 414.917 of this subpart. (D) Drug name. (B) If, more than 60 days after the ef- (E) Strength. fective date of the physician’s CAP (F) Quantity ordered. election agreement, the participating (G) Dose. CAP physician submits a written re- (H) Frequency/instructions. quest to the designated carrier to ter- (I) Anticipated date of administra- minate the CAP election agreement be- tion. cause, based on a change in cir- (J) Beneficiary Medicare informa- cumstances of which the participating tion/Health insurance (HIC) number.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00105 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.908 42 CFR Ch. IV (10–1–12 Edition)

(K) Supplementary insurance infor- (xii) Agrees not to transport CAP mation (if applicable). drugs from one practice location or (L) Medicaid information (if applica- place of service to another location ex- ble). cept in accordance with a written (M) Additional patient information: agreement between the participating date of birth, allergies, height/weight, CAP physician and the approved CAP ICD–9–CM (if necessary). vendor that requires that drugs are not (vi) Agrees to accept the particular subjected to conditions that will jeop- National Drug Codes (NDCs) supplied ardize their integrity, stability, and/or by the approved CAP vendor for the du- sterility while being transported. ration of the participating CAP physi- (xiii) Agrees to provide the CMS-de- cian’s enrollment with the approved veloped CAP fact sheet to bene- CAP vendor, subject to paragraphs ficiaries; and (a)(3)(vii) and (a)(3)(xiv) of this section. (xiv) May receive payment under the By electing to participate with an ap- ASP system when medical necessity re- proved CAP vendor, the participating quires a certain brand or formulation CAP physician also agrees to accept of a drug that the approved CAP ven- the changes to the approved CAP vendor has not been contracted to furnish dor’s CAP drug list that have been ap- under the CAP. proved in accordance with § 414.906(f). (4) Physician group practices. If a (vii) Agrees to place routine orders physician group practice using a group for CAP drugs at the HCPCs level, ex- billing number(s) elects to participate cept when medical necessity requires a in the CAP, all physicians in the group particular formulation on the approved are considered to be participating CAP CAP vendor’s CAP drug list. Medical physicians when using the group’s bill- necessity must be documented. When ing number(s). the conditions of this paragraph are (b) Program requirements. (1) CMS se- met, the participating CAP physician lects approved CAP vendors through a may submit a prescription order to the competition among entities based on approved CAP vendor that specifies the the following: NDC. (i) Submission of the bid prices using (viii) Notifies the approved CAP ven- the OMB-approved Vendor Application dor when a drug is not administered or and Bid Form for CAP drugs within the a smaller amount was administered category and competitive acquisition than was originally ordered. The par- area that— ticipating CAP physician and the ap- (A) Places the vendor among the proved CAP vendor agree on how to qualified bidders with the lowest five handle the unused CAP drug. If it is composite bids; and agreed that the participating CAP phy- (B) Does not exceed the weighted sician will maintain the CAP drug in payment amount established under sec- his inventory for administration at a tion 1847A of the Act across all drugs in later date, the participating CAP phy- that category. sician submits a new prescription order (ii) Ability to ensure product integ- at that time. This prescription order rity. specifies that the CAP drug is being ob- (iii) Customer service/Grievance tained from the participating CAP phy- process. sician’s CAP inventory and shipment (iv) At least 3 years experience in fur- should not occur; nishing Part B injectable drugs. (ix) Maintains a separate electronic (v) Financial performance and sol- or paper inventory for each CAP drug vency. obtained; (vi) Record of integrity and the im- (x) Agrees to file the Medicare claim plementation of internal integrity within 30 calendar days of the date of measures. drug administration. (vii) Internal financial controls. (xi) Agrees to submit documentation (viii) Acquisition of all CAP drugs di- such as medical records or certifi- rectly from the manufacturer or from a cation, as necessary, to support pay- distributor that has acquired the prod- ment for a CAP drug; ucts directly from the manufacturer.

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00106 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.914

(ix) Maintenance of appropriate li- (1) All costs related to the delivery of censure to supply CAP drugs in States the drug to the participating CAP phy- in which they are supplying CAP drugs. sician. (x) Cost-sharing assistance as de- (2) The costs of dispensing (including scribed in § 414.914(g). shipping) of the drug and management (xi) Other factors as determined by fees. The costs related to the adminis- CMS. tration of the drug or wastage, spill- (2) Approved CAP vendors must also age, or spoilage may not be included. meet the contract requirements under [70 FR 39095, July 6, 2005] § 414.914. (c) Additional considerations. CMS § 414.912 Conflicts of interest may refuse to award a contract or terminate an approved CAP vendor con- (a) Approved CAP vendors and appli- tract based upon the following: cants that bid to participate in the (1) Suspension or revocation by the CAP are subject to the following: Federal or State government of the en- (1) The conflict of interest standards tity’s license for distribution of drugs, and requirements of the Federal Acqui- including controlled substances. sition Regulation (FAR) organizational (2) Exclusion of the entity under sec- conflict of interest guidance, found tion 1128 of the Act from participation under FAR subpart 9.5. in Medicare or other Federal health (2) Those requirements and standards care programs. These considerations contained in each individual contract are in addition to CMS’ ability to ter- awarded to perform functions under minate the approved CAP vendor for section 1847B of the Act. cause as specified in § 414.914(a). (b) Post-award conflicts of interest. Ap- (3) Past violations or misconduct re- proved CAP vendors must have a code lated to the pricing, marketing, dis- of conduct that establishes policies and tribution, or handling of drugs pro- procedures for recognizing and resolv- vided incident to a physician’s service. ing conflicts of interest between the (d) Multiple source drugs. In the case approved CAP vendor and any entity, of multiple source drugs, there must be including the Federal Government, a competition among entities for the with whom it does business. The code acquisition of at least one CAP drug of conduct which is submitted as part within each billing and payment code of the application must— within each category for each competi- (1) State the need for management, tive acquisition area. employees, contractors, and agents to (e) Multiple contracts for a category comply with the approved CAP ven- and area. The number of bidding quali- dor’s code of conduct, and policies and fied entities that are awarded a con- procedures for conflicts of interest; and tract for a given category and area (2) State the approved CAP vendor’s may be limited to no fewer than two. expectations for management, employees, contractors, and agents to comply [70 FR 39094, July 6, 2005, as amended at 70 with the approved CAP vendor’s code of FR 70333, Nov. 21, 2005; 72 FR 66402, Nov. 27, conduct, and policies and procedures 2007; 74 FR 62013, Nov. 25, 2009] for detecting, preventing, and resolving § 414.910 Bidding process. conflicts of interest. (a) Entities may bid to furnish CAP [70 FR 39094, July 6, 2005] drugs in all competitive acquisition areas of the United States, or one or § 414.914 Terms of contract. more specific competitive acquisition (a) The contract between CMS and areas. the approved CAP vendor will be for a (b) The amount of the bid for any term of 3 years, unless terminated or CAP drug for a specific competitive ac- suspended earlier as provided in this quisition area must be uniform for all section or provided in § 414.917. The portions of that competitive acquisi- contract may be terminated— tion area. (1) By CMS for default if the ap- (c) A submitted bid price must in- proved CAP vendor violates any term clude the following: of the contract; or

