Medicare Program:

Federal Register Volume 76, Number 108 (Monday, June 6, 2011)

Proposed Rules

Pages 32410-32813

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

FR Doc No: 2011-13052

Page 32409

Vol. 76

Monday,

No. 108

June 6, 2011

Part II

Department of Health and Human Services

Centers for Medicare & Medicaid Services

42 CFR Part 414

Medicare Program; Five-Year Review of Work Relative Value Units Under the Physician Fee Schedule; Proposed Rule

Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services 42 CFR Part 414

CMS-1582-PN

RIN 0938-AQ87

Medicare Program; Five-Year Review of Work Relative Value Units

Under the Physician Fee Schedule

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed notice.

SUMMARY: This proposed notice sets forth proposed revisions to work relative value units (RVUs) and corresponding changes to the practice expense and malpractice RVUs affecting payment for physicians' services. The statute requires that we review RVUs no less often than every 5 years. This is our Fourth Five-Year Review of Work RVUs since we implemented the physician fee schedule (PFS) on January 1, 1992.

These revisions to work RVUs are proposed to be effective for services furnished beginning January 1, 2012. These revisions reflect changes in medical practice and coding that affect the relative amount of physician work required to perform each service as required by the statute. The Fourth Five-Year Review of Work includes services that were submitted through public comment and by the Medicare contractor medical directors (CMDs), as well as a number of potentially misvalued codes identified by CMS (that is, Harvard valued codes and codes with

Site-of-Service anomalies).

DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on July 25, 2011.

ADDRESSES: In commenting, please refer to file code CMS-1582-PN.

Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (please choose only one of the ways listed). 1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the ``Submit a comment'' instructions. 2. By regular mail. You may mail written comments to the following address only: Centers for Medicare & Medicaid Services, Department of

Health and Human Services, Attention: CMS-1582-PN, P.O. Box 8013,

Baltimore, MD 21244-8013.

Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments to the following address only: Centers for Medicare & Medicaid Services,

Department of Health and Human Services, Attention: CMS-1582-PN, Mail

Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments before the close of the comment period to either of the following addresses: a. For delivery in Washington, DC--Centers for Medicare & Medicaid

Services, Department of Health and Human Services, Room 445-G, Hubert

8. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201.

   (Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp- in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid

   Services, Department of Health and Human Services, 7500 Security

   Boulevard, Baltimore, MD 21244-1850.

   If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-9994 in advance to schedule your arrival with one of our staff members.

   Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

   For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section.

   FOR FURTHER INFORMATION CONTACT: Erin Smith, (410) 786-4497, for issues related to physician payment and for all other issues not identified below.

   Elizabeth Truong, (410) 786-6005, or Sara Vitolo, (410) 786-5714, for issues related to work RVUs.

   Ryan Howe, (410) 786-3355, for issues related to PE RVUs.

   SUPPLEMENTARY INFORMATION:

   Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that Web site to view public comments.

   Comments received timely will be also available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the

   Centers for Medicare & Medicaid Services, 7500 Security Boulevard,

   Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.

   Table of Contents

   I. Background

1. History

2. Physician Fee Schedule Rulemaking

3. The Five-Year Review Process 1. Identification of CPT Codes for Review 2. Background on American Medical Association/Specialty Society

   Relative Value Update Committee (AMA RUC) Recommendations AMA RUC 3. Five-Year Review of Work Process

   II. CMS Review of Five-Year Review Codes

1. CMS Analytical Approach

2. Summary of Proposed Work RVUs for Five-Year Review Codes

3. Code-Specific Discussions of Proposed Alternative Work RVUs 1. Drainage of Hematoma 2. Wound Repair 3. Skin Grafts 4. Destruction of Skin Lesions 5. Partial Mastectomy 6. Percutaneous Vertebroplasty/Kyphoplasty 7. Closed Treatment of Distal Radial Fracture 8. Orthopaedic Surgery--Thigh/Knee 9. Treatment of Ankle Fracture 10. Orthopaedic Surgery/Podiatry 11. Application of Cast and Strapping 12. Cardiothoracic Surgery 13. Vascular Surgery 14. Excise Parotid Gland/Lesion 15. Endoscopic Cholangiopancreatography 16. Sigmoidoscopy 17. Laparoscopic Cholecystectomy 18. Hernia Repair 19. Laparoscopic Hernia Repair 20. Urologic Procedures 21. Removal of Thyroid/Parathyroid 22. Implant Neuroelectrodes 23. Injection of Anesthetic Agent 24. Gastric Emptying Study 25. Nasopharyngoscopy 26. Cardiopulmonary Resuscitation 27. Osteopathic Manipulative Treatment 28. Observation Care

4. HCPAC-Recommended Work RVUs--Excision of Nail

5. CPT Codes Identified Through the Five-Year Review Process,

   But Not Reviewed by CMS 1. CPT Codes Referred to CPT Editorial Board 2. CPT Codes Withdrawn From the Five-Year Review

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   3. CPT Codes That Are Interim Final for CY 2011 4. CPT Codes for Preventive Medicine Services

6. Resource-Based Practice Expense RVUs 1. Overview 2. Practice Expense Methodology a. Direct Practice Expense b. Indirect Practice Expense per Hour Data c. Allocation of Practice Expense to Services d. Facility and Nonfacility Costs e. Services With Technical Components and Professional

   Components f. Practice Expense RVU Methodology 3. Practice Expense RVUs for Codes Included in the Five-Year

   Review a. Changes to Direct Practice Expense Inputs

   (1) Changes in Intra-Service Physician Time in the Nonfacility

   Setting

   (2) Changes in Hospital Discharge Management Services in the

   Facility Setting

   (3) Changes in the Number or Level of Postoperative Office

   Visits in the Global Period b. Changes in Components of the Indirect Practice Expense

   Methodology

   (1) Work RVUs, Direct PE RVUs, and Clinical Labor PE RVUs

   (2) Physician Time

7. Malpractice RVUs

   III. Budget Neutrality

   IV. Collection of Information Requirements

   V. Regulatory Impact Analysis

1. Overall Impact

2. Anticipated Effects: Impact on Beneficiaries

3. Alternatives Considered

4. Accounting Statement and Table

5. Conclusion

   Addendum A: Explanation and Use of Addendum B

   Addendum B: Relative Value Units and Related Information

   Addendum C: Codes With Work RVUs Subject to Comment

   In addition, because of the many organizations and terms to which we refer by acronym in this proposed notice, we are listing these acronyms and their corresponding terms in alphabetical order below:

   AAD American Academy of Dermatology

   AAN American Academy of Neurology

   AANEM American Association of Neuromuscular and Electrodiagnostic

   Medicine

   AAFP American Academy of Family Physicians

   AAGP American Association for Geriatric Psychiatry

   AAHCP American Academy of Home Care Physicians

   AANS American Association of Neurological Surgeons

   AAO American Academy of Ophthalmology

   AAO-HNS American Academy of Otolaryngology--Head and Neck Surgery

   AAOA American Academy of Otolaryngic Allergy

   AAOS American Academy of Orthopaedic Surgeons

   AAP American Academy of Pediatrics

   AAPM American Academy of Pain Medicine

   AAPMR American Academy of Physical Medicine and Rehabilitation

   AATS American Association for Thoracic Surgery

   ACC American College of Cardiology

   ACG American College of Gastroenterology

   ACNS American Clinical Neurophysiology Society

   ACOG American College of Obstetricians and Gynecologists

   ACR American College of Radiology

   ACS American College of Surgeons

   AFROC Association of Freestanding Radiation Oncology Centers

   AGA American Gastroenterological Association

   AGS American Geriatric Society

   AK Actinic keratoses

   AMA American Medical Association

   AMDA American Medical Directors Association

   AOA American Optometric Association

   ASA American Society of Anesthesiologists

   ASC Ambulatory surgical center

   ASCRS American Society of Colon and Rectal Surgeons

   ASGE American Society of Gastrointestinal Endoscopy

   ASHA American Speech-Language-Hearing Association

   ASPS American Society of Plastic Surgeons

   ASSH American Society for Surgery of the Hand

   ASTRO American Society for Therapeutic Radiology and Oncology

   AUA American Urological Association

   BBA 97 Balanced Budget Act of 1997 (Pub. L. 105-33)

   BBRA [Medicare, Medicaid and State Child Health Insurance Program]

   Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)

   BNF Budget neutrality factor

   CAPU Coalition for the Advancement of Prosthetic Urology

   CF Conversion factor

   CNS Congress of Neurological Surgeons

   CPEP Clinical Practice Expert Panels

   CPT Current Procedural Terminology

   CY Calendar year

   DRG Diagnosis-Related Group

   E/M Evaluation and management

   FR Federal Register

   HCPAC Health Care Professionals Advisory Committee

   HCPCS Healthcare Common Procedure Coding System

   HHS Health and Human Services

   ICU Intensive care unit

   IDTF Independent diagnostic testing facility

   IWPUT Intra-service work per unit of time

   JCAAI Joint Council of Allergy, Asthma, and Immunology

   MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173)

   MMSV Minimum multi-specialty visit

   MPC [the RUC's] Multi-Specialty Points of Comparison

   NCQDIS National Coalition of Quality Diagnostic Imaging Services

   NPWP Non-physician work pool

   NSQIP National Surgical Quality Improvement Program

   PC Professional component

   PE Practice Expense

   PE/HR Practice expense per hour

   PEAC Practice Expense Advisory Committee

   PERC Practice Expense Review Committee

   PFS Physician fee schedule

   RFA Regulatory Flexibility Act

   RIA Regulatory impact analysis

   RN Registered nurse

   RUC [AMA's Specialty Society] Relative [Value] Update Committee

   RVU Relative value unit

   SMS [AMA's] Socioeconomic Monitoring System

   SNF Skilled nursing facility

   STS Society of Thoracic Surgeons

   SVS Society for Vascular Surgery

   TC Technical component

   VA [Department of] Veteran Affairs

   CPT (Current Procedural Terminology) Copyright Notice

   Throughout this proposed rule, we use CPT codes and descriptions to refer to a variety of services. We note that CPT codes and descriptions are copyright 2010 American Medical Association. All Rights Reserved.

   CPT is a registered trademark of the American Medical Association

   (AMA). Applicable FARS/DFARS apply.

   I. Background

1. History

   Since January 1, 1992, Medicare has paid for physicians' services under section 1848 of the Social Security Act (the Act), ``Payment for

   Physicians' Services.'' Section 1848 of the Act contains three major elements: (1) A fee schedule for the payment of physicians' services;

   (2) a sustainable growth rate for the rates of increase in Medicare expenditures for physicians' services; and (3) limits on the amounts that nonparticipating physicians can charge beneficiaries. The Act requires that payments under the fee schedule be based on national uniform relative value units (RVUs) based on the resources used in furnishing a service. Section 1848(c) of the Act requires that national

   RVUs be established for physician work, practice expense (PE), and malpractice expense. In order to establish physician work, PE, and malpractice expense RVUs, section 1848(c)(2)(K)(iii) of the Act (as added by section 3134 of the Patient Protection and Affordable Care Act

   (Pub. L. 111-148) (hereinafter the ``Affordable Care Act'') also specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. Section 1848(c)(2)(B)(i) of the Act requires that we review RVUs no less often than every 5 years.

   The statute also specifies a budget neutrality requirement.

   Specifically,

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   section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or decreases in RVUs may not cause the amount of expenditures under Part B for the year to differ more than $20 million from what it would have been in the absence of these changes. If this threshold is exceeded, we are required to make adjustments to preserve budget neutrality.

2. Physician Fee Schedule Rulemaking

   On an annual basis, we publish regulations relating to updates to the RVUs and revisions to the payment policies under the PFS. Most recently, in the calendar year (CY) 2011 PFS final rule with comment period that was published in the Federal Register on November 29, 2010

   (75 FR 73170) (hereinafter referred to as the CY 2011 PFS final rule with comment period), we finalized most of the CY 2010 interim physician work, PE, and malpractice RVUs; issued new interim work, PE, and malpractice RVUs for new and revised codes for CY 2011; and finalized several other payment policies related to the PFS. In the

   January 11, 2011 Federal Register (76 FR 1670), we published a correction notice that identified and corrected a number of technical and typographical errors in the CY 2011 PFS final rule with comment period. The provisions of the correction notice were effective January 1, 2010.

   As noted previously, section 1848(c)(2)(B)(i) of the Act requires that we review RVUs no less often than every 5 years. We implemented the PFS effective for services furnished beginning January 1, 1992. The

   First Five-Year Review of Work was initiated in December 1994, and was effective for services furnished beginning January 1, 1997. The Second

   Five-Year Review of Work was initiated in November 1999, and was effective for services furnished beginning January 1, 2002. The Third

   Five-Year Review of Work was initiated in November 2004, and was effective for services furnished beginning January 1, 2007. The Fourth

   Five-Year Review of Work, the subject of this proposed notice, was initiated in November 2009 and will be effective for services furnished beginning January 1, 2012.

   This proposed notice describes the Fourth Five-Year Review of Work and sets forth proposed revisions to work RVUs resulting from the latest Review. This proposed notice also sets forth corresponding proposed changes to PE and malpractice RVUs affecting payment for physicians' services. Proposed revisions of physician work RVUs in this proposed notice and corresponding proposed changes to the PE and malpractice RVUs are subject to a 60-day public comment period. We will review public comments, make adjustments to our proposals in response to comments, as appropriate, and include final values in the CY 2012

   PFS final rule with comment period, effective for services furnished beginning January 1, 2012.

   We note that with each PFS rule, we provide a summary table

   (``Addendum B'') of physician work, PE, and malpractice RVUs by HCPCS code for all services under the PFS. For this proposed notice, to create Addendum B, we retained the current CY 2011 RVUs for most codes and displayed new RVUs for only those codes involved in the Fourth

   Five-Year Review of Work. PE RVUs for these Five-Year Review codes were calculated using CY 2009 Medicare PFS utilization data in order to maintain consistency with the current CY 2011 RVUs displayed for all other services.

   We note that the Addendum B that will appear in the upcoming CY 2012 PFS proposed rule, where the annual updates to the RVUs and revisions to the payment policies under the PFS are customarily proposed, will include PE RVUs recalculated using the most recently available Medicare PFS utilization data and reflect other changes that would result from proposed revisions to PFS payment policies for CY 2012 that also would be effective beginning January 1, 2012.

3. The Five-Year Review Process 1. Identification of CPT Codes for Review

   We initiated the Fourth Five-Year Review of Work by soliciting public comments in the CY 2010 PFS final rule with comment period that was published in the Federal Register on November 25, 2009 (74 FR 61738 and 61941) on potentially misvalued codes for all services. In response to our solicitation of potentially misvalued codes, we received comments from approximately 16 specialty groups, organizations, and individuals involving 113 Current Procedural Terminology (CPT) codes.

   Ten additional codes were submitted by the Medicare contractor medical directors (CMDs). Furthermore, CMS identified 96 services that we believed should be reviewed as part of the Fourth Five-Year Review of

   Work. These services fall within the two categories described in the CY 2010 PFS final rule with comment period: (1) Codes that were not previously reviewed by the AMA RUC, specifically, Harvard-valued codes with an annual utilization of > 30,000 services, and (2) codes that are valued as being performed in the inpatient setting, but that are now performed predominantly on an outpatient basis (codes with Site-of-

   Service anomalies). For Site-of-Service anomaly codes, we also applied additional selection criteria. Specifically, the codes we selected for the Fourth Five-Year Review of Work contained at least one inpatient hospital visit in their value and the most recently available Medicare

   PFS claims data at that time showed annual allowed charges of greater than $1 million.

   The following tables list the codes identified for the Fourth Five-

   Year Review of Work.

   BILLING CODE P

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   BILLING CODE P 2. Background on American Medical Association Specialty Society

   Relative Value Update Committee (AMA RUC) Recommendations

   Section 1848(c)(2)(K)(iii) of the Act (as added by section 3134 of the Affordable Care Act) specifies that the Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services. In accordance with section 1848(c)(2)(K)(iii) of the Act, we develop and propose appropriate adjustments to the RVUs, taking into account the recommendations provided by the AMA RUC, the Medicare Payment Advisory

   Commission (MedPAC), and others. To respond to concerns expressed by

   MedPAC, the Congress, and other stakeholders regarding the accuracy of values for services under the PFS, the AMA RUC has used an annual process to systematically identify, review, and provide CMS with recommendations for revised work values for many existing potentially misvalued services. In addition to providing recommendations to CMS for work RVUs, the AMA RUC also reviews direct PE (clinical labor, medical supplies, and medical equipment) for individual services and examines the many broad methodological issues relating to the development of PE

   RVUs.

   For many years, the AMA RUC has provided CMS with recommendations on the appropriate relative values for PFS services. The AMA RUC's recommendations on physician work RVUs have resulted in significant refinements in physician work RVUs over the years. In recent years CMS and the AMA RUC have taken increasingly significant steps to address potentially misvalued codes. As MedPAC noted in its March 2009 Report to Congress, in the intervening years since MedPAC made the initial recommendations, ``CMS and the AMA RUC have taken several steps to improve the review process.'' In addition to the Five-Year Reviews of

   Work, over the past several years CMS and the AMA RUC have identified and reviewed a number of potentially misvalued codes on an annual basis based on various identification screens for codes at risk for being misvalued, such as codes with high growth rates, codes that are frequently billed together in one encounter, and codes that are valued as inpatient services but that are now predominantly performed as outpatient services. This annual review of work RVUs and direct PE inputs for potentially misvalued codes was further bolstered by the

   Affordable Care Act mandate to examine potentially misvalued codes, with an emphasis on the following categories specified in section 1848(c)(2)(K)(ii) (as added by section 3134 of the Affordable Care

   Act):

   Codes and families of codes for which there has been the fastest growth.

   Codes or families of codes that have experienced substantial changes in practice expenses.

   Codes that are recently established for new technologies or services.

   Multiple codes that are frequently billed in conjunction with furnishing a single service.

   Codes with low relative values, particularly those that are often billed multiple times for a single treatment.

   Codes which have not been subject to review since the implementation of the RBRVS (the `Harvard valued codes').

   Other codes determined to be appropriate by the Secretary.

   (For example, codes for which there have been shifts in the Site-of-

   Service (Site-of-Service anomalies), as well as codes that qualify as

   ``23-hour stay'' outpatient services.)

   As a result of the annual potentially misvalued code review, CMS has reviewed over 700 codes for work and PE RVU changes outside of the comprehensive Five-Year Review process over the past several years and adopted appropriate work RVUs and direct PE inputs for these services in the context of contemporary medical practice.

   This Fourth Five-Year Review of Work advances the progress of our initiative to examine potentially misvalued codes by identifying and reviewing additional codes for CY 2012 in several of the categories specified in the Affordable Care Act, including a number of Harvard- valued codes. As

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   noted previously, we typically discuss the potentially misvalued codes initiative in the annual PFS proposed and final rules (for CY 2011, at 75 FR 40065 through 40082 and 75 FR 73215 through 73216, respectively).

   For example, we provided a detailed discussion of the prior reviews of potentially misvalued codes in the CY 2011 PFS final rule with comment period (75 FR 73215 through 73216). Furthermore, in addition to the proposals in this Five-Year Review of Work proposed notice, we plan to continue our work examining potentially misvalued codes for CY 2012 in the areas specified by the Affordable Care Act and others identified by the Secretary, consistent with the new legislative mandate on this issue. We will provide a comprehensive update regarding our progress to date in evaluating and revising the values for potentially misvalued codes, and discuss our priorities and future plans to ensure the accuracy of the relative values for all services paid under the PFS in the forthcoming CY 2012 PFS proposed rule.

   We greatly appreciate the considerable sustained efforts made by all members and staff of the AMA RUC to date, and we look forward to continuing our collaborative work with the AMA RUC toward our mutual goal of ensuring that CPT codes are appropriately valued under the PFS.

   For codes used primarily by nonphysician practitioners, the Health

   Care Professionals Advisory Committee (HCPAC), a deliberative body of nonphysician practitioners that also convenes during the AMA RUC meeting, submits recommendations directly to CMS. The HCPAC represents physician assistants, chiropractors, nurses, occupational therapists, optometrists, physical therapists, podiatrists, psychologists, audiologists, speech pathologists, social workers, and registered dieticians. We greatly appreciate the efforts of the HCPAC as well. 3. AMA RUC Five-Year Review of Work Process

   After compiling the list of potentially misvalued codes to be reviewed in the Fourth Five-Year Review of Work (Tables 1 through 4), we submitted the list to the AMA RUC.

   According to the AMA RUC's Five-Year Review timetable, upon receipt of the list of codes from CMS, the AMA RUC sent Level of Interest (LOI) forms to all specialty societies and the HCPAC so that the Five-Year

   Review codes could be reviewed initially by the appropriate specialty societies. To prepare for presentations of the codes to the AMA RUC, most specialty societies compiled data using a standard survey instrument whereby respondents compared the surveyed service with similar ``reference'' services for which there generally are well- established work values. Respondents were asked to estimate: the work

   RVU for the survey code; the time to perform the ``pre-'', ``intra-'', and ``post-'' service activities; and the technical skill, risk, and judgment involved with performing the service. Post-service activities were broken down into hospital and office visits and were assigned an appropriate evaluation and management (E/M) code by the respondents for the typical service. Each specialty society was responsible for selecting the physician sample size to be surveyed. In general, a minimum of 30 responses was required by the AMA RUC for the survey to be considered adequate. It is our understanding that the AMA RUC is currently reviewing its survey methodologies in order to improve the survey instrument's ability to provide valid and reliable data.

   As part of the AMA RUC's process, the specialty societies also provided the AMA RUC with a work RVU recommendation for each code under review. The AMA RUC met to hear the presentations from the specialty societies for each code, deliberate as a group, and vote on the work

   RVU, physician times, PE direct inputs (if applicable), and other aspects pertaining to the valuation of a code. The AMA RUC then sent its recommendations to CMS. As we have stated previously in conducting

   Five-Year Reviews, we retain the responsibility for analyzing any comments and recommendations received from the AMA RUC, developing the proposed notice, evaluating the comments on the proposed notice, and deciding whether and how to revise the work RVUs for any given service.

   II. CMS Review of Five-Year Review Codes

1. CMS Analytical Approach

   We conducted a clinical review of each code and reviewed the AMA

   RUC recommendations for work RVU, time to perform the ``pre-'',

   ``intra-'', and ``post-'' service activities, as well as other components of the service which contribute to the value. Our clinical review generally includes, but is not limited to, a review of information provided by the AMA RUC, medical literature, public comments, and comparative databases, as well as a comparison with other codes within the Medicare PFS, consultation with other physicians and healthcare care professionals within CMS and the Federal Government, and the clinical experience of the physicians on the clinical team. We also assessed the methodology and data used to develop the recommendations and the rationale for the recommendations. As we noted in the CY 2011 PFS final rule with comment period (75 FR 73328 through 73329), the AMA RUC uses a variety of methodologies and approaches to assign work RVUs, including building block, survey data, crosswalk to key reference or similar codes, and magnitude estimation. The resource- based relative value system (RBRVS) has incorporated into it cross- specialty and cross-organ system relativity. This RBRVS requires assessment of relative value and takes into account the clinical intensity and time required to perform a service. In selecting which methodological approach will best determine the appropriate value for a service we consider the current physician work and time values, AMA RUC recommended physician work and time values, and specialty society physician work and time values, as well as the intensity of the service, all relative to other services. In general, if we had concerns regarding the AMA RUC's application of a particular methodology for a code, we assessed whether the recommended work RVUs were appropriate by using alternative methodologies. For a full discussion of our views and concerns regarding the various methodologies, we refer readers to the

   CY 2011 PFS final rule with comment period (75 FR 73328 through 73329).

