Title 42: Public Health
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PART 414—PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES
Section Contents
Subpart A—General Provisions
§ 414.1 Basis and scope.
§ 414.2 Definitions.
§ 414.4 Fee schedule areas.
Subpart B—Physicians and Other Practitioners
§ 414.20 Formula for computing fee schedule amounts.
§ 414.21 Medicare payment basis.
§ 414.22 Relative value units (RVUs).
§ 414.24 Review, revision, and addition of RVUs for physician services.
§ 414.26 Determining the GAF.
§ 414.28 Conversion factors.
§ 414.30 Conversion factor update.
§ 414.32 Determining payments for certain physicians' services furnished in facility settings.
§ 414.34 Payment for services and supplies incident to a physician's service.
§ 414.36 Payment for drugs incident to a physician's service.
§ 414.39 Special rules for payment of care plan oversight.
§ 414.40 Coding and ancillary policies.
§ 414.42 Adjustment for first 4 years of practice.
§ 414.44 Transition rules.
§ 414.46 Additional rules for payment of anesthesia services.
§ 414.48 Limits on actual charges of nonparticipating suppliers.
§ 414.50 Physician billing for purchased diagnostic tests.
§ 414.52 Payment for physician assistants' services.
§ 414.54 Payment for certified nurse-midwives' services.
§ 414.56 Payment for nurse practitioners' and clinical nurse specialists' services.
§ 414.58 Payment of charges for physician services to patients in providers.
§ 414.60 Payment for the services of CRNAs.
§ 414.62 Fee schedule for clinical psychologist services.
§ 414.63 Payment for outpatient diabetes self-management training.
§ 414.64 Payment for medical nutrition therapy.
§ 414.65 Payment for telehealth services.
§ 414.66 Incentive payments for physician scarcity areas.
§ 414.67 Incentive payments for Health Professional Shortage Areas.
Subpart C—Fee Schedules for Parenteral and Enteral Nutrition (PEN) Nutrients, Equipment and Supplies
§ 414.100 Purpose.
§ 414.102 General payment rules.
§ 414.104 PEN Items and Services.
Subpart D—Payment for Durable Medical Equipment and Prosthetic and Orthotic Devices
§ 414.200 Purpose.
§ 414.202 Definitions.
§ 414.210 General payment rules.
§ 414.220 Inexpensive or routinely purchased items.
§ 414.222 Items requiring frequent and substantial servicing.
§ 414.224 Customized items.
§ 414.226 Oxygen and oxygen equipment.
§ 414.228 Prosthetic and orthotic devices.
§ 414.229 Other durable medical equipment—capped rental items.
§ 414.230 Determining a period of continuous use.
§ 414.232 Special payment rules for transcutaneous electrical nerve stimulators (TENS).
Subpart E—Determination of Reasonable Charges Under the ESRD Program
§ 414.300 Scope of subpart.
§ 414.310 Determination of reasonable charges for physician services furnished to renal dialysis patients.
§ 414.313 Initial method of payment.
§ 414.314 Monthly capitation payment method.
§ 414.316 Payment for physician services to patients in training for self-dialysis and home dialysis.
§ 414.320 Determination of reasonable charges for physician renal transplantation services.
§ 414.330 Payment for home dialysis equipment, supplies, and support services.
§ 414.335 Payment for EPO furnished to a home dialysis patient for use in the home.
Subparts F–G [Reserved]
Subpart F—xxx
Subpart H—Fee Schedule for Ambulance Services
§ 414.601 Purpose.
§ 414.605 Definitions.
§ 414.610 Basis of payment.
§ 414.615 Transition to the ambulance fee schedule.
§ 414.617 Transition from regional to national ambulance fee schedule.
§ 414.620 Publication of the ambulance fee schedule.
§ 414.625 Limitation on review.
Subpart I—Payment for Drugs and Biologicals
§ 414.701 Purpose.
§ 414.704 Definitions.
§ 414.707 Basis of payment.
Subpart J—Submission of Manufacturer's Average Sales Price Data
§ 414.800 Purpose.
§ 414.802 Definitions.
§ 414.804 Basis of payment.
§ 414.806 Penalties associated with the failure to submit timely and accurate ASP data.
Subpart K—Payment for Drugs and Biologicals Under Part B
§ 414.900 Basis and scope.
§ 414.902 Definitions.
§ 414.904 Average sales price as the basis for payment.
§ 414.906 Competitive acquisition program as the basis for payment.
§ 414.908 Competitive acquisition program.
§ 414.910 Bidding process.
§ 414.912 Conflicts of interest
§ 414.914 Terms of contract.
§ 414.916 Dispute resolution for vendors and beneficiaries.
§ 414.917 Dispute resolution and process for suspension or termination of approved CAP contract.
§ 414.918 Assignment.
§ 414.920 Judicial review.
Subpart L—Supplying and Dispensing Fees
§ 414.1000 Purpose.
§ 414.1001 Basis of payment.
Authority: Secs. 1102, 1871, and 1881(b)(l) of the Social Security Act (42 U.S.C. 1302, 1395hh, and 1395rr(b)(l)).
Source: 55 FR 23441, June 8, 1990, unless otherwise noted.
Editorial Note: Nomenclature changes to part 414 appear at 60 FR 50442, Sept. 29, 1995, and 60 FR 53877, Oct. 18, 1995.
Subpart A—General Provisions
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§ 414.1 Basis and scope.
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Link to an amendment published at 71 FR 48409, Aug. 18, 2006.
This part implements the following provisions of the Act:
1802—Rules for private contracts by Medicare beneficiaries.
1833—Rules for payment for most Part B services.
1834(a) and (h)—Amounts and frequency of payments for durable medical equipment and for prosthetic devices and orthotics and prosthetics.
1834(l)—Establishment of a fee schedule for ambulance services.
1834(m)—Rules for Medicare reimbursement for telehealth services.
1842(o)—Rules for payment of certain drugs and biologicals.
1848—Fee schedule for physician services.
1881(b)—Rules for payment for services to ESRD beneficiaries.
1887—Payment of charges for physician services to patients in providers.
[67 FR 9132, Feb. 27, 2002, as amended at 69 FR 1116, Jan. 7, 2004]
§ 414.2 Definitions.
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As used in this part, unless the context indicates otherwise—
AA stands for anesthesiologist assistant.
AHPB stands for adjusted historical payment basis.
CF stands for conversion factor.
CRNA stands for certified registered nurse anesthetist.
CY stands for calendar year.
FY stands for fiscal year.
GAF stands for geographic adjustment factor.
GPCI stands for geographic practice cost index.
HCPCS stands for CMS Common Procedure Coding System.
Physician services means the following services to the extent that they are covered by Medicare:
(1) Professional services of doctors of medicine and osteopathy (including osteopathic practitioners), doctors of optometry, doctors of podiatry, doctors of dental surgery and dental medicine, and chiropractors.
(2) Supplies and services covered “incident to” physician services (excluding drugs as specified in §414.36).
(3) Outpatient physical and occupational therapy services if furnished by a person or an entity that is not a Medicare provider of services as defined in §400.202 of this chapter.
(4) Diagnostic x-ray tests and other diagnostic tests (excluding diagnostic laboratory tests paid under the fee schedule established under section 1833(h) of the Act).
(5) X-ray, radium, and radioactive isotope therapy, including materials and services of technicians.
(6) Antigens, as described in section 1861(s)(2)(G) of the Act.
(7) Bone mass measurement.
RVU stands for relative value unit.
(8) Screening mammography services.
[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 58 FR 63686, Dec. 2, 1993; 59 FR 63463, Dec. 8, 1994; 60 FR 63177, Dec. 8, 1995; 63 FR 34328, June 24, 1998; 66 FR 55322, Nov. 1, 2001]
§ 414.4 Fee schedule areas.
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(a) General. CMS establishes physician fee schedule areas that generally conform to the geographic localities in existence before January 1, 1992.
(b) Changes. CMS announces proposed changes to fee schedule areas in the Federal Register and provides an opportunity for public comment. After considering public comments, CMS publishes the final changes in the Federal Register.
[59 FR 63463, Dec. 8, 1994]
Subpart B—Physicians and Other Practitioners
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Source: 56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. 15, 1992, unless otherwise noted.
§ 414.20 Formula for computing fee schedule amounts.
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(a) Participating supplier. The fee schedule amount for a participating supplier for a physician service as defined in §414.2 is computed as the product of the following amounts:
(1) The RVUs for the service.
(2) The GAF for the fee schedule area.
(3) The CF.
(b) Nonparticipating supplier. The fee schedule amount for a nonparticipating supplier for a physician service as defined in §414.2 is 95 percent of the fee schedule amount as calculated in paragraph (a) of this section.
[62 FR 59101, Oct. 31, 1997]
§ 414.21 Medicare payment basis.
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Medicare payment is based on the lesser of the actual charge or the applicable fee schedule amount.
[62 FR 59101, Oct. 31, 1997]
§ 414.22 Relative value units (RVUs).
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CMS establishes RVUs for physicians' work, practice expense, and malpractice insurance.
(a) Physician work RVUs—(1) General rule. Physician work RVUs are established using a relative value scale in which the value of physician work for a particular service is rated relative to the value of work for other physician services.
(2) Special RVUs for anesthesia and radiology services)—(i) Anesthesia services. The rules for determining RVUs for anesthesia services are set forth in §414.46.
(ii) Radiology services. CMS bases the RVUs for all radiology services on the relative value scale developed under section 1834(b)(1)(A) of the Act, with appropriate modifications to ensure that the RVUs established for radiology services that are similar or related to other physician services are consistent with the RVUs established for those similar or related services.
(b) Practice expense RVUs. (1) Practice expense RVUs are computed for each service or class of service by applying average historical practice cost percentages to the estimated average allowed charge during the 1991 base period.
(2) The average practice expense percentage for a service or class of services is computed as follows:
(i) Multiply the average practice expense percentage for each specialty by the proportion of a particular service or class of service performed by that specialty.
(ii) Add the products for all specialties.
(3) For services furnished beginning calendar year (CY) 1994, for which 1994 practice expense RVUs exceed 1994 work RVUs and that are performed in office settings less than 75 percent of the time, the 1994, 1995, and 1996 practice expense RVUs are reduced by 25 percent of the amount by which they exceed the number of 1994 work RVUs. Practice expense RVUs are not reduced to less than 128 percent of 1994 work RVUs.
(4) For services furnished beginning January 1, 1998, practice expense RVUs for certain services are reduced to 110 percent of the work RVUs for those services. The following two categories of services are excluded from this limitation:
(i) The service is provided more than 75 percent of the time in an office setting; or
(ii) The service is one described in section 1848(c)(2)(G)(v) of the Act, codified at 42 U.S.C. 1395w–4(c)(2)(G). Section 1848(c)(2)(G)(v) of the Act refers to the 1998 proposed resource-based practice expense RVUs (as specified in the June 18, 1997 physician fee schedule proposed rule (62 FR 33158)) for the specific site, either in-office or out-of-office, increased from its 1997 practice expense RVUs.)
(5) For services furnished beginning January 1, 1999, the practice expense RVUs are based on 75 percent of the practice expense RVUs applicable to services furnished in 1998 and 25 percent of the relative practice expense resources involved in furnishing the service. For services furnished in 2000, the practice expense RVUs are based on 50 percent of the practice expense RVUs applicable to services furnished in 1998 and 50 percent of the relative practice expense resources involved in furnishing the service. For services furnished in 2001, the practice expense RVUs are based on 25 percent of the practice expense RVUs applicable to services furnished in 1998 and 75 percent of the relative practice expense resources involved in furnishing the service. For services furnished in 2002 and subsequent years, the practice expense RVUs are based entirely on relative practice expense resources.
(i) Usually there are two levels of practice expense RVUs that correspond to each code.
(A) Facility practice expense RVUs. The lower facility practice expense RVUs apply to services furnished to patients in the hospital, skilled nursing facility, community mental health center, or in an ambulatory surgical center when the physician performs procedures on the ASC approved procedures list. (The facility practice expense RVUs for a particular code may not be greater than the non-facility RVUs for the code.)
(B) Non-facility practice expense RVUs. The higher non-facility practice expense RVUs apply to services performed in a physician's office, a patient's home, an ASC if the physician is performing a procedure not on the ASC approved procedures list, a nursing facility, or a facility or institution other than a hospital or skilled nursing facility, community mental health center, or ASC performing an ASC approved procedure.
(C) Outpatient therapy services. Outpatient therapy services billed under the physician fee schedule are paid using the non-facility practice expense RVU component.
(ii) Only one practice expense RVU per code can be applied for each of the following services: services that have only technical component practice expense RVUs or only professional component practice expense RVUs; evaluation and management services, such as hospital or nursing facility visits, that are furnished exclusively in one setting; and major surgical services.
(6)(i) CMS establishes criteria for supplemental surveys regarding specialty practice expenses submitted to CMS that may be used in determining practice expense RVUs.
(ii) Any CMS-designated specialty group may submit a supplemental survey.
(iii) CMS will consider for use in determining practice expense RVUs for the physician fee schedule survey data and related materials submitted to CMS by March 1, 2004 to determine CY 2005 practice expense RVUs and by March 1, 2005 to determine CY 2006 practice expense RVUs.
(c) Malpractice insurance RVUs. (1) Malpractice insurance RVUs are computed for each service or class of services by applying average malpractice insurance historical practice cost percentages to the estimated average allowed charge during the 1991 base period.
(2) The average historical malpractice insurance percentage for a service or class of services is computed as follows:
(i) Multiply the average malpractice insurance percentage for each specialty by the proportion of a particular service or class of services performed by that specialty.
(ii) Add all the products for all the specialties.
(3) For services furnished in the year 2000 and subsequent years, the malpractice RVUs are based on the relative malpractice insurance resources.
[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42493, Sept. 15, 1992; 58 FR 63687, Dec. 2, 1993; 62 FR 59102, Oct. 31, 1997; 63 FR 58910, Nov. 2, 1998; 64 FR 59441, Nov. 2, 1999; 65 FR 25668, May 3, 2000; 65 FR 65440, Nov. 1, 2000; 67 43558, June 28, 2002; 68 FR 63261, Nov. 7, 2003]
§ 414.24 Review, revision, and addition of RVUs for physician services.
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(a) Interim values for new and revised HCPCS level 1 and level 2 codes. (1) CMS establishes interim RVUs for new services and for codes for which definitions have changed.
(2) CMS publishes a notice in the Federal Register to announce interim RVUs and seek public comment on them. The RVUs are effective prospectively for services furnished beginning on the effective date specified in the notice.
(3) After considering public comments, CMS revises, if necessary, the interim RVUs and announces those revisions in a final notice published in the Federal Register. Any revisions in the RVUs are effective prospectively for services furnished beginning on the effective date specified in the final notice.
(b) Revision of RVUs for established HCPCS level 1 and level 2 codes. (1) CMS publishes a proposed notice in the Federal Register to announce changes in RVUs for established codes and provides an opportunity for public comment no less often than every 5 years.
(2) After considering public comments, CMS publishes a final notice in the Federal Register to announce revisions to RVUs.
(3) The RVU revisions are effective prospectively for services furnished beginning on the effective date specified in the final notice.
(c) Values for local codes (HCPCS Level 3). (1) Carriers establish relative values for local codes for services not included in HCPCS levels 1 or 2.
(2) Carriers must obtain prior approval from CMS to establish local codes for services that meet the definition of “physician services” in §414.2.
[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992]
§ 414.26 Determining the GAF.
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CMS establishes a GAF for each service in each fee schedule area.
(a) Geographic indices. CMS uses the following indices to establish the GAF:
(1) An index that reflects one-fourth of the difference between the relative value of physicians' work effort in each of the different fee schedule areas as determined under §414.22(a) and the national average of that work effort.
(2) An index that reflects the relative costs of the mix of goods and services comprising practice expenses (other than malpractice expenses) in each of the different fee schedule areas as determined under §414.22(b) compared to the national average of those costs.
(3) An index that reflects the relative costs of malpractice expenses in each of the different fee schedule areas as determined under §414.22(c) compared to the national average of those costs.
(b) Class-specific practice cost indices. If the application of a single index to different classes of services would be substantially inequitable because of differences in the mix of goods and services comprising practice expenses for the different classes of services, more than one index may be established under paragraph (a)(2) of this section.
(c) Computation of GAF. The GAF for each fee schedule area is the sum of the physicians' work adjustment factor, the practice expense adjustment factor, and the malpractice cost adjustment factor, as defined in this section:
(1) The geographic physicians' work adjustment factor for a service is the product of the proportion of the total relative value for the service that reflects the RVUs for the work component and the geographic physicians' work index value established under paragraph (a)(1) of this section.
(2) The geographic practice expense adjustment factor for a service is the product of the proportion of the total relative value for the service that reflects the RVUs for the practice expense component, multiplied by the geographic practice cost index (GPCI) value established under paragraph (a)(2) of this section.
(3) The geographic malpractice adjustment factor for a service is the product of the proportion of the total relative value for the service that reflects the RVUs for the malpractice component, multiplied by the GPCI value established under paragraph (a)(3) of this section.
[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992]
§ 414.28 Conversion factors.
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CMS establishes CFs in accordance with section 1848(d) of the Act.
(a) Base-year CFs. CMS established the CF for 1992 so that had section 1848 of the Act applied during 1991, it would have resulted in the same aggregate amount of payments for physician services as the estimated aggregate amount of these payments in 1991, adjusted by the update for 1992 computed as specified in §414.30.
(b) Subsequent CFs. For calendar years 1993 through 1995, the CF for each year is equal to the CF for the previous year, adjusted in accordance with §414.30. Beginning January 1, 1996, the CF for each calendar year may be further adjusted so that adjustments to the fee schedule in accordance with section 1848(c)(2)(B)(ii) of the Act do not cause total expenditures under the fee schedule to differ by more than $20 million from the amount that would have been spent if these adjustments had not been made.
[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 60 FR 53877, Oct. 18, 1995; 60 FR 63177, Dec. 8, 1995]
§ 414.30 Conversion factor update.
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Unless Congress acts in accordance with section 1848(d)(3) of the Act—
(a) General rule. The CF update for a CY equals the Medicare Economic Index increased or decreased by the number of percentage points by which the percentage increase in expenditures for physician services (or for a particular category of physician services, such as surgical services) in the second preceding FY over the third preceding FY exceeds the performance standard rate of increase established for the second preceding FY.
(b) Downward adjustment. The downward adjustment may not exceed the following:
(1) For CYs 1992 and 1993, 2 percentage points.
(2) For CY 1994, 2.5 percentage points.
(3) For CYs 1995 and thereafter, 5 percentage points.
[55 FR 23441, June 8, 1990, as amended at 60 FR 63177, Dec. 8, 1995; 61 FR 42385, Aug. 15, 1996]
§ 414.32 Determining payments for certain physicians' services furnished in facility settings.
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(a) Definition. As used in this section, facility settings include the following facilities:
(1) Hospital outpatient departments, including clinics and emergency rooms.
(2) Hospital inpatient departments.
(3) Comprehensive outpatient rehabilitation facilities.
(4) Comprehensive inpatient rehabilitation facilities.
(5) Inpatient psychiatric facilities.
(6) Skilled nursing facilities.
(b) General rule. If physicians' services of the type routinely furnished in physicians' offices are furnished in facility settings before January 1, 1999, the physician fee schedule amount for those services is determined by reducing the practice expense RVUs for the services by 50 percent. For services furnished on or after January 1, 1999, the practice expense RVUs are determined in accordance with §414.22(b)(5).
(c) Services covered by the reduction. CMS establishes a list of services routinely furnished in physicians' offices nationally. Services furnished at least 50 percent of the time in physicians' offices are subject to this reduction.
(d) Services excluded from the reduction. The reduction established under this section does not apply to the following:
(1) Rural health clinic services.
(2) Surgical services not on the ambulatory surgical center covered list of procedures published under §416.65(c) of this chapter when furnished in an ambulatory surgical center.
(3) Anesthesiology services and diagnostic and therapeutic radiology services.
[58 FR 63687, Dec. 2, 1993, as amended at 60 FR 63177, Dec. 8, 1995; 62 FR 59102, Oct. 31, 1997; 63 FR 58911, Nov. 2, 1998; 64 FR 25457, May 12, 1999]
§ 414.34 Payment for services and supplies incident to a physician's service.
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(a) Medical supplies. (1) Except as otherwise specified in this paragraph, office medical supplies are considered to be part of a physician's practice expense, and payment for them is included in the practice expense portion of the payment to the physician for the medical or surgical service to which they are incidental.
(2) If physician services of the type routinely furnished in provider settings are furnished in a physician's office, separate payment may be made for certain supplies furnished incident to that physician service if the following requirements are met:
(i) It is a procedure that can safely be furnished in the office setting in appropriate circumstances.
(ii) It requires specialized supplies that are not routinely available in physicians' offices and that are generally disposable.