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00107 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.914 42 CFR Ch. IV (10–1–12 Edition)

(2) In the absence of a contract viola- lated to the CAP to the appropriate tion, by either CMS or the approved government agency. CAP vendor, if the terminating party (d) The contract must provide for dis- notifies the other party by June 30 for closure of the approved CAP vendor’s an effective date of termination of De- reasonable, net acquisition costs for a cember 31 of that year. specified period of time, not to exceed (b) The contract will provide for a quarterly. code of conduct for the approved CAP (e) The contract must provide for ap- vendor that includes standards relating propriate adjustments as described in to conflicts of interest standards as set § 414.906(c)(1). forth at § 414.912. (f) Under the terms of the contract, (c) The approved CAP vendor will the approved CAP vendor must also— have and implement a compliance plan (1) Have sufficient arrangements to that contains policies and procedures acquire and deliver CAP drugs within that control program fraud, waste, and the category in the competitive acqui- abuse, and consists of the following sition area specified by the contract; minimum elements: (2) Have arrangements in effect for (1) Written policies, procedures, and shipment at least 5 weekdays each standards of conduct articulating the week of CAP drugs under the contract, organization’s commitment to comply including the ability to comply with with all applicable Federal and State the routine and emergency delivery laws, regulations, and guidance, includ- timeframes defined in § 414.902; ing, but not limited to, the Prescrip- (3) Have procedures in place to ad- tion Drug Marketing Act (PDMA), the dress and resolve complaints of partici- physician self-referral (‘‘Stark’’) prohi- pating CAP physicians and individuals bition, the Anti-Kickback statute and and inquiries regarding shipment of the False Claims Act. CAP drugs; (2) The designation of a compliance (4) Have a grievance and appeals officer and compliance committee ac- process for dispute resolution; countable to senior management. (3) Effective training and education (5) Respond within 2 business days to of the compliance officer and organiza- any inquiry, or sooner if the inquiry is tion employees, contractors, agents, related to drug quality; and directors. (6) Staff a toll-free telephone line (4) Enforcement of standards through from 8:30 a.m. or earlier and until 5 well publicized disciplinary guidelines. p.m. or later for all time zones served (5) Procedures for effective internal in the continental United States by the monitoring and auditing. CAP vendor on business days (Monday (6) Procedures for ensuring prompt through Friday excluding Federal holi- responses to detected offenses and de- days) to provide customer assistance, velopment of corrective action initia- and establish reasonable hours of oper- tives relating to the organization’s ation for Hawaii, Alaska, Puerto Rico, contract as an approved CAP vendor. and the other U.S. territories; (i) If the approved CAP vendor dis- (7) Staff an emergency toll-free tele- covers evidence of misconduct related phone line for weekend and evening ac- to payment or delivery of drugs or cess when the call center is closed, and biologicals under the contract, it will determine what hours on Saturday and conduct a timely and reasonable in- Sunday the call center is staffed and quiry into that conduct. which hours a toll-free emergency line (ii) The approved CAP vendor will is activated; and conduct appropriate corrective actions (8) Include assistance for the dis- including, but not limited to, repay- abled, the hearing impaired, and Span- ment of overpayments and disciplinary ish-speaking inquirers in all customer actions against responsible individuals, service operations. in response to potential violations ref- (9) Meet applicable licensure require- erenced at paragraph (c)(6)(i) of this ments in each State in which it sup- section. plies drugs under the CAP; (7) Procedures to voluntarily self-re- (10) Be enrolled in Medicare as a par- port potential fraud or misconduct re- ticipating supplier;

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00108 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.914