   During our clinical review to assess the appropriate values for the codes included in the Fourth Five-Year Review, several recurring scenarios emerged. We developed systematic approaches to address two particular areas of concern.

   The first area of concern pertains to codes with Site-of-Service anomalies. These are codes that were originally valued as inpatient services but current Medicare PFS claims data show they are furnished predominantly as outpatient services. We noted that for nearly all of the codes with Site-of-Service anomalies, the accompanying survey data suggest they are ``23 hour stay'' outpatient services. We discussed in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227) the ``23 hour stay service,'' which is a term of art describing services that typically have lengthy hospital outpatient recovery periods. For these 23 hour stay services, the typical patient is commonly at the hospital for less than

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   24 hours, but often stays overnight at the hospital. For example, if the patient arrives at the hospital at 6 a.m. for a scheduled surgical procedure that typically has a lengthy hospital outpatient recovery period, the patient may recover during the day and be ready to be discharged late in the evening without having to stay overnight at the hospital. More commonly, however, if the patient arrives at the hospital at noon for a surgical procedure that typically has a lengthy hospital outpatient recovery period, the patient may stay at the hospital overnight to recover and be discharged the following morning.

   On occasion, the patient may recover at the hospital for longer than a single night, either because the patient requires an even longer recovery period or the surgery was performed outside of usual business hours. For example, if the patient arrives at the hospital at 11 p.m. and requires an unscheduled surgical procedure that typically has a lengthy hospital outpatient recovery period, the patient may stay at the hospital overnight in preparation for surgery, have the surgical procedure performed, and then stay through another night recovering at the hospital before being discharged. In all these cases, unless a treating physician has written an order to admit the patient as an inpatient, the patient is considered for Medicare purposes to be a hospital outpatient, not an inpatient, and our claims data support that the typical 23 hour stay service is billed as an outpatient service.

   We believe that the values of the codes that fall into the 23 hour stay category, that is, services that typically have lengthy hospital outpatient recovery periods, should not reflect work that is typically associated with an inpatient service. For example, inpatient E/M visit codes such as CPT codes 99231 (Level 1 subsequent hospital care, per day); 99232 (Level 2 subsequent hospital care, per day); and 99233

   (Level 3 subsequent hospital care, per day), should not be included at their full RVU value in the valuation of these services that typically have lengthy hospital outpatient recovery periods. However, as we stated in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227), we find it is plausible that while the patient receiving the outpatient 23 hour stay service remains a hospital outpatient, the patient would typically be cared for by a physician during that lengthy recovery period at the hospital. While we do not believe that post-procedure hospital visits would be at the inpatient level since the typical case is an outpatient who would be ready to be discharged from the hospital in 23 hours or less, we believe it is generally appropriate to include the intra-service time of the inpatient hospital visit in the immediate post-service time of the 23 hour stay code under review. In addition, we indicated that we believe it is appropriate to include a half day, rather than a full day, of a discharge day management service. While some commenters advocated for a deferral on the issue of valuing 23 hour stay services, we note that a number of commenters supported CMS' approach. Consequently, we finalized this policy in the CY 2011 PFS final rule with comment period

   (75 FR 73226 through 73227) and encouraged the AMA RUC to apply this methodology in developing the recommendations it provides to us for valuing 23 hour stay codes, in order to ensure the consistent and appropriate valuation of the physician work for these services.

   The AMA RUC reviewed a number of Site-of-Service anomaly codes during its February 2011 meeting, many of which are Site-of-Service anomaly codes that have been valued on an interim basis since CY 2009.

   These Site-of-Service anomaly codes typically have a lengthy hospital outpatient recovery period and thus would be subject to the policy previously described for valuing the post-procedure physician care. CMS had requested that the AMA RUC re-review them due to concerns over the methodology the AMA RUC used originally in valuing these codes (74 FR 61777 and 75 FR 73221). Contrary to the 23 hour stay policy we finalized in the CY 2011 PFS final rule with comment period (75 FR 73226 through 73227), as described above, in the AMA RUC's review of

   Site-of-Service anomaly codes for CY 2012 as part of this Five-Year

   Review, the AMA RUC often recommended replacing the hospital inpatient post-operative visit blocks in the current work values with blocks for subsequent observation care services, specifically CPT codes 99224

   (Level 1 subsequent observation care, per day) and 99225 (Level 2 subsequent observation care, per day), which recently became effective under the PFS beginning in CY 2011. The AMA RUC stated in its summary recommendations to CMS, ``Adjustments to the allocation of post- operative visits are used as proxies and do not constitute changes to the physician work relative value of the service which was determined by magnitude estimation and physician specialty survey data during the last RUC review.'' However, we note that the AMA RUC generally recommended maintaining the current interim value of the CY 2009 Site- of-Service anomaly codes while replacing the inpatient hospital visit code blocks with subsequent observation care code blocks.

   We continue to be concerned over the AMA RUC's approach to valuing the physician work for these Site-of-Service anomaly codes. We believe the appropriate methodology entails accounting for the removal of the inpatient visit blocks in the work value for the Site-of-Service anomaly code since these services are no longer typically furnished in the inpatient setting. We do not believe it is appropriate to simply exchange the inpatient post-operative visits in the original value with subsequent observation care visits (which are appropriately reported in cases of nonsurgical hospital outpatient stays spanning 3 calendar days or longer), and maintain the current work RVUs. Furthermore, instead of the half discharge day management service included in past recommendations (CPT code 99238 (Hospital discharge day management; 30 minutes or less)), the AMA RUC generally recommended including a full observation care discharge day management service (CPT code 99217

   (Observation care discharge day management (this code is to be utilized by the physician to report all services provided to a patient on discharge from ``observation status'' if the discharge is on other than the initial date of ``observation status.''))) However, the AMA RUC indicated it is currently assessing this code to revise the physician times. We do not believe it is appropriate to substitute a full day of

   CPT code 99217 for the half day of CPT code 99238 that would be included in the work value for a Site-of-Service anomaly code according to CMS' established policy, especially given the AMA RUC's ongoing review of CPT code 99217.

   Accordingly, where the data suggested a Site-of-Service anomaly code (more than 50 percent of the most recent Medicare utilization is outpatient--based on PFS data from the fourth quarter of CY 2009 and the first three quarters of CY 2010 to represent the most recent full 12 months of claims data available) resembles a 23 hour stay outpatient service and the AMA RUC's recommended value from the Five-Year Review continued to include inpatient visits (or subsequent observation care codes) in the post-operative period, we applied the policy described above. That is, we consistently removed any post-procedure inpatient visits or subsequent observation care services

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   included in the AMA RUC-recommended values for these codes and adjusted physician times accordingly. We also consistently included the value of a half day of a discharge management service.

   An additional concern that arose in our clinical review of the codes relates to codes that are typically billed with an E/M service on the same day. The AMA RUC noted for a number of codes that the service was typically billed with an additional E/M service on the same day; however, it appears the AMA RUC did not consistently account for this overlap in formulating its time recommendations, an issue discussed on a CPT code-specific basis below. In cases where a service is typically furnished with an E/M service on the same day, we believe it is understood that there may be overlap between the two services in some of the activities conducted during the pre- and post-service times of the procedure code, and that these overlapping activities should not be counted twice. Accordingly, in cases where the most recently available

   Medicare PFS claims data show the code is typically (greater than 50 percent of the time--based on PFS data from CY 2009) billed with an E/M visit on the same day, and where we believe that the AMA RUC did not adequately account for overlapping activities in the recommended value for the code, we systematically adjusted the physician times for the code to account for the overlap. After clinical review of the pre- and post-service work, we believe that at least \1/3\ of the physician time in both the pre-service evaluation and post-service period is duplicative of the E/M visit in this circumstance. Therefore, we adjusted the pre-service evaluation portion of the pre-service time to

   \2/3\ of the AMA RUC-recommended time. Similarly, we also adjusted the post-service time to \2/3\ of the AMA RUC-recommended time.

   As noted in the CY 2011 proposed rule (75 FR 73328), in reviewing the AMA RUC recommendations for valuing the work of new, revised, and potentially misvalued services, we expend significant effort in evaluating whether the recommended values reflect the work elements, such as time, mental effort, and professional judgment, technical skill and physical effort, and stress due to risk, involved with furnishing the service. Subjecting each of the codes to a clinical review, we examined the pre-, post-, and intra-service components of the work. In cases where we disagreed with the AMA RUC's recommended work RVU, we proposed alternative values based on comparisons with other established reference codes with clinical similarity or analogous physician times, or the 25th percentile or low value as indicated in the physician survey, or, where applicable, employed the building block approach.

   Over the last several years our rate of acceptance of the AMA RUC recommendations has been higher. However, in response to concerns expressed by MedPAC, and other stakeholders regarding the accurate valuation of services under the PFS, we have intensified our scrutiny of the work valuations of new, revised, and potentially misvalued codes. We note that most recently, section 3134 of the Affordable Care

   Act added a new requirement, which specifies that the Secretary shall establish a formal process to validate RVUs under the PFS. The validation process may include validation of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, and stress due to risk) involved with furnishing a service and may include validation of the pre-, post-, and intra- service components of work. Furthermore, the Secretary is directed to validate a sampling of the work RVUs of codes identified through any of the seven categories of potentially misvalued codes specified by section 1848(c)(2)(K)(ii) of the Act (as added by section 3134 of the

   Affordable Care Act). While we are currently in the planning stage of developing a formal validation process, we have incorporated, where appropriate, the validation principles specified in the law in this

   Five-Year Review process.

2. Summary of Proposed Work RVUs for Five-Year Review Codes

   As stated previously, we sent the AMA RUC an initial list of 219 codes for review. We have encouraged the AMA RUC to review codes on a

   ``family'' basis rather than in isolation in order to ensure that appropriate relativity in the system is retained. Consequently, the AMA

   RUC included additional codes for review, resulting in a total of 290 codes for the Fourth Five-Year Review of Work. Of those 290 codes, 53 were subsequently sent to the CPT Editorial Panel to consider coding changes, 14 were not reviewed by the AMA RUC (and subsequently not reviewed by CMS) because the specialty society that had originally requested the review in its public comments on the CY 2010 PFS final rule with comment period elected to withdraw the codes, 36 were not reviewed by the AMA RUC because their values were set as interim final in the CY 2011 PFS final rule with comment period, and 14 were not reviewed by CMS because they were noncovered services under Medicare.

   Therefore, the AMA RUC reviewed 173 of the 290 codes initially identified for this Fourth Five-Year Review of Work, and provided the recommendations to CMS that are addressed below in this proposed notice. A list of the remaining codes that were identified for possible review through the Five-Year Review process but not reviewed can be found in section II.E. of this proposed notice. Upon clinical review, we are proposing to accept 89 out of 173 (51 percent) of the AMA RUC recommendations for work RVUs. In some cases, we also refined physician times for codes as deemed appropriate to correspond with the proposed work RVUs. CMS' decisions are summarized in Table 6.

   In addition, the HCPAC submitted for CMS review its recommendations to modify work RVUs for five CPT codes under the Fourth Five-Year

   Review of Work. Of those five CPT codes, three were not reviewed by CMS because the codes were withdrawn by the relevant specialty society due to a low survey response rate. We did not accept the HCPAC recommendations for the two remaining CPT codes, as detailed in section

   II.D.1 of this proposed notice.

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3. Code-Specific Discussion of Proposed Alternative Work RVUs 1. Drainage of Hematoma

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   In the Fourth Five-Year Review, we identified CPT codes 10140 and 10160 as potentially misvalued through the Harvard-Valued--Utilization

   > 30,000 screen.

   For CPT code 10140 (Incision and drainage of hematoma, seroma or fluid collection), the AMA RUC reviewed the survey results and determined that these data support maintaining the current work RVU of 1.58 for this service. The AMA RUC believed that the current work RVU for CPT code 10140 is appropriate and recommended a work RVU of 1.58.

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   We agree with the AMA RUC-recommended work RVU for CPT code 10140 and are proposing a work RVU of 1.58 for CY 2012, with a refinement to the time. We believe the current pre-service evaluation time of 7 minutes is more appropriate than the AMA RUC-recommended pre-service evaluation time of 17 minutes. CPT code 10160 (Puncture aspiration of abscess, hematoma, bulla, or cyst) has the same description of typical pre-service evaluation work and an AMA RUC-recommended pre-service evaluation time of 7 minutes. After clinical review, we believe that 7 minutes accurately reflects the time required to conduct the pre- service evaluation work associated with this service. A complete list of CMS time refinements can be found in Table 6. 2. Wound Repair

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   In the Fourth Five-Year Review, we identified CPT codes 12031, 12051, and 13101 as potentially misvalued through the Harvard-Valued--

   Utilization > 30,000 screen. CPT codes 12032-12047, 12052-12057, and 13100 were added as part of the family of services for review. In its review of this set of CPT codes, the AMA RUC determined that the original Harvard values led to compression within these code families, which the AMA RUC recommended correcting by reducing the relative values for the smallest wound size repair codes and increasing the relative values for the larger wound size repair codes.

   In general, the specialty society surveys of physicians furnishing these intermediate wound repair codes confirmed that the work of performing these services had not changed in the past 5 years and that the complexity of patients requiring the services had also remained constant. Despite the survey findings, however, the survey median work

   RVUs were usually somewhat higher than the current work RVUs for the larger wound size repair codes. For many of these codes, the AMA RUC recommended the survey median values as the work RVUs for these wound repair services, despite its common recommendation of the survey 25th percentile values for codes in other families. In those cases discussed below where we disagreed with the AMA RUC recommendations, we based our proposed work RVU on the survey 25th percentile value, which was also usually higher than the current work RVU for the larger wound size repair codes. For the smaller wound size repair codes the AMA RUC recommended a lower work RVU than the current work RVU, and we agreed.

   In this way, our proposals for the revised work RVUs for the wound repair codes address concerns about compression in the original

   Harvard-valued work RVUs within the family. Our proposed range of work

   RVUs for intermediate wound repair codes in various body areas, while not as large as the range that would have resulted from our adoption of the AMA RUC's recommendations, nevertheless is greater than the current range of work RVUs for the variety of wound sizes described by the repair codes.

   For CPT code 12035 (Repair, intermediate, wounds of scalp, axillae, trunk and/or extremities (excluding hands and feet); 12.6 cm to 20.0 cm), the AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the survey median work RVU appropriately accounts for the work required for this service.

   The AMA RUC recommended a work RVU of 3.60 for CPT code 12035.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12035 and believe that the survey 25th percentile value of a work RVU of 3.50 is more appropriate for this service. The majority of survey respondents

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   indicated that the work of performing this service has not changed in the past 5 years (79 percent), and that there has been no change in complexity among the patients requiring this service (82 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service and is consistent with the relativity adjustments recommended by the AMA RUC. Therefore, we are proposing an alternative work RVU of 3.50 for CPT code 12035 for CY 2012.

   For CPT code 12036 (Repair, intermediate, wounds of scalp, axillae, trunk and/or extremities (excluding hands and feet); 20.1 cm to 30.0 cm), the AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the survey median work RVU appropriately accounts for the work required for this service.

   The AMA RUC recommended a work RVU of 4.50 for CPT code 12036.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12036 and believe that the survey 25th percentile value of a work RVU of 4.23 is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (81 percent), and that there has been no change in complexity among the patients requiring this service (84 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service and is consistent with the relativity adjustments recommended by the AMA RUC. We are proposing an alternative work RVU of 4.23 for CPT code 12036 for CY 2012.

   In addition to the work RVU adjustment for CPT code 12036, we are refining the time associated with this code. We find an intra-service time of 70 minutes, the survey median, to be more appropriate than the

   AMA RUC-recommended intra-service time of 75 minutes. Per the survey, this time correctly captures the intra-service time differential between this CPT code and the key reference code. After clinical review, we believe that 70 minutes accurately reflects the time required to conduct the intra-service work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 12037 (Repair, intermediate, wounds of scalp, axillae, trunk and/or extremities (excluding hands and feet); over 30.0 cm), the

   AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the survey median work RVU appropriately accounts for the work required for this service. The AMA

   RUC recommended a work RVU of 5.25 for CPT code 12037.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12037 and believe that the survey 25th percentile value of a work RVU of 5.00 is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (81 percent), and that there has been no change in complexity among the patients requiring this service (83 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service and is consistent with the relativity adjustments recommended by the AMA RUC. Therefore, we are proposing an alternative work RVU of 5.00 for CPT code 12037 for CY 2012.

   For CPT code 12045 (Repair, intermediate, wounds of neck, hands, feet and/or external genitalia; 12.6 cm to 20.0 cm), the AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the survey median work RVU appropriately accounts for the physician work required for this service. The AMA RUC recommended a work RVU of 3.90 for CPT code 12045.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12045 and believe that the survey 25th percentile value of a work RVU of 3.75 is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (80 percent), and that there has been no change in complexity among the patients requiring this service (80 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service and is consistent with the relativity adjustments recommended by the AMA RUC. Therefore, we are proposing an alternative work RVU of 3.75 for CPT code 12045 for CY 2012.

   For CPT code 12046 (Repair, intermediate, wounds of neck, hands, feet and/or external genitalia; 20.1 cm to 30.0 cm), the AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the survey median work RVU appropriately accounts for the work required for this service. The AMA RUC recommended a work RVU of 4.60 for CPT code 12046.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12046 and believe that the survey 25th percentile value of a work RVU of 4.30 is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (79 percent), and that there has been no change in complexity among the patients requiring this service (79 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service. Therefore, we are proposing an alternative work RVU of 4.30 for CPT code 12046 for CY 2012.

   In addition to the work RVU adjustment for CPT code 12046, we are refining the time associated with this code. This service is typically performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-third.

   We believe that 9 minutes pre-service evaluation time and 9 minutes post-service time accurately reflect the time required to conduct the work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 12047 (Repair, intermediate, wounds of neck, hands, feet and/or external genitalia; over 30.0 cm) the AMA RUC reviewed the survey data from physicians who frequently perform this service and determined the survey median work RVU appropriately accounts for the work required for this service. The AMA RUC recommended a work RVU of 5.50 for CPT code 12046.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12047 and believe that the survey 25th percentile value of a work RVU of 4.95 is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (79 percent), and that there has been no change in complexity among the patients requiring this service (79 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service. Therefore, we are proposing an alternative work RVU of 4.95 for CPT code 12047 for CY 2012.

   In addition to the work RVU adjustment for CPT code 12047, we are refining the time associated with this code. Recent Medicare PFS claims data show that this service typically is performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore,

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   should not be counted twice in developing the procedure's work value.

   As described in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post service time by one-third. We believe that 9 minutes pre-service evaluation time and 10 minutes post-service time accurately reflect the time required to conduct the work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 12055 (Repair, intermediate, wounds of face, ears, eyelids, nose, lips and/or mucous membranes; 12.6 cm to 20.0 cm), the

   AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the survey median work RVU appropriately accounts for the work required to perform this service.

   The AMA RUC recommended a work RVU of 4.65 for CPT code 12055.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12055 and believe that the survey 25th percentile value of a work RVU of 4.50 is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (79 percent), and that there has been no change in complexity among the patients requiring this service (79 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service. Therefore, we are proposing an alternative work RVU of 4.50 for CPT code 12055 for CY 2012.

   In addition to the work RVU adjustment for CPT code 12055, we are refining the time associated with this code. We find an intra-service time of 60 minutes, the survey median and intra-service time of the key reference code, to be more appropriate than the AMA RUC-recommended intra-service time of 70 minutes. After clinical review, we believe that 60 minutes accurately reflects the time required to conduct the intra-service work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 12056 (Repair, intermediate, wounds of face, ears, eyelids, nose, lips and/or mucous membranes; 20.1 cm to 30.0 cm), the

   AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the survey median work RVU appropriately accounts for the work required to perform this service.

   The AMA RUC recommended a work RVU of 5.50 for CPT code 12056.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12056 and believe that the survey 25th percentile value of a work RVU of 5.30 is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (80 percent), and that there has been no change in complexity among the patients requiring this service (81 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service. Therefore, we are proposing an alternative work RVU of 5.30 for CPT code 12056 for CY 2012.

   In addition to the work RVU adjustment for CPT code 12056, we are refining the time associated with this code. We find an intra-service time of 70 minutes, the survey median, to be more appropriate than the

   AMA RUC-recommended intra-service time of 85 minutes. After clinical review, we believe that 70 minutes accurately reflects the time required to conduct the intra-service work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 12057 (Repair, intermediate, wounds of face, ears, eyelids, nose, lips and/or mucous membranes; over 30.0 cm), the AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the survey median work RVU appropriately accounts for the work required to perform this service. The AMA RUC recommended a work RVU of 6.28 for CPT code 12057.

   We disagree with the AMA RUC-recommended work RVU for CPT code 12057 and believe that the survey 25th percentile value of a work RVU of 6.00 (the current value) is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (80 percent), and that there has been no change in complexity among the patients requiring this service (81 percent). We believe that the survey 25th percentile value accurately reflects the work associated with this service.

   Therefore, we are proposing an alternative work RVU of 6.00 for CPT code 12057 for CY 2012.

   In addition to the work RVU adjustment for CPT code 12057, we are refining the time associated with this code. We find an intra-service time of 90 minutes, the survey median, to be more appropriate than the

   AMA RUC-recommended intra-service time of 100 minutes. After clinical review, we believe that 90 minutes accurately reflects the time required to conduct the intra-service work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 13100 (Repair, complex, trunk; 1.1 cm to 2.5 cm), the

   AMA RUC reviewed the survey data from physicians who frequently perform this service and agreed that the current work RVU of 3.17 maintains the appropriate relativity for this service. The AMA RUC recommended a work

   RVU of 3.17 for CPT code 13100.

   We note that the AMA RUC reviewed only two CPT codes in the complex wound repair family. While at this time we agree with the AMA RUC- recommended work RVU for CPT code 13100 and are proposing a work RVU of 3.17 for CY 2012, with a refinement to time, we request that, in order to ensure consistency, the AMA RUC review the entire set of codes in this family and assess the appropriate gradation of the work RVUs in this family. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (89 percent), and that there has been no change in complexity among the patients requiring this service (79 percent). We believe at this time that the current work RVU (3.17) and current times accurately reflect the service.

   For CPT code 13101 (Repair, complex, trunk; 2.6 cm to 7.5 cm), the

   AMA RUC reviewed the survey data from physicians who frequently perform this service and determined that the current work RVU of 3.96 maintains the appropriate relativity for this service. The AMA RUC recommended a work RVU of 3.96 for CPT code 13101. As we noted previously for the other complex wound code, at this time we agree with the AMA RUC- recommended work RVU for CPT code 13101 and are proposing a work RVU of 3.96 for CY 2012, with a refinement to time; however, we request that the AMA RUC review the entire set of codes in this family. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (94 percent), and that there has been no change in complexity among the patients requiring this service (79 percent). We believe that the current work RVU (3.96) and current times accurately reflect the service.