(iii) It is furnished before January 1, 1999.
(3) For the purpose of paragraph (a)(2) of this section, provider settings include only the following settings:
(i) Hospital inpatient and outpatient departments.
(ii) Ambulatory surgical centers.
(4) For the purpose of paragraph (a)(2) of this section, “routinely furnished in provider settings” means furnished in inpatient or outpatient hospital settings or ambulatory surgical centers more than 50 percent of the time.
(5) CMS establishes a list of services for which a separate supply payment may be made under this section.
(6) The fee schedule amount for supplies billed separately is not subject to a GPCI adjustment.
(b) Services of nonphysicians that are incident to a physician's service. Services of nonphysicians that are covered as incident to a physician's service are paid as if the physician had personally furnished the service.
[56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. 15, 1992, as amended at 63 FR 58911, Nov. 2, 1998]
§ 414.36 Payment for drugs incident to a physician's service.
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Payment for drugs incident to a physician's service is made in accordance with §405.517 of this chapter.
§ 414.39 Special rules for payment of care plan oversight.
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(a) General. Except as specified in paragraphs (b) and (c) of this section, payment for care plan oversight is included in the payment for visits and other services under the physician fee schedule. For purposes of this section a nonphysician practitioner (NPP) is a nurse practitioner, clinical nurse specialist or physician assistant.
(b) Exception. Separate payment is made under the following conditions for physician care plan oversight services furnished to beneficiaries who receive HHA and hospice services that are covered by Medicare:
(1) The care plan oversight services require recurrent physician supervision of therapy involving 30 or more minutes of the physician's time per month.
(2) Payment is made to only one physician per patient for services furnished during a calendar month period. The physician must have furnished a service requiring a face-to-face encounter with the patient at least once during the 6-month period before the month for which care plan oversight payment is first billed. The physician may not have a significant ownership interest in, or financial or contractual relationship with, the HHA in accordance with §424.22(d) of this chapter. The physician may not be the medical director or employee of the hospice and may not furnish services under an arrangement with the hospice.
(3) If a physician furnishes care plan oversight services during a postoperative period, payment for care plan oversight services is made if the services are documented in the patient's medical record as unrelated to the surgery.
(c) Special rules for payment of care plan oversight provided by nonphysician practitioners for beneficiaries who receive HHA services covered by Medicare. (1) An NPP can furnish physician care plan oversight (but may not certify a patient as needing home health services) only if the physician who signs the plan of care provides regular ongoing care under the same plan of care as does the NPP billing for care plan oversight and either—
(i) The physician and NPP are part of the same group practice; or
(ii) If the NPP is a nurse practitioner or clinical nurse specialist, the physician signing the plan of care also has a collaborative agreement with the NPP; or
(iii) If the NPP is a physician assistant, the physician signing the plan of care is also the physician who provides general supervision of physician assistant services for the practice.
(2) Payment may be made for care plan oversight services furnished by an NPP when:
(i) The NPP providing the care plan oversight has seen and examined the patient;
(ii) The NPP providing care plan oversight is not functioning as a consultant whose participation is limited to a single medical condition rather than multi-disciplinary coordination of care; and
(iii) The NPP providing care plan oversight integrates his or her care with that of the physician who signed the plan of care.
[59 FR 63463, Dec. 8, 1994; 60 FR 49, Jan. 3, 1995; 60 FR 36733, July 18, 1995 as amended at 69 FR 66423, Nov. 15, 2004; 70 FR 16722, Apr. 1, 2005]
§ 414.40 Coding and ancillary policies.
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(a) General rule. CMS establishes uniform national definitions of services, codes to represent services, and payment modifiers to the codes.
(b) Specific types of policies. CMS establishes uniform national ancillary policies necessary to implement the fee schedule for physician services. These include, but are not limited to, the following policies:
(1) Global surgery policy (for example, post- and pre-operative periods and services, and intra-operative services).
(2) Professional and technical components (for example, payment for services, such as an EEG, which typically comprise a technical component (the taking of the test) and a professional component (the interpretation)).
(3) Payment modifiers (for example, assistant-at-surgery, multiple surgery, bilateral surgery, split surgical global services, team surgery, and unusual services).
§ 414.42 Adjustment for first 4 years of practice.
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(a) General rule. For services furnished during CYs 1992 and 1993, except as specified in paragraph (b) of this section, the fee schedule payment amount or prevailing charge must be phased in as specified in paragraph (d) of this section for physicians, physical therapists (PTs), occupational therapists (OTs), and all other health care practitioners who are in their first through fourth years of practice.
(b) Exception. The reduction required in paragraph (d) of this section does not apply to primary care services or to services furnished in a rural area as defined in section 1886(d)(2)(D) of the Act that is designated under section 332(a)(1)(A) of the Public Health Service Act as a Health Professional Shortage Area.
(c) Definition of years of practice. (1) The “first year of practice“ is the first full CY during the first 6 months of which the physician, PT, OT, or other health care practitioner furnishes professional services for which payment may be made under Medicare Part B, plus any portion of the prior CY if that prior year does not meet the first 6 months test.
(2) The “second, third, and fourth years of practice“ are the first, second, and third CYs following the first year of practice, respectively.
(d) Amounts of adjustment. The fee schedule payment for the service of a new physician, PT, OT, or other health care practitioner is limited to the following percentages for each of the indicated years:
(1) First year—80 percent
(2) Second year—85 percent
(3) Third year—90 percent
(4) Fourth year—95 percent
[57 FR 42493, Sept. 15, 1992, as amended at 58 FR 63687, Dec. 2, 1993]
§ 414.44 Transition rules.
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(a) Adjusted historical payment basis—(1) All services other than radiology and nuclear medicine services. For all physician services other than radiology services, furnished in a fee schedule area, the adjusted historical payment basis (AHPB) is the estimated weighted average prevailing charge applied in the fee schedule area for the service in CY 1991, as determined by CMS without regard to physician specialty and as adjusted to reflect payments for services below the prevailing charge, adjusted by the update established for CY 1992.
(2) Radiology services. For radiology services, the AHPB is the amount paid for the service in the fee schedule area in CY 1991 under the fee schedule established under section 1834(b), adjusted by the update established for CY 1992.
(3) Nuclear medicine services. For nuclear medicine services, the AHPB is the amount paid for the service in the fee schedule area in CY 1991 under the fee schedule established under section 6105(b) of Public Law 101–239 and section 4102(g) of Public Law 101–508, adjusted by the update established for CY 1992.
(4) Transition adjustment. CMS adjusts the AHPB for all services by 5.5 percent to produce budget-neutral payments for 1992.
(b) Adjustment of 1992 payments for physician services other than radiology services. For physician services furnished during CY 1992 the following rules apply:
(1) If the AHPB determined under paragraph (a) of this section is from 85 percent to 115 percent of the fee schedule amount for the area for services furnished in 1992, payment is at the fee schedule amount.
(2) If the AHPB determined under paragraph (a) of this section is less than 85 percent of the fee schedule amount for the area for services furnished in 1992, an amount equal to the AHPB plus 15 percent of the fee schedule amount is substituted for the fee schedule amount.
(3) If the AHPB determined under paragraph (a) of this section is greater than 115 percent of the fee schedule amount for the area for services furnished in 1992, an amount equal to the AHPB minus 15 percent of the fee schedule amount is substituted for the fee schedule amount.
(c) Adjustment of 1992 payments for radiology services. For radiology services furnished during CY 1992 the following rules apply:
(1) If the AHPB determined under paragraph (a) of this section is from 85 percent to 109 percent of the fee schedule amount for the area for services furnished in 1992, payment is at the fee schedule amount.
(2) If the AHPB determined under paragraph (a) of this section is less than 85 percent of the fee schedule amount for the area for services furnished in 1992, an amount equal to the AHPB plus 15 percent of the fee schedule amount is substituted for the fee schedule amount.
(3) If the AHPB determined under paragraph (a) of this section is greater than 109 percent of the fee schedule amount for the area for services furnished in 1992, an amount equal to the AHPB minus 9 percent of the fee schedule amount is substituted for the fee schedule amount.
(d) Computation of payments for CY 1993. For physician services subject to the transition rules in CY 1992 and furnished during CY 1993, the fee schedule is equal to 75 percent of the amount that would have been paid in the fee schedule area under the 1992 transition rules, adjusted by the amount of the 1993 update, plus 25 percent of the 1993 fee schedule amount.
(e) Computation of payments for CY 1994. For physician services subject to the transition rules in CY 1993, and furnished during CY 1994, the fee schedule is equal to 67 percent of the amount that would have been paid in the fee schedule area under the 1993 transition rules, adjusted by the amount of the 1994 update, plus 33 percent of the 1994 fee schedule amount.
(f) Computation of payments for CY 1995. For physician services subject to the transition rules in CY 1994 and furnished during CY 1995, the fee schedule is equal to 50 percent of the amount that would have been paid in the fee schedule area under the 1994 transition rules, adjusted by the amount of the 1995 update, plus 50 percent of the 1995 fee schedule amount.
§ 414.46 Additional rules for payment of anesthesia services.
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(a) Definitions. For purposes of this section, the following definitions apply:
(1) Base unit means the value for each anesthesia code that reflects all activities other than anesthesia time. These activities include usual preoperative and postoperative visits, the administration of fluids and blood incident to anesthesia care, and monitoring services.
(2) Anesthesia practitioner, for the purpose of anesthesia time, means a physician who performs the anesthesia service alone, a CRNA who is not medically directed who performs the anesthesia service alone, or a medically directed CRNA.
(3) Anesthesia time means the time during which an anesthesia practitioner is present with the patient. It starts when the anesthesia practitioner begins to prepare the patient for anesthesia services and ends when the anesthesia practitioner is no longer furnishing anesthesia services to the beneficiary, that is, when the beneficiary may be placed safely under postoperative care. Anesthesia time is a continuous time period from the start of anesthesia to the end of an anesthesia service. In counting anesthesia time, the anesthesia practitioner can add blocks of anesthesia time around an interruption in anesthesia time as long as the anesthesia practitioner is furnishing continuous anesthesia care within the time periods around the interruption.
(b) Determinations of payment amount—Basic rule. For anesthesia services performed, medically directed, or medically supervised by a physician, CMS pays the lesser of the actual charge or the anesthesia fee schedule amount.
(1) The carrier bases the fee schedule amount for an anesthesia service on the product of the sum of allowable base and time units and an anesthesia-specific CF. The carrier calculates the time units from the anesthesia time reported by the anesthesia practitioner for the anesthesia procedure. The physician who fulfills the conditions for medical direction in §415.110 (Conditions for payment: Anesthesiology services) reports the same anesthesia time as the medically-directed CRNA.
(2) CMS furnishes the carrier with the base units for each anesthesia procedure code. The base units are derived from the 1988 American Society of Anesthesiologists' Relative Value Guide except that the number of base units recognized for anesthesia services furnished during cataract or iridectomy surgery is four units.
(3) Modifier units are not allowed. Modifier units include additional units charged by a physician or a CRNA for patient health status, risk, age, or unusual circumstances.
(c) Physician personally performs the anesthesia procedure. (1) CMS considers an anesthesia service to be personally performed under any of the following circumstances:
(i) The physician performs the entire anesthesia service alone.
(ii) The physician establishes an attending physician relationship in one or two concurrent cases involving an intern or resident and the service was furnished before January 1, 1994.
(iii) The physician establishes an attending physician relationship in one case involving an intern or resident and the service was furnished on or after January 1, 1994 but prior to January 1, 1996. For services on or after January 1, 1996, the physician must be the teaching physician as defined in §§415.170 through 415.184 of this chapter.
(iv) The physician and the CRNA or AA are involved in a single case and the services of each are found to be medically necessary.
(v) The physician is continuously involved in a single case involving a student nurse anesthetist.
(vi) The physician is continuously involved in a single case involving a CRNA or AA and the service was furnished prior to January 1, 1998.
(2) CMS determines the fee schedule amount for an anesthesia service personally performed by a physician on the basis of an anesthesia-specific fee schedule CF and unreduced base units and anesthesia time units. One anesthesia time unit is equivalent to 15 minutes of anesthesia time, and fractions of a 15-minute period are recognized as fractions of an anesthesia time unit.
(d) Anesthesia services medically directed by a physician. (1) CMS considers an anesthesia service to be medically directed by a physician if:
(i) The physician performs the activities described in §415.110 of this chapter.
(ii) The physician directs qualified individuals involved in two, three, or four concurrent cases.
(iii) Medical direction can occur for a single case furnished on or after January 1, 1998 if the physician performs the activities described in §415.110 of this chapter and medically directs a single CRNA or AA.
(2) The rules for medical direction differ for certain time periods depending on the nature of the qualified individual who is directed by the physician. If more than two procedures are directed on or after January 1, 1994, the qualified individuals could be AAs, CRNAs, interns, or residents. The medical direction rules apply to student nurse anesthetists only if the physician directs two concurrent cases, each of which involves a student nurse anesthetist or the physician directs one case involving a student nurse anesthetist and the other involving a CRNA, AA, intern, or resident.
(3) Payment for medical direction is based on a specific percentage of the payment allowance recognized for the anesthesia service personally performed by a physician alone. The following percentages apply for the years specified:
(i) CY 1994—60 percent of the payment allowance for personally performed procedures.
(ii) CY 1995—57.5 percent of the payment allowance for personally performed services.
(iii) CY 1996—55 percent of the payment allowance for personally performed services.
(iv) CY 1997—52.5 percent of the payment allowance for personally performed services.
(v) CY 1998 and thereafter—50 percent of the payment allowance for personally performed services.
(e) Physicians involved with two concurrent cases with residents. The physician can bill base units and time units based on the amount of time the physician is actually present with the resident during each of two concurrent cases furnished on or after January 1, 2004.
(1) To bill the base units, the physician must be present with the resident during the pre- and post-anesthesia care included in the base units.
(2) If the physician is not present with the resident during pre- and post-anesthesia care, then the physician may bill the case as a medically directed case in accordance with paragraph (d) of this section.
(f) Physician medically supervises anesthesia services. If the physician medically supervises more than four concurrent anesthesia services, CMS bases the fee schedule amount on an anesthesia-specific CF and three base units. This represents payment for the physician's involvement in the pre-surgical anesthesia services.
(g) Payment for medical or surgical services furnished by a physician while furnishing anesthesia services. (1) CMS allows separate payment under the fee schedule for certain reasonable and medically necessary medical or surgical services furnished by a physician while furnishing anesthesia services to the patient. CMS makes payment for these services in accordance with the general physician fee schedule rules in §414.20. These services are described in program operating instructions.
(2) CMS makes no separate payment for other medical or surgical services, such as the pre-anesthetic examination of the patient, pre- or post-operative visits, or usual monitoring functions, that are ordinarily included in the anesthesia service.
(h) Physician involved in multiple anesthesia services. If the physician is involved in multiple anesthesia services for the same patient during the same operative session, the carrier makes payment according to the base unit associated with the anesthesia service having the highest base unit value and anesthesia time that encompasses the multiple services. The carrier makes payment for add-on anesthesia codes according to program operating instructions.
[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 58 FR 63687, Dec. 2, 1993; 60 FR 63177, Dec. 8, 1995; 64 FR 59441, Nov. 2, 1999; 67 FR 80041, Dec. 31, 2002; 68 FR 63261, Nov. 7, 2003]
§ 414.48 Limits on actual charges of nonparticipating suppliers.
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(a) General rule. A supplier, as defined in §400.202 of this chapter, who is nonparticipating and does not accept assignment may charge a beneficiary an amount up to the limiting charge described in paragraph (b) of this section.
(b) Specific limits. For items or services paid under the physician fee schedule, the limiting charge is 115 percent of the fee schedule amount for nonparticipating suppliers. For items or services CMS excludes from payment under the physician fee schedule (in accordance with section 1848 (j)(3) of the Act), the limiting charge is 115 percent of 95 percent of the payment basis applicable to participating suppliers as calculated in §414.20(b).
[58 FR 63687, Dec. 2, 1993, as amended at 62 FR 59102, Oct. 31, 1997]
§ 414.50 Physician billing for purchased diagnostic tests.
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(a) General rule. For services covered under section 1861(s)(3) of the Act and paid for under this part 414 subpart A, if a physician bills for a diagnostic test performed by an outside supplier, the payment to the physician less the applicable deductibles and coinsurance may not exceed the lowest of the following amounts:
(1) The supplier's net charge to the physician.
(2) The physician's actual charge.
(3) The fee schedule amount for the test that would be allowed if the supplier billed directly.
(b) Restriction on payment. The physician must identify the supplier and indicate the supplier's net charge for the test. If the physician fails to provide this information, CMS makes no payment to the physician and the physician may not bill the beneficiary.
(1) Physicians who accept Medicare assignment may bill beneficiaries for only the applicable deductibles and coinsurance.
(2) Physicians who do not accept Medicare assignment may not bill the beneficiary more than the payment amount described in paragraph (a) of this section.
[56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. 15, 1992, as amended at 63 FR 34328, June 24, 1998]
§ 414.52 Payment for physician assistants' services.
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Allowed amounts for the services of a physician assistant furnished beginning January 1, 1992 and ending December 31, 1997, may not exceed the limits specified in paragraphs (a) through (c) of this section. Allowed amounts for the services of a physician assistant furnished beginning January 1, 1998, may not exceed the limits specified in paragraph (d) of this section.
(a) For assistant-at-surgery services, 65 percent of the amount that would be allowed under the physician fee schedule if the assistant-at-surgery service was furnished by a physician.
(b) For services (other than assistant-at-surgery services) furnished in a hospital, 75 percent of the physician fee schedule amount for the service.
(c) For all other services, 85 percent of the physician fee schedule amount for the service.
(d) For services (other than assistant-at-surgery services) furnished beginning January 1, 1998, 85 percent of the physician fee schedule amount for the service. For assistant-at-surgery services, 85 percent of the physician fee schedule amount that would be allowed under the physician fee schedule if the assistant-at-surgery service were furnished by a physician.
[56 FR 59624, Nov. 25, 1991; 57 FR 42492, Sept. 15, 1992, as amended at 63 FR 58911, Nov. 2, 1998]
§ 414.54 Payment for certified nurse-midwives' services.
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For services furnished after December 31, 1991, allowed amounts under the fee schedule established under section 1833(a)(1)(K) of the Act for the payment of certified nurse-midwife services may not exceed 65 percent of the physician fee schedule amount for the service.
§ 414.56 Payment for nurse practitioners' and clinical nurse specialists' services.
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(a) Rural areas. For services furnished beginning January 1, 1992 and ending December 31, 1997, allowed amounts for the services of a nurse practitioner or a clinical nurse specialist in a rural area (as described in section 1861(s)(2)(K)(iii) of the Act) may not exceed the following limits:
(1) For services furnished in a hospital (including assistant-at-surgery services), 75 percent of the physician fee schedule amount for the service.
(2) For all other services, 85 percent of the physician fee schedule amount for the service.
(b) Non-rural areas. For services furnished beginning January 1, 1992 and ending December 31, 1997, allowed amounts for the services of a nurse practitioner or a clinical nurse specialist in a nursing facility may not exceed 85 percent of the physician fee schedule amount for the service.
(c) Beginning January 1, 1998. For services (other than assistant-at-surgery services) furnished beginning January 1, 1998, allowed amounts for the services of a nurse practitioner or clinical nurse specialist may not exceed 85 percent of the physician fee schedule amount for the service. For assistant-at-surgery services, allowed amounts for the services of a nurse practitioner or clinical nurse specialist may not exceed 85 percent of the physician fee schedule amount that would be allowed under the physician fee schedule if the assistant-at-surgery service were furnished by a physician.
[63 FR 58911, Nov. 2, 1998]
§ 414.58 Payment of charges for physician services to patients in providers.
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(a) Payment under the physician fee schedule. In addition to the special conditions for payment in §§415.100 through 415.130, and §415.190 of this chapter, CMS establishes payment for physician services to patients in providers under the physician fee schedule in accordance with §§414.1 through 414.48.
(b) Teaching hospitals. Services furnished by physicians in teaching hospitals may be made on a reasonable cost basis set forth in §415.162 of this chapter if the hospital exercises the election described in §415.160 of this chapter.
[56 FR 59624, Nov. 25, 1991, as amended at 57 FR 42492, Sept. 15, 1992; 60 FR 63189, Dec. 8, 1995]
§ 414.60 Payment for the services of CRNAs.
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(a) Basis for payment. The allowance for the anesthesia service furnished by a CRNA, medically directed or not medically directed, is based on allowable base and time units as defined in §414.46(a). Beginning with CY 1994—
(1) The allowance for an anesthesia service furnished by a medically directed CRNA is based on a fixed percentage of the allowance recognized for the anesthesia service personally performed by the physician alone, as specified in §414.46(d)(3); and
(2) The CF for an anesthesia service furnished by a CRNA not directed by a physician may not exceed the CF for a service personally performed by a physician.