(11) Comply with all applicable Fed- (1) Referral to a bona fide and inde- eral and State laws, regulations and pendent charitable organization. guidance related to the prevention of (2) Implementation of a reasonable fraud and abuse; payment plan. (12) Supply CAP drugs upon receipt of (3) A full or partial waiver of the a prescription order to all participating cost-sharing amount after determining CAP physicians who have selected the in good faith that the individual is in approved CAP vendor, except when the financial need or the failure of reason- conditions of paragraph (h) of this sec- able collection efforts, provided that tion or § 414.916(b) of this subpart are the waiver meets all of the require- met; ments of section 1128A(i)(6)(A) of the (13) Provide direct notification to Act and the corresponding regulations participating CAP physicians enrolled at paragraph (1) of the definition of with them of updates to the approved ‘‘Remuneration’’ in § 1003.101 of this CAP vendor’s CAP drug list on a quar- title. The availability of waivers may terly basis. Changes must be dissemi- not be advertised or be made as part of nated at least 30 days before the ap- a solicitation. Approved CAP vendors proved changes are due to take effect, must inform beneficiaries that they unless immediate notification as de- generally make available the cat- scribed in § 414.906(f)(4) is required. The egories of assistance described in para- approved CAP vendor’s entire CAP graphs (g)(1), (g)(2), and (g)(3) of this drug list must be disseminated at least section. In no event may the approved once yearly; and approved CAP vendors CAP vendor include or make any state- must make a complete list that incor- ments or representations that promise porates the most recent updates avail- or guarantee that beneficiaries receive able to physicians on an ongoing basis. cost-sharing waivers. CMS posts on its web site the updated (h) The approved CAP vendor must verify drug administration prior to col- CAP drug lists for each approved CAP lection of any applicable cost sharing vendor. amount. (14) Ensure that subcontractors who (1) The approved CAP vendor docu- are involved in providing services ments, in writing, the following infor- under the approved CAP contractor’s mation necessary to verify drug admin- CAP contract meet all requirements istration: and comply with all laws and regula- (i) Beneficiary name. tions relating to the services they pro- (ii) Health insurance number. vide under the CAP program. Notwith- (iii) Expected date of administration. standing any relationship the CAP ven- (iv) Actual date of administration. dor may have with any subcontractor, (v) Identity of the participating CAP the approved CAP vendor maintains ul- physician. timate responsibility for adhering to (vi) Prescription order number. and otherwise fully complying with all (vii) Identity of the individuals who terms and conditions of its contract supply and receive the information. with CMS; (viii) Dosage supplied. (15) Comply with product integrity (ix) Dosage administered. and record keeping requirements in- (2) If the information is obtained ver- cluding but not limited to drug acquisi- bally, the approved CAP vendor must tion, handling, storage, shipping, drug also maintain the following informa- waste, and return processes; and tion: (16) Comply with such other terms (i) The identities of individuals who and conditions as CMS may specify in exchanged the information. the CAP contract consistent with sec- (ii) The date and time that the infor- tion 1847B of the Act. mation was obtained. (g) Under the terms of the contract, (3) The approved CAP vendor must the approved CAP vendor must provide provide this information to CMS or the assistance to beneficiaries experiencing beneficiary upon request. financial difficulty in paying their (i) The approved CAP vendor must cost-sharing amounts through any one comply with the following procedures or all of the following: before it may refuse to make further

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00109 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.916 42 CFR Ch. IV (10–1–12 Edition)

shipments of CAP drugs to a partici- beneficiary remains in compliance with pating CAP physician on behalf of a the payment plan and makes an initial beneficiary: payment under the plan within 15 days (1) Subsequent to receipt of payment after the delivery of the approved CAP by Medicare, or the verification of drug vendor’s written notice to the bene- administration by the participating ficiary offering the payment plan. CAP physician, the approved CAP ven- (7) If the approved CAP vendor has dor must bill any applicable supple- waived the cost-sharing obligations in mental insurance policies. accordance with section 1128A of the (2) An approved CAP vendor that has Act and § 414.914(g)(3), the approved received payment from the designated CAP vendor may not refuse to ship carrier for CAP drugs that have not drugs for that beneficiary. been administered must promptly re- (8) If the approved CAP vendor refers fund payment for such drugs to the the beneficiary to a bona fide and inde- designated carrier and must refund any pendent charity in accordance with coinsurance and deductible collected § 414.914(g)(1), the approved CAP vendor from the beneficiary and his or her sup- may refuse to ship drugs if the past due plemental insurer. balance is not paid 15 days after the (3) At the time of billing the bene- date of delivery of the approved CAP ficiary, or the participating CAP physi- vendor’s written notice to the bene- cian’s presentation of the bill on behalf ficiary containing the referral for cost- of the approved CAP vendor, the ap- sharing assistance. proved CAP vendor must inform the (9) The approved CAP vendor may beneficiary of any types of cost-sharing refuse to make further shipments to assistance that may be available con- that participating CAP physician on sistent with the requirements of sec- behalf of the beneficiary for the lesser tion 1128A(a)(5) of the Act and of the end of the calendar year or until § 414.914(g). the beneficiary’s balance is paid in full. (4) If the beneficiary demonstrates a [70 FR 39096, July 6, 2005, as amended at 70 financial need, the approved CAP ven- FR 70333, Nov. 21, 2005; 72 FR 66403, Nov. 27, dor must follow the conditions outlined 2007; 74 FR 62013, Nov. 25, 2009] in paragraph (g) of this section. (5) For purposes of paragraph (i) of § 414.916 Dispute resolution for ven- this section delivery means postmark dors and beneficiaries. date, or the date the coinsurance bill (a) General rule. Cases of an approved or notice was presented to the bene- CAP vendor’s dissatisfaction with de- ficiary by the participating CAP physi- nied drug claims are resolved through a cian on behalf of the approved CAP voluntary alternative dispute resolu- vendor. tion process delivered by the des- (i) Except as specified in paragraph ignated carrier, and a reconsideration (i)(5)(ii) of this section, if after 45 days process provided by CMS. from delivery of the approved CAP ven- (b) Dispute resolution. (1) When an ap- dor’s bill to the beneficiary, the bene- proved CAP vendor is not paid on ficiary’s cost-sharing obligation re- claims submitted to the designated mains unpaid, the approved CAP ven- carrier, the vendor may appeal to the dor may refuse further shipments to designated carrier to counsel the re- the participating CAP physician for sponsible participating CAP physician that beneficiary. on his or her agreement to file a clean (ii) If the beneficiary has requested claim and pursue an administrative ap- cost-sharing assistance within 45 days peal in accordance with subpart H of of receiving delivery of the approved part 405 of this chapter. If problems CAP vendor’s bill, provisions of para- persist, the approved CAP vendor may graphs (i)(6), (i)(7), or (i)(8) of this sec- ask the designated carrier to— tion, apply. (i) Review the participating CAP (6) If the approved CAP vendor imple- physician’s performance; and ments a reasonable payment plan, as (ii) Potentially recommend to CMS specified in § 414.914(g)(2), the approved that CMS suspend the participating CAP vendor must continue to ship CAP CAP physician’s CAP election agree- drugs for the beneficiary, as long as the ment.