   We are proposing to accept the values for CPT codes 13100 and 13101 on an interim basis only, as we appreciate that the AMA RUC reviewed only two CPT codes in the complex wound repair family. We request that, in order to ensure consistency and appropriate gradation in value of work, the AMA RUC review all of the codes in this family. Specifically, we request that the

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   AMA RUC review the remaining codes in the complex wound repair family for CY 2013, and we would maintain the values for CPT codes 13100 and 13101 interim for CY 2012 while the AMA RUC completes its review of other codes in the family. For CY 2013, the revised work RVUs for all codes examined by the AMA RUC in the complex wound repair family, including CPT codes 13100 and 13101, would be included as interim final work RVUs in the CY 2013 PFS final rule with comment period, and their values would ultimately be finalized for CY 2014. 3. Skin Grafts

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   In the Fourth Five-Year Review, we identified CPT codes 15120 and 15732 as potentially misvalued through the Site-of-Service Anomaly screen. CPT code 15121 was added as part of the family of services for

   AMA RUC review. In addition, we identified CPT code 15260 as potentially misvalued through the Harvard-Valued--Utilization > 30,000 screen.

   For CPT code 15732 (Muscle, myocutaneous, or fasciocutaneous flap; head and neck (e.g., temporalis, masseter muscle, sternocleidomastoid, levator scapulae)) the AMA RUC reviewed the survey results from physicians who frequently perform this service and recommended that this service be valued as a service performed predominately in the facility setting, as the survey data indicated that a majority of patients have an overnight stay. We note that it is unclear whether respondents were offered the option to state that the typical patient is in the hospital more than 24 hours, but not admitted as a hospital inpatient. The AMA RUC believes that this service should not be performed in the outpatient setting and that miscoding is the reason the Medicare utilization data reflect outpatient settings as the dominant place of service for this code. The AMA RUC and the surveyed specialties agreed that additional coding education needs to take place.

   The AMA RUC analyzed the survey's estimated physician work and agreed that these data support the median work RVU of 19.83, for this service, which is slightly less than the current value of 19.90. The

   AMA RUC recommended a work RVU of 19.83 for CPT code 15732.

   We disagree with the AMA RUC-recommended work RVU for CPT code 15732 and believe that an alternative work RVU of 16.38 is more appropriate for this service. We are also refining the time associated with this code. Although survey respondents and the AMA RUC indicated that patients receiving this service are typically admitted for more than 24 hours, the most recent Medicare PFS claims data show that CPT code 15732 is a code with a Site-of-Service anomaly. Upon review, it is clear that this code is being billed for services furnished to hospital outpatients, and we have no reason to believe that miscoding is the main reason that outpatient settings are the dominant place of service for this code in historical PFS claims data. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the inpatient hospital visit, reduced the discharge day management service to one-half, and adjusted times. These adjustments resulted in a work RVU of 16.38. We understand the AMA RUC's assertion that claims data indicating that this service is performed in an outpatient setting is the result of miscoding but, until the claims data indicate that this service typically is performed in the inpatient setting (greater than 50 percent), we believe it is inappropriate for the service to be valued including inpatient E/M building blocks.

   Therefore, we are proposing an alternative work RVU of 16.38 for CPT code 15732 for CY 2012, with refinements to the time. We will continue to monitor Site-of-Service utilization for this code and may consider reviewing the work RVU for this code again in the future if utilization patterns change. A complete list of CMS time refinements can be found in Table 6. 4. Destruction of Skin Lesions

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   In the Fourth Five-Year Review, we identified CPT codes 17271, 17272 and 17280 as potentially misvalued through the Harvard-Valued--

   Utilization > 30,000 screen. The dominant specialty for this family-- dermatology--identified several other codes in the family to be reviewed concurrently with these services and submitted to the AMA RUC recommendations for CPT codes 17260 through 17286. The AMA RUC determined that, with the exception of one CPT code 17284, the survey data validated the current values of the destruction of skin lesion services. We agreed with this assessment, with a few refinements to physician time.

   For CPT code 17270 (Destruction, malignant lesion (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement), scalp, neck, hands, feet, genitalia; lesion diameter 0.5 cm or less), the AMA RUC reviewed the survey results from physicians who frequently perform this service. The AMA RUC noted that the specialty did not provide compelling evidence to change the current value of the service; therefore, the AMA RUC agreed that the survey data support the current value of this service. The AMA RUC recommended a work RVU of 1.37 for CPT code 17270.

   As stated above, we agree with the AMA RUC-recommended work RVU for

   CPT code 17270 and are proposing a work RVU of 1.37 for CY 2012, with a refinement to the physician time. After clinical review, we believe that an intra-service time of 16 minutes, the survey median, accurately reflects the time required to conduct the intra-service work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 17271 (Destruction, malignant lesion (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement), scalp, neck, hands, feet, genitalia; lesion diameter 0.6 to 1.0 cm) the AMA RUC reviewed the survey results from physicians who frequently perform this service. The AMA RUC noted that the specialty did not provide compelling evidence to change the current value of the service; therefore, the AMA RUC agreed that the survey data support the current value of this service. The AMA RUC recommended a work RVU of 1.54 for CPT code 17271.

   As previously stated, we agree with the AMA RUC-recommended work

   RVU for CPT code 17271 and are proposing a work RVU of 1.54 for CY 2012, with a refinement to the physician time. After clinical review, we believe that 18 minutes, the survey median, accurately reflects the time required to conduct the intra-service work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 17274 (Destruction, malignant lesion (e.g., laser surgery, electrosurgery, cryosurgery, chemosurgery, surgical curettement), scalp, neck, hands, feet, genitalia; lesion diameter 3.1 to 4.0 cm), the AMA RUC reviewed the survey results from physicians who frequently perform this service. The AMA RUC noted that the specialty did not provide compelling evidence to change the current value of the service; therefore, the AMA RUC agreed that the survey data support the current value of this service. The AMA RUC recommended a work RVU of 2.64 for CPT code 17274.

   As stated above, we agree with the AMA RUC-recommended work RVU for

   CPT code 17274 and are proposing a work RVU of 2.64 for CY 2012, with a refinement to the physician time. After clinical review, we believe that 33 minutes, the survey median, accurately reflects the time required to conduct the intra-service work associated with this service. A complete list of CMS time refinements can be found in Table 6. 5. Partial Mastectomy

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   In the Fourth Five-Year Review, we identified CPT code 19302 as potentially misvalued through the Site-of-Service Anomaly screen.

   For CPT code 19302 (Mastectomy, partial (e.g., lumpectomy, tylectomy, quadrantectomy, segmentectomy); with axillary lymphadenectomy), the AMA RUC reviewed the survey results and determined that the current work relative value for CPT code 19302 appropriately places this service relative to other similar services, specifically CPT code 38745 (Axillary lymphadenectomy; complete) (work

   RVU = 13.87) which has similar work intensity and time. The AMA RUC recommended a work RVU of 13.99 for CPT code 19302.

   We disagree with the AMA RUC-recommended work RVU for CPT code 19302 and believe that a work RVU of 13.87 is more appropriate for this service. After clinical review, we agree with the AMA RUC that CPT code 19302 is similar in work intensity and time to CPT code 38745 (Axillary lymphadenectomy; complete) (work RVU = 13.87), which overlaps significantly with CPT code 19302, and as such, we believe these two procedures should have the same work RVU. Therefore, we are proposing an alternative work RVU of 13.87 for CPT code 19302 for CY 2012. 6. Percutaneous Vertebroplasty/Kyphoplasty

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   TIFF OMITTED TP06JN11.025

   In the Fourth Five-Year Review, we identified CPT codes 22521 as potentially misvalued through the Site-of-Service Anomaly screen. CPT codes 22520, 22522, 22523, 22524 and 22525 were added as part of the family of services for AMA RUC review.

   CPT codes: 22521 (Percutaneous vertebroplasty, 1 vertebral body, unilateral or bilateral injection; lumbar); 22523 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannulation (eg, kyphoplasty); thoracic); and 22524 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device, 1 vertebral body, unilateral or bilateral cannulation (eg, kyphoplasty); lumbar) currently include one full discharge management day, a CPT code building block usually only appropriate for codes that are typically performed in the inpatient setting. As these CPT codes are typically performed in the outpatient setting, the AMA RUC recommended, and we agree, that the discharge management day should be reduced by half. After reviewing the recent history of valuing these codes, the AMA RUC asserted that it believes that an inadvertent clerical error led to these codes showing one full discharge management day in the documentation of their E/M blocks, rather than a half day, and that these codes are actually currently valued using only half a day block. As such, the AMA RUC concluded that the current work RVU for these codes should not be reduced to reflect the removal of the half discharge day. The AMA RUC recommended maintaining the current work RVU for the 6 CPT codes reviewed in this family.

   After reviewing the documentation the AMA RUC provided and CMS records from when the codes were last valued, we do not find compelling evidence that previously these codes were valued to include only a half discharge management day. To the contrary, it appears as though the codes were previously surveyed with one full discharge management day.

   According to our established policy, we believe it would be appropriate to reduce the work RVU for these codes by the value of the half discharge management day and, therefore, we are removing 0.64 of a work

   RVU from each code. Therefore, we are proposing an alternative work RVU of 8.01 for CPT code 22521, 8.62 for CPT code 22523, and 8.22 for CPT code 22524 for CY 2012. 7. Closed Treatment of Distal Radial Fracture

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   In the Fourth Five-Year Review, we identified CPT codes 25600 and 25605 as potentially misvalued through the Harvard-Valued--Utilization

   > 30,000 screen.

   For CPT code 25600 (Closed treatment of distal radial fracture (eg,

   Colles or Smith type) or epiphyseal separation, includes closed treatment of fracture of ulnar styloid, when performed; without manipulation), the AMA RUC reviewed the survey results from physicians who frequently perform this service. The AMA RUC reviewed the number of post-operative visits recommended by the specialties and agreed that they were reflective of the service. The AMA RUC believes that the survey data support the current value of this service, and recommended a work RVU of 2.78 for CPT code 25600.

   We disagree with the AMA RUC-recommended work RVU for CPT code 25600 and believe that a work RVU of 2.64 is more appropriate for this service. We agree with the AMA RUC that CPT code 25600 requires more work than key reference CPT code 26600, and find that CPT code 27767

   (Closed treatment of posterior malleolus fracture; without manipulation) (work RVU = 2.64) is similar in complexity and intensity to CPT code 25600. Therefore, we are proposing an alternative work RVU of 2.64 for CPT code 25600 for CY 2012.

   In addition to the work RVU adjustment for CPT code 25600, we are refining the time associated with this code. This service typically is performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier, to account for this overlap, we reduced the pre-service evaluation and post service time by one-third. We believe that 5 minutes pre-service evaluation time and 7 minutes post-service time accurately reflect the time required to conduct the work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 25605 (Closed treatment of distal radial fracture

   (e.g., Colles or Smith type) or epiphyseal separation, includes closed treatment of fracture of ulnar styloid, when performed; with manipulation), the AMA RUC reviewed the survey results from physicians who frequently perform this service. The AMA RUC reviewed the number of post-operative visits recommended by the specialties and determined that they are reflective of the service. Based on comparisons to similar codes, the AMA RUC determined that a work RVU of 6.50, the survey's 25th percentile, accurately reflects the work required to perform this service. The AMA RUC recommended a work RVU of 6.50 for

   CPT code 25605.

   We disagree with the AMA RUC-recommended work RVU for CPT code 25605 and believe that the survey low value of a work RVU of 6.00 is more appropriate for this service. We find CPT code 28113 (Ostectomy, complete excision; fifth metatarsal head) (work RVU = 6.11) to be similar in intensity and complexity to CPT code 25605, though CPT code 28113 includes higher intensity office visits than CPT code 25605.

   Therefore, we believe the survey low correctly reflects relativity across these services, and are proposing an alternative work RVU of 6.00 for CPT code 25605 for CY 2012.

   In addition to the work RVU adjustment for CPT code 25605, we are refining the time associated with this code. Recent Medicare PFS claims data show that this service is typically performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. In its time recommendations to us, the AMA RUC accounted for duplicate E/M work associated with the pre-service period, but not the post-service period. To account for this post- service overlap, we reduced the post-service time by one-third, a methodology described in detail in section II.A. of this proposed notice. We believe that 13 minutes post-service time accurately reflect the time required to conduct the work associated with this service. A complete list of CMS time refinements can be found in Table 6. 8. Orthopaedic Surgery--Thigh/Knee

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   TIFF OMITTED TP06JN11.027

   In the Fourth Five-Year Review, we identified CPT codes 27385 and 27530 as potentially misvalued through the Site-of-Service Anomaly screen.

   For CPT code 27385 (Suture of quadriceps or hamstring muscle rupture; primary), the AMA RUC reviewed the survey results from physicians who frequently perform this service and determined that there was no compelling evidence that the work required to perform this service has changed. The AMA RUC recommended that this service be valued as a service performed predominately in the facility setting, as the survey data indicated that half of patients have an overnight stay.

   The AMA RUC recommended a work RVU of 8.11 for CPT code 27385.

   We disagree with the AMA RUC-recommended work RVU of 8.11 for CPT code 27385 and believe that a work RVU of 6.93 is more appropriate for this service. We are also refining the time

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   associated with this code. We note the data survey indicate that of those respondents who stated that they typically perform the procedure in the hospital, 19 percent (6 out of 32) stated that the patient is

   ``discharged the same day,'' 31 percent (10 out of 32) stated the patient is ``kept overnight (less than 24 hours),'' and 50 percent (16 out of 32) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent Medicare PFS claims data, CPT code 27385 is a code with a Site-of-Service anomaly since more than 50 percent of the Medicare utilization is not inpatient. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the hospital visit, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 6.93 with refinements to the time for CPT code 27385 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 27530 (Closed treatment of tibial fracture, proximal

   (plateau); without manipulation), the AMA RUC reviewed the survey responses from 33 (of 200 surveyed) physicians. Based on comparisons to reference codes, the AMA RUC recommended a work RVU of 2.81 for CPT code 27530.

   We disagree with the AMA RUC-recommended work RVU for CPT code 27530 and believe that a work RVU of 2.65 is more appropriate for this service. We are also refining the time associated with this code.

   Recent Medicare PFS claims data show that this service is typically performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-third. We believe that 5 minutes pre-service evaluation time and 7 minutes post-service time accurately reflect the time required to conduct the work associated with this service. We also removed the 2 minutes of pre-service positioning time, as it does not appear from the vignette that positioning is required for a non-manipulated extremity.

   In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the extracted time and subtracted it from the AMA RUC-recommended work RVU. For CPT code 27530, we removed a total of 7 minutes from the AMA RUC-recommended pre- and post-service time, which amounts to the removal of 0.16 of a work RVU. Therefore, we are proposing an alternative work RVU of 2.65 with refinement in time for CPT code 27530 for CY 2012. A complete list of CMS time refinements can be found in Table 6. Additionally, we recommend that the AMA RUC examine all of the non-manipulation fracture codes to determine if positioning time was incorporated into the work

   RVU for the codes and, if so, whether the need for positioning time was documented. 9. Treatment of Ankle Fracture

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   In the Fourth Five-Year Review, we identified CPT code 27792 (Open treatment of distal fibular fracture (lateral malleolus), includes internal fixation, when performed) as potentially misvalued through the

   Site-of-Service Anomaly screen. For CPT code 27792, the AMA RUC used magnitude estimation and recommended that the current value of this service, 9.71 RVUs, be maintained, and replaced the current inpatient hospital E/M visit block with a subsequent observation care service while maintaining a full discharge day management service.

   We disagree with the AMA RUC-recommended work RVU of 9.71 for CPT code 27792. The AMA RUC indicated in its summary of recommendations that the survey data show 100 percent (53 out of 53) of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 42 percent (22 out of 53) stated that the patient is

   ``discharged the same day,'' 44 percent (23 out of 53) stated the patient is ``kept overnight (less than 24 hours),'' and 13 percent (7 out of 53) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent Medicare PFS claims data, CPT code 27792 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 8.75 with refinements to the time for CPT code 27792 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 10. Orthopaedic Surgery/Podiatry

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   TIFF OMITTED TP06JN11.029

   In the Fourth Five-Year Review, we identified CPT codes 28002, 28120, 28122, 28715, 28820, and 28825 as potentially misvalued through the Site-of-Service Anomaly screen. CPT code 28003 was added as part of the family of services for AMA RUC review. CMS also identified CPT code 28285 as potentially misvalued through the Harvard-Valued--Utilization

   > 30,000 screen.

   For CPT code 28002 (Incision and drainage below fascia, with or without tendon sheath involvement, foot; single bursal space), the AMA

   RUC reviewed the survey responses and determined that CPT code 28002 should be decreased to the survey 25th percentile work RVU. The AMA RUC recommended a work RVU of 5.34 for CPT code 28002.

   We disagree with the AMA RUC-recommended work RVU for CPT code 28002 and believe that the survey low value of a work RVU of 4.00 is more appropriate for this service. We find CPT code 28002 to be closer to the complexity and intensity of CPT code 58353 (Endometrial ablation, thermal, without hysteroscopic guidance) (work RVU = 3.60) which has similar times and lower-level visits to CPT code 28002. We believe that the survey low value accurately reflects the work associated with this service and are proposing an alternative work RVU of 4.00 for CPT code 28002 for CY 2012.

   For CPT code 28120 (Partial excision (craterization, saucerization, sequestrectomy, or diaphysectomy) bone (e.g., osteomyelitis or bossing); talus or calcaneus), the AMA RUC used magnitude estimation, recommended that the current work RVU of 8.27 for this service be maintained, and replaced the current inpatient hospital E/M visit block with a subsequent observation care service while maintaining a full discharge day management service.

   We disagree with the AMA RUC-recommended work RVU of 8.27 for CPT code 28120. The AMA RUC indicated in its summary of recommendations that the survey data show 87 percent (45 out of 52) of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 16 percent (7 out of 45) stated that the patient is

   ``discharged the same day,'' 18 percent (8 out of 45) stated the patient is ``kept overnight (less than 24 hours),'' and 67 percent (30 out of 45) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent Medicare PFS claims data, CPT code 28120 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 7.31 with refinements to the time for CPT code 28120 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 28122 (Partial excision (craterization, saucerization, sequestrectomy, or diaphysectomy) bone (e.g., osteomyelitis or bossing); tarsal or metatarsal bone, except talus or calcaneus), the

   AMA RUC used magnitude estimation, recommended that the current work

   RVU of 7.56 for this service should be maintained for CY 2012, and replaced the current inpatient hospital E/M visit block with a subsequent observation care service while maintaining a full discharge day management service.

   We disagree with the AMA RUC-recommended work RVU of 7.56 for CPT code 28122. The AMA RUC indicated in its summary of recommendations that the survey data show 83 percent (43 out of 52) of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 12 percent (5 out of 43) stated that the patient is

   ``discharged the same day,'' 30 percent (13 out of 43) stated the patient is ``kept overnight (less than 24 hours),'' and 58 percent (23 out of 43) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent Medicare PFS claims data, CPT code 28122 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 6.76 with refinements to the time for CPT code 28122 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 28285 (Correction, hammertoe (e.g., interphalangeal fusion, partial or total phalangectomy)), the AMA RUC reviewed the survey responses and agreed that the appropriate work RVU for CPT code 28285 is a work RVU of 5.62, crosswalked from CPT code 28675. The AMA

   RUC recommended a work RVU of 5.62 for CPT code 28285.

   We disagree with the AMA RUC-recommended work RVU for CPT code 28285 and believe that a work RVU of 4.76, the current work RVU, is more appropriate for this service. The majority of survey respondents indicated that the work of performing this service has not changed in the past 5 years (67 percent), and that there has been no change in complexity among

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   the patients requiring this service (81 percent). We believe that the current work RVU accurately reflects the work associated with this service. Therefore, we are proposing an alternative work RVU of 4.76 for CPT code 28675 for CY 2012.

   For CPT code 28715 (Arthrodesis; triple), the AMA RUC reviewed the survey responses from 30 (of 150 surveyed) physicians for CPT code 28715 and determined that the current work RVU of 14.60 maintains the correct relativity among similar services. The AMA RUC recommended that this service be valued as a service performed predominately in the facility setting. The AMA RUC indicated that since the typical patient is kept overnight, the AMA RUC believes that one inpatient hospital visit as well as one discharge day management service should be maintained in the post-operative visits for this service.

   We disagree with the AMA RUC-recommended work RVU for CPT code 28715 and believe that a work RVU of 13.42 is more appropriate for this service. While the survey data show 93 percent (28 out of 30) of survey respondents stated they perform the procedure ``in the hospital,'' of those respondents who stated that they typically perform the procedure in the hospital, 7 percent (2 out of 28) stated that the patient is

   ``discharged the same day,'' 32 percent (9 out of 28) stated the patient is ``kept overnight (less than 24 hours),'' and 61 percent (17 out of 28) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent Medicare PFS claims data, CPT code 28715 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the inpatient hospital visit, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 13.42 with refinements to the time for CPT code 28715 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 28820 (Amputation, toe; metatarsophalangeal joint), the AMA RUC reviewed the survey responses and determined that the survey median work RVU of 7.00 appropriately reflects the physician work required to perform this service and maintains relativity among similar services. Therefore, the AMA RUC recommended a work RVU of 7.00 for CPT code 28820. In its recommendation to us for CPT code 28820, the

   AMA RUC included one post-operative hospital visit and one full discharge management day.

   We disagree with the AMA RUC-recommended work RVU for CPT code 28820 and believe that a work RVU of 5.82 is more appropriate for this service. The survey data for this code show that 87 percent of respondents indicated that they perform this procedure in the hospital, but without a distinction between the patient's status as a hospital inpatient or outpatient. Recent Medicare PFS claims data indicate that this service is typically (greater than 50 percent) performed in the outpatient setting. As we discussed in section II.A. of this proposed notice, for codes with Site-of-Service anomalies where the service is typically performed in the outpatient setting but valued with inpatient inputs, our policy is to remove any post-procedure inpatient visits remaining in the values for the codes, and adjust the physician times and work RVU accordingly. Therefore, in accordance with this policy, we reduced the discharge management day to half a day, eliminated the post-operative hospital visit, and adjusted the time and work RVU accordingly. As a result, we are proposing an alternative work RVU of 5.82 with refinements to the time for CPT code 28820 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 28825 (Amputation, toe; interphalangeal joint), the

   AMA RUC used magnitude estimation and ultimately recommended maintaining the current work RVU of 6.01, while also maintaining a full discharge day management service.

   We disagree with the AMA RUC-recommended work RVU of 6.01 for CPT code 28825. The AMA RUC indicated in its summary of recommendations that the survey data show 84 percent (37 out of 44) of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 36 percent (13 out of 37) stated that the patient is

   ``discharged the same day,'' 11 percent (4 out of 37) stated the patient is ``kept overnight (less than 24 hours),'' and 52 percent (19 out of 37) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent Medicare PFS claims data, CPT code 28825 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work

   RVU of 5.37 with refinements to the time for CPT code 28825 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 11. Application of Cast and Strapping

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   In the Fourth Five-Year Review, we identified CPT codes 29125, 29405 and 29515 as potentially misvalued through the Harvard-Valued--

   Utilization > 30,000 screen. CPT codes 29126 and 29425 were added as part of the family of services for AMA RUC review.

   For CPT code 29125 (Application of short arm splint (forearm to hand); static), the AMA RUC reviewed the survey results and determined that these

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   data support maintaining the current work RVU of 0.59 for this service.