(b) To whom payment may be made. Payment for an anesthesia service furnished by a CRNA may be made to the CRNA or to any individual or entity (such as a hospital, critical access hospital, physician, group practice, or ambulatory surgical center) with which the CRNA has an employment or contract relationship that provides for payment to be made to the individual or entity.
(c) Condition for payment. Payment for the services of a CRNA may be made only on an assignment related basis, and any assignment accepted by a CRNA is binding on any other person presenting a claim or request for payment for the service.
[60 FR 63178, Dec. 8, 1995, as amended at 62 FR 46037, Aug. 29, 1997; 64 FR 59441, Nov. 2, 1999]
§ 414.62 Fee schedule for clinical psychologist services.
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The fee schedule for clinical psychologist services is set at 100 percent of the amount determined for corresponding services under the physician fee schedule.
[62 FR 59102, Oct. 31, 1997]
§ 414.63 Payment for outpatient diabetes self-management training.
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(a) Payment under the physician fee schedule. Except as provided in paragraph (d) of this section, payment for outpatient diabetes self-management training is made under the physician fee schedule in accordance with §§414.1 through 414.48.
(b) To whom payment may be made. Payment may be made to an entity approved by CMS to furnish outpatient diabetes self-management training in accordance with part 410, subpart H of this chapter.
(c) Limitation on payment. Payment may be made for training sessions actually attended by the beneficiary and documented on attendance sheets.
(d) Payments made to those not paid under the physician fee schedule. Payments may be made to other entities not routinely paid under the physician fee schedule, such as hospital outpatient departments, ESRD facilities, and DME suppliers. The payment equals the amounts paid under the physician fee schedule.
(e) Other conditions for fee-for-service payment. The beneficiary must meet the following conditions:
(1) Has not previously received initial training for which Medicare payment was made under this benefit.
(2) Is not receiving services as an inpatient in a hospital, SNF, hospice, or nursing home.
(3) Is not receiving services as an outpatient in an RHC or FQHC.
[65 FR 83153, Dec. 29, 2000]
§ 414.64 Payment for medical nutrition therapy.
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(a) Payment under the physician fee schedule. Medicare payment for medical nutrition therapy is made under the physician fee schedule in accordance with subpart B of this part. Payment to non-physician professionals, as specified in paragraph (b) of this section, is the lesser of the actual charges or 80 percent of 85 percent of the physician fee schedule amount.
(b) To whom payment may be made. Payment may be made to a registered dietician or nutrition professional qualified to furnish medical nutrition therapy in accordance with part 410, subpart G of this chapter.
(c) Effective date of payment. Medicare pays suppliers of medical nutrition therapy on or after the effective date of enrollment of the supplier at the carrier.
(d) Limitation on payment. Payment is made only for documented nutritional therapy sessions actually attended by the beneficiary.
(e) Other conditions for fee-for-service payment. Payment is made only if the beneficiary:
(1) Is not an inpatient of a hospital, SNF, nursing home, or hospice.
(2) Is not receiving services in an RHC, FQHC or ESRD dialysis facility.
[66 FR 55332, Nov. 1, 2001]
§ 414.65 Payment for telehealth services.
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(a) Professional service. Medicare payment for the professional service via an interactive telecommunications system is made according to the following limitations:
(1) The Medicare payment amount for office or other outpatient visits, consultation, individual psychotherapy, psychiatric diagnostic interview examination, pharmacologic management, end stage renal disease related services included in the monthly capitation payment (except for one visit per month to examine the access site), and individual medical nutrition therapy furnished via an interactive telecommunications system is equal to the current fee schedule amount applicable for the service of the physician or practitioner.
(2) Only the physician or practitioner at the distant site may bill and receive payment for the professional service via an interactive telecommunications system.
(3) Payments made to the physician or practitioner at the distant site, including deductible and coinsurance, for the professional service may not be shared with the referring practitioner or telepresenter.
(b) Originating site facility fee. For telehealth services furnished on or after October 1, 2001:
(1) For services furnished on or after October 1, 2001 through December 31, 2002, the payment amount to the originating site is the lesser of the actual charge or the originating site facility fee of $20. For services furnished on or after January 1 of each subsequent year, the facility fee for the originating site will be updated by the Medicare Economic Index (MEI) as defined in section 1842(i)(3) of the Act.
(2) Only the originating site may bill for the originating site facility fee and only on an assignment-related basis. The distant site physician or practitioner may not bill for or receive payment for facility fees associated with the professional service furnished via an interactive telecommunications system.
(c) Deductible and coinsurance apply. The payment for the professional service and originating site facility fee is subject to the coinsurance and deductible requirements of sections 1833(a)(1) and (b) of the Act.
(d) Assignment required for physicians, practitioners, and originating sites. Payment to physicians, practitioners, and originating sites is made only on an assignment-related basis.
(e) Sanctions. A distant site practitioner or originating site facility may be subject to the applicable sanctions provided for in chapter IV, part 402 and chapter V, parts 1001, 1002, and 1003 of this title if he or she does any of the following:
(1) Knowingly and willfully bills or collects for services in violation of the limitation of this section.
(2) Fails to timely correct excess charges by reducing the actual charge billed for the service in an amount that does not exceed the limiting charge for the service or fails to timely refund excess collections.
(3) Fails to submit a claim on a standard form for services provided for which payment is made on a fee schedule basis.
(4) Imposes a charge for completing and submitting the standard claims form.
[66 FR 55332, Nov. 1, 2001, as amended at 67 FR 80041, Dec. 31, 2003; 69 FR 66424, Nov. 15, 2004; 70 FR 70332, Nov. 21, 2005]
§ 414.66 Incentive payments for physician scarcity areas.
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(a) Definition. As used in this section, the following definitions apply.
Physician scarcity area is defined as an area with a shortage of primary care physicians or specialty physicians to the Medicare population in that area.
Primary care physician is defined as a general practitioner, family practice practitioner, general internist, obstetrician or gynecologist.
(b) Physicians' services furnished to a beneficiary in a Physician Scarcity Area (PSA) for primary or specialist care are eligible for a 5 percent incentive payment.
(c) Primary care physicians furnishing services in primary care PSAs are entitled to an additional 5 percent incentive payment above the amount paid under the physician fee schedule for their professional services furnished on or after January 1, 2005 and before January 1, 2008.
(d) Physicians, as defined in section 1861(r)(1) of the Act, furnishing services in specialist care PSAs are entitled to an additional 5 percent payment above the amount paid under the physician fee schedule for their professional services furnished on or after January 1, 2005 and before January 1, 2008.
[69 FR 66424, Nov. 15, 2004]
§ 414.67 Incentive payments for Health Professional Shortage Areas.
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(a) Physicians' services furnished to a beneficiary in a geographic-based Health Professional Shortage Area (HPSA) are eligible for a 10 percent incentive payment above the amount paid for their professional services under the physician fee schedule.
(b) Physicians furnishing services in a geographic-based primary medical care HPSA are entitled to a 10 percent incentive payment above the amount paid for their professional services under the physician fee schedule.
(c) Psychiatrists furnishing services in a mental health HPSA are entitled to a 10 percent incentive payment above the amount paid for their professional services under the physician fee schedule. (The only physicians eligible to receive the 10 percent incentive payment in mental health HPSAs that do not overlap with primary care HPSAs are psychiatrists.)
[69 FR 66424, Nov. 15, 2004]
Subpart C—Fee Schedules for Parenteral and Enteral Nutrition (PEN) Nutrients, Equipment and Supplies
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Source: 66 FR 45176, Aug. 28, 2001, unless otherwise noted.
§ 414.100 Purpose.
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This subpart implements fee schedules for PEN items and services as authorized by section 1842(s) of the Act.
§ 414.102 General payment rules.
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(a) General rule. For items and services furnished on or after January 1, 2002, Medicare pays for the items and services as described in paragraph (b) of this section on the basis of 80 percent of the lesser of—
(1) The actual charge for the item or service; or
(2) The fee schedule amount for the item or service, as determined in accordance with §§414.104.
(b) Payment classification. (1) CMS or the carrier determines fee schedules for Parenteral and enteral nutrition (PEN) nutrients, equipment, and supplies, as specified in §414.104.
(2) CMS designates the specific items and services in each category through program instructions.
(c) Updating the fee schedule amounts. For each year subsequent to 2002, the fee schedule amounts of the preceding year are updated by the percentage increase in the CPI-U for the 12-month period ending with June of the preceding year.
§ 414.104 PEN Items and Services.
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(a) Payment Rules. Payment for PEN items and services is made in a lump sum for nutrients and supplies that are purchased and on a monthly basis for equipment that is rented.
(b) Fee schedule amount. The fee schedule amount for payment for an item or service furnished in 2002 is the lesser of—
(i) The reasonable charge from 1995; or
(ii) The reasonable charge that would have been used in determining payment for 2002.
Subpart D—Payment for Durable Medical Equipment and Prosthetic and Orthotic Devices
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§ 414.200 Purpose.
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This subpart implements sections 1834 (a) and (h) of the Act by specifying how payments are made for the purchase or rental of new and used durable medical equipment and prosthetic and orthotic devices for Medicare beneficiaries.
[57 FR 57689, Dec. 7, 1992]
§ 414.202 Definitions.
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For purposes of this subpart, the following definitions apply:
Covered item update means the percentage increase in the consumer price index for all urban consumers (U.S. city average) (CPI-U) for the 12-month period ending with June of the previous year.
Durable medical equipment means equipment, furnished by a supplier or a home health agency that—
(1) Can withstand repeated use;
(2) Is primarily and customarily used to serve a medical purpose;
(3) Generally is not useful to an individual in the absence of an illness or injury; and
(4) Is appropriate for use in the home. (See §410.38 of this chapter for a description of when an institution qualifies as a home.)
Prosthetic and orthotic devices means—
(1) Devices that replace all or part of an internal body organ, including ostomy bags and supplies directly related to ostomy care, and replacement of such devices and supplies;
(2) One pair of conventional eyeglasses or contact lenses furnished subsequent to each cataract surgery with insertion of an intraocular lens; and
(3) Leg, arm, back, and neck braces, and artificial legs, arms, and eyes, including replacements if required because of a change in the beneficiary's physical condition.
The following are neither prosthetic nor orthotic devices—
(1) Parenteral and enteral nutrients, supplies, and equipment;
(2) Intraocular lenses;
(3) Medical supplies such as catheters, catheter supplies, ostomy bags, and supplies related to ostomy care that are furnished by an HHA as part of home health services under §409.40(e) of this chapter;
(4) Dental prostheses.
Region means those carrier service areas administered by CMS regional offices.
[57 FR 57689, Dec. 7, 1992]
§ 414.210 General payment rules.
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(a) General rule. For items furnished on or after January 1, 1989, except as provided in paragraphs (c) and (d) of this section, Medicare pays for durable medical equipment, prosthetics and orthotics, including a separate payment for maintenance and servicing of the items as described in paragraph (e) of this section, on the basis of 80 percent of the lesser of—
(1) The actual charge for the item;
(2) The fee schedule amount for the item, as determined in accordance with the provisions of §§414.220 through 414.232.
(b) Payment classification. (1) The carrier determines fee schedules for the following classes of equipment and devices:
(i) Inexpensive or routinely purchased items, as specified in §414.220.
(ii) Items requiring frequent and substantial servicing, as specified in §414.222.
(iii) Certain customized items, as specified in §414.224.
(iv) Oxygen and oxygen equipment, as specified in §414.226.
(v) Prosthetic and orthotic devices, as specified in §414.228.
(vi) Other durable medical equipment (capped rental items), as specified in §414.229.
(vii) Transcutaneous electrical nerve stimulators (TENS), as specified in §414.232.
(2) CMS designates the items in each class of equipment or device through its program instructions.
(c) Exception for certain HHAs. Public HHAs and HHAs that furnish services or items free-of-charge or at nominal prices to a significant number of low-income patients, as defined in §413.13(a) of this chapter, are paid on the basis of 80 percent of the fee schedule amount determined in accordance with the provision of §§414.220 through 414.230.
(d) Prohibition on special limits. For items furnished on or after January 1, 1989 and before January 1, 1991, neither CMS nor a carrier may establish a special reasonable charge for items covered under this subpart on the basis of inherent reasonableness as described in §405.502(g) of this chapter.
(e) Maintenance and servicing—(1) General rule. Except as provided in paragraph (e)(2) of this section, the carrier pays the reasonable and necessary charges for maintenance and servicing of purchased equipment. Reasonable and necessary charges are those made for parts and labor not otherwise covered under a manufacturer's or supplier's warranty. Payment is made, as needed, in a lump sum based on the carrier's consideration of the item. Payment is not made for maintenance and servicing of a rented item other than the maintenance and servicing fee for other durable medical equipment, as described in §414.229(e).
(2) Exception. For items purchased on or after June 1, 1989, no payment is made under the provisions of paragraph (e)(1) of this section for the maintenance and servicing of:
(i) Items requiring frequent and substantial servicing, as defined in §414.222(a);
(ii) Capped rental items, as defined in §414.229(a), that are not purchased in accordance with §414.229(d); and
(iii) Oxygen equipment, as defined in §414.226.
(f) Replacement of equipment. Except as provided in §414.229(g), if a purchased item of DME or a prosthetic or orthotic device paid for under this subpart has been in continuous use by the patient for the equipment's reasonable useful lifetime or if the carrier determines that the item is lost or irreparably damaged, the patient may elect to obtain a new piece of equipment.
(1) The reasonable useful lifetime of DME or prosthetic and orthotic devices is determined through program instructions. In the absence of program instructions, carriers may determine the reasonable useful lifetime of equipment but in no case can it be less than 5 years. Computation is based on when the equipment is delivered to the beneficiary, not the age of the equipment.
(2) If the beneficiary elects to obtain replacement equipment, payment is made on a purchase basis.
[57 FR 57689, Dec. 7, 1992]
§ 414.220 Inexpensive or routinely purchased items.
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(a) Definitions. (1) Inexpensive equipment means equipment the average purchase price of which did not exceed $150 during the period July 1986 through June 1987.
(2) Routinely purchased equipment means equipment that was acquired by purchase on a national basis at least 75 percent of the time during the period July 1986 through June 1987.
(3) Accessories. Effective January 1, 1994, accessories used in conjunction with a nebulizer, aspirator, or ventilator excluded from §414.222 meet the definitions of “inexpensive equipment” and “routinely purchased equipment” in paragraphs (a)(1) and (a)(2) of this section, respectively.
(b) Payment rules. (1) Subject to the limitation in paragraph (b)(3) of this section, payment for inexpensive and routinely purchased items is made on a rental basis or in a lump sum amount for purchase of the item based on the applicable fee schedule amount.
(2) Effective January 1, 1994, payment for ostomy supplies, tracheostomy supplies, urologicals, and surgical dressings not furnished as incident to a physician's professional service or furnished by an HHA is made using the methodology for the inexpensive and routinely purchased class.
(3) The total amount of payments made for an item may not exceed the fee schedule amount recognized for the purchase of that item.
(c) Fee schedule amount for 1989 and 1990. The fee schedule amount for payment of purchase or rental of inexpensive or routinely purchased items furnished in 1989 and 1990 is the local payment amount determined as follows:
(1) The carrier determines the average reasonable charge for inexpensive or routinely purchased items that were furnished during the period July 1, 1986 through June 30, 1987 based on the mean of the carrier's allowed charges for the item. A separate determination of an average reasonable charge is made for rental equipment, new purchased equipment, and used purchased equipment.
(2) The carrier adjusts the amount determined under paragraph (c)(1) of this section by the change in the level of the CPI-U for the 6-month period ending December 1987.
(d) Updating the local payment amounts for years after 1990. For each year subsequent to 1990, the local payment amounts of the preceding year are increased or decreased by the covered item update. For 1991 and 1992, the covered item update is reduced by 1 percentage point.
(e) Calculating the fee schedule amounts for years after 1990. For years after 1990, the fee schedule amounts are equal to the national limited payment amount.
(f) Calculating the national limited payment amount. The national limited payment amount is computed as follows:
(1) The 1991 national limited payment amount is equal to:
(i) 100 percent of the local payment amount if the local payment amount is neither greater than the weighted average nor less than 85 percent of the weighted average of all local payment amounts;
(ii) The sum of 67 percent of the local payment amount plus 33 percent of the weighted average of all local payment amounts if the local payment amount exceeds the weighted average of all local payment amounts; or
(iii) The sum of 67 percent of the local payment amount plus 33 percent of 85 percent of the weighted average of all local payment amounts if the local payment amount is less than 85 percent of the weighted average of all local payment amounts.
(2) The 1992 national limited payment amount is equal to:
(i) 100 percent of the local payment amount if the local payment amount is neither greater than the weighted average nor less than 85 percent of the weighted average of all local payment amounts;
(ii) The sum of 33 percent of the local payment amount plus 67 percent of the weighted average of all local payment amounts if the local payment amount exceeds the weighted average; or
(iii) The sum of 33 percent of the local payment amount plus 67 percent of 85 percent of the weighted average of all local payment amounts if the local payment amount is less than 85 percent of the weighted average.
(3) For 1993, the national limited payment amount is equal to one of the following:
(i) 100 percent of the local payment amount if the local payment amount is neither greater than the weighted average nor less than 85 percent of the weighted average of all local payment amounts.
(ii) 100 percent of the weighted average of all local payment amounts if the local payment amount exceeds the weighted average of all local payment amounts.
(iii) 85 percent of the weighted average of all local payment amounts if the local payment amount is less than 85 percent of the weighted average of all local payment amounts.
(4) For 1994 and subsequent years, the national limited payment amount is equal to one of the following:
(i) If the local payment amount is not in excess of the median, nor less than 85 percent of the median, of all local payment amounts—100 percent of the local payment amount.
(ii) If the local payment amount exceeds the median—100 percent of the median of all local payment amounts.
(iii) If the local payment amount is less than 85 percent of the median—85 percent of the median of all local payment amounts.
(g) Payment for surgical dressings. For surgical dressings furnished after December 31, 1993, the national limited payment amount is computed based on local payment amounts using average reasonable charges for the 12-month period ending December 31, 1992, increased by the covered item updates for 1993 and 1994.
[57 FR 57689, Dec. 7, 1992, as amended at 60 FR 35497, July 10, 1995]
§ 414.222 Items requiring frequent and substantial servicing.
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(a) Definition. Items requiring frequent and substantial servicing in order to avoid risk to the beneficiary's health are the following:
(1) Ventilators (except those that are either continuous airway pressure devices or respiratory assist devices with bi-level pressure capability with or without a backup rate, previously referred to as “intermittent assist devices with continuous airway pressure devices”).
(2) Continuous and intermittent positive pressure breathing machines.
(3) Continuous passive motion machines.
(4) Other items specified in CMS program instructions.
(5) Other items identified by the carrier.
(b) Payment rule. Rental payments for items requiring frequent and substantial servicing are made on a monthly basis, and continue until medical necessity ends.
(c) Fee schedule amount for 1989 and 1990. The fee schedule amount for items requiring frequent and substantial servicing is the local payment amount determined as follows:
(1) The carrier determines the average reasonable charge for rental of items requiring frequent and substantial servicing that were furnished during the period July 1, 1986 through June 30, 1987 based on the mean of the carrier's allowed charges for the item.
(2) The carrier adjusts the amounts determined under paragraph (c)(1) of this section by the change in the level of the CPI-U for the 6-month period ending December 1987.
(d) Updating the fee schedule amounts for years after 1990. For years after 1990, the fee schedules are determined using the methodology contained in paragraphs (d), (e), and (f) of §414.220.
(e) Transition to other payment classes. For purposes of calculating the 15-month rental period, beginning January 1, 1994, if an item has been paid for under the frequent and substantial servicing class and is subsequently paid for under another payment class, the rental period begins with the first month of continuous rental, even if that period began before January 1, 1994. For example, if the rental period began on July 1, 1993, the carrier must use this date as beginning the first month of rental. Likewise, for purposes of calculating the 10-month purchase option, the rental period begins with the first month of continuous rental without regard to when that period started. For example, if the rental period began in August 1993, the 10-month purchase option must be offered to the beneficiary in May 1994, the tenth month of continuous rental.
[57 FR 57690, Dec. 7, 1992, as amended at 60 FR 35497, July 10, 1995; 71 FR 4525, Jan. 27, 2006]
§ 414.224 Customized items.
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(a) Criteria for a customized item. To be considered a customized item for payment purposes under paragraph (b) of this section, a covered item (including a wheelchair) must be uniquely constructed or substantially modified for a specific beneficiary according to the description and orders of a physician and be so different from another item used for the same purpose that the two items cannot be grouped together for pricing purposes.
(b) Payment rule. Payment is made on a lump sum basis for the purchase of a customized item based on the carrier's individual consideration and judgment of a reasonable payment amount for each customized item. The carrier's individual consideration takes into account written documentation on the costs of the item including at least the cost of labor and materials used in customizing an item.