100

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00110 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.916

(2) The designated carrier— for reconsideration in accordance with (i) Gathers information from the paragraphs (c)(3) and (c)(4) of this sec- local carrier, the participating CAP tion. physician, the beneficiary, and the ap- (3) Manner and timing of request for re- proved CAP vendor; and consideration. A participating CAP phy- (ii) Makes a recommendation to CMS sician who is dissatisfied with a CMS on whether the participating CAP phy- decision to suspend his or her CAP sician has been filing his or her CAP election agreement may request a re- drug administration claims in accord- consideration of the decision by filing ance with the requirements for physi- a request with CMS. The request must cian participation in the CAP as set be filed within 30 days of receipt of the forth in § 414.908(a)(3). The rec- CMS decision letter notifying the par- ommendation will include numbered ticipating CAP physician of CMS’ deci- findings of fact. sion to suspend his or her CAP election (3) CMS will review the recommenda- agreement. From the date of receipt of tion of the designated carrier and gath- the decision letter until the day the re- er relevant additional information consideration determination is final, from the participating CAP physician the ASP payment methodology under before deciding whether to suspend the section 1847A of the Act applies to the participating CAP physician’s CAP physician. election agreement. A suspension com- (4) Content of request. The request for mencing before October 1 will conclude reconsideration must specify— on December 31 of the same year. A (i) The findings or issues with which suspension commencing on or after Oc- the participating CAP physician dis- tober 1 will conclude on December 31 of agrees; the next year. (ii) The reasons for the disagreement; (4) Upon notification from CMS of a (iii) A recital of the facts and law participating CAP physician’s suspen- supporting the participating CAP phy- sion from the program, the approved sician’s position; CAP vendor must cease delivery of (iv) Any supporting documentation; CAP drugs to the suspended partici- and pating CAP physician until the suspen- (v) Any supporting statements from sion has been lifted. approved CAP vendors, local carriers, (5) The participating CAP physician or beneficiaries. may appeal that suspension by request- (5) Withdrawal of request for reconsid- ing a reconsideration of CMS’ decision. eration. A participating CAP physician The reconsideration will address may withdraw his or her request for re- whether the participating CAP physi- consideration at any time before the cian’s denied claims and appeals were issuance of a reconsideration deter- the result of the participating CAP mination. physician’s failure to participate in ac- (6) Discretionary informal hearing. In cordance with the requirements of response to a request for reconsider- § 414.908(a)(3). ation, CMS may, at its discretion, pro- (c) Reconsideration—(1) Right to a re- vide the participating CAP physician consideration. A participating CAP phy- the opportunity for an informal hear- sician dissatisfied with a determina- ing that— tion that his or her CAP election (i) Is conducted by a hearing officer agreement has been suspended by CMS appointed by the director of the CMS or a determination under § 414.917(d) de- Center for Medicare Management or nying the participating CAP physi- his or her designee; and cian’s request to terminate participa- (ii) Provides the participating CAP tion in the CAP under § 414.908(a)(v) is physician the opportunity to present, entitled to a reconsideration as pro- by telephone or in person, evidence to vided in this subpart. rebut CMS’ decision to suspend or ter- (2) Eligibility for reconsideration. CMS minate a participating CAP physician’s reconsiders any determination to sus- CAP election agreement. pend a participating CAP physician’s (7) Informal hearing procedures. (i) election agreement if the participating CMS provides written notice of the CAP physician files a written request time and place of the informal hearing

101

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00111 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.917 42 CFR Ch. IV (10–1–12 Edition)