   The AMA RUC recommended a work RVU of 0.59 for CPT code 29125. In its recommendation to us, the AMA RUC also noted that there is typically an

   E/M service furnished on the same day as this service.

   We disagree with the AMA RUC-recommended work RVU for CPT code 29125 and believe that a work RVU of 0.50 is more appropriate for this service. We are also refining the time associated with this code.

   Recent Medicare PFS claims data affirm that this service is typically performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-third. We believe that 5 minutes pre-service evaluation time and 3 minutes post-service time accurately reflect the time required to conduct the work associated with this service as described by the CPT code-associated specialties to the AMA RUC.

   In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the extracted time and subtracted it from the AMA RUC-recommended work RVU. For CPT code 29125, we removed a total of 4 minutes from the AMA RUC-recommended pre- and post-service time, which amounts to the removal of 0.09 of a work RVU. Therefore, we are proposing an alternative work RVU of 0.50 with refinement in time for CPT code 29125 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 29126 (Application of short arm splint (forearm to hand); dynamic), the AMA RUC reviewed the survey results and determined that the median work RVU overestimates the work value for this service and that there is no compelling evidence that the physician work has recently changed. Therefore, the AMA RUC recommended maintaining the current work RVU of 0.77 for CPT code 29126. In its recommendation to us, the AMA RUC noted that there is typically an E/M service furnished on the same day as this service.

   We disagree with the AMA RUC-recommended work RVU for CPT code 29126 and believe that a work RVU of 0.68 is more appropriate for this service. We are also refining the time associated with this code.

   Recent Medicare PFS claims data affirm that this service is typically performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-third. We believe that 5 minutes pre-service evaluation time and 3 minutes post-service time accurately reflect the time required to conduct the work associated with this service as described by the CPT code-associated specialties to the AMA RUC.

   In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the extracted time and subtracted it from the AMA RUC-recommended work RVU. For CPT code 29126, we removed a total of 4 minutes from the AMA RUC-recommended pre- and post-service time, which amounts to the removal of 0.09 of a work RVU. Therefore, we are proposing an alternative work RVU of 0.68 with refinement in time for CPT code 29126 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 29515 (Application of short leg splint (calf to foot)), the AMA RUC reviewed the survey results and determined that these data support maintaining the current work RVU of 0.73 for this service. The AMA RUC recommended a work RVU of 0.73 for CPT code 29515.

   In its recommendation to us, the AMA RUC noted that there is typically an E/M service furnished on the same day as this service.

   We agree with the AMA RUC-recommended work RVU of 0.73 for CPT code 29515, with a refinement to time. Recent Medicare PFS claims data affirm that this service is typically performed on the same day as an

   E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section II.A. of this proposed notice, to account for this overlap, we reduced the pre- service evaluation and post-service time by one-third. We believe that 5 minutes pre-service evaluation time and 3 minutes post-service time accurately reflect the time required to conduct the work associated with this service as described by the CPT code-associated specialties to the AMA RUC. Despite this reduction in time, after clinical review we believe that the AMA RUC-recommended work RVU of 0.73 accurately reflects the work associated with this service and maintains appropriate relativity with similar services. Therefore, we are proposing a work RVU of 0.73 for CY 2012, with a refinement to the time. 12. Cardiothoracic Surgery

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   In the Fourth Five-Year Review, we identified CPT code 33411

   (Replacement, aortic valve; with aortic annulus enlargement, noncoronary sinus) as potentially misvalued through the Site-of-Service

   Anomaly screen. We included a number of services that were also identified by the Society of Thoracic Surgeons (STS) in their public comments regarding candidate services for the Fourth Five-Year Review, including ventricular assist device (VAD) removal codes, VAD insertion and replacement codes, lung transplant codes, pulmonary artery embolectomy codes, descending thoracic aorta repair codes, congenital cardiac codes and general thoracic surgery CPT code 43415 (Suture of esophageal wound or injury; transthoracic or transabdominal approach).

   In its review of these cardiothoracic surgery codes, the AMA RUC recommended increasing the work RVUs for most of the codes (often substantially), while recommending that many of the service times be reduced. We also note that many of these codes have had the same work value since 1993, potentially historically supporting the longstanding appropriateness of the value from the perspective of interested specialties. While we discuss the proposed values for each revised code below, we note that for most of the codes in this family (but not all) we agreed with the AMA RUC that the work RVU should be increased, but believe that the survey 25th percentile work RVU reflected a clinically more appropriate increase than the work RVU recommended by the AMA RUC.

   Additionally, the AMA RUC recommended global period changes for several codes in the category of cardiothoracic surgery. For CY 2012, we

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   agree with the AMA RUC-recommended global period changes and work RVUs and are proposing the following: For CPT code 33977 (Removal of ventricular assist device; extracorporeal, single ventricle), a proposed work RVU of 20.86 and global period change from 090 to XXX (a global period of XXX means the concept does not apply); for CPT code 33978 (Removal of ventricular assist device; extracorporeal, biventricular), a proposed work RVU of 25 and global period change from 090 to XXX; for CPT code 36200 (Introduction of catheter, aorta), a proposed work RVU of 3.02 and global period change from XXX to 000; for

   CPT code 36246 (Selective catheter placement, arterial system; initial second order abdominal, pelvic, or lower extremity artery branch, within a vascular family), a proposed work RVU of 5.27 and a global period change from XXX to 000; and for CPT code 36821 (Arteriovenous anastomosis, open; direct, any site (eg, cimino type) (separate procedure)), a proposed work RVU of 12.11 and a global period change from XXX to 000.

   For CPT code 32851 (Lung transplant, single; without cardiopulmonary bypass), the AMA RUC reviewed the survey responses and determined that the survey 25th percentile work RVU of 63.00 appropriately accounts for the physician work required to perform this service.

   We disagree with the AMA RUC-recommended work RVU for CPT code 32851 and believe that a work RVU of 59.64 is more appropriate for this service. Comparing CPT code 33255 (Operative tissue ablation and reconstruction of atria, extensive (eg, maze procedure); without cardiopulmonary bypass) (work RVU = 29.04) with CPT code 33256

   (Operative tissue ablation and reconstruction of atria, extensive

   (e.g., maze procedure); with cardiopulmonary bypass) (work RVU = 34.90), there is a difference in work RVU of 5.86. This difference in work RVUs reflects the additional time and physician work performed while the patient is on cardiopulmonary bypass. We believe that this is the appropriate interval in physician work distinguishing CPT code 32852 (Lung transplant, single; with cardiopulmonary bypass), from CPT code 32851 (Lung transplant, single; without cardiopulmonary bypass).

   As we are proposing a work RVU of 65.05 for CPT code 32852 (see below), we believe a work RVU of 59.64 accurately reflects the work associated with CPT code 32851 and maintains appropriate relativity among similar services. Therefore, we are proposing an alternative work RVU of 59.64 for CPT code 32851 for CY 2012.

   For CPT code 32852 (Lung transplant, single; with cardiopulmonary bypass), the AMA RUC reviewed the survey responses and determined that the survey 25th percentile work RVU was too low and the median work RVU was too high. Therefore, the AMA RUC recommended a work RVU of 74.37 for CPT code 32582.

   We disagree with the AMA RUC-recommended work RVU for CPT code 32582 and believe that the survey 25th percentile value of a work RVU of 65.50 is more appropriate for this service. Therefore, we are proposing an alternative work RVU of 65.50 for CPT code 32582 for CY 2012.

   For CPT code 32853 (Lung transplant, double (bilateral sequential or en bloc); without cardiopulmonary bypass), the AMA RUC reviewed the survey responses and determined that the survey median work RVU of 90.00 appropriately accounts for the physician work required to perform this service.

   We disagree with the AMA RUC-recommended work RVU for CPT code 32853 and believe that the survey 25th percentile value of 84.48 is more appropriate for this service as a reflection of the time and intensity of the service in relation to other major surgical procedures. Therefore, we are proposing an alternative work RVU of 84.48 for CPT code 32853 for CY 2012.

   For CPT code 32854 (Lung transplant, double (bilateral sequential or en bloc); with cardiopulmonary bypass), the AMA RUC reviewed the survey responses and determined that the survey median work RVU of 95.00 appropriately accounts for the physician work required to perform this service.

   We disagree with the AMA RUC-recommended work RVU for CPT code 32854 and believe that the survey 25th percentile value of 90.00 is more appropriate for this service. A work RVU of 90.00 maintains the relativity between CPT code 32851 (Lung transplant, single; without cardiopulmonary bypass) and CPT code 32854, which describes a double lung transplant. We believe this work RVU reflects the increased intensity in total service for CPT code 32584 when compared to CPT code 32851. Therefore, we are proposing an alternative work RVU of 90.00 for

   CPT code 32854 for CY 2012.

   For CPT code 33030 (Pericardiectomy, subtotal or complete; without cardiopulmonary bypass), the AMA RUC reviewed the survey responses and determined that the survey median work RVU of 39.50 for CPT code 33030 appropriately accounts for the work required to perform this service.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33030 and believe that the survey 25th percentile value of 36.00 is more appropriate for this service. Therefore, we are proposing an alternative work RVU of 36.00 for CPT code 33030 for CY 2012.

   For CPT code 33120 (Excision of intracardiac tumor, resection with cardiopulmonary bypass), the AMA RUC reviewed the survey responses and determined that the 25th percentile work RVU for CPT code 33120 appropriately accounts for the work required to perform this service.

   The AMA RUC recommended a work RVU of 42.88 for CPT code 33120.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33120 and believe that a work RVU of 38.45 is more appropriate for this service. We compared CPT code 33120 with CPT code 33677 (Closure of multiple ventricular septal defects; with removal of pulmonary artery band, with or without gusset) (work RVU = 38.45) and found the codes to be the similar in complexity and intensity. We believe that a work RVU of 38.45 accurately reflects the work associated with CPT code 33677 and properly maintains the relativity of similar service. Therefore, we are proposing an alternative work RVU of 38.45 for CPT code 33120 for

   CY 2012.

   For CPT code 33412 (Replacement, aortic valve; with transventricular aortic annulus enlargement (Konno procedure)), the AMA

   RUC reviewed the survey responses and determined that the survey median work RVU for CPT code 33412 appropriately accounts for the work required to perform this service. The AMA RUC recommended a work RVU of 60.00 for CPT code 33412.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33412 and believe that the survey 25th percentile value of 59.00 is more appropriate for this service. Therefore, we are proposing an alternative work RVU of 59.00 for CPT code 33412 for CY 2012.

   For CPT code 33468 (Tricuspid valve repositioning and plication for

   Ebstein anomaly), the AMA RUC reviewed the survey responses and determined that the survey median work RVU for CPT code 33468 appropriately accounts for the work required to perform this service.

   The AMA RUC recommended a work RVU of 50.00 for CPT code 33468.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33468 and believe that the survey 25th percentile value of 45.13 is more

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   appropriate for this service. Therefore, we are proposing an alternative work RVU of 45.13 for CPT code 33468 for CY 2012.

   For CPT code 33645 (Direct or patch closure, sinus venosus, with or without anomalous pulmonary venous drainage), the AMA RUC reviewed survey responses and determined that the survey median work RVU for CPT code 33645 appropriately accounts for the work required to perform this service. The AMA RUC recommended a work RVU of 33.00 for CPT code 33645.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33645 and believe that the survey 25th percentile value of 31.30 appropriately captures the total work for the service. Therefore, we are proposing an alternative work RVU of 31.30 for CPT code 33645 for

   CY 2012.

   For CPT code 33647 (Repair of atrial septal defect and ventricular septal defect, with direct or patch closure), the AMA RUC reviewed survey responses and determined that the survey median work RVU for CPT code 33467 appropriately accounts for the work required to perform this service. The AMA RUC recommended a work RVU of 35.00 for CPT code 33647.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33647 and believe that the survey 25th percentile value of 33.00 is more appropriate for this service. Therefore, we are proposing an alternative work RVU of 33.00 for CPT code 33647 for CY 2012.

   For CPT code 33692 (Complete repair tetralogy of Fallot without pulmonary atresia), the AMA RUC reviewed survey responses, determined that the survey median work RVU for CPT code 33692 appropriately accounts for the work, and recommended a median work RVU of 38.75 for

   CPT code 33692.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33692 and believe that the survey 25th percentile value of 36.15 is more appropriate for this service. Therefore, we are proposing an alternative work RVU of 36.15 for CPT code 33692 for CY 2012.

   For CPT code 33710 (Repair sinus of Valsalva fistula, with cardiopulmonary bypass; with repair of ventricular septal defect), the

   AMA RUC reviewed survey response, determined that the survey median work RVU for CPT code 33710 appropriately accounts for the work required to perform this service, and recommended a work RVU of 43.00 for CPT code 33710.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33710 and believe that the survey 25th percentile value of 37.50 is more appropriate for this service. We believe the physician time and intensity for CPT code 33710 reflects the appropriate incremental adjustment when compared to the reference service, CPT code 33405.

   Therefore, we are proposing an alternative work RVU of 37.50 for CPT code 33710 for CY 2012.

   For CPT code 33875 (Descending thoracic aorta graft, with or without bypass), the AMA RUC reviewed survey responses and determined that the 25th percentile work RVU for code 33875 appropriately accounts for the work required to perform this service. The AMA RUC recommended a work RVU of 56.83 for CPT code 33875.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33875 and believe that a work RVU of 50.72 is more appropriate for this service. We compared CPT code 33875 with CPT code 33465 (Replacement, tricuspid valve, with cardiopulmonary bypass) (work RVU = 50.72) and believe that CPT code 33875 is similar to CPT code 33465, with similar inpatient and outpatient work. We believe this work RVU corresponds better to the value of the service than the survey 25th percentile work

   RVU. Therefore, we are proposing an alternative work RVU of 50.72 for

   CPT code 33875 for CY 2012.

   For CPT code 33910 (Pulmonary artery embolectomy; with cardiopulmonary bypass), the AMA RUC reviewed survey responses. After reviewing the service, the AMA RUC determined that it met the compelling evidence guidelines. The AMA RUC recommended a work RVU of 52.33 for CPT code 33910.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33910 and believe that a work RVU of 48.21 is more appropriate for this service. We compared CPT code 33910 with CPT code 33542 (Myocardial resection (eg, ventricular aneurysmectomy)) (work RVU = 48.21), and we recognize that CPT code 33542 is not an emergency service.

   Nevertheless, this procedure requires cardiopulmonary bypass and has physician time and visits that are similar to CPT code 33910 and that are consistently necessary for the care required for the patient. We believe that a work RVU of 48.21 accurately reflects the work associated with CPT code 33910 and properly maintains the relativity for a similar service. Therefore, we are proposing an alternative work

   RVU of 48.21 for CPT code 33910 for CY 2012.

   For CPT code 33935 (Heart-lung transplant with recipient cardiectomy-pneumonectomy), the AMA RUC reviewed survey responses, determined that the survey median work RVU appropriately accounts for the physician work required to perform this service, and recommended a work RVU of 100.00 for CPT code 33935.

   We disagree with the AMA RUC-recommended work RVU for CPT code 33935 and believe that the survey 25th percentile value of 91.78 is more appropriate for this service. We believe this service is more intense and complex than CPT code 33945 and that the survey 25th percentile work RVU accurately reflects the increased intensity and complexity when compared to the reference CPT code 33945. Therefore, we are proposing an alternative work RVU of 91.78 for CPT code 33935 for

   CY 2012.

   For CPT code 33980 (Removal of ventricular assist device, implantable intracorporeal, single ventricle), the AMA RUC reviewed the survey results and recommended the survey median work RVU of 40.00.

   Additionally the AMA RUC recommended a global period change from 090 to

   XXX. We agree with the AMA RUC-recommended global period change from 90 to XXX. However, we disagree with the AMA RUC-recommended work RVU for

   CPT code 33980 and are proposing for CY 2012 an alternative work RVU of 33.50, which is the survey 25th percentile work RVU. We believe the work RVU of 33.50 is more appropriate, given the significant reduction in physician times and decrease in the number and level of post- operative visits that the AMA RUC included in the value of CPT code 33980.

   For CPT code 36247 (Selective catheter placement, arterial system; initial third order or more selective abdominal, pelvic, or lower extremity artery branch, within a vascular family), the AMA RUC considered the survey results and recommended the survey median work

   RVU of 7.00 for this service. Additionally, the AMA RUC recommended a global period change from 090 to XXX. We agree with the AMA RUC- recommended global period change from 90 to XXX. However, we disagree with the AMA RUC-recommended work RVU of 7.00 for CPT code 36247. We believe maintaining the current work RVU is more appropriate given the change to the global period. Accordingly we are proposing a work RVU of 6.29 for CPT code 36247 for CY 2012.

   For CPT code 36825 (Creation of arteriovenous fistula by other than direct arteriovenous anastomosis (separate procedure); autogenous graft), the AMA RUC considered the survey data and ultimately recommended that

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   the current work RVU of this service, 15.13, be maintained.

   We disagree with the AMA RUC-recommended work RVU of 15.13 for CPT code 36825. As indicated by the most recent Medicare PFS claims data,

   CPT code 28122 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 14.17 with refinements to the time for CPT code 36825 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 13. Vascular Surgery

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   In the Fourth Five-Year Review, we identified CPT code 36819 as potentially misvalued through the Site-of-Service Anomaly screen, and we identified CPT code 36600 as potentially misvalued through the

   Harvard-Valued--Utilization > 30,000 screen. The Society for Vascular

   Surgery submitted additional CPT codes to be included in the Fourth

   Five-Year Review, including CPT codes 35188, 35612, 35800, 35840, 35860, 37140, 37145, 37160, 37180, and 38181.

   The AMA RUC noted that it believed there is compelling evidence to change the work values for CPT codes 35188, 35612, 35800, 35840, and 35860, since vascular surgery is one of the predominant providers of these services and had not participated in the original Harvard studies. In addition, the AMA RUC believes errors occurred in extrapolation of visits during the Harvard study, and apparent rank order anomalies may emerge when comparing these services to other vascular procedures.

   For CPT code 35188 (Repair, acquired or traumatic arteriovenous fistula; head and neck), the AMA RUC reviewed the survey results from 25 (out of a sample size of 400) physicians and recommended the survey median work RVU of 18.50 for CPT code 35188.

   We disagree with the AMA RUC-recommended work RVU for CPT code 35188 and are proposing for CY 2012 an alternative work RVU of 18.00, which is the survey 25th percentile work RVU. We believe the work RVU of 18.00 is more appropriate, given the decrease in the number and level of post-operative visits that the AMA RUC included in the value of CPT code 35188.

   For CPT code 35612 (Bypass graft, with other than vein; subclavian- subclavian), the AMA RUC reviewed the survey results from 25 (out of a sample size of 400) physicians and recommended a work RVU of 22.00 for

   CPT code 35612.

   We disagree with the AMA RUC-recommended work RVU for CPT code 35612 and are proposing for CY 2012 an alternative work RVU of 20.35, which is the survey 25th percentile work RVU. We believe the work RVU of 20.35 is more appropriate, given the decrease in the number and level of post-operative visits that the AMA RUC included in the value of CPT code 35612.

   For CPT code 35800 (Exploration for postoperative hemorrhage, thrombosis or infection; neck), the AMA RUC reviewed the survey results from 34 (out of a sample size of 400) physicians. Using magnitude estimation, the AMA RUC recommended that an appropriate work RVU for

   CPT code 35800 would be between the survey 25th percentile (12.00 RVU) and median (15.00 RVU) work value. Accordingly, the AMA RUC recommended a work RVU of 13.89 for CPT code 35800.

   We disagree with the AMA RUC-recommended work RVU for CPT code 35800 and are proposing for CY 2012 an alternative work RVU of 12.00, which is the survey 25th percentile work RVU. We believe the work RVU of 12.00 is more appropriate, given that two of the key reference codes to which this service has been compared have identical intra-service time (60 minutes), but significantly lower work RVUs.

   For CPT code 35840 (Exploration for postoperative hemorrhage, thrombosis or infection; abdomen), the AMA RUC reviewed the survey results from 34 (out of a sample size of 400) physicians. Using magnitude estimation, the AMA RUC recommended that an appropriate work

   RVU for CPT code 35840 would be between the survey 25th percentile

   (19.25 RVU) and median (22.30 RVU) work value. Accordingly, the AMA RUC recommended a work RVU of 21.19 for CPT code 35840.

   We disagree with the AMA RUC-recommended work RVU for CPT code 35840 and are proposing for CY 2012 an alternative work RVU of 20.75, which is between the survey 25th percentile and median work RVU. We believe the work RVU of 20.75 is more appropriate given the two reference codes to which this service has been compared.

   For CPT code 35860 (Exploration for postoperative hemorrhage, thrombosis or infection; extremity), the AMA RUC

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   reviewed the survey results from 34 (out of a sample size of 400) physicians. Using magnitude estimation, the AMA RUC recommended that an appropriate work RVU for CPT code 35860 would be between the survey 25th percentile (15.25 RVUs) and median work value (18.00 RVUs).

   Accordingly, the AMA RUC recommended a work RVU of 16.89 for CPT code 35860.

   We disagree with the AMA RUC-recommended work RVU for CPT code 35860 and are proposing for CY 2012 an alternative work RVU of 15.25, which is the survey 25th percentile work RVU. We believe this work RVU maintains appropriate relativity within the family of related services for the exploration of postoperative hemorrhage.

   For CPT code 36600 (Arterial puncture, withdrawal of blood for diagnosis), the AMA RUC reviewed the survey results from 38 (out of a sample size of 100) physicians and, based on comparisons to reference codes, recommended a work RVU of 0.32 for CPT code 36600.

   We agree with the AMA RUC's recommended work RVU and are proposing a work RVU of 0.32 for CPT code 36600 for CY 2012. In addition to the work RVU adjustment for CPT code 36600, we are refining the time associated with this code. Recent Medicare PFS claims data show that this service typically is performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post- service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-third. We believe that 3 minutes pre-service evaluation time and 3 minutes post-service time accurately reflect the time required to conduct the work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 36819 (Arteriovenous anastomosis, open; by upper arm basilic vein transposition), which was identified as a code with a

   Site-of-Service anomaly, the AMA RUC reviewed the survey results from 31 (out of a sample size of 400) physicians. The AMA RUC indicated that it believes this service should be categorized as one being typically performed in an inpatient hospital setting and recommended maintaining the current work RVU of 14.47.

   We disagree with the AMA RUC-recommended work RVU for CPT code 36819. The AMA RUC indicated in its summary of recommendations that the survey data show 97 percent (30 out of 31) of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 33 percent (10 out of 30) stated that the patient is ``discharged the same day,'' 53 percent (16 out of 30) stated the patient is ``kept overnight (less than 24 hours),'' and 13 percent (4 out of 30) stated the patient is ``admitted (more than 24 hours).'' These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As we discussed in section II.A. of this proposed notice, for codes with

   Site-of-Service anomalies, our policy is to remove any post-procedure inpatient visits remaining in the values for these codes and adjust physician times accordingly. It is also our policy for codes with Site- of-Service anomalies to consistently include the value of half of a discharge day management service and adjust physician times accordingly. We are thus proposing an alternative work RVU for CY 2012 of 13.29 with refinements in time for CPT code 36819. A complete list of CMS time refinements can be found in Table 6. 14. Excise Parotid Gland/Lesion

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   In the Fourth Five-Year Review, we identified CPT codes 42415 and 42420 as Site-of-Service anomaly codes.