[56 FR 65998, Dec. 20, 1991, as amended at 58 FR 34919, June 30, 1993]
§ 414.226 Oxygen and oxygen equipment.
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(a) Payment rules. (1) Payment for rental of oxygen equipment and purchase of oxygen contents is made based on a monthly fee schedule amount.
(2) Monthly fee schedule payments continue until medical necessity ends.
(b) Monthly fee schedule amount. (1) Monthly fee schedule amounts are separately calculated for the following items:
(i) Stationary oxygen equipment and oxygen contents (stationary and portable oxygen contents).
(ii) Portable oxygen equipment only.
(iii) Stationary and portable oxygen contents only.
(iv) Portable oxygen contents only.
(2) For 1989 and 1990, the monthly fee schedule amounts are the local payment amounts determined as follows:
(i) The carrier determines the base local average monthly payment rate equal to the total reasonable charges for the item for the 12-month period ending December 1986 divided by the total number of months for all beneficiaries receiving the item for the same period. In determining the local average monthly payment rate, the following limitations apply:
(A) Purchase charges for oxygen systems are not included as items classified under paragraph (b)(1)(i) of this section.
(B) Purchase charges for portable equipment are not included as items classified under paragraph (b)(1)(ii) of this section.
(ii) The carrier determines the local monthly payment amount equal to 0.95 times the base local average monthly payment amount adjusted by the change in the CPI-U for the six-month period ending December 1987.
(3) For years after 1990, the fee schedule amounts are determined using the methodology contained in §414.220 (d), (e), and (f).
(c) Application of monthly fee schedule amounts. (1) The fee schedule amount for items described in paragraph (b)(1)(i) of this section is paid when the beneficiary rents a stationary oxygen system.
(2) Subject to the limitation set forth in paragraph (d)(2) of this section, the fee schedule amount for items described in paragraph (b)(1)(ii) of this section is paid when the beneficiary rents a portable oxygen system.
(3) The fee schedule amount for items described in paragraph (b)(1)(iii) of this section is paid when the beneficiary owns a stationary gaseous or liquid oxygen system.
(4) The fee schedule amount for items described in paragraph (b)(1)(iv) of this section is paid when the beneficiary owns or rents a portable gaseous or portable liquid oxygen system and uses either a stationary oxygen concentrator or no stationary oxygen system.
(d) Volume adjustments: (1) The fee schedule amount for an item described in paragraph (b)(1)(i) of this section is adjusted as follows:
(i) If the attending physician prescribes an oxygen flow rate exceeding four liters per minute, the fee schedule amount is increased by 50 percent, subject to the limit in paragraph (d)(2) of this section.
(ii) If the attending physician prescribes an oxygen flow rate of less than one liter per minute, the fee schedule amount is decreased by 50 percent.
(2) If portable oxygen equipment is used and the prescribed oxygen flow rate exceeds four liters per minute, the total fee schedule amount recognized for payment is limited to the higher of—
(i) The sum of the monthly fee schedule amount for the items described in paragraphs (b)(1)(i) and (ii) of this section; or
(ii) The adjusted fee schedule amount described in paragraph (d)(1)(i) of this section.
(3) In establishing the volume adjustment for those beneficiaries whose physicians prescribe varying flow rates, the following rules apply:
(i) If the prescribed flow rate is different for stationary oxygen equipment than for portable oxygen equipment, the flow rate for the stationary equipment is used.
(ii) If the prescribed flow rate is different for the patient at rest than for the patient at exercise, the flow rate for the patient at rest is used.
(iii) If the prescribed flow rate is different for nighttime use and daytime use, the average of the two flow rates is used.
[57 FR 57690, Dec. 7, 1992]
§ 414.228 Prosthetic and orthotic devices.
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(a) Payment rule. Payment is made on a lump-sum basis for prosthetic and orthotic devices subject to this subpart.
(b) Fee schedule amounts. The fee schedule amount for prosthetic and orthotic devices is determined as follows:
(1) The carrier determines a base local purchase price equal to the average reasonable charge for items purchased during the period July 1, 1986 through June 30, 1987 based on the mean of the carrier's allowed charges for the item.
(2) The carrier determines a local purchase price equal to the following:
(i) For 1989 and 1990, the base local purchase price is adjusted by the change in the level of the CPI-U for the 6-month period ending December 1987.
(ii) For 1991 through 1993, the local purchase price for the preceding year is adjusted by the applicable percentage increase for the year. The applicable percentage increase is equal to 0 percent for 1991. For 1992 and 1993, the applicable percentage increase is equal to the percentage increase in the CPI-U for the 12-month period ending with June of the previous year.
(iii) For 1994 and 1995, the applicable percentage increase is 0 percent.
(iv) For all subsequent years the applicable percentage increase is equal to the percentage increase in the CPI-U for the 12-month period ending with June of the previous year.
(3) CMS determines the regional purchase price equal to the following:
(i) For 1992, the average (weighted by the relative volume of all claims among carriers) of the local purchase prices for the carriers in the region.
(ii) For 1993 and subsequent years, the regional purchase price for the preceding year adjusted by the applicable percentage increase for the year.
(4) CMS determines a purchase price equal to the following:
(i) For 1989, 1990 and 1991, 100 percent of the local purchase price.
(ii) For 1992, 75 percent of the local purchase price plus 25 percent of the regional purchase price.
(iii) For 1993, 50 percent of the local purchase price plus 50 percent of the regional purchase price.
(iv) For 1994 and subsequent years, 100 percent of the regional purchase price.
(5) For 1992 and subsequent years, CMS determines a national average purchase price equal to the unweighted average of the purchase prices determined under paragraph (b)(4) of this section for all carriers.
(6) CMS determines the fee schedule amount equal to 100 percent of the purchase price determined under paragraph (b)(4) of this section, subject to the following limitations:
(i) For 1992, the amount cannot be greater than 125 percent nor less than 85 percent of the national average purchase price determined under paragraph (b)(5) of this section.
(ii) For 1993 and subsequent years, the amount cannot be greater than 120 percent of the national average nor less than 90 percent of the national average purchase price determined under paragraph (b)(5) of this section.
[57 FR 57691, Dec. 7, 1992, as amended at 60 FR 35498, July 10, 1995]
§ 414.229 Other durable medical equipment—capped rental items.
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(a) General payment rule. Subject to the limitation set forth in paragraph (b) of this section, payment is made on a rental or purchase option basis for other durable medical equipment that is not subject to the payment provisions set forth in §§414.220 through 414.228.
(b) Fee schedule amounts for rental. (1) For 1989 and 1990, the monthly fee schedule amount for rental of other covered durable medical equipment equals 10 percent of the purchase price recognized as determined under paragraph (c) of this section subject to the following limitation: For 1989 and 1990, the fee schedule amount cannot be greater than 115 percent nor less than 85 percent of the prevailing charge, as determined under §405.504 of this chapter, established for rental of the item in January 1987, as adjusted by the change in the level of the CPI-U for the 6-month period ending December 1987.
(2) For 1991 and subsequent years, the monthly fee schedule amount for rental of other covered durable medical equipment equals 10 percent of the purchase price recognized as determined under paragraph (c) of this section for each of the first 3 months and 7.5 percent of the purchase price for each of the remaining months.
(c) Determination of purchase price. The purchase price of other covered durable medical equipment is determined as follows:
(1) For 1989 and 1990. (i) The carrier determines a base local purchase price amount equal to the average of the purchase prices submitted on an assignment-related basis of new items supplied during the 6-month period ending December 1986.
(ii) The purchase price is equal to the base local purchase price adjusted by the change in the level of the CPI-U for the 6-month period ending December 1987.
(2) For 1991. (i) The local payment amount is the purchase price for the preceding year adjusted by the covered item update for 1991 and decreased by the percentage by which the average of the reasonable charges for claims paid for all other items described in §414.229, is lower than the average of the purchase prices submitted for such items during the final 9 months of 1988.
(ii) The purchase price for 1991 is the national limited payment amount as determined using the methodology contained in §414.220(f).
(3) For years after 1991. The purchase price is determined using the methodology contained in paragraphs (d) through (f) of §414.220.
(d) Purchase option. Suppliers must offer a purchase option to beneficiaries during the 10th continuous rental month and, for power-driven wheelchairs, the purchase option must also be made available at the time the equipment is initially furnished.
(1) Suppliers must offer beneficiaries the option of purchasing power-driven wheelchairs at the time the supplier first furnishes the item. Payment must be on a lump-sum fee schedule purchase basis if the beneficiary chooses the purchase option. The purchase fee is the amount established in §414.229(c).
(2) Suppliers must offer beneficiaries the option of converting capped rental items (including power-driven wheelchairs not purchased when initially furnished) to purchased equipment during their 10th continuous rental month. Beneficiaries have one month from the date the supplier makes the offer to accept the purchase option.
(i) If the beneficiary does not accept the purchase option, payment continues on a rental basis not to exceed a period of continuous use of longer than 15 months. After 15 months of rental payments have been paid, the supplier must continue to provide the item without charge, other than a charge for maintenance and servicing fees, until medical necessity ends or Medicare coverage ceases. A period of continuous use is determined under the provisions in §414.230.
(ii) If the beneficiary accepts the purchase option, payment continues on a rental basis not to exceed a period of continuous use of longer than 13 months. On the first day after 13 continuous rental months during which payment is made, the supplier must transfer title to the equipment to the beneficiary.
(e) Payment for maintenance and servicing. (1) The carrier establishes a reasonable fee for maintenance and servicing for each rented item of other durable medical equipment. The fee may not exceed 10 percent of the purchase price recognized as determined under paragraph (c) of this section.
(2) Payment of the fee for maintenance and servicing of other durable medical equipment that is rented is made only for equipment that continues to be used after 15 months of rental payments have been made and is limited to the following:
(i) For the first 6-month period, no payments are to be made.
(ii) For each succeeding 6-month period, payment may be made during the first month of that period.
(3) Payment for maintenance and servicing DME purchased in accordance with paragraphs (d)(1) and (d)(2)(ii) of this section, is made on the basis of reasonable and necessary charges.
(f) Transition to the fee schedules. For purposes of computing the 10-month or 15-month period of continuous use for other durable medical equipment, as described in §414.230, the carrier counts the first month that the beneficiary continuously rented the equipment without regard to whether that month occurred before January 1, 1989 or after. If a beneficiary's 15-month rental period ends prior to January 1, 1989, no further purchase or rental payments are to be made except for maintenance and servicing of equipment as described in paragraph (e) of this section.
(g) Replacement of equipment. If the item of equipment has been in continuous use by the patient on either a rental or purchase basis for the equipment's useful lifetime, or if the carrier determines that the item is lost or irreparably damaged, the patient may elect to obtain a new piece of equipment.
(1) The reasonable useful lifetime of DME or prosthetic and orthotic devices is determined through program instructions. In the absence of program instructions, carriers may determine the reasonable useful lifetime of equipment but in no case can it be less than 5 years. Computation is based on when the equipment is delivered to the beneficiary, not the age of the equipment.
(2) If the beneficiary elects to obtain replacement equipment, payment is made on a rental or purchase basis in accordance with paragraph (a) of this section or on a lump-sum purchase basis if a purchase agreement had been entered into in accordance with paragraph (d) of this section.
[57 FR 57691, Dec. 7, 1992, as amended at 60 FR 35498, July 10, 1995]
§ 414.230 Determining a period of continuous use.
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(a) Scope. This section sets forth the rules that apply in determining a period of continuous use for rental of durable medical equipment.
(b) Continuous use. A period of continuous use begins with the first month of medical need and lasts until a beneficiary's medical need for a particular item of durable medical equipment ends.
(c) Temporary interruption. (1) A period of continuous use allows for temporary interruptions in the use of equipment.
(2) An interruption of not longer than 60 consecutive days plus the days remaining in the rental month in which use ceases is temporary, regardless of the reason for the interruption.
(3) Unless there is a break in medical necessity that lasts lnnger than 60 consecutive days plus the days remaining in the rental month in which use ceases, medical necessity is presumed to continue.
(d) Criteria for a new rental period. If an interruption in the use of equipment continues for more than 60 consecutive days plus the days remaining in the rental month in which use ceases, a new rental period begins if the supplier submits all of the following information—
(1) A new prescription.
(2) New medical necessity documentation.
(3) A statement describing the reason for the interruption and demonstrating that medical necessity in the prior episode ended.
(e) Beneficiary moves. A permanent or temporary move made by a beneficiary does not constitute an interruption in the period of continuous use.
(f) New equipment. If a beneficiary changes equipment or requires additional equipment based on a physician's prescription, and the new or additional equipment is found to be necessary, a new period of continuous use begins for the new or additional equipment. A new period of continuous use does not begin for base equipment that is modified by an addition.
(g) New supplier. If a beneficiary changes suppliers, a new period of continuous use does not begin.
[56 FR 50823, Oct. 9, 1991, as amended at 57 FR 57111, Dec. 3, 1992]
§ 414.232 Special payment rules for transcutaneous electrical nerve stimulators (TENS).
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(a) General payment rule. Except as provided in paragraph (b) of this section, payment for TENS is made on a purchase basis with the purchase price determined using the methodology for purchase of inexpensive or routinely purchased items as described in §414.220. The payment amount for TENS computed under §414.220(c)(2) is reduced according to the following formula:
(1) Effective April 1, 1990—the original payment amount is reduced by 15 percent.
(2) Effective January 1, 1991—the reduced payment amount in paragraph (a)(1) is reduced by 15 percent.
(3) Effective January 1, 1994—the reduced payment amount in paragraph (a)(1) is reduced by 45 percent.
(b) Exception. In order to permit an attending physician time to determine whether the purchase of the TENS is medically appropriate for a particular patient, two months of rental payments may be made in addition to the purchase price. The rental payments are equal to 10 percent of the purchase price.
[57 FR 57692, Dec. 7, 1992, as amended at 60 FR 35498, July 10, 1995]
Subpart E—Determination of Reasonable Charges Under the ESRD Program
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§ 414.300 Scope of subpart.
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This subpart sets forth criteria and procedures for payment of the following services furnished to ESRD patients:
(a) Physician services related to renal dialysis.
(b) Physician services related to renal transplantation.
(c) Home dialysis equipment, supplies, and support services.
(d) Epoetin (EPO) furnished by a supplier of home dialysis equipment and supplies to a home dialysis patient for use in the home.
[55 FR 23441, June 8, 1990, as amended at 56 FR 43710, Sept. 4, 1991; 59 FR 1285, Jan. 10, 1994]
§ 414.310 Determination of reasonable charges for physician services furnished to renal dialysis patients.
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(a) Principle. Physician services furnished to renal dialysis patients are subject to payment if the services are otherwise covered by the Medicare program and if they are considered reasonable and medically necessary in accordance with section 1862(a)(1)(A) of the Act.
(b) Scope and applicability—(1) Scope. This section pertains to physician services furnished to the following patients:
(i) Outpatient maintenance dialysis patients who dialyze—
(A) In an independent or hospital-based ESRD facility, or
(B) At home.
(ii) Hospital inpatients for which the physician elects to continue payment under the monthly capitation payment (MCP) method described in §414.314.
(2) Applicability. These provisions apply to routine professional services of physicians. They do not apply to administrative services performed by physicians, which are paid for as part of a prospective payment for dialysis services made to the facility under §413.170 of this chapter.
(c) Definitions. For purposes of this section, the following definitions apply:
Administrative services are physician services that are differentiated from routine professional services and other physician services because they are supervision, as described in the definition of “supervision of staff” of this section, or are not related directly to the care of an individual patient, but are supportive of the facility as a whole and of benefit to patients in general. Examples of administrative services include supervision of staff, staff training, participation in staff conferences and in the management of the facility, and advising staff on the procurement of supplies.
Dialysis session is the period of time that begins when the patient arrives at the facility and ends when the patient departs from the facility. In the case of home dialysis, the period begins when the patient prepares for dialysis and generally ends when the patient is disconnected from the machine. In this context, a dialysis facility includes only those parts of the building used as a facility. It does not include any areas used as a physician's office.
Medical direction, in contrast to supervision of staff, is a routine professional service that entails substantial direct involvement and the physical presence of the physician in the delivery of services directly to the patient.
Routine professional services include all physicians' services furnished during a dialysis session and all services listed in paragraph (d) of this section that meet the following requirements:
(1) They are personally furnished by a physician to an individual patient.
(2) They contribute directly to the diagnosis or treatment of an individual patient.
(3) They ordinarily must be performed by a physician.
Supervision of staff, in contrast to medical direction, is an administrative service that does not necessarily require the physician to be present at the dialysis session. It is a general activity primarily concerned with monitoring performance of and giving guidance to other health care personnel (such as nurses and dialysis technicians) who deliver services to patients.
(d) Types of routine professional services. Routine professional services include at least all of the following services when medically appropriate:
(1) Visits to the patient during dialysis, and review of laboratory test results, nurses' notes and any other medical documentation, as a basis for—
(i) Adjustment of the patient's medication or diet, or the dialysis procedure;
(ii) Prescription of medical supplies; and
(iii) Evaluation of the patient's psychosocial status and the appropriateness of the treatment modality.
(2) Medical direction of staff in delivering services to a patient during a dialysis session.
(3) Pre-dialysis and post-dialysis examinations, or examinations that could have been furnished on a pre-dialysis or post-dialysis basis.
(4) Insertion of catheters for patients who are on peritoneal dialysis and do not have indwelling catheters.
(e) Payment for routine professional services. Beginning August 7, 1990, routine professional services furnished by physicians may be paid under either the “initial method” of payment described in §414.313, (if all of the physicians at the facility elect the initial method) or under the “physician MCP method” described in §414.314. Physician services furnished after July 31, 1983 and before August 6, 1990, are payable only under the MCP method described in §414.314.
§ 414.313 Initial method of payment.
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(a) Basic rule. Under this method, the intermediary pays the facility for routine professional services furnished by physicians. Payment is in the form of an add-on to the facility's composite rate payment, which is described in part 413, subpart H of this subchapter.
(b) Services for which payment is not included in the add-on payment. (1) Physician administrative services are considered to be facility services and are paid for as part of the facility's composite rate.
(2) The carrier pays the physician or the beneficiary (as appropriate) under the reasonable charge criteria set forth in subpart E of part 405 of this chapter for the following services:
(i) Physician services that must be furnished at a time other than during the dialysis session (excluding pre-dialysis and post-dialysis examinations and examinations that could have been furnished on a pre-dialysis or post-dialysis basis), such as monthly and semi-annual examinations to review health status and treatment.
(ii) Physician surgical services other than insertion of catheters for patients who are on peritoneal dialysis and do not have indwelling catheters.
(iii) Physician services furnished to hospital inpatients who were not admitted solely to receive maintenance dialysis.
(iv) Administration of hepatitis B vaccine.
(c) Physician election of the initial method. (1) Each physician in a facility must submit to the appropriate carrier and intermediary that serve the facility a statement of election of the initial method of payment for all the ESRD facility patients that he or she attends.
(2) The initial method of payment applies to dialysis services furnished beginning with the second calendar month after the month in which all physicians in the facility elect the initial method and continues until the effective date of a termination of the election described in paragraph (d) of this section.
(d) Termination of the initial method. (1) Physicians may terminate the initial method of payment by written notice to the carrier(s) that serves each physician and to the intermediary that serves the facility.
(2) If the notice terminating the initial method is received by the carrier(s) and intermediary—
(i) On or before November 1, the effective date of the termination is January 1 of the year following the calendar year in which the termination notice is received by the carrier(s) and intermediary; or
(ii) After November 1, the effective date of the termination is January 1 of the second year after the calendar year in which the notice is received by the carrier(s) and intermediary.
(e) Determination of payment amount. The factors used in determining the add-on amount are related to program experience. They are re-evaluated periodically and may be adjusted, as determined necessary by CMS, to maintain the payment at a level commensurate with the prevailing charges of other physicians for comparable services.
(f) Publication of payment amount. Revisions to the add-on amounts are published in the Federal Register in accordance with the Department's established rulemaking procedures.
[55 FR 23441, June 8, 1990, as amended at 62 FR 43674, Aug. 15, 1997]
§ 414.314 Monthly capitation payment method.
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(a) Basic rules. (1) Under the monthly capitation payment (MCP) method, the carrier pays an MCP amount for each patient, to cover all professional services furnished by the physician, except those listed in paragraph (b) of this section.
(2) The carrier pays the MCP amount, subject to the deductible and coinsurance provisions, either to the physician if the physician accepts assignment or to the beneficiary if the physician does not accept assignment.
(3) The MCP method recognizes the need of maintenance dialysis patients for physician services furnished periodically over relatively long periods of time, and the capitation amounts are consistent with physicians' charging patterns in their localities.
(4) Payment of the capitation amount for any particular month is contingent upon the physician furnishing to the patient all physician services required by the patient during the month, except those listed in paragraph (b) of this section.