at least 10 days before the scheduled his or her designee chooses to review date. that decision within 30 days. If the de- (ii) The informal reconsideration cision is favorable to the participating hearing will be conducted in accord- CAP physician, then the participating ance with the following procedures: CAP physician may resume his or her (A) The hearing is open to CMS and participation in CAP. The hearing offi- the participating CAP physician re- cer and the CMS official may review questing the reconsideration, includ- decisions that are favorable or unfavor- ing— able to the participating CAP physi- (1) Authorized representatives; cian. (2) Technical advisors (individuals (ii) The CMS official may accept, re- with knowledge of the facts of the case ject, or modify the hearing officer’s or presenting interpretation of the findings. facts); (iii) If the CMS official reviews the (3) Representatives from the local hearing officer’s decision, the CMS offi- carrier; cial issues a final reconsideration de- (4) Representatives from the ap- termination to the participating CAP proved CAP vendor; and physician on the basis of the hearing (5) Legal counsel. officer’s findings and recommendations (B) The hearing is conducted by the and other relevant information. hearing officer who receives relevant (iv) The reconsideration determina- testimony; tion of the CMS official is final. If the (C) Testimony and other evidence final decision is unfavorable to the par- may be accepted by the hearing officer ticipating CAP physician, then the par- even though it would be inadmissible ticipating CAP physician’s CAP elec- under the rules of evidence applied in tion agreement is terminated. Federal courts; (d) The approved CAP vendor may (D) Either party may call witnesses not charge the beneficiary for the full from among those individuals specified drug coinsurance amount if the des- in paragraph (c)(7)(ii)(A) of this sec- ignated contractor did not pay the ap- tion; and proved CAP vendor in full, unless a (E) The hearing officer does not have properly executed advance beneficiary the authority to compel by subpoena notice is in place. When a beneficiary the production of witnesses, papers, or receives an inappropriate coinsurance other evidence. bill, the beneficiary may participate in (8) Hearing officer’s findings. (i) Within the approved CAP vendor’s grievance 30 days of the hearing officer’s receipt process to request correction of the ap- of the hearing request, the hearing offi- proved CAP vendor’s file. If the bene- cer presents the findings and rec- ficiary is dissatisfied with the result of ommendations to the participating the approved CAP vendor’s grievance CAP physician who requested the re- process, the beneficiary may request consideration. If the hearing officer de- intervention from the designated car- cides to conduct an in-person or tele- rier. This is in addition to, rather than phone hearing, the hearing officer will in place of, any other beneficiary ap- send a hearing notice to the partici- peal rights. The designated carrier will pating CAP physician within 10 days of first investigate the facts and then fa- receipt of the hearing request, and the cilitate correction to the appropriate findings and recommendations are due claim record and beneficiary file. to the participating CAP physician within 30 days of the hearing’s conclu- [70 FR 39097, July 6, 2005, as amended at 72 FR 66403, Nov. 27, 2007; 74 FR 62013, Nov. 25, sion. 2009] (ii) The written report of the hearing officer includes separate numbered § 414.917 Dispute resolution and proc- findings of fact and the legal conclu- ess for suspension or termination of sions of the hearing officer. approved CAP contract and termi- (9) Final reconsideration determination. nation of physician participation (i) The hearing officer’s decision is under exigent circumstances. final unless the director of the CMS (a) General rule. If a participating Center for Medicare Management or CAP physician finds an approved CAP

102

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00112 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.917

vendor’s service, or the quality of a contract. The approved CAP vendor’s CAP drug supplied by the approved contract will remain suspended during CAP vendor to be unsatisfactory, then the reconsideration process. the physician may address the issue (c) Reconsideration—(1) Right to recon- first through the approved CAP ven- sideration. An approved CAP vendor dis- dor’s grievance process, and second satisfied with a determination that its through an alternative dispute resolu- CAP contract has been suspended or tion process administered by the des- terminated by CMS is entitled to a re- ignated carrier and CMS. If CMS sus- consideration as provided in this sub- pends an approved CAP vendor’s CAP part. contract for noncompliance or termi- (2) Eligibility for reconsideration. CMS nates the CAP contract in accordance will reconsider any determination to with § 414.914(a), the approved CAP ven- suspend or terminate an approved CAP dor may request a reconsideration in vendor’s contract if the approved CAP accordance with paragraph (c) of this vendor files a written request for re- section. consideration in accordance with para- (b) Dispute resolution. (1) When a par- graphs (c)(3) and (c)(4) of this section. ticipating CAP physician is dissatisfied (3) Manner and timing of request for re- with an approved CAP vendor’s service consideration. An approved CAP vendor or the quality of a CAP drug supplied that is dissatisfied with a CMS decision by the approved CAP vendor, then the to suspend or terminate its CAP con- participating CAP physician may use tract may request a reconsideration of the approved CAP vendor’s grievance the decision by filing a request with process. If the service or quality issues CMS. The request must be filed within are not resolved through the grievance 30 days of receipt of the CMS decision process to the physician’s satisfaction, letter notifying the approved CAP ven- then the participating CAP physician dor of the suspension or termination of may ask the designated carrier to— its CAP contract. (i) Review the approved CAP vendor’s (4) Content of request. The request for performance; and reconsideration must specify— (ii) Potentially recommend termi- (i) The findings or issues with which nation of the approved CAP vendor’s the approved CAP vendor disagrees; CAP contract. (ii) The reasons for the disagreement; (2) Responsibility of the designated car- (iii) A recital of the facts and law rier. The designated carrier— supporting the approved CAP vendor’s (i) Gathers information from the position; local carrier, the participating CAP (iv) Any supporting documentation; physician, the beneficiary, and the ap- and proved CAP vendor; and (v) Any supporting statements from (ii) Makes a recommendation to CMS participating CAP physicians, the local on whether the approved CAP vendor carrier, or beneficiaries. has been meeting the service and qual- (5) Withdrawal of request for reconsid- ity obligations of its CAP contract. eration. An approved CAP vendor may This recommendation will include withdraw its request for reconsider- numbered findings of fact. ation at any time before the issuance (3) CMS will review the recommenda- of a reconsideration determination. tion of the designated carrier and, (6) Discretionary informal hearing. In gather relevant additional information response to a request for reconsider- from the approved CAP vendor, the ation, CMS may, at its discretion, pro- participating CAP physician, the local vide the approved CAP vendor the op- carrier, and the beneficiary before de- portunity for an informal hearing ciding whether to terminate the ap- that— proved CAP vendor’s CAP contract. (i) Is conducted by a hearing officer (4) The approved CAP vendor may ap- appointed by the Director of the CMS peal that termination by requesting a Center for Medicare Management or reconsideration. A determination must his or her designee; and be made as to whether the approved (ii) Provides the approved CAP ven- CAP vendor has been meeting the serv- dor the opportunity to present, by tele- ice and quality obligations of its CAP phone or in person, evidence to rebut

103

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00113 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.917 42 CFR Ch. IV (10–1–12 Edition)