   For CPT code 42415 (Excision of parotid tumor or parotid gland; lateral lobe, with dissection and preservation of facial nerve), the

   AMA RUC reviewed the survey data and, based on magnitude estimation, the AMA RUC recommended that the current work RVU of this service, 18.12, be maintained.

   We disagree with the AMA RUC-recommended work RVU of 18.12 for CPT code 42415. As indicated by the most recent Medicare PFS claims data,

   CPT code 42415 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 17.16 with refinements to the time for CPT code 42415 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 42420 (Excision of parotid tumor or parotid gland; total, with dissection and preservation of facial nerve), the AMA RUC reviewed survey results and, based on magnitude estimation, the AMA RUC recommended that the current work RVU of this service, 21.00, be maintained.

   We disagree with the AMA RUC-recommended work RVU of 21.00 for CPT code 42420. As indicated by the most recent Medicare PFS claims data,

   CPT code 42420 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 19.53 with refinements to the time for CPT code 42420 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 15. Endoscopic Cholangiopancreatography

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   In the Fourth Five-Year Review, we identified CPT code 43262 as potentially misvalued through the Harvard Valued--Utilization > 30,000 screen.

   For CPT code 43262 (Endoscopic retrograde cholangiopancreatography

   (ERCP); with sphincterotomy/papillotomy), the AMA RUC reviewed the service and believes that the specialty did not provide compelling evidence to change the current value of the service. Therefore, the AMA

   RUC recommended maintaining the current work RVU of 7.38 for CPT code 43262.

   We are proposing to maintain the current work RVU of 7.38 and the current physician time for CPT code 43262 for CY 2012. However, we are requesting that the AMA RUC undertake a comprehensive review of the entire family of ERCP codes, including the base CPT code 43260, and provide CMS with work RVU recommendations. We note that based on a preliminary review of the intra-service times for these codes, we are concerned the codes in this family are potentially misvalued. 16. Sigmoidoscopy

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   In the Fourth Five-Year Review, CMS identified CPT code 45331 as potentially misvalued through the Harvard-Valued--Utilization > 30,000 screen.

   For CPT code 45331 (Sigmoidoscopy, flexible; with biopsy, single or multiple), the AMA RUC reviewed the survey results and determined that the survey data support the current value of this service. Taking into consideration the 75th percentile of the survey results, the AMA RUC recommended a pre-service time of 15 minutes, intra-service time of 15 minutes, and post-service time of 10 minutes. Accordingly, the AMA RUC recommended a work RVU of 1.15 for CPT code 45331.

   We agree with the AMA RUC's recommended work RVU and are proposing a work RVU of 1.15 for CPT code 45331 for CY 2012. However, while the

   AMA RUC recommended pre-service times based on the 75th percentile of the survey results, we believe it is more appropriate to accept the median survey physician times. Accordingly, we are refining the times to the following: 5 minutes for pre-evaluation; 5 minutes for pre- service other, 5 minutes for pre- dress, scrub, and wait; 10 minutes intra-service; and 10 minutes immediate post-service. A complete list of CMS time refinements can be found in Table 6. 17. Laparoscopic Cholecystectomy

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   In the Fourth Five-Year Review, CMS identified CPT code 47563 as potentially misvalued through the Harvard Valued--Utilization > 30,000 screen and Site-of-Service Anomaly screen. The AMA RUC reviewed CPT codes 47564 and 47563.

   For CPT code 47563 (Laparoscopy, surgical; cholecystectomy with cholangiography), the AMA RUC reviewed the survey results and recommended that this service be valued as a service performed predominately in the facility setting, as the survey data indicated that a majority of patients have an overnight stay. Because some respondents stated that the typical patient would be kept at overnight in the hospital, the AMA RUC recommended a full day discharge management service be included in the value of the service. The AMA RUC recommended maintaining the current work RVU of 12.11 for CPT code 47563.

   We disagree with the AMA RUC-recommended work RVU for CPT code 47563. While the survey data show 95 percent (57 out of 60) of survey respondents stated they perform the procedure ``in the hospital,'' of those respondents who stated that they typically perform the procedure in the hospital, 30 percent (17 out of 57) stated that the patient is

   ``discharged the same day,'' 46 percent (26 out of 57) stated the patient is ``kept overnight (less than 24 hours),'' and 25 percent (14 out of 57) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As we discussed in section II.A. of this proposed notice, for codes with Site-of-Service anomalies, our policy is to remove any post- procedure inpatient visits remaining in the values for these codes and adjust physician times accordingly. It is also our policy for codes with Site-of-Service anomalies to consistently include the value of half of a discharge day management service, adjusting physician times accordingly. We are thus proposing an alternative work RVU of 11.47 with refinements in time for CPT code 47563 for CY 2012.

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   A complete list of CMS time refinements can be found in Table 6.

   For CPT code 47564 (Laparoscopy, surgical; cholecystectomy with exploration of common duct), the AMA RUC reviewed the survey results and determined that the 25th survey percentile was appropriate for this service. Accordingly, the AMA RUC recommended a work RVU of 20.00 for

   CPT code 47564.

   We disagree with the AMA RUC-recommended work RVU for CPT code 47564 and are proposing for CY 2012 an alternative work RVU of 18.00, which is the survey low work RVU. We are accepting the AMA RUC recommended median survey times and believe the work RVU of 18.00 for

   CPT code 35860 is more appropriate given the significant reduction in recommended physician times in comparison to the current times. 18. Hernia Repair

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   In 2007, the AMA RUC's Relativity Assessment Workgroup identified

   CPT codes 49507, 49521 and 49587 as potentially misvalued through the

   Site-of-Service Anomaly screen. The American College of Surgeons (ACS) surveyed these codes, and the AMA RUC issued recommended work values for these codes to CMS for CY 2010. In the CY 2011 PFS final rule with comment period (75 FR 73221), we reiterated that in the CY 2010 PFS final rule with comment period (74 FR 61776 through 61778) we indicated that although we would accept the AMA RUC valuations for these Site-of-

   Service anomaly codes on an interim basis through CY 2010, we had ongoing concerns about the methodology used by the AMA RUC to review these services. We requested that the AMA RUC reexamine the Site-of-

   Service anomaly codes and use the building block methodology to revalue the services (74 FR 62777 and 75 FR 73221). CPT codes 49507, 49521, and 49587 were among those CY 2010 Site-of-Service anomaly codes, and were reviewed again by the AMA RUC as a part of the Fourth Five-Year Review.

   For CPT code 49507 (Repair initial inguinal hernia, age 5 years or over; incarcerated or strangulated), the AMA RUC used magnitude estimation and recommended a work RVU of 9.97 for CPT code 49507 for CY 2010, which was slightly higher than the survey 25th percentile value.

   In CY 2010, while CMS adopted the AMA RUC-recommended work value on an interim final basis and referred the service back to the AMA RUC to be reexamined, the work RVU for CPT code 49507 used under the PFS was increased to 10.05 based on the redistribution of RVUs that resulted from the CMS policy to no longer recognize the CPT consultation codes.

   Upon re-review for CY 2012 as part of the Fourth Five-Year Review of

   Work, the AMA RUC determined that CPT code 49507 had been accurately valued in its recommendation for CY 2010 with support from reference services and specialty survey data, and stated that it found no compelling evidence to change the current physician work value of this service. The AMA RUC ultimately recommended that the current work RVU of 10.05 be maintained for CPT code 49507 for CY 2012.

   We disagree with the AMA RUC-recommended work RVU of 10.05 for CPT code 49507. The AMA RUC indicated in its summary of recommendations that the survey data show Ninety-eight percent of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 17 percent stated that the patient is ``discharged the same day,'' 40 percent stated the patient is ``kept overnight (less than 24 hours),'' and 43 percent stated the patient is ``admitted (more than 24 hours).'' These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent PFS claims data,

   CPT code 49507 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 9.09 with refinements to the time for CPT code 49507 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 49521 (Repair recurrent inguinal hernia, any age; incarcerated or strangulated), the AMA RUC used magnitude estimation and recommended a work RVU of 12.36 for CY 2010, which fell between the survey 25th percentile and median work value estimates. In CY 2010, while CMS adopted the AMA RUC-recommended work value on an interim final basis and referred the service back to the AMA RUC to be reexamined, the work RVU for CPT code 49521 used under the PFS was increased to 12.44 based on the redistribution of RVUs that resulted from the CMS policy to no longer recognize the CPT consultation codes.

   Upon re-review for CY 2012, the AMA RUC determined that CPT code 49521 was accurately valued in its recommendation for CY 2010, with support from reference services and specialty survey data, and stated that it found no compelling evidence to change the current physician work value of this service. The AMA RUC ultimately recommended that the current work RVU of 12.44 be maintained for CPT code 49521 in CY 2012.

   We disagree with the AMA RUC-recommended work RVU of 12.44 for CPT code 49521. The AMA RUC indicated in its summary of recommendations that the survey data show 99 percent of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 18 percent stated that the patient is ``discharged the same day,'' 37 percent stated the patient is ``kept overnight (less than 24 hours),'' and 45 percent stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between

   Page 32450

   the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent PFS claims data, CPT code 49521 is a code with a Site-of-Service anomaly.

   Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 11.48 with refinements to the time for CPT code 49521 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 49587 (Repair umbilical hernia, age 5 years or over; incarcerated or strangulated), the AMA RUC used magnitude estimation and recommended a work RVU of 7.96 for CY 2010, which was slightly below the survey 25th percentile physician work value estimate. Under the CY 2010 PFS, the work RVU for CPT code 49587 was increased to 8.04 based on the redistribution of RVUs resulting from the CMS policy to no longer recognize the CPT consultation codes. Upon re-review for CY 2012, the AMA RUC determined that CPT code 49587 was accurately valued in its CY 2010 recommendation, with support from reference services and specialty survey data, and stated that it found no compelling evidence to change the current physician work value of this service. The AMA RUC ultimately recommended that the current work RVU of 8.04 be maintained for CPT code 49587 for CY 2012.

   We disagree with the AMA RUC-recommended work RVU of 8.04 for CPT code 49587. The AMA RUC indicated in its summary of recommendations that the survey data show 100 percent of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 30 percent stated that the patient is ``discharged the same day,'' 42 percent stated the patient is ``kept overnight (less than 24 hours),'' and 29 percent stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent PFS claims data, CPT code 49587 is a code with a Site-of-Service anomaly. Therefore, in accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 7.08 with refinements to the time for CPT code 49587 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 19. Laparoscopic Hernia Repair

   GRAPHIC

   TIFF OMITTED TP06JN11.038

   For CY 2009, the CPT Editorial Panel created six new CPT codes to describe the specific levels of work associated with abdominal hernia repairs that are performed frequently with laparoscopic techniques. We accepted the AMA RUC's original work RVU recommendation for these services for CY 2009. However, we identified 4 of these laparoscopic hernia repair CPT codes, specifically CPT codes 49652, 49653, 49654 and 49655, as potentially misvalued through the Site-of-Service Anomaly screen, and requested that they be reviewed by the AMA RUC for Fourth

   Five-Year Review.

   For CPT code 49652 (Laparoscopy, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); reducible), for CY 2009, the AMA RUC used magnitude estimation and recommended the survey 25th percentile work RVU of 12.80 for CPT code 49652 for CY 2009. CMS accepted this recommendation. For

   CY 2010, the work RVU for CPT code 49652 was increased to 12.88 based on the redistribution of RVUs resulting from the CMS policy to no longer recognize the CPT consultation codes. Upon re-review for CY 2012, the AMA RUC determined that CPT code 49652 was accurately valued in its recommendation for CY 2009, with support from reference services and specialty survey data, and stated that it found no compelling evidence to change the current physician work value of this service.

   The AMA RUC ultimately recommended that the current work RVU of 12.88 be maintained for CPT code 49652 for CY 2012.

   We disagree with the AMA RUC-recommended work RVU of 12.88 for CPT code 49652. The AMA RUC indicated in its summary of recommendations that the survey data show 100 percent of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 16 percent stated that the patient is ``discharged the same day,'' 60 percent stated the patient is ``kept overnight (less than 24 hours),'' and 24 percent stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent PFS claims data, CPT code 49652 is a code with a Site-of-Service anomaly. In its recommendation to us, the AMA RUC asserted that Medicare claims data for this service are still new and may not reflect accurate Medicare utilization for this procedure. The most recent PFS claims data show that outpatient utilization for this code is well above the Site-of-Service anomaly threshold of greater than 50 percent, and we will continue to monitor the data to ensure that this CPT code, and all CPT codes, are valued appropriately for their site-of-service. In accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 11.92 with refinements to the time for CPT code 49652 for CY 2012. A

   Page 32451

   complete list of CMS time refinements can be found in Table 6.

   For CPT code 49653 (Laparoscopy, surgical, repair, ventral, umbilical, spigelian or epigastric hernia (includes mesh insertion, when performed); incarcerated or strangulated), for CY 2009, the AMA

   RUC used magnitude estimation and recommended the survey 25th percentile work RVU of 16.10 for CPT code 49653 for CY 2009. CMS accepted this recommendation. For CY 2010, the work RVU for CPT code 49653 was increased to 16.21 based on the redistribution of RVUs resulting from the CMS policy to no longer recognize the CPT consultation codes. Upon re-review for CY 2012, the AMA RUC determined that CPT code 49653 was accurately valued in its CY 2009 recommendation, with support from reference services and specialty survey data, and stated that it found no compelling evidence to change the current physician work value of this service. The AMA RUC ultimately recommended that the current work RVU of 16.21 be maintained for CPT code 49653 for CY 2012.

   We disagree with the AMA RUC-recommended work RVU of 16.21 for CPT code 49653. The AMA RUC indicated in its summary of recommendations that the survey data show 100 percent of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 9 percent stated that the patient is ``discharged the same day,'' 16 percent stated the patient is ``kept overnight (less than 24 hours),'' and 76 percent stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent PFS claims data, CPT code 49653 is a code with a Site-of-Service anomaly. In its recommendation to us, the AMA RUC asserted that Medicare claims data for this service are still new and may not reflect accurate Medicare utilization for this procedure. The most recent PFS claims data show that outpatient utilization for this code is well above the Site-of-Service anomaly threshold of greater than 50 percent, and we will continue to monitor the data to ensure that this CPT code, and all CPT codes, are valued appropriately for their site-of-service. In accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 14.94 with refinements to the time for CPT code 49653 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 49654 (Laparoscopy, surgical, repair, incisional hernia (includes mesh insertion, when performed); reducible), for CY 2009 the AMA RUC used magnitude estimation and recommended the survey 25th percentile work RVU of 14.95 for CPT code 49654 for CY 2009. We accepted this recommendation. For CY 2010, the work RVU for CPT code 49654 was increased to 15.03 based on the redistribution of RVUs resulting from the CMS policy to no longer recognize the CPT consultation codes. Upon re-review for CY 2012, the AMA RUC determined that CPT code 49654 was accurately valued in its CY 2009 recommendation, with support from reference services and specialty survey data, and stated that it found no compelling evidence to change the current physician work value of this service. The AMA RUC ultimately recommended that the current work RVU of 15.03 be maintained for CPT code 49654 for CY 2012.

   We disagree with the AMA RUC-recommended work RVU of 15.03 for CPT code 49654. The AMA RUC indicated in its summary of recommendations that the survey data show 100 percent of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 10 percent stated that the patient is ``discharged the same day,'' 33 percent stated the patient is ``kept overnight (less than 24 hours),'' and 56 percent stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent PFS claims data, CPT code 49654 is a code with a Site-of-Service anomaly. In its recommendation to us, the AMA RUC asserted that Medicare claims data for this service are still new and may not reflect accurate Medicare utilization for this procedure. The most recent PFS claims data show that outpatient utilization for this code is well above the Site-of-Service anomaly threshold of greater than 50 percent, and we will continue to monitor the data to ensure that this CPT code, and all CPT codes, are valued appropriately for their site-of-service. In accordance with the policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 13.76 with refinements to the time for CPT code 49654 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 49655 (Laparoscopy, surgical, repair, incisional hernia (includes mesh insertion, when performed); incarcerated or strangulated), for CY 2009 the AMA RUC crosswalked CPT code 49655 to

   CPT code 43280 (Laparoscopy, surgical, esophagogastric fundoplasty

   (e.g., Nissen, Toupet procedures)) (work RVU = 18.10), and recommended a work RVU of 18.00. We accepted this recommendation. For CY 2010, the work RVU for CPT code 49655 was increased to 18.11 based on the redistribution of RVUs resulting from the CMS policy to no longer recognize the CPT consultation codes. Upon re-review for CY 2012, the

   AMA RUC decided that CPT code 49655 was accurately valued in its CY 2009 recommendation, with support from reference services and specialty survey data, and stated that it found no compelling evidence to change the current physician work value of this service. The AMA RUC ultimately recommended that the current work RVU of 18.11 be maintained for CPT code 49655 for CY 2012.

   We disagree with the AMA RUC-recommended work RVU of 18.11 for CPT code 49655. The AMA RUC indicated in its summary of recommendations that the survey data show 100 percent of survey respondents stated they perform the procedure ``in the hospital.'' Of those respondents who stated that they typically perform the procedure in the hospital, 5 percent stated that the patient is ``discharged the same day,'' 8 percent stated the patient is ``kept overnight (less than 24 hours),'' and 87 percent stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As indicated by the most recent PFS claims data, CPT code 49655 is a code with a Site-of-Service anomaly. In its recommendation to us, the AMA RUC asserted that Medicare claims data for this service are still new and may not reflect accurate Medicare utilization for this procedure. The most recent PFS claims data show that outpatient utilization for this code is above the Site-of-Service anomaly threshold of greater than 50 percent, and we will continue to monitor the data to ensure that this CPT code, and all CPT codes, are valued appropriately for their site-of-service. In accordance with the

   Page 32452

   policy discussed in section II.A. of this proposed notice, we removed the subsequent observation care service, reduced the discharge day management service to one-half, and adjusted times. As a result, we are proposing an alternative work RVU of 16.84 with refinements to the time for CPT code 49655 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 20. Urologic Procedures

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   TIFF OMITTED TP06JN11.039

   In the Fourth Five-Year Review, we identified CPT codes 51705, 52005 and 52310 as potentially misvalued through the Harvard-Valued--

   Utilization > 30,000 screen. CPT codes 51710, 52007 and 52315 were added as part of the family of services for AMA RUC review. In addition, we identified CPT codes 52630, 52649, 53440 and 57288 as potentially misvalued through the Site-of-Service Anomaly screen. The specialty agreed to add CPT codes 52640 and 57287 as part of the family of services for AMA RUC review.

   For CPT code 51710 (Change of cystostomy tube; complicated), the

   AMA RUC noted that a request was sent to CMS to have the global service period changed from a 10-day global period (which includes RVUs for the same day pre-operative period and for a 10-day post-operative period) to a 0-day global period (which only includes RVUs for the same day pre- and post-operative period). The AMA RUC indicated that in the standards of care for this procedure, there is no hospital time and there are no follow up visits. The AMA RUC also noted that while the service was surveyed as a 10-day global, the respondents inadvertently included a hospital visit, CPT code 99231(Subsequent hospital care), and overvalued the physician work. Consequently, the AMA RUC did not use the survey results to value the code. Rather, comparing the physician work within the family of services, the AMA RUC compared CPT code 51710 to CPT code 51705 (Change of cystostomy tube; simple) and recommended a work RVU of 1.35 for CPT code 51710.

   We agree with the AMA RUC's recommended work RVU and are proposing a work RVU of 1.35 for CPT code 51710 for CY 2012. We also agree to change the global period from 10 to zero days. However, we note that while we believe that changing a cystostomy tube in a complicated patient may be more time consuming than in a patient that requires a simple cystostomy tube change, we believe that the pre-positioning time is unnecessarily high given the recommended pre-positioning time of 5 minutes for CPT code 51705, which has an identical pre-positioning work description. Hence, we are making refinements in time for CPT code 51710 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 52630 (Transurethral resection; residual or regrowth of obstructive prostate tissue including control of postoperative bleeding, complete (vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or dilation, and internal urethrotomy are included)), the AMA RUC reviewed the survey results and recommended that this service be valued as a service performed predominately in the facility setting, as the survey data indicated that a majority of patients have an overnight stay. Because the majority of respondents stated that the typical patient would be kept overnight in the hospital, the AMA RUC recommended that one inpatient hospital visit and a full day discharge management service be included in the value of the service for CPT code 52630. The AMA RUC stated that it ultimately did not believe there was compelling evidence to signal a recent change in physician work.

   Accordingly, the AMA RUC recommended maintaining the current work RVU of 7.73 for CPT code 52630.

   We disagree with the AMA RUC-recommended work RVU for CPT code 52630. While the survey data show 93 percent (37 out of 40) of survey respondents stated they perform the procedure ``in the hospital,'' of those respondents who stated that they typically perform the procedure in the hospital, 3 percent (1 out of 40) stated that the patient is

   ``discharged the same day,'' 43 percent (17 out of 40) stated the patient is ``kept overnight (less than 24 hours),'' and 54 percent (22 out of 40) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. As we discussed in section II.A. of this proposed notice, we believe that the 23-hour stay issue encompasses several scenarios. The typical patient is commonly in the hospital for less than 24 hours, which often means the patient may indeed stay overnight in the hospital. On occasion, the patient may stay longer than a single night in the

   Page 32453

   hospital; however, in both cases, the patient is considered for

   Medicare purposes to be a hospital outpatient, not an inpatient. Given that the most recent Medicare PFS claims data indicate this service is typically (more than 50 percent of the time) furnished in the outpatient setting, we believe it is appropriate to remove the post- procedure inpatient visit remaining in the AMA RUC-recommended value and adjust the physician times accordingly. We also reduced the discharge day management service to one-half. We are thus proposing an alternative work RVU of 6.55 with refinements in time for CPT code 47563 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 52649 (Laser enucleation of the prostate with morcellation, including control of postoperative bleeding, complete

   (vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or dilation, internal urethrotomy and transurethral resection of prostate are included if performed)), a Site-of-Service anomaly code, the AMA

   RUC reviewed the survey results of 16 (out of a sample size of 869) physicians. The AMA RUC recommended that this service be valued as a service performed predominately in the facility setting. Using magnitude estimation, the AMA RUC agreed that the 25th percentile survey value, which is lower than the current work RVU, was appropriate. The AMA RUC ultimately recommended a work RVU of 15.20 for

   CPT code 52649.

   We disagree with the AMA RUC-recommended work RVU for CPT code 52649. While the survey data show 94 percent (15 out of 16) of survey respondents stated they perform the procedure ``in the hospital,'' of those respondents who stated that they typically perform the procedure in the hospital, 33 percent (5 out of 16) stated that the patient is

   ``discharged the same day,'' 54 percent (9 out of 16) stated the patient is ``kept overnight (less than 24 hours),'' and 13 percent (2 out of 16) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. Nevertheless, the survey data confirm the most recent Medicare

   PFS claims data which show that CPT code 52649 is a code with a Site- of-Service anomaly. Accordingly, we applied our policy for a 23-hour stay service and reduced the discharge day management service to one- half. We are proposing an alternative work RVU of 14.56 with refinements in time for CPT code 52649 for CY 2012. A complete list of

   CMS time refinements can be found in Table 6.