(5) Payment for physician administrative services (§414.310) is made to the dialysis facility as part of the facility's composite rate (part 413, subpart H of this subchapter) and not to the physician under the MCP.
(b) Services not included in the MCP. (1) Services that are not included in the MCP and which may be paid in accordance with the reasonable charge rules set forth in subpart E of part 405 of this chapter are limited to the following:
(i) Administration of hepatitis B vaccine.
(ii) Covered physician services furnished by another physician when the patient is not available to receive, or the attending physician is not available to furnish, the outpatient services as usual (see paragraph (b)(3) of this section).
(iii) Covered physician services furnished to hospital inpatients, including services related to inpatient dialysis, by a physician who elects not to continue to receive the MCP during the period of inpatient stay.
(iv) Surgical services, including declotting of shunts, other than the insertion of catheters for patients on maintenance peritoneal dialysis who do not have indwelling catheters.
(v) Needed physician services that are—
(A) Furnished by the physician furnishing renal care or by another physician;
(B) Not related to the treatment of the patient's renal condition; and
(C) Not furnished during a dialysis session or an office visit required because of the patient's renal condition.
(2) For the services described in paragraph (b)(1)(v) of this section, the following rules apply:
(i) The physician must provide documentation to show that the services are not related to the treatment of the patient's renal condition and that additional visits are required.
(ii) The carrier's medical staff, acting on the basis of the documentation and appropriate medical consultation obtained by the carrier, determines whether additional payment for the additional services is warranted.
(3) The MCP is reduced in proportion to the number of days the patient is—
(i) Hospitalized and the physician elects to bill separately for services furnished during hospitalization; or
(ii) Not attended by the physician or his or her substitute for any reason, including when the physician is not available to furnish patient care or when the patient is not available to receive care.
(c) Determination of payment amount. The amount of payment for the MCP is determined under the Medicare physician fee schedule described in this part 414.
[55 FR 23441, June 8, 1990, as amended at 59 FR 63463, Dec. 8, 1994; 62 FR 43674, Aug. 15, 1997]
§ 414.316 Payment for physician services to patients in training for self-dialysis and home dialysis.
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(a) For each patient, the carrier pays a flat amount that covers all physician services required to create the capacity for self-dialysis and home dialysis.
(b) CMS determines the amount on the basis of program experience and reviews it periodically.
(c) The payment is made at the end of the training course, is subject to the deductible and coinsurance provisions, and is in addition to any amounts payable under the initial or MCP methods set forth in §§414.313 and 414.314, respectively.
(d) If the training is not completed, the payment amount is proportionate to the time spent in training.
§ 414.320 Determination of reasonable charges for physician renal transplantation services.
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(a) Comprehensive payment for services furnished during a 60-day period. (1) The comprehensive payment is subject to the deductible and coinsurance provisions and is for all surgeon services furnished during a period of 60 days in connection with a renal transplantation, including the usual preoperative and postoperative care, and for immunosuppressant therapy if supervised by the transplant surgeon.
(2) Additional sums, in amounts established on the basis of program experience, may be included in the comprehensive payment for other surgery performed concurrently with the transplant operation.
(3) The amount of the comprehensive payment may not exceed the lower of the following:
(i) The actual charges made for the services.
(ii) Overall national payment levels established under the ESRD program and adjusted to give effect to variations in physician's charges throughout the nation. (These adjusted amounts are the maximum allowances in a carrier's service area for renal transplantation surgery and related services by surgeons.)
(4) Maximum allowances computed under these instructions are revised at the beginning of each calendar year to the extent permitted by the lesser of the following:
(i) Changes in the economic index as described in §405.504(a)(3)(i) of this chapter.
(ii) Percentage changes in the weighted average of the carrier's prevailing charges (before adjustment by the economic index) for—
(A) A unilateral nephrectomy; or
(B) Another medical or surgical service designated by CMS for this purpose.
(b) Other payments. Payments for covered medical services furnished to the transplant recipient by other specialists, as well as for services by the transplant surgeon after the 60-day period covered by the comprehensive payment, are made under the reasonable charge criteria set forth in §405.502 (a) through (d) of this chapter. The payments for physicians' services in connection with renal transplantations are changed on the basis of program experience and the expected advances in the medical art for this operation.
§ 414.330 Payment for home dialysis equipment, supplies, and support services.
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(a) Equipment and supplies—(1) Basic rule. Except as provided in paragraph (a)(2) of this section, Medicare pays for home dialysis equipment and supplies only under the prospective payment rates established at §413.170.
(2) Exception. If the conditions in subparagraphs (a)(2) (i) through (iv) of this section are met, Medicare pays for home analysis equipment and supplies on a reasonable charge basis in accordance with subpart E (Criteria for Determination of Reasonable Charges; Reimbursement for Services of Hospital Interns, Residents, and Supervising Physicians) of part 405, but the amount of payment may not exceed the limit for equipment and supplies in paragraph (c)(2) of this section.
(i) The patient elects to obtain home dialysis equipment and supplies from a supplier that is not a Medicare approved dialysis facility.
(ii) The patient certifies to CMS that he or she has only one supplier for all home dialysis equipment and supplies. This certification is made on CMS Form 382 (the “ESRD Beneficiary Selection” form).
(iii) In writing, the supplier—
(A) Agrees to receive Medicare payment for home dialysis supplies and equipment only on an assignment-related basis; and
(B) Certifies to CMS that it has a written agreement with one Medicare approved dialysis facility or, if the beneficiary is also entitled to military or veteran's benefits, one military or Veterans Administration hospital, for each patient. (See subpart U of part 405 of this chapter for the requirements for a Medicare approved dialysis facility.) Under the agreement, the facility or military or VA hospital agrees to the following:
(1) To furnish all home dialysis support services for each patient in accordance with subpart U (Conditions for Coverage of Suppliers of ESRD Services) of this chapter. (§410.52 sets forth the scope and conditions of Medicare Part B coverage of home dialysis services, supplies, and equipment.)
(2) To furnish institutional dialysis services and supplies. (§410.50 sets forth the scope and conditions for Medicare Part B coverage of institutional dialysis services and supplies.)
(3) To furnish dialysis-related emergency services.
(4) To arrange for a Medicare approved laboratory to perform dialysis-related laboratory tests that are covered under the composite rate established at §413.170 and to arrange for the laboratory to seek payment from the facility. The facility then includes these laboratory services in its claim for payment for home dialysis support services.
(5) To arrange for a Medicare approved laboratory to perform dialysis-related laboratory tests that are not covered under the composite rate established at §413.170 and for which the laboratory files a Medicare claim directly.
(6) To furnish all other necessary dialysis services and supplies (that is, those which are not home dialysis equipment and supplies).
(7) To satisfy all documentation, recordkeeping and reporting requirements in subpart U (Conditions for Coverage of Suppliers of ESRD Services) of this chapter. This includes maintaining a complete medical record of ESRD related items and services furnished by other parties. The facility must report, on the forms required by CMS or the ESRD network, all data for each patient in accordance with subpart U.
(iv) The facility with which the agreement is made must be located within a reasonable distance from the patient's home (that is, located so that the facility can actually furnish the needed services in a practical and timely manner, taking into account variables like the terrain, whether the patient's home is located in an urban or rural area, the availability of transportation, and the usual distances traveled by patients in the area to obtain health care services).
(b) Support services—(1) Basic rule. Except as provided in paragraph (b)(2) of this section, Medicare pays for support services only under the prospective payment rates established in §413.170 of this chapter.
(2) Exceptions. If the patient elects to obtain home dialysis equipment and supplies from a supplier that is not an approved ESRD facility, Medicare pays for support services, other than support services furnished by military or VA hospitals referred to in paragraph (a)(2)(iii)(B) of this section, under paragraphs (b)(2) (i) and (ii) of this section but in no case may the amount of payment exceed the limit for support services in paragraph (c)(1) of this section:
(i) For support services furnished by a hospital-based ESRD facility, Medicare pays on a reasonable cost basis in accordance with part 413 of this chapter.
(ii) For support services furnished by an independent ESRD facility, Medicare pays on the basis of reasonable charges that are related to costs and allowances that are reasonable when the services are furnished in an effective and economical manner.
(c) Payment limits—(1) Support services. The amount of payment for home dialysis support services is limited to the national average Medicare-allowed charge per patient per month for home dialysis support services, as determined by CMS, plus the median cost per treatment for all dialysis facilities for laboratory tests included under the composite rate, as determined by CMS, multiplied by the national average number of treatments per month.
(2) Equipment and supplies. Payment for home dialysis equipment and supplies is limited to an amount equal to the result obtained by subtracting the support services payment limit in paragraph (c)(1) of this section from the amount (or, in the case of continuous cycling peritoneal dialysis, 130 percent) of the national median payment as determined by CMS that would have been made under the prospective payment rates established in §413.170 of this chapter for hospital-based facilities.
(3) Notification of changes to the payment limits. Updated data are incorporated into the payment limits when the prospective payment rates established at §413.170 of this chapter are updated, and changes are announced by notice in the Federal Register without a public comment period. Revisions of the methodology for determining the limits are published in the Federal Register in accordance with the Department's established rulemaking procedures.
[57 FR 54187, Nov. 17, 1992]
§ 414.335 Payment for EPO furnished to a home dialysis patient for use in the home.
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(a) Payment for EPO used at home by a home dialysis patient is made only to either a Medicare approved ESRD facility or a supplier of home dialysis equipment and supplies.
(b) Payment is made in accordance with the rules set forth in §413.170 of this chapter.
[56 FR 43710, Sept. 4, 1991]
Subparts F–G [Reserved]
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Subpart F—xxx
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Link to an amendment published at 71 FR 48409, Aug. 18, 2006.
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Subpart H—Fee Schedule for Ambulance Services
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Source: 67 FR 9132, Feb. 27, 2002, unless otherwise noted.
§ 414.601 Purpose.
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This subpart implements section 1834(l) of the Act by establishing a fee schedule for the payment of ambulance services. Section 1834(l) of the Act requires that, except for services furnished by certain critical access hospitals (see §413.70(b)(5) of this chapter), payment for all ambulance services, otherwise previously payable on a reasonable charge basis or retrospective reasonable cost basis, be made under a fee schedule.
§ 414.605 Definitions.
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As used in this subpart, the following definitions apply to both land and water (hereafter collectively referred to as “ground”) ambulance services and to air ambulance services unless otherwise specified:
Advanced life support (ALS) assessment is an assessment performed by an ALS crew as part of an emergency response that was necessary because the patient's reported condition at the time of dispatch was such that only an ALS crew was qualified to perform the assessment. An ALS assessment does not necessarily result in a determination that the patient requires an ALS level of service.
Advanced life support (ALS) intervention means a procedure that is, in accordance with State and local laws, required to be furnished by ALS personnel.
Advanced life support, level 1 (ALS1) means transportation by ground ambulance vehicle, medically necessary supplies and services and either an ALS assessment by ALS personnel or the provision of at least one ALS intervention.
Advanced life support, level 2 (ALS2) means either transportation by ground ambulance vehicle, medically necessary supplies and services, and the administration of at least three medications by intravenous push/bolus or by continuous infusion, excluding crystalloid, hypotonic, isotonic, and hypertonic solutions (Dextrose, Normal Saline, Ringer's Lactate); or transportation, medically necessary supplies and services, and the provision of at least one of the following ALS procedures:
(1) Manual defibrillation/cardioversion.
(2) Endotracheal intubation.
(3) Central venous line.
(4) Cardiac pacing.
(5) Chest decompression.
(6) Surgical airway.
(7) Intraosseous line.
Advanced life support (ALS) personnel means an individual trained to the level of the emergency medical technician-intermediate (EMT-Intermediate) or paramedic. The EMT-Intermediate is defined as an individual who is qualified, in accordance with State and local laws, as an EMT-Basic and who is also qualified in accordance with State and local laws to perform essential advanced techniques and to administer a limited number of medications. The EMT-Paramedic is defined as possessing the qualifications of the EMT-Intermediate and also, in accordance with State and local laws, as having enhanced skills that include being able to administer additional interventions and medications.
Basic life support (BLS) means transportation by ground ambulance vehicle and medically necessary supplies and services, plus the provision of BLS ambulance services. The ambulance must be staffed by an individual who is qualified in accordance with State and local laws as an emergency medical technician-basic (EMT-Basic). These laws may vary from State to State. For example, only in some States is an EMT-Basic permitted to operate limited equipment on board the vehicle, assist more qualified personnel in performing assessments and interventions, and establish a peripheral intravenous (IV) line.
Conversion factor (CF) is the dollar amount established by CMS that is multiplied by relative value units to produce ground ambulance service base rates.
Emergency response means responding immediately at the BLS or ALS1 level of service to a 911 call or the equivalent in areas without a 911 call system. An immediate response is one in which the ambulance entity begins as quickly as possible to take the steps necessary to respond to the call.
Fixed wing air ambulance (FW) means transportation by a fixed wing aircraft that is certified as a fixed wing air ambulance and such services and supplies as may be medically necessary.
Geographic adjustment factor (GAF) means the practice expense (PE) portion of the geographic practice cost index (GPCI) from the physician fee schedule as applied to a percentage of the base rate. For ground ambulance services, the PE portion of the GPCI is applied to 70 percent of the base rate for each level of service. For air ambulance services, the PE portion of the GPCI is applied to 50 percent of the applicable base rate.
Goldsmith modification means the recognition of rural areas within certain Standard Metropolitan Statistical Areas wherein a census tract is deemed to be rural when located within a large metropolitan county of at least 1,225 square miles, but is so isolated from the metropolitan core of that county by distance or physical features as to be more rural than urban in character.
Loaded mileage means the number of miles the Medicare beneficiary is transported in the ambulance vehicle.
Paramedic ALS intercept (PI) means EMT-Paramedic services furnished by an entity that does not furnish the ground ambulance transport, provided the services meet the requirements specified in §410.40(c) of this chapter.
Point of pick-up means the location of the beneficiary at the time he or she is placed on board the ambulance.
Relative value units (RVUs) means a value assigned to a ground ambulance service.
Rotary wing air ambulance (RW) means transportation by a helicopter that is certified as an ambulance and such services and supplies as may be medically necessary.
Rural adjustment factor (RAF) means an adjustment applied to the base payment rate when the point of pick-up is located in a rural area.
Rural area means an area located outside a Metropolitan Statistical Area (MSA), or, in New England, a New England County Metropolitan Area (NECMA), or an area within an MSA or NECMA that is identified as rural by the Goldsmith modification.
Specialty care transport (SCT) means interfacility transportation of a critically injured or ill beneficiary by a ground ambulance vehicle, including medically necessary supplies and services, at a level of service beyond the scope of the EMT-Paramedic. SCT is necessary when a beneficiary's condition requires ongoing care that must be furnished by one or more health professionals in an appropriate specialty area, for example, nursing, emergency medicine, respiratory care, cardiovascular care, or a paramedic with additional training.
[67 FR 9132, Feb. 27, 2002, as amended at 68 FR 67693, Dec. 5, 2003]
§ 414.610 Basis of payment.
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(a) Method of payment. Medicare payment for ambulance services is based on the lesser of the actual charge or the applicable fee schedule amount. The fee schedule payment for ambulance services equals a base rate for the level of service plus payment for mileage and applicable adjustment factors. Except for services furnished by certain critical access hospitals or entities owned and operated by them, as described in §413.70(b) of this chapter, all ambulance services are paid under the fee schedule specified in this subpart (regardless of the vehicle furnishing the service).
(b) Mandatory assignment. Effective with implementation of the ambulance fee schedule described in §414.601 (that is, for services furnished on or after April 1, 2002), all payments made for ambulance services are made only on an assignment-related basis. Ambulance suppliers must accept the Medicare allowed charge as payment in full and may not bill or collect from the beneficiary any amount other than the unmet Part B deductible and Part B coinsurance amounts. Violations of this requirement may subject the provider or supplier to sanctions, as provided by law (part 402 of this chapter).
(c) Formula for computation of payment amounts. The fee schedule payment amount for ambulance services is computed according to the following provisions:
(1) Ground ambulance service levels. The CF is multiplied by the applicable RVUs for each level of service to produce a service-level base rate. For services furnished during the period July 1, 2004 through December 31, 2006, ambulance services originating in urban areas (both base rate and mileage) are paid based on a rate that is one percent higher than otherwise is applicable under this section, and ambulance services originating in rural areas (both base rate and mileage) are paid based on a rate that is two percent higher than otherwise is applicable under this section. The service-level base rate is then adjusted by the GAF. Compare this amount to the actual charge. The lesser of the actual charge or the GAF adjusted base rate amount is added to the lesser of the actual mileage charges or the payment rate per mile, multiplied by the number of miles that the beneficiary was transported. When applicable, the appropriate RAF is applied to the ground mileage rate to determine the appropriate payment rates. The RVU scale for the ambulance fee schedule is as follows:
------------------------------------------------------------------------ Relative value Service level units (RVUs)------------------------------------------------------------------------BLS......................................................... 1.00BLS-Emergency............................................... 1.60ALS1........................................................ 1.20ALS1-Emergency.............................................. 1.90ALS2........................................................ 2.75SCT......................................................... 3.25PI.......................................................... 1.75------------------------------------------------------------------------
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(2) Air ambulance service levels. The base payment rate for the applicable type of air ambulance service is adjusted by the GAF and, when applicable, by the appropriate RAF to determine the amount of payment. Air ambulance services have no CF or RVUs. This amount is compared to the actual charge. The lesser of the charge or the adjusted GAF rate amount is added to the payment rate per mile, multiplied by the number of miles that the beneficiary was transported. When applicable, the appropriate RAF is also applied to the air mileage rate.
(3) Loaded mileage. Payment is based on loaded miles. Payment for air mileage is based on loaded miles flown as expressed in statute miles. There are three mileage payment rates: a rate for FW services, a rate for RW services, and a rate for all levels of ground transportation.
(4) Geographic adjustment factor (GAF). For ground ambulance services, the PE portion of the GPCI from the physician fee schedule is applied to 70 percent of the base rate for ground ambulance services. For air ambulance services, the PE portion of the physician fee schedule GPCI is applied to 50 percent of the base rate for air ambulance services.
(5) Rural adjustment factor (RAF). (i) For ground ambulance services where the point of pickup is in a rural area, the mileage rate is increased by 50 percent for each of the first 17 miles and by 25 percent for miles 18 through 50. The standard mileage rate applies to every mile over 50 miles. For air ambulance services where the point of pickup is in a rural area, the total payment is increased by 50 percent; that is, the rural adjustment factor applies to the sum of the base rate and the mileage rate.
(ii) For services furnished during the period July 1, 2004 through December 31, 2009, the payment amount for the ground ambulance base rate is increased by 22.6 percent where the point of pickup is in a rural area determined to be in the lowest 25 percent of rural population arrayed by population density. The amount of this increase is based on CMS's estimate of the ratio of the average cost per trip for the rural areas in the lowest quartile of population compared to the average cost per trip for the rural areas in the highest quartile of population. In making this estimate, CMS may use data provided by the GAO.
(6) Multiple patients. The allowable amount per beneficiary for a single ambulance transport when more than one patient is transported simultaneously is based on the total number of patients (both Medicare and non-Medicare) on board. If two patients are transported simultaneously, then the payment allowance for the beneficiary (or for each of them if both patients are beneficiaries) is equal to 75 percent of the service payment allowance applicable for the level of care furnished to the beneficiary, plus 50 percent of the applicable mileage payment allowance. If three or more patients are transported simultaneously, the payment allowance for the beneficiary (or each of them) is equal to 60 percent of the service payment allowance applicable for the level of care furnished to the beneficiary, plus the applicable mileage payment allowance divided by the number of patients on board.
(7) Payment rate for mileage greater than 50 miles. For services furnished during the period July 1, 2004 through December 31, 2008, each loaded ambulance mile greater than 50 (that is, miles 51 and greater) for ambulance transports originating in either urban areas or in rural areas are paid based on a rate that is 25 percent higher than otherwise is applicable under this section.
(d) Payment. Payment, in accordance with this subpart, represents payment in full (subject to applicable Medicare Part B deductible and coinsurance requirements as described in subpart G of part 409 of this chapter or in subpart I of part 410 of this chapter) for all services, supplies, and other costs for an ambulance service furnished to a Medicare beneficiary. No direct payment will be made under this subpart if billing for the ambulance service is required to be consolidated with billing for another benefit for which payment may be made under this chapter.
(e) Point of pick-up. The zip code of the point of pick-up must be reported on each claim for ambulance services so that the correct GAF and RAF may be applied, as appropriate.
(f) Updates. The CF, the air ambulance base rates, and the mileage rates are updated annually by an inflation factor established by law. The inflation factor is based on the consumer price index for all urban consumers (CPI-U) (U.S. city average) for the 12-month period ending with June of the previous year.