CMS’ decision to suspend or terminate findings of fact and the legal conclu- the approved CAP vendor’s CAP con- sions of the hearing officer. tract. (9) Final reconsideration determination. (7) Informal hearing procedures. (i) (i) The hearing officer’s decision is CMS will provide written notice of the final unless the Director of the CMS time and place of the informal hearing Center for Medicare Management or at least 10 days before the scheduled his or her designee (CMS official) date. chooses to review that decision within (ii) The informal reconsideration 30 days. If the decision is favorable to hearing will be conducted in accord- the approved CAP vendor, then the ap- ance with the following procedures: proved CAP vendor may resume par- (A) The hearing is open to CMS and ticipation in CAP. The hearing officer the approved CAP vendor requesting and the CMS official may review deci- the reconsideration, including— sions that are favorable or unfavorable (1) Authorized representatives; to the approved CAP vendor. (2) Technical advisors (individuals (ii) The CMS official may accept, re- with knowledge of the facts of the case ject, or modify the hearing officer’s or presenting interpretation of the findings. facts); (iii) If the CMS official reviews the (3) Representatives from the local hearing officer’s decision, the CMS offi- carriers and the designated carrier; cial will issue a final reconsideration (4) The participating CAP physician determination to the approved CAP who requested the suspension, if any; vendor on the basis of the hearing offi- and cer’s findings and recommendations (5) Legal counsel. and other relevant information. (B) The hearing will be conducted by (iv) The reconsideration determina- the hearing officer, who will receive tion of the CMS official is final. relevant testimony; (d) CAP participating physicians’ exi- (C) Testimony and other evidence gent circumstances provision. The fol- may be accepted by the hearing officer lowing process must be completed for even though it would be inadmissible participating CAP physicians’ requests under the rules of evidence applied in to terminate their participation in the Federal courts; program under exigent circumstances (D) Either party may call witnesses provisions described in § 414.908(a)(2)(v): from among those individuals specified (1) The designated carrier must— in the paragraph (c)(7)(ii)(A) of this (i) Determine whether a request to section; and terminate CAP participation was re- (E) The hearing officer does not have lated to approved CAP vendor service, the authority to compel by subpoena and if so, forward the issue to the ap- the production of witnesses, papers, or proved CAP vendor’s grievance process other evidence. within 1 business day of the receipt of (8) Hearing officer’s findings. (i) Within the request; or 30 days of the hearing officer’s receipt of the hearing request, the hearing offi- (ii) Continue to investigate, con- cer will present the findings and rec- sistent with § 414.916(b)(2) of this chap- ommendations to the approved CAP ter, and within 2 business days of re- vendor that requested the reconsider- ceipt, do any of the following: ation. If the hearing officer conducts a (A) Request a single, 2-business day hearing in person or by phone, the extension. No later than the end of any hearing officer will send a hearing no- 2-business day extension, the des- tice to the approved CAP vendor within ignated carrier must make findings and 10 days of receipt of the hearing re- a recommendation as provided in sub- quest, and the findings and rec- paragraph (B) or (C). ommendations are due to the approved (B) Submit a recommendation and CAP vendor within 30 days from of the relevant findings to CMS that the re- hearing’s conclusion. questing participating CAP physician (ii) The written report of the hearing be permitted to terminate his or her officer will include separate numbered participation in the CAP.

104

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00114 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.930

(C) Submit a recommendation and § 414.918 Assignment. relevant findings to CMS that the re- Payment for a CAP drug may be questing participating CAP physician made only on an assignment-related not be permitted to terminate his or her participation in the CAP. basis. (ii) In the case of a request made [70 FR 39099, July 6, 2005] under § 414.908(a)(2)(v)(B), the designated carrier also shall include in its § 414.920 Judicial review. recommendation its finding with re- The following areas under the CAP spect to whether the request is based are not subject to administrative or ju- on a change in circumstances of which dicial review: the participating CAP physician was (a) The establishment of payment previously unaware. amounts. (2) CMS will consider the carrier’s findings and recommendation and may (b) The awarding of vendor contracts. also make its own findings. As a result, (c) The establishment of competitive CMS will— acquisition areas. (i) Approve or deny the request to (d) The selection of CAP drugs. terminate participation in the CAP (e) The bidding structure. within 2 business days of receipt of the (f) The number of vendors selected. recommendation. (ii) Communicate the decision to the [70 FR 39099, July 6, 2005] appropriate Medicare contractors and § 414.930 Compendia for determination the participating CAP physician. of medically-accepted indications (3) A denial of the participating CAP for off-label uses of drugs and physician’s request to terminate par- biologicals in an anti-cancer ticipation in the CAP must include chemotherapeutic regimen. written notification of the right to re- (a) Definitions. For the purposes of quest reconsideration under § 414.916(c). this section: (4) Upon termination of participation in the CAP a physician must— Compendium means a comprehensive (i) Continue to submit claims for listing of FDA-approved drugs and drugs supplied and administered under biologicals or a comprehensive listing the CAP prior to the effective date of of a specific subset of drugs and the physician’s termination from the biologicals in a specialty compendium, CAP consistent with § 414.908(a) until for example a compendium of anti-can- all such claims are timely submitted. cer treatment. A compendium— (ii) Return any unused CAP drugs (i) Includes a summary of the phar- that had not been administered to the macologic characteristics of each drug beneficiary prior to the effective date or biological and may include informa- of the physician’s termination from the tion on dosage, as well as recommended CAP to the approved CAP vendor con- or endorsed uses in specific diseases. sistent with applicable law and regula- (ii) Is indexed by drug or biological. tion and any agreement with the ap- (iii) Has a publicly transparent proc- proved CAP vendor. ess for evaluating therapies and for (iii) Cooperate in any post-payment identifying potential conflicts of inter- review activities on claims submitted ests. under the CAP, as required under sec- Publicly transparent process for evalu- tion 1847B(a)(3) of the Act. ating therapies means that the process (5) An approved CAP vendor that has provides that the following informa- billed and been paid for CAP drugs that tion from an internal or external re- have not been administered must request for inclusion of a therapy in a fund any payments made by CMS or compendium are available to the public the beneficiary and his or her supple- for a period of not less than 5 years, mental insurer in accordance with which includes availability on the com- § 414.914(h)(3)(i)(2) of this chapter. pendium’s Web site for a period of not [70 FR 39098, July 6, 2005, as amended at 72 less than 3 years, coincident with the FR 66403, Nov. 27, 2007; 74 FR 62013, Nov. 25, compendium’s publication of the re- 2009] lated recommendation:

105

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00115 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.930 42 CFR Ch. IV (10–1–12 Edition)

(i) The internal or external request (ii) Publishes a listing of the timely, for listing of a therapy recommenda- complete requests by March 15th and tion including criteria used to evaluate solicits public comment on the re- the request. quests for 30 days. The listing identi- (ii) A listing of all the evidentiary fies the requestor and the requested ac- materials reviewed or considered by tion. the compendium pursuant to the re- (iii) Considers a compendium’s at- quest. tainment of the MedCAC (Medicare (iii) A listing of all individuals who Evidence Development and Coverage have substantively participated in the Advisory Committee, previously known review or disposition of the request. as the MCAC—Medicare Coverage Advi- (iv) Minutes and voting records of sory Committee) recommended desir- meetings for the review and disposition able characteristics of compendia (in- of the request. cluding explicit listing and recommendations) in reviewing requests. Publicly transparent process for identi- CMS may consider additional reason- fying potential conflicts of interests able factors. means that process provides that the (iv) Considers a compendium’s grad- following information is identified and ing of evidence used in making rec- made timely available in response to a ommendations regarding off-label uses public request for a period of not less and the process by which the compen- than 5 years, coincident with the com- dium grades the evidence. pendium’s publication of the related (v) Considers whether the publication recommendation: that is the subject of the request meets (i) Direct or indirect financial rela- the definition of a compendium in this tionships that exist between individ- section. uals or the spouse or minor child of in- (vi) Publishes its decision no later dividuals who have substantively par- than 90 days after the close of the pub- ticipated in the development or dis- lic comment period. position of compendia recommenda- (2) Exception. In addition to the an- tions and the manufacturer or seller of nual process outlined in paragraph the drug or biological being reviewed (b)(1) of this section, CMS may inter- by the compendium. This may include, nally generate a request for changes to for example, compensation arrange- the list of compendia at any time. ments such as salary, grant, contract, (c) Written request for review. (1) CMS or collaboration agreements between will review a complete, written request individuals or the spouse or minor that is submitted in writing, electroni- child of individuals who have sub- cally or via hard copy (no duplicate stantively participated in the review submissions) and includes the fol- and disposition of the request and the lowing: manufacturer or seller of the drug or (i) The full name and contact infor- biological being reviewed by the com- mation of the requestor. pendium. (ii) The full identification of the (ii) Ownership or investment inter- compendium that is the subject of the ests between individuals or the spouse request, including name, publisher, edi- or minor child of individuals who have tion if applicable, date of publication, substantively participated in the devel- and any other information needed for opment or disposition of compendia the accurate and precise identification recommendations and the manufac- of the specific compendium. turer or seller of the drug or biological (iii) A complete written copy of the being reviewed by the compendium. compendium that is the subject of the (b) Process for listing compendia for de- request. termining medically-accepted uses of (iv) The specific action that is re- drugs and biologicals in anti-cancer treat- quested of CMS. ment. (1) The CMS process— (v) Materials that the requestor must (i) Receives formal written requests submit for CMS review in support of for changes to the list of compendia the requested action. during a 30 day window beginning Jan- (vi) A single compendium as its sub- uary 15 each year. ject.

106

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00116 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 Centers for Medicare & Medicaid Services, HHS § 414.1100