   For CPT code 53440 (Sling operation for correction of male urinary incontinence (eg, fascia or synthetic)), the AMA RUC reviewed the survey results from 30 (out of a sample size of 717) physicians. The

   AMA RUC recommended that this service be valued as a service performed predominately in the facility setting. Using magnitude estimation, the

   AMA RUC agreed that the median survey value, which is lower than the current work RVU, was appropriate. The AMA RUC ultimately recommended a work RVU of 14.00 for CPT code 53440.

   We disagree with the AMA RUC-recommended work RVU for CPT code 53440. While the survey data show 97 percent (29 out of 30) of survey respondents stated they perform the procedure ``in the hospital,'' of those respondents who stated that they typically perform the procedure in the hospital, 38 percent (11 out of 30) stated that the patient is

   ``discharged the same day,'' 59 percent (18 out of 30) stated the patient is ``kept overnight (less than 24 hours),'' and 3 percent (1 out of 30) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. Nevertheless, the survey data show that the vast majority of responders indicated CPT code 53440 is typically performed in the hospital setting as an outpatient rather than an inpatient service. The survey data confirm the most recent Medicare PFS claims data which show that CPT code 53440 is a code with a Site-of-Service anomaly.

   Accordingly, we applied our policy for a 23-hour stay service and reduced the discharge day management service to one-half. We are proposing an alternative work RVU of 13.36 with refinements in time for

   CPT code 53440 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 21. Removal of Thyroid/Parathyroid

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   TIFF OMITTED TP06JN11.040

   In the Fourth Five-Year Review, we identified CPT codes 60220, 60240 and 60500 as potentially misvalued through the Site-of-Service

   Anomaly screen.

   For CPT code 60220 (Total thyroid lobectomy, unilateral; with or without isthmusectomy), the AMA RUC reviewed the survey results from 35

   (out of a sample size of 118) physicians. The AMA RUC recommended that this service be valued as a service performed predominately in the facility setting. The AMA RUC indicated that since the typical patient is kept overnight, the AMA RUC believes that one inpatient hospital visit as well as one discharge day management service should be maintained in the post-operative visits for this service. Using magnitude estimation, the AMA RUC recommended the current work RVU of 12.37 for CPT code 60220.

   We disagree with the AMA RUC-recommended work RVU for CPT code 60220. While the survey data show 97 percent (34 out of 35) of survey respondents stated they perform the procedure ``in the hospital,'' of those respondents who stated that they typically perform the procedure in the hospital, 18 percent (6 out of 34) stated that the patient is

   ``discharged the same day,'' 79 percent (27 out of 34) stated the patient is ``kept overnight (less than 24 hours),'' and 3 percent (1 out of 34) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. Nevertheless, the survey data show that the majority of responders

   Page 32454

   indicated CPT code 60220 is typically performed in the hospital setting as an outpatient rather than an inpatient service. The survey data confirm the most recent Medicare PFS claims which show that CPT code 60220 is a code with a Site-of-Service anomaly. Accordingly, in applying the policy for a 23-hour stay service, we removed the hospital visit, reduced the discharge day management service to one-half, and adjusted times. We are proposing an alternative work RVU of 11.19 with refinements in time for CPT code 60220 for CY 2012. A complete list of

   CMS time refinements can be found in Table 6.

   For CPT code 60240 (Thyroidectomy, total or complete), the AMA RUC reviewed the survey results from 35 (out of a sample size of 118) physicians. Using magnitude estimation, the AMA RUC believed that maintaining the current work RVU is appropriate. The AMA RUC ultimately recommended the current work RVU of 16.22 for CPT code 60240.

   We disagree with the AMA RUC-recommended work RVU for CPT code 60220. Of the 97 percent of respondents that stated they perform the procedure ``in the hospital,'' 100 percent stated that the patient is either ``discharged the same day'' or ``kept overnight (less than 24 hours).'' The survey data confirm the most recent Medicare PFS claims data which show that CPT code 60240 is a code with a Site-of-Service anomaly. Accordingly, we believe it is appropriate to remove the post- procedure inpatient visit remaining in the value and adjust the physician times accordingly. We also reduced the discharge day management service to one-half, consistent with our 23 hour stay service policy. We are proposing an alternative work RVU of 15.04 with refinements in time for CPT code 60240 for CY 2012. A complete list of

   CMS time refinements can be found in Table 6.

   For CPT code 60500 (Parathyroidectomy or exploration of parathyroid(s);), the AMA RUC reviewed the survey results from 35 (out of a sample size of 118) physicians. The AMA RUC recommended that this service be valued as a service performed predominately in the facility setting. The AMA RUC indicated that since the typical patient is kept overnight, the AMA RUC believes that one hospital visit as well as one discharge day management service should be maintained in the post- operative visits for this service. Using magnitude estimation, the AMA

   RUC ultimately recommended the current work RVU of 16.78 for CPT code 60500.

   We disagree with the AMA RUC-recommended work RVU for CPT code 60500. While the survey data show 97 percent (34 out of 35) of survey respondents stated they perform the procedure ``in the hospital,'' of those respondents who stated that they typically perform the procedure in the hospital, 18 percent (6 out of 34) stated that the patient is

   ``discharged the same day,'' 44 percent (15 out of 34) stated the patient is ``kept overnight (less than 24 hours),'' and 38 percent (13 out of 34) stated the patient is ``admitted (more than 24 hours).''

   These responses make no distinction between the patient's status as an inpatient or outpatient of the hospital for stays of longer than 24 hours. Nevertheless, the survey data show that the majority of responders indicated CPT code 60500 is typically performed in the hospital setting as an outpatient rather than an inpatient service. The survey data confirm the most recent Medicare PFS claims data which show that CPT code 60500 is a code with a Site-of-Service anomaly.

   Accordingly, we removed the hospital visit, reduced the discharge day management service to one-half, and adjusted times. We are proposing an alternative work RVU of 15.60 with refinements in time for CPT code 60500 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 22. Implant Neuroelectrodes

   GRAPHIC

   TIFF OMITTED TP06JN11.041

   In the Fourth Five-Year Review, CMS identified CPT code 63655

   (Laminectomy for implantation of neurostimulator electrodes, plate/ paddle, epidural) as potentially misvalued through the Site-of-Service

   Anomaly screen. CY 2009 Medicare PFS claims data indicated that for the typical case (greater than 50 percent), this service was not performed in the inpatient hospital setting and, therefore, we requested in the

   CYs 2010 and 2011 PFS final rules that the AMA RUC review this service again.

   For CPT code 63655 (Laminectomy for implantation of neurostimulator electrodes, plate/paddle, epidural), the associated specialty societies indicated that this service was recently surveyed and reviewed by the

   AMA RUC in April 2009 and concluded that there was no reason to believe another survey would result in different data requiring a change in the

   AMA RUC's previous discussion and recommendation. Accordingly, the AMA

   RUC recommended maintaining the current work RVU of 11.56, as well as the current physician time components.

   We disagree with the AMA RUC-recommended work RVU for CPT code 63655. We note that according to the survey data provided by the AMA

   RUC, of the 90 percent of respondents that stated they perform the procedure ``in the hospital,'' 18 percent stated that the patient is

   ``discharged the same day'' and 55 percent stated that the patient was

   ``kept overnight (less than 24 hours).'' Given that the most recently available Medicare PFS claims data continue to show the typical case is not an inpatient, and that the survey data for this code suggest the typical case is a 23 hour stay service, we believe it is appropriate to apply our established policy and reduce the discharge day management service to one-half. We are thus proposing an alternative work RVU of 10.92 with refinements in time for CPT code 63655 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 23. Injection of Anesthetic Agent

   Page 32455

   GRAPHIC

   TIFF OMITTED TP06JN11.042

   In the Fourth Five-Year Review, CMS identified CPT code 64405 as potentially misvalued through the Harvard-Valued--Utilization > 30,000 screen.

   For CPT code 64405 (Injection, anesthetic agent; greater occipital nerve), the AMA RUC reviewed the survey results and recommended the median survey work RVU of 1.00 for CPT code 64405.

   We disagree with the AMA RUC-recommended work RVU for CPT code 64405. We believe this code is comparable to the key reference CPT code 20526 (Injection, therapeutic (eg, local anesthetic, corticosteroid), carpal tunnel) (work RVU = 0.94). Accordingly, we are proposing an alternative work RVU of 0.94 for CPT code 64405 for CY 2012. 24. Gastric Emptying Study

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   TIFF OMITTED TP06JN11.043

   In the Fourth Five-Year Review, we identified CPT code 78264 as potentially misvalued through the Harvard-Valued--Utilization > 30,000 screen.

   For CPT code 78264 (Gastric emptying study), the AMA RUC reviewed the survey results and recommended the survey median work RVU of 0.95 for CPT code 78264.

   We disagree with the AMA RUC-recommended work RVU for CPT code 78264. We believe the 25th percentile survey value is more appropriate based on its similarity in the physician work to other diagnostic tests. Accordingly, we are proposing an alternative work RVU of 0.80 for CPT code 78264 for CY 2012. 25. Nasopharyngoscopy

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   TIFF OMITTED TP06JN11.044

   In the Fourth Five-Year Review, we identified CPT code 92511 as potentially misvalued through the Harvard-Valued--Utilization > 30,000 screen.

   For CPT code 92511 (Nasopharyngoscopy with endoscope (separate procedure)), the AMA RUC reviewed the survey results of 30 (out of a sample size of 100) physicians. The AMA RUC noted that there is typically an E/M service furnished on the same day as this service. AMA

   RUC indicated that it believes the survey data overestimated the physician work involved in the surveyed code and recommended that for

   CPT code 92511, a direct work RVU crosswalk to CPT code 69210 (Removal impacted cerumen (separate procedure), 1 or both ears) was appropriate.

   Accordingly, the AMA RUC recommended a work RVU of 0.61 for CPT code 92511.

   We agree with the AMA RUC's recommended work RVU and are proposing a work RVU of 0.61 for CPT code 92511 for CY 2012. However, while the

   AMA RUC noted that there is typically an E/M service furnished on the same day as this service, we are concerned that the times in the surveyed code were not adjusted to account for the overlap in times.

   The most currently available Medicare PFS claims data continue to show that CPT code 92511 is commonly billed with an E/M visit on the same day; therefore, as described in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-third. We believe that 4 minutes pre-service evaluation time and 3 minutes post-service time accurately reflect the time required to conduct the work associated with this service. A complete list of CMS time refinements can be found in Table 6. 26. Cardiopulmonary Resuscitation

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   In the Fourth Five-Year Review, CMS identified CPT code 92950 as potentially misvalued through the Harvard-Valued--Utilization > 30,000 screen.

   For CPT code 92950 (Cardiopulmonary resuscitation (eg, in cardiac arrest)), the AMA RUC reviewed the survey results recommended the median survey work RVU of 4.50 for CPT code 92950.

   We disagree with the AMA RUC-recommended work RVU for CPT code 92950. We recognize that patients that undergo this service are very ill; however, we do not believe that the typical patient meets all the criteria for the critical care codes. Furthermore, the most currently available Medicare PFS claims data show that CPT code 92950 is typically performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post service time by one-third.

   We believe that 1 minute pre-service evaluation time and 20 minutes post-service time accurately reflect the time required to conduct the work associated with this service. A complete list of CMS time refinements can be found in Table 6. 27. Osteopathic Manipulative Treatment

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   BILLING CODE C

   In the Fourth Five-Year Review, we identified CPT codes 98925, 98928 and 98929 as potentially misvalued through the Harvard-Valued--

   Utilization > 30,000 screen. Additionally, the American Osteopathic

   Association identified CPT codes 98926 and 98927 to be reviewed as part of this family since these were also identified to be reviewed by the

   AMA RUC Relativity Assessment Workgroup because these codes were identified through the Harvard-Valued--Utilization > 100,000 screen.

   For CPT code 98925 (Osteopathic manipulative treatment (OMT); 1-2 body regions involved), the AMA RUC reviewed the survey results and, based on comparisons to reference codes, recommended a work RVU of 0.50 for CPT code 98925.

   We disagree with the AMA RUC-recommended work RVU of 0.50 for CPT code 98925 and believe that a work RVU of 0.46 is more appropriate for this service. We are also refining the time associated with this code.

   Recent PFS claims data show that this service is typically performed on the same day as an E/M visit. The AMA RUC considered this, and determined that the work associated with the pre- and post-service time for CPT code 98925 is separate from the work conducted during the E/M visit. While we understand that these services have differences, we believe some of the activities conducted during the pre- and post- service times of the osteopathic manipulative treatment code and the E/

   M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section

   II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by \1/3\. We believe that 1 minute of pre-service evaluation time and 2 minutes post-service time accurately reflect the time required to conduct the work associated with this service.

   In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the extracted time and subtracted it from the AMA RUC-recommended work RVU of 0.50. For

   CPT code 98925, we removed a total of 2 minutes from the AMA RUC- recommended pre- and post-service times, which amounts to the removal of .04 of a work RVU, resulting in a work RVU of 0.46. We noted that 70 percent of the survey respondents indicated that the work of performing this service has not changed in the past 5 years (current RVU = 0.45).

   We are proposing an alternative work RVU of 0.46, with refinement in time for CPT code 98925 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 98926 (Osteopathic manipulative treatment (OMT); 3-4 body regions involved), the AMA RUC reviewed the survey results and determined that the survey 25th percentile work RVU of 0.75 provides the appropriate incremental difference between this CPT code and others in the family, considering the additional intra-service time required for the additional body regions involved. Therefore, the AMA RUC recommended a work RVU of 0.75 for CPT code 98926.

   We disagree with the AMA RUC-recommended work RVU of 0.75 for CPT code 98926 and believe that a work RVU of 0.71 is more appropriate for this service. We are also refining the time associated with this code.

   Recent PFS claims data show that this service is typically performed on the same day as an E/M visit. The AMA RUC considered this, and determined that the work associated with the pre- and post-service time for CPT code 98926 is separate from the work conducted during the E/M visit. While we understand that these services have differences, we believe some of the activities conducted during the pre- and post- service times of the osteopathic manipulative treatment code and the E/

   M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section

   II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by \1/3\. We believe that 1 minute of pre-service evaluation time and 2 minutes post-service time accurately reflect the time required to conduct the work associated with this service.

   In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the

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   extracted time and subtracted it from the AMA RUC-recommended work RVU of 0.75. For CPT code 98926, we removed a total of 2 minutes from the

   AMA RUC-recommended pre- and post-service times, which amounts to the removal of .04 of a work RVU, resulting in a work RVU of 0.71. We noted that 81 percent of the survey respondents indicated that the work of performing this service has not changed in the past 5 years (current

   RVU = 0.65). We are proposing an alternative work RVU of 0.71, with refinement in time for CPT code 98926 for CY 2012. A complete list of

   CMS time refinements can be found in Table 6.

   For CPT code 98927 (Osteopathic manipulative treatment (OMT); 5-6 body regions involved), the AMA RUC reviewed the survey results and determined that a work RVU of 1.00 provides the appropriate incremental difference between this CPT code and others in the family, considering the additional intra-service time required for the additional body regions involved. The AMA RUC stated that this value is supported by the survey 25th percentile work RVU of 0.97. The AMA RUC recommended a work RVU of 1.00 for CPT code 98927.

   We disagree with the AMA RUC-recommended work RVU of 1.00 for CPT code 98927 and believe that a work RVU of 0.96 is more appropriate for this service. We are also refining the time associated with this code.

   Recent PFS claims data show that this service is typically performed on the same day as an E/M visit. The AMA RUC considered this, and determined that the work associated with the pre- and post-service time for CPT code 98927 is separate from the work conducted during the E/M visit. While we understand that these services have differences, we believe some of the activities conducted during the pre- and post- service times of the osteopathic manipulative treatment code and the E/

   M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section

   II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by \1/3\. We believe that 1 minute of pre-service evaluation time and 2 minutes post-service time accurately reflect the time required to conduct the work associated with this service.

   In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the extracted time and subtracted it from the AMA RUC-recommended work RVU of 1.00. For

   CPT code 98927, we removed a total of 2 minutes from the AMA RUC- recommended pre- and post-service times, which amounts to the removal of .04 of a work RVU, resulting in a work RVU of 0.96. We noted that 77 percent of the survey respondents indicated that the work of performing this service has not changed in the past 5 years (current RVU = 0.87).

   We are proposing an alternative work RVU of 0.96, with refinement in time for CPT code 98927 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 98928 (Osteopathic manipulative treatment (OMT); 7-8 body regions involved), the AMA RUC reviewed the survey results and determined that a work RVU of 1.25 provides the appropriate incremental difference between this CPT code and others in the family, considering the additional intra-service time required for the additional body regions involved. The AMA RUC stated that this value is supported by the survey 25th percentile work RVU of 1.29. The AMA RUC recommended a work RVU of 1.25 for CPT code 98928.

   We disagree with the AMA RUC-recommended work RVU of 1.25 for CPT code 98928 and believe that a work RVU of 1.21 is more appropriate for this service. We are also refining the time associated with this code.

   Recent PFS claims data show that this service is typically performed on the same day as an E/M visit. The AMA RUC considered this, and determined that the work associated with the pre- and post-service time for CPT code 98928 is separate from the work conducted during the E/M visit. While we understand that these services have differences, we believe some of the activities conducted during the pre- and post- service times of the osteopathic manipulative treatment code and the E/

   M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section

   II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by \1/3\. We believe that 1 minute of pre-service evaluation time and 2 minutes post-service time accurately reflect the time required to conduct the work associated with this service.

   In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the extracted time and subtracted it from the AMA RUC-recommended work RVU of 1.25. For

   CPT code 98928, we removed a total of 2 minutes from the AMA RUC- recommended pre- and post-service times, which amounts to the removal of .04 of a work RVU, resulting in a work RVU of 1.21. We noted that 67 percent of the survey respondents indicated that the work of performing this service has not changed in the past 5 years (current RVU = 1.03).

   We are proposing an alternative work RVU of 1.21, with refinement in time for CPT code 98928 for CY 2012. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 98929 (Osteopathic manipulative treatment (OMT); 9-10 body regions involved), the AMA RUC reviewed the survey results and determined that the survey 25th percentile work RVU of 1.50 provides the appropriate incremental difference between this CPT code and others in the family, considering the additional intra-service time required for the additional body regions involved. The AMA RUC recommended a work RVU of 1.50 for CPT code 98929.

   We disagree with the AMA RUC-recommended work RVU of 1.50 for CPT code 98929 and believe that a work RVU of 1.46 is more appropriate for this service. We are also refining the time associated with this code.

   Recent PFS claims data show that this service is typically performed on the same day as an E/M visit. The AMA RUC considered this, and determined that the work associated with the pre- and post-service time for CPT code 98929 is separate from the work conducted during the E/M visit. While we understand that these services have differences, we believe some of the activities conducted during the pre- and post- service times of the osteopathic manipulative treatment code and the E/

   M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described earlier in section

   II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by \1/3\. We believe that 1 minute of pre-service evaluation time and 2 minutes post-service time accurately reflect the time required to conduct the work associated with this service.

   In order to determine the appropriate work RVU for this service given the time changes, we calculated the value of the extracted time and subtracted it from the AMA RUC-recommended work RVU of 1.50. For

   CPT code 98929, we removed a total of 2 minutes from the AMA RUC- recommended pre- and post-service times, which amounts to the removal of .04 of a work RVU, resulting in a work RVU of 1.46. We noted that 63 percent of the survey respondents indicated that the work of performing this service has not changed in the past

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   5 years (current RVU = 1.19). We are proposing an alternative work RVU of 1.46, with refinement in time for CPT code 98929 for CY 2012. A complete list of CMS time refinements can be found in Table 6. 28. Observation Care

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   In the Fourth Five-Year Review, CMS identified CPT codes 99218 through 99220 as potentially misvalued through the Harvard-Valued--

   Utilization > 30,000 screen. The American College of Physicians (ACEP) also submitted a public comment identifying CPT codes 99218 through 99220 to be reviewed in the Fourth Five-Year Review. The American

   College of Emergency Physicians (ACEP) also identified CPT codes 99234 through 99236 as part of the family of services for AMA RUC review.

   For CPT codes 99218 (Level 1 initial observation care, per day), 99219 (Level 2 initial observation care, per day), and 99220 (Level 3 initial observation care, per day), the AMA RUC believes that the patient population has changed for the initial observation care codes.

   The AMA RUC also believes that a rank order anomaly exists within this family of codes as the observation care codes have an analogous relationship to the initial hospital care codes (99221 through 99223).

   In October 2009, the AMA RUC considered three new CPT codes for subsequent observation care services and recommended a direct crosswalk to the corresponding level of subsequent hospital care codes (99231 through 99233) for the work RVU. The AMA RUC determined that similarly, the initial observation codes should be valued equivalently to the corresponding initial hospital care codes (99221 through 99223), which includes physician times and work RVUs. Accordingly, for CPT codes 99218-99220, the AMA RUC reviewed the survey results and recommended work RVUs of 1.92 for code 99218, 2.60 for code 99219, and 3.56 for code 99220 for CY 2012.

   We disagree with the AMA RUC-recommended work RVU for CPT code 99218, 99219, and 99220. We agree with the AMA RUC that appropriate relativity must be maintained within and between the families of similar codes. However, we believe that while the work RVUs of these initial observation care codes (99218, 99219, and 99220) should be greater than those of the subsequent observation care codes (99224, 99225, and 99226), we do not believe the work RVUs of the initial observation care codes (99218, 99219, and 99220) should be equivalent

   (or close) to the initial hospital care codes (99221, 99222, and 99223). We note that in the CY 2011 PFS final rule with comment period

   (75 FR 73334), we reviewed the new subsequent observation care codes, assigning the following work RVUs on an interim final basis for CY 2011: 0.54 to CPT code 99224, 0.96 to CPT code 99225, and 1.44 to CPT code 99226. These are all lower work RVUs than the subsequent hospital care codes (99224, 99225, and 99226). Furthermore, we noted that CMS has stated previously that in only rare and exceptional cases would reasonable and necessary outpatient observation services span more than 48 hours. In the majority of cases, the decision whether to discharge a patient from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours. Consequently, we believe that the acuity level of the typical patient receiving outpatient observation services would generally be lower than that of the inpatient level. We believe that if the patient's acuity level is determined to be at the level of the inpatient, the patient should be admitted to the hospital as an inpatient. We note that CMS has publicly stated in a recent letter to the AHA that ``it is not in the hospital's or the beneficiary's interest to extend observation care rather than either releasing the patient from the hospital or admitting the patient as an inpatient * * *'' (75 FR 73334).

   Consequently, we are not accepting the AMA RUC's recommendation to value the initial observation care codes at (for CPT Codes 99218 and 99219), or close to (for CPT code 99220) the level of initial hospital care services. Instead, we believe the work RVUs of the initial observation care codes should reflect the modest differences in patient acuity between the outpatient and inpatient settings. We compared the current work RVUs of the initial observation care codes to the interim final work RVUs of the subsequent observation care codes and found that the current relativity existing between these codes is acceptable. We also believe that the current work RVUs of the initial observation care codes maintain the proper rank order with the initial hospital care services. Therefore, we are proposing to maintain the following work

   RVUs for the initial observation care codes for CY 2012: 1.28 for CPT code 99218, 2.14 for CPT code 99219, and 2.99 for CPT code 99220. We note we are accepting the survey median physician times for these codes, as recommended by the AMA RUC. A complete list of CMS time refinements can be found in Table 6.