(g) Adjustments. The Secretary will annually review rates and will adjust the CF and air ambulance rates if actual experience under the fee schedule is significantly different from the assumptions used to determine the initial CF and air ambulance rates. The CF and air ambulance rates will not be adjusted solely because of changes in the total number of ambulance transports.
[67 FR 9132, Feb. 27, 2002, as amended at 68 FR 67693, Dec. 5, 2003; 69 FR 40292, July 1, 2004]
§ 414.615 Transition to the ambulance fee schedule.
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The fee schedule for ambulance services will be phased in over 5 years beginning April 1, 2002. Subject to the first sentence in §414.610(a), payment for services furnished during the transition period is made based on a combination of the fee schedule payment for ambulance services and the amount the program would have paid absent the fee schedule for ambulance services, as follows:
(a) 2002 Payment. For services furnished in 2002, the payment for the service component, the mileage component and, if applicable, the supply component is based on 80 percent of the reasonable charge for independent suppliers or on 80 percent of reasonable cost for providers, plus 20 percent of the ambulance fee schedule amount for the service and mileage components. The reasonable charge or reasonable cost portion of payment in CY 2002 is equal to the supplier's reasonable charge allowance or provider's reasonable cost allowance for CY 2001, multiplied by the statutory inflation factor for ambulance services.
(b) 2003 Payment. For services furnished in CY 2003, payment is based on 60 percent of the reasonable charge or reasonable cost, as applicable, plus 40 percent of the ambulance fee schedule amount. The reasonable charge and reasonable cost portion in CY 2003 is equal to the supplier's reasonable charge or provider's reasonable cost for CY 2002, multiplied by the statutory inflation factor for ambulance services.
(c) 2004 Payment. For services furnished in CY 2004, payment is based on 40 percent of the reasonable charge or reasonable cost, as applicable, plus 60 percent of the ambulance fee schedule amount. The reasonable charge and reasonable cost portion in CY 2004 is equal to the supplier's reasonable charge or provider's reasonable cost for CY 2003, multiplied by the statutory inflation factor for ambulance services.
(d) 2005 Payment. For services furnished in CY 2005, payment is based on 20 percent of the reasonable charge or reasonable cost, as applicable, plus 80 percent of the ambulance fee schedule amount. The reasonable charge and reasonable cost portion in CY 2005 is equal to the supplier's reasonable charge or provider's reasonable cost for CY 2004, multiplied by the statutory inflation factor for ambulance services.
(e) 2006 and Beyond Payment. For services furnished in CY 2006 and thereafter, the payment is based solely on the ambulance fee schedule amount.
(f) Updates. The portion of the transition payment that is based on the existing payment methodology (that is, the non-fee-schedule portion) is updated annually for inflation by a factor equal to the percentage increase in the CPI-U (U.S. city average) for the 12-month period ending with June of the previous year. The CY 2002 inflation update factor used to update the 2001 payment amounts is applied to the annualized (average) payment amounts for CY 2001. For the period January 1, 2001 through June 30, 2001, the inflation update factor is 2.7 percent. For the period July 1, 2001 through December 31, 2001, the inflation update factor is 4.7 percent. The average for the year is 3.7 percent. Thus, the annualized (average) CY 2001 payment amounts used to derive the CY 2002 payment amounts are equivalent to the CY 2001 payment amounts that would have been determined had the inflation update factor for the entire CY 2001 been 3.7 percent. Both portions of the transition payment (that is, the portion that is based on reasonable charge or reasonable cost and the portion that is based on the ambulance fee schedule) are updated annually for inflation by the inflation factor described in §414.610(f).
(g) Exception. There will be no blended payment allowance as described in paragraphs (a), (b), (c), and (d) of this section for ground mileage in those States where the Medicare carrier paid separately for all out-of-county ground ambulance mileage, but did not, before the implementation of the Medicare ambulance fee schedule, make a separate payment for any ground ambulance mileage within the county in which the beneficiary was transported. Payment for ground ambulance mileage in that State will be made based on the full ambulance fee schedule amount for ground mileage. This exception applies only to carrier-processed claims and only in those States in which the carrier paid separately for out-of-county ambulance mileage, but did not make separate payment for any in-county mileage throughout the entire State.
§ 414.617 Transition from regional to national ambulance fee schedule.
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For services furnished during the period July 1, 2004 through December 31, 2009, the amount for the ground ambulance base rate is subject to a floor amount determined by establishing nine fee schedules based on each of the nine census divisions using the same methodology as used to establish the national fee schedule. If the regional fee schedule methodology for a given census division results in an amount that is less than or equal to the national ground base rate, then it is not used, and the national FS amount applies. If the regional fee schedule methodology for a given census division results in an amount that is greater than the national ground base rate, then the FS portion of the base rate for that census division is equal to a blend of the national rate and the regional rate in accordance with the following schedule:
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------------------------------------------------------------------------ Regional National Time period percent percent------------------------------------------------------------------------7/1/04-12/31/04................................... 80 20CY 2005........................................... 60 40CY 2006........................................... 40 60CY 2007-CY 2009................................... 20 80CY 2010 and thereafter............................ 0 100------------------------------------------------------------------------
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[69 FR 40292, July 1, 2004]
§ 414.620 Publication of the ambulance fee schedule.
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Changes in payment rates resulting from incorporation of the annual inflation factor described in §414.610(f) will be announced by notice in the Federal Register without opportunity for prior comment. CMS will follow applicable rulemaking procedures in publishing revisions to the fee schedule for ambulance services that result from any factors other than the inflation factor.
§ 414.625 Limitation on review.
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There will be no administrative or judicial review under section 1869 of the Act or otherwise of the amounts established under the fee schedule for ambulance services, including the following:
(a) Establishing mechanisms to control increases in expenditures for ambulance services.
(b) Establishing definitions for ambulance services that link payments to the type of services provided.
(c) Considering appropriate regional and operational differences.
(d) Considering adjustments to payment rates to account for inflation and other relevant factors.
(e) Phasing in the application of the payment rates under the fee schedule in an efficient and fair manner.
Subpart I—Payment for Drugs and Biologicals
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Source: 69 FR 1116, Jan. 7, 2004, unless otherwise noted.
§ 414.701 Purpose.
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This subpart implements section 1842(o) of the Social Security Act by specifying the methodology for determining the payment allowance limit for drugs and biologicals covered under Part B of Title XVIII of the Act (hereafter in this subpart referred to as the “program”) that are not paid on a cost or prospective payment system basis. Examples of drugs that are subject to the rules contained in this subpart are: drugs furnished incident to a physician's service; durable medical equipment (DME) drugs; separately billable drugs at independent dialysis facilities not under the ESRD composite rate; statutorily covered drugs, for example, influenza, pneumococcal and hepatitis vaccines, antigens, hemophilia blood clotting factor, immunosuppressive drugs and certain oral anti-cancer drugs.
§ 414.704 Definitions.
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As used in this subpart, the following definition applies. Drug refers to both drugs and biologicals.
§ 414.707 Basis of payment.
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(a) Method of payment. (1) Payment for a drug in calendar year 2004 is based on the lesser of—
(i) The actual charge on the claim for program benefits; or
(ii) 85 percent of the average wholesale price determined as of April 1, 2003, subject to the exceptions as specified in paragraphs (a)(2) through (a)(8) of this section.
(2) The payment limits for the following drugs are calculated using 95 percent of the average wholesale price:
(i) Blood clotting factors.
(ii) A drug or biological furnished during 2004 that was not available for Medicare payment as of April 1, 2003.
(iii) Pneumococcal and influenza vaccines as well as hepatitis B vaccine that is furnished to individuals at high or intermediate risk of contracting hepatitis B (as determined by the Secretary).
(iv) A drug or biological furnished during 2004 in connection with the furnishing of renal dialysis services if separately billed by renal dialysis facilities.
(3) The payment limits for infusion drugs furnished through a covered item of durable medical equipment are calculated using 95 percent of the average wholesale price in effect on October 1, 2003.
(4) The payments limits for drugs contained in the following table are calculated based on the percentages of the average wholesale price determined as of April 1, 2003 that are specified in the table.
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------------------------------------------------------------------------ Percentage used to calculate Drug 2004 payment limit------------------------------------------------------------------------EPOETIN ALFA............................................... 87LEUPROLIDE ACETATE......................................... 81GOSERELIN ACETATE.......................................... 80RITUXIMAB.................................................. 81PACLITAXEL................................................. 81DOCETAXEL.................................................. 80CARBOPLATIN................................................ 81IRINOTECAN................................................. 80GEMCITABINE HCL............................................ 80PAMIDRONATE DISODIUM....................................... 85DOLASETRON MESYLATE........................................ 80FILGRASTIM................................................. 81HYLAN G-F 20............................................... 82MYCOPHENOLATE MOFETIL...................................... 86GRANISETRON HCL............................................ 80ONDANSETRON................................................ 87VINORELBINE TARTATE........................................ 81SARGRAMOSTIM............................................... 80TOPOTECAN.................................................. 84IPRATROPIUM BROMIDE........................................ 80ALBUTEROL SULFATE.......................................... 80IMMUNE GLOBULIN............................................ 80LEUCOVORIN CALCIUM......................................... 80DOXORUBICIN HCL............................................ 80DEXAMETHOSONE SODIUM PHOSPHATE............................. 86HEPARIN SODIUM LOCK-FLUSH.................................. 80CROMOLYN SODIUM............................................ 80ACETYLCYSTEINE............................................. 80------------------------------------------------------------------------
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(5) The payment limits for imiglucerase and alglucerase are calculated using 94 percent of the average wholesale price determined as of April 1, 2003.
(6) Exception. The payment limit for a drug otherwise subject to paragraph (a)(1)(ii) or paragraph (a)(4) of this section may be calculated using the percentage of the average wholesale price as the Secretary deems appropriate based on data and information submitted by the drug manufacturer.
(i) The manufacturer must submit data after October 15, 2003 and before January 1, 2004.
(ii) The percentage only applies for drugs furnished on or after April 1, 2004.
(7) In the case of blood and blood products (other than blood clotting factors), the payment limits shall be determined in the same manner as such payment limit was determined on October 1, 2003.
(b) Mandatory assignment. Effective with services furnished on or after February 1, 2001, payment for any drug covered under Part B of Medicare may be made on an assignment-related basis only. All billers must accept the program allowed charge as payment in full and may not bill nor collect from the beneficiary any amount other than the unmet Part B deductible and Part B coinsurance amounts, if applicable. Violations of this requirement may subject the supplier to sanctions, as provided by the statute (See §402 of this chapter).
Subpart J—Submission of Manufacturer's Average Sales Price Data
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Source: 69 FR 17938, Apr. 6, 2004, unless otherwise noted.
§ 414.800 Purpose.
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This subpart implements section 1847A of the Act by specifying the requirements for submission of a manufacturer's average sales price data for certain drugs and biologicals covered under Part B of Title XVIII of the Act that are paid under sections 1842(o)(1)(D), 1847A, and 1881(b)(13)(A)(ii) of the Act.
§ 414.802 Definitions.
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As used in this subpart, unless the context indicates otherwise—
Drug means both drugs and biologicals.
Manufacturer means any entity that is engaged in the following (This term does not include a wholesale distributor of drugs or a retail pharmacy licensed under State law):
(1) Production, preparation, propagation, compounding, conversion or processing of prescription drug products, either directly or indirectly by extraction from substances of natural origin, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis.
(2) The packaging, repackaging, labeling, relabeling, or distribution of prescription drug products.
Unit means the product represented by the 11-digit National Drug Code. During the first 3 years of the CAP (as defined in §414.902), the method of counting units excludes units of CAP drugs (as defined in §414.902) sold to an approved CAP vendor (as defined in §414.902) for use under the CAP (as defined in §414.902).
[70 FR 69 FR 17938, Apr. 6, 2004, as amended at 70 FR 70481, Nov. 21, 2005; 71 FR 48143, Aug. 18, 2006]
§ 414.804 Basis of payment.
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(a) Calculation of manufacturer's average sales price. (1) The manufacturer's average sales price for a quarter for a drug or biological represented by a particular 11-digit National Drug Code must be calculated as the manufacturer's sales to all purchasers in the United States for that particular 11-digit National Drug Code (after deducting the types of items and transactions listed in paragraph (a)(2) of this section and excluding sales referenced in paragraph (a)(4) of this section) divided by the total number of units sold by the manufacturer in that quarter (after excluding units associated with sales referenced in paragraph (a)(4) of this section).
(2) In calculating the manufacturer's average sales price, a manufacturer must deduct the following types of transactions and items:
(i) Volume discounts.
(ii) Prompt pay discounts.
(iii) Cash discounts.
(iv) Free goods that are contingent on any purchase requirement.
(v) Chargebacks and rebates (other than rebates under the Medicaid drug rebate program).
(3) To the extent that data on price concessions, as described in paragraph (a)(2) of this section, are available on a lagged basis, the manufacturer must estimate this amount in accordance with the methodology described in paragraphs (a)(3)(i) through (a)(3)(iv) of this section.
(i) For each such National Drug Code, the manufacturer calculates a percentage equal to the sum of the price concessions for the most recent 12-month period available associated with sales subject to the average sales price reporting requirement divided by the total in dollars for the sales subject to the average sales price reporting requirement for the same 12-month period.
(ii) The manufacturer then multiplies the percentage described in paragraph (a)(3)(i) of this section by the total in dollars for the sales subject to the average sales price reporting requirement for the quarter being submitted. (The manufacturer must carry a sufficient number of decimal places in the calculation of the price concessions percentage in order to round accurately the net total sales amount for the quarter to the nearest whole dollar.) The result of this multiplication is then subtracted from the total in dollars for the sales subject to the average sales price reporting requirement for the quarter being submitted.
(iii) The manufacturer then uses the result of the calculation described in paragraph (a)(3)(ii) of this section as the numerator and the number of units sold in the quarter as the denominator to calculate the manufacturer's average sales price for the National Drug Code in the quarter being submitted.
(iv) Example. The total lagged price concessions (discounts, rebates, etc.) over the most recent 12-month period available associated with direct sales for National Drug Code 12345–6789–01 subject to the ASP reporting requirement equal $200,000. The total in dollars for the sales subject to the average sales price reporting requirement for the same period equals $600,000. The lagged price concessions percentage for this period equals 200,000/600,000 = .33333. The total in dollars for the direct sales subject to the average sales price reporting requirement for the quarter being reported equals $50,000 for 10,000 units sold. Assuming no non-lagged price concessions apply, the manufacturer's average sales price calculation for this National Drug Code for this quarter is: $50,000−(0.33333 × $50,000) = $33,334 (net total sales amount); $33,334/10,000 = $3.33 (average sales price).
(4) In calculating the manufacturer's average sales price, a manufacturer must exclude sales that are exempt from the Medicaid best price calculation under sections 1927(c)(1)(C)(i) and 1927(c)(1)(C)(ii)(III) of the Act.
(5) The manufacturer's average sales price must be calculated by the manufacturer every calendar quarter and submitted to CMS within 30 days of the close of the quarter. The first quarter submission must be submitted by April 30, 2004. Subsequent reports are due not later than 30 days after the last day of each calendar quarter.
(6) Each report must be certified by one of the following:
(i) The manufacturer's Chief Executive Officer (CEO).
(ii) The manufacturer's Chief Financial Officer (CFO).
(iii) An individual who has delegated authority to sign for, and who reports directly to, the manufacturer's CEO or CFO.
[69 FR 17938, Apr. 6, 2004, as amended at 69 FR 55764, Sept. 16, 2004; 70 FR 70332, Nov. 21, 2005]
§ 414.806 Penalties associated with the failure to submit timely and accurate ASP data.
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Section 1847A(d)(4) specifies the penalties associated with misrepresentations associated with ASP data. If the Secretary determines that a manufacturer has made a misrepresentation in the reporting of ASP data, a civil money penalty in an amount of up to $10,000 may be applied for each price misrepresentation and for each day in which the price misrepresentation was applied. Section 1927(b)(3)(C) of the Act, as amended by section 303(i)(4) of the MMA, specifies the penalties associated with a manufacturer's failure to submit timely information or the submission of false information.
Subpart K—Payment for Drugs and Biologicals Under Part B
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Source: 69 FR 66424, Nov. 15, 2004, unless otherwise noted.
§ 414.900 Basis and scope.
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(a) This subpart implements sections 1842(o), 1847A, and 1847B of the Act and outlines two payment methodologies applicable to drugs and biologicals covered under Medicare Part B that are not paid on a cost or prospective payment system basis.
(b) Examples of drugs that are subject to the requirements specified in this subpart are:
(1) Drugs furnished incident to a physician's service; durable medical equipment (DME) drugs.
(2) Separately billable drugs at independent dialysis facilities not under the ESRD composite rate.
(3) Statutorily covered drugs, for example—
(i) Influenza.
(ii) Pneumococcal and Hepatitis B vaccines.
(iii) Antigens.
(iv) Hemophilia blood clotting factor.
(v) Immunosuppressive drugs.
(vi) Certain oral anti-cancer drugs.
[69 FR 66424, Nov. 15, 2004, as amended at 70 FR 39093, July 6, 2005]
§ 414.902 Definitions.
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As used in this subpart, unless the context indicates otherwise—
Approved CAP vendor means an entity that has been awarded a contract by CMS to participate in the competitive acquisition program under 1847B of the Act.
Bid means an offer to furnish a CAP drug within a category of CAP drugs in a competitive acquisition area for a particular price and time period.
CAP drug means a physician-administered drug or biological furnished on or after January 1, 2006 described in section 1842(o)(1)(C) of the Act and supplied by an approved CAP vendor under the CAP as provided in this subpart.
Competitive acquisition area means a geographic area established by the Secretary for purposes of implementing the CAP required by section 1847B of the Act.
Competitive acquisition program (CAP) means a program as defined under section 1847B of the Act.
Designated carrier means an entity assigned by CMS to process and pay claims for drugs and biologicals under the CAP.
Drug means both drugs and biologicals.
Emergency delivery means delivery of a CAP drug within one business day in appropriate shipping and packaging, in all areas of the United States and its territories, with the exception of the Pacific Territories. In the Pacific Territories, emergency delivery means delivery of a CAP drug within 5 business days in appropriate shipping and packaging. In each case, this timeframe shall be reduced if product stability requires it, meaning that the manufacturer's labeling instructions, drug compendia, or specialized drug stability references indicate that a shorter delivery timeframe is necessary to avoid adversely affecting the product's integrity, safety, or efficacy.
Emergency situation means, for the purposes of the CAP, an unforeseen occurrence or situation determined by the participating CAP physician, in his or her clinical judgment, to require prompt action or attention for purposes of permitting the participating CAP physician to use a drug from his or her own stock, if the other requirements of §414.906(e) are met.
Local carrier means an entity assigned by CMS to process and pay claims for administration of drugs and biologicals under the CAP.
Manufacturer's average sales price means the price calculated and reported by a manufacturer under part 414, subpart J of this chapter.
Multiple source drug means a drug described by section 1847A(c)(6)(C) of the Act.
Pacific Territories means, for purposes of the CAP, American Samoa, Guam, or the Northern Mariana Islands.
Participating CAP physician means a physician electing to participate in the CAP, as described in this subpart. The participating CAP physician must complete and sign the participating CAP physician election agreement. Physicians who do not participate in Medicare but who elect to participate in the CAP must agree to accept assignment for CAP drug administration claims.
Participating CAP physician election agreement means the agreement that the physician signs to notify CMS of the physician's election to participate in the CAP and to agree to the terms and conditions of CAP participation as set forth in this subpart.
Prescription order means a written order submitted by the participating CAP physician to the approved CAP vendor that meets the requirements of this subpart.
Routine delivery means delivery of a drug within 2 business days in appropriate shipping and packaging in all areas of the United States and its territories, with the exception of the Pacific Territories. In the Pacific Territories, routine delivery of drug means delivery of a CAP drug within 7 business days in appropriate shipping and packaging. In each case, this timeframe will be reduced if product stability requires it, meaning that the manufacturer's labeling instructions, drug compendia, or specialized drug stability references indicate that a shorter delivery timeframe is necessary to avoid adversely affecting the product's integrity, safety, or efficacy.
Single source drug means a drug described by section 1847A(c)(6)(D) of the Act.
Timely delivery means delivery of a CAP drug within the defined routine and emergency delivery timeframes. Compliance with timely delivery standards is also a factor for evaluation of potential and approved CAP vendors.
Unit is defined as in part 414, subpart J of this chapter.
Wholesale acquisition cost (WAC) means the price described by section 1847A(c)(6)(B) of the Act.
[69 FR 66424, Nov. 15, 2004, as amended at 70 FR 39093, July 6, 2005]
§ 414.904 Average sales price as the basis for payment.
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(a) Method of payment. Payment for a drug furnished on or after January 1, 2005 is based on the lesser of—
(1) The actual charge on the claim for program benefits; or
(2) 106 percent of the average sales price, subject to the applicable limitations specified in paragraph (d) of this section or subject to the exceptions described in paragraph (e) of this section.