(d) CMS may at its discretion com- (2) A supplying fee of $16 is paid to a bine and consider multiple requests pharmacy for each prescription fol- that refer to the same compendium. lowing an initial prescription after a (e) For the purposes of this section, transplant (as specified in paragraph publication by CMS may be accom- (b)(1) of this section) of drugs and plished by posting on the CMS Web biologicals describe in section site. 1861(s)(2)(J) of the Act, that the phar- [72 FR 66404, Nov. 27, 2007, as amended at 74 macy provided to a beneficiary during FR 62013, Nov. 25, 2009] a 30-day period. (c) 30-day dispensing fees. Beginning Subpart L—Supplying and CY 2006—(1) A dispensing fee of $57 is Dispensing Fees paid to a supplier to the extent that the prescription is for the initial dis- § 414.1000 Purpose. pensed 30-day supply of inhalation This subpart implements section drugs furnished through durable med- 1842(o)(2) and section 1842(o)(6) of the ical equipment covered under section Act, as added by section 303(e)(2) of the 1861(n) of the Act, regardless of the MMA, by specifying a supplying fee for number of partial shipments of that 30- drugs and biologicals covered under day supply. Part B of Title XVIII of the Act that (2) Except for supplied inhalation are described in sections 1861(s)(2)(J), drugs that meet criteria described in 1861(s)(2)(Q), and 1861(s)(2)(T) of the paragraph (c)(1) of this section, a dis- Act. pensing fee of $33 is paid for each dis- [69 FR 66425, Nov. 15, 2004] pensed 30-day supply of inhalation drugs furnished through durable med- § 414.1001 Basis of payment. ical equipment covered under section (a) Supplying fees. Beginning in CY 1861(n) of the Act, regardless of the 2006— number of partial shipments of that 30- (1) A supplying fee of $24 is paid to a day supply. pharmacy for the first prescription of (d) 90-day dispensing fee. Beginning drugs and biologicals described in sec- CY 2006, a dispensing fee of $66 is paid tions 1861(s)(2)(J), 1861(s)(2)(Q), and to a supplier for each dispensed 90-day 1861(s)(2)(T) of the Act, that the phar- supply of inhalation drugs furnished macy provided to a beneficiary during through durable medical equipment a 30-day period. covered under section 1861(n) of the (2) A supplying fee of $16 is paid to a Act, regardless of the number of partial pharmacy for each prescription fol- shipments of that 90-day supply. lowing the first prescription (as specified in paragraph (a)(1) of this section) [70 FR 70334, Nov. 21, 2005] of drugs and biologicals described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and Subpart M—Payment for Com- 1861(s)(2)(T) of the Act, that the phar- prehensive Outpatient Reha- macy provided to a beneficiary during bilitation Facility (CORF) Serv- a 30-day period. ices (3) A separate supplying fee is paid to a pharmacy for each prescription of drugs and biologicals described in sec- SOURCE: 72 FR 66404, Nov. 27, 2007, unless tions 1861(s)(2)(J), 1861(s)(2)(Q), and otherwise noted. 1861(s)(2)(T) of the Act. § 414.1100 Basis and scope. (b) Supplying fees following transplant. Beginning CY 2006—(1) A supplying fee This subpart implements sections of $50 is paid to pharmacy for the ini- 1834(k)(1) and (k)(3) of the Act by speci- tial supplied prescription of drugs and fying the payment methodology for biologicals described in section comprehensive outpatient rehabilita- 1861(s)(2)(J) of the Act, that the phar- tion facility services covered under macy provided to a patient during the Part B of Title XVIII of the Act that first 30-day period following a trans- are described at section 1861(cc)(1) of plant. the Act.

107

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00117 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150 § 414.1105 42 CFR Ch. IV (10–1–12 Edition)

§ 414.1105 Payment for Comprehensive (2) The amount determined using the Outpatient Rehabilitation Facility same methodology for drugs (as defined (CORF) services. in § 414.704 of this chapter) described in (a) Payment under the physician fee section 1842(o)(1) of the Act provided schedule. Except as otherwise specified that payment for such drug is not in- under paragraphs (b), (c), (d), and (e) of cluded in the payment amount for this section payment for CORF serv- other CORF services paid under para- ices, as defined under § 410.100 of this graphs (a) or (c). chapter, is paid the lesser of 80 percent (e) Payment for CORF services when no of the following: fee schedule amount for the service. If (1) The actual charge for the item or there is no fee schedule amount estab- service; or lished for a CORF service, payment for (2) The nonfacility amount deter- the item or service will be the lesser of mined under the physician fee schedule 80 percent of: established under section 1848(b) of the (i) The actual charge for the service Act for the item or service. provided that payment for such item or (b) Payment for physician services. No service is not included in the payment separate payment for physician serv- amount for other CORF services paid ices that are CORF services under under paragraphs (a), (c), or (d) of this § 410.100(a) of this chapter will be made. section. (c) Payment for supplies and durable (ii) The amount determined under medical equipment, prosthetic and the fee schedule established for a com- orthotic devices, and drugs and parable service as specified by the Sec- biologicals. Supplies and durable med- retary provided that payment for such ical equipment that are CORF services item or service is not included in the under § 410.100(l) of this chapter, pros- payment amount for other CORF serv- thetic device services that are CORF ices paid under paragraphs (a), (c), or services under § 410.100(f), orthotic de- (d) of this section. vices that are CORF services under § 410.100(g) of this chapter and drugs PART 415—SERVICES FURNISHED BY and biologicals that are CORF services PHYSICIANS IN PROVIDERS, SU- under § 410.100(k) of this chapter are PERVISING PHYSICIANS IN paid the lesser of 80 percent of the fol- TEACHING SETTINGS, AND RESI- lowing: DENTS IN CERTAIN SETTINGS (1) The actual charge for the service provided that payment for such item is Subpart A—General Provisions not included in the payment amount for other CORF services paid under Sec. paragraphs (a) or (d); or 415.1 Basis and scope. (2) The amount determined under the DMEPOS fee schedule established Subpart B—Fiscal Intermediary Payments under part 414 subparts D and F for the to Providers for Physician Services item or the single payment amount es- 415.50 Scope. tablished under the DMEPOS competi- 415.55 General payment rules. tive bidding program provided that 415.60 Allocation of physician compensation payment for such item is not included costs. in the payment amount for other CORF 415.70 Limits on compensation for physician services in providers. services paid under paragraphs (a) or (d). Subpart C—Part B Carrier Payments for (d) Payment for drugs and biologicals. Physician Services to Beneficiaries in Drugs and biologicals that are CORF Providers services under § 410.100(j) of this chapter, are paid the lesser of 80 percent of 415.100 Scope. the following: 415.102 Conditions for fee schedule payment (1) The actual charge for the service for physician services to beneficiaries in providers. provided that payment for such item is 415.105 Amounts of payment for physician not included in the payment amount services to beneficiaries in providers. for other CORF services paid under 415.110 Conditions for payment: Medically paragraphs (a) or (c); or directed anesthesia services.

108

VerDate Mar<15>2010 18:38 Nov 15, 2012 Jkt 226186 PO 00000 Frm 00118 Fmt 8010 Sfmt 8010 Q:\42\42V3.TXT ofr150 PsN: PC150