   For CPT codes 99234 (Level 1, observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date); 99235 (Level 2, observation or inpatient hospital care, for the evaluation and management of a patient including admission and discharge on the same date); and 99236

   (Level 3 observation or inpatient hospital care, for the evaluation and management of a patient

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   including admission and discharge on the same date), the AMA RUC reviewed the survey results from 50 internal medicine, family, geriatric, and emergency physicians. The specialty societies indicated and the AMA RUC agreed that survey results appeared flawed. The specialty societies determined that the inability to accurately survey the physician time and work required to perform this service was due to the fact that observation same day admit/discharge services are typically performed by hospitalists (primarily internists) or emergency physicians who work in shifts. Therefore, the physician performing the admission is typically not the same physician who performs the discharge and the survey respondents were not including the physician time and work for both parts of the service.

   Consequently, the AMA RUC used a similar methodology as was established to value these services in 1997, by taking the corresponding initial observation care code of the same level, for example, CPT code 99218 (AMA RUC-recommended work RVU = 1.92) plus half the value of a hospital discharge day management service, CPT code 99238 (work RVU = 1.28). Therefore, for CPT code 99234, the AMA RUC recommended maintaining the current work RVU of 2.56, as using the aforementioned methodology produces the same result. For CPT code 99235, the AMA RUC used the corresponding initial observation care code, CPT code 99219 (AMA RUC-recommended work RVU = 2.6) plus half the value of a hospital discharge day management service, CPT code 99238

   (work RVU = 1.28) and recommended the work RVU of 3.24, using the aforementioned methodology. Finally, for CPT code 99236, the AMA RUC used the corresponding initial observation care code, CPT code 99220

   (AMA RUC-recommended work RVU = 2.6) plus half the value of a hospital discharge day management service, CPT code 99238 (work RVU = 1.28) and recommended the work RVU of 4.2, using the aforementioned methodology.

   We agree with the AMA RUC's approach to valuing these observation same day admit/discharge services; however, we believe that the values for CPT codes 99218, 99219, and 99220 that are incorporated should be the CMS proposed values discussed above rather than the AMA RUC- recommended values. Therefore, using the proposed work RVU of 1.28 for

   CPT code 99218 and consistent with the aforementioned methodology, we are proposing a work RVU of 1.92 for CPT code 99234 for CY 2012. For

   CPT code 99235, using the proposed work RVU of 2.14 for CPT code 99219 and applying the methodology, we are proposing a work RVU of 2.78 for

   CY 2012. Finally, using the proposed work RVU of 2.99 for CPT code 99220 and applying the methodology, we are proposing a work RVU of 3.63 for CPT code 99236 for CY 2012. We also made corresponding physician time changes. A complete list of CMS time refinements can be found in

   Table 6.

4. HCPAC-Recommended Work RVUs 1. Excision of Nail

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   In the Fourth Five-Year Review, we identified CPT codes 11732 and 11765 as potentially misvalued through Harvard-Valued--Utilization > 30,000 screen.

   For CPT code 11723 (Avulsion of nail plate, partial or complete, simple; each additional nail plate (List separately in addition to code for primary procedure), the HCPAC reviewed the survey data and determined that the survey 25th percentile work RVU with total time of 15 minutes, was appropriate for this service. The HCPAC recommended a work RVU of 0.48 for CPT code 11732.

   We disagree with the HCPAC-recommended work RVU for CPT code 11723 and believe that a work RVU of 0.44 is more appropriate for this service. We compared CPT code 11723 to MPC CPT code 92250 and determined that CPT 92250 was the more appropriate crosswalk.

   Additionally, we find the HCPAC-recommended decrease in work RVU to be too small, given the recommended reduction in time. Therefore, we are proposing an alternative work RVU of 0.44 for CPT code 11723 for CY 2012.

   In addition to the work RVU adjustment for CPT code 11723, CMS is refining the time associated with this code. While we agree with the stated rationale justifying the 2 minutes pre-service time, we find the recommended 3 minutes post-service time to be excessive. Upon clinical review, we believe that 1 minute post-service time more accurately reflects the time required to conduct the post-service work associated with this service. A complete list of CMS time refinements can be found in Table 6.

   For CPT code 11765 (Wedge excision of skin of nail fold (e.g., for ingrown toenail)), the HCPAC reviewed the survey results and determined that the survey median work RVU with total time of 59 minutes was appropriate for this service. The HCPAC recommended a work RVU of 1.48 for CPT code 11765.

   We disagree with the HCPAC-recommended work RVU for CPT code 11765 and believe that a work RVU of 1.22 is more appropriate. We compared

   CPT code 11765 with reference CPT code 11422, as well as with CPT code 10060 (Incision and drainage of abscess (e.g., carbuncle, suppurative hidradenitis, cutaneous or subcutaneous abscess, cyst, furuncle, or paronychia); simple or single) (work RVU = 1.22), and determined that

   CPT code 10060 was more similar in intensity and complexity to CPT code 11765, and thus the better comparator code for this service. Therefore, we are proposing an alternative work RVU of 1.22 for CPT code 11765.

   In addition to the work RVU adjustment for CPT code 11765, CMS is refining the time associated with this code. This service is typically performed on the same day as an E/M visit. We believe some of the activities conducted during the pre- and post-service times of the procedure code and the E/M visit overlap and, therefore, should not be counted twice in developing the procedure's work value. As described in section II.A. of this proposed notice, to account for this overlap, we reduced the pre-service evaluation and post-service time by one-

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   third. We believe that 11 minutes pre-service evaluation time and 3 minutes post-service time accurately reflect the time required to conduct the work associated with this service. A complete list of CMS time refinements can be found in Table 6.

5. CPT Codes Identified Through the Five-Year Review Process, but Not

   Reviewed by CMS 1. CPT Codes Referred to CPT Editorial Panel

   The following table lists the CPT codes that were subsequently sent to the CPT Editorial Panel to consider coding changes. Therefore, the work RVUs for these codes are not addressed in this Five-Year Review proposed notice.

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   2. CPT Codes Withdrawn From the Five-Year Review

   The following table lists the CPT codes that were subsequently withdrawn from the Five-Year Review at the request of the medical specialty societies who submitted the codes for review in their public comments on the CY 2010 PFS final rule with comment period and with the agreement of the AMA RUC. Therefore, the work RVUs for these codes are not addressed in this Five-Year Review proposed notice.

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   The following table lists the CPT codes that were identified by CMS through the Five-Year Review process, but were recently addressed in the CY 2011 PFS final rule with comment period. The RVUs for these codes are currently interim final in CY 2011, were subject to public comment on the CY 2011 PFS final rule with comment period, and will be finalized in the CY 2012 PFS final rule with comment period. Two CPT codes on this list, 11040 and 11041, were deleted by the CPT Editorial

   Panel for CY 2011 and replaced by new CPT codes on this list (11042 through 11047). Therefore, the work RVUs for these codes are not addressed in this Five-Year Review proposed notice.

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   The following table lists the CPT codes that were identified through the Five-Year Review process by commenters on the CY 2010 PFS final rule with comment period, but are preventive medicine services not covered by Medicare under the PFS. The AMA RUC-recommended RVUs associated with these codes are published in Addendum B of this proposed notice for public reference, but have not been reviewed by

   CMS. Therefore, the work RVUs for these codes are not addressed in this

   Five-Year Review proposed notice. We note that Medicare covers a range of preventive services, including the initial preventive physical examination (IPPE) (``Welcome to Medicare Visit'') and the annual wellness visit (AWV), as detailed in the PFS CY 2011 final rule with comment period (75 FR 73412).

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6. Resource-Based Practice Expense RVUs 1. Overview

   Practice expense (PE) is the portion of the resources used in furnishing the service that reflects the general categories of physician and practitioner expenses, such as office rent and personnel wages but excluding malpractice expenses, as specified in section 1848(c)(1)(B) of the Act. Section 121 of the Social Security Amendments of 1994 (Pub. L. 103-432), enacted on October 31, 1994, required us to develop a methodology for a resource-based system for determining PE

   RVUs for each physician's service.

   This proposed notice sets forth proposed revisions to work RVUs affecting payment for physicians' services. PE RVUs were not subject to similar review. However, the proposed work RVU changes will have an impact on the development of PE RVUs due to the methodology we use to develop PE RVUs by looking at the direct and indirect physician practice resources involved in furnishing each service. Changes in work

   RVUs, changes in the intra-service portions of the physician time, and changes in the number or level of postoperative evaluation and management (E/M) visits associated with these services and their global periods result in corresponding changes to the direct PE inputs and other components used in the development of PE RVUs.

   The sections that follow provide more detailed information about the methodology for translating the resources involved in furnishing each service into service-specific PE RVUs and the ways in which the revisions set forth in this proposed notice alter some of the inputs used in that methodology. We also refer readers to the CY 2010 PFS final rule with comment period (74 FR 61743 through 61748) for a more detailed review of the PE methodology, including examples. 2. Practice Expense Methodology a. Direct Practice Expense

   We use a ``bottom-up'' approach to determine the direct PE by adding the costs of the resources (that is, the clinical staff, equipment, and supplies) typically involved in furnishing each service.

   The costs of the resources are calculated using the refined direct PE inputs assigned to each CPT code in our PE database, which are based on our review of recommendations received from the American Medical

   Association's (AMA's) Relative Value Update Committee (RUC). For a detailed explanation of the bottom-up direct PE methodology, including examples, we refer readers to the Five-Year Review of Work Relative

   Value Units Under the PFS and Proposed Changes to the Practice Expense

   Methodology proposed notice (71 FR 37242) and the CY 2007 PFS final rule with comment period (71 FR 69629). b. Indirect Practice Expense per Hour Data

   We use survey data on indirect practice expenses incurred per hour worked (PE/HR) in developing the indirect portion of the PE RVUs. Prior to CY 2010, we primarily used the practice expense per hour (PE/HR) by specialty that was obtained from the AMA's Socioeconomic Monitoring

   Surveys (SMS). The AMA administered a new survey in CY 2007 and CY 2008, the Physician Practice Expense Information Survey (PPIS), which was expanded (relative to the SMS) to include nonphysician practitioners (NPPs) paid under the PFS.

   The PPIS is a multispecialty, nationally representative, PE survey of both physicians and NPPs using a consistent survey instrument and methods highly consistent with those used for the SMS and the supplemental surveys. The PPIS gathered information from 3,656 respondents across 51 physician specialty and healthcare professional groups. We believe the PPIS is the most comprehensive source of PE survey information available to date. Therefore, we used the PPIS data to update the PE/HR data for almost all of the Medicare-recognized specialties that participated in the survey for the CY 2010 PFS.

   When we changed over to the PPIS data beginning in CY 2010, we did not change the PE RVU methodology itself or the manner in which the PE/

   HR data are used in that methodology. We only updated the PE/HR data based on the new survey. Furthermore, as we explained in the CY 2010

   PFS final rule with comment period (74 FR 61751), because of the magnitude of payment reductions for some specialties resulting from the use of the PPIS data, we finalized a 4-year transition (75 percent old/ 25 percent new for CY 2010, 50 percent old/50 percent new for CY 2011, 25 percent old/75 percent new for CY 2012, and 100 percent new for CY 2013) from the previous PE RVUs to the PE RVUs developed using the new

   PPIS data.

   Section 303 of the Medicare Prescription Drug, Improvement, and

   Modernization Act of 2003 (MMA) (Pub. L. 108-173) added section 1848(c)(2)(H)(i) of the Act, which requires us to use the medical oncology

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   supplemental survey data submitted in 2003 for oncology drug administration services. Therefore, the PE/HR for medical oncology, hematology, and hematology/oncology reflects the continued use of these supplemental survey data.

   We do not use the PPIS data for reproductive endocrinology, sleep medicine, and spine surgery since these specialties are not separately recognized by Medicare, nor do we have a method to blend these data with Medicare-recognized specialty data.

   Supplemental survey data on independent labs, from the College of

   American Pathologists, were implemented for payments in CY 2005.

   Supplemental survey data from the National Coalition of Quality

   Diagnostic Imaging Services (NCQDIS), representing independent diagnostic testing facilities (IDTFs), were blended with supplementary survey data from the American College of Radiology (ACR) and implemented for payments in CY 2007. Neither IDTFs nor independent labs participated in the PPIS. Therefore, we continue to use the PE/HR that was developed from their supplemental survey data.

   Consistent with our past practice, the previous indirect PE/HR values from the supplemental surveys for medical oncology, independent laboratories, and IDTFs were updated to CY 2006 using the MEI to put them on a comparable basis with the PPIS data.

   Previously, we have established PE/HR values for certain specialties without SMS or supplemental survey data by cross-walking them to other similar specialties to estimate a proxy PE/HR. For specialties that were part of the PPIS for which we previously used a crosswalked PE/HR, we instead use the PPIS-based PE/HR. We continue to use the previous crosswalks for specialties that did not participate in the PPIS. However, beginning in CY 2010 we changed the PE/HR crosswalk for portable x-ray suppliers from radiology to IDTF, a more appropriate crosswalk because these specialties are more similar to each other with respect to physician time.

   For registered dietician services, the proposed resource-based PE

   RVUs have been calculated in accordance with the final policy that crosswalks the specialty to the ``All Physicians'' PE/HR data, as adopted in the CY 2010 PFS final rule with comment period (74 FR 61752) and discussed again in more detail in the CY 2011 PFS final rule with comment period (75 FR 73183).

   As provided in the CY 2010 PFS final rule with comment period (74

   FR 61751), CY 2012 is the third year of the 4 year transition to the PE

   RVUs calculated using the PPIS data. Therefore, in general, the CY 2012

   PE RVUs are a 25 percent/75 percent blend of the previous PE RVUs based on the SMS and supplemental survey data and the new PE RVUS developed using the PPIS data as described above. Note that the reductions in the

   PE RVUs for expensive diagnostic imaging equipment attributable to the change in the equipment utilization rate assumption to 75 percent are not subject to the transition, as discussed in the CY 2011 PFS final rule with comment period (75 FR 73189 through 73192).

   Additionally, the PPIS PE RVU transition will not apply to CPT codes with changes in global periods. As discussed in the CY 2011 PFS final rule with comment period (75 FR 73183), we believe that a change in the global period of a code results in the CPT code describing a different service to which the previous PE RVUs would no longer be relevant when the code is reported for a service furnished with the new global period. The two CPT codes with proposed changes in global period for CY 2012 are: 51705 (Change of cystostomy tube; simple) and 51710

   (Change of cystostomy tube; complicated). The global period for each of these codes changed from a 10-day to a 0-day global period. c. Allocation of Practice Expense to Services

   To establish PE RVUs for specific services, it is necessary to establish the direct and indirect PE associated with each service.

   (1) Direct Costs

   The relative relationship between the direct cost portions of the

   PE RVUs for any two services is determined by the relative relationship between the sum of the direct cost resources (that is, the clinical staff, equipment, and supplies) typically required to provide the services. The costs of these resources are calculated from the refined direct PE inputs in our PE database. For example, if one service has a direct PE input cost sum of $400 and another service has a direct PE input cost sum of $200, the direct portion of the PE RVUs of the first service would be twice as much as the direct portion of the PE RVUs for the second service.

   (2) Indirect Costs

   Section II.F.2.b. of this proposed notice describes the current data sources for specialty-specific indirect costs used in our PE calculations. We allocate the indirect costs to the code level on the basis of the direct costs specifically associated with a code and the greater of either the clinical labor costs or the physician work RVUs.

   We also incorporate the survey data described earlier in the PE/HR discussion. The general approach to developing the indirect portion of the PE RVUs is described below.

   For a given service, we use the direct portion of the PE

   RVUs calculated as described above and the average percentage that direct costs represent of total costs (based on survey data) across the specialties that perform the service to determine an initial indirect allocator. For example, if the direct portion of the PE RVUs for a given service were 2.00 and direct costs, on average, represented 25 percent of total costs for the specialties that performed the service, the initial indirect allocator would be 6.00 since 2.00 is 25 percent of 8.00.

   We then add the greater of the work RVUs or clinical labor portion of the direct portion of the PE RVUs to this initial indirect allocator. In our example, if this service had work RVUs of 4.00 and the clinical labor portion of the direct PE RVUs was 1.50, we would add 6.00 plus 4.00 (since the 4.00 work RVUs are greater than the 1.50 clinical labor portion) to get an indirect allocator of 10.00. In the absence of any further use of the survey data, the relative relationship between the indirect cost portions of the PE RVUs for any two services would be determined by the relative relationship between these indirect cost allocators. For example, if one service had an indirect cost allocator of 10.00 and another service had an indirect cost allocator of 5.00, the indirect portion of the PE RVUs of the first service would be twice as great as the indirect portion of the PE

   RVUs for the second service.

   We next incorporate the specialty-specific indirect PE/HR data into the calculation. As a relatively extreme example for the sake of simplicity, assume in our example above that, based on the survey data, the average indirect cost of the specialties performing the first service with an allocator of 10.00 was half of the average indirect cost of the specialties performing the second service with an indirect allocator of 5.00. In this case, the indirect portion of the PE RVUs of the first service would be equal to that of the second service. d. Facility and Nonfacility Costs

   For procedures that can be furnished in a physician's office, as well as in a hospital or other facility setting, we establish two PE

   RVUs: Facility and nonfacility. The methodology for

   Page 32466

   calculating PE RVUs is the same for both the facility and nonfacility

   RVUs, but is applied independently to yield two separate PE RVUs.

   Because Medicare makes a separate payment to the facility for its costs of furnishing a service, the facility PE RVUs are generally lower than the nonfacility PE RVUs. e. Services With Technical Components and Professional Components

   Diagnostic services are generally comprised of two components, a professional component (PC) and a technical component (TC), each of which may be performed independently by different providers, or they may be performed together as a ``global'' service. When services have

   PC and TC components that can be billed separately, the payment for the global component equals the sum of the payment for the TC and PC. This is a result of using a weighted average of the ratio of indirect to direct costs across all the specialties that furnish the global components, TCs, and PCs; that is, we apply the same weighted average indirect percentage factor to allocate indirect expenses to the global components, PCs, and TCs for a service. (The direct PE RVUs for the TC and PC sum to the global under the bottom-up methodology.) f. Practice Expense RVU Methodology

   For a more detailed description of the PE RVU methodology, we refer readers to the CY 2010 PFS final rule with comment period (74 FR 61745 through 61746).

   (1) Setup File

   First, we create a setup file for the PE methodology. The setup file contains the direct cost inputs, the utilization for each procedure code at the specialty and facility/nonfacility place of service level, and the specialty-specific PE/HR data from the surveys.

   (2) Calculate the Direct Cost PE RVUs

   Sum the costs of each direct input as follows:

   Step 1: Sum the direct costs of the inputs for each service.

   Apply a scaling adjustment to the direct inputs.

   Step 2: Calculate the current aggregate pool of direct PE costs. This is the product of the current aggregate PE (aggregate direct and indirect) RVUs, the CF, and the average direct PE percentage from the survey data.

   Step 3: Calculate the aggregate pool of direct costs. This is the sum of the product of the direct costs for each service from

   Step 1 and the utilization data for that service.

   Step 4: Using the results of Step 2 and Step 3 calculate a direct PE scaling adjustment so that the aggregate direct cost pool does not exceed the current aggregate direct cost pool and apply it to the direct costs from Step 1 for each service.

   Step 5: Convert the results of Step 4 to an RVU scale for each service. To do this, divide the results of Step 4 by the CF. Note that the actual value of the CF used in this calculation does not influence the final direct cost PE RVUs, as long as the same CF is used in Steps 2 and 5. Different CFs will result in different direct PE scaling factors, but this has no effect on the final direct cost PE

   RVUs since changes in the CFs and changes in the associated direct scaling factors offset one another.

   (3) Create the Indirect Cost PE RVUs

   Create indirect allocators as follows:

   Step 6: Based on the survey data, calculate direct and indirect PE percentages for each physician specialty.

   Step 7: Calculate direct and indirect PE percentages at the service level by taking a weighted average of the results of Step 6 for the specialties that furnish the service. Note that for services with TCs and PCs, the direct and indirect percentages for a given service do not vary by the PC, TC, and global components.

   Step 8: Calculate the service level allocators for the indirect PE RVUs based on the percentages calculated in Step 7. The indirect PE RVUs are allocated based on the three components: The direct PE RVUs, the clinical PE RVUs, and the work RVUs. For most services the indirect allocator is: Indirect percentage * (direct PE

   RVUs/direct percentage) + work RVUs.

   There are two situations where this formula is modified as follows:

   If the service is a global service (that is, a service with global, professional, and technical components), then the indirect allocator is: Indirect percentage (direct PE RVUs/direct percentage) + clinical PE RVUs + work RVUs.

   If the clinical labor PE RVUs exceed the work RVUs (and the service is not a global service), then the indirect allocator is:

   Indirect percentage (direct PE RVUs/direct percentage) + clinical PE

   RVUs.

   (Note: For global services, the indirect allocator is based on both the work RVUs and the clinical labor PE RVUs. We do this to recognize that, for the PC service, indirect PEs will be allocated using the work RVUs, and for the TC service, indirect PEs will be allocated using the direct PE RVUs and the clinical labor PE RVUs.

   This also allows the global component RVUs to equal the sum of the

   PC and TC RVUs.)

   Apply a scaling adjustment to the indirect allocators.

   Step 9: Calculate the current aggregate pool of indirect

   PE RVUs by multiplying the current aggregate pool of PE RVUs by the average indirect PE percentage from the survey data.

   Step 10: Calculate an aggregate pool of indirect PE RVUs for all PFS services by adding the product of the indirect PE allocators for a service from Step 8 and the utilization data for that service.

   Step 11: Using the results of Step 9 and Step 10, calculate an indirect PE adjustment so that the aggregate indirect allocation does not exceed the available aggregate indirect PE RVUs and apply it to indirect allocators calculated in Step 8. Calculate the indirect practice cost index.

   Step 12: Using the results of Step 11, calculate aggregate pools of specialty-specific adjusted indirect PE allocators for all PFS services for a specialty by adding the product of the adjusted indirect

   PE allocator for each service and the utilization data for that service.

   Step 13: Using the specialty-specific indirect PE/HR data, calculate specialty-specific aggregate pools of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service across all services performed by the specialty.

   Step 14: Using the results of Step 12 and Step 13, calculate the specialty-specific indirect PE scaling factors.

   Step 15: Using the results of Step 14, calculate an indirect practice cost index at the specialty level by dividing each specialty-specific indirect scaling factor by the average indirect scaling factor for the entire PFS.

   Step 16: Calculate the indirect practice cost index at the service level to ensure the capture of all indirect costs. Calculate a weighted average of the practice cost index values for the specialties that furnish the service. (Note: For services with TCs and PCs, we calculate the indirect practice cost index across the global components, PCs, and TCs. Under this method, the indirect practice cost index for a given service (for example, echocardiogram) does not vary by the PC, TC, and global component.)

   Step 17: Apply the service level indirect practice cost index calculated in Step 16 to the service level adjusted indirect allocators calculated in Step 11 to get the indirect PE RVUs.

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   (4) Calculate the Final PE RVUs

   Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs from Step 17 and apply the final PE budget neutrality

   (BN) adjustment.