(b) Multiple source drugs—(1) Average sales prices. The average sales price for all drug products included within the same multiple source drug billing and payment code is the volume-weighted average of the manufacturers' average sales prices for those drug products.
(2) Calculation of the average sales price. The average sales price is determined by—
(i) Computing the sum of the products (for each National Drug Code assigned to the drug products) of the manufacturer's average sales price and the total number of units sold; and
(ii) Dividing that sum by the sum of the total number of units sold for all NDCs assigned to the drug products.
(c) Single source drugs—(1) Average sales price. The average sales price is the volume-weighted average of the manufacturers' average sales prices for all National Drug Codes assigned to the drug or biological product.
(2) Calculation of the average sales price. The average sales price is determined by computing—
(i) The sum of the products (for each National Drug Code assigned to the drug product) of the manufacturer's average sales price and the total number of units sold; and
(ii) Dividing that sum by the sum of the total number of units sold for all NDCs assigned to the drug product.
(d) Limitations on the average sales price—(1) Wholesale acquisition cost for a single source drug. The payment limit for a single source drug product is the lesser of 106 percent of the average sales price for the product or 106 percent of the wholesale acquisition cost for the product.
(2) Payment limit for a drug furnished to an end-stage renal disease patient. (i) Effective for drugs and biologicals furnished in 2005, the payment for such drugs and biologicals, including erythropoietin, furnished to an end-stage renal disease patient that is separately billed by an end-stage renal disease facility and not paid on a cost basis is acquisition cost as determined by the Inspector General report as required by section 623(c) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 inflated by the percentage increase in the Producer Price Index.
(ii) Except as provided in paragraph (a) of this section, the payment for drugs and biologicals, furnished to an end-stage renal disease patient that is separately billed by an end-stage renal disease facility, is based on 106 percent of the average sales price.
(iii) Effective for drugs and biologicals furnished in 2006, the payment for such drugs and biologicals furnished in connection with renal dialysis services and separately billed by freestanding and hospital-based renal dialysis facilities not paid on a cost basis is 106 percent of the average sales price.
(3) Widely available market price and average manufacturer price. If the Inspector General finds that the average sales price exceeds the widely available market price or the average manufacturer price by 5 percent or more in calendar year 2006, the payment limit in the quarter following the transmittal of this information to the Secretary is the lesser of the widely available market price or 103 percent of the average manufacturer price.
(e) Exceptions to the average sales price—(1) Vaccines. The payment limits for hepatitis B vaccine furnished to individuals at high or intermediate risk of contracting hepatitis B (as determined by the Secretary), pneumococcal vaccine, and influenza vaccine and are calculated using 95 percent of the average wholesale price.
(2) Infusion drugs furnished through a covered item of durable medical equipment. The payment limit for an infusion drug furnished through a covered item of durable medical equipment is calculated using 95 percent of the average wholesale price in effect on October 1, 2003 and is not updated in 2006.
(3) Blood and blood products. In the case of blood and blood products (other than blood clotting factors), the payment limits are determined in the same manner as the payment limits were determined on October 1, 2003.
(4) Payment limit in a case where the average sales price during the first quarter of sales is unavailable. In the case of a drug during an initial period (not to exceed a full calendar quarter) in which data on the prices for sales of the drug are not sufficiently available from the manufacturer to compute an average sales price for the drug, the payment limit is based on the wholesale acquisition cost or the applicable Medicare Part B drug payment methodology in effect on November 1, 2003.
(f) Except as otherwise specified (see paragraph (e)(2) of this section) for infusion drugs, the payment limits are updated quarterly.
(g) The payment limit is computed without regard to any special packaging, labeling, or identifiers on the dosage form or product or package.
(h) The payment amount is subject to applicable deductible and coinsurance.
[69 FR 66424, Nov. 15, 2004, as amended at 70 FR 70332, Nov. 21, 2005]
§ 414.906 Competitive acquisition program as the basis for payment.
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(a) Program payment. Beginning in 2006, as an alternative to payment under §414.904, payment for a CAP drug may be made through the CAP if the following occurs:
(1) The CAP drug is supplied under the CAP by an approved CAP vendor as specified in §414.908(b).
(2) The claim for the prescribed drug is submitted by the approved CAP vendor that supplied the drug, and payment is made only to that vendor.
(3) The approved CAP vendor collects applicable deductible and coinsurance with respect to the drug furnished under the CAP only after the drug is administered to the beneficiary.
(4) The approved CAP vendor delivers CAP drugs directly to the participating CAP physician in unopened vials or other original containers as supplied by the manufacturer or from a distributor that has acquired the products directly from the manufacturer and includes language with the shipping material stating that the drug was acquired in a manner consistent with all statutory requirements. If the approved CAP vendor opts to split shipments, the participating CAP physician must be notified in writing which can be included with the initial shipment, and each incremental shipment must arrive at least 2 business days before the anticipated date of administration.
(5) The approved CAP vendor bills Medicare only for the amount of the drug administered to the patient, and the beneficiary's coinsurance will be calculated from the quantity of drug that is administered.
(b) Exceptions to competitive acquisition. Specific CAP drugs, including a category of these drugs, may be excluded from the CAP if the application of competitive bidding to these drugs—
(1) Is not likely to result in significant savings; or
(2) Is likely to have an adverse impact on access to those drugs.
(c) Computation of payment amount. (1) Except as specified in paragraph (c)(2) of this section, payment for CAP drugs is based on bids submitted, as a result of the bidding process as described in §414.910. Based on these bids, a single payment amount for each CAP drug in the competitive acquisition area is determined on the basis of the bids submitted and accepted and updated from the bidding period to the payment year. This single payment amount is then updated on an annual basis based on the approved CAP vendor's reasonable net acquisition costs for that category as determined by CMS, based, in part, on information disclosed to CMS and limited by the weighted payment amount established under section 1847A of the Act across all drugs for which a composite bid is required in the category, and limited by the payment amount established under section 1847A of the Act for each other drug for which the approved CAP vendor submits a bid in accordance with §414.910. Adjustment to the payment amounts may be made more often than annually, but no more often than quarterly, in any of the following cases:
(i) Introduction of new drugs.
(ii) Expiration of a drug patent or availability of a generic drug.
(iii) Material shortage that results in a significant price increase for the drug.
(iv) Withdrawal of a drug from the market.
(2) The alternative payment amount established under section 1847A of the Act may be used to establish payment for a CAP drug if—
(i) The drug is properly assigned to a category established under the CAP; and
(ii) It is a drug for which a HCPCS code must be established.
(d) Adjustments. There is an established process for adjustments to payments to account for drugs that were billed, but which were not administered.
(e) Resupply of participating CAP physician drug inventory. A participating CAP physician may acquire drugs under the CAP to resupply his or her private inventory if all of the following requirements are met:
(1) The drugs were required immediately.
(2) The participating CAP physician could not have anticipated the need for the drugs.
(3) The approved CAP vendor could not have delivered the drugs in a timely manner. For purposes of this section, timely manner means delivery within the emergency delivery timeframe, as defined in §414.902.
(4) The participating CAP physician administered the drugs in an emergency situation, as defined in §414.902.
(f) Substitution or addition of drugs on an approved CAP vendor's CAP drug list—(1) Short-term substitution of a CAP drug. On an occasional basis (for a period of time less than 2 weeks), an approved CAP vendor may agree to furnish a substitute NDC within a HCPCS code on the approved CAP vendor's CAP drug list if the approved CAP vendor—
(i) Is willing to accept the payment amount that was established for the HCPCS code under this section; and
(ii) Obtains the participating CAP physician's prior approval.
(2) Long-term substitution or addition of a CAP drug. An approved CAP vendor may submit a request, as specified in paragraph (f)(3) of this section, for approval to substitute an NDC supplied by the approved CAP vendor for another NDC within the same HCPCS code or to add an NDC to the approved CAP vendor's drug list, if at least one of the following criteria is met:
(i) Proposed substitution of an NDC for a period of 2 weeks or longer.
(ii) Proposed addition of one or more NDCs within a HCPCS code included in the CAP drug category specified by CMS or on the approved CAP vendor's approved CAP drug list.
(iii) Proposed addition of—
(A) One or more newly issued HCPCS codes; or
(B) One of the following single indication orphan drug J codes or their updates: J0205, J0256, J9300, J1785, J2355, J3240, J7513, J9010, J9015, J9017, J9160, J9216.
(iv) Beginning January 1, 2007, the proposed addition of a drug(s) that has not yet been assigned a HCPCS code, but for which a HCPCS code must be established.
(3) Requesting the addition or substitution of CAP drug. An approved CAP vendor that meets the one of the criteria specified in paragraph (f)(2) must submit a written request to CMS or its designee. The request must—
(i) Specify the NDC(s) and the respective HCPCS code that is to be added or substituted.
(ii) Address the rationale for the substitution or addition of the NDC(s) or the addition of the HCPCS code(s) as applicable; and
(iii) Address the impact of the substitution of the NDC(s) or the addition of the NDC(s) or HCPCS code(s), or both on—
(A) Patient and drug safety;
(B) Drug waste; and
(C) The potential for cost savings.
(4) Approval of a request(s). CMS or its designee notifies the approved CAP vendor of its decision.
(i) Except as specified in paragraph (f)(4)(ii) of this section, an approved request is effective at the beginning of the next calendar quarter.
(ii) Approved substitutions for request based on a drug shortage or other exigent circumstance may become effective immediately provided that—
(A) CMS approves the immediate substitution; and
(B) The approved CAP vendor's notifies its CAP participating physicians of the substitution immediately following CMS approval.
(5) Payment for an approved drug change(s). The payment for—
(i) Substituted or added CAP drugs that are within a HCPCS code for which payment is computed under paragraph (c)(1) of this section is the single payment for that HCPCS code, as determined and updated in accordance with paragraph (c)(1) of this section; or
(ii) Added CAP drugs that are not within a HCPCS code for which payment is computed under paragraph (c)(1) of this section is specified under paragraph (c)(2) of this section.
[70 FR 39094, July 6, 2005, as amended at 70 FR 70333, Nov. 21, 2005; 71 FR 9460, Feb. 24, 2006]
§ 414.908 Competitive acquisition program.
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(a) Participating CAP physician selection of an approved CAP vendor. (1) CMS provides the participating CAP physician with a process for the selection of an approved CAP vendor on an annual basis, with exceptions as specified in §414.908(a)(2). Participating CAP physicians will also receive information about the CAP in the enrollment process for Medicare participation set forth in section 1842(h) of the Act.
(2) A participating CAP physician may select an approved CAP vendor outside the annual selection process or opt out of the CAP for the remainder of the annual selection period when—
(i) The selected approved CAP vendor ceases participation in the CAP;
(ii) The physician leaves a group practice participating in CAP;
(iii) The participating CAP physician relocates to another competitive acquisition area; or
(iv) For other exigent circumstances defined by CMS.
(3) The physician participating in the CAP—
(i) Elects to use an approved CAP vendor for the drug category and area as set forth in §414.908(b);
(ii) Completes and signs the CAP election agreement;
(iii) Submits a written prescription order to the approved CAP vendor with complete patient information for patients new to the approved CAP vendor or when information changes. Abbreviated information may be sent on all subsequent orders for a patient for which the approved CAP vendor has previously received complete information and that has no changes to the original information. Prescription orders may be initiated by telephone, with a follow-up written order provided within 8 hours for routine deliveries and immediately for emergency deliveries;
(iv) Does not receive payment for the CAP drug;
(v) Except where applicable State pharmacy law prohibits it, provides the following information to the approved CAP vendor to facilitate collection of applicable deductible and coinsurance as described in §414.906(a)(3):
(A) Date of order.
(B) Beneficiary name, address, and phone number.
(C) Physician identifying information:
Name, practice location/shipping address, group practice information (if applicable), PIN, and UPIN.
(D) Drug name.
(E) Strength.
(F) Quantity ordered.
(G) Dose.
(H) Frequency/instructions.
(I) Anticipated date of administration.
(J) Beneficiary Medicare information/Health insurance (HIC) number.
(K) Supplementary insurance information (if applicable).
(L) Medicaid information (if applicable).
(M) Additional patient information: date of birth, allergies, height/weight, ICD–9–CM (if necessary).
(vi) Agrees to accept the particular National Drug Codes (NDCs) supplied by the approved CAP vendor for the duration of the participating CAP physician's enrollment with the approved CAP vendor, subject to paragraphs (a)(3)(vii) and (a)(3)(xiv) of this section. By electing to participate with an approved CAP vendor, the participating CAP physician also agrees to accept the changes to the approved CAP vendor's CAP drug list that have been approved in accordance with §414.906(f).
(vii) Agrees to place routine orders for CAP drugs at the HCPCs level, except when medical necessity requires a particular formulation on the approved CAP vendor's CAP drug list. Medical necessity must be documented. When the conditions of this paragraph are met, the participating CAP physician may submit a prescription order to the approved CAP vendor that specifies the NDC.
(viii) Notifies the approved CAP vendor when a drug is not administered or a smaller amount was administered than was originally ordered. The participating CAP physician and the approved CAP vendor agree on how to handle the unused CAP drug. If it is agreed that the participating CAP physician will maintain the CAP drug in his inventory for administration at a later date, the participating CAP physician submits a new prescription order at that time. This prescription order specifies that the CAP drug is being obtained from the participating CAP physician's CAP inventory and shipment should not occur;
(ix) Maintains a separate electronic or paper inventory for each CAP drug obtained;
(x) Agrees to file the Medicare claim within 14 calendar days of the date of drug administration;
(xi) Agrees to submit an appeal accompanied by all required documentation (such as medical records or a certification) necessary to support payment if the participating CAP physician's drug administration claim for a CAP drug is denied;
(xii) Agrees not to transport CAP drugs from one practice location (place of service) to another location;
(xiii) Agrees to provide the CMS-developed CAP fact sheet to beneficiaries; and
(xiv) May receive payment under the ASP system when medical necessity requires a certain brand or formulation of a drug that the approved CAP vendor has not been contracted to furnish under the CAP.
(4) Physician group practices. If a physician group practice using a group billing number(s) elects to participate in the CAP, all physicians in the group are considered to be participating CAP physicians when using the group's billing number(s).
(5) Additional opt out provision. In addition to the circumstances listed in paragraph (a)(2) of this section, if the approved CAP vendor refuses to ship to the participating CAP physician because the conditions of §414.914(h) were met, the physician can withdraw from the CAP category for the remainder of the year immediately upon notice to CMS and the approved CAP vendor.
(b) Program requirements. (1) CMS selects approved CAP vendors through a competition among entities based on the following:
(i) Submission of the bid prices using the OMB-approved Vendor Application and Bid Form for CAP drugs within the category and competitive acquisition area that—
(A) Places the vendor among the qualified bidders with the lowest five composite bids; and
(B) Does not exceed the weighted payment amount established under section 1847A of the Act across all drugs in that category.
(ii) Ability to ensure product integrity.
(iii) Customer service/Grievance process.
(iv) At least 3 years experience in furnishing Part B injectable drugs.
(v) Financial performance and solvency.
(vi) Record of integrity and the implementation of internal integrity measures.
(vii) Internal financial controls.
(viii) Acquisition of all CAP drugs directly from the manufacturer or from a distributor that has acquired the products directly from the manufacturer.
(ix) Maintenance of appropriate licensure to supply CAP drugs in States in which they are supplying CAP drugs.
(x) Cost-sharing assistance as described in §414.914(g).
(xi) Other factors as determined by CMS.
(2) Approved CAP vendors must also meet the contract requirements under §414.914.
(c) Additional considerations. CMS may refuse to award a contract or terminate an approved CAP vendor contract based upon the following:
(1) Suspension or revocation by the Federal or State government of the entity's license for distribution of drugs, including controlled substances.
(2) Exclusion of the entity under section 1128 of the Act from participation in Medicare or other Federal health care programs. These considerations are in addition to CMS' ability to terminate the approved CAP vendor for cause as specified in §414.914(a).
(3) Past violations or misconduct related to the pricing, marketing, distribution, or handling of drugs provided incident to a physician's service.
(d) Multiple source drugs. In the case of multiple source drugs, there must be a competition among entities for the acquisition of at least one CAP drug within each billing and payment code within each category for each competitive acquisition area.
(e) Multiple contracts for a category and area. The number of bidding qualified entities that are awarded a contract for a given category and area may be limited to no fewer than two.
[70 FR 39094, July 6, 2005, as amended at 70 FR 70333, Nov. 21, 2005]
§ 414.910 Bidding process.
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(a) Entities may bid to furnish CAP drugs in all competitive acquisition areas of the United States, or one or more specific competitive acquisition areas.
(b) The amount of the bid for any CAP drug for a specific competitive acquisition area must be uniform for all portions of that competitive acquisition area.
(c) A submitted bid price must include the following:
(1) All costs related to the delivery of the drug to the participating CAP physician.
(2) The costs of dispensing (including shipping) of the drug and management fees. The costs related to the administration of the drug or wastage, spillage, or spoilage may not be included.
[70 FR 39095, July 6, 2005]
§ 414.912 Conflicts of interest
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(a) Approved CAP vendors and applicants that bid to participate in the CAP are subject to the following:
(1) The conflict of interest standards and requirements of the Federal Acquisition Regulation (FAR) organizational conflict of interest guidance, found under FAR subpart 9.5.
(2) Those requirements and standards contained in each individual contract awarded to perform functions under section 1847B of the Act.
(b) Post-award conflicts of interest. Approved CAP vendors must have a code of conduct that establishes policies and procedures for recognizing and resolving conflicts of interest between the approved CAP vendor and any entity, including the Federal Government, with whom it does business. The code of conduct which is submitted as part of the application must—
(1) State the need for management, employees, contractors, and agents to comply with the approved CAP vendor's code of conduct, and policies and procedures for conflicts of interest; and
(2) State the approved CAP vendor's expectations for management, employees, contractors, and agents to comply with the approved CAP vendor's code of conduct, and policies and procedures for detecting, preventing, and resolving conflicts of interest.
[70 FR 39094, July 6, 2005]
§ 414.914 Terms of contract.
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(a) The contract between CMS and the approved CAP vendor will be for a term of 3 years, unless terminated or suspended earlier as provided in this section or provided in §414.917. The contract may be terminated—
(1) By CMS for default if the approved CAP vendor violates any term of the contract; or
(2) In the absence of a contract violation, by either CMS or the approved CAP vendor, if the terminating party notifies the other party by June 30 for an effective date of termination of December 31 of that year.
(b) The contract will provide for a code of conduct for the approved CAP vendor that includes standards relating to conflicts of interest standards as set forth at §414.912.
(c) The approved CAP vendor will have and implement a compliance plan that contains policies and procedures that control program fraud, waste, and abuse, and consists of the following minimum elements:
(1) Written policies, procedures, and standards of conduct articulating the organization's commitment to comply with all applicable Federal and State laws, regulations, and guidance, including, but not limited to, the Prescription Drug Marketing Act (PDMA), the physician self-referral (“Stark”) prohibition, the Anti-Kickback statute and the False Claims Act.
(2) The designation of a compliance officer and compliance committee accountable to senior management.
(3) Effective training and education of the compliance officer and organization employees, contractors, agents, and directors.
(4) Enforcement of standards through well publicized disciplinary guidelines.
(5) Procedures for effective internal monitoring and auditing.
(6) Procedures for ensuring prompt responses to detected offenses and development of corrective action initiatives relating to the organization's contract as an approved CAP vendor.
(i) If the approved CAP vendor discovers evidence of misconduct related to payment or delivery of drugs or biologicals under the contract, it will conduct a timely and reasonable inquiry into that conduct.
(ii) The approved CAP vendor will conduct appropriate corrective actions including, but not limited to, repayment of overpayments and disciplinary actions against responsible individuals, in response to potential violations referenced at paragraph (c)(6)(i) of this section.
(7) Procedures to voluntarily self-report potential fraud or misconduct related to the CAP to the appropriate government agency.
(d) The contract must provide for disclosure of the approved CAP vendor's reasonable, net acquisition costs for a specified period of time, not to exceed quarterly.
(e) The contract must provide for appropriate adjustments as described in §414.906(c)(1).
(f) Under the terms of the contract, the approved CAP vendor must also—
(1) Have sufficient arrangements to acquire and deliver CAP drugs within the category in the competitive acquisition area specified by the contract;
(2) Have arrangements in effect for shipment at least 5 weekdays each week of CAP drugs under the contract, including the ability to comply with the routine and emergency delivery timeframes defined in §414.902;
(3) Have procedures in place to address and resolve complaints of participating CAP physicians and individuals and inquiries regarding shipment of CAP drugs;
(4) Have a grievance and appeals process for dispute resolution;
(5) Respond within 2 business days to any inquiry, or sooner if the inquiry is related to drug quality;
(6) Staff a toll-free telephone line from 8:30 a.m. or earlier and until 5 p.m. or later for all time zones served in the continental United States by the CAP vendor on business days (Monday through Friday excluding Federal holidays) to provide customer assistance, and establish reasonable hours of operation for Hawaii, Alaska, Puerto Rico, and the other U.S. territories;
(7) Staff an emergency toll-free telephone line for weekend and evening access when the call center is closed, and determine what hours on Saturday and Sunday the call center is staffed and which hours a toll-free emergency line is activated; and
(8) Include assistance for the disabled, the hearing impaired, and Spanish-speaking inquirers in all customer service operations.