   The final PE BN adjustment is calculated by comparing the results of Step 18 to the current pool of PE RVUs. This final BN adjustment is required primarily because certain specialties are excluded from the PE

   RVU calculation for ratesetting purposes, but all specialties are included for purposes of calculating the final BN adjustment. (See

   ``Specialties excluded from ratesetting calculation'' in this section.)

   (5) Setup File Information

   Specialties excluded from ratesetting calculation: For the purposes of calculating the PE RVUs, we exclude certain specialties, such as certain nonphysician practitioners paid at a percentage of the PFS and low-volume specialties, from the calculation. These specialties are included for the purposes of calculating the BN adjustment. They are displayed in Table 7.

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   Page 32468

   Crosswalk certain low volume physician specialties:

   Crosswalk the utilization of certain specialties with relatively low

   PFS utilization to the associated specialties.

   Physical therapy utilization: Crosswalk the utilization associated with all physical therapy services to the specialty of physical therapy.

   Identify professional and technical services not identified under the usual TC and 26 modifiers: Flag the services that are PC and TC services, but do not use TC and 26 modifiers (for example, electrocardiograms). This flag associates the PC and TC with the associated global code for use in creating the indirect PE RVUs.

   For example, the professional service, CPT code 93010

   (Electrocardiogram, routine ECG with at least 12 leads; interpretation and report only), is associated with the global service, CPT code 93000

   (Electrocardiogram, routine ECG with at least 12 leads; with interpretation and report).

   Payment modifiers: Payment modifiers are accounted for in the creation of the file. For example, services billed with the assistant at surgery modifier are paid 16 percent of the PFS amount for that service; therefore, the utilization file is modified to only account for 16 percent of any service that contains the assistant at surgery modifier.

   Work RVUs: The setup file contains the work RVUs from this proposed notice.

   (6) Equipment Cost per Minute

   The equipment cost per minute is calculated as:

   (1/(minutes per year * usage)) * price * ((interest rate/(1-(1/((1 + interest rate)- life of equipment)))) + maintenance)

   Where:

   Minutes per year = maximum minutes per year if usage were continuous

   (that is, usage = 1); generally 150,000 minutes.

   Usage = equipment utilization assumption; 0.75 for certain expensive diagnostic imaging equipment (see 75 FR 73189 through 73192) and 0.5 for others.

   Price = price of the particular piece of equipment.

   Interest rate = 0.11.

   Life of equipment = useful life of the particular piece of equipment.

   Maintenance = factor for maintenance; 0.05. 3. Practice Expense RVUs for Codes Included in the Five-Year Review

   Some direct PE inputs and other components of the PE methodology are directly affected by the proposed revisions in work RVUs and physician time described in section II.C. of this proposed notice. In the following discussion, we detail how changes in work RVUs, changes in the intra-service portions of the physician time, and changes in the number or level of postoperative visits associated with the global periods result in corresponding changes to direct PE inputs and other components used in the development of PE RVUs. a. Changes to Direct Practice Expense Inputs

   Proposed changes in the intra-service portions of the physician time, and in the number or level of postoperative visits within the global periods associated with particular codes, result in corresponding changes in the values of certain direct PE inputs

   (clinical labor time, equipment time, and supply quantity). The following sections present the logic we used in making changes in the direct PE inputs based on their association with physician time. These changes are included in the Five-Year Review of Work proposed notice direct PE database, which is available on the CMS Web site under the downloads for this proposed notice at: http://www.cms.gov/PhysicianFeeSched/.

   (1) Changes in Intra-service Physician Time in the Nonfacility Setting

   Clinical Labor: For most codes valued in the nonfacility setting, a portion of the clinical labor time allocated to the intra-service period reflects minutes assigned for assisting the physician with the procedure. To the extent that we are proposing changes in the times associated with the intra-service portion of such procedures, we have adjusted the corresponding intra-service clinical labor minutes in the nonfacility setting.

   Equipment Time: For equipment associated with the intra-service period in the nonfacility setting, we generally allocate time based on the typical number of minutes a piece of equipment is being used and, therefore, not available for use with another patient during that period. In general, we allocate these minutes based on the description of typical clinical labor activities. To the extent that we are proposing changes in the clinical labor times associated with the intra-service portion of procedures, we have adjusted the corresponding equipment minutes associated with the codes.

   (2) Changes in Hospital Discharge Management Services in the Facility

   Setting

   Clinical Labor: For most codes with 10 or 90 day global periods that are valued in the facility setting, a portion of the clinical labor time allocated to the intra-service period in the facility setting reflects minutes assigned for discharge day management. To the extent that we are proposing changes in the physician times associated with hospital discharge day management, we have adjusted the corresponding intra-service clinical labor minutes in the facility setting.

   (3) Changes in the Number or Level of Postoperative Office Visits in the Global Period

   Clinical Labor: For codes valued with post-service physician office visits during a global period, most of the clinical labor time allocated to the post-service period reflects a standard number of minutes allocated for each of those visits. To the extent that we are proposing a change in the number or level of postoperative visits, we have modified the clinical staff time in the post-service period to reflect the change.

   Equipment Time: For codes valued with post-service physician office visits during a global period, we allocate standard equipment for each of those visits. To the extent that we are proposing a change in the number or level of postoperative visits associated with a code, we have adjusted the corresponding equipment minutes.

   Supplies: For codes valued with post-service physician office visits during a global period, a certain number of supply items are allocated for each of those office visits. To the extent that we are proposing a change in the number of postoperative visits, we have adjusted the corresponding supply item quantities associated with the codes. We note that many supply items associated with post-service physician office visits are allocated for each office visit (for example, a minimum multi-specialty visit pack (SA048) in the proposed notice direct PE database). For these supply items, the quantities in the proposed notice direct PE database should reflect the proposed number of office visits associated with the code's global period.

   However, some supply items are associated with post-service physician office visits but are only allocated once during the global period because they are typically used during only one of the post-service office visits (for example, pack, post-op incision care (suture)

   (SA054) in the proposed notice direct PE database). For these supply items, the quantities in the proposed notice direct PE database reflect that single quantity.

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   2. Changes in Components of the Indirect Practice Expense Methodology

   (1) Work RVUs, Direct PE RVUs, and Clinical Labor PE RVUs

   In calculating the allocations for indirect PE RVUs, as we describe in section II.F.2.f. of this proposed notice, we calculate the service level allocators for the indirect PEs based on the three components: direct PE RVUs, clinical labor PE RVUs, and work RVUs. Therefore, changes in the values of those components result in corresponding changes in the allocation of indirect PE RVUs.

   (2) Physician Time

   Similarly, in creating the indirect practice cost index, as we describe in section II.F.2.f. of this proposed notice, we calculate specialty-specific aggregate pools of indirect PE for all PFS services for that specialty by adding the product of the indirect PE/HR for the specialty, the physician time for the service, and the specialty's utilization for the service across all services performed by the specialty. Therefore, changes in the physician time result in corresponding changes in the calculation of specialty-specific aggregate pools of indirect PE for all PFS services for that specialty and consequently, the allocation of indirect PE RVUs.

7. Malpractice RVUs

   Section 1848(c) of the Act requires that each service paid under the PFS be comprised of three components: Work, PE, and malpractice.

   From 1992 to 1999, malpractice RVUs were charge-based, using weighted specialty-specific malpractice expense percentages and 1991 average allowed charges. Malpractice RVUs for new codes after 1991 were extrapolated from similar existing codes or as a percentage of the corresponding work RVU. Section 1848(c)(2)(C)(iii) of the Act required us to implement resource-based malpractice RVUs for services furnished beginning in 2000. Therefore, initial implementation of resource-based malpractice RVUs occurred in 2000.

   The statute also requires that we review, and if necessary adjust,

   RVUs no less often than every 5 years. The first review and update of resource-based malpractice RVUs was addressed in the CY 2005 PFS final rule with comment period (69 FR 66263). Minor modifications to the methodology were addressed in the CY 2006 PFS final rule with comment period (70 FR 70153). In the CY 2010 PFS final rule with comment period, we implemented the second review and update of malpractice

   RVUs. For a discussion of the second review and update of malpractice

   RVUs, see the CY 2010 PFS proposed rule (74 FR 33537) and final rule with comment period (74 FR 61758).

   As established in the CY 2011 PFS final rule with comment period

   (75 FR 73208), malpractice RVUs for new and revised codes effective before the next Five-Year Review (for example, effective CY 2011 through CY 2014) are determined by a direct crosswalk to a similar

   ``source'' code or a modified crosswalk to account for differences in work RVU between the new/revised code and the source code. For the modified crosswalk approach, we adjust the malpractice RVU for the new/ revised code to reflect the difference in work RVU between the source code and the new/revised work value (or, if greater, the clinical labor portion of the fully implemented PE RVU) for the new code. For example, if the proposed work RVU for a revised code is 10 percent higher than the work RVU for its source code, the malpractice RVU for the revised code would be increased by 10 percent over the source code RVU. This approach presumes the same risk factor for the new/revised code and source code but uses the work RVU for the new/revised code to adjust for risk-of-service. The assigned malpractice RVUs for new/revised codes effective between updates remain in place until the next Five-

   Year Review. For this Fourth Five-Year Review, with the exception of 3

   CPT codes (33981, 33982, and 33983), the source code for each code reviewed in the Five-Year Review is the code itself. Under this usual circumstance, we calculated the revised malpractice RVU for these codes by scaling the current malpractice RVU by the percent difference in work RVU between the current (CY 2011) work RVU and the work RVU proposed in section II.C. of this proposed notice.

   CPT codes 33981 (Replacement of extracorporeal ventricular assist device, single or biventricular, pump(s), single or each pump); 33982

   (Replacement of ventricular assist device pump(s); implantable intracorporeal, single ventricle, without cardiopulmonary bypass); and 33983 (Replacement of ventricular assist device pump(s); implantable intracorporeal, single ventricle, with cardiopulmonary bypass) were previously contractor-priced and do not have current work RVUs.

   Therefore we applied the AMA RUC-recommended crosswalks to obtain the appropriate malpractice RVUs. The crosswalk source code for CPT code 33981 is CPT code 33976 (Insertion of ventricular assist device; extracorporeal, biventricular), and the crosswalk source for CPT code 33982 and 33983 is CPT code 33979 (Insertion of ventricular assist device, implantable intracorporeal, single ventricle). Consistent with the methodology described above, the malpractice RVUs for these three newly-valued codes were developed by adjusting the malpractice RVU of the source code for the difference in work RVU between the source code and the newly-valued code. All malpractice RVUs are listed in Addendum

   B of this proposed notice.

8. Budget Neutrality

   Section 1848(c)(2)(B)(ii) of the Act requires that increases or decreases in RVUs for a year may not cause the amount of expenditures for the year to differ by more than $20 million from what expenditures would have been in the absence of these changes. If this threshold is exceeded, we must make adjustments to preserve budget neutrality. We estimate that the net effect on the PFS overall from the Fourth Five-

   Year Review changes discussed in this proposed notice would be under

   $20 million for CY 2012, as compared to CY 2011, based on CY 2009

   Medicare PFS utilization data. The current law estimate of the CY 2012

   CF is $23.9396. Since the net impact on the PFS is under the $20 million threshold, we will not apply a budget neutrality adjustment to the CY 2012 conversion factor (CF). We note that additional changes to

   PFS payment policies, including the establishment of interim and final

   RVUs for coding changes that will be announced later this year, may result in the application of budget-neutrality adjustments for CY 2012.

   III. Response to Comments

   Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments received by the date and time specified in the DATES section of this preamble, and we will respond to the comments in the CY 2012 PFS final rule with comment period.

   IV. Collection of Information Requirements

   This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the

   Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35)

   Page 32470

   V. Regulatory Impact Analysis

1. Overall Impact

   We have examined the impact of this rule as required by Executive

   Order 12866 on Regulatory Planning and Review (September 30, 1993),

   Executive Order 13563 on Improving Regulation and Regulatory Review

   (February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the

   Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4),

   Executive Order 13132 on Federalism (August 4, 1999) and the

   Congressional Review Act (5 U.S.C. 804(2)).

   Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in any 1 year).

   We estimate that this proposed notice will redistribute less than $100 million of PFS expenditures in 1 year. Therefore, we estimate that this rulemaking is not ``economically significant'' as measured by the $100 million threshold, and hence not a major rule under the Congressional

   Review Act. Accordingly, we are not including a formal regulatory impact analysis.

   While we are not including a formal regulatory impact analysis, we are providing the following discussion for informational purposes. Of the CPT codes reviewed during the Fourth Five-Year Review of Work, there are both proposed increases and decreases in work values and changes in physician time. The changes in work values and physician time values result in corresponding changes to the PE and malpractice

   RVUs, as discussed in sections II.F.3. and II.G. of this proposed notice. Overall, we estimate that the net effect on PFS spending would be under $20 million for CY 2012, as compared to CY 2011. At the specialty level, this Five-Year Review of Work is estimated to have no significant impact based on the aggregate services that each specialty performed during CY 2009. We note that CY 2009 is the most recent year for which complete PFS utilization data are available at the time of the analysis for this proposed notice.

   The RFA requires agencies to analyze options for regulatory relief of small entities, if a rule has a significant impact on a substantial number of small entities. The great majority of hospitals and most other health care providers and suppliers are small entities, either by being nonprofit organizations or by meeting the SBA definition of a small business (having revenues of less than $7.0 million to $34.5 million in any 1 year). For purposes of the RFA, physicians, nonphysician practitioners (NPPs), and other suppliers, including independent diagnostic testing facilities (IDTFs), are considered small businesses if they generate revenues of $10 million or less based on

   SBA size standards. Approximately 95 percent of physicians are considered to be small entities. There are over 1 million physicians, other practitioners, and medical suppliers that receive Medicare payment under the PFS. Since we estimate that there are no significant impacts at the specialty level due to the proposed changes in RVUs resulting from the Fourth Five-Year Review of Work, the Secretary has determined that this proposed notice will not have a significant impact on the operations of a substantial number of small businesses or other small entities. Therefore, the Secretary has determined that this proposed notice will not have a significant economic impact on a substantial number of small entities.

   In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. We do not believe that there will be significant impacts on small rural hospitals given the overall insignificant impact attributable to proposed RVU changes resulting from this Five-Year Review of Work. Therefore, the Secretary has determined that this proposed notice will not have a significant impact on the operations of a substantial number of small rural hospitals.

   Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2011, that threshold is approximately $136 million. This proposed notice will not mandate any requirements for State, local, or Tribal governments in the aggregate, or by the private sector, of $135 million. Medicare beneficiaries are considered to be part of the private sector and as a result a more detailed discussion is presented on the Impact of

   Beneficiaries in section V.C. of this proposed notice.

   Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. We have examined this proposed notice in accordance with

   Executive Order 13132 and have determined that this regulation would not have any substantial direct effect on State or local governments, preempt States, or otherwise have a Federalism implication.

2. Anticipated Effects: Impact on Beneficiaries

   Overall, we believe these changes would improve beneficiary access to reasonable and necessary services since services would be more appropriately valued. The payment changes could also affect beneficiary liability. Any changes in aggregate beneficiary liability from a particular work RVU change would be negligible; however, an individual beneficiary's liability would be a function of the coinsurance (20 percent, if applicable, for the particular service after the beneficiary has met the deductible) and the effect of the work RVU changes on the calculation of the Medicare Part B payment rate for the service.

3. Alternatives Considered

   This proposed notice discusses the proposed revisions to the work

   RVUs and corresponding changes to the PE and malpractice RVUs under the

   PFS. The preamble provides descriptions of the statutory provisions that are addressed, identifies those areas when discretion has been exercised, presents rationale for our decisions, and where relevant, alternatives that were considered.

4. Accounting Statement and Table

   As required by OMB Circular A-4 (available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a004/a-4.pdf), in Table 8, we have prepared an accounting statement showing the estimated expenditures associated with this proposed notice.

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5. Conclusion

   As stated previously, the Secretary determined that the economic impacts of this proposed notice do not meet the level required by section 1102(b) of the Act or the RFA and, therefore, we are not providing a regulatory impact analysis.

   In accordance with the provisions of Executive Order 12866, this proposed notice was reviewed by the Office of Management and Budget.

   (Catalog of Federal Domestic Assistance Program No. 93.773,

   Medicare--Hospital Insurance; and Program No. 93.774, Medicare--

   Supplementary Medical Insurance Program)

   Dated: March 31, 2011.

   Donald M. Berwick,

   Administrator, Centers for Medicare & Medicaid Services.

   Approved: April 28, 2011.

   Kathleen Sebelius,

   Secretary, Department of Health and Human Services.

   ADDENDUM A: EXPLANATION AND USE OF ADDENDA B AND C

   The Addenda on the following pages provide various data pertaining to the Medicare fee schedule for physicians' services furnished in CY 2012. Addendum B contains the RVUs for work, nonfacility PE, facility PE, and malpractice expense, and other information for all services included in the PFS. We note that for this proposed notice, to create Addendum B, we retained the current

   CY 2011 RVUs from the CY 2011 payment file for most codes and displayed new RVUs for only those codes involved in the Fourth Five-

   Year Review of Work. PE RVUs for these Five-Year Review codes were calculated using CY 2009 Medicare utilization data in order to maintain consistency with the current CY 2011 RVUs displayed for all other services. Addendum C contains the list of CPT codes that were reviewed for the Fourth Five-Year Review of Work.

   (1) Addendum B: Relative Value Units and Related Information

   Used in Determining Payments for CY 2012 (Changes from CY 2011 for

   Services Reviewed in the Fourth Five-Year Review Only)

   In previous years, we have listed many services in Addendum B that are not paid under the PFS. To avoid publishing as many pages of codes for these services, we are not including clinical laboratory codes or the alpha-numeric codes (Healthcare Common

   Procedure Coding System (HCPCS) codes not included in CPT) not paid under the PFS in Addendum B.

   Addendum B contains the following information for each CPT code and alpha-numeric HCPCS code, except for: Alpha-numeric codes beginning with B (enteral and parenteral therapy); E (durable medical equipment); K (temporary codes for nonphysicians' services or items); or L (orthotics); and codes for anesthesiology. Please also note the following:

   An ``NA'' in the ``Nonfacility PE RVUs'' column of

   Addendum B means that CMS has not developed a PE RVU in the nonfacility setting for the service because it is typically performed in the hospital (for example, an open heart surgery is generally performed in the hospital setting and not a physician's office). If there is an ``NA'' in the nonfacility PE RVU column, and the contractor determines that this service can be performed in the nonfacility setting, the service will be paid at the facility PE RVU rate.

   Services that have an ``NA'' in the ``Facility PE

   RVUs'' column of Addendum B are typically not paid under the PFS when provided in a facility setting. These services (which include

   ``incident to'' services and the technical portion of diagnostic tests) are generally paid under either the hospital outpatient prospective payment system or bundled into the hospital inpatient prospective payment system payment. In some cases, these services may be paid in a facility setting at the PFS rate (for example, therapy services), but there would be no payment made to the practitioner under the PFS in these situations. 1. CPT/HCPCS code. This is the CPT or alpha-numeric HCPCS number for the service. Alpha-numeric HCPCS codes are included at the end of this Addendum. 2. Modifier. A modifier is shown if there is a technical component (modifier TC) and a professional component (PC) (modifier- 26) for the service. If there is a PC and a TC for the service,

   Addendum B contains three entries for the code. A code for: the global values (both professional and technical); modifier-26 (PC); and modifier TC. The global service is not designated by a modifier, and physicians must bill using the code without a modifier if the physician furnishes both the PC and the TC of the service. Modifier- 53 is shown for a discontinued procedure, for example, a colonoscopy that is not completed. There will be RVUs for a code with this modifier. 3. Status indicator. This indicator shows whether the CPT/HCPCS code is included in the PFS and whether it is separately payable if the service is covered. An explanation of types of status indicators follows:

   A = Active code. These codes are separately payable under the

   PFS if covered. There will be RVUs for codes with this status. The presence of an ``A'' indicator does not mean that Medicare has made a national coverage determination regarding the service. Contractors remain responsible for coverage decisions in the absence of a national Medicare policy.

   B = Bundled code. Payments for covered services are always bundled into payment for other services not specified. If RVUs are shown, they are not used for Medicare payment. If these services are covered, payment for them is subsumed by the payment for the services to which they are incident (for example, a telephone call from a hospital nurse regarding care of a patient).

   C = Contractors price the code. Contractors establish RVUs and payment amounts for these services, generally on an individual case basis following review of documentation, such as an operative report.

   E = Excluded from the PFS by regulation. These codes are for items and services that CMS chose to exclude from the PFS by regulation. No RVUs are shown, and no payment may be made under the

   PFS for these codes. Payment for them, when covered, continues under reasonable charge procedures.

   I = Not valid for Medicare purposes. Medicare uses another code for the reporting of, and the payment for these services. (Codes not subject to a 90 day grace period.)

   M = Measurement codes, used for reporting purposes only. There are no RVUs and no payment amounts for these codes. CMS uses them to aid with performance measurement. No separate payment is made. These codes should be billed with a zero (($0.00) charge and are denied) on the MPFSDB.

   N = Non-covered service. These codes are noncovered services.

   Medicare payment may not be made for these codes. If RVUs are shown, they are not used for Medicare payment.

   R = Restricted coverage. Special coverage instructions apply. If the service is covered and no RVUs are shown, it is contractor- priced.

   T = There are RVUs for these services, but they are only paid if there are no other

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   services payable under the PFS billed on the same date by the same provider. If any other services payable under the PFS are billed on the same date by the same provider, these services are bundled into the service(s) for which payment is made.

   X = Statutory exclusion. These codes represent an item or service that is not within the statutory definition of ``physicians' services'' for PFS payment purposes. No RVUs are shown for these codes, and no payment may be made under the PFS, (for example, ambulance services and clinical diagnostic laboratory services.) 4. Description of code. This is the code's short descriptor, which is an abbreviated version of the narrative description of the code. 5. Physician work RVUs. These are the RVUs for the physician work in CY 2011. 6. Fully implemented nonfacility PE RVUs. These are the fully implemented resource-based PE RVUs for nonfacility settings. 7. CY 2011 transitional nonfacility PE RVUs. These are the CY 2011 resource-based PE RVUs for nonfacility settings. 8. Fully implemented facility PE RVUs. These are the fully implemented resource-based PE RVUs for facility settings. 9. CY 2011 Transitional facility PE RVUs. These are the CY 2011 resource-based PE RVUs for facility settings. 10. Malpractice expense RVUs. These are the RVUs for the malpractice expense for CY 2011. 11. Global period. This indicator shows the number of days in the global period for the code (0, 10, or 90 days). An explanation of the alpha codes follows:

   MMM = Code describes a service furnished in uncomplicated maternity cases, including ante partum care, delivery, and postpartum care. The usual global surgical concept does not apply.

   See the Physicians' Current Procedural Terminology for specific definitions.

   XXX = The global concept does not apply.

   YYY = The global period is to be set by the contractor (for example, unlisted surgery codes).

   ZZZ = Code related to another service that is always included in the global period of the other service.

   (2) Addendum C: Codes With Proposed RVUs Subject to Comment for Fourth

   Five-Year Review of Work

   Addendum C includes the columns and indicators described above for Addendum B for codes with proposed RVUs subject to comment for the Fourth Five-Year Review of Work.

   BILLING CODE P

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   FR Doc. 2011-13052 Filed 5-24-11; 4:15 pm

   BILLING CODE C