(9) Meet applicable licensure requirements in each State in which it supplies drugs under the CAP;
(10) Be enrolled in Medicare as a participating supplier;
(11) Comply with all applicable Federal and State laws, regulations and guidance related to the prevention of fraud and abuse;
(12) Supply CAP drugs upon receipt of a prescription order to all participating CAP physicians who have selected the approved CAP vendor, except when the conditions of §414.914(h) are met;
(13) Provide direct notification to participating CAP physicians enrolled with them of updates to the approved CAP vendor's CAP drug list on a quarterly basis. Changes must be disseminated at least 30 days before the approved changes are due to take effect, unless immediate notification as described in §414.906(f)(4) is required. The approved CAP vendor's entire CAP drug list must be disseminated at least once yearly; and approved CAP vendors must make a complete list that incorporates the most recent updates available to physicians on an ongoing basis. CMS posts on its web site the updated CAP drug lists for each approved CAP vendor.
(14) Ensure that subcontractors who are involved in providing services under the approved CAP contractor's CAP contract meet all requirements and comply with all laws and regulations relating to the services they provide under the CAP program. Notwithstanding any relationship the CAP vendor may have with any subcontractor, the approved CAP vendor maintains ultimate responsibility for adhering to and otherwise fully complying with all terms and conditions of its contract with CMS;
(15) Comply with product integrity and record keeping requirements including but not limited to drug acquisition, handling, storage, shipping, drug waste, and return processes; and
(16) Comply with such other terms and conditions as CMS may specify in the CAP contract consistent with section 1847B of the Act.
(g) Under the terms of the contract, the approved CAP vendor must provide assistance to beneficiaries experiencing financial difficulty in paying their cost-sharing amounts through any one or all of the following:
(1) Referral to a bona fide and independent charitable organization.
(2) Implementation of a reasonable payment plan.
(3) A full or partial waiver of the cost-sharing amount after determining in good faith that the individual is in financial need or the failure of reasonable collection efforts, provided that the waiver meets all of the requirements of section 1128A(i)(6)(A) of the Act and the corresponding regulations at paragraph (1) of the definition of “Remuneration” in §1003.101 of this title. The availability of waivers may not be advertised or be made as part of a solicitation. Approved CAP vendors must inform beneficiaries that they generally make available the categories of assistance described in paragraphs (g)(1), (g)(2), and (g)(3) of this section. In no event may the approved CAP vendor include or make any statements or representations that promise or guarantee that beneficiaries receive cost-sharing waivers.
(h) The approved CAP vendor must comply with the following procedures before it may refuse to make further shipments of CAP drugs to a participating CAP physician on behalf of a beneficiary:
(1) Subsequent to receipt of final payment by Medicare, or the verification of drug administration by the participating CAP physician, the approved CAP vendor must bill any applicable supplemental insurance policies.
(2) If a balance remains, after the supplemental insurer pays their share of the bill, or if there is no supplemental insurance, the approved CAP vendor may bill the beneficiary.
(3) At the time of billing the beneficiary, or the participating CAP physician's presentation of the bill on behalf of the approved CAP vendor, the approved CAP vendor must inform the beneficiary of any types of cost-sharing assistance that may be available consistent with the requirements of section 1128A(a)(5) of the Act and §414.914(g).
(4) If the beneficiary demonstrates a financial need, the approved CAP vendor must follow the conditions outlined in paragraph (g) of this section.
(5) For purposes of paragraph (h) delivery means postmark date, or the date the coinsurance bill or notice was presented to the beneficiary by the participating CAP physician on behalf of the approved CAP vendor.
(i) Except as specified in paragraph (h)(5)(ii), if after 45 days from delivery of the approved CAP vendor's bill to the beneficiary, the beneficiary's cost-sharing obligation remains unpaid, the approved CAP vendor may refuse further shipments to the participating CAP physician for that beneficiary.
(ii) If the beneficiary has requested cost-sharing assistance within 45 days of receiving delivery of the approved CAP vendor's bill, provisions of paragraphs (h)(6), (h)(7), or (h)(8) of this section, apply.
(6) If the approved CAP vendor implements a reasonable payment plan, as specified in §414.914(g)(2), the approved CAP vendor must continue to ship CAP drugs for the beneficiary, as long as the beneficiary remains in compliance with the payment plan and makes an initial payment under the plan within 15 days after the delivery of the approved CAP vendor's written notice to the beneficiary offering the payment plan.
(7) If the approved CAP vendor has waived the cost-sharing obligations in accordance with section 1128A of the Act and §414.914(g)(3), the approved CAP vendor may not refuse to ship drugs for that beneficiary.
(8) If the approved CAP vendor refers the beneficiary to a bona fide and independent charity in accordance with §414.914(g)(1), the approved CAP vendor may refuse to ship drugs if the past due balance is not paid 15 days after the date of delivery of the approved CAP vendor's written notice to the beneficiary containing the referral for cost-sharing assistance.
(9) The approved CAP vendor may refuse to make further shipments to that participating CAP physician on behalf of the beneficiary for the lesser of the end of the calendar year or until the beneficiary's balance is paid in full.
[70 FR 39096, July 6, 2005, as amended at 70 FR 70333, Nov. 21, 2005]
§ 414.916 Dispute resolution for vendors and beneficiaries.
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(a) General rule. Cases of an approved CAP vendor's dissatisfaction with denied drug claims are resolved through a voluntary alternative dispute resolution process delivered by the designated carrier, and a reconsideration process provided by CMS.
(b) Dispute resolution. (1) When an approved CAP vendor is not paid on claims submitted to the designated carrier, the vendor may appeal to the designated carrier to counsel the responsible participating CAP physician on his or her agreement to file a clean claim and pursue an administrative appeal in accordance with subpart H of part 405 of this chapter. If problems persist, the approved CAP vendor may ask the designated carrier to—
(i) Review the participating CAP physician's performance; and
(ii) Potentially recommend to CMS that CMS suspend the participating CAP physician's CAP election agreement.
(2) The designated carrier—
(i) Gathers information from the local carrier, the participating CAP physician, the beneficiary, and the approved CAP vendor; and
(ii) Makes a recommendation to CMS on whether the participating CAP physician has been filing his or her CAP drug administration claims in accordance with the requirements for physician participation in the CAP as set forth in §414.908(a)(3). The recommendation will include numbered findings of fact.
(3) CMS will review the recommendation of the designated carrier and gather relevant additional information from the participating CAP physician before deciding whether to suspend the participating CAP physician's CAP election agreement. A suspension commencing before October 1 will conclude on December 31 of the same year. A suspension commencing on or after October 1 will conclude on December 31 of the next year.
(4) The participating CAP physician may appeal that suspension by requesting a reconsideration of CMS' decision. The reconsideration will address whether the participating CAP physician's denied claims and appeals were the result of the participating CAP physician's failure to participate in accordance with the requirements of §414.908(a)(3).
(c) Reconsideration—(1) Right to reconsideration. A participating CAP physician dissatisfied with a determination that his or her CAP election agreement has been suspended by CMS is entitled to a reconsideration as provided in this subpart.
(2) Eligibility for reconsideration. CMS reconsiders any determination to suspend a participating CAP physician's election agreement if the participating CAP physician files a written request for reconsideration in accordance with paragraphs (c)(3) and (c)(4) of this section.
(3) Manner and timing of request for reconsideration. A participating CAP physician who is dissatisfied with a CMS decision to suspend his or her CAP election agreement may request a reconsideration of the decision by filing a request with CMS. The request must be filed within 30 days of receipt of the CMS decision letter notifying the participating CAP physician of CMS' decision to suspend his or her CAP election agreement. From the date of receipt of the decision letter until the day the reconsideration determination is final, the ASP payment methodology under section 1847A of the Act applies to the physician.
(4) Content of request. The request for reconsideration must specify—
(i) The findings or issues with which the participating CAP physician disagrees;
(ii) The reasons for the disagreement;
(iii) A recital of the facts and law supporting the participating CAP physician's position;
(iv) Any supporting documentation; and
(v) Any supporting statements from approved CAP vendors, local carriers, or beneficiaries.
(5) Withdrawal of request for reconsideration. A participating CAP physician may withdraw his or her request for reconsideration at any time before the issuance of a reconsideration determination.
(6) Discretionary informal hearing. In response to a request for reconsideration, CMS may, at its discretion, provide the participating CAP physician the opportunity for an informal hearing that—
(i) Is conducted by a hearing officer appointed by the director of the CMS Center for Medicare Management or his or her designee; and
(ii) Provides the participating CAP physician the opportunity to present, by telephone or in person, evidence to rebut CMS' decision to suspend or terminate a participating CAP physician's CAP election agreement.
(7) Informal hearing procedures. (i) CMS provides written notice of the time and place of the informal hearing at least 10 days before the scheduled date.
(ii) The informal reconsideration hearing will be conducted in accordance with the following procedures:
(A) The hearing is open to CMS and the participating CAP physician requesting the reconsideration, including—
(1) Authorized representatives;
(2) Technical advisors (individuals with knowledge of the facts of the case or presenting interpretation of the facts);
(3) Representatives from the local carrier;
(4) Representatives from the approved CAP vendor; and
(5) Legal counsel.
(B) The hearing is conducted by the hearing officer who receives relevant testimony;
(C) Testimony and other evidence may be accepted by the hearing officer even though it would be inadmissible under the rules of evidence applied in Federal courts;
(D) Either party may call witnesses from among those individuals specified in paragraph (c)(7)(ii)(A) of this section; and
(E) The hearing officer does not have the authority to compel by subpoena the production of witnesses, papers, or other evidence.
(8) Hearing officer's findings. (i) Within 30 days of the hearing officer's receipt of the hearing request, the hearing officer presents the findings and recommendations to the participating CAP physician who requested the reconsideration. If the hearing officer decides to conduct an in-person or telephone hearing, the hearing officer will send a hearing notice to the participating CAP physician within 10 days of receipt of the hearing request, and the findings and recommendations are due to the participating CAP physician within 30 days of the hearing's conclusion.
(ii) The written report of the hearing officer includes separate numbered findings of fact and the legal conclusions of the hearing officer.
(9) Final reconsideration determination. (i) The hearing officer's decision is final unless the director of the CMS Center for Medicare Management or his or her designee chooses to review that decision within 30 days. If the decision is favorable to the participating CAP physician, then the participating CAP physician may resume his or her participation in CAP. The hearing officer and the CMS official may review decisions that are favorable or unfavorable to the participating CAP physician.
(ii) The CMS official may accept, reject, or modify the hearing officer's findings.
(iii) If the CMS official reviews the hearing officer's decision, the CMS official issues a final reconsideration determination to the participating CAP physician on the basis of the hearing officer's findings and recommendations and other relevant information.
(iv) The reconsideration determination of the CMS official is final. If the final decision is unfavorable to the participating CAP physician, then the participating CAP physician's CAP election agreement is terminated.
(d) The approved CAP vendor may not charge the beneficiary for the full drug coinsurance amount if the designated contractor did not pay the approved CAP vendor in full, unless a properly executed advance beneficiary notice is in place. When a beneficiary receives an inappropriate coinsurance bill, the beneficiary may participate in the approved CAP vendor's grievance process to request correction of the approved CAP vendor's file. If the beneficiary is dissatisfied with the result of the approved CAP vendor's grievance process, the beneficiary may request intervention from the designated carrier. This is in addition to, rather than in place of, any other beneficiary appeal rights. The designated carrier will first investigate the facts and then facilitate correction to the appropriate claim record and beneficiary file.
[70 FR 39097, July 6, 2005]
§ 414.917 Dispute resolution and process for suspension or termination of approved CAP contract.
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(a) General rule. If a participating CAP physician finds an approved CAP vendor's service, or the quality of a CAP drug supplied by the approved CAP vendor to be unsatisfactory, then the physician may address the issue first through the approved CAP vendor's grievance process, and second through an alternative dispute resolution process administered by the designated carrier and CMS. If CMS suspends an approved CAP vendor's CAP contract for noncompliance or terminates the CAP contract in accordance with §414.914(a), the approved CAP vendor may request a reconsideration in accordance with paragraph (c) of this section.
(b) Dispute resolution. (1) When a participating CAP physician is dissatisfied with an approved CAP vendor's service or the quality of a CAP drug supplied by the approved CAP vendor, then the participating CAP physician may use the approved CAP vendor's grievance process. If the service or quality issues are not resolved through the grievance process to the physician's satisfaction, then the participating CAP physician may ask the designated carrier to—
(i) Review the approved CAP vendor's performance; and
(ii) Potentially recommend termination of the approved CAP vendor's CAP contract.
(2) Responsibility of the designated carrier. The designated carrier—
(i) Gathers information from the local carrier, the participating CAP physician, the beneficiary, and the approved CAP vendor; and
(ii) Makes a recommendation to CMS on whether the approved CAP vendor has been meeting the service and quality obligations of its CAP contract. This recommendation will include numbered findings of fact.
(3) CMS will review the recommendation of the designated carrier and, gather relevant additional information from the approved CAP vendor, the participating CAP physician, the local carrier, and the beneficiary before deciding whether to terminate the approved CAP vendor's CAP contract.
(4) The approved CAP vendor may appeal that termination by requesting a reconsideration. A determination must be made as to whether the approved CAP vendor has been meeting the service and quality obligations of its CAP contract.
(c) Reconsideration—(1) Right to reconsideration. An approved CAP vendor dissatisfied with a determination that its CAP contract has been suspended or terminated by CMS is entitled to a reconsideration as provided in this subpart.
(2) Eligibility for reconsideration. CMS will reconsider any determination to suspend or terminate an approved CAP vendor's contract if the approved CAP vendor files a written request for reconsideration in accordance with paragraphs (c)(3) and (c)(4) of this section.
(3) Manner and timing of request for reconsideration. An approved CAP vendor that is dissatisfied with a CMS decision to suspend or terminate its CAP contract may request a reconsideration of the decision by filing a request with CMS. The request must be filed within 30 days of receipt of the CMS decision letter notifying the approved CAP vendor of the suspension or termination of its CAP contract.
(4) Content of request. The request for reconsideration must specify—
(i) The findings or issues with which the approved CAP vendor disagrees;
(ii) The reasons for the disagreement;
(iii) A recital of the facts and law supporting the approved CAP vendor's position;
(iv) Any supporting documentation; and
(v) Any supporting statements from participating CAP physicians, the local carrier, or beneficiaries.
(5) Withdrawal of request for reconsideration. An approved CAP vendor may withdraw its request for reconsideration at any time before the issuance of a reconsideration determination.
(6) Discretionary informal hearing. In response to a request for reconsideration, CMS may, at its discretion, provide the approved CAP vendor the opportunity for an informal hearing that—
(i) Is conducted by a hearing officer appointed by the Director of the CMS Center for Medicare Management or his or her designee; and
(ii) Provides the approved CAP vendor the opportunity to present, by telephone or in person, evidence to rebut CMS' decision to suspend or terminate the approved CAP vendor's CAP contract.
(7) Informal hearing procedures. (i) CMS will provide written notice of the time and place of the informal hearing at least 10 days before the scheduled date.
(ii) The informal reconsideration hearing will be conducted in accordance with the following procedures:
(A) The hearing is open to CMS and the approved CAP vendor requesting the reconsideration, including—
(1) Authorized representatives;
(2) Technical advisors (individuals with knowledge of the facts of the case or presenting interpretation of the facts);
(3) Representatives from the local carriers and the designated carrier;
(4) The participating CAP physician who requested the suspension, if any; and
(5) Legal counsel.
(B) The hearing will be conducted by the hearing officer, who will receive relevant testimony;
(C) Testimony and other evidence may be accepted by the hearing officer even though it would be inadmissible under the rules of evidence applied in Federal courts;
(D) Either party may call witnesses from among those individuals specified in the paragraph (c)(7)(ii)(A) of this section; and
(E) The hearing officer does not have the authority to compel by subpoena the production of witnesses, papers, or other evidence.
(8) Hearing officer's findings. (i) Within 30 days of the hearing officer's receipt of the hearing request, the hearing officer will present the findings and recommendations to the approved CAP vendor that requested the reconsideration. If the hearing officer conducts a hearing in person or by phone, the hearing officer will send a hearing notice to the approved CAP vendor within 10 days of receipt of the hearing request, and the findings and recommendations are due to the approved CAP vendor within 30 days from of the hearing's conclusion.
(ii) The written report of the hearing officer will include separate numbered findings of fact and the legal conclusions of the hearing officer.
(9) Final reconsideration determination. (i) The hearing officer's decision is final unless the Director of the CMS Center for Medicare Management or his or her designee (CMS official) chooses to review that decision within 30 days. If the decision is favorable to the approved CAP vendor, then the approved CAP vendor may resume participation in CAP. The hearing officer and the CMS official may review decisions that are favorable or unfavorable to the approved CAP vendor.
(ii) The CMS official may accept, reject, or modify the hearing officer's findings.
(iii) If the CMS official reviews the hearing officer's decision, the CMS official will issue a final reconsideration determination to the approved CAP vendor on the basis of the hearing officer's findings and recommendations and other relevant information.
(iv) The reconsideration determination of the CMS official is final.
[70 FR 39098, July 6, 2005]
§ 414.918 Assignment.
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Payment for a CAP drug may be made only on an assignment-related basis.
[70 FR 39099, July 6, 2005]
§ 414.920 Judicial review.
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The following areas under the CAP are not subject to administrative or judicial review:
(a) The establishment of payment amounts.
(b) The awarding of vendor contracts.
(c) The establishment of competitive acquisition areas.
(d) The selection of CAP drugs.
(e) The bidding structure.
(f) The number of vendors selected.
[70 FR 39099, July 6, 2005]
Subpart L—Supplying and Dispensing Fees
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§ 414.1000 Purpose.
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This subpart implements section 1842(o)(2) and section 1842(o)(6) of the Act, as added by section 303(e)(2) of the MMA, by specifying a supplying fee for drugs and biologicals covered under Part B of Title XVIII of the Act that are described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and 1861(s)(2)(T) of the Act.
[69 FR 66425, Nov. 15, 2004]
§ 414.1001 Basis of payment.
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(a) Supplying fees. Beginning in CY 2006—
(1) A supplying fee of $24 is paid to a pharmacy for the first prescription of drugs and biologicals described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and 1861(s)(2)(T) of the Act, that the pharmacy provided to a beneficiary during a 30-day period.
(2) A supplying fee of $16 is paid to a pharmacy for each prescription following the first prescription (as specified in paragraph (a)(1) of this section) of drugs and biologicals described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and 1861(s)(2)(T) of the Act, that the pharmacy provided to a beneficiary during a 30-day period.
(3) A separate supplying fee is paid to a pharmacy for each prescription of drugs and biologicals described in sections 1861(s)(2)(J), 1861(s)(2)(Q), and 1861(s)(2)(T) of the Act.
(b) Supplying fees following transplant. Beginning CY 2006—(1) A supplying fee of $50 is paid to pharmacy for the initial supplied prescription of drugs and biologicals described in section 1861(s)(2)(J) of the Act, that the pharmacy provided to a patient during the first 30-day period following a transplant.
(2) A supplying fee of $16 is paid to a pharmacy for each prescription following an initial prescription after a transplant (as specified in paragraph (b)(1) of this section) of drugs and biologicals describe in section 1861(s)(2)(J) of the Act, that the pharmacy provided to a beneficiary during a 30-day period.
(c) 30-day dispensing fees. Beginning CY 2006—(1) A dispensing fee of $57 is paid to a supplier to the extent that the prescription is for the initial dispensed 30-day supply of inhalation drugs furnished through durable medical equipment covered under section 1861(n) of the Act, regardless of the number of partial shipments of that 30-day supply.
(2) Except for supplied inhalation drugs that meet criteria described in paragraph (c)(1) of this section, a dispensing fee of $33 is paid for each dispensed 30-day supply of inhalation drugs furnished through durable medical equipment covered under section 1861(n) of the Act, regardless of the number of partial shipments of that 30-day supply.
(d) 90-day dispensing fee. Beginning CY 2006, a dispensing fee of $66 is paid to a supplier for each dispensed 90-day supply of inhalation drugs furnished through durable medical equipment covered under section 1861(n) of the Act, regardless of the number of partial shipments of that 90-day supply.
[70 FR 70334, Nov. 21, 2005]
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